Tuesday, December 28, 2004

Reward Systems

"Creativity should be followed, not led." -- Maria Montessori (Pg. 129)

That is a profound statement. Reward structures need to be geared around encouraging experimentation and not punishing failures.

That calls for some radical shifts in thinking. Our existing education systems are geared toward vertical, logical thinking that is an euphemism for critical or negative thinking. Wild, illogical and wacky ideas are what lead to creativity. Of course, they require vertical thinking for sound implementation. It is the lack of lateral thinking altogether that causes much concern.


The authors take a swipe at the accounting profession as follows:

"There is a profession, called accounting, that has made a business of developing and institutionalizing certain measures, even if they are the wrong ones." -- Page 159.

Wow! Finally, a book that acknowledges the harm that is done by standardized auditing practices. The design of reward structures that harm teamwork is a big problem as well.

In-Process versus Outcome Measures

The recommendation seems to be toward in-process measures as these are the only measures that can help guide action. Although these have been proven to work really well in the production industry, it is instructive to note their implementation in the software industry.

Software shops tend to institutionalize measures, such as lines of code, number of functions, cyclomatic complexity, etc.. Although these are in-process measures, they have been confused by their implementors to be in some way, an indicator of quality or productivity. If LOCs are to be maximized, then organizations ought to hire stenographers and not computer programmers.

On the other hand, if LOCs are to be minimized, that might force teams to refactor, revise and shorten. That might not be a bad idea after all.

The point in this section is that the right measures matter. Not any measure.
At any point, knowing the percentage of coverage could help programmers write more tests. However, it does not usually affect the quality of the tests. It is hard to believe that the quality of a test can be quantified in repeatable manner. That is also something the authors bring out, in that the measures are meant to be a soft guide with a "light touch."

When Memory is a Susbstitute for Thinking

I can appreciate this one from experience. The best of us get defensive when it comes to change. A soccer coach once lent be a great book - "The Mental Edge: Maximize Your Sports Potential With the Mind/Body Connection." The author puts it very nicely when he says, "When you do what you've always done, you'll get what you've always got."

I've encountered the defensive attitude so many times in my work - people just don't like to change habits every week. Industrial Logic has an practical approach to this - applying massive change in one go. Its like dipping your toe in really cold water, then your feet, leg and so on, getting tortured each time, as opposed to plunging in and acclimatising instantly. Of course, as the authors point out, you wouldn't want to be "chainsaw Al," who messed up the companies he touched due to his ethics (or lack thereof).

When Talk Substitutes for Action

This chapter is most interesting. It ties in nicely with the research done by Jim Collins in Good to Great, which shows that the greatest organizations have "Level 5" leaders, who have worked themselves up the ranks. These are leaders you would never have heard of. e.g. Do you know who the CEO of Cisco is?

America's opinion of what makes great leaders is undergoing a sea-change in our times.

Sutton and Pfeffer are not charitable to the current style of management education. There hasn't been any convincing response to their arguments yet, the outcry notwithstanding.

I was talking to a customer care representative the other day, and we started discussing consulting. I mentioned that the best consultants listen to the employees, ask them what the problems are, and how to solve them. They relay this to the top management, and the solution gets accepted and implemented. We had a good laugh over this, but the outsider factor cannot be ignored. It is human nature to take those around you for granted. The current system of education does not really teach humility and positive attitudes, and as the authors point out, critical analysis is considered a sign of scholarship. In such situations, the ear is closed to good ideas.

So I'd argue that consultants are a very important force in the world, the marriage counsellors in organizations, and can play a big role in changing people's lives for the better (or worse).

When Measurement Obstructs Good Judgement

This chapter is strikingly similar to Tom DeMarco's thoughts on Management By Objectives (MBO). However, Sutton and Pfeffer are less caustic and do give credit to the ideas behind balanced scorecards although the implementations tend to go overboard due to unnecessary complexity.

Contrast this with Industrial XP's Test-Driven Management, which requires periodic review of management objectives, and tries to keep them small, simple and measurable (3 to 5).

I had tried introducing balanced scorecards once as a single management test. The organization loved the idea, but I couldn't see the implementation during my lifetime with that company. Having said that, I still think it has value and some of the parameters need tracking over the period of a year or more. I had emphasized the fact that we did not know what is "desirable". Tracking certain dimensions might reveal information and help us learn where we would like to go. One way would be to identify the most successful teams and see how they scored on various dimensions.

As I have educated myself a little more now, I am a little torn about whether all software project teams in that org should be organized the same way, as priorities are often different. I am a big believer in the innovation capacity of all individuals and I like to see that capacity bloom. I cannot bring myself to believe that innovation has no place in projects that seem "routine."

When Fear Prevents Acting on Knowledge

"The key to driving out fear even during difficult times is to provide people with as much prediction, understanding, control and compassion as possible."

SASKEN in India is one company that has unique HR practices in the Indian IT industry.
Triple Whammy from Sasken

Sasken went through a difficult period in 2001, during a recession in the telecom industry. They had to decide between layoffs and paycuts, and chose the latter to retain their personnel. Across the board cuts were applied, including top management. Very few personnel left the company during this period. They also made a bet and specialized in a certain mobile technology. That helped them rebound as the economy started picking up. Sasken is rated as one of the best places to work for in India.