A polarity lens on change

“The Paradoxical Theory of Change. … change occurs when one becomes what he is, not when he tries to become what he is not… By rejecting the role of change agent, we make meaningful and orderly change possible.”

This quote by Arnold Beisser opens up the core chapter on change and transformation in Barry Johnson’s new book “And — Making a difference by leveraging polarity, paradox or dilemma.” I first came across the concept of Polarity Management 4 years ago and it’s become one of the foundational tools in my mental toolbox ever since, when I’m mindful enough to notice that the situation I’m trying to navigate is actually a both/and rather than an either/or dynamic. 

I won’t cover the basics of polarity management in this post. There are several good overviews of it available elsewhere, including my older post. “And” introduces several polarity archetypes: meta-polarities or polarity patterns, if you will, that aggregate together typical dynamics shared by a large set of specific polarities. This post will cover one such archetype/pattern shared by all polarities that, at their core, have to do with the tension between “continuity” and “transformation”. Other labels often used to describe this tension include: being/becoming, expansive/focused, traditional/innovative, familiar/new, stability/change. 

The core polarity is captured in this polarity map: 

On the one hand, there is a force attempting to Transform the situation. It is moving from “Missing” something valued, which is seen as a problem (-B), to “Going After” that which is “Missing,” which is a vision for a preferred future (+C).  

On the other hand, there is a force for Continuity. It is moving from avoiding the loss of something valued (-D) to “Holding On” to it with great pride (+A). 

Since traditional approaches to change view transformation as solving a problem, when the change effort encounters resistance, they suggest looking for ways to overcome or get around it. To get everyone “aligned” to move in the desired direction. The polarity lens clearly shows that this approach will likely make matters worse in the long-run: extend the time and effort it would take to reach the desired upside, and make it inherently unsustainable and likely to be reversed at a later date. 

Failing to notice and manage the polarity leads to getting hooked and stuck: 

• Hooked: The more powerfully we value something from our past (+A), the more powerfully we are afraid of losing it (-D).
• Stuck: The hook (+A/-D) becomes a wall that blocks the natural flow of the force that knows something is missing (-B) and wants a transformation by going after it (+C). This leaves the system stuck in the downside of Continuity. 

Alternative approaches orient differently toward resistance. Resistance is viewed as a resource that can be included in the process of making the transformation. The assumption is that there is wisdom in the resistance. Combining the energy of “going after” and “holding on” is likely to accelerate the pace at which the desired upside will be obtained and will make this destination more stable and long-lasting in the long-run. When we experience the downside of the pole towards which we were moving, it is recognized as the natural flow between the two poles. An early warning sign that some self-correction is necessary, not an indication that the direction is inherently wrong.

Managing the polarity well, can help the system get unstuck, following a 5-step process: 

1. Seek what value is being held (+A). Listen to those who are resisting the move towards what we are “Going After” (+C). Affirm the value to which they are “Holding On” (+A). 
2. The affirmation transforms the wall into a bridge to the fear of losing what is valued (-D). Listen to and respect the legitimate fear of losing what is valued. 
3. After identifying the resistor’s point of view (+A/-D) ask the question: “How might we (those holding on and those going after) gain what we are “going after”…
4. .. without letting go of what the resistors value…
5. … in order to move towards a Greater Purpose that works for both groups?”

The response to this question is the last step in the general SMALL (Seeing, Mapping, Assessing, Learning, Leveraging) process, synthesizing the insights of managing the polarity by:

• Identifying “Action Steps” that will allow us to capture the upside of the two poles. 
• Identifying “Early Warnings” that we’re getting too close to one of the poles and its downside is becoming noticeable. 

In another favorite book of mine, Mastering Leadership, Anderson & Adams describe Integral Leadership as follows: 

“This ability to hold opposites, conflict, tension and polarity, without avoiding them, oversimplifying them, or resorting to quick fixes, is the hallmark of this leadership… the ability to see and hold the whole system…with both fierce commitment to transformation and with compassion for what is.”

The approach outlined above offers a tangible way to make progress in that compelling journey. 

Terminations and compensation changes at Holacracy One

Ever since I read Brian Robertson’s book five years ago, one of my deepest qualms with Holacracy has been the gap it created around People practices such as performance management, compensation changes, and terminations.

Five years ago, I wrote: 

Dealing with “human spaces” problems such as hiring/firing, compensation, growth, etc. is not part of the Holacracy “operating systems” but mere “add-ons/apps” that each business should figure out on its own, once they adopt Holacracy. Yet at the same time, it’s been acknowledged that Holacracy is at odds with traditional “human spaces” solutions, and the friction between the two is a key cause for some companies attempting to adopt Holacracy but failing to successfully do so.

To use the “Holacracy as an Operating System” metaphor which Robertson introduced in his book: he created a new OS that’s incompatible with the existing apps (manager-led people practices) and launched it without an ecosystem of compatible apps. Only radical early adopters would switch to a new OS without an ecosystem of compatible apps already in place, which sadly, not only slowed down Holacracy’s adoption but also made it the target of very valid critique. 

Since then, I’ve learned to look at Holacracy less as a monolithic dogma and more as a source of inspiration for several potent building blocks for designing more human organizations. Top of which are the “OS Kernel”, the Holacracy Constitution, a compelling alternative to CEO/founder dictatorship for governing organizational power; and variations of the Integrative Decision Making process for more effective decision-making. 

While those are important pieces of the larger puzzle, it is still missing the key pieces of people practices and will not be complete without them.  

Robertson has softened up over the years too. When I heard him speak last year, he had a growing appreciation for the human aspect of the organization and for the need to cultivate not just “role” but also “sole”. 

In a series of blog posts published earlier this summer, he outlined how his Holacracy-run company, Holacracy One, handles two of the most challenging people practices in any organization —  terminations and compensation changes: 

Getting fired without a boss

A self-directed compensation system

The processes are also covered in detail in the company’s governance system, GlassFrog. 

Termination process (Partnership Review)

Roles: 

• Partner — the person whose affiliation with the organization is being reviewed. 
• Partnership Assessor — responsible for assessing Partners for continued partnership during scheduled Partnership Reviews.

Process: 

1. New Partners automatically go through a Partnership Review after three, six, and twelve months of tenure. Any Partner can request a Partnership Review for another Partner. 
2. All Partnership Assessors must participate in the review or waive their right to attend. They can also invite additional Partners to attend, as long as no other Partnership Assessor objects.
3. After sharing the context for the review (the reason it was called) participants vote (advocate for / neutral / against) on the following prompt: “knowing what I know now, if this partner weren’t already in the partnership, I would invite the reviewed partner into the partnership again now with their current relationship terms”. If the vote is not unanimous the Partnership Assessors explain their votes, discuss the matter and vote again. 
4. To remain in the company, a Partner must have more “advocate” than “against” votes and at least one “advocate” vote. 
5. If the decision led to a negative outcome, the Partner is notified and has three days to decide whether they want to accept the outcome or discuss it with the Partnership Assessors. If they opt for the latter, they have two weeks to have those discussions and decide whether to request a do-over. 
6. The outcome of a do-over Partnership Review is immediate and final. A negative outcome kicks-off the Partner offboarding process. 

Compensation change process (Compensation Review)

Roles: 

• Partner — the person requesting the compensation change. 
• Compensation Architect — responsible for designing, implementing, and evolving the organization’s overall systems and related processes for determining Partner compensation. As well as defining and publishing the organization’s possible compensation tiers, along with general criteria to guide others in assessing placements within it.
• Compensation Guardians– responsible for assessing proposals for compensation placements against other existing placements, and against the general guidance published by the Compensation Architect.

Process: 

1. Impact write up: The Partner submits a write-up of (a) the skills and other capacities with which they contribute most of their value to the organization, and (b) any constraints or weaknesses that limit the value those skills and capacities would otherwise be able to add. Part (a) can be written by someone else (after obtaining the Partner’s permission), but part (b) must be written by the Partner. All Compensation Guardians with relevant focus must confirm that the write-up is materially complete and accurate.
2. New compensation level proposal: The Partner submits a proposal for a new compensation level, using one of the allowed levels defined by the Compensation Architect. The proposal outlines arguments for and against the change, and an assertion that the author thinks that granting the new level is the right decision for the organization all things considered. The proposal can also be authored and submitted on behalf of a different Partner. 
3. Compensation Review: The proposer schedules a “Compensation Review” meeting with all relevant Compensation Guardians. Compensation Guardians can waive their right to attend, as well as invite additional Partners to attend, as long as no other Compensation Guardian objects. The Compensation Review follows the same structure as the Partnership Review (above) with a modified prompt: “If this person didn’t already work here, would you advocate for hiring them again at their proposed new compensation level?”. To be approved, a proposal needs more people advocating for it than against it, and at least one positive advocate.

Netflix’s No Rules Rules — Part 2

Every good plan changes when it meets reality, and my plan here is no different. While this was intended to be part 3 of the series, I decided to cover it now and leave the specific Netflix practices for later. 

Chapter 10 of No Rules Rules discusses the work that Netflix has done to adapt its unique culture to its multi-national footprint. Since Netflix started off in the US, many aspects of its culture aligned relatively well with general US culture. In places where intentional differences were introduced, the degree of difference was small enough that behavior change and convergence could be driven through standard means: role modeling, training, education, and processes/incentive systems. However, as Netflix expanded internationally, some aspects of its culture were at more extreme odds with local cultures. For example, its high candor culture, which celebrates direct negative feedback, was at odds with Japanese culture, which favors a much more indirect approach to negative feedback. 

The need to more deliberately explore and reconcile those cultural differences led to the initial collaboration between Reed Hastings and Erin Meyer, the book’s co-authors. Meyer is a leading researcher in the field of cultural differences, and her capstone research is covered in detail in her 2014 book The Culture Map. A more digestible summary of it is available in an HBR article titled: 

Navigating the Cultural Minefield

Meyer’s research “stands on the shoulders of giants,” synthesizing and integrating previous work by leading researchers such as Edward Hall, Geert Hofstede, Robert House, Mansour Javidan, Roy Chua, Michael Morris, and Richard Nisbett.

Meyer created a framework for analyzing and comparing cultures across 8 scales: 

1. Communicating (low context <> high context)
2. Evaluating (direct negative feedback <> indirect negative feedback)
3. Leading (egalitarian <> hierarchical)
4. Deciding (consensual <> top-down)
5. Trusting (task-based <> relationship-based)
6. Disagreeing (confrontational <> avoids confrontation)
7. Scheduling (linear time <> flexible time)
8. Persuading (principles first <> application first)

Communicating —  This scale measures the degree to which cultures are high- or low-context. In low-context cultures, good communication is precise, simple, explicit, and clear. Messages are expressed and understood at face value. Repetition and putting messages in writing are appreciated to clarify communication. In high-context cultures, communication is sophisticated, nuanced, and layered. Messages are both spoken and read between the lines. Less is put in writing, and more is left for verbal interpretation.

Evaluating —  All cultures believe that criticism should be given constructively, but the definition of “constructive” varies greatly. This scale measures a preference for frank versus diplomatic criticism. While often confused with communicating, many countries have different positions on the two scales.

Leading — This scale measures the degree of respect and deference shown to authority figures, placing people on a spectrum between the egalitarian and the hierarchical. 

Deciding —  This scale explores the differences between building group agreement and relying on an individual(usually the boss) to make decisions. We tend to assume that it’ll be strongly correlated with the “leading” scale, but this is not the case in all cultures. 

Trusting —  Cognitive trust (from the head) can be contrasted with affective trust (from the heart). In task-based cultures, trust is built cognitively through work. If we collaborate well, prove ourselves reliable, and respect one another’s contributions, we come to feel mutual trust. In a relationship-based society, trust is a result of weaving a strong affective connection. If we spend time laughing and relaxing together, getting to know one another on a personal level, and feeling a mutual liking, we establish trust.

Disagreeing — This scale measures how cultures view open disagreement — whether they feel it is likely to improve group dynamics or negatively impact team relationships. Some counties view the public airing of disagreement very dimly, while others are quite comfortable having spirited, confrontational meetings.

Scheduling — This scale measures how much value cultures place on being structured versus reactive. In some cultures, people treat the schedule as a suggestion, while others stick to the agenda. 

Persuading —  This scale measures a preference for inductive versus deductive arguments. Some cultures tend to find deductive reasoning more persuasive, whereas other cultures typically prefer an inductive style.

Netflix used Meyer’s research to identify the countries where the Netflix culture is most at odds with local cultures to:

•  Support team members in those countries better, knowing that they’ll likely take a little longer to adapt.
• Look at elements of its own culture that are most at odds and mitigate some of those tensions, such as increasing formal feedback in cultures that are less direct on the “evaluating” scale. 

On Meyer’s website, individuals and groups can take Meyer’s 24-question assessment, see where they fall on each of the eight scales, and compare their culture to the cultures of the countries in which they’re doing business. 

In my mind, the intra-cultural comparisons are more interesting than the inter-cultural ones. As my assessment suggests, while on some scales, my disposition was a blend of the two cultures of the countries I’ve spent the most time in (US and Israel), on others, I was more extreme than both in one direction or the others. Suggesting, perhaps obviously, that country culture is not the only contributing factor to my culture, and the two can differ quite significantly.  

Therefore, I see the tool’s key value as a fascinating diagnostic for organizations in codifying their organizational cultures across the eight scales, by aggregating all team members’ individual results. And it’s not just the medians that matter; it’s also the variabilities. Understanding on which scales there’s strong cultural coherence (low variability) and on which scales there’s weak cultural coherence (high variability) can help an organization focus its efforts on the latter if it wants to create a more coherent culture. 

Netflix’s “No Rules Rules” — Part 1

I recently finished “No Rules Rules” by Reed Hastings, Netflix’s founder and CEO, and Erin Meyer, a business professor at INSEAD. 

There’s a lot to extract from this book and I’m going to split that into a few blog posts with this rough game plan: 

• Part 1: (this post) high-level review of the book. 
• Part 2: review of specific Netflix processes and practices discussed in the book (may be split into more than one post). 
• Part 3: the culture map. 

The book aims to provide a pretty deep dive into Netflix’s company culture: how it came to be, how it’s reinforced and what business benefits it unlocks. 

Hastings and Meyer tag-team the writing, with Hastings typically providing the history of how a certain element of the culture came to be, how it evolved over time, and why it’s important, and Meyer providing both scientific backings to the merits of the element/practice and detailed on-the-ground depiction on how it manifests in the day-to-day life of Netflix’s employees. 

In a nutshell, Netflix’s culture is described as three key elements that are deeply intertwined: high talent density (quality of employees), high level of candor, and high level of freedom (low levels of control). The latter two are the source of Netflix’s famous “Freedom & Responsibility” (F&R) motto. 

After a brief introduction, the book goes through three iterations across these elements, each time offering a more evolved and sophisticated way to implement the element and take it to the next level. It concludes with a chapter on taking the Netflix culture global, which will be the sole focus of Part 3 of this series. 

Three things made this book a very worthwhile read: 

• First, it shows how the three cultural elements are intertwined, and how “leveling up” one element unlocks the next level of the other elements. 
• Second, some of the practices, like “sunshining” and in-person 360 feedback are finally described in a level of detail that makes them “safe enough to try” and opens the door to experimenting with them, at least in some contexts. Though the first point is an important caveat here: optimizing the part doesn’t necessarily optimize the whole. 
• Third, this is not a “Kool-Aid” book. As a reader, I didn’t get the impression that it was written by a Netflix culture zealot. There were no claims that these structures will work well outside of Netflix. I appreciated the authors’ efforts to share the challenges with the trade-offs the culture implies, alongside its strengths. Kyle and Donna’s struggles with the vague vacation policy, Jaime’s struggles with the vague expense policy, and Russel and Han’s struggles with paying top-of-market salaries are just a few of many examples that are covered in detail and demonstrate that the Netflix way is not necessarily the easy way. 

It is easy to come away from reading a book like this one with the wrong conclusion that the Netflix way is the best way and that every company should follow its lead. This is the lesson that many CEOs have (hopefully) learned, often times the hard way, trying to imitate Steve Jobs’ leadership style. 

The deeper and more useful insight from this book, in my mind at least, is the power of a cohesive culture, where elements reinforce rather than contradict one another, and the iterative process by which it evolves and strengthens. 

And even with that, a healthy amount of skepticism is still merited. As Steven Sinofsky once observed: 

Like so many company processes, when a company is doing “well” then the processes are exactly the right ones and magical. When a company is not doing so “well” then every process is either a symptom or the cause of the situation.

An often under-appreciated aspect of cohesive cultures is that inherently, they would never be a good fit for everyone. This is something that often gets missed by some of the big exposés about the Netflix (and to some degree, the ones concerning Amazon) and more recent critiques of the book. The personal stories of the individuals for which the culture didn’t work, or the edge cases where the culture broke can sometimes distract us from the bigger picture. 

And again, Sinofsky says it better than I can: 

In the same essay, he also points out that “the absence of a system is itself a system”. And that approach too is not without its challenges. 

Doing employee research right

A 2013 study by the Engagement Institute found that over 80% of global organizations survey their employees regularly, with an increasing number administering regular pulse surveys throughout the year. 

While employee survey research is one of the most common methods for conducting employee research, it is also the ONLY one widely used, leaving many organizations with significant blind spots and missed opportunities in improving their organizational health. Those challenges stem from both flawed execution and structural limitations of the employee survey methodology. 

A recent paper by Lewis Gerrard and Patrick Hyland offers a critical review of both theory and practice of employee survey research:

Employee Survey Research: A Critical Review of Theory and Practice

The origins of employee survey research can be traced all the way back to the 1920s. Today, well-designed organizational survey projects are characterized by three main activities: 

• Careful measurement with the clear aim of measuring personal perceptions objectively. 
• Robust data analysis, seeking to generate insight from survey responses. 
• Collective feedback & action planning, recognizing the importance of involving employees, managers, and leaders in the process of interpreting results, recognizing areas for change, and developing plans for improvement. 

While this simple bar is not always met by many employee survey projects, the paper focuses on deeper issues. 

At the theoretical level, employee survey research is based on several incomplete or outdated philosophies about the nature of organizations. For example, the design and analysis of surveys assume a clear and consistent cause-and-effect relationship between various organizational phenomena. However, complex adaptive systems theory, suggests that this view is overly simplistic and does account for chaotic, disruptive and emergent organizational dynamics that make predictable causal links unlikely. 

The paper offers a few additional examples of organizational theories/philosophies that underlie employee survey research and recent developments and discoveries have proven to be either incorrect or incomplete. 

At the practical level, the paper highlights three methodological challenges and three analytical mistakes that often get in the way of drawing accurate insights out of employee survey research. 

Methodological challenges 

• Overlooking the limitations of cross-sectional design: survey data is collected anonymously and analyzed at the aggregate level (department/organization) ignoring changes in employee population such as new hires, departures, and cross-departmental transfers between survey administrations. 
• Ignoring common method bias & the necessary conditions for claiming causality: causality analysis is conducted within a single survey resulting first, in an inability to measure and control for systematic measurement error — variance introduced by the measurement method itself. And second, in limiting the credibility of any causal relationships uncovered between survey items/dimensions since they were only explored at a single point in time. 
• Surveying only the evaluating and remembering self: since surveys often ask employees to make global evaluations about work based on retrospective reflections, they only capture people’s after-the-fact, reflected evaluations of events, which was shown to be different than their moment-to-moment assessment of the same events as they were happening. 

These methodological challenges are not without solutions: 

• Longitudinal survey design, tracking attitudes at the individual level and making comparisons based only on employees who completed all surveys over a given time period can address cross-sectional design limitations. 
• Creating temporal separation between measuring predictor variables and criterion variables — conducting statistical analysis across surveys rather than within surveys can address the “single point in time” challenges. 
• Experience sampling techniques like The Day Reconstruction Method can complement the standard reflective method ensuring that data from both the “experiencing self” and the “remembering self” are captured. 

Analytical mistakes 

1. Assuming more is better: consistently positive survey results have three potential drawbacks: 

• Strongly favorable attitudes may prevent organizational leaders from engaging in the critical process of reflection and change, increases the challenge of breaking out of the status quo. 
• Employees in some roles may actually benefit from a sense of dissatisfaction at work, where a sense of frustration is an important driver of action.
• In some cases, a stronger endorsement of an item is not predictive of increased outcomes. Some attitudes and employee states may be more beneficial if they fluctuate rather than maintained at a consistently high level. 

2. Overemphasizing contextual factors: the focus on measuring climate factors and shared employee experiences has led to a lack of practical integration between the psychology of individual differences and perceptions of workplace experience. A 2018 meta-analysis established that around 50% of the variance in an employee’s work engagement is predicted by personality and character variables. Therefore, variables like engagement are heavily influenced by the nature of the people selected into the organization. 

3. Assuming survey results will lead to change: while employee survey research has been a staple organizational practice for several decades, over a recent 18 year period (2000–2018), on average 30% of employees have been engaged at work, with a maximum variation of 4% in each direction. A principal assumption of the employee survey process is that leaders have the capacity and willingness to use employee feedback to create change. Yet this assumption has not always held true. Furthermore, studies demonstrated that factors like CEO personality play a key role in culture development, suggesting that a significant change in culture may only be possible with a significant change in leadership. A change that many organizations are often reluctant to make. 

Best-in-class employee research programs 

In addition to performing the activities required for well-designed organizational projects, addressing the methodological challenges and avoiding the analytical mistakes of employee survey research, the authors offer the following recommendations for creating best-in-class employee research programs: 

• Learn to use multiple methodologies — complement employee survey research with additional methodologies that make up for its blind spots and shortcomings. 
• Assess organizational phenomena at multiple levels — team effectiveness, for example, should be explored by assessing individual team member personalities, group-level behavior, and organizational-level culture. 
• Integrate multiple datasets — rather than analyzing attitudinal data in isolation, link it with effectiveness, performance and productivity datasets to generate more valid organizational insights.
• Engage multiple stakeholders — employee research programs aim to create insight, energy and direction for organization members, from front-line employees to c-suite members. Ongoing dialogue with that diverse group of stakeholders will help ensure that this objective is indeed achieved.