Vindictive Protectiveness

Let’s balance last week’s quant-heavy post with a post about a much softer topic: words.

Though I sometimes disagree with his views, Jonathan Haidt is one of my favorite academics. If you haven’t read The Happiness Hypothesis and The Righteous Mind, you should definitely add them to your reading queue. And if that’s too much of a time commitment, spend 20 mins watching his TED talk.

I just finished reading the Atlantic’s September cover story, that he co-authored with Greg Lukianof:

The Coddling of the American Mind

In it, they describe a cultural shift in American campuses – an attempt to shield young adults from words and ideas that make some uncomfortable, which they’ve labeled “protective vindictiveness”. It manifests itself in the form of growing accusations of “microaggressions” and requirements to issue “trigger warnings” (more on those in the article). Given that the aim of the movement is centered around emotional well-being, they use Cognitive Behavioral Therapy as a framework, to argue that it may be doing more harm than good on that front. Encouraging students to develop extra-thin skin, just before they go out into the “real world”, where they’ll encounter a plethora and words and ideas that they cannot control. It is worth reading their piece in full as I won’t be able to do it justice in summarizing it. In this short paragraph, I’ve probably already made some word choices that cased someone, somewhere to take offense…

But why am I covering a piece about campus culture in a blog about business organizational effectiveness? I’m glad you asked:

  • Today’s college culture problems are tomorrow’s business culture problems, as current students leave college and join the workforce, with this cultural indoctrination in mind.
  • Looking at the direction that typical “office sensitivity training programs” are headed, and the way that some related incidents are handled, some may argue that this culture has already started trickling into the work place.
  • Tech companies will be affected first as their demographic tends to skew young.
  • No matter on which side of the academic debate on “whether it’s the colleges’ job to prepare students for post-college life” you fall, this piece suggests that the skills/culture gap is widening. If colleges are not stepping up to address it (and some may argue, are making it worse), workplaces will have to.

With that last point in mind, Haidt and Lukianof suggest steps that can be taken to remediate the situation. Perhaps the most relevant one to the business world is teaching students (employees) how to practice Cognitive Behavioral Therapy, avoiding unhealthy emotional biases and applying more objective, critical thinking not only to the business problems they are tasked with solving, but more broadly to the way they chose to experience life.

Patty McCord, creator of the famous Netflix culture deck offers this relevant piece of advice: “97% of your employees will do the right thing. Most companies spend endless amount s of time and money writing and enforcing HR policies to deal with problems the other 3% might cause”.

Vindictive Protectiveness

Organizational Debt

Continuing one of my favorite themes in this blog, of using technical metaphors to explain organizational issues, I happily came across one of Steve Blank‘s recent posts:

Organizational Debt is like Technical Debt, but worse

Steve’s definition of Organizational Debt is short and simple: “all the people/culture compromises made to “just get it done” in the early stages of a startup. ”

Just like technical debt can hinder your ability to scale your product, organizational debt hinders your ability to scale your company.  Accruing these debts is sometimes the right business decision to make. But you need to be aware that you’re taking them on, and have a well defined trigger for identifying when you should stop whatever else you’re doing, and invest the time and focus in refactoring them.

Onboarding, training, culture and compensations, are a few examples of organizational systems that are likely to accrue organizational debt at the early stages of a startup.

A secondary theme that Steve calls out in his piece, is also worth noting: VCs tend to be not particularly good at helping their companies identify organizational debt and refactoring it. Fred Wilson also tangentially acknowledges that challenge in his “What VC can learn from PE” piece.




Organizational Debt

Corporate policy and Reg 2.0

The real boon in coming across Nick Grossman‘s blog, is discovering all the work he’s done around “Regulation 2.0”, which he recently summarized in a whitepaper:

Regulation, The Internet Way

Nick’s main thesis is that large scale internet platforms (eBay, AirBnB, Uber, etc.) are utilizing a different paradigm in regulating user behavior on their platforms, compared to the paradigm used by “traditional” governing institutions. And now, it’s time for the traditional governing institutions to start adopting the new paradigm as well.

Under the old paradigm, trust, safety and security risks are managed using a permission-based model: who can act and how are being defined in detail and upfront; permission to operate needs to be granted explicitly, typically using a certification/licensing scheme. But once permission is granted, accountability/compliance is only weakly enforced, typically using periodic inspections.

Under the new paradigm, trust, safety and security risks are managed using an accountability-based model: accountability/compliance is strictly and continuously enforced using data on the player’s behavior. Open-access is the norm, and no explicit permission to operate is required, as long as the data to monitor behavior is being provided. Essentially, a higher up-front risk is accepted, as long as the cumulative risk exposure can be reduced through the data-driven learning.

reg20Nick points out that some of the regulatory friction around permission-to-operate that these internet platforms encountered in recent years (Uber, AirBnb) is an outcome of this paradigm clash.

A similar push towards an open-access data-driven regulation, is brewing up in slightly less-sexy domains of the regulatory space such as Energy Efficiency. In recent months, several thought leaders in the space (1, 2, 3, 4) have advocated for a move away from traditional “deemed savings” approaches, based primarily on statistical sampling, to more progressive M&V approaches based on real-time data coming from Smart Meters. Similar to the web platforms, it’s the technological innovation, Smart Meters in this case, which unlocks the ability to switch to the new paradigm.

Personally however, I am much more interested in considering the applicability of this new paradigm in shaping internal policy inside corporations. You can think of internal policy as an effort to try and regulate employee behavior and promote the same trust, safety and security objectives. The upside is that the change management effort required to drive this paradigm shift inside a company is orders of magnitude easier, compared to changing policy at the city, state or federal level. The downside is that the amount of available data, may not reach the critical mass  necessary to enable the new paradigm. But I agree with Nick that this is not a good enough reason to simply default to the old one.

Encouraging evidence already exists. Consider Facebook’s Release Management policy. It’s a pretty good example, of a data-driven open-access/high-accountability policy. The release engineering team (aka “the governing institution”), structured a system in which the responsibility to shepherding the code changes out to the world remains on the shoulders of the software engineer who introduced the change. Data from past-performance (some variation of mean-time-between-failures and mean-time-to-restore-service) on each engineer is collected and factored into a “push karma” score. Only if the score drops below a certain threshold, does the release management team intervene and put constraints on the developer’s ability to push code. The concept of “targeted transparency” applies as well: developers are aware of their “push karma” score and can take action to improve it. Is it a perfect policy? Probably not. But it’s sure a big step in the right direction.

The next frontier, in my mind, are more broadly applicable corporate policies. Consider a company’s expense policy, for example, where transactions are rather frequent and data is abundant. It seems like a prime candidate for a policy re-design under the new paradigm. Other corporate policies, like the ones meant to prevent sexual-harassment and discrimination or the ones meant to drive effective hiring/firing, seem like tougher nuts to crack, since data is scarce and the stakes around each transaction are much higher. Yet this shouldn’t discourage us from continuously pushing the envelope in that direction until we find solutions that work.




Corporate policy and Reg 2.0

Work Rules! (book review)

I recently finished reading Laszlo Bock‘s (Google’s SVP of People Operations) book:

Work Rules!

In a nutshell, it’s about 70% one of the best People Operations books that you’ll ever read, and 30% a healthy overdose of the Google Kool-Aid. The former makes the latter completely worthwhile.

My two biggest takeaways:

  1. The  impact of the rigorous scientific, data-driven approach to figuring out the answers for some of the biggest people questions, like “do we really need managers?”, for example. Often times coming out with an answer that’s very different from the common wisdom.  Yes, every organization and company are different. But they are more similar than we think. Starting from a “tried and true” blueprint and then modifying it to the unique aspects of your organization, is a much better strategy than reinventing the whole thing from scratch. And to that end, the Google blueprint is a much better starting point than many of the more traditional HR practices.
  2. The impact of a people operations system that’s tied to a coherent set of overarching principles. This one is really hard to grok without reading the book, but being the visual thinker that I am, I tried to distill it into a mind-map, primarily for my own benefit, but others may find it useful as well:



Work Rules! (book review)

(Technical) Recruiting is Broken

“The software developer job interview doesn’t work. Companies should stop relying on them. The savviest teams will outcompete their peers by devising alternative hiring schemes.Years from now, we’ll look back at the 2015 developer interview as an anachronism, akin to hiring an orchestra cellist with a personality test and a quiz about music theory rather than a blind audition.” – The Hiring Post (Thomas Ptacek, Matasano)
“No one ever offered me a book. No one even offered advice, or suggestions on what was interesting in the field or what was not. No one ever said, “Here is how we are going to bring your skills to the next level and ensure you will be quickly productive on our team.” The only answer I ever got was, “We expect every employee to be ready on day one.” What a scary proposition! Even McDonalds doesn’t expect its burger flippers to be ready from day one.” – On Secretly Terrible Engineers (Danny Crichton, TechCrunch)
Let’s face it, recruiting today, and especially technical recruiting is terribly broken.
The two posts above, published recently, suggest that a differentiated recruiting process can be a substantial competitive advantage in competing for top talent. If you still need persuading that there’s a real problem here that needs fixing, they both make a pretty compelling case for that. The latter a bit more hyperbolically than the former.
They propose the following outlined process, leveraging behavior science throughout the process:
  1. (offline) Resume screen by recruiter
  2. 30-45 mins phone screen by director-level or above: [liking, authority]
    • Anodyne questions
    • AMA-style AMA
    • Exhaustive explanation of the selection process and what to expect at each stage
  3. Prep for on-site:
    • Send candidate a study guide and a couple of free books relevant to the work-sample test (see below) [reciprocity]
    • Extend an open-invitation to proceed with the process whenever they are ready [autonomy, commitment]
  4. On-site interview:
    • Work-sample test: NOT a whiteboard exercise or a generic coding exercise. An actual, hands-on, standardized exercise in the environment and the stack that the candidate will be asked to work in, ideally using a crippled version of the actual code base. More details in the first post
    • Cultural fit: by team members + one of a small subset of cultural bellwethers (usually “old guard” folks).
Generally speaking, they make the case for creating an interview process that is much less adversarial and much more collaborative, without compromising the rigor of the technical assessment (if not improving it at the same time).
I’ll leave you with one other good quote:
“The reality is, few professions seem so openly hostile to their current members as software engineering. There is always this lingering caution when interviewing a new candidate that somehow this individual has gotten through every interview process and team review without anyone realizing the incompetence before them… We can talk about interview strategies and coding reviews and take-home fake assignments all day, but nothing will improve until we have learned to address our own fear that we are going to hire an idiot.”
(Technical) Recruiting is Broken

It’s not a Promotion – It’s a Career Change

Lindsay Holmwood wrote a lovely piece about the common misconception of management being a promotion rather than a career change:

It’s not a promotion – It’s a career change

Lindsay covers two contributing factors for first time managers being woefully unprepared to their roles and managers:

  • Systemic undervaluation of non-technical skills , which is probably most pervasive in Engineering, but almost just as common in other disciplines.
  • The Dunning-Kruger cognitive bias (90% of people think they are “better than average” drivers”)

Which unfortunately tends to have a multiplied impact given the role of a manager.

He also suggests focusing on three key levers for improving your skill as a manager: professional training, mentors and self-education.

A highly recommended read, especially for aspiring managers and managers who often times get frustrated about not being able to do “real work”.

I know this all sounds rather trivial, but in places where management is not proactively positioned as a career change, and a an “individual contributor” promotion path is not well defined, management easily gets perceived as the “only way up”. Which is, as Rand Fishkin suggests, not a good situation to be in:

If Management is the only way up, we’re all F’d

It’s not a Promotion – It’s a Career Change

A Counterintuitive System for Startup Compensation

This First Round Review article  is one of the better articles on compensation I’ve read in a while, showcasing Molly Graham‘s comp framework.

A Counterintuitive System for Startup Compensation

The gist: a few key principles (no one is ever happy with comp, and comp never made anyone happy; salary opacity is a myth; etc.) yield a fairly simple, transparent and straight-forward comp system.

If you acknowledge the limited (but still critical) role that comp plays in attracting and retaining the best talent, and that fairly quickly, group effects (like fairness) become much more important than individual effects (attracting/retaining a specific person) – a very strong case can be made for a system that’s as formulaic as possible, and intentionally trying to keep discretion to the bare minimum.

Graham proposes a straw man in which a set of levels are applied cross-functionally, and base comp and equity are set only according to them. The only functional exception is sales, but comp for those roles is being addressed with the same formulaic rigor. There are no exceptions and no negotiations. The only discretion that a hiring manager may have is around slotting a candidate/employee into a certain level.

My favorite part in the article is its end, where an outline for scaling the plan as the company grows is discussed. This is an often overlooked aspect of such systems and I was delighted to see that it wasn’t ignored in this piece.

On a slightly more philosophical/abstract level, it’s interesting to think about the role equity typically plays in this plan and others. I think most startups view equity as a necessity for keeping cash burn rates under control, as well as a self-selection mechanism for attracting talent with high risk-tolerance w/r/t their personal comp (which is viewed as a desirable trait). A scenario in which one or more of these constraints/assumptions is relaxed, or a scenario in which they are supplemented with add’l assumptions about the purpose of equity, may suggest a different role for equity in such system.


A Counterintuitive System for Startup Compensation

Book: Reinventing Organizations

Reinventing Organizations by Frederick Laloux is so far the best book I’ve read in 2014. Which is worth noting given that I average about 20-30 non-fiction books a year.

Laloux applies a developmental psychology lens to looking at organizations. As it turns out, every major shift in the way we, humans, viewed the world, was accompanied by major innovations in the way we collaborate and work together, as summarized by the (modified) table taken from the book below:


The vast majority of organizations today operate under an “achievement” paradigm, but a shift from “achievement” to “pluralistic” is already a noticeable trend in the industry. Laloux, however, chooses to focus on the next paradigm shift: from “pluralistic” to “evolutionary”. He studied an impressive set of organizations who have already made or are in the process of making the paradigm shift, and distilled the commonalities into three major innovations: self management, striving for wholeness, and evolutionary purpose.

But not stopping there is what turns this book from an average to a very good one. For each of these innovations, Laloux provides detailed descriptions of how the core organizational structures, processes and practices change as a result. From decision-making, through hiring, firing and promoting, all the way to the squishy topic of organizational culture (I’ll cover the latter in a separate post).

For example, he provides some of the most inspiring and detailed descriptions of self management, a term that often gets aimlessly thrown around in agile environments. In the process, he debunks, through real examples rather than theory, some of the most common misconceptions around this concept, like the belief that the lack of hierarchy automatically means that there’s no structure, no management and no leadership.

The book does have its weaknesses. The forward, by Ken Wilson, is the worst part of the book and almost made me miss out on a phenomenal read. Referencing the organizational paradigms by their colors rather than their one-word descriptions was distracting at best. But most importantly, organizations with long and deep value chains, like software companies, are not getting a lot of attention in the study and the book. Laloux acknowledges in the appendix that they require certain adaptations, but Holacracy, the one known “operating system” for such organizations, is only covered anecdotally in the book.

As an aspiring evangelist of Laloux’s thesis, the things that I’m missing the most are shorter materials that I can use to pique the interest of a boarder yet-to-be-engaged audience, for which reading a 300+ page book is asking too much. A 10-page HBR-like article or a 20-min TED-like video talk will be great.

Get it. Read it. And tell me what you think.

Book: Reinventing Organizations

The Bell Curve Is A Myth

This following post by Josh Bersin (one of Reid Hoffman’s co-authors of “The Alliance” which I covered in the previous post) made the rounds a few months back and is still top-of-mind for me:

The Bell Curve Is A Myth

The gist: most common HR practices (performance reviews, promotions, etc.) pre-suppose a normal-distribution of performance across the employee base. However, careful studies have shown that real performance looks more like a power-distribution than a normal distribution. Many of the common HR practices “break” under those assumptions.

Bersin provides references to the academic papers that drew this conclusion, yet none of them hypothesizes why performance looks the way it does. Here’s my thesis: in the general/broader population, performance/mastery of a given skill does distribute normally. However, in almost any professional setting, we apply some sort of screening process – we intentionally try to hire the people who are “above average” (if not the top 5-10%) who are most qualified for the position. Since we don’t just pick people at random, there’s no reason to expect a normal performance distribution post-screening. We would expect to see something that resembles the right-most portion of a normal distribution – which also looks a lot like a power distribution.

These articles make a compelling case for why the current HR practices don’t make a lot of sense under these assumptions. But they fail to propose a prescriptive way to change them in the right direction.

What do you think? If we assume hat performance (at least in professional settings) follow a power-distribution, how should we change some of the key HR practices?


The Bell Curve Is A Myth

Performance Reviews and Functional Overloading

Today’s topic is a bit abstract so I’ll start with a concrete example:

Earlier this year Michael Mallete gave this lovely talk at Agile Singapore:

Performance Appraisals – the Bane of Agile Teams

It’s well worth an hour of your time, but if you can’t spare it, at least skim through the slides.

Here’s the gist: performance reviews are being used for six different purposes: improve company performance, provide career guidance and coaching to employees, improve feedback and communications, manage salary and benefits, facilitate promotions and justify terminations. Since it’s stretched it six different directions, it does a very poor job supporting each of the purposes.

A typical case of “jack of all trades, master of none” / “a bird in the hand is worth two in the bush” / <insert your favorite proverb here>.  I’ve seen this pattern enough times to give it a name: functional overloading. Another common area where you often see it is the product roadmap: is it a planning tool? a marketing tool? an alignment tool?

We usually end up in these situations while having the best intentions in mind. In an attempt to keep overhead/bureaucracy to a minimum, we try to use existing practices and tools to solve new problems by slightly tweaking them. But in the process, we end up stretching them too thin and overloading them.

In the case of performance reviews, Mallete advocates for an extreme approach: go back to the basics and tailor the most effective tool/practice to each one of the different purposes that we were using the original one for. I think this may be too aggressive at times, but some fragmentation of the existing tool/process, even if it’s not to its most basic components, is probably in order.

Your turn: what are the most common tools and practices that you’ve seen get functionally overloaded?


Performance Reviews and Functional Overloading