[Google] recently began crunching data from employee reviews and promotion and pay histories in a mathematical formula Google says can identify which of its 20,000 employees are most likely to quit...
The move is one of a series Google has made to prevent its most promising engineers, designers and sales executives from leaving at a time when its once-powerful draws -- a start-up atmosphere and soaring stock price -- have been diluted by its growing size.
I liked this bit the best:
The data crunching supplements more traditional measures like employee training and leadership meetings to evaluate talent.
Google's algorithm helps the company "get inside people's heads even before they know they might leave," said Laszlo Bock, who runs human resources for the company. [emphasis added]
I'm just imagining the conversation...
Valued Employee: "Come in."
Nervous Boss: "You may not know it yet, but you're about to leave Google. We don't want that."
Valued Employee, looking around for bugs and hidden cameras: "Nooo... I don't think so..."
Nervous Boss: "Never mind all that. We're giving you a pay raise, more stock options, a corner office, a personal assistant and a reserved parking spot."
Valued Employee: "But, but..."
Nervous Boss: "Let me finish. You're going to get extra vacation time, free membership in the executive gym, free lunch coupons at the company
Valued Employee: "But I don't..."
Nervous Boss: "Hang on. There's more. We're putting you on this new fun project and giving the
old, tedious one to one of the new guys and..."
Valued Employee: "OK, enough. I haven't been straight with you. You're right. I am planning on leaving. Did the algorithm tell you why?"
Nervous Boss: "Uh, no."
Valued Employee: "I'm leaving because you don't listen to me. I'm leaving because all this material wealth isn't going to bring me happiness. I've been accepted to seminary. I'm planning to go preach the gospel in the jungles in Papua New Guinea."
Nervous Boss, consulting print-out from the trusty Google personnel algorithm: "Oh. I see... Do they have search engines there"?
I'm excited to report that our new book, 'Threats in the Age of Obama' is now available for purchase -- from Amazon, as well as directly from our publisher, Nimble Books (same price; take your pick). Here's the cover:
I contributed a chapter entitled "Preparing One's Mind to See" expanding on this post last fall by about an order of magnitude (writing for publication is far more exacting than blogging!) Here's the brief blurb on Amazon:
If you are on a mission to change the way government works, particularly in the national security arena, this is one place where some independent and intellectually diverse thinking is to be found. In these essays, we offer our view of some of the more pressing threats the Obama administration will have to deal with in these early days of
the 21st century.
The title should not be taken as implying that this is a political book or that its insights are for the short term. Just the opposite. My esteemed co-authors make up a fascinating and insightful bunch of long-term thinkers who come at this from a wide array of perspectives.
Whatever you may have thought the next decade may bring before reading this, I guarantee you will be challenged to think about it differently, more holistically and in more depth afterward.
But before you get distracted reading everyone's bio or blog... BUY THE BOOK! :)
Side note: It's been quite a thrill just to get this far. The team is spread across eight different time zones. Most of us know one another's writings but only some of us have ever spoken live, much less met face-to-face. Welcome to the future of publishing.
It is actually possible not so see something that is really there... We can’t see patterns that our brains have filtered out... But although the risk hunters saw no danger as they stared into the seemingly benign financial jungle, in retrospect, there were certain signs — whose significance was not realized then — that should have sounded the alarm about the crisis that is now upon us...
The signs were there, but they couldn’t interpret them, even when strange and unusual things were happening. Part of the problem with grasping the significance of the anomalies was that the risk hunters were prisoners of their analytic models. What cues they picked up were interpreted in the context of their mental frameworks. They “saw” through the prism of their models. And their models did not account for the existence of the monster that was now closing in on them...
The scenario work I've done with clients for years is rooted in precisely the precept Fernandez begins with: that the mental models or frameworks that people build up over a lifetime, a career and/or a role strongly color what they believe is possible and therefore the kinds of potential problems and opportunities they are willing to consider. I mean literally color. Fernandez' analogies to invisible spectra are apt. It's not that the spectra aren't there. It's just that I'm not equipped to see ultraviolet, infrared or to hear a dog whistle.
I should note that, while the Economist article is about 'seeing' risk, the concept applies equally well to innovation. More on that in future posts. It's where I've been spending most of my time and energy recently.
Mental models are seldom examined. You and I may talk
about our views on particular future events, but it takes a lot of time
and effort (plus a common 'language' for discussing it) to talk in
terms of entire models. And mental models that are not examined and
described -- at any level -- tend to lead to decisions that don't fit
reality. (Think blindfolded child attempting to hit the party pinata
and hitting grandma instead).
Mental models are also fractal. My own colors the decisions I make, but
I also go about my day constrained, to a greater or lesser degree by
the mental models of the groups to which I belong (family, company,
church, country, etc.)
I'm reluctant to conclude that individuals' mental models are always able to change faster than those of groups. (We all know some stubborn stick-in-the-mud; perhaps he's the one staring at us in the mirror). Anecdotally, however, I know of more individuals who have had a 'Damascus-road' 180-degree 'a-ha!', 'boy I've been stupid, haven't I?' moment in some part of their lives than I do larger groups or companies that have done the same. (When that does happen, e.g., Bill Gates' famous 'Internet' memo ten or so years ago, it tends to be just a powerful individual who changed his mind, not evidence of the group turning quickly together.)
Finally, mental models not challenged systematically and fundamentally on a pro-active basis (e.g., with scenarios) tend to change only defensively and slowly (in response to hard, external truths; often at great cost). That's painful. As Fernandez writes:
I wonder to what extent the policy reaction to the current financial crisis is still colored by the limitations of received wisdom — the financial models — and the need to keep the music playing. The interventionary mechanisms of the last few weeks are designed to fix problems as we understand them. If you’re convinced we understand things now. At any rate we are firing into the last known position of the monster. Nothing can withstand that firepower. The crowds are being told not to worry because the monster will soon be dead. True, there are few doubting souls who are worried that the creature may actually be feeding off our weapons, but their fears are dismissed as nonsense. The important thing, we are told, is to keep things going, which was just the advice the traders gave the risk managers.
is remarkable how the advent of the current financial crisis
structurally resembles the intelligence failures leading up to 9/11:
the same misinterpretation of warning signs, the same blindness to
threats now evident in retrospect. The same belief in a rapid
resolution and a belief that the normal would soon be back.
In other words, we all sense that things have changed fundamentally (in financial markets and geopolitics) but we probably won't be able to develop our new mental models (at least collectively, agreeing on which ones are 'real') for many years -- not without a lot of deliberate thought-work, that is. Nor will we be able to perceive ongoing change properly (assessing both direction and magnitude) or develop said models in a way that enables us to act with precision, resolve and clarity. For years. That's a bit scary. It's also humbling (at least it should be).
Here's another thought that I should probably 'unpack' more fully in another post. Mental models are reflected in, but
less often challenged by analytical tools. Oh sure, insights can most definitely be had with them, but I'm talking about much bigger constructs. Sophisticated computer models, for the most part, tend to only amplify the force and reach of our brains.
They do not, as a general rule, make them better able to 'think
different' (ly) and develop new mental models for seeing the world -- for assessing the big risks in truly complex adaptive systems or for finding innovations.
The English language has, arguably speaking, been one of Great Britain's most prolific and resilient exports. Now it has become the basis for a new kind of international trade. That, along with cost pressures and reliable networks made the following virtually inevitable.
An Indian company will take over copy editing duties for some stories published in The Orange County Register and will handle page layout for a community newspaper at the company that owns the Pulitzer Prize-winning daily, the newspaper confirmed Tuesday.
Orange County Register Communications Inc. will begin a one-month trial with Mindworks Global Media at the end of June, said John Fabris, a deputy editor at the Register.
Mindworks' Web site says the company is based outside New Delhi and provides "high-quality editorial and design services to global media firms ... using top-end journalistic and design talent in India."
Substituting 'z's for the new copy editors' instinctual 's's in words
like 'institutionalized' won't be enough. As the saying goes: Britain and America are two countries separated by a common language. Perhaps more so with the other former colonies.
It will be interesting to see how they separate pure copy editing from tasks like fact-checking, local context, style and cultural nuance -- a lesson Dell and others learned the hard way, as faraway call center personnel (perfectly nice and perfectly competent) just didn't 'click' with their U.S. callers for a host of subtle reasons.
One demographic irony: in the not-so-distant future, the Indians may lose out to the Mexicans for the OC's outsourcing contract.
With air travel on my mind after a West Coast trip last weekend, the following strikes me as positive, (and not just because I'm a marathon runner who tends to pack light). Rather, it's the kind of thinking we do routinely when we help clients develop scenarios. E.g., what if industry 'A' adopted the business model of industry 'B'? Emphasis added:
Imagine two scales at the airline ticket counter, one for your bags and one for you. The price of a ticket depends upon the weight of both.
That may not be so far-fetched.
"You listen to the airline CEOs, and nothing is beyond their imagination," said David Castelveter, a spokesman for the Air Transport Association, a Washington, D.C.-based trade group. "They have already begun to think exotically..."
With fuel costs almost tripling since 2000, now accounting for as much as 40 percent of operating expenses at some carriers, according to the ATA, airlines are cutting costs and raising revenue in ways that once were unthinkable...
Singapore Airlines... is "trying to eliminate unnecessary quantities of extra water" to save weight, Chief Executive Officer Chew Choon Seng said in an interview...
Robert Mann, head of R.W. Mann & Co., an aviation consultant based in Port Washington, New York [said,] "If you look at the air-freight business, that's the way they've always done it... We're getting treated like air freight when we travel by airlines, anyway."
This signals that an industry long characterized by minimal innovation starting to think beyond convention (but... we've always done it that way!) The shock is external and pressing in this case (fuel costs). It needn't be so. Better to do this kind of thinking every day.
Best-practice use of scenarios involves doing this systematically, comprehensively and, over time, making it an ingrained habit of strategic thinking among management. (How could we change the rules to our advantage?) Having several contingent strategies already fully 'baked' when a crisis hits can move one ahead of more flat-footed competition who must do all that thinking while under existential, immediate pressure.
Working deep inside Wall Street these past eight months or so, I've had a privileged vantage point from which to observe some of the most tumultuous quakes in the industry in a generation -- and arguably in a century. (Given the near-catastrophic, and still potentially catastrophic nature of those changes, one might legitimately argue with whether 'privileged' or 'punitive' would be the right word to describe my seat in the proverbial bleachers on this one. Since I'm still being paid -- for now -- I'll stick with the former, if only because it has been quite an education.)
The market perceives the rating agencies to be doing much more than they actually do. The agencies themselves don't directly misinform the market, but they don't disabuse the market of misperceptions -- often spread by the rated entities -- that the agencies do more than they actually do. This creates a false sense of security and in times of stress this actually makes the problem worse...
It is hard for me to see how the rating agencies survive this debacle with their franchises intact.
On the failure of Bear Stearns and how the SEC has enabled the entire mess:
Rather than looking at its own rules which permitted increased leverage, lower liquidity, greater concentrations of credit risk and holdings of no ready market securities, the SEC is conducting an investigation to see if any short-sellers caused the demise of Bear by spreading rumors.
Of course, Bear didn't fail because of market rumors. It fell because it was too levered and had too many illiquid assets of questionable value and at the same time depended on short-term funding.
On how none of us are really spectators in this
...before Bear Stearns failed... I [had] planned to speculate that regulators believe all of these [major investment banks] are too big to fail and would bail them out, if necessary. The owners, employees and creditors of these institutions are rewarded when they succeed, but it is all of us, the taxpayers, who are left on the hook if they fail. This is called private profits and socialized risk. Heads, I win. Tails, you lose. It is a reverse-Robin Hood system...
As night follows day, it is certain that in the absence of tremendous
government regulation, this bailout [of Bear] will lead to a new and
potentially bigger round of excessive risk-taking...
On the counter-party credit system
In effect, [with Bear] the government appears to have guaranteed virtually the entire counter-party system. The message is that if you are dealing with a major player -- anyone in the "too big to fail" group -- you don't have to worry about that player's creditworthiness. In effect, your risk is with the U.S. Treasury...
...regulators should consider dismantling the counter-party system... require the posting of all derivative trades, clearing them through a central system and regulating margin requirements...
Sobering stuff, with a few funny bits (check out his water-vs-Coke analogy), along with some interesting long- and short- stock picks near the end. I urge you to read it all. The reason I post it here (a scenario- and big-picture-oriented blog) is that it will eventually touch pretty much everything in the global economy. Ignore it at your peril. Understand it and you'll at least be able to tell the difference between a two-by-four and a rock when it hits you (and all of us) in the back of the head.
CBS... has been in discussions with Time Warner about a deal to outsource some of its news-gathering operations to CNN... reducing CBS’s news-gathering capacity while keeping its frontline personalities, like Katie Couric, the CBS Evening News anchor, and paying a fee to CNN to buy the cable network’s news feeds.
For CNN, a deal with a broadcast network would mean a new revenue stream without having to add much in costs. For CBS, an arrangement with a cable channel would allow it to cut costs while maintaining the CBS News brand...
Structural change. In any industry, it can be a long time coming. But then, when it does, it's seemingly so sudden and so obvious in hindsight, leaving many to wonder what took so long and what all the fuss was about. Acknowledging that every industry is different and that this particular deal may have at least as much to do with tactical stumbles on CBS's part as it does any notion of industry grand-strategy, please allow me a quick diversion into another industry to illustrate the point.
Once upon a time, the computer industry was vertically integrated: chips, disk drives, monitors, software, printers and even keyboards were all manufactured--quite literally--by the same company that sold them under its own brand. Digital, Wang, Prime, Data General, IBM, Hewlett Packard, Unisys (and others more easily forgotten) asked customers to settle for second- (or third-) rate components in one area in order to get the pieces they had to have and ensure it all worked together properly. (I had the privilege of consulting to all of these folks between 1988 and the mid '90s, and while I had a ringside seat for only some, I was in the tent with a clear view for all.)
Then suddenly (it seemed, but not really) along came Intel and Microsoft and Dell and Canon (whose printers account for nearly all of what's sold under the HP brand) and people scratched their heads and wondered why they'd ever settled for less, and what on earth had sustained all these second- and third-rate products hidden inside these vertically integrated 'stacks'. (Yes, I know, what came next was not necessarily the perfect competition I'm making it out to be in every case, at every layer, but it was -- at least -- a more horizontally-oriented industry all-of-a-sudden (think pancakes) instead of a bunch of soup-to-nuts, buy-it-all-from-us-or-else brands with their own factories for everything.
Similar tales can be told about the automobile and aircraft industries (among others) however I don't have firsthand knowledge of those and so I leave such analysis to others. All are different. And yet at a very high level, all have been the same:
It becomes clear who's really really good at one particular 'horizontal' aspect of the business (e.g., working 'backwards': customer relationships, brand, distribution, manufacturing (yes, even in services), product development, R&D, etc.) and who's just pretty good. Everyone knows these things, but it's hard to tell because the pieces don't compete with each other directly ('pure plays'). Instead, they're all part of larger packages.
Everyone knows though, who's passionate and committed and has totally nailed a particular discipline and is climbing a learning curve and getting to scale faster than everyone else... and who's just in it (a particular horizontal layer) because they have to be to stay in business and pride or lack of imagination have kept them from having the hard conversation about what is core and what is context.
Internal factors play a huge role here. Pride and corporate politics can be overwhelming. Managers develop fiefdoms and want to stay attached to the mother-ship because they know also that it's cold out there and that their 'stuff' is not really competitive globally.
A quick side story on the side story:
I once consulted to a large computer company that made it's own keyboards (this was ~1991). They'd commissioned me to do a study of a) what customers liked and b) how cost-competitive they were. It was the first time they'd done either thing (telling in itself) and we cast the net very wide indeed to get it right.
Long story short: their manufacturing costs for these keyboards were roughly 8X what others were charging in bulk including shipping from faraway places with factories that had dirt floors and workers who subsisted on meager if not wholly inadequate diets.
But the clincher was this: when we did focus groups, the customers liked the cheap stuff better. It 'felt' better on their fingers. The keyboards were lighter. They could type faster. Case closed. With a vengeance. (I recall the client choking on their diet sodas behind the glass, struggling for something positive amidst the rubble of damning customer consensus... and then explaining to me why their stuff was technically much better and they had the charts to prove it. It didn't matter.)
My client had all but exited the business within a year, redeploying the capital to focus on other things they did much better (and still do).
What does any of this have to do with CBS and CNN? Why the rant?
Just this. As it becomes easier to coordinate assembly of the 'pieces' in a particular industry -- due to better communications, global capital flows and a host of other things. I.e., when the efficiency-driven, convenience-driven reasons for being vertically integrated and settling for best-in-house instead of best-of-breed begin to fade away and Coase's Law and the theory of the firm begin to dissolve (just as he predicted seventy years ago -- he's still with us, btw), we begin to see these kinds of changes in these headlines.
An organization with kick-butt field reporting and the scale to support it far into the future beats out an organization that once used to be known for that... but no longer. And the firm with the pretty faces decides that that's not such a bad thing to be... the face to the 'customer'. The brand. It's a perfectly honorable (and sometimes even very powerful) position to be in (though my personal opinion is that CBS may eventually lose that also). But regardless, clarity is good: You do this. We'll do that. And let's do business together because we're not really competing anymore.
Firms re-invent themselves as pancakes rather than bamboo shoots... horizontally-oriented, best-bar-none specialists rather than vertically-oriented best-in-house behemoths.
Yeah, I've taken some liberties here. Coase talked about other aspects as well. And CBS may merely be in its long-awaited death throes as CNN ascends. But this is a blog post, not a masters thesis.
Here's what I find funny: the obligatory denial-of-reality that's needed to keep the staff of the doomed division from defecting en masse and decimating any negotiating leverage that may remain:
Sandy Genelius, a spokeswoman for CBS News, said, “We are extremely
pleased with and proud of our news-gathering operation. No outside
arrangements are being negotiated...”
Someone's got to play calming music for the passengers as the deck tilts steeper and steeper.
At a recent speech at Columbia University, [Newsweek Editor Jon] Meacham delivered a blistering response after he asked who reads Newsweek and none of the 100-odd students in attendance raised their hands.
He can 'blister' all he wants, but I don't know of any industry in which that's proven effective as a means to enticing potential customers into buying your product. The blow-by-blow of that speech from early February is even more pitiful [emphasis added]:
After about an hour, there seemed to be no more questions for him, so Newsweek editor Jon Meacham turned to his audience—about 100 graduate students at Columbia journalism school—and said he had a question for them: Did anyone in the room read Newsweek or Time? There was a small, awkward rumbling before finally, a man shouted, "No!" ...
"Have you looked at Newsweek?" [asked Meacham]
"Sure," said the J-schooler.
"And it's not up to your standards?"
"I find [it] less useful honestly. The news? I don't get it from Newsweek..."
"Look, I need you," said Mr. Meacham... "It's an incredible frustration that I've got some of the most decent, hard-working, honest, passionate, straight-shooting, non-ideological people who just want to tell the damn truth, and how to get this past this image that we're just middlebrow, you know, a magazine that your grandparents get, or something..."
Unless I'm missing something (and there's not a whole lot more to the interaction than what I just posted) Meacham's entire argument for why people ought to read traditional news magazines rests on three things:
He's got 'good' people. That may be true in terms of writing skill, interpersonal integrity, reportorial drive, courage in the field and the like, but here's the bottom line: what 'good' means without reference to customers and their needs is anybody's guess. His assertion that those people are 'non-ideological' is a tip-off that he just doesn't get the blogosphere or Gen-Y, much less how mainstream media has evolved since the '70s.
He's frustrated. (He'd do better to have been paranoid, as Andy Grove was at Intel).
His business is tanking; he needs more customers. (The big three Detroit automakers circa 1980 come to mind here.)
Short take: it's an insular, supply-side argument for relevance that only a very few, slow-moving institutions (like higher education) can get away with, and even there, not for as long as they used to.