Category Archives: Business

Models, Metaphors and Analogies.

It is common to consider business structures by metaphors to other things. For instance, some people discuss organisations as if they are machines, where if you were to pull a handle a specific outcome will happen. Others consider societal models – battalions, tribes and so on. (Business leaders in particular seen to like military metaphors. Perhaps they like to imagine themselves as generals deploying the troops. Misguided, I’d say.) Yet others see medical metaphors, discussing organisations as if they were diseased bodies with issues to be cured.

Metaphors do serve a purpose: they help us to understand an organisation by thinking about it in a different way.

But they can also confuse. Organisations are made up of people, they are not strictly controlled and limited machines. They rarely work in the way you expect them to.

The more you know about the original subject of the metaphor, the weaker the metaphor can seem. There are two biological – botanical – metaphors that I have regularly come across that baffle me. Because I have been knowledgeable of botany (I have two degrees in the subject); and when I hear people using them, it seems that maybe the words don’t mean what they think they mean.

Let’s start with “rhizomes“. Rhizomes are, botanically, underground stems. They grow through the soil, occasionally putting up the visible bits of the plant. Iris have rhizomes; banana plants have rhizomes; bracken, the plant I am most familiar with, has rhizomes. I spent five years working with rhizomes. Whole hillsides can be covered by bracken, the visible fronds rising up from the subterranean rhizome. The rhizome grows through the soil, occasionally dividing, unseen. It divides and divides, growing on. The old rhizome rots away, and, reaching a dividing point, the divided rhizomes become two separate (though genetically identical, save for any random mutations that might have occurred).


Not a rhizome.
Photo by Tylerfinvold on Wikimedia, used under CC free licence GFDL. https://en.wikipedia.org/w/index.php?curid=13160509

When people talk to me about organisations with rhizome structures, what I see is a hillside covered in bracken, the rhizomes underground. True, it might be that my knowledge of bracken and other rhizomatous plants fogs the discussion somewhat. I’m sure that’s not the meaning they intended. But then I can’t help thinking maybe I know more about rhizomes than they do. And perhaps they should use a different model.

Not a “mycelium“, though. Mycelia might be considered to be the fungal equivalent of rhizomes. They are one of the fundamental parts of many (though not all) fungi: they grow as unseen filaments through a substrate – the soil, a dead tree, your skin. (Athlete’s Foot is a fungal infection, the fungus mycelia growing in your skin.) Mycelia are multi nucleate – fungi have a very different form to most organisms we’re familiar with – and they divide and reconnect. The visible parts of fungi we’re familiar with, mushrooms and toadstools growing above the ground, are specialised reproductive structures formed from mycelia: the fibres of the mushrooms we eat are composed of mycelia.


Not a mycelium.
Photo by chris_73Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=19658

When business people talk to me about mycelium organisation structures, what I see is athlete’s foot, or a fairy ring, the outward sign of fungal mycelia growing out from a point in the soil.

I can’t help but wonder what it actually is that they’re trying to describe, but I’m pretty sure it’s not that. (I have tried to understand, but the use of the word seems woolly; I got several pages in on Google before I found a definition, unclear as it is.)

The thing is, the mental models we create to explain and describe the world matter. If we think of organisations using a doctor-patient metaphor, it will lead to examining them in that way; if we instead use a mechanical metaphor, or a military one, we will find something different.

There’s no right answer, of course. Models, metaphors and analogies help us investigate the world around us. But they also skew our thinking. And they need to be used with care.

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RBS – My Part In Its Downfall…

Actually, I don’t think I had much part in the downfall of RBS, although I did work there for twelve years from 1994.

I am about to read an account of the bank’s collapse – Making It Happen, by Iain Martin (I also want to read Shredded: Inside RBS, the Bank That Broke Britain by Ian Fraser, but it wasn’t out in paperback when I was buying) – and I thought it would be a good idea to jot down my thoughts about RBS and its fall before I did so.

I don’t believe I have any special insight into RBS, and I don’t think I will have anything to say that isn’t already in the public domain. My job was far too lowly for that. My redundancy settlement, eight years ago, also had a clause about not bringing the bank into disrepute, but I think RBS has done a pretty good job of that without any assistance from me since I left.

DSCN5129
RBS flagship branch in St Andrew Sq, Edinburgh.

I joined RBS over twenty years ago as an analyst within a large change programme called Project Columbus, which, after a couple of bad years for the bank, was established to rethink the way the bank worked. It was Columbus which put RBS back on track and gave it the muscle and discipline to acquire NatWest in 2000, after a bidding war with local rival Bank of Scotland. (How many firms contain the name of their main rival within their own? People always confused RBS and BoS.)

Columbus refocused RBS on its customers. It brought in much better costing of its products and services – before, the bank hadn’t been able to tell how much it made or lost on each customer; it split (“segmented”) its customers into specific types, depending on the type of business (individuals – retail – and three different types of enterprises); and it established different types of specialist customer managers to meet the needs of those different types of customers, and in doing so it removed the generalist bank managers from branches.

Goodwin joined RBS in 1998, after Columbus was completed, as deputy CEO to George Mathewson. Goodwin masterminded the NatWest takeover.

By chance, I was one of the first RBS staff into NatWest. I had been at meetings in London the day before RBS took control, and, looking for people who could act as a presence, I was told to stay down in London. Three Jaguars drove a small raiding party from our midmarket hotel – there had always been a focus on cost management at RBS – to NatWest’s headquarters in Lothbury, in the shadow of both the Stock Exchange and the Bank of England. Fred Goodwin, the chief executive; Graeme Whitehead, the FD; Neil Roden, the HR director; Tony Williams, head of HR operations and systems (or something like that). And me.

(Actually, there were one or two other guys, too – I think we were six in total. All men.)

It was a symbolic occasion. Whitehead was wearing a kilt. There was little for me to do; I was secreted away in a small room, twiddling my thumbs, whilst the board directors established what there rules were.

At lunch, though, we all sat in the staff canteen, in a prominent spot; making a point. Jocks in kilts. This was a change. This bank was under new management.

* * *

Up until the NatWest takeover, RBS has been a medium sized regional bank. After it, it was (or saw itself) as a global. Before, it owned Direct Line, an insurance company, Citizens, a similar sized regional bank in north east USA, and a few other businesses. (The one that I always remember was Angel Trains, a train finance house that was spun off a few years later.) NatWest gave RBS global clout.

I believe the NatWest takeover was successful, though it probably lay the seeds for many of the problems that beset the bank later on.

RBS was a lean operation, with costs tightly controlled, and the same ethos. Fred Goodwin had earned the nickname “Fred the Shed” whilst at Clydesdale fire the way he shed costs – largely people (or alternatively, “Fred the Shred” – “shredded”). There was little fat at RBS, and there was much fat to be shed from NatWest. There were extensive wine cellars, an art collection, and lots of business units. And lots of efficiency savings to be made. RBS had a low cost/income ratio, one of the key measures city analysts and investors use to measure bank performance, and shifting NatWest’s operations to a similar C:I ratio would generate lots of profits.

The purchase of NatWest was based on cost cutting and removing duplicated services – essentially, economies of scale. NatWest, for instance, had something like twenty seven different versions of PeopleSoft (the database system used by HR departments) – which didn’t talk to each other. It was similar across other systems – there were multiple tax and accounting systems, all of which needed reconciling. Trimming the fat wasn’t difficult. (Bear in mind that there were many redundancies, too – a lot of people lost their jobs, from both NatWest and RBS.)

But relatively quickly RBS started to become as bloated as NatWest. When I joined RBS, the emphasis has been on servicing the customer-facing parts of the operation: I worked in a head office department which had cobbled together, second hand furniture in a building above a bus station; if you opened a window, you got a whiff of diesel fumes. True, this was somewhat the exception, but it made the point that we were an overhead, and what we were doing was working to make the customer-facing, revenue-generating parts of the organisation more successful.

RBS had central departments scattered throughout Edinburgh, many of them in somewhat dilapidated buildings, and it had been planned to redevelop a city centre site to house them all. After the NatWest takeover, Fred Goodwin apparently decided that something else was needed. Something out by the airport.

When Gogarburn was opened in 2005 – by the Queen – it seemed very opulent. There is an old investing adage – maybe from Jim Slater – that when a business starts investing in sparkly new headquarters, it is time to short the company. It would have been a very effective sell signal for RBS.

Gogarburn was very self contained. It had very good restaurants, a health club (with a full length swimming pool), a social club and bar, several shops, and a couple of Starbucks franchises. It had a nursery and a management school, delivering courses for the large numbers of executives it now had. It had a separate directors’ wing. There was no reason to leave.

Whereas RBS had been part of the city, after Gogarburn opened it was apart from the city. Gogarburn was isolated, and RBS became very insular. Being in Gogarburn felt like being part of the “Truman Show”. Everyone there worked for RBS. There were no more serendipitous meetings with contacts from other firms. You only saw people from outside RBS at Gogarburn if they were there for a specific meeting. Whilst communications within RBS undoubtedly improved, a broader understanding of and communication with those outside plummeted.

It was as if RBS saw itself above all that.

(I don’t think I lasted a year at Gogarburn, taking the opportunity to leave when I was offered a redundancy package during yet another internal reorganisation, in 2006.)

* * *

There were stories that Goodwin was intricately involved in the design of Gogarburn. Many may have been apocryphal – such as one saying he had personally been responsible for sending a shipment of marble back because it was the wrong shade, or that he personally spoke to the CEO of Vodafone to get a mast put on the roof to ensure adequate mobile coverage (under threat of removing the RBS contract). Either way, it was apparent that he was involved in details of RBS, rather than delegating and letting others get on with it.

He apparently held early morning meetings – “prayers” – add which he would grill his direct reportees. Failure was not an option. Some described his approach as bullying. It certainly don’t seem to have been particularly collegiate or collaborative. I don’t imagine he was easy to work for. The watchword was JFDI – “just ffffing do it!”

This permeated the firm, I would say. People were not happy making mistakes or getting things wrong. Success at any price. Thinking too much – or at all – was seen as a weakness. Decisions were made quickly and, once made, that was that.

Success at any cost is what probably broke the firm. When Barclays bid for ABN Amro (a year or two after I had gratefully left RBS), it was seen as a risk to RBS’s dominance – it’s claim to be the biggest bank in Britain – and, as a part of consortium of other firms (Santander, which had a long standing relationship with RBS, and a Belgian insurance firm), a counter bid was made. ABN Amro would be broken up and each member of the consortium would get the bits they wanted. RBS wanted the US retail business, which fitted well with Citizens, and some of the investment banking bits.

I’m sure the figures stacked up, at first: the deal would have made sense. But then as part of its defence ABN sold its US retail arm. And more importantly, the downturn started, and kept going. Barclays had dropped out. RBS continued. And ended up paying a lot of money for lots of toxic assets. And effectively going bust, and relying on a UK government bail out.

Between 1994 and 2007, RBS made accounting profits of £55bn before tax, and £39bn after tax. In 2008, it wrote off about £47bn according to Robert Peston on BBC Radio4’s “Today Programme”. In the seven financial years 2008 to 2014, RBS has has reported total losses attributed to shareholders of, by my calculation, £49bn. Basically, RBS hasn’t made any money since 1994, despite paying billions to the government in tax and to shareholders as dividends.

* * *

Personally, whilst I believe Fred Goodwin was the driving force both of the bank and the sour deal, I don’t believe all blame for the collapse of RBS lies with him. A lot does – it was his strategy – and his hubris which pushed forward with the ABN takeover.

Wanted Poster at Holburn Station (London, UK)
From takomabibelot on flickr, used under Creative Commons licence.

But many other people need to share some – or even much – of the responsibility:

  • other executive directors – the management team – should have been up to challenging Goodwin’s behaviour, including the more bullying, trampling aspects of it. I don’t know if any doubts were expressed by other members of the management team, but they probably should have been. Except that they would probably see their jobs and salaries get bigger as a result of the takeover. Could they be objective, even if they could stand up to Goodwin? Groupthink might also have played a role: it might have been hard to break rank. No one loves a naysayer
  • the board – particularly the non-executive board members. It should have been their role to make Goodwin and the management team accountable. Perhaps they did, though they all left under a cloud following the collapse of RBS
  • other employees. It is hard to tell the boss he’s wrong. It’s harder when the response is “jfdi!” But someone must have had doubts – all those people poring over the figures in finance; all those providing management training in the brand new management school
  • shareholders. Under market capitalism as practiced in the UK, shareholders are more likely to sell a firms shares than try to engage with management about corporate strategy that isn’t liked
  • regulators. They could easily have put an end to the folly. Following the crash and the collapse of RBS, the role if regulators had been greatly changed. (Until the next crash …)

I must point out that I fall into two of those categories – though as a fairly insignificant employee and a very small investor, I believe I had little influence (but lost a lot of money!).

I believe the real issue – the blame – lies with the board, both execs and non execs. They had oversight of the strategy and the deal. When the crash came, they should have pulled the plug. RBS would have looked weak – it might even have become a takeover target itself – but it would have survived the deal. Instead, they pushed on, buying illusory assets which quickly turned to dust, taking much of the UK economy with it.

Implementation.

For processes, design is coupled with implementation. It can be hard to separate the two, sometimes: poor design leads to poor implementation.

The City of Edinburgh Council has redesigned its domestic recycling processes, and over the last month it has been implementing the new design in my neighbourhood.

In addition to large communal bins for non-recyclable rubbish (destined for landfill), domestic recycling used to work with weekly curbside collections: cardboard and plastic bottles (only plastic bottles) collected one week; glass, paper and tin cans the other; and weekly collections of food waste for composting.

Each type of waste had a separate receptacle – red and blue boxes for cardboard and glass, a sealed container for food.

It wasn’t perfect. I would frequently forget to put out my recyclable waste and have to wait for the next collection. In a windy city, where gales seem to coincide with the weekly collections, the emptied containers would be blown all over the place.

The council announced in January that they were changing the process in February.

Instead of weekly collections, there are to be permanent large communal bins for general recycling (cardboard, paper, tin cans and plastic containers – not plastic bags, which are not recyclable), for glass, for food waste, and for landfill. Four different communal bins.

In many ways, this will work better: no more missing the weekly collection, no more boxes scattered across the road by the wind. Drop off recycling when it suits.

But…

(You knew there had to be a “But…”, didn’t you?)

But, firstly, communication has been poor. The launch date of “February” was unclear: when in February? Should I keep putting out recyclable waste for pick up before then? Where will the new communal bins be?

(These questions remain unanswered, despite the system already changing…)

Secondly, the one new communal bin for general recycling – cardboard etc (but not plastic bags) – looks very like the old landfill bin. It arrived a couple of weeks ago in the same place as the landfill bin it replaced. OK, it does say “general recycling” on it, with a long list of acceptable items and another list of unacceptable items. Maybe my neighbours can’t read. Maybe they didn’t notice the signs. Either way, on the first day it was on the street, it was full of plastic refuse sacks (presumably full of waste for landfill, not recycling). A couple of days later, it had just recycling waste in it, and someone – possibly the council, possibly not – had taped a new notice to it detailing again what could go in it – plus stating that putting the wrong items in the bin would mean it all had to be sent to landfill.

A couple of days later, I looked in it to see someone had placed polystyrene blocks in it – another no-no, meaning the whole bin is apparently destined for landfill.

The other bins – for glass and food waste – haven’t appeared, leaving my neighbours (and me!) clearly confused as to what to do with our waste. Before the changes, today would have been a cardboard collection; several neighbours have put out cardboard for collection, despite the new communal bin for cardboard (if it hasn’t been contaminated with landfill waste…).

According to the leaflets put through the door, the reason for the change was to increase the rate of recycling. In the short-term, this has clearly failed: at least two full recycling binloads will, according to the notice stuck on the bin, be destined to landfill because they contained the wrong kind of waste.

People are confused, and most likely throwing out recyclable waste in the landfill bins because of the uncertainty. The glass and food waste communal bins haven’t appeared. (Perhaps they have been camouflaged…)

So – in the short-term at least – the implementation has failed. It might just be bedding in. I can’t help thinking, though, had the design been better, with clearer communication (and, for instance, a timetable of what was happening when), it could have been a lot smoother.

Update: not only “today would have been a cardboard collection – but it was. The neighbours’ cardboard has been collected from curbside. For many systems, dual running during implementation makes a great deal of sense. But it has left me even more confused than before.

Design.

I listen to the radio. I listen to the radio in bed. So I have a clock-radio.

For many years, I had a Pure Siesta DAB radio. I liked it a lot: it worked well, it sounded good, and it was easy to use.

Particularly, its buttons were clear and easy to use. Kind of important in the dark.

But then, about a year ago, it stopped working. I couldn’t work out why it wasn’t working, so I bought a replacement. I thought about just getting the same again, but decided instead to try something else.

So I bought a Roberts, since they had a good reputation.

This one. It’s called Dreamtime.

A much smoother, more stylish design. Sleek, streamlined even.

And almost immediately I found out it was awful to use. The buttons, sitting level with the surface, are impossible to differentiate in the dark. Not a single day went by when the radio didn’t make me swear at it. Not necessarily conducive to a restful night. I was forever hitting the wrong button, and there wasn’t a way to cancel the operation without switching it off. Sometimes hitting “Select” actually reset the default settings so I’d have to reset them to my preference.

It might have looked good, but the Dreamtime was a real nightmare to use. Whoever designed it hadn’t used it in the dark. I doubt if they had used it at all.

Last week I finally cracked, pushed over the edge by it dreadful way of working. And so, whilst it was functioning much as it always had, I decided to get myself a new clock radio.

I bought a John Lewis Spectrum Clock. This.

It is small, it is simple, and I love it. It doesn’t do anything flash, it sounds fine, and it is a joy to use, even in the dark. The buttons are clearly laid out in batches, and feel different. Not once have I hit the wrong button by mistake. It sounds fine, too.

I’m not sure what the lessons are here. Maybe that “good” design is far more than eye-catching design: design has to include function; and good-looking might not necessarily by good design.

“Thinking Fast and Slow”

Last year I read Daniel Kahneman‘s “Thinking Fast and Slow“. It took me a long time – definitely reading slow, for me – but I think that was down to his style rather than the book’s content. I read it because two people from very different backgrounds recommended it in the since of a week, and despite being somewhat hard work, bits of it have stuck: they keep recurring in my thoughts.

So I thought I’d share some of those, and recommend it, too. (I haven’t looked at the book for the last six months, and I am deliberately writing from memory. So please don’t take these examples as gospel, and before quoting them, please look to Kahneman’s original text!)

Kahneman’s work can be considered an academic counterweight to Malcolm Gladwell’s “Blink”. Gladwell set out, I think, to suggest that we should trust our intuition (albeit that many of the examples he wrote about seemed to be based around what happens when intuition goes wrong. Policemen shooting innocent men, for instance).

Kahneman, a prolifically able psychologist (and Nobel prize winner in economics, for his work on behavioural economics), sets out to describe how the mind works, describing the unconscious, instinctive, intuitive brain – his “system 1” – and the conscious, analytical brain – “system 2”. System 1 is much faster and cheaper to run than system 2, and this is why for most things we are happy to let system 1 get on with it. His book is full of fascinating stories that illustrate how system 1 can lead us to make some very counter-intuitive decisions, often his own expense.

I started the book very sceptical. Despite all the evidence Kahneman provides, what he describes just didn’t sound like me. I’m analytical, rational, sensible. But he also describes how just about everyone thinks that, too. And left to its own devices, system 1 seems to get us into several bad habits.

For instance, it makes us bad at estimating things, particularly our own (and others’) expertise. Kahneman tells a story of how he was part of a team writing a new curriculum for a psychology course. After several months when they though they were making good progress, he asked another member of the team, who had a lot of experience of the process, how long it should take. The answer was something like “a good team will take a couple of years”; and when asked whether this was a good team, the answer was a resounding “no”! This was a team made up of very rational people – psychologists and educationalists – who frankly should have stopped right there and seen what they could change to achieve a better result. But instead, despite the insight they had received, they ploughed on as if nothing had changed. When Kahneman left the project several years later, it still hadn’t been completed.

In another situation, he describes undertaking leadership assessments for the Israeli army. He understandably decided to validate the process, to see whether the assessments predicted future success as a leader in the army. They didn’t. The predictions were no better than chance. And yet Kahneman continued his work assessing candidates, despite knowing that it was a complete waste of time.

His work in behavioural economics lead to Kahneman working with some stockbrokers. He looked at the firm’s remuneration and bonus structure. Analysing individuals’ results, he showed that success was random: and hence the large bonuses paid for results were completely unwarranted. He told the board, producing his evidence. The board, of course, did nothing, because their whole belief system (and the firm’s culture) was based rewarding success. No one accepted his evidence; they – the experts – knew better than the statistics.

Another story that really stuck with me it’s how bad system 1 is at assessing memories. It only recalls the last experience of something, rather than the totality of that experience. So if you’ve been listening to a piece of music on vinyl, for instance, and it ends with a scratch, you remember the scratch and not the forty minutes of pleasure that came before it. In an experiment to test this, subjects preferred an extended period of pain that ended in a reduction of pain rather than a much shorter period of pain that ended suddenly. System 1 remembers the pain at the end rather than the totality of the pain. The lessons here for anyone designing any process involving customers are rampant. Make it end with a smile!

I think these four simple stories illustrate how irrational even seemingly rational, analytical people can be. This is painful – these are people like me – but it is a valuable lesson, too.

I think the best lesson is to stop and think. This brings the conscious, rational system 2 to the fore. It is harder work, and slower, than letting system 1 determine our actions, and maybe not always appropriate. But it also leads to better, more mindful outcomes. (For instance, it may well be why people who keep “gratitude lists” report being happier – because they are bringing their conscious mind to bear, rather than letting system 1 remember only those last painful moments. There seem to be real benefits to keeping a journal or diary: it helps us to bring an active dimension to our otherwise irrational intuitive minds.)

“Anarchists in the Boardroom”: It’s Not You, It’s Me!

I read Anarchists in the Boardroom towards the end of last year, and I have been trying to get my head around writing about it.

First, a disclosure. I know Liam Barrington-Bush, and we have had lots of conversations about the ideas in his book; he shared some early drafts of a couple of chapters with me. I know many of the people he has spoken to in researching this book, and have been involved in some of the very many stories he tells.

It comes as no surprise, then, that I agree with many of the ideas he has about the power of social media to change organisations, and the way people relate to them.

That said, though, I have some problems with this. Worse still, I think their problem is – ME. That hurts…

Let’s take a step back. Liam comes from a not-for-profit background, and his focus is on changing the not-profit sector. Specifically, he wants to stop the damage he sees done in the name of “professionalism”, which he feels stops organisations being more like people. (He calls his social media campaign #morelikepeople. I am not sure I completely agree with his thesis around this – lots of people do bad things; making organisations more like people doesn’t mean they’ll behave more responsibly. Even sociopaths are people…)

I come from twenty five years working within or for corporates – I’m part of the professional management class at which Liam lays the blame. I have professional qualifications and a business degree. So it’s not surprising that…

What I didn’t like about the book was that it wasn’t – professional! It has a chatty, informal style which, for me, obscured the benefit of the experiences Liam describes, and how others could use them and harness social media (together with flatter structures, open communication, autonomy, and emergent and contingent change) to be more effective.

I think the audience – and impact – of this book could be wider than the not-for-profits Liam is targeting. But to reach deeper into the corporate world, you need to talk their language, and I am not certain that those in (or who aspire to in) the corporate boardroom will pick up this book. The things that has driven Liam to write it – the desire for organisations to me “more like people” – to have a human feel, about communication rather than data – will stop them

This is of course a paradox: to access those able to bring about change (top down or – preferably – bottom up), one needs to become more like them – exactly what Liam is trying to get away from.

Many organisations and the professionals within them actively resist change. One of the powerful things about organisation culture – “the way we do things” – is that it acts as homeostat, bringing the organisation back to its core and, sometimes, preventing change. Culture acts to keep the organisation on course. Most of the time, we’re not even aware of an organisation’s culture – it is all the below the surface stuff that is so obvious to those within it that they are oblivious.

Most of all, culture is rarely questionned. What social media can do is create the space to open up communications. Liam gives several examples where senior executives have taken to Twitter (by its nature it facilitates conversations) and the effect it has had on them – by allowing their staff and customers direct access. Just using a medium like Twitter allows the informal organisation to change – and can subvert the culture. That’s one way it has the potential to change organisations.

Liam’s book covers all this; my main issue with it is that it probably won’t reach the people who I think need to read it.

Talking ‘Bout My Generation.

Since the queen first saw the light she has seen invented and brought into use … every one of the myriads of strictly modern inventions which, by their united power, have created the bulk of modern civilization and made life under it easy and difficult, convenient and awkward, happy and horrible, soothing and irritating, grand and trivial, an indispensable blessing and an unimaginable curse.
Mark Twain

The Economist recently wrote about the difficulties for firms of managing different generations in the workplace; Gerry Taylor from Orangebox gave a talk at the Business School a couple of months ago on similar issues, particularly those resulting from the changing demographics and the impact of technology. The Economist article focuses on managing these different generations – and their different wants and needs; Taylor on the impact on workspaces of these different generations.

Taylor was talking about research from a couple of years ago, Office Wars 2012 [PDF], and I don’t think any of the facts were particularly new: changing technology (particularly social media), the rise of China, the internet of things – we all know it’s coming! – but his analysis was somewhat different, and interesting. His delivery was passionate and engaging, too!

Boomers – people like me – are in the middle or towards the end of their careers (depending how we manage the pensions timebomb…): by 2015, a third of the workforce will be over fifty years old. They are often defined by their work and they’re highly skilled (they’ve had a while to get there). They invented youth culture, and they’re rewritten the rules with each decade. They are IT adaptors who enjoy change and like trying new things.

Millennials believe they move faster than anyone working who’s older than them, are “digital natives” for whom being unconnected is not an option, and they are huge customers of technology – including in the workplace.

These pictures of two generations are clearly stereotypes, and there are other generations – “X” and “Y” – in between; they are perhaps relevant to only certain strata of society, but they help forecasters maker plans. Including what the office may look like.

One big difference between boomers and millennial is, despite all their technological know how, millennial are much less secure than boomers. This might just reflect the power balance, but it is the boomers who know how the world works and are confident about their place in it. After all, they made the rules.

Boomers have taken to changing office structures, particularly working from home. Taylor described a high tech company – it might have been IBM or Microsoft (but I can’t for the life of me find a reference to it – have you ever tried Googling “Microsoft office”?) – who brought in flexible working, including hotdesking and homeworking. The boomers jumped at it; the millennials rebelled. Lacking the security of the office and the personal networks that the boomers had spent their careers building, the millennials floundered.

Apparently what millennials value must about the office environment is the experience the boomers have. They need mentors. (This might not be just millennials: it is perhaps their stage in their careers rather than their generational status that is relevant.)

Our office spaces have been shaped by technology. The thing is, it’s the technology of the nineteenth century. Electric lighting, the telephone, lifts (“elevators” to our American cousins) and the typewriter made offices what they are. (You could probably add air conditioning to that list.)

And what they are are social spaces where people can make connections.

Technology will continue to make a huge impact on offices and how we work, and in particular it can free people from the workspace. But this also changes the dynamics of the workspace; and perhaps it is the boomers who will benefit.

Businesses need to change what they do with their offices, and how they relate to their younger staff, because the competition for talent will otherwise mean that will find employers who do. There is a contradiction here of course: with the economy still in the doldrums if not recession, where precisely I’d that competition for talent? Have millennials really got the pick of several job offers? I doubt it, right now; but these things can change quickly.

Why have offices – when technology lets you work anywhere, why do we need to all be in the same place? Because work is more than work: people – particularly those millennials – value the social aspects of the office.

But I have doubts. As the Economist itself states, youth unemployment is high around the world and there is a generation who may not know employment – no wonder those millennials are feeling insecure. Whilst recruiters and HR people still go on about “the war for talent“, for most people in most roles, just keeping a job is a struggle. Real wages are falling in the UK and in the USA, as well as the Eurozone.

The differences between generations may just reflect the differences in their life stages – differences which have always been there, as workers move through their work and actual lives. Of course what young employees want is different from those approaching retirement. One major difference with previous generations is that those approaching retirement may be doing so with trepidation, with rising retirement ages and falling annuity rates, and may be keen to keep working (and earning). People at different stages of their lives will have different outlooks – saving, “nest-building”, and so on. These may lead to conflict (some commentators talk of “intergenerational war“).

But for most jobs, nothing much has changed. And the employers can dictate the workplace and work culture that suits them best. To most people in most roles in organisations I imagine that the issues raised seem distant and unimportant. The workplace may be changing, but slowly, imperceptibly – for most.

Talking About Risk

Drew Rae gave a talk to Edinburgh Skeptics (sic) on “Dealing Reasonably with Irrational Fear”. At least, that was meant to be the topic, but his talk was more about how bad people (and that’s all of us…) are at judging and assessing risk, rather than dealing with it.

It was very interesting, though; given how we deal with risk the whole time, it never fails to amaze how bad we all are at estimating risk – and as Drew pointed out, even those whose job it is to measure risk can be several orders of magnitude out: he mentioned an experiment where professional risk assessors were asked to measure the same (risky) scenario, and the answers differed by orders of magnitude. In another experiment, it was found that experts

Much of this covered similar ground to Daniel Kahneman‘s “Thinking Fast and Slow” (though in my case, reading slow, too!) in examining the biases we all have in assessing data. We are overconfident in our own abilities and misconstrue the evidence. We even make up evidence (unwittingly – I hope) to fit our beliefs.

Much of this is down to the difficulty of working with low probability events: Drew showed how our uncertainty of the probability of a rare event happening is much, much higher than the risk of the event itself.

The way we consider risk also depends a lot on the way we frame the question, and our emotional response to it. People use quick rules of thumb – heuristics – to gauge probability, and whilst these might work well in everyday situations, they let us down badly when considering rare events.

As well as “judgement errors” arising from our heuristic mental models, Drew described how even professional risk managers make large systematic errors in assessing risk. For instance, they can forget or ignore whole categories of hazard, based on their own biases, and greatly over estimate their ability to predict the categories of hazard they do include. Their overconfidence stems from a certainty that their data are correct, an over estimation in the efficacy of safeguards, and – somewhat shockingly – relying on incorrect and untested assumptions, particularly regarding the independence of unlikely events.

For instance, everyone knows that multi-engined aircraft are designed to fly on fewer engines than they have: over capacity is built into the system, so that a plane may land even if one or more of its engines fails. Which is fine, until you consider that the likelihood of engine failure may depend on the experience and skills of the person maintaining the engines; and, typically, the same engineer will do maintenance on all of an aircraft’s engines. If they screw up on one engine, they are likely to screw up on more than one: the likelihood that one engine fails is not independent of the other engines failing.

Indeed, Rae reckoned that aircraft rely on so many incompletely tested systems that our reliance on aircraft remaining in the air was largely “faith based”! He reckoned that for any one aircraft, the likelihood of an accident is one in 10,000 years – and that to get adequate data to test this, we’d need to test aircraft for 20,000 years. Instead, we are happy to fly.

Aircraft are much safer than cars, though. If we applied the same standards of safety and maintenance to our cars as we do the aircraft engines, Rae reckoned we’d never drive: the processes would be far too cumbersome. In the UK, there are approximately 300,000 casualties and 3,500 deaths on our roads. I can’t find comparable data for deaths due to aircraft in the UK – perhaps a result of its rarity – but Wikipedia lists data from ACRO averaging 1,186 pa for the whole world.

Much depends on how one states risk. Figures for the USA show that an individual has 1/7,700 chance of dying in a road accident in a year, 1/306,000 chance of dying in a train accident, and 1/2,067,000 chance of dying in a plane crash. That is, you are forty times more likely to be killed in a car crash than a train crash, and over 250 times more likely to be killed in a car crash than in a plane crash.

On the other hand, in terms of miles travelled, car and trains have the same risk (1.3 deaths per 100 million vehicle miles) and planes slightly higher (1.9 deaths per 100 million aircraft miles). So cars are either safer than planes – or more dangerous, depending on your point of view. But a caveat: these figures are for the period 1999-2004, and therefore include the deaths of those on the planes involved in the terrorist attacks on the World Trade Center (a footnote says that the other deaths in 9/11 have been excluded from the figures). Wikipedia has rather different figures for the same measure, worldwide: death per billion kilometres travelled for air is 0.05, for rail 0.6, and for car 3.1; but neither sources nor the period covered are given.

[It has been said that more people may have died as a result of an increased aversion to flying in the USA following the airborne tourist attacks on 9/11 than in the attacks themselves: in the USA, road deaths increased by 1,500 in the year after 9/11, and it is easy to envisage that . (This paper attributes 1,200 more deaths on American roads to 9/11 in the year after the attacks, whilst this one estimates that, over time, a total of 2,170 deaths could be attributable to change of behaviour following 9/11 [PDF].) We dramatically over estimate the risk of dying in a terrorist attack. Terrorist attacks are very rare events, at least in western Europe and USA.]

We let our fears influence our perception of risk, too. Take nuclear power. There have been approximately five thousand deaths as a result of accidents at nuclear power plants (with Chernobyl responsible for four thousand of those). Coal fired power stations have result in 22,000 premature deaths each year in Europe alone. For the USA, it’s 13,000 deaths pa [PDF]; it would be fair to assume significantly more in China and Russia. Let’s be conservative and say 50,000 premature deaths worldwide from coal. But the perception is that nuclear power is dangerous.

Indeed, analysis of worldwide deaths from a variety of energy sources show that per unit of energy (terawatt hours), nuclear energy is the safest source of energy. (Wind doesn’t feature.)

There have to be caveats, of course: if the danger from nuclear waste are included – which remain hazardous for for hundreds of thousands of years (according to Greenpeace) – the picture could well be different.

Rae summarised the influences – biases – over our judgement of risks:

  • framing – how we ask the questions changes the results
  • familiarity – the more (we think) we understand something, the less risky it seems – the less scary, even – but also the more common we might think it, too
  • the extent to which the risk is voluntary – and hence how we feel we can influence it
  • percieved ability to control the risk (and 93% of drivers think they are above average…)
  • a preference to eliminate rather than just reduce risk
  • and a “dread factor” – an irrational fear: of nuclear power, carcinogenic compounds, genetic-manipulated organisms, and many, many other things.

I reckon the media has a lot to answer for. News headlines make unlikely events appear more common – headlines stick in our memories, media campaigns can last months and have a disproportionate effect.

Thoughts on Crowd-Funding

I have been thinking about crowd-funding recently, prompted by several things. First, LondonJazz had a post about Gwyneth Herbert crowd-funding her latest recording; then various projects were brought to my attention; and lastly Creative Edinburgh had a session about crowd-funding.

I have been uneasy about crowd-funding, and I haven’t really been able to understand why; it was my unease that took me to the Creative Edinburgh event: I wanted to get to grips with what concerned me about it. I love crowd-sourcing and collaborative-creation, and people using new models to get stuff done: what was so discomforting with collaborative funding? Why did I feel unwilling to help finance some of these projects when I think several of them are very worthwhile and I would (and have!) support them in other ways?

I think the post about Herbert’s work covers a lot of the area well – not least because the artist herself got involved in the debate, explaining her motives. (I should point out that I am not a fan of Ms Herbert’s work and he’s I’d not a project I would have funded – though I have a great deal of respect for her as a result of the post and how she has engaged with the discussion – pros and cons.)

Crowd-funding enables artists of all sorts to get projects done that might otherwise not happen; it allows supporters to get involved and contribute to the creative process; and both artist and supporter get something in exchange.

I think my reticence stems from two sources. The first is consumerist: I want to know what I am buying. Funding an early stage project means one doesn’t know what you’re going to get; if the target isn’t reached, the project wrong happen and you won’t get anything (though your pledge won’t be taken). Part of this is also that rewards don’t particularly interest me: if I’m contributing to a musician’s project, say, it will be because I want the music, not a signed photo (or other reward). I would pay for CDs or downloads, I would pay for gigs – but these are specific “products”; funding an early stage project is an unknown.

The second is perhaps a British reticence to discuss and get involved in money. This is mentioned in Ms Herbert’s comments on that blog post, and it was also an issue someone suggested to when we were chatting at Creative Edinburgh. It is a very personal thing; the artists know what one is providing, and how generous or stingy one has been. It just – well, doesn’t feel “right”.

The crowd-funding of creative projects is, I think, more like charitable giving than a consumer transaction. You are doing something to support a cause – albeit one that gives you something back. It is an altruistic act. One isn’t purchasing an object; and neither are you providing funding for financial return. The thing is that it isn’t a faceless charity that gets the money: it is real, flesh-and-blood (and of course connected) people. Friends. Both the speakers at Creative Edinburgh, talking from a fund-raiser’s point of view, said that one had to be prepared to be disappointed; the flipside – the donor’s view – is the feeling of peer-pressure that might keep them away.

As Herbert points out, artists have relied on patrons since time immemorial. Roman citizens funded artists in ancient Rome (“patron” is a Latin term); wealthy bankers financed the Renaissance in Florence; publication of literature was funded in Victorian Britain through subscription. Whilst writing this post, I recall several years ago making a charitable donation to support a jazz big band I admired. The one crowd funding activity I can remember participating in up to now has been to support Lloyd’s artistic endeavour because, at a very basic level, I was concerned he wouldn’t be able to eat if I (and others) didn’t! But being a patron is quite close to “patronising” – it doesn’t rest easily.

Having thought this through, then, I did decide to support a couple of projects last week. When it came down to it, it was LedBib posting worriedly on Facebook that they were close to raising what they were after but not there yet – and running out of time. When they were looking for £10,000, what I might contribute seemed a drop in the ocean; when they were looking for the final £300, a £25 contribution seemed a lot more. (As it happened, the Kickstarter website didn’t like my browser set up – specifically, I think, the various add-ons I use; though I have promised them the money, anyhow, and they passed their total without my £25.)

Having done that, I thought I should support Debbie’s sculpture project too, because I love the idea, so I’ve pledged to support that, too. (It didn’t make the total they were after, but they are going to have another go, which I will be supporting.)

[After I’d written this post, I watched Amanda Palmer’s now famous TEDtalk. Palmer – and again, I’m not a fan – discusses a lot of the things I’ve covered here, much more eloquently than I have – and from the artist’s perspective. It is a very powerful and moving video.]

“The Dark Arts of Innovation” – Or Not?

After excellent sessions on play and improvisation, I suppose I was only setting myself up for disappointment with the third of the series of talks at the ScienceFestival that I accidentally curated for myself: “the Dark Arts of Innovation. The talk’s title hints at secret recipes or innovation-magick, but whilst interesting and engaging, on that count it didn’t deliver. There were no secret tricks or short cuts, no quick fixes – though a fair bit of common sense.

I think this in part reflects the nature of the institutions represented by the three speakers: a university, a research institute and a private sector (and privately owned) company.

Light Bulb
Image from Olga Reznik on flickr.
Used under Creative Commons licence.

As Alan Miller, deputy principal (and responsibile for knowledge transfer) at Heriot Watt, pointed out, universities are steeped in tradition and conservative in nature; not necessarily the most innovative of institutions. Still, the Watt in Heriot Watt refers to James Watt, who whilst he didn’t invent the steam engine (that was Thomas Savery, apparently – I thought it was Newcomen, which proves that one really can learn stuff from the internet!), came up with an innovative design made greatly improved its efficiency and reduced its size, and enabled others to deploy it in many new ways – the power behind the industrial revolution.

Of course, once more the question of semantics came up. What exactly is innovation? Miller reckoned it was seeing the practical benefits of research – taking original research and creating products from it: exploiting experimental research and commercialising novelty. (As far as I recall, during my MBA the working definition of innovation we used was along the lines of seeing the potential products of new research, methods or processes, and then actually getting the product to market. Others define innovation as the generation of wealth from ideas.)

Either way, researchers are not necessarily the best innovators, and nor are universities the best at exploiting and commercialising their research. It has long been said that Britain is great at research but poor at exploiting it. Miller reckoned that Scottish universities are actually on a par with the US counterparts (a view which is consistent with this research into UK manufacturing from Southampton University). The UK parliament investigated the translation of research into commercial products last year, and produced a second report just last month. Others reckon the UK has no coherent policy on innovation. Part of the problem, I think, is whether a government can actually promote innovation specifically – they can make the economy as attractive for entrepreneurs and innovators (fat lot of success they’ve had there – though I guess they might argue the recent cut of the top rate of income tax is an effort to improve the incentives for entrepreneurs) – but I can’t help feeling that there is little governments can do to stimulate the process of innovation itself.

Heriot Watt tries to do this in various ways, though mostly by spinning off possible commercial outcomes from research into independent companies. The university doesn’t expect to to profit (though it hopes it will in the long term), but removing the removing the ties of bureaucracy and adding the profit motive seem to be beneficial.

The missing gap for me seemed to be how to identify those who were good at innvoation – clearly, not necessarily the same as those undertaking the initial research. My guess would be that most academics are motivated to a great extent by profit, but if one removes the results of their research and passes to someone else – even another (spin off) body – to commercialise, how does one recognise and reward to original researchers? Do they also profit from it?

Working out which bits of research actually have the potential also seems problematic: are there university committees assessing which bits of research might yield commercial results? Miller pointed out that the fruits of research may come a long time after the research itself – the development of transistors after WW2 relied on esoteric research into quantum mechanics decades earlier, for instance.

Fundamentally, though, Miller saw innovation as being all about people: they need to be stimulated to innovate. Unfortunately, how to actually do that doesn’t seem clear.

Lee Innes from the Moredun Institute gave some excellent examples of the way they have innovated. Firstly, they are very close to their ultimate costumers – farmers: indeed, they were established by the agricultural industry and are managed, in part, by farmers; they are aware of the issues facing farmers, and work with them on technological solutions. The profits of their innovation are channelled back into further research projects.

The institute also sifts ideas using evaluation criteria before product development and implementation – a long, and, she reckoned, potentially cruel process: you need to be willing to dump good, workable ideas if they might not come to fruition or would drain resources. “Killing the babies”, she called it.

The critical steps – necessary, even – seemed to be working in collaborative, cross-disciplinary teams, and for those teams to be small and flexible. She gave an example of a brainstorming session between the institute’s researchers and engineers from (I think) Heriot Watt where the engineers had picked up on a problem the researchers had thought of as insoluble – and a rapid diagnostic for toxoplasma is now in development. Being open to new ideas from unlikely sources seems to be beneficial – and I like the idea of innovation rising from random conversations! Spinning out potential products allows the innovators to work in flexible, dynamic, high performance teams to get the product to market – like any start up, perhaps. They are also open to unintended consequences – and exploit the novel application of them.

Promoting that sense of interdisciplinary collaboration in a high performing environment seems crucial to W L Gore. I have heard people from Gore speak before, and it has always seemed both an inspirational organisation – and completely down to earth. Gore’s Gerry Mulligan added to the passion for ideas I have seen from the firm before. It does sound like a truly innovative organisation, with a novel culture that has innovation at its core. (The first thing you see on their website is “A Commitment to Innovation Shapes Everything We Do” – quite a statement.) It eschews hierarchy and works with a minimum of bureacracy – no time sheets, for instance. Its teams are self-organising and wholly empowered; the only leaders are those who get followers (someone once said that Gore doesn’t do leadership training – they do followership training instead – though Mulligan did describe the leadership training those in senior positions get – clearly there is some recognition of hierarchy). Peers are involved in the annual review process – and are responsible for setting remuneration, too. Everyone gets 10% of time to work – or “dabble” – on their own projects.

This could also make it a harsh place to work, too – it may not be the best environment for introverts, perhaps. (I may be completely wrong, of course: if you are judged on your contribution to results by your peers, regardless of how loud you shout and how sociable you are, it could be that introverts may fly!)

It was, Mulligan said, all about the culture – and the people: without bureaucracy, hierarchy and “command and control”, innovation was able to flourish within small, flexible – and cross-disciplinary – teams based around relationships. Informal networks are key to sharing knowledge and enabling the teams to coalesce. All those conversations again…

There was long discussion about the nature of intellectual property, and who benefits from it. Gore uses patents a lot, and – in some jurisdictions – are bound to share the profits of IP with its developers (not in the UK). Mulligan described some bad experiences the firm had working with others and sharing IP, which had to be resolved in court, and felt it best to keep working relationships in house.

The speakers also felt that Scotland and the UK more generally had become risk averse: failure is a dirty word. Instead, they thought we ought to celebrate failure. At Gore, when a project closes because it fails, they have a party to celebrate. Of course, we can learn from failure – but to really learn, we need to share the knowledge of the failure. Researchers don’t publish details of experiments that fail, only those that succeed.

Condensing down what was said into that all elusive recipe for innovation, then…

  • small…
  • open…
  • collaborative…
  • flexible…
  • cross-disciplinary…
  • high performing…
  • empowered…
  • self managed teams
  • minimal bureaucracy
  • unafraid to fail
    And know when to stop!

But you still need to instill all that into your culture – and work with people who are creative innovators. Whoever they are.

Post Script. Whilst I have been writing this, my mind has kept returning to the Centre for Creative Collaboration, which I used to visit frequently when I was in London. C4CC acted (and, I presume, still acts!) a space promoting many of the themes of innovation that the speakers at this talk covered – particularly the open discussion and conversation. C4CC was set up in partnership with several of London’s higher education institutions, but is largely independent of them. Perhaps could be a model – only one many possible, mind – for incubation of innovation.