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chapter10
# Section 10: Organizational Culture
_How does culture emerge within an organization, and how can managers and leaders shape it? What role does personality play in the cultural DNA of an organization? How can you effectively leverage the culture within an organization?_



Parr. S. Culture Eats Strategy for Lunch, Fast Company. Author: Fantigrossi, Steven Marc; Editor: Steele, Samantha E

Culture is defined as “a balanced blend of human psychology, attitudes, actions, and beliefs that combined create either pleasure or pain, serious momentum or miserable stagnation.” An organization's brand is a result of its culture and serves as the most important factor in helping an organization stand out from the pack. An organization won’t be successful in the long term by only making good products and a profit, a good culture is also necessary. Good culture incorporates focus, motivation, connection, cohesion, and spirit in order to create a healthy workplace environment for employees to succeed. Employees and leadership alike must understand the vision of the organization and take steps to move forward towards its goals. Workers should be happy to be at work, be loyal to the organization, and put the team before themselves by working with others to increase efficiency and effectiveness.

But successful company culture cannot be created overnight, it has to be embodied by everyone in an organization from the leader down to the bottom. It has to be indoctrinated into employees from day one, just as a U.S. Marine learns the values of “the few, the proud” during the first day of training. In order to develop and nurture good culture, dynamic and engaged leadership must effectively communicate its organization’s values both within and outside the organization and show that they genuinely care; “authenticity and values always win.” Employees must be given clear roles and held accountable when they violate the values that they should be upholding. Also, organizations need to stop and celebrate the organization's success and take time to learn from its failures.

Organizational culture is a driving force in retaining both employees and customers. But having a common culture shouldn’t be confused with a lack of diversity. Core values drive culture and it is essential that everyone in an organization is moving in the same direction. However, within that culture, people of many different backgrounds, experience, and skills must be included to make a organization successful. By hiring employees who believe in the core values of an organization and that fill a unique role, an organization will be well-suited to be prosper in the long term.

Kantor, J. & Streitfeld, D. “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace.” The New York Times, August 15, 2015. Author: Swartwood, Hilary Ann; Editor: Farrior, Cheri Nicole

Taylor, B. “Why Zappos Pays Employees to Quit, and You Should Too.” Harvard Business Review, May 19, 2008. Author: Rosa, Edwin Emory

Can a Teacher Be Too Dedicated? The Atlantic. Author: Boucher, Timothy M.; Editor: Dorries, Joshua Wayne


Sutherland, J. & Sutherland, J.J. (2014). Scrum: The Art of Doing Twice the Work in Half the Time. Crown Business, Happiness: pp 145-170. Author: Dorries, Joshua Wayne; Editor: Orlan, Samuel Lawrence

Female company president: "I'm sorry to all the mothers I worked with." Fortune, March 3, 2015. Author: Sarawat, Fariha; Editor: Dorries, Joshua Wayne


Chamorro-Premuzic, T. “Why Do So Many Incompetent Men Become Leaders?” Harvard Business Review, August 22, 2013. Author: Gobbo, Andre Francis; Editor: Hamlin, Madeleine Rose

This article aims to explore the reasons why there are so few women in management positions. It starts by going through the three most popular explanations for why this phenomenon exists: (1) they are not capable, (2) they are not interested, and (3) they are both interested and capable but unable to break the glass ceiling. However, the author finds that these 3 explanations fail to account for the largest reason why women are underrepresented in management roles: a failure to distinguish between confidence and competence.

The author then goes on to explain that because we conflate confidence and competence, we tend to view men as better suited for management positions because they display their confidence (sometimes even hubris) more often than women. The arrogance and overconfidence more often found in men translates into them being perceived as better leaders, when in fact these traits are inversely related to leadership talent.

In most sectors the best leaders are usually humble. This trait is more commonly found in women than in men. Furthermore, this is true not just in the United States; the author cites a study done involving 23,000 participants in 26 different cultures indicating that women are more sensitive, considerate, and humble than men. The author cites another study showing that normative data on thousands of managers from across different industries and sectors points to men being consistently more arrogant, manipulative, and risk-prone than women.

The author makes an important distinction between _getting_ a management job and _doing the job well_. This difference is why many incompetent men find management roles and proceed to not do well. Because of this, many leaders tend to fail in their roles. The author notes that good leadership has always been the exception, not the norm.

Because there is a rise in trying to get women into leadership roles, the author notes that women shouldn't be trying to adopt these faulty characteristics of men in order to become more appealing for management positions. Rather, women should be emphasizing the characteristics that make them better in leadership roles: eliciting respect and pride from their followers, effective communication of their vision, empowering and mentoring subordinates, and a more flexible and creative approach to problem-solving.

While the glass ceiling is quite thick for most women, the author finds a bigger problem in the lack of career obstacles for incompetent men, and that we equate good leadership with psychological features that make the average man more inept than the average woman.






Carlson, N. “The Untold Story of Larry Page’s Incredible Comeback.” Business Insider, April 24, 2014. Author: Swartwood, Hilary Ann; Editor: Dieselman, Andrew

Grant, A. (2013). “Givers take all: The hidden dimension of corporate culture.” McKinsey Quarterly, April. Author: Perez, Philip A; Editor: Steele, Samantha E
## Culture Eats Strategy for Lunch
_Parr. S. Culture Eats Strategy for Lunch, Fast Company. Author: Fantigrossi, Steven Marc; Editor: Steele, Samantha E_

Culture is defined as “a balanced blend of human psychology, attitudes, actions, and beliefs that combined create either pleasure or pain, serious momentum or miserable stagnation.” An organization's brand is a function of culture and serves as the most important factor toward helping an organization stand out from the pack. As such, the long term success of an organization depends not only on making good products and a profit, but also on thriving culture. Good culture incorporates focus, motivation, connection, cohesion, and spirit in order to create a healthy workplace environment for employees to succeed. Employees and leadership alike must understand the vision of the organization and take steps to move forward towards its goals. Workers should be happy to be at work, be loyal to the organization, and put the team before themselves by working with others to increase efficiency and effectiveness.

However, a successful company culture cannot be created overnight, it has to be embodied by everyone in an organization from the leader down to the bottom. It must be indoctrinated into employees from day one, just as a U.S. Marine learns the values of “the few, the proud” during the first day of training. In order to develop and nurture good culture, dynamic and engaged leadership must effectively communicate its organization’s values both internally and outside the organization and show that they genuinely care; “authenticity and values always win.” Employees must be given clear roles and held accountable when they violate the values that they should be upholding. Conversely, it is also necessary that organizations stop, celebrate success and take time to learn from failures.

Organizational culture is a driving force in retaining both employees and customers. That being said, having a common culture should not be confused with a lack of diversity. Core values drive culture and it is essential that everyone in an organization is moving in the same direction. That's not to say everyone should behave identically; within a company culture, people of many different backgrounds, experience, and skills must be included to make it successful. By hiring employees who believe in the core values of an organization and that fill a unique role, a company will be well-suited to be prosper in the long term.


## Building a Team Culture Guided by Happiness
_Sutherland, J. & Sutherland, J.J. (2014). Scrum: The Art of Doing Twice the Work in Half the Time. Crown Business, Happiness: pp 145-170. Author: Dorries, Joshua Wayne; Editor: Orlan, Samuel Lawrence_

Sutherland argues that happy people do better, from making more money to living longer. He points to a 2005 paper which analyzed over 225 papers with 275,000 participants that found: “happiness leads to success in nearly every domain of our lives, including marriage, health, friendship, community involvement, creativity, and, in particular, our jobs, careers, and businesses.” Essentially the argument is that people aren’t happy because they're successful, they’re successful because they're happy.

If success is a result of happiness, and personal success leads to organizational success, it makes sense to incorporate happiness into an all-inclusive workflow system. Thus Sutherland wants to first quantify happiness, and then equate it with performance. The question becomes: how do we quantify happiness? But before quantifying, he argues we must first understand the underlying goal of implementing a new workflow. For Sutherland the goal of scrum is kaizen, the Japanese word for “improvement.” Once one evaluates what can be improved, happiness will flow, as individuals gain happiness through a sense of worth.

From the idea of kaizen, the “Happiness Metric,” was born. For Sutherland, at the end of each Sprint, each person on a team answers four questions which effectively identify what the kaizen should be, and the kaizen which will make people the happiest. There four questions are:

1. On a scale from 1 to 5, how do you feel about your role in the company?
2. On the same scale, how do you feel about the company as a whole?
3. Why do you feel that way?
4. What one thing would make you happier in the next Sprint?

Once all of the team members have answered these questions, the team decides on one top improvement and determines acceptance rates to achieve that improvement during the next sprint.

Perhaps the most important quality for successful improvement and happiness is organizational culture, specifically a culture of transparency, teamwork and collaboration. Sutherland states that scrum “provides a structure for the whole organization to head toward a common goal. Its pillars are transparency, teamwork, and collaboration.” Scrum makes people happy by providing direct feedback and a platform for collaboration.

An essential aspect of collaboration is understanding the type of people present within a workplace. They tend to fall into one of four categories: the hedonist, the nihilist, the rat-race-addicted manager and the person who is enjoying the work they’re doing today while keeping an eye towards the future. The hedonist is someone who is doing what makes them happy right now, with no concern for tomorrow. The nihilist believes that if work is not enjoyable today, it will forever be unenjoyable. The rat-race-addicted manager believes that if they put in 80-hour work weeks, and force others to do the same, then they’ll get promoted, which will lead to happiness, only to find out that once they get the promotion, there is a new set of obstacles that require more time than before. Scrum tries to identify the fourth type of person, as they rarely experience burnout or disillusionment. By working together and promoting a single mindset, the other personality types are able to resolve their underlying problems, and build a successful organization. People are incentivized to change themselves, team members become better people, and causes of unhappiness are systematically removed.


##Can a Teacher Be Too Dedicated? The Atlantic.
Author: Boucher, Timothy M.; Editor: Dorries, Joshua Wayne_
Summarized by Tim Boucher

This article describes a problem plaguing "no-excuse" charter schools: teacher fatigue. The article suggests that the problem arises , in part, because the no-excuse schools pride themselves on high expectations for their students and teachers and to achieve lofty goals require time intensive preparation and execution of lesson plans. The author states that in these schools "[e]very moment is planned [and] ... [n]o moment is wasted..." Every teacher and administrator at the school is on the same page about what their presence at the school is for: to get better educational results for historically underserved and underperforming students. To achieve this end, the schools have historically placed high demands on teachers, either requiring or necessitating that the teachers put in longer hours than the national average. To be clear, though, the vast majority of these no excuse charter schools are extremely successful at achieving their goals.

Due to the high expectations and lengthy hours, though, some of these no-excuse charter schools have seen significant annual turnover among their teachers with some teachers leaving after just 2 years and citing burnout and fatigue as reasons for their departure. To remedy this trend some of the schools have started to implement policies aimed at alleviating teacher fatigue. These policies include providing childcare to teacher-parents who have to work late, providing coverage the next morning by other teachers for people who had to stay late for student-concerts, and reducing the length of the school-day. One school reported that after implementing policies such as these, that they were able to keep 91% of their teachers.

One problem still exists though, and that is that even when administrators try to alleviate stress, "urging [teachers] to take a break," the teachers fail to do so. They feel they still have a lot of work to do in order to render the services they were hired to achieve. So the teachers continue to work and put themselves in a position where they may more likely to burn out. The author of this article did not suggest any systematic way to overcome this issue. Thus the problem remains of how these successful charter schools can keep their successful teachers.






## Why Zappos Pays Employees to Quit
_Taylor, B. “Why Zappos Pays Employees to Quit, and You Should Too.” Harvard Business Review, May 19, 2008. Author: Rosa, Adelaide Lee_

Paying new employees to quit is an extremely innovative strategy piloted by CEO Tony Hsieh of Zappos. Such a strategy would not normally be thought of as organizationally advantageous, as the objective of the hiring process is to acquire new employees not fire them. However, Hsieh seeks to foster a very specific organizational culture. Zappos is an extremely fast-paced environment that demands constant dedication from its employees. Those unable to sustain the high level of effort or those not completely dedicated to their employment are not the productive employees that Hsieh searches for. The hiring process is thus adapted to winnow the field, sorting the less dedicated employees from the desirable.

The method is quite simple, though the separation bonus has increased from “$100, … to $500, and may well go higher than $1000.” New employees are hired, then placed in a fully compensated “four-week training period that immerses them in the company's strategy, culture, and obsession with customers.” After one week of this training cycle, the new employee is offered a separation bonus. Hsieh's logic is that it is less costly to separate from employees before fully investing in them. A week of training gives the new employee a clear understanding of Zappos' organizational culture, and allows them to understand if they will be a good fit in that organization.

This hiring method results in a 1600 employee company filled with invested, motivated people. It is these people that connect emotionally with customers, building loyalty and brand. Hsieh strengthens the organizational culture, and more importantly the buyin of the employee as stakeholder, by sorting out those who are a bad fit at the very beginning of their employment.






## I'm Sorry to All the Mothers I Have Worked With

_Female company president: "I'm sorry to all the mothers I worked with." Fortune, March 3, 2015. Author: Sarawat, Fariha; Editor: Dorries, Joshua Wayne_

PowerToFly president Katherin Zaleski shares a personal story of how she, a ‘hardliner’ in her 20s who judged women with kids as unequal contributors to the workforce, came to realize how productive mothers can be after experiencing motherhood herself. She writes about how she, like many other women, have helped perpetuate a work culture that judges working mothers as less ‘committed’ or ‘productive’.

Zaleski weighs in on the male-dominated corporate culture of valuing time-spent-at-work over actual productivity that undermines the discipline, flexibility, time and effort that mothers bring to work. She shares a number of anecdotes, including one about meeting Cathy Sharick, the then managing editor of Time.com and also a mother of three children, and decided not to work with her for being ‘too much of a mother’; Zaleski ends up hiring Sharick later in life. She also mentions how books like Sandberg’s ‘Lean In’ basically perpetuate a sexist corporate culture by telling women to play the old rules to succeed.

In the piece she talks about how motherhood enabled her to see her past choices and judgments in a different light and taught her to appreciate the role of working mothers in the workforce. This lesson is what inspired her to co-found PowerToFly, a start-up that pairs women developers with jobs they can do from home. By working with more working mothers, Zaleski came to value how productivity overall could be increased by giving working mothers more flexibility and a chance to work remotely—especially given that 80% of US women will become mothers by the age 44.

Zaleski ends her piece on the note that working mothers are better at multi-tasking and keeping to deadlines as they have to balance responsibilities at work with those at home.



## Why Do So Many Incompetent Men Become Leaders?

_Chamorro-Premuzic, T. “Why Do So Many Incompetent Men Become Leaders?” Harvard Business Review, August 22, 2013. Author: Gobbo, Andre Francis; Editor: Hamlin, Madeleine Rose_

This article aims to explore the reasons why there are so few women in management positions. The three most popular explanations for why women are under-represented among managers are that: (1) they are not capable, (2) they are not interested, and (3) they are both interested and capable but unable to break the glass ceiling. However, the author finds that these three explanations fail to account for the largest reason why women are underrepresented in management roles: namely, a failure to distinguish between confidence and competence.

The author then goes on to explain that because we conflate confidence and competence, we tend to view men as better suited for management positions because they display their confidence (sometimes even hubris) more often than women. The arrogance and overconfidence more often found in men means they are often perceived as better leaders, when in fact these traits are inversely related to leadership capability.

In most sectors the best leaders are humble, and women exhibit humility more often than men. This is not only in the United States; the author cites a study done involving 23,000 participants in 26 different cultures that found that women tend to outperform men in emotional intelligence: in general, they are genmore sensitive, considerate, and humble than men. The author cites another study showing that normative data on thousands of managers from across different industries and sectors points to men being consistently more arrogant, manipulative, and risk-prone than women.

The author makes an important distinction between _getting_ a management job and _doing the job well_. This difference is why many incompetent men find management roles and proceed to not do well. Because of this, many leaders tend to fail in their roles. The author notes that good leadership has always been the exception, not the norm.

Because there is an ongoing push to get women into leadership roles, the author notes that women shouldn't be trying to adopt these faulty characteristics of men in order to become more appealing for management positions. Rather, women should be emphasizing the characteristics that make them better leaders: their ability to elicit respect and pride from their followers, effectively communicate their vision, empower and mentor subordinates, and a employ a more flexible and creative approach to problem-solving.

While the glass ceiling persists, the author concludes that the more pertinent issues are: (1) the lack of career obstacles for incompetent men, and (2) that we continue to confuse confidence for competence, thus equating good leadership with psychological features that make the average man more inept than the average woman. Taken together, these issues perpetuate a system in which we reward men for qualities that ultimately make them bad leaders, and punish women for the traits that make them good ones.







## The Hidden Dimension of Corporate Culture

_Grant, A. (2013). “Givers take all: The hidden dimension of corporate culture.” McKinsey Quarterly, April. Author: Perez, Philip A; Editor: Steele, Samantha E_

Adam Grant discusses corporate culture in his article "Givers take all: The hidden dimension of corporate culture." In his dialog, he suggests that “giver cultures” render many benefits such as greater productivity and organizational effectiveness in comparison to “taker cultures.”

### Types of Corporate Cultures
Grant identifies three types of cultures in organizations that he calls: giver cultures, taker cultures, and matcher cultures. A giver culture is one wherein employees help others, share knowledge, offer mentoring and make connections without expecting anything in return. In contrast, a taker culture is characterized with the norm being employees taking and not contributing anything in return. In these cultures, employees only help if their expected return outweighs personal costs. Different still are matcher cultures, which fall in the middle of the two aforementioned culture types, where employees trade favors and maintain an equal balance of give and take.

### Research Findings
Grant cites research on intelligence work finding that the “single strongest predictor of group effectiveness was the amount of help that [intelligence] analysts gave to each other.” He also cites researching suggesting that the amount of help employees give to each other in diverse contexts facilitates organizational effectiveness by “enabling employees to solve and get work done faster . . . enhancing team cohesion and coordination . . . ensuring that expertise is transferred from experienced to new employees . . . reducing variability in performance when some members are overloaded or distracted . . . [and] establishing an environment in which customers and suppliers feel that their needs are the organization’s top priority.” These examples suggest the importance toward creating a giver culture within an organization as opposed to a taker culture.

### Barriers to Giver Culture
Two primary barriers exist to creating a giver culture in an organization. The first is our natural human tendency to avoid asking for help—an employee may fear burdening colleagues, not know who to ask for help, or may fear appearing vulnerable or incompetent. The second is existing organizational structures that look more like winner-take-all markets, where leaders reward individual performance. The disadvantages of such cultures are that employees compete for resources and therefore will not provide help unless they receive something in return. Additionally, employees who give may see their productivity diminish as takers use their time and steal their ideas. Grant identifies three practices that create a giver culture in an organization: (1) Facilitating Help-Seeking, (2) Recognizing and Rewarding Givers, and (3) Screening Out Takers.

### Facilitating Help-Seeking
Grant states that, “Giver culture depends on employees making requests; otherwise, it’s difficult to figure out who needs help and what to give.” The problem is overcoming the first barrier of people’s tendency to avoid asking for help.

The author suggests an exercise called the “reciprocity ring,” where employees in an organization come together in small groups. Within these groups, employees ask personal requests, and then as people open up and feel comfortable they take turns asking for professional requests. The benefit of the reciprocity ring exercise can be both monetary and cultural. For example, one pharmaceutical executive saved $50,000 when another participant in the exercise had extra capacity at his lab and offered to synthesize an alkaloid free of charge.

One other example of a program that facilitated a giving culture was with a call-center provider that was experiencing a 97 percent turnover rate. The CEO’s team created a program called “Dream On,” which was modeled after the Make-A-Wish Foundation and invites employees to request one thing they want most in their personal life. A secret committee then began to make some of these requests happen. The program “has helped promote a culture where . . . ‘employees look to do things for each other and are literally paying it forward.’” Retention at the call-center increased to 67 percent from 3 percent and had its most profitable quarters after the program was implemented.

One disadvantage of a giver culture is that employees may end up so consumed with trying to fulfill others’ requests for help that they do not have the time or the energy to fulfill their own responsibilities. Grant suggests that this can be mitigated by setting clear time boundaries around helping others, allowing for the organization to “leverage the benefits of giver cultures while minimizing the costs.”

The author also notes that a designating an assigned helping role to one employee may provide additional benefits, as employees may be more comfortable asking that person for help than their colleagues.

### Recognizing and Rewarding Givers
A giver culture depends on a “comprehensive set of practices for recognizing and rewarding helping behavior in organizations.” As such, organizations should move away from performance evaluations based solely on results, which create win/loss mindsets, and towards evaluations that include an employees’ impact on other individuals and groups.

Caution must be employed with monetary incentives in a giver culture, they must not be too large. Employees may begin to game the system, seeking the rewards and undermining the motivation to give without expecting to receive in return, generating a taker culture.

### Screening Out Takers
An organization seeking to create a giver culture should have policies against hiring takers. Grant identifies three ways to identify takers.

First, takers “tend to claim personal credit for successes,” and tend to use the pronouns “I” and “me” instead of “us” and “we.” Look for applicants that “describe accomplishments in collective rather than personal terms.”

Second, takers “tend to follow a pattern of ‘kissing up, kicking down.’” These people are charismatic and appealing towards their bosses or other people in power, but negative towards subordinates and peers. Look for recommendations and references from a prospective employee’s colleagues rather than his bosses.

Third, takers “sometime engage in antagonistic behavior at the expense of others.” These people talk negatively about colleagues up for promotion or take advantage of customers to try and get ahead. Grant points to a questionnaire called the “conditional reasoning test of aggression” that research suggests accurately identifies whether a person is likely to engage in theft, plagiarism, forgery and other illegal activities, and likely to be absent or quit work.

### Live It
The article ends with advice that it is not enough for leaders to encourage a giver culture, but they must live it (“give it”). Grant provides an anecdote of a struggling film company that hired a new CEO. This CEO asked two leaders of one of the divisions of the company to give him names of people to layoff to save money on the budget. The division leaders resisted, and the CEO gave them an ultimatum. The next day the two men came in with a list containing two names—their own.

“No layoffs were conducted, and a few months later Steve Jobs bought the division from Lucas film and started Pixar with Ed Catmull and Alvy Ray Smith. Employees were grateful that ‘managers would put their own jobs on the line for the good of their teams,’ marvels Stanford’s Robert Sutton, noting that even a quarter century later, this ‘still drives and inspires people at Pixar.’”


## Can a Teacher Be Too Dedicated?
_Can a Teacher Be Too Dedicated? The Atlantic. Author: Boucher, Timothy M.; Editor: Dorries, Joshua Wayne_
Summarized by Tim Boucher

This article describes a problem plaguing "no-excuse" charter schools: teacher fatigue. The article suggests that the problem arises , in part, because the no-excuse schools pride themselves on high expectations for their students and teachers and to achieve lofty goals require time intensive preparation and execution of lesson plans. The author states that in these schools "[e]very moment is planned [and] ... [n]o moment is wasted..." Every teacher and administrator at the school is on the same page about what their presence at the school is for: to get better educational results for historically underserved and underperforming students. To achieve this end, the schools have historically placed high demands on teachers, either requiring or necessitating that the teachers put in longer hours than the national average. To be clear, though, the vast majority of these no excuse charter schools are extremely successful at achieving their goals.

Due to the high expectations and lengthy hours, though, some of these no-excuse charter schools have seen significant annual turnover among their teachers with some teachers leaving after just 2 years and citing burnout and fatigue as reasons for their departure. To remedy this trend some of the schools have started to implement policies aimed at alleviating teacher fatigue. These policies include providing childcare to teacher-parents who have to work late, providing coverage the next morning by other teachers for people who had to stay late for student-concerts, and reducing the length of the school-day. One school reported that after implementing policies such as these, that they were able to keep 91% of their teachers.

One problem still exists though, and that is that even when administrators try to alleviate stress, "urging [teachers] to take a break," the teachers fail to do so. They feel they still have a lot of work to do in order to render the services they were hired to achieve. So the teachers continue to work and put themselves in a position where they may more likely to burn out. The author of this article did not suggest any systematic way to overcome this issue. Thus the problem remains of how these successful charter schools can keep their successful teachers.





## The Untold Story of Larry Page’s Incredible Comeback

_Carlson, N. “The Untold Story of Larry Page’s Incredible Comeback.” Business Insider, April 24, 2014. Author: Swartwood, Hilary Ann; Editor: Dieselman, Andrew_

Larry Page is the child of computer science professors at Michigan State University. Page drew inspiration from Nikola Tesla; a Serbian immigrant who was a brilliant inventor and a lousy businessman. Tesla taught Page that big ideas aren’t enough- they need to be commercialized. To be successful, Page realized you also need a successful company while being wary of the Thomas Edison’s of the world.

In the beginning, Google gave Page the best of both worlds: he was building a product that millions of people use and he created an interpersonal culture intensely focused on ideas and outcomes rather than emotional niceties. Page wasn’t a social child, but in college and graduate school he connected to people over external abstractions- visions of the future, cool technologies. Page originally bonded with Sergey Brin, his co-founder, over a fierce day of argument and that’s how Page styled his management of Google. He encouraged his senior executives to fight the way he and Brin did. From this Page developed his rules for management:
- Don’t delegate: do everything you can yourself to make things go faster.
- Don’t get in the way if you are not adding value. Let the people actually doing the work talk to each other while you go do something else.
- Don’t be a bureaucrat.
- Ideas are more important than age. Just because someone is junior doesn’t mean they don’t deserve respect and cooperation.

When Google incorporated, Page was lucky to have Brin as a partner. Unlike Page, Brin was outgoing and energetic. He was a great at strategy, branding and developing relationships between Google and other companies. However, Google's insane growth prompted venture capitalists to invest $25 million with the stipulation that Page step down as CEO and hire “adult supervision.” Page took the deal, but later tried to change the terms so that Brin and him could continue running the company. This was mostly because Page was a paranoid control freak and didn’t want to relinquish his hold to someone else. However, John Doerr set up a meeting with other CEO’s so Page could see that Google did indeed need one. Page reluctantly hired CEO of Novell, Eric Schmidt.

Schmidt kept things even keeled, hired a team of executives, built a sales force, and took Google public. Even though he became more distant and remote, Page never stopped reviewing, approving, and contributing to products Google shipped. He remained a deciding vote in big strategic initiatives, like Google’s bid for wireless spectrum and acquisition of YouTube, but he was much less involved in the day-to-day operations. Over time Page came to appreciate Schmidt’s strengths. Schmidt had played a huge role in building the type of company that could capitalize financially on Page’s vision. The more comfortable Page became with Schmidt the farther he retreated.

In 2005, Page decided he wanted to put handheld computers with access to Google in everyone’s pocket. He bought a start up called Android and set it up as a separate entity only marginally tied to Google. Page gave Rubin the autonomy to run it without interference from the parent company. Eventually Android become the world’s most popular operating system. This gave Page enormous confidence in his executive abilities and he realized that earlier in his career he had been bad at delegating and trusting people.

In this time frame, Google had also developed big company problems- it was too bureaucratic and bloated, there were too many people working on projects and very little of those projects got public exposure, and it was not the cool, new super power any more, Facebook was. Further, among the senior executives, Schmidt had never entirely resolved the argumentative decision-making from the earlier days of Google. This had lead to the formation of bitter rivals who nearly refused to work with one another. Plus, Google had dialed back its ambitions, which didn’t make sense to Page. Google’s search-advertising business, incredible profit margins, and sustained growth was the kind of cash-generating machine needed to fund crazy schemes- exactly the type Page was always thinking up. After Page’s frustrations were voiced in an executive meeting Schmidt stepped down as CEO and Page took the reigns once again.

Page’s first order of business was reorganizing the company’s senior management by taking a handful of the companies most important product divisions and putting a CEO-like manager at the top of each. He decided Google would have a zero tolerance for fighting and admitted that in Google’s younger days this argumentative atmosphere was necessary because that was when Google had linear problems. However, now Google was faced with, what Page called, n-squared problems. To solve these, people needed to learn how to work together. From there, Google expanded it's interests. For example, Google began to install fiber-optic internet cables that are 100 times faster than broad band.

Google’s real danger for the long-term future is that it will become so huge it will capture nearly all the money any businesses on the planet spends on marketing. This means that Page spends a lot of time brainstorming and experimenting. For example engineers are working on creating a self driving car, and researching artificial intelligence. Google also hasn’t stopped acquiring other companies that fit its interests, like Titan Aerospace which produces drones. However the diversity of ideas has left investors worried that Google won’t be able to keep its focus. Page’s answer is: (1) Its easier for google to work on moonshots because there is less competition and the best people will work for google because they like ambitious projects and (2) all these schemes are part of providing the world better search. For Page “the perfect search engine would understand whatever your need is. It would understand everything in the world deeply [and] give you back kind of exactly what you need.”


## Inside Amazon: Competition as Culture
_Kantor, J. & Streitfeld, D. “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace.” The New York Times, August 15, 2015. Author: Swartwood, Hilary Ann; Editor: Farrior, Cheri Nicole_

Amazon employees are told to forget the habits they learned at previous jobs and follow the leadership principles- fourteen rules inscribed on laminated cards, eventually being quizzed on them. They are encouraged to tear apart one another’s ideas in meetings, keep long hours, and work towards the impossibly high standards the company sets for its employees. This is all part of the company’s experiment to test how far they can push their workers; redrawing the lines of what is considered acceptable. They do this by rejecting many of the popular management ideals that most corporations at least pay lip service to.

Amazon’s founder, Jeff Bezos, uses data-driven management as the underlining foundation for the company. From the moment Bezos founded Amazon he was determined to avoid the forces he believed weakened businesses over time- bureaucracy, wasteful spending, and lack of accuracy. As Amazon grew into a technological and retail giant, Bezos codified his ideas about the workplace into the leadership principles, or articles of faith that describe how Amazonians should act. Some of them are: No.5 hire and develop the best, No.2 exhibit ownership of every element of their businesses, No.8 bias for action, and No.7 think big.

Unlike other tech giants that motivate employees with gyms, meals, and benefits, Amazon does not make catering to employees a priority. Instead workers are motivated to embrace frugality and be relentlessly driven to please customers. Furthermore, Amazonians are encouraged to critique, and rip into each others ideas in order to come to the right decision. The genius of Amazon then is its ability to drive employees to drive themselves. Those employees who are good enough become an ‘Amabot” (or becoming one with the system). In warehouses employees are monitored by electronic systems to ensure they are packing enough boxes every hour, and in offices Amazon uses a self-reinforcing set of psychological, management and data tools to spur its employees forwards. Amazon has a perpetual flow of real-time, ultra-detailed metrics that allows it to measure pretty much everything its customers and employees do.

Many employees have said they were motivated to work at Amazon because they were driven by innovation, being able to think big, and be limitless. Other employees have chosen to work at Amazon to jump start their careers, eventually becoming addicted to Amazon ways of working.

Despite its highly competitive and data driven management, the rigorousness of Amazon is not for everyone. Most employees work 80 hours per week, and all employees are meant to put work first before everything else which has lead to unfairness. There have been cases of women taking maternity leave and then being accused of falling too far behind so they are let go. This is a reoccurring problem with employees who have undergone chemotherapy for cancer, or have lost loved ones and taken time off. The internal phone directory allows coelleagues to send secret feed back to other colleageus bosses, which ultimately tears down other employeees. Employees use the Anytime feedback tool to give co-workers feedback, but this has lead to scheming to ensure a certain employee receives bad reviews, and if you are unable to defend yourself against these criticisms you are often let go. This is one of the reasons Amazon has a high turnover rate. When employees are not able to give it everything, all the time, Amazon see’s it as a weakness. Team members are ranked and those at the bottom get let go from the company every year. However, this hasn’t stopped Amazon from growing, with the potential to become the first trillion- dollar retail company in the world. Amazon is driven by data, so the only way it will change is if the data says it must; that it makes the most economic sense to do so.



chapter11
# Section 11: Organizational Change

_All organizations must change, either because of a shift in mission or threats from the external environment. However, organizations must also put in place standard operating procedures in order to align action and resources towards specific organizational goals. Similarly, networks form organically in organizations that actively participate in problem-solving. In order to change, these processes and structures must be disrupted. Delicate political balances can be upset. As a result, inertia is very common in organizations. What are factors that lead to failed change processes in some organizations, and what can be learned from organizations that successfully implement change efforts?_


## Why Transformation Efforts Fail

_Kotter, J.P. (2007). “Leading Change: Why Transformation Efforts Fail.” Harvard Business Review, January: 96-103. Author: Tansits, Colin E; Editor: Perez, Philip A_

In John Kotter’s Leading Change: Why Transformations Efforts Fail, he explains that many managers and leaders in organizations do not understand that transformation is a process, not an event. Transformation occurs in stages that build on one another, and it takes a long time—years. Kotter explains that managers, who feel pressure to speed up the process, end up skipping stages. He warns that short cuts do not work when trying to effectuate a transformation.

In the article, Kotter focuses on eight errors common to several attempted corporate transformations: (1) Not Establishing a Great Enough Sense of Urgency, (2) Not Creating a Powerful Enough Guiding Coalition, (3) Lack of a Vision, (4) Undercommunicating the Vision by a Factor of Ten, (5) Not Removing Obstacles to the New Vision, (6) Not Systematically Planning for, and Creating, Short-Term Wins, (7) Declaring Victory Too Soon, and (8) Not Anchoring Changes in the Corporation’s Culture. Coincidentally, Kotter explains that positively addressing these errors creates the eight steps to transforming an organization.

Not Establishing a Great Enough Sense of Urgency is a common mistake that befalls many corporations. Kotter explains that a large percent must believe that a change to the usual course of business must occur. He says that, “From what I have seen, the answer is when about 75% of a company’s management is honestly convinced that business as usual is totally unacceptable.”

Not Creating a Powerful Enough Guiding Coalition is an error borne of only having a minimal amount of leadership on board with the transformation. Kotter explains that some minimum mass of leadership must join the transformation coalition for it to be successful.

Having a Lack of a Vision is a fairly straightforward error. Kotter explains that the guiding coalition must have a detailed picture of the future that is sought by the transformation. The vision should be more than a five-year plan—it should help clarify the direction in which the company needs to move. This vision should also include a strategy to achieve it.

Communication is essential to proper organizational management, and Undercommunicating the Vision by a Factor of Ten is all too common. Kotter explains that communications on all levels of the organization is necessary, and further, he explains that employees must be understanding and open to the communicated messages.

Despite creating a vision, Not Removing Obstacles to the New Vision can stop the transformation dead in its tracks. Kotter explains that the big obstacles must be confronted and removed. Obstacles might include decisions between moving the organization forward per its new vision and serving one's self interest. For example, budget cuts may be necessary for an organization, and if a manager cannot or will not cut his own salary, then others will question his commitment to the vision and the vision will be undermined. The manager should probably be let go.

Because the transformation process is so long and drawn out, small wins are important. By Not Systematically Planning for, and Creating, Short-Term Wins, there will be no goals for the organization to meet and celebrate. Kotter explains that employees need to see evidence of success in 12 to 24 months of the start. Further, Kotter makes clear that there is a difference between hoping for short term wins and creating them.

Tied directly to this is Declaring Victory Too Soon. Managers who do this can sink morale, and give little incentive for employees to follow them due to the lowered level of credibility. Declaring victory too soon kills the progress made on the organizational culture, progress, and other habits an organization is trying to create. Kotter states it takes 5-10 years for such progress to really "sink deeply into a company's culture," and declaring victory too soon may destroy any progress made. Kotter finds that "resistors" point to the declared victory as an indication that the "war has been won," and the old traditional habits that were toxic creep back in to the organization.

Lastly, Kotter explains that the transformation becomes the new norm when it becomes “the way we do things around here.” Not Anchoring Changes in the Corporation’s Culture is a harmful error that may lead to failure. For the transformation to fully succeed, it must become a part of the new norm.

## The Power of Crisis
_Duhigg, C. (2012). The power of habit: Why we do what we do in life and business (Vol. 34, No. 10). Random House. CH 6: The Power of Crisis: How Leaders Create Habits through Accident and Design. Author: Damon-Cronmiller, Christopher; Editor: Boucher, Timothy M._

Chapter 6 of Charles Duhigg's "The Power of Habbit: Why We do What we do in Life and Business," focuses on the major themes of "An Evolutionary Theory of Economic Change," by Yale professors Richard Nelson and Sidney Winter. Duhigg notes that this particular book is much too dense for the average person, and so takes the liberty of explaining its major themes of institutional habbits in layperson's terms. Institutional habits, according to Duhigg, are a response to inherent human nature and a fundamental characteristic of human organizations. Specifically, they are "battlefields in a civil war" with people constantly trying to vie for power and control. Most companies, nontheless, manage to survive because of artificially constructed "institutional" or "organizational" habits that prevent office politics from bogging them down (or even outright destroying them). Indeed, Duhigg argues that institutional habits actually give workers freedom to "experiment with new ideas without having to ask for permission" every time they try something new. He further finds, relying on Nelson and Winter, that institutional habits actually serve as a "rought organizational justice" in which internal strife "'follows [a] largely predictable path[]'" that is kept within certain confines so that work continues to get done. Furthermore, once institutional habits are formed, the only way to modify them is through crisis - that is, if an organization's life is hanging by a thread. To futher illustrate this concept, Duhigg draws upon two very different real-life cases that nontheless have a very similar theme.

The first case is that of the Rhode Island Hospital, which at the time was the only Level 1 trauma center in southeastern New England, and Brown University's primary teaching hospital. Despite its prestige, however, it was also a high-stress organization with an incredibly toxic work environment. In fact, nurses even set up a "color-code" system among themselves to brief each other of the doctors' personalities: from blue (nice and easy to work with) to black (can potentially put a nurse's job in jepoardy if they offer so much as one word of criticism). They also had a system to double-check orders from particularly "error-prone physicians." Technically, these habits worked for a time, but ultimately were unsustainable because they were constantly being developed on the fly. Ultimately the nurses' system began to fall apart when one day, a man in his late 80's arrived delirious and with severe bleeding from within his brain (sustained by a fall a few days prior). Due to a mix-up with the consent forms, the doctor in charge accidentally began to operate on the wrong side of his head; and beforehand when a nurse (not acknowledging at that moment this doctor was "code black") voiced concern about the consent forms, the doctor verbally attacked him and essentially threatened to kick him out of the room. While the doctor's team eventually drained the blood and stopped the bleeding, the man unfortunately never woke up from surgery and died a couple of weeks later. Some nurses claimed that this kidn of accident was inevitable because the hospital's institutional habits were abysmal.

Similar errors happened within the next couple of months, and the hospital ended up loosing roughy $500,000 in one year from fines alone. Before long the hospital became the sight of a media circus, forcing (among other things) an administrative change in staff and all elective surgery units to be shut down for an entire day while staff went through emergency team-building activities. As of Duhigg's book, safeguards are in place to make sure that everyone working in a trauma room has their voices heard, and the hospital has largely shaken off its reputation as a toxic place to work; and error rates went down significantly.

The second case is of a very different organization - King's Cross station of the London Underground (a.k.a., the city's metro system). Unlike the Rhode Island Hospital, the London Underground had a rigid, firmly planted system in place to make sure the organization ran smoothly and that no one stepped on each other's toes - drawn upon previous, legitimate altercations among staff and department heads. Unfortunately, the London Underground's institutional habbits were so deeply engrained it became very hard for staff to take on additonal duties, to grow professionally, and to take immediate action if they saw something was going wrong. This system of institutional habit fell apart during the King's Cross fire of 1987, which began when ticket booth worker Philip Brickell saw a wad of burning tissue at the foot of one of the station's wooden escalators and put out the fire. However, due to institutional habits, he was dissuaded from notifying anyone of (or doing anything else about) the incident, since an entierly different department handled fire saftey - and he knew better than to potentially get into trouble by overstepping his bounds. Several minutes later, a passenger hit the escalator's emergency stop button upon seeing smoke and "a glow from underneath the escalator's stairs." However, the station's chief saftey inspector Christopher Hayes did not initially call the fire department (a police officer on duty ultimately did) because he did not see any smoke at first and risked getting into trouble if he called the fire department before it was "absolutely necessary". When Hayes eventually entered the machine room to investigate, he immediately realized the fire was far larger and stronger than anyone could have imagined; however he, nor anyone else working in the station, could activate the sprinklers because the only people who knew how worked in an entierly different department (and even if they did the fire was already too powerful by the time Hayes officially discovered it). Additionally, King's Cross Station's Director of Operations was previously worried about the flamibility of the station's ceiling paint, but did not mention anything for fear of stepping on the toes of maintanance department officials.

The first firefighter arrived a half hour after Brickell first saw the burning tissue, but by then it was too late - a few minutes later a gust of wind from an arriving train triggered a flash fire throughout the station that killed 31 people and injured at least a dozen others. While such disasters are not entierly unheard of in metro stations, what set King's Cross station apart from other cases was what happened after the fire. When government special investigator Desmond Fennell probed into the specifics of what happened, he realized that the institutional habits that allowed the fire to happen had to be changed - and could only be changed through a crisis situation. A media circus developed from the 1987 King's Cross fire's aftermath, similar to that of the Rhode Island hospital - yet this one was deliberately orchestrated on Fennell's part through months of hearings, interviews, and a sharply critical report of his own writing. As a result, the administration of King's Cross station changed hands, and an entierly new institutional habit was formed - that of placing passenger saftey above all else.

## How a Charter School Revamped Its Culture
_How a Charter School Giant Revamped Its Culture to Put a Stop to Burnout. Author: Orlan, Samuel Lawrence; Editor: Lancto, Katelyn N_

This article is about how the KIPP charter schools tackled the difficult task of decreasing prevalent principal burn out that was leading to harmful turn over of talented teachers and principals at their schools.

KIPP is one of the largest charter school networks in the U.S. with over 180 schools in Washington, D.C. and 20 states. By 2010, KIPP had grown from one classroom in Houston to almost 100 schools. KIPP quickly realized that they had a problem; their principals were buring out after just one or two years. Approximately half of the KIPP principals who founded schools in 2006 were not in those same roles four years later. Research showed that principal turnover had a detrimental effect on student learning. In 2011, the National Bureau of Economic Research published a report stating that “the departure of a principal is associated with higher teacher turnover rates and lower student achievement gains.” It also said that “faltering organizations with high levels of turnover often have difficulty attracting experienced successors, who tend to be more effective. As a result, they become trapped in a ‘vicious circle’ of high managerial turnover and declining performance.” Dave Levin, a cofounder of KIPP charter schools, wanted to shift the way that people think about teaching, to viewing it as something you “could do for a career” and not just “thinking about it as something you do for a limited time, almost as a tour of duty.”

The broader education reform movement was also trying to dispel the perception that it was recruiting young individuals into the classroom that were only using the teaching experience as a stepping stone to other professions. Some charter schools have embraced this “revolving door of talent” system, accepting high turnover with teachers who are willing to work 80 hour weeks for a few years, while others have sought to retain educators deep into their thirties. These schools have tried various incentives including pay raises and “doctor days” which are semi-annual personal days dedicated to health and well-being. These changes were not enough. KIPP had a culture where the school leaders were seen as a “mythic figure.” Working long hours was a badge of honor, and that culture had to change. They were not sleeping; they were not exercising; they were not living in ways that were sustainable. KIPP hired a consultancy company called VitalSmarts to help change a culture where principals, similar to relay runners in a race, would “sprint for two years, and then pass the baton to someone else.”

The solution, VitalSmarts determined, was to “get help, so you can focus on what’s important.” A new approach, based on “vital behaviors,” was developed in an effort to change habits. The biggest task was changing the view of the principal and their primary responsibilities. Steven Epstein, executive director at KIPP school in Austin said "there’s nothing unique about your skill set that can do something better around a custodial issue or a food service issue, but there is something unique about coaching and professional development. The principal’s main responsibility is to develop the other people in their building." In 2011, KIPP introduced this new model and way of thinking. Of the founding principals who started that year, 82% were still in those positions four years later.

This new framework had many practical changes for principals. They shared “personal and professional goals with their managers, mentors, and staff [and] also [spoke] publicly about objectives like attending yoga twice a week, having dinner with friends once a week, and cooking healthy weeknight dinners for growing families.” The intent here was to link personal goals to the long-term success of the organization, which also helped eliminate some of the weirdness of talking about it. One principle lost over 60 pounds. The last “vital behavior” was “Renew to get stronger.” Levin chose this language because he felt “it removes all of the guilt.” He feels that the phrase “work-life balance” is too prosaic and can set the wrong tone. He reasons; "From an organizational point of view I tend not to think about issues of balance, I tend to think about issues of fulfillment. Everyone’s balance is going to be different, and there are going to be really long days. That’s just the nature of doing something great. But there’s an ebb and flow to this stuff and we want to create the condition for people to be successful and fulfilled by their roles."



## The Ballad of Paul O'Neill
_Duhigg, C. (2012). The power of habit: Why we do what we do in life and business (Vol. 34, No. 10). Random House. CH 4: The Ballad of Paul O’Neill. Author: Dieselman, Andrew; Editor: Whiting, Cal McCulley_

In the fourth chapter of Duhigg's "The Power of Habit," the author begins by introducing the new CEO of Aluminum Company of America (Alcoa). This new CEO, Paul O'Neill, was first introduced to investors. He began, not with the usual CEO speak of profit and synergy, but safety. This confused investors, and they panicked. They were wrong to do so. O'Neill, the author explains, drove Alcoa to massive profits in his 13 years at the companywould exit the company 13 years later having driving Alcoa to massive profits, all while driving down intances of accidents. How? O'Neill explains it as targeting 'keystone habits,' or habits that, when they start to shift, dislodge and remake other patterns.

O'Neill used the education he gained from his job in D.C., observing various agencies utilize their institutional habits to do either good or pointless work. He stepped into a very serious situation, one worker described it as "the Manson family, but with the addition of molten metal." He intended to bring the company together by focusing on something that everyone could agree on, safety.

He understood that he needed to find the root cause of injuries - why the injuries happened in the first place. He needed to institutionalize habits that promoted safety. O'Neill did this by forcing VP's to contact him with a plan everytime someone was injured on the job, in order to ensure that that injury could not happen again. This shifted everything else at Alcoa, making it a safer and more productive company.

The author continues the chapter by using Micheal Phelps as an example. In order to make him into an olympian, Phelps' coach knew they had to do something extra. Everyone in the olympics is a good swimmer, but phelps and his coach implemented a habit of visualizing the perfect race. Through continual visualization, Phelps was able to dive into the pool as if he had done it a thousand times before, and succeed.

The third portion of this chapter begins with O'Neill's experience with the U.S.'s high infant mortality rate. O'Neill was able to trace this phenomenon back to poor diets of mothers in rural areas, which was caused by poor education, which was caused by a lack of teacher training. Therefore, the solution was to educate teachers better on nutrition, so they could teach young women more effectively. By creating strctures that help other habits to flourish, O'Neill helped lower the infant mortality rate by 68%. The key to O'Neill's success was getting at the root cause of institutional failures. At Alcoa, this was safety. For infant mortality rate, it was lack of teacher training. O'Neill did not just attempt to address problems he saw at face value, but rather the things that caused these problems to occur, thus eliminating the problem more effectively.


## eBay's $50 Billion Turnaround
_Carlson, N. “You Can Explain eBay’s $50 Billion Turnaround with Just This One Crazy Story.” Business Insider, February 8, 2014. Author: Uk, Bolary; Editor: Boucher, Timothy M._

The article describes an incredible visionary of eBay CEO, John Donahoe, who successfully turned around the company from an 80% decline in stock price. After joining eBay in 2005, Donahoe started to restructure the company by deemphasizing eBay’s auction business. He began to move the company towards being a “technology partner” to small and large retailers and helped the businesses cope with a world dominated by Amazon.

The story of turnaround at eBay started from this smart tactical adjustment. Donahoe realized the main problem of eBay was the death of innovation in that employees stopped creating and developing sophisticated search technology. The company lost profits to other tech companies. In turn, the quantity of sales declined as the company depended on the Google ads tool which made it hard for consumers to find products they wanted to buy. After the issues had been identified, Donahoe came up with a solution after consulting with eBay board director Marc Andreessen, who was best-known as the creator of the first Web browser. Andreessen strongly believed that the output of tech companies is innovation and that great innovative ideas come from the founders of the successful tech companies.

Knowing that the founder of eBay had no interest in re-joining the company, Donahoe decided to build a team of founders by acquiring 34 companies after becoming the CEO. Currently thirteen startup founders work for eBay. A great turnaround example is the two-week reinvention of the eBay homepage, which was based on a rough idea of Jack Phillip Abraham, the founder of an e-commerce startup called Milo. When Milo joined eBay and Abraham built Milo’s technology into eBay the team soon became known as eBay Local, a division of the company responsible for assisting customers in getting quick access to products from local retailers.

On Feb, 2012, Donahoe invited Abraham to join him and other senior personnel for a meeting on the topic of “Innovation." The purpose of the meeting was to bring to life the earlier idea pitched by Anreessen to revamp innovation in the company. Abraham got the idea to reinvent eBay by having a similar News Feed like Facebook. However, instead of displaying updates from friends, the page could show updates from eBay sellers and product categories. Based on the shopping history and searches of users, eBay would turn the feed on without waiting for users to start following any product. Donahoe was excited about the idea and asked Abraham to get him a plan for next few weeks. He also promised to give Abraham all the resources he would need. While Abraham still had his own daily work to do with eBay local, he decided to create a small team of 6 of the smartest people from eBay to turn his idea into a reality. He kept his team small because having a bigger team would be time consuming, due to the politics and bureaucracy of eBay. Abraham also believed that he needed to take the team to far-away location for a limited time to accelerate the project. With a long history of entrepeneurial spirit, Abraham has been the kind of person whose risk-taking has resulted in significant innovation and productivity. However, without a clear roadmap of what the team was going to do, the fear of uncertainty arose and Abraham began to second guess his plans to reform the eBay website. Despite this fear, Abraham moved forward and took his team of six to Sydney, Australia where they brought his dream into fruition. Over two weeks, the team worked together and built a functioning prototype of a reinvented eBay.com.

Upon returning from the secret trip, Abraham had a meeting with Donahoe and presented the prototype of the new eBay.com. Donahoe looked at the prototype on the computer screen and ultimately burst out laughing stating "this could be the future of eBay." Similarly, the entire board of directors loved the feed and soon the feed became the central part of eBay.com. With this valuable tool, eBay has been able to increase sales and engagement. This is but one example of Donahoe's innovative vision for the future of the digital world and his ability to reform a slacking tech company back into the market leader it once was.

## Failed Policy Change
_Greider, W. “The education of David Stockman and other Americans.” The Atlantic, December 1981. Author: Sears, Kicia Kimberly; Editor: Tansits, Colin E_

The article details the first year in office of the man behind Reganomics, David Stockman. To get the public behind the drastic changes in Washington, Stockman had weekly conversations with the author, explaining the ideology behind supply-side theory, the chaos of early budget meetings, the battles in Congress, and the adjustments made after failure—either in Washington or in the market.

Stockman grew up on a farm in Michigan, and was a conservative Republican congressman when he was appointed to run the OMB for President Reagan. He enjoyed a mild youthful rebellion against his conservative beliefs as an activisit and theology scholar, but eventually came back to republicanism after studying at Harvard under influential neo-conservatives in political science and history. When he was called to work for OMB, he was a newcomer to supply-side theory, and was tasked with making Reagan's campaign promises a reality.

Unfortunately, the doubters and naysayers would prove themselves correct. Reagan's promises to cut income taxes, raise defense spending, and balance the budget were mutually exclusive. But early on in his appointment, Stockman was confident. He and other supply-side economists were predicting that Reagan's dramatic policy action would be enough to shock the market: they expected interest rates and inflation to fall, employment to become more efficent, and a big boom in the private sector that would outgrow the government. This belief held strong, and Stockman was confident that these new methods would do a far better job than the mostly-democratic relief programs, which he had seen fail again and again in his home state of Michigan. He predicted some pushback from liberals but thought that they would be convinced if he went after weak ideas and claims rather than people.

The first few months in office were a whirlwind. Stockman and his staff were putting together policy papers that recommended drastic cuts in nealry every governmental program in existence in a matter of days. They were also forecasting with the help of a computer that modeled the national economy. However, after inputting their changes based on Reagan's campaign promises, the model showed massive federal defecits, to the tune of $82B in 1982 and $116B in 1984. These numbers would certainly not result in the kind of market shock Stockman was hoping for, so he and other supply-side theorists changed the computer's model.

Stockman used the deficit predictions, however, to get the President to commit to the massive cuts necessary to balance the budget. He calculated that $40B in cuts were needed across the board. However, with the way actual government spending works, these cuts seemed impossible. If the total federal spending were a dollar, 48 cents of it went toward the social safety net, which Reagan had promised not to touch, so that whole piece was exempt from Stockman's cuts. Defense was another 25 cents of the dollar, and not only could that not be touched, but Reagan had promised to increase its share. 10 cents of the dollar went to paying off interest on the national debt. The remaining 17 cents went toward everything else government does: operations and grants to state and local governments. This is where most of the cuts would have to be taken from. Even though this seemed impossible, Stockman didn't believe the numbers. He thought he could make the government run more efficently with his cuts and the effects wouldn't be as drastic as they seemed.

Additionally, the plan was to get cuts approved as quickly as possible, before new Cabinet members could fully get a grasp of their departments and put together effective counter-arguments and proposals. And this worked. As a result, "Stockman's agency did in a few weeks what normally consumes months; the process was made easier because the normal opposition forces had no time to marshal either their arguments or their constituents and because the President was fully in tune with Stockman."

The author also presents a nice summary of some of these changes that I will reproduce in full here:

"The check marks [programs that were approved by the President for cuts] were given to changes in twelve major budget entitlements and scores of smaller ones. Eliminate Social Security minimum benefits. Cap the runaway costs of Medicaid. Tighten eligibility for food stamps. Merge the trade adjustment assistance for unemployed industrial workers with standard unemployment compensation and shrink it. Cut education aid by a quarter. Cut grants for the arts and humanities in half. "Zero out" CETA and the Community Services Administration and National Consumer Cooperative Bank. And so forth. "Zero out" became a favorite phrase of Stockman's; it meant closing down a program "cold turkey," in one budget year. Stockman believed that any compromise on a program that ought to be eliminated—funding that would phase it out over several years—was merely a political ruse to keep it alive, so it might still be in existence a few years hence, when a new political climate could allow its restoration to full funding." (My note).

This all happened so fast, and eventually Stockman would come to lament the speed with which everything was done. He had to make snap judgements based on little information--something that barely ever works unless one is already deeply experienced.

One of the major fights that came up was regarding cuts to the Export Import bank (Ex-Im). Stockman was trying to prove that supply-side theory could be equitable, and make cuts on the wealthy, on big interests, etc. and not just cut social programs. However, the interests he was going after favored big American manufacturers. Though he got the cuts for the moment, he anticipated pushback in the future.

While this was happening, defense was running wild with spending. They had been told they couldn't be cut, and had been promised increases in the future. Their budget was basically rubber-stamped and then ignored.

Stockman was also preparing to increase revenue and reduce defecits. This next phase of his plan involved closing loopholes in the tax code, which he thought would assuage liberal fears. However, the President rejected this plan. Stockman, at least on the surface, wasn't upset, "The vulnerability of Stockman's ideology was always that the politics of winning would overwhelm the philosophical premises." When his ideas would get shot down by the president, fail or get mutilated in Congress, or fail to meaningfully affect the market, he was quick to shrug it off and move on. He felt like the drastic action by the administration was shocking politicians and more and more were coming to support supply-side theory. He even had a "spy" in Democratic meetings that helped him meet and respond to their budget proposals.

However, though he could rally after political failures, the market failures were a much bigger pill to swallow. In fact, the market was not only not booming, but going into decline. The CBO predicted future defecits of $60B, which forced the administration to face uncomfortable questions, questions that Stockman thought he had prevented by placing what he called a "magic asterisk" on any future defecit problems that came up in his recommendations, claiming that these issues could be taken care of in the future, with more cuts. At this point, Stockman and his analysts knew the plan wasn't working. But this is not what they said publicly. The author notes, "Reagan's policy-makers knew that their plan was wrong, or at least inadequate to its promised effects, but the President went ahead and conveyed the opposite impression to the American public. With the cool sincerity of an experienced television actor, Reagan appeared on network TV to rally the nation in support of the Gramm-Latta resolution, promising a new era of fiscal control and balanced budgets, when Stockman knew they still had not found the solution."

Instead, Stockman planned to make small changes to the Reagan policy that he hoped would go unnoticed in the political arena as being contrary to what was initially promised. He needed to cut the defecits, but he couldn't be perceived as abandoning the strategy. He hoped to make changes to the tax-cut plan, and to cut defense, Social Security and health costs (Medicare and Medicaid). He hoped that the uproar after the CBO's defecit numbers was enough to get people willing to do these things.

He anticipated delaying the tax-cuts would be easy, politically. He also anticipated that he could make compromises to Social Security and health costs by ignoring future predictions of problems (in 2010) and emphasizing how bad things would be immediately if these cuts weren't made. The hardest part was defense, and Stockman knew he couldn't make any changes that looked like contradictions to the Presidents promises. However, he thought that defense had gotten so greedy that they alienated themselves and the cuts wouldn't be opposed in Congress. He still anticipated a market boom, but pushed it from April to August.

When he was met with bigger resistance on Social Secuity cuts than he anticipated, he brushed it off, saying that he felt peopel would come around and that they were just too sensitive to reactions of the public and press. In the end, the President turned on these cuts and they were postponed, until they would be of no use in preventing huge defecits. They ended up modifying the tax-cut plan instead to help close the gap.

Through all of this, Stockman was beginning to doubt the supply-side theology. He had seen what happened with these ideas in action, and thought that instead of being revolutionary, supply-side was just a way to rebrand old Republican idology of "trickle down" economics.

As things fell apart, his fears were confirmed. Politicians did what they (are supposed to) do best: compromise and make trades. Agreements were reached, and figures were decided. However, Stockman felt the figures that got approved were "ceilings" which could be reduced later on. Politicians were not on the same page, and when these figures were challenged later on, they turned on him. Eventually more agreements were struck and Stockman was forced to admit that his quest for equity in fiscal revolution had failed: "Now, as the final balance was being struck, he was forced to concede in private that the claim of equity in shrinking the government was significantly compromised if not obliterated."

Though it seemed like they had won politically, Stockman was no longer confident. He knew the numbers being presented to the public were imaginary. He said, " 'There was less there than met the eye. Nobody has figured it out yet. Let's say that you and I walked outside and I waved a wand and said, I've just lowered the temperature from 110 to 78. Would you believe me? What this was was a cut from an artificial CBO base. That's why it looked so big. But it wasn't. It was a significant and helpful cut from what you might call the moving track of the budget of the government, but the numbers are just out of this world. The government never would have been up at those levels in the CBO base.' "

Faced with failure, not just in the present but in the future, Stockman reflected on what had gone wrong. He blamed the speed with which he was asked to make cuts in the early months of his term, admitting they were made without much information. He turned on the supply-side purists, calling them "naive" and arguing that they had "gone too far." But more than that, he basically threw up his hands. He was scrambling to keep things together and said he couldn't put too much thought into how the system works, how slowly it moves, or what might happen, since he had little control over those things. He instead tried to focus on the immediate, and continue plugging away. He didn't know what would happen after the next election cycle, but it didn't seem to concern him too much. The reporter ends the article with a quote that seems to show Stockman calling supply-side a "crackpot" theory, but one that he is still going to push forward until there is another major shift in the economy or the political arena. He is defeated, but committed to lying in the bed he's made for himself. Unfortunately, it's not just his bed, but one he has made for the entire country as well.

## Organizational Change in an International NGO

_Lux, S. and Bruno-van Vijfeijken, T. (2013). “From Alliance to International: The Global Transformation of Save the Children.” E-PARCC Case Study on Collaborative Governance. Author: Whiting, Cal McCulley; Editor: Fantigrossi, Steven Marc_

**Part A - Barry Clark comes on Board**
In 2002, Barry Clark took note of many organizational issues when he joined an NGO named “Save the Children Alliance” (SC). The organization of the company did not connect between regional offices and there was no way to distinguish offices from each other. Even worse, the SC United Kingdom director barley even knew his counterparts. This decentralized organization was a result of World War II, where SC affiliates were on opposite sides and began to focus on different missions. As a result of SC’s lack of coordination, its reputation was damaged in the 1960s and 70s. Failure to respond effectively to disasters like the Guatemalan earthquake in 1976 plagued the organization.
To address the issue, SC members established an independent secretariat in Geneva, Switzerland in 1993 and named it the Save the Children Alliance (SCA) with the goal of facilitating collaboration. Due to its too few employees, lack of a clearly defined mission, and self-interested SC branches, SCA struggled to come together for the common cause.

Part B - In Search of Strategy
Clark noted that “[SCA’s] problem wasn’t so much a structure or organization or people problem, it was in fact a lack of coherent strategy.” While CEOs of the four major SC members representing United Kingdom, USA, Norway, and Sweden began to assert themselves in promoting a more centralized SC, but the many SC identities made its organization and strategy confusing to donors and also created inefficiencies. Many SC partners were not only not collaborating but were openly competing with one another!
Due to these inefficiencies, Clark convinced SCA to develop a new global strategy which included the adoption of independent board members to the Save the Children Alliance and the appointment of an independent Chair, a plan to develop a coordinated Alliance strategy for 2020, a 5-year plan, and an agreement on a common goal for the alliance to maximize contribution to the children,

**Part C - Give and Take, Changing Governance**
Three years after implementing the new global strategy, SC Alliance brought Peter Woicke onto its Board as Chair and appointed Charlotte Petri Gornitzka as the Alliance’s CEO. After receiving some resistance from the idea, Barry Clark took steps to coordinate work at headquarters, just as they do at the field level. Since Woicke believed that the four largest SC’s dominated the decision making process, he began to make changes to the structure and governance. The mission drove the structure; as Gornitzka stated, “We didn’t start with a decision about what would be the right organizational structure, instead, we focused on thinking about what children need, what the relevant role for Save the Children was, and what we were good at.” Unsurprisingly, the four large branches pushed back against the changes as they would be losing autonomy in decision making.
As part of the centralization process, SC established “managing members” of countries instead of “participating members” in order to make managing affairs in a country more clear-cut. SC established three workgroups focused on Fundraising, Strategic positioning, and People, Organization, and Governance (POG) group. These groups engaged in talks about the different options SC should look at.
In 2009, Members agreed to reconstitute Save the Children Alliance into what would now be Save the Children International. New bylaws for SCI board were then drafted and approved and the old alliance board stepped down. SC International’s board now consists of 14 directors – 9 drawn from the boards of the largest members by income, 3 elected by other members, and 2 independent external elected by the board. Peter and Charlotte resigned and took over responsibility for the next most significant task of SC’s organizational change, what became known as the “All Members Agreements.” To make the change, member organizations had to give up the operational control and direction of programs that occur in the field which was now facilitated by SC International through the regional offices and country programs as a direct outgrowth of the model of Unified Presence.

**Part D - Save the Children Org. Change: Implementation and Early Results**
Implementation of the new Members Agreement, in fact, would be more laborious, more time consuming, and more complicated than the change that SC had experienced to that point. The most daunting task that SCI faced were two key aspects of transferring country level programs into a unified delivery platform
Staffing issues became a difficult challenge, necessary for the new SCI. SCI needed to quickly recruit transfers from member organizations or hire externally into the new SCI positions that had been opened up. Budgets and decision making authority was lost by the program staff, national boards who raised funds no longer controlled the resources, and finance and audit departments lost authority over project finances. SC leadership faced pushback on the needed changes and relied on the values of organization to make the point that more children would be helped through the new structure.
The changes resulted in the members of the organization thinking of themselves as part of a larger SC team. Save the Children received increased media attention and was able to gain greater geographical coverage. Additionally, SC found attract talent and funders to help their efforts.

**Analysis**

Organizational change was needed at Save the Children because it lacked unity among its various field offices, which created inefficiencies in service delivery that cause funding to decrease. Since SC is an international organization, its offices throughout the world quickly developed their own identities, funding mechanisms, and decision making processes. These problems made it difficult to coordinate in its response and advocacy functions. Often, different field offices had different missions and visions for responding to certain crises or how to operate their individual office. All of these problems were manifest from a highly decentralized organization of the company that lacked an independent authority responsible for establishing a unified mission and coordinating between offices to ensure adequate delegation of authority and responsibilities.
SC organizational change was successful primarily because it centered on maintaining the mission and identity of SC. In the talks surrounding how to change the organization of SC, the main question asked was “how does this change assist in our mission of assisting as many children as we can?” By having organizational mission drive organizational change, SC was able to greatly enhance efficiency while maintaining and building its ultimate goal.
chapter12
# Section 12: Team Performance

_Team work is simultaneously one of the most important ingredients in organizations and one of the most difficult things organizations do. Teams rarely function well without effort. What are processes that can help teams function better?_

## Why Teams Don't Work

**Why Teams Don’t Work: Harvard Business Review. Author: Sarawat, Fariha; Editor: Checksfield, Molly Wentworth**

J. Richard Hackman, the Edgar Pierce Professor of Social and Organizational Psychology at Harvard University is a leading expert on teams. Hackman’s research reveals that most of the time team members don’t agree on what the team is supposed to be doing and that team leaders have to assume great personal and professional risks to determine the team’s direction.

Hackman talks about how people are taught from very early on in life that teams are great and can get the work done in a shorter time. However, research shows that challenges with coordination and motivation negate the benefits of collaboration, making teams under-perform quite consistently. Even among teams of senior executives there are similar challenges and Hackman argues that choosing effective team members requires ruthless decision making.

One of the most critical aspects to leading a successful team, according to Hackman, is understanding who is on your team and utilizing the strengths of each member to reach a common goal. It is imperative that leaders set the tone and exert authority during the first meeting with their team so they can establish direction and set the tone for future collaboration amongst all participants. Leaders are critical in setting the direction of the team, however in doing so they encounter resistance so intense that it can place their jobs at risk.

Hackman also suggests that reverse causality can explain the confusion about the cause-effect relationship between effective teams and job satisfaction—‘When we’re productive and we’ve done something good together (and are recognized for it), we feel satisfied, not the other way around.’

Hackman’s research shows that smaller teams are more effective than larger teams and while the addition of new members can inspire creativity, injecting too many new members can actually reduce productivity and accuracy. Hackman thinks every team needs a ‘deviant’—a disruptor who questions them and pushes back on complacence—to be more effective. President Obama surrounded himself with intelligent, strong-minded figures at the beginning of his first term who exemplify Hackman’s model of success. By including not one but many deviants in a group at that time, President Obama was able to engage in further exploration of knowledge, as opposed to passive acceptance of the status quo.

Being critical of our own actions within organizations is crucial to developing creative solutions to problems. There is a balance between individual autonomy and collective action that needs to be reached in order to succeed because either extreme yields potential failure. Our society should not romanticize group work in all instances but should instead recognize the costs and benefits of relying on teamwork in each situation.


## How Teams Can Work Better

Sutherland, J. & Sutherland, J.J. (2014). Scrum: The Art of Doing Twice the Work in Half the Time. Crown Business, Happiness: pp 71-144. Author: Legnetto, Deanna Marguerite; Editor: Rodriguez Ranf, Daniela

Throughout these three chapters, Sutherland discusses the importance of cutting down waste and planning strategically and realistically before what he calls Daily Stand-Up meetings and Sprints.

_Chapter 4: Time_

_The Sprint:_ Companies frequently give their employees large amounts of time to work on projects, most of the time which they seldom receive feedback before it’s too late and the time is long wasted. Instead of working slowly on long, drawn out projects, the Scrum Sprint allows teams to move through product development in a short amount of time. Using an example of “Team WIKISPEED” a company that makes cars in Seattle, the team presented all the projects they expected to get done in a week (designated time is one Sprint) on a large white board. As the projects changed in stages, the team members would move the items from "Backlog, Doing, and Done", allowing their colleagues to see the progress.

_Daily Stand-Up:_ Sutherland builds on the Sprint idea by using daily, 15 minute meetings in which everyone participates and attends. These performance measurement meetings revolves around three questions that can be utilized to assess each Sprint by giving the team a chance to spot any weaknesses or problems and solve them right away. Since special titles and specialization seem to create tension between roles in a group, absolving titles can be a productive action before adopting this “Daily Stand-Up”.

_Time and Time Again:_ Sutherland uses an interesting scenario of a friend’s plan for remodeling his house and a neighbor attempting the same. By using the Scrum model of Daily Stand-Ups and Sprints, his friend was able to complete the project in six weeks, while the neighbor’s project took twice as long and cost twice as much. One of the main differences between the jobs was how much time was wasted waiting on each piece to finish before the other could start.

_Takeaways from Chapter 4:_
- Time is finite. Treat it that way by breakingdown the work into pieces that can be accomplished in regular and set periods of time.
- Demo or die. At the end of the Sprint make sure you have something done.
- Throw away your business cards. Titles are distracting and they influence team dynamics. Be known for what you _do_, not what you're referred to.
- Everyone knows everything. Communication saturation accelerates work.
- One meeting a day. For team check-ins meeting once a day is enough. Use Daily Stand-up model to see what can be done to increase speed.


_Chapter 5: Waste Is a Crime_

Sutherland stresses the importance of establishing a positive rhythm or pattern to improve our habits and avoid "waste", which can be waste of time, waste of energy, waste in inventory, or the emotional waste of unreasonable expectations.

_Doing One Thing at a Time:_ Evidence shows us that working on more than one thing at a time presents extreme cases of waste, even if you’re a business executive and you are trying to juggle several projects at once. Similar to talking on the phone and driving, one’s brain cannot concentrate equally on both tasks. Teams can suffer tremendously from trying to multi task on three projects simultaneously instead of working through the first part, then the second, and finally the third. Rotating through projects creates wasteful time trying to get back on track when switching gears.

_Half Done Isn’t Done at All:_ Sutherland discusses the importance of having fully finished products or tasks rather than a bunch of half-finished ones. It is wasteful to invest in effort without the positive outcomes.

_Do It Right the First Time:_ A team that stops and works together to fix a problem, will achieve success faster than a team that has to make corrections following completion. Fixing it later Sutherland says, will take you more than twenty times longer than if you fix it now.

_Working Too Hard Makes More Work:_ Working longer hours is not necessarily an indication of working harder and in many cases can be seen as working slower or more inefficient. This idea syncs up with “ego depletion” and the notion that an individual is limited to a certain number of good or mindful decisions each day.

_Be Reasonable:_ Sutherland discusses Toyota’s Taiichi Ohno three types of unreasonableness waste and the effects on teams. Absurd goals can frustrate and destroy teams, unreasonable expectations sets teams up to fail, overburden can waste valuable time with monotonous tasks, and also “Emotional Waste” usually comes from a poisonous employee whom incessantly causes trouble. Anyone who causes emotional chaos, inspires fear or dread, or demeans or diminishes people needs to be stopped cold.

_Flow:_ He finishes chapter five by suggesting teams should strive to create an effortless flow of discipline that does not succumb to waste. Sutherland explains that Scrum is about enabling the most flwo possible.

_Chapter 6: Plan Reality, Not Fantasy_

Planning can easily get out of hand and buried underneath piles of paper. Grouping similar points together and organizing where to start first allows groups to prioritize their work.

_Wedding Planning:_ Sutherland relates estimating goals for a business to planning a wedding. It is important to make a priority list, which is consistently reviewed and updated and organized by value. Sutherland advices to only plan what you need to keep yout teams busy instead of ttrying to project everything out years in advance.

_Size Does Matter, but Only Relatively:_ Once a prioritized list is created, it’s important to scale these items in terms of size or amount of involvement. One scale is the Fibonacci sequence or “Golden Mean”, which is a pattern of numbers where the following number is always the sum of the previous two. This pattern allows our brains to better handle estimating large jumps than slight changes, which is more comfortable for the human mind.

_The Oracle of Delphi:_ It is common for certain things to occur when dealing with groups, such as “the bandwagon effect” or following the common ideas, “informational cascade” or over-valuing the judgement of others, and the “halo effect” or allowing one characteristic to influence other unrelated characteristics. In the case of the Rand Corporation during the Cold War, these three effects were avoided by the use of anonymous surveys given to each team member, so as to get rid of potential bias and locate commonalities in thinking.

_Planning Poker:_ Similar to Delphi, the art of “Planning Poker” is a faster and more accurate way of estimating. Each team is to use Fibonacci sequence labeled cards to estimate the size of each piece of the project. If each card is not within two sequences then the group must come together and share their reasoning, and re-submit their cards. This too allows groups to work without bias effects.

_There Are No Tasks; There Are Only Stories:_ Without giving individuals or teams a context of the items that need to be done, workflow may suffer. Similar to telling a story, providing an outline of who the task is being done for, what the particular goal is, and the motivation of why this individual wants this done will provide clear reasoning and may even improve estimates. These stories however, are best told as short, to the point stories that pinpoint straight forward tasks.

_Be Ready and Be Done:_ Sutherland uses the INVEST criteria to identify if a story is ready: Independent (able to self-complete), Negotiable (be flexible), Valuable (delivers value), Estimable (provide a scale), Small (to make for easy planning), and Testable (a way to test for completion). Tying this back to Sprints, these stories are commonly discussed at Sprint Planning meetings where accomplishments can be estimated.

_Know Your Velocity:_ By using all the applications discussed in this chapter, teams can develop a velocity and use this to calculate the time for a finished product. Using the Medco example, this velocity can and should be used to identify and correct for waste.


## The Shift in Management Philosophy

Denning, S. "Why do Managers Hate Agile." Forbes Magazine. Part I (January 26, 2015) and Part II (January 28, 2015). Author: Farrior, Cheri Nicole; Editor: Dieselman, Andrew

This article discusses the worlds of management and Agile. Management is when everything is vertical and being run top-down. Management functions systematically. The top bosses appoint workers, assign tasks, make decisions, and assess performance. Employees compete with other employees for compensation, and compensation is tied to rank. There is tight control and a heavy focus on efficiency. On the other hand, Agile is horizontal. The goal is customer satisfaction and money is a result, but not the ultimate goal. There is a focus on innovation which enables those doing the work to be able to utilize their talents and abilities. Firms with the horizontal mindset are thriving, while those firms with a vertical mindset are struggling.

The article states that the Agile approach consists of self-organizing teams working to deliver additional value directly to customers. Teams trying to go the distance as a unit, passing the ball back and forth, is more effective in today’s competition verses the relay race approach to product development. The agile approach is now becoming more popular in all sectors of the economy.

The agile approach was a result of hierarchical bureaucracy, which consists of individuals who report to bosses who have control and tell them what to do. Hierarchical bureaucracies created order in times of chaos and was scalable, efficient, and predictable. However, the focus was internal, it was non-collaborative, its plans were linear, and it was dispiriting to staff. However, none of these liabilities didn’t matter much because firms could overcome them, but then all of a sudden the world changed due to a number of factors: globalization, deregulation, new technology, and the Internet. The buyer gained power in the marketplace and the customer was now central. Average performance as no longer good enough. Innovation was required. This led to managers rethinking the way in which organizations were run and the birth of the agile world. Work was now done by self-organizing teams that could utilize the talents of all involved in the work and there was a main focus on satisfying customers needs.

The Agile approach there is a belief that if you put the customers needs first then the organization will flourish. Making money is the result not the goal.

At the team level, firms use the Product Owner to interpret what the customer wants. At firms like Apple, those doing the work are able to deal directly with the customers. Apple has been able to achieve a massive scale by having a platform serving as a lens to the need of the customer. They have hundreds of thousands developers working to meet the needs of its hundreds of millions of customers and because of that the hundreds of millions of customers have a product that is customized to meet their own interests and needs.

Scrum teams and the Apple platform are similar in that they have total focus on the customer, they have an ideology of enablement rather than control, they have a flat horizontal structure, they have the same iterative dynamic, and they both are inspiring people to do the work.

Another example of the dynamic of Agile is Autodesk, which is a leader in the CAD/CAM software and building system modeling. Autodesk has created a platform where companies in construction and civil engineering can utilize a number of apps to help large construction companies simulate all aspects of a giant building project before it begins. This allows these companies to anticipate problems and coordinate suppliers. As a result, Autodesk has been able to outperform the S&P 500 index.

Agile is not easy to accomplish, as there will be losses for the first few attempt, which can be costly. However, if companies are dedicated and persistent they will get to the goal, which will exceed any losses and failures they encountered a long the way.

Another component of Agile is continuous deployment. Etsy.com deploys more than 30 software improvements each day. By releasing small changes on a daily basis, its easier to spot and fix problems than it would be by releasing a bundle of many changes at once, as this can be difficult to figure out exactly where the problem was. In addition, management does not have to approve changes to the site. Improvements that have been fully tested are deployed immediately, with the staff devising the improvement overseeing their implementation. This creates mastery and autonomy. These small changes are significant and can create additional millions of dollars in sales. This method also enables rapid innovation and learning.

Managers are now having to ask new questions and with these new questions, the person at the top of the hierarchy doesn’t have the best answers anymore. There are some organizations who transition partially. You have one part of the company operating in a hierarchical bureaucracy, while the other part is operating under the agile and scrum mode. These different ideologies within the same organization can lead to a lot of friction within the company.



## Building Effective Teams

Duhigg, C. What Google Learned from Its Quest to Build the Perfect Team. The New York Times Magazine, February 25, 2016. Author: Berkley, Njeri N; Editor: Fantigrossi, Steven Marc

Twenty-five year old Julia Rozovsky wanted to find a job with a social aspect that would allow her to "be a part of a community". Upon being accepted to Yale School of Management, Rozovksy "was assigned to a study group carefully engineered by the school to foster tight bonds". Business schools have recently altered their curriculums to emphasize "team-focused learning" and reflect the enlarging demand for employees who can adeptly navigate group dynamics. Rozovsky met with her four teammates daily, and found that despite their shared experiences, the study group was stressful. She recalls feeling constant pressure to prove herself to the group, whose dynamics "put her on edge".

Rozovsky later joined a team as part of "case competitions". Rozovsky found this experience to be completely different from her study group, with members coming from different backgrounds. Everyone got along and worked well together in a fun and easygoing environment that they created and socialized prior to meetings. No team memberes were worried about other team members judging their suggestions. Rozovsky couldn't figure out why her experiences with the two groups were so dissimilar: she had friendly one-on-one interactions with the study group members, but when the group gathered, tension would arise. On the other hand, her competition team members seemed to have gotten along better as a group than as inidividual friends.

Psychologists, sociologists, and statisticians are now studying work habits and team composition, like Rozovsky's, in order to find out how to make employees more efficient and productive. Valuable firms have concluded that "employee performance optimization", the practice of "analyzing and improving individual workers," is not enough. Studies show that managers and employees' time spent on collaborative activities have increased by 50% or more over the last twenty years. Studies also show that groups tend to innovate faster, find better solutions, report higher job satisfaction, and increase profitability. It is imperative for companies to ensure effective teamswork if companies want to beat out their competitors.

After graduating from Yale, Rozovsky was hired by Google and assigned to Project Aristotle, where she studied the habits and tendencies of Google teams to figure out why some teams failed where others didn't. The researchers for Project Aritstotle reviewed academic studies regarding team functionality and scrutinized the composition of Google's groups. The researchers drew diagrams to display overlapping membership and looked at things like gender balance and group longevity, but were unable to find patterns that indicated an impact of team composition. Rozovsky and her colleagues continuously came across research that may provide insight to her previous conundrum: "group norms". Norms are the behavioral standards that can be unspoken or openly acknowledged. Norms can have a heavy impact on the way individuals act, but when the group gathers, the group's norms will often override individual inclinations. Project Aristotle's researchers began looking for group norms in their collected data and concluded that understanding and influencing group norms was the answer on how to improve Google's teams. Now they just needed to figure out which norms mattered the most.

In 2008, a group of psychologists from Carnegie Mellon, M.I.T. wanted to find out if there was a collective I.Q. that emerged in a group setting and is distinct from any individual. The researchers found that the right norms could raise a group's collective intelligence, while the wrong norms could be detrimental. Although not all successful groups behaved in the same ways, two behaviors were prominent: equality in distribution of conversational turn-talking (members spoke in same proportion), and average social sensitivity (intuiting how others feel based on tone of voice, expressions, etc.). These traits are aspects of psychological safety: a group culture defined by the Harvard Business School Professor Amy Edmondson as a "shared belief held by members of a team that the team is safe for interpersonal risk-taking". The concept and research of psychological safety led Project Aristotle to particular norms that are critical to success. After identifying the most critical norms, Rozovsky and her colleagues had to fgure out how to formulate communication and empathy into an easily scalable algorithm.

In late 2014, Project Aristotle publicized its research to select groups in the hopes of prompting employees to come up with ideas of their own. After one of Rozovsky's presentations, the group met Matt Sakaguchi, an ex-SWAT team member who currently manages technical workers at Google. Sakaguchi's previous team did not get along too well, and he wanted his new team to be different. Partnering up with Project Aristotle, Sakaguchi distributed a survey to his team which produced results that indicated a disconnect between members' work and overall impact. At a requested off site gathering, Sakaguchi related psychological safety to emotional conversations and began opening up to his team members. The experience allowed team members and researchers to realize that in order to feel psychologically safe, individuals must be able to share personal thoughts and feelings, and not just focus on efficiency.

Google's intense data collection did not lead to any new thinking, but actually confirmed what was already known: in the best and most successful teams, members listen to each other and show sensitivity to feelings and needs. Google did however demonstrate the usefulness of figuring out how to create psychological safety faster, better, and in more productive ways. Project Aristotle's data proved that success is often built on experiences and supported giving people a common platform and operating language.



## Dynamics of Team Formation

Casciaro, T., Lobo, M.S. (2005). “Competent Jerks, Lovable Fools, and the Formation of Social Networks.” Harvard Business Review, June, 92-99. 8 Author: Wohlenberg, Danielle Irene; Editor: Uk, Bolary

Informal social networks play a large role in resolving tensions and are crucial for success. These networks pose both positive and negative effects, and there are ways for organizations to learn how to emphasize the positive effects.

Competence and likability are the two most important factors for employees, and to determine how they matter, the Harvard Business Review has completed social network surveys at four different organizations, and studied more than 10,000 work relationships. The goal of this study was to see if they would be consistent among organizations and cultures, and if the findings would remain consistent with different measures of likability and competence. The study accounted for various biases and determined that among all organizations, people wanted to work with the “lovable star” (the person who is competent and likable).

Managers commonly reported that they prefer competence to likability but the study determined that reverse is true in practice, but would look “unprofessional” to profess.

The bias that everyone has different preferences, in which they like, plays a relevant role because people tend to like those who are similar, familiar, reciprocal, and attractive. However, there are positive and negative effects of “liking” the person you work with. “The objective is to then leverage the power of liking while avoiding the negative consequences of people’s affect-based choice.”

This study recommends to 1) manufacture liking in critical relationships, 2) position universally likable people to bridge organizational divisions, and 3) work on the jerks. This can be accomplished through “peer assist” knowledge management process, where environments are fostered for peer collaboration. There can also be less-formal Friday afternoon get-together.

Distrust and animosity can hinder these efforts and sometimes “intense cooperative experience” can be facilitated by organizations. In addition, when there is an employee who is a “lovable fool” (likable but incompetent), this employee should be identified so that they can be used to bridge gaps between diverse groups that may otherwise not interact.

This study determined that likability is a very important trait in employees, more so than competency. Likable individuals can be great assets to an organization and help to foster a positive work culture. When individuals are identified as good connectors and likable employees, it is important to position them strategically and take measures to keep them in the organization. It is also necessary for organizations to identify the “jerks” and reward good behavior, punish bad behavior, and assess their contributions, and reposition if necessary.


## When Teams Fail

Holmes, A. (2006). Maine's Medicaid Mistakes. CIO. Author: Kim, Chung Myung; Editor: Berkley, Njeri N

In October 2001, the state of Maine made a $15 million dollar contract with CNSI to create new generation of end-to-end system to process Medicaid claims and payments. It was expected to process claims much faster, cost efficiently, and accurately than its old Honeywell mainframe. From the beginning, it suffered from serious problems as a result of several mistakes. The contractor hired to develop the system (CNSI) had no previous experience in devleoping Medicaid claims systems. No training or testing was done before the switch to the new unproven technological platform, and the transition was done without any backup system in place. Furthermore, when the state of Maine issued an RFP for creating its new system, only two companies Keane ($30 million) and CNSI ($15 million) turned in their proposals. When contracting this type of project, government and agencies are supposed to expect more bids within the similar price ranges, however, Maine only had two proposals with totally different bidding price. As a result, CNSI, which did not have any experience in creating Medicaid claim processing system won the bid. CNSI was given 12 months to finish their project, but it was oblivious that they were not going to meet the given deadline. Only 65 people from DHS IT staffers and CNSI representatives were assigned to the project and did not have any Medicaid experts within the team, so they had difficult time communicating with those Medicaid experts in the Bureau of Medical Services. For the next two years, DHS IT staffers and CNSI workers worked intensively writing codes, but they still could not meet the extended deadlines, so they decided to reduce the testing procedures. They only went through 10 providers and claim cases, and there was no training for the staff to answer providers’ questions.

When they finally opened their new system to public, the system had sent 50 percent (24,000) of the claims into the ‘suspended’ files within the first week, which is much higher than the previous system’s 20 percent rate of sorting into suspended files. Inadequate training and technological glitches resulted in the state owing health care providers about $310 million in Medicaid payments and misprocessed or unprocessed claims had reached almost 647,000. Although, state of Maine finally hired XWave, an integrator and management consultant to resolve the issue, the decision that state of Maine made to spend over $25 million new system that is not any better than previous system is questionable.





chapter13
# Section 13: Innovation


_Innovation is the process of solving large-scale organizational problems or developing new technologies and processes to more effectively pursue goals. What can we learn from past examples of innovation? What types of organizational policies and processes inhibit innovation? What are characteristics and leadership practices in organizations that have been innovative?_


Bornstein, D. (2007). How to change the world: Social entrepreneurs and the power of new ideas. Oxford University Press. CH3 – Fabio Rosa: Rural Electrification. Author: Gobbo, Andre Francis; Editor: Rodriguez Ranf, Daniela

Lerner, J. (2012). The architecture of innovation: The economics of creative organizations. Harvard Business Press. CH1 – The Search for Innovation and Growth. Author: McCully, James I; Editor: Legnetto, Deanna Marguerite

Gladwell, M. “The Creation Myth: Xerox PARC, Apple, and the Truth about Innovation.” The New Yorker, May 16, 2011. Author: Boucher, Timothy M.; Editor: Berkley, Njeri N

Collins, J., & Hansen, M. T. (2011). Great by Choice: Uncertainty, Chaos and Luck-Why some thrive despite them all. Random House, CH4 – Fire Bullets, Then Cannonballs. Author: Lancto, Katelyn N; Editor: Legnetto, Deanna Marguerite

Christensen, C. (1997). The innovator's dilemma: when new technologies cause great firms to fail. Harvard Business Review Press. CH5 – Give Responsibility for Disruptive Technologies to Organizations Whose Customers Need Them. Author: Rodriguez Ranf, Daniela; Editor: Swartwood, Hilary Ann

Heath, C., & Heath, D. (2013). Decisive: How to make better choices in life and work. Random House. CH 4: Find Someone Who Has Solved Your Problem.

Heath, C., & Heath, D. (2013). Decisive: How to make better choices in life and work. Random House. CH 3: Multi-Track.

Heath, C., & Heath, D. (2013). Decisive: How to make better choices in life and work. Random House. CH 7: Ooch.



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# Section 14: Public Private Partnerships

Lerner, J. (2009). Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed--and What to Do About It. Princeton University Press. Author: Hamlin, Madeleine Rose; Editor: Creedon Jr, John Thomas

Mazzucato, M. (2013). The Entrepreneurial state: Debunking Public vs. Private Sector Myths. Anthem Press. Author: Perez, Philip A; Editor: Tansits, Colin E

Case Study on Public Private Partnership