Tag Archives: goals

How to Keep Goals From Blowing Up

The goals you set for your organization might be sabotaging the very success that you’re trying to cultivate.

That’s the message from Professors Maurice E. Schweitzer, Lisa D. Ordonez, Adam Galinsky and Max Bazerman – all of whom should surely win an award for the most creative titling of an academic research paper (“Goals Gone Wild” in the Academy of Management Perspectives journal).

In a recent New York Times article, the professors’ research was highlighted along with intriguing examples of the unintended consequences of goal setting.

Like this gem: An NFL team, in an effort to improve the performance of an interception-prone quarterback, added a clause to his contract penalizing him for every pass thrown to the opposing team. The result? The QB threw fewer interception — but only because he stopped throwing the ball altogether, which wasn’t the desired outcome.

See also: Your Data Strategies: #Same or #Goals?  

This goal-setting phenomenon is routinely on display in business circles, when companies focus so relentlessly on a metric that their people over-rotate on it. That ultimately drives undesirable, sometimes even awkward behavior. Perhaps you’ll recognize some of these examples from your own experience, as a businessperson or as a consumer:

  • Auto dealerships where franchise recognition is so closely tied to “top box” scores on a satisfaction survey that staff practically beg customers for an “Excellent” rating.
  • Call centers that set targets for call length, leading service representatives to be more interested in getting customers off the phone than in actually helping them.
  • B2B firms that use Net Promoter Score (NPS) as their primary gauge of performance, leading company representatives to hand-deliver the NPS survey at the most auspicious occasions (like on a golf outing with a client).
  • Companies with such laser-focus on market share targets that they acquire new business at all costs, even at the expense of profitability.
  • Human resource recruiters who are held accountable for qualified candidate “yields” from their sourcing methods, leading them to pass less-than-ideal applicants through the recruiting pipeline.

To avoid making your organization’s goals its own worst enemy, keep these four tips in mind:

1. Consider unintended consequences. In the fervor to address a business issue and rally the troops around an effort, organizations leap to embrace a metric without carefully considering all of the downstream impacts. Contemplating a new measure, or a renewed focus on an existing one? Put on your contrarian hat for a moment. Think of all the bad things that could happen if your staff focused, to a fault, on the line you’ve drawn in the sand. Based on how detrimental and probable those unintended consequences are, tweak your approach accordingly.

2. Strive for balance. Guard against over rotation on any single metric by creating a balanced system of measures. For example, if you want to encourage a sales-oriented culture, but wish to avoid staff making sales at any cost, then only reward those top salespeople who also meet some performance threshold for profitability or customer satisfaction.

3. Set Goldilocks goals. Setting goals is one management task where it’s dangerous to be cavalier. Set the bar too high, and you create unrealistic performance expectations that can disengage your staff or, worse, lead them to game the system. Set the bar too low, and you miss an opportunity to get people to stretch toward a higher level of performance. If you want to set a goal, first track the metric for a time to get a sense of its variability as well as the current performance level. That’ll help you set an informed goal that’s more likely to motivate rather than frustrate.

4. Beware the tie to compensation. Pay for performance – yes, I’m all for it. But organizations can get into trouble when they move too swiftly to tie particular metrics (especially new, unproven ones) to individual compensation. First, get some experience under your belt tracking the metric and providing individual feedback based on it. Then structure the compensation linkage in a way that reinforces a balanced approach to measurement.

See also: Integrating Strategy, Risk and Performance  

When it comes to performance measurement and goal setting, simple “carrot and stick” thinking won’t suffice. Business leaders must invest some real time engineering this piece of their workplace puzzle. It’s the best way to ensure that your organization’s goals are working for you, and not against you.

Your Data Strategies: #Same or #Goals?

Goldilocks entered the house of the three bears. The first bowl she saw was full of the standard, no-frills porridge. She took a picture with her smart phone and posted it to Instagram, with the caption #same. Then she came to Papa Bear’s bowl. It was filled with organic, locally grown lettuce and kale, locally sourced quinoa, farm-fresh goat cheese and foraged mushrooms. The dressing base was olive oil, pressed and filtered from Tuscan olives. It was presented in a Williams Sonoma bowl on a farm table background. She posted a photo with the caption #goals. By the time Goldilocks went to bed, she had 147 likes. The End.

Enter the era of the exceptional, where all that seems to matter is what is new, different and better. When Twitter came out, it didn’t take me long to pick up how to use hashtags. But then hashtags took on a life of their own and spawned a new language of twisted usage. Now we have #same — usually representing what is not exciting, new or distinctive. And we have #goals — something we could aim for (think Beyoncé’s hair or Bradley Cooper’s abs).

See also: Data and Analytics in P&C Insurance  

Despite their trendy, poppy, teenage feel, #same and #goals are actually excellent portable concepts. When it comes to your IT and data strategies, are they #same or are they #goals? What do your business goals look like? Are you possibly mistaking #same for #goals? Let’s consider our alternatives.

Are our strategies aspirational enough?

If you are involved in insurance technology — whether that is in infrastructure, core insurance systems, digital, innovation or data and analytics — you are perpetually looking forward. Insurance organizations are grappling daily with their future-focused strategies. One common theme we encounter relates to goals and strategies. Many organizations think they are moving forward, but they may just be doing the work that needs to be done to remain operational. #Same. When thinking through the portfolio of projects and looking at the overall strategy, it is common to wonder, “Isn’t this just another version of what we did three months ago, even three years ago?” Is the organization looking at business, markets, products and channels and asking, “Are we ready to make a difference in this market?” No one wants the bowl of lukewarm, plain porridge — especially customers.

Are we aiming one bowl too far?

On the flip side, our goals do need to remain rooted in reality. It’s almost as common for optimistic teams to look at a really great strategy employed by Amazon, only to be reminded that the company isn’t Amazon and doesn’t need to be Amazon. It just needs to consider using Amazon-like capabilities that can enable the insurance strategy.

Data lakes can be a compelling component in modern insurance business processing architectures. But setting a goal to launch a 250-node cloud-based Hadoop cluster and declaring you’ll be entirely out of the business of running your own servers is not a strategy that’s right for everyone.

If the organization is pushed too far on risk or on reality, it creates organizational dissonance. It’s tough to recover from that. Leaders and teams may pull back and hesitate to try again. Our #goals shouldn’t become a #fail.

Finding the “just right” bowl.

Effective strategies are certainly based in reality, but do they stretch the organization to consider the future and how the strategies will help it to grow? When the balance is reached and the “just right” bowl full of aspirations is chosen, there is no better feeling. Our experience is that well-aligned organizational objectives married to positive stretch goals infuse insurers with energy.

This example of bowls, goals, balance and alignment is especially apropos to data and analytics organization. It is easy for data teams to lay new visuals on last year’s reports and spin through cycles improving processing throughput. To avoid the #same tag, these teams also need to evaluate all the emerging sources for third-party aggregated data and big data scalable technologies. With one foot in reality and one stretching toward new questions and new solutions, data analysts will remain engaged in providing ever-improving value.

See also: How to Capture Data Using Social Media  

Even if an organization could be technically advanced and organizationally perfect, it would still want to reach for something new, because change is constant. Reaching unleashes the power of your teams. Reaching challenges individuals to think at the top of their capacity and to tap into their creative sides. The excitement and motivation that improves productivity will also foster a culture of excellence and pride.

We are then left to the analysis of our individual circumstances. If you could snap a photo of your organization’s three-year plans, would you caption it #same or #goals? Inventing your own scale of aspiration, how many of your goals will stretch the organization and how many will just keep the lights on?

Is It Time for Un-Change Management?

Pull back on the reins for a moment and come to a complete stop. What do you see behind you? Probably a wake of both straight and winding roads… some intact, some obliterated, most somewhere in between. You probably see customers satisfied and dissatisfied at a number of different levels. Same with employees.

Now look ahead of you. What do you see? A yet-to-be-unfolded strategic plan? A vision? Goals? Innovation?

“Change management” is used to make the transition to doing things a new or different way. It’s a tool used to implement change required for forward movement, innovation, strategies, etc.

“Un-change management” refers to the need for organizations to let go of the unwavering focus on innovation and advancement and share some of the time and energy removing that which is not valued by the external customer or not required by law. In a word, we’ll refer to it simply as “waste.”

Waste unattended grows, at best, in parallel with your company’s growth. If you are pleased with your growth goals, ask yourself if you’re pleased with your simplicity goals. The ratio of waste to value should be reduced when you grow. Unbridled growth often leads to an increase in the waste-to-value ratio, and that isn’t realized until years later, mostly because all eyes are on growth. Companies then scramble, point fingers, place blame and cut costs without really understanding were the problem could have and should have been addressed in the first place.

Continuous improvement is more about elimination of waste than it is about doing anything new. It requires serious focus on work and asking why things are done. The goal is to arrive as close as possible to creating perfect flow in your business systems — where orders are placed, where product or service is made or conducted and where they are provided to the customer for consumption.

Clean out the garage (and keep it clean)

For companies that have never emphasized waste, large gains are made in a relatively short period after they introduce their system of elimination. After that, removal efforts continue to whittle away at midsized waste and so on until, finally, the mindset converts to innovation. I think we’d all agree that an innovative company with little waste is a valuable thing indeed.

The way companies manage waste has a profound impact on the way the company culture emerges. (See www.ThreeBellCurves.com and download the free whitepaper.) Employees want to work on things that matter, not waste. Customers want to pay for things of value. Keeping the price low requires the elimination of as much waste as possible.

Is your company ready to share some of its change management with “un”-change management? If you are, you will create more room for value without escalating costs.

3 Keys to Achieving Sound Governance

Of the many definitions of governance, the simplest ones tend to have the most clarity. For the purpose of this piece, governance is a set of processes that enable an organization to operate in a fashion consistent with its goals and values and the reasonable expectations of those with vested interests in its success, such as customers, employees, shareholders and regulators. Governance is distinct from both compliance and enterprise risk management (ERM), but there are cultural and process-oriented similarities among these management practices.

It is well-recognized that sound governance measures can reduce the amount or impact of risk an organization faces. For that reason, among others, ERM practitioners favor a robust governance environment within an organization.

A few aspects of sound governance are worth discussion.  These include:  1) transparency and comprehensive communications, 2) rule of law and 3) consensus-building through thorough vetting of important decisions.

Transparency 

Transparency lessens the risk that either management or staff will try to do something unethical, unreasonably risky or wantonly self-serving because decisions, actions and information are very visible.  An unethical or covert act would stand out like the proverbial sore thumb.

Consider how some now-defunct companies, such as Enron, secretly performed what amounted to a charade of a productive business. There was no transparency about what assets of the company really were, how the company made money, what the real financial condition actually was and so on.

Companies that want to be transparent can:

  • Create a culture in which sharing of relevant data is encouraged.
  • Publish information about company vision, values, strategy, goals and results through internal communication vehicles.
  • Create clear instructions on a task by task basis that can used to train and be a reference for staff in all positions that is readily accessible and kept up to date.
  • Create clear escalation channels for issues or requests for exceptions.

Rule of Law

Good governance requires that all staff know that the organization stands for lawful and ethical conduct. One way to make this clear is to have “law abiding” or “ethical “as part of the organization’s values. Further, the organization needs to make sure these values are broadly and repeatedly communicated. Additionally, staff needs to be trained on what laws apply to the work they perform. Should a situation arise where there is a question as to what is legal, staff needs to know to whom they can bring the question.

The risks that develop out of deviating from lawful conduct include: financial, reputational and punitive. These are among the most significant non-strategic risks a company might face.

Consider a company that is found to have purposefully misled investors in its filings about something as basic as the cost of its raw materials. Such a company could face fines and loss of trust by investors, customers, rating agencies, regulators, etc., and individuals may even face jail time. In a transparent organization that has made it clear laws and regulations must be adhered to, the cost or cost trend of its raw materials would likely be a well documented and widely known number. Any report that contradicted common knowledge would be called into question.

Consider the dramatic uptick of companies being brought to task under the Foreign Corrupt Practices Act (FCPA) for everything from outright bribes to granting favors to highly placed individuals from other countries. In a transparent organization that has clearly articulated its position on staying within the law, any potentially illegal acts would likely be recognized and challenged.

How likely is it that a highly transparent culture wherein respect for laws and regulations is espoused would give rise to violations to prominent laws or regulations? It would be less likely, thus reducing financial, reputational and punitive risks.

The current increase in laws and regulations makes staying within the law more arduous, yet even more important. To limit the risk of falling outside the rule of law, organizations can:

  • Provide in-house training on laws affecting various aspects of the business.
  • Make information available to staff so that laws and regulations can be referenced, as needed.
  • Incorporate the legal way of doing things in procedures and processes.
  • Ensure that compliance audits are done on a regular basis.
  • Create hotlines for reporting unethical behavior.

Consensus-Building

Good governance requires consultation among a diverse group of stakeholders and experts. Through dialogue and, perhaps some compromise, a broad consensus of what is in the best interest of the organization can be reached. In other words, important decisions need to be vetted. This increases the chance that agreement can be developed and risks uncovered and addressed.

Decisions, even if clearly communicated and understood, are less likely to be carried out by those who have not had the chance to vet the idea.

Consider a CEO speaking to rating agency reviewers and answering a question about future earnings streams. Consider also that the CFO and other senior executives in separate meetings with the rating agency answer the same question in a very different way. In this scenario, there has clearly not been consensus on what the future looks like. A risk has been created that the company’s credit rating will be harmed.

To enhance consensus-building, companies can:

  • Create a culture where a free exchange of opinions is valued.
  • Encourage and reward teamwork.
  • Use meeting protocols that bring decision-making to a conclusion so that there is no doubt about the outcome (even when 100% consensus cannot be reached).
  • Document and disseminate decisions to all relevant parties.

During the ERM process step wherein risks are paired with mitigation plans, improved governance is often cited as the remedy to ameliorate the risk. No surprise there. Clearly, good governance reduces risk of many types. That is why ERM practitioners are fervent supporters of strong governance.

The Devil Is In The Details

Movies about space missions that result in catastrophe can teach us a lot about how not to manage a project (the “successful failure” of Apollo 13 comes to mind). Yet there are actual space mission catastrophes — the loss of the 1999 Mars Climate Orbiter (MCO), for example — that also offer valuable lessons in preventing fundamental mistakes.

The MCO was the major part of a $328 million NASA project intended to study the Martian atmosphere as well as act as a communications relay station for the Mars Polar Lander. Famously, after a nine-month journey to Mars, the MCO was lost on its attempt to enter planetary orbit. The spacecraft approached Mars on an incorrect trajectory and was believed to have been either destroyed or to have skipped off the atmosphere into space. The big question naturally was: What caused the loss of the spacecraft?

After months of investigation, the primary cause came down to the difference between the units of output from one software program and the units of input required by another. How, the media asked, could one part of the project produce output data in English measurements when the spacecraft navigation software was expecting to consume data in metric?

Those of us involved in expensive and high-risk projects would ask the similar question: How could this happen? What follows are a few findings from the Executive Summary of the Mars Climate Orbiter Mishap Investigation Board (MCO MIB), with lessons for us all.

  • The root cause of the loss of the MCO spacecraft was the failure to use metric units in the coding of a ground software file used in trajectory models. Specifically, thruster performance data in English units were used instead of metric units in the software application code.
  • An erroneous trajectory was subsequently computed using this incorrect data. This resulted in small errors being introduced in the trajectory estimate over the course of the nine-month journey.

That erroneous trajectory was the difference between a successful mission and failure. Lockheed Martin Astronautics, the prime contractor for the Mars craft, claimed some responsibility, stating that it was up to its company’s engineers to assure that the metric systems used in one computer program were compatible with the English system used in another program. The simple conversion check was not done. “It was, frankly, just overlooked,” said their spokesman.

Just overlooked? Those of us in project management know that large-scale projects require the ability to see not only the big picture — the goals and objectives of the project — but also the details.

While not as prominent as space exploration, insurance software development also has millions of dollars at stake. Insurance products can be very complex, and the interactions required in business systems along with the calculations involved are all critical to producing accurate results.

Errors in the way in which calculations are derived can produce problems ranging from failure to comply with the company’s obligations under its filings to loss of revenue. Even apparently simple matters such as whether to round up or down on a calculation can have profound impacts on a company’s bottom line.

Although the failure to address the difference between English and metric measurements was identified as the root cause of the problem with the MCO, the real issue at hand is what caused that failure. How was it missed?

Taking a project management perspective requires asking the question, “Why?” Why was a key element overlooked? What led an experienced team to miss a crucial detail?

In the search for answers, it’s interesting to look deeper inside the report by the Mars Climate Orbiter Mishap Investigation Board (MCO MIB). In addition to the root cause of failure to use standard units of measurement across the entire project, the report found a series of other issues that also contributed to the catastrophe. The following are other lessons of the MCO mission and how they can be applied more widely to project management.

  • Lack of shared knowledge. The operations navigation team was not familiar enough with the attitude controls systems on the spacecraft and did not fully understand the significance of errors in orbit determination. This made it more difficult for the team to diagnose the actual problem they were facing.

    It is likewise common for insurance software projects to have mutually dependent complex areas — for example, between the policy administration system and the billing system. If one team does not fully understand the needs of the other, there can be costly gaps in understanding.

    The MCO MIB recommended comprehensive training on the attitude systems, face-to-face meetings between the development and operations team, and attitude control experts being brought onto the operation’s navigation team. Similarly, face-to-face meetings between the policy experts and the billing experts, between the business side and the technology side, will go a long way toward a successful project. In the world of e-mail and instant messaging, I think all of us spend less face-to-face time. Nonverbal communication is 60% of our communication and is often very helpful; there’s zero face time when we rely on electronic communication.

  • Lack of contingency planning. The team did not take advantage of an existing Trajectory Correction Maneuver (TCM) that might have saved the spacecraft, since they were not prepared for it. The MCO MIB recommended that there be proper contingency planning for the use of the TCM, along with training on execution and specific criteria for making the decision to employ the TCM.

    The need for contingencies in insurance software development is important too. Strong project management will consider project risks and therefore contingencies. And contingency plans are important at every stage — development, implementation, and once the system is live. Issues must be dealt with rapidly and effectively since they have an impact on the entire business. Regular reviews of the contingency plans are also useful.

  • Inadequate handoffs between teams. Poor transition of the systems’ engineering process from development to operations meant that the navigation team was not fully aware of some important spacecraft design characteristics.

    In complex insurance software projects, there are frequent handoffs to other teams, and the transition of knowledge is a critical piece of this process. These large, complex projects should have a whole team dedicated to ensuring knowledge transfer occurs. No matter how good the specifications, once again, it’s vital to get face to face.

  • Poor communication among project teams. The report stated there was poor communication across the entire project. This lack of communication between project elements included the isolation of the operations navigation team (including lack of peer review), insufficient knowledge transfer, and failures to adequately resolve problems using cross-team discussion. As the report further notes:

    “When conflicts in the data were uncovered, the team relied on e mail to solve problems instead of formal problem resolution processes. Failing to adequately employ the problem-tracking system contributed to this problem slipping through the cracks.”

    This area had one of the largest set of recommendations from the MCO MIB, including formal and informal face-to-face meetings, internal communication forums, independent peer review, elevation of issues, and a mission systems engineer (aka really strong program or project manager) to bridge all key areas. Needless to say, this kind of communication is a critical part of any insurance software project, and these lessons are easily applied. Zealously hold project reviews (walk-throughs). Do them early and often. The time spent will pay you back with success.

  • The Operations Navigation Team was inadequately staffed. The project team was running three missions simultaneously — all of them part of the overall Mars project — and this diluted their attention to any specific part of the project. The result was an inability of the team to effectively monitor everything that required their attention.

    Sound familiar? We just experienced this on a software implementation project where the software vendor outsold its capacity to be successful. Projects are expected to run lean because of cost considerations, but it’s always important to ensure that staff is not stretched to the point of compromising the project.

  • There was a failure in the verification and validation process, including the application of the software standards that were supposed to apply. As the MCO MIB noted:

    “The Software Interface Specification (SIS) was developed but not properly used in the small forces ground software development and testing. End-to-end testing to validate the small forces ground software performance and its applicability to the specification did not appear to be accomplished.”

Every project manager will recognize the need to stick to protocol and agreed-upon processes during a software project. Ensuring that project team members know the project/system specifications and standards is essential to successful project delivery.

And so, the devil is in the details. My career in and around insurance technology has spanned three decades now. While I have learned much, two things are abundantly clear:

  • There is no substitute for really good project management.
  • There is no substitute for great business analysts.
  • There is no substitute for great communication.

Okay, make that three things! It’s bonus day.

The full MCO report is available here.