On violence, the death penalty, the Buddha, love.. and the tragedy of love..

The terrorist Kasab was hanged in India recently. Was that the right thing to do to him? Philosophers have debated both sides of the death penalty question for centuries, from Kant onwards.. but they have all missed the point.. (all except One, that is..) because they have asked the wrong question. The right question to ask is: was that the right thing to do to ourselves? The Buddha saw many centuries ago that the perpetrator of violence is always punished, not in the next world, but then and there – he becomes less of a human being, than which there can be no greater punishment. It is not out of compassion for the other person that we should abjure violence, it is out of compassion for oneself. The experience of love, of being in love, provides a different view of the same phenomenon. Whom does love benefit? It is the lover who is transformed, who is exalted, who is touched by the divine – not the one he loves. To the other person, it makes no difference whatsoever – if anything, it is an embarrassment and a burden. Which is why it is rightly said that the joy of love is in giving, not receiving.. Now to the tragedy of love.. what is the tragedy? Not Romeo and Juliet killing themselves, that is mere stupidity. The tragedy of love is this – what the lover wants is to make a difference to the one he loves, to make him/her feel the same joy/exhilaration he feels as a lover – and he can’t, because it is not up to him at all. That is tragedy, real tragedy, because it is irredeemable..

The previous post on why companies will always miss their targets, immediately raises the question: how should companies set targets, then? The immediate, and provocative, response would be: why should they set targets? Is there any evidence that companies who set targets get any benefit from the exercise? McKinsey and Co., for instance, does not set targets, there is no evidence that they have become laggards in their field. Ok, maybe that is too radical for some people to swallow. If we do insist on setting targets for the company as a whole, here are some thoughts on how to do it: 1. By strict analogy to Theory of Constraints thinking: top management should set an overall target for the company and announce it. Every account manager runs as hard as he/she can, and top management keeps monitoring the buffer (the shortfall, in this case). (In TOC applied to project management, the buffer is maintained only at the project level, not at the level of individual tasks, and it is the only metric monitored continuously). As the year progresses, top management shifts resources around, or adds resources to close the gap. Whoever puts up his hand and volunteers to do something extra or innovative to cut the shortfall is a hero, and so on. The point is, no account-level deficits or buffers, only company-level. 2. How is the company-level target to be set? By reference to external factors only, certainly not by an aggregation of account-level targets. Systems thinking requires us not to make the mistake of thinking global optimization is to be achieved by optimizing at subsystem level. 3. The difficult trick will be – how to evaluate and incentivize account managers. I would again think about this at two levels: at a philosophical level, the important thing is company performance; evaluating people is a secondary question and it doesn’t matter much if we come up with inexact ways of doing it. At an operational level, I would suggest a subjective evaluation by the CEO/COO of each account manager, based on assessment of his/her reality, and how much effort/innovation he/she put in to grow the business. We can even have a metric made up of absolute growth, customer satisfaction, innovation, and people satisfaction. Just because we want to be able to measure the performance of our managers, let us not make that itself a constraint to our growth! In the first place, there is no evidence that incentives improve performance (and a lot of evidence that they reduce performance), in the second place, let us not hurt the main goal – which is performance, just because we want to achieve a secondary goal – measuring performance. It is like weighing down Usain Bolt with a 10 kg speedometer just because we want measure how fast he runs. Let us find another way to evaluate and reward managers, that doesn’t directly constrain performance itself.

Why a company will always miss its target

Dr. Goldratt, in his wonderful work on project management, demonstrates that a project is guaranteed to be late if it is managed in the conventional way break down the project into work units, assign deadlines to each and build in buffers in each time estimate. His reasoning is roughly as follows: nobody is going to finish early because there is no incentive to do so, anyway work always expands to fill the time available, and so on – when we bring in what he calls ‘Murphy’, by which he means unpredictable uncertainty, ‘some s---‘ happening, basically, which will cause some overrun somewhere, the project as a whole is guaranteed to overrun, since nobody is going to make up for it. If we apply this same kind of thinking to revenue targets, we get a similar law – a company as a whole will never meet its target if its target is simply the aggregation of individual targets, for instance, on accounts. I have observed the same kind of behavior by account managers that Goldratt describes in the context of a project: as the year end, or quarter end approaches, an account manager who knows he is going to meet his target, eases off and coasts. Meanwhile, something is bound to go wrong in some other account, which will end up falling short of its target, thereby guaranteeing that the aggregate target is not met! This is a behavioral issue and cannot be resolved by adding or subtracting buffers to targets. It can only be met by recognizing, rewarding absolute performance, not performance against targets.. ‘run as hard as you can’ in Goldratt’s words. I believe the very process of target setting is causing us to underperform as an organization.

Should the Board drive Strategy?

‘This Board does not drive strategy adequately’ is a common criticism of Boards of Directors - we lament that Directors often don’t know enough of the company’s business to drive its strategic planning process, do not have enough hands-on experience in the industry, and so on and on.. I have had enough of such laments.. the right question to ask, I believe is – what is the role of the Board anyway? Is it to drive strategy? If it is, then what is the role of the CEO and CFO and CMO and every other CxO who makes up the senior management of the company? In many companies I work with, the CEO is also the Chairman and Founder of the company, or the scion of the founder. So he knows, better than anyone on his Board, what his company is about, and has his lifeblood invested in its well-being. In order to protect himself from ignorant Directors, he sometimes packs his Board with ‘yes men’ who will let him do whatever he likes (not always, I hasten to add.. some of my clients are very far-sighted). Unfortunately, the financial markets don’t think much of his Board.. and so on.. Clearly not a healthy situation. The way out is to understand what the proper role of the Board is. It is unrealistic to expect the Board, usually made up of people who are busy and active running their own businesses, to ‘drive’ the strategy of the company they have the honor of being ‘Directors’ of. What we can, and should expect of them, is that they should know the difference between a good strategy and a bad strategy, and, more importantly, to know when there is no strategy at all, merely a bunch of high-sounding slides. The management (CEO and his team) are the proper functionaries responsible for formulating a company’s strategy, for, remember, they are the ones who will have to execute it, and they are the ones who have to live and die by it. What the Board can and should do, is make sure they have a strategy and it appears to be well-founded and well-grounded. That is all. In an old, long-forgotten article, Elliott Jacques pointed out that, as we go higher up in any organization, the time horizon over which one ‘thinks’ becomes longer and longer. The horizon of the Board should be infinite, it is, after all, the role of the Board to ensure that the organization lives, and thrives, forever. The horizon of a CEO could be, say, ten years- the horizon over which a strategy or ‘theory of business’ may reasonably be expected to hold good. To ensure that the organization lives forever, the Board should consider the interests of all its stakeholders, including the community it lives in, and also ensure that it has a viable strategy. Of course, It should also ensure that the Management does not loot the company, and so on. But so far as strategy goes, it will never know enough to be sure it is the right, winning strategy – that is for the CEO to think about. The trouble, I think, is that many Directors were appointed to the Board because they were successful CEOs, so they naturally continue to think like CEOs. The sad truth is, being a good CEO and being a good Director are two different things..

On Scaling

On Scaling: Vipassana and Gyaanshala The numbers are so gigantic in India – any enterprise that wants to make a difference has to figure out how to scale. This is what we can learn from two amazing organizations: Vipassana centres and Gyaanshala. Take Gyaanshala first. It is an organization founded and run by my good friend Pankaj Jain in Ahmedabad – its aim is to provide primary education to slum children. Today, it is certainly the largest in India and perhaps in the world, with several thousand children enrolled. There are many aspects of this story, but the one I want to concentrate on here is: how did they solve the problem of scaling? The single biggest constraint facing any such enterprise today is lack of good teachers – that too, teachers willing to go and teach in slums, where the schools are located. Pankaj concluded that the only way to deal with the constraint was to make it go away – to evaporate the cloud, as Goldratt would have put it. He created a system where teachers become the least of the constraint – strong materials, detailed scripting of every session, and repeated and intense training and retraining of teachers, makes it possible for anyone to be a teacher in this system. Vipassana is another example. There are now Vipassana centres throughout the world, and thousands of people go through them every month. How has Mr. Goenka, the founder of these Centres in India, solved the scaling problem? In every session, at every centre, there are facilitators but their role is very limited – they hardly even speak. Even the instruction ‘take a break for 15 minutes’ is given by Goenkaji himself by a recorded audio. Every session is scripted in advance and controlled by an audio recording of Goenkaji. There is zero room for local deviations. And the experience is wonderful. The parallels are obvious, I do not need to explicate them…

Organizations in Motion

Org structure change! It is the magic potion, isn’t it, that CEOs want to feed their companies every now and then (could it be because the CEO is the only person not affected by it? Everyone reports to him anyway…!)
While this is not quite an annual exercise (thank heaven for that!), it does seem to happen every two or three years at least.. the current organization is not ‘delivering’ and we hope to shake things up a bit and maybe shake out some rust in the wheels.
This article is not about organization structure – really, too much has been said and written about organization structure for me to want to add anything to the body of work on it. The really important exercise is: thinking through how the organization will actually act –what will the organization look like in motion? For this, we need to shoot a film, not write a book – or, at least, write a movie script. Just as the business model is the strategy realized, so is ‘organization in motion’ the organization in action, on the ground. The business model and the ‘organization in motion’ are very closely related – the starting point for the ‘organization in motion’ is the business model.
In designing the organization, CEOs rightly ask: where do I want to place the levers of accountability? Whom do I want to give powers to? Implicit in this question is the more fundamental one: what business model do I want to build?
I will illustrate with a recent example: one of the companies I advise, is wrestling with the question: do I organize vertically or horizontally? Should we create P&L units (loosely called SBUs) around technology or around industries?
My own observation is that it doesn’t really matter – what matters is how the work is going to get done.. the questions we should ask are: what is our growth model? Are we going to grow existing accounts and relationships by selling them more and more products and services, or are we going to go from one client to another and sell them the same thing, over and over again?
The really important exercise, hardly ever done with enough seriousness is to construct a few scenarios and work through how the organization will delivering each scenario. Let us consider one: we have a customer, say, in the US, to whom we have sold a solution based on one technology. We have a team back in India working hard at delivering the solution. Now what? What comes next? How will we grow the business? Who will work with the customer to figure out what other technology solutions he needs? If the account is ‘owned’ by the first technology unit, what is the incentive for that business unit to cede control of the account to another technology unit? It can be made to happen, but only by ‘pulling teeth’.. is that what we want as the new ‘normal’? If we somehow manage to sell the customer the new solution, who will deliver it? Will it be the same team or a new team? Who will manage the interface between the teams? If we think this is the important ’business model’, then it stands to reason this is the level at which KRAs, incentives, team structures, business units, need to be aligned. Obvious, isn’t it? But how many organizations actually think through all this when they change the organization? Thinking through scenarios of the ‘organization in motion’ sounds artificial and trivial, but it is, in fact, the key to making sure the organization works!