Hard numbers on soft skills

Google is all about the numbers. Questioning the value of management, the Googlers founded Project Oxygen to investigate the characteristics of successful and less successful managers.

Employee surveys and performance reviews pinpointed eight key behaviors of the company’s most effective managers.

A good manager:

1. Is a good coach
2. Empowers the team and does not micromanage (See the sidebar “How Google Defines One Key Behavior”)
3. Expresses interest in and concern for team members’ success and personal well-being
4. Is productive and results-oriented
5. Is a good communicator—listens and shares information
6. Helps with career development
7. Has a clear vision and strategy for the team
8. Has key technical skills that help him or her advise the team

Now each manager receives specific feedback on items such as:

“My manager has frequent 1:1′s.”

“My manager provides difficult feedback constructively.”

“My managers helps me understand how my work impacts the organization.”

Managers’ scores have been rising across the organization.

For more information, see David Garvin’s HBR article How Google Sold Its Engineers on Management

Return on Intangibles

This article appears in the October 2013 issue of Chief Learning Officer.

Understanding learning’s value depends on measuring what can’t be touched. 

In his marvelous book Intellectual Capital, Tom Stewart asked, What’s new? Simply this: Because knowledge has become the single most important factor of production, managing intellectual assets has become the single most important task of business.”

In the last twenty years of the twentieth century, Wall Street investors changed the way they determined what a company was worth. That’s why Return on Intangibles is the most important metric in the CLO’s toolkit.

In the Industrial Age, tangible assets produced wealth, so investors put their money on plant and equipment. In the Network Era, know-how, innovation, and relationships became the keys to profitability, and investors began to value these invisible things more than physical assets. Things you couldn’t see (intangibles) became more valuable than things you could see and touch (tangibles).

In 1980, tangible assets accounted for 80% of the market cap of companies in the S&P 500. In a scant two decades, an amazing flip-flop took place. By 1999, intangible assets accounted for 80% of the value of the market. Instead of relying investing in expectation of a continuation of a stable past, investors began betting on the future.

In a scant two decades at the end of the twentieth century, an amazing flip-flop took place. Investors who had put their money predictable output began betting on the future. In 1980, tangible assets accounted for 80% of the market cap of companies in the S&P 500. By 1999, the situation was reversed, with intangible assets accounting for 80% of the value of the market.

That change in what investors value is fundamental to understanding return on investment, but sadly many L&D managers are saddled with outmoded, mid-twentieth century notions and procedures that don’t value intangibles at all.

Mechanically, intellectual capital is a company’s market capitalization (its value on the stock market) less its book value (the value reported on its balance sheet). When I attended business school in the seventies, nobody had this anomaly figured out. Shouldn’t stockholder’s equity be marked to market? The historical figures on the balance sheet failed to report what a company was worth.

Intellectual capital comes in several forms. Human Capital is the know-how and abilities of an organization’s people; Relational Capital is personal and business links to customers, partners, and suppliers; and Structural Capital is the infrastructure, processes, culture, and intellectual property that define how the organization operates.

Intellectual capital is largely a matter of mind and relationships. It’s impossible to measure directly, but you know in your heart that it’s real. What’s more important, the plant or the people? Where’s the real value to come from? The biggest upside is improving know-how, relationships, and processes; that’s what gives investors the confidence to up their ante.

Yet some experts tell CLOs not to quantify the returns on intangibles. Fearing a lack of precision in assessing their value, they leave them out of Return on Investment calculations entirely.

Business people love the security of firm numbers: they feel objective, even when they’re not the right numbers. The downside is that leaving intangibles out of the equation almost guarantees that they will not receive the attention they deserve, leading to unbalanced and suboptimal decisions.

Most business managers recognize that they’re managing a living organization, not a balance sheet, but many managers of L&D are still in a fog. Why? Because they’ve learned a narrow view of Return on Investment, namely ROI as seen through the eyes of a bank loan officer.

Commercial loan officers want assurance that if a loan goes south, they will be able to get their money back. Presumably, a borrower who cannot repay a loan is in trouble, perhaps bankrupt. The business is headed down the tubes. The banker looks at “liquidation value.” What could the bank sell the pieces of the company for? What can be salvaged?

In a fire sale intangibles are worthless. The Human Capital has already walked out the door. Relationships are frayed and there’s no one to maintain them. Brand is tarnished. Perhaps some IP and proprietary processes can be sold off at a discount but you can’t bank on it.

Were I evaluating a company in foreclosure, I’d list intangibles off to the side because I wouldn’t expect to be able to liquidate them.

When I’m working with a going concern, it’s the opposite. I pay more attention to leveraging the intangibles because that’s where the big upside resides.

 

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50 suggestions for implementing 70-20-10

Things should be as simple as possible, but no simpler. implementing 70-20-10 is not simple. Sharing 50 suggestions on putting 70-20-10 to work has consumed five posts spread over two months. Today the series is complete. Here’s what you’ll find:

Post 1   Post 2   Post 3   Post 4   Post 5

Post 1 People learn their jobs by doing their jobs. Effective managers make stretch
assignments and coach their team members. Experience is the teacher, and managers shape their teammembers’ experiences. Knowledge work has evolved into keeping up and taking advantage of connections. We learn to do the job on the job. To stay ahead and create more value, you have to learn faster, better, smarter.

The Coherent OrganizationAs standalone companies realize that they’re really extended enterprises, co-learning with customers and stakeholders becomes important as everyone faces the future together. Players throughout the corporate ecosystem need to be operating on the same wave-length. This can only happen when we’re adapting to the future, i.e. learning, at the same pace.Internally, everyone needs to stay current.

These posts offer guidance to managers who want to make learning from experience and conversation more effective. Replacing today’s haphazard approaches with systematic, enlightened management accelerates the development of future workers and gets the entireorganization working smarter. The potential is great.

Among the organizations that have adopted the 70:20:10 approach are Nike, Dell, Goldman Sachs, Mars, Maersk, Nokia, PriceWaterhouseCoopers, Ernst & Young, L’Oréal, Adecco, Banner Health, Bank of America, National Australia Bank, Boston Scientific, American Express, Wrigley, Diageo, BAE Systems, ANZ Bank, Irish Life, HP, Freehills, Caterpillar, Barwon Water, CGU, Coles, Sony Ericsson, Standard Chartered, British Telecom, Westfield, Wal-Mart, Parsons Brinkerhoff, and Coca-Cola.

Charles Jennings made 70:20:10 a guiding philosophy of learning during his eight-year tenure as Chief Learning Officer at Reuters, the world’s largest information company. (Disclosure: Charles and I are colleagues at the Internet Time Alliance. He is the world authority on 70:20:10 and these posts draw heavily on his work.)

Post 2 The 70 percent: learning from experience. People learn by doing. We learn from experience and achieve mastery through practice. Experience is a difficult task master. We learn more from making a mistake than from getting it right the first time. That’s why wise managers throw team members into stretch assignments. It accelerates learning. Being ejected from one’s comfort zone is why some say that the only thing worse than learning from experience is not learning from experience. Matching the most appropriately challenging experience to the developmental stage of the worker is the most powerful lever in the manager’s toolbox.

Charles Jennings reports that performance inevitably improves when managers ask their team members these three simple reflective questions:

  1. What are your reflections on what you’ve been doing since we last met.
  2. What would you do differently next time?
  3. What have you learned since we last met?

Post 3 The 20 percent: learning through others. Learning is social. People learn with and through others.

Conversations are the stem cells of learning. Effective managers encourage their team members to buddy up on projects, to shadow others and to participate in professional social networks. People learn more in an environment that encourages conversation, so make sure you’re fostering an environment where people talk to each other.

A Community of Practice (CoP) is a social network of people who identify with one another professionally (e.g. designers of logic chips) or have mutual interests (e.g. amateur photographers). Members of CoPs develop and share knowledge, values, recommendations and standards. An effective community of practice is like a beehive. It organizes itself, buzzes with activity and produces honey for the markets.

Post 4 Formal learning includes courses, workshops, seminars, online learning and certification training. Unfortunately, a lot of organizations aren’t using online learning to its full potential, and the results at those organizations reflect that. Learning expert Robert Brinkerhoff figures only about 15 percent of formal training lessons change behavior.12 This is a reflection of both formal learning creation and of the lack of focus on experiential and exposure learning. If what we learn is not reinforced with reflection and application, the lessons never make it into long-term memory.

Formal learning is typically conducted by an instructor. So why do we address it in a paper on managers? Because managers can make or break the success of formal learning programs. Research has found that the most important factor in translating formal learning into improved performance is the expectation set by managers before the training takes place13. Understanding the needs of the learners and following up after the event are also essential for formal learning success.

Post 5 You will need to become a champion for the new approach to developing talent. You must convince your sponsor that managers and supervisors are the linchpins to developing new talent. Without them, the company could find itself with nobody on the bench to take on future challenges. For your career, this lead role is high risk/high reward.

Managers have to learn how to develop their people. It doesn’t always come naturally, and managers can get too busy to pay much attention to it. Let them know you don’t expect them to train their people. Rather, they will set examples for their team; they will foster experiential learning by leading their team to tackle new challenges (the 70), by helping them reflect on the lessons of experience and by coaching them at every step (the 20), and by showing them how to get formal learning on the subject (the 10).

The Learning and Development Roundtable of the Corporate Leadership Council pinpointed three management practices that significantly improve performance.

  1. Setting clear expectations and explaining how performance will be measured.
  2. Providing stretch experiences that help their team members learn and develop.
  3. Taking time to reflect and help team members learn from experience.

Managers who set clear objectives and expectations and explain how they measure performance are much more likely to succeed. Their teams outperform their peers by 20%. That’s an extra day every week to get the job done (and engage in deep learning). Managers should make explicit why they’re assigning particular projects, what they expect people to learn and what sort of debrief will occur after the assignment.

The 70-20-10 model depends on L&D teaming up with managers to improve learning across the company, but often managers do not appreciate how vitally important they are in growing their people. This is the absolute, must-do secret to success to improving learning and development. Frontline managers must take this as the very definition of manager: someone who develops others by challenging them with assignments that stretch them to the point of flow17. This takes a can-do manager who knows how coaching creates mental models and habits, how motivation activates a chain of high-performance activities and what success habits their team members need to adopt.

Charles Jennings says that the role that managers play is far more important than that of Learning and Development or HR. Your role is to help managers learn that:

  • People learn from experience.
  • Managers shape the experience of the people on their team.
  • Experience coupled with reflection sticks lessons in memory.
  • Daily mid-course correction is much more powerful than after-the-fact reviews.
  • Every project they assign is a potential learning experience for their team members.

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Can your team’s marriage be saved?

clo_logo_sm (1)Can This Marriage Be Saved?

by Jay Cross

Return to: http://clomedia.com/views/articles/can-this-marriage-be-saved/

 

The National Institute of Mental Health spent millions of your tax dollars to build John and Julie Gottman a Love Lab. At the lab, personnel observed thousands of couples. They shot video, monitored heart rates, jitteriness and skin conductivity. They amassed recordings of hundreds of couples interacting at different times in their relationships.

The couples in the Continue reading

Reinventing management, the Stoos movement

Full house (10) for today’s Hangout on Air. I don’t know how many watched on YouTube.

We had a good discussion of the Stoos Movement and combining agile with management. Or replacing management with agile.

YouTube:

Slides from Hangout:

Transcript from Hangout:

You invited people into the hangout.

Peter Isackson

9:49 AM

Hi Jay

You invited people into the hangout.

Loretta Donovan

10:37 AM

Given Continue reading

World Stoos Day

Stoos (rhymes with close or dose) is a mountain village of 100 inhabitants at 1,300 metres in the center of Switzerland. People come to ski.

mtnpic

 

A year ago, twenty of us met on the mountaintop in Stoos to imagine management and business anew. Peter Stevens sent invitations:

Steve Denning, Jurgen Appelo, Franz Röösli and Peter Stevens are pleased to personally invite you to a spontaneous weekend in the mountains. Our goal is to bring together a group of (no more than) 20 (thought) Continue reading

Great, intimate professional gathering on talent management and learning

When people ask me what conferences they should attend, I tell them that small, intensive, participatory events work best for me. Most of these are invitation-only affairs. One exception, assuming you’re astute in talent management or corporate learning, is the annual Future of Talent Retreat.

This year will be the 8th Future of Talent Retreat. I’ve been to every one and will be attending this one in San Francisco, November 16-20.

Past attendees have included senior leaders and HR visionaries Continue reading

Management 3.0 from Jurgen Appelo

Jurgen Appelo plays with more models of how things ought to work than anyone I else I know. His book Management 3.0 presents, assesses, and sometimes interconnects with agile, people-oriented processes relentlessly. I’m a fan. See his blog. And this presentation:

Jurgen and I met at the Stoos gathering. I just bought his latest, How to Change the World, to read on vacation.
Here’s the Stoos bookshelf. This is about as close to a definition Continue reading