Nourish the Unexpected: Facilitating Emergence

It’s not quite enough to stop controlling in order for the people in your organization to do self-managed, unprecedented work. Facilitating their work is also critically important.

Facilitation nourishes and encourages people in several ways. It feeds the part of us that wants independence and mastery because a more experienced manager/co-worker is helping us with a goal instead of exercising command over it. It feeds the part of us that wants social validation: if someone is helping us accomplish a goal, it tells us the goal is worth accomplishing. It even feeds the part of us that’s lazy–that is, the part that wants to accomplish our goals while using the smallest amount of energy possible.

Think of your organization as a computer:

Algorithmic Containmentphoto credit: Algorithmic Contaminations via photopin (license)

A computer is highly structured, functional, and hierarchical, but in order to continue running the latest software, it has to be continually upgraded and redesigned. A computer doesn’t grow on its own. This is the traditional organizational model.

Now think of your organization as a garden, growing all kinds of plants:

English gardensphoto credit: Gardens at Canons Ashby via photopin (license)

You can select the kinds of plants to grow, you can fertilize and water them to help them grow faster (but not too much or it will choke them), and you can trellis them to help them grow in a certain way, and you can prune them when they grow in ways that aren’t fruitful. Plants in a garden grow on their own, but left untended, weeds will sprout up and diseases will take hold and some plants won’t receive enough nutrients.

(Doesn’t this second metaphor sound like your organization already? Why do we so often feel like we need the additional layer of inorganic structure, except that we want an illusion of control that we don’t actually have?)

Facilitation is the art of pruning, trellising, weeding, hedging, fertilizing, and helping your organization grow. You don’t order a pear tree to blossom, you don’t command bees to pollinate, you don’t provide tomatoes with minimum production quotas. You also don’t give them these initiatives and then go back inside your house and expect everything to work unless you’re told otherwise.

A similar approach can be used to grow your organization.

Consider an example of a great gardener: Brian Grazer, movie and television producer and co-founder of Imagine Entertainment. Grazer’s preference to ask questions and make requests rather than give orders helps gain buy-in, makes people feel respected, and allows him room to doubt his knowledge without being hands-off. As a leader, he uses questions and requests as a form of trellising, guiding people to grow in a certain direction rather than commanding them to do so.

The kind of gardener you become is up to the specifics of your situation. So long as you’re seeking to grow your people and your organization, you will treat them with care and make sure they have the resources, support, and guidance they need to grow in the way that’s best for them. Being neglectful and being overattentive both have their hazards.

Have you ever worked with a good “gardener?” What have you learned from these people who dedicate themselves to growing their people, their organizations, and even their strategies?

The Strengths of Adaptive Organizations

While most of my posts can be applied to many different kinds of organizations, and even more can be applied to businesses specifically, I write all my posts with adaptive organizations in mind.

Adaptive organizations are generally loosely-structured, non-hierarchical, and depend on temporary teams to pop up and disband on their own. They’re the primary focus of Frederic Laloux’s book Reinventing Organizations, as well as the driving philosophy behind the consulting firm Undercurrent.

Adaptive organizations are designed to maximize the co-operation of human and machine. Unlike Industrial Age organizations, adaptive organizations (what Frederic Laloux calls “teal” organizations) do not rely on humans functioning as machines. Instead, they depend on the value created by healthy individuals, collected from diverse backgrounds and bonded into communities by a common vision for the future.

The contrast between the two concepts can be so pronounced that some can’t even fathom how these futuristic organizations would work. But the fact that adaptive organizations are already beginning to emerge (as with Spotify, Valve, and GitHub) shows that they aren’t just a philosophical exercise. They are real, they are successful, and they will continue to thrive.

Laloux outlines three principles of adaptive organizations: self-management, wholeness, and evolutionary purpose. While these are incredibly useful guidelines for creating a future organization, they don’t quite explain why adaptive organizations work. I’d like to propose three corollaries to Laloux’s principles.

  1. Traditional organizations rely on planned behavior; adaptive organizations encourage emergent behavior. Traditional organizations are heavily planned: they hire people with specific skill sets to fit into specific roles and accomplish specific tasks that make up a system that’s carefully designed to play out the vision of the entity at the top. This ultimately makes traditional organizations less than the sum of their parts. Adaptive organizations operate at the opposite end of the spectrum: they expect employees to manage themselves and one another dynamically. Fixed hierarchy is counter-productive because it limits deviation from an established agenda; in a fixed hierarchy, I don’t have much room to do anything that doesn’t directly benefit my immediate supervisor, and he in turn has little room to do anything that doesn’t benefit his immediate supervisor. Designing an organization to encourage emergent behavior means opening up to unplanned innovation by anyone at any time. It can be equal parts dangerous and game-changing; the art and science of emergent behavior is to minimize the danger without discouraging the game changers.
  2. Traditional organizations consolidate efforts in an attempt to design the best, most efficient single outcome; future organizations rely on multiple discovery to generate iterative, multi-dimensional innovation. When a traditional organization discovers two different efforts to accomplish a similar goal, it’s seen as inefficient. Duplicative efforts are shut down and/or consolidated into one another, leading to political battles and possibly resentment on the part of the employees who were trumped. These consolidation efforts frequently fail, either in process (they are never completed) or in product (the outcome is too unwieldy or unhelpful). Multiple discovery allows several efforts to reach the same point from multiple directions, or to reach different points from a similar origin. The outcomes of the individual efforts tend to be leaner and more focused, and if one option fails there are others at the ready.
  3. Traditional organizations depend on metric productivity (output divided by hours divided by pay rate); adaptive organizations develop unique value. Metric productivity is the enemy of unique value: it suggests that all products, customers, and employees are comparable and judges each employee against some Platonic ideal of productivity. Metric productivity is what causes us to believe that putting in more hours makes us more valuable to our employer, that what we do to our bodies in our off-hours isn’t important to what happens when we’re on the clock, that our mental and spiritual and social well-being is something we do on our own time and work doesn’t factor into it. But metric productivity isn’t just bad for employees, it’s also a dead end for employers. If your concern is wholly for metric productivity, chances are high that you’re in competition with someone. Competition is a sinkhole. If you’re not digging yourself out of it and creating unique value, you’re bound to lose.

This is how adaptive organizations can thrive in spite of the concerns that keep leaders locked into traditional models. Adaptive organizations eschew the assumptions of traditional organizations–efficiency, competitive pricing, planned behaviors and outcomes–and take the lead because they engage both employees and customers in a way that makes traditional competition obsolete. They also gain efficiencies in unexpected ways–from Buurtzorg spending less time on patients by spending more time with them, to Netflix’s “the best are 10x better than average” philosophy. In the end, adaptive organizations are even better than traditional organizations at traditional metrics, because they focus on purpose and put the future of their organization in the hands of each individual. Instead of focusing on functional planning, an effective leader provides focus, narrative, and inspiration to the efforts of the collective–as Saint-Exupery puts it, she teaches them “to yearn for the vast and endless sea.”

This post serves as the frame for my next several posts, in which I’ll tackle multiple discovery and dig further into emergent behavior to provide some practical understanding of how to apply these concepts to a real organization.

What do you believe about adaptive organizations? What’s keeping you from applying these principles to your own organization? I look forward to discussing with you in the comments.

Do This, Not That: Market Versus Social Norms

Dan Ariely makes a distinction between market norms and social norms in the fourth chapter of Predictably Irrational. He touches briefly upon the way that employers mix their messages, dangerously breaking social contracts and making things about money when they are attempting to lead a socially-driven organization.

As the book documents, operating on market norms (i.e., thinking about the money I’m getting in return for the activity I’m doing) can damage productivity even when compensation is considered adequate. But worst of all, it can damage relationships when we assumed we were operating on higher terms–social norms like trust, reciprocity, and friendship. And we can’t mix the two: once we perceive that our efforts are being valued according to market norms, that’s the mindset we use for the entire interaction.

The next era of commerce will not be kind to organizations that depend on market norms, except as perhaps a back end, business-to-business protocol. For the most part, those things that are driven by competition, price, and data can be outsourced to computers and become a secondary function of people-facing businesses, businesses that use humans for those things humans are uniquely capable of accomplishing.

If you’re still using market norms to run your business, it’s best to start weeding them out now, before they relieve you of all your self-motivated people and leave you with half-hearted key-punchers.

Here are a few “do this, not that” guidelines for common business practices:

  1. Pay healthy salaries, don’t track hours. Some businesses require hour tracking, but to the extent that it’s possible your people shouldn’t identify the time they put in with dollar amounts. Doing so puts them in a market mindset: Am I getting enough money to be worth what I’m doing? Paying healthy salaries instead removes market questions from their minds, and has the potential to make the rare transformation of money into a social contract: the business is a community that takes care of your needs, rather than an employer compensating you for your activity. This is the genius behind Netflix’s policy to pay employees as much as they would pay to keep them: there’s no need for employees to ever negotiate salary or think about how much their work is worth, so they operate on a basis of trust and social contract rather than constantly competing with the employer for a fair wage. Even better if employees have direct deposit, where the money simply appears in their accounts as if by magic.
  2. Appeal to social contract, don’t talk about money. It should go without saying that you should never bring up the fact that you’re paying an employee, or use money as a bargaining chip for a change in behavior. They’re already aware that a threat to their position in the community is a threat to their livelihood. Focus on the social contract rather than the monetary transaction. Are they letting down their co-workers? Are they hurting their ability to make a difference in the organization? Talk about those things. If you have to mention money, it’s already a lost cause. (If they’re the ones bringing money into it, you might as well address their concerns–they’re already thinking in market terms. Take it as a form of feedback on your ability to keep market norms out of your business, and consider whether the issues raised might affect other people as well.)
  3. Make your people financially secure, don’t cut costs at their expense. If your employees have to be worried about paying the rent, covering bills, and eating, then they are already thinking about their jobs in terms of market norms. If you’re going to employ someone, make sure you’re ready to pay enough that they don’t have to be concerned about the basics of life. That includes health care, child care, and retirement. Ariely and James Heyman report that people who perceived themselves as paid inadequately lost as much as a third of their productivity at a very simple mechanical task (forget creative problem solving), and that’s without factoring in any worries about feeding their children. And if Costco is any indication, paying a living wage is a clear path to sustainable business.
  4. Share successes, don’t pay bonuses. This is a tricky one: Traditionally, bonuses are the way you share successes. But paying bonuses can create a clear line between the actions of an employee and the money, turning the action into market-regulated action rather than social-regulated action. There are different ways of accomplishing essentially the same thing. One is to reframe the concept of compensation entirely, as with my post on taxation. If employees interpret the amount they earn not as a payment from you but as something they are accomplishing with you, it may be possible to avoid activating market norms. Another way is to award the bonus as an in-kind gift–but this is fraught with pitfalls. Having the employee choose the gift causes the employee to think about the monetary value; choosing the gift for the employee puts one in danger of choosing something the employee doesn’t want or need; and having co-workers choose may invite comparison and market-norm thinking among the co-workers.
  5. Show loyalty, don’t dig moats. There are already a lot of financial obstacles to leaving a job. Creating new ones causes your people to think about the job in terms of their financial need instead of thinking about the social contract. Instead, you should make it as easy as possible for them to leave–and challenge yourself to convince them they shouldn’t. To the extent your people feel that they are with you by choice and not by necessity, they will be more likely to act on social norms instead of market norms.

It can be difficult to manage the financial needs of the business while operating on social norms, but undermining the social norms can quickly undo all the effort you’ve placed into creating them. If you start by thinking of your organization as a community, a family, or a nation, you will be on more solid ground. And when in doubt, leave the money out of it.

Who Is the Mother of Invention?

You’ve heard that “necessity is the mother of invention.” It’s a proverb that’s likely over 500 years old. But what does it mean?

The saying might recall Captain Kirk calling down to Scotty in engineering, and Scotty iconically replying, “She canna take much more, Cap’n!” Fans of the show 24 similarly joke about Jack Bauer telling Chloe to “just do it!” as the push she needs to make the impossible happen. And let’s not forget the ingenious agent Macgyver. Our culture is rife with the myth of the skilled but uncertain innovator solving an impossible problem in an unrealistic time frame simply because it was necessary. This kind of resourcefulness is a cornerstone of Americans’ beliefs about economics and the world.

But the question is: How true is it? Not the one-in-a-million stories we pluck from the biographies of rags-to-riches businessmen, but the kind of everyday invention and innovation that drives our economy forward. Does desperation drive invention? Or is it something else?

The answer, as with many things, is dependent on the specific definition and context. Desperation as a sense of urgency to meet a particular deadline may spur certain kinds of innovation. But desperation as a state of being–that is, the lack of security around one’s position, as with financial poverty or the ongoing threat of being fired–tends to lock us into survival mode. Desperate people grasp at proven solutions that promise to get them what they need, rather than inventing solutions that may not be sufficient.

That’s not to say these solutions are without risk. But consider someone who agrees to transport bulk drugs: The activity is risky, but the payoff is assured. Innovation requires room to be uncertain about the outcome: Will there even be a payoff? Will it be big enough? You can see this play out at companies that are in danger of bankruptcy: Rather than innovating out of the problem, for the most part they cut down to the basics and try to replicate past success. For every individual that becomes more innovative under that kind of pressure, thousands lose the ability to innovate at all.

If not desperation, then, what drives innovation?

The first parent may surprise you: Laziness. We innovate because the way things are being done is just too much work. This is part of the reason for a disconnect between hours worked and productivity: An innovator can work half as much as someone who doesn’t innovate, and still accomplish more. Laziness gets a bad rap simply because there are so many who misuse it. One of my own innovations early in my working life was a matter of saving myself the tedium of several weeks of repetitive tasks. That innovation was ultimately spread to offices around the country and saved hundreds of hours.

The other is often thought to be exactly the opposite: Enthusiasm. We also innovate because we want something new and better for the future. Our ability to anticipate the future is one of the things that distinguishes human evolution from natural evolution: we can evolve not just for the present circumstances but for the circumstances we anticipate.

Together, laziness and enthusiasm are the push and the pull of an engine. Laziness, better described, is a dissatisfaction with or disinterest in things as they are; enthusiasm is a deep interest in the possibility of things to come. Spitting out what is and sucking in what’s coming is the process that drives innovation forward. Without enthusiasm, laziness becomes pessimistic and defeatist. Without laziness, enthusiasm becomes toothless; if the present isn’t so bad, it’s better to just let that future come on its own.

Necessity may be a parent of invention in at least one sense: We invent things that are useful to us. If we didn’t need it, why would we invent it? This reveals a critical problem with the way innovation is handled in many organizations. Some businesses try to institute an “innovation department.” But isolating the innovators from the problems is self-defeating. An innovation department has to go the extra mile just to understand what problems need to be solved, and may often end up solving problems that don’t exist or aren’t high-priority. The power for innovation is always best placed in the hands of those who experience the need on a daily basis.

Finding Yourself: Acting Like a Leader

In my life, I have to play many roles. For most of my casual life, I can play roles that suit the way I typically act–roles that are consistent with the way I usually tell my story, and modes of being that I’m comfortable slipping into. But often in business and in leadership, I have to take on roles I’m less comfortable playing.

When I’m communicating with multiple stakeholders, for example, I have to take on a different role with each one. With IT, I have to be someone who cares about process, rules, requirements, risks, ROI. With the knowledge management team, I’m a person who is concerned with lowering the barriers to documenting and sharing knowledge. With executives, I am someone who cares about strategic initiatives. In each instance I play a different role.

The famed acting teacher Uta Hagen wrote in A Challenge For The Actor about her struggle to “lose herself” in her roles when she first studied acting. The expectation is often that we have to leave ourselves in some room, and assume the posture, the voice, the gestures, and the attitude of an entirely different person. We have to become so engaged in this other person that we forget who we are and transform completely into the fictional role.

I’ve seen it happen often where colleagues felt they had to drop who they were in order to play a particular “role” in a business context. They had to pretend to be leaders, to pretend to be presenters, to pretend to be experts. They had to wear different clothes and censor thoughts and act like they cared about things. And in some cases, they pulled it off. If you’re making a sale, you can pretend for a couple of hours. But if you’re leading a team or an organization, pretending won’t get you very far.

Hagen’s revelation that finally allowed her to act well was that “losing herself” was not just a red herring but an impossible task. We can never abandon ourselves, and even if we could we would be empty, a complete blank without human features or relations. (Perhaps you’ve met such “empty” people–often they are diagnosed with narcissism or sociopathy, and have to work much harder to be authentic if authenticity is something they desire.) Instead of “losing herself,” Hagen realized she had to find herself in the role.

A great actor doesn’t connect with us because of his excellent display of mannerisms and vocalizations. Compare Johnny Depp’s Jack Sparrow in Pirates of the Caribbean with Meryl Streep’s Miranda Priestly in The Devil Wears Prada. Each features an acclaimed actor in an over-the-top role. But although Jack Sparrow is entertaining, there is an edge to Priestly that makes us bleed: she is in the end a human being like we are, despite her conniving and condescension.

Any role I assume–a leader, an advisor, a seller, a buyer, a mentor–is not something I can piece together from a set of ideas about what that kind of person should be, stitched together like Frankenstein’s monster and given life by sheer force of will. In order to inhabit each role, I must find the version of myself that is the role I’m assuming–the version that really cares about the same things as his audience, and doesn’t just pretend so that he can manipulate that audience.

To that end, Uta Hagen laid out nine questions to understand a role. Actors would lay these out and understand them in detail, but as a professional, it’s better to work out a way of thinking for different groups of stakeholders.

  1. Who am I? Consider your own background, your strengths and particularly the differences in your perspective that could be valuable to your audience. Your influence begins with truths about who you are–not necessarily the truths you are used to playing, but truths nonetheless.
  2. What time is it? Consider the circumstances in the world: What are the current movements in your audience’s industry and professional field? What are they dealing with on a day to day basis? How does that affect the version of yourself that relates to them? What time of day is it? How does that affect you? How does it affect your audience?
  3. Where am I? Physical context is very important to our psychology. Are you in an executive boardroom? A cubicle? Have you flown in from far away? Has your audience?
  4. What surrounds me? Notice the physical features of the reality around you. These are part of the context of your audience and so they are a part of you as well.
  5. What are the given (immediate) circumstances? What do all the present parties have on their minds? Where has your audience come from just before the present moment, and where are they going afterward? Are people under pressure to meet a deadline? Are they dealing with the fallout of a controversy? Are things slow and a lot of people on vacation? Consider how these things affect your audience and, consequently, your role in relation to them.
  6. What is my relationship? Why do you know these people? Who do they think you are? What kind of influence do you have on them? (You always have some kind of influence–be specific.) What other relationships are important to the situation, e.g., does your audience see you as a protege, representative, or advisor to someone they respect?
  7. What do I want? Remember that this desire is specific to your role: that is, the role that is interacting with this specific audience. You want something in relation to them: either from them, for them, or better yet, with them. If you want too many things, or what you want is not specific, your role will be unclear and your presentation will be confusing.
  8. What is in my way? The obstacles you face will usually relate to your audience, e.g., getting their buy-in. If it isn’t, you are wasting their time and yours. Be specific about these obstacles: Is it a matter of investment level? Risks? Timeline? Priorities?
  9. What do I do to get what I want? These questions are about you and your role. Don’t get ahead of yourself by solving your audience’s problems for them. What are you doing right now that will achieve the goal of the current interaction? How can you alleviate your audience’s concerns and help them see the opportunity you see?

In the end, you aren’t aiming for a deception, but a version of yourself–found in your personal truths–that relates to and operates with your audience. Understanding how you create those roles, and how you can better refine them, is ultimately a process of becoming more authentic in each of those roles. Rather than putting them on like masks, you will become more yourself in each of them, and consequently a better leader in all of them.

Recognition: The Motivational Compass

I’ve discussed removing obstacles and providing feedback. I want to talk about one other way to feed motivation, one that walks a line between intrinsic and external: recognition.

Lack of recognition is a surefire way to kill motivation. In fact, if you really want to destroy someone’s will to work, don’t criticize their efforts–just ignore them. And yet, many leaders seem to operate on the assumption that if something is good it will be self-evident, and end up seeming to ignore the fruitful efforts of those around them.

In American business, we’ve mythologized disruptors who plough forward with complete disregard for the praise or derision of others: Steve Jobs is our Hercules, Elon Musk our Perseus. But this mythology ignores the reality of the human social identity in favor of the fraction of a percent who accomplish radical individual change. It also ignores the reality that the vast majority of what happens in the world–even the vast majority of change–is a product of those who are not disruptors. We idolize the individual who makes an enormous change while downplaying the collective power of millions who make small changes.

And for those millions making small changes, recognition is completely critical. It’s a social compass: we want to know that what we are doing is useful to those around us, to guide our further efforts to be more useful. In ancient times, it was largely self-evident: if I shoe a horse or patch a tent, I can see how it’s useful to my customer. Today, business is so abstract that often the only indication of whether something is useful is the explicit response of the people around us–particularly in remote work environments (e.g., working from home).

I feel recognized when someone to whom I’ve given authority to value my work has evaluated it, found it valuable, and expressed that value back to me.

I’ll use this definition as a jumping off point to discuss the important parts of recognition:

  • someone: Unlike feedback, which can be automated, recognition is an essentially human, social act. The value of recognition is that the phenomenon exists in another person’s consciousness. Consider even the word, “recognition:” making my experience (of another person’s contribution) conscious. Unless the phenomenon exists in human consciousness and is expressed sincerely out of experience, it is false and doesn’t serve the purpose of recognition as a motivator.
  • to whom I’ve given authority: Authority doesn’t necessarily fall along any chain of command. I make the decision to give authority based on my own values. Every action has an intended impact and an intended target, whether these things are conscious or unconscious, deliberate or haphazard. The target of that impact is usually the one to whom I give authority. (This is true because of the converse: the one to whom I give authority is usually the target of my intended impact, even if there’s a more obvious impact on someone else.) However, we may also give authority to others we respect.
  • authority to value my work: The particular type of authority is contextual. The work I’ve done is intended for a specific purpose. To that end, the person who has authority in each instance will depend on the work that is being valued.
  • has evaluated it: Evaluation is a conscious act–it’s not simply taking and using the object, but specifically noting its features and overall usefulness. This is the act of recognition: acknowledging one’s own experience of the work and bringing it to consciousness.
  • found it valuable: Recognizing that someone’s work is useless isn’t helpful when trying to encourage motivation. Even if the work turns out not to be valuable for the specific purpose you intended, try to recognize what is valuable about it. If it’s utterly irredeemable, then the situation may call for feedback but not recognition.
  • expressed that value: These last two steps can sometimes get lost in the act of recognition, when I recognize that something is valuable to me and then go out and use it, while forgetting to report its value. The danger is in believing that recognizing value is sufficient and then keeping that recognition to myself. I not only have to recognize value, but express the value. Expressing the value as I perceive it is enough; even if the work is part of some larger scheme, it doesn’t need to accomplish its ultimate ends to be successful.
  • back to me: This is another point that can be overlooked. Expressing the value you perceive to someone else is great, and can lead to great things. But that’s not the purpose of recognition. Recognition reflects my perception of value back to the person who created that value.

Has this post been valuable to you? What was valuable about it? How could it be more valuable?

Feedback: The Motivation Superpower

Intrinsic motivation, left to itself, can be unfocused. This is especially true across an entire organization. There are ways to improve focus through establishing shared values and getting everyone to tell the same story, but there are also mechanisms for improving the focus of an individual’s intrinsic motivations. Few of these mechanisms are more fundamental than feedback.

I don’t mean peer review forms or a semi-annual sit-down with the boss. I mean simple feedback loops that work throughout every day.

Simple feedback works like this: A subject takes an action, there is a reaction, and information about the reaction is returned to the subject, who can then use the information about the reaction to modify her activity. I touch a hot kettle, the kettle burns my fingers, my nerves send information about my fingers burning back to me, and I pull my hand away. This is how fundamental feedback is. But because so much business in today’s world is abstract, we have to construct feedback loops deliberately rather than expecting feedback to happen on its own.

Lack of feedback can quickly erode motivation. And the more entrepreneurial or “self-starting” a position is, the more important feedback is to the person in that position. Feedback is your sight, like a bat echoing its own songs to understand the contour of the world around it. If you don’t hear an echo, how do you know what to do?

Yet for how fundamental it is, it’s surprisingly easy to forget. And then it’s surprisingly easy to chalk up motivation problems to lack of incentives, or poor leadership, or other priorities getting in the way, when really the people around you are lost in a world that doesn’t echo back at them.

How can you create effective feedback?

Feedback must be immediate, contextual, and apparent. Feedback is a behavioral stimulus–it has to fit both the time and the context of the action that caused it, and it has to be clear and concise in order to reveal information that’s useful for subsequent action.

This doesn’t mean feedback is always a result of things that are done–sometimes it’s the result of something that’s undone. Networking sites like LinkedIn and dating sites like tend to provide feedback in the form of a percentage completion bar to let you know how “complete” your profile is. Of course, your profile on these sites is as complete as you want it to be–but by creating this bit of feedback, such sites are able to encourage participants to improve the quality of information about themselves without offering any incentive other than having a “more complete” profile.

Feedback is a leadership superpower because all feedback is either grounded on some fixed point (values), directed toward some fixed point (objectives), or both. Thus continuous feedback is a way of aligning the efforts of a team toward the same values and objectives. And if you focus on those ends–values and objectives–when providing feedback, you can effectively avoid micromanagement while getting results that both satisfy your goals and represent your team.

Sometimes as a leader, I may have to manufacture feedback. This may require a shift in perspective: rather than believing there’s no feedback available because something is tied up in political limbo, I may need to provide feedback on the work itself–its quality, its relevance, etc. My team member will be able to take that feedback and apply it to other efforts. As a consequence, they’ll also be creating value that better fits my own vision, since it’s directed toward my feedback.

I may also have to generate feedback for myself. One way to go about this is to establish clear expectations with every completed action. After completing something for which I expect feedback–which does not necessarily mean something that requires “notes” or changes–I can mention the kind of information I want to receive and the date by which I would like to receive it, and then follow-up after the appointed time has passed. Remember this information should be immediate (and contextual), concise, and oriented toward fulfilling values and accomplishing objectives; it should as a result be quick and easy for the requested party to provide.

Proper application of feedback can, on its own, stimulate a lot of action without the addition of artificial incentives. It’s the first step in turning intrinsic motivation outward, but it doesn’t yet offer an actual incentive–merely a reflection. The information reflected back at us also implies specific objectives–something that someone outside of us is looking to find, and therefore something we can work specifically to improve, which we do if we have the intrinsic desire to create something useful for another person. Giving feedback without tying it to any extrinsic reward is the second level of motivational strategy.

What are some effective ways you’ve found to provide feedback to others? What ways have you learned to solicit useful feedback from others?

Are Your Taxes Too High?

Many business owners and investors stand squarely on the side of tax cuts. Their belief is that taxes are too high and should be reduced to encourage economic activity. And yet many of them fail to apply the argument to their own nations.

“Wait–taxes?” you say. “I don’t levy taxes.”

With the invention of capitalism, economists re-branded feudal taxation as “harvesting excess value.” But wages can also be seen as a reverse tax on the value produced by workers: where a feudal lord might take a certain amount or percentage, the capitalist allows an employee to keep a certain amount.

This reverse tax was an important invention when capitalism was conceived. It allowed people who didn’t create revenue directly (in the form of crops, manufactured goods, etc.) to create new kinds of value, particularly value that could only be created in concert with other specialists. In turn, workers were given a stable wage and economic and seasonal fluctuations were (in theory) absorbed by the capitalist. So a business became a kind of micro-socialist system within the larger context of capitalism.

Employees are, by and large, grateful for this micro-socialism: generally speaking, employees prefer to have stable paychecks, benefits, and job security–and if they don’t, they can always start their own businesses. But trying to squeeze every cost-saving measure you can out of your employees can be counter-productive, in the same way that increasing taxes can be counter-productive when there aren’t meaningful benefits to match.

While many entrepreneurs face the problem of not paying themselves enough, there are some who pay themselves far too much. And as the size of the company slides upward, owners and executives tend more and more frequently to be out of touch with how much they are taxing their employees–and the cost to their businesses.

This brings up two relevant issues from the world of economics and policy:

  1. What is the appropriate level of taxation to maximize revenue?
  2. What social programs are meaningful enough to justify taxation?

The appropriate level of taxation to maximize revenue follows what is known as the Laffer Curve (although the idea goes back to Arthur Pigou). The basic idea is that tax revenues at 0% and tax revenues at 100% are both zero (which is not entirely accurate, but close enough to be useful). That means that somewhere in between 0% and 100%, there’s a point at which you would receive less revenue if you either increased or decreased taxes, because increasing taxes would discourage revenue-earning activity and decreasing taxes wouldn’t result in substantively more revenue-earning activity.

The second question belies the fact that the peak of the curve can be shifted by many variables–and in fact is always shifting. One of the ways you can create a positive shift–that is, justify increased taxes while also increasing tax revenue–is by implementing meaningful social programs. In the politics, these social programs can be controversial, but in the operation of a business, they are relatively standard: health benefits, flexible hours, etc. They generally fall under the HR umbrella, but can also fit into support departments like printing, IT, and so on.

By this point you may be thinking this over-complicates the issue. The conventional wisdom is that labor is labor, and you compensate people based on the work they do and how well they do it–a simple transaction of value for money.

However, conventional economics has this one wrong. The emerging field of behavioral economics recognizes that not just incentives and disincentives, but context, internal motivations, values, ethics, biases, and other factors affect behavior. When you hire someone, an hour isn’t always an hour. The amount their work is taxed, the context in which they operate, and their emotions toward their work and employer will affect their behavior.

Given this knowledge, you could go with a more libertarian approach–give as much back to your employees as possible–or you could choose to go full socialist.

Lately, many organizations are going full socialist, including The Container Store and Wegmans Food Markets. In addition to providing great benefits, they’ve absorbed nearly all possibility of layoffs, and almost exclusively promote from within rather than recruiting experienced hires.

Netflix employes a different model of socialism: They pay literally top dollar–as much as they would offer to keep you if you got a job offer somewhere else. Management helps you if you’re in a slump, and if your skills just don’t fit the needs of the organization anymore they offer a generous severance package, including placement assistance.

There are two interesting traits in these socialist models: they all experience an increase in revenue that more than makes up for the reduction in employee taxes, and none of them offers the outrageous benefits offered by Google or other Silicon Valley heavyweights.

Which brings us to the question: What makes a meaningful social program (a.k.a. benefit)? Google is famous for having extravagant campuses with free meals, on-site massages, and a host of other benefits. But these only provide minor incremental value because they are simply “free stuff.” The same is true if you give your employees gift cards or tickets to a sports game. These aren’t really fostering a better environment, they’re just “free stuff.”

Meaningful social programs remove obstacles and increase feelings of security and freedom. They promote stability and peace-of-mind, they remove distractions or red tape, and they let you know that if something happens–if you have a child or have to take care of an elderly parent, if you have a bad quarter or even a bad year, etc.–your organization has your back. Each program must have a specific intent behind it that removes worries and stigma, provides a safe environment, or better enables problem solving and innovation. Especially for those who are budgeting a start-up, let these criteria be your guide.

For a lot of people reading this, extravagant social programs won’t be within the realm of possibility anyway. You might already be paying your employees less than they could get somewhere else. But it’s not so much an issue of whether you’re paying them less–so long as they’re able to cover their cost of living–but whether you’re taxing them fairly and giving them the tools they need to close the gap with what they could earn elsewhere. Help them–or sometimes just free them–to create new value and bring in new business. Not every potential employee will be excited about the idea, but the good ones will see the opportunity and jump for it.

There’s a lot more to be learned from macroeconomics and tax theory if you have a large business or your business is growing, but I’d love to hear your thoughts and answer any questions in the comments.

Partnering Up: The Four Things People Need

It’s possible to make everyone who works with you a literal partner, with a share of your company and all the commensurate benefits and dangers. But not only does that likely sound unappealing to you, it’s probably not appealing to most of the people who would work with you.

What most people want isn’t literal ownership. Most people don’t care for the risk and the inconsistency. What they want is actually fairly straight-forward.

  1. Trust. When you are working with a partner, you trust her. Yet in so many environments, employees are treated with suspicion. It’s easy to find reasons to worry that your employees are stealing from you, or wasting time you’re paying them for. The sad irony is that treating your employees with suspicion not only undermines your relationship with them, it actually encourages them to do the very things you’re trying to guard against. Start with trust–which is a form of dependence–and you will be rewarded with a healthier business.
  2. Humanity. The average person wants to be treated like a human being, equal in substance to everyone else. The fact that one person is the employer and another the employee isn’t a matter of quality or even of mastery. It’s a matter of role. If you are suited to be a leader, it’s better for you to lead; if you aren’t suited to be a leader, you have something equally valuable to contribute that your leader can’t. Leadership requires the humility and courage to be equal even to interns and entry-level employees, and to hold their investment in your firm as dearly as you hold your own.
  3. Community. I may use this interchangeably with another word: context. But for now I want to emphasize that the community of co-workers, leaders, and in the larger sphere suppliers and customers, is critical to the ability of each individual to work toward the good of the whole. A business is not just a place of employment, it is a clan, a tribe, a nation. You must be bound not just by function but by myth and identity and culture, or you will not hold together.
  4. Mastery. Each person wants to be a part of that community not just in the abstract, but by bringing mastery to it. This means each individual is the best at something, is constantly challenged to expand her ability, and is poised to contribute in a way that no one else in the company–perhaps no one else in the world–is able. Perhaps just as importantly, it means each individual’s contribution and domain is recognized, respected, and rewarded.

Throughout all these, there is a common undercurrent: respect. At each stage, you are establishing and building respect for the people working with you. And they in turn are growing in their respect for you.

It’s not difficult to understand, but it’s more difficult than you might think to accomplish. Fortunately, I’ve put these in a specific order to help you work toward each. Start at the top and work your way down. Once you get to the bottom, start over again. Make it a regular exercise, and let me know if you don’t see improvement.