The folly of stretch goals

December 5, 2016

By Dan Markovitz via   Article

“I just finished listening to the terrific Planet Money podcast on the Wells Fargo fiasco. You probably already know the big picture of how the bank illegally and unethically opened accounts for customers. But this episode brings the fraud down to a human scale by interviewing some of the Wells Fargo employees. While John Stumpf was lauded in the business press for his ‘8 is Great’ mantra (that’s eight accounts per customer), this goal created what employees called a ‘boiler room’ culture and a ‘grindhouse.’

Of course, W. Edwards Deming fulminated against the absurdity of arbitrary numerical goals. Point #11 of his obligations for management states: ‘Eliminate numerical goals, numerical quotas and management by objectives.’

Back in 2012, I wrote an article for the Harvard Business Review on The Folly of Stretch Goals — and really, what is Stumpf’s ‘8 is Great’ but a stretch goal? I argued that stretch goals can be demotivating, can cause excessive risk-taking, and can lead to unethical behavior. I cite Sears as an example. . . and now you can add Wells Fargo to the list.

In Profit Beyond Measure, Thomas Johnson wrote:

‘That happens a lot, we honestly translate aims to goals. And then we do stupid things in the name of the goal get it the way of the aim. We forget the aim sometimes and put the goal in its place.’

I’m no oracle, and I’m certainly no Deming. But I do know that the evidence is pretty clear that when you set arbitrary stretch goals, you’re taking a bet that may very well end up with you testifying before Congress.”

Ask this question

December 5, 2016

By Andy Orin via   Article

Ask This Question to End Your Job Interview on a Good Note

“No matter how well your job interview goes, there’s still an awkward moment at the end when you don’t really know if you should continue the conversation or begin your goodbyes. But if you ask a positive question, you can end your interview on a high note.

Over on Medium, Marshall Darr suggests that when you interviewer is wrapping things up and asks if you have any other questions, you may want to pipe up and ask them about their own experience at the prospective company. Darr suggests you ask something along the lives of:

‘I was wondering what your best moment so far at (company name here) was?’

It might seem a little cheesy, but you’ll get your potential employer to discuss what they actually value at the company they work for, with the added plus—perhaps—of subconsciously associating you and your interview with a positive memory. It’s a simple question that can make the closing tone of your interview optimistic. And if your interviewer can’t really come up with any positive memory on the spot, well, that’s a new red flag to consider about your potential employer.”

Supreme Court grills Apple, Samsung

December 5, 2016

By  via   Article

Supreme Court grills Apple, Samsung over value of design patents

“Even the US Supreme Court justices were a little befuddled over what to do with the legal saga between Apple and Samsung.

The two largest phone makers in the world squared off in the highest court in the land Tuesday over the value of design patents, marking the likely conclusion to a long-running battle that goes back to a 2012 case.

One nuance of the case — how jurors were supposed to break out the value of a design from the overall product — was a source of most of the questions. The justices wanted to know what instructions the jury would be given when looking at damages.

‘If I were the juror, I simply wouldn’t know what to do,’ Justice Anthony Kennedy said several times during the hour-long hearing here in Washington, DC.

The justices used the analogy of a Volkswagen Beetle in their questioning to understand the positions of Apple, Samsung and the Justice Department.

Some justices pointed out that the VW Beetle’s design is what makes that car different from all the others, but Justice Samuel Alito remarked that some people don’t care what a car looks like but instead want good gas mileage or other features.

A decision by the court, which is hearing its first design case since the 1800s, could have a ripple effect across the technology industry and ultimately affect the gadgets you buy. What’s at question is how much money one company has to pay for copying the designs of another. Current law says an award can be collected on the entire profits of an infringing device. In this case, that’s the $399 million Samsung paid Apple late last year.

The Supreme Court will likely rule on this case in the first quarter.”

Programmed to sacrifice pedestrians

December 5, 2016

By Charlie Sorrel via   Article

Self-Driving Mercedes Will Be Programmed To Sacrifice Pedestrians To Save The Driver

“When they crash, self-driving Mercedes will be programmed to save the driver, and not the person or people they hit. That’s the design decision behind the Mercedes Benz’s future Level 4 and Level 5 autonomous cars, according to the company’s manager of driverless car safety, Christoph von Hugo. Instead of worrying about troublesome details like ethics, Mercedes will just program its cars to save the driver and the car’s occupants, in every situation.

One of the biggest debates about driverless cars concerns the moral choices made when programming a car’s algorithms. Say the car is spinning out of control, and on course to hit a crowd queuing at a bus stop. It can correct its course, but in doing so, it’ll kill a cyclist for sure. What does it do? Mercedes’s answer to this take on the classic Trolley Problem is to hit whichever one is least likely to hurt the people inside its cars. If that means taking out a crowd of kids waiting for the bus, then so be it. …

‘If you know you can save at least one person, at least save that one. Save the one in the car,’ von Hugo told Car and Driver in an interview. ‘If all you know for sure is that one death can be prevented, then that’s your first priority.’ …

The moral confusion is deepened when we consider that autonomous cars may save millions of lives that would otherwise have been snuffed out by careless human drivers. That’s no consolation if a Mercedes chooses to use you as an airbag to save its owner, but maybe you’d already have been killed a few years before if a particular human driver hadn’t been replaced by a driverless car.

Mercedes’s von Hugo, then, thinks that the ethical problems will be outweighed by the fact that cars will be better drivers overall. ‘There are situations that today’s driver can’t handle, that . . . we can’t prevent today and automated vehicles can’t prevent, either. The self-driving car will just be far better than the average human driver,’ he told Car and Driver.”

Would-be Nelson Mandelas

November 28, 2016

By André Spicer via   Article


“Another significant source of stupidity in firms we came across was a deep faith in leadership. In most organisations today, senior executives are not content with just being managers. They want to be leaders. They see their role as not just running their business but also transforming their followers. They talk about ‘vision’, ‘belief’ and ‘authenticity’ with great verve. All this sounds like our office buildings are brimming with would-be Nelson Mandelas. However, when you take a closer look at what these self-declared leaders spend their days doing, the story is quite different.

No matter how hard you search there is little – if any – leadership to be found. What most executives actually spend their days doing is sitting in meetings, filling in forms and communicating information. In other words, they are bureaucrats. But being a bureaucrat is not particularly exciting. It also doesn’t look very good on your business card. To make their roles seem more important and exciting than they actually are, corporate executives become leadership addicts. They read leadership books. They give lengthy talks to yawning subordinates about leadership. But most importantly they attend many courses, seminars and meetings with ‘leadership’ somewhere in the title. The content of many of these leadership-development courses would not be out of place in a kindergarten or a New Age commune. There are leadership-development courses where participants are asked to lead a horse around a yard, use colouring-in books, or build Lego – all in the name of developing them as leaders.

At least $14 billion gets spent every year on leadership development in the US alone yet, according to researchers such as Jeffrey Pfeffer at Stanford, it has virtually no impact on improving the quality of leaders. In our own research, we found that most employees in knowledge-intensive firms didn’t need much leadership. People working at the coalface were self-motivated and often knew their jobs much better than their bosses did. Their superiors’ cack-handed attempts to be leaders were often seen as a pointless distraction from the real work. George, a manager in a high-tech engineering firm, told us he saw himself as a very ‘open’. When we asked his subordinates what he actually did, they told us that he provides breakfast in the morning and runs an annual beer-tasting.”

Idea survival

November 28, 2016

By Shane Parrish via   Article

Using “Survival of the Fittest” to Improve “Idea Survival”

“Nature has a passion for quantity as a prerequisite to the selection of quality; she likes larger litters, and relishes the struggle that picks the surviving few. She is more interested in the species than the individual.” Will Durant

“Nature is more interested in species survival than individual survival. In fact, she’s ruthless. She doesn’t care which individuals survive as long as the group survives.

The struggle becomes a natural filter to get rid of the weakest of each species. This ‘selective removal of the weakest’ improves the overall chances the group survives over the long-term.

The key here is the filter. You need the filter.

We have no such filter when it comes to ‘idea retention.’

We collect ideas and mental models and we employ them. However, we don’t have a natural filter to eliminate them. Even repeateded failure of a idea we hold dear is often not enough to convince us we’re wrong.

There is another way.

In the work required to have an opinion, we mention this quote from Charlie Munger:

We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.’

So what can we do to encourage this?

We need to be eager to be wrong. Darwin understood this idea, that’s part of the reason he’s in the history books.

In failing to learn from nature’s natural culling process we become more interested in our ideas surviving than ideas that survive time.”

Gambler’s fallacy

November 28, 2016

By Shane Parrish via   Article

Mental Model: Misconceptions of Chance

“The gambler’s fallacy implies that when we come across a local imbalance, we expect that the future events will smoothen it out. We will act as if every segment of the random sequence must reflect the true proportion and, if the sequence has deviated from the population proportion, we expect the imbalance to soon be corrected.

Kahneman explains that this is unreasonable – coins, unlike people, have no sense of equality and proportion ….

He illustrates this with an example of the roulette wheel and our expectations, when a reasonably long sequence of repetition occurs.

After observing a long run of red on the roulette wheel, most people erroneously believe that black is now due, presumably because the occurrence of black will result in a more representative sequence than the occurrence of an additional red.

In reality, of course, roulette is a random, non-evolving process, in which the chance of getting a red or a black will never depend on the past sequence. …

The gambler’s fallacy need not to be committed inside the casino only. Many of us commit it frequently by thinking that a small, random sample will tend to correct itself.

For example, assume that the average IQ at a specific country is known to be 100. And for the purposes of assessing intelligence at a specific district, we draw a random sample of 50 persons. The first person in our sample happens to have an IQ of 150. What would you expect the mean IQ to be for the whole sample?

The correct answer is (100*49 + 150*1)/50 = 101. Yet without knowing the correct answer it is tempting to say it is still 100 – the same as in the country as a whole.

… It is important to realize that the laws governed by chance are not guided by principles of equilibrium and the number of random outcomes in a sequence do not have a common balance. … In fact, deviations are not ‘corrected’ as a chance process unfolds, they are merely diluted.”