R&D Executive Leadership

I have always been fascinated by the trend to blame and praise business leaders in the USA. I have often wondered how anyone can justify paying a CEO as much as several hundred engineers. Here is an excellent blog post by Prof. Sutton of Stanford University.

James Meindl’s research on “the romance of leadership” shows that leaders get far more credit—and blame—than they deserve, largely because, cognitively, it is easier and more emotionally satisfying to treat leadership as the primary cause of performance than to consider the convoluted and often subtle mishmash of factors that actually determine performance differences.

And there is some empirical evidence of the impact leaders have:

…many studies show that for more than 75 percent of employees, dealing with their immediate boss is the most stressful part of the job. Lousy bosses can kill you—literally. A 2009 Swedish study tracking 3,122 men for ten years found that those with bad bosses suffered 20 to 40 percent more heart attacks than those with good bosses.

I have slowly realized that organizations take on the culture of their leaders and behave like them. For example, in many service organization such as legal or management consulting, everyone is driven to become a partner. They do whatever it takes to make themselves look good to the partners – all the while complaining that people are not being rewarded for their skills, but on how they “kiss up to” the partners. Even so, when the become partners, they actually repeat the same behavior…

Linda Hudson, CEO of BAE Systems, got this message after becoming the first female president of General Dynamics. After her first day on the job, a dozen women in her office imitated how she tied her scarf. Hudson realized, “It really was now about me and the context of setting the tone for the organization. That was a lesson I have never forgotten—that as a leader, people are looking at you in a way that you could not have imagined in other roles.” Hudson added that such scrutiny and the consequent responsibility is “something that I think about virtually every day.”

So, what is a leader to do? Here are Prof. Sutton’s suggestions:

Take Control

Express confidence even when you don’t feel it
Don’t Dither
Get and Give Credit
Blame Yourself

Bolster Performance

Provide Psychological Saftey
Shield People
Make Small Gestures

In case you want more, here are many more related posts…

Impact of Incentive Bonus Plan

Here is a cool article from Management Science on Empirical Examination of Goals and Performance-to-Goal Following the Introduction of an Incentive Bonus Plan with Participative Goal Setting:

Prior research documents performance improvements following the implementation of pay-for-performance (PFP) bonus plans. However, bonus plans typically pay for performance relative to a goal, and the manager whose performance is to be evaluated often participates in setting the goal. In these settings, PFP affects managers’ incentive to influence goal levels in addition to affecting performance effort. Prior field research is silent on the effect of PFP on goals, the focus of this paper.

The authors studied retails store performance (I believe retail stores have a much better handle on performance bonuses than most R&D organizations I know)

Using sales and sales goal data from 61 stores of a U.S. retail firm over 10 quarters, we find that the introduction of a performance-based bonus plan with participative goal setting is accompanied by lower goals that are more accurate predictors of subsequent sales performance. Statistical tests indicate that increased goal accuracy is attributable to managers ‘meeting but not beating’ goals and to new information being impounded in goals.

So, managers lower the goals and then meet them!

we find that prior period performance has incremental power to explain goal levels in the postplan period. Our results provide field-based evidence that PFP and participative goal setting affect the level and accuracy of goals, effects that are associated with both information exchange and with managers’ incentives to influence goals.

Take home message is to be very careful with setting up an incentive bonus plan. In R&D organizations, it is even more difficult because the results are often not measurable and incentives tend to get disconnected from performance to start with. Please let me know if you would like to discuss this further.

Innovation Grows Among Older Workers

Newsweek has an interesting article about research that suggests that Innovation Grows Among Older Workers:

Duke University scholar Vivek Wadhwa, who studied 549 successful technology ventures. What’s more, older entrepreneurs have higher success rates when they start companies. That’s because they have accumulated expertise in their technological fields, have deep knowledge of their customers’ needs, and have years of developing a network of supporters (often including financial backers). “Older entrepreneurs are just able to build companies that are more advanced in their technology and more sophisticated in the way they deal with customers,”Wadhwa says.”

Somethings to keep in mind building an R&D team…

And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35.

Or:

One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.

The take home message for me is that innovation is not tied to an age group. In fact, younger employees always need help learning the ropes (as in the case of Toyota). The R&D managers challenge there for is to build virtual and focused communities that facilitate knowledge exchange and transfer.

Prevent Taking a Bad Day Home with this Simple Step

Here is a quick how to Prevent Taking a Bad Day Home with this Simple Step – John Baldoni – The Conversation – Harvard Business Review:

Feeling frustrated at work, especially late in the day? Most of us feel this way from time to time. The challenge is what to do about it

Here are 3 steps the author recommends:

Take a deep breath
Pick something easy to do (and complete it)
Get up and leave.

Thats it…

Putting a value on training

Training is extremely critical to most R&D organizations. Toyota, as we have seen, has made improved training a key cornerstone of their quality improvement initiatives. The article Putting a value on training McKinsey Quarterly addresses how to measure effectiveness of training programs and develop a business case for deploying them.

…typically measure training’s impact by conducting surveys of attendees or counting how many employees complete courses rather than by assessing whether those employees learned anything that improved business performance. This approach was, perhaps, acceptable when companies had money to spare. Now, most don’t.

However, there is a need for more formal approaches to measure return-on-investment of training programs

Yet more and more, organizations need highly capable employees—90 percent of the respondents to a recent McKinsey Quarterly survey1 said that building capabilities was a top-ten priority for their organizations. Only a quarter, though, said that their programs are effective at improving performance measurably, and only 8 percent track the programs’ return on investment.

The article talks about a detailed training program for BGCA (Boys and Girls Clubs of America). Suffice it to say that the training was quite extensive and expensive.

BGCA therefore built its training program around those four subjects. The program involved both intensive classroom work and a project chosen by each local team; projects ranged from implementing new HR processes to deepening the impact of after-school programs. By the end of 2009, over 650 leaders from approximately 250 local organizations had been trained.

Here is the key message plan how you will measure effectiveness before launching an expensive training program. This was much easier for a not for profit organization such as BGCA:

Because the program was designed to improve specific organizational-performance outcomes, the process of assessing its impact was straightforward. Where the leaders of local organizations had received training, BGCA compared their pre- and post-training results. More important, it also compared the post-training results against those of a control set of organizations, which had similar characteristics (such as budget size) but whose leaders had not yet gone through the training.

FYI – the training was a success for BGCA. They could measure the delta between trained and untrained organizations and actually calculate a return on investment. The fact that they matched organizations to control sets, gave them the confidence that the results were relevant. In for-profit organizations, metrics might be different but they must be measured before and after launching training programs. Metrics and accountability is key to success of most campaigns.

Key take away:

In every case, companies must continually review and revise the links between skills, performance, and training programs. Typically, to determine which metrics should be improved, companies assess their current performance against industry benchmarks or their own goals. Like retailers and manufacturers, most other companies know what kinds of skills are tied to different areas of performance. So a good next step is to conduct an analysis of the relevant groups of employees to identify the most important specific skills for them (as BGCA did) and which performance-enhancing skills they currently lack. To get a clear read on the impact of a program, it’s crucial to control for the influence of external factors (for instance, the opening of new retail competitors in local markets) and of extraordinary internal factors (such as a scheduled plant shutdown for preventative maintenance). It’s also crucial to make appropriate comparisons within peer groups defined by preexisting performance bands or market types.

Practical Advice for multi-location team development

The article Practical Advice for Companies Betting on a Strategy of Globalization in Knowledge@Wharton has a useful reminders about how to balance between local staff vs. head office staff. As with anything, the suggestion is to start with a clear vision:

The success of any international venture also depends on the human resources policy that the company pursues. ‘It took us years to create local talent,’ said Alvarez-Pallete. He believes it is essential ‘to decide what part of the business you are going to manage locally, and what it is that creates the most value.’

The article recommends a balanced approach – hire local talent, but only put those people in-charge who have similar values as the head office. The diversity they bring will enhance performance and the fact that they understand corporate culture, will make communication easier.

As a result, he leaves in charge those people who are closest to the corporate culture and goals laid out by headquarters. Falcones added that ‘diversification contributes wealth in terms of human resources. It is one of the most important assets brought by globalization. It is incredible how much we can learn about good business practices when we can understand different cultures.’

Not sure how easy it is to find these people – especially if the cultures / geopolitical between head office and local office are large…

How to keep your top talent

Here is what the pointy haired boss suggests:

Here are three ways to keep the top talentfrom the corporate executive board:

Get to know the top talent
Don’t mistake current level of performance with future potential
Differentially reward top talent

Here is a bonus also from CEB – things to keep in mind for motivating your teams:

His core aim is to clearly communicate a consistent vision and then drive accountability for executing it. He’s done this by avoiding five dysfunctions on his staff that aligns well with Lencioni’s work. Lencioni’s five dysfunctions are: 1. Absence of trust 2. Fear of conflict 3. Lack of commitment 4. Avoidance of accountability 5. Inattention to results

What drives satisfaction in virtual teams?

As you have probably noticed, management of virtual teams and co-development across multiple organizations is a favorite topic of mine. Here is a very interesting paper from the Journal R&D Management: An analysis of predictors of team satisfaction in product development teams with differing levels of virtualness:

The purpose of this study is to empirically examine and assess the moderating effects of extent of virtualness on a variety of well-established predictors of new product development team satisfaction. We focus our study on 178 different new product development teams from a variety of industries and use extent of virtualness as a structural characteristic of the teams, measuring it on a continuum.

The paper had three findings that I find are very important to any R&D manager (as the virtual teams pointed out, most teams become some what virtual even when the members are on different floors).

(1) relationship conflict has a more deleterious effect on team member satisfaction as teams become more virtual, mainly because it is very difficult for team members of virtual teams to resolve their interpersonal disputes;

So, the article empirically establishes an increased need for active conflict management and effort to keep the team loose.

(2) the relationship between preference for group work and team satisfaction is moderated by extent of virtualness, such that preference for group work increases team satisfaction more as virtualness increases;

I am not sure if I understand this. Please help if you do. From what I read, the people who love to work in groups are more satisfied with work in virtual teams. Does that mean that R&D managers staffing virtual teams have to either not select or provide extra help to people who tend not to like work in groups?

(3) goal clarity and familiarity are not moderated by extent of virtualness, but have a significant direct effect on team satisfaction.

Pretty straight forward – for virtual teams to succeed, goals need to be extremely well communicated. They also need to be effectively communicated across discipline, organizational and cultural boundaries. This to me is the biggest challenge to codesign. I am not sure if I have found effective tools and processes to address this challenge…

Cost overruns and schedule delays of large-scale U.S. federal defense and intelligence acquisition programs

Project Management Journal in the paper Causal inferences on the cost overruns and schedule delays of large-scale U.S. federal defense and intelligence acquisition programs provides some interesting data on cost and schedule overruns in USG programs:

For example, statistical data from a recent Government Accountability Office (GAO) report (2008a) on 95 weapons systems found that the total cost growth on these programs was $295 billion, and the average schedule delay was 21 months. These large numbers represent a growing trend in cost overruns and schedule delays since the GAO began tracking these metrics in 2000. For comparison, the estimated total cost growth in the year 2000 of 75 DOD programs was $42 billion, normalized to fiscal-year 2008 dollars.

The author indicates three reasons for the overruns ineffective human resources policies and practices, consolidation of the aerospace industry, and too many stakeholders:

A study was undertaken to understand why cost overruns and schedule delays have occurred and continue to occur on large-scale U.S. Department of Defense and intelligence community programs. Analysis of data from this study infers the causes of cost overruns and schedule slips on large-scale U.S. federal defense and intelligence acquisition programs to ineffective human resources policies and practices, consolidation of the aerospace industry, and too many stakeholders.

Specifically, he posits that ineffective human resource policies lead to inexperienced personnel both in contractors and customers, people rotate through jobs too frequently, and there are too many contractors involved. I can imagine that most of these are realities of the current economic and cultural environment. Just as Toyota found out, these come from inability for R&D management tools and processes to deal with that environment and increasing complexity.

The author also posits that too many stakeholders lead to frequent changes in requirements. I am not sure if the environment that leads to requirement changes is going to change any time soon. I guess that means that the R&D managers need to come up with processes to deal with requirements changing effectively – without adding cost overruns and schedule slips…

The block diagrams that the author came up with look interesting. However, I am not sure if I am able to agree with them fully. It appears that he had his conclusions made first and then fit the analysis to support them…

Overall, a great article – well worth reading.

Get Immediate Value from Your New Hire

HBR has some excellent advice on Get Immediate Value from Your New Hire:

Start Early: Start as early as possible in the process to expose your new hire to the organization’s or unit’s culture and to explain how work gets done.
Get Them The Right Network: The first thing a manager can do is ensure that the new hire understands how important the informal or ‘shadow’ organization is in getting things done
Get Them Working: Giving them real work immerses them in the way things function at the organization. This doesn’t mean you should let them “sink or swim”; definitely provide the support they need.

This are useful reminders for both manager hiring new team members and team members getting involved in new organizations. My success in several organizations has been hampered by lack of understanding of informal / shadow networks. One interesting observation: Supervisors in companies with strong shadow organizations were much more reluctant to explain them! And some principles to Remember:

Do: Hire for cultural fit as much as for capabilities and skill; Introduce your new hire to ‘culture carriers’ and ‘nodes’; Explain how work actually gets done at your organization

Don’t: Let a new hire stay in ‘learning’ mode for too long; Assume your new hire can’t be productive from the start; Rely on the org chart to help explain lines of communication