The Yala is so versatile that it’s hard to know just how you could use it. Here are three extraordinary ways to use a Yala:
- To create a forward-looking measure of performance
- To demonstrate a long-term commitment to quality
- To sustain the conversation between big set-piece events
To create a forward-looking measure of performance
Sometimes we need a revolution in the type of questions we ask. A Yala provides a low-cost channel to encourage people to take a heads-up of view of business.
Accounting numbers are historical and say little about the future. Running a business like this is often likened to trying to drive a car by looking in the rear-view mirror. Such numbers are inevitably simplifications. So it is too easy to hide behind them. The numbers may look bad but this may be of little significance, merely a problem of timing at the monthly or quarterly cut-off. Or they may look good reflecting past success but not capturing any causes for concern about the future. Hence discussions on monthly reports can be taken up in clarifying why the situation is perhaps not as bad as it looks from the figures (due to the timing of payments or receipts, perhaps), and not mention that the situation may be even worse than it appears because of longer-term problems that have yet to show up anywhere in the accounts.
Instead, the smartest executives cut to the chase by asking their managers not “did you make the numbers this month?” but “are you happy, worried or unhappy?” This invites people to listen to their gut-feelings and express their personal view on where the business is headed, rather than provide a monthly commentary on why accounting numbers do or do not provide an accurate reflection of current performance.
Over-reliance on numbers is a widespread affliction in business. Unrelenting pressure to “make the numbers” each quarter and year-end is frequently cited as the cause of short-term, even fraudulent, behavior. This (and unfounded hubris) lay at the root of the Enron scandal and led, in turn, the downfall of Arthur Andersen, the oldest and largest accounting firm in the USA.
In The Earnings Game: Everyone Plays, Nobody Win (one of the surprisingly rare articles that concedes the scale of the problem) the Harvard Business Review of June 2001 noted that:
The fetishistic attention to an almost meaningless indicator [quarterly earnings] might be cause for nothing more than amusement, except for one thing: the earnings game does actual harm. It distorts corporate decision making. It reduces securities analysis and investing to a guessing contest. It compromises the integrity of corporate audits. Ultimately, it undermines the capital markets.
And,
SEC chairman Arthur Levitt, has called earnings management a ‘widespread but too little challenged custom.’ Empirical data appear to support Levitt’s position. A 1999 study of thousands of corporate earnings… found that quarterly earnings reports that meet analysts’ expectations exactly or exceed them by just a penny per share occur far more frequently than would be likely in a random statistical distribution… ‘It’s hard to find corporations that don’t pump up their earnings’.
This is an example of Goodhart's law, named after its developer, Charles Goodhart (a former advisor to the Bank of England and Emeritus Professor at the London School of Economics). Goodhart's original 1975 formulation was:
Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.
But it is nowadays more usually expressed as:
Once a social or economic indicator or other surrogate measure is made a target for the purpose of conducting social or economic policy, then it will lose the information content that would qualify it to play such a role.
While it originated in the context of market responses, the Law has profound implications for the selection of high-level targets in organizations.
I experienced a classic example of this malady while working for an organization that got its customers to score its quality on a 5-point scale, averaging the scores, evaluating its managers on their average score (taken out of context) and paying the most to those with the highest scores. It seemed reasonable and it might have worked if the company’s relationships with its clients were quite so simple. The aim was to improve quality; but focusing on scores was not the same thing. Inevitably, with this kind of incentive, scores rapidly improved as managers got better at “making the numbers”. But the true issues of our quality were different and far more difficult to talk about. Reducing everything to numbers created a false sense of security: over-simplifying the issues, encouraging people to react to old problems rather than anticipate new ones, and confusing higher scores (the outcome) with better quality (the objective).
Over-reliance on numbers is dehumanizing. In my experience, numbering views (such as levels of customer satisfaction) and then setting these numbers as targets (maybe even linking them to salary levels) has always led to “massaging” the numbers. They are averaged and then averaged again in unsound ways that blur the sometimes devastating impact of a single unsatisfied customer.
Though asking a contributor whether they are happy, worried or unhappy might at first seem weak, it invites people to use their intuition to look forward and beyond the numbers. Showing a view like “highly dissatisfied” in red (the color of danger) might appear to lack rigor but it leaves no doubt about the significance of such an answer. And this is precisely the kind of forward-looking measurement system that you can now implement very simply with a Yala.
Thus the first way to use a Yala is to generate a forward-looking measure of performance; a second way to use a Yala is to demonstrate an extraordinary, long-term commitment to quality.
To demonstrate a long-term commitment to quality
Most service firms want to understand their clients’ perceptions of quality. All too often, however, their surveys often don’t probe deep enough or continue long enough. A Yala provides a web-based platform for listening long and hard to your customers.
Typically, customer surveys focus on the Content and Conduct of the service provided. Asking about Content is like asking customers in a restaurant whether they like the food. If the food is no good, almost nothing else matters. This is a bad restaurant. Asking about Conduct is like asking about service. The food may be good but was it what you ordered and was it served on time and hot? Maybe a survey will ask customers to venture an overall impression of your service, like the ambiance of a restaurant. But rarely will a customer survey invite comments on the innovativeness of the service, like the imagination of a restaurant’s menu. Yet it is the novelty and flair of the cooking that differentiates a merely very good chef from a truly great one, and increasingly it is the creativity of its services that distinguishes an exceptional service firm from its many highly-competent competitors.
Likewise, most service firms will poll their customers on completion of an assignment and maybe up to six months later. But the hallmark of the greatest service firms is the longevity of their work. So why not implement a process for continuous feedback, whereby your clients can advise you on the durability of your value-added, three or even five years later?
Most professional service firms – like lawyers, accountants and management consultants – declare victory after every assignment. The punitive social architecture of their up-or-out policies makes it career threatening not to do so. Yet how much of their work makes little or no impact or, even, has a negative effect over the long term? As Peter Drucker pointed out long ago, the most expensive books in the world are not in Oxford’s Bodleian library but are consulting reports on the shelves of major corporations and public institutions, much more costly and much less read than any ancient manuscript.
In the Public Sector especially, these experts’ work may end up as just another report on the pile of over-studied topics. In the Private Sector, it may end up as just another organisational reshuffle – plus ca change, plus c’est la meme chose! Or, should Goodhart’s law kick in, it may even lead to the bureaucratic burden of further targets for overworked employees.
So wouldn’t it be encouraging if some of these experts cared enough about the value added of their hugely expensive services to monitor the results over the long term – as is now possible with a Yala? And, at a time when discretionary expenditure on consultants and advisers is coming under closer scrutiny, wouldn’t that differentiate the professional service firm that had the nerve to address such questions?
Creating a forward-looking measure of performance and demonstrating a long-term commitment to quality are two powerful ways to use a Yala. Sustaining the conversation between set-piece events is a third.
To sustain the conversation between big set-piece events
Between Future Search, the Public Conversations Project, the World Café, Open Space Technology, and many other mediating and moderating technologies, there is clearly a great deal known about the facilitation of dialogue. Most approaches involve carefully planned get-togethers. But what happens after the big set pieces, the important face-to-face events? What happens when people go back to their day jobs, and the old culture and old ways of thinking start to seep back into their bones? A Yala provides a great way to maintain the momentum between public conversations, sales conferences and conventions of all types.
All these processes designed to encourage dialogue naturally place great importance on “getting the whole system in the room”. In simple relationships, it makes sense (and is good manners) to physically introduce people who have to work together and to give them time to get to know one another.
This may be possible at the start of a relationship and from time-to-time thereafter. But those who have to work together are frequently too geographically dispersed to make this practical. Contributors change so rapidly that it is impossible for new people to first meet all the others to whom they must relate “in the flesh”.
Fortunately the Internet offers another way to make introductions. The Yala is a handy tool for maintaining contacts. As you add new users, you create a who’s who directory. People are introduced to one another without predefined orders. Unplanned encounters take place and dense interconnections arise. The whole system gathers to continue its conversation in a virtual room.
For example, in July 2010 the city of Denver (in Colorado, USA) hosted an international event called The Biennial of the Americas. It was described as a “celebration of the culture, ideas and people of the Western Hemisphere” that brought together “national and international visitors for a cross-cultural experience bridging and unifying the artistic, intellectual and political progress of the hemisphere's 35 nations” with the grand aim of “facilitating the development of a unified vision for the future of the Western Hemisphere”.
“The Americas Roundtable” was the primary component of public dialogue. These Roundtables covered a variety of topics including education, poverty reduction, energy and climate change, women in leadership, health, trade, and philanthropy. They involved citizens of most of the more than 35 countries in the Hemisphere. Participants included senior government offi¬cials, business CEOS, non-profit leaders, academicians, journalists, and other professionals. Roundtables invited ten to twelve people to take the stage and took place in front of large public audiences. Invited participants were allowed to make some prepared remarks but it was hoped that such formal conversations would quickly give way to candid, spirited, and unscripted dialogue. Thus the Americas Roundtable was "designed as a public call to action, all in an effort to identify common challenges, seek joint opportunities, and promote collaboration”.
This bold event was declared a success... but it now seems unlikely to be repeated in 2012, for its organizers missed the opportunity to create a web-based platform for further collaboration. The goodwill and mutual understanding that had been achieved could have been strengthened and deepened at a tiny fraction of the cost of the original event and – who knows? – a 2012 conference may then have happened after all.
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