Author: Dart

Harvard Marketing guru, Clayton Christensen gives a lecture on how to better understand your customer. I transcribe it at length here:

One of the big fast food restaurant companies was trying to goose up the sales of their milkshake product line. They segmented their markets first by product category: you had the main meals over here, and they had the deserts over here that were categorized by product; they could tell you exactly how many milkshakes were sold by Mac Donald’s, Burger King, Wendy’s and so on. And they also segmented their markets by demographic. So they could give you a demographic profile of the people who were most likely to buy it. They even had psycho-graphic profiles of these people.  So they would invite  people who fit those profiles into conference rooms and say “Could you tell us what we could do to our milkshake that would cause you to buy more of them? Do you want it chocolatier, creamier, chunkier, chewier, cheaper…?” And they would get very good feedback.  They would then improve the product, and it never have any impact on their sales or profitability whatsoever.

So one of our colleagues went in and just stood in one of their restaurants for 18 hours, with the question on his mind, “Gosh, I wonder what job people hire a milkshake to do for them?”   So he took very careful data on: When did they buy it? What were they wearing? Were they alone or with a group of people? Did they buy a meal with the milkshake or just the milkshake? Did they eat it in the restaurant? Did they leave?  It turned out that nearly half the milkshakes were sold in the very early morning. It was the only thing they bought, they were always alone and they always got in the car and drove off with it.

So the next morning he comes back and he confronts these people as they are leaving the restaurant with the milkshake in hand and he asks them “Excuse me please, but can you tell me what job you were trying to get done for yourself when you came here to hire this milkshake”?  As they would struggle to answer, he would say “Well think about when you were in the same situation, needing to get the same thing done, but you didn’t come here to hire a milkshake, what did you hire?”  And it turned out that they all had a similar job.  That was, they had a very long and very boring commute to work. They just needed something to do while they were driving. One hand had to be on the wheel, but God had given them this extra cup holder, and they just needed to keep busy. They weren’t hungry yet, but they knew they’d be hungry by ten o’clock, so they wanted something that would thunk down in their stomach and stay for a while.

“So what do I hire when I got this job to do? Well, come to think of it I hired a banana last Friday. But it didn’t do the job well at all. It was gone in two minutes, I was hungry by 7:30; and yeah I guess I hire donuts on occasion, but they get my fingers sticky, it gets the steering wheel gooey; and I hire bagels, but they are dry, tasteless, crumb all over my clothes; if I put cream cheese or jam on them I gotta steer with my knees, and then if the phone rings that’s a problem.  And I remember once I hired a snickers bar but it made me feel so guilty that I never hired one again. But let me tell you, when I hire one of these milkshakes, it’s so viscous, that it easily takes me 20 minutes to suck it up that think little straw. I have no idea what the ingredients are, but I do know I’m still full at ten o’clock, and it fits right in that cup holder.”

And it turns out that the milkshake does the job better than any of the competitors. The competitors are not Burger King milkshakes, but bananas, donuts, bagels, snickers, and very importantly the milkshake is competing against boredom. Because it’s so inconvenient to find your way to that restaurant, and then you gotta to wait in the drive though lane or the line inside to get it, so a lot of times they just drive to work bored out of their tree.

Instead of considering only the attributes of the milkshake, this approach  considers the whole context in which the customer is using the product. What do customers really seek to solve in their situation whey they bring their custom to this product?

For a number of years I’ve been using this method to better understand what employee-customers get from work. And I’d like to do the same with you right now. Ask yourself this question: what job do you hire your job to do for you? Take a few minutes. Think about it before continuing below. See if you can write down at least three or four. If one of the first ones you think of is “to give me money” take it a step further and ask what you want the money for.

I’ve asked this question of many people. And the responses have included  the following.  I hire my job:

1. to give me puzzles to solve
2. as a place to hang out with friends
3. to make things
4. to be a part of a team
5. to learn
6. to make me look good at parties
7. to make me unique
8. to help others
9. to protect or nurture my family
10. to help me buy other experiences
11. to get me access to circles from which I would otherwise be excluded
12. to be my stage and my audience
13. to play dress up
14. to escape my family
15. to provide structure to my life
16. to leave a legacy
17. to be independent from my husband
18. to give me messes to tidy up
19. for the thrills
20. to reward the trust of the people who helped me to get here
21. to give me a field on which to compete
22. to be my creative medium

Why is it important to frame the question as “the job you hired ____ to do?”   It’s a question that reaches beyond the surface attributes of a particular product, to the why of the product.  If I asked you which of three variable speed drills you like, you might make some distinctions around size or grip or drill speed. But If I ask you what job you hired the drill to do for you, you would say “to make holes”.  And then we could develop a much deeper understanding about what good hole making is like, how well the drill satisfies that objective, and what other products besides drills might be competitors.

So when we ask the question about job, we are reaching around the limitations imposed on our thinking by the standard model, according to which the only answer to question of what we hire our job to do for us, should be “to give us money.” Of course money is important, and is behind three  or four of the common answers (Buy Experiences, Take Care of my Family, Take Care of Myself, and to some extent Look Good at Parties).  But the value being received by workers goes well beyond a paycheck.  The standard model implies that work is something we don’t want to do (that’s why we have to be bought), but when you look at this list – Puzzles, Messes to Tidy Up, Help People, Leave a Legacy, and others, it’s clear that work itself has value to the person doing the work.

 

 

 

 

The standard model makes a handful of uncontroversial assertions:

1. The purpose of the enterprise is to grow revenue profitably.
2. To do this we provide the customers goods and services that they want in exchange for money.
3. We use that money to purchase things like facilities, fixed assets, labor, and services from other enterprises.
4. The role of HR is to build and run services that deliver labor to the business at a reasonable cost.

The standard model is wonderfully simplifying because it makes it possible to compare every business decision against the criteria of how much money it will make the enterprise, and we have these great accounting systems to keep track of how we are doing.  I was an evangelist for this way of thinking until several years ago when I began to notice inconsistencies. Like a scientist whose results don’t conform to the dominant paradigm, I found a loose thread, and when I started to pull it, the model unraveled.  Each of the assumptions in the list above proved  to be either wrong or so incomplete as to be seriously misleading.

To tell this story I have to share something about my discipline of business architecture.  Business Architects like myself build models that describe how the enterprise functions; when a company goes through a transformation such as entering new markets or establishing a new route to an existing market, we use these models to coordinate change.  These models are designed to solve the dungeon entrance problem by consider the enterprise whole, as from a great altitude. To achieve this they must be be quite abstract – if such a model were used to describe an elephant, it would work just as well for a mouse, because both have  heart, lungs, eyes and so on.  These models are nonetheless very rigorous. Like math, these models argue back when you try to do something logically unsound.

Here’s how they work: As stated earlier, enterprises are too complex to visualize all at once. Business architecture  solves this problem  by modeling just a few dimension at a time.  One view depicts how the information systems in an enterprise interact with each other to support operations; another view depicts how the parts of operations interact to support the customer, and a third view depicts how external customers and partners experience the company. These different views are all linked behind the scenes by a database, so looking at each view is like rotating a cube and looking at different surfaces of the same object.

In these models, the workforce shows up the Operations View, which is the view of how things work inside the the enterprise.  That’s consistent with the standard model. But when it came time to place the employer brand strategy into the model, the only place it fit was with all the other brand strategies, which are out in the Business View.  But if it belonged in the Business View, then it was facing an external customer. The necessary conclusion that somehow the worker was both inside the company as a part of operations and outside it as a customer at the same time. But the standard model is very clear that there is only one customer – the customer for the goods and services produced by the enterprise.

I know this must seem like a minor thing.  A glitch in a bit of arcane math in a back office. And observed in isolation, maybe it would have been. But it lined up with a number of other observations. Why was it that my company had often felt the need to set up an organization dedicated to employee experience, but each time would dismantle it because we couldn’t justify the expense? It’s like we were pulled toward investing in the employee experience but our environment, but our logical reasoning (using the standard model) couldn’t support it. The same thing would happen with efforts to set up a function dedicated to helping employees to move inside the company, and yet every few years we would be compelled try again. If the employee is a customer, however, those efforts made a lot more sense.  So when I found this surprise in our business architecture model, it didn’t look immediately like a glitch, it looked like a finding, and it led me to start digging at the foundations of the standard model, starting with the idea of customer.

What exactly is a customer, and why do we care about them?
The word derives historically from “custom,” meaning habit. As early as 1409 it was used to describe a buyer, someone who made a habit of purchasing goods at a particular shop and with whom the shopkeeper had to maintain a relationship in order to keep the buyer’s “custom,” or future business. The etymology of the word captures the attribute of customers that makes them so important: customers exchange value with the enterprise and are free not to.

There is no doubt that employees exchange value with the enterprise – that’s why enterprises pay them – but enterprises pay to buy capital assets, real estate, IT infrastructure and other goods. The real clincher is choice.  Employees are customers because, unlike other inputs to production, employees have free will.

When I first came to this conclusion, part of my mind discounted it.  I thought: sure, technically employees are customers, but they can’t be nearly as important as the product-customer.  Then I did the math.  I figure that at my current company, the employee delivers about 18 billion dollars worth of value to the enterprise. That’s nearly as much as all of our sales to Asia and Europe combined. It’s more than the sales of our two top product categories.  So not only are employees a customer, they are a massive customer.

And then I thought: I accept that employees are exchanging value, but they are not exchanging that value in the form of dollars and a company can’t survive without money, so the value provided by employees can be discounted. But even as this thought went through my mind, I could see the holes in the logic. While it is true that an a enterprise can’t survive without income, neither can it survive without the expertise and labor of the workforce. Both are critical. And when you think about it, if a baker provides bread to a cobbler in exchange for fixing his shoes, the cobbler is no less a customer just because he does not pay with cash.

Some part of me still shied away from idea of the employee as customer because I instinctively knew that it strikes at the foundations of the dominate orthodoxy, and I would be excommunicated from the Church of Serious Business People if  i spoke about it in public.  If this worries you, avert thine eyes, and read no further. But if, like me, you are equally attracted to poking false beliefs in the eye, let’s go.  Once you start to take the idea of the employee-as-customer seriously, the world of business changes dramatically. It will take me the rest of these pages to explore all the ramifications.

When I say large enterprises are illusory, I don’t mean that they are not real. I am employing the first definition of the word: causing illusion, deceptive; misleading. But the illusory nature of large enterprises is less an attribute of the enterprise than it is of we who try to understand them.  It seems to be in our nature to be undercorrect and overconfident.

Cognitive linguists like George Lakoff at UC Berkeley and Mark Johnson at the University of Oregon have advanced a very compelling argument that metaphor is not just how we speak, but how we think. For example, we understand argument in terms of a metaphor of combat: “your claims are indefensible“, “she advanced a theory”, “he shot down all of my points”, “I demolished his line of reasoning.”.   And when we use a concept like war to think about a concept like argument, we necessarily ignore  aspects of the concept that are not made available by the war metaphor.  What if we thought of argument as a dance? We would likely plan and conduct debate differently.  There are other examples: the future is up and ahead; love is a journey; knowledge is light or vision; ignorance is darkness or blindness; affection is warmth; government is parents.

Linguists refer to these metaphoric thinking tools as frames, and they argue that we unconsciously load frames into our working intelligence and use them to interpret and ultimately act in different situations.

I have an example from my own experience. One of the most powerful lessons I learned as an undergraduate was taught not by an academic professor, but by my dive instructor.  He asked all of his students to throw their masks and fins to the bottom of the pool and had us line up at the edge. He then said “ready, set, go!” and we all dove in to find our gear. It was chaos. People were grabbing gear from each other, one girl got kicked in the face and came up crying, someone else got scratched and was bleeding. I was proudly one of the first to successfully retrieve all my gear.  Then our coach tore us down: “What just happened here?” he yelled. “Are you animals? Tracy was hurt and nobody even noticed. Eric is cut. You were all fighting with each other. Why didn’t one of you go down, get a mask at random, and collect all the gear for the others?”   I burned with shame, and I never forgot that lesson. But it had been a trap;  he had deliberately framed it as a competition when he said “ready, set, go” and we had all used that frame to determine how we solved the problem.

The thing about frames is that they are incredibly hard to spot once they are loaded, and a great deal of evidence implying that they are wrong can stack up around you before you start to doubt. If my dive instructor hadn’t pointed it out, I never would have though twice about how that competition turned out.

False frames are incredibly dangerous. No one blunders as enthusiastically as someone who is wrong by assumption. False models for how the world works gave us witch burning, leaching, and lobotomies, to name a few. Looking back we marvel at the ignorance of these solutions to perceived problems, but close study shows that in the frame in use by the societies in which they were popular, these approaches were mainstream and entirely reasonable.  They were establish, documented, and authoritative ways of solving for complex situations as they were understood at the time.

And this leads to one last attribute of frames: they are contagious.  Politicians know this and use it.   When the conservatives use the phrase “tax relief”, they are deliberately framing taxes as an affliction, and what kind of person could be against relief from an affliction? (george lakoff, moral politics);

Large enterprises are one of these complex situations, and like all such things we use metaphor to understand them. Business writers, business schools, and consultants build up authoritative, documented approaches to solving problems, which may or may not be right, but that are contagious and based upon assumptions that are difficult to see because they are baked right into the language. Given the difficulties in seeing and thinking about the enterprise these assumptions can survive unchallenged for a long time.  One of them is what I will refer to as the “standard model” for understanding talent.

 

The difficulty we have in  defining where the enterprise begins and ends is symptomatic of our mistaken belief that, because we can put a name to it, an enterprise is a thing – an object like any other – this intuitive oversimplification becomes more overt when we attempt to comprehend what goes on inside.  The first dictionary definition of “complex” is certainly true of the enterprise: “consisting of many different and connected parts.”  But If we are to improve the performance of the enterprise, we must know how those parts interact with and affect each other over time, and many of those causal relationships are arranged in positive and negative feedback loops that make changing one part of the system have unpredictable affects on the whole system. And although we humans are pretty good at thinking in three dimensions, we struggle at four; enterprises manifest many more than four dimensions. (Analysts who have attempted to diagram how enterprises work will know what I am talking about – two-dimensional paper just can’t hold a picture of how everything works together.)

 

Large enterprises are invisible to the eye: take my company as an example. 70k people spread across more than a hundred countries. If you started traveling right now, you might be able to see all of the buildings over the next 6 months. But are the buildings the whole of the enterprise? I think we have to say no.  You can look at the general ledger, and see numbers representing assets and cash flow;  you can stand back and consider the company’s brand; you can look at the complete list of employees, and even meet many of them; you can watch the stock price and read what analysts are saying. Are any of these the company? Even taken all together, I don’t think they add up to the enterprise. And most importantly for our discussion, since we are are examining the question of how to get better, if you go into one of the buildings and look at people working, what do you see? For the most part you see people talking on phones and typing on computers, but you can’t see what kind of work they are doing. A software engineer looks the same as an accountant, and accountant just like a someone in marketing or HR. It’s impossible to observe more than a small fraction of the work being executed by a large organization, much less how well that work is being done.

We talk about “the company” as if it’s a thing like any other, but things generally have edges where they stop and the rest of the world begins, right? What defines the edges of the enterprise?  Again, is it about real estate? Like the property line of the land on which the buildings sit? Probably not, since many buildings are leased, and much of the work done happens beyond those boundaries.  Is it primarily an accounting concept such that all the things owned by the enterprise are on the inside and things not owned are out? That’s a interesting one, since my company is made up of many legal entities, each with their independent ownership, and things flow in and out of that ownership.  Is the edge defined by the workforce, such that employees are inside, but contractors out?  I have personally never arrived at a satisfactory answer, but I have a working definition: an enterprise is an open system (stuff flows in and out of it while it continues to be itself) unified by common purpose, which is self-creation and continuity. And it is largely a practical consideration at which level of organization we choose to focus.  We can focus just on our team, department, function, company, or the whole ecosystem of partners and and suppliers.

It’s like this: when we are first given a job within a large organization it is as though we are led blindfolded into a building. When the blindfold comes off, we find ourselves in a small white room with a door on each of two opposing walls. Hands reach through one door with raw materials to be processed. Different hands reach through the other door to take our finished product. If we are knowledge workers, the inputs and output are information. As we begin to work, voices through the delivery door yell at us when we don’t perform as they would like. We in turn shout instructions through the receiving door when they don’t provide us with appropriate raw materials. Admittedly, it’s not a great job, but it’s comfortable: they bring us snacks, and it pays the bills. Over time, we make friends with the people next door; we chat about our families and what we did for the weekend. But we have very little understanding of how what we do contributes to the overall output of the larger building.

One day a voice comes over a loudspeaker to tell us that we must do better. This presents a problem on several levels. For one thing, we don’t really understand what the building produces. Not really. Occasionally we receive postcards from people in offices with windows, telling us what they can see. But these communications are infrequent and contain little information, so our understanding of the ultimate output is fragmented and incomplete. And we don’t understand what goes on in all the other rooms between us and the outside, so we don’t really know how changes in our work will affect the final product. Our friends in the neighboring rooms don’t know any more than we do. This gap in knowledge is filled first by conjecture, which, as it circulates between the rooms transforms into superstition, then myth, then orthodoxy. Because of these challenges, we don’t really know what “better” is, so we focus on doing the plausible, rather than the effective: everyone look busy.  I call this the dungeon entrance problem.

This is a book about the business of talent. I distrust most business books. This is the way they usually start: “Everything is changing. If you don’t run to keep up you will fail. the cure is:” insert the author’s one-dimensional solution here – leadership or innovation or whatever. This is unsatisfying for several reasons.

I disagree with the assertion that any single thing can certainly improve the performance of any complex system. Although there are counter examples, for the most part that’s not how the real world works: in the paradoxical cooperative/adversarial soup in which each enterprise exists, we and our partner/competitors have solved the more easily soluble, and what remains is the difficult.

But more fundamentally, I don’t believe that our greatest challenge is change. This opinion is not in fashion. Rapid change is real – indeed, the change in the business environment, especially where driven by improvements to technology, is exponential – but I believe the most profound challenges faced by the enterprise do not change. When one thoroughly considers any system, it is possible to perceive enduring truths. In the same way that while each river-crossing represents a unique challenge to the bridge builder, the mechanical laws of bridge building remain constant; the physics underlying the system abide no matter how dynamic the context. Understanding these fundamental truths is a prerequisite to determining what actions to take to deal with any situation, so identifying a response to the changing circumstance without understanding a system’s fundamental nature is at best a waste of time, and at worst a fatal distraction.

In these pages I will argue that we have been thinking about talent wrong. Fundamentally wrong, at the level of the physics. This is like telling the bridge builder that all of her bridges may fall down because her modelling software had the wrong formula.  I believe that the fundamental challenge we face as business people, is that of improving large, invisible, multidimensional, systems of which we are not only a part, but a part of the problem. Because of who we are, and how organizations are structured, we have framed the problem incorrectly, and as a result we are consistently making poor business decisions.