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Jack Ma – The Magician that Conjured Alibaba

It seemed appropriate that after profiling Jeff Bezos I should take a look at Jack Ma, the Chairman and founder of China’s answer to Amazon, Alibaba.

Jack Ma (real name Ma Yun) started Alibaba in 1999 as a means to harness the power of the internet to link Chinese exporters to local and international business customers – including in the West.

Jack Ma

A charismatic leader

It is harder to say which is bigger, Jack Ma’s bank balance (his personal worth is estimated at $29.5 billion1) or his personality. He is a natural entertainer and you can’t help but be enthralled by his rags to riches tale of growing up in communist China as the son of poor musical storytellers. In his many speaking engagements, Ma inspires his audiences with his never give up attitude and boasts of being refused entrance by Harvard 10 times and rejected for dozens of jobs. Watch “How to become a Billionaire”.

Globalisation and embracing the West

Ma’s intimate understanding of how to do business in his homeland has been a competitive advantage. But perhaps greater than his knowledge of China has been Jack’s curiosity about the West; starting when he was a teenager giving foreign visitors tours of his hometown Hangzhou in exchange for English lessons.

In my blog “How to build a future-ready workforce”  I discussed the importance of cross-cultural competency. Jack Ma’s fascination with western culture has seen him build and leverage relationships with powerful people across the world and turned Alibaba into a global player.

Innovation through improvement not invention

Ma attributes his success to identifying and seizing opportunities that arise out of problems. On his very first encounter with the Internet, Ma searched on ‘beer’. When he saw that no Chinese beers turned up in his search, his instincts kicked into gear and he decided that China needed an Internet company.2

Ma has also shown that innovation is possible without personal expertise and without creating something entirely new. With no coding or computing skills to speak of, Ma adapted existing online retail concepts specifically for China by engaging staff with the technical skills and know how to carry out his vision.3

The employees who became millionaires overnight

Like other billionaire success stories, Jack has his own set of wisdoms and mantras which are chronicled in books and videos like “Jack Ma’s 10- Rules for Success”. One of his rules for success is to focus on the culture of the company.

Alibaba’s values are enshrined in something employees call the Six Vein Spirit Sword – a shout out to Jack’s favourite martial arts fiction writer. Half of an employee’s annual performance appraisal depends on how well they embody Jack’s ‘kung fu’ values.4

Camaraderie is at the heart of teamwork at Alibaba. Every employee adopts a nickname, and it is not unusual for staff to take a break during an intensive work day to swim, do handstands or play video games. During Jack Ma’s years as CEO, tens of thousands of employees and their families would also attend Alifest, a stadium sized annual employee talent show where workers would sing, dance and perform skits. Even Ma could be seen at these events in crazy wigs and costumes singing Chinese pop songs.5

But it would seem Alibaba took the saying ‘work hard, play hard’ to extremes in the early startup days. It is suggested that the first employees earned barely $50 per month and worked seven days a week, often sixteen hours a day. Reportedly Ma required employees to be on call at all times and implemented a policy that new hires were to live no more than 10 or 15 minutes from the office.6

That said, the hard work paid off for many employees when the company shares they had been given as bonuses turned them into instant millionaires after Alibaba’s IPO in 2014.7 Today, Alibaba continues to tie new employee remuneration to stock in the company as a means of linking individual pay to company performance. (Read more about the relationship between talent management and company share price in my article).

Diversity and the empowerment of underrepresented groups

While Silicon Valley remains male dominated, Jack Ma is a vocal advocate for women calling them his company’s “secret sauce.” 8 Women make up 48% of Alibaba’s workforce, around 34% of Alibaba’s high-level managers, and a third of its founding partners.

Jack Ma also promotes the importance of empowering young people – particularly with technology. He recently established a $26 million scholarship programme with the University of Newcastle; a merit based scheme favouring indigenous and disadvantaged students and emphasising global and social awareness.9

Connecting people

At Cognology our purpose is to bring people together and help them achieve great things. We understand that by harnessing technology, we can help people collaborate at work more seamlessly, productively and successfully.

In many ways, Ma’s goals are similar. Jack Ma believes that technology and the internet has no limits and has devoted his adult life to connecting people and businesses across the world to make it easier to do business anywhere.

Works Cited

  1. “Jack Ma.” Forbes. Forbes Magazine. Web. 09 Apr. 2017.
  2. Stone, Charles Clark and Madeline. “The Incredible and Inspiring Life Story of Alibaba Founder Jack Ma, One of the Richest People in China.” Business Insider. Business Insider, 02 Mar. 2017. Web. 09 Apr. 2017.
  3. Zakkour, Michael. “How Jack Ma’s ‘Crazy’ Management Style Built a Technology Empire.” Entrepreneur. 29 Sept. 2014. Web. 09 Apr. 2017.
  4. “Magic Jack Ma and the Six Secrets behind the Success of Alibaba.” Financial Review. 21 June 2016. Web. 11 Apr. 2017.
  5. RPT-The Alibaba Culture: Kung Fu Commerce with a Dash of Theatre.” Reuters. Thomson Reuters, 08 June 2014. Web. 11 Apr. 2017.
  6. McFarland, Matt. “This CEO Banned His First Employees from Living More than 15 Minutes from Work.” The Washington Post. WP Company, 22 Apr. 2016. Web. 10 Apr. 2017.
  7. Daily, China. “Alibaba IPO Creates Thousands of New Millionaires in China – The Boston Globe.” BostonGlobe.com. 19 Sept. 2014. Web. 11 Apr. 2017.
  8. Kokalitcheva, K. (2015) “Female Executives are Alibaba’s ‘Secret Sauce’” Fortune. 20 May 2015 . Web 10 April 2017
  9. Low, Catie. “Alibaba’s Billionaire Founder Opens Australian Headquarters.” The Sydney Morning Herald. The Sydney Morning Herald, 03 Feb. 2017. Web. 09 Apr. 2017.
  10. “TIME Person of the Year 2014 Runner-Up: Jack Ma.” Time. Time. Web. 09 Apr. 2017.
  11. Barboza, David. “At Alibaba, the Founder Is Squarely in Charge.” The New York Times. The New York Times, 06 Sept. 2014. Web. 09 Apr. 2017.
  12. Image: https://upload.wikimedia.org/wikipedia/commons/3/38/Jack_Ma_2008.jpg

Elon Musk – Leading a quest to save the future

Elon Musk – Leading a quest to save the future

47 year old South African born entrepreneur Elon Musk founded X.Com in 1999. X.Com later became Paypal and was sold to Ebay in 2002. After making a cool $165 million out of the deal, Musk turned his focus to new and more ambitious ventures. First he founded Space X, a company designing and manufacturing spacecraft with goals to commercialise space travel and colonise Mars. Then in 2003, he commenced Tesla Motors and started producing zero emission electric sports cars. More recently, Musk convinced Tesla shareholders to acquire his third passion project, Solar City; a business owned by Musk’s cousin, specialising in powering homes, businesses and eventually cities with solar power.1

Elon Musk - Leading a quest to save the future

The lure of a strong vision

Musk wraps all of his companies up in a larger than life vision that attracts and inspires his employees.2 At Tesla Group, people genuinely believe they are saving the planet. At SpaceX, they are on a crusade to give humans a second chance on another planet if earth gets into trouble.3

Musk intimately understands the heady attraction of such ambitious work for highly skilled people. When releasing his electric car patents to the world, Musk openly taunted his competitors: “My vision allows me to hire and retain better people than you will ever be able to hire for any amount of money. They will be smarter, they will work harder and they will stay longer.3

I wrote about the positive effect of workers feeling a higher sense of purpose in my blog ‘Work and Happiness’.

Selecting the best talent

Musk has a reputation for hiring only the best people on the planet to work for him – whether to build a rocket or cook in the cafeteria.4 He believes that bringing on a few leading minds in the field and giving them the freedom to accomplish their responsibilities is better than hiring a lot of people to get a complicated job done. According to Musk, numbers just slow down progress and make a task more expensive to complete.

Apart from wanting the best, Musk also values a positive attitude and an easy to get along with personality. (Watch ‘Elon Musk talks Talent vs. Personality in Employees’).

Musk personally interviewed the first 1000 staff for Space X and even today still interviews every engineer. However, he encountered unique challenges sourcing talent along the way. In particular, it was difficult to entice experienced people away from established aerospace players like Boeing and Airbus. So he went after younger talent; personally scouring PhD programs from a range of universities for individuals who had built something, or had been on a team that had made something from nothing.2

At Tesla, the experience was a little different. Cars hadn’t been done in Silicon Valley before so there were a number of software engineers excited about the prospect of applying their skills to an entirely new product. Tesla also had the backing of a Silicon Valley legend – Google Founder Sergey Brin – to boost the project’s appeal and the credibility of the Tesla brand amongst target applicants. Once again, Musk stayed close to the recruitment of talent,2 even taking to Twitter himself to advertise for engineers for the autonomous vehicle division.5

Recruitment techniques

Musk makes applicants write essays about why they want the role. He also gives them a riddle to solve to test critical thinking. In the interview, Musk is known to play mind games; he barely pays attention to candidates and sits with his back to them2 before spinning around to drill them with questions.6

Musk is a proponent of behavioural interviewing techniques. Unless a prospective employee can break down the solution to a problem in granular detail, he will conclude that they do not really know the answer or have embellished the level of their involvement.6

Intense culture

Job ads on the Tesla careers website come with a warning: “These jobs are not for everyone, you must have a genuine passion for producing the best vehicles in the world. Without passion, you will find what we’re trying to do too difficult.”6

According to Dolly Singh, former Head of Talent Acquisition at Space X, working with Musk is not a comfortable experience as he is never satisfied. He pushes his team so hard they sometimes feel like they are “staring into the abyss”. However, this pressure on performance is deliberate. Musk knows that his staff will exceed even their own expectations if he keeps the heat on.7

And, as Singh points out, “you don’t get to Mars with a bunch of softies.”

Musk describes himself as a nano-manager. Even more intense than a micro-manager, he maintains a hands-on obsession with the tiniest operational and design details.1 And when there is a pressing problem preventing progress, Elon will devote the majority of his time and energy to it.2

Structure and communication

The Musk businesses run on flat structures. Staff are free to contact anyone directly, including Elon.2

At Space X, the engineers (including Musk) physically sit on the manufacturing floor in giant glass cubicles. They have to walk through the floor to get to their office so are forced to look at everything going on and interact with staff.2

Is Musk a modern day superhero?

Musk has been described as a modern day Howard Hughes and even compared to comic book hero Iron Man (aka Tony Stark). There is no doubt he is a physics genius. And, if popular media reports are to be believed, has a penchant for fast cars and beautiful women. However, Musk knows that to achieve his ultimate goal of saving the planet and establishing interplanetary colonisation, it will take a team of superheros. To this end, his approach is quite simple: seek out people who are as talented and driven as he is; ensure that the work environment is as motivating and meaningful as possible; and, establish clear and measurable objectives. Sounds easy, right?

Works Cited

  1. Wartzman, Rick. “Admire Elon Musk All You Want, but Please Don’t Manage like Him.” Fortune.com. Fortune, 21 Jan. 2015. Web. 21 May 2017.
  2. “How Elon Musk Builds Organizations That Can Achieve Anything – Recruiting & Training, Remaking R&D, Setting Strategy.” Innovation Leader. 13 Feb. 2017. Web. 21 May 2017.
  3. Lavoie, Andre. “Want to Hire the Best Talent? Be Like Elon Musk and Set a Strong Vision.” Entrepreneur. 22 July 2014. Web. 21 May 2017.
  4. Carson, Biz. “Elon Musk Is so Obsessed with Hiring, He Even Poached the Best Yogurt Shop Employee from Pinkberry.” Business Insider Australia. 02 June 2015. Web. 21 May 2017.
  5. Burns, Matt. “Want To Work For Tesla? Elon Musk Turns To Twitter To Recruit Engineers.” TechCrunch. TechCrunch, 19 Nov. 2015. Web. 21 May 2017.
  6. Tovey, Alan. “Elon Musk: Have You Got the Drive to Work for Tesla?” The Telegraph. Telegraph Media Group, 20 Nov. 2015. Web. 21 May 2017.
  7. Feloni, Richard. “A Former SpaceX Employee Explained What It’s Like To Work For Elon Musk.” Business Insider Australia. 24 June 2014. Web. 21 May 2017.

Elon Musk image By Steve Jurvetson [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Jeff Bezos – an Amazonian chief

With my last blog “Warren Buffett – Not your average billionaire”, I kicked off a series of posts we are dedicating to some of the most successful leaders of our time.

There has been a lot of media coverage lately regarding the imminent launch of an Australian branch of Amazon.com – the world’s biggest online retailer. Not surprisingly, the talk of them setting up shop here has sent local retailers into a spin.

Given its power to disrupt markets and change the way the world shops, I thought it would be timely to take a look at the founder, Chairman and CEO of this tech giant – Jeff Bezos.

Worth an estimated $72.7 billion, Bezos is painted by biographers as part dreamer, part quantitative analyst. As a teenager he imagined himself becoming an astronaut but instead went on to major in computer science at Princeton, before putting his skills to use on Wall Street. In 1994, despite having a successful career and a six-figure salary, he left Wall Street behind to create Amazon.com, a start-up retail business in the emerging and largely uncharted world wide web.

Jeff Bezos quickly proved himself a ‘wunderkind’ with great instincts. He survived the dot.com bust of the late 1990’s and continued building Amazon on the back of his own ingenuity, self confidence, and propensity to think big.

Jeff Bezos

Think like the Chief

As he transitioned from a start-up boss into a leader of tens of thousands of people working across multiple businesses, Bezos became renowned for demanding nothing short of excellence from everyone around him. His expectations are captured in Amazon’s 14 Leadership Principles, and it is said that those who do best at Amazon are those who have internalised these principles and think like Jeff. And when they don’t meet his exacting standards, Bezos doesn’t mince words. For your horror (or amusement) I have included some examples of brutal one-liners that have been attributed to him

  1. “Are you lazy or just incompetent?”
  2. “I’m sorry, did I take my stupid pills today?”
  3. “Do I need to go down and get the certificate that says I’m CEO of the company to get you to stop challenging me on this?”
  4. [After reviewing the annual plan from the supply chain team] “I guess supply chain isn’t doing anything interesting next year.”
  5. [After an engineer’s presentation] “Why are you wasting my life?”

Survival of the fittest

Under Bezos’s direction, Amazon is reported to ‘manage out’ a certain percentage of its work force annually, with leaders required to rank staff and dismiss the least effective performers. [1]

Bezos has been accused by critics of lacking empathy and treating workers as expendable resources, but he has also never hidden the fact his priority is and always has been to create value for the customer.

Cohesion – the enemy of innovation?

A questioning and analytical atmosphere is characteristic of Amazon’s culture. Bezos expects his leaders to openly disagree and argue their perspectives, regardless of how uncomfortable it may make them may feel. [1] To this end, Amazon were early adaptors of an agile feedback system they call the “Anytime Feedback Tool” that enables staff to receive real time input from colleagues who have something to say about their work.

At Cognology we know from our own research that team sizes are expanding and companies are striving to find ways to facilitate greater connection, collaboration and sharing of ideas. In this respect, Amazon seems like a bit of an anomaly. Bezos is famous for his two pizza rule: no team should be larger than can be fed with two large pizzas. Bezos believes that smaller teams guard against groupthink and promote innovation. He has also suggested that cross-team communication can be disastrous for innovation as agreement between teams can limit the creative tension required for new ideas. [2]

Keeping his fingers on the pulse

Sharing his time across various ventures, Bezos cannot physically be present for every key decision Amazon makes. Being a number cruncher at heart, he puts his faith in the company’s enormous data resources and analytics, and expects leaders to use metrics to make almost every important decision.

But Bezos doesn’t just rely on cold hard data. The entrepreneur is also said to regularly scan random customer emails for feedback and complaints. And when an email is forwarded to a leader accompanied by a simple “?” from Jeff, the recipient knows to act. [3]

The heart of a Warrior

Adventure and discovery appear to be in Jeff Bezos’s very DNA. However, his passion for progress goes far beyond selfish interests or the financial benefit of shareholders. Bezos seems driven by a self-imposed higher calling to advance the welfare and development of the whole human race. His vision for the future has compelled him to commit hundreds of millions of dollars to a number of ambitious yet noble ventures like carbonless energy, advancements in neuroscience, and Blue Origin – an enterprise aimed at making space travel accessible to millions of people so that they may one day live and work in space.

Leadership involves choices. Jeff Bezos understands that to be truly great, you must be prepared to make choices that are neither popular nor easy. Without apology Jeff challenges his people to use their gifts, follow their convictions, and walk the path less travelled.

It is perhaps unfortunate that we get many of our insights into business leaders through the media, who (let’s face it) have a tendency to emphasise the sensational aspects of a story. Bezos has certainly received his share of bad press in recent years and if you believe the anecdotes of former staff who claim bad experiences, Amazon is a tough place to work. But given Bezos’s accomplishments and endeavours I can’t help but wonder how balanced the narrative has been.

I watch with interest for if and when Amazon.com comes to our shores.

References

  1. B. Stone, 10 10 2013. [Online]. Available to subscribers: https://www.bloomberg.com/news/articles/2013-10-10/jeff-bezos-and-the-age-of-amazon-excerpt-from-the-everything-store-by-brad-stone
  2. D. Baer, 18 03 2014. [Online]. Available: https://www.businessinsider.com.au/the-strategies-jeff-bezos-used-to-build-the-amazon-empire-2014-3.
  3. R. Sanghani, 15 10 2013. [Online]. Available: http://www.telegraph.co.uk/technology/amazon/10379912/How-Jeff-Bezos-rules-his-Amazonian-empire.html
  4. Jeff Bezos image by Yolo0906 (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Warren Buffett – Not your average billionaire

This blog will be the first in a series of posts profiling some of today’s most successful business leaders. Each leader is recognised as a trailblazer in their own right; entrepreneurs and visionaries who have dared to challenge the status quo and write their own rules.

This series will explore their different leadership styles and approaches and look at how this has shaped their success.

I decided to kick off with a name you might recognise as being one of the wealthiest and most business savvy people on the planet.

Warren Buffett

Warren Buffett is the creator and CEO of Berkshire Hathaway, a holding company with interests in the likes of Apple, Costco and Coca Cola. [1]

Buffett has been a regular on the Forbes 400 Richest People in America list since 1982, and in 2008 was officially crowned the richest person in the world with a fortune of $62 billion.

Warren Buffett is the stuff of legends and has a cult-like following of investors that hang on his every word. But for me, it is not so much his financial prowess that I’m interested in, but rather how his distinctive leadership style has contributed to his celebrated status in the world of business.

Laissez Faire Management Style

Numerous books and articles written about Warren Buffett refer to his laissez-faire approach to management. A French term, laissez-faire loosely translates to “let them do” -basically let people do as they choose. This label seems fair given what I have come to learn about Buffett’s hands-off approach.

When Buffett buys a business, he leaves the managers alone to run the company the way they would have had he not bought them. Unlike other CEO’s, he doesn’t seek to exert control through traditional corporate plans or strategic meetings, and generally only communicates through his annual letter to the board. [2]

So how has Warren Buffett managed to successfully build an empire with assets worth $621 billion [3] whilst all the time remaining at arms length?

Adapting the Situation to Suit the Leader

Perhaps the secret lies in the corporate culture and operating environment he has carefully cultivated over the last four decades.

Engaging Top Talent
Warren Buffett has been quoted as telling his children “If you want to soar like an eagle in life, you can’t be flocking with the turkeys”. His personal philosophy is to surround yourself with good people whose behaviour is better than yours so that they inspire and challenge you. When hiring managers, Buffett looks for integrity, intelligence, and energy. [4]

Autonomy and Accountability
It stands to reason then that by choosing highly motivated and capable leadership, Buffett has been able to entrust his businesses to the stewardship of others. Handing over full autonomy is fundamental to the way Buffett operates. [2] (For more on the benefits and challenges of autonomy see A Sensible Discussion about Autonomy)

Meaningful Communication
Though Buffett’s communication with his people may be infrequent, his words have impact. He showers praise on the people who work for him in his annual letters but is also generous with advice. He breaks down complex financial concepts in a way that anybody can understand him.

Values-Driven Culture
In Part II of my blog Aligning People I discussed how a group united by values will achieve far more than one that’s driven by other agendas. Interestingly, Buffett only acquires well-led, profitable companies that share his values. He believes that a values-driven culture translates to strong business performance and credits a strong culture with the ability to attract and retain outstanding employees. [5]

If you want to soar like an eagle in life, you can’t be flocking with the turkeys

Authentic Leadership – Living the Values, Walking the Talk.

An ‘aha’ moment for me in my research into Warren Buffett was when I realised that the values he pursues in business he practises in all aspects of his life.

Thriftiness

Berkshire Hathaway only acquires firms with low debt and strict cost control. This reflects Buffett himself who is renowned for his frugal nature. He still lives in the same house he purchased in 1958 for $32,500 and drives himself to work everyday. [6]

Hard Work and Discipline

Lawrence A Cunningham in his book Berkshire Beyond Buffett wrote that,
“Buffett’s own success has been built through hard work, discipline, a no-nonsense acquisition strategy and unwavering adherence to core values”. [2]

Buffett demands the same level of discipline and commitment from his leaders. He asks only that they stay true to their core business and values. In other words, he expects them to keep doing what they know how to do and to do it well. No more, no less. [2]

Integrity and Humility

Cognology has found extensive evidence to suggest that integrity is a key attribute of exceptional leaders. Buffett is passionate about maintaining a reputation for doing the right thing and instructs his leaders to “zealously guard Berkshire’s reputation.” [7]

Buffett is admired for the humble manner in which he openly admits his failures and his willingness to share the lessons he has learnt. In turn he encourages his business leaders to “face up immediately to bad news” and not let problems fester. [7]

But Warren Buffett is not as warm and cuddly as he might seem. He has shown that he is also a man prepared to deal with any leader that has breached what he holds sacred. A Buffett biographer once noted that “when a leader violates corporate values or generates reputational damage, the axe falls swiftly.” [2]

Letting Go

At 87, Warren Buffett has no plans to retire. People will remember Buffett for his extraordinary ability to pick good investments. But in truth, a lot of his success has been due to his ability to identify talent and retain top performers for the long term.

His leadership style has been shaped by his own personality: his honesty, his integrity, his humility, and his other deeply ingrained values. He has succeeded in demonstrating that you don’t have to maintain tight control over your people to do well in business. Success can in fact come from letting go – so long as you have laid the right groundwork to begin with.

References

  1. CNBC, [Online]. Available: http://www.cnbc.com/berkshire-hathaway-portfolio/.
  2. L. A. Cunningham, Berkshire Beyond Buffett : The Enduring Value of Values, Columbia University Press, 2014.
  3. Market Watch, “marketwatch.com,” [Online]. Available: http://www.marketwatch.com/investing/stock/brk.a/financials. [Accessed 09 03 2017].
  4. Vintage Value Investing, [Online]. Available: http://vintagevalueinvesting.com/wp-content/uploads/2017/01/Warren-Buffett-University-of-Florida-Lecture-Vintage-Value-Investing.pdf.
  5. L. A. Cunningham, “The Philosophy of Warren E. Buffett,” The New York Times, 05 02 2015.
  6. A. Mohr, “www.investopedia.com,” 22 07 2016. [Online]. Available: http://www.investopedia.com/financial-edge/0412/the-everyday-lives-of-frugal-billionaires.aspx.
  7. W. Buffett, “berkshirehathaway.com,” 31 12 2014. [Online]. Available: http://www.berkshirehathaway.com/letters/2014ltr.pdf.

What can Netflix, HubSpot, Zappos and Google teach you about the future of performance management?

At last count, the Netflix culture document had been viewed almost 11 million times. It’s been a viral sensation and has challenged the way that millions of people think about the future of performance management, work and HR.

Since the Netflix culture presentation appeared online in 2009, many other technology companies’ culture docs have attracted similar attention.

What excites me is that performance management plays such a big part in these documents. It’s clear that rethinking the way goals are set and feedback is given is hugely important to these companies and their employees.

In this article we’re going to take a quick look at four particularly popular culture docs and how they’re approaching performance management.

Netflix

What they do: Provide on-demand internet streaming media
Founded: 1997
Number of employees: 2000+
Glassdoor rating: 3.7
Culture doc views: 10,720,425

Read the Netflix culture doc

Netflix Culture

Netflix on setting goals

Netflix’s performance management is built on the core idea of ‘context, not control’. This means that managers must give employees an understanding of context to enable autonomy and sound decisions.

So rather than setting goals in isolation, managers should make their employees aware of: the link to the organisation’s goals, the relative priority of the goal, the level of refinement required, key stakeholders and the definition of success.

The onus here is clearly on the manager to provide the best environment for employees to excel. Speaking directly to managers, the Netflix culture doc says: “When one of your talented people does something dumb, don’t blame them. Instead, ask yourself what context you failed to set.”

Netflix on feedback and performance reviews

Netflix has also moved away from annual reviews to a more frequent feedback process. In an article for Harvard Business Review, co-author of the Netflix culture doc Patty McCord explains: “If you talk simply and honestly about performance on a regular basis, you can get good results—probably better ones than a company that grades everyone on a five-point scale.”

I couldn’t agree more with Patty on this point. High frequency feedback is something I’m a huge advocate for. And it’s one of the key elements of Agile Performance Management.

HubSpot

What they do: Inbound marketing software
Founded: 2006
Number of employees: 500+
Glassdoor rating: 4.5
Culture doc views: 1,571,813

Read the HubSpot culture doc

HubSpot on feedback

Hubspot on feedback

Like Netflix, HubSpot have moved away from annual performance reviews. Instead they’ve implemented social performance management software to facilitate year-round feedback in real time. As the company put it here:

“If you want to hire and retain great young employees, you have to work the way they live… using social networks to facilitate interactions on a regular basis and to solicit feedback.”

Zappos

What they do: Sell shoes and clothing online
Founded: 1999 (acquired by Amazon in 2009)
Number of employees: 1500+
Glassdoor rating: 3.8
Culture doc views: 53,000

Read the Zappos culture doc

Zappos on feedback and reviews

Zappos has long been recognised as an innovator in performance management. They’ve done this through heavy emphasis on the importance of values and culture. As Zappos’ culture doc states: “Interviews and performance reviews at Zappos are 50% based on values and culture fit.” 

This introduction of behavioural competencies into performance management does tend to be a characteristic of more forward-thinking companies.

I’ve talked about the difference between behavioural and functional competencies before. My opinion (which I share with Zappos) is that a combination of both is almost always required to be effective.

Zappos Core values

Google

What they do: Run the internet (amongst other things)
Founded: 1998
Number of employees: 53,000+
Glassdoor rating: 4.4
Culture doc views: 1,220,625

Read a presentation from Eric Schmidt on how Google works

Google on goals

Google often gives employees responsibility for setting their own goals. As the following slide makes clear, goal setting at Google is somewhat unconventional in other ways…

Google goals

 

In fact, scoring too high on completed goals at Google is frowned upon – it means the goals weren’t ambitious enough!

It’s an interesting technique (but one you might want to test carefully before implementing in your business).

Google on feedback and reviews

Google places great emphasis on peer feedback, which is sensible given the approach to goal setting. As an anonymous employee stated on Glassdoor:

“Promotion and work performance is entirely reliant on peer reviews. In other words, to get ahead at Google and to get a positive performance review, you must get positive reviews from your fellow co-workers. Your manager might love you, but if your co-workers don’t like you, you have some work to do.” 

While many companies have adopted 360-degree feedback it’s uncommon to see peer reviews that can actively block an individual’s chance of promotion.

My top performance management takeaway from each #culturecode

Netflix: High-performance people will do better work if they understand context.

Hubspot: If you want to hire and retain great young employees, let them work the way that they live

Zappos: Rather than just measure people on their ability to do their job, also measure their performance against company culture and values.

Google: Let your employees set ambitious (and sometimes unachievable) goals. But hold them accountable with an emphasis on peer reviews.

Have you seen other #culturecode docs with particularly innovative approaches to performance management? Let me know via Twitter (@Cognology). I’d love to keep adding to this list.

How to waste $41 billion dollars on performance management

My open letter to Bill Morrow, recently appointed CEO of the National Broadband Network

Laying cables for the NBN

Dear Bill,

Congratulations on your recent appointment as CEO of NBN. It’s a big job, even with your history of telecom turnarounds.

I read with interest the article in The Australian about your plans to fix the cultural problems at NBN. As an expert in performance management, I’ve seen cultural problems of all shapes and sizes. But it sounds like the mess you’ve inherited at NBN is truly something unique!

I’m amazed by some of the cultural and engagement problems. So I wanted to offer you some friendly advice and a second pair of eyes. Here’s my thoughts about your strategy to turn NBN into a high performance organisation.

Increasing workplace engagement

I know that the NBN has been a bit of political kick-ball. And that there’s been a lot of changes.

But you’re building a transformational piece of Australian infrastructure. The goals of what you’re setting out to do are very big (and very clear). NBN is almost the definition of a mission driven organisation. So there’s no reason that you should be dealing with an organisational engagement score of just 44%!

In my opinion, your workforce at NBN has to be inspired by a mission driven culture. Every employee needs to get up in the morning ready to shape the future of the country. And you can do this by giving them clear expectations that are directly connected back to the goals and mission of the organisation.

Setting clear expectations and holding people accountable

I can see that you’ve recognised the huge role that performance management has to play in fixing the culture. In fact, I know that you’ve “set about reforming the way the company measures performance”.

But I wanted to issue a word of warning. Measuring performance is typically only half of the challenge in a dysfunctional culture. The biggest problem is clearly setting out what high performance actually looks like in the first place.

In my experience, you get high performance when every employee can explicitly state what high performance looks like for their role, on a day-to-day basis.

And I bet this isn’t the case at NBN today. In fact, I’m going to make a wager that you have thousands of employees running round with unclear position descriptions and requirements. These employees have no real clarity around what they need to do to be successful. And as a result, they start playing the blame game.

Ending the blame game

The blame game that’s going on at NBN at the moment is typical of what I see in organisations with badly broken performance management. How it happens is clear from one of your quotes in The Australian:

“An independent assessment by KordaMentha and Boston Consulting Group cited a fear among staff of “being blamed for mistakes” that “generated a lack of willingness to accept responsibility in some functional groups”.

When you do performance management well, it’s clear who is responsible for delivery. The process ensures that your employees are deeply invested in their goals and objectives.

Remember that at heart, great performance management really isn’t much more than an organisational process for accountability.

I’ve seen the impacts of a ‘blame-game’ culture before. And I’ve got no doubt this is how NBN got to an engagement score of 44%. Because in the ‘blame-game’ environment, everyone is watching their back. Right now, your staff don’t have the time (or the energy) to care about their role in shaping the future of Australia.

Getting visible alignment

I think it’s great you’re working to show a more aligned culture by knocking down the walls. Every high performance organisation I work with makes effort to show how everyone is working together. As you said:

“If we really want to change this culture then we have to start at the top and drop this hierarchical feel. These things are minor in nature but they are symbolic. It shows us getting off our pedestals so we can align together and work together.”

Getting off the pedestal is important. And so is showing everyone that the mission of the organisation is more important than your harbour-view office.

People at NBN do need a symbol of change. And tearing down the office walls might help with that. But don’t confuse the quick win of knocking down the walls with the long-term change in behaviour that you need. You can tear down physical walls in a weekend, but good performance management and a culture of accountability takes hard work over many years.

You’ve got a big job ahead, so good luck

We both know this is going to be hard work. Cultures don’t transform themselves overnight. But with hard work, you can keep people accountable to delivering high performance at NBN. Here’s my four-step action plan:

  1. I’d remind every employee of the role they play in delivering the mission of NBN.
  2. I’d quickly get rid of those that don’t care.
  3. I’d make sure that for those that do care, the expectations of high performance are explicitly set out.
  4. And finally, I’d focus on making the connection between every individual’s performance and the mission of building a better Australia.

Once everyone can see how those expectations connect back to the big mission of NBN, you’re in with a fighting chance.

Good luck – I’m looking forward to seeing a very engaged team coming through my neighbourhood to connect us to the NBN soon!

Jon

Image credit: Bidgee used under CC-SA 3.0 License