Posts by: lucia

The following interview with Susan Lucia Annunzio is a condensed version of HR.com’s live, one-hour online learning seminar, which was also broadcast on Voice America Internet radio.

To listen to this interview, please click here.

KE: Susan, your book is called Contagious Success. Let´s start by having you tell us why you gave that title to your book.

SLA:We believe that a company is like an organism. The company can be healthy [for a company that would mean it is growing profitably] or unhealthy. Like an organism, a company is made up of cells. These cells are your workgroups. Some of those cells are healthy. If they are healthy, a company´s workgroups are making money and/or innovating in some way. Companies also have unhealthy cells, workgroups that aren´t doing well. The vast majority of cells are ´in the middle´ – the average-performing workgroups.

What our research team thought was: what if we could put the healthy cells under a microscope, examine them and discover a ´gene´ – something that is unique to all of these workgroups. If we could determine a common denominator, maybe we could spread health, make it contagious. A lot of companies today are erasing the unhealthy cells. They are good at identifying low performance and through downsizing and right sizing, eliminating and getting rid of some of the unhealthy work groups in the company. What companies are not doing is adding, by taking their healthy cells and trying to make them even healthier, or by multiplying the number of healthy cells. How can we spread the health or make it contagious throughout the organization? My group said, “Is there a high performance gene?” “Is there something unique to these healthy workgroups around the world that we can identify?”

KE: So that was the purpose of your research. Maybe you can tell us a little bit about the research project itself.

SLA:In order to answer the question, “Is there a high performance gene?” we conducted the largest ever, systematic study of knowledge workers to identify the genetic code of high performing cells. Why knowledge workers? In every company your best candidate for innovation is your knowledge worker. It doesn´t mean that other people in your company won´t be innovative. It means that the drivers for that innovation are most likely your knowledge workers. Or, the knowledge worker will be managing those people who will develop the innovation. So we decided to ask, “How can we find out the common experience of knowledge workers in work groups?” Our population represented the top ten percent income bracket of every country that we studied. All of our participants had a university degree. Forty percent had advanced degrees – masters and Ph.D.´s. Thirty percent of the global Fortune 500 companies were represented, including companies such as Intel, Microsoft, Goldman Saks, Pfizer and Sony. In fact, we studied the highest paid, best-educated people from the top companies in the world.

KE: How did you communicate with this group, Susan? Was it Internet-based surveys?

SLA: Yes. Internet-based surveys were used and we randomly picked 600 people whom we talked to on the phone. From the group of 600, we selected 100 people with whom we conducted a 90-minute interview.

KE: And from this information you identified the “genes” of high-performing teams that you reveal in your book?

SLA:Exactly. There were unique, discernable characteristics to these groups. They were quantifiable. We could measure these characteristics and show that if a group had these characteristics, they not only made money but they also demonstrated innovation. These characteristics were also global. We found no differentiation in our findings in any country that we studied, or in any industry. And, they were replicable.

Now for the results themselves: 77% of our knowledge workers said their workgroup was high performing, but only 10% could actually support the claim. That is, demonstrate some sort of measurable results that their workgroup had achieved. Most workgroups (52%) globally are “in the middle”. 38% are non-performing.

KE: So do workgroups stay in one category long-term?

SLA:Well, we said to the non-performing group, “Were you always non-performing? Was there a time in the past that your group was high performing?” When asked that question, 30% said, “Yes, we used to be high performing. There was a time that we could have substantiated the claim. But that time has gone away.”

We found that the number one killer of high performance around the world is short-term focus: the quarter to quarter mentality – getting today´s results was hurting high performance. We heard stories like: “Oh yes, our team was high performing and then what happened is they raised the bar, they raised our performance standards, they lowered our resources, cut our staff, decreased our budget and thus, we couldn´t keep it up.” Or, “They cut up our team and distributed us around the company, hoping that our dispersed team members would help raise the results for several different units.”

But what we found was that if you put a high performer in one of those unhealthy cells, the high performer can no longer do their best work. So the work group, and the environment of the work group drive performance much more than the individual worker.

The second killer of high-performance involves leaders who put their self-interests above those of the work group. In these instances, we saw a lot of hoarding of information and micro-management.

KE: So based on the analysis of the high performing, average performing and non-performing workgroups, you were then able to identify what uniquely creates and sustains the high performers?

SLA: Absolutely! What is most important is that we have, for the first time ever, proven that certain characteristics within a workgroup environment make money and drive innovation.

One of the startling things we found out was that it´s not the leader. Many of the people listening today are probably creating competency models for leadership. We were not able to create a competency model of a leader who was running a high performing work-group. We found many different leaders with many different characteristics. We studied one group, for example, that went through four very different leaders with very different styles. However, what they had in common was a high performance work environment.

The number one driver of high performance is that work groups that are high performing have people who feel valued: smart people get treated as though they are smart. What we saw in the study was that these people were told what to do and not how to do it. Differences of opinion and different ways of thinking were respected. In both high performing groups and in non-performing groups, people had high expectations and worked hard. What differentiated high performance is when people worked hard and had high expectations, coupled with treating smart people like they were smart – you got high performance. We asked someone in a high performing workgroup in an under-performing company, “What do you attribute as the number one factor that drove the high performance in your group, even though your group is in an under-performing company and under-performing industry?” And he said, “The CEO values the input of our group.”

I spoke with Tom Mendoza who is the President and CEO of Network Appliances in California. His company went public in 1995 and became profitable in 1996. Since they´ve become profitable, they´ve had 21 consecutive quarters of 70% year after year growth. Tom said to me, “I hire the smartest kids I can find. I give them all the information they need to do their job. My competitors have said things to me like, ´You shouldn´t give them the information, it´s gonna come back to haunt you, its gonna go to the competition,´ and I´ve been in business for over a decade now. It not only hasn´t come back to haunt me – I keep growing.” He said, “I hire these young people, they have bright minds. I give them information and I tell them I want to go to Pittsburgh but I don´t give them a map.” And, I think that´s a really good story of what valuing people really looks like.

The second driver of high performance is the ability to optimize critical thinking. In today´s world there is a plethora of information over the Internet and other sources. In the past, especially knowledge intensive industries would hire people to go out and find information. Take myself, as an example. I am running a consulting firm. I would hire junior people to go get me information about a company. Today, I don´t want people to go find information; I want them to be able to discern that information. I want them to go through all of the information that is available and come up with one page for me – what´s important and what´s not important and how it affects my ability to do my job.

KE: What kind of environment optimizes that kind of critical thinking?

SLA:What we found was that these environments worked congruently. Emotions were low and thinking was very high. People said our leader leads by his or her example. We live the values of our organization. The values of our organization are not plaques on the wall. We use the values of our organization to drive business results. We make decisions using the values of our organization. Of course part of what made that environment congruent was pay for performance. In high performing groups, people are rewarded for performance. However, if asked what drives their high performance, pay consistently ranked fifth. Our interpretation of that finding is that paying for performance is necessary but not sufficient to drive high performance.

The last variable of high performing work environments is the ability to seize opportunities. That means taking challenges and turning them into business opportunities. High performing groups and non-performing groups had strategic plans, they stuck to these plans and they measured these plans against goals. However, strategic planning only paid off when a learning environment was created – an environment where people could learn from one another, where they could ask questions, where they could think through and generate new ideas, where they were able to make and learn from their mistakes, where mistakes were seen as opportunities for growth and consequently they were able to take calculated risks.

We spoke with a group called the Green Diesel Team out of International Truck and Engines. International Truck runs its trucks on diesel fuel. In California, about five years ago, they changed the emissions standards on small trucks so that the current form of diesel fuel had to be changed. This group of people understood that if this law were being changed for small trucks in California, soon it would affect larger trucks around the US and they would soon be out of business. They were very pro-active. They saw this problem as an opportunity. They worked with the Environmental Protection Agency. They got the laws of the land changed quickly, requiring a diesel fuel that was as safe as gasoline. They also created a product that they could retrofit on their engines to accept this new diesel fuel, putting them 10 years ahead of the competition. This retrofitted product is now the fastest-growing product at International Truck and Engines. So, environments that value people, optimize critical thinking and seize opportunities have the genetic code of high performance. Not only do these environments help recruit high performers, they help retain the best and brightest. They are talent magnets – the word spreads, people learn about these workgroups and want to work for them.

KE: So let´s move to some suggestions. You´ve described the characteristics of a work environment that supports high-performing teams. What about organizations that don´t have these elements in place? What can they do to begin to move folks from the non-performing and average performing into the high performing areas?

SLA:Remember our distribution. We had 10% high performing, 52% in the middle and 38% non-performing. Let´s pretend that hypothetically our distribution of workgroups around the world could represent a typical company. What if we could draw a line in the middle group of average performers (52%)? What if we could pick the top 20% of the middle group, the ´almost there´s´, those that are closest to high performing, but haven´t quite made it over?

We would begin by identifying those top 20% and teaming them with compatible work groups in the high performing category. Who are the high performing groups in the company that have compatible issues — either compatible customers, compatible challenges, compatible regions of the world – something about those groups that is compatible? Our recommendation would be to create ´Swat Teams´; combining members of high performing groups and members of average performing groups. The focus of these Swat Teams is to increase the performance of both groups.

In order to do this the senior executives in the company have to play a role. I spoke to the CEO of a company who created these Swat Teams and he assigned a senior executive to each team. The senior executive´s role was to say, “Your job is to increase company performance and you are to do that by working together to increase the performance of both of your groups. You are to talk about what are your barriers to success, what are your accelerators. I´m going to give you all the information you need to increase your performance and I´m going to act as your champion to help eradicate the barriers and accelerate the accelerators.”

KE: And through this process, we move the ´almost there´s´ to the high-performing category and hopefully gain some increased performance from the high-performers as well?

SLA:Exactly. If we can get those Swat Teams to work together and we take that 20% from the middle and get that 20% to work with the 10% we can hypothetically, and at a minimum, increase that high performing work group to 20%. Now our bias is that that 10% of high performing work groups drives 90% of the revenue in a company. If we can double the number of high performing work groups driving the revenue the profitable growth of the company will increase and it will increase exponentially.

KE: You provide some additional suggestions in your book about ways to increase the performance of the already high performing groups.

SLA: Everyone in our survey rated 45 items in terms of how they drove high performance. Then we looked at that 10% of high performing groups. They rated the 45 items on a 10-point scale. The average of our high performing groups was a 7. And no groups scored higher than a 7.8. So, we said to ourselves, how could those 7´s be turned into 10´s?

We suggest that you begin by identifying your high performing groups. We have a set of tools that help companies assess which groups are high performing and which are almost there. But companies can also create these tools themselves. In my book there are a lot of suggestions of the variables that drive high performance. Based on these variables, you can create your own tool. Once you´ve created the tool and identified which groups are high performing, I´m suggesting that you bring members of these work groups into a room with senior executives and construct what we call ´tell all´ meetings.

For example, we brought about 100 people from a global company into one of these meetings for two days. For the first four hours we talked about what all the barriers are – what I would call the ´unspeakable subjects´: those things people talk about behind closed doors – that they are afraid to say out loud – in case they get fired. We know that people are afraid they are going to get fired if they speak candidly, so at these meetings senior officers have to offer amnesty. We have to tell people that we want to increase the performance of our company and this is a meeting where not only are you not going to be fired, you are going to be rewarded for telling us what gets in the way. To ensure that this happens we suggest that senior executives be armed with some of those unspeakable subjects. Prior to some of the meetings we ran we did some interviewing to find out what some of those barriers were. In one instance, the CEO started the meeting by saying, ´I know what you´re thinking. You´re thinking the biggest barrier to this company is me. You don´t think I have the passion to do the job.´ He went on to say, ”You are also thinking our bureaucracy has become too cumbersome, we have too much paperwork, too many initiatives.´ So he said the things that people were thinking. He set the stage for people to begin talking about these things.

We talked about four hours and had real honest dialogue about the barriers. Then, we created teams within the meeting to address those barriers to success and to figure out, within the two days, how we could get rid of them. As a result, when we started this meeting, they had 60 technology initiatives in play. They reduced it down to 10. They eliminated 460 lines of paperwork. It saved the people in the room a whole lot of time. They constructed three new deals at this meeting and worked together with the senior executives to go to market. Three months later, they brought in $17 million dollars of new revenue to the bottom line and had over 5 new global client contracts – none of this had been started prior to that meeting.

KE: A pretty good return on investment for that initiative.

SLA:Yes. I think one of the things that really helped was the night we had an awards ceremony. Most of this ceremony was fun and games – but the last award was the ´Courage Award.´ This was given to the person who spoke the most unspeakable subject that day. He bad-mouthed the Chairman of the Board. He came to the podium saying he thought he´d be fired, not get an award. He received a standing ovation. That´s really offering amnesty, finding out what´s getting in the way of success.

So our contention is that if you can identify what´s really getting in the way and allow people to speak candidly, you can bring those 7´s up to 10´s and increase the performance of even your high-performing groups.

KE: An incredible example of how an organization can alter the culture to support the high performing teams to do even more. Any final thoughts?

SLA: Contagious Success is about how to infect your organization with sustainable, profitable growth through dramatically improved workgroup performance, increased innovation and environments that attract and retain the best of the best. We believe the way to do that is to apply the findings of this study.

In Contagious Success, we point out that before a company can improve its performance, it needs to bring taboo subjects into the light. One technique I use is the “tell-all” meeting. At this meeting, the senior leadership team offers amnesty for telling the truth. People air their frustrations so they can get past their emotions and have room to think. This meeting paves the way for the company to confront the issues and move forward.

That’s exactly what happened at IBM, as described in the December 2004 issue of Harvard Business Review in an interview with CEO Samuel Palmisano conducted by Tom Stewart and Paul Hemp. Palmisano described a 72-hour “ValuesJam” via the corporate intranet that drew about 50,000 employees and generated nearly 10,000 comments about the company’s values. This was a tell-all meeting on a major scale.

For the first 24 hours, people vented – e.g., “The only value in IBM today is the stock price.” Eventually, the tone of the comments changed: the criticism became more constructive and the postings began to focus on the parts of the culture worth preserving.

Palmisano told HBR that “the electronic argument was hot and contentious and messy… We had done three or four big online jams before this… Even so, none of those could have prepared us for the emotions unleashed by this topic. You had to put your ego aside – not easy for a CEO to do – and realize that this was the best thing that could have happened.”

Amen.

This week, we’ve talked a lot about how success can be contagious… but it can’t spread without contact.

In my work with executive teams, one of the biggest challenges I face is getting all of these brilliant minds to come together, really listen to each other and apply their brainpower to address a common problem or goal.

Typically, I will use a “collaboration model” with steps including: vent; reverse negative assumptions; generate ideas; identify what’s smart about each idea, watch for the recurring themes (and make sure all of theses themes are included when the ideas are blended into a solution); pinpoint the dangers; and finally, develop an action plan.

One of the single most important lessons I’ve learned in business is to look for the good in every idea – to find “what’s smart” about what someone else is saying, even if I don’t agree with them. We’ve all played the “gotcha” game – jumping on something we just know is a bad idea… punching holes in someone’s argument to prove how smart we are.

But aren’t we all sometimes a little quick to jump to conclusions? Haven’t we all made assumptions about something that we think is just plain stupid, when in fact it may have turned out to be the next paradigm shifter?

I am often asked whether I believe business leaders deliberately get in the way of high performance. The answer to that is an emphatic “no.” Sometimes people are just not good managers – they don’t have the right skills to foster environments in which people can do their best work. However, a much larger problem is the effect of short-term focus on performance.

Companies are today under constant pressure to reduce expenses, cut staff and live quarter to quarter. This may drive short-term profits, but it’s killing high performance.

The way companies are cutting is harming their ability to grow profitably. Instead of discussing how to solve the problem with workers, they unilaterally mandate cuts. This often demoralizes high performers and takes away the resources they need to do their best work.

What is the effect of short-term thinking on performance at your company? How does it get in the way?

Both Janice and Valeria recently shared great examples about “company interference” that can get in the way of high performance.

Unfortunately, these types of situations are not unusual. In our study, fully one third of the respondents from “non-performing” workgroups classified themselves as “used-to-be’s.” That is, they were once high-performing, but a variety of factors have worked against them, usually as a result of short-sighted actions (or inactions) from senior management.

In fairness, companies today are under enormous external pressures to achieve results fast. But there is also plenty of evidence out there that you can achieve results the “right” way, without sacrificing innovation, creativity, and long-term growth. The secret is finding these high-performing workgroups in your company, figuring out what they are doing right, and helping spread that health across the organization.

Bucking conventional wisdom is not always easy to do, but quite often it can be the most effective path to sustainable, profitable growth.

Susan’s point about protecting the workgroup reminded me of Ford. When the automaker was under pressure to deliver its first hybrid vehicle, management insulated its Escape Hybrid team from the usual distractions. Instead of stopping what they were doing and putting together a Power Point progress report, what one team member called “the dog and pony show,” they focused on solving the problems at hand, such as getting nine completely new technologies to work together. Execs loosened other rules and accelerated the teams requests for resources. The result? During those six months, the group doubled its productivity. It was an eye-opening approach that Ford’s product development execs said they were eager to try with other teams.

One of the most interesting findings of the Contagious Success research is that in high-performing groups, the leader “protects” the group from the larger company, whether lobbying for more resources or shielding the group from company interference. Sometimes this means bending company “rules” when they are getting in the way of performance. But good leaders use “intelligent disobedience” – knowing which rules they can break and which they can’t.

One plant manager I spoke with tried for two years to get her company to change its compensation plan to reward the workers in her plant more fairly. When nothing happened, she informed executives in her monthly report as well as in an email that unless she was instructed otherwise, she was going to change the policy. She counted on the fact that no one would pay close attention, and she was right: she got no response. In this case, the manager protected the financial interest of her workgroup at some risk to herself.

Company interference often takes the form of incongruity between words and actions. When the leader is forced to protect the group from these inconsistencies, it can take a high toll. People develop an “us versus them” mentality. They become a secret society, unwilling to share their successful strategies. The company’s performance suffers.

When I speak to groups around the world about this phenomenon, I always see nods of recognition in the audience. Tell me your stories – How does your company get in the way? How do your leaders protect the group?