I'm Sorry I broke Your Company

8. Out of the Boxes, Charts, and Spreadsheets How to Think Without Consultants

Frederick Taylor, the father of scientific management, was among the very first management consultants and perhaps the first true management guru. His 1911 book, The Principles of Scientific Management, was a best seller for several decades, and his ideas influenced the management of many big American corporations. He was famous in his day, giving many lectures, consulting to well-known companies, and providing advice to the government. Perhaps his greatest legacy is that he helped develop the curriculum at the Harvard Business School, where he also lectured. Even today, the ideas of «Taylorism,» associated with monitoring and measuring and finding the one optimized way of performing a task, have outlived the man by a century. Matthew Stewart, in his book, The Management Myth: Why the Experts Keep Getting It Wrong, said about Taylor, «In place of verifiable data and reproducible methodologies, he provided only anecdotes, embellished with speciously precise numbers and arcane formulas of indeterminate provenance.» Apparently, Taylor was full of bull: performing back-of-the-envelope calculations that had no bearing in reality, overestimating benefits, overcharging his clients, and proclaiming the success of his methods by fudging data — providing the blueprint for the modern management consultant.

Taylor is a good example to examine because we have a century of hindsight with which to judge his ideas. While scientific management was all the rage back in the industrial era, the term «Taylorism» today has mostly a pejorative connotation. Like most great thinkers, Taylor had some very useful ideas and some harmful ones. Some of his useful concepts were to

• Analyze work to determine how to do tasks more efficiently

• Train employees rather than leave them to their own devices

• Find tasks that fit employees' capabilities rather than assign jobs willy-nilly

• Give ample rest breaks to prevent both mental and physical fatigue

• Provide incentives to induce workers to produce more

While many of his ideas are still in practice, his name will be forever associated with the rote, obedient, mechanistic approach to work that ruled the assembly lines a century ago. He believed that thinking work should be separated from manual and menial work and that only a few workers were capable of thinking. He thought managers, the thinkers, should design the work and create standards, while the rest of the employees should be subservient to the managers and follow the rigid standards. This methodology had the effect of dehumanizing the workplace and even resulted in a strike at the Watertown Arsenal. He also never factored human variability into his stopwatch experiments. His most famous case involved finding the most efficient way to shovel pig iron. He chose to observe the strongest and biggest operator to determine the most effective methods (and based his benefit calculations on this persons ability) without considering differences in height, strength, or body type. He also asked the laborer to work as fast as he could, a rate that was unsustainable over long durations.

While Taylorism is mostly repudiated today, the idea that businesses can monitor, measure, and optimize their way to success still survives in modern management methods. We still call upon the mantras of the Taylor efficiency movement: «Work smarter, not harder»; «Do more with less.» We still believe measurements are the key to management. We still call it «management science.» But where Taylor, and many subsequent management consultants, got it wrong is that management is not a science.

The objects of science behave according to the laws of nature because they have no will. Cells divide, planets orbit suns, acids combined with bases explode, and temperature and pressure change the form of elements, all in predictable patterns. None of these objects have a consciousness, an ego, feelings, or a sense of humor. In contrast, the animal kingdom, of which we are part, is constantly surprising us. Who knew that penguins could be homosexual, that bacteria could «speak» complicated languages, or that pigeons could figure out mazes? Yet much of management science assumes that people are rational entities that will behave according to set rules. We know that individual humans do not behave on a purely rational basis, but still we assume that when we put lots of people together, somehow all their irrationalities cancel out each other, and these people behave according to rational formulas. (How many people are required to make the transition from an irrational to a rational body?)

Because management is not actually a science, there are no «answers» and, especially, no business «solutions.» Nevertheless, business management theory consists of numerous methodologies and prepackaged solutions that provide step-by-step instructions on how to be successful. It's ingrained in the thinking of the business world that following a best practice will guarantee success. Very few people even question this assumption. When data shows that most process reengineering efforts fall short of their expected benefits, most mergers and acquisitions fail, and companies with executive incentive compensation plans tend to underperform those without, instead of questioning the validity of the theory, executives try to figure out which step they did wrong so they can try it again. These methods and solutions are the fad diets and miracle foods of the business world. As long as business executives keep searching for magical solutions and guaranteed step-by-step plans, businesses will never develop a healthy approach to management. Business is not different from life; it is life. What you need to create a healthy business is the same as what you need to create a healthy life. Fads and step-by-step methods simply don’t work in either case.

A long time ago, I realized that it is much easier to work with human nature than against it. Even more importantly, you are much more likely to be successful when you work with humans rather than against them. The underpinning of Taylorism was to get humans to behave like machines, to act contrary to human nature. Managers often complain that the reason their initiative failed was because the employees lacked the discipline to follow it. Members of a species that created space flight, the Internet, cartoons, and music videos are not equipped to follow highly regimented processes or to be purely rational or to sacrifice their dignity for the sake of corporate policies. Rather than imposing these methods on our workforce in an effort to remove the human variability, executives need to use these methods as tools to take advantage of human variability. Instead of trying to take the humanity out of the workplace, we need to strive to develop as much humanity as possible. The difference is understanding that the solutions, methods, and theories are not the truth but someone’s perception of how the world works. We can learn from other people’s perceptions to broaden our own insight, but we need to recognize there is a good chance that some of their ideas are wrong.

That’s the trick, isn’t it? How can you discern the good ideas from the bad? It all starts with thinking. Well, it all starts with starting to think. Although I place a lot of the blame for our corporate malaise on consultants, companies are also at fault. Many companies hire consultants to do their thinking for them. Companies will routinely hire consultants to develop their strategies or restructure their companies or determine the feasibility of an acquisition with the result being that people who know nothing about your business are making the most important decisions about your business. One of the biggest flaws of Taylorism was trying to separate the thinking from the work. This legacy lives on in the business world, where thinking is often discouraged while task completion is rewarded. Given the choice of a software program or a checklist or a spreadsheet that spits out an answer versus an opinion from a human brain, many businesses will opt for the nonbrain choice.

Changing our thinking is at the same time the hardest and the easiest thing to do. To that end, I have put together some exercises to help you think without a consultant. The point of these exercises is to help you think about your business in a different context, outside the management-method-fads context and into a creating-a-healthy-business-lifestyle paradigm. Keep in mind that these are not solutions, just ways to help you identify what might be a myth.

Thinking exercise 1: Strive to enhance humanity

If the basic building blocks of businesses are people, then anything that helps people improve should improve your business. The way I see it, organizations consist of four elements — the individuals, subgroups and their interactions, the entire group, and the interactions of the entire group with the rest of the world. This is a guideline I use to determine if a new program or initiative is going to help or harm the organization. It doesn’t really matter what the initiative is called as long as it does one of the following:

1. Improve relationships. My biggest successes with process reengineering projects came when we improved relationships across different functional areas. Early initiatives in process reengineering and quality circles got people together to solve problems and share information. The biggest problem with talent management systems is that they replace relationships with paperwork and ratings. I have found that this is why some knowledge management efforts fail as well. They try to replace learning from someone else with a document. Whenever someone has extra budget money to spend on training, I usually recommend some kind of communications training. The more comfortable your organization is with open and honest conversations between all layers of the hierarchy, the more likely problems and issues will become visible quickly and resolved quickly. In my experience, many business problems are due to a lack of communication, and often my real value as a consultant is in being a communications vehicle between functions or levels. That's an expensive way to communicate.

If your program is going to improve relationships, you've got a winner. If it is an attempt to replace relationships, good luck with that!

2. Improve judgment or expand thinking. This could apply to anything that helps improve decision making and judgment, like better information, more insight, and clearer reports. Supply-chain automation delivered great benefits because all the suppliers and vendors could see the same information and make decisions based on it. Strategic planning is great at increasing knowledge. Metrics help, too. The problem is when you try to use these tools in place of judgment. A piece of paper or a complicated information system does not have the capacity for analysis, information gathering, synthesis, and conclusion that a human has. Automated call centers with push-button menus and standardized scripts are universally hated by customers because they try to replace human judgment. Databases with information on common problems and customer histories, however, help a customer service representative troubleshoot because they provide information to help judgment. There's a big difference between a checklist containing a list of questions to consider and one that calculates a rating at the bottom. People don’t mind adding more questions to the former; it just gives them more to think about. However, if you have to tabulate every line item for a score, everyone will want to keep that checklist short and simple, thus providing less information to consider while making a decision.

Make sure your initiative is geared to improving the quality of thinking and not to finding a tool to replace thinking.

3. Create an environment that helps employees enjoy life. This would apply to initiatives like upgrading the office furniture, holding company picnics, and generally creating a fun place to work. I believe that anything a company does to improve the lives of the employees ultimately improves the relationships with the customers, the local community, and the corporate shareholders. As members of the human race, we have an obligation to each other to help make our lives worth living. As civilization has advanced, we've mostly abolished practices like genocide and slavery. There is no reason to tolerate slavery in the workplace just because it has a salary attached. I have seen some dreadful places to work — mostly factories that were loud, dirty, polluted, unheated, and non-air-conditioned. Employees called in sick regularly and found every excuse to take a break. Wouldn't you? I have also seen factories that were clean, climate controlled, and noise controlled. Absenteeism wasn't a problem. Keeping costs low is no justification for treating employees like slaves, especially now in our stressed-out workplaces, where long hours, little vacation, and a working lunch are the norm. It doesn't even make good business sense. People need rest, exercise, and periodic breaks to think properly and be productive. I've been through several costcutting initiatives, and often some of the first things to be eliminated are the employee perks like free coffee, subsidized lunches, and discounted gym memberships. Only afterward do the cost cutters realize that these perks are all productivity enhancers.

More than enough data is available that shows investments in employees produce better company results, like growth in revenues and profits.

4. Strive to make life better for your customers. Although I think the best way to serve your customers well is to treat your employees well, I have heard enough anecdotes about companies that cheat their customers to warrant making this the fourth item on my list. I just don't see how you can create a sustainable business if the only goal is to make money for yourself. Isn't the point to create something valuable that you can charge money for? That's not the same as being in business to make money. We don't love Apple products because they have a high profit margin or buy pharmaceuticals because pharma companies have favorable earnings per share. We believe their products make our lives better, even in a small way. People tend to part with their money more easily if they believe they are making their lives better with their purchase. From my experience, whenever a company changes the conversation from how to deliver better services to how to sell the most profitable engagements or from how to create lifesaving medicines to how to create hugely profitable medicines, It's been a warning sign that the company was embarking on a decline. I think of money as a measure — a measure of success. The money should be a means, not an end. When it becomes the end, a company is in danger of neglecting to add value, and that eventually means no more company.

If an initiative is geared to adding value to the world, then it has a much better chance of adding value to the company.

Thinking exercise 2: Use another context, or please try this at home

A common innovation thinking exercise is to alter the problem you are trying to solve by putting it in a different context. For instance, if you are trying to find ways to bring your products to market faster, you think of another context where you are trying to create something faster, like building a house or sculpting a piece of artwork. My thinking exercise 2 is to think about whether your program or initiative would be effective in a different aspect of life. If what you propose wouldn't work in another type of organization, it likely won't work in a business organization. Below are several (somewhat ridiculous) scenarios that take the subject matter of my chapters and apply it to other life situations.

Strategic plan development Sara is an Ivy League graduate currently working at a prestigious consulting firm. The company is urging her to get her masters in business administration, but she is not sure what she wants to do with her life. The only consulting assignments she really enjoyed were in public policy. She decides to hire a team of life coaches to develop a five-year life plan for her. After interviewing Sara, her family, and her friends, they put together a plan: she should go to New York University law school and study international law. Afterward, she should join a prestigious global law firm, travel all over the world, fall in love with a partner and get married, and continue to work part-time in law while raising a family of one boy and one girl.

What happens if Sara gets offered a once-in-a-lifetime overseas consulting assignment with the World Bank? It will definitely derail her plan. Should she take it?

Process best practice implementation You review your household finances and discover that your family is spending way more than they are taking in. This is a surprise because you earn a good salary and don't have lots of expenses. Clearly, someone is spending too much money! You decide your family needs a budget, so you look on the Internet and find a budgeting template to use. That night after dinner you show your family the template they will be required to use. After a month, you review the finances again and discover the problem is still there. While everyone had used the template, you notice that many expense entries are missing. So you decide to buy Quicken and install it on everyone's computer. Now every transaction will be recorded automatically. After a month, you review the Quicken reports and find you still have negative cash flows. You have tons of transactions to review in Quicken, but many of them seem to be miscategorized. You decide what you really need is a more robust software program and better enforcement of the process!

Target goals Larry is the coach of a kids' soccer team. The team had a dismal record last year, so this year he decides to implement a few new policies to motivate the kids. After tryouts, Larry not only assigns the kids their positions, but also determines individual objectives for them — how many saves, goals scored, and defensive moves — dependent on position. There are per-game objectives and those for the entire season. Those kids that exceed their goals are rewarded with two scoops of ice cream after the game. Those that meet their goals get one scoop, while those that don't meet theirs get the pleasure of watching their teammates eat ice cream. What kind of team would this end up being?

Performance appraisal You know, my kids are not really performing the way I think they should. This year I am going to review their behaviors and accomplishments in December and discuss all the things I think they should be doing better. To help them improve, I will rate them on academics, athletics, social leadership, and business acumen. My expectation is that they need a minimum competence in each of these areas to be successful in life. Their overall ratings will result in an adjustment to their allowance in the New Year. What kind of psychiatry bills are they going to incur later in life?

Performance coaching While I'm trying to improve my kids, I should target my husband as well. He never does the dishes, and it drives me crazy. I took a weeklong class on relationship skills to address this issue, and now I have a feedback model to use on him: ASCA (Ask permission, be Specific, describe Consequences, create Actions). I tried the ASCA model, and he promised he would clean more often, but still nothing changed. After consulting with my feedback tip sheet, I realized that the actions weren't specific enough. Next, I developed an action plan outlining exactly when and how he needed to clean up and gave that to him. He rolled his eyes at me. Clearly he is uncoachable, and I need to file for divorce.

Poor-performance action plans Unfortunately, Jans career has caused her to move quite often, resulting in many school changes for her kids. Fortunately, Jans children are quite intelligent and adaptable and usually adjust easily to their new schools, so their academic performance hasn’t suffered. However, after this last move, Jans oldest daughter is miserable, and her grades are terrible. She says it’s because her new school is obsessed with football and cheerleading, two areas she has no interest in. This daughter complains that all her teachers use these sports in their classes as examples. Jan also suspects her daughter is being bullied because she doesn't attend any games. As a good parent, should Jan outline an action plan to get her daughters grades up to passing before she looks for a different school?

Leadership assessments and development programs I find the state of American politics quite distressing. Some of the candidates don’t seem at all qualified to lead. Why doesn’t politics take a cue from business? Before graduating from high school, every student should take a leadership assessment. Those people who score well should be picked to go to an Ivy League school to study law or public policy. This way, we can ensure we have a continuous supply of qualified candidates.

Last ridiculous scenario: consultant selection You’ve been married for over a decade and have two small children. You and your spouse seem to be arguing over everything lately — finances, chores, lack of intimacy. After yet another argument last night, you began to cry uncontrollably, and the two of you finally started to talk about your problems. You both concluded that you still love each other very much, and you want to make it work, especially for the kids, but you need outside help. You decide to try marriage counseling. The two of you do research and ask for recommendations for a good counselor. You get five recommendations:

• Counselor 1 has a surefire five-step program to resolve all marital issues and will lead you through the program. The first step is on a website, so you can get started at home.

• Counselor 2 specializes in marital strife with young kids. She knows exactly what your problems are due to her work with other couples. She'll provide you with a manual outlining what to do and two consultation sessions if you have any questions on the material.

• Counselor 3 has a proprietary assessment for the two of you to take. Based on your results, he will formulate a custom solution based on his standard set of marital solutions.

• Counselor 4 is a famous author of several well-known books. She is also pricey and not readily available for counseling sessions. She recommends you buy her software program, which will lead you step-by-step through all the aspects of marriage counseling.

• Counselor 5 wants to sit and talk with the two of you about your problems and take it from there.

Which counselor do you choose?

Thinking exercise 3: Mean what you say and say what you mean

The root cause of many business problems is the conviction that business is something other than a group of people and that business issues and solutions are something other than what they really are. Much of this fallacious belief system is due to the way we talk. We all know business is full of obscure jargon, and I know that I have been guilty of relying on jargon in this book. Although we often joke about it, I don't think we spend enough time thinking about the consequences of the words we use (me, too). The words we use shape the way we think, which is why spin doctors are popular in politics. The easiest way to start changing how we think about business is by changing how we talk about business.

I am amused by the two overused phrases I hear in reaction to some of my ideas. When I explain why I think strategic plans are limiting, my colleagues often argue that I have it all wrong: «Strategic plans are supposed to be living documents.» Living documents? Other than in Harry Potter movies, I've never seen a living document. And that’s the problem. Rather than assigning resources to update the plan or putting a process in place to do so, management just dismisses all the work required to keep a strategic plan current with an «It’s a living document.»That’s a complete abdication of responsibility in favor of reliance on magical paperwork. When I explain how numerical targets and incentive compensation encourage bad behavior, the reaction is, «How else do you hold peoples feet to the fire?» Yikes! Why are we trying to torture our employees? The problem with torture is that you get exactly what you torture for, regardless of the truth, which is exactly what these systems do. We really need to pay attention to the language we use and start talking the truth rather than using euphemisms and aphorisms, or we will continually address symptoms rather than problems. «Creating efficiencies» means firing employees. «Restructuring» means firing even more employees. Unless we call things what they really are, we will never be able to fully understand them or respond appropriately.

Table 2 shows the topics I've discussed in the preceding chapters with alternatives for how we should describe them. Notice how the change of words changes what you think.

Table 2 Translations of business jargon

The jargon phrases either warp or limit our thinking. When you call it what it really is, the problems become obvious. The other phrases we need to banish are «Manage the bottom line,» «Maximize shareholder value,» and anything similar. As in the weight-loss-versus-healthy-lifestyle analogy I used in chapter 3, we don’t actually want to do these things. What we really want is to create and maintain a healthy company. Creating and maintaining a healthy company is completely different from playing around with numbers on a spreadsheet. A healthy company has to have a healthy organization full of healthy people with healthy relationships in a healthy environment.

This problem of using words to obfuscate what we really want is endemic throughout the business world, and we really need to stop. Many of my consulting colleagues hate the jargon as much as I do, but the blame lies squarely on the management consulting industry. We are the ones who coined the phrases. Much of the jargon can be traced back to a book or a method conceived or popularized by consultants. The crux of the problem is that consultants are expected to be thought leaders and are rated and compensated on thought leadership. What exactly is thought leadership? Thoughts are things we make up in our heads, and leadership is persuading everyone else to follow them. We've done a good job at that.

On behalf of all the management consultants everywhere who have filled your lives with meaningless jargon, delusional programs, and misleading models, I am truly and deeply sorry.

None of this means that you should avoid hiring management consultants. In this age of very lean companies and outsourced workforces, it is almost impossible not to hire consultants. Using consultants has many benefits, especially on projects that are not part of normal operations. In my corporate career, there were as many times I wished we had hired outside expertise as there were times I wished the management consultants would disappear. Moreover, like hiring a personal trainer or a nutritionist, you tend to follow the advice when you have to pay for it. Sometimes, a company just needs the fresh perspective an outsider brings.

As a management consultant, I've occasionally found myself in lose-lose situations. Typically, this happens when clients have hidden agendas or are shirking their responsibilities. The worst thing a client can do is to hire someone to do their thinking for them. We can provide analyses, recommendations, expertise from other areas, and new ways of looking at situations, but the success and failure of the company needs to be with the leadership team, not the advisors. The other lose-lose situation I hate happens when clients don't trust the advice of their own people. As soon as I walk in the door, everyone resents me. Worse is when top executives don't like what their team is telling them so they hire consultants to buoy their own opinions. Remember, you can always find someone willing to say what you want to hear if you pay enough.

Table 3 sums up my advice on when consultants can benefit your organization and when they can't.

Table 3 Reasons to hire a consultant

A successful consulting engagement is the result of a successful partnership. It really has to be a two-way relationship. In that respect, you need to find someone you are comfortable having a relationship with. Most of us consultants truly want to help our clients. This profession has It's share of jerks, and I don't care how smart they are — you cant have a viable relationship with a jerk. However, many of the well-meaning consultants believe in all the mumbo jumbo they've created, and that's a problem, too. I know that I used to believe in the models and methods, especially proprietary ones. When they don't work, these consultants' advice is to do it again, only harder, because a step must have been missed or not executed well. You want a consultant who will listen, investigate, analyze, and probe before offering recommendations and solutions.

Here's my advice on what to look for and what to avoid when hiring consultants:

Table 4 Advice for hiring a consultant

Table 4 Advice for hiring a consultant, continued