Category Archives: Strategy

The Disruption Distortion

By now you may have read about the hand-to-hand combat in the hallowed hallways of Harvard.

In a scathing critique of Clay Christensen’s seminal work on disruptive innovation, Jill Lepore, a fellow Harvard professor, claims in a New Yorker essay“It’s a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, and shaky evidence.”

Christensen responded in an interview with Business Week saying:

“In fact, every one—every one—of those points that she attempted to make [about The Innovator’s Dilemma] has been addressed in a subsequent book or article. Every one! And if she was truly a scholar as she pretends, she would have read [those]. I hope you can understand why I am mad that a woman of her stature could perform such a criminal act of dishonesty—at Harvard, of all places.”

Whoa! Let the fireworks begin!

Walking the talk

In the interview, Christensen doesn’t dispute the almost random use of the word “disruption” or the need to bring discipline and understanding around a very useful theory. But he does set the record straight on many of Lepore’s drive-by claims, such as incumbents not disappearing in the retailing industry, integrated steel companies such as U.S. Steel still being dominant, disruption not happening overnight, about unionization as an explanatory factor, and the failed Disruptive Growth fund.

I did some quick research of my own research: Nucor (the disruptor) is the largest U.S. steelmaker in terms of market value with a market cap of $16 billion—four times that of U.S. Steel (the disrupted) with a market cap of only $4 billion. Nucor’s operating margin of 7.7% in 2013 was more than twice as high as U. S. Steel’s 3.4%. U.S. Steel has lost more than $900 million from 2010-2013 while being in the red every one of those years. Meanwhile, Nucor has been profitable every year with a net profit of $1.9 billion during the same timeframe.

And yet Lepore hangs her hat on U.S. Steel being “the largest U.S. producer of steel” (without saying on what basis) to accuse Christensen of ignoring factors that don’t support his theory.

Christensen is truthful in the interview. He openly admits to having missed the fact that iPhone was disrupting the laptop and was not a sustaining innovation against Nokia.

He says that he could list 10-15 problems that we still need to resolve, and if Lepore were “actually interested in the theory and cared enough about it to walk 15 minutes to talk,” he would have listed the problems with the theory for her.

“She [appears to have] only read one book at the beginning in the naive belief that the end comes out at the beginning,” fumes Christensen. “But because her purpose was to discredit me rather than look for the truth, she didn’t even look.”

The rest was unreadable

Lepore’s penchant for over-the-top theatrics is obvious very early on. She recalls finding a copy of “Steppenwolf” floating like a raft in a clogged sink. This was in the last years of the 1980s, mind you. Twenty Five or so years later, she still remembers reading the exact words on the cover: “In his heart he was not a man, but a wolf of the steppes.”

Then, dramatically, she adds: “The rest was unreadable.”

But amazingly enough, she could still read—on the cover of this unreadable, waterlogged book floating in the sink—that it was a Bantam Books edition, and still recall that fact 25 years later.

I was unable to retrieve the actual bloated book from the clogged sink at Polaroid (a “disrupted” company), but I was able to find two Bantam Books editions, one from 1979 and another from 1983, on goodSteppenwolfreads.com website.

Assuming the book Lepore purportedly discovered in the bathroom was similar to one of these two covers, I am simply amazed that the words (“The world-famous novel of a man’s struggle toward liberation”) written just below the exact words she quotes were unreadable to her, but she was somehow able to decipher (and still remember) on a bloated cover the words “A Bantam Book” written in much smaller print just above the quoted words in the 1979 edition cover or running vertically and way off to the edge of the 1983 edition cover.

This whole unreadable theme is a setup, you see. Fast forward to the end and Lepore closes her diatribe with the “Steppenwolf” reference saying that “it is still available in print, five dollars cheaper as an e-book,” as if that in itself is convincing evidence of disruptive innovation theory’s failure.

Then she dramatically ends: “He’s a wolf, he’s a man. The rest is unreadable. So, as ever, is the future.”

As if implying that no bogus theory like disruptive innovation is going to make the future readable, Lepore moves on to pen the history of the national anthem in a column the following week, describing how the American flag “flew from the right-field pole, snapping in the wind like a whip” during the first game of the 1918 World Series, in Chicago.

It is remarkable what historians can find out.

Ulterior motive

After waxing on for the first two and a half pages about the wanton use of disruption, and not-so-casually dropping Michael Porter’s name, Lepore pulls out the dagger out of nowhere:

The strength of a prediction made from a model depends on the quality of the historical evidence and on the reliability of the methods used to gather and interpret it. Historical analysis proceeds from certain conditions regarding proof. None of these conditions have been met.

She conveniently forgets to mention Christensen’s scholarly article titled “The Ongoing Process of Building a Theory of Disruption” published in 2006 in the Journal of Product Innovation Management.

In this article, Christensen responds to the critiques head on while accepting some as useful additions or corrections and suggesting that others are ill-founded.

He recounts the development of the theory of disruption within the context of a model of what theory is and how it is built. He also addresses the concern about the model’s predictive ability and provides four publicly documented examples to show that the fear is unfounded.

On the contrary, Lepore takes random acts of other people under the name of “disruption” and blames them on Christensen. While it is true that “disruption” has become a buzzword, it is not Christensen’s fault that people have misused and even abused it.

So what could be Lepore’s motivation? Hard to say for sure, but I am going to hazard some guesses:

Attack Dog: Porter is on record, in a New York Times article on online education at Harvard, saying “Clay sees disruption everywhere.” Having worked for Porter (as an assistant to his assistant), Lepore may be in his camp. But I doubt that Porter would sic Lepore on Christensen. I hope Porter has better things to do than that.

Personal:  Her tirade, while very well-written, seems rather personal. (“History speaks loudly, apparently, only when you can make it say what you want it to say.”) Those are serious accusations to make. Christensen is right. If you are going to ambush his life’s work, you owe him some professional courtesy—especially if you work within walking distance of him on the same campus. But Christensen says that he has never met Lepore, so how could it be personal?

Pressed for time: Writing columns while teaching and conducting research can’t be easy. Maybe she was just pressed for time and got something out quickly by the deadline. Given the length of it (more than 6,000 words) and the various references (although superficial) to Christensen’s work, however, this essay seems like a well-planned attack.

Notoriety:  I have known of Christensen for at least 15 years. I have bought many of his books and have quoted him in my articles. I have heard him speak and even met him briefly at the World Innovation Forum event in 2007. Although she is a well-accomplished Professor of American History at Harvard and a contributor to The New Yorker since 2005, I had no idea who Jill Lepore was—until now. So, if notoriety was her motive, it is mission accomplished.

Charles Barkley is no stranger to drunken and overzealous fans accosting him. After he threw a man out of a window during a bar fight, a judge asked Barkley if he had any regrets. Barkley replied: “Yeah, I regret we weren’t on a higher floor.”

Contrary to WSJ story, Hispanics at the bottom in UC admissions

In a WSJ story called “Hispanics Gain at California Colleges,” Miriam Jordan reports that The University of California (UC) has admitted more Hispanics than whites for the first time.

The story reports that Latinos accounted for 28.8% of the 61,120 Californians admitted for this fall’s freshman class at the UC system’s nine undergraduate campuses, up from 27.6% last year and topping the 26.8% share of whites.

While that is definitely a noteworthy development, the story left something to be desired: As always, looking at the numerator without attention to the denominator can lead to erroneous conclusions.

Although the WSJ story recognizes that Hispanics represent California’s largest ethnic group and reports the ethnic composition of 15-19-year-olds in California, it doesn’t quite finish the thought or the calculation.

College AdmissionsSo, I decided to finish it myself! I created a table based on the info in the WSJ story, CA Dept of Finance data, and filled in some blanks for “other” ethnicities because the percentages didn’t add up to 100% otherwise.

All of a sudden, these numbers show in a very different light! Hispanics are at the bottom when you consider their percent representation compared to the other ethnicities.

 

UC Freshman

Ethnic Composition 15-19 year

% Representation

Hispanics

28.8%

49.4%

58%

Whites

26.8%

29.2%

92%

Asians

36.2%

10.9%

332%

Black

4.2%

6.0%

70%

Other

4.0%

4.6%

87%

100%

100%

That left me wondering about a few questions, such as:

  1.  How has the % Representation changed over time?
  2.  What effect has California’s prohibition of consideration for race or ethnicity (Proposition 209, the 1996 ballot initiative that amended the state constitution) has had on % Representation?
  3.  How do these percentages look over time at the state’s most competitive schools, UC-Berkeley and UCLA?

Answers to these questions are important because things may be changing. A Washington Post blog said that California voters could decide this fall whether to allow state universities to consider the race, gender, color, ethnicity or national origin of applicants when deciding admissions.

According to the blog, State Sen. Ed Hernandez, a Los Angeles Democrat and lead sponsor of the bill, said the percentage of minority students in the University of California and California State University systems has declined precipitously since Proposition 209 had passed.

Stay tuned!

Imperative for HR: Don’t put lipstick on a pig

Last year, a Gallup survey on the “State of the American Workplace” found that only 30% of the U.S. workforce is engaged. What role must HR play in this crisis of workforce disengagement?

Back to the basics

As described in a previous post, the basic facts on employee motivation have been fairly well known since 1968 as revealed in on one of the all-time classic Harvard Business Review articles titled “One More Time: How Do You Motivate Employees?” by Frederick Herzberg.

His research showed that the set of factors that dissatisfy employees are separate and distinct from the factors that create satisfaction. The growth or motivation factors that are intrinsic to the job are: achievement, recognition, the work itself, responsibility, and advancement. These factors are tied to the job content.

The dissatisfaction-avoidance factors are extrinsic to the job and are found in the job environment. They include: company policy, supervision, interpersonal relationships, working conditions, salary, status, and security. As the Gallup survey observed, “indulging employees is no substitute for engaging them.”

Imperative for HRUnfortunately, environmental factors that titillate are far easier to address than the intrinsic factors that motivate. But that is akin to putting lipstick on a pig. Little wonder then that a majority of the workforce is either uninspired or actively disengaged?

Failing grade for HR

Corporate Leadership Council’s 2006 research report titled “Defining Critical Skills of Human Resources Staff,” based on a survey of chief human resources officers at nearly 200 organizations, had found that few CEOs saw the function as strategically important, or as meeting performance expectations.

It is debatable whether that perspective has changed much in the last few years, and that is what presents HR an opportunity to shine in two key areas:

Strategy Formulation: Strategy is the company’s modus operandi for dealing with future challenges. If HR doesn’t fully understand the strategy, how can it help shape it? How can it guide the company in that direction? It is incumbent on HR to understand the strategy, and more importantly, its implications as they relate to determining how employees will align with the changing business priorities.

  • What organizational structure will be best suited to accomplish the objectives?
  • How can the work itself be designed and organized to maximize intrinsic motivation?
  • What HR policies will be more effective than others?

In short, as Herzberg puts it: “How do you install a generator in an employee?”

Strategy Implementation: In many organizations having a feel-good mid-winter meeting in Arizona creates a false sense of security that strategic planning can be accomplished in a two-day powwow.

Again, HR has an important function to perform in advising business executives on the practicalities of implementation. HR is in a great position to inject reality by communicating employees’ existing capabilities and what it will take to bridge the gap to the future capabilities. HR can be the litmus test to see what kind of change management effort the company will need.

To accomplish these objectives, however, HR will need to take off the blinders and broaden its horizons about strategy formulation, data-driven recommendations, being consultative, change management, and communication. Instead of being seen in a tactical compliance role, HR must view itself in a strategic position of generating and sustaining commitment. HR should focus on being the bridge between the company and the employees’ intrinsic connection to their work.

Then, and only then, will HR be seen as a strategic partner rather than order-takers and invited to be at the head table.

PS: This blog is based on my article published in HR Strategy and Planning Excellence and also posted on HR.com.

Marketing Effectively As An Underdog

As a marketer, it is easy to feel overwhelmed when going up against much bigger rivals. The big dogs can have an impressive legacy, unique branding, and deep pockets. So, if you are an underdog, how do you market effectively with low or no marketing budget?

Philip Kotler, the father of modern marketing, said: “Marketing is not the art of finding clever ways to dispose of what you make.” Unfortunately, putting the cart before the horse has become far too easy in today’s social-media frenzy.

Marketing Underdog

The good news is that there are many examples of upstarts outflanking much bigger rivals. But it requires a fundamental rethinking of a company’s place in the customer marketplace.

Achilles’ Heel

History has shown that market leaders can be their own worst enemies. Their soft underbelly can present opportunities in three areas for those who dare to be creative and passionate:

Scope: Larger companies, with my-way-or-highway attitude, often ignore certain customer segments because they may be unprofitable or difficult to serve. Smart marketers need to develop product or service offerings to help these underserved or neglected non-consumers. For example, Southwest Airlines started with three planes and targeted those passengers who couldn’t afford to fly and were either driving or taking the bus instead.

Service: Big companies can install customer-relationship software, but instilling a customer-first culture is often difficult for them because of unwieldy operations, multiple locations, internal politics, inward focus, and misplaced incentives. For example, Chick-fil-A, which started as Dwarf Grill in Hapeville, Georgia, has managed to keep customer loyalty and employee engagement front and center in an industry where fast food is synonymous with unfriendly service and high attrition.

Scale: Larger rivals can make huge investments, but they can also have blinders on about bigger and better customers. For example, Paychex saw an opportunity to make payroll outsourcing easy and affordable for small businesses after realizing that heavyweight ADP’s product offerings, internal processes, information technology, resource allocation, and incentive structure were all geared toward serving larger employers with 50+ employees.

Ignorant Antagonists

If these examples of upstarts outwitting the incumbents appear one-off or outdated, think again. Clayton Christensen, one of the world’s top experts on innovation and growth, has done in-depth research on how industry leaders get blindsided—precisely because they focus too closely on their most profitable customers and businesses.

According to Christensen, successful companies relentlessly move up-market by pursuing “sustaining” innovations aimed at demanding, high-end customers and by making better products that can be sold for more money to them. When they do so, however, they unwittingly open the door to “disruptive” innovations at the bottom of the market.

Mark Twain knew this more than a century ago. He said: “The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to, and so the expert isn’t prepared for him; he does the thing he ought not to do; and often it catches the expert out and ends him on the spot.”

The caveat for low-budget marketers is to avoid taking the Goliaths head-on by going into battle with a sword. Instead, the trick is to develop an unconventional, five-smooth-stones strategy that would make the established rivals laugh and say, “Yeah, right!”

So, put on your ignorant antagonist hat and think carefully about what you want to market, to whom, and why before worrying about how to market it.

Remember the time when established mainframe computer makers labeled the personal computer a toy, when digital cameras were mocked by professional photographers, or when online education was pooh-poohed by major universities?

PS: A version of this post was previously published at Marketing Profs and CommPRO.Biz, both leading websites for marketing and communications professionals worldwide.

 

Wrong-Headed Cure for Reducing Healthcare Costs

As the debate about how to reduce healthcare costs rages on, Jeffrey Singer, a general surgeon in Phoenix and Cato Institute adjunct scholar, has published an opinion piece in the Wall Street Journal. “The Man Who Was Treated for $17,000 Less” chronicles how the surgeon “saved” the patient, with a low-cost indemnity type of health insurance policy, $17,000 by pretending that he was uninsured, self-pay. It is a wrong-headed cure for reducing healthcare costs.

healthcare - head in the sandDr. Singer concludes among other things that it is the third-party payment system that interferes with true price competition, so market clearing prices can’t develop. He goes on to chastise Obamacare for expanding the role of the third party and practically eliminating the role of the patient in the delivery of health care.

On the face of it, Dr. Singer’s arguments to diminish the role of third-party payers seem compelling. After all, by bypassing the insurance company the patient paid only $3,000 when he was asked to pay $20,000 upfront. But that’s like saying, “I saved $17,000 by not buying a Rolex I didn’t need.” Based on the examination of assumptions and facts, I contend that Dr. Singer’s arguments are hollow and his conclusions are erroneous.

By Dr. Singer’s own admission, the true price for the procedure was $3,000, and at that price “none of the providers was losing money on my patient.” Why on earth then the providers and the hospital felt compelled to mark up the price to $23,000 for this unsuspecting patient? Could it have something to do with the fact that the insurance policy had no provider-network requirements or preferred-hospital requirements?

These absurd markups saw the light of day, when Medicare released hospital billing data and outpatient services data this summer. As reported in The Arizona Republic, for every $4 charged to Medicare, Arizona hospitals collected $1 from the federal health program for those 65 and older. My own analysis showed that New Jersey had a markup of 6.2 times and the prices were marked up by 5.4 times on average in California relative to what Medicare actually paid.

Contrary to the statements made by the hospitals and providers claiming that charges don’t matter because Medicare doesn’t actually pay them, Dr. Singer’s example clearly shows that anyone without the enormous purchasing power of Medicare or a third party behind them is highly susceptible to these astronomical charges. In other words, Dr. Singer justifies the role of third parties with his own example.

I agree with Dr. Singer that when patients are directly involved in their own healthcare decisions, they are more accountable. However, another major flaw in his argument is the utopian assumption that all patients have the medical and financial knowledge, cost and utilization data, the necessary time, wherewithal, and ability to analyze and negotiate every healthcare expense on literally thousands of diagnoses codes on the basis of quality, outcomes, and price. If Dr. Singer hadn’t gone to bat for this patient, could this patient have accomplished all of what Dr. Singer did on his behalf by himself in today’s system?

If we are truly going to bend the healthcare cost curve down, among other things we must first shine the light on incomprehensible, nationwide markups that have become the norm. As a start, maybe Dr. Singer can start by quoting to all patients regardless of their insurance status the price he actually accepted instead of the “more than enough” $2,500 list price.

If the hospitals and providers accepted and published what Medicare pays as the “standard” price, instead of marking it up 5-7 times, it would automatically diminish the role of third-party payers.  The payers will no longer have to play the game of chicken with the hospitals. And the unsuspecting patients—insured, underinsured, or uninsured—will no longer be caught in the crossfire.

Old News: The News Business is in Trouble!

News flash: The News business is in major trouble! (Okay, just kidding about this being a news flash.)

It was reported on Monday that Amazon founder Jeff Bezos is buying the money-losing Washington Post and other newspapers for $250 million.

The Washington Post is not alone in this predicament as can be clearly seen with the troubles of NY Times, Gannett, and Tribune Company. After all, NY times just dumped the Boston Globe at a 93% loss after purchasing it for $1.1 Billion and selling it for $70 million.

At first glance, this may seem like a knee-jerk, impulsive purchase by Jeff Bezos. Be assured that it’s neither a toy nor a trophy purchase for Bezos. He has been on an unmistakable path to transform Amazon from a passive, online retailer to become the content king. He has deftly made inroads into content production, publishing, distribution, storage/retention, and cloud services infrastructure.

With that trajectory in mind, the purchase of the Post seems like a logical extension to own highly reputable and brand-name content—especially at a throw-away price.

What exactly Bezos has in mind remains to be seen. An educated guess will be that he will imbed and find other channels to distribute the content while working some reverse synergies to help Amazon.

As the AP has reported, Bezos has always emphasized that “It’s all about the long term.” He doesn’t have a magic formula for turning the Post around. He does has deep enough pockets to wait until he can figure it out and do it semi-profitably. As with the Kindle, he may adopt the strategy that it is merely a means to an end and not something that has to generate a ton of profits.

All in all, it looks like a smart move, but we may have to wait a few years to see how it actually plays out. If Bezos is successful, however, it could transform the media landscape. It could trigger major journalistic purchases by other titans like Google and Microsoft.

Bezos’s would be a one-of-a-kind strategy that may or may not be replicated easily by others though.

Gangnam Style: Superstar Teachers and Suicidal Kids

The field of education is abuzz about “The $4 Million Teacher” piece in The Wall Street Journal. Sort of.

Amanda Ripley, in a WSJ piece plugging her upcoming book, states that South Korea’s students rank among the best in the world and its top teachers can make a fortune. She wonders whether the U.S. can learn from this “academic superpower” with a 93% high-school graduation rate. She credits tutoring services offering after-hours classes (“hagwons”) in every subject for a fee, where private tutors now outnumber schoolteachers for the success.

To me, it’s like asking to reform high school drama departments using Brad Pitt as an exemplar. Mr. Kim, the featured four million dollar man, is hardly a teacher. He is a smart and accomplished businessman capitalizing on the intense desire for rote learning in a broken public education system driven by desperate parents. This is precisely the kind of misguided hero worship (e.g. Google) I have railed against in earlier posts.

There are major contradictions in the WSJ article too. On one hand it says, “To create such trust, Mr. Kim suggests paying public-school teachers significantly more money according to their performance—as hagwons do.” On the other, it admits to a ruthless meritocracy for hagwons teachers in which “their pay is based on their performance, and most of them work long hours and earn less than public school teachers.”

To put it in the right context, let’s consider this. According to the CIA’s World Factbook, South Korea is a country that is slightly larger than Indiana, but has a population of nearly 49 million. Mother’s mean age at first birth is 29.6—nearly 5 years older than in the U.S. South Korea spends 5.1% of GDP on education expenses compared to 5.4% for the U.S.

And there is a darker side to this rat race. In all likelihood the competition is incredibly intense and the peer pressure absolutely brutal. “Eight out of 10 South Korean parents say they feel financial pressure from hagwon tuition costs. Still, most keep paying the fees, convinced that the more they pay, the more their children will learn,” says Ms. Ripley.

A Yahoo! Finance article by Naomi Rovnick says, “The country has the highest suicide rate in the OECD and the fourth-lowest fertility rate.” Ms. Rovnick also cites a BBC article which quotes child psychologist Kang-ee Hong: “From the beginning of childhood, the importance of money and achievement are emphasised by their parents, so they feel that unless you are successful in school grades and a good job, good prestigious college, you’re not successful, and the parents behave as if ‘you’re not my child’.”

Now, you are scaring me if the parents’ obsession with money and status is driving young people to suicide. I guess you have to be careful what you wish for. Besides, is this hagwons system making South Korean kids smarter? “That is a surprisingly hard question to answer,” says Ms. Ripley. “The most affluent kids can afford one-on-one tutoring with the most popular instructors, while others attend inferior hagwons with huge class sizes and less reliable instruction—or after-hours sessions offered free by their public schools.”

Jeffrey Pfeffer and Robert Sutton, both of whom I had the pleasure of meeting in April, have written that “The logic behind what works at top performers, why it works, and what will work elsewhere is barely unraveled, resulting in mindless imitation.”

Bottom Line: Blind copying of so-called best practices in vacuum without properly understanding the logic, culture, context, or implications often leads to disastrous consequences.

Hiring at Google: GPAs are worthless!

Same old, same old. In a recent interview with NY Times, Laszlo Bock of Google was uncharacteristically frank with his self-assessment about hiring at Google. He basically admitted that GPAs are worthless and brainteasers are a complete waste of time.

hiringThe prevailing notion for success, particularly fueled by successful tech companies, has been that you interview the smartest kids on earth—based on 4.0 GPAs from top colleges and universities­, you hire them based on some irrelevant questions that make the interviewer feel really smart (e.g., how many golf balls would fit in an airplane), and then you lavish them with a dining room that used to be run by the Grateful Dead’s former chef, café stations to eat free food, snack rooms stocked with goodies, game rooms with video games, foosball, pool, and ping-pong tables.

And voilà! That’s the tried and true formula for eternal success and a trillion dollar market cap.

And then some overeager reporter looking to write the next most-viewed story or some good-to-great consultant looking to write the next bestseller writes a one-size-fits-all, 20/20 hindsight piece based on “scrupulous research and extraordinary access.” The circumstantial evidence as to how Google is reinventing the world order becomes an urban legend and everyone rushes to buy foosball tables.

Nobody stops to think that Larry Page and Sergey Brin probably didn’t have Grateful Dead’s former chef making meals or that nobody wasted their time by asking dumb brainteasers. Hardly anybody remembers the huge part luck may have played repeatedly in their success. For one, they were quite fortunate that their offer to sell Google for less than $1 million, a year after founding, was turned down because the buyer thought the price was too high.

Now Google crunches “Big Data” only to find out that it’s not really a big deal after all. It analyzes tens of thousands of interviews to determine whether anyone there is particularly good at hiring only to find out that there is “zero relationship” and that it’s a “complete random mess.” What? You don’t say! Google rediscovers that structured behavioral interviews work well. Yeah? How else do you find out in a few hours about collaboration, interpersonal, or communication skills or the ability to deal with ambiguity, manage multiple priorities, adaptability, or decision-making?

It is amazing to me how the halo effect of random success becomes folklore. Next thing we may find out is that earth is not flat.

Google’s jobs page says: “We’re looking for smart, team-oriented people who can get things done.” Really? Last time I checked, nobody was looking for dumb, selfish people who drop the ball. “We’re also observing people working together in different groups and have found that the average team size of any group at Google is about six people.” No way! J. Richard Hackman, an expert in team dynamics, has written books about the optimal team size being six.

In all fairness, Bock freely admits in his WSJ interview that “it’s not stuff that the world has never seen before.” If only others would ignore.

Nobel Prize winner Daniel Kahneman sums it up beautifully in his book Thinking, Fast and Slow: “The ultimate test of an explanation is whether it would have made the event predictable in advance. No story of Google’s unlikely success will meet that test, because no story can include the myriad of events that would have caused a different outcome. The human mind does not deal well with nonevents.”

Let’s start by treating the NY Times interview with Bock as a nonevent.

Everyone together now: The more things change, the more they stay the same.

Rediscovering Old Truths: A Tail Can’t Wag the Dog

The more things change, the more they stay the same. I am talking about employee satisfaction and engagement or lack thereof. A recent Gallup survey found that 70% of employees hate their jobs.

As I was sitting in an auto repair shop, I was pondering this: Although we have amazing technology now that can park and even drive cars, we still have CV joints, axles, and brake pads—all of which my car needed. By the way, constant velocity joints (aka CV joints) were first proposed by Robert Hooke in the 17th century to solve problems with previous joints that failed to maintain constant velocity during rotation. No doubt, the technology and materials in all of them have advanced beyond imagination, but the basics are still the same. That got me thinking.

Recently, there was a “revelatory” news story in the media. You know how everybody starts jumping up and down as if this is the greatest thing since sliced bread.

CNBC reported that just 30 percent of employees are engaged and inspired at work, according to Gallup’s 2013 State of the American Workplace Report, which surveyed more than 150,000 full- and part-time workers during 2012. Gallup found that “indulging employees is no substitute for engaging them.”

Duh! The basic facts on employee motivation have been well known since 1968. They are based on one of the all-time classic Harvard Business Review articles titled One More Time: How Do You Motivate Employees?by Frederick Herzberg. His research showed that the set of factors that dissatisfy employees are very separate and distinct from the factors that create satisfaction. In other words, satisfaction and dissatisfaction are not the two sides of the same coin. And that is because two different needs of human beings are involved.

The growth or motivation factors that are intrinsic to the job are: achievement, recognition, the work itself, responsibility, and advancement. These factors are tied to the job content. The dissatisfaction-avoidance factors are extrinsic to the job and are found in the job environment. They include: company policy, supervision, interpersonal relationships, working conditions, salary, status, and security. If these hygiene factors, as Herzberg called them, are absent they create dissatisfaction, but they don’t necessarily motivate people just because they are present.

In corporate environments fixated on analyst ratings and on showcasing next quarterly earnings, do you really think many companies really care about the job content, let alone lose sleep over enriching it? OD (Organizational Design) has become as odious a word as HR.

Gallup said: “At the end of the day, an intrinsic connection to one’s work and one’s company is what truly drives performance, inspires discretionary effort, and improves wellbeing. If these basic needs are not fulfilled, then even the most extravagant perks will be little more than window dressing.”

In short, a tail can’t wag the dog! The only “revelation” in the news story was that we haven’t learned a whole lot since 1968.

In the next post I will talk about Google’s “revelation” about hiring.