StrategyDriven Podcast Episode 19 – Validate the Extremes
StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve better results. These podcasts elaborate on the best practice and warning flag posts on the StrategyDriven website.
Episode 19 – Validate the Extremes elaborates on Strategic Analysis Best Practice 8 – Validate the Extremes. This discussion:
- examines why and under what circumstances models generate less than accurate results
- provides an example illustrating the kind of model output which could lead decision-makers to take inappropriate action
- recommends questions analysts should ask to prevent being misled by erroneous model output
[powerpress]
Organizational Accountability Best Practice 1 – Fact-Based Management
To say the accountable organization manages by fact may seem to suggest that a utopia exists, one in which all circumstances can be defined by ones and zeros. Within this utopian organization, executives and managers act to harvest the ones and discard the zeros.
While this is clearly not the case, managing by fact does imply that executives and managers leading accountable organizations strive to eliminate the subjectivity and raw opinion that is sometimes injected into the decision-making process; grounding decisions on a more tangible, objective foundation.[wcm_restrict plans=”53537, 25542, 25653″]
To move across the management spectrum from fiction to fact is not an easy journey; it can be out right daunting. But the executives and managers leading accountable organizations recognize it is only through fact-based management that superior results will be consistently achieved. They understand it is only through objective, fact-based management and not through opinionated whims and pet projects that their organization will most optimally function to achieve its desired goals. Indeed, it is only with facts that one can measure results and the progress made toward achieving them.
The challenge associated with fact-based management is how to transform the subjective into the tangible. While many things are commonly believed to be valuable but immeasurable, they all become measurable when focus is placed on their resulting value. For instance, it is often said that organizations value their employee’s experience. Individual experience is an extremely difficult quality to quantify and therefore measure. Should experience be measured based on time? Or education? Or positions held? Or some combination of all of these things? Ultimately, organizations value experience because of the benefits it brings, namely, a combination of higher-quality results and improved productivity. Both of these qualities are far more quantifiable than the more subjective quality of experience. While it may be difficult to substitute quality and productivity measures for experience in some short-term cases, over the long-term, use of these value adding performance measures can help the organization be more objective in its personnel evaluations; thereby, helping the organization become more accountable.
Pillars of Accountability
The StrategyDriven organization is build upon the premise of fact-based management. Anchored by its stated mission goals, the StrategyDriven organization acts to objectively gather and assess its internal performance and external environmental facts in order to select and enact the projects and initiatives that will enable it to most effectively achieve its goals. Furthermore, these organizations build systems of vertically cascaded and horizontally shared performance measures to continuously align and adjust the decisions, actions, and rewards of its executives, managers, and individual contributors to the optimal achievement of mission goals.
Therefore, fact-based management supports the Pillars of Accountability as follows:
Pillar 1: clearly defined, broadly communicated, time bound goals
- objectively defining mission measures
- strategic decision-making
Pillar 2: vertically cascaded, horizontally shared measures of performance
- measuring internal and external performance
- tactical decision-making supporting activity alignment and adjustment
Pillar 3: transparent, equitably administered consequences
- establishing objective, personnel performance measures and goals
- issuing equitable, results-based rewards
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Leadership Lessons from the United States Naval Academy – The Five Basic Responses
As a midshipman at the United States Naval Academy, I learned several powerful leadership tools that convey confidence, competence, and responsiveness; ultimately enhancing my and the organization’s effectiveness at getting things done. One of these tools is the midshipman’s Five Basic Responses:
- Yes/No, Sir/Ma’am
- I’ll find out, Sir/Ma’am
- No excuse, Sir/Ma’am
- Aye, aye, Sir/Ma’am
- The right answer
Powerful words that while not often used verbatim in the business world, convey a strong desire to maximize ones value to the organization. Examining each more closely reveals how this is accomplished.
- Yes/No, Sir/Ma’am: Direct, to the point. Places the answer the questioner seeks at the forefront, immediately satisfying the information need and allowing for additional information to be offered as desired. Like the right answer, assuming the yes or no is correct, the response reflects favorably on the individual. Appropriate response to closed questions.
- I’ll find out, Sir/Ma’am: A sign of both responsiveness and initiative. No individual knows everything or is expected to. Individuals who admit when they have a knowledge gap and a willingness to close that gap and report back in a timely manner are greatly respected. Only when an individual does not know information expected of his or her position, or when he or she does not follow through with acquiring and reporting on the unknown information, is the individual thought poorly of. Appropriate response to open questions the answer to which is not known.
- No excuse, Sir/Ma’am: Assumption of responsibility for ones actions or inaction that leads to undesired consequences. This response should not be overused particularly in instances where a senior is trying to ascertain the causes of adverse outcomes.
- Aye, aye, Sir/Ma’am: Direct, to the point, and responsive so long as the individual follows-up on the request. Appropriate response to action requests.
- The right answer: When clear, concise, and to the point, the right answer presented confidently reflects favorably on the individual. Appropriate response to open ended questions.
The principles behind the Five Basic Response should not be dismissed because of the military-style language. Seniors, peers, and subordinates all appreciate direct, concise answers provided confidently and respect those who assume responsibility for their actions. Consider the following business-professional language for the Five Basic Responses:
- Yes/No [plus a clear, concise explanation].
- I don’t know [paraphrase the question] but I will research the answer and get back to you by [fill in the time and/or date].
- I’m responsible for [paraphrase the adverse consequence]. Can we discuss how to resolve the situation and what I might do in the future to avoid [adverse consequence] from occurring again?
- I’ll [paraphrase the action to be taken] and report back to you by [time and/or date the action will be completed].
- [Clear and concise statement of the right answer.]
I find employing the principles of the Five Basic Responses in my professional life has helped me to earn respect as a leader; in turn enabling me to more effectively work with others to achieve value-adding objectives. I attribute this to the sense of confidence, competence, and responsiveness this approach helps me to exhibit as well as the garnering respect because of an appropriate assumption of responsibility.
Strategic Analysis Best Practice 8 – Validate the Extremes
Performance studies of today’s intricate, technology-driven organizations and the fast paced business environments in which they operate yield unprecedented amounts of data. Analysts often employ complex algorithms and visual models to synthesize and process this data into meaningful information organization leaders use to formulate their company’s direction.[wcm_restrict plans=”40685, 25542, 25653″]
Mathematical modeling, however, can sometimes provide analysts with misleading information. Because they seek to characterize performance while accounting for a broad range of unique circumstances, models and other forms of statistical analysis often assume a normal results distribution and subsequently rely on average values. This reliance on averages, in turn, may mute an impactful occurrence at the extreme of the performance range. Thus, it becomes important for analysts to validate performance extremes.
An Example:
Consider the following example. A customer survey is performed to assess the quality of a company’s product. Twenty-five customers are asked to rate the product’s quality during the first three months of ownership on a scale of 1 to 5, 1 being unacceptable and 5 being excellent. Figure 1, Survey Results Sample Data, graphically illustrates the feedback received.
Because the product is considered to be a price-leader within its category, a minimum initial quality rating of 3.5 was desired. The actual quality rating received, reported as an average, was 3.6; satisfying this goal. However, examination of the extremes using a simple bar chart reveals that twenty percent of all survey participants gave the product a 1 or unacceptable rating. This significant number of low quality ratings warrants further investigation by analysts and, most likely, the attention of and corrective action by company leaders.
Final Thoughts…
Validating the extremes occurs not only at the edges of the data range, but also includes validation of background assumptions and unexpected results.
It is equally important to remember that validating the extremes is not limited to simply identifying conditions that warrant further investigation. Validating this data implies that analysts will probe deeper to identify why these anomalies exist so to provide leaders with the information they need to make actionable decisions; even if the decision is to take no action.
Validation of the extremes is also a best practice defense against the adage of “if it sounds too good to be true, it probably is.” Regardless of the circumstances, analysts should review their model and statistic-driven findings for:
- omissions and anomalies
- unpredictable results as the end of data ranges
- reasonableness and consistency with known realities
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Business Performance Assessment Program Best Practice 3 – Avoid Using Absolutes
Evaluators performing business performance assessments often find themselves awash in data suggesting their company’s performance significant lags that of competitors and top industry performers. Evidence suggesting the need to improve may be so plentiful that the self assessors come to believe immediate reforms must be made if to only ensure the continued viability of their organization.[wcm_restrict plans=”47742, 25542, 25653″]
All too often, the performance improvement focus of a business performance assessment drives assessors to lose a degree of perspective regarding what their organization does right; even for those things for which they are recognized as an industry leader. Lacking a balanced perspective on their organization’s performance, evaluators fall prey to the notion that no process, product, or person is adequate to the task and that everything and everyone needs to dramatically improve. Translated into the self assessment report itself, this overly negative perspective may result in the business performance assessment team advocating the proverbial ‘throwing out the baby with the bathwater.’
One easily employed method of reducing the likelihood of overstating the organization’s performance improvement needs is to, at a minimum, challenge and often to avoid the use of absolute terms. Such terms typically point directly to overstated positions warranting further consideration. Absolute terms to listen for during routine team communications and oral presentations as well as in written notes, memos, and reports include:
- all, every, everyone, everything
- none, no one, nothing
- always, forever, have to
- never, under no circumstances
Final Thoughts…
There may be occasions where a business performance assessment team finds no readily available evidence that corporate performance need to improve in one or more areas. The history of business reveals, however, that many significant advances came from the improvement or replacement of industry leading practices. Subsequently, the avoidance of absolutes is equally important, if not as often applicable, to the characterization of strong performance.
In some rare cases, the use of absolute statements is warranted and necessary. However, it is important that instances are recognized, validated, and deliberately and conservatively made so as to not diminish the credibility of the overall assessment findings.[/wcm_restrict][wcm_nonmember plans=”47742, 25542, 25653″]
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