We have introduced another business short story, titled the Balanced Scorecard, providing a convenient link to the Kaplan/Norton book and showing how this approach can only operate with genuine and lasting commitment from the top.
If you would like to ready this story send an e-mail to blog@mtpplc.com
Wednesday 1 July 2009
The Business of Education by Steve Coomber, Training Journal, April 2009
This is one of a series of three articles based on different business schools. I have only included one because they all say much the same things and are, to a varied extent, ‘puffs’ for different schools. This one is chosen because it has more to say about broader issues and because it features Mike Osbaldeston, former colleague of the MTP founders at Ashridge and now on the point of retiring as Dean of Cranfield.
Inevitably such articles tend to be self serving and this one is no exception. In common with every management training institution, Osbaldeston emphasises the growth of customised courses as the main trend of the last few decades. Less typically he also stresses the importance of research to the Cranfield course designs, saying ‘research improves practice and our teaching is rigorously based on research’. It would have been interesting to explore in more detail precisely what is meant by research in this context and how this links in with the trend to customisation; for example, how far these days do global companies want their course content to be based on external academic research? Don’t most of them prefer course design and content that relate to their own needs and therefore require customisation to their own issues and culture?
The article contains other interesting information. Cranfield was apparently rated number one in the UK for customised courses (presumably only business schools were included in the survey as MTP courses did not feature!) and this may be something to do with the previous Ashridge experience that Osbaldeston brought to Cranfield. It is also interesting - and perhaps the reason for their success - that a third of their customised programmes are off the Cranfield site. Previously the need to fill bedrooms and conference rooms was a major barrier to flexibility of this kind and it is obvious that Cranfield have had to accept the reality that companies want to specify where their managers will be trained. A barrier to this trend in the past was the fact the academic staff were providing off-site training on a private consultancy basis and it would be interesting to know how Cranfield dealt with this sensitive issue.
Most interesting are Osbaldeston’s views on the recession and how Cranfield are coping. He states that some aspects of management training are counter cyclical, for example managers may use the opportunity during the downturn to take a year or two out to gain an MBA. He also believes that the trend to customisation makes management training more resilient; the cost of individuals going on expensive public courses would be the first to be cut, but the corporate programme would be more likely to continue because of its link to strategy and because cancellation would send out the wrong messages.
There is a final part of the article when the trends for the future are discussed and, in line with our own views at MTP, Osbaldeston emphasises the move to modularised programmes with a blend of face-to-face and on-line learning. It is interesting and surprising however that, while he mentions Cranfield’s podcasts and blogs, he does not mention the major trend that we are seeing, the delivery on-line by tutors in a virtual classroom environment.
To access this article go to:
http://www.trainingjournal.com/tj/2031.html
Inevitably such articles tend to be self serving and this one is no exception. In common with every management training institution, Osbaldeston emphasises the growth of customised courses as the main trend of the last few decades. Less typically he also stresses the importance of research to the Cranfield course designs, saying ‘research improves practice and our teaching is rigorously based on research’. It would have been interesting to explore in more detail precisely what is meant by research in this context and how this links in with the trend to customisation; for example, how far these days do global companies want their course content to be based on external academic research? Don’t most of them prefer course design and content that relate to their own needs and therefore require customisation to their own issues and culture?
The article contains other interesting information. Cranfield was apparently rated number one in the UK for customised courses (presumably only business schools were included in the survey as MTP courses did not feature!) and this may be something to do with the previous Ashridge experience that Osbaldeston brought to Cranfield. It is also interesting - and perhaps the reason for their success - that a third of their customised programmes are off the Cranfield site. Previously the need to fill bedrooms and conference rooms was a major barrier to flexibility of this kind and it is obvious that Cranfield have had to accept the reality that companies want to specify where their managers will be trained. A barrier to this trend in the past was the fact the academic staff were providing off-site training on a private consultancy basis and it would be interesting to know how Cranfield dealt with this sensitive issue.
Most interesting are Osbaldeston’s views on the recession and how Cranfield are coping. He states that some aspects of management training are counter cyclical, for example managers may use the opportunity during the downturn to take a year or two out to gain an MBA. He also believes that the trend to customisation makes management training more resilient; the cost of individuals going on expensive public courses would be the first to be cut, but the corporate programme would be more likely to continue because of its link to strategy and because cancellation would send out the wrong messages.
There is a final part of the article when the trends for the future are discussed and, in line with our own views at MTP, Osbaldeston emphasises the move to modularised programmes with a blend of face-to-face and on-line learning. It is interesting and surprising however that, while he mentions Cranfield’s podcasts and blogs, he does not mention the major trend that we are seeing, the delivery on-line by tutors in a virtual classroom environment.
To access this article go to:
http://www.trainingjournal.com/tj/2031.html
The hidden dangers of goal setting by Philip Delves Broughton, Management Today, June 2009
This article is of relevance to current debates in both the public and private sectors; for instance do targets make doctors and teachers focus on the wrong patient priorities to massage the figures? Are managers in the private sector too focussed on short-term goals and is that at the root of the banking crisis?
This article suggests an important shift in attitudes might be taking place and quotes the announcement by the new CEO of Unilever, Paul Polman, that he will abandon quarterly financial targets, as a potential watershed in attitudes at the top. Certainly those of us who remember the days of Unilever’s ‘Path to Growth’ and the impact of failing to meet the ambitious publicly declared goals, will sympathise with this view. Polman states that ‘consistent delivery over time’ is what matters and that ‘we need new habits and to avoid chasing our tail’.
The article quotes the police force and rail network as examples of public sector operations where common sense and customer interests have been forgotten in the interests of targets; to quote his words - ‘managers become target setters rather than implementors’. The author’s view is that both public and private sector bodies are far too complex to be judged by one or two quantitative goals and it is inevitable that there will be adverse, unintended consequences. These pose unnecessary stress and create a fear of failure, reduce cooperation and decrease motivation in the long-term.
Broughton suggests that slavish adhesion to short-term targets was a major factor in the demise of both Northern Rock and Enron; he also believes that this was exacerbated by the fact that they set revenue rather than profit goals as their number one priority. This may apply to Northern Rock but I do not agree with that assessment in the case of Enron. The key factor as that they were fraudently manipulating profits; the problem was not revenue or profit targets but ethics.
This view is confirmed later in the article when the author changes his stance to say that in fact targets are not the real problem; they do have benefits because most people perform better when they have clear goals. The problem is the ethics of those who pursue and monitor them. It is the lies and the bad behaviour shown by those who are being measured - and tolerated by those who manage them - that is the real problem. And if this is the way that most competitive managers behave, it would be better not to have targets, or at least to set goals that are more flexible and easily achievable.
One recommended answer in the article is to create learning goals rather than performance goals, which sounds sensible but is never fully explained with examples and guidance. It would have been good to hear more on this; without such a follow-up the article veers too much to the negative side. It would also be interesting to hear more about how those like Unilever’s Paul Polman, who are ditching targets, are replacing them with other more effective motivational tools.
To access this article go to:
http://www.managementtoday.co.uk/search/article/908158/why-excessive-goal-setting-bad-business/
This article suggests an important shift in attitudes might be taking place and quotes the announcement by the new CEO of Unilever, Paul Polman, that he will abandon quarterly financial targets, as a potential watershed in attitudes at the top. Certainly those of us who remember the days of Unilever’s ‘Path to Growth’ and the impact of failing to meet the ambitious publicly declared goals, will sympathise with this view. Polman states that ‘consistent delivery over time’ is what matters and that ‘we need new habits and to avoid chasing our tail’.
The article quotes the police force and rail network as examples of public sector operations where common sense and customer interests have been forgotten in the interests of targets; to quote his words - ‘managers become target setters rather than implementors’. The author’s view is that both public and private sector bodies are far too complex to be judged by one or two quantitative goals and it is inevitable that there will be adverse, unintended consequences. These pose unnecessary stress and create a fear of failure, reduce cooperation and decrease motivation in the long-term.
Broughton suggests that slavish adhesion to short-term targets was a major factor in the demise of both Northern Rock and Enron; he also believes that this was exacerbated by the fact that they set revenue rather than profit goals as their number one priority. This may apply to Northern Rock but I do not agree with that assessment in the case of Enron. The key factor as that they were fraudently manipulating profits; the problem was not revenue or profit targets but ethics.
This view is confirmed later in the article when the author changes his stance to say that in fact targets are not the real problem; they do have benefits because most people perform better when they have clear goals. The problem is the ethics of those who pursue and monitor them. It is the lies and the bad behaviour shown by those who are being measured - and tolerated by those who manage them - that is the real problem. And if this is the way that most competitive managers behave, it would be better not to have targets, or at least to set goals that are more flexible and easily achievable.
One recommended answer in the article is to create learning goals rather than performance goals, which sounds sensible but is never fully explained with examples and guidance. It would have been good to hear more on this; without such a follow-up the article veers too much to the negative side. It would also be interesting to hear more about how those like Unilever’s Paul Polman, who are ditching targets, are replacing them with other more effective motivational tools.
To access this article go to:
http://www.managementtoday.co.uk/search/article/908158/why-excessive-goal-setting-bad-business/
‘Empty Promises’ by Jane Simms, Director May 2009 and ‘Why I can’t stand the Apprentice’ by Hugh Greenway, Training Journal May 2009
I am reviewing these two articles together because they are both short and easy to read, and they are interesting as a follow-up to my review last month of the recent Alan Sugar biography.
These articles both represent the opposite view to his rather sycophantic biographer; they state that Sugar presents an unfortunate image of business that might give people - particularly those considering a business career - the wrong impression. Jane Simms’s article is something of a rant about the quality of the people who compete and the narrow thinking that goes into task selection. She compares the show to the 1990s programme Troubleshooters with John Harvey Jones which, she suggests, was much more realistic and informative about business. Though I agree with her sentiments, I think the ratings would be very much in favour of The Apprentice, and that is how success in TV is measured.
Simms criticises the contestants even further by saying that a matrix of talent and profile would put all of them in the high profile low talent box; she also hints that Sugar might be in the same box and suggests that it would be good to see more low profile, high talent people on TV, like Terry Leahy of Tesco. One wonders however if really successful businessmen like Leahy would take part and if the entertainment level would be the same; this raises the key issue of the programme’s objective, is it to educate or entertain?
Greenway has similarly strong views about the dysfunctional contestants but blames the selection process before and during the series; he says that ‘anyone who looks like they might have a shot at being a decent human being is usually trampled underfoot in the first few episodes’. He believes that the series has deteriorated as it has gone on, that it started with more educational business content but has collapsed into the worst kind of reality television.
His view of Sugar is also interesting. He believes that he has much experience to share and that he is capable of educating people, of admitting his own mistakes and of being more than a ‘tyrannical bully’. But the production and editing of the programme has made him into an absurd caricature of the macho senior manager. One suspects he is right and that the same could be said of the contestants too. A programme designed to show the worst of everyone may be entertaining but it tells you very little about business.
To access this article go to:
Empty Promises - http://www.director.co.uk/MAGAZINE/2009/5%20May/simms_62_10.html
Why I can’t Stand the Apprentice
- http://www.trainingjournal.com/tj/2107.html
These articles both represent the opposite view to his rather sycophantic biographer; they state that Sugar presents an unfortunate image of business that might give people - particularly those considering a business career - the wrong impression. Jane Simms’s article is something of a rant about the quality of the people who compete and the narrow thinking that goes into task selection. She compares the show to the 1990s programme Troubleshooters with John Harvey Jones which, she suggests, was much more realistic and informative about business. Though I agree with her sentiments, I think the ratings would be very much in favour of The Apprentice, and that is how success in TV is measured.
Simms criticises the contestants even further by saying that a matrix of talent and profile would put all of them in the high profile low talent box; she also hints that Sugar might be in the same box and suggests that it would be good to see more low profile, high talent people on TV, like Terry Leahy of Tesco. One wonders however if really successful businessmen like Leahy would take part and if the entertainment level would be the same; this raises the key issue of the programme’s objective, is it to educate or entertain?
Greenway has similarly strong views about the dysfunctional contestants but blames the selection process before and during the series; he says that ‘anyone who looks like they might have a shot at being a decent human being is usually trampled underfoot in the first few episodes’. He believes that the series has deteriorated as it has gone on, that it started with more educational business content but has collapsed into the worst kind of reality television.
His view of Sugar is also interesting. He believes that he has much experience to share and that he is capable of educating people, of admitting his own mistakes and of being more than a ‘tyrannical bully’. But the production and editing of the programme has made him into an absurd caricature of the macho senior manager. One suspects he is right and that the same could be said of the contestants too. A programme designed to show the worst of everyone may be entertaining but it tells you very little about business.
To access this article go to:
Empty Promises - http://www.director.co.uk/MAGAZINE/2009/5%20May/simms_62_10.html
Why I can’t Stand the Apprentice
- http://www.trainingjournal.com/tj/2107.html
Clarifying your Learning and Development Strategy, by Wendy Hirsh and John Burgoyne, Training Journal, June 2009
This is also one of a series of three articles but I did not review the other two because they said nothing new and focussed on conventional issues of course design and delivery. I have chosen to review this one because it concentrates on the thorny issue of evaluation - which everyone seems to want to hear about - and does make some useful points to guide the learning professional in the search for this Holy Grail.
As is normal in such articles, the four Kirkpatrick levels are used as the language of the debate; in our view this is the key benefit of the Kirkpatrick framework. The authors make the important point that there are multiple stakeholders who will want different kinds of evaluation of courses and four are mentioned - the learner, the external provider, the line manager and the L&D professional who commissions the training. The argument is that evaluation should be based on the decisions that have to be made by the stakeholders and their relative importance.
The article quotes a framework developed by Mark Easterby-Smith that suggests that the first stage of evaluation is to determine the questions to be asked; are they about the effectiveness of the process or the learning outcome? Are they about proving success or trying to find a better way of doing things? These fundamental questions need to be asked before any evaluation methodology can be considered.
One rule of thumb that I had not heard before is the suggestion that the cost of evaluation should not exceed 10% of the cost of the training. Though I applaud any attempt to relate the two together, it begs the question of how you define cost in each case and how much time it would take a financial person to carry out the costing evaluation. It does however lead to the sensible conclusion that more sophisticated evaluations at the higher end of the Kirkpatrick levels are only likely to be valid for major strategic learning initiatives.
The article ends - as many such articles inevitably do - with some points that have been made many times before; that evaluation should be built into course design and should be developed as a long-term strategic approach rather than a ‘one-off’ hit for a particular programme. There are rather too many clichés in the article - evaluation is a strategic journey for instance - but I did like the description of this journey; from doing things well to doing things better, to doing better things.
To access this article go to:
http://www.trainingjournal.com/tj/2186.html
As is normal in such articles, the four Kirkpatrick levels are used as the language of the debate; in our view this is the key benefit of the Kirkpatrick framework. The authors make the important point that there are multiple stakeholders who will want different kinds of evaluation of courses and four are mentioned - the learner, the external provider, the line manager and the L&D professional who commissions the training. The argument is that evaluation should be based on the decisions that have to be made by the stakeholders and their relative importance.
The article quotes a framework developed by Mark Easterby-Smith that suggests that the first stage of evaluation is to determine the questions to be asked; are they about the effectiveness of the process or the learning outcome? Are they about proving success or trying to find a better way of doing things? These fundamental questions need to be asked before any evaluation methodology can be considered.
One rule of thumb that I had not heard before is the suggestion that the cost of evaluation should not exceed 10% of the cost of the training. Though I applaud any attempt to relate the two together, it begs the question of how you define cost in each case and how much time it would take a financial person to carry out the costing evaluation. It does however lead to the sensible conclusion that more sophisticated evaluations at the higher end of the Kirkpatrick levels are only likely to be valid for major strategic learning initiatives.
The article ends - as many such articles inevitably do - with some points that have been made many times before; that evaluation should be built into course design and should be developed as a long-term strategic approach rather than a ‘one-off’ hit for a particular programme. There are rather too many clichés in the article - evaluation is a strategic journey for instance - but I did like the description of this journey; from doing things well to doing things better, to doing better things.
To access this article go to:
http://www.trainingjournal.com/tj/2186.html
Getting HR on board, by Kathleen O’Donovan, Personnel Today, June 2009
I remember Kathleen O’Donovan as the first female to be Financial Director of a top 100 company and who, after a period of impressive performance, lost her job. However she seems to have found a niche as a mentor and serial non-executive director. Here she writes about the role of HR and the ways in which HR people can and should reach board level; it is clear that her career gives her a different perspective from someone with a more conventional HR background.
My reason for liking this article is perhaps because it ties in with our own views and the trends that we see - the need for HR people to have business as well as personal skills. The author stresses that, to have a chance of being successful at board level and achieving the desired ‘strategic relationship’ with the CEO, the HR person must be confident and fluent in financial topics. This would include general knowledge such as understanding company accounts as well as hot topics within the HR orbit, such as the financial implications of pension schemes (An example of a company taking a similar view is MTP’s biggest project this year, the on-line delivery of a business acumen programme to all the senior HR people of one of the world’s biggest high tech companies).
O’Donovan believes that HR people with a desire to ‘go plural’ like her can use such skills to obtain non-executive directorships with other companies; she suggests that many major companies are looking for people who have business skills, understand executive remuneration and would be suitable for the increasingly important remuneration committees within the main boards of public companies. She does however fail to mention the problems of getting yourself into the non-executive network - often much more closed than it should be - or the fact that such roles can often be poisoned chalices, as the members of the remuneration committee of RBS has recently found!
The article also suggests that the HR person who wishes to rise further should try if possible to spend time in a line management role in another function, not just to improve business skills but also to understand how HR is seen by the internal customer. She also believes that there must be a good relationship with the Financial Director, a powerful axis based on mutual support, a powerful combination of the hard and the soft side of board level decision-making.
Financial and business skills are not the only ones mentioned in the article. She emphasises emotional intelligence as a quality possessed by most HR people which is sorely needed at board level. But it is only possible to use it to influence others at board level if the confidence and competence in business skills are there.
Maybe I liked this article because it told me what I believe and want others to hear, but it is certainly worth a read by the ambitious HR person who is prepared to take on that poisoned chalice.
To access this article go to:
http://www.personneltoday.com/articles/2009/06/01/50923/how-to-get-board-ready-trade-secrets.html
My reason for liking this article is perhaps because it ties in with our own views and the trends that we see - the need for HR people to have business as well as personal skills. The author stresses that, to have a chance of being successful at board level and achieving the desired ‘strategic relationship’ with the CEO, the HR person must be confident and fluent in financial topics. This would include general knowledge such as understanding company accounts as well as hot topics within the HR orbit, such as the financial implications of pension schemes (An example of a company taking a similar view is MTP’s biggest project this year, the on-line delivery of a business acumen programme to all the senior HR people of one of the world’s biggest high tech companies).
O’Donovan believes that HR people with a desire to ‘go plural’ like her can use such skills to obtain non-executive directorships with other companies; she suggests that many major companies are looking for people who have business skills, understand executive remuneration and would be suitable for the increasingly important remuneration committees within the main boards of public companies. She does however fail to mention the problems of getting yourself into the non-executive network - often much more closed than it should be - or the fact that such roles can often be poisoned chalices, as the members of the remuneration committee of RBS has recently found!
The article also suggests that the HR person who wishes to rise further should try if possible to spend time in a line management role in another function, not just to improve business skills but also to understand how HR is seen by the internal customer. She also believes that there must be a good relationship with the Financial Director, a powerful axis based on mutual support, a powerful combination of the hard and the soft side of board level decision-making.
Financial and business skills are not the only ones mentioned in the article. She emphasises emotional intelligence as a quality possessed by most HR people which is sorely needed at board level. But it is only possible to use it to influence others at board level if the confidence and competence in business skills are there.
Maybe I liked this article because it told me what I believe and want others to hear, but it is certainly worth a read by the ambitious HR person who is prepared to take on that poisoned chalice.
To access this article go to:
http://www.personneltoday.com/articles/2009/06/01/50923/how-to-get-board-ready-trade-secrets.html
Chasing Daylight by Eugene O’Kelly, published by McGraw-Hill
Eugene O’Kelly, global CEO of KPMG, thought he had a great and well balanced life until he found he had three months to live. But this news made him evaluate whether his life priorities had been well balanced and he soon decided to resign from his job and spend his remaining time tidying up the other aspects of his life that he now realised he had been neglecting - his family, friends and all the things that he had never had time to do. He also decided to write this book in order to help others see things as clearly as he did.
The book then describes the story of his last three months, the last chapter being completed by his wife as he became too weak to finish it. He also became too weak to do some of the things that he had planned but this did not seem to matter; he had found a positive purpose to help him cope with his devastating news.
It is difficult to know whether his admirable combination of clear thinking and contentment was a sort of bravado or a genuine response to tragedy, but in a way it does not matter. I not only read the book myself but also gave to several others who are in busy management roles; the feedback confirmed that no-one can read this book without thinking more seriously about their own life work-life balance.
Is it a good thing to encourage managers under pressure to think this way or is it best for them to carry on blindly as company committed workaholics? Clearly there is no answer that applies to everybody because we all have different circumstances and needs but this book will make everyone who reads it stop and think about their life priorities.
The book then describes the story of his last three months, the last chapter being completed by his wife as he became too weak to finish it. He also became too weak to do some of the things that he had planned but this did not seem to matter; he had found a positive purpose to help him cope with his devastating news.
It is difficult to know whether his admirable combination of clear thinking and contentment was a sort of bravado or a genuine response to tragedy, but in a way it does not matter. I not only read the book myself but also gave to several others who are in busy management roles; the feedback confirmed that no-one can read this book without thinking more seriously about their own life work-life balance.
Is it a good thing to encourage managers under pressure to think this way or is it best for them to carry on blindly as company committed workaholics? Clearly there is no answer that applies to everybody because we all have different circumstances and needs but this book will make everyone who reads it stop and think about their life priorities.
Balanced Scorecard by Robert S Kaplan and David P Norton, published by HBR Press
Re-reading this book reminded me how easy it is for management teachers to think that they know and can explain a subject while in fact they are leaving out some key principles and nuances. Thus it pays for each of us to go back from time to time and study again the principle source, to see if knowledge can be reinvigorated and enhanced. This is particularly true of the Balanced Scorecard where the authors have produced updated versions, clarifying and building on their original methodology.
These were the insights that were either clarified or reinforced on my second reading:
- The financial metrics should be reviewed as the business life-cycle stage changes over time.
- The original framework was Financial, Customer, Learning and Growth (not just ‘People’ as is often seen) and Internal Business Processes.
- Later thinking is that there should be more flexibility depending on strategic goals, for instance innovation can be a separate dimension if - as is likely for growth companies - this is seen as central to achievement of long-term goals.
- From this it is clear that the scorecard should evolve and be developed by top management as the strategy of the company changes over time.
Kaplan and Norton seem to have a refreshing view that they did not get it right first time and have refined their ideas, as well as encouraging others to develop them further. Just recently some further work by Hannabarger, Buchanan and Economy - with the rather populist title of ‘Balanced Scorecard for Dummies’ - was welcomed by Kaplan as a ‘fourth generation’ development; it provided a split between tactical and strategic aspects, and more drilling down to day-to-day operations.
In the current climate there is more criticism than ever of businesses that are too financial and short-term in focus; therefore the message and discipline of the Balanced Scorecard is even more important than it was at the time of the original book in the mid nineties. Even if you do not use the label, the principles are essential knowledge for those running the modern business.
These were the insights that were either clarified or reinforced on my second reading:
- The financial metrics should be reviewed as the business life-cycle stage changes over time.
- The original framework was Financial, Customer, Learning and Growth (not just ‘People’ as is often seen) and Internal Business Processes.
- Later thinking is that there should be more flexibility depending on strategic goals, for instance innovation can be a separate dimension if - as is likely for growth companies - this is seen as central to achievement of long-term goals.
- From this it is clear that the scorecard should evolve and be developed by top management as the strategy of the company changes over time.
Kaplan and Norton seem to have a refreshing view that they did not get it right first time and have refined their ideas, as well as encouraging others to develop them further. Just recently some further work by Hannabarger, Buchanan and Economy - with the rather populist title of ‘Balanced Scorecard for Dummies’ - was welcomed by Kaplan as a ‘fourth generation’ development; it provided a split between tactical and strategic aspects, and more drilling down to day-to-day operations.
In the current climate there is more criticism than ever of businesses that are too financial and short-term in focus; therefore the message and discipline of the Balanced Scorecard is even more important than it was at the time of the original book in the mid nineties. Even if you do not use the label, the principles are essential knowledge for those running the modern business.