Joanne Molesky
Transcript
Hello, good morning.
Welcome.
I'll just give people a bit of time to sit down here and introduce myself. I'm Joanne Molesky. I'm going to talk today on growing an innovative culture.
First of all, I want to say I am thrilled and honored to be here at Lean Camp in France.
Had the pleasure of spending yesterday with my husband on our 31st wedding anniversary, walking around Paris.
And it was truly amazing, an experience we will cherish forever. I work for a company called ThoughtWorks. We are a technology company. We're well known for agile software development. What we basically do is build software for different companies. We are a global company. We have over 40 locations around the world. We're in India, China, Australia, North America, the UK, Spain, Germany.
We were in Africa, but we've pulled out. And we're also in Latin America, Brazil, Chile, Ecuador.
I am, just to tell you a little bit about myself, because it's relevant to innovation and learning.
I started out my career as a dietitian in healthcare. I worked in that field for 12 years. And health care within, and I live in Canada, health care in Canada took a dive around the mid-80s, and I just got tired of having to manage cutbacks on our funding constantly that resulted in poor health care for our patients. So I left. I had children, and then I got bored when my children started school. I said, I need to do something else with myself. So this was mid-90s. I took my first job in technology, teaching people how to use Netscape Communicator. Does anybody here remember that? Yeah. I didn't know anything about technology, but I knew about learning, and I knew about this is the way of the future, so I should get on this bus rather than healthcare.
Many years later, my children grew up, they finished high school, and I said to my husband, who also works at ThoughtWorks, let's go someplace. You work for a company that has offices around the world. So we landed up going to Australia. And I convinced ThoughtWorks to hire me. Because from the time I started to teach Netscape Communicator to this time is in 2010, I had actually worked my way up. I had worked as a BA. I had worked as a quality assurance analyst. And then I got into governance and risk and compliance for the use of technology. And I convinced ThoughtWorks to hire me because I said, the way you work using agile methodologies and being connected with people like Martin Fowler and Jez Humble, who at that point had just released a book called Continuous Delivery, is a far less risky way for our organization and our clients to work than the traditional ways that we produce software. And it uses a lot of the lean principles, basically. That fast feedback cycle, adjusting, not really following the plan, but figuring out what works best. I got to write a book with Jez Humble and Barry O'Reilly, and we called it Lean Enterprise, and it's part of the Eric Rieser series. series, the Lean Startup series for Eric Reese with the Raleigh Press. All of a sudden, I became this world expert on how to innovate at scale. Okay? I don't know if I am, but, you know, we each contributed something. We made a really good team. I feel we made a really good book. But what we found out is we were writing as technologists about how to innovate using technology at scale. And what we found was that there's this gap between the business and technology.
In the past, you know, when I started working in the mid-80s with technology, technology was the bottleneck for the business to get things done.
It's not today. The business can't keep up with technology. And what we're finding is that technology has become a strategic capability. How business will deliver its services to customers and get new customers and grow or be higher performing.
But there's problems. Because of the way organizations, and particularly big organizations, structure themselves, this willingness to support experimentation and innovate is non-existent. People are stuck in the way they do things.
And there isn't a safe learning environment, and I'll talk about this, but we basically produced this slide to say, you have to mind this gap. It used to be you would say that technology serves the business.
And then it goes, no more technology is aligned with the business. And now we say, no, no, no, the business is technology.
And most people who work with technology all the time understand this. But people who are managers don't understand this. Many businesses just do not understand it. So we spend a lot of our time today doing organization transformation. How do you change your organization's structure? And your processes to help you catch up with the rest of the world. Because if you don't, you're going to be sunk.
So that's how I got here, on stage talking to you and parents.
So anytime I start, I always want to make sure that we understand the languages, what I'm about to talk to you about. And the first one is culture.
So culture is really important in this because it is the way we actually work. I think most people, I'm talking to Lean Kamba and you guys get this, okay? It is what actually exists within the organization. That allows you to get things done. And when we talk about innovation, it's how do we build a culture to get us to introduce new ideas, whether it's a way of work, how do we build a new device, how do we change our methods,
And if this was easy, I wouldn't be up here talking to you today, because you guys would all be doing it. And you'd be in the organizations you should talk to. It's really, really hard. And why is it hard? It's because organizations are actually like an organism, very complex, and consist of people. Who are also very complex. And, you know, everybody, you go in and you start talking about organization transformation and say, give me the recipe to say how to change. Just tell me how to do it. And I'm going, man, if you're going to listen to me on how to do it, it's going to be wrong. Because I don't understand your culture. I don't. understand your organization. And most of the time, you probably don't do. So it's probably a trial and error thing that's going to have to happen. And I can give you some concepts, some tools, some methods that you might want to try. But in the end, it's going to be up to you to make those decisions if you want to be successful. Joanne, tell me a story about how we do risk and compliance using continuous delivery and have a secure environment. And I'm going, tell me how these guys do it. Tell me how my competition does it. And I go, I can tell you. But if you follow that, it's going to be wrong. Because their organization, very different from your organization. I can give you some general ideas. But in the end, again, up to you to make those decisions.
The other problem is that your culture, how you work, what you say, what you do, each strategy every day. This is very common. You've probably all heard of it. Just a little slide there. But people don't understand this. Managers don't understand it.
They say, well, we're going to have an organization transformation. We have our values here in our layers of culture. We have our values defined. How many people work for an organization that says, these are the things we value, this is our purpose, and these are the things we value? Or have worked? I've worked with them.
And this is adapted from Edgar Schein.
But then you go, you have artifacts. That's what's visible and observable. So I used to work for an organization that says, we put families first. And yet when I asked for maternity leave, you know what the answer was?
You're not getting any.
What happens when there's a misalignment there?
Called cognitive dissonance.
It's called cognitive dissonance. It is like, what the, you know?
That's bad. And I go, why am I working for these people? And I become disillusioned. And then I start making decisions. And my decisions happen to be, okay, I need the money, so I'm just going to shut up and show up for work and do the absolute minimum amount it takes to get here every day, put in my eight hours, and stay here.
Yes, you disengage. So there is a, the Gallup poll in the United States has been doing studies for over decades. I think it's 20 years, up to 20 years now, where they look at the engagement of employees in large organizations. And the figures are staggering. They vary from year to year, but essentially it is that. Only maximum 20% of your employees are actively engaged in their work, if it's that. Some years it's higher, some years it's never higher than that, it's always lower, between 10 and 20%. Then you have a big majority of people who are disengaged. They're just like, I'm going to show up for work, I'm going to do what I'm told, and then I'm going to go home and actually start my life. It's a real shame when you consider how much time we spend working when you're full-time.
But what's really stunning is the number of people who actually start to sabotage the system because they're so angry. Up to 15% of your employees are actively sabotaging the system to make things worse than they are. And somebody said to me, imagine if you could get all those disengaged employees to be engaged, what you could accomplish. Imagine if you actually had the capability to ferret out the people who are so disengaged that they're sabotaging the system and either move them out or shift them over to become engaged. What could you accomplish?
And that's where innovation comes in. That's when you would be able to innovate.
There's also Shook's theory on culture, and I know this is Lane Camban, you've probably already seen this before, so I'm not going to talk too much about it. But essentially, our old theory used to be, if I can define the culture and the values and just train people on how they should behave, they will behave that way. And they don't. What John Shook found out when he worked, he was the first American to work in management in Toyota, was that you have to change the behavior to change thinking, which then drives the values and attitudes and develops a new culture.
So these change programs that I'm constantly involved in says basically, and talking agile or organizational transformation, we're going to bring in, we're going to create a team, we're going to have a big plan, we're going to train everybody, we're going to teach them new ways to work, and then everything will be fine. They'll just work that way.
and it doesn't work. Performance gets an upswing as people try something, but what happens is the organizations haven't changed their culture and their organizational structure to support that new way of working. And I'll talk a little bit about key things later on, but I just wanted to show you this. And to give you this quote, people, you can tell me something, I'll forget. Me personally, I forget very, very quickly. Okay? Teach me something and I'll remember. But you involve me, that's when I start to learn. When you allow me to do things, that's when I start to learn. And most of us will learn by doing. Some of us can gain the knowledge, but it's putting it into practice is how we learn. to support that new way of working. And I'll talk a little bit about key things later on, but I just wanted to show you this and to give you this quote. People, you can tell me something, I'll forget. Me personally, I forget very, very quickly. Okay? Teach me something and I'll remember. But you involve me, that's when I start to learn. When you allow me to do things, that's when I start to learn. And most of us will learn by doing. Some of us can gain the knowledge, but it's putting it into practice is how we learn.
Gary Hamill's a management expert in the States, and he has this quote, which I really love.
We have 21st century internet-enabled businesses and technologies.
We use mid-20th century management processes, things that were developed after the 60s up to the turn of the century.
And we all have 19th century management, that command and control, where it was developed in a way when the owner, the person at the top, actually was a subject matter expert and could tell you how to do things. And the workers actually were not very well educated, if you put it that way. And they were just willing to do it. It doesn't work today. Our workers are very highly skilled, highly trained individuals with a lot of knowledge and the ability to gain more knowledge. So what do we do? We hire a bunch of people who are really, really smart and can learn, and we put them in a situation and say, shut up and do it the way I tell you to do it.
Is it any wonder why that huge percentage of our working population is disengaged?
I remember, you know, when I was... I started in technology and I come out of healthcare, which has a different attitude, right? And it was, we're building this hierarchy for a organization finance system. And we've had one developer working on it for two months, three months, and nothing's come of it. What are we going to do? Let's put a different developer on it.
You go, okay.
One month, two months later, nothing's happened. And they go, what are we going to do? And I said, don't tell me you're going to put another developer on it, because that's not working. It's a really complex problem. You've got to approach it in a different way.
This was quite novel to them. They go, but that's the only way you can do it. And I go, well, no, actually, what if you got somebody from the business who understands the hierarchy talking with a developer and maybe two developers and two business people and get them in a room and sort it through? Understanding that it's not going to be absolutely perfect the first time, but it'll be a heck of a lot better than not having nothing, or than having absolutely nothing.
And my boss said, you know what? This isn't your problem. Just go away.
That still happens today. Not so much where I work, but in a lot of organizations and banks particularly where we have clients, they say, have you tried this? And they'll go, no, we're not allowed to talk to those people. Can you imagine that? So people can't even talk to each other. So no wonder we have a problem and they can't innovate.
This comes out of an article of the Harvard Business Review, Why Organizations Don't Learn.
Preoccupation with success. Some of the things that I read in this article were quite enlightening. And he said, you know, particularly within the Western culture, we have this preoccupation with success. And it is so bad that we are willing to say something we know is absolutely wrong, rather than admit that we don't know. So the question is, is it going to work or not? It's not. What are you going to learn?
Is this going to work or not? I want to know.
Okay, and I say to this some companies, I remember saying to an executive, okay, nobody's tried this before in your industry. I don't have any stories to give to you. Can you figure out, do you want to be the first one to take that step? Because I can help you take small steps. And it's good. No, I need to. know that it's going to work.
And I go, but you're missing the point. Nobody knows that this is going to work for you until you actually try it. I can help you reduce the risk in trying it, but I can't tell you that it's absolutely going to work.
We're so preoccupied with successes and things we do, we tell ourselves, if I'm successful, what is it a result of? My hard work, my good planning, and, you know, just doing it the right way. We celebrate that. If I'm not successful...
Someone else's problem.
It's not even that. Because a lot of us know that blaming other people is bad. It's bad luck. It was the wrong time we did it. You know, there's always a reason for it. It was bad luck. Well, guess what? Most of the time we're wrong. And if we're successful, and this is why I'm up on this stage today, it's because I'm lucky.
Nothing else.
It's all random, you know? And you go, okay, how can I increase my chances of being lucky? And reduce my risks being unlucky, right? To try and control that unknown stuff. That bias towards action, I'm not, you know, if I'm not doing something, If I'm just thinking, I'm not really earning my money. And he'd go, but we hire all these really smart people to do what?
To think, to work together. But you can't do that because our organizations have this bias towards action. You have to be doing something, producing something, even if it's just documentation that nobody ever is going to read.
We always have this bias towards fitting in, and that's culture, right? I will do, I will dress, I will act, I will behave the way others do. Because if I don't, I don't feel like I'm fitting in, and people treat me differently. And that makes us feel bad as humans, because we basically have this herd mentality. And the bias towards experts. So I don't know if you guys know who Simon Wardley is. He's a consultant out of the UK, and he worked on the UK Gov initiative where they transformed the way they delivered digital services to UK citizens. And before that, he worked for a company that was being very, very successful. And he developed a way to map his strategy for the use of technology and for the company in a very successful manner. So it was a company that worked on digital photography storage and print. of images.
Company was growing over three to five years. What happened? The parent company, they were bought out, the parent company brought the experts in. And the experts looked at it and said, you know, there's no future in digital photography.
The future is in, everybody sing now, 3D television.
Who has a 3D television in the room?
One guy. Do you use it? You like it?
Yeah. Who has a digital camera and keeps digital photos? Everybody.
Guess what they did?
They went with the experts, and they went out of business. Just collapsed.
So that's why we don't learn.
And then the last thing I want to talk about, you know, to give you the background, is about organization information processing. Because this is really critical in having innovation. And, you know, whether it's new ways to work or new devices, new ways of using technology. This is work done by Ron Westrom, who actually comes out of the risk in aviation, and he was investigating a lot of airline crashes. And in the course of his investigations and being exposed to a lot of different companies, what he found out was high-performance companies could fall into three categories, basically. Power-oriented, where novelty is crushed.
You do it the way we've always done it because that's the way we do it for no other reason.
Other organizations are rule-oriented, where if I have something new, it creates a problem.
I'll work through the problem, but it creates a lot of extra work, so we don't really like new things. And then the last one was performance-oriented, where he says, novelty is implemented.
Now, the thing... Also, you could probably guess, is that it wasn't about the success of the organization because all these organizations were quite successful. But if you wanted high performance with low employee turnover and good safety records, he found they landed in this category.
So this is what we're looking for. If we have a new idea, how do we implement it as quickly as possible and find out if it's going to work for us and to improve things?
So this is from Mike Rother. The ability of your company to be competitive and survive today lies not so much in the solutions themselves, but in the capability of the people in your organization to understand the situation and develop a solution.
So every time I go in as a consultant and they say, how do we do this? Or tell us how to do this. And then we say, okay, first we'll have the conversation for two weeks. The immediate response is, we don't have the time and the money to spend two weeks thinking about this. Just do it. I hear one client just, just do this. And, you know, at that point, we kind of go, you know what, it's going to be a waste of our time, it's going to be a waste of your time, maybe we should talk about, you know, you finding somebody else to do this.
Whoops, sorry.
People.
So what does it take to be the innovative culture? People and processes.
What's missing from there?
Tools. Everybody says, I've got the perfect tool that's going to help your transformation. I'm going, snake oil.
Right? This is all about people and all about process. So, you know, for the rest of this time, I just want to talk about that.
Within ThoughtWorks, and we're well known for our innovation in the technology area, particularly producing software for clients and helping clients figure out how to use technology,
we have spent a lot of time over the last 15 years looking at how to hire people. And we hire for aptitude.
My background, coming out of risk and compliance, coming into ThoughtWorks, was major, major shift for them. Because prior to this, they hadn't really thought about risk and compliance. But what they could see was that risk and compliance was becoming increasingly difficult for many of our clients.
But it's not just that. They didn't look and say, what do you know about risk and compliance? It was, what's your experience? Where have you worked before? Do you have a variety of experience? If I had always worked in risk and compliance, I don't think I would have got in.
So we actually look for a variety of experiences. And guess what? There are some experiences that we always look for and we find are quite true. We look for, have you worked in a service industry? Have you worked as a wait person?
A bus driver?
customer service agent, because that gives you empathy for customers and also gives you an indication of whether you have a tolerance to work with a variety of different people who are demanding things from you. So we don't ask, you know, what's your degree in computer science?
Most of us don't have a degree in computing science, and I'm talking about developers.
What we do is we assess the skills over the knowledge, because we can teach you how to do things, but it's your ability to learn and adapt that we're actually looking for.
And we also look at this emotional intelligence to see what are the things within the interview process that tells us that you have a high emotional IQ, that you can have empathy with people, that you are self-aware. Because we're going to put you in front of clients, and if you don't have that emotional intelligence, it's going to be a disaster.
Very few positions, even in most businesses today, where you would hire an individual for a specific knowledge and set them at a desk in the corner. Although there are some people like that, and they're very valuable to the organization. But for most positions, that's not the case today. So you have to be aware of that. We always hire for aptitude and attitude, and we train for the actual position. When I worked for an airline, it was the same thing. Very successful airline in Canada called WestJet. We always would say, hire for aptitude and attitude, and train people.
We also need to be aware of our own unconscious biases. This comes to self-awareness. Okay, they're unconscious, so you don't know about them until somebody actually points them out to you. So you just go, that's actually not me. And then you go, no, that's probably me, is when somebody points it out. So we actively seek diversity, and this goes beyond gender, beyond race, religion, age.
Your physical abilities. We have deaf people, we have blind people working for us, we have people who are physically disabled as well, in other ways. Our own unconscious biases, this comes to self-awareness, okay, they're unconscious, so you don't know about them until somebody actually points them out to you. So you just go, that's actually not me, and then you go, no, that's probably me, is when somebody points it out. So we actively seek diversity, and this goes beyond gender, beyond race, religion, age. Your physical abilities. We have deaf people. We have blind people working for us. We have people who are physically disabled as well in other ways.
Education. How many job descriptions do you see where you have to have at least a degree in computer science or whatever, you know, a master's in, a PhD in, or we're not even going to consider you? Do you immediately filter out anybody who doesn't meet that education qualification? Because you're doing yourself a disservice.
Yeah, sometimes, sometimes not. For us, our experiences, we do ourselves a disservice. We have doctors working as developers. We have...
Philosophers working.
Yeah. Yeah. But what we do is we go, that diversity in our learning styles, our education learning styles and thinking processes, it's what makes us successful at being innovative. Because it brings that new thought process and understanding to the larger community.
And education, too, I often see this in North America, we're only going to hire from the best schools.
And then you get inbreeding. We have a bias to choose people who are most similar to ourselves.
And that's why when we do an interviewing process, there is never a one-on-one interview.
It is always our candidates are always the candidate and at least two people on our side to balance the process of saying, is this a candidate that could be suitable for us or not?
And when we do that, what we call pairing for interviewing, it's two different types of people. So I would pair with a developer or manager. And if I was hiring a risk and compliance person, I'd bring in a BA or even a developer. So we get that different perspectives. I've done interviews with people, you know, my colleagues in India, I'm in North America, candidates in the EU. We work that way too sometimes, depending on who the group is. But that's how we remove our unconscious bias. Another really good way is when you're filtering out resumes, people who have applied, remove the names, remove the gender, remove the dates to see, you know, who actually is the best candidate for interviewing on that initial screening.
So, do you guys know who Tim Berners-Lee is?
He invented the internet. He's the father of the internet.
This quote, we need diversity of thought in the world to face the new challenges that the internet has introduced to businesses and the world in general.
Because without that diversity, you get that narrow focus and you don't have the social connections to your customers, to each other, to understand how you work and how you can improve things.
And the last thing I want to talk about when I talk about people, and Andrea spoke this morning on leadership. Leadership is key in making this work.
We need leaders that are open to new ideas.
They have to be courageous. Which is really difficult because a lot of leaders come up through the management cycle.
And managers are not taught to be courageous. They're taught to be cautious, right?
They have to be uncomfortable. One of the hardest things for me when I started working at ThoughtWorks was the level of discomfort I had because everybody questioned the things I said. And it forced me to start questioning myself whether the things that I was actually saying were indeed the only way to do things. And what I found out is there's many, many, many, many different ways of doing things. It's just figuring out what's best for you at a given point in time that's going to work.
Moving on to processes. Do we have the capability to respond and learn?
And this comes down to decision making, and this comes out of a framework called ValIT that was ISACA in 2007, I think. But they say basically when we're looking at businesses and being innovative, we have to ask ourselves a couple of things. Are we doing the right thing? Are we doing it the right way? Are we getting them done well? And are we getting the benefits? Most organizations figure they do this, these two, and this little bit correctly. But when we go into organizations, what we find out is that they're not quite sure they're doing the right thing. And man, they never look at are we getting the benefits. It's just like... Plan do, plan do, plan do, plan do, plan do, plan do.
No check and act. No study and act. And you have to break that cycle. And how you break it is through doing measurements.
And I think there's a whole session on this. Are you measuring your outputs or are you measuring your outcomes? Okay? The outputs, how many things have I completed? Okay? Is the process complete? Have I checked all the boxes? We find that when we come even to innovation, most organizations are working at this level. The very successful high-performance organizations work at this outcome level. That's what they're measuring. What is the consequence of the work being done? What happens to the result of that output? Are our customers happier? Are our customers staying with us longer? Are they spending more money with us? Do they keep coming back? Are they referring?
Are people happier? Is our loss of people slowing down? People staying with us longer? Those are the types of outcomes that you have to be measuring with the goals.
And how do you do that?
Well, you can't do a big mass change program for this. It's like, tomorrow we're going to be innovative. We're going to create an innovation center, and we're going to put a bunch of very smart people over there, and they're going to figure out how to do new things, and then we're going to do them. That doesn't work. What does work, though, is the experimentation. So you've probably seen many, many different, and it's planned to check that. It's a scientific method. It is not rocket science, but most of us fail to do it because we're not very disciplined. We don't consciously make an effort to do this all the time. We experiment. Make them small, make them frequent, do the measures, and adjust. So you think of the improvement kata, you think of the Uda loop, you think of all those different ways of explaining this very same thing.
Look at what you got, figure out where you want to be, Do something that will help you get there and measure it. See if it's actually moving you in the right direction. And then do it.
Really easy to say, but again, because we're working with people, it's really, really hard to do. So it takes that leadership and each individual's to take responsibility, you know, to assume the responsibility to work in this way. Because if we can't, can't do that, then we're never going to be able to be innovative. Because what we find is that we deal with day-to-day crisis and we create operational crises for ourselves that don't allow us to actually think about how we can make it better. We're too busy fighting the fires to think about why the fires started in the first place. So the first thing when we go in and we talk about innovation is, what does your operations look like? Are you working with operational excellence? And mostly my experience is in the field of technology, and they go, well, no, we have a real problem here, here, here, and here. So the first step is to get that operational excellence.
And then allows you time to start doing the experimentation.
Over time, what we're looking for is where you've got the operational excellence, but we have within the business the Horizon One, and probably many of you have seen this model before, where you have, we're doing execution, sustaining, and retiring things. But we've also got room down here to do experiments for new things. And also exploit some of the things that we figure are going to work. Now, in the field of technology, some of the methods that we use to do this after we get the operational excellence is we'll actually have innovation days where people are given time. to actually think about how can we get better? Is there something completely different that we want to try and do an experiment on to see if it actually has legs that we want to invest more money in? And these down here, the funding models and the way we think about them are very different than what we do up here, the things that we actually have in execution and sustaining already.
Eventually you'll get a disruption point where the things that you're exploiting take over the things that are sustaining and they become horizon one. And then they'll go down and your horizon three becomes horizon one. And this is, you have to have this constant flux of products and services in order to get to a level where you're actually going to innovate. Because if you don't have that, it's very rare that you'll have this eureka moment from a single source in your company and that you actually change the entire company.
And even sometimes when you do that, if you haven't got this in flux and you haven't got ways to measure it, you haven't got ways to explore it, you could tank the whole company. And Kodak is a really good example of that, where they invented the digital camera. But because in the Horizon One, where was their money being made?
It was in the printing of the photographs.
They didn't realize that they were in the business of creating memories for people and that the technology was changing in the way people looked at memories.
So he said, ah, digital cameras, we don't need them.
Who needs photographic processing equipment today?
It's all software.
I don't need the chemicals in the trays anymore. Some of us who are, you know, like that sort of thing still have them. But most of us, we don't care.
The other process I just want to touch upon is this annual budgeting process. And this comes from Beyond Budgeting Institute. Is anybody aware of this in here? A few of you. Yeah. I highly recommend you go to it. But what they're saying is the annual budgeting is the core of our management problems. It prevents us from being innovative. Now, I want to point out that it's not the budgets are a problem. It's the process of making the budget that's the problem. Okay? Everybody needs a budget. And in fact, I challenge some of my teams in their thought works to say, okay, you want to try this, you go ahead. You've got two weeks, two people, and you need to come back in two weeks and show me. By defining those constraints and restricting the resources that they have available to them, it forces them into creativity. Having a budget, you know, knowing how much have I got to spend on something is really important. And you want to control those costs. That, too, is really important. What is wrong is for big companies particularly to say, drop everything for the next six weeks. We're going to plan for the next 18 months out. And most of us don't know what that's going to look like anyway. And we create a lot of figures and numbers to say, this is what we're going to do. And then we then determine how many people we're going to need for different projects. And everybody is like, well, now that I said I'm going to spend this money and I got approval, I actually have to spend the money. But you know what? Nobody's going to use whatever the work, you know, result of all this work that we do.
That's a waste, and that's what Beyond Budgeting says. The other part of Beyond Budgeting, they said, is this thing where we judge people's performance based on the amount of budget that they control and their ability to stay within the budget. That's wrong.
So I always say, change the funding model.
It's not an annual budget. It's a different funding model.
Where if I have a very high, I look at the complexity of the relationships, what the user focus is for the actual activity, and the required rate of change, and speaking about technology. So if it's one to one, it could go from one to one, one team to one team, or one product to a customer. Or it can be an entire enterprise level that's very, very complex.
Is it customer focus or is it core operations? Because again, that will determine how much funding and how much time you want to spend on that. And what's the required rate of change? Am I expected to make changes every week or am I expected to make changes once a year? Because if it's once a year, it's going to be a longer term, bigger funding box. But key to this is also how I report back on where it's going.
I'm just going to sit back there. So when we do this at ThoughtWorks, what I actually say is, are these small things here? You can report to me once every two weeks, and at some point I'm going to tell you, keep going, and we'll move it into higher funding block, longer-term reporting. It's a feedback mechanism. And we'll decide whether we're going to exploit it for ourselves. Or we're just going to stop the work. This is key. Most of us, in the processes that we do to manage the people and the way they work, is we never stop things.
We just keep going. And you know that sunk cost fallacy. I've spent a million dollars on this. If I pull it out now, I'm going to have to write that off, and that's going to affect my balance sheet.
So in our book, I wrote a whole chapter on how we, in particular large organizations, the financial management processes are dictating the way we work.
And it's to the detriment of the entire organization. It creates a lot of waste. Because we don't have regular feedback loops, and we don't make the decisions to stop work.
And in order to be innovative, you've got to stop doing some stuff to make room for new stuff.
It's math.
But most people go, well, I can't. We go in and we look at the portfolios of some companies. How many services do you have running? Well, we figure we have about 1,000 services. Okay, who's using those services? We don't know.
We got stuff over here that might be one person uses once a year. Why don't you shut it off? Well, I might need it. Most enterprises are hoarders. Do you know what a hoarder is? Just can't let go of anything. Nothing. Keep junk around all the time. That gets in the way of being able to see what you actually have and where you need to go.
So one of the first steps we always say is, think about what you're going to stop doing before you think about how I'm going to innovate.
So in summary, we go challenge your own preconceptions. Many of us say, I'm not part of the problem. I always talk about leadership.
Leaders are usually part of the problem. And it's like, everybody else can change, but I don't need to change. No, each of us needs to think about how we're going to change, and that includes the leadership. Select the right people. Make sure you have in place. Keep them there. Change the way they work so they actually can use the brains that God gave them to make work better and so they can enjoy the work they're doing. And then the other one is experiment, start small, and learn fast.