Keep an eye on your relatives

We all have unusual relatives. You know the ones. You try to avoid them at family gatherings. Sure, sometimes they can provide a good story or an entertaining observation. But, in general, you know how to manage them. When you see them coming, you head for the kitchen to wash the dishes.

Unfortunately, we aren’t always as good at managing relative data. Relative data are those calculations and metrics that summarize and simplify a data set. Often, we use this data as the basis for further analysis rather than going back to the source. That’s a mistake.

Consider this example. Two baseball players are competing for the league’s batting title. In the first half of the season, Player A has a higher batting average than Player B. Then, in the second half of the season, Player A once again hits for a higher batting average than Player B. Is it possible for player B to wind up with a higher battering average for the season as a whole?(from John Allen Paulos' book, Innumeracy)

Before answering, think about this other example. You have two departments in your company. Department A has employee satisfaction of 4.15 and Department B has employee satisfaction of 4.05. Is it possible that Department B has more people who are satisfied?

The answer to both questions is “yes”. (for an explanation, see graphics at end of the article)

Did those answers surprise you? If so you might be falling into the common trap of taking the average of one or more averages. The distribution and number of data points in each sample makes a difference when “rolling up” data. Averages omit information about either of those. Taking the average of a set of averages results in being two steps removed from the original data. A lot of information can be lost. We all learned this lesson playing the telephone game in school. The further you get from the source, the less reliable and useful the information.

I recently saw another example of the misuse of relative data. An author claimed that lower employee engagement can lead to a 300% drop in shareholder value. This was based on data showing that companies with higher than average employee engagement, had a 10% greater return on shareholder value than average. Companies with lower than average employee engagement had a 20% lower return on shareholder value.

This conclusion is misleading. The real drop in shareholder value is 30%, the difference between the two percentages.

It’s true that a loss of 20 cents is 300% less than a gain of 10 cents, but that’s a different issue. While technically correct, it’s misleading – especially when presented as the “drop” in value. It’s not the drop in shareholder value, it’s the percentage difference between the percent differences in shareholder value. You are now two steps removed from the original data.

The problem with using a relative comparison of a relative comparison is that it doesn’t really tell you anything. 300% sounds like a spectacular difference. However, the difference between one and four is also 300% as is the difference between .01 and .04. Each of those changes implies something very different in terms of the actual impact on shareholder value. What you care about as a leader are the actual changes and how they compare.

Use caution when working with relative numbers or numbers that are representations of data. They are fine for getting a quick read of your data. However, using them as the basis for further calculations and analysis is risky. You quickly lose meaning and understanding of the original data set. To deepen your analysis, go back to the original data.

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Illustration of baseball and employee engagement examples

Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.

Learning from our teenagers

Well, summer's over and it's time to go back to school. It seems like the right time to re-run this entry (from a couple of years ago) on what we, as leaders, could learn from our teenagers.
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I know that we were supposed to have learned everything we needed to know in Kindergarten. It's hard to argue with sharing, saying "thank you" and playing nice.

However, from a leadership point of view, I think we need to look a little farther down the road. I know teenagers may seem like an unlikely source of business wisdom. However, if you pay attention, their messages are right on. More importantly, they are simple and to the point:

• So what?
• Yeah Mom, I’ll do it later
• No way—I’m not doing that!
• Are we there yet?
• How will I ever use this when I grow up?
• You just don’t know what it’s like for kids today
• Is that it?

Try to bring a little more of that "inner" teenager to work with you. Just leave the iPod at home.

So what?
Great leaders create meaning and purpose for their people. Don't just bark out orders. Help people understand the big picture. People will rally around purpose more than they will a task.

Yeah Mom, I'll do it later
You can’t do everything. Some things matter more than others. Keep the 80/20 rule in mind. Eighty percent of the value you create comes from twenty percent of your effort. Prioritize your work to ensure that you are doing the most important things for yourself and for your organization. Put off those things that are not critical to the organization’s success.

No way - I'm not doing that
Learn to say 'no' and mean it. Protect your time, and more importantly, your team's time. Keep the administrative and busy work to a minimum if you can't eliminate it entirely.

Are we there yet?
Teenagers don’t care about the plane trip, they just want to get to the beach. Your boss and customers are similar. They don’t care about all the stuff you “do”, it is what you accomplish that gets noticed. Stay focused on results--don't just get caught up in activity.

How will I ever use this when I grow up?
Your people's time is valuable. It might be nice for them to learn your company's history during orientation, but it probably won’t help them do their job better. Understand what is keeping your people from performing and focus on that. Keep the "interesting" stuff to a minimum and make it available off-line--if they want to read it.

You don't know what it’s like for kids today
What motivates you might not motivate others. Their goals are probably not the same as yours. Treat each person as individual. Talk to your people directly. Don't rely on your managers and supervisors to give you the scoop. And, don't let the employee survey be your main source of input from your team. Get to know them yourself.  The same holds  true for your customers.

Is that it?
Your kids want complete solutions. They want the latest smart phone, the apps, the downloads, the leather carrying case, the skins, and the rapid-charger. Give them just one and they'll look at you like your nuts.  Your business needs complete solutions too. If a problem is worth solving, it’s worth solving completely. Don’t cut corners or skimp. It is better to have one problem fully solved than five problems partially solved. The partial solutions often breed new problems of their own.

Following the wisdom of a teenager can greatly improve your communication, team effectiveness, and overall impact. Of course, there are probably a few things that your teenagers can learn from you too.

When eight out of 94 equals .4%

In his book, Reckoning with Risk, Gerg Gigerenzer tells the following story about computing risk:

"A few years ago, I enjoyed a guided tour through Daimler-Benz Aerospace (DASA), which produces the Ariane, a rocket that carries satellites into orbit. Standing with my guide in front of a large poster that listed all 94 rockets launched so far (Ariane models 4 and 5), I asked him what the risk of an accident was. He replied that the security factor is around 99.6 percent. That was surprisingly high because on the poster I saw eight stars, which meant eight accidents. . . I asked my guide how eight accidents could translate into 99.6 percent certainty. He replied that DASA did not count the number of accidents, but rather computed the security factor from the design features of the individual parts of the rocket. He added that counting accidents would have included human errors and pointed out that behind one of these stars, for instance, was a misunderstanding between one worker who had not installed a screw, and the worker on the next shift who had assumed that his predecessor had done so."

Theoretically, the calculation was correct. Combining the risks of the parts can predict the risk of the whole.

However, it describes a rocket that doesn't exist. A rocket is not just a collection of its parts. All rockets are assembled by people and/or machines. Human or machine error is a major factor in considering the safety of the rocket. The 99.6% security factor simply did not represent the real world. Just look at the evidence. The actual failure rate was 21 times greater than the computed risk. Having an accident in one out of every 12 rockets drives a very different set of decisions than does one out of every 250.

Data should reflect the context in which your decisions and actions play out. Otherwise, despite its technical accuracy, it can drive the wrong decisions.  When the rocket was first developed, there wasn't any experiential data.  Therefore, the calculation they used was probably the best approximation.  However, it would seem that the calculation should have been updated when the context changed and more information became available. This is especially true given that the actual data were significantly different from what was projected. It's ok to change your metrics or your calculations as you learn more about your business.

Take a look at the data that you use to make decisions. Do they accurately reflect reality? Do you understand what information is included and excluded? Do you know who created this data and for what purpose? If you answered "no" to any of these questions, you might be working under a false sense of certainty.

Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.

Do your tools just help you do the wrong things more efficiently?

When I was younger, my friend Brian and I used to go fishing a lot. Boy did we look the part. We both had an incredible arsenal of fishing gear: multiple poles, waders, bait catchers, and tackle boxes so big we needed a wagon to carry them. We could have graced the cover of any reputable fishing magazine except for one thing. We never caught any fish!


All around us, people with much less gear always seemed to have more "luck". It wasn't about luck. Brian and I had no idea what we were doing.


Many years later, I worked with a guy named Les Artman. Les had a simple time management system. He kept a 3 x 5 index card in his shirt pocket. Every time he needed to do something he wrote it on the index card. (Les had an incredible talent of writing in 4 point font). As he completed a task, he'd cross it off. Once the index card got full, he'd transfer the open tasks to a new one and start over. Les was surrounded by people with sophisticated day planners or electronic information managers (this was pre-Blackberry and iPad) yet he was more productive than anyone I've ever met.


Often, when working with a new client on a workshop, they ask what tools I will be providing. My response, in general, is "not many". This makes a lot of people uncomfortable. They aren't sure how people can do their jobs better without tools.  I assure them that they will get the tools they need but they will get something even more important - an understanding of what they are doing.


I'm not opposed to tools. I do include them, when appropriate, in my workshops and in my consulting work. But tools (and processes) need to be used in context. They help improve performance only if the person using them knows what he or she is doing. Otherwise, most just makes it easier to do the wrong things in a fast, structured, and efficient manner.


This issue of tools versus understanding surfaces most when talking about "soft skills" such as communication, change management, or leading people. Perhaps the stigma of being called "soft skills" drives the need to create tools and templates. Having a tool seems to lend some type of engineering quality to a task.

But the problem is that tools don't replace thinking or understanding. Developing a communication plan without really understanding and appreciating people's needs and concerns will probably make your change program more difficult.  I've seen a lot of leaders do a lot of damage using tools without understanding.


Think of people who are good communicators.  They take the time to think about what they want to say (or hear), and determine the best way to do it. They don't need fancy tools. In fact, many do what they do in a very natural, simple way. Like Les Artman, the best leaders understand what they are doing and adapt tools to their needs. 

Understanding and thinking take more time than completing templates but they yield better results. Give your leaders tools and processes to support and facilitate their thinking. Don't use them to replace thinking.


Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.

Creating Impact Plans

Do you have an action plan in place to help you reach your goals? Do you monitor it? Do you follow up if things aren't being accomplished? If you answered "yes" to those questions you are probably doing a good job executing.

Now, here's a harder set of questions. Has anything changed as a result of your actions? Are your customers or people better off? Are you tracking and following up on the impact?

Action is important but so are results. In many organizations, people are working hard and accomplishing a lot of work. Yet, the real changes to the business are few and far between.

Perhaps there is an opportunity to change the focus of our planning. If you are already doing action plans, you have the skill and discipline to execute. The difference is what is being executed. Instead of laying out tasks and deliverables, lay out a series of results or "impacts" to the business. Then manage your plan according to that.  What's going to change?  What will be happening differently?  What will increase and what will decrease?  That is your impact plan.  And, your impact plan can be incremental.  Perhaps your ultimate goal is to reach 1,000 new customers.  Your impact plan might parse that into groups of 200 at a time.

You'll still have to manage all of the activities. However, you wont' stop once an activity is completed. You'll keep focused until the benefit of that activity is realized.

Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.

Predicting the past

The City of New York is considering suing BP for losses to its pension investments. (Reuters, June 24, 2010). They claim that BP misled them regarding safety procedures that led to the current oil spill. Perhaps that's the case. Or, perhaps, as with any investment, they took a risk. At the time the investments were made, the data predicted a positive return from BP. But then an unexpected event occurred which changed the results. Now they want their money back.


Despite all of the advances that have been made in analytics, we still cannot predict the future. We can do a pretty good job of understanding what's probable, but that's not the same as predicting. It's important to understand the difference and the implications of that difference.


Many executives fall into the trap of thinking that if they just had the "right" data, they'd be able to make the right decision. There's no such thing as the "right" data. There will always be supporting and contradicting data for any decision. And, the best data we have is only from the past or present. The best we can do is model that and make our best guess as to whether the future will look the same. And, make no mistake - regardless of how much data we have, when talking about the future we are making a guess.


Often the future doesn't behave in quite the same way as the past. For example, a company's stock price can vary greatly despite the company turning in similar business performance. A positive national economic report might drive all stocks up. In other quarters, there might be an oil spill. While understanding a company's business performance data is a good start toward understanding what it stock price might do, there are no guarantees. There is a broader context in which that performance plays out


Sometimes we forget that data doesn't occur in a vacuum – the context surrounding it matters. For example, a company did an extensive ROI analysis on one of its internal departments. They used the results of that analysis, which were quite positive, to justify and drive a new operating strategy. However, the new strategy sought to fundamentally change the operating model that had driven the ROI data. Predictive models are good, but they are based on past conditions. Changing context will also change results.


In The Black Swan, Nicholas Taleb provides a striking illustration of this:

"Consider a turkey that is fed every day. Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race "looking out for its best interests," as a politician would say. On the afternoon before the Wednesday of Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief." (p. 41)

Taleb uses the term "learning backward" in describing this line of thinking. He argues that the thousand days of historic data (of the Turkey being safely fed) actually provide a negative value.

"Consider that the feeling of safety reaches its maximum when the risk is the highest. But the problem is more general than that; it strikes at the nature of empirical knowledge itself. Something has worked in the past until – well, it unexpectedly no longer does, and what we've learned from the past turns out to be at best irrelevant or false, at worst misleading" (p. 42)

In this case a simple understanding of Thanksgiving is much more useful than the thousand days of data. While our world is a bit more complex than a Turkey's, we often fall into the same trap.  I'd bet that the New York Pension Fund's feeling of safety (for their investment) increased proportionally with BP's exploration and drilling activities.

I'm not suggesting that we abandon all data and pull out the Ouija board to make decisions. Having solid facts and data is the foundation to good decision making. However, it's just a foundation. We still need to use our brains, our experience, and yes, even our gut. When we combine those things with data, we are more likely to make a good decision.


At the same time, we also have to acknowledge the limits of data. Too many executives get stuck in the illusion that if they just find the right set of data, they will make perfect decisions. In the midst of that search, they wind up making no decisions or are surprised and unprepared when their decisions don't turn out as expected.


If the data is accurate and reasonable (not just to you but to others who understand the context of what that data is describing) it is probably sufficient. It's then time to make some judgment calls and move forward.


Brad Kolar is the President of Kolar Associates, a leadership consulting and workforce productivity consulting firm. He can be reached at brad.kolar@kolarassociates.com.