Seller and Buyer Signals

Often we learn from the website of some consultancy claims like this: "We have over 150 years of combined experience in..." Analogous to this type of claim we have those in the multi-channel audio amplifiers market that read: "150 Watts Total Power."

The idea behind such claims is that the consultancy has, let us say, 8 employees with 20 years of experience each, and the amplifier pumps 30 Watts in each one of its 5 channels. In both cases, the customer gets more than anyone's 20 years worth of experience, and 30 Watts coming from any single speaker, respectively. The problem with such claims is that neither work experience nor the channel power in amplifiers is an additive function--generally speaking, f is an additive function if for every two real x1 and x2, f(x1 + x2) = f(x1) + f(x2). In other words, nobody gets the arithmetic sum of all parts as advertised.

When it comes about people's experience, it could be redundant, irrelevant, and almost never a linear function. I, for one, would so much more welcome the advice from 5 people with 30 years of experience each than from 50 people with only 3 years. As for amplifiers, I'll take anytime a 75 Watt stereo amplifier (75 Watts per each channel) over a 5 channel-30 Watt one.

"150 years of combined experience" shows lack of intellectual rigor, whereas "150 Watts Total Power" shows unethical behavior, of those who want to sell that service, and amplifier, respectively. To me, the first type of claim is a signal about sellers and the second about buyers.

The (usually) missing view

It is not often that you get to learn the fair views of an executive while s/he is still active--too much PR, and excessive 'non-confrontational' working environments. Such considerations make it that much more valuable the following comment with the MiniMSFT blog by MrMischevous, aVP in product development at a large software vendor. I'll provide context and pointers throughout the text:

I'm a VP in product development (not for Microsoft, but another major apps vendor - there aren't that many, so take your pick). Where possible, I'd like to give you the VP take on many of the issues you've raised here:

1) Curves: Everyone, including VPs, hate curves. But the alternatives aren't that pretty. What typically happens in a salary review is that senior execs, based on overall market forecasts, put aside an amount for bonuses. Each department is then given a budget (typically based on the number and level of people) that they must fit into.

Several Microsoft employees seemed to be very unhappy with the Curve ranking system at their company. At a recent company meeting, they were told that the 'curve' was gone.

This is where a curve is useful - it stops grade inflation. It is easy (and lazy) for a manager to grade all of his people at 4. But when it comes time to assign bonuses and merit increases, what should he do? Should he just give them all the same? Now look at it from the VP's perspective. She needs to review all of her managers and their orgs. How can she differentiate on people if her managers gave everyone a 4? And what happens when promotions are discussed? Too many promotions leads to title inflation (which in turn leads to bogus titles being created to slow down advancement or artificial rules limiting how quickly people can get promoted). But if everyone is a 4, how does the VP decide who gets bumped up? In this case, it comes down to which managers yell the loudest or are the best arguers. Not a good system either.

Curves themselves are not innately bad - they force people to make decisions. It's the structure of the curve and the peripheral items associated to the curves that cause the most angst, as follows:
1) Curves usually mean that the same people are always at the top: This is the biggest problem. If you're a manager in charge of a five-person group, the problem is that you will probably end up giving the same people the same scores year after year. That is incredibly frustrating to people, as it feels like nothing they do will affect their score. The only cure here is active and good management - the manager needs to promote people and rank them against their new position, which probably results in a lower score as they are being graded against a much higher set of standards, and against people who have been in the role longer. Stars will need to be told of this at the time that they are promoted or they will be unhappy also. There is no easy answer here, but there are fair answers, which result from open communication as to the standards and requirements of a title. People may not like the answers, but at least they will at least admit they come from a fair process.
2) Curves are innately biased towards management - If I'm a Senior Director ranking my group, who will be number one on my list? Me, of course. Spots 2-4 will usually be my Directors (and hopefully those rankings are warranted). Then come the individual contributors, which is not a pretty picture for them. This inequity can be solved, but it requires that the HR organization defines two curves - one for Directors and above, and one for individual contributors. This approach also tends to root out problem managers pretty quickly too.
3) Gaming of the curve - if stock and bonuses are tightly tied to position, then managers will have to start swapping people around on the curve just to make sure that there is some equity on the compensation over the years. It's far better to have a system which gives recommendations but allows the manager some leeway.

So curves going away might seem like a good thing, but now you've lost the discipline in management that comes with curves. And don't for a moment think that because the curves went away that stack-ranking went away. Every good manager has to know which people are the best, and which must be kept happy at all costs. That will never change.

2) RIFs: GE has had a "Bottom 5" program for many years. Once a year, the bottom five percent of the organization is let go. It is not a pleasant process, but in my experience the people who went were known to be the weakest link in the organizations, and the end result was better for both them and the org. However, for this program to work, the organization CANNOT be static. The first cut or two might be getting rid of the B- players, but after that you start cutting into good people, and that's when morale gets hit.

There's a second reason that most middle management is not behind a Bottom 5 program - in most cases they will not get replacement headcount. If their Bottom 5 candidate is providing any positive value at all, they will be loathe to to fire them. Good managers take a hard look at the services their groups are providing, and start whacking the work which provides the least value, and start pushing others to different organizations better equipped to handle them. A great example is tech support - engineers and PMs should be writing FAQs and doing a weekly half hour call with the tech support engineers instead of answering questions directly. Leverage is your friend.

3) Finally, I'd like to add my take on the question you posed earlier: "Let's say you walk into your office one morning. You reflect on your team before going through the morning email and have the realization that one of your reports (who perhaps has done a good job making you feel like an excellent manager) was in fact playing the system like this FAQ calls out. Or worse. What would you do?"

The person tending the MiniMSFT blog posted an FAQ, (How it works: FAQ on reviews, promotions, job changes, and surviving re-orgs), which stands as a set of basic survival skills in the Microsoft landscape.

Simple. If they weren't good at their own job, I'd counsel or fire them (and have done so in the past). But if they were good at their own job, I'd promote them.

I could hear the anguished screams of MM readers as I typed that last sentence. Why, they scream, would you allow style to to win over substance? Simple. To reach the higher levels, both style and substance is required. Despite what engineers would like to think, getting to Director is only partially a function of how technically good you are at your own job. I recently promoted two people in my own org to Director. Predictably, within a week two others came to my desk asking when they could make Director, since they had been there as long as the other guys. When I asked them why they thought I had promoted the other two, they sat quietly - they were unable to articulate why I had made the decision. I explained to them that at the higher levels, the intangible qualities are as important as the tangible ones - the ability to walk into a room and "own" it, the ability to summarize complex concepts succinctly so that senior execs can understand them, the ability to manage their own boss.

The FAQ made it sound like managing your boss is evil. Nothing could be further from the truth. I manage my boss, a Senior VP, all the time. As a matter of fact, I only speak to him about twice a week - everything else I keep below his radar. That way he has time to do the important things like consider strategy, pricing, alliances, and legal issues (something I do also, but on a smaller scale than him). I, in turn, am teaching my reports to do the same. Don't come to me with half-formed thoughts or partially digested data. Come with distilled knowledge and recommendations. Keep the small stuff out of my sight so that I can think about how to make everyone's job better. I want my reports to manage me - it means that they are beginning to think like executives and that I will be able to promote them too.

I've gone on long enough - perhaps when I have more time I will write up the executive side to that FAQ - it's always useful to know how the other half thinks. But realize that it is possible to make VP without out stabbing anyone and still be able to sleep at night. It takes a lot of work and a lot of thought about where you want both your career and your product to be. But it is doable, and it does give you the chance to make a difference, which is really why I got into software in the first place. (source:

This comment should provide an useful (and alternative) view into the thought process of an executive. Many times, due to corporate rules or role-playing, such process is not obvious thus the corporate relationships suffer. In other words, to the extent politicking is a constant in all human activities, corporate included, most everyone would be better off by knowing it and its rules.

Generation Y

Here are a few thoughts generated by encounters I had with Gen-Y members of the workforce.

By and large, upon learning about their careers, it seems that only unemployment beats the professional life of your typical Gen-Y person--workplace dynamics being so different from a life centered on education, so neatly divided, and timely shuttled between activities.

I follow up with the question: Since your company seems interested neither in your aspirations nor in optimizing your professional potential, what do you plan to do about it? To go back to grad/B-school, learn [about] business and then do something on my own, comes the answer. I figured then that s/he didn't know what exact knowledge s/he was supposed to pick up from the school, and school was a mere detour to answering the question of what you want to do in life. Then s/he goes on to the second line of defense: I have an idea about what I want to do but I don't have a business plan; I need to do a business plan and don't know how to do it. My next question is: Why do you need a business plan? Hm, you may be right, I don't think I need one either, but that's what everybody seems to say.

To the extent the above situation is not unique, please consider the following:

The main idea behind most B-schools is to keep their staff employed while imparting some information about how businesses run. With few exceptions, people don't get that much better jobs after the B-school than what they had before. In other words, there is an inflation of degrees out there while meaningful work-experience is scarce commodity. "Meaningful" as in taking initiatives, having increased responsibility, or contributing directly to the bottom line. Plus, one would do well to also consider the cost of opportunity against whatever better job prospects a business degree brings.

Secondly, the thinking has been that any idea, in its way from concept to profit, needs a business plan/model--a blueprint for a process to make money--in order to succeed. That may be the case in some instances--let us say, when you have a very well defined idea, have some professional reputation, and go to raise money--but brings little to those entrepreneurs who have already been able to match a need with a product/service offering. Those entrepreneurs would be better off by thinking of ways to bootstrap their business, ideally until profitable, and only then think of scale and business plan. On an historical note, have a look at the Intel's business plan here.

In other words, try to make the most out of your day-job, identify and co-opt the least amount of resources to take you from concept to anything people may want to consume/access, and only then worry about business plans/models and such. I have a strong feeling that the founders of Yahoo, Google, Skype and any other number of great business did just this. As a matter of fact, Skype, being so successful at what it's been doing, passed along the problem of finding a business model/plan to E-Bay.