This article was originally published in Harvard Business Review (2011).
Every day I go to meetings where language suggests people are cogs.
With peers in a few CEO roundtables, I’ve heard things like: “I plan on hiring 3 biz dev people to get $345K per headcount in revenues.” After publishing a book about closing the execution gap by focusing on the “peopley” stuff, CEOs of major companies took me aside (in a friendly way) to suggest I had made a major faux pas, and would be seen as having gone “soft.” In spite of a forest’s worth of academic papers and rafts of best practices published by the likes of HBR on the importance of the “soft” stuff, most companies continue to treat people as inputs in a production line. I’ve had leaders ask me if this “people engagement thing” is something that can be added on, after the core business stuff is done, sort of like adding frosting to a cupcake.
And I. Can’t. Believe. It.
Are we still having this conversation, really?
We know our economy has shifted away from mostly producing things. It makes no sense in such a landscape to keep talking about people as if people are disposable, replaceable, cogs in the mix.
Gurus like Don Tapscott, Tammy Erickson, John Hagel, Rosabeth Moss Kanter, Gary Hamel, and more recently, Umair Haque, have all written about how our new economy is about producing ideas, experiences, and meaning. Companies like Google, Facebook, Twitter, Slideshare, and even Groupon are based on the conversion of ideas and creativity into value, rather than shipping physical stuff. Even companies producing “things” have found a way to embrace the new economy. Look at Apple. Their earnings per employee figure is $419,528 per head, beating out even Google’s of $335,297/head and well on its way to be double that of Microsoft, currently at $244,831. They outperform their industry because they’ve figured out how to enable the key asset of the new economy: scalably leverage many people’s contributions, including the app developers eager to piggyback on the industry’s most attractive devices.
Yet most organizations still operate much as they did in the industrial age. We manage the measurable, rather than the things that create meaning that fuels creativity, that enables innovative thinking and that helps any company to outpace the market.
Am I revealing a certain naïveté in even writing this? Maybe yes, maybe no. Because I know the truth today: In work archetypes, we believe we must choose either performance or people. We can’t see them as one and the same. We tag performance as the quantitatively focused work of what we can design, market, measure, track, bill, and monetize. Talent, purpose, culture and creating meaning is the peopley work mostly viewed by the performance folks as “cost centers,” or departments that exist only to manage legal risk. The two camps operate with a “live and let live” approach, and they don’t attempt to collaborate or interoperate with one another.
I have long believed that this “two camps” model must change, convinced that a more unifying model must be possible. And now we have “existence proofs” in the form of successful companies with different models. And it’s not all of these companies were built from scratch; some were reinvented. The peopley stuff is what allows organizations to not just win, but also win repeatedly.
There’s plenty of empirical data to support this strategic direction. Gallup, the research firm, recently did a meta-analysis across 199 studies covering 152 organizations, 44 industries, and 26 countries. It showed that high employee engagement brings an uplift of every business performance number. Profitability up 16%, Productivity up 18%, customer loyalty up 12% and quality up an incredible 60%.
We know that life is not just about efficiency. So why do we resist the idea that work can be about greatness?
We know we need more than the simple efficiency that our current measures capture. Our view of performance has become limited by overly focusing on those metrics. Because we can see the outward manifestations of work performance like products shipped, revenues booked, and earnings-per-share, we can discuss them in analyst calls and at management meetings. We can barely see and surely can’t measure the soft aspect of how we make great products, revenues or earnings per share.
That doesn’t mean that greatness can’t be decoded. There are pieces that we can see and understand. It includes groups being creative. It includes people being themselves. It includes all of us having confidence that we’re making a difference. It’s asking questions that let us reimagine what could be. It’s feeling motivated. It’s about being challenged within our capabilities. It’s all of us having a rich, intense sense of joy at work. It’s trusting ourselves, and our ability to learn. It’s about being trusted by others. It’s when we can say to each other: I believe in you. It’s about being courageous and not always trying to fit in. It’s about everyone knowing what matters. It’s about all of us learning, and growing and changing. It’s about creativity and inventiveness, and the ability to go fast because we are adaptable. It’s about getting rewarded for caring about the commons, not just the silos.
We need a measure that captures all of that. Something that captures our purpose, our talent, and the way our culture enables us to create velocity in bringing ideas to market.
How do we do start to measure the peopley stuff and also keep on performing and measuring the external stuff — how do we make sure we don’t throw out the baby with the bathwater? For too long, the quants have lived in one world, and soft, peopley folks in another. Neither side was particularly willing to take the first steps necessary to bridge the gap, or even to even acknowledge that bridging was possible. I hold that to realize our organizations’ full potential, both sides must work hard to get that bridge built.
For now, let’s all agree that when someone proposes that we can put off that peopley stuff till later, we can all answer a resounding: “No, we can’t.” It’s not the frosting on the cupcake. It’s the key ingredient in how we make the cupcake bigger.
Nilofer Merchant is a corporate advisor and speaker on innovation methods. She has launched 100 products netting $18B in revenues at tech companies like Apple. She has helped to grow companies from Fortune 500s to Silicon Valley start-ups for the past 20 years.
This article was originally published in Harvard Business Review in 2011.