Every business is a talent business, retail edition

Over coffee this morning I caught an interview with Macys CEO Terry Lundgren who was a guest on CNBC discussing the retailer's latest quarterly results, (which were surprisingly positive for a company that like many in the retail industry has been struggling of late).

During the interview about the positive results and momentum that seem to have buoyed the company in the 2nd quarter of 2016, one of the CNBC reporters questioned Lundgren about the key drivers of this shift and hopeful turnaround in Macys business. Here's the question, (paraphrased a little), and then Lundgren's response, which I found really interesting.

Reporter: :What is the most important thing you are doing to change the business, is it inventory management, is it physical changes to the stores, or is it the increased investment in digital and e-commerce?"

Lundgren: "I think the biggest single thing that we did was that we decided to invest in people and putting more people back on the sales floor in advance of the performance of the business. So it was a bet so to speak. In a retail business like ours with so many stores, the biggest expense you have is your salesforce on your floors. So investing millions and millions of dollars back into that part of the business before the business turned around was the biggest bet that we placed in the beginning of the 2nd quarter. That to me, because I am watching what we call our 'Magic Scores', which are our customer service scores every single month now improving and going in the right direction. And I think that investment in people has had the biggest positive impact."

There is a popular saying, I think that even has been repeated on this blog from time to time, that 'Every company is a tech company', alluding to the fact that transformative and disruptive technology-driven change has redefined business, markets, competition, service delivery, communication, and pretty much everything else. And while I do believe that sentiment is largely true, and the most successful companies will be the ones that can adapt to and exploit new technologies the fastest, we can't ever let the 'talent' part of the popular Culture--Strategy--Talent triangle go wanting.

Is was surprising and refreshing to hear the CEO of huge organization attribute smart investments in talent as the primary driver of what he and Macys hopes to be a sustained turnaround in business fortunes.

It's never all about new technology. It's never all about the best business strategy. And it's never all about assembling the best talent. It is all about finding the balance between all three, and knowing, as seems to be the case with Macys, when to shift investments and attention to shore up the side of the triangle that may be lacking, and the one that has the greatest opportunity to impact customers and results. 

Every business a tech business today. Sure.

But even if you don't buy that, you have to agree that every business ,truly, at the end of the day, is a talent business.

VACATION REWIND: Netflix ratings and what they might mean for your real-time feedback program

NOTE: I am on vacation this week - please enjoy a replay of a piece from January of this year.

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Netflix ratings and what they might mean for your real-time feedback program

Everyone's favorite entertainment streaming platform/service Netflix has been in the news plenty lately.

Their most recent earnings announcement was pretty fantastic, their revenues and reach are climbing steadily, and they continue to set the pace, tone, and standard for the modern entertainment experience. Just about everyone who is a Netflix subscriber loves it, and some think that Netflix (and some other services like Hulu and Amazon Prime), might one day ring the death bell for traditional broadcast networks and cable service providers.

Netflix is a case study example of a company that has managed growth, transition, technological change, and even making some strategic blunders to become one of the digital age's most interesting and influential companies. You might recall that Netflix made quite a stir in the HR/Talent Management space with their famous 'Culture Deck' a few years back. That document, which some have called the most important one in all of Silicon Valley, was seen and shared by thousands.

But why I was interested in posting about Netflix this week has nothing to do with their 'culture deck' or consumer cord cutting or the new season of Orange is the New Black. It is for another element of the Netflix approach I find really interesting and relevant to HR and talent management pros today - their approach and attitude about program ratings, the traditional way most TV programs have been judged, and their creators rewarded.

As consumers of TV we are all at least somewhat aware of ratings. They are reported on regularly. We all hear stories about TV's highest rated shows. And we know that when shows are cancelled, the usual reason is low ratings. In the traditional TV model, ratings are closely monitored, are made public and are widely reported on, and are the ultimate form of either validation and success, or rejection and failure. 

Want to know the ratings of any broadcast or cable TV show? That information is not that hard to find.

Want to know the ratings or even the total number of viewers for Netflix shows like Orange or House of Cards? Well, good luck finding out that information. Here is what Netflix thinks about ratings, from a recent piece on Business Insider:

Netflix thinks ratings are bad for television shows, and are a negative force on the talent that produces them.

Last week, executives from the likes of NBC and FX traded barbs with Netflix over ratings transparency.

FX CEO John Landgraf said it’s “ridiculous that we don’t have usage numbers on Netflix," while NBC’s Alan Wurtzel cited data from an outside research company that Netflix’s ratings weren’t all that impressive.

Netflix fired back, not just at NBC’s data, which content chief Ted Sarandos called "remarkably inaccurate," but at the very idea of ratings.

Netflix has always closely guarded its viewership data, so much so that many of its creators don’t even know how well their shows are doing. Tina Fey, who was the co-creator of the Netflix show “Unbreakable Kimmy Schmidt,” said she had no idea how many people were watching the show,according to the Wall Street Journal.

Now Netflix is saying this type of secrecy is actually good for shows. Sarandos said that instant ratings data turns TV into a weekly arms race between networks, and puts “a lot of creative pressure on talent,” Variety reports.

He asserted that the focus on ratings “has been remarkably negative in terms of its effect on shows.”

Quite a bit to take apart from that story but the key for me is not the 'old guard' sniping at Netflix from the NBC exec, but rather the Netflix point of view that a focus on ratings, particularly instant or 'real-time' ratings information is in fact harmful to the creative talent that it is increasingly engaging to produce its content.

It is kind of a remarkable point of view, and in the modern world of digital content delivery and availability of big data and powerful analytical tools, very counter-intuitive. Everything - marketing, politics, sports, and yes even HR and talent management is in an almost lock-step march towards compiling more data, gauging success or failure more discretely, and importantly - providing results and feedback to people much more often.

You can't swing a cat in a room of HR people today and not find at least someone, maybe a few someones, that are scrapping annual performance reviews and shifting towards some kind of alternative program for assessing and hopefully improving employee performance. While these new approaches differ at least some, they almost always have one thing in common - the encouragement of more frequent 'feedback' (if you like 'ratings'), given to employees in the course of a year.

Sure, this 'feedback' is meant to be less formal, more forward-looking, and less frightening than the annual performance review, but strip away the new terms we are using and underneath it all to many employees it is going to feel like you've replaced the dreaded annual performance review with anywhere from 12 to 52 'mini' performance reviews. And that is going to stink worse than any uncomfortable one-hour annual performance review meeting ever did.

The real thing to think about in all this is the effect that feedback/criticism/ratings will have on talented people, especially creative people that are increasingly the difference between organizational success and failure.

Netflix, the paragon of the modern company, culture, and talent engine has decided that less feedback (in form of program ratings), is actually a positive, and beneficial to the creative talent with which it engages, and which it needs to compete and succeed. It thinks for people to do their best, most creative work, they can't be constantly worried, on a week-to-week basis, with ratings and viewer numbers. Netflix is playing the long game.

So what does this mean for you, the HR and talent pro wrestling with these trends and changes in the way 'traditional' performance management has always been done?

It might mean this: Replacing traditional, annual performance reviews with a system that amounts to more frequent, if less formal, performance reviews might be exactly the wrong thing to do if you are trying to get the best, most creative results from your teams.

Or said differently, how many really, really talented people do you know that like to be told how they are doing all of the time?

Are you a buyer or seller of talent?

In sports, and I will contend, in most other industries as well, teams and organizations are either 'buyers' of talent, i.e, the best candidates and people leave other organizations to come there to work,  or are 'sellers' of talent, i.e. they tend to lose their most talented people to other, better opportunities and organizations. 

The problem for organizations however, is figuring out where they want to be on the spectrum of 'seller/buyer' of talent, vs. where the market (and the talent), perceive them to be on said spectrum. In other words, it can be pretty easy for team and organizational management to in accurately peg themselves as a buyer or acquirer of the best talent, when the talent no longer sees the organization as all that desirable.

And in big time sports like Major League baseball, NBA basketball, and international soccer/football at the highest levels we see this tension between desire, perception, and reality plays out often, as teams vie for the services of the best and most talented players. 

Case in point, the potential transfer of one of European soccer's top players, Paul Pogba from the Italian club Juventus to the English club Manchester United. Juventus' management sees themselves as an acquirer of talent clearly, as evidenced by this quote from team manager Massimilliano Allegri on the Pogba situation, (courtesy of Business Insider).

"I am calm about the English rumours. Anyone who has the opportunity to leave Juventus has to consider things very carefully, because right now Juve are among the top four European clubs. 

"This is not a selling club that just lets its players go. Pogba belongs to Juve and at the end of the day he too will want to win another Scudetto (Italian league championship) and hopefully the Champions League.

"We have grown in terms of appeal and awareness of our own capabilities. So far our market this summer has been eight out of 10, bringing in players of international pedigree like Medhi Benatia, Dani Alves, and Miralem Pjanic."

Tease that out a little bit and we can see clearly that Juventus see themselves as a talent acquirer - they think Pogba would be better off remaining with Juventus instead of leaving for Manchester United, and additionally, they are 8 out of 10 in acquiring top-level players against competing clubs.

Meanwhile, Man United, long considered a buyer or acquirer of talent themselves, but who have dropped a bit lately due to some disappointing results, see the potential Pogba signing as one that cements and solidifies their reputation as a desirable location and organization for the very top tier of soccer talent to ply their trade. 

Where Pogba ends up deciding where to play his soccer is a decision that will validate the ambitions and self-perception of one of these two organizations, and cast some doubts on the other. Both teams see themselves as 'the' destination for talent of Pogba's level. It will be interesting to see how this plays out.

Why does this matter to you and your organization?

Because it serves as a reminder of two important points. One, it is important to understand that no matter how you perceive your organization's desirability as a place to work, your self-perception needs to align with market reality in order to better inform and shape your talent strategy.

And two, at the end of the day, your organization's perception and position as a talent buyer or seller is a decision that the talent makes, not you. No amount of branding, or history, or posturing, or past glory will make up for the best talent deciding a competing organization over yours. 

It's good to know where you stand in the pecking order, and it is better to know how and why the most talented people decide to put you there.

Have a great week!

SLIDES: Digital Transformation and Talent - #Inforum2016

I had the privilege to present yesterday at Inforum 2016, the annual customer conference for Infor, a leading provider of enterprise cloud technologies - including Human Capital Management.

My topic was Digital Transformation and Disruption, and the impact that accelerating and profound technology innovation and change is having on talent and talent management. I also included and talked about the incredible Pokemon Go phenomenon, and what that suggest for HR and talent. My only regret from the talk is that I really didn't get in a solid 'Sport and HR' re-set, but I guess I can try and do better next time.

Embedded below are the slides I presented at Inforum, and after the embed, (email and RSS subscribers may need to click through), I want to expand a little on the last slide - the recommendations that accompany the pic of Maxwell Smart.

Steve Boese - Digital Transformation and the Future of Talent from HR Happy Hour

The tough challenge for HR and business leaders when faced with all this disruptive technology is just how to go about getting started, deciding on what types of technology in which to invest, and how to prioritize time, investment, and resources.

On the Maxwell Smart slide, I offer three catergories of value that you can consider when evaluating new technology. Whatever technology you consider, it needs to meet a need in at least one of these three areas - two is better - but if you can find a project that manages to provide value in all three? Then you are basking in the glory forever more.

1. Reduce or eliminate organizational barriers- these are the inefficient systems and processes that get in the way of your employees being able to do their best work. Things like convoluted approval processes, endless email chains with no one making a decision, or antiquated and disparate technology solutions that fail to integrate smoothly if at all. This is the proverbial 'low hanging fruit' that the smart HR leader looks to exploit for quick, easy, and visible wins.

2. Improve and enhance customer service - HR is at the end of the day still largely a service organization providing support and consultation to the rest of the organization. How can you provide that service better, faster, with more inherent value tomorrow than you are doing today? Where can you leverage modern tools to allow employees to get access to tools, information, and people to enable them to focus on their roles and not on your rules? Technologies in this category don't just make HR better, they make the organization overall better as well.

3. Create a differentiated and persoanlized experience - One of the themes that I touched on in the talk was the way many of these modern breakthrough technologies like Uber, Stitchfix, and even Pokemon Go succeed by creating individual and personalized experiences and do this at massive scale. Stichfix sends out thousands and thousands of 'fixes' - collections of clothes and accessories to its customers - and no two are ever the same. Most organizations send out a handful of offer letters in a month, and except for the salary, everything else about them is EXACTLY the same. The same can probably be said for benefits and perks packages, physical characteristics of the work environment, and the method and process for training, development, compensation, and evaluation. Is it easier to have uniformity in all of these processes? Sure it is. Does it make the most sense for you business? Maybe not. It would be easier for Stitchfix to send all its customers the same 5 garments each month, but would that make the customers feel special and valued? Would they keep coming back?  I doubt it.

So those were my big three points that I wanted to leave the audience with today, and what I hope you think about when making the important organizational decisions around technology investment. Make sure you are hitting the best value category for you and if you can punch 2, or even 3 of the categories then you will probably be giving the keynote at Inforum next year!

It was super exciting and fun to be a part of such a big event - many thanks to the team at Infor for having me! 

Is it a great company culture or just a collection of great talent?

Lots and lots of folks like to push 'culture' as the primary driver of organizational success. I have written and presented pretty extensively on why I think that's wrong. Check any of my 'Rock-Paper-Scissors' posts in case you are interested.

One of the many reasons I get a little skeptical about this 'cult of culture' is that by its very nature culture is hard to define, to measure, and hard to draw any kind of a direct (or even a dotted) line from culture to actual results. I'm not saying it's impossible, but just really, really, tough.

But another reason why culture gets too much emphasis is how easy it can be to confuse a great culture with what is really just a collection of great talent. This challenge was discussed, I think very effectively, on of all things an NBA podcast I was listening to recently, by ESPN writer Kevin Arnovitz on the July 6 episode of The Lowe Post Podcast.  Lowe and Arnovitz were discussing the recent decision by NBA star Kevin Durant to leave the Oklahoma City Thunder and join the Golden State Warriors - a team famous for their 'culture'.

Here's Arnovitz' observations on culture v. talent, then some comments from me after the quotes:

On an NBA team is culture permanent? Or is it really just transient? Is it this fancy word people like us to describe what is really just a concentration of good talent, but it seems like culture? But actually what it is is just really good basketball players there? Which is why they (the Warriors) win, it's not because they have any special connection to the community of San Francisco like people like to talk about. 

Steve here - I think these observations are spot on, especially in a business setting like an NBA team where individual talent and excellence plays such a critical role in organizational success. Said a little differently, it is almost impossible to achieve the highest level of team success in the NBA without at least one superstar player, and one or two other All-star caliber players. You simply can't win without that talent level no matter how fantastic your team's culture may be.

And I know that I get a fair bit of heat from folks for trying to make these kinds of HR/talent points using sports analogies, as some folks think that an NBA team and its dynamics offer little to us to learn from, back here in the real world. But I continue to think that they are valid ones to make, especially as more and more organizations and work teams have to rely on ideas, innovation, creativity, and quite simply talent, in order to succeed in a hyper-fast, hyper-competitive world.

Ask yourself some of the questions about your organization that Arnovitz hints at.

What would really drive increased performance at your shop? More talented people? Or a somehow 'better' culture?

Which one of those levers is easier for you to influence? To measure? To replicate?

This isn't about me trying to convince you that culture = bad and talent = good.

It's about making sure we keep both in mind, (along with Strategy, if we really want to get back to my Rock-Paper-Scissors take).

When you put 4 of the best 10 or 12 best basketball players in the world on the same team you are going to win A LOT of games. If at the same time you have a great culture, you may win one two extra games.

But the great culture without the great players? Good luck in the draft lottery next year.

Have a great week!