WEBVTT 00:00:00.000 --> 00:00:02.960 Hello and welcome back to the Deep Dive. I want 00:00:02.960 --> 00:00:06.500 to start today with a specific feeling. I think 00:00:06.500 --> 00:00:08.160 it's something every single person listening 00:00:08.160 --> 00:00:10.179 has felt, whether they're running a multinational 00:00:10.179 --> 00:00:12.960 corporation or, you know, just trying to manage 00:00:12.960 --> 00:00:16.019 a household budget. It's that physical sensation 00:00:16.019 --> 00:00:19.609 of rowing a boat. You are sweating. Your muscles 00:00:19.609 --> 00:00:21.910 are burning. You are putting absolutely everything 00:00:21.910 --> 00:00:24.570 you have into every single stroke. You're giving 00:00:24.570 --> 00:00:28.190 it 110%. Exactly. And then you look up, wipe 00:00:28.190 --> 00:00:29.850 the sweat off your forehead, and you realize 00:00:29.850 --> 00:00:32.829 the boat is just spinning in a circle. Or, and 00:00:32.829 --> 00:00:34.570 this is maybe even more terrifying, you realize 00:00:34.570 --> 00:00:36.950 that while you're rowing north with all your 00:00:36.950 --> 00:00:40.549 might, Everyone else in the boat is rowing southeast. 00:00:40.890 --> 00:00:43.590 Yes, that's it. Exactly. It's that universal 00:00:43.590 --> 00:00:46.630 frustration of effort without progress. It's 00:00:46.630 --> 00:00:49.630 the disconnect between I am working so, so hard 00:00:49.630 --> 00:00:51.609 and why on earth aren't we getting anywhere? 00:00:51.710 --> 00:00:55.109 And today we are diving into a topic that, well, 00:00:55.210 --> 00:00:57.509 it claims to be the solution to that specific 00:00:57.509 --> 00:01:00.789 nightmare. We are talking about business performance 00:01:00.789 --> 00:01:03.289 management. Which, I'll be the first to admit, 00:01:03.490 --> 00:01:05.450 is a phrase that sounds like it was designed 00:01:05.450 --> 00:01:08.510 by a committee to put insomniacs to sleep. It 00:01:08.510 --> 00:01:11.230 really does. I have to be honest, when I saw 00:01:11.230 --> 00:01:13.569 the research stack for this week, I saw business 00:01:13.569 --> 00:01:16.530 performance management, and my brain immediately 00:01:16.530 --> 00:01:19.609 went to, okay, get ready for an hour of spreadsheets, 00:01:19.609 --> 00:01:22.310 acronyms, and people in suits pointing at pie 00:01:22.310 --> 00:01:24.750 charts. Yeah, the corporate speak. I was ready 00:01:24.750 --> 00:01:27.680 to be bored, but... And I really want the listener 00:01:27.680 --> 00:01:32.040 to hear me on this. I was completely 100 percent 00:01:32.040 --> 00:01:33.819 wrong. I'm glad to hear you say that, because 00:01:33.819 --> 00:01:36.379 usually, you know, when people hear performance 00:01:36.379 --> 00:01:38.780 management, their minds go straight to their 00:01:38.780 --> 00:01:41.560 annual review. Oh, yeah. They think of some horrible 00:01:41.560 --> 00:01:43.959 form they have to fill out where they rate themselves 00:01:43.959 --> 00:01:46.719 a four out of five on synergy and just hope they 00:01:46.719 --> 00:01:48.959 get a two percent raise. Right. The bureaucratic 00:01:48.959 --> 00:01:52.060 hoop jumping. It feels like a chore. But as I 00:01:52.060 --> 00:01:53.739 got into this research, especially the stuff 00:01:53.739 --> 00:01:55.180 we're going to talk about later, the stuff about 00:01:55.180 --> 00:01:57.519 the philosophy. performance, I realized this 00:01:57.519 --> 00:02:01.239 isn't about bureaucracy at all. It's about it's 00:02:01.239 --> 00:02:03.819 like the nervous system of an organization. Hmm. 00:02:04.459 --> 00:02:06.700 That's a good way to put it. It's about psychology. 00:02:06.879 --> 00:02:09.539 Honestly, at times it felt more like we were 00:02:09.539 --> 00:02:12.259 reading a treatise on human nature than a business 00:02:12.259 --> 00:02:15.580 manual. Well, that's because at its core, a business 00:02:15.580 --> 00:02:17.979 is just people. It's just a collection of humans 00:02:17.979 --> 00:02:21.060 trying to do something together. And if you don't 00:02:21.060 --> 00:02:23.300 understand how to align human behavior with a 00:02:23.300 --> 00:02:26.240 big abstract goal. you don't really have a business. 00:02:26.580 --> 00:02:28.539 What do you have? You just have a group of people 00:02:28.539 --> 00:02:31.080 in a room, you know, confusing each other. So 00:02:31.080 --> 00:02:33.840 that is our mission today. We are going to strip 00:02:33.840 --> 00:02:36.240 away the corporate speak, and believe me, there 00:02:36.240 --> 00:02:38.919 is a lot of it, to figure out how organizations 00:02:38.919 --> 00:02:42.259 actually measure success, why they almost always 00:02:42.259 --> 00:02:45.240 fail at it, and the deep, almost existential 00:02:45.240 --> 00:02:48.729 reasons why we all get stuck. And I think we 00:02:48.729 --> 00:02:50.810 have to start with the alphabet soup. Oh, we 00:02:50.810 --> 00:02:53.069 have to. It's like a prerequisite. Because the 00:02:53.069 --> 00:02:55.210 business world seems to have a fetish for three 00:02:55.210 --> 00:02:57.490 -letter acronyms. It's unavoidable. I think it's 00:02:57.490 --> 00:02:59.710 a mechanism of gatekeeping, honestly. If you 00:02:59.710 --> 00:03:01.889 confuse people with enough acronyms, they have 00:03:01.889 --> 00:03:04.090 to hire you, the consultant, to explain them. 00:03:04.169 --> 00:03:06.530 That is a very cynical take, and I absolutely 00:03:06.530 --> 00:03:09.610 love it. So, okay, in the research, I'm seeing 00:03:09.610 --> 00:03:12.430 BPM, I'm seeing CPM, and I'm seeing EPM. And 00:03:12.430 --> 00:03:14.889 they seem to be used almost interchangeably. 00:03:15.389 --> 00:03:17.870 Help us out here. Are these different beasts 00:03:17.870 --> 00:03:20.969 or is this just branding? For all intents and 00:03:20.969 --> 00:03:22.949 purposes, for the person listening to this, they 00:03:22.949 --> 00:03:25.289 are the same beast wearing different hats. Okay. 00:03:25.789 --> 00:03:29.189 BPM is business performance management. CPM is 00:03:29.189 --> 00:03:32.129 corporate performance management. EPM is enterprise 00:03:32.129 --> 00:03:34.469 performance management. It's all the same idea. 00:03:34.669 --> 00:03:36.889 So why the different names then? Is it just, 00:03:36.990 --> 00:03:39.610 like you said, consultants trying to sell a new 00:03:39.610 --> 00:03:43.009 thing every few years? That's a huge part of 00:03:43.009 --> 00:03:46.009 it, yes. But it also depends on who is doing 00:03:46.009 --> 00:03:48.479 the talking. The source material points out that 00:03:48.479 --> 00:03:50.719 the industry analysts, the people who write the 00:03:50.719 --> 00:03:52.919 reports and the software vendors, they can't 00:03:52.919 --> 00:03:55.900 even agree on a standard term. So Gardner might 00:03:55.900 --> 00:03:58.819 call it one thing to differentiate their report 00:03:58.819 --> 00:04:01.360 from, say, IDC, who calls it something else entirely. 00:04:01.659 --> 00:04:04.120 But if you strip away the label, the function 00:04:04.120 --> 00:04:06.419 is identical. And what is that function? If we 00:04:06.419 --> 00:04:08.780 boil it down to its absolute essence, what is 00:04:08.780 --> 00:04:11.599 it? Alignment. That is the one word you need 00:04:11.599 --> 00:04:15.280 to remember from all of this. Alignment. It is 00:04:15.280 --> 00:04:18.360 a set of processes and, yes, analytical tools 00:04:18.360 --> 00:04:21.160 designed to ensure that the strategy actually 00:04:21.160 --> 00:04:23.500 connects to the execution. Strategy connects 00:04:23.500 --> 00:04:25.860 to execution. That sounds great on a PowerPoint 00:04:25.860 --> 00:04:28.939 slide, but let's make it more visceral. You used 00:04:28.939 --> 00:04:31.240 an analogy in our pre -show chat about the human 00:04:31.240 --> 00:04:33.240 body that I thought was perfect for this. Right. 00:04:33.300 --> 00:04:35.860 Think of an organization, any organization like 00:04:35.860 --> 00:04:39.639 a human body. The brain is the strategy, the 00:04:39.639 --> 00:04:42.579 C -suite. The brain says, I see a cup of coffee 00:04:42.579 --> 00:04:44.839 over there. I want to drink it. That's the goal, 00:04:44.939 --> 00:04:47.139 the mission statement. Exactly. We will be the 00:04:47.139 --> 00:04:49.540 leading consumer of coffee in this room. I can 00:04:49.540 --> 00:04:51.720 get behind that mission. Now, for that coffee 00:04:51.720 --> 00:04:54.220 to actually reach your mouth, the brain has to 00:04:54.220 --> 00:04:56.000 send a signal, right? It goes through the nervous 00:04:56.000 --> 00:04:58.199 system, down the spine, to the arm, to the hand. 00:04:58.339 --> 00:05:01.459 Okay. The hand has to extend. It has to grasp 00:05:01.459 --> 00:05:03.060 the cup with just the right amount of pressure, 00:05:03.199 --> 00:05:05.420 not too loose so you drop it, not too tight so 00:05:05.420 --> 00:05:07.899 you crush it, then lift it and bring it to the 00:05:07.899 --> 00:05:10.360 mouth. And BPM is the nervous system in this 00:05:10.360 --> 00:05:13.879 analogy. BPM is the nervous system. If you have 00:05:13.879 --> 00:05:16.720 some kind of neurological disorder, the brain 00:05:16.720 --> 00:05:19.120 might be screaming, pick up the cup. But the 00:05:19.120 --> 00:05:22.220 hand might just spasm. Or the hand might not 00:05:22.220 --> 00:05:25.060 move at all. Or, and we've all seen this in companies, 00:05:25.279 --> 00:05:27.680 the hand might just punch the cup right off the 00:05:27.680 --> 00:05:30.000 table. I feel like I have worked for several 00:05:30.000 --> 00:05:32.860 companies where the hand is definitely, definitely 00:05:32.860 --> 00:05:35.560 punching the cup off the table on a daily basis. 00:05:35.620 --> 00:05:38.110 We all have. And that's the thing. Most companies 00:05:38.110 --> 00:05:40.389 have a perfectly fine brain. They have a strategy. 00:05:40.449 --> 00:05:42.269 They know what they want to do. We want to increase 00:05:42.269 --> 00:05:45.110 sales. We want to have happy customers. It's 00:05:45.110 --> 00:05:47.089 not rocket science. Right. The goals are usually 00:05:47.089 --> 00:05:49.449 pretty clear. The problem is the nervous system 00:05:49.449 --> 00:05:52.129 is shot. The signal isn't getting to the hand. 00:05:52.610 --> 00:05:55.129 The hand, which is the employee sitting at their 00:05:55.129 --> 00:05:57.250 desk on a Tuesday morning, doesn't know what 00:05:57.250 --> 00:06:00.529 the brain wants. Or, and this is key, they are 00:06:00.529 --> 00:06:03.480 incentivized to do something else entirely. So 00:06:03.480 --> 00:06:05.420 BPM isn't just about checking the numbers at 00:06:05.420 --> 00:06:07.480 the end of the quarter. It's the actual wiring 00:06:07.480 --> 00:06:10.540 that connects the intention to the action. Precisely. 00:06:10.560 --> 00:06:12.800 And the source material highlights that this 00:06:12.800 --> 00:06:15.740 isn't a passive thing. It's very active. It involves 00:06:15.740 --> 00:06:17.740 setting standards. That's telling the hand this 00:06:17.740 --> 00:06:20.000 is what grasping the cup looks like. It involves 00:06:20.000 --> 00:06:22.500 timely feedback. That's telling the hand, hey, 00:06:22.579 --> 00:06:24.480 you're missing a bit to the left. And the rewards, 00:06:24.540 --> 00:06:26.519 I assume. And it involves rewards, giving the 00:06:26.519 --> 00:06:28.459 hand a little dopamine hit when it finally gets 00:06:28.459 --> 00:06:30.899 the coffee. That clarity is what really struck 00:06:30.899 --> 00:06:34.500 me. The text says it explicitly outlines the 00:06:34.500 --> 00:06:37.240 role of each individual. But let's be real for 00:06:37.240 --> 00:06:40.990 a second. In my experience, and I bet in the 00:06:40.990 --> 00:06:43.470 experience of a lot of our listeners, that explicit 00:06:43.470 --> 00:06:47.649 outline usually feels like a cage. It feels like 00:06:47.649 --> 00:06:50.470 micromanagement. So how would you distinguish 00:06:50.470 --> 00:06:54.930 between good, healthy alignment and just standing 00:06:54.930 --> 00:06:57.110 over someone's shoulder breathing heavily? That 00:06:57.110 --> 00:06:59.269 is the million -dollar question, isn't it? And 00:06:59.269 --> 00:07:02.009 it's where most, and I mean most, implementations 00:07:02.009 --> 00:07:04.769 of this stuff fail completely. Because if BPM 00:07:04.769 --> 00:07:07.550 is just about compliance, just checking boxes 00:07:07.550 --> 00:07:10.209 to say you did the thing, it's worthless. It's 00:07:10.209 --> 00:07:11.649 actually worse than worthless. It's destructive 00:07:11.649 --> 00:07:15.009 to morale. True BPM is about clarity of expectation, 00:07:15.449 --> 00:07:17.930 not micromanagement of method. Okay, give me 00:07:17.930 --> 00:07:20.329 an example. What's the difference? Micromanagement 00:07:20.329 --> 00:07:23.389 is, I want you to make exactly 50 cold calls 00:07:23.389 --> 00:07:26.629 using this exact script between 9 a .m. and 11 00:07:26.629 --> 00:07:29.250 a .m., and you must log them in this specific 00:07:29.250 --> 00:07:33.029 color -coded spreadsheet. Ugh. That's soul crushing. 00:07:33.149 --> 00:07:35.470 That's treating the human like a robot. Exactly. 00:07:35.750 --> 00:07:37.990 It's focusing on the activity. Now, alignment, 00:07:38.110 --> 00:07:40.810 good alignment is. Our big goal is to increase 00:07:40.810 --> 00:07:43.470 market share in this region by 10 percent. Your 00:07:43.470 --> 00:07:45.629 role in that big picture is to generate new. 00:07:46.029 --> 00:07:49.050 qualified leads how you do that is largely up 00:07:49.050 --> 00:07:51.449 to your skill and creativity but we will measure 00:07:51.449 --> 00:07:53.829 the outcome the number of qualified leads and 00:07:53.829 --> 00:07:55.490 we'll give you feedback on whether you're on 00:07:55.490 --> 00:07:58.230 track to help us hit that target ah okay so one 00:07:58.230 --> 00:08:00.170 focuses on the motion the other focuses on the 00:08:00.170 --> 00:08:02.110 result and crucially the connection to the big 00:08:02.110 --> 00:08:06.189 picture exactly but and here is the big pivot 00:08:06.189 --> 00:08:08.769 the thing that really surprised me even if you 00:08:08.769 --> 00:08:10.889 have clear goals and even if you have a good 00:08:10.889 --> 00:08:14.980 feedback loop things still go wrong All of the 00:08:14.980 --> 00:08:17.639 time. And this is where the research took a turn 00:08:17.639 --> 00:08:20.959 that I honestly did not expect. Yes. This was 00:08:20.959 --> 00:08:23.060 my favorite part of the source material. I was 00:08:23.060 --> 00:08:25.220 turning the page expecting to see a breakdown 00:08:25.220 --> 00:08:27.879 of, I don't know, EBITDA or some other financial 00:08:27.879 --> 00:08:30.740 metric. And suddenly I'm reading about ontology 00:08:30.740 --> 00:08:34.080 and worldviews. It felt like we stumbled out 00:08:34.080 --> 00:08:36.080 of the business school and into a philosophy 00:08:36.080 --> 00:08:38.679 lecture. We did. We absolutely did. We stumbled 00:08:38.679 --> 00:08:42.500 into the work of Werner Erhard, Michael C. Jensen. 00:08:42.909 --> 00:08:44.990 And their colleagues. And I think this is the 00:08:44.990 --> 00:08:47.610 most critical part of our entire deep dive today. 00:08:47.850 --> 00:08:50.429 Because they argue that the standard way we look 00:08:50.429 --> 00:08:52.629 at performance, that mechanical cause and effect 00:08:52.629 --> 00:08:55.669 model, is fundamentally flawed. Flawed is a polite 00:08:55.669 --> 00:08:57.850 way of putting it. They basically say we are 00:08:57.850 --> 00:09:00.029 all looking at the world through a keyhole and 00:09:00.029 --> 00:09:02.350 completely missing the entire door. That's a 00:09:02.350 --> 00:09:04.250 perfect way to describe it. So let's break this 00:09:04.250 --> 00:09:07.220 down. Usually, if performance is bad, if sales 00:09:07.220 --> 00:09:09.519 are down, what's the first thing we do? We look 00:09:09.519 --> 00:09:11.879 for a mechanical cause, a linear cause. We say, 00:09:11.940 --> 00:09:14.179 oh, the price must be too high, or the sync people 00:09:14.179 --> 00:09:17.000 are lazy, or our marketing slogan wasn't catchy 00:09:17.000 --> 00:09:20.580 enough. It's very simple. A causes B. But Eckhart 00:09:20.580 --> 00:09:22.960 and Jensen say there is a hidden source of performance 00:09:22.960 --> 00:09:25.440 that this kind of analysis can't even touch. 00:09:25.620 --> 00:09:29.159 They call it ontological constraints. Now, ontology 00:09:29.159 --> 00:09:31.960 is a big $10 word. Can we unpack that for a minute? 00:09:32.080 --> 00:09:34.940 We have to. Ontology is the philosophical study 00:09:34.940 --> 00:09:38.080 of the nature of being, of reality, what is real. 00:09:38.500 --> 00:09:40.659 So what Eckhart and Jensen are saying is that 00:09:40.659 --> 00:09:44.039 a person's worldview. The filter, the lens through 00:09:44.039 --> 00:09:47.379 which they see reality itself, acts as a constraint, 00:09:47.519 --> 00:09:50.379 like a governor on an engine, on what is even 00:09:50.379 --> 00:09:53.000 possible for them to do. Okay, that sounds really 00:09:53.000 --> 00:09:54.960 deep, but I need to ground this. Because right 00:09:54.960 --> 00:09:57.000 now it sounds like we need to start burning sage 00:09:57.000 --> 00:09:59.340 in the conference room to improve quarterly numbers. 00:09:59.600 --> 00:10:01.700 How does a worldview actually stop someone from 00:10:01.700 --> 00:10:03.840 doing their job? All right, let's construct a 00:10:03.840 --> 00:10:06.120 scenario. Let's say you have a mid -level manager 00:10:06.120 --> 00:10:09.960 named Steve. Steve is smart. He's capable. He 00:10:09.960 --> 00:10:11.799 knows the product inside and out. He knows the 00:10:11.799 --> 00:10:14.360 customers. Yeah. But his team's performance is 00:10:14.360 --> 00:10:19.159 just stagnant, flat. Okay. So the mechanical 00:10:19.159 --> 00:10:22.299 A causes B analysis would be send Steve to a 00:10:22.299 --> 00:10:24.700 management training seminar. Right. Or give Steve 00:10:24.700 --> 00:10:26.820 a better laptop. Yeah. Maybe increase Steve's 00:10:26.820 --> 00:10:28.879 bonus if he hits his targets. We'll incentivize 00:10:28.879 --> 00:10:30.799 him. We'll incentivize him. And you do all of 00:10:30.799 --> 00:10:33.840 that and Steve's performance doesn't budge, not 00:10:33.840 --> 00:10:37.279 one inch. Why? Because Steve has a worldview 00:10:37.279 --> 00:10:40.100 constraint. What's his worldview? Let's say deep 00:10:40.100 --> 00:10:42.700 down, based on his past 20 years of experience 00:10:42.700 --> 00:10:45.279 in corporate America, Steve holds a worldview 00:10:45.279 --> 00:10:48.279 that says this. Upper management is predatory. 00:10:48.620 --> 00:10:50.799 They don't actually care about the product or 00:10:50.799 --> 00:10:52.919 the customers. They only care about juicing the 00:10:52.919 --> 00:10:55.019 stock price to get their own bonuses. I think 00:10:55.019 --> 00:10:57.059 I know Steve. I think I am Steve on some days. 00:10:57.200 --> 00:10:59.919 Many of us are. But look at the practical consequence 00:10:59.919 --> 00:11:02.419 of that worldview. If that is Steve's fundamental 00:11:02.419 --> 00:11:05.259 reality, how does he interpret a new strategic 00:11:05.259 --> 00:11:07.820 initiative from the top? He immediately sees 00:11:07.820 --> 00:11:11.120 it as a scam or a trap or just the flavor of 00:11:11.120 --> 00:11:13.779 the month. Exactly. So if his boss comes into 00:11:13.779 --> 00:11:15.659 the room all excited and says, we have this amazing 00:11:15.659 --> 00:11:17.740 new opportunity to expand into a new market. 00:11:18.100 --> 00:11:21.120 What does Steve hear? He hears, here comes another 00:11:21.120 --> 00:11:24.100 half -baked scheme to squeeze more work out of 00:11:24.100 --> 00:11:26.639 us for the same pay so the CEO can buy a new 00:11:26.639 --> 00:11:29.720 boat. Right. And so what does he do? He disengages. 00:11:29.899 --> 00:11:31.759 He does more than that, doesn't he? He doesn't 00:11:31.759 --> 00:11:36.120 just disengage. He... actively though maybe subconsciously 00:11:36.120 --> 00:11:39.500 resists it. He complies maliciously. He does 00:11:39.500 --> 00:11:42.039 the absolute bare minimum required to not get 00:11:42.039 --> 00:11:45.210 fired. His performance is capped. Not because 00:11:45.210 --> 00:11:47.590 he lacks the skill, but because his worldview 00:11:47.590 --> 00:11:49.610 makes high performance literally impossible. 00:11:50.009 --> 00:11:52.250 You can't perform excellently in a system you 00:11:52.250 --> 00:11:54.309 believe is fundamentally corrupt or pointless. 00:11:54.590 --> 00:11:57.289 You can't. Your brain won't let you. It's a protective 00:11:57.289 --> 00:12:00.169 mechanism. Yeah. And that is so powerful because 00:12:00.169 --> 00:12:02.289 it means all the standard operating procedures 00:12:02.289 --> 00:12:05.129 and key performance indicators in the world don't 00:12:05.129 --> 00:12:06.710 matter a single bit if you haven't addressed 00:12:06.710 --> 00:12:08.940 the lens the person is looking through. Wow. 00:12:09.200 --> 00:12:11.960 Okay. And this leads directly to their second 00:12:11.960 --> 00:12:14.700 major point, which is about language. But not 00:12:14.700 --> 00:12:17.159 just the words we say out loud. They focus on 00:12:17.159 --> 00:12:20.279 the unsaid. The unsaid. This part of the research 00:12:20.279 --> 00:12:22.259 gave me chills reading it because it's just so 00:12:22.259 --> 00:12:24.419 true. It's the conversation that happens with 00:12:24.419 --> 00:12:25.980 your eyes across the conference table. It's the 00:12:25.980 --> 00:12:29.000 meaning of the silence in the room after someone 00:12:29.000 --> 00:12:30.840 says something. It's the elephant in the room 00:12:30.840 --> 00:12:32.940 that everyone is quietly feeding peanuts to, 00:12:33.059 --> 00:12:36.139 but nobody will acknowledge is there. Yeah. Paint 00:12:36.139 --> 00:12:40.399 me a picture of the unsaid in action in a business 00:12:40.399 --> 00:12:43.899 setting. Okay. Imagine a big project launch meeting. 00:12:44.259 --> 00:12:46.899 The vice president is up at the front presenting 00:12:46.899 --> 00:12:49.519 a timeline that is obviously patently impossible. 00:12:50.159 --> 00:12:52.460 We are going to launch this fully integrated 00:12:52.460 --> 00:12:56.059 global platform in three months. Right. Everyone 00:12:56.059 --> 00:12:58.460 in that room is an expert. They are senior engineers, 00:12:58.659 --> 00:13:02.200 project managers. They all know logically and 00:13:02.200 --> 00:13:05.220 with certainty that this kind of project. takes 00:13:05.220 --> 00:13:08.179 six months minimum. But nobody says it. Nobody 00:13:08.179 --> 00:13:10.740 says a word. Maybe because they're afraid of 00:13:10.740 --> 00:13:13.200 the VP. Maybe because the last guy who spoke 00:13:13.200 --> 00:13:16.220 up and pointed out reality got sidelined. So 00:13:16.220 --> 00:13:18.460 what do they do? They all nod. They say things 00:13:18.460 --> 00:13:20.840 like, yes, an exciting challenge. But the unsaid 00:13:20.840 --> 00:13:23.340 conversation is screaming in everyone's head. 00:13:23.519 --> 00:13:25.220 It's screaming. And that unsaid conversation 00:13:25.220 --> 00:13:28.240 is, this is going to fail. We are all going to 00:13:28.240 --> 00:13:30.659 miss this deadline. This is a death march. And 00:13:30.659 --> 00:13:32.929 we're all just pretending it isn't. And that 00:13:32.929 --> 00:13:36.149 unsaid conversation becomes the actual reality 00:13:36.149 --> 00:13:38.230 they are operating in, not the one on the PowerPoint 00:13:38.230 --> 00:13:40.269 slide. That's the critical insight. Correct. 00:13:40.429 --> 00:13:42.909 Yeah. And because their actual reality is this 00:13:42.909 --> 00:13:45.429 is a death march. How do they perform? They don't 00:13:45.429 --> 00:13:47.610 innovate. They don't take risks. They cover their 00:13:47.610 --> 00:13:50.149 asses. They document every single email so they 00:13:50.149 --> 00:13:51.909 can't be blamed when the whole thing inevitably 00:13:51.909 --> 00:13:55.049 explodes. So the unsaid drags the performance 00:13:55.049 --> 00:13:57.750 of the entire team down like a lead anchor. Yes. 00:13:57.830 --> 00:14:00.730 And so if you apply the Earhart and Jensen approach. 00:14:01.850 --> 00:14:04.230 A good manager isn't someone who just makes a 00:14:04.230 --> 00:14:06.409 better timeline on a spreadsheet. A good manager 00:14:06.409 --> 00:14:09.110 is someone who can make the unsaid said. How 00:14:09.110 --> 00:14:11.710 do you do that? It's a manager who has the courage 00:14:11.710 --> 00:14:14.070 to stop the meeting and say, hang on a second, 00:14:14.169 --> 00:14:16.529 I'm sensing some hesitation here. The energy 00:14:16.529 --> 00:14:19.590 in the room just dropped when I said three months. 00:14:20.710 --> 00:14:22.870 What is the conversation you guys are all having 00:14:22.870 --> 00:14:25.009 in your heads right now that you're not saying 00:14:25.009 --> 00:14:27.690 out loud? That takes an incredible amount of 00:14:27.690 --> 00:14:31.659 guts. And trust. It does. But that's what real 00:14:31.659 --> 00:14:33.620 performance management is at a philosophical 00:14:33.620 --> 00:14:37.139 level. It's not about forms. It's about clearing 00:14:37.139 --> 00:14:40.019 the interference, the ontological constraints 00:14:40.019 --> 00:14:42.919 and the unsaid toxins so that the nervous system 00:14:42.919 --> 00:14:46.049 can actually work properly. I love that. It takes 00:14:46.049 --> 00:14:48.669 it from this world of cold, hard mechanics to 00:14:48.669 --> 00:14:50.590 something more like therapeutics. It's about 00:14:50.590 --> 00:14:53.090 organizational health. It is. But we have to 00:14:53.090 --> 00:14:55.049 zoom out a little because while this absolutely 00:14:55.049 --> 00:14:57.509 applies to Stab and his cubicle, the source material 00:14:57.509 --> 00:15:00.090 made a very clear point to show that this isn't 00:15:00.090 --> 00:15:02.370 just for corporate offices and skyscrapers. No, 00:15:02.370 --> 00:15:04.809 and that's a common misconception. We hear business 00:15:04.809 --> 00:15:06.970 performance and we immediately think selling 00:15:06.970 --> 00:15:10.149 widgets for a profit. But the principles of alignment 00:15:10.149 --> 00:15:12.730 and worldview apply anywhere human beings are 00:15:12.730 --> 00:15:14.809 trying to achieve a common goal. The source brought 00:15:14.809 --> 00:15:17.009 up two really interesting examples that felt 00:15:17.009 --> 00:15:19.669 at first like they were from left field, health 00:15:19.669 --> 00:15:22.070 care and agriculture. Right. Let's start with 00:15:22.070 --> 00:15:25.750 agriculture, specifically the research institutes 00:15:25.750 --> 00:15:27.710 in developing sectors, because that felt like 00:15:27.710 --> 00:15:30.029 such a hard pivot from talking about ontology. 00:15:30.309 --> 00:15:32.450 It seems like a pivot on the surface, but it's 00:15:32.450 --> 00:15:34.549 actually the exact same problem of alignment, 00:15:34.830 --> 00:15:37.730 just in a much more complex environment. Think 00:15:37.730 --> 00:15:40.230 about an agricultural research institute. What 00:15:40.230 --> 00:15:42.610 is their product? What is their goal? Better 00:15:42.610 --> 00:15:46.309 seeds. Research papers. It's fuzzy. It's incredibly 00:15:46.309 --> 00:15:48.549 messy, right? If you are a sales company, your 00:15:48.549 --> 00:15:51.710 primary metric is profit. It's easy. It's a number. 00:15:51.870 --> 00:15:54.529 But if you are a research institute funded by 00:15:54.529 --> 00:15:56.710 the government to improve food security in a 00:15:56.710 --> 00:15:59.690 region, your metrics are, well, they're incredibly 00:15:59.690 --> 00:16:01.909 complex. The source used the phrase societal 00:16:01.909 --> 00:16:04.509 contribution. How on earth do you put societal 00:16:04.509 --> 00:16:07.549 contribution into a spreadsheet and track it 00:16:07.549 --> 00:16:10.710 weekly? You can't. Not directly. And that's the 00:16:10.710 --> 00:16:13.269 challenge. Let's say your institute develops 00:16:13.269 --> 00:16:16.309 a new strain of rice that is more resistant to 00:16:16.309 --> 00:16:18.710 drought. Great. You can measure the scientific 00:16:18.710 --> 00:16:20.889 output. We publish five peer -reviewed papers. 00:16:21.090 --> 00:16:24.049 That's the academic metric. You can measure commercialization. 00:16:24.250 --> 00:16:27.509 We sold $1 million worth of seeds to distributors. 00:16:27.629 --> 00:16:30.330 That's the financial metric. But the real goal, 00:16:30.429 --> 00:16:34.850 the mission, is did fewer people starve? Or did 00:16:34.850 --> 00:16:37.789 local farmers' incomes... stabilize over the 00:16:37.789 --> 00:16:39.610 long term. And those are lagging indicators. 00:16:39.889 --> 00:16:41.830 Those results might not show up for five or even 00:16:41.830 --> 00:16:44.970 10 years. Exactly. So how do you manage the performance 00:16:44.970 --> 00:16:47.649 of a scientist today for a result that only happens 00:16:47.649 --> 00:16:50.450 in a decade? The source talks about the need 00:16:50.450 --> 00:16:52.909 for complex drivers. You can't just look at the 00:16:52.909 --> 00:16:55.409 final outcome. You have to look at leading indicators. 00:16:55.629 --> 00:16:58.509 Like what? Like collaborations. Are the scientists 00:16:58.509 --> 00:17:00.710 in the lab actually talking to the farmers in 00:17:00.710 --> 00:17:02.769 the field? Are they working with the local supply 00:17:02.769 --> 00:17:04.910 chain distributors? Are they building a system? 00:17:05.029 --> 00:17:07.029 Or are they just publishing papers in a vacuum? 00:17:07.289 --> 00:17:09.410 It also mentions something called a smart lab 00:17:09.410 --> 00:17:11.730 bubble, which sounds like a title for a sci -fi 00:17:11.730 --> 00:17:14.240 movie. It does, doesn't it? Yeah. But it's really 00:17:14.240 --> 00:17:16.319 about the modernization of these institutes. 00:17:16.339 --> 00:17:19.400 In a so -called smart lab bubble, you are using 00:17:19.400 --> 00:17:23.079 data -driven, real -time systems. It's not just 00:17:23.079 --> 00:17:24.740 a guy with a clipboard and a notebook walking 00:17:24.740 --> 00:17:27.160 through a field anymore. It's connected sensors 00:17:27.160 --> 00:17:30.140 in the soil measuring moisture. It's real -time 00:17:30.140 --> 00:17:32.539 genomic data from the plants. It's predictive 00:17:32.539 --> 00:17:34.599 modeling for weather patterns. It's about getting 00:17:34.599 --> 00:17:37.730 faster feedback from the system. So even in the 00:17:37.730 --> 00:17:40.670 dirt, literally in the field, BPM is there. It's 00:17:40.670 --> 00:17:42.250 just using different sensors and a different 00:17:42.250 --> 00:17:44.710 timeline. That's it. Exactly. And then you have 00:17:44.710 --> 00:17:46.710 health care. Yeah. And the stakes there are obviously 00:17:46.710 --> 00:17:49.730 even higher. If a salesperson fails to meet their 00:17:49.730 --> 00:17:52.450 quota, the company loses a bit of money. If a 00:17:52.450 --> 00:17:54.869 hospital's performance management system fails, 00:17:55.190 --> 00:17:59.089 people die. The alignment there has to be absolute. 00:17:59.250 --> 00:18:02.509 There's no room for error. And yet it's one of 00:18:02.509 --> 00:18:04.109 the hardest places to implement it correctly. 00:18:04.980 --> 00:18:06.920 Because of the tension between the individual 00:18:06.920 --> 00:18:09.799 and the system. A surgeon, for instance, might 00:18:09.799 --> 00:18:12.519 be performing perfectly. The surgery itself was 00:18:12.519 --> 00:18:15.079 a technical success. But if the post -op nursing 00:18:15.079 --> 00:18:18.039 care is understaffed because of budget cuts and 00:18:18.039 --> 00:18:20.579 the patient gets a preventable infection and 00:18:20.579 --> 00:18:23.839 dies, was the outcome a success or a failure? 00:18:24.019 --> 00:18:25.680 It was a failure of the system. It was a failure 00:18:25.680 --> 00:18:27.200 of the system. Yeah. And that brings us right 00:18:27.200 --> 00:18:30.069 to the team dynamic. Because whether it's a surgical 00:18:30.069 --> 00:18:32.230 team in a hospital or a sales team on a floor, 00:18:32.470 --> 00:18:36.589 you are rarely, if ever, working alone. And the 00:18:36.589 --> 00:18:38.950 research had a very specific and stark warning 00:18:38.950 --> 00:18:41.509 about what it called the teamwork paradox. The 00:18:41.509 --> 00:18:44.430 paradox is this. You want the team to win. That's 00:18:44.430 --> 00:18:47.069 the goal. But most performance management systems 00:18:47.069 --> 00:18:49.430 that we see in the wild are designed to judge 00:18:49.430 --> 00:18:51.430 and rank the individual. We've all seen this. 00:18:51.549 --> 00:18:53.970 The most famous or infamous example is stack 00:18:53.970 --> 00:18:56.470 ranking or the vitality curve. Yeah, that was 00:18:56.470 --> 00:18:59.549 Jack Welch at GE, right? He made it famous. The 00:18:59.549 --> 00:19:03.630 rank and yank. The idea is you rank all your 00:19:03.630 --> 00:19:06.589 employees on a curve from one to 100. The top 00:19:06.589 --> 00:19:09.569 20 percent get a big bonus. The middle 70 percent 00:19:09.569 --> 00:19:12.170 are fine and the bottom 10 percent get fired 00:19:12.170 --> 00:19:15.309 every year. And on paper, you know, to a certain 00:19:15.309 --> 00:19:18.690 type of cold hearted, rational economist, that 00:19:18.690 --> 00:19:21.009 makes a kind of brutal sense. Survival of the 00:19:21.009 --> 00:19:23.769 fittest. You cull the weak members of the herd 00:19:23.769 --> 00:19:26.190 and the herd gets stronger. But human beings 00:19:26.190 --> 00:19:29.920 aren't wildebeest. We are complex social creatures 00:19:29.920 --> 00:19:33.180 driven by emotion and psychology. If you tell 00:19:33.180 --> 00:19:36.180 me that my survival, my ability to pay my mortgage, 00:19:36.380 --> 00:19:38.960 depends on being ranked higher than you, what 00:19:38.960 --> 00:19:41.160 is the first thing I am going to do? You're going 00:19:41.160 --> 00:19:43.480 to stop helping me immediately. Worse than that, 00:19:43.559 --> 00:19:46.380 you might actively sabotage me. Right. If I figure 00:19:46.380 --> 00:19:48.559 out a better, more efficient way to do my job, 00:19:48.740 --> 00:19:50.259 am I going to share it with you and the rest 00:19:50.259 --> 00:19:52.180 of the team? Absolutely not. That's your secret 00:19:52.180 --> 00:19:54.230 weapon. Of course not. Because if I share it, 00:19:54.230 --> 00:19:55.549 you might get better, the whole team might get 00:19:55.549 --> 00:19:57.309 better, and then you might knock me down into 00:19:57.309 --> 00:19:59.950 that bottom 10%. So the system that was designed 00:19:59.950 --> 00:20:02.910 to improve overall performance actually caps 00:20:02.910 --> 00:20:05.789 performance because it destroys the flow of information 00:20:05.789 --> 00:20:08.430 and collaboration. It creates a new ontological 00:20:08.430 --> 00:20:12.369 constraint of fear and distrust. The source material 00:20:12.369 --> 00:20:15.009 is very, very clear on this point. Effective 00:20:15.009 --> 00:20:19.029 BPM must foster teamwork, cooperation, and trust. 00:20:19.609 --> 00:20:21.769 If your metrics turn your office into the Hunger 00:20:21.769 --> 00:20:24.769 Games, you have already lost. The game is over. 00:20:24.950 --> 00:20:27.329 So how do we do it right? If we can't just fire 00:20:27.329 --> 00:20:29.970 the bottom 10%, how do we actually measure things 00:20:29.970 --> 00:20:32.630 and improve performance? The source gets into 00:20:32.630 --> 00:20:35.009 the OD perspective. That's organizational development. 00:20:35.289 --> 00:20:38.009 Right. And OD gives us a formula that is, on 00:20:38.009 --> 00:20:40.779 the surface, deceptively simple. Performance 00:20:40.779 --> 00:20:43.779 equals actual results versus desired results. 00:20:44.039 --> 00:20:46.799 Okay. Simple enough. Actual versus desired. The 00:20:46.799 --> 00:20:49.319 gap, the space between those two things, is what 00:20:49.319 --> 00:20:51.420 they call the performance improvement zone. I 00:20:51.420 --> 00:20:53.640 like that branding. It sounds a lot better and 00:20:53.640 --> 00:20:55.579 more optimistic than calling it the failure gap. 00:20:55.839 --> 00:20:58.059 It is. It implies a growth mindset. It implies 00:20:58.059 --> 00:21:00.519 that the gap isn't a moral feeling. It's an opportunity. 00:21:00.779 --> 00:21:03.440 It's closable. And the Office of Personnel Management, 00:21:03.619 --> 00:21:07.400 the OPM, lays out a five -step cycle to work 00:21:07.400 --> 00:21:10.660 within that zone. and close that gap and i want 00:21:10.660 --> 00:21:12.619 to walk through these because in my experience 00:21:12.619 --> 00:21:15.259 most companies only do two of them and they do 00:21:15.259 --> 00:21:17.680 them poorly okay hit me what's step one step 00:21:17.680 --> 00:21:21.400 one plan plan the work and set expectations okay 00:21:21.400 --> 00:21:24.319 already we have a problem because in my experience 00:21:24.319 --> 00:21:26.740 planning is usually just someone handing you 00:21:26.740 --> 00:21:28.839 a quota and saying here's your number good luck 00:21:28.839 --> 00:21:34.079 that's not a plan that's a wish a hope real planning 00:21:34.079 --> 00:21:36.160 means setting expectations that are verified 00:21:36.160 --> 00:21:39.089 and mutually understood Does the employee actually 00:21:39.089 --> 00:21:41.130 understand how their work contributes to the 00:21:41.130 --> 00:21:44.349 goal? Do they have the resources they need? Is 00:21:44.349 --> 00:21:46.769 the goal even realistic? That's planning. Okay, 00:21:46.849 --> 00:21:49.710 that makes sense. What's step two? Monitor. And 00:21:49.710 --> 00:21:51.609 this doesn't mean spying on your employees with 00:21:51.609 --> 00:21:54.210 keystroke loggers. It means looking at the data 00:21:54.210 --> 00:21:56.089 continuously so you can make intelligent course 00:21:56.089 --> 00:21:58.410 corrections along the way, not just at the end 00:21:58.410 --> 00:22:01.410 of the year. Step three. Develop. This is the 00:22:01.410 --> 00:22:03.329 one that gets skipped the most. Almost always. 00:22:03.890 --> 00:22:06.509 Explain what you mean by develop. Okay, so you've 00:22:06.509 --> 00:22:09.380 planned. And you're monitoring. You see a gap 00:22:09.380 --> 00:22:11.480 opening up. You see Steve is falling behind on 00:22:11.480 --> 00:22:14.480 his target. The default corporate reaction is 00:22:14.480 --> 00:22:16.960 to put Steve on a performance improvement plan, 00:22:17.099 --> 00:22:19.839 which is just code for we're about to fire you. 00:22:19.980 --> 00:22:23.160 Right. It's a punitive step. It is. The develop 00:22:23.160 --> 00:22:26.160 step says your first job isn't to yell at Steve. 00:22:26.559 --> 00:22:29.680 It's to develop Steve. It's to sit down with 00:22:29.680 --> 00:22:32.059 him and say, hey, I see a gap here. Let's figure 00:22:32.059 --> 00:22:33.839 this out together. Do you need more training? 00:22:34.190 --> 00:22:36.849 Do you need a mentor? Is there a bureaucratic 00:22:36.849 --> 00:22:39.430 blockage that I, as your manager, can remove 00:22:39.430 --> 00:22:42.210 for you? It's taking shared responsibility for 00:22:42.210 --> 00:22:44.190 the employee's capacity. That requires a manager 00:22:44.190 --> 00:22:46.210 who actually wants to manage and lead people, 00:22:46.329 --> 00:22:48.930 not just someone who is good at filling out spreadsheets. 00:22:48.990 --> 00:22:51.329 That is the whole ballgame, correct. After that, 00:22:51.410 --> 00:22:54.230 step four is rate the actual formal evaluation. 00:22:54.509 --> 00:22:58.029 And step five is reward. Now, on the reward side 00:22:58.029 --> 00:23:01.329 and the rate side, we need metrics. We need something 00:23:01.329 --> 00:23:03.910 to measure, and the source takes a really useful 00:23:03.910 --> 00:23:06.349 study by Richard and his colleagues that outlines 00:23:06.349 --> 00:23:08.829 three key pillars of organizational performance. 00:23:09.549 --> 00:23:11.609 I found this helpful because usually we tend 00:23:11.609 --> 00:23:14.390 to focus on just one of them. Yes, the three 00:23:14.390 --> 00:23:17.630 pillars. They are financial performance, product 00:23:17.630 --> 00:23:20.789 market performance, and shareholder return. Okay, 00:23:20.829 --> 00:23:22.289 let's break this down. Financial performance 00:23:22.289 --> 00:23:24.670 is the obvious one. Profit, return on investment, 00:23:24.829 --> 00:23:27.250 that kind of thing. Right. Simple question. Did 00:23:27.250 --> 00:23:29.910 we make money? Product market performance is... 00:23:30.170 --> 00:23:32.410 What exactly? That's your sales growth and your 00:23:32.410 --> 00:23:35.490 market share. Did we get bigger? Did we take 00:23:35.490 --> 00:23:38.789 ground from the competitor? And finally, shareholder 00:23:38.789 --> 00:23:41.170 return. That's things like total shareholder 00:23:41.170 --> 00:23:44.470 return, economic value added. Basically, did 00:23:44.470 --> 00:23:47.349 the stock go up? Do we create value for the owners? 00:23:47.569 --> 00:23:49.990 So here's my question. Why do we need to separate 00:23:49.990 --> 00:23:52.049 these three? Aren't they all kind of the same 00:23:52.049 --> 00:23:54.029 thing? If I make a ton of money, doesn't my stock 00:23:54.029 --> 00:23:56.680 go up and my market share naturally grow? Not 00:23:56.680 --> 00:23:59.940 necessarily. And this is where bad BPM, a bad 00:23:59.940 --> 00:24:02.599 incentive structure, can absolutely destroy a 00:24:02.599 --> 00:24:04.980 company from the inside out. Imagine you are 00:24:04.980 --> 00:24:08.380 a CEO and your annual bonus is tied only to pillar 00:24:08.380 --> 00:24:11.339 number one, financial performance, specifically 00:24:11.339 --> 00:24:14.500 this year's profit margin. Okay. My only job 00:24:14.500 --> 00:24:16.960 is to maximize profit right now. How do you do 00:24:16.960 --> 00:24:19.130 that? What are the easiest levers to pull? I 00:24:19.130 --> 00:24:22.109 cut costs to the bone. I fire the entire research 00:24:22.109 --> 00:24:24.990 and development department. I switch to cheaper, 00:24:25.069 --> 00:24:27.890 lower quality materials for our product. I stop 00:24:27.890 --> 00:24:31.029 all advertising and marketing spend. Boom. Your 00:24:31.029 --> 00:24:33.609 costs plummet. Your revenue stays the same for 00:24:33.609 --> 00:24:35.950 a few months out of inertia. Your profit margin 00:24:35.950 --> 00:24:38.990 looks absolutely amazing. You get a massive bonus. 00:24:39.170 --> 00:24:42.019 You're on the cover of a magazine. But what happens 00:24:42.019 --> 00:24:44.759 to the other two pillars? My product market performance 00:24:44.759 --> 00:24:47.200 is about to fall off a cliff because my product 00:24:47.200 --> 00:24:49.819 now sucks and nobody knows about it anyway. Right. 00:24:49.900 --> 00:24:52.960 And eventually my shareholder return is going 00:24:52.960 --> 00:24:55.519 to crash and burn because Wall Street realizes 00:24:55.519 --> 00:24:58.740 the company has no future and no innovation in 00:24:58.740 --> 00:25:01.380 the pipeline. Exactly. You robbed Peter to pay 00:25:01.380 --> 00:25:04.059 Paul. Wow. You sacrificed the long term for the 00:25:04.059 --> 00:25:07.309 short term. A robust performance management system 00:25:07.309 --> 00:25:09.789 forces you to balance these three pillars. It 00:25:09.789 --> 00:25:12.410 creates a healthy tension. It forces the leadership 00:25:12.410 --> 00:25:15.750 to say, yes, we want to be profitable, but T, 00:25:15.890 --> 00:25:17.630 not at the expense of our future market share. 00:25:17.809 --> 00:25:19.869 It's a three -legged stool. If you kick out one 00:25:19.869 --> 00:25:22.049 of the legs, the whole thing falls over. That's 00:25:22.049 --> 00:25:24.470 a perfect analogy. And that leads us directly 00:25:24.470 --> 00:25:28.069 into the dark side. We've talked a lot about 00:25:28.069 --> 00:25:31.509 how this should work in a perfect world. But 00:25:31.509 --> 00:25:34.470 the research is also full of cautionary tales 00:25:34.470 --> 00:25:37.829 about how it fails in the real world. And the 00:25:37.829 --> 00:25:39.950 single biggest failure point, the one that comes 00:25:39.950 --> 00:25:41.910 up again and again, is something we touched on 00:25:41.910 --> 00:25:44.710 earlier. Fairness. The fairness factor. Humans 00:25:44.710 --> 00:25:48.390 have an innate, primal, almost biological sense 00:25:48.390 --> 00:25:51.549 of fairness. You see it in toddlers sharing toys. 00:25:51.670 --> 00:25:53.809 You even see it in monkeys. There's a famous 00:25:53.809 --> 00:25:56.430 experiment where if a monkey sees another monkey 00:25:56.430 --> 00:25:58.950 get a delicious grape for doing nothing, well, 00:25:58.990 --> 00:26:01.450 he gets a boring rock for doing a trick. He won't 00:26:01.450 --> 00:26:03.690 just be sad. He will get angry. He will throw 00:26:03.690 --> 00:26:05.630 the rock at the researcher. I have definitely 00:26:05.630 --> 00:26:07.849 wanted to throw rocks at researchers or, you 00:26:07.849 --> 00:26:10.289 know, bosses in the past. We all have. If employees 00:26:10.289 --> 00:26:14.140 perceive this system as fun— If they think the 00:26:14.140 --> 00:26:16.240 metrics are rigged, the boss just plays favorites, 00:26:16.420 --> 00:26:19.279 the goals are impossible anyway, they don't just 00:26:19.279 --> 00:26:21.819 perform poorly. They become actively disengaged. 00:26:21.839 --> 00:26:24.019 They become toxic. They try to break the system. 00:26:24.160 --> 00:26:26.039 And another trap that the source mentioned was 00:26:26.039 --> 00:26:28.799 the compliance trap. This is when BPM devolves 00:26:28.799 --> 00:26:32.119 into pure bureaucracy. It becomes a ritual devoid 00:26:32.119 --> 00:26:34.619 of meaning. I have to fill out these stupid forms 00:26:34.619 --> 00:26:37.099 by Friday so HR doesn't send me an angry email. 00:26:37.519 --> 00:26:40.099 I feel like 90 % of corporate performance reviews 00:26:40.099 --> 00:26:42.759 in America today are exactly that. It's a ritual. 00:26:42.819 --> 00:26:45.160 There's no real conversation. There's no development. 00:26:45.339 --> 00:26:47.640 It is. And the moment it becomes a ritual, it 00:26:47.640 --> 00:26:50.279 loses all of its power. The alignment is completely 00:26:50.279 --> 00:26:53.460 broken because the goal shifts from how do we 00:26:53.460 --> 00:26:56.420 improve performance to how do we complete this 00:26:56.420 --> 00:26:58.539 form as quickly as possible. The source also 00:26:58.539 --> 00:27:01.400 mentioned 360 -degree feedback as being a kind 00:27:01.400 --> 00:27:04.500 of double -edged sword. It is. It's a great example 00:27:04.500 --> 00:27:07.279 of a tool that could be incredibly powerful or 00:27:07.279 --> 00:27:09.240 incredibly destructive, depending on the environment 00:27:09.240 --> 00:27:11.660 you use it in. So the idea is good, right? Getting 00:27:11.660 --> 00:27:13.720 feedback not just from your boss, but from your 00:27:13.720 --> 00:27:16.240 peers and the people who report to you, it gives 00:27:16.240 --> 00:27:19.400 a full 360 -degree picture. Theoretically, it's 00:27:19.400 --> 00:27:23.279 fantastic. But in practice, if you have a low 00:27:23.279 --> 00:27:25.680 -trust culture, a political culture, it just 00:27:25.680 --> 00:27:27.559 becomes another weapon. I'm going to trash you 00:27:27.559 --> 00:27:29.400 in your 360 review because you didn't agree with 00:27:29.400 --> 00:27:31.859 my idea in that meeting last week. Or the opposite. 00:27:31.920 --> 00:27:34.319 I'll scratch your back if you scratch mine. It 00:27:34.319 --> 00:27:37.380 becomes a popularity contest or a tool for political 00:27:37.380 --> 00:27:40.160 maneuvering. Again, all comes back to the underlying 00:27:40.160 --> 00:27:44.160 culture. You cannot install a fancy 360 feedback 00:27:44.160 --> 00:27:47.680 software system on top of a toxic, low -trust 00:27:47.680 --> 00:27:50.460 culture and expect it to magically fix the culture. 00:27:50.640 --> 00:27:53.079 The culture will just corrupt the system. The 00:27:53.079 --> 00:27:55.000 culture will always eat the system for breakfast. 00:27:55.279 --> 00:27:58.410 Every time. This brings us to the final major 00:27:58.410 --> 00:28:01.069 misconception. And it's a big one. The technology 00:28:01.069 --> 00:28:05.910 myth. Because when I hear BPM or CPM, my mind 00:28:05.910 --> 00:28:09.069 immediately pictures software. I picture a dashboard 00:28:09.069 --> 00:28:11.730 on a giant screen in a boardroom with red and 00:28:11.730 --> 00:28:13.809 green and yellow lights. And the software vendors 00:28:13.809 --> 00:28:15.890 of the world love that you picture that. They 00:28:15.890 --> 00:28:18.009 spend billions and billions of dollars on marketing 00:28:18.009 --> 00:28:20.130 to make you believe that BPM is the software. 00:28:20.309 --> 00:28:22.569 That if you just buy their product, all your 00:28:22.569 --> 00:28:25.069 problems will be solved. But the source says... 00:28:25.069 --> 00:28:27.859 What? The source says explicitly, software is 00:28:27.859 --> 00:28:29.940 not essential to the definition of business performance 00:28:29.940 --> 00:28:33.339 management. That is wild to me. It seems so counterintuitive 00:28:33.339 --> 00:28:36.619 in our tech -obsessed world. I know. But it's 00:28:36.619 --> 00:28:39.539 true. You can do world -class effective business 00:28:39.539 --> 00:28:42.299 performance management with a napkin and a good 00:28:42.299 --> 00:28:46.240 conversation. If you and I sit down and I clearly 00:28:46.240 --> 00:28:49.099 explain the goal. and we agree on your role in 00:28:49.099 --> 00:28:51.720 achieving it, and I give you honest, timely feedback, 00:28:51.839 --> 00:28:54.779 and we trust each other, that is world -class 00:28:54.779 --> 00:28:57.460 BPM right there. And the fancy software is just 00:28:57.460 --> 00:29:00.420 a tool to help scale that conversation. Ideally, 00:29:00.519 --> 00:29:03.460 yes. In the best case, it's a tool to facilitate 00:29:03.460 --> 00:29:05.920 that. But what often happens is the software 00:29:05.920 --> 00:29:08.720 becomes a distraction. We obsess over the dashboard, 00:29:08.839 --> 00:29:10.839 and we forget to have the human conversation. 00:29:11.099 --> 00:29:13.750 We confuse the map for the territory. There's 00:29:13.750 --> 00:29:15.529 an interesting historical note in there about 00:29:15.529 --> 00:29:18.130 Gartner, you know, the big tech analyst firm, 00:29:18.210 --> 00:29:20.089 and how they changed the definition of all this 00:29:20.089 --> 00:29:23.309 back in 2017. Yes. They actually stopped using 00:29:23.309 --> 00:29:25.630 the term CPM, corporate performance management, 00:29:25.809 --> 00:29:28.609 as a formal category. They blew it up and split 00:29:28.609 --> 00:29:30.950 it into two new things, financial planning and 00:29:30.950 --> 00:29:35.029 analysis, or FP &A, and financial close. Why 00:29:35.029 --> 00:29:36.230 does that matter? It sounds like they're just 00:29:36.230 --> 00:29:37.890 splitting hairs moving the deck chairs around. 00:29:38.130 --> 00:29:41.369 It matters because it signals a fundamental shift 00:29:41.369 --> 00:29:44.109 in thinking. It separates the looking forward 00:29:44.109 --> 00:29:46.890 from the looking backward. Okay. Explain that. 00:29:47.089 --> 00:29:49.529 Financial close is accounting. It's closing the 00:29:49.529 --> 00:29:50.769 books at the end of the quarter. It's making 00:29:50.769 --> 00:29:53.390 sure everything balances. It's history. It's 00:29:53.390 --> 00:29:55.930 reporting on what happened. Like FP &A. FP &A 00:29:55.930 --> 00:29:58.069 is planning. It's strategy. It's forecasting. 00:29:58.410 --> 00:30:01.789 It's the future. Ah. So they recognize that you 00:30:01.789 --> 00:30:03.609 can't drive the car if you're only looking in 00:30:03.609 --> 00:30:05.829 the rearview mirror. That's it. Exactly. The 00:30:05.829 --> 00:30:08.089 whole industry shifted its focus toward planning 00:30:08.089 --> 00:30:20.950 and agility. So, wow. We've been on a massive 00:30:20.950 --> 00:30:22.769 journey here. We started with that feeling of 00:30:22.769 --> 00:30:26.150 frustration, of rowing in circles. We waded through 00:30:26.150 --> 00:30:31.769 the alphabet soup of BPM, CPM, EPM. We got unexpectedly 00:30:31.769 --> 00:30:34.309 deep into the philosophy of artological constraints 00:30:34.309 --> 00:30:37.690 and the power of the unsaid. We looked at rice 00:30:37.690 --> 00:30:40.910 farmers and heart surgeons. We analyzed the total 00:30:40.910 --> 00:30:44.829 failure of the Hunger Games office culture. And 00:30:44.829 --> 00:30:46.829 we stripped away the myth that this is all just 00:30:46.829 --> 00:30:49.309 about software. That's a lot to take in. It is 00:30:49.309 --> 00:30:51.190 a lot. But I want to bring it back to the listener 00:30:51.190 --> 00:30:53.690 for a final takeaway. If I'm listening to this 00:30:53.690 --> 00:30:56.410 and I'm a manager or maybe just an employee who 00:30:56.410 --> 00:30:58.869 feels stuck and disengaged, after everything 00:30:58.869 --> 00:31:00.990 we've talked about, what is the one thing I should 00:31:00.990 --> 00:31:03.210 do differently tomorrow morning? I would say 00:31:03.210 --> 00:31:06.390 this. Stop looking for a mechanical fix. Stop 00:31:06.390 --> 00:31:08.390 thinking, if I just had a better spreadsheet 00:31:08.390 --> 00:31:10.950 or a new project management app, everything would 00:31:10.950 --> 00:31:13.970 be okay. Look at the clarity and the psychology 00:31:13.970 --> 00:31:16.730 of the situation instead. Ask the hard questions. 00:31:16.829 --> 00:31:19.349 Ask the really hard questions. Ask, do we as 00:31:19.349 --> 00:31:22.150 a team actually agree on what winning looks like? 00:31:22.390 --> 00:31:25.730 And more importantly, if you feel stuck, look 00:31:25.730 --> 00:31:27.809 for the constraint. The worldview constraint. 00:31:27.910 --> 00:31:30.569 Yes. If your performance is capped, don't just 00:31:30.569 --> 00:31:33.390 ask, what am I doing wrong? Ask, how am I viewing 00:31:33.390 --> 00:31:35.930 this situation? What is the story I'm telling 00:31:35.930 --> 00:31:38.930 myself about this job, this company, or my boss 00:31:38.930 --> 00:31:41.839 that is making success impossible? That brings 00:31:41.839 --> 00:31:43.680 me to the final thought I want to leave everyone 00:31:43.680 --> 00:31:46.240 with today. And it goes right back to Earhart 00:31:46.240 --> 00:31:49.259 and Jensen and their most powerful idea. They 00:31:49.259 --> 00:31:52.500 talk about the power of the unsaid. Here's where 00:31:52.500 --> 00:31:55.579 it gets really interesting for some self -reflection. 00:31:55.740 --> 00:31:57.720 We all have them. We all have these conversations 00:31:57.720 --> 00:32:00.259 running constantly in our heads that we never, 00:32:00.279 --> 00:32:02.819 ever speak out loud. I'm not good enough for 00:32:02.819 --> 00:32:05.759 this role. My boss secretly hates me. This entire 00:32:05.759 --> 00:32:08.240 project is doomed to fail. And whether you're 00:32:08.240 --> 00:32:10.579 aware of it or not. Those unsaid conversations 00:32:10.579 --> 00:32:13.240 are running your life. So the provocative thought 00:32:13.240 --> 00:32:16.779 for the day is this. What is the unsaid conversation 00:32:16.779 --> 00:32:19.500 that is currently putting a ceiling on your potential? 00:32:19.839 --> 00:32:23.220 What is the one thing you aren't saying to your 00:32:23.220 --> 00:32:25.619 boss, to your partner, or maybe most importantly 00:32:25.619 --> 00:32:28.400 to yourself that is keeping your boat spinning 00:32:28.400 --> 00:32:31.339 in circles? Identify that, have the courage to 00:32:31.339 --> 00:32:33.339 speak it, and you might just find that the nervous 00:32:33.339 --> 00:32:35.500 system starts working again. Thanks for diving 00:32:35.500 --> 00:32:36.819 deep with us. We'll see you next time.