Archive for July, 2010

Lessons from Tyler Heights: Beware the Unintended Consequences of Metrics and Incentives

One can find many interesting lessons for business and innovation in case studies from ongoing experiments in public education. For example, the Summer 2010 edition of American Educator illustrates a lesson we teach in Conquering Innovation Fatigue: metrics to drive performance can have unintended consequences that may hurt rather than help. Indeed, unintended consequences are a major theme of the book, as we consider the problems arising from metrics, corporate and government policies, innovation initiatives, laws, taxation policies, and other factors, all of which can contribute to what we call innovation fatigue.

In terms of education and the danger of improper metrics, Linda Perlstein’s article, “Unintended Consequences; High Stakes Can Result in Low Standards,” examines a highly celebrated school in Annapolis, Maryland that received media attention and praise for seemingly miraculous success in education. The new principal arrived in 2000 to find Tyler Heights Elementary School in a dismal state with only 17% of its students getting satisfactory scores on the state test. She began redirecting efforts in the school to address this problem. Eventually her laser-focus efforts paid off, delivering the stunning success of 90% of third-graders performing well on the Maryland State Assessment, when only 35% of third-graders did so two years before. Several newspapers recognized the amazing turn-around and people at the school celebrated the success. But was it real success?

To achieve good performance on the Maryland State Assessment, education for the children was largely focused on how to do well on the test. Students learned how to write BCR’s (“Brief Constructed Response”) to deal with expected questions about poems and plays, and practiced writing these short answers for many hours, without actually studying poems or plays. “What gets tested is what gets taught,” the principal told the teachers, even if that meant leaving behind the material that was supposed to be taught according to state standards. Bins of equipment for studying science were largely unused.

Tyler Heights’ third-graders got only the most cursory introduction to economics and Native Americans, and much of the curriculum was skipped altogether. The students were geographically ignorant. . . . The third-graders had heard Africa mentioned a lot but were not sure if it was a city, country, or state. (They never suggested “continent.”) At the end of the year, the children in Johnson’s class were asked to name all the states they could. Cyrus knew the most: three. He couldn’t name any countries, though, and when asked about cities, he thrust his finger in the air triumphantly. “Howard County!”

The state standards required a broad curriculum, but the metrics for assessing that were based on one particular test and all the incentives were for helping students pass that test. In spite of the praise for the miracle at Tyler Heights, had the children really been helped?

The Campbell Effect

The problem with unintended consequences from metrics such as tests is hardly unique to Tyler Heights. Daniel Koretz, also writing in the same issue of American Educator (see page 3 of the PDF file on unintended consequences), explains that in education and other fields, score inflation is a common and well known but widely overlooked problem. In the social sciences, a phenomenon that leads to score inflation is known as Campbell’s Law. While widely applied to education, it was developed while looking at business. Donald Campbell, a prominent social scientist, examined the role of corporate incentives on the performance of employees. His research led to this general formulation: “The more any quantitative social indicator is used for social decision making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.” (Donald T. Campbell, “Assessing the Impact of Planned Social Change,” in Social Research and Public Policies: The Dartmouth/OECD Conference, ed. Gene M. Lyons, Hanover, NH: Public Affairs Center, Dartmouth College, 1975, p. 35. See also Can New York Clean Up the Testing Mess? by Sol Stern.)

Campbell’s Law is at work when schools game tests to get better scores, at the expense of education. It is at work when cardiologists choose not to operate on patients who might need surgery rather than risk hurting their own published statistics on mortality rates among their patients (Koretz refers to a 2005 story from the New York Times reporting the shocking results of a survey of cardiologists). It is at work when a company tries to boost innovation with metrics or incentives that result in game playing, while leaving the real problems from culture, systems, and vision unaddressed.

In our experience, metrics and incentives can play a valuable role in driving innovation, but only when the corporation has a culture that genuinely encourages innovation, when there is a shared vision of innovation and success, and when sound systems are in place to advance innovation. Without those, you can not only waste a lot of resources in attempting to drive innovation with metrics and incentives, you can actually make a weak culture become pathological and lethal, sometimes exacerbating fatigue factors like the Not Invented Here syndrome, theft of credit for innovation, and breaking the will to share. Adding incentives linked to metrics without the right culture and systems can be sort of like throwing raw meat into a school of sharks or piranhas. You can generate a lot of activity, a lot of exciting thrashing and splashing, but in the end there will just be a lot of blood in the water and fewer thinkers and producers in your school.

As always, innovation success requires that you carefully monitor for harmful unintended consequences from the policies, programs, and incentives you have in place. Innovation metrics, incentives of all kinds, and employee performance evaluation systems and other tools associated with metrics can backfire. Unless you are tuned to the voice of the innovator and understand the impact of unintended consequences, you can be like the company we treat in Chapter 8 of our book that felt like it was a rock star of innovation while they were actually squelching it. Don’t let the unintended consequences of well-intended policies and metrics crush your innovation success.

Let Innovationedge Strengthen Your Approach to Innovation

With our experience at Innovationedge, we are prepared to evaluate your culture and innovation-related systems to help you strengthen your innovation capabilities and create greater ROI. Not happy with the innovation performance you’ve seen? Not sure you are measuring it correctly? Worried about the unintended consequences that your incentives might have? Give us a call and let us help you diagnose your state and provide a roadmap for future innovation success.

Are you an authentic leader?

As we’re seeing in the job placement industry, finding and keeping top-notch employees takes far more than the promise of a nice paycheck even in a down economy. (Don’t take my word for it; this video is a must-see for anyone looking to retain talented workers.)

If you want to create a strategy around hiring people who mesh with your organization’s culture and values, keep it real and keep it clear.

How your people come to know your culture and values depends on your authenticity–the way that you communicate. If you are a leader with any role in retaining employees, you absolutely must be able to clearly articulate a your company’s culture, business strategy and goals not only to your people but to your shareholders and the marketplace.  (I’ve got more to say on this here.)

We all need employees who have the energy, passion and creativity to bring innovative new ideas to the table. And what they need to keep that spark going is authentic leadership from you. Have you created an environment that inspires or detracts from innovation? Are you providing ample and exciting opportunities to be a part of the team?

Employees will continually weigh and consider these elements  along with the monetary and psychological rewards.

The H.S. Group: Intransition

July 19, 2010 Cheryl Perkins No Comments » Media Coverage

Cheryl’s article, “21st Century Challenges” appeared in The H.S. Group’s summer 2010 newsletter “Intransition.” The article discusses how companies can deliver top-line growth and true innovation in a tough business climate by overcoming the two-fold challenge of talent management and innovation.

Click here to read the full article.

Embracing Generation Y

July 17, 2010 Cheryl Perkins No Comments » Consumer "Identity", Trends

As a parent I’ve had a lot of experience delving into the mindset of one of the biggest market segments in the world.  Generation Y, sometimes called the Millenials or echo boomers, will significantly shape the way Boomers (like me)  work, shop and play.

There are a lot of forces shaping this huge demographic group, which includes those born between 1977 and 1997. They are our teens and young adults. With more than 80 million members, The Ys outnumber those in my generation by more than 3 million people.

Here is how the generations align in our history:

1901-1924 “G.I. Generation,” came of age during World War II and was known for its respect for government and its patriotism.
1925 – 1942 “Silent Generation,”  known for its post-war stoicism and its ability to take adversity in stride.
1946-1964 “Baby Boomers,” the largest generation of the past century, is credited for creating and defining the American middle class.
1965-1976, “Generation X,” a more independent and cynical generation.

So how do we define this Generation Y? And how are they shaping future trends for the rest of us? For one thing, we know that this generation is less likely to read a newspaper subscribe to cable or satellite television or own a land line.  They love brands and have an incredible purchasing power that those in other generations did not. They are more optimistic about their futures. They are techno-savvy and probably  the generation best prepared for globalization, but their employment expectations and work habits tend to rub older generations the wrong way.  (By the way, that last link about work habits is an excellent read if you are an employer.) Here’s a snapshot from this article about some common frustrations:

“They walk in the door on day one with very high expectations.”

“They don‟t want to pay their dues and climb the ladder.”

“They walk in the door with seventeen things they want to change about the company.”

“They only want to do the best tasks.”

“If you don‟t supervise them closely, they go off in their own direction.”

“It‟s very hard to give them negative feedback without crushing their morale.”

“They walk in thinking they know more than they know.”

“They think everybody is going to get a trophy in the real world, just like they did growing up.”

Each new generation brings its own challenges and unique gifts to the table, and understanding and relating to the emerging generation has always been the key to harmony. The reality is, we all need to do some research into this dynamic and unconventional group of young people who are leading the charge and changing the game.

13 July 10: The Post-Crescent

July 13, 2010 Cheryl Perkins No Comments » Media Coverage

Innovationedge’s Innovation Industry Pulse Poll was featured in an article titled, “Enhanced value, customer experience trump prices” in the The Post-Crescent business section on July 13, 2010.

Click the image below to read the article.

30 June 10: Yahoo! Business News

July 13, 2010 Cheryl Perkins No Comments » Media Coverage

Innovationedge’s Innovation Industry Pulse Poll was featured in an article titled, “Innovation Survey Reveals Corporations’ Efforts Not Just Focused on Cost Savings” on Yahoo! News on June 30.

Click below to view the full article.


Marketers look at the Mom Factor

July 6, 2010 Cheryl Perkins No Comments » Alpha Moms

For the past several years now I’ve been writing about the influence moms have on advertising and marketing–even product creation.  (Remember how Nintendo asked mothers about how to enhance Wii?)

Now a new report on the 2010 Mom Social Influencer offers some great numbers and interesting facts about just how much the marketplace should be valuing the insights moms have to offer. The segmentation study comes from BabyCenter, a great site to check out.

The report identifies five unique segments of social moms: the Field Expert (A young but experienced stay-at-home mom who uses social media to share parenting advice), the Lifecaster (A millennial mom of young children who is always connected and communicating using social media), Pros (A self-employed Gen X mom with young children who loves giving well-thought-out advice and values recognition.), the Butterflies (A mom-to-be expecting her first child who is so tightly scheduled that she tends to only post on important updates using  social media), and the biggest segment called the Audience (a very large group representing a mix of moms at different stages, from expectant moms to moms of older children. These women have fewer online friends and comment less frequently in social media, but are still present and highly influenced by the other segments) .

Interestingly, the Influencers category counts for only 18% of social moms, but they wield 78% of the influence.

Here are the report’s key highlights:

  • Pregnancy and birth triggered 94% of moms to seek out information and share opinions with others online.
  • 18% of social moms wield 78% of the overall influence.
  • Field Experts and Lifecasters make up 16% of audience and wield 67% of the influence.
  • 91% of social moms use Facebook for socializing and 89% use BabyCenter for gathering useful information.
  • Pros have 89% of influence on blogs, Lifecasters have 47% on Facebook, and Field Experts have 44% on the BabyCenter community.