Archive for the 'Management' Category

When Policies And Procedures Do Not Reflect The Way Things Are Really Done


An organization’s cultural capital is a type of asset that impacts what an organization produces and how it operates. Cultural capital is analogous to physical capital, like equipment, buildings, and property, or to human capital, like the accumulated knowledge and skills of workers, or reputational capital, like franchise value or brand recognition. In an organization with a high level of cultural capital, misconduct risk is low, and its organizational structures, processes, formal incentives, and desired business outcomes are consistent with the firm’s stated values. Unspoken patterns of behavior reinforce this alignment and drive corporate outcomes.

By contrast, in an organization with low levels of cultural capital, formal policies and procedures do not reflect the way things are really done — that is, the stated values of the organization are not reflected in the behavior of senior leaders or the actions of the organization’s members. Misconduct then results from norms and pressures that drive individuals to make decisions that are not aligned with the values, business strategies, and risk appetite set by the board and senior leaders. Rules may be followed to the letter, but not in spirit. All of this increases misconduct risk and potentially damages the organization and the industry over time.

As with other forms of tangible and intangible capital, an organization must invest in cultural capital or it will deteriorate over time and adversely impact the organization’s productive capacity.

If principles are going to be used, they have to be easy to remember


The objects we call books aren’t the real books, observed contemporary American essayist Rebecca Solnit. They’re the potential for one; the real book “exists fully only in the act of being read,” she writes. So too with leadership principles: They only really exist if employees are thinking about them, saying them to themselves, bringing them up in conversation with colleagues. The principles have to get stuck inside their heads like a pop song.

Drawing on the neuroscience literature, we realized that the right model would be pithy to the point of ready recall. (Simply put, the harder it is to remember something, the less it’ll be remembered.) Working with NLI, the Microsoft senior leadership team came up with six words to maximize memorability — create clarity, generate energy, deliver success — based on what they believed were the most important things that leaders at Microsoft would need to do to lead the company forward.

The key is to find the word or phrase that captures the priority you’re trying to invoke. Create clarity sought to focus everyone on creating more-compelling products and solutions with the customer even more in mind. Generate energy was needed to turn the culture to even more innovation. Deliver success served as a reminder of what truly mattered most.

But becoming easy to remember is hard to do

Microsoft had historically tried to arrive at a leadership model the same way most companies do: by way of subtraction. That means taking a framework of half a dozen categories, with five to 10 elements each, then shaving it down from there. This is incredibly difficult, because it feels painful to leave anything out.

There’s an assumption underlying this that makes sense for a tech giant. We often assume that human memory is like a computer — capable of right-clicking on anything important and saving it without incident. But rather than hardware, we have wetware, and the organ inside our skulls can handle only so much information at once.

Instead of editing down, you have to start with boundaries around how much information people can recall easily, then put the most important things into that space. Just as you’d design an app according to the capacity of a device, you need to design language to the capacity of a brain.

Brain scientists call our recall of sounds echoic memory, and it lasts for only a handful of seconds. It turns out that if a statement takes less than three seconds to say to yourself or say out loud, it is significantly easier to recall and use. Any time you craft an idea that you want people to remember easily, if the idea can be said out loud in under three seconds, the chances of usage go up dramatically.