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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
Turning Strategy Into Results

How can leaders translate the complexity of strategy into guidelines that are simple and flexible enough to execute? Rather than trying to boil the strategy down to a pithy statement, it’s better to develop a small set of priorities that everyone gets behind to produce results.

Strategy, at its heart, is about choice. Few companies succeed by making a single big bet. Most winning strategies are based on a bundle of choices about, among other things, the customers to serve, the scope of the business, product offerings, and capabilities that interact with one another to help a company make money.1 Consider Trader Joe’s Co., the U.S. grocery retailer based in Monrovia, California. It focuses on educated, health-conscious customers, which influences where it locates its stores, which products it stocks, and the type of employees it hires. The company’s choices reinforce one another to increase customers’ willingness to pay, reduce costs, and thereby drive profitability. The dense interdependencies among the choices prevent rivals from imitating Trader Joe’s winning strategy. Piecemeal imitation of a few elements — for example, the store format or the focus on private labels — wouldn’t work. Instead, a rival would need to replicate the full set of interconnected choices.

Strategy is inherently complex. We see this in the thick reports and complex frameworks that companies use to describe their strategic choices and how they connect with one another. Describing a strategy favors complexity, but executing it requires simplicity. To influence day-to-day activities, strategies need to be simple enough for leaders at every level of the organization to understand, communicate, and remember — a strategy that gathers dust on a shelf is nothing more than an expensive bookend. A strategy for execution must provide concrete guidance while leaving managers with enough flexibility to seize novel opportunities, mitigate unexpected risks, and adapt to local conditions. The act of codifying past choices into an explicit strategy, moreover, reinforces historical commitments and locks a company into inertia.2 Complex strategies, particularly those that include detailed plans, tend to be long on guidance but short on flexibility.

Strategy Made Simple

How can leaders translate the complexity of strategy into something simple and flexible enough to execute? Your first instinct might be to boil a complex set of choices down to a handful that matter the most. Indeed, a series of strategy experts have argued that managers should do just that by distilling their strategy to a concise statement (less than 35 words) summarizing a few core choices.3 The strategy distillation approach hinges on a few fundamental strategic categories — such as the choice of target customer or core competencies — that can summarize the heart of any company’s strategy. The authors illustrate this approach with strategies they have inferred from observing what has worked in the past at successful companies such as Southwest Airlines Co. or Ikea.

We have learned, however, that this approach works best with companies that have relatively straightforward strategies to begin with. Part of our research on strategy execution included a four-year action research project in which we worked with top management teams of eight to 12 companies per year in formulating strategies for execution.4 The teams used a framework that boiled down their company’s strategy to three elements: target customers (who), the value proposition (what), and how the company would deliver, sell, and distribute products or services (how).5 The approach worked well for a subset of the companies, including a low-cost regional airline, a single-format retailer, a restaurant chain, and a producer of steel girders. Although operating in different industries, the companies shared three characteristics: They focused on a single business, offered a standard value proposition to a clearly identified customer segment, and their strategy was stable over time.

Executives in companies that didn’t fit this mold, by contrast, struggled to boil their strategy down to a few key choices. An online job site in Eastern Europe, for example, could not identify a single customer because it served job seekers, employers, advertisers, and partners that listed jobs in multiple countries. Leaders also found it difficult to combine corporate and business unit strategies into a single formula. One company ran an online high school and a separate division that developed digital content, which it sold to other educational institutions (including other high schools). The two divisions were deeply interwoven, but the leadership team never managed to articulate a single strategy that worked for both parts of the business.

Strategies in transition posed another challenge. Combining choices that drove historical success with those required to win in the future resulted in convoluted statements that left employees baffled as to where they should focus. Simple strategies, we found, don’t work for companies that compete in multiple businesses, serve multiple customers, or are in the midst of a strategic transition.

Distilling a strategy into a few core choices sounds great in theory, but often derails in practice. You might think the issue was the specific framework we chose, but the roots of the problem go much deeper. To differentiate a company from rivals, the strategy should be specific to the company’s history and context, which implies the list of potentially strategic choices is long. Any short list of essential factors is likely to exclude choices that are critical to some companies.6 To be clear, this critique is not meant to devalue the work of the strategy scholars who created these frameworks, but rather to underscore the difficulty of reducing the inherent complexity of strategy into simple statements. Many companies simply cannot cram 10 pounds of strategic complexity into a three-pound bag.

If boiling down a complex bundle of choices to a few key elements doesn’t create a strategy for execution, what does?

Strategic Priorities

Instead of trying to summarize their strategy in a pithy statement, managers should translate it into a handful of actions the company must take to execute that strategy over the medium term. Strategic priorities should be forward-looking and action-oriented and should focus attention on the handful of choices that matter most to the organization’s success over the next few years.

Many complex organizations that compete across multiple industries, product lines, and customer segments rely on strategic priorities to advance strategy. More than two-thirds of S&P 500 companies, for example, published explicit mid-term objectives intended to help implement their strategy. (“How to Recognize a Strategic Priority When You See One” describes our research and summarizes key findings.)

What companies call their corporate objectives doesn’t matter; S&P 500 companies use a variety of labels, ranging from the mundane (strategic priorities, areas of focus, strategic objectives) to the exotic (Microsoft Corp. referred to “interconnected ambitions” and retailer Kohl’s Corp. talked about “greatness agenda pillars”). (See “Common Names for Strategic Priorities Among S&P 500 Companies.”)

Whatever terminology companies use, their objectives share a few common characteristics. They typically extend three to five years — shorter than that is too tactical, longer too visionary. They are limited to a handful — of S&P 500 companies publicizing their objectives, 78% listed between three to five in total. (See “Strategic Priorities Among S&P 500 Companies.”) And they are strategic, in the sense that they describe specific actions that will help the company to execute its strategy, as opposed to financial targets or corporate values.

Many executives tell us that they use strategic priorities but report that the approach isn’t working as well as they had hoped. To set the strategic agenda and drive implementation effectively, we have found that strategic priorities need to balance guidance with flexibility, counterbalance the inertia of business as usual, and unify disparate parts of the business. Crafting strategic priorities that do all of these things — and do them well — is a tall order. The remainder of this article will describe the seven characteristics of effective strategic priorities, explain why they matter, and suggest practical diagnostics managers can use to assess their company’s strategic priorities. The figure below, “How Effective Are Your Strategic Priorities?”, summarizes the seven factors.

1. Limit the number of priorities to a handful. Restricting the number of strategic priorities to three to five has several advantages. Most obviously, having a small number will be easier to understand, communicate throughout the organization, and remember.7 Rather than overwhelming employees with the full set of all choices and interdependencies that make up a company’s strategy, communicating a few strategic priorities can focus attention, effort, and resources on the things that matter most now. The best priorities serve as strategic guardrails. If they know the parameters they must work within, managers and employees can fill in the blanks based on their local knowledge and circumstances.

Having too many priorities is a mistake, but having too few can be a problem as well. One wholesale energy company we studied declared a single strategic priority: to manage risk and preserve value. This was a worthy goal, to be sure, but one that was far too abstract to provide useful guidance to employees. A single priority in isolation is rarely enough to drive a strategy that requires multiple initiatives to work together.

2. Focus on mid-term objectives. Strategic priorities act as a bridge between long-term aspirations — embodied in a vision or mission — and annual or quarterly objectives. The types of initiatives that have the biggest impact (for example, building data analytics capabilities, integrating online and physical stores, or entering a new market) typically take a few years. Of course, there are exceptions: A financial turnaround, for example, would require an immediate focus on short-term cash generation and debt reduction. But in general, we’ve found a good rule of thumb is “three to five in three to five” — three to five strategic priorities that can be accomplished in three to five years.

Once you’ve set mid-term priorities, it’s important to stick to them. When a team announces five-year priorities and changes them a year later, employees dismiss those objectives (and their successors) as the “flavor of the month” that they can safely ignore. British fashion retailer Burberry Group plc offers a good example of staying the course.8 When Angela Ahrendts joined Burberry as CEO in 2006, she announced five strategic priorities (including intensifying non-apparel sales, accelerating retail-led growth, and investing in underpenetrated markets) and selected quantitative metrics for each. Ahrendts stuck with the priorities for seven years, updating employees and investors regularly on progress against each goal, which reinforced the message and the company’s commitment to achieving those objectives. During this period, Burberry’s share price handily outperformed competitors and the broader market.

3. Pull toward the future. Strategy should guide how a company will create and capture value going forward, rather than codifying how it made money in the past. In dynamic markets, ongoing success typically requires innovation and change. The things that position a company for the future — for example, entering unfamiliar markets, building innovative business models, or developing new capabilities — differ from business as usual. Both are critical, but they often pull in opposite directions.

Maintaining a healthy balance between the status quo and innovation is hard work. Well-oiled capabilities, established resources, organizational structure, metrics, and rewards favor a company’s legacy business, and employees will naturally default to activities that are familiar, straightforward, and produce predictable results.9 Keeping the trains running in the core business is necessary for success, but these routine activities will usually take care of themselves without having to be prioritized at the corporate level.

Innovation and change, by contrast, require ongoing attention. New activities are difficult, frustrating, uncertain, and require sustained effort and monitoring to be successful. This is where strategic prioritization can help. Prioritizing forward-looking initiatives can tip the scales in favor of the activities that can ensure future vitality but are most likely to fail without sustained effort.

Striking the right balance between sustaining a legacy business and building for the future requires judgment — there is no cookie-cutter template for getting it right. To gauge whether things are in balance, we suggest leaders look at the mix of priorities in terms of those that support and refine the current business model (for example, cost reduction, operational excellence, serving current customers, extending existing products) versus the objectives that take the company in a new direction (for example, entering new markets, building digital capability, non-incremental innovation). Leaders can also ask how different the business would look in three to five years if they were to achieve all their objectives. No mix of priorities is right for every company, but we have found that leadership teams that don’t examine their strategic priorities tend to overweigh business as usual.

4. Make the hard calls. Apple Inc. CEO Steve Jobs often stood at a whiteboard during strategy retreats and personally led discussions among the company's top 100 leaders to set strategic priorities.10 The assembled team would generate a long list of possibilities and after much wrangling and discussion, they would whittle them down to a rank-ordered list of 10, at which point Jobs would strike out the bottom seven to ensure the company focused on the most critical priorities.

In organizations of any size, there will be dozens or hundreds of competing and often conflicting priorities. The discipline of honing priorities down to a handful can force a leadership team to surface, discuss, and ultimately make a call on the most consequential trade-offs the company faces in the next few years. When executives make the hard calls and communicate them through the ranks, they provide clear guidance on the contentious issues likely to arise when executing strategy. But making trade-offs among competing priorities is difficult — they are dubbed “tough calls” for a reason. Prioritizing different objectives results in “winners” and “losers” in terms of visibility, resources, and corporate support. Many leadership teams go to great lengths to avoid conflict, and as a result end up producing toothless strategic priorities.

A common way to avoid conflict is to designate everything as “strategic” — one S&P 500 company, for example, listed a dozen strategic objectives. Another way leadership teams resist making difficult calls is by combining multiple objectives into a single strategic priority. A large retailer, for example, listed six key business priorities. So far, so good, but when you dug into the so-called priorities — “focus on the fundamentals of the business,” for example — the apparent discipline proved illusory. “Focus on the fundamentals” included, among other items, inventory management, cost cutting, customers, product categories, in-store experience, execution, speed, agility, lead-time reductions, and developing and retaining staff. If leaders dodge the hard trade-offs, their priorities provide little useful guidance to the troops.

Leadership teams also avoid prioritization by burying their strategic priorities among competing mandates and guidelines. The CEO of a large European bank (not one of the S&P 500), for example, was pleased when his team agreed on four strategic priorities during their strategy retreat. That was the good news. The bad news was that the team tacked them on to what the bank was already attempting to do, using three transformation initiatives, a four-part declaration of principles, four customer service priorities, five core beliefs, eight rules of conduct, nine corporate values, 20 promises to stakeholders, and 120 key performance indicators. Baffled employees ignored the latest directive and carried on with what they were already doing.

5. Address critical vulnerabilities. Even when you recognize the importance of making the hard calls, it’s often difficult to know where to focus. Strategy is inherently complex and the sheer number of possible objectives can overwhelm teams. So how can executives move from a complex strategy to a handful of strategic priorities?

A key insight comes from military strategists, who have long acknowledged the complexity of armed conflict.11 Military planners often visualize the field of operations as a complex system of enemies, allies, infrastructure, popular support, and other features that collectively influence who wins and who loses a war. They then hone in on the so-called “centers of gravity” — the parts of the system that are both critical to the enemy’s success and most vulnerable to attack.12

Business leaders can deploy a similar approach by identifying the “critical vulnerabilities,” the elements of their own strategy that are most important for success and most likely to fail in execution. In for-profit organizations, pinpointing the most important actions means thinking through — and, ideally, quantifying — how the objective would help create and capture economic value. How much would a potential priority increase customers’ willingness to pay? How much would it decrease costs to serve target customers? How much would a priority deter new entrants or competitors by building a moat around the fortress? What new revenue streams would a proposed objective open up?

Some elements of a company’s strategy — for example, a well-known brand or well-honed capabilities — will be critical to success but may not require sustained attention or investment. While important, these may not be priorities. Instead, companies should prioritize initiatives or activities that are at the greatest risk of failure without the sustained focus and investment support that strategic priorities can provide. When identifying critical vulnerabilities, it’s important to look at both the elements of strategy that are at risk due to external factors (such as shifting customer preferences, disruptive technologies, or new entrants) and internal challenges (need for culture change, organizational complexity, or need to build new competencies).

6. Provide concrete guidance. A company’s strategic objectives should be tangible enough that leaders and employees throughout the organization can use them to prioritize their activities and investments (and also to help them decide what to stop doing). Unfortunately, many leadership teams agree on vague abstractions that everyone can get on board with, confident that the resulting platitudes will not constrain their options. One S&P 500 company, for example, listed strategic imperatives including “focus on our customers’ needs and wants,” “be an industry leader,” and “look to the future.” Clearly, a company’s strategic priorities are too vague when you can’t guess the company (or even the industry) by reading them. (“Vague Versus Concrete Strategic Priorities” contrasts the vague strategic priorities of American Airlines with the concrete priorities of Southwest Airlines.)

Many associate concrete guidance with financial targets. Revenue and profitability goals are indeed specific, but they quantify where management wants to end up without providing direction on how the company should get there. Using financial targets as strategic priorities, then, is the business equivalent of a coach telling the team what the final score should be without explaining how to beat their opponents.

Rather than relying solely on financial targets, leaders should start with the key actions required to execute their strategy, and translate these into metrics that provide concrete guidance on what success would look like. By tracking progress against metrics, leaders can maintain a sense of urgency over the months or years required to achieve the goal, identify what’s not working to make midcourse corrections, and communicate progress along the way — even before financial results are in — to keep key stakeholders on board.

Top executives can quickly assess whether their strategic priorities are sufficiently concrete by asking middle managers what they would stop doing based on the priorities. The answers will quickly expose fuzzy objectives. Leaders can also test concreteness by taking each strategic priority, stripping it of flowery prose and buzzwords, and seeing what’s left. For example, once you remove the marketing spin and buzzwords from a statement like “we put muscle behind innovation, making a step change in the pace of commercialization,” there’s not much substance left.

7. Align the top team. Unfortunately, lack of agreement on company objectives is fairly common among top teams. As part of our research on strategy execution, we surveyed more than 10,000 managers across more than 400 organizations. When asked how closely members of their company’s top executive team agreed on key priorities, nearly one-third said senior executives focused on their own agendas or that there were clear factions within the top team.13

The reality is actually worse than the survey results suggest. In addition to asking senior executives if they agree on the company’s priorities, we asked them to list their company’s key priorities over the next few years. In the typical company, barely half of the executives voiced the same company-wide priorities.14 Indeed, in terms of shared strategic priorities, we found that two-thirds of the top executives were on the same page in just 27% of the companies we studied — hardly a recipe for successful execution.

Executing strategy often requires different parts of the company to work together in new ways (such as when a company moves from selling stand-alone products to integrated solutions or when a retailer blends online and retail sales). Strategic priorities should reinforce one another to ensure the different parts of the company are moving in tandem. At a minimum, the priorities shouldn’t conflict with one another or pull the organization in opposing directions. The best strategic priorities hang together and tell a coherent story about how the company as a whole will create value in the future. They should also provide guidance on how to adjudicate the conflicts that will inevitably arise as different parts of the organization try to execute the strategy in the trenches.

Strategic priorities should lay out what matters for the company as a whole to win and should reflect the interdependencies among the choices. If senior executives pursue goals that aren’t aligned with one another, the disagreements will filter down the silos, and the various teams will work at cross-purposes.

Management teams sometimes diverge because each function wants to promote its own pet objective: Human resources might want to say something about “world-class talent,” for example, while finance might want to highlight how the company delivers “industry-leading shareholder returns.” Rarely is anyone considering the trade-offs among these objectives, their interdependencies, or whether meeting unit-level objectives will affect the company’s ability to succeed. These priorities can reinforce, rather than break down, organizational silos.

Executives rightly focus on how to craft a great strategy, but often pay less attention to how their strategy can be implemented throughout a complex organization. To steer activity in the right direction, a strategy should be translated into a handful of guardrails that provide a threshold level of guidance while leaving scope for adaptation as circumstances change. Strategic priorities are a common tool to drive execution, but in many cases these objectives are not as effective as they could be. By following a few guidelines, executives can articulate a strategy that can be communicated, understood, and executed.

An adapted version of this article appears in the Spring 2018 print edition.

REFERENCES (14)

1. M.E. Porter, “What Is Strategy?” Harvard Business Review 74, no. 6 (November–December 1996): 61-78.

2. D. Sull, “Why Good Companies Go Bad and How Great Managers Remake Them,” rev. ed., (Boston: Harvard Business School Press, 2005).

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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
Continuous Feedback is not Enough. 3 Shifts for Performance Management

For the past few years, we’ve been hearing a scream of despair from the corporate world on the undelivered promise of performance management. With increased attention to the employee experience and higher investment on measuring HR impact, it has become even more evident how broken the system is.

While the ongoing discussions all focus on the necessary shift from formal review-based approach to a continuous feedback culture, some research has revealed that it is not that simple. A comprehensive analysis has suggested that only a third of the times feedback is leading higher performance, and sometimes it even decreases it.

As such, this article intends to share some insights on why the traditional approach is not working and what can be done to improve results. Of course, there won’t be a “one-size fits all” magical solution, as it will always depend on the context of each organization. In any case, there is already some evidence-based insights that we can rely on to make meaningful changes on our PM approaches.

Why is the old PM system broken?

While the traditional PM system has both administrative (compensation, promotions, legal..) and developmental intentions, it has been mostly focused on the first and it has been defined in a foundation of mistrust and faulty assumptions.

Foundation of Mistrust: an illusion that monitorization and control increase performance is still present, but these current approaches often undermine the very behaviors that lead to high performance, preventing honest conversations, creating conflicts, negative emotions and even incentivize manipulations of the evaluation process. In fact, the factors that truly have an impact are not rules and processes, but healthy relationships that foster communication and trust.

Faulty Assumptions: the system characteristics have also been based on several faulty assumptions. Here are 3 demystifications that most of us may not have been aware:

1. Most employees believe they are above-average performers, which is obviously not true but it leads to a decreased motivation and perceptions of unfairness for most employees who will be labeled just as average;

2. Backward-looking evaluations put people on the defensive, sometimes leading to decreased motivation and performance;

3. Most performance ratings are not accurate reflections of objective performance due to biases and conflicting interests of managers. Truth is, studies have found that the correlation between individual performance ratings and business unit performance is zero.

 What should we do instead?

Given this information, many organizations may feel tempted to quit performance management altogether. However, there are methods that lead to important results and should be considered. During my exploration of the evidence available, I have identified 3 main important shifts:

  • Flexible Goal Setting
  • Continuous Feedback Culture with Forward Looking-Coaching
  • Reducing the Formal Process Burden.

1. Flexible Goal Setting

Goals are important as they improve focus and inspire action, but they lead to better performance when they are specific, challenging, personally meaningful and within the individual’s control to achieve.

Conducting Flexible Goal-Setting: It has become essential for organizations to adapt to changes as they occur, and that requires moving away from the cascading year-based goals to a trusting approach. A good case study worth exploring is Google and their OKR(objectives and key results) method. In any case, there is good practices to guarantee effective performance goals as you can see on the following image from a SHRM reportwhich I believe makes a good summary:

Strengthening Goal Commitment: research has also found that goal commitment can be increased in several ways including having people make a public commitment to the goal, increasing self-efficacy, and increasing the attractiveness of outcomes associated with goal attainment (e.g., by communicating a compelling vision, or changing employees’ perceptions concerning the consequences of attaining or not attaining the goal). Developing a growth mindset may also be important on the face of failure and for persistence to goal attainment. Research indicates that the belief that ability is malleable can be enhanced by telling people that their skills can be developed via practice and by praising effort (rather than ability) following successful performance.

2. Continuous Feedback Culture with Forward-Looking Coaching

Delivering Effective Feedback: Feedback not always improve performance. It depends on the feedback content, how it is delivered, who delivers it and how it is received. It has been found that the most effective feedback is timely, specific with examples and focused on task-related behaviors rather than on personal characteristics. It is also important that it is delivered by a source who is credible for the recipient and providing it showing the intent of helping the individual improve and learn rather than transmitting judgment.

- Delivering Forward Looking Coaching: However, coaching has showed to deliver consistent good results and it may be the best context to deliver feedback. It is two-way and involves working collaboratively to understand barriers to success and to develop strategies to overcome them. It intends to help the individual to solve his or her own problems. Since feedback raises awareness, but is not the end goal of the conversation, coaching that allows for a forward-looking reflection will have a higher impact in driving action. A very good concrete example by a CEB report showed the difference:

Traditional Feedback: “At the last staff meeting, you did a nice job of setting the agenda and kicking things off. However, you didn’t engage the quieter members of the group, and you let Sam dominate the conversation.”

Teachable Moment/Coaching Context: “Let’s discuss how that meeting went. What did you think went well? I agree the agenda was very clear—any lessons learned that will help you continue this habit in future? What would you do differently next time? I agree Sam seemed to dominate the conversation. What techniques will you try next time to keep things more balanced?”

-Creating a Feedback Environment: A third important factor to consider is that feedback is not solely responsibility of the managers, neither it can be, in a world where self-managed and project-based teams is on the rise. Feedback-seeking by the employees is as important action to guarantee the intended results. Therefore, a feedback environment that is supportive instead of been viewed as a sign of insecurity should be incentivized by organizations.

3. Reducing the Formal Process Burden

Keeping the ratings or not is a whole debate that could and should be kept for a next whole article. In any case, organizations that decide to keep ratings have some options to start reducing the strain given by the formal process:

- Reduce or eliminate documentation. Accept that we don’t need to control all details or get a software that makes it easy to insert quick information;

- Eliminate self-assessments: their impact is inconsistent and is one more step to go through that can create conflict;

- Don’t make a forced normal distribution: Performance is frequently skewed, with most employees clustering tightly together at the low end, with about 20% of the population outperforming their peers by several orders of magnitude. Therefore, organization are better simplifying their scales to few clusters that differentiate 3 types of performers: Employees who are not meeting standards and need development; Employees who are doing an adequate job and should receive rewards (majority); The top performers who should receive the highest rewards.

Conclusion

An important thing to keep in mind is that PM is a sensitive issue. Ineffective performance management systems have the potential to waste time and money, damage relationships, decrease motivation and job satisfaction, and increase employee turnover. So, don’t take it lightly and explore evidence-based insights that can help you improve your organization.

If you want a real-life example of a company who has successfully implemented a feedback and coaching culture without keeping the formal reviews, check out Adobe’s website full of resources free to use.

However, many organizations have also put these practices in place in some form but found that poor implementation has undermined their effectiveness. Have you decided you need to reformulate your PM approach but are not sure where to start? For a next article I’ll go deeper in the importance of making the implementation right, and how you should go about it.

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About the author: Diana Oliveira has been focused on matters as employee experience and organizational performance for the past 3 years. She has created the event Employee Experience Bootcamp where more than 100 companies have participated, collaborated in a consulting company in Germany and is currently conducting research in informal performance management and feedback at ISCTE-IUL in Lisbon. Feel free to reach out: diana_oliveira@iscte-iul.pt



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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
How Adobe retired performance reviews and inspired great performance

Click on the links and see what great resources Adobe have shared in relation to their "Check In' process

The story of Check-in.

The story of Check-in
In 2012, Adobe’s then Senior Vice President of People Resources, Donna Morris, was feeling frustrated with annual performance reviews. The process was so complex, bureaucratic, and paperwork-heavy that it ate up thousands of hours of managers’ time. It also created barriers to teamwork and innovation, since the experience of being rated and stack-ranked for compensation left many employees feeling undervalued and uninspired.
Donna was mulling the issue on a visit to one of Adobe’s India offices when a reporter asked her what was new or innovative in human resources. Even though she hadn’t yet discussed the idea with Adobe’s CEO, her peers on the leadership team, or her own team, she announced, “We plan to abolish the performance review format.” Her revelation made the front page of the Economic Times of India, and a major disruption was underway. She headed back to the U.S. determined to catalyze change and help create something better for Adobe employees and the company as a whole.
Donna and her team solicited feedback from all across the company, and after months of work and many iterations, Adobe introduced Check-in, an informal, ongoing dialogue between managers and their direct reports that has employees feeling more engaged and empowered.
See Donna's full keynote from the SABA WW2015 event.
 
 

Adobe performance management, then and now.

Tools and resources


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
Turning Your Culture Into a Design Culture

Design is very easy to comprehend when you are building customer-centric products or services. Heck, it makes total sense to start from the customer perspective and to use the multitude of design thinking techniques to identify, validate, value and prioritize customers’ most important needs.  We got Personas, Journey Maps, Storyboards, Prototypes, Mockups, Canvases and such to help us intimately understand our customers, their environments and what it is they are trying to accomplish.  We take them through the facilitated “Diverge to Converge” process to ensure that we have a holistic view of their requirements.

But I have even something bigger in mind for Design Thinking. Instead of just using design to build customer-centric products and services, how about using design to create a customer-centric mindset to enable an organization’s digital transformation? And how do we integrate design into the everyday processes of the organization to support that customer-centric digital transformation?

One of the challenges with digital transformation is ensuring that everyone in the organization understands how their role and tasks tie directly to the organization’s digital transformation.  My colleague John Morley and I are on a mission – to leverage design thinking to change an organization’s culture in support of its digital transformation. 

And what’s more fundamental to an organization’s operations than meetings, an activity that most organizations do poorly and everyone hates.

Want To Change The Culture?  Let’s Start with Meetings!

Let’s face it, most meetings suck.  They are boring, loosely structured and usually a waste of time for all the participants except the organizer.  We invite the wrong folks, forget the right folks, don’t properly prepare the attendees for the meeting and usually walk out with a poorly understood set of action items. Yea, meetings suck.

Check out these meeting factoids from the site“The Curse of the One-Hour Meeting”:

“Every day in the U.S., there’s an average of 11 million meetings taking place. The average office employee spends over five hours each week sitting in meetings and over four hours preparing for them. That’s more than an entire working day devoted to meetings. Managers fare even worse, logging an average of 12 to 14 hours a week in meetings. Sources tell us it’s only getting worse, with meeting frequency increasing year over year.”

Here are some sample quotes about meetings from a number of sources including the articles “The 16 types of meeting that get work done” “Where The Action Is” by  J. Elise Keith:

  • “People don’t take meetings seriously.  They arrive late, they leave early and they spend most of their time doodling.”
  • “People wander off topic! Participants spend more time digressing than discussing.”
  • “Nothing happens once the meeting ends.  People don’t convert decisions into action.”
  • “People don’t tell the truth! There’s plenty of conversation but not much candor.”
  • “Meetings are always missing important information – so they postpone critical decisions.”
  • “Meetings never get better.  People just make the same mistakes again and again.”
  • “Make a decision!  Move faster!  Analysis Paralysis!”
  • “Our meetings are like something out of the ‘The Office’” (that’s actually my quote)

So if you want to change a company’s culture and improve the odds of a successful digital transformation journey, let’s start by applying Design Thinking to the most fundamental of company activities – meetings.

Introducing the Meeting Development Canvas

John Morley and I collaborated to see how we could use the Stratgyzer.com Business Model canvasconcept to make meetings more effective and productive; to ensure that each meeting participant understands how the meeting ties back to the organization’s key initiatives (see Figure 1). 

Figure 1:  Meeting Development Canvas

Let’s review each of the panels on the Meeting Development Canvas:

1.    Purpose of Meeting: There should be one primary purpose for each meeting that satisfies and aligns the objectives of the Stakeholders. The meeting can seek to satisfy multiple objectives that support that one Purpose. The meeting should nothave more than one Purpose.

2.    Stakeholder Requirements:  A meeting can have multiple stakeholders. The meeting Purpose should aim to enable the Stakeholder objectives  It is essential to understand:

  • The ‘jobs’ they are trying to do (their objectives)
  • The challenges they face in doing them
  • The benefits accrued by overcoming the challenges.

3.    How To Enable Stakeholders: How will this meeting enable the Stakeholders’ objectives (at a high level)?

4.    Work Phase & Relationship:  Describe what phase of the relationship you are at with the stakeholders – Beginning, Mid-way, Nearing Conclusion – with respect to the purpose of the meeting. This means that there may be an orchestrated series of meetings necessary for the successful execution of meeting purpose and the gathering of stakeholder requirements.

5.    Decisions & Outcomes: What specific decisions and desired outcomes do we need to achieve from this Meeting in order to satisfy the Stakeholder Objectives (outlined in “Stakeholder Requirements”) and deliver on the Purpose of the meeting?

6.    Our Ask:  What are the specific “Asks” of the stakeholders by the meeting organizer? 

7.    Key Activities:  What Key Activities will we need to undertake to deliver the decisions and the desired meeting outcomes?  These Activities may arise from the ‘Ask’ of Stakeholders in the meeting.

8.    Key Resources:  What Resources (existing & additional) are going to be required to support the Activities outlined in panel #7?

9.    Partners:  With whom will we partner (Internal and/or External) in order to fulfill the key activities or supply Resources that deliver on the Stakeholders’ objectives?

10.  Action Items: What are the specific Action Items arising from this meeting?  They should satisfy:

  • The stakeholders’ requirements
  • Support the meeting purpose 

11.  Alignment to Corporate Objectives:  Specifically, how does the meeting Purpose and Outcomes satisfy the Organization’s strategic initiatives?  

The last point may be the most important panel in the Meeting Development Canvas.  If there is not a clear linkage between the meeting and the organization’s strategic initiatives, then why are you having a meeting, or more importantly, how can you tweak the meeting to more closely align with the organization’s strategic initiatives?

Also, an important part of the Meeting Development Canvas is how much work needs to be done prior to the meeting, especially key meetings where there are specific Asks.  This means that the organizer likely needs to talk to communicate to the participants the meeting purpose and objectives, and capture beforehand the participants’ requirements.  Half the battle is won before the meeting even begins!

Summary

The McKinsey article titled “The Business Value of Design” provides numerous factoids to support their proposition that organizations that adopt design are more successful and effective (see Figure 2).

Figure 2: Organizations that Embrace Deliver Better Financial and Shareholder Value

While the Meeting Development Canvas is not likely used for all meetings, it should certainly be used for any meetings where there are specific asks of the different participants, and especially if there might be conflict between the requirements of the different stakeholders.

Conflicts within organizations are not a bad thing; it is almost certainly to happen in organizations where team members have a high degree of ownership for their work.  The Meeting Development Canvas isn’t designed to gloss over these conflicts, but is designed to provide a forum and process for the resolution of those conflicts.

Now, isn’t that a great way to start changing and aligning the culture of the organization?  Yea baby, that’s the real power of design!




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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
What are the 9 factors of a great agile organisation?

Most agile practitioners and coaches will refrain from providing advice on what the perfect agile organisation looks like, because we acknowledge that every situation is different and every organisation needs a way of working that suits their people and the environment they find themselves in.

However, I believe that as we’ve learned more about agile ways of working and the modern management principles that underpin it, we can see that great agile organisations have some key characteristics in common, and will gravitate towards demonstrating them.

I believe this type of organisation will demonstrate nine key characteristics, although the degree to which they do, and how they will achieve it, may be different.

  1. Frictionless redeployment of the company strategy towards new opportunities
  2. Opportunities matched with the capability to capture them
  3. Cross-functional independent teams
  4. Team structures that reform with the changing landscape
  5. Strategy and outcome alignment at all levels
  6. Cohesion at multiple levels
  7. Disruptive thinking co-existing with a continuous improvement mindset
  8. A culture of openness and inclusion with a bias for action
  9. Risk avoidance balanced with the ability to experiment

As an organisation starts to embrace a modern agile mindset, it will begin to move towards demonstrating these nine key characteristics.

Here is the rationale as to why…

 

Frictionless redeployment of the company strategy towards new opportunities

Agile teams embrace change and acknowledge the fact that as we work, we learn more about how and what we should be doing. The lean startup streams of agile embody this mindset and results in teams that embrace opportunities to improve their product. In some cases, this may mean a complete pivot of the product and the abandonment of existing plans, but this is something that is embraced, not avoided.

Embodying the mindset that opportunities are always changing infers the need for companies to be able to redeploy their company against a new strategy, targeting new opportunities, with minimal friction. Any resistance preventing the ability to pivot the business at enterprise scale results in missed opportunities in this type of environment.

What this looks like

A great agile organisation will demonstrate the ability to rapidly pivot toward new opportunities and stop investments in unimportant activities in a frictionless way.

 

Opportunities matched with the capability to capture them

Agile teams understand that no piece of work is ever the same. Nor is the environment they work within. The combination of these two factors means that the problems they are trying to solve are ever-changing. More importantly, agile teams accept that even if their team compositions are stable and don’t change, they will need to be uplifting their skills and capabilities in order to remain relevant and effective.

In this type of environment, teams understand that they are constrained in only being able to pursue opportunities that are within their current capabilities and skill-sets. Doing otherwise leads to teams working on non-feasible solutions given the technology and skills available to them.

With this mindset, a team understands this constraint. They also keep a keen eye on the future and the capabilities that they need to obtain in order to capture future opportunities. This future focus translates into a company that is continuously enhancing its capabilities to be ready for its next opportunity, while continuing to deliver value by focusing on the opportunities it can capture here and now.

What this looks like

A great agile organisation pursues opportunities that are linked to their capability to do so, but continuously evolves its capabilities to be ready to take on future opportunities, even if those opportunities are currently unknown.

 

Cross-functional independent teams

Cross-functional independent teams are the most explicit of requirements for agile organisations. Although simple in theory it is much harder to put in place in practice. When looking at the company from a bigger picture perspective, most teams are formed as semi-cross-functional teams. This is because they are often formed around only a portion of the company’s true end to end value stream.

Teams formed this way are never truly independent because they depend on up and downstream teams to help deliver value. This occurs because we have the tendency to create teams around areas within our control and not based on the actual value-stream of the product we are working on.

Expanding our thinking to focus on a complete value stream (one that includes discovery, problem validation, concept validation, delivery, release, launch and any other activities involved in building a successful product), changes the definition of what makes up a cross-functional team.

As the ability to consume technology makes it easier, the reliance on technology specialists is reducing. This enables a broader, more diverse set of skills to come to bear in deploying technology solutions. Embracing a cross-functional team mindset means that a company will understand that the definition of a cross-functional team changes depending on the type of problem a team is trying to solve.

An agile company will continuously review the types of problems it is trying to solve for and design cross-functional teams based on the different skills required, as the problems change over time. As the ability to leverage more diverse skills increases due to the consumerisation of technology, it will continue to restructure teams to have the least dependencies possible.

What this looks like

A great agile organisation will understand that as the opportunities we are pursing change, so do the skills we require. As their ability to consume complex technology increases they will continuously review and adjust their team structure to ensure they retain truly cross-functional independent teams.

 

Team structures that reform with the changing landscape

Traditional organisations often resist changing organisational structures due to the change impact it introduces. Agile organisations understand that as our business landscape changes, the structures we have in place may not be suitable to address the new opportunities that emerge. Instead, an agile organisation looks to enable team structures that can easily reform with the changing business landscape.

Static structures age and decay over time. This means that, if a structure is fixed, there comes a time when the structure no longer fits the challenges we are facing. Agile organisations focus on reducing the resistance to organisational change by leveraging approaches such as facilitated advocacy and people led change.

Alternate approaches such as self-selection enable approaches for conducting organisational restructures that reduce change resistance and instead result in higher levels of engagement and excitement during the change.

What this looks like

A great agile organisation understands that as the opportunities we are pursing change so does the organisational structure that is best suited to pursing those opportunities. Rather than avoiding structural change an agile organisation reduces the resistance to change and encourages teams to actively reform their structure to match the changing business landscape.

 

Strategy and outcome alignment at all levels

One of the greatest strengths of an agile organisation is the ability to leverage the collective strengths of all individuals in the company. This ability to do this, however, requires team members to have high levels of alignment around what a company is trying to achieve. This enables them to demonstrate higher levels of autonomy, as well as alignment to the company’s goals. This is commonly referred to as self-organisation in the agile space, and at scale, self-organisation results in the increased ability for teams to take action in a constantly changing environment.

Because the focus is to enable autonomy and alignment towards achieving a common goal, and the expectation is that the environment will change, an agile organisation understands that it is more important to align on the strategies and the decision making process it will follow rather than the plans it produces.

An agile organisation looks to build alignment around strategy at all levels ranging from stratospheric business strategies down through to the delivery strategies a team will follow. The alignment around the decision making process increases the ability for teams to make high-quality decisions as the environment changes and continue to move in the direction the company is aiming for.

What this looks like

A great agile organisation builds alignment around the outcomes it is trying to deliver as well as the strategies it will employ to make decisions. It enables high quality decentralised decision making by ensuring every team and individual is able to make decisions that are consistent with the company’s overall goals even as the business environment changes.

 

Cohesion at multiple levels

Agile organisations are extremely good at creating highly cohesive autonomous teams; however, one of the pitfalls of building highly cohesive teams is that they can quite often result in lower levels of cohesion at department and company levels.

As agile has evolved, teams have learned that there is a need to build cohesion at department and company levels to reduce the frequency at which a team optimises their local team factors at the expense of the greater good of the company.

Structures such as Spotify’s tribe, chapter, guild model are approaches of building cohesion across a range of dimensions.

What this looks like

A great agile organisation seeks to build broad company cohesion balanced with team level cohesion to ensure that teams are highly effective but still willing to sacrifice their short term objectives for the greater good of the company.

 

Disruptive thinking co-existing with the continuous improvement mindset

Often considered to be opposing mindsets, agile organisations have grown to understand that disruptive thinking and the continuous improvement mindsets co-exist in every individual. Attempting to compartmentalise the activities into different parts of a company reduces our ability to leverage the collective power of all individuals in the company.

Instead, an agile organisation understands that each individual can contribute to both disruptive innovation and continuous improvement activities. Rather than separating the two, it is more important to help individuals understand the problems that they are trying to solve, and the type of mindset required for the given problem.

A company like Toyota values the knowledge of every individual within it. While delivering product innovations such as the hybrid electric/petrol technology within the Prius, they have still maintained their reputation as a leader in the application of the lean continuous improvement mindset.

What this looks like

A great agile organisation encourages disruptive things and a continuous improvement mindset in all individuals. It improves the ability for its team members to understand the problems they are solving for and the ability to appropriately use the right type of mindset for a given problem.

 

A culture of openness and inclusion with a bias for action

Agile environments encourage diversity in all its forms due to the improved outcomes it achieves through innovation and creative thinking. Different perspectives are embraced for the radical ideas they can bring; however, agile teams understand that this can also lead to analysis paralysis when looking for the perfect solution and requiring consensus among all individuals.

Instead, an agile organisation understands the importance of positive momentum and encourages a bias for action. An agile organisation values playing in the right ballpark rather than finding the one perfect answer. Because they work in short iterations, agile teams are comfortable in not working on the one perfect solution because they are always confident that they will be working on one of the most valuable opportunities available at any given time.

What this looks like

Great agile organisations embrace diversity and provide an inclusive working environment but also demonstrate a bias for action. They encourage the ability to commit quickly to action, even as a diverse team by ensuring it is always working on a valuable idea through the use of short decision cycles and incremental, iterative delivery.

 

Risk avoidance balanced with the ability to experiment

Although risk avoidance is valuable in some contexts, it is highly costly to do so. Agile organisations instead encourage the ability to experiment safely by making it easier and quicker to find problems and subsequently recover from them.

By making it safe to fail, agile organisations encourage the ability to experiment safely, leading to positive customer outcomes for the product sooner.

What this looks like

A great agile organisation balances the costs associated with a company’s need to avoid risks with a more targeted approach of being able to quickly detect and recover from issues quickly. Instead of attempting to guess and protect against every possible thing that could occur, they focus on learning what the real problems are, to avoid catastrophic outcomes in a cost effective way.

 

Growing an agile organisation

As a company adopts an agile mindset, they will ultimately move closer to exhibiting these nine characteristics over time but how they get there will be different. The level and pace at which they do so will also be different and is largely dependent on how much the company and its leadership team is willing to commit to shifting the culture and operating model of the company.

It requires constant support and a persistent focus in moving towards what great looks like but hopefully, these nine key factors provide enough of a view to get you started.

Agile is not always for everyone, but I believe our future working environment and the accelerating pace of change that the fourth industrial revolution will bring, will require it to be.

Good Luck!


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ORGANIZATIONAL DEVELOPMENT, DESIGN & LEARNING
Real learning in a virtual world

How can corporate trainers prepare employees for dangerous or extraordinary workplace scenarios? VR technology offers immersive learning opportunities for an increasingly broad range of experiences.

Introduction: Total immersion

AT THE oil refinery, emergency sirens begin to wail. A shift supervisor races to the scene of the emergency and sees smoke already billowing from the roof of a distillation unit. He needs to get the fire under control, but when he opens the door to the control room, a wall of flame greets him. The situation is worse than anything in his training manual. How can he locate the shut-off button when he can’t see through the flames? He hesitates—and in that moment, the pressure built up in the distillation tower releases in a massive explosion, ripping apart the building and scattering debris across the whole refinery.

A red message flashes before the supervisor’s eyes: Simulation failed. A voice comes over the intercom and says, “All right—let’s take two minutes, and then we’ll reset from the beginning.” He is covered in sweat as he takes off the headset. It had been a virtual reality (VR) simulation, but the stress was real; more importantly, the lessons on how to respond to a crisis had been real.

For decades, trainers have faced a difficult trade-off: How can you adequately prepare learners to make good decisions when facing dangerous or extraordinary situations? You can provide simple learning materials like books and classes, but these are likely inadequate preparation for stressful and highly complex situations. Or you can expose the learners to those situations in live training, but this can be extremely costly—not to mention hazardous. For many jobs and situations, training has long offered an unappealing choice between easy but ineffective, or effective but expensive and risky.

VR promises a third way: a method of training that can break this trade-off of learning and provide effective training in a safe, cost-effective environment.1 Certainly, the technology is not optimal for every learning activity. But VR has been shown to offer measurable improvement in a wide array of immersive learning outcomes, in tasks that range from flying advanced jets to making a chicken sandwich to handling dangerous chemicals.2

This article is intended to help trainers identify whether VR is right for their particular learning needs and chart a path toward successful adoption of the technology. Ultimately, learning-focused VR can turn novices into experts more swiftly, effectively, and smoothly than ever before.

It’s all about expertise

Success in business often rests on having the right expertise in the right places: having the IT expert on hand when the system goes down, or the best shift manager on duty when a huge order comes in. The more experts in an organization, the more likely an expert will be around when needed.

Of course, expertise can be purchased by hiring established experts. But their numbers are finite, and with needs constantly shifting, training often makes far more sense. Corporate learning, then, aims to create expertise as quickly and effectively as possible. We want people to learn better and more quickly. This begs a question: What exactly is expertise? Just what is it that we want people to be able to do after training?

Expertise is easiest to define in terms of what it is not. Expertise is not merely the number of years one has studied or how many academic degrees—or corporate training certificates—one has earned or even the results one has achieved. For example, simply tabulating wins and losses in tennis turns out to be a poor way of ranking the best players.3 And notwithstanding some popular theories, thousands of hours of practice don’t always generate expertise. For example, deliberate practice accounts for only 29.9 percent of the variance in expertise in music.4

Experts are not only better at executing particular tasks—they tend to think about things fundamentally differently than amateurs. In fact, they can execute better precisely because they think about things differently. Experts typically see more when looking at a situation than an amateur. Research comparing a world champion chess player with amateurs showed that the champion was better not only at playing chess but at knowing the game. The champion had a better understanding of a chessboard setup after viewing it for five seconds than a skilled amateur did after 15 minutes of studying the board.5

That result came about not because the chess champion was any smarter or had faster visual acuity than his amateur opponents—it was a product of expertise itself. Experts are able to recognize patterns behind the data we all see. Academic research has found a similar pattern-recognition story in nearly every industry from medicine to chess.6 Experts in diverse domains are better able to reorganize and make sense of scrambled information.7 Where knowledgeable amateurs rely on rules and guidelines to make decisions, experts are able to quickly read and react to situations by recognizing indicators that signal how a situation is behaving.8 A key to creating experts, it seems, is not the memorization of facts or knowledge but, rather, instilling flexible mental models that help explain why systems act the way they do.

How can we learn better?

In hindsight, trainers may have had it easy in offering certifications based on hours of study. Creating deeper expertise can be far more challenging. How can we train people to see deeper patterns in data? How do we know whether they are using flexible mental models?

For most people, experiences that expose trainees to tough or atypical cases force them to create more refined or specialized reasoning than that found in a book or procedure manual.9 The most effective learning may come from unexpected scenarios, a challenge to present in a book or classroom.10 But unpredictable, experience-based learning has obvious limitations: It is easy to learn from experience when failure simply means losing a chess match, but what about fighting a fire, unloading hazardous chemicals, or configuring a wind turbine—all tasks for which failure means huge costs or even death? The problem facing trainers is how to create the benefits of learning from experience without incurring the costs of facing rare or dangerous experiences. The answer is to re-create those experiences.

Take medical training, for example. A cardiologist may practice for years, continually training, before reaching the peak of her profession. One reason: Many of the most serious medical problems are extremely rare, meaning that a doctor must often work for years before encountering them and building expertise in how to recognize and treat them. With some procedures requiring doctors to practice on 100 patients before reaching a critical level of skill, this means that some doctors may retire before even having the opportunity to become an expert in treating certain rare conditions.11

VR training offers a shortcut. Given its ability to present immersive, realistic situations over and over again, the technology can give doctors the opportunity to potentially build expertise on conditions before they see them for the first time in real patients (see figure 1). VR can also offer the ability to learn in new ways—not only simulating what a doctor might see but presenting it in 3D or in more detail. For example, a cardiologist could see a heart defect, not just from symptoms or test results but as a 3D model, allowing her to peek inside the heart and understand the problem more deeply and how to treat it more accurately.12

Virtual reality is one technological component of digital reality that can help solve real-world business problems and create competitive advantage

Virtual reality: Better training faster, safer, and at less cost

VR technology can enable more effective learning at a lower cost and in less time than many traditional learning methods. This is because VR can allow for more training repetitions, especially when dealing with costly, rare, or dangerous environments. For example, the skills of aviation maintenance personnel can degrade when budget constraints limit flying hours; if jets are not in the air, there is nothing to be fixed. But without that practice, critical maintenance skills can slip, leading to increased accidents.13 VR can allow maintenance staffers to keep up their skills by learning from experience, at a fraction of the cost of putting an actual jet in the sky.

VR is not just about saving money—it can provide better outcomes than many traditional learning methods. Most research examining the technology’s effectiveness have found that it reduces the time taken to learn, decreases the number of trainee errors, increases the amount learned, and helps learners retain knowledge longer than traditional methods.14 These effects apply to the general population as well as specialists training for unique tasks. One experiment compared how prepared airline passengers were for an emergency from reading the ubiquitous seatback safety card versus completing a brief immersive game. Passengers who used the game seemed to learn more and retain their knowledge longer than those who merely read the safety card. These better outcomes are almost certainly linked to the fact that the game was more successful than the card at engaging passengers and arousing fear, both incentivizing participants to learn and providing the neurological surprise to support that learning.15

Beyond simply improving how well learners retain information, VR-based training can help learners when they get it wrong. The ability to track all of a trainee’s actions and inputs as he or she moves through a scenario can reduce the cost of providing individual feedback and giving tailored feedback. Experts need not sift through all the data and tell a trainee where he or she went wrong—the system itself may be able to determine likely causes of error and best strategies for avoiding those errors in the future.16

All of these capabilities mean that VR can be a valuable learning tool for a variety of tasks in any industry—and some real-world applications are already catching up to predictions that academic research has suggested:

  • Better learning. Some major retailers have begun training workers using VR simulations. Staff are able to repeatedly take on new tasks such as managing the produce department or annual challenges such as dealing with Black Friday.17 Working through these challenges is designed to help people directly see the impact of their actions on customer experience. And simulations can even allow staff to virtually travel to other stores to see how operations are managed there, spreading good ideas and offering paths to improvement.18 As a result, some companies have found that not only do people seem to retain more compared to traditional methods—they appear to learn more as well.19
  • Faster learning. In 2017, KFC debuted a VR training simulation to help trainees learn the chain’s “secret recipe” for preparing chicken. Using the simulation, trainees were able to master the five steps of making fried chicken in 10 minutes, compared with 25 minutes for conventional instruction.20

Linde’s experience with VR-based training illustrates the technology’s potential benefits. One of the world’s largest suppliers of industrial gases, Linde delivers hazardous chemicals to thousands of locations daily, meaning that truck drivers must handle materials that may be explosive or, at -320° F, cold enough to instantly freeze hands solid. When one slip-up can mean injury or death, how can new drivers build their skills and expertise? For Linde, VR-based training provides an answer. In the virtual environment, new drivers can get dozens of repetitions, building safe habits before stepping out on their first delivery.21VR can even give drivers an X-ray view of what is happening inside the tanks as they work. Not only are drivers practicing the right skills—they are learning the underlying concepts of why they are the right skills. That is what can create expertise—allowing drivers to react to unexpected situations quickly and with confidence.

Linde is experimenting with more ambitious VR training environments as well. The company used CAD files for a plant currently under construction to create an immersive VR environment, aiming to train the operators who will eventually manage that plant.22 As with the earlier oil-refinery example, operators can practice emergency procedures or dangerous tasks, but they can also explore the environment, understand how all systems fit together, and even peek inside operating machinery to have a better view of the plant for which they will soon be responsible.23

When can VR enhance training?

As with any technology, VR is a tool, not a magic bullet. Incorporating VR into a training program hardly guarantees quality improvements; indeed, the coming years will doubtless bring anecdotes of VR disappointments along with successes. Trainers should bring the same careful planning in program design and learning goals to VR as to any other training effort—including focusing programs around understanding the knowledge that an organization needs learners to acquire and what they should then do with that knowledge.

The knowledge that learners must acquire can cover a wide range, but several factors are particularly relevant to VR technology: how rare the knowledge is, how observable, and how easily it can be replicated physically. A cardiologist may struggle to learn about uncommon heart defects exactly because they are rare, limiting learning opportunities. Many find organic chemistry challenging to learn partly because one can’t directly observe molecular bonds with human senses; landing on an aircraft carrier is tricky to perfect because repetitions are both costly and dangerous.

Another attribute to consider: what trainers expect learners to do with the knowledge once they have it. Do people simply need to recognize and apply it, as with reading the defense in football, or do they need to perform complicated actions such as synthesizing it with other knowledge and adjusting to context? All of these factors play into how best to present knowledge to learners.

By understanding the different factors that go into learning, a trainer can make informed decisions about when VR is appropriate and design the best training possible to maximize performance (see figure 2). For example, if learners need only acquire relatively simple information—that is, information that is common, obvious, or easy to represent—VR may be superfluous and no more effective than books, classroom instruction, or job aids.

Similarly, if learners need to do more complex tasks involving simple information, VR may help, but there may be easier, cheaper ways to accomplish the learning. Take the simple knowledge of a workflow: Workers need to understand the workflow and apply it in different contexts. VR might certainly help in learning such workflows, but it may not always be necessary. If the various contexts of the work are not rare, dangerous, or costly to recreate, using case studies or job aids may be cost-effective alternatives.

The decision framework can help determine when and how to use VR in learning

Where VR moves into a class of its own is when the knowledge that learners must acquire is complex: where trainees must try to grapple with difficult-to-observe phenomena that occur rarely or in dangerous situations. In these cases, VR-based training may well be an effective choice, offering the advantages of faster and better learning at lower cost.

Indeed, VR’s ability to allow for collaboration and for repeated simulation opens up entirely new learning possibilities:

  • Shared scenarios. Consider a military squad that needs its members not only to individually do the right thing but to coordinate and work together. Shared scenarios can allow members to practice individual actions and communication within the squad in a variety of combat situations they could not normally face.
  • Seeing the unseen. VR may be even more helpful for research scientists. Not only do they often need to collaborate within teams—they regularly struggle with concepts not easily visualized. But imagine if a team of scientists could share ideas while all looking at a 3D model of the molecules they are studying. They could come up with new ideas inspired by finally seeing the previously unseen—and they could then easily share those ideas with their colleagues.
  • Test and re-test. VR technology allows trainees to test ideas as well as share them. Many Formula 1 auto racing teams use VR extensively in preparation for races, going far beyond drivers simply learning the track—after all, they already know it by heart. Instead, the teams use simulations to test different setups for their car and different race strategies.24 The aim is to prepare team members for any eventuality during the race, helping them react swiftly. This type of virtual testing represents a deeper form of learning, one in which the drivers and the teams are using VR to see into the future and discover the deeper patterns in what is likely to happen. In short, they are building expertise.

Getting started is less daunting than it may seem

Many trainers no doubt find exciting the description of VR as a new technology that can bring revolutionary benefits, though CFOs and CTOs—worried about complex technical integration, high up-front costs, and years of headlines about VR hype—may express less initial enthusiasm. The good news: Implementing VR technology may be far less daunting than it might seem. With standardized development kits, training design and technical integration have never been easier, as the costs of hardware, computing power, and storage continue to fall. As a result, many will find the cost of VR-based training applications increasingly reasonable. Especially when companies consider the increases in performance and the cost savings from time lost to longer, traditional training methods, VR can show a rapid return on investment.

With technology improving and prices dropping, the major steps to consider for creating successful VR learning resemble those typically involved in designing any good learning program:

  • Understand your training needs. Determine the type of knowledge that learners must absorb and how they must use that knowledge during the job to help understand whether VR is right for your need and how it should be used.
  • Create your business case. Quantify the expected benefit from the training in terms of increased performance, decreased errors, and productivity gains from fewer days lost to training. Array those benefits against expected costs to understand the ROI for the project.
  • Pilot the training. Start small. Begin with a pilot program to evaluate the effectiveness of the VR training and its adoption within the organization.
  • Quantify the benefit and scale the program. Use the results of the pilot program to validate initial estimates of ROI, modify the program based on what worked and what did not, and scale in scope or size of deployment.

Following these steps, companies adopting VR should get more than a shiny new technology—they can get better learning at lower cost than other options. Ultimately, the applications of VR and its ROI are limited not by dollars or technology but purely by imagination.