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Kindle Notes & Highlights
by
Safi Bahcall
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December 25, 2020 - January 1, 2021
It’s easy to see how the salary step-up rate might affect your decision on how to spend that extra hour.
If, however, promotions come with a 2 percent increase in pay, who cares? You might as well put your energy back into your project, where some extra effort could earn you a bigger bonus or increase the value of your stake in the company’s success.
Promotions happen so rarely that it’s not worth spending any time politicking. With a span of two, however, you are constantly in competition with your peer.
equity fraction, which we will write as E. Equity ties your pay directly to the quality of your work.
The greater your equity fraction, the more likely you are to choose project work over politics.
The greater your skill on the projects to which you have been assigned, which we can call project–skill fit, the more likely you are to choose project work. The lower your project–skill fit, the more likely you are to choose politics.
Let’s call it return-on-politics: how much politics matters in promotion decisions. Are promotions decided purely (or almost entirely) on merit? Or do lobbying, networking, and self-promoting make a big difference?
What matters for our purposes, in our simple-model organization, is the ratio between project–skill fit and return-on-politics. We will write that ratio, which is a measure of overall organizational “fitness,” as F.
E Equity fraction S Span of control F Organizational fitness G Salary growth rate up the hierarchy
DARPA is run like a loose collection of small startups, with no career ladder. A hundred or so program managers each lead one project or field of research. They are granted an extraordinary degree of autonomy and visibility, not unlike McElroy’s brand managers.
there is no career ladder. Project managers are hired for fixed terms, typically between two and four years (their employee badges are printed with an expiration date).
The combination of visibility and autonomy creates a powerful motivating force: peer pressure.
That impartial view, of both successes and failures, is crucial for a strong system mindset, as discussed in chapter 5.
find opportunities to increase autonomy, visibility, and soft equity.
open innovation, companies jointly develop new ideas, technologies, or markets with customers (usually early adopters or superfans) or business partners (for example, suppliers and comarketers).
Open innovation comes with a double bonus. Companies gain access to fresh ideas, often from
exactly the kind of enthusiasts they want to engage, like the donut-and-adrenaline-fueled kids on the Georgia Tech Red Balloon team or the brilliant improvisers on the MIT team. At the same time, they also improve soft equity—peer recognition.
At McKinsey, for important promotion decisions, a senior partner, chosen for his or her limited overlap with a candidate’s office and practice, is brought in to conduct an independent evaluation.
The process may take as long as three months. The investigation is
exhaustive: a partner once explained to me that your evaluator ends up knowing your strengths and weaknesses better than your mother. The lost time is expensive. It takes away from client work, which generates income.
retains careers but invests heavily in reducing the subjectivity of promotion decisions.
matching employees and projects.
McKinsey, however, dedicates a full-time team to managing project–skill fit.
task. But poor project–skill fit can also result from an overmatch: skills so far above project needs that the employee has maxed out what he or she can contribute.
employees stretched, on average, neither too much nor too little by their roles.
A designer who has learned new techniques wants to practice them.
ladder. Leaders well coached on group dynamics are likely to spend more time with their teams. It’s fun working with high-performing teams who appreciate you. It’s less fun to spend time with dysfunctional teams who hate your guts.
If the prize for promotion were not as rich—if project success earned you the jackpot of your dreams, and promotion earned you no more than a used tissue—then the battles would not be as fierce.
Examples of celebrating rank include not just big increases in base salary, but any kind of special privilege: parking spots, a special cafeteria, trips to Hawaii for “executive workshops,” and so on.
Pay contractors by the hour, and problems may multiply. Reward sales, and profits may disappear (customers can be bought).
There’s no such thing as a perfect incentive system, but it’s easy to stumble into a terrible system,
I’m still amazed by how often large companies compensate junior or mid-level employees on company earnings. If your project can move earnings by no more than a tiny fraction of a percent, how does a company-earnings bonus motivate you?
(Economists call a similar issue in the use of public goods the “free-rider problem.”)
spot: rewarding teams for collective outcomes.
identify wasteful bonuses
tap into the power of nonfinancial rewards:
creative talent responds best to feedback from other creative talent.
SUMMARY: RAISE THE MAGIC NUMBER
Simple changes that encourage, but don’t mandate, behaviors we would like to see have been called “nudges.” In their book with that title, Cass Sunstein and Richard Thaler
Daniel Kahneman
Phase separation: separate loonshot and franchise groups 2. Dynamic equilibrium: seamless exchange between the two groups 3. Critical mass: a loonshot group large enough to ignite
The Royal Society of London, created in 1660, brought together nearly all the founders of modern science in England,
book. I use the distinction between S-type and P-type because teams and companies or any large organization develop deeply held beliefs, sometimes consciously, often not, about both strategies and products—and loonshots are contrarian bets that challenge those beliefs.
