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Alan Pentz on building new strategies in an era of disruptive change and rapidly advancing technology.

Are You Ready For Pay For Performance?

The Administration has recently emphasized its intention to implement pay for performance across the federal workforce. You can agree or disagree with the idea, and in my view the evidence is mixed, but that doesn't change the fact that government leaders will have to have a strategy to deal with it.

To make pay for performance work, you have to set clear goals and point the organization towards those goals. Surprisingly this is rarer than it should be. Many organizations have to muddle through without much direction. Some staff are connected to customers and have a good idea of what they need but many others simply revert to doing whatever is convenient, seems to be rewarded internally, or simply engage in internal fights for resources and power. If your culture is like this, pay for performance will simply exacerbate those problems. But if you are able to develop a simple and clear strategy, you have a chance to transform your organization.

The key is to first make some tough choices about what goals you are going to focus on. Most organizations don't choose because it is painful to have to say no and so they do a little...

Think Like a Gambler: Innovation Is About Making Bets

I've been reading a new book from Annie Duke called Thinking in Bets. Who doesn’t love a former World Series of Poker winner who also has a PhD in cognitive psychology? But she doesn't just have a fascinating background. Her book also offers some great lessons for anyone interested in innovation. One of the key problems I see in innovation, particularly in government, is the tendency of leaders to spend too much time analyzing their choices. Then once they have made their decisions, they commit too many resources to them.

From Duke's perspective, most things in life are bets. When we order chicken over fish, we are betting we'll be happier with the chicken. If we fund a project, we are making a bet. Along with this is how a betting perspective impacts our thinking. As humans we are often overconfident in our decisionmaking and even if we are unsure, we become more confident after a decision has been made. Studies of confirmation bias show that we seek information confirming our views and filter out evidence to the contrary. That's a great strategy to feel good in the short term but isn't going...

Don’t Confuse Strategy With Outcome

It's almost a truism that we should judge the quality of a strategy and the projects and initiatives that come from it based on their outcomes. We're results oriented after all, aren't we? Unfortunately using outcomes as your sole measure is usually a terrible way to judge effectiveness. Outcome-based measures are usually the holy grail of performance measurement but if the goal is to make decision-making processes repeatable and to learn from past experience, judging solely on the basis of a few outcome data points won't get us very far.

What we need to do is focus on the quality of the strategy and decision-making process that led to the outcome. Our first question should always be whether the process was sound using the available data to make as informed a decision as possible. As Michael Mauboussin shows in his book The Success Equation, with most things in life there is a continuum between skill and luck. Most endeavors combine elements of the two. We can and should use skill to make decisions, but in the end, luck will act on those decisions in ways we cannot predict. The more complex and multi-faceted the issue and...

Leadership is about Hard Decisions

I've become increasingly convinced that good organizational leadership is relatively simple but not easy. In other words, unless you work at NASA, good leadership and management isn't rocket science. You can argue around the edges but most gurus preach that leaders should:

  1. Know their customer and mission.
  2. Set a clear direction.
  3. Focus resources on the most important initiatives that will get you there.
  4. Build a great team to implement.
  5. Ensure accountability.
  6. Communicate the story and progress of the organization.
  7. Learn and adapt as you go and never forget about No. 1.

None of that is particularly difficult to understand and certainly anyone with an average IQ can do the job. Warren Buffett famously urged investors with an IQ of 150 to sell 30 points. He wrote:

“To invest successfully does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework.”

Replace "invest" with "lead" and the statement is equally as true.

For example, the No. 1 problem I see government leaders struggle with is canceling or moving resources from one project and giving them to another...

3 Tips For Managing Innovation

We are used to seeing innovators lauded for their brilliance. They are insightful geniuses who see around corners and live ahead of their times. In practice, most innovators stumble into success. Innovation is more about implementation and execution than it is about inspiration. Of course Edison figured that out over 100 years ago when he said: "Genius is 1 percent inspiration, 99 percent perspiration."

It pays to take a more opportunistic approach. Twitter started off as a side project at a podcasting company that had been made irrelevant by Apple. Steve Jobs didn't want apps on his precious new iPhone. Facebook was a social network for Ivy League colleges and Netflix mailed DVDs. Change and adaptation are crucial to success.

Don't discount the importance of ideas. They are the starting point and the motivator to take action, just don't stick to closely to those original ideas. As a government leader you should be careful to design your project planning to allow for adjustments and learning. Often the best insights come from ideas that occur during implementation. The original idea doesn't always work but it leads you down a path to something that does. In other words...