Reduce Organizational Drag

SARAH GREEN CARMICHAEL: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green Carmichael. Busy people like to say that time is money. But actually, that’s not true. If you spend money, you can earn more of it. But time is always finite. Once it’s gone, we can’t ever get it back.

And yet in our organizations, we routinely squander time, energy, and talent in a way we would never waste cold, hard cash. Meetings run long and involve too many people. Email chains spout out of control. And projects drag on and on, even after it’s clear they are not working.

This is frustrating and demotivating for everyone involved, but it can be especially hard to watch as a manager or senior executive when you’re one step removed from the action and struggling to figure out how to intervene.

Today, we’ll tackle that problem with Michael Mankins, a partner at Bain & Company and the co-author of the new book, Time, Talent, Energy– Overcome your Organizational Drag and Unleash Your Team’s Productive Power. Michael, thank you for joining us and welcome to the IdeaCast.

MICHAEL MANKINS: Thanks for having me.

SARAH GREEN CARMICHAEL: I want to ask you about something that you argue in the book– an organization’s time goes largely unmanaged. What do you mean when you say that?

MICHAEL MANKINS: So if you think about the way money is managed at companies, how it’s invested is carefully governed. So there’s business cases for every new investment, or hurdle rates that are established so that you have to exceed in order for the project to go forward. And performance is carefully tracked to make sure that every penny went to its highest value, best use, and the project is actually delivering what was promised.

None of that’s the case for time. So there’s a quote by Andy Grove from Intel that we use in the book, but also in an HP article a few years back, that just says you wouldn’t dare of letting an employee walk away with a piece of office equipment, but you let them walk away with the time of their fellow managers all the time.

Most organizations don’t actually know where they invest their collective time, even though the tools are available to answer that question today, and they weren’t a few years back. And as a result, that scarce resource, time, is often squandered unintentionally, or certainly not put to its highest value and best use, which is the test that you would apply for things like financial capital.

SARAH GREEN CARMICHAEL: You’ve actually managed to calculate some numbers against this to show how much time we actually are wasting.

MICHAEL MANKINS: Yeah, a few years ago we performed what we called organizational audits on 25 large companies. A portion of those we applied people analytics tools. A few of the things we found were pretty startling. So the average front line supervisor today spends about eight hours a week, about a full business day, answering or responding to somehow processing email, though about half of it is unnecessary.

And what I mean by unnecessary is that it’s either emails that should never have been sent in the first place, should never have been sent to this individual, so should never have found their way into this person’s inbox, should never have been replied to by this individual or anyone else, hence generating a new email chain, et cetera.

So if you think about it, somewhere around four to five hours of unproductive time could in essence be liberated if you could just get rid of that. And that doesn’t even start to talk about meetings. So the average front line supervisor spends 11 hours a week in meetings, so more than a full business day in meetings involving more than four people. And meetings is where we’ve experienced the most rapid growth.

SARAH GREEN CARMICHAEL: In terms of wasted time.

MICHAEL MANKINS: It’s literally the cumulative amount of organizational time dedicated to meetings. So that’s not only the length of meetings, the number of meetings, but actually the number of people invited to meetings. And that has been growing at a fairly consistent pace since about 2008, which is when we first started gathering data on this.

But again, of that 11 hours, about half of it is unneeded. So half of it is either meetings that should never have been scheduled in the first place, meetings that should have been scheduled but this person didn’t need to attend, meetings that should have been scheduled, this person should have been asked to attend, but only a portion of the meeting. If you add up all of those, you get less than half of the total meeting time.

And so the result is we estimate that somewhere around 20% of a line supervisor’s time could be eliminated if you are successful at just getting rid of unnecessary e-communications and unnecessary meetings.

SARAH GREEN CARMICHAEL: That’s crazy.

MICHAEL MANKINS: And it’s no wonder then that work creeps into weekends and that people experience more and more time being dedicated to work and yet not feeling like they’re able to do as much as they could or should.

SARAH GREEN CARMICHAEL: I think some people would argue, or have argued, that as work becomes more complex, it demands more collaboration. And that all of this is just the natural cause of being more collaborative. But that’s not I think the explanation that you’re going to buy.

MICHAEL MANKINS: Yeah, well, no. I think that a certain amount of that is the case. Collaboration in our view is a double-edged sword. So the real reason why meetings have increased– just take meetings, for example, and why that’s growing so rapidly– is both a function of a desire for greater collaboration in the workplace, but I think more largely driven by what we think of as the dark side of Metcalfe’s Law, is what we call it.

So Bob Metcalfe was the inventor of the Ethernet, founder of 3COM. He’s now a professor of entrepreneurship I think at the University of Texas in Austin. He postulated that the value of a network increases geometrically with the number of nodes in the network. So think fax machines. One fax machine isn’t very valuable. Two, actually, creates the ability to communicate back and forth. Yet a third, though, it increases geometrically, et cetera.

What Metcalfe didn’t say but he probably knew is that there’s a dark side to that. That as the cost of one-to-one and one-to-many communications declines, the number of those interactions increases.

I think of my own professional life. So I’ve been in the professional world for almost exactly 30 years. When I first started work, when I ask an assistant or someone to set up a meeting or had to do so myself, it was a lot of work. You had to call each of the individual participants in the meeting, you had to settle on a date and– voila– you got a meeting.

Today, it costs absolutely nothing. You basically have access to everyone’s calendar. You sometimes don’t even communicate with the individuals. You just get a meeting that plops down on your calendar. Adding a new person to that meeting is costless.

And the result is that both the number of meetings has increased. But more importantly, the number of participants per meeting has increased. You have this perverse effect on the cost or the dark side of Metcalfe’s Law.

One sad commentary in why I think it’s not just collaboration is that we found in the organizational audits that we did that about one third of the meetings that occurred, people were sending three or more IMs or emails during the meeting. So it can’t be that people are that effective in their collaboration if they’re parallel processing during almost every single moment of the meeting. So it’s a dysfunctional collaboration or collaboration for collaboration’s sake that I don’t think is just the result of trying to get the best out of teams.

I’m not writing that off as a potential benefit. But think about how great it would be if you had both meetings that were occurring with all the right people in them and no more than that to allow the individuals to get the best out of their teamwork, but at the same time leave them time to do individual work as well.

SARAH GREEN CARMICHAEL: So how much does all of this cost in dollar terms?

MICHAEL MANKINS: Yeah, so we didn’t do research, but there’s been research by Gary Hamel and others that have basically placed the cost of the economy at about $3 trillion.

SARAH GREEN CARMICHAEL: Wow.

MICHAEL MANKINS: Yeah, it’s big. And it’s I think a growing number would be our research as well. So there’s only so much drag that you can put up with before most productivity drives to a halt and slows growth.

SARAH GREEN CARMICHAEL: So this is I guess the $3 trillion question. What can companies start to do about this problem?

MICHAEL MANKINS: What we found is, first of all, it has to start at the top because most processes in bureaucracy are not intended to be bureaucracy from the outset, but become that way over time. So typically they’re essentially set by senior leadership.

We looked at coming out of the organizational audits that we did that, if you add a mid-level supervisor to a company, they create enough work for themselves plus about a tenth of another person.

By contrast, when you hire a very senior executive, for every senior executive you add to a company, they create enough work for themselves, enough work for one and a half other people, plus they bring with them a caravan– what we call a caravan of chiefs of staff, administrative assistants, et cetera, which all generate work in their own right. So you get this huge amount of work that’s actually driven from the top. And so you have to change that.

SARAH GREEN CARMICHAEL: What are some good examples of that?

MICHAEL MANKINS: The company that we cite in the book is Seagate, which used the information only as a vehicle for trying to change behavior. So they generate reports every week for senior executives and said, this is the organizational load that you’re putting on the company, and that’s because of the emails you send, the meetings you schedule, the work that you create. And they produced benchmarks for similar executives at their level, executives in similar functions, executives on average in their geography, and said, we’re not policing this. We just want to reduce that number by 10%.

Well, people self-police. They basically say, well, wow, I did realize that by inviting Molly and Jenny to the meeting that that was actually creating that much load– but it does and they self-police. There’s an example that I find powerful– and it’s real– about the undersecretary of defense procurement. She was at her first meeting– this is a number of years back and this was relayed to me by a client of the defense sector who I would describe as a crotchety old guy.

He said, I went to this meeting and there’s like 60 people in the room. And this woman comes in and she introduced herself. And she says, well, why don’t we just form a circle and get to know each other. And he literally said, Michael, to me, I thought, holy crap, this is going to be a complete touchy-feely session.

So they form a circle of 60 people and she goes to each one and says, well, introduce yourself, tell me what organization you represent and why you’re here. And she gets to the third person and he does this. And she says, well, thank you for coming, but we don’t actually need you here. You can excuse yourself. We’ll go on without you.

By the time she got to the tenth person, people are exiting the room in mass because they know they don’t need to be there. They know they don’t have any function and they would just as soon not be excused. And the result was the meeting was much smaller.

Well, you can do that. Senior executives should be doing that in a regular core. So I relayed that story to an executive and the thing he did. Well, the next meeting he went into, there were 40 people in the meeting. And he just basically decided he was going to reduce the number of people in the meeting.

And so information really is pretty powerful. And providing that information in real-time can actually have a big impact on behavior.

SARAH GREEN CARMICHAEL: The concept of a fixed-time budget. What is that? What do you mean by that? How does that work?

MICHAEL MANKINS: That’s almost always figurative. Ford used to have what they call meetings week, where all of the senior executives from all over the world met in Dearborn for five days of meetings each month. When Alan Mulally became CEO of Ford, the perception from Alan and others, when he came on board, was that’s a lot of time.

And the sentiment though was, I don’t know if that’s too much time or not, I just got here. All I know is we’re not going to add to that. We’re not going to spend any more time. So for every new meeting you schedule, you have to tell me what meeting you’re going to cancel, because we have to fund all new meetings out of old meetings.

And hence, it’s a sense of a bank. So you fund the organization’s time from a fixed amount. And eventually, what you’ll find is that fixed amount doesn’t have to be fixed, it can go down. But at least start with the notion that every new meeting that we’re going to schedule for senior executives is actually going to be funded by some existing meeting.

SARAH GREEN CARMICHAEL: How do you know if you are making headway? What are some of the signs you can look forward to say, yes, this is starting to work.

MICHAEL MANKINS: Definitely when you talk about removing the tax of organizational drag, you’ll feel it right away. So the way you’ll know is, are you having meetings on weekends. Are you actually able to dedicate more of your week time to work? Or does it creep into you after hours, et cetera? And that’s something you will feel right away. I mean, it’s like a load being lifted from the organization.

The other two elements, talent– and we haven’t really talked much about energy– it takes time to realize. What talent basically does is allow you to get so much more done in so much less time. So if you’re trying to grow faster, unleashing the power of your talent is critical. But you’ll only experience it by looking back on everything you accomplished this year versus last year as an organization.

SARAH GREEN CARMICHAEL: If you are reducing organizational drag through eliminating unwanted or unnecessary email and meetings, that helps reduce waste, but it doesn’t necessarily– what we would call in our business jargon terms– growing the top line of productivity, right? So how do you think about marshaling all of your best talent when you are meeting with them in order to get the best results from those people?

MICHAEL MANKINS: Yeah, I think you’ve got it right. I mean, so we think of organizational drag as essentially a tax. And you can’t make people wealthier just simply by lowering the tax rate. I mean, you can get them to keep more of what they have, but you can’t make them wealthier.

What you actually need to do in order to increase productive power is you have to manage talent and energy more effectively. Talent in our research plays a really key role. But it’s just not the quality of people you have, it’s how they’re deployed, teamed, and led.

We found that the best-performing companies have about one in seven employees is an A-player. And then we compared that to the rest who also have about one in seven. So both sets have about 15% of their workforce that is star talent or A-players.

What’s very different is the way they’re deployed and the way they’re teamed and led. The best performing companies applied a model that we describe as intentional, non-egalitarianism. That is, they are intentionally over indexing certain roles with more star talent. And those are a very small fraction of the roles that need to be performed in the company, but they’re the most important roles.

So at Apple, it’s software development. At Google, it’s software engineering. In consumer foods companies, we talk about AB InBev in the book, it’s brand management. It’s these key functions that, if they break and aren’t performed well, the strategy has no possibility of succeeding. 95% of the talent in those roles is A-players. Which means that for the rest of the roles in the company, it’s less than one in seven that’s a star talent.

We found that they’d employed unintentionally perhaps a model that we described as unintentional egalitarianism, which meant that every role in the company had about one-seventh of the players in that role were star talent.

SARAH GREEN CARMICHAEL: So they’re all kind of peanut buttered out.

MICHAEL MANKINS: It’s peanut butter.

SARAH GREEN CARMICHAEL: Yeah.

MICHAEL MANKINS: And so deployment matters a lot. And concentrating your difference makers where they can make the biggest difference matters.

But also teaming matters. So a few years back, we looked at the productivity of all-star teams, what they call at Apple Navy SEAL teams. And we found that there’s this force multiplier, that if you put A-talent with other A-talent, you actually get even more than the two of them combined out of that team. And the more of those teams you have applied against mission critical initiatives, the better the performance, because you can get more done faster.

SARAH GREEN CARMICHAEL: I’ve seen some other studies that suggest that when you have a bunch of A-players on the team, you don’t get something greater than the sum of its parts. Sometimes you don’t even get average performance. Sometimes these all-star teams have a reputation of being very squabbly with each other.

MICHAEL MANKINS: I think it’s a myth that all-star teams don’t work because egos get in the way. There’s no question that that can be the case. But if you think about the Dream Team in the Barcelona Olympics, the first time that pro basketball players were allowed to perform at the Olympics, well those are the best of the breed in basketball.

Why didn’t they collapse under their own weight? Well, because the mission was greater than any individual. The team was what wins the gold medal, not Michael Jordan, not the other players of the team. So you create the ability where the team has to succeed before any individual can succeed.

You also have to recognize that leadership matters. So it’s very hard to have an all-star team led with an average leader. And the multiplier effect, though, the other way around is really powerful. There is research that was done by the Department of Labor a few years ago that talked about the importance of leadership on team performance.

On an average team, if you put an A-leader in charge of it, they’ll actually increase that team’s performance by quite a lot. I think it’s 11% or 12%. Don’t quote me on the exact numbers, although they do appear in the book.

But if you take that same leader and you put him in charge of an all-star team, an all A-player team, they’ll increase it by even more, almost 20%. And keep in mind, that team was performing better from the beginning. So the effect of having A-leaders in front of all-star teams pegged against initiatives that are critical to the company’s performance can have this huge benefit for the company.

But everything you mentioned is not only common myth, it’s actually reality unless it’s carefully managed. So you have to create incentives to effective teaming.

SARAH GREEN CARMICHAEL: When you say A-player or all-star, what exactly are you talking about? Are you talking about somebody who’s 10% better or someone who is dramatically better?

MICHAEL MANKINS: Yeah, we all know that the best are a lot better than the rest– or better, anyway. What we didn’t recognize, I think, until we did research on the topic was just how much better the best are than the rest.

So the best software developer at Apple is nine times more productive. That is right– it’s more than nine times more usable code per day than the average software developer in Silicon Valley. The best blackjack dealer at Caesar’s Palace, Las Vegas keeps his table playing five times longer, which, as you can appreciate, is highly correlated with the amount of money the Casino makes than the average blackjack dealer on the Strip. The best cardiac surgeon at the Cleveland Clinic has survival rates that are 12 times better than the average cardiac surgeon out there. The best fish butcher at Le Bernardin Restaurant in New York can butcher three times more fish than the average fish prep cook, basically in New York.

So there are these big differences in performance between the best and the rest. And the more creative and unstructured the work, the bigger the difference. So this highly repetitive work, like fish butchery, still a big difference. But it’s far less than what you’re going to see in software engineering and legal work, where Wachtell Lipton– the partners are ten times more productive than the average partner in New York.

So you have to populate yourself with as much great talent as you can to take advantage of those differences. But as I noted earlier, people have figured that out, that the war for talent matters. And it turns out to be a stalemate, that the best have won almost as much as the rest in terms of the quantity of A-talent. What’s very different as I’ve noted is the way they deploy in team and lead them.

Just to give you a sense for the difference in productivity, it took 600 Apple engineers less than two years to develop, debug, deploy, OS X, sort of a revolutionary change in the company’s operating system. It took more than 10,000 Microsoft engineers more than five years to develop, debug, deploy, and eventually retract Microsoft Vista.

So I’m not saying that that’s the only factor that’s involved. Clearly, it wasn’t. But it’s the fact that there’s a fundamentally different approach to teaming on an equivalently mission-critical effort that produced just dramatic differences in productivity.

SARAH GREEN CARMICHAEL: What can companies do to start unleashing their best A-talent in a productive way?

MICHAEL MANKINS: There are a handful of things that are precursors. One is that you have to know what your all-star talent is. We call them difference makers. And many companies have the mechanisms in place to start to do this.

SARAH GREEN CARMICHAEL: It wouldn’t be obvious?

MICHAEL MANKINS: Well, most companies have a way of assessing performance and potential. And we’re really talking about people who are high performance and high potential. We do argue in the book that the tests for performance are typically quite rigorous, but the test for potential tend not to be. So the more rigorous you can be on the assessment of potential, the better.

But once you’ve got a gauge for who those difference makers are, what I think most companies do not do is actually differentiate some roles as being more important than others. It seems sacrilegious to say some things that people do are more important than what other people do. But as we highlight in the book, it doesn’t make much sense to have the world’s best pastry chef if your business is package delivery. Who cares, right?

I mean, but less subtle distinctions are not made. So there are some companies where brand management is a critical function. There are others where it actually doesn’t matter at all. But for those businesses, such as consumer products, where it’s the key differentiator, the key difference in whether a strategy is successful or not, you better make sure that your difference makers are in those roles and not evenly peanut buttered to cross other roles.

And then I think the things that are other more on the sidelines but no less important is rewards. So so much of our reward system today is a discouragement to effective teaming. So virtually no great work is done alone. It’s typically done with people on teams.

And Steve Jobs has the famous statement that says that– every great piece of work is done in teams. Well, then teams are what should be rewarded right and recognized, much more so than individuals. And at least in most large companies today, particularly in the United States, but not exclusively, performance rewards are tied to individual performance much more so than team performance. Much more than 50% of your compensation, for example, is tied to your individual performance, as opposed to the team that you performed on.

You need to know who your star players are. You need to make sure they’re in the roles where they can have the biggest difference. And you need to make sure that they’re incented or rewarded for behavior that makes them effective and collaborating as part of an effective team. If you do that, you can get a long way towards realizing the most out of the scarce resource of talent.

SARAH GREEN CARMICHAEL: So we’ve talked so much about A-players, and it makes sense because they have this outsized impact. But if most of the people in the organization are B or C players, how should managers think about those people?

MICHAEL MANKINS: Yeah, so I think that every employee in the company needs to be engaged and inspired. And that’s why we have energy.

SARAH GREEN CARMICHAEL: Energy– it’s one of your three things.

MICHAEL MANKINS: It’s the core– is that there is only so much that you can get from B and C players. The more they can contribute and the more the organization can get out of their way and allow them to contribute, you can get a lot of productivity out. But what we’ve found is that the entire level of productivity of an organization goes up, whether you are an A-player or B-player or C-player, if you are inspired, truly inspired by the leader and the team you’re on.

And inspirational leadership, much to against common mythology, isn’t innate. You’re not born General Patton. You actually can be taught to be inspirational. It is something that can be learned. So focusing on improving the inspirational leadership capabilities of every leader in the company is key to improving the productivity of everybody. But most importantly, the six-seventh of the organization that are B and C players, because that’s where the biggest impact is on inspiration.

And so what we found is that it’s talent, it’s the way you deploy the very best difference makers, and it’s inspiration that basically drive the difference in performance between the best and the rest, which is pretty sizable. And both are very different.

So every company loses something to organizational drag. It’s true, the best lose less. But it’s really how they deploy talent and how they inspire their workforce that makes the best 40% more productive than the rest in our research.

SARAH GREEN CARMICHAEL: One of the things that strikes me is, well, most managers are leading teams they’ve inherited and they don’t have the authority to reorganize their team or even to poach stars from someone else’s team. If you’re thinking about all this and thinking, this sounds great but I’m stuck in the position that I’m in as a manager or even a senior executive, what can people start to do to reorganize their work in a better way?

MICHAEL MANKINS: So I believe fundamentally it has to start at the top. But if you’re in the middle, there are things you can do. Specifically, you can role model the behaviors you want to see.

So just because other people invite people to meetings that don’t need to be there doesn’t mean you do have to invite people to meetings that don’t need to be there. Just because other people reply all to every email doesn’t mean you have to reply all to every email. Just because other people copy their everybody and their aunts Betty on emails for reasons of information sharing doesn’t mean you have to do that.

And I know from personal experience that it’s odd at first not to answer emails that you think you shouldn’t answer. But after a while, people get it. People get, oh, I get it. He doesn’t think he has to answer that. In fact, he doesn’t really have to answer that.

But the biggest thing I think you can start to do is start to catalog what is it that the organization is doing to you, a talented manager, that’s preventing you from doing your best work. Just take your calendar– [? load it– ?] take your calendar and basically start to outline how many of these types of activities you found that actually got in the way of you producing great output. Yeah, you’re going to have meetings and email. But I bet the one thing that comes out to you is how much time you spend on stakeholder management with stakeholders that actually aren’t stakeholders in the decision you’re trying to make anyway.

And I think it’s the combination of low-cost collaboration that has led to this proliferation of email and meetings, combined with this obsessive need for stakeholder management, that it’s now expanded into stakeholders that actually don’t have a stake in what actually is being managed. Both of those have to change.

And so cataloging how much of your time is spent in each, I think, can be useful as information to share with senior executives. With senior executives, we found just providing information, no guidelines, just saying, here’s the load you put on the organization because of the emails you send, the meetings you schedule, and the work essentially that’s behind all of that. And you just say, wouldn’t it be great if we could reduce that load by 10%.

And you provide all that information to all the executives, what their benchmark is for other executives at their level or in their function. They’ll self-police. And what do you instantly do? You stop having attendees at meetings that don’t need to be there. And you stop using reply all.

And I fundamentally believe that reply all is about 3% to 4% productivity loss for all companies. So if you could basically just get rid of that, either literally or figuratively, you’ll actually liberate productive time.

SARAH GREEN CARMICHAEL: Well, Michael, thank you so much for taking the time to talk with us today.

MICHAEL MANKINS: Thank you, appreciate it.

SARAH GREEN CARMICHAEL: That was Michael Mankins. His book, coauthored with Eric Garton, is called Time, Talent, Energy– Overcome your Organizational Drag and Unleash Your Team’s Productive Power.

You can find the book and more from Michael on this topic at hbr.org. Thanks for listening to the HBR IdeaCast. I’m Sarah Green Carmichael.