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When business goals backfire: How to adjust to unintended consequences

What are the values most important to a company? MIT's innovation expert Michael Schrage shares his thoughts on how to approach Key Performance Indicators.

Michael Schrage: There are several questions, essential questions that leaders and managers should ask themselves when they look at how they want KPIs to have an impact and influence on their organizations.

The most important one is obvious: What’s most important to the organization? Where is value really created? Where is value really created for us internally and for our clients, for our customers, for our users, whether they be business or consumers? How do we want to measure that? What kind of performance leads to those kinds of outcomes?

The big challenge, the difficult challenge, the challenge that my colleagues and I and my clients and I and my students and I debate and argue the most is: when are KPIs means, and when are KPIs ends?

Sometimes we want to have key performance because that’s what excellent means. We’re always greeting customers with a smile. We’re always trying to provide the easiest most convenient, the best possible user experience.

There are other times when the outcome is really what matters the most which is we get a profit on this. We get a sale for this.

What are means and ends?

Sometimes the KPIs link. Here’s how: “We’ve dramatically increased our sales.” That’s fantastic. Sales, sales KPI. “We’ve outperformed our sales KPI and expectation.” Oh, “three weeks later, three months later, the returns for what we’ve sold are larger than ever before; The customer satisfaction scores or the net promoter scores have dropped precipitously!” Oh my gosh, we have to manage tradeoffs between KPIs?

The leadership challenge, the management challenge is not just “how do we do a better job of identifying, cultivating, deploying KPIs,” it’s “how do we identify and manage the tensions and sometimes conflicts between them?”

Again, that’s why this is such a fun subject, because sometimes there can be changes where the KPIs converge or a new KPI emerges from your observation of means and ends.

So there are many stories and anecdotes that can be told about KPIs that really positively and constructively transform how an organization behaves. And there are also sadly (but obviously) examples of what one might call pathological KPIs, KPIs that make sense in the moment but when you review their ultimate impact internally and externally – bad, bad.

A classic example from 10-15 years ago, back when we had call centers instead of contact centers, was “time spent on calls.” That many call centers were compensated. The key performance indicator was “how do we keep the call down to two minutes, three minutes, five minutes?”

And so throughput calls per hour, calls per day were a dominant KPI because that’s what productivity was going to be. What did you end up with? High throughput, very unhappy customers, even oftentimes if their situation was resolved because the feedback was “I felt rushed. I felt they were interrupting a lot. It was a bad UX. It was a bad customer experience.”

There was also emerging at that time the notion of “first touch,” first call resolution. How can we get things resolved at that time, at the first call without making the person call back or without your calling them back?

Interestingly if I may digress, you know what really transformed that KPI was chat programs.

Because what people could do was they could do a chat and say “hey, I’m having this kind of problem. What should I do with this person?” And they were able to use their colleagues or a database or a Wiki to get an answer to do first call resolution. So this ties into the notion of not just a dominant KPI but how do we get a productive tension between KPIs?

One is “time spent on call.” The second is “effective resolution” and the third is “customer satisfied.”

You’re never going to get them all right but there’s going to be a sweet spot there. And in this case triangulating those KPIs to create a sweet spot was transformative for a lot of call centers that subsequently became contact centers.

So remember, if you pick the wrong dominant KPI you may end up with perverse outcomes because you are incentivizing perverse behaviors. If you’ll forgive me for making a bad acronymic pun, one of the ways you shock people into this recognition is that you say “KPI doesn’t just stand for ‘key performance indicator,’ it stands for ‘key performance incentive’.”

So make sure you’re recognizing and rewarding the right things, not things that can lead to perverse or counterproductive outcomes.

What are the values most important to a company? Can they be told by Key Performance Indicators (KPIs) alone or can the wrong incentive lead to the wrong outcome for a company? MIT's innovation expert Michael Schrage shares his thoughts on how to approach KPIs, using a classic example from the call center industry to show how dangerous an inexact business performance goal can be.

Remote learning vs. online instruction: How COVID-19 woke America up to the difference

Educators and administrators must build new supports for faculty and student success in a world where the classroom might become virtual in the blink of an eye.

Credit: Shutterstock
Sponsored by Charles Koch Foundation
  • If you or someone you know is attending school remotely, you are more than likely learning through emergency remote instruction, which is not the same as online learning, write Rich DeMillo and Steve Harmon.
  • Education institutions must properly define and understand the difference between a course that is designed from inception to be taught in an online format and a course that has been rapidly converted to be offered to remote students.
  • In a future involving more online instruction than any of us ever imagined, it will be crucial to meticulously design factors like learner navigation, interactive recordings, feedback loops, exams and office hours in order to maximize learning potential within the virtual environment.
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White dwarfs hold key to life in the universe, suggests study

New study shows white dwarf stars create an essential component of life.

NASA and H. Richer (University of British Columbia)
Surprising Science
  • White dwarf stars create carbon atoms in the Milky Way galaxy, shows new study.
  • Carbon is an essential component of life.
  • White dwarfs make carbon in their hot insides before the stars die.
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"Forced empathy" is a powerful negotiation tool. Here's how to do it.

Master negotiator Chris Voss breaks down how to get what you want during negotiations.

Photo by Joe Raedle/Getty Images
Personal Growth
  • Former FBI negotiator Chris Voss explains how forced empathy is a powerful negotiating tactic.
  • The key is starting a sentence with "What" or "How," causing the other person to look at the situation through your eyes.
  • What appears to signal weakness is turned into a strength when using this tactic.
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Octopus-like creatures inhabit Jupiter’s moon, claims space scientist

A leading British space scientist thinks there is life under the ice sheets of Europa.

Credit: NASA/JPL-Caltech/SETI Institute
Surprising Science
  • A British scientist named Professor Monica Grady recently came out in support of extraterrestrial life on Europa.
  • Europa, the sixth largest moon in the solar system, may have favorable conditions for life under its miles of ice.
  • The moon is one of Jupiter's 79.
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How to catch a glimpse of Comet NEOWISE before it’s gone

Unless you plan to try again in 6,800 years, this week is your shot.

Image source: Sven Brandsma/Unsplash
Surprising Science
  • Comet NEOWISE will be most visible in the U.S. during the evenings from July 14-19, 2020.
  • After July 23rd, NEOWISE will be visible only through good binoculars and telescopes.
  • Look in the northwestern sky below the Big Dipper after dusk while there's a chance.

UPDATE: NASA is broadcasting a NASA Science Live episode highlighting Comet NEOWISE. NASA experts will discuss and answer public questions beginning at 3PM EST on Wednesday, July 15. Tune in via the agency's website, Facebook Live, YouTube, Periscope, LinkedIn, Twitch, or USTREAM.

Before last evening, July 14, 2020, the easiest way to see Comet NEOWISE — the brightest comet to zoom past Earth since 1977's Comet Hale-Bopp — from the United States was to catch it about an hour before sunrise. Now, however, you can see it in the evening, where it will remain for until the 19th. This is a definite don't-miss event — NEOWISE won't be coming back our way for another 6,800 years. It's the first major comet of the millennium, and by all accounts, it's unforgettable.

NEOWISE just got back from the Sun

Comet NEOWISE is named after the NASA infrared space telescope that first spotted it on March 27th. Its official moniker is C/2020 F3. It's estimated that the icy comet is about three miles across, not counting its tail.

NEOWISE is now heading away from our Sun, having made it closet approach, 27.4 million miles, to our star on July 3. The heat from that encounter is what's given NEOWISE its tail: It caused gas and dust to be released from the icy object, creating the tail of debris that looks so magical from here.

As NEOWISE moves closer to Earth, paradoxically, it will be less and less visible. By about July 23rd, you'll need binoculars or a telescope to see it at all. All of which makes this week prime time.

An evening delight

star constellation in sky

Image source: Allexxandar/Shutterstock/Big Think

First, find an unobstructed view of the northwest sky, free of streetlights, car headlights, apartment lights, and so on. And then, according to Sky & Telescope:

"Start looking about one hour after sunset, when you'll find it just over the northwestern horizon as the last of twilight fades into darkness."

It should be easy to spot since it's near to one of the most recognizable constellations up there, the Big Dipper. "Look about three fists below the bottom of the Big Dipper, which is hanging down by its handle high above, and from there perhaps a little to the right." Et voilà: Comet NEOWISE.

Says Sky & Telescope's Diana Hannikainen, "Look for a faint, fuzzy little 'star' with a fainter, fuzzier little tail extending upward from it."

The comet should be visible with the naked eye, though binoculars and a simple telescope may reveal more detail.

You may also be able to snap a photo of this special visitor, though you'll need the right gear to do so. A dedicated camera is more likely to capture a good shot than a telephone, but in either case, you'll need a tripod or some other means of holding the camera dead still as it takes a timed exposure of several seconds (not all phones can do this).

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