The Recognition Factor: Transforming Workplace Culture | A Scratchie Podcast

Adapting to Change: Transforming Workplace Culture with Rich Alderton | Episode 13

• Scratchie • Season 1 • Episode 13

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Rich Alderton, a seasoned expert in adaptability intelligence, takes us on a transformative journey from the shop floor to the boardroom, sharing insights on how change, psychology, and immediate recognition can revolutionize workplace behavior. Rich's compelling narrative highlights the significance of cultivating an adaptable mindset, allowing individuals and organizations to not just embrace change but thrive on it. With a rich background in the pharmaceutical industry, Rich illustrates how addressing our primal reactions to change can lead to profound cultural shifts that foster more engaging and productive environments.

We delve into the fascinating blend of ancient wisdom and modern psychological research, exploring Buddhist approaches to fear and self-acceptance. Drawing from Harvard research, we discuss how our initial response to fear is hormonally driven, and how beyond that, we have the power to choose curiosity over judgment. This conversation segues into the challenges of altering organizational culture within traditional project management constraints, inviting listeners to rethink how they approach change management and cultural transformation.

Behavioral change through positive incentives is another key theme, where we analyze how transactional incentives can transform resistance into engagement. With examples ranging from construction sites to IT projects, Rich illustrates the effectiveness of aligning rewards with clear expectations, drawing inspiration from Dan Pink's "Drive". This episode promises to equip you with the tools to harness the power of motivation and change, leaving you with thought-provoking insights into transforming workplace culture through strategic incentives and adaptability.

Ready to take the next step? Visit https://www.scratchie.com/book-a-demo to see how Scratchie can help you recognise and reward safe behaviour on your projects. The future of construction safety starts here.

Speaker 1:

Welcome everyone. We have Rich Alderton today. We're going to explore how understanding change, psychology and immediate recognition can transform workplace behavior. And so Rich comes from. He's taken a journey from the shop floor to the boardroom, developing expertise in helping people raise their what he calls adaptability intelligence, and so he's got over 25 years experience leading change in innovative organizations. And so we come from slightly different well, not even slightly from quite fundamentally different areas in terms of affecting behavior and change and that sort of thing. And when we had a little chat last week it was I knew this would be an interesting discussion. So, rich, with that intro, I'm really happy to welcome you to this podcast.

Speaker 2:

It's great to be here, james. I'm really looking forward to this. This is not a typical conversation that I have and, yeah, meeting you has fired a few neurons for me. So, yeah, looking forward to it, lovely.

Speaker 1:

So can we start by you telling us a little bit of your background, your journey from the shop floor to the boardroom, and just your story, essentially.

Speaker 2:

Okay, well, very quickly. Yes, I fell straight out of university onto the shop floor working the night shift on the Strepsils packing line. I wanted leadership experience as soon as I could, and working in factories seemed to be the fastest and least glamorous way to get that. So, yeah, I've spent most of my life in supply chain. I was very lucky.

Speaker 2:

Having run a global supply chain in Sweden, I got the opportunity to reinvent myself into running a sales and marketing division for the company Down Under, so I was kind of next door to you in New Zealand for what ended up being nine years, which is where I set up this business.

Speaker 2:

So, having made it to being a kind of middle order batsman CEO, I thought I realized actually what my purpose was.

Speaker 2:

I saw around me on my journey that, whatever your background, whatever your job title, however many stars you've got on your lapel, most people seem to resist most change most of the time, and that's what makes you and I in the same business Although, yes, I think we're going to talk about how we come from that from different angles.

Speaker 2:

So I decided to dedicate my entire career to helping people endure, enjoy rather than endure um, a life of change that surely lies ahead for all of us, rather than just making rich owners even richer. I I thought I could, I could be more useful than that um, and so, while I was still based in new zealand, I I up High Performance Change back in well, 10 years ago now, 2014. Got it, and so I do a bit of coaching, a bit of training, and I've developed this model around adaptability, intelligence not a phrase I invented to help people deal with and not just deal with, but actually, you know, thrive on even negative change. Because from I believe and I think what I've distilled is that if you can see even negative change as the opportunity to make a positive difference, then you're probably going to have a more productive, more engaging life, and that's kind of where I come from.

Speaker 1:

Okay. So what is it about change management that the traditional change management approaches that fail? What is it? Where's its weakness.

Speaker 2:

Oh yeah, good question. Okay, so I've seen change from most angles. Actually, I don't know if any of your viewers are watching this, but I've got a lot of gray hair and I've seen change from most angles. I've been a pawn in the game. I've been a change manager. I've been a project manager. I've been a change manager. I've been a project manager. I've been a sponsor of change.

Speaker 2:

When I ask organizations, how do you prepare your people for change which I think is a reasonable question the default answer always comes back, nearly always comes back as we use change management. So change management is well proven over the last 30 years to increase the success of projects, because change management focuses on the most difficult bit of projects, which is the people. Tickety-tick, all good, except that what you're actually doing is you are treating your most strategic assets tactically. You are only preparing them for change when change is needed. Wouldn't it be a brilliant idea to prepare them for change before change is needed?

Speaker 2:

And that's where developing a more adaptable mindset and disassociating people's personal development around change with a specific change. Let's get them open to the idea of change and then, when you throw them into a project, all you've got to convince them of is that this new IT system or product launch or restructuring is actually a good idea, because what people have is a whole load of innate, negative, primal reaction to change which we've evolved over 50,000 years to have as a protection mechanism. Let's deal with that separately and it takes time to do that, time that projects never have. So projects only skim over. They don't change people's attitude to change. They're really good at changing what people do. They're really not so good at changing people's attitude to change.

Speaker 1:

So yeah, I'm all about the long-term and culture change and embedding change in people's thinking and having that kind of adaptable mindset so you're ready for whatever happens next, on the basis that we haven't got a clue what's happening next and can you think of any stories, any illustrations, any kind of real world examples of you know how sort of of the two types really, the um, that obvious reticence to change and then, once the team is kind of prepped for change, and how that changes things?

Speaker 2:

Yeah, I can.

Speaker 2:

I worked on two very large projects.

Speaker 2:

I worked for one of the what was at the time the world's largest pharmaceutical company here in the UK back at the turn of the millennium in the UK back at the turn of the millennium, and we had back then we were trying to hit this thing called Y2K the most immovable, biggest hoax of a deadline that existed, but we didn't know that at the time.

Speaker 2:

So we were putting in a new IT system and we basically had to herd people from the old IT system into this new one that was going to be Y2K friendly and it was pretty brutal. We tried as hard as we could with the time that we had to help people and coax them, but in the end you end up, as all projects do, they all run out of time and you end up pushing people through that change. And that was really my first experience of what got me thinking that perhaps we're not doing this right. And then I went on to another massive, even bigger project where we restructured the manufacturing footprint and we took 104 factories down to 72 around the world, and again that was a pretty brutal exercise as well. Same for this pharmaceutical company.

Speaker 2:

Yeah and that reinforced again what I'd already kind of learned in the previous one. So now I understand that it works. You can make it happen. You can get people from A to B, but they don't then want to go from B to C any more than they wanted to go from A to B.

Speaker 2:

So getting people through change doesn't make people love change and it doesn't engage them. And what does that do to your productivity, right? So clients of mine who've been through the Adaptability Intelligence program, what we do is we talk about things like fear and anxiety, stuff we don't talk about nearly enough at work. Well, I think we are doing a lot better as a Western society talking about anxiety these days, which is great, but still we could talk about it more and we really I don't think leaders really understand how much it nobbles your productivity by having people in a state of anxiety. By having people in a state of anxiety and I've got data to show that when you do raise people's adaptability intelligence, it increases their levels of innovation, it increases their levels of collaboration, it decreases their fear and anxiety and frees them up so that they are more open to the idea of change and it means that projects happen more quickly and more completely and we've got and we've got some data on that. But the most sorry, yeah, no, no, it's well okay.

Speaker 1:

I was going to say one. You know, there's a couple of ways that I would be anxious if I was an employee of one of these big companies, and one of the principal ones is am I going to have a job? Am I going to get fired? I don't know how I could prepare for that. Don't know if I don't know how I could prepare for that, and is my power structure going to change so that I come off second best? Either my boss, who I like, goes away and someone who I don't like comes in, or I lose my power in the organization, like that. Those are the things that I, I imagine I would be worried about. I've never worked in a large organisation. Okay, you know how am I going? Are they sort of some of the common fears and anxieties that people have?

Speaker 2:

Losing your job. So the two extreme examples I always go to is that inside work it's losing your job. Outside of work it's losing a loved one to is that inside work it's losing your job. Outside of work it's losing a loved one. These are two of the biggest, most negative, unwanted, unplanned and unavoidable changes that we all probably go through. Um, so if you take that, okay, so what I say to people? I can't you know, I'm not. I'm, I don't wear a fairy dress.

Speaker 2:

Very well, I can't wave my magic wand and keep you in your job. What I can do is I can help you deal with the fallout right. So it goes something like this when you're sitting in front of your boss and she tells you that you've just lost your job, your primal response your fight and flight. You want to punch her on the nose or run screaming from the room right, screaming from the building Back in the day, out in the savannah. Those were both very good protective things to do, but if you look in your HR manual, you'll find that they're both disciplinary offenses these days. So what you've got to do is learn to control your fear right, and one of the ways that you can learn to control your fear is something we call discovery, which is don't run away from the source of your fear. Run towards it.

Speaker 2:

Metaphorically, if you're actually down a dark alley, obviously don't take this advice, but what you've got to do is find out everything you can about that situation. So, are there any more jobs going in this company? If there are, would I be suitable? If I'm not, could I be trained? And would you wait for me, and would you maybe even pay for that training? And if none of those are yes, then would you use your own personal network to help me on my way? If you're all these nice placatory words that you're giving me, if you actually mean half of them, would you help me? Right, the answer to all of those questions might be no, and you're in no better place than you were when you walked into that, when you were first given that news.

Speaker 2:

Right, but what that does is it gives you back your feeling of control. What you're afraid of is actually the loss of control, so that you feel persecuted, that you are not now able to protect those who rely on you for protection, to put a roof over their heads, or that your reputation has been damaged. You're standing in the community or at work or whatever it is in the modern world that we are afraid of since the saber-toothed tiger disappeared. Asking questions and finding out gives you back that sense of control, and you will then know that whatever move you make is likely to be the best move that you can make.

Speaker 2:

The problem is that the neuroscience of fear is that your brain actually shuts itself down from thinking, from operating, because all of this big brain that we have here, the neocortex at the front, it comes up with some fantastic ideas and solutions, but they all take too long when you're facing a saber tooth tiger, and it can be the difference between life and lunch. So what your amygdala does in your brain the fear center, possibly of your brain is it shuts your brain down and just says, right, let's go straight to action. And what discovery does is it fires your brain back up and allows you to get back in control, and that feeling allows you to think clearly and your next move is. So I can't stop you being made redundant. What I can help you do is make sure that your next move is a good one.

Speaker 1:

Got it Okay. So that's a nice honest way to look at it, and it reminds me a little bit of the whole kind of the Buddhist mindset. Well, I mean, pick any kind of well-established religion, not the. You could argue Buddhism is a religion. But the whole thing of acceptance basically is to say look, accept the real life as it is and then move forward. You know so, uh, and then, like you say, lean into it as opposed to sort of shying away I, I think that's yeah I I.

Speaker 2:

You said that about 20 times quicker than I did. I wish I'd said I mean that's, that's it, that's. Yeah, you said that about 20 times quicker than I did. I wish I'd said that. I mean, that's it. That's it in a nutshell. It's about. You know, there's a great book it sounds a bit harsh. It's called Sumo Shut Up and Move On. And what he says in that book is that. One of the things that stuck him for me was he says give yourself some hippo time so you're allowed to wallow, so you're not expected to move on immediately. Give yourself some wallowing time but then move on. And if you keep looking backwards, you know you'll go backwards.

Speaker 1:

It's so true and I've done this. I'm not sure if you've heard of Vipassana, but it's a 10-day silent retreat and it's related to Buddhism, but it's a technique. It's not any kind of belief system or anything like that. It's a technique and you go there. It's all over the world and I think the Buddha rediscovered it 2,500 years ago, so it's quite an old method and what it involves is body scans.

Speaker 1:

So you sit in this for one hour, each meditation is one hour and you're scanning your body.

Speaker 1:

So you're reconnecting to your body.

Speaker 1:

Essentially, because we spend so much time here up with so much time, you know in our brains, right, and there's a lot of wisdom in our bodies and so right.

Speaker 1:

So what this does is reconnect and there's so many things that come out of that. But one of the things is to observe, like you were saying, observe feelings and thoughts and sensations in your body and not judge them. So if you're feeling anger, you're more inclined to step outside of it and observe yourself being angry, not change it, like, continue to be angry, but just observe that you're being angry. Or if you're feeling your gut knotted up because you're anxious about something, it's like let it be knotted up, don't try and change anything, but just observe that, and then also observe that it gently kind of unwinds, because typically when you look at it, when you observe it, typically it starts to behave itself a bit more, you know. So that's very interesting how what you've described, that kind of observation of the self, is really really connected to very, very old techniques of some of the wisest people, kind of, in history.

Speaker 2:

Yeah, yeah, interesting that research has just come out of Harvard in the last 12 months about fear and our response. That basically that they've. They've established that the first 90 seconds of you feeling threatened, so fear is your response to a clear and present danger. The first 90 seconds you, you, you may not be in control, you know, I, I would say I can help shorten that um, but the first 90 seconds you are running on adrenaline, you, it's a knee-jerk response. You're being um managed by your hormones.

Speaker 2:

You know adrenaline and cortisol, but beyond 90 seconds, if you so, if you've got rage, if you've got road rage, um, beyond 90 seconds, that is your conscious decision to to carry on. You you were talking there about, you know it subsides, there is medical evidence that that is in fact exactly what happens and you, you can learn to control your fear. You may not be able to stop feeling the fear, but you can learn to control it, and certainly beyond 90 seconds. It's your fault, it's all down to you, that's your decision, so own it, look ownership of these sorts of things is key, isn't it?

Speaker 1:

And sort of it sounds like it's a uh, it's a contradiction. But ownership, but also lack of judgment. So not to judge it. Observe it, own it, but don't necessarily judge it. I'm feeling the anger or I'm feeling whatever it is. Oh, that's interesting. It looks like a scientist with a notepad. Oh, look at that anger, that Anger Interesting, nodded stomach. Oh, that's fascinating. You know, and it's mine, it's me, but it's okay, you know, yeah, yeah, no, spot on.

Speaker 2:

Well, this is not going well, james. We're violently agreeing with each other. So far, that's right. That wasn't the plan. That wasn't the plan.

Speaker 1:

No, no, no. Well, let's actually change tack to rewards and recognition, because we might find some juicy disagreement there or at least some sparring. In our earlier discussion, when you were describing change and that sort of thing, it sounded to me like it was enlisting people to be okay with change and new situations and that sort of stuff to get people to buy into a narrative you know of where the company is headed and that sort of thing. Is that roughly where you're coming from with this change management?

Speaker 2:

So what I do is not change management. Okay, here's what change management does Change management I'm a management consultant, so let's go straight to the iceberg analogy. It's written in my contract, right? So the tip of the iceberg is all the project managers and change managers have the time and the scope to deal with. If they do anything more, it's scope creep.

Speaker 2:

You're never going to change people's psyche. You're never going to change people, the organizational culture within one project. There isn't time, there isn't money. All you can do is convince people to be herded from this, this it system to that it system. You were doing it this way yesterday. Tomorrow you're going to do it that way, um, and if I can get you to do that, I've done my job. I'm. My job is to get in, change you and get out so I can get onto the next uh project as quickly as possible. It's all about efficiency. You know the gantt chart, the critical path analysis. Let's get through that and out.

Speaker 2:

So it's kind of transactional, very, very transactional, right. What lies beneath the surface is all of this primal, innate fear and anxiety that we feel about change. When we hear the word change, what, how does that make us feel that? That? That's how you know how adaptable you are. When your knee-jerk response to to the word change is oh look, I'm a rock. I hear this rich, I'm a rock. You've got no chance of ever changing me or. I love it, I live for it, I, I I'm bored if I'm doing the same thing more than three seconds in a row, right and all stations in between.

Speaker 2:

So what I do is I try and change people's attitude, to change right, so that when… Okay, got it so you go deeper than… yeah, so if people have the confidence, if they have the self-control to deal with their fear, if they have the self-assurance to deal with their anxiety, if they have the self-esteem to know that even negative change is the opportunity to make a positive difference, and if they have the self-actualization to realize that even negative change is a chance for personal growth. Sometimes, when the chips are the lowest is when we can bounce the highest and find out not just who we are, but who we could be. This is the magic of what change actually is. When you can see change in those terms, all of a sudden it becomes much easier to deal with some bloody IT system, However bad it is. I know I'm going to be able to not just cope, but come out of this making a difference, being a better person and learning something from it. And actually you know I could get.

Speaker 2:

You went into Buddhism, so I'm going to get existential. Why are we here if not to make a difference on the planet, rather than sit on our hands for as long as we can, avoiding change as much as we can until our pension kicks in? If that's the life you lead, you shouldn't be listening to this podcast. I don't think Right.

Speaker 1:

Yeah, yeah, okay, yeah, yeah.

Speaker 1:

Previous discussion we spoke, um, about the kind of the archetypes, different archetypes of people, some of them, some of whom would respond really well to, um, the well, change management at a superficial level and the kind of the attitudinal drivers of that and the behavioral drivers of change management, that sort of thing, right, yep and Yep, and whereas other people they might, and we call them to sort of, maybe to oversimplify this and it might be a bit reductionist, but hear me out, if you wear a hard hat or a hairnet and so if you're sort of working on the coalface and you have these people try and recruit you to a dogma, to a belief system, to some sort of change, and you say I just don't care, it's not up, you know, and what you're really in a psychological sense, you're saying I'm not the archetype that responds well to what you're trying to deliver to me.

Speaker 1:

And that's where we had our discussion last time. Well, last week, wasn't it? Yeah, yeah, absolutely when? How do you approach those people? And that's what we've been concentrating on, because we're saying, and there's some classic stories I think I forget if I shared this one with you, but of the team that wasn't working well on one job and came across to another job that had this safety incentive program, and did I tell you that story?

Speaker 2:

Yeah, but that's right, so it did.

Speaker 1:

Well, yeah, okay. So there was exactly that. In the centre of Sydney, in a construction setting, there was a team that wasn't working well, was notorious, but they were what's called a nominated subcontractor. So the client had told the general contractor, the builder, that he had to work with this team and they were notorious.

Speaker 1:

Anyway, this general contractor was running this safety incentive program, our safety incentive program called Scratchy, where if somebody does the right thing, they get an instant on-the-spot categorized reward, typically $10, $20, $50 reward. And so this team came and the site manager said you don't have to agree to any sort of anything, really, but what I'm saying, you've got to do the right thing. And if you don't do the right thing, you know what the consequences are. But, on this job, if you do these things, if you keep your area tidy, if I keep seeing you with your hard hats and your personal protective equipment and all that sort of thing, if you do all those things, well then we can give you on the spot, instant cash rewards. And this team changed instantly.

Speaker 1:

It was the first time that they well, you know, according to DC and Ryan, they were given autonomy to make their own decision. And so well, they said actually we like the sound of cash awards. We'll do what is it. You want those things, we'll do that, no problem. And turned them around within hours. It wasn't even in days or weeks, it was within hours. They were doing as the site manager wanted, and so you know, that's an example of change in inverted commas, or at least behavioural change, right in a very different way, because it's almost. It's not expecting them to buy into any of your ideas or your dogma or anything like that. It's just saying do these things, you'll get this. And they responded really well. So I'd love to hear your thoughts on that and how that could be woven into, you know, with a week or so of having, you know, considered it.

Speaker 2:

Yeah yeah, how that could be. Yeah, yeah, I can see me rocking up with my PowerPoint presentation saying there are four levels of adaptability intelligence.

Speaker 1:

Right intelligence, and I'd really like you to Exactly.

Speaker 2:

I'm imagining the response I would get. Now we did, we did talk. My my my go-to motivational thought leader is is Dan Pink. You know the guy who wrote Drive the surprising truth about what motivates us. And actually you know what guy who wrote Drive the surprising truth about what motivates us. And actually you know what Dan said was that incentives do work. You know it's about 1% of his entire book because he's saying incentives only work when.

Speaker 2:

But that's exactly the situation I think that you're in. So what Dan says is that incentives only work when the work is transactional. I don't know that he even talks about a type of person. My interpretation I could be wrong is that he's really talking about the type of work. So, where it is transactional, you wear your hard hat and we will give you this reward.

Speaker 2:

What Dan says is that that extrinsic motivation that comes from outside from you, james, actually works, and you didn't need to read his book, although I know you have to know that that works because you see it every time you hand out a card. So I think, in terms of for the specific type of work where it is very clear that you have to follow these rules and guidelines on how to be safe on a construction site. I think from memory. What Pink talks about is that if there is any element of creativity or choice within whatever decisions you get to make on the work that you're doing, incentives in his research tends to fall down. But what you're saying is it's pretty black and white. You know you've got to. Yeah, this is the safe way to operate. Yeah, there's really no discussion about it. You either do it or you don't, and if you don't, you're out. And if you do, then there's a reward in it for you. And no surprise then, dan would say, is that your system works gangbusters.

Speaker 1:

Yeah, it's interesting. So Dan Pink, he popularized a biblical book I think I mentioned last week by DC and Ryan called SDT Self-Determination Theory. Yeah, and SDT is based on three needs psychological needs and this is telling you stuff you already know. But for the audience, there's the need for autonomy, the need for competence and the need for relatedness the need for autonomy, the need for competence and the need for relatedness. And it's funny because I came about, dc and Ryan, after establishing Scratchy in the field.

Speaker 1:

So you know, 15 years ago we wanted to win Apple Store. Did the Apple Store build in Australia, starting with Sydney? I was running a construction company and Apple said show me some safety innovation. Starting with Sydney, I was running a construction company and Apple said show me some safety innovation. So we rolled this idea out and it was very half-baked and we won the project and we were like, oh no, now we have to actually do it. And so we tried it out right. So we printed off scratch cards and we gave them to our supervisors and the supervisors would give them to workers when they were doing the right thing. So because we had this hunch that we needed to invert the paradigm of safety, which was inherently punitive and it needed to be inverted so that it was inherently encouraging, like the rest of the mammalian kingdom.

Speaker 1:

If you want to train any mammal or encourage any mammal to do something, then it's usually better with a carrot than with a stick. Try training a child or a dog or a seal or a horse or a dolphin with slaps and see how well you go. You know, you train them with treats and encouragement until it becomes intrinsically either habitual or you know whatever. And so what? Dc and Ryan talk about where there is autonomy, competence and relatedness. So if you give someone an award, it's not so much the $10 or the $20 that matters, it's the fact that the supervisor has gone. I'm calling you competent in this, that's good.

Speaker 1:

And the person has had the autonomy to do this. He hasn't been forced, he hasn't been forced down his throat. So autonomy gets a tick. Competence gets a tick because my supervisor just told me I'm good because of the above definition of giving a reward and then relatedness. Well, you know my supervisor. I never wanted to look him in the eye because I was always afraid of getting you know, of getting some kind of critical feedback. But now, with this encouragement, all of a sudden there's this reconnection between management and worker. So it hit me really hard when I read DC and Ryan. It was like wait, autonomy, competence, relatedness, all three of them. All you need to do is actively encourage the worker and reward them for specific work that gets done. And then the question so that was good, that was all great, and you might want to say something to that. But I could go on.

Speaker 2:

I'd like to ask you a question, which is and I buy into all of that, and who would argue with them and with Pink, yeah, is there a limit to where you can take scratches and this philosophy?

Speaker 1:

That's a great question.

Speaker 2:

Does it extend beyond transactional work? Do you think that you can incentivize everybody with everything for this, or does it have a niche?

Speaker 1:

Well, I'll answer that with a question.

Speaker 2:

You're a management consultant. Right, that's right.

Speaker 1:

No, in fact I think it was. Kissinger was asked why is it that Jewish men always answer a question with a question? And he said what do you mean by that yeah question? And you said what do you mean by that? Um, yeah. So, um, my question to you is you the last time you're in the us? Uh, I'm assuming you you've. You've traveled, you've well traveled, yeah I was in.

Speaker 2:

I was in upstate new york this summer.

Speaker 1:

Yes, okay, and you go to a restaurant and, generally speaking, how is the service in restaurants in the US? Oh, unbelievably brilliant. It's amazing, isn't it? And why, would you say, is the big reason? Especially if you're someone like Charlie Munger, you would find no surprise, because Charlie Munger has said every time I have guessed the power of an incentive, I've always underestimated its power. Right. So the power of tipping is magnificent for restaurant culture. So it's really proven in a day-to-day example across all restaurants in the US. You go there, you're going to get great service. You go to some of these other countries with no tipping and you know if they're friendly, then it's hit and miss. You can get lucky or not, but it's very rare to find a restaurant with bad service in the States.

Speaker 1:

So I would say, to answer your question, what's its limit and at what point is it a sugar high and when you know? Because people automatically think, yeah, but I want to do it until I get the outcome and then I want to stop doing it. It's like, why stop doing it? It's like saying with stop tipping. It's like I'm going to tip and to get this change and then I just want to not tip anymore because I want to pocket the money. It's like doesn't work like that. It's like you will get, um, a magnificent change through this, on the spot, instant rewards, and don't stop doing it and it's fine and that's okay. It's not. It's not a bug in the system. It's fine and that's okay. It's not a bug in the system, it's a feature. That's what I would say as an answer to that question. Right, okay?

Speaker 2:

Yeah. Do you find that if you stop giving those incentives, does the behaviour go back to what it was? Or does it say you said earlier that that you know it becomes intrinsic, it becomes, yeah, habit. So at that point do you stop giving the incentives? Or do you find that if you, if any of your clients have, have stopped the program, does the thing go into reverse, or is this permanent behavior change?

Speaker 1:

yeah, I I really think that people saying what happens when I remove it are thinking the wrong way about this, because what we've proven is that and I'm not accusing you of anything you're throwing questions around and you're putting that as a very commonly put question to us, whether it might be someone asking you or whatever it might be. And the reason why I say it's not thinking about the right way is if something is proven to be highly effective, why would you want to not do it anymore? So right, so, and that's what we've found is that every time someone starts to again with a Charlie Munger kind of attitude, you know, okay, let's go the other way around. Senior management in Glaxo, or you know one of these big pharmaceutical companies.

Speaker 2:

Yep.

Speaker 1:

They are incentivised. They receive bonuses on a strategic level because they do a strategic job. So if your firm meets these strategic goals, then you will get a big fat bonus. And guess who's incentivized to make those things happen? And so you know that's very common across all of the capitalist world is that if the senior leaders achieve goals, then they get a bonus. Now the question that the shareholders don't ask is okay, but next year I want to not do a bonus, but I still want to get that outcome. It just doesn't work like that, right. And so what I'm suggesting? With something like Scratchy or any kind of I just don't know of any instant categorised rewards for the people wearing hard hats and hairnets. So I'll just call it scratchy, because there's nothing else that.

Speaker 1:

I've seen Right Is what's that doing? What that does is exactly the same. It's a fractal. What it does is exactly the same, but on a micro level for a highly tactical job. So you do this task well. That actually lines up with our strategy down. But you don't need to know that you do these behaviors, these tasks well and you'll get a reward and they go cool, okay, excellent, because I'm not here. I mean, I might be here for love, but I'm also here for money, you know. So yeah, yeah, so that's.

Speaker 2:

I absolutely get it. I've been on the shop floor, you know, back in the 90s when suggestion schemes were. They were maybe a bit, you know, more flavor of the day than they are these days. But actually I've got a story when I was working one of my first jobs and I was working in a on a shampoo bottle bottling line, um, and the the incentive scheme was if you get, if you come up with a uh, an idea, um, then you'll get 20 of the first year savings. I mean, this was this.

Speaker 2:

I'm kind of arguing with myself now because this is going into having a creative thought. This isn't just a transactional thing. And this lady on the line who could have come in and turned her brain off for eight hours a day, she figured out that rather than having a vacuum-formed tray to stand all these very tall, high center of gravity bottles that kept falling over on the line, so they put them in a vacuum-formed tray before they went into the shrink wrapper. She said, well, why don't we replace that with an elastic band? And she got a check with a whole bunch of zeros on the end.

Speaker 1:

What a brilliant story.

Speaker 2:

That's exactly it's such a good story and why wouldn't? As a leader you know, sitting on your big fat strategic bonus every year. Why would you ever want to stop that?

Speaker 1:

Oh mate, what a story. That's what I'm talking about, because this woman is seeing these bottles go past 500 times an hour or whatever it is, and, like you say, her brain, she can be thinking about whatever she likes. She's got the autonomy to do that. And someone said to her apply your brain to this line and you'll get something from it. Well, guess what? It's amazing, yeah, yeah.

Speaker 2:

And of course, the other thing was from a manual handling point of view. She's got to lift those bottles into the vacuum form tray. So over the course of an eight-hour shift, you know, she's probably lifting what the world's strongest man has to deal with. Yeah, and now, all of a sudden, all she has to do is gather them together on the belt and put a band around them. So good.

Speaker 1:

So good.

Speaker 2:

Yeah, okay, what I'm still thinking, though. So hopefully that proves to you that I absolutely get what you do and I back you 100%, and I'm sure Dan Pink and Desi and Ryan would as well. How do you think this could be applied? Do you think this could be applied to we're going to put in a new IT system? That's always my go-to example because it's the one that upsets people the most, because for most people, including myself, I can't even spell IT. For most people, it is kind of here be dragons. We don't really know what goes on with IT and it's a big unknown and it causes a lot of fear and anxiety. Could you apply Scratchies to help motivate people to adopt a new IT system?

Speaker 1:

Interesting. You beat me to the question, oh, brilliant. Because I'm not sure I could answer it. That's why I'm asking it.

Speaker 2:

Yeah.

Speaker 1:

Well, I guess again I'll sort of answer the question with a question. Mike, again I'll sort of answer the question with a question. Are there specific behaviours that are important to the success of that project? And the example I have is in. So let's say, mcdonald's is a client of ours. What's important to McDonald's is clean as you go. So clean as you go is a concept that they keep encouraging and they keep reminding, and it's sort of like it borders on nagging, because they're always telling these 16-year-olds to clean as you go and so you can keep telling them that and that's fine. But every now and then, if you see one of your crew cleaning as they go, you say Joe, that's exactly what I'm talking about. Come over here, you legend. Or Joe's not allowed to have his phone on our shift. So, joe, what I'm giving you is a remote award. By the end of your shift, you go to your phone, you're going to have a scratch, you're going to have a reward. Joe goes, awesome. And the other crew say I want some of that, I want to do that Now. So that's clean as you go.

Speaker 1:

In construction, obviously it's safety. But one example is they were building a data centre, inney, and they needed the contractors to use a particular car park. And so the leadership site leadership said all right, guys, um, anyone who uses the car park gets an entry into the scratchy each day and it's a hundred dollars to be won every day. So shifted everyone's behavior. So everyone, everyone went to use the car park. So it was that he used that in kind of a way that we'd never imagined. So my question is are there certain behaviors and typically they're kind of mundane but important behaviors that you wish the people doing this project would do more of? And if there are, and there always are then there is a room for instant categorised rewards and it will affect the behaviour and the performance of the very people whose performance this success relies upon.

Speaker 2:

Okay. So I think the positive here is that if you take an IT system right, somebody's doing four transactions within that new IT system that they're booking goods in or something. You could say that's a transaction and you were doing it this way on the old system and we're going to train you up in the new standard operating procedure which will be handled by this new IT system. So we're going to change the process and then we're going to put a new IT system in that mimics that process system, in that that that copy that mimics that process. Um, you could say that that's, that's transactional and that every time you use that transaction uh, you know that then then you'll be entered into the scratchy. You don't have the autonomy because it's you know you, you have to use it. So people aren't used, people don't have that freedom that you would have in choosing which car park to use. So I don't know if it would tick that box, but it is transactional, so it might.

Speaker 2:

The problem is you've got to get them open to the idea of learning that new SOP, which they will be resistant to, and then the project will suffer the inertia that all projects suffer, and that's one of the big problems I've got and maybe you can solve it. Maybe you can't in total, you certainly can in part. I know that. But what I found is, however many projects that people go through, everybody seems to have. All projects seem to have the same amount of inertia every time, and it's the same people being forced through these projects, which means that people aren't becoming more open to change just because they've been through the experience of going through change. In fact, if change is handled badly and a lot of the time it is people become less open to the idea of change than they were before. That's getting off the point.

Speaker 1:

Open to the idea of change than they were before. That's getting off the point. Well, you mentioned SOP. Can we go to that? Yeah sure, is learning new SOPs a big part of an IT process? Is that something that? That sounds to me something like that is a bit of it's difficult to get people to do, but is very important to the outcome of the process.

Speaker 2:

And that's why I bring it up, because it is fairly structured. It's very structured and it is transactional. So normally two things happen when you go from an old IT system to a new one. The first is you actually fix the process. They always say don't automate your problems, because then you'll just do them wronger quicker.

Speaker 1:

Yeah, right, so whatever's going on, have you seen Elon's steps to that, the five steps?

Speaker 2:

No.

Speaker 1:

As you're talking, I'll find it. It's so good, anyway, carry on, yeah, okay.

Speaker 2:

So what you do is you fix the process first of all and you make that right, and then you automate it. Yes, the process first of all, and you make that right, and then you automate it, yes, and put it into the news. So you might have two, two parts to your sop. One is this is how the goods are going to be booked in, and then, yes, on this computer system. This is how that transaction actually works, and these are the buttons that you need to press in order to make that transaction happen.

Speaker 1:

Okay. So for that what you could do is a kind of a duolingo approach to the SOP. So let's say there's a dozen SOPs that people need to learn. For every SOP that you do, you get points. And for every little quiz that you do, at the end of it you get points and you get a randomized award.

Speaker 1:

So every third SOP or something you get a scratchy. So it's unknown, you're not doing it particularly for the scratchy, because you don't know. There's this anticipation. You don't know when you're going to get a scratchy, but you know that the more SOPs you do, the bigger chance you have of getting a scratchy. And then, once every week, you can say here's the leaderboard of all the SOPs that have been done this week and we're going to draw out of a hat. The more SOPs that you've done, the higher your chances of getting the grand prize, which might be $500 or something like that. And so, or it could be $200. You've got to contextualise it, yep, right. Or it could be $200. You've got to contextualize it, yep, right.

Speaker 1:

And then, so these people that have SOPs were a boring, you know, dragging my heels to do it. Now it's a. How do I play the game? How do I get on top of the leaderboard? You know that sort of thing. So that's an example of a behavior that's necessary but it's really hard to sell and people have only ever applied the stick to it, but now it's applying the carrot and so people get g'd up. They say, of course, I'll give it my attention, I was going to watch tv tonight but I'm going to do a couple of sops. It's the same deal um with uh, with duolingo. It's why it's the world's biggest uh language trainer is because they've just simply gamified language learning. Language learning is really hard, as you know, and they've proven that gamification can really motivate almost anyone to do anything.

Speaker 2:

Yes, yeah.

Speaker 1:

Now can I give you Elon's five-step process for building great products. I love it. Number one make your requirements less dumb. According to Elon, your requirements are definitely dumb, it doesn't matter who gave them to you. So iterate on your project requirements before starting. Make them clearer, simpler and more specific. So that's number one Make your requirements less dumb. Number two try very hard to delete the part or process. So if you're not occasionally adding things back in, you're not deleting enough. Try everything you can think of to get rid of the part or process before even starting, and you'll end up with a streamlined end product. Number three out of five simplify. So once you've done steps one and two, you know that you actually need to build the thing. So now make it as simple as possible.

Speaker 1:

The most common error of a smart engineer is to optimize a thing that should not exist. Number four accelerate cycle time. So work with urgency and move fast. Design, build, test, iterate, keep moving faster. Elon says that no matter how fast you think you're going, you're moving too slowly. Move faster. Um, elon says that no matter how fast you think you're going, you're moving too slowly. Move faster. Uh, the the caveat there is if you're digging your grave. Don't dig faster, just stop digging your grave. And then finally, in the five-step process, is automate. So only now that you've built the thing, um, now you can make production repeatable and scalable on that sort of thing, right? So I thought that might be worth sharing. It's a beautiful five step from the genius of our kind of era.

Speaker 2:

So yeah, yeah, that's very good. Um, yeah, when it comes to um. So, look, I, I buy that, I I buy that. And there I think what you've demonstrated is that there is definitely room within something as big and creative as an IT implementation, which maybe a lot of leaders listening to this would be nodding their head saying, yep, this is a problem I've had to deal with and maybe Scratches is part of the answer to that.

Speaker 2:

I absolutely buy your argument on that, absolutely buy your argument on that. If you look slightly beyond the transactional, you know I've redefined adaptability. If you look it up in the dictionary, it says the ability to adjust to new conditions, which is, you know, absolutely right, a little bit dry and almost entirely useless at helping us understand what it is to be adaptable. So we've redefined that as having the curiosity to see the need or opportunity for change, to scour your external environment, to see what's coming and what's possible, the courage to actually make change happen, because it's easy to be a spectator and to know what to do, but you need courage to actually make it happen.

Speaker 2:

Courage is underrated and something Elon just mentioned there, the velocity to turn quickly in the right direction. Yeah, yeah. And so those things you know they come from the head and the heart and the hands, and where is the transactional nature of your reward system? How is that going to encourage me to be curious? And how would you reward curiosity if you think that's, you know, something worth having and exhibiting in your employees?

Speaker 1:

Yeah, I would encourage not to call it transactional. I would say it's as transactional as getting paid to do work is transactional. So, you know, transactional is also giving a service person like a waiter in the New York restaurant a tip is transactional. It giving a service person like a waiter in the New York restaurant a tip is transactional, it doesn't matter. You know, receiving the CEO receiving a bonus for the strategic win of his company is transactional. So I don't think transactional matters. It's you know, it's all about we want this particular behaviour to be done.

Speaker 1:

We are all working in competing priorities, we've all got different things going on. And your example of that woman on the line who found a more efficient way because the reward steered her thinking towards it, to say, okay, I'll give it some thinking time, because that's what now? I know they've been clear to me with what they want. They've asked me for my input. But not only that. They said they're going to reward me if I come up with a good idea.

Speaker 1:

There's two things there, and that's the same thing with giving instant on the spot rewards for certain kind of mundane tasks. They're making it the management making it really clear what they want. And then they're saying and if you do it, then you know we'll recognise you for it. Our walk is going to meet our talk, you know. So what we do is going to meet what we say. It's not just going to be posters on the wall, it's going to be no, if you do it, we're going to recognise you and reward you for that. So it kind of lines up everyone, yeah, okay, well, rich, we're getting close. It's been an hour.

Speaker 2:

We've run out of time. I know We'll have to have a part two, we will.

Speaker 1:

It's been such an interesting discussion. I really enjoyed it, me too. I'm going to try and uh summarize it. Um, we sort of um started with um with what, what, your background, and then we spoke about uh kind of um, well, the iceberg. You brought out the iceberg metaphor. I think it took uh 17 minutes for that to come out, so yeah proud moment, um.

Speaker 1:

So yeah, tip of the iceberg being um being this kind of change management, but underneath it, the really important drives being attitude and behavior and beliefs and all those sorts of things, and that's what you really affect. And then we spoke about how um scratchy, or at least how on the spot, instant rewards can affect change, and can affect actually more than change, you know, sort of deeper than that. Anyway, it's been a great discussion. I really thank you for your time and, like you say, you can always follow it up.

Speaker 2:

It has been fantastic, very thought-provoking for me. Yeah, great.

Speaker 1:

Okay, well, I'll leave it at that and I look forward to meeting you in person at some point. Yeah, I'll leave it at that and I look forward to meeting you in person at some point. Yeah, that would be great, excellent, okay, thank you, rich. Thanks, james.

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Garry Mansfield

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James Kell

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Rich Alderton

Guest