Quantitative data on diversity and business results from McKinsey and Goldman

Note: I’m experimenting with publishing content first in my newly-launched newsletter, Fieldnotes, and then here on my blog. Aside from some minor edits, this blog post is taken from the first edition of Fieldnotes sent out earlier this week. Subscribe here or feel free to take a peek at the first issue.

Diverse boards (and executive teams) lead to better results for shareholders and there is rigorous research from reliable sources to prove it. McKinsey released a report on diversity this month that got a fair amount of coverage but I also uncovered some intriguing data from Goldman that barely got any coverage. Below is what you need to know from each.

McKinsey’s “Delivering through Diversity” report (PDF) contains an analysis of 1000+ companies in 12 countries. This WSJ story has a good summary. Key data:

  • Companies that ranked in the top 25% in terms of the ethnic mix of their executive teams turned out to be 33% more likely to outperform competitors on profits than those in the bottom 25%.

  • Companies with the most women on their management teams were 21% more likely to achieve above-average profitability, compared with those with relatively few women in senior, decision-making roles.

  • Still a LOT of work to do. Among the 346 companies included in its 2015 study, the collective share of women on executive teams has since risen only 2 percentage points to 14%, while the proportion of ethnic and cultural minorities has climbed just 1 percentage point to 13%. This is, of course, pathetic.

Research that got very little coverage but is must-read is Goldman’s detailed 40-page report “The PMs Guide to the ESG Revolution: From Article of Faith to Mainstream Investing Tool” (PDF). The report focuses purely on ESG measures that boost stock price and generate “alpha” (see this for extended definition of “alpha”) over a 3-5 year period. The key finding: gender diversity ranks the highest of all of the factors they studied as companies with higher ratios of female employees saw an average annual alpha of 3.3% across all sub-sectors. If you don’t want to read the report, listen to Derek Bingham of the GS research team discuss it in this podcast (btw, Goldman’s podcast series is quite good).

At this point, if you’re a CEO or other senior leader and you don’t have a direct hand in building a more diverse company, you’re being negligent as a business leader and working against the long-term interests of your company.

(Yet. . . activist investors are more likely to target female CEOs. Firms with female CEOs were 50% more likely to be targeted by activists and approximately 60% more likely to be targeted by multiple activists as noted in Harvard Business Review. Go figure.)

Best books for new, first-time managers

I recently asked on Twitter: “what book would you recommend most for new, first-time managers?” It’s been a while since I’ve been a first-time manager or managed first-time managers directly, so I was curious. Below is the list of what folks recommended. The categories were added by me after realizing an unstructured list of 35+ books would be too overwhelming. I certainly haven’t read all of these books but put some notes in the list next to books I have read and a few notes next to ones I haven’t read but know something about. If you have a book you think should be here and isn’t, email me (hello@chaddickerson.com). I’ll also include this in the newsletter I’m launching (more info here).

General management & leadership

Tech management and leadership

Note: having been a CTO and CEO, I recommend reading these books alongside the more general management books. An engineering leader with strong general management chops and business skills is a rare and valuable breed. 

Communication

Culture

 Prioritization and results

Psychology and how people think

Other (literature, non-fiction with important themes)

Michael Dearing suggested taking his very well-regarded general management course, so I mention that here. Even if you can’t take the course, check out page two of the syllabus for some great readings. Thanks, Michael!

Again, if you have a book you think should be here and isn’t, email me!(hello@chaddickerson.com) I’ll try to keep it updated.

Keynote at Railsconf

I did a keynote at Railsconf yesterday entitled “Optimizing for developer happiness.” Huge thanks to Ben Scofield and Chad Fowler for the invite. It was a blast!

Below is the video and here are the slides on Slideshare.

I’ve got a longer post in me that builds on the themes in the talk — hoping to get that up in the next couple of weeks!

Update: just found a talk called “Optimize for Happiness” by Tom Preston-Werner (Github co-founder) about optimizing for happiness vs. money. Tom’s talk definitely pre-dated mine and looks at happiness from a somewhat different point-of-view. Definitely worth reading/watching.

How we manage development and operations at Etsy

I just found a new reason to love Quora: questions people ask can spur you to write about topics you’ve had kicking around in your head for some time. Such was the case with this one:

How does Etsy manage development and operations?
Etsy seems to have scaled far and fast, whilst continuing to add new features; how is all this managed – is there a strictly-defined process within which engineers operate, or is it a case of hiring clever people and letting them get on with it (Facebook-style)?

I posted my answer, and cross-posted it to the Etsy engineering blog, too.

Collecting software methodologies

I’ve always enjoyed reading about software development methodologies and approaches (my favorite essay is Frederick Brooks’ “No Silver Bullet“), probably less because I love software and more because it’s interesting to see how people, who are inherently fallible, translate their hopes and desires into instructions for an inanimate machine. When you mix the innate fallibility of humanity with the near-absolute certainty of the “right way” present in at least a few software engineers, you’ve got a very peculiar kind of theater.

Bust of George Bernard Shaw, Reading Room, British MuseumWhen people ask me what I think about various software development methodologies, I can’t say that I have a super-strong opinion except that processes that are generally “agile” are good. Recently, I was thinking about this and dusted off a copy of Major Barbara, a George Bernard Shaw play (one of my favorites) that deals with religion. Adolphous Cusins (a not-so-sympathetic character in the play) says this in Act II:

I am a sort of collector of religions; and the curious thing is that I find I can believe them all.

That’s pretty much how I feel about XP vs. Scrum vs. your-agile-methodology-here. There’s a little bit of goodness in all of them.

(Photo: bust of George Bernard Shaw in the Reading Room at the British Museum)

IBM does Hack Day

I was pleased to see that the folks over at IBM recently ran their own Hack Day modeled on the ones we’ve been doing at Yahoo! (which had its own inspirations, of course). IBM is still one of the giants of American business — #10 on the Fortune 500 list — so this is significant.

Kelly Drahzal reports on what happened. Be sure to check out the Hack Day participant map and more on how they are handling their presentations. From what I can tell on Kelly’s blog, she totally nailed the spirit: Looking forward to seeing where this goes next, but my message is … Just DO it. Nice work, Kelly and IBM.

I’m just back from vacation so I don’t have time to write much more now, but in the quiet U.S. holiday period last week while most folks in the states were kicking back on the beach or enjoying backyard BBQs, Yahoo! had two more large-scale Hack Days: one in London for the entire EU (which exceeded all expectations. . . I was in London to see the presentations from all over the European continent) and a second in Bangalore, India. Amazing stuff.

Yahoo! Hack Day tomorrow, and some of my inspirations

Tomorrow at noon, we kick off our fourth Hack Day at Yahoo! It runs from noon tomorrow until noon Friday, followed by demos Friday afternoon and a party. As I write this, I am fielding questions from Yahoo hackers who are planning to stay here all night tomorrow night putting together their hacks. Awesome.

We’ve now had two (1, 2) in Santa Clara and one in Bangalore. Hack Day #5 happens in Bangalore on July 4th, followed closely by the pan-European EU Hack Day in London on July 6th. This thing has serious legs around Yahoo! Terry Semel and Jerry Yang presented Hack Day awards personally in Bangalore (see the Flickr photo — there are close to 200 photos tagged hackday on Flickr now — expect more this week). During the Friday demos, C-level execs will be mixing it up with the hackers (we’ve had wonderfully enthusiastic support from the top!)

Hack Day at Yahoo! has minimal rules:Tools for Yahoo! Hack Day

  • Take something from idea to prototype in a day
  • Demo it at the end of the day, in two minutes or less (usually less)

Sounds simple (and it is), but like all simple things, a lot of thought went into making it so simple. Most of my time the past few months has been spent keeping Hack Day relatively “pure.” What do I mean by “pure”? Well, it would be very easy to make such an event a “rah rah” corporate exercise with all sorts of interests trying to mold the event to some very specific business end, but that doesn’t happen. Hack Day is by hackers, for hackers. The ideas are theirs, the teams are self-determined, and no technologies are proscribed. I don’t even know what people are building until they get up to do their demos at the end of the day.

Looking towards Hack Day tomorrow, I wanted to point out a few of the inspirations that inspired those simple organizing principles (to paraphrase the famous Newton quote, we’re definitely standing on the shoulders of giants):

These are just inspirations, of course. I can’t begin to tell you how much I’ve learned getting this off the ground initially and putting it together for a multi-national public company with several thousand employees. It would fill a book that I don’t have the time to write right now.

In the end, Yahoo! hackers really make the whole thing happen, though — I just help create the context. I’m looking forward to seeing what happens tomorrow. I have no idea what will emerge, just that it will be cool and I’ll have a big smile on my face.