Clever Geek Handbook
7 March 2025

Analysis Without Paralysis

Recommendation

Developing a good corporate strategy requires rigorous analysis. You don’t need to become a quant or a statistics expert, but you should understand how worthwhile analytics abet planning. Strategic analysis expert Babette E. Bensoussan and management professor Craig S. Fleisher explain, in simple terms, 10 classic, tried-and-true diagnostic techniques in this introduction to strategic development. This isn’t a book for nerds, but for business executives and managers who need to know the basics of analysis so they can develop better corporate strategies. This guide is easy to use, with concise but thorough introductions to major analytical tools, their pros and cons, and step-by-step instructions for how to implement each one. BooksInShort recommends this useful primer on corporate analytics to any managers who need grounding in this important discipline.

Take-Aways

  • Managers should know some common analytical techniques since good analysis is the basis for strategic planning. Turn to 10 well-tested analytical tools:
  • First, the “BCG Growth Matrix” labels each product as a “cash cow, star, dog or problem child.” Second, “competitor analysis” gives you a handle on your rivals.
  • Third, use basic financial statements and ratios to make sense of your numbers.
  • Fourth, understand your industry’s “five forces”: barriers to entry, supplier power, consumer power, product substitution and competitive challenges.
  • Fifth, turn to “issues analysis” to prepare for changes in your public environment.
  • Sixth, supplement that with “political risk analysis” that studies external challenges.
  • Seventh, “scenario analysis” can help you plan your firm’s future.
  • Eighth, “macroenvironmental analysis” illuminates the “political, economic, social and technological” (PEST) aspects of your business.
  • Ninth, “SWOT analysis” uncovers corporate strengths and weaknesses.
  • And tenth, “value chain analysis” shows you how to improve your costs and serve your customers.

Summary

Do You Know What You Don’t Know?

Executives must develop solid, sustainable, original corporate strategies tailored to give their companies a competitive advantage. But strategies don’t blossom out of the ether; they usually start with sharp analytics. Thorough analysis of your strategy, your industry, your rivals and your business setting should provide an “early warning” of upcoming challenges and “an objective, arm’s-length assessment” of your competitive position. Cogent analysis will enhance your capacity to respond rapidly to environmental changes, give you assurance that your decisions are based on “systematically derived” data and provide the tools you need to transform your ideas into concrete plans.

“Analysis is without a doubt one of the more difficult and critical roles a manager is called upon to perform.”

Relying on your “intuition” or “experience” to drive your business is no longer enough. Today’s competition is global, and you’re working in a “knowledge economy” that increasingly puts a premium on synthesizing data in new, creative ways. Keeping rivals from co-opting your products and processes is harder now, so you need to work faster and smarter. You don’t have to be an expert in statistics or a quantitative analyst, but you do want a basic grasp of the advantages that worthwhile analysis can bring to your company.

“Effective analysis requires experience, good inputs, intuition, models and, some would argue, even a dash of good luck.”

Gathering data is much easier than analyzing it. For a variety of reasons, analysis doesn’t always provide the outcomes you need. For example, using the same analytics time and again leads to “tool rut,” where every problem looks like a nail if all you own is a hammer. Moreover, many business school graduates tend to apply finance and accounting skills to strategic questions instead of using data analysis. Finally, many people analyze the information they have, never asking what other data they need to address the problems they face.

“What Is Analysis?”

Simply put, analysis means dividing a problem or issue into its components and then studying each element’s “value, kind, quantity or quality.” The basic approach consists of four stages:

  1. The “analytical framework” describes the reason for the analysis.
  2. The collection assembles the facts.
  3. The analysis attempts to uncover the sense behind the facts.
  4. The “implications” set the stage for a final decision.
“As a process, analysis depends upon raw data. However, not just any data will lead to effective analysis.”

Analytic skills are like muscles: The more you exercise them, the stronger they get. Set a goal for your research before you choose your analytics, and don’t use the same tools too often. Analysis is not a panacea; you still must use good judgment in assessing the results. The following 10 “classic techniques” for developing strategy form a base level of knowledge for any executive:

1. “BCG Growth/Share Portfolio Matrix”

In the early 1960s, General Electric and the Boston Consulting Group (BCG) developed a methodology that “multiproduct, multimarket...multinational” firms can use to assess their portfolio strategies and allocate their resources. The “BCG Growth Matrix” compares a firm’s current market share to the market’s growth prospects, and it categorizes the results in four boxes: 1) low growth and high market share equal a “cash cow” – milk it for all it’s worth; 2) high growth and high market share denote a “star” – invest; 3) high growth and low market share can indicate a “problem child” – study it; and 4) low growth and low market share mean a “dog” – sell or close it. The matrix is simple to develop and understand, but it has some flaws: Market share does not always indicate profitability, and some firms succeed in low growth markets.

2. “Competitor Analysis”

Understanding your competitors can help you discover and manage prospects and risks. Studying your rivals helps you to learn their strategies, judge their predictable responses to your moves, correlate their plans and capabilities, and develop insights into weak spots you could exploit. First promulgated by Harvard’s Michael Porter, one of the first strategists to propose a “formal and systematic model to gather information about competitors,” this analysis helps you prepare defensive moves and launch offensive plans. Gather and analyze four categories of data about your peers: 1) Their “drivers” or “future goals, philosophies and strategies”; 2) their “current strategies”; 3) their “current capabilities and resources”; and 4) their “management assumptions.” This analysis can help your firm move decisively in a competitive environment, rather than just react to rivals’ actions. But don’t base all your strategy on this analysis; you might ignore issues and opportunities from outside your peer group or industry. Being too much of a “copycat” can limit innovative thinking.

3. “Financial Ratio and Statement Analysis”

Becoming comfortable with certain financial concepts and terminology will make you a more effective strategist. Financial Ratio and Statement Analysis (FRSA) helps you make sense of your fiscal numbers and – combined with other analytical techniques – is an important part of strategic planning. First, study the “accounting equation” – a company’s liabilities and net worth equal its assets – and then examine the parts of that equation: current, fixed and noncurrent assets; current and long-term liabilities; and “owner’s equity.” Learn to read an income statement of revenues and expenses and to understand its relationship to the balance sheet – as a snapshot of a firm’s assets, liabilities and equity. Monitor cash flow by using the “position statement” and the “statement of changes in owner’s equity.” Ratios like “inventory to sales” or “debt to equity” indicate performance, that is, how your firm compares to its peers and its industry standing. But FRSA offers only a past, static view of your progress. Be wary of “benchmarking for mediocrity” by overemphasizing your company’s financials relative to its peers.

4. “Five Forces Industry Analysis”

Is your industry cutthroat or monopolistic? Porter’s methodology for studying industry dynamics reveals your competitive environment. Measure five forces: 1) the “threat of new entrants” overcoming your industry’s barriers to entry; 2) the “bargaining power of suppliers,” that is, who wields the power; 3) the “bargaining power of buyers,” or the extent to which clients dictate terms; 4) the “threat of substitute products or services,” usually from outside the industry; and 5) the “degree of rivalry among existing competitors.” Rank the intensity of each force from one to five (five being weakest), and indicate with an arrow if the trend is growing or declining.

“Analysis would be less necessary if people could execute their decisions themselves and nobody had to convince anybody of anything.”

This analysis can help you predict how shifts in one force affect the others, how such changes might influence industry profitability and how to respond. Your industry is only one component of your strategy; your “core competencies” might override your concerns about your overall industry.

5. “Issue Analysis”

External environments pose challenges that can influence your strategic choices. Assessing “public environmental intelligence” alerts companies to emerging societal or policy issues. For example, executives can voice opinions about pending legislation that might affect their operations, they can adjust their human resources practices in light of social trends, or they can exit businesses that conflict with community standards. Choose issues and areas most likely to shape your firm’s operations and plans. Evaluate various scenarios in order of their magnitude and likelihood, and identify possible responses. Preparing for these issues can give you the flexibility and time you need to deal with them, but going forward you must keep your analysis current. Apply creative reasoning in your research because many policy issues are unpredictable and “defy logical or rigorous assessment.”

6. “Political Risk Analysis”

Political risk analysis (PRA) provides intelligence about a crucial aspect of the external environment: government policies, actions and politics, and their impact on corporate activity. A good PRA might cover tax and tariff regimes, political unrest, corruption, legislation and “threats to physical and intellectual assets.” Globalization, outsourcing, intellectual property protection and political instability make PRA essential to your strategic arsenal. While lots of information is available online, you must check its reliability. Many firms now hire consultants to keep them updated because of the complexity of this field. Analyzing political risk is “part art and part science,” so don’t make assumptions, particularly about issues involving unfamiliar cultures.

7. “Scenario Analysis”

Businesses create scenarios, or “detailed descriptions of what the future might look like,” to address the chance and magnitude of change in their strategic planning. Scenario analysis clarifies situations that are highly uncertain, subject to change or prone to expensive shocks. Scenario analysts use “computer-generated econometric models” to assess quantitative variables and to apply several other methods in specific circumstances, such as “cross-impact analysis” to calibrate an event’s probable impact on fabricated scenarios. To develop a useful scenario analysis, create multiple possible descriptions of the future. Then either use “deductive reduction” to explore the possible paths each scenario presents or utilize “inductive reduction” to cut the number of variables down to the most likely ones. A good scenario analysis can kick-start discussion, thinking and action among strategy makers. Don’t opt only for scenarios that best match current competencies; be open-minded about possible real change in the future.

8. “Macroenvironmental Analysis”

This deals with variables outside your company’s control – that is, matters that are “social, technological, economic, ecological and political/legal” (STEEP – also called PEST, for “political, economic, social, technological”). These areas generate great uncertainty among strategic planners.

“Always assume that competitors are simultaneously performing similar analysis on your company.”

Think of your corporate environment as three concentric rings, like a target pattern: At the center is your firm’s “internal” environment; the next ring is the “operating” environment, which encompasses your clients, vendors and competitors; and encircling both is the “general” or STEEP environment. Social factors to consider include unionization, consumer ethics and income inequities in the population. Technological matters include bandwidth and access to university talent. Economic factors include inflation, GDP and interest rates. Ecological variables include your power sources, as well as pollution and environmental rules. The political milieu encompasses activism and regulatory regimes. Defining such externalities is a challenge.

9. “SWOT Analysis”

Assessment of your company’s strengths, weakness, opportunities and threats, called SWOT analysis, has been around since the early 1970s and is firmly entrenched in the business lexicon.

“By definition, any time someone tries to gauge risk, something unexpected can happen.”

A SWOT analysis assesses a company’s capabilities relative to its outside environment, so it pairs well with five forces and STEEP analyses. Use SWOT to strategize at the product, division or operating levels. Gauge your firm’s internal and external SWOT components by asking “What can we do?” “What might we do?”, “What do we want to do?” and “What do others expect us to do?” Implementing SWOT is simple and not costly, but it can produce answers that are too general since it uses qualitative measures. Individuals can interpret its inputs in different ways, making its results more useful in strategic thinking than in executing strategies.

10. “Value Chain Analysis”

Value Chain Analysis (VCA) separates the components of your firm that create economic value for customers, analyzes the cost of each component and improves them to build profits and satisfy clients. VCA, which Porter also popularized, considers two sides of a firm’s functions: its “primary activities” (supply and distribution logistics, operations, marketing, sales and service) and its “support activities” (technology, personnel and infrastructure). You can adjust profitability by changing these components.

“Environmental conditions affect the entire strategic management process.”

Value chain analysis can help you visualize your relative position in your industry. VCA can refine SWOT analysis by probing finer details about strengths and weaknesses and comparing cost to value. Its drawbacks lie in its focus on physical products and assets. Newer versions of VCA relate to information technology and services companies. While useful, VCA requires a substantial investment in time and in “benchmarking, customer research, competitive analysis and industry structure analysis.”

About the Authors

Babette E. Bensoussan is managing director of the MindShifts Group, a strategic planning consultancy. Craig S. Fleisher is a management professor at the University of Windsor, Canada.

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Analysis Without Paralysis

Book Analysis Without Paralysis

10 Tools to Make Better Strategic Decisions

FT Press,
 


7 March 2025

Business Process Management and the Balanced Scorecard

Recommendation

The emphasis on process performance as an element of organizational success is growing. Strategy consultant Ralph Smith explains the evolution of strategic processes as tactical weapons in business leaders’ competitive arsenals. He provides a brief analysis of the current state of global competition and demonstrates how what he calls “process-based competition” evolved from Total Quality Management. However, his book is not just historical; it is practical. Smith explains how to create a “strategy map” and how to use it as a foundation for your balanced scorecard. He organizes the final chapters of his book around a six-step flowchart that will help you become an effective strategic-process competitor. The book is concise but dry. Like many authors with systems of their own, Smith advocates using facilitators and consultants – especially himself – to guide you through your strategic process. However, underneath his sales pitch lies a good deal of substance. BooksInShort recommends this book to executives who are looking for practical implementation strategies.

Take-Aways

  • Business process management has evolved radically since the 1970s.
  • Formerly, firms did not think about the relationship between their goals and processes. Today, organizations incorporate “process performance” into their strategies.
  • Use a six-step flowchart to implement strategic project management at your company.
  • First, create “vision statements” and “mission statements” to delineate your firm’s aspirations and purpose, and to focus and build consensus among your employees.
  • Second, assess the gap between your firm’s present position and its future goals.
  • Third, illustrate your company’s cross-functional relationships on a “strategy map” to show how the firm plans to compete and how each person’s work affects its success.
  • Fourth, customize a balanced scorecard (BSC) to show you whether you are on course to meet your specified goals.
  • Your BSC should provide feedback on how to improve your processes to achieve your goals and strengthen your company’s operations.
  • Fifth, use all your collected data to execute your plan for process improvements.
  • Sixth, monitor your progress. Make adjustments when necessary to stay on track.

Summary

Why Processes Matter

The 1970s was the great era of giant command-and-control companies. Back then, vertical structures were fashionable, and people viewed corporations as vast, intricate mechanisms in which the operation as a whole would run properly if each person in the hierarchy did his or her assigned task. Interdepartmental communication was minimal, and workers and managers did not think about the relationship of their activities to the goals of the organization. For example, one aluminum company paid employees according to how many pounds of material they produced. This discouraged them from paying any attention to “customer needs, job due dates or special requests.” Customers, in fact, had little choice. Their option was not “take it or leave it,” but rather, “take it or take it.” Companies knew customers had no viable alternatives.

“Current trends in the business world are forcing organizations to focus on process if they want to remain successful.”

However, by the mid-1980s, the business environment had changed. In reaction to globalization and foreign competition, many organizations started to re-evaluate their processes. Technology, entrepreneurship and initiatives such as Total Quality Management (TQM) replaced the top-down 1970s ethos. Companies realized that they could improve their processes, save money and raise quality by requesting workers’ input. This also helped them retain employees in an environment of increased worker mobility. Firms reassessed the old hierarchies and manuals, and recognized that good economic times were no excuse for complacency. They began to fix their broken procedures in a practice of “continuous improvement.”

“Many of these trends, such as the mobility of the workforce, rising customer expectations and the speed at which business is conducted, are not likely to stop in the near future.”

The Internet made even more drastic changes in the way businesses work. Firms now sell to customers and buy from suppliers around the globe easily, cheaply and quickly. Customers expect high standards from the products and services they consume. The companies that can use technology and modern business processes most efficiently have the competitive advantage over those that remain rooted in traditional business methodologies. Information and process efficiency are not just goals: They are essential weapons in your competitive arsenal.

Processes and Strategy

Business process management evolved in four “waves”:

  1. “Total Quality Management” – TQM implied “ironing out the wrinkles” of business processes to make them more efficient. Many businesses and organizations, such as the U.S. Department of the Navy, began reorganizing their operations in the mid-1980s. They wanted to identify and analyze their most successful business practices, and apply them to offices and locations throughout the organization. Although widespread today, this way of operating was revolutionary just a couple of decades ago. At that time, the idea was to design the organization correctly and let it run on its own, rather than to raise issues of quality. Businesses competed through the products and services they offered their customers. By rationalizing how they produced and delivered those goods, they found they could both increase quality and lower cost.
  2. “Business process re-engineering” – Contrary to popular opinion, re-engineering, as introduced by Michael Hammer and James Champy in their 1993 book, Re-Engineering the Corporation, was not a code word for layoffs and downsizing. Rather, it implied that continuous improvement and incremental changes, as stipulated by TQM, were not enough to improve a company’s processes. Firms gave up trying to iron out the wrinkles in the shirt and started realizing that the shirt no longer fit. Re-engineering meant taking a big risk to completely redesign processes so that businesses could become more efficient and receive bigger rewards. By integrating processes throughout the company, firms could reliably produce high-quality goods and services.
  3. “Process-oriented organizational design” – The next phase was for businesses to manage their processes holistically, through process-oriented organizational design. Rather than conceiving of each function as isolated in its own silo, executives began to view functions and accountability in relation to one another in a matrix. Managing by the quarterly numbers was no longer enough. They had to think in terms of integrated processes and how the work of each department affected others down the line.
  4. “Process-based competition” – This is where “process performance is integrated into strategy.” In fourth-wave firms, processes guide strategy, which, in turn, decides the future and the direction of the organization. Managers began to realize that they could use their new structures to compete more successfully, igniting process-based competition. These days, organizational strategy is no longer stationary until senior management deigns to change it; it is adaptive. Management receives information, learns from its operations and changes to meet the organization’s goals.
“‘Things are the way they are because they got that way’. This statement implies that it is critical to understand how a current situation developed and evolved if you truly want to be effective in changing the status quo.”

To implement strategic process management, use this six-step flowchart:

Step 1: “Vision and Mission”

The “vision statement” and the “mission statement” are two very different entities:

  • Vision statement – Communicates where you are going, what your company will become and what it will be doing in its perfected future state. The vision should be inspiring. Present it in a way that allows everyone to buy into it. While the vision should require your team to stretch, it shouldn’t require them to jump across the Grand Canyon. Your vision should be radical enough to inspire action and urgency, yet practical enough to implement.
  • Mission statement – Provides a compelling description of your organization’s reason for being, what it provides and for whom. The mission statement is for your employees, to give everyone a common understanding they can use to align their work.
“A high-performing organization...must not only understand how to identify and correct its process weaknesses...it must also...leverage process strengths and opportunities for strategic advantage.”

The mission statement is not a public relations piece. Sure, you can create something that the public relations department can promote as your corporate mission, but don’t confuse that with your actual mission statement, which should inspire your company’s every activity. The difference is crucial.

Step 2: “Strategic Assessment”

In this step, identify and analyze the gaps between your company in the present and the organization you wish to create, as outlined in your vision and mission statements. Take this large task in two phases:

  1. Informal SWOT assessment – This is a discussion of strengths, weaknesses, opportunities and threats. A facilitator can help keep SWOT conversations focused and prevent them from drifting into unproductive side discussions. Too often, SWOT analysis sessions degenerate into debates about current problems or future programs, or finger-pointing. How many people you include in the discussions depends on the size of your company, but include enough people to get a wide variety of feedback on where your company is today and what team members really think. Separate facts from analysis: The SWOT discussion should reveal facts about your current strategic position. Don’t worry about consistency. If you collect enough information, it will probably seem to point in many different directions.
  2. Formal analysis from various perspectives – During this phase, use the mass of information you gathered during the SWOT analysis and look at it from several points of view, including (but not limited to) “financial, customer, process and learning.” Each of these perspectives raises important questions. For example, from the financial point of view, you should identify key indicators, trends and external factors. Use any technique that will help you get reliable answers to your questions. Once you see where your organization stands and you compare it to your corporate vision, the strategic gaps you need to close will become apparent. Obviously, you cannot do everything at once. Categorize and prioritize your activities, and identify the constraints that may limit your ability to close the gaps.

Step 3: “Strategy Map”

A series of articles by Robert Kaplan and David Norton in Harvard Business Review made the concept of strategy maps famous. Strategy maps are visual tools that reveal the cross-functional, cause-and-effect relationships throughout your organization. The maps explain how the company intends to compete and how each person’s work affects its success. The maps do not simply describe company operations. Rather, they show in which direction a company must move to implement its strategic goals. For example, if you want to increase customer satisfaction, create a strategy map that shows what should occur in finance, customer concerns, processes and learning to meet that goal.

“Putting together a Balanced Scorecard is much easier once the strategy map has been created. The first few columns of the BSC that deal with perspectives and objectives are already completed on the strategy map and can easily be formatted.”

As you create your maps, you may find that they include functional areas that do not easily fit into one of those categories. That’s fine; tweak your maps so they work for you. Meet with each functional group, and garner team members’ input on the design to make sure that what you are constructing is relevant and useful.

Step 4: “Balanced Scorecard” and “Strategic Initiatives”

The fourth step has two interconnected components:

  1. Balanced scorecard (BSC) – Also designed by Kaplan and Norton, this management tool gauges whether the organization is on track to meet its strategic objectives.
  2. Strategic initiatives – These are your plans for closing the gaps you identified during the mission and vision phase.
“The scorecard is simply an information providing tool. A good analogy is to view the scorecard like a scale when you are on a diet.”

You can use a properly designed BSC to drive your agenda, but the BSC need not be your only measuring system. Your company needs to quantify lots of data, and trying to fit too much information into your BSC will obscure your strategic goals and make the BSC unwieldy.

Don’t be afraid to use the same metrics in various measuring regimes; just be sure the data come from the same source. You’ll have a problem with using the same measure in numerous places only if you use multiple sources and end up with different numbers for the same measurement.

“The Balanced Scorecard...help[s] an organization monitor the effectiveness of strategy and make midterm course corrections between iterations of the strategic planning process.”

Don’t become dependent on your BSC. It is a tool that you should change if it isn’t providing helpful feedback. Your BSC should measure and supply feedback for your strategic processes, and your strategic processes, in turn, should yield data for your BSC. Both your BSC and strategic processes must flow into the execution of your company’s operations and strengthen your competitive advantage.

Step 5: “Execution”

You probably know of companies that created vision and mission statements they never used. Other firms skip the formation of strategy maps, even though they provide a strong foundation for creating a BSC. Your strategic maps, BSC and strategic initiatives should focus and energize your management team and enable them to work together to close the gaps between where you are and where you want to be.

Step 6: “Monitor and Adjust”

As you monitor your progress, evaluate what you are accomplishing and where it is taking you. Make course corrections when necessary. Alter your strategy maps, BSC, strategic initiatives and even your vision and mission statements, as you see more clearly where you’re going. Use them as tools to gain a more lucid understanding of your company and as tools to fashion your processes into strategic weapons that your competitors will be hard-pressed to match. Aim to succeed both in the present and in the future.

About the Author

Ralph Smith has helped hundreds of firms improve their performance and has been a featured speaker at several universities in the United States.

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Business Process Management and the Balanced Scorecard

Book Business Process Management and the Balanced Scorecard

Focusing Processes on Strategic Drivers

Wiley,
 


7 March 2025

How Full Is Your Bucket?

Recommendation

Going through life with a short, handy, happy philosophy – particularly one as affirming as the concept in this book – is very nice. However, a fine line separates simple from simplistic. Although some readers will enjoy the breezy easiness of this approach, others might find it to be just a first step toward becoming more upbeat. Donald O. Clifton, a pioneer in positive psychology, and his co-author and grandson, Tom Rath, developed the “bucket” and “dipper” theories of happy emotions, based on Clifton’s research. The bucket is a metaphor for your sense of well-being. Every interaction fills your bucket or drains it. You also have a psychological dipper you use to add to or take away from other people’s sense of joy and security – their buckets. The choice, the authors explain, is yours. The book includes small drop-shaped cards for dropping a few friendly notes. It also provides five strategies that can increase your positive emotions and those of the other people in your life. If your bucket is perennially half-empty, BooksInShort recommends dipping into this bestseller to see if it holds water for you.

Take-Aways

  • Every interaction affects the way you feel.
  • When your “bucket” is full, you feel upbeat and happy. When it is empty, you feel negative and sad.
  • You either fill other people’s buckets or use your “dipper” to empty them.
  • Praise generates good feelings at work, but negative actions also are contagious.
  • Most people focus on what is wrong instead of what is right. That also has been the prevailing trend in studies of human nature.
  • Research shows that negative emotions actually can cause health problems.
  • Positive emotions can increase your life span, provide a buffer against illness, and reduce stress and depression.
  • In a marriage, the “magic ratio” is five positive interactions for every negative one.
  • Using five strategies can increase your optimistic emotions and those of everyone around you.
  • Those tactics are: Boost other people, emphasize your strengths, form close friendships, give spontaneously, and be aware of other people’s preferences and needs.

Summary

“The Dipper and the Bucket”

Traditionally, doctors study what is wrong with people. Donald O. Clifton decided to take a different approach and study what is right with people. He became curious when he learned that the death rate in North Korean prisoner of war camps was around 38%, higher than in any similar camps. The difference was that the North Koreans broke each prisoner’s will to live by depriving him of all positive emotional support. The impact of this overwhelming desolation caused many captives to give up. After learning about this, Clifton decided to pose a new question: “Can positivity have an even stronger impact than negativity?”

“The results of our encounters are rarely neutral; they are almost always positive or negative.”

Clifton’s subsequent research gave birth to the “Theory of the Dipper and the Bucket.” The bucket is a metaphor for how you feel. Everyone has an invisible bucket. Throughout the day, every interaction either fills your bucket or takes away from it. When your bucket brims over, you feel contented. When it is low, you feel sad and depleted. Everyone also has an invisible dipper. You use this dipper to either fill or empty other people’s buckets. Doing and saying positive things fills their buckets, whereas being negative empties them. Every choice you make in your interactions with other people adds to or takes away from the contents of their buckets.

Creating a Positive Work Environment

Managers need to supply two ingredients – “recognition” and “praise” – to generate good will among their employees. People who regularly receive both forms of encouragement achieve increased productivity, warmer relations with their co-workers, better feedback from customers, fewer accidents and longer tenures with their companies. Unfortunately, people’s buckets are seldom filled at work, so they become negative and “actively disengaged,” which costs companies billions in lost productivity. Empty buckets also result in more absences, accidents, turnover, and even fraud and embezzlement.

“We face a choice every moment of every day: We can fill one another’s buckets, or we can dip from them.”

Most work environments not only lack positive reinforcement, they breed negativity, a highly contagious condition. In fact, one disengaged employee can infect an entire workplace. Laura’s story is a prime example. Laura spent a great deal of time and effort preparing for a presentation. However, just as she was getting into the meat of her program, she overheard two of the people attending the meeting share a negative comment about her appearance. She grew flustered and lost her momentum. Her boss added fuel to the fire by saying, “Laura does not look very happy with us.” Laura continued spiraling downward as her boss and colleagues drained her bucket.

“Great recognition and praise can immediately transform a workplace.”

The realm of customer service is particularly vulnerable to workplace negativity. One study of a call center revealed that a few of the service representatives alienated every customer who talked to them. In contrast, several other representatives gave each caller a positive experience. Those effective reps needed praise and attention, but employees often find that formal corporate recognition programs feel contrived and insincere. That does not have to be the case. Managers can easily, inexpensively generate positive emotions among employees and achieve great results.

At Home and in School

Hundreds of opportunities arise every day for people to fill or empty your bucket during thousands of brief, individual moments. Some of these moments are neutral, whereas others are either positive or negative. Look at one person’s day to see the impact of every interaction.

“Right now, the majority of us don’t give or receive anywhere near the amount of praise that we should.”

Take Tammy, a single mother of three. Amid a typical morning rush, Tammy is giving her kids a quick breakfast when her six-year-old drops her toast on the floor. Her two older siblings and Tammy reprimand her, making her feel awful about an inadvertent mistake and somewhat depleting everyone’s bucket. Tammy then leaves the kids at school and pulls into the parking lot at work just in time. She heads for an open space at the same time as another driver. Tammy decides to relinquish the spot. When she walks up to the building’s entrance, the other driver holds the door for her and thanks her for being so kind. Tammy feels a warm rush after that pleasant exchange, but her mood darkens when she realizes she has a performance review later that morning. Her boss outlines several things she needs to work on, but neglects to mention any of her successes. She feels down until an executive passes her in the hallway and pays her a compliment. Tammy is proud that the executive remembered her and her work, and her bucket feels much fuller.

“Most of us have grown up in a culture in which it’s much easier to tell people what they did wrong instead of praising them when they succeed.”

Although a simple compliment can have a wonderfully beneficial effect, most people tend to point out what is wrong instead of what is right. Schools tend to focus on the negative, not the positive, and, often, so do parents. For instance, when a child brings home a report card with two As, two Bs, one C and one F, most parents talk about the F instead of the two As. One study confirmed that praise and positive reinforcement are far more effective teaching tools than criticism. Children who received praise improved their work by 71%, those who were criticized improved it by 19% and children who were ignored raised their achievement only 5%.

Positive Psychology

Positive psychology focuses on “what is right” with people and tracks the outcomes of positive emotions. Research shows that negative feelings actually can cause health problems. Conversely, optimistic, upbeat feelings can increase longevity, provide a buffer against illness, and reduce stress and depression. They allow you to function at your very best. Research by Barbara Fredrickson at the University of Michigan revealed that:

  • Positive emotions protect you from negative emotions.
  • Positive emotions increase your resistance and buoy your spirit.
  • Positive emotions enable you to explore new avenues of thought.
  • Positive emotions boost your physical and psychological resilience.
  • Positive emotions raise the productivity of teams.
“Positive reinforcement about our strengths can buffer us against getting overwhelmed with the negative.”

One study about marriage showed that a couple needs a “magic ratio” of five positive moments for every negative moment for the marriage to remain strong. This magic ratio holds true in the workplace as well.

The Author’s Story

Author Tom Rath believes that his personal story is a perfect example of how getting your bucket filled can shape your life. From when he was very young, Tom’s large family always focused on the things he did well. They encouraged him to pursue his passions and they celebrated his accomplishments, great and small. At age 10, Tom opened a snack stand. By the time he was 12, he employed 20 of his schoolmates. His parents did not try to force him to excel in areas that didn’t interest him. Instead, they encouraged him to devote himself to the things he did best. His mother would say, “Never try to teach a pig to sing. It wastes your time and it annoys the pig.”

“Negative emotions can be harmful to your health and might even shorten your life span.”

When Tom was 16, he developed poor vision in one eye. This turned out to be a symptom of a rare ailment called von Hippel-Lindau disease, which causes tumors to develop in various parts of the body. Tom’s family helped him focus on what he could do to prevent the onset of more symptoms. This proactive stance helped him remain positive in the face of adversity. Tom believes that living with a full bucket has enabled him to face the challenges of his illness and to continue to live his life to the fullest.

“Positive emotions are not trivial luxuries, but instead may be critical necessities for optimal functioning.”

Use these five strategies to boost your emotions and those of the people around you:

First Strategy: “Prevent Bucket Dipping”

The first step toward maintaining a full bucket is learning to stop dipping from other people’s buckets. Catch yourself in the act of making a negative comment. Try to say something positive instead. When you hear other people talking negatively, see if you can turn them around. Keep score by rating your interactions as positive or negative. Strive for the magic ratio of five to one.

Second Strategy: “Shine a Light on What Is Right”

Focus on “what is right.” A woman in an unhappy marriage decided to do just that. She began to comment on everything she liked about her husband. Although he was skeptical at first, he soon warmed up to her new attitude and began to do the same for her. Their relationship grew more loving and positive as they concentrated on filling each other’s buckets at every opportunity.

“We all experience positive and negative interactions every day that influence how we feel and behave.”

Consider the 15 statements in the “Positive Impact Test” to determine if you fill other people’s buckets or empty them:

  1. “I have helped someone in the last 24 hours.”
  2. “I am an exceptionally courteous person.”
  3. “I like being around positive people.”
  4. “I have praised someone in the last 24 hours.”
  5. “I have developed a knack for making other people feel good.”
  6. “I am more productive when I am around positive people.”
  7. “In the last 24 hours, I have told someone that I cared about her or him.”
  8. “I make it a point to become acquainted with people wherever I go.”
  9. “When I receive recognition, it makes me want to give recognition to someone else.”
  10. “In the last week, I have listened to someone talk through his or her goals.”
  11. “I make unhappy people laugh.”
  12. “I make it a point to call each of my associates by the name she or he likes to be called.”
  13. “I notice what my colleagues do at a level of excellence.”
  14. “I always smile at the people I meet.”
  15. “I feel good about giving praise whenever I see good behavior.”

Third Strategy: “Make Best Friends”

Many people stay with their jobs, at least in part, because they have developed close relationships at work. This “best friend” syndrome is evident in every kind of group, team and activity. Research shows that people who have best friends at work are more productive and achieve higher customer satisfaction levels than those who do not.

“When it comes to robust and meaningful bucket filling, individualization is key.”

How can you build such relationships? Learn the names of the people you interact with regularly. Try to fill their buckets at every opportunity. Listen to them with an open mind and make an effort to be supportive. Be free with your praise. Let them know when their work or their actions are special.

Fourth Strategy: “Give Unexpectedly”

Although receiving a present on your birthday is always nice, unexpected gifts fill your bucket a little bit more. This holds true with your employees, friends and loved ones. An unexpected gift lets them know that you appreciate them. It does not have to be something tangible or expensive. The gift can be as simple as sharing a secret, or sending someone an article you think he or she will find interesting. In this case, truly it is the thought that counts.

Fifth Strategy: “Reverse the Golden Rule”

This bucket-filling variation of the golden rule is, “Do unto others as they would have you do unto them.” This means that you should tailor your bucket-filling approach to the individual involved. For instance, some people enjoy over-the-top gestures while others prefer a private compliment. By considering someone’s preferences, you recognize his or her unique identity. Ask some of these questions to get started:

  • “What are your ‘hot buttons’ – hobbies or interests you like to talk about?”
  • “What increases your positive emotions or ‘fills your bucket’ the most?”
  • “What type of recognition or praise do you like best?”
  • “What is the greatest recognition you have ever received?”
“We don’t have to allow ourselves to be defined by our hardships.”

Use small, personal notes to tell people thank you, to give a compliment, or to acknowledge an achievement or good deed. Such “drops” are very good at filling buckets.

About the Authors

The American Psychological Association recognized the late Donald O. Clifton, Ph.D., as the “Father of Strengths Psychology.” He chaired Gallup, Inc., and wrote Now, Discover Your Strengths. His grandson, Tom Rath, worked with him and now focuses on professional development programs.

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How Full Is Your Bucket?

Book How Full Is Your Bucket?

Positive Strategies for Work and Life

Gallup Press,
 



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