Profit Environment

"Profit Environment is to our knowledge the only existing system able to calculate the present and future impacts of Human Factors upon your profits in dollar terms."

Profit Environment's 'Secret Sauce'

Interview of PE’s creator, Andrew Olsen, by Design Group Inc. Consultant Randal Dick, Oct 2012.

Diagnosis is useless unless a treatment that achieves wellness follows. This is as true of companies as it is of individuals. 'Profit Environment' not only provides its client companies an insightful diagnosis, it also involves a process of discourse and decision that deeply engages staff in the continuing work of change. I caught up with Andrew Olsen, the mind behind Profit Environment (PE) for an explanation of the 'secret sauce' that makes it all come together:

RD: Andrew, what in a nutshell is the secret sauce of PE, and why is it so important?

The secret sauce is the discipline of science. The PE diagnosis is based on the most powerful profit prediction science that I know exists. The global causal modeling research is just the most sophisticated there is. And no, I had no part in the research - alas! Every other horse in the HR leadership and teams surveys race uses correlation stats instead of causal stats. They survey dimensions that rise and fall with profit, whereas PE measures dimensions that are proven to cause profit to rise and fall. This alone sets PE out in front of the pack.

Next, the 'treatment' decisions are made using dollar cost, Return-On-Investment calculations based on that predictive science. I know of no science outside of this research that can do that. The usual scenario is that you get some bad scores and there is an argument about how much should be spent on fixing it with a guess that it will do better than break-even. With PE you can actually calculate the break-even point in dollar terms. Instead of the usual posturing and stand-offs between the HR softies and the Finance bean-counters, both parties use PE dollar calculators to make the decisions and isolate the most strategic target variables. You can see which problems not to fix, which things are just symptoms.

Then there is the discipline of planning, applying and monitoring the intervention through the usual mire of organizational priorities and politics. The key difference of the PE process here compared to other intervention strategies is that the target changes are very specific and set by science, not theory. This kind of heightened credibility can add an extra layer of seriousness and attention to the project.

Finally, science dictates that the end state, not just the baseline, gets measured to test if the intervention worked. There is 'no escape' until the leader and team prove to be genuinely more engaged, excited and productive in their work. Curiously, that is a kind of 'trap' that people actually want to be 'caught' in because it brings about their own flourishing. People hate being in sub-optimal teams with ineffective leaders. It is so normative - 'Dilbert' and 'The Office' are so easily recognized and ‘enjoyed’ - that it is a kind of slow, quiet crime against humanity.

RD: Andrew, you came from an organizational psychology background. How did that contribute to PE's secret sauce?

AO: I knew and lamented for years how lame the science behind the market for this sort of thing is. There are so many products out there that claim to measure the crucial dimensions of leadership, team health, climate and so on. I was often asked to recommend or comment on or endorse this or that approach, and I just annoyed people by pointing out how the theory might be impressive, elegant, famous or even correlative, but was not predictive. People still bought them because the fancy graphics were so cool, because famous business authorities had endorsed them, and so on. But the minute I saw this incredible causal research I knew I had found the real thing. This was something I would be willing to spend my own money on. I quit my consulting job and went full time at turning the academic research into a useable product. It just doesn't compare. Mathematically, the very recent discovery/ invention of the causal stats (structural equation modeling) beneath PE makes products based on conventional psychometrics look almost primitive. I am naughty - I want to ask a potential buyer to ask our competitors to describe the difference between PE and their product!

RD: What difference does it make whether a company does or does not use the secret sauce?

AO: OK, I'll go out on a limb and lose friends and influence on people. The market is dominated by products like Myers-Briggs and the DISC profile. They are psychometrically coherent, correlated to this and that, and immensely popular. As performance predictors, and as instruments of significant business improvement they are, in my experience, utterly tragic.  They appeal to narcissism, they give the false impression that a label is a cause, and they have no capacity to change the quarterly returns for business owners. So, to your question, the difference that it makes is that your HR dollar is thrown into the airy fairy toilet. I will openly retract this on your website if anyone can show me independent data proving otherwise. I'm afraid I am sounding aggressive here, but I've watched so many managers spend vast sums of other people's money - shareholders, taxpayers, etc. - on these things and get nothing but a warm fuzzy out of it for everyone. Yes, I confess I am an INFP if that helps, and a High D and I. So what? Show me how knowing that makes anyone save or earn a million dollars in the coming year. It doesn't.

RD: Andrew, normally change creates angst and sometimes resistance among staff. How is it that PE can have positive results in that regard?

AO: PE puts the change decisions and interventions in the hands of the people who make the diagnosis. The leader and the team interpret for themselves what the data means and decide for themselves whether they ought to do anything about it. There's no-one to argue against, no-one to be passive aggressive towards and play office politics with. We lead them through the sequence so that they tell and own the story. We stay as witnesses and mentors through their own work. They tell us and themselves whether they have made the change. 

RD: Any closing thoughts?

AO: Yes, just one. About the secret sauce of science. We are so serious about the science aspect that we make our potential clients do a formal Return-On-Investment calculation in dollar terms before we will even sign them up. We insist that they understand that they are buying and buying into science, a scientific process, and that everything we offer and recommend has to be testable and prove itself. We want our clients to think scientifically, systematically, about every aspect of their business. So this calculation not only gives them financially sound evidence for whether to sign up or not, but also works as a pattern of the whole intervention. The sauce is systematic, science-based discipline. There is no magic trick, no slick consultant nonsense, no sales disguise. That's what I want people to understand.