Gen Xers Are Managing By The Numbers
June 03, 2014 | By Neil Howe
This editorial originally appeared in Forbes.
Want to hire someone on a hunch? Good luck convincing your Gen-X boss. To make your case, you’ll need proof—and it better be quantitative. Under the direction of Xer managers, many of whom assumed leadership roles in business during the Great Recession, the workplace is becoming more numbers-driven than ever.
During the downturn, Xers kept their companies afloat through relentless cost-cutting and sought out data-based software to help boost efficiency. They’ve maintained the same results-oriented outlook during the recovery, obsessively focusing on the bottom line to improve their companies’ performance while avoiding risky, big-picture moves.
When Boomers dictated management style, they published books that focused on perfection and fulfillment like Good to Great and In Search of Excellence. Now the shelves are filled with titles focused on pragmatism and survival, as in Fire Someone Today and Results Rule!
One illustration of this new approach is the increasing use of Big Data. More companies are trying to remove human error from the hiring process by introducing tests, quizzes, and even video games. Xerox is one satisfied customer: Since it began using Evolv’s workforce analytics software to screen applicants in 2011, the company reports that employee performance has risen by 3 to 4 percentage points and worker retention has improved.
Data analytics is also making company’s operations—from warehouse locations to shipping—more efficient by enabling them to keep shelves stocked with high-demand goods. Pioneered by big-box stores like Walmart and e-commerce giants like Amazon, these methods are especially beneficial for companies with large networks rather than local or regional chains.
Other companies are using data to guide product development and marketing. Take Zynga, which mines huge amounts of user data to determine what features it should add to new games. And rather than commission a traditional market-research test, Ford used algorithms to search the Internet for opinions on “three-blink” turn indicators when deciding whether or not to include the function in its 2010 Fusion. Big Data can even serve as a tastemaker: Software that supposedly can predict hit songs is now available to record labels.
Perhaps more than any other aspects of business, data have transformed marketing and operations. Access to browsing history has changed the game in advertising. By putting algorithms to work, companies are now able to target customers who follow specific behavior patterns and or visit certain websites. They’re also using it for more creative tasks, like determining what types of humor resonate most in ad campaigns.
Focusing on the numbers doesn’t only mean utilizing algorithms—it also means old-fashioned cost-cutting. Xers are looking for ways to boost profits with minimal risk—even if this results in less product innovation. Capital spending in the United States, for example, is projected to grow this year at its lowest rate in four years. Companies are also spending less on labor, with many supplanting entry-level staff with interns. Indeed, in 2013 the only area where major corporations upped spending was advertising and marketing.
As a generation, Xers are known for risk-taking. So what explains this conservative approach to business? Perhaps this rising generation of managers was so traumatized by their companies’ near-death experiences during the recession that they became more cautious. Financially hard-pressed, they see the downside of failure—job loss without an easy career alternative—as greater than the upside of success. Xers fear that their performance will be judged by the numbers they generate without the boss asking any deeper questions. And they tend to focus on what they can control, which is cost and efficiency, not future sales or the mood of the global economy.
Many Boomers aren’t thrilled by this new approach. One frequent complaint is that algorithms can’t replace “heart.” As former Burger King CMO Russ Klein recently wrote in Advertising Age: “Data will never substitute for the human senses and the role they play in determining great from good.” Others are raising red flags over companies’ reluctance to invest. Conservative spending, they argue, could actually be holding back the recovery.
Boomer executives have always stressed the importance of long-term, strategic thinking. They believe that understanding the motivations behind consumer behavior makes for better business decisions. To quote Klein: “Knowing my customer’s digital footprint is powerful knowledge. Knowing what’s in her heart—now that is big.” Boomers want to managewhat GSD&M founder Roy Spence calls “purpose-driven” companies, rather than ones that blindly follow the numbers.
Like it or not, the Xer management style is here to stay. So what this mean for the future? It depends on how you interpret their current actions. The narrative of recession-ravaged Xers with a risk-off mentality posits that Big Data and the bottom line will rule for decades to come—leading to declining innovation in the long term.
Another possibility is that Xers are refraining from making any major overhauls until they’re fully independent of Boomer CEOs and Silent directors. This may explain why startups and small-cap companies—which are more likely to be run solely by Xers—are taking more risks and, as a whole, are enjoying a much greater valuation boost in equity markets. (The Russell 2000 has outperformed the S&P 500 in recent years.) In this case, the S&P 500 will do better as Xers take over corporations. But this possibility is still years away, since Boomer CEOs aren’t retiring (the average CEO age in 2010 was 53) and increasingly regulated corporate boards are experiencing little turnover (the average board member age in 2012 was 68).