TechExec 7: Doing Layoffs Right, the Cobra Effect and A/B Testing

(Total read time: 6 minutes)

Hey there,

Welcome to the 7th edition of TechExec - the newsletter that turbocharges your growth to become a Tech Executive!

This newsletter is on its way from India, where I traveled to attend my brother’s wedding. Before landing into India, I took a short detour to Boston, to attend my One Year Reunion at Harvard Business School. Not only, it was great seeing old some friends, and faculties, but also it was a reflective exercise in many ways. Reply to this email, if you want me to write more about my time at HBS :)

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Now to the main content …

As promised, here are this week’s BLTs:

💼 B - a Business concept/theory/story

💝 L - a lifestyle advice

🤖 T - a Tech explainer

💼 B - Doing Layoffs Right

I took a course at HBS called “The CEO Experience”. It was taught by John Lynch, the four-time (2005–2013) governor of New Hampshire and the former CEO of Knoll, a national furniture. The course had so many “hard truths”, and he would reinforce them via different lessons. One of the hard-truths was about layoffs. He used to say

Mass layoffs are indeed the flavor of the season, and it does feel fortunate to hang onto a job. Now I don’t yet know what it means to get laid off, but I read enough LinkedIn posts to know how much people feared the day, and yet they felt blindsided. With companies doing multiple layoffs over the past 6 months, you don’t know if we are done with those yet.

Employers say the employees are part of the family, but most layoffs prove that the employees are just numbers. There has got to be a better way. While looking for that, I stumbled upon an eye-opening HBR article. The article first looks into current practices, which are causing more pain than gain, and then goes into some recommendations. Let’s dive into the current practices:

Sudden terminations without clear communication hit employee morale hard, leading to decreased motivation and loyalty. It scares away top talent, leaving organizations starved of crucial skills and expertise. Not a recipe for long-term success, right?

Traditional layoffs also risk losing the collective wisdom and institutional memory that make companies thrive. It's like throwing away the secret sauce! Mishandled layoffs tarnish a company's image, impacting relationships with customers, suppliers, and potential hires. Layoffs take a toll on employees' well-being, causing stress and anxiety. Ignoring their needs only makes matters worse.

💡But here's the silver lining! The article offers game-changing recommendations to make layoffs better, foster resilience, and preserve your company's future:

✅ Openness and transparency: Replace secrecy with clear communication. Gradual, phased approaches provide employees with early warnings and involve them in decision-making, building trust and respect.

✅ Outplacement services: Support your displaced employees by offering career transition assistance, resume workshops, job search resources, and retraining programs. Help them land on their feet and maintain goodwill with both current and former staff.

✅ Strategic talent retention: Rethink the outdated "last in, first out" (LIFO) approach. Instead, consider employees' skills, expertise, and future potential. Retain high-potential individuals and provide development opportunities to ensure your company's long-term success.

✅ Emotional support: Prioritize the well-being of your employees during transitions. Show empathy, offer counseling services, and establish support networks to help them navigate the emotional challenges of job loss.

💝 L - The Cobra Effect

🐍 Brace yourself for the "Cobra Effect" tale!

Picture this: British colonial rule in India. The Brits, eager to squash the cobra population, launched a genius plan—a bounty program offering rewards for each slithery snake killed. But guess what? Instead of dwindling cobras, they got more! People hopped on the breeding bandwagon, trying to cash in on those sweet rewards, resulting in an unintended population surge of those venomous creatures.

Now, let's zoom out and see the bigger picture. The Cobra Effect embodies those situations where our oh-so-well-intentioned actions to fix a problem end up smacking us with unintended, negative consequences. Ouch! It's a friendly reminder to take a step back and carefully evaluate the potential repercussions of our brilliant interventions and policies.

But wait, here are some jaw-dropping real-life examples of the Cobra Effect to sink your teeth into:

1️⃣ To reduce traffic congestion, several cities have tried implementing the “odd-even” rule where only cars with license plate ending in odd (even on alternate days) digits are allowed on the roads. What ends up happening is people buying more cars so that they have cars for all the days making the situation worse. Yep, that's the Cobra Effect striking with a traffic jam twist!

2️⃣ In 2016, several Wells Fargo employees opened accounts in customers’ names, forged signatures, and engaged in other unethical practices. Oops!

3️⃣ Miami Dophins started throwing away games in the 2021 season so that they could increase their draft position in the next season.

🤖 T - A/B Testing

A/B testing is like playing a game of "this or that" with your product, service, website, or even newsletter. You pit one version against another to see which comes out on top. One example could be me sending two different versions of newsletter (e.g. different color scheme, title, timing, etc) to you folks, and see which one has an higher open rate or CTR. But like any strategy, A/B testing has its ups and downs.

One of the biggest advantages of A/B testing is that it allows you to make data-driven decisions. Instead of relying on assumptions or gut feelings, you can test two versions of a page and see which one performs better. This can lead to significant improvements in conversion rates and the overall user experience.

However, there are also limitations to A/B testing. One of these is that it can be time-consuming and expensive. You need a large enough sample size to make statistically significant conclusions, which means running tests for longer periods of time.

Another limitation is that A/B testing can only tell you so much. While it's great for optimizing specific elements on your page, it doesn't give you a complete picture of your users' behavior. You may need to use other research methods, such as surveys or user testing, to get a fuller understanding of what's working and what's not. Also note that, A/B testing only measures short-term performance and does not account for long-term effects on customer satisfaction or loyalty.

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Until next time!

Gaurav