Amplifying Ambiguous Risks at Nvidia

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How do leaders make sure they are hearing the unvarnished truth? How can they cut through the bureaucracy and access unfiltered information? Writing in today's Wall Street Journal, Ben Cohen describes one technique employed by Jensen Huang, CEO of Nvidia. Cohen draws from a new book by Tae Kim (“The Nvidia Way").   Cohen and Kim describe the infamous T5T memos that Huang reads each week. 

T5T notes (Top 5 Things) come from employees at all levels of Nvidia.  Huang reads them all.  They describe issues that they are noticing, concerns they have, or simply exciting and interesting things that they are working on in their areas.  He reads them all while sipping a glass of his favorite Scotch on a Sunday evening.  Cohen describes Huang's rationale for reading all these emails:

"The documents that make it to a typical CEO tend to get so watered down along the way that they’re liable to leave a puddle on his desk. Huang doesn’t bother with any of them. He doesn’t believe in formal strategic planning or status reports, either. “Status reports are meta-information by the time you get them,” Huang said last year. “They’re barely informative.” He doesn’t want information that has already made its way through layers of management. What he wants is 'information from the edge,' he said last month in a public interview with Laurene Powell Jobs."

In research with Amy Edmondson and Richard Bohmer, we have described how organizations tend to downplay ambiguous risks. Leaders and their teams discount warning signs that are unclear and fraught with incomplete information. As a result, organizations miss opportunities to recover from initial problems and develop solutions. Larger, more serious failures result from the inability to assess ambiguous threats effectively. Huang seems to be purposefully using the T5T memos to identify and amplify these ambiguous risks, and to make sure that the bureaucracy doesn't dampen or paper over important threats.

In Kim's book, Huang explains, “I’m looking to detect the weak signals. It’s easy to pick up the strong signals, but I want to intercept them when they are weak.”

Do You Really Want a Team Full of Self-Starters?

Is it effective to have many proactive members on your team?   You might think the answer is quite obvious.   Who wouldn't want a set of self-starters on a team?  Well, think again.  Kyle J. Emich and his co-authors have written an interesting new paper titled "Better Together: Member Proactivity Is Better for Team Performance When Aligned with Conscientiousness."  Interestingly, they used the Everest Simulation that I co-authored with Amy Edmondson as the basis for one of two studies conducted for this paper.   

These scholars find that the alignment of proactivity with conscientious leads to the best results.  In other words, teams are most effective if highly proactive individuals are also quite conscientious.  Meanwhile, teams are better off if the least conscientious members are not very proactive.   Why does this alignment (high-high and low-low) work best for teams?  The scholars find that it leads to more effective coordination among team members. They write:

At the outset of this paper, we asked how organizations should create teams that are proactive, but that also engage in the planning necessary to coordinate that proactivity and perform well. Taken together, our studies reveal that teams in which member proactivity and conscientiousness align within team members across the team are more coordinated and perform better than teams in which these attributes are unaligned.

It makes intuitive sense to me.  You do not want self-starters who take initiative, but then are unlikely to do the hard work required to follow through on their commitments.  We have all been part of groups in which some people don't fulfill their commitments.  Think about the Project Aristotle research project conducted at Google by Julia Rozovsky.  She and her colleagues studied more than 150 teams at Google, and they tried to identify the attributes that distinguished the highest performing teams from the lowest.  Dependability was one of the five key characteristics of the highest performing teams.  In those groups, members could count on others to do what they said they would do.  

Whole Foods Tries Small Format Stores... Again

Source: https://media.wholefoodsmarket.com/

Roshan Fernandez reports in today's Wall Street Journal about Whole Food's renewed attempt at operating small format stores. Fernandez writes that "The 9,100 square-foot Daily Shop location is about a quarter the size of a regular Whole Foods, and sells items at comparable prices. 'We’re serving a previously unmet need in the neighborhood,' said Nicole Davia, a Whole Foods senior vice president."  Whole Foods has opened several of these Daily Shops in New York, with plans to expand to Washington, D.C. soon. 

As it turns out, Whole Foods has tried small format stores previously, and that effort failed. In 2016, the company launched an experiment with a series of small format stores labeled "365 By Whole Foods Market."  Those stores sold primarily private-label items under the 365 label that Whole Foods sells in its larger locations.  The notion was to offer a lower-priced selection in these small format stores, with the target being millennial customers who were resistant to the high prices at Whole Foods.  The company was reacting to the "Whole Paycheck" image that turned away some shoppers.  At the time, Fortune's Beth Kowitt reported on the launch of the 365 stores:

“Our goal is to compete in the marketplace without lowering the Whole Foods standards,” Turnas (head of the 365 stores) told Reuters during a recent store tour. He said 365 stores will complement Whole Foods’ premium, full-service sister brand – often dubbed ‘Whole Paycheck’ in popular culture in reference to its perceived higher prices. But the new chain will have to work hard to avoid being labeled “a cheaper Whole Foods”, said Kevin Kelley, a principal at strategy and design firm Shook Kelley, which has worked with Whole Foods and other grocers.

When I teach strategy, I often invoke this story as a classic example of straddling two quite different business models... and failing as a result.  365 was quite distinct from the Whole Foods' premium grocer model, but not as lean as Aldi or as much of a fun treasure hunt experience as Trader Joe's.  It was hopelessly floating in the middle, unclear about who it truly wanted to be.  The result was confusion, both internally and for the customers.  

This time, Whole Foods is sticking with its premium, upscale positioning with the new small format stores.  Thus, it seems that they have addressed one major mistake from the attempt a decade ago.  Now, the question becomes whether they can operate small stores efficiently.  Fernandez quotes former Wal-Mart executive Bill Simon, who says, “If they’re going to operate a bunch of small-fresh stores, the degree of difficulty is as high as you’ll see in retail."  Simon and others point out that many larger grocers fail at small format stores because of the logistical challenges, as well as the difficulty stocking a sufficient number of higher margin items in the limited shelf space.  Aldi and Trader Joe's have perfected the small format model, but many large format grocers don't fully understand the difficulty shifting from their supercenters to these much smaller footprints, often in congested, urban areas.   If Whole Foods can figure it out, there is clearly opportunity here, as many customers do like the concept of "fill-in" trips to smaller stores that are located near their homes and workplaces.  

When to Express Gratitude: Timing Matters

Many employees would love to hear more expressions of gratitude from their leaders.  They often indicate that they do not receive sufficient recognition for taking on challenging work and achieving  tough objectives. As Thanksgiving approaches, perhaps leaders might consider how to say thank you to team members who have engaged in an extraordinary effort in pursuit of a challenging goal. However, leaders would be well-served to not just think about how to say thank you, but when they do so.

New research by Professors Hooria Jazaieri and Olivia O'Neill indicates that the timing for expressions of gratitude matters a great deal. They write, "According to our research, however, thanking people after they engage in their tasks does not provoke the same resilience and perseverance as expressing gratitude before the task begins."

In a series of studies, these scholars found that demonstrating gratitude before an employee embarks on an unpleasant task can help "counteract some of the negative emotions associated with the task."  Moreover, they found that anticipatory expressions of gratitude can foster more persistence on the part of their employees as they encounter obstacles and difficulties.  Why do anticipatory acts of gratitude have more beneficial impact than after-the-fact thank you statements?  The scholars argue that articulating one's gratitude before employees embark on an unpleasant task "can help cultivate employees’ sense of purpose and value."   As a result, employees demonstrate more resilience when encountering setbacks and obstacles.  

Retraining Your Brain to Cope with Negative Feedback

Have you ever become incredibly stressed and anxious after receiving negative feedback?  Have you spent more time worrying than actually addressing the corrective actions you might take in light of the criticism?  David Rock and Chris Weller have written a useful article for Fast Company about coping with negative feedback.   They offer some helpful tips.   Rock and Weller argue that your brain moves into a "threat state" when you receive negative feedback, and that mental state prevents you from moving forward constructively. They write:

The stress we feel during and after a negative feedback conversation is a form of a threat state—in particular, a threat to our sense of status. The brain senses danger, so it shuts down precious cognitive resources and diverts energy toward worrying about our standing and reputation. Cognition and threat, therefore, work as a kind of seesaw. As one is high, the other necessarily is low.

Rock and Weller argue that you may need a quick break (a walk is helpful) to calm down if you are feeling extremely anxious.  Then, you should assess the situation and engaging in practices they call labeling and reappraisal.  Labeling entails naming the emotions that one is experiencing and that might be getting in the way of thoughtfully considering how to improve based on the input one has received.   Then, they encourage people to "reframe part or all of the negative situation in a more positive light. For instance, if you’re given feedback that you don’t speak up enough in meetings, instead of feeling embarrassed or dejected, can you reappraise the situation as a positive in that your manager respects your opinions?"  

Having reappraised the criticism, individuals can examine why their performance led to the negative feedback.  Perhaps some obstacles have gotten in the way of doing good work.  Or, perhaps you became sidetracked and fell into some bad habits.   To develop a corrective action plan, individuals should imagine what improvement looks like.  What will success look like?  How will they behave in the future if they have addressed these concerns?  What changes will they have made to their work habits? How will others perceive them if they have undertaken a set of corrective actions?  Imagining a better, more productive self can help one move past the negative emotions that crowd out learning and self-improvement in the face of unexpected negative feedback. 

Why Airbnb CEO Brian Chesky Doesn't Believe in One-on-One Meetings

In this interview, Airbnb founder and CEO Brian Chesky argues against the use of recurring one-on-one meetings between leader and team member.   Here is an excerpt: 

I don't believe in one-on ones and almost no great CEO in history has ever done them... the one-on-one model is flawed it's a recurring one hour one-on-one meeting where the employee owns the agenda and what happens is they often don't talk about the things you want to talk about.  You become their therapist.  They're bringing you problems, but often times they're bringing you problems that you want other people in the room to hear.  There are very few times employees should come to you one-on-one without other people.  Perhaps if they're concerned about something if they're having a difficult time in their personal life, if they want to confide in you with something that they don't feel safe telling a group, but that should be infrequent.   If that's happening frequently that is a very ominous sign.  [I prefer] recurring group meetings in which everyone hears each other's views, where there are  notes taken.  It's very transparent.  [We all know] the topic, what decision was made, who was in the room, who had input.  If the process was unfair in some way... or inadequate, there is at least a record of the process, and people can weigh.  

Chesky loves to be provocative with regard to leadership style and process.  Here again he's offering a fresh perspective, and one that warrants serious consideration.  He's pointing out a serious risk associated with one-on-one meetings.  Specifically, he has two worries.  First, Chesky doesn't want decisions being made in these meetings, rather than in group settings where the person's peers can offer their perspectives on the same issues.  He wants the productive conversation and give-and-take that emerges from group dialogue and debate.  He doesn't want to make decisions in a vacuum.  Second, he worries about the one-on-one meeting becoming what he calls a "therapy session."  He thinks that quick check-ins as needed can occur if someone has a personal concern or problem, but he sees no reason for a recurring meeting to talk about personal matters.  Moreover, Chesky does not think the employee should be driving the agenda of these recurring one-on-one meetings.  

Chesky makes some strong points.  He's certainly correct that leaders should not be sacrificing transparency and the value of constructive debate by learning about perspectives and viewpoints too often in one-on-one rather than team meetings.  On the other hand, he doesn't talk about the value of one-on-one meetings as forums for providing coaching, mentoring, and constructive feedback.  Perhaps those meetings don't need to take place weekly, but most employees do need some opportunity to solicit and receive coaching and constructive criticism in a private setting.  In the end, I don't think the issue is WHETHER to hold recurring one-on-one meetings, but HOW leaders and their team members use the meetings.  It should not be a complaint session.  It should not primarily be a decision-making meeting.  It should be an opportunity to drive personal improvement and enhance performance.  

Are You Willing to Pay More for Products Someone Loved Creating?

Writing for Kellogg Insight, Dylan Walsh reports this month on some fascinating new research by Jake Teeny, Anna Paley, Robert Smith, and Daniel Zane. Teeny and his colleagues examined the relationship between willingness-to-pay and the level of enjoyment a seller derives from creating a product. Walsh summarizes the findings:

As a whole, the studies showed that buyers actually associated production enjoyment with greater product quality and value, consequently increasing how much they were willing to pay for it. And yet sellers often charged less for the products and services that they enjoy providing, even though they also believed them to be of higher quality.

The scholars argue that potential buyers seem willing to pay more for products when they believe that sellers have experienced high levels of intrinsic motivation while creating the products.  In other words, if the seller valued the process of creating the product as much, if not more, than the good itself, then buyers seem willing to pay a higher price for the product.  On the other hand, they argue that sellers price the product with their own enjoyment in mind.  If you are performing an unenjoyable task, you might charge more for a particular service.  If you are doing something very enjoyable, you may perceive some of your "compensation" has come in the form of that satisfaction and pride.  As a result, you may not expect as high of a price for the product from the buyers.  

What does this mean for sellers?  Think carefully about showing your customer how much effort and passion has gone into the creation of a good or service.  You might just command a higher price as a result.  And sellers... not shortchange yourself when placing a value on something you loved creating. 

Does this research have lessons for employees in larger organizations? Perhaps it does.  Do we demand less monetary compensation if we truly love our job?  Are we shortchanging ourselves in these situations?