Friday, July 03, 2009
Comparison in Decision-Making
Dan Ariely also points out in his book, Predictably Irrational, that we tend to avoid difficult comparisons when making purchasing decisions, while gravitating toward easier comparisons. What does this mean? Suppose we are comparing products A and B, and these two products differ along many dimensions. Now suppose that we add a slightly inferior version of A to our set of choices. How does this affect our behavior? It turns out that adding a slightly inferior version of A to the mix enhances the likelihood to choose the better version of A. Why? Human beings tend to gravitate toward the "easy" comparison...i.e. comparing A to the inferior version of A. Once we do that, the choice becomes obvious.
Wednesday, July 01, 2009
Predictably Irrational
Several weeks ago, I wrote about the attempt by some Harvard Business School students to create an MBA oath akin to the professional oaths taken by doctors and lawyers. I must admit that I had my doubts regarding the efficacy of such an oath in promoting more ethical and responsible behavior on the part of business executives.
Today, I just finished reading Dan Ariely's interesting book, Predictably Irrational, while on the train from Amsterdam to Brussels (I'm teaching several executive education workshops this week in Europe through the Institute of Management Studies). Ariely is a behavioral economist, i.e. a scholar working at the intersection of psychology and economics to understand how human behavior often does not confirm to the "rational" model of choice employed by many economists.
In his book, Ariely has several chapters on the topic of honesty and cheating. He describes an interesting experiment in which he examines whether being reminded of the Ten Commandments might induce individuals to exhibit more honest behavior. In the experiment, participants were asked to solve some simple mathematics problems. The control group did not have an opportunity to cheat; they handed their answers directly to the experimenter. A second group had an opportunity to cheat; they were allowed to self-report their number of correct responses without handing in their answer sheets. Prior to taking the math test, this group was asked to write down the names of ten books that they had read in high school. Finally, a third group also had the opportunity to cheat through self-reporting, but they were asked to write down as many of the Ten Commandments as they could remember. What did Ariely find in this experiment? The second group answered more questions correctly than the control group, suggesting some cheating. However, the third group (which recalled the Ten Commandments prior to taking the test) did not answer any more problems correctly than the control group. Amazingly, many subjects could not recall all of the Ten Commandments, yet they still exhibited honesty. Simply thinking about moral standards had induced honest behavior!
Could this mean that taking a professional oath would reduce unethical behavior on the part of business executives? I'm not so sure. As Ariely points out, the key to his experiment is that the subjects were asked to think about the Ten Commandments immediately before they had an opportunity to cheat. In the case of the MBA oath, students may take it upon graduation, but the tempting situation may not occur to them for a number of years. Thus, the key to any professional oath is not simply to administer one at the start of a career, but to somehow reinforce its salience over time.
Today, I just finished reading Dan Ariely's interesting book, Predictably Irrational, while on the train from Amsterdam to Brussels (I'm teaching several executive education workshops this week in Europe through the Institute of Management Studies). Ariely is a behavioral economist, i.e. a scholar working at the intersection of psychology and economics to understand how human behavior often does not confirm to the "rational" model of choice employed by many economists.
In his book, Ariely has several chapters on the topic of honesty and cheating. He describes an interesting experiment in which he examines whether being reminded of the Ten Commandments might induce individuals to exhibit more honest behavior. In the experiment, participants were asked to solve some simple mathematics problems. The control group did not have an opportunity to cheat; they handed their answers directly to the experimenter. A second group had an opportunity to cheat; they were allowed to self-report their number of correct responses without handing in their answer sheets. Prior to taking the math test, this group was asked to write down the names of ten books that they had read in high school. Finally, a third group also had the opportunity to cheat through self-reporting, but they were asked to write down as many of the Ten Commandments as they could remember. What did Ariely find in this experiment? The second group answered more questions correctly than the control group, suggesting some cheating. However, the third group (which recalled the Ten Commandments prior to taking the test) did not answer any more problems correctly than the control group. Amazingly, many subjects could not recall all of the Ten Commandments, yet they still exhibited honesty. Simply thinking about moral standards had induced honest behavior!
Could this mean that taking a professional oath would reduce unethical behavior on the part of business executives? I'm not so sure. As Ariely points out, the key to his experiment is that the subjects were asked to think about the Ten Commandments immediately before they had an opportunity to cheat. In the case of the MBA oath, students may take it upon graduation, but the tempting situation may not occur to them for a number of years. Thus, the key to any professional oath is not simply to administer one at the start of a career, but to somehow reinforce its salience over time.
Tuesday, June 30, 2009
New Zealand Air's Creative Advertisement
Well, this certainly represents an interesting way to advertise the lack of fees on an airline... the crew in body paint!
Building Effective Boards
Beverly Behan outlines some key principles regarding the construction of effective boards of directors. I think it's especially important to note that so much of the governance reform literature focuses on the composition of the board, whereas much of the impact can be found in improving board process. After all, one can alter composition to insure, for instance, a high share of outsiders on the board, but that doesn't mean that the board will truly be independent of top management. Many people who appear to be outsiders, in fact, may have close social ties with the CEO. Composition, then, is a blunt instrument of governance reform. For boards to operate effectively, they need to rethink their process. That improvement effort should focus on key process issues such as information flow, opportunity for surfacing divergent views, and the like.
Monday, June 29, 2009
Made to Stick
I just finished reading Chip and Dan Heath's best-selling book, Made to Stick, while on vacation in Maine. What a terrific book! The Heath brothers explain how we can create, spot, and communicate ideas that people both memorable and compelling. I love the blend of research insights, practical advice, and convincing examples. The Heath brothers boil "stickiness" down to six key principles: simplicity, unexpectedness, concreteness, credibility, emotions, and stories. For those who are interested in increasing the impact of their ideas, this book is a must-read.
Discover Bryant University
Later this summer, my institution, Bryant University, will be hosting two great events for high school students interested in learning more about our school. We hold these events each summer. This year's "Discover Bryant" programs will be held on August 14th and August 28th. The programs represent a casual and fun way to learn more about the school. The event includes a campus tour, mock interview session, and a barbeque lunch with members of the faculty and staff. I hope to attend both picnics and to meet many prospective students and their families at that time. Come learn more about how Bryant prepares young people for personal and professional success through applied learning. We don't just teach theories espoused by those in the ivory tower; we create opportunities for students to apply what they are learning through a variety of projects and real world experiences. We hope that talented young people will come take a look.
Thursday, June 25, 2009
Ethnography for Innovation
Business Week provides another example of the power of ethnographic methods in the innovation process. This article features a new product development project at OfficeMax. Here's an excerpt:
"In order to get beyond the survey data, OfficeMax asked GravityTank, a Chicago innovation consultancy, to study women who buy office supplies. "If you wanted to understand the behaviors of a long lost tribe in the Amazon, you wouldn't send them a census survey. You'd observe them," says Ryan Vero, OfficeMax executive vice-president and chief merchandising officer, who initiated the research. Ditto, he says, with consumers. "Ethnographies are a critical component of our innovation process."
Vero wanted to know more about the potential customers' underlying needs and values. How could OfficeMax offer something more valuable than an eco-friendly paper line or longer-lasting pens? What products would address their problems? What messaging would resonate? Did OfficeMax need to change the design or staffing of its stores to better address female customers? Gravity Tank's task was to paint a more complete portrait of women's lives and understand how office supplies fit into them.
The research team recruited a group of 10 women, all from the Midwest, who together represented a cross-segment of OfficeMax's customer base, which includes both small offices and big companies.
Over the course of two weeks, the Gravity Tank field teams, including a researcher and videographer/photographer, spent one or two days with each subject, arriving at the woman's home in the morning and shadowing her as she traveled to work and back. "We try to watch for workarounds. Things people don't necessarily perceive as a problem, because they've developed a way around it," says Shailesh Patel, a Gravity Tank partner who led the OfficeMax project.
For instance, the research teams repeatedly saw women trying to reuse file folders, often writing a new project name on a Post-It and sticking that on the tab. But because the adhesive was relatively weak, the Post-Its would often fall off."
"In order to get beyond the survey data, OfficeMax asked GravityTank, a Chicago innovation consultancy, to study women who buy office supplies. "If you wanted to understand the behaviors of a long lost tribe in the Amazon, you wouldn't send them a census survey. You'd observe them," says Ryan Vero, OfficeMax executive vice-president and chief merchandising officer, who initiated the research. Ditto, he says, with consumers. "Ethnographies are a critical component of our innovation process."
Vero wanted to know more about the potential customers' underlying needs and values. How could OfficeMax offer something more valuable than an eco-friendly paper line or longer-lasting pens? What products would address their problems? What messaging would resonate? Did OfficeMax need to change the design or staffing of its stores to better address female customers? Gravity Tank's task was to paint a more complete portrait of women's lives and understand how office supplies fit into them.
The research team recruited a group of 10 women, all from the Midwest, who together represented a cross-segment of OfficeMax's customer base, which includes both small offices and big companies.
Over the course of two weeks, the Gravity Tank field teams, including a researcher and videographer/photographer, spent one or two days with each subject, arriving at the woman's home in the morning and shadowing her as she traveled to work and back. "We try to watch for workarounds. Things people don't necessarily perceive as a problem, because they've developed a way around it," says Shailesh Patel, a Gravity Tank partner who led the OfficeMax project.
For instance, the research teams repeatedly saw women trying to reuse file folders, often writing a new project name on a Post-It and sticking that on the tab. But because the adhesive was relatively weak, the Post-Its would often fall off."
Wednesday, June 24, 2009
Visiting Zappos
My colleague, David Ager, and I spent yesterday afternoon visiting Zappos, the fast-growing on-line shoe retailer. Zappos has been recognized repeatedly for its extraordinary customer service as well as its very distinctive organizational culture. We simply had to see what Zappos was all about... and we learned a great deal during our visit.
I had heard so much about Zappos' ten core values, which are at the heart of its unique culture and commitment to exceptional customer service. What struck me most, though, was how every employee we met could rattle off the core values. Not only that, but they seemed incredibly committed to bringing these values alive each and every day. These people absolutely loved the company and their jobs.
We also heard legendary stories of how Zappos "delivers WOW through service." One person, for instance, described multiple occasions when employees have spent HOURS on the phone with a customer to help them find just the right shoes that they wanted. In another example, a woman bought shoes for her husband, but he died right after the order was placed. The Zappos' employee not only helped her return the shoes and get her money back, but also sent a beautiful bouquet of flowers to the funeral.
The work environment proved quite unique. Each group decorates its own workspace, and each group had a unique greeting for us as we toured the offices. People freely answered so many of our questions, and they wanted to share their knowledge with us. Zappos talks a great deal about the importance of passion, and we certainly saw a great deal of evidence of passion for the company and its mission.
Perhaps most interestingly, we learned that many much larger companies are trying to learn about Zappos, and trying to understand how they deliver such an exceptional customer experience.
For more on Zappos and its core values, you might wish to view this video:
I had heard so much about Zappos' ten core values, which are at the heart of its unique culture and commitment to exceptional customer service. What struck me most, though, was how every employee we met could rattle off the core values. Not only that, but they seemed incredibly committed to bringing these values alive each and every day. These people absolutely loved the company and their jobs.
We also heard legendary stories of how Zappos "delivers WOW through service." One person, for instance, described multiple occasions when employees have spent HOURS on the phone with a customer to help them find just the right shoes that they wanted. In another example, a woman bought shoes for her husband, but he died right after the order was placed. The Zappos' employee not only helped her return the shoes and get her money back, but also sent a beautiful bouquet of flowers to the funeral.
The work environment proved quite unique. Each group decorates its own workspace, and each group had a unique greeting for us as we toured the offices. People freely answered so many of our questions, and they wanted to share their knowledge with us. Zappos talks a great deal about the importance of passion, and we certainly saw a great deal of evidence of passion for the company and its mission.
Perhaps most interestingly, we learned that many much larger companies are trying to learn about Zappos, and trying to understand how they deliver such an exceptional customer experience.
For more on Zappos and its core values, you might wish to view this video:
Monday, June 22, 2009
Lessons in Leadership
If you have not seen it, the Wall Street Journal has developed a rich set of video resources on leadership. They call the site, "Lessons in Leadership" - it includes many videos from CEO interviews that they have done. Many videos offer good, practical advice for managers. Here's the link.
Business Plan Flaws
London Business School Professor John Mullins has a terrific article in today's Wall Street Journal about the typical flaws in entrepreneurs' business plans.
Subscribe to:
Posts (Atom)
