Do Boards Pick the Right Person as CEO?

What happens when the Board of Directors appoints an internal candidate to the position of CEO?  Do they tend to pick the right person, or do they overlook/reject an alternative candidate that would have been a better CEO?  Stanford scholars David Larcker, Stephen Miles, and Brian Tayan examined this issue recently.  They examined 121 transitions at the 100 largest companies over a ten-year period.  They found that roughly 1/3 of executives who were not selected for internal promotion to CEO were, in fact, hired at other companies.  However, the internally promoted CEOs experienced higher shareholder returns than those executives who were not chosen and left to lead other firms.   

Don't Try to Imagine the Future! Ask Others Before You Decide

You have to make a decision. Suppose you are trying to decide on whether London or Dublin is a better place to visit with small children. You read the travel guides and try to imagine what it will be like in each city. You envision what your daily experiences will be like. Will you make a decision that your family finds acceptable and enjoyable? Alternatively, you could ask others who have traveled to London and Dublin. What were their experiences like? Which did they prefer for their small children? You might hesitate to use the latter strategy of consulting others. After all, your family is rather unique. What if those other families are very different from yours? 

It turns out that consulting others makes much more sense than trying to envision the future, at least in most cases. Harvard psychologist Daniel Gilbert has studied this type of decision. Gilbert describes the strategy of consulting others as "surrogation" - i.e. you are using others' experiences as a surrogate for your own. Harvard Magazine described one experiment that Gilbert and his colleagues conducted and summarized their findings:

In one experiment to test surrogation, the psychologists asked a sample of women to predict how much they would enjoy a “speed date” with a particular man. Some women saw his personal profile and photograph; others learned nothing about him other than how much another woman (a stranger) had enjoyed her speed date with him. The second group predicted their enjoyment far more accurately than the first. Both groups had expected the reverse, and oddly enough, despite the outcome, both groups preferred to have the profile/photograph for their next date.

This suggests that ideas trump reality. But in predicting your likings, even someone else’s direct experience trumps mental hypotheses—which is why surrogation works. But to be helpful, the surrogate’s experience must be recent. “People are very poor at remembering how happy they were,” Gilbert says. “So it’s not very useful to ask, ‘How much did you like something you experienced last year?’ People get most questions about happiness wrong. But there is one question they get right: how happy are you right now?”

Why Would Abercrombie & Fitch Pay Someone NOT to Wear Its Apparel?

When we think about social influence, we typically think about how and why people tend to feel pressures to conform to the behavior of their peers, colleagues, or teammates. We act a certain way, or make certain decisions, because others have made similar choices or taken similar actions. However, at times, social influence works in the opposite way. We do not want to be like certain people. Therefore, if they act a certain way, we most certainly do not want to behave in a similar fashion. 

Jonah Berger, author of Invisible Influence: The Hidden Forces That Shape Behavior, relates a story about this type of repellent effect of social influence in an episode of the Hidden Brain podcast.   Berger tells a story from the reality show, Jersey Shore, believe it or not!  He explains that Abercrombie & Fitch once paid Mike "The Situation" Sorrentino NOT to wear its apparel.   Similarly, a Gucci competitor sent Nicole "Snooki" Polizzi one of Gucci's handbags.  Why would that Gucci rival do that?  They knew that many luxury handbag customers would be turned off by the fact that Snooki was carrying around a Gucci handbag.  That would hurt the Gucci brand image, and perhaps help the rival's position in the market.   

Berger explained ,"It turns out influence is very much like a magnet...but it just as well repels us.  And the idea here is, well, if Mike 'The Situation' is wearing Abercrombie & Fitch, maybe other people aren't going to want to wear it anymore. Or if Snooki is hanging on to a Gucci handbag, maybe that will help their competitors because no one will want to wear Gucci anymore. So we need to understand how social influence attracts, but also how it repels."

Berger once conducted a study with Stanford's Chip Heath to demonstrate the power of this repellent effect.  Berger and Heath distributed Livestrong wristbands to residents of a particular dorm on the Stanford campus.  One week later, they distributed the wristbands to a nearby residence hall known on the campus as the "geeky" dorm.   The researchers tracked continued usage of the wristbands.  They found a 32% drop in wristband usage by the first group.  They had witnessed the "geeks" wearing the Livestrong wristbands, and a sizeable number of them had abandoned wearing them as a result!  

Put Your Shared Norms on the Wall!

I had lunch with the CEO of a major academic medical center today.  He mentioned a key aspect of the culture of his top management team.  In the conference room they use for weekly meetings, they have a list of shared norms and ground rules up on the wall.  He explained how these norms are very useful to help the team engage in productive dialogue and debate.   Moreover, this leader expressed how important it was that the team members held him and each other accountable for adhering to these rules of engagement.  If someone didn't behave in accordance with these norms, they could be gently, or perhaps not so gently, reminded about their unacceptable behavior.  They could be told that they had violated a particular rule.  This leader concluded by arguing that building the right culture means you have to be specific about the behaviors you expect.   In addition, people have to hold each accountable for adhering to these behavioral norms.  Peer-to-peer accountability is key.  

Are Your New Hires Fitting In?

Joann Lublin reported yesterday in the Wall Street Journal about new research regarding cultural fit of new employees. Lublin described the research of Sameer B. Srivastava, Amir Goldberg, and their colleagues. The scholars examined 10.2 million emails among 601 full-time staffers at a technology company written between 2009 and 2014. They hypothesized that language is a key element of culture at an organization. Adopting a similar communication style as your colleagues represents one key element of cultural fit. What did they find? According to Lublin,

"The review of 10.2 million internal messages found that new hires who stuck around and thrived used language styles similar to those of their co-workers. Newcomers with high cultural fit had a greater chance of advancing to managerial positions, the study found. Quitters experienced decreased cultural fit roughly midway through their tenure. But individuals with low cultural fit had a four-times-higher risk of getting fired after three years."

In short, newcomers who thrived at the organization either communicated in a similar fashion as existing employees (implying that the hiring process had screened effectively for cultural fit), or the successful newcomers adapted their communication style so as to fit in at the organization. Those that left or did not succeed at the organization failed to adapt to the way people communicated at the tech company.

Why Persuading People with Facts Doesn't Work At Times

The British Psychological Society's Research Digest reports on a new study by Gregory Trevors and his colleagues.   They examined why we fail at times to persuade people with factual evidence.  Why don't fact-based arguments change minds?  In the past, researchers have posited that a "backfire" effect can occur when you confront someone with information that challenges their pre-existing views.  Why?  They have argued that people begin to recall all the information supporting their existing position.  An "arms race" occurs in their minds, as they retrieve all the data that rebut the new factual evidence being presented to them.  Trevors takes the research on this backfire effect one step further.   That work hypothesizes that, "When people read information that undermines their identity, this triggers feelings of anger and dismay that make it difficult for them to take the new facts on board."  

Trevors and his colleagues conducted an experiment with regard to genetically modified foods.  120 students participated in the study.  The scholars first tested "how important food purity was to the participants' sense of identity."  Then the researchers provided the students with scientific data contradicting their views in opposition to genetically modified foods. Here is what they found:

"After the researchers gave participants scientific information worded to directly challenge anti-GMO beliefs, those with higher scores in dietary purity rated themselves as experiencing more negative emotions while reading the text, and in a later follow-up task, they more often criticised GMOs. Crucially, at the end of the study these participants were actually more likely to be anti-GMO than a control group who were given scientific information that didn’t challenge beliefs: in other words, the attempt to change minds with factual information had backfired."

What's the lesson here?  You have to understand WHY people hold certain beliefs.  If those views are deeply tied to their identity, then fact-based arguments alone will not prevail.  In fact, they might backfire.  What can you do differently?  Here is the advice offered in the Research Digest article:

If persuasion is most at risk of backfire when identity is threatened, we may wish to frame arguments so they don’t strongly activate that identity concept, but rather others. And if, as this research suggests, the identity threat causes problems through agitating emotion, we may want to put off this disruption until later: Rather than telling someone (to paraphrase the example in the study) “you are wrong to think that GMOs are only made in labs because…”, arguments could firstly describe cross-pollination and other natural processes, giving time for this raw information to be assimilated, before drawing attention to how this is incompatible with the person’s raw belief – a stealth bomber rather than a whizz-bang, so to speak.

Unreasonable Goals, Unethical Behavior

In a recent Harvard Business Review post, Liane Davey explores the connection between unreasonable objectives and unethical behavior.  Sometimes, you face a difficult situation as a team leader.  You have been given an unreasonable goal to achieve.   Davey examines how team leaders can prevent their employees from engaging in inappropriate conduct as a means to achieving highly aggressive goals.  

First, Davey argues that you need to "define the off-limits options" when discussing how to achieve your objectives.  Davey recommends asking, "What would we not be willing to do to hit our target?”  Second, Davey argues that you need to probe carefully to understand how people are trying to achieve their targets.  Don't just focus on results.  Focus on the behaviors and the processes that are being employed to try to achieve those results.  Third, don't single out publicly those people who are struggling to achieve highly aggressive goals.   Such shaming may cause them to resort to unethical methods to achieve better results.  Finally, keep your eye out for outliers... people doing extraordinarily well in the face of aggressive targets.  If one person or unit is exceeding all others by 30%, you might want to ask, "How could they be doing so much better than all the others?"  Don't accuse them of inappropriate behavior without any evidence, of course.  Probe to understand what their best practices might be, for purposes of sharing those with other team members.  However, be on the lookout for any evidence that they may be crossing the line in pursuit of top notch results.  

In sum, these types of vigilant behaviors will help avoid some very unpleasant surprises.   Don't just complain about unreasonable objectives, or demand that your team go above and beyond to achieve those results. Keep a close eye on how people go about their work so as to avoid putting you and your organization at great risk.   

The Customer vs. The Task

You approach the counter at a fast casual restaurant, coffee shop, or bakery.  You would like to place your order.   The workers appear busy performing various tasks.  They need to do this work in order to serve you effectively.  They must wash dishes, clean counters, sweep the floor, obtain supplies from a cabinet, refill the coffee maker, etc.   You understand that these tasks must be completed.  However, you become frustrated very quickly because no one has taken your order.  In fact, no one has even acknowledged your presence at the counter.  They have not said good morning and/or welcomed you to the establishment.  They keep their back turned and their head down.  They walk past you several times without so much as a word to you.  We have all experienced this frustrating moment... workers placing task before customer.   Perhaps we have even walked away at times, when the wait seemed to be interminable.  

World class customer service requires a different approach.  Companies have to train employees to put customer before task.  They does NOT necessarily mean dropping everything to take the person's order immediately (though that should be done if the task is not a high priority at the moment).  After all, you can't fulfill a coffee order if there is no coffee brewing at the moment.  However, an effective associate acknowledges the customer's presence.  They greet them professionally and courteously.   They ask them politely to wait one moment while they complete the particular task that needs to be done immediately.   They explain what the task is, and why it is important.   Managers need to help employees understand how to approach these situations.   Moreover, they need to make sure they are not sending employees the wrong message, by establishing controls and incentives that might cause associates to put task before customer.   Far too many employees feel pressured to put the task first because they haven't received the right message from their bosses.  

Stress Testing Your Partners & Team Members

Stanford Professor Lindred Greer studies startup teams extensively.   Not surprisingly, she advises students and others to be very careful in selecting partners and team members with whom to work.  She cites the old adage that she has heard many times from entrepreneurs and investors:  "Hire slow, fire fast."  In an interview on the Stanford website, Greer offers a recommendation for how to evaluate a potential partner or team member:

With my students, one of the big things I ask before they commit is, “Have you had a fight yet? Do you know what this person is like when things get stressful and ugly?” And if you haven’t seen that yet, then you need to find ways to gently explore how this person will react if you disagree with them or stress goes up... Push back on something much harder than you usually do, and see their reaction. That can reveal a lot. I’ve had students come back to me saying, “Oh, my gosh. I’m so happy I did that. That was terrifying.”

I find the advice useful, though I could see where it might be difficult to find just the right way to conduct this stress test without alienating a potential collaborator.  Many companies, though, clearly are trying to find ways to do some forms of stress testing as part of their selection process.  Increasingly, they ask job candidates to perform make presentations, conduct and share some work that they have done, and take certain tests.  They are putting some level of pressure on candidates, and they are seeing what they can accomplish and how they handle themselves.  

Do Technical Experts Make Better Leaders? Part 2

Someone read yesterday's blog post about technical experts as leaders, and they asked me if I had done a similar analysis for NFL coaches.   In yesterday's blog post, I showed that most NBA championships have been won either by non-players or players who never made an All-Star team.   That finding stood in contrast to a scholarly study that showed former All-Stars achieving a higher winning percentage than non-stars or non-players.  The scholars used those findings to argue that technical experts thrive as leaders, contrary to conventional wisdom.  My results regarding championships didn't fully support their conclusion. 

What about the NFL?  What do the data show there? I reviewed the list of Super Bowl winning coaches from 1966-2016.   32 coaches have won the 51 Super Bowls (several coaches have earned multiple championships, including Bill Belichick and Chuck Noll, who both won 4 times).  Of those coaches, only 1 man made the Pro Football Hall of Fame as a player (Mike Ditka).  Only two men earned Pro Bowl status as players (Mike Ditka and his mentor, Tom Landry, who made it to one Pro Bowl as a punter for the New York Giants in the 1950s).   None of the other Super Bowl winning coaches earned Pro Bowl status as a player.   Thus, in football, it appears that the findings are even more pronounced.  Championships are generally not won by coaches who were formerly superstar players.  

Are Technical Experts Better Leaders?

James K. Stoller, Amanda Goodall, and Agnes Baker have published an intriguing Harvard Business Review article titled, "Why the Best Hospitals are Managed by Doctors."   In the piece, they state the following based on their research: 

Support for the idea that physician-leaders are advantaged in healthcare is consistent with observations from multiple other sectors. Domain experts – “expert leaders” (like physicians in hospitals) — have been linked with better organizational performance in settings as diverse as universities, where scholar-leaders enhance the research output of their organizations, to basketball teams, where former All Star players turned coaches are disproportionately linked to NBA success, and in Formula One racing where former drivers excel as team leaders.

The final sentence surprised me a bit.  I'm a lifelong basketball fan, and the conventional wisdom certainly has been that All-Star players do not always make the best coaches.   Consider the struggles of NBA greats such as Dave Debusschere, Isaiah Thomas, Bob Cousy, Willis Reed, Elgin Baylor, Bill Cartwright, Kurt Rambis, and Wes Unseld.  In addition, who can forget Magic Johnson's very short coaching career with the Lakers?   He won just 5 of 16 games and quit coaching.   

Given the conventional wisdom, I took a look at the research.  Goodall wrote a paper with Lawrence Kahn and Andrew Oswald about NBA coaches.   They studied NBA coaches from 1996-2004, and they found that former all-stars have a higher coaching winning percentage than non-stars, and former players overall do better than non-players.  The results were statistically significant.  I decided to probe a bit further though.  What about championships?  Did former players excel at winning championships as coaches?  Here are the all-time results for professional basketball championships:  

• 13 former NBA All-Stars have won championships as a coach, totaling 18 championships. 
• 9 former players, who never earned All-Star status as players, won 24 championships. 
• 10 men who never played in the NBA won championships, totaling 28 championships. 

Yes, 22 former players earned championships vs. only 10 non-players.   That's a large difference. However, only 41% of the coaches who won championships were all-stars, and only 26% of the championships were won by coaches who were all-star players. Moreover, many All-Stars earned a single championship as a coach, while many non-stars or non-players built a legacy of multiple championships (consider Popovich's tenure with the Spurs as the most recent example).   Interesting... I'm not sure what to make of this data, but I certainly think it's worth further investigation.  Do similar patterns hold true in other professions?  

Consistency & Simplicity: Keys to an Effective Message

In a recent New York Times Corner Office column, Adam Bryant interviewed John Lilly, a partner at Silicon Valley venture capital firm Greylock Partners.  Lilly offered this leadership lesson that he learned early in his professional career.  I find it particularly useful as a new year begins.  Many leaders will be trying to offer explanation of their vision for the coming year.  It's worth heeding Lilly's advice.  

I didn’t understand the role of simplicity and messaging early on. One of the things that happened at one of my start­ups was that I would get bored saying the same thing every day. So I decided to change it up a little bit. But then everybody had a different idea of what I thought because I was mixing it up. So my big lesson was the importance of a simple message, and saying it the same way over and over. If you’re going to change it, change it in a big way, and make sure everyone knows it’s a change. Otherwise keep it static.

Jimmy Kimmel's Take on New Year's Resolutions

I posted this funny video clip from Jimmy Kimmel last year just a few days into the new year.  It's worth another look!