Why We Need to Reflect

In my last blog post, I discussed several reasons why organizations don't learn effectively from experience. New research from Giada Di Stefano, Francesca Gino, Gary Pisano & Bradley Staats demonstrates that reflection proves critical to personal and organizational improvement. These scholars have published a working paper titled, "Learning By Thinking: How Reflection Improves Performance."    They argue that we can't simply rely on learning by doing.  We have to reflect upon that experience to learn effectively.  They conducted a series of studies to examine the role of reflection in the learning and improvement process.   They conclude the following:

In our daily battle against the clock, taking time to step back and engage in a deliberate effort to learn from one’s prior experience would seem to be a luxurious pursuit. Though some 9 Data show that between 1973 and 2000, “the average American worker added an additional 199 hours to his or her annual schedule—or nearly five additional weeks of work per year (assuming a 40-hour workweek)” (Schor, 2003: 7). In the meanwhile, between 1969 and 2000, “the overall index of labor productivity per hour increased about 80 percent, 27 organizations increasingly rely on deliberate learning tools, as in the case of after-action reviews and post-mortems (Catmull, 2014), there has been little effort to encourage individuals to take the time to think about the past, rather than to do more and more. Articulating and codifying prior experience does entail the high opportunity cost of one’s time, yet we argue and show that thinking after completing tasks is no idle pursuit: It can powerfully enhance the learning process, and it does so more than the accumulation of additional experience on the same task. Performance outcomes, we find, can be augmented if one deliberately focuses on learning from experience accumulated in the past. Results from our studies consistently show a significant increase in the ability to successfully complete a task when individuals are given the chance to couple some initial experience with a deliberate effort to articulate and codify the key lessons learned from such experience. 

Why Don't We Reflect & Learn?

Most leaders acknowledge the value of learning from past experience.  Some organizaitons have established highly regarded best practices for deriving lessons learned from past projects.  For instance, the U.S. Army pioneered the After-Action Review process, and it has documented the substantial benefits derived from the systematic use of this lessons learned methodology.  Still, most leaders don't spend nearly enough time faciltating these types of activities or empowering their people to engage in this type of work.  Why?  What seems to be preventing these powerful learning experiences from occurring in organizations?  The usual answer is time.  We hear responses such as the following:   "We would love to conduct postmorterms, but who has the time to perform that work?"  "We are always rushing off to implement the next set of plans."  "No one rewards you for taking time out to review and learn from past experiences."  

In my view, time represents a significant challenge, but these types of explanations often mask a deeper problem in the organization.  What are the true impediments to engaging in after-action reviews?

1.  Blame culture.  People fear that the process will degenerate into a finger-pointing exercise, rather than a true learning experience.  In these types of organizations, people fear talking about mistakes and how to learn from them, because they don't want to be accused of being part of the problem.  

2.  Lack of systemic thinking.  In many organizations, explanations of past failure tend to be individualistic, i.e. who was the rotten apple that needed to be thrown out of the bunch?  Learning organizations embrace systemic explanations for past success and failure, i.e. was the barrel rotten, and therefore, did it spoil some of the apples?  Systemic explanations for failures do not preclude managers from holding people accountable for negligent or irresponsible acts.   However, they help managers understand multiple factors that may contribute to success and failure. 

3.  Attribution error.   Psychologists have shown that people often attribute others' failures to character flaws, lack of expertise, or other internal deficiencies.  However, we explain our own failures quite differently.  We blame external events or factors beyond our control.  Such distortions in our attributions may explain why we do not engage in lessons learned exercises as frequently as we should. 

4.  Low leader self-awareness.  In some enterprises, leaders have tried to facilitate such after-action reviews, and the efforts have not been fruitful.  Thus, they choose not to spend time performing them again.  However, these leaders often are not aware that their presence and influece during the after-action review discouraged candid dialogue.  Thus, the group did not generate powerful lessons learned, as people refrained from discussing the tough issues.  Leaders sometimes lack the awareness to recognize how their behavior and presence may have distorted the dialogue during an after-action review process.  

What Type of Projects Receive Support on Kickstarter?

What type of projects receive support on crowdfunding platforms such as Kickstarter?  Anirban Mukherjee, Cathy Yang, Ping Xiao, and Amitava Chattopadhyay conducted extensive research on this topic.   They examined over 50,000 projects on the Kickstarter platform over several years.  The scholars wanted to know how claims about the innovation would affect funding. Would projects that claimed to be highly novel receive more funding than those that claimed to be quite useful and practical?  Interestingly, they discovered that projects claiming novelty raised funds just as effectively as those that claimed usefulness.  However, claiming BOTH tended to be less effective.  Why would projects that claimed to be both novel and practical not receive as much support on the crowdfunding platform?  The scholars offered three possible reasons:

1.  Credibility:  People might view a project as too good to be true if it claimed to be highly novel and very practical/useful.  

2.  Risk aversion:  Perhaps funders wanted to invest in projects that they deemed feasible and likely to become implemented effectively.   They might have deemed the projects that claimed to be both novel and useful as highly risky. 

3.  Polarization:  Truly breakthrough innovations often can be polarizing.  Some people are fans, while others are haters.  Consider how people often reacted initially to breakthrough products such as the iPod.  Something claiming to both novel and practical might have a polarizing impact.  

Telltale Signs That You Might be Fired

In many cases, workers are shocked when they are dismissed from their jobs.  They don't see it coming.  In today's Wall Street Journal, Sue Shellenbarger writes about the signs that might suggest your job is at risk.  Here's her list of warning signs:

• Your boss stops dropping by your desk with suggestions.
• You’re left out of important meetings you used to attend.
• Once-friendly colleagues start to avoid you.
• You never get any feedback.
• You never ask for any feedback.
• You start comparing yourself to mediocre peers rather than stars.
• You’re not sure what your boss cares about.
• You don’t care what your boss cares about.

In general, the article focuses on the problem of low self-awareness.  In too many instances, people do not recognize their own under-performance, or understand their weaknesses in the eyes of their boss.   Shellenbarger cites a particularly compelling academic study published in 2014 by Oliver Sheldon, David Dunning, and Daniel Ames.  These scholars found that people's overly optimistic views of their own performance tend to persist even in the face of critical/negative feedback.   In fact, low performers tend to dispute the legitimacy of that feedback or the person who provided it.  Finally, their studies show that high performers tended to be more interested and willing to pursue self-improvement strategies with regard to issues such as emotional intelligence.   Consequently, it would appear that the stronger performers only get better, while the low performers miss key opportunities to develop their capabilities.  

Amazon: No Need to Disclose (yet)

Shira Ovide has a terrific article for Bloomberg BusinessWeek titled, "Amazon Takes Secrecy to a Comic Extreme."   She writes,

Companies, of course, would prefer to reveal as little as possible. And then there's Amazon.com Inc., which takes financial disclosure stinginess to the next level. So far, investors have been fine with it. They see one of the world's most ambitious companies and a stock price that has quadrupled since 2012, and happily toss aside their Amazon spreadsheets filled with question marks. But Amazon's thriftiness with financial disclosure could backfire. Secrecy is acceptable when companies are doing well. It becomes suspicious when things go south.

Ovide writes that Amazon provides quarterly earnings projections that are "comically broad."   Ovide explains that the company "loves to show charts without labels" and provide investors and analysts with "reams of fluff."  Bezos, I believe, would rebut Ovide's observations by explaining that Amazon does not manage for quarterly earnings or to meet short-term investor expectations.  He is managing for the long term, and he's putting the customer first.  That's his story, and he's sticking to it.  In fact, he's stuck to it for 22 years, profits be damned.  

Ovide does make an important point though.   This attitude about disclosure works beautifully until a company stumbles.  If and when that happens to Amazon, the willingness to accept very limited disclosure will change.  In fact, it may change quite suddenly if Amazon falters.   For now, though, Amazon gains a key competitive advantage through its limited disclosure policy.   Competitors don't know the types of details that they would love to have access to as they formulate their strategies.  Once again, Bezos has found a way to gain the upper hand.  Some of his key rivals have to play by a different set of rules.  Not only must they turn a sizable profit to please investors, but they must disclose much more information.  

Scanning Your Environment

When organizations fall behind the competition, we often hear people describe how the enterprise had become increasingly insular in recent years. Managers focused on enhancing operational efficiency, and they fixated on internal processes and procedures. As a result, they did not recognize key trends and changes in the marketplace. They did not spend enough time learning about new types of competitors. How can we become better at scanning our external environment? Here are four key steps that can enhance your efforts:

1. Make time for environmental scanning on your agenda. Carve out space on your calendar each week to learn about new technologies, products, or competitors. Dedicate some time each year to attend a conference, speaker, or workshop that falls outside of your normal routine. If you don't make time for scanning, it's easy to allow other duties to crowd out this key activity. 

2. Identify some young people in your organization with whom you can connect on a regular basis. Talk to them about social and technological trends. Compare and contrast how they use their smartphone, computer, television, automobile, and other devices differently than you do. Inquire as to how their consumption patterns might differ from yours (currently or when you were their age). 

3. Make it a habit to read the major SEC filings of your competitors. Don't just read the articles that appear in the Wall Street Journal. Dig into the details found in those financial reports. Read what analysts are saying about the competition as well. Consider listening to a few earnings calls from your rivals. It's amazing how many managers have never actually dug into these types of documents. They rely on journalists to tell them about major events taking place in their industry without studying the competition more closely. 

4. Take a look at what your suppliers are doing. Many environmental scanning efforts focus on customers. That's important, naturally. However, you can also glean a great deal of information from your partners and vendors in the supply chain. How is their business changing? Are they selling to different people? Have their portfolios of products and services changed? Have any of them started to vertically integrate? Suppliers must adapt as they see changes downstream in the value chain. Watching for those adaptations can tip you off to key trends in your market.

Walk My Mind - Listen to my "Walkcast"

Walk My Mind describes itself as an organization that "provides a platform that fosters walking, learning, listening and community."  The company's website features "walkcasts" with educators and authors.   The goal is to promote two healthy habits coming together (walking and learning).    You can listen to my "walkcast" here.  I discuss leadership, decision-making, and problem finding.  Enjoy!  

Blind Spots that Derail Careers

Fast Company's Stephanie Vozza writes this week about the need for accurate self-assessment.  She argues that being blind about our weaknesses can derail our careers.  She cites a new book by Kellogg School of Management Professor Carter Cast.   In his book, Cast describes five blind spots that impede our careers:

1. A me-first attitude that leads to poor listening skills
2. Micromanaging others, hindering your ability to build and lead a team
3. Being too comfortable with routines and resisting change
4. Having narrow perspectives on business that undermine your ability to be strategic
5. Not following through on promises due to poor organization or task management skill

How to Stop Being a Micromanager

We have all worked for a micromanager at one point or another in our careers.   The experience can prove very frustrating.  We cherish our autonomy and believe in our abilities.  We become frustrated when a micromanaging boss meddles in our work.  Moreover, we become disenchanted when that meddling slows us down, creating numerous delays while our competition passes us by.   Of course, we all have probably micromanaged one of our employees or team members at some point or another.  Those in glass houses... 

How can someone stop being a micromanager?   Naturally, a simple recipe does not exist.  Here are a few baby steps in the right direction though:

1.  Make a list of the types of decisions in which you have been involved heavily over the past month or so.   Now divide the list into two categories: the ones in which you absolutely must be involved, and the ones where you  might test letting go a bit.  Give it a few weeks or a month, and see how things go.  Let your subordinates know that you are going to try to let go on those particular decisions.  Review and assess periodically to see if the change has been productive.  

2.  Identify the people you trust the most in the organization.  Consider providing them more autonomy.  Talk with them about the opportunities that they wish to pursue, and the situations where they feel confident moving with less direction and oversight. 

3.  Examine your calendar.  How can you free up some time to think more strategically about the direction of the organization?  What meetings or commitments are soaking up your valuable time, while strategic issues receive less attention than they deserve?  Consider shifting responsibility to subordinates so that you can find time to address high-stakes, high-risk issues that warrant your undivided attention.  Extract yourself from a few meetings and follow up to see how things went without your presence. 

4.  Review the forms and memos that arrive on your desk for signature and approval.  How many layers of approval exist on those issues?   Do you need to be one of those layers?  Consider changing the rules and procedures to provide others more autonomy.  For example, might you change the spending limit above which people must obtain your approval?   Do you need to sign off on as many personnel requisitions as you do?   Does someone really need your approval to reserve that particular space or hold a special event in your offices?  

5.  Assess your email inbox.  Do you need to be involved in all those email threads?  How might you reduce your email traffic by 10%?   Consider the situations from which you could extract yourself.  Think about how much more productive you can become if you eliminate 10% of your emails.  

Scarcity of CEO Talent? Are Board Members Right?

Joann Lublin of the Wall Street Journal reports today on directors' beliefs about the CEO talent pool. She writes:

The pool of executives qualified to take over the top job at the biggest U.S. companies is incredibly shallow, especially in the technology industry, a recent survey of directors finds. On average, directors of Fortune 250 companies estimate that fewer than four people inside and outside their company have the management expertise and industry-specific knowledge to step into the CEO role and run it as well as its current leader, according to a Stanford University survey of 113 such directors. Board members also say an average of six executives could perform at the same level as the head of their largest rival. 

I found these results interesting. It certainly explains why CEOs receive very high compensation packages. The question, however, is whether directors are right. Apparently, the conventional wisdom is that the talent pool is very shallow. Do directors have concrete evidence to support this belief? What if they are wrong? What would that mean for corporate leadership, governance, and compensation? I haven't seen any concrete, valid research that supports the conventional wisdom here. I'm not saying they are absolutely wrong; I would just like to see proof.

Telling the Hard Truth at Work

Wall Street Journal, October 11, 2017

Sue Shellenbarger of the Wall Street Journal interviewed me during her research for today's column titled, "The Best Ways to Tell the Hard Truth at Work."   She addresses the topics of how to encourage candor across the enterprise, provide honest feedback to others, and tell the hard truth in a constructive fashion.  

Feedback's Impact on Innovation: A Key Tradeoff

Harvard Business School Professor Daniel Gross has a very intriguing new product development research article forthcoming in the Rand Journal of Economics.   Gross studied the impact of feedback on innovation efforts.  Specifically, he collected data from over 4,000 commercial logo design contests from an online platform.  Gross tried to understand the impact of feedback on the quality of subsequent submissions.  However, he also studied whether feedback might discourage some applicants from submitting additional designs in future rounds of the competition.  

What did Gross discover?    First, not surprisingly, feedback does improve the quality of subsequent work.   However, feedback also discourages future participation.  People who receive low ratings in the initial round are less likely to continue in the contest.   "A majority of players (69.5%) whose first rating is the lowest possible rating will subsequently stop investing in the contest."  That's not necessarily a bad thing.  Weeding out low performers can be efficient.  However, Gross finds that the detrimental impact on participation is NOT exclusive to individuals who receive negative feedback initially.  He also finds that, "Feedback can simultaneously reduce incentives for high-performers to participate, relative to incentives in a state of ignorance, by revealing or enabling high quality competitors."   Yikes!  We can actually discourage good people from continuing by being critical of their early work.  We should not be surprised by this finding.  Let's face it.  We all have a hard time receiving critical feedback at times.  

Thus, a tradeoff exists.   Quality improves, but participation suffers, when we provide critical feedback.  There's good news here though.  What's the net effect?  Gross argues that, "Feedback significantly increases high-quality output, with gains in quality far outweighing the costs to participation."  Moreover, he argues that, "Making feedback private yields modest incremental benefits by shrouding information on competitors' performance, which in turn reduces attrition."   In sum, we will have to live with some attrition when we provide critical feedback, but the net effect is positive in the innovation process.  

Building a Culture of Trust

Neuroscience researcher Paul J. Zak has been studying trust for many years.   A recent Inc. column by Marissa Levin summarized some of his key research findings.  Zak has discovered that people at high-trust organizations experience less stress, higher productivity, more engagement, and more job and personal satisfaction.  How does one build a culture of trust in your organization?  Zak advocates eight strategies:

• Recognize excellence
• Provide challenging (but not impossible) work for people
• Give workers the autonomy to choose how to do their work
• Give employees voice, particularly in how they design their jobs. 
• Communicate clearly, concisely, and frequently. 
• Build relationships among employees. 
• Facilitate whole-person growth and development. 
• Show vulnerability as a leader, thus making others feel psychologically safe. 

Boards of Directors Assessing Corporate Culture: It's About Time!

The Board of Directors bears responsibility for oversight and control of the management of an enterprise. Their duty to monitor management actions and performance includes assessing the risks that the organization faces. Unfortunately, many boards have been caught by surprise by recent scandals and crises at firms such as Wells Fargo, General Motors, Volkswagen, Uber, Toshiba, and Theranos. Key risks remained hidden for lengthy periods of time. When the boards finally became aware of these issues, the damage had largely already been done... to company reputation, share price, etc. In many of these cases, investigators and analysts have blamed the corporate culture. The organizational cultures encouraged inappropriate behavior and discouraged people from sharing bad news. The boards in many of these situations did not understand the dysfunctional elements of the corporate cultures. 

The Wall Street Journal reports today that some boards have decided to become more involved in understanding and evaluating organizational culture. Joann Lublin reports:

Corporate culture counts. But bad culture can damage a company’s reputation, results and recruitment. That’s why boards are starting to scrutinize the cultures of companies they serve. Directors at Whirlpool Corp. , for example, make sure its workers feel comfortable divulging bad news by tracking internal surveys. Companies such as Citigroup Inc. and CACI International Inc. have formed board culture committees. 

Culture describes the way values and actions create a unique business environment. One recent study found that a positive corporate culture improves company profits. Yet “few boards currently have an explicit focus or formalized approach to cultural oversight,’’ said Helene Gayle, a director ofCoca-Cola Co. and Colgate-Palmolive Co. A blue-ribbon panel co-led by Ms. Gayle wants boards to monitor corporate culture as vigilantly as they do risks. The 34-member commission, organized by the National Association of Corporate Directors, released an extensive report on Wednesday that suggests how boards could bolster their oversight of company culture. 

Can board oversight and intervention help? Absolutely. As Lublin reports, Whirlpool went through a scandal in 2010, and the company instituted changes at the behest of the board. They focused on encouraging workers to share bad news. The result? According to the Wall Street Journal, "Worker survey scores about their willingness to speak up rose 10 percentage points between 2010 and 2015." 

I would add one important recommendation to this push on the part of several boards. Before engaging in culture audits and other monitoring mechanisms, these boards also need to look in the mirror. They must evaluate the board's culture. Are people able to speak freely in board meetings? Do directors have the appropriate incentives? Does risk management get sufficient attention on the agenda at meetings? The boards cannot be effective at evaluating and enhancing the organization's culture if they do not practice what they preach.

Marathon Complete!

I completed one of my sabbatical goals yesterday - running the Twin Cities Marathon.  I'm so grateful to my family for all their support, and to many friends, family, colleagues, and former students who contributed to my charitable campaign.  Thanks to the generosity of many people, I have raised $5,989 for Homes for our Troops.  This amazing organization builds specially adapted homes for severely disabled military veterans.  I'm so proud to have contributed to their incredible work.  If anyone would still like to donate (just $11 more to pass $6,000!), you can do so by clicking here.   Now, back to my academic goals for this sabbatical - gotta write this book!