Offering Predictability in Turbulent Times

In a recent article for McKinsey, Stanford Professors Robert I. Sutton and Hayagreeva “Huggy” Rao offered some highly useful tips for leaders navigating the current tumultous environment.  They offer key insights regarding predictability and understanding.  Sutton and Rao argue that leaders must try to offer as much predictability as possible to their employees.  Moreover, they have to explain the rationale for their actions clearly and concisely.  Here's an excerpt:

The protective powers of predictability are a central theme in psychologist Martin Seligman’s classic research on learned helplessness. His “safety-signal hypothesis” was inspired by the air-raid sirens used in London during the Blitz, in 1940 and 1941, when German bombers attacked the city night after night. Because England’s warning system was so reliable, Londoners could go about their business without fear of being killed by German bombs so long as the sirens were silent. When the sirens wailed, they knew it was time to scurry underground to “the Tube” and other safe locations.

The upshot of Seligman’s work is that threats to well-being do less harm if reliable signals enable 

people to know when they are safe from the threat versus when it is imminent, fear is warranted, and it is time to take action to minimize risk. Conversely, if people never feel safe, their feelings of powerlessness cause them to suffer constant anxiety, despair, and, ultimately, physical and mental illness.

While predictability is about the potential for bad (or good) things to happen (or not), understanding is about the why. We humans have a burning need for explanations of important events in our lives. When events, especially distressing ones, are uncertain—and clear-cut answers aren’t forthcoming—people get anxious and generate plausible explanations. Once people invent, articulate, and spread such imagined explanations, they can have a hard time letting them go, no matter how incomplete, biased, or downright wrong they are, suggests research by Prashant Bordia and his colleagues.3

Dampening the anxiety that fuels distracting rumors requires explaining decisions in enough detail to convey that you, as a leader, are treating the people affected with nuance and care. Leaders also do well to rely heavily on simple headlines and repetition, because the anxiety provoked by crises can make it hard for people to process complex information.

Know-it-all vs. Learn-it-all Leaders

Listen to Microsoft CEO Satya Nadella speak about "know-it-all" vs. "learn-it-all" leaders and organizations.   Great way of applying growth mindset to organizational leadership and transformation.   He discusses this topic during the first portion of the video interview.

Shadow Boards of Younger Employees

Source: Needpix.com

My former student, Cassidy Forsley, recently shared an interesting article on LinkedIn. It's a Harvard Business Review article titled, "Why You Should Create a 'Shadow Board' of Younger Employees." I enjoyed reading the article, as I've encountered companies employing such practices over the years. Each time, I've been impressed with the results. The article authors, Jennifer Jordan and Michael Sorell, describe how Prada and Gucci have used shadow boards successfully.  They write: 

A lot of companies struggle with two apparently unrelated problems: disengaged younger workers and a weak response to changing market conditions. A few companies have tackled both problems at the same time by creating a “shadow board” — a group of non-executive employees that works with senior executives on strategic initiatives. The purpose? To leverage the younger groups’ insights and to diversify the perspectives that executives are exposed to.

I think one benefit of a shadow board is that executives sometimes hear perspectives that their direct subordinates and middle managers are fearful of sharing with those in the C-suite.   A lack of psychological safety limits the views and information flowing to the top.   However, as one CEO joked to me, "the young employees are just stupid enough to tell me the truth!"  In other words, they aren't worried as much at times about the negative career repurcussions of sharing the unvarnished truth with top executives.   The shadow boards also enable companies to tap into the insights of younger consumers as well as spot social and technological trends.  Furthermore, as the authors argue, it increases employee engagement, thereby helping with talent retention.  

Hiring: Ask Why, What, and How

Source: modernhealthcare.com

Kevin Lofton is CEO of Catholic Health Initiatives. He has served in that capacity since 2003. Catholic Health Initiatives is the country's third largest nonprofit healthcare system. It includes roughly 100 hospitals across 17 states. Several years ago, he participated in an interview with Adam Bryant, then of the New York Times. Here's Lofton on how he hires. I think the why/what/how progression is very helpful to consider as you interview. 

How do you hire?

I start with the “why” — why are you here, why would this role fit into your career path, and why are you interested in coming to our organization? I then focus on the “what” — what are the things that you’ve done that relate to what you might do here, and what are your ideas for how you can help us?

And then I move to the “how,” and that’s where character comes in. How do you do business? Somebody might be a cardiovascular surgeon who is going to put a lot of money on our bottom line, but if they yell at nurses in the operating room, then we don’t want them.

Reflecting on your Decision-Making Mistakes: Anne Mulcahy

Source:  CNBC

In this article for McKinsey, former Xerox CEO Anne Mulcahy reminds us that you need to analyze the decisions you didn't make, as well as the decisions you have made, when reflecting on your mistakes. The missed opportunity may be a bigger mistake than the poor decision that you made. 

Decisiveness is about timeliness. And timeliness trumps perfection. The most damaging decisions are the missed opportunities, the decisions that didn’t get made in time. If you’re creating a category of bad decisions you’ve made, you need to include with it all the decisions you didn’t get to make because you missed the window of time that existed to take advantage of an opportunity.

She also writes about the absolute necessity to cultivate internal critics on your team:

My own management style probably hasn’t changed much in 20 years, but I learned to compensate for this by building a team that could counter some of my own weaknesses. You need internal critics: people who know what impact you’re having and who have the courage to give you that feedback. I learned how to groom those critics early on, and that was really, really useful. This requires a certain comfort with confrontation, though, so it’s a skill that has to be developed.

I started making a point of saying, “All right, John-Noel, what are you thinking? I need to hear.” And this started to demonstrate that even if I did show my colors quickly, they could still take me on and I could still change my mind. The decisions that come out of allowing people to have different views—and treasuring the diversity of those views—are often harder to implement than what comes out of consensus decision making, but they’re also better.

The Essence of Excellent Mentorship

Source:  PxFuel

We've all heard the age-old advice: Find a terrific mentor.  Ask them good questions.  Learn from their successes and failures.  Gather feedback from them before making high-stakes decisions.  But what makes a terrific mentor?  Can we identify the "secret sauce" to excellent mentorship?

Brian Uzzi, Yifang Ma, and Satyam Mukherjee have conducted a fascinating large-scale study that may shed some important light on this question.  The scholars compiled a remarkable dataset of over 37,000 scientists and mentees.  They examined more than 1 million research papers produced by these scholars over a 57 year period.   Moreover, they looked at major prizes won by the researchers.  

They found something quite interesting.  The most successful protégés often make their make in subject areas distinct from those in which their mentors earned their stellar reputations.   Kellogg Insight described the research in a recent article as follows:

In some ways, this goes against conventional wisdom: students who are successful and carry on their mentors’ work are often perceived as rising stars. But in the long run, the most successful scientists are those who chart their own paths.

Uzzi and his colleagues try to identify what makes terrific mentors whose protégés soar.  They argue that the best mentors don't try to create a "mini-me" at all.   However, they do share a "secret sauce" with their mentees.  What is this secret sauce?   Again, here's an excerpt from the Kellogg Insight article about the research:

It’s clear that the best mentors pass on something that goes far beyond subject-matter expertise. (If that were the case, mini-me mentees would have been the most likely to succeed.)  Uzzi and his coauthors believe that what’s being passed between future prizewinners and protégés is tacit knowledge. Mentees aren’t just learning concrete skills from their mentors. They’re also picking up how their mentors come up with research questions, how they brainstorm, how they interact with collaborators, and so on—knowledge that is difficult to codify and often learned by doing.

That's the secret sauce.  Tacit knowledge.  In a mentoring relationship, focus on the critical skills that enabled the mentor to succeed, not just the subject matter expertise. 

Which Music Do We Prefer? Interesting New Research

https://freesvg.org/

We know that Spotify, Apple, and others have developed sophisticated algorithms to recommend music to listeners. While many customers know precisely what they would like to listen to, others are open to discovery. Spotify distinguishes between those listeners with a "closed" vs. "open" mindset. The algorithms are especially important for those with an open mindset. 

Now we have a new academic study that suggests an interesting way to predict the music we will enjoy. David Greenberg, Sandra Matz, Andrew Schwartz, and Kai Fricke have published a paper titled, "The Self-Congruity Effect of Music" in the Journal of Personality and Social Psychology.  They write: 

Across three studies we show that people prefer the music of artists who have publicly observable personalities (“personas”) similar to their own personality traits (the “self-congruity effect of music”)... Our findings are largely consistent across two methodological approaches to operationalizing an artist’s public personality: (a) the public personality as reported by the artist’s fans, and (b) the public personality as predicted by machine learning on the basis of the artist’s lyrics.

The scholars also show powerful evidence of a gender effect in music preferences.  They write:

The present article also provides the first evidence that listeners tend to prefer music from artists of the same sex, which had been previously theorized but not studied empirically (Hagen & Bryant, 2003). That is, the gender-fit between the listener and artist was found to be a significant predictor of musical preferences.

So, the next time you say yourself, "I love that artist's music."  Ask yourself, what do you know about that performer?  Why do you like that artist?   For companies, of course, the implications are profound.  Can they use this finding to refine their algorithms, without intruding on our personal privacy?  What if listeners were willing to disclose more about their personality in order to discover more music they would enjoy?   

Book of the Month

Thank you to Alex Urrea, Managing Partner at Eduscape, for selecting Unlocking Creativity as a book of the month selection and for his thoughtful review.  Urrea writes:

Unlocking Creativity, written by Michael Roberto, is a perfect read for all educational leaders and classroom teachers who want to generate comprehensive plans on how to approach this period in education. Mr. Roberto writes about the six mindsets that we must shift in order to think creatively and constructively; I believe that we must reflect on these mindsets so we don’t retreat to the usual comfort zones that have produced mediocre and factory-like results in education for decades.

Essential Summer Reading List

Source: Getty Images

Thank you to Jack McCullough, founder and president of the CFO Leadership Council, for including my book, Unlocking Creativity, on his list of essential summer reading.   McCullough's complete list may be found in this Forbes article published last week.  

Farming for Dissent at Netflix

Source:  Wikimedia

Yesterday, I listened to the first episode of the Recode by Vox podcast, Land of the Giants: The Netflix Effect.  The episode focuses on Netflix's vaunted corporate culture.   Many of you have probably read a great deal about the Netflix culture and the famous slide deck describing its tenets and values that circulated widely on the internet for years.   This episode takes a comprehensive, balanced look at the culture, highlighting its strengths and limitations.  I found one particular aspect quite interesting, given my work on decision making.  Here's an excerpt from a description of the episode by Recode/Vox:

Another tenet — “farming for dissent” — came out of one of the company’s biggest failures. You might remember it as a punchline: Qwikster.  The short version: In 2011, Hastings wanted to move his company from its core DVD-by-mail service to online streaming, which was growing quickly but was still a smaller part of his business. So he tried splitting Netflix into a DVD business and a streaming business named Qwikster. Which meant that if his customers wanted the same services they were already getting before, they would have to subscribe to both and end up paying 60 percent more.  Netflix veterans still wince about the experience: The company was skewered on social media and by SNL. Its stock dropped 70 percent, and more than 700,000 people canceled their subscriptions.

Eventually, Hastings admitted that Qwikster’s name, the price hikes, and the way the company talked about it all had been a huge blunder. He rolled back the changes.  But in Hastings’s narrative, the failure was useful for Netflix’s culture. He thinks that many of his top employees could have told him he was wrong but were too afraid or at least too in awe of their CEO’s former successes to say anything.

“Everyone knows the tale of the self-absorbed, arrogant CEO who doesn’t listen. And there’s an element of that, because we have been so successful at so many things before that,” Hastings told us earlier this year at Netflix’s offices in Los Angeles. “But the more subtle one is that I had been so successful before that most of the executives thought ... ‘But Reed has been right on so many things. I’ll bet he’s right on this one. And I’m just not seeing it.’”

After the debacle, Hastings instituted “farming for dissent,” a formal practice where employees are supposed to run their big ideas by colleagues and have them tell you candidly — on a Google Doc that’s open for everyone to see — what’s wrong with it. It’s considered integral to the company that your coworkers tell you what they really think of your idea, even if — perhaps especially if — you’re their boss.

Lessons from a Poker Player: Counteracting Cognitive Biases

Microsoft vs. Apple: Vertical Integration

Source: CIO.com

In a matter of days, we saw two contrasting announcements by tech giants Apple and Microsoft.  First, Apple announces that it will be making its ARM-based processors for Mac laptops and desktop computers.   The firm will no longer be using Intel chips.   Second, Microsoft announces it will close all 83 of its retail stores.  What's happening here? Apple is deepening its vertical integration, while Microsoft is backing off.  

Both strategies make sense.  Vertical integration has always made more sense for Apple than for Microsoft.  Apple has used vertical integration, backward and forward, to control product quality, enhance brand experience and product differentiation, and stay close to its customers.  Microsoft has operated in the portion of the industry that has relied far less on vertical integration.  Microsoft made the operating system, Intel made the microprocessors, Dell, Lenovo, HP and others assembled the PCs, and a variety of players helped distribute and retail the computers.   

What, then, was Microsoft doing in the retail store business?  I'm not sure.  It never made as much sense as it did for Apple to operate stores.   The genius bar, product demonstrations, computer classes, and other activities that occur within an Apple store are all part of the rationale for vertical integration at the company.   These activities deepen Apple's relationship with its customers, enable it to collect valuable information directly from its most ardent fans, help the firm create a powerful brand experience, and provide an opportunity to enhance product differentiation.   Microsoft doesn't sell the same type of products, nor does it have the same type of image.  Moreover, its customers are different.  Microsoft has incredibly satisfied, loyal customers; Apple has fans.  Remember the word fan comes from the word fanatics.  Apple's customer base is just different, and it fits more with a vertical integration strategy.  

Vertical integration, of course, has many drawbacks.   I often discuss these limitations and risks at length in my strategy courses.  However, in some cases, it can make a great deal of sense.  Apple may be one of those cases; Zara may be another.  Microsoft's competitive positioning doesn't appear to be as conducive to vertical integration.