The "Quiet Quitting" Debate

Source: The Street

Several weeks ago, Lindsay Ellis and Angela Wang wrote an article for the Wall Street Journal on the "quiet quitting" phenomenon in the workplace.   Here's an excerpt:

Zaid Khan, a 24-year-old engineer in New York, posted a quiet quitting video that has racked up three million views in two weeks. In his viral TikTok, Mr. Khan explained the concept this way: “You’re quitting the idea of going above and beyond. You’re no longer subscribing to the hustle-culture mentality that work has to be your life,” he said. Mr. Khan says he and many of his peers reject the idea that productivity trumps all; they don’t see the payoff.

Naturally, the concept of quiet quitting has sparked a ferocious debate about work ethic, employee engagement, and organizational culture. Today, Kathryn Dill and Angela Wang wrote an article for the Wall Street Journal about the "backlash" against the quiet quitting movement. They present several people pushing back:

• Arianna Huffington: “Quiet quitting isn’t just about quitting on a job, it’s a step toward quitting on life."
• Kevin O'Leary: “You have to go beyond because you want to. That’s how you achieve success."
• Amy Mosher: “It’s not about the quiet quitters. It’s about everybody else and the unfairness that occurs there."

For me, the discussion certainly creates a fair amount of concern.  I do worry about work ethic among a segment of the workforce.  I'm someone who loves my work and has always tried to go above and beyond for my students and my institution.  I would have a very hard time even contemplating quiet quitting.  However, I do understand why some employees have disengaged.  Moreover, I think the quiet quitting phenomenon should cause business leaders to seriously rethink four key issues.  They have to address these organizational weaknesses if they want to prevent people from disengaging in this manner:

1.  Why are people disengaged? Is it really because they are overworked and trying to dial back their workload, or is it because you have not provided them meaningful, purposeful work and some voice in the organization?  Would they work much harder if they were passionate about a project or believed that their work could have a substantial impact on customers and other constituents of the organization?  The job here is to rethink the roles people have and the way that work gets done.  
2. How are we measuring performance and providing feedback?  Is it possible for someone to coast unnoticed?  If so, that's deeply problematic.  Managers need to have a firm grasp on the way that work gets done, as well as how the workload is shared (equally or unequally) among their team members.  Providing feedback often is critical, but so is listening to hear people's concerns about their role and the organization's processes and systems.  
3. Are we investing appropriately in developing our people?  How can we improve their skills and capabilities?  Workers will invest in their organizations if the leaders demonstrate a willingness to invest in them.  Yes, you might invest in their training and development and then they might leave.  The investment is worth the risk.   They will disengage or perhaps leave anyway if they are not growing and developing on the job.  
4. Have our highest performers developed a perception of unfairness about how the workload is shared?   Perceptions of fairness have a substantial impact on organizational commitment and buy-in.  You will lose your best people if they think others are not carrying their fair share of the workload.  

Becoming Vigilant & Detecting Early Warning Signs

Source: Flaticon

Wharton decision-making experts George Day and Paul Schoemaker have identified four strategies for becoming vigilant leaders who can detect early warning signs effectively.  They recognize that the best companies overcome tunnel vision, avoid complacency, and scan the environment successfully to identify opportunities and threats.  Here are their four strategies:

1. Assemble a diverse team of independent thinkers: "One way to scope is by assembling a diverse team of independent thinkers from both inside and outside the company who can, as one of our clients phrased it, 'tap into the organization’s paranoia' and invite everyone to voice hunches, concerns, doubts, or intuitions that would otherwise remain dormant."

2.  Ask questions that acknowledge the limits of existing knowledge:  Effective leaders admit what they personally don't know and where key gaps exist in the organization's expertise.  Day and Schoemaker advocate asking three types of questions: learning from the past, interrogating the present, and anticipating the future.  They write, 

One method for learning from the past is to use past successes to create watching and listening outposts in other markets by asking, “Who there has a consistent record of seeing sooner and acting faster?” and “What is their secret?” Many companies interrogate the present by monitoring blogs, social media sites, and chat rooms for signs of brewing trouble with customers, with an eye toward timely remedial action. Vigilant organizations pay special attention to customers’ evolving behaviors and needs. One way to do this is by studying “edge cases” that could suggest opportunities or threats. (In engineering, the term edge is used to describe situations that purposefully push the limits.) To prepare for what’s ahead, leaders can develop different scenarios that reflect how today’s uncertainties might play out in years to come. To stimulate scenario planning, leaders should pose guiding questions about the future such as “What surprises could really hurt us (or help us)?” and “What might be some future surprises as big as those that we saw in recent decades?”

3.  Use active environmental scanning techniques:  By that, the scholars mean that you should develop hypotheses and then use scanning to try to test those hypotheses.

4.  Employ the wisdom of crowds to choose which signals to amplify and clarify:  Scanning can identify many opportunities and threats.  The challenge, then, is to determine which issues on which to focus attention more closely.  One way to choose is to employ the wisdom of crowds - let a broader group of people voice their opinions as to which issues warrant further scrutiny. 

Should Disney Divest ESPN?

Dan Loeb, (Source: CNBC)

News reports this week indicate that activist investor Dan Loeb has written a letter to Disney's leadership team, calling on the firm to make a series of strategic changes. Specifically, Loeb recommended a divestiture of ESPN. He also recommended that Disney accelerate the planned acquisition of Comcast's 33% stake in Hulu, and then for Disney to integrate Hulu into its Disney+ streaming service.  Disney's leadership has rebuffed Loeb's attempts to push for change.  

The ESPN recommendation certainly has triggered a lively debate.  Students will find this question an interesting one that goes directly to the heart of many core corporate strategy concepts. On the one hand, ESPN has been a cash cow for Disney for years. According to CNBC, "Disney is making more money from cable subscribers than any other company solely because of ESPN. ESPN and sister network ESPN2 charge nearly $10 per month combined, while Disney requires pay TV providers to include ESPN as part of their most popular cable packages."  Moreover, ESPN+ has become an important part of Disney's efforts to offering streaming options for customers.  ESPN+ has had limited content to date, but perhaps, Disney will eventually offer customers an opportunity to stream all Disney and ESPN content in a true over-the-top option for those wishing to cut the cord.   

Imagine having all Disney cable channel content, all ESPN cable channel content, and all Disney/Hulu streaming content available directly to customers who don't want to purchase cable.  Disney has been reluctant to make this type of aggressive move, in part because the firm continues to generate a ton of cash from fees secured through cable TV subscriptions.  Moreover, Disney would anger cable television partners greatly if it circumvented them completely and went directly to customers.  Still, as more and more people cut the cord, the calculus there may change, and Disney may pursue a complete over-the-top solution for customers.  

On the other hand, in corporate strategy, we typically argue that multiple businesses should only be owned and operated under one roof if they pass two tests:  the better-off test and the ownership test.  The better-off test asks whether significant economies of scope exist, such that ESPN has a stronger competitive advantage because it is owned by Disney.   Loeb argues that it is not obvious ESPN has a more powerful advantage because it is part of the Disney corporate family.  For example, in his letter, he writes, "“ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting."  Moreover, the synergies between ESPN and other parts of Disney do exist, but they are not nearly as substantial as, for example, the synergies between the theme parks and the movie studio.  

The ownership test asks whether the corporate parent needs to own a particular subsidiary to actually achieve key benefits of collaboration.  Could another organizational arrangement (ranging from market contracts through strategic alliances or joint ventures) be more efficient and effective than full ownership?  Here too Loeb argues that ESPN may not pass the ownership test.  He writes, "We believe that most arrangements between the two companies can be replicated contractually, in the way eBay spun PayPal while continuing to utilize the product to process payments.”  In other words, ESPN could still work with Disney and its portfolio of companies without being fully owned by the corporate parent.   This argument reminds me of one criticism back when Disney purchased ABC in the mid-1990s.  Some analysts pointed out that Disney already collaborated closely with ABC on events such as the Disney Sunday night movie of the week on ABC (which Michael Eisner would introduce).  The analysts then argued that Disney could pursue more of those types of partnerships and collaborations without having to spend billions to acquire ABC. 

The debate will be fascinating to watch.  The key point here is that Disney should not necessarily own ESPN simply because the subsidiary is profitable.  It also should not necessarily divest ESPN simply because cord-cutting is reducing subscribers at the sports network.  The longer strategic view should be driving this decision with a focus on these two critical corporate strategy tests.  

Rationalizing a Splurge: Not Just An Individual Decision-Making Error

Source: Tripadvisor

University of Chicago Professor Abigail Sussman has conducted some interesting research on how and why individuals tend to rationalize splurging.  She has studied this behavior in both the context of financial decisions and eating/dieting behavior.  Sussman finds that people tend to view decisions in isolation, and they view a particular consumption decision as a special one-time event.  Oh, it's a wedding, and it's a special celebration... so I can splurge on the giant piece of wedding cake.  Or, I have an event to attend, so it's ok to splurge on a nice new suit.  Examining events in isolation, as one-time events, enables us to deviate from disciplined decision making.  

People don't tend to look at categories of decisions.  For instance, there most likely are a series of opportunities to splurge on various delicious food and spoil our diet.  The wedding cake is not likely the only chance to splurge.  We have to stop looking at decisions in isolation, according to Sussman. 

The same logic holds for business decisions, in my view.  Company leaders sometimes can perceive opportunities or threats as one-time special events, and thereby justify an investment that might otherwise seem inadvisable.  For example, executives might convince themselves that this acquisition opportunity is unique, and that they simply can't let it pass them by.   They have to overpay, or they will never have a similar chance in the future.  Of course, the opportunity often is not that unique, and overpaying often leads to disaster.  Exercising some discipline and restraint is essential in these situations.  Ask yourself: Is this situation as unique as we are portraying it?

Not-so-Hidden Costs of Employee Turnover

Source:  Workstyle 

We all know that employee turnover can be very expensive.  Searching for, hiring, onboarding, and training new employees proves to be a costly endeavor for most firms.  If turnover increases, these costs can become quite burdensome.  A new study documents another significant cost of employee turnover - the decrease in product quality that can result from that loss of experienced and knowledgeable employees.  The paper is titled, "The Hidden Cost of Worker Turnover: Attributing Product Reliability to the Turnover of Factory Workers" by Ken Moon, Prashant Loyalka, Patrick Bergemann, and Joshua Cohen.  

The scholars studied the failure rates of 50 million cellphones produced by a major Chinese manufacturer and tracked the performance of those phones over four years of customer use.   Here's an excerpt from Knowledge@Wharton documenting the findings: 

• Each percentage-point increase in the weekly turnover rate for workers increased product failure by 0.74% to 0.79%.
• Failure was 10.2% more common for devices produced in the high-turnover weeks following payday, which was once a month, than for devices produced during the lowest-turnover weeks immediately before payday.
• In other weeks, the assembly lines experiencing higher turnover produced an estimated 2% to 3% more field failures on average.
• The associated costs amounted to hundreds of millions of dollars.