Learning Something New... Without Forgetting the Old

Kristin Wilson and Scott Rockart have published an intriguing paper titled, "Learning in Cycles."  In this article, the scholars examine how firms learn and adapt over the course of business cycles.  They examine a critical challenge that organizations face as they encounter cycles.  Firms must learn and apply new lessons and skills at different points in a business cycle, but they must not forget old lessons and capabilities... as they may need them again in the future as the cycle changes once more.   In a feature on Duke's Fuqua Insights web page, Rockart explains some of their findings:  

“What people learn, and what people need to do well, differs at different points of a cycle,” Rockart said. “Imagine you’re a waiter, and during the week you are working with families, taking time over a meal, whereas on the weekends your customers are college kids looking to party. In order to be a good waiter during the week, you introduce yourself, you take time to talk, but on the weekends you are moving fast and not spending as much time with each customer. The waiter knows they need to act differently in those different settings. They’re constantly being reminded because the cycle is so fast.”

But at firms, Rockart said, these cycles can last years.   “So it’s very easy for individuals to forget what they used to know, and even more importantly, to lose confidence in the importance of what they used to know,” he said. “If you’re a manufacturer, when things are booming, you need to make sure you can get supplies, hire workers, and expand a factory. During a downturn you may have to do very different things: make sure your customers won’t fail on credit; that your inventories are lean and your costs are controlled; and reduce your workforce.”

I think the finding is particularly important because we often hear that managers must "unlearn" old behaviors and ideas as they learn and adapt to new competitive realities.  Yet, this research shows that can't discard our learning completely.  Some of those lessons, skills, and capabilities will be useful again as business cycles change. How can we learn without completely forgetting? It's a fascinating challenge for many leaders. This work reminds me of a memorable quote from F. Scott Fitzgerald, who once said, "The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function."

Who Asks For Feedback?

Should leaders ask for feedback?  Of course.  Everyone should desire constructive input that can help them learn and improve.  Do they ask for feedback?  Oh, now we might have a very different story!  Bradley Busch recently wrote a blog post for the British Pyschological Society's Research Digest about a study of feedback-related behaviors by primary school teachers.   Busch summarized the research findings of James Spillane, Matthew Shirrell, and Samrachana Adhikari.  The three scholars recently published a paper in Educational Evaluation and Policy Analysis titled, "Constructing “Experts” Among Peers: Educational Infrastructure, Test Data, and Teachers’ Interactions About Teaching.  Spillane and his colleagues examined the tendency for teachers to ask for, or not ask for, feedback from their peers.  Busch highlights a key finding from this study:

The researchers found that the best teachers, as measured by those who had a higher percentage of students who met the minimum requirement to pass their class, and whose classes had higher than average test scores, were no more likely to be sought out by their colleagues for their advice. On the other hand, these expert teachers were the ones who were actually more likely to seek advice from their peers the following year. It seems that the better the teacher performed, the more likely they were to go out and obtain feedback on how to be even better.

The finding that the most able are not particularly sought after for their advice and are instead more likely to seek it from others is perhaps unsurprising. Other research, known as the Dunning-Kruger effect, has found that the least able tend to have an inflated view of their abilities, which would presumably lead to them seeking out less feedback. After all, why would one seek out advice if they think there is little room for development? As for the expert teachers in this study, the researchers speculate that their advice-seeking tendencies may be explained as “they represent a group of teachers who are constantly striving to improve by seeking out advice and information from others”.

For me, the study leads naturally to a question about leaders in a variety of organizational settings.  Do the highest performing leaders have a tendency to ask for feedback more often than lower performing individuals?  Are the highest performers not sought out more often by their peers for help and advice?  Future research should explore these interesting questions.   My sense is that we will find results quite similar to those described here in an educational setting. 

Getting the Most out of College

Tomorrow I'll head off to bring my oldest daughter off to college.  I'm incredibly excited for her, but I know that I'll miss her a great deal.  Each year on this blog, I often provide some advice for incoming college students... hoping my own students will take a look and perhaps heed some of my advice.  This year, I want to share some thoughts from a very good column in the New York Times this week.  Frank Bruni wrote a column titled, "How To Get The Most Out of College."   Among other things, he touches on some of the key findings from research by Gallup, Purdue University and the Strada Education Network.  Here's Bruni's summary of the results of that work (emphasis added): 

Previously known as the Gallup-Purdue Index and now called the Strada-Gallup Alumni Survey, it has questioned about 100,000 American college graduates of all ages about their college experiences, looking for connections between how they spent their time in college and how fulfilled they say they are now. The study has not found that attending a private college or a highly selective one foretells greater satisfaction. Instead, the game changers include establishing a deep connection with a mentor, taking on a sustained academic project and playing a significant part in a campus organization. What all of these reflect are engagement and commitment, which I’ve come to think of as overlapping muscles that college can and must be used to build. They’re part of an assertive rather than a passive disposition, and they’re key to professional success.

My experience validates this research finding.  My students who have achieved these "game changers" have achieved academic and professional success, while thriving personally as well.  Find a mentor, engage in an in-depth piece of academic work, and become a leader of a campus organization or initiative.  Those are key elements to a successful college experience.  

The Benefits of Losing a Star Employee (Temporarily)

We often convince ourselves that star employees are indispensable.  We worry about losing them, even for a short time.  At some firms, managers restrict the ability of star employees to attend professional development opportunities, because they fear letting them leave even for a week.  Or, they resist attempts to rotate high potentials to other units, even though such lateral transfers might be very beneficial for the individual's development and for the organization's long term effectiveness. Such attitudes about star employees merit examination. Are stars actaully so indispensable? Might losing them, perhaps for a short time, actually be beneficial for a team? John Chen and Pranav Garg examine these issues in a fascinating new paper titled, "Dancing with the stars: Benefits of a star employee’s temporary absence for organizational performance" - published in Strategic Management Journal.  

The scholars obtained statistical data on individual and team performance in the National Basketball Association from 1991-2015.  They examined how teams performed when a player was lost due to injury for a period of time.  Not surprisingly, the researchers find that team performance declines when a star player is absent due to injury.  However, they find that team performance rebounds to a level higher than pre-injury when the star player returns to the basketball court.  The scholars argue that performance increases because team members develop new knowledge and find new ways of working together in the star's absence.  The improved routines and teamwork lead to higher performance when the star returns.   Moreover, the star's absence provides opportunities for other team members to display and enhance their skills.  

Should you send your star employee to that leadership development program or other professoinal development opportunity? Yes. The authors argue that it's a win-win scenario, benefiting the individual employee and the team overall. Here is an excerpt from their paper:

Sending a star for a training program may be a win-win scenario. While the star is away, the firm can discover new routines and provide opportunities to non-stars that might actually improve the firm’s overall prospects on critical projects. At the same time, training programs can help the star develop team building or leadership skills that contribute to the firm’s longer-term roadmap upon her return... Our study underscores the idea that disruption may foster learning. In doing so, we echo recent thinking that an organization “periodically needs to shake itself up, regardless of the competitive landscape” (Vermeulen, Puranam, and Gulati, 2010: 71) and search for new routines, even when it is performing well.

Stop Telling People to Find Their Passion

Source: Public Domain Pictures

Paul O’Keefe, Carol Dweck, and Gregory Walton have written a forthcoming article in Psychological Science titled, "Implicit Theories of Interest: Finding Your Passion or Developing It?"  In this paper, they draw upon Dweck's work on growth vs. fixed mindsets, and they apply this framework to the topic of people's passions and interests.   In this paper, they contrast individuals with a fixed theory of personal interests to those with a growth theory.   Those with a fixed theory believe that they possess a passion for certain types of work, and they simply must discover those interests.  Individuals with a growth theory believe that interests must be "cultivated through investment and persistence."  

The scholars conduct a series of studies to examine the impact that these different theories have on motivation and behavior.   They discovered that, "A fixed theory was more likely to dampen interest in areas outside people's existing interests."  Moreover, they found that people with a fixed theory believed that they would be highly motivated once they discovered their passion.  In a sense, they foresee an easy path once their underlying interests and passions are revealed/discovered.  Those with a growth theory of interests tend to adopt a more realistic outlook, namely that they will encounter difficulties as they pursue a passion.  

Finally, perhaps most importnatly, in their final experimental study, the scholars discover an important relationship between a growth theory and persistence in the pursuit of an area of interest:

Inducing a fixed theory led students to discount a newfound interest more definitively upon exposure to challenging content. Difficulty may have signaled that it was not their interest after all. Taken together, those endorsing a growth theory may have more realistic beliefs about the pursuit of interests, which may help them sustain engagement as material becomes more complex and challenging.

This new research strongly complements earlier work at Stanford by Bill Barnett and Dave Evans. In their book, "Designing Your Life: How to Build a Well-Lived, Joyful Life," Barnett and Evans apply deisgn thinking principles to the process of discovering and building a career.   They argue that one does not find his or her passion by sitting in a dorm room pondering life's big quesitons.  Instead, they argue that one should adopt a learn by doing approach, much like a design thinker.  You prototoype as a design thinker, and you can do the same with regard to building a career.  In short, you try various things, by shadowing an alumnus for a day, taking an internship, meeting with mentors in various fields, attending a professional conference, or trying a course in a different field.  Through these actions, you learn about what interests you and what does not.  In many ways, Barnett and Evans are arguing that you must cultvate and develop your interets through action, rather than waiting for a passion to be revealed through some "aha" moment.  Now, O'Keefe, Dweck, and Walton provided sound psychological research that complements the practical guide to designing a career offered by Barnett and Evans in their terrific book.  

Spanx CEO Sara Blakely: Workarounds, Questions, Observation

This Stanford interview with Spanx founder and CEO Sara Blakely is chock full of leadership insights.   For those who do not know the story, Blakely came up with her initial product idea when she designed a simple workaround before heading to a party.  One night, she cut the bottom of of a pair of pantyhose so that she would have the appropriate undergarment to go with her white pants.  As design thinkers often say, a workaround is a bright flashing light indicating a customer pain point or frustration.   In this case, Blakely didn't notice some other user's workaround; she developed it herself.  

In the video below, take special note of how she talks about always observing and asking questions. She says, “I think of a lot of ideas at traffic lights. I pay attention to things that haven’t evolved and why. I ask myself questions all day, every day. I could be looking at a table and be like, ‘Why is the table like that? When was the table first created? Is that the actual best design for a table? Or could there be something different?'"   

Blakely also discusses her philosophy about failure in this video, something I write about in my upcoming book on creativity.   From identifying workarounds to asking questions and sharing failure stories, Blakely's approach to leadership and innovation bears close examination.  

Avoiding Leading Questions

In yesterday's blog post, I discussed the way you frame a question has a significant influence on whether others will reveal problems, risks, and bad news to you as a leader.   In this blog post, I would like to expand on the topic of asking the leading question.   

We often find ourselves asking leading questions without even being fully aware of our behavior.  We do not recognize how our mental models and assumptions have shaped our inquiries in ways that may influence the way people respond to us.   

Years ago, psychologist Elizabeth Loftus studied the issue of leading questions.  She found that small changes in the way that we phrase a question can matter a great deal (similar to the research cited in yesterday's blog post).   For instance, she showed research subjects the video of a car accident in one study.   For some individuals, she asked them how fast the car was traveling when it drove through a stop sign.  Fo others, she simply asked them about the car's speed when turning right, without mentioning the stop sign.   Later, not surprisingly, when asked if they had seen the stop sign, more people responded affirmatively if the question referred to the road sign.   Loftus describes the inclusion of the stop sign as a "presupposition" - “a condition that must hold in order for the question to be contextually appropriate.”

In a later experiment, Loftus examined the impact of including false presuppositions in our questions.  After showing research subjects a video of another car accident, she asked some of them, “How fast was the white sports car going when it passed the barn while traveling along the country road?” She posed others a similar question, but without mentioning the barn at all.   The barn actually never appears in the video.  Later, she asked all the research subjects if they had seen the barn in the video.  Sure enough, many individuals in the first group reported spotting the barn - they were led to believe it existed by the phrasing of the question posed to them.  

Do managers include presuppositions in their questions?  Sure, we all do at times.   Consider the question, “How much will market share rise if we increase our advertising spending?” This question presumes that more advertising spending will increase sales, and more so for the manager's firm than for competitors.  What if the advertising drives primary demand, increasing sales for the entire prodcut category (but therefore, not improving market share)?  What if competitors respond/match the spending hike, and therefore, it has no effect on market share at all?   The words "how much" at the start of the question may distort the responses that one receives.   

[This post summarizes the discussion of leading questions in my book, Know What You Don't Know.]  

Phrasing the Question: Start by Presuming a Problem

Julia Minson, Eric VanEpps, Jeremy Yip, and Maurice Schweitzer have published a new paper titled, "Eliciting the truth, the whole truth, and nothing but the truth: The effect of question phrasing on deception."  They report their research regarding the impact that question phrasing has on a counterparty's willingness to reveal critical information.  They examine this issue in the context of negotiations and job interviews.  

Minson and her colleagues contrast three types of inquiries:  positive assumption questions (presume that no problem exists), negative assumption questions (assume a problem exists), and general assumption questsions (no mention of a problem). The authors provide an example of positive vs. negative inquiries. Positive: “This car doesn’t have any problems, right?” Negative: “What is wrong with this car that you are trying to sell me?”  

The authors conduct a series of studies to examine the impact that different types of questions have on a counterparty's behavior. They find that negative questions elicit the revelation of more critical information about problems.  In an interview with Knowledge@Wharton, Van Epps concludes, "“People are much more likely to disclose problems when you presume [there is a] problem.”  

These scholars examine questions in the context of job interviews and negotiations, but I think an even more important application might be for leaders assessing risk in their organizations.  We know that bad news often does not rise to the top in organizations.  How can leaders uncover hidden risks before small problems have become major crises?  This study suggests that leaders should ask probing questions that presume a problem exists, rather than inquiring in ways that assume things are going smoothly.  

We Underestimate the Power of a Thank You Note

Source: Pixabay

Several months ago, I drafted a blog post about a rather discouraging piece of research on gratitude. Jeremy Yip, Cindy Chan, Kelly Kiyeon Lee, and Alison Wood Brooks conducted a study regarding competitive negotiations. They discovered that "negotiators are likely to respond selfishly and opportunistically to gratitude expressed in competitive deal-making situations." 

Today I have some encouraging news about gratitude. Amit Kumar and Nicholas Epley have published some interesting work in Psychological Science based on a series of experiments that they conducted. The scholars asked people to write thank you notes to people who had a positive impact on them in some way. The researchers also asked each note writer to predict how the recipient would feel upon receiving the expression of gratitude. The British Psychological Society's Research Digest recently summarized the key findings from this research. 

The senders of the thank-you letters consistently underestimated how positive the recipients felt about receiving the letters and how surprised they were by the content. The senders also overestimated how awkward the recipients felt; and they underestimated how warm, and especially how competent, the recipients perceived them to be. Age and gender made no difference to the pattern of findings.

Other experiments showed that these same misjudgments affect our willingness to write thank-you messages. For instance, participants who felt less competent about writing a message of gratitude were less willing to send one; and, logically enough, participants were least willing to send thank-you messages to recipients who they felt would benefit the least.

Kumar and Epley believe that this asymmetry between the perspective of the potential expresser of gratitude and the recipient means that we often refrain from a “powerful act of civility” that would benefit both parties.

The lesson is clear... take the time to write that thank you note, becuase it will probably have more of an impact than you believe. You might just make someone's day, and it won't take much effort on your part to do so.

Should You Hire for Cultural Fit or Not?

For decades, executives have stressed the importance of hiring for cultural fit.  You often hear discussions about cultural fit among people on recruitment and selection committees, as well as by people working for executive search firms.   Recently, though, Adam Grant of the Wharton School has made an important point about the downside of hiring for cultural fit, and he's received a great deal of attention for his thought-provoking and insightful comments.  Here's what Grant has said, as reported in an interview with Dan Schawbel for Fortune. 

First, stop hiring on cultural fit. That’s a great way to breed groupthink. Emphasizing cultural fit leads you to bring in a bunch of people who think in similar ways to your existing employees. There’s evidence that once a company goes public, those that hire on cultural fit actually grow more slowly because they struggle to innovate and change. It’s wiser to follow the example from the design firm IDEO, and hire on cultural contribution. Instead of looking for people who fit the culture, ask what’s missing from your culture, and select people who can bring that to the table.

Is he right?  I htink he makes a strong argument for avoiding groupthink.  Managers do have a very unfortunate tendency to hire people who look, think, and act much as they do.  To be effective, leaders need to consider hiring people who think differently, who complement and augment their own skills and abilities (rather than replicating the expertise and modes of thinking already on the team).   

Having said that, I think there are some important aspects of "fit" that need to be considered when hiring.  Otherwise, new employees will either face organ rejection at their new firms, or they will have an adverse impact on the organization's effectiveness.  First and foremost, it's very important to make sure that a new hire shares the same values as the organization he or she will be joining.  Second, does the new hire believe in the mission of the enterprise?  Do they feel passionately about the organization's purpose?   They may have different views about the means to achieve those objectives.  That's healthy.   Finally, will the person's leadership approach enable others to succeed?  Hopefully, the hiring organization has leaders in place who have created a safe place where others can speak up, discuss mistakes, express dissent, and ask challenging questions.   New hires have to be able to create a safe climate for their employees as well.  If they a history of acting in ways that discourage others from speaking up, then they won't "fit" and they will have an adverse impact on the organization's effectiveness.  

Preparing for a Storm: Lessons for Business Leaders from Hurricane Research

Knowledge at Wharton features an interview this week with Professor Robert Meyer regarding his research on hurricane preparation (or lack thereof, by many citizens). Here's an excerpt: 

Knowledge@Wharton: How difficult is it to get people to be proactive?

Meyer: It varies. We’ve done some studies as to who is prepared for storms and who isn’t. What we find is that the people who are the most at danger of not preparing are those who have been through a storm but not a very strong one. Effectively, they think that they’ve survived a hurricane, but they actually haven’t.

On the other hand, surprisingly, people who are often better prepared are people who move into an area and have never been through a storm. They’re listening to the end-of-the-world broadcasts that are coming on television and saying, “I’ve just moved to Miami or the mid-Atlantic, and I’m going to believe what they tell me on the news, that I’d better really prepare.” These people do prepare. Unfortunately, what happens is that then when the storm comes through and they find nothing really happened, then the next time they figure, well, maybe I might prepare a little bit but not as much.

Source: Wikipedia

What's the lesson for business leaders?  How does this research finding apply beyond the scope of hurricane preparation?  Consider the types of competitive threats that your company faces?  Have you coped with similar threats in the past?  If you have, and if the threats were mild in nature, that might make you less likely to take future threats seriously.   You might think, "I've been through this before, and it wasn't so bad. It won't harm our business."   

Repeated mild threats leads to a sort of dampening of our sensivity to risk.  Diane Vaughan wrote about this concept many years ago in her research on the Challenger space shuttle accident.  She described the phenomenon as the "normalization of deviance."  Basically, the unexpected can gradually become the expected, which can then gradually become an acceptable risk.   To an outsider, of course, a threat can seem much more serious and severe. They have never seen this type of risk in the past.  The lesson, then, is that you might want to make sure that you engage both new leaders and incumbent managers in a constructive debate when assessing competitive threats.  The new voices can bring a necessary sense of urgency to the conversation, and they can perhaps help the organization assess the risk in a more accurate way.  

Generalists vs. Specialists: Boosting Creativity on Your Team

Scholars Florenta Teodoridis, Michael Bikard, and Keyvan Vakili have completed a new study regarding the role of generalists vs. specialists in the creative process. They posed the following hypothesis, as described in a recent Harvard Business Review post:

We theorized that the benefits of being a generalist are strongest in fields with a slower pace of change. In these fields (think oil and gas, mining), it might be harder for specialists to come up with new ideas and identify new opportunities, while generalists may be able to find inspiration from other areas. We also theorized that the situation flips for fields with a faster pace of change. In this case (think of quickly evolving fields such as quantum computers and gene editing), generalists may struggle to stay up to date, while specialists can more easily make sense of new technical developments and opportunities as they arise.

How did they study this question, and what did they find? The researchers examined the breakthroughs in mathematics by scholars in the Soviet Union from 1980-2000. They specifically wanted to look at the work being conducted during the Soviet era, when the pace of change was slow, to the period after the Soviet Union collapsed, when the pace of change increased substantially. Their detailed study confirmed their initial hypotheses. As they noted, "Generalists appear to be relatively successful as long as the pace of change is not too rapid, but their productivity decreases when the pace of change increases. At the same time, specialists appear to perform better when the pace of change accelerates."

Experts and Innovation

Stanford Professor Riitta Katila describes the role experts should and should not play on a team when it comes to developing breakthrough innovations. Check out the video clip below, in which she describes lessons from her research:

The Economics of Vacations

Kellogg Insight has published an interesting feature about key research findings from its faculty with regard to the economics and psychology of summer vacations. One of my favorite segments focuses on Tom Hubbard's research on demand shocks. Full disclosure: Tom , his sister, and I went to high school together. He's a terrific strategy researcher. Here's an excerpt, explaining what he learned about demand shocks by studying how the interstate highway system's development affected the gas station industry:

Perhaps you’ll decide to drive to your destination. You probably didn’t know that the gas stations you will pass reveal an interesting economic lesson about demand shocks.  Demand shocks represent a sudden rise or drop in consumers' desire to purchase a good or service. Empirical evidence of how companies and industries respond to demand shocks is hard to come by in large part because shocks, such as a particularly effective advertising campaign, happen everywhere at once.

Strategy professor Thomas Hubbard found inspiration for a way to study demand shocks in memories of family vacations.  "When I was a kid riding in the car to Florida, I-95 wasn't completed yet, and we had to take side roads," he says. What, he wondered, happened to the gas stations in towns after the interstate arrived? "I realized that these were demand shocks."

Studying demand shocks to gas stations during the construction of the interstate highway system was useful because "they're observable many times over many years in many regions," Hubbard says.  He combined government data on gas stations with data on when every mile of the interstate opened. He also poured over old maps to figure out what the best route was between two cities in the 1950s, before the interstate arrived, then measured how far that route was from the new interstate.

Hubbard found that when interstates were built close to existing roads, gas stations responded to the increased demand by expanding in size and hiring more employees, but few additional stations were built. When a new interstate opened several miles or more from the previous highway, entirely new gas stations opened up to service the demand, but the size of existing stations stayed the same.  The results suggest that entry opportunities in expanding markets are not as simple to exploit as they might seem.

New Version of Columbia Multimedia Case Study

I'm pleased to announce that Harvard Business Publishing has released a completely updated version of the award-winning multimedia case study about the Columbia space shuttle accident that Amy Edmondson, Richard Bohmer, and I created, along with our research associates Erika Ferlins and Laura Feldman.  The updated technology provides a much better experience for students and instructors, while maintaining the rich detail about the communications and information flow among managers and engineers during the shuttle mission.  The case offers important lessons about how to manage ambiguous risks and threats, create a culture where people feel comfortable speaking up and sharing bad news, make timely and effective high-stakes decisions, and build high performing teams.  Thank you to the entire technology team at HBS for working so hard to design this updated multimedia experience!  

Design Thinking is Hard on the Brain

In a new article published in Research-Technology Management (When Cognition Interferes with Innnovation:  Overcoming Cognitive Obstalces to Design Thinking), my colleague Allison Butler and I offer one plausible explanation for why many individuals struggle with the design thinking process. We argue that design thinking is "hard on the brain."   In developing our argument, we draw upon six years of work in curriculum design, teaching, and research on design thinking - including the creation and execution of Bryant University's IDEA program (an intense, three-day design thinking experience that all 850+ first-year students undertake each year).   

We believe that all individuals have the capacity to be creative, yet we often think, reason, and process information in ways that hinder our ability to innovate. Our brains are wired to operate as efficiently as possible, which is ideal for making our way in the world in daily life, but an impediment to successful design thinking.  The article examines the cognitive obstacles at each stage of the design thinking process, and we offer strategies for overcoming these impediments.  

For instance, we describe how our tendency to engage in top down processing when we observe a situation can cause us to miss important details about user behavior.   Moreover, we explain how inattentional blindness and confirmation bias afflict many people trying to conduct field research and empathize with users.  During the ideation stage of the design thinking process, fixation becomes a significant problem.  People get stuck on ideas within a particular category during the brainstorming process, and they fail to generate a sufficiently diverse range of concepts and solutions.   Finally, during the prototyping and testing stage, a number of cognitive obstacles impede our ability to learn, adapt, and iterate effectively.  For instance, our tendency to rationalize our own failures as due to external circumstances rather than internal causes (the fundamental attribution error) prevents us from using feedback effectively to iterate and improve our solution.   Similarly, the sunk cost effect means that we often find ourselves throwing good money and effort after bad, rather than abandoning solutions that receive negative user feedback. 

How do individuals overcome these obstacles?   That's the key contribution of our article.  Based on our work with many students and practitioners, we describe countermeasures to address these cognitive obstacles.  The article offers a number of such strategies.  One of my favorite is the notion of engaging in parallel rather than serial prototyping.  We draw upon research that shows how parallel prototyping can help people avoid fixation and premature convergence on one type of solution, and it can help individuals receive and utilize user feedback more effectively.   For an in-depth explanation of each our countermeasures, I hope you will take a look at the article.  

Looking for Labor Market Inefficiencies

Miriam Gottfried and Laura Cooper have written an article in the Wall Street Journal this week about billionaire investor Robert Smith and his private equity firm, Vista Equity Partners. The article examines the company's secretive "formula" for evaluating investment opportunities and enhancing performance in portfolio companies. I was particularly struck by the fact that the company uses an intelligence test to evaluate job candidates. Here's an excerpt describing this test: 

A proprietary cognitive assessment, similar to an IQ test, includes questions on logic, pattern recognition, vocabulary, sentence completion and math. The test inspires consternation and fear among existing employees, according to former employees. Vista primarily hires job applicants who do well, often young people with modest credentials or experience. These are its “high performing entry-level” workers, or HPELs.

Later in the article, Gottfriend and Cooper describe the people often hired by Vista Equity Partners:

Most of the people Vista hires score highly on the cognitive test. Often they are young employees with less-impressive credentials or experience. These HPELs, as they are known, may have gone to state universities and be willing to do a job for $75,000 that an Ivy League graduate in a high-cost market would demand twice as much for.

I've always been highly skeptical of using intelligence tests to evaluate job candidates for several reasons. First, I'm never quite sure of the validity of the tests being used. Second, I think performance on the job is driven by many factors beyond raw intellectual horsepower. Emotional intelligence, ability to work on a team, communication skills, and other skills play a major role in a new employee's success in the workplace. Finally, I wonder if these tests do have a bias toward younger candidates who have recently completed school (the article discusses this point). 

Having said that, the interesting part of Vista's strategy seems to be its use of the test to target exceptionally intelligent candidates from lesser-known colleges and universities. Vista seems to recognize that companies often pay a hefty premium for graduates from elite institutions such as Columbia, where company chief executive Robert Smith earned his MBA. Companies have a hard time evaluating young candidates, and so they use a diploma from an elite school as a signal of quality. 

However, firms may be missing the opportunity to recruit great talent if they focus exclusively on the "signal" provided by a degree from an elite institution. What if a firm could identify the best talent from the non-elite schools and thereby acquire great talent at a much lower price? That seems to be the question that Vista has asked and tried to answer using this intelligence test and other tools. They appear to be using the test to exploit a labor market inefficiency. The article, unfortunately, does not have too much detail on the Vista approach, given the highly secretive nature of the firm's methods. It would be interesting to know more so as to ascertain the merits and drawbacks of this aproach.

Shrink to Grow: Why Don't More Companies Adopt This Strategy?

As we witness the breakup of GE, a thought comes to mind regarding a rarely used corporate strategy - namely, the "shrink to grow" approach.   Many years ago, I went to work for General Dynamics after graduation.  When I began working there, General Dynamics was #44 on the Fortune 500 list of the largest American firms by revenue.  However, the company had been hit by acquisitions scandals and a string of very disappointing financial results.  Then the firm witnessed the fall of the Berlin Wall and the collapse of the Soviet Union, and the US government began to shrink defense spending in key areas affecting the firm's businesses.  The company's leadership knew that consolidation needed to occur in the defense industry.   General Dynamics sold many of its major businesses, including its largest business unit (which manufactured the F-16 fighter jet) as well as smaller units such as its Cessna Aviation division.  

By the mid-1990s, General Dynamics had two major divisions remaining:  one unit produced nuclear submaries, and other manufactured tanks and other armored vehicles.   In 1996, General Dynamics ranked only #350 on the Fortune 500 list.  In the years that followed though, the company began to grow again, building on these two remaining platforms.  It acquired Bath Iron Works, for instance, to expand its shipbuilding business beyond submarines (Bath produced destroyers).   It made a series of other acquisitions as well.  By 2005, General Dynamics had risen to #115 on the Fortune 500 list.   Moreover, the company became highly profitable and delivered strong shareholder returns in this era.   

Why don't more companies adopt a "shrink to grow" approach when experiencing poor financial results and/or other crises/scandals?   Many executives hate the thought of shrinking, of leading a much smaller organization.   They focus on the top line (revenue) and market share, rather than thinking about how to position the organization to thrive in the long run.   As we watch GE shrink now, perhaps we will see that it positions the organization to succeed and grow again over time.  More companies should consider this strategic approach. 

The Downside of Open Office Environments

Harvard scholars Ethan Bernstein and Stephen Turban have published an intriguing new study regarding open office environments. The study is distinctive because of its methodology. The scholars used sociometric badges and microphones to monitor the face-to-face interactions of employees before and after the switch from cubicles to an open-office layout. As a result, they did not rely on people's feelings and perceptions about the layout, but instead, they collected objective data about the impact that a change in office environment had on human interactions. The scholars discovered that face-to-face interaction dropped substantially after the shift to an open-office layout. Here is a summary of the research findings, from the British Psychological Society's Research Digest:  

The results were stark: after the shift to an open-plan office space, the participants spent 73 per cent less time in face-to-face interactions, while their use of email and instant messenger shot up by 67 per cent and 75 per cent respectively.

A second study involving 100 employees at another Fortune 500 company was similar but this time the researchers monitored changes to the nature of the interactions between specific pairs of colleagues before the shift to an open-plan office compared with afterwards.

There were 1830 interacting dyads and, of these, 643 reduced their amount of face-to-face interaction after the workspace became open-plan, compared with just 141 showing more physical interaction. Overall, face-to-face time decreased by around 70 per cent across the participating employees, on average, with email use increasing by between 22 per cent and 50 per cent (depending on the estimation method used).

How Do You Respond to Bad News?

Source: Flickr stock photo

As a leader, you should be creating an environment where people feel comfortable sharing bad news.  You don't want them hiding problems, or worse yet, manipulating data to make it seem as though things are proceeding smoothly.   When people do surface issues and concerns, leaders face a moment of truth.  How should you respond?   You only need to shoot the messenger once to poison the organizational culture for years to come.  People have long memories.  They will remember if a prominent leader reacted poorly to the messenger who delivered bad news.   

What is the right way to respond to someone brings forward a key risk or problem with potentially damaging ramifications for the business?   

• First, leaders need to express their gratitude and praise the courage that it took to raise the issue.  
• Second, they need to point out the harm that hidden risks can pose to the organization, and encourage others to come forward in the future with similar concerns or problems.  
• Third, leaders have to avoid the natural instinct to ask, "Why did this happen, and who is responsible?"  Certainly, there will be time to delve into the causes of this problem.  However, in the moment, leaders want to avoid finger-pointing and assigning blame.  Instead, they must focus on bringing people together to solve the problem.  They need to ask, "How can we resolve this problem?  What do we need to do moving forward?"  Naturally, answering these questions will require some investigation as to the cause of the problem.  However, the focus on problem solving rather than "investigation and interrogation" will mean a world of difference moving forward.  
• Fourth, leaders must encourage the team to look systemically at the problem, rather than individualistically.  They can't focus on the individual(s) involved, but instead must address the systemic issues that led to this failure.  It's not about the one rotten apple usually... it's about the damaged barrel that caused the apples to spoil.  
• Finally, leaders must look inward.  How did their behavior, leadership style, goal-setting tactics, and means of rewarding employees lead to this problem?  Acknowledging your own role in the situation not only helps the organization improve and avoid making a similar mistake again, but it makes others more comfortable discussing the mistakes and errors that led to this failure.