Tuesday, May 22, 2018

Do Temporary Incentives Harm Intrinsic Motivation?

For many years, the conventional wisdom has been that offering temporary incentives reduces intrinsic motivation. University of Chicago Professor Oleg Urminsky summarizes the view held by many scholars and practitioners in the fields of business and education:   

The view that a temporary incentive could undermine intrinsic motivation has had a major impact on policy, particularly in relation to children and education. The author and lecturer Alfie Kohn has published several books on the topic, including one called Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes. Appearing on the Oprah Winfrey Show in 1996, he explained why he saw rewarding kids as a bad idea: “One of the findings in psychology that has been shown over and over again [is that] the more you reward people for doing something, the more they tend to lose interest in whatever they had to do to get the reward.”   He went on to talk about grades as problematic incentives, and he went further in his book, writing that verbal praise is coercive and should be avoided because it contains an implied threat to withhold praise in the future.

Urminsky describes new research conducted by University of Buffalo’s Indranil Goswami.  He points out that Goswami doesn't just measure what happens immediately after an incentive disappears.  Instead, he tracks the effects of incentives over time.   What did Goswami find?  Indeed, intrinsic motivation appears to drop when a temporary incentive is removed. However, that drop is extremely short-lived. After a short period, motivation returns to the pre-existing level, and in fact, it increases rather quickly to a point slightly higher than the original level. The charts shown here demonstrate the prediction from prior research vs. the new findings. Urminksy concludes, "The results are inconsistent with the dire warnings about incentives. Providing a temporary incentive can yield a boost in behavior while people are being paid, and only a small and brief decline afterward. Maybe incentives work pretty well after all."  He calls for more research given these interesting findings that challenge our conventional wisdom.  I agree.  We certainly need to learn more before we simply adhere to the pre-existing beliefs that incentives absolutely reduce intrinsic motivation.  

Friday, May 18, 2018

Advice for Graduates - Class of 2018

As commencement approaches for the Class of 2018, I would like to take a moment to offer a few words of advice.  This year, I write with a fresh perspective, as I have a graduating senior. My daughter, Grace, will be graduating high school in two short weeks (sigh!).   I ask that you consider these words from former President Teddy Roosevelt.  

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat. 

In today's world, we have far too many critics and not enough doers.  It is far too easy to point fingers and find fault with the actions of others, without looking in the mirror.   It is too easy to explain what's wrong with the way things are done now, without offering alternative paths forward.  Be solution-oriented.  You do not have to set out to change the world with one bold leap.  Instead, consider how you can make your workplace, community, or home a better place tomorrow, with one small step or two.  If we each take those small steps, together we can make a real difference.  
How will you make a difference?  You do not have to possess formal authority to create positive change.  Hone your skills of persuasion and influence.  Build coalitions, marshal resources, and connect with others who can help and support you.   Demonstrating true leadership often means exercising influence without authority.  

Finally, be passionate about your ideas, but never allow yourself to become too rigid.  As they say, argue as if you are right, but listen as if you are wrong.   The best thinkers and leaders have "strong opinions, loosely held" as Stanford's Bob Sutton has suggested.  Do not succumb to confirmation bias.  Seek out discordant data and disconfirming evidence.   Consider why the opposite might be true.  Encourage those around you to speak up, express dissent, and ask provocative questions.  

I wish you all the best of luck in future endeavors, with hopes for much personal and professional success.   Congratulations, Class of 2018!  

Thursday, May 10, 2018

Making Sure People Recognize Their Impact

Adam Bryant, formerly of the New York Times, interviewed Deborah Bothun recently and posted her comments on LinkedIn.   Bothun spent 21 years at PricewaterhouseCoopers.  The two now owrk together at Merryck & Co, a leadership development consultancy.   Bothun explains that she wants everyone in an organization to understand that they can make an impact on the customer, the organization's mission, and the P&L.   She explains about the latter in this excerpt:

Another one of my themes is that often people don’t think of their role as having a P&L impact. Everybody’s role ultimately has a P&L impact. No matter what functional area you’re in, you need to be responsible for the commercialization of that organization.   Regardless of what you do, you need to understand how what you do drives revenue or drives cost. That way, you become more knowledgeable about the drivers in your area and how they intersect with the drivers of growth in other areas, and you become more integrated into the whole team. And if you can start to think that way, you’re going to have a much better chance of moving in the direction you want.

I'm in full agreement with Bothun.  If people at all levels understand how they can make an impact, they can be encouraged and empowered to bring forth ideas for making the organization more successful.  People will be more motivated if they recognize the ways in which their work matters, and how their efforts can enhance the organization's overall success.  

Wednesday, May 09, 2018

Better Governance: Redesigning Board Meetings at Netflix

David Larcker and Brian Tayan have written an article about Netflix redesigned management's relationship with the Board of Directors, while also rethinking how board meetings should be conducted. They describe how Netflix built a more transparent relationship with the board, while helping the directors gain a better understanding of the business and the management team. Larcker and Tayan explain:

Netflix takes a radically different approach. It incorporates two unique practices. First, board members periodically attend (in an observing capacity only) monthly and quarterly senior management meetings. What’s more, communication with the board comes in the form of a short, online memo that allows directors to ask questions and comment within the document. Executives can amend the text and answer questions in what is essentially a living document. We believe these two innovations meaningfully contributed to Netflix’s extraordinary performance in recent years.

I find the memos be particularly interesting as a means of preparing directors for a fruitful discussion at the board meeting itself.   The roughly 30-page online memos provide links to supporting analysis and to the Netflix systems, so that directors can examine raw data behind the conclusions.  Directors can post questions and comments on this memo before the meeting.  Fellow directors, as well as the executive team, can review these questions prior to the board gathering.  The board meetings themselves become a dialogue, rather than a series of canned presentations filled with tons of powerpoint slides.  

This format provides for a much more productive board meeting.  In my view, management and board meetings should always involve a healthy dose of preparation.   The meetings themselves should be about dialogue, not documents.  The written materials should be distributed and reviewed prior to the in-person meeting.   Insuring equal access to information means that people can come to the table prepared to discuss a topic and not disadvantaged because some in the room have seen the data while they have not.   

What's stopping many boards from adopting these types of practices?  Of course, you know the answer.  It takes a chief executive who is very secure and confident in their abilities, and one who is willing to listen to tough questions and dissenting views.  Moreover, it takes a committed board with members who are prepared to put in the work prior to the meetings.  

Monday, May 07, 2018

Crediting the Team vs. the Individual

Min Kay, Devon Proudfoot, and Rick Larrick have written a new article titled, "There’s No Team in I: How Observers Perceive Individual Creativity in a Team Setting."   The authors focus on the extent to which we attribute the quality of creative output to an individual vs. the team as a whole. In a discussion about the research, Larrick explains, "“Any time that you have so much of a company’s success tied up in the perceived success of a single individual, there’s a risk.” 

Source: Wikimedia
In explaining the experimental research findings from the research he conducted with his colleagues, Larrick states, "“It’s striking how little people adjust for the role of a team unless they’re hit over the head with the image of a team."  Indeed, in their studies, these scholars found that showing people an photographic image of all team members actually enhanced the extent to which they attributed the creative success to the group vs. an individual. However, if people are simply told about the presence of a team, but not shown the visual image, they are more likely to give an individual a great deal of the credit for the creative output. 

Larrick concludes, "If you want people to have faith in a team that can sustain success over time even with potential turnover, that’s when you want to call attention to it being a team output that is more about process and culture than one person.”  I would add that the best leaders insure that others know about the importance and the contribution of the entire team.  Moreover, they don't attribute to much of a project's success to their own actions, but instead recognize the valuable contributions of those working with them.  

Friday, May 04, 2018

Leaders: It's Not About You!

Amy Modglin wrote a terrific column for Forbes titled, "Leadership: It's Not About You." She explains that shifting the focus to your people enables an organization to achieve much greater success.   Modglin argues:

View your people as your biggest success. A good leader supports those around them. Your focus should be on developing them, helping them succeed, and watching them grow into the people they want to become. When your people are successful, it is a reflection on you as a leader... Acknowledge and appreciate people. Everyone wants to be valued. It is critical as a leader to give your people credit and recognition for the incredible things they do. One of the reasons people leave a job is because they feel underappreciated. A leader should never take the credit for the work that their people do. A good leader is a generous leader who recognizes people.

Now you might conclude (rightfully) that this philosophy is rather obvious.  Of course, it's not about you as a leader.  Of course, you should appreciate and recognize your people's contributions.  Yet, so many leaders do not do so effectively.   Why?

1.  The longer you stay in a job with considerable success, the more you become convinced as a leader that you are the reason for a great deal of those results.  

2.  Outsiders often attribute FAR too much of an organization's success to the leader at the top.   Leaders begin to believe their own press clippings.  

3.  Fundamental attribution error:  We blame others' failures on their internal weaknesses, but explain away our own failures as a result of uncontrollable outside forces. 

4.  The Board often exacerbates the problem by reinforcing the notion that the leader is "indispensable" to the organization.  

Wednesday, May 02, 2018

Scattered Priorities

Author and consultant Ron Carucci wrote an article recently for Harvard Business Review, and he described how some leadership teams struggle with scattered priorities. He writes:

One study, done by the consulting firm RHR International, showed that among high-performing leadership teams, 93% are able to prioritize the most important issues and 96% focus on the right issues. By contrast, in low-performing leadership teams, only 62% prioritize well and 53% are seen as being focused on the right issues. The implications for an organization whose leadership team is poorly focused are serious: Wasted resources, wasted effort, and widespread confusion become the norm.

Why do leadership teams find themselves exhibiting scattered priorities?   Here are a few reasons based on my own work with various organizations:

Source: Juan Martinez via Flickr
1.  Top executives engage in reactionary behavior based on a recent event or trendy topic that struck a chord with them.   

2.  Executives don't want to make the hard choices.  Therefore, they spread resources around to too many initiatives, in part because they don't want to disappoint key managers.   Conflict avoidance plays a role here too. 

3. Leadership teams always add items to the strategic agenda, but never step back and consider removing key initiatives.  Thus, the breadth of the agenda grows larger and larger over time.  

4.  Executives make the mistake of thinking that they will grow revenue more quickly if they simply expand their product and service offerings.   They expand and diversify because it seems the easy route to growth, rather than thinking about how to deepen their existing competitive position as a means of achieving growth objectives.

5.  Top leaders assume that declaring issues as priorities is motivating for employees.  They don't realize that employees actually become demotivated if they experience confusion about the strategic agenda, and if they feel stressed and torn in different directions.  

Tuesday, May 01, 2018

The Death Spiral at Struggling Restaurants

Source: Wikimedia
I see it time and again.  A restaurant begins to face declining revenues for competitive reasons.  Perhaps fast casual restaurants begin to take share, as Panera and others have done.  Perhaps dietary trends cause a shift in consumer preferences.   As the restaurant grapples with declining sales, it makes two moves to try to reverse its fortunes.  First, it broadens the menu, adding a variety of new dishes.  This move often backfires for two reasons.  The new menu items blur the firm's distinctive positioning in the marketplace.  What precisely is this restaurant all about, and what does it specialize in these days?  Broadening the menu also adds a signficant amount of complexity to the operation.   Speed and quality of service suffers.  As the menu expansion fails to generate strong revenue growth, the restaurant makes its second big move. It cuts costs, particularly with regard to staff.  Of course, speed and quality of service declines even further as a result of the cost cutting.  The death spiral intensifies.   

We have seen this death spiral transpire at Bertucci's, a pizza restaurant based here in the Northeastern United States.   Over the course of the past two years, I have seen the menu continue to expand.  Service has suffered.  As service declined, people stopped going to the restaurant.  Cost cutting affected the quality of the experience.  Several weeks ago, the company filed for bankruptcy.  It's unfortunate, as the company once offered a terrific family dining experience.