Monday, March 29, 2021

A Simple Strategy to Help Us Achieve Our Goals

Source: Gold Dust Dental Lab

Katie Mehr, Amanda Geiser, Katherine Milkman, and Angela Duckworth have published an interesting new study that highlights a simple strategy that might help us achieve our goals.  They studied people's efforts to exercise more often.  They introduced a simple strategy; they call it "copy-paste prompts."  In their experiment, they gave some participants the following instructions:

"In this study, we want to help you learn about an effective hack or strategy that someone you know uses as motivation to exercise. Over the next 2 days, we’d like you to pay attention to how people you know get themselves to work out. If you want, you can ask them directly for their motivational tips and strategies."

In other words, participants had to actively seek out goal achievement strategies from people they knew.   They compared the behavior of participants receiving these instructions to a control group, as well as a group that passively received advice on how to meet exercise goals.  In short, encouraging people to benchmark and learn from others is an effective way to nudge them toward putting in the work to achieve their goals.  It's much better to encourage them to ask for advice rather than telling them what to do.  It's simple and intuitive, and it's not a costly intervention.  The scholars discovered that, 

"A brief and virtually costless copypaste prompt improved goal-directed outcomes over the following week. Specifically, this nudge led to greater increases in the amount of time spent exercising than did passively receiving a strategy of similar quality, highlighting the value of actively finding goal-related strategies among one’s peers."  

Why did this simple strategy prove effective?  They provide several reasons.

1.  Examining the effective strategies of peers raises the probability that individuals will actually employ advice.  Moreover, hearing what works for their peers increases people's beliefs in their own abilities to achieve certain goals. 

2.  The advice may be more "customized and goal-relevant" since the individuals chose the peers from whom they wanted to learn.  

3,  People feel a sense of empowerment and autonomy when they seek out information and advice themselves, rather than being told what to do. 

Monday, March 22, 2021

Demonstrating Impact, Showing You Care

Thasunda Brown Duckett, CEO of TIAA
Source:  WSJ

In Google's Project Aristotle, Julia Rozovsky and her team identified the five most important attributes that distinguish the highest performing teams at the company from the lowest.  Impact was one of these five characteristics.  Rozovsky and her group defined impact as follows:  "The results of one’s work, the subjective judgement that your work is making a difference, is important for teams. Seeing that one’s work is contributing to the organization’s goals can help reveal impact."  What happens, though, if workers don't always feel as though they are having a significant impact on the company's broader goals and objectives.  What if some workers never interact with customers, and thus, never see the positive effect their actions have on customer experience and satisfaction? Leaders need to bridge that gap. They need to create a "line of sight" between the workers' actions and the customer. They need to demonstrate and affirm that the workers are having an impact.  In so doing, leaders also can show their front-line employees that they truly care about them and value their efforts.  

Here's a great example of a leader who understood the importance of affirming impact. Thasunda Brown Duckett is the new CEO of TIAA.  Prior to that, she served in several senior executive positions at JP Morgan Chase, including as CEO of their Auto Finance business.  In an interview with David Gelles of the New York Times, she described one of her early moves as leader of that business at JP Morgan Chase: 

When I was named C.E.O. of Auto, within the first 90 days I went to the mail room, and I told them, “Keep doing your job with excellence. If you don’t put that payment in the right chute, and it accidentally goes to mortgage, then the customer doesn’t post on time, they’re upset, and they end up closing their account with us. But you started that process. So when you hear me talk about our customer experience having improved, brush your shoulders off.”  And they go, “You’re welcome. You know we got you.” At that moment I was able to connect them to Chase, to this bigger narrative. And now they know that T cares about everybody.

Friday, March 19, 2021

Why Do Entrepreneurs Keep Entering Highly Unprofitable Industries?

Source: New York Times

During the early days of my strategy courses, we often learn about Porter's five forces as a tool for evaluating industry structure.  We often examine industriest at the extreme - either highly profitable (such as pharma) or highly unprofitable (such as airlines or fitness centers).  We use the framework to try to explain the level of profitability in these markets.  Of course, one examine barriers to entry quite closely.  Low barriers to entry tend to depress profits in an industry, because new players can easily come in and compete on a relatively even playing field with incumbent firms.  

Students often ask me a question:  "Why do entrepreneurs keep entering these industries with consistently low profits? Don't they understand how hard it is to make money in these markets?"   What a terrific question!  As I read a New York Times story this morning about two new upstart airlines, the question really hit home again.  Why enter the airline business when it has been so unprofitable for decades?  After all, Richard Branson has told a great joke about the business.  He says that people always ask him how to become a millionaire.  He says it's quite easy.  You just start as a billionaire and then open an airline.  

What is happening in these industries?  For me, three factors explain the continued entry into unprofitable markets. 

1.  The low barriers to entry make it quite enticing for entrepreneurs.  They don't see the major obstacles that often obstruct entry into other industries.   They would love to be an entrepreneur, and they are looking for "easy targets" - i.e. markets that they can access more readily than some others.  

2.  They enter because, to them, it's a lifestyle business. They aren't think simply in terms of profit maximization. Fitness centers is a good example.  People open gyms because they have a passion for fitness and wellness.  They also would love to be their own boss.  A similar phenomenon has emerged in the wine industry. Many people enter the business because of their passion for the art and craft of making wine.  It's also a status symbol to enter the industry. Witness the celebrities who enter, including athletes, movie producers, and actors and actresses.  

3.  Entrepreneurs think to themselves, "I'm different. I'll be the exception to the rule."  In fact, some of the most compelling business stories are those of firms that have made strong profits in very unattractive industries. People know the remarkable story of Southwest Airlines, or Ryanair in Europe.  Or, they have observed the success of Planet Fitness and Trader Joe's (both companies about which I have written case studies - Planet Fitness case and Trader Joe's case).   Therefore, entrepreneurs think to themselves, "I can do that!"  Or, they look at the many failures in the industry and think, "That won't be me. I'm smarter than that!"  Unfortunately, they often don't understand quite what that it takes to position a firm to survive and thrive in a very challenging industry.   Hubris clouds their judgement as well.   

Wednesday, March 17, 2021

Is Courage a Double-Edged Sword?

Source: Wikimedia

We all would like to believe that we have the courage to make difficult choices in our lives, whether they be personal decisions, or choices at work or about our careers. How does courage impact our decision making? Kellogg Professor Derek Rucker and University of Illinois-Chicago Professor David Gal set out to examine this question. They started by noting that a great deal of experimental research has documented the loss aversion phenomenon, i.e. the notion that losses loom larger than gains.  Yet, they wondered why people actually make very bold decisions at times in their personal and professional lives.  Loss aversion does not always seem to inhibit their ability to take a big swing.  To examine this issue further, the scholars conducted several interesting experiments.

In one experiment, they studied the decision making of over 500 research subjects. First, they asked half of the participants to write about an occasion when a person they knew had displayed courage. The other half of the research subjects wrote about an individual accomplishing something quite ordinary. Then the participants faced a decision. One half of the research subjects confronted a crucial decision regarding a serious illness. The other half faced a fairly trivial choice regarding a small sum of money. Those who wrote about someone's past courageous choice were much more likely to choose the riskier option in the medical decision. However, when it came to the fairly trivial monetary decision, little difference existed between the two groups of participants. Courage didn't play a factor in the trivial choice.  It mattered a great deal on the serious, high-risk decision.  

In a second experiment, they recruited over 400 research subjects. One half read about a substantial career gamble. The others read about a significant monetary gamble.  In other words, this time both choices involved a high degree of risk.  They wanted each choice to evoke some degree of fear. Their pretesting confirmed that. However, pretesting also revealed that the career gamble was "more purposeful, couragous, and worthy of respect." Then they asked each research subject to rate how important courage was to them. Finally, the participants had to make the crucial decision (either about career or money). In both decisions, courage increased people's willingness to make the riskier choice, but much more so for the career gamble than the monetary situation.

Rucker concludes, “This suggests that, in contrast to some of the findings in controlled laboratory gambles, people might have a radically different response to risk in some situations. When people see an opportunity to be courageous, and want to see themselves as courageous, that may actually lead to a preference for the riskier option.”

What do we make of these findings?  Well, courage certainly is a desirable attribute.  It enables us to make bold choices that can propel our organizations and careers forward.  However, we have to wonder if our desire to feel and appear courageous might push us to make some rash or ill-advised decisions at times.  Should we really approach the serious decision with a greater propensity to take risk as compared to the trivial decision? Is that an appropriate thing to do?  Courage, it appears, is a double-edged sword. 

Friday, March 12, 2021

Does Your Organization Have Good Mechanisms for Upward Feedback?

Source: picpedia

TINYpulse has published a good blog post about employee retention.  While the conclusions are not at all surprising, they are worth reviewing.  As the economy recovers, retaining top talent will be a substantial challenge for many firms.  Here's one key item from the blog post: 

Employees won’t stay if there isn't a culture of encouraging upward feedback

Employees that don’t feel comfortable giving upward feedback are 16% less likely to stay at their companies, according to TINYpulse. Feedback shouldn’t just flow one way. Open communication is key to understanding the needs and points of improvement for both managers and employees.

Qualtrics reports that 60% of U.S. employees reported having a way to provide feedback about their own employee experience. But only 30% said their feedback is acted upon by their employer.

It’s great when employees have upward evaluation systems in place. But when they believe their leadership can’t or won’t do anything to improve a problem, they may consider their employers to be ineffective.

Encourage employees to regularly communicate their thoughts. An open line of communication will demonstrate to employees that their opinions are important. Regular and honest communication shows employees that they’re valued, and it also allows you, as a leader, to recognize when adjustments might need to be made to improve employee retention.

Sunday, March 07, 2021

It's Not So Easy to Walk in Someone Else's Shoes


Leaders can be much more effective if they demonstrate empathy for their team members.  However, many of us struggle at times to empathize.   In fact, quite surprisingly, we may empathize LESS if we have been in another person's shoes in the past, and we have faced simliar obstacles.   Several years ago, Rachel Ruttan, Mary-Hunter McDonnell, and Loran Nordgren reported on some fascinating research they had conducted concerning our capacity to empathize.   Here's an excerpt from their Harvard Business Review article, in which they summarize the findings from a series of experimental studies:

Taken together, these results suggest that people who have endured a difficult experience are particularly likely to penalize those who struggle to cope with a similar ordeal.  But why does this occur? We suggest that this phenomenon is rooted in two psychological truths.

First, people generally have difficulty accurately recalling just how difficult a past aversive experience was. Though we may remember that a past experience was painful, stressful, or emotionally trying, we tend to underestimate just how painful that experience felt in the moment. This phenomenon is called an “empathy gap.”

Second, people who have previously overcome an aversive experience know that they were able to successfully overcome it, which makes them feel especially confident about their understanding of just how difficult the situation is. The combined experience of “I can’t recall how difficult it was” and “I know that I got through it myself” creates the perception that the event can be readily conquered, reducing empathy toward others struggling with the event.

What's the implication of this finding?  We have to step back and not dwell so much on our own successful experience overcoming certain obstacles or adversity.  Perhaps we were fortunate to have a great mentor who helped us through a tough spot, and this person does not.  Or, maybe we benefited from a strong team around us that provided crucial support, complementary skills, and key expertise.  Perhaps most importantly, though, we have to try to remember our struggles during the process, rather than only dwelling on the successful outcome we may have achieved.  We sometimes forget the setbacks and gloss over the tumbles and failures along our path.   

The other day, I read a Wall Street Journal article about a unique exercise conducted at Furman University and Denison University.   Many professors participated in a program in which they tried to learn how to solve the Rubik's Cube in less than five minutes.  The activity placed the professors back in the shoes of a novice learning a new task.  After going through the process, many faculty members experienced a healthy dose of humility.  They had forgotten how hard learning a new skill or body of knowledge could be.  The hope was that this attempt to stimulate more empathy for their students could make them better teachers.  

The same type of activity might be useful for business leaders.  Going back and working for a few days on the front lines of the organization might open their eyes to the challenges and obstacles faced by those employees, particularly during these trying times.  At Hilton Hotels, CEO Chris Nassetta took over when the firm needed a turnaround.  He directed his top managers to work one week per year in the firm's hotels.  They took on jobs on the front lines, such as housekeeping, facilities, or front desk work.  They gained a new appreciation for what was happening at the ground level in the organization.  In Nassetta's view, it made them all better leaders.  

Monday, March 01, 2021

The Classic Traps Encountered by New Leaders

Michael Watkins wrote one of the best books on leadership transitions - The First 90 Days.  He's a friend and former colleague from HBS, and he now teaches at IMD in Lausanne, Switzerland. Through his research, Michael identified some of the classic traps experienced by new leaders in their early months in charge. Here are a couple of the traps that seem to me the most worrisome for new leaders:

Not engaging in social learning

Watkins argues that new leaders sometimes isolate themselves during the early months in charge.  They spend an inordinate amount of time reading reports, analyzing data, and meeting with a close circle of direct reports.  Unfortunately, they do so at the expense of engaging with a broader range of voices throughout the organization.  They forget that there is much more to learn from people than from data.  Watkins explains that you build a reputation very quickly of either being approachable or not.  It's hard to modify those first impressions if you isolate yourself at the start.  

Staying too long with the existing team

Sometimes, new leaders stick with the incumbent team because they want to give those people the benefit of the doubt, despite concerns from the board and others about their performance.  In other cases, they convince themselves that they must keep those people because of their institutional knowledge.  Certainly, wholesales changes simply for the sake of bringing in your own people can be hasty and even distastrous.  However, leaders should beware of failing to make changes when a broad swatch of the organization witnesses serious under-performance within the top team.  Failing to make needed changes will cause people to lose faith quickly in a new leader. 

Getting captured by the wrong people

Certain people will work hard to influence and persuade the new leader.  They will do so because they want to preserve or enhance their own power.  They may try to protect their priorities in the face of potential change.  Or, they may push agenda items that they could not persuade the previous leader to endorse.  New leaders have to be very careful about being "captured" by the wrong people.  Leaders may not only get bad advice. People throughout the organization are paying attention.  If they think that the leader is surrounding himself or herself with the wrong people, it will again diminish faith and trust in the new leader.