Entrepreneurs and Salespeople: Are You Overestimating How Much Others Value Your Product?

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Minah Jung, Alice Moon, and Leif Nelson have published a new paper titled, "Overestimating the valuations and preferences of others," in the Journal of Experimental Psychology.   The scholars examine how individuals evaluate the preferences of others.  Specifically, they find that people tend to systematically overestimate how much others will value something.   Here's an excerpt from their paper: 

In social judgments, we are frequently called upon to make predictions about the evaluations of others, such as how much a friend will enjoy a recommended novel, how long a coworker will be willing to wait for useful feedback, or how much a potential buyer will be willing to offer for a used set of golf clubs. The overestimation bias has important implications on real-world economic and social decisions. Furthermore, the paradox we document suggests that someone who perfectly understands others’ enjoyment for a good may nevertheless be imperfect at setting prices, simply because they fail to recognize how people trade off enjoyment against other valuation metrics, such as willlingness-to-pay and willingness-to-wait. This suggests that social and consumer judgments may suffer not only from general overestimation but also from an additional imperfect understanding of how people weigh trade-offs. Many preferences are developed from a complex weighting of positives and negatives, the balance of which produces a summary evaluation for each individual. When judging the preferences of others, however, that complexity may be ignored and the weight of some attributes will seemingly tip the scales in the direction of a simpler, more intense preference.

This research has important implications for entrepreneurs who are trying to determine whether their idea will gain traction in the market.   Are they systematically overvaluing their idea, or overestimating how much people will be willing to pay for the product or service?   We all know that entrepreneurs can fall in love with their own idea, but this research gives us a deeper understanding of precisely why we can't estimate willingness-to-pay properly and accurately.   The same bias, of course, affects salespeople in a wide variety of professions.  Do they really understand the potential buyers' preferences?  Can they accurately assess value from the buyers' perspective?   

The Perception Gap: Leader vs. Team Members

Kat Boogaard has written an interesting post for the Atlassian blog titled, "Attention leaders: there’s something your team isn’t telling you."  She explains the findings from some of the firm's research on leaders and their teams.   In particular, she focuses on the perception gap between the leader and his or her team members.  Here's an excerpt that summarizes the research findings:

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When we asked managers to rate their agreement with statements about their team’s health, they consistently agreed at a higher rate than their individual contributors. For instance:

• 37 percent of managers said their team had quick and easy access to information, but only 20 percent of their individual contributors agreed.
• 45 percent of managers said they receive honest feedback, but just 26 percent of individual contributors felt they like could give that honest feedback.

This inflated view is even worse in the C-suite. C-level executives are two times as likely to say that their team is high performing or has high well-being, while their individual contributors view those aspects as well below average.

How can leaders close this perception gap?  Boogaard has some good recommendations. For instance, she advocates getting out of your office to put your finger on the pulse of the organization, rather than waiting for people to come to you with problems or concerns.   Similarly, she focuses on the importance of promoting psychological safety within your team.   I would add one other important tip for closing this perception gap.  Find a truth teller on your team.   Find a sounding board, or consigliere if you are a fan of the Godfather movies.  Talk to them one-on-one, and use those private conversations to get a sense of whether team members are seeing things the way that you are.  Kathy Eisenhardt's research shows that effective leaders in high-growth firms operating in turbulent environments often have these confidantes who help them in numerous ways as they make tough decisions.  However, the key is to find a truth teller, not a yes-man or yes-woman.  Make sure it's someone who will give it to you straight.  

Evaluating Creative Ideas: Ask Why, not How

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Stanford Professor Justin Berg has conducted some fascinating new research regarding people's self-evaluation of creative ideas. How do they assess the ideas that they generate, and can they spot the best ideas at a very nascent stage of the problem-solving process? Berg finds that individuals are not great at spotting the very best idea. In fact, the idea that they rank second-best at first often tends to be superior to the concept that seemed optimal at initial glance. What's happening? Berg explains his theory of how evaluation goes off track in this Stanford Leadership Insights article:

“People value concreteness too much and abstractness too little in their initial ideas,” Berg says. A concrete idea, he went on, is necessarily more developed, and so it will more readily present its creative virtues. Abstract ideas, meanwhile, can be difficult to see as promising. “The best initial ideas likely won’t seem very creative at the beginning—there may not be enough substance to see their potential originality and usefulness. Their abstractness is a barrier that prevents people from spotting their potential.”

Berg tested this theory by putting people in more abstract states of mind as they assessed their initial ideas. He had them ask “Why is this a good idea?” as opposed to “How is this a good idea?” and then provide answers. This approach was based on prior research showing that focusing on why (versus how) encourages abstract thinking. This simple shift to a more abstract mindset helped people identify their most promising idea at the outset.

This theory definitely resonates with me.   Research has shown the value of "why" questions and abstract thinking.   I think "how" questions often shift people into an "implemental" mindset too quickly, as I wrote about with Derek Pankratz in this article for Deloitte Review.  When we start thinking about how to execute an idea too soon, we can actually select a flawed course of action.  We become vulnerable to certain biases and faulty reasoning.  Perhaps we are also less creative too, as Berg's research suggests.   We move from the abstract to the concrete prematurely in those situations.  We need to think about what we want to do and why we want to do it, before we get too bogged down into the execution-related issues.  Of course, we can't ignore the how while we are making the decision, but the balance of our thinking can't shift too much to the how at those early stages of the creative problem-solving process.

Why Your Innovation Lab Might Be Failing

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Vip Vyas and  Diego Nannicini of Distinctive Performance have written an interesting blog post titled, "Is Your Innovation Process a Corporate Illusion?" for INSEAD's Knowledge website.  The authors examine why some companies have shut down their innovation labs, after achieving less-than-desirable results.  Vyas and Nannicini offer several different explanations for the underperformance of these labs, but I find one explanation particularly compelling.  They argue that the leaders at the lab often lack credibility with the managers in the core business.   Here's an excerpt: 

In their efforts to promote a culture of creativity, companies may establish unintended physical and psychological distances between their main business operations and the innovation lab’s activities.

Setting up the lab as a free-thinking island, or tasking it with forwarding critical initiatives, is a key strategic decision. Without a clear pathway for connecting to the core business units, the innovation lab can find itself generating orphan products that fall into no man’s land. Even worse, the lab becomes nothing more than an expensive showcase, running public tours and hosting product demo kiosks.

The takeaway: An innovation lab needs solid executive sponsorship and advocates from mid-level management to effectively integrate solutions into the existing organisation.

To accomplish this feat, one has to insure that the leaders of the both the lab and the core understand one another.   After all, they often speak different languages, use different metrics, and have very different risk tolerance levels.  They also use quite different methodologies for making decisions.  Fostering understanding and appreciation of each other's methods, processes, and mindsets is essential for effective cooperation.   Otherwise, innovative ideas will wither on the vine. 

How Big is Your Idea? Will it Move the Needle? The Questions That Stifle Innovation

Early Career Failures: Do They Make You Stronger?

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We all have heard the old adage: What doesn't kill you will make you stronger. Researchers at Kellogg School of Management have tested whether that is indeed true when it comes to early career failures. They did so by examining a very unique dataset. Dashun Wang, Benjamin Jones, and Yang Wang have examined research grants provided by the National Institutes of Health (NIH).  The paper, published recently in Nature Communications, is titled, "Early Career Setback and Future Career Impact."  The scholars compared scientists awarded grants early in their career to those who narrowly missed out on achieving a grant.  Here is what they found, as summarized by Kellogg Insight:

To figure out just how much of a difference these early successes or setbacks made to a scientific career, the researchers traced the careers of 623 near-miss and 561 narrow-win scientists.  Notably, it turned out that the two groups published at similar rates over the next 10 years—not what you’d expect, given that narrow winners got an early leg up from their NIH grant funding. Even more surprising, scientists in the near-miss group were actually more likely to have “hit” papers (that is, papers that cracked the top-five percent of citations in a particular field and year). In the five years after they applied for NIH funding, 16.1 percent of papers produced by scientists in the near-miss group were hits, compared to 13.3 percent for the narrow-win group.

The researchers went on to rule out some of the possible explanations for this finding.  For instance, they demonstrated that the finding is not attributable to attrition by the "near-miss" scientists... i.e., it is not explained by quitting on the part of some of the researchers who did not receive grants early in their career.  They conclude that the career paths of these "near-miss" scientists suggests that they indeed did become stronger through adversity.  Somehow, the early career failure inspired them to persevere, led to key learnings, and/or helped them understand their own strengths and weaknesses.   As a result, they overcame the failure and went on to achieve considerable success.  What an uplifting finding for all of us... the old adage is not just a cliche...there is real truth there apparently! 

How Do I Assess This Firm's Culture Before Taking a Job?

Source: SHRM

Joann S. Lublin wrote a Wall Street Journal column last week about assessing the organizational culture of a firm at which you are considering taking a job.  She offered five tips for how to identify warning signs that a culture might not be the right fit for you.   I thought her first strategy was particularly useful.   Lublin argues, "Identify Who and What Count."  Here's an excerpt:

To grasp unwritten norms, discern what is acceptable behavior—especially for rainmakers, said Gail Meneley, co-founder of Shields Meneley Partners, a career-transition firm. She recommended inquiring whether sales stars operate under looser standards, such as completing deals without required internal approval.

“You may feel uncomfortable working for a business where there are different rules for different people,’’ she cautioned.

Small but significant gestures can offer hints about what behaviors matter. In 2017, Brad Neuenhaus became chief business officer of MindEdge Learning Inc., a provider of online education. He did so partly based on a company lunch he had attended as a customer. He recalled being impressed when a MindEdge leader exhibited respect for employees by clearing their plates.

“I wanted to be part of their organization,” Mr. Neuenhaus said. “Culture starts at the top.’

You might think that such small gestures don't matter, but in fact, they often can signal a great deal about the interpersonal and cultural dynamic at a company.  I had a boss who once said that he used to pay close attention to how someone treated a waiter or waitress at a restaurant during an interview process.  These things do matter.   At the end of the day, your antenna should be up at all times as you assess cultural fit. 

Simplify to Amplify: The Spindrift Story

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I recently listened to a particularly intriguing episode of Guy Raz's How I Built This podcast.  Raz interviewed serial entrepreneur Bill Creelman, founder and CEO of Spindrift - the sparkling water company.  I found one particular part of the Spindrift growth story quite compelling.  Creelman explains that the company had started to take off, and then he made the courageous and intelligent decision to exit one of the firm's two product lines.  

In the beginning, Spindrift sold both a sparkling water product made with real squeezed fruit, as well as a soda product (albeit one with less sugar than mainstream soda brands).   The interesting part of the story is that the soda product line was quite profitable, and it was generating millions in revenue for the company.   Yet, Creelman decided that that the brand positioning needed focus and clarity.  He called it a "simplify to amplify" strategy.   Creelman explains, 

Source: spindriftfresh.com

"That was a really important moment for us... we had a very low sugar soda, but even that, among our team, that was confusing. We had people who would say, you know, I don't drink soda. And we would say, well this isn't a soda... So, we made the hard decision to shut down about a $5 million business, super profitable, and just focus our resources on the sparkling water... The risk was for us that if we didn't stand for one single thing that we were going to go down the path of so many other businesses where you sort of try to do everything pretty well and nothing really, really great."

As I've written before on this blog, far too many companies try to be all things to all people.  They would never exit a profitable business, even if it meant a clearer competitive positioning that would be more sustainable in the long run.   Creelman made a smart move, sacrificing in the near term for the sake of a smarter strategy for competing in a confusing and highly competitive marketplace.  

Failing to Change When Faced With Negative News

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I recently read about a new study by Bradley R. Staats and his co-authors titled “Maintaining Beliefs in the Face of Negative News: The Moderating Role of Experience” in Management Science.  They set out to study how decision-makers react when faced with negative news.  The scholars chose to look at how expertise affects our likelihood to adjust our behavior in light of new negative information.  They assembled an interesting database about cardiac stent use in Pennsylvania from 2003-08 involving nearly 400 cardiologists. During this time, the Federal Drug Administration (FDA) recommended that doctors reduce their use of drug-eluting stents, but it did not ban the use of these devices.  The scholars set out to see how much the FDA's announcement affected behavior.  In particular, they wanted to see how experts reacted, as opposed to doctors with less experience.  Would overconfidence lead some experts to discount the new negative information?  Here's what they found: 

"For each standard deviation increase in experience, cardiologists were 6.3% more likely to use the drug-eluting stents before the FDA warning. Afterward, their use of the stents fell, but they were still more likely — 2.8% for each standard deviation increase in experience – than average to use the drug-eluting stents."

An article on the University of North Carolina's Kenan-Flagler Business School website summarizes the results and implications of this study:

It’s a kind of paradox. Are more experienced individuals – because of their presumably greater expertise – more likely to change their behavior when confronted by new information? Or are they more likely to resist new decisions because they’re confident about relying on their experience?  That’s the fundamental question tackled by Brad Staats, professor of operations and faculty director of the Center for the Business of Health at UNC Kenan-Flagler.  “Ideally, when you receive new information, you quickly adjust your decision-making – and you would expect the most experienced people would do so most accurately,” says Staats, “but our research indicates that might not be the case when they get negative news.”

Preparing for a Meeting: You Do Better When You Anticipate Conflict

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This week, I read an interesting interview with several scholars from the Kellogg School of Management. In the interview, Professor Cynthia Wang describes an interesting study that she conducted with Denise Loyd, Katherine Phillips, and Robert Lount, Jr. They published their findings in an Organization Science paper titled, "Social Category Diversity Promotes Premeeting Elaboration: The Role of Relationship Focus."   Wang reports that people tend to prepare better for meetings when they anticipate interacting with others with whom they expect to have conflicting views.  This preparation and introspection leads to better decisions.  Here's Wang commenting on the research:

Sometimes conflict can actually be productive. When you go into a group meeting with somebody who is very different from you, the assumption that there’s going to be a conflict actually leads to better outcomes because you prepare better. For example, in one study, Katherine Phillips and I gave people tasks and said, “Hey, you’re going to be working with a stranger from the opposite political persuasion.” We then saw that knowing this leads you to start preparing a little bit more for the discussion, because you assume that there is going to be conflict. This drives better decisions in the end, because you’re more prepared and more introspective. On the other hand, if we come from the same group, we don’t challenge each other as much.

The Charade of Consultation

Years ago, my friend Mike Watkins, author of the best-selling book The First 90 Days, coined the term "charade of consultation."  He used it to describe instances when leaders would hold meetings, ask for input and advice, and yet do not genuinely provide an opportunity for those participants to influence the final decision.  He described these situations as a charade because the decisions were pre-ordained, a fait accompli.  Leaders were simply using the meetings to pretend that they were giving employees voice in the decision-making process.  Somehow, they thought that soliciting input would build buy-in, without recognizing that employees would see right through the charade.  

What are the negative consequences of engaging in a charade of consultation?

1.  Leaders diminish the extent to which their employees trust them.  That loss of trust adversely affects commitment, engagement, and morale.  

2.  Implementation efforts falter, because employees have not bought into the decision that was made.  They perceived the decision process as unfair, and therefore, they fail to commit the selected plan of action.  

3.  Employees opt out of future opportunities to participate in decision-making processes.  They think to themselves, "What's the point?  They aren't really listening to us anyway."   

4.  Leaders find themselves only hearing from people that agree with their proposals and plans.   Dissenters have opted out, and thus, leaders find themselves operating in an echo chamber. 

Does this mean that leaders always have to do what employees think is best, over their own better judgement? Of course not.  The opposite of the charade is not workplace democracy.  It's a thoughtful, robust, open process of dialogue and debate.  After hearing diverse viewpoints, the leader can then make a more informed and prudent decision.  

Is Avoiding Losses Actually a More Significant Motivating Force Than Realizing Gains?

For decades, psychologists and behavioral economists have proclaimed the importance of loss aversion, one of the most prominent cognitive biases identified by researchers. However, a recent thought-provoking article in Scientific American by David Gal challenges the conventional wisdom. Gal writes about the research he has conducted with David Rucker and published in the Journal of Consumer Psychology. 

Source:  Blue Diamond Gallery

Gal argues that, "Loss aversion is essentially a fallacy." The statement surprised and intrigued me. Could it really be true that such a prominent theory was incorrect, and that a great deal of evidence existed to contradict it? Gal explains in more detail:

That is, there is no general cognitive bias that leads people to avoid losses more vigorously than to pursue gains. Contrary to claims based on loss aversion, price increases (ie, losses for consumers) do not impact consumer behavior more than price decreases (ie, gains for consumers). Messages that frame an appeal in terms of a loss (eg, “you will lose out by not buying our product”) are no more persuasive than messages that frame an appeal in terms of a gain (eg, “you will gain by buying our product”).

People do not rate the pain of losing $10 to be more intense than the pleasure of gaining $10. People do not report their favorite sports team losing a game will be more impactful than their favorite sports team winning a game. And people are not particularly likely to sell a stock they believe has even odds of going up or down in price (in fact, in one study I performed, over 80 percent of participants said they would hold on to it).

To be sure it is true that big financial losses can be more impactful than big financial gains, but this is not a cognitive bias that requires a loss aversion explanation, but perfectly rational behavior. If losing $10,000 means giving up the roof over your head whereas gaining $10,000 means going on an extra vacation, it is perfectly rational to be more concerned with the loss than the gain. Likewise, there are other situations where losses are more consequential than gains, but these require specific explanations not blanket statements about a loss aversion bias.

Perhaps most interestingly, Gal goes on to offer an explanation for why loss aversion has become such a prominent principle generally accepted by many scholars as truth.  He explains that another key cognitive bias, confirmation bias, has been a major factor. Scholars have tended to look for evidence that confirms and bolsters the theory of loss aversion, while dismissing or discounting contradictory or discordant findings. Other social forces too have helped to maintain and preserve the conventional wisdom. Gal concludes, "Wrong ideas can persist for a long time despite contrary evidence, and therefore, that there is a need to critically assess accepted beliefs and to be wary of institutional consensus in science and otherwise."

Working Backwards to Innovate at Amazon

Recently, Lisa Eadicicco wrote an article for Business Insider titled, "This is the test Amazon uses to decide which ideas are worth turning into new products."  She describes the "working backwards" methodology that Amazon routinely uses during its new product development process.  Here's an excerpt: 

And while Amazon's product portfolio may be larger and more diverse than ever, there's a simple process the company uses to figure out which ideas are worthy of becoming real products: writing a press release.  This is what has come to be known as the "working backwards document" within Amazon, a mock press release that describes the product and the problem it's trying to solve.

"Everything starts as a working backwards document," Miriam Daniel, Amazon's vice president of Alexa and Echo devices, recently said to Business Insider following the company's fall product launch event. "The reason we write a press release is, when we read it, we want to be able to say as a consumer, 'Wow, I want that.' We write with that end in mind."

All of the devices Amazon unveiled during its event at the end of September started as a working backwards document, says Daniel. The goal of the working backwards document is to help the product team focus on what the main use case for a particular product would be.

Often, at Amazon, they not only draft the press release as part of this working backwards process.  They also write the frequently asked questions document that will be provided to customers if the product/service is built.   These documents help Amazon's managers envision how customers will react to the new product, and in particular, whether it will fulfill a customer need or alleviate a key pain point for users.   

I wrote about the working backwards approach in my book, Unlocking Creativity.   It's a powerful technique that can help individuals step back and gain some distance from a challenging problem.  They can look at the problem in a new way by jumping forward in time and trying to predict how others will react to our solution at that point in the future.  For more on how and why this type of approach is worthwhile, check out the video below: 

 

The Benefits of Giving Advice (not just receiving advice)

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Lauren Eskreis-Winkler, Katherine Milkman, Angela Duckworth, and Dena Gromet have conducted some fascinating new research on the benefits of giving others advice.   Of course, we all believe that we can learn and grow by seeking advice and feedback from others, perhaps with more experience and expertise than us.   However, this study examines the benefits from giving advice to others.  How does the giver benefit?  According to the authors, giving others advice, even on an issue about which you are struggling or feeling challenged, can raise your self-confidence and motivation.  In so doing, it can help us achieve our goals more effectively. 

The scholars conducted an experiment with approximately 2,000 high school students.  Eskreis-Winkler explains the research and their findings in this article for Knowledge@Wharton:  

We recruited about 2,000 students and randomized them to one of two conditions. Either they’re in the treatment, which is that they give advice to younger students, or they’re in the control condition, which is practice as usual and they didn’t receive anything in particular. The program was online, so teachers took their students to the computer lab and students signed in. There was this very aesthetically pleasing, graphically designed program that students walked themselves through. They were asked to be coaches. We said, “Help us help other students.” Then the treatment — they went through a series of exercises that tried to elicit their advice.

There were some multiple-choice questions that asked them to advise on optimal study locations. There were some open-ended questions where they were writing notes of advice to younger students. The whole experience was short, but it was meant to make them feel like bona fide advisers. They had information to give, and we were getting it, and we were actually going to give it to younger students.

The hypothesis was that this act of stepping into the adviser role would raise the students’ confidence, increase their motivation. It was a pretty high bar, but we were hoping and expecting that it would, in turn, raise the students’ achievement levels. We collected the students’ grades over the academic quarter to see whether this intervention, which was delivered to students at the beginning of the third quarter, would increase their grades. And it did. We specifically pre-registered and predicted in advance that it would raise their grades in a target class. This is a class in which students self-report that they’re most motivated to improve. Math is a subject that’s notoriously difficult to change student achievement and a subject in which many students lack confidence. We thought this advice-giving intervention would be effective in math, and we did find that the students’ target grades and their math grades improved relative to students in the control condition.

Put Your Work (and Yourself) Out There!

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Last week, Renee Fleck authored a blog post titled, "The best creative advice of 2019: Words of wisdom for every designer."   There are some gems in there from various design professionals.  My favorite is from Lisa McCormick, a freelance illustrator and graphic designer.   Her advice:  "Be a factory, not a warehouse."   Here's the explanation:

“My college professor said this and it really stuck with me. It’s a reminder to not be “too precious” about your work and hide it until everything is absolutely perfect (that day will never come). Swallow your pride and put yourself out there and share your work. Keep making things, try new ways of creating, and take risks. It’s better to keep creating and putting yourself out there so you can get honest feedback and move forward.  So, be a factory by continuously creating and putting your work out there. Don’t be a warehouse, storing work in a dark corner that never sees the light of day.”

I concur completely.   Unfortunately, many of us await perfection before putting our ideas and our work out there.  We lose precious opportunities for feedback, adaptation, and iteration.   We censor ourselves because we are afraid of the judgment of others.  If we want to boost our creativity and our learning potential, we have to overcome this self-made obstacle.  

Four Tips for Speaking Up Effectively

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Suppose you have a dissenting opinion to share, or perhaps you are the reluctant bearer of bad news.  How can you be sure that leaders in your organization will listen attentively and genuinely consider your views?  What strategies can you employ to speak up effectively?  Here are four tips:

1.  Know your audience.   Understand the background of the person you are trying to persuade and influence.  What makes them tick?  How do they make decisions?  Are they fact-based decision-makers who want reams of data and evidence, or do they rely on their intuition at times?  What's the history of this particular person on this issue?   An effective dissent is not simply the collection of important facts and logical arguments.  Effective dissent entails TAILORING your argument to the people you are trying to persuade.  

2.   Work through the gatekeepers.   For many senior leaders, important information often flows to them through key gatekeepers.   Understand who these people are that have significant influence on the person you are trying to persuade.   Who does that leader rely on as a sounding board or confidante?   Sometimes, the most effective case of speaking up does not entail a direct conversation with a leader, but instead, works through these gatekeepers.  In other cases, the gatekeeper may not relay the message for you, but they can help you determine HOW to convey your message effectively.  

3.  Ask questions.   Don't simply state your opinions and proclaim the facts that support your argument.  Ask questions that help you understand how leaders are thinking about a particular issue.  Ask questions that encourage leaders to question assumptions and examine other alternatives.  The most effective dissenters bring people along, often encouraging leaders to come to the conclusion themselves that they may be headed in the wrong direction.   You are much more likely to succeed if they come to question their own arguments.   

4.  Tell a story.  Don't just convey facts and data through bullet points and charts.  Make sure you have crafted a compelling story - a narrative that integrates the key facts and arguments.  You are much more likely to persuade someone with a story than with a list of bullet points. 

Asking Open-Ended Questions of Your Team

Jan U. Hagen, Zhike Lei, and Avner Shahal have written a short digital article for Harvard Business Review about their research on aircraft crews.  Unsurprisingly, they find that captains who create  psychologically safe environment, and who actively seek input from their crew members, tend to perform more effectively and make better decisions.   Still, it's worth reading the piece as it does highlight some of the key ways that we can engage our teams effectively as leaders. For instance, they point out that the most effective aircraft captains use open-ended questions to solicit input from others.   They summarized their findings as follows: 

The captain’s style of communication had a major impact on crew performance in two major ways. First, crews performed consistently better under intense time pressure when the copilot was included in the decision making process than when the captain analyzed the problem alone and simply gave orders. Second, captains who asked open-ended questions — “How do you assess the situation?”; “What options do you see?”; “What do you suggest?” — came up with better solutions than captains who asked simple yes or no questions. By contrast, the latter method resulted in the copilot affirming the captain’s decision and proved worthless to problem evaluation and solving.

The takeaway we gathered here is that involving colleagues as equal decision partners by asking them questions — a form of leadership that organizational development scholar Ed Schein terms “humble inquiry” – taps into the other person’s expertise and aids constructive, factual information exchange. These questions are not simply for the sake of participation, but rather to gather information, opinions, and proposals for action. Teams who continuously exchanged information, analyzed the facts, evaluated options, made decisions, implemented them, and then reviewed what they had implemented, were the most successful in safely completing their flight simulations.

I think the importance of open-ended questions cannot be overstated.  Too often, managers ask leading questions, or questions that constrain the way that their team members will tend to think about a problem or situation.  The open-ended question often enables a leader to gather a broader range of perspectives and alternative solutions.  

Leading Virtual Teams

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Many of us perform a great deal of work virtually these days.   While many technologies have enabled effective virtual work, significant challenges remain when it comes to leading teams whose members are not co-located.  I recently came across a blog post by my former colleague, Michael Watkins (author of the bestseller, The First 90 Days), about how to lead virtual teams effectively.  He offers ten terrific tips.  I found two of his suggestions particularly helpful.  They are posted below:

Get the team together physically early-on. It may seem paradoxical to say in a post on virtual teams, but face-to-face communication is still better than virtual when it comes to building relationships and fostering trust, an essential foundation for effective team work. If you can’t do it, it’s not the end of the world (focus on doing some virtual team building). But if you can get the team together, use the time to help team members get to know each other better, personally and professionally, as well to create a shared vision and a set of guiding principles for how the team will work. Schedule the in-person meeting early on, and reconnect regularly (semi-annually or annually) if possible.

Commit to a communication charter. Communication on virtual teams is often less frequent, and always is less rich than face-to-face interaction, which provides more contextual cues and information about emotional states — such as engagement or lack thereof. The only way to avoid the pitfalls is to be extremely clear and disciplined about how the team will communicate. Create a charter that establishes norms of behavior when participating in virtual meetings, such as limiting background noise and side conversations, talking clearly and at a reasonable pace, listening attentively and not dominating the conversation, and so on. The charter also should include guidelines on which communication modes to use in which circumstances, for example when to reply via email versus picking up the phone versus taking the time to create and share a document.

I agree with both of Michael's recommendations here.  I would simply add an important element to his concept of a communication charter.  All teams, whether virtual or not, should think carefully about shared norms and ground rules with regard to how team members will interact.   That goes beyond the very specific types of ground rules associated with online or phone conversations described above.  All teams should consider developing shared norms and ground rules regarding how they will engage in thoughtful debate, express dissent respectfully, engage in active listening,  avoid interrupting others, prepare for meetings, and provide necessary materials in advance (among other things).   Leaders need to hold people accountable for adhering to these ground rules.  What's the best way to develop these norms?  Collaboratively.  Rather than simply providing your team with a set of rules, a leader is best served to work with the team to develop shared norms which everyone is comfortable adhering to moving forward.   Buy-in is crucial.  

Making Time for Big Picture Thinking

Adrian Granzella Larssen has written a terrific Fast Company article titled, "How to get out of the weeds and make time for big-picture thinking."  Larssen introduces executive coach Melody Whiting's perspective on why we often overload our schedules.  Whiting argues that a busy schedule reinforces our self-perceptions.  Here's an excerpt:

Source: Wikipedia

Everyone’s busy, and that’s not exactly by accident. Wilding’s take is something that might be uncomfortable to hear: “It makes us feel useful and wanted, and especially for people who are leaders or traditionally high achievers, that’s how they source their self-worth—via accomplishments and what they get done.”

Larssen has some good suggestions for how to rethink the way we manage our time, so that we can have more time for strategic thinking and reflection.   I highly recommend the article.  Among other things, Larssen reminds us of the value of the Eisenhower Matrix, a simple diagnostic tool that the former president and military leader recommended for setting the right priorities.  

Why Entrepreneurs Don't Learn From Their Mistakes

Source: Flickr

Edinburgh University Business School Francis Greene has written a terrific, research-based article for the Wall Street Journal titled, "Why Entrepreneurs Don't Learn From Their Mistakes."   Greene challenges the fail fast philosophy espoused by many in the the start-up community, by arguing that the credo only works if we actually learn effectively from our mistakes.  However, Greene's research shows that entrepreneurs don't actually learn very well over time.   Greene explains:

While second-chance stories are comforting, my research shows that entrepreneurs don’t learn from their mistakes. In fact, it’s the opposite: Fail once and you’re most likely to fail again. Believing in the myth only sets entrepreneurs up for more failure—and leads to disappointment and frustration.

There are many reasons why this is so, but the most important is basic psychology: Learning is a complex process that usually doesn’t proceed as simply and obviously as we hope. We struggle to take away lessons about what went wrong and then apply those insights to new situations. Or we simplify our experiences and leave out key details that would help us get a complete picture of why things went wrong.

I should note that Greene's research focuses on whether entrepreneurs who experienced a failed startup are more likely to be successful at their next start-up than first-time founders.   The "fail fast" philosophy, of course, does not simply talk about learning from complete failures.  It describes an iterative, experimental, prototype-based approach to building a startup.   You hopefully don't fail completely, thus going out of business.   You encounter small experiments that fail, and you hopefully learn from their to improve your business model. 

Still, Greene's research resonates with me and is consistent with plenty of other research showing that humans are constrained in their ability to learn from failure.  We like to believe that failure is a wonderful professor, but we often don't derive the right lessons and make the correct changes in the aftermath of an unsuccessful event.   I highly recommend reading the article for more detail on why we struggle so badly to learn from our mistakes.