Thursday, December 29, 2011
Recently I attended the University of Chicago Booth School of Business Entrepreneurial Roundtable event where two Kellogg graduates spoke. One of them was Robert Pasin, CEO of Radio Flyer, the red wagon we all grew up with.
An audience member asked this question:
“So you are growing your company and you make a new hire who doesn’t fit into your culture but is very, very good at what he does and makes a lot of money. So who wins the culture or the superstar?”
Without a moment's hesitation Robert Pasin responded: “The culture. That’s very easy. We learned that the hard way with a superstar that nobody could work with. Whenever that happens we have a program called ‘Deselection With Dignity’ and we mean it because we want to part ways in such a way that everyone feels good about themselves and Radio Flyer.”
Here's a CEO who absolutely gets it. He's a client I wish we had!
Tuesday, November 29, 2011
'Yes,' I reply, 'my father treated me to the most demanding discipline. He trusted me!'"
- Robert Galvin, former CEO Motorola
Galvin wasn't talking about trust as much as he was about empowerment. Empowerment is the true embodiment of trust. Without it, trust is just a word.
Sunday, November 20, 2011
In preparation for a presentation next week on motivation I picked up Daniel Pink’s book Drive. I’d picked it up once before and couldn’t remember why I didn’t finish reading it. Now I remember why. It is the fundamental premise of the book, summed up by Pink himself:
"Cocktail Party Summary: When it comes to motivation, there’s a gap between what science knows and what business does. Our current business operating system–which is built around external, carrot-and-stick motivators–doesn’t work and often does harm. We need an upgrade. And the science shows the way."
Really? Our current business operating system is built around external, carrot-and-stick motivators? That is like saying a deck of cards consists of red cards. Not entirely false, since red cards are in the deck, but not sufficiently true to hold up to a quick scrutiny. After all, half the cards are black. It is true that some managers use a carrot-and-stick motivational mode. But there have always been businesses that have been led by far more thoughtful and insightful leaders.
We don’t need science to show us the way, since the path has been well travelled by many business leaders long before the scientist studied the issue. Robert Galvin at Motorola stands tall in this crowd. He wrote:
“A wiser man put it thus: We measure the effectiveness of the true leader not in terms of the leadership he exercises but in terms of the leadership he evokes; not in terms of his power over others, but in terms of the power he releases in others; not in terms of the goals he sets and the directions he gives but in terms of the plans of action others work out for themselves with his help; not in terms of decisions made, events completed and the inevitable success and growth that follow from such released energy but in terms of growth in competence, sense of responsibility and in personal satisfaction among many participants.”
Thus, Pink answers a question that’s been answered many times before. A more interesting question might be, “Why is it that, when the evidence supporting the effectiveness of great leadership is so evident, do we still find managers using techniques that deliver mediocre results?" There must be something compelling in using coercion to control behavior in others. That would make for a more interesting psychological study.
Lets redefine the problem: What is so compelling about management styles, broadly represented as carrot-and-stick methods, that causes managers to use them, when we know these methods are less effective in achieving stated company goals. How do we replace that behavior with a more effective one?
Monday, November 14, 2011
Saturday, November 12, 2011
“Hiring managers hire the people they like the most.” Here, the research is definitive1. Hiring managers hire the people they like the most. Why? Primarily because hiring managers have no training and no expertise in the art of how to pick the best candidate. That forces hiring managers to use whatever tools they have at hand to come to a choice. People like other people who are most like themselves. FREE WHITE PAPER: http://blog.peakinterview.com/files/7/2/0/1/6/270087-261027/HiringWhitePaperr2.pdf
Monday, October 3, 2011
Saturday, August 27, 2011
No doubt every manager is familiar with the plethora of research which shows that an engaged workforce is substantially more productive than an unengaged or disengaged workforce. Research also suggests that the key to having a highly engaged workforce is the behavior of the leader. Almost all business leaders are familiar with Jim Collins’ Level 5 Leader who is self-effacing, reserved, quiet and who listens well. The Level 5 leader is the most adept at engaging the workforce.
In the July 2011 Harvard Business Review article Why Fair Bosses Fall Behind authors Wiesenfeld, Rothman, Wheeler-Smith and Galinsky point out that, “the most effective leaders are generally those who give employees a voice, treat them with dignity and consistency, and base decisions on accurate and complete information.” These are Level 5 Leaders, bosses who treat people fairly.
But here is the rub. According to the authors, your ambition to get to the top of an organization may be undermined by this ‘good boss’ behavior. In the article they suggest that decisions about high-level promotions most often center on perceptions of power, not fairness, and apparently, it is hard to be both -- powerful and fair.
However, other psychological research may suggest that there is something more fundamental going on here. Interestingly, the likely reason this is true could be due to how the human brain functions and how it evaluates human interactions.
The author’s claim that we base high-level promotions on perceptions of power is probably a bit off target. (Power, after all, isn’t really a competency.) Experience suggests that when we look to hire someone into senior management roles we look for people who have superior intelligence; who are highly competent; and who have established themselves as experts. And i
t is in this evaluation that the brain screws us up.
Neuroscientist suggest that if you want to be perceived as having superior intellect, as highly competent, and as an expert, you’d better go to the dark side: you’d better go negative.
According to neuroscience, in our brains, positive emotions act as signals that the environment is basically benign, while negative emotions signal that some problem or threat is at hand. The theory argues that negative emotional experiences and words trigger a distinct, elaborate and detailed style of cognitive interpretation, whereas positive experiences and words trigger more general and script-based cognitive processing. In other words, our brains work much harder when we are processing the negative than when we process the positive.
It turns out that when the brain is working harder, it evaluates the interaction as more intelligent - it takes more brain-power to process, therefore it is more intellectually stimulating, therefore more intelligent.
The next time you’re in a meeting, and the boss starts a sentence with “I think...” pay attention to how people in the room agree with the boss. (Don’t worry about the people who disagree with the boss, if the boss says “I think” then these people are probably on their way out the door.) For the people who agree with the boss, you’ll see two kinds of responses.
The first will go something like this. Suppose the boss says something like “Well, I think our customers are perfectly content with our current three color options.” The response will be agreeable: “You are absolutely right boss, our customer are delighted with the current color schemes, we should just keep those in place for the foreseeable future.”
The second person will say something like this, “The people in this company
who keep pushing for more color options, well I just don’t understand them. If they’d put the slightest effort into really trying to understand what our customers value, and why they buy from us, they wouldn’t be wasting our precious time and resources on this nonsense. I am very happy, boss, that you see this so clearly. I couldn’t agree more, our current color offerings are spot-on and we should be focussing on more important issues.”
Of these two people, whom do you think is the climber? It’s the second one, of course. So, if there are any Machiavellian Princes out there, here is the cunning duplicity for you: Be a Level 5 Leader to the people who report to you and who you depend upon to be as engaged and productive as possible. To your boss and his or her peers, appear to be a bit of an jerk; not too much, but provide an ample enough negative positioning to appear to be more intelligent, more competent and more of an expert. Then, when they make you CEO, bury the jerk and be a great leader.
(Oh, and I should mention that there are two distinct ways to structure negatives. Psychology suggests that one way is far more effective than the other. Want to know more?...)
Tuesday, August 2, 2011
Wednesday, June 29, 2011
"In a day and a half, Dan and Bill understood our business, helped us think through a wide range of strategic options, and then took a small idea and turned it into a big idea. I would encourage anyone who wants to build a healthier, more profitable business to talk with them.”
- Mike Cipriano, Partner, Millennia Group
Thursday, June 2, 2011
Sunday, May 29, 2011
Wednesday, May 25, 2011
In the June 2011 issue of The Harvard Business Review psychologist Daniel Kahneman and colleagues present an article on attempting to overcome bias in business decision-making. Bottom line: decision makers can’t really overcome their own bias. Decision makers are swimming against a very strong current. My company, Tailwind Discovery Group is all about leveraging the existing energy, we figure out how to swim with the current. In talks I give on Behavioral Sales, I take exactly the opposite approach from Kahneman, I show you how to use bias to your advantage which turns out to be both, much easier and much more successful.
Kahneman, et al, rightly point out how insidious bias is in the workplace. When it comes time to make a decision, every one of us is overwhelmed by biases we don’t even see in ourselves. In some respects the power of the bias is given a boost by the hierarchical nature of internal relationships in the company. The decider is always the superior in rank.
In the article the authors point out that: the evidence we select in making a decision; how we weigh that evidence; and our bias toward ambiguity influence our ability to make good decisions:
“Confirmation bias, for instance leads people to ignore evidence that contradicts their preconceived notions. Anchoring (bias) causes them to weigh one piece of information too heavily in making decisions; loss aversion makes them too cautious. In our experience, however, awareness of the effects of biases has done little to improve the quality of business decisions.”...
“...this process is fraught at every stage with the potential for distortions in judgment that result from cognitive biases. Executives can’t do much about their own biases, as we shall see.”
Daniel Kahneman and colleagues bow to this fact. You can’t fight your own biases. But you can attempt to see bias at work in others, and use that intelligence to help fine tune your own decision a little bit. But you can only hope for a little bit of improvement because your own bias influences your ability to detect the same bias in others. Trying to overcome your own biases is like rowing a dingy up a waterfall.
In my Behavioral Sales talk, I show you, not how to overcome biases, but rather how to leverage them in your favor. With the Counterfactual-Hypothetical questions you will influence Anchoring bias in the buyer’s brain. Then with the Peak/End questions (as Kahneman himself showed in his work leading up to the Nobel Prize) you will influence the buyer’s brain cognitive bias. Done well, these two approaches will greatly boost your chances to win the sale.
Sunday, May 15, 2011
Saturday, May 14, 2011
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As you can see, it turns out that I am the problem. But I did not follow their instructions in the end. In the image above there is a blue hyperlink at the bottom of the input page and it turned out that (apparently they did not realize this in their computer) but I already had an account with Moneybookers and I simply went there and completed the transaction. Oh, and they did not require a phone number!!!
Sunday, April 17, 2011
Sunday, April 10, 2011
Nearly three years ago I blogged on Boeing’s strategic mistake of outsourcing the design and build of the 787. I wrote: “While Boeing still retains vast amounts of intellectual capital through its central role in the 787 developments, it is foregoing a tremendous amount of intellectual property in the form of know-how.”
Know-how is about experience. It is something that blueprints and instructions cannot impart. In the case of aircraft manufacturing is the the know-how of engineers and the technicians who put the pieces together. But know-how plays the same important role in any industry.
In his book The Wealth and Poverty of Nations, David S. Landes tells of the French needing an additional supply of their 75-mm field guns during WWI. They ask for US help and sent the blueprints over to the US. However, even though they followed the blueprints precisely the US team could not build satisfactory canons. It wasn't until a team of French workmen came over and showed the Americans how to make and assemble the pieces, that the American could build guns of comparable power and stability. - Know-how!
The 787 uses new materials and new designs. But these raise problems that were not anticipated by the engineers. Discovering how to solve those problems and how to get around these many little obstacles is what makes up know-how. Since it is 3rd parties who are doing this work, Boeing isn't even aware of most of these problems and solutions. Boeing has given away that know-how. And, more importantly, the know-how is now available to any competitor who wants to contract with the 3rd party.
Actually Boeing should have known this. Before all this outsourcing began John Hart-Smith, a senior technical fellow at Boeing gave a talk internally in which he pointed out the pitfalls of the outsourcing strategy
"Subcontracting of higher-level design work means partners may end up with the specialized knowledge they need to supersede the prime manufacturer. One must be able to contribute in some way to products one sells to avoid becoming merely a retailer of other people's products."
His main recommendation was:
"Retain sufficient in-house production manufacturing that it is possible for future engineers to acquire the skills needed to develop new products, without which all businesses will fail."
Of course, as an engineer he was thinking engineering, but the problem is more widespread. It is also the knowledge of the technicians in airframe, avionics, flight control, and powerplant who figure out ways to put things together that miss out on know-how.
Outsourcing is something that must be thought through thoroughly. When you outsource a portion of what creates your competitive advantage, then you risk losing control of the valuable intellectual property known as “know-how.”
Tuesday, March 22, 2011
Saturday, February 26, 2011
A McKinsey study early this year suggested that just 33 percent of executives say their companies’ strategies rest on novel data and insights not available to competitors.
“One likely explanation: the widespread availability of information and adoption of sophisticated strategy frameworks creates an impression that “everyone knows what we know and is probably analyzing the data in the same ways we are.” Yet if strategists question their ability to see something that no one else does, they are less likely reach for the powerful insight that is most likely to differentiate them from competitors.”
This was a shocking report for me. My company Tailwind Discover Group is focussed on creating competitive advantage for small and mid-sized businesses. Competitive advantage is always based on the insight that differentiates our clients from their competitors. That is what we help companies discover, that wonderful insight which drives their differentiator. We go after the differentiator that matters most to their customers.
But the biggest shock from the McKinsey study was that:
“just 53 percent of executives characterize their companies’ strategies as emphasizing the creation of relative advantage over competitors; the rest say their strategies are better described as matching industry best practices and delivering operational imperatives—in other words, just playing along.”
In other words, more than half of all companies probably remove themselves from being our clients simply because they don’t understand what makes a business sustain. These companies are going out of business, they just don’t know it yet.
Monday, February 21, 2011
I am in the process of preparing for a discussion on the Durbin amendment to the Dodd Frank Act, and the proposed Fed regulation it requires. I am not sure the government understands what problem they are trying to solve. The law falls under the category of consumer protection. But what it actually does is move a little money from the pockets of the banks to the pockets of the retailers. This is exactly what was done in Australia, also purported to be a benefit to consumers, and, of course, it had no impact on them at all. The Fed draft of the regulation has a 135 page meandering preamble full of distinctions that add nothing to the regulation. For example they make the distinction between four party transactions (which are actually five party) and three party transactions, (which are more likely just two party). But the distinction is meaningless in the context of the discussion. Someone must be paid on word-count.
Stupidity in government is nothing new. Back in 1492 Ferdinand and Isabella of Spain did somethings stupid, umm, now what was it? Oh yes, they ordered the expulsion or conversion of the Jews of Spain. In addition to the pain this cause for Spaniards of Jewish heritage, this also had an unfortunate impact on distant Sicily.
Sicily, owed allegiance to Spain and felt it had to go along. It did procrastinate a little. But in the end the Sicilians too, expelled their Jewish population. Almost immediately trade shrank to nothing.
Later, at the end of the seventeenth century some effort was made to get them to come back. The economy needed the trade. It took decades to convince anyone to return, but the returning Jews found unwelcoming arms. They weren’t allowed to stay long. It turned out the queen hadn’t borne a male heir, and the clerics convinced the royal couple that it wouldn’t happen so long as the Jews were around. So out they went again.
Superstition, intolerance, dogmatism, and ignorance are traits easily acquired and difficult to exorcise. Even today, Sicily is feeling the effects of this history.
The Spanish intolerance was a part of its eventual downfall. It was once the undisputed richest country in the world and declined to irrelevance. It spent rather than invested, acquired rather than manufactured, suppressed thought rather than welcomed it, and disparaged hard enterprise. People, both the industrious and the thoughtful, went elsewhere and took scientific investigation and technological innovation with them.
Thursday, February 17, 2011
Last night MIT Enterprise Forum in Chicago hosted “Debate Night: Human vs. Artificial Intelligence.”
Unfortunately, Artificial Intelligence failed to show up and instead, was represented by a very intelligent bit of carbon and water named Kristian Hammond, a Professor of Electrical Engineering and Computer Science at Northwestern University who fancies himself as “a machine, or else I don’t know what to think.” Representing Human Intelligence was the delightfully non-machine-like Valerie Pajak, a manager of Business Intelligence and Analytics at APP.
The television show Jeopardy was kind enough to schedule their Watson competition to wrap around the MITEF event, and it was a topic of conversation for the group. The breakthrough for Watson, was that rather than rely on a set of programming steps, the driver of Watson is ‘search’.
Whether it is search, or programming steps around an expert system, or even a set of genetic algorithms, what passes for artificial intelligence to date has been limited to retrieving relevant existing knowledge. This is an important part of human intelligence and, as such, has been improving for hundreds of years. The index at the back of a text book is a form of this sort of intelligence. And while it is an important part of human intelligence, it is only important because of what it enables. Humans dominate the earth not because we can retrieve knowledge, but because we can create new knowledge. And since no new knowledge is ‘whole cloth’ it always depends upon some level of prior knowledge. Existing knowledge is the foundation of new knowledge.
But to create new knowledge, the useful existing knowledge must be in the brain of the human who creates the new knowledge. We create new knowledge in three ways:
- Discovery - We stumble across something that provides a solution to a problem we have.
- Experimentation - We are pretty sure we can find the right solution if we just try a whole bunch of alternatives.
- Synthesis - We have a problem stored in memory, and we’re probably not actively thinking about it when something magical happens, and, voila! a solution pops out of (or is it ‘into’) the brain.
What will truly make Artificial Intelligence beat human intelligence is when the computer can mimic whatever it is that happens in our brains when we’re taking a shower, or out for a long walk, or we’re in bed at 3am dreaming, and that problem solving insight explodes and we create new knowledge. When a computer does that, maybe someone should pull the plug so we can figure out how bad it could get.
Sunday, January 30, 2011
In a letter commenting on a Harvard Business Review article on customer service, the president of a consulting company specializing in costumer service commented that only emotionally satisfied customers increased their spending because “The reason is quite simple. Customers expect satisfactory customer service, so providing it does not translate into increased loyalty and value.”
But that’s wrong. We don’t ‘expect satisfactory customer service’. We hope for it, we wish for it, but what we expect -- is to be disappointed.
My wife ordered 4 filters from Sam’s Club online. When the box arrived, the exterior box was undamaged, but inside one of the filter boxes was ripped open and the filter damaged, and another filter box was filthy dirty. In other words, the filters were in this condition before they were packed.
I called Sam’s Club customer service on December 30th and spoke to a representative who told me she would have the two bad filters replaced.
Then, a couple of weeks later the Sam’s Club representative called about the filters. She said she spoke to the vendor and I needed to talk to the vendor. I said, “Vendor? what are you talking about, we ordered these from Sam’s Club.” After a brief discussion I suggested that she connect the two of us to the vendor and we resolve the issue together. She asked if she could put me on hold while she made the connection. I sat there on hold as long as I could which was an unusually long time but then had to run an errand and after 20 minutes I disconnected. I received no call back.
That evening I wrote a letter to Brian Cornell, the CEO of Sam’s Club letting him know what happened and suggesting that I should not have to talk to a vendor if I order from Sam’s. Otherwise, I should just order from the vendor, what value does Sam’s add in that case, it just adds a layer of complication that I don’t need. I asked that he please have someone resolve this little problem.
That was three weeks ago. I’ve heard nothing.
A Costco just opened up down the street...perhaps...
Friday, January 28, 2011
Yunus understood that people come up to, or down to, the level set for them by their environment. He wrote, “One cannot but wonder how an environment can make people despair and sit idle and then, by changing the conditions, one can transform the same people into matchless performers.” He saw this remarkable aspect of the human condition, just as Toyota had seen it. People respond to the environment into which they are thrust. To let them be their best, leaders need to establish the right environment to allow people the opportunity to prove their worth to themselves.