Here’s a link to a great post on LinkedIn Pulse by a former colleague and all around great guy, Craig Long.
Craig provides some great insight into what it takes for operational programs to bridge the gap from operational impact to financial impact.
Good reading for all!
Geoff
Operation Red Wings was a not-so-obscure military operation in the mountains of Afghanistan. It started on June 27th, 2005 with the insertion of a SEAL reconnaissance team onto the side of a mountain near the suspected location of an Afghan insurgent leader. After circumstances that were made famous in a book and by Hollywood, 3 of the 4 SEALs were killed, along with 8 SEALs and 8 Special Operations aviation team members who were sent to rescue the original SEAL team when their helicopter was shot down. Marcus Luttrell became the famous Lone Survivor of the original 4 SEALs in this episode, as documented in his book and in the subsequent movie.
And yet…
In late June and early July 2005, I was completing a particularly challenging consulting engagement and then taking two weeks off to enjoy some paternity leave surrounding the birth of our second child. I bet I complained about the long hours and the hardships I had to endure with a newborn in the house while I padded around in sock feet and drank the coffee of my choice while enjoying my air-conditioned house in Dallas, TX and my paid leave from a challenging but all-in-all cushy job as a consultant at a global firm.
Anybody see the irony, yet?
Somewhere, there is a fight going on. You might be in the middle of it, and you might not. It’s being carried out on your behalf, and you might not even know it.
In a recent conversation with a finance lead of a very strong business I work with, we came to an agreement on something. The money isn’t made by the spreadsheet jockeys or the executives: It’s made by the gang who’s making product on the shop floor and the salespeople who are making sure the customer is happy and buying.
In other words, there’s a fight going on. Somebody is out there sacrificing their own time and talent on behalf of the company, just like you, except if they don’t do their work today, there is no tomorrow. Perhaps we ought to acknowledge that.
What’s the implication here? It’s nothing new really, but it is important. For all of us who live our lives off of the derivatives and commissions of real value, it’s important to stop and ask whether we are enabling value creation or hindering it.
I can hear it now: “Oh, silly consultant… how could I as an executive be hindering value creation? Look how much they pay me!”
Well maybe, just maybe, you are being paid for what you positioned for, not what you’re worth; it happens. Usually it happens to other people, not to you (that is, I’ve never met someone who would admit they are overpaid–only a few people who admit their jobs were easy).
Yet there are innumerable vain corporate initiatives that create ungodly productivity taxes for organizations without really creating any value. I’m looking at you, activity-based accountants and demanders of the 90-page board report that nobody reads; they are everywhere. Often, they are directed by people who enjoy plenty of time in their sock feet drinking the coffee of their choice while those who are in the fight struggle a world away. Except that a world away in instances like this could be just on the other side of the wall on the shop floor, or around the corner in the sales office.
I recognize that it’s a little bit strained to compare people who are struggling to get product off the dock or to make the next sale to Navy SEALs fighting in Afghanistan, but the imperative is the same. Whether we’re talking about citizenship in a free society or our own work as executives, managers, and analysts, somebody out there is fighting on your behalf, and you’ll be a better pro if you recognize it.
So, do you reward those who make the money or those who posture for it?
I’ve written before on the benefits for strategists of finding strength and beauty, and you can look here for that.
But this post is a little different. This one is about finding strength from adversity. This is about the pony in the pile. If you don’t know the apocryphal story, here it is:
Once there were five-year-old twin boys,
one a pessimist and the other an optimist.
Wondering how two boys who seemed so alike could
be so different, their parents took them to a psychiatrist.The psychiatrist took the pessimist to a room piled high
with new toys, expecting the boy to be thrilled, but instead he burst into tears.Puzzled, the psychiatrist asked, “Don’t you want to play with these toys?”
“Yes,” the little boy bawled,
“but if I did I’d only break them.”Next the psychiatrist took the optimist to a room piled high with horse manure.
The boy yelped with delight, clambered to the top of the pile,
and joyfully dug out scoop after scoop,
tossing the manure into the air with glee.
“What on earth are you doing?” the psychiatrist asked.
“Well,” said the boy, beaming,“There’s got to be a pony in here somewhere!”
So that’s the pony in the pile in the traditional sense, but what about in your own professional life? How do you look for the pony in the piles of manure you’ve walked into? Maybe the better question is, “Do you even look for the pony?” I can offer a few anecdotes that address my own stubborn growth on this topic. I’ve reflected on these often.
About 12 years ago, I was an ambitious, strapping young lad who had just joined what many consider to be the most prestigious professional services firm in the world. My second assignment as a member of this bastion of intellect and influence was to recommend elements of a massive downsizing for a struggling company. It was not only a project that you had to swallow hard to take in the first place, it was also right in the middle of the holiday season. I have never hoped to have to say “Merry Christmas, you’re fired” to anyone as they are being laid off, but this was it. The pile of manure was tall, dark, and handsome, and to put it bluntly, I didn’t see a pony in sight.
It was, to most people involved, a distasteful project.
Then, about 9 years ago, I had the opportunity to lead a team in a gut-wrenching engagement to support the buy side of a highly complex, time-sensitive M&A transaction that involved multiple large corporations, multiple cultures, and a massive government component to boot. For all involved, it was an absolute mess of a project, and I got to sit right at the nexus. The pile of manure was standing tall once again.
These couple of instances of the “pile” and their separate trajectories through my life may be informative to you.
The first instance was dire, but it was clearly an opportunity to learn something I hadn’t learned before. Nobody was breaking ethical rules; the company was just sick and needed help. I was everything short of malcontent, and at some point, I even got there. But the work got done, I learned a ton, and to this day I believe that any young, self-righteously smart person ought to have to go through the effort of trying to turn around a dying company, even if only as an adviser. In short, here, the pony was staring me right in the face, and I only needed to look.
The second instance was exceptionally challenging. Through the hours, pressure, and politics, several people involved with the project struggled to recoup their professional lives after it was over. In that instance, I could sense that the learning experience would be a good one. I could also sense–as the banker across the table from me fell asleep during the meeting–that the pain was shared across all parties; in other words, I didn’t have to dig too far to find the pony. That was one of the most heartbreaking and energy-sucking projects I’ve had the opportunity to be a part of–one that I never want to relive–but the experience I gained from that roughly 10-week period of no sleep, constant travel, and absolute burnout strongly buttressed my professional outlook–although it left behind scar tissue that to this day has not gone away.
So why the serenade on heaps of manure and ponies? Really it’s because maybe somebody else can benefit from the little bit of perspective I’ve been able to accumulate. Namely:
I’ve never been accused of being an eternal optimist, but I have learned that when you’re presented with a pile of manure, dig for the pony.
How about you? You dig?
“The board looks at us like we are the Navy Seals,” the executive told me. “We agree on a number and go get it—year in and year out—and we need someone on the team to soften that view.”
The exec was looking for a “softener” in the form of a person who could put a strategic wrapper around what amounted to a reputation for being single-minded financial performers. The Navy Seals comparison might have even been a little strong since the half-dozen or so Navy Seals I know would say that frogmen rarely just “follow orders.” That’s what the Marines do, and they do it well, but it’s not as sexy to compare yourself to leathernecks.
But I digress. The gist is that the “person” the executive was looking for would be sorely misplaced. Let me tell you why.
When it comes to C-level executives, there really are two different leadership mindsets: wartime and peacetime. This is covered very well by author, venture capitalist, and former CEO Ben Horowitz on his blog, here. I’m going to take a slightly different angle than Ben and say that a great executive can dial up both mindsets, but he or she has to be explicit about it. Specifically, in wartime, there is no tomorrow, and in peacetime, it’s all about tomorrow.
I write a lot about respect and healthy strategic outlooks for high-performing organizations, but I don’t spend a lot of time on financial and value-based performance. Why? Because it’s a prerequisite; If you don’t create value or enable it as an executive, you’re probably not going to cut it. As I wrote nearly a year ago: Performance is the prerequisite. The latest management article on how mindfulness unlocks your team’s performance is all nice, but financial performance is where the median CEO is going to be evaluated. So, balancing performance needs and organizational “health” is, fundamentally, what value-based strategy is all about. In the purest sense, and in the short term, performance and health can be highly conflicting, and that is why executives—really leaders of any stripe—need to manage the balance, which is where the wartime/peacetime mindset conflict comes into play.
A wartime mindset means that decisions get made, by me, every day. It means I don’t have time for debate and discussion, that emotion and, yes, intensity are a part of the puzzle. In wartime, there is no comfort in comfort—it’s win or else. You fight through injury. You forego pleasantries. Wartime mindsets are most appropriate in business during times of economic crisis, customer crisis, or product transition/launch/retirement, during deals, and, most importantly, during times of competitive attack. As Horowitz puts it, during times of existential threat.
In wartime, a leader makes an objective or else. Take that hill! Hold that beach! Cut 50 FTE! Close that deal! They are all the same. Mind if I curse? Was I rude? Oh, you didn’t like that I threw that document on the table? It bothers you to have to work past 7? Comes with the territory. It takes a strong stomach. Suck it up. It’s wartime.
A peacetime mindset is one of building. It means that studies can be done. It means that I might defer a decision for a year (or more in some companies) because…bluntly…I don’t have to make it. It’s where investment and improvement come into play. It’s the mindset that focuses on people’s careers, the future of the company, and the weaknesses that need to be addressed (but not until the next employee conference). As Horowitz puts it, it’s the time to “focus on expanding the market and reinforcing the company’s strengths.”
It is a mistake to think of wartime as better than peacetime. They are different, and executives must understand the difference. Some will be much better leaders in peacetime than in wartime, although that’s beside the point.
What’s important is that great companies are built with a peacetime mindset and sustained with a wartime mindset.
Executives, especially CEOs, must be explicit about the state of war a company is in; that distinction drives all others. Why must the CEO be explicit? Because it’s not always obvious to others in the organization. To use the U.S. military’s old DEFense CONdition ratings: When the CEO is at DEFCON 1 (signaling nuclear war) and the organization is at DEFCON 5 (signaling peacetime), things get discombobulated.
A CEO might be at war based on things the CEO and only the CEO knows, while the rest of the organization might be at peace because, well, things seem to be going well. This is a recipe for disaster as the CEO continually churns through people, disregards ideas, and thinks short term without real rhyme or reason. If you operate as if it’s wartime and everyone thinks it’s peacetime, you will demoralize your people. CEOs who have overweening focus on the short term (layoffs, cost cutting, and general pressure) while extolling their company’s strong financial performance year in and year out run into this problem. They create cognitive dissonance in the organization.
A CEO might be at peace in an organization that knows it’s at war, and then the opposite thing happens: the CEO is fiddling with transformation or branding while the customer base is burning. If you operate as a peacetime CEO and everyone thinks it’s wartime, you will lose credibility quickly. There’s a reason we still talk about Nero: a CEO who fails to acknowledge that there are existential threats will lose his or her organization.
That is why leaders, CEOs and others, need to be clear on how they view their worlds. They need to be clear that DEFCON 1 behavior (slashing product lines and replacing people) is only warranted by DEFCON 1 threats, so they need to get people on the same page. Everyone also needs to be clear when DEFCON 5 behavior (delaying decision on a project viewed as critical by others or by a faction within the company) is warranted as well.
This is the most important distinction a CEO will make in the day-to-day operation of a company: Wartime or peacetime.
Yeah, but we want a team of warriors, you say. So you continually keep the pressure on through artificial means—even lying to people about the true state of things to make them seem more dire—in order to ensure that people keep an edge or a warrior mindset.
I get it. It’s sexy, like saying you’re a Navy Seal. But it’s also dangerous.
From analyses on the topic of combat fatigue, it’s a known fact that normal people cannot sustain a wartime mindset for an extended period of time. Those who are in active, continuous combat for more than a month generally start to lose effectiveness. Those who are in active continuous combat for more than a couple of months typically become psychiatric casualties. This is true in actual combat, and I’d propose that it’s true in figurative combat.
Dave Grossman, a researcher on the science of combat and killing, outlines from an earlier study that after the beaches of Normandy in World War II, 98% of soldiers who survived constant combat for 60 days had become psychiatric casualties. The other 2%? They were characterized as “aggressive psychopathic personalities.”
Let that sink in for a second.
The negatives of manufacturing a wartime mindset for your organization are legion. Not only do you (1) place focus on survival vs. building as outlined above, you (2) create an environment in which normal people struggle to thrive for any extended period of time and (3) facilitate the rise of psychopathic personalities who actually can handle the sustained pressure.
It makes no difference whether the artificial pressure is placed by the CEO herself or by some proxy, another C-Level executive or consultant tasked with “cracking the whip” so that the CEO can be the good cop.
So, be explicit about the DEFCON you face, and only go to war when it’s fully warranted. Again, this is the most important distinction you will make as CEO.
While executives (like the one in my opening story) may recognize that their boards see them as mercenaries who propagate a state of war because they act like it, they can’t solve that by adding peaceniks to the team; the peaceniks won’t be heard if the entire organization is charged for combat or thinks the C-level executives only expect combat mentalities. Culture, as I’ve written before here, will crush even the best change agents. The executives have to acknowledge—themselves—a credible state of war or peace within the organization and actually live it out.
And if they can’t change? Well…
One of the great realities of any mental game is the potential for the mind to short circuit it.
In golf, the emergence of mental short circuits that lead otherwise great golfers to make awful mistakes is known as the yips.
Some believe that at this very moment, Tiger Woods is suffering from the yips. Many aging professional athletes resort to intensive therapy to avoid the yips.
The yips, to put it bluntly, stink.
If you want to see how bad the yips can be, you need look no further than former major league catcher Mackey Sasser.
I’ll link to a fascinating video by ESPN as a part of its 30 for 30 shorts series that illustrates in gory detail the way Sasser’s mind was rewired through a specific traumatic impact.
Here’s a link to the video.
Sasser, a catcher for the New York Mets organization, lost the ability to smoothly toss the ball back to the pitcher.
His was a colossal case of the yips.
Have you ever witnessed a manager who is off their game? Perhaps they used to be an engaging and warm leader. But, after years of constant delivery and pressure, they have deteriorated into a shell of their former self. Perhaps, like Mackey Sasser, they have undergone a severe psychological stress that helped surface severe issues that were hiding under their former leadership profile.
Is it possible to get a case of the yips in business?
I think so. And here’s why: Like any other mental pursuit, working with and leading people takes energy, focus, and drive. No, I won’t say that the average manager needs the mental acuity of the average professional golfer. Still, if the mind of a pro golfer–used to repeating actions with extreme precision for year after year–can be completely tripped by the yips; then so can a manager’s.
The manager can go from being a great listener to being a constant critic. He might go from being a a thoughtful problem solver to being a problem finder and complainer.
He might go from developing people to driving them away.
Sure, it’s possible that our formerly effective manager has gone off the deep end. Or, it’s possible he has a case of the management yips.
I bring this up for one reason, and I’ll write more on this at another time. When a leader loses his way, he has to make a change. In golf, many a case of the yips is dealt with by creating distance from prior habits. For instance, right handed golfers often actually start to putt left handed. In a sort of ironic twist, they jump so far out of their old system that they relieve the hitches and glitches that come with the yips.
So, if you are a manager who has perhaps gotten off your game even though your processes, habits, and disciplines haven’t changed, consider jumping out of your system. Change things up. Look for fresh air, do meetings standing up. Stop taking calls in your office.
You might have a case of the management yips. And, like so many other pressure and stress induced bad behaviors, the only way out is through.
What’s the difference between a performance culture that focuses on the positive and one that focuses on the negative?
It’s okay to focus on the negative—the misses and the missteps—in defining performance, but success doesn’t live in the negative.
Here’s a funny observation: When we are down on people and processes and investments and strategies, we focus on what’s not performing. We find the flaws.
You’ve probably seen it in play. You read the performance review of a person who’s out of favor, and it’s rife with articulation of the negatives. “Fails to do this, avoids this, lacks this, shirks that.” We become so quick to criticize based on flaws that we don’t realize something critical: Doing so is a losing strategy. Why? Because 90 percent of everything is crap. This phrase, commonly known as Sturgeon’s Law, implores us to evaluate things based on their strengths, not their shortcomings.
Even the best of performers have a flaw, or ten. If you focus on the negative aspects of people, strategies, and performance, you will inevitably find them, no matter where you search. So the most honest appraisal of anything is to look at the peak of its performance. It’s to look at the 10 percent of a person’s work that reflects their best effort—what reflects their best performance—and then to compare and act.
I’ve witnessed talent processes that have clearly focused on strengths, and I’ve witnessed others that focused on flaws, but one thing stands out: Talent systems that focus on flaws reject more good talent than those that focus on strengths.
Why? Because when their talent ecosystem focuses on flaws, business leaders who take on the hardest assignments run the highest risk of being fired, regardless of their intrinsic talent. When the same leader is in a talent ecosystem that focuses on strengths, their tough assignments become opportunities to show strengths that are not evident in other circumstances. At worst, a very strong manager in a tough situation gets reassigned, not resigned to the dustbin.
The same can be said for strategy. A strategy that racks up a few losses early can be thrown out when flaws are the focus, but long-term success depends on defining strengths, not avoiding weaknesses.
So, 90 percent of everything is crap. Knowing that, focus on the strengths in the people and concepts around you.
Any strong, financially based view of productivity must address the cost side of the equation. So, we are faced with the need to assess, restructure, and consequently reduce costs.
Cost reduction and restructuring exercises are underway at companies around the world at any given point in time. Just ask the likes of IBM, which recently found itself mired in a bit of bad PR around the scope and magnitude of cost cuts coming in 2015.
Any leader who has been through one of these exercises can tell you how harrowing it can be.
It’s not harrowing because of the topic itself…After all, any Neanderthal can lop costs. Just tell him how much to go get, and he will get it.
It’s harrowing because cost reduction exercises are tough to get right.
Cost reduction exercises start with either a burning desire to improve a strong company, or a burning platform under a struggling one. But, what separates a true “strategic cost reduction” mindset from our friendly Neanderthal whacking away is a considered approach to performance and risk (notice I didn’t say cost) that centers on effective allocation of burden and costs.
Unfortunately, whacking can become the norm.
Let me tell you why.
Usually, a strategic cost reduction exercise begins with a provocative question. It’s the sort of question that gets any organizational or budget leader into a sincere case of the willies quickly.
“How would you do what you need to do with 40% fewer resources?”
It’s a scary question, but one that is a great stretch exercise for any organization at any time.
Applying a strategic cost mindset, such a question is intended to invoke the necessity of invention that more incremental approaches can never get to.
Just look at the structure of the question:
“How would you do what you need to do…” – This piece of the question implies creativity on the output side. Are you doing too much? Are there things better left to others? Could you justify the first and last outputs that you and your organization are creating? Are you covering your key risks?
“…with 40% fewer resources?” – This piece of the question gets at the input side…In this case, justify the resources in light of the outputs.
Done well, strategic cost exercises that root themselves in the question above result in leaner, more effective organizations with better clarity and stronger culture.
However…
…Executives who use this sort of thought process to reduce costs have a pernicious tendency to fall out of a strategic cost mindset and into a whacking mindset.
They ask their people “How can you reduce costs by 40%?”
What’s the nuance? It’s in the implied calculus around inputs, outputs, risks, and justification. In the first (and best) case, the question posed is a creativity inducer. In the second case, it’s simply an order couched as a question.
That is the realm of legendary whackers like “Chainsaw” Al Dunlap.
Many, many executives and consultants have taken this sort of 40% question–intended as a thought starter and creativity driver–and turned it into a fait accompli.
All situations are different. But, the right thing to do is ensure a structured approach to evaluation, action, and strategic alignment.
In one client I served, a transportation provider facing significant financial stresses following 9/11, the strategic cost exercise was about the solvency of the company. Its leadership team faced an existential threat and had to act fast. But, rather than just issuing an order to “cut costs” by a given percentage (the whacker’s favorite approach), the company’s leadership took a highly structured, thoughtful, but blisteringly fast-paced approach.
In another client situation, this time in packaging, longer term structural changes in the industry led to a need for rethinking the company’s organizational and operating footprint. The two things went together. With a measured approach, the company found more than 20% improvement in cost structure through organization and footprint alone.
And, get this, neither of these companies killed morale.
Wait! What? Neither, you say? Come on! These exercises are murderous to morale…Right?
Not really.
And I’ll tell you why: The ones who get this sort of exercise right start with strategy and mission, and end with a better organization at a lower cost aligned with the strategy and mission.
The ones who get it wrong start with a number, usually a percent or hard dollar number, and end with a number.
The right thing to do is to measure, then cut. It sounds simple; but it isn’t. Any time a significant cost reduction effort is undertaken, it is about redesigning the operating model of the company.
Whacking isn’t the way to do such a thing.
One thing to be very careful about: Some of these exercises can be strategic and driven very carefully from the top; but because of breaks in communication or agency problems they can at the same time be viewed by the organization as arbitrary whacking.
Senior leadership sees itself as implementing a strategic cost framework.
Senior leadership’s agents–perhaps aggressive middle managers or consultants under pressure to deliver budgetary numbers–resort to the whacking model.
People on the ground see job cuts coming like artillery barrages. Sure, there’s some rhyme to it (perhaps the stanza repeats every budget cycle), but the reason isn’t there.
All action obtains meaning, regardless of whether meaning is communicated.
A structured, thoughtful, strategically aligned, and well-communicated approach to productivity improvement is the foundation of a modern performance ethic.
I’d be interested in your thoughts and experiences in this area.
This is going to appear to be a soft article…after all, I’m writing on finding beauty.
But, I can assure you that the concept here applies to the hardest core, barest knuckled aspects of business as much as it applies to stopping and smelling the figurative roses.
The gist is this: Through a combination of hurry and training, we get locked into the “things we do” every day. We become so focused (or, I might say, unfocused) on problems–the ugliness and weakness–that we forget to appreciate the things of beauty and strength right in our midst.
You and I can be better leaders if we stop and acknowledge the strengths and beauty around us.
What I’m writing on today is a positive appreciation for winning practices and attitudes that are right under our noses. We actually don’t often have the discipline to look for the things of beauty that are right in front of us; and all too often that’s because we’ve been rewarded by others for finding ugly.
Finding ugly.
You know, like finding what other people are doing wrong…Finding out what’s broken…Searching out weaknesses and soft spots–All those things that good problem solvers finders do.
Oops. You saw that correctly.
Problem finders often focus on the ugly.
Problem solvers tend to look for the sublime.
You know why? Because our strengths tend to be what we use to overcome our weaknesses.
Strengths are possibilities. Weaknesses are limitations.
Building a winning strategy in business and life by focusing only on what is broken or weak is, near as I can tell, impossible. Sure, strategic plans can start with break fixes, but if they end there, they will miss the upside.
Trust me.
Beauty is in your strengths.
Finding beauty means having a willingness to step back and appreciate the real capabilities that you, the people around you, and your organization actually have right now.
It might be the way that your organization processes material…
or serves customers…
or designs product…
or, and this is a good one, respects one another.
Evaluating capabilities–strengths and not merely weaknesses–is a critical step for any strategist.
Add to that the fact that positive framing of capabilities and situations is likewise a real strategic leadership strength; and you will find that a focus on beautiful strengths is a healthy thing for your relationships as a leader, family member, and friend.
Too often, and for too many good reasons, we get distracted from finding the beauty of strong capabilities around us.
The good reasons? Well, more often than not, we have a problem to solve.
While you are focused on achieving that bonus or making it to the next stopping point in your career, or–maddeningly–just following orders, you might be missing the beautiful things around you.
The talent you have.
The talent people around you have vs. what is available in the market.
The glory of a job you did well today.
You know… the little things.
I’ll give a great example of how distraction can rule our lives and remove us from recognizing beauty around us. Some of you may have seen this before; but if not, I encourage you to watch it.
In this video, famed virtuoso violinist Joshua Bell decides to play in a D.C. subway station, just to see if anyone notices… Have a look. It’s well worth a couple minutes of your time.
I’m betting that more than a handful of the people who walked through that subway station were not only aficionados of classical violin, but were probably so much so that they could tell you how excited they would be to go to the symphony hall to see such a performer as Joshua Bell.
And, they each had the opportunity not only to see Bell, but to have an almost personal performance by him. That’s something that many people would pay a lot of money for.
But they aren’t looking for the thing of beauty that is right in front of them.
It’s a remarkable and somewhat sad commentary on the pace of our lives that a virtuoso gets nearly zero reactions from everyone powering their way through the train station toward their next goal.
The same distractions apply to you while you lead your life…
Chances are you have strengths right in front of you that aren’t being used.
Chances are you’ve let “popular” notions of what talent or capability looks like (in the worst case–prejudiced or preconceived notions) cloud your vision of what strong capabilities are right in front of you.
Chances are, you’ve gotten yourself into a hurry.
I’ll leave you with a little bit of humor.
If you have never seen it, I encourage you to watch the “Double Rainbow” video here.
Now, There’s a guy who found a thing of beauty in his life.
Okay, so maybe you don’t have to get that excited. Still…
…Go find your double rainbow today.
Find a thing of beauty today. Find a strength to build on. It might get you somewhere that a focus on ugly won’t.
That’s a core secret of an effective strategist.
I’d love to have you share your reactions and comments…
Here’s a quick hit in the spirit of Saturday and “Coffee and a Do Not.”
How often do you “stick” where you are not because it’s the best place, but because it’s “your” place?
You keep a crappy job, or a good job within a crappy culture.
You keep a car that constantly breaks down.
You own stocks that have been perennial losers.
Perhaps you are business owner that keeps holding onto an underperforming management team, or a set of underperforming businesses.
In really nasty situations, you stay close to bullies, abusers, cheats, and other ugly people because they are the ones you’ve grown up with.
It happens to all of us.
In social psychology is a cognitive bias known as The Endowment Effect. In short and simple words, this effect means that, as humans, we have a tendency to value things we currently own more than we would value them if they were somebody else’s.
A bird in the hand is worth more than a bird in the bush. But worse, even when faced with a better bird right in front of us we keep the bird in the hand.
That car you have that constantly breaks down? You’d never buy it from someone else, because better ones are on the market right now.
That crappy job you’ve stayed in for years? You’d never take it again if you knew what you know now because, again, better ones are on the market right now.
That loyalty you feel to that clearly unethical leader? You’d criticize anyone else who did that because you know better.
But, these are yours, and so you ascribe higher value to them–in many cases defending them irrationally–than you otherwise would.
The result of the endowment effect isn’t all bad. It allows us to have some comfort in difficult times. How many times have you heard people justify their current awful situation as a “blessing” when pretty much anyone else would say it was a curse? That is, at least partly, the endowment effect in action. Loyalty has some roots in this effect, and loyalty can be good…to a degree.
But, on the downside, the endowment effect has a highly insidious effect on your career, finances, relationships, etc.
It causes you to let your current situation define more of your future situation than it should.
That’s right, you “stick” in bad situations, investments, relationships, and jobs longer than a “smart” person would, because your brain is wired to make it so.
Why else do people look back on years working for a particular leader and say “what was I thinking?”
The truth is, they weren’t thinking. They valued where they were, irrationally so.
I’m not one who believes that absolute objectivity is either possible or really a good thing. We have emotional and irrational ties to everything; and in general they help us to function.
But…
Because this particular bias can cause you to waste valuable years of your career (or, even valuable time repairing a crappy car), you and I need to watch out for its effects.
The best way to guard against the endowment effect is to think. Yeah, that’s right, just think. Stop for a minute and ask yourself if you are valuing the abuse you take, or the ethical stretches you have been ordered to execute, more than a sane person on the outside would.
Stop for a minute and ask yourself whether you’d be better off making a trade. That works whether we are talking investments, jobs, subordinates, superiors, or that priceless artwork you own.
You guard against the endowment effect by considering a trade.
One of the very interesting people I had the opportunity to work with and then know for years was the famous “genius” of American football, Bill Walsh.
Bill was famously effective as a general manager in the NFL–that is, he was great at making personnel decisions. In fact, he made a lot of very high profile athletes very angry by trading them to other teams while they were still “good” players. Bill wanted to trade players a year before their production fell off. This facet of Bill Walsh’s approach was chronicled nicely in the recent NFL Network documentary Bill Walsh a Football Life.
A famous aspect of Bill’s objectivity was that he asked his staff what they thought Joe Montana’s trade value was…during Joe Montana’s prime. Joe Montana, for those who do no know, was and is one of the greatest quarterbacks in the history of the NFL. Bill was willing to test the market for his quarterback–the lynchpin of his offensive gameplan–while his quarterback was still building a hall of fame resume.
Bill didn’t suffer from the endowment effect, at least in his player personnel decisions.
I guess I should call it a privilege to be a guy who was recruited by, hired by, and cut by Bill. You knew where you stood.
As brutal as that seems, and I’ll write on the brutality of NFL talent management at some point in the future, sometimes we need to adopt a little bit of that mindset to protect ourselves.
Where does the endowment effect show itself in your life and experience? Please share…
4 Myths about Apple design bring up at least one very interesting top management dilemma about talent, structure, and strategy.
Fast Company Design and author Mark Wilson recently shared an article that focused on one former Apple employee’s views on myths about what makes Apple go when it comes to design.
I’ll put the link HERE.
The four myths explored are:
#1 Apple has the best designers
#2 Apple’s design team is infinite
#3 Apple crafts every detail with intention
#4 Steve Jobs’s Passion frightened everyone
The whole is worthwhile…I wanted to focus on only one part of the commentary.
The first one.
Here’s the operative passage from that particular myth:
“I think the biggest misconception is this belief that the reason Apple products turn out to be designed better, and have a better user experience, or are sexier, or whatever . . . is that they have the best design team in the world, or the best process in the world…[but] It’s actually the engineering culture, and the way the organization is structured to appreciate and support design. Everybody there is thinking about UX [User Experience] and design, not just the designers. And that’s what makes everything about the product so much better . . . much more than any individual designer or design team.”
and this:
“It has often been said that good design needs to start at the top—that the CEO needs to care about design as much as the designers themselves. People often observe that Steve Jobs brought this structure to Apple. But the reason that structure works isn’t because of a top-down mandate. It’s an all around mandate. Everyone cares.”
I added that emphasis at the end…
Here’s my shorthand explanation of this explication: Everybody thinks that Apple has the best design talent but what Apple actually has is a distinctive design environment.
This gets to talent, people, organization structure, mission, and purpose.
Sports teams from the New England Patriots to the Milan Indians have shown that system, buy-in, and dedication can overcome talent gaps.
But, too often overcoming talent gaps is pithy-fied in such nonsense as “Hard work beats talent when talent doesn’t work hard.”
That may be true in one off contests or one-on-one basketball, but hard work is only a fraction of the story when it comes to true, structural catalysis of excellence.
Corporate leaders need to think about far more than talent. Talent is a resource that has a quickly diminishing return when it is placed in the wrong environment. And, counter to that, the right environment can provide exceptional leverage to middling talent.
This one person’s view of Apple (I emphasize, one person’s view) reinforces this notion.
As an organization leader at the frontline or as a senior executive in the C-suite, are you thinking about the structural limitations your work environment places on your talent? Are you trying to overcome them by simply trading out people or “upgrading” your talent?
A race car with a fantastic engine can only go so far as its suspension, aerodynamics, tires, and pit crew allow.
Aligning mission, structure, and talent is what it appears Apple has done well.
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