Do we really need flamboyant visionaries to run our companies?

Photo by Hamed Saber

The Economist decided to wage an all front attack against humility in leadership and management. One of Its recent columns discusses what kinds of leaders make the best CEOs. The argument?

In general, the corporate world needs its flamboyant visionaries and raging egomaniacs rather more than its humble leaders and corporate civil servants. Think of the people who have shaped the modern business landscape, and “faceless” and “humble” are not the first words that come to mind.

It looks like this claim comes just out of the best management books of the beginning of the last century. As Bill Taylor from Harvard Business Review Blog points out, most of the claims in the column are not only wrong, but plainly misleading:

The crux of The Economist’s argument relies on what’s known as the Great Man Theory of History. After trumpeting the virtues of business geniuses such as Bill Gates, Steve Jobs, Lou Gerstner, and Jack Welch, it then generalizes from this handful of larger-than-life moguls: “The best ambassadors for business are the outsize figures who have changed the world and who feel no need to apologise for themselves or their calling.” It’s an intriguing essay and a good read. It’s also a false choice — and a bad reading of history. For one thing, when it comes to larger-than-life CEOs, I can name as many scoundrels and failures as I can geniuses and world-changers.

My view? Three things are wrong with The Economist’s view.

First, the assumption that there is only one way. Maybe, for some companies and in certain situations, the flamboyant visionaries are the best fit as CEO’s. But not in every situation. Some companies need the quiet leadership behind the scene, the steady hand that improves and creates processes that lead to growth and innovation. Taylor’s choice of the historic Great Man Theory seems appropriate. It too claimed that only certain people are fit for leadership roles. We know today that this attitude was plain wrong.

Second, the assumption that the flamboyant visionaries must be in the top of the pyramid. You can be in a leadership role and create change in your company, without being the CEO, especially if the CEO in that company needs to deal more with management issues, where the “raging egomaniacs” are just not cut out to do the job. Management and leadership are different things that require different talents. The column refers to Bill Gates. We need to remember what Bill Gates is doing today: As Marcus Buckingham and Donald O. Clifton: write in their book Now, Discover Your Strength:

“…[Y]ou will excel only by maximizing your strengths, never by fixing your weaknesses. This is not the same as saying ‘ignore your weakness’. The people we described did not ignore their weakness. Instead, they did something much more effective. They found ways to manage around their weakness, thereby freeing them up to hone their strengths to a sharper point. Each of them did this a little differently. Pam liberated herself by hiring an outside consultant to write the strategic plan. Bill Gates did something similar. He selected a partner, Steve Ballmer, to run the company, allowing him to return to software development and rediscover his strengths’ path…

Third, when you read the column you feel almost like there have never been hugely successful leaders that changed the world while acting humbly. Has humble leaders never brought change and created value to society? Michael Dell comes to mind as someone who succeeded doing both. The research and consulting advice that The Economist is complaining about did not come out of thin air and it is based both on empirical evidence and experience. But what does that have to do with anything. The Economist wants a good story. A flamboyant leader, even if he will be less effective.

I am amazed how even a respected journal like The Economist falls prey to the conventional wisdoms and continues to harbor management principles that are almost a hundred years old, although we have so much research and experience suggesting otherwise.

Elad

Is money equals motivation a conventional wisdom we have to break?

The last few days I have been reading the book Predictably Irrational, by Dan Ariely. It describes many experiments done over the years that illustrate how people behave in irrational ways when we – and when I say we I mean traditional economics – expect them to act like rational people. While I don’t agree with some of the conclusions Ariely makes in his book, I find the questions fascinating. Thus, I am going to dedicate my next few posts to relevant lessons for managing people the book.

Chapter 4 of the book is called: “the cost of social norms – why we are happy to do things, but not when we are paid to do them”. In it, Ariely describes a number of experiments that show how when people are paid to do things, they do them with less enthusiasm and effectiveness. It reminded me of the above fascinating TED talk by Dan Pink that talks about similar experiments that led to similar (but a little different) conclusions. Both Ariely and Pink conclude that we need to rethink the effectiveness of money as a motivator for work.

So, is money being the best motivator another conventional wisdom that needs breaking.  Well, I will let my past as lawyer get the better of me and say – yes and no.

Yes, because we need to realize that the world is changing. That some things that we thought were true are not true anymore. There is a growing tendency of people to seek out work that not only gives them money, but also gives them joy, a sense of impact and work life balance. People look to use their strengths more and attempt to reach a state of flow. And we need to understand that money creates problems, because it is easy to compare (link in Hebrew). I would direct you to Ariely’s first chapter in the book about relativity.

But the answer is also no. in some situations, monetary rewards work. And when we think about these experiments we need to remember a few things. First, the experiments described in Ariley’s book and in Pink’s lecture are experiments, done in a lab, on students and not in a real work environment. Real life is different and we need to be careful in applying the lessons learned in the lab without thinking about the differences between students in the lab and real life work environment. Second, these experiments are social science experiments. They don’t have one result. They check for averages. And averages are sometimes dangerous. The experiments show trends. They show tendencies. But they don’t show how all people behave in all situations. And we know that monetary rewards do work in certain circumstances. As Paul Hebert from I2I explains, although there are some accurate things in Dan Pinks’s lecture, we must be careful when taking it as saying all monetary rewards are bad. Below is his presentation on how to look at incentive reward strategies within the context of how business operates:

From all the theories of motivation I encountered to date, the one I like the most is Vroom’s expectancy theory.  The reason I like it so much is that it talks about personalization. About understanding each employee specific motivation and about customizing the right rewards, invectives, and recognition, in order to motivate him. And I think this is the most important lesson from the science and experiments. We should be careful from applying one approach. We should doubt and check if what we are doing actually works. And the most important thing of all, we should not assume what motivates people, we should find out.

Elad

The unconventional wisdoms: helping people succussed and long-term teams

Photo by John Spooner

One of my favourite subjects here in this blog has been conventional wisdoms. Those things that mangers usually believe in, but that have been proven wrong and ineffective. Over the life of this blog I have mentioned some of them, mostly relating to the management of people and teams. That is why it made me so happy to read Bob Sutton’s post: “What are the Dumbest Practices Used By U.S. Companies?“. It’s nice to have smarter and more experienced people reinforce your ideas from time to time.

I recommend reading the post and the comments which offer many mistaken conventional wisdoms. With so many of them out there, I sometimes wonder how the business world works at all. But I wanted to focus my attention to two of these practices that are mentioned in the original post, and add a few thoughts of my own. This is the first one:

2. Dysfunctional Internal Competition.  This is a big theme in The Knowing-Doing Gap and Morten’s Hansen’s masterpiece Collaboration.  If you dig into the problems in the banks and a lot of other companies, they actually punish people who help others succeed, both via the reward systems and who gets the most prestige.  This seems to persist even though the evidence against such assumptions and systems are so clear.

I must admit that I have never seen this problem described like this. But it makes a lot of sense. As I advocate in this blog, following Markus Buckingham preaching, is that the most important thing a manger could do is help other people succussed. And if organizations are built in a way that hinders the ability of managers to do this, that actually incentivizes them not to do what there are supposed to do, there is no wonder why so many people feel out of place in their workplace and why so many people do not reach their full potential and quote “a bad manager” as their number one reason for leaving their jobs. It is about time to not only make sure that we as managers engage in helping other people excel, but also to ensure that there are systems in the places we work for are set to support that function.

This is the second practice Sutton complains about:

3. Breaking-up Teams Constantly.  American companies often seem to love moving people around constantly, breaking-up teams, giving people new experiences, and so on.  Certainly, there is a time for fresh blood, but if you read J. Richard Hackman’s Leading Teams you will see that the weight of the evidence is that breaking up teams less often rather than more often is linked to all sorts of effectiveness indicators.  Also, see this post about the Miracle on the Hudson where I discuss this literature.

Again, I never thought of this problem in the way described here but it makes perfect sense when you think about it from a strengths perspective. An effective team, among other things, is a team where every member is attuned with his strengths; where synergies are created from the diverse opinions and talents. And it takes time to create this synergy, because people are so different. But it is their differences that creates strength and allows them to perform excellently. I think everyone who has worked in a team felt it. The difference between the beginning of the life of the team and the end of it, when each team member has learned his teammates’ traits and knows how to work in tune with them. So, maybe we need to think about long-term teams and about ways in which we sustain them.

Two challenges laid down for managers of organizations… will you take them upon yourself?

Elad

The process of effectiveness

photo by grahambones

One the bloggers I follow regularly is the cartoonist Hugh MacLeod in his blog gapingvoid.  This week he wrote a post titled: “artists are entrepreneurs and marketers, too“. The subject of the connection between art and business is a subject he writes a lot about and I think this a worthy cause, as the two are not as different as we usually think. But what this post made me think about is something bigger, due to a comment on one of his other posts that he quoted in this post, which goes like this:

The thing about working as an artist is that you never realize how much of the work is on top of making the actual art. I was remembering how when I started out, I would visit the studios of more established artists and couldn’t begin to grasp how they ran the show. It’s taken years to slowly put each piece in place. Every day there’s new problems to solve, but if you can solve them in a way that sticks— so that from now on that issue is covered, eventually you come up with an efficient system for supporting the most important work you do, which is the art.

An artist is like every professional. He is very good at something. He has his strengths. But the problem is that he has to do so much work around that doesn’t use those strengths. It may be administrative. It may be marketing. Or it could be anything else. And every second he is not doing what he is good at is a waste of time, effort and a moment where we all miss on his art.

I am sure you felt it before. I know I have. Working as a law intern is all about wasting your time and doing things that are under your potential. Work that can be easily done by someone who did not study law for 4 years. And when somebody complains about it, the answer is usually something like: “this the way it has always been, it’s part of the territory”.

Well, it is not. Because great managers know that this is a conventional wisdom that must be ignored. Managers need to help each employee excel at his job. This means that they should do everything they can to make sure the employees use their strengths as much as they can. So a great manager will create a process that allows his professionals to concentrate as much of their time on what they do best. It just like the second phase according to theory of constraints:

“Decide how to exploit the constraint (make sure the constraint’s time is not wasted doing things that it should not do)”.

Employees being the constraints in the good sense of the word, of course. But the idea is still the same.

I believe it is all about the process. The way your business or team operates, should support the people in it and their strengths. You need to decide which employees are your priorities, your valuable assets, your constraints, and build the business around making sure they have the ability to employ their strength if not all the time, most of the time. The process should not only be effective by itself, it should support and make sure that the right people are effective.

Elad

Obliquity and management

Photo by Olibac

As part of a “Business Ethics” course I am taking at my AGSM MBA I came across this fascinating article by John Kay titled:  ”The role of business in society”. It deals with the long lasting debate surrounding the role of business – to make profits or to be a good corporate citizen. It is an interesting look at the debate and I think it makes some valid points, even though I think in its essence it does not contribute something very new to the discussion. However, one concept in the article made me reach a revelation, the principle of obliquity:

I call this paradox the principle of obliquity. It says that some objectives are best pursued indirectly… We are all familiar with one application of the principle of obliquity. While Americans, characteristically, talk of the pursuit of happiness, happiness is rarely best achieved when it is pursued. Research in social psychology confirms our intuition and experience. Happy people are not, in the main, those who selfishly promote their own interests: in fact happy people are most often characterized by a kind of uncalculating and outgoing generosity

In a later article, titled: “The oblique approach”, Kay writes the following things:

With maturity – personal or corporate – comes the principle of obliquity. Goals are often best achieved indirectly. Many people have noted the paradox that the most profitable companies are not necessarily the most profit oriented

It is so inspiring to read something that actually makes you feel: “wow”. And that is the way I felt when I was reading about this concept. So many times during my life I was told that the first thing we should do is concentrate on the goals and try to align ourselves with them. Why, I taught it myself a number of times. And it is true. And useful. And effective.

But not always. Because sometimes the best way to reach a goal is to reach it indirectly. We all know that sometime we are so obsessed with something that we hurt our chances of actually gaining it. When we let go, it somehow comes naturally. And I know it sounds very Hollywood-Movie like. But it actually happens.  

Think about it. When do you learn the most? When you are sitting in class actually trying to learn or when you are doing something and the learning comes as a side effect? Most people say that the most they learned it from the indirect learning – from other people, from doing, from watching – and not in formal courses. Or from failing. Could you imagine that? Those of us who learned how to drive know that the best teacher of driving is the road. Once you start driving, it actually teaches you about how to drive.

And this concept is so true in so many business settings. And it explains why many of the conventional wisdoms are just wrong! Would the manager help his flowers more by solving their problems or by letting them reach the answers by themselves? If you want to improve the performance of your team do you focus your managerial attention on your strongest people or on your weakest people? The answer to both of these questions is the indirect answer. Don’t give answers and the strongest people. or just think about Judo Strategy, and its claim that sometimes we don’t need to attack by pushing, but by pulling. Or by substituting effort for ability.

I am not saying that the answer to each and every problem is the indirect approach. But when we realize that the direct approach is not working, why not try to attack the challenges we face indirectly. It could be a powerful tool. After all, as Abraham Maslow said: “When your only tool is a hammer every problem looks like a nail“.

Elad

Resisting the temptation to give answers

Photo by walknboston

There are lessons you learn and that you need to be constantly reminded of. A few months ago, I wrote this:

The conventional wisdom that a manager needs to say to its employees how to do their work is already intertwined into people’s expectations. Just the same way people think that there is one best way to write a speech, give a presentation, use notes or get the audience attention, while there isn’t, people expect their manager to tell them how to do their work.

Today, in class, as a part of a workshop dealing with adaptive leadership, we read an article by Ronald A. Heifetz and Donald L. Laurie, which had this sentence in it:

We all – superiors and subordinates alike – have to change our expectations for dispensing and receiving definitive answers.

As someone who used to spend a lot of time teaching, I know how big the temptation is. Someone asks a question. You know the answer. Actually, you know three times what is needed to give the answer. And you are tempted to immediately give that answer. The problem is, if you want a good process of teaching, you should (in many cases) divert the question back to asker or to the entire class and creates a process of self learning.

Management (or as many people call it, leadership, but I won’t go there in this post) is exactly the same. Your employee comes to you with a problem. He expects you to solve it for him, to tell him what to do. That is the conventional wisdom. But, that is exactly what you should not do in most cases. The famous creed: “don’t give a hungry man a fish, teach him how to fish” is right and not implemented enough. We need to resist the temptation and try to give solution and answers and move to letting people find their own ways. So they will be able to do the job when you are not there. Tell him what the desired outcome is and let him find the solution. Give him the support and help, but not the solution. Resist the temptation.

So, are you able to resist the temptation?

Elad

The process of doubting

photo by ktylerconk

“I doubt, therefore I am” René Descartes

Today, I was part of a practice debate. The subject of the debate was: “that executives’ bonuses should be slashed”. I was part of the negative team that is supposed to argue that the claim is wrong. The positive team, which is the first to argue, started by claiming that they do not think that bonuses, which they defined as stock options and monetary compensation, should be totally slashed, but they should be taken down to a reasonable level. Now, I can talk about the subject itself (which I guess I pretty hot in today’s economy), the arguments (who determines what is reasonable?) and about the experience (I recommended it) but I want to talk about something else. Why didn’t they claim that bonuses are ineffective?

I admit that I did not think about this straight away. Like the positive team and without any relation to what my team was supposed to argue, I also took it for granted, that such bonuses are effective in creating productivity and results. I thought about this question later when I was reading an article called “Evidence Based Management” by Jeffery Pfeffer and Robert I. Sutton. In it, the writers claim that managers often take decisions without considering relevant and available evidence. One of the examples they give is the following:

There is, in fact, little evidence that equity incentives of any kind, including stock options, enhance organizational performance. A recent review of more than 220 studies complied by Indiana University’s Dan R. Dalton and colleagues concluded that equity ownership had not consistent effects on financial performance

In this blog I write from time to time about the fact that there are conventional wisdoms of management which are just wrong. As times goes by, I am surprised to see how many are there and how widespread they are. I don’t know if the incentive idea is wrong or right. It might be that the inconsistency is part of the fact that there isn’t one way to create motivation. But the fact remains the same. I think most of the managers you will ask will say it is a good idea. It is a conventional wisdom.

Just today, Seth Godin, in his post, writes about another example of a conventional wisdom: bigger and not better. A short quote:

You’re at a conference, talking to someone who matters to you. Over their shoulder, you see a new, bigger, better networking possibility. So you scamper away. It’s about getting bigger. Compared to what? You’re never going to be the biggest, so it seems like being better is a reasonable alternative.

So, why does this happen? I don’t know. But from my limited experience and according to Pfeffer and Sutton’s article, it happens all the time. So, as managers, what can we do? My answer? Doubt. We need to cast doubt all the time.

The problem is it is harder than it sounds. Besides all the regular hurdles, like pride, the sense that we know better, our preference to our own experience over others experience and more, new brain research actually shows that our brain is such a lazy machine, that it does everything it can not to think about new ideas and concepts. This means we have to make it. We have to create processes that will make us cast doubt. All the time.

So, as managers, we should create processes that facilitate the casting of doubt on a regular basis. I am sure you know better than I do how to do it at your place of work. The question is when is the last time you cast doubt on what you take for granted?

Elad

“Follow Your Passion” – good or bad advice?

I just saw this intriguing talk by Mike Rowe in which he tries to make a case for the lost world of manual “dirty” skilled labour. I find his thoughts stimulating and inspiring, as someone who is his youth thought about trying to work for a time in manual labour. I also liked the idea that we need to respect every job because it is part of a greater web that makes our lives what they are. The main theme of the talk is Rowe’s realization that he got things wrong and the explanation of what they are.

One of those things is passion. He decides to “attack” the known creed: “follow your passion”. He actually says that it was probably the worst advice he ever got (!). his attack is done by giving examples of people who did not follow their passion but are doing great, like a pig farmer who collects food scraps from casinos in Las-Vegas because people’s leftovers are good food for pigs. He grows huge pigs in twice the normal speed and makes a lot of money while doing something that is good for the environment.  Right, he is smelly most of the time, but he is happy and rich. Rowe says, ask that pig farmer – “did you follow your passion?” and he will laugh at you. Rowe goes to give more examples but you get the idea (or you can watch the talk…).

And that got me thinking. Did I get it wrong? In my E-book, I devote a full chapter to passion and its importance in reaching success and happiness. I write a lot in this blogs about how people follow the conventional wisdom without thinking about it, and Rowe’s talk frightened me.  Was I following the conventional wisdom here?

After I thought about it I realised that I don’t agree with Rowe. I think “follow your passion” is a very good advice. But I think our disagreement lies in the interpretation we give to the phrase “follow your passion”. While – I think – Rowe interprets “Follow your passion” as “do something you love”, I interpret “Follow your passion” as do whatever you do with passion. In the E-book I describe how in my view, being passionate means three main things: Being interested in what you do, striving for change and improvement and sharing your knowledge.

Now, I don’t know that pig farmer from Las-Vegas, but I am pretty sure, that the moment he went into this industry, he followed some or all three of these rules. This doesn’t mean he loves the pig industry and sees higher calling in it. It just means that he does what he does with passion. And this leads to him being successful.

So, what does “follow your passion” means for you?

Elad

Are sales people only motivated by commissions?

Photo by emdot

Today in Our Organizational Behaviour class we had a case study about SAS. SAS is a software company with a very unique culture that has been successful and profitable for more than 30 years. I won’t bore you with the full description of the company and how its special practices differentiate it from many other companies and allows it to be included in the “100 companies people most want to work for” list for many years in a row.

I am more interested in my classmates work. As part of the presentation, the three teams that presented their findings today in class had to present recommendations on how to company should face it future challenges and what changes should be made to the company’s strategies and culture.

In SAS, there is a unique approach to sales commissions. General sales targets are defined, but there is no commission to sales people based on the number of sales they make. As the case study describes it:

“Account representatives are not paid on the basis of sales commissions. Goodnight [SAS owner and CEO - E.S.], in explaining this practice, noted that ’sales commissions do not encourage an orientation toward taking care of the customer and building long-term relationships.’ Also, he believes a commission culture is too high pressure. He stated that they have had sales people come over from Oracle because they were tired of the high stress, high pressure, Oracle culture”.

It is important to note that the absence of commissions does not seem to hurt sales. SAS constantly surpasses all its competitors in terms of sales and more than that, has a 98% of renewal of contracts.  As the quote above suggests, the lack of commissions also seems to fit with the general culture of the organization and seems to work.

This is the reason I was truly surprised to discover that all 3 teams recommended changing the pay system for the sales representatives and adding a commission based system. My simple question is WHY? It seems to work. More important than that, this is what makes SAS unique. You know how I feel about the importance of being remarkable.

You can argue about the question whether the commissions approach is the right approach generally (or maybe argue about using a joint approach), but it seems to work for SAS. So why change it?

You might say that people think that if they are motivated by money than other people are the same. But we know they are not. People are different.

Another explanation.  I read somewhere (and I can’t find the link) that people report that they are not motivated by money but by more “noble” cause, but always assume that other people are only motivated by money.

I was thinking about it a lot. I don’t know why. I think this is another example of a conventional wisdom that people have a very hard time to abandon. Conventional wisdom that only money rewards motivates people. Is it a true? Some argue it isn’t. The SAS example sure shows us that this conventional wisdom might be wrong in certain cases.

I don’t know which explanation is correct. I only know that the three teams that presented today in class all had a bias towards commission based approach. And in that, I think, there is some lesson for all of us. Think you can tell what it is?

Elad