Are you warming or others or burning them?

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In The Social Animal: The Hidden Sources of Love, Character, and Achievement by David Brooks, the author writes:

State power is like fire—warming when contained, fatal when it grows too large. In his view, government should not run people’s lives. That only weakens the responsibility and virtue of the citizens. But government could influence the setting in which lives are lived. Government could, to some extent, nurture settings that serve as nurseries for fraternal relationships. It could influence the spirit of the citizenry.

Reread it with the words “government” replaced by “management” and “citizens” replaced by “employees”:

Managerial power is like fire—warming when contained, fatal when it grows too large. In his view, management should not run people’s lives. That only weakens the responsibility and virtue of the employees. But management could influence the setting in which lives are lived. Management could, to some extent, nurture settings that serve as nurseries for fraternal relationships. It could influence the spirit of the employees.

I couldn’t have put it better. No to micro-management. Yes to creating environments that support relationships, human connection and practical wisdom. No to rules that are only mechanisms of control. Yes to boundaries that enable safe exploration and supports people where complete freedom and autonomy fails.

Simple but not simplistic. Hard to put into practice. It is much easier to try to control everything. It usually doesn’t work in the long-run.

Elad

Inner natural guidance

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I have been reading Tal Ben-Shahar’s fascinating book The Pursuit of Perfect: How to Stop Chasing Perfection and Start Living a Richer, Happier Life and came across a reference to the Montessori Method of Education. As I was reading about it, I thought that it actually describes a big part of my approach to the practice of management. And as I wrote in the past, I believe that education and management are closely related (see for example here). I took a paragraph from Wikipedia describing the method and added the words manager and employee where teacher and child were originally written and this is what you get:

Applying this method involves the [teacher] manager in viewing the [child] employee as having an inner natural guidance for his or her own perfect self-directed development. The role of the [teacher] manager (sometimes called director, directress, or guide) is therefore to watch over the environment to remove any obstacles that would interfere with this natural development. The [teacher] manager‘s role of observation sometimes includes experimental interactions with [children] employees, commonly referred to as “lessons,” to resolve misbehavior or to show how to use the various [self-teaching] managerial materials that are provided in the environment for the [children] employee‘s free use.

Take away hurdles. No more rules but environments that support the development of practical wisdom. Experimentation and reflection.

I could not describe it better myself.

Elad

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Experts and novices

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Seth Godin has fascinating short post out today. He describes his own interpretation of The Dreyfus model of skill acquisition. His conclusions:

1. Don’t talk to all your employees, all your users or all your prospects the same way, because they’re not the same.

2. If you treat an expert like a novice, you’ll fail.

I love point number one because I extensively write about it myself (for a summary, see here). The notion of equality must be banished from places it is not needed at. As Godin hints – in the area of marketing – and of course, in the area of managing people. If treat everybody the same we get cogs in a machine. The answer should be found in the idea of Equifinality. There are a lot of ways to reach success.  If we treat everybody according to their uniqueness we create variety which is beneficial. In the past, management practices were built on mechanisms of control that were intended to deal with heterogeneity. Today, this heterogeneity is need ingredient in the creation of innovation. We don’t need to control it, we need to embrace it.

But point number two is not less powerful. As I mention in my no more rules presentation, the use of rules and lose of judgment and practical wisdom is a short-run gamble for productivity. In the long run, only self-thinking, experts how develop practical wisdom through trial and error could produce tangible innovative, human connecting results. When you treat somebody like a novice, you are sacrificing his or her future ability because you prevent him from developing the qualities you need the most.

Elad

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When should a manager force employees to do things they don’t want to do?

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Dan Ariely wrote an interesting post about the Chilean pension system that mandates savings by all citizens. Not surprisingly, Ariely calls the post: “Want People to Save? Force Them”. This connects with an earlier post by Ariely (which I also wrote about) that discussed an experiment which showed  that by limiting the list of questions people could use to engage in a conversation, deeper and more meaningful conversations were brought to life.

These two posts got me thinking. In this blog I write a lot about rules in management and about how managers should let go of the mechanisms of control. I generally believe that the basic concepts Dan Pink presents in his book, Drive, of Autonomy, Mastery and Purpose are three of the most important tools managers have in their disposal.

At the same time, I do believe that sometimes, managers should force some processes on their employees. Just like people are bad at saving and need to be made to save, because in the longer-term it is better for them, there are things employees would not do and need a manager to force them. Engaging in more meaningful conversations is a great example. And if we can do that by designing the rules of the meeting differently (for example), this is an important tool that managers should use.

This is a very difficult conclusion for me as it goes against many of my personal beliefs about liberty and the importance of choice (more on this unrelated subject – see here). But I do believe that great leaders and managers know how to walk the line between allowing autonomy and forcing people to engage in some important paternalistic processes. I don’t have a complete list of these instances, but I am planning to start thinking more and more about this subject.

Any ideas? In what issues do you think managers should force employees to do things for their own long-term benefits?

Elad

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Shorts: Amar Bhidé on the deference of human judgment in favor of computer models.

Today, I heard HBR.org Ideacast titled Bringing Judgment Back to Finance where Amar Bhidé, author of a recent HBR article The Judgment Deficit and of a book titled A Call for Judgment: Sensible Finance for a Dynamic Economy was interviewed about the ideas in his article and book.

It is a fascinating cast and I would let you listen to it. I wanted to point to what in my view was the main idea. Over-reliance on computer models, both in finance and in other areas of life, is dangerous. While computer models and arithmetic based rules are important, they should not replace human judgment.

I must admit that when I prepared my No More Rules! presentation and wrote the MIX hack under the same title, I haven’t even considered cases where the rules are no man-made, but computer made. This, of course, leads to a different set of complexities (Hey, this is what the computer says). I think however, that the message is the same. We need people who think, how develop skill, judgment and practical wisdom. Rules, guidelines and arithmetic models are tools that should help human make decision, not replace them.

Interesting stuff!

Elad

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To fail forward

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Jeff Stibel in an HBR.org blog post titled Avoid Decisions, Avoid Life, writes:

To fail forward, you must create many decisions, each incrementally improving your businesses. This is the opposite of a Six Sigma discipline and probably has no place on an assembly line (or a surgery bed). But it drives many companies forward, as they become enabled to make calculated decisions that lead to learning, growth, and ultimately success. Success by failure is not an oxymoron.

For me, Stibel’s explanation touches to the heart of the difference between the management approach of the old economy (efficiency, standardization, productivity and thus – rules!) and the new economy (effectiveness, value through human interaction, creativity, practical wisdom and thus – no more rules!).

As usual, I am not saying that Six Sigma (or all productivity driven approaches) is a bad idea or that is should never be implemented. I am just saying that the foundations on which Six Sigma (and similar methods) is built on are not fit for more and more of the challenges modern business are facing.

Failure (and more importantly, learning from failure) is the heart of innovation as it is at the heart of developing practical wisdom. If we don’t want people to become cogs, we need to create an atmosphere that promotes failing forward. Many business today depend on their people’s passion, creativity and initiative. By implementing, as Stibel says, the opposite discipline, there is slim chance of tapping into these resources.

Elad

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Brain science supports the notion of No More Rules!

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I haven’t touched the issue of No More Rules! for a while now (link straight to the presentation). But something I came across last week reminded me of it. It turns out that a couple of years ago, two scientists did an interesting experiment that links directly to my claim.

They studied Jazz musicians while they improvised their music. Jazz improvisation is unique in that it demands a lot of creativity to play as it is distinct in style and in the way it is played. They compared those people to people who played regular music, out of notes. What they studied was their brains.

It turns out, that when the musicians improvised, thus needing creativity, the areas associated with creativity in their brains lighted up. When they played what on the notes in front of them, the areas in their brain associated with following rules lighted up. Up to this point, there were no surprises. However, what was surprising was that when the musicians improvised, the areas in their brain that are associated with following rules, not only did not light up, they showed decreased activity. As if in order to improvise and be creative, you need to let go of the rules and inhibitions. Here is a short paragraph from a summary from the Johns Hopkins website:

The scientists found that a region of the brain known as the dorsolateral prefrontal cortex, a broad portion of the front of the brain that extends to the sides, showed a slowdown in activity during improvisation. This area has been linked to planned actions and self-censoring, such as carefully deciding what words you might say at a job interview. Shutting down this area could lead to lowered inhibitions, Limb suggests

Those of you who have been following my writings about rules and how they inhibit practical wisdom and creativity which are the building blocks of the current economy are already nodding in understanding of the implications of this research.

How do we expect our people to be creative and generate value when we keep surrounding them with rules and inhibitions? Now, it is not only logic and behavioral experiments supporting my claim, it is also brain science.

Elad

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More on safety, rules and unintended consequences

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One of the questions people often ask me after they watch my No More Rules presentation concerns the issues of rules around safety. The logic goes something like this: even if we agree with you that rules are bad, sometimes, in the sake of safety, we have to make so many rules, after all, it saves people lives.

This is a worthy point that I don’t explain well enough in the presentation itself and is worth an additional short explanation.

Even in the presentation itself I emphasize that I don’t think all rules are bad. Rules are a legitimate way to regulate behavior. The point I am trying to make is two folded. First,when we do choose rules, there is a problem with the way we make them – they focus on limiting instead on unlimiting. Second, our overuse of rules is a problem.

Rules that are unlimiting, that create value, that protect are great rules. Like the rule that demands that every person in the operating room state his name in the beginning of the operation so there will be better communication. Because this is a rule that actually saves lives. It is a great rule.

There is a danger in the accumulation of rules. Richard Hackman, in Leading Teams, talks about the effects of over regulating the cockpit environment:

All the well-intentioned additions to procedure manuals, together with all the automated devices that have been introduced into cockpits and all the management directives intended to promote efficiency or passenger service, may be having what policy analysts call perverse effects…. It is certainly true that too much latitude for flight crews can result in a poorly disciplined cockpit in which members are unable to predict who is going to take what action next. But it also is true that too much standardization, even in the interest of safety, sometimes can perversely result in crews monitoring systems and executing procedures less attentively and deliberately than would be ideal – especially when, as usually is the case, the flight is routine and everything’s seems to be proceeding normally.

When you use too much rules, people forgo judgment!

In Switch: How to Change Things When Change Is Hard the writers describe an example. They tell how a department manager in General Motors succeeded in making the Injury rate in this department drop 21 percent from previous levels (which was already one of the best in plants doing similar work). How?

Poppe threw out the old complicated policy and boiled down the new safety policy to two specific behaviors… that’s it.

Less rules, but rules that are tailored to the situation.

In the case of safety, many times the best way to create a safer environment is to use only design and not rules at all. It just take more time, effort and thinking. It is much easier to make a rule. But it is not necessarily the most effective way. In another part of Switch, the authors describe a machine that only operates if you press buttons with both your hands. That way you can’t endanger your hands even if you wanted to. No rules. Design!

Think about baby proofing an apartment – instead of telling the kid not to touch the obvious things, we create a safer environment. And when he does touch something (and he will, because we can’t think of anything), we need to make sure he learns a general lesson from that. If we only spend time telling him what he cannot do, how will he be able to develop judgment?

Rules are not bad by themselves. Rules are bad when used in the wrong places and in the wrong way. And they are especially bad when used in an excessive manner like we see in some of the dominant business practices in our society. It is true for safety as it is true for sales as it is true for any other field.

So again, let’s stop with the rules.

Elad

Business is a mystery, not a puzzle – information overload and judgment

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Umair Haque, a fascinating writer (which I quoted in my No More Rules! Presentation), wrote a captivating piece in HBR.org the other day. He discussed the famous Efficient Market Hypothesis (definition from Investopeida):

An investment theory that states it is impossible to “beat the market” because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to the EMH, stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments.

Haque, who constantly writes about the need for a new economy based on value creation instead of the old one that was consternated on creating money for itself, offers a new idea:

I’d like to advance a hypothesis. Call it the Efficient Community Hypothesis. It says: where efficient markets incorporate “all known information,” efficient communities incorporate “the best known information.” An efficient market is a tool for sorting the largest quantity of info. But an efficient community is a tool for sorting the highest quality info. On its own, the EMH is simply about informational efficiency: that prices incorporate “all known information.” Where it falls down is in terms of informational productivity: whether prices incorporate accurate, valid, and reliable information — high quality knowledge, instead of low-quality noise. Incorporating all known information doesn’t mean incorporating good information.

Haque deals with a very important point. Let’s assume for a minute that when the EMH was originally hypothesized it was correct (even though there is a debate about that). Well, there is no doubt today that the world has changed dramatically. Just think about the differences in quantities between the information that was available, let’s say, 30 years ago, and the quantities available today. There must be a law of diminishing returns at work here. At some point, the more information we put in, the less we gain from it. And sometimes when we abundance of information happens, just as Malcolm Gladwell tries to convince us in Blink: The Power of Thinking Without Thinking, decisions become worse, not better.

But it is even deeper than that. The EMH assumes that information is the only thing we need in order to interpret the market. If we only have all the information, we can come with the right answer – the price. It is kind of a puzzle. Give me all the information and I will give you the answer. But the stock market represents companies that work in the real world. And the real world is, well, uncertain. And yes, it is also more uncertain then it used to be 30 years ago. Even if you do give me all the information, I still need to use judgment in order to give you an answer. And it might be right, but it might not. In an article called “Open Secrets”, that is now part of his book, What the Dog Saw, Gladwell writes:

The national-security expert Gregory Treverton has famously made a distinction between puzzles and mysteries. Osama bin Laden’s whereabouts are a puzzle. We can’t find him because we don’t have enough information. The key to the puzzle will probably come from someone close to bin Laden, and until we can find that source bin Laden will remain at large.

The problem of what would happen in Iraq after the toppling of Saddam Hussein was, by contrast, a mystery. It wasn’t a question that had a simple, factual answer. Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much.

So what Haque rightly calls for is judgment and trust and expertise on a more common basis. Knowing that we have a lot of information, that a lot of it is irrelevant and that the future is unpredictable, we need two things. First, just like in the case of the doctors described in Blink trying to decide if a patient is a risk for a heart attack, simplify our decision making process. As Gladwell says, they are swimming in knowledge, but lacking in understanding. The simplification helps their judgment. Second, we need people with more practical wisdom, ability to infer judgment and to make decisions that accept the uncertainty.

And that second issue throws me back to my point about rules. In my presentation, No More Rules! I claim that the wide spread use of rules is killing people’s practical wisdom. It is killing their judgment. Just when we have more information than ever and when we need simple good judgment more than ever, we are creating cogs that follow automated rules and formulas that treat the world like a puzzle. Life and business, is mystery, isn’t it time we face up to it?

Elad

Unlearning from Frederick Winslow Taylor

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In my presentation “No More Rules!” – which earned me a few heartwarming reviews up till now (Still waiting for yours!) – I claim that the use of too many rules in management today is harmful in many ways and that we need to revamp our thinking about their use and efficiency because in aggregation they might create more harm than good.

One issues I talk briefly about in the presentation is the fact that the basic assumptions about the use of rules comes from the thinking of Frederick Winslow Taylor whose work and book The Principles of Scientific Management revolutionized American industry leading it to new levels of efficiency and productivity. In the last few days, while reading 12: The Elements of Great Managing by Rodd Wagner and James Harter, I found two very interesting references to the Taylor’s work that amplify the normative argument I try to make in the presentation.

The first is a direct quote from Taylor’s The Principles of Scientific Management:

The development of a science (of managing tasks) involves the establishment of many rules, laws and formulae which replace the judgment of the individual workman and which can be effectively used only after having been systemically recorded, indexed, etc.”.

The second quote is from Taylor biographer Robert Kanigel who wrote in the book The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency (Sloan Technology):

Scientific management was degrading. In reducing work to instructions and rules, it took away your knowledge and skill. In standing over you with a stopwatch, peering at you, measuring you, rating you, it treated you like a side of beef. You weren’t supposed to think. Whatever workmanly pride you might once have possessed must be sacrificed on the altar of efficiency, your role only to execute the will of other men paid to think for you. You were a drone, fit only for taking orders. Scientific management, then, worked people with scant regard not only for the limitations of their bodies but for the capacity of their minds.

I don’t know about you, but the fact that this kind of approach is at the base of many of the achievements of the 20th century makes me feel a little bit ashamed. Notwithstanding the fact that today’s competitive advantage does not stem anymore from productivity and efficiency (which can be replicated easily) but from innovative thinking, Art and practical wisdom, this kind of approach seems inhuman and unsustainable. And still, in the number of times I encountered Taylor in my academic education, his approach was treated with respect and as a basis for modern thinking.

History is filled with individuals that, sometimes for noble reasons, led different disciplines in the wrong way. I do not think Taylor was a bad man. He probably believed he was working for the general good. However, the long-term damage his thinking produced is felt today and probably will be felt in the future. His assumptions are so intertwined into our thinking that it is hard to identify their exact influence. It is time to let go of our Tayloristic heritage and start celebrating the capacity of human minds. History will judge us on how well we learned from Taylor’s mistakes and how fierce we were in our approach to change it.

The change begins with you. What are you doing for it?

Elad