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

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

Photo by Jorge Franganillo

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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

The unlimiting rules of process

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I just finished reading Blink: The Power of Thinking Without Thinking by Malcolm Gladwell. I know it has already become a cliché to like one of Gladwell’s books, especially for someone like me that has Gladwell’s name as one of the bigger tags for this blog. However, I found the book so thought-provoking and compelling that I really do not care if it is a cliché. I am going to devote a  number of posts contemplating some of the issues discussed in the book.

Lately, as those of you who follow this blog know, I wrote about rules in the world of management and even made a  video presentation about it. One of the things I advocate for in my presentation is that if we do use rules, we need to use rules that are unlimiting instead of limiting. Design, by definition is limiting, however, we all know and feel when the design frees us up and helps us achieve things instead of limit us. I wrote in the past about the idea of lack of friction, an idea I borrowed from Bob Sutton’s blog where he wrote:

It is one of those phrases that applies to all sorts of things, great customer experiences where good things happen and your feel no friction, organizational practices that are seamless and painless, and even government services that seem designed to reduce the burden on you.

One of the stories Gladwell tells made think about that. He tells the story of Improv Theater. The whole idea of Improv Theater is that there are no scripts and no rules. People go out on stage and do whatever the audience suggests and whatever the other actors lead them to. Without any rules, wonderful things are created. It seems random and chaotic and utterly irrelevant to business and management but when Gladwell dwells deeper into the theater and the method he finds that there are rules and it is not chaotic.

In fact, the people of the theater spend a lot of time not only training but also giving feedback to each other and dissecting each others’ performances. Because if we do want to rely on human judgment to make common sense decisions and employ practical wisdom, we need them to be able to train and to give them feedback and ample opportunity to reflect on their performance.

But what was even more interesting is the rules themselves. Because it is a great example of what I call a rule about process and not about content. Gladwell explains that one of the most important rules in the Improv Theater business is that of acceptance. The actors must agree to every suggestion, crazy as it may sound, the other actors make. This is the heart of what makes Improv Theater so entreating and compelling (and you have to read the book for examples, I don’t want to ruin it for you). But this is just it. The rule does not try to regulate the content the actors are dealing with or where they take the ideas, it just regulates the process. You have to agree to everything and flow with it. How? That is your judgment to make. This is how Gladwell describes it:

Do you have to be particularly quick-witted or clever or light on your feet to play that scene? Not really. It’s a perfectly straightforward conversation. The humor arises entirely out of how steadfastly the participants adhere to the rule that no suggestion can be denied. If you can create the right framework, all of a sudden, engaging in the kind of fluid, effortless, spur-of-the-moment dialogue that makes good Improv Theater becomes a lot easier…. He created successful spontaneity.

And I ask you – how much of the work you or your employees do is Improv Theater? Is it customer service? Is it sales? Is it teaching or working with the client of standing up in court and talking? There is no script in life. What is people’s reaction to the fact that there is no script? They try to write a script. But when you write a script, you will have the same show every day or you will need to write one every day. That is very hard as the world is changing and you have better things to do. Instead of writing a script (rules about content) why don’t we try to create a rule of accepting (rules about process) and an environment or framework that allows people, with the proper training and reflection ,to shine out there in the stage of life?

Elad

Shorts: Kip Tindell on hiring great people and the power of unshackling

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I was reading an interview with Kip Tindell, chief executive of the Container Store, which was conducted and condensed by Adam Bryant from the New York Times. There are a lot of golden nuggets in this interview but two struck me as particularly interesting. Here is the first quote:

One of the other foundation principles is that one great person could easily be as productive as three good people. One great is equal to three good. If you really believe that, a lot of things happen. We try to pay 50 to 100 percent above industry average. That’s good for the employee, and that’s good for the customer, but it’s good for the company, too, because you get three times the productivity at only two times the labor cost.

Indeed. I wrote in the past about the importance of choosing the right people. I love the fact that they also pay more as they know they will get more. Now, we can be cynical and say that this is what every company tries to do. But when the CEO talks about it with such passion, for me at least, it rings differently. Imagine knowing you are working in a company that states it hires great people. How will that make you feel about your work? How will this kind of environment support your motivation?

This is the second quote:

So we have what we call foundation principles. They are talked about and emphasized around here constantly. They’re all almost corny, a little bit Golden Rule-ish, but it causes two things. It causes everybody to act as a unit. Even though we’re sort of liberating everybody to choose the means to the ends, we all agree on the ends, and the foundation principles are what cause us to agree on the ends. As a result, we have people unshackled to choose any means to those ends, but it’s not mayhem because our foundation principles kind of tie us together.

I created a 47 minute presentation to explain the power norms have over rules and the meaning of that on the practice of rules in the management world. Tindell put it into one paragraph!

Elad

No more rules – the video presentation version

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What do Seth Godin, Daniel Pink, Dan Ariely, Malcolm Gladwell, Lawrence Lessig, Barry Schwartz, Jonathan Zittrain and Philip K. Howard have in common?

Well, they have all given amazing talks in TED conferences and I recommended watching all of these talks. However, that is not the commonality I had in mind. What is common to all of them is that their ideas are all mentioned in a new presentation I created and called “No More Rules”. This presentation gathers many of the ideas I have been writing about in this blog for the last few months and puts them all together with new, exciting and even surprising concepts and examples.

I set out to create a ten minute presentation and ended up with a much longer one. And this is after limiting myself and leaving many examples and concepts out of it for the sake of time and clarity. I hope you would invest your time with me and allow me to take you through a journey of re-thinking about the way we use rules in the workplace and in the management of people.

This is the first time I am recording a narration of a presentation online and turning it into a movie. This may be obvious even to the untrained eye (and ear) who chooses to watch it. However, I had a lot of fun creating this over the last few weeks and hope you will enjoy watching it just as much as I did creating it and thinking about it.

If you do, the best way to reciprocate is to comment here, post about it and spread it in any way you can considering your relationships in the social media space and beyond. If you don’t, those methods are just as valid to teach me a lesson and vent your frustration. Anyway, I hope to engage you in a conversation.

Thank you for visiting my blog.

Elad