Controlled Anarchy

Photo by Fail Blog

I have been delving into two sources of great management success stories in the last few days, trying to wrap my head around what exactly they have in common. Suddenly, I encountered the picture above and it suddenly made sense. Controlled Anarchy.

The first story was featured in a great podcast from the HBR Ideacast series. In this podcast they interviewed Jonah Keri, sports and stock market writer. Keri is the author of The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First. This is the book description from Amazon:

In The Extra 2%, financial journalist and sportswriter Jonah Keri chronicles the remarkable story of one team’s Cinderella journey from divisional doormat to World Series contender. When former Goldman Sachs colleagues Stuart Sternberg and Matthew Silverman assumed control of the Tampa Bay Devil Rays in 2005, it looked as if they were buying the baseball equivalent of a penny stock. But the incoming regime came armed with a master plan: to leverage their skill at trading, valuation, and management to build a model twenty-first-century franchise that could compete with their bigger, stronger, richer rivals—and prevail.

In the interview Keri talks about many things that helped this amazing turnaround to happen, but a few themes emerge – trust, attendance to disciplined process, focus on hiring and open-mindedness.

At the same time, I am reading A Chance to Make History: What Works and What Doesn’t in Providing an Excellent Education for All by Wendy Koop, founder and president of Teach for America. The stories of the schools that actually work, the schools that are able to take children from underprivileged neighborhoods and propel them all the way to college, show similar characteristics: trust, attendance to disciplined process, focus on hiring and open-mindedness.

In both these stories, between the lines, you read about a delicate balance:

1. A high dedication to numbers balanced with a focus on the people who drive them.

2. Focus on outcomes balanced with discipline to keep on the right process when the outcomes don’t come.

3. High accountability for results balanced with amazing trust in people to find their own best way to do what needs to be done to succeed and open-mindedness to their new approaches.

The last balance of the three, which is the most important in my eyes, is why I thought about the idea of Controlled Anarchy. These two success stories (and more I encountered in the past) seem to revolve around leaders and managers creating a very wide-set of boundaries and trusting their people to succeed in these boundaries. Instead of spending time and effort on micro-managing how people do their work, they focus their efforts on hiring the best available people, giving them the support and resources they need, and trying to learn from them while holding them accountable for the outcomes they produce. In other words, these leaders allow Anarchy in Controlled boundaries.

This Anarchy has another upside. As Steven Johnson illustrates in his book, Where Good Ideas Come From: The Natural History of Innovation, mistakes, failures and noise are an important factor in innovation:

The history of being spectacularly right has a shadow history lurking behind it: a much longer history of being spectacularly wrong, again and again. And not just wrong, but messy. A shockingly large number of transformative ideas in the annals of science can be attributed to contaminated laboratory environments…

Good ideas are more likely to emerge in environments that contain a certain amount of noise and error.

Is there Anarchy in your organization?


The probability of a desired outcome

Photo by striatic

Dan Ariely writes a fascinating blog post about outcomes in management:

If you practice kicking a soccer ball with your eyes closed, it takes only a few tries to become quite good at predicting where the ball will end up. But when “random noise” is added to the situation—a dog chases the ball, a stiff breeze blows through, a neighbor passes by and kicks the ball—the results become quite unpredictable.

If you had to evaluate the kicker’s performance, would you punish him for not predicting that Fluffy would run off with the ball? Would you switch kickers in an attempt to find someone better able to predict Fluffy’s involvement?

That would be absurd. And yet it’s exactly how we reward and punish managers. Managers attempt to make sense of the environment and predict what will result from their decisions.

It reminded me of something I wrote not a while back:

But judging results does not mean that we should ignore efforts or processes. In a football game, just like in real life, people have to make many decisions under pressure. Sometimes the outcomes of those decisions are positive and sometime they are not. But even if the outcome is negative it does not necessarily mean that decision was wrong. It just means it led to an unwanted outcome. And vice versa. Good decisions could lead to bad outcomes.

When you think about it, big parts of management are attempts to decrease variance. To make sure the same desired outcomes happen again and again. But as Nassim Taleb will tell you (in The Black Swan), it is all a game of probability. You can never make sure the result will be the same every time. What you can do is try and make the process as tight as possible in order to increase the probability of a desired outcome. This is true for manufacturing and programs like six-sigma and it is true for new product development and innovation.

I agree with Ariely completely. There is a need to change our focus on outcomes and put more focus on the right processes. And this doesn’t have to start with board of directors. Every manager can start this change. Ask yourself – how am I evaluating my employees? Is my feedback and recognition based solely on outcomes or does it take into account the process as well? Do I start a learning discussion by focusing on what the final outcome was or do I start by asking how did we get to that outcome?

Like many biases, our bias toward outcomes is, like Ariely says, understandable. But it does not mean it is something we can’t manage or change. By asking the right questions and focusing managerial effort and concentration on process and decisions we can easily increase the probability of a right outcome.



The combination of a killer process and almost religious trust

Photo by schmollmolch

Seth Godin writes about Finding inspiration instead of it finding you:

One approach to innovation and brainstorming is to wait for the muse to appear, to hope that it alights on your shoulder, to be ready to write down whatever comes to you. The other is to seek it out, will it to appear, train it to arrive on time and on command.

Your first idea might not be good, or even your second or your tenth, but once you dedicate yourself to this cycle, yes, in fact, you will ship and make a difference.

This falls right in line with what I wrote about teamwork just a few days ago:

The idea that someone “from above” will “direct” the individual accomplishments is not only outdated, it is insulting. It reminds of me of how serfs were treated in the old days.

Instead, we need to understand that teamwork, like passion, creativity and initiative (all the required ingredients for success in the today economy) are emergent properties. Teamwork is not about doing what the boss says. It is about Synergy. And Synergy cannot be commanded and controlled from above. It can only be emerge by an enabling atmosphere.

Same same but different. It is not about commanding or deciding or just doing. It is about taking a commitment that translates into habit. It is about creating the right atmosphere and environment. In the world of productivity you know that if you show up and do what the rulebook says, you will produce something. In the world of creativity, you can show up, there is not real rule book, and even if you do what all the experts say, you might come up with nothing or come up with bad ideas.

But that is exactly the point. Trust the process. As That Guy with the Nametag writes:

Whatever you’re currently disciplining yourself to do, there comes a point where you have to affirm: “Look, I might not like doing this right now. But I have great faith. I honor and trust the process. And I know it’s going to pay dividends. And sure, I might not know what those dividends are yet. Or when they’re going to surface. But when they do, I’ll know that the wait was well worth it.”

The combination of a killer process and almost religious trust is the only combination that can work for innovation. And the cool thing is, the only one who can find the right process for you and develop that reverence like trust… is you.

Are you still here?



Re-visiting the Asch Effect


I have encountered this piece of research many times before and it never ceases to amaze me. What you can see in this short video is a demonstration of the Asch Effect:

When surrounded by individuals all voicing an incorrect answer, participants provided incorrect responses on a high proportion of the questions (32%). Seventy-five percent of the participants gave an incorrect answer to at least one question.

The Asch Effect is a well-known phenomenon that almost everybody experiences. I am sure each and every one of you has been in some situation where he didn’t say what he really thought because of the group. I am sure many of you changed their opinions depending on what they heard from others. And still, we conduct meetings and lead teams like this is not an issue we have to deal with.

We can all agree that some of the best ideas are those that are different, unique and will be regarded by our close team as just wrong. If you are thinking of something new and unfamiliar, it will be answered with resistance. The great breakthroughs don’t come out of best practices. They come out of inventing something totally new. However, as Hugh MacLeod correctly points out in Ignore Everybody: and 39 Other Keys to Creativity:

The better the idea, the more “out there” it initially will seem to other people… Good ideas alter the power balance in relationships. That is why good ideas are always initially resisted.

Luckily, the solution is in our hands. Until today, when I studied about the Asch Effect, I was not fully aware of this point:

When the confederates are not unanimous in their judgment, even if only 1 confederate voices a different opinion, participants are much more likely to resist the urge to conform than when the confederates all agree. This finding illuminates the power that even a small dissenting minority can have. Interestingly, this finding holds whether or not the dissenting confederate gives the correct answer. As long as the dissenting confederate gives an answer that is different from the majority, participants are more likely to give the correct answer.

As usual, the answer can be found in the process. First, we need to try to create a way where everybody submits their ideas or judgments without hearing everybody else’s answers. The default of going around the table and hearing everybody turns out to be a terrible default. Second, more importantly, always appoint a devil’s advocate. Especially, when there seems to be a consensus.  Somebody who will voice concerns and raise important issues, even if they are false, just to elicit more ideas from the rest of the team and to overcome the Asch Effect. Third, use change in management. Change orders, places and roles within your meeting. Not only it will prevent from one person to always hear the rest of the people talk, it will also prevent stagnation in the norms and will elicit more creativity. Brain research has shown that just by changing the environment, even in small scales, our brain must react with more thinking.

We can overcome the Asch Effect. But we must try very hard not to forget it.


Managerial blindness

Photo by Andréia

A few days ago I read a fascinating article in Wired magazine titled: Accept Defeat: The Neuroscience of Screwing Up. The article describes why it is so hard for people to learn from failure and talks about the importance of diversity and of checking our own assumptions when we fail at something. As I am fascinated by the conventional wisdoms that seem to stick to the world of management despite the abundance of research to suggest that these practices are just wrong, I was captivated by the article and some of the research it describes. I decided to quote a few gems from the article and add a few comments of my own.

We are not as objective as we think:

The reason we’re so resistant to anomalous information — the real reason researchers automatically assume that every unexpected result is a stupid mistake — is rooted in the way the human brain works. Over the past few decades, psychologists have dismantled the myth of objectivity. The fact is, we carefully edit our reality, searching for evidence that confirms what we already believe. Although we pretend we’re empiricists — our views dictated by nothing but the facts — we’re actually blinkered, especially when it comes to information that contradicts our theories. The problem with science, then, isn’t that most experiments fail — it’s that most failures are ignored.

This is something we have to remember as managers. First, when we communicate with people, they will see in it and hear in it what they want and always what we say. They are pre-wired to look for information that fits their preconceptions. That means we have to work extra hard at making people understand what we say. Second, when we try to make a decision, be it a business decision or a decision about an employee, we need to be very careful and create a process that really objectifies the decision. It is not enough to decide according to the data, we also need to make sure that we aren’t ignoring the important data. Playing the devil’s advocate, explaining it to somebody else or getting a fresh opinion are all good ideas. It is less important what we do than that we actually do something beyond our own attempt at objectivity. Third, learning from failure is not something obvious and we must work hard on it.

Belief, in other words, is a kind of blindness:

The lesson is that not all data is created equal in our mind’s eye: When it comes to interpreting our experiments, we see what we want to see and disregard the rest. The physics students, for instance, didn’t watch the video and wonder whether Galileo might be wrong. Instead, they put their trust in theory, tuning out whatever it couldn’t explain. Belief, in other words, is a kind of blindness.

This is a great explanation for many of the managerial conventional wisdoms. Let’s say you believe in the simple carrot and the stick or in telling employees what to do. These are your preconceptions. And you will look for evidence that they are working. And if they don’t work, because they consistently don’t give amazing results, you don’t change your belief. You find excuse or something else to blame for this failure. Probably the employees themselves. They are lazy. They are stupid. It is the Gen Y. They don’t appreciate everything I do for them.  There is of course no way your beliefs or conventional wisdoms are the problem. Let’s cure our managerial blindness.


Earning not winning

Photo: Dave Bullock (eecue)

I am a regular reader of the Incentive Intelligence blog and enjoy it very much. Today, I read a really interesting post about the negative use of the word “but” titled: Incentives AND Recognition – Forbes Article AND Some Thoughts. You should read it. I was distracted by one sentence in the post, representing an idea Paul writes about in his blog a lot:

Incentive programs are NOT contests and awards are earned NOT won

The last part of the sentence is so important and so powerful I get blown away by it every time I read it. Some might say this only semantics. But semantics have power. I wrote this in my e-book:

In her book, “Mindset: The New Psychology of Success“, Psychology Professor Carol Dweck, describes a study she and her colleagues conducted with adolescences. They gave a few hundred students a non verbal IQ test. When the students finished the test, they praised them for their results. Some students were praised for their ability: “Wow, that is a really good score, you must be really smart“. Other students were praised for their effort: “Wow, that is a really good score, you must have worked really hard“. Both groups had equal scores to begin with, but after the praise the groups began to differ.

Students who were praised for their ability were not inclined to taking on new tasks. They did not want to expose their flaws. They wanted to keep their smart appearances. In contrast, the group that was praised for their effort showed a different behavior, they actually asked for new challenging tasks to handle!

After interviewing the groups, the researchers gave a new test, much harder this time. The ability group reported feelings of failure. Most of them, when asked to describe their feelings of failure, said: “We are not so smart after all”. More importantly, the ability group, who reported enjoyment of the first test, told the researchers they did not enjoy the second one. In contrast to the ability group’s reaction to the second difficult test, the effort group did not see their lesser results at the second test as failure. When confronted with their failure in the second test they mostly said: “we will just need to put in more effort in order to succeed”. More importantly, they reported enjoyment from both tests. Even the one they failed!

Later, both groups were given an easy test again. The ability group performed worse than it did in the first test. They lost their faith in their ability. The effort group actually performed better than it had done in the first test. They used the harder test to enhance their skill. Not only did they enjoy the ride, in the long run, it improved their outputs.

We need to acknowledge, everyday, the results are not a windfall. They do not just happen. They come out of hard work. And it is the hard work that we want to incentivize. Not every type of hard work of course, but hard work that leads, in the long term, to desired results.

A few days ago I wrote about the difference between decisions and outcomes. And while I believe in outcome management I am also a big believer in the idea of processes. Not standardized processes that confine people in bureaucratic prisons. Individualized processes that are the product of experience, thinking and the understanding of our own uniqueness. And the only way to do that is focus on the effort and the work we put in the created the desired results.

Nothing worth gaining is ever gained without effort. And the effort is the important part of gaining it. As usual, my epic fantasy readings give me another perspective. In Best Served Cold Joe Abercrombie writes:

…It was what you gave out that made a man, not what you got back…


Bad decisions and bad outcomes

Photo by jeffwesse

I was reading this post today in the Nudge Blog about something that happened in the NFL league this week (a decision made by Bill Belichick). Honestly, I don’t really understand the NFL lingo, but one quote in the post caught my eyes:

“Well, he went for it and it didn’t work. Then his team lost a game it was winning by six points with two minutes left.  We don’t need any more proof then that to know it was a dumb decision, no matter what any stat geeks claim. This isn’t calculus calls. This is the NFL.”

In my blog I wrote a number of times about the idea of outcome management. Instead of telling your employees how to do the job you need them to do, just explain to them what the final needed outcome is and let them do it their way. Then judge them according to the results.

But judging results does not mean that we should ignore efforts or processes. In a football game, just like in real life, people have to make many decisions under pressure. Sometimes the outcomes of those decisions are positive and sometime they are not. But even if the outcome is negative it does not necessarily mean that decision was wrong. It just means it led to an unwanted outcome. And vice versa. Good decisions could lead to bad outcomes.

Failure is an important part of growing, learning and improving (also see here). As long as we learn from it. If we only look at the outcome, we might miss the real lesson for next time. The problem is, only decisions are under our control, while outcomes are always subject to chance. So while determining the process for our employees is not the best of ideas, helping them learn to improve their process, by assessing it together, is the right way to go.

So, before you decide that your employees made a “dumb decision” look for more evidence than the mere fact that team lost the game.


The forest, the trees and the process of management

Photo by ~Sage~

Today, I was listening to a podcast episode of “This American life” called: “Return to the giant pool of money“. It is a fascinating podcast going back, a year later, to the characters of the This American life’s most listened to podcast: “The giant pool of money“. That episode tried to explain, in layman terms, some of the major causes for the global financial crisis. Both podcasts are highly recommended (especially the original one), but the thing that caught my eyes (or actually, ears) is one sentence in the entire podcast. When interviewing one of the experts about what caused some of the brightest people in the world to create financial tools that almost brought the world economy down, he says something like this (this is not an accurate quote as I write it out of my memory):

I think what happened to these people is that they suffered from the trunk phenomena.  They were so focused on what they did, that they could not see the bigger picture. To paraphrase the famous sentence, they were not only missing the forest, they were actually missing the trees.

Have you ever felt like that? Have you even been so concentrated on doing your part in the best that you can, that you forgot the big picture or even the small picture around you? I know it happened to me. And I think it happens to all of us all the time.

As our world is becoming more specialized and more focused, as we go from knowing everything about a single tree to knowing everything about a single trunk, it becomes even more important to stop and look at the bigger picture.

We are all part of a complex system and nothing we do is done in vacuum. It always has ripple effects. And understanding how our work connects with the rest of the system, be that system what it may be, should be a consistent part of doing our jobs. Part of the process of the doing the job. This is something that we need to be responsible to do for ourselves. But as managers, it is even more important that we help our teammates do it. Because they are not always able to do it alone. So it has to become part of the process management.

I don’t know what would have happened if the people in Wall Street or working with Wall Street would have stooped and looked at the trees or at the forest. They may have or may have not stopped doing what they did. But I do know that stoping to remind ourselves and our teams that there is a bigger picture is starting to be an important part of each professional process.

So, how can we make sure not to forget the big and bigger picture?


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.


Intuitive Vs. Analytical

I was watching Mae Jemison’s TED talk today about the connection between science and art. In this interesting talk she explains why she thinks the perception of many people that science is analytical while art is intuitive is wrong. Actually, she claims, they are both a manifestation of the same idea. You can find analytical thinking in art and you can find intuitiveness in science.

That made me think. This debate is relevant to business as well. How should businesses be run? According to intuition or analysis? The answer, of course, is both.

In the last few weeks I have been preparing for interviews with management consulting firms. One thing you understand when you practice solving business cases and reading about how these firms operate, is that there is a tremendous importance to analysis. You are expected to be structured in the way you approach each problem, you are expected to think about all the problems while at the same time paying attention to the little details. But at the same time you see how important intuition in their work and thinking process is. You are also expected to hypothesize and prioritize. Go with your basic logic, gut feeling and intuition.

I heard many people in the past say: “I am a numbers guy” or “I am a big picture – go with my gut – kind of guy”. Hell, I said it myself a few times. And I think knowing what you are is an important part of success. At the same time, it is also important to understand that the fact that you have a certain point of view, a bias if you will, does not make the other way wrong. It means that we should actively try to seek out the other way.

It seems to me that success, in art, science or business, comes from integrating intuition and analysis. That is one of the reasons diverse teams have trouble working in the short term (they speak different languages – one of intuition while the other analysis) but in the long term, they tend to outperform homogeneous teams (which do not take the full picture).

Thus, if we are unable to use both (and most people will struggle doing it consistently) we need to complete our own biased point of view, with the opposite point of view. Or just remind ourselves to re-check the other point of view every once in a while.

So, how do you integrate both intuition and analysis in your everyday work?