Archive for the ‘Hard Facts’ Category

Hearing true things is more important than saying smart things

January 20, 2008

When dealing with customers, is it better to

  • listen carefully to their needs, or
  • have something smart to say?

Answer: Hearing true things is more important than saying smart things.

Being wise is more important than being smart.

People need to ask good questions before they can come up with smart answers.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Strategy is destiny? Not necessarily!

January 15, 2008

Many companies think that if only they can devise the right strategy (plan) then they will be successful. Companies spend lots of time and effort devising a corporate strategy. However, strategy is overrated: “Successful implementation is much more important to organizational success than having the right strategy.”

In the book Hard Facts by Jeffrey Pfeffer and Robert I. Sutton the authors make an analogy to football:

In U.S. football, virtually every play is designed to go for a touchdown. Why doesn’t it? Failures in execution. Linemen miss blocks, running backs stumble, receivers run the wrong routes or drop the ball, the quarterback doesn’t throw the ball where it was supposed to go, and so forth. There is no question that there is, on occasion, brilliant play calling — the sports equivalent to strategy — that can make a difference in the outcome. But most of success in football and in other sports is based on being able to effectively execute the plays that are designed.

Competence and capability are important for corporate success. Too much attention to getting the strategy right can divert attention away from building the capability to operate effectively. We have seen that many organizations use planning and talking about implementations as substitutes for action — a syndrome we called “the smart-talk trap.” To help his players avoid this trap, former SanFrancisco 49ers head coach Steve Mariucci told them, “I never wear a watch because I always know what time it is. It is always NOW. And now is when you should do it.”

Are CEOs several hundred times more important than frontline people? Their salary says they are

January 2, 2008

Organizations are social entities, and people are social creatures.  What this means for leaders is that social relations are important.   People compare themselves to others and derive feelings of worth and status from that comparison.  Consequently, pay differences have not only substantive but symbolic meaning.

Take the most notorious example [of pay differences], CEO pay.  CEOs who make several hundred times more than what the average employee in their company makes send the signal that what they do is several hundred times more important.  Is that really the right signal to send?  If frontline people think that what they do doesn’t matter very much for the organization’s success or in the opinion of senior management, why bother worry about how well they are doing their job?  It is not by accident or coincidence that many of the most successful, consistently best-performing companies have CEOs who are not outrageously overpaid – Amazon.com, CostCo, and Southwest Airlines are a few current examples.  By sending a signal that performance is a collective, not just an individual, endeavor, those companies are more likely to induce thought, creativity, and effort on the part of their people.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

See this related blog:  Paradox: Embracing Decentralization while Hailing the CEO as Corporate Savior

Don’t hire people who are only or mostly in it for the money

December 29, 2007

“If they come for the money, they’ll leave for the money.”  [James Treybig]

If you had a choice, when confronting a serious, possibly life-threatening illness, of going to see one of two doctors, which would you choose: (a) a doctor who had entered medicine primarily to make a lot of money, or (b) a doctor who had entered medicine because he or she was interested in the subject matter and had a desire to serve people?

Don McCabe and his colleagues have conducted numerous studies of college student cheating over the years.  They have found that students who are in school or have chosen a major for instrumental reasons — in order to get a better job or to make more money — are much more likely to cheat than students who have chosen a course of study because of their interest in the subject matter.  This result makes perfect sense if you think about it.  It I am trying to master a subject because of my intrinsic interest, cheating makes no logical sense — it defeats my desire to learn the material.  If I am, on the other hand, studying just to get a credential, then what matters is the credential — getting out with the piece of paper — not necessarily what I learn.

The implications for companies are clear.  If people are there for the money then they will do what it takes to get the money, regardless of what that is.  Much better, it would seem, to have people who actually have some interest in the company, its customers, its products and services, and its values.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Unless people know what the truth is, it’s unlikely they’ll make the right decision

December 7, 2007

“Unless people know what the truth is, it’s unlikely they’ll make the right decision.” [Wisdom of Crowds by James Suroweicki]

If employees see problems and keep it to themselves, it leaves an organization without knowing the truth, and thus unlikely to make the right decisions and stunts organizational learning. For example:

“Those nurses whom doctors and administrators saw as most talented unwittingly caused the same mistakes to happen over and over. These “ideal” nurses quietly adjust to inadequate materials without complaint, silently correct others’ mistakes without confronting error-makers, create the impression that they never fail, and find ways to quietly do the job without questioning flawed practices. These nurses get sterling evaluations, but their silence and ability to disguise and work around problems undermine organizational learning. Rather than these smart silent types, hospitals would serve patients better if they brought in noisy types instead.”

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Wise people realize that all knowledge is flawed

December 2, 2007

Wise people realize that all knowledge is flawed, that the only way to keep getting better at anything is to act on what you know now, and to keep updating.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton

Cognitive error: acting on only what is immediately visible

November 29, 2007

Managers, consultants, gurus, the press, and just about everyone else gives individuals too much credit and and blame for organizational performance. This misguided faith in the omnipotence of saviors and villains is due largely to a cognitive error made by most people in Western countries. This fundamental attribution error was uncovered decades ago by psychologist Lee Ross. He noted that people place excessive weight on individual personality, preferences, and efforts when trying to explain what people (and groups and organizations) do and why they do it, and underplay the setting, culture, or system. This occurs partly because of how human perception operates. When we look at a situation, like a company, we see individuals — individuals acting, making decisions, doing great or awful things. The context in which this happens, the industry and general economic environment, the actions of all those people we don’t see, are less obvious and vivid. So it is not surprising that we overattribute actions and consequences to individuals rather than to the constraints under which they operate. [Hard Facts by Jeffrey Pfeffer and Robert I. Sutton]

In the book Economics in One Lesson Henry Hazlitt shows how this cognitive error crops up in economic decision making. People make economic decisions based on what they immediately see (e.g. “adding a tariff will result in these — visible — people keeping their jobs, so let’s add a tariff”), and they fail to consider the unseen possibilities and things that could be (e.g. by adding a tariff some people keep their job, but the rest of the population — the unseen individuals — subsidizes them by paying higher prices at the market).

This cognitive error — focusing only on what is visible and seen — rears its head in many ways, resulting in many missteps.


A related blog: Organizations: focus on creating a great system, not finding great talent

Organizations: focus on creating a great system, not finding great talent

November 28, 2007

People’s performance (in an organization) depends on the resources they have to work with, including help they get from colleagues, and the infrastructure that supports their work.

It is impossible for even the most talented people to do competent, let alone brilliant, work in a flawed system.

A well-designed system filled with ordinary — but well-trained — people can consistently achieve stunning performance levels.

Consider investment analysts: they are treated like stars, hired away at enormous salaries, and many achieve great media notoriety. Boris Groysberg found that after a company hires a star, bad things happen all around: “The star’s performance plunges, there is a sharp decline in the functioning of the group or team the person works with, and the company’s market value falls.” In particular, “46% of the research analysts did poorly in the year after they left one company for another … their performance plummeted by an average of about 20% and had not climbed back to the old levels even five years later.”

Why do so many companies still place so much emphasis on getting and keeping great people and so little on building and sustaining great systems? A big part of the answer is that Western countries glorify rugged individualism so much that we make cognitive errors. We give too much credit to individual heroes when organizations do things right and place too much blame on individual scapegoats when things do wrong.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton


A related blog: Myth: talent is completely fixed and predetermined at birth

Fallacy: IQ is fixed

November 22, 2007

Raw cognitive ability — at least performance on tests that measure it — isn’t nearly as difficult to enhance as many people think. When people believe they can get smarter, they do. But — and this is very important — when people believe that cognitive ability is difficult or impossible to change, they don’t get smarter.

A series of studies by Columbia University’s Carol Dweck shows that when people believe their IQ level is unchangeable, “they become too focused on being smart and looking smart rather than on challenging themselves, stretching and expanding their skills, becoming smarter. Dweck finds that most people believe either that intelligence is fixed or that it can be improved through effort and practice. People who see intelligence as fixed believe statements like “if you are really smart at something, you shouldn’t have to work hard at it,” don’t take remedial classes to repair glaring deficiencies, avoid doing things they are not already skilled at because it makes them look dumb, and derive less pleasure from sustained effort and commitment. After all, they believe, if you have to work hard at things, it means you aren’t that smart.

Hard Facts by Jeffrey Pfeffer and Robert I. Sutton