Wednesday, January 18, 2017

Do Boards Pick the Right Person as CEO?

What happens when the Board of Directors appoints an internal candidate to the position of CEO?  Do they tend to pick the right person, or do they overlook/reject an alternative candidate that would have been a better CEO?  Stanford scholars David Larcker, Stephen Miles, and Brian Tayan examined this issue recently.  They examined 121 transitions at the 100 largest companies over a ten-year period.  They found that roughly 1/3 of executives who were not selected for internal promotion to CEO were, in fact, hired at other companies.  However, the internally promoted CEOs experienced higher shareholder returns than those executives who were not chosen and left to lead other firms.   

Tuesday, January 17, 2017

Don't Try to Imagine the Future! Ask Others Before You Decide

You have to make a decision. Suppose you are trying to decide on whether London or Dublin is a better place to visit with small children. You read the travel guides and try to imagine what it will be like in each city. You envision what your daily experiences will be like. Will you make a decision that your family finds acceptable and enjoyable? Alternatively, you could ask others who have traveled to London and Dublin. What were their experiences like? Which did they prefer for their small children? You might hesitate to use the latter strategy of consulting others. After all, your family is rather unique. What if those other families are very different from yours? 

It turns out that consulting others makes much more sense than trying to envision the future, at least in most cases. Harvard psychologist Daniel Gilbert has studied this type of decision. Gilbert describes the strategy of consulting others as "surrogation" - i.e. you are using others' experiences as a surrogate for your own. Harvard Magazine described one experiment that Gilbert and his colleagues conducted and summarized their findings:

In one experiment to test surrogation, the psychologists asked a sample of women to predict how much they would enjoy a “speed date” with a particular man. Some women saw his personal profile and photograph; others learned nothing about him other than how much another woman (a stranger) had enjoyed her speed date with him. The second group predicted their enjoyment far more accurately than the first. Both groups had expected the reverse, and oddly enough, despite the outcome, both groups preferred to have the profile/photograph for their next date.

This suggests that ideas trump reality. But in predicting your likings, even someone else’s direct experience trumps mental hypotheses—which is why surrogation works. But to be helpful, the surrogate’s experience must be recent. “People are very poor at remembering how happy they were,” Gilbert says. “So it’s not very useful to ask, ‘How much did you like something you experienced last year?’ People get most questions about happiness wrong. But there is one question they get right: how happy are you right now?”

Monday, January 16, 2017

Why Would Abercrombie & Fitch Pay Someone NOT to Wear Its Apparel?

When we think about social influence, we typically think about how and why people tend to feel pressures to conform to the behavior of their peers, colleagues, or teammates. We act a certain way, or make certain decisions, because others have made similar choices or taken similar actions. However, at times, social influence works in the opposite way. We do not want to be like certain people. Therefore, if they act a certain way, we most certainly do not want to behave in a similar fashion. 

Jonah Berger, author of Invisible Influence: The Hidden Forces That Shape Behavior, relates a story about this type of repellent effect of social influence in an episode of the Hidden Brain podcast.   Berger tells a story from the reality show, Jersey Shore, believe it or not!  He explains that Abercrombie & Fitch once paid Mike "The Situation" Sorrentino NOT to wear its apparel.   Similarly, a Gucci competitor sent Nicole "Snooki" Polizzi one of Gucci's handbags.  Why would that Gucci rival do that?  They knew that many luxury handbag customers would be turned off by the fact that Snooki was carrying around a Gucci handbag.  That would hurt the Gucci brand image, and perhaps help the rival's position in the market.   

Berger explained ,"It turns out influence is very much like a magnet...but it just as well repels us.  And the idea here is, well, if Mike 'The Situation' is wearing Abercrombie & Fitch, maybe other people aren't going to want to wear it anymore. Or if Snooki is hanging on to a Gucci handbag, maybe that will help their competitors because no one will want to wear Gucci anymore. So we need to understand how social influence attracts, but also how it repels."

Berger once conducted a study with Stanford's Chip Heath to demonstrate the power of this repellent effect.  Berger and Heath distributed Livestrong wristbands to residents of a particular dorm on the Stanford campus.  One week later, they distributed the wristbands to a nearby residence hall known on the campus as the "geeky" dorm.   The researchers tracked continued usage of the wristbands.  They found a 32% drop in wristband usage by the first group.  They had witnessed the "geeks" wearing the Livestrong wristbands, and a sizeable number of them had abandoned wearing them as a result!  

Friday, January 13, 2017

Put Your Shared Norms on the Wall!

I had lunch with the CEO of a major academic medical center today.  He mentioned a key aspect of the culture of his top management team.  In the conference room they use for weekly meetings, they have a list of shared norms and ground rules up on the wall.  He explained how these norms are very useful to help the team engage in productive dialogue and debate.   Moreover, this leader expressed how important it was that the team members held him and each other accountable for adhering to these rules of engagement.  If someone didn't behave in accordance with these norms, they could be gently, or perhaps not so gently, reminded about their unacceptable behavior.  They could be told that they had violated a particular rule.  This leader concluded by arguing that building the right culture means you have to be specific about the behaviors you expect.   In addition, people have to hold each accountable for adhering to these behavioral norms.  Peer-to-peer accountability is key.  

Thursday, January 12, 2017

Are Your New Hires Fitting In?

Joann Lublin reported yesterday in the Wall Street Journal about new research regarding cultural fit of new employees. Lublin described the research of Sameer B. Srivastava, Amir Goldberg, and their colleagues. The scholars examined 10.2 million emails among 601 full-time staffers at a technology company written between 2009 and 2014. They hypothesized that language is a key element of culture at an organization. Adopting a similar communication style as your colleagues represents one key element of cultural fit. What did they find? According to Lublin,

"The review of 10.2 million internal messages found that new hires who stuck around and thrived used language styles similar to those of their co-workers. Newcomers with high cultural fit had a greater chance of advancing to managerial positions, the study found. Quitters experienced decreased cultural fit roughly midway through their tenure. But individuals with low cultural fit had a four-times-higher risk of getting fired after three years."

In short, newcomers who thrived at the organization either communicated in a similar fashion as existing employees (implying that the hiring process had screened effectively for cultural fit), or the successful newcomers adapted their communication style so as to fit in at the organization. Those that left or did not succeed at the organization failed to adapt to the way people communicated at the tech company.

Wednesday, January 11, 2017

Why Persuading People with Facts Doesn't Work At Times

The British Psychological Society's Research Digest reports on a new study by Gregory Trevors and his colleagues.   They examined why we fail at times to persuade people with factual evidence.  Why don't fact-based arguments change minds?  In the past, researchers have posited that a "backfire" effect can occur when you confront someone with information that challenges their pre-existing views.  Why?  They have argued that people begin to recall all the information supporting their existing position.  An "arms race" occurs in their minds, as they retrieve all the data that rebut the new factual evidence being presented to them.  Trevors takes the research on this backfire effect one step further.   That work hypothesizes that, "When people read information that undermines their identity, this triggers feelings of anger and dismay that make it difficult for them to take the new facts on board."  

Trevors and his colleagues conducted an experiment with regard to genetically modified foods.  120 students participated in the study.  The scholars first tested "how important food purity was to the participants' sense of identity."  Then the researchers provided the students with scientific data contradicting their views in opposition to genetically modified foods. Here is what they found:

"After the researchers gave participants scientific information worded to directly challenge anti-GMO beliefs, those with higher scores in dietary purity rated themselves as experiencing more negative emotions while reading the text, and in a later follow-up task, they more often criticised GMOs. Crucially, at the end of the study these participants were actually more likely to be anti-GMO than a control group who were given scientific information that didn’t challenge beliefs: in other words, the attempt to change minds with factual information had backfired."

What's the lesson here?  You have to understand WHY people hold certain beliefs.  If those views are deeply tied to their identity, then fact-based arguments alone will not prevail.  In fact, they might backfire.  What can you do differently?  Here is the advice offered in the Research Digest article:

If persuasion is most at risk of backfire when identity is threatened, we may wish to frame arguments so they don’t strongly activate that identity concept, but rather others. And if, as this research suggests, the identity threat causes problems through agitating emotion, we may want to put off this disruption until later: Rather than telling someone (to paraphrase the example in the study) “you are wrong to think that GMOs are only made in labs because…”, arguments could firstly describe cross-pollination and other natural processes, giving time for this raw information to be assimilated, before drawing attention to how this is incompatible with the person’s raw belief – a stealth bomber rather than a whizz-bang, so to speak.

Tuesday, January 10, 2017

Unreasonable Goals, Unethical Behavior

In a recent Harvard Business Review post, Liane Davey explores the connection between unreasonable objectives and unethical behavior.  Sometimes, you face a difficult situation as a team leader.  You have been given an unreasonable goal to achieve.   Davey examines how team leaders can prevent their employees from engaging in inappropriate conduct as a means to achieving highly aggressive goals.  

First, Davey argues that you need to "define the off-limits options" when discussing how to achieve your objectives.  Davey recommends asking, "What would we not be willing to do to hit our target?”  Second, Davey argues that you need to probe carefully to understand how people are trying to achieve their targets.  Don't just focus on results.  Focus on the behaviors and the processes that are being employed to try to achieve those results.  Third, don't single out publicly those people who are struggling to achieve highly aggressive goals.   Such shaming may cause them to resort to unethical methods to achieve better results.  Finally, keep your eye out for outliers... people doing extraordinarily well in the face of aggressive targets.  If one person or unit is exceeding all others by 30%, you might want to ask, "How could they be doing so much better than all the others?"  Don't accuse them of inappropriate behavior without any evidence, of course.  Probe to understand what their best practices might be, for purposes of sharing those with other team members.  However, be on the lookout for any evidence that they may be crossing the line in pursuit of top notch results.  

In sum, these types of vigilant behaviors will help avoid some very unpleasant surprises.   Don't just complain about unreasonable objectives, or demand that your team go above and beyond to achieve those results. Keep a close eye on how people go about their work so as to avoid putting you and your organization at great risk.