Tuesday, August 1, 2017

Management Lessons from "The Fix"

In his recent book “The Fix: How Nations Survive and Thrive in a World of Decline,” Foreign Affairs editor Jonathan Teppermann lays out ten seemingly intractable problems that the world faces today, such as inequality, poverty, immigration, and Islamic extremism. and then proceeds to detail solutions that some countries and cities have implemented to address these problems. It’s a hopeful book, and shows the importance of such drivers as determination, drive, out-of-the-box thinking, luck, and the power of human spirit and cooperation.

While many large corporations today have continued to enjoy success, there is no executive I have spoken to in the past few years who can deny the many challenges that his or her corporation faces - geopolitical issues, pressures from activist shareholders, ethical scandals, engaging employees, disruptive innovations, changing consumer demands, technological shifts, cyber security, and competitive challenges, to name just a few.

These corporate challenges may not rise to the level of the problems that Tepperman has laid out in his book, but they are nonetheless daunting for most executives. I believe that there are lessons in his book that might be relevant for organizations. Tepperman suggests the following five general lessons for nations; I’ve provided brief explanations for these (since his titles alone are not self-explanatory), and some take-aways for organizations.
1.     The power of promiscuous thinking. From his success stories, Tepperman concludes that nations and their leaders should not hesitate to be pragmatic and to apply good ideas: “… when the stakes were greatest, they refused to let their principles or loyalties get in the way of their search for solutions.” Tepperman does not suggest doing anything unethical or illegal, or what might go against a nation’s core values. Rather, my take-away here is that organizations need to employ “outside-in” thinking, and do their best to eliminate the Not-Invented-Here syndrome.
2.     Embrace extremity. In other words, view a crisis as an opportunity to become unshackled from the past: “…leaders … all saw that their crises gave them a once-in-a-generation chance to turn adversity into advantage and rewrite the rules …”. In his classic Good to Great, author Jim Collins identified successful leaders who were willing to confront the hard facts about their situation. As another example, Andy Grove, when he was leading Intel, decided to walk away from the memory chip business when it became clear that, profitable as this business was, it had no long-term future.
3.     Please all the people – some of the time. Tepperman argues that while many of the successful leaders in his book did compromise on their solutions, they also made sure that no group felt disenfranchised or alienated by their decisions because no one got everything. There were no outright winners and losers. This lesson might not be as relevant for organizations, but one take-away for me is what I have observed when company leaders decide to sell off or shut down parts of their business (as when companies like P&G and GE have done). By explaining their decisions clearly, engaging their teams, and treating employees with respect and fairness, leaders an mitigate the risks to morale and productivity.
4.     Govern with guardrails. For nations, this means having checks and balances as well as creating conditions to minimize unacceptable behaviors, such as corruption. This seems to me like the efforts many governments are establishing to “nudge” their citizens. In their classic work, Thaler and Sunstein (2008) describe choice architecture and how nudges can help. Starting in the UK with the creation of a Behavioral Insights Team in 2010, nudge strategies have been formally implemented in over 50 countries. As reported in The Economist (May 20, 2017), when the UK established its own nudge unit with the help of Richard Thaler, the government made it clear that unless the unit saved at least ten times its running cost (about 500,000 pounds a year), it would be shut down after two years. It saved about 20 times its running cost, and the unit is still operating. Managers in organizations can help make sure that they have policies and practices that make judicious use of nudges, in addition to applying both positive and negative incentives.
5.     Make revolution through evolution. In other words, don’t take short cuts when making changes; make sure you do the hard work necessary and get involved. When Jack Welch and John Reid (former CEO of Citibank) decided to implement Six Sigma as an initiative in their respective organizations, for example, they themselves went through black belt training and taught classes to managers and supervisors.

In addition to the five lessons above, I suggest that there are five other management lessons from his book that could be added to this list.

First, having the right leader is critical. Tepperman describes how in Rwanda, which had gone through a period of genocide when the Hutu majority tried to exterminate the Tutsi minority, President Kagame emerged to unify the country and get rid of ethnic discrimination. For example, government ID cards and other official documents removed all references to tribal affiliations. He and the government also invested heavily in economic reconstruction and institution building. In my experience, leadership matters not only at the C-suite level, but at every level of the organization.

Second, innovations might not always work immediately, or might be counter-intuitive. In Brazil, former president Lula introduced a program called Bolsa Familia (or Family Grant) to address the severe inequality and poverty problems that the country faced. Families that qualified (those who lived in extreme poverty as well as moderately poor families) received a hand-out from the government, and they could do what they wanted with the money. There were a few other conditions: children between six and fifteen years old had to attend school at least 85 percent of the time; children under seven had to get immunized; and all children had to get regular medical check-ups. There was strong pushback at the beginning, from conservatives to progressives, as well as from economists and government officials. Eventually, the program became a success, reducing inequality and even giving a boost to the economy. Take one among many corporate examples. While companies like IBM and HP have been struggling with their PC business, Microsoft has invested in innovations with its various Surface devices. Although not yet hugely profitable, these devices have been earning well-deserved recognition and are now considered competitive with some of Apple’s Mac devices.    

Third, get people involved and engaged. In Botswana, one of Africa’s success stories, its first president Seretse Khama used a practice called kgotla. This is how Tepperman describes this practice:
“In precolonial times, the Tswana used kgotla to work out personal disputes, make financial decisions, and answer other administrative questions. Whenever a kgosi (king or chief) needed to resolve such a matter, he’d convene his tribe in a designated enclosure surrounded by fence posts topped with rhino or cattle skulls. There the Batswana would hash out business. And they would use the meetings to hold their rulers to account, questioning and challenging the kgosi’s decisions.” (p. 123)

President Khama applied this principle in his government. For example, before implementing a policy, the proposal would first “… be circulated to all ministers and their top civil servants. It would also be discussed in Parliament’s all-party caucus and at kgotla meetings held throughout the country. Only after consensus had been achieved would cabinet vote on a measure. And only then would be government act on it.” (p 130) With any major transformational change in an organization, engaging the leaders as well as the troops is critical to long-term success. Lou Gerstner learned this lesson well in his turn-around of IBM in the eighties.

Fourth, emphasize on what can unite rather than on what will divide. One of his examples is Singapore, where its former leader Lee Kuan Yew focused on good governance and getting rid of bribery, graft and corruption as a competitive advantage of this nation-state to attract foreign investment. A few years ago, I worked with an executive who had just taken over a division. What he found were department heads constantly bickering and blaming each other for problems with the business. One of the first actions that Rick (not his real name) took was to have an off-site, where he brought in competitors’ products and commercials to show the external threats that the division faced. He pointed out that the enemy was not each other, but these competitors and that only by working together could they hope to defeat the competition.

Fifth, make sure you have the right team in place. It was fascinating to read Tepperman’s description of how former Mayor Michael Bloomberg created an antiterrorism strategy in New York City following 9/11, despite receiving little cooperation from the FBI or funds from the federal government. But the key to his success was “…his ability to surround himself with brilliant, unconventional thinkers and doers. The mayor consistently hired the best people he could find for any given job, and he rarely worried about whether or not they possessed conventional credentials.” Furthermore, he continues, Bloomberg avoided the problems faced by other government officials: bad management, excessive bureaucracy, and risk aversion. He did this “by giving his lieutenants an uncommon amount of freedom, encouraging them to think big – and then standing by them if and when they failed big.”

Professor Richard Hackman and his colleagues have done extensive research on the effectiveness of senior leadership teams (Wageman et al., 2008) and found that only about a third of senior teams are effective. They concluded that having the right team in place is one of the essential conditions for an effective leadership team. This means ensuring that the team consists of individuals who have the knowledge, skill, and experience required for the team’s work. Beyond technical skills and experience, they argue for selecting team members who have strong conceptual thinking ability, as well as empathy and integrity.

Many of these principles or lessons are not new; they have been discussed by management gurus such as Peter Drucker and Marshall Goldsmith as well as highly-respected and successful business and military leaders. The parallels to governing nations and Tepperman’s examples is further evidence of their broad applicability.

Collins, J. (2001). Good to Great: Why Some Companies Make the Leap and Others Don’t. New York: HarperBusiness.

Tepperman, J. (2016). The Fix: How Nations Survive and Thrive in a World in Decline. New York: Tim Duggan Books.

Thaler, R. and Sunstein, C. (2008). Nudge: Improving Decisions about Health, Wealth, and Happiness. New Haven, CT: Yale University Press.

Wageman, R. et al. (2008). Senior Leadership Teams: What It Takes to Make Them Great. Boston: Harvard Business School Press.

Saturday, July 1, 2017

Generational Differences: Myth or Reality?

Traditionalists (otherwise known as Matures or the Silent Generation), those born before 1946, are hard-working and detail-oriented. They are disciplined and like consistency and uniformity. They are stable and loyal and, at work, they are concerned about healthcare and retirement benefits and possibly being discriminated against because of their age. Baby boomers, those born between 1946 and 1964, were indulged as children and are generally optimistic; they work hard and believe in self-improvement. They are driven but uncomfortable with conflict. At work, they put in long hours and are concerned with competition from the coming generation. Gen Xers, those born between 1965 and 1979, were alienated as children and do not respond well to authority and are willing to challenge it; they tend to be skeptical. However, they are practical in their approach to work and are technologically savvy. Millennials (or Generation Y), those born between 1981 and 1995, were protected as children and their parents are often their BFFs. They are digital natives and like to collaborate, but are also achievement-oriented. They like to multi-task and are self-assured. They like to be autonomous, but also feel they deserve to be recognized and rewarded. They are used to working in teams and have a can-do attitude at work.

You have no doubt read many generalizations like the above that have been made about these four generations, and the challenges organizations have because these four generations are working side-by-side in the workplace today (see for example, Hawley, 2009; Taylor, 2014; and Twenge, 2006). In addition to these four generations, organizations are already starting to hire members of Generation Z, those born after 1995. Despite the many descriptions of these generations and their differences that are found in the popular press, the reactions from researchers and the scientific community have been quite mixed. In fact, it is one of the few topics in social science research today for which there is no end of controversy and debate. The more tempered of the researchers would say that we should exercise caution in making these generalizations because the evidence is not yet in. On the other hand, there is another group of researchers who have concluded that the evidence just does not exist, and that generational differences are for the most part artificial. They explain that it is difficult to separate the effects of age and life stage with shared experiences (or cohort effects). Others go further and argue that it is dangerous to even consider generational differences because it stereotypes people of different generations. Furthermore, such differential treatments might lead to age discrimination lawsuits, at least in the United States.

In the media and among many managers I have spoken to, however, these differences seem real. A few of these managers express genuine frustration with the attitudes of some Millennials, and there have been many articles written about them, from how they should be treated, the kinds of work environments they prefer, their work-life balance, and their desire for continuous feedback. Price Waterhouse Coopers has made it a point in its recruiting to target Millennials, and to develop human resources practices to engage and motivate them. Other managers I have interviewed shared their concerns about Millennials managing older workers. In Silicon Valley, there are many start-ups where Millennials are finding it challenging to manage other Millennials.

Why the continued appeal of contrasting workers’ attitudes and preferences from a generational perspective? There are several explanations, and I offer the following, some of which are based on the hypotheses that Steel and Kammeyer-Mueller (2016) have suggested. First, we have a tendency to stereotype and make generalizations about groups of people. It simplifies our thought process and provides us with mental short-cuts. Generational grouping is one among many dimensions where it seems almost second-nature for us to believe that the differences among them are indeed real. Second, we know from evolutionary psychology that as a species we humans make spontaneous ingroup-outgroup categorizations; even when the criteria for categorizing are sometimes trivial (like preferences for certain paintings or even certain colors) we affiliate ourselves with those who we feel we have something in common (Tafjel and Turner, 1986; van Vugt and Park, 2009). Forming these generational categorizations is not at all surprising, given that different generations have a presumed number of experiences in common.

Third, following attribution theory, our stereotypes are reinforced when we attribute the causes of behavior to a generational characteristic. For example, a manager attributes the difficulties a Baby Boomer employee may be having with a new technology being introduced in his company because he is of that generation that does not like technology. Fourth, our stereotypes are further reinforced because of cognitive biases – specifically availability and representative biases. As an example of availability bias, note that lottery organizers like to publicize their winners so when people are thinking about buying that lottery ticket, they will remember examples of these winners. Similarly, when we think about Millennials, examples that come to mind are from the media or from our recent encounters with millennial employees. With representative bias, we tend to generalize from a Baby Boomer or two and conclude that they are representative of the entire generation.

As mentioned earlier, the debate about generational differences is far from settled, with the skeptics arguing that many of these differences can be explained in part by age, life stage, or career stage, while others argue that there are in fact generational cohorts that we can view as belonging to different categories based on common shared experiences (e.g., World War II for Traditionalists, the Civil Rights movement for Baby Boomers). There are actually two sets of arguments here. The first argues that categorizing individuals by generation ignores individual differences. Costanza and Finkelstein (2015), for example, argue that “The key to managing a multigenerational workforce effectively is for managers not to make decisions about employees using their generation as a shortcut to their characteristics and needs but rather to measure critical individual differences as well as to track the gradual developmental and demographic changes that occur within and among individuals over time.” (p. 317)

The second argues for not using generation at all as a category to differentiate individuals. Here are Costanza and Finkelstein again: “The assumption that grouping people into arbitrary cohorts on the basis of supposedly impactful events they may have experienced in a common way will somehow magically make them much more homogeneous on those variables is not only unsupported by the research but also runs counter to what we know about individual differences.” (p. 321)

However, while those proponents of generational differences argue that individuals who have more or less experienced what sociologists call “history-graded influences” (such as the independence of Singapore for Singaporeans or the fall of Ferdinand Marcos in 1986 for Filipinos) can potentially impact their developmental outcomes, this does not suggest that everyone will be impacted in the same way. As Lyons et al. (2015) stated: “… within-cohort variance does not disprove the existence of generations; it is an interesting empirical feature of generations that helps us to delineate patterns of thought and action within the generation.” (p. 351) For example, organizational behavior researchers analyze employee data by looking at groupings such as length of service. The assumption here is that in general those with differing lengths of service might have different attitudes about the organization – and in fact, they often do. This is not to deny the existence of variation within each of the categories of length of service, but simply to use a grouping variable to understand patterns. Similarly, market researchers segment potential customers through such variables as age and gender. Advertisers charge more for TV ads that are targeted for that coveted 18-49 segment.  Furthermore, as Banaji and Greenwald (2013) have pointed out, “It is not possible to be human and to avoid making use of stereotypes.” In fact, they suggest, we have stereotypes based on different categories, and we rarely stereotype persons on one category alone. It is the combination of these categories that allows us to form an impression that makes each person unique.

The reality for many managers is that more and more of them are facing multiple generations of employees in the workplace. Furthermore, millennials alone are expected to be 50% of the workforce by 2020. This adds even more complexity and another dimension to the diversity of the workforce (in addition to other dimensions such as race, gender, and cognitive styles). My advice to managers is the following. First, be aware of your own assumptions and biases with regard to different generations. Increasing your self-awareness by checking with others and asking for feedback should be part of a manager’s toolkit. Per, a Swedish Baby Boomer manager recently hired to manage a group of very young engineers at a high-tech start-up, initially started by giving a lot of autonomy to his team. To his surprise, not everyone responded well, with some of them asking for more structure and more direction than Per would have expected from these Millennials.

Second, learn to adapt a flexible style especially when communicating with different team members. While this might go against your natural preference, fight the tendency to always stay in your comfort zone, especially when selecting how to communicate with others. The most successful salespeople and presenters make it a point to know their audience and tailor their messages accordingly. Learn about and practice different styles so you will be able to draw on these different styles as needed. Third, make an effort to learn the wide range of social media platforms available. Most of us know about LinkedIn and  Twitter, but what about Pinterest and Yammer? How much do you know about these tools, and how the extent to which your organization is using them as communication tools for employees? Read about, and/or ask colleagues and your direct reports, about how you can use some of these tools to improve your communication. 

Fourth, seek commonalities among your diverse team members to build cohesion and a common purpose, and learn how to use these differences to your team’s and organization’s advantage. Kathy, a marketing manager for a consumer products company, built a highly effective team made up of different generations of members by involving them in developing a challenging goal for the team (in her case, to create a successful marketing campaign in 12 months) and drawing on the different types of expertise within the team for contributions. Another example of using generational differences effectively is the practice of reverse mentoring, which companies such as Cisco, MasterCard and HP have implemented successfully.

Banaji, M. and Greenwald, A. (2013). Blindspot. New York: Delacorte Press.

Costanza, D. and Finkelstein, L. (2015). Generationally Based Differences in the Workplace: Is There a There There? Industrial and Organizational Psychology, 8 (3): 308-323.

Hawley, C. (2009). Managing the Older Employee: Communicate, Motivate, Innovate. Avon, MA: Avon Books.

Lyons, S. et al. (2015). Generational Differences in the Workplace: There Is Complexity Beyond the Stereotypes. Industrial and Organizational Psychology, 8 (3): 346-356.

Steel, P. and Kammeyer-Mueller (2015). The World Is Going to Hell, the Young No Longer Respect Their Elders, and Other Tricks of the Mind. Industrial and Organizational Psychology, 8 (3): 366-371.

Tafjel, H. and Turner, J. (1986). The Social Identity Theory of Group Behavior. In S. Worchel and W. Austin (Eds.), Psychology of Intergroup Relations, pp. 7-24. Chicago: Nelson-Hall.

Taylor, P. (2014). The Next America: Boomers, Millennials, and the Looming Generational Slowdown. New York: Public Affairs.

Twenge, J. (2006). Generation Me: Why Today’s Young Americans Are More Confident, Assertive, Entitles – and More Miserable Than Ever Before. New York: Free Press.

Van Vugt, M. and Park, J. (2009). The Tribal Instinct Hypothesis: Evolution and the Social Psychology of Intergroup Relations. In S. Sturmer and M. Snyder (Eds.), The Psychology of Prosocial Behavior, pp. 13-32. London: Blackwell.