Chapters 1 & 2: The Case for Evidence-based Management
In too many businesses, we do things because of tradition or “everyone knows you should.” Not all of those assumptions are correct.
How to recognize the poor decision practices:
1) Casual Benchmarking. A few case studies are cited, often by those that have already drawn conclusions.
2) Doing what seems to have worked in the past. Why did it work? Sure it was the reason for success?
3) Following deeply held but unexamined ideologies. High rollers are the key to casinos growth (wrong). Stock options are a good employee reward system for increasing the company’s long-term growth (wrong).
What if there is no sound data available? Do some research (try to buy your own product, for example), and look at the underlying assumptions—there is probably some research on that subject.
Decisions based on facts reduce the hierarchy of a corporation (an opinion—even from a high level manager—doesn’t matter as much).
The authors list the following as ways evaluate management ideas:
1) Treat old ideas as if they are old ideas (in order to sell news, old ideas are recycled as new)
2) Be suspicious of “breakthrough” ideas or studies (like the previous desire for new, this is the desire for big)
3) Celebrate/Develop collective brilliance, not lone gurus (often those ideas oversimplify management issues)
4) Emphasize virtues and drawbacks (physicians will tell you the potential drawback, but sometimes in business we talk as if ideas are perfect)
5) Use success/failure stories to illustrate sound practices, not as a valid research method (reports from the winners and losers of the company are not a good way to do things in the future)
6) Take a neutral, dispassionate approach to new ideas (our own past thinking is the hardest thing to overcome)
Chapter 3: Half-truth: Work is Different from the rest of your life
Somehow we got this idea that people should behave different at work. There are some good applications for this, such as objective decision making and following roles and rules. But other ideas are not healthy such as: people have to compete against each other, you can’t have emotions/opinions (or you are only allowed to have mad or rude emotions), or that clothes make the person.
To guard against this half-truth: Don’t permit behaviors at work that wouldn’t be tolerated elsewhere. Recognize and accommodate the needs of the whole person.
Chapter 4: Half-truth: The best companies have the best people
Some feel that if we just hired the smartest guys, the best salespeople, etc. we would be the best company. And there is some truth to the fact that the best will perform so much better than the rest (the 80/20 or even 90/10 rule applies here).
But that assumes that you can find the best talents for your group and that people are static—once they are the best (or not) they will always be. Those assumptions aren’t correct. Rather, great process/systems trump great people.
To guard against this half-truth:
1) Treat talent as something almost everyone can earn, not just a few people own.
2) The law of crappy systems trumps the law of crappy people (even the smartest people put in a job/position with bad systems will not be productive)
3) Wisdom: perhaps the most crucial talent (wisdom: know what you know and know what you don’t know)
4) Encourage people to be noisy and nosy—it promotes wisdom (make reporting mistakes something people feel comfortable about so that the company can improve)
Overall, try to get (and treat) as many “top dogs” as you can in your organization—not just a select few.
Chapter 5: Half-truth: Financial incentives drive company performance
This seems to be a “known.” Everyone is trying to align pay with company performance. But often these cause more harm them help.
In order for it to work, the performance outcomes must be under the control of the people who receive the incentives. And one need to be very careful of what they say is important (via incentives)—sometimes a “do it at all costs” will result.
Ironically, when we ask people what they are motivated by money isn’t usually listed first (or even second). But when we ask what others are motivated by, we all think money is #1.
Incentives also signal what is important, but it can be very blunt. And sometimes the incentives unintentionally motivate the wrong behavior (some may not report negative information, for example). Another consequence is you often are attracting the wrong kind of people—those that are in it for the money and have less loyalty or willingness to do more if it isn’t related to the incentive.
Guidelines for using incentives:
• Don’t try to solve every problem with financial incentives
• Sometimes less is more effective (a small incentive may still keep teamwork and be rewarding)
• Be careful what you wish for, you just may get it
• Worry about comparisons and distributions, not only individuals or levels (a small difference in pay can make the lesser paid employee feel they are not as valued)
Chapter 6: Half-truth: Strategy creates destiny
The pendulum may have swung too far in the strategy camp. Successful founders admit that luck/flexibility plays a part in their companies triumph.
If strategy was the end-all that it seems to be talked about right now, it would mean that others could copy a company’s strategy and equally compete with them. Rather, implementation deserves some credit. And we are all aware of the large companies that could/would not champion new technologies because they were linked to the old way of doing things.
So where should strategy’s role be?
• In a sentence (from John Sall, cofounder of SAS Institute), “listen to your customers, listen to your employees, do what they tell you.”
• Don’t confuse operational/implementation problems with a need to change strategy
• Keep it simple (a strategy should be able to be explained in a few sentences—something everyone in the corporation can get their brain around)
• Learn as you go (spread lots of seed and feed the ones that grow)
• Balance the attention to strategy with the attention to the details of implementation
Chapter 7: Half-truth: Change or die
Contrary to some modern writings, change isn’t all it is cracked up to be. Some questions that deserve to be asked before implementing significant change:
1) Is the practice better than what you are doing right now? (done elsewhere, or testable on a small part of the organization)
2) Is the change worth the time, disruption, and money? (are these realistic projections?)
3) Is it best to make only symbolic changes instead of core changes? (will it hurt company performance if done? Worth doing something to keep reputation or relationships?)
4) Is doing the change good for you but bad for the company?
5) Do you have enough power to make the change happen?
6) Are people already overwhelmed by too many changes? (this is the change-of-the-month?)
7) Will people be able to learn and update as the change unfolds? (employees must feel the change is a work-in-progress)
8) Will you be able to pull the plug? (how will you know when it is failing?)
If you can get through these questions and are ready to move forward with the change, it doesn’t need to be painful. You can help by doing the following four things:
1) Dissatisfaction: people need to be unhappy with the status quo. If unhappiness isn’t there, create it.
2) Direction: relentlessly communicate what the change is, why it’s necessary, and what people ought to be doing right now.
3) Overconfidence—punctuated by self-doubt and updating: create a self-fulfilling prophecy that the change will succeed and be worth the pain. But to avoid blind faith, have episodes where people can openly discuss their doubts and uncertainties. The update your plan of change with the new facts.
4) Embrace the mess: there will always be errors, setbacks, frayed nerves, etc. Treat glitches as part of the process: learn from them and focus on fixing the problem. Point at solutions not at each other.
Chapter 8: Half-truth: Great leaders are in control of their companies
We all want to believe that leaders are in control of their companies. And there is no doubt that leaders can make a big difference. But they aren’t omnipotent. And an honest leader will admit that they get too much credit and too much blame.
We as humans ascribe more credit to leaders than is due. Studies show that we use cognitive shortcuts to interpret information, and in doing so we place excessive faith in leaders. Another part of the reason this half-truth persists is because of the leaders themselves. They are positive, can-do people that want to drive their success. And they are compensated to be in charge.
And there is good evidence that we don’t want leaders to really have total control. Even though they sometimes think they have the best ideas, usually a group will do much better.
So what should a good leader do? Walk the seemingly contradictory middle ground.
• Act and talk as if you are in control and project confidence about the future (at times that may mean faking it until you actually are able to have more confidence/control of the outcome)
• Take credit and some blame (give your team as much credit as possible, and personally take some blame—insisting that you know what is wrong and have a plan to fix it)
• Talk about the future (optimistically describe how things will be)
• Be specific about a few things that matter and keep repeating them