Category: Evidence-based Management

I
got a question from Diego over at Metacool
this morning about conditions under which people are “less smart” can
outperform people who are “more smart.” I wrote Diego a long rant about topics
ranging from teams dynamics to wisdom, but I realized that probably the single
most important point I made was stolen from my Stanford colleague Carol Dweck, a
psychologist who has been studying beliefs about intelligence for decades. Check
out her book, Mindset,
for the complete story.  But the
headlines from her research have profound implications for everything from
whether we should classify people as smart or dumb to whether it is wise or unwise
to encourage people to do things where they are likely to fail.

We
talk about Dweck’s research a lot in Hard
Facts, as it raises questions about what it means to be smart or talented – and for
much the same reason – Malcolm Gladwell raises it in his fantastic New Yorker essay on the Talent Myth,
which asks: Are Smart People Overrated?

Here
is Dweck’s Main point (This is a condensed and edited version of what
we say in Hard Facts):   When talent or IQ is believed to be fixed, this
assumption can cause people to believe that it just isn’t worth trying hard
because they – or the people they lead – are naturally smart or not, and there
is little, if anything, anyone can do about it. BUT raw cognitive ability 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.

Dweck’s numerous studies show
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 either believe
that intelligence is fixed or it can be improved through effort and practice. People who see smartness 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 they derive less pleasure from sustained effort and commitment. After all, they believe that, if you have
to work hard at things, it means you aren’t that smart.

Dweck concludes that, when
people believe they are born with natural and unchangeable smarts, it causes
them to learn less over time. They don’t
bother to keep learning new things and improving old skills, and even when they
do try, they don’t enjoy it. But people who believe that intelligence is
malleable keep getting smarter and more skilled at what they already can do,
and are willing to learn new things that they do badly at first.

This research has profound
effects for leadership: It means that if you believe that ability is fixed and
communicate this to the people you lead in your organization, they will treat
their performance as an “impression management” problem, and carefully avoid
providing you with information that they are bad at anything. If, by contrast,
you—and they—believe that performance and ability are malleable, they will see
tasks as learning opportunities, not just tests that determine if they are
preordained to be “good” or “bad” at something.

This research also has essential implications for
stereotypes about IQ. There is strong
evidence that many African-Americans are subtly brainwashed to believe that
intelligence is fixed and they have inherently lower ability than members of
other races. The myth that
African-Americans are “hard-wired” to have lower IQ’s and they can’t do
anything about it has been perpetuated by everyone from Nobel Prize winner
William Shockley to academic psychologists in the controversial The Bell
Curve. These stereotypes undermine
academic performance even among those African-American students who earn the
best grades and test scores. Some
fascinating research shows, however, that if you can convince them that smarts comes from what people do, not what they
were born with, performance improves markedly. In a study with Stanford undergraduates,
randomly selected students were persuaded to believe that intelligence was malleable
rather than fixed. Two months later, they
reported being more engaged in and taking more pleasure from the academic
process than students in control conditions. Most impressively, students
persuaded to believe that smartness was malleable got better grades the next
term, especially African-American students.

Dweck’s research and subsequent studies following
in her path have received press attention, but I believe that they deserve far more
because there are so many messages in our society that you are smart or dumb,
talented or not, or an A player or a B player, and there is nothing that you or
anyone else can do to change you. Yet, in
fact,  a large body of evidence suggests
that such beliefs only will hold when you (or your leaders) believe they are
true!

P.S.
The reference for the study of Stanford students is: Aronson, Joshua, Carrie B.
Fried, and Catherine Good (2001) Reducing the Effects of Stereotype Threat on African American College
Students by Shaping Theories of Intelligence. Journal of Experimental Social
Psychology. 22: 1-13.

P.P.S.
There is also a wonderful, and related, Gladwell New Yorker story about Stanley
Kaplan’s war with the Educational Testing Service over the SAT. Kaplan’s company helps students prepare for
the SAT and other standardized tests. The Educational Testing Service held the official position – for decades
– that studying for such tests was useless because they tapped what students
had learned over the years at school and also reflected "fixed" elements of their IQ.  They pushed the belief that studying for the test was useless despite a compelling body of evidence showing
that studying for the SAT had significant and sometimes large effects on a
student’s scores.  ETS has relented in recent years, but they resisted mightily for decades. Again, we see a case
where treating something as fixed rather than malleable can have profound
effects, and place a student at disadvantage. 

The business section the Sunday New York Times had an interesting article on value of the MBA degree, called Hedge Funds and Private Equity Alter Career Calculus.  The article told stories about people who went into these fields and got rich without ever getting an MBA.  This article continues a series debate that has been raging in both academia and general media outlets about the value of the MBA in recent years. 

My Stanford colleague Jeff Pfeffer created a lot of excitement about this topic a few years back when he (along with Christina Fong) published an article called The End of Business Schools? Less Success Than Meets The Eye. I provide a link to the article, as there is a lot in it –and in classic Pfeffer fashion — note that although most people in the debate rely only on stories, The End of Business Schools provides research to support many of the claims. Pfeffer and Fong touch on many nuances of MBA education, but two findings and the related inferences, really got a lot of play in major media outlets:

1. Unless you go to business school in the top 10 or so, getting an MBA reduces your lifetime income because, you don’t make more money when you get out, and you have lost two years in workforce. So if you can’t get into a top school, you might be better off just skipping business school — assuming the main reason you are going is to get a better paying job.

2. If you do go to a top business school, there is no relationship between your grades and how much money you end-up making.  The main financial value of going to business school seems to be that you enter an elite network, not what you are taught in the classes.  (Business school professors really hate this one, as it means that those students who do as little work in classes as possible, and devote all their time to networking, are acting in economically rational ways).

And as I have written here before, there is a related argument that not finishing school is
the best path to wealth and fame too (Indeed, much like the MBAs that
Pfeffer and Fong write about, many Stanford dropouts such as the guys
who started Google and Yahoo! were able –and smart — to dropout
because the elite network they entered at Stanford enabled them to
launch their companies, and they didn’t need to learn more stuff in
their classes to get rich).

The controversy about MBA education will keep swirling, which Pfeffer loves.  He was once was described (I paraphrase) by MIT Professor John Van Maanen as being attracted to controversy "like a bear to honey."   And Jeff  can be very hard to argue with because he relies primarily on facts and logic to support his assertions.
 

BUT in all this debate   — including in the recent New York Times article — about the "value" of degrees there is something that is rarely said that reveals a lot about the MBA degree in particular and management in general.  I am also stealing this from Pfeffer, although I think I first heard it from Harvard Business School’s Rakesh Kahruna.  The discussion about the "value" of the MBA always seems to end — no matter where it starts and no matter what nuances are discussed by Pfeffer and others — with a focus on how much money it puts (or doesn’t put) in the recipient’s pocket.   

There is remarkably little conversation about whether it teaches people to do a better job of helping and serving clients, employees, or anyone else.  Yet sociologists will tell you that a defining feature of a profession is that members are trained and socialized to put their client’s interests AHEAD of their own.  That is what lawyers and doctors promise to do before they start to practice, for example. 

In contrast, the societal message — and it is often quite explicit — is that the most effective managers take as much money as possible for themselves from their clients. There isn’t even the pretense of putting other’s needs ahead of your own in most talk about management education.  Look at your cell phone or credit card contract if you don’t believe me, or think about what it means to succeed in a hedge fund or private equity firm — it is all about managers taking as much for themselves as possible, and leaving clients (and in some cases employees) with as little as possible. The people who run these firms will protest, but look at the financial structure.

So, although management is craft that I respect a great deal, and is one that is remarkably difficult to learn and practice, it isn’t right to call it a profession as clients seem to be viewed and treated as people you "extract value from" so you can get richer, not as people whose interests should be put ahead of your own.

Indeed, one cynic once suggested to me that if managers took an oath, rather than something like ‘first do no harm," it would be something like "Take as much as you can from as many customers as you can without driving them into the arms of your competitors."

P.S. Another interesting perspective on the value of the MBA degree comes from Henry Mintzberg. Check out his fascinating (if a bit ponderous) Managers Not MBAs, which argues that MBA education is largely wasted on people who have never managed before, but that it can be quite valuable for people who have years of management experience, as they have a much better idea of what lessons they can take away to practice their craft. 

I think that Mintzberg takes this argument a bit too far as I do think that management education can help rookies do a better job.  But Mintzberg’s point rings true based on my (anecdotal) experience. I’ve found that the more experienced the group of managers that I teach, the more that they appreciate — and work to apply — the "softer" stuff that I teach on innovation, turning knowledge into action, building a civilized workplace and so on.  Inexperienced managers tend to believe that they are smarter than all those dumb leaders they study, or a lot smarter than any boss they have ever had, and they don’t need such soft stuff.  But once they spend a few years trying to manage people, they realize that — like ice skating or making a movie — doing it well is a lot harder than it looks!

P.P.S. Don’t miss Stefan Stern’s comment below, he reprints a column that he wrote for the Financial Times that is right on target.

Andy Hargadon is author of a great book called How Breakthroughs Happen and is a Professor at the University of California at Davis.  I know  Andy well as I chaired his dissertation and we did an intensive study of innovation at IDEO in 1990’s, which resulted in several papers published in peer reviewed papers on brainstorming and technology brokering.  Andy wrote a post a few weeks back on his blog, Harga-blog, about the virtues of qualitative research. He sings a similar song to that in my recent post on Evidence-Based Management Doesn’t Mean Just Quantitative Evidence, and in fact, quotes the same Steinbeck that I did.  Andy, who knows a lot about innovation, does a fascinating job of showing how — within organizations — a focus on  quantitative measures can lead to some unfortunate consequences (I hadn’t seen his post until today, his was first!) Andy quotes a Wall Street Journal story that demonstrates how what economists call "perverse incentives" for producing patents led to some pretty dysfunctional behavior at HP a few years back (before Mark Hurd got there, I believe these incentives are now removed):

"What [Carly] Fiorina doesn’t mention is why the number of patents
skyrocketed. Much of it had to do with a program put in place in 1999
to get HP into the top 10 patent producers. It relied on paying
engineers for each new possible filing. At the time, it was $175 for a
basic "invention disclosure," $1,750 if it became a patent application,
and another chunk of cash and a plaque for an actual patent.  One
engineer, Shell Simpson, nearly tripled his salary by working weekends
in the first year by filing 120 disclosures and 70 patent
applications-at one point taking two weeks off to work on patents
full-time."

Or as my colleague Jeff Pfeffer sometimes says — be careful what you reward people to do, you might get just that and NOTHING else.  I agree with Andy that this is a problem caused partly by placing too much emphasis on the count, but I also think that not all financial reward systems have such perverse effects.  All have their quirks, but some work better than others.

BusinessWeek just put together a list
of “B-School
Stars,” which they describe as “10 B-school professors who are influencing contemporary
business thinking beyond the halls of academia.”  I am honored to be on the list, to join the
likes of Warren Bennis, Steve Levitt, and Nobel Prize winner Myron Scholes.  But a few things about the story are bugging
me. For starters, I confess that,
although I enjoy the benefits of sometimes being called a “thought leader” or “management
guru,” these labels have always made me squirm a bit because they imply a
flawed perspective on how knowledge is developed.  As I wrote in CIO Insight a few years back when Business 2.0 applied the “guru” label to me:

‘My main objection is that gurus are glorified as lone geniuses
who conjure up revolutionary new ideas about strategy, innovation, marketing,
managing people and the like. Gurus seem to do everything in their heads
without thinking about others’ work, while famous scientists thank those who
came before them, as Sir Isaac Newton did when he [supposedly] said, "If I
have seen further, it is by standing on the shoulders of giants." The
implication is that management knowledge is developed through a drastically
different process than that in the physical sciences, that only an anointed
management genius can generate big new ideas, that they do it alone, and that
their ideas are magically produced in complete form without drawing on others’
work.’

Toward this end, Hard
Facts proposes Sutton’s Law: “If you think that you have a
new idea, you are wrong. Someone probably already had it. This idea isn’t
original either; I stole it from someone else.” I
think that this law especially holds true when it comes to business ideas. For
example, when Jeff Pfeffer and I were writing Hard Facts, we took a
detailed look at Harvard Business Review’s annual lists of “Breakthrough
Business Ideas,” examining lists that were published across several years. We concluded that none if these 60 or so “breakthroughs’
were actually original (including ideas on these lists that were credited to us,
such as the no asshole rule and evidence-based management). Making claims that one has spanking-new
breakthrough may fuel book sales and help consultants land new clients, but as Stanford’s
Jim March once wrote
me “most claims of originality are testimony to ignorance and most
claims of magic are testimony to hubris.”

In
addition to my concerns that stories about star academics can fuel the fiction
of the lone genius, and that most alleged breakthrough business ideas are
really repackaged old ideas, another
thing about the BusinessWeek list REALLY
bugged me: All ten “stars” were men, and from what I can tell from the
pictures, all white men. This bugged me because I could immediately think of
women management professors who have had huge impacts outside of academia. The first person who came to mind was Harvard’s Rosabeth
Moss Kanter, whose Men and
Women of Corporation is one of the most influential business books ever
written, and who has had a huge impact over the years with her writing,
speaking, and consulting on innovation – as well as in a host of other
areas. Rosabeth’s  2006 Harvard
Business Review article, “Innovation:
The Classic Traps,” is perhaps the best thing I have ever read in the huge
pile of writing on this subject. 

I
also thought of my Stanford colleague, Kathleen
Eisenhardt, a strategy professor in my department, whose work has
affected the direction taken by numerous major corporations and
start-ups. Moreover, a recent Fortune magazine cover story described the
book that Kathy wrote with Google’s Shona Brown (who is also
Kathy’s former doctoral student), “Competing
on the Edge,” as providing the blueprint for Google’s approach to business
strategy –- see Chaos
By Design. These are just two
examples of women who qualify as “B School Stars,” I could go on and on. And
there are also plenty non-white males that I could nominate as well, starting,
for example with Stanford Business School’s brilliant Hau
Lee, who has had a huge effect on the supply of numerous companies of all
sizes, and has been involved in the founding of multiple companies.

Perhaps
I shouldn’t complain about an article that puts me in such nice company and that
says such nice things about me. Perhaps I
am being ungrateful and obnoxious. But I’ve
always felt that, as a tenured professor who claims to do fact-based research,
I have an obligation to say what I believe is true. Or, as I’ve written before
(stealing a phrase from Michigan’s
Karl Weick), to “argue as if I am right, and to listen as if I am wrong.”  It sometimes gets me trouble, and there are
people who wish I would keep my mouth shut and quietly gather the golden crumbs
that come with such press attention.

In
this case, I felt compelled to complain because I believe that there are a lot
of woman (and non-white men) all star business school professors out there, and
that the BusinessWeek writers should have
listed some of them, as it could fuel the inaccurate impression that only
professors who have a penis and a white face are having big impacts outside of
academia.  I hope they provide a broader list next time that
they list B school all stars. 

P.S.
Also, it is a small thing, but I am not exactly a business school professor. My
primary appointment is in the Department of Management Science &
Engineering, which is in the Stanford Engineering School. I do have a courtesy appointment in the Graduate
School of Business, so I guess calling me a B School professor is technically accurate.
Plus I do profess and write about
management, and I have had quite a few Stanford Business School students in my
classes over the years.  I also think
that Steve Levitt has his primary appointment in the economics department, not
the business school, at Chicago. I don’t consider this exactly a flaw in the
story, however, as people from many different disciplines – economics, sociology,
psychology, anthropology, and engineering – produce knowledge that is relevant
to business, and the exact place that they work in academia often doesn’t
matter much.

I was interviewed by Carol Hymowitz at the Wall Street Journal for a story called, "Though Now Routine, Bosses Still Stumble During the Layoff Process," about a month ago.  Talking with Carol inspired me to go back and review some of the old and new research on organizational decline for a series of posts that I did on layoffs for Harvard Business Online (See 1, 2, and 3).  I spent a lot of time thinking about these challenges at one point, as my earliest stream of research was on organizational decline and death (My dissertation was on the process of organizational death), and in 1988 Kim Cameron, Dave Whetten, and I published a (now out of print) collection of readings on organizational decline (It is pictured to the right). I also published quite a few academic articles on the topic, including (with Stan Harris) what might still be the only study of funerals for dying organizations.

After talking to Carol, I was inspired to go back and read some of the more recent research on downsizing and and organizational decline. There is more evidence now, but the basic pattern of the findings haven’t changed that much in the last 20 years or so (although there are some interesting new twists… for example, doing layoffs in organizations that have historically "empowered" employees does more damage to performance than layoffs in more traditional companies because it undermines the "psychological contract" that empowered employees thought they had with the company).

In these three posts, I talk about this body of research evidence,including the general findings that layoffs are often associated with further decline and often don’t lead to the cost savings initially imagined.  In my my view, however, the most important of these posts is the second: It is based on a huge body of psychological research about the conditions under which a source of stress will do more or less damage to people — and what can be done to reduce the harm done to people and profits during downsizing as a result.  We review this research in The Knowing-Doing Gap as well, and apply it to downsizing decisions, but I think it is worth "reprinting" what I wrote a Harvard Business Online here, as I believe this set of principles are crucial to an leader who implementing any change that employees will find disconcerting.  The four key principles are prediction, understanding, control, and compassion; to quote my Harvard Business Online Post

1. Prediction: Give people as much information as you can about what will happen — to them as individuals, to their workgroups, and to the organization as a whole — and when it will happen. This makes the layoff real for people and helps them prepare for the future. 

2. Understanding: Explain why you believe the
change is necessary. Human beings have consistently negative reactions
to unexplained events. This effect is so strong that it is better to
give an explanation that people dislike than no explanation at all —
so long as the explanation is credible.

3. Control: Giving people influence over what will
happen is often impossible, but giving them influence over how it
happens and when it happens is often possible.

4. Compassion: Senior executives should express
human compassion, and when appropriate, sorrow, for the consequences of
their business decisions.

Carol Hymowitz’s article
uses the two rounds of layoffs at Martha Stewart Living Omnimedia to
show how a company can use these four principles to protect employees’
mental and physical health and to sustain loyalty during a difficult
time. I learned a similar lesson a few years back when I did a workshop
with the senior management of Procter & Gamble on our book The Knowing-Doing Gap.
When I mentioned prediction, understanding, control, and compassion,
they explained how these principles reflected what they had learned
about plant closings. John E. Pepper Jr.,
who was then P&G’s chairman, explained that they had learned plant
closings do far less damage, in terms of lost productivity, retention
of employees who are offered jobs elsewhere in the company, and lost
sales in the city where the closing is done, when:

1. They explain how the plant closing will unfold in detail to both
employees and members of the affected community. In particular, they
announce the closing date and specific milestones well in advance.

2. They explain the business case for closing the plant in detail to both employees and the community.

3. They give affected employees choices over how they experience the
closing, in particular giving them options about when and in what ways
they find a job inside the company, along with other options such as
help with finding a new job (or new career) outside the company.

4. They express human concern — both in public and private — to affected employees and community officials.

In other words, P&G executives learned that plant closings go
better when they use prediction, understanding, control, and compassion
as guidelines as they implement distressing — and perhaps unavoidable
— organizational change.

As always, I appreciate your comments.  Have you used principles like these to implement tough decisions?  Can they help your organization? Have they helped your organization? Or is this just some pretty academic theory that doesn’t really work?

My
dear friend and co-author Jeff Pfeffer and I have started a series of
interesting conversations about what we might study next. We’ve been doing a little brainstorming and constructive
argument. As part of this adventure, we’ve been talking about the impact of our
last book on evidence-based management and what evidence-based management
means.

One
of the themes that we keep returning to is our concern that managers and the
business press seem to automatically assume that quantitative evidence is
always the best evidence. This point
especially came home a in recent Wall
Street Journal article by Scott Thrum called “Now
Its Business By Data, But Numbers Can’t Tell The Future.”

Scott
talks about how quantitative data have helped companies including Yahoo!,
Google, and Harrah’s gain competitive advantage, and talks about our book Hard Facts and Tom Davenport’s Competing
on Analytics, with the implication
seeming to be –-based on stories from P&G and Google – that evidence-based
analysis is useful for making short-term tweaks, but not for seeing the future
or making big breakthroughs. I think
that this perspective is partly right, although quantitative evidence can also
lead to huge changes in organizational strategy (e.g., consider one hard fact:
The huge numbers of baby boomers retiring in the next decade, now that is
something that shaking a lot of organizational strategies).

But
there is an implication in this article and others that I find especially
disturbing: The message seems to be that evidence-based management means management
by quantitative data. I reject that
thought, and have always believed that there are times when qualitative data
are more powerful, valid, and useful for guiding action than quantitative data. I will likely touch on this point more in future
posts, but to get things started, there are three times when I believe that
qualitative data are essential.

1. When you don’t know what
to count. Unstructured observation of people at work,
open-ended conversation, and other so-called ethnographic methods are
especially useful when you don’t know, for example, what matters most to
customers, employees, or a company. Just
hanging around and watching can have a huge effect. I am reminded of something that happened
years ago at HP. Senior management was concerned
that people weren’t buying their PC’s, so instead of just reading marketing
reports, they each went out and tried to by an HP at a local computer
store. I remember then CFO Bob Wyman
telling us that it was one thing to hear that consumers weren’t impressed with
HP PC’s, and quite another to have a salesperson suggest that ought to buy
something other than an HP because they were a poor value.  HP is now the leader in the PC business, and
although I am sure this one little experience wasn’t the main cause, it did
help senior executives get a more complete understanding of what elements of customer experience they might start counting.

2. When you can count it,
but it doesn’t stick. As Chip and Dan Heath conclude in Made to
Stick, statistics show that people are swayed by stories
, not
statistics. So this means that even if
you have good quantitative data to back your decisions, your decision will be
harder to sell if you don’t have some compelling stories and images to go with
it. So, to take the case of Procter
& Gamble, they have had quantitative evidence for many years that the “in-store”
experience of encountering a P&G product has a huge effect (beyond
advertising, prior brand loyalty and so on), but the message really sunk in
when folks for the Institute for the Future simply took CEO A.G. Lafley and his
team shopping a few years back. This
experience, in combination with work done with IDEO and P&G’s fantastic
head of design, Claudia
Kotchka, have helped P&G develop a deeper understanding of their
customer experiences – and to tell better stories – than could have happened
through quantitative evidence alone.  And it has led them to focus greater effort on designing the experience of encountering the product on the shelves — not just packaging, but also where and how the products are displayed, and also, they’ve learned the importance of educating store employees about their products.

As
another example, our d.school students did a project about a year ago on ways
that large financial institutions alienate young college grads who want to
start saving money. Look at the desk to
the left, which came with a banker in a three piece suit. The students who went to talk to that banker
were all under 25 years old and were dressed in shorts t-shirts, but most had lucrative
job offers – which meant that they would be making more that that banker in a
few months.  The setting and the banker
were so stiff that the idea of putting their money in his bank seemed like a
bad idea to the students – they found it intimidating and they felt as if they
couldn’t trust the banker or institution.  The picture of that desk (and the guy in the
three piece suit, not shown here) is much ‘sticker” than any survey finding
that young people hesitate to put money a bank or investment fund.

3. When What You Can Count Doesn’t
Count. Researchers are always looking for things
that are easy to count, so they can get numbers that are amenable to
statistical analysis. There are times
when these numbers do matter. Sales, numbers of defects, and so on can be
valuable. But in the hunt for and obsession
with what can be counted, the most important evidence is sometimes overlooked. As
Einstein said, “Not everything that counts can be counted, and not everything
that can be counted counts.”

The
best example I’ve ever seen of the limits of quantitative data – and virtues of
story telling stories and qualitative experience – is found in on page 3 of John
Steinback’s 1941 classic “The Log from the Sea of Cortez,” a
book about marine collecting expedition that he went on with his dear friend Ed
Ricketts.  I first heard about this from
Karl Weick, and have repeated it in many contexts – it is one of those
paragraphs that every manager and researcher in every field can benefit from:

The Mexican Sierra has “XVII-15-IX”
spines on the dorsal fin. These can be easily counted. But if the sierra
strikes hard so that our hands are burned, if the fish sounds and nearly
escapes and finally comes over the rail, his colors pulsing and his tail
beating the air, a whole new relational reality comes into being – an entity
which is more than the sum of the fish plus the fisherman. The only way to
count the spines of the Sierra unaffected by this second relational reality is
to sit in a laboratory, open an evil smelling jar, remove a stiff colorless
fish from the formalin solution, count the spines, and write the truth
"D.XVII-15-IX." There you have
recorded a reality that cannot be assailed — probably the least important
reality concerning either the fish or yourself.

It is good to know what you are
doing. The man with the pickled fish has
set down one truth and has recorded in his experience many lies. The fish is not that color, that texture,
that dead, nor does he smell that way.

Again,
I am not rejecting quantitative evidence, it is essential in many settings. But
qualitative evidence has great virtues as well, for spurring hypotheses,
emotions, and for enabling us to “see” truths that aren’t easily counted. I
love that line “The man with the pickled fish has set
down one truth and has recorded in his experience many lies.”

This post is meant to get conversation started. When is quantitative evidence especially
valuable? And when does it lead people
to record apparent – even unassailable — truths that mask many lies and
dangerous half-truths?

Check out Guy’s blog for a great interview with Jeff Pfeffer about his new book "What Were They Thinking?

I have already raved about Jeff’s new book here (and admitted I am biased, because we are friends and co-authors).  But it seems I am not alone.  As an example of Pfeffer’s directness, consider this exchange between Guy and Jeff about corporate ethics:
            

Guy’s Question: How do you stop the misdeeds (for example, Enron) in organizations?
            
    
Pfeffer’s Answer:
What is interesting is that there are few social sanctions—as
contrasted with legal or financial ones—for bad behavior. Executives
who have served jail time are back on TV and are still celebrities.
More to the point, they aren’t shunned by their colleagues.

The
prevailing mood seems to be, as long as people retain enough wealth,
they can buy their way back by donating time and money. If we are
serious about enforcing norms, then there have to be real sanctions. In
the military academies, violations of important norms are met with
expulsion or social ostracism—eating alone, for instance. Not so, not
yet, for the most part in the corporate world.

There is plenty more on Guy’s blog, and of course, in What Were They Thinking?

If
you want to read something wonderful from one of our great organizational
theorists, I urge you to buy Jeff
Pfeffer’s brand new book What Were
They Thinking? Unconventional Wisdom About Management.

This
is a completely biased opinion. I have
written two books with Jeff and numerous articles, and we are close
friends. But let’s start with my claim
that Jeff is one of our greatest organizational theorists.  For my tastes, our three greatest living academic
organizational theorists are, in my opinion, The University of Michigan’s Karl
Weick, Stanford’s (now retired) James
March, and Jeff Pfeffer. When I say “academic,”
I mean scholars who have contributed important theories and published extensively
in peer reviewed academic journals. If you look at the work of any organizational theorist
who has ever lived, no one except for perhaps Nobel Prize Winner Herbert Simon exceeds
the breadth and depth of Jeff’s contributions.

I
invite you to look at Jeff’s record; here is a link to his
academic vita. Note that Jeff has
published 13 books and over 150 articles and chapters. These often landmark publications are on a remarkably
wide range of topics including power and politics, demography, wage
differences, joint ventures, organizational size, leadership, job design, the
person-situation debate, human resource management practices, performance
metrics, economics, and his most recent work on “time as money.”  He has won virtually every award that the field
has to offer and keeps cranking articles and books out, and now at 60  years
old, he isn’t slowing down.  I have
always especially been impressed by the degree to which Jeff treats (and talks
about) research as a social process. One
of the keys to Jeff’s success is that he works so well with so many co-authors. He has had over 40 different co-authors and
he is so good to work with that few of us end-up writing just one paper with
Jeff.  This is quite a feat given that an academic
article can easily take several years to complete (my last academic paper with
Jeff took about four years from the first brainstorming session to publication)
and a book can take even longer.

What
distinguishes Jeff from other star academic organizational theorists, however,
is that he uses so much of this academic knowledge to influence what
organizations and their managers actually do. Jeff isn’t as well known in
managerial circles as Peter Drucker or Jim Collins.  But I believe that his work should be as
well-known because his ideas are so research-based and so practical. And unlike
most star academics in his field, Jeff is deeply immersed in the stuff
of organizational life. Jeff is on the boards of two companies and has been on
several others; and unlike some “wimpy” academics on boards, Jeff is very
active. One day, as we were going to
lunch, I asked him how his day was going: He replied that he had just fired his
first CEO! He was the one the board
appointed to do it. Jeff has presented his ideas to hundreds of companies and tens
of thousands of managers over the years, and is constantly writing articles and
books that blend his deep academic knowledge with his remarkable understanding
of the practical demands faced by real managers and leaders.

Jeff
is most useful – and most fun to listen to – when he starts ranting about some
managerial or organizational problem. He
is funny, irreverent, and has no compunction about biting the hands that feed
him (e.g., Jeff makes a compelling case against the value of MBA education –
something that he does, in part, for a living).   And no
matter how strongly you disagree with him, he has this annoying habit of basing
his arguments on the best theory and evidence in peer-reviewed academic publications.
Plus when he writes about an unstudied topic, his logic is often so compelling
that refuting his arguments is extremely difficult. I have, unfortunately, been on the wrong
side of hundreds of arguments with Jeff over the years – so I speak from
experience. This is partly because I
disagree with many of his opinions, and partly because our motto is “the more
we fight, the better we write.”  So even
if we seem to be agreeing about something, we often argue about anyway to
challenge our assumptions and develop our logic.

Now,
let’s return to Jeff’s new book, What Were
They Thinking. I just got my
copy in the mail from Amazon yesterday, and read it for the third time. Every
time I start to read this book, I end-up devoting a couple hours to the thing,
re-reading it from start to finish.  It contains
one compelling rant after another. These essays are organized into sections on “People
Centered Strategies,” “Creating Effective Workplaces,” “Power Play” (also see Jeff’s
classic and standard MBA text for classes on organizational power and politics Managing
With Power), “Measures of Success,” and “Facing the Nation” (On organizations
and public policy).

You
will be taken by each of the 28 essays in this book, and if you are like me,
you won’t be able to choose a favorite. To
give you a taste, however, consider Chapter 8, called “Let Workers Work.” Jeff shows how increasing numbers of
companies are placing a larger burden on employees to choose among multiple insurance
plans, to choose among dozens or hundreds of options of spending retirement savings,
and to devote increasing numbers of hours to doing the work required to receive
these benefits. Jeff than goes through
case after case to show how much time employees are expected to devote to
figuring out and using their benefits. Jeff points out that this trend is
spreading even though the logic of the modern organization is based on the
concepts of the division of labor and specialization. Yet, in direct defiance of such logic, one organization
after another (including Stanford University) is asking employees to spend more
and more time dealing with their benefits in order to save some short-term administrative
costs. Jeff wonders why so many
organizations require so many skilled and highly paid workers to do work that
they don’t know how to do well and, in many cases, could be done more quickly and
cheaply by specialists.

Or,
if you want to read an annoying and well-crafted argument, check out Chapter 27
on “What to Do – and Not Do – About Executive Compensation.” Pfeffer calls for less transparency about CEO pay. He argues that one of the main things that drive
up CEO pay is that every human-being thinks of him or herself as “above average.”
He shows how making CEO salaries public
helps ratchet up pay because most boards and most CEOs like to think of
themselves as superior people who associate with other, similarly superior
humans. So, every year, companies keep
raising CEO salaries to support this illusion that they are “better than the
rest” (an illusion largely unaffected by poor performance – humans are
remarkably skilled at rationalizing away poor performance). 

Jeff
makes the counter-intuitive, but theory-based, argument that if boards and CEOs
couldn’t engage in social comparison because they had no information or
had only unreliable information about other companies, this ratcheting process would be
short-circuited. Pay levels might go down because boards would instead focus on
equity within companies and would be more likely to be offended by outrageous
numbers.  This is classic Pfeffer:
Annoying, research-based, and quite possibly right.

If
you want to read something by one of the greatest organizational theorists, if
you want to be entertained, if you want to confront some good ideas that
will make you squirm, and that might just cause you to change how you manage for
the better, What Were
They Thinking? is the book for you. Or at least that is my deeply
biased opinion.

In
my opinion, the best management book published in recent years is Made to Stick: Why Some Ideas Survive and Others Die. It is written by my Stanford colleague Chip
Heath and his brother Dan Heath. Made to Stick is a compelling read, it is
based on rigorous research, and is extremely useful for anyone in any line of
work who needs to craft message that people will remember, spread, and will
shape their behavior. The book not only
has been on numerous bestseller lists since being released in January, it is
fast becoming a standard text in management classes of all kinds, especially in
marketing. I predict that it will become much like Robert Cialdini’s classic Influence, which has become a standard text
in many psychology and marketing classes. Influence uses evidence-based
principles about the tools of persuasion and does so in an engaging and useful way.
I have been using Influence for years in my organizational behavior classes,
and when former students talk to me about these class, they often say something like “I don’t remember much about the class, but I still use that Cialdini
book.”   

This
may sound like a weird connection, but all the news about Paris Hilton’s jail
sentence reminded me of one of may favorite examples of the kind of message
that “sticks.”

Paris’s great-grandfather was Conrad
Hilton, founder of the worldwide hotel chain. There is a quote attributed to Hilton that is
one of the most “sticky” stories I know, and to this day, I think of every time
I stay in a hotel that has shower curtains in the bathtub. The version of this story that I have heard most often goes something like
this:

‘When
Conrad Hilton appeared on Johnny Carson’s Tonight Show years ago, Johnny asked
him if there was anything he wanted to say to the millions of people in the TV
audience. Hilton looked into the camera
and said:  "Yes, please remember to
put the shower curtain INSIDE the tub.”’

Frankly, I
am not entirely sure if this is a true story,and if it is true, he may have said it
elsewhere (Wikipedia claims that Hilton said it on his deathbed). But – as Chip and Dan show us by using urban
myths –  ideas that stick have six
characteristics that can all be seen in this little story (whether a story is true or not):

1. Simple: “Put the shower curtain INSIDE the tub" is about as simple as a message it gets.
2. Unexpected: Although Hilton was founder of a hotel chain, the TV audience was probably expecting something far more profound (and perhaps less self-serving).
3. Concrete: Putting the curtain inside the tub is a very tangible message.
4. Credible: Hilton was credible because he built a huge hotel chain, partly by applying simple ideas like this one persistently, and at the time, Johnny Carson was host of one the highest-rated TV talk show hosts.
5. Emotional. This story is, at least to me, pretty funny, and in some version I’ve heard, people talk about Johnny Carson and  he audience just cracking-up.
6. Story. One of the main points of the Heath’s book is that a message packaged in a good story is more memorable, more likely to be passed from one person to others, and more likely to affect action. Indeed, when I put the curtain inside the tub, I hear the entire story in my head, and although I never actually saw the show, I still see Conrad Hilton telling the story and Johnny
        Carson laughing his trademark laugh in my mind’s eye.

The
ideas in Made to Stick aren’t just
useful for analyzing past stories, Chip and Dan use these six SUCCES (one "S" shy of the word "success")  principles to teach executives and students how to best craft new messages and stories too.  In fact, Just a few weeks weeks ago I watched Chip do a masterful job of leading an exercise with Stanford d.school students, helping them craft messages about spreading the use of compact fluorescent light bulbs, which use far less energy than conventional bulbs.   

Finally,
there is an interesting twist – and challenge – discussed in Made to Stick: The statistics show that
people remember stories, not statistics. This has some pretty weird implications if you want valid ideas to spread and stick, including research-based
management practices. Sure, the first step is to select practices
and ideas that are valid or at least that seem to be supported by the strongest logic or evidence. (I am not sure, for
example, that we need to run controlled studies to show that the more customers
who put the curtain in the tub during showers, the less costs will be generated for a big
hotel chain – it is pretty obvious.)

BUT the second step – which too many researchers
and policy-makers miss – is that you need to craft valid messages and stories
in ways that will stick and spread. Unfortunately,
having a better idea isn’t enough; good ideas don’t stick without a great
salespeople to spread craft and spread the news. For example, Steve Jobs and Thomas Edison
would not have become among the most famous innovators in American history on
the basis of technology ability alone:  It is no accident that they are two of the
most compelling storytellers and salespeople in business history. 

The
power of “sticky stories” creates a major challenge for managers, consultants,
and researchers who want to spread evidence-based practices, and stop the
spread of nonsense and half-truths. Those ideas that spread and stick aren’t necessarily the best, but
instead, those sold by the best stories and story tellers – a troubling
implication of the Heath brothers’ brilliant book.

I forget many, many things. I have lost two cell phones and an iPod this year, for example, and I am just terrible at remembering names.  New research by two Stanford psychologists — Anthony Wagner and Brice Kuhl Pictured to the left)– makes me feel better (go here for the complete story). To quote the press release:

For the first time, Stanford researchers using functional magnetic resonance imaging (fMRI) have discovered that the brain’s ability to suppress irrelevant memories makes it easier for humans to remember what’s really important.

"It’s somewhat of a counter-intuitive idea," said Brice Kuhl, a doctoral student working in the lab of Associate Professor Anthony Wagner of the Psychology Department. "Remembering something actually has a cost for memories that are related but irrelevant." But this cost is beneficial: The brain’s ability to weaken unimportant memories and experiences enables it to function more efficiently in the future, Kuhl said.

Does this mean that companies should start screening people out who have bad memories?  Sounds like too weird an idea even for me!