Читать книгу Provoke - Geoff Tuff - Страница 17

Some of the stories that we use to bring concepts to life are fun to write: they're evocative, pleasant to remember, and the better ones are strangely apt. Others feel a bit cringe-worthy … because they are so archetypical as to sound ripped from the reels of a corporate training video. Here's the thing, though: not only is this story real, but versions of this story happen all the time to the two of us. We've sat through meetings countless times – and we're sure you have, too – where it's going well until someone makes a comment from which a pile-on ensues.

With that, let's play the training video …

“I thought we were finally going to move! But in the end, we acted like ourselves again. Can I ask a favor? Can we chat for a minute tomorrow, early your time?”

Geoff looked down at his phone at the text from an old client in the United Kingdom. He had worked with Sammy for a long time at his prior company, but they hadn't spoken for a while as Sammy adjusted to his new company and role. Geoff was curious to hear what was going on when the phone rang the following morning.

After pleasantries, Sammy jumped into what he wanted to share. “So, we have been working on this new product launch for the last several months. I'm really excited, and so is the vast majority of the management team when we talk about things in private. But get them into a meeting, and all of a sudden the enthusiasm at the water cooler turns into silence in the meeting.”

Geoff asked Sammy to share an example of a recent meeting. “We had come into this session with some new thinking to share. We showed that there is a group of customers that should be highly likely to adopt a new offer we've been toying around with. We've learned a lot about the needs of this group and feel like they will be very willing to pay for this “concierge” level of service. I've been trying to get the team to let us launch a prototype at a few stores in some key markets just to try it out. But every meeting is kind of like Groundhog Day.”

“Say more,” said Geoff.

Sammy continued, “So I was in the meeting, and we presented the analysis, mostly to head nods. Not a lot of negative comments throughout. There were five people in the meeting with me. One of them – Joe – spoke first as we moved out of the presentation into discussion: ‘I'm supportive. I really think the concierge program is a big opportunity and we need to move on it quickly.’ Then, Reshmi shared a similar perspective: ‘I like it, too. I also don't think the competition is looking at anything similar so we can get out ahead.’ Two other people nodded.

“I then said, ‘Okay, great. I'll get the team moving on a prototype.’ I thought we were moving forward this time. I really did. Then the fifth person, Molly, who had been sitting silently said, ‘One quick question, Sammy. Have you guys given any thought to how we'll scale this across some of the smaller markets? I know we're starting in the large markets, which makes a ton of sense. Have we thought about how we'll roll this out to the broader markets?’”

Geoff knew what was coming next.

Sammy continued. “‘Actually, Molly, given the proportion of our sales that come from smaller markets, we haven't given this a ton of thought. We think that if we are successful in large markets, that's a win in and by itself.’”

Sammy sighed. “That's when the floodgates opened. Antonio then weighed in. ‘Molly makes a good point. It's probably not a bad idea to put some thinking behind this.’ And then came Paula. ‘I agree, it can't hurt.’ Joe then sealed the deal. ‘Sammy, why don't we give you a few weeks to think this through, and then we can see your analysis.’”

It was at this point that Sammy picked up the phone and called Geoff. He was at his wits’ end and ready to quit.

“Honestly: we have to make a move here or we'll be stuck trying to play catch-up. Why is it that herd mentality tends to favor caution and incrementalism instead of being bold?!”

We expect that the story depicted in the “training video” is recognizable to most of you. It happens just about every day in organizations around the world. A combination of basic human biases – what we call fatal flaws – and organizational dysfunction mean that most businesses systematically miss the opportunity to take early action against emerging trends – whether they are still in the “if” stage or the early stages of “when.” They wait until the only choice is one of adaptation.

We call these cognitive biases “fatal flaws” only somewhat in jest. People aren't literally dying from them, but they can make the difference between an organization failing or thriving. Successfully spotting subtle – or not-so-subtle – trends that meaningfully impact the prospects for businesses is a fundamentally important capability that impacts every business, big or small, old economy or new economy, virtual or physical.

When businesses are faced with fundamental changes to the environment in which they operate, leaders have a choice – but only if they can effectively identify the meaningful trends. Those choices involve either riding the trend downwards, adjusting the business model to fit the emerging trend, or shaping the trend to create advantage. None of these is a “wrong” choice, by the way. Riding a trend downwards can be a very profitable choice. Many diversified companies that had tobacco divisions have spun them into singular entities that have no other businesses, and they pay massive dividends, despite having an addressable market that shrinks every year. The problem is, most companies that end up in wind-down mode do so accidentally … missing any opportunity to create advantage along the way.

Choosing not to adjust your business model means the company is effectively choosing to be a wind-down firm – one that has a finite life, a business that is terminal. They're winding down, even if executives in the industry fail to recognize this fact. Print publishing companies that choose not to migrate to a digital platform in the face of shrinking paper readership or traditional department stores that do not adjust their core value proposition (i.e., everything under one roof) in the face of intense online competition are examples of this. The question that will most likely impact the amount of value created during the wind-down is whether the move is executed as a purposeful choice, or inadvertently because all other options have dried up.

At the end of Detonate we pondered the value of being a pop-up firm: one that is formed and launched with a planned extinction date. Temporary retail stores – ones for limited edition goods in Japan or Halloween costumes in the United States – are great examples of this. Vaccine sites (we hope, at the time of writing) could be another. These entities have taken the ultimate step in embracing impermanence as a way to create advantage for themselves. Bringing some of the pop-up mindset to the wind-down world, whether you end up there with foresight or by accident, is a critical tool for any company operating in an uncertain market. Based on our experience, though, we think most management teams want to avoid being wind-down firms. Unfortunately, they don't make the logic clear with the other members of the management team. We believe that having an explicit conversation about whether to ride a falling trend or make the necessary investment to evolve a business model is critical – and most organizations never have this conversation as a result of the fatal flaws.

There's nothing fundamentally wrong with either strategic path. Winding down a company over a period of time can be very profitable. And adaptation can be really hard. However, one recipe for failure is to try to operate as if you're going to last forever when the external conditions dictate winding down. Here's the crux of the reason that cognitive biases and organizational dysfunction are so detrimental. Many management teams don't identify the trends, they don't have the conversation, and then they fall into predictable patterns that avoid putting critical issues on the table to decide whether to adapt to the emerging trend or wind down the company.

The first step in adapting is seeing change in the external environment, and the second is choosing to respond. If you can't even see the changes coming, you can't get to a point where you can effectively debate how you'll respond and, even at that point, other biases prevent action. Companies must be aware of the human biases that create the precondition for systematic organizational blindness and inaction. Let's explore several of the cognitive biases, starting with those that make it hard to see trends.

Availability bias. If we had a nickel for every time someone, when challenging market research, cited preference of a family member to discredit or support the research, we'd have a lot of nickels. You've probably been in a meeting like this, too, where someone would say something like, “I gave a sample to my daughter and she hated it.” Although it's unfortunate that his daughter disliked the product, it certainly does not imply that the research is faulty. It's also clear that, in addition to not appreciating the relevance of sampling size, the person in question might be suffering from the availability bias – that is, the tendency to rely on examples that are easy to access mentally. It was challenging for our friend in Chapter 1 to see the possibility of cord cutting because the concept simply wasn't mentally accessible to him at that point.

We would be remiss if we didn't note that the availability bias is certainly contributing to the current divided state of American politics. Social media has become an echo chamber and we are no longer exposed to other ideas or concepts and, as a result, find other points of view “wacky” or disproportionately “out of step.” It's too easy not to stretch to find new information or to try to adopt a different point of view when information that supports your preconceptions is so readily available.

Egocentric bias. Whereas the availability bias is about what information is more proximate to an individual, the egocentric bias is the tendency to overweight data that is consistent with one's previous point of view. Why is this important? The world is a muddy place and there is often lots of data that is unclear. If you are more likely to select and use data that conforms to your view of the world, then it makes it harder for you to incorporate different views into your overall perspective. Interestingly, there is data that shows that people who are bilingual are less subject to egocentric bias because they have grown up paying attention to others' points of view. When there are new trends that don't conform to your worldview, it's harder to see them – and even harder to incorporate them into your decision-making about how to respond. (The egocentric bias also tends to result in people overestimating their contributions to a group and underweighting the contributions of others, but, from the point of view of what causes people to miss trends, we are less interested in that aspect of the bias.¹)

The egocentric bias may have developed because the human brain is better at coding things into memory when individuals believe that information will have an impact on them. At some point in our evolutionary history, this may have had advantages to our survival. Now, it challenges our ability to succeed if humans are less able to incorporate data that is not obviously connected to our current worldview.

Affect heuristic bias. This bias suggests that people base their judgments on their perceived affect toward what they are judging. Here, affect refers to the size of the emotional response (either good or bad) associated with the stimulus. Essentially, affect heuristic is a “gut” response to something that is triggered when we have strong feelings associated with the subject.²

The reason affect heuristic is partially responsible for the systematic blindness of people toward new – or distant – trends is that small trends are unlikely to provoke any emotional response. In our example in Chapter 1, our executive was unconcerned about a 1.75% segment because it didn't trigger any emotional response because it was overwhelmingly small compared to his overall market share. We also see this in people who try to get healthy. For many, the immediate response to exercising is that it “hurts” (a strong negative emotion) but the potential health benefits (a strong positive emotion) don't happen for a long time.

Each of the preceding three biases contributes in part to the inability of individuals to see trends that are at the “if” stage, or even the early “when” stage. They may not be in the available array of data that leaders assess, or they are discounted because they don't conform to their views, or they don't elicit an emotional response because of how distant they are. Taken together, “if” issues tend not to get raised within an organization until they might trigger some emotional response in someone (usually labeled an alarmist within the organization). Although we can't say this definitively, our strong hypothesis is that by the time something is triggering an emotional reaction, it's highly likely that the trend is at the far end of the “when” stage, when options for influence are limited.

The challenge of not seeing trends is further exacerbated by the human tendencies that prevent action against those trends. Several well-known biases include:

Status quo bias. This is a pretty straightforward bias: a preference for the status quo over a change. One explanation for this bias is that a deviation from the status quo is perceived by people as “losing” something – and humans are quite loss averse. Another explanation is that the status quo requires less cognitive effort to comprehend and maintain, while thinking about change requires more effort.³

The status quo bias is key when applied to organizational challenges. In our experience, we see a pervasive behavior from management teams that is rooted in the status quo. Imagine a management team meeting to evaluate a new product for launch. They will rightly name all the risks associated with the move against the potential upside. In most cases, they implicitly compare it to a baseline characterized by the status quo. For instance, consider the following typical risks that one might hear in a management meeting:

 “It may not work as we anticipate, and our competition will gain share.”

 “Our customers may not give us brand permission.”

 “Our channels won't want to stock it.”

 “There's no way sales will go for it.”

 “The lawyers will just say ‘no.’”

Of course, all of those are distinct possibilities, but the comparison is implicitly to a status quo that is riskless. Management teams almost never take the status quo and assess all the risks associated with not launching the product – risks such as maybe our competitors will launch something faster or if we don't launch it and our competitors do, we will lose customers in the future. The way human beings tend to think about the status quo naturally positions any deviation from it as a “loss.” In other words, it makes the status quo a “stock” value (measured at one point in time – the present), rather than a “flow” value (measured over time).

Overconfidence bias. Another bias that makes action difficult is being overconfident in one's likelihood of being correct. People overestimate the likelihood that they are correctly judging a situation. They underestimate the chance that they are wrong. Several studies have demonstrated this bias by asking people to answer questions such as how to spell words or true/false statements on general knowledge topics, and then assessing their confidence in their answers. Systematically, people overestimate their chance of being correct. In other words, on questions they say they are 100% certain they are right, they are only correct say 90% of the time, and on questions they feel they are 80% right, they are correct less than 80% of the time.⁴

Combining these – when you couple the overconfidence bias with the availability heuristic, in which people don't see possibilities they are not intimately familiar with, and don't adequately assess the risks of the status quo – makes it easy to see how human beings are prone to systematic misevaluation of the potential impact of emerging trends that are not yet pervasive in their world. They just miss and/or dismiss them as a result of being typical human beings.

It would be great if organizational behaviors tended to correct for these human fallacies but, sadly, they don't. They do the opposite, reinforcing them and increasing the likelihood that humans fall prey to these tendencies. Several ways that human biases are reinforced in organizations include the following:

Embarrassment in meetings. How many meetings have you been in in which you had something important to say that disagreed with the consensus but you held your tongue just in case you were wrong? Or how many times did a disagreement start to develop when someone interjected to suggest “taking it offline”? Taking it offline is the widespread phenomenon that supposedly “saves” people from having to discuss challenging topics in groups. A successful meeting is one in which everyone agreed and people left feeling good – or the boss is happy. One of our very close friends was once brought to a meeting as a summer intern to keep the boss from yelling, because the team surmised that the boss wouldn't yell in the presence of an intern.

We look at meetings as something to get through while keeping face rather than a setting to discuss and debate important topics. This is corporate theater and not real discussion. Everything is prewired and socialized so that nobody has to disagree in the presence of others. Frankly, the two of us wish we might have lived in the time of Alfred Sloan, who once famously said, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain understanding of what the decision is all about.”

If management teams are literally unable to create meeting space where legitimate disagreements are raised, not only because people might be embarrassed but because successful meetings are characterized as the kind where people don't disagree, then they will increasingly be unable to see and debate emerging threats.

Fear of embarrassment is a form of loss aversion on an organizational scale. People don't want to be seen to be wrong in meetings because organizational culture tends to deem being wrong as a loss of status.

Cognitive bandwidth of leadership. There is a demonstrated bias in psychology called the scarcity effect that makes people value things that are scarce above things that are plentiful. It used to be that only the very most senior executive leadership had their calendars characterized by wall-to-wall meetings. Now it's everyone in the organization. Our hypothesis is that the number of meetings is inversely correlated with the challenges of scheduling them. Prior to pervasive calendar software, one might see a handful of meetings per day. Now that we can simply go onto someone's calendar and see their open time, plop, there is another meeting. As a result, people have less time to do actual work and think. Some calendaring software now provides for the ability to recapture “focusing time,” because the need for scheduling time to think is greater than ever.⁵

What does this mean in practice and what does it have to do with the ability to see trends? Time has become the scarce resource. The two of us, if bored in meetings, usually like to try to make a game of estimating when someone will inevitably say “in the interest of time” (as if time were a stakeholder that needed representation in the meeting). We each try to call the precise time when it will be said (for example, 6 minutes to go, 3 minutes to go). Time spent in discussion and debate is cut short because there's another meeting to go to. We almost never hear someone say, “This is a really important topic and I know we all have other meetings, but let's spend more time on this.” Discussions are snuffed out.

This is particularly problematic for our most senior leaders. Their days are filled with meetings, travel, and meals with not a lot of time for themselves or to think. As Michael Porter and Nitin Nohria wrote in Harvard Business Review, “CEOs are always on, and there is always more to be done. The leaders in our study worked 9.7 hours per weekday, on average. They also conducted business on 79% of weekend days, putting in an average of 3.9 hours daily, and on 70% of vacation days, averaging 2.4 hours daily. As these figures show, the CEO's job is relentless.”⁶ As a result, they rarely have sufficient time to think about the future and the challenges their businesses might face in the future. Too many organizations are governed by the tyranny of the urgent.

Escalation of commitment tendencies. Perhaps the ultimate expression of the status quo bias is the tendency to increase the level of commitment to a choice despite increasingly negative outcomes. The classic business example of this is the now infamous choice by Blockbuster Video to declare that it was in the “store” business versus the DVD-to-home business, even in the face of increasing evidence that customers preferred the emerging model of DVD-to-home. An even more costly escalation of commitment can happen in military conflicts; once military action is taken, it is difficult to de-escalate until one side is defeated.

Organizational politeness and desire for full consensus. Another organizational tendency is that people can be overly polite in groups, not willing to have “sharp elbows” or embarrass anyone during meetings. This is perhaps the flipside of the don't-be-embarrassed phenomenon. But there are in fact bad ideas. There are also ideas that, although not bad per se, are knowingly impractical. However, we observe that rather than be honest with the person about why the idea is bad or why it is impractical, the group suggests that it can be investigated further to be polite. This has the unintended consequence of delaying action on the critical path and wasting resources on ideas that are not fundamentally valuable.

Naturally, this begs the question: How can you tell the difference between a bad idea and important, well-intentioned dissent, a critical feature of great management decisions and innovation? And how do you make sure people feel empowered to raise ideas that might be a source of important correction or inspiration?

We'll examine this further in Chapter 4, but it's critical to understand the underlying rationale for the perspective, not just its existence. Our preferred method of addressing this challenge (which is far superior to avoiding conflict by “taking it offline” or agreeing to do more work unnecessarily) is to play a game of HBD … and we don't mean Happy Birthday. HBD stands for hunch, bias, or data. Lest we cause some confusion, in this game, the meaning of bias does not refer to the cognitive kind, but rather a personal tendency (e.g., Geoff's bias is to get stuff off his plate and never touch it again; Steve's bias is to talk things through … and through).

In this game, you ask the person floating the idea to share their logic and whether their idea is a hunch, a bias, or based on data. If it's a bias (for instance, they just prefer to study things more) or a hunch without compelling logic (“It just feels that way to me”), then it's fair to let the group know that, given a broad consensus otherwise, the group should move forward. But if the logic is compelling and based on real observations or data, then the group should give it stronger consideration. Although perhaps not a perfect antidote, this should help solve the difficult challenge of wanting to invite dissent, especially from diverse voices who may not feel as comfortable speaking up without compelling the group to run down every idea. Over time, groups must demonstrate that they value ideas with terrific logic.

Structural dismantling of organizational curiosity. Our final fatal flaw is the tendency by many organizations to underfund – or completely cut – exploratory learning budgets when push comes to shove. It happens so frequently it's almost cliche: at the start of budget season, everyone says it's important to go and learn about customers and their environments … but by the end of the season, someone points out that this spending can't directly tie to revenue next year, so it gets eliminated. No leader would say they aren't curious about the customers and markets they serve, but most organizations behave as if they aren't. You can't claim curiosity that you don't follow through on. And if you aren't actively looking, you won't see the new and important trends on the horizon in time to DO SOMETHING valuable about them.

When all of this is taken together, what do we end up with? We have people in organizations who are biased against even seeing possible impactful trends in the marketplace, just by the nature of being human – not because they are incompetent or evil. If they do identify a trend, they are biased against seeing it as important to their business and tend to discount it entirely. And if a trend does get raised, there are considerable organizational impediments to taking any meaningful action against it.

In other words, the dynamic interaction of human tendencies with organizational dysfunction produces systematic blindness that decreases the potential playing field for organizations. Failure to see possibilities makes it increasingly likely that organizations end up pursuing an implicit “wind-down firm” strategy on a slope to irrelevancy, following a shrinking market to its very bottom.

But we think there are ways for companies to pursue strategies that have them adapt and thrive. We'll explore some basic tactics for how to address systemic individual blindness in the next chapter before turning our attention to more advanced provocation strategies in Part II.