Mike Lehr's Blog

Wayne Curtis’ article, “The Secret Ingredient,” which appeared in the April 2012 edition of The Atlantic discusses liquor companies’ claims about centuries-old, secret recipes. His point is that marketing drives the myths and stories behind these recipes more than the actual ingredients of the spirits do. For example, citing chemist T.A. Breaux, Curtis says there are no significant production secrets behind vodka, the best-selling spirit globally. Yet, he concludes:

. . . a healthy measure of mythology actually makes for a better-tasting product. Never mind the mouth or nose as the chief receptors of flavor. Sometimes, imagination and suggestion trump all.

There are many ways for us to change the taste of food without changing anything about the food; however, stories impact us well beyond taste. Look at how emphatic politicians are about their personal stories especially focus on rising from humble beginnings or overcoming severe challenges, thus working to wrap their story inside the classical hero myth.

Stories influence the intuitive aspect of interpersonal interactions, tapping directly into people’s feelings by way of presentation. The way we present something, including people, dramatically influences people’s perceptions of it. Since stories can change the way we view people, they can change how we interpret what those people say.

Therefore, when it comes to Placebo Management, stories become a form of interpersonal branding. If they can affect something as tangible as the taste of spirits, consider what they can do for intangibles such as our personalities. Consider the story built around IKEA and its founder, Ingvar Kamprad; it’s a motivational force for employees and consumers alike.

So, with this in mind, what stories do you promote about yourself, your company and others to change people’s taste about their talents and efforts?

Other posts in this series:

• Placebo Management: Impacting Employees’ Beliefs
• Placebo Management (Pt 2): Tapping Emotions

Imagine soil so toxic that nothing will grow. No matter how good our seeds, our farming techniques and the weather are; nothing will grow. The same thing happens when we try to promote great ideas in a bad relational environment: they fail.

That’s why relationships are more important than vision, culture more important than strategy. Vision and strategy can’t grow in toxic relational and cultural soil. This analogy also frames leadership as an affect influencing the hearts and minds of members, requiring the ability to tap both aspects of an interpersonal relationship: emotional and rational.

While this analogy’s point seems obvious, we are biased toward reason; thus, when problems arise, we tend to believe presenting new ideas, educating on the facts or reasoning better will solve them. It’s not unusual for me to have to restate this analogy several times in order to get people to focus on plans containing tactics to improve relationships or to manage conflict. In other words, our tendency is to just find better seeds, use better farming techniques or hope for better weather rather than address the soil.

This happens because no matter how good our ideas are, people will tend to decide that they’re bad if they don’t like or trust us. Our facts won’t change things either because people tend to believe perceptions over facts. People will naturally find reasons to discount our logic and facts.

When we combine all of this with the fact that a diverse workforce improves business, there is great stress on traditional management styles typically unsuited to nurturing the right positive feelings that can dramatically improve performance. By framing problems with this analogy, I increase my success in introducing relational solutions, which are often seen as too “fuzzy” or “soft.” Perhaps it will help you too.

We sometimes hear, “Nice guys finish last.” However, in genetics altruism creates a dilemma because it exists – and not just in humans. The question is why. Even Darwin considered it a challenge to his theory of natural selection. Why would any creature help another at a steep personal cost?

The article, “Kin and Kind,” written by Jonah Lehrer in the March 5, 2012 edition of The New Yorker, investigates altruism and its role in evolution. Whether its bats, bees, birds, ants or humans, the presence of altruism in these species suggests that kindness can’t be a losing strategy. In fact, insects displaying an extreme form of altruism called “eusociality” tend to dominate the insect world over their self-interested brethren.

E.O.Wilson, a main proponent of altruism as a positive contributor in evolution summarizes it this way:

Selfishness beats altruism within groups. Altruistic groups beat selfish groups.

If we look at the Napoleonic era and the rise of the nation state, we find that the demise of mercenary (self-interested) armies began when citizen (altruistic) armies, cemented by patriotic and nationalistic emotions arrived on the scene. However, the reason why we don’t see more altruism in nature and our everyday lives is that a cohesive group must exist first. Again, context matters; encouraging self-interest will yield a self-interested culture, encouraging altruism will yield an altruistic one.

Of course, this prompts the question: Can a company built upon self-interested incentives triumph over a company with a cohesive, altruistic culture? Evolution suggests it won’t. Of course, that doesn’t mean a few self-interested people inside the altruistic cultures won’t try to take advantage of the others. Perhaps they are there to really test how cohesive and altruistic the company is?

Nevertheless, it seems that evolution could really be on the side of the nice guys.

Other posts in this series:

• Cooperation vs. Competition on the Business-to-Business Level
• Cooperation vs. Self-interest: Which Reigns Supreme?
• Cooperation vs. Self-interest (Pt 2): Context – The Great Influencer
• Cooperation vs. Self-interest (Pt 3): Empathy
• Cooperation vs. Self-interest (Pt 4): Intrinsic Rewards
• Cooperation vs. Self-interest (Pt 5): Humans vs. Apes
• Cooperation vs. Self-interest (Pt 6): Incentives & Rats

In this post I want to show how informal organizational power and its role in leadership can produce different kinds of leadership. My inspiration is from a Chinese concept of rulers that is over two thousand years old, and I first read in connection to the I Ching. From it, I produced two forms of leadership: Organizational Leadership (OGL) and De Facto Leadership (DFL). When any group identifies its leader, the critical question is:

Are the members’ hearts into following the leader?

The answer is the same difference between a loveless marriage and a loving one. That’s why I express OGL as a hollowed circle to be filled and DFL as a solid circle to be embraced (figure). A loving marriage is love (blue) embraced by the formal structure of marriage (red). Leadership is best when the formal organizational structure is given to leaders that people want to follow, thus producing Aligned Leadership (ALL).

OGL is the hierarchy using titles such as manager and executive to convey positions of authority and rules of responsibility. OGL is more akin to management. DFL is dependent upon the person’s qualities; people follow them regardless of what the rules say. This is how some can be leaders without being managers.

A scene from Braveheart expresses very well the difference between DFL and OGL. In it, the lead Scottish noble, Robert the Bruce, is trying to convince the commoner warrior, William Wallace, that he needs the noble’s support. The latter responds with, “Men follow courage not titles.”

OGL, DFL and ALL reinforce the idea that leadership is an affect that requires tapping into emotions and integrating both aspects of an interpersonal relationship. This helps people to see what they want to see in their leaders, thus encouraging them to follow.

Other posts in this series:

• Leadership vs. Management: The Difference
• Leadership vs. Management: The Difference (Part II)
• Leadership vs. Management: The Difference (Part III)
• Leadership vs. Management: The Difference (Part IV)
• Leadership vs. Management: The Difference (Part V)

In the March 26, 2012 edition of The New Yorker, I ran across the article, “The More the Merrier”, which sited the work of Zeynep Ton, a professor at the MIT Sloan School of Management, that looked at four low-price retailers: Costco, Trader Joe’s, Quik Trip and Mercadona. The article cited these findings:

These companies have much higher labor costs than their competitors. They pay their employees more; they have more full-time workers and more salespeople on the floor; and they invest more in training them. . . . What’s more surprising is that they are more profitable than most of their competitors and have more sales per employee and per square foot.

In my previous post, “Business Profitability Paradox”, I expressed that a business that maximizes its profits every minute will eventually go out of business because no investments are made (which hurt profitability). The article cites the demise of retailers such as Circuit City and Home Depot when they cut labor costs (to maximize profits short term) only to see the first go out of business and the second to be a shadow of its former self.

Thus, when employers start demanding a good ROI (return on investment), I often ask, “Over what time period?” In this case, training and a good business culture don’t happen overnight; however, the costs do. Many times, as with Circuit City and Home Depot, profits rise immediately with the right cost cuts. However, the revenues it hurts don’t fall off until later.

Now, it’s easy to discount Ton’s study as solely a retail phenomenon, but the investment principles hold true beyond just labor.

Therefore, over what period do you want a good ROI? That answer will determine the type of investments you are willing to make.
 
Original post: Business Profitability Paradox

Related post by Zeynep Ton: Retailers Should Invest More in Employees

The article, “The Modern Matchmakers,” from the February 11, 2012 edition of The Economist contained two major business lessons that I’ve discussed earlier regarding the solving of people-related problems:

1. What people think they want isn’t necessarily what they will choose
2. When faced with too much choice, people have less energy to think about them

For example, the article cites the work of Eli Finkel of Northwestern University on speed-dating in which he found that “people’s stated preference at the beginning of the process do not match the characters of the individuals they actually like.” Furthermore, “that when faced with abundant choice, people pay less attention to characteristics that require thinking and conversation to evaluate . . . and more to matters physical.” In short, just as Sheena Iyengar of Columbia University and Mark Lepper of Stanford concluded that too much choice is demotivating,” Finkel found it can dull thinking processes.

As I had also done in an earlier post on online dating, we can translate these themes to our business efforts by asking three questions:

1. How much freedom does someone want?
2. What does someone really want; what will he really do or decide?
3. How much (and what kind of) thinking will someone require from a leader?

These further translate into more tactical questions for managers and executives such as:

1. How much flexibility or process must I give someone?
2. What differences do I see between what he wants and what he actually does?
3. What kind of decisions do I give her to make and what (or when) do I decide for her?

Complicating this further is the fact that the answers will vary for each employee, requiring deeper and more interpersonal skills from managers and leaders. Are your managers up for the challenge?

Previous post on online dating:  What the Failures of Online Dating Can Teach Us

Businesses spend much money on developing their visions, strategies and processes; however, they spend relatively little on culture, which trumps all of the others. Megan McArdle discusses her observations of General Motors and others in “Why Companies Fail,” appearing in the March 2012 issue of The Atlantic.

When we talk about vision, strategy and process, they are very much head concepts as opposed to heart ones. For example, they don’t concern themselves much with the relationships that employees have between one another or even the relationships that the management team has with employees. The simplest relational techniques are rarely connected to these heady concepts when, in fact, it’s relationships that drive the cohesion and morale of any organization.

Unless we touch our employees on their emotional foundation, vision, strategy and process will fall far short of their intended success. This perspective transforms leadership into more of an emotional function from a rational one.  This perspective also helps us understand why common business tools such as incentives and processes can retard our efforts to build relationships and effect change.

Using a farming analogy, it doesn’t matter what vision, strategy and processes we use; if the soil isn’t good, we will struggle. In business, the soil is the relationship between the management team and employees. It forms the foundation of a company’s culture. If that team can’t develop effect relationships or isn’t motivated to even use simple relationship building techniques, then how can we expect it to implement great visions, strategies and processes?

Related post: Great Strategy? Don’t Neglect Culture

The Freedom-Order duality expresses a dimension of our personality involved in interpreting how we balance freedom and order. It can help us – in real time – understand, appreciate and predict better the reactions of others to such things as processes, decision-making, management, customer service, change and organization.

However, all of this is arbitrary, subjective, meaning different people are comfortable with different levels of freedom and order. To some freedom is chaos because it seems anyone can do whatever he wants. To others order is slavery because there is someone or a rule telling her what to do. Therefore, since there are no absolute states for either, you can be the benchmark as the figure shows. This allows you to assess whether people are more freedom-oriented or order-oriented than you are by the feelings and thoughts they trigger in you.

For instance, more freedom-oriented people might make you feel they are:

You might also notice they tend to use words such as these:

By contrast, more order-oriented people might make you feel they are:

Similarly, you might find them using words such as:

In our daily business lives, this means adding process and procedures to those who are more freedom-oriented than we are might stir anxious feelings about becoming nothing more than an automaton. Conversely, more flexibility and options to more order-oriented people might trigger anxious feelings about what is the right thing to do.

Once we are sensitive to this, we can better position the change by adapting immediately to what we observe in others. To the freedom-oriented people, we will need to reassure the flexibility of adding their own dimension, and to order-oriented people reassuring clear definitions of their duties will exist. In essence, we personalize our approach and words to by appreciating people and their needs better.

We often overlook the downside of processes in our businesses because we enjoy how they allow us to scale and reduce labor costs. However, they often become the infrastructure that retards flexibility and adaptability as people’s self-interest and comfort zones become wedded to the processes.

The November 2010 issue of the Harvard Business Review, which focused on leadership lessons from the military, Boris Groysberg, Andrew Hill and Toby Johnson wrote about the tradeoffs between process and flexibility. Their article, “The Different Ways Military Experience Prepares Managers for Leadership,” discussed the tradeoffs that each of the four branches of the U.S. Military made and how they influenced leadership styles.

Their research showed that CEO’s who had military experience in the Navy and Air Force tended to “take a process-driven approach to management; personnel are expected to follow standard procedures without any deviation.” This allowed them to excel “in highly regulated industries and, perhaps surprisingly, in innovative sectors.”

Conversely, those with an Army and Marine Corps experience tended to “embrace flexibility and empower people to act on their vision.” They were able to excel “in small firms, where they are better able to communicate a clear direction and identify capable subordinates to execute accordingly.”

Throughout the article, the authors contrasted the process orientation of the Navy and Air Force with the adaptive one of the Army and Marine Corps, the important point being that there is a tradeoff between the two. Even though they justified why each branch had the orientation it did, they still contrasted the two orientations as a trade-off. In simple terms, it’s hard to have both.

Therefore, when we rush toward processes to create standardized, consistent and repeatable outcomes, we need to leave room for adaptation. After all, life never duplicates itself in exactly the same way.

Previously I had indicated that placebo management could impact performance. I recently read

Michael Specter’s article, “The Power of Nothing,” in the December 12, 2011 issue of The New Yorker. He shared Ted Kaptchuk’s work on the Placebo Effect at the Harvard Medical School. I found this passage extremely apropos for placebo management:

. . . although placebos had no impact on the chemical markers that indicate whether a patient is responding to therapy, patients nonetheless reported feeling better. Kaptchuk concluded that objective data should not be the only criterion for doctors to consider.

Translated to the business world, we cannot just evaluate our effectiveness with people only on objective considerations. For instance, when a manager explains a business plan to an employee, the value isn’t just in the manager’s explanation and the employee’s understanding. There is additional intangible value in the time the manager spent with the employee. The manager could have enhanced this value by taking the employee to breakfast or lunch for the discussion.

As we saw there are two aspects to an interaction: thinking and feelings (see diagram to right). In this example, the manager’s explanation represents the thinking; the time and place represent the feeling. A different outcome would occur if the manager simply gave the plan for the employee’s reading.

In using this managerial approach, keep five things in mind:

1. Objective information and criteria don’t tell the whole story
2. People react differently
3. Expectations of you and the other person matter
4. Feelings matter more than #1
5. Different users have different results

Relationship building strategies and techniques maximize the placebo effect. It helps to have a strategy for improving your relationship with each of your employees. Implementing initiatives and effecting change will be easier and more effective.

Other links in this series: Placebo Management: Impacting Employees’ Beliefs