A Revolutionary Idea

What if we’ve been wrong all this time? What if one of our most fundamental beliefs about human nature, based on scientific evidence, turns out to be mistaken?

This past week, scientists released news of the discovery of a 4.4 million year old fossil of one of our ancestors. Ardipithecus ramidus, or “Ardi” for short, was perhaps the last common ancestor of apes and humans. What’s so striking about Ardi is the teeth. They are considerably smaller and blunter than those of our chimpanzee relatives, and more like our own.

This little detail has huge implications. The belief that nature is red in tooth and claw, and that human nature is as red as they come, was bolstered by observations of chimpanzees ripping both monkeys and other chimpanzees to shreds with their teeth. Jane Goodall has even described in detail two females with a taste for the infants of their rivals.

When we believed we evolved directly from the chimp, it could only be assumed that the same blood lust was deep inside us as well. Despite the wonders of civilization and the ample evidence of altruistic behavior, we were seen to be violently competitive at heart. And if that is the nature of our species, we could be excused for feeling the need to summon up those instincts in our defense from time to time.

This view justified war and all of its horrors, for it is just a natural expression of who we are, perhaps amplified a bit by technology. As Frans de Waal puts it in his recent piece in the Wall Street Journal, it became “hard to escape the notion that we are essentially ‘killer apes’ destined to wage war forever.”

This idea permeates all of our relationships, not just those of nation-states. Since our instinct is to be competitive, we must be constantly on our guard to ensure we’re not taken advantage of. When it comes to management, we’ve developed systems and practices to ensure that people do the right thing for the enterprise and not give into their instincts. We certainly cannot leave them to their own devices.

So cut throat competition becomes a self-fulfilling prophesy. “If everyone is just out for themselves,” the thinking goes, “I must be too.”  All of the excesses of the corporate world can then be justified, from over the top executive compensation to shady mortgages. Caveat Emptor.

But the discovery of Ardi suggests a kinder and gentler human nature. Without those fangs, our ancestors couldn’t have been the blood thirsty creatures we’ve taken them for. Along with the more peaceful gorillas and bonobos, humans are now seen to be a cooperative species, and the violent chimpanzees as a mutation branching off the main trunk of evolution.

De Waal offers further evidence. In the Ultimatum Game, a staple of Behavioral Economics, human players display a preference for equity over financial gain. Neuroscientists have discovered mirror neurons that fire empathetically when we observe others feeling pain.

If we take the ramifications of Ardi’s discovery to heart, our idea of human nature has to be turned inside out, and very different behavior should follow.  We would have to start out trusting people and assuming they’re going to do the right thing. It would revolutionize the way we manage people.

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How to Think Your Company into a PR Mess

<We've come to expect inhuman treatment by the airlines. As the carriers struggle to stay afloat, we have learned to live with the results of their short-sighted cost cutting. We strap ourselves in seats that have all the comfort of the rack, pay outrageous fees to hazard our checked luggage will arrive when we do, and purchase snacks that must have been deemed unfit for penal institutions. Given the way flight attendants have been treated by management, we know that the skies will be anything but friendly.

But hotels are different. We usually have a choice, so we’re lured with amenities and promised the best service. It is, after all, called the hospitality industry. Advertisements often include pictures of friendly staff members, eager to please.

I don’t really care about fruit baskets or complimentary continental breakfasts, but I do want a clean room and pleasant interactions with the hotel staff. We all know that in a service industry, the attitude of employees has an enormous impact on quality, and the way employees are treated is mirrored in the way they treat customers.

Apparently, the management of Hyatt Hotels knows this too. In the career section of their corporate website, under pictures of smiling and satisfied employees, they entice prospective job candidates with the offer, “Discover your place to shine in our warm, respectful, and inclusive culture.”

I owe a debt of gratitude to Hyatt, because I’m alway looking for good examples of bad thinking in business. If they had set out to illustrate every flaw in conventional management thinking, they couldn’t have done a better job. And as if to illustrate how flawed paradigms can lead to a succession of self-defeating decisions, their attempts to mitigate their public relations disaster has created an even bigger one.

I can see how it happened in my mind’s eye. Well intentioned managers are gathered in a conference room with a spread sheet projected on a screen. It shows that occupancy is down and room rates have been cut, so margins are being squeezed. Finance is driving for expense reduction and somebody comes up with the idea of outsourcing housekeeping. The business model shows that the savings go right to the bottom line. It’s hard to argue with the objective logic of the decision.

But another manager, perhaps from HR, raises the objection that it will be difficult to train the new staff. This objection is addressed logically with the suggestion that the current housekeepers train the new employees. When somebody suffering from a short spasm of empathy raises the further objection that the housekeepers may be unwilling to train those that are taking their jobs, one of the more creative members of the group comes up with the idea of telling them that the new people are just substitutes for those on vacation. The meeting adjourns with everyone comfortable that they have executed their responsibility for prudent financial management.

The thinking may be logical, but it’s a perfect example of how costly an exclusive focus on measurable objectives can be. By viewing the employees as no more than a cost, management lost sight that they are also human beings capable of both thought and independent action. Of course, they weren’t going to go quietly, and inevitably their story would find its way to the press.

The morality of tricking long term employees into training their replacements and then firing them may be an issue for the managers and their consciences. But the idiocy of the decision from a long term business perspective ought to have Hyatt’s shareholders up in arms.

Not only did management forget that employees are people, they somehow missed the populist anger against large corporations welling up in the country. Apparently, they also forgot they were in liberal Boston and even more liberal Cambridge, where the rights of working people are held sacrosanct. The resulting boycott of the hotel by the populist mayor, governor, and even the taxicab drivers may have been an unintended consequence, but it should have been anticipated.

And, of course, the logic also obscured critical interdependent relationships. No attention was paid to how employee relations impact customer relations, or how the “talk” on the website ought to match the managers’ “walk.”

Focusing on numerical objectives and driving for cost reductions may be conventional wisdom, but it creates tunnel vision. So management also missed that the company they outsourced to has a record of labor law violations and of employing illegal aliens, but the  Boston Globe didn’t.

This morning, Hyatt announced they will now give the laid off housekeepers either a job with an outsourcing company or career training, and will continue to pay them their original salary for the near term. If there was some soul searching at the company, the search didn’t go very far. Predictably, the housekeepers aren’t simply interested in a job or in the money. They want their original jobs and their relationships with their coworkers back. They want to “shine” in Hyatt’s “warm, respectful, and inclusive culture.”

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A Tale of Two Stores

Imagine my joy. On the plane to Chicago, I had read a review of Thomas Pynchon’s new book, Inherent Vice, and in the taxi from the airport, I saw one of the large chain bookstores just a block from my hotel. I anticipated the novel would transport me far from the blandness of one more hotel room.

When I entered the bookstore, I was greeted by a young lady eager to help. I asked her about the book and she took me over to the wall of best sellers. After scanning the shelves for a couple of moments, she informed me that they didn’t have it. When she left me to my own devices, another customer, having overheard our conversation, directed me to the shelf it was on. As I walked toward the cash registers with my book, I passed a section not ten feet away with hundreds of copies of the book prominently displayed.

We’re learning from brain science how flawed both our perception and our thinking can be. While we tend to focus on breakdowns in complex areas such as strategy, we can be remarkably thick when it comes to even the simplest of things.

I’m not talking about the young lady, for I suspect she did the best she could with what she had. I’m talking about the decisions of management, when it comes to the allocation of resources for staffing, training, or technology. Further evidence of just plain bad business judgement was apparent when I went to pay for my book.

There were two banks of cash registers. One had apparently not been used for quite a while, because boxes of books were haphazardly piled on the counter. The other bank had five registers marked with large numbers, but only two were staffed. A long line of customers waiting to pay snaked through several aisles.

It seems to me rather short-sighted to make people stand in line to give you their money, rather than making it as easy as possible. But there we stood, waiting and waiting, as the line inched forward. Soon we were grumbling to one another about the torture we were forced to endure.

Several customers simply gave up and left. Others told their fellow sufferers that they would never come back to this store. When it was finally my turn to pay, I couldn’t resist suggesting to the cashier that making people wait that long wasn’t good for business. He readily admitted that the store was always horribly understaffed.

What could management be thinking? Most likely, the same thing lots of business managers think during hard times: we need to cut costs. Labor is one the few variable costs, so it’s just common sense to reduce staff. Similar decisions are made in business everyday.

But such a decision will potentially cost far more in the long term than it will save in the short term. There’s no shortage of available labor, so doubling the number of cashiers couldn’t possible cost more than another twenty-five or thirty dollars an hour. With a two story building in a prime shopping area of downtown Chicago, such an expenditure is insignificant. And I heard enough people swear to never return to the store that the cost of lost business was at least several multiples of that twenty-five to thirty dollars.

But there is an even more profound flaw in management’s thinking. While a greeter at the front door is a nice touch, in my case it ended up detracting from my satisfaction as a customer. It doesn’t appear that anyone fully empathized and anticipated the entire customer experience, from beginning to end. If they had, the greeter would’ve been trained to locate books or at the very least have a handheld computer that would locate them for her.

In fact, I bet there’s an iphone app that would enable her to tie into the store’s central computer system, and the cost would be as insignificant as adding a couple of more cashiers. If management had walked a couple of blocks down the street, they would’ve found an Apple store where they could buy the technology. They would’ve also found a retail experience that was brilliantly managed from start to finish.

After finally completing my purchase, I went to the Apple store just to look at the new iphone.  Again, I was greeted at the front door, but then I was escorted to a specialist, who took me over to the iphone area, knowledgeably answered all of my questions, and in short order convinced me to buy the phone. He then set the phone up, taught me how to use it, and even downloaded the owner’s manual on to the phone.

The phone itself is enticing, both technically and aesthetically. Even the packaging is a treat. When it came time to pay, there was no line to wait in. My specialist had a handheld computer that managed the transaction and emailed me my receipt. Apple has created not only a great product, but a a great customer experience. I have to believe that strong empathy with the customer guides all of the company’s decisions, from product design to retail layout and staffing.

Brain science teaches us how just focusing on the numbers leads to trading off the long-term for the short-term, no matter how reasonable the anticipated cost savings may be. It also teaches us how buying decisions are driven emotionally and how important empathy is to building satisfying relationships with other people, customers included. But one doesn’t need sophisticated brain scans to see what better thinking will do for a business. Just stroll down Michigan Avenue and stop in both the bookstore and the Apple store.

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