Jaws

When there’s less money coming in, the conventional wisdom holds that it’s prudent to cut your spending, whether you’re a consumer or a multinational corporation. This is particularly true if the economy is experiencing the worst downturn in eighty years, and it’s not at all clear when there will be a return to prosperity.

Sure, there are always opportunities, if the wolves aren’t yet at the door, for those willing to take a risk. While everyone else is being tight-fisted, you can get a great deal on that new Cadillac Escalade you’ve been lusting after. If all of your competitors are cutting back, a well-timed investment in marketing can help your company gain share.

But fearful times have a tendency to bring out the worst in people. The emotion-generating amygdala starts pumping cortisol into the system, slowing our thinking and narrowing our vision. Just when we need to be at our best, we become stupid. Across the board cost cutting driven from the top down isn’t always the smartest approach.

When you’re up to your neck in alligators, you may forget that your goal was to drain the swamp.  However, that doesn’t make the snapping jaws any less real. Nor will a trip aboard the Starship Enterprise to the final frontier of culture change, despite the assertions of a recent article in The Wall Street Journal.

It’s hard to argue against the two studies quoted in the article, claiming the limitations of cost-cutting initiatives.  I’m even willing to believe in the benefits of culture change, though the survey touting them was conducted by a consulting firm that makes its money from, of all things, selling culture change.

But what bothers me is the article’s mystification of culture. The “right” culture comes across as the magic beans that will grow a giant stalk of profitability. The definition we’re offered by a business school professor is “people believe in the organization, in their land manager, and therefore help them perform as much as possible, they think they are valued by the organization, both employers and workers are gaining mutual benefit.”

Now all of this is good stuff, but it’s just the kind of thing that gives my profession a bad name (or makes people question if it is a profession.)  I can’t see any one of my clients betting their company’s survival on “you’ve got to believe,” nor would I have any idea how to quickly effect such a belief.

Culture is the set of ingrained habits that determine the way people do things in the absence of prescriptive policies and procedures. But more than just belief is needed to realign those habits with the critical success factors of the business. It takes a consistent message, conveyed through everything leaders do and say, about how people can come together, behave in specific ways to overcome obstacles, and achieve an exciting vision of the future.

But when the alligators are restless, there’s a more immediate way to achieve efficiencies and refocus efforts. Gather the responsible people together and give them all of the unvarnished information you can about the state of the business. Share the financials and the challenges. Then ask them to work together to come up with recommendations on what to do.

This will engage them, give them control over their destiny, and create ownership for what needs to be done.  Since they’re closer to the work, they’ll avoid many of the mistakes that are inevitable when cost-cutting is mandated from the top down.  If two heads are better than one, an entire organization of minds is bound to come up with better ideas than an individual manager, no matter how smart he or she may be.

This approach can be implemented quickly and doesn’t depend on turning around the Queen Mary of corporate culture before results are achieved.  Nor does it require a starship, or beans of any kind.  And when it’s employed, a high performing culture magically takes hold.

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The Strategic Imperative

It seems like everyday we’re treated to a business news story that just a couple of years ago would’ve seemed fantastic, but now is just taken in stride. Many of the pillars of American industry have either gone bankrupt or been acquired at fire sale prices, more than one quarter of all residential mortgages are under water, unemployment is at ten percent and could stay that high for years, and even Harvard has been forced to cut back because of the thirty percent drop in the value of its endowment.

All of these are just examples of what economists tell us is structural, not cyclical change. The business world is now a fundamentally different place, and things are not about to return to the way they were. In my day job, I see lots of pain out there, which drives an intense focus on cost reduction and a strong aversion to risk trying anything new. While it’s understandable that in such times people would just hunker down, I fear this is exactly the opposite of what needs to be done.

When a crisis hits, our fight or flight reaction kicks in, narrowing our vision to what it takes to survive. But the unexpected and painful event can also stop the automatic processing of the brain and change the way we look at things. We become more willing to change, and with a fresh perspective, we become more innovative and recognize new opportunities. How we respond is a conscious decision.

At the same time our economy is being transformed, so too is our understanding of how our minds work and how we make such decisions. We’re learning about how our perceptions shape the world we live in, how much our actions are driven by emotion and not logic, and how big ideas change the way the mind works. These and other findings of brain science challenge the conventional wisdom on how to conduct business.

The changes roiling the economy and the latest brain research combine to create an imperative for every company to fundamentally rethink their business. Customer needs have changed, but now we have better ways of understanding what they are. Costs must be controlled, but there are new management practices and organizational designs that ensure greater efficiency. Fundamental change is now a fact of life, but we have the tools to help people prosper from it.

Perhaps the most fundamental lesson of brain science is that the world is only what we think it is, but our thoughts will determine our actions. My bet is that those that see the present as an opportunity are going to take the bold action needed to flourish. Those that don’t will be yesterday’s news.

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What Can Brain Science Teach Us About Nasal Spray and Accountability?

In a recent study, researchers found that the neuropeptide Oxytocin leads to more trusting behavior, even in relationships where there’s built in conflict. Subjects that received Oxytocin through a nasal spray displayed more trust in the classic game Prisoners’ Dilemma than those that were administered just a placebo.

In Prisoners’ Dilemma, the logical bet is for both prisoners to look out for themselves and not depend on the other one being trustworthy. It’s a particularly interesting game for business because it mirrors life in most organizations. Each member stands to benefit from collective action, if everyone else is trustworthy. But if they’re not, looking out for number one is often the safer strategy. Or as a client once put it, “If it’s a question of my team being successful or sending my son to college, it’s a no brainer.”

Because of this, leaders have long struggled with the issue of trust, but now through the miracle of modern science, we have a solution. Everyone just needs a little sniff of Oxytocin nasal spray, which is apparently available on the internet for as little as $29.95 for a two week supply. That’s quite a bit cheaper than hiring a team building consultant.

Tempting as it may be, this is precisely the kind of lesson we don’t want to learn from brain science. It’s not only that the same spray could be used for dishonest purposes–imagine if it were pumped into the showrooms of used car dealers, but that we’re drawing the wrong kind of lessons from the latest discoveries. The real learning is that our behavior is driven less by the nature of any situation we may find ourselves in, than by the way we think about the situation. Change the thinking and we change the behavior, and we can it do perfectly well without recourse to pharmaceuticals.

Recently, one of my clients was distressed by the unwillingness of his direct reports to be held accountable. As a result, he was focused on how to improve the organization’s measurement systems and how to establish clear consequences for non-performance. While the right kind of measures are critical for any business and while people should not be immune from the consequences of a failure to perform, accountability is less of a problem to be solved than it is a symptom of a more basic issue.

When I talked to the direct reports, they weren’t unwilling to be held accountable. They just didn’t agree with what they were being held accountable for. Their objectives were set top down, and they felt that they didn’t match the reality of their businesses. Much as they respected and even admired their boss, they were convinced he was too far removed from operations to understand what they were up against. The perceptions of each were different and in conflict.

Our logical minds are deluded into either/or thinking. In fact, one of Aristotle’s laws of logic mandates that there can be no middle ground–something is either the case or it is not.  Either the objectives are fair or they’re not. Either the boss is right or the employees are. But when we move beyond logic and incorporate how the mind works, we appreciate that both the manager and his direct reports are right, from their point of view.

The solution to this disconnect is not tighter measures and more draconian consequences. It’s impossible to build an infallible system for accountability and threats of punishment hardly motivate people to give their all for the business. Instead, the conflict should be taken as an opportunity to rethink the business from the top down.

Our ideas are instantiated  in neural networks arranged hierarchically in the brain. Those at higher levels drive decision-making and behavior at lower levels that are in harmony with them. If we get agreement at the highest levels, operational conflicts disappear.

When I pulled together my client and his team to address the conflict over accountability, we started by agreeing on a vision for the business and a strategy to achieve it.  With everyone in sync on what they wanted to accomplish and how best to do it, the objectives and how to ensure they were met just fell out naturally. Even better, the managers now worked toward achieving their objectives because they wanted to, not because they were afraid of the consequences if they didn’t. The result was a tighter and more efficient organization, and far more engagement from everyone. In just a quarter, performance improved significantly.

A squirt of nasal spray might have made the direct reports more trusting of their boss and the boss more trusting of his people. But it wouldn’t have made the direct reports able to achieve objectives that didn’t fit their businesses. The best chance of improving performance is to address how people think at the highest level.

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