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Competition or Co-operation? Collaborate & Co-operate to build and not to destroy.

February 19, 2014 1 comment

Competition – or Cooperation? When companies merge, or when one company acquires another, the aim is to integrate the two into one unified entity as quickly as possible.

The problem is that often, this doesn’t happen. There is competition, resentment and rivalry and the two fail to unite. The problem is how to prevent this so that there is a successful integration of the employees of the two companies so that they take pride in the new merged company.

Rabbi Jonathan Sacks suggests that the Bible gives a way forward when he discusses what happened after the Israelites built the Golden Calf in the Sinai desert. They were given a task – to build a tabernacle to pray to God. Moses asks the Israelites to make voluntary contributions to the construction of the Tabernacle – the Sanctuary. They do so with such generosity that Moses has to order them to stop.

If you want to bond human beings so that they act for the common good, get them to build something together. Get them to undertake a task that they can only achieve together, that none can do alone.

The power of this principle was demonstrated in a famous social-scientific research exercise carried out in 1954 by Muzafer Sherif and others from the University of Oklahoma, known as the Robbers’ Cave experiment. Sherif wanted to understand the dynamics of group conflict and prejudice. To do so, he and his fellow researchers selected a group of 22 white, eleven-year-old boys, none of whom had met one another before. They were taken to a remote summer camp in Robbers Cave State Park, Oklahoma. They were randomly allocated into two groups.

Initially neither group knew of the existence of the other. They were staying in cabins far apart. The first week was dedicated to team-building. The boys hiked and swam together. Each group chose a name for itself – they became The Eagles and the Rattlers. They stencilled the names on their shirts and flags.

Then, for four days they were introduced to one another through a series of competitions. There were trophies, medals and prizes for the winners, and nothing for the losers. Almost immediately there was tension between them: name-calling, teasing, and derogatory songs. It got worse. Each burned the other’s flag and raided their cabins. They objected to eating together with the others in the same dining hall.

Stage 3 was called the ‘integration phase’. Meetings were arranged. The two groups watched films together. They lit Fourth-of-July firecrackers together. The hope was that these face-to-face encounters would lessen tensions and lead to reconciliation. They didn’t. Several broke up with the children throwing food at one another.

In stage 4, the researchers arranged situations in which a problem arose that threatened both groups simultaneously. The first was a blockage in the supply of drinking water to the camp. The two groups identified the problem separately and gathered at the point where the blockage had occurred. They worked together to remove it, and celebrated together when they succeeded.

The lessons for companies trying to work together should be obvious – integration isn’t through words but actions, collaboration and co-operation. It’s NOT through conflict or continuing the “us” and “them” approaches often seen.

In another, both groups voted to watch some films. The researchers explained that the films would cost money to hire, and there was not enough in camp funds to do so. Both groups agreed to contribute an equal share to the cost. In a third, the coach on which they were travelling stalled, and the boys had to work together to push it. By the time the trials were over, the boys had stopped having negative images of the other side. On the final bus ride home, the members of one team used their prize money to buy drinks for everyone.

Similar outcomes have emerged from other studies. The conclusion is revolutionary. You can turn even hostile factions into a single cohesive group so long as they are faced with a shared challenge that all can achieve together but none can do alone.

The point is obvious. In order to integrate two groups together – whether they are companies, teams, departments or any other collection of people – you need to encourage not just co-operation with motivational words, but also set in place collaboration that involves both groups sharing and building together.

When mergers & acquisitions fail it is often because the two parts don’t behave as one. The Robber’s Cave experiment gives an explanation on why this is – and more importantly, how to correct it.

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Pluralistic Ignorance

May 13, 2013 Leave a comment

How often have you heard something – and not questioned it, as you don’t want to appear stupid, foolish or ignorant?

Too often people accept what they are told and don’t question information. In educational environments this leads to a failure to learn. In business environments, it leads to bad decisions and bad strategy. Received wisdom becomes the operating principle rather than reality – especially when things have changed or are changing.

The reason people don’t question is that they don’t want to look foolish in front of peers, bosses or employees. Rather than highlight something that doesn’t make sense, they prefer to keep quiet so as not to appear stupid. The term for this is “pluralistic ignorance“. It is especially a problem in cultures where “losing face” is an issue. (I wrote about this almost two years ago -see  Competitive Intelligence & Culture). In such cultures, employees find it difficult to question superiors – there is almost a belief that superiors are in their position as they know more and are better.

Pluralistic Ignorance” is a phenomenon that prevents people questioning, when they fail to understand something or when they disagree with an issue, because they feel that they are the only ones not understanding or agreeing. It leads to “group-think” whereby a group of people fail to face up to their lack of knowledge or address false/inaccurate information because they don’t wish to appear foolish by questioning it.

In business it is important to emphasise communication and openness at all levels – and encourage questioning. This is especially key for effective competitive intelligence, but can be just as much a problem in CI as in other corporate areas if CI people aren’t looking out for it. For example, in CI there is the risk that a key piece of intelligence is missed because the person (perhaps a sales rep) doesn’t pass it on. They are sure that the CI team will already know this / that senior management is sure to know this – and so they don’t want to look stupid by passing it on.

The solution appears easy – build a corporate culture that rewards those who share information, even if it is already known. The difficulty is that such openness often contradicts other aspects of the corporation including hierarchical aspects – where one needs to address chains of command to pass on information. This leads to problems where the person at the bottom passes on information to their superior. This person then qualifies the information (exaggerating good news and softening bad news) when they pass it up – and by the time it reaches the actual decision-maker the information has been so transformed as to become meaningless and often false.

An example of how pluralistic ignorance works can be seen in this video of a college lecture. This brief (5 minute) video is the first in a course on behavioural economics. The lecturer, Dan Ariely of Duke University Business School (and TED speaker), is aware of the problem and halfway through this lecture shows how it works.

https://www.youtube.com/watch?v=-9wHttUayMo

Testing perceptions – Myers-Briggs and false appearances

February 25, 2013 Leave a comment

Every morning at around 7.45am, BBC Radio 4 includes a short talk from a religious figure giving listeners a thought to ponder. The daily “Thought for the Day” is given by Christian priests and vicars, Rabbis, Imans and others.

The Last Supper

The Last Supper
(Hans Holbein the Younger, 1524)

This morning’s programme (25 February 2013) featured  Dr Giles Fraser, priest-in-charge of St Mary’s, Newington. Fraser spoke about Jesus and pointed out that the Western World’s perceptions on what he looked like are likely to be wrong. He referred to classical paintings of Jesus and contrasted these to  Judas. Jesus is often blonde while Judas tends to be much more swarthy looking with a longer nose and red or dark hair. Jesus has become an archetypical North European, while Judas reflects stereotypes on how Jews are supposed to look. Of course Jesus was Jewish – and was born and lived in what is now Israel. So did Judas. Both would have had Semitic physiognomies – as both were Jewish.

Fraser’s point however has further implications. There is a tendency to put our own preconceptions and views onto others – and expect others to behave and think like we do. In a business context, this can be fatal as it means we see competitors as just reflections of ourselves. When a competitor comes up with something that appears odd, or that we don’t understand, the inclination is to say that the competitor has it wrong – rather than that we have it wrong, which could just as easily be the situation. This error is a classic type of blind spot.

Myers-Briggs Type Indicators

One part in Fraser’s short talk caught my attention. While he was studying to become a priest, he was taught about Myers-Briggs Type Indicators based on work by Carl Jung.  Fraser commented that both he and his fellow trainee priests were asked to assess the personality type of Jesus based on what they knew and had learned about him. They were then assessed using the Myers-Briggs test. Most found that the personality type they had given to Jesus was actually a reflection of their own type.

The implications for this are that people have a tendency to assign their own expectations and prejudices onto others – and judge them accordingly.

Myers-Briggs test form

The Jungian Briggs Myers 16-Types Personality Test (JBM16) is designed to measure how you like to look at the world and make decisions.

In business recruitment, this can mean choosing a candidate who, rather than bring something fresh to the business, just continues the same old approach. Although this may avoid conflict, it also means that the chance for new, innovative thinking and an ability to change or challenge current norms is also lost. There is a real risk that recruiting clones may lead to the business stultifying and failing to recognise new opportunities and threats.

In research interviewing any attempt to profile an individual remotely is just foolhardy and a key source for interviewer bias, resulting in flawed interviews and erroneous conclusions riddled with misconceptions. Yet there are interviewers who claim to be so expert at such psychometric evaluations that they can assess an interviewee within minutes even though the published tests for Myers Briggs involve dozens of questions  that need to be answered before an assessment can be made.

In business analysis it can lead to a potentially more serious problem. Some analysts pride themselves on their ability to identify the personality type of business or political leaders, without meeting them and with minimal information. Unless there is a vast quantity of information available on another individual – speeches, TV and radio interviews, published articles and opinion pieces, etc. it is risky to extrapolate about another individual and anticipate their behaviour remotely. The danger is that the analyst may project their own typology onto the leader – judging them by reported actions without necessarily understanding the thought processes that lay behind those actions or even the accuracy of the reporting. The risk is that any assessment will be based on prejudices – rather than reality, and so lead to poor decisions.

Business research and analysis should depend on accurate and rigorous methodologies, and not pop-psychology. Myers-Briggs can be useful when backed up by sufficient data. It should be viewed as an analysis tool requiring detailed insight into the subject. Using these, and other similar psychometric approaches, as a basis for complex business decision-making without the full data as demanded by the process is another route to business failure, so treat with care, and treat advocates of these tools even more carefully.

Myers Briggs personality types

Great service leads to growth & profits – for Bettys, it’s a piece of cake!

July 9, 2012 1 comment

I recently visited a friend in Leeds – a major city in the North of England. On the Sunday, a group of us travelled the short distance from Leeds to Harrogate, a few miles away. Harrogate is a spa town – you can walk past the “Royal Pump Room” museum  and still smell the sulphur from the spring below. This is just one of several mineral wells containing iron, sulphur and other chemicals that made the town an attraction in the Victorian and earlier Georgian eras.

As well as the spa, Harrogate also features the first Bettys Tea room.

Bettys Tea Room

Bettys was founded in 1919 and has since grown to include a number of other tea rooms across Yorkshire. The family run company now also includes  Taylors of Harrogate, the tea and coffee merchants with brands including the best-selling Yorkshire Tea.

Our visit to Harrogate included a visit to Bettys for morning tea and cakes. We were amazed at the level of service provided.

One friend asked about the orange juice on the menu. “Was it freshly squeezed?” Instead of just acknowledging that it was, we were told that it had been – but not that day, but on the Friday, as it was squeezed off-site and not at weekends. We asked about the ingredients of one of the cream cakes – was it made with butter or margarine and was it suitable for vegetarians? The waitress wasn’t sure – so said she would check in the ingredient listings. It turned out that it was made using butter and was fully vegetarian.  It tasted superb.

I watched our waitress (on the bill it said her name was Jade) – and others. They smiled, they conversed, were friendly, helpful, and their body language showed a real care and attention to each customer.  They knew their products – and if they weren’t sure they didn’t lie or guess, but went to check. The service was impeccable.

It turns out that the superb service is no accident. I asked whether there was any training provided – and was told that each waitress had one-to-one training before starting, and they were expected to learn the menu and were tested. They had an induction phase where they were watched and it took some time before they could graduate to become a full waitress. This training showed – it wasn’t just in product knowledge but also in the whole interaction with the customer, that made our visit such a pleasure. Bettys even has a dedicated website devoted to working for the company at www.workingforus.co.uk.

The results of this focus on excellence show in Bettys financial results. The company consistently makes a profit – and turnover and net worth has grown impressively over the last 5 years. This is despite one of the worst downturns for decades – showing that Bettys has come up with a strategy that seems recession proof. Although profits have not shown the same growth, they’ve remained stable – perhaps reflecting the value offered by the company, compared to competitors. (We paid more for our sub-standard tea on the self-service motorway café journeying up to Leeds).

Bettys shows how important service is for a business, and how appropriate training can lead to top-quality results, and evident staff satisfaction. (In 2007 Bettys was listed in “the 100 best companies to work for” compiled by The Sunday Times). This focus on quality, in the product as well as the product knowledge, attention to detail and customer focus can translate to the bottom-line result – and lead to turnover growth and profits.
Queue outside Bettys, Harrogate
The queues outside, waiting to get into the Tea room is evidence that Bettys is doing something right. The results – financial and reputational are too. It may look like a piece of cake to achieve this – but the numbers of companies that fail to provide adequate service shows that it isn’t. Maybe they should make a visit to Harrogate part of their own staff training!

Disagreements at the top

March 16, 2012 1 comment

This week the news reported the departure from their companies of two executives – both long-standing.

Greg Smith’s departure from Goldman Sachs, after 12 years, has been reported globally. This is not surprising – as everybody loves to hate bankers, and investment banks. The claim that Goldman Sachs viewed clients as “muppets” is a delicious image, and so it’s not surprising to see a journalistic feeding frenzy following Smith’s resignation letter, published in the New York Times on 14 March 2012.

The real question however is whether Smith’s departure matters. I think that it depends on what clients do, and I suspect that the answer will be very little or perhaps nothing. Obviously Goldman Sachs’s aim is to make money. In a testosterone fueled environment, bravado, where clients are called muppets and phrases such as “hunt elephants” (referring to getting customers to spend more with you) shouldn’t be a surprise. If anything, the discussion will raise again (for a few more weeks) the issue of banker remuneration. It may even have a salutary effect by making firms such as Goldman Sachs emphasise that ethical behaviour in business must be the norm, and that the 1980s dogma that “greed is good” is not an asset post the 2008/9 financial crisis. As Goldman Sachs has said in response:

In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.

In fact, as the Economist suggests, the real muppet may be Smith himself, for not realising that clients aren’t stupid, and that if they weren’t getting value from the firm they’d move elsewhere. I suspect that the real reason for Smith’s resignation was sour grapes. Perhaps somebody got a bigger bonus. Whatever the reason, it’s unlikely he’ll find similar work with other banks – as no company will want to employ somebody who is quite so vocal in their condemnation of their former employer.

The more interesting departure however, from a strategic perspective, was that of Richard Brasher, the UK boss of the supermarket Tesco. Brasher was the most high profile departure since new CEO, Philip Clarke, replaced Sir Terry Leahy. Leahy retired from Tesco at the end of February 2011 and since then a number of other senior executives have left or are leaving the firm. These include

  • David Potts, head of the Asian operations who will retire, aged 55, from Tesco in June;
  • Andy Higginson, head of Tesco bank and former group finance and strategy director – also aged 55;
  • David Reid, Tesco’s chairman – who was replaced by Sir Richard Broadbent in November 2011;
  • Lucy Neville-Rolfe, Tesco’s director of corporate and legal affairs, who will retire from Tesco in January 2013. Lucy Neville-Rolfe’s role is being split into two – neither of which will be a board post;
  • Richard Jones, Head of Clothing who has moved to the private Irish supermarket, Dunnes, taking the same role;
  • Laura Wade-Gery, CEO of Tesco.com and Tesco Direct, and head of non-Food, who has moved to a board-level position with Marks & Spencer.
The news stories reporting Brasher’s departure mentioned Tesco’s poor winter sales implying that this was the reason for the change. Philip Clarke will take over Brasher’s role, combining the job of UK CEO with that group Chief Executive. Some reports suggested that deep disagreements existed between the two over strategy for the UK – which issued its first profit warning for 20 years. Tesco has not denied this. Although originally Clarke said that there was no rift between the two, he changed his tune after the announcement of Brasher’s departure, saying

You can’t have two captains in a team

However it’s not just Brasher that seems to be finding a problem. The number of senior executives – especially long-standing executives – leaving Tesco suggests profound disagreements at the top.

David Reid was expected to retire and Tesco had been looking to appoint a new chairman to replace him. Potts, Higginson and Neville-Rolfe are also reported to be retiring. Their departures, so close together, suggests an unhappiness with Clarke’s management of Tesco as generally companies try and prevent large-scale boardroom changes to ensure continuity.

When a board is split over strategy and cannot agree, continuity is not possible. Management is all about consensus and agreement on the path that should be followed.  If this is not possible  there has to be change, with one side or the other leaving. The alternative is chaos, resulting in the company losing share and profitability as the focus moves to internal dispute, rather than market growth. This appears to be the situation at Tesco – forcing Philip Clarke to assert his authority. It was either his head or Brasher’s. As Clarke said: there can only be one captain.

 

Note: After writing the above article I came across a great Harvard Business Review blog looking in depth at Goldman Sachs culture and how it may have changed over the years since Greg Smith started (and why). Worth reading for any Goldman Sachs watchers:

http://blogs.hbr.org/fox/2012/03/greg-smiths-resignation-op-ed.html

9% of 11-year old boys can’t read! So what?

December 17, 2010 1 comment

You can tell that news is sparse on the ground – unlike the snow. The newspapers have already done a blanket coverage on the snow and how the UK again skidded to a halt, so they can’t do that one again. Instead, the press is trumpeting on about how terrible it is that 9% of boys can’t read properly when they leave primary school.

Apparently BBC Radio 4 asked the Department of Education for the number of children who failed to reach level 2 reading age, the standard expected for seven-year olds, and found out that around 18000 boys aged 11 had a reading age of seven or less. This was in contrast to other statistics that have shown a steady rise in standards – with children achieving the expected minimum level 4 having gone up from 49% of children to 81% in the last 15 years.

Seemingly, even worse, in some areas – for example Nottingham – 15% of boys failed to get past the level 2 reading level.

The problem with all this isn’t the statistic but the lack of context. When reporting information (whether for competitive intelligence, general business or marketing research, or whatever) it is essential to include the context. A figure on its own is meaningless. In fact, those figures for Nottingham could be brilliant – if five years ago, 30% of boys had failed to get past the level 2 reading level. It would mean that the numbers of children failing had halved. Conversely if the number had gone up from 5% then this would be a massive indictment against the teaching profession who were failing to motivate and educate their pupils.

In fact, the original story from the BBC does give some context.

In 1995, the proportion of 11-year-olds getting Level 2 or below in English – the standard expected of a seven-year-old – was 7%. In 2010, it had fallen only to 5%.

The figures show the problem is worse for boys. Overall in England, 9% of them – about 18,000 – achieved a maximum of level 2 in reading.

This shows that in fact, performance has improved overall, with underachievers falling from 7% in 1995 to 5% of all children now. However without a longer-term trend it is impossible to put much value into the statistics – especially as other research reported by the BBC looking at seven year olds showed that children with special educational needs, and from deprived homes (meaning that they were entitled to free school meals), were the worst performers. A third (33.6%) of seven years olds on free school meals failed to reach the requisite level 2 in writing and 29.3% failed to reach this level for reading. In contrast, the children who did not receive free school meals did much better – only 12.1% failed to reach the required level for reading, and 15.5% for writing.

I’m actually surprised that some mathematically-challenged journalist hasn’t picked up on these figures and claimed that providing free school meals results in children under-performing at school. In reality, all the figures show is that such children have barriers to learning that schools have to try to overcome. This may be because the children are under-stimulated at home (and so start at a lower level than their peers), come from homes where English is not spoken by the parents or are of lower intelligence overall. (In fact, intelligence tends to fall on a normal curve. If 10% of children outperform – and have a reading age 3 years ahead of the norm, you can expect that a further 10% will have a reading age 3 years less than the norm).

The lesson from such statistics and reporting is simple: before publishing statistics in the press or in a business report provide a context.

This context can be temporal – looking at how figures change over time. In the case of the school statistics, they appear to have improved over the years for both the low and average achievers – a testament to the teaching profession. Context can also be seen when comparisons are made – as in the comparison between children on free school meals versus those not entitled to this benefit.

Strategic decisions based on figures should only be made when context is included. Without it, the figures mean nothing, and should be left to melt away, like snow.

The Art of the Possible

October 17, 2010 2 comments

I try and make sure that my blog posts stand on their own – and if read in a year’s time will still be relevant. Although I sometimes focus on news issues, I always try and look beyond to lessons that can be learned.

The news this week throughout the world has focused on the rescue of the Chilean miners. News stories have focused on how the 33 miners kept up their spirits, their faith in God, their humility and so on. The rescuers were praised for their commitment to free the miners – and that they never gave up.

There are numerous lessons to be drawn from this news story – for management of businesses and humanity in general. However I’m not the first to spot the connections. Jeff Kaplan’s ThinkIt blog post Corporate Lessons from the Chilean Miner Rescue is worth reading. Jeff highlights how the rescue showed commitment to save the miners, determination to rescue them, and for the miners to stay alive, cooperation to achieve the objectives, and several more aspects that made the rescue possible.

There was one area that Jeff didn’t cover, and that is that believing in yourself can turn something that seems impossible into something possible. Benjamin Zander, the  conductor of the Boston Philharmonic Orchestra co-wrote a great motivational book – “The Art of Possibility“. I think that this is the true miracle of the Chilean miners and the best lesson to be learned. Rather than give up the miners as lost, efforts were made to locate them. When they were found, even more efforts were made to get them all out alive. What seemed impossible was proved not to be – difficult, but achievable.

However bad things are, giving up is not the solution. Rather, try, try and try again. Failure should never be an option. Instead focus on succeeding – and if things don’t go right first time, try again, learning the lessons from the first time so that mistakes aren’t repeated.

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