The Business Sensei

Thoughts on multitasking

When we multitask, we force our brains to continuously move information around. Ever notice how your computer starts to slow down and the disk light flashes more when you have a lot of apps open? The computer has to constantly rotate information from the hard disk to RAM depending on which app you’re using. Our brains are very similar. Unlike computers, however, which never get tired, our brains very quickly get tired.

Another problem is that our brains are built to remember uncompleted tasks. As we start to stack up uncompleted tasks, more and more of our mental computer becomes engaged in tracking the uncompleted tasks, leaving less available to deal with the problem in front of us.

The net result is that multitasking brings about a short-term pop in productivity, for maybe a couple hours (if that), but productivity swiftly declines after that. Unlike other skills, which improve as we use them, our performance while multitasking does not improve: instead, our ability to concentrate on a problem may actually decline because we develop the habit of switching too often and too soon.

An office with a lot of multitasking is almost always one in which work flow and office routines are not well developed or thought out. Most so-called emergencies aren’t.

So how is that some people (e.g. athletes) appear to do multiple things at once? If you practice something until it becomes second-nature, then you can appear to multitask. The key is that the practiced activity no longer takes any appreciable amount of concentration: think of it as a body macro. However, like macros they are hard to interrupt, change on the fly, or pick up in the middle if you do get interrupted.

The importance of a vacation

I was recently interviewed for an article in AOL Jobs on taking breaks. You can read the full article here, or a related article (which I had nothing to do with), here.

The first article didn’t use everything I wrote, so here’s the full text, including the questions I was asked.

• Why is it so important from a performance perspective to log off and then return to work completely refreshed?

Let’s start by understanding how our brains work. We are built to tune out repetitive stimuli and focus on the novel. This isn’t all that surprising: most animals are built that way. It’s not the unchanging thing that is most likely to be a threat, it’s the thing that’s changed. Taking breaks allows us to view our work with new eyes instead of becoming bored and burned out.

Another piece of the puzzle is the way we make intuitive leaps. Archimedes didn’t have his “Eureka!” moment while he was staring at the problem. He had it when he took a break and went to the baths. Taking breaks enables the mental static to fade out and the creative and unexpected connections to pop up. Some of the recent work in neuroscience suggests that, although they’ve become encrusted with mystic gibberish, Zen Koans are designed to force the brain to essentially “take a break” from a problem it is stuck on.

• Is it helpful to perhaps check e-mails periodically on vacay for urgent matters to diminish anxiety and the workload upon return or is it better to be completely shut off?

I’m not sure that there’s a one-size-fits-all answer to this. There are some things to recognize though: our brains are built to remember uncompleted tasks better than completed tasks. You might ask, “If that’s so, why do we forget so many tasks?” The answer is that we are usually trying to remember too many different tasks!

When we check our email during vacation, we run the risk of seeing a problem that we feel we have to address and can’t from where we are. At worst, that can blow the vacation out of the water. If nothing else, it can ruin the rest of the day, or several days, because we can’t get the problem out of our heads. If you are going to check email during a vacation, make sure you have an easy way of queuing anything important so that you’ll be reminded of it when you get back. That makes it much easier to forget about it during vacation without worrying that you won’t remember to deal with it.

I will observe that the people who have the most trouble unplugging during vacation are also the people who work for or lead teams that have significant other performance issues. If you feel that you must check email during vacation or your team won’t be able to get anything done, that’s not an email problem, that’s a team development problem. You need to fix it. Similarly, if you’re telling me that people on your team can’t take a vacation without so much work piling up that they either have to work from the beach or are overwhelmed the moment they return, that’s also not a vacation problem. That’s either a team development problem, a leadership problem, or a scheduling/time management problem, possibly all three. Address those issues and you’ll be amazed how many of the other problems go away.

• What are two or three ways people can do this? For instance, one source told me to simply not bring the BlackBerry to the beach so you’re not tempted and in turn, you avoid losing the BlackBerry to sand damage.

Turning off the computer, putting the iPhone on airplane mode (so you can still listen to music), etc, are common techniques. I usually leave the computer off at least one day of every weekend. The real answer, though, is not technological, it’s personal: develop the habit of turning off. By turning off the computer one day of the weekend, I am practicing turning off under “controlled conditions.” When I went camping with my family earlier in the summer, I did bring the computer in case I wanted to write (I didn’t — never turned it on), and I put my iPhone in airplane mode. I took it out of airplane mode once to delete emails. Didn’t read anything, just deleted anything that was obviously unimportant.

It feels difficult at first to turn off. That’s why practicing is important.

• What are some benefits to logging off?
  

See above. Logging off helps increase motivation, productivity, and creativity. Let me add that the brain is a muscle. Like any exercise, it pays to change it up so we don’t get stuck in ineffective habits.

• In this digital age it makes it so tempting to remain connected but is it better or does it no matter if a vacation is a vacation is a vacation whether or not you take a long weekend that’s 100% work-free or a two week vacation whereby you periodically check in for messages?

It takes 7-10 days to really destress and start to relax. Staying connected can only slow that down. That said, if you can be disciplined about not getting sucked into your Blackberry and can control your time, checking for messages probably won’t do too much harm. Keep in mind, though, that once you show your co-workers that you’re available to help them during your vacation, you can count on them continuing to bug you. After all, by responding while on vacation, you’ve effectively given them permission.

• If there’s anything else you’d like to add as it relates to how to log off and why we need to, please feel free to add.

If you do check for messages, make sure you have a good calendaring service (e.g. iCal, GCal, followup.cc, etc) where you can quickly and easily schedule reminders for when you get back.

If you find yourself waking up in the middle of the night worrying about work or can’t get work problems out of your head, block out some “worry time” on  your calendar. Give yourself 15 minutes, and move on. Once we’ve addressed an uncompleted task, even if merely by scheduling time to think about it, we can let it go.

The Corporate Culture Conundrum

I get asked a lot about corporate culture. In this case, I ended up responding to a very detailed query at such length that I decided to include it here since I doubt the person interviewing me will be able to use all of what I wrote (I’m also posting this after the article comes out, so I don’t upstage anyone).

Let’s start by defining culture. At root, culture is nothing more than the residue of perceived success. In other words, it is the accumulated knowledge of how to be successful at a particular company and how the company is successful in the marketplace.

Why success and not failure? Simple. We tend to repeat the behaviors that appear to bring us success, and discontinue those that do not. Moreover, cultures based on failure simply do not survive. At some point, there have to be successes in order for the culture to remain viable.

I focus on perceived success because what really matters is not whether a behavior is really successful so much as our belief that it is successful. For example, in the 1990s, Nokia firmly believed that its success was due to its innovative management style. The reality was that they had a hot product, cell phones, in an exploding market. When the market saturated, their revenues dropped off along with every other cell phone provider in 2000. Today, Nokia is increasingly irrelevant. If everyone at the company had come to work wearing Groucho Glasses every day, their product would still have sold and they might very well have ascribed their success to their innovative dress code. The results would have been pretty much the same, although people might have been inspired to tell better jokes.

Because culture contains within it the memory of success, it is very hard to change. No one likes to change what’s working! What’s worse is that a behavior rarely succeeds all the time: when something doesn’t work, we ascribe the failure to “not trying hard enough” and resolve to do better. The resulting semi-randomness to the success produces a response similar to playing a slot machine: random success is highly addicting.

This phenomenon becomes particularly important when we realize that the business environment changes more rapidly than the culture. A once successful behavior gradually stops working. However, because it fades out slowly, intermittent successes along the way serve to make the behavior stronger and stronger even as its usefulness is decreasing. When it comes to not changing a behavior, it takes only the occasional success to make up for an awful lot of getting kicked upside the head.

This also means that there are two key aspects to culture: what we do and why we do it. Most organizations focus purely on the “what” and ignore the “why.” Even when an organization attempts to change culture, they almost always focus on what they are doing. Unfortunately, when you only change the what, you are changing the superficial. The underlying why will rapidly pull the new behavior back into alignment with the original behavior; although cosmetic changes may persist, the new “what” will be fundamentally identical to the old.

The “whys” of culture also interlock: there is rarely one reason for a particular behavior. As a result, attempting to change one “why” can also be quite difficult because a) it’s hard to identify it precisely, and b) the rest of the interlocking structure of beliefs pulls it back. It is quite possible for a CEO or senior management team to simply chop off a piece of a corporate culture, but it can be quite unpredictable what else they’ll lose: for example, when IBM dropped its traditional full-employment policy, they also lost a great deal of employee loyalty and their historic “IBM takes care of me and my family, I take care of IBM” employee mindset.

With that said, let me jump over to your questions:

1. How do you know when there's something wrong with your corporate culture (what are 2-3 signs), or how do you know if things need improving just a bit?

Something is “wrong” with a corporate culture when the culture can no longer obtain resources, that is to say clients and revenue, from its environment. The early symptoms can manifest in several ways before the revenue drop really hits. The most common is a persistent feeling of being stuck: more and more effort is expended for less and less success. Previously successful revenue generating behaviors are losing their effectiveness, but doing so in fits and starts.

Another common symptom is increasing defensiveness on the part of management: executives don’t want to hear why something isn’t working, and attempts to address problems are met with denial. At exactly the point where the executive team should be bringing in outside help, they become increasingly unwilling to do so. An outsider is far too likely to grind the sacred cows into hamburger. IBM’s decision to bring in Lou Gerstner in 1992 is an example of a company overcoming that fear of outsiders and actually addressing their problems.

A third symptom of culture problems is a persistent inability to make and keep decisions. When teams within the company, or the company as whole, continually revisits discussions and can’t seem to follow-through on goals, that’s a major warning sign that you need to take action.

2. Where do generational differences among staff and colleagues come into play?

Let’s start with the elephant in the living room: the Gen Y myth. This whole concept that Gen Y’ers are somehow less dedicated, less motivated, or less <insert here> than Gen X or Boomers is, quite simply, a myth. Indeed, the whole idea that the younger generation is less respectful, dedicated, hard-working, and so forth, than their elders is itself a cultural belief that goes back at least to Socrates.

What is different, however, is that Gen Y’s do not share the cultural belief that you graduate from college, work at one job for 40 years, and retire to enjoy your “golden years.” While this was, or at least appeared to be, a valid cultural belief at one time, it is no longer valid in the current environment and shows no signs of regaining validity. However, for those who grew up with it, it is very difficult to put it aside.

Within an organization, what matters first is not the generational differences but the degree of immersion in the culture of the organization. Younger employees are less deeply immersed in the culture; they’ve had less time to absorb it and to assume its values. Thus, they are more likely to propose ideas and approaches that older employees view as violating cultural values and hence are more likely to reject. Note, by the way, that I’m referring less to chronological age than to amount of time with the company. Since the older employees typically have more authority, younger employees are more likely to be frustrated. How they cope with that will, however, be strongly influenced by their generational cultural values: a Boomer or X’er might decide that if they stick around and pay their dues, they’ll get a voice in due time; a Gen Y’er is probably more likely to go somewhere else. One solution is not inherently better than another.

3. How do you cultivate a creative and collaborative team (what 2-3 three things can really build that team culture)?

Culture is whatever is seen as successful. If you want people to collaborate, reward collaboration. Sounds simple, but it just doesn’t happen. Companies focus on individual performance and individual reward. As a result, they get a bunch of individuals often competing for a limited pie. While it is important to acknowledge and reward individual contributions, that cannot be all that you reward and it should never be set up in a way that creates competition between team members.

4. It's all about innovation, how best to encourage creative brainstorming for service/product innovation (what works and what doesn't and why)?

There are four culture traps to avoid and four cultural beliefs to build. The four traps are:

Perfection — We must make the perfect mousetrap… which works until someone comes along with a cat.

Protection — We must not hurt our existing products. Pity our competitors don’t feel that way…

Identity — We’re an X not a Y. IBM was a serious business company in the 1980s. They didn’t “do games.” Now they’re heavily involved in serious gaming.

Creeping Box — We’re so far outside the box no one can catch us. Just ask Yahoo… Once you move outside the box, the box grows and suddenly you’re just one of the pack.

The cultural values to foster

Continuous education — Keep people learning. Don’t limit people to taking classes in their areas of expertise; rather encourage employees to study whatever interests them. Innovation comes from putting together apparently disparate pieces of information.

Making mistakes — How do you respond to mistakes? Innovation is a messy business. If mistakes are punished, no one will risk making them and innovation will falter. Thomas Edison famously said that he’d learned a thousand ways to not make a light bulb. Easy to say, hard to live.

Strategic breaks — Allow the breakthrough to happen. The “eureka” moment doesn’t happen when we’re exhausted from banging our head against the wall. It comes when we take a break and do something different. Learn how to take breaks strategically.

Patience — Don’t wait for a crisis to force your hand. Necessity may be the mother of invention, but waiting for the last minute to start innovating is the number one cause of premature death amongst new ideas.

5. How do intangibles like volunteerism, office greening, impact corporate culture?

Intangibles matter to the extent that they reflect the corporation’s values, beliefs, and aspirations. Volunteerism can be very important in a company that views itself as a good citizen of the community. However, to be effective, intangibles have to be worth the time and energy expended on them. If employees who volunteer their time end up being paid less or promoted less frequently than those who don’t volunteer their time, volunteerism will fade out. The behavior that is rewarded will become part of the culture, and the culture will attract those who believe in the values manifested through the behavior.

6. What are other intangibles that are important but corporations may not be keen about their importance?

How meetings are conducted, whether employees are permitted to work from home, how much freedom and autonomy versus direction employees are given, how mistakes are handled, how disagreements are managed, how permissible it is to question authority, are just a few of the intangibles that shape cultures.

7. How important is culture today and why?

Organizational culture is probably the most important most powerful force in any corporation. Because culture is the lessons of the past, it provides the template for how to behave in the future. Once a corporation loses sight of its culture, it’s only a matter of time before it slams into a brick wall.

8. Is your sense that most firms are focused on their culture, why or why not?

While many firms focus on their culture, they focus on the wrong aspects of it. Most companies focus purely on the “what,” those superficial artifacts that are easy to see but which have the least significance. It’s hard to focus on the “why.” Indeed, really delving into the “why” of your culture is rather like performing open heart surgery on yourself. In other words, you need the assistance of a trained outsider who is not immersed in your culture to see the elements you take for granted.

9. Any interesting, stats, surveys or other data about corporate culture?

Let me point you my book, “The 36-Hour Course in Organizational Development.” Chapter one is about culture and the entire book discusses how organizational development shapes and is shaped by culture.

10. If a company can make only one change in it's culture, how to determine what should be that priority?

The biggest priority is changing the belief that you can change only one thing… Seriously, culture change is not a precise, surgical operation. Sure, if you’re only after changing the “what,” you can pick one thing, but for anything non-trivial you have to go after the “why.” That requires taking the time to really understand what values and assumptions that are taken for granted are no longer valid, and then building up a new set of values and assumptions. Most culture change fails because it tries to focus too narrowly on one thing. Corporations go through a lot of pain and spend a lot of money only to experience a fleeting success before the culture reverts back to the way it was: when you seek to change only one thing, everything connected to that one thing acts to pull it back to its original form.

Psychology of branding

I was interviewed recently on the psychology of branding and creating personal brands. Since this question comes up a lot, I’m posting my thoughts here.

Let’s start by looking at what a brand is. At the most basic level, your brand is what people think of when you’re not there. IBM, for example, built a brand of service and dependability in the 1940s-1970s. Then their brand became overpriced and stodgy before they took control back in the 1990s and rebranded themselves.

Broadly speaking, a company’s brand is the shorthand for what they do and what’s exciting about them. A given brand won’t interest everyone; the goal is to create a brand that appeals to the people to whom you want to appeal: your target market if you’re selling products/services, your potential employees if you’re hiring, and so on.

Creating brand loyalty as early as possible and reinforcing whenever possible thus does two things: it builds your potential customer base and it builds a pool of people who start to connect themselves to the brand, who start to think of themselves as representing the brand. This is one of the easiest ways to attract potential  employees because they self-select: they’re already interested and at least passively loyal to the ideal of the company. Hiring people who are already bought into the ideal of the company saves a lot of effort convincing them to buy in later, and those employees are also the easiest to motivate.

Individuals, however, do not have the reach of a corporation. Corporations are also abstract entities, whereas individuals are, well, individual. Thus, individual brands need to focus more around personal attributes and what the brand means to others. For an employee, this usually means branding yourself as someone who produces results for the company. Specific details will vary according to the industry: a software engineer might build a brand as someone who writes bug-free code or who always delivers ahead of deadlines, etc. A salesman might build a brand around closing the most difficult clients, around rapid closure, around rescuing faltering deals, etc.

One of the reasons why candidates may stand out in an interview but fail to make a mark on the job is that they saw the interview and landing the job as the goal, instead of as a stepping stone. Another problem is that after a candidate lands the job, they often aren’t quite sure what to do next to stand out. If a candidate wants to establish their brand during the interview and then hit the ground running, I advise asking the interviewer(s) the following question: “If you hired me and in six months thought I’d done an excellent job, what would I have done to make you feel that way?”

Take notes when the interviewer answers! Not only does this question help the interviewer convince himself to hire you, you are also identifying your initial most critical goals. Hitting those goals establishes you as someone who produces results. Once you’ve established that brand, not only do better assignments come your way, you are also more likely to be forgiven if something does go wrong (and the fact is, sooner or later something always goes wrong).

What Big Picture?

As published in The CEO Refresher

Using the Force: What Every Exec Can Learn from Darth Vader

As published in the Worcester Business Journal

My 6-year-old son is seriously into Star Wars. As we were watching the movies recently, he turned to me and asked, “Why is Darth Vader such a mean leader?”

Coming from a kid who thinks the Sith are kind of cool, the question took me by surprise. On the other hand, it’s rather heartening to see that even a small child can recognize bad management. Of course, the real question is not what makes Darth Vader such a bad leader. After all, when you’re the Dark Lord of the Sith, you don’t really need a reason. More aptly, the question is: What does it take to be a good leader?

No Intimidation

First, we have to dispense with the primary weapon of the Sith: fear. Darth Vader rules through terror, but the fact is, you don’t need to have the power to choke people to death using the Force to create a climate of fear. Fear is very effective at getting people to move away from something. In the practice of Jujitsu, fear of injury is often quite sufficient to convince an attacker to dive headfirst into the ground or into the nearest wall. Some mistakes are a natural part of doing business. When people are shamed for making mistakes or threatened with loss of their jobs if they don’t measure up, they become less creative, less dedicated and errors are not corrected.

Team Spirit

To be a positive leader, the first step you need to take is to focus on affiliation. You might also think of it as team spirit. When people come together to form a team, the first thing they do is look for common ground. To really create affiliation, the leader needs to actively get to know his team members and encourage them to get to know one another.

Independence

Next is building autonomy. Perhaps counter-intuitively, autonomy is the result of having structure. Structure lets each team member know what the others are doing well enough to trust them when they aren’t visible. That trust is what permits autonomy.

Lack of structure is chaos. Too much structure is stifling. For example, when an employee comes up with a good idea and your response is to ignore them, that is too little structure. When you say, “Good idea! Here’s how we can make it better!” that’s too much structure. Appropriate structure is to say, “Great idea! How did you come up with it?”

Great Expectations

Competence is not just hiring competent people. It’s creating an atmosphere of competence. Nothing succeeds like the expectation of success.

Managers can motivate employees in one of two ways: you can focus on failures, and make dire predictions about what will happen if employees screw up; or you can focus on success, and remind the employee of the things they did well.

The keys to great leadership are: get away from fear, build affiliation, create structure to enable autonomy, and craft an atmosphere of competence.

The hard part is finding the right balance for your team and your company. Start slowly and let yourself accelerate as you learn to use these techniques effectively. You’ll soon be amazed at how fast you’re going.

Common Hiring Mistakes

When I spoke at ERE Expo, Todd Raphael, editor of the Journal of Corporate Recruiting Leadership, interviewed me on why companies make hiring mistakes. The interview is now up on YouTube: http://www.youtube.com/watch?v=GUFbWww7Pic.

Mousetrap Company

As published in Corp! Magazine

Remember the classic kid’s game, Mousetrap? In this historic tribute to the legendary Rube Goldberg, players have to assemble an exceedingly convoluted and baroque mechanism that will supposedly catch a mouse. As I have young kids, I recently had a refresher course in the game. What was interesting was the debate about which part of the trap is the most important: the crank turn at the beginning? The shoe that kicks the bucket, the ball bouncing down the stairs, the diver that flies into the washtub or the trap itself falling down the pole? In the end, most of the kids decided that it must be the trap, since without that you can’t actually catch the mouse.

Listening to the debate, I had the rather disturbing experience of being reminded of a certain software company. A similar debate occurred there as well: the engineers who were supposedly designing and implementing the software were being raked over the coals because they hadn’t successfully produced a workable product by the deadline. At first glance, it was clearly their responsibility to build the product, and their failure was costly indeed to the company.

The first glance is not, however, always the most accurate one.

In the game of Mousetrap, a number of things have to happen correctly in order for that all important trap to fall. If the shoe doesn’t kick the bucket, the ball won’t go bouncing down the stairs. If the crank doesn’t turn, the gears won’t rotate and the shoe won’t move. Indeed, while a failure at any point in this wonderfully elegant mechanism will derail the whole thing, failure at the start means that it won’t even get going.

At this software company, the process for getting a release out the door was, unfortunately, even more elaborate than the mousetrap. The biggest problem, though, was the crank at the top. The company had several products, and competition for resources was fierce. What the CEO seemed to be paying attention to was what received the time and energy of the engineers. Although the CEO kept saying that this particular release was critical to the future of the company, he made no effort to organize the company around that release, nor did he delegate that task to anyone else. Thus, the assumption from the top down was that this release couldn’t really be as important as all that.

By the time engineering got involved, the engineers were focused on multiple tasks. Without any direction from above, they took their best guess on which direction to go. Being engineers, that meant that they pursued the interesting technical problems, not the serious business priorities: when not given direction, most people will do the thing they are best at doing, whether or not that is the thing that really needs to be done at that moment.

When it came time to ship the product, the best that could be said about it was that it didn’t crash too often. The customer was not pleased.

What happened here was that there was no logical flow of control or means of prioritizing tasks. Superficially, an unhappy customer was the fault of the engineers; certainly, they took the blame. However, was that really accurate? The engineering team did their job as best they could with the information they had available. The real failure was in the leadership: when no one is leading, people follow the path of least resistance. That may not get you where you want to go. Although the failure did not manifest until the very end, the seeds of that failure were sown long before the engineers ever started working on that particular product.

Fundamentally, it is the job of the leader to set the direction for the company and keep people moving in the right direction.

It is the job of the leader to build the team so that the employees will follow him in that direction. It is the job of the leader to build up his management team so that he does not become the bottleneck.  It is the job of the leader to make sure that the technical problems and the business problems are in alignment and that the biggest contracts are the ones that get priority. This seems obvious, but for something obvious, it certainly fails to happen in far too many situations.

In this particular situation, the company’s mousetrap didn’t work very well. The trap didn’t fall. The rod didn’t move. The diver didn’t dive. The crank might have turned, but it didn’t turn particularly well. Indeed, the company really only got one part of the mousetrap process to work well.

They did manage to kick the bucket.

Stephen Balzac is a consultant and professional speaker. He is president of 7 Steps Ahead (www.7stepsahead.com), an organizational development firm focused on helping businesses to increase revenue and build their client base. Steve is a contributing author to volume one of “Ethics and Game Design: Teaching Values Through Play,” and the author of “The 36-Hour Course in Organizational Development,” published by McGraw-Hill. Contact him at steve@7stepsahead.com.

Blood in the Streets

Baron Rothchild, the famous investor, is credited with the saying, “Buy when there’s blood in the streets, even if the blood is your own.”

The good Baron had a point. The stock market often starts to rally exactly when the economy appears to auditioning for a part in “A Series of Unfortunate Events.”

I’ve heard several CEOs say that they can’t possibly be expected to grow their businesses in today’s economic climate: they don’t know what their health care costs will be, they don’t know how the economy is doing, they don’t know what the labor market will be like in a year, and so forth.

In other words, there’s blood in the streets and some of it is their own.

While I appreciate their concerns, let’s get real: retail stocks are up, tech stocks are up, restaurant stocks are up, and so on. More companies are trouncing earnings estimates than are missing them. In other words, those CEOs who are ignoring the blood in the streets and aggressively running their companies are seeing results.

Part of the problem today is that the 1990s were relatively easy. You didn’t have to be a very good leader to do well. Indeed, you had to be a pretty poor leader to not do well. Today, though, is very different. This is simply not as fertile an economic environment. If you want to lead effectively, you have to know what you’re doing.You also need to have confidence in yourself and in your team: if you don’t, you won’t be able to move forward. Trust comes from confidence, and without trust it’s impossible to depend on others. One might also argue that confidence comes from trust, which is somewhat true: they build upon one another.

If you don’t have confidence and trust, what’s left? The same thing that keeps many would-be investors (including some so-called professionals) from buying when there’s blood in the streets: fear.

The problem with fear is that it makes sitting and doing nothing seem so rational. It’s always easier to not buy stocks when the market looks bad. Perhaps if you wait, it’ll be more clear. Of course, you might also miss some major opportunities. There’s a reason Baron Rothchild was so successful when so many of those around him were not… By the same token, it’s always easier to blame someone else for your decision to not take action.

If you are unwilling to move, whether it’s because you blame the government or Zeus or little pink bunny rabbits hiding inside your computer, recognize that the solution is to take action. Make your company stronger. Build your team. If you don’t have all the skills you need, find someone who does and get them on board.

Because when the blood’s all been cleaned up and the streets are pristine, the party is over.

The Peter Principle of the thing

Okay, the Peter Principle, that each person in an organization is promoted to their level of incompetence, is legendary. Since it was first advanced by Lawrence J. Peter in the 1960s, it’s been one of those things that is spoken about amusingly but with a certain element of “yeah, right.” (which is, I believe, the only example of a double-positive making a negative, but I digress.)

Well, if you’ve ever wondered if the Peter Principle works, it turns out that it does. This year’s management Ignoble Prize went to The Peter Principle: A Computational Study. The researchers found that not only does it work, it’s potentially unavoidable if ones duties following a promotion are essentially unrelated to ones duties before the promotion. In other words, the skills of an engineering manager are not identical to those of an engineer. Being a good salesmanager is not the same as being a good salesman, and so on. The study went on to state that organizations could improve their efficiency by promoting randomly the most and least competent performers!

Looking at this study, I’m struck by the basic assumption underlying it: the principle works if the duties as you move up are substantially different from what they were at the “lower” level. Unfortunately, this is a pretty valid assumption. There is a cultural belief in most businesses that management is “higher” on the corporate ladder than being an individual contributor. As a result, if you really want to increase your salary and status in the company, you need to keep climbing. Unfortunately, this means that there’s a very good chance that eventually you’ll reach the point that you can’t do the job well anymore, and hence you’ll be stuck in a job that doesn’t fit your skills and talents.

It’s a very perverse incentive!

It occurs to me that instead of insisting on the ladder or believing that doing well at job X means that you’ll do well at job(not x), perhaps a better approach might be to give people the opportunity to try out a new job. Providing some sort of training for the new job is also a good idea. It’s rather disturbing how often people are “promoted” into management and then given no training on what to do. In a perfect example of the Peter Principle, they are taken out of the job that they excel in and for which they probably trained for many years, and put into a job for which they have no training and possibly no talent. The former, at least, can be fixed.

Of course, even when there is management training, it has to be done right. The occasional one-off, soon forgotten until the next year, is hardly sufficient. Consider how much training it probably took for the person to be successful in their previous job! Management training needs to be focused, given the reality of time constraints that exist in most businesses, and it also needs followup. Waiting a year until the next training won’t do it!

It takes a lot of effort to avoid the Peter Principle. I suspect that many businesses are figuring they can’t afford to do anything about it. My question is, can they afford not to?