Not long ago, an article in the New York Times discussed how Merck created what appeared to be an independent, peer-reviewed journal, and then used that journal to convince doctors to prescribe Merck products.
What is particularly amazing about this story is that Merck is the same company that 20 years ago created a cure for River Blindess, even though they knew that the people most in need of that cure would never be able to pay for it. At the time, the cost to the company was estimated at $200,000,000. Then CEO Roy Vagelos said that he felt that there was really no other choice: he was living up to Merck’s ideals of “health before wealth” and “do good and good will follow.”
As things worked out, the long-term benefits to the company, in terms of prestige, being able to attract top-notch researchers, and access to emerging markets, were immense. Merck did good, and good did indeed follow for the company and its shareholders. It just wasn’t obvious at the time that things were going to work out that way.
So what happened? How did a company that lived up to its ideals as Merck did come to be the same company that used rather questionable practices to convince doctors to use its products?
Now I have no particular contacts or channels into the brains of the people at Merck, so what follows is purely supposition based on observing similar patterns of behavior in sports and business.
It’s well known in sports that athletes who are solely focused on winning do less well than those who are focused on personal excellence and skill mastery as well as winning. Indeed, a total focus on the outcomes and not the process can lead to a number of problems, including depression, burnout, and reduced enjoyment in the activities. Failure, instead of being a learning experience or an opportunity to evaluate and adjust, becomes something to avoid at all costs.
Ways of avoiding failure might involve only facing easy opponents, or it might involve cheating in various ways. Fear of failure is a very powerful force; the most successful athletes are those who master the art of learning how, and when, to not care if they win or lose.
When a business becomes totally focused on making money, it falls into a trap similar to that of the athlete. Milton Friedman to the contrary, a business cannot be solely about making money. Rather, a business is about producing innovative, or at least useful, products and services. These products and services must, in some demonstrable fashion, provide value to people. Money is how the business knows it’s succeeding.
Like sports, however, when the focus becomes too short-term and too outcome oriented, it becomes increasingly easy to justify behaviors that make money now instead of behaviors that maintain the product pipeline. It’s really no different from the athlete who sacrifices long-term health or career for a victory today. Living up to ones ideals is easy when things are going well; it’s when things get difficult that the real test comes.
Being a successful athlete, at any level, takes a great deal of work and dedication. There are always people who are looking for short-cuts. Being a successful company takes work and dedication as well; staying successful is, arguably, even harder. Over the years, very few have managed it. The tendency to take short-cuts is always there. It’s the businesses that stick to their ideals and are not captured by the fear of failure that last the longest and are most likely to survive the inevitable tough times.
I had this conversation recently with my 3.5 year old son. We were in the car, and he had just dropped his favorite stuffed animal, a black cat named Midnight. He couldn’t reach it, and I was feeling around trying to find it for him, while he kept telling me I was near Midnight. When I finally tried asking him if I should move my hand left or right, his response was that I should move my hand, “right to Midnight.”
Now the fact is, a 3.5 year old doesn’t really understand that I don’t know what he knows: after all, he can see my hand and the cat, therefore I should know which way to move. This sort of thing is not at all unusual with young children. For the most part, it’s generally pretty funny.
It’s much less funny when senior management is in the role of the 3.5 year old, and the employees or customers are trying to figure out what is going on. Young children haven’t yet learned to consider other perspectives; management, on the other hand, doesn’t have that excuse.
Many people are familiar with companies that put out products with incomprehensible interfaces or unreadable documentation, and then become highly irate when the customers complain that they can’t figure out how to use the product. I worked with one high tech company where the CEO and engineering team routinely described their customers, primarily research scientists, as a bunch of incompetent idiots. They simply could not understand why their customers could not understand how to use the product. After all, the CEO and the engineers understood it.
Fortunately, very few people are going to argue that a company needs to get input from its customers and involve them in the design process. After all, that’s the best way to make sure you’re giving them something that they’ll be happy to spend money on. The real problem arises when the company’s internal communications are lacking. It is, sadly, not at all unusual for management and engineering, or engineering and sales, or any other combination of departments to be talking past each other. The groups are nominally all working for the same company, but none are capable of recognizing that the others don’t know what they know or cannot imagine that different groups within the company have different, equally valid, priorities.
Engineers, for example, are most concerned with building elegant, effective solutions to problems. Salesmen want to sell product. Documentation wants to describe what the product does. Customer support wants to help the customer actually use the product. Managers are trying to meet deadlines and generate revenue for the company. It would seem that everyone is on the same page. The reality, though, is far different. The engineer’s elegant solution may be brilliant, but impractical: for example the engineer who suggested driving bolts into the side of my house to hold up a sunshade for an afternoon. While that would have solved the immediate problem, it was just a bit of overkill and could easily have caused other problems down the road. Salesmen may promise features that engineering can’t implement or management, in an effort to close a deal, might set overly aggressive deadlines. A case in point occurred in one company I dealt with, when the CEO turned to the VP of Engineering and asked when the product would be ready to ship.
“September 1st,” said the VP.
The CEO turned back to the phone and said, “We’ll have it for you on July 15th.”
The CEO simply could not understand why engineering couldn’t have the product done by July 15th, and the VP of Engineering simply could not understand why the CEO couldn’t accept September 1st. The net result was that the product ended up shipping on October 1st, delayed by a constant series of unmeetable deadlines.
When I’m telling this story, someone always says to me that the two people simply needed to communicate better. True, but not very useful. If it were simple, they would have done it. Under the pressure to get a product out the door, each one forgot to stop and get the full picture. Their frames of reference narrowed to the point where they could not imagine any other answer than the one they had locked onto. Whether two people or ten people are involved, it’s important to stop and ask four critical questions:
1.What do I know that they do not know?
2.What do they know that I do not know?
3.Do I actually have enough information to make a decision?
4.Are we really all on the same page?
Taking the other person’s perspective can pay off in a big way. What’s stopping you?
If you’re a fan of the Daily Show, you probably saw Jon Stewart eviscerate Rick Santelli. This was extremely funny, and triggered quite the entertaining backlash from former hedge fund manager Jim Cramer. In one of the clips that Jon Stewart subsequently played, Cramer is shown talking about how his instincts for the market are telling him that Bear Stearns is doing fine. Of course, we all know what happened to Bear Stearns.
Now, my point here is not to bash Jim Cramer. The fact is, anyone who makes market predictions the way he does is going to be wrong a lot. That’s the nature of the game. Rather, my point is that trusting one’s gut is not always the best approach.
Gut instinct is not a magic power. The “gut instinct” for an untrained person being thrown in jujitsu is to reach out to protect themselves; that’s a great way to get hurt. Instinct, or gut feel, or whatever you want to call it, is something that is built up through practice and experience. Sandy Pentland, in his book Honest Signals, has a couple interesting suggestions for how gut feel might work. The short form, though, is that gut feel comes from rapidly and often unconsciously, recognizing that the current situation is similar to other situations you’ve experienced, and, through this pattern matching process, devleoping an appropriate response.
Sounds good, right?
To a point, it is. Any athlete will tell you that you have to train until your responses become instinctive. In fencing, for example, you don’t have time to think, you have to trust your intuition. That’s great, except when intuition leads you down the wrong path.
In sports, that’s relatively easy to fix. You go back to the drills and exercises you originally used, you go back to training with your coach, and you practice the correct response to the scenario. The tough part is when the trained response conflicts with the gut response. It’s difficult to accept when our intuition is wrong and work to change it.
Furthermore, the more complex the situation and the more hidden variables there are, the harder it is to pattern match correctly. Surface similarities will often fool our intuition into thinking it’s one situation when, in fact, it is another. Legendary stock trader Jesse Livermore once wrote that though he listened to his gut, he followed his rules. Why? Because when he just listened to his gut he lost money in a big way.
When you just rely on your gut, you have nothing to fall back on when things don’t work. Is this a temporary aberration or are you fundamentally wrong? If your gut told you to buy Bear Stearns at 50, well, your gut might be feeling a little bit unhappy right now.
Bruce Lee is famous for saying, “Learn the drill, master the drill, forget the drill.”
If you started with the drill, you have something to fall back on when instinct or intuition isn’t giving you the right answers. If you’re just relying on your gut and it stops working, what else do you do?
Scott Adams, of Dilbert fame, routinely features tales of bumbling managers. The popularity of Dilbert, and the degree to which it resonates with people, are a testament to his accuracy; indeed, Dilbert’s pointy-haired boss has become an iconic figure. Dilbert aside, however, I have observed that very few leaders are intentionally like the pointy-haired boss depicted in the comic strip. Rather, they engage in pointy-haired behaviors without realizing the effect they are having on the organization as whole. Let’s explore some examples of such behaviors and their unintended consequences.
1. Pointy-haired bosses break their own rules and figure either no one will notice or no one will mind because they are in charge. In one company, the CEO called everyone together to talk about the importance of really working hard and putting personal needs to one side in order to ship a product. At the end of the talk, he announced he was leaving for a two week vacation in Hawaii and wished everyone good luck. This did not go over well. One vice-president, who had apparently not been warned, almost choked on his coffee. When the CEO came back, two people had quit and the rest were up in arms.
2. The pointy-haired boss believes that he is separate from the group he leads. In fact, leaders are also group members, with a very important and well-defined role. Through their actions, leaders set the norms for their group. For example, the manager of a team at a large software company imposed a $.25 penalty for being late to meetings. When he was subsequently late himself, the team gleefully demanded he pay up. After a brief stunned moment, he tossed a quarter into the pot. No one complained about the fine after that. What the leader does is directly mirrored in the organization. When leaders find that employees are not living up to the standards of the organization, they often need to look in a mirror and see what example they are setting.
3. Pointy-haired bosses fail to recognize the culture they are creating. To be fair, it’s hard to see your own culture from the inside, and despite what many managers and CEOs believe, culture is formed not from what you say but from what you do. As MIT’s Ed Schein observes, “Culture is the residue of success: success in dealing with external challenges and success in internal advancement.” What behaviors are successful in the organization? What behaviors are rewarded? The very behaviors that people tell me they want to change are frequently the ones they are encouraging.”
4. Pointy-haired bosses lack an understanding of group/team dynamics. They like to say that their organization is “different,” and the research on group dynamics doesn’t apply. That’s like the people in early 2000 who said about the stock market that “This time, it’s different.” If you’re dealing with people, patterns repeat. It pays to recognize the patterns and understand how they are manifesting in your specific situation.
5. Pointy-haired bosses are often unable or unwilling to create a clear, compelling vision for their organization that gets everyone involved and excited. The best way to attract and retain top talent is to make people care about what the company is doing. That’s best done through painting a vivid picture of the outcome and creating clear goals.
6. Pointy-haired bosses motivate through short-term rewards and/or intimidation. They assume they know what their employees want, rather than taking the time to ask or to observe how people are responding. Short-term rewards and intimidation generate short-term spikes in performance, but build neither loyalty nor the desire to go the extra mile. Unfortunately, far too many people are willing to sacrifice the longer-term performance of their team for a short-term gain. In one company, the head of engineering “motivated” employees by inviting them to join him for happy hour in a bar on Friday nights. Had he asked, he would have realized that what the team wanted on Friday nights was to go home and have dinner with their families. Instead of motivating the team, he made them feel imposed upon.
Finally,
7. Pointy-haired bosses do not believe in asking for or accepting help. It’s not about asking for help, it’s about investing time and money to enable the company to accomplish its goals. The boss’s time is a resource; skilled leaders invest their time and the time and money of their business where that will produce the best return. Sometimes the best return is obtained by investing in an employee, sometimes by investing in a contractor.
Very few leaders deliberately engage in these Pointy-haired boss behaviors. Rather, their behaviors are the result of their own corporate success story. Therefore, for all that even one or two Pointy-haired boss behaviors can derail an organization, behaviors acknowledged to be counter-productive are very difficult to eradicate. Nevertheless, the ability of a manager or CEO to recognize these failings and invest in changing themselves is the true test of “great” leadership.
Stephen R. Balzac, "The Business Sensei," is a consultant and professional speaker. He is the president of 7 Steps Ahead, LLC, a consulting firm helping businesses get unstuck and transform problems into opportunities.
