Tuesday, May 15, 2018

The Escalation of Bias

“I don’t care who does the electing, so long as I get to do the nominating.” This gem often is attributed to Boss Tweed, the notorious American political manipulator. In any competition, the surest way to win is to narrow down the list of those in the running. If you are the only viable candidate, you’re in. Competitions often are unfair, but restricting who can race to the top is especially important because it escalates bias to the highest levels.


The escalation of bias goes on every day the world over. What you may not realize is that it happens especially when people think they are being fair. Let me explain.

Slogans like “We are an equal opportunity employer” are seen in many companies, especially in the United States. Although such slogans are not always lived up to, in many places things have improved compared to the past. Although racism, sexism, and other forms of discrimination endure, in many industries we are seeing efforts to hire more fairly. But what about promotion?

The executive suite remains difficult to penetrate for women and minorities in the US, despite the greater fairness in hiring at lower levels. In what feels like a “bait and switch,” we hire for diversity, only to stay with the same old bias when it comes to promotion. This no doubt feels pretty unfair to those who might have merited a promotion, but were passed over because of a superficial characteristic like race or sex. Yet the hidden effect is on the privileged, who then enjoy the escalation of bias.


To see why, consider what happens to someone in the traditionally favored group – white men in the case of the US. For them, hiring equally and then promoting unequally escalates bias. After all, when it comes to choosing the next boss, blessed are those who are surrounded by "unpromotables." If race and sex matter for promotion, then the sure bet is to be the only white man in the running. So it is that hiring policies meant to improve fairness, ironically, may be triggering the escalation of bias.

The escalation of bias operates in many walks of life: The law firm that hires for diversity, but then promotes to partner those who get on with the old boys. The technology firm that boasts of a sex-blind and color-blind hiring process, run by a traditional-looking C-suite and board. We even see it in global competitions among companies. Firms are often allowed to enter another country to compete, only to find out once there that they have restricted access to government permits and the like.

In each of these situations, you get in through a fair process - but you move up through a biased one. When we trigger the escalation of bias, the privileged dominate the race to the top.


Evidence of this kind of effect triggered by hiring temporary workers is reported in my paper with Anne Miner.

Monday, April 30, 2018

Persistence Enables Innovation

Changes keep coming. Yesterday’s new thing is likely to be eclipsed by another new thing tomorrow. Many companies try to catch these waves, but only a few last. What separates the innovators from those who flame out?

Some say it comes down to being able to "pivot" into new areas fast. But in fact, the opposite is true; it comes down to persistence.

Here is the problem. You can redesign your company to become something completely different overnight, but companies that pivot overnight lack depth. After all, how deep is your ability in an area that you just discovered yesterday? You may be able to offer a product, but you’ll lose the first time you run up against a firm that has a deep background of knowledge. And to have depth of knowledge, you need to maintain a consistent focus over time.

For example, a few years ago the data storage company NetApp was approached by the Swiss stock exchange for technology to deal with connecting networks in a novel way to improve data availability and disaster recovery. NetApp’s head of Europe back then was Andreas Koenig, a scrappy “can-do” executive with a good understanding of NetApp’s technologies. Koenig knew that NetApp had been doing research for some time on continuous data availability and disaster recovery for networks spanning different locations. So he went back to corporate R&D to find a solution for this customer. There he found “Metrocluster,” a project that had been researched extensively and then shelved by the company’s corporate engineering group. Koenig resurrected the project, to the surprise of some insiders. But the product was a hit in Europe and quickly became an important part of NetApp’s product offering.

Note the key fact in this story: NetApp engineers had been working persistently on the problem for some time – even before it was clear that there was product demand. So when the market took off for this product, NetApp was able to respond well; they had deep knowledge in this area. A number of companies claim to have this kind of product, but how well-developed is their technology? The firm that persists builds its capabilities, and will win against the Johnny-come-lately.

The key to successful innovation is persistence. Keeping your focus over time builds deep knowledge. In a world of fads and fashions, have the courage to stake out a domain where you are the expert. You won’t be all things to all people, but when you do compete, you’ll win.


Systematic evidence of this idea is in my paper with Elizabeth Pontikes.

Sunday, April 15, 2018

Wrong-headed Leadership

The idea is common sense. Giraffes repeatedly stretch out their necks to get at leaves, and so over generations this action has made their necks very long. So reasoned Jean-Baptiste Lamarck in 1801, offering an early (though now discredited) version of evolutionary theory featuring heritable traits acquired by use. Over the centuries, the idea seems to keep reappearing, perhaps because we wish adaptation were so controllable. Notoriously, Joseph Stalin favored the idea as being consistent with revolutionary thinking - and profoundly harmed Soviet-era scientific progress by enforcing his belief. Wrong-headed leadership can do a lot of damage.

I see wrong-headed leadership in business all the time. Like Stalin, business leaders routinely believe that ideas are true because they want the ideas to be true. For instance: "Our organization can be both extremely efficient and extremely innovative at the same time." We know from research that this claim typically is not true; there is a trade-off between the high-variance behaviors that spawn innovation and the low-variance behaviors that make for efficiency. Yet the idea keeps reappearing, perhaps because we wish adaptation were so controllable. And so for decades management gurus have claimed to have discovered the way to make this wishful thinking true.

And when it comes to knowing the truth, our emotions seem to make things worse. Often teachers appeal to their students by being funny, or exciting, or nice, or passionate. At least since Aristotle we've known that emotional persuasion often trumps logic. After I teach a class, students tell me they "enjoyed" their experience. Hmm. Did they learn? If enjoyment is the point, perhaps class should feature a real comedian.

Same goes for the other Aristotelian appeal - credibility. Often successful business leaders become lecturers at business schools. Listen to them describe why they think something is true, and you will often hear "In my class, I teach...". Because they teach it, it must be true?

Of course, our belief in the truth of an idea should depend on whether the idea is supported by research. Such an appeal to logic lacks the emotion of pathos or the bluster of ethos, but it helps us to avoid wrong-headed thinking. Next time you accept an idea as true, ask yourself why. Wishful thinking? Good feeling? Bluster? You may be headed toward your own episode of wrong-headed leadership.

Brad Jackson has written an interesting book on this issue.

Saturday, March 31, 2018

Corruption's Mark

The fix was in. As the horses entered the turn, a large wall made them briefly invisible to the stands. Moments later the horses came back into sight - with the long-shot now in the lead. A collective moan. Angry shouting. Torn tickets flying, the cynical crowd realizing that it had been the "mark" - the victim of a con.

Of course, horse racing is notoriously corrupt - hence the crowd's immediate, cynical reaction to the fix. But corruption abounds in the world today, and affects our well being more deeply than you might realize.

You are probably thinking of corruption's direct consequences: The better horse loses; the lesser firm gets the deal; the meritorious job candidate is passed over. Such injustice often leaves the mark helpless. They played by the rules, but someone else was playing a different game - one where a corrupt payoff trumps merit. And so everyone loses: fans, shareholders, and consumers alike. Only the thief prospers in such a system.

Yet corruption has an even more insidious effect: collective nihilism. I first saw this effect in my old step-grandfather when I was but a boy. I was telling grandpa about the coming world series matchup. Grandpa waggled the cigar in his mouth, took it out, and said "the whole thing's fixed." I replied, "What do you mean, 'fixed'?" A deep, cigar laugh, and then "Well, they pay everybody off to make sure it goes the way they want. Then they collect their bets. They think we're stupid."

So went my first exposure to nihilism, the view that our institutions are so hollow as to render all action pointless. I said nothing; I knew better. Taking after my own father, I have always believed in the possibility of effective action, and to this day I resist the cynical urge to see everything as one big "fix."

But for many, widespread corruption has sown the seeds of nihilistic cynicism, distorting their perceptions. I recall a conversation in Moscow with a frustrated entrepreneur that illustrates the problem. As we shared a drink, he pointed to a passing luxury car and reflected, "When you see a nice car blow by, you know that guy stole from someone." How odd, I thought. Of course thieves are everywhere, but the shining Teslas in Palo Alto look to me like the fruit of hard work and innovation. Yet he sees corruption, and so throws up his hands as if to say "all is pointless."

Effective leadership roots out corruption, not just to do "what's right", but to create institutions that reward meaningful action. If we fail this leadership challenge, we fail the innovators of the future.


A sample of the research in this area is by Marcolo Veracierto.

Thursday, March 15, 2018

Discovery Beats Planning, so Plan to Discover

Heard at an outdoor café along University Avenue in Palo Alto: “The strategy was clear. You can’t start as a platform. You start as an application and then, when the user base is large enough to get a network effect, you can pivot into a platform.” Knowing nods around the table; wisdom understood by the cognoscenti.

I was hunkered down with a Super Tuscan at the last sidewalk table, eavesdropping on the ideas circulating among the start-up crowd. This one is a lesson from my elective course at Stanford. Not to imply that I’m the headwaters. To the contrary, I’ve waded into a stream of ideas cascading around the valley, ideas that change with each new, unexpected development. Even the subject of the debate I overheard, Facebook’s platform strategy, was discovered along the way. Originally, Facebook’s leaders saw it as a social network application. Only once Facebook grew large did the idea materialize to become a platform. So in 2007 the website’s APIs were opened to a world of developers who could independently create Facebook applications. Since then, a litany of reversals and changes have fueled debate among developers and users, as Facebook has tried to exert control over the platform. Some have criticized Facebook for this haphazard evolution. Turns out, that is how most strategies emerge: Discovery beats planning.

For more evidence, go back and look at the strategic plan from years ago at your favorite successful company. There is a good chance that the company’s winning strategy won’t appear in that old plan. Examples abound: Trader Joe’s, a boutique specialty retailer in the U.S., once made its money selling cigarettes and ammunition – a far cry from the microwavable organic meals and fancy cheeses one can get there today. Honda Motors, famously, planned to sell big motorcycles – “choppers” – in the U.S., and ended up discovering the market for small “minibikes.” The list of examples goes on, including many entrepreneurial firms that discover a strategy better than the plan their founders once pitched.

So how do we deal with the fact that discovery beats planning?

One common reaction is to pretend that the success was planned. Of course, after a discovery we naturally try to make sense of what we see working so well. And there is nothing wrong with retrospective rationalization; we do it all the time in business school “case studies” in an effort to learn. The problem is allowing retrospective rationalization to masquerade as a well-planned strategy, as in the young folks talking about Facebook (“The strategy was clear…”) Such a misunderstanding leads observers to think (wrongly) that great businesses result from a great plan.

Another bad reaction is to wax cynical, surmising that success really just comes down to luck. This conclusion denies the fact that some people are better than others at spotting the opportunities that (luckily) come along. There is much more to discovery than the flip of a coin. When plans produce unanticipated consequences, these look like failures.  If you think that leadership means waiting to get lucky, you’ll conclude from such failure that your luck has run out – a self-fulfilling prophecy.

But there is information in those unanticipated consequences for those who know to seek it out. Scott Cook, Intuit’s founder, coaches his people to “savor surprises” – to see deviations from plan as the fountainhead of opportunity. Seen this way, the strategic plan is just step one in the discovery process. Leaders that understand this truth do not pretend to know the solution in advance. Instead, they plan to discover.



A more academic treatment of this idea is in my book on the Red Queen.

Wednesday, February 28, 2018

The Authenticity Advantage

I recall sitting in the Café Mediterranean in Berkeley, struggling to make sense of Das Kapital. The upstairs seating area was good for such study, and for the occasional erudite discussion. A quirky intellectual commented on my choice of reading, and the conversation was easy. He was interesting – a physician who had majored in philosophy. I did not know that was possible; pre-meds stay focused on grades, and you don’t do that writing essays on epistemology. And then he muffed, mispronouncing Wittgenstein. Why do you major in philosophy, if not to learn how to pronounce Wittgenstein? Clearly he was not a philosophy major. Probably he was not a doctor. Maybe he was not even a guy. The conversation was over; he was a poser.

Posers work hard to conform, because they know that people are well-tuned to detect fakes. Think Frank Abagnale, the notorious serial impostor who successfully carried on in a number of false careers - including as an airline pilot, lawyer, and doctor. Criminal though he was, we are in awe of Abagnale in no small part because most of us suffer from the opposite problem: impostor syndrome. Psychologists note that many people have trouble fully embracing their own accomplishments. So the posers of the world, repulsive though they are, have to be admired for their ability to embrace playing a part in the play of life.

Growing up in San Diego, you knew the tourists because they were too perfect: Heishi beads, surfboard wax, hair just so. We locals spent a lot of time on the beach, but had not thought enough about the outfit. In my case: cutoffs that I actually cut off, no board, bad hair. Idiosyncrasy implies authenticity, since posers pay so much attention to form.

In competition, posing can be effective. We concentrate on how we dress when we apply for a job, because we’re posing and want to be seen as an appropriate choice. Those who compete in mating contests work hard at how they present themselves on Facebook. (Does he really prefer romantic comedies?) Of course companies do this too – and sometimes to great effect. You may remember when you found out that Sam Adams beer was not even brewed by the company that posed as its “brewer,” or when you realized that Häagen-Dazs ice cream was not from Europe. But it must be admitted that these brands, posers though they may be, fool enough people to be strong competitors.

The downside of posing is that most anybody can do it. In 2004 eBay declared it would dominate China, and entered by acquiring the then-leading Chinese firm EachNet. By 2008 they had failed utterly – overtaken by authentic rival TaoBao.  What happened? eBay “became Chinese” overnight through an acquisition, while TaoBao built something idiosyncratic from the ground up. I was developing case studies in China back then, and recall that there was nothing distinctive about eBay’s China operation. In fact, it was run out of Seoul! The problem with posing is that you may end up competing with the real thing.

Those who stick to their authentic identity are difficult to imitate. If you go into any part of NetApp, a leading data storage company with operations worldwide, you will see the same organizational culture in action anywhere on earth: little regard for formal titles, open exchange of information, a shared sense of concern for the customer, and respect for well-intended action. These norms are widespread at NetApp because the company hires and promotes with that culture in mind – a habit formed by its founders in its early days, and reinforced to this day by its CEO George Kurian and his leadership team. (Check out Tom Mendoza’s talks on this subject.) Of course, that means the company’s growth needed to be mostly organic, rather than by acquisition. Such growth can be painful at times, and certainly slower than the sudden growth that comes with acquisition. But most of us would prefer to grow steadily than to acquire and then fail.

Authentic companies fail too, of course. A firm’s idiosyncratic approach to doing business may be dead wrong, in which case they will fail. But to paraphrase Jeff Miller, they may be wrong, but at least they are not confused. So a difficult choice needs to be made if you are growing a business. Do you conform to the established recipes you see around you, or do you build on what makes your company authentic? Posing is likely to be less risky – at least until you encounter the real thing.


For the research on authenticity and competition is the book by Hannan, Pólos, and Carroll.

Wednesday, January 31, 2018

What Makes You Unique?

I recall a few years ago one of the kids came home from elementary school with a paper "award" that looked like this:

That afternoon, the school playground was littered with these things. Apparently the school had copied hundreds of the identical awards. Just fill in your child's name, and you have mass customization.

I got to thinking about the problem of uniqueness yesterday. I had breakfast at Baji's, but forgot my earbuds. So I was forced to listen to the guru bellowing wisdom at the next table, mansplaining to his "client" how to succeed as an entrepreneur: "...you need to have barriers to entry...bla bla bla...all about execution...bla bla bla...focus on your capabilities...bla bla bla...just like at Google...bla bla bla..."

Putting aside the superficial content, the most remarkable thing about the "conversation" is that I never once heard the entrepreneur speak. Not one single word - from when I ordered coffee to when I paid the check. So the guru thinks that his wisdom is right, regardless of what business he is talking about. Just follow his recipe, and success is yours - no matter who you are, what you do, what you're good at, or what challenges you face.

But we know from research (and experience) that there are many roads to success, each unique in some way. Research identifies this as the problem of "competitive heterogeneity," where companies differ in unique ways that lead to very different outcomes. In practice, if you listen (really listen) to people at work, you may come to see possibilities for success that apply to them because of their unique circumstances, their unique abilities, and their unique shortcomings. Of course, this means actions that might help one company to succeed may well fail for another. A sobering fact if you're a guru peddling a recipe.

Caution: Don't now conclude that generalizations cannot be true or useful. Research has taught us many useful generalizations about business success. For instance, we know that delegation and empowerment increases employee involvement and creativity. But like all generalizations, putting such an idea into practice brings in many other variables that can change what happens. Delegation that works for a creative video game studio in Chicago may not work well in a Mexican brewery or in a German automobile factory. In short, whether a generalization holds true in practice depends on the unique circumstances of the company in question.

Knowing generalizations about business is not enough. To succeed, you must also know when to apply your general knowledge in the right, specific circumstances. Know what makes your company unique. Only then can you begin to find your own, unique, path to success.


The problem of "competitive heterogeneity" is the subject of considerable research, including my book on The Red Queen.

Monday, January 15, 2018

Think You're Well Connected? Stop Fooling Yourself

You read a lot. You’re informed daily through Twitter, various blogs, and a few subscriptions. Your network is very large, and is made up of people who also have large networks. With technology at your fingertips, you are extremely well informed.

You’re fooling yourself.

Humans want to know what others think, and we’re especially persuaded when information is verified by different sources. The problem is that our “different” sources often tap the same information. You hear something from a Twitter feed that you like, that is confirmed on a blog, that is confirmed yet again by a video of a Ted talk. But what if each of these got their information from the same source? You are all recycling one single datum! It is bad to be poorly informed, but it is much worse to be poorly informed and not realize it.

For example:

“As CEO, I make sure I am in the thick of it. I stay right in the middle of things: product development, engineering, marketing, sales – they all keep me in the know.” So said the CEO of a software startup where I was conducting interviews. I met with him four times over four months, as he shaped the strategy of his budding company. He was surprised when they failed. All his information sources agreed that his strategy would win.

But let’s take a closer look. I asked everyone in his company to tell me whom they turned to for work-related advice and information. Using the matrix of these information flows among everyone in the firm, I mapped the company’s information network here - where the squares are people and the lines are their communications:


As you can see, this company's communication network is dense and saturated, with plenty of paths for information to get around. But that is precisely the problem. Throw one single datum into this company and it rapidly cycles throughout the whole system over and over and over. The central people in the middle – including the CEO – are no better informed than anybody else in this network; they just think they are. But they are simply hearing the same information as it gets recycled over and over apparently from different sources. No wonder they convinced themselves that their strategy made sense. They got the illusion of a second opinion without ever really getting a second opinion.

The solution?

Gather information from those who do not communicate with one another. In fact, you want to gather information from entire networks that do not communicate with one another. Truly rich and diverse information comes only when you hear, separately and independently, from “worlds” that do not overlap: From different parts of the earth, different economic sectors, different social demographics, different religions, languages, ideologies and cultures.

But gathering such varied data is difficult, and it is getting more difficult because of the IT revolution. Twitter will suggest that you listen to people who listen to each other. Amazon will suggest that you read something very much like what you just read. Even your search engine will try to make sure that you get results that are similar to the ones you clicked on last time. If you go with the flow, you’ll end up hearing the same narrow view recycled repeatedly – yet you’ll think you did your due diligence.

Don’t fool yourself.


One of the best academic approaches to information networks is by Duncan Watts.

Sunday, December 31, 2017

The Leader's Lens

It was time to run an online survey of the employees at a large technology company. My work with their leadership team had raised some interesting research questions, so one of the vice presidents asked her assistant to help me make it happen. She said to her assistant, who I will refer to here as Amelia, "Please help Bill to get access to everything he needs. We want to get everything arranged pretty quickly."

Amelia is a remarkable assistant - very thorough. But often she is asked to organized social events. So that was the lens through which she understood her boss' request. I was thinking "survey;" she was thinking "social event." 

As we began working on the project, Amelia asked, "when will it take place?"

"As soon as we can set everything up," I responded, adding, "I would like to host it here at Stanford." Although I did not explain this to Amelia, my concern was that if we hosted the survey on the company's servers, I might not be able to analyze the data on my own computer for security reasons.

"Host it at Stanford!" she responded. 

"Sure," I said. "We do this all the time."

She asked, "How many employees will be involved?"

"All of them," I replied.

"ALL OF THEM?" Amelia was dumbfounded.

"Of course!" I said. "We can use our server and--"

"But, Bill," she interrupted, "it makes no sense to host it at Stanford. We host these all the time here at our company. And we can get servers, of course!"

"Servers?" I questioned, "really, Amelia, one server should be more than enough."

"ONE SERVER, for the ENTIRE company?" Exclaimed a flabbergasted Amelia.

"No problem." I said. "These days servers are extremely efficient. And the tasks should not be too intensive."

As the discussion went on, we ultimately realized the misunderstanding and had a good laugh. But this story nicely illustrates the importance of one's "interpretive lens," the assumptions that shape how we understand information. Amelia and I were hearing all the same words, but they meant very different things to each of us because we were looking through different interpretive lenses.

Effective leaders understand the importance of the interpretive lens. I remember at one company, their sales head in Europe went around the approved product and price list, creating a solution for a customer that was not approved by the corporate marketing organization. He won the customer, and in fact was responsible for growing the business considerably through such tactics. The CEO called him back to the firm's silicon valley headquarters; some thought it would be a reprimand. But the CEO brought him into a top leadership meeting to applaud him for being entrepreneurial and customer focused. The manager received a promotion and a raise. This story spread through the company's employees quickly. The CEO's interpretive lens saw the manager as an innovator. Others saw him as a rule breaker. Both interpretations were correct, but the CEO wanted the "innovator" lens to win the day. By making his interpretation clear to everyone, he helped to shape their interpretive lenses. 

Every day at work, alternative lenses compete. Is a failed project shameful, or a healthy sign of experimentation? Is an outspoken employee insubordinate, or is she showing leadership? A great leader shapes the lenses through which her employees interpret what happens.

Look around you at work. Do you like the lens being used to interpret what happens? If not, what does this say about your leadership? 


The sociological research on this topic is reviewed by Robert Benford and David Snow.

Friday, December 15, 2017

Are You Dancing Like a Pigeon?

You know the story:
  • eBay enters China, declaring its intention to dominate the market there the same way it dominated other markets. It fails within four years.
  • Following spectacular success at the strategy, Microsoft decides to pursue "windows everywhere" in the mobile space - only to be rendered irrelevant by the rise of native mobile platforms iOS and Android.
  • Faced with competition from Netflix, Blockbuster decides to double down on their brick-and-mortar stores, building them out.  Quickly they would go from a multi-billion dollar market leader to bankruptcy.
You're probably tired of such lists - failed once-great companies. But notice this: In these cases and so many more, the failure happened because leaders kept doing what had just worked well for them.

Bottom line: We like to keep doing what worked the last time around.

And in this way, we are similar to the dancing pigeons in Skinner's famous experiments. Years ago, Professor Skinner used his "Skinner box" to demonstrate a powerful point: Even the simplest of animals, a pigeon, will see a pattern in randomness. The box featured a mechanism that would randomly feed the pigeon. The bird, thinking that whatever it was doing prior to the feeding was "causing" the food, soon found itself doing a herky-jerky dance.

And so it is that you and I dance like a pigeon, too. We repeat what seemed to work last time, hoping to get the same result. When asked to defend our decisions, we say "this is what worked last time." And at the world's leading business schools, we sit in rapt attention listening to executives tell us what they did that "caused" them to be hugely successful.

"But," you object, "people have big brains and can reason. Of course the pigeon just dances to the tune of a random machine; it is stupid." Well, listen carefully next time you hear a successful leader speak. If they point to "experience," seriously ask yourself how large a sample they have to draw on. If it is a sample of one, as is often the case, then we may be looking at a dancing pigeon. Alternatively, listen for logic. If the leader gives you the logic behind his actions, then we're making progress. But very often executives simply let the "facts speak for themselves." Look what that did for the pigeon.

Doing whatever seemed to work that last time? You may be dancing like a pigeon.


The leading scholar on this problem is Jerker Denrell.

Thursday, November 30, 2017

Delete All Meetings!

You don't need me to tell you that scheduled meetings are over the top. A friend of mine at a high tech firm here in the Valley noted that this week his entire schedule - all day every day - was nothing but meetings. We're no better here in academia. We run life through committees, which of course meet. We even have a committee called "The Committee on Committees."

Of course we understand the theory. Some say it goes back to Ben Franklin, who famously advocated planning as a way to become more virtuous. You're thinking "I must be a saint." But note, in this sample of Franklin's idea of a well planned day, that there is not a single meeting! Well, perhaps some of his 8 hours of "work" included meetings. But odds are, those meetings would have happened on an as-needed basis. They were not formally locked into his schedule - and certainly not put there by others regardless of the reason (or lack of reason) as is common for us all today.

Meetings are a great example of what sociologist Max Weber called "procedural rationality" - as opposed to substantive rationality. Meetings symbolize that work is being done in a rational way, regardless of whether they actually contribute to getting things done. "I did not see you at the meeting." "Did you know about the meeting?" "We should work on this. Let's schedule a meeting." "I'm heading up a new committee. We'll be meeting." And then there are all the regularly scheduled meetings set on "repeat" within everyone's calendars.

What is missing from formal meetings is the question "why?" Under norms for procedural rationality, we assume that meetings make sense. But think of how often you meet without actually knowing why! We set a meeting, and then we figure out what should be on the agenda. In this way, meetings are a perfect example of a solution looking for a problem.

On the other hand, there is a type of meeting that is really very useful - the informal chat. I remember an eye-opening conversation with the great anthropologist Bill Durham. We talked spontaneously about "co-evolution" and I came up with an idea that would lead to a series of papers and a book. You probably have similar experiences; the informal, possibly random interaction that turned out to be golden.

Informal conversations are useful because unless they have value you don't have them. We cut small talk short precisely because it is not useful. Informal talks continue only when they matter.

Knowing this, Steve Jobs' vision for the new Apple campus is of a great big circle. His idea was to increase the chances of random, informal interactions in the center. No doubt Steve still remembered the informal "random access" period at the Homebrew Computer Club back in the 1970s, where he and Wozniak showed off their first Apple computers.

The lesson? Delete all meetings from your calendar. Schedule time to actually work. And meet with others informally just as long as is useful.


An interesting study of the value of informal connections is by Sharique Hasan.

Wednesday, November 15, 2017

Winning as a Self-Fulfilling Prophecy

They left without the photographer.

The bride was being consoled by her best friend, who was hoping to keep the makeup from liquefying. The yacht was perfect, of course, and most of the bridesmaids were there as planned. How dreamy – except now no pictures. Well, the bride would make sure that the photographer never got another high-profile job. And, to think, all the best families had raved about what a genius he is.

Two hours later, as they lay on the yacht’s sun deck in the warm tropical air, they heard the roar of twin diesels. Looking up, there in the bow-sprit chair of a racing marlin boat was the photographer, Paul Barnett, snapping photos from a long telescopic lens. James Bond with a camera.

But of course! You don’t photograph the wedding party on the yacht itself; too close quarters. You shoot from a separate boat! What a genius.

Let me tell you, the story from my brother Paul’s perspective sounds a lot different: A desperate realization that you were told the wrong time; a frantic cab ride to the marina, only to see the yacht heading to sea; a search for a fast boat; a payoff to a nefarious bad guy; the last-second idea to shoot from the bowsprit chair strapped in like a marlin fisherman.  And then, of course, the usual self-assured act later on, as if to say “all part of the plan.”

Some people have a way of making things go right, no matter how badly they seem to be going wrong. Why do winners seem to just keep winning?

Social scientists tell us that winners keep winning for several reasons. First off, maybe they are just better. But quality aside, we know that those with a reputation for past success tend to get disproportionate credit for future wins – the so-called “Matthew effect” described by the sociologist Robert K. Merton. And of course the winners from the past tend to be in the right place to make things happen in the future, and have the connections and resources to make good on those opportunities. 

But there may be another reason that winners keep winning – a reason that is particularly useful to understand business leadership: The self-fulfilling prophecy. Some people tend to be unrealistically optimistic, a view that sometimes makes itself come true.

The downside of unrealistic optimism is that you are out of touch, but the upside is that your outlook might trigger a self-fulfilling prophecy. Steve Jobs was said to have been surrounded by a “reality distortion field,” in that he would believe in possibilities even when others saw them as unthinkable. Of course, once Steve believed, then others would too – making his vision more likely to come true.

So-called “positive illusions” of this sort have been talked about by social psychologists for years in terms of mental health outcomes (see the work by Shelley Taylor and her colleagues). A related idea is the "growth mindset" featured in Carol Dweck's influential work, where our belief that we can develop ourselves leads to greater effort and better outcomes. In sum, when we believe that positive outcomes are possible, we behave in ways that increase the chances of those outcomes.

Paul Barnett could not accept that he would fail. So in a situation where others would throw up their hands and admit defeat, he kept scrambling. Not letting the facts get in the way, the unrealistic optimist expends effort as if victory was within reach – which of course makes that victory more likely. And with every victory, the optimist’s unrealistic view gets confirmed yet again.

The lesson for leadership is clear. Of course we know that a well-informed decision is one that sees reality for what it is. But leadership is so much more than correct calculation. Especially in uncertain times, what the leader believes to be true may end up so through the self-fulfilling prophecy.


For some of the academic work in this area, try this summary of Professor Dweck's work on the growth mindset.

Tuesday, October 31, 2017

On Walls, Ignorance, and Hate

A few days ago I was lecturing a group of executives on the topic of innovation. The talk went well for the audience, but it was a tough one for me.

The problem started when I glanced out the window. The venue was the top floor of the Axel Springer building in Berlin. From my place at the front of the room you could see where Chris Gueffroy was gunned down trying to cross the "death strip" of the Berlin Wall just months before it would come down in 1989. And now here I was speaking at Axel Springer, the publishing house that stood as a beacon of free speech overlooking that wall.

I could just see the tracings of where the wall had been, but I forced my attention back to the audience. The diversity of the group suddenly became salient: Women and men; different religions; different regions; different political views. In that moment, I was aware of the most remarkable thing about my lecture: I was speaking freely in that place to a diverse group without fear.

Walls divide - especially walls erected by governments. When effective, these divisions reinforce ignorance by preventing people from seeing each other, from listening to each other, and from experiencing life together. Walls may be built for many reasons, but once built, walls are monuments to ignorance.

Ignorance, meanwhile, makes it easy for people to hate. It is hard to hate someone when you know them as fully human, when you can relate with them and when you have shared life with them.

One is reminded of the Stanford Prison Experiment, a controversial experiment conducted by psychologist Philip Zimbardo in 1971. Participants were all male students at Stanford, similar in so many ways, but in the experiment they enacted the roles of "guards" and "prisoners." Even though they knew these were just roles, the resulting behavior of the guards towards the prisoners was shocking - as was the prisoners' resignation to their fate. Much has been written about this experiment, and its precise psychological lessons remain the subject of debate to this day. But one thing is clear: It demonstrated that people treat others less humanely when they are separated by a gulf of ignorance - in this case replacing names with numbers and covering individuality with the uniforms of guard and prisoner. In short: ignorance breeds hate.

So to those in my government wanting to erect a wall, consider this: Walls increase ignorance, and ignorance breeds hate. My vote: I prefer to be immersed in the rich diversity that we humans have to offer.


A large academic literature investigates this phenomenon using the term "intergroup bias."

Sunday, October 15, 2017

Metacompetition

I fell for the shoe-shine huckster on Bourbon Street. I was young, and my wife and I were all dressed up. I could not resist the challenge, called out loudly to me amidst a large audience: “I bet I can tell you where you got your shoes!” I hesitated and replied, “Okay, where?”  Game over. He shouted “On your feet!”, fell to his knees, spat on my shoes (with disrespect), and began to shine them furiously. How did I end up standing with my pretty young wife in the middle of a laughing, half-drunk mob – as a wiry man gave me an unwanted, overpriced shoe shine? He seemed to know I was asking myself that question. Now with some pity in his eyes, he looked up at me and said “Never play another man’s game.”


Since then I remind myself of his message often: make sure you play the right game. Common sense, I know. Big men throw shotput; tall women shoot hoops; smart folks solve equations; tight bodies go to the beach. Of course we each try to play the right game – and the same goes for companies. That is what “business strategy” is all about. But sometimes the game being played is unclear, and then we risk losing by playing the wrong game.

People and companies often lose by playing the wrong game. This happens, for instance, when people fail to get a job. Several rounds of interviews end up in disappointment, and then you find out they were looking for someone with a sales background, or experience in C++, or geographic flexibility, or fluent Mandarin, or whatever. At that point, you probably wondered why they did not make their criteria clear in the first place. The problem is that in real life competitions, unlike board games or sports, the criteria for winning are often decided while the game is being played. Inside the company, different people may favor hiring different kinds of people for a given job, and that debate is often taking place even as you are interviewing. Once the dust settles, you find out you lost based on a criterion on which you never would have even tried to compete. You lost the “metacompetition” – the competition over the game being played. When you lose a metacompetition, you lose without ever really competing – like the fool on Bourbon Street playing another man’s game.

Metacompetitions decide the fates of people and companies all the time:

If Facebook succeeds in a country, companies that produce Facebook apps suddenly “win” access to that market; metacompetitions between platforms determine the fates of applications.

If teaching comes to be valued more than research in a university, then professors skilled at teaching rise in prominence; metacompetitions between performance criteria determine professional status.

When CDMA-based technologies took off in the US, companies like QualComm that work on that standard prospered; metacompetitions between standards decide the fates of the firms that adopt (or reject) those standards.

When an oil spill raises concerns about the environment, consumers favor businesses with good environmental records; metacompetitions between beliefs determine the criteria we use to evaluate whether a firm is “good.”

If a particular organic foods certification becomes important to consumers, companies with that certification are favored; metacompetitions between certifications determines how the quality of firms is measured.

In all these examples, you could be the very best at what you do, but lose in the metacompetition over what criteria will matter. On the other hand, you may win due to a metacompetition that protects you from fierce rivals who play a different game.

Great leaders pay attention to metacompetition. They advocate the game they play well, promoting criteria on which they measure up. By contrast, many failed leaders work hard at being the best at what they do, only to throw up their hands in dismay when they are not even allowed to compete. These losers cannot understand why they lost, but they have neglected a fundamental responsibility of leadership. It is not enough to play your game well. In every market in every country, alternative “logics” vie for prominence. Before you can win in competition, you must first win the metacompetition over the game being played.


Research on metacompetition appears in my book on the Red Queen.

Saturday, September 30, 2017

Don't Just Pivot!

No doubt you've heard insanity defined as "doing the same thing over and over and expecting different results." And yet we know from science that advances often come when experiments fail to replicate a result. Einstein himself, said to be the aphorism's author, often repeated experiments. After all, experiments sometimes produce false results. You don't have to be Einstein to know it is a good idea to run the test again.

Yet if you are in business, you probably live by the insanity aphorism - insisting that no test be repeated. How often have you said "But we already tried that, and look how it turned out!" Calling others insane is an effective way to shut down further experimentation (and thinking).

Fortunately for us all, the world re-runs experiments all the time, and often gets different results. Webvan failed. Now Amazon, Google, and others are delivering to your door. EachNet (and its acquirer, eBay) failed to make cash-on-delivery work in Chinese C-to-C e-commerce. Now Taobao's cash-on-delivery system is thriving. The failures of Alta Vista, Excite, Lycos, and others led many to conclude that internet search could not be a business. Now, well, you know.

You're probably already trying to explain the differences in all these examples. Slow down; the broader issue here is the problem of false results.

Sometimes experiments generate false negatives - they tell you "no" when the real answer is "yes." And sometimes experiments generate false positives, telling you "yes" when the real answer is "no." You of course know about false positives and false negatives in medicine. We worry about them a lot, which is why we often go back for a re-test when things get medically serious. But for whatever reason, we don't think about false results nearly enough in business.

For instance, I recall one of the early movers in digital medical diagnostic imaging. Their system was rapidly adopted by several hospitals, leading to a lot of excitement, including executives quitting their jobs and joining the company. Then growth abruptly ended. It turns out the early wins were a false positive. (Many more examples of false positives can be found in Geoffrey Moore's "Crossing the Chasm" books, enough to have created a consulting juggernaut.)

False negatives in business are common too, as in the examples of search, delivery, and Chinese COD - but they are often harder to spot. The problem is that false positives are self-correcting, but false negatives are not. When you get a positive result from a business experiment, typically you'll keep at it. If it turns out to have been a false result, the world will make that clear enough. But if you get a false negative, you'll be inclined to "pivot." And you'll never know that you were on to something good - unless somebody else tries it again.

Perhaps you are thinking: "Hey, in all your examples, there were some variables that changed. A good test would take into account all the variables that matter." Sure, Amazon and Google now know about some things that Webvan did not, and they have adjusted those variables accordingly and that's why their experiments are working when Webvan's did not.

Here's the problem: Often we don't know all the variables that matter. This problem is well understood in science. Good scientists know that two seemingly identical experiments can produce different results, since often there are variables operating that are unknown to the scientist at the time. In fact, even random chance can produce odd results. That's why a good scientist knows that there is a lot she does not know; so she runs the test again.

The lesson: Insane though it may seem, don't just pivot. Run the test again.


A rigorous treatment of this problem, sometimes called the "hot stove effect" is by Jerker Denrell and James March.

Friday, September 15, 2017

The Crossroads

The corner of Telegraph Avenue and Channing Way in Berkeley was at the crossroads in 1977. An angry man in a torn shirt waved his arms helter-skelter, hollering gibberish as he kicked a newspaper stand into the intersection. The commotion drew the attention of the hippy bead-sellers and t-shirt vendors; even the scraggy-bearded students took notice. Fittingly, the name of the newspaper in the broken stand was “Appeal to Reason.” Oblivious to the racket, a blind tarot-card reader wearing a Scottish plaid stared upward as he shouted predictions to a freshman who had paid his 5 bucks: “You are about to go through great change!” went the fortune, as his wrinkled old fingers probed the braille card face up on the table. Amazed at this clairvoyance, the student nodded open-jawed, “Yes, how did you know?!” Berkeley in the 1970s was at the crossroads, where novel combinations created unforgettable oddities.

It turns out that the crossroads create more than local color. At the crossroads, novel combinations often go nowhere; but now and then you see genius: Bill Gates built BASIC software for the Altair hobby computer, thereby getting to know the folks at IBM – and then accepting as a “side project” the job of getting their PC’s operating system to work. Bell Labs scientists Arno Penzias and Robert Wilson measuring background radiation from space in an effort to improve microwave communications; then finding the evidence that would win them the Nobel Prize for the “Big Bang” theory. Gordon Moore, Robert Noyce, and the others of the “traitorous eight” meeting at Shockley Labs in Mountain View, and from there forming Fairchild and the foundation of the Silicon Valley.

Great minds? Yes, but there are many great minds. In case after case, innovation explodes when such people find themselves crossing paths in the right place at the right time.

And these meetings need not involve technology: The crossroads have spawned great films, new approaches to banking, fusion cuisine, masterpieces of literature, new musical genre – the list goes on. Often my family and I raft the Rogue River, stopping to do yoga along the way. Sounds strange, but this marvelous innovation resulted when the rafting guru Peter Fox met yoga master Susan Schneck. Strange and beautiful combinations happen at the crossroads.

Want to be at the right place at the right time?  Go to the crossroads. You may discover genius, or not. But you won’t end up doing, yet again, the predictable.


Systematic research on this idea appears in the work of Lee Fleming.