Managing risk is supposed to be a key aspect of leadership. Why are most so poor at doing it?
 

Leaders and senior executives are rubbish at assessing risk. The financial crisis and economic meltdown prove it. Even top bankers, whose whole job is surely most about risk, got it so badly wrong that they not only killed the goose that was laying the golden eggs to satisfy their greed, they came perilously close to cooking everyone else’s goose as well.

Of course, leaders don’t accept how bad they are at understanding the risks they undertake. If they did, they might well be able to do something about it. Instead they do what all macho managers do to avoid admitting a weakness—they resort to mindless bravado.

This only makes matters worse. Instead of slowing down, or shying away from risks they don’t understand, they plunge ahead to show what tough guys they are. Then, when it all comes crashing down around their heads, they indulge in the other age-old custom of all bullies and egotists—blaming someone else.

You have to accept that human beings in general have a poor ability to estimate risk accurately—especially if they do it based on emotions, as most do—but that’s not an adequate excuse. Leaders are paid to manage risk. It’s one of the things they claim to be able to do better than the average Joe. If they cannot do better than anyone else, why pay them so much?

Why leaders don’t grasp risk properly

These are some of the commonest reasons why leaders get it wrong when it comes to understanding the risks that they are taking:

• They don’t grasp the laws of probability. Rather than take the time and trouble to delve into what it is, admittedly, an arcane discipline, they rely on mythology and rules of thumb. Since, however, no macho manager ever admits to not knowing anything, they either ignore all the statistics are telling them or ‘interpret’ them to match their own biases. Fire, it is said, is a good servant but a bad master. That’s even more true of statistics.
• They make decisions emotionally. How you feel about something has nothing to do with the actual likelihood that it will happen. This is the mistake gamblers make. Winning makes them feel good, so they wager more next time. Losing makes them feel angry, so they wager more and ‘double up’ to get their money back. Few stop to work out the exact possibilities of winning and losing.
• They let their egos rule. Many mergers and acquisitions come about, not from business logic, but to feed the ego of the CEO. That’s probably why 70% or so fail. Betting big on a merger makes those at the top feel important, whether or not the decision makes any sense from a business point of view. There will always be bankers and consultants eager to prove it does. Those guys make so much money from feeding the grandiosity of CEOs they can always justify anything that produces fees for them.
• They don’t understand the figures and so give too much respect to experts. The phrase ‘scientific management’ has become the curse of our time. No matter how crazy the idea, it can nearly always be sold to a boardroom full of professional leaders, provided it is wrapped up in scientific jargon and supported by sufficient tables of data. Few around the boardroom table understand any of it. They decide on whether or not they like the expert and find the presentation sufficiently entertaining. (Privately, I suspect they judge the strength of the evidence by weight. The heavier the report, the more trust they put in it.)
• They treat anecdotes as evidence. You have to put much of the blame for this failing on the media. We have become so used to news reports filled with ‘human interest stories’ instead of facts or logical argument, many people have lost the ability to see a difference between them. Management books use anecdotes, trotted out one after another, to support what the author is claiming. Stories are much more entertaining than logic or data, and a good deal of management writing today has long ago crossed the border between instruction and entertainment. Much of it should be re-shelved under ‘comic books’.

Even when leaders do try to grapple with the evidence, they still get it wrong.

The human mind, as I said, is poor at understanding probability. There are three patterns of thought which are especially effective at leading us into incorrect decisions:

• ‘The proximity effect’ bedevils our understanding of cause and effect. When two things occur closely together, in time or distance, we have a tendency to assume the one caused the other. As a result, people misunderstand what is going on and apply their efforts to dealing with things which are more or less irrelevant to what they want to achieve.
• ‘The recency effect’ describes the way that recent events appear larger and more important to us than those which happened some time ago. People who have just taken a risk and succeeded are more likely to take another one. Those who fail will hang back, even if they have an excellent record of success in the past. (This effect , by the way, explains why the small error you made yesterday erases from your boss’s mind all the good things you’ve done in the previous twelve months.)
• ‘The familiarity effect’ makes us underestimate the risks associated with something we know, and overestimate those associated with something unfamiliar. It explains why doing what we have always done feels less of a risk than change—even if it’s obvious that what we have done in the past won’t work and new ideas are necessary.

The mythology of conventional management is that a combination of statistical analysis, past experience and the pragmatic application of a handful of management models renders most business risks negligible. The reality is that conventional management’s obsession with speed, substitution of action for thought, tendency to confront uncertainty with bravado, emotional bias, and confusion of egotism with leadership, has made dealing with risk into a quagmire which has already swallowed up billions upon billions of dollars.

Ordinary humans are poor at assessing risk and usually accept it. Managers are supposed to be professionals at risk management, so deny any weakness in their approach. Yet, in recent years, most executives have been no better at handling risk that the man or woman in the street—often considerably worse. Isn’t it time to acknowledge this weakness in conventional management attitudes and put a stop to it?

Technorati Tags: risk, choice, managing risk, making decisions, emotional decisions, management myths

Maybe motivation by management does more harm than good
 

I’m beginning to feel about motivation as I do about communication. Why are there so many books and articles about it? If one or two of them contained all you needed to do it well, the others would be unnecessary. It’s more likely that motivation has been hyped, like communication, because it’s a vague topic with broadly positive connotations—an ideal area for offerings from consultants, authors, publishers, and bloggers.

Why do we even need to motivate people? As far as I can see, people are well able to motivate themselves. Look at all the time, effort and money people devote to things that interest them. In the majority of cases, these activities often no material gain. They don’t help people’s careers, they don’t bolster them socially and they consume large amounts of money.

Just one example. Over the past few years, a group of enthusiasts in Great Britain raised enough money, and contributed enough unpaid labor, to build a steam locomotive to a 1940s design—starting from scratch. Now that it’s completed, the media excitement is over, and it pulled its first few trains of excited passengers, the only thing they have to look forward to is raising still more money, and contributing yet more unpaid labor, to keep it operating. Who ‘motivated’ them to do that?

The more I think about it, the more motivation by management seems to me to be a wolf in sheep’s clothing. Just as war is said to be diplomacy continued by other means, conventional management approaches to motivation are command-and-control given a more fashionable and acceptable face. The carrot may be dangled ahead, but the stick is never very far behind.

Why not appreciate people instead? It’s quick, cheap, uncomplicated and requires no training manuals or courses to learn how to do it.

This table summarizes my concerns with motivation and how I think appreciation avoids the problems.

Motivation has a fundamental dishonesty hidden within

My final concern is this: there’s a fundamental dishonesty at the base of motivation. Take the requirement that any leader should be able to motivate his or her staff. It sounds perfectly reasonable until you test the concept a little further.

I suspect anyone could ‘motivate’ any number of staff by offering them huge amounts of money or unlimited benefits. Of course, this isn’t what is required. The test of a leader’s skill in motivation is the ability to get people to do things without giving them more. It assumes a basic minimum use of incentives. Coercion is always cheapest.

That’s what I mean by a fundamental dishonesty. The leader is expected to save the organization money by persuading or manipulating people to work harder for less reward. This is the hidden agenda behind conventional approaches to motivation. It’s little wonder that there are so many books, articles and training courses on how to do it. It’s just another way of cutting costs.

Alternatives to motivation

• The first alternative I would offer is realism. There will always be situations in which people take jobs that they do not have much interest in, and would prefer not to do, purely out of economic necessity. They agreed to do the job because they needed the money.
       Why not accept this? All these people need is to be told what they have to do and be left to get on with it. Trying to motivate them is pointless. Expecting them to be ‘motivated’ is futile. All it does is add an unnecessary layer of guilt and coercion. Instead of accepting that they do what they’re paid to do, and being grateful for that, managers mark them down as uncommitted and lacking in team spirit — judging them against expectations that have nothing to do with the task, and that the employees never accepted when they signed on.
• My next alternative is appreciation. I think nearly everybody longs to be accepted and appreciated. You only have to look at the opposite to see this is so. People who are rejected and feel themselves to be undervalued swiftly become angry and depressed. You’ll never hear anyone say, “please don’t appreciate me. I really don’t like it.”
       If managers accepted people for who they are and what they can do, and openly appreciated whatever good results they obtained, there would be no need for motivation. People would naturally be drawn to repeating the actions that produced such a happy result.

Am I too skeptical about motivation? I don’t think so. The essence of skepticism is testing things to see if they live up to what is claimed for them. In this case, it seems to me that motivation falls a long way short. At the very least, it suggests the ways being used to motivate people today need considerable revision.

If motivation is truly command-and-control management being carried on behind a smokescreen of smiling faces, it’s hard to see that we need it at all.

Technorati Tags: motivation, management, command-and-control, management myths

Why are working relationships between bosses and subordinates such a problem?

I thought it would be a good idea to review some of the basics of management—topics that we take for granted because they are so familiar to us, or because we assume the last word on them has been spoken and there is nothing more to be said. Motivation is on my list, as is communication, but I am going to start with the topic of working relationships between bosses and their subordinates.

Establishing good working relationships with subordinates is something every manager has to attempt. That’s why it’s the subject of innumerable books, articles, training courses and blogs.

This bothers me. Since managers are obviously still struggling with establishing productive relationships with their team members, the advice being given has to be missing something essential.

I’m not going to claim that I know the answer, but I do have some suggestions for areas of questioning that might move us forward.

Is everyone ‘showing up’ and paying attention?

The most basic requirement for any relationship is that both parties should be ‘present’. By that I mean both should be involved in that relationship and give it their undivided attention, in person, whenever necessary. Yet, what I observe are managers proclaiming their wish to have productive relationships with their staff while avoiding actual contact with them whenever possible.

It’s a truism to point out that relationships have two sides. Have such managers yet to grasp this point? They expect their subordinates to be fully involved in establishing and maintaining a relationship with them, while they make little or no effort in return. Talking with them is like speaking to an answering machine. You get a pre-recorded message back and have no means of knowing whether the message you leave will ever be listened to.

What you give your attention to grows; what you ignore, or attend to only when forced, quickly withers away. No relationship can survive prolonged neglect by either party.

Are they being honest with one another?

Exactly the same point could be made about honesty in relationships. Managers demand that their subordinates be open and honest with them, yet feel no obligation to behave the same way in return.

If you are not honest about a relationship, the message you are giving is that you don’t value it. This is as true of the relationship between boss and subordinate as it is of the relationship between spouses or friends.

Dishonesty destroys a relationship because all are based on some degree of mutual trust. If deal with you only on a one-off, transactional basis, there’s little need for me to trust you. We do what we must do and there’s an end of it. But if you and I are to work together, I have to feel sure that you will do what you promise, tell me the truth and deal with anything that concerns me openly and honestly.

It’s a sad thing to have to say, but many bosses do none of these. It’s little wonder that their subordinates have come to expect duplicity and concealment as normal—or that they repay the boss in kind.

Who’s paying attention?

Another corrupting influence on working relationships is narcissism. Why should anyone enter into a relationship with me, if the focus of that relationship is always fixed on me and what I want?

In today’s rushed workplace, attention is at a premium. That’s all the more reason to direct it where it matters most. A great many bosses think that is on themselves and their own careers. The only time they have any attention left over for their subordinates is when they want to complain or criticize. While the subordinate is ignored for the rest of the time, he or she is expected to find as much attention for the boss as the boss demands—at whatever time and on whatever topic.

Would you stay friends with someone who never found time to give you any attention? Would you stay with a lover who demanded that you fulfill his or her smallest need, while ignoring yours in return? Why should you behave differently with the boss? The boss may indeed be able to demand that you jump as and when requested, but that is a matter of authority, not the basis for a relationship.

The relationship between a boss and a subordinate is always going to be affected by their relative positions in the hierarchy. You have to face this. That’s why so many are based more on the approach you would expect between master and servant than between colleagues pursuing the same goal. Subordinates are paid to carry out instructions from the boss and are expected to comply without resistance. To make the boss feel better, they are also expected to look as if they enjoy it.

Is that a relationship? Hardly. It looks more like prostitution. You pay. I give as little in return as I can get away with . . . and fake some pleasure to make you feel special.

Is the boss trying to change you?

If the boss wants a relationship, it has to be marked by acceptance. No relationship gives either party the right to change the other to fit their expectations or wishes better.

One of the commonest causes is for breakdown in marriage is when one spouse determines to change the other to fix some problem or match an ideal. At once, the relationship becomes manipulative. The one starts ‘doing things’ to the other, who resents it.

Doesn’t this sound like the typical boss dealing with a subordinate? Isn’t this the basis for performance management and similar techniques? I, the boss, assert the right to change you, the subordinate, into what I want. If you don’t accept me doing that, it means you’re ‘ not co-operative’, ‘not a team player’, or ‘lack commitment’. Your career will suffer accordingly. You may even have to be let go.

To accept someone as they are is the basis of all successful relationships. It doesn’t mean you don’t help them to improve, or that you don’t make clear what works for you and what doesn’t. It does mean you don’t try to ‘do things’ to them or manipulate them. Any changes they make must be of their own, free will. You can advise what might be best, help them find a way forward, and, most certainly, show your appreciation of positive results. What you cannot do is coerce them or use the relationship as a means of blackmail.

Time, attention, honesty and acceptance are the keys

Relationships take time. In the end, their success is what you make it. If you don’t take time to pay the other person adequate attention, accept them for who they are and deal with them honestly, the person to blame for any breakdown is you.

Why are relationships between bosses and subordinates such a problem? The answer is clear. They will remain a problem as long as they are seen as tools of authority and used for manipulation under the guise of co-operation. A relationship is not a technique to be applied to an object to produce a particular result. It must consist of open, willing contact between individuals who are equally committed to its success. Anything else is fake and will fail.

Technorati Tags: relations with the boss, dealing with the boss, working relationships, getting on at work

Management isn’t rocket science—nor should it be.
 

Nobel Laureate Paul Krugman, whose mild criticism of the economic policies of George Bush earned him such vitriolic treatment a few years ago, was quoted recently as worrying that economics as a discipline is going backwards—and that economists, as a profession, understood less about the economy than they had a generation before. I think he’s right, and I think that other areas, especially management, have the same problem. Yet I find that a cause for optimism in the slightly longer term. Let me try to explain why.

We’ll start with economics. When I studied the subject, a very long time ago, economists were essentially interested in how the economy worked, and how it could be made to work better. During the 1970s, pointy-headed rocket scientists took over the discipline, and maneuvered it into a world of mathematical models, which showed how the economy ought to behave, if certain arbitrary assumptions were true.

They gave each other Nobel prizes for cleverer and cleverer demonstrations of the theoretical consequences of tenuous assumptions. This is presumably the origin of the famous joke about the economist who said, “I accept it works in practice. But I’m not sure it can be made to work in theory.” Meanwhile, the real economy was coming apart at the seams in a way that it had no right to.

Management off the rails

It was the same in management. When I was a young civil servant, I was sent on management training courses run by older and more experienced colleagues, who made use of pragmatic research in areas like occupational psychology. I watched, learned from, and was taught by, my bosses every day, on the basis of their own lifetime of experience.

Twenty years later, my staff returned glassy-eyed from expensive, externally run management courses, having learned that management was about ticking colored boxes and lying about the nature of your job to make it look as though everything you did was objectively measurable.

Like economists, management theorists came to believe that messy reality could be reduced to theories and formulas, generally with the objective of getting more work out of fewer people. When reality intervened (evidence that bonus schemes generally degrade performance and destroy cohesion, for example) it was put to one side, so as not to sully the purity of the concept.

In management, as in economics, theoretical castles in the air were built on the basis of arbitrary and un-provable assumptions. (“Consumers act rationally and with perfect knowledge”. “People are only motivated by money.”) By making such simplifying assumptions, elaborate and satisfying intellectual theories could be constructed, and sold to naïve and insecure senior managers.

Floating away from reality

Like economists, management theorists floated away from all contact with reality, and so were useless when organizations faced real crises.

Just as it’s not surprising that some have begun to question whether economic theory serves any useful purpose at all, so the same question has been asked of management theory too. Like economic theory, management has gone backwards in recent years, and organizations are now less well run than they were, by people who are less knowledgeable and less well trained.

These similarities are not a matter of chance; the two disciplines are closely related. They began as an attempt to understand reality, and finished up as an attempt to impose a design on it. Now they lie in pieces on the floor, revealed in all their uselessness and dysfunctionality. Indeed, one partly caused the problems of the other. Managers in the financial sector were selected mainly for their ability to falsify numbers, even if they couldn’t manage their way out of a wet paper bag, and had no business running anything more complicated than a vegetable stall in a market.

Life goes on

But there’s a ‘but’. Just as the economy must go on, so organizations have to continue in some form. I used to think that the decline in organizations was terminal and unstoppable, but now I’m not so sure. It may be that we have touched the bottom and are about to come up again.

The reason is, very simply, that the kind of theories we write about on ‘Slow Leadership’ do work, and have been tested over many years in all kinds of situations. Most fashionable management concepts, on the other hand, work brilliantly in theory, but fall apart immediately in practice. At some point, organizations will have to adopt practices that truly work, or they will perish.

It’s partly a question of perspective and timescale. Anyone with twenty or thirty years experience in organizations must have had the sick feeling of decay and decline. The temptation is to believe that things can only get worse, or at least no better. Yet just as the rules for running a successful economy are well known—if deliberately ignored recently—so management itself is not rocket science. We know how to manage organizations effectively. You can read about it here. Hang on—at some point, we are going to have to go back to reality.

Oh, and I don’t mean to be dismissive of rocket scientists: at least they know how to construct something that actually works—unlike management theorists.

Technorati Tags: managment myths, management theories, practical management, managing better

Another case of look before you leap?
 

Downsizing—laying people off—is the immediate response of macho managers to corporate profitability problems. It’s conventional wisdom that cutting costs—especially labor costs—is the best way for a company to get back on its feet.

But does it work?

An interesting article by Professor Freek Vermeulen on the Harvard Business Publishing blog reviews the evidence and suggests an answer (“The Tricky Truth About Downsizing”).

The answer? Not very often. On average, they simply don’t work. For example, professors James Guthrie, from the University of Kansas, and Deepak Datta, from the University of Texas at Arlington, examined data on 122 firms that had engaged in downsizing and statistically analyzed whether the program had improved their profitability. And the answer was a plain and simple “no.” The average company did not benefit from a downsizing effort, no matter what situation and industry they were in.

It looks as if this is yet another management myth. Organizations are much more than financial entities. Over the last few decades, our obsession with accounting practices, financial trickery and the primacy of ‘shareholder value’ (another myth), has blinded us to the basic fact that organizations are as much human systems as financial ones.

Only organizations that treat their ‘human resources’ with the least as much care as their finances stand any chance of coming out of this recession in reasonable shape.

Technorati Tags: downsizing, lay-offs, cutting costs, evidence-based management

It’s possible that having clear goals may be the problem, not the solution.
 

One of the commonest platitudes of management and career development is the need for clear goals, carefully set down, with marker points and ways to measure of progress. What if this is not true? Maybe it’s simply an assumption, based on nothing more than how some people like to do things.

We probably do need to have some idea of the direction we are heading towards, but that is not the same as having clearly-stated, fixed goals. The world changes quickly and those beautifully crafted goals are hard to set aside, even if they no longer make sense.

Having clear goals also tempts us to keep our eyes on them and not on what is happening around us. As the current recession has shown, when people focus narrowly on set goals, they miss most of the signs that suggest they’re headed in the wrong direction.

It’s easy to allow those same goals to dictate our lives, so they become an obsession. When that happens, people stay with them long after they have become obstacles to progress. Just look at all the failed products companies went on pouring cash into, long after it was clear they didn’t merit another penny.

Flexibility and goals don’t mix

It’s common sense to stay alert to changes in your environment that might require some change of direction. After all, when prediction is either impossible or inaccurate, the only alternative is to be ready to change on a dime. Since no one knows what the future will bring, you would expect that flexibility would be valued more highly than it is.

That this isn’t so says more about companies’ desire for imposed stability than their clarity of thought. Detailed plans and budgets provide an illusion of predictability in a world that has almost none. Leaders are so afraid of unpleasant surprises that they try to tie up the future in spreadsheets and charts. It won’t work.

If goals interfere with flexibility, we need to ask whether that’s a positive or a negative outcome. Experience suggests the latter. Whenever we ask, “Why didn’t someone see that coming?” we’re pointing to a situation in which the most likely answer is that they didn’t plan for it. What wasn’t built into the goals wasn’t looked for or even noticed.

Detailed goals lead to seeking short-term wins

Most people who set goals also set ‘markers’ or a series of targets to allow them to gauge whether they are proceeding on track.

It’s human nature to want to achieve early success, especially since that is the time when those ‘markers’ will be uppermost in the minds of those above you. Experience suggests that most plans have a far shorter shelf-life than is claimed when they are written. No organization I have ever worked in has been immune from allowing past plans to fall into abeyance as new ones are written, typically well before the point at which the final outcome of the previous plans could be known.

What this means is that people know to value ‘quick wins’ far more than steady progress towards supposedly long-term goals; and if getting quick wins means taking big risks with longer-term outcomes, few will care. Not only may they be gone long before the downside of those risks becomes clear, the whole plan will probably have been replaced by a newer one.

Goals narrow the focus

It has been fashionable to judge performance by reference to goals achieved, then allocate rewards accordingly. It should therefore be no surprise that people have fixed their attention exclusively on what produces a monetary outcome, even if that means crossing ethical boundaries or ignoring what, by any other criterion, should be more important.

You can liken this to having ‘tunnel vision’. Whatever is outside the narrow path ahead defined by set objectives (many set months or even years into the past) is judged irrelevant.

Imagine walking along a busy street and only being able to see what lay directly ahead of you. You would be totally unaware of anything approaching you from any angle but dead ahead; unaware of passing traffic or people beside or behind you. How safe would you be? What would be the risks that you missed because you couldn’t turn your head?

I suspect none of us would be willing to make the experiment. Indeed, those unfortunate people who do suffer from physical tunnel vision are generally classified as blind or disabled, in need of special care and consideration. Yet tens of thousands of managers and leaders put themselves in almost the same situation on a daily basis.

As Tom Robbins wrote in “Still Life with Woodpecker”:

“Tunnel vision is caused by an optic fungus that multiplies when the brain is less energetic than the ego. It is complicated by exposure to politics. When a good idea is run through the filters and compressors of ordinary tunnel vision, it not only comes out reduced in scale and value, but in its new dogmatic configuration produces effects the opposite of those for which it originally was intended.”

Are you suffering from ‘goal intoxication’?

For most people, a glass of wine or beer now and again is a pleasant source of relaxation. For alcoholics, it is a life-threatening obsession. It’s much the same with goal setting and planning.

Pursuing set goals sounds like a good idea, but only until you consider it in greater depth. Then you can see the drawbacks as well as the possible benefits. Whether they come from restricted flexibility, seeking out short-term wins and ignoring the wider risks, or simply the narrowing of focus that blinds you to approaching dangers coming from unexpected directions, firm goals need to be treated with great care.

Given the prevalence of silly phrases like, “What cannot be measured cannot be managed,” it’s not surprising people are seduced by the illusion of predictability and stability having clear plans and goals offers. Life in uncertain, the future ambiguous and our circumstances changeable—all attributes the human mind finds it difficult to deal with in any comfort. Yet relying on illusions is unlikely to help, even when they are decked out with PowerPoint slides and pages of tables and ratios.

The answer may be more attention and intention

Intention is the decision to aim for some long-term outcome that makes sense at any given time, but remains flexible to change as needed.

Unlike plans and goals, intentions remain broad and inclusive. They lack the precision of the set targets and timescales, yet more than make up for that by being adaptable to changing circumstances. To have a firm intention is like knowing you want to drive to Boston or Istanbul, but staying flexible along the way to whatever route makes most sense in current traffic and weather conditions.

Attention means staying alert at all times to anything that might affect your progress or the appropriateness of your intended destination. It means going along with all your senses on high alert, constantly looking around to see what might be approaching from unexpected directions.

Intention and attention, taken together, will see you along the way with less risk and more chance of success than that closely-argued and detailed planning document. If you don’t want to waste it, you could always burn it. It will provide more light that way.

Technorati Tags: goals, goal setting, planning, strategic planning, setting targets, predictability, future plans

“Zombie banks” has become a commonplace term in the US. It means banks and other financial institutions that are essentially ‘dead’—i.e. bankrupt—but are kept alive by huge transfusions of public money.

There are other zombie organizations out there, some of them are still making profits (or, at least, sustainable losses). These zombie organizations aren’t bankrupt, they’re brain dead. They function and appear to live, but the people at the top—their ‘brains’—stopped thinking decades ago.

When macho management triumphed, one of its obvious features was a dislike—I might say a fear—of thinking in any but the most basic forms. Only two aspects of the mind were revered: computation, to make decisions automatic and numerical; and intuition, to reach snap judgments ahead of the competition.

Types of thought that used to be seen as the heights of human endeavor—logical reasoning, reflective questioning and creativity—were the most suspect. Where decision-making is based on following set, numerical formulae, reasoning is assumed to be a waste of time. Where obedience to superiors and ideological dogma rule, questioning becomes disloyalty. Creativity has no place either, because those in charge believe they know everything useful already.

We can now see the mess that results when eager action and hard work are combined with the absence of any appreciable mental activity; when pulling the levers before the next person pulls one—and thus ‘wins’ in the competition to be seen as the most decisive—trumps thinking whether it’s the right lever to pull.

Macho ideology claims everyone works in their own narrow, economic self-interest and thus magically produces a perfect balance of market forces. Swallowing this wholesale, these people made emotional, short-term decisions that were neither in their own interests nor anyone else’s. Taken together, those decisions combined to produce, not a self-regulating market, but one that is only functioning at all because of unprecedented intervention by governments around the world.

Isn’t it time that we recognized this type of management is totally and completely dead, whether it appears still to be walking and talking or not? That now, more than ever, we need leaders who can think independently, reason creatively, and work to utilize the best minds (not the biggest egos) available to them?

Technorati Tags: management, leadership, worn-out ideas, failed management, management dogma

(This is a guest article from Michael Taplin.)

Almost every business disaster of recent times has lack of supervision as a root cause.
 

I know this is a bold statement, that’s why, to demonstrate the essential truth of the proposition, I need to start from the beginning and ask what we mean by supervision in a business environment.

Supervision means literally to oversee or to watch over “from above.” Who was supervising Bernie Madoff? Certainly not the US financial regulators, or the SEC. His audit arrangements have been revealed to be a sick joke. Who was supervising Kenneth Lay and Jeffrey Skilling while they built the fraudulent empire that was Enron?

As we pore over the entrails, we typically find no trace of supervision—of effective oversight or control—at the higher levels of the corporation. Our system relies on the governance of corporations by a board of directors, yet in too many failed corporations we find little evidence of it. The group of directors is dominated by a powerful chief executive who often also holds the position of chairman.

Supervision has become deeply unfashionable.

The words we use show how this has occurred. Let me offer a few examples:

• “Foreman” (and the clumsy “forelady”) has virtually disappeared from the lexicon.
• “Leading hand” is never heard today.
• “Supervisor” is rarely used as a title or a function.
• “Managers” have become “team leaders.”

These words too have disappeared from our publicly used management vocabulary: oversee, administer, control, run, take charge, organize, handle, superintend, watch, observe. As leadership has taken over from management, the personal qualities associated with it have come to be seen to be more important than mastering a set of coherent management disciplines.

I have watched as the language of personal development—the building of inner strength and vision—has taken over in the fashionable process known as ‘management development’. Team building is now the experience of value in the management development tool-shed: an activity based on suffering together to achieve self-discovery and group resourcefulness in the face of artificially created adversity .

The old-fashioned idea that people need supervision to assist them, especially to learn how to do a job when they enter a new work situation, is now rejected. ‘Gen-Y’ people, it seems, demand self-actualization through a meaningful career, instead of seeking admission to membership of a productive team. We are expected to take their assumption of personal competence at face value.

Mastery of a trade or profession through apprenticeship has also been fudged by the theory that all learning can be broken down into a series of unit standards; and that competence means acquiring a pass mark in sufficient units of learning to be awarded a certificate.

If we can find all the notes on the piano, does that mean we can play beautiful music? If someone can grasp the theory of music, does that make him or her a talented musician?

Can we recover the art of supervision?

In society at large, we are fortunate that there are strong reservoirs of traditional supervision—in science, medicine and the arts. We still have teachers who learned their skills in the apprenticeship tradition. Many of these are keen to pass on their deeply-embedded knowledge of the art of supervision to the present generation of managers.

To revitalize our management processes, all we need is for the present generation of leaders to find and use these people to teach their team leaders how to practice the art of supervision. They will need to turn their backs on the stream of management fads and magic-bullet solutions, and revert to the tried and true ways that fit the present stage of human evolution.

We need society to recognize that when there is a failure of supervision at the higher levels of management of corporations, the public good is at risk. It does not seem too hard. A little courage and willpower will go a long way.

Michael Taplin is the driving force behind bizlearn.biz. He spent 25 years as an independent consultant, owning and running successful businesses that trained thousands of people in large organizations. 12 years ago he left the Australian corporate scene behind to move to rural New Zealand, where he got close to the small business culture and has been a volunteer business mentor working through Business Mentor NZ. As a Teaching Fellow of the Graduate School of Business at Massey University , he has taught in both the MBA and Public Sector Management programs and worked in the small island nations of the Pacific where he made many friends.

Technorati Tags: supervision, learning, management development, creating new managers, management myths

Here’s one of the best and simplest explanations I’ve yet seen of what has been going on in the business world, written by Bob Sutton (“Do Economists Breed Greed and Guile?”) for Harvard Business Publishing’s blog. If you want to understand why no one trusts anyone else in organizations today, read this.

He writes:

Although some economists will quarrel with this view, most of the models and assumptions they pass on to their students reflect a fundamental belief about human beings: We are hard-wired to be selfish. They assume, like Alan Greenspan’s mentor Ayn Rand, that it’s a dog-eat-dog world, and that humans want and take as much for themselves as possible and to stomp on others along the way. As an example, “agency theory” remains one of the most influential theories among economists and business-school finance professors. Major proponents of this theory not only assume that human beings pursue their narrow self-interest; they also assume that people do so with guile (“treacherous cunning; skillful deceit”). If you travel through life believing that all human beings behave this way, you will look to screw people at every turn and assume that they will do it to you given the chance. And if you act as if this true of every human interaction, and treat everyone around you as if they too are always looking for only short-term and selfish wins, you will create a self-fulfilling prophecy.

This describes such a one-sided and partial view of the human condition that it would be laughable, did it not produce such tragic consequences. Of course deceitful behavior comes naturally to us all; but so does supportive and altruistic action as well. Humans are ‘hard wired’ for all aspects of being human. The difference between you and an ant is not that you don’t have behavioral instincts, as the ant does, but that you have the power to choose consciously whether or not to follow them.

Pointing out that deceit comes naturally to people is no more important than reminding us that we don’t have to learn how to breathe. That comes naturally too. We can do both without being taught how. We can also sleep, eat, laugh, make friends, show love and trust one another without anyone giving us lessons first.

Just as we all do far more than breathe during a typical day, so we can all draw upon a wider range of behaviors towards those we deal with than screwing them over or using them purely for our own, selfish ends.

It seems as if business schools have been locked somehow in the theory that no one has free will any more—perhaps least of all those mathematical economists.

Technorati Tags: attitudes, econmic theory, management myths, what’s wrong with business schools

Here’s a short extract from a sobering piece in Management-Issues (“Survival of the loudest”):

“The meek shall not inherit the earth, or at least will not rise to the top of the management tree, a new study has suggested. Rather it is those who make the most noise, irrespective of whether they are the most competent, who get noticed. According to research by University of California at Berkeley academics . . . it is those who display traits of ‘high dominance’, in other words being assertive, forceful and self-assured, whatever their actual abilities. In fact the study . . . has argued that this can even apply to people who actually lack competence.”

Of course people who “lack competence” can make it to the top, and often do. In a world which has very muddled ideas about what constitutes ‘leadership’ and ‘leadership ability’—and where top managers nearly always recruit in their own image—it would be amazing if you did not end up with executive suites full of pushy, assertive, extroverted egotists.

The question is not does it happen, but how can we manage to get the real talent to the top in place of the loudmouths who constantly shout about what they can do, then prove it’s less than they claim?

One helpful step would be to stop using all the tired sporting and military analogies for leadership and start looking at it in its own right. What truly makes for a successful leader?

My own shortlist of attributes would include these:

• The willingness to think deeply and independently.
• A true focus on creating the best outcomes for the most people over the longest period of time.
• The willingness to reflect carefully on all the available options before committing to action.
• An acceptance of the ethical and moral responsibilities that go with all leadership positions.
• A sound appreciation that the bulk of his or her job is about helping others succeed, not improving his or her own position.
• An understanding that profit is an outcome of good management, not a goal to be pursued for its own sake.
• Open-mindedness and adaptability, in place of rule-bound, silo thinking.
• Most of all, moral courage to stand up for what is right and accept full responsibility for all his or her actions and their outcomes.

If we had chosen our leaders on this basis, instead of being so impressed by big egos, loud mouths and empty Armani suits, would we be facing the same problems today. What do you think?

Technorati Tags: leadership, assertive leaders, egotist bosses, leadership traits, finding talent