Here is an excerpt from an article written by Jeffrey Pfeffer for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
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It’s never easy to decide to stop pursuing a strategy. Americans got a reminder of that in President Obama’s speech recently on Afghanistan; it was dispiriting to hear him describe the extended timetable required to remove even just the incremental troops who went in as the surge. But at least Obama did manage to make a decision to scale back. Many leaders faced with a strategy that isn’t working don’t get that far.
Even when things clearly aren’t going right, strong psychological tendencies keep the average leader from admitting it and correcting course. A pathbreaking study by Barry Staw in the 1970s helped to clarify why. In it, MBAs were asked to choose the best R&D investment strategy for a case company; then, they were shown how that strategy played out (disappointingly). In the next round they were asked what to do next: Should they switch R&D projects in midstream, or pour more money into the original strategy? Staw found that the answer differed substantially based on who made the choice in the second round. When the same person responsible for the disappointing first strategy was given the power to decide the next move, it was much more likely that they would choose to stay the course. They were predisposed to escalate the commitment because to do otherwise would be to admit a mistake. (Interestingly, Staw’s paper makes direct reference to the war in Vietnam as a situation where logic might fall prey to face-saving.)
None of us likes to admit to bad decisions, but imagine how much harder that is for someone who has been chosen to lead a large organization precisely because he or she is thought to have the power to see the future more clearly and chart a wise course. The faith of others not only creates pressure, it also infects the leader with the impression that he or she really is powerful enough to make things work out. For proof of how far this self-confidence can go, look to Ellen Langer’s research on the “illusion of control.”
She showed that people have such an inflated sense of the control they personally exercise over their circumstances that they are willing to bet more on gambles when it is their own hand that rolls the dice or pulls a card from a deck. Among leaders, whose beliefs in their powers to intervene effectively have had plenty of reinforcement, that tendency is surely amplified.
And here’s one last piece of research I can’t resist citing in a discussion of why leaders are so likely to double-down on bad bets. Leslie Perlow did a fascinating study of engineers doing software development and observed them frequently using their time in ways that could only make it more difficult to meet their aggressive deadline. Her perceptive interpretation of this behavior was that, while an action that prevents problems goes mostly unnoticed, pulling a flailing project from the fire garners plenty of attention and rewards. Since leaders — like doctors — earn reputations for being great by resolving crises, they may have the same incentive to create the need for heroics.
With all these psychological tendencies acting on a leader’s judgment, it’s a wonder anyone ever manages to pull the plug on an effort that is consuming resources but going nowhere. Only the best leaders can hold fast to the truth that their job is to set strategy and ensure effective execution of it — and that at least half of that job is deciding what not to do. They know they must be disciplined in thinking about what products not to pursue and bring to market, what geographies not to enter, what activities not to focus on at the moment.
Gary Loveman, CEO of Harrah’s Entertainment, is someone who gets this. Visiting Stanford one day, he told my class that when he entered the company as COO he reduced most executives’ job scope, because he believes that people don’t do very well processing complex agendas and that success mostly comes from effort focused on the most critical and achievable objectives. Scale this up and you have the notion of comparative advantage, which suggests that companies, regions, and even nations should prune their activities and focus on areas of relative strength.
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Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University, where he has taught since 1979. His latest book is Power: Why Some People Have It and Others Don’t.
Chesbrough is Adjunct Professor, Haas School of Business at the University of California, Berkeley, and Executive Director of its Center for Open Innovation. His landmark book Open Innovation: The New Imperative for Creating and Profiting from Technology (2003) articulated a new paradigm for industrial research and development. His more recent book, Open Business Models: How to Thrive in the New Innovation Landscape (2006), carries the open approach a step further, arguing that business models themselves need to become more open. Innovating business models requires open technology strategies, but also new approaches to managing intellectual property as well. His most recent book, Open Services Innovation: Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era (2011) explores innovation in a services context. He earned a BA degree in economics from Yale University, an MBA degree from Stanford University, and a PhD degree in business administration from UC Berkeley.
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Morris: Before discussing your latest book, Open Services Innovation, a few general questions. A great deal has happened in the global business world since our last conversation three years ago. In your opinion, which change during that recent period is the most significant and why do you think so?
Chesbrough: In the past three years, there has developed a short-term crisis in both the EU and the US, as each region wrestles with serious issues that are somewhat different. But these issues have had a dampening effect on innovation in both regions, as companies manage through a turbulent and uncertain environment. There is an unfortunate tendency to treat innovation as a luxury good, something to welcome in good times, but cut back on in tough times.
Meanwhile, there is a longer term and to my mind even more important trend, which is the rise of the “emerged markets”. China, India and Brazil of course, but also Turkey, Latin American, South Africa, places that many innovation scholars gave little attention to in the past. There is no question that in this rebalanced world innovation is going to become a global phenomenon to manage and to study.
Morris: As I survey the ever-increasing number of new technologies that appear, I am reminded of Goethe’s poem Der Zauberlehrling (The Sorcerer’s Apprentice) written in 1797. Do you share my concern that at least a few of the new disruptive technologies have taken on a life of their own?
Chesbrough: The statistic that blew me away the most was one I read on Henry Blodget’s Business Insider website. It showed that people are spending fully half of their online time on the Net on Facebook, and the other half on everything else there is on the Web. I don’t know if that’s true, but if so it is truly mind-blowing. I know that it is not true of me or my wife, and that it is true of both of my daughters. I don’t know what a world built around Facebook will look like in the future. It makes me feel like I am on my way to becoming obsolete.
Morris: Howard Gardner’s extensive research on multiple intelligences suggests this next question: Can an “open” mindset be developed? If so, how?
Chesbrough: Yes I believe it can be developed. While this is not an area that I have studied rigorously, I know from my own life experience that at the root of whatever open mindset I have is a basic humility that recognizes my own limitations and numerous areas of ignorance. Being open for me means not being paralyzed by those shortcomings, but using my realization of them as a spur to learn and to grow. When I must function as an expert, ironically that often blocks my own growth. When I get to ask questions, wonder why something is happening or how it works, I can feel myself being stretched ever so slightly in new directions. Happily, being a teacher and having children both force me into stretching myself with some frequency!
Morris: In The Opposable Mind, Roger Martin has much of value to say about integrative thinking. As he explains, it is “the predisposition and the capacity to hold two [or more] diametrically opposed ideas” in one’s head at the same time and then “without panicking or simply settling for one alternative or the other,” be able to “produce a synthesis that is superior to either opposing idea.” Integrative thinking requires a “discipline of consideration and synthesis [that] is the hallmark of exceptional businesses and those who lead them.” This seems to describe the open mindset you have endorsed for years. Am I correct?
Chesbrough: Yes, you are. I define open innovation to be a process whereby companies utilize external knowledge more extensively in their own innovation processes, and allow others to utilize the unused ideas they have outside. Open innovation thinking is an “and”, not an “or”. It is NOT an argument that calls for outsourcing all of one’s R&D. Rather, it is a call to integrate internal and external in the integrative manner that Martin articulates.
Morris: What seem to be the most common – and troublesome – misconceptions about open innovation and open business models?
Chesbrough: Many conflate open innovation with open source software, or open source development methodologies. While both concepts share an appreciation for open, participatory engagement of many people in the innovation process, open innovation explicitly incorporates the business model as a core part of the innovation process. Many adherents in open source explicitly eschew business models as irrelevant or even evil. Yet many observers of open source software itself would acknowledge that many businesses have built “open source business models” that helped them achieve greater impact and scale than they otherwise would have done. To me, this is both a good thing (it is good that these open source tools and products have expanded greatly) and a statement of how the world works. It also raises the possibility that adherents of open source sometimes overlook, that some business models could pervert the good intentions of open source and harness all that community contribution for nefarious purposes. This was a concern when Microsoft tried to fork Java some years back by offering a version that only ran on Windows. Oracle seems to be testing the waters lately with Java as they file suits against Google and others who utilize open source.
Morris: What, in fact, is true?
Chesbrough: Some of the most successful open source projects these days are led by large companies, who are investing significant time and effort into the open source projects because it directly or indirectly benefits their own business models (not because they have become altruistic). Contributors and volunteers need to pay attention to who is driving the agenda for these projects, so that they remain aware of how their hard work is being used in the world.
Morris: Now please shift your attention to Open Services Innovation. When and why did you decide to write it?
Chesbrough: Well, I focused my previous books on innovating new products and new technologies. But I often got questions about “what do I do if I am a service firm”? I realized that we know a lot about how to innovate new products, new processes, and new technologies, but know far less about how to innovate in services. Yet this is the majority of economic activity for most OECD countries. So there was a gap to fill. And there is good academic work going on in services innovation research, but little of that has been translated to a general audience. That is part of what I tried to do in Open Services Innovation.
What gives this topic special importance is the rise of China and other emerging economies, those that are now innovating as well as manufacturing the innovations of others. There is a risk of a commodity trap, where firms that focus exclusively on developing better products and technologies run the real risk of failing to differentiate their offerings sufficiently, and instead become commoditized by innovative entrants from the emerging parts of the world.
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To read the complete interview, please click here.
Henry Chesbrough invites you to check out the wealth of resources at these websites
Dan Roam is the author of two international bestsellers, The Back of the Napkin: Solving Problems and Selling Ideas with Pictures and Unfolding the Napkin: The Hands-On Method for Solving Complex Problems with Simple Pictures, both published by Portfolio Trade, a Penguin imprint. The former was selected as BusinessWeek and Fast Company’s best innovation book of the year, and Amazon’s #5 selling business book. The Back of the Napkin has been published in 25 languages and is a bestseller in Japan, South Korea, and China. His latest book is Blah-Blah-Blah: What To Do When Words Don’t Work, also published by Portfolio/Penguin Group (November, 2011).
Roam has helped leaders at Microsoft, eBay, Google, Wal-Mart, Boeing, Lucas Film, Gap, Kraft, Stanford University, The MIT Sloan School of Management, the US Navy, and the United States Senate solve complex problems through visual thinking. Dan and his whiteboard have been featured on CNN, MSNBC, ABC News, Fox News, and NPR. His visual explanation of American health care was selected by Business Week as “The World’s Best Presentation of 2009″. This inspired the White House Office of Communications to invite him in for a discussion on visual problem solving.
Roam is the founder of Digital Roam Inc, a management consulting company that helps business executives solve complex problems through visual thinking. Through lectures, workshops, books, and hands-on projects with many of the world’s most influential organizations, He as helped teams learn to solve complex problems by relearning how to see after discovering the power of pictures as a business problem-solving tool in the 1990’s when he founded the first marketing communications company in what was then the Soviet Union. With no Russian language skills, he quickly realized that his business pictures transcended the language barrier. Since that eye-opening experience, Dan has been fine-tuning the visual thinking tools he introduces in his books.
Roam received two degrees at the University of California, Santa Cruz: fine art and biology. This combination of art and science kicked off Dan’s cross-disciplinary approach to problem solving. Dan is a licensed pilot, a skill that demands constant practice in understanding complex visual information displays. He has applied his business-oriented visual thinking skills while working in Switzerland, Russia, Thailand, France, Holland, and the US. He lives in San Francisco.
Note: Here is an excerpt from my first interview of Dan Roam. To read the complete interview, please click here. There will be a second interview in conjunction with the publication of his new book, Blah-Blah-Blah, in November.
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Morris: Before discussing any of your specific books, a few general questions. First, to what extent (if any) have you had any formal training in the creative arts such as painting, drawing, and sculpting?
Roam: I have drawn all my life. My earliest memories are of drawing pictures on my parents’ kitchen table. In school I attended the same basic art classes as everyone else. But while I showed talent and loved drawing, I didn’t like the way art was taught. It was too wishy-washy; too much about “being creative” and “expressing myself” at the expense of actually learning anything.
By the time I entered the University of California at Santa Cruz, I had no interest in pursuing art. I signed up for the Pre-Med track and studied biology, chemistry, physics, and environmental studies. But in my junior year at the university, two events occurred which were to have a profound impact on my perception of “creativity.”
The first was that I unexpectedly fell in love with organic chemistry; it turned out to be completely visual. Remember those plastic “ball and stick” models of molecules? I spent hours building shapes with them, and excelled at chemistry. The second was that I discovered that “art” could be taught as a rigorous discipline with rules and tools. Those rules had nothing to do with applying paint; they were about how people THINK — and that was exactly what I was looking for. Before long, I realized that painting was every bit as intellectually challenging as science and that the same fundamental ways of thinking applied to both.
In the end, I extended my undergraduate career by another year so that I could complete degrees in both biology and painting. I never went on to medical school, instead finding my call helping businesspeople see for themselves the connections between planning, science, finance, communications, and “art”.
Morris: I have a large family and Pictionary is one of our favorite games to play. One son is a highly-renowned professional illustrator. (He created the illustration for the homepage of my website.) Whenever we play, his team never wins because his drawings are elaborate and consume so much time. I thought about that as I read your two books. Chip and Dan Heath assert that the “stickiest” ideas are always the simplest. Why is it also true that, when communicating ideas, the simplest drawings (i.e. those involving circles, squares, arrows, and stick figures) are most effective?
Roam: Without a doubt, the simplest, fastest drawings are the most effective for communicating an idea. I understand well your son’s Pictionary challenge; I suffered the same fate as I always tried to make my drawings “better”, inevitably destroying their essential character along the way. Now I realize that I’ve actually spent the last thirty years learning how to “draw badly really well.”
Morris: With all due respect to your response to the previous question, I think one of the greatest benefits of your approach to communication is that it requires people to have a solid, crystal clear understanding of what they want to communicate and how they plan to organize their ideas before they begin to draw. Is that a fair assessment?
Roam: I believe that we do not truly know something until we can clearly explain it to someone else – and the younger the person we can explain it to, the better we know it. I’m not alone in this belief, of course. Einstein himself said, “All physical theories, their mathematical expressions notwithstanding, ought to lend themselves to so simple a description that even a child could understand them.” Since an effective picture of an idea must by definition account for the essentials, being able to draw a simple picture of your idea is just about the best test I can think of to prove that you really do understand it yourself. It’s far harder to fake a simple picture than it is a wordy essay. The picture you create is your mind standing there for all to see, unprotected by verbiage. If you can’t draw it, you don’t get it.
Morris: The creative and performing arts are often referred to as “international languages.” Having lived and worked in so many different countries, have you found that to be true?
Roam: The creative and performing arts clearly transcend language and cultural barriers, which is what makes painting and music in particular so enchanting regardless of origin. But the cognitive power of what we call “art” goes far deeper than that. When I first moved to Moscow in 1990, it was still the days of the Soviet Union. Here I suddenly found myself in a strange land, surrounded by people whose language I didn’t understand – and I was supposed to be running an advertising agency! That was crazy: in those days it was still illegal to earn a profit. In that environment, nobody – not my colleagues, employees, or clients – had a clue what “business planning” was. It was drawings that saved the day. I found that if I could map out an idea graphically (what is “profit,” for example, and why it might be a good thing), then we could begin to understand each other.
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To read the complete interview, please click here.
You cordially invited to visit these websites:
I also urge you to check out these videos:
Kerry Patterson, Joseph Grenny, David Maxfield, Ron McMillan, and Al Switzler are assoviates in the VitalSmarts firm, “An innovator in corporate training and organizational performance, VitalSmarts helps teams and organizations achieve the results they care about most.” They have also collaborated on four business bestsellers: Crucial Conversations, Crucial Confrontations, Influencer, and most recently Change Anything.
Here are mini-bios:
Kerry Patterson is a co-founder of VitalSmarts who has co-authored three New York Times bestselling books as well as designed the company’s line of award-winning training programs. He received the prestigious 2004 BYU Marriott School of Management Dyer Award for outstanding contribution in organizational behavior. He also did his doctoral work in organizational behavior at Stanford University.
Joseph Grenny is an acclaimed keynote speaker, three-time New York Times bestselling author, and co-founder of VitalSmarts. A consultant to the Fortune 500, he has designed and implemented major corporate change initiatives on every major continent for the past 20 years.
David Maxfield is a leading researcher and frequent conference speaker on topics ranging from dialogue skills to performance improvement. The author of the immediate New York Times bestseller, Influencer he did doctoral work in psychology at Stanford University, where he studied personality theory and interpersonal-skill development.
Ron McMillan is a three-time New York Times bestselling author and a sought-after speaker and leadership consultant. As the co-founder of VitalSmarts, he has consulted with leaders ranging from first-level managers to corporate executives on topics such as leadership and team development.
Al Switzler is a renowned consultant and world-class speaker who has directed training and management initiatives with dozens of Fortune 500 companies worldwide. In addition to his consulting work, he co-founded VitalSmarts and authored three immediate New York Times bestselling books.
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Morris: Before discussing Change Anything, a few general questions. When and why did you and your co-founders start VitalSmarts?
Ron McMillan: My co-founders and I came together in 1990 – so we’ve been together over 20 years. Our mission at VitalSmarts is to increase humanity’s capacity to change for good. We believe that practical application of good social science can enable organizations to be substantially more effective at adding value to the world, can make workplaces more humane, and can empower individuals to achieve much more of what they want from life. That’s what VitalSmarts is trying to accomplish.
Morris: Please explain the process by which you began to collaborate on a series of four books. Also, how has the division of labor been determined?
Kerry Patterson: Like most authors, we didn’t start as authors. In our case, we initially formed a partnership aimed at delivering corporate consulting and training offerings.
After forming the team and developing our training products we finally decided to write a book. As you might guess, five authors offers the blessings of synergy and division of task, as well as the possible nightmare of not being able to agree on the content or create a common voice.
Here’s how we encourage the one and reduce the other. After we’ve studied and developed the content of our training products, we sit down and create a detailed writing outline for the upcoming book. We then assign out chapters, write them, pass them back and forth, give them an overall edit to ensure voice continuity, and send the first draft to our editors. We then make more changes, pass it around again, retouch for voice and continue this process until we decide the product is finished.
Morris: For those who have not yet read Change Anything, what is “the new science of personal success”? In which respects is it scientific?
David Maxfield: I lead our research team at VitalSmarts and the Change Anything Labs. We work with the very best of current social scientists – people like Albert Bandura, who was my advisor from Stanford, Dean Karlan at Yale, Toni Yancey at UCLA medical school, Brian Wansink from Cornell, and many others. Before writing Change Anything, we studied the change attempts of more than 5,000 people—focusing on those we label “Changers”. These Changers are individuals who once faced enormous personal challenges, but wrestled them to the ground and have remained successful for at least three years. From our study of the Changers and decades of social science research, we discovered willpower has very little to do with one’s ability to change. There are actually six sources of influence that shape our actions and those who develop strategies within all six sources are ten times more likely to change.
Morris: Were there any head-snapping revelations while completing research and then the manuscript? Please explain.
David Maxfield: People often talk about how long it takes to change. A head-snapping revelation we discovered is that “time” is not the variable that matters. Change is not about time; it’s about the number of influences working for or against you. Imagine you are on the losing side of a tug of war—if it’s just you and your willpower on one side and all six sources of influence lined up against you, then more time won’t help.
On the positive side, once you’ve taken the blinders off, seen the influences that are currently keeping you stuck, and brought all six sources of influence over to your side, then dramatic changes happen quickly.
Morris: What is the “Willpower Trap”? How best to avoid it or escape from it?
Al Switzler: The Willpower Trap is the false assumption that our ability to make good choices stems from nothing more than our willpower. As soon as our willpower runs thin, we shop trying to change altogether. We have a lot less control over our behavior than we think we do; however, we do have great control over the things that influence us. Successful changers spend less time trying to “gut it out” and more time wisely aligning the six sources of influence that control their behavior.
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To read the complete interview, please click here.
You are cordially invited to check out the resources at these websites:
Peter Sims is an author, speaker, and entrepreneur. He is the author of is Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, from Simon & Schuster: Free Press. Previously, he was the co-author with Bill George of True North, the Wall Street Journal and BusinessWeek best-selling book, and he worked in venture capital with Summit Partners, a leading investment company, including as part of the team that established the firm’s London Office.
His work has appeared in Harvard Business Review, Tech Crunch, and Fortune and he’s a contributor to the Reuters, Fast Company, and Harvard Business Review blogs. He received an M.B.A. from Stanford Business School where he and several classmates established a popular course on leadership and has had a long collaboration with faculty at Stanford’s Institute of Design (the d.school). He frequently speaks or advises at corporations, associations, and universities, including Google, Eli Lilly, Cisco, ConAgra, Pixar, and Stanford University.
He lives in San Francisco and his great-great-great grandfather, Jacob Gundlach, founded Gundlach Bundschu (GunBun) in Sonoma, California’s oldest family-owned winery, which is run today by his cousins who, unlike Peter, know a lot about wine.
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Morris: Before discussing any if your books, a few general questions. First, when and why did you begin your association with Stanford’s Institute of Design (the d.school)?
Sims: I was introduced to George Kembel, the cofounder and Executive Director of the d.school in 2002. George became my design thinking teacher and mentor, while I shared about my experiences as an entrepreneur, investor, and student of leadership and entrepreneurship with George and his d.school colleagues. Understanding design methods literally changed the way I think; all of a sudden, I was immensely more creative, and the key insight I had was that those methods overlapped with the way entrepreneurs worked in the unknown. That became the basis for Little Bets.
Morris: What business lessons have you since learned from that association that have direct relevance to successful change initiatives in almost any organization, whatever its size and nature may be? For example, is it possible to design initiatives that will avoid or overcome cultural resistance?
Sims: There are a few principles from design that will influence the business world for years to come. The first is the ability to do rapid, low-cost prototyping at the early stages of developing ideas. We never learned that in business school, yet planning in PowerPoint and Excel is often a terrible waste of time when the answers exist outside the office, in the unarticulated needs of potential users of that idea. That’s where ethnographic observation and need-finding techniques from design, the kind used by anthropologists, play an important role. People in business are surprisingly bad at truly understanding their customers’ needs. Market research doesn’t work for identifying unarticulated needs; just ask Steve Jobs who often says, “People don’t know what they want if they haven’t seen it.”
Morris: Thomas Edison once observed, “Vision without execution is hallucination.” Here’s my question: Even after having designed the best strategy, what should leaders do if there is no buy-in?
Sims: I’ve experienced this; it happens all the time. If there is no buy-in, leaders should wonder if they are hallucinating. That’s one reason I’m very happy to see the rise of a number of schools of thought featured in Little Bets, such as design, lean startups, and counterinsurgency that advocate failing quickly to learn fast, in order to test assumptions and build on gains that work. We’re living in an era that rewards bottom up innovation, yet top-down thinking is still the dominant management norm, an outgrowth of industrial management. The world is far too uncertain for top-down management – just ask Generals in the Army as they’ve learned in the Middle East, where they don’t know the problems they’ll encounter each day. They have to be able to rapidly adapt.
Morris: In your opinion, are investment opportunities for venture capital firms better, worse, or about the same today as they were when you were associated with Summit Partners? Please explain.
Sims: The market is far more competitive and saturated with capital today than it was several years ago. As the investment hold periods get longer, and the return profiles fall, venture capital as an industry is going through a recalibration, where name brand firms will make it, while a lot of dumb money will go away. In addition, the social media valuations we see today, such as Linked In at 30+ times revenue, or Facebook valued the way it is indicates a bubble. The only question I cannot answer is how long that bubble will last.
Morris: Now please shift your attention to True North, a book you co-authored with Bill George. For those who have not as yet read it, what is “true north” and what is its significance?
Sims: Your True North represents your most deeply held values and aspirations.
Morris: What are the defining characteristics of “authentic leadership”?
Sims: Bill George defined authentic leadership along five dimensions in his book Authentic Leadership, most importantly leading from an ethical set of values, and a sense of purpose.
Morris: Throughout history, who do you think offer the best examples of an “authentic” leader? Please explain.
Sims: Abraham Lincoln, Nelson Mandela, Jane Adams, Bill Hewlett and Dave Packard. Oprah and Pixar’s Ed Catmull is a great modern day example, as are the leaders Jim Collins profiles as Level 5 Leaders in Good to Great.
Morris: Were Hitler and Stalin authentic leaders? Please explain.
Sims: No, because they weren’t ethical.
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To read the complete interview, please click here.
Peter Sims cordially invites you to check out the resources at these websites:
Here is an excerpt from an article written by Jeffrey Pfeffer for Harvard Business Review‘s “The Conversation” series. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
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Recently when Cathleen Black resigned after just three months as New York City’s schools Chancellor, many influential New Yorkers decided that the way to analyze the event was as evidence of their mayor’s stumbling.
That’s quite a turn of interpretation for a man who, for several years, seemed to be able to do no wrong. Not that long ago, Michael Bloomberg was being talked about widely as a post-partisan presidential possibility. The fact that the bloom is now off the rose, and constituents are said to be tiring of him, offers an important lesson in power for all of us.
Let’s start by observing the obvious: that anyone who wields great power is bound to rub some people the wrong way, and those disaffected people accumulate over time. They also tend to have longer memories. As Dan Julius, a senior academic administrator now in the University of Alaska system told me years ago, “the things you did that upset people and create enmity live on much longer than what you did that people liked and created supporters.” Thus, the goodwill Bloomberg earned during the successful tenure of former schools chancellor Joel Klein, and for the many things he has done to make New York more economically vibrant and livable, is rapidly degrading. People are already forgetting how he took on budget problems inherited from his predecessor, Rudy Giuliani, and helped the city successfully live within its means. Accomplishments seem to have a shorter half-life — at least in people’s memories — than animosities.
This is one reason that leaders need to be “repotted” after a long tenure, believed Ernie Arbuckle, the Stanford Business School dean who did much to put the school on its successful trajectory. He noted that it becomes harder to get things done as resentments build and people get tired of you. Arbuckle stayed as dean for 10 years, then left to become chairman of the board of Wells Fargo for ten years, and after that, chairman of Saga Foods, also for ten years. (It will not surprise you to hear that he thought the right moment to “repot” was after ten years.) But he didn’t see it as only a problem of perception. He also thought that, after a while in a given position, one’s ability to see new challenges and opportunities clearly diminishes.
The problem is that most people, having attained a position of power, are reluctant to leave it and venture into new territory. Often, having racked up accomplishments and seen them celebrated, they are fired up by the possibility that, with a little more time, they could do more. In some cases, they cling to office because their age suggests they will not go on to scale any greater heights. Yale professor Jeffrey Sonnenfeld described this phenomenon in his decades-old book, The Hero’s Farewell.
In it Sonnenfeld noted that while some aging CEOs exited gracefully while they still enjoyed wide acclaim, many hung on too long, reluctant to face their own mortality. There was William Paley, the titan of CBS, who challenged his biographer by asking just why he had to die. And there was Armand Hammer, CEO of Occidental Petroleum, who put in place a long-term incentive plan for himself with a ten-year payout horizon — when he was in his 90s. Few executives or political leaders are as wise as UCLA’s legendary basketball coach, John Wooden, who retired after winning his tenth championship — quitting while he was on top.
[To read the complete article, please click here.]
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Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University, where he has taught since 1979. His newest book, from HarperBusiness, is Power: Why Some People Have It and Others Don’t.
Here is an excerpt from an article written by John Hagel III and John Seely Brown for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.
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Mindset is everything. If that statement seems too strong, consider that we bring these basic assumptions to every decision and action we make. Left unexamined, they may unnecessarily restrict us or lead us in the wrong direction altogether. Perception may not truly be reality, but when it comes to how we approach challenges and opportunities, mindset determines the world we encounter and possibilities we apprehend. Achieving the power of pull requires us to make our assumptions explicit and examine them in different contexts — testing, challenging and refining.
In her 2006 book, Mindset: The New Psychology of Success, Stanford Professor Carol Dweck distinguishes two extremes of the mindsets people tend to have about their basic qualities:
• In a fixed mindset, “your qualities are carved in stone.” Whatever skills, talents, and capabilities you have are predetermined and finite. Whatever you lack, you will continue to lack. This fixed mindset applies not just to your own qualities, but to the qualities of others.
• In a growth mindset, “your basic qualities are things you can cultivate through your efforts…everyone can change and grow through application and experience.” Qualities like intelligence are a starting point, but success comes as a result of effort, learning, and persistence.
The distinction between fixed and growth mindsets has tremendous implications — as individuals and organizations — for how we address the growing pressures around us.
The Mindset Paradox: The greatest threat to success is avoiding failure. One of the most provocative aspects of Dweck’s work is what it says about our approach to challenges. In a fixed mindset, you avoid challenging situations that might lead to failure because success depends upon protecting and promoting your set of fixed qualities and concealing your deficiencies. If you do fail, you focus on rationalizing the failure rather than learning from it and developing your capabilities. With a growth mindset, you focus on learning and development rather than failure and actively pursue the types of challenges that will likely lead to both learning and failure. This sounds a lot like the questing disposition we have discussed previously.
Mindset profoundly shapes key business practices:
Business Ecosystems. If you have a fixed mindset, you believe that there are a finite set of smart people and valuable resources outside your company. The challenge is how to identify, connect with and mobilize them to deliver more value to the marketplace — static resources tied together in a static ecosystem. The ecosystem benefits from the network effects of adding more and more participants because more diverse capabilities are connected and accessible.
If you believe that both the resources and the ecosystem itself are dynamic, then the role of the ecosystem is not just to connect and mobilize existing resources but to build relationships that help all participants get better faster. This leads to a more powerful form of increasing returns — not just network effects but new mechanisms to accelerate learning and performance improvement — as each participant learns faster as more and more participants join the ecosystem.
Talent Management. A fixed mindset leads you to focus almost exclusively on attracting and retaining talent. The assumption: each person’s skills and capabilities are set. You will tend to devote too many resources to those with a perceived stock of knowledge and overlook (and eventually lose) employees with limited stocks but great learning potential. Worse, because you underestimate the value of learning and development, you won’t likely get the most out of those employees you do value.
With a growth mindset, you understand that individual and organizational capabilities can be cultivated and developed, to improve performance and to expand in new directions. You focus more on talent development, creating work environments and practices that enable employees, regardless of work classification, to develop new skills and to learn by working with others, by problem-solving and experimentation.
Relationship-building. A fixed mindset fosters a zero-sum view of the world: if you win, I lose. With a fixed and finite set of value, the only question is how to allocate it. This perspective fosters conflict and mistrust and, not surprisingly, relationships governed by relative power, tend to be transactional and are rigidly defined to protect each party’s share of the value.
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John Hagel III and John Seely Brown are co-chairmen of the Deloitte LLP Center for the Edge, and have written several books focused on technology and innovation. Their latest is The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion, co-authored with Lang Davison and published by Basic Books (2010).