Like punting

TRUST It is happier sometimes to be cheated than not to trust.

2009-03-16T05:04:00.001-07:00

TRUST

It is happier to be sometimes cheated than not to trust
Samuel Johnson in The Rambler (1750)
I went to a very interesting lecture recently by Prof. Madan Pillutla of the London Business School; he invited the class to consider the situation as set out below.
A game with two players
Initiator starts off with a sum of money, say £100. They can send some or all of it to the responder.
Any money that is sent will be tripled on its way to them. E.g., if the initiator sends them £1, the responder will receive £3 the initiator sends them £10, the responder will receive £30; the initiator can send the responder any amount they wish.
If the responder receives any money from the initiator, they will have a choice to send some, none, or all of it back to the initiator. (The responder will have 3 times what the initiator sent them.) They can send back any amount that they wish to the initiator. (Note: whatever they send back will not be tripled again)

As the initiator how much money would you send knowing that the amount would be tripled in transmission but the responder can send back any amount they wish? As expected there was a variety of answers, ranging from zero the risk specialists (much chastened by recent experience) to the full £100 (about 20%of the audience of 40 or so).
Take a moment to consider what you would do?
The table below shows results from experiments with $10 and $20. The conclusion is clear the more you send then on average the better off you are (For these relatively trivial amounts of money).
If you fully trust the other party then that trust begets reciprocity.
Trusting actions that were quick (and therefore seen as spontaneous) were more likely to be reciprocated than those that are not (Narayanan & Pillutla, 2009)
Trust was highest when cooperation was not the result of a contract (Malhotra & Murnighan, 2002)

Some conclusions from the Professor
Be a Trusting Person (Develop a Thick Skin; Take a Leap of Faith)
Trust Many People Completely: This way you hedge your bets over many trusting choices, far better than hedging your bets by partially trusting everyone.
Create Situations that allow/promote Trust (Spontaneous, without a safety net, without expectations, etc.,)
Follow through on your promise-- Good reputations are priceless, and they are very fragile
A unilateral gesture may ensure cooperation when you get off the wrong foot (e.g., Anwar Sadat)
If you think that something may go wrong, due to the action of the other party, it is incumbent upon you to do something about it
Be sure that everyone has defined the game in the same way

2009-02-13T06:51:00.000-08:00

Never Apologise Never Explain

Last week we had a couple of contrasts. Four Masters of the Universe competed with each other in abject grovelling and Gordon Brown pursuing his ‘Leith Laundry List’ style of argument interspersed with continuing claims of messianic abilities.
You could argue that the former Masters of the Universe had no option with the tumbrils rolling to the door of the Thatcher room and the assembled gawkers taking up knitting. This was a ritual in which everyone knew their part. The juxtaposition of the grovelling four made for great collage on the evening news
The question is, did this get is anywhere? Did is move us forward 1 mm in terms of building confidence and getting lending moving again. I guess not but then rituals are just that, more heat than light, more show than substance.
Obama admitted to screwing up his appointment of Health Secretary and Performance Tsar, over his appointees’ failure to pay taxes. Obama’s approach was: a fulsome admission, a resolution to learn from mistakes and then a swift resolve to move on. Maybe we could all learn from this.
However, you’ve got to be big enough, credible enough and have enough political and emotional capital to learn from mistakes and get round the Kolb cycle otherwise you look weak. Authority once questioned rarely returns.
Maybe Obama has really set a new trend and his approach to management will resonate even as far as Wall Street (fat chance) but his approach to the campaign offers key management lessons not least how to apologise and benefit.

Rummy Was Right

2009-02-02T08:25:00.000-08:00

Rummy Was Right
We all remember first hearing the then Secretary Of State for Defence Donald Rumsfeld proclaim ‘There are known unknowns. That is to say, there are things that we know that we know. There are known unknowns. That is to say there are things that we now know we don’t know. But then there are also unknown unknowns. These are things that we do not know we don’t know’
Rummy was widely ridiculed and lampooned for a while. There was a great sport collecting his sayings and ranking them along the more famous Bushisms.
Reflection indicates that he was of course right and in its way in the statement above is really quite a neat summary of the way the world of information and intelligence works.
We can think of it as ever in terms of a 2 x 2 matrix.

Rummy’s matrix

In relationships in the Johari window and its darker brother Nohari window is a popular way of describing the benefits of feedback and disclosure. The 2 x 2 matrix in this case looks like:

The open area is that part of ourselves in which we are aware and which is known to others. It includes attitudes, behaviour, motivation, values way of life etc. We are literally an open book.
The hidden area cannot be known to others unless we disclose it. Some of this data we retain out of fear and other data we are merely keep to ourselves out of choice. The degree to which we share our thoughts with others (disclosure) is the degree to which this area can be known.
In the blind area there are things about ourselves which we do not know that others can see more clearly than we can. When others offer feedback in a supportive way, we are able to test the new reality of who we are and we should be able to grow and develop.

The unknown area represents the unconscious. It can sometimes be revealed in a flash of insight or through a new and uncharted situation in which we are able to reveal to ourselves and others our hidden depths.
The basic premise of the Johari window is that it is through asking (feedback) and telling (disclosure) our open pane is expanded. We gain access to the knowledge and hence the potential represented by the unknown pane.
The insight provided by Donald Rumsfeld was to articulate what we all know when facing a new situation. Recognising those areas which we know we don’t know and exploring with others what they know what we don’t know should enable the area in the bottom right-hand corner ‘we don’t know that we don’t know’ to shrink. As in relationships making this area, (the unknown area and the blind area) as small as possible by revealing in the open area what we know, should make for better decision-making and more open exchange.
Of course in politics and in conflict we may wish to keep this information strictly within bounds but recognising where those bounds are and recognising where the opponents’ boundaries are is vital in winning the argument or the battle.
Finally the Times reports today that the efficient market hypothesis is dead-for now. This hypothesis asserts that financial markets are informationally efficient hence the price of traded assets, stocks bonds etc already reflect all known information. This leads to the assumption that banks, self interest would prevent them doing anything that would threaten their own survival. Yet look what has happened.
In Rummy’s terms the size of the box containing the ‘unknown unknowns ‘the things that we do not know that we’d do not know’ was much much larger than initially perceived. And more crucially the box containing things ‘we know we know’ proved to be much smaller. This was not just bankers’ knowledge, but politicians, economists, journalists etc.
The moral I guess, besides recognising Rummy as a philosopher of the first order, is to always examine sceptically all of the boxes and when in doubt recognise that those things ‘we know we know, are likely to be many fewer (even if the collective wisdom all points in one direction) than the first examination would suggest.
PS A nice quote from the Ford Learning Network ‘If only Ford knew what Ford knows’ prompted an investment in software which analysed not just text but audio and video from around Ford relevant content is automatically delivered to enable employees to leverage the value of materials and learn about new subject areas quickly and effectively.
Nothing for me used to beat wandering up to someone else’s desk and just having a chat. It will be shame if that dies out. It’s the quirky view of the world which spurs insight and invention.

2009-01-23T04:49:00.000-08:00

Feedback-a Rolls Royce solution?

Conventional wisdom says feedback is key to development of managerial talent and performance. If we’re lucky at some stage in our careers we’ve had an excellent boss or colleague who has really helped us move forward with timely, accurate and practical feedback.
Rypple (see below) offers a novel way of collecting feedback from a trusted network of key peers, mentors and managers. Through accurately framed short questions (e.g.) what do you think of how I chaired the meeting today? Employees can get online responses, anonymously if required. It’s a classic case of ‘feed forward’. Employees can build and manage their own coaching network without waiting for formal occasions such as the annual review in order to get feedback. Big brotherish?-Users say no. It fits perfectly with the Net Generation’s expectations and expertise.
Rolls Royce makes most of its profits from collecting and using the performance data from its engines whilst they are in flight. How about real-time data on your managerial performance direct to your Blackberry? “How did the presentation go?” No need to wait for water cooler gossip to drip through. It’s all there from your trusted network within minutes of the finish of your efforts.
How about extending this approach so that feedback can be linked to competency frameworks (with scaling) or values systems? Typically competency frameworks cover communication skills, people management, team skills, customer service skills, results-orientation and problem-solving. These are very close to the top ten feedback requests which Rypple reports as requests from its existing population of users.
If things are working well great, if not there can be collective action and accurate monitoring of the results of any changes.
How about the future? Sounds a little scary, but if the process is properly managed and if everyone sticks to the rules of feedback (i.e. Feedback should be objective, not judgmental, simple, supportive and above all actionable), this approach could be a real step forward but tread carefully.
Refs:
Rypple
http://www.economist.com/business/displaystory.cfm?story_id=12863565.
http://www.rypple.com/index.shtml
Rolls Royce
http://www.economist.com/business/displaystory.cfm?story_id=12887368
Competency
http://www.cipd.co.uk/subjects/perfmangmt/competnces/comptfrmwk.htm?IsSrchRes=1
BOYATZIS, R.E. (1982) The competent manager: a model for effective performance. London: Wiley.
Feedback
BOB THOMSON Growing People Chandos publishing ISBN1 84334 213 8

2009-01-13T03:10:00.000-08:00

From Thought to Action

After a group has worked together and been exposed to a lot of fresh thinking and ideas how do you turn thinking into action and promote the productive exchange of ideas.
Open space
http://en.wikipedia.org/wiki/Open_Space_Technology
has worked well for me at the end of a 3 day programmes when the object of the exercise is to promote reflection and action back in the day job. Takes time to setup.
Memorably the principles:
Whoever comes are the right people
Whenever it starts is the right time
Whatever happens is the only thing that could
When it's over it’s over

Were taken literally by one group who decamped from the hotel in Leicester Sq London where we were running the programme to the steps of the national gallery (having been shooed away from Trafalgar Sq )about 100m away complete with flip chart (see picture). Probably the most memorable session ever and the quality of the discussion wasn't bad either.

I've found Rich pictures useful http://systems.open.ac.uk/materials/t552/index.htm
Particularly if you employ a gallery format where interpretation of the rich picture is left to the Viewers and the artists keep silent until asked for their view.
Related to the question of volumes of folk (400!) is the Taking Liberties exhibition at the British Library (Free). The other two exhibitions are well worth a look to. Visitors are invited to put on a bar coded Bracelet which is used to identify them (anonymously) and enable them to vote on a variety of thorny Civil Liberties questions doted around the exhibition. This is also available on line at http://www.bl.uk/onlinegallery/takingliberties/interactive.htmlThe data is all collected plotted and displayed for viewing at the end. There is great use of a board and pads to collect comments at the exhibition’s finish.

Stay or Go the Classic Dilemma

2009-01-07T08:48:00.000-08:00

Stay or Go?

Today‘s paper (see below) reports that Jean Le Cam who had been lying third in the Vendee round the world yacht race, took the risk of leaving his upturned boat after 18 hours and swimming to safety. This incident prompts thoughts about the general principles of survival and decision making. What contributes to the decision on the classic ‘stay or go?’ question as outlined in ‘desert survival ‘scenarios? Or the more general decisions, in business, about persistence and consistency versus moving on, through a proper regard for ‘ sunk costs ‘ and a healthy attitude to good money after bad.

Don’t spend your time looking up dead donkeys arses as my boss once succinctly put it.

Are there some general principles to predict how those in business, charged with making decisions will react? David Merrill’s work on personal styles could help here. Broadly he postulates four basic styles based inevitably around a 2 x 2 matrix using the dimensions of assertiveness and responsiveness.
Assertiveness defined as ‘the degree to which one’s behaviours are seen by others as being forceful or directive’
Responsiveness defined as ‘the degree to which one is seen by others as showing emotion or demonstrating awareness of the feelings of others’
The four Styles are then as below:
Analytical- less assertiveness and less responsiveness
Positive points: industrious, persistent, exacting
Negative points: critical, stuffy and picky
(Almost certain to stay) e.g. Gordon Brown
Driving-more assertiveness and less responsiveness
Positive points: independent, decisive efficient
Negative points pushy, tough, harsh
(Almost certain to go) e.g. Alastair Campbell
Amiable – less assertiveness and more responsiveness
Positive points: supportive respectful and willing
Negative points conforming, pliable dependent
(Almost certain to stay) e.g. Jack Straw
Expressive – more assertiveness and more responsiveness
Positive points: stimulating, enthusiastic ambitious
Negative points excitable, undisciplined re-acting
(Almost certain to go) e.g. Tony Blair

Refs:
http://www.timesonline.co.uk/tol/sport/more_sport/sailing/article5462404.ece
Personal Styles and Effective Performance- David Merrill and Roger Reid
People Styles at Work- Robert and Dorothy Bolton

IN THE TENT OR OUT

2008-12-05T04:19:00.000-08:00

In The Tent Or Out
Barack has appointed Hillary (and Bill) as Secretary Of State. This has prompted much fury amongst some of his supporters who had hoped for a clean break and genuine change, as promised, by Barack on the stump.
It prompted thoughts and questions about whether former rivals for the top job in a country or a company can ever work successfully together.
Mrs Thatcher dealt decisively and contemptuously for a time with her rivals, in dismissing them as ' wets '. It came back to haunt her with Michael Heseltine’s resignation and the leadership election which followed, they queued up to tell her that she lacked support of her colleagues and hence could not continue.
Three examples from succession at great companies do prompt some lessons. Recently the succession at GSK has passed from JP Garnier to Andrew Witty. His two rivals in spite of being offered (as reported) inducements of millions and seats on the GSK board did not stay and found themselves eventually, lucrative situations in rival companies or outside.
Similarly the newly appointed chief executive of Nestlé saw one of his rivals emerge as the chief executive of Unilever (the first chief executive from the outside for 78 years).
Probably the most well documented and widely praised Chief Executive succession of recent times was that of the legendary Jack Welch at GE. Welch claims to have contemplated and planned for his successor for 10 years. The three main rivals each had deputies appointed so that's when the eventual successor was chosen that there would be in turn succession to those posts. Jeff Immelt eventually emerged as the anointed one whereupon his two rivals promptly left.
Whilst this does deliver substantial corporate head room and in some senses frees up the remainder of the organisation for others. It is surely wasteful of talent at the very top or the company.
The question therefore is given that these individuals are ' in it to win it ' whether they can ever stick around and work successfully with the victor in a succession plan which is inevitably a bruising encounter for the ego as well as the ambition.
Which makes Hillary is decision to accept and Barack's decision to invite her, all the more surprising. There are probably two factors at work here:
First at the top of the American political system there is simply no other place to go once the top job has been secured. There is no equivalent of a fortune 500 company waiting in the wings to snap up more talent.
Secondly and this is unique perhaps to Hillary's situation and to Barack’s dilemma. Hillary comes with Bill. This provides access to a successful and admired former president full of potential to add a dimension of experience, thinking and imagination in delivering Barack's vision.
Is there a way therefore of harnessing the vanquished rivals in the business situation. The two for the price of one situation described above in Hillary’s appointment very rarely arises in business. The opportunity to deliver a rivals overall vision from within a company is necessarily limited given the ambition, independence and desire for autonomy which has driven all the rivals to the very near the top.
The conclusion therefore must be that the classic succession planning principle of having successors in the wings not just for the top jobs but for those immediately below the top must apply. GE’s approach would seem pragmatic whilst GSK’s in retrospect although no doubt well-intentioned, well engineered and well thought through, founders on the ambition and sheer ‘testicular fortitude’ (as Barack memorably described one of Hillary’s qualities) of the candidates nearing the top all large organisations.