Larry J. Bloom
We deeply want to be led by people who know what they’re doing and who don’t have to think about it too much — but there’s one glitch in that: The amount of success it takes for leaders to become overconfident isn’t terribly large.
Some achieve a reputation for great successes when all they have done is take chances that happened to work.
The fierce personal confidence and sense of infallibility that characterizes many leaders serves as a breeding ground for mind-bugs (non-conscious flaws in the way humans think and make decisions).
As a result, leaders can fall into a trap of believing they are better informed than they really are. Then fact gathering, analysis, insights, judgments and decisions suffer — as you’ll see from the real world examples below.
A Penney can’t become an Apple
In the fall of 2011, Ron Johnson, the whiz behind Apple’s $50 million-per-store retail business, was appointed not just as CEO of J.C. Penney Co., but as the savior responsible for transforming one of the dowdiest dinosaurs in American retail.
Seventeen months — and many mistakes later, he’s out of a job. What happened? Johnson so desperately wanted J.C. Penney to become the Apple of department stores that he failed to understand his customers and ended up alienating them.
Johnson could have easily known better but refused to test his ideas in advance, reportedly shooting his critics with the pushback, “We didn’t test at Apple.”
Johnson was unknowingly a victim of a mind-bug called the “informed leader fallacy,” when a leader believes he is better informed and has better instincts than others simply because he is the leader.
Is Hewlett-Packard blind to that fact?
Hewlett-Packard Co.’s terrible track record of making and integrating acquisitions speaks for itself. After buying Palm for $1.2 billion in 2010 and announcing the TouchPad in early 2011, HP killed these products six months later with a record $3.3 billion write off.
In August 2011, HP announced the acquisition of Autonomy, which provided so-called intelligent search and data analysis. HP didn’t stress the price — $11.1 billion, or an eye-popping multiple of 12.6 times Autonomy’s 2010 revenue — but focused on Autonomy’s potential to transform HP from a low-margin producer of printers and PCs into a high-margin, cutting-edge software company.
HP stunned its still reeling investors when it said it was writing down $8.8 billion of its acquisition of Autonomy, in effect admitting that the company was worth an astonishing 380 percent less than HP had paid for it.
So what is HP’s CEO Meg Whitman planning to do now? Return to making acquisitions, of course: “We will be incredibly measured and disciplined. We are very mindful of the event that we just came off with Autonomy, so don’t worry about that.”
While only time will tell, Whitman would be wise to worry about the Informed Leader Fallacy mind-bug.
Be wary of transformative thinking
What these leaders have in common should serve as an enduring lesson.
Just as Johnson was going to transform J.C. Penney into America’s retailer, Autonomy was supposed to transform HP into a software powerhouse.
So-called transformative thinking that renders traditional valuations irrelevant and silences critics is a breeding ground for bugs in leadership thinking and decision-making. ●
Larry J. Bloom spent 30-plus years helping grow a small family business to over $700 million in revenue. He is the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions,” consultant, board member, and owner of a startup media and software company that promotes better thinking. He was born and resides in Atlanta, Ga. For more information, visit www.curecorporatestupidity.com or email email@example.com.
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Facebook’s recent recovery from its ill-fated IPO began with a blunder.
“It was probably one of the biggest mistakes we’ve ever made,” expounded Mark Zuckerberg, famed billionaire co-founder and CEO of Facebook. His personal belief that standalone mobile device apps would go away and we would access mobile apps through websites like we do on PCs turned out to be dead wrong.
While consumers were abandoning laptops for mobile devices and spending huge amounts of time downloading apps designed for small touchscreens, Facebook had only one engineer dedicated to the iPhone. The rest of its software developers were at work designing a version of Facebook that was doomed to flop.
One thing, however, separated Zuckerberg from the thousands of Silicon Valley success stories that fail because they don’t adjust to a changing environment. He overcame his instincts and owned up to his mistake before it was too late. Zuckerberg’s realization provides two important lessons that can benefit all decision-makers.
We need to avoid getting so attached to our decisions that we fail to look for problems in our own thinking.
Whenever we reason, we do that within a point of view. Any flaw in that point of view is a possible source of faulty thinking. Personal beliefs may cause us to unknowingly draw conclusions and make decisions based on limited, unfair and misleading personal interpretations of information.
To address his mobile problem, the software wizard who had savored such enormous success so early in his career had to come to terms with failure. And he had to make sweeping structural and cultural changes that often went against many of his prior decisions and instincts.
Instead of going faster (a Zuckerberg religion at Facebook), mobile developers had to suspend new releases. Instead of a dogged focus on the mobile web, they had to change gears and embrace apps.
Instead of trying to reach the broadest possible audience, Facebook ultimately had to pick one operating system to show off what it could really do in mobile.
“I can’t overstate how much we had to retool the whole company’s development processes,” Zuckerberg confessed.
Take points of view into account
View contrary opinions as gifts and resist shooting the critics.
Leaders know that any decision they make is subject to their judgment being questioned. And whether they’re fully aware of it or not, they’re really not in the market to have their decisions, beliefs and choices questioned.
Whether we are team leaders or CEOs, we subconsciously develop the tendency to marginalize people who disagree with us.
In October 2011, a Facebook engineer named Cory Ondrejka stood in front of Zuckerberg imploring that Facebook was broken in a big way. Facebook’s problem, according to Ondrejka, was its mobile app. It was so slow and awful, that it opened the possibility that users would defect Facebook for faster, better mobile social media apps.
Zuckerberg was clearly uncomfortable but he did not “shoot his critic.” In the end, he made the courageous decision to change courses and the results paid off. Facebook’s stock passed its $38 IPO price for the first time since its rocky public debut last May, crossing a symbolic hurdle that has eluded it for more than a year. Reflecting back later Zuckerberg said, “I signed off on the change but it wasn’t my instinct.”
It takes courage to challenge our own thoughts. It is a struggle among different parts of the brain.
The real issue is that most of us do not notice our thoughts. We are out of touch with ourselves and it can be debilitating.
Fortunately for Facebook and its investors, Zuckerberg had the intellectual courage to defy his own thinking.
Larry J. Bloom spent 30-plus years helping grow a small family business to more than $700 million in revenue. He is the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions,” consultant, board member, and owner of a start-up media and software company that promotes better thinking. He was born and resides in Atlanta, Ga. For more information, visit www.curecorporatestupidity.com or email firstname.lastname@example.org.
One thing that most bad bosses have in common is lack of awareness that they’re bad bosses. With so much at stake personally, nobody wants to believe they are the problem. Not only is that bad for decisions, it’s bad for careers and employee health as well.
It’s no surprise — bad bosses are toxic. According to an independent study by Florida State University College of Business, employees stuck in “bad boss” relationships experienced more exhaustion, job tension, nervousness, depressed mood and mistrust. They also were less likely to take on additional tasks, such as working longer or on weekends, and were generally less satisfied with their job.
Many experienced HR professionals have noted: “People don’t leave their jobs in a company; they leave their managers.”
Compared to the obvious tirades, bad boss behaviors can be more subtle and include unreasonably discounting input, the “silent treatment,” failing to give credit when due, not keeping promises, blaming others to cover up mistakes or embarrassment, making unwarranted negative comments and obsessive micromanagement. Many are simply unaware of the huge negative impact of some of their behaviors and resist any thought that they are wrong — until it may be too late.
The real problem
The problem is that left untrained, we are all susceptible to making errors in judgment based on blind spots in the way we perceive reality. My experience is that once bosses are afflicted they may subconsciously shut down the very thing that can help: diversity of thought. So even if you are convinced that you are the greatest manager around, you would still be wise to check for bugs in your own thinking. Here are five signs that you may be a bad boss.
1. Do you act in ways that discourage questioning of your views and assertions?
2. Do you tend to distance yourself from responsibility for error?
3. Do you check with your subordinates to see if your communications are inconsistent or ambiguous?
4. Are you inclined to blow off ideas that are not consistent with your point of view?
5. Do you seek and reflect on feedback from others regarding your behavior?
Avoiding blind spots
Identifying blind spots in our thinking is essential to making quality decisions. Yet few bosses have the intellectual courage to ask their subordinates to rate them in these areas. That creates a paradox. How can someone have all the answers before they ask the questions? The idea that bosses and supervisors would rely on intuition for something this important makes little sense.
So here is an idea. Ask your team to anonymously rate you in these five areas. Compare with your own rankings and discuss improving your blind spots with the team. And note: If you have the immediate reaction to dismiss this exercise, you may have a blind spot!
A new kind of leader
Companies want employees who can systematically pursue important goals, recognize and analyze significant problems, communicate essential meanings, and assess their own performance on the job.
The responsibility of leadership is to create a culture where these behaviors can thrive. That requires a mastery of ourselves rather than command and control of others. ?
Larry J. Bloom spent 30-plus years helping grow a small family business to more than $700 million in revenue. He is the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions,” consultant, board member and owner of a start-up media and software company that promotes better thinking. He was born and resides in Atlanta. For more information, please visit www.curecorporatestupidity.com or contact Larry at email@example.com.
According to experts, 85 to 95 percent of new products launched each year are failures. But since companies regularly consider industry data, market intelligence and relevant expertise as part of the decision-making process, these high failure rates are not likely due to a lack of information.
Rather, they are due to defects in our internal mental processes — flaws in the way we gather and process information that often go unnoticed and unaddressed. Here are three that can unknowingly create a virtual “mind field” of risk for business decisions such as new product launches.
1. Influence of the boss: Determining the level of sufficiency based on the source
In business, there are specific results that our boss or other stakeholders desire, and we attach strong feelings to achieving them. For example, if our boss has a significant attachment to launching a new product, we may spend disproportionately more time seeking information that validates the boss’s view than searching for information that conflicts with the boss’s desire.
As a result, we unconsciously go about gathering information under the boss’s influence and create an environment for faulty decisions. We end up living with the unrealistic but confident sense that we have figured out the way things are and that we have done that objectively. And if decisions do not go well, we find comfort that we can always blame our boss later.
2. Snap-judgment defense: The tendency to unreasonably defend decisions made solely on snap judgments
Due to the hard-wired threat response in our brain, we make rapid judgments about what is happening, which allows us to quickly determine what information is most relevant and then take speedy action. This is helpful when the threat is physical and we must act without delay.
But in business, we often find it easy to lose track of how quickly we are judging a situation or how much we’ve explained away.
Since we associate leadership with decisiveness, being decisive becomes a self-driven attribute causing us to focus solely on explaining and defending our snap judgment. Our logic circuits shut down and we are unable to objectively consider points of view that conflict with our own.
3. Shooting the critics: The tendency to marginalize people who disagree with us
Leaders know that any decision they make is subject to their judgment being questioned. And whether they’re fully aware of it or not, they’re really not in the market to have their decisions, beliefs and choices questioned.
Whether we are team leaders or CEOs, we subconsciously develop the tendency to marginalize people who disagree with us. When this happens, people stop telling the truth. They avoid rocking the boat and just quietly stay out of the line of fire.
The solution to this problem requires the courage to challenge our own thoughts. When these flaws in thinking are deeply entrenched, companies are at significant risk of being displaced by competitors, new technology and novel business models. By pausing to look for these cognitive defects, leaders can make better decisions, avoid problems, reduce risk, improve outcomes and never have to lament, “What was I thinking when I made that decision?”
Larry J. Bloom spent 30-plus years helping grow a small family business to more than $700 million in revenue. He is a consultant, the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions,” and the owner of a start-up media and software company that promotes better thinking. For more information, visit www.curecorporatestupidity.com.
Leaders rely on people at all levels to provide essential contributions to company decisions. Yet real people have flaws. Information and decisions can get filtered, even in good faith ways, on their way through the company power structure to leaders. Understanding this human phenomenon can help leaders avoid its pitfalls.
Fear and survival
Scientists refer to survival as the organizing principle of the brain. When our brain perceives a threat to survival, it triggers a fear reaction. This reaction gave primitive humans a better chance of staying alive. Humans who lived on passed these traits to future generations.
Although the fear reaction is essential to our survival, in modern humans it can also be disruptive. That’s because our brain triggers a mostly unconscious reaction to its perception of threats. Under this condition, the brain loses its ability to correctly interpret subtle clues from the environment, reverts to familiar behaviors, loses some of its ability to perceive relationships and patterns, and tends to overreact in a phobic way.
The following are some examples.
? Fairness: Fairness matters to humans, so the brain perceives unfairness as a threat. It can be so powerful that some people are willing to fight or die for causes involving justice, fairness and equality. When this occurs in the workplace, employees may unknowingly reject new facts or select and use data in a self-serving way in order to “restore fairness.”
? Ambiguity: When our brain perceives uncertainty or confusion, the fear reaction is aroused. It’s like having your computer freeze. Until it’s resolved, it’s difficult to focus on other things. Uncertainty registers as something that must be corrected and people may see patterns in random data where none exist or underestimate their own shortcomings as the brain attempts to “feel comfortable again.”
? Control: The degree of perceived control determines if a fear reaction will be triggered. For example, not being able to exercise routine decisions without perceived overinvolvement of a supervisor can easily generate fear. Then we may unknowingly defend decisions made solely on snap judgments or subconsciously conform our thinking to that of the group. It can develop into a problem that impacts creativity and innovation.
? Trust: The quality of decisions depends on healthy relationships. In the brain, each time we interact, we unconsciously make a quick friend-or-foe distinction depending on the context. When the person is perceived as competition, survival circuits may be triggered. Spinning and/or withholding information from the next level of management are a few of the possible results.
? Social status: We are biologically predisposed to threats to our social status in the workplace as part of our survival programming. As a result, supervisors may have the nonconscious tendency to marginalize people who disagree with them. Similarly, people may avoid disrupting group beliefs if it serves to improve their social status.
As you can see, each day at work is filled with moments of perceived survival. When reactions occur, people are just not in touch with their thinking. It can unknowingly affect fact gathering, analysis, insights, judgments, decisions and performance. Personal strategies may be obscure and not apparent even to those who are using them.
Using this insight to improve results requires two things: No. 1, it requires employees to understand how human tendencies can impact their decisions, and No. 2, it requires management to set the tone by encouraging objective self-assessment of these nonconscious filters and candid communications throughout the organization.
Most important decisions rely on at least some subjective input by humans. To improve performance, leaders must take responsibility for creating an organization that is in touch with its thinking. Only then can we step out of the thousands of years of collective human conditioning and improve the quality of our decisions. <<
Larry J. Bloom spent 30-plus years helping grow a small family business to more than $700 million in revenue. He is a consultant, the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions,” and the owner of a start-up media and software company that promotes better thinking. For more information, visit www.curecorporatestupidity.
An organization is a factory that depends on its employees to manufacture judgments and decisions. Ironically, people receive very little formal training in the human tendencies that unconsciously threaten these choices. The problem is that a misguided belief left untamed will contaminate judgments, decisions and bottom-line performance.
An Atlanta-based CEO of a midsize company recently told me how his new levels of authority policy for decision-making will mitigate risk. His self-confidence eroded when I asked, “Can internal policies alone change the way individuals receive and filter information, or is the human component of risk management an inevitable limitation on its utility?”
A couple examples of human tendencies that can lead to problems are when workers unconsciously spin information to please the next level of management, or when they reject new facts because they conflict with existing norm. When this is part of an organizational culture, operational risk increases and performance suffers.
Expose the risk
In any business activity, there is one element we cannot fully understand because it is us: the human element. From psychology to cognitive social neuroscience, research points to shortcomings in how people gather and process information and experiences in order to answer questions, solve problems, determine judgments and make decisions. Many are simply unaware of the flaws plaguing some of their decisions. This generates risk associated with an organization’s culture, which I call cultural risk.
If we think of risk management as the entire machine, cultural risk management is one of the critical gears. The machine will not work as well if this gear is faulty. While merely a starting point, asking these questions routinely before recommendations are moved upstream will begin to create an organizational culture in touch with its thinking.
1. Do we have sufficient information to make this decision?
This question addresses the requirement to make decisions based on both relevant and significant information of adequate breadth and depth. One human tendency is that we may present and/or accept data as sufficient for a decision that does not completely frame the situation in a balanced fashion, as long as it supports the decision we subconsciously want to make.
2. What makes us confident that information is accurate?
Clarifying accuracy addresses the requirement to make decisions based on clearly defined, reliable, factual, precise and fair information. If inputs are not accurate, then decisions will be faulty regardless of the quality of the ensuing decision-making process. We may unknowingly confuse unverified information with fact, see patterns that are not real, or experience a reflex-like rejection of data simply because it contradicts existing norms.
3. How do individual beliefs color the decision?
Giving attention to our beliefs considers the influence of one’s own point of view, desires, values, principles and emotional connections in conjunction with any decision. The question addresses the idea that whenever we reason, we do that within a point of view. Any flaw in that point of view is a possible source of faulty thinking. We may unknowingly draw conclusions and make decisions based on limited, unfair or misleading personal interpretations of information. We can get so locked in that we are unable to see the issue from other rational points of view. Once under the control of our beliefs, the truth is hard to see and hear.
4. What is the influence of the group involved with this decision?
This examination considers the group’s definition of reality, as well as bureaucracy, power structure and vested interests in conjunction with any decision. Every organization consists not only of individuals, but a hierarchy of power among those individuals. No matter how noble the group’s goal, there is often a struggle for power beneath the surface. Personal strategies may be obscure or in apparent, even to those who are using them.
Many nuts-and-bolts leaders find talk of culture to be a “soft issue” and give it second-class attention at best. But to lower risk and improve performance, culture must be addressed.
Larry J. Bloom spent 30-plus years helping grow a small family business to more than $700 million in revenue. He is the author of “The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions” and the owner of a start-up media and software company that promotes better thinking. For more information, visit www.curecorporatestupidity.com.
Just like software can have bugs, humans have bugs in the way we think and make decisions. As a result, many problems of businesses today are not the result of some outside factor, rather they are self-inflicted as a result of “mind bugs” — bugs in the critical internal processes that occur in the 5 inches between our ears.
The pervasiveness of mind bugs in business decisions is due to the fact that they are a product of human nature — hardwired and highly resistant to feedback. They can affect fact-gathering, analysis, insights, judgments, and decisions — and increase risk accordingly. The challenge is that the very mind bugs that are the source of the problem cause us to resist discovering them. Change the way we think? Our mind bugs tell us there is absolutely nothing wrong with the way we think. Here is a perfect example provided by Arthur Blank, co-founder of the highly successful Atlanta start-up The Home Depot, owner of the National Football League’s Atlanta Falcons, respected businessman and philanthropist.
“A lot of leaders, they listen, but they don’t really want to hear the results to the answers and when the answers come, they find a way to reinterpret them based on their original perspective of what they think the answers should be,” Blank says. “They might give you their honest opinion of what they think you’ve got to do to improve your business, but then you put it through your own filter and look at it through your own rose-colored glasses, and you choose not to see it that way. You say, ‘That’s not really what they meant. They meant some other things,’ and you just believe what you want to believe.”
Here are two mind bugs that are at the source of this problem.
Informed leader fallacy: A belief by a leader that he is better informed and has better instincts than others simply because he is the leader.
We deeply want to be led by people who know what they’re doing and who don’t have to think about it too much. So by the time we achieve a leadership position ourselves, we are good at making others feel positive in our judgment, even if there’s no strong basis. But the amount of success it takes for leaders to become overconfident isn’t terribly large. Some achieve a reputation for great successes when in fact all they have done is take chances that happened to work out. The fierce personal confidence and sense of infallibility that characterizes many leaders serves as a breeding ground for this mind bug. Most decision makers will trust their own intuitions because they think they see the situation clearly. Accordingly, it causes leaders to fall into a trap of believing they are better informed than they really are.
Closed mind: The inability to hold and examine two opposing views at the same time or to consider perspectives other than one’s own.
When we are afflicted with this mind bug we subconsciously shut down the very thing that can help us examine our own beliefs: mindful evaluation of diversity of thought. In essence, things are the way I see them because that is the way I see them. As perpetrators, we are sometimes not aware of doing this. Other times we may even be proud of it. We make the self-serving assumption that we have figured out the way things are and anything that challenges our point of view becomes “unthinkable.” It is not that we shoot the critics or fail to listen. To the contrary, we may spend time demonstrating our listening skills to others to prove we are good listeners, but afflicted as we are, we just don’t hear them. We simply are not aware that we don’t allow ourselves to hold and mindfully examine two opposing views at the same time. We give lots of lip service to others, but true diversity of thought is shut down. Once infected, we feel pretty good until the day of reckoning when we ask ourselves: “What was I thinking when I made that decision?”
Recovery requires courage
The solution to this problem requires courage — the courage to challenge our own thoughts. The real issue is that most of us do not notice our thoughts. We are out of touch with ourselves, and it can be debilitating. It’s like breathing carbon monoxide. You can’t see it or smell it, but it can harm you just the same.
Larry J. Bloom spent more than 30 years helping grow a small family business to more than $700 million in annual revenue. He is the author of “The Cure for Corporate Stupidity: Avoid the Mind Bugs that Cause Smart People to Make Bad Decisions” and the owner of a start-up media and software company that promotes better thinking. For more information, visit www.curecorporatestupidity.com.