Tuesday, April 29, 2008

Too busy to lead III - The draw of certainty & ambiguity aversion

This series of blogs about leaders being too busy to lead appear, from the emails I have received, to have struck a cord with quite a lot of people. The emails can roughly be divided into three categories:

  1. About 20% from leaders who recognise their situation and have emailed for help to change the situation, which we are busy dealing with,

  2. About 60% saying 'this is so true' from people complaining that their bosses don't lead and spend most of their time micromanaging, interfering in their work and that they spend more time covering their backs and supplying 'urgent data' to the leader rather than being productive.

  3. The rest (about 20%) were from leaders saying words to the effect that they would love to get on with leading only "My staff are incompetent so I have to manage them".

The emails were interesting on their own, however being a researcher at heart I decided to investigate a bit further so I started to ask some questions. I wanted first of all to know what the email writers (251 in all) thought the issues were that led to this situation.
In order of popularity of answer:

  1. Leaders doing what they are comfortable with / used to doing
  2. Role ambiguity between leadership and management
  3. Lack of trust on behalf of the leader
  4. Fear of the risk of something going wrong (Similar to but different from no 2)
  5. Incompetent staff (guess which group this answer wholly came from)
  6. Lack of confidence on behalf of the leader
  7. Lack of training for the leaders and others
  8. Incompetent leaders
It would appear, if this is correct, that the number one reason for the lack of leadership behaviour from leaders is the safety of doing what the leaders know best - what they used to do. Of the 20% of emails I got from leaders asking for help all of them agreed with the statement that tended to behave in ways that were consistent with their old roles particularly under pressure and revert to management activities rather than maintaining a leadership presence.

Last year (2007) Science published an article about the role ambiguity and certainty plays in our brains based on an experiment Camerer did based on the Ellsberg Paradox which I talked about earlier:

Camerer's experiment revolved around a decision making game known as the Ellsberg paradox. Camerer imaged the brains of people while they placed bets on whether the next card drawn from a deck of twenty cards would be red or black. At first, the players were told how many red cards and black cards were in the deck, so that they could calculate the probability of the next card being a certain color. The next gamble was trickier: subjects were only told the total number of cards in the deck. They had no idea how many red or black cards the deck contained.

The first gamble corresponds to the theoretical ideal of economics: investors face a set of known risks, and are able to make a decision based upon a few simple mathematical calculations. We know what we don't know, and can easily compensate for our uncertainty. As expected, this wager led to the "rational" parts of the brain becoming active, as subjects computed the odds. Unfortunately, this isn't how the real world works. In reality, our gambles are clouded by ignorance and ambiguity; we know something about what might happen, but not very much. (For example, it's now clear just how little we actually knew about Iraq pre-invasion.) When Camerer played this more realistic gambling game, the subjects' brains reacted very differently. With less information to go on, the players exhibited substantially more activity in the amygdala and in the orbitofrontal cortex, which is believed to modulate activity in the amygdala. In other words, we filled in the gaps of our knowledge with fear. This fear creates our bias for certainty, since we always try to minimize our feelings of fear. As a result, we pretend that we have better intelligence about Iraqi WMD than we actually do; we selectively interpret the facts until the uncertainty is removed.

Camerer also tested patients with lesioned orbitofrontal cortices. (These patients are unable to generate and detect emotions.) Sure enough, because these patients couldn't feel fear, their brains treated both decks equally. Their amygdalas weren't excited by ambiguity, and didn't lead them astray. Because of their debilitating brain injury, these patients behaved perfectly rationally. They exhibited no bias for certainty.

Obviously, it's difficult to reduce something as amorphous as "uncertainty" to a few isolated brain regions. But I think Camerer is right to argue that his "data suggests a general neural circuit responding to degrees of uncertainty, contrary to decision theory."

It would appear that our response (aversion) to ambiguity may have a neuronal explanation (not an excuse mind you), which may in turn explain why only about 2% of leaders are mode 4 leaders and are naturally comfortable, or more accurately have a greater ability to mediate their discomfort with uncertainty (emotional resilience).

Sunday, April 20, 2008

Too busy to lead II - leading as part of a system

The point of yesterday's blog was that by:
  • separating out the different levels of leadership and management on an operational basis,
  • assigning clear roles and responsibilities for each level
  • ensuring people stick to their areas of responsibility,
  • keeping the lines of communication operationally relevant, and
  • fostering a collective responsibility for success
then things run much more smoothly, effectively and efficiently. The realisation we had was that part of the command problem we had was 'role ambiguity'.

We had so many incidents where commanders felt they had to go to the scene because as police officers that was what they were used to doing, rather than stay away and keep a broader and more strategic view.

Leaders and managers get promoted largely because they were good at their previous jobs. When they were promoted or given a job they are (sometimes) sent on generic training for management or leadership but do not receive training or coaching about their new role and place in the system. When we researched how leaders and managers performed under pressure we found that they tended, when things get difficult or ambiguous, to revert to what they knew or were used to doing before they were promoted. This usually means that when there is a problem or stressful issue, they start to get involved in and micromanage people. We had so many incidents of inappropriate Action Bias where commanders felt they had to go to the scene of an incident because as police officers that was what they were used to doing, rather than staying away and keeping a broader and more strategic view.

The GSB (Gold, Silver, Bronze) system works so well because it sees the different levels of responsibility as interconnected parts of one system. What we learned was that:
  • training and coaching the leaders to become more disciplined and draw back, concentrating on strategic issues (not getting sucked into operational decisions and problems),
  • training the managers to manage at a tactical level and not get sucked into doing and micromanaging, and
  • critically, ensuring that everyone understands
    • the system,
    • how it works,
    • what their roles, responsibilities and expectations are, and crucially
    • how and what (and what not) to communicate to whom
builds a healthy system where people become more professional and start making better decisions. A central part of the system is to train people how to make better decisions, think in different ways (See Modes of Leadership) when solving problems and learn how to deal positively with ambiguity.

Leaders that are rushing around doing things, fire fighting and managing are a symptom of an unhealthy system.

Leadership is one part of a living system. Like any organ in a living body, it has a purpose and a defined place within the system. Confuse the boundaries of these and the system will not function optimally. A healthy system requires that each part is healthy in itself and works in harmony with the others. Every organ is as important as the rest in the chain. Likewise leaders and managers need to work together in harmony with every other function.

Leaders that are rushing around doing things, fire fighting and managing are a symptom of an unhealthy system. They should have their finger on the pulse of the organisation and be looking after strategic issues, not solving operational problems - thats what the managers and their teams are for. Far too many leaders operate at inappropriate levels in organisations and as a result end up creating the very situations are trying to resolve.

This is all very well but does it work in profit making businesses as well as service industries?
We have worked with investment banks, engineering firms, sales companies, retail enterprises and growing transport companies. The minimum ROI we have seen in the first year has been 3350%. Yes you read that right and that does not include factors for happier and more professional staff and better decision making capabilities.

Are you too busy? Think again you may well be what is holding your organisation back.

Saturday, April 19, 2008

Too busy to lead?

You won't be too busy to die

It's odd how things happen in themes, it's a bit like waiting for a bus. There isn't one for ages and then three or four all arrive at the same time. For some reason this is happening with our contact with a certain type of 'leader' at the moment. I put the word leader in parenthesis for a good reason; they aren't really leading even though they call themselves leaders.
They are far too busy solving problems, managing people and directing operations to lead.

Let me tell you a (true) story:

In the early 1980's, the British police forces had a big problem. There was increasing civil unrest in the form of strikes, riots and other large scale public order events. In 1981 the police service was largely unprepared for these events in all sorts of ways. I know because I was involved in all of these as a young police officer. We didn't have the equipment, training and worse still the leadership to deal with these kids of large fluid and dangerous situations. Many mistakes were made and many people were injured and in a couple of cases deaths occurred.

The big issue was the leadership.

The first night on the Toxteth (Liverpool) riots in 1981 saw a police force overwhelmed and needing backup from neigbouring forces. Rows of houses, shops and cars were in flames. Crowds of 100's and in some cases 1,000's were thrashing the local force. Only 1 in 20 police officers had the equipment or training for public order events, and even then not on the scale being experienced during that hot summer with it's very long nights. I know I was there.
One night we were in the front line being petrol bombed, bricked and generally attacked with anything the crowd could get hold of. An officer next to me got hit by a petrol bomb and a brick at the same time. I and another officer doused the flames and pulled the officer back whilst protecting him with our shields from the rain of missiles. The plan in these situations is to remove the injured officer to safety, get medical help (which should always be just behind the line) and then return to the line. We pulled the smoldering officer into a doorway whilst screaming for a medic. Whilst we were waiting we made sure the fire was out and started to attend to his most immediate injuries. At that moment we both realised that we weren't alone in the recess of the building. I flicked my torch on, quickly protecting the injured man with my shield fearing the worst. The beam of the torch quickly picked out the shape of a police officer who was standing right at the back of the deeply recessed doorway. Confused at first we then realised that it was the area commander, a superintendent who was meant to be in charge of this overall situation. the other officer who had helped me drag the injured man back with said spontaneously "F*** me, I hadn't realised we had gone that far back!"

Many things were learned in the those days of the 1981, particularly in terms of leadership which as I got promoted became a central theme of my professional work as Director of Studies at the then, National Police Training.

Like most leaders senior police officers get to their position by doing the job. When they come under pressure they often revert to type and want to get involved in the action (Action Bias). As a result I was involved, with many others in restructuring the way we lead and managed situations that were 'out of the ordinary' incidents. Out of this came the Gold Silver and Bronze command system.

The idea here was to put a framework around leader's and manager's roles and responsibilities. Gold are the leaders at a strategic level. They set the mission goals and then ensure that silver has all the resources they need to do their task. They are kept separate from Silver and are not to go on the ground.

Silver achieves the mission by developing a strategy with gold and bronze as advisers and then commanding operations with one bronze expert as a tactical adviser. Silver commanders are not allowed to leave the command centre. Under no circumstances are Gold or Silver allowed anywhere near operational workings. They almost always (there is lots of evidence for this) make things worse for the people actually doing the job and usually distract them.

Bronze are the managers / commanders on the streets. It their job to make the strategy work at a local level using their operational expertise and without interference from above.

As you will no doubt realise this takes trust. Trust in the professional abilities of other people to do their job.

In short if you are too busy to lead you are doing the wrong things. In our seminars, workshops and coaching we help to get people back to doing what they are meant to be doing and get the organisation running properly.

Quite often the blockages in an organisation are blockages of thinking at the top. Free this up, get organised, start trusting and organisations start to flow and achieve.

Thursday, April 17, 2008

Recruiting, promotions and other nonsense.

Just about everyone who has had a job has been through a job interview. What was your last one like? What was your worst experience?
I was in a company recently and had the opportunity to observe the recruitment of a number of people. The process was quite typical. A job specification was drawn up, sometimes by the last incumbent and sometimes by a 'specialist'. Some qualifications are decided on together with the usual candidates such as good communication skills etc.
An advert is placed and CV's or application forms start to roll in together with references.
There is then the quick sift to weed out the no-hoper's and a date is set for the interview or interviews. The person arrives and the recruiters get a 'feel' for the candidates with or without the aid of psychometrics through an interview. A decision is taken and the job offer is made and hey presto a new employee is recruited. Most are a variation on this theme.
I have conducted many such processes and observed quite a few. And the success rate of all this activity? It would be hard to argue that most recruitment processes do much more than recruit across a normal distribution. About 10-15% are great choices with an equal number being real dogs that you wished you hadn't bothered with and the remainder sort of average.
Whilst I was observing the recruiting process this time I wondered if the chances of recruiting real stars would change much if people were chosen at random from the final sift? I would hope that all that effort made a difference, but from experience and from what the MD was saying - 'It's difficult to get quality people' I wonder.
The same goes for promotions. People get promoted for a variety of reasons. Again about 10-15% were spot on and turned out to be stars. Sometimes some people get promoted who you think are dubious and find that they really rise to the position. And an equal number who you think will make good managers or leaders from their previous behaviour and attitude turn out to be surprisingly bad. As they say past and current performance is not an indicator of future performance.
More sophisticated processes have assessment centres but I am still left wondering as their success rate.
One model I like is to give people a go. Come in and do the job and then we will decide.

Often when dealing with prospective clients we offer to run a workshop / coaching sessions etc. and if they don't like it / it doesn't deliver we will walk away we won't charge. (This has never happened by the way we have always secured the contract).

You wouldn't buy a car without doing a test drive so why do the same with jobs and promotions?

There is only one way to tell if you have a potentially good leader for example. Put them in a position of leadership and see what happens.

Tuesday, April 15, 2008

T5 - some departures on time...

In the previous blog; Terminal 5 Chaos I made comments about the apparent lack of leadership capability of Gareth Kirkwood and how he came across during the press conference on the first day of the fiasco. Interestingly today he announced that he, together with David Noyes the BA Customer Service Director are leaving the company. The press have now engaged in a 'was he pushed or did he jump' series of speculations.
As I have said on a number of occasions leading when things are ok and the problems are purely operational ones takes skill. Leading at times of ambiguity, change and difficulty is the real test of leadership. Times like this requires agility, emotional resilience and the ability to not only cope with ambiguity but to be able to use it to your advantage.
Most leadership however does not occur under the glare of the media. Poor leadership frequently gets hidden and carries on quietly causing damage unhindered, but noticed by many who can't or won't speak up.
Preparing leaders to deal with situations 'when the wheel comes off' is a specialist process that unfortunately gets left out of most development and coaching events.

Monday, April 07, 2008

Global Value Chains and global decision making - problem solved

Late last week I was working with a post doc from Cambridge University who's research area is Global Value Chains or supply chain management. At the end of the session she mentioned that she was having problems getting a job, which surprised me a bit. She then rattled off a list of interviews she had attended and given presentations at and not been picked. So we sat down for a couple of hours to 'solve the problem'. What came out of this amazed both of us.
The first thing we had to do was to workout what the problem was. So she gave me the presentation she roles out for such occasions and it was impressive research. However we soon discovered that it was (like a lot of doctoral research) so specialist that only a handful of people in the world could engage at any meaningful level with the subject, and I wasn't one of them!
We quickly did a profiling job on her audiences and discovered the same was largely true of them. They were supply chain experts in their own right but not to the level required to really get to grips with her research. As she said, "It's so specialised that it's not important".

So using the principles of solving ambiguous problems we set about getting to grips with this one. Quite quickly she was designing a full page advert for the New Scientist to attract money so that she could continue with her research. This process brought about some key realisations about Global Value Chains and the issues facing developing countries as a result of the activities of globalised companies.

The issues we realised were these:
In manufacturing global companies like source the components from many countries. The decisions about where to get or manufacture the components from are based on a matrix of factors. Some of the factors in the decision matrix include cost, quality, ease of access, stability of the country, labour force and production unit, skills, inducements like tax breaks, transport and proximity to the line of the chain (So if every thing else is sourced from the Asiatic countries sourcing a small component from Europe might not make sense unless there is a good reason for it) etc.
Once the global supply chain is established, countries find that they have a relationship with other countries in the chain through the company. They have close relationships with those links on either side of the chain and more distant but equally reliant relationships with other countries further down or further up the chain. Each country in the chain is in a symbiotic relationship with the others and the company and yet they as a country are in competition with each other and want as big an amount of the pie is possible.
Once these supply chains have been established (Decisions made) they do not remain static. Many things can change or even remove one or a number of the links (Countries) in the chain. The thing to bear in mind here is that many of the links are developing countries. So a large global company setting up in a developing country helps economically. However that country does not have control of this production capability and it can move away as quickly as it arrives, especially in times of market slowdown or when another country offers a better deal.

The issue is that just about all of then decisions make are about what is best for the company. It doesn't take much imagination to work out what happens to a country that has attracted a number of of these links in a number of global value chains, when it is no longer seen as not the place to be, for whatever reason, somewhere cheaper, closer etc. It is very possible to imagine a scenario where a developing country is on the receiving end of a decision to pull out, or reallocate the chain elsewhere. If the country has a number of these chains and they all pull out, the economy of some countries would be dire straights, with the potential for civil or even international conflict.

The problem is that all of the decisions being made are fragmented and based on the health of the company not global stability. This has already happened with the global credit markets. Leaders making moneymaking decisions have created the current credit crunch. It is the lack of systems thinking outside of their own company system that has created a problem that is harming them now.

One of the things mode 4 leaders are really good at is seeing and understanding wider systems. They tend to act with this bigger picture in mind. Unfortunately from our research only about 1.2% of the leadership population are mode 4 leaders.

As for the post doc she (and I)now sees and understands the wider context that her work vitally contributes to. Her research concentrates on the relationships between emerging market countries who are part of global value chains. Her next interview is tomorrow. I'll let you know what happens.

Friday, April 04, 2008

Decision making errors 4 - The Majority Fallacy

This problem solving and decision making error has a number of other names, such as the Bandwagon error. It is quite closely linked to 'group think' in which people do what the group decides to do.

Making great decisions

The infinite variety of people's problem solving capability and the basis of their decision making never ceases to amaze me:

Thursday, April 03, 2008

Decision Making Error # 3 The Bias Bias

Today's video looks at a phenomena known as the Bias Bias, or the bias blind spot reported by Pronin in 2002. The full reference is below.

Pronin, E., Lin, D.Y., Ross, L., 2002. The bias blind spot: perceptions of bias in self versus

others. Personality and Social Psychology Bulletin 82, 369-381

Wednesday, April 02, 2008

Emotional Resilience, Decisions and making good Judgements

Over on the Neuroanthropology site there is a blog I have been meaning to comment on for a month about emotions and decision making. Now whilst the actual blog is a critique of three studies on decision making and emotions from a neuroanthropological methods perspective it does make interesting reading from our point of view.
I don't intend to replicate the blog as it is examining a series of methodological issues and you can read it yourself here.

However I will comment on the three findings from a practical decision making perspective and how people deal with risk and ambiguity.

  1. The first study it reports on shows that sad people "spend more money to acquire the same commodities than those in a neutral emotional state.”
  2. The second is about trader behaviour and risk and concludes "that traders who let their emotions get the best of them tend to fare poorly in the markets. But traders who rely on logic alone don’t do that well either. The most successful ones use their emotions to their advantage without letting the feelings overwhelm them.”
  3. "Studies have shown that adolescents are very well aware of their vulnerability and that they actually overestimate their risk of suffering negative effects from activities like drinking and unprotected sex…" ‘It now becomes clearer why traditional intervention programs fail to help many teenagers,’ Dr. Valerie Reyna and Dr. Frank Farley wrote. ‘Although the programs stress the importance of accurate risk perception, young people already feel vulnerable and overestimate their risks.’ In Dr. Reyna’s view, inundating teenagers with factual risk information could backfire, leading them to realize that behaviors like unprotected sex are less risky than they thought. Using an analytical approach of weighing risks versus benefits is ‘a slippery slope that all too often results in teens’ thinking that the benefits outweigh the risks,’ she said.
The points I want to make about these findings are these (somewhat different to the original blog):
  1. The first (and simple) point I would make here is that each of these findings point to the importance of emotional intelligence and emotional resilience in decision making, especially when there is risk or ambiguity involved.
  2. My second point is that it is impossible to have a wholly analytical approach without our emotions and beliefs being involved, none of us are robots devoid of such influences. Therefore it is vital that we understand our own individual biases and emotional triggers and can either incorporate them into our thinking or act to mitigate their effects.
  3. That analytical approaches (the last study) to decision making can in certain situations exacerbate the problem and make the decision less effective, compared to an emotional or gut based one. What is happening in this particular case is that the fear of the risk prevents risky behaviour. When analysed the real risks became apparent (“The risk of pregnancy from a single act of unprotected sex is quite small, perhaps one chance in 12, and the risk of contracting H.I.V., about one in 500, is very much smaller than that") and therefore leads to more risk taking. This can also work in a positive direction. A very personal example I would quote here was when, many years ago I was in the Army learning to make parachute jumps. The analytical approach helped to move me past my fears - (terror actually) and walk out of a perfectly workable aircraft and plummet to earth, my life relying on a bit of silk and some string. One was considered to be a good result and the other judged to be not so good.
In summary making good decisions and solving problems well, is more than just collecting and analysing data. Judgement is a very large part of such activities. A big part of making good judgements is emotional resilience and intelligence.

This leads me to a question; How is judgement making developed in our leaders?

I'll leave this for another blog at another time as there are some concrete things that can help people to make better judgements.