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Archive for the ‘culture’ Category

“Causes no harm to others”

Posted by Mark Bennett on August 11, 2012

Is it okay to do something that technically breaks the law, but causes no harm to others? Where is the line between what society forbids or restricts and what the individual wants to do anyway? What about doing something legal, and while it isn’t causing harm to others right now, still carries that risk?

Felix Salmon wrote an interesting, ethics-based counter to Randy Cohen’s opinion piece on bicyclists who run red lights. I’ll let you read each and draw your own conclusions about whether one or the other is on solid ethical grounds (you may or may not find it ironic that Cohen was formerly the Ethicist writer for the New York Times and has a book coming out called, “Be Good: How to Navigate the Ethics of Everything.”)

That’s stupid and I’m smart

To me, there was another aspect that is relevant to all of us as well, both as individuals as well as organizations. It relates to people’s chronic underestimation of risk and overestimation of their ability. Cohen touches on it, but I think he falls into a common trap about risk in doing so (seemingly to rationalize his own behavior – a common cognitive error.)

It’s this: “It’s okay what I/we do as long as I/we cause no harm to others.” It’s the philosophical “free-pass” to rationalize breaking rules without having to feel guilty about it. In fact, you can even feel more ethically-intelligent about it!

But there’s more to it. The companion quote is: “And I/we cause no harm to others because I/we are more careful/better than others.” This is a cognitive bias of the first order.

We’ve seen it in environmental disasters and the way the most recent financial crisis has unfolded. We see it in the way some businesses and individuals in those businesses continue to behave even after the consequences of their previous actions have been recognized, exposed, and reported on. In many cases, the rationale is either, “I/we broke no law” or “Even if we did violate a regulation, our actions caused no direct harm to others.”

It’s okay, I’m being very careful

The problem is that laws to stop at red lights aren’t there because we think that people intentionally drive into intersections if they knew they would crash into someone. It’s because even as careful as you think you are, misteaks happen.

It’s to a certain extent about risk. Risk is the bad thing that might happen. It doesn’t mean it will happen. A person could go their entire (natural) life running red lights “when it was safe” and never have an accident. A company could cut corners on pipeline inspections for decades and never have an oil spill. Another could get extremely leveraged on risky loans and never have to ask for a bailout (hey, it could happen!) The list goes on. Things where nothing bad happens even though a law or regulation is broken (or not.)

Checklists serve a similar purpose in reducing risk. Surgeons don’t intend to leave instruments in patients. Pilots don’t purposely ignore instrument readings. It’s easy to think that checklists are an unnecessary burden for you (but maybe not the other guy.) But as all humans are susceptible to errors in thinking and perception, even the most careful of us can think we took out all the retractors, checked all the dials, and examined all lanes heading into the intersection.

There is a whole spectrum here. For instance, we’ve seen that in the financial industry, companies take great effort to find loopholes in existing regulations, invent new financial products that aren’t regulated yet, or redefine existing products so that regulations don’t apply. When it comes down to it, is that really any different than ignoring a law? Is it okay since “everyone else is doing it?”

This wasn’t supposed to happen

Even when you point out the dire consequences *if* something was to go wrong, it’s very easy for people to come up with a back of the envelope calculation about why the % probability of something bad happening times the consequence is far, far lower than what “that other careless guy” or “that other greedy/reckless company” is doing.

So it’s okay. It’s not causing harm to others. Until it does.

Photo by CarbonNYC

Posted in cognitive bias, culture, risk, Uncategorized | Leave a Comment »

Sustainable Means More Than Recycling

Posted by Mark Bennett on March 13, 2012

In a world where almost everyone is considering the question of whether the notion of capitalism is obsolete, if you do think it’s still the right notion, then what is it that needs to change?

Part of the answer has been touched upon in whether profit should be the object of single-minded focus. Profit is of course a big factor in investor decisions, but every investor doesn’t think the same way. Some investors value the vision or purpose of a venture in combination with return on their investment, and to varying degrees. The bigger picture of profit is that it enables the continued existence of the venture to pursue its broader goals and the various investors have different perspectives on profit and those goals.

But there are also more than just capital investors.

More than one kind of investor

Society is also an investor in just about every capitalist endeavor, either directly or indirectly, either actively or passively. This might be through government activities such as taxes and tax breaks, subsidized loans, and contracts.

Consumers are investors as well, through the decisions they make on whether to buy a product or service that entails an ongoing relationship with a firm in order to get the most value out of the purchase.

Employees are also investors, through their commitment to see projects through tough times, to forego another job offer (even taking into account innate risk aversion), and investing their time into gaining experience and development in areas related to their organization’s vision or purpose.

Each of these investors has a stake in the organization just as much as the capital investor. So what happens when management loses sight of the bigger picture of the whole range of investors that exist and thinks only in terms of “increase shareholder value”?

Capital investors who were initially attracted to the vision and purpose of the venture start to see it fade and become muddled in a “race to the bottom” for profit or lost in generic, “be the best” platitudes.

Customers start to see no reason to keep buying the product or service. There’s no value in the brand and if switching costs are high for now, it just builds resentment, further reducing the value the customer sees.

Employees not only start to see all the previous things happening, and how it affects their future prospects in staying with that organization, but they are very likely on the receiving end of a poor work environment. In addition to long hours and low pay, the lack of vision and purpose take away even the semblance that their sacrifices might have some meaning to them.

Looking at all the investors, together

So, what to do? What’s key is to see that when all the different kinds of investors are considered together, the organization’s ability to deliver value to each is improved.

Think in terms that go beyond simply making your organization “a great place to work”, or “an environmentally friendly company”, or “good for society”, or “making the best product or service” – those can be just as narrow as “best risk/return record in the industry” if viewed as siloed, separate things.

Think instead about how all the pieces do fit together – how customers value your products/services is affected by your impact on the earth’s resources and environment, what your employees think about what their work means affects delivering a superior return to your investors across all that they value. These factors all interact in the outside world, as more people are beginning to understand, so your organization must also determine how it fits into that web of interaction.

An excellent book that focuses on the “how” with well-researched examples, is “Management Reset” by Ed Lawler and Chris Worley. It describes what the authors refer to as “Sustainably Managed Organizations”, in contrast to the long-standing “Command and Control Organizations” and the more recent “High Involvement Organization.”

Sustainably Managed Organizations (SMOs) weave together all the aspects of the organizations relationships with economic, social, and environmental stakeholders (not just “shareholders.”) They break out their approach to how SMOs operate into the major components that every organization must attend to if it really wants to achieve any meaningful change: Strategy, Structure, Talent, and Culture.

Leadership impact

Leadership is needed in all four of these components if the change effort is to have a chance of success. Most of all, leadership can have the largest positive impact through talent – the way people are treated, and culture – how behavior is guided…if it would only put the needed focus there.

Think about it – the places where organizations have gone off the rails and landed in the headlines on topics such as corruption, environmental disaster, and financial collapse of outrageous origin have been due in large part to culture and how certain behaviors were encouraged, tolerated, or rationalized.

Now think about how those negative outcomes affected the broader set of investors and their future decisions regarding those organizations.

We’re way past getting by with “Our people are our most important asset.” Organizations must now be able to explain how they manage their talent to generate value and create superior business performance – most of all to their people. Executives must be the primary talent managers, understanding how the workforce capabilities enable/constrain strategic options and impact execution.

Think what can happen when leadership is focused on how they manage talent and shape behaviors to the same extent it is focused on strategy and structure.

Photo by nickwheeleroz

Posted in culture, leadership, strategy, talent | 5 Comments »

 
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