When there’s less money coming in, the conventional wisdom holds that it’s prudent to cut your spending, whether you’re a consumer or a multinational corporation. This is particularly true if the economy is experiencing the worst downturn in eighty years, and it’s not at all clear when there will be a return to prosperity.
Sure, there are always opportunities, if the wolves aren’t yet at the door, for those willing to take a risk. While everyone else is being tight-fisted, you can get a great deal on that new Cadillac Escalade you’ve been lusting after. If all of your competitors are cutting back, a well-timed investment in marketing can help your company gain share.
But fearful times have a tendency to bring out the worst in people. The emotion-generating amygdala starts pumping cortisol into the system, slowing our thinking and narrowing our vision. Just when we need to be at our best, we become stupid. Across the board cost cutting driven from the top down isn’t always the smartest approach.
When you’re up to your neck in alligators, you may forget that your goal was to drain the swamp. However, that doesn’t make the snapping jaws any less real. Nor will a trip aboard the Starship Enterprise to the final frontier of culture change, despite the assertions of a recent article in The Wall Street Journal.
It’s hard to argue against the two studies quoted in the article, claiming the limitations of cost-cutting initiatives. I’m even willing to believe in the benefits of culture change, though the survey touting them was conducted by a consulting firm that makes its money from, of all things, selling culture change.
But what bothers me is the article’s mystification of culture. The “right” culture comes across as the magic beans that will grow a giant stalk of profitability. The definition we’re offered by a business school professor is “people believe in the organization, in their land manager, and therefore help them perform as much as possible, they think they are valued by the organization, both employers and workers are gaining mutual benefit.”
Now all of this is good stuff, but it’s just the kind of thing that gives my profession a bad name (or makes people question if it is a profession.) I can’t see any one of my clients betting their company’s survival on “you’ve got to believe,” nor would I have any idea how to quickly effect such a belief.
Culture is the set of ingrained habits that determine the way people do things in the absence of prescriptive policies and procedures. But more than just belief is needed to realign those habits with the critical success factors of the business. It takes a consistent message, conveyed through everything leaders do and say, about how people can come together, behave in specific ways to overcome obstacles, and achieve an exciting vision of the future.
But when the alligators are restless, there’s a more immediate way to achieve efficiencies and refocus efforts. Gather the responsible people together and give them all of the unvarnished information you can about the state of the business. Share the financials and the challenges. Then ask them to work together to come up with recommendations on what to do.
This will engage them, give them control over their destiny, and create ownership for what needs to be done. Since they’re closer to the work, they’ll avoid many of the mistakes that are inevitable when cost-cutting is mandated from the top down. If two heads are better than one, an entire organization of minds is bound to come up with better ideas than an individual manager, no matter how smart he or she may be.
This approach can be implemented quickly and doesn’t depend on turning around the Queen Mary of corporate culture before results are achieved. Nor does it require a starship, or beans of any kind. And when it’s employed, a high performing culture magically takes hold.
It seems like everyday we’re treated to a business news story that just a couple of years ago would’ve seemed fantastic, but now is just taken in stride. Many of the pillars of American industry have either gone bankrupt or been acquired at fire sale prices, more than one quarter of all residential mortgages are under water, unemployment is at ten percent and could stay that high for years, and even Harvard has been forced to cut back because of the thirty percent drop in the value of its endowment.
All of these are just examples of what economists tell us is structural, not cyclical change. The business world is now a fundamentally different place, and things are not about to return to the way they were. In my day job, I see lots of pain out there, which drives an intense focus on cost reduction and a strong aversion to risk trying anything new. While it’s understandable that in such times people would just hunker down, I fear this is exactly the opposite of what needs to be done.
When a crisis hits, our fight or flight reaction kicks in, narrowing our vision to what it takes to survive. But the unexpected and painful event can also stop the automatic processing of the brain and change the way we look at things. We become more willing to change, and with a fresh perspective, we become more innovative and recognize new opportunities. How we respond is a conscious decision.
At the same time our economy is being transformed, so too is our understanding of how our minds work and how we make such decisions. We’re learning about how our perceptions shape the world we live in, how much our actions are driven by emotion and not logic, and how big ideas change the way the mind works. These and other findings of brain science challenge the conventional wisdom on how to conduct business.
The changes roiling the economy and the latest brain research combine to create an imperative for every company to fundamentally rethink their business. Customer needs have changed, but now we have better ways of understanding what they are. Costs must be controlled, but there are new management practices and organizational designs that ensure greater efficiency. Fundamental change is now a fact of life, but we have the tools to help people prosper from it.
Perhaps the most fundamental lesson of brain science is that the world is only what we think it is, but our thoughts will determine our actions. My bet is that those that see the present as an opportunity are going to take the bold action needed to flourish. Those that don’t will be yesterday’s news.
In my day job, I’m coaching an extremely capable executive in a high technology company. During our first meeting, I asked him to explain his business. It took no more than thirty seconds or so before I was absolutely lost.
My first thought was that this was a much more complex business than I had ever encountered. Just as I despaired of ever getting a handle on it, he made a statement that brought it all together.
But then his explanation moved back to a level of detail that had me lost again. After a couple of minutes, another statement clarified everything. Clearly, there was a pattern here.
The best way I can describe it is by distinguishing between inductive and deductive thinking. Inductive thinking is the basis of scientific method—it builds from empirical evidence to a general idea that encompasses the evidence. In contrast, deductive thinking starts with the general idea and then reasons back down to the experience.
It’s only to be expected that a highly trained engineer would favor inductive thinking and feel at home in a world of technical detail. But the business world prefers that information be presented deductively: tell me what you’re going to tell me and then fill in the details.
When my client was explaining his business, I got lost in the trees. It was only periodically that I would catch a glimpse of the forest.
Smart, well-trained engineers are the lifeblood of high technology companies, but without a strong business focus, there will be no company. Often, there is a split down the middle of the company, with the engineers on one side and the business people on the other.
Neither are terribly enamored of one another. Not speaking the same language, each has a hard time understanding what the other is saying. The cooperation that is essential for the success of the company is elusive.
One way to bridge the gap is for each to recognize they need to turn their thinking upside down. Going against their nature, the engineers need to present their conclusions first, and only then back them up with the detailed logic they’re so good at.
Likewise, the business people need to turn their thinking upside down and present the logic that leads to their conclusions. It will enhance their credibility with their more technical colleagues.
When both try to think like the other, communication and cooperation will improve. It’s not a bad approach to take whenever we’re confronted with people different than ourselves.