Market-Based Management®

Which manager are you?

A supervisor finds out from HR that one of his direct reports wants to work for another supervisor in a different division.  Knowing this other supervisor and believing himself to be better, he is perplexed and calls the report into his office.

"I don't understand," he says to the report.  "I am smarter.  Our division has higher revenues.  I treat you well - aren't I nice to you?"

"You are very nice to me," says the report.

"Don't I pay you well?"  he asks.

"You pay me quite fairly," the report agrees.

"I don't get it, then... why are you talking to this other supervisor - what can he possibly offer that I cannot?"  the supervisor asks.

The report responds: "Look, you're right - in some things you are much more accomplished - you have some wonderful strengths.  But this other supervisor has capabilities and strengths that are different from yours and matter more to me."

"Like what?" the supervisor challenged.

"Well, he's been teaching me many interesting things - like how to read minds!  Would you like me to read yours?"

The supervisor smiles and says, "sure.  What am I thinking right now?"

"Give me a second - concentrate - it's hard for me since I am new at this..."

"Okay, I'm focusing..."

"I have it!" the report says .  "You are asking yourself, 'How can I help my reports better understand and develop the ability to apply MBM in order to contribute in ways that will maximize the long term profitability of the company.'"

"Ha!!  That's not at all what I was thinking!" the supervisor says triumphantly.

"I know," says the report.  "And that's why I want to work for the other supervisor."

[I adapted this from a humorous anecdote relayed by Harold S. Kushner in his book, Overcoming Life's Disappointments.] 

Physician, Heal Thyself

Or at least heal me on the day I get sick, not a week later.  Marina Krakovsky has a thought-provoking piece over at Slate.com.  The big question it tackles: why can I get a reservation at a fine restaurant the day I want to eat there, but I have to wait two weeks to spend 15 minutes with the pediatrician?  The answer: because medical practices are antiquated.

(I took on a lesser Slate.com article here.)

Anchors Away

Cognitive biases (i.e., widespread deviations from logical thinking) are always fascinating to me.  You can imagine my surprise when I stumbled upon one I was previously unaware of in my three-year-old son. 

Before parenthood, I assumed that you could tell your child anything and expect even your wildest assertions to be met with unbridled credulity.  After all, it's not as though the little tot has a built-in fact checker in his oversized melon.  If you want him to believe that Phyllis Diller spends her evenings hunting for the souls of disobedient children, just tell him so.  He's not going to launch an investigation.

To my surprise (and disappointment) I found that there are strict limits to my powers to mold young minds at will.  About six months ago I noticed my son disagreeing with me adamantly when I would try to pull the wool over his eyes.  I would, for instance, change the lyrics of a song I had taught him, or tell him that a green traffic light indicates that one needs to stop.  He would explain loudly that I was singing the song wrong, and that one stops at red lights, not green.  This seemed odd to me.  After all, I was the one who gave him the information on these things in the first place, and at the time he had accepted my wisdom unquestioningly.  I was his source of knowledge.  And now, as his source of knowledge, I was changing his reality (or futilly attempting to do so).  Why the resistance?

Then it hit me.  My son will believe whatever I tell him on a given topic as long as I am providing him his first bit of information on that topic.  Once he has absorbed that initial fact, it becomes his reality, and I am no longer in control of that part of his knowledge.  In other words, if he gets two pieces of information, each with the same probability of being true (in that they come from the same source) he will believe the first piece of information he happened to hear.

After a little digging I found that this is not a phenomenon unique to my son.  It's a cognitive bias known as "Anchoring," and it affects us all to a greater or lesser extent.  When we have no information on a topic, we are very malleable in our opinions on it.  But once we get some information on the topic, our mind uses that information as an anchoring point, and it is difficult to accept contrary information as true.  Unfortunately, this is still the case even if the contrary information is of higher quality than the initial information  (this helps explain, to some extent, why people tend to hold religious and political beliefs similar to those of their parents).

The application to business is obvious.  Firms that have a faulty vision of reality are at serious risk of financial trouble, and an unfortunate (but widespread) human weakness is to base your vision of reality on early information rather than good information.  Knowing that we have this weakness, we would do well to make a conscious effort to overcome it.  If you find it difficult to change your mind after forming an initial opinion (especially with regards to your firm), do a reality check.  There's a good chance you're in error even if you're not in doubt.