Research on dishonesty – following the saying “One bad apple spoils the (whole) barrel” – found that the unethical behaviour of other individuals (cheating for example) can influence the behaviour of observers. This is particularly the case when the observer and the cheater are part of the same group or “barrel”.
This is already a very interesting finding.
However, could we also turn the saying around? If we would remind an apple it is part of a “bad” barrel make it bad too?
Researchers from the University of Zurich put this to the test. They randomly selected 128 banking employees. Half of the group were primed with bank related questions reminding them they were part of the banking industry (the barrel) and the other half received unrelated questions. After this they participated in a specific game renowned for measuring dishonest behaviour. They then extended this experiment to employees outside the banking industry doing the same thing.
The question at hand… would it make a difference to the participants’ behaviour whether or not they had been reminded they were part of the ‘banking’ barrel? The answer was a rather clear yes (an increase of 16% dishonesty). This same effect was not measured for medical doctors or the general population.
When bank employees were reminded of their professional identity their compliance to the honesty norm was weakened. An industry’s professional identity is very relevant to the subsequent ethical behaviour of its participants.
When it comes to strategy there are many illusions. We would like to think strategy is intentionally formulated (and then implemented) by top management. We imagine an off-site of the management team where strategy is dreamed up and designed. There are major decisions which are then carefully cascaded (down) through the organisation ultimately resulting in a sustainable competitive advantage.
Many years ago Henry Mintzberg did something both simple and amazing… he became a “fly-on-the-wall” researcher following managers around, observing what they actually did when managing and when strategising. The result was quite demystifying. It turned out managers were not half as intentional as what management books had been telling us and what we thought they would be. It was a big surprise because even managers themselves – when we had asked – told us they were intentional planners.
So Mintzberg put this intentionality management illusion to bed and we now know there is sometimes intentional strategy but there is also very often emergent strategy originating from autonomous strategic behaviour within the company.
Emergent, autonomous strategic behaviour… it is quite scary to many a command-control manager. However, it turns out that it is actually very important and beneficial to the performance of a company. It starts as informal projects which can be somewhat dissonant to the current overall direction of the company but are inspired by a rationality of the “local” sort. Laurent Mirabeau and Steve Maguire illustrate this in a very interesting empirical paper recently.
Through time as these projects gain support (or not: ephemeral strategic behaviour) and this support happens through the introduction of new strategic categories or – more often – by stretching existing strategic categories (post-rationalising). In many ways it is like patterns of the past become plans for the future (see Mintzberg).
Conclusion: Improving strategy is (also) facilitating autonomous strategic behaviour in your organisation.
Most of us have grown up appreciating one or more superheroes and now that we have grown up we still fancy the idea one person can truly matter. The effect a CEO can have on the performance (profitability) of a company has traditionally been measured in the 10-20 percent range. Depending on people’s perspective this CEO effect can be heralded as negligible or as considerable.
CEO-effect guru Donald Hambrick (and associate) , recently, have taken an advanced approach to measuring the CEO effect. With the “CEO in context” approach Hambrick provides a much more accurate measurement of the CEO effect. Among others there is a much more accurate indicator of industry performance (excluding the focal company) and company performance (with controls for inherited profitability and company health). The results are – frankly – shocking.
With the traditional CEO effect being in the 10 – 20 percent range you could still argue whether this was small or big. With Hambrick’s new research the CEO effect is measured a whopping 38.5%. This is one big effect and it is for better or worse.
Hambrik provides convincing validity testing of the new technique. And, finally, he also illustrates the CEO effect with comparing Lou Gerstner and Sam Palmisano of IBM. The traditional indicators mis-identified Gerstner as a poor CEO. This new measurement puts him in the top decile. It is all very convincing.
Now, if you are a CEO…
What is it that you are thinking when you hear your impact is twice the size?
You definitely matter and because you do the essence of your job to make everybody else matter. The buck does not stop at your desk, it starts at your desk. Make sure the CEO effect will be a positive one because if it negative…the impact is also twice as big..
What is the first word that comes to mind when you think about strategy? Typically, the first word that is mentioned is plan or planning. (What is yours?) If you observe executives – which is very different from asking questions or sending surveys! – you find that there are two types of strategy, which happen alongside each other. No, it not strategy formulation versus strategy implementation. Strategy without implementation is not strategy.
Instead, there is strategy as design and strategy as practice.
Strategy as design is aimed at uniqueness, aimed at building competitive advantage.
- The focus is on things that other companies cannot imitate and that are valuable, rare, and disguised within the organisation;
- The process of strategy as design is not straightforward;
- Unique business insights often start as irritations with existing offers (iPhone) or as slow cultivated hunches. The process cannot be planned but it can be facilitated and encouraged by using a design approach (IDEO);
- The resource-based view and concepts like resources, capabilities, dynamic capabilities, and transient competitive advantage are important for strategy as design.
Strategy as practice is aimed at excellence through publicly known, imitable practices which can be transferred across companies. (link)
- The focus is on things that are common practices, which can significantly influence the performance of companies;
- The process of applying (best) practices is relatively straightforward (in theory);
- Implementing best practices – rather than mere business fads – is about “conscientious, explicit, and judicious use of practitioner expertise and judgment, evidence from the local context, a critical evaluation of best available research evidence, and the perspectives of those people who might be affected by the decision.” (evidence-based management);
- Typical strategy concepts like the Five Forces, BCG matrix, and strategic groups analyses fit within strategy as practice. However, also best practice in communication, hiring, teamwork, project management, total quality management, etc. belong here.
Strategy as design – particularly when successful – is more dramatic and receives most of the attention. And, most executives, when they have the choice, would prefer to compete on uniqueness rather than excellence. However, there is no “choice”. The focus needs to be on both, but most of the managerial effort will need to be on strategy as practice.
Fascinating research by Bloom and others in Indian textile plants demonstrates the power of strategy as practice. The textile plants who were assigned to use standard best factory practices (regular maintenance, recording reasons for machine breakdown, removing trash from shop floor, etc.) increased productivity by 11% compared to the textile works who were in the control group. (link)
There are two very distinct types of strategy that are both necessary for the prosperity of your company. And both types of strategy need to be intentionally managed and trained.
The reputation of human resources departments continues to be problematic. This is partly because executives don’t back their written and stated people strategy with the behaviour which should accompany it. Perhaps more importantly, though, is the general lack of business, strategy, and organisational change understanding you find in HR departments. If you like to read more about this, read this article.
However, when business literacy increases and HR is starting to reflect more on its impact there are interesting hurdles along the way. One important trap is the training measurement trap.
We see this regularly when it comes to measuring the impact of HR training efforts. In most companies training efforts are evaluated through learner reaction measures (questionnaires filled out by training participants).
It seems rather self-evident learner satisfaction is important. And it is, but perhaps not in the way we would think. It is important in terms of continued interest in training efforts and that is why lots of effort should be given to improving learner reaction measures. It is a so-called hygiene factor.
However, when a learner is dissatisfied with a training effort research evidence shows this is unlikely to have much, if any impact of actual transfer of learning to on-the-job application.
And it is this on-the-job application (transfer of learning) measurement that is typically missing in corporate training efforts.
Learning Retention Rates:
- 5%: The average retention rate of powerpoint-driven training efforts (measured 2 weeks after the event);
- 10%: If participants also engage in reading;
- 20%: Add audio-visual means;
- 30%: Add demonstration… ;
- 50%: Add group discussions;
- 65%: Add personalisation – how do my personal qualities contribute to this;
- 75%: Add practice by doing…;
- 80%+: Add explaining to others.
- Are you evaluating your training efforts?
- Are you using learner reaction measures?
- Are you using learner retention measures?