Swimming pools, guns, and why your people don’t speak up

In his book, Freakonomics, Steven Levitt has an excellent chapter on risk. He quotes risk consultant, Peter Sandman who said, “That basic reality is that the risks that scare people and the risks that kill people are very different.”

Sandman uses a simple definition of risk.

Risk = Hazard + Outrage

For example, Levitt poses the question of which house you’d be more comfortable allowing your child to play – one with a swimming pool or one with a gun. The hazard, death, is the same. The data tells us that considerably more children die from swimming pool accidents each year. Yet most people would consider the home with the gun more “risky”. Levitt’s rationale

“. . .The thought of a child being shot through the chest with a neighbor’s gun is gruesome, dramatic, horrifying – in a word outrageous. Swimming pools do not inspire outrage.”

Sandman and Levitt’s models also apply at work. Decisions to speak up, take certain actions, or do many of the things that we encourage (yet often don’t see) are driven by perceptions of risk.

The key is to understand what role you, as a leader, play in people’s perception risk. Levitt discusses three drivers of individual's perceptions of risk and outrage: sense of control, reaction and immediacy.

Control
We tend to see things that are out of our control as being more risky. That's human nature. Yet, organizations often hold people accountable for things that are out of their control. When this happens, people seek ways to reduce that feeling of risk. Often their risk-averting behaviors become destructive to the organization.

A simple example is the classic “shoot the messenger” syndrome. When bringing bad news becomes a risk, people stop reporting it. That’s when the real risk arises.

A more complex example is in goal setting. In one company sales people’s goals included product quality. Yet the sales people had no control over any aspect of the production process. Levitt points out that we typically feel at less risk when we are the ones perfoming a task. (Do you feel safer in the driver or passenger seat of your car?) To reduce their perceived risk, the sales people attempted to assert some control. They began micro managing the production managers. This prevented the production managers from fully focusing on their jobs. Sometimes the sales people would go around the production managers talking directly to supervisors and employees. By giving them a goal over which they had no control, the organization increased these people’s perception of risk. The result was dysfunctional behavior and performance.

The current economic climate affects business in ways that are completely out of anyone’s control. Your reaction can either fuel or reduce people’s perception of personal risk.

Reaction
Levitt’s swimming pool example is about how reaction impacts our perception of risk. The gun evokes a stronger emotional reaction than the pool. Therefore, the gun is perceived as riskier.

Leaders’ reactions drive employee perceptions of risk. How do you react to mistakes, wrong answers, or dissention? Are you aware of the level of "outrage" you display in response to various actions and behaviors?Of course, there are actions that should generate outrage – unethical behavior, lack of integrity, illegal behavior. Actions that lead to significant losses or hurt the business should also create outrage. The point isn't to tolerate any level of performance. Yet sometimes we invent or magnify the "hazard" reacting disproportionately to its real damage.

I knew an executive who extremely detail oriented. This person could comb through a 25-page document and find every typo, inconsistent font, or inconsistent color. He did this even on rough drafts, before the content was even final. Not only did he find the errors, he made a big deal about them. People knew that a less than “perfect” presentation would generate outrage. They adapted their behavior. If someone had an hour to work on a presentation, they’d spend ten minutes on content and 50 minutes proofreading. The documents looked great, but most of them didn’t say much.

Or, consider how new ideas are received in meetings. Ideas that are too far out of the status quo are often ridiculed. Yet, if we consider the risk equation, stating an idea really poses no hazard. Yet for some, just speaking can be a risk. Employees quickly learn that staying within a very narrow boundary decreases their risk.

Another risk-creating behavior stems from hoarding data. The leader holds back information to later use as a weapon against ideas he or she doesn’t support. Alternatively, perhaps an employee simply overlooks a piece of data. The leader’s response in that situation determines the perceived level of outrage. If missing a piece of data results in a reprimand, people will soon stop bringing ideas or recommendations to the table. Instead they'll regress to just providing simple facts and information. Look at your meeting dynamics. Are people comfortable asserting their point of view? Do they go out on a limb? Or, do your people stick to the facts? If people are playing it safe, it might be time to reassess where they perceive the risks.

Immediacy
Levitt's finaly point is that a current issues often appears more risky than a future issues. Stephen Covey made a similar point when he talked about “Quadrant I” and “Quadrant II” activities – those activities that are either urgent/important or not urgent/important. He notes that we often spend more time on the first quadrant (urgent/important) at the expense of the second quadrant. I’ve even found people who spend considerable time third quadrant (urgent/not important). This reinforces Levitt’s point of the power of immediacy in our perception of risk.

Sometimes the problems that are right in front of us do need fixing. If your house is on fire, that’s not the time to be focusing on how to decrease the risk of fire.

However, that’s not always the case. There is an on-going debate about whether short-term, quarterly based decision making improves or hampers organizational performance. In tough times, like the ones we are in now, many organizations forego investing in longer term risks in order to address short term issues. Fiscal responsibility is important but it must be balanced. If your actions cause you to lose customers in the short term, you might not have anyone to buy your product once things pick back up. If you get back on your feet, a workforce that can’t provide a quality product or service, a customer base that no longer remembers your brand, and a portfolio of old, outdated products will probably put you right back into the same place you started.

As a leader, you influence your employees’ perceptions of hazard and outrage
Too often, leaders make the very behaviors they seek carry the greatest risk. There are certainly times when people should feel at risk. It’s ok to be outraged at shoddy work or incompetence. However, shoddy work and incompetence are very different from results that are outside of people’s control or are due to honest mistakes.

What would happen if you fully unleashed people's potential?

"What would happen if you fully unleashed people's potential?"

I've used this tag line for over a two years to help leaders rethink their responsiblity and relationship to the people with whom they work. We often overlook the passions, talents, and hopes of people as we try to mold them into "efficient" and "productive" workers.

Yet, sometimes I forget its real meaning. The following video from this year's TED conference is a vivid reminder of what it really means to unleash people's potential. I'm including the introductory note from Chris Anderson, TED founder, which provides some context.

We've just released one of the most powerful performances in TED's history. It happened 13 days ago at TED2009 with a surprise satellite link to Caracas and a youth orchestra led by the international phenomenon Gustavo Dudamel. He and the young members of the orchestra, many born into poverty, had had their lives transformed by a national music teaching program built by TED Prize Winner Jose Antonio Abreu.

If you give yourself one TED treat this month, make it this one. Please block out 20 minutes, hook up your computer to the best speakers you own, crank the volume and enjoy orchestral music as you've never seen or heard it before. <--this is the link

More background here.
Chris Anderson & the TED Team

Outcomes versus activity

Which of the following goals reflect business outcomes?

· Reduce procurement costs
· Standardize customer service processes
· Implement an enterprise-wide financial system
· Increase manager attendance/throughput in leadership development program
· Increase the use of preferred vendors
· Decrease SG&A expenses
· Increase customer service calls taken per hour

Only the first and sixth are true business outcomes. Did that surprise you? The rest are activities – all done in service of an outcome, but not outcomes themselves.

In everyday use, an outcome (or result) is something that is completed – the culmination of an action. If I am in charge of a wide-scale system implementation. The “outcome” is a new system. This is a legitimate interpretation. But I’m not sure that is what leaders mean when they say “business outcome”.

Leaders don’t just want stuff done. They want stuff done that impacts their business in a positive way. A new system is neutral - it can create a result but it might not. The real result is what happens in the organization because of the new system. For example, if the system was intended to automate certain processes and reduce administrative costs, yet those costs don’t go down, then it hasn’t made a difference (assuming that nothing else changed either). If the costs do decrease, then there is a change. It’s the change in cost that is the result - not the system. Leaders care about the savings, not necessarily, how you get there. Their goal isn’t to have a system, it is to have lower costs. That's when they starting counting value.

In the fast-paced business world, people who “drive results” get recognized. It is generally faster (and more visible) to complete an activity than it is to see the change to the business. Therefore, the activity often takes center stage. In the short term, creating a lot of activity might generate rewards. Over time, however, it will lose its luster. At some point you’ll be asked to show the value of all of that activity.

The problem
Switching from an activity focus to an outcome focus is more than just a mindset change (although that is an important first step). Activities can be accomplished discretely, outcomes cannot. So if you are signing up to an outcome, you’ll probably need to involve more people, more streams of work, and more effort. Similarly, signing up for an outcome also creates greater and more visible accountability. It’s one things to promise a redesigned process or new set of policies. It’s quite a different thing to commit to making customers happier or reducing operating costs. Yet, although its more work, signing up to deliver a true business result will make you, and your organization more succesful overall.

A common pushback I hear is that major initiatives can span multiple years. Therefore, if you are only taking credit for the “outcome” you won’t have anything to show while you are working. I encourage leaders to plan their two to three year stream of value and outcomes. Therefore, while you are working on a new program this year, you are delivering the results from the program that you completed last year. That way, you always have work in progress and true outcomes being delivered.

Leaders are under increasing pressure to deliver results. It’s time to change the way we think about what those results look like. A lot of activity doesn’t necessarily equate to a better organization. Getting things done only matters if those things make a difference.

Innovation: Don’t let the shininess fool you

The following are four quotes about technologies that were predicted to revolutionize learning. Try to guess what each is referring* to and when it was said:

a) …will revolutionize education…can motivate students, guide and sharpen their reading by providing background and demonstrations, encourage responsibility for independent learning, arouse curiosity and develop new insights and the excitement of discovery. A school where these are in use may find itself bursting out of old patterns.

b) To bring the world to the classroom, to make universally available the services of the finest teachers, the inspiration of the greatest leaders...and unfolding world events.”

c) Is destined to revolutionize our educational system and that in a few years it will supplant largely, if not entirely, the use of textbooks.

d) The inventor or introducer of the system deserves to be ranked among the best contributors to learning and science, if not among the greatest benefactors of mankind (sic).

While nearly all of these things have had impact on the world, few delivered on their promise for education. Why not?

The models of education didn’t change to reflect the abilities of the technology. Instead of focusing on how the major problems in education, the people making these quotes were focused on the technology. Not surprisingly, similar quotes have been made for computer-based training, web-based training, blogging, Second-life, Facebook and Twitter.

Many organizations with which I've worked have bought into the hype associated with these technologies (or their own versions of them) to manage learning, knowledge management, or talent management. They are then often surprised when people don't use them inside the company like the do in their personal lives. But there is a simple reason for this. People may try out a new technology because it's "cool" but they won't keep using it unless it solves their problems. For example, people use blogs, Twitter, or Facebook because they want to communicate their thoughts, lives, ideas to a wider audience but have been unable to using other means. However, while a person might want to share the minute by minute details of his or her life or his or her message about saving the planet, he or she might not have that same passion when it comes to work-related information. If your organization does not have a pent up demand from people who are dying to share information but can't, then even the coolest social networking tool is going to mostly go unused. It's not about the technology, it's about the problems that the technology can solve.

That’s not to say that the current Web 2.0 tools won't have an impact on learning or corporate knowledge sharing. If they do, however, it will because there was also an innovation elsewhere that made the new technology essential.

Often new technologies are simply used as substitutions for old technologies. A colleague of mine, Rheinhart Ziegler, once referred to this as putting old wine into new bottles. Early television shows would have people sitting still talking to each other as they did on the radio. Once people started thinking about how they could leverage the visual aspects of television, things began to change.

We often get distracted by the newness of a technology and lose sight of the real problems that their business faces. If you want to create innovative solutions, focus on the problems and constraints facing your business. Finding ways to overcome those will produce innovative solutions. Sometimes that will require cool new technology. Sometimes not. Use technology to support your goals but don’t get distracted by it or its promise. The real promise comes from what’s inside.

* a) television-1962 b) radio-1917 c) motion pictures-1922 d) chalk board-1841