Why does the world of business persist in trying to make concepts work after they’ve repeatedly failed?
As pointed out last week, this seems to be a pattern. Whether the repeatedly failed idea is incentive pay, recruiting, performance appraisals, outsourcing, or waterfall software development, plausibility appears to trump the evidence, over and over again.
We need to know why. Otherwise we’ll just do it all over again with the next idea. There isn’t just one reason the world of business throws lots of good money after bad, either — there are quite a few. To get you started:
The Edison Ratio
Last week’s column mentioned this: One reason businesses persist in trying to make failed concepts work is that they should. As Edison pointed out, genius is one percent inspiration and ninety-nine percent perspiration, so the odds that failures are the result of flawed execution are high.
Also, few ideas are either purely good or purely bad, and in fact, you’d do yourself a service by eliminating “good” and “bad” from your business vocabulary altogether. Some ideas are better than others; that’s about all you can say about such things. It’s a very rare idea that’s so good it will survive hapless execution. Almost as rare are ideas so bad that they’re doomed to fail even when executed with immense skill.
The close but no stogie syndrome
The first automobiles weren’t practical forms of transportation — they were for hobbyists and tinkerers, but were in all respects inferior to the horse when you wanted to get around, even when the driver had paved roads available.
The first personal computers weren’t useful for very much, either — they were also for hobbyists and tinkerers. They needed lots of improvements before they were ready for prime time.
The take-home lesson: Many ideas that fail can, with the right refinements, become spectacular successes.
It worked once, in limited circumstances
“What do you mean, incentive pay has never worked? Companies have paid commissions since time began, and it seems to motivate the sales force pretty well.”
Yup. Commissions do motivate sales representatives — so much so that the profession has gained something of an unsavory reputation for doing anything … anything … to close a deal.
Commissions work to motivate sales professionals so long as all that matters is making a sale. As companies start to care about customer retention and long-term customer relationships, commission structures either become more complex or start to actively interfere with the company’s strategic goals.
Lots of ideas work in specific circumstances. Mathematicians haven’t invented numbers small enough to describe how many work in all circumstances. Which is why very often, the right answer isn’t to either stay with an idea or to give it up. It’s to figure out where it fits and where it doesn’t.
Flock mentality
Ever hear a flock of parrots wake up in the jungle? The way it works is that one wakes up and squawks. That wakes up some more parrots, who repeat the squawk, waking up others until they’re all squawking.
That doesn’t make the original squawk a blinding insight that must be true. You’re just hearing a bunch of parrots, repeating what each other are saying.
Sometimes, in business, all that’s happened is that someone said (or wrote) something with a lot of confidence — enough so that someone else decided to repeat it. Pretty soon, enough companies are outsourcing IT to India and manufacturing to China (with whoever is promoting the idea publishing lots of books and articles explaining how great it’s going to be) that all the rest figure they’re missing the boat and start making their own plans, too.
This is especially likely when the idea being promoted creates a pleasing narrative — a story that reinforces a decision-maker’s biases.
IT outsourcing, for example, fits right into a commonplace executive bias that IT is a pain in the neck to oversee; outsource it and it becomes Someone Else’s Problem. That this doesn’t hold up to any scrutiny at all doesn’t matter, because very few people scrutinize ideas that fit into narratives that please them.
The best part of this is that when whatever-it-is doesn’t work the problem has to be with the execution. All the CEO has to do is fire someone (sorry, “hold someone accountable”) and the board of directors will be happy as can be.
Now comes the hard part: Everything you just read is about you. And me. It’s about them, too, but they don’t matter. You and I are completely vulnerable to all of the above. Which leads to this uncomfortable question:
What are you going to do about it?
While there are business people who are good at analysis and introspection, they tend to be in a small minority. Business men, like economists, are always focused on positive feedback loops which generate more and more profit. Both groups are generally at a loss when the feedback loops are negative. The ideas and their execution don’t have to be great so much as timely, but great ideas and timely execution when brought together have enormous consequences, be it the eradication of a disease such as polio, or the creation of the HTML server and browser. Unfortunately, both of those examples were initiated by scientists. The latter example was made popular by Netscape and it is likely that in the public mind, Netscape created the web browser.
I’m not sure that large businesses are great idea incubators since they are hierarchical authoritarian structures. From my experience, both government and business stifle more ideas than generate them due to either a lack of imagination or risk aversion or both by management. If businesses were truly idea enablers, there would be more research and development within business rather than a lack or it. There would be fewer subsidies given for corporate research and design in the form of tax breaks, and there would be fewer mergers and acquisitions by companies such as Oracle. One can say that start ups are idea generators, but a lot of start ups spring from academic and corporate research labs. Since the latter are in decline, that leaves academia.
I haven’t even touched on the effect of belief and ideology, but biases and prejudices affect all humans. The smart ones know they are biased though and seek other perspectives. Since the art of argument is being destroyed in this country, learning through discussion, debate, and constructive argument is becoming a lost art as is critical thinking. I don’t know what the solution is, but cutting educational budgets is not it. An ignorant workforce is not a smart, innovative, or effective workforce. While education does not confer intelligence or creativity, it does give the intelligent tools to use effectively.
I love to blame marketing, so why not again this time. Let’s face it, businesses are always trying to move onto the next big thing. In IT, you can invent a perfectly good solution that can work for years, but the IT vendors are already onto the next thing. They in turn market the heck out of it and soon gain traction. Only a few cynics question the idea. Why else would our development tools keep changing? Can anyone honestly tell me that C# is more productive than the 80s/90s 4GLs? With hardware costs being so low, is the Cloud really that big of a deal (and worth all of the risks)? Do we really need Windows 8 for a majority of business users? I’ve always said that you eventually reach a point that you have a toaster. It makes toast really well and there isn’t much innovation left. I think all of us can fall into the trap of looking for the next big thing. Nothing wrong with it, but somewhere between black and white is grey and that is where the heavy lifting and decision making need to be.
Bob:
The problem you state in your article is the ‘corporate dementia’ that has overtaken so many people in business…both young and old. Not having been trained as a businessman, but as a musician, I didn’t have the ‘education’ to be blinded. I was trained to listen…and, be creative. It helped my business and creative sense to the point where people kept asking me:”How did you think of that? How did you see that?”
I’m not minimizing education; I endorse it. But, there must be other skills taught to break us out of the Lemming tendencies these corporations are nurturing.
Tom Friedman just wrote an article a few months ago about the Dean of an Indian University. The Dean was quoted as saying (and I’m paraphrasing here):”I discourage recruiters from coming to my campus. I want our students to start their own companies…it is the only way we will catch China”
After 33 years in the Real Estate business I was ‘retired’…it was the best thing that could have happened to me. I now own my own company…Jim
Flock Mentality is alive and well in our society (Social Media), business (Out Sourcing), and government (all the above). I admit I lack the mental band-width to truly understand the complexities of our culture, our human capacity to remain ignorant, and how best to navigate the chaos; however, I refuse to be a Lemming, and I will always ask the awkward question: “Why?”
Aaaaack! Bob, Don’t stop there! I depend on your answers!
Was that a parrot squawk?
This was an interesting article. There were two reasons given in favor of holding onto ideas that aren’t working, and two reasons not to. This leaves us in the uncomfortable position of trying to figure out in a particular case whether better execution or refinement will lead us to a big winner, or whether we’re pursuing a strategy that has lost relevance or never had a sound basis to start with.
I’m very much looking forward to a future column, where Bob provides some guidelines from sorting the wheat from the chaff!
Of course, there is no one single reason why people hold on to ideas that don’t work. But the structure and culture of large organizations certainly provide several good reasons.
1. In general, getting promoted is more a function of “playing the game” well than anything else. For example, if offshoring software development is the brainstorm of the day, then offshore we go. That there is zero evidence of a valid business/ financial case in favor of offshoring is irrelevant, and those who question or oppose the idea will be gone.
2. Large organizations obviously are essential for many things, but by their nature they tend to weaken accountability. Success has many fathers, but failure is an orphan. The absence of good negative feedback loops, and the vested interest of advocates of bad ideas of dismiss, ignore or suppress negative feedback, keeps bad ideas alive.
A focus on short-term results at the expense of the longer term is part of the problem–many a bad idea (even with mediocre execution) can be made to look successful in the short run. The “best” practitioners of this are also the ones who quickly “move on to the next project,” leaving someone else to take the blame when things turn sour. Of course, the problem is always with the post-implementation execution, not the idea or its implementation itself.
That leaders focus on the short term may well be due in great part to their inability to grasp any longer term. Elliot Jaques provided an explanation of this particular aptitude in his “Requisite Organization” theory (see this article in The Economist for an overview: http://www.economist.com/node/13599026?story_id=13599026).
In short, his research pointed toward each person’s having some innate upper limit to his ability to plan and manage over increasing time spans, and that this limits the individual’s fitness for competently performing at ever higher levels of an organization.
I personally have observed time and again the results of promoting someone past that upper limit, and believe that it’s what explains the observations made in “The Peter Principle”: “In a hierarchy, every employee tends to rise to his level of incompetence.”