Minimize Negativity

Posted on May 7, 2024 by David Shedd

Negativity has been with mankind forever.  From the perspective of evolutionary psychology, we are all descendants of humans who scanned the horizon for negative (and dangerous) factors, acted to avoid these negative factors, survived, and reproduced.  In today’s world, we are less likely to be eaten by a lion, bitten by a snake, or eat poisonous berries; yet negativity persists.  Negativity becomes dysfunctional when our psychology interprets anything negative to be the same as seeing a lion in the bush sixty yards away.

Our Negative World

We focus too much on negativity.  Countless studies have shown that more than two-thirds of our self-talk is negative.  This continues when we get together in groups.  Biology professor Robert Sapolsky relates that:

Anthropologists, studying everyone from hunter-gatherers to urbanites, have found that about two thirds of everyday conversation is gossip, with the vast majority of it being negative.

The media thrives on negativity because negativity sells.  Look at a newspaper or listen to a news report and consider how many stories are negative and often blown out of proportion.  Negativity is everywhere because it makes the person being negative appear smarter.  As psychology and business professor, Teresa Amabile, writes:

“When people hear negative, critical views, they regard them as inherently more intelligent than optimistic ones; when we’re trying to seem smart to others, we tend to say critical, negative things.

The Effects of Negativity

All this negativity has a harmful effect on our individual happiness and our company morale.  The more we focus on the negative, the more pessimistic we become.  This is made worse by the negativity bias.  As Wikipedia defines it:

Negativity bias is a cognitive bias that results in adverse events having a more significant impact on our psychological state than positive events. Negativity bias occurs even when adverse events and positive events are of the same magnitude, meaning we feel negative events more intensely.

In short, as any sports fan will know, a win does not feel as good as a loss feels bad.

Minimizing the Negativity

The first order of business is to reduce our exposure to the negative. 

  • Reduce the time we spend reading or listening to negative or critical material. 
  • Have less contact with the negative people in our lives. 
  • Recognize that much of the negativity that we read and hear is designed to lure us into reading or to show us how smart the writer or speaker is.   
  • Be less negative ourselves.  As social psychologist Roy Baumeister writes:

To be a good partner…what’s crucial is avoiding the negative.  Being able to hold your tongue rather than say something nasty or spiteful will do much more for your relationship than a good word or deed.

  • Keep the negativity bias in mind and realize that the negative things we do read and hear are rarely as bad as they seem and that the negative predictions are usually just plain wrong. 

“The fact is that negative events do affect us, but they generally don’t affect us as much or for as long as we expect them to.”  Dan Gilbert (psychologist and writer)

“Similarly, we believe a lot of things because our innate negativity bias is reinforced by a constant stream of dire headlines, expert predictions of decline and doom, and vivid images of things going wrong.” Andrew McAfee (economist)

Leadership and Negativity

As leaders, our negativity affects us and our entire team.  As such, we need to be even more focused on minimizing negativity.  Some quick suggestions:

  • Be positive and be seen to be positive almost every day.  A leader’s energy and mood, whether positive or negative, is contagious. So, let’s infect our teams with positivity.
  • Compliment more:  Find someone doing something right every day and then compliment them.
  • Rarely criticize: When good employees make mistakes, they usually beat themselves up more than we would ever beat them up.  So, further criticism is just piling on.
  • Avoid “but”: All too often, we give a compliment and then temper it with “but” and then a suggestion for improvement.  In these situations, the employee forgets the compliment and focuses on the criticism.
  • Don’t dwell on the past; but focus on the future.  When a negative event occurs, we can do nothing about it except focus on how we can do better, overcome the negative event, and move our business forward.

“Learning to shift your attention away from unhelpful thoughts and emotions and recast negative events in the most productive light possible is one of the most important health [and business] habits to cultivate.”  Winifred Gallagher

Conclusion

Whether as individuals in relationships or as leaders in companies, we need to accentuate the positive and minimize the negative.  Martin Seligman, the father of positive psychology, summarizes the research on positivity and negativity:

Companies and relationships that are above a 2.9:1 ratio for positive statements and comments to negative statements and comments are flourishing.  Below that ratio (the Losada ratio), companies and relationships are not doing well.

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Keep Eyes on the Business

Posted on April 4, 2024 by David Shedd

100 years ago, Henry Ford said:

“The competitor to be feared is one who never bothers about you at all but goes on making his own business better all the time.”

To be successful leaders, we need to be that competitor.  We need to keep our eyes and our focus on our business.  To be that competitor, we need to overcome all the distractions that…

  1. We ourselves create.
  2. Today’s world throws at business leaders.

Distractions We Create Ourselves

We create many distractions ourselves.  For entrepreneurial leaders, a key distraction is having too much going on, having too many business or investment interests.  Additional distractions we may take on include vanity projects designed more to boost our ego than to drive business success: building a new headquarters, writing a book, speaking at high-profile events, becoming a thought leader.

Distractions Thrown at Business Leaders

Countless organizations vie for our time, attention, and money – trade associations, customer groups, unions, charities (local and national), civic groups, boards of directors of other companies, seminars, lobbying groups.  In moderation, participating in a few of these organizations can be productive and helpful to our careers and our businesses.  In excess, they divert our focus away from our primary jobs – running a successful business.

Personal Distractions

Distraction from our personal lives may be unavoidable; but they need to be managed around.  Divorce, sickness, the illness or death of a loved one, financial difficulties, and other personal or family issues in our lives suck our energy and attention away from our business.

How to Manage These Distractions

Successful leaders guard their time and attention jealously and overcome these distractions.

  1. Limit outside activities to the essential minimum, generally participate in at most two at any one time.
  2. Ensure that there is always slack in our workload and in our lives to allow us to still manage our business well even if a personal distraction upsets our apple cart.
  3. Finally, if these distractions appeal to us more than the daily blocking and tackling of the business, then we need to hire a strong number two to run the business while we take on the role of being a Mr. or Mrs. Outside focused on these outside activities while our number two Mr. or Mrs. Inside runs our business.
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6 Simple Expressions of a Good Leader

Posted on March 7, 2024 by David Shedd

To be a good leader, we need to master and put into practice the basics.  The basics of good leadership start and end with how we communicate and interact with our teams and our customers.  I offer my list of six expressions that we all need to use on a regular basis.

  • I Don’t Know

This expression carries with it both honesty and humility.  We do not and should not have all the answers.  When we admit that we don’t know, we allow our team to also admit when they don’t have all the answers.

  • I Was Wrong

This is another expression that shows our honesty and humility.  When we admit to mistakes, we open the door to learning and improvement. 

  • I’m Sorry

Apologies are vital to strong interpersonal and customer relationships.  If we make a mistake or neglect to do something, a forthright apology (followed by improved behavior) goes a long way to making up for what we (or our team) did or did not do.

  • What Can We Do Better?

As leaders, we need to support and help our teams win.  Asking this question ensures that our teams know that we want to help and that we want to be better.  This is a forward-looking expression.  We are not trying to cast blame; we are trying to improve.

  • Great Work!

Compliments are vital to success.  Unfortunately, most employees hear criticisms far more than compliments.  As good leaders, we need to regularly compliment our teams for jobs well done.

  • Thank You

The final and most important two words for leaders.  We need to thank our teams for their great work, and we need to thank our customers for their business.  Without our teams and without our customers, we have no business.  So, regular thanks are in order.

Conclusion

We can all improve our leadership by remembering and putting into practice these six simple expressions.  Thank you.

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Hidden Potential: The Science of Achieving Greater Things

Posted on February 6, 2024 by David Shedd

In his book, Hidden Potential, Adam Grant offers insight into how we can realize our hidden potential and achieve greater things.  This advice is relevant to us, as individuals, and as leaders of teams and companies.  To give a flavor of this excellent book, I will let Adam Grant speak through his own words.

Build and Focus on Character Skills

  • The most meaningful growth is not building our careers – it’s building our character.
  • Character skills training had a dramatic impact.  They studied proactivity, discipline, and determination, and practiced putting those qualities into action.
  • When evaluating others, beware of mistaking past accomplishments and experience for future potential.  Background and talent determine where people start, but character skills shape how far they can climb.

Be a Sponge and Learn Even When It is Uncomfortable

  • Learning styles are a myth.  The way you like to learn is what makes you comfortable; but it isn’t necessarily how you learn best.  Sometimes you even learn better in the mode that makes you the most uncomfortable, because you have to work harder at it.
  • Seek out new knowledge, skills, and perspective to fuel your growth – not feed your ego.  Progress hinges on the quality of information you take in, not on the quantity of information you seek out.
  • Teach what you want to learn.  You understand it better after you explain it – and you remember it better after you take the time to recall it.

Ask for Advice, Not Feedback

  • Instead of seeking feedback, you’re better off asking for advice.  Feedback tends to focus on how well you did last time.  Advice shifts attention to how you can do better next time.  In experiments, that simple shift is enough to elicit more specific suggestions and more constructive input.  Rather than dwelling on what you did wrong, advice guides you toward what you can do right.
  • Ask, ‘What’s one thing I can do better next time?”

Strive for Excellence, Not Perfection

  • Progress comes from maintaining high standards, not eliminating every flaw.  Practice wabi sabi, the [Japanese] art of honoring beauty in imperfection, by identifying some shortcomings that you can accept.
  • Measure your progress over time, not against an opponent.  When you compete against yourself, the only way to win is to grow.

Build a Smarter Team

  • The best teams have the most team players – people who excel at collaborating with others.
  • A single bad apple can spoil the barrel: even when one individual fails to act pro-socially; it’s enough to make a team dumb and dumber.
  • Collective intelligence is best served by a different kind of leader.  The people to promote are the ones with the pro-social skills to put the mission above their ego – and team cohesion above personal glory.  They know that the goal isn’t to be the smartest person in the room; it’s to make the entire room smarter.

To Build an Even Smarter Team, ‘Brainwrite’

  • Instead of brainstorming, we’re better off shifting to a process called brainwriting.  The initial steps are solo.  You start by asking everyone to generate ideas separately.  Next, you pool them and share them anonymously among the group.  To preserve independent judgment, each member evaluates them on their own.  Only then does the team come together to select and refine the most promising options.
  • Brainwriting increases collective intelligence through balanced participation.  In brainstorming meetings, it’s too easy for participation to become lopsided in favor of the biggest egos, the loudest voices, and the most powerful people.  The brainwriting process makes sure that all ideas are brought to the table and all voices brought into the conversation.

Redefine Success

  • Success is more than reaching our goals – it’s living our values.  There’s no higher value than aspiring to be better tomorrow than we are today.  There’s no greater accomplishment than unleashing our hidden potential.
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What’s Our Zero to Sixty?

Posted on January 3, 2024 by David Shedd

Late one afternoon, a major plumbing leak sprang up in a building we were helping to build.  Our field team sprang into immediate action, mobilized a large crew of workers, worked overtime, and repaired the damage caused by the water leak.  In the end, the immediate action saved the customer more than $4M and helped ensure that the building was completed on time.

In business, crises occur, often (as above) through no fault of ours.  To respond, we need to instantly get up to speed, marshal the resources, and resolve the crisis.  Successful, rapid responses tie us in even closer with our customers, making us trusted partners.

In a previous job, our continued rapid responses for a telecommunications company led to us being put on retainer as a dedicated hurricane response team for this customer.  This business was profitable and led to an increased market share in our core infrastructure products business for this customer.

How to Improve Our Zero to Sixty?

To be able to rapidly respond, our companies need:

  • A customer service mentality focused on helping and supporting the customer in any way possible.
  • An unbureaucratic culture of making it happen and getting it done, which often leads to asking for forgiveness instead of asking for permission.
  • Rapid response protocols and training to ensure we respond in the best way possible for ourselves and our customers.
  • Empowered front line leaders who can make immediate decisions to respond to a crisis.
  • Dedicated, loyal employees who will sacrifice their time (often their weekends) to get the job done.
  • Clear lines of upward communication to ensure that upper management is in the loop and can put in place the appropriate guardrails on the response to ensure that the company is protected.
  • Upper management that supports the front-line leaders and that will reward fairly the workers who do the extra work.
  • Good processes in place so that the crises that occur are rare and do not become the default way of doing business.

Conclusion

The benefits of having a Ferrari-like zero to sixty go beyond crises and rapid response situations.  It leads to an empowered, more responsive, and faster organization that can get more done and serve its customers better. 

Lieutenant Colonel Anthony Burgess at West Point describes how the ability to respond rapidly makes a U.S. Army unit the best that it can be:

The successful unit – the one best able to accomplish its objective – consists of soldiers who not only have a broad range of skills but know how to learn quickly and respond creatively.  Each soldier takes the initiative, every soldier collaborates.  While the soldiers will of course obey orders that come down from the hierarchy, the group as a whole has to have the characteristics that enable it to succeed in an environment that changes faster than the hierarchy can respond.

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Complexity and Problem Solving

Posted on December 6, 2023 by David Shedd

I recently listened to a course titled Understanding Complexity.  A key takeaway from the course is that the tools we use for regular problem solving do not fully work with complex problems. 

In regular problem solving, we determine the root cause of the problem, consider the best solution by determining which solution will give the highest expected value, we then implement that solution, and solve the problem once and for all.  Nice, neat and tidy.

This does not and cannot work with complex problems.

What is Different About a Complex Problem?

We encounter complex problems in economics, politics, business, project management, social networks, ecologies, even in understanding our biology.  In each of these situations, there is never one root cause to the problem, and it may not even be possible to determine the relative importance of multiple root causes.  Further, the problem involves actors or events that are connected, interdependent, and make their own decisions.  So, any action will change the actions or events and change the nature of the problem – a complex problem keeps evolving.  In the course, they called it ‘dancing landscapes’ that change constantly.

How to Approach Complex Problems?

Despite the challenges of complexity, we still need to move our countries, our businesses, and our lives forward.  Below I provide suggestions on how we can approach complex problems.

Be Humble:  We need to be humble about what we can do.  We are not going to find the answer to a complex problem.  Certainly, we need to realize that any simple answer is nearly certainly going to be wrong.  As the American Political Economist Charles Lindblom wrote (back in 1959):

A wise policy maker consequently expects that his policies will achieve only part of what he hopes and at the same time will produce unintended consequences he would have preferred to avoid.

Be Confident: We need to be confident that we can and will move forward even without ‘solving’ the root cause.  We can make the problem less onerous or easier to avoid.  Or we can make the problem easier to deal with.

While we may never be able to fully solve society’s big problems such as inequality or racism, we can make great progress by treating the symptoms and negative effects that these problems create.

Think Small: Big solutions are almost always incorrect solutions leading inevitably to unintended consequences.  Even if correct, big solutions may be impossible to implement – great in theory; but falling short in practice.  In discussing the excellent work done to improve aviation safety, United Airlines Executive Ed Halliday wrote:

Everybody was looking for the home run that solved all of the accidents.  The more we got down to it, the things that had the biggest impact were base hits.

Simplify: A first step should be to simplify the current conditions.  This will often mean looking at current laws, policies and practices and adjusting or deleting them to make a complex situation just that bit simpler.  As my old boss, Jim Schack, would say:

Sometimes, it is not what you add to a situation or problem, but what you take away that makes a difference.

Focus Intently on the Objectives and Incentives of Those Involved:  As written above, what makes complex problems complex is that there are actors involved who make their own decisions.  We can never take these actors for granted and need to focus on the decisions that they make and why they make these decisions.

Most government laws, tax breaks, and regulations fail on this point.  They are obscure, difficult to understand, and vague so the intended beneficiaries do not begin to take advantage of them while others with the financial and legal training use the vagueness to create a loophole to capitalize on something that was not intended for them.

Gradual and Incremental: The concepts of continuous improvement are fundamental to addressing complex problems.  We focus on a small, definable element of the problem, resolve that element, and then focus on the next element.  With these series of incremental changes, we avoid making lasting mistakes and continue to move the needle forward.

Let Good Enough Be Good Enough:  As we implement continual improvements, we reach a point of diminishing marginal benefit – it is no longer worth the time, money, and effort to keep improving.  That is O.K.  We just need to focus on another higher leverage issue.  Letting good enough be good enough avoids the striving for maximal efficiency.  With maximal efficiency, we often create a system that is too rigid and fragile and in danger of breaking. 

Countless manufacturing companies experienced this issue during Covid-19 with their just-in-time supply chains that were too optimal.  They thus did not have buffers and slack in their system and came apart due to the initial disruptions from Covid.

Conclusion

Complex problems are fundamentally different from simple problems.  While we may never discover and solve the root cause of the problem, we can use the approaches listed here to move forward and improve our nations, our businesses, and our lives despite these complex problems.

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Build a Great (and Good) Company

Posted on November 1, 2023 by David Shedd

“Power tends to corrupt and absolute power corrupts absolutely.  Great men are almost always bad men.”  Lord Acton

This well-known quote from the 1800’s rings true.  As countless observers continue to remark, great historical leaders (in business, politics, and the arts) are rarely good individuals.  In pursuing their ambition to exercise their power, achieve, and be great, these leaders leave behind a trail of unfilled promises, broken relationships, unhappy families….

What works for leaders often works for companies as well. 

In his 2001 book, Good to Great, Jim Collins defines great companies solely by their ability to achieve consistent and long-term outstanding results year after year.  But let’s think about one company on that list of “great companies”: Philip Morris, the cigarette manufacturer.  Would anyone argue that they are a good and ethical company?

To be truly great, the companies that we build need to combine outstanding long-term financial performance with being good and doing good.  A great and good company is ethical, contributes to society, treats their employees well, delights their customers, and achieves consistent outstanding results year after year.

In short, as leaders we need to build great and good companies. 

  1. Focus on some product or service that contributes to society.
  2. Have a purpose for the company that is about more than just making money.
  3. Hire for more than capability and ambition; hire for character.
  4. Treat our good employees well and value them.
  5. Satisfy customers and treat them well; do not screw them over or confuse them.
  6. Play by the rules of society and follow the spirit and the letter of the law.

Unfortunately, too many companies today fail on at least one of these six measures.  Right off the top, we can think of:

  1. Hospitals, pharmaceutical companies, and health care companies that contribute to society, but screw over those least able to afford them – the uninsured.
  2. Private Equity companies and technology companies, and countless others who manipulate the law and the tax code to pay far less than their fair share.
  3. Hotels, rental car companies, banks, restaurants and other companies with hidden fees and surcharges that confuse and take advantage of customers.

For truly long term success great and good companies will prevail.

As an aside, of the 11 companies in Good to Great (Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, Wells Fargo), only three – Abbott, Nucor, and Kroger – have avoided a major scandal and continue to out-perform in the approximately 20 years since the book was published in 2001. 

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Creeping Complexity

Posted on October 4, 2023 by David Shedd

Anthropologist Joseph Tainter writes, “Complexity creeps up on you.”  Today, complexity has been creeping up and overwhelming us.  Within our companies and in our personal lives, we need to fight hard against this complexity to enable us to realize our goals.  As Schumpeter writes in The Economist:

“The biggest threat to business almost always comes from too much complexity rather than too much simplicity.”

The Danger of Complexity

Much of the complexity in today’s world is needless.  This complexity taxes us mentally, diverting our mental capacity away from other, more important areas.  Complexity also allows others, who understand the complexity, to take advantage of us.  An excellent example of both these trends is medical billing.  Who does not get exhausted trying to understand medical bills with initial over-charging, insurance, deductibles, and co-payments? When it gets too complex and confusing, we often just pay the bill even when it might not be correct.

All this complexity creates stress and anxiety, as we deal with something we don’t understand and feel ourselves being taken advantage of.

Why Is Everything So Complex?

Complexity exists for several reasons:

  • Negotiations and Compromises: This is why government regulations, laws, taxes, and business contracts are far more complex than they need to be.
  • The “Just One More” Factor:  I have often discussed the need to start out simple with the caveat that “we can always make it more complex later.”  While good advice, the initial, simple idea or product gets more and more complex as we keep adding more to it.
  • Lack of Re-design and Re-consideration: As Steve Jobs wrote, “When you first start off trying to solve a problem, the first solutions you come up with are very complex, and most people stop there.  But if you keep going and live with the problem and peel more layers of the onion off, you can oftentimes arrive at some elegant and simple solution.”
  • Incentive: Consultants, law firms, accountants, and lobbyists create and thrive on complexity to fuel their business and make us need the services they are providing.  As Jonah Goldberg writes, “The upper class in this country is making the rules of the game more complex.  And the problem can be simply stated: Complexity is a subsidy.  The more complex government makes society, the more it rewards those with the resources to deal with that complexity, and the more it punishes those who do not.”
  • Business Education / Training: As Warren Buffett writes, “Business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”
  • Our Expertise: “Familiarity with a particular area or domain leads to a particular kind of myopia that diminishes the ability to see creeping complexity.”  Alan Siegel
  • Profitable: Complexity, as in the medical billing example, is profitable.  It allows companies to confuse customers and charge them more with incorrect or hidden pricing, add-ons, and additional services than they would in a simple world.

What Can We Do?

In a perfect world, we would be able to simplify regulations, laws, taxes, and business contracts.  Unfortunately, we cannot control the government and there are too many people leeching off complexity to see much change anytime soon.

But we can focus on our business and ourselves and work to keep them as simple as possible.

  • Focus on keeping things short and simple (even if not perfect).  Most concepts and actions in business do not need to be perfect; they just need to be good enough.  So, aim for the simpler and good enough solution. 
  • Put ourselves in our customers’ shoes and try to make it as easy as possible for them to do business with us.  Two good examples of being simple and easy to do business with are Southwest Airlines and Amazon.
  • Avoid the “just one more” problem.  As we start out with something simple and begin adding to it, we need to have the courage to subtract less important features or arguments as we add other features or arguments, ideally one for one – eliminate one feature for every one feature added.
  • Simplify our product and service offerings.  In a 2006 study from Bain, “Reducing complexity and narrowing choices can boost revenues in companies by 5% – 40% and cut costs by 10% – 35%.”
  • Eliminate all low value-added work and activities, especially focusing on eliminating work, reports, or activity that we may need ‘just in case’… as opposed to work, reports or activity that we use regularly in our lives and businesses.

Conclusion

“Any intelligent fool can make things bigger, more complex, and more violent.  It takes a touch of genius — and a lot of courage—to move in the opposite direction.”  E. F. Schumacher

In the end, the simpler that we make our businesses and our lives, the better, more profitable, and happier we make ourselves, our employees, and our customers.

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Upward Communication Makes Us All Better

Posted on September 5, 2023 by David Shedd

In a previous blog, Communicate Upward, I discussed the need for upward communication and how to communicate upward.

In this blog, I discuss upward communication and how it improves our employees’ understanding and capabilities.

Upward Communication

Good upward communication needs to happen regularly (either daily or weekly depending on the capability of the employee) and it consists of a concise summary of the activities for the time period including:

  • The progress of the work since the last communication
  • The challenges encountered and overcome
  • The current issues and challenges
  • Upcoming challenges
  • Need for additional tools, resources, and people to complete the work

For both the employee and the supervisor such a regular summary is vital.

For the Employee

  • Requires the employee to step back and consider the issues, challenges, and progress – to see the forest for the trees.
  • The act of speaking or writing out such a summary helps the employee understand the issues even better.  “We learn when we speak; we learn when we write.”
  • Allows the employee to demonstrate their capability by discussing the challenges encountered and overcome.
  • Prevents the employee from becoming buried by forcing them to request assistance as needed.
  • Strengthens the employee’s ability to predict future issues and challenges; an essential skill as an employee moves up in an organization.

For the Supervisor

  • Gives a succinct summary of activity and progress; saving time and reducing the number of check-ins with employees.
  • Shows the employee’s understanding of their work and the situation.
  • Shows the gaps in the employee’s understanding when an important issue or concern is not addressed.
  • Enables the supervisor to assess their level of supervision – should they widen or narrow their guardrails on the employee?
  • Allows for course correction and coaching and praise as the employee details their activity and progress.
  • Gives the employee a feeling of greater autonomy and control, developing them into stronger, more independent, and capable employees.

Conclusion

We all need to encourage our employees to communicate upward regularly; it helps the employee; it helps the supervisor; it helps the company.

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Reject Equality… Embrace Fairness

Posted on August 2, 2023 by David Shedd

In a previous blog, I wrote about Ideological Necrophilia, the continued love of ideas that have been tried repeatedly and proved (again and again) not to work.  One failed idea that I wrote about is that we need to treat everyone equally. 

In this blog, I want to flush out the mistake of treating everyone equally.

This idea of treating people equally comes in three separate areas:

  • Managing people equally
  • Applying rules and procedures equally across the company
  • Paying people equally based on job position

Each one of these ideas has failed and will continue to fail – from a leadership perspective, for the benefit of the company, and in terms of fairness.

Managing People Equally:  The saying goes that we should manage everyone by the Golden Rule.

Manage People as You Yourself Would Want to Be Managed

This idea does a disservice to us as managers and to the people who work for us.  We need to realize that we are not managing ourselves, we are managing other people who have different capabilities, personalities, and goals.  Taking that into consideration, we need to manage each of our direct reports by the Platinum Rule:

Manage Your People as They Need to Be Managed

Applying Rules and Procedures Equally Across the Company: Yes, we want to be reasonably consistent and fair in applying company rules and procedures. But we cannot be ironclad.  We need to make exceptions for different people’s situations and capabilities.  The relevant example in today’s age is work from home.  Certain individuals may be allowed to work from home, while others cannot.  Much of this depends upon the performance of the person and their capability to be productive working from home. Work from home is a privilege that needs to be earned every day.

Paying People Equally Based on Job Position:  Equality in pay is a nice sentiment that fails every test of fairness and business sense.  We need to pay people (without discriminating based on race, sex, religion, etc.) based on their performance level and their contribution to the company.  Two people in the same role may need to be paid significantly differently.  Equality in pay leads to poor performers being overpaid and top performers being underpaid.  Over the long term, the poor performers will stay, and the top performers will leave, significantly hurting the business.

Conclusion

We cannot manage our business based on equality.  Instead, we should focus on being fair.  People are different and should be treated differently in how they are managed and how they are paid. Life may not be fair.  But our business should be.

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Team Building

Posted on July 5, 2023 by David Shedd

Winning teamwork is fundamental to the success of any organization.  Winning teamwork requires trust, openness, communication, and respect among the members of the team. The purpose of a team building event is to deepen the bonds within the team and increase this trust, openness, communication, and respect.

Some recommendations on how to have a successful team building event:

Do It Regularly … Do It Rarely:  Determine the appropriate interval for team building events – every six months, once a year, once every two years.  The appropriate interval is not too long that the team grows apart and not too short that the event becomes yet another series of meetings.

Get Away from the Office: It is crucial to get everyone out of the normal business element and interact as people in a different environment.  The informal discussions when the team is out of the office at dinner or doing an activity are usually the most valuable part of the team building event.

Keep It Modest… Keep It Short… Keep It Fun: As for outside the office activities, dinners are the easiest to plan.  Going to a sporting event, especially if the budget allows you to get a suite, is great fun if everyone likes sports.  I prefer something that is more active: go kart racing, canoeing, hiking, off road riding, a treasure hunt.  It is best if the activity part is kept short (at most 3 – 4 hours), so those who don’t like it can suffer through.  It is best if the whole team building event is also short – one or two nights at most.

Get Some Work Done: Building on the fun activity, there should be some meetings and some work accomplished.  The purpose of this part of the team building event is to enhance relationships in a business setting with everyone more relaxed from the activity.

Boy Girl Seating: During the events, the dinners, and the meetings, assign positions or seats to allow for interaction between people who do not always interact.  In this way, people will be forced to interact outside their normal work group.

Show and Tell: In encouraging sharing of ideas and lessons learned, have a Show and Tell session where each person or group brags about some progress or advance that they have made.  Framing this session as a Show and Tell with the objective of both learning and reminding helps reduce any clash of egos and gets everyone thinking about what they can share to improve the team and the business.

Conclusion

As regular readers of my blogs know, I encourage fewer and shorter meetings.  However, rare, regular, and well thought out team building events are vital in building a winning team and a successful business.

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The Team is More Important than the Individual

Posted on June 6, 2023 by David Shedd

At the height of the Great Recession, the CEO was focusing the company on production efficiencies to reduce costs.  One regional president, by contrast, was driving forward to grow sales.  This president’s region outperformed all the other regions.  But the regional president had not focused on production efficiencies and all the other initiatives of the CEO.  At yearend, this regional president was rightly fired.

I was this Regional President.  I was convinced that my approach was the right approach to navigate through the Great Recession.  I may have been right about that.  I may have been wrong about that.  But I was not in line with the direction the company was taking.   Embarrassingly, it took me several years to understand why I was let go.  With over 10 more years of experience and a bit more humility, it is now obvious to me why I had to be fired:

The Team is More Important Than the Individual

To have a successful team, everyone needs to be rowing in the same direction and focused on the same goals.  One maverick, no matter how talented or successful, disrupts the progress of the team.  In fact, the more successful the maverick, the more they need to either be re-aligned or let go so that they do not become examples to others on the team.

As leaders, we need to constantly assess our people to ensure that they align with the mission, the values, and the direction of the company.  This is especially important with our senior leaders.  If they are not aligned, it is a near certainty that the teams working for them are not aligned.  Dysfunction and under-achievement will follow.

Three weeks ago, we had a talented superintendent on a project whose team was performing well in terms of safety, quality, and efficiency.  But he did not follow our company values and do what was asked of him, even after being spoken to on several occasions. It was an easy decision to fire that superintendent and promote someone into that position who aligned with our mission and values.

I guess I have learned something after all these years.

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Ideological Necrophilia

Posted on May 2, 2023 by David Shedd

“Ideological necrophilia – a love of ideas that have been tried and proved not to work.” Moises Naim (Venezuelan writer and journalist)

In the political world, we see ideological necrophilia in a continued love of Marxism and communism by the left and tax incentives and enterprise zones as a way to help the poor on the right.  Both ideas have been tried repeatedly and, despite their continued popularity, have never worked.

In business, we see such necrophilia in ideas and concepts that are quite popular but have failed again and again and again.  Below, I have put together a few strong candidates for ideological necrophilia in business:

  • A good talker will make a good salesperson.  Yes, salespeople need to be outgoing and unafraid of rejection.  However, salespeople that are good talkers usually can never shut up and annoy and/or bore their customers.  A better idea: a good listener will make a good salesperson.
  • We need to grow now, and the profits will come later.  This has been the cry of countless fast-growing companies.  Still, this idea nearly always fails.  Yes, Amazon is making profits after years of growth and losses.  But, our owners, Boards of Directors, and bankers are unlikely to have the patience to wait the 6 years it took Amazon to make a yearly profit.
  • More is better. More features, more choice, more complexity, more people.  In nearly all cases, more makes things more difficult, more confusing, and harder to manage.  The better adage is as my previous boss used to say, “it is not what you add to a situation that makes a difference; it is what you take away.”  Less is more.
  • We need to treat everyone equally.  This seductive idea of equality sounds great.  But it damages organizations.  Top performers leave; poor performers stay – the opposite of what we want for our companies.  We need to treat everyone fairly; not equally.
  • My top performers don’t need to be managed.  We all need to be managed and coached, top performer or not.  Without management or oversight, top performers can often go outside their guardrails and inflict damages on companies.  Without being mentored or coached, top performers will stagnate and will not develop and improve their skills and performance.  While we may manage our top performers with a lighter touch, we still need to manage and coach them.
  • It is not the situation; it is the person. Whether it is a performance issue or an ethical issue, we often attribute the thoughts and actions to the individual.  Years of social psychology research prove that, while the person matters, the situation that person is put in matters equally.  A top performer put into a no-win situation will under-perform; a highly ethical person put into an undefined and ethically vague situation may push the ethical boundaries. In short, we need to ensure that we create a culture and situations that allow average and excellent performers to succeed ethically.

So What?

The point of highlighting these candidates for ideological necrophilia is for us, as leaders, to recognize these seductive, yet mistaken ideas and realize that they will fail no matter what we do. So, let’s avoid them.

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Be Kind

Posted on April 5, 2023 by David Shedd

One of our team asked their supervisor (a valued senior manager in our company) whether the supervisor had read an E-Mail that was sent.  In front of a group of ten people, the supervisor responded: “I have seen that you sent me an E-Mail; I have not read the E-Mail.  I have a lot of priorities and your E-Mail is not my top priority.  I will get back to you when your E-Mail gets to the top of my priority list…”

Time for a little coaching with this supervisor. Despite what we often see on television, leaders should never be this inconsiderate.  As leaders, we need to always be kind.

Why Do We Always Need to Be Kind:

  • The power of our position: as leaders in a hierarchy, we have control over the lives and well-being of our employees.  Hence, everything that we say or do, good or bad, is magnified in the eyes of our employees.
  • The overwhelming power of negativity: In countless social psychology studies, it has been shown that one negative comment has 4 – 5 times the power of a positive comment.  Thus, we should be especially careful about negative or unkind comments.
  • There is never a time to be unkind.  Firm discussions and discipline should be focused on improving the employee and always need to be done with empathy, kindness and consideration.

“Be kind whenever possible.  It is always possible.”  Dalai Lama

Some Ways to Ensure That We Are Always Kind:

  • Realize that we are blessed: As leaders we are in an advantageous position, usually well-paid and doing a job that we enjoy. In short, we should be grateful for what we have.  If we still cannot be kind and considerate in such a situation, then we may not have the moral stock to be a leader.
  • Consider that our employees are usually facing their own challenges and difficulties.  They certainly do not need another unkind comment or action from their boss.  As Plato is reported to have said:

“Be kind, for everyone you meet is fighting a hard battle.”

  • Keep our egos in check. Wayne Dyer puts it well:

“In the battle to be right or kind, choose kind; it’s closer to your values and the values of others.”

  • Remember to take a moment to respond, especially when upset or angry.  As leaders and people, we should never instinctively react.  A measured response is far better than a quick-trigger reaction.
  • Take care of ourselves and our families:  It is easier to be kind to others when we are healthy and doing well in our own personal lives.  Even when we don’t feel great, however, we need to have on our leadership game face and be positive and kind.
  • Realize the advantages of kindness.  Being kind makes us happier and builds winning teamwork.

“Doing a kindness produces the single most reliable momentary increase in well-being of any exercise we have tested.”  Martin Seligman (Positive Psychologist)

Conclusion

“It is rather embarrassing to have given one’s life to pondering the human predicament and to find that in the end one has little more to say than: ‘Try to be a little kinder.’” Aldous Huxley (British Author of Brave New World)

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Skin in the Game

Posted on March 7, 2023 by David Shedd

In a previous job, I had around 100 salespeople who reported either directly or indirectly to me.  As a group, they were strong in sales.  But they lagged in paperwork, especially sales reporting and expense reports, and in doing any kind of mathematical cost-benefit analysis for their customers. However, when it came to their commissions (we had a complex commission program), they were mathematical geniuses knowing the effect of what each sale would mean for their commissions.

This anecdote illustrates well the importance of having “skin in the game.”  When these salespeople had skin in the game – their commissions – they understood everything.  Having skin in the game focuses our mind and attention to the matter and significantly improves understanding, accountability, and performance.

As leaders, we need to ensure that we have ‘skin in the game’ especially regarding any rules, policies and procedures that we may introduce in our company.  We need to be equally accountable and responsible for following our own policies and procedures.  What is good for our team needs to be equally good for us.  Similarly, if we ask someone in our company to take a risk, we need to take a risk right along with him or her.

Nassim Taleb is the author of the book, Skin in the Game.  The main idea of the book is that too many business and political leaders make laws and procedures where they do not have skin in the game.  There is no accountability and the leaders do not need to follow their own rules.  This leads to unfair and overly complex laws and procedures.  A few examples in business that I have seen:

  • Complex expense tracking and reporting systems that the top executives don’t need to follow because their administrative assistants do it for them.
  • Overly complex policies that people in the organization are required to follow, but not the leaders.

“Things designed by people without skin in the game tend to grow in complication (before their final collapse).”  Nassim Taleb

  • Risky initiatives assigned to a young leader that can make or break his or her career where the boss has no risk and will suffer no ill effects if the initiative fails.
  • Advice from a financial advisor to invest in something her or she is not invested in him or herself.
  • Reports from consultants who are paid for the reports not for the success or failure of their recommendations.
  • Unequal pay structures where top management are insulated from performance risk due to the size of their base salaries.

When leaders do not have skin in the game, they do not understand the challenges and struggles of their team, they make things more difficult for their team, they are respected less, and their companies underperform.

The final thought goes to Nassim Taleb.

“Never trust anyone who doesn’t have skin in the game.”

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6 Simple Expressions of a Good Leader

Posted on March 1, 2023 by David Shedd

To be a good leader, we need to master and put into practice the basics.  The basics of good leadership start and end with how we communicate and interact with our teams and our customers.  I offer my list of six expressions that we all need to use on a regular basis.

  1. I Don’t Know
    1. This expression carries with it both honesty and humility.  We do not and should not have all the answers.  When we admit that we don’t know, we allow our team to also admit when they don’t have all the answers.
  2. I Was Wrong
    1. This is another expression that shows our honesty and humility.  When we admit to mistakes, we open the door to learning and improvement. 
  3. I’m Sorry
    1. Apologies are vital to strong interpersonal and customer relationships.  If we make a mistake or neglect to do something, a forthright apology (followed by improved behavior) goes a long way to making up for what we (or our team) did or did not do.
  4. What Can We Do Better?
    1. As leaders, we need to support and help our teams win.  Asking this question ensures that our teams know that we want to help and that we want to be better.  This is a forward-looking expression.  We are not trying to cast blame; we are trying to improve.
  5. Great Work!
    1. Compliments are vital to success.  Unfortunately, most employees hear criticisms far more than compliments.  As good leaders, we need to regularly compliment our teams for jobs well done.
  6. Thank You
    1. The final and most important two words for leaders.  We need to thank our teams for their great work, and we need to thank our customers for their business.  Without our teams and without our customers, we have no business.  So, regular thanks are in order.

Conclusion

We can all improve our leadership by remembering and putting into practice these six simple expressions.  Thank you.

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The Challenge of Being Ethical

Posted on February 7, 2023 by David Shedd

“The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.” Groucho Marx

“There’s one way to find out if a man is honest – ask him. If he says, ‘Yes’, you know he is a crook.  Groucho Marx

As Groucho Marx humorously touches on, we all want to be honest and to be considered honest and ethical.  In business and in life, this can be a challenge.

Ethical Challenges and Pitfalls

Bounded Ethicality: People often act unethically without even being aware that they are being unethical.  This often happens in heat of the moment when decisions are made under stress.  We then compound the issue by justifying to our ourselves why we behaved as we behaved.  Once we have justified that to ourselves in our own minds, we do not consider the behavior to be unethical.

Blind Eyes: As Max Bazerman writes in his excellent book, Why We Fail to Do What’s Right and What to Do About It, if we are motivated to turn a blind eye to unethical behavior (we gain something from the unethical behavior) then we often will not see the behavior.

“A core finding of behavioral ethics: that people who have a vested self-interest in a situation have difficulty approaching the situation without bias, even when they view themselves as honest.”  Max Bazerman

Judging Behavior: We all too often judge behavior not by the ethicality of the decision; but by the result.  As such, a behavior that is done with unethical intentions that turns out fine will be judged far better than a behavior that is done with the best of intentions that turns out poorly.  In short, we judge others and how ethical they are by their actions.

Our Ethical Example: While we judge others by their actions, we judge ourselves by our intentions.  The leadership challenge is that we may do something with the best of intentions, but our action is perceived by others as unethical or unfair, either because the action in and of itself is judged to be unethical or (as above) the result turns out to be unethical.

The Conflict of Interest Paradox:  It has repeatedly being shown (both in social psychological experiments and in surveying real-life examples) that when individuals disclose a conflict of interest, it gives them a license to engage in further immoral behavior.  As an example, doctors who disclose conflicts of interest (being paid by companies to do research, etc.) are more likely to exaggerate or engage in biased behavior than doctors who are being paid by companies to do research, but who do not disclose this fact.

What Then Must Be Done?

For each of us to be more ethical leaders, we need to first understand these ethical pitfalls and consider them in our decision making.  A short list of actions that we can do to be more ethical leaders:

  • In preparing for a stressful situation or meeting, pre-commit to our intended ethical course of action and set limits on our behavior by sharing it with other people beforehand.
  • Realize when we have a self-interest and fight hard to not let this self-interest affect our decisions or actions.  For one example, we need to evaluate unexpected good fortune.  As it were, we need to look gift horses in the mouth.
  • As in decision making in general, we need to evaluate decisions and behaviors by the process and quality of the decision-making, not by the result.
  • We need to understand how our decisions and actions are perceived.  Most importantly, we need to explain the “why” behind our decisions and actions so that others may understand the ethical basis of our behavior even if the decision or action turns out poorly.

Finally, we need to ethic proof our companies:

  • Vet our employees.  Hire good, honest people and push to expel unethical people even when they are high performers or are performing a job that is vital to the company.
  • Do not overwhelm our companies with countless and complex rules and procedures.  Instead, have fewer, but always clear cut, policies and procedures that allow for little ambiguity in their interpretation.  Among the deadliest enemies of ethical behavior are bad policies and procedures.
  • Ensure that we emphasize that we value being ethical over just following the law.  Can we have all the decisions in our company be such that we would not be upset if the details of the decision were published on the front page of The Wall Street Journal?
  • Trust but Verify.  We still need to have the controls in place to spot unethical and illegal behavior when it first starts.  We need to oversee the behaviors of all of our employees and we need it to be known that we are overseeing their behaviors.

Best of luck to all of us to be more ethical leaders today, tomorrow and every day.

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Rough Seas Ahead?

Posted on January 4, 2023 by David Shedd

Economists, politicians, and many business leaders are predicting a recession in 2023 as the Federal Reserve continues to tighten to lower inflation and inflationary expectations.

Alas, I have no insight on whether an economic downturn will come to pass.  I do know that this is a great time to build resilience into our organization and our people that will help our businesses to withstand any downturn and profit from any upswing.

Simplify and Focus

Whether a recession is coming or not, now is the best time to simplify and focus our business on what is most important.  In good times, we all accumulate excess processes and people which create more work and more people.  It is a good time to cut through all that and to simplify.  Most importantly, we need to ask ourselves: what are we doing that we do not need to do anymore?

Tighten Up the Crew

With the excess processes and people, we have accumulated some poor performers.  The prospect of a downturn gives us the opportunity to lay off (with respect) poor performers due to “lack of work.”  This strengthens the team where good performers are probably already doing double duty to cover for and correct the mistakes of the poor performers.

Recommit to Our Good People

Along with the need to tighten up the crew, we need to re-commit to our good people continuing to provide and support them and to assure them of their strong future with our company.  In rough seas, we all want to tighten our belts and watch costs closely.  But, we still need to celebrate our good people and ensure that we keep our business as a great place to work.

Recommunicate the Vision and the Mission

To recommit to our good people, we need to get out to our team (one on one, in small groups, and in larger townhall settings) and recommunicate our vision, our mission, and our strong future together -rough seas be damned

Be Opportunistic

With a simplified and focus business and our great people, now may be the time to be opportunistic: to enter a new business or product line, to invest, to find good people from the competition, to seek out the right acquisitions.  Warren Buffet is quoted as saying:

Be fearful when everyone else is greedy and greedy when everyone else is fearful.

Likewise, we need to be opportunistic when everyone else is re-trenching.

Conclusion

With a strong vision and mission and a great crew, we will surmount any upcoming rough seas. 

Full speed ahead!!

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Evolution and Change in Business

Posted on December 7, 2022 by David Shedd

Looking at our businesses within the context of evolution can give us actionable insights to help move our businesses forward. 

Despite what we may have read or heard; evolution is not about a dog-eat-dog world where only the strongest individuals survive.  A quick tutorial on some key concepts in evolution:

  • Survival of the Fittest: Please note that it is not ‘survival of the strongest or toughest’.  Instead, it means survival of those who are most able to prosper in the current environment.  Importantly, if the environment changes the criteria for being the fittest changes. 
  • Group Evolution: Although evolution plays itself out through each individual who either survives or does not survive until he or she can reproduce, evolution is not just an individual attribute.  Evolution is also a group attribute.  Indeed, much of the success of homo sapiens and our other ancestors came from working together as a group, clan or faction to enable the individuals within the group, clan or faction to survive. 

Human evolution is not just the story of individuals competing with other individuals within each group; it’s also the story of groups competing with other groups.  Greg Lukianoff

  • Punctuated Equilibrium: As pioneered by Steven Jay Gould and Niles Eldredge, evolution does not take place at a consistent pace.  There are long periods of dull stability punctuated by periods of swift change usually determined by significant changes in the external environment.
  • Evolution is Inevitable: Over the medium to long term evolution will triumph.  Those who do not adapt will over time diminish and become less relevant.  As Leslie Orgel writes, “evolution is cleverer than you are.”

With that quick tutorial finished, let’s discuss how thinking in terms of evolution can help us improve our business.

  • The external environment is and will always be changing.  Thus, we, as individuals, need to always be learning, adapting, and changing our behavior to fit the changing world.  Similarly, companies need to be changing.  The beginning of the end for many companies is when the world outside the company is changing more rapidly than the world inside the company.  Such companies are often perfectly fit for a world that no longer exists.
  • But, as with the idea of punctuated equilibrium, we need to be mindful of when we should evolve slowly and when we should change dramatically.  Constant dramatic change will leave our companies in turmoil and may make our companies perfectly fit for a world that does not yet exist.
  • Evolution occurs from the bottom; it starts with the individual or the individual group.  For our companies, evolution needs to begin on the front lines with our customer facing employees (sales, services, operations) who will be the first to know that the world is changing.

“For too long we have underestimated the power of spontaneous, organic and constructive change driven from below, in our obsession with designing change from above. Embrace the general theory of evolution.  Admit that everything evolves.”  Matt Ridley

  • Our companies are groups.  For us to remain fit, our whole company needs to remain fit.  In short, a collection of individuals no matter how good and fit for today’s environment will always lose out to a team that comes together to learn and make the company good and fit for today’s environment.  A team of superstars will nearly always lose to a superstar team.
  • Change and improvement is not enough.  We need to adapt and improve more rapidly than others.  If not, we will fall behind and eventually become extinct.
  • The individuals and companies that have been and remain successful are not necessarily smarter, stronger, or ‘better.’  They just have done a better job of continuously fitting themselves to the environment in which they exist.  

In short, harnessing the power of evolution will help move our companies forward.

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Let’s Be Scientific

Posted on November 2, 2022 by David Shedd

As leaders, we are required to constantly evaluate evidence and make decisions.  In doing so, we often succumb to “winging it” and making decisions on the fly, trusting our gut.  While this might work for some decisions, it does not work for long term success.

Instead, we need to be scientific in our analysis of data and in our decision making.  Below, I offer some general guidelines on how we can all be more scientific in our daily leadership activities.

Know the Difference Between a Belief and Science: The easy way to differentiate the two is that if something cannot be disproved, it is not science. We see this most often in people’s ideology and viewpoint when we ask the question: what would it take for you to change your mind?  Without a good, open-minded answer to this question, you are dealing with a person’s beliefs.  As someone’s beliefs are strongly influenced by confirmation bias and are difficult to change, we need to avoid making a decision based on beliefs.

Use the Scientific Method: When doing data analysis, we must always begin with a hypothesis and see if our data proves or disproves that hypothesis.  When we look at data and then try to create a hypothesis after the fact, we are usually hypothesis hunting – looking for a pattern that confirms our current thinking.  And we have not proved anything.

Be Skeptical of Conclusions Drawn from Data.  In analyzing data, we need to remember five fundamentals:

  1. As the astronomer Carl Sagan said: “Extraordinary claims require extraordinary evidence.”  In other words, if something seems too good to be true, we need to have overwhelming evidence to prove that it is true.
  2. Popularity does not determine proof.  Just because a lot of people believe something to be true does not make it true.
  3. Correlation is not causality.  Just because two things happen at the same time or one after the other does not mean that one event caused the other.
  4. Small sample sizes do not usually determine anything.  In short, one or two anecdotes does not equal a trend.
  5. Data usually is messy.  When the data lines up too perfectly, it is usually too good to be true and shows either a flaw in the data or the result of some after the fact hypothesis hunting.

Consider the Base Rate: As I have written before: Use the Base Rate For Better Decision Making, we need to consider the base rate in analyzing our data and making a decision.  Just because something is now twice as risky does not mean much if the initial risk is infinitesimally small.

Evaluate the Decisions That We Have Made: We need to look at the decisions that we make and evaluate them.  Did we make the right decision?  Why or why not? Then, ask what we can do to make a better decision in the future.  Decision-making is not a pure science; but, we do well to make our decision-making more scientific.  This evaluation of our own decisions and re-calibrating our probability or views when we receive new evidence, has been shown repeatedly to improve projections and forecasting.  If we ignore our decision-making track record, we get too confident in our decision-making abilities and begin to make poorer decisions.  If we do not evaluate our decisions, we will end up being like those talking head ‘experts’ on television, social media, or the newspapers – ‘always certain, usually wrong.’

Summary

By being scientific and following these guidelines, we can make better decisions that will move our companies forward.

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