Tuesday, January 23, 2018

Consolidation Has Not Helped the King of Beers Regain Its Crown

Source: Wikipedia
Fortune reports today that Budweiser is now the #4 beer in America. Thirty years ago, Anheuser Busch sold 49.2 million barrels of the core Budweiser brand in the United States, accounting for more than one in four beers sold. In 2016 the company only sold 14.4 million barrels of Budweiser. Today, Bud Light is the #1 beer in America, and the traditional Budweiser brand has fallen behind both Coors Light and Miller Lite. Of course, Budweiser's struggles are not unique.  Bud Light has lost volume as well over the past decade, as Americans turn to craft beers and imports.  According to Fortune, the top ten brands account for only 50% of the beer sold in America, whereas they once accounted for 2 out of every 3 beers purchased by consumers.  

The beer industry has consolidated dramatically in recent years, as brewers engaged in a wave of mergers and acquisitions.  While they have achieved considerable cost synergies, these mergers have not solved the fundamental growth problem that the mainstream brands have in the United States.  Consolidation often occurs when companies experience top line pressures.  That may help improve earnings in the short run, but often mergers do not recharge growth.  The King of Beers needs help, and the solution won't come from further dealmaking.  

Monday, January 22, 2018

Delegating Tough Choices to Avoid Responsibility and Regret

Mary Steffel and Elanor Williams have published a study on delegation in the Journal of Consumer Research.    They conducted a series of experimental studies to determine when and why consumers delegate difficult purchasing decisions.   They found that people tend to delegate tough choices to avoid responsibility/blame and to avoid the possible feelings of regret that emerge when one makes challenging decisions.  Steffel and Williams summarize their findings as follows:

This research shows that consumers cope with difficult decisions by recruiting others to choose for them. Across eight experiments, participants were more likely to ask others to choose on their behalf when choices felt difficult than when they felt easy. Delegation increased when choices felt difficult regardless of whether that feeling was because the choices themselves were more difficult (e.g., with a larger number of alternatives, with difficult tradeoffs, or with a smaller difference in relative attractiveness between the alternatives), or because the choices were processed less fluently for superficial reasons (e.g., the options were presented in jargon). Delegation increased when choices felt difficult regardless of whether the consequences were real or hypothetical and regardless of the importance of those consequences.

Does the same type of pressure and behavior emerge when managers make decisions at work?  It would be interesting to take a look at those situations, as opposed to consumer purchasing decisions.  

Thursday, January 18, 2018

What Information Do We Wish That We Had?

Over the years, Garold Stasser and his colleagues have demonstrated that many teams exhibit "shared information bias" - i.e. teams spend a great deal of time discussing information common to all team members, and they do not share, discuss, and integrate privately held information effectively.   As a result, teams make poor decisions because they do not leverage the unique knowledge and expertise of some team members.  

How can teams overcome the shared information bias?   People have described a variety of strategies, many focusing on a climate of psychological safety as well as strong process facilitation by the leader.   I would argue that one other techique can be very helpful.  Team members should ask the following question as they engage in collective problem solving:  What information or data do we WISH THAT WE HAD in trying to solve this problem?  Think about that question for a moment.  In most cases, team members focus on what they already know, rather than thinking about what information they wish they had in order to solve the problem.  By asking, "what data do we wish that we had," teams might encourage members to come forward with critical information that they might not have already shared for a variety of reasons.   In short, building a wish list might invite those who can help fulfill those wishes to come forward.  

Tuesday, January 16, 2018

The Hawaii False Alert: Is It Really Human Error?

Source: www.worldatlas.com
Don Norman has written an outstanding article for Fast Company about the false alert that caused panic in Hawaii over the weekend.  In the aftermath of the incident, we heard that "human error"  caused the false alert to be transmitted widely to citizens of the state. Norman challenges this initial conclusion. Norman writes:

When some error occurs, it is commonplace to look for the reason. In serious cases, a committee is formed which more or less thoroughly tries to determine the cause. Eventually, it will be discovered that a person did something wrong. “Hah,” says the investigation committee. “Human error. Increase the training. Punish the guilty person.” Everyone feels good. The public is reassured. An innocent person is punished, and the real problem remains unfixed. The correct response is for the committee to ask, “What caused the human error? How could that have been prevented?” Find the root cause and then cure that. To me, the most frustrating aspect of these errors is that they result from poor design. Incompetent design. Worse, for decades we have known how proper, human-centered design can prevent them.

Norman points out several egregious design flaws with this alert system.  First, why was a confirmation not required before the alert was sent?  Ideally, he notes, the confirmation should be provided by a second person working independently from the person who selected the alert message.  Second, when operating in test mode, the messages should all start with a clear indication that it is only a test.  That should be in bold!  It should be capitalized!  It should be crystal clear!   Finally, the system should be designed to enable immediate correction.   The delay was preventable with better design.  

In sum, you can look at any failure in two contrasting ways.  You can examine it individualistically, i.e. it is human error.  Or, you can look at it systemically, i.e. what systems, procedures, and situational factors contributed to poor actions or decisions?   The latter approach is much more likely to lead to learning, improvement, and future accident prevention.   We have shown that in our own research on tragic accidents such as the Columbia space shuttle accident.   

Friday, January 12, 2018

Managing Promotions Effectively

How do you maximize employee productivity? To answer that question, many companies focus a great deal on the extrinsic reward system. Others recognize, rightfully, that intrinsic motivation matters more than the compensation scheme. These firms focus on the organizational culture, mission statement, and other factors that may shape the work environment and employee behavior. Jeff Haden, Inc.com contributing editor, points out that one factor may be more important than all the rest. Here's an excerpt from this article:

A survey of over 400,000 people across the U.S. found that when employees believe promotions are managed effectively, they are more than two times as likely to give extra effort at work -- and to plan for having a long-term future with their company.  But wait, there's more: When employees believe promotions are managed effectively, they are more than five times as likely to believe their leaders act with integrity.  The result? At those companies, employee turnover rates are half that of other companies in the same industry. Productivity, innovation, and growth metrics outperform the competition.

Why such a significant impact with regard to promotions?  I think it's because employees care a great deal about what scholars call procedural justice.   In short, we don't just care abou the outcomes that we experience at work.  We care about the process by which decisions are made.  If we perceive those processes to be inequitable, unjust, or illegitimate in any way, then our commitment, satisfaction, and trust in leadership will decline.   So, as you think about promotions, remember that everyone is watching, not just the people in that particular department.  They are looking to see if the process is just.  

Wednesday, January 10, 2018

Reaching Your Goals: The Value of an "Emergency Reserve"

What are some techniques for helping individuals achieve their goals?  Wharton Professor Marissa Sharif has conducting some useful research on this topic.  She argues for the value of establishing an "emergency reserve" when setting objectives.  

Consider one experiment that she conducted.  She examined how people performed when setting goals for how steps they would walk each day.   For one group of research subjects, she asked them to try to reach their step goal (either 7,000 or 10,000 steps) during all seven days of the week.  For a second group, she asked them to try to achieve this objective during any five of the seven days.  Finally, for a third set of research study participants, Sharif asked them to reach their steps goal each of the seven days, but she provided them an "emergency reserve" in the form of two "skip days" that they could use at their discretion.  What did Sharif find in this experiment?   The people provided the skip days did a better job of achieving their step goals, and in total, they walked more steps during the week!  

Why is the emergency reserve so effective? Human nature seems to cause us to cling to those skip days. We don't want to use them unless it's a true emergency. People feel bad about using them simply because of a lack of willpower. That feeling causes us to walk more steps each day. 

Sharif also finds that individuals enjoy having emergency reserves. It makes them feel better about setting aggressive goals, and it makes them more likely perhaps to set out to achieve an ambitious objective. She concludes,

"I found that if people have these bigger goals of trying to lose weight or trying to become fitter, they prefer goals with emergency reserves to goals without. What this means is that not only can companies help their consumers perform better by incorporating emergency reserves into their goals, but they can also attract them to sign up initially by offering emergency reserves within their program."

Tuesday, January 09, 2018

The Middle Manager as Translator

Source:  http://acceleratedbr.com/blog/
Middle managers often are bombarded with information from above and below in organizations.  They must share directives and plans with the people working on the front lines of the organization.  At the same time, they must listen carefully to their team members and communicate their concerns, questions, and ideas upward in the organization.   In so doing, they play the role of translator in many cases.  Why?   Top executives and front-line employees do not speak the same language at times.  In fact, they speak starkly different languages - Greek and Japanese, if you will.  

Consider the goals established by senior management.   The CEO and his or her team often speak in terms of broad financial and strategic goals such as Return on Invested Capital, Market Share, Total Shareholder Return, and Asset Turnover.    The language fits the audience that they must deal with most regularly:  outside investors, Wall Street analysts, credit rating agencies, board members, and fellow members of the top management team.  

Consider, though, the meaning of this language system to front-line employees.  In many situations, they do not understand these goals clearly.  How exactly do you calculate Asset Turnover, and what does it say about the health of the organization?  Perhaps more worrisome, front-line workers may not care much about these objectives.  It's hard to imagine a retail cashier or assembly line worker, such as my parents, eager to get to work in the morning to achieve a higher return on invested capital.  What do they care about?  How do they find meaning in their work?  What motivates them?  The middle manager must answer those questions, and they must translate those top-level financial and strategic goals into a set of concrete objectives that are meaningful and important to the front-line employees.   Then, they must connect those objectives, and the work people are doing in pursuit of them, to the bigger picture.  In so doing, middle managers help workers understand the role they play in helping the firm achieve its larger objectives.   

At the same time, middle managers must listen carefully to their team members.  They speak their own language about the work being done, the concerns of customers, and the problems with the firm's processes and systems.   The middle managers must translate what they are hearing, so that they can communicate these issues clearly and concisely to top managers.  The middle managers must ask themselves:  How do these concerns or problems get in the way of achieving the firm's top level goals?  What resources and management support do my employees need to make the improvements that they suggest?  Top management may not understand these issues clearly, as they are so far removed from the work itself, and from the customers.  By translating their team members' ideas and concerns appropriately, middle managers can achieve the type of alignment required the organization and its employees to thrive.