Updated: Jan 24
We all know that getting and keeping talent is essential for commercial success. As I wrote in my previous post, hiring and retaining talent is undoubtedly one of the most important strategic objectives that leaders can focus on. I’m preaching to the converted – so I’ll move on!
However, what isn’t readily acknowledged is that talent is also the greatest source of risk.
Unlike hardware and software, performance cannot be guaranteed and productivity cannot be controlled. People cannot be ‘fixed’ through re-configurations or annual upgrades (though strangely some organisations’ performance management approaches still seem to think they can!). Misunderstandings can significantly divert businesses away from their intended goals. Individual disengagement can destroy customer relationships. Divisions within and between teams often prevent businesses from exploiting opportunities or defending against threats.
It’s not enough just to hire and keep great talent. Organisations must also constantly manage how their people behave - as individuals, leaders and as a collective - to have any chance of achieving their objectives. In fact, organisational behaviour influences so much, from how commercial decisions are made, to how teams cope with change, to how customers are treated, that it can make the difference between success or failure.
Which begs the question – if it’s so important, why do so many businesses completely ignore the most dangerous and destructive behaviours? Why, having spent considerable time and resources managing conscious behaviours, do they think the unconscious ones don’t matter?
Back in 1991, before he became famous for the insightful (if rather chewy) Thinking Fast and Slow (2011), Daniel Kahneman wrote a relatively succinct 10-page research paper called Anomalies. With his colleagues Jack Knetsch and Richard Thaler, he identified three unconscious behaviours that affected economic decision-making.
The ‘Endowment Effect’ found that people are more likely to retain an object they own, than acquire that same object when they do not own it.
‘Loss aversion’ described peoples’ tendency to prefer avoiding losses than to acquiring equivalent gains (i.e. it is better not to lose £10 than to find £10).
And ‘Status Quo Bias’ defined a preference for the current state of affairs, with any change from that baseline perceived as a loss, regardless of the actual impact.
Skip forward to 2015 and Matthew Syed described ‘Cognitive Dissonance’ in his book Black Box Thinking (2015). Cognitive dissonance is defined as the psychological pain of accepting facts which challenge existing views, preventing an open and rational cycle of improvement. In short, it can be just too painful to admit mistakes, resulting in people subconsciously reframing the situation or evidence to reinforce their original beliefs. Read the remarkable story of Dorothy Martin’s UFO cult to see the power of this behaviour in action!
And finally, organisational design experts Arthur and Jane Reay Jones have defined ‘unintentionality’. Unintentionality is the naturally occurring, almost inevitable irrationality that sits alongside the rational, hard-headed decisions that people make. Every person has existing subconscious bias that influences how they interpret things like information, values, strategy or objectives. Without being aware, managers and individuals earnestly pursue strategies or tactics that undermine or even damage their business, even though they genuinely believe their actions to be in the organisation’s best interests.
Now, whilst I’m no behavioural economist, it’s pretty easy to identify these behaviours in action in many businesses today.
The refusal to let go of long-established processes, systems or tools (many with significant sunk costs), even though tangible evidence suggests continuing is no longer the best thing to do. The adherence to traditional measures and metrics of success, when changing competitors, markets and expectations have rendered many of those targets immaterial.
The devotion to command and control management styles, even though they demonstrably suppress innovation, while alienating and demotivating the talent that organisations depend on to build customer loyalty. The dedication to intra-functional task completion, even when commercial success depends on inter-functional collaboration to deliver results.
If you multiply these behaviours and biases for each layer within an organisation, it’s a surprise that businesses get anywhere near their objectives! However, set them within the context of the digital age, where adaptability, speed, accuracy, and agility are commercial imperatives, these behaviours expose organisations to so much more risk that they place the very future of the business in doubt.
Ignoring these unconscious behaviours, beliefs and biases will almost certainly result in the business sabotaging itself.
All the amazing work that so many organisations do is quickly undermined by old habits, hidden beliefs, unquestioned assumptions or invisible misunderstandings. Workforces find themselves, as Ian Altman eloquently described it “stuck in negative patterns, outdated thinking and harmful prejudices.”
Without confronting unconscious behaviours and biases head on, a business’s greatest asset can quickly become its greatest liability. Leaders must act now, before all their great work goes to waste. #transformationtimebomb