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The trouble with conventional wisdom

2014-05-15 05:37:03

Sydney Finkelstein

Get on the bus! How many times have we heard that one from managers exhorting

their team to buy into the project or strategy they are spearheading?

If you re not on the bus, you re not a team player, or even worse, you re a

negative influence. And we know what happens to people branded as negative in

an organization, don t we?

But what if this most common of conventional management wisdom is wrong even

dangerously wrong?

What s the point of having everyone rowing in perfect unison if you re going

the wrong way?

In the constant push to get everyone going in the same direction on the job

an admittedly critical component of leadership we ve fallen into the trap of

valuing alignment over insight. What s the point of having everyone rowing in

perfect unison if you re going the wrong way?

Getting on the right bus is only one of many aphorisms of business that can

cause more harm than good if followed blindly.

How about if it ain t broke, don t fix it ? Leaving aside the increasingly

recognised point that companies are much better off breaking what they re doing

rather than waiting for competitors to do so (which is why there are so few

durable industries left), invoking this old staple sends a not-so-subtle

message to your team about what you think of change.

It s hard enough to get people to challenge the status quo without relying on

evocative images that will make them think twice.

When I m working with management teams, I usually ask people to identify one or

two generally accepted notions about how their business works, and then I ask

them to entertain the possibility that maybe that conventional wisdom is wrong.

It turns out that starting with the premise that something might be broken is

effective to get people to start questioning assumptions that could be holding

them back.

For example, managers at a major retailer pointed out how their strategy was

based on their superior understanding of customer preferences. What they didn t

want to accept: their traditional customers were declining in number. The

millennial generation rising up to account for a bigger share of the overall

market played by different rules, making that deep understanding of customers

more of a disadvantage than an advantage. It s not that the strategy toward

yesterday s customers was broken, it was just becoming less relevant.

One of the most hard-wired bits of all conventional wisdom is that managers

have to make their number no matter what. The performance target is

inviolable. After all, companies without a powerful performance-oriented

culture seldom do well.

But this bit of wisdom comes with a downside, often a big one.

Imagine a company that engineers an improved technology in a core business, but

sticks with the older version of the technology because it s been successful

for them in the past. Making the number requires a return on the technological

investment, so you decide to earn royalties by licensing the improved product

to competitors.

This strategy boosts earnings in the short term: the division hits its

performance target, and everyone is happy. But one year later, the new improved

technology is starting to take off, strengthening those competitors. What s

more, because of your comfort level with the old technology, you continue to

stick with it despite the changes all around you. That happy story of making

the numbers is exactly what happened to Motorola in the mobile-phone business,

plummeting from a dominant market share to an also-ran by giving away a

potentially world-beating technology simply to generate that short-term pop.

Too many companies are too focused on making that number today, often at the

expense of what will happen tomorrow. This is not just a short-term vs.

long-term trade-off (although in modern business long-term keeps coming up

faster and faster). A slavish attention to hitting performance targets may also

account for bribery scandals at companies like Siemens in Europe and Avon in

Africa. And we re not even talking about the burnout pressure on all those

managers singularly focused on their magic number.

Conventional wisdom becomes conventional because it has an inherent truth to

it, or at least it once did. In our rush to adopt the shorthand of business, we

can easily miss the subtleties and nuances that should give pause, and thought,

to what we are doing.