Marina Gorbis's Blog, page 1587

The Hidden Danger of Being Risk-Averse

People are generally not all that happy about risk. As Nobel Prize-winning psychologist Daniel Kahneman has written, "For most people, the fear of losing $100 is more intense than the hope of gaining $150. [Amos Tversky and I] concluded from many such observations that 'losses loom larger than gains' and that people are loss averse."

While the phenomenon of loss aversion has been well-documented, it's worth noting that Kahneman himself refers to "most people" — not all — when describing its prevalence. According to 20 years of research conducted by Columbia University's Tory Higgins, it might be more accurate to say that some of us are particularly risk-averse, not because we are neurotic, paranoid, or even lacking in self-confidence, but because we tend to see our goals as opportunities to maintain the status quo and keep things running smoothly. Higgins calls this a prevention focus, associated with a robust aversion to being wide-eyed and optimistic, making mistakes, and taking chances. The rest of us are promotion-focused, see our goals as opportunities to make progress and end up better off, and are not particularly averse to risky choices when they hold the potential for rich gains.

Studies from Columbia's Motivation Science Center have shown that prevention-focused people work more slowly and deliberately, seek reliability over "coolness" or luxury in products, and prefer conservative investments to higher-yielding but less certain ones. Further research conducted by Harvard's Francesca Gino and Joshua Margolis, indicates that prevention-focused people are more likely than the promotion-focused to behave ethically and honestly — not because they are more ethical per se, but because they fear that rule-breaking will land them in hot water.

They even drive differently. In one study, researchers at the University of Groningen in the Netherlands equipped customers of a Dutch insurance company with a GPS that was used to monitor their driving habits. The prevention-focused were, not surprisingly, less likely to speed than their promotion-focused fellow drivers. A second study showed that they also needed larger gaps between cars in order to feel comfortable merging.

So when people talk about the factors leading to the recent recession, and you hear a lot about excessive risk-taking (what Alan Greenspan famously called "irrational exuberance"), the prevention-focused would probably be last on your list of potential culprits. But you would be wrong.

That's because everything I just told you about prevention-focused people is true when everything is running smoothly — when the status quo is acceptable. When the Devil you know is better than the one you don't (a prevention-focused bit of wisdom if ever there was one.)

When the prevention-focused feel they are actually in danger of loss — and when they believe that a risky option is the only way to eliminate that loss — it's a very different story.

For instance, in one study conducted by Abigail Scholer and her colleagues at Columbia, participants invested $5 in a particular stock. Half were subsequently told that the stock had lost value — not only the initial investment, but an additional $4. The other half were told that the stock had gained $4 in value. (These values were determined — they were told — by a computer simulation of real-world conditions). Then participants were given the option to invest again, this time with a choice: a 75% chance of gaining $6 and a 25% chance of losing $10 (the conservative option), or a 25% chance of gaining $20 and a 75% chance of losing $4 (the risker option). Note that while the odds were longer, only the riskier option could eliminate the loss of $9 for those currently at -$4. Note also that these were undergraduate students to whom the dollar amounts at stake were significant.

The promotion-focused chose the risky option roughly 50% of the time, regardless of whether their stock had gained or lost value. But the prevention-focused preferred the risky option only 38% of the time under gain and 75% of the time under loss. In other words, prevention-focused people generally prefer the conservative option when everything is going according to plan, but they will embrace risk when it's their only shot at returning to status quo.

This suggests that "excessive exuberance" may be something of a misnomer. Certainly there are risk-loving traders on Wall Street, and some of the blame for the events that led to the recession lies with them. But much of it seems to lie with investment bankers — people who rarely strike anyone as "exuberant." If anything, they appear to despise risk — so much so that they lobbied hard to create a system (i.e., "Too Big To Fail") in which comparatively little risk (for them) existed.

These are the people who, counter-intuitively, will take the most dangerous risks under the right circumstances. One of the most famous risk-takers in recent memory is JP Morgan's "London Whale," Bruno Iksil, who doubled down on a losing bet rather than admit his losses, ultimately costing the bank over six billion. Evidence from the Senate hearings on the matter, in the form of recorded phone calls and emails, paints a picture of desperation rather than over-confidence. (Incidentally, Iksil was head of the Chief Investment Office, the purpose of which is to protect the bank by hedging some of its other riskier bets. This is no longer ironic, when understood from the vantage of prevention focus.)

This is why the only deterrent to reckless risk-taking is to make sure that reckless risks have real consequences for those who take them — to make sure, as Nassim Taleb has put it, that the players have "skin in the game." These consequences have to be worse than those of the risks themselves, or they will not be effective. And frankly, they still may not deter a true risk-loving, thrill-seeking cowboy trader — but then again, they aren't really the ones you need to look out for.

Know Your Team's Motivational Mindset

Heidi Grant Halvorson, author of Nine Things Successful People Do Differently , urges leaders to look at the psychological factors that influence behavior at work in order to propel teams to success.

Why Women Are Better than Men at Recognizing Faces

When women were shown images of unfamiliar people, eye-tracking technology showed that they fixed upon the faces 10% to 40% more times than men did, suggesting that women's ability to gather more visual information is what gives them a better memory for faces, says a team from McMaster University in Canada led by Jennifer J. Heisz. In learning new faces, females seem more likely to direct their gaze to highly informative regions, such as the eyes. Past studies have shown that women typically perform better than men in facial-recognition tests.

Greece in the Balance

Greece is back in the news, and it's not all bad. The country hasn't crashed out of the euro and there's even talk of "Grecovery". Major funds, including Third Point LLC, are poised to invest billions of euros in the country. Chinese giant Cosco has announced big investments in Greece's major port, Pireaus. Approval has been granted to build a new gas pipeline, which will pass from Azerbaijan through Greece.

Yet the recent kerfuffle around the national TV company and the near collapse of the government are reminders that the country still has a way to go before it's off the sick list.

On the positive side, Greece has tidied up its balance sheet (at least the privately held debt), and nearly balanced its budget, excluding interest payments. But it hasn't yet tackled its operational challenges, the root causes of the country's crisis.

The fact is that Greece is monstrously inefficient as a manager of public services. It is unable to collect taxes fairly, thus imposing unreasonable tax burdens for the few who work and pay taxes; tax evasion is still rampant; and, perhaps more importantly, the excessive red tape, strong bias for incumbents, and weak competition authorities get in the way of the efficient functioning of the economy.

Precious few things have changed in this regard.

The previous government was a political compromise between the conservative ND, the socialist former ruling party PASOK, and the left-wing DIMAR party. True, to the surprise of many analysts, the prime minister, Antonis Samaras, abandoned his earlier populist rhetoric and tried to sort out public finances. But on the issue of administrative reform, his government procrastinated, wasting a valuable year.

Pressures from EU creditor nations have mounted steadily in the last few months, and the Government was asked to identify 14,000 job cuts by September, with the first 2,000 to be fired by the summer. This was to signal that Greece had the will and skill not only to cut salaries but also to reform. Predictably, Greece was unable to meet its commitment.

Two weeks ago the government got bad news on another front: Gazprom backed off from the purchase of DEPA, the Greek Petroleum state organization. To salvage his government's credibility in the wake of this, the prime minister decided to take a gamble. The restructuring of ERT, Greece's national radio and TV corporation, had been under discussion for a while but the unions and other entrenched interests had so far seen to it that the discussion had gone nowhere. Samaras unilaterally decided to shut it down altogether.

The political world was in shock. Bold move, said some. Undemocratic and reckless said others: shutting down ERT meant leaving news in the hands of private channels, partly owned by Greek oligarchs.

The move was meant to placate the EU creditor nations, by offering the 2,650 laid-off ERT employees to fill the summer's "firing" quota. It was also meant to show that, perhaps for the first time ever, Samaras and his government "meant business" on administrative redesign. And the majority of Greeks, as polls showed, broadly supported this drastic move.

Yet the plan backfired, as it was executed without much planning, without consulting the government's allies, and with no consideration to a recently commissioned plan on how to wrap up ERT and re-build it as a truly independent entity.

The most obvious impact was on the government itself. Rumours of fresh elections resurfaced, and after two weeks of political turmoil the socialist party DIMAR left the coalition government, and the former ruling party PASOK became a full partner. More serious was the effect on public service employees; any future effort to rationalize public services will now face very stiff resistance. Nonetheless, the cloud does have a silver lining. The long held taboo on firing public sector employees has been broken, and discussions about reforming the public sector have started in earnest.

It is past time. Change management is the current imperative for Greece. But as with any other turnaround situation, the nature and the magnitude of the crisis reveals the opportunity. The working of the public sector is so far off what it could and should be, and its existing human resources are so under-utilized that a solid rethink, pushed through with steely determination but also a deft touch could transform the entire nature of public service in Greece.

This is the challenge confronting the new minister charged with public sector reform, Kyriakos Mitsotakis. The Harvard MBA graduate will need all the skills developed as a McKinsey consultant and a Venture Capital executive — and then some. He'll need to redirect the discussion from whether and how to fire public sector employees, to how to rationalize the structures. And for this, he'll need to work both with the administration and the EU creditor nations. He'll need to focus on getting the structures right, and on empowering the capable people within the administration to push through reforms — all this against a recessionary backdrop and in a coalition government with a slim parliamentary majority.

Greece is hanging in the balance. If Samaras, Mitsotakis, and their colleagues dare to tackle the monster that their very own parties built, they will ensure their, and their country's, survival. To do so, they have a few short months. The clock is ticking, and we're on overtime.

The SCOTUS Decisions Every Employee Should Be Talking About

The U.S. Supreme Court in recent years has often ruled in favor of employers in disputes brought by employees, and in the hectic final week of this year's term the Court issued two little-noticed rulings that continue that tack. Both decisions, by identical 5-4 majorities in which Justice Kennedy joined with the conservative wing of the Court, impose procedural requirements that will make it harder for some employees to prevail in cases of employment discrimination.

The first case, Vance v. Ball State University, decided the issue of whether a non-managerial employee with some modest supervisory responsibilities should be treated as a co-worker or as a supervisor in a workplace harassment case. Historically, a supervisor's racial (or religious or ethnic or gender-based) discrimination is directly attributable to the employer — so if a supervisor's racially-based harassment or job decisions create a hostile work environment, the employer is liable. If a co-worker discriminates, however, the employer is liable only if it was negligent in allowing the discrimination to take place, or by failing to take effective steps to protect the victim.

The Court, in an opinion written by Justice Alito, rejected the plaintiff's claim (supported by the EEOC's regulations) that the definition of "supervisor" should be flexible, based on the facts of each case, and determined by the extent of the alleged harasser's authority to assign specific workplace tasks, direct the plaintiff's performance of those tasks, and generally oversee the workplace. Instead, the Court adopted a stricter definition: A supervisor, for purposes of the employer's liability, is someone who has the authority to effect a "significant change in employment status," such as firing or refusing to promote an employee, reassigning her to significantly different responsibilities, or changing substantial benefits.

This is especially interesting given today's managerial and consulting environment, where shifting responsibilities abound. Take this passing observation by Justice Alito, where he addresses this managerial gray area: "Particularly in modern organizations that have abandoned a highly hierarchical management structure, it is common for employees to have overlapping authority with respect to the assignment of work tasks. Members of a team may each have the responsibility for taking the lead with respect to a particular aspect of the work and thus may have the responsibility to direct each other in that area of responsibility." In this environment, basing discrimination decisions on case-by-case determinations of whether the defendant has enough supervisory authority would be difficult to apply. By voting for a black-and-white test — does this person have authority to hire and fire, or not? — Alito hoped to help lower courts avoid this sort of uncertainty.

In second case, University of Texas Southwestern Medical Center v. Nassar, Dr. Nassar, a Muslim of Arab descent on the University's faculty , claimed that his department chair blocked his re-appointment to the staff of an affiliated hospital in retaliation for Dr. Nassar's accusation that an intermediate university supervisor was prejudiced against Arab Muslims. The case went to trial, and a jury found in Dr. Nassar's favor, awarding him $3,000,000 in damages (later reduced by the trial court to $300,000).

Before detailing the SCOTUS decision, some historical background: Title VII of the Civil Rights Act of 1964 prohibits not only employment discrimination based on status (race, color , religion, sex, or national origin), but also retaliation against any employee who brings a complaint based on that status, whatever the merits of the underlying claim may prove to be. The issue of causality — what the complainant must prove in court to establish the causal link between his status or action and the forbidden discrimination or retaliation — had proven troublesome. So in 1991, Congress amended Title VII to make clear that an employee complaining of status discrimination need not prove that his status (race, ethnicity, or whatever) was the sole motivating cause of the discrimination, but only that it was a "motivating factor" for a decision in which other factors may also have been at work. In doing so, however, Congress said nothing about whether that lesser burden of proof applied also to claims of retaliation. The issue before the Court was whether it did apply.

Dr. Nassar argued that it did, and that he therefore need not prove that he would have been re-appointed absent racial or ethnic discrimination; he should prevail if discrimination was a "motivating factor" in the decision, even if not the sole one. The Court rejected his argument, ruling in favor of the university. Justice Kennedy, writing for the majority, relied primarily on the fact that Congress had lessened the burden on employees only in the section of the law that prohibited discrimination based on status, and not in the separate section that prohibited retaliation. Title VII is a "precise, complex and exhaustive" statute barring discrimination, he wrote, and the Court should not infer that Congress meant to amend the allocation of burdens of persuasion in retaliation cases if it did not specifically say so. He goes on to say that the Court cannot infer "that every reference to race, color, creed, sex, or nationality in an antidiscrimination statute is to be treated as a synonym for 'retaliation.'" Dr. Nassar now appears to face the prospect of a new trial, and if he is to prevail again he must prove that retaliation was the sole reason he was not appointed.

In each case, Justice Ginsburg, writing for the four dissenters, criticized the majority's opinion as ill-advised, contrary to EEOC guidance, and needlessly burdensome for victims of employment discrimination or retaliation.

While employers (and especially their lawyers) will welcome these decisions, it is important to keep in mind that neither decision actually softens the long-standing federal prohibition on employment discrimination or on retaliation against those who bring such claims. In the Vance case, the Court moved an amorphous group of non-managerial supervisors into the co-worker cohort, requiring victims of harassment to prove negligence on the part of the employer - a step employees need not take if the harasser is a supervisor with power to hire, fire, or transfer. One question the Court did not answer, however, is whether a non-managerial supervisor whose recommendations for promotions and other job actions are so conclusive that a higher-up need only formally sign off on the paperwork would still be considered a mere co-worker, in the Court's construct.

And in Dr. Nassar's case, the Court stiffened the requirements necessary to prove retaliation — but that ruling does not affect claims of discrimination based on race, color, religion, national origin or sex. And Congress, as it did in 1991, is free to amend Title VII, this time to make clear that retaliation claims must henceforth also proceed on the more employee-friendly standard. Labor and employee groups will likely mount such an effort. Whether this Congress is willing to go along, however, is a very debatable question.

Ten Steps to Planning an Effective Cyber-Incident Response

With cyber criminals successfully targeting organizations of all sizes across all industry sectors, organizations need to be prepared to respond to the inevitable data breach.

A response should be guided by a response plan that aims to manage a cyber security incident in such a way as to limit damage, increase the confidence of external stakeholders, and reduce recovery time and costs.

We've found in our work with large global organizations that many companies do have response plans but don't truly operationalize them. Often, the documentation prescribing how to act in the event of a breach is out of date, inaccessible to key decision makers, generic, unhelpful for guiding specific activities, or some combination of the above.

In many cases, especially in global organizations, response plans aren't integrated across business units. Developing individual plans in silos inhibits the sharing of critical information and best practices and leads to a lack of coordination during large response efforts.

And too many plans sit idle. Organizations that are highly conscientious about practicing fire drills fail to rehearse the steps they would take in the event of a data breach.

Here are 10 principles to guide companies in creating — and implementing — incident-response plans:

Assign an executive to take on responsibility for the plan and for integrating incident-response efforts across business units and geographies.
Develop a taxonomy of risks, threats, and potential failure modes. Refresh them continually on the basis of changes in the threat environment.
Develop easily accessible quick-response guides for likely scenarios.
Establish processes for making major decisions, such as when to isolate compromised areas of the network.
Maintain relationships with key external stakeholders, such as law enforcement.
Maintain service-level agreements and relationships with external breach-remediation providers and experts.
Ensure that documentation of response plans is available to the entire organization and is routinely refreshed.
Ensure that all staff members understand their roles and responsibilities in the event of a cyber incident.
Identify the individuals who are critical to incident response and ensure redundancy.
Train, practice, and run simulated breaches to develop response "muscle memory." The best-prepared organizations routinely conduct war games to stress-test their plans, increasing managers' awareness and fine-tuning their response capabilities.

An effective incident response plan ultimately relies on executive sponsorship. Given the impact of recent breaches, we expect incident response to move higher on the executive agenda. Putting the development of a robust plan on the fast track is imperative for companies. When a successful cyber attack occurs and the scale and impact of the breach comes to light, the first question customers, shareholders, and regulators will ask is, "What did this institution do to prepare?"

Data Under Siege
An HBR Insight Center





How to Have the IT Risk Conversation
Rethinking Security for the Internet of Things
The Escalating Cost of Software Malice
Cyber Security Depends on Education

The Next Big Opportunity for Startups

When I made the transition two years ago from working with a 100 year-old organization — one I had called home for almost eight years — to working with companies sometimes less than 100 hours old, I assumed I would see tremendous differences.

In my early career, I had experienced the textbook definition of outdated management thinking that centered on hierarchy and lack of trust.

Our physical presence at the office during the workweek was considered proof that we were doing our jobs. Someone was often assigned to stand at the door to make note of the people who were more than a few minutes late. Despite the fact that almost every employee was a working parent, if you wanted to see your child in a school play or take him or her to the doctor during work hours, you had to request a half-day off — time off was not allocated in hourly increments. There were also fairly rigid dress code requirements; for instance, if women wore skirts, we expected to wear pantyhose (and this was in 2003).

When I was finally in a leadership role at that older organization, I put a tremendous amount of energy into changing these outdated practices. I reached outside of the non-profit world and outside of our organization (an uncommon practice at the time) to people like Tony Hsieh, Jason Fried, and Seth Godin for insight and examples of what a better workplace could look like.

I think because I found so many examples of innovative workplaces in the startup world, when I transitioned to working with startups I expected that to be the norm. I expected that every founder would be building a company that was innovative not only in developing products but also in approaching the work itself.

There is a lot that is different: An idea can go from concept to creation practically overnight. Red solo cups are more common than red tape. Failure is seen as a bit more inevitable. The ping pong tables and the Kegerator purring quietly in the corner make work at a tech startup look different, too.

However, when you strip away those symbols, what's left are rows and rows of people typing away at computers, looking pretty much like any company in America. Every company, even the massive companies that are now known for having horrible cultures, began as startups with cultures that were often positive and passionate. As new companies are being launched, we have an opportunity to shift that trajectory, but while we're building better products, we're doing very little to build better companies.

In the last two years, I have watched successful startups begin to crack at the seams when resentment and frustration build. For instance, when a new company grew from a team of six people to a team of 90 in less than a year, it appeared that the founders had never bothered to think through things like organizational culture or vacation policies.

I am often astounded by the personnel policies and employee handbooks of young companies that seem to be innovative but have severely outdated policies in place — similar to the policies I had worked to change at my old job.

A serial entrepreneur recently estimated that one-third of startup entrepreneurs prioritize their organizational culture and personnel policies, trying to do something innovative. One-third think about it but follow the template of how things were done in the past. The last third basically don't consider culture at all.

This may be in large part because there are pressures, especially from investors, in the startup community that are driving entrepreneurs to focus on the product rather than the workplace. I've spoken to investors who agree that establishing a good culture is important, but what they feel comes first is creating a viable product that has some potential for creating value or generating revenue. Many investors just want to know that their investments are working tirelessly on making that product happen, even in some cases taking up practices like emailing their investments late at night to see how fast the person responds.

The zeitgeist of the startup world is that if you are not grinding it out, if you are not "crushing it" on evenings and on weekends, then you are not only less likely to make it, but you're also not cut out to be an entrepreneur. It is a hazing ritual that says "you signed up for this. If you want to whine about the hours or about the toll on your life, then go somewhere else."

But it is taking its toll. Suicides of well-known startup founders and the substantial number of people who privately suffer serious depression and other mental health issues are grave examples. Recently, I heard that an anonymous suicide prevention hotline is launching just for startup founders and their employees. This does not provide a good starting point for building organizations with positive cultures that maximize not only employee potential, but organization potential and sustainability as well.

Some may argue that a "survival of the fittest" mentality is essential in challenging professions such as running a tech startup and by weeding out those who cannot make it, you make the whole system stronger. It shouldn't be this way.

Entrepreneurs are faced with a unique opportunity to not only build innovative products but also to build companies that break the cycle and do not play off of fear, false superiority, or treating work as simply an exchange of labor for money. Instead, startups can build companies in which every person they employ can flourish. The world will get better when we build better organizations, not just when we build better products.

Practical Tips for Overcoming Resistance

Although many managers and leaders are under pressure to get things done quickly, pressuring subordinates frequently leads to resistance. This is not due to stubbornness as much as it is due those subordinates simply feeling overwhelmed by the volume of work they have. Emotions also come into play; for instance, if you're trying to get through to an irate customer or shareholder, it can be tough to break through the resistance their anger creates.

To get some tips on how to overcome resistance I reached out to Xavier Amador, originator of the LEAP Method (LEAP stands for Listen-Empathize-Agree-Partner) and Founder of the LEAP Institute and author of I'm Right, You're Wrong, Now What? Break the Impasse and Get What You Need.

MG: Dr. Amador, or shall I call you, Xavier, how did you come up with the idea that we needed a more effective way of overcoming resistance than the usual pushy/persuasive approach?

XA: Mark please call me Xavier. Okay if I call you Mark?

MG: Of course!

XA: Before answering your question, I want to point out something that just happened. By asking me what name I prefer you call me by, you took a step toward connecting with me and not creating resistance — You did this before we were even out of the gate! I practice the same simple habit with almost everyone. Without asking, you didn't know if I would find "Dr. Amador" too formal and distancing, or "Xavier" too presumptuous and disrespectful. Either reaction would have raised a little resistance. And the fact that you pronounced my name correctly — "Javier" instead of "Zavier" — helped too. You obviously took the trouble to find out, or saw me speaking, and remembered the pronunciation. So without hearing one word from me you were already listening. And that's the cornerstone to lowering resistances.

Now to your question: I would love to say the idea was mine, but it's actually ancient wisdom and the result of paying attention to what actually works. The lesson learned is: You don't win on the strength of your argument. You win on the strength of your relationship. And you can strengthen relationships in seconds and easily by putting down your rusty overused communication tools and picking up some new ones. Feedback from thousands of LEAP followers who are owners, CEO's, managers and sales reps reinforced the universality of this vital lesson I learned years ago working with psychotic patients who were literally living in an alternate universe: it feels [like] "What planet is he on?" when someone gives us a reflexive no and resists what is obviously common sense.

You never win on the strength of your argument — or your negatively perceived directive if you are the one holding power in the relationship. Even if your subordinate does what you wanted, the initial resistance will fester and spread as they implement the details. If it was pushed down their throats, instead of something they felt some ownership of, they will resist...[and] it will come back to bite you later. What we hear over and over again is this: "When I stopped trying to convince her and instead focused on listening to his point of view and respecting it, the resistance just disappeared. It happened so fast it felt like magic!"

MG: Why do so many people especially managers and leaders approach resistance in such an ineffective manner?

XA: Because its natural to punch back. It's a lifelong habit most people have. We repeat ourselves, often more loudly and over and over again, when someone hasn't heard or doesn't agree. When I have a good idea, a solution to a problem, or a product/service I know will increase market penetration, I am eager to communicate it to the other person or group. And when I get resistance, it feels like I've been pushed back or hit. And so the reflex is to push or hit back — to counter punch in an effort to show the other side why they were wrong. The reflex is to stand my ground.

This type of interaction looks just like a boxing match. Using LEAP we've learned you can stand your ground without verbally hitting back. Here's the first and most important tool: When you get resistance, [say to yourself], "Shut up, listen and win!"

That's what I say to myself to remember to use the tools I know work. "Shut up" may sound rude and counter productive, but for me it's a splash of cold water. It gets my attention so I can stop dismantling and start using my authority to build stronger relationships. That's the prize, a strong relationship. Strong relationships are the key to meaningful and effective partners and work relationships. Nothing else comes close to being as important. No productive business can exist without strong relationships — think about it. And yet, too often, we ignore the "state of the union" while resistance, defensiveness and even tempers are on the rise.

Now that you've stopped talking, to show you listened, repeat back what you've heard "So you don't think this will work and it's a bad idea because.... Did I get that right?" Just listen and make sure you've heard it the way the other person meant it.

Then explore just a little bit more. Go for the emotion behind the push back. Empathize. [Say something like,] "Now that I understand your position, I can see why you would be uneasy buying in." Take the resistance that is negative energy and use it, by absorbing it, so the person feels respected and safe, lowers their defenses, and as a result opens up to you.

In this exchange, instead of boxing, the verbal interaction looks more like Jujitsu. You meet the resistance, not with a push or punch but instead with open hands. As the person comes at you with their resistance, with open hands you step aside and embrace the negative movement, use its energy, to move the person where you want them.

MG: What would you say to those who may feel that "lowering their guards" and leading with "open hands" will undermine their authority?

XA: Well first I would listen to their resistance and lower it by communicating my genuine understanding and empathy for it.

With authority comes strength. You can use that strength to strengthen the relationship or to strong-arm the other person and create a resistance movement in your own backyard. You have the luxury of being able to speak softly knowing that you are the one carrying a much bigger stick.

Here's a life and death example of this principle. LEAP-trained hostage negotiators have far superior firepower when they've cornered the person they're trying to persuade, but they approach their subject with an open ear and open hands "Talk to me, tell me what you want?" is what works to engage someone who has taken hostages, and to convince them to release their hostages and come with you peacefully. "Come out with your hands up we have you surrounded and out-gunned," leads to a fire fight. Don't help others hold your ideas, proposals and directives hostage with their resistance by opening fire.

MG: I don't know if this is an example of Partnering with you, or just showing good manners, but Xavier I'd like to give you the final word. Do you have a quote or statement that will help remind our readers of the importance of LEAPing into better communication rather than jumping down people's throats when they are resistant?

XA: I will repeat myself because the following two things are that important. First, if you are getting push-back, shut up, listen and win. And second, remember when you are faced with resistance you never win on the strength of your argument, you win on the strength of your relationship. One final word, I hope your readers will let me know if our conversation helped them by contacting me at XavierAmador@LEAPinstitute.org. Thanks Mark for the opportunity to have this conversation.

Here's How to Actually Empower Customer Service Employees

There is perhaps nothing as fundamental for organizations as customer service. Any company in a truly competitive market suffers an inevitable decline if it ignores this basic discipline for too long. Take McDonald's for example—the organization's recent confession to franchisees that 20 percent of customer complaints are due to "unfriendly service," with "rude or unprofessional employees" as the number one complaint is a reminder that the final customer touch point often determines whether or not customers return. Despite spending nearly $2 billion annually on advertising, McDonald's service frequently leaves a bad taste.

Similarly, Brian Moynihan, CEO for Bank of America, one of the country's largest banks in both assets and branches, has implored employees to improve their relationships with customers. How committed is Moynihan to this? He mailed letters to the homes of 270,000 employees outlining the need to make it easier for customers to do business with the bank. This comes after nearly five years of internal discussions about becoming "customer centric"—more than three with Moynihan at the helm.

The importance (and difficulty) of engaging an organization's "front line" to deliver on the customer strategy has been a recurring topic for HBR. It's one of the fundamentals that companies in all industries must remember to revisit and for some, resuscitate after periods of neglect.

Our research into more than 20 front-line focused organizations (the basis for our recent book Judgment on the Front Line), led us to a set of principles for moving well beyond the basics of customer service by putting power, resources and trust in the hands of front line personnel. By doing so, an elite group of companies has enabled their employees to more rapidly address customer problems, anticipate unarticulated needs and drive customer-facing innovation.

We uncovered information about a variety of companies, ranging from the Ritz-Carlton and Yum! Brands to the Mayo Clinic and U.S. Navy SEALs. Consider what we can learn from the following examples:

Amazon, where CEO Jeff Bezos often insists on leaving an empty chair at meetings to represent the "customer's voice," has a data-driven culture which actively encourages employees to build experiments based on customer insight. Innovations such as shopping cart recommendations have been the direct result of entry-level employees taking initiative. Behavior-based search was first implemented by an intern, resulting in a three percent revenue increase.
Zara, the Spanish fast-fashion company, receives quantitative data and qualitative observations from store managers daily to better understand what customers want. Every day, store staff chat with customers, asking questions like, "What if this skirt was longer?" or "What other colors would you like for this item?" This has allowed Zara to limit failed product introductions to just one percent (the industry averages nearly ten percent) while producing nearly ten times the number of products as its largest competitors.

Even with these successes, we've found that no single organization has all of the answers. But combining effective best practices from these diverse organizations and others provides a methodology for building a front line-focused organization, as well as the leadership required to enable your front line to make real-time judgment calls. This process encourages leaders to break down the individual elements required to build and reinforce front line judgment while ensuring they provide an integrated, systemic framework for action rather than a pastiche of so-called empowerment initiatives overlaid on a command-and-control structure. As companies seek to get more contribution and creativity from frontline personnel, here's a five-step process for moving beyond a suggestion-box mentality.

Step 1: Get Started: Connect the front line to the customer strategy. Paradoxically, empowering the front line starts with senior leaders, who have the authority to ensure frontline voices are heard. Senior leaders need to help match their customer promise to the capabilities of the front line while listening closely so they can help align the culture, training, work processes and reward systems. Yum! Brands CEO David Novak, for example, has given every employee the latitude to spend up to ten dollars to fix any customer problem.

Step 2: Empower Your Workforce: Teach people to think for themselves. Employees at every level need to understand the customer strategy. They also need simple problem solving frameworks that are used throughout the organization to promote cross-hierarchical dialogue. We found that the methodology mattered less than having a shared language and thought process for diagnosing root causes or exploring unmet needs. For example, Ritz-Carlton uses MR BIV as a common framework for spotting mistakes, rework, breakdowns, inefficiencies and variations in work processes.

Step 3: Experiment to Implement: Grant front line workers latitude to experiment. Front line workers not only see service breakdowns but also opportunities for serving customers in entirely new ways. Teaching front line leaders the basics for designing simple experiments enables organizations to test many more ideas than could ever be orchestrated centrally. Facebook puts this into practice during "hack-a-thons" designed to unleash pent-up employee creativity. Vital features such as Facebook Video, which has garnered billions of views, have come from giving individual programmers the time and resources to put their customer insight into practice.

Step 4: Eliminate the Barriers: Break down the hierarchy. Nearly every organization has embedded assumptions about roles and power. Freeing front line capacity requires frequent, diligent effort to eliminate decision processes or administrative work that gets in the way of enabling the front line to expeditiously serve customers. For example, at the Mayo Clinic of Scottsdale, nurses have the power to question any doctor's decision or diagnosis through its "Plus One" protocol, completely breaking down the traditional hierarchy. If nurses - some of whom have far more experience than many doctors - fear for a patient's safety, they can move up the chain of command or bring in a specialist to consult and potentially override the initial care recommendation. The hospital was recently named by Consumer Reports as the safest teaching hospital in the U.S.

Step 5: Invest in Your Frontline: Put budget behind it. Too often, companies reserve big budgets for senior management training while spreading funding thin for front line personnel. Similarly, too many companies are content to hire front line staff without carefully considering whether they possess the right attitude and values to represent their brand. At Zappos, it's not unusual for someone interviewing for a $13-per-hour call center job to meet with 15 people before being hired. If they do get the job offer, they will be required to sit through several weeks of training, including listening to recordings of real customer interactions, before they ever work a full day.

Delivering a great customer experience is a fundamental that every company needs to practice, and organizations that excel in this area focus on how to get the most from their front line. As companies such as McDonald's and Bank of America reconsider how their employees interact with customers, they will be challenged to move beyond just rhetoric. If they are truly serious about turning their people into their greatest asset, they'll invest in the front line.

Why You Might Make a Better Decision After a Quick Game of Solitaire

Research participants were nearly twice as likely to give the correct response to a complex decision-making problem if they were distracted by a simple three-minute number-matching task before being asked for their answers, says a team led by Marlène Abadie of the University of Toulouse in France. A more-demanding distraction had no such effect: Participants had a 75% chance of giving the right answer after the easy task, but just a 40% chance after a tougher task or if there was no distractor at all. During an easy distraction, the brain seems to unconsciously enhance the memory of a problem's essence, the researchers say.