I subscribed to a new podcast from the Harvard Business Review called the “Ideacast.” In less than four shows they have demonstrated precisely why business literature runs between useless and stupid. I imagine the sort of jackass manager who reads most of the junk published must have it handed to him while he is standing on a window ledge about to jump from his executive suite. The better choice would be to end it all. I hate to make such generalizations but if HBS’s publishing arm puts out cud like this one imagines that literally any stupid idea makes the cut at some publisher somewhere.
Particularly apropos is the current podcast which contains two topics which are the subject of two books and two articles in HBR. The first is “Deliberate Mistakes” which suggests that following some random 5 part formula, business people should be encouraged to make mistakes. The formula boils down to: if the potential upside of the opportunity is greater than the opportunity cost, do it. Pardon me, but did anyone not standing on a window ledge need to be told the basic premise of entrepreneurship? Of profit? Of economics?
Of course, perhaps I should be so harsh: let’s look at some example case studies, Harvard style! First witness a missed opportunity: organic food retailer Whole Foods has picked up the majority of the organic food market because “big, dumb” supermarkets were too timid with stocking organics in their stores. Of course, had they stocked a small selection of organics, they would have been able to squelch Whole Foods before it had gained market share, and would have one less competitor.
Obviously the “big, dumb” chains made a misstep here, 20/20 hindsight says that they could have stopped Whole Foods (which is itself debatable). But is the prescription really to “make a mistake”? Could the stocking of organic foods be considered a mistake? Not really. Obviously there was a market or Whole Foods wouldn’t have existed. Obviously customers of supermarkets are also customers of niche chains like Whole Foods, given that supermarkets have larger customer bases. Stocking organics wouldn’t have been a total mistake, so why didn’t supermarkets do it sooner? Perhaps it is because the supermarket paradigm didn’t include organics at the time and had no reason to start doing so until a market was already established. Organics cannot afford to pay for shelf placement, organics would require space particularly in the crowded and low margin fresh vegetables aisle, organics turn over is neither seasonal nor matches the volume that supermarkets need to make a profit.
However, obviously when a niche market starts opening stores you rethink your strategy and start to analyze your new competitor. But it wasn’t so simple a decision. What was the advantage that Whole Foods had over the incumbents? That it wasn’t an incumbent! That it was specialized! That its model was different, it was serving the needs of a small demographic very well instead of the needs of a large demographic well enough. These mean that just stocking organics doesn’t equate to facing the competition. In fact facing the competition would have been better served by making your own Whole Foods type stores in existing areas and building dedicated sections into new stores and then reintegrating a successful side project back into the main stores (much like what was done with in supermarket video stores and florists in the 80’s, the height of supermarket subdividing).
A few more examples in brief: in the 70’s Ma Bell “tested” not requiring certain bad credit risks to put down a security deposit before they could obtain phone service. The test resulted not in hundreds of thousands in bad debt but thousands of new and responsible customers. A company who normally did not answer RFPs that were not directly in its current lines of business decided that it should instead answer all RFPs and build out infrastructure if required to satisfy and RFP. The result? More money and new lines of business!
These sorts of case studies are like hand-picked urban legends worthy of late night infomercials. “I quit my job and decided to start my own business. Now I make a million a year and only work when I want!” It can happen and clearly the opportunity cost (a few year’s salary) is less than the potential reward (a million per year) but clearly it is not a good idea to randomly quit jobs and start businesses.
Further just calling something just a “mistake” implies that you don’t really understand why it’s a mistake. For if it were simply a mistake it should be absolutely clear why it was the wrong thing to do, not just in hindsight but revisiting the situation without knowledge of how things played out. There must be something endemic about the behavior other than the loss of profit. Not every lost opportunity is a mistake. Otherwise the definition of success would be a completely random path through a minefield of potential disasters.
Suggesting that people make “deliberate mistakes” is suggesting that they deliberately not strategize and do things that seem wrong at the time in hopes they will turn out right. If I’m not mistaken that is a popular definition of insanity. Even the successful examples of mistakes are employing a strategy here but by simplifying it into “seems like the wrong idea, but they did it, and they won” or “seems like the wrong idea, so they didn’t do it, and they lost” you suggest a strategy tantamount to “git er dun”, while, as a researcher and academic yourself, you sidestep the question of what the real factors differentiating the winners and losers. Of course when you select case studies for those two outcomes, “did it and won” or “didn’t and lost” what other prescription can you expect than “just do it.”
That is really the problem with case studies. With 20/20 hindsight you can choose any story and make it a “case study” which turns into a sort of fable in which some arbitrary moral is asserted based on your induction, not deduction. Without taking a statistical approach and analyzing some real data you are never going to see the forest for the trees.
I shouldn’t go on but I will… the second topic is “middlescense”, which apparently is the behavior of employees midcareer. First of all there is the premise of a crisis when the Baby Boomers retire and there is no one to replace them. Talk about self groping. I would agree that boomers have entrenched themselves at the top and as they get closer to retirement they’re going to have to dig themselves out, but to suggest there is a crisis that won’t solve itself is to suggest that the boomers are asleep at the wheel. They’ll either train their replacements or their company will fail, it’s clear how lines of succession are drawn in companies and people move up. Logically today’s upper management are tomorrow’s executives. To suggest the problem is more the one of succession is to presume that boomers are somehow better or more capable than “kids these days”: the classic self-indulgence of old codgers.
Second is that it turns out that people are not solely motivated by more money and don’t always want to climb the corporate ladder! That’s news? At least it is true. So how do we solve this “middlesensce” problem? It sounds strangely similar to the old midlife crisis doesn’t it? Glad you asked! We give them more flexibility, let them transfer, and take on new assignments and… if they want it we demote them! How do you tell the difference between the guy who wants to be demoted and the guy who wants to new assignment and transfer? You LISTEN to them!!! So the solution to midcareer apathy is to LISTEN TO YOUR EMPLOYEES! Newsflash Harvard: the solution to nearly every employee morale problem is to listen to your employees and give them what the want. If they ask for a new assignment and you feel they’re capable, it makes no difference if they’re 20 or 50, give them the assignment. Or let them become apathetic or quit.
So unlike the previous topic which suggested that we abandon all logic and do whatever, this random Joe (or rather in this case Jo) wants us to do the obvious thing and pay attention to and satisfy our employees’ needs. My barber gives better advice then Harvard. In fact, perhaps he should publish a book, “Shave your way to Success” or maybe “A Cut Above” where he can outline well thought out theories on how driving a nicer car than you can afford not only attracts nicer women than you can afford, but it results in employee demoralization and lower profit.
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