A new professional challenge in 2017

 

After more than a year of research, planning, and reflection, I have decided to take on a new professional challenge in 2017. I have been accepted to serve as a military peacekeeper/observer through the Swiss Armed Forces company SWISSCOY stationed in Kosovo in former Yugoslavia.

I will serve as a team commander in the rank of captain and will be responsible for a Liaison and Monitoring Team (LMT).

Much like every other male Swiss citizen, I served in the Swiss military but retired as a First Lieutenant when I moved to Australia in 1995. More than 20 years after my last day of service, I will once again put on my uniform, this time to receive training in all aspects of military peacekeeping.

SWISSCOY is a 200+strong company of men and women. Entirely made up of Swiss soldiers, SWISSCOY has been stationed in Kosovo and Bosnia since 1999, immediately following the Yugoslav war.

Members of SWISSCOY serve voluntarily (no conscripts) but are compensated. Everyone is armed for self-defense with semi-automatic rifle and pistol, but as peacekeepers our greatest hope is we’ll never need them. SWISSCOY is under the command of the Kosovo Force (KFOR) of NATO but is UN mandated. Thirty one nations contribute to KFOR, including Germany, Turkey, Poland, the USA, and Canada.

My engagement will start with three months of training in Stans/Switzerland from January 2017 to March 2017, together with the men and women with whom I will serve. We will then be deployed from April 2017 to October 2017 in Kosovo.

After my deployment, I will to return to Seattle and Redpoint Leadership Coaching.

There are three main reasons for me to leave my comfortable life in Seattle and seek out this new challenge:

1. Making a meaningful contribution for a better world: As a citizen and resident of the privileged western world, I view it as my obligation to give back and make an ever-so-small personal contribution to those who are less privileged, in particular those who suffer from the aftermath of armed conflicts. As many of you know, my dad’s mission work has inspired me deeply.

2. New challenge: I am looking forward to fulfilling my mission with a newly formed team in an unknown environment. While I have no doubt this won’t always be easy, I am very much looking forward to the new challenges and ahead. I am also looking forward to digging deep into the history of the region and getting a thorough understanding of the current conflicts in the Balkans.

3. Gaining new leadership experience: I am looking forward to the close collaboration with local civilian leaders and military leaders of SWISSCOY and other nations as well as taking on the leadership of my own team. I have no doubt that I will gain new, valuable leadership experience that will be personally enriching and will serve me well in my future as an Executive Coach.

As with every change, there are inevitable downsides as well:

Away from my family: I will be away from my two sons, Luc (11) and Liam (9), for nine months. While I will have three weeks of home leave during the deployment, it will be difficult for all of us to be apart for that long. In order to ease the separation, we are planning to communicate regularly via skype/phone/text/email. I communicated my reasons for pursuing this opportunity early and openly with my family, and while they understand my motivation, they are sad to have me gone for that long, as I’ll be sad to be away from them. I take some comfort in hoping my boys will learn the importance of giving back from my example, the way I learned it from my father.

Away from my business: I will have to scale my business down during my absence (and scale it back up upon my return). Thankfully, I have a network of strong colleagues I can refer my existing clients out to. Nevertheless, it will take some time and energy to build my business back up.
If you are interested in keeping tabs on what I’m up to during my service, I will communicate via Facebook, LinkedIn, and my blog at https://redpointcoaching.wordpress.com/category/coaching/
I look forward to staying in touch with you during my service.
For more info on the training I will be undergoing:

For more on SWISSCOY’s mission:

How To Run a Great Meeting

By Urs Koenig, PhD, MBA
Leadership Coach
http://www.redpointcoaching.com

‘One either meets or one works’ – Peter Drucker

‘Shadowing’ my clients at meetings they lead or participate in is an important part of my leadership coaching. It is a highly effective coaching technique that allows for just-in-time feedback to my clients.

Through these shadowing sessions, I get to experience many different meeting settings and styles. Time and time again I am amazed how poorly some of these meetings are run (yes, even by some of my clients…). No wonder our people complain about meetings: they are boring, the boss just drones on, we don’t actually accomplish anything, etc. etc.

By following three very basic principles, you will be virtually guaranteed to run a solid – maybe even a great – meeting. You will help your team achieve bigger goals, resolve and even prevent unhealthy conflict, and promote good teamwork.

Like with many things in life, the 80/20 rule applies: apply these basic three principles to your meetings (20%) and you will take care of 80% of the usual meeting dysfunctions.

Before I get to the three principles, one thing upfront: only have a meeting if you need a two-way conversation. Meetings are meant for discussion, debate, and decision making. If you merely need to relay information one way, consider other methods (such as email).

 

Define Outcome Goals for Every Agenda Item

Get into the disciplined habit of sharing outcome goals with your team at the onset of every discussion. Start every agenda item with the following sentence: “The outcome goal of this discussion is to….”.

Here is a list of things I hear all too often that are NOT outcome goals:

  • ‘talk about…’
  • ‘further discuss…..’
  • ‘tell you all about…’

 

Here is a list of good outcome goals:

  • ‘make a decision on….
  • ‘develop a clear plan for…’
  • ‘brainstorm and capture ideas for ….’
  • ‘get buy in for….’
  • ‘receive input on…’
  • ‘get everyone’s questions on … answered’

By forcing yourself to define an outcome goal, you clarify for yourself and your team why this is worthy of discussion.

 

Clarify How You Will Make Decisions

Before capturing any decision you are making during the meeting, clarify how you will make it. I have experienced countless cases where leaders did not communicate how they will make their decision leading to huge frustrations on the team’s part.

Here is the classic scenario: the leaders simply wants input from the team, but in her mind it’s clear that she will make the decision on her own after listening to her team’s discussion. As far as she is concerned, the team has consulting/influencing power but no decision-making power. The team members, on the other hand, assume that they actually have decision-making power (e.g. through a vote) and are stunned that the leader wraps up the discussion by stating that she will announce her decision next week.

To avoid the frustration, the leader could have clarified at the onset of the discussion: ‘I will make the decision next week after hearing everyone’s opinion and input today.’ Alternatively she could have said: ‘We will make this decision by majority vote,’ or

‘It is important to me that everyone is 100% on board with the decision we reach. Hence we will make the decision by consensus.’

No matter how you will decide, communicate your decision-making process upfront, thereby avoiding misunderstandings and frustration!

 

Capture Decisions, Next Steps and Accountability

Many people dislike meetings because they feel nothing ever gets decided or acted upon. Don’t run one of those meetings.

Your goal as the meeting chair is to make sure that all team members understand what has been decided on at the meeting, what the next step is, who will take it, and by when.

Once you have reached a decision, have your team members verbalize/paraphrase their understanding of the decision. You will be amazed how this simple exercise of paraphrasing surfaces misunderstandings about decisions you assumed had been made!

Don’t keep minutes – capture decisions, action items, ownership, and timelines. After the meeting, send brief notes out to all the participants of the meeting.

These notes might look something like this:

 

Decision?

Fill the open position in our department by end of September 2015.

 

Next deliverable?

Draft job ad in conjunction with HR and email to all before next meeting. Finalize at next team meeting.

 

By whom?

Bill (Director of Marketing)

 

By when?

Email job ad to all before next meeting

Be sure to bring these notes forward to your next meeting. Start the next meeting with a review of the outstanding action items from last meeting. You will be surprised at how productive your people will be when they know that they will be held accountable in front of their peers. If they haven’t made progress, use this time to figure out why and help them remove obstacles.

I believe that even the late, great Peter Drucker would have agreed that meetings which follow these three basic principles would be worth attending!

 

Turning Those Flabby Abs Into Sexy Six Packs by Urs Koenig, MBA, PhD

Read what Marshall Goldsmith, who first pioneered our stakeholder based leadership coaching has to say about:

1. Hard Work, and;

2.The Difference Between Simple and Easy When Achieving goals

I absolutely love this article and hope you will too!

sixpackabsSaid Goldsmith, “I don’t watch much TV. But on a recent Saturday morning, I found myself channel-surfing for about 15 minutes. I was amazed at how many of the ads were about getting in shape. Here are some of the exact phrases I heard:

 

“Six-second abs.”
“Easy shaper.”
“Incredible – a miracle!”
“It feels terrific! Let us show you how easy it is!” “Quickly turn your flabby abs into that sexy six-pack!”

My favorite was one that claimed that “visible results” could be achieved in two three-minute sessions!

I am from Kentucky. Excuse the language, but a phrase from my childhood captures my feeling for these claims: “What a pile of bullsh- – t!”

If you want to know why so many goal setters don’t become goal achievers, you can pore over a bunch of enlightening academic studies about goals or you can watch infomercials for 15 minutes. Where did we ever get the crazy idea that getting in shape is supposed to be quick and easy? Why do we think that there will be almost no cost? Why are we surprised when working out turns out to be arduous and healthy foods don’t really taste that good?

I see the impact of this kind of thinking all the time. I recently got a call from Mary, an EVP for human resources, who was dealing with integration of people and systems after her company had made a large acquisition. “Don, our CEO, has been hearing some serious grumbling about Bill, our chief information officer,” she groaned. “Bill is 56 years old and has great experience. No one else in the company can match it. Unfortunately, he wants everything to be done his way. There are some brilliant people in the company we acquired who have their own ideas. Several of their top people, including our new COO, are expressing concerns about Bill. Don wants this issue resolved now! He has suggested that we get an executive coach to work with Bill. Given Bill’s busy schedule and our immediate needs, Don would like to see a dramatic change in Bill within a couple of months. Because Bill is also very impatient, he won’t work with a coach who will waste his valuable time. Do you think that you can help us? When could you start?”

Like all of the folks who buy these miracle products to help them get in shape, Mary wanted a miracle coach to immediately change Bill.

I pointed out that Bill was a 56-year-old executive. Just as with diet and exercise, Bill’s behavioral habits took years to develop and won’t go away overnight. We all set goals to get some aspect of our lives in shape. All too often, we fail to meet them. Why? There are four major challenges that we mistakenly assess:

1. Time: “This is taking a lot longer than I thought it would,” or “I don’t have time for this.”

2. Effort: “This is a lot harder than I thought it would be,” or “I’m tired. It’s just not worth it.”

3. Competing goals: “I had no idea I would be so busy this year. I’ll just have to worry about this later.”

4. Maintenance: “After I got in shape, I celebrated by indulging in some of the actions that forced me to set my goals in the first place.
Now, for some unexplained reason, I’m back where I started. What am I supposed to do? Go on some kind of diet for the rest of my life?”

We often confuse the words “simple” and “easy.” The changes I help people make are generally very simple. However, they are never easy. Just as with diet and exercise, changing behavior involves hard work. It takes time.

During the next year, Bill will be barraged with competing goals that will distract him from his efforts to change. He needs to realize that lasting leadership development is a lifelong process. A temporary change in behavior to “look good” in the short term will only create cynicism if Bill doesn’t stick with it. I can help Bill if he is willing to put in the time and effort. If not, hiring me would probably be a waste of everyone’s time.

Look in the mirror. Not just at how you look but who you are. If you want to be a better leader, a better professional, or just a better person – don’t kid yourself. To achieve meaningful goals, you’ll have to pay the price. There’s no product, no diet, no exercise program, and (I hate to admit it) no executive coach who can make you better. Only you can do it. If your source of motivation doesn’t come from inside, you won’t stick with it. This may not be material for a Saturday morning TV ad, but it’s great advice for any real achievement.

MGpictureBy Marshall Goldsmith, reprinted from Fast Company Magazine August 2005

How To Drive Success In Your Business (And Family) by Urs Koenig

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Want your staff and children to be more successful?

Yes, of course you do!

It’s oh so very easy:)  Simply cultivate the following combination of traits in your employees and your kids:

 

  1. A Superiority Complex. Instill in them a deep seated belief in their exceptionality.
  1. Insecurity. Make them feel that who they are or what they have done is not good enough.
  1. Impulse control. Teach them the ability to systematically delay gratification.

It’s odd to think of people feeling simultaneously superior and insecure. Yet it’s exactly this contrary combination that two Yale law school professors found that generates drive. In their book , “The Triple Package: How Three Unlikely Traits Explain the Rise and Fall of Cultural Groups in America,” they detail how a chip on the shoulder and a burning desire to prove yourself, combined with the ability to sacrifice present gratification in pursuit of future attainment creates a  winning combination for success.

Chue & Rebenfeld, whose work was recently featured in the New York Times found a seemingly un-American fact about America today: for some cultural groups, the American dream of upward mobility is much more alive than for others. Some of the winners include Indian Americans, Iranians, Lebanese and Chinese. These groups, on average, earn almost double the national income.

Among religious groups, the success of Mormons in corporate America is well documented. Jews make only about two percent of the United State’s adult population yet make up a third of the current Supreme Court and about a third of American Nobel Prize winners.

Merely stating the fact that certain groups do better than others, as measured by income and test scores, can set off a firestorm and accusations of racism. It’s almost too obvious to state but these facts don’t make one group ‘better’ than others and material success does not equal a life well lived.

Groups rise and fall over time. This points to the fact that there are cultural forces at work here and debunks the idea that groups succeed because of innate biological differences (third generation Chinese American students for example perform no better than their white peers).

In isolation, each of these traits is insufficient, and potentially damaging. A superiority complex often leads to complacency, insecurity can be crippling and impulse control often results in an inability to experience pleasure.

Success is propelled by the combined triple package of superiority complex, insecurity and impulse control. These simple qualities are cultural, learnable and hence open to anyone. We can model and teach them in our business and in our own family.

I have personally experienced how some of the world’s top management consultancies such as McKinsey, BCG, Bain et al.  do an outstanding job at cultivating the above traits. These firms pride themselves on hiring only the top students from business schools. Once hired, you belong to the ‘chosen few’. There is no question that these firms employ some of the brightest people and yet almost every single consultant I have ever met has deep seated insecurities about never being good enough, which makes them work so incredibly hard.

Ask yourself the following questions:

  1. A Superiority complex
  • What stories and metaphors are you using to instill a belief of exceptionality in your people?
  • How do you ensure people who work at your company feel like they are ‘the chosen one’? Part of a superior elite?
  • What rituals are you employing to foster the belief that your business is the ONE that is going to make it big and leave the competition in the dust?
  1. Insecurity
  • How are you creating a culture of ‘good enough is never good enough’ in your business?
  • How do you get your people to relentlessly strive for continued improvement?
  • What stories are you sharing so that you make it clear that ‘around here, we are never satisfied with the status quo no matter how good it is’?
  1. Impulse control
  • What systems and incentive do you have in place so that folks are committed for the long haul?
  • How do you ensure that your people become exemplars of your company’s culture and vision?

And of course, don’t forget: nothing is more powerful than modeling behavior you want to see!

 

In 2014: Design The Best Place To Work, by Urs Koenig, PhD, MBA, Principal, Redpoint Coaching

by Urs Koenig, PhD, MBA, Principal, Redpoint Coaching

jsw_kidbuildingAs we embark onto 2014 I would like challenge you to design the very best place to work! How would this organization of our dreams look do you ask? Read on…

Rob Goffee, an emeritus professor of organizational behavioral at the London School of Business, and Gareth Jones, a visiting professor at the IF Business School in Madrid, posed the question about what the company of our dreams looks like to hundreds of leaders. They summarized their findings in the May 2013 edition of the Harvard Business Review (“Creating the best workplace on earth: what employees really require to be their most productive”)

Here is what they found. In the organization of our dreams:

  1. I can be myself
  2. I am told what is really going on
  3. My strengths are magnified
  4. The company stands for something meaningful
  5. My daily work is rewarding
  6. Stupid rules don’t exist

These principles might all sound like common sense. Who wouldn’t want to work in a place that followed them? Most leaders and all of our clients are aware of the benefits of such a ‘dream organization’, which many studies have confirmed. And yet, no organization we are aware of possesses all six virtues.

Why is that so? Several of the attributes run counter to traditional and well established practices and deeply ingrained habits. Others are complicated and costly to implement. Some conflict with each other. All of them require you as the leader to carefully balance competing interests and to rethink how you allocate your time and energy.

So as Goffee and Jones point out, the company of our dreams remains largely aspirational.  I therefore offer the below assessment as a challenge to you and your people to aim at creating the most productive and rewarding working environment possible.

The Dream Company Diagnostic

How close is your business to the ideal? The more checks, the closer you are.

  1. Take the assessment yourself
  2. Have your senior team and a cross section of your people take the assessment
  3. Compare the findings and discuss inconsistencies

Let me be myself

___ I am the same person at home as I am at work

___ I feel comfortable being myself

___ We are all encouraged to express our differences

___ People who think differently from most do well here

___ Passion is encouraged, even when it leads to conflict

___ More than one type of person fits in here

Tell me what’s really going on

___ We’re all told the whole story

___ Information is not “spun”

___ It’s not disloyal to say something negative

___ My manager wants to hear bad news

___ Top executives want to hear bad news

___ Many channels of communication are available to us

___ I feel comfortable signing my name to comments I make

 Discover and magnify my strengths

___ I am given the chance to develop

___ Every employee is given the chance to develop

___ The best people want to strut their stuff here

___ The weakest performers can see a path to improvement

___ Compensation is fairly distributed throughout the organization

___ We generate value for ourselves by adding value to others

Make me proud I work here

___ I know what we stand for

___ I value what we stand for

___ I want to exceed my current duties

___ Profit is not our overriding goal

___ I am accomplishing something worthwhile

___ I like to tell people where I work

Make my work meaningful

___ My job is meaningful to me

___ My duties make sense to me

___ My work gives me energy and pleasure

___ I understand how my job fits with everyone else’s

___ Everyone’s job is necessary

___ At work we share a common cause

Don’t hinder me with stupid rules

___ We keep things simple

___ The rules are clear and apply equally to everyone

___ I know what the rules are for

___ Everyone knows what the rules are for

___ We, as an organization, resist red tape

___ Authority is respected

Decide where you believe the most important deficits are and take action during 2014 in order to move your organization one step closer towards the very best place to work.

Stop Overdoing Your Strengths By Urs Koenig, PhD, MBA

strengthsweaknessroadsignI consider myself a pretty successful person. I am proud of what I have achieved academically, professionally, athletically and in my personal life.

While working towards my achievements over the last 40+ years I have displayed some of the following strengths:

  • Focused and highly goal oriented
  • Very structured
  • Single minded 

At times I also have been guilty of overdoing my strengths by showing up as

  • Too Rigid
  • Inflexible and loosing sight of the big picture

A lot of us have been told that we shouldn’t spend too much time on improving our weaknesses but rather get them to an acceptable level and then focus on perfecting our strengths. The logic behind this thinking goes something like this: you will never be really good at your weaknesses.  Get them to a good enough level and then surround yourself with people who are strong where you are weak. Use your energy to move your strengths from excellent to world class. Become outstanding at one thing vs. being slightly above average at a few things.

While I agree with the notion of focus and becoming outstanding at a few select things, there is a key point missing in the above argument:

BallandchainBy relentlessly focusing on further enhancing our strengths we often neglect to realize that we can indeed (and very often do!) overdo our strengths! Remember my own example above. It is easy for me to go from being highly driven, goal oriented and focused to too single minded and inflexible!

So here is one of the few absolute truths I believe in and frequently quote in my leadership coaching:

Every weakness is a strength overdone.

I am focused and structured. When I overdo it, I am becoming inflexible and rigid.

Your boss might be highly empathetic and sensitive. When overdoing his strengths, he looses sight of the business agenda, or worse, becomes a pushover.

Your direct report is self confident and a strong presenter. She often overdoes her confidence and comes across as arrogant.

Ask yourself*:

  • What is my biggest strength both in my personal as well as my professional life? How might this strength overdone show up as a weakness?
  • What is the first step I can take today to address my ‘strength overdone’?
  • *And if you are as brave as our coaching clients are, you will also ask someone who knows you well and be willing to tell you the unvarnished truth.

Marshall Goldsmith on the value of advertising your leadership coaching goal by Urs Koenig, PhD, MBA

Marshall Goldsmith on the value of advertising your leadership coaching goal:

Those of you who are familiar with our leadership coaching (hotlink) know that we don’t coach behind close doors only but make the process of leadership coaching transparent by bringing it out into the organization. Here is what our teacher Marshall Goldsmith has to say about the value if advertising goals in his recent Leading News article :

“It pays to advertise. I know a playwright who never reveals what new work she’s writing. “When you talk about it,” she says, “you’re not writing it. You’re just talking.” That sort of secretiveness may apply to creative work, but it doesn’t apply to rebuilding your reputation. People have preconceptions about you. They not only filter everything you do through those preconceptions, but they are constantly looking for evidence that confirms them. Thus, if they believe you are perennially late, even when you’re only a few seconds late to a lunch date or a meeting they’ll quietly file that away as another example of your tardiness. However, if you tell them you’re making a serious effort to be on time from now on, that bit of “advertising” can change their perception. They’ll be on alert for evidence of your on-time behavior rather than confirmation that you’re always late. That little tweak in perception, created solely by telling people that you’re trying to change, can make all the difference.

 

To Hire the Best: Make Them Work! by Urs Koenig, PhD, MBA

jsw_job_interview_4One of the most important tasks you have as a leader is to build a great team. Building a great team, of course, means hiring right! You cannot spend too much time or effort on hiring wisely. The alternative to hiring wisely? Managing toughly, which is much more time consuming, costly, and emotionally draining.

I have always been intrigued by how so many of our clients and colleagues agree with this on paper but then keep doing the “same old, same old” when it comes to interviewing.

Interviews are often poor predictors for how the person will perform at their job. Some subpar candidates interview well while some great candidates simply don’t present themselves well at all during an interview.  What to do? Make each candidate perform actual work before you make your final hiring decision!

 Homework

The New York Times recently featured the CEO of Palo Alto Software, Sabrina Parson, who does it this way: “Everyone who interviews with us, no matter what the position, gets homework. We do an initial phone interview, and then they get homework before the in-person interview. It’s two hours of work. The purpose of it is not to find the correct answer, but more to see their thought process. But more than 50 percent of the people you send the homework to never contact you again. It’s great because we don’t want that person.”

So there you have it: Giving candidates homework weeds out half of the people; the half you don’t want to talk to anyway! The money and time you save with this approach needs to be invested into working with those who actually submit their homework.

Once you are further into the process and you are down to your top three candidates, have them spend a day in your business doing actual work.

Actual Work

Yes, you will have to be somewhat creative here and yes, of course it might feel a bit staged and artificial but being able to observe each candidate at work or – even better – working side by side with each candidate, beats the best interview hands down! Not only are you able to observe the candidate at his or her tasks, you are also getting insights on how the candidate show up in a somewhat stressful situation and – maybe most importantly – how the person interact with your team members.

But you ask: What about more managerial positions?

Remember: leaders and managers get stuff done through people. Most of the work any leader or manager does includes interacting with people (vs. doing stuff). How can you simulate the real work of a leader or a manager? Have them interact with our team! Not just by having a nice chat but by actually battling out some real business problems.

Again, you need to be somewhat creative here. Ask yourself: what are some of the most important things you expect them to do during their first six months in the job?

Developing and implementing a new product strategy?

Have them walk you and your team through their thinking on a white board. Engage them in a hard discussion and observe how they show up. How concisely do they communicate? How do they build on other people’s ideas? Are they able to explain their thinking without getting defensive?

Building a team?

Have them outline their hiring process to you. Have them conduct a meeting with your existing team. How about a one-on-one goal setting meeting with one of their potential direct reports?

Remember, no matter what job position you are interviewing for: by having the job candidate do real work in your business you will significantly increase your chances of hiring right vs. having to manage toughly.

 Ask yourself:

  • How much has it cost in the past to correct a hiring mistake – in training time, salary costs, and lost energy and opportunities?
  • How can my organization improve our hiring by making candidates do real work?
  • What is the one step I commit to implementing in order to make our hiring more effective?

For more leadership resources and tools, visit Redpoint Coaching.

How to Make Better Business Decisions: Avoid the Hidden Traps! (Part II), by Urs Koenig, MBA, PhD, Principal, Redpoint Coaching

jsw_sunk_cost_imageMaking decisions is one of the most important jobs of leaders. It is also the toughest and the riskiest. Bad decisions can ruin your business or career.

In a previous edition of ChangeAbility,  I examined two, well-documented psychological traps and told you what you can do about them in order to make better decisions.  These two traps were:

THE ANCHORING TRAP & THE STATUS-QUO TRAP

In this edition, I am discussing the following two traps:

THE SUNK-COST TRAP & THE CONFIRMING EVIDENCE TRAP

THE SUNK-COST TRAP

We all sometimes make choices in a way that justifies past choices, even when the past choices are no longer valid.

Imagine you have been standing in line at the post office for 15 minutes. You have a meeting with an important client coming up, and you run the risk of being late to the meeting if you keep standing in line. What do you do?

For many of us the thinking goes something like this, “Well, dam#$^%! I have already been standing in line for 15 minutes; it would be really stupid to give up my space now, so I will stand in line even if I end up being late to the important meeting.” We just fell into the sunk-cost trap.  How so?

It’s simple: we are justifying our decision to keep standing in line by what we have done in the past (i.e. standing in line for 15 minutes already) and not by what is best going forward. Even if you have been standing in line for hours, you need to leave the line if your client meeting is more important than mailing those packages. As economists would say: it’s all about maximizing your utility going forward!

Other examples of the sunk-cost trap include business owners who pour enormous effort into improving the performance of an employee whom they should not have hired in the first place. It is also very common in banking. When a borrower’s business runs into trouble, a lender often advances additional funds in the hope that the business can turn around. If the business does have a good chance to do that, this is wise; otherwise it’s just throwing good money after bad.

Why can we not free ourselves from past decisions? Frequently, it is because we are unwilling to admit mistakes. If you, for example, fire a poor performer who you hired, you are making a public admission of poor judgment. It seems psychologically safer to let him or her stay on, even though that choice only compounds the error.

Sometimes a corporate culture reinforces the sunk-cost trap. If the penalties for making a decision that leads to poor outcome are overly severe, managers will be motivated to let failed projects drag on forever – in the vain hope that they will somehow turn around.

WHAT CAN YOU DO ABOUT THE SUNK-COST TRAP?

Make a conscious effort to set aside any sunk cost – whether psychological or economic – that will muddy your thinking about the choices at hand:

  • Seek out and listen carefully to the views of people who were uninvolved with the earlier decision
  • Examine why admitting earlier mistakes distresses you. If it’s your wounded self-esteem, deal with it head-on. Remind yourself that even smart choices can have bad consequences and that even the best and most experienced executives are not immune to errors in judgment
  • Don’t cultivate a failure-fearing culture that makes employees perpetuate their mistakes. Lead by example by admitting your own mistakes
  • Remember: “If you are in a hole, stop digging.” – Warren Buffet 

THE CONFIRMING-EVIDENCE TRAP

Imagine you are the president of a successful, mid-size, Italian shoe manufacturer, considering whether to call off a planned plant expansion. For a while you have been concerned that your company won’t be able to sustain the rapid pace of growth of its exports. You fear that the value of the Euro will strengthen in coming months, making your goods more costly for overseas consumers. But before you put the brakes on the plant expansion, you decide to call up an old business school classmate, the CEO of a similar company that recently cancelled plans for a new factory, to check her reasoning. She presents a strong case that other currencies are about to weaken against the Euro. What do you do?

You’d better not let this conversation be the clincher because you’ve probably just fallen victim to the confirming-evidence trap. This bias leads us to seek out information that supports our existing instincts or points of view while avoiding information that contradicts it. What, after all, did you expect your acquaintance to give, other than a strong argument in favor of her decision?

Two fundamental psychological forces are at work here:

  • We subconsciously decide what we want to do before we figure out why we want to do it.
  • Our inclination is to be more engaged by things we like than by things we dislike – a tendency well documented even in babies. Naturally, we are drawn to information that supports our subconscious leanings.

WHAT YOU CAN DO ABOUT THE CONFIRMING EVIDENCE TRAP?

It’s not that you should not make the choice you are subconsciously drawn to. It’s just that you want to make sure it’s the smart choice. Here is how you put it to the test:

  • Get someone you respect to play the devil’s advocate to argue against the decision you are contemplating. Better yet, build the counter-argument yourself. What are the strongest reasons to do something else?
  • Be honest with yourself about your motives. Are you really gathering information to help you make a smart choice, or are you just looking for evidence confirming what you think you’d like to do?
  • In seeking the advice of others, don’t ask leading questions that invite confirming evidence. If you find that an advisor always seems to support your point of view, find a new advisor. Do not surround yourself with yes-men (and women).

Your Take-Away:

  • When facing major decisions in your business or life, be sure to use the above techniques to avoid falling into the Sunk-Cost Trap and the Confirming Evidence Trap.

This article is based on: “Hammond, Ralph & Raiffa: The Hidden Traps in Decision Making,” Harvard Business Review, January 2006.

 

Improve Your Company’s Leadership Now: Redpoint Now Offering Leadership Training

jsw_learningtoleadIf your organization is going to grow and prosper, you know that developing strong leaders is no longer optional, but a strategic imperative.

You’ve found that “on the job training,” mentoring and trial and error isn’t good enough. Nor does existing skill-based training address the behavior development necessary for true leadership growth.

That’s why Urs and I have been searching for a program that would help us help our clients grow their own leadership capacity. We wanted something that met our high standards — it had to be practical, hands-on, no-nonsense and, oh yeah, highly effective.

We are very pleased to announce that we have entered into a partnership with Path Forward Leadership  to license their highly acclaimed Path Forward Leadership Workshop Series  as part of our own product offering. The Path Forward Leadership series is specially designed to turn managers into strong leaders and enrich and strengthen your entire organization.

It’s not a “one day wonder” but rather a comprehensive approach to improving leadership effectiveness by challenging participants to apply insights to real-world situations, guided by our own expert facilitation and coaching.

Interested? Intrigued? Nervous? (That’s a good sign!) Contact us if you’re ready to significantly improve your organization’s capacity and competitive advantage by investing in leadership development.