Corporate Mindset, Circa 2009: "Don't Bother Me With the Truth. I'm Busy."

"I would bet anyone that has worked in the corporate world would agree that organizations are hugely inefficient and that much of what managers do is self-defeating. At the same time, there is a solid body of data on which organizational designs and management practices improve performance. The reason we don't replace what doesn't work with what does is exactly what the latest research in neuroscience teaches us."  - Charles S. Jacobs  

Charles S. Jacobs

His unique approach enables managers to use the new understanding of how the brain works to comprehensively rethink their businesses, creating more robust competitive strategies and the performance-oriented organizations needed to implement them. His work provides the key to overcome the number one obstacle to meaningful improvement in business performance—the rapid and effective management of change.

New! Full Transcript now available - read more.

For each key area of management, from strategy to leadership, Jacobs shows the limitations of our current practices:  

• Feedback — both positive and negative — doesn’t improve performance.  Studies show that positive feedback has no effect on an employee's behavior and that negative feedback only makes bad performance worse.
• Setting measurable objectives often backfires on the manager. Unless employees set their own objectives, they have no reason to work to achieve them.
• Managers who produce the best results are the ones who do the least managing. Closely supervising employees is the surest way to have them abdicate responsibility, forcing you into a vicious cycle of micro-managing.   The solution:  Managers must stop thinking they can control behavior.  People will behave the way they want, regardless of how rational we judge them to be.  This means implementing new, often counter-intuitive approaches that harmonize with how the mind actually works:   Smaller rewards tend to be more motivational than larger ones.
• Being competitive is often the best way to encourage cooperation.
• Pay increases don’t motivate.  Engaging work, however, produces the natural equivalent of a cocaine high that keeps high performers producing at their peak.
• Meeting the customers' basic needs is just the ante that gets you in the game; the real advantage comes from understanding what they want.   


• The lessons of neuroscience come down to this: Once we understand how our brain works, we can decipher the secret code determining how people respond.  

Full Interview Transcript

Welcome to Total Picture Radio, the voice of career and leadership development. Exclusive sponsorship opportunities are now available on Total Picture Radio for high profile trade shows, conferences and events we cover throughout the year. Take center stage and join forward-thinking companies such as Deloitte, Taleo and HRmarketer sponsoring our award-winning podcast. For more information, email sponsor (at sign)totalpicture dot com or call 203-292-0012.

Welcome to a leadership channel podcast on Total Picture Radio. This is Peter Clayton reporting.

Charles S. Jacobs is the founder of the Amherst Consulting Group, founder and managing partner of 180 Partners and the author of Management Rewired: Why Feedback Doesn't Work And Other Surprising Lessons From the Latest Brain Science.

Charles, welcome to Total Picture Radio.

Charles: Peter, thank you for having me.

Peter: Before we get into a discussion of your book, I'd like to talk about a couple of recent posts you had on your blog and folks that are listening to this can go to the website at TotalPicture.com and you'll find links to Charles' website and his blog right there.

One is titled is 5 Tips For Failing Miserably as a Manager. I really enjoyed that title because so much of what we do here, and especially in leadership development is talk about all of the things that you need to do and one of these tips that you have is check with your people frequently to see if they need help.

Now I know a lot of managers who do that, so why is that wrong?

Charles: It all has to do with perception. From the perspective of the manager, this is absolutely the right thing to do. And actually, it's a very noble and heroic thing to do because it takes a lot of time that could be devoted to other things. But from the perspective of the people that are being checked with, it comes across differently; people feel as if they're being … well… over managed, over supervised, as if they're being checked on not to see if they need help, but rather to see if they're doing the right thing.

I once worked with a general manager who prided himself on walking through the factory, both in the morning and the afternoon. But when you talk to the people in the factory, they hated his appearances. They thought he was trying to catch them doing something wrong.

So it's the perceptual issue that makes that not the right thing to do.

Peter: Is it different then if you are doing executive leadership development and you're 360 feedbacks with your team; is that a different kind of feedback or analysis of your performance?

Charles: I believe it is. The subtitle of the book is Why Feedback Doesn't Work. Feedback doesn't work because of the feedback. I mean we all need feedback to get better. I find that the only way that I improve is when I get feedback and it's generally feedback that I'm not all that happy to get because it feels uncomfortable, but that's how I improve; that's how I know that there are other things that I can be doing better. So any kind of mechanism, whether it's 360 degree feedback or whatever, that allows you to get that feedback in a non-threatening way where you can distinguish between the person giving it to you and the actual feedback itself, I think is very positive. And rather perhaps than checking with people frequently to see if they need help, it might be better if the manager scheduled office hours, like professors do in universities, so that if people had an issue, they could come and talk to the manager and it could be a bit less formal.

Peter: Another thing on this list of five that a number of people I know would find surprising is set stretch objectives.

Charles: Yeah, well there are a number of issues around stretch objectives. One of the ones that I pick up in the blog posts is just simply that what is a stretch objective to a manager can be really onerous to an employee. And again, it's the perceptual issue. So is this something that's going to help somebody grow, or is this an objective that's going to be so far reaching that you simply can't achieve it, in which case, it becomes demotivational because people just give up.

The other problem with objectives that I think is really important is that this idea of the mind being objective. What is really means is that we have to get rid of the emotional input that is part of our thinking process, and that emotional input is what allows us to learn from past experience and to forecast the future.

So when we try to be overly objective, we essentially become very short term thinkers, the opposite of what we'd like objectives to accomplish for ourselves.

So when people are talking about objectives, they ought to be in the context of a vision about the business that addresses more than just simply numbers; it addresses what's important to people.

Peter: Another on your list is focus on behavior, not attitude or intent. What do you mean by that?

Charles: When I studied psychology in college a long time ago, behaviorism was the reigning school at that point and you learned how you could train pigeons by giving them shocks or rewarding them or whatever. And so a lot of that was carried into the business world and it's very attractive to managers that they can focus on something tangible, something that they can see. So the recommendation was go after the behavior, don't go after the intent or the attitude, you can't know what's going on in peoples' minds.

But the reality is that our behavior is driven by what's going on in our minds. So if we only focus on the behavior, we are actually sub-optimizing the way that people's brains work and we're probably insuring we're going to fail.

My best example was when AT&T actually became deregulated and they all of a sudden had to start paying attention to their customers and they mandated that their operators say at the end of every call "Thank you for calling AT&T." Well, the response from operators was just incredible, I mean, it was so snarky and so nasty the way they would say that. I one day said to an operator "boy, that must really get you having to say that." She said "yes, we always are trying to do the best job we can and we're trying to be friendly. It's just we don't like being told that."

So it would have worked better for AT&T to tell those operators listen, customer service is important. Be friendly. Make the customer feel important. They probably would have done in a way that was much more effective than the way they ended up doing it.

Peter: Speaking about AT&T, they used to be one of my largest clients when I was making corporate rah-rah movies. They sent to me Columbus, Ohio after they did the hostile takeover of the NCR to make a feel-good film. Well, you can imagine how well that turned out. [laughing]

Charles: That's wonderful.

Peter: You write a lot in this book of yours, Management Rewired, about problems, particularly with a number of your clients that have to with mergers and acquisitions, and it seems to me that people keep making the same mistakes over and over again.

Charles: It really is incredible. I mean, let's start with the data. I mean, the data tells us that two-thirds of mergers or acquisitions don't improve shareholder value and in fact, 18 months later, there's been a decrease in shareholder value, so that ought to give you pause right then.

My first company, Amherst Consulting, was acquired and what was amazing to me was that here I had done all this work on integrating mergers and acquisitions and nobody ever asked me in the acquiring company what we should be doing and in fact, myself and somebody else who that had run another company that was acquired got together and we wrote a memo and put together a PowerPoint presentation on all the right things to do. You know, we never got a hearing, nobody ever wanted to hear that, and the result was that most of my people ended up leaving after the acquisition. I left within a year because I just found that it wasn't working out and a lot of that, if you just really focus on the people issues and focus on making sure that the cultures come together, you don't have to pay that price.

Peter: Another of my favorite stories is another of my large clients was Citibank a number of years ago. When Travelers came in and literally took over the Citi and, of course, at that time there was this public posturing that John Reed and Sandy Weill were co-CEOs. Well, c'mon, anybody within that organization could see clearly that all of Sandy's people came in and basically took over the place and started running it the way they wanted to run it which was completely different from the way it had been run under John Reed's leadership.

Charles: I mean, I saw that one coming. First of all, because John Reed and Sandy Weill were very different people and they had very different philosophies of management.

Peter: Oh, no kidding.

Charles: I actually was a big fan of John Reed. I thought he had done terrific things at Citibank and one of the things that I thought was most impressive was when he got the job as the CEO form his boss Walter Wriston. He moved his office from the 52nd floor to the 2nd floor, and I believe I mention that in the book; that was a very symbolic move that said listen, "this is no longer the white-shoe banking culture. I'm going to be accessible to people." And so that was the kind of leader he was and obviously, Sandy wasn't quite the same sort of leader.

Peter: Well, let's talk of some about your book Management Rewired. I've done a lot of interviews with people who have done stuff in neural leadership and neuroscience, and there is such a resistance out there in the business community too when you start talking about the brain in neuroscience and what do you get from your clients and what kind of resistance do you get?

Charles: I find that my clients in general are interested in one thing and that's improving the performance of their business and they're not in interested in theory, they're not interested in research, they're not interested in eloquent models, unless you show them that there's a direct connection to improving the performance of the business, and so you really have to kind of grab them.

I talk in the book about creating this dissonance to stop the way that we're looking at things so that we can see things in a different way, and I think you need to do that with people so that they understand how fundamentally transformational what we're learning about the brain is. It really does change everything.

So I guess the short answer to your question is you get some resistance, you get some people asking why should I pay any attention to this, but when they really catch on to what's going on, then they're amazed and they find that it's really got great applicability to improving performance.

Peter: Going back to your blog for a second, and this is also things you've written about in your book, you have a blog titled, "Brain Science Can Lead Us Out of the Doldrums" and of course, there is so much stress out there today. People have so much anxiety in the workplace. I keep hearing from people, especially in large organizations, that employees are cemented to their chairs. They're not going anywhere. They're terrified that if they go off to a conference or do some training that somebody's going to say "well, you know, so and so must not have anything to do because they're off to this conference." The fear within these organizations is palpable. So how can brain science and some of the concepts that you're writing about help people get out of this fear?

Charles: Peter, I think that's the money question. If there is going to be any validity to applying brain science, or learning from brain science to management, it's to enable people to deal with situations like this and I think it's particularly important because my read of the current economic situation is this isn't going to improve. I mean, we've pull ourselves back from the abyss, we ought to feel good about that but I don't see anything that's going to drive growth in the near term. So I think we're going to be dealing in an environment like this for quite awhile. In fact, Paul Krugman recently said that he doesn't see things turning around in a big way until 2012.

So what do you do doing during times like these? Well, one of the things that we know about the way the brain operates is that when people are under pressure like this, they engage in the flight-or-fight syndrome; that's their response when they're feeling threatened. And what that means is that hormones are pumped into their system. The hormones ready them to fight or to run or whatever it may be, but the hormones adversely affect the brain. What they do is to slow down the functioning of the brain because if you're looking at the saber toothed tiger, you're not worried so much about the meaning of the universe, you're worried about how am I going to get away from that tiger. So it slows down the brain. It also narrows our vision literally and metaphorically, we no longer look at the long term.

So we're now looking at a landscape of companies that are really hunkered down, very much the way you described it and I think that they're paralyzed. Well, there's no percentage in that. What good does that do to you to be in that frame of mind? Or what good does it do to you to focus on what's negative?

The people that are going to really prosper coming out to this downturn are the people that say "listen, times are bad but it's an opportunity." If I can get beyond this sort of negative feeling I have and start looking for opportunities, I'm going to be able grab market share from the people that are paralyzed and, of course, we know this since there have been a number of articles about it recently but a very large number of successful companies were started during recessions or downturns – Procter & Gamble, Microsoft are two that come to mind.

So this is a great opportunity, and the thing that I feel is so energizing about brain science is that what we're learning is that ideas change the way we think. So if you lock the idea in your mind to start looking for opportunities and you constantly reinforce it and you coach yourself, you're going to start finding opportunities and you're going to end up being more successful. So I think this is a really direct learning from brain science that will improve the way businesses operate.

Peter: And yet, so many companies out there are sticking with the old formulas, Charles, that setting goals and performance reviews and all the things that we've been doing for years.

Charles: Peter, I've got to tell you my favorite one. We were talking to a very large and well respected company about coming in and doing some work for them based on the book, and at one point they said "listen, we really can't do that" and I said why, and they said "we developed this leadership model over the last several years and we don't want anything to disrupt it."

Now, think about the mindset behind that. Don't bother me with the truth, I'm busy. So I think that's true. I just think that's the mode that people are in, and for a manager, the most important is to get people out of that mode and get people focused on what's exciting about the work that they're doing. I've seen that repeatedly when times are tough, either in an economy or in a company, the managers that have their people really focused on the work are the ones that come out the best in the long run.

Peter: I was talking with Noel Tichy recently, and his observation is that so many of these big companies are still stuck in this complacency, and it kind of goes back to years ago when I was working with AT&T and when you were working with AT&T, I mean, that brand was unassailable. There is nothing you could do to destroy that brand and yet, they did.

Charles: We should also mention that back in the 90s before their bankruptcy filing, in the 18 months prior to it, they had spent over a half a billion dollars on consultants. So that sort of tells you how valuable consultants might be in certain circumstances or how unwilling people are to listen. I think it is this complacency, and it's a big thing for people that kind of move out of their comfort zones and to recognize that the only way that they're going to be successful is to do something different.

Again, I think this is a change in mindset; that's what's so exciting about life is that we're constantly getting different things coming at us and it's an adventure to go and pursue those. We're in a time where the status quo isn't going to work. The companies that are pursuing the status quo are just not going to be around in the future. The ones that are going to be successful are the ones that say hey, this is not a problem; this is an opportunity for us.

Peter: The metaphor I kind of use for this is people who stay in abusive relationships, they're predictable. They know what's going to happen and they're so afraid of change and doing something to get out of that relationship, no matter how abusive it is, they stay in it. And so people are staying in these companies, cemented to their chairs, terrified and yet, not really seeing what opportunities exist out there even within their own organizations to change things.

Charles: Yeah, and the data that's coming out of employee opinion surveys now is really amazing. I mean, people no longer are interested in interesting work, they're no longer concerned with their compensation; they're just happy to be employed. And I actually find that kind of sad, in the same way, it sounds like you did a lot of work in the Telco industry and I did too. And I always used to find it sad that people would be in one of my workshops or one of my seminars and they would say things like "I only have five more years until I retire." Five years is a long time. There's a lot of living you can do in five years. And so I keep coming back to this issue of it being a decision that you make based on your will that I am not just going to coast, I am going to do what I need to do to make the next five years exciting, to make myself successful and I come back to what's the option? The option is just more the same that's not going to be satisfying.

Peter: Another thing that I'm seeing – a trend that I'm seeing out there and I've heard this from a number of recruiters is that the midsize companies are out there cruising for talent. They realize that a number of really senior, very smart, very capable are out on the street and they can get them for a bargain, bring them in to their organizations and reinvent the places.

Charles: Again that's the opportunity. That's the good side of what's going on is there are a lot of people out there. There is also an opportunity… I mean, if I can just do a quick story.

I was in Chicago and I wanted to buy a new book, Thomas Pynchon just came out with a new novel. So I went in to a bookstore and I was greeted by this really nice lady who said "good afternoon, can I help you find something?" I gave her the title of the book and she took me over to the new release section and she couldn't find it. She said "I'm sorry we don't have it." She walked away and a customer walked up to and said "the book is over there" and led me to a section and it was an entire wall full of the book, literally. So I grabbed the book and I go to checkout and I'm standing in the line, it must have taking me 25 minutes to pay for this book.

Now, I understand that when times are tough maybe you pull back a little bit on training, maybe you pull back a little bit on staffing – but, isn't that just a great example of bad decisions being made. Give that woman who's a greeter a handheld computer that will tell her where every book is, all she has to do is type in the name. That's no cost or whatsoever. Add a couple more of people for whatever… $10 an hour (I doubt they even get paid that) and get them staffing the cash register because people don't take care of their customers.

So if you want to run a successful business right now, start taking care of your customers. Don't make those silly decisions that may be working right now on the bottom line in the short term but are going to cost you customers an opportunities in the future.

Peter: That is so true and so many companies are doing exactly that; they're cutting back on customer service, they're cutting back on staff, they're cutting back on training. In the long run, that is really going to implode their businesses.

Charles: I just think that we've seen it. One of the early lessons I learned in my career was when times are tough, the finance people will drive this and most senior managers will say we've got to cut expenses, everything that we can't afford, we've got to cut any discretionary dollars that we spend.

When times are tough, the best thing to do is invest in marketing and sales. The problem with that is is that you don't know that any investment you make in marketing and sales will directly lead to improved demand for your products or services, but it's a risk you take, but the smart money takes that risk. That's really at the point at which you start spending money, rather than stop spending money.

Peter: A couple of examples. Of course, these are examples everyone uses that you have in your book of companies that are going about this in a very strategic way are Apple and Google.

Charles: I mean I can't say enough about Steve Jobs. I buy absolutely everything that Apple produces. I'm always stunned at how good the products sound, the services are. And if I think about what makes a company like Apple successful – just to stay with them for a moment – there is a real focus on the user experience. This is all about how the customer feels. This is part of Steven Jobs' brilliance is that it's a beautiful design, it's got ease of use, all of those things that are so important. I just think that he does a brilliant job, and I wonder if part of the reason that he's so successful is that he went through some tough times early on.

Remember when they brought in Scully from Texaco…

Peter: Oh yeah.

Charles: …and he essentially got fired. So maybe there is something about leadership – and I talk a little bit about this in the book – maybe there is something about this theory of twice born leaders, that when leaders go through something difficult, then they learn how to help other people through difficult situations in the future.

Maybe that's another positive that will come out of what we're experiencing right now is that maybe we'll all learn a little bit about how to recognize our own fallibility, how to focus on things that are important so that we can be more successful… the focus on the customer. The focus on the customer. And also the idea that you don't start cutting back when times are tough. I would bet that Apple is spending at least as much in R&D as they have in the past, if not more.

Somebody gave me a quote that I had never heard from, which was "If I have $1 left, I'm going to spend it on marketing." And I think that really says it all.

Peter: Absolutely. I really appreciate your time today, Charles. What did you learn in writing Management Rewired that you'd like to share with the audience?

Charles: If I can, I'd like to share two things. The first thing is that although for a long time, I've sort of preached this idea of focus on the customer and really think about where they're at and to treat everybody as customers – your employees, members of your family… if we begin to recognize that any human relationship we have is about selling, we're going to be a lot more effective.

And so then I sit down and write this book, and the first edition of the book I give to my brother to read, and my brother tells me that nobody would ever want to read the book. I didn't even pay attention to the #1 rule that I had been telling all of my clients that I'm writing in the book, which is pay attention to customers. So it took me awhile to understand how to write in a way so that it's interesting to read and so that people wouldn't want to put the book down. It's literally turning yourself inside out and trying to step into the shoes of the reader.

The second thing that I learned that for me has just tremendous ramifications is that we only know our ideas about the world; we don't know the world directly. This sounds a little philosophical, but really what it means is that the world we live in is mental. Mental worlds operate differently than physical worlds.

We don't have to worry about motivating people or pushing people; what we really want to do is use ideas to create the kind of mental environment that will select out the behavior that we want. And that's really a very different approach. So what we should be working on is helping people to think in different ways so they'll do the right thing, not worried about whether we have the right reward system in place or whatever; let's tap into what makes people really excited about our work.

Peter: Charles, again, thank you so much for taking time to speak with us today on Total Picture Radio. I look forward to doing so again.

Charles: Peter, thanks a lot. I'll be happy to come on anytime. I've really enjoyed it.

Peter: Thank you.

Charles S. Jacobs is the founder and managing partner of 180 Partners and the author of Management Rewired: Why Feedback Doesn't Work And Other Surprising Lessons From the Latest Brain Science.

Charles' feature page is in the Leadership Channel of Total Picture Radio – www.TotalPictureRadio.com - where you'll find resource links and more information.

This is Peter Clayton reporting. Thank you for tuning into Total Picture Radio, the voice of …

Here's a sample from Charles' Management Rewired blog, titled 5 Tips for Failing Miserably as a Manager.

There are many articles on tips for succeeding as a manager, but there aren't any for those managers aspiring to failure. The benefits of failure are many: the chance to move away from a material lifestyle to a more parsimonious one, the free time to pursue the increasingly popular hobby of rummaging through dumpsters, and the opportunity to bond with other like-minded souls at the unemployment office, to name just a few. My research in brain science proves that these following tips are guaranteed to make any manager fail to achieve the results they intended:

Check with Your People Frequently to See If They Need Help. Not only will this suck up huge amounts of your time, it will distract you from the more value-added strategic work you should be doing. Even better, though, it will drive your people nuts. Given their perspective, they'll misinterpret it as you checking on them because you don't trust their competence. They'll become resentful and passive, ensuring that the performance of your business spirals downward.

Give Direct Feedback on Performance. Even if you think it's constructive, they won't. Because it conflicts with their self-image, they'll either reject the feedback or reject you. If it comes across even the least bit punitive, they'll growl at you with aggression and be motivated to do exactly what the feedback tells them they shouldn't. In other words, if you tell them "You could be better at punctuality" this will ensure that they won't show up to work at all.

Set Stretch Objectives. If they're really a stretch, there's no way people will be able to achieve them, and they'll become so frustrated that they'll stop even trying. Because the objectives come from you, rather than from them, you can bet they won't be a good fit with the job. Plus, if you insist on managing only by the numbers, without reference to an aspirational vision, you'll guarantee that people don't use the emotional part of the brain. It will both sap their energy and bar them from accessing the past learning that allows them to make better decisions. So if you tell them to reach for the stars, they'll instead reach for a sledgehammer with your name on it.

Focus on Behavior, Not Attitude or Intent. If you tell people specifically what to do and don't address the thinking behind the behavior, you can ensure they'll do it badly. Without that overarching understanding, the behavior won't fit the specific situation they find themselves in, different behaviors will conflict with one another, and they'll be executed unwillingly. When AT&T insisted that operators say, "Thank you for calling AT&T," their snarkiness reached new heights.      

Install Tight Control Systems to Ensure the Right Behavior. Control systems may just be the best tool for a manager that wants to fail. They signal that employees aren't trusted to do the right thing and so demolish their loyalty. They're costly and tend to squander resources, like the one that insisted on reports filed for even a fifty-dollar expense when it cost seventy-five dollars to process it. If they're particularly irksome, employees will waste countless hours figuring out how to subvert them. Best of all, control systems eliminate any need for employees to feel they're personally responsible for doing the right thing.            

With proper attention to these tips, most managers should find themselves free to pursue other career options in a matter of months. There is a danger, however. In direct opposition to what we're learning from brain science and management research, a number of organizations believe that this is the right way to manage. Should that be the case in your company, you may instead find yourself rapidly promoted up through the ranks in direct proportion to the lack of results you'll achieve.  

You'll make a boat load of money in the short-term and sink the company in the long-term. The Board of Directors will eventually have to fire you, but you'll leave with a nice severance package. Hey, everybody in finance has been doing it with proven results so why not you?

You'll have to forego the camaraderie of the food bank and the carefree life of the homeless. But the mind is a wonderful thing. If you close your eyes and imagine hard enough, imported pate can taste just like the dog food the wiped-out shareholders in your company are forced to eat.

© 2009 Charles S. Jacobs.

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