Stop Spending, Start Managing: Strategies to Transform Wasteful Habits - Hardcover

Menon, Tanya; Thompson, Leigh

Hardcover

ISBN 10: 1422143023 ISBN 13: 9781422143025

Publisher: Harvard Business Review Press, 2016

Synopsis

Too often, managers spend money to solve problems at work, whether that means hiring outside consultants, investing in new software to fix communication issues, or bribing employees with cash to motivate them. But many managers are surprised when the problem they tried to solve reappears a few months, weeks, or even days later. The money is gone, but the problem is still there.

These costs can add up, particularly when you consider the additional loss to your company in wasted time, energy, and resources when you don’t solve problems effectively. Tanya Menon and Leigh Thompson, experts in how organizations work, have developed a framework to help you understand why you fall into this trap, and how to escape it.

Five psychologies—each of which substitutes spending for your own powers of management—lead to wasteful spending:
1. Mindless spending: throwing money at a problem to avoid thinking about it;
2. Ego spending: squandering resources to make yourself look good;
3. Please-like-me spending: wasting time and money to avoid conflict;
4. Talk-to-me spending: buying expensive technologies to help people communicate; and
5. Follow-me spending: using financial incentives to motivate people

To break these habits, Menon and Thompson show how you can use your smarts as a manager to find solutions. By consciously observing waste and identifying hidden value, widening your mind-set beyond ego, courageously negotiating with others, encouraging meaningful interaction, and transforming people with positive values and relationships rather than cash, you can overcome these psychological barriers and find the value that already exists in your organization and yourself—for free.

About this title

About the Author

Tanya Menon is an associate professor at Fisher College of Business, Ohio State University. She is also an associate editor at Management Science, and her research considers how people in organizations collaborate.

Leigh Thompson is the J. Jay Gerber Distinguished Professor of Dispute Resolution & Organizations at the Kellogg School of Management, Northwestern University. Thompson has authored several books, including Creative Conspiracy and The Truth About Negotiations.

Excerpt. © Reprinted by permission. All rights reserved.

Stop Spending Start Managing

Strategies to Transform Wasteful Habits

By Tanya Menon, Leigh Thompson

Harvard Business Review Press

Copyright © 2016 Harvard Business School Publishing Corporation
All rights reserved.

ISBN: 978-1-4221-4302-5

Contents

CHAPTER 1 How Spending Substitutes for Managing, 1, 
CHAPTER 2 The Expertise Trap, 33, 
CHAPTER 3 The Winner's Trap, 63, 
CHAPTER 4 The Agreement Trap, 91, 
CHAPTER 5 The Communication Trap, 119, 
CHAPTER 6 The Macromanagement Trap, 147, 
CHAPTER 7 From Wicked Problems to Workable Solutions, 177, 
Notes, 193, 
Acknowledgments, 211, 
Index, 000, 
About the Authors, 000, 

CHAPTER 1

How Spending Substitutes for Managing

For the past year, Sandeep had been leading what he called "a team in name only." At this point, he felt down for the count. He took a moment to consider how things had gotten so dysfunctional, and at what cost.

As a senior executive at a multinational software company, Sandeep was tasked with developing a strategic vision and getting buy-in from the high-level players on his cross-functional team. Facing new competitors in an already crowded market, he had little room for error. But even before he took over, the odds were against him. His two predecessors had spent upward of $5 million on surveys, focus groups, ethnographies, and market analyses. In the end, they failed to implement a functional strategic vision. One of the previous leaders had been demoted, and the other had left the company.

Now it was Sandeep's turn at the helm. He immediately discovered that the marketing and technical groups on this team were incapable of agreeing on which projects to pursue. The marketing group wanted to move product quickly and reduce offerings to only the most successful products. The technical group wanted to pursue several different projects at different stages of development. To the technical folks, the marketing focus was "small picture." To marketing, the tech group's ambitions were "pie in the sky" and impractical. Meetings were contentious, inefficient, and counterproductive.

Sandeep did his best to break the stalemate. To try to get the group talking, he created opportunities for regular videoconference updates. Yet the patterns of deadlock persisted. When he initiated one-on-one conversations with team members, all he got was finger-pointing. He spent thousands of dollars organizing an off-site retreat that was no more productive than the conference calls. Both groups continued to advocate their preferred solutions without listening or learning from each other.

Sandeep hired yet another consultant, who proposed yet another user ethnography. On this, at least, both tech and marketing sides agreed: "We want insight and action — not more research."

Finally, having gained no traction on any of his efforts, Sandeep knew he had no choice but to ask the two strongest (and most obdurate personalities on either side to step down from the group so he could dismantle the coalitional dynamics. He had no illusions about how this strategy would be perceived by the overall group. "It will be terrible," he conceded.

We asked Sandeep to calculate how much this impasse had cost the company. As a highly analytic thinker, he took this question quite literally. Pulling out his calendar, he backtracked to when he first took over the team. His only real expense was the several thousand dollars he spent on the off-site and consultants, nowhere near the $5 million his predecessors had converted into beautifully bound reports and PowerPoint decks.

But then he examined a typical week, flagging all the relevant meetings, engagements, and presentations and noting how many people were involved in each "time sink," as he referred to the wasted energy and time. After a few moments of painful calculation itemizing the person-hours wasted in dysfunction, he said, "Hours are not even the right metric — we are talking months of squandered time!" When he included the missed business opportunities as well, Sandeep estimated that well over $5 million had evaporated.

Getting traction on Your hardest problems

In our work as business school professors and consultants, we've met countless managers like Sandeep who, despite their sophisticated training and best intentions, fail to achieve their goals. They've come up against problems that refuse to budge no matter how hard they push. As gritty and persistent as managers are, at some point, they all face people problems that sap their time, money, and energy without producing results. Indeed, such problems may even get worse the harder they try to solve them. At first, managers may not see the signs of the money pit, but eventually the reality of investment without return becomes inescapable. And, perhaps, like Sandeep, you've said, "Enough is enough."

To investigate the price of what we call action without traction, we surveyed eighty-three senior executives (70 percent male; 87 percent with more than ten years of work experience, with 45 percent having ten years or more in senior management roles) from a range of different industries, countries, and functions. We asked them to identify their most critical people problem at work and estimate the company's expenditures in dealing with just that one issue. On average, they estimated that the problem had cost them $15,470,289.99 and 5,514 hours and that, on average, 357 people in their organizations could have been doing something else other than dealing with the issue. We left this survey open-ended so executives could generate their own numbers. These were their perceptions, not scientific calculations, but they pointed to the magnitude of resources wasted on these issues.

We then asked the executives to identify, from a list of problem-solving approaches, all the things that their organizations were doing to try to solve the problem: 68 percent reported discussing the problem in meetings, 43 percent were conducting analyses, 36 percent had hired a consultant, 23 percent had fired people, 30 percent had hired more people, and 11 percent had taken other actions. Only 20 percent had done "basically nothing" to address the problem. Executives estimated that there was a 46 percent chance that these approaches would solve the problem. In spite of all this spending, only 16 percent believed that it would be possible to purchase a solution; 60 percent believed that it was impossible to purchase the solution, and 24 percent were unsure whether such a solution could be bought.

In other words, managers are trying to solve intractable people problems in any way they can. They're exhaustively using all their skills to find solutions — spending time, energy, and money in the process — yet these problems still persist.

If you have ever experienced this feeling of action without traction in your own work, then this book is for you. We wrote it so that managers can stop spending and start managing. Most of the leaders and managers we have worked with are highly motivated and educated, yet when they confront certain people problems, they can't easily rely on algorithms and established management strategies to provide clear solutions. And so they can become vulnerable to what we call spending traps — where spending, whether it's through money or time, energy, and other resources, comes to substitute for the real work of leading, managing, and executing. The strategies in this book allow you to escape such traps and transform your vexing people problems with solutions you can apply yourself through the skills you already have as a manager.

Let's begin by looking at how thorny problems — like those confronting Sandeep — emerge, grow, and explode, causing people to fall into spending traps. In trying to understand how managers navigate these impasses, we've observed three key insights: First, people problems, not technical problems, exact the greatest toll on productivity. Second, managers often squander thousands of dollars every day in lost opportunities, aimless meetings, and squabbling teams without realizing or tracking these losses. Finally, most managers in impasse aren't paralyzed in inaction. They are in fact engaged in constant action, but that action is ineffectual, failing to produce rewarding outcomes.

Something Wicked this Way Comes

When you ask most people what a "hard problem" is, their first response typically involves intellectual paradoxes in math or chess, or technical engineering issues. However, these are the very types of problems that managers can often solve with their intelligence, training, and analytic models.

Instead, at the heart of most apparently intractable problems at work, we usually find people problems. These might include the colleague with the enormous ego and toxic personality, the team with inefficient decision-making processes, an employee who is unmotivated to change, and all the resulting conflicts that emerge from these human dynamics. It is these predicaments — not the technical enigmas — that ultimately become the deepest time sinks and money pits that managers face, precisely because they seem impossible to correct through coherent methodologies and analytics.

Wicked problems are a class of truly hard problems — policy problems like climate change, terrorism, and the health-care and pension crises. The word wicked does not refer to their good or evil nature, but rather to their deviously impenetrable structures. Because people problems have wicked features, conventional approaches do not allow people to appreciate their complexity, and may, in fact, lead to wasteful and ineffectual strategies for solving them.

Of course, managers never get a memo or an e-mail that clearly announces that a wicked problem is brewing in their organization. But there are at least four cardinal characteristics by which we can recognize the wicked problems that can ensnare us. And Sandeep's people problem met all the criteria.

One feature of wicked problems is that they lack a neat formula for resolution. With more technical or logistical problems, we can rely on established algorithms to work through the issues. But people problems such as Sandeep's always involve unique individuals with complex issues and concerns that can't simply be modeled and resolved through linear problem solving. Wicked problems do not have "owner's manuals" or their own go-to answer key.

A second key feature is the lack of demonstrable answers. Ordinary problems, such as "What is 240 divided by 6?" or "What is the price/earnings ratio of our acquisition target?" have clear, verifiable answers. However, the people problems that keep managers up at night have no conclusive solutions. Instead, there are multiple possible strategies that they need to work through, and there is no single best answer — indeed, often there are no solutions whatsoever. And in many cases, truly wicked problems cannot be solved; at best, they can be tamed.

Another feature of wicked problems is that it is often impossible to test proposed solutions. When you're dealing with people, you could test different solutions but those tests could have irreversible consequences. In Sandeep's case, if a new strategy caused certain members of the team to become angry and frustrated, the situation might devolve irretrievably.

Finally, wicked problems contain complex interdependencies to multiple problems. Sandeep's team was embedded in a complex, global, cross-functional network, so any action could create ripple effects. The two ringleaders were of course linked to others, so if Sandeep antagonized them, he could lose the rest of the network, multiplying the problems. People problems leave little room for error, so one impulsive move can cost you dearly.

As we'll see, the managers and leaders who are most effective at managing wicked problems are those who — rather than fixating on the conventional solutions that initially come to mind — actively shape these problems and then identify a diverse range of options to combat the issue.

The Hidden Waste of People Problems

When managers think about people problems, they often picture small-scale inefficiencies — arguments with coworkers, unproductive teams, disorganized meetings, and unmotivated employees. By contrast, when they think about issues in finance, marketing, and operations, they mention high-level issues that could rise to the CEO's desk.

In our work with organizations, we have observed that while managers might be personally frugal and careful in the financial aspects of their operations, they unconsciously tolerate significant waste with respect to their people problems. Managers like Sandeep are often stunned when they discover the value being erased by the "small-scale" issues. People problems typically become the largest money pits at work, and they grow without the organization's awareness because the true costs of this class of problems typically aren't measured. Because such problems are not readily quantified in the way that, say, capital expenditures are, we became interested in trying to calculate the everyday value destruction they trigger. In addition to quantifying the waste, we also hoped to develop methods to escape these money pits that capitalized on ideas, not invoices.

What's in Your Garbage Can?

A popular TV commercial has the tagline, "What's in your wallet?" We became interested in finding out what is in managers' garbage cans — whether it's wasted money, time, knowledge, or other resources. To quantify the waste from people problems, we developed a survey called the Daily Waste Score.

We asked the eighty-three executives who spoke to us about their most critical impasses to put a price on the amount their companies lost each day due to a range of "small-scale" people issues like interpersonal conflicts and unproductive weekly staff meetings. We gave them a number of prompts and asked them to estimate the daily costs, on a scale of $0 to $20,000, of each. Figure 1-1 shows the results of our findings. (You can calculate your own Daily Waste Score by filling out the chart at the end of this chapter.)

We expected our study to reveal significant waste. However, we were not ready for the magnitude of the results. We were expecting a tremor and we witnessed an earthquake!

Bottom line: In the course of a day, the executives estimated wasting an average of $7,227.07 per line item per day, for a total of $144,541.30 per day, summing each of the twenty points of waste. That's an astounding $52,757,574 of lost value and potential per year per organization on "small-scale" people problems. Again, these are perceptions rather than scientific measures, but they reveal the significant value that could be captured by addressing these issues.

The Two Types of Waste

The losses calculated through this survey can be classified into two different types of waste. Type I waste is readily discernible and easily quantifiable in immediate financial losses. Consider the following example: In 2005, former French president Jacques Chirac unveiled Airbus's plans for a double-decker jet, the A380, in a glittering party that celebrated both European integration and technological advancement. However, at that very moment, Airbus engineers were already in firefighting mode, caught in a crisis that would belie both claims; cost the company over $6 billion in materials, labor, and multimillion dollar fines for delayed delivery; and ultimately send the parent company's stock tumbling over 26 percent.

The ostensible reason for the delay was a software compatibility problem. When the German factory delivered hundreds of miles of cable, it failed to fit the planes on the assembly lines in Toulouse, France. (To appreciate the complexity: each plane required 100,000 different wires, for a total of 330 miles per plane). But underneath this apparently technical problem, there were layers of wicked people problems. The French head of the A380 program had unsuccessfully tried to persuade the German designers to update their software to integrate it companywide. In the words of a senior Airbus executive, "It was partly a question of national pride. The German engineers sort of felt that there was a French solution being imposed on them. But the fact was there was a tool being used in Hamburg that was behind the times." And at the top, the rivalries between the French and German leadership personified the company's decades-long efforts to integrate the British, Spanish, German, and French manufacturers into a single company.

(Continues...)

Excerpted from Stop Spending Start Managing by Tanya Menon, Leigh Thompson. Copyright © 2016 Harvard Business School Publishing Corporation. Excerpted by permission of Harvard Business Review Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Edition details

• Publisher: Harvard Business Review Press
• Publication date: 2016
• Language: English
• ISBN 10: 1422143023
• ISBN 13: 9781422143025
• Binding: Hardcover
• Number of pages: 208