The Ape In the Corner Office

At the kleptocracy called Enron, executives built a culture dedicated to stealing from grandmothers—and they justified it with one of the most misinterpreted ideas in modern science.

SAP & The Perils of Imitating Highly Profitable Companies
February 12, 2006

Humans are built to imitate. We actually have mirror neurons in our brains to help us do what everybody else is doing. That makes it easier for us to fit in as members of a highly social species.

The trick is to avoid imitating stupidly, right?

But our natural urge to shun failure and imitate success can be hazardous, particularly in business.

Let's say a highly successful company reports that it uses "quality circles," or “job enrichment,” or “total quality management.” Competing managers hear that and leap to the conclusion that the company succeeded because of this management innovation. So they try it, too. A study at Cornell University demonstrated how imitating "excellence" in this fashion causes management theories to rise and fall in wildly faddish cycles.

Later, it turns out that the success of the company that started it all had nothing to do with the big new management idea. The company may even have succeeded despite the innovation. But nobody notices. Because of the business obsession with success stories, managers have already moved on in search of the next big idea to imitate.

This all comes to mind because of the current ad campaign in which software maker SAP is actively seeking this kind of blind imitation. It boasts that customers using its software are 32 percent more profitable than companies that don't.

Blogger Nicholas Carr suspected that this statistic was misleading and said so. The company that did the research for SAP issued a huffy reply. Among other things, the CEO who wrote the letter said that this was clearly "a success by association Ad campaign. There are no claims in any aspect of the campaign that imply that the client's success is because of SAP."

But here's what the ad actually says: "The right software can make any size company more efficient, more agile, more responsive. In short, make your company more. That's why companies that run SAP are 32% more profitable than companies that don't."

Reminded of this wording by Carr, the CEO for the research company replied, with disarming honesty, "You are correct. I guess I didn't pay enough attention to the voiceover."

So that 32 percent bragging point? It's one of those statistics that sound good but mean nothing.

And the moral? Don't just use the part of your brain that's built to imitate. You're getting paid the big bucks to think about the hard questions. So ask that high-priced consultant about the times when his big new idea failed. That's often a lot more interesting than when it succeeded.

Otherwise, you could end up as just another upper management sucker, blindly imitating make-believe success stories.

And I got a statistic here that says you will be, let me see now, 32 percent less profitable.

December 18, 2005

Have you spent too many hours this year riveted to television images of people suffering through all our worst nightmares: Fleeing tidal waves, stumbling out of bombed subway tunnels, wading past dead bodies in the streets of a great American city?
Why do we watch? Why do get so emotional about people we’ll never meet? Why do we sit through endless replays of the same horrific scenes (as if maybe this time it will come out differently)?

Scientists say we watch partly for self-preservation: Paying attention to other peoples’ disasters is a way to keep the same things from happening to us. That’s one reason we like thrillers and shark-attack movies so much. It may seem jarring to conflate Hurricane Katrina with, say, “Jurassic Park.” But both play on biological systems that have evolved to help us save our own skins.

The explanation starts with the victims themselves: Let’s say you narrowly escaped the terrorist bombings in London this summer. “Flashbulb memories” of the event are probably imprinted on your brain, particularly in the amygdala, which is your subconscious fear central. If you encounter some hint of that experience, even years later, the amygdala’s role is to put you on alert before your conscious mind suspects that anything is amiss. That way, you have a better chance of getting out alive.
What’s more surprising is that almost the same response occurs even in people who merely watched on television. “When you watch somebody else in a fear learning circumstance,” says New York University neuroscientist Elizabeth Phelps, “you will have a reaction in the amygdala as if it’s happening to you.” You feel their fear, and this fear helps prime your own subconscious first-alert system in case you ever face a similar crisis.

But our intense interest in disasters isn’t just a matter of self-preservation. We are also built to connect with other people and share their emotions: When someone looks frightened, our eyebrows also rise in fear, often without our being aware of it. When we see a child’s face screwed up in anguish, we make the same face, and doing so actually causes us to feel sorry, too. When we see someone else in pain, it activates the pain-sensitive regions of our own brains.

Being on the same emotional page helped keep families and tribes together during our evolution, when food was scarce and predators abundant. Groups that didn’t “click” tended to get a brief, bloody lesson in natural selection. As a result, empathy, emotional contagion, mirror neurons, and other mechanisms for social bonding are now built into our biology. Television simply “grafts onto these innate systems,” says University of Western Ontario psychologist J. Phillippe Rushton, “and when we look at people suffering 12,000 miles away, our bodies react in the same way.”

November 28, 2005

The other day, a colleague in Africa got back to me about an email request:

Hi Dick
I see that you sent this a few days back. Unfortunately one of our staff got eaten by a lion so we have been trying to sort the mess out ...

He wasn’t kidding. Things like that still happen in the African bush.

But it also wasn’t as far from our own daily experience as it sounds. Until a few hundred years ago, we all lived with the threat of predators. That forgotten evolutionary experience is still part of our genetic memory. And every time we walk into a meeting or get up to give a talk, there’s still a part of us that’s wondering, “Am I going to get eaten alive here?”

Fear is good, in moderation. It makes us alert to faint hints of trouble ahead. It tells us when to cross to the other side of the street. And thus it can keep us alive. On the other hand, fear can also make us want to close the door and hide under our desks.

The good news is that we are beginning to figure out how to control fear. Last week, a new study identified the gene that produces a protein called stathmin. In mice (and probably also in humans) stathmin is highly concentrated in the amygdala, which is the brain’s fear central. Removing the gene makes the mice a little too bold. They wander out into open spaces where, in the real world, they would get picked off by predators. Identifying the gene responsible for this manufactured courage means that someday soon science may be able to develop drugs to regulate fear and help people with post-traumatic stress disorder.

But we don’t have to wait for drugs. Other recent research suggests that meditation can also reduce the level of innate fearfulness in the brain. Despite the association with the contemplative life, meditation apparently makes people better prepared to take risks and explore new territory. Case in point: Former CEO Bill George has meditated all his life and in the 1990s, it helped him make Medronics one of the fastest-growing companies in America.

So, yeah, there are lions out there, and you need to keep your eyes open. But whistling a happy tune—or meditating a calming mantra—can help you settle down, focus on the job, and get through the day in one piece.

November 2, 2005

1. Your writing for National Geographic and Smithsonian is mostly about animals. Why a book about workplace behavior?

When I am not tracking animals in the Serengeti or the Amazon, I often write about people at work: How a supermarket runs, or how a stage manager brings a new musical to Broadway. I saw enough of the same behaviors in both worlds to think I could have a little fun—and also learn some useful lessons.

2. For instance?

Alpha apes and humans often step on subordinates, and the subordinates often pass it on. It’s called “redirected aggression,” and it helps you lower your stress hormone level and recoup your dignity. Unfortunately, it can also poison a workplace. So you need to recognize that the tendency is dangerous and take it out on a treadmill or a punching bag instead.

3. So being the ape in the corner office doesn’t necessarily mean being brutal?

Some alpha chimps rule by brute force. Others cultivate subordinates and share the rewards of the hunt. It’s the same with human bosses. With either type, understanding the behaviors—simple things like facial expressions, or the biology of being the righthand man--can help you survive and prosper. And by the way, talking about animal behaviors, and laughing about them, is also a good way to get human behaviors out in the open that you might feel awkward discussing more directly.

4. What's your favorite Ape/manager story?

Leslie Wexner of The Limited once launched a sales campaign called “Win At Retail” or WAR. He used real battle footage. Then he strode across the
stage like Patton and admonished his sales reps that “Retail is war!” And,
good grief, this was at a company that sells women’s lingerie! I try to get people to see that, even for animals, the war mentality isn’t the smartest way to succeed.

5.. You write that chimps engage in aggressive encounters 5 percent of the time and more positive interactions 20 percent of the time. Which way is it going in the workplace?

My book argues that our lives are really about cooperation far more than conflict; it's just that we're built to pay more attention to the negative
stuff. Even companies that supposedly hate each other often do deals
together. Like Sun and Microsoft, or Apple and IBM. Companies are also starting to recognize that cooperation works better than conflict with their own employees. For instance, the Gap recently published a report detailing management abuses in its Third World factories. Even Wal-Mart claims to be fixing some of its most notorious work practices.

6. Who are the worst Apes? The best?

How about Jeff Skilling, who flipped the bird at his own employees and turned Enron into a kleptocracy? Or Hank Greenberg, who ran AIG on the principle of always taking unfair advantage? There are plenty of good bosses around, too-- A.G. Lafley at Procter & Gamble, David Neeleman at
JetBlue. We just notice the bad ones because they’re more of a
threat--and, o.k., more fun to read about.

7. How does gossip fit into the office jungle?

Bosses often have this idea that they can stop employees from gossiping. Well, they might as well try to teach hippos how to dance the gavotte. Gossip is human nature. Our primate ancestors bonded by physically grooming one another. We do it by sharing the inside skinny with our co-workers. Studies indicate that gossip is overwhelmingly positive and also 75-95 percent accurate. So instead of trying to stamp it out, my book explains how to use it shrewdly.

8. What's the best piece of advice you can offer for a manager?

Misunderstanding our nature as social animals is the single biggest mistake you can make. It leads to all kinds of myths that are epidemic in the workplace—that gossip is bad, that we succeed by being rugged individualists, that conflict should be avoided at all costs, that hierarchy is a destructive force. On the other hand, understanding the biological roots of our workplace behavior can go straight to the bottom line. In my book, for instance, I describe how understanding the natural history of reconciliation saved one American company more than $75 million in liability costs. That’s something to crow about.

Why Is The Boss Such A Jerk?

October 14, 2005

It’s time to celebrate—or let’s just say observe—National Boss Day. It’s this Sunday, October 16, and you’ve gotta wonder if they picked a Sunday on purpose. In fact, you might be wondering. Do you have to be a jerk to get to be boss in the first place? Or does being boss turn you into a jerk after you get the job? Writer and commentator Richard Conniff says he’s got some
clues:

Being in charge unbalances the mind a bit. That’s the conclusion a University of California at Berkeley research team came up with recently to explain why bosses often behave badly. Getting power encourages an unihibited focus on rewards--like money, status and sex—without too much concern for the obstacles, or for other people.

In one playful experiment, the researchers put three people in a room and randomly made one of them the boss as the trio worked through a boring sociological survey.

After a half-hour, a researcher came in and offered the trio a plate of five cookies. The “boss” almost always took an extra cookie and often wound up spewing crumbs across the table. Even random power could apparently make a person "disinhibited.” They had created …a cookie monster.

Power made President Lyndon Johnson disinhibited too…he received subordinates while seated on the toilet.

All this fits with other studies suggesting that power can change an individual’s behavior and biochemistry, down to the level of serotonin and cortisol.

In fact, a Stanford University study coming out this week looks at what happens in fish called cichlids, when a low-ranking male becomes dominant.

The drab, harried underling suddenly turns bright yellow or blue. He lays on muscle and develops an impressive stripe across his face, the equivalent of managerial eyebrows. The researchers don’t say if he also starts acting like a jerk. But they suggest that there may be parallels, with cellular underpinnings, in the way humans respond to a change in social status.

O.k., a lot of you bosses are saying, “Hey, I’m no cichlid.” And no doubt it is possible to become boss and still be decent and considerate, even when surrounded by fawning subordinates. In fact, on a personal note, I’d like to say that my boss is a terrific human being. Way to go, boss. You’re the best.

We all live with facial stereotyping—and also practice it. For instance, we have evolved as mammals to coo over a baby face. That’s how nature tricks us into taking care of our kids. When baby-faced features carry over into adulthood, our innate response carries over, too. We trust people with big eyes and chubby cheeks.Go figure.
		But here’s a scary side of facial stereotyping: People seem to prefer masculine features in a leader. This may be a genetic predisposition. Or it may just be a bad habit from being bossed around for 10,000 years by what Carly Fiorina once called men “with twenty-inch necks and pea-sized brains.” Either way, the taste for masculine-looking leaders holds true even when all the potential candidates are women.
Researcher Anke von Rennenkampff did the study, using two photographs of each female candidate for a leadership position. One candidate had a biologically masculine face, the other biologically feminine. Each candidate was photographed dressed in a masculine style and also in a feminine style. Guess which photograph test subjects preferred for the leadership position. The one promising aspect of the study was that, if the feminine candidate wanted the leadership job, she could improve her standing from number four to number two simply by dressing in a more masculine style.

Duel ... Sorry ... Dual CEOs at Airbus Parent EADS

At EADS, the parent company of Boeing rival Airbus, a brutal boardroom fight ended in June with the appointment of dual CEOs. Thomas Enders, a 46-year-old German, and Noel Forgeard, a 58-year-old Frenchman, now share power.

If we can take the struggles for alpha status within chimpanzee troops as a reasonable precedent, it will not be long before one of the two CEOs drives the other into exile. And until then, uncertainty about who's really on top will unsettle the entire company.

(If you don't buy the chimp precedent, take a look at The Ape In The Corner Office, pp. 71-72, about the brief bloody period of joint leadership after Sandy Weill moved in at Citigroup.)

Enders joked about the EADS situation to the Financial Times (September 14,
2005: http://news.ft.com/cms/s/752c2026-2481-11da-a5d0-00000e2511c8.html

"It would be really funny if guys like Noel and I would say we love sharing power at the top of the company."

Boeing would probably be laughing all the way to the bank, if only they could get the apes in their corner office (former CEOs Phil Condit and Harry C. Stonecipher) to stop groping the help.

Any monkey would recognize what Rupert Murdoch was up to when he gave his kids top jobs at the company he built. Among baboons and vervet monkeys, nepotism like that comes naturally. High-ranking elders routinely interfere at playtime to ensure that Little Tiffany Baboon and Young Percy Vervet III get their way.

The new generation thus grows up secure in the habit of defeating the family ’s subordinates, and the monkey dynasty gets passed from one generation to the next. And what’s wrong with a little nepotism? Everybody does it. Bob Dylan’s son is a hit singer. John Cheever’s kids write books. Descendants of U.S. Senator Prescott Bush get to live in the White House.

Nepotism evolved as a natural behavior partly because it’s a shortcut to trust and cooperation. But kids don't necessarily inherit their parents’ abilities. Let’s talk about work dogs. Dogs inherit expertise at smelling things, a trait emphasized in German shepherds by selective breeding. When puppies grow up with mothers trained in narcotics-detection, 85 percent of them show an aptitude for the family business. But here’s the surprising thing: When puppies with the same genetic predisposition get raised by untrained mothers, only 19 percent of them show this aptitude. It’s about nurture more than nature.

Children born to the founders of great companies don’t generally benefit from the kind of selective breeding that’s common with dogs. And they may not even get raised by the entrepreneurial parent, but by the divorced spouse. Or by the nanny. So whether they inherit the right stuff for running a company is a crap shoot. And yet founding families still play a role in one-third of S&P 500 companies. Nepotism may still work. A study in the Journal of Finance found that family-controlled public companies perform significantly better than non-family companies. But a recent Harvard Business School study refined this analysis. Companies where the founder is still in charge do in fact perform better. But descendants “destroy value,” especially in the second generation.

One problem with nepotism at any company is that it creates resentment. Other employees are likely to wonder just what a buzz-cut, tattoo-wearing thirty-three year old like Lachlan Murdoch did to earn more than $4 million last year. But the real problem is that nepotism has no place when you’re playing with other peoples’ money. News Corp. is a public company, where the Murdochs own just a fraction of the stock but wield disproportionate influence. Paying fat salaries to the founders's kids can look like an abuse of managerial trust. Rupert Murdoch has built a great company. But that’s no reason shareholders should let his family monkey around with it for generations to come.

Postscript

The Wall Street Journal reported on August 25, 2005, that Lachlan Murdoch got a $5.8 million bonus for 2004, on top of his handsome salary. Shareholders in the company--and other employees--must wonder if he earned this because of his brilliant leadership abilities.

Or was it just his last name?