Humans are lazy thinkers. Although the brain comprises only about 2.5% of our body weight, it generally uses 20% of the body's energy. That's why the human learning machine prefers to operate in a low gear—on autopilot—as much as possible: It's a conservation thing. As Nobel laureate and behavioral economist Daniel Kahneman puts it, "Laziness is built deep into our nature." So (your slothful brain is probably thinking) what's wrong with that? Well, according to Edward Hess, the big problem is that business has taken the "laziness model"—aka operational excellence—as far as it can go.
"The lazy brain is why the operational excellence model—in which companies fight for dominance by being faster, better and cheaper—rose to dominance in the first place," says Hess, a professor at the University of Virginia's Darden Graduate School of Business and author of the new book Learn or Die: Using Science to Build a Leading-Edge Learning Organization (Columbia Business School Publishing, 2014, www.EDHLTD.com). "We take what we already know, replicate it, improve it and repeat. It is much easier than thinking innovatively.
"Unfortunately, many of the jobs this model creates can now be done by machines," he adds. "Today, the only real competitive advantage is an ability to learn and innovate. That's it. And if your business is set up on the old model, it just doesn't lend itself to learning and innovating."
Fact is, the old operational excellence model provides too many reasons not to learn—too many reasons to remain lazy, complacent, robotic. Steeped in the "command and control" paradigm of operational excellence, leaders (and employees) see learning as a high-risk activity. Combine a deeply entrenched attitude that risk-taking is a no-no with the brain's inherent laziness and you get a company that can't innovate its way out of the proverbial wet paper bag.
The implication is clear: If you want to survive the coming Digital Age of Machines (aka the 21st century) you must give your culture a serious shake-up. You must engage and reward people so strongly that they're willing to override their natural tendency toward laziness and continuously generate and share new ideas.
"In other words, you have to create an idea meritocracy," says Hess. "Doing so requires creating a hybrid business model, one that prioritizes the need for innovation while keeping in play the best aspects of operational excellence—for example, its focus on relentless, constant improvement. Succeeding at this hybrid culture requires a commitment to learning. Lazy brains won't survive."
How can you and your employees energize your lazy brains and revitalize your culture in the process?
Transforming New Ideas Into Products
Empower fast, cheap, customer-centric experimentation. Intuit is a very successful and highly profitable company. (Quicken, TurboTax, and QuickBooks are a few of its products.) About eight years ago, after becoming concerned that it was losing its edge, Intuit proactively created a new culture and installed new processes, all designed to create an idea meritocracy. One of its primary goals was to galvanize product development by discovering often-unstated customer needs and creating solutions for them.
"Intuit wanted to empower idea generation and encourage fast, cheap, customer-centric experimentation by all employees," explains Hess. "As part of the transformation, founder Scott Cook stated that decisions would no longer be made at Intuit based on PowerPoints and politics, but by customers themselves, who will 'vote with their feet' for the ideas they like best.
"They designed the experiments to first test key customer needs or value assumptions so that they could move quickly on critical 'must-have' data," he adds. "Also—here's the 'cheap' part—they decided to start small in scope until innovators had more and better data to justify a larger investment."
In India, young Intuit innovators conducted an experiment on helping farmers get the best price for their products—even though management initially wasn't interested in the idea. Operating under Intuit's new "Caesar is dead" principle, they forged ahead with their research and spent time with farmers to understand their business challenges. They found the farmers didn't know what price wholesalers would pay on any given day in any geographical market for their crops. So, they created an app for mobile phones that provided farmers with daily prices from various markets. As a result, the farmers could choose to travel to the market that would pay them the highest price; 1.6 million Indian farmers now use the successful program.
"Cook and other leaders have made this a prime example of how empowered employees can quickly and cheaply transform new ideas into products that materially improve people's lives," says Hess. "Allowing employees to pursue their own ideas is a great cure for lazy thinking and one in which Intuit wins either way. If an idea succeeds, the company reaps the benefits. And if it doesn't, the company still has energized, engaged employees who are motivated to try again."
Turn mistakes into "surprises." Another major change was needed at Intuit to fully engage the workforce in this new culture of innovation and learning—specifically, a new mental model about mistakes. Fact is, lots of ideas just don't work out. They may not be supported by data when they are tested, or a process improvement idea that looked wonderful in theory may not work as expected in practice.
"In an idea meritocracy, mistakes like these are not punished so long as financial risk parameters are respected," Hess asserts. "Instead, they are viewed as learning opportunities. There is no mistake so long as you learn. Intuit even calls mistakes or experimental failures 'surprises.' First of all, while mistakes are not good, there's no negative connotation with surprises. Surprises don't elicit the same amount of fear and anxiety that mistakes do. And when we aren't afraid, we're more likely to take risks that have the potential to lead to big wins. Second, in many cases, those 'surprises' ultimately point employees down a different path that could have great promise."
Teach employees to work around their weaknesses. Bridgewater Associates, the largest and one of the most successful hedge funds in the world, implements its idea meritocracy through a culture and processes designed to help people overcome the common human obstacles to learning: their cognitive blindness, dissonance and biases, and their ego-driven emotional defensiveness. Bridgewater does that through radical transparency, constant stress-testing of one's thinking by others, the daily rigorous use of best learning processes, complete candor, permission to speak freely, and an egalitarian idea meritocracy where everyone has the duty to challenge ideas regardless of rank or position in the hierarchy.
Bridgewater also has installed root cause analysis as its standard process of diagnosing problems and examining results that differ from desired results. To do all of that well requires employees to be aware of their personal weaknesses and to either get training to improve those weaknesses or to team with others whose strengths complement those weaknesses.
Empowering Employees to Fix Mistakes
Let employees "pull the cord." Sometimes employees see big problems and mistakes but feel powerless to make a change. They figure bringing mistakes to the attention of higher-ups is above their pay grade and not a part of their job description, or they fear ending up being the proverbial messenger who gets shot. Of course, these feelings of powerlessness are terrible for morale and just encourage people (and their brains!) to keep going on autopilot.
The solution is to make it very clear to employees that they are able not just to point out problems, but to take bold action to correct them. At Toyota, an idea meritocracy was created by giving every employee in the factory the ability to "pull the cord" at any time to stop production. In other words, all employees were empowered to take ownership of preventing defects and mistakes.
"In many cases, fixing a mistake required a team to discover the root cause of the problem and to devise a process that would prevent that mistake from happening again," Hess comments. "Empowering line employees to take responsibility for continuously improving processes using root cause analysis helped Toyota keep employees engaged and was Toyota's quality differentiator for years. Unfortunately, Toyota diluted that system in its drive for global expansion and global sales leadership."
Make it a duty to dissent (even when you have to shoot down a HiPPO). Google's culture is built on driving innovation and experimentation—in other words, trying new things. To support this culture, pay level is irrelevant in decision making, and so is experience or tenure—unless the experience provides data used to frame good arguments. In fact, Eric Schmidt, Google's chairman, stated in the book How Google Works that Google employees are told not to listen to "HiPPOs," or the "Highest Paid Person's Opinion."
"At Google, permission to speak freely is not enough—one has a duty to dissent," notes Hess. "This means that relative 'rookies' can—and do—raise objections and present alternate ideas when they disagree with their bosses. A similar duty to dissent can be found at UPS, which has an employee-centric culture of 'constructive dissatisfaction,' meaning that everyone has the duty to find ways to improve.
"Allowing dissent is yet another way to combat lazy thinking," he adds. "When employees know their voices not only will be heard but are needed, they're far more likely to engage in the kind of thinking that leads to big ideas and positive changes."
Idea meritocracies are able to continuously improve or innovate faster and better than the competition, says Hess.
"Seek to engage all employees in constant improvement or innovation through everyday learning," he advises. "No matter what product or service you sell, in order to compete in a technologically advancing, highly globalized competitive environment, you must be in the business of learning. You must build a culture where lazy thinking is snuffed out and big thinking is encouraged and rewarded."
Edward D. Hess is a professor of business administration and Batten Executive-in-Residence at the University of Virginia's Darden School of Business and the author of 11 books, including Learn or Die: Using Science to Build a Leading-Edge Learning Organization, by Columbia Business School Publishing (September 2014).