21 Oct 2014
Blinded by the Light: Avoiding the Blind Spots of Leadership
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From post 9/11 to the Catholic Church and Penn State Football, many notable organizations have “leadership blind spots”. Professor Max Bazerman talks about the power of noticing in a leadership position and how it can enhance an organization.



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Transcript

On this edition of “The Business” — What good leaders don’t notice.

I’m Brian Kenny, Chief Marketing Communications Officer at Harvard Business School.

Max Bazerman knows leaders— He’s Co-Director for Public Leadership at the Harvard Kennedy School and he teaches Business Administration here at HBS. Even with his own leadership credibility, Max Bazerman is dogged by something: The things he and other people in positions of power fail to see— or hear— or act on. So he wrote a book about, basically, paying attention. It’s called: “The Power of Noticing: What the Best Leaders See.” And here’s one takeaway: That co-worker who gripes all the time— and just seems to stir up trouble? You might want to hear them out.

Max Bazerman: I think anybody who basically says the way we’ve been running things for the last 25 years is problematic comes across as a troublemaker. And sometimes they’re simply troublemakers and sometimes they have a really good point that we’ve been missing for an awfully long period of time.

BK: The fact is, the consequences of not listening— or acting—on what’s going on day to day can be dire. Just think of the long-standing problems at two very different institutions in the past decade- The scandal involving management at Penn. State Football— and another involving priests in the Catholic Church:

MB: Both involve child abuse. Both involved lots of people who had some information that they didn't follow-up on, they didn't act on. Lots of people who somehow believed that the problem would solve itself in some mythical way. It was shockingly unrealistic. What I find sort of fascinating about both is that the Catholic Church and Penn State Football are both institutions where people feel an enormous amount of loyalty. We often think of loyalty as a good thing and there are many good things about loyalty, but I think loyalty has a dark side. And that is that when we're so loyal to an institution and there's a serious ethical problem within that organization, it may be that we're blinded from noticing that ethical challenge. Undoubtedly in the Penn State story, in the Catholic Church story, there were people who just noticed clearly terrible information and without a doubt they should have done something. I don’t this noticing is the story. It was really the lacking the moral courage to act. But I think that there are dozens of other people, maybe hundreds of other people who had significant hints and should have felt a more significant obligation to do something about it. But with loyalty and with ambiguity and with being overwhelmed and getting different signals from different sources, it's easy to end up not acting in a situation. Where if you read about that story as a description on paper and you were asked, should the person act, your answer would be yes. But in the midst of ambiguity, busyness and confusion, so often we don't. I think that most of us would like to think of ourselves as people who would act in those situations. The question is, how do we go about changing our mentality so that we basically decide in advance that the kind of person I want to be is a person who does notice, who does follow-up on this information and when appropriate acts.

BK: What about the conventional wisdom or the advice that many of us have heard throughout our careers, which is keep your head down. Do your job. Don't make any waves. Things will work out.

MB: That may be an okay way to reduce the likelihood of getting fired, but it sounds like a dreadful way to run your professional career over the next 40 years. I think that we should all think forward to when we're retiring and what kind of legacy do we want to have left? I think that many of us, if we thought to the future, we can imagine a world where we would like to be proud of the fact that we noticed and acted on critical information that we saw.

When something seems off and you don't know quite what it is, you follow through to figure out what it is rather than saying, I'm too busy to focus on it. You think about what it is that people might not notice. What are the incentives? What are the structures that we're creating that are keeping people from speaking up when something is sort of out of whack? One of my clients, a Fortune 25 corporation has an internal video that they don't release externally, but it's an internal video of four senior vice presidents who all tell their 15 minute story of the time when their boss was doing something wrong. So they went above their boss' head and they're now senior vice presidents. This corporation celebrates their behavior rather than trying to send signals that you should never go above your boss' head.

BK: But it doesn't always work that way. So if we think about some of the examples you give in the book. Tell me where the blind spots were for example with Enron.

MB: So we've talked about it briefly earlier because I think there were a number of watch dogs who didn't bark.

One of the most important events that hit the financial world soon after the 9/11 disaster hit the country was the collapse of Enron. Enron was a firm that was involved in very faulty accounting it was fraudulent. They were hiding losses in a variety of ways and they were using a variety of different accounts to truly bamboozle the investment community. Their auditor was Arthur Andersen and as we discussed before, the job of an auditing firm is to independently and objectively assess the financial condition of the firm according to the books that the corporation presents. In this particular case what Enron was doing from a financial standpoint was truly egregious and should have been noticed by smart professionals but Arthur Andersen was earning$25 million in auditing fees and $27 million in consulting fees. At least partially as a result of their incentives to get rehired and to continue selling their consulting services, they didn't seem to notice information that was truly egregious. The question is, how could this possibly occur? When we're motivated to not notice, our ability to not notice far exceeds what our expectations are. As a result, asking an auditor to notice the fictional accounts of their client may be a lot like asking a parent to notice the limitations of their child. It just isn't reasonable to assume that when people have every incentive to not notice, that they are going to notice. Reputation is simple not sufficient when the person or the organization is not noticing has the incentive to not notice.

BK: And I'm thinking some of the people listening to this and people who read your book might have that same sort of hindsight as 20/20 experience where you've now emerged from that busy period. You actually can notice things that you might not have noticed when you were immersed in it. How would you advise somebody who has a similar kind of epiphany and maybe it's not about something as big as what you faced. But even if it's a small thing, should we go back and sort of rectify those things?

MB: I think we want to lead a life that we're proud of. So I think in many cases we want to do our best to rectify. At the same time, there are lots of people who are in situations where being a whistle blower has real risks and I don't mean to ignore those risks. I don't mean to down play those risks and I'm very sympathetic to people who don't have job security, who don't sufficiently act in ways that we can easily read a description of and say they should. But it's quite easy to understand how they don't given job insecurity, given a variety of uncertainty, given differences in how organizations respond to whistle blowers. For me, that's simply one more call to leadership to create an organization that everybody can be proud of that. They reward whistle blowers rather than punishing them.

BK: Another example that you point to, this happened back in 1986. It's a moment that I remember vividly watching it as a college student was the space shuttle Challenger disaster that happened in 1986. Where was the blindness there?

MB: That was an amazing episode and many of us can remember when we first found out that the shuttle had exploded. So the evening before the Challenger disaster two engineers from Morton Thiokol suggested that there was a problem of temperature being related to o-ring failure. The engineers, while their intuition was right, their presentation was significantly lacking and they basically presented the seven past flights of the Challenger, of the shuttle program, let me go back. They presented the past seven shuttle missions where there had been o-ring problems.

BK: And the o-rings that's what connects the different pieces of the ship together?

MB: That’s right yeah and it needs to seal in order for it to be secure. And sealing is a problem, it turned out that sealing is a problem at cold temperatures. But the amazing part is the evening before the launch when the engineers suggested that there was a problem, they talked about the seven past launches where there were problems. And then they argued with a guy named Larry Malloy at NASA who wanted to launch arguing that he didn't see a partner and the Morton Thiokol engineers said they did see a pattern. And the amazing part is that there were many smart people in that discussion who had technical training and if you asked a smart engineer if you wanted to know whether temperature was related to o-ring failure. Should you look at the successes, failures or both, the fact that the answer is both is extraordinarily obvious yet the discussion focused only on the past failures and no one asked the question whether the successes tended to be at higher temperatures. And if anybody had noticed that they were using the wrong information, then it would have been easy to get the other 17 data points and it's quite likely that we would have never launched the Challenger on that day. And what we see in that meeting is something I think we see in lots of meetings where there's somebody, it used to be the person with the chalk and now it's the person with the PowerPoint presentation who guides what information we pay attention to. And she has a remarkable ability to influence what information is and isn't considered. And so many of us fail to step back and ask the question, what information would we actually need to address the question rather than what information do we happen to have in the room?

BK: And in this case, was there any motivation not to launch? Should anybody have been thinking about that?

MB: So I think Morton Thiokol was concerned over true, true safety issues. Back in 1986 in fact there were enormous political pressures to have a successful launch. Reauthorization for NASA was coming up and NASA dramatically wanted a success and they wanted a success quickly, not two months later. So there was political pressure in favor of launching. The real pressure to not launch had to do with the fact that Morton Thiokol had the right intuition but the wrong presentation.

BK: And certainly nobody set out with the intention of doing harm to anybody. This was not a situation where they wanted anything bad to happen but they were blinded by the fact that they wanted to get this thing out. The pressure was there to do it.

MB: I think that you have it exactly right. So nobody wants to launch an unsafe shuttle. On the other hand, they also wanted success quickly. To the extent that you're focusing on the success quickly, it's quite possible that that blinds you to the safety risks that actually exist. If we think about the discussion and there are many version that are publicly available to see that discussion, what's amazing is that Frank Malloy from NASA changes the conversation to the idea that we continue with plans to launch unless you can give me evidence that it's not safe. And we see that the status quo ends up being critically important. When most of us would argue we shouldn't launch the shuttle until we're confident that it is safe, rather than putting the burden on the engineers to prove that it isn't.

BK: Very interesting. So you've experience failure to notice in a very personal way and you write about that in the book too around the testimony that you provided in the case against big tobacco. Can you talk about that a little bit?

MB: Sure. I was an expert witness in 2005 in a landmark RICO case that the U.S. Department of Justice had filed against essentially the tobacco industry. Without going into detail, I was hired as a remedy witness and made a variety of pretty strong recommendations about the potential to provide monitors to consider restructuring the organizations within the tobacco industry. My direct testimony had been submitted in writing in mid-April. And on April 30th I showed up in Washington, D.C. to work with the Department of Justice attorney that I had been working with to prepare for my testimony in court, my cross examination in court on May 4th. After having worked on this for about seven weeks and after having basically spent about 166 hours of time, I showed up in Washington and the attorney that I was working with sat down and he looked at me in a very formal way.

BK: This is the attorney for the federal government?

MB: Attorney for the federal government for the Department of Justice who I had been working with closely for six, seven weeks. And he looked very serious and he said to me in a very formal way, Professor Bazerman, and that, my eyes startled at that because by that time he was used to calling me Max. He said Professor Bazerman the Department of Justice requests that you amend your testimony to note that it would not be relevant if any of the following four conditions existed. And I'm not a lawyer, but he then read to me four conditions in legalese that I didn't come close to understanding. And he was asking me to amend my testimony to note that it would not be relevant if any of these four conditions existed.

BK: Basically making your testimony irrelevant--

MB: [Interposing] potentially irrelevant, yeah. And I said to him so why would I agree to that when you know that I didn't understand what you just said. He said, because if you don't amend you testimony the way I just specified, there's a good chance that my superiors will eliminate you from the trial before you testify on Wednesday, May 4th. And I said, no I don't amend my testimony and he said, good let's prepare in case you're still on the case. And I remember sort of thinking this is truly bizarre and there's something wrong here. But it was also the busiest work period of my life. I was getting ready to testify a few days later, excuse me. After I testified there were a number of other illegal issues that I needed to deal with in the case. My mother was terminally ill. My sister was fighting breast cancer and life was just complicated. I'm giving you my excuses if you can't tell. Despite this sort of bizarre episode we moved forward. I did testify. I did other work for the Department of Justice in this case. And things moved forward and the case ended in early June. The judge had not rendered her decision, which would take another year. But then on June 17th I woke up at 5:00 a.m. in London. I was working with a corporate client and I woke up at 5:00, a bit of jet lag, opened up my PC and checked the New York Times and on the front page of the New York Times was a story about Matthew Myers, the president of Tobacco Free Kids. The story was about he had just come forward with evidence that Robert McCallum of the Department Justice, the number two official at the Department of Justice, was involved in tampering with his testimony. As I then sort of read what Matthew Myers had experienced, it was close to a repeat of what I had experienced on April 30th. I just had this overwhelming thought boy did I blow it. Not sure what I was supposed to do on April 30th but nothing was clearly not the right answer to this question.

BK: Right.

MB: I think that illustrates the fact that things that we need to notice are often a little fuzzy. They often don't occur at the most convenient time. Life is often busy. You have other concerns. You don't even quite know what would you do with this information. But despite all these excuses I can provide to you, I still think I made a fundamental mistake by doing nothing in response to the episodes of April 30th. On June 17th I quickly called my spouse who knew more about Washington than I did. And by the end of the day was in conversations with the Government Accountability Project, an organization that represents whistle blowers and I spoke to the Washington Post about this story and they soon covered the story as well. So eventually I got to the right answer. But for me what I think of as an inappropriate delay.

BK: So you tell this story and you talk about the sort of epiphany that you had when you opened up your computer that morning and looked at the headline, but I'm hearing you also talk about the fact that you didn't do what they asked you to do. You stuck to your guns. You went with the testimony that you originally had. So you did do the right thing. What was it that moment that occurred to you where you felt like you had failed to notice?

MB: What strikes me about that story is that by reading the account about Matt Myers on the morning of June 17th, being groggy and jet lagged at 5:00 a.m., it was obvious that I needed to do something.

BK: What was obvious about?

MB: That the Department of Justice was acting in a way that I found egregious at best and illegal at worse. And I had information about this and I did nothing about it. I'm a tenured professor at Harvard. My salary is secure. I'm a pretty hard person to harm. So why wouldn't I speak up and going back to April 30th, why didn't I speak up?

BK: Well that brings up another question that I had, which is if I've got blind spots, if I'm not a good noticer, can I really recognize that in myself or do I need somebody else to point that out to me? If so, whose best positioned to do that? Do I need to surround myself, I guess with people who aren't going to just tell me what I want to hear. We hear that a lot but you point to examples in the book where it clearly seemed like there were patterns of behavior where people didn't want to tell the Emperor that he had no clothes.

MB: Right. So I think a leader's willingness to see and hear the even bad news is absolutely critical. I would encourage all leaders to think about the most difficult of their senior executives, the ones who is always bringing up the annoying questions in meetings.

BK: We all have those.

MB: And it could be that they're just really an annoying person, but it could be that they're serving a valuable function and that they're forcing us to think about things that are critically important. That if we don't think about them now, we're going to be thinking about them down the road after the bad event has occurred. So how do we harness the power of people around us to be critical? How do we reward that function and how do we put up with the fact that none of us kind of like the person who's saying, maybe the project won't work.

BK: But maybe it won't.

MB: Exactly. And how do we go about grabbing the insight and thinking it through rather than trying to shut it down?

BK: I'm going to assume that I've already failed to notice a bunch of things as this day began. How can I get better at noticing?

MB: So I think by the fact that you asked that question you're ahead of a lot of leaders. So a lot of leaders just don't have it on their agenda to become better noticers. So I think that having a goal to notice is an excellent first step. Second, I think it's great to review recent behaviors and identify why, what didn't you notice, why didn't you notice those, how would you change those environmental conditions. I think periodically asking those around you what are the key threats and challenges facing this organization will lead you to hear about lots of information that people are sort of thinking about but aren't crystallizing and that's the nature of noticing. We do have hints. We're just not acting on them. I think that leaders are special because they affect not only their own decisions, but those around them. So what kind of culture and norms are you creating in your organization that will affect the propensity of other people to provide you with critical information that you should be noticing. What incentives exist in your organization? How do employees understand those incentives? It would be great to go talk to individuals five levels lower than you in your organization. Find out what they would do if they found that their boss was doing something in appropriate. If the answer isn't what you would want it to be, how would you create an organization that would function more effectively.

BK: Great advice from Professor Max Bazerman. Max thank you for joining us today.

MB: Thank you for inviting me.

BK: Max Bazerman’s book is entitled The Power of Noticing: What the Best Leaders See- You can find a link on our webpage at HBS.edu/TheBusiness.

BK: Take a few minutes to tell us what you notice about our podcasts, what you’d like to hear about— and who you’d like to hear from. Post your comments at #thebusiness. And Subscribe to “The Business” on iTunesU— or Follow us on Harvard SoundCloud. Another edition of “The Business” comes your way in two weeks. Thanks for listening.

End Transcript

 

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