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It's never too late to give up

Does hard work always pay off? In some cases, definitely yes, in others not so much...

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Johan Östlin, chartered psychologist and leadership consultant at Alumni shares his thoughts.

Winners never quit, quitters never win!
According to Tobias Degsell, who has done much research in this area, Nobel Prize winners have a few things in common. The one that stands out the most is persistency, as most have continued to work, long after being told that their research was a dead end. The most amazing example might be that of Barry Marshall, who received the prize for his discovery of the bacteria Helicobacter Pylori and the fact that it causes most cases of gastric ulcer. Gastric ulcers had previously been thought to be caused by stress and spicy foods. Amazingly, Barry was not only seen as a madman by his colleagues for pursuing his idea, but also prohibited from conducting animal trials to test his hypothesis. The only living creature upon which he could legally test it was himself, so he drank a glass of Helicobacter Pylori and, as history relates, subsequently developed ulcers.

This is just one story of how grit, or 'conscientiousness' (try saying that ten times really fast), as it's often referred to within industrial and organisational psychology research, is an established success factor for individuals at work. There are also indications that this might apply on a group level; a large 2015 study conducted by researchers In-Sue, Seongsu and Van Iddekinge, found that high levels of emotional stability, conscientiousness, extraversion and agreeableness in an organisation correlated with high production levels. High production levels are in turn related to good financial results, so this tells us that organisations with nice, energetic, stable and thorough employees produce more and are financially better-off.

But is it really so simple?
If something seems too good to be true, it's often because it is too good to be true. Take, for example, the unfortunate stories of Blockbuster, Nokia and Kodak, all once market leaders in their respective fields. They didn't have a problem with production, what hit them was disruption! Blockbuster was killed by Netflix, the other two by Apple. They were killed by innovative companies, companies that had adapted to a new era. Neither Netflix or Apple were start-ups - far from it. Apple had struggled for several years before Steve Jobs returned; what he did when he came back was to stop practically everything then going on, so as to be prepared to proceed full force when the next big thing occurred. So, metaphorically speaking, he stopped running around hunting all types of prey and instead waited patiently, letting the small ones go, in order not to scare the big one away. And all this, while everyone around him was starving!

Steve Jobs' success with Apple was partly based on him forcing the organisation to stop doing things. Susan Wojcicki, CEO of YouTube and previously Senior VP at Google, provides another example of this thinking. She lists one of Google's eight pillars of innovation as 'never fail to fail'. Failure is thus an integral part of Google's success! There's logic to this; if you never fail, you probably haven't set the bar high enough. Google is not known for Google Video Player or Google Answers, but this isn't a problem; you will never be remembered for what you've tried, but for what you've achieved. Google is known for YouTube and Google AdSense, built on the experiences of those previous failures.

So, what does Google do differently? According to Google, the key to innovation is to fail fast. So that's what they do! Google Video Player and Google Answers are only the tip of the iceberg when it comes to failed projects at Google, but as they are good at failing fast, they are able to close down failed projects early, so that the cost doesn't drag down the entire business.

But how do you know which projects to pursue and which ones are failures?
Well, this is not easy! One important villain is, unfortunately, our own brain. Daniel Kahneman won the Nobel Prize in 2002, for showing that one of the cornerstones of economic theory (that people make rational decisions) is false. Interestingly, he won the prize within the field of economy, for his research in cognitive psychology. Kahneman and many others in the field of behavioural economics have shown that people are far from rational and the 2017 Nobel Prize in Economics went to Richard H. Thaler 'for his contributions to behavioural economics'.

One of the irrational things that we tend to do is complete things in which we have invested a lot of time and energy. This is not rational, because the time, energy and resources invested are already gone, whether we reach the finish line or not. The only interesting thing, from a rational perspective, would be how much return we might receive from the additional investment, compared to the current return in economic terms, disregarding sunk costs. From a rational perspective, it's never too late to give up!

So, in practice, if we have invested a lot in a digitalisation project, the decision on whether to invest more to complete it should be based on the estimated return of investment in relation to that investment and nothing else. But in reality, this rarely happens.

The sunk cost fallacy and how to avoid it.
In reality, we tend to keep fighting until we reach the finish line, no matter what. Perhaps it is because we are, after all, gregarious animals and this instinct is and has been beneficial for us from a social perspective? It is not unusual for IT projects to cost 10 times more than initially estimated. Most projects (3 out of 4 according to some studies, 4 out of 5 in others) are not only heavy in cost - they also tend to have a very limited effect on revenue generation, as they are focused on such things as internal efficacy. To refer back to Steve Jobs, this might be not only financially devastating, but also obstruct us from actually achieving the next big thing!
One way to avoid the sunk cost fallacy is to use techniques such as impact mapping, to keep track of initiatives and the goals that they are supposed to attain. Impact mapping is actually very similar to the way in which clinical psychologists work with clients, even though it comes from the software development world. The common denominator is 'smart people working with complex problems' and the thing with complex problems is that there is no best practice solution available; you'll have to find your way forward by testing different solutions, as one single solution won't solve the problem, but a certain set of solutions probably will - most often it's not the initial attempts, but, as in the Google example, later iterations.

So, from one perspective, it's better for organisations to have a lot of people with grit. But, at the same time, doing nothing or failing fast are apparently also success factors. From my point of view, it comes down, in the end, to leadership. If you have an organisation filled with people who work hard at what they're supposed to and don't stop until you tell them to, then you are blessed! But if you steer these people in the wrong direction then you have a big problem, since they will carry on tirelessly doing the wrong things. In that case you might actually be better off with a more difficult group of people who question your every step. If you don't have a good plan, it might be better to do nothing. Or, even better, to try a lot of ideas that might achieve your goals and ensure that you'll know how to fail fast if they don't.

Posted on January 2, 2018 7:31 AM |