Bob MacDonald on Business

Sage Advice for Superior Business Management

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Succumbing to Peer Group Pressure in Business is Like Suicide by Mediocrity

March 29th, 2015 · Building Better Business Managers, Business Management, Effective Leadership

Peer group comparisons are insidious because while they seem so safe and innocent, the effect is to level rather than levitate performance.

Those of you who are long-time, loyal readers of this blog (both of you) are aware of my loathing of peer group pressure and peer-group analysis in business. The problem is that when we capitulate to peer-group pressure, the standards PeerPressureof the group, rather than what we might be able to accomplish, become the measure of achievement. What is so sinister about the coercion of peer-group comparison in business is that it boils down to being pressured to do what everyone else is doing and because they are all doing the same thing, it makes it seem right and safe. My long-held, deep-seated belief is that a company wins not by being on a peer with the competition, but by being the competition.

What set me off this week was a conference call with the management of a company I have been working with and a consulting group hired by the company. The company has been struggling a bit with its performance and was seeking some assistance from the consultants as to what they might do better. The consultants started with a detailed comparison of the performance of other companies in the same industry. They made the point that peer companies were also reporting lackluster performance and in comparison, the client company was competitive with the others. This conclusion allowed the management of the company to feel better about themselves (and more willing to pay the consultant’s fees), but for me, it was just another example of the tomfoolery of relying on peer-group comparisons and pressure.

My belief is that peer-group comparison can be a valuable tool, but only when the peer you are comparing your performance to is you and what you did in the past. Your own past performance should be the peer comparison. My thesis is that so long as you are constantly getting better at what you do then ultimately you will always do better than your peers. When you focus on what you are doing and keep doing it better, there is no need to worry about what the peers are doing. In fact, doing so could actually inhibit your ability to innovate and limit your potential growth.      

From my experience, the most pernicious problem affecting business managers is, and always has been, the deleterious effect of peer pressure. Anyone who’s ever managed a business or even a department knows what I’m talking about. Peer pressure is that never-ending force exerted by others that is intended to intimidate a person to change their attitude and behavior to conform to that of the group.

We all experienced generous helpings of this pressure as teenagers when, for better for worse, we’re cajoled into “going along with the crowd.” And while that might be an unavoidable accident of growing up, we should have outgrown that need to cave in to the group when we become adults. Unfortunately that is not the case for many.

Copycat Business Management Seems to be the Rule

The “accepted” rule of business seems to be that the goal is to keep up with the other businesses in our industry. The general attitude is that not only should we try to be on a par with the competition, but it’s also perfectly acceptable (even smart) to copy what the others are doing in hopes of achieving a similar result. The consultants have a name for this: It’s called best practices. I have long argued that chasing or responding to the actions of peer group companies is a disastrous management philosophy. The idea of copying the “best practices” of competitors will always keep us behind, while suppressing the potential for innovation and creativity. Yet, this “lemming-to-the-sea” behavior is rampant in many industries.

How to Avoid Peer Pressure

In my book, Cheat To Win, I devoted an entire chapter to avoiding peer pressure, noting that “when you start moving with cheattowincoverthe herd, everybody suffers. That kind of stupidity will bring down whole industries.” That prediction became eerily correct in the 2008 banking meltdown and financial crisis. It turns out that everyone was doing the same thing and that turned out to be the wrong thing.

Simply put, my rule is this: Ignore peer pressure and look for a better way. Be aware, but don’t compare your business to others. Don’t try to beat them at their own game. Always find a better, more creative way to best the competition. Create your own game and make them struggle to beat you. In simple terms, in order to combat peer-pressure we must have the confidence to be different. We need to be brave enough to not do what everyone expects us to do, just because they do it. Yes, that’s easier said than done, but it is the right thing to do. And I have a handy bullet list of principles to make that happen:

Thoughts for resisting peer-pressure in business

  • Have a clearly defined set of values and beliefs; and stick to them.
  • Keep your vision, know the market, concentrate on your company and focus on customer needs and wants.
  • Have the self-confidence to believe that what you are doing is the right thing.
  • Know what your competitors are doing; not to copy them, but to beat them.
  • Be your own peer by comparing how you are performing today with how you performed in the past.

In the end, if you want to achieve your own brand of success, know that the best way to do that is to create, not copy.    Send article as PDF   

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Why Do They Call it the “Silent Primary”?

March 22nd, 2015 · Business Management, Personalities in the News, Politics and Politicians Gone Awry

Because there is a lot they don’t want you to know or hear.

You may not realize it, but even though the next national election is still more than a year and a half away, a virtual gaggle of candidates is already attempting to get made-up, made-over and primped (some even pimping) for the next scheduled beauty pageant we call a presidential election.

Just look at the lineup: Scott Walker, Jeb Bush, Mike Huckabee, Rand Paul, Chris Christie, Ted Cruz, Ben Carson, Lindsey Graham, Rick Super PacsPerry, Marco Rubio, Rick Santorum, Bobby Jindal, George Pataki, Sam Brownback, Carly Fiorina and Donald Trump. And what do they all have in common? They have all declared that they are “exploring” a campaign for the Republican nomination for president. So far, the list of potential Democratic presidential candidates is a bit shorter, with only Hillary Clinton, Joe Biden and maybe Elizabeth Warren in the discussion. (As I have written before, the Republicans are always more fun.)

The story we are supposed to believe is that all these potential candidates – especially the ones bearing Republican credentials – are focused on the much-ballyhooed primary season that starts with the Iowa caucuses next January. In this string of primaries from January to June, voters of both the Republican and Democratic parties are supposedly able to select their candidate for president. But it is a sham. It is stagecraft made-up to look like Jeffersonian democracy at work.

The reality is that the real primary election is already underway. It’s happening right now. And it is called the “silent primary” for good reason: It is a primary to which we are not invited to participate. It is a primary in which only huge corporations and the mightiest of the mighty wealthy are allowed to vote.

Unlike millions who will traipse to the polls for next year’s primaries, there may be less than 50 voters in this “silent primary.” But these elite voters will determine among themselves who the rest of us will be allowed to vote for next year. The ballots in this silent primary are paper, paper money, which is counted in multiple millions of dollars. The only “exploring” these 16 would-be candidates will do is to identify how many millions of dollars are pledged to them by corporations and the super-wealthy.

This so-called “silent primary” is the residue of the Supreme Court’s 2010 Citizens United decision that declared corporations and the uber-wealthy were free to contribute unlimited amounts of money to a candidate. The general issue in the Citizens United case was the corrupting power of money in politics. The Supreme Court took the narrow position that money itself is not corrupting. The Court ruled that for corruption to be present there must be a quid pro quo such as specific promise to do something, i.e. a bribe. This opened the door for corporations and the wealthy to give as much money as they desired. And this created the “Super PAC” so donors could avoid the appearance of a bribe, by giving the money to a group that, in theory, the candidate does not control.

As a result, all these would-be candidates for president are scurrying around the country trying to curry the favor of these obscenely wealthy contributors. The meetings are held in secret, so who knows what is being said or promised?

Who Are These Super PAC Donors?

It has been estimated that there are about 50 billionaires and near-billionaires that organize and “vote” in this “silent primary.” Among them and the Super PACs they support, it is projected that well over one billion dollars will be raised and spent to support the winner of their own personal private primary. You can get a glimpse of which organizations and individuals donate to the Super PAC honey pot here.

For any candidate the “silent primary” is the first and most important primary of all; all the other “real primaries” are simply window dressing. If you as a candidate don’t find favor in the private “silent primary” of Super PAC donors, then for all intents and purposes your campaign is over before the big show — the public primary —  even begins.

As evidence of this, it has been reported by the media that Chris Christie, who was the early odds-on favorite for the Republican presidential nomination is losing the “silent primary” and his star is fading. Mitt Romney considered another run for president, but when an early survey of the “silent primary” voters was taken, finding little support, he abandoned his effort. We may agree or disagree with either Christie or Romney, but we will never be allowed to freely express our viewpoint because those controlling the “silent primary” have already spoken for us.

The Supreme Court may have been well intended, but the justices were just plain wrong. By defining corruption as only existing in the case of a specific bribe agreement, the Court effectively fertilized the real corruption in politics, the influence of virtually unlimited amounts of money.

The consequence of this new world of post-Citizens United politics, is that fewer than 50 people can decide who millions of voters can or cannot vote for in an election. All these wealthy donors and their Super PACs use their money and influence to determine (in secret) just who the rest of us will have the opportunity to actually vote for; as if we had a real choice.

The reality is that unless a candidate does well in the “silent primary” (it should be called the “pecuniary primary”) they will lack the funds necessary for a campaign in the modern world of politics. And this robs the rest of us of the real chance to participate in democracy. Thanks to the Supreme Court’s decision in Citizens United a new type of democracy is emerging in this country; what we could call a “silent democracy.” It is a system that is silent, because much like the “democracy” in Russia and China, everyone gets to vote, but who they get to vote for is determined by the power of a few that is far beyond the average person’s power to control.

If we continue to accept a democracy that condones decisions made in a “silent primary,” we will soon find our rights to a true democracy silenced.    Send article as PDF   

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E-Mails, Hillary and You

March 15th, 2015 · Business Management, Improving Your Business Leadership, Politics and Politicians Gone Awry

A lesson for all leaders: Sometimes doing the right thing can be undone by doing it the wrong way. 

For the past couple of weeks the circus spotlight of politics has been played on Hillary Clinton’s use of a private e-mail system while she served as Secretary of State. Apparently she didn’t want to use the free one at work, so she and Bill just got one of their own and commingled yoga appointments with affairs of state. Of course the Republicans went ballistic, viewing this private e-mail system as some type of nefarious secret plot on the part of Hillary.

gty_hillary_clinton_jc_150311_16x9_992Did it surprise you at all that some of the Republican senators who were the most vociferous in their attacks on the Clinton e-mail system admitted they didn’t know what e-mail is and had never sent one? On a related front, maybe the 47 Republican senators would have been better off using a private e-mail for their letter to the Ayatollah Ali Khamenei; rather than releasing it to FOX News.

But I digress. The public exposure of Hillary’s private e-mail system does raise some legitimate issues and questions. (It should be noted that the Republicans in Congress were apprised of this private e-mail system over two years ago, when Hillary turned over e-mails dealing with the Benghazi attack.) Since Clinton was conducting sensitive government activity, it is appropriate to question the security of her e-mail system. Were there communications that should have been disclosed or at least properly cataloged and preserved? Was it even legal for a high government official to use this type of private e-mail system?

In addition, the idea of a secret e-mail system resurrects and reinforces the 20-year pattern of the Clintons being less than transparent in their personal and public activities. Going back to the 1992 Whitewater scandal, all the way up to current questions about the Clinton Foundation, the Clintons seem to have had a phobia about transparency; they have released information only when forced to do so. In fairness, no wrongdoing by the Clintons (except for one minor indiscretion by Bill) has ever been shown, but this lack of openness has created the perception of shady or even illegal activity.

The same can be said regarding the current Hillary e-mail brouhaha. Hilary’s response to “e-mailgate” was late in coming and her rationale (“it was more convenient than having two phones”) has been a bit muddled and weak. Equally telling was Clinton’s comment that if she had to do it over again, she would have taken a different approach. What emerges from that confession is that Hillary may have been guilty of poor judgment, but not of violating the law. No matter how she responds though, she is still vulnerable to the accusation that she must be hiding something.

A Lesson To Learn

There is an important lesson to learn here for anyone in leadership. The reality is that people – especially critics – respond less to what a leader does than how they do it. A leader can be more successful when the focus is on what they are doing, rather than how they are doing it. But for that to happen, leaders must be transparent and willing to accept candid advice from others.

Individuals rise above others to become leaders by exhibiting commitment, talent and effort. Unfortunately, as the position and power of the leader increases, there are fewer and fewer brave souls who are willing to question or challenge their ideas and actions. This unwillingness to question the leader may be good for their ego, but it strips them of the protection they need against doing what should not be done or doing what should be done the wrong way.

It is telling to note that in referring to the private e-mail issue, Clinton said, “It would have been better if I had simply used a second e-mail account … but at the time, this didn’t seem like an issue.” This means that Clinton did not think the issue through; not surprising considering all the other responsibilities she had at the time. It means she did not ask, “What will this action look like when it becomes public.” It also showed that she was either not seeking or not listening to advice from others. This is a trap the individuals in positions of leadership and power often fall prey to.

There is a progression in leadership that if not forcefully resisted, can result in the failure of even the strongest leaders. Early in the tenure of leadership there is a willingness to be open to a wide range of ideas and even constructive criticism. But as experience is gained, especially if that experience is one of success, there is a tendency for the leader to narrow the opening that allows divergent ideas or suggestions to enter into the mix of the leader’s thinking and acting.

This disconnect begins small but becomes compounded as the power of the leader increases and there are fewer and fewer people willing – or even allowed – to offer unembellished opinions to the leader. So either because they have succumbed to their own feeling of invincibility or the power structure has choked off divergent ideas, the leader becomes more and more isolated with his/her thoughts.

Moreover, experience and success can tempt the leader to believe they have all the answers, but yielding to that temptation is the ultimate death knell of effective leadership. And often a leader (think of Hillary Clinton and Richard Nixon here) will come to believe their mission and work is so important that they have the right to use any means to accomplish it and others will be castigated as not supportive if they question how or why the leaders do what they do.

Avoiding the “Big Man” Trap

The only way for a leader to avoid falling prey to the false invincibility of “knowing it all” is to make sure that there are always those close by who are not only allowed, but encouraged to question and challenge – not the ideas of the imagesleader—but the tactics and strategy used to achieve the objective. The leader must have enough confidence in their ability to say to others, “Look I know I’m good. You don’t have to tell me that. What I need from you is to tell me when I am off base.” In effect, a leader needs a “burr under the saddle” that will constantly question tactics and give perspective as to how actions may appear to others.

Those who serve in such roles are not malcontents or complainers. To the contrary, they may not have their own ideas for accomplishing the objective. Indeed, it works best if the individual questioning and challenging the leader has no personal axe to grind. Their value is to view the issue from a different perspective and to question and constructively challenge what has been proposed. This forces the leader to at least consider other actions and options to achieve the objective.

There is another benefit for the leader when they are always open to contrary viewpoints on tactics and strategy. Leaders will be identified as being different from others, and this builds a real bond of appreciation and loyalty from those who work for them. The followers appreciate the opportunity to have their viewpoint heard – without recrimination – and to be appreciated as offering value in the process. Invariably this creates a loyalty to the leader and a sincere desire to help the leader be successful.

And the Moral of the Story …

In the perspective of all that is actually important in the world, the fact that Hillary Clinton used a private e-mail system when serving as Secretary of State is a proverbial gnat on an elephant’s ass. As it turned out Hillary complied with the letter of the law, but did not have the sensitivity to recognize the spirit of the law. The current situation would never have emerged if someone close to her had been charged with and allowed to ask the question: “What will this look like if the private e-mail system becomes public?” If, at the start, Clinton had openly disclosed the system and allowed the State Department to install systems and procedures to monitor it, there never would have been an issue.

But this is a good lesson not just for the elite and powerful in politics, it’s a good lesson for any leader. The aura of authority and the typical corporate structure creates a “core of power” that by its nature suppresses diversity of ideas, challenge and criticism. The presence and freedom of those who can question and challenge tactics and action may at times be frustrating and an irritant for leaders, but they perform a very important function. As a leader, you may never know how many bad decisions such an open environment will prevent, but it will make all your decisions better.    Send article as PDF   

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