Friday, October 19, 2018

Using Subordinates to Manage Managers: Influence Tactics that Work

It is well known that organizations work well when subordinates know how to manage managers. Experienced work groups often need to teach their new and inexperienced manager what routines are important because they work much better than the alternatives. Work groups facing new conditions often need to tell their experienced manager that the world has changed and that their work needs to change with it. Managerial effectiveness starts with the ability to listen to subordinates and learn from them.

When organizations need to change, can the subordinates managing their managers be a good tool for making it happen? Research published in the Administrative Science Quarterly by Katherine C. Kellogg answers this question. The managers she studied were actually medical doctors who do a range of managerial tasks and are at least as protective and assertive of their own ideas and ways of working as regular managers. If a hospital wants to change its overall activities, who are best situated to manage the medical doctors: medical directors or medical assistants? Kellogg’s research showed what happened when two hospitals tried to implement patient-centered reforms in their clinical practices.

As you might have guessed from the title, medical directors were not very useful for getting doctors to change their practices. A doctor can easily ignore instructions from higher levels in the organization, or even protest them. A doctor can also ignore suggestions from lower levels in the organization, but one of the hospitals found a set of tactics that made the suggestions coming from subordinates very persuasive. Those subordinates were medical assistants, who help to manage doctors’ patient inflow, time, and information. Each medical assistant works with multiple doctors, so they are central nodes in the doctor network. By having medical assistants meet without the doctors in the room, the hospital let them benefit from the experience of other medical assistants in their networks and become even more central. The hospital could also use the meetings to motivate the medical assistants, teach them how to influence doctors, and have them teach each other how to do so.

The medical assistants ended up with a wide range of influence tools and with a network that gave them exactly the information needed to use those tools well. They put together information for the doctors that helped the doctors follow reforms while still feeling that they were in charge. After all, the doctors felt they were reacting to better information, not to the assistants assembling it. The medical assistants would ask the doctors to change practices to help the assistant work better, and the doctors would grant such favor requests because they knew they were dependent on the assistants and felt that favors were a good reward. The medical assistants would strategically choose which doctors to approach first for changing practices and would let other doctors know when those first doctors had agreed to make changes. That way doctors felt they were not following assistants but other doctors.

Why do we know that these tactics for managing the manager work? As I wrote earlier, two hospitals tried to implement patient-centered reforms, but only one succeeded – the one using these tactics. Maybe not all of these tactics were needed in the hospital, or are needed elsewhere, but Kellogg’s research certainly shows how managers can be managed to make changes in an organization.

Monday, September 17, 2018

Which Entrepreneurs Will Remain Communist?

I know the title is puzzling – entrepreneurship is associated with capitalism, not communism. But there is one big exception. China, the world’s largest nation, has both a capitalist market and a state controlled by the Communist Party. It wasn’t always this way. Before the market transition under Deng Xiaoping, its economy was run according to communist principles, and Communist Party members were trained to see these principles as good and capitalist economies (meaning pretty much the rest of the world) as fundamentally evil.

Those who were party members under the market transition were suddenly told that communist rule is good and a market economy is also good. That’s a tough combination to swallow and one that may have had some consequences for their professional lives. A new paper in Administrative Science Quarterly by Christopher Marquis and Kunyuan Qiao looks at how party members acted when they became entrepreneurs in charge of young and growing firms. They studied the choice of internationalization, which is particularly meaningful for entrepreneurs with a communist background because an international firm has to interact with foreign countries that were previously seen as evil.

As you might expect, entrepreneurs who were members of the Communist Party before they founded their enterprises were less likely to internationalize than entrepreneurs who weren’t, suggesting that the association of foreign nations with evildoing had some effect on their business decisions. Although this was expected, it is far from obvious: The same Communist Party that created that association then led the market transition and encouraged firm foundings to improve the economy. For many of these entrepreneurs, the basic ideology they were trained in meant more than the party’s updated instructions.

Other findings give hints on what could make Chinese entrepreneurs behave less like traditional communists. Interestingly, two important ones involve government actions. First, entrepreneurs who got involved in social networks created by the government, such as industry associations, were more likely to internationalize their firms. In social networks, people learn from and influence each other, and these networks had exactly that effect. Entrepreneurs learned more about how to internationalize and why doing so wasn’t evil, and they acted on it.

Second, government corruption led to internationalization. Firms that were exposed to greedy governments (usually local ones) and had their resources taken away turned to internationalization as a way to get into cleaner economic and political environments. Presumably, these entrepreneurs learned that not all evil was foreign. Evil could be found domestically also, so the difference between foreigners and locals perhaps was not as great as they had been taught.

This study confirms that the Communist Party has a lifelong influence on its members but shows that those influences can be weakened – by the state. This is an interesting conclusion about what can occur when a party and state are combined, and it should raise questions about how other sources of influence on entrepreneurs combine.

Thursday, August 2, 2018

Who Makes the Fastest Progress—the Specialist or the Generalist?

The title looks like a simple question and one that would be important to know the right answer to. People choose whether to be a specialist in one subject, a generalist who can master multiple subjects, or something in between (like the specialist who knows a few things about related subjects). Firms choose whether to hire specialists and generalists and how to organize their work. The idea in each case is that there is some benefit to the choice. The specialist has deep knowledge and developed skills; the generalist has a broad overview and flexibility. But they can’t both be best – or can they?

We know surprisingly little about the answer to this question, but now there is progress thanks to new research published in Administrative Science Quarterly by Florenta Teodoridis, Michaƫl Bikard, and Keyvan Vakili. Because specialists and generalists can have different value in different contexts, they chose one that is particularly important for firms: the generation of knowledge through research. After all, research and development is a budget item and a function in most firms of some size, and it is how firms invest in their future.

To make the research conclusions especially clear, they didn’t look at firms but at university researchers in mathematics. Unlike firm R&D employees, mathematicians typically work alone, or when they work in teams every team member is named in the publication. Their productivity is very easy to measure because every important step of progress results in a publication, and the more important publications receive more citations. And in mathematics, something special happened: In the Soviet Union, a lot of research on mathematics was advanced but kept secret from the West, and it was revealed to the world when the Soviet Union collapsed. That gave mathematicians in the rest of the world insight into theoretical mathematics that was very advanced (areas in which Soviets were ahead) or areas that were nothing special (in which they were even). So it was possible to measure the progress of specialists and generalists both in fields with rapid progress and fields that had slow progress.

The comparison was important, it turned out. Because specialists have deep knowledge, they make the fastest progress when faced with fast-paced research fields. They have the foundation to leap forward when presented with significantly different knowledge than what they hold currently. For generalists, fast-paced fields are confusing because there is too much new knowledge to incorporate, and they have too little in-depth knowledge to make sense of it.

But generalists can also make fast progress: they just require slow-paced research fields. In such fields, they can use their generalist knowledge to incorporate and integrate knowledge from outside the specialized field, and by doing so they renew the field.  That’s much harder to do for specialists, who know little outside their field.

So now we know who is best: either specialists or generalists, depending on the pace of the field of knowledge they enter. That makes the choice easy for firms that know the pace of the field in which they want to do research. It makes the choice hard for individuals, who typically choose specialization early in life and then keep it for a long time. Personally I would still choose specialization, because it is more fun to be ahead when things change fast. It is also less safe, of course. Choices are never easy, but it is good to have research that shows us the consequences.

Free article downloads are available for a limited time only:

Teodoridis, F., Bikard, M., & Vakili, K. 2018. Creativity at the Knowledge Frontier: The Impact of Specialization in Fast- and Slow-paced Domains. Administrative Science Quarterly, Forthcoming.

Monday, July 30, 2018

Which CEO is Scarier: The Narcissist Liberal or the Extravert Conservative?

CEOs are consequential people. They have a central role in organizing the firm, choosing subordinates, and proposing strategies to their boards and implementing them. We know that (most) CEOs have ideologies and personalities. We don’t know much about how these two interact to shape what firms do. Until now. Let’s start with a simple fact: a CEO can be anywhere from liberal to conservative in political ideology and can be either low or high on narcissism (self-grandeur and self-indulgence) and extraversion (communication need and ability). So there are narcissist liberals and extravert conservatives, and the other way around, and liberals and conservatives who are neither narcissists nor extraverts.

Does this matter? New research by Abhinav Gupta, Sucheta Nadkarni, and Misha Mariam published in Administrative Science Quarterly shows it does. Their idea was that CEOs’ narcissism and extraversion could make their companies act more ideologically. Narcissists think that their view of the world is the right one, and extraverts are good at persuading others. In both cases the result is that the firm becomes more ideological. (A firm doesn’t have to be liberal or conservative, of course, and would be ideologically neutral if its CEO were neutral.)

So what did the evidence show? Downsizing the firm is a typically conservative action and was in fact more often done by conservative CEOs – especially if they were extraverted. Corporate social responsibility (CSR) is a typically liberal action and was more often done by liberal CEOs – especially if they were narcissistic or extraverted.

There was one non-finding in the study’s interactions: narcissism does not make conservative CEOs downsize their firms more. There are many possible explanations, one of which is that narcissists think of themselves and everything associated with them as being grand and great. Shrinking the firm likely isn’t their first choice of action, even if there are good reasons to do so.

Clearly ideology and CEOs’ personalities shape firms. They do so in ways that can make CEOs pretty scary, given the mix of ideology and personality that one can find. CSR is a good thing for society, but if it is done by a narcissistic liberal CEO one has to wonder whether the firm’s resources are used well. Downsizing can be necessary, but if done by an extroverted conservative CEO one has to wonder whether others thought differently but were persuaded to reduce the firm’s employment more than they should. Both are scary thoughts.

The article can be downloaded for free for a limited time:

Gupta, A., S. Nadkarni, and M. Mariam
2018. "Dispositional Sources of Managerial Discretion: CEO Ideology, CEO Personality, and Firm Strategies." Administrative Science Quarterly, forthcoming.

Monday, July 23, 2018

Concentration, Vision, Practice: Essential for Tennis Players – and New Ventures

I just saw research on how to successfully start a new venture that made me think about the Wimbledon tennis tournament. Here’s why: some of the things that are obvious sources of strength in tennis are widely thought to be weaknesses in business – but if current research is any guide, they are strengths. Concentration, vision, and practice through endless repetition are how champions are built in tennis, a sport where the average serve speed is 180 km/h for men and 155 km/h for women. But how is that related to new ventures?

Research recently published in Administrative Science Quarterly by Susan Cohen, Christopher Bingham, and Benjamin Hallen looks at how new ventures perform in accelerators, which are training and development programs for new ventures. They looked at many accelerators to find out exactly what activities accelerate and improve a venture more, because some accelerators have been successful in helping launch new ventures but others have not. Before they started, we knew very little. Their findings were clear – and completely the opposite of some common beliefs about forming and improving new ventures.

Belief 1: New ventures should start with a solid business plan and be given information and introductions to potential mentors gradually over time to develop their ventures. This is not true. Ventures should be given concentrated consultation and advice early in the founding, because that is when the value of new information is highest. The venture may be most flexible and uncommitted at this stage, but even if it isn’t, Cohen, Bingham, and Hallen found that the concentration of feedback was key: it helped venture founders overcome their own biases and assumptions, connect with potential customers, rethink what would be best for the business, and act on the new information.

Belief 2: Entrepreneurs should avoid divulging information about their activities to other entrepreneurs, who might steal their ideas. This is not true. Yes, we’ve all learned since childhood that secrets are valuable, but in business, quality trumps secrecy. New ventures in accelerators were able to understand their own business much better and improve faster when they had a clear vision of what other ventures were doing. That was only possible when they also shared information about their activities.

Belief 3: New ventures should have development plans customized to their needs. This is not true. The problems faced by new ventures are very similar, so using a standard process that lets ventures practice how to overcome these problems is best. New venture founders don’t know what they don’t know, so by customizing – seeking input and knowledge from only the people they assume will be most useful to them – they create blind spots.

How can we be so wrong about the factors that create successful new ventures? All venture founders, advisors, financiers, and researchers have incomplete information and bounded rationality. Ventures are typically not visible until they have reached a certain size and become full organizations, so there is not enough knowledge about the crucial founding phase. And we humans learn from what we see in very limited ways, strongly shaped by prior beliefs and selective use of examples. The secrecy belief is a good example, because it is such an old myth that people rarely challenge it.

The best accelerators go against these three beliefs and foster concentration, vision, and practice. Their ventures are much more successful than those of accelerators that follow the conventional beliefs. Entrepreneurs should take note, even if they are not part of an accelerator. I think Serena Williams would approve.