Even the best leaders miss things. That's a point made by Max Bazerman, the Jesse Isidor Straus Professor of Business Administration at the Harvard Business School, in his forthcoming book, The Power of Noticing.
"It is important to think through how people will actually respond to [workplace] incentives, and too many executives do not do this often enough," Bazerman writes.
His case in point comes later in the book, when he describes how one of his talented former students--now a thoughtful, creative executive who is usually a "first-class noticer"--failed to observe a key drawback of her sales team's incentives.
Specifically, she was struggling with a particular salesperson named Jason (not his real name). "He seemed utterly unaware of the fact that his customers were far more likely to fail to pay their bills than [were] the customers the other salespeople were bringing to the organization," writes Bazerman.
As it turned out, incentives were a big reason why. The company paid its commissions based on booked sales, as opposed to actual money sent in by customers. So while Jason's booked sales ranked highly within the organization, his on-paper success did not correlate to increased revenues. He earned his commissions even if customers never paid their bills.
In other words, the incentives offered no reward for noticing which customers were likely to be responsible payers. Which is kind of important.
And it leads to a key observation Bazerman makes about the business of blind spots. It has to do with the concept of "choice architecture," a concept that comes from scholars Dick Thaler and Cass Sunstein, the authors of Nudge. The basic idea is that leaders need to become superb choice architects. That is, they need to design systems encouraging employees to strive for important organizational goals (paying customers) rather than the specious individual goals (booked sales).
But there's a deeper question in play here. Why is it that even first-class noticers like Bazerman's former student can sometimes fail to observe what seems (with hindsight) like an overtly flawed incentive system?
In a recent phone interview, I asked Bazerman if the existence of faulty choice architectures was the inevitable by-product of organizational hierarchy. You know, the sort of thing that's bound to happen in any organization attempting to manage the ever-complex task of aligning employee self-interests with overall team interests.
Bazerman said no. "Without any hierarchy at all it exists," he said. "We can see it in our daily lives." In the book, he provides an example from his own life. As a young man, he was a superb card player, especially at tournament bridge. He eventually quit to focus on his studies. He has not touched a deck in 35 years.
But he sometimes muses on how well he'd play, if he made a comeback. And he's convinced that in one key respect, he'd be much better: The honed skill of making inferences based not on what the other card players do, but what they don't do.
It's this particular act of noticing--making deductions, in a Sherlock Holmes way, about the things that are not happening--that can make any leader better at identifying personal and organizational blind spots.
What steps can you take to improve at noticing what's not happening? Bazerman recommends tasking a group in your organization with this express goal: To analyze your current policies, practices, and compensation structures for their potential downsides.
Bazerman's blind-spot prescription echoes what Hal Gregersen, executive director of the MIT Leadership Center and a senior lecturer in the MIT Sloan School of Management, has recommended for executives who fear they'll fall prey to another type of managerial blind spot: The one preventing you from identifying your future competitors. The one preventing you from seeing how your business model might get disrupted.
Gregersen suggests that leaders create internal disruptive teams. Their entire goal should be to compile a list of the questions that your organization should be asking itself--questions you're not currently asking, because of the blind spots caused or abetted by your company's choice architecture.
A key to these teams is staffing them with innovative thinkers--the creative types whose big-picture hypothesizations won't be hemmed in by your current policies, practices, and compensation structures.
One other key: You don't want these teams to include members of upper management. They are too knee-deep in the nitty-gritty to provide the outside perspective you need.
Bazerman points out that you can also call on bona fide outsiders--those who don't work for your company--to share their thoughts on your potential blind spots. He cites the work of Daniel Kahneman and Dan Lovallo, who have documented that "the insider tends to view a given situation as unique, while the outsider is more capable of generalizing across situations."
The bottom line in all this is something you probably already knew, but haven't acted on quite enough: It's crucial to challenge your own views and biases--and your company's practices, even its "best" practices--with external options and opinions.
In short order, this habit will help you identify your blind spots. Over time, it might even save your organization.