A634.5.4.RB - Is Marketing Evil

Fraud includes when individuals engage in intentional deceptive practices to advance their own interests over those of the organization or other group. Fraud is any purposeful communication that deceives, manipulates or conceals facts with the intent to harm others. Fraud can be a crime and convictions can result in fines, imprisonment or both. Globally, fraud costs organizations over $3.5 trillion a year. The average organization loses about 5 percent of annual revenues to fraud. Some major ways fraud is detected include: tip, management review, internal audit, by accident, document examination and external audit. The majority of fraud detection is due to tips. Types of fraud include: accounting, marketing, puffery and implied falsity. (Ferrell, Fraedrich, and Ferrell, 2015)

Marketing fraud is the process of dishonesty creating, distributing, promoting and pricing products and services and is a business area that generates potential ethical issues. False and misleading marketing communications destroys customers' trust in a company. Lying, a major ethical issue involving communication, is a potentially significant problem. For both internal and external communications, it causes ethical predicaments because it destroys trust. For example, the Securities and Exchange Commission (SEC) charged two units at financial services firm Oppenheimer & Company with misleading investors about the value of their private equity funds. They agreed to pay more than $2.9 million to settle the lawsuit. Misleading  marketing can also cost consumers hard-earned money. (Ferrell, Fraedrich, and Ferrell, 2015)

False and deceptive advertising is a key issue in marketing communications. One set of laws common to many countries concerns deceptive advertising - that is, advertisements not clearly labeled as advertisements. In the US, Section 5 of the Federal Trade Commission (FTC) Act identifies deceptive advertising. Abuses in advertising range from exaggerated claims and concealed facts to outright lying, although improper categorization of advertising claims is the critical point. Courts place false or misleading advertisements into three categories: puffery, implied falsity and literal falsity. (Ferrell, Fraedrich, and Ferrell, 2015)

Puffery can be defined as exaggerated advertising, blustering and boasting upon which no reasonable buyer would rely and is not actionable under the Lanham Act (1946). For example, in a lawsuit between two shaving cream companies, the defendant advertised the moisturizing strip on its shaving razor was "six times smoother" than its competitors' strips, while showing a man rubbing his hand down his face. The court rejected the defendant's argument that "six times smoother" implied that only the moisturizing strip on the razor's head was smoother. Instead, the court found the "six times smoother" advertising claim implied that the consumer would receive a smoother shave form the defendant's razor as a whole, a claim that was false. Implied falsity means the message has a tendency to mislead, confuse, or deceive the public. Advertising claims that use implied falsity are those that are literally true but imply another message that is false. An example of implied falsity could be a company's claim that its product has twice as much of an ingredient in its product, implying that it works twice as well, when in reality the extra quantity of the ingredient has no effect over performance. Literally false includes two categories: tests prove (establishment claims), when the advertisement cites a study or test that establishes a claim; and bald assertions (nonestablishment claims), when the advertisement creates a claim that cannot be substantiated, as when a commercial states a certain product is superior to any other on the market. Literally false also includes "weasel word" expressions such as "helps prevent," "helps fight," and "helps make you feel." (Ferrell, Fraedrich, and Ferrell, 2015)

Ethical guidelines can have a positive impact to marketers, however, it makes more of an impact when you have to sign something, e.g., ethics training (yearly), an ethics commitment (yearly) and a code of conduct. This makes more of an impact because it is in writing and documented and not "hearsay." This can also help companies "balance" the need to win with being ethical. Above all, ethics should be a company value that is embedded in culture to help manage and lead marketing efforts.

No, it is not ethical to track my buying habits or web visits to target me for marketing purposes. Why, because it is an invasion of privacy and personal information from public scrutiny and violation of my constitutional rights (the right to be left alone). However, there are some websites that track my information automatically based on searches and purchases, e.g., Amazon and Barnes & Noble, and make recommendations of what I would be interested in. And unfortunately, some of this information goes out to marketers for further action on their part.

From a leadership perspective, I would lead by example, e.g., words and actions, along with the "Golden Rule" of respect, trust and understanding.     

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

Is Marketing Evil? Marketing Viewed as a tool by German University in Cairo students Hala El Sayed and Ingy El Ghazaly (n.d.)

A634.4.4.RB - Is Affirmative Action Ethical

One way to promote equal opportunity and correct past discrimination is through affirmative action. Since the mid-1960s, major government contractors have been required by presidential executive order to adopt written affirmative action plans including goal, actions and timetables for promoting better equality in the workplace. The purpose is to reduce job discrimination by encouraging organizations to take positive, i.e., affirmative, action steps to overcome past employment practices and traditions that may have been discriminatory. (Lawrence and Weber, 2014)

Affirmative action became increasingly controversial in the 1990s and early 200s. For example, new laws such as Proposition 209 in California were passed banning or limiting affirmative action programs in public hiring and university admissions. The issue was also debated in Congress and in the courts. Proponents of affirmative action argued that these programs provided an important tool for achieving equal opportunity. In this view, women and minorities continued to face discriminatory barriers and affirmative action was necessary to balance the playing field. Some large corporations backed affirmative action programs, finding them helpful in monitoring their progress in providing equal job opportunity. For example, General Electric (GE), AT&T and IBM said that they would continue to use affirmative action goals and timeframe schedules even if they were not required by law. (Lawrence and Weber, 2014)

Some organizations use quotas, goals, and timeframes schedules for affirmative action. This includes training programs to meet the needs of employees who have been discriminated against in the past, and in some cases less qualified applicants may have to be hired or promoted in order to accomplish affirmative action. In addition, when employees retire, resign or are fired, they should be replaced - at all level, including management, by members of those groups that have been discriminated against. Some organizations feel the government should mandate affirmative action employment practices and enforce them fully in all businesses by withholding government contracts and funding and imposing fines and prison sentences when and where necessary. (Thiroux and Krasemann, 2015)

Reverse discrimination is a term that describes the plight of some, mostly white males, who have in turn been discriminated against when affirmative action programs have been implemented. For example, reverse discrimination would occur if a company hired an African American man or woman who was less qualified than a white person, either because of the person's  race or sex. However, reverse discrimination occurs when one group (ethnic, race) is unintentionally discriminated against in an effort to help another group. For example, if a more qualified white man were passed over for a job as a police officer in favor of a less qualified Hispanic man to remedy past discrimination in a police department, this might be unfair to the white candidate. (Thiroux and Krasemann, 2015)

In 2009, the US Supreme Court heard a case brought by Frank Ricci, a white fireman in New Haven, Connecticut. Earlier, Ricci had taken an exam for promotion to lieutenant and had scored sixth among 77 candidates. However, the city decided to discard the results, because none of the 19 African-Americans who took the test qualified for promotion. Ricci and 19 other firemen (one who was Hispanic) then sued the city, saying they had been the victim of reverse discrimination. The city defended its action, saying the test was flawed. The Supreme Court ruled in favor of the firemen plaintiffs, saying they had been subjected to race discrimination "solely because the higher-scoring candidates were white." (Lawrence and Weber, 2014)

Critics of affirmative action also argued that these programs could actually stigmatize or demoralize the very groups they were designed to help. For example, if a company hired a woman for a top management post, other people might think she got the job just because of affirmative action preferences, even if she were truly the best qualified. This might undermine her effectiveness on the job (along with organization) or even cause her to question her own abilities. For this reason, some women and persons of color called for less emphasis on affirmative action, preferring to achieve personal success without preferential treatment. (Lawrence and Weber, 2014)

Additional arguments for discrimination, a business's employment practices are its own affair. If employers want to hire white males, then they have the right to do so without interference because they are the owners of their businesses. In addition, even if one accepts the notion that there has been discrimination in the past, this is seldom the fault of present employers, therefore they should not have to correct deficiencies they did not cause. Employers should not have to hire less qualified people in order to "integrate" their businesses, nor should they have to provide additional training to people who are unqualified simply in order to make up for past discrimination. (Thiroux and Krasemann, 2015)

References

Lawrence, Anne T. and Weber, James (2014). Business and Society: Stakeholders, Ethics, Public Policy (14th ed.). New York, NY: McGraw-Hill.

Thiroux, Jacques P. and Krasemann, Keith W. (2015). Ethics: Theory and Practice (11th ed.). New York: Pearson Education, Inc.            

 

 

A634.3.5.RB - The Harder They Fall

I can share some insights on dilemmas that happen in society, work and in my life.

I have worked for Boeing for about 18 years now and I also worked for Lockheed Martin for 9 years. Boeing headquartered in Chicago is the world’s largest aerospace company. Several conflicts of interest, ethics, leadership and organizational problems rocked the aerospace giant about twelve years ago. Lockheed Martin is the world's largest defense contractor and is headquartered in Bethesda, Maryland.

 

In 2003, Boeing was sued by competitor Lockheed Martin, for having proprietary rocket launch documents belonging to Lockheed Martin. Several Boeing employees (who were former Lockheed Martin employees) were fired and received prison terms. The Pentagon cancelled contracts worth over $1 billion awarded to Boeing and the company was also banned from bidding on future rocket launch defense contracts in July 2003. In 2005, the two year ban and penalty was lifted by the Air Force. (Boeing, 2015)         

           

In 2003, Mike Sears, CFO, and Darlene Druyun, Vice-President and Deputy General Manager of the Missile Defense Systems unit, were fired and both received prison terms – he for four months and she for nine. She sought and received a $250,000 a year job at Boeing while she was working as an Air Force procurement officer at the Pentagon. She and Mike Sears negotiated her position along with a $22 billion contract to supply the US Air Force with (100) 767 refueling tankers. Congress later cancelled the contract after the scandal was disclosed and went public. (Boeing, 2015)

 

In December 2003, the board of Boeing announced that it had accepted the resignation of Chairman and CEO, Philip Condit. Condit stated, “Accountability begins at the top”.  (Anonymous, 2005)   

 

The tanker program competition was reopened for re-evaluation and proposals to all airframe manufacturers including European Airbus. After an intense review and evaluation for several years, the 767 was selected as the winner.  

         

Harry Stonecipher, former Boeing vice chairman and COO, who also headed McDonnell Douglas when it merged with Boeing in 1997, was brought out of retirement to run Boeing. Stonecipher soon restored credibility to the aerospace giant along with increasing market valuation by over 50%. He also promoted corporate ethics as a top priority. However, it was then disclosed that Stonecipher was having an extramarital affair with a female company executive. The board ordered him to stop but he refused. He was then asked by the board to resign. The relationship violated Boeing’s code of conduct which ironically Stonecipher implemented and all employees must sign once a year. His “poor judgment… impaired his ability to lead.” "His downfall was that he failed to practice what he preached. ” (Ached & O’Donnell, 2005)              

           

Not only did these scandals shake Boeing as far as jobs, contracts and reputation but the Pentagon and Congress as well. There were several changes for the Air Force leadership too. In 2004, Air Force Secretary James Roche and Assistant Secretary for Acquisition (chief weapons buyer) Marvin Sambur resigned because of the Boeing tanker scandal and public embarrassment of the procurement strategy. Congress lead by Senator John McCain (R-Arizona) highly criticized the scandal along with the Pentagon procurement strategy and how the deal came together. Secretary of Defense Donald Rumsfeld put the tanker deal on hold and promised to revamp the procurement process with major changes. Congress and several US government agencies including the Justice Department investigated the scandal. McCain stated, “The chapter on the tanker lease proposal cannot be closed until all the stewards of taxpayer funds who committed wrongdoing are held accountable.” (Wolf, 2004)      

Lockheed Martin had multiple bribery and fraud scandals along with financial contributions made by officials of the US aerospace company from the late 1950s to the 1970s in the process of negotiating the sale of aircraft.

According to Ben Rich, former director of Lockheed's Skunk Works:

"Lockheed executives admitted paying millions in bribes over more than a decade to the Dutch (Prince Bernhard, husband of Queen Juliana, in particular), to key Japanese and West German politicians, to Italian officials and generals, and to other highly placed figures from Hong Kong to Saudi Arabia, in order to get them to buy our airplanes. Kelly (Clarence "Kelly" Johnson, first team leader of the Lockheed Skunk Works) was so sickened by these revelations that he had almost quit, even though the top Lockheed management implicated in the scandal resigned in disgrace." (Rich and Janos, 1994)

The scandal caused considerable political controversy in West Germany, Italy, the Netherlands and Japan. In the U.S. the scandal nearly led to the corporation's downfall, as it was already struggling due to the commercial failure of the L-1011 TriStar airliner. (Rich and Janos, 1994)

So, what is the root cause of all these examples? It is greed, self-interest and focus on oneself along with human nature and ego. And these examples do not demonstrate leadership in fact just the opposite. What is the fix? Ethics training, ethics curriculum and code of conduct and most importantly leadership by example. And regulation monitoring too, e.g., the Foreign Corrupt Practices Act which makes it illegal for American persons and organizations to bribe foreign government officials and the Sarbanes-Oxley Act.  

References

Ached, Byron & O’Donnell, Jane (2005, March 7). Extramarital affair topples Boeing CEO.         USA Today – Money. Retrieved

            http://www.usatoday.com/money/industries/manufacturing/2005-03-07-boeing-     stonecipher_x.htm

 

Anonymous (2005, May 25). Boeing Under Phil Condit. Retrieved            

            http://icmr.icfai.org/casestudies/catalogue/Business%20Strategy2/BSTR098.htm

Ariely, Dr. Dan: Beware Conflicts of Interest (TED Talks: Ideas worth spreading). Retrieved       from http://www.ted.com/talks/dan_ariely_beware_conflicts_of_interest.html    

Boeing (2015). Available http://www.boeing.com/

Kramer, R. M. (2003).The Harder They Fall. Harvard Business Review, 81(10), 58-66.

Rich, Ben and Janos, Leo (1994). Skunk Works. United States of America: Little,             Brown, &        Company (Canada) Limited.

Wolf, Jim. U.S. Air Force top weapons buyer quits. Reuters. Wed Nov 17, 2004.           

 

A634.2.4.RB - Theories of Ethics

According to LaFollette, there are two categories (styles) of ethical theory, reasoning and critical thinking which have developed the contemporary understanding of ethics: 1. consequentialism which emphasizes the consequences of our actions, and, 2. deontology which emphasizes rules and principles to follow separately of consequences. Consequentialism is defined as "choosing the available action with the best overall consequences" and deontology states that "we should act in ways circumscribed by moral rules or rights, and that these rules or rights are at least partly independent of consequences." (LaFollette, 2007)   

Teleology (Greek word for "end" or "purpose") means reference to moral philosophies in which an action or behavior is considered morally right if it produces a desired outcome or result including: pleasure, knowledge, career development, the realization of self-interest, utility, wealth and fame. Teleological theories assess the moral implications of an action or behavior by looking at its consequences, and moral philosophers today consider these theories as consequentialism. Two important teleological theories that usually guide decision making in individual business decisions are egoism and utilitarianism. (Ferrell, Fraedrich, and Ferrell, 2015)

Egoism defines right and acceptable behavior in terms of the consequences for the individual. Egoists believe that they should make moral decisions that will maximize their own self-interest and worth, which is defined differently by each person. Self-interest and worth can include: physical well-being, power, pleasure, fame, a satisfying career, good family life, good social life, and wealth. From an ethical decision-making perspective, an egoist will usually choose the alternative that contributes most to his/her self-interest. Many in society and the business world believe egoistic people and companies are inherently unethical, short-term oriented and willing to take advantage of any opportunity for gain. For example, some telemarketers demonstrate egoism when they prey on elderly consumers who are usually vulnerable because of age, medical issues, loneliness and fear of losing their financial independence. Unfortunately, thousands of senior citizens fall victim to fraudulent telemarketers each year including losing their homes, real estate, cars and financial savings. (Ferrell, Fraedrich, and Ferrell, 2015)

However, enlightened egoism takes a long term focus and enables the well-being of others even though their own self-interest remains important. An example of enlightened egoism is an individual helping a turtle across a highway because if it were hurt or killed in the process the person would feel distressed. Enlightened egoists may follow professional codes of ethics, control pollution, avoid cheating on taxes, help create jobs and support community projects not because these actions not because these actions benefit others but because it helps them achieve an individual goal such as self-esteem, self-actualization or advancement within the organization. An example is an enlightened egoist could call management's attention to a co-worker who is making false accounting financial reports, but only to protect the organization's reputation and the egoist's own job security. Another example, an enlightened egoist could become a whistle-blower and report misconduct to a regulatory agency to receive an award for exposing misconduct. (Ferrell, Fraedrich, and Ferrell, 2015)

Utilitarianism is like egoism and is concerned with the consequences, however, the difference is the utilitarian seeks the greatest good for the greatest number of people. Utilitarians believe they should make decisions that result in the greatest total utility, or the greatest benefit for all those affected by a decision. For example, a utilitarian might argue for organizations that legally sell harmful products such as tobacco, guns or alcohol. It has been argued that despite their drawbacks, allowing them to be sold legally is less harmful than having them sold illegally and unregulated. This approach influenced similar forms of legislation, such as the recent laws in Colorado and Washington legalizing the regulated sale of medical marijuana. Utilitarian decision making relies on a standard systems comparison of costs and benefits to all affected parties. The US Supreme Court has made several decisions on organizational sexual harassment stating to employers that "one of the costs of doing business" is to prevent sexual harassment for the better of employees and society. Rule utilitarians believe behavior is based on principles or rules designed to promote the greatest utility, e.g., "bribery is wrong" and adhere to strict rules. Act utilitarians believe specific actions instead of specific rules promote the greatest utility. Rules such as "bribery is wrong" serve only as general principles for act utilitarians. They would agree that bribery is wrong not because there is anything inherently wrong with bribery, but because the total amount of utility decreases when one's personal interests are placed ahead of those in society. (Ferrell, Fraedrich, and Ferrell, 2015)

 Deontology refers to moral philosophies that focus on the rights of individuals and the intentions associated with a certain behavior rather that consequences. Contemporary deontology has been greatly influenced by German philosopher Immanuel Kant who developed categorical imperative: "Act as if the maxim of thy action were to become by thy will a universal law of nature." This means if you feel comfortable allowing everyone in the world to see you commit an act and if your reasoning for acting in a certain manner is acceptable to become a universal principle guiding behavior, then committing the act is ethical. Fundamental to deontological theory is the idea that equal respect must be give to all persons. In contrast to utilitarians, deontologists argue that there are some things we should not do even to maximize utility. For example, deontologists would consider it wrong to kill an innocent person or commit a serious injustice against  someone, no matter how much greater social utility would result from doing this, because this action would infringe on individual rights. On the other hand, a utilitarian might consider such an act acceptable if that action lead to some greater benefit. Deontologists believe individuals have certain absolute rights including: freedom of conscience, freedom of consent, freedom of privacy, freedom of speech and due process. To decide if behavior is ethical, deontologists look for conformance to moral principles. For example, if a manufacturing worker becomes ill or dies as a result of conditions in the workplace, a deontologist would argue that the organization must change its production processes to correct the condition no matter what the cost, even if it means going bankrupt and all the workers lose their jobs. However, a utilitarian would analyze all the costs and benefits of changing the production processes and make  a decision on that basis. In summary, teleological philosophies consider the ends associated with an action, whereas deontological philosophies consider the means. (Ferrell, Fraedrich, and Ferrell, 2015) (MacKinnon and Fiala, 2015)

Rule deontologists believe conformance to moral principles based on logic determines ethicalness. Examples include Kant's categorical imperative and the Golden Rule of Judeo-Christian tradition: "Do unto others as you would have them do unto you." Act deontologists believe that actions are the standard basis to judge morality and ethicalness. Act deontology requires an individual to use equity, fairness and impartiality to make and enforce decisions. Past experiences are more important than rules and rules serve only as guidelines in the decision-making process. People know that certain acts are right or wrong regardless of consequences. And act deontologists consider the unique characteristics of a specific act, situation or point in time take precedence over any rule. (Ferrell, Fraedrich, and Ferrell, 2015)

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

LaFollette, Hugh (2007). The Practice of Ethics. Malden, MA: Blackwell Publishing. 

MacKinnon, Barbara and Fiala, Andrew (2015). Ethics: Theory and Contemporary Issues (8th ed.). Stamford, CT: Cengage Learning.

 

A634.1.6.RB - The Buck Stops and Starts With You

The MBA curriculum has remained almost standard for decades, but, ethics curriculum has been added as a new topic. Ethics is institutionalized as an academic requirement and not elective at leading business schools including Harvard, Wharton (Pennsylvania)  and Darden (Virginia). With the criminal convictions of insider traders in the 1980s, business schools identified a new opportunity and started focusing on ethics in the 1990s. The business and leadership collapses of Enron, WorldCom, Arthur Andersen, etc. have kept ethics a hot and important issue. Ethical case study scenarios usually make for engaged classroom discussions including research, casework, re-enactments and role-playing for future workplace applications. The top business schools train their future champions of business and industry to deal with any challenge. The focus of  ethics in the MBA curriculum is not to make students role model citizens but to make students and future business leaders aware of the ethical implications of business decisions including: anti-trust actions, predatory pricing, insider trading, environmental issues, corporate restructuring, employee privacy issues, diversity issues, sexual harassment and conduct of multinational corporations. (Silbiger, 2012)

Discussions and curriculum about ethics rests on the foundation that businesses should adhere to a socially responsible approach to decision making called the social responsibility approach. Proponents of this approach believe that companies have societal obligations that go beyond making profits. Business schools teach students to adopt this "politically correct" philosophy. It is argued that because companies are so powerful with impacts on society, they have an obligation to assume social responsibilities. Companies should be managed for the benefit of their stakeholders: customers, suppliers, employees, communities and owners (stockholders). Company leaders bear a fiduciary responsibility to all stakeholders. (Silbiger, 2012)

Just opposite of  the "politically correct" philosophy espoused at mist institutions is a competing school of thought led by Milton Friedman at the University of Chicago. Friedman's philosophy is that business's sole duty is to make profits. "Businesses are in the business of maximizing shareholders' value by a prudent use of scarce organizational resources, as long as the activities of the businesses are within the letter of the law." Friedman believes it is up to government to determine what the laws should be. A profitable business benefits society by creating jobs, improving the standard of living of its owners and employees. Corporations pay taxes that support government's social action. Friedman's theory and philosophy is regarded as one of the proponents of capitalism in economics courses (Silbiger, 2012)  

What is the feedback from business school students? Students give several responses to whether ethics can be taught. "If it can't be taught, why am I taking this class?" "Look at the behavior of certain corporate executives who have been found guilty of criminal conduct. They surely haven't learned proper ethical values." Students summarize the learning lesson is this: "although certain ideals or types of knowledge can be taught, ethical behavior (actions) cannot because it is a matter of individual choice." (MacKinnon and Fiala, 2015)

Even several leadership, management and business books, e.g., The Guerilla Marketing Handbook, and Sun Tsu: The Art of War for Managers use the common theme that surprise attacks, guerilla warfare, and other warlike tactics are necessary to win the battle for American consumer and sales. Unfortunately, this business-as-war reasoning and philosophy fosters the idea that honesty is unnecessary in business. Boeing and European Airbus is the biggest business rivalry and competition in the world. Several books document this including The Sporty Game and Boeing versus Airbus: The Inside Story of the Greatest International Competition in Business by John Newhouse. (Ferrell, Fraedrich, and Ferrell, 2015)

In addition, The Goal: A Process of Ongoing Improvement (Theory of Constraints) business novel by Eli Goldratt emphasizes that the goal of any business is to make money. The theory, philosophy and novel is used by many companies and business schools. (Goldratt, 2012)

Podolny suggests that business focus is too much quantitative (numbers) and needs more focus and emphasis on qualitative (soft skills) including ethics and corporate social responsibility. This includes a holistic approach to business problems and case studies. Faculty from both the "hard" and "soft" disciplines must discuss material in the same classroom, e.g., teaching teams. When business schools teach leadership, emphasis is on the big picture and not the hands-on practical details. Podolny recommends business schools adopt a code of ethics similar to the medical (doctors) and bar (lawyers attorneys) associations to develop codes of conduct for MBAs and to withdraw the degrees of those who break the manager's code including conduct, behavior and actions. (Podolny, 2009)

References

Ferrell, O.C., Fraedrich, John, and Ferrell, Linda (2015). Business Ethics: Ethical Decision Making and Cases (10th ed.). Stamford, CT: Cengage Learning.

Goldratt, Eliyahu M. (2012). The Goal: A Process of Ongoing Improvement. Great Barrington, Massachusetts: The North River Press Publishing Corporation.

MacKinnon, Barbara and Fiala, Andrew (2015). Ethics: Theory and Contemporary Issues (8th ed.). Stamford, CT: Cengage Learning.

Podolny, Joel M. (2009). The Buck Stops (and Starts) at Business School. Harvard Business Review (June 2009). Boston, Massachusetts: Harvard Business School Publishing.

Silbiger, Steven (2012).  The Ten Day MBA: A Step-By-Step Guide To Mastering The Skills Taught In America's Top Business Schools (4th ed.). New York, NY: HarperCollins Publishers.  

 

A630.9.4.RB - Hiring and Recruiting

Does Schmidt's description of the Google Culture make sense to you? Is this a reasonable way to view the work that most people are doing in your workplace? As a leader, does it take courage to have and to implement this point of view? Could this approach backfire?

 

For a manager, the right answer to the question "What is the single most important thing you do at work?" is hiring. This is similar to sports coaches or general managers. Yes, they go to meetings all day too, yet the single most important thing do is draft, recruit, or trade for the best players they can. Smart coaches know that no amount of strategy can substitute for talent, and that is as true in business as it is on the field. From the outset, Google's founders understood that to consistently hire the best people possible, the model to follow wasn't that of corporate America, but that of academia. Universities usually don't lay professors off and invest a lot of time in getting faculty hiring and promotion right usually with committees and not hierarchical. "Our people are our most important asset" is a well known cliche, however, you need to change how the members of the team are hired. The nice thing is that anyone can make them. (Schmidt and Rosenberg, 2014)

 

A workforce of great people not only does great work, but it attracts more great followers. The best workers are like a herd: they tend to follow each other. Most people came to Google because they wanted to work with the best smart creatives. This is known as the "herd effect." Passionate people don't wear passion on their sleeves, they wear it in their hearts and includes: persistence, grit, seriousness, drive and all-encompassing absorption. (Schmidt and Rosenberg, 2014)

 

You usually hear people say they only want to work with someone they would want to have a beer with. However, truth be told, some of the most effective colleagues are people we most definitely would not want to have a beer with. And in some cases they are people we would rather pour a beer on. You must work with people you don't like, because a workforce comprised of people who are all "best office buddies" can be homogeneous, and homogeneity in an organization breeds failure. Multiple viewpoints and ideas, aka diversity, is the best defense against myopia. (Schmidt and Rosenberg, 2014)

 

Interviewing is the most important thing you can do. Review resumes and perform Google search. Check LinkedIn profile. The goal of the interview is to form and opinion of him/her. A strong opinion. A yes or no. Find the limits of his/her capabilities. The best interviews feel like intellectual discussions between friends ("What books are you reading right now?"). Google looks at four categories: leadership, role-related knowledge, general cognitive ability and Googleyness (uniqueness, creativity and collaboration). (Schmidt and Rosenberg, 2014)

 

Another part of the interviewing process that most companies screw up is letting the hiring manager make the hiring decision. The problem with this is that the hiring manager will probably be the new employee's manager that after a few months or a year. Besides, in most organizations, who you work for matters a lot less than who you work with. Google uses hiring committees whose decisions are based on data, not relationships or opinions.  (Schmidt and Rosenberg, 2014)

Google's "20 Percent Solution" encourages all employees, in addition to working their regular projects, to spend 20 percent of their time experimenting on what they think will benefit, develop and grow Google. This is a great example of empowerment, creativity and innovation. Most of Google's growth and advancements have happened because of this. For example, both AdSense and Google News were prototyped in "20 percent time." High risk projects usually are removed from consideration and provide lessons learned. However, many succeed and become important businesses which in turn can create additional opportunities. (Beahm, 2014)

I have worked for several companies that used the "buddy system" in hiring. This created "pyramids" competing with each other and promoting rivalry within the organizations. In addition to this, there were golf tournaments, parties etc only with the select few. And guess what, this was the downfall of the organizations (along with other culture and strategy issues) and those organizations aren't around anymore. And I have worked for several organizations that use hiring committees and these organizations are successful and still in business. In addition, these companies hire the best talent, aka A's, and use similar criteria to Google: leadership, role-related knowledge, general cognitive ability and Googleyness (uniqueness, creativity and collaboration). In addition, the talent includes academia qualifications and above all passion.          

 

What can you take away from this exercise to immediately use in your career?

 

Apply "Google's Hiring Dos and Don'ts":

 

·         Hire people who are smarter and more knowledgeable than you are.

·         Don't hire people you can't learn from or be challenged by.

·         Hire people who will add value to the product and our culture.

·         Don't hire people who won't contribute well to both.

·         Hire people who will get things done.

·         Don't hire people who just think about problems.

·         Hire people who are enthusiastic, self-motivated, and passionate. 

·         Don't hire people who just want a job.

·         Hire people who inspire and work well with others.

·         Don't hire people who prefer to work alone.

·         Hire people who will grow with your team and with the company.

·         Don't hire people with narrow skill sets or interests.

·         Hire people who are well rounded, with unique interests and talents.

·         Don't hire people who only live to work.

·         Hire people who are ethical and who communicate openly.

·         Don't hire people who are political or manipulative.

·         Hire only when you've found a great candidate.

·         Don't settle for anything less.

 

(Schmidt and Rosenberg, 2014)

 

References

Beahm, George (2014). The Google Boys: Sergey Brin and Larry Page In Their Own Words. Agate Publishing: Chicago.         

Eric Schmidt on business culture, technology, and social issues (2011). Retrieved from http://www.mckinsey.com/insights/strategy/eric_schmidt_on_business_culture_technology_and_social_issues

Schmidt, Eric and Rosenberg, Jonathan (2014). How Google Works. New York: Grand Central Publishing. 

A630.8.4.RB - Build a Tower, Build a Team

The Marshmallow Challenge is a fun and instructive design exercise that encourages teams to experience simple and profound lessons in collaboration, innovation and creativity. The task is simple  and takes only eighteen minutes. Teams must build the tallest freestanding structure out of 20 sticks of spaghetti, one yard of tape, one yard of string, and one marshmallow. The marshmallow need to be on top.

 

Do you agree with Tom Wujec's analysis of why kindergarteners perform better on the Spaghetti Challenge than MBA students? Can you think of any other reasons why kids might perform better?

 

Yes, I agree with Tom's analysis on kindergartners versus MBA students. Why? Business students talk about it, they figure out what it's going to look like, they jockey for power and position. They spend time planning, organizing and controlling as they sketch out the spaghetti ideas. They spend the majority of their time assembling the sticks into ever-growing structures. And then, just as they are running out of time, someone takes the marshmallow and puts in on top. They stand back and say "wow" and they admire their work. Then the weight of the marshmallow causes the structure to buckle and collapse. Business students are usually trained in their graduate curriculum to develop and implement the single right plan. Then the execution and implementation stage begins. So sometimes MBA students get distracted and "bogged down in the details" such as "paralysis by analysis" which is time consuming and not usually value added. This is what happens, they run out of time after putting the marshmallow on the top and the crisis starts. Sound familiar in business?

 

What kindergartners do differently is that they start with the marshmallow and they build successive prototypes always keeping the marshmallow on top so they will have multiple opportunities to fix when they build prototypes along the way. Designers recognize this type of collaboration as the foundation of the iterative process. And with each prototype version, kids get instant feedback input about what works and what doesn't work. Kids are usually more creative and innovative as far as ideas and implementation along with experimenting and freewheeling. Failure is not on their mind or in their plan. They want to have fun and succeed. Children are artists.      

 

In your view, why do CEOs with an executive assistant perform better than a group of CEOs alone?

 

Executive assistants usually have good organizational skills along with being creative, innovative with new ideas and approaches. They coach and communicate with CEOs on these along with providing closed-loop communication. They get the players involved and engaged in the process. They are the go to person to get things done. 

 

If you were asked to facilitate a process intervention workshop, how could you relate the video to process intervention skills?

 

The Marshmallow is a great opportunity as a icebreaker activity, get a team into a creative frame of mind, and encourage your organization to think about what it takes to improve creativity, innovation and problem-solving. In addition, it is a powerful technique to improve a team's capacity to generate new ideas, build rapport and incorporate prototyping - all of which are at the heart of creative innovation.

 

Lessons emerge when comparing teams' performance. Who tends to do the worst? Why? Who tends to do the best? Why? What improves performance? What destroys it?

 

What can you take away from this exercise to immediately use in your career?

 

First is the importance of icebreaker activities as learning exercises. Second is the importance of creativity, innovation and problem-solving for new ideas and approaches. I have had the opportunity to work for several aerospace companies that are big on this along with "experimenting." Lockheed Martin has the "Skunk Works" and Boeing has the "Phantom Works" for creative collaboration in advanced research development and applications for aerospace. Lockheed developed the SR-71 Blackbird, U-2 Dragon Lady and F-117 Nighthawk. In addition, lean manufacturing and the Toyota Production System (TPS) promote "moonshining" and "trystorming" to experiment with new ideas prior to implementation. These are usually included in continuous improvement activities, e.g., kaizen, value stream mapping (VSM) etc. It all starts with an idea, sketch, build a prototype mock-up, try it out and see if it works, change modify it, try it out again. Then proceed with full design and implementation. Another great example is the "Post It Note" that was developed by experimenting at 3M.   

References

Tom Wujec: Build a tower, build a team (TED Talks) (2010). Retrieved from  http://www.ted.com/talks/tom_wujec_build_a_tower