Nudge: Preface to the Final Edition
An excerpt from the updated edition of the bestselling book.Nudge: Preface to the Final Edition
The sixth installment of our quarterly Business Practice feature involves a group decision gone (or going) awry:
You work in the corporate office of a national fast-casual restaurant as a marketing manager. Your boss, the vice president of marketing, has asked you and several of your colleagues—all peers in terms of your standing within the company—to put your heads together on a strategy for boosting weeknight dinner traffic. Several of your colleagues have made promising suggestions, but to your surprise, the idea that’s taken hold most firmly is the one from your fellow marketing manager Velma: planned shortages of certain staple menu items, designed to stoke demand.
You think this is a terrible idea, and although Velma’s personal powers of persuasion have helped her sell it to the rest of your group, you’re confident senior management will recognize it for the calamity it is, and it will reflect poorly on all of you. You have pointed out flaws in this strategy, politely, in two separate group meetings, but the group keeps moving toward presenting it. You do not want to be associated with this idea. What should you do?
Please describe how you would address this problem, including scripting any conversations you would have with Velma, your boss, your teammates, or anyone else you feel is relevant.
This scenario is a bit different from previous installations of Business Practice. In most of our earlier situations, it is clear with whom you should have a conversation: a boss, a coworker, a potential employer, etc. In this case, the organization (or at least your team) is out of sorts— everyone seems to be following along with Velma’s lousy idea. Should you keep your mouth shut? If not, with whom do you talk? And what do you say?
I have spent years studying and teaching decision-making. Decision-making in organizations can be tricky. Or worse. When I ask students and executives to reflect on their organizations’ decision processes, there is generally a collective groan.
While organizations can make better decisions than individuals on their own, they often do not. In fact, the decision errors that I teach in my decision-making class are generally amplified in group settings. For example, research by University of Illinois’ Janet A. Sniezek and Rebecca A. Henry finds that groups tend to be even more overconfident than individuals, and University of Toronto’s Glen Whyte finds groups are more susceptible to sunk costs.
Words matter. The first year I taught negotiation, I ran into one of my students in the cafeteria. After a few minutes of small talk, she asked me: “What qualifies you to teach negotiation?” Ouch. I believe that she meant to ask: “Negotiation is an interesting class to teach. How did you come about teaching this class?” Words matter.
Preparation matters too. The “what qualifies you” question is one I did not anticipate, especially in my early days as a professor. But years later, I’ve heard many questions—straightforward, incisive and cutting, sincere but naive, tricky and lined with booby traps, difficult to answer, and just plain bizarre. I’ve encountered them in class, while talking about my research, and in dealing with students, faculty, and staff members at Booth. I’ve learned to reflect on conversations I’ve had that have gone poorly or well, or, most likely, a bit of both; to anticipate what questions I will be asked; and to prepare for an upcoming conversation by scripting words and simulating how others will respond.
Business Practice is a new quarterly series designed to help you better deal with challenging conversations. It is a partnership between Chicago Booth Review and the Harry L. Davis Center for Leadership, of which I am the faculty director.
We built these elements into Business Practice:
The inspiration for this series comes from my friend and former PhD student, Cade Massey, a Booth graduate who is now a professor at the University of Pennsylvania. Over the years, Cade and I, like all negotiation teachers, have been bombarded by requests for advice on how to deal with difficult negotiation situations. We do our best to answer these questions with students one-on-one. Why not be more efficient and systematic and discuss these in class? And, perhaps more important, why not help students learn from these encounters and come up with a better answer for themselves? So, in my class, I have students script responses to five difficult negotiation questions. “Scripts,” as I call this part of class, has consistently been one of the most popular elements of my Advanced Negotiations course.
Students in my negotiations class learn by seeing the wide range of student responses—some very different in style and strategy, some identical in intention yet executed very differently. Students also rate responses in real time, giving letter grades ranging from A to F. Students are often shocked to see the broad range of ratings for the same response—it is not uncommon for a response to elicit an impassioned A and an equally vociferous D.
That’s why the crowdsourcing of ratings in Business Practice is especially valuable. The readers of Chicago Booth Review are a sophisticated bunch. They reflect a wide range of perspectives, interpersonal styles, experiences, and culture. Tons of research in social psychology has documented our tendency to be egocentric in our predictions: I choose a response because it is appealing to me, and hence I expect it to be effective with others, some of whom may think like me but many of whom will not. Learning to step out of our shoes and into the shoes of the many others we may encounter is an extraordinarily useful skill.
Needless to say, difficult situations are not confined to negotiation; they are part of daily organizational life. That’s the impetus for Business Practice. We look forward to helping you prepare for the difficult situations in your own professional life—just as you, through your feedback, will help others prepare for theirs.
Other research on group processes, such as that by Miami University’s Garold Stasser and Arkansas Tech’s William Titus, provides some insight into how groups can end up pursuing a truly bad idea. The problem starts because Velma, incorrectly, believes her idea to be a good one. Velma is a gifted advocate, so it takes some time before you recognize the idea’s inherent shortcomings. “Running out of popular items? Really?” However, once you’ve come to this realization, you also become aware that no one else has voiced any negative opinions. Maybe they too all think that Velma has a good idea. Do you really want to argue against an idea that everyone else thinks is terrific? Do you want to be that person? And maybe Velma actually does have a good idea? Then you’re at once that person and an idiot.
Of course, even if you are right, confronting Velma is going to be uncomfortable and possibly counterproductive. Velma very likely will become defensive. Indeed, for this reason and others, group discussion often leads to a polarization of viewpoints, with individuals walking away with even more strongly held attitudes and opinions.
We posted this scenario on October 2, 2019, and closed the survey on October 22, 2019. We received 56 responses, with the responses ranging in length from 6 to 519 words, with a median length of 100 words. The responses were rated 482 times. Each response was rated on average 8.6 times (median: 7) with 38 responses (68 percent) receiving five or more ratings. (The infrequently rated responses were submitted late in the cycle, close to when the survey was closed).
Responses were rated on a 1 (“Strongly disapprove”) to 7 (“Strongly approve”) scale. A histogram of all ratings is shown below.
The mean rating for all answers was 3.73. At this point, we’ve gotten used to seeing fairly low average ratings for Business Practice responses, ratings that reflect the general difficulty of the scenarios, which tend not to have a single obvious solution.
We next turn to the average ratings of each response submitted. The analysis below is restricted to the 38 responses with five or more ratings. The histogram below plots the average ratings for each of these responses. The average rating was 3.72, with responses ranging from the worst-rated response (1.25) to the best-rated response (5.17).
72 percent of responses came from men, and 26 percent of responses came from participants who used a chicagobooth.edu email address. For the first time, there were no large or reliable differences between Booth and non-Booth respondents, or between men and women.
If you provided a response, we have sent you: (i) a histogram of the ratings for your response; (ii) your average rating; and (iii) a percentile ranking that indicates where your response fell in the distribution of all submitted responses.
To give you a sense of the range of ratings, I’ve listed a few responses spanning the range from unfavorably rated (5 percent, 10 percent, and 25 percent in the distribution, meaning that 95 percent, 90 percent, and 75 percent of responses are rated better), to average (50 percent in the distribution), and favorably rated (75 percent, 90 percent, and 95 percent in the distribution). All of these responses had five or more ratings.
To examine more systematically which elements led to more favorable evaluations, I coded the responses on various dimensions. First, I examined the target of the next conversation: Velma, the team, and/or the boss. Most of the responses included a single target, though some included multiple targets.
The group was the most common target (58 percent of responses) and also resulted in the highest ratings (4.08). Speaking to Velma (26 percent of responses) was less favorably evaluated (3.48), while approaching the boss (26 percent of responses) received the most negative evaluations (2.93).
Responses also varied in content, with 68 percent of responses making an argument (“Directly outline, with data/numbers, why this method will not work.”), 18 percent asking questions (“I think it is worth discussing with the team why they think it is a good idea.”), and 29 percent of responses seeking some cover (“When the unintended consequences are realized, reinforce to your boss that you shared this with him and the team.”). Asking questions was the most-favorably-evaluated approach (4.11), followed by making an argument (3.77), and then seeking cover (2.93).
Finally, I examined the tone of the response, coding responses as “direct” (69 percent of responses), “subtle” (22 percent of responses), or neither (8 percent of responses). Here are examples of direct and subtle responses:
Subtle responses were evaluated most positively (4.26), followed by direct responses (3.7), and finally neutral responses (3.26).
Now for the top three responses! I’ve gotten permission to list names and backgrounds of the respondents.
3 Response: “The team needs to understand the deviant perspective in the group. (Yours!) So you should not go around the team to upper management, or anything of the sort. That will undermine your team and impair your working relationships. No team trusts a defector. That said, you have a perspective that is not shared. But you are confident in it. The first thing that you need to do is understand your own perspective and gather some information that will help you to refine your view and elaborate on the reasons why your perspective is valid. Using concrete information and well-thought-through arguments will be important in this situation. So you don’t want to raise the issue again without doing the work you need to do. Part of this is understanding what is wrong with your own ideas. Once you have crafted this and are sure you have a point, and that you can explain why, then you need to speak to your teammates in a respectful and factual manner
“‘I understand that we have decided to go with option A. Option A makes sense for several reasons.’ (State them. Ummm, we read [Arizona State University’s Robert] Cialdini’s book, perhaps?). ‘However, before we proceed I want to make sure we are really considering this fully.’
“It is worth considering whether you approach the group together or have one on one conversations. I would probably vet the ideas with one or two thought leaders. Let them help you by pushing back. And then raise it in a meeting. Good luck.”
2 Response: “First I would take Velma aside, and expressing a very sincere desire to help her and the team, would impress upon her the risk that this idea will be received poorly and will not have the desired effect. Then I would problem solve with her about how to modify/enrich the idea to make it less risky and potentially more successful.
“If that doesn’t work, I would arrange another group conversation in which I would more strongly lead the group to figure out how risky this idea is. I would do this not by blatantly stating my concerns and objections, but rather through a series of questions:
“This approach has worked well for me at all levels of leadership. It works best if you have already established a reputation for being a team player and helping others to succeed, rather than being seen [as] someone who is [in] it to advance your own interests at the expense of others.”
1 Response: “Write a formal analysis, detailing the intended and unintended consequences of Velma's plan, including the PR disaster if a major publication got inside information leaked about the ‘planned shortages.’ Assign some dollar estimates to the various outcomes, add them up on a probability matrix, and see what the likely financial results might be.
“When [the plan] goes badly, be on record as a discordant voice.”
Thanks for these responses! Each of the respondents will receive a Business Practice coffee mug. Display it proudly!
This installment of Business Practice considered a commonplace problem in organizations: dysfunctional group processes. As someone who teaches and studies decision-making, my best advice is to minimize the chance that this situation occurs in the first place. Many organizations have not thought deeply about how to improve their group decision-making processes. Much of the time this doesn’t matter, but sometimes it leads to us going with our organizations’ equivalent of Velma’s dumb idea.
There are lots of good, accessible books on the pitfalls of group decision-making, including one by my Chicago Booth colleague, Reid Hastie, and a former University of Chicago colleague, Cass Sunstein: Wiser: Getting beyond Groupthink to Make Groups Smarter. I highly recommend this book to anyone who wants their organization to make smarter decisions.
What does this literature suggest about how your organization can minimize the chance of choosing badly? Hastie and Sunstein offer eight approaches for improving group decision processes. I’ll focus on a few:
These three approaches aim to get a fuller set of options on the table, and to encourage a reasoned, unbiased discussion of alternatives.
Group decisions are hard. Even the best of processes will generate their share of failures. It is nevertheless harder and riskier to deal with these problems once they have arisen, as in this scenario.
As Benjamin Franklin is widely credited with observing, an ounce of prevention is worth a pound of cure. Don’t wait until your team starts spinning toward a bad decision before considering how to stop it. Take measures now to help keep bad decisions from getting momentum in the first place.
George Wu is the John P. and Lillian A. Gould Professor of Behavioral Science at Chicago Booth.
An excerpt from the updated edition of the bestselling book.Nudge: Preface to the Final Edition
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