The Behavior Behind the Buzzwords

The language of management —the specialized jargon, catch-phrases and buzzwords — is a kind of shorthand. At its best, it helps people who share common assumptions to communicate with one another. Too often, however, the words lead people down the wrong path. They signal one thing, but they really mean another.

I’m not talking about the many euphemisms used to paper over the unpleasant realities of the job — down-sizing, for example. Those usually fool no one, which is why they make such easy targets for humorists like Scott Adams, Dilbert’s creator. The terms and phrases I have in mind are those that mislead managers themselves, setting the wrong expectations about behavior that is vital to an organization’s performance.

Setting clear expectations, as every good manager knows, is critical to getting everyone in an organization to do his or her part. It is also vital to every individual’s sense that he or she is being treated fairly. When an activity turns into a buzzword, the odds are high that managers will stop thinking consciously about the behavior they’re trying to elicit and the best way to set expectations clearly. That’s why it’s important to pay attention when buzzwords take over management’s most important responsibilities.

Thinking Inside the Box

Consider the all-too-familiar admonition to “think outside the box.” Whenever a phrase like this makes the rounds in organizations, there’s usually a genuine itch that needs to be scratched — at least at first. A decade or so ago, the competitive environment had intensified rapidly and overcoming resistance to change was the challenge facing organizations of all sorts. “Thinking outside the box” entered the lexicon of buzzwords as a way of capturing people’s need to embrace new ways of conceptualizing old problems.

Today, the phrase makes many people cringe. There is often an inverse correlation between the frequency of its use and the amount of truly original thinking under way. The problem with phrases like “thinking outside the box” is that they quickly become slogans, applied universally and somewhat mindlessly. That’s a shame because, properly understood, thinking outside the box can be a very useful metaphor.

The phrase comes from a famous puzzle most people have tried at one time or another, in which nine dots are arrayed in three rows of three dots each. The challenge is to connect all of the dots by drawing four straight lines without lifting the pencil from the page. The puzzle stumps people because when they look at the dots, they immediately see a square and unconsciously assume that they have to stay within the confines of the imaginary box. Not so. The solution requires that two of the four lines extend outside the space defined by the outermost dots. Thinking outside the box, then, is a metaphor for thinking beyond the common mental models that shape the way people see the world.

Most managers who talk about thinking outside the box are unaware of the phrase’s origin. They use the term to mean “Think creatively!” or worse, “Damn it, why can’t you be more creative!” — an exhortation that leaves most people feeling inadequate and at sea. Divorced from its origins, the phrase places a misleading premium on originality for its own sake.

In fact, a lot of valuable innovation is sparked precisely because there is a box — a puzzle with rules that limit and define good solutions (the restriction on lifting the pencil, for example). In other words, there is a problem to be solved within a set of specific constraints. In this regard, innovation in business is not unlike creative performance in art and athletics. Working within the constraints of the sonnet form, for example, Shakespeare produced extraordinary poetry. Or take the virtuoso performance of a basketball player like Michael Jordan: His feats would have been meaningless if the court had no boundaries and the game had no rules. To cite a managerial parallel, Toyota’s development of just-in-time inventory management was sparked by the company’s cramped physical space.

There is no more gripping illustration of out-of-the-box thinking than the rescue of the Apollo 13 lunar mission. An explosion caused by a faulty coil in an oxygen tank damaged the spacecraft, and landing on the moon — Apollo 13’s mission —was out of the question. Gene Kranz, director of flight operations, decisively redirected his organization to a new mission: bringing the crew home alive. The spacecraft was dangerously low on power and Mission Control in Houston had to work against the clock to design an energy-saving reentry plan. A second emergency added to the tension, as carbon dioxide levels began to rise rapidly. If the team in Houston couldn’t design a makeshift air filter that the astronauts could then cobble together with objects at hand, the astronauts would die. Anyone who has seen the film version of these events will remember this scene. A project leader at Mission Control dumps three boxes full of assorted objects on the table and says to his team: “We’ve got to find a way to make this (holding up a square object) fit into the hole for this (picking up a round object) using nothing but that (pointing to the mound of stuff on the table).” The resulting filter — patched together with some plastic hose, duct tape, the cover of the crew’s flight plan and a sock — does the job, and the crew eventually makes a safe return home.

How did Mission Control save the Apollo 13 astronauts? Passion, dedication and the refusal to accept failure all played a part. And the staff at NASA did find creative solutions to seemingly impossible problems. Were they thinking outside the box? You could say yes, but only if you understand that such thinking depended on absolute clarity about the box — the problem to be solved and the constraints that had to be respected.

Gene Kranz defined the box for Mission Control. First, he gave the group a clear mission so that there was no ambiguity about the goal to be achieved. Second, he kept everyone informed about the harsh realities of the astronauts’ situation —the worsening power shortage and the rising CO₂ levels. Clarity of mission and good data are critical and often underappreciated aspects of innovation in business. Creating new value often means solving problems within constraints. Good managers know how to use the constraints of strategy, business models and budgets as challenges to spark creativity and ingenuity.

David Pottruck, co-CEO of Charles Schwab, tells a story that illustrates this discipline in action.1 A team was asked to find a better way to research and resolve customer complaints — not a heroic mission like Mission Control’s but representative of the incremental innovation that most managers engage in. First, the team mapped out Schwab’s process and found ways to shave a couple of days off the two-week average for resolving complaints. Next, it adopted a more aggressive goal — to reduce the response time to one week — that prompted even more careful scrutiny of the process. Everyone had taken for granted, for example, that contacting customers in writing was a legal requirement. After the team learned that sending letters was only a matter of custom, it made phoning with the response the norm, reducing the time needed to resolve problems by days.

When the Schwab team got the time down to a week, it could have declared victory and moved on. Instead, it posed an even bolder question: Can we get the response time down to 48 hours? This wasn’t incremental problem-solving anymore; it was starting over with fresh thinking about the value the process created. In other words, it was redefining the box. What did customers want? The answer had seemed clear: They wanted quick responses. But wait a minute. Didn’t they really want complaints resolved in their favor? What would Schwab do differently if the problem were redefined as one of customer retention rather than complaint response?

That question, and the insight about value that provoked it, led the Schwab team to ask what it was costing the company to resolve each dispute and what it would cost to give customers what they truly wanted. The team discovered that 80% of complaints involved dollar amounts that were less than what Schwab was spending to research them. So if the goal was to retain customers, the obvious solution would be to concede any dispute in which the dollar amount in question was less than the research cost. Reframing the question turned incremental improvement into a breakthrough that allowed Schwab to settle 80% of disputes in 48 hours.

So is this an example of thinking outside the box? Again, yes and no. The Schwab team’s reframing of the question was essentially a process of designing a new box with a new set of carefully defined constraints. Much of the innovative work of organizations — which can be described as the orchestrated search for new value — fits this pattern. The box metaphor, divorced from its origins as it usually is, signals that there are no constraints in that search, and that signal is fundamentally misleading about the vital work of innovation.

Resource Allocation Means Saying No

The term “resource allocation” misleads in another way. Hardly a colorful metaphor, resource allocation is a dry-as-dust technocratic phrase that makes people’s eyes glaze over. Who would suspect that such a bloodless term refers to one of management’s most difficult and emotionally charged responsibilities? Or that a phrase that seems to be about making people and money available to pursue an initiative is just as much about taking those resources away?

What makes resource allocation — or, to put it in plain English, matching resources to opportunities — so hard? Part of the difficulty is lack of information: Decision makers often don’t know how much an opportunity is potentially worth, much less which of hundreds of opportunities are likely to pay off. Often, the information they need to make these determinations rests with project champions who are competing against one another for resources. Even with perfect information, focusing an organization’s resources in the right places would never be easy. People disagree about priorities. They build empires and defend their turf. They cling to the past and to familiar territory. They hate to stop what they’re doing because that would look and feel like an admission of failure.

The crux of the matter is that providing resources for one project means not giving them to another. It means, in other words, that managers often have to say no when it is always easier to say yes. The quantification of opportunities can help, sometimes enormously, to depoliticize the difficult decisions about priorities, but they remain tough decisions. For the media and the public at large, and even for many people inside organizations, the human face associated with resource allocation is usually the individual who has lost out. The problem is particularly painful in health care, as a story involving Humana, a large health-care provider, reveals.2

In the United States, health-care managers have to negotiate their way between two conflicting social goals. As members of a basically humane and just society, Americans believe no one should be denied care, but they also demand cost containment and affordable health insurance. Humana found itself on the horns of this dilemma when it analyzed its spending and found that the sickest 10% of its patients accounted for 80% of costs. Patients with congestive heart failure — a chronic disease that costs the nation $17 billion a year — were among the most costly. Humana then began to apply an approach to congestive heart failure called “disease management.” Under its CorSolutions program, it assigns nurses to follow those patients most at risk, to call them on the phone to discuss their diet or medication, and to urge them to seek care early so that they avoid the kind of crisis that often results in expensive hospital stays. Nationwide, one in five patients diagnosed with congestive heart failure dies within the first year, but Humana has reported that CorSolutions cut the mortality rate for its patients to one in ten. That’s performance, by anyone’s standard.

Here’s the rub. Putting more staff to work on patients with congestive heart failure meant pulling resources away from other patients, resources that Humana felt weren’t producing commensurate benefits. That decision was painful for the individuals who lost benefits they had come to depend on. They sued Humana and won $80 million in damages. My point is not to take sides but to highlight both how difficult resource-allocation decisions can be and how critical they are to an organization’s performance. Resources are never unlimited, and managers always have to make trade-offs in order to achieve results. But any manager who fails to anticipate that resource allocation, to use the bloodless term, will evoke the strongest passions is in for an unpleasant surprise.

Resource allocation always means pulling the plug on existing activities that aren’t panning out. And cutting off resources can be a wrenching experience, as anyone who has managed R&D in a pharmaceuticals company will tell you. Performance in that industry is a function not only of betting on the right projects, but also of knowing when it’s time to walk away from a project. Such decisions are extremely difficult. Because it takes so long to develop a new drug, a project leader may work on as few as five or six projects in an entire career. Imagine the pressure that generates to keep a project going — and how personally devastating the company’s decision to kill a program can be.

Such decisions are necessary, however, not just in R&D but across the board. They are the only way to liberate resources from yesterday’s priorities. Peter Drucker has noted repeatedly that the greatest obstacle to innovation in organizations is the unwillingness to let go of yesterday’s success and free up resources that no longer contribute to results. He once referred to the products and businesses people cling to most tenaciously, despite their mediocre performance, as “investments in managerial ego.” The solution, says Drucker, is the discipline of “systematic abandonment,” a discipline Jack Welch applied when he undertook to remake GE in 1981. As Welch has said, “We needed to ask ourselves Peter Drucker’s very tough question, ‘If you weren’t already in the business, would you enter it today?’ And if the answer is no, face that second difficult question, ‘What are you going to do about it?’ ”

Because resource-allocation decisions can be so painful, large corporations for many years tended to rely on formulaic approaches. If Division A accounted for 20% of the corporation’s sales, it would get 20% of the resources for investment. If expenses had to be cut by 10%, the order would go out to impose those cuts across the board. Allocation by the numbers eliminates the politics and numbs the pain. But it also eliminates thinking and judgment and rules out choices that could better match resources to opportunities.

Such formulaic approaches are symptomatic of bureaucracies, of organizations more focused internally on their own politics than externally on achieving results. Consider that the share of the U.S. defense budget going to each branch of the military barely changed at all during the last three decades of the 20th century, despite the dramatic changes that occurred in the threats to national security and in military technology. The less an organization is pressured by outside forces to perform, the more likely it is to allocate its resources by some inward-looking logic of compromise. It will avoid rocking the boat.

Respect for the Individual (I Respect You, You’re Fired)

No value is more universally and loudly proclaimed in organizations than respect for the individual. L ike thinking outside the box, this catchphrase makes people cringe because it is so often said insincerely. And even when it is used sincerely, the phrase is misleading. It implies a kind of everyone-gets-treated-the-same ideal, and it’s easy for individuals to take the next step and interpret the phrase to mean “I will be treated just as I would like to be.” And that’s dangerous thinking because the needs of the organization manifestly do not always coincide with the wishes of individual employees.

What, then, does respect for the individual mean in an organizational context? First, it means accepting that every employee is different and therefore good at different things. Everyone brings different gifts, talents, attitudes and ways of thinking to the workplace. What matters most to performance is matching the right individual to the job. One of management’s critical responsibilities, then, is hiring the right people — spotting talent and putting it where it can contribute to performance.

This is a very old idea. Hiring the right person for the job was one of the core principles of scientific management laid out by Frederick Winslow Taylor a century ago. When he studied 75 pig-iron handlers at Bethlehem Steel, he found that only one in eight was physically right for the job. And while working at a bicycle ball-bearing plant, although Taylor came up with a number of productivity-enhancing ideas, the most important of all, he said, was selecting the “right girls” — in this case, those with quick reflexes.

Look at any organization known for its ability to execute and you will find a robust process for hiring, promoting and, yes, firing people. Southwest Airlines is a case in point.3 As of the late 1990s, Southwest screened about 200,000 applicants per year, interviewed 35,000, and hired 4,000. The company takes a best-practices approach to defining the kind of talent the company needs. For example, consider how it goes about selecting pilots. At one point, the company interviewed its top 35 pilots in order to identify traits that they had in common. The pilots themselves, not HR staff, interview and make the hiring decisions for pilots seeking to work for Southwest (likewise, baggage handlers hire new baggage handlers, and so on).

More than anything else, former CEO Herb Kelleher once said, “We draft great attitudes. If you don’t have a good attitude, we don’t want you, no matter how skilled you are. We can change skill levels through training. We can’t change attitude.” Southwest, in fact, once turned down the chance to hire a pilot with outstanding flying credentials because he was rude to a receptionist during the recruiting process. Like all good managers, Kelleher had the wisdom to distinguish what is teachable from what isn’t. But in most organizations, too little time is spent on hiring the right people and understanding their talent, and far too much time and energy is wasted trying to fix unfixable weaknesses.

Despite the care Southwest takes in selecting people, the company knows it won’t get it right every time. That’s why, as president and COO Colleen Barrett once put it, Southwest is “pretty darn religious” about watching people’s performance during the probationary period. When the company sees someone whose attitude or sense of teamwork does not mesh with Southwest’s culture, she went on, “We will counsel once or twice and we will be harsh.”4 A corollary of respect for the individual, harsh as it may sound, is management’s responsibility to fire people who are in jobs they can’t perform. This is work most managers would rather not do. But avoidance of the task is bad for the organization as a whole and is perhaps even worse for the individual who is struggling and unlikely ever to succeed if he stays where he is.

Straight Talk

A common thread runs through my observations about the catchphrases of management. Look carefully and you will find that management’s real challenges lie precisely in what the words don’t say. Before you embrace a colorful slogan like “thinking outside the box,” understand that while you will probably succeed in getting people moving, you may send them in the wrong direction. When the language is antiseptic, as in “resource allocation,” make sure you’re prepared for just how emotionally charged the reality can be. And when the phrase sounds just a bit too pious for comfort, as in “respect for the individual,” ask yourself whether there isn’t a darker implication lurking behind the fine words. Buzzwords and catchphrases can speed communication. But when it comes to the messy, human realities of management, a dose of straight talk — and clear thinking — can go a long way.