Win-Seeking vs. Perceived Stupidity Avoidance

Sunday’s New York Times had a fascinating article about (American) football entitled Coaches Take More Risks, But Perhaps Not Enough.

I’ve always believed that business managers are too conservative for two reasons:

  • They are rewarded for plan performance, not absolute performance.  (See Beyond Budgeting for more on this whole meme.)
  • They seek to avoid looking stupid as a primary motivation

To make this concrete, at BusinessObjects I’d often ask myself who (hypothetically) was the better manager:

  • The guy who ran Italy, who signed up for 75% growth and delivered 69%
  • The guy who ran France, who signed up for 25% growth and delivered 30%

In the vast majority of corporate reward systems, Mr. France is the winner.  In fact, if Mr. Italy’s not careful, he risks not only looking stupid but quite possibly getting fired — all for delivering double the growth of Mr. France.

I was, however, stunned to realize that the same kind of thing happens in professional athletics.  If there ever were an endeavor where getting-the-win should matter more than looking-dumb, you’d think it would be professional sports.  But it’s not so:

“Coaches are primarily conservative by nature,” Fouts said. “They don’t want to lose their jobs because they made a stupid decision. They are making a lot of money.”

Perhaps coaches are paid on a bad compensation plan, I wondered, one that doesn’t properly incent winning.  But it seems deeper than that.  A related story, Mr. Fourth And Go For It, details the work done by a UC Berkeley economist, David H. Romer, prompted by listening to a Raiders game many years ago:

[Romer] came up with the idea to rigorously examine fourth-down plays after listening to a radio broadcast of an Oakland Raiders game in his car about a decade ago. Although the Raiders had the ball in striking distance of the end zone, one of the commentators remarked that they would be smarter to kick a near-certain field goal rather risk going for a touchdown.

“I am pretty analytic,” Romer recalled telling himself. “That is a pretty shallow way of thinking about it.”

His work suggests that on fourth-down plays coaches are actually more motivated by perceived-stupidity-avoidance than by winning.  All this in a highly competitive sport with absolutely clear winners and losers and stakes that run in the tens of millions of dollars.  But here’s a typical — and funny — response to Romer’s work from a member of the football establishment:

“If we all listened to the professor, we may be all looking for professor jobs,” Bill Cowher, a former Pittsburgh Steelers coach, once remarked in ESPN The Magazine.

If you can’t get football coaches to take intelligent risks, does a business executive even have a chance to get his/her managers to take them?

This should make us all stop and think about how and when our organizations can make people look stupid, how to change that, and how to properly reward risk-taking, tolerate mistakes, and provide a culture in which people feel it’s a safe place to innovate.

4 responses to “Win-Seeking vs. Perceived Stupidity Avoidance

  1. This is linked to the general business dislike of acknowledging the reality of risk and randomness. Changes in performance must always be explained — the response “it’s just random” would quickly get somebody fired.

    The sports analogy holds: given randomness, it’s inevitable that some teams have “hot streaks” — but these are always firmly considered a direct result of the team’s quality, but it’s more likely to be the sports equivalent of throwing a fair coin: given enough throws, it’s inevitable that it will come up heads ten times in a row at some point.

    Randomness makes it very, very hard to assess the quality of prior decisions. Let’s say you will win $10 if a coin comes up heads, and $20 if it comes up tails — what do you call? (Tails of course). But then it comes up heads. Did you make the right decision?

    In the business world, where the odds can never be explicit or checked, the answer is “no” (even though you would make the same decision again in the circumstances) — and you may get fired for it.

    You are less likely to get fired for a small “mistake” (i.e. right decision, but bad luck) than a big one — hence the conservative decisions…

  2. Interesting Post. It made me think that if failures are the stepping stones of innovation, then to what extent should organisations encourage risk-taking and and tolerate mistakes is a very big and complex question.

  3. I liked this post and it reminded me of these two articles by Jared Spool: “Failure Is Not an Option — It’s a Requirement” http://www.uie.com/articles/failure_not_an_option

    And also this one: “The 3 Qs for Great Experience Design” http://www.uie.com/articles/the3qs/ where he talks about living a culture that relishes failure.

  4. Pingback: DPS Live Blog – Dave Kellogg Keynote - MarkLogic Newsletter

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s