Theory of Incremental Advantage

The Importance of Delegating Responsibility

Many businesses recruit employees with very specific skills (such as online marketing or media relations). The team members must interact with one another. For example, a press release cannot be issued until it is drafted; quotes are taken from senior officials; edited; reviewed by corporate communications, lawyers and other parties mentioned in the release; proofread; and, sent to the wire services. As this example shows, there are a lot of bottlenecks in getting work done. Most of the affected people waiting for permission to move a piece of work forward will, in effect, be paralized. Removing departments from a decision making process and delegating authority can relieve an enterprise of some of the roadblocks to productiviy.

Also, waiting drives some people to make unintelligent decisions. In a study conducted by Gregory Burns, an associate professor of psychiatry and behavioral sciences at Emory University, respondents were given an option of receiving an electric shock now or a lesser shock after waiting. Roughly a third opted for more voltage sooner.

Delegating Authority

Those executives who cannot disengage from the office and delegate authority undermine employees' confidence to make decisions and be creative.

When Hiring Go For Intelligence

There is an old saying that states, "When searching for employees, look for the three "I's": intelligence, integrity, and initiative. You can't put in what G-D left out." Jack Welsh said he looks for four “e’s”: Energy, the ability to energize their teams, an edge in making tough decisions (a sign of intelligence), and a track record of executing. As for the last point, there is a proverb which holds that a man with too many good excuses cannot be trusted.

Intelligence is the most telling variable in determining an executive's success. I mean the old-fashioned, politically incorrect, high SAT scoring kind of intelligence. It is intelligence that will equip an executive to make decisions when no precedents exist. It is intelligence that can maximize opportunity and avoid obstacles. It is intelligence that enables an executive to defuse a tense situation. It is intelligence that will enable superiors to delegate authority and responsibility.

The best way to evaluate an executive's intelligence is to ask them to recommend a solution to a problem that the business confronts. The articulation of the recommendation will reveal their thought process and therefore their strengths and weaknesses. It is more important that executives can express themselves verbally than in writing. Crisis require immediate response which can only be delivered through verbal communication. You can't spend an afternoon writing a memo to address a crisis. Verbal communication can better motivate the troops than memos and communiques.

When Being the Last is the Best

Decision makers are inherently prone to assume that the most available information is also the most relevant. This is called "Availability Bias". You should try to take advantage of Availability Bias by positioning yourself to be the last to present your proposals. The last person who lobbies for his proposals can often hold undue influence over the decision makers' verdict. This is true in terms of interviewing candidates, listening to zoning proposals for real estate deals, and arguing before juries.

On the other hand, when you are making the decisions, you should not be overwhelmed by the last person to present to you. One way of insulating yourself from availability bias is to stagger the order in which each candidate presents to the various decision makers so that only one decision maker will be at risk of availability bias for any particular candidate.

Positive Reinforcement

Employees need to be given well-defined areas of responsibility in spheres for which they are most well-suited and the tools to do their jobs effectively. After the employee is suitably positioned and equipped and producing great work, the best managers give their employees positive reinforcement.

Once students at a business school decided to conduct an experiment on their professor. This professor had a habit of pacing back and forth from the left side to the right side of the classroom as he lectured. On the day of the experiment, the students on the right sided feigned boredom, looked at their watches and down at their notes every time the professor walked to the right of the room. When the professor paced to the left side of the room, the students perked up, chuckled at his comments, participated in the discussion, and took copious notes. At the end of the session, the professor spent nearly all of his time on the far left side of the room.

Many studies have found that positive reinforcement releases the neurotransmitter dopamine. For example, one study revealed that video game players receive a twofold increase in levels of dopamine, a level similar to that observed following intravenous injection of amphetamine or methylphenidate. This chemical not only makes employees feel good when they receive praise, it is also crucial to memory and learning. It creates an internal reward system that makes employees want to repeat behavior that the company needs - if doing the right thing earns them recognition.

Be Careful About Hiring Superstars

Raw intelligence is an extremely important factor to consider in making hiring decisions. However, there are some drawbacks of hiring high IQ superstars. People who have been pegged as highly intelligent often worry more about acting smart than learning new things. Many highly intelligent people serve up plenty of ideas but deliver few tangible results. There is a big difference between having great credentials and being a great contributor. A lot companies that cultivate star talent have crashed. Examples include Enron, Arthur Anderson, and Drexel Burnham Lambert. Nick Leeson, a young trader, single-handedly caused Barings Bank to collapse. Not only was Barings Bank acquired for a symbolic (pound) 1 by ING but ING even dropped the Barings name after one year as the new Dutch owners believed that the Barings name was a liability. As Malcolm Gladwell pointed out "the organizations that are most successful are the ones where the system is the star."

Benefits of Responsiveness

More rapid communication with employees and customers reduces the amount of irrelevant noise directed towards you. By your consistently responsive behavior, you create an aura of sensitive responsiveness to the network you are connected to. When people know that you are paying close attention to what they send you, they can not help but be more conscious of the quality and appropriateness of their messages. When the feedback loop is shortened in any relationship, it breeds a much healthier and more productive situation.

Humor is an Important Management Tool

Ambitious and driven people constantly find themselves in stressful situations. Humor is an excellent tool for defusing tense situations and for coping with stress and is used by the most successful people. Victor Borge once described humor as the shortest distance between two people.

According to research conducted by James Rotton, a psychologist from Florida International University, people who spontaneously use humor to cope with stress have especially healthy immune systems, are 40% less likely to suffer a heart attack or stroke, experience less pain during dental surgery and live 4.5 years longer than most.

In 2005, Michael Miller and his colleagues from the University of Maryland studied the relationship between finding the word funny to describe someone and the inner lining of their blood vessels. When such vessels expand, they increase blood flow around the body and promote cardiovascular well-being.

People Expect Change

Change is difficult to implement since change has no constituency. However, once change takes effect (such as an acquisition or corporate reorganization), employees expect change. Psychologists have determined that most people are not so much apprehensive about change. Rather they are apprehensive about not knowing which changes will take place. Informing your employees of the impending changes as soon as possible will relieve them of much of the stress.

General Eisenhower Demanded Optimism

Despite all of the difficulties of war, General Eisenhower deamnded a "calm and cheerful" atmosphere in his Supreme Headquarters Allied Expeditionary Force - and he go it.