Grades Exam– 40% –Exam 1: Motivation; Indv. Differences; Managing boss –Exam 2: Social Networks; Decision Making; Culture –Multiple choice and/or short-essay questions –Articles; Cases; Synopses. Quizzes—20% -Three quizzes Book– 20% Managementor Exercises– 20% Speakers– 23,28,30 Page 1

Simple but Powerful Advice Give views in advance, in private. Pick who will speak first at random (US Supreme Court Justices start with junior-most member) Encourage and reward disagreement.

Delusional Optimism Due to both cognitive biases and organizational pressures: - exaggerate own talents; downplay luck - self-serving attributions: in annual reports - scenario planning tends to reward most optimistic appraisals. - anchoring - competitor neglect. - pessimism often interpreted as disloyalty

How to Take The Outside View Select a reference class: –choose a class that is broad enough to be statistically meaningful but narrow enough to be truly comparable to project at hand-- movies in same genres, similar actors Assess the distribution of outcomes: –Identify the average and extremes in the refer- ence-class projects’ outcomes--the studio executive’s reference-class movies sold $40 million in tickets on average. But 10% sold less than $2 mil- lion and 5% sold more than $120 million. Predict, intuitively: –where you fall in the distribution– executive predicted $95 million Estimate reliability of your prediction –correlation between forecast and actual outcome expressed as a coefficient ranging from 0 to 1. Correct the intuitive estimate for unreliability –less reliable the prediction, more needs to be adjusted towards the mean.

Culture Slides Given the power of social influence… (e.g., 70% of seminary students failed to help man in need when told to hurry to a waiting class; when another person in a restroom, 90 percent washed their hands; otherwise, less than 20 percent did so) “I don’t know what a cult is and what those bleary-eyed kids selling poppy really do, but I’m probably that deeply committed to the IBM company” 20-year veteran IBM employee quoted in WSJ Pepsi’s culture of competition; 3M’s culture of innovation; IBM’s culture of service Page 5

Steven Hsieh on Zappos/Culture Page 6

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Culture’s Consequences… -Influences efficacy of strategy through alignment -Enhances control -Increased commitment from employees -A sense of distinctive identity and a hard to replicate basis of distinctive competence Page 8

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Page 10 "RESULTS—that's all that counts, period.“ Support groups are akin to “victim’s groups,” which the best women avoid

Gender remains an issue… –France approved a new law in 2010 that would force companies to increase the number of women serving on boards of directors by 40% by 2016 –Norway forced companies to increase female board representation to 40%: businesses howled. Potential cost: lost experienced people (but all male boards perform very well (LVMH, French luxury goods company, mostly female customers; but almost entirely male board) Potential gain: social justice; more creative?; less groupthink? Where to find qualified women with experience in core business? Binders full of women…

Why Are Women Underrepresented at Top? -Biology? -Stereotypes and stereotype threats? -Lack of qualified women? -Barriers to opportunities, especially of the informal kind? -Lack of institutional support? -Organizational Culture? Page 12

What is Organizational Culture? A social control system? A shared pattern of belief and expectations: the power of peers: control without the sense of external, binding constraint A normative order? The culture of “constructive confrontation at Intel. The central, cherished values, enshrined in prototypic people, stories, symbols (Pepsi’s culture of competition; 3M’s culture of innovation; IBM’s culture of service) The intended culture vs. the emergent culture Page 13

How is culture shaped? -Participation: when choice is volitional, explicit and public, it enhances commitment (systems to involve people: advisory boards; etc.) -Symbolic action: Repeat; put money where mouth is; symbols and ceremonies (Jerry Sanders pushing innovation at AMD: revenues measured as Asparagus) -Listen -Reward systems and policies Page 14

The Art of Virtual Persusaion

The Legal Perspective on Diversity and Discrimination Discrimination law: –Seeks to determine whether an individual has been inequitably treated because of the demographic category to which s/he belongs Diversity law: -Broader concept dealing with the overall climate of an organization and its degree of heterogeneity. An evaluation of diversity is therefore likely to be more subjective than assessments of discrimination

The Business Rationale for Diversity It makes legal and economic sense: Nondiscrimination is the law: –Coca Cola (race discrimination) –Home Depot (gender discrimination) –Texaco (race discrimination) –US Govt. (in 2000, $508 million case; women who were refused employment with US Information Agency) –Walmart (gender discrimination: class action lawsuit on behalf of 1.6 million employees: statistical analysis showed Walmart paid less to women and gave them fewer promotions: 70% employees female: only 30% are managers) Little choice: Changing demographics (Blacks: 10%; Hispanics: 18%; Asian: 20%) Customers diverse, then employees should be diverse Enhanced group and organizational performance? Diversity= richer ideas and learning; employee attraction and retention

Diversity Paradigms Discrimination and fairness: US Army Access and Legitimacy: U.S. investment bank expanding to India hires Indians Learning and effectiveness: Law firm where minority attorneys brought in minority business; but also expanded the kind of work that the company as a whole took on (i.e., changed business strategy)

Women and Glass Ceiling Are people less worried about appearing sexist than racist? Catalyst (2006): At nation’s largest 500 companies: –women are 50% of managers, but only hold 15.4% of senior exec. jobs, down from 16.4% in 2005 –women received 48% of law degrees, but account for only 17.9% of partners –in 2007, the median pay for women was.82 percent of that for men. Outperform: go beyond expectations Develop style with which men are comfortable (Marlyn Monroe or Iron Maiden) Seek out challenging assignments Find mentors

The Psychology of Tokenism Visibility (tokens capture disproportionate share of attention) Polarization (exaggeration of differences) Assimilation (Tokens attributes are distorted to fit preexisting generalizations)

The Significance of Numbers for Social Life Simmel (1950) Kanter (1977): relative proportions; not a matter of innate biological differences, or even of culture; it’s a structural issue of relative proportions. Tokens: Treated as “representatives of a category, as symbols rather than as individuals.”

Friendship Network at an Ivy League University in 1988

Skewed, Tilted, and Balanced Groups Skewed groups (100:0 to 85:15): difficult for tokens to generate alliances or gain power. Tilted (65:35):minority members can become potential allies; can affect group culture; become individuals differentiated from each other and from the majority. Balanced (60:40 to 50:50): culture and interaction reflect balance; majority and minority turn into potential subgroups; outcomes depend upon other structural factors than mere group membership.

Spencer & Owens Discrimination and Fairness Perspective (We are all the same; differences do not matter) S&O’s Discrimination and Fairness perspective Approach -Diversity as moral imperative -Eliminate discrimination: treat everyone the same -Progress assessed by examining recruitment and retention goals. Results Pressures to assimilate Differences undiscussable; conflict suppressed People feel alienated and devalued Performance undermine Access and Legitimacy perspective Approach -Use diversity to connect with market segments -Progress measured by achieving recruitment and retention goals in boundary or visible positions Results -Experience regarded as limited or specialized -Career paths limited; people feel exploited -Differences neither analyzed nor leveraged

Integration and Learning Approach Approach -Cultural differences as resource for learning (different perspectives and experiences) -Use differences to enhance work processes and core work -Progress measured by power traditionally underrepresented groups have to change the organization and its work. Result -Differences embraced, discussed, disputed, evaluated -People feel valued and respected -Cultural competencies learned and shared -Work enhanced by insights, knowledge, skills grounded in peoples’ experiences.

Eight Preconditions for Making Shift to Integration-and- Learning 1.Leadership must understand that diverse workforce will embody different perspectives and approaches to work, and must value variety of opinion and insight. 2.Leadership must recognize both learning opportunities and the challenges that the expression of different perspectives presents. 3.The organizational culture must create expectation of high standards of performance for everyone. 4.Organizational culture must stimulate personal development. 5.Organizational culture must encourage openness. 6.Organizational culture must make workers feel valued. 7.Organization must have a well articulated and widely understood mission. 8.Organization must have a relatively egalitarian, non bureaucratic structure

Deloitte and Touche 1991– Heavily recruiting women since 1980; 50% of new hires women but only 8% of candidates for partner were women; “We prided ourselves on our open, collegial work environment 1992– Deloitte’s Initiative for Retention and Advancement of Women –Launched by CEO Tim Cook: Product is our talent –Worried about it seeming like Affirmative Action Six Steps 1.Made Senior Management Front and Center (not an HR thing) 2.Make an airtight business case (Where will new partners come from?) 3.Let the world watch you (press conference; external advisory council; article in WSJ) 4.Begin with dialogue (don’t assume you know views) 5.Flexible but quantitative accounting (asked for numbers: are top women receiving proportionate share of plum assignments? 6.Promote work-life balance Page 28

END DISCUSSION OF CULTURE HERE Page 29

How to Avoid Dysfunctional Group Decision-Making? Groups: Bigger and more diverse= better? Problems in groups: –Individual effects: Anchoring; Availability; Confirmation; Sunk-cost –Social Effects: Don’t want to disturb cohesion; assumption that group is smarter; desire to seem fair and reasonable; give in to high-status people How overcome?

Shoreham Nuclear Power Plant GE plant in NY, 60 miles from Manhattan Designed to produce megawatts Initial estimated cost: $65 million Final cost: $6billion After 11 years (’73- ’84), never opened! Construction flaws Labor unions Public concerns over safety Escalation of commitment, or failed persistence?

Blowing Up

Shoreham Nuclear Power Plant GE plant in NY, 60 miles from Manhattan Designed to produce megawatts Initial estimated cost: $65 million Final cost: $6billion After 11 years (’73- ’84), never opened! Construction flaws Labor unions Public concerns over safety Escalation of commitment, or failed persistence?

Escalation of Commitment: The Flip Side of Persistence

Reducing Escalation of Commitment Set minimum targets for performance, and force decision makers to compare against these targets Stimulate opposition using “devil’s advocacy” Rotate managers through roles Reduce ego-involvement Provide and study more frequent feedback about project completion and costs Reduce risk and penalties for “failure” Make explicit the costs of persistence

Page 36 The Asch Effect Standard Line Card Comparison Lines Card

Asch Effect: What are the implications of the Asch effect for managers? –Strong social effects on what we see and do. How to organize meeting and debates: –Find ways of getting people to express their views and opinions in ways that prevent those views being swayed by perceived group opinions. –Emphasize that you are not interested in “yes men.” –The importance of people who don’t get along with others– Socrates was turned into an outcast… but should not have been. –Crucially: Once one person dissents, the likelihood of others speaking up goes up dramatically.

Page 38 Milgram: Obedience to authority (1974) Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process. Moreover, even when the destructive effects of their work become patently clear, and they are asked to carry out actions incompatible with fundamental standards of morality, relatively few people have the resources needed to resist authority =Milgram+Shock+Experiment&Form= VQFRVP#view=detail&mid=E49E9EE0 93CEC55FE564E49E9EE093CEC55FE5 64http:// =Milgram+Shock+Experiment&Form= VQFRVP#view=detail&mid=E49E9EE0 93CEC55FE564E49E9EE093CEC55FE5 64 What percentage of ordinary, law- abiding, Yale students would deliver the maximum 450 volt shock? 50% > 60%

"the essence of obedience consists in the fact that a person comes to view themselves as the instrument for carrying out another person's wishes, and they therefore no longer see themselves as responsible for their actions. Once this critical shift of viewpoint has occurred in the person, all of the essential features of obedience follow"

Page 40 Groupthink Groupthink: When you feel a high pressure to conform and agree and are unwilling to realistically view alternatives What are some of the reasons or factors that promote groupthink? What can be done to prevent groupthink?

Symptoms of Groupthink and Decision Making Symptoms of Groupthink  Invulnerability  Inherent morality  Rationalization  Stereotyped views of opposition  Self-censorship  Illusion of unanimity  Peer pressure  Mindguards Decision-making Defects 1)Few alternatives 2)No reexamination of preferred alternatives 3)No reexamination of rejected alternatives 4)Rejection of expert opinions 5)Selective bias of new information 6)No contingency plans Figure 10-6

Page 42 Groupthink: Implications for Managers Assign to each member the role of critical evaluator– this role involves playing “Devil’s Advocate” by actively voicing doubt and objections. Use subgroups and bring in outside experts for exploring the same policy decisions. Use different groups with different leaders to explore the same question.

Groupthink: Implications for Managers Assign to each member the role of critical evaluator– this role involves playing “Devil’s Advocate” by actively voicing doubt and objections. Use subgroups and bring in outside experts for exploring the same policy decisions. Use different groups with different leaders to explore the same question.

Groupthink: Implications for Managers Assign to each member the role of critical evaluator– this role involves playing “Devil’s Advocate” by actively voicing doubt and objections. Use subgroups and bring in outside experts for exploring the same policy decisions. Use different groups with different leaders to explore the same question.

Reducing Escalation of Commitment Set minimum targets for performance, and force decision makers to compare against these targets Stimulate opposition using “devil’s advocacy” Rotate managers through roles Reduce ego-involvement Provide and study more frequent feedback about project completion and costs Reduce risk and penalties for “failure” Make explicit the costs of persistence