What Were They Thinking? July 07, 2008 Unconventional Wisdom About Management(Harvard Business School Press, $25.00)
Even intelligent business leaders can constantly make mistakes. In What Were They Thinking?, author Jeffrey Pfeffer notes how managers can make better decisions if they foresee unintended consequences and cast aside overly simplistic notions of human behavior. The book advocates these objectives through a compilation of essays from his Business 2.0 column, "The Human Factor," updated to enhance Pfeffer’s discussion of why so many businesspeople succumb to these pitfalls.
Examining how businesses often fail to recognize unintended consequences, Pfeffer notes how companies commonly make reflexive decisions that boost cash flow in the short run, but result in the loss of valuable employees and a drop in sales. Illustrating this point, he mentions how newspaper companies have a habit of responding to increased competition by slashing reporting costs and other editorial expenses. This may seem like a pragmatic decision, but it leaves them filling up their pages with stories from other news services, thus putting themselves at a huge competitive disadvantage.
In terms of understanding human behavior, Pfeffer argues for embracing a more nuanced outlook of what motivates employees, asserting that an approach based on incentives and punishments unleashes an array of problems. As the author points out, focusing on monetary rewards can corrode an employee’s intrinsic motivation. Likewise, he says that presenting various sanctions makes people react negatively given their natural inclination to resist any sort of outside pressure to change their behavior.
While you may not agree with every idea advanced in What Were They Thinking, it will certainly get you to broaden your perspective with its unconventional wisdom for handling business decisions.
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