Why OB? The Science behind the Oracle of Omaha

What value does organizational behavior provide? It can’t teach us a new production philosophy that will allow us to cut down our inventory by half or how to pick winners and losers in the stock market. So, why organizational behavior? The answer is that the economy is fundamentally concerned with the interactions between individuals. Thus, it is the science of organizational behavior that allows for one to come to understand others and, perhaps more importantly, their personalities and styles in terms of management and production.

To understand someone, their personality and traits must be analyzed. Furthermore, the interactions that one has with others tells us the type of person that they are. One interesting individual is Warren Buffett. As one of the richest and most successful men of the past century, people have been consistently asking what is it that makes Buffett such a winner. What makes him different than the thousands of other investors? The article “Meeting Warren Buffett” by the Harvard Independent alludes to the answer. In the article, we see that Buffett has a positive core self-evaluation. He does not doubt his capabilities, yet he is still humble. Buffett illustrates how to be at ease with oneself, as he is humble, confident, proactive, and humorous. He is a man, who at the age of 83, still eats “ice cream with a whole lotta chocolate sauce” and jokes about only being proficient in the “allocation of capital”. Buffett’s proactive nature, confidence, and humility also tie into his investment strategy in “invest now, (and) you’ll have a lot of money”. He believes in picking companies that “have already won the race”, such as Coke and Gillette, and then sticking with them. This philosophy of remaining with his stock picks differs greatly from the philosophies of many stock traders who seek to sell stocks as soon as there is a 5 cent increase in value.

I contend that his philosophy in stock trading is much like his own personal philosophy. It is rooted in the basic knowledge of human nature; we may be volatile in the short term but in the long term, we are very predictable. He understands that the market and companies are simply the congruence and magnification of many people and their actions. Thus, they “are irrational and volatile” in the short term but that “he’ll get rich holding steady”. All of these examples point towards an individual with a high level of emotional intelligence, as he is able to understand his own and others emotions and perceptions and subsequently regulate his own emotions and decisions accordingly. Warren Buffett is a man of outstanding success because he understands himself and is confident in his own skin demonstrating a positive core self-evaluation. He is able to obtain the full potential of himself without over thinking his abilities or short-changing himself. He also demonstrates an incredible understanding of others in knowing the general trend of people in markets and companies. He is therefore able to successfully hold true to his beliefs and in the end, win.

http://www.harvardindependent.com/2014/04/meeting-warren-buffett

A Leadership Case Study: Apple

Apple lends us an interesting example of how good leadership is vital for the success of a corporation. Investors and consumers alike see Apple as a powerhouse, which makes it easy to forget the rocky history of leadership within the company. Apple was founded by Steve Wozniak and Steve Jobs in 1976. In 1985 Jobs was ousted from the company he founded, and the company began a time of turbulence during which Jobs’ leadership may have been very effective. Apple was founded on a philosophy of being different and giving consumers the most excellent experience possible. When Jobs left, the strategy fell away from that core philosophy and the company began to function with cost and price in mind ahead of quality. After twelve years, Jobs returned to Apple as CEO.

Apple’s trouble without Jobs shows the importance of leadership, even for a company that seems infallible. Looking through the perspective of Organizational Behavior we can ask, “What was Apple’s leadership missing during Jobs’ absence?” For one, although charisma is not the only important part of leadership, Apple lacked the charisma that Jobs possessed. Jobs was certainly not perfect, but he was intelligent, ambitious, honest, confident, conscientious, and energetic. All of those qualities are imperative to good leadership and are present at Apple because of Jobs. Additionally, although Jobs was sometimes hard to work with, his emotional intelligence was very high in terms of his knowledge of his employee’s wide range of capabilities. Jobs was absolutely not a “country club” manager; but, his management was also not exactly “authority obedient”. Jobs and the rest of Apple leadership push their employees for production first while encouraging them to produce imaginative ideas that would not be possible if obedience was the primary management standard. Jobs was also able to lead by example and inspire his employees. This allowed trasformational rather than transactional leadership to take place. His passion and devotion to Apple lend a perfect example for how all Apple employees should work to meet expectations.

One way that Apple reaches success is through effective teamwork. Jobs recognizes that teams and collaboration are central to Apple’s success. He is also cognizant of the fact that teamwork is based on trust. He recognizes that the spirit of collaboration and teamwork starts at the top and trickles all the way down through the company.

The question still remains whether Apple will continue its dominance under the new leadership of CEO Tim Cook. In choosing Cook to replace himself, Jobs found a candidate that was certainly qualified and able as a leader. But, Cook has a very different personality, which begs the question, “Can Apple survive without Jobs’ leadership?” Cook is much less vocal and divisive than Jobs. Additionally Cook seems to be more focused on the satisfaction of employees at Apple. Differences aside, Cook has two key traits that mirror Jobs. First, he demands excellent results, and second, he leads by example. Like Jobs, Cook works extremely hard, always putting the company first, and is almost neurotic in his constant analysis of Apple and its performance. It is entirely unclear whether Apple’s poor stock performance lately is due to Cook or other factors. It would certainly be a counter-example to Organizational Behavior theories if the poor performance is due to Cook. Cook is outwardly focused on his employee satisfaction and Apple’s commitment to the greater community of which it is a part. Both factors that would typically lead to improved performance, but the results are not there. In the time since Jobs’ death, Apple has been at a crossroads of leadership and strategy and the primary concern should be, “What made Steve Jobs such a special leader and is it possible to replace his effective leadership?”

 

http://www.forbes.com/sites/jackzenger/2013/08/22/the-big-lesson-about-leadership-from-steve-jobs/

http://online.wsj.com/news/articles/SB10001424052702304610404579405420617578250

Survival Tips for Navigating the Workforce

1. Know yourself

Understanding how you work in teams and individually plays a huge role in organizational behavior. People come into the world with tendencies and we need an awareness of and appreciation for one another’s differences. Emotional intelligence is reflected in job, team and interview performance, one’s quality of interpersonal relationships, and leadership effectiveness. In addition, emotional intelligence is related to professional success and predicts scholastic success above intelligence and personality.

How to prepare: Take personality assessments such as the Myers-Briggs and the Big 5. Learn what each response means and what it tells you about yourself and how others work to develop emotional intelligence

2. Have the right attitude

Attitudes dictate your actions and having the right attitude and mindset can assist you in life and survival.  Additionally, attitude is a determinant of success, so we must know how to manage others and their attitudes.

How to prepare:

As a leader, follow these steps to increase job satisfaction:

1. Create anonymous survey- this will help find the source of dissatisfaction within the workplace without creating negative attention

2. Set goals to kick start motivation – clearly define goals and benchmarks

3. Build relationships-  host social engagements to foster interaction in the workplace

4. Provide incentive to perform – get the team excited about the job at hand

5. Show appreciation for your workers – give positive feedback

6. Redesign tasks – foster creativity and achieve the best team results

7. Enrichment of work – believe in the work you do so that others will as well

8. Meet fulfillment needs – meet necessary needs to ensure that the worker feels valued for their product

9. Be equitable – treat all fairly and equally

3. Be able to Perceive

Perception is important because you learn how to make effective decisions. As humans we are not purely logical and rational thinkers. It is important to remove natural biases to ensure that we are making fair decision.

How to prepare: Avoid THESE theories

Attribution Theory: Deciding what “caused” someone’s behavior, the “why”

Internal: factors originate within the individual

External: factors originate from the environment

Our response if we make

Internal attributions – we tend to be more punitive, harsh

External attributions – we tend to be more developmental

Fundamental attribution effort: Attribute the behavior of others more to internal than external factors (for success and failure)

Self-serving bias: For ourselves, internal attributions for own favorable outcomes and external attributions for failures

 4. Avoid Discrimination

Our natural tendencies can lead to bad decisions; thus we look to avoid biases. As leaders, we only want to discriminate across job performance. We must be able to discern between subjective and objective  information to ensure that we are making clear and unbiased decisions.

How to prepare: avoid THESEtheories

Framing: People make different decisions based on how the problem is presented to them

When the information is presented as a loss/negative terms, one tends to be risk seeking

When the information is presented as a gain/positive terms, one tends to be risk averse

How to negate:

Flip the information the other way around; Remove the frame

Escalation: When you keep doing something because you believe you are already so invested

How to negate:

Set limits to commitment in advance; Realistically evaluate by using objective criteria; Have multiple decision makers; Don’t have a failure-fearing culture

Availability Heuristic: The tendency to base judgments on information that is readily available

How to negate:

Have a disciplined approach to judgments; Examine assumptions; Use statistics or facts rather than memory

Confirmation Bias: We seek out information to confirm rather than dis-affirm our point of view. Confirmation bias affects where we get our information and how we interpret it.

How to negate:

Examine all evidence with equal rigor; Play devil’s advocate; Don’t ask leading questions; Consider your motives

Anchoring: Being influenced by the information that is given to you and likely to make decisions around it. Anchoring appears in situations such as the previous year’s sales volumes or salary negotiation

How to negate:

Use alternative starting points; Don’t anchor others; Think on your own first; Beware in negotiations

 

5. Welcome diversity

Diversity presents opportunities for better talent, greater creativity, and increased problem solving skills. It also directly contributes to strategy, morale, profit, productivity, team synergy, skills, policies, and behaviors. In order to effectively utilize diversity, we must go beyond affirmative action, number driven quotas, and  “color blind” approaches.

How to prepare: how should you manage diversity?

1. Link strategically to business success

2. Recruit and promote from diverse pools

3.  Foster and ensure unbiased HR practices

4. Measure diversity and inclusion

5. Hold managers accountable

6. Support flexible arrangements

7. Make the position of chief diversity officer count

8. Provide access to ongoing training, socialization events, and leadership education

9. Sponsor mentoring programs and employee resource groups

10. Offer quality role models

 

6. Understand Teams

Teams are an asset in the workplace as they increase diversity of views, quality of decisions, and provides more complete information and knowledge. Today, 85% of fortune 500 firms use teams. Team skills include technical expertise, problem solving, and interpersonal skills.

How to prepare:

1. Know how to run an effective team meeting

2. Get to know one other

3. Set goals to reach

4. Establish roles within the team

5. Discuss group norms

 

7. Be the right leader for the situation

Great teams require effective leadership; however, different teams, goals, and needs, require different types on leadership. Having the ability to recognize which type of leader is right for the situation is the important part. Concern for people in the right balance with concern for production- the trick is knowing when to be relaxed and when to be strict. Different situations call for different styles.

Different styles of leadership:

Transformational: transforming the way the team thinks and motivate them in the direction of a common goal

Transactional: maintaining the status quo, managing

Directive: concern for production

Supportive: concern for people

Participative: everyone helps with decisions

Achievement: everyone involved in goal setting

Different sources of power:

Coercive: punishment based

Reward: reinforcement based

Legitimate: position based

Referent: relationship based

Expert: knowledge based

How to prepare: Know your leadership personality and where your derive your power from. Develop the skills of communication, influence, teamwork, and coaching necessary for being an effective leader.

 

8. Be Ethical

Ethics is the key to leadership and organizational success. It can be defined as “doing the right things when no one is looking;” however, there are different ways to decide which is right and which is wrong.

Principles of ethics:

Utilitarian: Greatest good for the greatest number of people.

Cultural Relativism: What is normally accepted by the culture

Enlightened Self-Interest: “What is best for me?’

Legalism: Right and wrong established by the law

Categorical Imperative: “What if everybody did it?’

Light of Day: “What if my actions were published in tomorrow’s paper?’

Golden Rule: Treat others the way you would like to be treated

How to prepare: Decide which principles are most import to you and stick to them, especially in tough ethical decisions

 

Discovering Your Leadership Style

There are many effective types of leaders. You must work to figure out what type of leader you are in order to improve your leadership skills. Below are several leadership theories that may apply to you. Consider these theories and how you can improve your skills by focusing in on one style.

Transformational Leadership 

Transformational leaders are leaders who provide their leaders with a sense of importance and mission. They work to motivate their followers in many ways and focuses on the purpose of the mission. These leaders personally get to know their followers while coaching them and showing respect. They consider ideas put forth by their followers and make each member of a team feel important.

In the clip above from the movie “Apollo 13”, NASA Flight Director, Gene Kranz, demonstrates transformational leadership. He is facing a critical decision with regards to his flight crew in space. The flight crew is losing power in their space craft and something must be done quickly in order to save their lives. Kranz shows transformational leadership by keeping his team focused on their main mission – to keep the space crew alive. He motivates his team by counteracting negative comments with focused ideas that keep the hope alive and keep his crew on track. He also shows genuine consideration for his team members through his interaction with the team member who has the suggestion to turn the system off. He shows respect to this member through his calm demeanor and by taking the idea seriously. Finally, Kranz’s final line of “Failure is not an option” further motivates his team members to keep working hard and to not give up because it is simply not an option in their mission.

 

Authentic Leadership

Authentic leaders have specific values and they stick to these values in everything they do. In teams, they create an environment of open communication and they are open with their team about information. People trust these leaders and tend to have faith in them.

This clip from “We Were Soldiers” shows Lieutenant Moore being an authentic leader. Lt. Moore’s is giving this speech right before his crew, the 7th Calvary goes into battle in the Vietnam War. He encourages communication and connection between his team by identifying their differences and why these differences make them such an effective team. These words bring his team together and encourage them to set aside their differences and work together. He sets forth his value of leaving no man behind and sticks to it by promising to come home with every man, dead or alive. By promising to be the last man off the battlefield, he shows that he is there with his team every step of the way, building faith and trust while sticking to his values.

 

Charismatic Leadership

Showing charisma means articulating a specific vision to your followers and considering the needs of your followers. Effective leaders also demonstrate behaviors that differ from the norm and show that they are willing to take risks for the good of the followers and the team.

William Wallace, the protagonist in this clip from “Braveheart”, demonstrates charismatic leadership. His Scottish soldiers are regrouping in their fight for freedom against the English. The English army is much bigger and stronger than the Scottish, so many of the Scottish soldiers are losing hope. Wallace shows charisma by taking personal risk; he is rallying soldiers to take part in a fight that will most likely be unsuccessful and could get extremely ugly because of the uneven match. He is putting his life on the line in this risk by deciding to continue fighting instead of making peace.  He also articulates a specific vision by focusing his speech on the freedom that could be achieved for his people. By focusing on the freedom that his people want so badly, he also considers the needs of his followers in this powerful speech, making them feel included and important which in turn tightens their teamwork.

 

Personality & Values

Values

 

Chuck Noland, the Fed-Ex delivery man from the movie “Castaway” shows us the importance of strong values. He has an ability to judge what is right and what is desirable, which helps him escape the island. Although Chuck’s value system shifts while on the island, it is his ability to reorganize his hierarchy of values that enables him to survive.

Prior to the crash, Chuck’s terminal values were prosperity and economic success, as well as health and well-being. Once on the island, it becomes obvious that a value system centered on prosperity and economic success will be of no use to him. Due to a high self-monitoring and high proactive personality, he is able to prioritize new values and focus his actions on achieving freedom as well as the original goal of health and well-being. In order to stay true to this new value, Chuck alters his behaviors and focuses on autonomy, self-reliance, and ambition. These instrumental values allow Chuck to make the appropriate decisions that will lead to his survival and escape from the island.

 

“I knew, somehow, that I had to stay alive. Somehow. I had to keep breathing. Even though there was no reason to hope. And all my logic said that I would never see this place again. So that’s what I did. I stayed alive. I kept breathing. And one day my logic was proven all wrong because the tide came in, and gave me a sail. And now, here I am. I’m back. In Memphis, talking to you.” – Chuck

“We might just make it. Did that thought ever cross your brain? Well, regardless, I would rather take my chance out there on the ocean than to stay here and die on this shithole island, spending the rest of my life talking…” – Chuck

Personality & Values

Personality

In the first half of the course, we talked about personalities and values. Understanding our own personality helps us identify our preferences and tendencies for how we react to different situations and how we interact with others. Understanding other people’s personalities helps us better manage these relationships.

In the popular TV show “Lost”, Flight 815 crashes onto a deserted island. The show follows the characters’ lives as they struggle to survive. After analyzing Jack Sheppard – one of the main characters on the show, we have concluded that based on the Myers-Briggs personality test, he would be typed as an ESTJ.

E – Jack is extroverted because almost immediately following the crash, he becomes the leader of the group by being assertive and taking action to make things happen. People are naturally drawn to him and he takes the time to get to know the others on the island in order to better understand all of the issues and appropriately delegate tasks.

S – Being a surgeon before landing on the island, Jack learns best from hands on experiences and gathers his information from the details he observes in current situations. His decisions are also driven from past experiences with his father and middle school bullies, and he dissects them over and over again in his head in order to better understand what happened.

T – Jack makes his decisions based on logic and evaluates alternative choices by weighing the pros and cons of each. He lives by a set of standards in which he applies to all situations that he faces on the island. He does not take into account the opinions of all other members on the island and is not concerned with being tactful, but rather executes what he believes is the most effective strategy.

J – Jack is very focused on making decisions for both himself and the group in order to get things done. He does not like when the group leaves things undecided and is infuriated by the characters who walk off while plans are trying to be made. He does not leave things unsettled and tries to establish routines within the group in order to keep everyone organized and establish order.

Although there is no ideal personality type, it is apparent that these qualities of Jack’s personality are what allow him to become a natural leader in the group and it is his organization, logical thought processes, and attention to detail that ultimately helps the group survive on the island.

While stranded on this island, a major factor in survival is the characters’ abilities to act professional and be reliable team members. Jack displays high levels of extraversion, conscientiousness, and emotional stability which are all positive qualities associated with “professional” success. His creativity, positive outlook and ability to control stress levels and manage emotions make him the right choice for leader as well as a valuable team member.

We believe ESTJ is a personality type that you would want to find yourself with if you were stranded on a deserted island for a variety of reasons. First, their ability to live in the present and focus on concrete evidence would keep them thinking rationally and focused on the best means of survival given the current situation. They are realists who would not hang around waiting to be rescued, but rather would go out and accomplish tasks to save themselves. As well, their natural tendency to take initiative by instructing and organizing others allows them to better utilize all resources (human and physical), in order to increase their chances of survival.