This latest episode of the AIQ Podcast explores how organisations can encourage staff to work together to share ideas, avoid mistakes and improve performance.
Good collaboration is key to success in almost every field, from business to finance to sport. Find out more about:
- How companies can avoid the dangers of “group think”
- What “casual collision zones” are
- How to ensure meetings are really collaborative
- What sort of incentives are most effective in driving collaboration?
Exploring how organisations can encourage staff to work together to share ideas, avoid mistakes and improve performance. Find out more in this episode.
Vince Lombardi knew a thing or two about building successful teams. An American football player turned coach Lombardi led the Green Bay Packers to five NFL championships and two Super Bowl trophies in the 1960s. But despite his legendary leadership abilities, Lombardi knew his achievements would not have been possible without his colleagues from his players and fellow coaches to the ground staff who tended to the turf at Lambeau Field Stadium, as he once put it. Individual commitment to a group effort. That is what makes a team work, a company work, a society work, a civilization.
Work collaboration has never been more important in driving success, especially in industries that rely on specialist knowledge such as finance. In this episode of the AIQ podcast, we highlight four key principles for successful collaboration. These solutions needn't be difficult or expensive, but they can make a team work. The first principle is all about promoting idea flow. This may sound like management speak, but it refers to something simple and important. The circulation of ideas and creative energies around an organization.
Companies in technical and creative industries have been experimenting with different ways of improving interaction among their teams for some time now with some surprising results. Take Google, which noticed staff in long queues at the company canteen were more likely to strike up conversations with those around them. So managers devised an experiment to find out the optimal length of time baristas should spend making a coffee. Not so long as to annoy employees thirsty for a caffeine hit. But long enough to promote serendipitous conversation what Google likes to call casual collisions.
We caught up with Kirk VALIS, global head of creative capability development at Google, to find out more about those casual collision zones are my top tip.
How can you create casual collision zones where people come together? More now at Google in San Francisco, for example. We try and make it. If you go, there's a certain breeze that I think about in one of our services offices where you wait for minutes for a coffee on average, regardless of how many people are there. So they just speed up or slow down. You're the only person in the queue. Are just slow down, go for minutes because I maximize the opportunity for activism.
Tweaking the layout of work spaces can also make a difference. A recent study from the Kellogg School of Management found evidence of a positive spillover from high performing individuals to colleagues sitting in a 25 foot radius around them, boosting T.Y. performance by as much as 15 percent. The kind of results usually associated with expensive training and recruitment initiatives, but for collaboration to truly take hold. Employees need to feel comfortable sharing ideas in more formal settings, such as meetings. And this can be more difficult than engineering casual confabs around a desk or in the coffee queue.
There are some simple ways to ensure meetings are truly collaborative. Structuring meetings so that everyone has an equal chance to contribute, said the loudest voices aren't allowed to dominate can help encouraging senior members of the team to speak. Last can also make a difference. Here's Sunil Krishnan, head of Multi-Asset Funds of Eager Investors, to explain more.
The other one, of course, is preventing the differential seniority culture, which means that everyone waits for the boss to speak. And then they say, well, I agree with him or her. The idea of managers and team leaders being ideally the people to speak last has some currency feedback from my team suggests that they agree with that. They noticed the difference.
That brings us to the second rule for good collaboration, avoiding group think groupthink is when a desire for harmony overrides the inclination to correct bad decisions. If a team is too comfortable to find consensus, may take hold and ill thought through ideas may go unchallenged. In his landmark 1972 study, Victims of Group Think. Psychologist Irving Jannis uncovered group think at the heart of some of the 20th century's worst political miscalculations from the failure to anticipate the bombing of Pearl Harbor to the escalation of the Vietnam War.
The dangers of groupthink are made worse by a related psychological phenomenon known as the risky shift, whereby an individual feels less responsibility when acting as part of a group than when they are alone. That can be a big problem among financial professionals who manage risk on behalf of others.
Inevitably, the areas where people can't really see the contrary case are the ones where you need to be most cautious. In some ways, as an individual, you can think that stinkier investment idea is a no brainer. If as a group you think that nobody in the room has a bad word to say about it. Then there should be a slight longbow. There must be a decent argument on the other side. Otherwise the price of the asset would be very different from where it is today.
I wouldn't be into a market. So what needs to be wary of investment discussions where literally no one can take the other side? And I think there is something to be said for the devil's advocate approach. For some, take the other side. And that's something that you can do as chair of meat to minimize that risk.
Promoting diversity is another good way of avoiding group think. Economists have pointed to the importance of diversity managing risk. Diverse teams are much better at predicting the outcomes of complex systems such as markets. Here's Professor Scott Page from the University of Michigan, author of the book The Diversity Bonus. Speaking at the European Central Bank in 2017, you can prove the following theorem.
You can show that if people are making numerical predictions that the crowd's error because the average error of the people in the crowd, well, that makes sense. You think the crowd is about as good as the average person in it. But it turns out the crowd is actually better than the average person in the crowd or equals the average error minus the diversity. Now, this is a real theorem. This isn't like a management book theorem that like teamwork equals thoroughness plus effort, possibility plus meaning or something.
Now, this is like real math, says Hess's. It's like the Pythagorean Theorem. This is a mathematical identity. Anytime you have a group of people make numerical predictions, this will be true. The challenge here, when you think about leveraging diversity, is thinking about how do we get people who think differently in the room? How do we make them feel safe so that they share their different models? Because if we do, we're collectively going to do better.
So this isn't a feel good thing. This is just a mathematical fact.
Professor Paige is referring to cognitive diversity. But the same is true for identity diversity. Teams are diverse in terms of gender, race, sexuality and class background are less likely to fall victim to group think are more likely to deliver success. Here's behavioral scientist Victoria Pullout of the University of California at Berkeley, presenting her research on the subject to the World Economic Forum in Davos.
Diversity used in the right way can help power. Innovation once gave a talk on unconscious biases. For a group of synthetic biologists, and they were very excited to tell me about a discovery that they had just made of the prize winners in a competition, an annual global competition they had in synthetic biology. The prize winning teams, the ones that had women, tended to win more often. I went back and looked at the literature within experimental psychology and found that once again the studies seemed to point to groups that were composed, had some gender diversity, tended to perform better on a variety of measures.
I then looked at literature in business management and as it turns out, one study conducted by some researchers who looked at companies in the Standard and Poor's composite fifteen hundred list, and they looked at the representation of women in those companies and top management and found that gender diversity in top management predicted an increase of 42 million dollars in firm value. Another similar study was conducted looking at 177 U.S. national banks looking at racial diversity and found once again that those companies that had racial diversity tended to have an enhanced firm performance.
The Bank of England's Andy Haldane argues organizations should learn from this research into the benefits of diversity and approach recruitment in the same way investors approach portfolio construction. The best asset may not be the one that offers the highest returns or the lowest volatility, but the one whose characteristics complement the wider portfolio.
A low correlation to existing assets will offer diversification benefits, for example. Following the analogy, the right hire may not be the candidate without standing individual skills. The star performer, but an alternative whose qualities fit better with the existing talent pool.
Third principle for good collaboration is about using the right technology from flock to fused Skype to slack, organizations have a plethora of shiny digital tools at their disposal to allow employees to chat and share ideas. Integrating new fangled productivity tech is not just a gimmick, it can boost output. Modern collaborative platforms such as Skype can display charts and data in high definition, allowing teams to share and discuss research in real time as they chat, even if they're based on opposite sides of the globe in the near future.
Augmented and virtual reality technology could make these meetings even more immersive. Several software platforms have been developed specifically to facilitate knowledge sharing and idea flow. But the right technological tool needn't always be something specifically designed for the purpose, as well as Web based communication tools such as Skype and WebEx. We have found that the software platform confluence, ordinarily deployed as an I.T. workflow tool, can be repurposed to compile and circulate, reset and assign tasks across teams aiding collaboration.
Here's Sunil Krishnan to tell us more.
And of Śiva, there are something like 10000 registered users of conference is actually primarily used by I.T. developers as IT workflow tool. So it's not really something that's used outside of I.T. circles, but it was something that had come to our attention that we've started to use it now to do all of those things for our multi-asset research and portfolio instruction discussions. So we now use it as a way to allow everyone to access presentations, to be used meetings, minutes of previous discussions and conclusions potentially to assign action points.
There's comments, space for people to continue the debate off line. And all of this has come from a piece of software that was not designed for asset managers, but in our case, happens deceases very well.
The fourth and final principle for good collaboration is about designing incentives. These need to be tailored in such a way that accounts for the difference between process and outcome. This distinction is well-established in the sporting world. Athletes who focus solely on beating a personal best are likely to neglect the sorts of processes undertaking a set number of practice sessions per week, for example, that may indirectly contribute to that goal. Incentives can help focus minds on what is important. The same principle holds for collaboration if only outcomes are incentivized.
Those who contribute to the process may not receive their due recognition. In fact, competitive outcome focused incentive structures may get in the way of good collaboration. As team members may come to feel that by helping their colleagues, they're wasting time. That would be better spent focusing on individual goals to properly recognise the collaborative efforts of team members. It therefore makes sense for managers to retain some discretion over Pann rewards, while quantitive data driven methods of tracking performance are becoming more sophisticated.
They tend to track outcomes while ignoring important factors such as idea, generation and support for the wider group, argues Sunil Krishnan.
We're in an industry where the danger is that you assess performance literally in terms of basis points of PNL. But that, I think, runs a big risk of confusing process, an outcome in the same way as for a sports team. You need to be able to separate out whether the performance is as good as it could be from the. Did the results turn out well this quarter or this season?
Vince Lombardi would no doubt agree. In business, as in sport, perfecting a collaborative atmosphere is as much art as it is science.
However, by following these full rules promote idea. Flow, avoiding group think. Choose the right technology and incentivize collaboration. Organizations can take the first steps towards achieving it. The rewards can be significant after all. As Lombardi said, individual commitment to the group effort is what makes a team work. His cluttered trophy cabinet is all the proof you need.
Thank you very much for listening to the AIQ podcast, please look out for future episodes and feel free to subscribe through any of the major podcast channels.
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