Bob Sutton

I first posted this last December, but I thought that it would be fun to update it for 2012.  Note I have removed two from last years list: Men and Women of the Corporation and Who Says that Elephants Can't Dance?  They are both great books, but I am trying to stick to 11 books and the two new ones below edge them out. Here goes:

I was looking through the books on Amazon to find something that struck my fancy, and instead, I started thinking about the books that have taught me much about people, teams, and organizations — while at the same time — provide useful guidance (if sometimes only indirectly) about what it takes to lead well versus badly.  The 11 books below are the result. 

Most are research based, and none are a quick read (except for Orbiting the Giant Hairball). I guess this reflects my bias.  I like books that have real substance beneath them.  This runs counter the belief in the business book world at the moment that all books have to be both short and simple.  So, if your kind of business book is The One Minute Manager (which frankly, I like too… but you can read the whole thing in 20 or 30 minutes), then you probably won't like most of these books at all.

1. The Progress Principle by Teresa Amabile and Steven Kramer.  A masterpiece of evidence-based management — the strongest argument I know that "the big things are the little things." 

2. Influence by Robert Cialdini the now classic book about how to persuade people to do things, how to defend against persuasion attempts, and the underlying evidence.  I have been using this in class at Stanford for over 20 years, and I have had dozens of students say to me years later "I don't remember much else about the class, but I still use and think about that Cialdini book."

3.Made to Stick Chip and Dan Heath.  A modern masterpiece,  the definition of an instant classic.  How to design ideas that people will remember and act on.   I still look at it a couple times a month and I buy two or three copies at a time because people are always borrowing it from me.  I often tell them to keep it because they rarely give it back anyway. 

4. Thinking, Fast and Slow Daniel Kahneman.  Even though the guy won the Nobel Prize, this book is surprisingly readable.  A book about how we humans really think, and although it isn't designed to do this, Kahneman also shows how much of the stuff you read in the business press is crap.

5. Collaboration by Morten Hansen.  He has that hot bestseller now with Jim Collins called Great By Choice, which I need to read. This is a book I have read three times and is — by far — the best book ever written about what it takes to build an organization where people share information, cooperate, and help each other succeed.

6. Orbiting the Giant Hairball by Gordon MacKenzie.  It is hard to explain, sort of like trying to tell a stranger about rock and roll as the old song goes.  But it is the best creativity book ever written, possibly the business book related to business ever written.  Gordon's voice and love creativity and self-expression — and how to make it happen despite the obstacles that unwittingly heartless organizations put in the way — make this book a joy.

7. The Pixar Touch by David Price.  After reading this book, my main conclusion was that it seems impossible that Pixar exists. Read how Ed Catmull along with other amazing characters– after amazing setbacks, weird moments, and one strange twist after another — realized Ed's dream after working on it for decades.  Ed is working on his own book right now, I can hardly wait to see that.  When I think of Ed and so many others I have met at Pixar like Brad Bird, I know it is possible to be a creative person without being an asshole.  In fact, at least if the gossip I keep hearing from Pixar people is true, Jobs was rarely rude or obnoxious in his dealings with people at Pixar because he knew they knew more than him — and even he was infected by Pixar's norm of civility.

8. The Laws of Subtraction by Matthew May.   This 2012 book has more great ideas about how to get rid of what you don't need and how to keep — and add — what you do need than any book ever written.  Matt has as engaging a writing style as I have ever encountered and he uses it to teach one great principle after another, from "what isn't there can trump what is" to "doing something isn't always better than doing nothing."  Then each principle is followed with five or six very short — and well-edited pieces — from renowned and interesting people of all kinds ranging from executives, to researchers, to artists.  It is as fun and useful as non-fiction book can be and is useful for designing every part of your life, not just workplaces.

9. Leading Teams by J. Richard Hackman.  When it comes to the topic of groups or teams, there is Hackman and there is everyone else.   If you want a light feel good romp that isn't very evidence-based, read The Wisdom of Teams.  If want to know how teams really work and what it really takes to build, sustain, and lead them from a man who has been immersed in the problem as a researcher, coach, consultant, and designer for over 40 years, this is the book for you.

10. Give and Take by Adam Grant.  This book won't be out for a few months, but you should pre-order it so you don't forget. Adam is the hottest organizational researcher of his generation.  When I read the pre-publication version, I was so blown away by how useful, important, and interesting that Give and Take was that I gave it the most enthusiastic blurb of my life: “Give and Take just might be the most important book of this
young century. As insightful and entertaining as Malcolm Gladwell at his
best, this book has profound implications for how we manage our
careers, deal with our friends and relatives, raise our children, and
design our institutions. This gem is a joy to read, and it shatters the
myth that greed is the path to success."  In other words, Adam shows how and why you don't need to be a selfish asshole to succeed in this life. America — and the world — would be a better place if all of memorized and applied Adam's worldview.

11. The Path Between the Seas by historian David McCullough. On building the Panama Canal.  This is a great story of how creativity happens at a really big scale. It is messy. Things go wrong. People get hurt. But they also triumph and do astounding things.  I also like this book because it is the antidote to those who believe that great innovations all come from start-ups and little companies (although there are some wild examples of entrepreneurship in the story — especially the French guy who designs Panama's revolution — including a new flag and declaration of independence as I recall — from his suite in the Waldorf Astoria in New York, and successfully sells the idea to Teddy Roosevelt ).  As my Stanford colleague Jim Adams points out, the Panama Canal, the Pyramids, and putting a man on moon are just a few examples of great human innovations that were led by governments.  

I would love to know of your favorites — and if want a systematic approach to this question, don't forget The 100 Best Business Books of All Time.

P.S. Also, for self-defense, I recommend that we all read Isaacson's Steve Jobs — I keep going places — cocktail parties, family gatherings, talks I give and attend, and even the grocery store where people start talking about it and especially arguing about it.  As I explained in Wired and Good Boss, Bad Boss I have come to believe that whatever Jobs was in life, in death he has become a Rorschach test — we all just project our beliefs and values on him.

It is Thanksgiving morning here in California and I was thinking of all the good things in my life I have to be thankful for, just as I know that so many of you are thinking today.  I thought it would be nice to reprint a story and poem I first posted on this blog over five years ago, on the day The No Asshole Rule was published and it was updated shortly after on the day Vonnegut died.  The key part is Vonnegut's Joe Heller poem, one of the last things he published before he died.  His message that reminding ourselves how much we have (rather than how much we want), that so many of us "have enough," is timeless and especially fitting for the day.  Enjoy and have a happy Thanksgiving.

 I just heard that Kurt Vonnegut died. I loved his books and was touched by his sweet contribution, for creating the best moment I had when writing the book. His death makes me sad to think about, but his life brings me joy. All of us die in the end, it is the living that counts — and Vonnegut touched so many people. Here is my story.

The process of writing The No Asshole Rule entailed many fun twists and turns.  But the very best thing happened when I wrote for permission to reprint a Kurt Vonnegut poem called "Joe Heller," which was published in The New Yorker.  I was hoping that Vonnegut would give me permission to print it in the book, both because I love the poem (more on that later), and Vonnegut is one my heroes.  His books including Slaughterhouse Five and Breakfast of Champions had a huge effect on me when I was a teenager– both the ideas and the writing style.

I wrote some anonymous New Yorker address to ask permission to reprint the poem, and to my amazement, I received this personal reply from Vonnegut about two weeks later. Take a look at the two sides of the postcard, it not only is in Vonnegut's handwriting and gives me permission to use it "however you please without compensation or further notice to me," the entire thing is designed by Vonnegut (and I suspect his wife helped, as she is a designer).  "Life is No Way to Treat an Animal" is one of the famous sayings from his character Kilgore Trout — even the stamp is custom.  It is one of my favorite things.

The poem fits well in my chapter on how to avoid catching asshole poisoning.  Here is how I set it up in the book:

'If you read or watch TV programs about
business or sports, you often see the world framed as place where everyone
wants “more more more” for “me me me,” every minute in every way.
The old bumper sticker sums it up: “Whoever dies with the most toys wins.” The
potent but usually unstated message is that we are all trapped in a life-long
contest where people can never get enough money, prestige, victories, cool
stuff, beauty, or sex – and that we do want and should want more goodies than
everyone else.

This attitude fuels a quest for constant
improvement that has a big upside, leading to everything from more beautiful
athletic and artistic performances, to more elegant and functional products, to
better surgical procedures and medicines, to more effective and humane
organizations. Yet when taken too far,
this blend of constant dissatisfaction, unquenchable desires, and overbearing
competitiveness can damage your mental health. It can lead you to treat those “below” you as inferior creatures who are
worthy of your disdain and people "above" you who have more stuff and status as
objects of envy and jealousy.

Again, a bit of framing can help. Tell yourself, “I have enough.” Certainly,
some people need more than they have, as many people on earth still need a safe
place to live, enough good food to eat, and other necessities. But too many of
us are never satisfied and feel constantly slighted, even though – by objective
standards – we have all we need to live a good life. I got this idea from a lovely little poem
that Kurt Vonnegut published in The New
Yorker called “Joe Heller,” which was about the author of the renowned
World War II novel Catch 22. As you can see, the poem describes a party
that Heller and Vonnegut attended at a billionaire’s house. Heller remarks to Vonnegut that he has
something that the billionaire can never have, "The knowledge that I've
got enough." These wise words
provide a frame that can help you be at peace with yourself and to treat those
around you with affection and respect:

Joe Heller  

True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.

I said, "Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel 'Catch-22'
has earned in its entire history?"
And Joe said, "I've got something he can never have."
And I said, "What on earth could that be, Joe?"
And Joe said, "The knowledge that I've got enough."
Not bad! Rest in peace!"

–Kurt Vonnegut

The New Yorker,
May 16^th, 2005

(Reprinted with Kurt Vonnegut’s permission — see the above postcard!)

P.S. I also added another post about Vonnegut after this one that was good fun, which talked about my favorite quote.

P.P.S. The first version of this post was written on February 22nd, the day The No Asshole Rule was published.  I then updated in mid-April of 2007, after I heard that Vonnegut had died.  This is the third update because it seems like such a  great Thanksgiving message.

About 15 years ago, UC Berkeley's Barry Staw
and I had a running conversation about the conditions under which
showing anger, even having a temper tantrum, is strategic versus
something that undermines a person's reputation and influence, and for
leaders, the performance of their teams and organizations.  In fact,
Barry eventually collected some amazing in-the-locker room half-time
speeches for basketball coaches that he is currently  working on writing
and publishing. 

I thought of those old conversations when I got
this amazing note the other day (this is the same one that inspired me
to do my last post on the Atilla the Manager cartoon):

I just discovered your work via Tom Fishburne, the Marketoonist. I had an
asshole boss until I got her fired. For 6 years I was abused and I should have
done what you say and got out as soon as I could. But you get comfortable and
used to the abuse. You even think you are successfully managing the abusers
behavior with your behavior. Ridiculous I know. I suffered everything you
mentioned including depression, anxiety and just plain unhappiness. The day I
snapped, I used the "I quit and I'm taking you down with me" tactic.
I did document the abuse even though just like every asshole situation, everyone
knew she was an abuser. In an impassioned meeting I let top management know
exactly why I was quitting, let them know they are culpable for all the mental
anquish and turnover and poor results stemming from the asshole. They probably
thought I was a madman with nothing left to lose and about to sue and defame
the company (they'd have been correct). Two hours later she was walked out. Now
the department is doing great and actually producing instead of trying to
manage the reactions of a lunatic.

I am taken with this note for
numerous reasons.  For starters, I am always delighted when the victim
of an asshole finds a successful way to to fight back.  I am also
pleased to see  that, as happens so often, once this creep was sent
packing, people could stop spending their days trying to deal with her
antics and instead could devote their energies to doing their jobs well.
And in thinking about it in more detail — and thinking back to those
old conversations with Barry — I believe that showing anger was
effective in this situation for at least three reasons.

1. He was right.
This was, as the headline says, an evidence-based temper tantrum. 
Although his superiors may have not been overly pleased with how he
delivered the news, he apparently had darn good evidence that this
person was an asshole and doing harm to him and his co-workers. Facts
matter, even when emotions flare.

2. His anger was a reflection of how others felt, not just his particular quirks and flaws. 
This outpouring of anger and the ultimatum he gave were seen as giving
voice to how everyone who worked with this "lunatic" felt.  It was his
tantrum, but it was on behalf of and gave voice to others.  In such
situations, when a person is not seen as out of touch reality or crazy,
even though he may have felt or even acted like a "madman" for the
moment, the anger and refusal to give in can be very powerful.  I also
suspect that, in this case, those same bosses who fired him felt he same
way about the local asshole, and his anger propelled them to take an
action they knew was the right thing to do. The notion that emotions are
contagious and propel action is quite well established in a lot of
studies (see research by Elaine Hatfield for example). 

3. The was a rare tantrum. 
This follows from the last point.  If you are always ranting and
yelling and making threats, people aren't likely to take you
seriously.   Tantrums are effective when they are seen as a rare and
justified outburst rather than a personal characteristic — as something
that is more easily attributed to the bad situation the person is in
rather than personal weakness or style.

Please, please don't use
this fellow's success as a reason to start yelling and making threats
and all that.  That is what a certified asshole would do.  But — while
such outbursts are not always the product of rational planning — this
little episode provides instructive guidance about when expressing anger
might produce outcomes for the greater good.  It also provides some
interesting hints about when it is best to try to stop outbursts from
those you are close to versus when egging them on is a reasonable thing
to do.

Finally, a big thanks to the anonymous writer of this note.  I learned something from it and I hope that other do as well.

P.S. This note and post makes me think that some revision to my list of Tips for Surviving Workplace Assholes might be in order.

I got a note from a manager about this cartoon and story at the Marketoonist, which is drawn and written by Tim Fishburne — he talks about The No Asshole Rule and the problem of brillant jerks. Check out his site, it is filled with great stuff — like this cartoon and story about my least-favorite U.S. company, United Airlines.

P.S. I am sorry I have not been blogging much, I am hoping to turn up the volume and have a lot of things to write about, especially Matt May's new book The Laws of Subtraction.  But life keeps getting in the way!

I spent the morning trying to catch-up on all the emails that have been piling-up and the stuff I have been collecting to read for the book we are are writing on scaling-up excellence. Huggy Rao and I spent the week as co-directors of an executive program called Customer-Focused Innovation. We had great fun and learned an enormous amount from the 65 executives who participated in blend of traditional classroom education (we call it the "clean models" part) and d.school experiential education — project with JetBlue aimed at bringing more "humanity" to air travel for their customers (we call this the "dirty hands" part).

The program appears to be a big success (participants rated it 4.87 on a 5-point "willingness to recommend" scale). But after all those logistics and all that social ramble, I am delighted to have a quiet day.
I wasn't planning on doing a post, but I couldn't resist sharing the opening of an article by the amazing Karl Weick, one of the most imaginative people in my field.

Karl started out his 2002 British Journal of Management on "Puzzles in Organizational Learning: An Exercise in Disciplined Imagination" this way:

It is sometimes possible to explore basic questions in the university that are tough to raise in other settings. John Gardner (1968, p. 90) put it well when he said that the university stands for:

• things that are forgotten in the heat of battle

•values that get pushed aside in the rough and tumble of everyday living

• the goals we ought to be thinking about and never do

• the facts we don’t like to face

• the questions we lack the courage to ask

I read that list over and over. As you may know, the late John Gardner was one of the most thoughtful leadership "gurus" who ever lived and so much more. As a university professor, this reminded me of why my colleagues and I — at our best, we all screw-up at times — do certain things that annoy, surprise, and — now and then — actually help people. We feel obligated to take years trying to figure out the answers to questions that seem pretty simple on the surface. We study obscure things that seem trivial or at least not very important right now. We feel obligated to go with the best evidence even when we don't like answer (e.g., the recent Stanford study that shows there is little or no documented health advantage to organic food isn't something I want to hear, but it is so carefully done that I accept it as the provisionally true). We also feel obligated to ask questions of ourselves at others that can be quite unpleasant for everyone.

I think of my colleague Jeff Pfeffer in particular here, who throughout his whole career, has raised questions about everything from the overblown effects of leadership, to the ways that focusing on money turns us greedy and selfish, to his current work on how organizations and workplaces can make us ill and cause us to die premature deaths. Jeff has made a lot of people squirm people over the years, including me, but he is doing exactly what John Gardner asserted that  a good professor ought to do — seek and tell the truth, even when it is hard to take.

As has happened so many times throughout the nearly 30 years I have been a university professor, Karl Weick (with a big assist from John Gardner this time) has reminded me yet again of what is important in my line of work and the standards I should try to follow. 

As regular readers of this blog may recall, my wife — Marina Park — is the CEO of the Girl Scouts of Northern California.  It has been a busy year from Marina and her staff because it is the 100 year anniversary of the founding of the Girl Scouts and there have been many celebrations.  There was an especially wild one called 100 Hundred, Fun Hundred where some 24,000 girls gathered at the Alameda County Fair Grounds to camp and engage in activities ranging from rock climbing, to scuba diving, to dancing to roakc bands.  You can read about the various celebrations here on their website.  

Today, I am focusing on the Forever Green Awards — a series of dinners that have been held throughout Northern California to honor women who "have made a significant impact to sustaining the environment, economy, or community."  I have been three of the eight award dinners now and have been inspired by many of these women (here is the complete list), from opera soprano Katherine Jolly, to Jane Shaw the Chairman of the Board at Intel, to Amelia Ceja — the Owner & President Ceja Vineyards. 

I  heard something last week at the dinner in Menlo Park that especially caught my ear — from none other than Brandi Chastain, the Olympic Women's Soccer gold medal winner and world champion, who still plays soccer seriously and now often works as a sports broadcaster for ABC and ESPN.  Of course, Chastain we always be remembered for throwing off her jersey after scoring the winning goal at the Women's World Championships in 1999 — in 2004 she wrote a book called "Its Not About the Bra."

The award winners at Menlo Park were each asked to describe the best advice they ever received.  Brandi began by talking about her grandfather and how crucial he was to her development as a soccer player and a person.  Brandi said that he had a little reward system where she was paid $1.00 for scoring a goal but $1.50 for an assist — because, as she put it, "it is better to give than receive."

I love that on so many levels.  I helped coach girls soccer teams for some years, and getting the star players to pass was often tough.  And moving into the world of organizations, as Jeff Pfeffer and I have been arguing for years, too many organizations create dysfunctional internal competition by saying they want cooperation but behaving in ways that promote selfish behavior.  Chastain's grandfather applied a simple principle that can be used in even the most sophisticated reward systems — one that I have seen used to good effect in places ranging from General Electric, to IDEO, to McKinsey. 

P.S. The last Forever Green Awards will be in Santa Rosa at the Paradise Ridge Winery.  Click here if you want to learn more.

William Gibson is one of the most influential and out there science fiction writers of our time.  Read about him here and here. He is credited with first usign the term "cyberspace" in a 1982 story and Wikipedia claims "He is also credited with predicting the rise of reality television and with establishing the conceptual foundations for the rapid growth of virtual environments such as video games and the World Wide Web."   He is also credited with one of my favorite quotes "The future is already here — it is just not very evenly distrubited.

P.S. A big thanks to Caroline for sending this to me!

I confess that as an avid reader of The New York Times, I have been disappointed in recent years because they devote too much space to interviews with CEOs and other bosses. Notably, it seems to me that they run the same column twice every Sunday: Adam Bryant's "The Corner Office" and another interview column called "The Boss."  I do love many of these interviews anyway, as The Times gets interesting people and their editing makes things better.  And I am a big fan of Adam Bryant's book, The Corner Office, as it did a great job of transcending the column.   What bugs me, however, is that The Times devotes so much of the paper to interviews now, I suspect, because it is simply cheaper than producing hard-hitting investigative journalism.  They do an occasional amazing in-depth story, but there is too much fluff and not enough tough for my tastes.  

That said, some of the interviews are still striking.  One of the best I have ever read appeared yesterday, with Citrix CEO Mark Templeton. The whole interview is unusually thoughtful and reminds me that people who don't see themselves as CEOs and don't lust after the position often turn out to be the best candidate for the job (related point: see this study that shows groups tend to pick people with big mouths to lead but that less pushy and extroverted leaders tend to lead more effective teams — at least when the teams were composed of proactive members).   In particular, however, I was taken with this quote from Templeton:

You have to make sure you never confuse the
hierarchy that you need for managing complexity with the respect that
people deserve. Because that’s where a lot of organizations go off
track, confusing respect and hierarchy, and thinking that low on
hierarchy means low respect; high on the hierarchy means high respect.
So hierarchy is a necessary evil of managing complexity, but it in no
way has anything to do with respect that is owed an individual.

If you say that to everyone over and over and over, it allows people in
the company to send me an e-mail no matter what their title might be or
to come up to me at any time and point out something — a great idea or a
great problem or to seek advice or whatever.

There is so much wisdom here, including:

1. While there are researchers and other idealists running around and urging companies to rip down their hierarchies and to give everyone equal power and decision rights, and this notion that we are all equal in every way may sound like a lovely thought, the fact is that people prefer and need pecking orders and other trappings of constraint such as rules and procedures. As Templeton points out so wisely, organizations need hierarchies to deal with complexity.  Yes, some hierarchies are better than others — some are too flat, some have to many layers, some have bad communication flows, and organizational designers should err on making them as "light" and "simple" as possible — but as he says, they are a necessary evil.

2.  His second point really hits home and is something that all too many leaders — infected with power poisoning — seem to forget as they sit at the top of the local pecking order "thinking that low on
hierarchy means low respect; high on the hierarchy means high respect."  When leaders believe and especially act on this belief, all sorts of good things happen, including your best people stay (even if you can't pay them as much as competitors), they feel obligated to return the respect by giving their all to the organization (and feel obligated to press their colleagues to do as well), and a norm of treating people with dignity and respect emerges and is sustained.  Plus, as Templeton points out, because fear is low and respect is high, people at the top tend to get more truth — and less CYA and ass-kissing behavior.

No organization is perfect.  But a note for all the bosses out there.  If you read Templeton's quote a few times and think about what it means for running your organization, it can help you take a big step toward excellence in terms of both the performance and well-being among the people you lead.

I've been reading research on organizational size and performance as it is pertinent to the book that Huggy Rao and I are writing on scaling-up excellence.  In doing so, I also have been following the debate about banks and whether the assertion that both a cause of the meltdown and a risk for future fiascos is that banks are "too big to fail."   Of course, the debate is hard to sift through because there is so much ideology and so many perverse incentives (example: the bigger the bank, the more the CEO, top team, and board will — in general — be compensated). 

Although bankers have been generally silent on this, some have started speaking-up since former Citigroup CEO Sandy Weil — the creator of that huge bank (which lives on courtesy of the U.S. taxpayers) — joined the chorus and argued that big banks ought to be broken-up.   Simon Johnson — an MIT professor — had an interesting editorial in the New York Times yesterday where he reviews some of the recent arguments by bankers and lobbying groups that very big banks are still a good idea — and refutes their arguments (and points out that both Democrats and more recently Republicans are starting to challenge the wisdom of mega-banks). 

I especially want to focus on the "economies of scale argument," that argument that there are more efficiencies and other advantages enjoyed by larger systems in comparison to smaller ones. This appears to be the crux of an editorial in defense of large banks published in the NYT on August 22nd by former banking executive William B. Harrison Jr.   I was struck by one of Johnson's retorts:

As I made clear in a point-by-point rebuttal
of Mr. Harrison’s Op-Ed commentary, his defense of the big banks is not
based on any evidence. He primarily makes assertions about economies of
scale in banking, but no one can find such efficiency enhancements for
banks with more than $100 billion in total assets – and our largest
banks have balance sheets, properly measured, that approach $4 trillion.

Although I am interested in — and an advocate — of the power of growing bigger and better organizations at times, doing so is only justifiable in my view if excellence can at least be sustained and preferably enhanced, and the side-effects and risks to do not overwhelm the benefits.  Unfortunately, the optimism among the bigger is better crowd often outruns the facts.  For starters, I would love to see sound evidence that really really big organizations enjoy economies of scale and other performance advantages — Wal-Mart might be such a case, they certainly have market power, the ability to bring down prices, and brand recognition  — but I can't find much systematic evidence for economies of scale across really big organizations.  If Mr. Harrison is correct, for example, there isn't any evidence of increased efficiencies for banks over 100 billion in assets.

This debate reminds me of some fascinating research on the differences between cities and companies. Luis Bettencourt and Geoffery West of the Santa Fe Institute present fascinating evidence that larger cities are more efficient and effective than smaller ones.  As they conclude in this article in Nature:

Three main characteristics vary systematically with population. One, the space required per capita shrinks, thanks to denser settlement and a more intense use of infrastructure. Two, the pace of all socioeconomic activity accelerates, leading to higher productivity. And three, economic and social activities diversify and become more interdependent, resulting in new forms of economic specialization and cultural expression. We have recently shown that these general trends can be expressed as simple mathematical ‘laws’. For example, doubling the population of any city requires only about an 85% increase in infrastructure, whether that be total road surface, length of electrical cables, water pipes or number of petrol stations.

OK, so it seems that economies of scale do exist for at least one kind of social system, cities.  Does this provide hope for those bankers?  Apparently not. Check out West's Ted Talk on "The Surprising Math Cities and Corporations."  He concludes several interesting things about scaling. First, the bigger the biological system, the more efficient it becomes. Second, following the above quote and the logic that follows from organisms, cities become more efficient (and creative and financially successful too) as they become larger.  Third, that cities rarely die, but organizations almost always do (he claims always).  Fourth, he shows that companies do scale — in fact he talks about Wal-Mart, shows their economies of scale,  and describes his dataset of 23,000 companies. But the twist is that as companies become larger and older they become weighted down with bureaucracy and — unlike cities — the resulting internal friction both outweighs the benefits of economies of scale and renders them unable to to pull-off the radical innovations required to stay alive. 

Here is this conclusion in more detail, from an article in The New York Times:

This raises the obvious question: Why are corporations so fleeting?
After buying data on more than 23,000 publicly traded companies,
Bettencourt and West discovered that corporate productivity, unlike
urban productivity, was entirely sublinear. As the number of employees
grows, the amount of profit per employee shrinks. West gets giddy when
he shows me the linear regression charts. “Look at this bloody plot,” he
says. “It’s ridiculous how well the points line up.” The graph reflects
the bleak reality of corporate growth, in which efficiencies of scale
are almost always outweighed by the burdens of bureaucracy. “When a
company starts out, it’s all about the new idea,” West says. “And then,
if the company gets lucky, the idea takes off. Everybody is happy and
rich. But then management starts worrying about the bottom line, and so
all these people are hired to keep track of the paper clips. This is the
beginning of the end.”

The danger, West says, is that the inevitable decline in profit per
employee makes large companies increasingly vulnerable to market
volatility. Since the company now has to support an expensive staff —
overhead costs increase with size — even a minor disturbance can lead to
significant losses. As West puts it, “Companies are killed by their
need to keep on getting bigger.”

There are still advantages to size despite these rather discouraging data"  market power, legitimacy, the ability to do complex things that require multiple disciplines, and brand recognition come to mind.   And there are studies by economists that show economies of scale under some conditions.  Some organizations are also better than others at limiting the burdens of bureaucracy as they grow– Wal-Mart is one of them.  As a practical matter, when I think of Bettencourt and West's data and combine it with Ben Horowitz's amazing post on scaling, it appears his advice to "give ground grudgingly," to add as little structure and process as you can get away with given your organization's size and complexity, is even more sound than I originally thought.

As with many researchers, West has a healthy ego and states his findings with more certainty than is probably warranted.  But these are — unlike the bankers — evidence-based statements, and when I combine them with what Huggy and I are learning about how hard scaling is to do well (there are big differences between companies that do it well versus badly), the lack of evidence for economies of scale in really big banks, and a system where the primary defenders of really big banks have strong incentives and weak evidence to support their positions, I am hoping that in a political season where my country seems hopelessly split on so many issues, perhaps this is one where both sides can come together and hold an evidence-based position.

I appreciate the interesting comments and suggestions in response to my last post on different levels of felt accountability.  Readers may recall that I proposed — from best to worst – that a team or organization can be characterized as having people who feel everything from authorship. mutual obligation, indifference, and mutual contempt.  I have especially been thinking about this comment from Justdriven, which builds on a prior comments by AnnieL:

"Regarding
your first question, I think AnneL may have identified a fifth category
between mutual obligation and indifference which would be fear driven
box checking. This would be the case where individuals follow procedures
out of a fear of retribution rather than an endorsement of said
procedures. This would seem to be what the pilot experienced. This stage
would be a slippery slope that takes you from mutual obligation to
indifference and then contempt."

I am taken with "fear driven box-checking" as it seems to be both a symptom and a cause, where people who feel powerless have no ability — and thus no obligation — to help make things go well because the system makes it impossible regardless of how good their intentions might be.  This comment also got me thinking about how, in some systems, people can zoom past indifference and move to mutual contempt by following the rules exactly as a way to fight back against a bad system or boss — especially when there are bad standing rules or orders for a given challenge.   "Working to rule" is a classic labor slow down tactic, and there is some sweet revenge and irony when you get back at company or person  that you don't like by following their instructions to the letter. 

More broadly, I have been interested in the notion of "malicious compliance" for a long time.  In Chapter 6 of Good Boss, Bad Boss I wrote about how it is sometimes used to get back at a bad or incompetent boss, or in the example below, by bosses to shield their people from a lousy boss up the chain of command:

I know bosses who employ the opposite strategy to undermine and drive out incompetent superiors. One called it “malicious compliance,” following idiotic orders from on high exactly to the letter, thereby assuring the work would suck. This is a risky strategy, of course, but I once had a detailed conversation with a manager at an electronics firm whose team built an ugly and cumbersome product prototype. After it was savaged by the CEO, the manager carefully explained (and documented) that his team had done exactly as the VP of Engineering ordered, and although he voiced early and adamant objections to the VP, he gave up because “it was like talking to a brick wall.”
So this manager and his team decided ‘Let’s give him exactly what he wants, so we just said “yes sir” and followed his lousy orders precisely.’ The VP of engineering lost his job as a result. Again, this is a dangerous and destructive strategy, and I would advise any boss to only use it as a last resort.

I would be curious to hear of other examples of malicious compliance — and if you have any ideas of how to create conditions so it won't happen. Its is one of this sick but fascinating elements of organizational life.