Tag Archives: organizations

Bringing sociology and understanding culture to Wall Street

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A sociologist argues for the value of bringing a sociological perspective to Wall Street after noting how the president of the Federal Reserve Bank of New York recently used the term culture repeatedly and defined the term:

“Culture relates to the implicit norms that guide behavior in the absence of regulations or compliance rules—and sometimes despite those explicit restraints. … Culture reflects the prevailing attitudes and behaviors within a firm.  It is how people react not only to black and white, but to all of the shades of grey. Like a gentle breeze, culture may be hard to see, but you can feel it. Culture relates to what “should” I do, and not to what “can” I do.”

Dudley has a doctorate in economics, and spent a decade as chief economist at Goldman Sachs. But in his remarks he sounded more like a sociologist than an economist. His many mentions of “culture” could be significant. I’m hoping they mark the beginning of a change in how regulators think about reining in law-breaking and excessive risk-taking at banks. I’m also hoping that I had something to do with them…

So I studied sociology, and for my doctoral dissertation focused on the organizational culture of Goldman Sachs. The dissertation became a book, titled What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and Its Unintended Consequences (HBR Press, 2013). One of the changes I document in the book is how Goldman drifted from a focus on ethical standards of behavior to legal ones — from what one “should” do to what one “can” do.

After the book was published, Dudley got in touch. I met with him and his people, and discussed what I had learned in my study of sociology and, in particular, my in-depth study of Goldman. I made recommendations on how to improve regulation. Also, I sent him two pieces I wrote for HBR.org, one on the importance of focusing on organizational behavior and not just individuals, the other asserting that culture had more to do with the financial crisis than leverage ratios did.

One of the key conclusions I drew from my study was that to achieve sustained success and avoid firm-endangering risks, a firm like Goldman has to cultivate financial interdependence among its top employees.

Employees that can make big financial decisions on their own means that many will take big risks and a lot of money could be lost. This reminds me of some of the arguments of Nassim Taleb who suggests losses should not be shared, especially in unpredictable areas like the stock market or with innovative and cutting-edge financial instruments. Instead, there could be organizational cultures that promote more prudent financial decisions that may still be innovative and profitable but limit the possibility of major black swan losses.

Sociologist/CIA fellow describes “the paradox of the war on terror”

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A recent sociology dissertation asked members of the CIA to describe their work and the “war on terror”:

Nolan, a CIA Graduate Fellow in sociology, produced the ethnography by making observations and interviewing 20 analysts in NCTC’s Directorate of Intelligence (DI) while also working full time as a counterterrorism analyst at Nation Counterterrorism Center (NCTC) from January 2010 to January 2011.

She notes that many analysts feel overwhelmed because “they often were not really sure what their jobs were, and they felt that they had very little understanding of what other people in the organization do.”…

What Anna detailed is the paradox of the War on Terror: The U.S. is fighting, but there are no clear day-to-day objectives. There is an enemy, but it is more of a network than an entity. There is an objective, but there is no clear way to win.

Last year The Washington Post, in a report on the NTCT’s disposition matrix, noted that Obama administration officials believe that U.S. global kill/capture operations “are likely to be extended at least another decade. Given the way al-Qaeda continues to metastasize, some officials said no clear end is in sight.”

I’m not quite sure this is confusing, as the article then goes on to suggest. This is a new kind of operation but the parameters are not entirely unknown. The U.S. is working against social networks, which take time to understand and track. (Think of recent efforts for academics and police to analyze the social networks of gangs.)

However, we could ask whether this new reality matches the kind of bureaucratic structure common in larger organizations. If the objectives change consistently as does the information coming in, it seems like there has to be a corresponding structure that allows smaller units to act somewhat independently and quickly respond to situations. Yet, more smaller and independent units still require coordination so they are not working at cross-odds or important information and actions fall through the cracks.

Similarly, it requires a different mentality from the public who might prefer clearly defined operations. Fighting terrorism is not that. Even when there are “successes,” it can take years to lead to them. “Winning” is not one-time event where a peace treaty is signed but rather the ongoing amount of time citizens in the United States are not threatened. (Americans have some experience with these ongoing wars. See the war on drugs and the war on poverty.)

It seems like there is a lot of room here for sociologists to investigate the war on terrorism, the military, the government, and the responses of the American public. Sociologists may have shied away from military sociology in recent decades but this is a critical component for understanding today’s world…

The McDonaldization of TED

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Wired looks at the spread of TED around the world:

Free online access is just one of two major initiatives that TED has undertaken to engage a wider audience. The other is fully physical and has equally changed the character of the organization. That initiative, called TEDx, began in 2008 as a way to bring TED-like gatherings to smaller communities. It quickly spread to cities and towns around the globe—1,300 so far, in 134 countries, hosting more than 800,000 people in total, many times more than have ever attended an official TED event. The video viewing I attended at the Bozeman library was not some random screening; it was an overflow simulcast of the inaugural TEDxBozeman, which had sold out its tickets in six days. Each event is required to show at least two videos from TED.com, but the rest of the speakers are in person, often local, creating a TED-style experience for places where “ideas conference” isn’t even part of the lexicon.

TED does place some restrictions on the independent organizers. The TEDx logo renders the x like an asterisk, with a tagline below that reads “x = independently organized TED event.” But in practice, TED has put its entire reputation in the hands of these organizers, if only because they’re so entrepreneurial and so plugged into their communities. These local showrunners recruit speakers unknown to TED central and coach them on how to present their ideas. The resulting one-day conferences draw huge crowds. For most of the world now, and even for most of the United States, these events are TED.

Chris Anderson (no relation to the editor of this magazine), a former media executive who has run TED since 2001, sees both TEDx and TED.com as in keeping with a larger philosophy of “radical openness.” But putting media online is a standard practice, whereas these satellite events have taken Anderson into entirely uncharted territory: He has given his nationally known brand away to thousands of complete unknowns, spawning independent TED events in cities and towns all around the world. Can “big ideas” really cover that much ground?

This piece praises TED for this move – here is the concluding paragraph:

As gauzy as this may sound, there really is some idea that underpins whatever it is that each of us does, and there’s some narrative (whether our own or someone else’s) that helps convey it to others. By bringing speakers out of their specialties, by teaching them to talk to everyone, TEDxes are helping speakers connect with audiences, and helping audiences in turn to connect ideas inside their own minds. That is, they’re adding to our store of stories—and it’s hard to think of a much better reason to get together than that.

I can’t help think of George Ritzer’s analysis of McDonaldization. As the headline for the article suggests, TED has become a franchise. And with franchising and a global spread, Ritzer argued these traits come to dominate organizations:

  • Efficiency – the optimal method for accomplishing a task. In this context, Ritzer has a very specific meaning of “efficiency”. In the example of McDonald’s customers, it is the fastest way to get from being hungry to being full. Efficiency in McDonaldization means that every aspect of the organization is geared toward the minimization of time.
  • Calculability – objective should be quantifiable (e.g., sales) rather than subjective (e.g., taste). McDonaldization developed the notion that quantity equals quality, and that a large amount of product delivered to the customer in a short amount of time is the same as a high quality product. This allows people to quantify how much they’re getting versus how much they’re paying. Organizations want consumers to believe that they are getting a large amount of product for not a lot of money. Workers in these organizations are judged by how fast they are instead of the quality of work they do.
  • Predictability – standardized and uniform services. “Predictability” means that no matter where a person goes, they will receive the same service and receive the same product every time when interacting with the McDonaldized organization. This also applies to the workers in those organizations. Their tasks are highly repetitive, highly routine, and predictable.
  • Control – standardized and uniform employees, replacement of human by non-human technologies
  • Culture – As a part of standardization, cultural hybridization occurs. As McDonald’s enters a country, consumer patterns are unified and starting with the food chains, local cultures are westernized.

Maybe TED is a bit different because it is about ideas and the content of the different talks could vary widely between Bozeman, Montana and Indonesia. This article also suggests the parent organization isn’t completely controlling everything on the other end. At the same time, I imagine attendees have some idea of what kind of product a TED conference is and they expect to have a particular kind of experience. What happens if the product at the local level, particularly when comparing a local TEDx conference versus the larger official TED talks, doesn’t compare? Even though the conferences are about ideas, do the ideas tend to clump together in certain fields or ways of viewing the world? The trick here is to balance a consistently good TED experience with new ideas that push attendees to see the world in new ways, all while avoiding becoming just another global brand or product.

Genius and creativity = “a probabilistic function of quantity”

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I was recently reading a Malcolm Gladwell article about the invention of the computer mouse and came across this statistical definition of genius and creativity:

The psychologist Dean Simonton argues that this fecundity is often at the heart of what distinguishes the truly gifted. The difference between Bach and his forgotten peers isn’t necessarily that he had a better ratio of hits to misses. The difference is that the mediocre might have a dozen ideas, while Bach, in his lifetime, created more than a thousand full-fledged musical compositions. A genius is a genius, Simonton maintains, because he can put together such a staggering number of insights, ideas, theories, random observations, and unexpected connections that he almost inevitably ends up with something great. “Quality,” Simonton writes, is “a probabilistic function of quantity.”

Simonton’s point is that there is nothing neat and efficient about creativity. “The more successes there are,” he says, “the more failures there are as well”—meaning that the person who had far more ideas than the rest of us will have far more bad ideas than the rest of us, too.

To put this in graph terms: as time increases, a creative person has an increasing number of ideas, a line with positive slope. Underneath this overall line of ideas is another positive line tracking the unsuccessful ideas and below that, increasing steadily but perhaps at a slower rate, is the line of successful ideas. In other words, the more overall ideas someone has, the more failures but also the more quality ideas.

The rest of the article is about creating the right structural environment to take advantage of ideas. Most groups and organizations won’t recognize all the best ideas but innovative organizations find ways to encourage and push the good ideas to the top. Indeed, the clincher at the end of the article is that Steve Jobs, supposedly one of the best innovators America has had in recent decades, missed some opportunities as well.

Learning from the organizational structure of al-Qaida

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Studying organizations is hot today and here is some real-world evidence: US Special Operations forces were aided in their search for terrorists by mimicking al-Qaida’s structure.

One of the greatest ironies of the 9/11 Era: while politicians, generals and journalists lined up to denounce al-Qaida as a brutal band of fanatics, one commander thought its organizational structure was kind of brilliant. He set to work rebuilding an obscure military entity into a lethal, agile, secretive and highly networked command — essentially, the U.S.’ very own al-Qaida. It became the most potent weapon the U.S. has against another terrorist attack.

That was the work of Stanley McChrystal. McChrystal is best known as the general who lost his command in Afghanistan after his staff shit-talked the Obama administration to Rolling Stone. Inescapable as that public profile may be, it doesn’t begin to capture the impact he made on the military. McChrystal’s fingerprints are all over the Joint Special Operations Command, the elite force that eventually killed Osama bin Laden. As the war on terrorism evolves into a series of global shadow wars, JSOC and its partners — the network McChrystal painstakingly constructed — are the ones who wage it.

Very interesting. This story suggests that factors manpower, equipment, and even charismatic leadership can only go so far: an organization’s structure is vital to its outcome.

Several Weberian thoughts that I have:
1. If this course of action is now considered a success, would the rest of the Armed Forces (and even other organizations) be willing to change their organizational structures? Is this the end of bureaucracy in the Armed Forces or could there be other global situations or battlefields where a traditional bureaucratic structure works better?

2. The article places a lot of emphasis on General McChrystal and his finer and lesser moments. Is McChrystal a classic example of a “charismatic authority” and if so, can his work be routinized? In his forthcoming book, will McChrystal put himself at the center of the story? Since it sounds like JSOC has moved on without him with his ideas, was McChrystal’s ultimate role to introduce these ideas and then bow out? And if McChrystal is good at solving such problems, where could he be put to best serve?

A final thought: how would the American public respond to this idea that adopting al-Qaida’s ideas is what can make America (and its military) great? Is this American pragmatism at work?

Shopping Harvard students flock to “Sociology 109: Leadership and Organizations”

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Harvard has a tradition that students can spent the early days of the semester “shopping” among classes before settling on what they will take throughout the semester. A sociology class, Sociology 109: Leadership and Organization, was apparently quite popular during this shopping period:

Peter Chen ’13 had shopped the perennially popular Sociology 109: “Leadership and Organizations” last fall, so he expected the course to be somewhat crowded when he visited it again Wednesday on the first day of shopping period.

But when he arrived at the start of the class, student shoppers were already overflowing out the door, blocking Chen’s entrance into the lecture hall.

“I tried to push in a little bit and funnel into the room,” said Chen, who was forced to stand outside the lecture hall for about 10 minutes before wiggling his way into a newly empty chair.

Another Sociology 109 shopper, Stephanie L. Grayson ’14, said she showed up a full 20 minutes early to ensure a seat in the class, which she suspected would be crowded because it was taught by popular sociology lecturer David L. Ager. The course—which will be lotteried down to 80 students by the end of shopping period—drew about 180 shoppers, according to Ager.

What I am interested in is this: why is this particular class so popular? The article hints at a few reasons that certain classes are overflowing in the shopping period: they fulfill certain general education requirements or, as indicated regarding Sociology 109, has a popular lecturer. These are not unusual reasons.

But looking at the title of the course, I wonder if another factor is at work: this sociology class has direct implications for business. The professor has “a Ph.D. in Organizational Behavior, a joint degree granted by Harvard Business School and the Graduate School of Arts and Sciences at Harvard University.” Additionally, he has worked with both businesses and governments:

Ager has consulted and taught for several large multinational firms from different industries including finance, high-technology, hospitality, consumer products, bio-technology, bio-energy, telecommunications, and wholesale distribution. In addition, he has advised large, family controlled businesses around the world. His list of clients includes companies such as Mars, Inc., Rockefeller & Co., Inc., Caterpillar, and Morgan Stanley. His consulting activities include leadership development, strategic planning, talent management, change management, M&A, team building and succession planning.

Prior to coming to Harvard, Ager worked as an adviser to Cabinet Ministers in the Fisheries and Oceans and the Employment and Immigration portfolios of the Canadian government. He also served as a member of the finance organization at Nortel and as the Director of the Mexico Research Initiative at the Ivey School of Business, University of Western Ontario.

While students might have difficulty seeing how sociology classes directly relate to business settings, this class seems uniquely positioned to attract business majors, entrepreneurial types, and others who might otherwise think sociology is impractical.

Or perhaps there is a growing demand among sociology students for organizational theory. It does seem to be growing within sociology itself.

The benefits of Best Buy’s flex schedules for employees

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Two sociologists have published a study in the American Sociological Review that shows that employees at Best Buy’s headquarters benefit from flex schedules:

Sociology professors Erin Kelly and Phyllis Moen said a flexible work schedule that focuses on results and not just activity cut turnover at Best Buy’s Richfield headquarters by 45 percent while improving productivity.

The flex schedules, they said, cut down on stress and work interruptions due to personal issues because employees were able to find a better balance between their work and home lives…

The U of M study followed 600 workers for eight months after the start of the program, 300 who worked under the flex plan and 300 who continued working the traditional 9-5 day…

The study showed that 6 percent of the employees working under the flex plan left Best Buy during the study period, while 11 percent of the control group left during that time. Also, the results were about the same regardless of gender, age, tenure, job satisfaction, and stage of life.

Turnover can be a problem for companies who then have to hire new employees and train them so cutting turnover even five percent is no small matter.

Based on the success of the program, Best Buy has changed some of their practices:

The research showed that the flex program led to Best Buy getting rid of “low-value work,” such as unnecessary meetings. The researchers said staff and supervisors started re-considering their work patterns, figuring out what activities were the most productive.

It would be interesting to see exactly how the employees in the flex program talk about these changes. And I would be interested in hearing more about this trade-off in a company stressing results rather than activity – are there downsides to this?

Considering workplace flexibility

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Some jobs offer more flexibility than others where a worker has an opportunity to structure their own schedule or make it to other important events in life that are held during typical work hours. Sociologist Alfred Young has looked into the issue of workplace flexibility and recently made a report to a conference:

When an assembly-line worker at a Midwestern auto-parts plant studied by Alford A. Young Jr. , a sociology professor at the University of Michigan, left work without permission to coach his son’s football team in a championship game, he paid a high price, Young told about 200 researchers, government officials and employers Tuesday at a Washington, D.C. conference on flexibility.

The story sprang from a study of the means employees use to resolve work-family conflicts–collaborating with the boss vs. sneaking around. The worker, whom Dr. Young called James, had committed to coaching his son’s team, and when the team made the championship round he asked to take a Saturday afternoon off to be present. The boss said no.

When the day arrived, James left work for lunch and later called his boss to say that his car had broken down, saying “ ‘I called Triple-A but I don’t know if I can make it back,’ ” Young says. James got to coach the game, but he also got written up by his supervisor and busted to a lower seniority level.

Such disruptions can be avoided, Young says, if supervisors bend a little, perhaps even breaking a rule or two, to try to find a solution within the work team, perhaps by allowing a shift trade; this benefits employers by motivating employees to go the extra mile and remain loyal to the company.  While this happens routinely at many workplaces, about 80% of all workers still lack the workplace flexibility they want, according to the Alfred P. Sloan Foundation, the conference sponsor. What doesn’t work, his study found, allowing to develop the kind of clash that encompassed James.

I feel like a lot of the talk about telecommuting and the changes that might come to the workplace due to changing technology might really be about increasing the flexibility of workers. If the main concern is that a job gets done, perhaps it doesn’t matter as much whether an employee keeps certain office hours. Younger workers also seem to like the idea of flexibility, to not be completely tied down because of a job. But perhaps even the American small business spirit could be tied to this issue – some people enjoy being able to set their own hours and agenda.  But this may not apply in the same way to areas like manufacturing.

If 80% of workers desire more flexibility, is this something more businesses and organizations should address? I would be interested in knowing what holds businesses back from being more flexible with workers. Profits? Appearances? A certain workplace culture? Directives from higher-ups?