Improved Leadership. Competitive Advantage.

Several years ago, we worked with a client who suffered continually poor performance during a Refueling Outage. We suggested some minor staffing realignment prior to the Outage along with changing the format and specific times of critical meetings during the Refueling Outage. Immediately, three managers of varying ranks shot back, “No way. We tried that in 1983, and it won’t work.” We were stunned. But it happens all the time. Let’s strip away the emotion and examine this phenomenon critically.

First, one of the interesting aspects of this story is that two of the managers were in high school in 1983. It was clear that the narrative had been passed down year after year. And it had the gravity and force of fact despite only one of the three managers actually being present at the time. Stories are an important part of the organization. They help transfer knowledge and provide an identity to an organization. However, they become particularly dangerous when they create a bias that many can’t identify or just refuse to challenge.

Second, the response to our recommendation also illustrates the folly of small sample sizes. The absolute scientific and statistical minimum to generate an appropriate inference is from a sample of at least 30. In other words, the research community often considers generating conclusions from samples less than 30 un-scientific, inappropriate, or dangerous. In this case, these three managers were generalizing from a sample size of one that occurred about 30 years earlier!

Third and related, their response shows the power of the prior hypothesis bias. Here, we can look to Starbucks for guidance. The founder and CEO of Starbucks, Howard Schultz, originally pitched his idea of coffee shops with high priced specialty coffee to potential investors and partners. They laughed at him, and told him that it would never work in the United States. We had Folgers, and nobody would pay $1.50 for coffee. But Schultz argued that the times were changing. Americans were getting wealthier (because of women entering the workforce en masse), but also getting busier (also because of women entering the workforce en masse). Schultz argued that men and women would pay for a cup of coffee for the mere convenience and also could enjoy some peace away from a busy home. Besides, he had evidence that it worked in Italy for years. The potential investors balked claiming that we couldn’t be more different than Italy. Starbucks was born because a leader realized that the present was different than the past, and changes in the environment would allow something like Starbucks to succeed. Back to our case, organizations learn and grow and change every day and every year. So, just because something failed 30 years ago, doesn’t mean it will fail now. The organization with new and different (and hopefully better) people may be better equipped today to enact the change.

So, remember, we should always learn from past mistakes, but we shouldn’t be bound to them. There are, indeed, cases where it is time to try it again. To discuss this idea in more depth, please reach out to one of the founding partners of ELP.