Over the years it has gotten more challenging to teach organizational power and politics to my Stanford students. Acquiring power means getting ahead, and they now grow up in a world that seemingly eschews competition. A student last year told me she had quit her swim team and instead played water polo because at swim meets, everyone got a ribbon no matter where they finished.

The problem is that in the world after high school, or maybe after college with the inflated grades, competition is, for better or worse, a fact of life.  There is only one CEO, one managing partner in a law or consulting firm, one President, one school superintendent, one commanding general—you get the point.  It is not at all evident to me that we do our students any favors by shielding them from the psychological rigors and stresses of competition until they are playing for the highest possible stakes—their careers.

The problem is that people seem to view competition as antithetical to cooperation, as if they are mutually exclusive.  This is too simplistic a way of viewing things. Competitive behavior does not necessarily decrease people’s ability to cooperate, to come to the aid of others.  (In fact, it may increase it.)  In the extreme, sure, we can find instances where seemingly competitive people cause great harm.  We see greedy, venal, self-interested actors doing terrible things and mistakenly assume that the cause must have been related to simply being competitive.  This isn’t simply a reflection of a competitive personality or culture.  Rather, it reflects an individual psychosis–an egomaniacal personality.

We do ourselves and others a huge disservice by downplaying the importance of competition.  The world is inherently competitive and success (and, frankly, survival) is predicated on a healthy competitive drive.  One could argue that our competitive drive is evolutionarily advantageous.  It is something to be nurtured and harnessed, not dulled.

In the clip below (first 30 seconds), two men are “tearing money”–literally taking cold hard cash and tearing it to pieces.  Each time one of them tears some cash the other ups the ante and tears even more money:

It’s a pretty creative way of sending a costly signal–demonstrating one’s type through a costly act that only a strong actor could afford to send.  In this case, the two men are engaging in a kind of relational signaling–the one that can tear the most money will prove that they are stronger of the two.

There is a stream of research on negotiation that shows the strategic expression of anger is effective, apparently because it is taken as a sign you are “tough” and thus leads your intimidated opponent to make concessions.  A new study by Hajo Adam and his colleagues suggests that this may be a culturally specific finding, which applies to people of Western descent but not necessarily others.  In a pair of studies that compared people of European descent to people of East Asian descent they found, in both a hypothetical and a more realistic negotiation, that people in the two groups had opposite reactions to negotiating with an angry opponent:

“Western-ancestry students were more likely to make a concession to their negotiation partner whereas the East-Asian ancestry students were less likely to do so.”

Various iterations of the study pinpointed that the expectation of what was considered “culturally appropriate” was the key determinant of subject reaction.

Intuitively, I think this makes a great deal of sense.  Too often, we let rational models of negotiation and interaction dominate our thinking on the subject and forget that context, culture, and psychology have a substantial impact on how such strategies will work in practice.

The strategy of expressing anger and displaying strength and toughness can be traced back to the earliest work of Schelling and indirect coercion.  Actor A wants Actor B to change the status quo (i.e. make a concession).  To do so, Actor A sends a signal that conveys their toughness and resolve which should influence Actor B’s behavior given this new information about A’s type and what they are capable of.

From a rational-actor perspective, this makes sense.  However, problems can arise when we try to implement such a strategy in practice.  People don’t always conform to the rational-actor model.  In the case of the research by Adam, et al., the audience’s reaction is influenced by their perception of what is appropriate versus what is utility maximizing.  (One might say that what is considered utility-maximizing is culturally determined.)  This means that when you send a signal you have to take into account the perspective of your audience (culture, psychology, etc).  It may not always be the determining factor, but it may significantly affect how your signal is received and the behavior it provokes.

However, I think there are limitations to the generalizability of the research since it didn’t address a crucial element: multiple audiences.

Signals are rarely sent in a vacuum.  Particularly when it comes to business, people rarely interact in a purely one-on-one setting, where their actions are guaranteed to stay hidden from any third parties.  Typically, the signals we send will be seen and interpreted by multiple audiences and this can significantly complicate negotiations.  Public bullying may backfire and cause the target to dig in their heels instead of offering concessions.  Signals must not only be clear enough to minimize the variance around their interpretation.  They must also avoid creating a situation that actually makes it harder for the target to behave in the way the sender wants them to.

The research by Adam, et al., looked at pairs of negotiators separated from other observers.  If they had introduced third parties my guess is that their results would have been different.  Backing down to an aggressive threat would likely be viewed as unacceptable across both Western and East Asian subjects for related reasons.  For many Westerners, backing down to a threat would signal weakness and a lack of resolve.  If third parties are present and see this they may assume that the subject that made the concession could be bullied in a similar manner in the future.  In order to avoid being challenged in this way by multiple actors down the road, the subject is more likely to stand firm and avoid giving any concessions under duress.*  A similar dynamic is likely to play out with those of East Asian decent given the importance of “face” and honor in those cultures.  When additional subjects are introduced into the experiment the results are less likely to break down among cultural lines.

(Thanks to Andrew Chen for pointing to Sutton’s post)

*Some have dubbed this the “Culture of Honor” and theorized that, in the United States, it explains why Southerners may be more prone to violence than Northerners.  This culture is structurally determined, however.  Cultures of Honor are likely to develop where a) individuals are at economic risk from other citizens (e.g. where what is most valuable is easy to transport), and b) where the state is weak or nonexistent and cannot reliably protect personal property.  The argument goes that, for structural reasons, herding societies are the most prone to develop a Culture of Honor and herding (as well as settlers immigrating from herding cultures) was more prevalent in the South.  Therefore, a Culture of Honor was inculcated amongst Southerners but not Northerners.

The problem with behavioral signaling is that actors have incentives to pass themselves off as something they are not (e.g. capable, smart, committed, etc).  This has fueled research in economics and political science, with researchers searching for situations and mechanisms that make signals reliable–i.e. the signal can only be sent by actors that have certain characteristics, and therefore are separated from actors that do not.

But what about physiological signals?  If behavioral signals are subject to manipulation, why not focus on the physiological signals sent by the human body?  For example, if we want to know if an actor plans on following through with a commitment it would be helpful if there were physiological signals given off by the body (e.g. blood pressure, rapid eye movements, body heat, facial movements) that were highly correlated with the act of lying.  Dr. Paul Ekman has been conducting breakthrough research in one of these areas for decades, focusing on what he terms “micro-expressions”–physical manifestations of emotions that “leak out” when someone tries to conceal them.  (Ekman’s work is the inspiration behind the FOX television series Lie to Me.)

Physiological signals would seem to be more reliable since faking these types of signals is conceivably very difficult, if not impossible.  However, there is another concern one mus take into account regarding physiological signals, and their practical application in areas such as transportation security: false positives.  While physiological signals might make it difficult for someone (say, an actor intent on hijacking a plane) to hide their intentions, the same physiological signals that indicate ill intent could also be present if someone is generally nervous about flying, being questioned by authorities, etc.  The key to using a signal as a diagnostic tool is it’s ability to reliably separate types of actors.  If the same signal can be intentionally sent or passively expressed by actors of different types (i.e. hijacker versus nervous flyer), then the signal loses its power.

Fast Company recently profiled some new technology from WeCU Technologies that proposes to reliably diagnose risky airline passengers:

CEO Ehud Givon compares the function of WeCU’s detection system with a doctor’s diagnosis. The technology is relatively simple: a synthesis of electronic sensors and knowledge gleaned from behavioral studies. During a routine act, such as check-in at an airport kiosk, travelers will be subjected to a near-invisible stimulus that will trigger physiological responses among those who are concealing something. Sensors hidden in the kiosk will pick up the cues and alert security officers. WeCU’s boldest claim is that its system can weed out the mal-intentioned from the merely stressed out.

WeCU claims that they’ve developed their measures in such a way as to avoid the problematic false positives that have long provided a barrier to the deployment of these types of systems.  It will be very interesting to see how they fair once introduced into a live environment.  If the system is able to minimize the number of false positives as well as the number of false negatives (the number of terrorists that evade the system) it will be a big step forward in the practical application of physiological signaling.

A recent paper by scholars working in Yahoo! Research looked at the extent to which friends on Facebook could accurately predict the degree to which their friends (placed on a continuum of strong to weak ties) agreed with them on various political issues.  The results:

We found that when friends disagree on a political issue, they are unaware of that disagreement about 60% of the time. Even close friends who discuss politics are typically unaware of their differences in opinions.

On the one hand, the result doesn’t surprise me all that much since political issues are arguably the most sensitive topic amongst friends and family and people tend to adjust their actions in order to fit into a socially-expected perception of who they are.  However, I would have guessed that people who interact on Facebook would be more likely than a control group to accurately predict the degree of agreement with friends.  For one, the platform is built to allow people to share their thoughts on any topic, so it provides a window into people’s feelings that face to face interaction may not.  Also, people tend to be less inhibited when there is physical distance between themselves and their interlocutors, so you would assume that topics that may be uncomfortable to discuss in person will be discussed on Facebook for all to see.  That makes the finding even more interesting for me.

I’ve written about this topic previously, and Ridley’s perspective lies fairly close to my own.  We tend to think of ideas as 1) creations of single, brilliant individuals, and 2) unique in history, rather than derivative.  Narratives of great discoveries suggest that ideas are created de novo from individual minds.  However, if we take the time to deeply explore many of the greatest breakthroughs in science, art, etc, we find that the greatest ideas are the result of communities of thinkers and their combination, in unique and creative ways, of pre-existing ideas.  To use Ridley’s metaphor, communities take existing ideas and breed them.  That reproduction results in mutations and recombinations, which create a new species of idea that is superior to existing populations of ideas that we all then benefit from.  Knowledge creation has an evolutionary and communal character to it.

It further reinforces the importance of creating conditions that facilitate the intellectual transmission of diverse ideas and perspectives (what I’ve called “social bumping“).  This can include helping people build diverse social networks, promoting the co-mingling of various subject-matter experts, and encouraging people to share their ideas and perspectives when they might otherwise feel as though it wasn’t their place to speak up.  As Ridley says during his talk, “We all know little bits, but none of us knows the whole.”  Given that is the case, we would be wise to design an environment that maximizes the mating of diverse ideas.

For me, the most interesting finding is the disproportionate way that misery spreads in relation to happiness:

In the current study, Hill’s team compared patterns of relationships and emotions measured in the study to those generated by a model designed to track SARS, foot-and-mouth disease and other traditional contagions. They discounted spontaneous or immediately shared emotion — friends or relatives undergoing a common experience — and focused on emotional changes that followed changes in others.

In the spread of happiness, the researchers found clusters of “infected” and “uninfected” people, a pattern considered a “hallmark of the infectious process,” said Hill. “For happiness, clustering is what you expect from contagion rates. Whereas for sadness, the clusters were much larger than we’d expect. Something else is going on.”

Happiness proved less social than sadness. Each happy friend increased an individual’s chances of personal happiness by 11 percent, while just one sad friend was needed to double an individual’s chance of becoming unhappy. (my emphasis)

Something to think about.

Beggs is a Ph.D. Candidate at Harvard and focuses on behavioral economics (incentives, generally).  She has a great sense of humor and does a great job of relating the sometimes complex and arcane concepts of economics to the average reader through her humor.  As she notes:

In a perfect world I would be some sort of odd hybrid of Steve Levitt (see Freakonomics), Demetri Martin (see here) and Jon Stewart (hopefully you don’t need any clarification on that one). Stated another way, I want to trick people into learning stuff and entertain them in the process.

Enjoy!

Instead of giving up-and-comers larger assignments, consider intentionally giving them smaller, more ambiguous ones. Have them crack into a new geographic market. Ask them to lead the development of a completely new business model. Force them to think creatively about how they will access or assemble the resources to solve the challenge.

Facing highly ambiguous challenges will help managers develop a set of tools that prepare them for the uncertainties they will increasingly encounter as they ascend up the corporate ladder.

I think Anthony is right that future leaders will face the “the new normal” of constant change.  However, his solution rests on an unacknowledged assumption: people can simply be trained to better adapt to ambiguity.

It is certainly possible to learn certain skills that may make one more efficient dealing with an ambiguous environment, but it is much harder to re-wire people so that they become more comfortable with a less structured environment.  Certain people are wired to embrace an ambiguous environment, much like others need structure and certainty.  Not only are certain people wired in such a way as to make them more comfortable with ambiguity, but they actually crave it.  Anthony’s solution sounds like a rather inefficient way of determining which managers have a love of ambiguity in their DNA.  A better solution would be determining which managers have the ambiguity “gene” through some kind of behavioral analysis and then placing these managers in the more ambiguous environments.