How powerful people slip

How powerful people slip

The descent from being a darling of Wall Street to being reviled by shareholders can be swift and unforgiving. Stories abound of overreach and missteps by top leaders, often with grievous legal or financial consequences. When a company crashes because of a scandal or ethical error, onlookers naturally wonder: “How could the leaders let themselves get into a situation like that? They had all the advantages that go with their position, and so much to lose. Shouldn’t they know better?” But in fact, it’s their brain’s reaction to being well-regarded and powerful that often takes executives and other people in authority over the cliff.

Stories of senior leaders making poor decisions are rampant at every scale: from minor transgressions that create quiet frustrations inside HR departments, to global scandals that thrust leaders into the public eye. Each case is different, but they all have one common element: In the brain, a set of responses to temptation gradually shifts the attention of powerful people away from the disciplined behaviors associated with enlightened management. If you want to be the kind of leader who resists these missteps, you have to develop a clearer understanding of the dynamics of power — and their effect on your own thinking and that of others around you.

You don’t need to be a CEO to have the kind of power that leads you to slip. Power, in this sense (and in the social psychology literature) is defined as “relative control over valued resources.” It is always felt in context: a junior manager may have power compared with an intern, and midlevel managers may have more power than their direct reports, even if those ranks include some highly educated and capable specialists. Access to resources gives a person with power the ability to influence and control what others do; people with power are therefore generally accountable for broader outcomes.

There is nothing intrinsically wrong with power, especially when used constructively. But the experience of having power — especially the difference in power between oneself and others — can trigger several problematic patterns of brain activity. In other words, having power can affect the way you think to a point at which there are distinct observable changes in your brain.

Studies have found, for example, that high levels of relative power often correspond with increased neural activity in the brain’s behavioral activation system (BAS). BAS is a pattern of neural circuits posited by psychologist Jeffrey Alan Gray in 1970 as an explanation for how the brain processes the experience of rapid reward. Nestled deep in the brain, these circuits include the basal ganglia and parts of the prefrontal cortex. They have been known to release the neurotransmitter dopamine, associated with pleasure. If you are a leader, the increase in BAS activity produced by the power of your role can make you more effective in noticeable ways — specifically, by increasing your attention to goal-relevant information, your comfort with innovation and risk taking, and your ability to think at a visionary level.

Gray and subsequent psychologists have also posited that when the BAS is engaged, another system, called the behavioral inhibition system (BIS), tends to be more idle. The BIS, generally associated with in the brain’s septohippocampal system (near the brainstem, part of the limbic system), is associated with feelings of anxiety, sensitivity to punishment, frustration, and risk aversion. This is the system that monitors and detects discrepancies between your goals and actions, and helps you stop yourself from performing an action that doesn’t seem right.

You might think of activity in the BAS as a source of energy, useful for getting things done, and of BIS activity as counterproductive, hindering progress. In reality, the most effective top leaders balance the two systems. Those who accomplish this, drawing on both types of thinking — that associated with BAS and that associated with BIS — are much more likely to make good decisions. They are also more likely to foster an inclusive, diverse workforce with high levels of participation, accountability, and performance.

In a review of the research literature by the NeuroLeadership Institute, BAS activation was found to contribute to three key shifts in the minds of those who feel powerful, even temporarily, relative to those around them. Powerful people become more focused on a grand vision, and more likely to neglect the details needed to carry it out successfully. For the sake of reaching their goals expeditiously, they tend to limit the number of people they engage with, rather than being inclusive to a broader, more diverse group of people. And because they are oriented toward optimism, they may assume everything will turn out OK, and neglect to prepare adequately for risks.

These responses may lead to other forms of problematic behavior: for example, tolerating subtle abuses in their workplace or ignoring early signals of looming crisis. Even as they do these things, leaders seem to be unaware that they are doing them. Moreover, unless leaders take active steps to understand these power dynamics and mitigate them, they may undermine legitimate efforts that other leaders or employees make in the pursuit of teamwide success.

The solution is to find explicit ways to open the organization, engage with people, bring information to the surface, and pay attention to detail. Paradoxically, the thinking associated with difficult challenges can help stop or reverse the slippages associated with power. Devoting attention to this in advance — for example, advancing levels of inclusion when times are relatively good — can help prevent an individual, or an organization, from an unexpected fall.

Vision neglecting detail

One of many financial-services firms that prospered in the early 2000s was a regional bank called Mountain Citizens Savings & Loan (the organizations and people cited as examples in this article are disguised, but the basic facts and essentials have not been changed). It had a steady business in adjustable-rate mortgages — subprime financial instruments that charged low interest rates in their early years and much higher rates later. CEO Kevin Finnerty was known for his expansive vision: With this popular form of financing, Mountain could help thousands of people buy their first house.

However, when the global economic crisis hit in 2008, the details of these mortgages became more pertinent. The rising interest rates kicked in just as many borrowers were laid off, making it extremely difficult for them to pay their monthly bills, and the sudden credit crunch made the loans difficult to refinance. As the number of foreclosures mounted, Mountain’s subprime assets collapsed, dragging the bank down with them. But Finnerty persisted with his vision. In mid-2008, Finnerty told shareholders that the bank would rebound, because the philosophy behind the mortgages was still sound. Unfortunately, that quarter’s balance sheet showed millions of dollars in losses, and Mountain was acquired by another bank before the year was out.

In retrospect, the CEO’s expansive, idealistic vision was undermined by his failure to analyze the assets at the center of the bank’s business model. This happened despite Finnerty’s years of experience, his analytic training, his benevolent aspirations, and the hundreds of professionals working for him. How do we make sense of his slip into overconfident decision making? One way is to examine the brain’s patterns of construal. People interpret events and other people’s behavior according to a context they already have in mind. Finnerty, for example, could perceive the details of the loans only in the context of his vision.

Construal is not always visionary. Some people, like Finnerty, tend to operate at a very abstract level of construal, in which the vision (the “why” of what they do) predominates. They are known for their ability to inspire people. Others favor more concrete levels of construal; they’re more apt to focus on details (the “how”). Research suggests (pdf) that people with relatively little power tend to gravitate toward concrete construal: the low-level details, the nitty-gritty of how to get things done. When they stop paying attention to detail, even the brightest luminaries can miss warning signs right under their nose, as Finnerty did.

As a leader, you should purposely move among different levels of construal, often providing specific cues to your colleagues. For example, in a big strategy meeting where a dozen or so people are all focused on the vision for a project, you might ask: “What does this mean for day-to-day operations?” You can also set up “if–then” plans to trigger concrete thinking: “If the debt rises above a certain level, then we will suspend our growth plans and regroup.” When you make a move like this, an expansive strategy meeting can pivot to a fruitful discussion of the details, which may reveal some sober options that would otherwise be ignored.

You can also strengthen your “how”-level thinking through teamwork. Designate one or two people as the “how-thinkers,” charged with raising concrete issues in every conversation about lofty expectations. Although any single person may struggle with switching between the two distinct cognitive tasks of abstract and concrete construal, a team of why-thinkers and how-thinkers can offer a much better balance.

Goals neglecting people

Being a leader is often an isolating experience, which affects the way leaders behave with others. A senior executive typically eats lunch in a private room on floor reserved for executives. He or she takes a private car to the airport and sits in a business-class seat, booked by a services team dedicated to executive comfort. Interaction with a wider team is less frequent, and is seldom conducive to detailed conversations. Indeed, in many cases, an executive’s daily schedule is designed to exclude most of the others in the pyramid of subordinates.

To be sure, these trappings of power serve important functions. They keep the leader’s mind clear to make weighty decisions, and they save time. But they also have side effects such as eroding the leader’s ability to include others and narrowing the leader’s goals. The higher people rise in their company, the more they are compensated on the basis of their ability to hit certain financial targets. These numbers then become the dominant priority. The needs of customers and employees may factor into a leader’s decision making, but only insofar as they move the organization — and the leader — toward those predetermined goals. Indeed, as many leaders rise, they focus less and less on what others are thinking or what their needs may be.

Consider the story of Sam Beauregard, the CEO of the Copacetic Company, a well-known consumer products manufacturer. Hired from outside the company as a turnaround artist, Beauregard almost immediately announced that Copacetic would lay off several thousand employees, a historic number amounting to half of its current workforce. The company, he said, was so absurdly bureaucratic that such an extreme measure was necessary.

Copacetic had long cultivated its operations specialists, who now argued for keeping more people on board, if only for the sake of the company’s own capabilities and institutional memory. Beauregard didn’t want to hear it; he laid that group off first. Most of them easily found jobs elsewhere.

Almost immediately, the cost cutting improved the bottom line. Beauregard was hailed as a hero by investors. But major staff layoffs, if not well prepared for and well thought out, can do more harm than good. Instead of becoming more innovative, Copacetic found itself unable to launch new products on time or on budget. It also faced new quality problems, management battles, and disputes with suppliers and customers. Within five years it was bankrupt. When Copacetic finally sold off its product line to pay creditors, Beauregard received the lion’s share of the blame. It all could have been avoided had he paid more attention to what his subordinates were thinking.

Just how easy is it for the powerful to lose sight of others? In one telling experiment, Columbia University psychologist Adam Galinsky asked people to draw the letter E on their foreheads with a marker. People who were primed to feel powerful drew the E so that it could be read as if looking out from their own head, while those not primed more often drew the E so that others could read it. Galinsky concluded that power reduced people’s ability to take other’s perspectives into account when making decisions.

It can feel productive and satisfying to narrow your focus to goals, which are easier to manage than people; however, your peers and subordinates will feel intimately this lack of meaningful inclusion and perspective taking. People are extremely sensitive to certain social needs and whether they are being met. The SCARF model, developed by David Rock at the NeuroLeadership Institute, outlines five such social needs: status (the need for ranking in a hierarchy), certainty (the need for control over one’s environment), autonomy (the need for agency and independence), relatedness (the need for belonging and inclusion), and fairness (the need for equity and justice). Leaders who fail to take others’ perspectives into account risk threatening their sense of relatedness, fairness, and status. People may feel that they don’t have a voice, that their opinions don’t matter.

If you are a leader in a powerful role, your own brain functions may make it difficult to see the harm caused by chronic neglect of other people’s perspectives and thinking. The solution is to make a deliberate effort to engage. Show people that their ideas are sought, heard, and considered. Actively seek out alternative points of view — in meetings, email threads, and spontaneous daily chats. Rather than sequester yourself in a private office, spend part of your day working in an office or another shared area to create more opportunities for social interaction. Use those interactions to gather diverse viewpoints and ask for feedback on key issues.

Research also suggests that making explicitly prosocial goals — goals that relate to human benefits, such as developing your team members or creating an inclusive environment — can be an effective way of reversing the neglect of people. For example, high-powered participants in one study (pdf) paid more attention to information about employees when they prioritized the goal of “creating a positive workplace atmosphere” over the goal of “maximizing productivity.” Build people into your goals, and you’ll always keep them in mind.

Optimism neglecting risk

A persistent sense of optimism is characteristic of senior leaders. Powerful people tend to pay more attention to the possible upsides of their ideas or actions than to the possible negative consequences. This is often inspiring; it helps keep employee morale high through difficult headwinds. But it can also lead to the kind of recklessness that torpedoes projects, departments, or the organization itself.

Irrational optimism was clearly present during the first several years at LightSaber, a technology startup that had been spun off from a larger incumbent firm. After exceeding analyst expectations for most of its life, the firm announced a big drop in profits, resulting in an even larger decline in stock price. Jessica Wicks, LightSaber’s CEO, claimed that the declines were due to unique business challenges and would soon be replaced by gains. She continued to set audacious goals, insist that the company was capable of meeting them, and borrow against those expectations. In one massive display of confidence, Wicks spent millions of dollars to build a heliport at headquarters.

Wicks’s assurances gave way to an increasingly desperate pattern of overvaluation. The company’s growth projections would turn out to be exaggerated; as accounting errors came to light, the company’s prospects dimmed and the stock price fell further. After two years of this pattern, the board forced Wicks to resign. On the brink of bankruptcy, the company merged with another tech giant.

Wicks was a competent business leader, knowledgeable about the technology. But her high visibility and power led her to systematically underestimate risk. Many senior executives have a similar propensity for cognitive distortion. They know things have generally worked out in the past — that’s how they’ve managed to rise so high — so why shouldn’t they work out now?

If you have a similar propensity, you may need to take active steps to gain a clearer picture of potential risk. One helpful technique is called “mental contrasting.” Think about your desired future alongside other plausible futures. Consider a range of circumstances, some optimistic and others much less so. Your future may then seem like one of many other possible outcomes, rather than an inevitability. Imagine what it would take, realistically, to bring your optimal scenario to life, visualizing the milestones along the way.

As with scenario planning, this can help you think about how your actions have a direct effect on the future. For example, if you want to develop a successful product, what kinds of things would have to happen, and in what sequence? This is less a planning activity than a visualization of the story as it unfolds. Research has found that this approach of imagining step-by-step progress can help people make smarter decisions, such as cutting back on smoking, with longer-lasting results than trying to rely on willpower alone. This exercise can help you understand your own optimism more clearly: Which aspects of it are truly realistic assessments of opportunity, and which are wishful thinking?

Inclusion as a remedy

Because they’re not widely understood, the negative consequences of high levels of power differentiation can snowball. Excessive visionary thinking, goal focus, and optimism all reinforce one another. Interestingly, one way to reverse the snowballing is to take inclusion as a starting point for rebuilding your leadership capabilities.

Research shows that attention to inclusion — providing time and space for people from a variety of backgrounds to voice their ideas and contribute — can help make teams more effective. The most capable companies make inclusion a habit: People throughout the enterprise feel that they have a voice and will receive recognition for expressing their ideas constructively. But in too many companies, the people in power unconsciously send signals that undermine inclusion. Considering diverse points of view doesn’t always fit well with full-steam-ahead, optimistic, visionary goal setting.

Using inclusion-related activity to help you avoid your own cognitive traps can make your entire organization more creative and less prone to risk. Instead of isolating yourself, deliberately work at a desk in an open-plan or semipublic space. Others may be prompted to ask you questions in passing, which you can answer thoughtfully. If you notice that some of the most junior people in the meeting have been quiet, you might call on them for input. These types of simple actions help keep you concrete; they draw your attention to what people are thinking, and they provide an opening for risks to come to the surface and be considered.

You might also move more directly to avoid falling into familiar power traps. When your colleagues in a meeting speak at abstract levels of construal, articulating the blue-sky projections and aspirations everyone wants to hear, you might take a different tack — asking the team, “What can we actually act on today?” and figuring out what’s feasible.

Afterward, back at your office, you put off heading home for a few minutes. You reflect on how a more cautious, grounded, detail-rich approach might pan out — or, better yet, an approach that realizes the essentials you aspire to without putting the project or enterprise at risk. You figure out the right move, resolving to check it with the rest of your team tomorrow. This bodes well for the future: Although you were optimistic in the meeting, you didn’t let your grand schemes get the best of you, and you didn’t just ask for others’ opinions, but acted on them.

When leaders work to embed these habits into their culture, over time they naturally start doing the work of including — that is, soliciting feedback, mitigating bias, raising quiet voices, and incorporating more nuance into their decision making. All the while, they preserve all the virtuous qualities we come to expect from our leaders, including visionary thinking, lofty goal setting, and bright-eyed views of the future that inspire everyone to achieve.

Published at Thu, 31 Oct 2019 05:00:00 +0000