Few of us doubt that evil exists…

…the question is where.

I recently had my world rocked when I read Philip Zimbardo’s book, The Lucifer Effect: Understanding How Good People Turn Evil.  Not so much by the fact that each of us has a propensity for evil behavior – who among us hasn’t made a biting comment when we’ve felt hurt or threatened?

What did surprise me was Zimbardo’s insight as to how the situations we face trigger evil behavior and how quickly that can occur.  Professor Zimbardo, a social psychologist, created the Stanford Prison Experiment at Stanford University in the 1970s.  His goal was to determine whether or not situations influenced behavior and, if so, to what extent.  His findings are amazing.

Within a few days male college students who had agreed to be either guard or prisoner depending on the luck of the draw experienced the following:

• Guards became progressively more verbally and psychologically abusive (physical abuse was not permitted) – so much so that the experiment was stopped after just five days.
• Those guards who didn’t participate in the abuse, or did so only sporadically to avoid criticism themselves, didn’t do anything to curb the abusive guards’ behavior.
• Some prisoners experienced such severe depression that they were released after only a day or two in the experiment.  Interestingly they could have left voluntarily at any time, but didn’t.
• All prisoners became accepting of the ill treatment they received.
• Professor Zimbardo admits that he fell victim to the situation and moved away from what he perceived his true nature.

What’s the message for us?  As we’re thinking about how we structure our organizations, incentive programs and other aspects of our business, let’s keep in mind this propensity for evil.  Are we creating an environment in which we encourage arrogance toward customers, intolerance with employees or exceedingly unrealistic expectation for vendors.

If you’re thinking “I’d never do that.”  Take a look at some of your policies.  Have you set sales quotas and, in doing so, encouraged your salespeople to sell to customers who don’t really value what you offer.  Worse yet, are they lowering the price to get the sale which hurts both your company and the customer.

Have you established aggressive collection policies?  If so, have your collectors lost their compassion for people who are trying to pay you, but find themselves struggling to find a way to do so.

Have you created compensation programs that encourage your employees to ignore what’s in the best interests of your customers or your business.  Years ago, during a training program I was presenting to mid-level managers, they told me of an ongoing problem.  When I began to offer suggestions on how to deal with the problem, they said “Oh, we know how to fix it.  That’s not how we’re compensated.”  Ouch!

It’s counter-intuitive, but the policies we establish and the procedures we put into place have the propensity to trigger the evil that exists in all of us by virtue of our human nature.  Spend a few extra minutes evaluating your policies and procedures with an eye to the evil it could create and you’ll save yourselves and those with whom you interact a great deal of pain.

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 6, Eclectic Education, to gain new perspectives from a social psychologist.  I also used Step 4, See Similarities, to demonstrate how his concepts apply our policy-making, procedure-writing activities.  Finally, I used Step 6, Contrarian Mindset, to offer ways to avoid triggering the less savory aspects of our human nature.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com. Please share your experience with our readers by posting a comment.

For insights into how you can apply counter-intuitive thinking to your pricing strategy, visit my Pricing for Profit blog at www.pricingforprofitbook.com.

My latest book, Pricing for Profit, was released 9.9.09 in the United States, Canada, U.K., Italy, France, Germany and the Netherlands.  It’s available in all the major bookstores – Borders, Barnes and Noble and Amazon.

Too much government intervention?

Or too little, too late?

While these are questions that will undoubtedly be debated for decades, they are the wrong questions.  Why?  Because they don’t provide any insights into how we avoid government intervention in the future.

In my book, The Uniqueness Myth, I note that in many companies’ policy decisions are made without regard for whether or not the policy will invite regulation.  Even in the face of threatened regulation, many businesses and professions refuse to reexamine policies.  For decades Congress threatened to regulate the accounting profession.  The American Institute of Certified Public Accountants was able to deflect those threats with assurances that the profession was doing an effective job of regulating itself.  Of course that all changed when Enron’s and WorldCom’s creative accounting came to light.

These massive frauds resulted in the Sarbanes-Oxley Act which imposed major financial recordkeeping, control and reporting standards on businesses and the accountants alike.  These regulations didn’t just affect the accounting profession and those companies whose stock is traded publicly; it extended to small to mid-size businesses as well.  The cost of complying with Sarbanes-Oxley is estimated to be in the billions of dollars.  Now we’re experiencing trillions of dollars of cost as a result of the failed policies in the mortgage markets.

It’s not just the financial costs of regulation that are troublesome.  It’s the loss of freedom to decide our own destiny.  It’s counter-intuitive but if we developed policies with an eye to avoiding regulation, we’d have the freedom to craft approaches to doing business that allow us to gain a competitive advantage using significantly less costly approaches than those dictated by a regulatory agency.

How do we do a more effective job of avoiding government regulation?

1. Take policy decisions out of the hands of one or two individuals.  Everyone, including business owners, has a personal agenda that often overrides sound reasoning
2. Establish a cross-functional team that involves all the major disciplines in your organization so that the policy’s impact on customers, employees, vendors, and owners is evaluated effectively
3. Establish a checklist of questions to use in the evaluation in step 2.  Make sure the checklist includes the question “Will this policy invite regulation?”
4. Any time that you’re tempted to bypass this process, remind yourself of the costs involved in complying with regulations with which you’re already saddled.  Then ask yourself “Do I really want to risk further regulation?”
5. Get involved in your industry or professional oversight functions.  When you see practices developing that are likely to invite regulation, remind the membership of the costs they’re incurring as a result of previous regulation.  Then help them develop policies that will help them and you avoid future regulation and gain a competitive advantage in the global marketplace.

As you can see there isn’t significant time or cost investment associated with crafting policies that avoid regulation.  Even with step 5, the cost you’ll incur by being active in your industry or profession pales in comparison to the cost of regulation.  Use these simple steps to help you avoid inviting the government to become your business partner.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 1, Contributory Negligence, to demonstrate how we contribute to every problem we face and how that knowledge can be used to craft simple, inexpensive, easy-to-implement solutions.  To learn more about the 7 Steps to Becoming INVALUABLE program, click on http://furwengler.com/7Step/htm

Please share your thoughts, whether you agree or not, by posting a comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com