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Facets of business psychology

Being a business psychologist can be giddy-making. Well, that is our job.  To have the giddy-experience so other people don’t have to.

Industrial or work psychology

When we want to improve productivity, we ask “what is the best way of doing this work?”  Whether you do it or whether I do it, what is the best way (and when we get sophisticated, what is the error range and variance)?

Personnel psychology

When we want to choose someone to do the job, who will find it easiest to do the job?

Organizational psychology

What is the best way of organizing the work so that we can all get along with the minimum of emotional friction?

The thinking behind business psychology

The answers to these question do not necessarily contradict each other but the thought process behind them is contradicting.

Work psychology assumes we are all the same and can learn easily. Personnel psychology assumes we are all different and our differences are hard to change.  Work & personnel psychology looks at what we do as individuals and organizational psychology might ask us to sacrifice efficiency for the sake of the group.

Who’s right and who is wrong?  No one.  Each question offers a slightly different perspective.  And that is giddy-making.  What we are good at is separating the questions  and asking them one at a time so that we don’t end up with a confused, useless mess. That is what we are trained to do and we train for a long time – 5 years.

Modern questions in business psychology

Our giddy life doesn’t stop with the 3 traditional questions, though.

Old management theory assumed that change was slow, that there was a ‘best way’, that people were happy with the social and political relationships suffered and enjoyed by their forefathers, and that someone, somewhere knew what to do and how to do it and that the world would be sufficiently obliging to wait while they decided what to do and told everyone in the organization.

We know now that the world is not like that.

Work psychology

Laying out work for others to do while we decide is so, so, last century and bankrupt motor corp, we should be shot for suggesting it.

We’ve known for I don’t know how long in the military, and at least 40 years in psychology, that we should set a goal that is appropriate for a person’s skill level, give them the resources, free access to incoming feedback, and let them get on with it.

People cannot function with our constant back-seating driving.  And the world will not wait for an organization that is that slow.  It might seem like it will wait but that is probably because of some artificial barrier to entry.  Best to see how much that barrier costs and how long that will be sustained.  More under organizational.

Personnel psychology

Much of the work we do in personnel psychology is for really large organizations, like armies, where gathering “objective” information and allocating people on a “best fi”t model makes sense.   We introduce efficiencies for everyone.

In smaller organizations, we are expensive ,and frankly managers don’t listen.  Why is it that?  This is an organizational psychology issue not a personnel psychology issue. So let’s move on.

Organizational psychology

Getting along in an organization is about human relations and “passing the ball” without dropping it.  Management and organizational theory comes into play along with a raft of other issues, including politics.

The biggest issue in organizational psychology is “what is in it for me?” When managers are insecure, they will look for people who will protect their interests.

In big organizations, it is our job to reassure the managers and put the brakes on their worst self-interested excesses.  We flag up artificial barriers to entry that are maintained at huge financial and moral cost (e.g. apartheid in South Africa and excessive privilege like doctor’s payments in the US).  We put in procedures to balance managerial interest with organizational interest, in pay, for example, and in the selection of people who are good for the organization and not simply good for the manager.

We provide stability, in other words.  Sometimes we even introduce a generative, healthy upward spiral.  Though world events in the last two years show clearly that preventing a destructive tail spin would be a pretty good outcome.

We have to include people.  Honorably.  Allowing a core group to take over is very, very destructive.

Future organizations

Having said that.  What is the future of large organizations?

We are much more likely to move towards a system of local modularization in which smaller companies cooperate to complete specific contracts as the aerospace industry did with the Boeing 787.  Our business will change accordingly.

My predictions for the future of business psychology

This is how I see our profession moving.

Work psychology

In depth understanding of the work of an industry and the critical factors affecting productivity and learning in each sub-sector.  We will become a mirror to the industry.

Personnel psychology

Continue to show people the limits of occupations.  To give an obvious example, if I am a sprinter I’ll run the sprints not the marathon, and so on.

Beyond this well developed technology that needs to be updated to keep us informed about the limits of new professions, we might possibly change our focus to understanding careers over a lifetime: how do we develop a narrative that sustains us over the rapid changes in industry structures that we are likely to see over 50 years of our working life?

I think developmental psychology might become more important than personnel psychology and understanding business might become more important that the brute horsepower of “intelligence”.

Organizational psychology

The biggest change will be the nature of organizational life and the work that we are called upon to do. Companies will become smaller and more specialized and a new beast will emerge. Akin to entrepreneurial and holding companies, and replete with negotiation-minded supply chain specialists, these new organizations will create the projects and organizational conditions that set the boundary conditions for specialists to work together to be creative.

Specifically, it is my best guess, at March 2010, that these new organizations will analyse the markets and flag up what markets want, host discussions between relevant suppliers and arrange consortium funding, and carry the market risk themselves, though conceivably they may make innovative arrangements on the demand side too.

Further, some firms will specialize in backing up the market “seers” with infrastructure to allow global cooperation – firms like Cisco and firms specializing in virtual law and financing.

And then we will have people doing their stuff.  The producers.  Who are doing what they love and who morph and develop as they respond to the market. Hmm, I think there may be a role for people who develop the industry, much like the aerospace industry in the UK.

These aren’t my ideas. The first three strands were developed by Hagel & Brown, now of Deloittes.

My advice to young business psychologists

In not so brief words, that’s where I see us going.  My advice to young psychologists is

1. Pick an industry that you love and understand how it is developing and changing and the skills needed within it.

2. Learn more developmental psychology and narrative counselling than psychometrics.  Testing is a mature field.  Little is happening there.

3.  Think whether you want to serve producers, coordinators or entrepreneurs.  Maybe try all three out. Maybe in you industry you have to do all three.  Or, maybe you should specialize.

You need to map the ecology of your industry, see where your heart is, and join the people you love to serve.

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Our strengths are our connections to the environment

Our strengths are not in ourselves.  They are in our connections with our environment.  So says Ralph Stacey, complexity theorist at University of Hertfordshire.

What on earth does he mean?  Is this just some abstruse idea that I can safely ignore?  Is it some pop idea that it is not what you know, it is who you know?

Use systems theory to understand your business and take action!

I am going to explain this idea using ideas from MGMT101: very basic systems theory.

Imagine the world as set of concentric circles. Go on.  Draw them.  Draw three.

Outer circle : macro-environment ~ the cloud

The very outer circle is the big bad world ~ the macro environment ~ the cloud. This is where you do your PEST analysis. This is where we worry about Politics, Economics, Social Trends like birth rates and Gen Y and Technological Change like Social Media.  What is happening in the stratosphere of our lives?  It is important to know this stuff.  In the slow moving world of the 1950’s, it was possible to look up and do this once a year.  In this day and age, you should have a set of Google Alerts just for this purpose. If you are a large organization, you should have part of your intranet reserved for articles on these topics written by your own staff in their areas of expertise.

Outer circle but one : micro-environment ~ your pond

The next circle are your competitors ~ your micro-environment ~ your pond.  Who is in your pond?  This is where we use Porter’s Five Forces.  We think about what your customers actually want.  What are the benefits of our products and services (rather than our features).  We think about what it takes to get into this business (barriers to entry).  We think about the suppliers on whom we depend (and how much they or we call the shots).  We think about who else ‘wants in’ to the business ~ who are our competitors.  We think about what our customers could use as a substitute for our service our product.

The ecosytem of our pond is quite complicated and we are sometimes overwhelmed by thinking it out.  I’ve found two concepts really help.

  • Think of your lunch.  Who wants your lunch? The answer is often very surprising. After all, if scientists depend on government for their money, then they are in the businesses of public administration, government or politics.  This is usually an aha moment.
  • Think of the food chain.  We are often make jokes about being at the bottom of the food chain. Actually you want to be at the bottom of the food chain. If you are nobody’s lunch, then there is no reason for your existence.   Who dies if you die?  Often your existence is rather diffuse.  So let’s phrase that a little.  Who would be inconvenienced if you closed down? You can see why businesses try to create monopolies. They are safe if they are indispensable.  Here is another aha moment when you see clearly who are your allies in the great game of  commerce.

When we have our competitors (they want our lunch) and our customers (they eat us), we are on the way to describing the ecosystem of our pond.

Defining your micro-environment ~ your pond ~ is work that you have to do yourself

Both these questions about ‘lunch in the eco-system’ are hard to answer.  They are not like PEST which is common to huge swathes of people and answered in The Economist and other general sources like that.

These are questions you must answer.  I can suggest ideas. We can borrow ideas and insights from other people in the trade.  Occasionally we find a really good book on our business like Michael Riley’s Human Resource Management in the Hospitality Industry.  Mostly we have to sit down and answer

  • Who wants my lunch?
  • Who thinks I am their lunch?  Who depends upon me?

We need concrete answers.  Take photos for me.  Tell me what they had for breakfast and where they are are 2.17 in the morning.  Why that time?  Because you know them so well.

The third circle – who are you and what is your agenda?

With those concrete and specific answers we can define the next circle.  Who are you and what are your strengths?

Now we do the SWOT analysis.  What are your strengths ~ your internal capacity, or things that you do every day, that allow you to be who you are.  Your weaknesses ~ those things you wish you weren’t (but might just be the flip side of your strengths).  The opportunities ~ those things coming up that you really want to do.  Threats ~ those things upcoming that you want to get out of.  You SWOT analysis is just a fancy ‘to do’ list.

Your strengths are the things you like to do and that you probably did yesterday too.  That’s what makes us thing they are us.

But they are really a story that we tell ourselves about us.  That’s why we look partly at our inner talk. We have a story of who we are, who we secretly fear that we are, we we secretly want to be.   We will always have our secret fears and aspirations, but our happiest times are when most of our story is out in the open.

And what is our story?  It is the story of what we do with other people for other people while we are up against a threat (those who want our lunch!).  It is a playful story about people who are in this game ~ with us and against us.  Cheering us on and getting in the way!

We cannot tell this story with the story of the outer two circles.  We cannot tell this story with the story of our times – the PEST analysis. We cannot tell the story without the story of our pond – Porter’s Five Forces.

Our story is a story about real people.  You must tell me who those people are.

Your strengths are your participation in the game of life. Everything you say and everything you do, with real live people.

Tell me that story and I will show you a successful business and blossoming career.

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Save the cost of the carpets

And the 3rd well-kept secret of social media is that it saves us the cost of wearing out the carpets.

In short, the story goes like this. Social media attracts more ‘window-shoppers’. The window-shoppers hopefully include surprise visits from people outside our target market. We have more people wearing out the carpets and not buying anything. They are also people who are different from our typical customers. To extend the analogy, let’s say they bring mud in on their boots too.

So is social media a good thing. If we have more people who look-see but who don’t buy, do we want them? Aren’t carpets rather expensive?

Yes they are. But in the virtual world, carpets are fairly cheap. But that is not the real point.  In the virtual world, if you are smart, people make carpets for each other.

Let your customers weave the carpet

In a conventional company, we’d be most unhappy if people came to our shop just to party with their friends. That’s because they are using facilities that cost us money. We figure it is cheaper to advertise “off the premises” in magazines and TV than in the shop itself.

In social media, hosting a party costs as lot less. Sometimes it costs us almost nothing per person because the first person invites the second and the second the third, etc.

Let your management report reflect the carpet weaving operation

It is so obvious to anyone in social media but our reports don’t always make this clear.

  • Attracting window-shoppers has negligible cost.
  • If we are smart, we looking out for unusual newcomers. We are using the window-shoppers to help us understand how our market morphs and mutates. We are in business when we understand our market as it is, not how we want it to be.
  • And if we are really smart, our ‘window’ morphs and mutates with the market so people see what they want to see and find what they want to find.

That’s what our reports and metrics should be reflecting.

  • The cost per visitor
  • The changing nature of the market
  • The way we are responding spontaneously to changes in the market and those of our goods and service that our window-shoppers find attractive.

Now, I told you the secrets for free. I’d be happy to know what you think of them!

My social Network on Flickr, Facebook, Twitter...
Image by luc legay via Flickr

Jon Ingham is on to something good.

How can we leap-frog ahead of our competition by using social media?

How can the easy interaction between staff members, whether on the intranet or on Facebook and Twitter, build a stronger team?

How does our combined strength on Facebook and Twitter build more loyal links between us and our customers?

New IT has always give competitive edge

IT boffins have always been brilliant at looking at how a new technology allows us to put old working practices in the trash, leap-frog over our competitors, leaving them in a mad scramble to catch up.

The social nature of the two-way web gives us the opportunity to jettison old norms about social structure and leap ahead with tighter relations.

Who will win the social media race?

One of the interesting features of these revolutions is that it is usurpers who tend to use new technologies.

Barack Obama used my.barackobama.com to mobilise door-to-door canvassers and to raise money $ by $ because he was coming from behind. The Conservatives have been quicker to jump on the social media band wagon because they are trying to wrest the lead from Labour.

In business, we see Best Buy coming in to challenge big box companies with their ‘pull’ HR – work any time like a university lecturer – just get it done.

We see students playing David and successfully challenging the Goliath HSBC.

HR is taking its place with leading IT

Jon is chairing a session at the Social Media in Business conference on October 23rd. He will be surrounded by geeks who will tell you the ins-and-outs of being found on Google and managing your blogging policy.

HR is taking up the chance to be strategic

Jon is doing what I’ve always liked doing: asking how can we change the rules to give us permanent competitive edge?

How do the people, and the way we arrange them, give us and edge on our competitors? How can we take our competitors by surprise and make them chase us?

Oh what fun business is when we treat it as a race!

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Is the internet good for you?

Was it this week that we had the media telling us that Facebook would give us cancer?  And a professor telling us that the internet makes us scatty?

Well, I won’t go where angels fear to tread, but I do know this.  The world has changed in a fundamental way and it is very important THAT YOU GET IT!

The internet has changed the way we make a living and before you go off and spend 5 to 10 years getting a qualification and doing low paid jobs to get experience, have a look at the business model of the profession you are entering.  Will your profession survive the intenet?

And don’t ask recruiters and HR officers either.  They rarely know the answers.

Ask experienced people who are responsible for strategy in their field and don’t join up unless they can ask clearly!  Invite people who have a hig profile in your future career to talk to your school, university or service club, and ask the questions you need to ask!

Managing risk

At the heart of any profession or occupation is the management of risk – yep that thing that bankers didn’t seem to understand.

Very simply, we cannot know everything in the world and when we have an unfamiliar decision to make, we turn to professionals for advice – doctors, lawyers, teachers, plumbers, and even, bankers.  Even my lowly purchase of a loaf of bread at the supermarket is the purchase of advice.  I am trusting my supermarket to sell me something wholesome and good at a reasonable price.

But how do we know who we can trust?

We have several mechanisms.

  • First is a system of licenses.  A body, like the British Medical Association gives a doctor a practising certificate, for example, to indicate the doctor has the training and knowledge that we expect.
  • Second is a system of audits & inspections.  Chartered Accountants like KPMG and Deloittes check the financial affairs of a business and tell us if it is a going concern.
  • Third is the business model itself.  Newspapers, for example, would verify information is correct before they printed it and it was for that verification that we would pay a shilling or a dollar for our paper, though we often felt that we were buying the content.  They are motivated to get information correct so they stay in business.

The internet adds another way to manage risk

The internet has changed the game of business, and importantly the careers available to us, because it adds, among other things, an additional way to manage risk.  This additional mechanism for managing risk affects how consumers get advice and who gets paid for giving advice.

  • Google Search, for example, allows us to pull up information from all over the world in the blink of an eye.  For many particularly simple matters, we can find information for free and save ourselves the fees of professional advice.  Knowledge has become more easily available and much cheaper.
  • Twitter provides recommendations with equal speed and allows customers to speak to each other. The wisdom of crowds gives us assurances that previously were only available from auditors and inspectors.
  • Blogs, YouTube, Flickr make us all citizen journalists.  Collecting and transmitting data is now so cheap and easy that events like a plane ditching in the Hudson are transmitted as they happen.  No paper or TV service can report events so quickly.

But there is so much rubbish on the internet

Indeed there is.  And it is very important to treat the information for what it is.  IT IS NOT information provided with a stamp of approval from a professional body or a well established business.

This is frightening for many people.  And so it will be until they think clearly about what is happening and act accordingly.

We have two tasks therefore.

  • First, understand how to verify information on the internet.
  • Second, to understand how the internet changes the value of various professions and how much people in those professions will earn in the future.

A lot of people write about the first task.  I am interested in the second.

How does the internet change the value of various careers and the salary you can expect to earn?

Whether you are in a profession or ‘old school organization’, or if you are changing careers and thinking about your next move, these are the questions that I think you should ask.

5 questions to ask about the value of information in your profession or organization

1   Why did you want to go into this career?

When you chose this career, what value did you believe you would add to the world?  Why did you undertake the qualifications instead of just opening up your business?  What did the qualifications teach you that cannot be taught elsewhere and freely on the internet?  How are the systems of knowledge maintained so the knowledge of your profession is deeper and more valuable that information on the internet? To what extent is the profession protected artificially and will these artificial barriers be stripped away by the internet?

2  How do you maintain integrity?

What are the promises that your profession makes to the public and are these promises genuine?  For example, do you send someone to jail for breaking these promises?  What areas of malpractice does the profession look out for?  How do you check that your core promises are being honoured?  When your customers are able to talk directly to each other, what aspects of your service can they inspect better than you can? If they are able to check themselves, of what value is your guarantee?  What aspects can they not check and is the responsibility of your profession?

3  What does your online profile say?

Are you on professional groups like Facebook, Twittter, LinkedIn and Xing?  If we Google your name, can we find you?  What issues are Googled by your clients/customers/patients and what do they find? How do you maintain your profile?  How good is your understanding of information traffic on the internet and the way Google chooses what to show people?  How is your profession learning about the internet and the way it is developing?  How is your profession managing the conversation about the internet among your members?

4  What is your ‘authority’ on the risk management issues which have been the basis of your profession?

What are the issues on which your profession is expert, experienced and willing to help other people, albeit for a fee?  Who in the internet world defers to your opinion and how do they link to you?  How does your profession monitor your online authority?  How do you manage your online authority?  How do you manage the way one member of your profession competes with another for internet domination?  How do you ensure that your clients/customers/patients get access to well debated information and ‘honest authority’, so to speak?

5  How do you help your customers/clients/patients find the information they need and make intelligent choices?

What choices are your customers/clients/patients making on a daily basis?  What information do they use?  What do they search for?  How does information find them and are they able to process it safely and to their advantage?  How has the internet changed this process? And how have those changes, and ongoing changes, changed the basis of your business model?  How you make a living, in other words, and how future members of your profession will make a living?

Your comments?

This is the first time I’ve written about these issues.  So I’d be very interested in your views – or comments – or indeed questions.

How do you think the internet changes our work and our long-term potential to make a living?

What questions should we be asking leaders of professions and encouraging our young people to ask before they invest in an expensive training?

Synergy is not a word I like but do we have a better word for describing productive interaction between people? Alex from alwaysnewmistakes writes on how essential synergy is to doing well. Yeah. What a great post contrasting Venice in the time of Vivaldi with Silicon Valley of today. True, true, true.

And Alex makes the further point that it is not enough to be close to abundance. One must take part. My favorite author David Whyte puts it like this:

“I want to know if you are prepared to live in the world with its harsh need to change you.”

Some months ago, I also picked some criteria for the conditions for synergy from an academic paper by David A Lane (I’ve lost the url, unfortunately.)

a. We must have a reason to interact (e.g., you make cheese and I like to eat cheese)

b. Our roles must be complementary (e.g, you sell and I buy)

c. We must interact often enough for a system to emerge (e.g., I must buy from you to keep you in business and you must have cheese to sell to me)

d. We must have permission to find solutions and opportunities to act.

David A Lane talks in terms of worrying less about the outcome and more about the quality of the interaction.  Indeed, I can go to my local deli and if they don’t have what I want, trust to them to produce something that meets my needs.   I once lived in a country where there was a flour shortage.  When the local bakery opened at 7am, I would go in and ask what is for breakfast? And eat what ever they produced!  Generative:  they were in the bakery business and I was hungry.   We could work out the rest imaginatively!   That is synergistic whereas going into a well stocked supermarket, isn’t really.

Synergy – I think it is an essential idea!


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