39: The New Principles of Business Management

listening and enjoy the podcast. David Burkes is a best selling author and award winning podcaster and associate professor of Management at Oral Roberts University. David is a regular contributor to the Harvard Business Review in Forbes. A popular corporate speaker, he's consulted with all kinds of companies, from startups to Fortune five hundred companies. His latest book is Under New Management, How leading organizations are upending Business as Usual. Thank you

so much, David for talking to me today. Scott, thank you so much for talking to me, and thank you for making me sound way cooler than I am. By the way, in that biol thank you you are. If anything, you understated like I feel like in the inside flap of your book it says something like he's a slowly rising superstar, Like, I thought it was funny the way

you wereed that. So let me tell you the real story, because this is the only podcast where listeners will actually understand that I actually intentionally put in a word in there, and it's funny that you mentioned it. So they had, you know, the bio that the publisher wrote was, you know, David Bergs is blah blah blah, highly regarded, influential, business

school whatever. And I remembered this really cool study that basically showed that people disproportionately wait potential over sort of like proven ability, like we're more likely to pick somebody who's the next somebody than to pick the person. And so I insisted on no, no no, no, no no, a let's be humble, but be It might pay off better if

we say increasingly influential. Right. We're not saying that I'm this amazing person, right, but I'm getting there, and maybe people will more be more willing to come along on the journey, which is, by the way, is the actual sort of reflection, Like I feel like I look at sort of my intellectual heroes in the field and I'm nowhere near there, but I'm working towards it and hopefully are they so, I I mean, from the book writing standpoint, I'm a huge fan of what Dan Pink does for

other people's research. Right, So Dan, you know, ed Richard Ryan and Edward dec did some amazing research, and Dan does this wonderful job of summarizing it. So I would probably list him first. Roger Martin is an intellectual hero of mine. The Opposable Mind is like I had to read it like six times. It's a brilliant, brilliant book. And then I mean, that's really so anybody who sort

of falls in that space. I include in that sort of space, Chip Heath, our mutual friend Heidi Grant Halverson, this guy Scott Barry Kaufman, kind of anybody who can bridge the gap. What I describe it is this, I want to tear down the wall between the Ivory Tower and the Corner Office, and anybody else who can do that I look up to. So you guys are all awesome in that, and that's my goal too. Thanks. I learn an awful lot from you in this new book of yours. I really liked it, by the way, and

I liked it for a lot of reasons. And one reason I liked it is because I really did feel like I was learning a lot. I mean, it's kind of like stepping into a new world. This organizational psychology world is something I don't swim in every day. And I thought there were a lot of things that you talked about that are really interesting. And yes, they were all counterintuitive. And everyone these days says, you know, the word counterintuitive, because it's like the thing to say to

sell books. But I felt like your stuff was totally counterteuitive. Can we discuss some of these things, would that be? Yeah? Yeah, absolutely great. So one thing you talk about is salary transparency, and there's a lot of debate about, you know, should we be like revealing our salary to other people should we not? And your research suggests that it might actually be a good thing. Yeah so, and not only for ourselves but for the company, for society. It's got a

huge benefit. And I was actually I was not expecting to come out on this side of it. You know, I live in the middle of the country. I tend to vote center right. I'm not that I mean, I'm an academic, so that's probably the reason it's center right, but you know, I'm a libertarian by nature. It was not so privacy is a big deal. And I was not expecting to come out when this like, no everybody should know what everybody gets paid thing. But I looked, I mean I looked at the research. I looked at

the research on information asymmetry. I looked at the psychological research and the lab about when people know when people are using pay for performance and they know how they stand compared to their peers, whether they're told the exact number or just where their ranking is, like, they're more

motivated to work hard to improve their standing. So there's a corporate benefit, there's a benefit to individuals from having the negotiation benefit of knowing that it reduces that information asymmetry. And then I wasn't expecting to find it. Even there's even some evidence to indicate that that dramatically reduces the gender wage gap. You know, there's still a lot of people arguing over what things to factor in in, factor out.

But like unfactored analysis, if you have the whole United States where it's seventy seven cents on the dollar, but in like the federal government where they use what's called leveling, and there's just there's certain tiers in every job is assigned to a tier, and everybody knows what those tiers pay. The wage guy shrinks to right around eleven to ten percent, which is pretty dramatic. Right, So regardles, I mean, it's indisputable that there's something going on here in a sense

of fairness. And then it also, I mean, it increases perceptions of fairness. There's evidence that a lot of people who feel discriminated against in the past or taking advantage of in the past, or gravitate towards these systems. It was really I was not expecting to find so much evidence that it's good not just for people, but for companies and for society. But I got to the point where the evidence was overwhelming and I had to go,

you know what, you know, this is this. Yeah, it might be uncomfortable sharing what we considered to be private information, but the benefits of it are make it worth it. I wonder how we can reconcile that with the research and positive psychology showing that that kind of information, like we compare ourselves to relative to others, and when that information is salient, it kind of lowers our well being.

I think it depends on you know, one of the uniform things that we see in these transparent companies is that before they go transparent, there are dedicated reasons for why a person's salary is what. Now that's either levels or a lot of places use a formula. I look at a company called Buffer that has totally transparent salaries and actually post salaries on the internet for all to see.

But they also post the formula and like, you right now can go to buffer dot com slash salary and like figure out how much you would make if you worked there. Really, and so yeah, I mean try it. I mean don't try it now because you'll kill bandwidth interview, but later try it. And what that's doing is I

look at it as it's a feedback mechanism, right. It's not that you're comparing yourself to somebody and saying, oh so and so makes more than me, So I'm miserable if you know that oh so and so makes more because they occupy this position that demands more of their time or demands this skill set that I don't have.

Then you have some clear cut feedback. And yes, it might sort of gradually reduce a sense of well being, but it also sort of gives you that path forward, right, and that feedback forward to what you actually need to do to kind of improve your standing. Right, But no,

I mean you're definitely right from that research. I mean, in the book, I talk about a thing called equity theory that shows that when we're doing these comparisons and we feel like two people make the same but one earns whereas two people work the same hard or have the same skill set or what have you, but one person earns more, then we're really frustrated. There's a sense of dissatisfaction. There's all all of those similar things from comparisons.

But interestingly, equity theory kind of comes at it from the angle of where our brains are capable of nuance, and so we can see if somebody is putting in more hours or has a different skill set and that's the reason that they're earning more than That sort of takes some of that pain of the dissatisfaction off the table because we see there's a reason, and if we're willing to do those things, we can have that too. Okay, Yeah, no,

I can wrap my head around that. And you know, going to the organizational workspace sort of environment, it's there's so much controversy about like what are the best like practices to support optimal productivity. And you know a lot of people are also asking, well, sometimes optimal productivity can conflict with optimal wellbeing, And you know, what are the intersections in your book where you found that they will align with both productivity and well being? Well, so, I

think a fair question. Yeah, no, no, no no, it's hugely fair. And you know, I think that the fundamental thesis of underde management is actually kind of that idea that a lot of management ideas and a lot of management models and practices were built off of a very sort of Frederick Taylor Principles of scientific management idea, which was productivity. First, we figure out what is the smallest scale repeatable task.

We optimize for what's the number of times somebody can repeat that task in a given shift, and then we incentivize to make sure they hit that number right, which is very much productivity at odds with well being. But as we've shifted from a physical factory to what actually Roger Martin said, intellectual hero calls a decision factory. But we switch from physical labor to mental labor, right to not from industrial work to knowledge work, a lot of

those assumptions are faulty. And that's really what underdo management is calling into question is a lot of these things that rest on a bedrock of Frederick Taylor and principles of scientific management are at odds with the idea that if ideas are the driver of this work, of this knowledge work, then we need to think about well being

in productivity hand in hand. In other words, we can't just look at oh, it's our job to drain people of their energy and drain people who are sense of well being and then hope they have work like balance that brings it back up. Now, we have to do

something that's sort of continuously there. And one of the areas in the book that I think is most reconcilable with that area is I have a chapter called Ditch Performance Appraisals, Yeah, which is all about that sort of annual review where you give somebody label and usually a development plan. Right, I mean even at a university we do this, right, I have a professional development plan I have to fill out every year. That's and we go out at the end of the year and we go

through it all. And it's really if you look at a lot of the research on when we need in order to improve how often we need feedback? It's really annual. This is terrible. I mean, imagine, I tell a lot of people, Imagine that you were playing a sports Imagine you played football and you go out there on Sunday and you play really hard, but we're going to wait a year to tell you the score. How do you

get better for next Sunday? Like? How do you know what to work on if you're not getting that regular feedback? And so what a lot of companies are doing now is ditching that annual review and coaching managers on how

to have ongoing conversations. A lot of these more informal conversations that are replacing the annual performance review are not just around feedback, but they're also around expectations, my expectations for you, yours for me, and also conversations about growth and development, in other words, where do you want to go, what are your long term goals, etc. I Actually, you know what I think about your famous phrase you talk about Epaul Torrens often falling in love with a future

version of yourself. Well, if you're a manager and you've never had a conversation with what is that future version of yourself that your employees envision, how do you know how to coach them? How do you know how to give them that right feedback? And so a lot of these informal conversations are taking that shape feedback expectations, but also growth and developmental goals. And that's a hugely beneficial system, especially compared to just we're going to label you once

a year as meets or exceeds or underperforms. That makes sense. What excites you the most about being in the field of manas much like why are you in this field? And like why do you do what you do? Why do I do what I do? So, I mean, if we'll go back to that falling in love with the future vision of yourself. When I was super young, I

wanted to be a writer. But when you're really little, you don't know the different ways that you can be a writer, right, so you think you're going to write novels or actually, actually, one time when I was like five years old or maybe fifth grade, not five years old, Well, one time when I was fairly young, single digits. Let's say, at one time when I was single digits, I actually typed out like a three thousand word essay letter by letter when I was working on by typing and then

like printed it out and called it my book. It was I mean, it was sheer plagiarism, right yeah, but I didn't know what plagiarism was of the time. I was just really proud that I got three thousand words, right yeah, and all throughout like my childhood self, you see this idea later it was sort of be a novelist or whatever. And I went to university under I went to undergrad for that. I studied writing as an undergraduate major, and around my creative writing, yeah, like literally,

I mean it's called literary writing. I studied how to write novels and poems and short stories and all that sort of thing. And around my junior year was when The Tipping Point came out. I think time it was when I found a copy of The Tipping Point. I'm not sure exactly when it came out, and I read Gladwell and it was the first time. And you know, it's funny. Now, on the other end of a graduate degree in organizational psychology, you look at Gladwell with mixed feelings.

But one thing he does amazing is he tells a story about research, and that just fascinated me, like you could take a psychological study and tell it to someone in a way where even if they didn't know what P values were, they could understand what was going on. And that fascinated me, and I read more and more and more in that and suddenly became suddenly like it was like, Okay, well how do I study more of this?

And literally not knowing that you could be a science writer without going to graduate school and getting a doctorate in leadership and a master's degree in orgdynamics and all this sort of stuff. I went to school for all that, all those sort of things. Yeah, and then when all that was over, the goal was always to write about this like it was to understand it at a deep level so I could write about it. I'll tell you firsthand,

I'm a terrible researcher. Right, you should never ever, the Imagine Institute should never fund a proposal that I am on a care more researcher. But what I can do, and what I get a lot of joy from doing, is writing about other people's research. Is tearing down that wall between the Ivory Tower and so the people that need to apply that research. And so that's what really energizes me. Yeah, that energizes me too. Yeah, that's great.

So the two big things that are potential barriers to productivity, one you talk about email, the other you talk about vacation policies. And in my head, those two things are linked to each other because when I go on vacation, I want, like, if I go a day without email, that's a vacation for me, you know, for me, that's

a vacation. So yeah, and it's funny and undernew management, I actually talk about Daimler Company has a policy they call mail on Holiday, which is literally a program that's installed on their email systems where you know, you set the auto responder like you're away at a conference or on vacation, but it then says I'm away of vacation and when I return, every email that was sent while I was on vacation is going to get deleted. So if it's important, you know, I'll be back on March first.

If it's important, send me it then. And I think, I mean, I think that's brilliant because you can actually be on vacation, right, Yeah, that is really brilliant and you don't have to feel like this impending doom upon

your return. Totally, totally but I think it also speaks to a larger realization, which was this tool that is amazing, right, because it's cheap to send messages and it's asynchronous, meaning you can send it now and not have to need to catch their attention to call them on the phone and need them right that second. You can just send it and trust that they'll get back to you later.

We've really kind of abused the tool because it's so cheap to send messages, we send them all the time, and because it's asynchronous, we send it whenever we want. But we never really dealt with that issue of being okay, waiting for a response, And so now we have this world where we feel like we always need to be on It's nine o'clock at night and I sent you an email. How come you didn't reply until eight thirty

the next day? Well because I was asleep, right, you know, and then I was commuting into work, right or I was getting my kids off to school and then commuting into work. So what really what happened? We kept using tool and using this tool and using this tool, and we never had a conversation about whether or not this tool was the right thing for our communication and collaboration needs, and a lot of companies now that I profile on

enter do management, said forget it, we're done right. Some do the mail on holiday thing, but some say, you know, we're done with internal email entirely. We're going to design a better way to communicate electronically. And so a lot of companies are starting to build that. It's usually a custom solution, but then there are other options out there now, project management tools, collaboration tools like Slack that people can use off the shelf. But it's that idea, I mean

revolutionary concept. Right, have a discussion about your communication needs first, then pick a tool. Instead, we picked a tool and we didn't really pick it. It It just was invented and we all picked up and started using it and we never had that conversation about whether or not it was

the right tool to use. Yeah, you know, you mentioned somehow how your book brings together insights from corporate leaders, entrepreneurs, and organizational psychologists, because you say they've all been working to build a new set of tools. That's the way you frame it. Yeah, yeah, well I use that. I mean I go to go back to scientific management. This is actually one of the principles that ironically, maybe we should have kept was Frederick Taylor was famous for this.

He I mean literally there's one story that he was working with a certain factory and he figured out that if you were shoveling coal into a furnace, that a average mail of working age could shovel should shovel twenty one point five pounds of coal per shovel load if any more than that, and they'll burn out for the end of an eight hour shift, and any less than that or not being sort of peak productive. But there

was a problem. No shovel he could find could hold twenty one point five so he designed a shovel specifically for that factory for that usage. Right, Yeah, But how much of the problems that we're in now are because we're using management tools or organizational tools or even sort of life management tools that were designed for a different

era and they're not the right tool. Like that's my fundamental thesis is that even Frederick Taylor wouldn't approve of what we're doing now because work changed and we kept the same tools. Yeah, I mean there's huge analogies to it. Education as well. Oh no, absolutely, absolutely, Yeah, both are in the wrong kind of model of how to get

optimal productivity out of people. Right, both are still in a very much industrial model, which is based on the idea of keeping the system going instead of what are the individual needs of the employees, stakeholders, all of that sort of thing, exactly exactly. Well, yeah, and that breinges the question about burnout because I think that under these conditions are almost like causing, like burnout is going to

be inevitable under these conditions. So you talk a little bit about some things we can do to prevent purnout, So can you tell me a bit about that? So, I mean, one thing that I'm hugely in favor of, not just for burnout reasons, but for as you know, a lot of research on the role of incubation and creative thinking and all that sort of stuff, are sabbaticals,

our vacations longer than a day. You know. Like, on one hand, I totally relished with you when you said if you do a day without email, that's a vacation. But on the other hand, like Scott, that's sad. You need to take a break, right, I need a vacation for really totally totally. And what we find is a lot of organizations and this was this is actually cool insight I was not expecting to find, but I talked

about an under management. The first company to start US sabbaticals the way academics do was McDonald's McDonald's of all places, and then later Intel picked it up. And I think most of us are familiar with like sabbaticals being this perk of tech companies. But it was literally the corporate offices of McDonald's, which is funny because it's the ultimate like industrialized burger chain, right, It's this ultimate industrial work

applied to restaurants. But yet they invented the sabbatical. And what they find is that if for decreasing burnout, for increasing sort of longevity productivity, also getting a lot of insights and also, I mean one of the other things, it's not just about rest when you're on sabbatical, it's about, you know, academic sabbaticals are about doing research, and just professonalbaticals about the same thing, learning new skill sets and

bringing new ideas into the organization. There's a really cool thing there from a nerdy management standpoint that it's also a way to stress test a succession plan. In other words, if you make somebody leave for longer than a week. Then you can actually see who are the people that can help do those tasks. And in some cases companies will even say like, Okay, this manager is leaving, so you're filling their role for the month that they're on sabbatical.

And why did they pick that person because they were next in line. And we get the chance to test that person in the role, see how she does, and then if it's for her, if it's a good fit, then we know who the successor is, and if it's not, we have time to find a new one. I love that. Yeah. Yeah, you talk about how you can revolutionize the hiring process, if I remember correctly. I think Rod Friedman talks about that too in his new book about sabbaticals or about

that about the hiring process. Yeah, so Ron and I both deal with this, and there's there's a lot of research on this actually, going all the way back to Boris Grousberg had a book that made a huge impact in like in the academic circles my mind, rod, et cetera. I don't know how big of an impact it made in other ones, but it was this idea that we hire people based on past performance, right, we hire people

based on whether or not they look like a star. Yeah, potential like potential, Yeah, like I tried to do with Oops.

But what we never consider is when you break performance down, the majority of the variance in individual performance is actually explained by the team, by the company resources, by a lot of other things outside of the person, right, which I mean, honestly, this should come as no surprise to even if you're not an organizational psychologist, because we know we all influence each other, right, But yet we look at people in a vacuum when we're making these hiring decisions,

and most of the time we only have one or two people inside the company interview that person, and then we say, yeah, you were a star at your old company, come over, and the performance almost always declines because we never gave consideration to fit. And what I talk about an underde management is this idea that if team fit is important, then why is the team not making the

hiring decision. And there are a lot of companies, my favorite, which is Whole Foods because they have this really interesting model, but there are a lot of companies that hire as a team. In the case the Whole Food's, actually the manager still makes the hiring decision, but the team gets a vote after thirty days, so you can't fake it, right.

You might have been able to fake it with the manager, but then you get on the team and if you're not a good fit for the team, they can actually say no, thanks, we hold ourselves to a higher standard. You're not making it up. And John Macki, the CEO of Whole Foods even said, like a team doesn't gel together until they've kicked somebody off, until they've made a definitive statement of this is the less that we hold

ourselves accountable to. And he didn't make it, so we're letting him loose, or, as I like to say, we're inviting him to be successful elsewhere. Yeah, that sounds like some reality TV show episodes I've seen about totally kicking them off the island. Yeah, I mean I hate that. I mean that might be the one thing from Survivor that was a good idea, exactly exactly. We're on the same page here, on the same page. Yeah, cool, really cool.

And then so what about like open offices or like, you know, the design of the office space itself are very hot right now, right open offices are very hot. Oh, totally, and I'm sure you're familiar with. I mean, there's a lot of research on collaboration and the power of serendipity, and then there's actually an equal amount of research on how it sort of drives you nuts, right, how it

can drive you nuts. I mean, even like I loved that Susan Kin started working with Steelcase and sort of speaking up for the people that aren't energized by an open office plan. But the truth is that like all of us, there are some costs to an open office plan. So there is some research around collaboration. I think we speak about it more than there's actual research there and the benefits of it from that standpoint, but there's a lot of research on how it increases distraction, it increases

senses of stress. One of my favorite ones is that in open office floor plans, people call in sick more often, which either means they're legitimately sick or they're sick of their office, right. In either case, they call in and And what I think is interesting is that it really to me, the solution demonstrates and this is where I

figured you'd like this chapter. It demonstrates the complexities of individual differences, right because the solution is to create a palette of places where people have this freedom to move around into different workspaces, private ones, collaborative ones, really open ones, really close ones ones but they're only two or three people and really don't have any sort of one place, but have the freedom to go from a variety of places, because then they can pick based on their individual needs,

based on the needs of the work at hand, et cetera. And one thing I found was really interesting is that one of the biggest predictors on whether or not an office space will have a positive impact on productivity was perceived control. In other words, how much control do you think you have over where you work? And if you have a lot of it, you're more likely to be motivated and be productive. And I think that, again, it

speaks that individual differences thing. You know yourself, you know the environment that you work best in, so giving people the freedom to choose that environment can have a huge benefit. Yeah. I really like that, And it also speaks to just a fundamental human need for autonomy totally, totally, yeah, regardless of your individual differences. Yeah, very cool, very cool, so cool. We've already covered a lot of ground. It's funny because I don't want to give it all away, you know.

So let's go another five ten minutes here and we'll pick a couple more things that really have stood out to me. Okay, I really like this one. You should help your employees quit? What right? This one's actually fascinating.

This was one of the first sort of crazy sounding company policies that I picked up on, and in fact, like when I was writing a proposal for the book I think I called I think the working title was like the Worst Best Practices or something like that, because it was this idea of like the best practices that just sound absolutely ridiculous, right, and paying people to quit was one of the first ones. I mean, I remember, I don't remember where I heard it. I think it

was on the Freakonomics podcast. They talked about how Zappos gives everybody the offer right after about three or four weeks working at Zappos, after you get through primary training, they make you the offer. And it started out as a small offer, but now it's somewhere like four thousand dollars to quit. You've gone in and you've you've started down the path to work at Zappos. But if you feel like it's not a fit, we'll make it easier for you to say goodbye. Fascinating, which well, and I

think it's fascinating actually for two reasons. One that the one that I didn't see getting discussed anywhere, right. The first is this idea of sunk costs, right, which we're all sort of familiar with. You started down a course of action, and you're going to continue down it because you're still down there, even if it's not a good idea. You've invested so much you've just got to keep going. And the money is sort of a way of making it easier for you to self select out even if

you feel the pull of sunk costs. But the other is actually confirmation bias. I mean, if I paid you four thousand dollars to quit pen, right, you're not going to take the money. But then every day afterwards, when you think of that offer, you're going to think this must be a great place to work. Because I didn't take the money, right, Maybe the money wasn't enough. You get my points there. Yeah, whether we're doing it consciously or not, we now need to confirm the wisdom of

our decision to turn down the money. And so we look for reasons why it's a great place to work. And so the deal is actually it makes even more sense thing because you don't have to pay the money and you get the benefit. And that's why I mean Zappo's literally the sort of the dirty secret of the offer is that only about five to eight percent of people ever take that. That's why they can afford to

do it. I was gonna say, yeah, yeah, because it's not like everybody's taking it, right, So it's a fascinating deal because it gets all of that benefit with very little money, and so lots of other companies have started emulating it. When Amazon dot Com actually bought Zappos dot Com, the offer sort of migrated over, but Amazon changed it

a little bit. They do it every year, so in certain divisions, it's not it's not doesn't apply to everybody, but in certain divisions at the one year mark when you do your when you do your annual review, which is funny, given our prior conversation, you also kind of give Amazon an annual review because they give you an offer to quit, and it starts small, but over time it can get up to five thousand dollars if you

choose to walk away. That's really cool. Yeah. I mean that's a great example of something that I just totally didn't know anything of the research on that topic. That's just very counterto So here's another one. You know, everyone keeps saying put your customers first, right, it's become like a tagline. But you're saying you should put your customer second. Yeah, yeah, well the heck man totally. Yes, absolutely, the customer is

always wrong. Okay, maybe not always wrong, but you know, we've had this mentality in business primarily, we've had this mentality that the customer is always right. And that may be true, and customer satisfaction is really important, especially for earning repeat business. But it turns out that the way to ensure that you can get consistent customer satisfaction is to not focus on it. It's a result the system

that you focus on is employee satisfaction. If you take care of your people, if you put your employees first, they'll put your customers first. It comes from what The cool phrase that I learned from this in looking at the story of NEYEIR and HLC Technologies was the value zone. In other words, a company's value zone are the people that interact with the customer. When you think of a company, who do you think of you know, as a customer of that company, who do you think of it? It's

that person that's in the value zone. And so we need to make sure that those people know that we have their back, that we're not going to throw them under the bus, that we're going to take care of them, we're going to develop mantle opportunities, that they're not going to be starving and hungry, right, but that in every way we're going to put them first, not just in it's not just a money and a benefits thing, but

it's also an accountability thing. They need to feel that we are accountable to them, not they accountable to people higher up in the ORG chart. And if they have all of those things, they're more likely to put the customer first. And I think this is interesting because I was doing a podcast interview a few days ago with an education podcast and I never really thought about it, but how many of us in education now, especially in

higher education, use this terrible model that students are our customers. Right, Yeah, and okay, I don't really like that model. But even if it's true, does that mean that we put them first? No? It means, what is the value zone of a classroom or the value zone of an education system is a classroom, and so do we put that first or do we keep the system going first, whether that's higher ED or

even K through twelve. We need to make sure that the value zone of the organization truly is that classroom, so that they can sort of put students first and put stakeholders first. So I wasn't expecting it till they brought it up, Like it's weird. I'm sure you'd have this too, when you write a book and then people read it and they see stuff that's not there, but you're like, that's brilliant. You should have told me this a year ago when I was writing it. Oh yeah,

I go with that all the time. Yeah. I could go on to stories about that, but I'll keep this interview about you. This is a couple of last questions. So why are companies so resistant to changing these practices? So one of the things, like, I mean, I think change in general people are resistant to. You know, we don't really most often we don't really make a definitive change until the cost of not changing outweigh the cost of changing, right, We have that sort of status quo bias.

But truthfully, I found the people who are resistant to a lot of the ideas in this book say the exact same thing. They say, well, what we're doing now is working, and what we're doing now is working. It is, And it was that's the first thing I sort of want to point out. I was like, it is, Okay, that's interesting. You can't just challenge people a little bar for working. That's actually exactly my point. The example I

use is the internal combustion engine. Right. So I was a terrible student of physics and undergrad but I remembered one thing, which was that the internal combustion engine is only like it maxes out at about thirty percent efficiency. In other words, like you put gasoline into it, and the energy that's stored in that gasoline, only about thirty percent of it gets actually put towards forward motion of the automobile. The rest is lost to heat and friction

and other things in the system. So, sure, it's working, but it's only working if you're willing to accept thirty percent efficiency. Right, and organizations are actually the same thing. If we've moved from industrial brute force labor market to a knowledge work mental energy market. Then the best measurement of performances is or one of the best predictors of

performance is engagement. Right, oh yeah, and engagement is caps out around twenty percent right in the United States, where a little bit better, it's a thirty percent, which is exactly where the internal combustion engine is weird. So yeah, it's working, but exactly what you said, only if you

have a really low bar of working. And I see that there are a lot of companies, especially the companies that are really dependent on exclusive skill sets, exclusive knowledge, and that sort of war for talent is the word we use a lot of times in the business world. Those companies made the change first because the cost of not changing meant that the people that they needed, who had the mental ability that they needed, the knowledge, skills

and abilities they needed, departed. So they made the change first in order to get that sort of talent. But that's basically how it's going to work. As soon as you start to see too many of that talent leave the field in order to get into something that has a higher engagement rate, you're not going to change. But hopefully, I mean, the visionary leaders are the ones that saw this ahead of time. And decided to start making those

changes to totally abuse the car analogy. The visionaries are the people like Elon Musk who go, hey, you know what, in order to make this work, we need to do away with that whole internal combustion engine thing entirely, and then we can make a more energy efficient car. Right, And we're still tweaking, and we're still there, and it's it's really hard to again, to abuse the analogy. It's really hard to see the jump when the alternative is not as effective as the status quo. But if you

wait until after it's more effective, it's too late. And I think that's why most companies are resistant to change. And it's a shame because it'll be too late. The talent will have already left the door. Yeh know, it's a shame. And you know, one good way to keep the talent is to not just have something that works, but have something where they're flourishing. Yeah, you know, like you can be in a relationship and you say, yeah, there's ship's working, but that no one wants to be

in a relationship that's just working. You know, you want to be a relationship that's flourishing. That's where both people are like you know, ecstatic to be around it, are passionate around each other. In the industrial era, the unit of design, in other words, like the thing that it all went back to the building block of an organizational design was the product. What do we need in order

to make this product? Okay, we'll design the whole system around that, and that's where we got things like the assembly line, and they were great inventions. But if we as a company are relying on mental energy, the knowledge skills and abilities of our employees to come up with our products, in other words, it's not a brute force mental or excuse me, it's not a brute force labor thing, it's a mental thing. Then we need to ask those questions.

And the unit of design switches from the product to the person because the product comes from between that person's ears, and so we need to really focus on design from that aspect, and how do we make how do we design a system where those people flourish so that our products will flourish exactly? Yeah and yeah, Like my friend colleague Emasapala has a recent book, Happiness Track, about how if we kind of start with the happiness part of

the equation, then productivity follows from that. Yeah, no, absolutely, or I mean I think you had Tom Wrath on the show. I had them on my podcast and I asked him, I ask everybody, what do you believe that most people don't, And he said, I believe that people should leave work more energized than when they showed up.

And I wish I would have heard that while I was still writing my book, because I totally agree that unless we ask ourselves the organizational design questions like how do we create an environment where people get energy from doing the work instead of the work drains their energy. Unless we can ask questions and design a system like that, we're going to lose out. Completely agree. So what's the next big change that you see? That's an interesting question.

I mean, so Underney Management's about every change that I saw. No, I honestly wish I knew. I think we're not here yet. Like I look at this book as I don't want to use the term prophecy, but I mean I look at this book as here's where I'm seeing the visionary companies going, the most innovative companies going, and the next thirty to forty years is going to be a game

of catchup and the challenges. I would love to make the disastrous assumption that I know where we as a society and we as humans and our relationships with technology and all of these sort of things are fifty years from now. But I'm not looking that far out. I mean, the truth is, honestly, I'm looking about fifteen years out. I have two boys. I have a four year old and a two year old, and so they're going to hit the workplace anywhere from fifteen to twenty years from now.

They're going to have that sort of first real job, and so my goal is to make that work better by the time they hit it. Right, So we're thirty percent engagement right now. I'd love to get it to at least fifty so that my kids have like a coin flip chance of finding a workplace that gives them energy. And if we can do that, man like, I'm happy,

I'm good. I'll call it at that. Right. So I'm looking fifteen to twenty years out, and I'm working so that my boys can work at an organization that's better than when I found it, right, if that's the way it put it. Yeah, I mean, this book itself is revolutionary, and the ideas and there are revolutionary enough that we already we don't need to be thinking about the next thing. If we could do these things right this scale, we'll take care of the rest on once we'll get here.

Totally gotcha. Well, thank you, David. I really appreciate this chat today. Oh, thank you so much for having me. Thanks for listening to the Psychology Podcast with doctor Scott Barry Kaufman. I hope you found this episode just to start provoking and interesting as I did. If you'd like to read the show notes for this episode or here last episodes, you can go to the Psychology Podcast dot com. H