Presentation date: November 2, 2004
The following is a summary of the virtual seminar covering:
- The definition, levels, and cycles of confidence.
- How leaders prevent losing streaks and instill organizational confidence.
- The keys to building an organizational culture and foundation of confidence.
Confidence in an organization is more than just a spirit of "We can do it." It is the foundation, systems, and culture involving positive behaviors such as open communication, self-scrutiny, respect, teamwork, accountability, collaboration, and initiative that result in winning. In turn, winning breeds greater confidence and raises the company to an even higher level.
Building organizational confidence, especially in turnaround situations where organizations have been on losing streaks, is the work of leaders. Leaders must instill confidence by combining short-term "bold strokes" to quickly mobilize the organization, with initiating a "long march" that changes systems and habits. Leaders must start by building credibility and confidence in the organization through small wins. This can occur by fixing the work environment that people see every day and investing in people even prior to the achievement of results.
Using examples from sports and business, and responding to numerous listener questions, Professor Kanter discussed her research and conclusions from her most recent book, Confidence: How Winning Streaks and Losing Streaks Begin and End, regarding the importance of confidence as a driver of business and organizational success.
1. Confidence, or lack of it, is not just a characteristic of individuals, but applies to organizations and their external stakeholders. Defining confidence is simple: positive expectations for success. But, achieving and maintaining confidence is not as simple. Confidence falls at the midpoint between despair, which results in feelings of hopelessness and helplessness, and arrogance, which triggers complacency and a sense of false entitlement. Confidence produces peak performance: a willingness to invest, commit, work hard, persist and persevere, making confidence a highly desirable trait.
There are four levels of confidence, with each level building on the prior one:
- Self-confidence: This is what most people associate with confidence. This is a personal attitude of high aspirations and expectations; it is the belief that "I can do it."
- Team confidence: This is having confidence in each other, counting on each other, giving and receiving respect and support, and giving and taking responsibility.
- System confidence: This entails organizations having confidence in the organizational structures and routines for accountability, collaboration, and initiative.
- External confidence: This is confidence that external stakeholders, based on their positive expectations produced by the previous three levels of confidence, will invest to provide resources (money, time, energy, etc.).
2. Confidence and winning is a cyclical process that feeds off of itself, as does lack of confidence and losing. These cycles involve both internal and external confidence. Internally, a good mood and positive work environment lead to positive behaviors such as open communication, self-scrutiny to continuously improve, respect, and cooperation. Positive behaviors lead to good problem-solving based on information and facts, teamwork and speed, and creativity and courage; in turn, good problem-solving leads to disciplines and practices that take organizations to a higher level of accountability, collaboration and initiative. Each of these factors lead to winning, and winning reinforces the actions and leads to greater confidence.
This holds for external confidence as well. Winning yields positive attention from the press and stockholders, which further increases the resources available to the company—this includes attracting the best people who like to work for winners. Winners get better deals and are left alone by others who don't want to disrupt the winning.
Losing is the exact opposite. The culture of losing is one of bad organizational mood; low energy, and self-doubt; dysfunctional behaviors with blame and infighting; lack of information and less teamwork that results in poor problem-solving; and disciplines and practices that are eroded. These losing behaviors in turn cause the organization to lose even more, which also translates into a decline in external confidence. Negative attention and bad press lead to fewer and less loyal fans and to declining external resources; losing teams get less favorable deals; and the effects of losing cause disruptions and distractions.
3. Maintaining a winning streak, and preventing a losing streak, does not entail having no troubles, but overcoming them. The secret of winning streaks is obvious—not to lose; avoiding losing streaks is just as obvious—not to lose twice in a row. Streaks are about confidence and momentum. No organization or situation is perfect; troubles are inevitable and include natural disasters, strategic threats, fumbles ("dropping the ball") and fatigue. The key to winning is recognizing that troubles will occur, and finding a way to win even when experiencing problems and making mistakes. This can occur by anticipating the troubles that are likely to occur, and by practicing harder and working harder. (The example was shared of the University of Connecticut's women's basketball team, which has its starters practice not against five other players, but against eight, to simulate the most difficult circumstances imaginable, and therefore making the actual game easier.)
Winning streaks end when organizations move away from and neglect the cornerstones and basics that led to winning. This includes denial in seeing apparent problems, lack of open communications, and panicking, which results in anxiety, abandoning the plan, and throwing the organization into chaos.
4. Building organizational confidence, and turning losing streaks into winning streaks, is the work of leaders. Great leaders build winning streaks, prevent losing streaks, and in turnaround situations, they focus on changing the momentum. Turnarounds are always worse than the new leader thinks because the organization is depressed and skeptical because previously promised changes have not come to fruition. And there are problems under the surface that haven't even been discussed.
Leaders have to combine "bold strokes" that have an immediate impact with initiation of a "long march." Bold strokes coming from the top of an organization can result in fast and specific changes, but the changes are likely to be short-term, and the organization's systems and habits will remain unchanged. The long march, which will be slower, fuzzier, and where the leader has less control, creates sustained long-term momentum by changing the systems and habits to build organizational confidence.
The work of leaders is to build confidence in others, even prior to achieving positive results; the confidence that is created will actually lead to the intended positive results. Two actions that leaders can take which have a positive symbolic value include:
- Fixing what people see every day. This is a small and simple step that creates a good mood and positive behaviors. It can include cleaning up the work environment and solving basic problems that workers find annoying. Also, it is a small win that builds the credibility of the leader. Confidence and winning streaks are built through small wins.
- Investing in people to show them that they are worth it. As opposed to holding out a reward for achievement of results, a strong sign can be an investment in people before results are achieved. By showing that the leader thinks that the organization merits the investment, it boosts organizational confidence. Just the slightest glimmers of confidence in losing organizations can get the ball rolling.
5. Leaders create a culture of accountability, collaboration, and inspiration.
- Assure accountability: Make information transparent and accessible, by fostering straight talk and communicating the facts, which builds trust and prevents denial.
- Cultivate collaboration: Create conversations across the organization; talking is required to solve problems and to reinforce respect and inclusion. Define goals that define success and that signal how each person contributes to achieving the overall goals.
- Inspire initiative: Encourage new ideas and treat people with respect as experts in their work. Encourage small wins that make a difference and build momentum.
The example was shared of Continental Airlines. Prior to 1994, Continental had been on a ten-year losing streak, having been through ten CEOs during this time. The culture was dysfunctional with secrecy and infighting. When Gordon Bethune became CEO, he set a goal of becoming one of the top four airline carriers based on on-time performance, and offered to share equally with all employees 50 percent of the cost savings achieved by better service. Employees were motivated to achieve this goal and showed initiative in taking actions that helped the company achieve it. Results were communicated through regular voicemail messages sent to all employees.
The result: Continental changed its culture, energized employees who felt, "We are all in this together," and achieved its goal within one month. The company then raised the bar on its goals year after year. During a difficult time for airlines, Continental consistently outperformed the industry. The company's culture was on display during the power grid failure of September 2003, when two of Continental's three hubs went dark and other airlines grounded their fleets. Continental's employees, displaying initiative and confidence, assured safety and kept flying, even adding flights for stranded passengers from other airlines. During the two-day blackout, Continental generated an extra $4 million, while all of the other airlines lost money.
Other Important Points
- Optimists versus pessimists. Winners tend to be optimists who seek out information, even if negative. Pessimists are often in denial and don't want to know the truth so they don't seek information.
- Practice. For athletes to practice is clear, but how do business people practice? By refining the technical skills that they use in their profession, and by tackling difficult problems that stretch them.
- Honesty. Companies need honest assessments of reality. These can be gained through anonymous surveys.
- Higher standards. For organizations on neither winning or losing streaks, but that win some/lose some, one secret is to create higher standards for the organization seeking to raise performance levels.
- Tough is OK. Fear is not a great way to build confidence, but being tough, setting high standards, and not accepting excuses is effective at driving people and organizations to higher performance.
Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School, specializing in strategy, innovation, and leadership for change. She advises major corporations and governments worldwide, and is the author or co-author of sixteen books, including her newest book, Confidence: How Winning Streaks and Losing Streaks Begin and End (September 2004) and Evolve!: Succeeding in the Digital Culture of Tomorrow. Other award-winning bestsellers include Men & Women of the Corporation, The Change Masters, When Giants Learn to Dance, and World Class: Thriving Locally in the Global Economy, and Rosabeth Moss Kanter on the Frontiers of Management. In 2001 she received the Academy of Management's Distinguished Career Award, its highest award for scholarly contributions, for her impact on management thought, and in 2002 received the World Teleport Association's Intelligent Community Visionary of the Year Award.
Walter Kiechel is editor-at-large for the Harvard Business School Publishing Company. Previously, he was the company's editorial director and the senior vice president in charge of its publishing division. From early 1997 until his appointment to his current role in 1998, he served as publisher of Harvard Business Review. With a long history of writing and editing on corporate strategy, the new economy, and trends in the workplace, he has been an advisor to Bain & Company and to other companies and individuals. Kiechel spent most of his early career at Fortune. As assistant managing editor (1988), executive editor (1992), and finally managing editor, he created a strategy for the magazine as a cutting-edge journal of "ideas, strategies, and solutions for decision makers." He has done daily broadcasts on "The New Economy" for the CBS Radio Network and hosted the Fortune Week television program on CNBC.