Tim Harford’s ‘Adapt – Why Success Always Starts With Failure’ – How are businesses putting it into practice?

I just finished reading Tim Harford’s latest book: ‘Adapt – Why Success Always Starts With Failure’. Harford is a smart man, as befits a leader writer for the Financial Times and a successful author of popular economics books. He has a particular gift for putting us in our comfort zone by first describing situations we are familiar with before revealing the economic forces at play underneath. He does all this in his trademark breezy and insightful style.

Probably the key issue in the book is: what is the best way to solve complex problems? The narrative flows around the solution to this question. Real-life challenges are explained, a proposed approach is offered (‘Adapt’) and plenty of examples are given to support Harford’s proposal.

As a starting point, Harford argues strongly against a culture of reliance on experts and centralised management in the face of complex problems. He cites research which demonstrates that the power of experts to make accurate predictions is poor. Harford uses both the USSR and Donald Rumsfeld’s stewardship of the war in Iraq as examples of spectacular failures of centralised control. Both were guided by top-down, all-knowing ideologies and both were intolerant of dissent. Consequently, both were incapable of learning what was happening on the ground and were blind to evidence that what they were doing was not working.

For truly complex problems Harford argues that a ‘trial-and-error’ approach to problem solving works best. He draws on evidence from biology (evolution), business and military warfare to support his case and outlines the three steps to follow, given here:

1. first, seek out new ideas and try new things (‘fail often’);
2. when trying out new things, do so on a survivable scale;
3. seek out feedback and learn from your mistakes

In supporting this approach, Harford stresses the value of having a  ’worms-eye’ view of the situation, whereby those solving the problems get to see them up close. What implications does this have for business? It means that we need to encourage feedback from the coal-face of the operation. For example, we should consider: What is the true nature of the problem the customer has? What does the customer really value? We need, therefore, to harness the wisdom and experience of the employees who are working in the ‘value zone’ of the company. This is reminiscent of the Employees First Customers Second approach taken by Vineet Nayar and HCL Tech (http://blog.careergro.com/2012/03/14/the-employees-first-customers-second-phenomenon/) where Nayar is adamant that it is impossible for him, even as CEO, to know all the answers. Consequently, Nayar made conscious efforts to empower HCL Tech employees to take the initiative in and responsibility for solving the business’ problems.

In ‘Adapt’, Harford provides examples of companies which take a decentralised approach to the successful operation of their businesses. One is the UK high-street repair-service retailer, Timpson, whose business model is founded on a culture of transparency and on staff being empowered to solve customers’ problems as they arise. Timpson has gone so far as to remove EPOS systems from his shops because he wants the local outlets rather than head office to run the business.  The owner, John Timpson calls his approach ‘Upside Down Management’ and has, literally, written the book on the subject http://www.amazon.co.uk/dp/B003NX730G/ref=rdr_kindle_ext_tmb

A second example is W L Gore, which Fast Company magazine has labelled ‘the world’s most innovative company’. From the outset, W L Gore believed that engaging his employees was critical to his goal of Gore becoming an innovative organisation. To this day, Gore associates set their own career goals, self-commit to the work they choose to do and feel a deep association with the goals of the organisation. Gore is a perennial on the ‘great companies to work for’ lists. See an excellent interview with Gore CEO Terri Kelly by Gary Hamel here: http://blogs.wsj.com/management/2010/03/18/wl-gore-lessons-from-a-management-revolutionary/

What Timpson, W L Gore, HCL Tech and Whole Foods (also featured by Harford) each do, in addition to giving employees freedom and responsibility in the business, is to  make them accountable to each other. Each organisation places a lot of weight on peer-to-peer feedback. With bottom-up power comes peer accountability, it seems.

Thanks to Tim Harford for yet another good read. You can find out more details about him, his books and his other activities at http://timharford.com/

Gerard

Twitter: @Gerard_cpd