THE ECONOMIST: Dumb maxims lead to dumb outcomes — how management mantras harm company culture

Mantras can be very useful. “Garbage in, garbage out” is an excellent way to think about data, hiring and much else.

“If you have a dumb incentive system, you get dumb outcomes” was Charlie Munger’s most important aphorism. As a way of embedding a culture or galvanising employees to think in specific ways, mantras can be powerful tools. But, partly for that reason, they should also be used with care.

Some mantras are obviously false. “The customer is always right” is one such example. Those signs warning that violence or abuse of staff is not tolerated are pretty big clues that customers can be problematic. But even those who don’t beat you up can cause trouble.

As Clayton Christensen’s thinking on disruptive innovation laid out decades ago, loyal buyers tend to value incremental changes to products that already suit their needs. That leads established firms to overlook new ideas that do not appeal to their current users.

Once a saying sticks, however, it can be hard to undo. Some have tried alternatives to “The customer is always right”. “The customer deserves to be heard” sounds more like a set of Miranda rights than a promise of great service.

“The customer is always respected” is better, but few firms are brave enough to tell their customers that they have thought about it and concluded the original saying was nonsense.

Other mantras are true in unexpected ways. “It’s who you know, not what you know” is a piece of career-related conventional wisdom. It is normally couched as advice to get out there and network. And the value of personal connections may well go up if AI slop starts to overwhelm standard recruitment processes.

But a recent paper by Lei Liu of the University of Exeter and her co-authors adds an interesting wrinkle. Their study looks at the career trajectories of head coaches in America’s National Basketball Association, and finds that being well-connected is double-edged.

Those who had got experience under a star coach were less likely than others to be fired if they underperformed, but more likely than others to be fired if they exceeded expectations. In their case, the reflected glory of association with a star seemed to mean that both disappointments and achievements were discounted.

Most mantras depend on context. “Ask forgiveness, not permission” is an obvious example. In the right circumstances, this phrase encourages rapid decision-making and bold thinking. In the wrong circumstances, it is associated with recklessness and public apologies.

“Don’t bring me problems, bring me solutions” is another in this category. You can see why bosses might like this aphorism. Everyone is busy. Whining about things is unconstructive. Encouraging employees to come up with answers is a way of giving them agency. But there are times when you really do want to know about problems, whether a solution comes attached or not.

That is the message of a recent paper by Alexander Romney and Michael Ulrich, both of Utah State University, and Daniel Newton of the University of Iowa. The researchers looked at suggestions made by employees of a railway company in America over a four-year period; the business had a formal process for logging these suggestions and tracking what happened as a result of them.

The authors categorised over 600 of the messages into one of two buckets: new ideas to improve the status quo (such as ways to speed up boarding) and concerns about things that might cause harm to the business (such as not having a policy for dealing with lost children).

They found that managers at the company responded more urgently to potentially harm-causing concerns than to suggestions for improvements. High-speed transport is an industry where people tend to be especially conscious of risks.

Not every company is so vigilant. But almost every business has its own set of break-glass-in-emergency problems. Speaking up about them might not be easy, but should be encouraged. “If the building’s on fire, even if you don’t have a solution, you should still say something,” says Mr Newton.

Mantras have to be memorable to catch on. “Bring me problems when those problems are sufficiently urgent. Otherwise bring me solutions” is more accurate but a bit less catchy.

“Ask for forgiveness, not permission, unless you’re crossing an obvious red line” has the same drawback.

It is wiser to drum home another mantra: “There is an exception to every rule.”