Albert Dunlap Style Likability: Those Who Seek Flattery Get Enemies

[The following post is re-blogged from Organizational Musings. Click here to view the original article. It is a commentary based on a recently published article in Administrative Science Quarterly entitled “Those Closest Wield the Sharpest Knife: How Ingratiation Leads to Resentment and Social Undermining of the CEO,” co-authored by Gareth D. Keeves, James D. Westphal, and Michael L. McDonald. From Organizational Musings:] 

I will start this post with an old story. CEO of Sunbeam Corp., Albert Dunlap, known as an expert in turning around troubled firms and selling them for a profit, was sued by the SEC in 2001 for accounting fraud. He was eventually barred from serving as an officer or director in any company, plus ordered to pay investors defrauded money in a class-action lawsuit.  Albert Dunlap was clearly someone in need of flattery, not just money, as he had the classical flattery-sickness symptom of a book written to celebrate his successes (see also his picture!). How he managed things internally in each firm he led is disputed, but much was said about his intimidation of other managers, who probably would conclude that a lot of flattery and ingratiation might help their career. Of course, managers still did better than employees, because his signature move in turning firms around was mass layoffs.

An interesting detail of his downfall was that managers around him were quick to release information that helped the investigation, which is distinct from the many firms with management teams that do all they can to deter and obstruct investigators. Is there a systematic reason for this difference? Possibly. A recent article in Administrative Science Quarterly by Gareth Keeves, James Westphal, and Michael McDonald looks at what happens when managers ingratiate their CEO through flattery and other tools. Their findings are interesting. First, managers who flatter lose their liking of the CEO. Somehow when people artificially put others on a pedestal they also start looking down on them.

Second, managers who flatter may go on to undermine the CEO. The light-handed version of this is to undermine the CEO’s messages to journalists, as this research showed. The heavy-handed version is what happened to Albert Dunlap. Among other events, his comptroller reported that he had been pushing for accounting practices that crossed the legal boundary, and sales people were quick to report “channel stuffing.” Channel stuffing is to sell too many goods and selling them too early, which is not illegal in itself (the sales channel can return unsold goods, so it is safe for them), but it is illegal when the sales are accounted as if they were final.  Those were practices that the SEC (and some investors) suspected, and that meant that what looked like a turnaround in sales and profits was actually a fraudulent scheme.

Seeking flattery is never thought of as a good thing. What we now know is that it also triggers undermining, and for those who have real weaknesses – like a CEO engaged in fraud – that undermining can be very consequential.

Communities as Nested Servicescapes

jsrrr.JPG[We’re pleased to welcome Xiaojing Sheng from the University of Texas at Rio Grande. Sheng co-authored a recently published article in the Journal of Service Research  entitled “Communities as Nested Servicescapes” with Penny Simpson and Judy Siguaw. From Sheng:]

  • What inspired you to be interested in this topic?

From groups of four to sixteen sipping margaritas in local restaurants to dancing at a beach or Mexican fiesta, retired winter migrants are a ubiquitous presence in the Rio Grande Valley of South Texas each winter. These migrating consumers repeatedly come to the area in large numbers each winter to enjoy the warm tropical weather, to participate in the many available activities, and to enjoy each other in their highly social living environment of mobile homes and recreational vehicle communities. These senior citizens also become an inseparable part of the region by routinely going to restaurants, events, shows and stores where they seem to exude a comradery and enjoyment of life not seen by typical residents of any community. For these migrants, winter life in the Valley seems to be a fun-filled, months-long vacation. Through casual observation of the lifestyle of these hundreds of thousands of active retirees, we were driven to understand their experiences as they become immersed in the broader servicescape of the Valley and in the nested servicescapes of their mobile home/recreational vehicle communities in which they reside for extended periods of time.

  • Were there findings that were surprising to you?

The finding that servicescape engagement weakened the positive effect of perceived servicescape satisfaction on loyalty intention is unexpected and surprising. This is probably because high levels of activity engagement become all-consuming, making perceived servicescape satisfaction itself less important in loyalty intention. For example, consumers may be willing to overlook a rundown beach villa if the beach activities are exceptional. On the other hand, lower levels of engagement strengthened the impact of perceived servicescape satisfaction on loyalty intentions, conceivably because consumer attention is less distracted by activity involvement, and therefore, more focused on servicescape factors.

  • How do you see this study influencing future research and/or practice?

An interesting finding from our study is that, when consumers interact with two servicescapes of which one is nested within another, their experiences are shaped by the effects of the individual servicescape, the compounding effects of both servicescapes, and by the transference effects between the two servicescapes. Consequently, marketers need to take a holistic approach to managing servicescapes at all levels to create an overall positive consumer experience. We hope that our research serves as a catalyst for future studies that examine effects of nested servicescapes. Moreover, we hope our work encourages other researchers to investigate less conventional servicescapes, such as regions, towns, and neighborhoods, because there is so much more to be learned about how the places in which we live, work, and play affect and transform our lives.

Don’t forget to sign up for email alerts through JSR’s homepage so you never miss a newly published article.

How to turn a Cinderella product into a market queen

[The following post is re-blogged from the London School of Economics and Political Science Business Review. Click here to view the article from LSE. It is based on a paper recently published in Administrative Science Quarterly titled “How Cinderella Became a Queen: Theorizing Radical Status Change.“From LSE:]

The case of Italian grappa shows that more than marketing is needed to raise a product’s market status, write Giuseppe Delmestri and Royston Greenwood

Quality, we know, is often necessary, but it’s far from a sufficient condition for market status. Better technologies lose format wars — as Betamax did against the inferior VHS videotape in the 1980s, and as artisanal bakeries did to industrial mass producers.

Losing status, however, is much easier than gaining it. Ask law firms, accounting firms, even universities how they might break into the elite status group within their industry, and there is typically no response. Turning low into high status is profoundly difficult — irrespective of quality, and especially if the starting point is from the base of the market status pyramid.

In the case we discuss below — Italian grappa — several attempts by entrepreneurs to improve the status of grappa and of their artisanal production methods resulted in failures and even bankruptcy — even though the quality of the product was superb. But Italian grappa did achieve the dramatic status move from the bottom to the top of the status ladder. It rose from a plebeian underdog of whisky and cognac to become a lifestyle product served at eminent social gatherings and offered by starred restaurants. How did this happen?

Until the 1970s, Italian grappa was considered a cheap, almost stigmatized beverage consumed at the margin of society and as being only appropriate for workers, peasants and alpine soldiers. It was associated with stigmatized artisanal and even clandestine production in hidden shacks. At the time, artisanal family firms were considered primitive — paradoxical in a country that would later give rise to the Slow Food Movement that praised such organizations. It is intriguing, therefore, that it was a young lady, Giannola Nonino — the wife of Benito, an exceptional distiller but marginal entrepreneur in the North Italian Friulian province — who turned the savoury spirit from a social no go to an hedonic must of Italian after-dinner tasting.

Giannola and her family, thanks to their Grappa di Picolit, created a beachhead into the expensive high status category occupied by foreign spirits; other artisanal producers followed and, eventually, the whole meaning of grappa in Italian society turned on its head. Grappa became “lo spirito nazionale,” at equal level with whisky and cognac (see figure below).

Figure 1. Category positions in the superordinate class of spirits in the Italian marketfigure-1-grappa-nonino

What can we learn from this story on how to elevate the status of a whole market category? We discovered that turning a weak low status position into a strong high status one is possible thanks to theorization by allusion — in other words, by performing a sort of cultural judo, never attacking directly the powerful market incumbents while relying on a perfect understanding of the cultural context of the market and of the own distinctive strengths.

Fundamentally, the strategy of allusion is based on three interconnected tactics:

  1. Detach yourself from the category in which customers put you. You should first confuse your customers and stakeholder. Giannola designed the bottle and presented herself in a way that contradicted restaurateurs’ and critics’ expectations on what grappa is and should be. When looking at the design and shape of the tiny minimalist bottle (see picture below) they wondered: ‘Is this grappa?’ When confronted with a young passionate lady dressed in Armani fashion, sommelier in restaurants were puzzled, but listened. Moreover, although the Noninos initially gave their precious bottles as gifts to prominent Italians, afterwards the price of Grappa di Picolit was set at an ‘astronomical’ level — again, as a way of distancing themselves from the low status traditional ‘grappa’ category. Finally they avoided any direct cooperation with grappa producers. They sought to avoid any risk of stigma by association. In the first stage of status elevation you should avoid bad company. All these tactics detached the product form the grappa category. But, puzzling your customers and stakeholders is not enough—you need a second tactic…small-grappa-nonino

    1. Emulate a proximate high status category. In other words, in addition to confusing potential clients and consumers you should provide a key by which to answer the confusion. The Noninos, supported by the anarchist maverick food and wine critic Luigi Veronelli, did so by adopting the vocabulary and practices of high status French wine (single grape, appellation of origin, cru). They also networked and convinced distinguished wine sales agent to distribute their grappa. And they directly addressed sommeliers in reputed restaurants. Doing so gave these stakeholders a language for talking about grappa in distinguished terms. Importantly, emulation is not the same as directly competing with high status members of the category in which you are located – the Noninos did not try and emulate and thus directly challenge premium cognac nor whisky.
    2. Engage in storytelling that connects tradition and cultural innovation. All of the previous tactics and efforts will be useless if you fail to engage in appropriate storytelling. It is necessary to embed and engage your product in stories beyond your immediate market, stories that resonate with wider cultural debates. Such cultural engagement is pivotal. Otherwise, why should a sommelier or a wine critic believe in the analogy between grappa and French wine? The Noninos used a kind of tightrope storytelling. On the one hand they reinterpreted and praised fading cultural traditions and national institutions: they fought for the preservation of traditional Friulian grapes, boldly presented themselves as a family business, promoted artisanal methods as authentic, and linked their bottles to traditional Venetian glass manufacturing. On the other hand, they connected grappa to the emerging Milanese art design and fashion movements and launched a Literary Award to anchor their story to an upward wave of national identity affirmation that resonated with the values of the Italian emerging elites.

    It is unlikely that the push for radical status elevation could be delegated to a PR agency. What we learned from this case is that unusual success only occurs when authentic messages are conveyed by authentic messengers that put their face and themselves at stake. And status dynamics of market categories are not important for consumer products only! Consider that institutional entrepreneurs are much needed in our organizations if we want to address the grand challenges of our times. Take these two examples: How to elevate the status of vegetarian meals in order to favour the reduction of carbon-intensive meat and dairy consumption? Or how to reduce the status of private in comparison to public transportation for the same aim?

    Notes:

    • This blog post is based on the authors’ paper How Cinderella Became a Queen Theorizing Radical Status Change published in Administrative Science Quarterly, December 2016.

    • The post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.

    • Featured image credit: Nonino grappa distillery, by Riccardo Cattapan, ©Nonino 

    • Before commenting, please read our Comment Policy.

How Superstitions May Impact Risky Behavior

Superstitions, particularly in Eastern cultures, often inform decisions, from the mundane to the life-changing. Existing research links a superstitious mindset to 544623640_258eaf528a_ba higher likelihood of engaging in riskier behaviors, such as gambling. A new Social Marketing Quarterly article seeks to explore different styles of superstition and the way in which these styles may impact a tendency towards risk. In their paper “Exploring Different Types of Superstitious Beliefs in Risk-Taking Behaviors: What We Can Learn From Thai Consumers,” authors Sydney Chinchanachokchai, Theeranuch Pusaksrikit, and Siwarit Pongsakornrungsilp examine differences between passive and proactive superstitious consumers. Passive superstition involves a strong belief in fate or destiny; these individuals feel that their luck is beyond their control. Proactive superstitious individuals, however, may practice certain rituals for to attract good luck or ward off evil forces. The researchers summarize:

The impact of superstitious beliefs on decision making and how they affect both business and consumers has been observed for several decades. Chinese consumers are willing to pay premium for something that contains number “8” and Thai consumers will do the same for number “9”. Those numbers are considered good luck and prosperity in the cultures. There are times that consumers make irrational decisions based on superstitious beliefs. Our paper explores different types of superstitious beliefs and how they affect risk-taking behaviors. We chose Thailand as a context because Thai consumers are known for their superstitions. We found that people who are “passive superstitious” (meaning that they believe in fate and generally do not take any superstitious action to control the situation) make riskier decisions when they received superstitious objects (e.g., lucky charms). These people do not usually go out and seek superstitious objects or practice superstitious rituals. As online gambling, online financial investments, and other risk-taking activities become more accessible to consumers, knowing that individuals may be either proactive or passive superstitious, the marketing campaigns for these types of products should be carefully monitored and regulated as some promotional tactics may trigger risky decisions.

So while passive superstitious consumers may be highly influenced by magical objects, proactive superstitious consumers are less likely to modify their behavior based on such an object.

Don’t forget to sign up for email alerts so you can stay up to date with the latest research from Social Marketing Quarterly.

*Image attributed to Tiago Daniel. (CC)

Writing With Resonance

jmia_26_1-cover[We’re pleased to welcome Ninna Meier from Copenhagan Business School, and Charlotte Wegener from Aalborg University. Meier and Wegener recently published an article in Journal of Management Inquiry entitled “Writing with Resonance.” From Meier and Wegener:]

  • What inspired you to be interested in this topic?
    We started writing about resonance and practicing resonant writing in the spring of 2014. We wanted to understand why some texts have impact and others don’t; why some texts are a pleasure to read, why their messages linger. In short: we wanted to understand resonance as something which may happen between writer, text, and reader.  With writing being the primary mode of dissemination of research results for most academics, we wondered why this important topic was so poorly understood and received so little serious scholarly attention.
  • Were there findings that were surprising to you?
    As we started experimenting with our writing, academic and otherwise, we learnt that this is something you can offer through your writing, but never deliver. We also found valuable lessons in how to write this way from fiction writers.
  • How do you see this study influencing future research and/or practice?
    Based on our investigations and experiences we are now breaking grounds for a new research field and writing practice, as this way of writing, which we call Open Writing, in our view is obviously linked to calls for Open Science.

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A Conversation with Henrich Greve, ASQ Editor

The ASQ Blog

The ASQ blog opens 2017 with a video interview with Henrich Greve, our ASQ editor.

In this video, Henrich shared with us the steps ASQ has taken or will be taking to stay impactful, and discussed the role ASQ plays in the management field. He also talked about the hopes and messages he has for schools and scholars.

Get inspired and stay tuned for ASQ blog in the new year!

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Why are Women Less Likely to Re-Apply for that Executive Role?

The recruiting process can be muddy to begin with, and even more discouraging for women who are seeking an executive role, due to historically male-dominated leadership positions. So why are women discouraged from re-applying to the role they were rejected from? Would they re-apply to that company in general after a negative recruitment process?

A new study 15816385513_ca92c68893_z.jpg
published in Administrative Science Quarterly entitled “Leaning Out: How Negative Recruitment Experiences Shape Women’s Decisions to Compete for Executive Roles,” aims to explain the reasons why women may be continuously underrepresented in these executive roles.

The article is co-authored by Raina A. Brands and Isabel Fernandez-Mateo, both representing the London Business School. The abstract for their article is below:

This paper proposes that gender differences in responses to recruitment rejections contribute to women’s underrepresentation in top management. We theorize and show that women are less likely than men to consider another job with a prospective employer that has rejected them in the past. Because of women’s status as a negatively stereotyped minority in senior roles, recruitment rejection triggers uncertainty about their general belonging in the executive domain, which in turn leads women to place greater weight than men on fair treatment and negatively affects their perceptions of the fairness of the treatment they receive. This dual process makes women less inclined than men to apply again to a firm that has rejected them. We test our theory with three studies: a field study using longitudinal archival data from an executive search firm, a survey of executives, and an experiment using executive respondents testing the effects of rejection on willingness to apply to a firm for another position. The results have implications for theory and practice regarding gender inequality at the labor market’s upper echelons, highlighting that women’s supply-side decisions to “lean out” of competition for senior roles must be understood in light of their previous experiences with employers’ demand-side practices. Given the sequential nature of executive selection processes, rejection-driven differences in the willingness to compete in a given round would affect the proportion of available women in subsequent selection rounds, contributing to a cumulative gender disadvantage and thus possibly increasing gender inequality over time.

This article is currently free to read, by clicking here. If you enjoyed the research, don’t forget to sign up for email alerts on the ASQ homepage so you never miss a new issue.

Image attributed to COD Newsroom (CC).