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Changing Mental Models: Hr's Most Important CHANGING MENTAL MODELS: HR’S MOST IMPORTANT TASK Jeffrey Pfeffer In the “managerial knowledge” marketplace, there is little evidence of much diffusion of ideas or innovative business models or management practices. In organizations not implementing what they know they should be doing based on experience and insight, and in companies not acting on the basis of the best available evidence, one main factor explains the difficulties—the mental models or mind-sets of senior leaders. How they are formed, what they are about, and a multitude of examples that show how those mind-sets can be improved are presented here. © 2005 Wiley Periodicals, Inc. Here is a paradox. In the financial markets, powerment and putting people first, the lan- investment information is rapidly and effi- guage of employee and customer loyalty, ciently diffused. New product and service and so forth—in many cases, not much ac- innovations, be they junk bonds, new forms tually changes in terms of what occurs on a of options, or debt securities that allocate day-to-day basis and in fundamental organi- and price risk in an innovative fashion, get zational business models. rapidly copied by competitors. But in the A few examples will help illustrate how “managerial knowledge” marketplace, there long it takes to successfully imitate effective is little evidence of much diffusion of ideas management models. Southwest Airlines or innovative business models and manage- was the most successful, productive, and ment practices. How can I say this in a profitable U.S. airline. Its success was world in which there are entire industries widely described in books, cases, and articles devoted to spreading concepts and best literally decades before JetBlue, ATA, and a practices, and where management is occa- few others in the United States, Europe, and sionally accused of being too fad-driven? Asia finally began to successfully imitate its Because although there is certainly rapid approach. Or, as described in an article in diffusion of language—the language of Fortune, Toyota has been world class and quality or Six Sigma, the language of em- ahead of its competitors in automobile qual- Correspondence to: Jeffrey Pfeffer, Thomas D. Dee II Professor of Organizational Behavior, Graduate School of Business, Stanford University, Stanford, CA 94305-5015, 650-723-2915, [email protected] Human Resource Management, Summer 2005, Vol. 44, No. 2, Pp. 123–128 © 2005 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hrm. 124 • HUMAN RESOURCE MANAGEMENT, Summer 2005 ity and productivity for many years, and this why mental models affect organizational per- competitive advantage persists even though formance and why they are a high leverage the company gives plant tours to its competi- place for human resources to focus its orga- tors and its approach has been extensively nizational interventions. described and analyzed in books and re- To return to the examples, Toyota’s suc- Whole Foods’ search articles.1 Nevertheless, its rivals seem cess has much less to do with the specific big insight that to have trouble learning from and about Toy- techniques of its quality process—cords to others can’t ota and catching up. stop the production lines if there are defects, quite copy is that people In the gambling business, Harrah’s En- just-in-time inventory systems, and particu- actually will tertainment has used evidence, gathered lar statistical techniques—and much more to pay more for from its customer database and from run- do with a philosophy that supports quality high-quality ning numerous small experiments, to turn (and productivity and innovative product de- food they want conventional wisdom about how to make sign as well). The techniques and specific to eat. money in the casino business upside down.2 practices can be, and are, copied. The phi- Although Harrah’s has outperformed its ri- losophy is much harder to inculcate. South- vals and its approach has been widely docu- west Airlines’ success is not simply a result of mented and praised, once again there is little not serving meals or flying only 737s on evidence of successful imitation of its man- short hauls, something many other airlines agement techniques by others in the indus- have imitated. Instead, the key to South- try. And want still another example of success west’s performance is great service and out- not being imitated? Take Whole Foods, the standing productivity produced by a strong natural foods grocery store chain whose culture built on a value system that puts em- stock sells (as of summer 2004) at a ployees first, customers second, and share- price/earnings ratio of about 40—for a gro- holders third, along with a way of thinking cery store, no less—and has a five-year re- about and treating employees that has built turn to shareholders of over 330%. Whole loyalty and commitment even with a heavily Foods’ big insight that others can’t quite copy unionized workforce. is that people actually will pay more for high- Whole Foods has a different conception quality food they want to eat. This strategic of its business, captured in part in its “Dec- insight entails customizing both prepared laration of Interdependence,” that permits it food and even packaged goods selections for to operate differently and innovate to main- the local market in recognition that tastes in tain its position as the leading natural foods food vary, giving up on the idea of driving grocery store chain. And Harrah’s success is product costs down as much as possible but premised on a different way of thinking enhancing margins in the process. about the gambling business and what its In considering these and many similar strategy is. While other companies in the cases of organizations confronting either gaming industry build “attractions” and are knowing-doing problems—not implementing increasingly hotel, convention, and show what they know they should be doing based businesses with some gambling thrown in, on experience and insight—or doing-know- Harrah’s remains focused on gambling and ing problems—companies not acting on the on systematically understanding how to basis of the best available evidence—one fac- make money in that industry, in part by of- tor looms large as an explanation for the dif- fering a higher level of customer service. ficulties: the mental models or mind-sets of Also, Harrah’s focuses less on high rollers or senior leaders. As Mary Kathryn Clubb, for- families with small children (who have nei- merly a senior partner at Accenture, puts it, ther lots of free time nor a lot of discre- in order to get different results, you must do tionary money) and does not try to attract different things. Clubb’s insight was that in people by “comping” rooms. Instead, it has order to do different things, at least on a con- identified and focused on its best customers, sistent, systematic basis over a sustained older players who live nearby, see gambling time period, companies and their people ac- as entertainment, and are much more inter- tually must begin to think differently. That’s ested in free chips than free rooms. Changing Mental Models: HR’s Most Important Task • 125 An emphasis on the importance of mind- models. The ability to identify and help oth- set and mental models as a way of under- ers discover their mind-sets and mental mod- standing the foundation of organizational els, and the capability to change those mind- success makes intuitive sense. Every organi- sets when necessary, are possibly among the It is, in fact, zational intervention or management prac- most critical capabilities an HR professional possible to uncover and tice—be it some form of incentive compen- can have or acquire. change mind- sation, performance management system, or Many people apparently believe that sets and mental set of measurement practices—necessarily mental models or mind-sets are not a very models and to relies on some implicit or explicit model of useful focus for organizational intervention, do so human behavior and beliefs about the deter- since this sort of approach is seldom em- reasonably minants of individual and organizational per- ployed. First, changing how people think is efficiently, reliably, and formance. It is therefore just logical that (a) going to be more difficult than just changing predictably. success or failure is determined, in part, by what they do, since assumptions and mind- these mental models or ways of viewing peo- sets are often deeply embedded below the ple and organizations, and (b) in order to surface of conscious thought. Second, to change practices and interventions, mind- some people, this type of intervention seems sets or mental models must inevitably be an “softer” than the more typical HR interven- important focus of attention. tions such as redesigning incentive plans, Where do these mental models or mind- implementing new performance manage- sets come from? First, most of our models of ment programs, and introducing human re- business and behavior are unconscious and source information systems such as auto- implicit. This suggests the first practical step mated applicant tracking and computerized is to get people thinking about the implicit hiring systems. But in spite of the apparent models of human behavior, organizational difficulty and its less tangible nature, chang- performance, and strategy that are implied ing the way people think about situations is, by their organization’s ongoing practices. in fact, the most powerful and useful way to Second, a lot of what we do is based on sim- ultimately change behavior and thereby af- ply repeating what we have done before, car- fect organizational results. rying the past into the future.
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