Do you remember the last time you rode one of those pirate ship rides at an amusement park? The ones that swing you forward and back to ever-increasing heights, like a sadistic pendulum?
If you do, try to relive the feelings you had on that ride. The euphoria on the way up. The moment of panic near the top. Your stomach briefly leaving your body on the rapid descent. And the repetition, swinging over and over and over again… maybe literally ad nauseum.
My apologies if you just lost your breakfast.
The pirate ship’s back-and-forth motion very well describes a particular phenomenon in business that erodes value, destroys morale, and sometimes sinks whole companies.
Arrrr you ready to hear more?
What the pirate ship ride looks like in business
In short, the pirate ship ride (hereafter “PSR”) gets started due to a reaction to a perceived problem – frequently a “crisis situation” – that causes an over-application of a solution, eventually leading to an equal and opposite crisis. This then leads to an over-correction back to the starting position. Rinse and repeat, forever. Just like the PSR.
If you’ve worked in enough teams, you’ve probably been on a PSR at least once, although you might not have recognized it as such. Here are a couple of examples of how it can manifest in companies.
Example 1: The new boss who shakes things up
SlowMo Software’s strict processes and burdensome hierarchy of managers are getting in the way of progress. It just takes too long to get from point A to point B. The company is trying to do some bold new things, and it needs a jolt in the right direction.
An energetic new boss is brought in to provide the spark. The burdensome processes are ejected, and the hierarchy is flattened. The new way of doing things is more agile and features bottom-up decision making. Hard to argue with that, and the team likes it – what a relief after years of slogging through bureaucracy! Things seem to be happening more quickly. All is good in the new world order.
Two years pass, and the cracks in the new structure have long since surfaced. Quality has slipped. Direction is haphazard and dominated by cults of personality within the team. Nobody seems to have a firm hand on the wheel – “organic” decisions aren’t so much made as stumbled into. Things still seem to be happening quickly, but is the movement linear or circular?
The new (now old) boss has moved on to be an agent of change in a different company. His replacement is someone with a different view, an operational type who runs a tight ship. She recognizes the lack of process and poor command-and-control structure as obvious impediments. She starts tackling the problems by instituting significant new processes that look eerily similar to the ones that were abandoned 24 months ago…
Example 2: The boom and bust cycle
The widget industry has been in decline for two years, but BoomNBust Widgets, Inc. has learned to live lean and views efficiency as a strategic advantage. During the downturn, their bad cash position led them to miss out on some investments, but they’ve managed to hold the line.
Now, the COO sees a massive uptick in orders, and it’s time to go big. Sales doubles its headcount to capture market share. R&D swells 50% to work on new product lines. New directors and line managers are hired. Investments in IT that have been put off for years are finally happening. Yes, some questionable requisitions are approved – do we really need five Keurig machines and fair trade copy paper? – but they’re drops in the bucket.
The party ends 3 years later when the market contracts again. Lots of revenue was booked in the meanwhile, but it was primarily reinvested in the new product lines – none of which have been as immediately lucrative as the overeager VP’s projections had made them out to be.
The company holds out as long as possible, but layoffs are inevitable. Management is forced to overcorrect with deep cuts. “Efficiency” is the buzzword again. Opportunities still exist during the contraction, but there’s no money or willpower left to pursue them. To the employees who remain, it feels like the last contraction all over again…
Why the PSR happens
Why in the world do teams and companies behave this way, vacillating from one extreme to the next? How do intelligent, rational people end up on the PSR?
My hypothesis is “group polarization.” Psychologists have studied this phenomenon extensively; in short, it’s been shown that groups of people who collaborate will push themselves towards more radicalized, extremist views than any individual in the group held prior to the collaboration. All that’s required is a consensus that a change in one direction is necessary.
An example: the company has free cash flow that could be invested in R&D. Bob likes the idea of allocating 10%. Mary prefers 20%, which is fairly aggressive. Susan is more conservative at 5%. If you put them in a room to come to a consensus, what do you think they’ll arrive at? Per the polarization theory, they’re highly likely to walk out having agreed on an allocation of 30%, 40%, or more. They’ve talked one another into an irrational frenzy.
The same effect can be seen in radical religious movements, local and national politics, economic crises, and jury deliberations. Without a very delicate balance of opposing viewpoints, moderation goes out the window and extremism is all that’s left, to disastrous effect.
In summation, when faced with an opportunity or a crisis, a group will pursue a course that goes beyond the healthy “maximal solution” and into a nearby trough. Finding the high middle-ground is a rare feat for people because we surround ourselves with people like us and lose our ability to think critically. This ensures that we stay on the PSR, forever riding from one crisis to the next.
Get off the ride!
“Too much of a good thing” isn’t just a pithy expression. The solution to the PSR is to recognize that nearly everything taken to an extreme will cause a problem, including the proposed solutions to your current problems. Yin and yang.
The next time you’re taking part in setting a new direction, start with a resolution to think critically and be open-minded. Ask yourself these questions and, if necessary, write down the answers to serve as a reference in the midst of the frenzy:
- What are the things about the status quo that are working? Is there something we’ve been doing all along that has reaped benefits we might have become desensitized to?
- If our proposed direction is taken to the extreme, what are the likely outcomes, and can we mitigate them right now? Are there checks and balances that should be built in?
- Can we find examples of our proposal run amuck in other teams or in other areas of life? Can history offer us parallels that will enlighten us toward the best middle-ground?
Don’t be like every other human out there. Be tempered. Be even-handed. Most of all, be a moderate voice in the midst of extremism.
And best of luck convincing the rest of the crowd.
If you maintain a critical and open mind, one that always strives to see things from multiple vantages, you’ll be well prepared to find the balance that eludes most people – and you might just save the rest of your group from an epic failure. The narrow path between “yes, always!” and “no, never!” is overflowing with unrealized profit.
So get off the PSR! Save your sanity. Save your company. Save your breakfast.