Leadership Change: The Trillion-Dollar Shift from Social Conformity to Truth-Seeking

“10.000 years ago, if you’re the village truth teller, you might get clubbed to death in the middle of the night” is Jeff Bezos answer to what he calls the “1 Million Dollar question” asked by Lex Fridman in Episode #405 of his Podcast. (Full Clip: https://youtube.com/clip/UgkxdxxQa0OzeG7GC38PggkZ8crOpzPWWuaf?si=JxwehE5Iw34VlpLe)?

Why is this a 1 Million Dollar question and how could we use the answer to create faster growing companies?

Amazon became one of the fastest growing companies worldwide by creating what Jeff Bezos calls “High Velocity Decision Making” and this is always about finding truth. And finding truth is many times uncomfortable as most people prefer to behave based on social norms and conformity.?

But acting based on social conformity makes organizations pay an extremely high price - actually it might add up to a sum that they are not aware about. This is a result of poor and gut feeling based decision making, long decision making processes and the reduction of employee engagement from long discussions without positive results.

Just a couple of findings from studies:

• 75% of people conformed to the majority opinion, even when it was clearly wrong, found a study about conformity bias conducted by Salomon Asch in 1951, which is until today regarded as an important and still credible research.?
• 61% of people feel pressured to cover some facet of their identities at work, also as a result of social group pressure. That is the shocking result of a research published in a whitepaper by Kenji Yoshino, published in Harvard Business Review 2014.
• 1.597 trillion US Dollars is the current market capitalization of Amazon in January 2024, still growing by at least 10% per year, which is based on corporate culture that tries to eliminate such influence on decision making.

So: Why is this actually not a 1 million but a 1 trillion Dollar question?

Imagine a dark and dystopian world where brilliant and innovative ideas are slowed down by the heavy hand of social conformity, leading to a staggering 20% loss in potential revenue growth annually for businesses. Teams are exhausted from long discussions. Growth rates are under massive pressure due to most decisions being made slowly and ending up in consensus. This hypothetical scenario underscores an invisible crisis in the corporate world – the high cost of social conformity and weak and slow decision making, where the fear of standing out from individuals with brilliant ideas could be costing companies billions in unrealized innovative breakthroughs and market opportunities.

Did I say hypothetical? Let’s flip the hypothesis upside down. On the other hand Forrester’s Study “The Insights Driven Business” actually reveals that organizations that rely on objective data and insights (aka “truth”) for better and faster decision making have an 8x higher chance to grow by 20% or more per year.

Section 1: The Cost of Conformity

What does Bezos exactly refer to that happened 10.000 years ago?

Well, it’s a history lesson with a twist. Our ancestors survived by blending in - sticking with the crowd was key to staying alive. Fast forward to today's business world, and we're still playing by these ancient rules that are deeply rooted in our subconscious parts of our minds. Ever wonder why 'going with the flow' feels easier? It's hardwired in us. But in business, this instinct can blind us to innovative ideas that challenge the norm.

Everybody knows the Blockbuster story. Long story short: They’re eradicated. But did you realize that this was a result of weak decisions influenced by social conformity instead of truth? Despite all data and insights that the Blockbuster executives should have known,? the story exemplifies how sticking to familiar, traditional models without adapting to emerging trends (already visible in data back at this time!) can lead to massive failure. Blockbuster simply underestimated the potential of digital streaming and online platforms. This adherence to conventional wisdom, despite clear signs of industry evolution, mirrors a common social conformity behavior, where businesses follow established norms rather than pioneering new approaches. Netflix's success, in contrast, demonstrates the benefits of challenging traditional models and embracing innovation.

Fun fact: I won’t forget the A/B testing introduction by Reed Hastings given to new employees in an online course that was shown by Colin McFarland at growthmarketingSUMMIT.com 2023.

Section 2: Truth-Seeking as a Business Imperative

Are you a truth seeker?

Truth-seeking is hard to find in most leaders' preferences as it is about actively pursuing facts and understanding, including questioning assumptions and digging deeper into issues. It's a proactive approach to uncovering what we don't know. Focusing on what is not known might be perceived as a weakness but making decisions based on these facts and insights leads to faster and better decisions. Again, publicly and honestly opening up, saying “I don’t know but let’s find out” requires a lot of courage. Why is truth-seeking so hard to find? The sad truth is: Most leaders today are cultivated from a different perspective where “I know!” is the opposite but mostly best answer to get a promotion.

Changing the corporate culture towards truth seeking is hard to achieve but it might lead to a couple of advantages for the entire organization:

Innovation: It fosters a mindset of curiosity and exploration, encouraging employees to challenge existing ideas and develop novel solutions.

Adaptability: Such a culture enables a company to respond quickly to changes in the market or industry, as decision-making is based on factual understanding rather than assumptions.

Long-Term Success: By prioritizing truth and facts, organizations can make more informed, strategic decisions that contribute to sustainable growth and success.

Employee engagement: A truth-seeking culture positively impacts employee engagement by fostering an environment where each individual feels valued for their unique insights and perspectives.

I already mentioned the cost of a lack of innovation, but you should also never forget the (invisible) cost of the lower employee engagement you are currently facing in a traditional culture - endless meetings, tiring discussions. So imagine what might happen when a truth-seeking culture is implemented: When employees know that their opinions and observations are actively sought and appreciated, it cultivates a sense of belonging and significance. This environment encourages them to be more involved and invested in their work, leading to higher levels of job satisfaction and engagement. Additionally, being part of a culture that values truth and authenticity can lead to a more fulfilling and meaningful work experience.

Let’s circle back to Amazon: What could we possibly learn from Jeff about fostering a truth-seeking culture?

In my presentations, I have been telling the Amazon case for almost 15 years. It’s because Amazon's story is an excellent example of how a truth-seeking organization can thrive. Under Jeff Bezos' leadership, Amazon has fostered a culture where data-driven decision-making is paramount. This approach is evident in their use of A/B testing and analytics to understand customer preferences and improve their services.

Since 2006, every change of the website experience is validated with data:

https://drive.google.com/file/d/1thtKmW_hHYRijIvmzc9QeNbEauvhlnZR/view?usp=sharing

Imagine the amount of insights they have as a competitive advantage. Amazon's culture encourages employees to challenge assumptions and bring forward new ideas, nurturing an environment where innovation is not just encouraged but expected (Remember Jeff’s “Day 1” Letter to the shareholders…). This truth-seeking mindset has enabled Amazon to continuously adapt and grow in the rapidly evolving e-commerce market, continuously inventing new products and services.

Section 3: Implementing a Culture Shift

We all know it: the fish stinks from the head.?

So walk the talk. In the quest for cultural change, leaders like you play an indispensable role. They are not just change initiators but also the sustainers of this transformation. That’s why you need buy-in from top executives if you are starting an A/B-testing or experimentation program. For effective change, you need a vision. A leader's vision, communication, and actions set the tone for the desired culture. All leaders must lead by example, embodying the values and behaviors they wish to see in their teams. Moreover, leaders need to actively engage with team members, encouraging open dialogue and feedback, which reinforces a culture of inclusiveness and adaptability. This ongoing commitment from leadership is essential for the successful implementation and maintenance of cultural change.

Some possible actions you can take:

• Lead by good example: Demonstrate your own “humbleness” and truth-seeking behavior in your decision-making process. Start with holding back your own opinion and instead by saying “well, I don’t know so let’s find out” or “...analyze this further”. It sounds easy but many times it’s hard to withstand the desire to rapidly decide things.

• Explicitly Promote Open Communication: Encourage open and honest dialogue. Create an environment where employees feel safe to express their thoughts and opinions. Explicitly ask for different opinions - but make sure you mean it.?
• Actively Encourage Critical Thinking: Foster an environment where questioning and critical analysis of ideas are welcomed. You could do so by praising team members that raise concerns or have different opinions and dare to come up with them.
• Provide Training: Actually it’s hard to say “No” or “I have a different opinion”. But if you exercise it, you can learn that there is no real threat. Offer resources and training on effective communication. My personal book recommendation: Radical Candor (Kim Scott) is an inspiring piece of work that shows how we could possibly eliminate the conflict that many people see between appreciative but honest communication.
• Recognize and Reward: Acknowledge and reward people who demonstrate truth-seeking behaviors, e.g. follow a new idea that required the courage to fail but they learned something. Always praise the insight, not the failure. (that’s where the value come from - the failure is just a means to an end.
• Incorporate Diverse Perspectives: Ensure that decision-making includes diverse viewpoints to avoid echo chambers. Especially introverted people often have great ideas but they don’t dare to come up with these ideas in meetings. Talk to them and help them find the right way to participate in meetings. Invite people from completely different teams with different backgrounds to your next meeting.
• Regular Feedback as a system: Let’s be honest - it’s really hard to give critical feedback. Implement a system of regular feedback where employees can voice concerns and suggestions. I highly recommend implementing 360° feedback where managers receive systematic feedback about their performance as leaders.
• Foster a Learning Culture: It’s not about A/B tests, it’s about insights and learning. Share your insights with everyone on the right level. Encourage continuous learning and adaptation based on these insights.

Finally: I became a big fan of John Kotter’s 8 step change process. It’s not so hard to understand and it will for sure help you to facilitate change. Maybe you are not the CEO but you can start with the first step by creating a sense of urgency towards the c-suite - and they take it from there.

More information about this model: https://www.kotterinc.com/methodology/8-steps/?

Section 4: Challenges and Solutions

Maybe you’re not the CEO. Maybe you are stuck somewhere in the middle management of your organization. So one thing is sure: there will be resistance and it’s normal. Social behavior is strongly rooted in the unconscious mind. Some people have the preference towards truth-seeking while others don’t. It’s important to know your stakeholders and work your way forward in an organization.

I guess I could write a book about stakeholder management, but let’s keep it simple. If you follow these steps, your chances to succeed and reach out to the top management as a sponsor for the change will get much higher:

• Step 1: Understand the relevant stakeholders. We all know the common model where you try to understand the interest and the power of stakeholders. The most common model is the power-interest matrix, you find it here: https://en.wikipedia.org/wiki/Stakeholder_analysis. I don’t find it helpful to locate the stakeholders inside the matrix, but…
• Step 2: … understand the organization. My tipp is to use the matrix it to draw a “colored” map of the organization that especially shows the attitude (“interest”) of stakeholders. This is the foundation for paving your way through the hierarchy.
• Step 3: Go the right direction. You simply cannot influence people with more power and different attitude but you can try to understand them. Stakeholder management is all about understanding stakeholders. The colored map shows you the right direction and you can use it to make your “listening tour” through the jungle of different opinions and goals within your organization.
• Step 4: The stairs are always swept from top to the bottom. (That’s how we say it in German…). Change needs a sponsor from the top management and after understanding the whole landscape you can start getting buy-in.?
• Step 5: Use the Kotter model to initiate change. Start with creating a sense of urgency and building an alliance for change. The more powerful your alliance is, the higher is the possibility of success.

Case Study: The Value of a Truth-Seeking Culture

A/B-testers, CRO- and experimentation people are truth-seekers. Maybe you already have the attitude, skills and abilities to influence your culture in your organization.?

The following case is an example, where a mid-sized e-commerce company realized at a certain point that experimentation should not only be an online marketing tactic but a valid strategy that informs decisions across the whole organization - so they implemented it with buy-in from top management.?

The fact that there was buy-in from top management accelerated the desired change towards a truth-seeking culture and the results were massive:

The success factors for this overwhelming success do not surprise you if you read this article. This is a summary of the most important achievements:

• Stage 0: no AB/tests (grey)no surprise & no results
• Stage 1: A/B-testing as a marketing tactic (green)A/B-testing was introduced from the online marketing team. This “new habit” showed that some assumptions from the past have been surprisingly wrong.Stakeholder management revealed that the c-suite should be involved, A special report was created and they received cumulative results aggregated and tailored to their expectations.C-suite started to behave more humble after some of their own ideas created surprising results.
• Stage 2: A/B-testing as a strategy (blue)More and more A/B-tests were done (executive buy-in!).Cultural challenges became visible and were solved using Kotters change model.After a final critical buy-in from the finance team (controlling was skeptical about the validity of A/B-test results), the whole management and leadership team were convinced that this is the right way to goFinally, every change on the website was tested, even MVPs, smoke-tests and product development increased the amount of experimentsThe value received from experimentation (a.k.a. “truth seeking” was 5x higher compared to the time before executive buy in and cultural change

Conclusion:

"The definition of insanity is doing the same thing over and over and expecting different results." A. Einstein

The current business landscape is changing dramatically and change is needed to adapt, the call to action is clear: embrace a culture of truth-seeking. Dear leaders, this transformation begins with you. Lead by example, foster open communication, and encourage diverse perspectives and critical thinking in your team. By doing so, you will unlock new potentials for innovation and growth, setting your organization on a path to long-term success.

Now is the time to step forward and champion this cultural shift, leading your organization into a future where honesty, curiosity, and integrity are the cornerstones of every decision and strategy.

PS: not only your business numbers will benefit - your team will love it, too.