As an accountant are you a hedgehog or a fox? (part 2 of 2)

Following on from the last post. Here is an alternate perspective on the question is it better to be a hedgehog or a fox?

For the professional accounting adviser – is it better to be a a fox?

Here is an alternate point of view from the prestigious Economist magazine. It says it may be better to be a fox. See: BETTER A FOX THAN A HEDGEHOG

CAN we blame the “experts” for not predicting the financial crisis? I don’t know of any scientific method that could have perfectly called and timed it. Some things were very troubling—global imbalances and the housing bubble—but did it have to get this bad? There were probably a myriad of ways it might have played out, some even worse, some better (remember the IMF  hoping for a happy and gradual unwinding). How can you predict a tepid, inconsistent government reaction (economists suffered a touch of hubris there) and market panic? Human behaviour is tough to predict and when humans try to anticipate what other humans will do—you can get a big mess.

Philip Tetlock, a professor of organisational behaviour at the Haas Business School at the University of California-Berkeley, talks to Money about why humans make poor forecasters and, if you must listen to one, what qualities to look for. He reckons there exists two types of experts:

The most important factor was not how much education or experience the experts had but how they thought. You know the famous line that [philosopher] Isaiah Berlin borrowed from a Greek poet, “The fox knows many things, but the hedgehog knows one big thing”? The better forecasters were like Berlin’s foxes: self-critical, eclectic thinkers who were willing to update their beliefs when faced with contrary evidence, were doubtful of grand schemes and were rather modest about their predictive ability. The less successful forecasters were like hedgehogs: They tended to have one big, beautiful idea that they loved to stretch, sometimes to the breaking point. They tended to be articulate and very persuasive as to why their idea explained everything. The media often love hedgehogs.

According to Mr Tetlock you should listen to humble, self-critical experts who shy away from bold pronouncements. The better ones often use words such as “however” and “perhaps”, instead of “moreover” and “all the more so”. That’s a tough sell to CNBC. He claims these thoughtful types have higher success rates. But I would classify the people who called the crisis as hedgehogs rather than foxes. A foxy economist would probably not incur the moniker Dr Doom. Our now celebrated prophets see no end in sight and think things will get much worse; should we still listen to them?

No. In our research, the hedgehogs who get out front don’t tend to stay out front very long. They often overshoot. For example, among the few who correctly called the fall of the Soviet Union were what I call ethno-nationalist fundamentalists, who believed that multi-ethnic nations were likely to be torn apart. They were spectacularly right with Yugoslavia and the Soviet Union. But they also expected Nigeria, India and Canada to disintegrate. That’s how it is with hedgehogs: You get spectacular hits but lots of false alarms.

Mr Tetlock seems to suggest we should listen (and we might want to listen to someone if only to falsely encouraged that we live in a world where chaos does not reign) to the very people who meekly warned of problems, but never said how bad things might get. Most of the time, they will steer you in the right direction. But they’re not infallible; only a hedgehog would’ve seen this coming.

What do you think?

See you next post,

James E

As an accountant are you a hedgehog or a fox? (part 1 of 2)

The web is an amazing thing – the largest most dynamic library human kind has ever known. I was listening to a podcast recently and came across to a reference I had never heard before – something about a hedgehog and a fox. After a little research I uncovered the piece below thanks to a website called Internet Marketing Secrets – for more info see Internet Marketing Secrets

The hedgehog and the fox, is an ancient axiom made known by Archilochus a Greek author & poet (645 BC) It simply states, “The fox knows many things, but the hedgehog knows one big thing.”

It became popular through an essay by Isaiah Berlin, where he divided the world into two types of thinkers… hedgehogs and foxes, based upon the ancient parable.

The fox is sneaky, and always trying to scheme up new ways. Their world is complex, always on the move, and they never tend to focus on a single unifying theory. The hedgehog is simple. They organize the world into a single unifying concept. The fox, for all his cunning, is defeated by the hedgehog’s one defense.

According to Isaiah Berlin’s essay, “There exists a great chasm between those, on one side, who relate everything to a single central vision… and, on the other side, those who pursue many ends, often unrelated and even contradictory… The first kind of intellectual and artistic personality belongs to the hedgehogs, the second to the foxes.”

In short, hedgehogs set goals, and they have systems by which they accomplish things. Foxes, tend to go off in all directions, without a methodology, goals, or systems to success.

When applied to a business, it means “Know Your Self” and your core competencies. Have a well defined culture. A vision. Know who you are. What you are about. And what you are trying to achieve.

The concept was widely popularized by Jim Collins’ #1 best seller, “Good to Great.” Why some companies make the leap… and others don’t.

According to Jim, “Those who built the good-to-great companies were, to one degree or another, hedgehogs. They used their hedgehog nature, to drive toward what we came to call, a Hedgehog Concept, for their companies. Those who led the comparison companies, tended to be foxes, never gaining the clarifying advantage, of a Hedgehog Concept, being instead, scattered, diffused, and inconsistent.”

As a professional accountant are you a hedgehog or a fox?

See you next post.

All my best,

James E

The importance of culture

The other week I was in a meeting with a few partners from a mid-sized accounting firm. One of the themes of the discussion was how they could effect change in the culture of the firm. It seems to be a common challenge to firms I meet.

Recently I read a fabulous article by Arshad Chowdhury who blogs for Fast Company Magazine. See http://www.fastcompany.com/1801014/culture-isnt-costly to read the full article.

Here is an excerpt from the article which, I dare say, will help you an dyour firm think about culture and how to effect change. Enjoy!

Successful company culture can make the difference between a workplace people dread and one they brag about. You don’t have to have a Google-sized budget to offer great culture. Many culture-changing initiatives have no direct costs to the company. In fact, when properly executed, culture-improving initiatives can lower company costs in both the short and long term.

I’ve spent the past 10 years learning about and implementing solutions to make work better for employers and managers alike. I’ve touched hundreds of companies large and small and have seen many distinct cultures. Based on this experience I offer these simple initiatives to encourage a peaceful, productive workplace that people love.

Make Rules for the 95%, Not the 5% 

Most of your employees are hard working, motivated, and professional. Workplace rules should be designed to give maximum autonomy to the vast majority of your workers. Don’t burden people with rules designed to control the 5% of employees who are constitutionally unmotivated or undisciplined. From dress code to work hours to meeting attendance, fewer rules in the workplace are better.

For one, fewer rules can start saving you money right away. Get rid of expensive firewalls blocking Facebook and YouTube. At the same time, access to these tools can help your employees research and network faster.

Celebrate Going Home Early

It’s not true that the longer you work, the more work you will get done. According to a 2010 study, flexible work hours can lead to increased retention and productivity. You can quickly improve culture by focusing on work output instead of hours of input. If you’re going to leave the office early, go ahead and announce to your coworkers that you just closed a mega account, sent out that TPS report, and are now heading for the golf course. There’s no shame in going home after hitting a home run.

Stop Swearing

Not all rules are bad. Implement a “no swearing” rule today: no swearing about or at your coworkers or customers. By cutting out swearing, you will elevate discourse to expression of thoughtful ideas instead of base emotions. An environment where people swear at one another can quickly turn toxic. The no swearing rule can save you millions by avoiding costly lawsuits where disgruntled employees–with good reason–strike back.

Cultivate Experts

Imagine if every one of your employees was an expert in what they did; if, no matter how mundane their subject, they could teach it with passion. The benefits to you, your company, and your employees would be profound. Encourage people to become experts by having them research best practices in their field and share those with their colleagues on a regular basis. At my companies, we encourage book clubs for every level of employee. We incur cost here by buying every book club member an e-book. The $79 e-book, however, pays for itself twice: once when employees brag about their incredible work environment with their coworkers, and again when employees learn to do their jobs better through ongoing learning.

Talk About the Future

Start taking people out for coffee, one at a time, to ask them where they want to be in five and 10 years. Armed with this information, help them achieve those goals, even if the goals aren’t related to your company. If an employee tells you he or she wants to be an actor, support them when they want to take acting classes. This way, in the time that they are with you, they’ll be loyal, committed, and thankful for the support.

Let Employees Manage Their Own Energy

Our metabolism is guided by our bodies’ circadian rhythms. We all experience peaks and troughs of energy throughout the day, and the highs and lows differ for each person. One-third of your employees experience a dip in energy so steep that between 2 p.m. and 4 p.m. each day they need to nap.  So let them nap. According to a NASA study, a nap of just 26 minutes can boost productivity by 34%.

Recognize Your Team Every Day

People don’t work for just money. They work for recognition, too, so don’t deprive your employees of this vital form of compensation. They are working to build your company every day. As such, give them specific words of thank-you the moment the occasion calls for it. You should be thanking each person you directly work with at least two times a week. As my mentor Chester Elton (coauthor of The Carrot Principle) says, reward behavior you want to see repeated.

See you next time,

James E