Rosabeth Moss Kanter explains why winning streaks and losing streaks perpetuate themselves, and how leaders can shift the dynamics of decline to circle of success.
An internationally known business leader and expert on strategy, innovation and leadership for change, Kanter holds an endowed chair as the Ernest L Arbuckle professor of business administration at Harvard Business School, and advises major corporations and governments worldwide. She is the author of 16 books, former editor of the Harvard Business Review and considered one of the most prominent business thought leaders in the world.
Kanter talks with James Nelson about her most recent book, Confidence, an analysis of real-world behaviour that creates self-reinforcing cycles of winning and losing. Her book looks at how companies, sports teams and even governments foster winning streaks and succumb to losing streaks, and how leaders make choices that affect the odds of success, propelling winning streak or reversing losing one.
When did the idea for Confidence come to you and what was your main motivation in writing it?
I’ve always been concerned about large-scale transformations, innovations and change, so I’m constantly watching companies. I became particularly interested when the global economy shifted from the boom years of the 1990s to the poorer economy of the 2000s. I was thinking about what businesses and other organisations needed to do to recover, looking specifically at turnarounds. I noticed that in turnarounds, leaders had to solve not only the operational, financial and strategic problems, but also had to shift the company culture. Companies in distress had negative culture that leaders needed to work on. It became evident during the bust years that we were experiencing some of the same culture of low expectation and passivity in the economy at large. This is in contrast to the exuberance, energy, excitement, belief in risk-taking and innovation of the boom years.
I thought about the nature of cycles, spirals upward, spirals downward and what leaders had to do to shift the cycle. We talk constantly about the word confidence and regularly invoke the term self-confidence as an attribute in success. But we also talk about confidence in the economy, consumer confidence, investor confidence, etc. I saw that confidence grew easily in good times and eroded quickly in difficult times. I wondered about that connection because I saw self-fulfilling prophecy at work: if people believed in success they would work harder and make success possible, and if they believed in decline they would turn passive and negative. I began to see the negative culture that leaders had to shift in turnarounds as part of larger phenomenon, as losing streak.
I decided to expand my research beyond business to sports, because I became interested not only in what sustains success but also what sustains failure. If you understand those two things then you understand what leaders need to do.
Does the word confidence have some special connotation for you?
Confidence consists of positive expectations for favorable outcomes. It influences the willingness to invest – to commit money, time, reputation, emotional energy, or other resources – or to withhold or hedge investment. This investment, or its absence, shapes the ability to perform. In that sense, confidence lies at the heart of civilization. Everything about an economy, society, an organisation, or team depends on it. Every step we take, every investment we make, is based on whether we feel we can count on ourselves and others to accomplish what has been promised. Confidence determines whether our steps are tiny and tentative or big and bold.
On the way up, success creates positive momentum. People who believe they can win are also likely to put in the extra effort at difficult moments to help ensure positive result. On the way down, failure feeds on itself. As performance starts running on positive or negative path, momentum can be hard to stop. Growth cycles produce optimism, decline cycles produce pessimism. These dispositions help predict the recovery of problem-ridden businesses, low-performing schools, or even patients on their deathbeds.
It’s extremely important to remember that failure and success are not episodes, they are trajectories. They are tendencies, directions and pathways. Each decision may seem like new event, but the next performance is shaped by what happened the last time out. The meaning of any particular event is shaped by what’s come before. In this way history and context shape interpretations and expectations.
Confidence by itself doesn’t produce success, but it sets the cycle in motion. When you have confidence you work harder, invest more and stay longer. If you don’t have confidence you give up easily, don’t put in the time, don’t have the commitment and failure becomes self-fulfilling prophecy.
Confidence has lot to do with staying positive in the face of adversity.
Adversity is the test of confidence. It’s easy to be confident when things are going well. That’s why once winning streak begins it becomes easier to keep it going. Because more and more factors contribute to success. Once losing streak starts it gets harder to turn it around, as more factors signal decline. For example: you don’t have the resources; you don’t have the investment; the judgement calls are not made in your favour; you don’t get good press; you can’t recruit talent and it gets harder to win.
When you’re winning, confidence makes it possible to win, but winning also builds confidence. They are mutually reinforcing. So the times that you really see the difference between winners and losers is in times of adversity because winners keep working at it and don’t give up. They bring the situation back to positive track. Losers panic, stop believing in themselves and in one another. It becomes every man for himself instead of the team pulling together. In times of adversity losers are bewildered, passive and they don’t take action. They become more negative and start complaining, all of which makes it ever harder to solve the problems.
When I talk about the culture that builds winning streaks, they are all habits of behaviours that make it more likely to solve problems when you have crisis.
What’s the best way to keep winning streak going?
When I talk about perpetuating success as in winning streak, whole series of successes, I don’t mean that you never stumble or have setback but, you solve it faster.
I tried to study what sustains success, not just winning once, but how do you build it into the system to succeed repeatedly. You have culture of confidence and it’s crucial this culture is supported by the cornerstones of confidence: accountability, collaboration and initiative. Confidence springs from firm foundation that you are accountable and every single employee is likewise accountable. There is collaboration where employees share decision-making and have common goals. And there are opportunities for people to take the initiative – take action and make difference.These cornerstones of confidence are the bedrock I saw time and again in companies which sustained winning streak over prolonged period.
Success is neither magic nor dumb luck: it stems from consistent hard work to perfect each detail. It is even little mundane. Win, go back to work, win again. What great leaders do is to set up systems in which people are routinely scrutinising their own performance and striving to improve. In great teams people go over the data and very specifically their own contribution in order to hold themselves to high standard.
But all winning streaks end at some point.
It’s generally not external factors that stop winners, but their own failure to maintain the discipline and support systems which enabled them to turn winning into habit. Winning is form of toil that can breed its own troubles.
Success als
