Why Leaders Change Things, Often with No Impact

The leadership seminar we did for the ESRC and Scottish Government yesterday provided me with an excellent explanation for why leaders’ desire to change things often results in no significant progress (but plenty of change fatigue and rewards for leaders). I’m grateful to Keith Grint for pointing me in the direction of this interesting piece of research over a cup of tea prior to the seminar.

(By the way, if you want access to what we talked about, here’s the publication we produced for the seminar with the help of Chris Blunkell, the ESRC and Scottish Government. It will be posted shortly).

Back to the story - a group of Israeli researchers shed new light on these issues, drawing from the art of goalkeeping in soccer [Bar-Eli, Michael, Azar, Ofer H., Ritov, Ilana, Keidar-Levin, Yael and Schein, Galit (2006): "Action bias among elite soccer goalkeepers: The case of penalty kicks," in: Journal of Economic Psychology].

Here’s how one blogger, Elli Malki, from the financial services industry described the research because the analogy has been used before (and she summarises the article well saving me from doing it).

‘ The researchers examined a very unique situation in soccer games—penalty kicks. From a behavioral point of view, penalty kicks have several unique characteristics:
ln most cases, the penalty kick ends with a goal being scored, thus having a significant effect on the result of the game.
An experienced goalkeeper has faced many penalty kicks and thus is expected to know how to react to them.
From the moment of the kick, it takes 0.2-0.3 seconds until the ball reaches the goal. Thus, the goalkeeper cannot know in advance what will be the direction of the kick and must choose the direction of his jump based on his past experience.
As a result of these characteristics, a penalty kick is a type of a "natural experiment" in which it is possible to examine the choices made by the goalkeepers under uncertainty. Since soccer players' compensation is dependent on the performance of their team, the result of the goalkeeper's choice will not only affect the result of the particular game, but also the long-term prospects for himself and for his team.
The researchers examined 286 documented penalty kicks from games of top soccer teams. For each one of the penalty kicks, a group of three qualified referees was asked to determine: (1) the direction of the kick; (2) the direction of goalkeeper's jump.

The results are presented in Table 1 and Table 2 in the original paper.


To summarise, Table one showed that the directions of the kicks were almost uniformly distributed. About 1/3 of the kicks were aimed to each one of the directions (left, right or center of the goal). On the other hand, the decisions of the goalkeepers were biased toward jumping to either the left or the right side of the goal. Only in just over 6% of the penalty kicks did the goalkeeper choose to stay in the center of the goal.

Were the decisions of the goalkeepers rational? To answer this question, the researchers examined the success rate of the goalkeepers to stop the penalty kicks. Altogether, goalkeepers succeeded in stopping 42 penalty kicks—14.7% of all the kicks that were examined. The overall success rate of stopping penalty kicks is very low and most kicks result in a goal being scored. The results showed that there is no connection between the success rate in stopping the kick and the direction of the kick. The success rate is very similar regardless of the direction of the kick.
On the other hand, an analysis of the 42 successes showed that the success rate of staying in the center (e.g., doing nothing) was more than double than the success rate of jumping to either direction.

Thus it seems that the decision made by the goalkeepers in 94% of the cases—to jump either to the right or the left—was not rational, since it decreased their chances of stopping the penalty kick.

Why does it happen? The researchers provide the following explanation:

An identical negative outcome (a goal being scored) is perceived to be worse when it follows inaction rather than action. The intuition is that if the goalkeeper jumps and a goal is scored, he might feel "I did my best to stop the ball, by jumping, as almost everyone does; I was simply unlucky that the ball headed to another direction (or could not be stopped for another reason)." On the other hand, if the goalkeeper stays in the center and a goal is scored, it looks as if he did not do anything to stop the ball (remaining at his original location, the center)—while the norm is to do something—to jump. Because the negative feeling of the goalkeeper following a goal being scored (which happens in most penalty kicks) is amplified when staying in the center, the goalkeeper prefers to jump to one of the sides, even though this is not optimal.

And this explantion was confirmed by subsequent interviews with top professional goalkeepers

The researchers call this behavioural phenomenon an "action bias." (Elli Malki, http://www.indexuniverse.com/sections/research/4801-what-can-investors-learn-from-goalkeepers.html?start=1&Itemid=7)

Elli’s concern was the relationship between and action-bias and investment decisions. However, the authors of the article also point out implications for management, the most obvious one being why leaders change things (even when doing nothing would be the right course of action). When an action-bias is couple with significant rewards for changing things, as is often the case under modern day performance management, appraisal and pay systems, this action-bias is likely to be magnified substantially – ‘ leaders change things, they do not maintain’ goes the clarion call and is given further credence by the often made distinction between management (who do maintain) and leaders. Yet, often this action bias, motivated and sustained by the rewards system, leads to little else other than the creation of further problems, which, yes, you’ve guessed it, requires a further action bias. The result is, as Keith Grint pointed out, 25 years of constant structural change in the NHS has resulted in no change. We’re pretty much where we were at the beginning.

Bruce Ahlstrand made a similar point in a book many years ago revisiting productivity bargaining at the Esso Fawley Plant, made famous by Alan Flanders book in the 1960s (for the old industrial relations scholars). Twenty-five years of productivity bargaining from 1960 onwards implemented by frequent changes in HR leadership resulted in Esso Fawley remaining bottom of the productivity league table, exactly where it began in the early 19060s. He attributed this to a performance appraisal system that rewarded change, a failure to monitor the results of the changes but people being promoted on the basis of introducing change. New appointees were stuck with the same problem (because the unions learned new tricks to re-invent them) so naturally they came up with the same solution, albeit in a different guise. So, there's definitely something in the old saying, "the more things change, the more they remain the same'.