Executive Speaker Series

Sustainable Behavioral Advantage: Rethinking Thinking

think leadership

INSIGHT: Lee Newman, Professor of Behavior Science at IE University and IE Business School examines how companies can achieve sustainable “behavioral advantage” by helping managers understand and improve the way they think, in the everyday moments of truth that ultimately drive success or failure. This article was originally published in IEDP’s “iedp insight” publication in December 2012.  You can learn more about IEDP by visiting www.iedp.com.

Lee Newman is a professor of Behavioral Science and Dean of Social and Behavioral Sciences at IE University and IE Business School. Professor Newman’s research, teaching and training activities focus on managerial decision making and positive approaches to leadership. A citizen of the United States, Lee Newman has an interdisciplinary training in Engineering (Brown University), management (MIT) and psychology and computer science (University of Michigan) and a decade of experience as a management consultant with McKinsey & Company and two technology ventures in which he was a co-founder.

Competitive advantage, or at least the classic conception of it, is no longer very sustainable. Change is constant in the modern marketplace and strategic, operational, technological and informational advantages are often quickly copied. Newman believes that what companies need to consistently stay ahead of the competition is to develop behavioral advantage: an advantage achieved by building an organization of individuals and teams that think and perform better, at all levels. An organization with a behavioral advantage is able to out-think and out-innovate the competition, over and over and again. Behavioral advantage is difficult to achieve, but even harder to copy.

So how can a company develop behavioral advantage?

According to Newman, in the last decade behavioral scientists have made great progress in research focused on how people think and make decisions (behavioral economics), on the nature of human excellence (positive psychology) and on the psychology of motivation and change. At IE, Newman is leading an effort to translate and apply this research to help individuals and their organizations think and perform at their best.

“We call this effort Positive Leadership. It is ‘positive’ because it is about helping professionals who are already performing well, move up the curve towards extraordinary performance.” IE’s Positive Leadership initiatives involve three main thrusts.

Mindware Training. The first involves what Newman calls Mindware Training. Drawing on cognitive research, decision simulators, and mindfulness practices, this training allows professionals to understand the components of their own thinking (for example, attention, reasoning, and memory), the limitations in these components, and how these limitations lead to biased judgments and error-prone decisions in the workplace. Having experienced first-hand how both seasoned corporate managers and newly minted entrepreneurs arrive at their everyday decisions, Newman believes that “despite our differences, when facing the pressures of the modern workplace, we all tend to resort to fast and default ways of thinking that require less effort. The problem is that these defaults are biased and often get us into trouble. The good news is that these biases can be identified — and with simple training techniques, people can literally learn to think better”.

Harnessing Strengths. The second thrust of Positive Leadership involves identifying and capitalizing on strengths. According to Newman, research in positive psychology has demonstrated that professional development that focuses on weaknesses is psychologically draining and disengaging for employees: it works up to a point, and then produces little improvement relative to the effort invested. In contrast, when people understand their strengths and are able to use them every day at work, it produces positive emotion, greater engagement, a greater sense of accomplishment and better professional relations. “We’ve got it backwards”, says Newman. “Most companies design efficient work processes, and then assign the people to the work. They should be doing it the other way around, first identifying the strengths of their people and teams and then designing the work around them. It’s a win-win: better for the well-being of employees and better for the bottom line of the organization.”

Professional Fitness. The third component of IE’s Positive Leadership initiative is what Newman refers to as “Professional Fitness”. “Going to the gym three times might make us excited about getting in shape, but certainly does not make us physically fit. Are three-day leadership development programs any different?” To become professionally fit, Newman believes that professionals need to actively apply what they have learned in the everyday situations they face on the job. Scientific studies have shown very clearly that deep change requires both consistent practice and an understanding of how habits are formed and modified.

Newman believes that Positive Leadership methods provide a clear path that companies can follow to develop behavioral advantage. “The future of professional development is happening now, and it is based on behavioral science”, says Newman. “As an example, our new Executive Master in Positive Leadership & Strategy incorporates mindware training, strength-based development, and positive approaches that allow senior managers to rethink the way they lead themselves, their teams, and the core functions of their organizations”. Newman emphasizes that IE is taking the idea of professional fitness seriously. “This hybrid program combines the intense, schedule-friendly format of leadership training once each business quarter, with “at-work” programs in which participants practice their training directly in the leadership challenges they face on the job.

About the Author

Dr. Newman’s work centers on translating and applying psychology to help people optimize their performance in the workplace.