Learning Corner with Jeffrey Pfeffer: Break Some Rules in 2021

A favorite article of mine, one assigned in my MBA elective, "The Paths to Power," is Malcolm Gladwell’s 2009 piece in the New Yorker, "How David Beats Goliath." The premise: Underdogs often win competitions by not following the rules or conventional wisdom. David beats a stronger and larger Goliath by using a shepherd’s tool (a slingshot) instead of trying to defeat Goliath using swords and shields—which would play into Goliath’s strength.

As a treatise on personal strategies to obtain organizational power and influence—or as a guide to organizational strategies to win in competitive environments—the message is simple but profound: In almost all domains, success is achieved by breaking the rules. In fact, the heuristic association between rule-breaking and power led some Dutch social scientists to ask if breaking with social norms could help create perceptions of power. In four studies, that is precisely what they found: People who violated social expectations were seen as more powerful.

Maybe all the control and rule enforcement that have come to constitute the essence of management are subverting the innovations that create success. This is scarcely a radical idea. The original Hewlett-Packard company was based on the idea of creating autonomous units—and to encourage the absence of rules, for many years HP eschewed an HR department. Decentralized decision-making has been a mantra of progressive management for years—think the late Tony Hseih’s holacracy at Zappos.

As we depart from a year that forced us to push against most of the "norms" and rules we’d come to accept, perhaps the biggest thing we bring into 2021 is the acceptance that doing things differently doesn’t have to be synonymous with "unprecedented times," but instead a sign of successful management.

Gladwell notes that in warfare, when the weaker side uses the same strategy as the stronger, they lose most of the time. When, however, they fight a different way—often called unconventional warfare—the demonstrably weaker side wins about two-thirds of the time.

In business, too, some of the most successful organizations are those that depart from what conventional thinking dictates. Take an example from the grocery business: It’s a low-margin industry, where most companies pursue economies of scale through purchasing in enormous quantities and seek lower labor costs by minimizing staffing (and the skills of staff) in a vain effort to out-Walmart Walmart. Whole Foods succeeded by flipping the script. Selling higher-priced, organic, healthful foods required having more, better-trained people in the store—who were rewarded in part for the performance of the store and their department. Because taste in food varies by location, letting departments within stores stock according to local preferences produced more profit.

Southwest Airlines is another example of finding success by doing things differently. The airline knew that time spent waiting to take off in congested hub airports not only aggravated customers, but planes also do not make money while on the ground. So Southwest adopted a strategy that emphasized rapid turnaround of equipment and using uncongested facilities to fly point-to-point, eschewing the hub-and-spoke approach of most of its competitors.

If breaking the rules can have such great payoffs, why don’t more people—or

companies—do it? People and organizations seek safety, and following rules and convention seems safer. People confront two conflicting motives. On the one hand they want to stand out, to excel, but on the other, they want to fit in. Put prosaically, many companies—and individuals—seek to obtain extraordinary results by doing what everyone else is doing, by following the crowd. Trapped by the tyranny of benchmarking—you cannot benchmark your way to being exceptional—results are predictable but also often mediocre.

As Gladwell noted in his article, George Washington defeated the British by hiding behind rocks, not by marching in open formation. But once Washington experienced some success, he began to emulate the British military practices, until high casualties and failure caused him to return to his unconventional—albeit successful—approach to warfare.

People and companies need to train themselves to not care excessively about what everyone else thinks about you. Using evidence and analysis and focusing on results can help win the argument about breaking the rules. Gary Loveman’s career at Harrah’s, later renamed Caesars, is a perfect illustration. Loveman emphasized customer service and loyalty as he cut turnover and focused on rewarding employees for service scores, not building fancy buildings.

His analyses uncovered that the most profitable customers were local players of slot machines, not the high-rollers that competitors were chasing. Companies can encourage courage by honoring, promoting—and certainly not firing—people who do innovative things, even if they sometimes look like odd ducks.