Is there a hippo in the room?

October 3, 2016

What happens when the elephant in the room is the hippo outside the room?

We’ve all seen it happen. A team of junior employees has brainstormed on an idea and together come up with a possible solution to a problem. In walks a senior member of staff and the idea, which had been reached by a consensus, is usurped by the opinion of one individual, just because he or she happens to be higher up the company food chain.

Highest-paid person’s opinion (HIPPO)

Introducing the HiPPO, or the highest-paid person’s opinion, a reference to the tendency for lower-paid employees to defer to higher-paid employees when a decision has to be made. Traditionally, authority for the most important strategic decisions has been left to the person in the most senior position within a company, namely the HiPPO. But all too often the HiPPO can prove to be wrong.

Take JC Penney for example, the disastrous decision by the US department store to abandon its budget-conscious customer base and attempt to move upmarket was driven by Ron Johnson, a $52 million-a-year-earning HiPPO who single-mindedly pursued his own ideas without considering whether the decisions were having the right impact on the business. The effect: revenue fell by a quarter and the company’s market capitalisation almost halved in one year alone, proving that Johnson’s gut instinct was one that was better not followed.

In reality, these so-called HiPPOs don’t make ill-informed decisions on purpose. It just highlights the fact that relying on the judgement of one person, or a very small team, based purely on seniority is likely to lead to trouble.

To be fair, business culture is changing. Where hierarchy was in the past given a lot of prominence, today, new ideas such as social platforms and crowd voting are helping to turn decision-making into a more group-led activity. Companies are seeing the benefits of integrating the expertise, knowledge and perspectives of many more people both inside and outside an organisation, and acknowledging the likelihood that widening the net at the input stage has the potential to vastly improve the success of the output.

After all, a new product that is chosen by one individual is likely to adhere to only their requirements and desires, whereas one chosen by a crowd, should, in theory, be free from individual biases, misinterpretations and overly zealous personal opinion. The message here is that just because you are in charge, doesn’t mean you have better opinions or ideas.

This is becoming increasingly apparent in the business world today, particularly in technology companies, where a lot of the good ideas come from new employees and not necessarily the highest paid person.

Take Amazon for example. The online retailer has fostered a culture of experimentation in which leaders at all levels are encouraged to test ideas in the marketplace and then let data – not senior leadership, guide implementation. Furthermore, it has even opened up the process to customers. Back in 2014, Amazon launched its Kindle Scout Programme, whereby readers are asked to look at excerpts from unreleased books and vote on which ones they think deserve a shot at being published and sold through Amazon. While a positive vote from readers doesn’t necessarily equate to publication – the final decision remains with the Kindle Scout team – it does give Amazon an idea of what its audience wants to read.

Lego is another company which relies on groups of people to decide which products are likely to be successful. Last year the Danish firm announced a crowdsourcing business model, whereby any Lego fan can submit a product design which is then voted upon by an open community of fellow Lego fans. When a product submission reaches 10,000 votes or more, it gets a formal review and, unless there are any legal issues, moves into production.

This business model means that by the time the product reaches the shops it has already been thoroughly vetted and is in demand. It also effectively allows Lego to employ thousands of designers, without actually having them on its payroll.

It is basically a form of crowdsourcing with the aim of avoiding the HiPPO and creating a more level and open playing field. Crowdsourcing has become a bit of a buzzword lately, taking on various different guises, ranging from raising money from individuals for small projects through to using expert computer programmers and data operators to crack codes and find solutions to problems posed by anyone from the NHS, large retailers or government agencies. (See our article on Kaggle in the previous Brickendon Journal (08) and on our website.)

It is effectively creating a virtual workforce. Generating a model for experimentation, innovation and creativity that achieves unprecedented engagement and scalability. While it is unlikely that the HiPPO will be wiped out any time soon, there is definitely a tendency to move towards a more open and consensual way of working. After all, the current emphasis on data and metrics will make it difficult not to succumb to the need to test and quantify the actions you are taking. And in today’s cut-throat penny-pinching business world, it is too late to find out at the end, that it hasn’t worked.

In short, it is about time the HiPPO followed in the footsteps of its namesake, the hippo, and became a team player. According to an animal fact website, hippos live communal lifestyles and are by no means loners. They like doing things together.

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