Archive for May, 2015

ConstructionWithWorkerBy  Brian Honea

Consumers’ conservative financial behavior suggests modest economic growth for the remainder of the year, though the housing industry appears to be gaining momentum, according to Fannie Mae’s Economic and Strategic Research Group’s May 2015 Economic Outlook released Thursday.

Following a weak economic first quarter, continued negative economic fundamentals including a strong U.S. dollar and the lingering effects of last year’s oil price decline have resulted in a downgrade in economic growth to 2.3 percent for all of 2015, down by 0.5 percentage points from the prior forecast. The projection for economic growth in 2015 is only slightly ahead of 2014’s moderate pace of 2.2 percent.

“Last year we saw a strong second quarter rebound from a weak first quarter. We expect the same pattern this year, but a more muted bounceback,” Fannie Mae Chief Economist Doug Duncan said. “The drop in oil prices has led to a reduction in business fixed investment, particularly in the mining and energy extraction space, but hasn’t yet translated to a significant increase in personal spending, with consumers remaining financially conservative by choosing to ramp up their savings or pay down their debt. Incoming data point to some strengthening of consumption for the second quarter.”

Leading indicators for the housing sector have shown that despite the moderate economic growth predicted, housing may experience a strong season in the spring, according to Fannie Mae. In March, existing home sales rose to their highest level in nearly two years, although for Q1 existing home sales were off slightly from the previous quarter’s total.

Despite a slowdown in March, new single-family home sales ended the first quarter at their strongest pace in seven years. Other leading housing indicators that show a strong season may be ahead are pending home sales (increased in March for the third consecutive month) and purchase mortgage apps, which in early May jumped to their highest level in nearly two years. Strong home price acceleration has helped to improve equity positions and loan performance, foreclosure starts fell down to their long-run average of 0.45 percent, and the early-stage delinquency rate for single-family mortgage loans declined to their lowest level since 1972, indicating an improvement in the current quality of outstanding mortgage debt and tightening labor market conditions.

“We also are seeing positive developments in the housing space, supporting our forecast of moderate but broad-based improvement in 2015 compared to last year,” Duncan said. “Purchase mortgage applications have moved up consistently for a couple of months, and while refinance applications have recently pulled back, the actual volume of both purchase and refinance originations earlier in the year came in stronger than we had projected. As a result, we have raised our mortgage origination forecast to $1.46 trillion for the year.”




To my readers – while this is my longest Blog Post yet, it is a very interesting article, if you have time to get through it all. Please post your comments and opinions on the page and let’s hear what you think – what is your experience – how do you see yourself?  Happy reading!

Smile at the customer. Bake cookies for your colleagues. Sing your subordinates’ praises. Share credit. Listen. Empathize. Don’t drive the last dollar out of a deal. Leave the last doughnut for someone else.

Sneer at the customer. Keep your colleagues on edge. Claim credit. Speak first. Put your feet on the table. Withhold approval. Instill fear. Interrupt. Ask for more. And by all means, take that last doughnut. You deserve it.

Follow one of those paths, the success literature tells us, and you’ll go far. Follow the other, and you’ll die powerless and broke. The only question is, which is which?

Of all the issues that preoccupy the modern mind—Nature or nurture? Is there life in outer space? Why can’t America field a decent soccer team? —It’s hard to think of one that has attracted so much water-cooler philosophizing yet so little scientific inquiry. Does it pay to be nice? Or is there an advantage to being a jerk?

We have some well-worn aphorisms to steer us one way or the other, courtesy of Machiavelli (“It is far better to be feared than loved”), Dale Carnegie (“Begin with praise and honest appreciation”), and Leo Durocher (who may or may not have actually said “Nice guys finish last”). More recently, books like The Power of Nice and The Upside of Your Dark Side have continued in the same vein: long on certainty, short on proof.

So it was a breath of fresh air when, in 2013, there appeared a book that brought data into the debate. The author, Adam Grant, is a 33-year-old Wharton professor, and his best-selling book, Give and Take: Why Helping Others Drives Our Success, offers evidence that “givers”—people who share their time, contacts, or know-how without expectation of payback—dominate the top of their

fields. “This pattern holds up across the board,” Grant wrote—from engineers in California to salespeople in North Carolina to medical students in Belgium. Salted with anecdotes of selfless acts that, following a Horatio Alger plot, just happen to have been repaid with personal advancement, the book appears to have swung the tide of business opinion toward the happier, nice-guys-finish-first scenario.

And yet suspicions to the contrary remain—fueled, in part, by another book: Steve Jobs, by Walter Isaacson. The average business reader, worried Tom McNichol in an online article for The Atlantic soon after the book’s publication, might come away thinking: “See! Steve Jobs was an asshole and he was one of the most successful businessmen on the planet. Maybe if I become an even bigger asshole I’ll be successful like Steve.”

McNichol is not alone. Since Steve Jobs was published in 2011, “I think I’ve had 10 conversations where CEOs have looked at me and said, ‘Don’t you think I should be more of an asshole?’ ” says Robert Sutton, a professor of management at Stanford, whose book, The No Asshole Rule, nonetheless includes a chapter titled “The Virtues of Assholes.”

Lacking an Adam Grant to weave them together, the data that support a counter-case remain disconnected. But they do exist.

At the University of Amsterdam, researchers have found that semi-obnoxious behavior not only can make a person seem more powerful, but can make them more powerful, period. The same goes for overconfidence. Act like you’re the smartest person in the room, a series of striking studies demonstrates, and you’ll up your chances of running the show. People will even pay to be treated shabbily: snobbish, condescending salespeople at luxury retailers extract more money from shoppers than their more agreeable counterparts do. And “agreeableness,” other research shows, is a trait that tends to make you poorer.

“We believe we want people who are modest, authentic, and all the things we rate positively” to be our leaders, says Jeffrey Pfeffer, a business professor at Stanford. “But we find it’s all the things we rate negatively”—like immodesty—“that are the best predictors of higher salaries or getting chosen for a leadership position.”

Pfeffer is concerned for his M.B.A. students: “Most of my students have a problem because they’re way too nice.”

He tells a story about a former student who visited his office. The young man had been kicked out of his start-up by—Pfeffer speaks the words incredulously—the Stanford alumni mentor he himself had invited into his company. Had there been warning signs?, Pfeffer asked. Yes, said the student. He hadn’t heeded them, because he’d figured the mentor was too big of a deal in Silicon Valley to bother meddling in his little affairs.

Narcissistic CEOs cluster near both extremes of the success spectrum. “There is such a thing as a useful narcissist.”

“What happens if you put a python and a chicken in a cage together?,” Pfeffer asked him. The former student looked lost. “Does the python ask what kind of chicken it is? No. The python eats the chicken. And that’s what she”—the alumni mentor—“does. She eats people like you for breakfast.”

In Grant’s framework, the mentor in this story would be classified as a “taker,” which brings us to a major complexity in his findings. Givers dominate not only the top of the success ladder but the bottom, too, precisely because they risk exploitation by takers. It’s a nuance that’s often lost in the book’s popular rendering. “I’ve become the nice-guys-finish-first guy,” he told me.

Give and Take seeks to pinpoint what, exactly, separates successful givers from “doormat” givers (the subtleties of which we will return to). But it does not consider what separates successful jerks, like Steve Jobs, from failed ones like … well, Steve Jobs, who was pushed out of his start-up by the mentor he’d recruited, in 1985.

The fact is, me-first behavior is highly adaptive in certain professional situations, just like selflessness is in others. The question is, why—and, for those inclined to the instrumental, how can you distinguish between the two?

In the summer of 2008, a popular surfing spot in California was frequented by a surfer named Lance, to whom we should be grateful. Lance thought every wave was his, so when a fellow surfer, Aaron James, grabbed a wave well within the bounds of surfing etiquette, James was subjected, like many before and after him, to a profanity-laced diatribe.

What an asshole, James thought as he picked up his board.

Philosophers since Aristotle have been obsessed with categories, and James—who got a doctorate in philosophy at Harvard and teaches at the University of California at Irvine—is no exception. What did I mean, exactly, by asshole? He wondered.

James honed a definition that he finally published in his 2012 book, Assholes: A Theory. Formally stated, “The asshole (1) allows himself to enjoy special advantages and does so systematically; (2) does this out of an entrenched sense of entitlement; and (3) is immunized by his sense of entitlement against the complaints of other people.”

What separates the asshole from the psychopath is that he engages in moral reasoning (he understands that people have rights; his entitlement simply leads him to believe his rights should take precedence). That this reasoning is systematically, and not just occasionally, flawed is what separates him from merely being an ass. (Linguistics backs up the distinction: ass comes from the Latin assinus, for “donkey,” while the hole is in the arras, the Hittite word for “buttocks.”)

James wasn’t focused on whether assholes get ahead or not. But I ran his definition past a management professor who is: Donald Hambrick, of Penn State. He told me it sounded “almost identical” to academic psychology’s definition of narcissism—a trait Hambrick measured in CEOs and then plotted against the performance of their companies, in a 2007 study with Arijit Chatterjee.

Measuring narcissism was tricky, Hambrick said. Self-reporting was not exactly an option, so he chose a set of indirect measures: the prominence of each CEO’s picture in the company’s annual report; the size of the CEO’s paycheck compared with that of the next-highest-paid person in the company; the frequency with which the CEO’s name appeared in company press releases. Lastly, he looked at the CEO’s use of pronouns in press interviews, comparing the frequency of the first-person plural with that of the first-person singular. Then he rolled all the results into a single narcissism indicator.

How did the narcissists fare? Hambrick had been “hoping against hope,” he confessed, to find that they tended to lead their companies down the toilet.

“Because that’s what we all hope—that there’s this day of reckoning, a comeuppance.” Instead, he found that the narcissists were like Grant’s givers: they clustered near both extremes of the success spectrum.

This U-shaped distribution, Hambrick grudgingly allows, suggests that “there is such a thing as a useful narcissist.” Narcissistic CEOs, he found, tend to be gamblers. Compared with average CEOs, they are more likely to make high-profile acquisitions (in an effort to feed the narcissistic need for a steady stream of adulation). Some of these splashy moves work out. Others don’t. But “to the extent that innovation and risk taking are in short supply in the corporate world”—an assertion few would contest—“narcissists are the ones who are going to step up to the plate.”

Of course, that says nothing about how narcissists (or takers, or jerks) get to the executive suite in the first place. Grant argues that many takers are good at hiding their unpleasant side from potential benefactors—at “kissing up and kicking down,” as the saying goes—which is undoubtedly part of the story: a number of studies indicate that takers show one face to superiors, whence promotions flow, and another to peers and underlings. But that isn’t the entire story. It turns out that undisguised heelish behavior can often help you get ahead.

Consider the following two scenes. In the first, a man takes a seat at an outdoor café in Amsterdam, carefully examines the menu before returning it to its holder, and lights a cigarette. When the waiter arrives to take his order, he looks up and nods hello. “May I have a vegetarian sandwich and a sweet coffee, please?” he asks. “Thank you.”

In the second, the same man takes the same seat at the same outdoor café in Amsterdam. He puts his feet up on an adjoining seat, taps his cigarette ashes onto the ground, and doesn’t bother putting the menu back into its holder. “Uh, bring me a vegetarian sandwich and a sweet coffee,” he grunts, staring past the waiter into space. He crushes the cigarette under his shoe.

Dutch researchers staged and filmed each scene as part of a 2011 study designed to examine “norm violations.” Research stretching back to at least 1972 had shown that power corrupts, or at least disinhibits. High-powered people are more likely to take an extra cookie from a common plate, chew with their mouths open, spread crumbs, stereotype, patronize, interrupt, ignore the feelings of others, invade their personal space, and claim credit for their contributions. “But we also thought it could be the other way around,” Gerben van Kleef, the study’s lead author, told me. He wanted to know whether breaking rules could help people ascend to power in the first place.

Yes, he found. The norm-violating version of the man in the video was, in the eyes of viewers, more likely to wield power than his politer self. And in a series of follow-up studies involving different pairs of videos, participants, responding to prompts, made statements such as “I would like this person as my boss” and “I would give this person a promotion.” The conditions had to be right (more on this later), but when they were, rule breakers were more likely to be put in charge.

“There’s surprisingly little work on this, if you ask me,” van Kleef told me. But the new field of evolutionary leadership has shed some light on the matter. Instead of asking why some people bully or violate norms, researchers are asking: Why doesn’t everyone?

There was a time in mankind’s history—well, prehistory—when being a bully was the only route to the top. We know this, explains Jon Maner, an evolutionary psychologist at Northwestern’s Kellogg School of Management, by deduction. Every last species of animal except Homo sapiens determines pecking order according to physical strength and physical strength alone. This is true of the seemingly congenial dolphin, whose tooth-and-fin battles for status resemble Hobbes’s “war of everyone against everyone.” And it is true even of our closest cousin, the chimpanzee.

“For animals, a victory or a defeat is not complicated to interpret,” says Robert Faris, a sociologist at UC Davis. If you were to screen the movie Cool Hand Luke for an audience of chimps—something he has not done—they would have no trouble determining who prevails in the prison boxing scene: the hulking boss, Dragline, beats Luke until the title character can barely stand. But the next scene would leave the chimps scratching their heads. Luke, the loser, has become the new leader of the prisoners.

A human moviegoer could attempt to explain. Because Luke kept getting up out of the dirt, even when he was beat, he won the other prisoners’ respect. But the chimps would just not get it. “That’s a complexity of humans,” Faris says: it was not until after the human-chimpanzee split that Homo sapiens developed a newer, uniquely human path to power. Scholars call it “prestige.”

Prestige emerged when our ancestors gained the ability to exchange know-how. An undersized ape-man who knew a better way of finding berries or building a fire or trapping a gazelle could now, instead of being forced to accept beta status, attract a clientele who would trade deference for access to his expertise. Unlike dominance, which is mediated by fear, prestige is freely conferred. But once conferred, of course, it decisively changes the dynamic of power: five ordinary ape-men can, in conjunction, overcome even the strongest single antagonist. The question of “who’s in command?” was now complexified by the question of “who’s in demand?”

Whether this new, competence-based path to power emerged is not debated by scholars. If it hadn’t, The Iliad wouldn’t have opened with Achilles, the greatest warrior in all of Greece, working for Agamemnon. The question is whether prestige supplanted dominance as the only path to power—or whether the older system also remains operational.

In one study, people who stole coffee for their group were much more likely to be put in charge.

Anyone who’s been through middle school might agree that “reputational aggression”—a k a vicious gossip, or even verbal abuse—seems to play a role in the status struggles of teenagers. Using data from North Carolina high schools, Faris uncovered a pattern showing that, contrary to the stereotype of high-status kids victimizing low-status ones, most aggression is local: kids tend to target kids close to them on the social ladder. And the higher one rises on that ladder, the more frequent the acts of aggression—until, near the very top, aggression ceases almost completely. Why? Kids with nowhere left to climb, Faris posits, have no more use for it. Indeed, the star athlete who demeaned the mild mathlete might come off as insecure. “In some ways,” Faris muses, “these people have the luxury of being kind. Their social positions are not in jeopardy.”

Cameron Anderson, a research psychologist at UC Berkeley, believes that among adults, dominance plays little role anymore in the rise of leaders. “If a person is trying to take charge of the group simply by inducing fear,” he figures, “there’s too much to lose by deferring to him.” He’s convinced that we elevate the people we think are more competent, not more scary. But even if he’s right, there’s still room for an indirect advantage to domineering behavior—one that Anderson himself has illuminated in dramatic fashion.

The problem with competence is that we can’t judge it by looking at someone. Yes, in some occupations it’s fairly transparent—a professional baseball player, for instance, cannot very well pretend to have hit 60 home runs last season when he actually hit six—but in business it’s generally opaque. Did the product you helped launch succeed because of you, or because of your brilliant No. 2, or your lucky market timing, or your competitor’s errors, or the foundation your predecessor laid, or because you were (as the management writer Jim Collins puts it) a socket wrench that happened to fit that one job? Difficult to know, really. So we rely on proxies—superficial cues for competence that we take and mistake for the real thing.

What’s shocking is how powerful these cues can be. When Anderson paired up college students and asked them to place 15 U.S. cities on a blank map of North America, the level of a person’s confidence in her geographic knowledge was as good a predictor of how highly her partner rated her, after the fact, as was her actual geographic knowledge. Let me repeat that: seeming like you knew about geography was as good as knowing about geography. In another scenario—four-person teams collaboratively solving math problems—the person with the most inflated sense of her own abilities tended to emerge as the group’s de facto leader. Being the first to blurt out an answer, right or wrong, was taken as a sign of superior quantitative skill.

Confusing cause and correlation—the lab researcher’s bugaboo—is what the confidence man (or woman) relies on. Overconfidence is usually not a put-on, however. “By all indications, when these people say they believe they’re in the 95th percentile when they’re actually in the 30th percentile, they fully believe it,” Anderson says.

Because overconfidence comes with some well-documented downsides (see: Rumsfeld, Donald), Anderson has lately been recruiting subjects with accurate self-impressions and instructing them to act confidently when they are uncertain, and seeing whether they fare as well as the true believers. “The actors are pretty darn convincing,” Anderson reports—but not as convincing as people whose mind-sets are genuinely untethered from their skill-sets. “It’s just that being fully self-deceived gets you further,” he says.

I did wonder, though: Could the apprentice actors, given enough time, come to inhabit their roles more fully? Anderson noted that self-delusion among his study’s participants could have been the product of earlier behaviors. “Maybe they faked it until they made it and that became them.” We are what we repeatedly do, as Aristotle observed.

In fact, it’s easy to see how an initial advantage derived from a lack of self-awareness, or from a deliberate attempt to fake competence, or from a variety of other, similar heelish behaviors could become permanent. Once a hierarchy emerges, the literature shows, people tend to construct after-the-fact rationalizations about why those in charge should be in charge. Likewise, the experience of power leads people to exhibit yet more power-signaling behaviors (displaying aggressive body language, taking extra cookies from the common plate). And not least, it gives them a chance to practice their hand at advocating an agenda, directing a discussion, and recruiting allies—building genuine leadership skills that help legitimize and perpetuate their status. This is why, in college, it’s good to speak up on the first day of class.

It is possible, of course, to reframe Anderson’s conclusions so that, for instance, initiative is itself a competence, in which case groups would be selecting their leaders more rationally than he supposes. But is a loudmouth the same thing as a leader?

Actually, let’s think about that.

When George Cabot Lodge, a professor emeritus at Harvard Business School, talks of the prewar years, he remembers a specific game of tackle football he played as a 10-year-old, and the man screaming and swearing on the sidelines. The man was wearing boots and breeches, apparently just off a horse, and was exhorting his son with four-letter words to “get in there and fight!”

It was 1937. America was at peace. George S. Patton was not. So conspicuous was the cavalryman among the mothers (and it was only mothers, Lodge recalls) at the Shore Country Day School on Boston’s genteel North Shore that Lodge remembers feeling bad for Patton’s son (also named George), who was playing tackle. Lodge, whose father had just been elected to the Senate, was playing guard.

The next time Lodge saw Patton was 1942. The Lodges and the Pattons went for a picnic at Fort Benning. On the way home, Senator Lodge took Patton’s military vehicle and Patton drove the Lodges’ civilian car, with Mrs. Lodge up front and Lodge the younger in back. “We were racing along this straight road, going about 70, when all of a sudden Patton takes his ivory-handled revolver out of his holster and starts shooting in the air,” Lodge recollects. “I guess to liven up the trip for me.” A military policeman pulled him over, as if on script, to receive the obligatory “Don’t you know who the hell I am?” Then, Lodge says, Patton “clapped the embarrassed MP on the shoulder and said, ‘That’s all right, young man. You’re just doing your job.’ And then he pulled onto the road and sped away, pistol blazing.”

Decades after Patton made his historic mechanized thrust across the plains of Europe, the World War II veteran and social historian Paul Fussell told a reporter that he wanted to write a book about the general. It was going to ask: “Is success in generalship related to the perversion of being a bully in social life?”

The book never came to pass. But Patton is a valuable case study on several counts. First, Lodge’s story underscores the importance of context: traits that serve you well in one context (wartime Europe) do not necessarily serve you well in another (peacetime Massachusetts), which would recommend a kind of adaptability that Patton lacked.

But second, Patton raises the question of the jerk’s value to the group. Bullying his own soldiers got Patton reprimanded and sidelined (in 1943, he’d slapped two privates suffering from battlefield fatigue and awaiting evacuation). His ability to bully the enemy is what restored him to favor five months later.

When I thought about whether I had friends or associates who fit Aaron James’s definition of an asshole, I could come up with two. I couldn’t pinpoint why I spent time with them, other than the fact that life seemed larger, grander—like the world was a little more at your feet—when they were around. Then I thought of the water skis.

Some friends had rented a powerboat. We had already taken it out on the water when someone remarked, above the engine noise, that it was too bad we didn’t have any water skis. That would have been fun.

Within a few minutes, an acquaintance I will call Jordan had the boat pulled up to a dock where a boy of maybe 8 or 9 was alone. Do you have any water skis?

The boy seemed unprepared for the question. Not really, he said. There might be some in storage, but only his parents would know. Well, would you be a champ and run back to the house and ask them? The boy did not look like he wanted to. But he did.

The rest of us in the boat shared the boy’s astonishment (Who asks that sort of question?), his reluctance to turn a nominally polite encounter into a disagreeable one, and perhaps the same paralysis: no one said anything to stop the exchange. But that’s the thing. Spend time with the Jordans of the world and you’re apt to get things you are not entitled to—the choice table at the overbooked restaurant, the courtside tickets you’d never ask for yourself—without ever having to be the bad guy. The transgression was Jordan’s. The spoils were the groups.

When it came to brands like Gucci and Burberry, people were willing to pay more when they felt rejected by the salesperson.

James, the philosopher, told me of a jerk who managed to avoid being labeled one by his closest colleagues partly by offering the occasional pro forma apology. But also, when it came to vying for resources with other departments in his organization, he could stand and articulate the case more persuasively than anyone else that his group deserved those resources.

Isolating the effects of taker behavior on group welfare is exactly what van Kleef, the Dutch social psychologist, and fellow researchers set out to do in their coffee-pot study of 2012.

At first blush, the study seems simple. Two people are told a cover story about a task they’re going to perform. One of them—a male confederate used in each pair throughout the study—steals coffee from a pot on a researcher’s desk. What effect does his stealing have on the other person’s willingness to put him in charge?

The answer: It depends. If he simply steals one cup of coffee for himself, his power affordance shrinks slightly. If, on the other hand, he steals the pot and pours cups for himself and the other person, his power affordance spikes sharply. People want this man as their leader.

I related this to Adam Grant. “What about the person who gets resources for the group without stealing coffee?” he asked. “That’s a comparison I would like to see.”

It was a comparison; actually, that van Kleef had run.

When the man did just that—poured coffee for the other person without stealing it—his ratings collapsed. Massively. He became less suited for leadership, in the eyes of others, than any other version of himself.

Grant paused a quarter of a beat after I told him that. “What

I would love to see,” he said, “is the repeated version of that experiment.” Time frames, he stressed, were important. Evidence suggests, “It takes givers a while to shatter this perception that giving is a sign of weakness. In a one-shot experiment, you don’t get to see any of that.”

In another study, from the world of shopping, you do get to see it. And it’s where the advantage to being a heel begins to look a lot more limited.

Darren Dahl had never set foot in the Hermès store in downtown Vancouver when, one afternoon, he sauntered in. Clad in jeans and a T-shirt—looking “kind of ratty,” he confesses—he had not planned on a shopping excursion. The saleswoman behind the counter looked up from some paperwork and, as Dahl remembers it, “literally shook her head in disapproval.”


What a jerk, Dahl thought. He reacted by leaving the store—after buying $220 worth of grapefruit cologne. Two bottles of it.

“I couldn’t believe I had spent so much money,” says Dahl, who should have known better: he is a professor of marketing and behavioral science at the University of British Columbia. Before long, he had devised a study that asked, was it just him? Or could rudeness cause other people to open their wallets too?

The answer was a qualified yes. When it came to “aspirational” brands like Gucci, Burberry, and Louis Vuitton, participants were willing to pay more in a scenario in which they felt rejected. But the qualifications were major. A customer had to feel a longing for the brand, and if the salesperson did not look the image the brand was trying to project, condescension backfired. For mass-market retailers like the Gap, American Eagle, and H&M, rejection backfired regardless.

Finally, the effect seemed to be limited to a single encounter. When Dahl and his colleagues followed up with the buyers, he found evidence of a boomerang effect much like the one he had felt a few minutes after his purchase: the buyers were less favorably disposed toward the brand than they had been at the outset. (And come to think of it, Dahl says, he hasn’t been back to Hermès since.)

Luxury retail is a very specific realm. But the study also points toward a bigger and more general qualification of the advantage to being a jerk: should something go wrong, jerks don’t have a reserve of goodwill to fall back on.

In early 2003, there was nothing wrong with Howell Raines’s New York Times. The paper had won seven Pulitzer Prizes since his promotion to executive editor a year and a half earlier. Then a scandal broke. A Times reporter, Jayson Blair, had been fabricating material in his stories.

A town-hall meeting that was intended to clear the air around the scandal, during which Raines appeared before staff members to answer questions, turned into a popular uprising against his management style. “People feel less led than bullied,” said Joe Sexton, a deputy editor for the Metro section. “I believe at a deep level you guys have lost the confidence of many parts of the newsroom.”

Raines himself had acknowledged as much earlier in the meeting. “You view me as inaccessible and arrogant,” he said. “Fear is a problem to such an extent, I was told, that editors are scared to bring me bad news.” It was an attempt to show he was a listener, Seth Mnookin reported in his book Hard News. But after listening to Sexton’s comments, Raines blew up. “Don’t demagogue me!” he shouted.

And that was pretty much it for Howell Raines. Though it was the paper’s publisher, Arthur Sulzberger Jr., who accepted his resignation soon after, Raines had effectively been shot by his own troops.

To summarize: being a jerk is likely to fail you, at least in the long run, if it brings no spillover benefits to the group; if your professional transactions involve people you’ll have to deal with over and over again; if you stumble even once; and finally, if you lack the powerful charismatic aura of a Steve Jobs. (It’s also marginally more likely to fail you, several studies suggest, if you’re a woman.) Which is to say: being a jerk will fail most people most of the time.

Yet in at least three situations, a touch of jerkiness can be helpful. The first is if your job, or some element of it, involves a series of onetime encounters in which reputational blowback has minimal effect. The second is in that evanescent moment after a group has formed but its hierarchy has not. (Think the first day of summer camp.)

The third—not fully explored here, but worth mentioning—is when the group’s survival is in question, speed is essential, and a paralyzing existential doubt is in the air. It was when things got truly desperate at Apple, its market share having shrunk to 4 percent, that the board invited Steve Jobs to return (Jobs then ousted most of those who had invited him back).

But here is where we should part company with the labels that have carried us this far. Nice guys aren’t always nice. Heels aren’t always heels. We have the capacity to change. Don’t we?

At one point in my research for this article, I devised my own field experiment, in which I would walk into three luxury retailers—Tiffany, Rolex, and Tesla—to see whether I could instill deference in the salespeople by acting like Tom Buchanan, American literature’s most fully formed heel. This meant dispensing with all social pleasantries—no “please” or “thank you,” no “hello” or salutation of any sort—and speaking in sentences of three words or fewer.

Methodological flaws (notably, lack of a control: I could not send a nicer version of me back into the same stores) contaminated my investigation. But the study did yield one finding: it is very hard to play against type. I could handle the three-word limit, albeit with great discomfort and a series of barbaric utterances (“Show me this,” “This is unacceptable,” “Why Rolex?”). But the ban on pleasantries was too much. The reflex to say hello or thanks was so ingrained that I found I had to muffle the words as they leaked out under my breath. I have a feeling that the impression I left may have been less “jerk” and more “oddball to be soothed or pitied.”

As the business scholar Adam Grant puts it, “What I’ve become convinced of is that nice guys and gals really do finish last.”

“This was an issue I struggled with while writing” Give and Take, Adam Grant told me. “I think it is hard to change.” That said, Grant continued, most people switch between styles depending on context. “Most people are givers with friends and family” but tend to match their colleagues’ behavior at work. “I think that changing people’s style is less about teaching them an entirely new mode of operating than getting them to realize, oh, this mode you use in one domain can be imported into another.”

Practice helps, too. Perhaps no one better exemplifies this than my old friend Jim Vesterman. Vesterman took a break from his business career to enlist in the Marine Corps, joining its ultra-elite Force Recon unit and seeing combat in Iraq. Now he runs a Houston-based tech company.

Prior to joining the Marines, Vesterman told me, he had a pretty middle-of-the-road business personality, never running too hot or too cold. Upon joining the Marines, he recalled, he entered an environment in which he might suddenly be told to start fighting a fellow cadet with a padded stick while yelling at the top of his lungs—and then, just as suddenly, to stop, sit down, and straighten out a tiny wrinkle in his uniform. When he reentered the business world, Vesterman said, he was different.

Armed with the knowledge that he could “go from 15 to 95 real quick” and then bring it back down just as fast, his “idling state” was extreme calm. But he also became more forceful. He described a recent conversation with a lawyer who was resisting his idea of applying for a trademark. Vesterman cut the lawyer off mid-sentence, with the word stop. In an aggressive tone, he explained that he wanted the trademark because it could have a chilling effect on competitors, even though he understood the lawyer’s point that it could be challenged. Vesterman then brought his tone down, and apologized for raising his voice.

“I love it!” the lawyer exclaimed. Vesterman recalled him saying that he wished more of his clients were as passionate and direct. “I think you can be tough, as long as you’re not toxic,” Vesterman told me. One other distinction sticks with me from an earlier conversation with him: when I used the word aggression, he said he preferred the word aggressiveness.

What is the difference?

Aggression is both a behavior and a feeling. Aggressiveness is just a behavior, and can be turned on or off. The first serves as an outlet. The second is simply a tool.

Which leads us back to Steve Jobs.

Yes, he brought great spoils to a great many groups. And yes, he hurt a lot of people while doing that. What most everyone can agree on, though, is that Jobs was an outlier. As Stanford’s Robert Sutton points out, “If we copied every habit of successful leaders, we’d all be drinking Wild Turkey, like Southwest Airlines’ co-founder Herb Kelleher.”

So to anyone out there still wondering, here’s your permission slip: you do not have to be like Steve. When Isaacson, his biographer, was asked by a 60 Minutes interviewer about Jobs’s failings, he replied, “He could have been kinder.” Grant adds, “How do we know he succeeded because of his asshole behaviors … and not in spite of them?” Indeed, a more recent biography of Jobs, by Brent Schlender and Rick Tetzeli, argues that Jobs matured during his time away from Apple, and was much more modulated in his behavior—giving credit when appropriate, dispensing praise when warranted, ripping someone a new one when necessary—during the second (and more successful) half of his career.

Without that kind of modulation—without getting a little outside our comfort zone, at least some of the time—we’re all probably less likely to reach our goals, whether we’re prickly or pleasant by disposition.

As Grant himself puts it, “What I’ve become convinced of is that nice guys and gals really do finish last.”

He believes that the most effective people are “disagreeable givers”—that is, people willing to use thorny behavior to further the well-being and success of others. He points out that some of the corporate cultures we consider most “cutthroat” likely are filled not with jerks but with disagreeable givers. Take General Electric, once famed for its “rank and yank” policy of jettisoning the bottom 10 percent of performers each year. “I thought that on face value, GE might be a place where you would expect takers to rise. But it seems more complicated than that,” Grant says.

“The people are really tough there in the sense that they’re going to challenge you to grow and develop, they’re going to set higher goals for you than you would set for yourself. But they’re doing it to make you better and they’re doing it with your best interests and the company’s best interests in mind.” Grant adds: “The hardest thing that I struggle to explain to people is that being a giver is not the same as being nice.” When I thought back to some of the most compelling people I’ve interviewed in business, Grant’s words rang true. Intel’s Andy Grove immediately came to mind. Ask Grove a dumb question, I once learned, and he’ll tell you it’s not the right question. He’s the one who largely built Intel’s culture of what the company calls “constructive confrontation,” in which you challenge ideas, but not the people who expound them. It’s not personal. He just wants his point to be understood. The result is that you do your homework. You come prepared.

The distinction that needs to be made is this: Jerks, narcissists, and takers engage in behaviors to satisfy their own ego, not to benefit the group. Disagreeable givers aren’t getting off on being tough; they’re doing it to further a purpose.

So here’s what we know works.

Smile at the customer. Take the initiative. Tweak a few rules. Steal cookies for your colleagues. Don’t puncture the impression that you know what you’re doing. Let the other person fill the silence. Get comfortable with discomfort.

Don’t privilege your own feelings. Ask who you’re really protecting. Be tough and humane. Challenge ideas, not the people who hold them. Don’t be a slave to type. And above all, don’t affix nasty, scatological labels to people.

It’s a jerk move.



Homes are selling at a faster clip this spring, but something still isn’t quite right in housing.

Thanks to the epic real estate crash of the last decade, market watchers and reporters now have a whole cottage industry of data providers to track every move in home sales and mortgage financing. But looking at all those numbers now, something doesn’t add up to a “normal” housing market.

Mortgage rates are rising, up pretty significantly in just the past two weeks from an average 3.6 percent on the 30-year fixed to just over 4 percent. In the first three months of the year, rates were lower, prompting a refinance “boomlet.”

Lower rates, however, did not translate into more mortgages to purchase a home. In fact, purchase loan originations were down 25 percent in the first quarter from the previous quarter and up only 1 percent from a year ago, according to new numbers from RealtyTrac.

“The purchase loan market remained largely missing in action despite tepid growth from a year ago. The prime buying season still remains ahead, providing some hope that first time homebuyers and other traditional buyers relying on traditional financing will come out of the woodwork in greater numbers in the coming months,” said RealtyTrac Vice President Daren Blomquist.

But in analyzing the numbers, Blomquist admitted that FHA insured loans, a favorite among first-time buyers due to their low minimum down payments, saw weak volume. Granted the first quarter was still winter, but the comparison to a year ago points to weakness, especially given that the economy has supposedly improved in the past year.

RealtyTrac also recorded the highest volume of non-owner occupant buyers (largely investors) in the first quarter since 2011. Investors are still in the game, and some are now starting to use mortgages again for their purchases, though that share is still small.

“Investor activity continues to represent a disproportionately high share of all home sales activity in this housing recovery, but unlike the past three years the large institutional investors are backing out while the smaller, mid tier and mom-and-pop investors are remaining active,” said Blomquist.

That dovetails with a report from CoreLogic showing that all cash sales are still inordinately high. At nearly 38 percent of all sales, cash is still king. That’s down from 46.5 percent at the worst of the housing crash in 2011, but it’s still significantly higher than the normal 25 percent share. Some states, like New York, Alabama, Florida and Indiana are seeing around half of all sales in cash.

Cash may in fact play a bigger role in the coming months, as weak inventory leads to more bidding wars. All-cash buyers have a significant advantage in the competition, as sellers would rather not have to rely on borrower buyers, especially as home prices rise more dramatically, and homes don’t get appraised at deal values.

Home prices have been gaining steam this spring, rising at a far faster pace than income and employment growth. April was the third-straight month that prices grew above 6 percent, according to Redfin, a real estate brokerage. Even with three-straight months of increased listings-about 10 percent more each month, according to Redfin-supply is not keeping up with demand, not even close.

The numbers also don’t speak well of credit availability. Forty-seven percent of real estate industry experts polled by Zillow said lending is still too restrictive. Tight credit, combined with higher home prices, continue to sideline first-time buyers, at least in larger metropolitan markets. Good news for the rental market, but not for home ownership.

“Renters face several challenges,” said Zillow Chief Economist Stan Humphries. “They need enough money on hand to start to buy homes. Even as mortgage credit becomes easier to obtain and home prices level off, renters are confronted with slow income growth and high rental rates. In addition, they face sometimes fierce competition for very few available homes in the market.”

Still another survey, of demand, finds that since the end of the recession in 2009, the housing market’s capacity to support sales activity has nearly doubled. That is, people’s ability to purchase a home. This points again to the supply problem at the heart of housing today.

“The fact that actual existing home sales volumes were lower than market capacity, yet house prices are increasing, indicates that the market is experiencing supply constraints more than demand constraints,” said Mark Fleming, chief economist at First American.

Put simply, the housing market is underperforming because both homebuilders and home sellers are underperforming. Housing starts are still well below even historical norms, despite pent-up demand, and sellers, despite gains in home equity, are still not willing to list at current prices.

“Existing-homes sales are currently below expectations because it’s hard to be a buyer if at first you can’t be a seller,” said Fleming. “Without the constraint of insufficient equity, many more homeowners would be willing to sell their homes, especially given the continued low interest rate environment and increased certainty in labor markets.”

The home ownership rate now stands at the lowest level in 25 years, and it continues to drop each quarter it is measured. Next week the National Association of Realtors will report April sales of existing homes. The headline numbers will likely be better than they were a year ago and as compared to the previous month; one number, however, does not tell the whole housing story.


Rich Karlgaard Forbes Magazine Staff

SOCIALISM WORKS! So wrote management guru Tom Peters, in FORBES ASAP, in the 1990s. You scoff? Okay, you’re half right. Socialism works, but only in very small numbers. It doesn’t scale.

The same is true of teams in business. Think of any typical ones: research, a product invention, a marketing launch or a sales campaign. A team of people happily committed to the project and to one another will outperform a brilliant individual nearly every time. But the team must be small–really small–or it will get in its own way.

This isn’t a new idea. In Roman times a squad was made up of soldiers who could effectively hear their commander’s orders during the clash of battle. The squad’s size–eight–was defined by the number of soldiers who could share a standard tent. Two thousand years later Amazon’s founder and CEO, Jeff Bezos, speaks of the “two-pizza rule” as the guidepost for team size. “If it takes more than two pizzas to feed the team, the team is too big,” Bezos likes to say.

Is it a coincidence that Roman legion squads and Amazon’s strike teams are of similar size? No. The very nature of the human brain–in particular, short-term memory–revolves around what psychologist George Miller famously called “the magical number seven, plus or minus two.” That is, human short-term memory is capable of capturing and briefly holding between five and nine items of information. Think of Zip codes. The brain has a limited repertoire of tricks to enhance that power. (One of them is “chunking” small clusters of data, such as the way we see telephone numbers as a three-digit area code, a three-digit local prefix and a four-digit direct number at the end.)

This means the optimal size of small teams is the same as the effective range of short-term memory in our brains. Our minds seem to work best in that zone of seven, plus or minus two. Below that, the team often devolves into pairs or trios; above that, team communication begins to break down. But why, exactly, does it break down beyond the two-pizza-size team?


The answer lies in the mathematics of networks. To understand the magnitude of this effect, let’s look at the smallest number of connections in a team and progress forward, showing the total number of connections:

2 members = 1 connection
3 members = 3 connections
4 members = 6 connections
5 members = 10 connections
6 members = 15 connections
16 members = 256 connections
32 members = 1,024 connections

Notice that after the low-digit numbers the equation settles down into N², with N representing the number of team members. The complexity of the network grows far faster than the number of team members does. At 1,500 team members–the typical size of a $500 million (revenue) company or division–the number of interconnections reaches 2.25 million. And that creates an obvious problem. Human beings can only handle, much less maintain, much smaller numbers of connections. That’s why, as the number of team members grows, relationships degrade quickly.

Most of us are good at staying in contact with five or six other people on a constant basis. But doing so becomes a whole lot tougher with a dozen or more. At 50? Fat chance. Not even those rare individuals who have photographic memories for faces and names are able to stay in touch with a team that size in the same way they can with one made up of only a half-dozen others. Despite the tools of social networks, texting and videoconferencing, we still don’t have the time or the bandwidth to continually maintain hundreds or thousands of close, personal connections.

That’s why bigger teams almost never correlate with a greater chance of success. That’s why socialism fails beyond a dozen or so people. It has nothing do to with ideology and everything to do with the hard math of impossible connectivity.


A new study finds that thinking about far-off events in terms of days, rather than years, makes people get started sooner.

Procrastination is, in essence, stealing from yourself. The reason goals are so hard to reach, many psychologists think, is because each person believes they are really two people: Present Me and Future Me. And to most people, Future Me is much less important than Present Me. Present Me is the CEO of Me Corp, while Future Me is a lowly clerk.

“Instead of delaying gratification,” people “act as if they prefer their current self’s needs and desires to those of their future self,” write psychologists Neil Lewis of the University of Michigan and Daphna Oyserman of the University of Southern California in a new study in Psychological Science. Why put that money in your 401(k) when you want those shoes now? Why not eat that cupcake today when swimsuit season is still a good six weeks away?

So Oyserman and Lewis asked themselves: What if people could be made to think of their future selves as more connected to their current selves? What if Present Me was forced to imagine exactly how Future Me will feel the night before the big paper is due, and Present Me had never bothered to start?

Through a series of experiments, Oyserman and Lewis found that if subjects thought about a far-off event in terms of days, rather than months or years, they seemed like they would happen sooner. For example, the authors write, something like a friend’s wedding “seemed 16.3 days sooner when considered in days rather than months and 11.4 months sooner when considered in months rather than years.”

In a series of follow-ups, the researchers sought to determine whether people would take action sooner if they were told a certain event was happening in X days rather than (X/365) years. For example, participants were told to imagine they had a newborn child, and that the child will need to go to college in either 18 years or 6,570 days. The researchers found those in the “days” condition planned to start saving a whopping four times sooner than those in the “years” condition, even when controlling for income, age, and self-control.

Thinking about far-off events in terms of days, it turned out, did make a person more able to feel for his or her future self—a self who has, after all, the same wants and needs. Perhaps those Rent kids were onto something when they measured a year in 525,600 minutes.