Yale faculty speaks on climate change & biz leaders | Economic Times

Daylian Cain teaches organisational behaviour and economics at the Yale School of Management. Speaking to Srijana Mitra Das, he discusses transformations business leaders should encourage in the era of climate change:Q. The world faces a climate crisis today. In this situation, how do you define effective business leadership?A. Leadership today is less about telling people what they should do and more about effectively changing their behaviour. Given the access to information most people have now, leading is more about transforming or nudging positive actions. In the context of environmental health, instead of aiming only at gigantic changes, leaders need to inspire small steps that, in time, become a habit. The puzzle is, how do you make those small steps seem le s s sm a l l a nd mor e meaningful?As a hypothetical example, take a university wanting its science labs to close their exhaust lids at night in order to avoid excessive heat being wasted from buildings. One night, a scientist remembers halfway home that she’s left the exhaust lid on. Now, the scientist might think, ‘Well, one night won’t seriously damage the ozone layer.’ So, she might just go on home.But the trouble is, all our behavioural choices, small and large, add up over time. So, one innovation a leadership could try would be to announce departmental green awards — but these would involve random checks for eligibility factors like whether lab exhaust lids were shut. The prospect of such checks causes a concrete change — the scientist will know that her lab will be ineligible for the award if it’s checked that night. With this in mind, she’ll be much more likely to go back and close the exhaust.Leaders today must think of how to incentivise good behaviour one step at a time. Effective leaders should make even seemingly small steps appear consequential by linking values to them. Importantly, such leaders understand how to empower our everyday will power to do the right thing. 85496326Q. Why do you say the environmental crisis reflects a conflict of interest?A. The climate crisis has been brought on by what I call ‘smart people doing dumb things’ — such behaviour is due to a conf lict of interest. We emphasise long-term thinking for creating sustainability — but we still reward short-term growth. One of the greatest challenges before businesses today is to find ways to reward long-term goals, visions and processes, rather than privileging only short-term outcomes. I’ve often found salespeople are encouraged to think short-term. CEOs frequently want them to make the sale quickly and throw the project over the wall for the next person to deal with any problems.Their compensation is based thus on making the sale and not on ensuring the long-term profit of the client or the long-term costs of handling such a project. So, while you may say that employees are encouraged to think long-term, you’re actually only rewarding their short-term vision.This lies at the heart of how many businesses approach the climate crisis. It’s much harder to be green or pro-social when we’re paid to be shortterm thinkers, rewarded for how our stock is doing rather than how our world is doing. But this can change if CEOs rethink their vision and design incentives encouraging more sustained and sustainable behaviour.Q. You research negotiations. Today, businesses, governments and civil society worldwide are negotiating sustainability interventions. What are your recommendations?A. Saving the planet will be the result of successful negotiations — to achieve these, we need to learn to see things better from the other side’s perspective. We often talk too much of what we want and not enough of what the other side wants. But a successf u l negotiation is always about understanding the other side, being more curious about them and analysing their needs. If we can give them some of what they want, that eases the route to what we want.With the climate crisis, I categorise negotiators into three groups. Group one is the believers. They already have green values and they are very much on board. Group two is those who disagree and don’t want to come on board at all. We frequently spend too much time trying to change this group’s mind. I’m more interested in group three, which is those people who want to come on board eventually but not now, maybe in the future. I see a lot of potential in this group. By understanding their needs, incentivising rewards suitably and nudging them to act now rather than later, we can arrive at much more successful outcomes.Like all social challenges, the climate crisis also mirrors delayed gratification and procrastination. But, to mitigate this, instead of aiming only at large measures, we need to reward small steps towards the values we want to inculcate. That’s where effective leadership makes a real difference.(Views expressed are personal)