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Be Careful What You Count: The Perils of Measuring the Wrong Thing

September 15, 2025 By Nagesh Belludi Leave a Comment

Be Careful What You Count: The Perils of Measuring the Wrong Thing There’s an old joke about the Soviet Union’s approach to industrial planning. It’s been told so often it’s practically folklore, but like all good parables, it endures because it captures something fundamentally true about human behavior under pressure.

In the days of the Soviet Union, Moscow set production quotas, which became the dominant concern of factory managers.

When a commissar told a nail factory’s manager that he would be judged on the number of nails the factory produced, the factory had made lots of little, useless nails.

The commissar, recognizing his mistake, then informed that the factory manager’s performance would be judged on the weight of the nails produced. Consequently, the factory then produced only big nails.

This isn’t just a cautionary tale about bureaucratic absurdities. It’s a lesson in what happens when incentives are designed by people who assume that metrics are neutral, incorruptible things. They’re not. Metrics are like mirrors in a funhouse: they reflect something, but rarely what you intended.

Myles J. Kelleher, in Social Problems in a Free Society: Myths, Absurdities, and Realities (2004,) offers another gem from the Soviet archives:

One Soviet shoe factory manufactured 100,000 pairs of shoes for young boys instead of more useful men’s shoes in a range of sizes because doing so allowed them to make more shoes from the allotted leather and receive a performance bonus.

The logic is impeccable. The outcome is ridiculous. And yet, this isn’t just a Soviet problem. It’s a human one. People respond to the rules of the game. If you reward volume, you’ll get volume—regardless of whether it’s useful, desirable, or even remotely sane.

The significance is blunt: people don’t optimize for purpose; they optimize for score. And if the scoreboard is flawed, so is the game.

Idea for Impact: Don’t Incentivize the Wrong Game

The moment you tie rewards to a number, behavior shifts to serve that number—regardless of whether it reflects anything meaningful. That’s the risk. What gets measured gets done, but it also gets distorted or quietly avoided. The point is to measure what matters, and to understand why it matters.

Start by asking what you’re trying to achieve. If the goal is customer satisfaction, measure the experience, not the volume of calls. If it’s innovation, don’t count patents—look at whether they solve real problems. Activity isn’t the same as effectiveness, and often works against it.

Then look at the resources involved. Efficiency only matters if it supports a valuable outcome. A team chasing empty metrics isn’t efficient—it’s drained. And before introducing any performance measure, ask how it might be exploited. If someone can meet the target while ignoring the purpose, you haven’t built accountability—you’ve created a loophole.

Metrics are instruments. Used well, they clarify. Used poorly, they mislead. Measure carefully.

Reward carelessly, and you’ll get exactly what you asked for—just not what you needed.

Wondering what to read next?

  1. When Work Becomes a Metric, Metrics Risk Becoming the Work: A Case Study of the Stakhanovite Movement
  2. Numbers Games: Summary of The Tyranny of Metrics by Jerry Muller
  3. Why Incentives Backfire and How to Make Them Work: Summary of Uri Gneezy’s Mixed Signals
  4. People Do What You Inspect, Not What You Expect
  5. Master the Middle: Where Success Sets Sail

Filed Under: Business Stories, Mental Models, Sharpening Your Skills Tagged With: Decision-Making, Ethics, Goals, Motivation, Performance Management, Persuasion, Psychology, Targets

Virtue Deferred: Marcial Maciel, The Catholic Church, and How Institutions Learn to Look Away

August 13, 2025 By Nagesh Belludi Leave a Comment

Virtue Deferred: Marcial Maciel, The Catholic Church, and How Institutions Learn to Look Away Organizations often face a moral dilemma when confronting high-performing individuals—those rainmakers whose charisma and drive yield tangible results (Jack Welch’s ‘Four Types of Managers’ model.) They secure vital funding, lead winning campaigns, and appear central to the organization’s mission. Their value is clear. Their presence seems irreplaceable. Leadership, captivated by performance, may grow dependent on them.

Yet behind the brilliance, some of these figures violate core principles. They may cultivate toxic workplaces, breach ethical boundaries, or engage in outright abuse. This reveals a troubling paradox: the same individuals who fuel success may simultaneously erode the institution’s moral foundation. Fearing the loss of key assets, organizations may choose to look the other way—or worse, actively protect them.

Tolerance of this behavior extracts a steep cost. Morale withers. Trust deteriorates. Cultures of fear and duplicity take root. Behind a polished facade, core values decay. Integrity is sacrificed for short-term gain.

Few cases illustrate this more vividly than that of Marcial Maciel and the Catholic Church.

A Charismatic Predator Shielded by Power

In 2019, to mark the 80th anniversary of Pius XII’s elevation to Bishop of Rome, Pope Francis announced the opening of Vatican archives from his papacy. Scholars welcomed the decision, many of them drawn to longstanding controversies regarding Pius XII’s role during the Holocaust.

Included in this research were damning revelations about Marcial Maciel Degollado (1920–2008,) the Mexican priest who founded the Legion of Christ and the Regnum Christi religious order. Lauded as “the greatest fundraiser of the modern Roman Catholic Church,” Maciel transformed the Legion into a formidable spiritual, financial, and political force.

Beneath this polished image, however, lay systemic abuse.

Maciel was a chronic drug addict and serial predator who molested at least 60 boys and young men under his care. After his death, reports revealed that he had fathered multiple children—two of whom he allegedly abused—and maintained sexual relationships with several women, including one reportedly underage. His authorship of the book Integral Formation of Catholic Priests (1997) stands in grim contrast to the depraved reality of his life and actions, underscoring a profound institutional moral corruption.

The archives showed that senior Church officials, including Pope Pius XII, were aware of Maciel’s misconduct as early as the 1940s. Efforts to remove him began in 1956 but were halted following the pope’s death. Despite mounting evidence, Maciel remained in power for decades.

'Betrayal Crisis Catholic Church' by Boston Globe (ISBN 0316776750) Why was he protected? Because he was more than a priest—he was a rainmaker. His ability to attract wealth and influence made his misconduct inconvenient. The institution prioritized survival over accountability.

Even after repeated warnings and detailed accusations, the Church delayed meaningful action for over half a century. Only in 2006 did Pope Benedict XVI remove Maciel from public ministry, ordering him into a secluded life of prayer and penance. He died two years later. In 2010, the Vatican formally condemned his “reprehensible actions” and placed the Legion under direct papal oversight.

The Institutional Blind Spot: When Success Shields Abuse

Maciel’s story is not just a case of individual moral failure. It is a systemic cautionary tale. He turned the Legionaries of Christ into a financial and political juggernaut, directing millions toward Church coffers and gaining favor with powerful bishops and cardinals. In the institutional calculus of power, his sins were inconvenient, but his financial value was immense. He was shielded not despite his crimes, but because of them.

When institutions conflate prospering with virtue, they protect the golden goose—even when it lays rotten eggs. Often this happens not out of malice, but out of habit. In doing so, they risk betraying the very mission they claim to uphold.

Wondering what to read next?

  1. Power Inspires Hypocrisy
  2. Ethics Lessons From Akira Kurosawa’s ‘High and Low’
  3. The Enron Scandal: A Lesson on Motivated Blindness
  4. The Poolguard Effect: A Little Power, A Big Ego!
  5. Power Corrupts, and Power Attracts the Corruptible

Filed Under: Business Stories, Leadership, Sharpening Your Skills Tagged With: Attitudes, Biases, Conviction, Ethics, Getting Along, Integrity, Likeability, Motivation, Performance Management, Psychology

Conscience is A Flawed Compass

July 21, 2025 By Nagesh Belludi Leave a Comment

A Reflection on Why Conscience is a Flawed Moral Compass: Example of Jefferson and Slavery Conscience isn’t as reliable a guide on moral questions as it’s often made out to be. Consider Thomas Jefferson’s advice to his impressionable 11-year-old daughter, Martha:

If ever you are about to say anything amiss or to do anything wrong, consider beforehand. You will feel something within you which will tell you it is wrong and ought not to be said or done: this is your conscience, and be sure to obey it. Our Maker has given us all this faithful internal monitor, and if you always obey it, you will always be prepared for the end of the world, or for a much more certain event, which is death.

Yet despite publicly opposing slavery, Jefferson conveniently owned enslaved people to support his lavish lifestyle and even fathered children with an enslaved woman.

This stark contradiction highlights a critical truth: even a informed and discerning conscience does not guarantee consistently virtuous action, particularly when self-interest is at stake.

And that’s the great paradox of conscience—the inherent tension between the powerful, felt imperative to obey one’s inner moral sense and its demonstrated fallibility and subjectivity and inconsistency.

Moral consistency is a myth.

Wondering what to read next?

  1. Ethics Lessons From Akira Kurosawa’s ‘High and Low’
  2. The Streisand Effect: When Trying to Hide Only Makes it Shine
  3. Of Course Mask Mandates Didn’t ‘Work’—At Least Not for Definitive Proof
  4. Virtue Deferred: Marcial Maciel, The Catholic Church, and How Institutions Learn to Look Away
  5. Why Incentives Backfire and How to Make Them Work: Summary of Uri Gneezy’s Mixed Signals

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Biases, Conflict, Conviction, Critical Thinking, Ethics, Integrity, Philosophy, Psychology, Virtues

When Work Becomes a Metric, Metrics Risk Becoming the Work: A Case Study of the Stakhanovite Movement

February 10, 2025 By Nagesh Belludi Leave a Comment

Aleksei Stakhanov: The Soviet Miner Who Redefined Productivity Standards

The Struggles of a Low-Performing Mine & The Birth of a Hero

Alexei Grigoriyevich Stakhanov (1906–77) was a miner from Donbass, a coal-rich region in Soviet Ukraine where all mines were state-run with strict monthly production quotas. Failure to meet these targets often resulted in trouble for managers and local Communist Party officials.

Stakhanov worked in one of the region’s lowest-performing mines. Despite having no education beyond primary school, he was determined to improve his community’s productivity. Driven by a deep sense of responsibility, he relentlessly searched for ways to boost output and eventually devised a novel solution.

In the 1930s, miners used picks to extract coal, which was then hauled out by pit ponies. In cramped tunnels, miners would hack away at the coal while propping up the roof with logs. Stakhanov proposed a new system: one miner would focus on continuously picking coal, another would load it onto carts, a third would prop the roof, and a fourth would guide the ponies. He also suggested replacing the traditional pick with a heavy mining drill, requiring specialized training. Despite initial skepticism from the manager, Stakhanov persuaded the team leader and local party official to give it a try.

On the night of August 30, 1935, Stakhanov, along with three colleagues, entered the mine with the party boss and a local reporter. Six hours later, they emerged victorious, having mined 102 tons of coal—more than 14 times the original target.

The feat drew immediate attention. The local newspaper published Stakhanov’s story, and Soviet industry minister Sergo Ordzhonikidze shared it with Joseph Stalin. Soon, Stakhanov’s achievement was celebrated in Pravda, the central party newspaper. After Stalin’s endorsement, the story spread across the Soviet Union, and Stakhanov became a national hero and a symbol of Soviet productivity.

The Obsession with Metrics

Stakhanov’s achievement remains a pivotal moment in Soviet history. It became a shining example of efficiency, elevating him to the status of the ideal worker in the eyes of the Soviet state. His success sparked the Stakhanovite Movement, a state-driven campaign that encouraged workers to exceed their quotas and demonstrate the superiority of socialism.

Stakhanov’s image quickly flooded posters and newspapers, celebrated as a national role model. In December 1935, as America was still grappling with the Great Depression, Time magazine featured Stakhanov on its cover, bringing his story to American shores and solidifying his international fame. After his death, the important industrial city of Kadiivka in the Donbass region was renamed Stakhanov in his honor, a tribute that lasted from 1978 until 2016.

The Stakhanovite Movement: When Metrics Drive Work, Not Outcomes The Stakhanov Movement capitalized on the collective desire for improvement and transformation, leading to increased productivity through better-organized workflows. However, as often happens, when metrics become the sole focus, they overshadow the true purpose of the work. In the Soviet system, the state had to ensure control over production, align workers’ efforts with central economic plans, and maximize output. Quotas played a key role in this strategy, setting mandatory production targets across various industries. Over time, these quotas became the primary measure of success, with workers judged by numbers rather than the quality or long-term impact of their efforts. Those who failed to meet the targets risked being labeled as “wreckers” and accused of sabotaging the system. Stakhanovites were celebrated as heroes, rewarded with media attention, lavish rewards, and even having their names immortalized on factories and streets.

This obsession with metrics led to manipulation, particularly with the “socialist competition” that the Stakhanovite Movement encouraged. Groups and individuals competed to exceed production norms. Workers, fixated on meeting targets, sometimes resorted to shortcuts or ignored safety standards to boost output. As a result, the real goals—sustainable production, worker welfare, and innovation—became secondary pursuits. The metric of raw output became the work itself, distorting its true purpose.

The Obsession with Metrics: A Cautionary Tale

The Stakhanovite Movement highlighted the dangers of an obsession with productivity metrics and how they can distort the true nature of work.

While metrics can serve as useful benchmarks, aligning efforts with goals and driving performance, excessive focus on them can shift the emphasis from the work itself to the measurement process. Each new metric introduces an opportunity cost—resources are drained, and your team’s time is consumed.

When employees become fixated on hitting targets, they often prioritize numbers over innovation and lose sight of the bigger picture. Over-reliance on metrics can distort performance, neglect long-term goals, and stifle creativity.

Complex tasks involve many variables that a single metric cannot capture. Focusing too narrowly on one measure risks oversimplifying the situation, missing critical factors, and turning the work into a mechanical process.

Idea for Impact: Challenge metrics that don’t add value. Discard those that fail to measure real success. Take control of meaningless measurements and strike the right balance between measurable performance and the true purpose of the work.

Wondering what to read next?

  1. Why Incentives Backfire and How to Make Them Work: Summary of Uri Gneezy’s Mixed Signals
  2. Be Careful What You Count: The Perils of Measuring the Wrong Thing
  3. Numbers Games: Summary of The Tyranny of Metrics by Jerry Muller
  4. People Do What You Inspect, Not What You Expect
  5. Master the Middle: Where Success Sets Sail

Filed Under: Business Stories, Leading Teams, Managing People, Mental Models Tagged With: Biases, Critical Thinking, Decision-Making, Ethics, Goals, Motivation, Performance Management, Persuasion, Psychology, Targets

People Do What You Inspect, Not What You Expect

January 24, 2025 By Nagesh Belludi Leave a Comment

People Do What You Inspect, Not What You Expect Expectations alone won’t cut it. Without active monitoring, goals quickly go off the rails. In the restaurant business, setting food quality standards without inspection is like leaving the door wide open for trouble. Left to their own devices, staff will cut corners, skip steps, and serve subpar meals, leading to under-cooked food and neglected health standards.

Without oversight, people do just enough to stay out of hot water. Worse, if they think no one’s watching, unethical shortcuts slip through the cracks.

Inspection shows you’re serious, holding people accountable and keeping them on track. It drives performance, prevents complacency, and shuts down any funny business.

Idea for Impact: What gets inspected, gets done.

Wondering what to read next?

  1. When Work Becomes a Metric, Metrics Risk Becoming the Work: A Case Study of the Stakhanovite Movement
  2. Numbers Games: Summary of The Tyranny of Metrics by Jerry Muller
  3. Be Careful What You Count: The Perils of Measuring the Wrong Thing
  4. Why Incentives Backfire and How to Make Them Work: Summary of Uri Gneezy’s Mixed Signals
  5. Don’t Overemphasize Hitting Financial Targets

Filed Under: Business Stories, Managing People, Mental Models Tagged With: Ethics, Goals, Motivation, Performance Management, Persuasion, Targets

Is Ethics Just About Getting Caught?

September 24, 2024 By Nagesh Belludi Leave a Comment

Is Ethics Just About Getting Caught? A surgeon friend of mine often quips, “If you think you can ‘get away’ with something, you probably shouldn’t be considering it in the first place.”

A reliable rule, no doubt! But rightness or wrongness isn’t as clearcut.

In philosophy, there’s a school of thought called virtue ethics. It suggests that moral behavior comes from cultivating a virtuous character and living in alignment with virtues like honesty, compassion, and courage. If you’re even thinking about deceitful behavior, it’s a sign that your character might need a bit of a tune-up.

On the flip side, while deliberate wrongdoing should never be condoned, sometimes ethics shifts to focus on practical utility. Utilitarianism, another philosophical approach, judges the rightness or wrongness of an action based on its consequences. From this viewpoint, wrongdoing might be seen as justifiable if it leads to a greater good, with the consequent focus on artfully dodging repercussions.

Wondering what to read next?

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  4. The Truth Can Be Bitterer than a Sweet Illusion
  5. Power Corrupts, and Power Attracts the Corruptible

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Attitudes, Decision-Making, Discipline, Ethics, Integrity, Philosophy

Consistency Counts: Apply Rules Fairly Every Time

July 4, 2024 By Nagesh Belludi Leave a Comment

Consistency Counts: Apply Rules Fairly Every Time It’s confusing when managers are strict one day and super chill the next.

Your employees get bummed out when it’s “by the book” one day and “anything goes” the next.

No matter how your day’s going, stick to the company rules and procedures. Keep it consistent, and it’ll be way less stressful for your team.

The same goes for customers. For example, consider how dealing with airline customer service can be a real headache, especially regarding baggage size rules. It’s like stepping into a game of roulette where different people and locations play by entirely different sets of rules. What’s acceptable at one airport becomes a baggage debacle at the next stop, turning the baggage ‘rules’ into a guessing game, even with the same airline.

Consistency in sticking to company policies is a big deal for keeping things stable and trustworthy.

When your employees and customers see you playing it fair and square all the time, they know what to expect.

  • Create clear documentation and implement robust training programs for employees.
  • Keep leadership messaging consistent and on point, foster a culture of compliance and accountability across all levels of the organization, and regularly audit policy adherence, incorporating it into performance metrics.

Idea for Impact: Stay Consistent, Stay Fair. Stay on the same page, reliably and uniformly. Staying consistent with policies is key to building solid relationships with your employees and your customers.

Wondering what to read next?

  1. Not Every Customer is a Right Fit for You—and That’s Okay
  2. Leadership Isn’t a Popularity Contest
  3. From the Inside Out: How Empowering Your Employees Builds Customer Loyalty
  4. Managing the Overwhelmed: How to Coach Stressed Employees
  5. A Sense of Urgency

Filed Under: Leadership, Managing People, MBA in a Nutshell, Mental Models Tagged With: Coaching, Conflict, Conviction, Customer Service, Discipline, Ethics, Great Manager, Likeability, Performance Management

Why Philosophy Matters

June 25, 2024 By Nagesh Belludi Leave a Comment

Beyond Joy: The Essence of Living Well through Philosophy Philosophy transcends mere instrumentality; it delves into the depths of existence, ethics, meaning, truth, and reality. It goes beyond being a means to the ends of happiness, moral virtue, and critical thinking—it encompasses all these aspects and more.

Philosophy is primarily concerned with identifying what we should pursue as ends in themselves. Philosophy prompts us to reflect on the nature of the good life, the virtues worth pursuing for their own sake, and the guiding principles that shape human behavior towards these meaningful ends. This pursuit may or may not yield happiness. But it doesn’t matter, so long as we live well—which means to live in such ways that align most closely with our inherent natures.

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Filed Under: Living the Good Life, Mental Models Tagged With: Attitudes, Ethics, Philosophy, Virtues, Wisdom

Why New Managers Fail to Stop Unethical Behavior Among Subordinates

June 17, 2024 By Nagesh Belludi Leave a Comment

Unveiling the Causes Behind Managerial Failure in Ethical Oversight Embarking on a new role presents a host of challenges, and discovering unethical or potentially illegal practices within the organization can be a pivotal moment. The real question that emerges is whether you will be the catalyst for change in the face of such issues.

Imagine stepping into the shoes of a new retail banking sales manager at Wells Fargo, where fraudulent accounts were the means to achieving targets. Picture yourself becoming a manager at Volkswagen, only to uncover the manipulation of emissions tests by engineers using software. In both scenarios, middle management failed to intervene as these unethical practices took root.

As individuals rise to positions of authority, they wield the power to address unethical practices, yet sometimes, they don’t. Personal character flaws such as greed, sexism, or an unwavering pursuit of self-interest can drive this inaction, fostering complacency. Preserving the status quo and maintaining their position may become a higher priority than confronting misconduct.

Another significant factor at play is group identification. This involves adopting the group’s values, beliefs, and behaviors, becoming intertwined with one’s self-concept. Higher-ranking individuals often intensify this identification, feeling a stronger bond with their group or organization. Their membership becomes a point of pride, and they are more motivated to contribute to the group’s objectives than their lower-ranking counterparts.

However, this deep identification with the group comes with an ethical downside. It can obscure a manager’s ability to recognize ethical issues within the group. In simpler terms, those in higher-ranking positions may fail to perceive unethical actions because their strong identification blinds them to ethical violations. Consequently, they may hesitate to take action or intervene due to a lack of awareness.

Idea for Impact: Companies need to explore strategies that instill a strong moral compass in future business leaders. These leaders must maintain their ethical integrity as they climb the corporate ladder. Creating a safe environment for whistleblowing is crucial, empowering individuals to report dishonesty without fear of retaliation. It’s time to foster ethical leadership and ensure that the ascent up the corporate hierarchy aligns with an unwavering commitment to integrity.

Wondering what to read next?

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  2. The Enron Scandal: A Lesson on Motivated Blindness
  3. Power Inspires Hypocrisy
  4. Expanding the Narrative: Servant Leadership beyond Christianity
  5. Power Corrupts, and Power Attracts the Corruptible

Filed Under: Business Stories, Leadership, Mental Models Tagged With: Ethics, Getting Along, Integrity, Leadership, Persuasion, Psychology, Role Models

Embracing Cultural Sensitivity: A Case Study of Akira Kurosawa’s Oscar Speech

May 6, 2024 By Nagesh Belludi Leave a Comment

Consider the acceptance speech delivered by the renowned director Akira Kurosawa when he received the Honorary Award at the 62nd Academy Awards in 1989. This award recognized his lifetime achievements and his significant impact on filmmaking, both in Japan and internationally.

I am very deeply honored to receive such a wonderful prize, but I have to ask whether I really deserve it. I’m a little worried, because I don’t feel that I understand cinema yet. I really don’t feel that I have yet grasped the essence of cinema. Cinema is a marvelous thing, but to grasp its true essence is very, very difficult. But what I promise you is that from now on I will work as hard as I can at making movies and maybe by following this path I will achieve an understanding of the true essence of cinema and earn this award. George [Lucas], Steven [Spielberg]. Thank you.

In the Western world, some may perceive this language as a display of false modesty. It appears that the legendary Kurosawa, whose cinematic genius revolutionized storytelling, downplays his abilities and achievements, seemingly deflecting praise.

Let’s Be Cautious Not to Impose Norms We Call Our Own

While Kurosawa’s speech might come across as insincere or disingenuous, it’s important to consider cultural relativism. Different cultures have varying values, norms, and philosophical perspectives. What might be seen as a positive sentiment in one culture can be perceived differently in another.

Respecting Diversity: Avoiding Imposing Personal Norms As this case study illustrates, the concept of humility in Asian cultures may differ from that in Western cultures. Many Eastern cultures approach humility not merely as an understanding of personal limits, but as a way to let go of the self, understand one’s place in the larger scheme of existence, and connect with a greater reality. (In contrast, Western traditions, for they’re based in Abrahamic traditions, often conceptualize humility as submission to God.) Eastern traditions encourage adopting a particular perspective on life, focusing on understanding the small role one plays in a vast universe, appreciating others, and recognizing their inherent worth. For instance, in Buddhism, one of the elements of the eight-fold path is “right intention,” which involves freeing oneself from selfishness, partly achieved through humble thought.

Idea for Impact: Cultural sensitivity is essential to avoid unintentional offense. Interpreting sentiments and communication within the cultural and philosophical context of the individuals involved is crucial for effective cross-cultural understanding and respect.

Wondering what to read next?

  1. There’s Real Danger in Religious Illiteracy
  2. Labeling Damage
  3. Racism and Identity: The Lie of Labeling
  4. Ethics Lessons From Akira Kurosawa’s ‘High and Low’
  5. Why Others’ Pride Annoys You

Filed Under: Leading Teams, Managing People, Mental Models Tagged With: Attitudes, Biases, Buddhism, Conflict, Diversity, Ethics, Getting Along, Group Dynamics, Philosophy

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About: Nagesh Belludi [hire] is a St. Petersburg, Florida-based freethinker, investor, and leadership coach. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isn’t compromised by a lack of a big-picture understanding.

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