ITHACA, New York—About halfway through his keynote presentation at The Hotel Ezra Cornell conference Friday, Gary Loveman of Harrah’s Entertainment asked if there were any young mothers in the capacity crowd. After some goading, a woman tentatively raised her hand, to which the speaker bluntly replied, “You’re a terrible mother.”

Harrah's chief Gary Loveman presented during The Hotel Ezra Cornell conference.

That mother, for example, was unlikely to ask, “Why am I a bad mother?” and then take the appropriate steps to alter her behavior if the claim was true. Instead, she was undoubtedly offended, if not outraged, at the charge. The same is true in the hospitality industry when managers ask their direct reports to adapt to such difficult economic conditions.

“In management, we find ourselves in a similar place but with a potentially less-offensive issue,” Loveman said. “If I go to a marketing director who works with me, and I say, ‘You have to do better. You have to bring customers to the casino at less expense. You have to downsize your expense.’ The first thing they hear isn’t, ‘How might I market better?’ The first thing they hear is, ‘You don’t like what I do.’”

The single loop

This defensive way of thinking is what business theorist Chris Argyris refers to as single loop learning, Loveman explained. Surrounded by stable conditions, most people approach a task with an ingrained method of response. Rarely will they stop and ask, ‘Why am I responding the way I do?”

A crisis is the best way to break out of that single loop and go into the double loop, when you stop to consider why you’re doing what you’re doing, Loveman said. Unfortunately, because single-loop learning is reinforced by successful behavior, it’s often the most successful employees who have the greatest difficulty breaking out of past behavior.

For example, when Harrah’s had to address its operational inefficiencies spurred by it’s acquisition of Caesar’s Entertainment in 2005, many smart people within the company found the learning curve difficult because it called into question practices they did successfully in the past, Loveman said.

Bursting the bubble

For no one is this shift more difficult than the CEO, who lives in a bubble of unyielding optimism.

“We live in this extraordinary realm of nonsense,” Loveman said. “If that isn’t pierced by our own doing, we might even come to believe it. … We, more than anyone else, have to get it, even when getting it is really unpleasant. We have to look at the world as it is, not how we want it to be.”

So how do you shift your capacity to learn and adapt in such a tumultuous market?

“Being good at (managing during a downturn) requires mastery of empiricism, learning, and basic competence,” Loveman said.

First, you can’t react emotionally to calls of change. You have to look at empirical results to understand reality. One of the best ways to do that is by creating a valid and transparent measurement tool.

“We now have scoreboard recording devices that measure the relative efficiencies at everyone of those 53 properties, and everyone sees how they’re doing,” the Harrah’s chief said.

Second, you must continually ask, “How can we be doing this better?”

Finally, you must be competent. Eventually, most smart people are able to step back from the situation and use their skills to address the challenge at hand, Loveman said.

Once you’ve mastered this process, you must sit down and walk your direct reports through it as well, he said.

“We can’t prosper by doing what we did earlier in reverse,” Loveman said “… We’re going to have to find a new way to do a lot of this stuff.”