Life is about making choices, and those choices have consequences. In business, leaders are constantly making choices: which projects to prioritize, which candidates to hire, which vendors to select, which targets to acquire, which virtual background to use in the next video conference.
If business is a test, many leaders under pressure often treat these decisions as true-false questions rather than multiple choice. They look at each potential solution as soon as it’s visible, and decide “yes or no:” if yes, stop looking for alternatives; if no, move on to the next yes-no decision.
Another approach is to collect potential solutions and evaluate them as a set. What are the comparative strengths of each? How could the leader construct a hybrid solution by combining the best components into a single solution? Can one long-shot solution become negotiating leverage against the incumbent? And finally, have you evaluated your potential actions against the alternative of “do nothing” ?
Once a decision has been made, is a leader willing to change course if the results don’t come through as expected? A common bias is the sunk cost fallacy – the cause of “throwing good money after bad.” After making a decision, re-assess the path you are on versus the alternatives that are still available. Net of additional switching costs, can what you have learned since the initial decision lead to a better outcome with an alternative solution?
Leaders face a barrage of decisions each day. My intent is that the techniques outlined above help you achieve better outcomes from at least a few of those decisions. Please use the comments to provide your feedback and questions.
Meetings are a request for scarce resources, made days (or weeks) before the event. In the time between the meeting request and the event, new information appears and relationships evolve.
What this means to me
Any discussion should include the most important topics that the attendees need to address at the time of the meeting, not only those proposed in the agenda when the meeting was scheduled. If we don’t, we are wasting scarce resources, denying ourselves the current truth, and ultimately weakening our relationships.
Putting this knowledge to work
After reviewing the proposed agenda for a scheduled meeting, raise what I believe to be the most important topics to the discuss with the other attendees, and allow the group to decide how to devote the remaining time. Follow up 1:1 afterwards as needed to discuss the most important topics.
Two quick examples
Arriving at a standing monthly meeting, we review the pre-defined agenda and standard “status deck.” There are critical resourcing issues that emerged since the last meeting that aren’t on the agenda but are impacting the team’s rate of progress, so I ask the team is we can spend 10 minutes during the current meeting discussing that issue or to find another time before the end of the day that’s more convenient .
When I get a vague or empty meeting request from a person I don’t work closely with, I decline the meeting request and politely request clarification on what they want to achieve with the discussion. Sometimes a quick phone call can help soften this reply as it’s somewhat unusual in corporate culture.
Anxiety and stress in our most important relationships arises from guessing what others want from us, and from guessing how we should “show up” for them.
What this means to me
During intense conversations at home or at work, when I am guessing what the other person needs from me I feel anxious and physically stressed. This causes the conversation (and therefore the relationship) to degrade in a few ways:
I’m no longer listening fully to the other person because I’m distracted by thinking about my own feelings and needs.
In a state of “arousal” (fight-or-flight) my listening and attention will get even worse.
The other person, seeing me in a stress state, could react to that with their own stress response, amplifying the anxiety and stress of the conversation.
Putting this knowledge to work
Just ask the other person what they need, and to tell them what you need, so that we can show up for each other in the most helpful way and avoid the stress of guessing.
Two quick examples
When my spouse starts telling me about a difficult part of the day, I can say “that sounds tough…do you need strategy or sympathy from me right now?”
When I am talking with someone on my team about a challenge we need to solve, be explicit about my expectations: “I just need to talk through this scenario with someone – can you help poke some holes in my hypothesis? If there are any actions for you afterwards, I’ll be specific.”
The human brain takes up to half a second after receiving sensory inputs to apply judgments, cognitive biases, and labels.
What this means to me
A core personal development theme for me is to become less reactive. Instead of classifying an event as bad (or good) and labeling the person who “caused” it as incompetent (or amazing), I’m trying to delay those sub-second reactions.
Putting this knowledge to work
Daily practice to delay my reaction between an observation and a response (meditation helps here). Change my genuine reaction to an event with curiosity: see things as neither good nor bad, just things to explore and understand. Don’t react at all to things that are out of my control (yes, this has echoes of Stoicism).
It’s that time of year again: most companies are pushing hard to close the final quarter of the fiscal year while simultaneously planning the budget and strategic objectives for next year. Depending on the type, size, and maturity of your business, this exercise could include anything from a rigorous, zero-based, quantitative analysis of global operations to a white board session over a beer. Or maybe not: Basecamp doesn’t plan more than six weeks ahead. Most likely, your experience involves too many revisions of painfully formatted spreadsheets that will be forgotten in a few months when the reality of daily business sets in.
Regardless of the mechanics of your planning process, the fundamental question is: how much can we achieve?
In many organizations, the answer to this question starts and ends with leadership. But when growth requires broad adoption of new systems, behavior change by the end users of these systems matters as much as, or more than, leadership capacity. Let’s look at why this matters, and what you can do differently in this year’s planning cycle to incorporate the concept.
Leaders think leadership is important. Whether it’s self-preservation or cognitive bias, many leadership teams will over-weight their role in driving change. I’m not endorsing the leaderless organization fad, and I believe it’s essential to sanity-check the number of strategic objectives and special projects assigned to each leader (in addition to his or her “business as usual” responsibilities) when building an annual plan. Even an Agile approach to program and project management, with more frequent interrogation of outcomes, risks, and blockers, can leave leaders overwhelmed. When a single leader is overloaded, delays and dependencies can put an entire program at risk. When the organization is capable of a high rate of change without enough effective leadership capacity, employees feel disengaged and top talent starts to look elsewhere. So if we’ve established that leadership capacity matters, why isn’t that enough?
Sustained improvement happens when a new, better thing happens more often than the previous, worse thing. Even in highly technical, capital-intensive industries, measurable changes in performance only occur with adoption of new solutions. Software teams can ship new features, and if users don’t adopt those features, the users don’t realize the benefits, no matter how many times in a row you say the word “done.” Managers can train teams on new procedures, and if those employees don’t perform their work differently, the same defects, inefficiencies–even accidents–will persist. Marketing teams can crank out more content, and if sellers don’t change the way they engage with buyers…you get it.
Therefore, in addition to a “top down” assessment of leadership capacity across projects, take a “bottom up” view of behavior changes during your annual planning cycle. Look across your portfolio of projects: which roles, or individuals, in the organization will have to sustain behavior change for the projects to succeed? Are we asking too much of the same people?
Here’s a hypothetical example from a fictional software company:
HR leadership plans to change the performance management process, using a new online tool
Marketing leadership plans to change the content management system, including how inbound leads are routed to Sales
Operations leadership plans to change the quote to cash process, including a new set of contract templates
Sales leadership plans to change the compensation structure, with different payouts for new logos vs account expansion
Product leadership plans to introduce a new self-service subscription feature as part of the next major release
From a top down view this set of projects will require cross-functional coordination, however, no single leader will be overloaded with responsibilities. Great, all set, let’s get started–right? A bottom up view of the behavior changes required for these projects to generate results, however, reveals that Sales Managers will be overwhelmed by requests from different project leaders to work differently. It is much better to identify this risk during the planning cycle than in the mid-year review, when each project leader is scrambling to understand–or worse, to blame the Sales Managers–why they are not hitting their numbers.
Leadership matters. But without behavior change that fuels adoption, results don’t stick. Try this approach in your annual planning cycle to see if it generates a greater rate of improvement–and leave a comment below with any questions or feedback.
It’s another busy week for you and your team, and you are feeling very productive while working through your action list. You write a concise email to a few team members with the intent of delegating work for the coming week, and cheerily close with this line:
Let me know how I can help.
— what you said to your team
Those six words have just sent a powerful, yet subtle message to your team:
I want to maintain the appearance of supporting you, but I’m not actually engaged in your success.
— how your team perceives you
Genuine support arises from setting clear direction, being accessible to engage, and providing effective coaching. “Let me know how I can help” creates a veil of accessibility, while placing the burden entirely on the team to understand the direction and seek out the manager’s support. The irony of the disengaged manager is that the team members who could benefit most from support — those with the greatest need for direction and coaching — have the largest barrier to receiving support.
After clearly establishing the mission and purpose for the team (“the why”), setting clear direction means that you’ve defined both what to do and how to do it. To use a trivial example: when my family works together to prepare dinner, the why is an expression of our values (satisfy our nutritional needs, self-sufficiency, appreciation of diverse cuisines, etc.). The what is a set of tasks and recipes that comprise the meal, and the how is a standard of quality and steps to follow so that no one gets hurt and the meal is tasty.
In a work environment, the manager needs to discern whether the team member needs help with what to do or how to do it (or both). Asking questions (“Tell me how…”) and reviewing draft work product (“Show me what…”) are effective techniques to assess any gaps. The manager should be doing much more listening than talking in this interaction. The table below suggests some practical steps for the manager depending on each team member’s situation.
It’s not your team members’ responsibility to let you know how you can help them. As an engaged manager, genuine support arises from:
Setting clear direction by expressing the mission and purpose of the team’s work in clear and compelling terms (“the why”)
Being accessible to engage by scheduling regular 1:1 checkpoints and leaving blocks in your schedule when your team can find you for informal, ad hoc collaboration
Providing effective coaching by assessing whether each team member understands what to do and how to do it, and then following through with the right type of support for the scenario
How does this approach fit with your team culture? What’s stopping you as a manager from engaging more with your team? What’s an even better way to provide genuine support? Leave a comment below…
All of the time management books, blogs, lectures, and videos you’ve already seen boil down to two concepts:
Prioritization: Is the right work getting the right amount of resource overall?
Delegation: Is the active work being done with the right leverage in the organization?
Since “the right work” is always a mix of urgent, strategic, cash-generating, compliance-driven, and internally-focused tasks, the list can seem nearly endless. For that reason it can be more useful to flip the question: rather than asking “what work should be done today?” instead think about prioritization as deciding what work should not be done by anyone in the organization.
By extending the same logic to a manager’s own work list, think about delegation as deciding what work should not be done by the most senior person on the team.
Recently I’ve attempted to take this principle to the extreme by challenging myself to delegate everything. Does this mean that each day I do…nothing? Of course not (although I still aspire to). It does mean that for each new task that passes the prioritization filter above, I ask the following questions:
Who on my team has already demonstrated the capability to complete this work successfully?
Who on my team could take this work as a development opportunity?
Then I will spend a few minutes with these folks and review the “what by when” to ensure that the deliverable, the ready date, the standard of quality, and the approach are clear.
Now in many cases the team member(s) are not yet ready to take on the new work, either because the capability gap is a bit too large, or other work must get done within the available time. Whenever possible, it’s best for the team member to attempt the work even if the manager completes it, both for the experience and to capture some specific feedback that supports his or her professional development.
Regardless of whether the team member completes the delegate-able work, both the manager and the team member benefit:
More frequent calibration on the team members’ capabilities and gaps to the next level
More frequent and more specific feedback
More visibility into the “day in the life” of the manager, which helps to increase transparency about the present (“what does she do all day?”) and the future (“do I really want that job one day?”)
More effort applied at the highest point of leverage in the organization – meaning that work is done by the most junior person who can complete it successfully. This creates capacity for both senior and junior resources to tackle more challenging work
Delegation is difficult because when done properly, there is a genuine risk of failure for both parties. By attempting to delegate everything, you are flipping the question from “what can I delegate?” to “what can’t I delegate, and why?”
In this context, by “investors” I mean professional managers of (mostly) other people’s money, that move millions at a time — not retail savers like most of us with thousands in a retirement account.
Investors want predictable returns that match the risk-weighted expectations for the portfolios they manage.
Every type of investor has a certain risk profile and horizon over which want to achieve returns. And that rate of return will always be compared against some benchmark, hurdle rate, or previous high water mark.
Here are some investor type examples, listed in order of decreasing tolerance for volatility:
Angel investors want to “give back” to early entrepreneurs by providing their money, advice, and time with minimal expectations of financial return
Venture Capitalists will tolerate writing off 9 investments to get one with a 10x exit
Private equity partners want 8% IRR in a 6 year horizon
Retirement plan administrators want “5 real:” that is, 5% annualized growth after adjusting for inflation and foreign currency exchange
In equity investments, return on capital comes from share price appreciation and dividends. Recently share buybacks have become a hot topic, as an alternative means of returning excess earnings to investors (instead of dividends), but let’s leave that aside for now (instead, read what Matt Levine has written about it). The new theory views public markets as a way to return capital to early stage private investors — again, out of scope for this post.
From this point, let’s narrow the scenario: you are a leader at a publicly traded company. With stock that trades on the public markets, you need to know what kind of returns your investors want. Index funds, representing a large share but not the majority of equity investors, want the index, which is an aggregate of the prices of the individual stocks in the index, to rise at some multiple of inflation. Some investors speculate on companies being acquired at a premium. Any “long” investor wants prices to grow over time. For a given P/E ratio, earnings growth gets you price growth. Higher earnings growth, sustained over enough reporting periods to establish a new expectation, can command a higher P/E ratio and therefore a greater rate of return on the same annual earnings growth rate.
Drilling down another level, the best way to achieve earnings growth is through revenue growth at constant margins. I say “the best” because revenue has no practical upper limit for a single company, while cutting costs to grow earnings will eventually run out of costs to cut. Revenue growth at constant margins isn’t easy — it’s the stuff careers are made of, or broken by.
I’m fortunate that my entire career has been devoted helping companies achieve more profitable growth, either as a consultant or manager, in both “old tech” and “new tech” industries. I am constantly learning from my direct experiences and case studies of other businesses. Some industries, like energy, healthcare, and FMCG, require significant capital investment across complex global supply chains. Timing these investments within business cycles, maximizing returns of a capital projects portfolio, and pursuing operational excellence are essential in saturated markets with low levels of consumer loyalty and commoditized offerings.
The tech industry contains a different set of growth challenges with different economics: achieving product/market fit then scaling up investment in sales, marketing, support, and infrastructure. Growing markets, loyal (or fickle) consumers, fierce competition for talent and regulatory uncertainty provide endless alternative scenarios for management teams to evaluate when making decisions.
So, when determining what strategy to execute, what projects and initiatives to fund, and generally where to focus your scarce leadership attention, first understand what your investors want based on their expectations for risk-adjusted returns.
Here are some additional resources that you might find useful:
All careers start on a steep learning curve: doing new work in unfamiliar surroundings, often with entirely different vocabulary and social norms than we’ve experienced before. “Fake it ’til you make it” is a common survival mode for new hires — and for many professionals, this persists for years as impostor syndrome. Ideally, learning and challenges remain as positive aspects throughout our careers, while confidence and competence replace the new hire’s feelings of doubt and confusion.
Many professionals start gaining experience as either an intern or an apprentice. What is the difference between an internship and an apprenticeship? Both are temporary positions or limited duration contracts. Both are entry-level roles with no prior experience required, beyond education in a relevant subject.
The key differences between interns and apprentices are the levels of support and expectations applied by the employer’s organization.
As the two-by-two matrix above illustrates, apprentices have both high expectations and high support. Apprenticeship is typically the first phase in on-the-job development of a skilled trade; popularized by the German manufacturing industry and often debated about its adaptation to the US labor market. The apprentice model, however, has expanded beyond skilled trades to tech job categories like software development. Regardless of the industry, employers invest in apprentices because the apprentices represent a valuable future labor pool. Competing firms are willing to invest in apprentices’ development to strengthen the industry without the fear of poaching: employers expect that individual workers are just as likely to join a company from its competitors as to leave. In a 2016 US Department of Commerce study, individual employers reported attrition rates in the single digits, while a broader study by NCEV in Australia showed contract completion rates in the 45%-55% range (slightly higher for non-trades). Performance expectations for apprentices are similarly high, including competency checks, either formal or informal, for apprentices to demonstrate the new skills they develop as they acquire increased responsibility and tackle assignments of greater complexity.
The typical corporate intern sits in the opposite quadrant: low expectations for performance with low levels of support. Employers generally give summer interns low volumes of low-risk, low-priority work, capping off the internship with predictably low-quality presentations. Individual companies, especially those who take pride in seeing their names at the top of ranking tables, might disagree with my categorization. A notable exception is Year Up: despite the title “intern,” the program follows a model much closer to apprenticeship. As a manager, I make the personal investment to coach and mentor interns that I host, and surely other individual managers are willing to do the same. Broadly, however, corporate internships are seen both by employers and interns as networking opportunities, resume padding, and the chance to earn some summer money (and generally to spend it just as quickly while drinking with other interns).
Two other alternative scenarios complete the matrix. The low-expectations, high-support quadrant is “nepotism:” imagine the young, barely competent relative of an executive or high-ranking bureaucrat coddled and gently steered away from career ending blunders by infinitely patient staff. The high-expectations and low-support quadrant I’m calling “rookie draft pick:” imagine the high-pressure, fend-for-yourself environment described in countlessathletememoirs. Financial services interns might argue this quadrant characterizes their world more accurately.
So whether you are a young professional seeking career-developing experience, or a leader seeking to create a pipeline of high-quality talent, understand what levels of support and expectations are in place. The balance between these two factors will determine the outcomes for your interns, apprentices, princelings, or rookie draft picks.
Legends spanning history from Marcus Aurelius to Bill Gates to Scott Adams have acknowledged the role of luck in achieving success. Despite this humble and public affirmation of chance’s important role in business success, the social connotations of “games of chance” (better known as gambling) are resoundingly negative.
Answer quickly, chess or poker: which game has more prestige? Which game has an extra-curricular club with its picture in the high school yearbook? Which game gets played late into the night on boozy weekends with college buddies?
While I’ve never had the patience to improve my skills at either chess or poker, I grappled with this apparent societal contradiction for decades until a recent interview with Annie Duke, author of Thinking in Bets and other brilliant books, brought it all into focus for me.
I’m now convinced that teaching my daughters how to play chess instead of poker would be a major Dad Fail.
The key idea that brought it into focus for me is what Annie Duke calls “resulting.” Learning occurs when we reflect on the outcome of a choice we made, to inform our future choices. As Ray Dalio puts it, “pain plus reflection equals progress.” Daniel Kahneman, and others, explored how biology and society influences our decision making. In the realm of games, chess is deterministic: both players have all the information, and winning or losing a game is causally linked to the quality of decisions you make. Poker, however, is probabilistic: each player’s information is limited, and the outcome of any hand depends to some extent on which card flips over in front of which player (and their seating arrangements), so winning or losing a game is always a combination of decision quality and luck.
“Resulting” means categorizing a decision as good or bad based on whether the situation yielded a positive or negative outcome. This behavior drastically undervalues the role of luck in outcomes, and risks cementing poor decision making habits into the fabric of an organization. Conversely, active separation of the decision from the outcome, and objectively attributing the outcome to either luck or skill, is essential to improving decision making quality.
Business is a game of chance. The outcome of any complex scenario, whether it is an enterprise sale or a marketing program or a fundraising round or an executive search, depends somewhat on which events unfold in which order. In an organization led by a chess player, positive outcomes arise from “good” decisions alone, and negative outcomes arise from “bad” decisions alone. The implications are significant and pervasive: who gets promoted (or fired), which tactics become “best practices” (or taboo), etc., could all be a function of luck. Confirmation bias (among others) becomes cemented in the leader’s inner circle. In an organization led by a poker player, the culture includes open discussion about confidence levels and risk reduction, constructive dissent (i.e., playing “Devil’s Advocate”), and active eradication of cognitive bias.
So consider what example you set for your team, how you coach them to to make better decisions, who you involve in pre- and post-mortems of significant decisions you make. Are you “resulting” or are you leading them like a champion poker player?