Questioning certainty

Yesterday I filled up my entire gas tank for $15, $1.79 per gallon. It wasn’t that long ago that I recall many experts telling us to brace ourselves. They were certain that we wouldn’t see gas fall below $3.00 for a very long time, if ever.

The September 27, 2008 New York Times Article, “Behind Insurer’s Crisis, Blind Eye to a Web of Risk” starts off with this quote, from 2007, given by a former executive at AIG,

“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.

(“http://www.nytimes.com/2008/09/28/business/28melt.html?em).

These aren’t isolated examples. How often do you hear predictions or recommendations given that are qualified by the speaker’s assurance of their absolute certainty?

The issue with the two predictions above isn’t that they wound up being wrong. The real issue was the way that the speakers ruled out any possible alternative to their way of thinking. That’s dangerous. That’s not leadership, that’s fanaticism disguised as business.

So should we stop trying to make any prediction or forecast out of fear that we’ll be wrong? Of course not. Speculation is an important part of a leader’s job. The willingness to put oneself on the line in that way is something that differentiates leaders from the rest of us. Somewhere along the line however, we’ve come to judge people’s credibility on how certain and confident they appear.

Perhaps, it’s time to shift focus. Strength/ knowledge/ leadership shouldn’t be a measure of certainty. It should be assessed based on thoughtfulness.

Good leaders make predictions that are based on careful thinking. Given the complex world in which we operate any belief in a single right answer or conclusion is wrought with problems.
Here are a few tips for ensuring that you are tempering your certainty with sense:

• The more certain you are, the more questions you should be asking
• If you can’t see an alternative scenario within the realm of reason, find someone else who can.
• Don’t accept the first reasonable solution you hear, require that someone research an opposite scenario/alternative
• Don’t believe that something is right, until you’ve thoroughly exhausted all the ways it might be wrong

In the information age, is scope still a good proxy for impact?

A friend of mine recently received feedback that if he ever wanted to be seen as successful he needed to take on more responsibility. Otherwise, he could never have enough impact to compete with his peers. I hear this argument made a lot. There is a bias that unless you supervise a large group of people, have responsibility for several program areas, and manage a large budget, you can’t have impact.

I think that made sense in an industrial model. When you product was a “thing”, certainly the more things you could get produced the greater the impact you could have on a company. More people, more budget, and more program areas were a natural way to produce more things.

However, I’m not as sure that this always holds true in an information/conceptual age. If you generally believe the Pareto principle, you know that 80% of an organization’s value is driven from 20% of your resources. Therefore, couldn’t a person managing 20% have a greater impact than the one managing 80%? Isn’t the mantra “do more with less”?

As the financial crisis continues to unwind, we are finding that the people who defined and executed the investment strategies for financial institutions had significantly more (negative) impact than the rest of those institution’s workforces. Those investment teams didn’t have large client bases and probably didn’t have huge teams (compared to the sales force). Yet, they had enormous impact.

Tools like outsourcing and automation allows us to better separate transactional work from value-added work (i.e., splitting the “eighty” from the “twenty”). The result might be that some people have very small teams focused on the “twenty” while others may have large teams or systems focused on the “eighty”. Who is better positioned to have impact?

Some organizations have begun to recognize this, at least on paper. Increasingly organizations try to tie goals to outcomes rather than process metrics or span of control type metrics. However, we still have a long way to go on using truly outcome-focused measure in our goals – but that is a topic for another day. Perhaps we are moving in the right direction. Yet, there still seems to be a belief that people with more “responsibility” (where responsibility is defined in terms of quantifying people, programs, and budgets) have the potential for having greater impact.

This is not to suggest that leaders who have a high span of control don't or can't have impact. The point is to change our focus from how much is being managed to what is being managed and assess impact accordingly.

Working with high, average, and low performers

“You are one of the worst leaders that I’ve worked for.” Imagine my surprise at hearing those words upon walking into the break room. Yet, once I listen to this person’s concerns, I had to agree. Well, I didn’t think I was one of the worst leaders, but I certainly had been making some mistakes.

She believed that she should have been promoted long ago. “Good leaders advocate for their people, you don’t back me up at all.” - It was my fault that she hadn’t been promoted. What I could not tell her (or at least what I didn’t feel was appropriate to tell her at that moment) was that just two weeks before I was advocating for her. I wasn’t advocating for her promotion though. I was trying to convince my boss and the rest of the leadership team that we should give her one more chance and not fire her.

I wasn’t being a good leader. How could there be such a mismatch between how other people saw her and how she saw herself? The answer was simple, I was sending her the wrong messages.

I wasn’t falsely praising her or telling her that she was next in line for a promotion. It was much more subtle – something that I see many leaders do. I didn’t differentiate the way that I interacted with her. In fact, I took pride in the fact that I treated everyone on my team the same. That’s a mistake, not everyone on your team is the same and treating them that way is what is unfair.

People who perform at different levels require different types of interactions with their leaders. This isn’t just about telling them their level of performance. In fact, directly labeling someone as a high, average, or low performer does more to hurt than help their performance. I’ve found that thinking through the following seven types of interactions will help you differentiate the way you work with people at all levels:

• What is your goal for developing this person?
• What do you talk about?
• What do you hold them accountable for?
• What types of opportunities do you provide them?
• What type of training/information do you provide?
• What type of feedback should you provide?
• What should you recognize and highlight?

More importantly, you do this consistently. You do it through both informal and formal processes and in every interaction.

The table above shows how you can differentiate your interactions for high, average, and low performers. Remember that the goal isn’t to compliment or stigmatize anyone. It is to provide the guidance and support they need to succeed.

Good leaders don’t treat everyone the same. They recognize that each person has a different set of needs based on their ability and performance. Good leaders adapt to those needs and meet people where they are at.

Goals should be about more than just doing the job well

What if I told you that my personal goals for the year were:

• Maintain a healthy weight
• Don’t bounce any checks
• Buy groceries once a week
• Wake up on time each morning
• Be a good parent

My guess is that you’d be pretty underwhelmed. These don’ t sound like goals do they? They sound more like the things I am supposed to do as a normally functioning grown up.

So why is it that I often see similar goals in the business world?

• Achieve quality target
• Maintain customer/employee satisfaction
• Complete XYZ project on time and on budget
• Make operating margin of 5%

Like the personal goals above, these goals are just a statement of what you are supposed to do as a normally functioning leader. Your goal shouldn’t be to hit the budget, your job is to hit the budget.

Goals should focus on specific positive changes that you are making to the organization. They should be about results and outcomes.

Part of the reason that these get tangled up is compensation. Goals often play a key role in determining bonuses and other rewards. That’s fine as long as the bonus really is a “bonus”. If you are giving someone a bonus for meeting the budget, aren’t you paying twice for his or her performance? The first time you paid with their salary, the second time you paid with the bonus. If they can’t meet a budget, they should be getting remedial help (or another job).

Leaders have to run your business efficiently and effectively. They also have to improve it continually. Those are two separate issues. Make sure that your expectations, goals, compensation, and rewards are aligned properly. A leader whose goals is to merely do his or her job successfully is not a leader at all.