/Tag: strategy

The Happy High Achievers

If you're like most high achievers, real happiness remains elusive.

Are you happy in your job? The data says you’re probably not. I can also speak from experience. For most of my life, I operated under a false assumption that the more successful I became, the more happiness I’d feel. But what I found was just the opposite. At one point in my early thirties, I had the experience of attaining everything I had once dreamed of. But instead of feeling elated and happy, I felt burdened, stressed, and beaten down by constant and competing demands. In my experience in the Young President’s Association, a worldwide group of successful CEOs, I found that very few were actually genuinely happy as well.

Why is this? Why doesn’t greater success seem to lead to greater happiness? There’s an interesting study on success and happiness by Dr. Vance Caesar of the Caesar Group that sheds some light on this phenomenon. In an ongoing study of high achievers (the top 2-3 percent of individuals in a given field) across all walks of life, Dr. Caesar discovered this: Only 1 out of 10 high achievers (.2 to .3 percent of the total pool) rate themselves as authentically happy. Imagine that: If you gather ten thousand top achievers from all walks of life—the rich, the famous, the talented—only a handful will actually consider themselves happy.

What’s the difference between a happy high achiever and the rest? In his research, Dr. Caesar identifies eight attributes that dictate both success and happiness. Most of these are fairly easy to recognize and intuitively make sense. They include a driving sense of purpose, a compelling vision, and the intrinsic feeling that your work is meaningful. Other attributes include beliefs and behaviors that create inner peace, a regular process involving the three Rs (review, renewal, and recommitment), and outstanding discipline. Additionally, happy high achievers generally work with mentors and coaches.

It turns out that one of the secrets of the top of the top—the tiny fraction that is both successful and happy—is that they mastered the game of energy management to such a point that they get more than they give from all of their key relationships. That may sound confusing at first so allow me to explain.

As we’ve discussed, everything is a system and every system exists in relationship to other systems. What happy high achievers recognize is that everything in life is ultimately an exchange of energy. After our health, the single greatest factor that energizes us or depletes us is the quality of our closest relationships. If you’ve ever been in a “vampire” relationship that sucks all the energy out of you, you know it can take days to recover from even a brief encounter. On the other hand, if you have a best friend who always seems to make you feel better, then even a brief encounter can float you higher for days. Recognizing this, happy high achievers make a conscious effort to establish and nurture energizing relationships.

Successful relationships are a two-way street. In an ineffective relationship, one or both parties experience the feeling of giving more energy than they get back. For example, a marriage where one partner feels she is constantly giving more than getting creates resentment. Over time, that resentment builds up and she says, “I’m leaving you because my needs aren’t being met.” In a business setting, the employee who feels he is continually giving more to the company than he is getting in return will soon become bitter and burned out, with either an ulcer or a new job search on the horizon.

On the other hand, a highly effective relationship is one where both parties are able to give each other what they need in a way that adds to their own energy. For example, a marriage where it’s easy (i.e., there is a low cost of energy) for both partners to meet the needs of the other and both partners feel their needs are met is a highly successful union. The relationship “just works.” In a business setting, you’ll find a great mutual fit when an employee feels she is getting more from her job than giving to it, and her managers feel they are getting more from her than they’re giving in total compensation. The employee is thinking, “I can’t believe they pay me to do this. I would do it for free . . . can you believe it?” Similarly, her managers are thinking, “She is one of our top performers. She’s passionate about what she does and delivers outstanding work. I wish I had ten more like her.” The bottom line is that the relationship is net additive, supportive, and energizing to both parties. It just works.

The key differentiator, then, between happy high achievers and the rest is that happy high achievers are extremely vigilant about only allowing relationships into their lives that add to their energy. This includes their marriages as well as their relationships with their families, companies, boards of directors, key staff, and important clients. They make it a point to only allow relationships that are net additive. If a relationship isn’t net additive, it’s no longer one of their primary relationships. It gets shifted or it is gone.

Back to The Success Guide.

Next to Are You Giving More Than You Get in Return?

By |2019-08-11T10:54:41-07:00March 11th, 2012|Articles|2 Comments

Where Are Your Energy Drains?

You can't mask underlying energy losses for long. You've got to eliminate them instead.

According to the laws of physics, your success is determined by how you manage energy – and there’s a universal success formula to prove it. Quite simply: success is a function of integration over entropy. Your goal is always to have high integration and low entropy. In “How to Choose the Right Strategy“, I explained how to create high integration in your company. What gets too little attention in business, however, is the havoc that high entropy plays on a system. It truly is the ultimate killer. Or as physicists Sir Arthur Eddington aptly put it in the early 20th century, “The law that entropy always increases holds, I think, the supreme position among the laws of Nature. If someone points out to you that your pet theory of the universe is in disagreement with Maxwell’s equations — then so much the worse for Maxwell’s equations. If it is found to be contradicted by observation — well, these experimentalists do bungle things sometimes. But if your theory is found to be against the second law of thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation.”

So if there’s anything you should be doing in your business that you’re probably not focused enough on, it’s cultivating an awareness of entropy and a commitment to reducing it. Personally, I didn’t appreciate the significance of entropy in my own business until I ran into it. Hard.

In 1998, at the age of 28, I co-founded an affiliate marketing company in Minnesota and moved it to Santa Barbara, California. By 2001, the company was soaring like a rocket, generating incredible growth rates (much easier to do for a small company than a large one but it’s still a very exciting time), and was adding staff and customers as fast as we could to scale. During this period, everyone who associated with the company, from the staff to the customers and even people on the street, seemed genuinely blown away by its energetic, passionate, and committed culture.

As co-founder and CEO, I would often walk into the office and feel lifted two feet off the floor by the collective energy and enthusiasm of the group. I had installed a giant train whistle on the wall that the sales team would blow every time there was a sale. While the bankers on the second floor weren’t too happy with the frequent “blassssssssssssssssstttttttttttttttttt” of the whistle, we would all cheer loudly. It was a heady and intoxicating time.

Most of us had a feeling that the company had a growing opportunity in front of it and that we had the capabilities to execute on it. It was also relatively easy to make and implement decisions and there was a lot of momentum overall. That all seemed to change in a heartbeat.

During that heady period, I made the decision to hire a professional management team to supplement my own inexperience. “We’re growing really fast and we need experienced hands to help us navigate,” I said. But within two weeks of hiring the “pros,” I walked on that same office floor and, rather than feeling uplifted, I felt a crushing weight. Rather than excitement, momentum, and progress, there was a palpable sense of fear, finger-pointing, and in-fighting in the air. The new leadership had assumed a top-down approach of closed-door decision making that quickly eroded the culture we had worked hard to build.

That extraordinary climate I thought we were building had quickly became a cesspool and all the momentum was gone. The friction within the system had become so high that the ability to maintain the system, make decisions, and get work done became very low. I was dumbfounded, confused, and afraid. “What is going on and how do I fix it?”, I asked myself. I didn’t know it then but I had run up against the classic laws of physics. I did understand, however, that if I didn’t fix it fast, my company was going to fail.

Thankfully, this mini-crisis was a wake-up call. Through a series of steps and some outstanding guidance, I was able to realign the organization, reduce the internal entropy, and accelerate its performance. Today, the company is the world’s largest affiliate marketing company, If we hadn’t dealt with the growing entropy, it would have been just another startup failure.

“Sniff” Out the Drains

In business and in life, ignore energy drains at your peril.

Now that you’re aware of the principles of success, make it a habit to regularly sniff out and eliminate energy drains in your life and work. Energy drains are a symptom of entropy. Energy gains are a symptom of integration. Your goal is to keep the gains high and the drains low.

Energy flows from inside out so begin with you. How’s your physical, mental and emotional health? Any energy drains? If so, what is causing them and how can you address them? Then move outward to your primary love relationship and key family relationships. How are they? Is there friction or flow? If there’s friction, what is causing it and how might you help to address it? Keep moving outward and look at your company. Where does energy seem to be flowing and where are the energy drains occurring? You do this by walking around observing, asking questions, and listening. When you notice signs of unhealthy entropy, take note. Flow is good. Excessive friction is bad. Remember: your company has a fixed amount of energy and whenever there’s a real drain, it’s stealing from your top-line performance.

For example, you may notice that there seem to be good flow and momentum in the sales process. You can tell because you have satisfied, paying clients who come back and buy more of your product or service. The sales team is motivated and working well together. At the same time, you might notice significant friction and energy drains within engineering. What’s causing this? Is it the people? The process? The structure? A misalignment in vision and values? Whatever the cause, if you want to increase execution speed, you’ll first need to address the drains.

Sometimes energy drains are so significant that they can seem impossible to handle. Maybe the friction with your board is so extreme that trying to address it seems more costly than putting up with it. Or perhaps you’ve lost trust and respect with your co-founder. How do you deal with something that, if it goes badly, could bankrupt the whole company?

Obviously life and work are complicated and each situation is unique. I’m not going to insult your intelligence by telling you that there’s a simple, magical, three-step formula to eliminate every major drain. But change always begins with a shift in perspective. And it’s that greater perspective of the real cost of energy drains and their adverse impact on the system that I’d like you to cultivate. Once you begin to view problems and conflicts as energy drains, you’ll be able to find energy-gaining solutions much more easily.

How you deal with energy drains and maximize top-line integration is the art and science of Organizational Physics. As you study and apply the these principles to your life, work, and relationships, your ability to solve even the most complicated challenges gets better and better. For now, just remember that if you want greater top-line performance, you’ll need to start by identifying the energy drains standing in the way.

Back to The Success Guide.

Next to The Happy High Achievers.

By |2019-08-11T10:54:41-07:00February 27th, 2012|Articles|Comments Off on Where Are Your Energy Drains?

The Misaligned Organization and What to Do About It

In 1993 I was a college student in St. Paul, Minnesota. I drove a twenty-year-old canary yellow Toyota Corolla with bald tires, a broken heater, and a misaligned chassis. Because my spending priorities then were the necessities of college life (pizza, beer, girls, and rent), I never invested in making the car safe to drive.

Navigating that car on the icy roads of thirty-below Minnesota winters required a certain ability to go with the flow. But eventually, my refusal to to replace the tires and align the chassis caught up with me. Driving late one winter night … it’s easy to guess what happened. Wipe out. Crash. Car totaled.

Thankfully, no one was hurt.

I share this story because it’s easy to tell when a car is misaligned. The car squeaks, there’s friction and a loss of power, and it’s difficult to steer where you want to go. Similarly, if you know what to look for, it’s easy to tell when your business is misaligned. If you act early on, you can avoid a crash and even improve performance fast.

What It Means to Have an Aligned Organization

Well after I had sold that old Toyota, I received some more equally important lessons on the value of organizational alignment. In my late twenties to mid-thirties, I personally led two companies into compound annual growth rates (CAGR) exceeding 5,0000% per year. From startup to $4M and $12M in two and four years respectively. While this may be chump change to some entrepreneurs, these periods of rapid growth were priceless learning for me. They also provide a valuable lesson that’s applicable to companies of all sizes and at all lifecycle stages.

The surprising thing is that, in order to get that kind of exponential growth, I didn’t have to fight, cajole, or struggle for years. Instead, the leadership team and I created the right internal and external alignment for growth to occur. Because we got the alignment right, the businesses executed extremely fast. The same lesson holds true for you. If you can get the internal and external alignment right for your business, you’ll dramatically increase its probability of thriving and executing very quickly. I’m not guaranteeing 5,000% CAGR. In fact, I’m not even recommending you try for that — it’s much wiser to shoot for more sustainable rates of growth. But the act of creating alignment is essential to every business. Get it right and your company can execute swiftly and powerfully. Get it wrong and you won’t get back on the growth curve until you do get it right. Alignment is the key.

At the most basic level, “external alignment” means that the company’s unique capabilities are well integrated with growing market opportunities. Basically, the company is in the right place, at the right time, with the right set of capabilities, and “pulled” forward by growing market demand. “Internal alignment” means that the collective organizational mass is headed in the right direction and there’s little internal friction stopping the work from getting done. If external alignment is the train engine that powers growth, then internal alignment are the passenger cars being pulled forward. Your goal is to have a powerful engine with smoothly running cars.

When all of the elements of external and internal alignment come together, you’re going to have a very high probability of catching a fantastic growth wave. Intuitively, this should make a lot of sense. Envision a company with the right strategy and business model for the current market conditions. The core team shares the same vision and values. They all want to end up in the same destination and have the same boundaries on what is and isn’t acceptable behavior. There’s a structure in place that assigns authority and accountability for the work that needs to get done. The team has a sound process to consistently make good decisions and implement them fast. And talented, passionate people are flocking to the organization because they sense an opportunity and are intrinsically motivated by the work that needs to be done. If you had all these things, how could you not be successful?

The Early Signs of Misalignment

Unlike a cheap car, you can’t afford to crash your business into a wall. Don’t wait to realign your company once sales are falling and the market has shifted. You want to be well ahead of that curve. If you’re wise, you’ll pay attention to the early signs of misalignment, and take action immediately to address them. You’ll recognize when it’s time to realign the organization when the company isn’t executing as fast as it needs to. Symptoms may include:

  • The Founder’s Trap – the company can’t seem to scale beyond the founder, resulting in a bottleneck to growth and execution
  • Incomplete priorities – the company can’t say “no” to various opportunities and therefore isn’t committed to a clear and purposeful strategy
  • Amnesia – the company seems to have forgotten what it really is and why it’s really in business
  • Internal friction – the company takes too much energy and effort to make simple decisions and get work done
  • Cash crunch – the company has sales but no profits
  • Loss of innovation – the company no longer innovates but acquires growth by buying other companies
  • Poor team performance – the team isn’t stepping up to the size of the opportunity

How to Align Your Organization

Aligning your organization isn’t something you draw up in isolation and then announce to the team. The greatest plan in the world is only as good at the team-wide commitment to implementing it. You’ll need to follow all the steps of a sound decision-making and implementation process and involve those with authority, power, and influence in the alignment process itself. This usually amounts to you and your core leadership team (5 to 15 people on average) going through the process together. Here’s the 6-Phase process I’ve found most effective in aligning organizations for improved performance. In my experience, depending on the size and complexity of the business, it takes anywhere from one to three months to complete Phases 1 to 5, and double that time to fully integrate those changes in the culture and optimize performance in Phase 6.

Phase 1: Aligning the Strategy

The main thing to keep in mind when it comes to aligning or realigning the organization is that, no matter how bad things may be in the current environment, the organization will still naturally resist any change. So your first step is always to unfreeze, unlock, or drain away any resistance to change. My favorite method for doing this is to get the leadership team off site for 1.5 days and, as part of a strategy session, take a holistic view of the organization. We look at where it currently is on its strategic roadmap, as well as any sources of entropy (friction and potential improvement areas) impacting execution. With a shared recognition of what’s really happening versus what should be happening, the leadership team gets on the same page and commits to finding solutions. The desired outcome from the strategy session is group clarity and commitment to the chosen growth strategy; shared recognition of the 3-5 key burning balls or obstacles and an action plan to address them; greater appreciation for individual management styles and perspectives among the team; and recognition of key issues affecting team performance and how to address them. Armed with this information, awareness, and buy-in, you’re ready for Phase 2.

Phase 2: Aligning the Organizational Structure

The purpose of this stage is to create leadership team recognition and buy-in for the right organizational design to support the chosen growth strategy. Like the stage before it, this stage is best conducted off site with the leadership team and, if done well, takes 1 day to complete. The desired outcome should be group recognition and buy-in for: 1) the role requirements and key performance indicators (KPIs) for each business function; 2) the individuals who will perform each role; 3) the talent gaps in the structure; and 4) the new hire priority sequence. The result is a new organizational structure that best supports the company’s growth strategy.

Phase 3: Aligning the Organizational Management Process

This part of the process doesn’t need to be conducted off site. Instead, it’s really a matter of taking the outcomes (the strategy, KPI’s, and short-range and mid-range goals gathered from the prior two phases) and ensuring that the management team is executing towards them with little hindrance. This usually requires a period of time to gather up the right metrics and to make them easy to report on and measure. It also requires spending some extra time with members of the leadership team to ensure they fully understand and are performing in their new roles. At the same time, the goals for longer-range business development need to be managed and tracked through a separate process. Basically, there’s one process to execute on short-range tasks (which is handled during weekly Leadership Team meetings) and one process to execute on long-range business development (which is handled by a Company Council). In other words, don’t attempt to manage long-range goals in a short-range setting. The combined result is better team-wide decision making, an improved capacity to prioritize in the face of change, and more rapid implementations.

Phase 4: Aligning Budgets, Targets, and Rewards

Phase 4 really goes hand in hand with Phase 3. Based on the new strategy, structure, and roles, you’re working with the leadership team to identify the budget and annual, quarterly, and monthly financial and operational targets for the business. The result is greater clarity and incentives for the entire organization, as well as a methodology to track financial and operational performance.

Phase 5: Aligning the Vision, Values, and People

While the the prior phases equip the senior leadership team for success, this phase integrates that groundwork throughout the rest of the organization. You accomplish this by collaborating with the leadership team to help cascade the strategy, vision, values, roles, and expectations down to the rest of the company. The desired outcome is a shared understanding of everyone’s role in shaping the company’s success, vision, and values. The result is a strong organizational culture that supports overall momentum and accomplishment.

Phase 6: Optimization

From here on, until it’s time to realign the organization again, it’s a matter of optimizing overall company performance. The not-so-ironic thing is that, because you’ve invested the time and energy in getting the alignment right, you don’t have to optimize much at all. The ball starts rolling downhill under its own inertia. The outcome is a higher performing, more resilient organization that executes powerfully on its chosen growth strategy.


To get the most out of your team and create a culture of high performance, focus your efforts on aligning the organization for success. Alignment includes 1) Strategy, or making sure that the company is meeting the needs of its customers, now and over time; 2) Vision and Values, or making sure that people have bought into a common destination and shared modes of acceptable behavior; 3) Structure, or getting the organizational design right so that there is authority and accountability for key functions and the business can scale; 4) Process, or putting in place a method for making good decisions and implementing them fast; and 5) People, or attracting and cultivating talented employees who are a good fit and are intrinsically motivated to do the work that needs to get done. It takes tremendous energy and focus to get alignment – but when you finally get it right, your organization will execute very fast indeed!

By |2019-08-11T10:54:41-07:00February 10th, 2012|Articles|2 Comments

Mastering Team-Based Decision Making

Like a rock rolling down hill, you want to get the mass of your organization moving quickly in the right direction.

Every business has mass, which is a measure of its resistance to change. The challenge in getting an organization to change direction is the fact that its mass isn’t neatly self-contained. Rather, it’s scattered throughout its people, systems, structures, and processes – and the collective inertia causes resistance to change. In order to get the organization to execute on its strategy, you’ve got to get the mass contained and headed in one direction.

Having aligned vision and values, as well as an aligned organizational structure, is the first step. If you have misalignment in these areas, then no matter what, you’re not going to get very far. At the same time, alignment in vision, values, and structure alone won’t cause the business to move. They just help to hold the mass together and keep internal friction low. Making the organization come alive and move quickly in a chosen direction requires that two things be done well: making and implementing decisions. In fact, the secret to organizational momentum lies in continually making good decisions and implementing them quickly.

The Most Important Process in Your Business

Every business relies on multiple processes (sales, customer service, finance, product development, marketing, etc.). These can be highly visible or nearly invisible, organic, haphazard, detailed, flexible, constant, or changing and either a boon or a burden. When a process is performing well, it allows the work to get done better and faster. When it’s not, you feel like you’re swimming upstream.

While your business has many different processes – some working well and others maybe a total clusterf#@*k – it’s the process of decision making and implementation that’s most critical to your success. Why? Because at the most fundamental level, a business is simply a decision-making and implementation system. Think about it — every problem and opportunity require a decision to be made (and yes, deciding to do nothing is a decision too) and a solution to be implemented. If the business does this well — if it continually makes good decisions and implements them fast — then its momentum will increase and it will be successful. If it does the opposite — if it makes bad decisions, or if it makes good decisions but implements them slowly, or my personal favorite, makes bad decisions and implements them quickly — then it will fail. Just as a haphazard sales process results in lost sales, poor fulfillment, and an inability to scale, a poor decision-making and implementation process results in poor decisions, flawed implementations, and an inability to scale the business.

What’s ironic about the process of decision making and implementation is that most businesses don’t even think of it as a process. (In case you’re asking… decision making and implementation are not two distinct things. They’re really two parts of one process that must go hand in hand. More on this in a bit.) While there’s usually a recognized process for functions like sales and customer service, the process for decision making and implementation is hidden in plain sight and often operating haphazardly. Like many of the principles I discuss in my work, it’s a crucial meta-level process with important applications all across the board.

In order to help your business accelerate its execution speed, I’m going to explain what an effective decision-making and implementation process is, how to do it well, who should be involved, and when to use it.

What Does an Effective Decision-Making and Implementation Process Look Like?

I want to give you an immediate sense of what the process of making good decisions and implementing them quickly actually looks like by sharing a short movie clip. I call it the “Dances with Wolves Management Meeting.” There’s a lot that modern-day management team meetings can learn from it. Unless you speak Sioux, you won’t understand what they’re saying – and it doesn’t matter. As they say, 90% of communication is non-verbal. The gist is that the senior tribe members have gathered to discuss what to do about foreigners invading their territory. You can compare that to any company faced with a cataclysmic market change and struggling with what to do about it.

Dances with Wolves Management Meeting from Lex Sisney on Vimeo.

Here’s what I want you to notice about the clip:

1) Notice that there’s a lot of conflict. People in the meeting have really strong opinions and don’t hold back in sharing them. Notice too that the conflict doesn’t destroy the affinity that tribe members have for one another. They’re debating the merits of different approaches in an attempt to find the best one. They don’t hold back but they’re not attacking each other, either. Each person has their say. When a person is speaking, each member seems to be genuinely listening and considering that perspective.

2) Notice that there’s one decision maker. It’s the wizened chief who sits back and listens until he’s heard enough perspectives. He gives plenty of time to review the information and generate insights from that information. But once that process is complete and the chief decides, the entire tribe gets behind the decision. There’s full debate pre-decision, no debate post-decision. Put another way, the meeting was fully participative but not democratic — there’s one person ultimately in charge. Once the decision is made, it’s time to stop debating and start executing.

3) Notice that it’s hard to figure out what to do. Life was complicated then. It’s even more complicated now. It’s hard to make good decisions. Despite the fact that it’s a critical decision, however, the chief doesn’t get excited or agitated. He’s calm; he’s cool; he listens. Then he decides and people act. While you may disagree with their decision, you’ll have a hard time disagreeing with the process the tribe used to reach it (other than they should have made a concerted effort to get more data up front — but more on the importance of data gathering in a bit).

4) Notice that the meeting has all the key influencers and centers of power in attendance. The chief and the tribe intuitively recognize a universal truth: Whoever is going to be impacted downstream by a decision, should be involved upstream in the decision-making process itself. Why? When people fully participate in the decision-making process, they’re less resistant to the implementation of its outcomes. In fact, they’re usually in favor of those outcomes and eagerly want to drive them forward. Imagine, on the other hand, if the chief skipped this meeting and decided what to do in isolation or with a few elders. Whatever the decision, the collective mass of the rest of the tribe would have slowed down or resisted, subtly or not so subtly, the implementation. Members of the tribe would have questioned, doubted, and disagreed (e.g., “Why are we fighting?” Or “Why are we fleeing?”). By involving a critical mass of the tribe up front in the decision itself, the resistance to change was much lower post-decision and implementation swifter.

5) Notice that the meeting doesn’t linger. The tribe gathers together. They’re all present and engaged. They invest as much time as they need and no more. Then they wrap. I’m willing to bet that most of your management meetings aren’t run nearly as efficiently.

The Rhythm of Decision Making and Implementation

There’s a rhythm to decision making and implementation. Most organizations screw it up, so pay attention. The right rhythm is slow-quick. It’s not quick-slow or quick-quick – and it’s clearly not slow-slow. What do I mean? Slow-quick means that you spend adequate time in making a good decision and then fly like a rocket on implementation. Don’t do the opposite. In other words, don’t make half-baked rapid-fire decisions that get bogged down on implementation. Don’t be that company that confuses rapid decision making with rapid implementation. And don’t be that company that’s just bogged down and lethargic generally. There’s a rhythm to life, a rhythm to dance, a rhythm to decision making and implementation. Be astute and aware enough to know which rhythm to activate and when.

The most common reason companies get this rhythm wrong is time pressure. You need to be able to transcend time pressure in the decision-making phase of the process and then use it to your advantage during the implementation phase. Allow me to explain. Constant time pressure results in poor decisions. When a company’s leadership feels a tremendous amount of pressure to execute quickly in a nebulous environment – and there’s a feeling that doing something is better than doing nothing – it will tend to make half-baked, rapid-fire decisions. This approach is a classic folly because the team fails to see the complete picture before them. Under time pressure, it fails to take into account different perspectives, gather enough information, get buy-in, find new insights in the data, make a well-rounded decision, and reinforce it. The result is a poor decision that gets bogged down on implementation. The team tries to go quick-quick but the result is quick-slow.

When we're under time pressure, the full picture looks like this. The results is poor decisions and slow or flawed implementations.

Make decisions once a critical mass of the company contributes to everyone to seeing the full picture. The result will be really fast implementation.

If you’ve ever worked in a “fire-ready-aim” setting, then you already know that making rapid-fire decisions doesn’t result in faster execution speed – which you do want. What happens instead is that a lot of half-baked decisions get rattled off, pile up, and create bottlenecks on implementation. And unlike decision making, implementation is where you want to use time pressure to your advantage, setting clear outcomes and delivery dates. It’s not how fast you’re deciding, it’s how fast you’re implementing on a well-formed solution.

Many startup founders will change their strategy from one moment to the next, justifying this with something like, “We have to be nimble around here. The market is always shifting and we’re trying to find our footing. We need to fail fast and keep trying. If you can’t keep up, get off the boat.” This is a perfect example of how the concept “fail fast” is often misunderstood. “Fail fast” is an expression used in high-tech startups. It means that, in environments with rapid change and time pressure, you can only find answers in the real world, not on a white board. You therefore want to get the product released promptly and tested in the hands of actual customers because this allows you to better understand their needs. If the product “fails,” this is seen as net positive (assuming client expectations are managed) because it eliminates more uncertainty about what doesn’t work and you can test again based on better information. However, “fail fast” isn’t a creed you use to keep making poor, ill-formed decisions time and again. It means that you need to implement a good decision fast. It’s a slogan for swift implementation, not erratic decision making.

Of course it’s not only startups that suffer from fast decision making and poor implementations. A recent prominent example is NetFlix. In 2011, NetFlix announced that it would segment its business into two distinct brands, one focused on streaming (NetFlix) and the other on DVD delivery (Qwikster). Reed Hastings, the company CEO, was right in my opinion to attempt to restructure the business into two distinct business units (see Strategy). But in their quest to hurry a decision, they screwed up the implementation. They didn’t set up a process to communicate and manage expectations with their customer base and key influencers; they didn’t acquire the social media identifiers for Qwikster; and they didn’t recognize that customers would balk at having two logins without a process to make it easy for them. The resulting market backlash really hurt them – cutting their market cap in half. Reed Hastings was later quoted as saying, “We simply moved too quickly, and that’s where you get those missed execution details. It’s causing, as you would expect, an internal reflectiveness. We know that we need to do better going forward. We need to take a few deep breaths and not move quite as quickly. But we also don’t want to overcorrect and start moving stodgily.”

That’s exactly right.

The truth is that fast execution requires a good decision-making process up front – and effective decision making takes time! It takes time to gather the right people, set the stage, gather data, generate insights, decide what to do, assign action items, and reinforce the decision. It’s counterintuitive but the right path forward is to slow down on the decision-making so that you can speed up on the implementation. In other words, you slow down to go fast.

Of course, this all presupposes that you actually have the time. If it’s a real crisis, then you’ll need to act swiftly and try to reduce the negative fallout later. But whatever you do, don’t confuse acting swiftly with acting smartly.

The Steps to an Effective Decision-Making and Implementation Process

There are six steps to effective decision making that are based on the agile development methodology of the Agile Alliance.1

Pre-step Get the Right People in the Room
Step #1 Set the Stage
Step #2 Gather Data
Step #3 Generate Insights
Step #4 Decide What to Do
Step #5 Assign Action Steps
Step #6 Reinforce

Pre-Step: Get the Right People in the Room

There’s a really simple rule of thumb to remember for good decision making and fast implementation: Identify who will be impacted by a decision downstream, and involve them upstream in the decision-making process. Intuitively, this makes sense. In your own life, would you prefer to personally decide what to do or have someone tell you what to do? When you’re given an opportunity to genuinely participate in a decision-making process, not only do you help to create a better decision through your unique insights, but you also become more willing to implement the decision itself. You feel a greater sense of ownership and less resistance to change.

Gathering a critical mass in the company – and specifically those who will be impacted downstream by a decision – also leads to better outcomes because different people see different pieces of the full picture. Each person impacted has a unique perspective on the problem or opportunity: One sees what to do; another has information on how to do it; another can see new ways to accomplish the same task; and yet another can empathize with how others will be impacted. Each person brings different information, experience, and knowledge to bear on the problem or opportunity, contributing to everyone seeing the full picture.

Here’s a funny story of a CEO who failed to gather in the decision-making process upstream those who would be impacted downstream. I’m not sure where it originates but I have to believe there’s some truth to it because it sounds all too common. It goes like this….

“A toothpaste factory had a problem: they sometimes shipped empty boxes, without the tube inside. This was due to the way the production line was set up, and people with experience in designing production lines will tell you how difficult it is to have everything happen with timings so precise that every single unit coming out of it is perfect 100% of the time. Small variations in the environment (which can’t be controlled in a cost-effective fashion) mean you must have quality assurance checks smartly distributed across the line so that customers all the way down the supermarket don’t get pissed off and buy someone else’s product instead.

Understanding how important that was, the CEO of the toothpaste factory got the top people in the company together and they decided to start a new project, in which they would hire an external engineering company to solve their empty boxes problem, as their engineering department was already too stretched to take on any extra effort.

The project followed the usual process: budget and project sponsor allocated, RFP, third-parties selected, and six months (and $8 million) later they had a fantastic solution — on time, on budget, high quality and everyone in the project had a great time. They solved the problem by using some high-tech precision scales that would sound a bell and flash lights whenever a toothpaste box weighing less than it should. The line would stop, and someone had to walk over and yank the defective box out of it, pressing another button when done.

A while later, the CEO decides to have a look at the ROI of the project: amazing results! No empty boxes ever shipped out of the factory after the scales were put in place. Very few customer complaints, and they were gaining market share. “That’s some money well spent!” – he says, before looking closely at the other statistics in the report.

It turns out, the number of defects picked up by the scales was 0 after three weeks of production use. It should’ve been picking up at least a dozen a day, so maybe there was something wrong with the report. He filed a bug against it, and after some investigation, the engineers come back saying the report was actually correct. The scales really weren’t picking up any defects, because all boxes that got to that point in the conveyor belt were good.

Puzzled, the CEO travels down to the factory, and walks up to the part of the line where the precision scales were installed. A few feet before it, there was a $20 desk fan, blowing the empty boxes out of the belt and into a bin. “Oh, that — one of the guys put it there ’cause he was tired of walking over every time the bell rang”, says one of the workers.”

You wouldn’t be reading this story if the CEO had first actually taken the time to include the shop floor workers — those who would be most impacted by the decision — in the decision-making process itself. If he had, he likely would have saved 6 months and $7,999,980! But clearly it is neither time- nor cost-effective in most instances to gather every individual who will be impacted downstream by a decision upstream in the decision-making process. That’s why a country uses a representative democracy, why a public company uses a board of directors, or why parents are the legal guardians of their children. These gather the mass and centralize the decision making into one representative body. The same is true for your organization. It has a critical mass that can represent the rest of the company.

If you don’t gather in the mass, the resistance to change remains high; poor decisions get made because they lack vital inputs from those impacted by the decision; and implementation gets bogged down. Conversely, if you gather in the mass first, two things happen: 1) Better decisions are made because they take into account multiple different perspectives and interests and 2) Implementation is swift because a critical mass within the organization has adopted the decision as their own (assuming a good decision-making process was followed, there’s alignment in vision and values, and the structure is well designed) and they’ll collectively drive it forward. To use a physics analogy, if you first coalesce the organizational mass, then you can “hit” it with a force of change and it will quickly accelerate in a new direction.

To get everyone in the same room (or at least on the same phone call) and to follow the 6 steps of effective decision-making as a team. It does not mean to periodically ping the authority, power, and influence and update them on your progress. Nor does it mean to inform them once a decision has been made. To reduce the resistance to change, you need to involve them in the decision-making process itself. Why? For the same reason that lawyers do not conduct a jury trial independently and then report their findings for the jury to decide upon. A fair trial couldn’t work this way. Notice too that, if a jury member, lawyer, or judge can’t make the day of the trial, then the trial is postponed. Similarly, if you can’t get the right people in the room or on the phone at the same time, you would be well served to postpone the meeting to a later date. If you try to press ahead, you’ll likely end up increasing the resistance to change, not decreasing it.

Step 1: Set the Stage

Once you’ve identified and gathered in the mass of authority, power, and influence, you need to set the stage of the decision-making process. Setting the stage means getting everyone in the room on the same page about why the meeting or project is taking place, the desired outcomes, the participants’ roles and responsibilities (including who has authority to make the final yes/no decision), and the rules and expectations for the process. Because time pressure is the enemy of effective decision making, one of the most important things you can do when setting the stage is to create the right environment for the best decision to unfold. This requires unfreezing the group, getting initial buy-in to the problem/opportunity, and running efficient and timely meetings.

One of the most important parts of setting the stage is easy to do but often mistakenly skipped. What is it? It’s what the founder of organizational psychology, Kurt Lewin, called “unfreezing.” What Lewin recognized in the early 1900s is that inertia exists within people just as it exists within objects. Basically, when you and I show up to a meeting, our bodies are present but our minds are not. Instead, we’re stuck in a mental inertia still thinking about something else. The last phone call we were on. The emails we just received. A family or personal issue. The work we still need to accomplish. The hot girl or guy we fantasize about. We’re hungry. Whatever. The list is infinite.

The only purpose of having a meeting is to have the team participate through the process as one unit, through which each participant brings their whole being, experience, knowledge, and awareness to the task at hand. This requires everyone involved to first unlock or unfreeze their mental inertia — to create a sense of space or mental capacity to focus on the task and embody a future change. If this was true in the early 1900s, its even more true in our faster-paced times.

It’s actually pretty easy to unfreeze a group as long as you take a few minutes to do it. How? The simplest way is to get each participant to talk out loud. Just say something. Anything. It could be as simple as “How was your weekend?” to “What is costing your energy right now?” to “Ready?” What you’ll notice is that it doesn’t matter so much what the question is as it does for each participant to say something out loud. For example, I was facilitating a workshop this week and after the group returned from a short break I asked each person in turn, “Are you ready to continue?” One participant responded, “No, I’m not. I just got a really bad phone call about a deal I was trying to close. I’m devastated.” He sat there for a few more moments, then he said, “OK, now that I cleared that out loud, I’m ready to go.” Speaking out loud will always help to shift energy in a person and bring more presence to the task at hand.

Getting Initial Buy-in to the Problem or Opportunity

In addition to unfreezing the group, you’ll want to help set the stage by ensuring that the group has a unified vision of what it’s trying to accomplish. I recommend that you tie the desired outcomes for the team and/or project into the personal desired outcomes of the individual participants. One way to do this is to simply ask each person, “What is the desired outcome for this meeting (or this project) for you personally?” and write down his or her response. Then once each person has had a chance to state his or her desired outcomes, make sure that all the desired outcomes are aligned and attainable and if not, address them up front accordingly. “This one seems out of scope for this particular project. What do you guys think?” Once you’ve got alignment on desired outcomes, people should be clear and eager to dive into the process.

The reason I suggest you ask participants about personal desired outcome is that, when we have a personal interest in something, we’re much more engaged in attaining it. Often people show up to a meeting with no clear idea why they are there in the first place. By asking “what’s in it for you?” you’ll help them to reflect on and clarify what any potential rewards may be. “Hmmm, you know, I’d like to learn more about how XYZ works.” Or, “I’d like to be part of a kick-ass team that really produces results.” If a person has no personal desired outcome related to this meeting and/or project, it’s a sign that they probably shouldn’t be in that meeting.

Running Efficient and Timely Meetings

When it comes to setting expectations on time management in the decision-making process, here are some guidelines. Most of the time spent in decision making is invested in Steps 1 to 3 (Setting the Stage, Gathering Data, and Generating Insights). Once this is accomplished, it’s pretty straightforward to complete Step 4 (Deciding What to Do) and Step 5 (Assigning Action Steps for Implementation). A general rule of thumb is to invest 80% of the time in Steps 1 through 3 and 20% of the time in Steps 4 through 6. That means in an hour-long meeting, 42 minutes would be allocated to setting the stage, gathering facts and generating insights and just 18 minutes to deciding what to do, assigning action steps, and integration. If you feel that 18 minutes is not enough time to decide what to do, assign action steps, and integrate, it’s a clear indication that you’ll need to schedule a longer meeting. But don’t skimp on the first three steps. That’s where most of your time investment should occur. If you do skimp, it will come back to bite you through poor decisions and flawed implementations.

My grandfather used to say that the mind can only handle what the seat can endure. Speaking as a person who has a hard time sitting long periods, I concur. My favorite way to handle this is to run 75-minute team sessions with a 5 to 15 minute break in between. This allows enough time for the group to make meaningful progress. At the same time, it allows the group enough space and personal freedom to restore the body, check their email, make a phone call, etc. Get agreement from the group up front about the time frames in which you’ll run sessions and breaks. This will allow participants to focus on the task at hand.

Just a couple of words of advice. You need to be disciplined in time and flexible in process. This means that there will be occasions when you need to spend more time in one part of the process than you were anticipating. But remain disciplined in time. When it’s time to break, break. When it’s time to wrap, wrap. Also, make sure to unfreeze the group when they come back from a break or start a new session. The team needs to proceed through the process as one unit. Once the stage is set, it’s time to move into Step 2: Gather Data.

Step 2: Gather Data

Gathering the data means collecting all the facts and perspectives in the room on the issue at hand. If you don’t take the time to gather all the facts, the group is going to miss the full picture and make a half-baked decision. Each person will see the problem in a different light and no agreement will be reached on what the core issue really is.

Here’s an example to show what happens when you skip gathering data. Imagine a technology company that is experiencing a 10% reduction from the previous quarter’s sales. Alarmed, the board of directors asks the CEO to identify the problem and present a solution at the next board meeting. The CEO gathers the VP of Sales, VP of Marketing, CTO, and CFO in a conference room and says, “All right. We’re down 10% this quarter. The board wants answers. What are your solutions?” This approach to problem solving is a disaster in the making. It’s not the right way to make good decisions at all. Why? Because the leader skipped gathering data as a group and, as a result, each individual in the room will have a divergent perspective and conflicting interests and styles that never get reconciled.

In this scenario, the VP of Sales, who’s a hard-charging, task-focused type (Psiu) will likely point the finger at marketing: “We’re not selling because we’re not driving enough inbound leads. Get me more leads and we’ll sell ‘em!” The VP of Marketing, who’s more of a creative, big-picture type (psIu), will point the finger at technology: “We’re not selling because the product features we’ve been requesting are six months behind schedule!” The CTO, who likes to keep things nice and stable (pSiu) will point the finger back at marketing and sales: “We’re not selling because the business side keeps changing requirements in the middle of our production cycle!” And the CFO, who prefers to keep the drama low (psiU) will respond with, “We’re not selling because there’s too much infighting!” After an hour of fruitless discussion, the CEO throws up his arms in exasperation, makes a rushed set of decisions, and barks out his orders for the team to follow. The executive team all nod their heads in agreement, but inside they’re thinking, “Oh boy, here we go again. Another half-baked plan that’s not going to get us anywhere.”

What should have happened? The group should have first gathered data on multiple aspects of the problem. For example, what is the economic growth rate during that quarter? What are competitive sales figures? What is the client satisfaction rating? What facts do sales, marketing, technology, and finance have that can add clarity to the picture? Stick to data gathering here. Don’t dive into solutions yet, no matter what. When someone tries to go for the solution (and they will) stop them: “We’ll get to solutions in a bit but let’s first make sure that we have a full picture. Let’s keep gathering information.”

What happens if you don’t have the data you need? Go get it. Break the meeting. Assign action steps for people to come back with good, clean data as soon as possible. Set a new meeting to continue with the information the team needs to make a good decision.

There are two reasons that gathering good data from the team is so critical. The first is that good information is like a light in the darkness. Change constantly alters reality – and the faster the change, the harder it is to see and understand what’s happening and adapt to it. What was a good decision last year/month/week/yesterday may no longer be a good decision now. People change, markets adapt, situations alter, and technologies disrupt and get disrupted. Good information makes it possible to manage all this because it allows you to better understand and respond to each of the phases you’re moving through. It reveals what’s really happening now and provides insights into what might happen next.

The second reason to gather data as a group is that each person brings a different perspective to the table. Without a shared “data-base” each person is going to operate as if their perspective were the right one, thus missing key elements of the situation. If, however, the entire team can all agree that “yes, this is the data and we believe it’s correct and comprehensive,” that opens the door to new perspectives and a coherent understanding of the situation. It’s a good shared data set that leads to the next step, Generating Insights.

Step 3: Generate Insights

Now that the team has the data and can agree on the facts, it’s time to leverage the collective wisdom of the group to generate insights. What might be causing these facts to occur? What are the underlying causes and what are the symptoms? It’s important to get all the perspectives on the table before deciding what to do. Stimulate an environment of curious exploration versus blame and finger pointing. In the previous example, one insight might be that there’s poor coordination between development and customer requirements. Another might be that sales are down because the economy tanked. It doesn’t matter at this stage which insights are correct, only that the group is collectively generating insights based on a shared set of facts.

Step 4: Decide What To Do

If the group has gone through a process of setting the stage, gathering the facts, and generating insights, now is the time for the authority in the room to decide what to do. Good decision making is not a democratic process; it’s a participative process. By creating an environment of authentic group participation, the person who is responsible for having the decision implemented must now make it. Because those with power and influence over the implementation have been given the opportunity to have their voice heard, they should stand behind the decision. It does not mean that the decision will make everyone happy, but it does mean that the team now needs to back whatever decision is made. After facilitating over 100 group decision-making processes, I have yet to witness the ultimate authority make a decision that is at odds with the group. It’s not that the authority is afraid to make a hard decision; rather, it’s that everyone involved has reached the right decision together. When this occurs, it’s actually pretty easy and fast to move ahead towards implementation.

Step 5: Assign Action Steps

Now that a basic decision has been made, it’s time to assign action steps and amp up the time pressure on the implementation. In simple terms, the group needs to identify what to do, who is doing it, and by when. You’re setting clear deliverables, clear dates, and unarguable accountability to execute on that decision. In this part of the process, there may be a slight give and take between the authority in the room and those charged with performing different aspects of the implementation. Arthur Authority asks, “Frank, when do you think you can complete the XYZ analysis?” Frank replies, “I need to do a little research and speak with Marge. I’ll have it to you by next Friday.” If this is amenable to Arthur’s needs, the action item gets accepted and written down: “Frank to complete XYZ analysis by next Friday.” If it’s not amenable, then Frank and Arthur need to identify ways to change the task or speed the process. Because they’ve gone through the entire process together, both Frank and Arthur are fully aware of the broader implications, needs, and purpose of the action item. Consequently, there’s usually really easy agreement and clarity on action items. And when in doubt, lean towards more time pressure than less.

Compare this to a scenario when Arthur and Frank don’t go through the decision-making process together. In this scenario, Arthur has to get one-on-one time with Frank, explain the situation, and attempt to get Frank to change his schedule and priorities. It’s not always easy to do – and it generally results in a poorer decision and a bogged-down implementation.

Step 6: Reinforce

Reinforcement is essential to a well-run decision-making process. In this final phase, the group reflects on and integrates the process they just experienced and the decisions reached. It’s not a chance to complain, but rather to verbally lock in and commit to the implementation. A simple way to reinforce and close the meeting is to poll the group on their individual experiences during the process, as well as their views on how to improve it or how to support the implementation. The authority in the room is the last person to speak and then the meeting is closed. The end result is always better decisions and greater buy-in for the implementation. If not, it’s a clear indication that the requisite level of authority, power, and influence weren’t in the room, that there was a breakdown in the process, or that there’s a greater underlying misalignment at the level of vision and values or structure.

Executing on Short-Range Tasks vs. Long-Range Business Development

Just as there is a particular rhythm to follow for effective decision making and implementation, there’s a particular rhythm for managing business needs between short-range execution and long-range business development. From the article on organizational structure, you’ll learn that short-run needs always overpower long-range ones. You therefore need to create an organizational process that allows for effective long-range planning and development combined with short-range execution.

The rhythm goes like this. One to two times per year, a Company Council, represented by the key functional heads and key team members throughout the organization (those 1s and 2s you want to groom for the long term), should gather together off site to set the long-range (one-to-three-year) strategy and to align the organizational structure to support that strategy. The goal of this strategic alignment session is to allow everyone to focus on long-run changes impacting the market and the business and to identify potential improvement areas within the business. It’s important to do this long-range work off site to stimulate a new and broader perspective among the team. Once the long-range strategy is identified, shorter-range goals and outcomes are set, budgets and rewards are established, and the key performance indicators (KPIs) are identified for each business function.

Armed with a common long-range strategy, clearly defined authority and accountability within the structure, and defined short-range goals, the core functional heads form into a Leadership Team, led by the CEO, that meets weekly or biweekly on site to review progress, make decisions, and execute the plan. These short-range tactics support the long-range development plan. This shared alignment and dialogue among the Leadership Team allows everyone to stay on the same page, track and adjust performance, and keep the friction low. It should also reduce the total number of meetings conducted each week because, instead of scheduling ad hoc meetings, decisions are funneled into regular Leadership Team meetings where a good decision-making process is followed.

Watch for Signs of Deeper Problems

As you gather the authority, power, and influence over the implementation into the decision-making process, you will be well served to also recognize the signs of organizational misalignment or inertia. If there’s significant misalignment within the organization’s Execution Diamond (Vision and Values, Structure, and People), then your task will be very challenging indeed. Instead, your best course of action would be to gather in the authority, power, and influence to first realign the Execution Diamond. Once that is aligned, you can then attack the problem or opportunity you want to resolve.


In order to increase organizational momentum, you must make good decisions and implement them swiftly. In order to do that, you have to first gather in the mass of authority, power, and influence over the implementation and reduce the resistance to change. Then a force of change can be applied through an effective decision-making and implementation process and the organization will accelerate quickly in the desired direction. Any time a key decision needs to get made, follow a sound process that begins by setting the stage, followed by gathering the data, generating insights, deciding what to do, assigning action steps, and reinforcing the decision. With the right people in the room, good decision making naturally leads to swift implementation.

Back to Tutorials.

1.The Agile Alliance

By |2019-11-18T15:54:52-08:00January 24th, 2012|Articles|Comments Off on Mastering Team-Based Decision Making

Organizational Physics Business Acceleration Coaching

Q4 of 2011 was a big period for me. I successfully restructured 3 fast-growing companies while personally coaching 17 entrepreneurs and business leaders. Wow! I’m grateful for the opportunities and to participate in some awesome results. What kind of results? Here’s a snapshot:

  • A company with flat sales the past two years was struggling with accelerating growth. The company co-founders were feeling burned out. We reset the strategy, restructured the organization so the founders could escape low-value tasks, repositioned the story to appeal to investors, and accelerated the product development process. The result? The company raised over $500K in financing, launched a new killer app, and already has a full sales pipeline for 2012.
  • A 5-year-old company had been losing money since its inception. It had a strong culture but was suffering from customer turnover and too many competing priorities, with no way to manage them effectively. We implemented a new go-to-market strategy, restructured the company for clearer ownership, and streamlined the decision-making and product development processes. The result? The company reached cash flow profitability for the first time and is poised to grow from $3M to $7M in 2012.
  • After Google changed its AdSense algorithm, a 7-year-old international internet company lost 90% of its revenue overnight. Ouch. At the same time, the founder was feeling ready to move on and pursue the next new thing. What did we do? We quickly sold off the business for over six figures, netting a nice profit. Then we launched an entirely new business that the founder is truly passionate about.

My goal this quarter is to reach a new audience of entrepreneurs and business leaders. I have a few slots open. There’s no better time than right now to align and activate for the coming year around proven principles that drive results. If 2012 feels like your year to bust out in your business and personal life, consider the impact of 1-on-1 coaching with a master at organizational transformation. This is not a program for everyone.

You’re an ideal fit for this program if…

  • Your business has $2M to $20M in revenue.
  • You’re an entrepreneur with a great opportunity but you’re stuck in the founder’s trap (you can’t seem to get the business to scale beyond you).
  • You’re a CEO who needs to take things to the next level in strategy, team, and execution.
  • You’re committed to playing flat out and to try on new methods

If you’re ready to level up, I’ve got a simple process and powerful principles to get you tangible results starting this quarter.

I only work with select individuals and companies. The first step is a get-to-know-you meeting to see if there’s a good fit. Just contact me at the number below to arrange an initial conversation.

Thanks and best wishes for a great 2012,


PS. Please share this with others in your network who you think will be interested in organizational transformation.

By |2019-08-11T10:54:42-07:00January 18th, 2012|Articles|Comments Off on Organizational Physics Business Acceleration Coaching

The 5 Classic Mistakes in Organizational Structure: Or, How to Design Your Organization the Right Way

Is your organization designed to be a rocket or a parachute?

If I were to ask you a random and seemingly strange question, “Why does a rocket behave the way it does and how is it different from a parachute that behaves the way it does?” You’d probably say something like, “Well, duh, they’re designed differently. One is designed to go fast and far and the other is designed to cause drag and slow an objection in motion. Because they’re designed differently, they behave differently.” And you’d be correct. How something is designed controls how it behaves. (If you doubt this, just try attaching an engine directly to a parachute and see what happens).

But if I were to ask you a similar question about your business, “Why does your business behave the way it does and how can you make it behave differently?” would you answer “design?” Very few people — even management experts — would. But the fact is that how your organization is designed determines how it performs. If you want to improve organizational performance, you’ll need to change the organizational design. And the heart of organizational design is its structure.

Form Follows Function — The 3 Elements of Organizational Structure & Design

A good design supports its purpose

A good design supports its purpose[/caption]There’s a saying in architecture and design that “form follows function.” Put another way, the design of something should support its purpose. For example, take a minute and observe the environment you’re sitting in (the room, building, vehicle, etc.) as well as the objects in it (the computer, phone, chair, books, coffee mug, and so on). Notice how everything serves a particular purpose. The purpose of a chair is to support a sitting human being, which is why it’s designed the way it is. Great design means that something is structured in such a way that it allows it to serve its purpose very well. All of its parts are of the right type and placed exactly where they should be for their intended purpose. Poor design is just the opposite. Like a chair with an uncomfortable seat or an oddly measured leg, a poorly designed object just doesn’t perform like you want it to.

Even though your organization is a complex adaptive system and not static object, the same principles hold true. If the organization has a flawed design, it simply won’t perform well. It must be structured (or restructured) to create an design that supports its function or business strategy. Just like a chair, all of its parts or functions must be of the right type and placed in the right location so that the entire system works well together. What actually gives an organization its “shape” and controls how it performs are three things:

  1. The functions it performs.
  2. The location of each function.
  3. The authority of each function within its domain.

The functions an organization performs are the core areas or activities it must engage in to accomplish its strategy (e.g. sales, customer service, marketing, accounting, finance, operations, CEO, admin, HR, legal, PR, R&D, engineering, etc.). The location of each function is where it is placed in the organizational structure and how it interacts with other functions. The authority of a function refers to its ability to make decisions within its domain and to perform its activities without unnecessary encumbrance. A sound organizational structure will make it unarguably clear what each function (and ultimately each person) is accountable for. In addition, the design must both support the current business strategy and allow the organization to adapt to changing market conditions and customer needs over time.

What Happens When an Organization’s Structure Gets Misaligned?

It’s very hard to operate within a broken structure.

When you know what to look for, it’s pretty easy to identify when an organization’s structure is out of whack. Imagine a company with an existing cash cow business that is coming under severe pricing pressure. Its margins are deteriorating quickly and the market is changing rapidly. Everyone in the company knows that it must adapt or die. Its chosen strategy is to continue to milk the cash cow (while it can) and use those proceeds to invest in new verticals. On paper, it realigns some reporting functions and allocates more budget to new business development units. It holds an all-hands meeting to talk about the new strategy and the future of the business. Confidence is high. The team is a good one. Everyone is genuinely committed to the new strategy. They launch with gusto.

But here’s the catch. Beneath the surface-level changes, the old power structures remain. This is a common problem with companies at this stage. The “new” structure is really just added to the old one, like a house with an addition – and things get confusing. Who’s responsible for which part of the house? While employees genuinely want the new business units to thrive, there’s often a lack of clarity, authority, and accountability around them. In addition, the new business units, which need freedom to operate in startup mode, have to deal with an existing bureaucracy and old ways of doing things. The CEO is generally oblivious to these problems until late in the game. Everyone continues to pay lip service to the strategy and the importance of the new business units but doubt, frustration, and a feeling of ineptitude have already crept in. How this happens will become clearer as you read on.

Edwards Demming astutely recognized that “a bad system will defeat a good person every time.” The same is true of organizational structure. Structure dictates the relationship of authority and accountability in an organization and, therefore, also how people function. For this reason, a good team can only be as effective as the structure supporting it. For even the best of us, it can be very challenging to operate within an outdated or dysfunctional structure. It’s like trying to sail a ship with a misaligned tiller. The wind is in your sails, you know the direction you want to take, but the boat keeps fighting against itself.

An organization’s structure gets misaligned for many reasons. But the most common one is simply inertia. The company gets stuck in an old way of doing things and has trouble breaking free of the past. How did it get this way to begin with? When an organization is in startup to early growth mode, the founder(s) control most of the core functions. The founding engineer is also the head of sales, finance, and customer service. As the business grows, the founder(s) become a bottleneck to growth — they simply can’t do it all at a larger scale. So they make key hires to replace themselves in selected functions – for example, a technical founder hires a head of sales and delegates authority to find, sell, and close new accounts. At the same time, the founder(s) usually find it challenging to determine how much authority to give up (too much and the business could get ruined; too little and they’ll get burned out trying to manage it all).

As the business and surrounding context develop over time, people settle into their roles and ways of operating. The structure seems to happen organically. From an outsider’s perspective, it may be hard to figure out how and why the company looks and acts the way it does. And yet, from the inside, we grow used to things over time and question them less: “It’s just how we do things around here.” Organizations continue to operate, business as usual, until a new opportunity or a market crisis strikes and they realize they can’t succeed with their current structures.

What are the signs that a current structure isn’t working? You’ll know its time to change the structure when inertia seems to dominate — in other words, the strategy and opportunity seem clear, people have bought in, and yet the company can’t achieve escape velocity. Perhaps it’s repeating the same execution mistakes or making new hires that repeatedly fail (often a sign of structural imbalance rather than bad hiring decisions). There may be confusion among functions and roles, decision-making bottlenecks within the power centers, or simply slow execution all around. If any of these things are happening, it’s time to do the hard but rewarding work of creating a new structure.

The 5 Classic Mistakes in Organizational Structure

Bad design is bad design in any field.

Here are five telltale signs of structure done wrong. As you read them, see if your organization has made any of these mistakes. If so, it’s a sure sign that your current structure is having a negative impact on performance.

Mistake #1: The strategy changes but the structure does not

Every time the strategy changes — including when there’s a shift to a new stage of the execution lifecycle — you’ll need to re-evaluate and change to the structure. The classic mistake made in restructuring is that the new form of the organization follows the old one to a large degree. That is, a new strategy is created but the old hierarchy remains embedded in the so-called “new” structure. Instead, you need to make a clean break with the past and design the new structure with a fresh eye. Does that sound difficult? It generally does. The fact is that changing structure in a business can seem really daunting because of all the past precedents that exist – interpersonal relationships, expectations, roles, career trajectories, and functions. And in general, people will fight any change that results in a real or perceived loss of power. All of these things can make it difficult to make a clean break from the past and take a fresh look at what the business should be now. There’s an old adage that you can’t see the picture when you’re standing in it. It’s true. When it comes to restructuring, you need to make a clean break from the status quo and help your staff look at things with fresh eyes. For this reason, restructuring done wrong will exacerbate attachment to the status quo and natural resistance to change. Restructuring done right, on the other hand, will address and release resistance to structural change, helping those affected to see the full picture, as well as to understand and appreciate their new roles in it.

Mistake #2: Functions focused on effectiveness report to functions focused on efficiency

Efficiency will always tend to overpower effectiveness. Because of this, you’ll never want to have functions focused on effectiveness (sales, marketing, people development, account management, and strategy) reporting to functions focused on efficiency (operations, quality control, administration, and customer service). For example, imagine a company predominantly focused on achieving Six Sigma efficiency (which is doing things “right”). Over time, the processes and systems become so efficient and tightly controlled, that there is very little flexibility or margin for error. By its nature, effectiveness (which is doing the right thing), which includes innovation and adapting to change, requires flexibility and margin for error. Keep in mind, therefore, that things can become so efficient that they lose their effectiveness. The takeaway here is: always avoid having functions focused on effectiveness reporting to functions focused on efficiency. If you do, your company will lose its effectiveness over time and it will fail.

Mistake #3: Functions focused on long-range development report to functions focused on short-range results

Just as efficiency overpowers effectiveness, the demands of today always overpower the needs of tomorrow. That’s why the pressure you feel to do the daily work keeps you from spending as much time with your family as you want to. It’s why the pressure to hit this quarter’s numbers makes it so hard to maintain your exercise regime. And it’s why you never want to have functions that are focused on long-range development (branding, strategy, R&D, people development, etc.) reporting to functions focused on driving daily results (sales, running current marketing campaigns, administration, operations, etc.). For example, what happens if the marketing strategy function (a long-range orientation focused on branding, positioning, strategy, etc.) reports into the sales function (a short-range orientation focused on executing results now)? It’s easy to see that the marketing strategy function will quickly succumb to the pressure of sales and become a sales support function. Sales may get what it thinks it needs in the short run but the company will totally lose its ability to develop its products, brands, and strategy over the long range as a result.

Mistake #4: Not balancing the need for autonomy vs. the need for control

The autonomy to sell and meet customer needs should always take precedence in the structure — for without sales and repeat sales the organization will quickly cease to exist. At the same time, the organization must exercise certain controls to protect itself from systemic harm (the kind of harm that can destroy the entire organization). Notice that there is an inherent and natural conflict between autonomy and control. One needs freedom to produce results, the other needs to regulate for greater efficiencies. The design principle here is that as much autonomy as possible should be given to those closest to the customer (functions like sales and account management) while the ability to control for systemic risk (functions like accounting, legal, and HR) should be as centralized as possible. Basically, rather than trying to make these functions play nice together, this design principle recognizes that inherent conflict, plans for it, and creates a structure that attempts to harness it for the overall good of the organization. For example, if Sales is forced to follow a bunch of bureaucratic accounting and legal procedures to win a new account, sales will suffer. However, if the sales team sells a bunch of underqualified leads that can’t pay, the whole company suffers. Therefore, Sales should be able to sell without restriction but also bear the burden of underperforming accounts. At the same time, Accounting and Legal should be centralized because if there’s a loss of cash or a legal liability, the whole business is at risk. So the structure must call this inherent conflict out and make it constructive for the entire business.

Mistake #5: Having the wrong people in the right functions

I’m going to talk about how to avoid this mistake in greater detail in a coming article in this series but the basics are simple to grasp. Your structure is only as good as the people operating within it and how well they’re matched to their jobs. Every function has a group of activities it must perform. At their core, these activities can be understood as expressing PSIU requirements. Every person has a natural style. It’s self-evident that when there’s close alignment between job requirements and an individual’s style and experience, and assuming they’re a #1 Team Leader in the Vision and Values matrix, then they’ll perform at a high level. In the race for market share, however, companies make the mistake of mis-fitting styles to functions because of perceived time and resource constraints. For example, imagine a company that just lost its VP of Sales who is a PsIu (Producer/Innovator) style. They also have an existing top-notch account manager who has a pSiU (Stabilizer/Unifier) style. Because management believes they can’t afford to take the time and risk of hiring a new VP of Sales, they move the Account Manager into the VP of Sales role and give him a commission-based sales plan in the hope that this will incentivize him to perform as a sales person. Will the Account Manager be successful? No. It’s not in his nature to hunt new sales. It’s his nature to harvest accounts, follow a process, and help customers feel happy with their experience. As a result, sales will suffer and the Account Manager, once happy in his job, is now suffering too. While we all have to play the hand we’re dealt with, placing people in misaligned roles is always a recipe for failure. If you have to play this card, make it clear to everyone that it’s only for the short run and the top priority is to find a candidate who is the right fit as soon as possible.

How to Design Your Organization’s Structure

If you want to go far, you’ll need a good design.

The first step in designing the new structure is to identify the core functions that must be performed in support of the business strategy, what each function will have authority and be accountable for, and how each function will be measured (Key Performance Indicators or KPIs). Then, avoiding the 5 classic mistakes of structure above, place those functions in the right locations within the organizational structure. Once this is completed, the structure acts as a blueprint for an organizational chart that calls out individual roles and (hats). A role is the primary task that an individual performs. A (hat) is a secondary role that an individual performs. Every individual in the organization should have one primary role and — depending on the size, complexity, and resources of the business — may wear multiple (hats). For example, a startup founder plays the CEO role and also wears the hats of (Business Development) and (Finance). As the company grows and acquires more resources, she will give up hats to new hires in order to better focus on her core role.

Getting an individual to gracefully let go of a role or a hat that has outgrown them can be challenging. They may think and feel, “I’m not giving up my job! I’ve worked here for five years and now I have to report to this Johnny-Come-Lately?” That’s a refrain that every growth-oriented company must deal with at some point. One thing that can help this transition is to focus not on the job titles but on the PSIU requirements of each function. Then help the individual to identify the characteristics of the job that they’re really good at and that they really enjoy and seek alignment with a job that has those requirements. For example, the title VP of Sales is impressive. But if you break it down into its core PSIU requirements, you’ll see that it’s really about cold calling, managing a team, and hitting a quota (PSiU). With such a change in perspective, the current Director of Sales who is being asked to make a change may realize, “Hmm… I actually HATE cold calling and managing a team of reps. I’d much rather manage accounts that we’ve already closed and treat them great. I’m happy to give this up.” Again, navigating these complex emotional issues is hard and can cost the company a lot of energy. This is one of the many reasons that using a sound organizational restructuring process is essential.

A structural diagram may look similar to an org chart but there are some important differences. An org chart shows the reporting functions between people. What we’re concerned with here, first and foremost, are the functions that need to be performed by the business and where authority will reside in the structure. The goal is to first design the structure to support the strategy (without including individual names) and then to align the right people within that structure. Consequently, an org chart should follow the structure, not the other way around. This will help everyone avoid the trap of past precedents that I discussed earlier. This means – literally – taking any individual name off the paper until the structure is designed correctly. Once this is accomplished, individual names are added into roles and (hats) within the structure.

After restructuring, the CEO works with each new functional head to roll out budgets, targets, and rewards for their departments. The most important aspect of bringing a structure to life, however, isn’t the structure itself, but rather the process of decision making and implementation that goes along with it. The goal is not to create islands or fiefdoms but an integrated organization where all of the parts work well together. If structure is the bones or shape of an organization, then the process of decision making and implementation is the heart of it. I’m going to discuss this process in greater detail in the next article in this series. It can take a few weeks to a few months to get the structure humming and people comfortable in their new roles. You’ll know you’ve done it right when the structure fades to the background again and becomes almost invisible. It’s ironic that you do the hard work of restructuring so you can forget about structure. Post integration, people should be once again clear on their roles, hats, and accountabilities. The organization starts to really hum in its performance and execution speed picks up noticeably. Roaring down the tracks towards a common objective is one of the best feelings in business. A good structure makes it possible.

Structure Done Wrong: An Example to Avoid

Below is a picture of a typical business structure done wrong. The company is a software as a service (Saas) provider that has developed a new virtual trade show platform. They have about ten staff and $2M in annual revenues. I received this proposed structure just as the company was raising capital and hiring staff to scale its business and attack multiple industry verticals at once. In addition to securing growth capital, the company’s greatest challenge is shifting from a startup where the two co-founders do most everything to a scalable company where the co-founders can focus on what they do best.

Structure done wrong. Can you tell what's wrong with this picture?

So what’s wrong with this structure? Several things. First, this proposed structure was created based on the past precedents within the company, not the core functions that need to be performed in order to execute the new strategy. This will make for fuzzy accountability, an inability to scale easily, new hires struggling to make a difference and navigate the organization, and the existing team having a hard time growing out of their former hats into dedicated roles. It’s difficult to tell what are the key staff the company should hire and in what sequence. It’s more likely that current staff will inherit functions that they’ve always done, or that no one else has been trained to do. If this structure is adopted, the company will plod along, entropy and internal friction will rise, and the company will fail to scale.

The second issue with the proposed structure is that efficiency functions (Tech Ops and Community Operations) are given authority over effectiveness functions (R&D and Account Management). What will happen in this case? The company’s operations will become very efficient but will lose effectiveness. Imagine being in charge of R&D, which requires exploration and risk taking, but having to report every day to Tech Ops, which requires great control and risk mitigation. R&D will never flourish in this environment. Or imagine being in charge of the company’s key accounts as the Account Manager. To be effective, you must give these key accounts extra care and attention. But within this structure there’s an increasing demand to standardize towards greater efficiency because that’s what Community Operations requires. Efficiency always trumps effectiveness over time and therefore, the company will lose its effectiveness within this structure.

Third, short-run functions are given authority over long-run needs. For example, Sales & Marketing are both focused on effectiveness but should rarely, if ever, be the same function. Sales has a short-run focus, marketing a long-run focus. If Marketing reports to Sales, then Marketing will begin to look like a sales support function, instead of a long-run positioning, strategy, and differentiation function. As market needs shift, the company’s marketing effectiveness will lose step and focus. It won’t be able to meet the long-run needs for the company.

Fourth, it’s impossible to distinguish where the authority to meet customer needs resides and how the company is controlling for systemic risk. As you look again at the proposed structure, how does the company scale? Where is new staff added and why? What’s the right sequence to add them? Who is ultimately responsible for profit and loss? Certainly it’s the CEO but if the CEO is running the day-to-day P&L across multiple verticals, then he is not going to be able to focus on the big picture and overall execution. At the same time, who is responsible for mitigating systemic risk? Within this current structure, it’s very likely that the CEO never extracts himself from those activities he’s always done and shouldn’t still be doing if the business is to scale. If he does attempt to extract himself, he’ll delegate without the requisite controls in place and the company will make a major mistake that threatens its life.

Structure Done Right

Below is a picture of how I realigned the company’s structure to match its desired strategy. Here are some of the key things to recognize about this new structure and why it’s superior to the old one. Each box represents a key function that must be performed by the business in its chosen strategy. Again, this is not an org chart. One function may have multiple people such as three customer service reps within it and certain staff may be wearing multiple different hats. So when creating the structure, ignore the people involved and just identify the core business functions that must be performed. Again, first we want to create the right structure to support the chosen strategy. Then we can add roles and hats.

Structure done right. You should be able to instantly tell how to scale this business.

How to Read this Structure

At the bottom of the structure you’ll see an arrow with “decentralized autonomy” on the left and “centralized control” on the right. That is, your goal is to push decision-making and autonomy out as far as possible to the left of the structure for those functions closest to the customer. At the same time you need to control for systemic risk on the right of the structure for those functions closest to the enterprise. There is a natural conflict that exists between decentralized autonomy and centralized control. This structure recognizes that conflict, plans for it, and creates a design that will harness and make it constructive. Here’s how.

Within each function, you’ll see a label that describes what it does, such as CEO, Sales, or Engineering. These descriptions are not work titles for people but basic definitions of what each function does. Next to each description is its primary set of PSIU forces. PSIU is like a management shorthand that describes the forces of each function. For example, the CEO function needs to produce results, innovate for changing demands, and keep the team unified: PsIU.

Identifying the PSIU code for each function is helpful for two reasons. One, it allows a shared understanding of what’s really required to perform a function. Two, when it’s time to place people into hats and roles within those functions, it enables you to find a match between an individual’s management style and the requirements for the role that needs to be performed. For example, the Account Management function needs to follow a process and display a great aptitude towards interaction with people (pSiU). Intuitively you already know that you’d want to fill that role with a person who naturally expresses a pSiU style. As I mentioned earlier, it would be a mistake to take a pSiU Account Manager and place them into a Sales role that requires PSiu, give them a commission plan, and expect them to be successful. It’s against their very nature to be high-driving and high-charging and no commission plan is going to change that. It’s always superior to match an individual’s style to a role rather than the other way around. Now that you understand the basics of this structure, let’s dive into the major functions so you can see why I designed it the way I did.

The General Manager (GM) Function

The first and most important thing to recognize is that, with this new structure, it’s now clear how to scale the business. The green boxes “GM Vertical #1 and #2” on the far left of the structure are called business units. The business units represent where revenues will flow to the organization. They’re colored green because that’s where the money flows. The GM role is created either as a dedicated role or in the interim as a (hat) worn by the CEO until a dedicated role can be hired. Each business unit recognizes revenue from the clients within their respective vertical. How the verticals are segmented will be determined by business and market needs and the strategy. For example, one GM may have authority for North America and the other Asia/Pacific. Or one might have authority for the entertainment industry and the other the finance industry. Whatever verticals are chosen, the structure identifies authority and responsibility for them. Notice that the code for the GM/PsIU is identical to the CEO/PsIU. This is because the GMs are effectively CEOs of their own business units or can be thought of as future CEOs in training for the entire organization.

Underneath each green business unit is a Sales role, responsible for selling new accounts and an Account Management role, responsible for satisfying the needs of key clients. Essentially, by pushing the revenue driving functions to the far left of the structure, we are able to decentralize autonomy by giving each GM the authority and responsibility to drive revenue, acquire new customers, meet the needs of those customers. Each GM will have targets for revenue, number of customers, and client satisfaction. They also have a budget and bonus structure.

The Product Manager (PM) Function

To the immediate right of the green business units is a black box called “PM” or Product Manager. The function of the Product Manager is to manage the competing demands of the different verticals (the green boxes to its left) as well as the competing demands of the other business functions (the grey boxes to its right) while ensuring high product quality and market fit and driving a profit. The grey boxes to the right of the Product Manager — CEO, Finance, Operations, Engineering, Marketing Strategy, and Admin — represent the rest of the core organizational functions. Effectively, these functions provide services to the green business units so that those units have products to sell to their markets. The revenue that the business generates pays for those internal services. Profits are derived by subtracting the cost of those services from the revenues generated by the business units. A Launch Manager who helps to coordinate new product releases between the business units supports the Product Manager.

The code for the Product Manager is pSiU. That is, we need the Product Manager to be able to stabilize and unify all of the competing demands from the organization. What kind of competing demands? The list is almost endless. First, there will be competing demands from the verticals. One vertical will want widget X because it meets the needs of their customers; the other will want widget Z for the same reasons (and remember that this particular company’s strategy is to run multiple verticals off a single horizontal platform). Operations will want a stable product that doesn’t crash and integrates well within the existing infrastructure. Engineering will want a cutting-edge product that displays the latest functions. Marketing Strategy will want a product that matches the company’s long-range plans. Administration will want a product that doesn’t cause the company to get sued. The CEO will want a product that tells a great story to the marketplace. Finance will want a product that generates significant ROI or one that doesn’t require a lot of investment, depending on its lifecycle stage. So the list of inherent conflicts runs deep.

The reason we don’t want a psIu in the Product Manager is that at this stage of the company’s lifecycle, the innovative force is very strong within the founding team, which will continue to provide that vision and innovation in another role, new Vertical Development and R&D under Marketing Strategy (more on this later). Nor do we want a Psiu in the Product Manager function because a big producer will focus on driving forward quickly and relentlessly (essential in the earlier stages of the product lifecycle) but will miss many of the details and planning involved with a professional product release (essential at this stage of the product lifecycle).

It’s worth discussing why we want the product P&L to accrue to the Product Manager function and not the CEO or GMs. By using this structure, the CEO delegates autonomy to the GMs to drive revenue for their respective verticals and for the Product Manager to drive profits across all verticals. Why not give P&L responsibility to the CEO? Of course the ultimate P&L will roll up to the CEO but it’s first recognized and allocated to the Product Manager. This allows the CEO to delegate responsibility for product execution in the short run while also balancing the long-range needs of the product and strategy.

We don’t give the Product Manager function to the GMs at this stage for a different reason. If we did, the product would have an extreme short-run focus and wouldn’t account for long-run needs. The business couldn’t adapt for change and it would miss new market opportunities. However, the GMs will need to have significant input into the product features and functions. That’s why the Product Manager is placed next to the GMs and given quite a lot of autonomy – if the product isn’t producing results in the short run for the GMs, it’s not going to be around in the long run. At the same time, the product must also balance and prioritize long-range needs and strategy and that’s why it doesn’t report to the GMs directly.

If the business continues to grow, then one of the GMs will become the head of an entire division. Think of a division as a grouping of multiple similar verticals. In this case, the Product Manager function may in fact be placed under the newly formed division head because it is now its own unique business with enough stability and growth to warrant that level of autonomy. Remember that structures aren’t stagnant and they must change at each new stage of the lifecycle or each change in strategy. For this current stage of the lifecycle, creating a dynamic tension between the GMs, the Product Manager, and the rest of the organization is highly desired because it will help to ensure a sound product/market/execution fit. I’ll explain more of how this tension plays out and how to harness it for good decision making in the next article.

The Operations Function

To the immediate right of the Product Manager is Operations. This is the common services architecture that all GMs use to run their business. It is designed for scalable efficiency and includes such functions as Customer Service and Technology Infrastructure. Notice how all of these functions are geared towards short-run efficiency, while the business still wants to encourage short-term effectiveness (getting new clients quickly, adapting to changing requests from the GMs, etc.) within these roles and so it gives more autonomy to this unit than to those to the right of it. The code for Operations is PSiU because we need it to produce results for clients every day (P); it must be highly stable and secure (S); and it must maintain a client-centric perspective (U). It’s important to recognize that every function in the business has a client that it serves. In the case of Operations, the clients are both internal (the other business functions) as well as external (the customers).

The Engineering Function

Going from left to right, the next core function is Engineering. Here the core functions of the business include producing effective and efficient architectures and designs that Operations will use to run their operations. This includes SW Design, SW Development, and QA. Notice, however, that the ultimate deployment of new software is controlled by the Product Manager (Launch Manager) and that provides an additional QA check on software from a business (not just a technology) perspective. Similar to Operations, Engineering is also short-run oriented and needs to be both effective and efficient. It is given less relative autonomy in what it produces and how it produces it due to the fact that Engineering must meet the needs of all other business functions, short- and long-run. The code for Engineering is PSIu because we need it to produce results now (P) and to have quality code, architecture, and designs (S), and to be able to help create new innovations (I) in the product.

The Marketing Strategy Function

The next core function is Marketing Strategy. Marketing Strategy is the process of aligning core capabilities with growing opportunities. It creates long-run effectiveness. It’s code is psIu because it’s all about long-term innovation and nurturing and defending the vision. Sub-functions include new Vertical Development (early stage business development for future new verticals that will ultimately be spun out into a GM group), R&D (research and development), Marketing Execution (driving marketing tactics to support the strategy), PR, and People Development. A few of these sub-functions warrant a deeper explanation.

The reason new Vertical or Business Development is placed here is that the act of seeding a new potential vertical requires a tremendous amount of drive, patience, creativity, and innovation. If this function were placed under a GM, then it would be under too much pressure to hit short-run financial targets and the company would sacrifice what could be great long-term potential. Once the development has started and the vertical has early revenue and looks promising, it can be given to a new or existing GM to scale.

The purpose of placing R&D under Marketing Strategy is to allow for the long-run planning and innovative feature development that can be applied across all business units. The short-run product management function is performed by the Product Manager. The Product Manager’s job is to manage the product for the short run while the visionary entrepreneur can still perform R&D for the long run. By keeping the Product Manager function outside of the GM role, New Product Development can more easily influence the product roadmap. Similarly, by keeping the Product Manager function outside of Marketing Strategy, the company doesn’t lose sight of what’s really required in the product today as needed by the GMs. Similarly, if the R&D function was placed under Engineering, it would succumb to the short range time pressure of Engineering and simply become a new feature development program — not true innovative R&D.

The reason Marketing Execution is not placed under the GM is that it would quickly become a sales support function. Clearly, the GM will want to own their own marketing execution and he or she may even fight to get it. It’s the CEO’s role, however, to ensure that Marketing Execution supports the long-range strategy and thus, Marketing Execution should remain under Marketing Strategy.

The basis for placing People Development under Marketing Strategy rather than under HR is that People Development is a long-range effectiveness function. If it’s placed under HR, then it will quickly devolve into a short-range tactical training function. For a similar reason, recruitment is kept here because a good recruiter will thrive under the long-range personal development function and will better reflect the organization’s real culture.

The Finance & Admin Functions

To the far right of the organization are the Administrative functions. Here reside all of the short-run efficiency or Stabilizing functions that, if performed incorrectly, will quickly cause the organization to fail. These functions include collecting cash Controller (AR/AP), Legal, and the HR function of hiring and firing. Notice, however, that the Finance function is not grouped with Admin. There are two types of Finance. One, cash collections and payments, is an Admin function. The other, how to deploy the cash and perform strategic financial operations, is a long-run effectiveness function. If Finance is placed over Admin, or under Admin, the company will either suffer from lack of effectiveness or a lack of efficiency, respectively. It also creates a tremendous liability risk to allow one function to control cash collections and cash deployments. It’s better to separate these functions for better performance and better control.

The CEO Function

The top function is the CEO. Here resides the ultimate authority and the responsibility to keep the organization efficient and effective in the short and long run. The code for the CEO is PsIU because this role requires driving results, innovating for market changes, and keeping the team unified. By using this structure, the CEO delegates autonomy to the GMs to produce results for their respective verticals. The GMs are empowered to produce results and also to face the consequences of not achieving them by “owning” the revenue streams. The CEO has delegated short-run Product Management to produce a profit according to the plan and simultaneously balances short- and long-run product development needs. At the same time, the CEO protects the organization from systemic harm by centralizing and controlling those things that pose a significant liability. So while the GMs can sell, they can’t authorize contracts, hire or fire, or collect cash or make payments without the authorization of the far right of the structure. Nor can they set the strategy, destroy the brand, or cause a disruption in operations without the authority of the CEO and other business units.

The goal of structure is to create clarity of authority and responsibility for the core organizational functions that must be performed and to create a design that harness the natural conflict that exists between efficiency and effectiveness, short-run and long-run, decentralization and control. A good CEO will encourage the natural conflict to arise within the structure and then deal with it in a constructive way. More on how to do this in the next section.

Remember that within any structure, individuals will play a role and, especially in a start-up environment, wear multiple hats. How you fill roles and hats is to first identify and align the core functions to support the organization’s strategy. Then, assign individuals to those functions as either a role or a hat. In this particular structure, the role of CEO was played by one founder who also wore the temporary hats of GM Vertical #1 and #2 until a new GM could be hired. The other founder played the role of Product Manager, as well as Engineer until that role could be hired. Clearly delineating these functions allowed them both to recognize which roles they needed to hire for first so that they could give up the extra hats and focus on their dedicated roles to grow the business. Going forward, both founders will share a hat in Marketing Strategy with one focused on new Business Development and the other on R&D. These Marketing Strategy hats play to the strength of each founder and allow them to maintain the more creative, agile aspects of entrepreneurship while the business structure is in place to execute on the day-to-day strategy.

Summary of Organizational Structure & Design

To recap, design controls behavior. When an organization’s structure is misaligned, its resistance to change will be great and its execution will be slow. Organizational structures get misaligned over time for many reasons. The most basic of these is inertia, through which companies get stuck in old ways of doing things. When restructuring your organization, there are some classic mistakes to avoid. First, always redesign the structure whenever you change the strategy or shift to a new lifecycle stage (do this even if there are no personnel changes). Second, avoid placing efficiency-based functions such as operations or quality control over effectiveness-based functions such as R&D, strategy, and training. Third, avoid giving short-range functions like Sales, Operations, and Engineering power over long-range functions like Marketing, R&D, and People Development. Fourth, distinguish between the need to decentralize autonomy and centralize control and structure the organization accordingly. Finally, avoid placing the wrong style of manager within the new structural role simply because that’s the past precedent. Changing structures can be really hard because there’s so much past precedent. If the organization is going to thrive, however, the new structure must support the new strategy. In the next article, I’m going to discuss the most important process of any business: the decision making and implementation that brings the structure alive.

Need help designing and integrating a new organizational structure? Contact Lex for an initial consultation.

Next to The Most Important Process in Your Business: Or, How to Make Good Decisions and Implement Them Fast

By |2019-08-11T10:54:42-07:00January 9th, 2012|Articles|16 Comments

The Physics of Fast Execution

Fast business execution creates its own momentum.

Let’s do a thought experiment. Imagine that you’re standing in the middle of a racquetball court surrounded by four walls. At your feet is a basketball. First, notice how the basketball just tends to sit there. That’s called inertia. In order to get the ball to do something, you have to apply a force to it. In this case, you give it a kick and the ball rolls along the floor, bounces off the wall, and careens in another direction before coming to rest again. Next, you walk and retrieve the ball and bring it back to the center of the court, place it on the floor, and this time, you give it a really hard kick. What happens? The ball rolls even faster across the floor, bounces off the wall with more power, and travels further in a new direction than the first kick. In essence, you just experienced all three of Newton’s laws of motion.

Newton’s three laws of motion will shed light on the speed and direction of your organization. If you want to move your organization forward quickly in a chosen direction, you should understand these laws and how they apply to business execution. Put another way, if you want to be successful, work with – not against – the physics.

The First Law of Motion

Newton’s first law of motion is about inertia. Inertia is a recognition that an object will tend to do what it’s been doing, unless acted upon by an imbalanced or outside force. In our thought experiment, that’s why the ball tends to stay at rest in the middle of the floor until you do something, like give it a kick. Inertia works in both ways, however. Once the ball is in motion from the kick, it tends to stay in motion too, until an outside force such as gravity, friction, or a wall acts upon it. Once the ball comes to rest, it will remain at rest until it is acted upon by another force.

Newton's First Law of Motion

Obviously, an organization isn’t a simple object like a ball. But you can still use the lens of inertia and see how it impacts an organization. Basically, because of inertia, an organization will tend to continue to do what it’s been doing unless acted upon by another force. That is, if your organization is slowed, stymied, or stuck, it will continue to act that way unless you do something to change it. And the greater the inertia, the greater the effort required at getting it to move in a new direction. On the other hand, if your organization is currently experiencing a lot of momentum, then like a train roaring down the tracks, it will be hard to slow down. Inertia can work in your favor too.

About the Physics

In Newtonian physics, “force” is a push or a pull on an object and is defined as either “balanced” or “imbalanced.” An imbalanced force is one in which either the push or the pull exerts an unequal force and cause the object to move. If all forces are equal or balanced, there is no motion.

In Organizational Physics, a “force” is not a push or a pull on an object, but a force of change applied to an organization. The force in this case is the Producing, Stabilizing, Innovating, or Unifying force or some combination of these.

Just as in Newtonian physics, one or more of the forces must be imbalanced in order to effect change. For example, if you want to drive your organization forward in terms of productivity, you’ll need to apply more Producing force and less of the others. To have the organization become more stable, you’ll need more of the Stabilizing force. To help it discover new opportunities and avoid future threats, you’ll need to amp up the Innovating force. And to keep the organization unified as a whole, you’ll need the Unifying force at work. Balancing and unbalancing the right forces in the right sequence, while keeping entropy low and integration high, is the art and science of Organizational Physics.

The Second Law of Motion

Newton’s second law of motion is about the relationship between force, mass, and acceleration. In our thought experiment, when you kicked the basketball harder, it had more acceleration and went further. There’s an equation in physics that explains this and is written F=MA (Force equals Mass times Acceleration). Basically, F=MA tells us that if you take two objects of the same mass and hit one with force, you’ll have acceleration. If you hit the other with more force, you’ll have more acceleration. That’s why if you were to take two identical basketballs and kick one really hard, it would accelerate to a certain speed and travel a set distance. Kick the other one less hard and it will accelerate to a slower speed and travel less distance.

Newton's 2nd Law of Motion: F=MA

While any frustrated CEO would surely love to simply kick their organization in the ass to get it to accelerate, it’s obvious that that’s not how things work. But why is that? Why can’t a CEO, a teacher, or a parent apply a force of change to the organization and make it move quickly and easily just like a ball being kicked? If F=MA, then why don’t your kids pick up their toys when you tell them to? Why doesn’t your sales team respond to the force of your incentive plan? Why won’t the market readily respond to the appeal of your advertising?

The answer is not that an organization isn’t a physical object like a ball. The answer is this: Mass is not size or volume. Mass is resistance to change. So the reason an organization, or a person, or a market is relatively hard or easy to move is due to its inertia or resistance to change. If the organization has a high mass, there’s plenty of visible and invisible resistance to change and it will be very difficult to get it to alter its behavior. If the mass is low, then there’s little resistance to change, which will come easily. This is an important distinction. Just because a Fortune 500 company is really “large,” does not mean its mass is necessarily big. Or, just because a family of four is relatively “small,” doesn’t mean that its mass is automatically light.

Here’s an example to show why mass is resistance to change and not size or volume. The United States of America is a very large, complex organization. Imagine that you have been elected President. You want to implement changes that you believe will benefit all. However, there are over 300 million people, each with different levels of needs, wants, desires, and perceptions, who are all represented by different politicians, who are in turn supported by different corporations and political action groups. Your legislative agenda is seen as beneficial to some segments and as a terrible loss to others. Therefore, the mass is very high. Even though you’re the President, it’s very, very hard to push your agenda forward because the resistance to change is so great.

There’s a saying in Washington: “Never lose the opportunity of a good crisis.” What does this mean? When there’s a crisis, the normal resistance to change is lowered because the system is under threat. When this occurs, it becomes much easier to get new legislation passed. For example, after the 9/11 crisis in the United States, new legislation called the Patriot Act was quickly passed. This legislation strictly curtailed civil and constitutional liberties and would have been unthinkable without a preceding crisis that first reduced the resistance to change.

I’m not advocating that you create crises to get your organization to do something differently. Rather, I’m making the point that mass is not size or volume but resistance to change – and even a very large organization, such as a country, will move quickly in a new direction if the resistance to change is low enough. Once the organization gets moving in that new direction, it will tend to stay on that course until another force causes it to stop or change.

The Third Law of Motion

Newton’s third law of motion recognizes that for every action, there is an equal and opposite reaction. That’s why, when the basketball in our experiment hits the wall, it careens off in the opposite direction from which it struck. If the ball is coming quickly into the wall, it will travel far in the opposite direction. If it’s coming slowly into the wall, it will travel less distance in the opposite direction. Action and reaction are the essence of the third law of motion.

Newton's 3rd Law of Motion

Therefore, when you’re implementing change in one area of your organization, there will always be an equal and opposite reaction in another. If you’re not careful, the opposite reaction can also slow the speed and direction of your organization.

For example, imagine that your business is expanding rapidly. Congratulations! This is something you’ve wanted for a long time and you’ve worked very hard at it. You’ve finally got the momentum you were seeking. But guess what happens next? Faced with the new growth, the business’ administrative systems and people are falling apart and must be managed to keep pace. That’s an equal and opposite reaction. If you don’t manage the reaction well, it will act as a drag on your momentum. Or, with all the work and effort you’ve put into the business, your family life is stretched thin. If you can’t find a way to restore harmony, the family system will suffer from an equal and opposite reaction to your booming business.

The Secret to Executing Fast

In order for an organization to accelerate momentum, there are really only two things that must occur: The organization must make good decisions and implement them quickly. That is, if the organization makes a good decision and implements it quickly, and then makes another good decision and implements that one quickly, then like a train picking up speed, it will increase its momentum. Pretty soon it will be flying down the tracks and hard to stop. However, if it implements a bad decision, it will destroy momentum. Even worse, if it implements a bad decision quickly, it will derail completely. Conversely, if it makes a good decision but takes too long to implement it, then its momentum will decelerate too. Good decisions implemented fast are the key to organizational momentum.

So how do you make good decisions and implement them quickly? The secret lies in how the organization’s mass is managed. That is, if the mass is manageable, then it’s easy to apply a force of change and get the organization to do something new. Within organizational dynamics, the challenge in managing mass is that resistance to change is scattered throughout the organization. It lies within the individuals making the decisions, those doing the work, and those who can help, hinder, or influence the results. Therefore, no matter how much or what type of force you attempt to apply, when the organizational mass is widely dispersed, there’s nothing that can be leveraged to effectively push or pull against the organizational inertia.

Think of it like this — the reason that your organization doesn’t behave like an object — a basketball, for example — is because its mass is scattered all about. While a basketball is neatly self-contained and you can move it at will, your organization can feel more like a bunch of shattered glass loosely strewn about. With such a dispersal of mass, no matter how much of a force of change you try to apply, it won’t be very responsive.

In order to effect change, you must first gather in the organizational mass.

If it was possible to gather the pieces of glass and glue them back together – in other words, to make them behave like a ball again – then it would be easy to give that ball a push. Similarly, if you were able to gather in the organizational mass, then it would begin to behave like a ball and change its speed and direction. Once you gather in the mass and reduce the resistance to change, you can then hit it with a force, such as a decision or a directive, and it will tend to rapidly accelerate in a new direction.

Aligning the Execution Diamond to Increase Organizational Momentum

In order to have swift execution, the organization must have its vision & values, structure, processes, and people in alignment. (M) is the mass of the organization.

There are four basic subsystems of an organization that help to keep the mass self-contained and malleable, rather than scattered and resistant. These four subsystems, called the Execution Diamond, are the organization’s Vision and Values, the organizational Structure or design, the decision-making and implementation Process, and the People and teams involved. Think of these subsystems like a corral or a boundary that helps to keep the organizational mass self-contained.

So what are you trying to accomplish with these subsystems? In a word: Alignment. Your objective is to align each of these subsystems with your chosen strategy. By creating alignment the organization’s mass will be contained and headed in one direction. But without it, your organization will experience friction that prevents it from accelerating. In the worst-case scenario, it will eventually cease to function altogether. This means that if you want a fast-moving organization that goes in the right direction, then you’ll first need to create alignment within the subsystems. In fact, rather than taking action in a misaligned environment, save yourself the time, energy, and resources (not to mention the headaches, heartburn, and sleepless nights) by first aligning the Execution Diamond and then enacting change.

Back to Tutorials.

By |2019-08-11T10:54:42-07:00December 13th, 2011|Articles|1,048 Comments

Getting from PSIU … to Really Good Management

Best management advice ever: "Gnothi Seauton"

If you’ve been following along in the management guide, you know that there are four fundamental forces (PSIU) that shape individual and organizational behavior. You also know that these forces compete for available system energy and that if even one of the forces is absent, the organization will perish. I’ve also mentioned that, if you want your organization to do something new – such as change direction or accelerate performance – you must engage the appropriate force. But how does all this translate into practical steps? And how can you use it to be a better manager of people and situations?

1) Know the Forces at Play

Knowing the forces at play within an individual or an organization delivers fast insight into what otherwise appears as complex or random behavior. For example, if you set up a team with all Producers, then that team is going to demonstrate some predictable behavior and outcomes. It’s going to move very quickly, produce a large volume of work, and blow past its milestones in record time. However, the work is going to have errors (it will be an inch deep and a mile wide), it will totally miss out on the implications and the coordination with other departments, and it will lack creative problem solving. A team of all Unifiers would have very different but equally predictable outcomes.

There’s another important benefit to knowing the forces at play. It’s this: it allows you to see and accept things for what they are, with less judgement. You should not underestimate the power of this. On the one hand, judgment is the capacity to assess situations or circumstances astutely and to draw sound conclusions. Obviously, good judgment is a critical skill for a manager. On the other hand, it’s hard to be a good manager when you’re holding personal judgment against someone or something. That type of interpersonal judgment causes us to close down, stop seeing what’s really there, and miss out on finding creative solutions. It also causes the other person (the person being judged) to feel resentful, unrecognized, and discounted. Like everyone else, I’ve experienced both sides of judgment, as both the judge and the judged. I can unequivocally say that interpersonal judgment demonstrates a lack of personal responsibility and results in a waste of energy and a loss of opportunity.

Growing up, my younger brother Carter and I fought constantly. I was the “responsible” older brother intent on working hard and “making it big” in the world (PsIu). He was the young, carefree spirit who loved to hang out with his friends (psiU). I’m ashamed to say that I would frequently nag, condemn, and ridicule him to get his act together, “be a man,” and make something of himself. The truth is that my vision of him was severely clouded by own judgment and he responded to me as you probably would: “Fuck off. You’re not in charge of me!” Later in college, after a few years of living apart, I took a road trip to visit him in Bozeman, Montana, to go hiking and camping in the mountains. Outdoors in this new environment, and probably because I was out of my own comfort zone, I was able to let go of my “judgment vision” and see my brother in a new light. In fact, I was utterly in awe at what I saw. Here was a young man who was extremely capable, knowledgeable, thoughtful, and powerful. Who was this person? Where did he come from? The fact is that he was there all the time. It was my own judgment that had prevented me from seeing him fully. What a sad loss of time, brotherhood, and missed opportunity!

On the other hand, I’ve also been the judged when my boss couldn’t truly hear, see, or listen to me without his own “judgment vision” clouding the interaction. For example, I had a mentor who is widely-known as a brilliant management thinker, highly regarded and wise. Many rightfully refer to him as the Peter Drucker of his era. I was originally introduced to his work as an entrepreneur and we struck up a collaboration and a friendship. Later, because I was so enamored of his methods, I joined his organization as an associate. However, soon after I joined and he became my “boss” (and not just a friend and mentor), something really altering happened.

He no longer seemed to see, hear, or understand me as clearly as he did before! On the receiving end, it felt like there was a thick interference field now operating between what I spoke and what he heard, between who I was and what he saw. Because I had the experience of collaborating with him deeply before he became my boss, the discrepancy was really profound. Now that I was “inside” the organization, it seemed that I was subjected to the same type of judgment vision I had projected onto my brother. As an employee, my own judgment vision towards him was equally activated. Now, there was no longer an individual and friend, but a “boss” and my own projections of whatever that entailed. All in all, we were two talented, capable people who couldn’t see past their own judgments.

To be clear, I don’t think my example of judgment vision between employee and boss is unique. In fact, I think it’s often the norm. For example, the COO for a famous personal development guru recently approached me seeking help in their strategic growth: “Lex, basically the guru doesn’t listen to anyone inside the company. He really only listens to external experts. We’re stuck on this issue and we need an external expert that he’ll listen to.” We all judge others and ourselves incorrectly. Sometimes consciously, usually not. Judgment of yourself and others may sometimes feel right and good, but it’s really a loss of energy, productivity, and human potential. There is a better way.

Instead of letting your interpersonal judgments run wild, learn to judge the force, not the person. By “judging” or identifying the force, you are able to respond to the underlying energy patterns at work, without becoming caught up in personal criticism. You’ll give yourself and others the freedom to be fully seen, heard, and reach full potential; you’ll have more productivity and less drama in relationships; and the entire organization will have a greater chance to flourish.

Judging a force is pretty straightforward. Rather than labeling a something as good or bad, right or wrong, you simply observe the force in action. Is this individual or situation change-driving or change-responding? Are they dealing with the parts or dealing with the whole? Is it a Producing, Stabilizing, Innovating, or Unifying force or some combination? By judging the force, you are better able to discern behavior without getting caught up in the drama. For example, if I had judged the force within my brother, “Oh, that’s the Unifier force. It likes to be with friends, hang out, and have a good time,” then I’m sure our relationship wouldn’t have been so needlessly draining for both of us. Similarly with my old boss, if I had learned to judge the force rather than the person, I would have been much more effective: “Ahhh, that’s the Innovator/Stabilizer combo. I shouldn’t offer up new ideas in this situation. Instead, I should ask some thoughtful questions to help him reveal his own vision further. And when I do see an opportunity to pursue, I should come prepared with lots of data to support it.”

When we don’t reduce others to the sum of our judgments, not only do we see more clearly but we also allow them to respond to us in a more positive way. We can then enjoy much healthier, more creative, and less energy-draining relationships.

2) Give the Force What It Needs

Whatever your managing, always work with, rather than against, its nature

Each of the four styles has a particular focus and need. The Producer is focused on what to do and needs autonomy to do their work. The Stabilizer is focused on how to do it and needs time and data to perform analysis. The Innovator is focused on finding new solutions (we call this, “Why Not?” as in “Why not this approach or why not this way?”) and needs excitement for their ideas. The Unifier is focused on the people involved and requires time to process relationships and emotions.

Good management requires versatility. You don’t manage different people or situations the same way. An effective manager is a flexible one who understands the different focus of each style and gives each one what it needs. Of course, to be truly flexible (and not just wishy-washy) you need to have a strong internal vision and values. You also need to know yourself. Are you a Producer, Stabilizer, Innovator, Unifier, or some combination? And what are your biases? Whatever your style, it impacts how you see the world and interact with others. Good managers recognize their own style and have the ability to adjust it for short periods based on who they are interacting with – all without compromising their own authentic vision and values.

Why is it important to meet the needs of each force? Assuming that you’re dealing with a mature individual, as you give a force what it needs, the energy of that force “moves through” and can make space for the emergence of other forces. But if a force doesn’t have its needs met, the energy stagnates and causes entropy to rise. Put another way, once someone has had their immediate needs met, they are in a much better state to be able to see and appreciate all the other forces and perspectives involved.

Imagine that you’re sitting in your office and different styles of people are coming to you for advice. In the following examples we are going to assume that you are a psiu – that is, you have an equal balance of all four forces. Of course, in real life, no one has a perfect balance so you will have to adjust your temporary style based on your predominant style. Here’s how you might successfully interact with each style by giving each force what it needs.

Polly Producer storms into your office. She has high energy. She’s talking fast and moving quickly. She’s focused on what to do and is frustrated at the continued delays. Your task is to give the force what it needs. So what do you do? You speed up your pace. You take a structured approach. You focus on the most immediate short-term objectives. You help remove any obstacles that are preventing the work from getting done.

Once Polly Producer has had a chance to vent her frustration, she’s once again able to focus on completing the task at hand. In addition, because you’ve met the immediate needs of her strong Producing force, Polly is now able to see things in a new light too. She can have a greater appreciation for all the details (Stabilizing), as well as an improved awareness of other people’s perceptions (Unifying) and the big picture of the overall strategy (Innovating). You can now give Polly lots of autonomy to complete the task. And because she’s a Producer, you don’t have to worry about the work getting done. You only have to check that it’s the right work and she hasn’t gone too far in one direction.

Sam Stabilizer knocks on your door. Sam speaks and moves at a more deliberate, thoughtful pace. He’s focused on how to complete a task or project. He’s in your office because the recent corporate objectives don’t make perfect sense. So what do you do? You slow down your pace. You carve out time to really explain things. You give Sam all the information he needs and all of the raw data involved in the decision. You focus on the short-term practical issues. You help him focus on how to do things more efficiently. You give him plenty of time to analyze all the data.

After Sam Stabilizer’s needs are met, he can amp up is creativity (Innovating) and production power (Producing) and better connect with others (Unifying). But if Sam was never given the data or time to analyze it, he would simply be stuck in his Stabilizing force. There’s no sense in berating Sam to work harder, to be more creative, or to be a better team player until you’ve also given him time to analyze and make sense of the data. By doing this, you’re able to leverage Sam’s talents and will likely uncover aspects of the problem or situation that would remain hidden if he, or someone like him, hadn’t analyzed it.

Isabel Innovator makes a grand appearance. She speaks and moves in broad, fast strokes. She’s been thinking about the new project and has some ideas. “Why not do it this way?” she asks. So what do you do? You amp up your own pace and get excited! You give her the space to go really big picture and take an unstructured, creative approach. Together you explore the broader implications, how to drive better results, and uncover where new innovations lie.

Once Isabel Innovator has had a chance to get excited with someone about her new idea, she may notice that the romance of it starts fading – followed by an increased awareness of the real effort (Producing), details (Stabilizing), and teamwork (Unifying) involved in bringing it to life. The result will be a better, more well-rounded decision. Isabel can now get out of her own way too. She can still be highly creative but won’t be nearly as disruptive by always throwing new ideas into the mix just because they’re new and she wants to be heard.

Ulysses Unifier enters your office and wants to chat. He’s focused on who is doing the work on the new project and is noticing that team morale isn’t has high as it could be. Ulysses moves, speaks, and thinks more deliberately and is usually “happy” and gregarious (unless he’s upset and will then need time to process his feelings). In this case, Ulysses seems really upset. So what do you do? You slow down your pace and try to see the world as Ulysses sees it. You give him space to share his feelings and get his perspective on the needs of the rest of the team. You empathize with him.

After Ulysses Unifier has had a chance to process his feelings, he’s much more capable of doing the work (Producing), following the process (Stabilizing), and supporting the new strategy (Innovating). If he doesn’t get his Unifier needs met, he’s going to be unproductive. Not only that: his gifts as a Unifier, including the ability to uplift others, empathize, intuit, and bring harmony to the team will be lost. By giving the force what it needs, the energy moves through and Ulysses can be at his best once again.

It’s obviously hard work to give a force what it needs. It takes time, energy, skill, and awareness to do it successfully. But if you don’t give a force what it needs, what happens? Our old enemy entropy starts to rear its ugly head. When the needs of a force aren’t met, rather than dissipating, entropy increases and becomes detrimental to the individual and to the team. Polly becomes frustrated to the breaking point. Sam withdraws into quiet resentment. Isabel gets dejected at the lack of interest around her and spins out even more crazy ideas (or stops sharing altogether). Ulysses gets so caught up in the melodrama that he becomes moody, grouchy, and petulant.

So yes, while managing others well is hard and time-consuming work, not managing well has an even greater cost. Doing it right is always worth your time.

By |2020-01-06T08:16:53-08:00December 5th, 2011|Articles|1,061 Comments

The Key to High Performing Teams

Great organizations thrive by joining complementary styles.

Growing up, I had a good friend whose dad was very successful. They lived in a gorgeous home on Lake Minnetonka and I was lucky to spend time a lot of time there, hanging out and enjoying their largesse. Among the things I vividly recall about their home was a refrigerator magnet that read, “Behind every successful man is a wise woman.” I remember that magnet because it made my fourteen-year-old self wonder, “Hmmm, is Mrs. B trying to tell the world that she’s equally responsible for all this magnificence?” and “Is it really true that all successful men have a supportive woman behind them?” or “Maybe it’s her way of putting her husband in his place…” I didn’t have the answers then. But looking back, I can see that this message (dated and cliche-ridden as it is) is worth pondering and has implications for marriages and businesses alike.

The Secret to a Successful Marriage

A happy and successful marriage comes from joining complementary styles.

Marriage or partnership is an exemplary opportunity to match and leverage complementary PSIU forces. No one can be predominantly change-driving, change-responding, focused on the parts, and focused on the whole all at the same time. For much of human history, sexual and gender differentiation resulted in men playing the part of PsIu while women played the part of pSiU. That is, men were responsible for bread-winning (P) and strategy or career advancement (I) while women were responsible for organizing domestic life (S) and taking care of children and family (U). In short, the left side of the PSIU chart shows the classic “feminine” functions and the right side the “masculine” ones.

In the United States in the 1970s, when baby boomers shifted to a dual-income family model and women entered the professional workforce en masse, women joined men on the Producer and Innovator (or traditionally “masculine”) side of the chart. The result? Couples started outsourcing their Stabilizer functions to housekeepers, bookkeepers, and organizers and their Unifier functions to babysitters and marriage counselors – all to keep the family together!

Today, as many of us have outgrown long-standing assumptions about gender and marriage, we can see that the point is not about gender roles. Rather, it’s that all four forces must be present for a family – however you define it – to thrive. Specifically, what all successful and harmonious unions have in common is that both partners naturally complement each other. For example, a partner who is a PsIu will tend to harmonize well with someone who is a pSiU. If one partner is naturally externally focused on career innovation and the other is internally focused on domestic harmony and organization, the partnership can really work. If one partner is naturally better able to focus on short-run needs and structures, while the other is better at seeing the long run and creating harmony, that can also really work. Any number of themes and combinations are possible. What matters is that both partners complement the other and (as long as they share love, trust, and respect) they will have a happy partnership.

Compare that to a relationship where both partners are entirely focused on their careers and personal ambitions, while displaying strong Producer and Innovator traits (PsIu). If this occurs, there won’t be enough force organizing and bonding together the family, which will suffer and tend to disintegrate. On the other hand, consider a union where both partners are stable and prudent but prefer to hang out with their friends than develop their careers (pSiU). In this case, the couple will probably have a great social life and terrible cash flow. It takes a complementary team to have a chance at a happy relationship – and both partners must give and take to create a balance.

The Secret to a Successful Business

Highly visible leaders may get all the press accolades but, behind the scenes, there's always a complementary partner/team.

If you pay close attention, you’ll notice that a highly successful and visible business leader usually has a highly capable and less visible complementary partner. For example, Apple’s late CEO Steve Jobs was recognized for his inventiveness, charisma, and uncanny ability to predict the future of technology and anticipate (even produce) consumers’ desires. Jobs was also famous for his blistering attention to product detail. In one oft-repeated anecdote, we hear that Jobs ordered the original iPod dismantled the night before the press launch when he noticed that the headphone jack did not make a satisfying click when inserted. These are classic traits of the Innovator. Jobs was also infamous for his impatience and high work ethic. These are classic Producer characteristics. As a management style, therefore, Jobs coded as PsIu.

Tim Cook was Apple’s COO (now CEO) who, according to most reports, was a perfect complement to Jobs. Cook works at a relentless pace (Producer), is a spreadsheet junkie with ruthless attention to detail on the supply chain (Stabilizer), and is also down to earth, soft-spoken, and good at maintaining relationships (Unifier). As a management style, therefore, Cook is a PSiU. Cook’s production drive met Jobs’ own. They both demonstrated extreme attention to detail, but in different domains. While Jobs was a powerful Innovator, Cook is more of a Stabilizer and Unifier who makes things efficient and smoothes the way with others. Together, they made a powerful complementary team.

According to a 2011 profile by the New York Times, “Their complementary skills have helped Apple pull off the most remarkable turnaround in American business, and made it the world’s most valuable technology company.” The Times also recognized that a huge void would need to be filled when Jobs passed on: “When Mr. Cook is on his own, he will have to compensate for the absence of Mr. Jobs — and his inventiveness, charisma and uncanny ability to predict the future of technology and anticipate the wishes of consumers” (all Innovator qualities).

So while Steve Jobs was celebrated as the world’s greatest CEO, behind the scenes he had a complementary partner and executive team. The necessity of the complementary team gets short shrift in the media, however, which celebrates the cult of the individual. Just browse through any bookstore and you’ll see the mugs of Donald Trump, Bill Bellicheck, Jack Welch, Richard Branson, or the latest guru celebrated with very little mention of their complementary partners who supported their success.

Even business schools promote this cult of the individual leader. Read a popular business book about leadership and it will say something like this: A good leader produces results (P), brings efficiency and systems (S), is able to innovate to changing market demands (I), is a good people person (U), and focuses on the vision and values (U). This is nonsense. It’s a myth. Just because it gets spun as fact in the media doesn’t make it true. The bottom line is that if you want to be successful (and happy), you’ll need to surround yourself with complements. You simply can’t go it alone.

Next to Getting from PSIU … to Really Good Management

1. Migeul Helft, The Understudy Takes the Stage at Apple The New York Times: January 23, 2011

By |2020-10-25T04:14:00-07:00December 1st, 2011|Articles|1,050 Comments

The Innovator Style

The Innovator is focused on driving change while finding new and better ways of doing things. To get an intuitive sense of the Innovator’s qualities, think of a dynamic, creative, big-picture person who has a plethora of new ideas and is usually excited by the latest one, until a new one strikes again. That’s an Innovator. If you put this person in a rowboat and say, “Row!” What will they do? Well, they’ll start to come up with new ideas! “Why don’t we put a sail on this baby? How about a glass bottom? That would be pretty cool! Come to think of it, a 250hp motor would do just the trick; I bet we can find one at the marina. Be right back.”

The Innovator has a tremendous ability to peer into the future and to anticipate how seemingly disparate trends will (or can be made to) merge together. They are highly conceptual and get easily excited about new ideas and opportunities. Because an Innovator can sense change occurring faster than other styles, they spend a lot of time trying to get others to see the same thing they do. They usually attempt to do that by explaining the idea and sharing their enthusiasm, and by trying to get others to understand and be enthusiastic too. Our best Innovator qualities are our ability to anticipate change, to be imaginative, charismatic, and inventive. Without the Innovator force, we would have no ability to adapt to changes in our environment and we would quickly become irrelevant or extinct.

The Big I

When the Innovator trait is exceedingly strong, we call it a Big I. A Big I is like a mad genius. It’s always cooking up one crazy sounding idea after the next. The Big I comes into work whenever they want and leaves work whenever they want. If they have an office, it’s likely a testament to their own unique individuality and creativity. The Big I doesn’t like to have meetings unless it’s to discuss a new idea and as long as they get to do most of the talking. Their biggest frustration is that things are stymied in production and implementation or that they get bogged down in managing release schedules and milestone dates, rather than working on the next new thing. Their common complaint is that others “don’t get it.” Their answer to most problems is to come up with a new idea.

The Big I is not usually comfortable giving schedule estimates because they recognize they just don’t have the interest (or a clue) as to how long something will actually take. Those are details for others to figure out. But they’re happy to give predictions on when market trends will converge. However, because they see a future (not necessarily the accurate future) so clearly, they tend to overestimate when something will actually occur. Therefore, if they think the market demand will tap out in two years, in reality it’s probably just getting started then. But if and when demand finally does arrive, the Big I is already bored with it — OMG, that’s so last decade! — and has moved on to yet undiscovered things.

The Big I gets bored with the status quo really easily. Their past creations are never good enough because something new keeps being invented. If there’s nothing new to build or think about, they prefer to destroy what’s already been built. “Hey, let’s tear this old thing down and rebuild something new.” If you walk into their office, the first thing you’ll hear about is their latest idea and why it’s important and revolutionary. When this person supervises others, there’s a lot of chaos among the staff, projects, and schedules. They’ll usually have a right-hand person who suffers while trying to keep up with the extreme amount of innovation, has learned to separate a passing notion from a true need for implementation, and struggles to coordinate all the moving pieces.

The reason that the Big I always pursues so many different ideas and opportunities is that they’re afraid of standing still and being trapped. To stand still is risk boredom and there’s not much more terrifying than that. So to ask a Big I to focus on one thing and complete it is like asking a crack addict to put down the crack pipe. It’s very, very hard and not a lot of fun at all.

In the hit 1985 movie Back to the Future, Christopher Lloyd plays Doc, a madcap inventor and a pretty good depiction of a really Big I. He always seems to have three new ideas running through his head; he has a garage full of half-completed inventions; he’s enthusiastic; he loves to think big; and the viewer is never quite sure if he’s for real or insane because he’s so far out there on the edge. Notice when he’s most happy — when one of his ideas finally works! This clip is in a non-English language. It doesn’t matter. The qualities of the Big I are easy to spot in any language.

Big I Under Stress

When the Big I is under extreme stress, they tend think themselves into a corner. Because they see so many options, it’s hard to choose one. Thus, they’ll want the flow of options and counter options to stop so that they can pick a path and get out of the mess they’ve created. The Big I tends to seek escape when under duress. So if things are going poorly in the office, you can expect to find them thinking of a new idea, dreaming of a vacation or a fun new purchase, diving into entertainment, or generally trying to avoid reality. When angry, the Big I can get very volatile and hypercritical of others.

Big I and Other Styles

The Big I appreciates Producers because they act really fast to implement their vision. However, sometimes it can be frustrating to have to explain to the Producers why the Big I is changing the strategy again. “Can’t they see it? It’s so obvious!!” Besides, they are kind of boring and uncreative. They absolutely loathe Stabilizers who are finicky, slow, and say “no” a lot! They distrust other Innovators and view them as arrogant competition. They enjoy Unifiers because the Unifier is easy to be around, always has a supportive and encouraging word for their latest idea, and can be a useful ally in galvanizing support for their latest vision.

Managing a Big I

If you’re managing a Big I, you have an outstanding idea generator and a terrible implementer. If you have a good relationship, they’ll want to bounce new ideas off you frequently because they need to talk things through and weigh different possibilities. Often they can be scattered and inconsistent so you’ll need to make sure that the work is actually getting done and that the details are being well managed. Because the Big I is capable of generating so many new ideas, they are often unaware of how the changes they propose are hard for everyone else to keep up with. They overlook the intricate details involved in implementation and conveniently forget all of the half-completed projects they’ve left in their wake. If you praise them for having great ideas and get excited with them, you’ll have a loyal employee.

If Your Boss is a Big I

If your boss is a Big I, you will need to demonstrate your value by helping them complete the pieces of the puzzle they see in their mind. But whatever you do, don’t add to or change the vision for them. That would be like taking their paintbrush and drawing on their half completed canvas. It’s very risky and the Big I may never forgive you for it. Instead, ask questions, gently point out gaps in the planning, and always try to be enthusiastic about their ideas. Because a Big I changes their mind so frequently, you’ll need to be able to discern between a passing notion and real action item. “Oh that, we’re not doing that any more, I changed my mind this morning. Didn’t I tell you? Here’s what we’re doing now…” is something you’ll hear frequently.

The Big I thinks and speaks conceptually in big patterns and generalities. They see things others just can’t. They promote people who they believe can help them achieve their vision. They fire people who no longer fit the vision or who seem to be creating obstacles to achieving it. If they are away on a long airline flight, you can expect them to show up at the office with a list of fifty new ideas and improvements.

The Big I can’t stomach saying “no.” For them, saying “no” means shutting the door to new opportunity. If you present a proposal to a Big I and they do say “no”, unlike a Big S, you can’t go back and try again. That’s it. It’s over. They’ll likely snap your head off if you try again. Consequently, a “yes” from a Big I doesn’t really mean “yes” either. A “yes” for a Big I is more like “sure, sounds pretty good, let’s explore it more.” For example, if you were to ask a Big I, “Mr. Jones, what do you think about this new prototype?” and Mr. Jones responds, “Hey, I like it! Very cool! We could also make it do this…” That’s not a legitimate go-ahead signal. When Mr. Jones comes back in two weeks and you show him the progress on the prototype, he’ll probably say something like, “What? Why are you working on this? I didn’t approve of this. It’s time you focus on the XYZ project, we’re already three months behind schedule!” So a “no” is a final “no” from a Big I but a “yes” is more of a “maybe.”

Summary of the Innovator Style

To recap, Innovator qualities are what allow us to sense and adapt to change and to find creative solutions and new opportunities. Innovators are creative and dynamic. They have an innate ability to see things others can’t yet see. When taken to an extreme, the Innovator turns into a Big I and can become overzealous in pursuing too many different strategies, all half-baked and constantly changing.

Back to Tutorials

Next to The Unifier Style

By |2019-11-19T10:29:00-08:00November 16th, 2011|Articles|1,032 Comments

The Producer Style

The Producer is focused on what to do now and working hard to get it done rapidly. To get an immediate sense of the Producer’s qualities, think of a fast-charging, focused, determined, high-energy person who thrives on working long and hard. That’s a Producer 1. If you put this person in a rowboat and say, “Row!” What will they do? Well, they’ll just start rowing straight ahead — and fast! They don’t need to ask questions, plan a route, understand where they should go, or even how long they’ll be gone. They just row and keep rowing until you say, “Stop!”

The Producer has a tremendous capacity to work hard to accomplish a goal and takes great pride in winning. That could be winning the new account, completing the project, achieving a goal, or beating the competition. A Producer is decisive and makes decisions based on what can be accomplished now, without waiting for all the information to be in hand. Instead, they figure it out as they go. Our best Producer qualities are our ability to act, lead the charge, overcome obstacles, urge a team to action, and be effective, assertive, and victorious. A Producer is a lot like the engine of a car. The bigger the engine, the faster the organization can go.

The Big P

When the Producer trait is exceedingly strong, we call it a Big P. A Big P is like a hammer. It sees every problem as a nail and the solution is to hit it. Hit it with hard work, more work, and faster work. The Big P comes into work very early and leaves work very late. If they have an office, it’s likely very messy with lots of projects and tasks to complete (and usually awards and trophies on display). The Big P doesn’t like to have meetings unless they’re short, to the point, and focused on the most pressing task at hand. Their biggest frustration is that things aren’t getting done fast enough according to their own internal clock. Their common complaint is that others aren’t working as hard as they do. Their answer to most problems is to work harder, longer, and faster. Because of this, they tend to overestimate the amount of work that can be accomplished by a team. Therefore, when getting schedule estimates from a Big P, recognize that they are going to significantly underestimate the actual time it will take to complete a team project. If they say one month, it will be more like three to four months.

The Big P can’t stomach falsity and they’re often brutally honesty in their communications. If you went into their office, the first thing you’d hear about is how hard they’ve been working and how much they still have to complete. When this person supervises others, there’s a lot of anxious waiting by the staff because the Big P is not very effective at delegating. Often, they delegate at the very end of a project when they just can’t do the work themselves and a deadline is fast approaching. The staff then leaps into action to try to solve another last-minute crisis.

The reason that the Big P always has so much work to do is because they value themselves and others based on how much work they do. Delegating tasks or planning ahead to avoid a crisis actually decreases the Big P’s sense of self-worth. The Big P thrives on averting crises. And the bigger the crisis, the better. In fact, sometimes the only way you can get their attention is to present a new crisis for them to fix.

In the 1992 movie Glenn Gary Glenn Ross, Alec Baldwin plays an extreme Big P. His character, Blake, is sent in by Mitch and Murray, the faceless owners of a real estate office, to motivate the salespeople. Blake shows up with a pair of brass balls, cusses out the sales team, and announces a contest where only the top two salespeople will get the more promising leads and everyone else will get fired. That’s a Big P. Perform or else – and do it quickly.

Big P Under Stress

When the Big P is under extreme stress, they tend become erratic in their actions. They will tend to make a lot of mistakes because they can’t see the big picture, understand the details, or communicate and unify the rest of the organization. It’s the classic “Fire, Ready, Aim!” When angry, the Big P tends to lash out verbally, tell others what to do, and becomes domineering or aggressive.

Big P and the Other Styles

The Big P gets along really well with other Producers because they value hard work and move at the same fast pace. They don’t mind Stabilizers as long as the Stabilizers don’t creating “unnecessary” barriers to getting work done. But if they do, watch out. Producers respect an Innovator’s ability to see into the future but dislike Innovators who cause too much chaos or changes in strategy because that requires Producers to have to re-focus and change their work. That’s hard for a Big P to do. Producers will often judge Unifiers as sycophants who don’t do any real work, chitchat all day, and play the political winds – unless, of course, a Unifier can help the Producer alleviate obstacles that are in the way of getting tasks completed. In that case, they’ll form an uneasy alliance.

Managing a Big P

If you’re managing a Big P, you never have to worry about them working hard enough or finding the inner motivation to complete a challenging task. Instead, you need to be mindful that they don’t run too far in the wrong direction. While another style might require the symbolic whip to trigger them into action, the Big P will need a set of reins to slow them down. A Big P needs a high level of autonomy in their tasks and the best way you can support them is to help eliminate obstacles that prevent the work from getting done. Be mindful also that, because the Big P is outstanding at completing the tasks at hand, they may have blind spots around how the work is impacting others, how the big picture has changed, and the intricate details involved. If you praise them for being productive and celebrate and honor their victories, you’ll have a loyal employee.

If Your Boss is a Big P

If your boss is a Big P, you will need to demonstrate your value based on measurable achievements and by how long and hard you work. That is, if you’re working long and hard and producing tangible results such as sales wins, products launched, hours billed, or capital raised, then you’ll be in good standing with your boss. If you need a request fulfilled, you better phrase it quickly and to the point and be able to show how it is necessary for completing short-term tasks and goals. The Big P values actions more than words and has little patience for politics, bureaucracy, or anyone and anything they view as standing in the way of what they want to achieve.

The Big P thinks and speaks literally. They are plain spoken. A “yes” means just that and a “no” does too. Therefore, a Big P takes you at your word as well. If you say you’ll do something, even in an off-hand way, they’ll remember it and hold you to it. If you follow through, you’ll be accepted and rewarded. If you fail, you’ll lose favor with the Big P, regardless of the surrounding circumstances. The Big P loves to reward and promote for performance and to fire for a lack of performance. It’s black and white. So when its time to discuss your performance review, be prepared to validate your wins and state how you will mitigate your losses going forward. If you keep failing to hit your stated goals, you’re at risk of getting fired, regardless of the circumstances.

Summary of the Producer Style

Producer qualities allow us to work hard, achieve our goals, and be decisive and effective in our actions. They provide the engine for accomplishment. When taken to an extreme, they turn into Big P – a giant hammer that only sees what’s in front of it, gets overwhelmed by taking on too much, and seeks to alleviate its frustration by pushing things to go faster.

Back to Tutorials

Next to The Stabilizer Style

By |2019-11-19T10:30:11-08:00November 11th, 2011|Articles|2,707 Comments

The Secret to Managing Everything

Life exists in patterns

The secret to understanding management is this: Complex adaptive systems (such as people and organizations) must (1) shape and respond to changes in the environment and (2) do so as whole organisms, including their parts and sub-parts. If they are unable to do so, they will cease to get new energy from the environment and will perish.

Intuitively, this makes sense. For example, imagine a family of four. If the family is to survive and flourish, it must shape the environment by getting resources such as money, food, and shelter. It must also respond to the environment, including to changes that are economic, societal, ecological, and so on. At the same time, it must pay attention to the all the parts that make up the family system – things like the act of cooking, cleaning, commuting, paying the bills, and taking the kids to school. It must take into account the different and often conflicting needs of the individual family members. It must also give focus to holistic dynamics so that the family acts like a single, unified whole – for example, making sure that there’s plenty of love, warmth, laughter, support, and nurturing for all of its members.

If the family isn’t able to shape or respond to the environment, or if it loses focus on the parts or the whole, it will quickly run into trouble. If the pattern continues, then the family will disintegrate. Just imagine a family that doesn’t have income, or a family that can’t perform its daily routine, or that can’t respond to new economic changes, or whose members are always fighting among themselves. Obviously, it’s not a family you’d want to be a part of. It is not resilient or adaptive to change. It costs all of its members more energy than they get in return. Such a family is on the precipice of complete failure.

The same is true for every organization. It must be constantly shaping and responding to change while focused on the parts and the whole. Therefore, I am going to classify observable behavior, at its most basic level, as either shaping or responding to change while focusing on the whole organization or on its parts or sub-parts. I call this the Adaptive Systems Model of organizational behavior.

The Adaptive Systems Model of organizational behavior

The dimensions of behavior within the Adaptive Systems Model exist on a relative and time-dependent scale. For example, if there’s a high drive to shape the environment, then at the same time, there will be a lower drive to respond to change. If there’s a high drive to focus on the parts, there will be a lower drive to focus on the whole. You can see this in your own life. Notice that, when the daily pressures and actions of work and life consume you, you’re also not simultaneously focused on the big picture. That’s why you periodically “get away from it all,” go on vacation, or take time out to get a new perspective. Notice too that if you’re busy building a new business, you don’t have the time and energy to respond to all the little vicissitudes of life, family, friends, and so on. As the farmer once said, “there’s a season to sow and a season to reap and they don’t happen at the same time.”

All behavior can be viewed and understood through this basic model. Note that I’m not talking about “good” or “bad” behavior, nor about why something is behaving the way it is – only that it is behaving along these relative dimensions. Now that you have an overview of the basic dimensions of behavior, you can use this framework to reveal some amazing insights into the people and situations you’re attempting to manage and to do it more effectively. Here’s how.


By |2019-11-19T10:30:44-08:00November 5th, 2011|Articles|1,006 Comments

How Square Went Against Popular Strategic Advice and Won

Square Payments followed a counter-intuitive strategy and so should you.

There’s a popular view among technology startups that a smart business strategy is to build a product that’s designed for the leading industry giant to acquire. It usually sounds something like this: “We’re building the next-generation router that Cisco will need to add to its product line. Our strategy is to build the product, get them to adopt it, and ultimately have them buy us out.” Like a lot of things in life, just because this view is popular, doesn’t mean it’s right. In fact, gearing your strategy towards the leading industry giant is usually dead wrong. Here’s why and how to choose a better strategy.

The Story of Square

You may have heard of a company called Square Payments, Inc. Square is a mobile payment solution company that allows anyone to accept credit card payments using their mobile phone. In just over a year since its launch, the company had nearly $1 billion in processed payments. It has recently accepted an undisclosed investment from Visa, the leading credit card processor. The insider consensus is that, if Square continues to execute its strategy, it will revolutionize how we pay for things in the real world. It could be as disruptive to payments as iTunes was to music. How did this all happen in such a short amount of time?

The story of how Square came to life is a great one. Square was created by Jack Dorsey (Jack also happens to be the co-founder and Executive Chairman of Twitter, but that’s a different story). When you learn the story of Square, it becomes clear that Jack didn’t start out to revolutionize the payments industry. His original goal was much more modest. Dorsey’s former boss and good friend (and eventual co-founder), Jim McKelvey, lost a sale for his hand-blown glass because he had no way of accepting credit cards. The problem was one many people had: the barriers to setting yourself up to accept credit card payments were too high. So Dorsey set about to see if he could create a better system.


By |2020-01-06T08:00:30-08:00November 2nd, 2011|Articles|1,066 Comments

The Pre-Startup Checklist

Before a startup ever launches, you should have a checklist of critical items in place. These items have nothing to do with writing a business plan or forming the articles of incorporation. In line with the old saying “well begun is half done,” without these basic requirements, the venture won’t get off to a successful start. Even worse, ignoring this checklist can lead to your investing a lot of capital, time, and energy – only to find out that you’re doing the wrong thing, with the wrong team, at the wrong time.

The Real Difference Between Startup and Pre-startup

I’m going to define the core difference between startup and pre-startup using a single word: commitment. Commitment means that the entrepreneur and founding team have taken a real risk to make the business happen. They are clearly and unequivocally in. It’s Dodge City or Bust. Without commitment, the venture will remain stuck in pre-startup mode – as an idea that will never be actualized.

For example, I recently had coffee with an old colleague who wanted to talk about his new “startup.” He had written a business plan, registered a domain name, and was seeking advice on raising capital and building the technology. He was still working at his day job, where he planned to stay while building on the idea in his spare time. As we talked, I could tell that what he really wanted was someone with whom he could discuss the idea – to explore it further and get another perspective. He was still just trying it on and not yet fully committed.

You can always tell if someone is committed to a new venture by his or her actions. Have they taken a significant risk such as quitting their day job or putting their own money into it? Are they excitedly and constantly talking about the opportunity? Are people rallying around their cause and vision? These are all great signs of commitment – and that’s when you know you’re in startup mode. With them, a new business can be born and has a chance of success. Without them, you’re still in pre-startup or it’s a non-starter.


By |2020-01-06T08:35:24-08:00October 31st, 2011|Articles|713 Comments

The Stages of the Execution Lifecycle

Keep climbing the mountain

Navigating your company up the execution lifecycle 1 and keeping it in optimum shape is a great challenge. This article will show you how to do it successfully.

The stages of the execution lifecycle become easier to understand with a little pattern recognition. Basically, every business must shape or respond to its environment and it must do so as a whole organization, including its parts and subparts. If it doesn’t do this, it will cease to exist. Recognizing this, we can call out four basic patterns or forces that give rise to individual and collective behavior within an organization. They are the Producing, Stabilizing, Innovating, and Unifying (PSIU) forces. Each of these expresses itself through a particular behavior pattern. The combination of these forces causes the organization to act in a certain way.

The four forces of Organizational Physics.

Just like the other lifecycles, the execution lifecycle exists within a dynamic between stability and development. The basic stages of the execution lifecycle are birth, early growth, growth, and maturity and, from there, things descend into decline, aging, and death. The focus within the execution lifecycle should be to have the right mix of organizational development and stability to support the stages of the product and market lifecycles. That is, the lifecycle stage of the surrounding organization should generally match the lifecycle stage of the products and markets. If it’s a startup, the surrounding organization is the entire company. If it’s a Fortune 500 company, this includes the business unit that is responsible for the success of the product as well as any aspects of the parent organization that influence, help, or hinder the success of the product.

The stages of the Execution Lifecycle.

The surrounding organization should act a certain way at each stage of the product/market lifecycle, as you’ll see below. Note that, when a force is or should be dominant, it will be referenced with a capital letter:

• When piloting the product for innovators, the company should be in birth mode and be highly innovative and future-oriented (psIu)
• When nailing the product for early adopters, the company should be in early growth mode and be producing verifiable results for its customers (Psiu)
• When beginning to scale the product for the early majority, the company should be standardized and operations streamlined for efficiency (PSiu)
• When fully scaling the product for the early majority, the company’s internal efficiencies should be harnessed, as well as the capability to launch new innovations and avoid the commodity trap (PSIu)
• When milking the product for the late majority/laggards, the company should use the proceeds from the cash cows to launch new products into new markets that will in turn progress through their own PSIU lifecycle stages.


By |2020-01-06T07:59:07-08:00October 28th, 2011|Articles|3,857 Comments