Playing To Win
Strategy and Leadership #2
I am continuing the strategy and leadership theme with another key piece of the leadership puzzle: making choices. My 16th Year III Playing to Win Practitioner Insights (PTW/PI) piece is called Strategy & Leadership #2: What Choices to Make — and Not. You can find the previous 126 PTW/PI here.
Making choices is a key component of leadership and for strategy. This is, of course, not surprising, even obvious. In this series and elsewhere, I have reinforced repeatedly that strategy is about making choices. And in fact, you make choices whether you think of them as choices or not, so it is important to be thoughtful about them.
That might feel that the imperative for leaders to make lots of choices. Isn’t making more choices better than fewer? No. Both choosing and not choosing are important. But how should a leader think about which choices those are and are not?
Up and Down
Leaders need to recognize two things about company structure and choices.
On one hand, as you go up in the company, managers have more knowledge than those below about how the interconnections between various pieces of the company work. A regional plant manager will have more knowledge about how all his plants connect together in a network than the managers of individual plants in his region. And the GM of the region will have more knowledge about how manufacturing connects with the other functions under her purview. And the President of the business unit will have more knowledge about how the regions under his purview fit with the other regions. And the CEO of the company will have more knowledge about how the business units under her purview fit with the other business units.
Conversely, as you go down in the company, managers are more knowledgeable about customers. It is because as you go down in the hierarchy of the company, you are closer to the customer and more likely to spend more time with them. In a hospital chain, the surgeon with the patient is much more knowledgeable about what to do than the CEO of the hospital, even if the CEO used to be a surgeon too.
The extremes of the company are the CEO at its top and front-line workers at the bottom.
CEOs know most about the whole company, including what the entire company can and should stand for. That means the CEO is in the best position to determine the Winning Aspiration of the company overall. CEOs also know most about how the company’s various businesses interconnect with one another, what are the synergies and commonalities. That puts the CEO in the best position to make choices on the Where-to-Play and How-to-Win of the company overall.
Front line employees know the most about the customer, especially in service businesses, which have become the biggest segment of the economy and are continuing to get even more prominent. Frontline workers know the most about the customer standing in front of them. These workers do make decisions, even if you think they are ‘just executing.’ You need them to make the best decisions, not the decisions mandated by managers farther from the customer than they are.
I believe that even in manufacturing businesses, the employees farther down the company hierarchy — for example, the sales force — know more about customers than those higher up the hierarchy. In a diversified company, the President of a single business unit will undoubtedly know more about the business unit’s customers than the CEO of the whole company. And the head of the European Region of the business unit President will know more than the President, etc.
The Choice Principle
The choice principle I advocate is minimalism. Leadership is about making only the choices that you are best positioned to make — and not making the ones for which you aren’t, even if you are more senior than the person who will make the choice. I advocate minimalism for two reasons.
First, taking choices from others who are as good or better than you at making them underutilizes them, stilts their development, and at worst infantilizes them. They get used to their superior making choices for them that they are completely capable of making. That is the antithesis of leadership. Sadly, it happens all the time. That is especially the case if you add in the innumerable times that leaders second-guess the choices of their subordinates. That is the same as making the choice themselves, only worse. Do they have to second-guess occasionally? Of course. Correcting/enhancing poor decisions is part of a leader’s job. But doing it routinely makes for an ineffective leader.
Second, there is a range of choices for which they are just plain better. If they report to you, there are choices for which they will have more of what Michael Jensen calls ‘specific knowledge’ than you have. That is knowledge that is attached to a particular person because of the person’s job and can’t be easily transferred to another person — as it could be if it was ‘general knowledge.’ The surgeon above has specific knowledge about the patient that the hospital CEO lacks. Just because you are their superior doesn’t mean you are better positioned to make the choice. Just because you are better positioned to make higher-level choices doesn’t mean that you are better at theirs — or should spend your time second-guessing theirs. If you want to underutilize them, stilt their development, and infantilize them, go ahead.
But if you want to be a strong leader who develops great choice-makers, the key is minimalism.
How to Make the Choices You Choose to Make
Minimalism is the principle for how many choices leaders choose to make. But the opposite holds with respect to how to make the choices the leader chooses to make. The first thought could be that the leader should be minimalist here too — I know the most about this choice, so I will make it by myself.
That is one option to be sure. But it assumes that because you know the most about the choice, you couldn’t make a still-better choice by accessing thoughts and advice from others who work with or for you. That is a pretty arrogant assumption! Making clear that you are taking responsibility for the decision, but value and want to integrate the views of others into that choice is almost certain to produce a higher quality choice.
But it also has a second benefit. As a leader, everything you do is likely to be observed and then modeled by those who work for you. As I often say, Kremlin-watching doesn’t only happen in Moscow. If you want them to make decisions on their own without consultation with their teams, then make your decisions by yourself. If you want them to lead in making decisions but do so collaboratively, then model that behavior.
My view is to strive to show balance. They need to see you as a leader. Don’t come to them for decisions that you can and should make on your own. But avoid being seen as isolated and singular, or you will create an isolated and singular management culture.
Leadership involves restraint at whatever level of your organization you serve from CEO all the way down to first line managers. You need to make the choices that you are best positioned to make but avoid making any more than that. A key part of your job is to advance the leadership capabilities of all who work under your direction. They won’t advance if you make choices that they are capable of making.
And they will learn a lesson that you would rather not have them learn if you make all the choices alone. Again, show restraint. If you model utilizing your team to help you make the best possible choices, even if you could make them alone, they are likely to follow your lead with their teams. That will build the choice-making culture and skills of the organization.
This kind of restraint is the badge of leadership.
Next week, I will shift to how to help those who you lead to make better choices.