Playing To Win
Technocrats vs. Strategists
The Limitations One Imposes & the Possibilities the Other Enables
One of my most engaged readers, Cameron, encouraged me to write something on technocrats, a term I often use pejoratively to describe a large segment of the executive population. Inspired, I decided to write a Playing to Win/Practitioner Insights (PTW/PI) piece on Technocrats vs. Strategists: The Limitations One Imposes & the Possibilities the Other Enables. And as always, you can find all the previous PTW/PI here.
Technocrats vs Strategists
For me, the senior executive world divides into two camps: technocrats and strategists. Though I will describe it as a duality, that is just for purposes of simplification. It is really a spectrum with pure technocrat at one end, pure strategist at the other and an even mix of inclinations in the middle. In my experience, the biggest segment of executives are clustered around the technocrat end of the spectrum.
When I think about technocratic executives, the first who comes to mind is a CEO I worked for nearly a decade ago. He was well into a long tenure as a widely beloved CEO of a Dow Jones 30 country — so a big, important and famous company — when I started advising him. The company had a terrific longtime CHRO who was joined by a CFO hired from the outside in the belief that their company wasn’t being strategic enough. They worked as a team for about 18 months to convince the CEO to hire me as a strategic advisor. And it was a substantial contract — ten days per year for three years. And was structured as a take or pay contract by which the company would pay me whether or not the CEO used all ten days/year.
It became my strangest assignment of all time. I would book an appointment — his office would never take the initiative — and we would talk. Based on the conversation, I would suggest things to work on/study. He would always nod and assure me that he would think about it. Months would pass and I would get on his calendar again. We would chat again and often he would give me something to read. I would read whatever it was — an investor deck, an analyst report, etc. — and get back to him. He once asked me to go talk to each of the business unit presidents. I did it and came back with thoughts on the most important strategic issues to tackle. But he never did anything.
I finally realized that he didn’t think strategy was really his job. In fact, it became clear to me that he saw himself as having no job other than supervising his direct reports. As a result, he couldn’t think of a thing to do with me. I tried for one year and the CHRO and CFO asked me to keep at it for a second year, but halfway through the third year, we mutually ended it because I hadn’t worked more than 20% of the days for which they had contracted — it was good money, but silly.
It was a frustrating and sad (though lucrative) experience. But it did help me understand that there was a spectrum across which executives could be positioned — and he was at the technocratic end. And having a technocratic CEO isn’t a disaster. The company did OK during his time as CEO. The stock price grew, but since the time he retired, it has grown at five times the compound annual rate as during his time at the helm.
The experience has gotten me thinking more about the key features of technocrat CEOs — and the contrast with what I think of as strategist CEOs. There are three key contrasting features that I look for to understand what I am looking at.
How they Define their Jobs
Technocratic CEOs
They define their job — 100% of their work — as managing people. They assign out all the work and then spend all their time managing the people to whom they have assigned out all the work. That means meeting with them to check whether they are doing what they have been assigned to do, badgering them if they aren’t doing it fast and thoroughly enough, and evaluating/compensating them.
I got a perfect exemplar when my successor as dean of the Rotman School took office. Almost immediately, he appointed four senior academics as vice-deans who together became responsible for pretty much everything at Rotman. When he asked me my opinion on his new structure, I told him it was pretty damn expensive. Each of the four cost approximately $500K/year (when the huge university overhead charge was factored in) because they were all extremely senior academics. But the cost multiplied because the teaching loads of the vice-deans were reduced from four courses/year to one/year because of this new administrative load. That meant needing to hire three more tenure stream professors to replace the teaching of those twelve courses — and that would be about $350K/year (because you could hire somewhat more junior ones). So, adding in the dean, that five-person team cost the school just under $4 million/year — about 3% of the entire budget.
And the only thing left for the dean to do was to manage the four vice-deans. That is technocracy.
Strategic CEOs
Strategic CEOs define their jobs as solving the most important problems facing the organization — often alongside their direct reports but not simply by assigning those problems to direct reports.
For example, when AG Lafley became CEO of Procter & Gamble in 2000, he needed to work alongside the customer teams to repair relationships with retailers that his predecessor had strained. It involved him accompanying the leaders of the customer teams to meet in person with the CEOs of their retail customers to build bridges. He didn’t call in his customer team leaders and assign them the task of repairing those relationships.
The company had a big problem with declining effectiveness of innovation, so he worked with his R&D leadership to come up with the Connect & Develop program that has since become a model for many other companies. The baby diaper business was in bad shape and P&G’s biggest brand in the entire company, Pampers, and was losing share to Kimberly-Clark’s Huggies. Lafley appointed a leader from outside the diaper business (or even the paper sector), Deb Henretta, to lead the turnaround. But rather than assigning the problem entirely to her, he worked alongside her to fix the business — which she admirably did.
Strategist CEOs spend as close to 100% of their time as possible to solving problems. Sure, they appoint people to manage what those executives are capable of managing. But they use their skills to solve important problems that no one else can and collaborate with their direct reports where joint action is the most effective.
That was my approach at the Rotman School. I worked closely with the heads of media relations, external events, and Rotman Magazine to put Rotman School on the map for its intellectual content. I worked with our Chief Administrative Officer to create an entirely new financial framework between our faculty and the university that underpinned our ability to increase revenues tenfold in my time as dean. I led the effort to create the most innovative curriculum in business education, etc.
Their Tools and How they Use Them
Technocratic CEOs
Technocratic CEOs put enormous faith in formal processes. They believe that the process, if f followed assiduously, will produce the desired results. That is, the right set of inputs, put through a rigorous process will produce the desired outputs. When they audit processes, they audit them for completeness, not for outputs.
That is why technocrats love, love, love to plan. The always have elaborate charts on how ‘strategy’ links to ‘long-range planning’ which links to ‘annual budget’ which is converted into OKRs. It is these steps that are most important.
It is reminiscent of Sam Hinkie’s wildly unsuccessful tenure as General Manager of the National Basketball Association’s Philadelphia 76ers. He had a plan to lose badly for several straight years in order to earn very high draft picks, plus he traded established players for still more very high draft picks. And during the whole process, he would admonish fans to ‘trust the process’ when they doubted his plan. He ensured that each input happened as envisioned, but the desired output — winning — never did.
Strategic CEOs
Strategic CEOs believe that processes can be helpful but simply don’t ‘trust the process.’ They don’t believe that any process will guarantee results. They audit processes for progress toward desired outputs — not for completeness. And if progress toward outputs is not observed, they will abandon or alter the process, not double-down on it. One of the finest and most strategic CEOs I have ever worked for is Charles Koch, legendary CEO of the $125 billion private conglomerate, Koch Industries. I was sitting in a meeting with him when he reviewed their longstanding process of building a particular seasonal pattern into its mammoth crude oil buying program. After reviewing the numbers, he said about the process that he had a big hand in creating (and he very rarely used curse words): “I guess [our process] ain’t worth a damn.” And that was the end of that process.
Strategic CEOs are fundamentally output oriented. They focus relentless on outputs because they know that is the only way they are likely to get the outputs they desire.
The Form of the Output they Target.
Technocratic CEOs
The form of the output that technocratic CEOs pursue is (with credit for the analogy to friend and former Steelcase and Ford CEO, Jim Hackett) multiple pixels. They love creating lists — to-do-lists that can be assigned out to people. And then each person’s assignment can be managed on a one-to-one basis.
That is why they love strategic planning. Done their way, it creates a list of initiatives that can be monitored and managed. If bad things happen despite the initiatives being completed, the technocratic CEO blames chance, random outside events for the shortcomings — not the process or the list.
Strategic CEOs
The form of the output that strategic CEOs pursue is a portrait — an integrated set of choices that connect powerfully with one another to produce the desired outcome.
They know they can’t just farm out the pieces in fire-and-forget fashion and hope that the integration will happen by itself. They actively manage the integration and make adjustments as the work evolves in a shifting competitive environment. If the outputs are not as desired, they blame themselves.
Practitioner Insights
Obviously, I am partial to strategic CEOs. They create possibilities while technocratic CEOs impose limitations on their companies. Surprisingly, there are 100% technocratic CEOs who dedicate all their time to managing people, running processes and generating lists of initiatives. I am baffled by how they get to the top. But often boards feel comfortable with them and either don’t see or don’t care about the limitations they impose — limitations that, like the DJ30 company above, aren’t obvious until the technocrat is gone.
There probably aren’t any truly 100% strategic CEOs. Those toward that end of the spectrum still have to manage people and run processes. But they strive to get as far to that end of the spectrum as they possibly can by solving problems both independently and along with direct reports, focusing on the output of not inputs to processes and creating vivid pictures of the outcomes they seek to create — not lists of initiatives.
As a strategy practitioner, you have two tasks on this front.
First, push yourself toward the strategic end of the spectrum even if you have been trained to operate at the technocratic end — which is your likely training if you went to business school. Watch strategists senior to you and learn from them. Evaluate yourself critically against the spectrum that I have laid out.
Second, help the people to whom you report to become more strategic. This is a hard task because they most certainly are not required to listen to you. But encourage/invite them to get involved in solving problems, not just to assign them. Help them focus on outputs. And turn their pixels into portraits and challenge them to improve the portrait.
