There are common themes that tear down growth, understanding, and progress in our world, and they happen all around us. These are the mistakes that cause tremendous problems in our institutions and ripple on to affect people everywhere.
These points are simple. But, to be the leader or change-maker deserving of your title, be sure to keep them and practice them.
1. “You’re fired because we failed to meet the target.” Focus on the quality of decisions and not the quality of outcomes. This requires the strength to become responsible for the void between your employee’s decision and the outcome you then present to your superiors/shareholders. However, you will reap the rewards by fostering an organization that focuses on getting it right, not just appearing to get it right. You will improve the quality of your employee pool and give them all the benefit of clarity in their decisions, which will lead to a happier workforce, stronger loyalty, and higher productivity. This idea is a teaching point of Professor Ronald Howard, father of Decision Analysis.
2. My customers just don’t see the value of my product. My opponents just don’t see the obvious truth. Avoid internally minimizing those who disagree with you. Become the student of your enemy, and you will begin to see your source of contention with far greater insight. Treat your customers with humility – they know more than you ever will. The big companies known for poor customer service will not last, even if the alternative is an inferior competitor who listens. Also, push yourself to do this on the personal fights you care about deeply, such as debates over religion, sexuality, and abortion. The national ‘debate’ we recently had over healthcare legislation was hugely impeded because most everyday people went to rallies to find others who agreed with them, instead of understanding and learning from their opposition.
3. “My business partner just betrayed me”. Incentives guide all action. Focus on understanding and guiding incentives in all your dealings for all parties involved. Expect people to act according to their incentives, and you will never be disappointed (unless you misread their incentives, of course). There are a multitude of ways to create great incentives for your employees – be creative and you will find ones that work like a charm. The realm of incentives is far greater than money, time, or effort – it includes reputation, prestige, accountability, guilt, embarrassment, aspirations, social pressure, ideologies, and so on. The universe runs on incentives – make it a dimension of your own thought.
4. Allocate risk to the group most able to manage that risk. This is an essential premise to structuring a deal or an agreement of any kind. Every agreement you ever make is subject to a wide range of risks, from negligent personal default to force majeure. Find risks in your agreements and ensure those risks are allocated to the right party. If your trading partner has the greatest ability to build components, your partner should bear the cost incurred if they do not supply you with the components you have agreed to. Similarly, if you operate a warehouse that is central to the deal, you are able to protect that warehouse and you should bear the responsibility for the goods inside. Always align the transfer of ownership and risk with the flow of money.
5. Derive satisfaction from the strength of your own ideas, not the strength of others’ interest in your direction. I have met too many entrepreneurs who get excited about macroeconomic trends and assume they will make money in the new ‘hot’ field (think the iPhone App Store). When you feel your competitors moving in one direction, react to the vacuum with a moment of thought. Do not make the mistake of automatically following your team / group / department / company / industry / sector. Participants in a gold rush often leave the real wealth to those who stay behind and fill in the gaps.
Look around for those who follow the principles above. You will find examples every day of those who practice these and those who don’t, and the difference in results should be evident. What other ways do you know of to conquer the world? Write me.