This week one of our presidents shared a powerful brand position she had been researching in the shadows for months. After encouraging her to share it even though she wasn’t ready, my partner asked, “I’m curious; why have you waited until now to share this?” Her response: “I was scared you would say ‘no’, so I wanted more time to develop it so you would say ‘yes.'” As it turned out, her fear was unwarranted. He loved what she shared and wished we had been breathing life into this more compelling position sooner.
Her huge relief reminded me how much work there is to do to grow our leaders into our ways of working that deliver top 1% shareholder returns. Upon initial introduction, leaders are excited about our “team of peers” model. Yet, as this recent example demonstrates, it often takes a handful of situations before new leaders learn to work in this more transparent and agile ways. And that’s understandable!
People have been conditioned throughout their lives to orient from Hierarchy (the 1-up,1-down power dynamics between supervisor and subordinate) rather than Heterarchy (a peer-to-peer supervisor and subordinate relationship). As a result, subordinates tend to prioritize words and actions with the goal of pleasing -or- maintaining a stable relationship with their supervisor rather than striving for a relationship where they actively and transparently share differences. Unfortunately, performers focused on pleasing and maintaining have their attention in the wrong place!
The choice to conceal rather than reveal can have disastrous consequences. For example, in one of my CEO assignments, we enlisted our private equity owner’s internal technical group to guide our software development team in a re-platforming cost estimate. At no point during the estimating process did the consulting group’s talented technical resources share with anyone that they lacked the experience to estimate a project of this type or scale. After we discovered they had underestimated the project by $40M, the consulting resources quietly told me they had not wanted to disappoint the board by telling them the deliverable was beyond their current expertise. A private choice to conceal that had tragic consequences.
Beyond ethical dilemmas for organizations, hierarchies also:
- Limit thinking and sharing
- Constrain available choices
- Degrade decision quality and commitment
- Create more work for everyone
Instead of orienting from “This is my domain, I’m in control of it”, we want leaders creating environments that:
- Embody a felt sense that we are “in this together”
- Prioritize the transparent sharing of what’s most effective over “whose idea is it?”
- Move freely in exploring and experimenting with a fuller range of choices
- Coordinate our collective intelligence and choices over time
In our companies, we want our leaders and their performers to SWITCH THEIR FOCUS from “Whose got the power?” to “Best idea wins!” This means that in decisions and implementation sometimes a company leader is following ours/others lead and sometimes we are following theirs.
How do two people, or a group, decide who should lead in any given moment?
The person with the best discernment(s) of reality.
Said another way, the person with the most expertise and most learning cycles under their belt should take the lead. And in our companies, we strive for leadership transfers that are fluid, happening easily and quickly, based on expertise rather than education, position, tenure, or title.
This is the egoless path. A recognition that there are things we want to learn from others and things they can learn from us. That we are partners on this journey, operating freely and independently, and then calibrating later.
Here’s a chart contrasting a traditional and an adaptive power structure:
What I’m enjoying about this content is that there is both an opportunity to learn in this framework from the perspective of a leader and a contributor in a given interaction when there is a level of trust between both parties that enable these Heterarchical models of governance.
A challenge, or question about the way this has been presented. It appears that the framing of this article is that one method of organizational design is superior to the other; but I wonder if that is actually true or if I’m reading this correctly.
I can imagine in highly stable environments, where an organization has conditions like highly industrialized systems, regulatory capture, a stable series of competitors or none at all; is there merit in hierarchical structures? Or maybe better asked, are there conditions where hierarchical structures are the correct organizational framework?
THIS IS EXCELLENT CONTENT!
I’m thankful for your comment, so I can clarify.
The best governance model for an organization is contextual, dependent on things like competitive landscape, organizational culture, boundary conditions, the gravity of decision making, and leadership capability. However, even within these elements, what’s right depends on the moment, which I will cover with an example.
Our portfolio companies prefer adaptive governance models that are flat, flexible, fast, and better equipped to deal with the uncertainty and complexity in today’s rapidly changing business environment. However, adaptive governance structures are not for everyone. They require sophisticated leaders as well as solid organizational design skills. Additionally, leaders from traditional hierarchies often haven’t developed the personal capacities (the reasoning, perspective, or communication faculties) to build “WE” environments filled with distributed authority, candor, sincerity, and promise keeping, so leaders must be willing to invest time in developing those around them.
Even when an adaptive structure is a strategic aim designed to create a competitive advantage, my partner and I sometimes have to step in and take control. Seizing control happened recently in one of our companies, where we witnessed new leaders:
1) Focusing on the wrong things
2) Wasting time on old issues where solutions already existed
3) Making unwise changes based on past experiences
We chose to implement “Project Reset” to deepen the senior team’s understanding of our operating principles and the business system procedures associated with their roles. We taught them why the principles work, modeled how to execute them, and then coached leaders until their leadership decisions and actions were trustable. In less than three months, we turned around the financial damage done and put the company back on pace for record returns. While these new leaders were doing their best, we had to take a more controlling “wartime” approach to get the company back on track.
Thinking about your question makes me want to do a post to dig deeper into this topic. Thank you, David!