“All Star vs Average”… Applied To Top Leaders

A couple of recent HBR posts by Bill Taylor  (author of Practically Radical) caught my eye.  They were brought on by Zuckerberg’s justification of FB’s recent FriendFeed acquisition at a value of roughly $4M per acquired employee.  An energetic debate followed via blog comments about whether an “all star” worker can really deliver exponentially more than a “good” worker. 

In context, the original discussion was about technical people like engineers and developers… but I’m intrigued by the application in the leadership realm… In fact I think it may be truer of leadership roles than technical roles.  Let’s set aside the topic of executive comp; here’s a personal example of the actual business results that an “all star” leader can deliver v. just an “average” leader.

Early in my career I worked at two different financial software companies… and they were a perfect example of the difference that the leader’s capability makes. Consider:
    > Both were founded at roughly the same time, each by a really smart guy
    > Both thought “I bet I can write software that makes accounting & taxation stuff way easier.”
    > Both were classic B-school studies with founders growing businesses beyond themselves.
    > Both (arguably) had access to the same supply of labor, capital, etc.
    > And, it’s a fair generalization to say they had the same basic opportunity. You get the point.

The Results?
After ~20 years in business, Company A topped out at less than $40M in revenue.  It was ultimately acquired by Company B which had exceeded $1.5B in revenue over the same time horizon.

The Difference?
I had an inside view to both companies and I believe that the leadership capability of the top guy made all the difference. In Company A the founder couldn’t figure out how to distribute leadership authority in a way that left him confident about the company’s direction.  In Company B, the top guy figured out that letting go was the only viable path to growth.  But the way he let go is actually the key: He figured out how to develop a robust leadership factory, teaching a common set of leadership values & methods, which led to a robust leadership infrastructure: a broad group of unified, high-performing leaders all running the same direction.

Bottom line:
There is little doubt in my mind that an “all star” leader v. a “good” leader will drive exponentially better business results.

Put The Plan In Writing!

So you have determined to inspire your team to greatness, harnessing their loyalty & belief in a common cause. Fantastic!   But… What exactly do you want your team to do?  And… How will you make sure they are all on the same page?

Answer: Do like Doc… Write it down!

Boston Celtics head coach Doc Rivers giving his team the plan

A former CEO of mine tells the story of his first GM role, running a “small” division of ~1,000 employees and ~$100M in revenue for GE. In an early discussion w/his boss, he explained his gameplan for the division… and then his boss asked him one simple question: “How in the [world] do you think you can get 1,000 employees headed in the same direction if you haven’t written down the plan?”

Practical. True. And sadly, often overlooked.

Every leader should have a written plan. The format of this plan is less important that the content. In the simplest form, your plan should include:

  • Long Term Vision: where are you going over the next 5-10 yrs?
  • This Year’s Objectives: what does success look like?
  • This Year’s Metrics & Targets: how will we measure ourselves against our objectives?
  • This Year’s Priorities: what are the few most important priorities/initiatives we must deliver in order to succeed?
  • If you go much beyond this, you get extra credit… but just get this far to start!

…So What? (What should I take away from reading this?)

What follows is common sense. But as Ben Franklin said “what is common sense is not common practice.”

For Leaders:

  • Write down the plan. Don’t worry about making it beautiful… just get the main ideas in writing, simple bullet points on a page or two should do it.
  • Share it with your team. Get their input… do they believe with the vision? Do they agree with the objectives? Do you have the right priorities/initiatives to move the needle? 

For Everyone: These concepts apply in both business & in life.

Have you ever thought about writing down the plan for the next 5 yrs of your life?  Try it… you will be surprised at the focus it provides you in your day-to-day life choices.

What is “leadership?”

Simply put, leadership is… influence.  The ability for person A to influence person B to do something.

So how do you influence others?   Influence comes from the application of power and can be used for “good or evil” as we’ve all seen.  There are several kinds of power that you’ve probably experienced.

Types of power leaders can use to influence others:

  • Positional power.  Also called “legitimate power” or “structural power,” it is the power of an individual because of their position/title and duties.  It’s when you do [a task] because your boss asked you to.  The military typifies this approach.
  • Coercive power.  It includes the ability to demote or to withhold rewards if the desired actions aren’t taken.  While highly motivating in the short-term, the downsides include increased stress, fear, uncertainty, etc on the part of the recipient.  Don’t recommend it.
  • Expert power.  Power someone has because of very specific skills or expertise.  This type of power is usually highly specific and limited to the particular area in which the expert is trained and qualified.  You all know someone like this – they are a technical genius in their field and when they speak, everyone listens.
  • Reward power.  Reward power depends on the power wielder’s ability to confer valued rewards (benefits, time off, desired gifts, promotions, increases in pay, responsibility, etc). This power is obvious but also ineffective if abused.
  • Referent power.  Ability of individuals to attract others and build loyalty, based on the relationship and interpersonal skills of the power holder.  This loyalty creates the opportunity for interpersonal influence.  Hopefully you’ve had the good fortune to work with someone like this – a boss you were proud to follow, a colleague that you could get you to run through a brick wall for them, or a team member that always inspired you to go the extra mile.

…So What?  (What should I take away from reading this?)

For Leaders:
◊ Take personal inventory. Which forms of power do you rely on most heavily? Is that effective in the short term? What about in the long term?
◊ What changes do you need to make in your personal approach to the use of power?

For Individual Contributors:  You’re leading every day… in fact you can be more powerful than people with “leadership titles!”
◊ Think about your spheres of influence… who do you influence on a regular basis?
◊  How are you consciously using your powers… for good & not evil?

For All Human Beings: 
These concepts apply in both business & in life.  Think about how you could change your use of these forms of power to enrich the personal relationships that mean the most to you.