5. Understanding All the Forces at Play

Concept

The second element of the Leadership Point-of-View (LPV) is “understanding all the forces at play.” Many who are promoted out of a functional leadership responsibility continue to see the world primarily from their comfortable mental platform—their historical experience. Executives who come from operations are likely to be most concerned about efficiencies, productivity, fixed assets, and supply chains. Executives who come out of finance are likely to focus mostly on balance sheets, equity, operating ratios, stock price, and the economy. This will be exacerbated to the extent their contracts emphasize stock price (stockholders’ interests). Executives who came out of marketing are more likely to focus on brand image, marketing campaigns, raising the top line (revenues), and advertising. Focusing on revenue generation is not necessarily wrong, it’s just that more revenues without profits aren’t worth much. Focusing on productivity isn’t wrong, unless it is at the expense of generating more revenues. I know of companies who have managed their productivity into bankruptcy.

All of this is natural. People tend to be creatures of habit. People are more comfortable talking about and dealing with issues they have dealt with before. But becoming a general manager, an executive, demands a balanced perspective and attention on ALL of the key forces at play. Executives who rely too heavily on their experience are likely to be blindsided by issues and problems that lie outside their historical expertise.

Obviously, one way to overcome this tendency is to recruit experts in the areas that one is not strong in to be a part of the management team. Some people are better at this than others. Some are too proud to admit that they might not know what’s going on or have an intimate feel for what’s happening in the functional areas outside their past expertise.

This is one reason I am a strong advocate of the MBA degree for any manager and for any professor of business. Understanding the key issues and dilemmas of all the 10 or more functional fields in a business (finance, operations, accounting, marketing, strategy, human resources, leadership, ethics, economics, decision analysis, communications) is essential, in my mind and experience, to understanding how they all work together in an enterprise. Managers and teachers who rely too heavily on their functional field at the expense of an understanding of how they integrate do themselves and their organizations a disservice.

Imagine you were a doctor in a hospital emergency room (ER). Without warning, a gurney is pushed into your service bay. There is a human lying on the gurney. You have no background information, no medical history, nothing other than the person lying in front of you. What do you look for?

Readers are not likely medical doctors, nevertheless, you have a mental theory about what doctors look for. Write that down here. What is your semi-conscious ER triage model? (Note: We ask you your view before we share ours in several chapters. We are inviting you to do your best thinking BEFORE you read about ours. It’s too easy to not do that and then say, “oh I knew that.”)

It turns out that there are 13 systems that together create a fully functioning human being. Not all of these are critical for immediate survival, but many of them are. ER doctors will look for several things immediately:

Lesser systems like urinary tract function, glandular function, sexual function, and so on are important and can be considered after the critical ones have been attended to and confirmed.

What’s your “ER TRIAGE” template for a company? That is, if you were assigned to be the new CEO of a company without any prior knowledge, what would be your “priors” about how to assess the health of that organization? Write that down here.

Having asked this question of managers all over the world, it’s clear to me that active managers with significant responsibilities have widely varying implicit models. When asked to put those models on paper, the discrepancies between peoples’ models becomes obvious. Even just sharing with one neighbor, most managers find things they had overlooked—and they modify their models.

As a budding executive, you have an implicit model in your head. You wrote it down in the box above. Did it include the following?

Did your list include all of these essential business health factors? Would you/did you add anything else not subsumed by these categories?

Example

Walt Disney and his older brother, Roy, were a formidable force in the entertainment industry. Walt had the vision and values clearly in mind and could provide creative direction. Roy was more business oriented and practically focused. A former banker, he helped Walt channel his creative juices into a financially solid and sustainable corporation that has become a giant in the entertainment world.

Soichiro Honda and Takeo Fujisawa had a similar relationship as the Disney brothers, but one that expressed itself in the Japanese and global automobile industries. Honda was, like Walt, the creative force behind Honda (properly pronounced Hone-da, not Hawn-da) directing its engineering and product development functions. Fujisawa managed the financial side of the business—one that grew into a global conglomerate with products in automobiles, lawn care, motorcycles, and other segments. Fujisawa was known for his motto, “always tell the customer the truth,” a VABE that many executives today do not behave.

Diagram

Challenge