Leadership

Thanks to my brother for sending me the link to Ken Robinson on the Principles of Creative Leadership on the Fast Company website.  The best piece of it:

The role of a creative leader is not to have all the ideas; it’s to create a culture where everyone can have ideas and feel that they’re valued. So it’s much more about creating climates. I think it’s a big shift for a lot of people.

I found the rest of the article somewhat vague.  But I agree with this paragraph.  Leaders of many organizations — government, companies, non-profits, clubs, charity events, etc. — could benefit from learning this.

Leaders often mistakenly believe their role is to come up with the new ideas to move their organization forward.  They believe they need to chart a course.  The followers don’t help, they also often believe this.  It’s tempting to try to be the hero and to expect leaders to try to be heroes.

But it is also ineffective and risky.  Certainly, it appears to have worked in a few circumstances.  Steve Jobs pops to mind.  But, I would be willing to bet that there are some unsung heroes even in his success stories.

It’s not ineffective and risky for leaders to come up with new ideas.  It’s ineffective and risky when its only their ideas that get attention and organizational resources for several reasons.

Why?  Because so many successes are the result of accidental experiments.  Somebody’s track record isn’t necessarily a good predictor of their future success.  The folks who do have a good number of successes probably have more trials and failures as well.

The reason why this leadership style isn’t prevalent is because few people believe this.

I think back to this and this post on Felix Dennis, publisher and billionaire.  He has come up with a number profitable ideas in his day.  But, the true secret to his success is how he has harnessed the ideas of others.

Felix Dennis Tidbits

Here are a few final bookmarks from Felix Dennis’s How to Get Rich.  I highly recommend the book, even if you don’t wish to get rich.  It’s easy to read and contains a lot of wisdom that can help you in various parts of your life.

On luck, first-mover myth and tunnel vision (p. 142):

The only truth about luck, good or bad, is that it will change.  The law of averages virtually guarantees it.  And here, I think, is one difference that separates me from my “unlucky” friend, whom I shall call Albert.

By moving so adroitly and so swiftly from one thing to the next, Albert does not place himself in the way of luck.  He is too much in love with the green, green grass just over the hill.

Then again, Albert is more intelligent than I am.  But there is a downside to all this intelligence and imagination.  He thinks a little too much before he acts.  He weighs the options too carefully. He is capable of imagining defeat.

So while he is clever enough to want to minimize his risk by switching to yet another new and uncontested marketplace, he leads himself into uncertainty. And into error.

Uncontested markets are usually uncontested for a reason. Nature abhors a vacuum and if no one else is contesting a market, it may well be that no such market exists.

There are other differences between Albert and me.  He is a great believer in partnering and share options and employee profit participation.  …in Albert’s case, this division of the spoils is undertaken in the minutest detail, long before there are any profits whatever to share.  Albert believes they encourage his coworkers. But such arrangements are immensely time-consuming and a distraction from the tunnel vision necessary to become rich in the first place.

On negotiation and politics (p. 149):

If you are overly fond of haggling, my advice is that you quit thinking about making money the old-fashioned way and consider becoming a politician instead.  That way you can rob and plunder your fellow citizens year after year without risking your own financial security or capital–you bastard. (By the way, please get used to people thinking of you as a bastard.  After all, it’s what nearly everyone thinks of politicians, except themselves).

On management (p. 150):

All great companies, all well-run organizations, need great managers and great staff.  That much, at least, is pretty obvious.  You forget it at your peril.

But the acquisition of of managers who can bring a sense of mission to even mundane tasks, who can identify potential candidates, nurture late bloomers, fire dullards and whiners and adapt to changing circumstances–that searching, identifying and nurturing is not about negotiating.  It’s about setting an example of true meritocracy in a company where nepotism hasn’t a chance and where those who wish to succeed are given every opportunity and encouragement to do so.

How’s your ‘adaptive efficiency’?

I’m two-thirds of the way through Arnold Kling’s and Nick Schulz’s book From Poverty to Prosperity and I highly recommend it.  The authors’ prose is crystal clear and for each of their concepts they include the dialogue of interviews with folks who were key in discovering or developing the idea, which I find extremely useful and interesting.

One such interview is with Douglas North, 1993 winner of the Nobel in economics.  In it, North describes what is meant by adaptive efficiency.  It’s worth understanding.

The idea is that the world is changing and (p. 158):

…since you don’t know which way the world is changing and you don’t know what’s right or what’s wrong with these things, one characteristic of adaptive efficiency is that you must permit lots of trials and errors in the world.  That means you encourage institutions that allow people to make mistakes, that allow them to try new ideas, and you encourage the destruction of institutions that don’t work, because one of the problems with organizations that are created by institutions is that they tend to create vested interests and then you can’t get rid of them.

I think this captures the key to a long-running, successful organization.  Organizations that allow the vested interests to block trial and error adaptation will eventually lose out to organizations that encourage it.

A few pages later, North makes a parallel observation in regards to individuals (p. 163):

We should be very tentative about how we understand the world.  That doesn’t mean you don’t do things. You’ve got to do things, but you’ve got to recognize you may be wrong. We don’t know enough.  And so it’s terribly important to recognize that you can be wrong, and to be, therefore, very susceptible to modifying the theories you hold in the light of new evidence.

Now as I said, that doesn’t mean you don’t do anything; you’ve got to do things.  It does mean that you’re willing to be adaptively efficient [in the face of] change and to rethink the problems as you evolve.

These passages are similar to advice from Felix Dennis that I’ve posted about previously.  Be persistent, but not to the point of being stubborn.  If something’s not working, realize it, drop it and move to the next thing (persistence), don’t keep doing the same thing over and over again (stubbornness).

These passages also made me think of two norms built into our mental models that resist change for the better.

One norm is the belief that failure is bad.  The other is that we don’t like to be wrong.

Both norms are tied into our individual pride and self-esteem and I believe they are reinforced from an early age and may be at the very heart of what is wrong with our education system.

This also reminds me of Salman Khan’s statements about learning in this post.  Folks master bicycle riding because the “institutions” (or our beliefs) around bicycle riding encourages trial and error (“if you fall down, get back on and try again”) and expects mastery.  But with math and reading, our “institutions” (education system) penalizes trial and error and failure, but does not expect mastery.

How are you raising your kids?  Do you encourage them to experiment and that it’s okay to be wrong or to fail?  As a father, I know that’s tough.  You naturally want to see your kids succeed and you definitely don’t want them to experiment and fail with stupid stuff like irresponsible behavior (though facing the consequences of such behavior usually inspires some quality learning).  But, maybe we should give them a little more leeway to experiment and fail in productive pursuits.

How’s the adaptive efficiency in the organizations that you are a part of?  It’s not good with mine.  There’s an abundance of folks that believe they need to get it right the first time, and are often disappointed when they don’t.  There’s also an abundance of folks that seem to try the same things over again even when past experience gives plenty of clues that it will not be successful.

I will post more from the Kling and Schulz book in future posts.

The Dennis Principle

Cover of "How to Get Rich: One of the Wor...

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In 1969, Laurence Peter and Raymond Hull wrote the book, The Peter Principle and since then the observation that every employee tends to rise to his or her level incompetence has been synonymous with the title of their book.

The idea is that folks tend to perform competently at some levels and then are rewarded with promotion until they eventually reach a level where they are no longer competent.

If only that were true.  In my experience, competence is not what is rewarded with promotion.

I think Felix Dennis describes the scene more accurately in How to Get Rich, when he discusses delegation (p. 186):

It used to be surprising to me why so many people appeared to have a problem with delegating.  But I finally figured it out, and the answer isn’t a pretty one.  It concerns our old bugaboo, ownership.

If you own a company and that company’s purpose is to make you wealthy, you will be content, delighted even, for any amount of glory to go to anyone who works there, providing you get the money.  It is in your best interests to delegate whenever it makes sense in such circumstances.

If you do not own the company, or any part of it, then it is possible you are only a senior manager because you like power. It is not true of everyone, of course. But often enough. You like bossing people about.  You enjoy telling them what to do.  If that is the case, then you might be understandably reluctant to delegate real power or opportunity, in case the person you delegate to proceeds to excel. This, in turn, may well demonstrate to the rest of the company what a ho-hum manager you really are.

This is a warped way of thinking. But I am convinced it lies behind much of the reluctance to delegate I have encountered in my business life.  I used to be surprised at this reluctance of others, both in and out of my own companies.  Now I’m not surprised at all.

Bossy people and glory hounds are mostly interested in building a power base so they can have yet more people to boss about. It’s pitiful and a little sad, but we have all seen it.  We saw it in school. We saw it in the playground.  We saw it in college. And we saw it in our first job. If you are observant, you have been seeing it nearly all your life.

This type of managerial toad will often talk about training and delegation in sepulchral tones, but then, as the old proverb tells us, “the Devil can quote scripture for his own purpose.”

You can’t deal with bossy, puffed-up sods who won’t train you and won’t delegate.  You can only move departments or change your place of work.  It isn’t worth the time to do anything else.

Based on my experience, such folks tend to reward inputs (did you do it the way I said to do it?) instead of outputs (was it successful ?).  They somehow manage to assume credit for successes (which they then don’t easily share) and masterfully distance themselves from failures. They are expert horn tooters.

I’ve often scratched my head at the behavior.  It seems counterproductive.  But silly me, I viewed it from the owners perspective for some reason.  As Dennis lays it out, it makes perfect sense.

What’s really sad to me is that this is the type of leadership that has been taught to us since we were young.  I often struggled when myself or my friends attended leadership development camps or training.

My intuition told me that even the leaders of the camps didn’t really have a grasp on true leadership.  What they discussed was more of the bossy/glory hound leadership — how to stand tall and speak with authority and how to make yourself look busy, even when you don’t know what you’re doing.  It’s about managing up and improving your image.

I’ll add my own observation to Dennis’.  These types of leaders tend to gravitate to organizations that are already successful.  They say things like, “we are professional managers that will take over where the founders left off” and “we can take the business to the next level”.

In reality, it’s the organization’s prior success that allows it entertain such leadership for awhile.

I prefer Dennis’ style of leadership.

A few reasons why Felix Dennis is rich

Here are some more bookmarks from Felix Dennis’ book How to Get Rich.

One:  He doesn’t let spite get the best of him.  When people who are on their way up decide to leave Felix Dennis’ company and set up their own, Dennis has a rather interesting approach (p. 16).

I always wish them well. Not only outwardly, but in my heart, too. Often I throw a party for them.  Or write glowing testimonials.  Once or twice I have even underwritten their office lease or introduced them to a banker or a lawyer I trust.  Why do I react this way?

Three reasons.  Firstly, I’m proud of them.

Second, it’s win-win.  If they fail, they may well return to our company, especially if they remember that my senior colleagues and I sincerely wished them success in their new venture.  Thus, if they fail, the company will be enhanced by their return.  While if they should succeed — then we will be all richer for having an old alumnus as a friendly rival in the industry, rather than having created an enemy who wishes us anything but well.

Lastly, it’s because I fear them.  I fear they may have spotted something we may have missed, some gap in the market. I fear we may have failed to listen to them. I fear that their new venture will grow at our expense while it poaches our personnel and our market share.  And the only way to deal with fear is to cozy up to it.

Two: He’s always looking for the next hit.  One of his cardinal virtues is to listen and learn.  He has four assistants assigned to handle the strangers that want to bring ideas to him (p. 129 – 133).

Why? Because I want to hear what they have to say.  …when you stop listening, you stop learning.  And if you stop learning, it’s time to get out of the kitchen and let someone else do the cooking.

Listening is the most powerful weapon after self-belief and persistence you can bring into play as an entrepreneur.  And yet I’m familiar with numerous senior executives running large companies who might spend two or three weeks in between listening to a “stranger”–or a “minion.”

He goes on to give advice on courtesy and how to handle meetings from outsiders and insiders.  I especially appreciated this one:

…what of the young lady who works for your company and brought you (or her manager), the great idea that worked so well?

If you’re a sensible, decent, worthwhile human being, you will reward her handsomely and promote her.  And you will thank her publicly.

If you’re a rotten, ingrate scumbag, without any decent feelings whatever, you will not reward her.  And you’ll get rich.  But perhaps not quite as rich as a more enlightened owner. Because if your clever employee has had one such great idea, she may well have another later.  And she is unlikely to stay working for a company that stiffed her so badly, or to hand them another gem, isn’t she?

Three: It looks like he uses the experimentation model I described in this post to keep business growing (p. 123).

I am one of the richest self-made men in Britain for two reasons.  I own my own company outright, and I began to make more baskets [as in don’t put all your eggs in one basket] the minute the first had a few eggs in it.

Take any business and any idea.  You need focused, tunnel vision to get it on the road and to begin to make some money.  You can expand it, maybe franchise it or take it to other cities or even other countries.  But, in reality, it is still the same basket with a lot more eggs.

If you had created a chain of fast-food stores, then it would be unwise to leave matters there.  Public tastes chance and customers are fickle.  To protect your investment, you would need to create new baskets.

Dennis then explains that Chock full o’Nuts is the more successful basket from a former shelled nut chain store and convinced me to finally buy a can of it on my next trip to the store (I’ve been looking at that can for years trying to figure it out).

Four: Proper definition of persistence (p. 112):

Stubbornness is not persistence.  Stubbornness implies you intend to persist despite plentiful evidence that you should not. A stubborn person fears to be shown he or she is wrong.

“Persistence” is a vital attribute for those who wish to become rich, or wish to achieve anything worthwhile for that matter.  As is ability to acknowledge that one has made a mistake and that a new plan of action must now be made. Any such acknowledgment is not a weakness, it is a sign of clear thinking.  In its way, it is kind of persistence in itself.  Try, try try again, does not mean doing what has already failed, over and over again.

Many folks I know mistake stubbornness for persistence.

Fail and fail again

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I enjoyed The Mogul’s Maxim from the latest Forbes and the additional online material that didn’t make it to the magazine article.  In it, Jeff Bercovici interviews Felix Dennis, who launched Maxim magazine.  They discuss Dennis’ new book The Narrow Road, which is “a collection of lessons for would-be entrepreneurs”.

Should you start a business?

Felix Dennis: This is a very difficult subject because the vast majority of people should not try this. You’re just going to wreck your life. The percentage of people who actually get rich is very small, and the collateral damage to your life is very high.

JB: But you also say anyone can succeed using your principles.

FD:As long as they’re prepared to fail again and again first. Anyone of reasonable intelligence can succeed and make substantial sums of money if they’re prepared to make the sacrifices. Anyone.

Felix on taxes:

I pay my taxes. I know I’m the last idiot left on the planet who does. I think we’re taxed far too much and taxed in the wrong way. I’m firmly of the belief, after my experiences in Hong Kong, in a 15% flat tax with an $18,000 exemption. If you want the most money, it’s real simple, brother. You just have a flat tax on absolutely everything, and all those guys at Deloitte & Touche–they can start digging ditches.

It would be nice to live in a world where digging ditches was more valuable than tax gymnastics.

It’s always reassuring when I find I agree with someone who has experienced a good measure of success.  The willingness and perseverance to try and fail and try and fail and try again is something I’ve observed in successful people — not just entrepreneurs.  Ask successful actors, writers, professional athletes about their failures.

That lesson isn’t taught well in K-12 education.  Failure doesn’t end your life.  It happens.  It’s common.  You can learn from it. And try again.  Life is trial and error.

I plan to read Dennis’ book.