4 Things Every Business Leader Should Know (But Most Don’t)

Yet read through the business press and you’ll find no shortage of simple rules and slogans that supposedly unlock success. We’re told to “innovate or die,” to fight a “war for talent” and to “find our why.” Yet as Philip M. Rosenzweig points out in The Halo Effect, many of these notions break down under more rigorous analysis.

The truth is that leadership is the art of managing the ambiguous, or as Stanley McChrystal has put it, “a complex system of relationships between leaders and followers, in a particular context, that provides meaning to its members.” In other words, things are never simple., but here are some things I wish someone had told me a long time ago. I hope they help.

1. Innovation Is Never A Single Event

The apple that fell on Isaac Newton’s head. The chance observation that led to Alexander Fleming’s discovery of penicillin. Steve Job’s insight about “a thousand songs in my pocket that led to the iPod and the resurgence of Apple. It seems like every innovation story starts with a story of serendipity and spontaneous epihpany.

Yet innovation is never a single event. It is a process of discovery, engineering and transformation and those three things almost never happen at the same time or in the same place. So managing innovation is largely about managing handoffs between those three phases.

What most managers fail to realize is that, when it comes to innovation, generosity is often a competitive advantage. The best innovators aren’t necessarily any smarter, or harder working or more ambitious than anyone else. What makes them different is that they build better networks and that’s what makes them more likely to come across that random piece of information or insight that helps them crack a really tough problem.

That’s much different than the stereotype of what many believe an innovator looks like or acts like. All too often, managers hire a mercurial, egotistical jerk who would rather grandstand and spout off ideas than build strong, collaborative relationships. That’s the easiest way to kill a culture and stop innovation in its tracks.

Innovation is, probably more than anything else, essentially about collaboration.

2. You Need To Fire Nasty People

Once you begin to to understand how important it is to institute a culture of generosity and collaboration, it becomes clear that you need to change not only how you hire, but how you fire. That’s why at some point fairly early in my career I began to suspect that I should fire nasty people, even if they seemed to be high performers.

The first time I tried it was with a sales director I had inherited, who accounted for 90% of her department’s revenues. It was a highly controversial move. But when the dust settled, something amazing happened. Sales shot up! As it turned out, she wasn’t really great at selling, she was great at getting sales attributed to herself.

After that, I never looked back. Firing nasty people became a mantra. In fact, it became so ingrained in our company’s culture that it was even included in orientation training, so that employees knew from day one how important we believed a collaborative environment to be.

Some time after instituting the policy, Bob Sutton published his excellent book, The No Asshole Rule outlining a wealth of research showing the hidden costs of holding on to nasty people in your organization. So if you are wondering if that high-performing jerk on your team is worth the trouble, rest assured, he (or she) is not.

3. Don’t Believe Everything You Think

A leader’s primary job is to make decisions. Most of these will have a significant impact on other people and must be made with incomplete information in a compressed time frame. The truth is that you never really know if you’re making the right decisions. Information can only be validated forward, never backward. Nevertheless, decisions need to be made.

What makes things considerably more difficult is that our minds often work against us in a number of ways. First, our brains have evolved to detect patterns that may or may not be there. We also tend to overweight the information that is easiest to access, rather than what’s most likely to be accurate and we have a tendency to seek out information that confirms our beliefs and reject contrary evidence.

So it’s super-important to check ourselves and not believe everything we think. We need to work to make sure we’re actively encouraging a diversity of opinions. There are formal processes that can help us do this, such as pre-mortems and red teams. Other practices, such as having the most senior leaders speak last at meetings, can help too.

Most of all, we need to have a sense of humility. It’s far too easy to be impressed with ourselves. Or, as Richard Feynman famously put it, “The first principle is that you must not fool yourself—and you are the easiest person to fool.  So you have to be very careful about that.”

4. The Role Of A Leader Has Changed

In 1975, more than 80% of US corporate assets were tangible assets, or things like factories, equipment and real estate. The role of a leader was, largely, to formulate plans concerning those assets, mobilize them with a specific strategic intent and direct execution of those plans. Good leaders were supposed to be wise, but firm taskmasters.

Today, however, the script has flipped and more than 80% of corporate assets are intangible assets, so things like licenses, patents and other intellectual property. The primary purpose of today’s leaders is to manage ecosystems of talent, technology and information. Good leaders are, as Stanley McChrystal has put it, “empathetic crafters of culture”.

Strategy is no longer a game of chess, in which we plot out each move, survey the board, and plan a new set of moves. Events happen in real time, far too fast for leaders to be consulted at each juncture. Things work more like a MMO video game, in which you recruit a team and other assets to achieve a specific strategic objective and then repeat the same process for the next quest.

What it comes down to is that we can no longer just tell people to do what we want, we need to attract people who want what we want, who share our sense of mission. A leader’s job in a networked age is, largely, to widen and deepen connections. It is no longer enough to simply plan and direct action, we must inspire and empower belief.

This article was first featured on digitaltonto.com.