Leading Through Chaos: The Leverage for Change
What came before: In part 1, we saw that chaos is a problem because it makes prediction hard. A barbell strategy helps us make it through. In part 2 we dealt with risk of ruin, and part 3, covered upside opportunity.
I’ve been talking about what you need to work through a time of turbulence. It involves planning (or not-planning) differently. That means actually changing the way you do things.
These mindset shifts are easy enough to do when it’s just you, but if you have a team, it gets way harder.
Narrator: these were not “easy enough to do” when it’s just you.
But there’s a lever. When you’re adapting an organization to new challenges, there’s one place where a small tweak can snowball into large organizational shifts.
The lever requires leadership, and a different emphasis on how you show up as a leader.
But before we can talk leadership, you need to understand the lever. It’s one that you use a dozen times a day…
The Moment of Truth
At my first management job, I was chose to join several company executives in a training with W. Edwards Deming. Deming founded the Total Quality movement which revolutionized Japanese manufacturing, and then American.
Deming taught us how to improve the quality of our work, systemically. We learned sexy, exciting things like cause/effect fishbone diagrams and statistical process control charts.
Our spouses were thrilled by our newfound dinnertime conversation!
Narrator: Their spouses were not thrilled.
When we got back to the office, someone reported that our product was hard to install. I ran to a vice president who had been at the workshop.
“This is the perfect time for us to set up a Deming system with my team! Let’s do it!”
“No,” he said. “There’s no need. What we learned will emerge from our work organically.”
(Ah, yes. The famous “statistical process control charts emerge from our work like Venus emerging from the sea” principle. I can’t even write the sentence without rolling my eyes so hard my glasses fall off.)
What he did was make a decision, the decision not to keep doing what he did. He could have decided to try a statistical process control chart. That decision make the difference. Or in this case, the sameness.
Two roads diverged in a wood, and I—I took the one less traveled by, And that has made all the difference. — Robert Frost
When you make a decision to take one road over another, it can be minor for the first few steps. The other road is still visible. A few more steps, and the other road fades from sight. Pretty soon, you’re somewhere new and different, far from where you would have been.
To weather the storm in a business, the magic is in how they decide
If you want to change behavior, change decisions. It’s possible.
I learned from VICI Partners, a consulting company that has perfected the art of changing companies by changing their decisions.
Their method works. They have a perfect decades-long track record of helping companies change decisions. The proof? Their clients get a minimum profit boost[1] of 30–80% in under a year, whether it’s a $50 million company or a $20 billion company. And they charge based on results, so they’re highly motivated to do what works.
I like that! When I hear about results like that, I want to learn everything I can. Fortunately, the managing partner is a lifelong friend, and he put up with me asking him to step me through their process a piece at a time.
(I was so impressed that I’ve become a finder for them, so if you’d like an introduction, please request it through me.)
Reaching Decision Nirvana
Let’s explore their broadest framework—how long-term successful companies organize the decisions that lead to enduring success.
VICI’s decision-making framework looks at two dimensions of a company: (1) are decisions made from data or politics, and (2) can many people make decisions or is decision-making centralized.
The “Nirvana Zone” produces the outstanding results: data-based decisions, with many people free to make decisions. That’s where you want to be in times of turmoil.
That’s where we’ll focus. (You can read about the whole decision-making framework here.)
Amazon embodies the Nirvana Zone. Jeff Bezos encouraged many decision-makers to try things, with crystal-clear guidance to do what’s best for the customer. Amazon Prime and AWS Cloud Services were two of the small experiments. AWS now powers 40% of the Internet, and Amazon Prime is now a key element in Amazon’s profit-making strategy.
In short, you want NO POLITICS and MANY PEOPLE who can decide (and they need to be educated in order to decide).
The messages you need to give your decision-makers.
Now let’s apply this to what we’ve learned so far. You need to operate in a time when we can’t predict well: cover your downside and find unpredictable upside opportunity while using “affordable loss” so you can still sleep at night.
The challenge: aligning the decisions-making in your firm.
First, do a Nirvana Zone check. Who can make decisions in the firm? Do they base decisions on data, or politics, opinion, and whimsy?
If you’re not data-based with distributed decision-making, your first task is to start creating that culture. (Culture change is leadership stuff. That’s coming in the next installment.)
You’ll collect data that depends on your specific business. But among the data you want:
- What (possibly new) problems are customers struggling with?
- What are competitors doing?
- Which sectors are doing well?
- Which are faltering?
You’ll want many people who can make decisions from the data. You want them running experiments within your affordable less, to find and grab opportunity when they see it. Expect most to fail at finding the next great business opportunity, but done right, they should succeed at learning, which tilts the in your favor.
The upside opportunity comes from being a learning machine, while surviving long enough to find the path to long-term survival.
We’ve been talking systems and budgets. But people make up your company. Change like this needs more than management. It needs leadership.
… it’s leadership all the way down
Now that we know what we need to do, and how we need to be organized to do it, the final installment of Leading Through Chaos, will tackle what you as a leader—official or otherwise—need to do to put it into practice.
In the next and final installment, we’ll confront head-on the biggest mistake that many business leaders make and what you need to do to navigate through…
P.S. If you’re interested in learning more about organizational decision-making, leadership, VICI, or culture change, just drop me a line.
Technically, operating earnings, but let’s not split hairs. ↩︎
