The Iron Triangle: Influencing Behaviors and Creating Outcomes
As leaders, the distillation of our job is to create outcomes (The company does well; the product launches on time and with reasonable quality; retention is decent; etc) and influence behaviors (people do the right thing for whatever definition of “right” is appropriate for the local context).
So here we are:
How do we create behaviors and outcomes?
I’ve not yet discovered any meaningful way to do this other than through three aspects of an organization’s environment:
People
The people you hire will come in with some beliefs, commitments, ways of working, biases, skills, deficiencies, and unique attributes. You’ll be able to shift many of them to one degree or another; you’ll try to keep the ones who you recognize as contributing to the behaviors and outcomes you want, and (hopefully) you’ll be dealing thoughtfully with people whose contributions to behaviors and outcomes don’t meet your needs.
Values
Every organization has values it believes in (every organization also has values it espouses; ideally, the two sets of values are identical. They aren’t always). Slack’s values are “smart, humble, hardworking, collaborative.” Netflix’s are “judgment, communication, courage, curiosity, passion, selflessness, innovation, inclusion, integrity, and impact.”
Values (the real ones, not necessarily the ones documented on the jobs site) provide the people operating within the environment a default north star for how to make philosophical tradeoffs when they need to make difficult decisions. At least, they do all other things being equal.
Company Operating System
I don’t mean Linux
The Company operating system is the actual set of processes, levers, ways people are rewarded (and punished). These are, essentially, the real rules of the game most people try to win. All other things being equal, smart human beings will observe the company operating system and use it to learn how to be successful in the local environment.
And there you go:
How might this be useful?
At least in my experience, companies are generally thoughtful (to one degree or another) about the alignment between the people they hire (and fire) and the behaviors and outcomes they want. They spend quite a bit of time talking, debating, and agreeing on their values. And they tend to underestimate the value of a company operating system that works consistent with the behaviors and outcomes they desire.
The end result of such a system is an environment where the incentives in place — the incentives provided by the company operating system — are perverse. They teach people to do the wrong thing in order to be successful.
An entirely imaginary example
Imagine a company that might be interested in increasing talent density. Notice we just defined a desired outcome here.
Now, imagine two potential companies with the same shared desired outcome.
In one company, call them Happbook, leadership says “Obviously, we’re all working in a constrained world and you will need to justify additional headcount. However, if you engage in thoughtful performance management and as a result terminate an employee for non-performance, you are guaranteed a replacement headcount.”
The other company, Booksl, has a different approach. They want to use every departure as an opportunity to thoughtfully invest in the business, and that means every departure is an opportunity to potentially move headcount around. In this company, leadership says “Obviously, we’re all working in a constrained world and you will need to justify additional headcount. Additionally, if you lose someone — whether to voluntary attrition, involuntary termination, or intra-company move, you will need to justify keeping your headcount; if you cannot do so, you will not be able to replace this person.”
All other things being equal, which company will do better at improving talent density? Why?
Obviously, if I’m a Booksl leader and I have someone who is toxic and terrible and unfixable on my team, I will terminate them — their overall impact on my organization is negative. I’d rather lose the headcount than have them here. But if I have someone who is barely good enough — who is, in a manner of speaking, revenue-neutral, the system teaches me to hold on to them.
This may not be what Booksl’s leadership wants. They may count on the people they hire to do the right thing for the company — to behave in the way they want them to behave so they can accomplish the outcome they want — irrespective of the company operating system. And this will work, for a short while, until these good people learn these lessons. It may even work for a long while, if you do a great job hiring good people who are dumb and don’t learn from their environment. However, “our goal is to hire good, dumb, people” as a hiring strategy has its own failure modes and in general I’d recommend against it.
It will feel to some people like optimizing the company operating system for the behaviors and outcomes you want is an amoral endeavor — “damn it,” they’ll exclaim, “you should do the right thing irrespective of the incentive system in place, or you just don’t belong here.” Which is an admirable, deeply moral, and ineffective stance.
The only long-term effective strategy here is to be deeply curious and introspective about your company’s operating system, and how it encourages or discourages the behaviors you want. And try to keep morality out of the discussion.
