Week 39, 2023—Issue #275
Hands-On Leadership, Achievement Paradox, Budgetary Control
Successful organizations do three things: they create more value than they capture, they optimize for personal fulfillment, and they organize for long-term profitability.
Here are three ideas to help you do the same:
#valuecreation
Hands-On Leadership
Executives need hands-on experience for informed decisions
Amid criticism of being “out-of-touch,” former Starbucks CEO Howard Schultz put his executive team to the test. According to The Wall Street Journal, he asked, “Is there anyone in this room who can go with me to an espresso machine and make a latte?” Meeting only silence, he declared, “I don’t think we can fix the systemic problem with the level of lofty knowledge that exists in this room.” Schultz’s critique led the incoming CEO, Laxman Narasimhan, to spend six months training as a barista and working in stores. This hands-on experience, which supposedly included a fair amount of latte making, is now informing Narasimhan’s decision-making, serving as a lesson that “lofty knowledge” is incomplete unless paired with hands-on expertise and experience.
#personalfulfillment
Achievement Paradox
Fulfillment requires a balance between short and long-term goals
In this 2012 TED Talk, Clayton Christensen discusses the human tendency to prioritize short-term goals over long-term investments. When we find ourselves with a spare ounce of energy or an extra 30 minutes, he observes, we usually channel it into activities that offer a sense of achievement. More often than not, this involves closing a sale or shipping a product, etcetera. Rarely does it mean spending quality time with loved ones. This isn’t because family and relationships are unimportant, but rather because they don’t offer that quick hit of accomplishment we seem to be hardwired to seek. Christensen notes that many of his Harvard Business School classmates ended up tremendously successful yet woefully unfulfilled due to their relentless focus on short-term career milestones.
#longtermprofitability
Budgetary Control
There are systemic flaws in the traditional budgeting process
I was in Lisbon last week speaking at the World Agility Forum 2023. And in that talk, I relayed the following story from Steve Morlidge’s The Little Book of Beyond Budgeting: “The process used by most businesses today differs little from that described in 1922 by James McKinsey in his book ‘Budgetary Control’. Some advances have been made since then… But none of these developments has fundamentally changed the basic architecture of the budgeting process set out nearly a century ago.” Budgeting is still primarily a top-down process focused on cost control that asks us to make predictions about the future. “In summary, budgeting is like a car that has been designed to operate only in ideal circumstances. As soon as it hits a bump in the road, the wheels fall off. Why would you buy a car like that?”
That’s all for this week.
Until next time: Make it matter.
/Andreas
How can we build better organizations? That’s the question I’ve been trying to answer for the past 10 years. Each week, I share some of what I’ve learned in a weekly newsletter called WorkMatters. Back-issues are published to Medium after three months. Subscription is free. This article was originally published on Friday, Sep 29, 2023.
