Managers are expected to competently tend to issues within their personal span of control. Perhaps more importantly, though, they are expected to develop into leaders. Just being placed in a position of authority doesn’t make someone a leader. Stature as a leader is something that has to be earned.
In my mind the litmus test for leadership potential is how managers approach change. Below I’ll lay out what I see as the three primary approaches to change management and then make conclusions about how they relate to leadership.
I’ve always been a change agent. I guess it is part of my nature. Later in my career I was pretty effective at putting together justification for and instituting significant operational changes that positively impacted my employer’s financials.
Implementing significant change is not easy. Many years ago I received sage advice from a colleague about change management that has stuck with me over the years. It takes the form of the following three leadership categories:
• A leader is someone who is perceived as being one step ahead of everyone else.
• A lunatic is someone who is perceived as being two steps ahead of everyone else.
• A heretic is someone who is perceived as being three (or more) steps ahead of everyone else.
These categories point out a real issue. Namely, the further you get out in front of conventional practice the greater the risk—both career- and business-wise—you take.
In retrospect I think my friend was trying to counsel me that I should rein myself in a bit. After thinking about his three points, however, I came to understand that they define a fundamental differentiator between types of managers, and the development of more or less effective leadership styles.
The normal One-Step-Ahead Manager focuses on improvement through incremental change, i.e., tweaking. This is the easiest and least risky form of change to sell and implement. Don’t get me wrong, incremental changes are important. But they should be regarded as something that is “necessary but not sufficient” relative to business practice.
Those who rely solely on this type of strategy typically are capable of thinking outside-the-box but, in fear of failure, resist doing so. Consequently, their position in management seldom leads to step-function-type improvements, i.e., the ones that actually lead to competitive advantage.
Before going into more detail about One-Step-Ahead Managers I’ll share an observation I have relative to MBAs. In my experience MBA holders seem to excel in working inside-the-box but seldom deliver fundamental change. If you think about it this makes some sense. After all, what else is a MBA program there for other than to indoctrinate students on how to work within the existing Standard Accounting Principles system? Unfortunately what I’ve seen—and I realize I’m making a generalization—is that if you want a manager who will lean towards playing-it-safe, hire someone with a MBA.
One-Step-Ahead Managers often make a practice of gaming-the-system. I’ll use a sports analogy to explain what I mean by this. In the “old days” (remember, I’m a bit of a geezer!) athletes from the former Soviet Union were dominant in the sport of weight-lifting. In fact, at one point in the early 1960s they held over one-half of all individual weight category world records. The Soviet Union’s sports federation would financially reward their weight-lifters every time they set a new world record. The weight-lifting athletes soon realized that they could come out way ahead financially by setting records incrementally, i.e., tweaking them. In other words, weight-lifters would on purpose set records only by the minimum recognizable poundage increase (which I believe was one-half kilogram). Consequently it was not unusual for the top weight-lifters to end up with a double-digit number of new world’s records (and bonus awards) over a career. They were managing by the numbers to maximize their personal financial benefit.
One-Step-Ahead Managers who game the system tend to follow a similar strategy relative to their own performance goals. In purchasing the primary goal is about delivering a positive material variance, i.e., piece-price reductions. Knowing that improvements in performance will be expected every year they really don’t look to make step-function type improvements since—while this may make them excel for the performance year in question—it will negatively impact their ability to hit their goals in succeeding years which would negatively affect their personal compensation. A sole focus on incremental improvements, on the other hand, positions One-Step-Ahead Managers to more predictably meet future piece-price reduction goals and receive the financial benefits that go along with them.
The worst example I’ve seen of this type of thing in purchasing is when potential new suppliers offer significant up-front piece-price reductions to get their foot-in-the-door (usually in an attempt to buy-the-business, which happens more than you might realize). One-Step-Ahead Managers would then game that price reduction opportunity by splitting up the offered savings contractually over a number of years to bank ahead achievement for future year performance goals. No kidding—I’ve actually seen colleagues do this. Needless to say, in doing so they certainly aren’t looking out for the best interests of their company which would, of course, benefit more from getting all of the savings up front. I’m sure there are similar analogies for functional areas outside of purchasing.
Unfortunately, some people who are promoted to management regard that as the achievement of a career goal and not their opportunity to have deeper and broader impact. My observation is that these are usually One-Step-Ahead managers who are more interested in maintaining their position than anything else. To do this they focus on predictable, incremental change management. In my opinion, such managers are a-dime-a-dozen. Unfortunately, today’s corporate world seems have set up an infrastructure which encourages managers to focus on One-Step-Ahead change. Let’s face it: incremental changes seldom lead to measurable competitive advantage. Rather, they are for maintaining the current status of your business position. And a sole focus on incremental change will seldom achieve that, at least over time.
Two-Steps-Ahead Managers are willing to stretch their focus beyond incremental improvements, but only to the extent that their proposed changes are within sight of current practice. Another way of stating this is that they are facilitators of evolution.
There is wisdom and safety in this strategy since it allows people to relate a proposed future to processes people currently understand and are comfortable with. On the other hand, it involves both a tougher sell, i.e., business case justification, and significantly more heavy lifting to bring such changes into reality than does tweaking.
A Two-Steps-Ahead change management strategy can lead to a noticeable marketplace competitive advantage but usually one that is relatively short-lived, i.e., lasts only a year or two. Why? Because by keeping current processes in sight of current practice, competitors can also see the “way ahead” and are soon able to reproduce the same types of improvements within their organization.
Three-Steps-Ahead Managers are visionaries. The types of changes they advocate are revolutionary. As a result they can have more trouble gaining buy-in for their proposals since they tend to be based on changing the rules-of-the-game. Because of this, a personality trait Three-Steps-Ahead Managers need to have is being able to accept rejection and (sometimes) abuse. To be effective, they also need to have an almost religious belief in the extreme value of the changes they are proposing.
I sometimes use the analogy that Three-Steps-Ahead Managers are akin to authors submitting manuscripts to publishers. Rarely are book proposals accepted upon first submission, at least from authors who have yet to achieve popularity. So writers need to treat rejection as a form of constructive criticism, tighten up their writing and re-submit. Then, if the story is a good one and well-written, it will eventually get published. So, too, with the business cases that Three-Steps-Ahead Managers put together to justify their proposals.
One point needs to be made here. Very few executives in industry are willing to accept just-trust-me as justification for supporting a change. There are a lot of people out there with opinions and ideas. While these may seem interesting they are of no value without a convincing business case. This is an important distinction between Three-Step-Ahead Managers and dreamers. Having a dream can be a good first step but without a solid justification behind it, it remains only a dream.
So what type of change strategy should a manager adopt? My answer may surprise you. The truth is managers need to utilize all three of the above strategies if they want to be seen as effective leaders. As much as I disparaged incremental changes earlier in this column, One-Step-Ahead tweaking is a necessary component of a comprehensive process improvement program. Its weakness comes when it is used as the primary—or sole—change management strategy. Why? Because tweaking doesn’t lead to quantifiable or sustainable competitive advantage. Instead, at best, it maintains the status quo. And it only does this if your competitors are also solely focused on tweaking.
A Two-Steps-Ahead strategy is a type of insurance policy that assures you that your competitors won’t gain a jump on you in the marketplace. There are a spectrum of Two-Steps-Ahead-type changes, from those that are closer to the tweaking end, on the one hand, to those that approach Three-Steps-Ahead impacts on the other. Many times a Two-Steps-Ahead change is the result of finding the middle ground after an initial Three-Steps-Ahead proposal is rejected. And, when planned right, they can be a stepping-stone for follow-up to Three-Steps-Ahead process changes. For instance, one Two-Steps-Ahead change plus a second Two-Steps-Ahead change doesn’t always add up to two Two-Steps-Ahead impacts—sometimes they result in a Three-Steps-Ahead result.
Three-Steps-Ahead proposals are rarely adopted. Why? Sure, I understand it is more difficult to get support for radical change and tweaks. But I see the bigger issue here is that Three-Steps-Ahead changes seldom represent quick-hits, i.e., proper implementation of radical change usually involves multiple years—something that isn’t palatable on Wall Street. But when executive management has the foresight and courage to support sound Three-Step-Ahead proposals they are well rewarded.
Over my 40-year career I’ve personally championed about a half-dozen significant process changes. Most of them were on the cusp between the Two-Steps-Ahead and Three-Steps-Ahead categories, with one in particular definitely far out into the Three-Steps-Ahead realm. Being a change agent won’t necessarily endear you to colleagues, especially those that made-their-mark in creating the existing state. But at the end of a career—and I suspect life in general—it will be these impacts that give one the greatest satisfaction.
So what is my formula for True Leadership?
• First, true leaders do just enough One-Step-Ahead tweaking to keep their positions. This means that they probably don’t consistently hit as high a performance level as those that solely focused on tweaking. Why? Because some years they won’t have delivered any Two-Steps-Ahead or Three-Steps-Ahead changes. On the other hand, true leaders are rarely satisfied with only hitting “singles” (to use a baseball analogy), i.e., remember, it takes a lot of singles to win a ballgame—and this can only happen when the other team doesn’t have their own power hitters.
• Second, true leaders have a significant focus on Two-Steps-Ahead evolution type changes. This type of change is the bread-and-butter of good managers/leaders. With this focus, in addition to “singles,” they frequently hit “doubles” or “triples.” In baseball, this type of production usually leads to wins.
• Third, true leaders spend time and effort cultivating Three-Steps-Ahead revolutionary changes, as well as foster an environment where the people in their organizations are encouraged to propose blue-sky type ideas. Even though home-runs (especially grand slams) are less likely than singles, doubles or triples, it usually takes a power hitter or two to lead a team to a championship.
The split on how much time and effort to put into each of these strategies is based on the business you participate in, as well as the competition. I have always felt a reasonable split is as follows:
• One-half or so of department effort should be spent on pursuing One-Step-Ahead activities. After all, you do need to consistently produce acceptable performance. Most if not all tweak activities should deliver their expected results.
• One-third or so of department effort should be spent on pursuing Two-Steps-Ahead activities. These have a pretty good chance of being supported and delivering evolutionary results a decent percentage of the time.
• One-sixth of one’s effort should be spent on pursuing Three-Steps-Ahead activities. These are rarely supported but when they are and are well implemented, they produce revolutionary results and give extreme feelings of accomplishment.
People want to play on a winning team and will see the manager that sets them up for success as a true leader. They will also recognize managers who do not set them up for this type of success.
My next article will discuss the need for civility.