Burn Your Rule Book and Unlock the Power of Principles
The producer of a thought leadership event for senior
executives called me recently. She shared with a rueful chuckle that the theme
for this year’s meeting was uncertainty: in economic policy, trade, healthcare,
international relations…the list went on. I replied that the event would
certainly tap into a larger zeitgeist — everyone is wrestling with uncertainty.
Although
some argue that there have been more turbulent periods in history, I
would respond that these comparisons don’t matter. Perceived turbulence
and uncertainty is higher than it has been in several generations. As I’ve
discussed in an earlier post,
trust in our stabilizing institutions is in decline. A recent article in the Journal of Emergency Management documents
the turmoil: The frequency and magnitude of natural disasters is increasing.
Although overall violent crime is down in the U.S., complex, coordinated
attacks and terrorism are up. Cybersecurity incidents rose eightfold between
2006 and 2012 — and continue to increase. Look outside and street protests,
sometimes violent, seem to occur weekly on issues including immigration,
healthcare access, and First Amendment rights.
There is no magic formula to quiet the forces
of disequilibrium that swirl around us. Leaders, however, can help their
followers cope with tempestuous situations by creating pillars of certainty in
those areas where they can exert control. In particular, an organization and
its leaders can stand for rock-solid principles that consistently guide their
thinking and actions over time.
Principles,
unlike rules, give people something unshakable to hold onto yet also the
freedom to take independent decisions and actions to move toward a shared
objective. Principles are directional, whereas rules are directive. A simple example
of a rule: “All merchandise returns must be made within 30 days.” Contrast this
with Nordstrom’s principle-based approach: “Use your best judgment in all situations. There will
be no additional rules.” The former shows no trust in either the sales
associate or the customer. The latter is exactly the opposite and encourages
the frontline worker to build a relationship with the customer.
It has been more than three decades since Lou
Gerstner turned IBM around using what was then a groundbreaking idea: managing
by principes rather than procedures. Yet many organizations have been slow to
move beyond rule-based approaches.
In some rule-based enterprises, it is the
enduring, mythical power of a four-inch-thick procedure manual that lays out
exactly what workers can and cannot do. In others, it is accumulated
organizational ossification. Of course, there are regulations, union rules, and
other legitimate constraints. Too often, however, rules were designed to fix
the problems of yesterday and remain in place long after the problem itself has
changed.
The result is a disconnect between a need and
the ability to fulfill it: “That’s not in my job description.” “I’m not
authorized to make that decision.” “I know it doesn’t make sense, but I’m just
doing what they told me.” Customers are frustrated — and so are employees.
Efficiency and engagement both suffer. Revenue and profit are sure to follow.
Some companies, however, driven by the
increasing evidence of the links among purpose, profit, and employee engagement
along with the increased need for organizational agility are taking the
principle route.
Consider,
for example, U.K. upstart Metro Bank and their “One to say yes; two to say no” principle. That is, any frontline employee can decide
to say yes to a customer request, but if they think the request should be
denied, they must get permission from a colleague or supervisor. That’s a
welcome, empowering inversion of the typical approach.
Although
such approaches may seem most natural in a B2C setting, B2B companies can
benefit as well. When Laura Baldwin took
the reins of O’Reilly Media from founder Tim O’Reilly in 2011, the company was
shifting its organizational orientation from product lines to audience segments
and, perhaps more daunting, building the company up beyond its charismatic
founder to thrive.
Baldwin
told me that the key was not to try to be the next Tim but rather to involve
everyone in aligning actions with aspirations. From this, O’Reilly’s operating principles were
born. Some (“Is it best for the customer?”) are lofty and conceptual. Others
(“Know your numbers” and “Measure what matters”) are hard-nosed. One of
the more intriguing principles: “Embrace, adapt to, and drive change.”
Baldwin said that one of her goals was to
provide people with the same set of standards for working together. “Principles
give everyone a voice — even outside of their formal roles,” she said. As a
universal norm, they level-set between veterans and new recruits. They can even
prompt fresh thinking: “If one of our principles is to ‘Look from the outside
in,’ then why shouldn’t we try…?”
Principles
are not a panacea. Amazon had a public head-butt with its leadership principles
after a New York Times exposé portrayed
a brutal work environment. CEO Jeff Bezos’s response was that he “didn’t recognize” the company in the article. To Bezos’s credit, he took
immediate action to try to better align aspirations with reality, starting
with a letter to employees that encouraged them to escalate “callous management
practices” to HR or to email Bezos directly. The company has also taken steps to
change how it evaluates employee performance.
If you want to help your organization design
its own principles, here’s how to get started:
Think
about your organization at its best.
Dig
into the root behaviors, conditions, and other factors that make things work
well, and craft principles to reflect and stimulate more of this positive
energy. Ask yourself: What happens when my people are at their peak? Do they
demonstrate initiative? Do they feel free to exercise their best judgment? Do
you feel a jovial collegiality even when things are tense?
Be
ready to live your principles, even when it gets tough.
Actions will always speak louder than words. As a
leader, realize that the drumbeat for revenue and profit is constant. You have
to ensure that the other principles get as much attention as those bedrock
goals, and that in practice they fulfill their intention.
At O’Reilly, part of Baldwin’s job is to
balance the needs of the customers, the shareholders, and the employees. “If
it’s great for the customer but hurts employees, that’s not good,” she said.
“It’s one of the reasons we have a principle about generosity and reciprocity.”
Make
the principles public.
Baldwin noted that
O’Reilly’s operating principles are posted in every conference room. “Visitors
always stop to read them,” she said. “And the reaction is overwhelmingly good.”
Encourage employees to refer to the principles to explain why they made certain
decisions. The more they are part of daily life, the greater impact they’ll
have.
Baldwin offered some final advice: Don’t expect
to be perfect. O’Reilly’s principles have evolved over time. “We don’t always
get it right, and that’s OK,” she said. “We can always do better next time.”
That sounds like a great starting principle for any organization.
https://www.strategy-business.com/blog/Burn-Your-Rule-Book-and-Unlock-the-Power-of-Principles?gko=3c77f&utm_source=itw&utm_medium=20170914&utm_campaign=resp
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