Put principles before processes

The Algorithmic Leader

This post is an excerpt from "The Algorithmic Leader: How to Be Smart When Machines Are Smarter Than You," by Mike Walsh. He is the CEO of Tomorrow, a global consultancy on designing companies for the 21st century. He advises leaders on how to thrive in the current era of disruptive technological change. He is also a keynote speaker and the author of "Futuretainment," and "The Dictionary of Dangerous Ideas,"

 

Work is changing. Not just because we have new technology to drive efficiency and automation, but also because the nature of business itself is becoming more complex, unpredictable, and dynamic.

Strangely enough, the more we automate work and decision making, the more important it becomes to thoughtfully manage and support the remaining human-based activities. Underestimate the creativity and agility of the human mind at your own risk! Even as AI improves, there will always be tasks, decisions, and activities that machines cannot accomplish and that humans must take on. And in fact, as everything else becomes automated, the human- reliant tasks actually increase in importance.

So how should algorithmic leaders manage their teams in this new environment? Do we need highly structured workflows, performance indicators, and processes? Or simply some fluid principles to guide behavior?

These are important questions to consider, because they go to the heart of what separates twenty-first-century companies from twentieth-century ones. You might think the difference is nothing more than technology. Software vendors will promise you greater productivity, collaboration, and employee engagement if you upgrade your systems. If only it were that simple!

You can’t buy your way into the twenty-first century. Sure, you can spend millions on upgrading your systems, but nothing will change if you don’t put in the hard work of thinking about how your people should interact with each other, solve problems, and generate ideas. Technology may have changed the hardware of your business, but culture is your true operating system.

Great corporate culture isn’t easy to create. And I’m not going to tell you how to do it. It is something you and your team need to figure out on your own. Literally thousands of books have been written on the subject. You could read all of them and still not know what to do. The reason for that is simple: company culture is like the culture of a country. Paris, Texas, will never be Paris, France.

The true secret of successful cultural change is finding and augmenting the behaviors, patterns, and mindsets that are already working for you, rather than trying to superimpose the values of another company onto your own. That said, while you ought to avoid blindly adopting another company’s approach, you can learn some- thing from the experiences and struggles of other algorithmic leaders. While some factors that affect workplace culture will be familiar to you, they need to be reconsidered in the context of data and AI.

A good starting point is the question of control. Do you design a perfect model of what high performance looks like and get your teams to conform to that? Or do you give people the freedom to do what they think is best?

One of the most influential documents on how to manage people in an algorithmic era came from Netflix. Shared millions of times on SlideShare, the 124-page document called "Netflix Culture: Freedom & Responsibility" was written by Patty McCord, then head of talent at the company, who spent fourteen years in the job. The Netflix Culture Deck, as it became known, was called “the most important document ever to come out of the Valley” by Facebook COO Sheryl Sandberg.

The deck is worth a read. Some of its ideas were developed further by McCord in "Powerful," where she explains that the fundamental lesson they learned at Netflix is that the elaborate, cumbersome system for managing people developed in the twentieth century is no longer appropriate for survival in the twenty-first. However, rather than creating a complex new model for managing people (like Holacracy), they did the opposite. They kept removing policies, processes, and procedures so that people could get stuff done, guided by their own judgment.

In McCord’s view, too many companies try to patch their command-and-control system of decision making with talk of “employee engagement” and “empowering people,” offering bonuses and pay tied to annual performance reviews, or “fun” workplace activities. The false assumption here is that people must be incentivized in order to commit themselves fully to their work and that they need to be told what to do. Netflix discovered that by embedding a core set of behaviors in its people, and then giving them the freedom to practice them, its teams would be naturally motivated, proactive, and ultimately successful.

Principles rather than processes are what matter.

Principles can’t be vague mission statements. They have to be concrete enough to be useful, but fluid enough to adapt to a wide variety of circumstances. Just coming up with a list of motherhood statements will not lead to culture change. Even Enron and Bear Stearns had their own set of values, for all the good it did them in the end. Amazon’s 14 Leadership Principles work because they are a codification of useful behaviors that are already practiced daily at the company. Take a moment to look them up. They make for interesting reading and discussion with your colleagues.

While the story about Jeff Bezos writing down his founding fourteen principles on a napkin when he started Amazon is prob- ably apocryphal, there is no doubt that the principles have been adopted enthusiastically by his leaders and teams.

For example, take Principle No. 1: Customer Obsession. The exact wording is this: “Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

Many companies express similar views about customers, but without going to the lengths that Amazon does in bringing its values to life. For example, whenever Amazon is planning a new product, the team involved has to come up with a PR FAQ, an imaginary pseudo press release describing the new product and a list of the kinds of questions that customers might have about it.

Other values, like Principle No. 13 -- Have Backbone; Disagree and Commit --  might be less obvious, but they are similarly tied to the decision-making culture at Amazon. In a letter to shareholders on the topic of Principle No. 13, Bezos explained that rather than having his team waste time trying to convince him to make a decision that he disagrees with, he backs them and gives them the chance to prove him wrong. As an example, he describes a decision to approve a particular Amazon Studios original program.

“I told the team my view: debatable whether it would be interesting enough, complicated to produce, the business terms aren’t that good, and we have lots of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away with ‘I disagree and commit and hope it becomes the most watched thing we’ve ever made.’ Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment.”

Too many traditional leaders claim to serve the customer, or claim that they encourage innovative thinking, but when the opportunity comes to back their teams and trust their judgment, they indirectly sabotage their ideas by not providing the right resources, support, or affirmation.

The most important part of governing by principles rather than processes is doing just that: you have to stand behind them. 

 

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