Substack shows you my newest post first, which is great for keeping up, but it’s not the right way to get started. Read in whatever order interests you, but if you want a structured, linear approach, you can start at Chapter 1 and work down.

New posts will keep landing at the top of my Substack, and I’ll keep this page updated as the map grows.

PART ONE — Why We Lead

1. The Flannel CEO: A Real-World Guide to Purposeful Leadership

2. Knowing Why We Lead

PART TWO — Leadership: A Systematic Approach

3. Setting a Vision

4. Leading Through Listening

5. Accountability, Authority, and Negotiation

6. Annual Planning

7. High Performance May Not Look the Part

7. The Drumbeat of Recurring Rituals

8. Frontline Flannel

9. Congruent Compensation

10. Leadership Styles: Their Uses and Pitfalls

PART THREE — Leading Yourself: Vitality

11. Vitality During Duress: How a Start-Up Can End Up

12. Taking Care of Your Physical Health

13. Taking Care of Your Financial Health

14. Taking Care of Your “Digital Health”

15. Taking Care of Your Mental Health

PART FOUR — Best Practices

16. Balancing Tactical Execution with Deep Thought and Strategic Planning

17. Don’t Skip Level

18. Rabbit Hole or Rat Hole?

PART FIVE — Opinions

Watch Your Language! — On the sloppy way we’re talking about AI, agents, and the workforce.

More Clear Evidence that Purpose Matters — New data on why purposeless organizations bleed their best people.

Our Wake-Up Call in this Age of AI — Does employee engagement matter as AI adoption accelerates? Yes — the “last mile” of AI adoption comes from our people, and the recent data on how they’re struggling is a real wake-up call.

Mission and Profit — Can a for-profit company really be mission-driven? Should it be?

How did I let this happen?

What is he thinking?

What impact did I just have on my career?

The Background

The company had just spent the prior year trying to port from a custom, in-house software platform to a set of third-party solutions. It hadn’t gone well. We had recently pivoted 180 degrees and doubled down on our commitment to developing differentiated software.

We immediately set the seemingly impossible goal of launching four extremely large projects in a single year. Because the foundation of the business was a broker-dealer model, two of the projects involved the ground-up development of an options trading platform and a margin lending system.

The work was as much about understanding the requirements and regulatory environment as it was about developing working software. I became particularly fascinated with the interplay of what is called Reg T and the former NASD Rule 2520. One governs the initial requirements for margin lending and introduces the concept of a Special Memorandum Account (SMA) that tracks and locks excess equity. The other created requirements for maintenance margin as well as the mechanics for margin calls. If we got this wrong, we could blow up customer accounts, subject the firm to credit risk, or face regulatory fines. It was imperative we get it right.

The implied math seemed bizarre at first, especially in the interplay between these two rules, but I eventually recognized an underlying elegance. The math made sense but would require complex, real-time calculations as transactions were being posted during market hours as well as nightly mark-to-market calculations on closing balances to understand where the account stood at the end of the day. I couldn’t find decent examples in other systems. The third-party system we had looked at got it all wrong—in fact, their approach was one of the early red flags for that failed project. But as we studied the problem, the right data model to track intraday and end-of-day balances was emerging, as well as the ledger and audit trail that would be necessary to validate and track these nuanced calculations for our operations staff and regulators.

At the moment I was sitting with my eyes closed, I was deep in the intricacies of the data model and processing patterns. I was swimming in complex details that were critical to get right. I was designing a system of interlocking parts that needed to work together flawlessly.

Indeed, these structures became the foundation for working software that supported the firm for the next decade. They survived significant operational loads as well as future financial audits and regulatory examinations.

At that very moment I appeared to be sleeping on the job, I was engaged in what might have been my most productive activity of the entire year.

What did the CEO do?

Nothing.

The CEO didn’t tap my shoulder when he saw me apparently resting in my cubicle.

He didn’t say anything.

If he reads this article, he may not remember the moment, and if he does, he may be completely unaware of what was going through my head as he passed by.

Notably, I was part of an incredibly productive team that indeed completed the four major projects in barely over a year. In hindsight, I suspect there was a level of trust that allowed the CEO to pass by without making a comment. Maybe he thought I needed the rest. Maybe he thought I deserved a short break.

The moment didn’t impact my career, but the projects did—in a positive way.

When I later became a CEO, I often thought back to that moment.

How do I show up as a leader? Does my leadership style support an environment that acknowledges productivity and performance don’t always come from busy work? How do I avoid being the CEO who demands hands-on keyboard, eyes-on-screen for hours a day, when I know that environment will kill the very conditions under which these higher-order brain functions can thrive?

These are great questions, and they tie directly to the systems I later discovered in which purpose is upheld, forward planning occurs, and accountability is still nurtured – all without suffocating real performance.

As a leader, how do you support the higher-level brain functions that are hard to observe, measure, and reproduce?

In the prior Flannel CEO article, we discussed the clear need for strategic planning. Let’s assume you’ve gone through the effort to schedule time for yourself or your senior team. You know where you want to focus. You’ve prepared a detailed agenda.

Once you’re together, however, you find the team is incapable of staying on task. As the clock ticks through the precious hours you’ve wrestled into your difficult calendars, instead of working through the important topics you’ve identified, the dialogue keeps heading off on deep tangents. They seem important, but so did the original agenda!

With a blend of humor and insight, I sometimes discern whether the tangent is a rat hole or a rabbit hole.

What’s the difference?

A Rabbit Hole

A rabbit hole is something like the wonderland that Alice discovered. It’s full of new ideas, interesting conversations, and innovations. There are trinkets. There are potions. There are strange characters full of novel inspiration and bizarre surprises. It’s a magical space where you can indeed become trapped and miss out on the strategic planning you meant to do, and yet some part of you recognizes there are wondrous prizes you might take with you—that is, if you ever manage to leave the rabbit hole.

A Rat Hole

A rat hole, on the other hand, is full of junk. It may look like trinkets, but it’s really trash that should have been discarded and has instead accumulated over years. That garbage may have some value to you or members of your team, but ultimately the conversation feels like a meaningless tangent from the work you should really be doing. In fact, it may feel like déjà vu. Haven’t you seen this stuff before? Why are we sorting through these meaningless details? Are we pretending to be good stewards by hoping to recycle stuff we know we need to throw away? And why is it getting darker as we descend into the hole?

Getting Back Above Ground

The distinction may sound academic, but it’s also a fun way to declare that you’ve digressed. At Critical Insight, we discovered that quickly shouting “rat hole” or “rabbit hole” meant to all of us that we were on a tangent and needed to come back to our core agenda.

The distinction is also useful. Whether you’re in a rabbit hole or a rat hole, you need to escape—but you may also admit that you need to bookmark the tangent and come back to the underground cave sometime in the future.

Assuming so, the way you deal with a rabbit hole is quite different from the way you might deal with a rat hole.

When you’re ready to return to a rat hole, you arrive with the intention of working through accumulated junk that is distracting your team. The tool to apply is Issue Processing, or more formally, Problem Management. The goal is to unpack the issue or problem, understand what’s really happening, and dig into root cause in order to land on corrective actions. Let’s avoid having the conversation again by uncovering the pattern, discovering the reason we keep coming back to the issue, and committing to well-formed corrective action. For more, you can read the section on “Facilitating Issue Processing” in my former Drumbeat of Recurring Rituals article.

A rabbit hole, on the other hand, is potentially a source of inspiration and ideation. If you want to return to a rabbit hole, design a facilitated brainstorming workshop. Create the space for people to throw ideas on a wall, maybe in the form of sticky notes. Do this freely and playfully. Let it be dreamy. Talk to the caterpillar smoking the hookah on top of the mushroom. Let the initial brainstorm be free of critical thinking. Once the ideas have been gathered, you can subsequently use clustering exercises and voting buttons to work towards actionable content. Feel free to check out the “Facilitating Brainstorming and Decisions” section of Leading through Listening.

If nothing else, consider simply introducing this vocabulary to your team.

Was this article a rabbit hole for you?

As a founder, CEO, or team leader you try to balance daily execution with deep thinking and planning. It feels like an impossible challenge. The demands of daily work are compounded with the interruptions of incidents, urgent matters, and a growing population of employees that need your leadership, coaching, and decisions. New leaders inevitably discover that they are spending all their time on tactical matters, making them ineffective at the deeper strategic considerations where their leadership is even more important.

Having experienced this challenge over a couple of decades, I found myself meditating on the ways my practices evolved over the years. Some of my eventual techniques were simply best practices or tricks of the trade. One bigger shift came from a key change in how I planned—or rather, who should do the planning. I shifted from thinking of myself as the strategist to thinking of myself as a facilitator of group ideation, team planning, broad-based execution, and adaptive performance.

The Recurring, Generic Calendar Block

Let’s start with the original idea I used that admittedly didn’t work so well.

Most of us have tried a recurring meeting on our calendar with some provocative title that suggests we are going to extract ourselves from the myriad details of daily execution and either get caught up or, ideally, get ahead and do some forward thinking.

We might title this something like “Catch Up” or “GSD,” which you may claim stands for “Get Stuff Done.” We naively expect that our team will respect the need for heads-down time to catch up on all the stuff that they very likely have asked us to do for them.

We might alternatively claim to be looking ahead and call the recurring calendar block something like “Strategic Thinking” or “Planning.”

We might instead mark the block as “No Meetings Fridays” as we seek to democratize the idea.

These generic recurring meetings tend to fall apart for a few obvious reasons. We know that this is a recurring calendar block. There will always be more. We inevitably give these times up for other items that have higher urgency. Of course, the list of urgent items never shrinks and the urgency never decreases. We realize we’re not using this time the way we meant to. We then react and declare our renewed intent to hold the boundary, only to fail again.

Furthermore, we often have certain employees and potentially an executive admin that have full access to our calendars and can see what things are titled. Assuming so, we must commit to continuous evangelism for the importance of any generic items on our calendar. We then lose the battle of defending abstract concepts against concrete needs, interruptions, incidents, and higher-priority tasks.

Be More Specific

The first improvement I suggest is this: be more specific about what you’ll actually do so you and others are less likely to book over the calendar time. Is your “No Meeting Friday” supposed to start with a workout, evolve into catching up on a bunch of deliverables, and end with a chance to think about the upcoming year? If so, label it that way!

If you read my article, “Taking Care of Your Physical Health,” you know I’m a fan of scheduling non-negotiable time for workouts. This practice is not only important for our own physical health; it also sets an example for our team members that encourages them to do the same. I realize workouts are not the same thing as deep thought and strategic planning, but I argue they are a prerequisite. Our second-order brain functions come alive when we keep our bodies healthy. If some of the time is for a workout, title it clearly.

Staying with this theme of making your time blocks more specific, we can similarly decompose the broad ideas of getting caught up and doing planning into more specific things on our calendar that clarify to us and our team the key priorities on which we’ll focus. We can pull items from our prioritized to-do list and block out time for those things specifically. You may name a deliverable you intend to finish. You may name a key client report or major decision that you’re moving forward on. If you use this approach, you and your team will be much more reluctant to schedule something over the time block.

If you really want time for planning, then consider being more specific. What is the rhythm of your planning cycle? Are you planning the next week, the next month, the next quarter, the next year, or the next three years? While any calendar block labeled as planning is more likely to be deprioritized by you or your team for urgent matters, I do think a meeting block before budget season that shows as “Work on annual plan” is more likely to be honored.

Circling back on scheduling workouts as a specific item, there is a variation that also allows time for deep thought and planning: a walk. I think best when I walk. If you make one of your recurring workouts a solid time for a long walk, you may find that you accomplish not only a lift in your physical health but also a time when ideas from deep in your mind surface to your conscious attention.

Team-Centered Planning

At some point in my leadership journey, as I became more senior, my understanding of “planning” began to shift.

Before the change, I assumed I needed to plan. I needed time for deep thoughts about where we were going.

After I planned, my next task was the important work of communicating whatever vision I had formed to my team.

In communicating that vision, I heard more ideas and, often, objections. The vision evolved even as I communicated it.

As we entered execution, my job was to continuously remind my team of the vision. Of course, the vision shifted as we adapted to new information and issues. Those changes needed to be disseminated.

At some point, I realized that I was not only limiting my team’s ability to execute by throttling all of the strategy through my own head, but more importantly, I was stuck within the confines of my own ability to innovate. I was failing to take advantage of the immense power of the minds around me.

I embraced the paradigm shift. I realized planning was not something to do alone by blocking my calendar and hoping I could defend the time from other urgent items. Rather, planning was an opportunity to facilitate ideation with my team and gather input to support critical decisions.

When planning, I love a flare-then-focus approach. We would get out the sticky notes and whiteboard markers. We got the ideas flowing, allowing each team member a few minutes to jot down their answers. This was the brainstorm—the “flare”—that got minds active and voices present. I then used facilitated approaches to focus the room on priority topics and add detail. We used voting buttons. I encouraged discussion and debate. We ended with clear decisions. (For more, see my prior article, “Leading Through Listening.”)

Certainly, as a leader, I was still accountable. We didn’t become a democracy. I needed to finalize key decisions, and I sometimes made choices that were unpopular with my team. If I garnered the insights of the team as a core element of getting to the decision, however, then the decision was better informed. Not only was I making better decisions, but the team was bought in for having been part of the process. Even if they had asked for a different direction, at least they understood that there was a process and reason behind the decision I made.

And, if I had a team around me that had helped form the strategy, understood its nuances and details, and understood the reason behind the key decisions we initially made, then I also had a team that could be empowered and trusted to make decisions along the way. I didn’t need scripted robots following a pre-determined plan. I needed real people solving complex problems and using judgment to adapt their activities on a daily basis.

I began to think of my mind as not the thing in my own head and body, but the collective mind of the team around me. Deep thinking and strategic planning were no longer something to block on my personal calendar. I was no longer trying to defend an abstract, solitary exercise that I’d titled cleverly to keep others away. Rather, these sessions were a block of time with my key leaders, with a very specific agenda and desired output. That type of calendar block was sacred and honored by all of those around it.

The planning session wasn’t a singular exercise, either. I thought of planning as a set of long-term and near-term exercises. I broke planning into long-term visioning, annual planning, quarterly plan iterations, and weekly performance cycles. Each of these could have a recurring ritual on our calendars. In this manner, we made real time for strategic thinking.

Summary

Leaders need to balance tactical execution with forward thinking, but a recurring calendar block with an abstract title isn’t likely to work. Has being more specific helped you, or do you have other practices that actually work? Have you found ways to make planning a team activity rather than a solitary exercise? How do you make time for thinking ahead when all the details of the minute demand your immediate attention?

Gallup’s engagement data shows consistent decline in post-pandemic morale and engagement. It doesn’t seem to be about remote work; remote employees often report higher engagement. The drivers appear to be manager burnout, economic uncertainty, and organizational instability (i.e. layoffs). There is a growing sense among employees that they are being treated like interchangeable parts rather than developed like human beings. If you care about productivity, this is an enormous red flag.

If you think AI is going to compensate for that productivity loss, you’re partly right, and you also may be betting on smoke and mirrors. Organizations with engaged employees looking to multiply results with AI are going to see an enormous productivity lift. But are your employees excited about AI? This data is not great either.

HBR reports that 76% of U.S. executives think their employees are enthusiastic about AI adoption, but just 31% of individual contributors actually expressed enthusiasm. That’s a big divide! If your AI strategy is to cut costs by laying people off, you’ve got a short-term view, and your competitors with engaged employees (maybe in China, where AI enthusiasm is much higher) are going to eat your lunch.

The organizations that use AI to multiply people, not replace them, will win. I’m not saying our jobs won’t change. I’m not saying we shouldn’t replace some work with automation so our real people can focus on other areas, like coordinating all the productivity that is possible! I AM saying that people and AI are different things, and they both matter.

In my essay late last year, “Watch Your Language”, I emphasized the need to use different nouns for people and agents. AI is not the “new employee.” It is not our “coworker.” IT is not the “HR of AI.” AI is a new productivity machine, and engaged employees ready to reinvent their work by using AI need to be your focus.

The companies that navigate these next years well will not simply deploy AI effectively; they will also help exhausted employees and managers reconnect to a rooted sense of meaning, dignity, and real shared purpose. I realize these are both enormous initiatives, and yet you can’t do one without the other.

If you’re not investing in AI, your head is in the sand. If you’re investing in AI but not in your people, you’re still losing.

Our work environments are complex. We want to point our people in a common direction. We require highly skilled employees to design new solutions in a way that can’t be scripted—in fact, the employee’s manager likely does not yet know the right answer. Outcomes require problem-solving more than repeatable process. We hire for judgment more than obedience. And, the learning speed of our people is nearly, if not equally, as important as the speed of execution.

In these environments, we seek the extreme productivity of humans that are using second-order brain functions to see deep patterns, solve problems, and innovate. To support this kind of “thriving” brain, we need to create a supportive environment and motivate the work in alignment with innate human meaning. We need to declare a resonant Purpose.

Without common Purpose, the people in our organizations are likely to show tactical, compliant behavior at best, and dysfunctional or even fraudulent behavior at worst.

Certainly, we also seek to align people to jobs that match their “spark,” interests, and talents. This pursuit of making the job “fun” is essential. At the same time, these motivations are individual, and they can be brittle at times. Purpose is a stronger motivator because it is shared and resilient.

Purpose also drives career decisions and hence the retention of our highest performing employees. This is true for front-line employees and even more so for our leaders. Indeed, prior articles highlight the central importance of Mission in my own decisions about where to work and what organizations to lead. Research from sources like Gallup and MIT Sloan consistently shows that employees who find purpose in their work demonstrate higher engagement, lower turnover, and stronger discretionary effort, all of which are directly tied to measurable business outcomes.

In case you’re wondering, the need for Purpose doesn’t change in this age of growing AI usage. Almost all businesses still have people, even if they are managing AI agents. Indeed, the ideation and reinvention required to harness the productivity lift of AI requires high-level strategic thinking from our people. Even businesses formed around AI usually have at least a CEO. And every business has an owner. In a world where scarcity of productive resources may be chiseled away by automation, the business of attracting demand from finite human desire and attention will require innovation. While the nature of our work may change, humans will be involved in delivering, steering, sharing, leading, and owning the work. Wherever humans work, Purpose matters, and wherever we have AI increasing productivity, we want it to be accountable to human intent. Undoubtedly, as we increase the use of AI, it’s imperative that the prompts and context we provide to agents are grounded in human Purpose.

Mission drives human motivation. Well-motivated people perform at a high level, innovating and enhancing products, services, and service delivery. Revenue increases. Productivity and efficiency are enhanced. Employees are retained, reducing the costs of churn, hiring, and training new employees.

Strong Mission drives better economics.

Should Mission be For Profit?

But is the reverse true? Should Mission-driven organizations be for-profit corporations? With all this discussion of Mission, you might assume I would prefer to lead not-for-profit organizations. To be clear, that’s not where I thrive.

At Critical Insight, we often talked about our choice to be a Mission-driven business. The Mission was front and center in everything we did, and yet we were clear that we chose to operate in a for-profit structure precisely because we believed for-profit enterprises are able to move most quickly. The speed of for-profit organizations comes from the deliberate, sustained, and essential focus on the customer. When you are for-profit, this focus is a survival instinct.

Undoubtedly, cash flow is the lifeblood of an organization. Expense obligations cannot be ignored. Cash inflow is essential. When that cash comes from customers making buying decisions, you get a constant, intense focus on innovating back from that customer. To remain viable, for-profit organizations require speed, urgency, and innovation. Customer-focused organizations seek precision through research, problem-solving, and iterative agility. For-profit organizations that fail at customer-back thinking typically fail to survive.

And as we noted before, performance and innovation thrive when employees have a customer focus foundationally rooted in a deep sense of Purpose.

The combination of customer focus and Mission is powerful in well-run for-profit businesses.

Not-for-Profit?

Not-for-profits state their Mission and align all decisions back to the Mission. I’ve had extensive dialogue with CEOs of not-for-profit institutions and deeply admire their leadership and grit. Not-for-profits that receive income directly from their customers can benefit from the same primary focus on customer-back innovation as a for-profit business. There are times when a not-for-profit structure is the right way to accomplish a Mission.

I’ve not chosen this structure for my own work. In particular, I’ve found myself avoiding structures that rely on cash inflows from donations. My reaction may be a simple aversion to asking for donations. Related, however, I note that a reliance on this kind of fundraising may force a focus on donors. The not-for-profit must clarify a core value proposition that attracts their funding. This value proposition should, and normally does, focus on Mission, but the services the organization ultimately offers to the end customer are not tightly coupled to the survival instinct of the not-for-profit structure. Quality of service is undoubtedly demanded by the Mission, but ultimately, the lifeblood of cashflow requires donations first and customer service second. The implication can be that customer service is a degree removed from the intense focus that a for-profit organization must have to survive.

This isn’t universally true, of course. Structurally, however, the systemic pressure put on a not-for-profit that relies on donations forces attention to the donors.

Government?

If you want to move a Mission forward, what about working in the governmental structures of our country, states, counties, and cities? This depends largely on the nature of your Mission. We need fair rules. We want to humanely enforce those rules. We need a forum for interpreting the rules and making judgments. If the Mission you imagine needs to live within these structural authorities, then doing your work in government or politics may be the right approach.

At the same time, most of us recognize that government moves slowly. Unlike for-profit structures, government lacks direct customer survival pressure. Many of us will fight for our democracy, but the existence of government is rarely in question. Over time, voter pressure, elections, and the actions of elected officials can cause certain elements of the government to be enhanced or shut down, but this is a much slower process than what occurs with customer buying decisions where customers are “voting with their dollars” every moment.

Government can innovate when mission-aligned and well-funded, but it is not structurally optimized for rapid, customer-driven iteration. In fact, in the structural elements of our government, we may reasonably resist innovation.

The Vice of Profitability

For speed and innovation, our answer to the question, “Should Mission-driven organizations be for-profit corporations?” is pointing to “yes.”

The problem with a for-profit organization, however, is that profit can be the central mandate, derailing Mission. If you find yourself leading a corporation, you need to embrace this tension and be prepared to take a stance. You’ll have long-term economics on your side, and you’ll need to be prepared to fight short-term battles.

Admittedly, it can be messy. The potential issues are structural and begin at the board level. Most for-profit organizations have a board of directors that bears a primary fiduciary duty to shareholders. If the core governance structure of a corporation is centered around fiduciary duty, where does Mission fit in?

At the risk of repeating myself, Mission fits right in the center of the Vision. A Vision is poorly formed if its centerpiece is profit (or its related drivers, like growth, size, market share, category dominance, and so forth). Such economically-centered Visions may drive short-term frenzy, but they ultimately fail to inspire people to realize or bring forward their best performance. A Vision should be centered on Mission, and it must live up to that Mission in daily decisions, so employees continue to be motivated to do great work and so customers come to trust the authentic purpose of the organization and continue to consume its products and services. This is where your long-term economics can blossom.

That said, the duty to profit can push on decisions where Mission gets in the way. In the short term, a Mission can look like a distraction from the fiduciary duty that management inherits from the directors. Management must be diligent to emphasize the long-term importance of Mission to the owners, the leaders, the employees, and the customers.

This isn’t always easy. The argument for Mission can feel weaker than we would like. Let’s look at some situations.

We can certainly name stories where Mission was ignored and fraudulent financial reporting drove near-term financial performance for owners. This isn’t really a case of fiduciary duty winning over Mission, however. These stories usually end in financial ruin.

You can argue that the pressures of socially responsible investors create a fiduciary duty to Mission. In some cases, this human influence on valuation has resulted in some alignment between the financial performance of an organization’s securities and its Mission, but the data is sometimes inconsistent and soft.

Customer buying behavior is influenced by an organization’s Purpose. Hence, Mission drives revenue. The reverse is also true. Customers react negatively to stumbles in corporate ethics and Mission. However, we’ve also seen major brands survive significant scandals or misalignments of purpose or politics if their service is superior.

Similarly, we can probably each name stories where organizations created false narratives in their brand story, taking advantage of customer situations or attitudes to act in a way where profit was supported while the service took advantage of a customer weakness. Sometimes, these organizations survive, but the story often includes significant brand damage and sometimes the death of the business. This creates some argument for upholding Mission in service of a fiduciary duty.

Then again, sometimes fiduciary duty and Mission appear to be opposed. Global warming is hard to battle because of the “ethical arbitrage” breaking the link of real costs and costs-of-goods-sold. Fossil fuels create societal and global costs that users do not individually bear. In a corporation, the benefit of travel will be modeled against travel costs in daily corporate decisions. The travel costs include airfare, which is priced to cover the cost of fuel, but those are a fraction of the costs of global warming, which are borne by people and other species across the globe. In corporate decision-making, the ethical choice should be to reduce travel, and yet that same choice may lower revenue and profits.

The strongest argument for aligning fiduciary duty and Mission is often the employee motivation and retention topics we already covered. There is a consistent body of research supporting the connection between employee performance and retention with Mission.

Along with the benefits to the customer and investor interest, the long-term economic benefit of putting Mission and Purpose front and center is a reasonable argument. While the governance structure of corporations focuses on the fiduciary duty of directors, which they delegate to management, the alignment of Mission to profit allows a for-profit business to authentically be a vehicle for Mission.

Benefit Corporations?

While some apparent tension may remain between fiduciary duty and Mission in traditional corporations, the benefit corporation, a relatively recent structure, may help provide resolution.

A benefit corporation is still a for-profit company. It has shareholders, and the elected board of directors still holds a fiduciary duty. Because the lifeblood of cashflow drives benefit corporations to focus on the customer, they can provide the speed and pace of a for-profit organization.

We’ve already argued that these economics can be supported by a Mission. A benefit corporation, however, goes one step further in support of Mission. The board of directors of a benefit corporation is required to also consider stakeholder impact—employees, customers, community, and environment—when making decisions. This means that Mission is structurally included in the core governance mandate for the organization.

In a traditional corporation, the Mission survives if leaders fight for it. In a benefit corporation, the Mission is protected by design.

In our economic history, this structure is relatively new, but no longer experimental. The first benefit corporation legislation, developed in partnership with the not-for-profit B Lab, passed in Maryland in 2010. Adoption spread relatively quickly. Today, most U.S. states, including Delaware, California, New York, and Washington, allow companies to incorporate as benefit corporations, making the structure broadly accessible.

Because the structure explicitly allows, and requires, leaders to balance both shareholder and stakeholder benefits, employees can see Mission not only in the core Vision of the organization but even in the documents that govern its formation and governance. This structural underpinning for Mission directly supports the human motivation that leads to high-order performance and employee retention.

This structure can also strengthen the trust of customers influenced by Purpose and the underlying ethics and intentions of a brand. We’ve already discussed how Mission strengthens demand. Benefit corporations can highlight their structural clarity that aligns profit with impact. In crowded markets, a benefit corporation has a potential ability to differentiate from traditional Mission-driven corporations by making this structural argument.

Given our previous focus on how Mission enables economics, it’s no surprise that research into the economic performance of benefit corporations is directionally reassuring.

If nothing else, longitudinal studies find that the additional focus on stakeholders does not create an undue economic burden. Over time, benefit-oriented firms perform similarly to traditional companies on financial metrics. Some evidence suggests a temporary dip in profitability following adoption of a benefit corporation structure, likely due to investments in stakeholder initiatives, but this effect tends to diminish over time. Research in journals such as the Journal of Business Research finds that clearly articulated Mission and stakeholder focus can contribute to stronger reputation, legitimacy, and customer relationships, which are linked to long-term performance.

For benefit corporations, and by extension for Mission-driven traditional corporations, the alignment of governance with Mission is not only philosophically appealing, but economically sound.

Summary

The fusion of Mission and for-profit enterprise is powerful, both in its potential positive impact to the world and in the resulting powerful economics. The aspirations of Mission and profit are not only compatible but mutually reinforcing.

For-profit organizations should be based on Mission. Mission motivates people, drives revenue, improves performance, lowers cost, and enhances profitability.

In reverse, Mission-driven leaders may reasonably select for-profit structures for moving their work forward. The survival instinct of for-profit, customer-facing organizations drives innovation, speed, and agility towards a Mission.

For these reasons, my recent decisions of where to work and how to lead have been unwavering. In the last decade, I solely focused on driving Mission-driven, for-profit organizations. For the decade and a half before that, I was lucky enough to find myself thriving in an already Mission-driven organization.

If you agree that Mission drives performance, then your governance, your structure, and your decisions should reflect that belief. Put Mission at the center of your Vision.

If you are starting something new, consider a for-profit structure. If you anticipate moments where doing the right thing may conflict with short-term profit, building your Mission through a benefit corporation is worth serious consideration.

• Organizations that don’t have a clear purpose beyond money and category dominance will see incredible people leave. Before they do, performance will surely suffer as people are distracted by the angst and life planning needed to extract themselves from their purposeless institutions.

• On the other hand, organizations with purpose enjoy loyalty, dedication, and high performance. Their motivated individuals will think mostly about how they evolve their careers in industries that bring them immense, grounded, personal satisfaction and a sense that their work matters.

I’m talking about real purpose—the kind of thing that employees sign up to support and feel in every decision of every day of their career with the organization. Sure, pay also matters. Benefits matter. A culture of “play” and innovation matters. Great leaders matter. But if the underlying purpose isn’t clear, these things don’t add up to real motivation. If organizations don’t clarify their purpose, their demotivated people will not operate anywhere near their best. If organizations pay more but realize lower motivation, they only erode their bottom line. When employees leave, the expenses of recruiting and retraining add to the problem. Most importantly, these organizations waste the precious human genius that could be making our world a better place.

This was demonstrated in dozens of stories told across multiple days. We laughed. We cried. We searched our hearts and minds. We planned next steps. We sometimes looked at retirement. We sometimes looked at promotions. We often looked at the delicate process of getting away from golden handcuffs to pursue work that was more meaningful. I say handcuffs because that’s what the high pay, stock options, and benefits amounted to for organizations that didn’t have purpose. No one wants to be locked to their job.

The lack of purpose was sometimes in an organization’s core vision. If the vision focused on size, growth, profitability, dominance, or valuation and wasn’t centered on a meaningful mission, then purpose was explicitly absent.

The lack of organizational purpose also showed up in execution. If there was lip service to higher values and mission but the execution showed that the organization had lost its way, it was arguably worse than if the organization hadn’t declared a purpose in the first place.

In contrast, I heard numerous individuals declare their commitment to the mission of healthcare. I heard doctors who had become administrators and now planned to consult in the industry that was saving and improving human lives daily. The dedication these people showed to the industry spanned organizations. Their motivation was deep. Given the successful careers I heard about, I have reasonable confidence that their performance was also outstanding.

While we spoke to so much more, I emphasize here that organizations thrive best when they are built around a real purpose. Center your vision on that mission. Authentically support that in your daily decisions. The world will be a better place, your organization will execute with passion, and your bottom line will reflect the benefit.

CEOs proclaim AI as the “new workforce” because AI does real work and so agents are “workers.” Our productivity will jump as we “manage” AI agents, “delegating” work to them, enhancing every employee that can become an “AI boss” (and threatening the job of every employee that can’t). The IT Department is going to become the “HR department” of AI agents.

WTF?

The term “HR” was already outdated. Thinking of humans as “resources” flies in the face of thinking of humans as real people. At my prior company, we had a Chief People Officer, not an HR director. Why are we using an already outdated term to further diminish human value by applying it to AI agents?

Don’t get me wrong. AI is going to create a significant leap forward in productivity. The fusion of human and artificial intelligence is powerful, and the advances we see daily feel, and are, exponential. However, the skills of leading humans and prompting and coordinating AI remain distinctly different.

There is some overlap, certainly, and maybe that is part of the confusion. We use natural language to communicate with both. We pay for their time and request outcomes from each. More context is helpful to both humans and AI. Clarity in our expectations is similarly imperative.

However, AI agents, and the models behind them, are inherently tuned as probabilistic machines, designed to give the answers that we are most likely to appreciate. Said another way, AI is designed to do what it’s told. It doesn’t have desires, although we can train it to mimic them. It doesn’t have its own agenda, except through the training we’ve provided. Importantly, I don’t believe it has the quality of experience, and hence is not, and will not be, conscious. Today, it’s pretty easy to agree that AI is a silicon-based prediction machine based on underlying binary data and computations that are no more aware or conscious than a piano. I believe that will definitionally remain the case. Someday, the distinction of whether AI or humans are “more conscious” may become a debate, and it’s worth preparing your answer. I have mine. AI models are, despite rapidly increasing capabilities in intelligent-like behavior, ultimately tools.

Humans, on the other hand, are real people. They are conscious. They carry hopes, dreams, desires, and a sense of meaning. They feel joy, pain, exhilaration, frustration, and love. For these reasons, humans have rights. Related, motivating a human to do great work takes more than commands or prompts. Importantly, humans remain capable of deep understanding and thought. Today, that also means humans are capable of higher orders of innovation and problem solving. If the day comes when AI beats us in some of these capabilities, I will continue to maintain that people have rights and a conscious experience that must be valued and must be considered when leading. Regardless of how our skills compare to computational machines, we are not tools.

Leading people and coordinating AI agent work require very different skills. We do ourselves a disservice overloading terms like “worker,” “workforce,” “boss,” and especially “HR.” I even cringe at the use of “AI manager,” but have come to accept that we’ve already adopted the word “management” for roles that don’t necessarily lead people—as in “Product Management,” “Vendor Management,” or “Budget Management.”

As we overload terms meant to refer to people, we exacerbate an all-too-common business problem: we generally don’t do a good job training managers to lead real people. We continue to need humans in business, after all; strong leadership remains an essential skill. Even before AI, we frequently created new leaders by promoting individuals who were productive using technology. We often let them fail in the radical transition from managing machines to motivating and aligning teams of people. The assumption that leadership skills can be translated from technical skills hinders innumerable first-line managers and founder CEOs. Organizations and investors assume the shift will be easy, or at least seamless.

In my experience, the shift is quite jarring.

An old story

In the early 2000s, I was a software and data engineer. My daily work involved understanding the key business problems from my leadership team, decomposing those into analytical questions, building data models, and moving the data through efficient extract-transform-load capabilities. I trained business analysts to query the data and present answers to complex questions.

Because I was a reasonably good engineer, and because I was increasingly versed in the data behind our organization’s business decisions, I was seen as a good candidate for management. I was asked to lead teams. The role started small, with a team of about five engineers that had previously been peers, but in the fast-moving machinations of a growing organization, I was soon leading over a dozen people.

I was exhilarated, panicked, and overwhelmed. Mostly, I was flailing. My software engineering skills didn’t translate cleanly to leadership. In those days, we used object-oriented programming. My immature mental model started with an assumption that my team members were instantiated “human objects” that could encapsulate their data, take inputs, process information with clear methods, produce responses, and make method calls to other “human objects” when some type of interaction was needed. If we needed another human in the same role, we could create a new object from the same class. Ideally, the class was a child for a parent class that included methods that consistently applied at the corporate level. Managing people was going to be very orderly and organized.

Leading People

Because this story is dated, it’s straightforward to recognize that object-oriented concepts aren’t a great foundation for managing and motivating real people.

Leading humans is a complex but ultimately more rewarding challenge. Because people have rich aspirations and are capable of out-of-the-box performance and radical innovation, leadership is less about defining the activities you want a “human object” to undertake and much more about describing a vision and motivating people to achieve it. This is very different from writing a computer program.

Eventually, I got support and made the transition. Since that moment in the early 2000s, I learned a few things about leading people.

I believe that when you set a vision, it should have multiple dimensions. It should center on purpose, because people seek and build meaning in their work. The vision should also include values, a customer definition, the core promise of the offering, a long-term future-state aspiration, an annual plan, and a breakdown of that plan into the near-term goals and targets. The vision needs multiple facets because people want to understand the plan from numerous angles. Some people are motivated by certain parts of the vision, and diverse people will attach themselves to differing dimensions.

If you want accountability to that vision, start with negotiation. Humans are more likely to align their actions to the vision when they are allowed to negotiate their commitments, matching expectations with resources. In fact, the annual plan that is part of your vision should be the product of an intense negotiation with your senior leaders. Accountability is then supported by a learning environment where activities can be debriefed, improved, and coached to better seek the planned outcomes.

As we pursue that common vision, we should also balance purpose with play.

By “play,” I don’t mean there are ping-pong tables in the office—although that might be fine—but rather that the work taps into a person’s “spark,” putting them into a flow state where time flies and higher-order brain functions do incredible work. To enable this sense of play, we match people to the right kind of work and then get out of the way—and get the organization out of the way—by eliminating distractions, interruptions, and red tape.

Fun blossoms when people are given freedom in a supportive environment. Part of leading is giving people space to be who they really are. By definition, fun cannot be mandated from up high. It happens when you celebrate the personalities and core capabilities that come to life. You align accountability by agreeing on the key outcomes that the organization needs, but not by directing specific activities. Activities and outcomes are related, but they are not the same thing.

Admittedly, some days, work won’t feel fun. People may arrive with troubles from their personal life—stresses, sadnesses, or priorities that are going to make those days feel less fun. Some parts of the job are just not fun for anyone, and yet some of that work probably still needs to be done. On those days, we recognize that purpose is the more resilient motivator, and this is another reason why the organization’s purpose must be the centerpiece of the vision. If the mission is upheld by leaders, understood by teams, and authentically supported in the organization’s decisions, then it aligns people even during hard times. It won’t differ between individuals. Purpose can be upheld in times of stress and during those moments when the job is less fun. This is true, of course, if and only if you consistently uphold the vision in daily management decisions.

Support fun. Align purpose.

Managing people is not at all like writing a computer program.

The Current Story

Engineering skills now include prompt engineering. With AI, we don’t much care about whether the model has fun. For our people, however, their sense of joy and freedom on the job is going to correlate strongly with their performance as information workers.

Some of the context we provide in a vision may be helpful in an AI prompt. However, this is different from defining purpose for a human. No doubt, an AI model has been trained in a manner that includes guardrails that serve as values that govern its output. For a human, however, a defined purpose can tap into the deep and important definition of their own sense of meaning, providing additional motivation that supports out-of-the-box innovation and problem-solving. More importantly, rallying around an agreed purpose values the human and helps them ascribe moral value to their own work.

The way we decompose and delegate work from a vision to a team of people may have parallels in the way we design AI agents and assign work to them, but humans perform best, and feel most valued, when delegation occurs through negotiations that start with offers or requests and iterate through resources and possible expectations of outcomes until there is an agreement. AI, on the other hand, is built to do what it’s told, in the manner that the model predicts will be best received. You may iterate and refine the prompt through an interaction with the AI agent, but you’re not negotiating. You’re clarifying a command.

Conclusion

My fear is that the seemingly human experience of interacting with AI is causing many to make the same mistake I made as a young manager—that leading people is like working with a computer. We are erroneously conflating the two and overloading terms meant to apply to humans.

They remain distinctly different skillsets. We should use different language. Let’s not call AI agents “the new workforce” and avoid describing the employees that utilize AI as “AI bosses.” Let’s especially avoid using the term “HR” for AI. In fact, let’s drop the term altogether.

Humans remain our greatest source of innovation.

Human quality of life remains an essential goal.

Leading people remains a critical skill.

People thrive with great leadership, and while businesses clearly need to embrace the power of technology, those with great people are still the most likely to succeed.

Leadership is acutely important today. With so much change happening in the job markets, our role as leader faces a major challenge. Human motivation is derailed by fear. Our ability to communicate vision through this massive disruption is essential.

More than ever, businesses, technologists, and even universities need to double down on the importance of leading and managing people. In parallel, we will propel our technology forward. The combination is going to yield incredible productivity improvements even as we undoubtedly will repeat, and learn from, old mistakes.

Let’s first agree on a working definition for “skip-leveling.” You “skip-level” when you negotiate a task with, or declare a material decision to, someone who does not report directly to you. This could be a team member who reports to a manager deeper within your organization. This could also be a team member who reports up to a peer of yours in the organization.

A Common Story

Imagine you’re a software engineer. A high-priority product launch has been decomposed into mature stories that are on your team’s backlog. Through sprint planning, your team has broken those stories into tasks and committed to a certain set in the current two-week sprint. You’ve assigned tasks to yourself and are heads-down cranking out code in your favorite IDE with your favorite AI coding assistant taking the boring stuff.

The CEO walks by.

He has a pet project.

He interrupts your flow and asks you about the pet project.

He asks how long it would take.

You reply, “Oh, only a few hours.”

“Cool. Thanks! Can you have that to me by end of day?”

Of course you can. He’s the CEO, after all.

At your standup the next morning, you describe “What I did yesterday.” That description does not, unfortunately, include any of the tasks from your team’s committed backlog.

Your scrum master describes the CEO as an impediment in the S2 meeting that afternoon.

A Director in that meeting goes to the Chief Product Officer and says, “It happened again.”

The CPO tells the CEO that the major product launch date is now at risk.

What happens next depends a lot on the personalities of the people involved, but regardless of whether there is a “mea culpa” or a “just work harder” outcome, the situation isn’t great.

The Problems with Skip-Leveling

In a functioning organization, team members are working from a set of commitments they have made to the organization through whatever governance processes are in place. Maybe they are working off a prioritized list in a Kanban process. Maybe, like in the example above, they are pushing through sprint commitments in a Scrum process. Maybe they are maintaining service levels on a volume of requests where they follow Standard Operating Procedures (SOPs), seeking high operational excellence and low response time. Whatever process is in place, there is a strong likelihood that the people in your organization are working at full utilization. That should typically be your first assumption.

Sure, it’s often possible for a team member to take on a small amount of additional work without impacting their core commitments. It’s reasonable to ask people with expertise, authority, or access to do things. In many cases, you might have an assumption that the team member will inform their manager of their workload as it evolves.

However, you probably do not recognize the actual impact. You might not like the actual impact if you were aware of it. And if the manager of that individual doesn’t like the impact, but you are senior to them, you put them in the tough spot of either overriding your request or spending a bunch of their time working out how to reconsider priorities and manage the impacts.

If you are making a clear request to an individual in an organization that deviates from standard process and represents a reasonably large commitment, you are going to derail the process.

This doesn’t only apply if you are the CEO. If you are a Senior Manager, Director, or Executive, many in the organization are going to see you in a position of authority and power. If you make a request or decision that impacts someone’s core commitments, you are setting them, and their manager, up for failure. In fact, you’re setting your entire organization up for failure.

There is a simple way to avoid this. Include the manager in your request and let them be part of the decision about whether or not to accept the request. In fact, if you are asking for priority, let the manager make the decision, and include the team member who would do the task only as an FYI.

If you have multiple layers of management between you and the person you are asking, include them all. This may seem excessive, but if you leave out a key manager, you run the risk of putting something, or someone, at risk of missing their commitments. If this list of managers gets long, your sense that the list is excessive should be a cue that you’re probably making a very clumsy request. Find a different way to delegate, and at a higher level!

This is also true if you are reaching into someone else’s organization. If you are making a request of a peer, you can make it directly. If you are making a request deeper into an organization managed by a peer, include the peer and any layers of managers that are between your peer and the individual taking the request.

Exceptions

You don’t need to follow this advice if:

· You are making the request to an established intake process. If you’re creating an IT Helpdesk ticket to look at an issue, that’s a clear workflow that is already resourced. Including managers in the request is silly and will make the request look like an escalation.

· You are leading an established working group, subcommittee, or club in the organization. In this case, the individual’s membership in the group should have gone through some kind of manager approval or “heads up” process, and the group’s activities are understood to be part of their time commitment.

· You are responding to a request from an individual already working on a task. If they need clarification or decisions and they request it as part of their existing workflow, you can respond, of course.

· You are an Incident Commander assigned to lead an approved Incident per your Incident Response Governance Process (or the equivalent). Organizations should have a clear process for handling high-severity incidents. That process usually includes an approval body that can create a declared Incident, assign an Incident Response Team (including an Incident Commander), and communicate the Incident to the appropriate level of management. An Incident is typically allowed to override existing business-as-usual priorities. If you are the Incident Commander, it is reasonable to request actions from anyone in the organization. As a matter of formality and courtesy, however, it is still a best practice to include the management chain of any individual receiving the request.

Summary

Leadership roles carry the appearance of authority and power. Be careful to ensure your positional influence doesn’t conflict with, or confuse, the delegation and governance processes actually in place to coordinate work across the organization. Avoid “skip-leveling,” and include managers in any request or material decision that impacts the priorities or workload of people who don’t report directly to you.

In the “Knowing Why We Lead” article and throughout this series, we’ve foundationally rested leadership practices on human motivation, with the underlying recognition that we want work that is fun and purposeful.

Since writing that early article, I more deeply appreciate how important it is that we enjoy our work. Indeed, the Total Motivation framework weights “play” as the strongest intrinsic motivator (see linked article above for more comments on Total Motivation and links to the source book, Primed to Perform).

I’ve been recently inspired by a new book by Bree Groff titled, Today Was Fun: A Book About Work (Seriously).[1] She dives into what a “fun” day at work really means, what practices can help, and what can get in the way. Suffice it to say that a fun day at work doesn’t simply mean you took time to play a game of ping-pong or foosball, but that the work itself was enjoyable, which likely also means you are doing the kind of work that hits your “spark,” you enjoy your teammates, and you work in a structure that allows you to authentically bring your true self to the job.

As leaders, creating spaces in our workplace where our people can realize this positive joy should be central to how we structure our workplace.

However, while “Play” may be the strongest motivator, it has some notable differences for leaders than “Purpose.”

Play is individual. It differs by person. Enabling fun is often about granting freedom for your teammates to explore and innovate in their own particular areas of interest. As a leader, you then get out of the way and serve your team by trying to remove extrinsic distractions and barriers.

Play can be brittle. There are days when the realities of home or the job mean that some parts of the job won’t feel fun.

Purpose, on the other hand, should be shared by all of the team. It is a unifying motivator.

Purpose is also resilient. Our sense of purpose should carry us through even the days when work doesn’t feel fun.

I’m not arguing that anyone should take a job that has purpose but is seriously unenjoyable because it doesn’t match your personality or offered in a toxic culture. Purpose shouldn’t override our need for a sense of joy, but it can certainly carry us through bumps in the road.

For these reasons, this series has focused on embedding Purpose in the center of Mission and Vision to create a common, shared goal.

Simultaneously, whenever you can make the work fun, you’ll create more enjoyment and see better results.

The Responsibility of Leadership

All of these principles of motivation apply to ourselves as well.

Hopefully, leadership is a job that brings you joy and satisfaction. Aligned with the Purpose and Vision you declare for the team, your own motivation to leadership should be grounded in Purpose.

That Purpose should be steady and carry you through even bumpy times. You share that sense of Purpose with your team. The search for joy, however, increasingly becomes your own responsibility.

The higher you ascend in leadership, the more important it is to proactively structure your days to enable your own sense of “play.” As you move up the management chain, you have more authority and autonomy and likely less support; your increased scope carries an assumption that you’re able to take care of yourself. If you are CEO, the personality of the Board of Directors may help or hinder your sense of fun, but generally, your Board’s responsibilities don’t include structuring your work for your happiness. Your ability to enjoy your work is up to you.

At the same time, as you move into more senior roles, the stresses generally increase. You are hopefully delegating credit when your teams achieve great outcomes, but you also hold ultimate accountability for all outcomes, even the misses. You will increasingly feel outside forces from happy and unhappy customers, market changes, financial realities, and the significant risks that you’ll manage and mitigate. Compounding the strain, mental stress can lead to physical ailments. Maintaining mental health in the face of these pressures becomes increasingly difficult, and yet it is unavoidably imperative.

Indeed, your ability to lead effectively is rooted in your ability to return to your higher-order brain functions. When you exhibit “adaptive performance;” when you operate out of your “thrive brain;” when you are working in a way that you are triggering true inspiration accompanied by joy; then you are going to catalyze great results in your leadership. Specifically, a “thriving” leader sets a clear vision, negotiates clear expectations, coaches to great performance, holds consistent accountability, learns from iterations, celebrates wins, and achieves outsized results. These moments are exhilarating!

Thinking back on my own performance when I was stressed, and what I’ve seen in other managers that were struggling, the behaviors are quite opposite. A “surviving” leader defaults to randomization, constantly shifts expectations, uses a directive “do what I say” style, rewards only the people they like, looks for mistakes, blames people for failures, and achieves varied or even fraudulent results.

Clearly, you want to have the skills to navigate your way out of the low-thought, quick-action survival brain that tends to take over in times of stress.

This need to care for our mental health is not a sign of weakness. It’s not a distraction from “real work” that needs to be serviced just barely enough to allow us to “get back to work.” Our mental health is, first and foremost, the central experience of our daily life. A sense of purpose may drive you through periods of stressful experiences, but eventually your joy and agility are essential not only to your performance as a leader, but to the core quality of life that matters most to you each day and, someday, on your last days as you look back on your life.

The Habits of Mental Health

So, what should we do?

First, we must commit to monitoring and maintaining our mental health just as we do our physical or financial health. That’s easier said than done. Somehow depression grabs us in a way that convinces us that we need to hold it in our own embrace. Anxiety may start because something particular worried us, but the feeling can build until we are anxious about everything. In my experience, degraded mental health can feel like an addiction. We cling to the “bad stuff” and spiral downward. Your family, mentors, and peers may help you recognize the situation, or you may be on your own. Your commitment to waking up and making the conscious decision to move forward and upward can be the best habit you ever form.

As you step into this journey, you find the practices that help you restore your equilibrium and find the path back to the space where you find joy.

For me, walking is my primary path to introspection, acceptance, and even inspiration. The bi-lateral motion of walking, coupled ideally with fresh air, the sounds of birds, and views of trees, grass, or a changing sky, has repeatedly helped me return to inner peace and clarity. In crux moments, long twenty-plus mile walks have allowed me to make the most important career decisions of my life.

My own art is music, and an improv session at the piano or guitar can settle the dirt out of the puddles of my brain, expressing my emotions with a renewed clarity that allows me to move forward.

Breathing exercises have helped, and they have the benefit of being something you can do in the workplace, often without anyone noticing. The simple practice of observing your breath and feeling the wind of each inhale and exhale in and around your nose can be magical. If you have a moment, a few repetitions of 5-5-5-5 breathing can be great. Breathe in for a count of five, hold for five, breathe out for five, and hold the exhale for a final count of five. Repeat.

A life coach or counselor has helped me at times. If you feel you need that help, find it. If you’re carrying demons from your past, or if you’re struggling with relationships with your spouse, your kids, or with others, a counselor can be a great asset.

Find the techniques that work for you and keep seeking out new ones as a life practice. There are a broad array of books, coaches, and practices available. Prayer. Guided meditation. Volitions. Tai Chi. Yoga. Exercise. “PQ Reps.” Simply feeling your feet on the ground. Feeling the wind on your face. Listening to your breath.

These pathways to your higher-order way-of-being are important first because they make life great. They are also essential to performing well as a leader.

Summary

Practices for mental health may sound trite because, indeed, they are straightforward and should be easy. The hard part, in my own experience, is first recognizing when I am stressed or unhappy. The second part is letting go of the emotions and attachments that are holding me in the stress. If I can do these two things, the third step is the easiest: performing a restorative practice that I know works for me.

What works for you?

[1] Groff, Bree, Today Was Fun: A Book About Work (Seriously), Page Two Books, Inc., 2025.

In today’s environment, your “digital health” is increasingly important.

By “digital health,” I mean the “virtual you” made of all the 1s and 0s that you leave behind like a trail of digital DNA.

Here are a few rules to follow.

Passwords

Use strong passwords. Length is most important. Use some reasonably long phrase that is memorable to you but not easily guessed by any other person or machine. “PearsRYummy2MeWhenRipe” could be an example. Length matters more than special characters, although some sites still frustratingly require special characters.

Don’t write down passwords in a notebook you carry with your laptop. Don’t put them on sticky notes hidden under your keyboard. Don’t reuse your important passwords across accounts. If it gets stolen from one account, you don’t want a bad actor using it on other accounts.

A simple way to follow these best practices is to use a good password manager to take care of all of this for you. It will make strong passwords for you that are unique across all the sites and apps you use.

Multi-Factor Authentication

Strong passwords aren’t enough. Always use Multi-Factor Authentication (MFA) that requires at least two factors from the set of what you know, what you have, and who you are.

The two factors could be a password and facial recognition.

Some standards suggest the factors could be something you are (facial recognition) and something you own (like your phone)—but if you are kidnapped or physically held, a malicious actor could force your phone open by pointing it at your face. If that is also how you protect sensitive apps inside the phone, that’s not great. Your face and your phone may be two different factors, but they are likely to be in the same place at the same time. (Did you know that hitting the side button on your iPhone six times in a row disables facial recognition, requires the PIN, and allows you to easily place an emergency call?)

MFA is most often a password and a one-time code you get from an authenticator app, and this is fine.

Some sites still use a password and a one-time code that is texted to you, but whenever you can, avoid this method. It’s becoming increasingly trivial to “steal” a phone number by fraudulently acquiring a SIM card or intercepting SMS text messages some other way. At the same time, I realize many financial institutions still rely on this as their primary form of MFA. Every time I can, I remind them that they should upgrade to support authenticator apps. If you want to join me in making that demand, I welcome it!

The Permanence of Digital Memory

Importantly, know that ANYTHING you type into a digital device could someday be the headline of a newspaper. Text messages, documents you store in the cloud, pictures you post on social media, and recordings you (or someone else) make of your voice can be stored, stolen, and potentially subpoenaed.

If you have a voice-recognition device around you, which is becoming nearly ubiquitous, the things you say around those devices fit into this bucket.

Act as if you’re on stage whenever you are leaving a digital record. Limit what you share on social media.

Social Engineering and Deepfakes

Be alert to social engineering. Keep up on the latest techniques that the “bad guys” are using to separate us from our money, assets, or identity. You’re likely getting a constant stream of emails, texts, and phone calls from bad actors. With generative AI, those messages have increased in quality. No longer can we rely on typos or bad grammar to set off our internal alarms. We have to raise our guard even higher.

Be aware that you may soon get a social engineering call from a “family member.” You’ll hear their voice. You’ll maybe see them on video. If your grandchild FaceTimed you and told you they were scared and they were being held for ransom, would you pay it? If your CEO made a video call to you with the CFO beside them asking you to wire money, would you? These calls can be deepfakes, and it’s getting increasingly easy to put those together. Talk to your family and colleagues about ways to compensate. One method is to hang up and call the person back—if you call their phone, it’s less likely that you’ll be connected with a deepfake. Some families and organizations have code words—if you don’t hear the code word, then it’s not actually your family member or colleague talking to you.

Backups and Storage

Make sure your important information is backed up. Cloud solutions make this easier than ever. If your data is on OneDrive, Google Drive, or Dropbox, they should be making backups for you, and yet I see many of you still storing files on your local hard drive with no cloud sync.

With some subscription services, you can go back to earlier versions. Check whether your storage service allows you to recover from ransomware—i.e. malware that encrypts your files and demands a ransom to decrypt them.

Set your devices to use disk encryption. That way, if they are stolen, it’s simply the device you lose—not all of your data.

Basic Hygiene

It makes sense to freeze your credit with the three major bureaus—Experian, Equifax, and TransUnion. This can prevent a malicious actor that has details about your identity from opening new accounts in your name. You can temporarily unlock the credit report if you need to legitimately apply for a loan or credit card.

If you are the admin of your PC or your entire family’s set of PCs, consider separating your standard account from your admin account. This reduces the risk of any malware you might introduce from running with full privileges.

Always patch your devices—your phones, your laptops, your computers, your smart TVs, your digital watches, and your home routers. Any time you can set an operating system or app to auto-update, do so.

Summary

Again, none of these rules are novel, but the basics are imperative. Stolen identities, extortion, and theft are only going to add to your stress. If you said the wrong thing in the past and it is now in the press, it may get in the way of your future career.

As a leader, and really as any human in today’s world, your digital health is a key asset.

Some of you are cybersecurity experts. What else would you add?

As we continue our conversation about vitality, let’s talk about financial health.

In the United States especially, we are ultimately and increasingly responsible for our own budgets, our emergency cushion, our healthcare, our retirement plan, and pretty much all aspects of our financial health. Your employer may help you with these things, but we change employers throughout our life—sometimes voluntarily and sometimes not.

Career plans, especially during times of change or opportunity, involve risk. For example, multiple times I have shifted from the safety of salaried work to potentially more lucrative and interesting consulting gigs that paid hourly under contracts that could be terminated at any time. I’ve reinvented myself from a software engineer to a manager, going from an area I knew deeply to starting over on my skill journey. I later excelled as an executive leader at a major bank and then shifted to embrace the major risks of the startup world, abandoning a strong compensation package to take a CEO role that paid less in the first year than what I invested in capital. Some of these bets paid off. Some didn’t. It was exciting and ultimately rewarding, but many of those steps would have been impossible if I hadn’t felt confident that my finances could land me on my feet even when a particular bet did not pay off.

If you are comfortable with your financial health, you have the chance to take bigger risks that may yield larger benefits, both in your personal development as well as potentially your pocketbook. On the other hand, if you do not have financial health, you’ll avoid risk. Worse, the stress of personal financial issues may make you unhappy at home and ineffective at work. Leaning back into the concepts of Primed to Perform[1], if economic stress becomes the reason for doing your job, you’re not likely to exhibit strong, adaptive performance.

Let’s focus on the basics. As in the conversation about physical health, I’m not going to announce a new gimmick or secret. Rather, I’m going to re-iterate the basics we all should be doing, and yet so many of us miss.

Cash Flow

On one hand, financial health is about cash flow. If you live above your means, using large mortgages, home equity loans, auto loans, retail loans, and credit card debt to spend big today but pay later, you become locked into your need for steady income. If you had a chance to reinvent your career into something brand new, fulfilling, and potentially more rewarding, could you take the risk that you’d fail and lose the job? If you had a chance to take a low-paid, high-equity gig with a promising startup, could you make the bet? If you wanted a sabbatical, could you take that precious time off? If you hit your desired retirement age, can you ever stop working?

Net Worth

On the other hand, this is also about building net worth over time.

Every financial planner will tell you that you need an emergency fund. You want to be able to cover six months of expenses. Some would suggest you have enough for twelve months.

You also want to generally know you’re growing your nest egg. Just a couple years out of college, a good friend of mine told me over a beer that he measured his net worth every year. I thought he was crazy. We were young! Figuring out my net worth would be a cumbersome and vain exercise, I thought, but he convinced me to try. I opened Excel and wrote down my bank account balances, my IRA balance, my 401k balance, the value of my car, the value of my home, the liability of my mortgage, and any other debt I had (at the time, I had nothing beyond my mortgage). It all added up to a pretty small amount, but I was only 25 years old.

Importantly, I measured my net worth again when I was 26. The value was a bit higher. That was a burst of endorphin for me.

I started to have an intuitive understanding of my net worth, and as I made decisions about my life, my job, my purchases, and my investments, I thought about each action in terms of that annual measurement of net worth.

Thus I created the game theory that eventually would allow me to retire.

Notably, to the mid-20s-me, it also gave me confidence that I could take risks with my career. Those chances sometimes paid off with larger rewards.

Compounding Returns

The focus on net worth is largely meant to get you on the right side of compounding interest and returns.

If you have more debt than investments, you’re on the wrong side. Compounding interest is dragging you down. Each step forward first has to recover from the step you already took backwards as you realized and paid interest on your debt. Every dollar you try to save goes instead to servicing a burden. It’s a highly stressful way to live. If you’re in this situation already, then your first job is to get out. I’ve seen many friends saddled with credit-card debt, and when they climbed out of that hole, they were elated. It takes time, but it’s important to be persistent. Pay down that debt.

However, if you’re building savings and investments, the process works exactly the opposite way. That nest egg starts to grow on its own. Over long time periods, that growth is really significant. And the more you save and grow, the more upside you’re likely to see.

If your nest egg is large or complicated enough to need a real financial advisor, go find one. If you’re young or early in your savings, there are some simple rules.

Money you need near term (like an emergency fund or savings for some goal in the next year or two) should be in a low-risk savings vehicle—like an FDIC insured savings account.

If your money won’t be needed until much later, for example in retirement, you can usually earn better returns by taking more risk. A diversified fund of stocks may be the right choice, maybe with some mix of bonds.

The longer the time horizon, the more likely it is that higher-risk investments in the stock market through things like ETFs or mutual funds are going to grow your nest egg.

That said, you need to know your own risk tolerance and behavior. If a drop in the market is going to freak you out and cause you to pull your money out at exactly the wrong time—when the market is down—then you might want to think about lower risk vehicles like bonds. My general comment is this: if you get on the roller coaster, be prepared to ride the roller coaster.

There are plenty of financial planners and investment advisors that can help you honestly assess your appetite for risk. Once you know your appetite for risk, you can make more complex net worth decisions like whether you want to pay down a low interest mortgage or instead put the money in the market where you have the chance—but not the guarantee—to earn higher returns.

If you seek out an advisor, find someone that acts with a fiduciary duty. If they are paid by selling you things, that arrangement is likely a conflict of interest. Financial planners and advisors that are paid hourly are simply being paid for their service. That’s pretty straightforward. Advisors that earn an asset management fee are typically getting paid a lot more, but that arrangement is more likely to align their interests with yours. Do that math, however, and ask yourself if their fees are worth the level of service they are providing.

Let me wrap up this section by summarizing the main point: you need to get on the right side of compounding interest and returns!

A Shared Financial Plan

These basic rules, combined with some clarity on your own hopes, dreams, and goals, form the foundation of a financial plan. We each have our own vision for our best life plan. A written financial plan can support that life plan, and a financial planner can help you put one together.

If you’re married, this is all the more important. I was part of a Vistage group of CEOs. We did issue processing every month, and once in a while, a fellow CEO would bring up a personal issue. I can’t tell you the number of times the root cause of an issue with their spouse was the lack of an explicit financial plan! As I did, many CEOs take big risks with a deep investment in their own company with both their actual money (their financial capital) and also in their time (their human capital). If a spouse isn’t aligned on that risk and reward profile, that’s a real problem. The bigger problem I typically saw, however, wasn’t that there was clear disagreement on the plan. Most often, our issue processing uncovered that the spouse simply wasn’t aware of the plan. If you’re a CEO that brings home only $60k a year but fully owns a small company that holds $5M in cash and may someday sell for something between $0 and $50M, walk your spouse through the scenarios!

If you read my earlier post on “How a Start-Up can End Up,” you’ll likely catch the hint that we “landed the plane” at my prior company, but I didn’t personally walk away with any big cash infusion. However, I had followed the above rules, and even as I put in many hard and emotionally valuable years, my nest egg was working for me in the stock market. It is for those reasons that I could take a sabbatical, and why retirement is an option. When I entered my sabbatical, I authored a complete plan in Excel. I shared that plan, and our potential retirement plan, with my wife in immense detail.

Make it Easy (and Fun If You Want)

The steps are meant to be habits. They should be easy once you get in the groove. Notably, this is NOT about researching and picking stocks or individual investments. I hold the CFA® credential, and if there’s anything I learned in the intensive studies required for passing those exams, it is that great analysts don’t regularly beat the market. On average, a fund advised by a manager that seeks to beat the market is going to cost you more in fees than they earn in additional returns. If experts can’t consistently get it right, what chance do you have?

More importantly, what does this mean for you? It means that, for the most part, you’re likely best to pick a basket of low-cost index funds in the form of diversified ETFs. Tools on major investment websites can help you do this. A low-cost automatic portfolio that rebalances periodically and seeks tax efficiency is likely to make sense. If your balances are high enough, you’ll likely even get access to a CFP, and if your balances do become significant and more complicated, that planner can help you allocate your investments in tax efficient ways. The overall point is to make this easy on yourself. Don’t feel the need to pick stocks. Don’t try to time the market. Definitely don’t let your emotions drive your market timing. Make this unemotional.

I do have a caveat. If you like tinkering in the market, if you enjoy picking stocks, and if you take some joy in telling your family, friends, and colleagues about the times you beat the market or lost your money, then my suggestion is to open a “Cocktail Party Account.” This is the account where you make or lose enough money to talk about it at your next cocktail party! My general rule of thumb is this: Keep it to a small amount, maybe a $5,000 starting balance or 5% of your liquid assets. You can pick stocks in this account. You can invest in options. If your net worth is high enough and you hit the bar for being an accredited investor, you can pick angel investments in small startups. Don’t “go naked”—don’t invest in things that can lose more money than you put in. Do feel free to have fun and learn. Maybe you’ll get lucky. If this cocktail party fund outperforms your core portfolio, feel free to use it as spending money or double-down on your cocktail party investments. If it loses all its value, talk it up—you’ll have a great story. You might periodically replenish the fund if needed, but don’t let this cocktail party drain your net worth. This is the side show. Picking your own stocks in your core portfolio is not generally the best practice.

Knowing When Enough is Enough

These practices are important, but our life is not ultimately about the accumulation of wealth. Our finances should support our life goals and desired lifestyle. If you are at a point where you’ve built a nest egg, don’t be afraid to enjoy it. Take those trips. Consider a sabbatical. Potentially shift your work away from that which makes you money towards that which matches a higher sense of purpose—even if that purpose is relaxation and fun! While many of us may be shy of the kind of wealth discussed in the book, Die With Zero[2], there should come a time when you can enjoy your financial health. Don’t wait too long. Some of your bucket list items may be more enjoyable when you are younger. Whether it’s retirement or early time off, don’t let these financial rules become bigger than the dreams they enable.

Summary

Nothing here is rocket science. Just like with your physical health, your financial health is generally the sum of some basic practices. If things get complicated, experts are available.

To summarize:

• Set yourself up to be able to take risks that can bring rewards with your career and your assets

• Be mindful of your cash flow

• Measure your net worth at least once a year

• Build a financial plan as your life gets more complicated

• Talk to your loved ones about your shared plan

• Enjoy your nest egg while you can

That’s it!

[1] Doshi, Neel and McGregor, Lindsay. Primed to Perform: How to Build the Highest Performing Cultures through the Science of Total Motivation. HarperCollins, 2015.

[2] Perkins, Bill, Die With Zero: Getting All You Can from Your Money and Your Life. Mariner Books, 2020.

As we explore multiple dimensions of health, let’s start with basics on physical health.

I’ll begin with a short story. I was early in my career and deep in a project I was leading. I put in long hours, eating whatever snacks were available and augmenting my diet with what could be delivered. I skipped workouts because I couldn’t afford the time.

This continued into a second major project.

And a third.

I was excelling at work, but when I looked in the mirror, I suddenly didn’t like what I saw. It wasn’t just the weight I was putting on. The look of fatigue in my face caught me off guard.

I was self-aware and self-confident enough to realize I wouldn’t let those trends continue.

My immediate thought? “I need to quit this job.”

I knew enough to “count to ten,” by which I mean I slept on it. It occurred to me that it was ludicrous and counter-productive to quit. I simply needed to draw a non-negotiable line in the sand. I would schedule my workouts and refuse to let them be overwritten. If my employer had an issue with that, I would make my case and let them put my job on the line. But I’d stay on my side of that line in the sand.

Of course, my employer didn’t have an issue, The company had a gym. The CEO encouraged people to use it. He wanted his staff to stay healthy. He brought in a nutritionist for an educational session. The health degradation was the result of my own expectations of excellence—or a lack thereof, as it turned out.

In that brief moment in time, I learned so many lessons.

First, it’s okay to put your health first. In fact, it’s imperative. If you’re unhealthy, it’s hard to be happy. If your energy level slips, you’re more irritable. You’re a less enjoyable teammate. You’re less productive. In extreme cases, you miss long stretches of work because you’re sick or, worse, in the hospital. You might shorten your life. You only get one of those, so don’t waste it. You’re no use to your employer when you’re dead. More importantly, your job is no benefit to you if it kills you, figuratively or literally.

Second, the rhythm of good habits is essential. I’ll quote my late uncle, Bayard Johnson, from his book Damned Right[1].

“You get good at what your practice, so you got to be real careful what you do, because you’re always practicing. You got to start off doing what you want to end up doing. Otherwise you get real good at what you start off doing and forget where it was you wanted to get to.”

Pretty straightforward, right? Healthy habits are not habits if you repeatedly let them slip. If you keep putting off the workouts, that will become your ritual. On the other hand, if you stick to the workouts, you’ll find you continue to get better at keeping them! Avoid the big New Year resolutions that last only six weeks. Choose realistic, incremental habits that you can keep FOR THE REST OF YOUR LIFE. Then, hold on. Sure, if you have a plane flight, you may not exercise at your normal time—but when you land, it’s pretty easy to hit the hotel gym and shower when you arrive. Certainly, don’t let the pressures of work interrupt those habits. You can adapt, but don’t disrupt the promises you make to your own body.

I’ll share a related story. In my former days at Capital One, I was invited to fly to Arlington for a one-day intensive at digital lab. I flew out late in the afternoon, landed around 10pm at Dulles, and expected to be in meetings all day the following day, followed by dinner, and an evening flight home from the Reagan airport. Assuming I’d have zero time to exercise, I packed a small bag. I was surprised when our meetings wrapped up early, and I had two hours to fill before dinner. I giddily observed that it was a perfect 75 degrees outside, with low humidity. Why had I forgotten my running gear? How had I been so stupid?

In a moment of inspiration, I asked my driver to stop by a running store I found on Google maps. I needed new shoes anyway—my existing shoes were due for replacement. I purchased shorts, a t-shirt, socks, and new shoes and put them to immediate use. Those shoes have been replaced numerous times, but I still occasionally wear the shirt I purchased. It says simply, “Run.” That’s what I did. My new rule became: never leave home without running shoes!

I’ll add that running or walking is an amazing way to get to know the cities you’ll visit. I’ve learned so much about DC, Nashville, Boston, Central Park, Dallas, Scottsdale, San Francisco, Disney World, and even my home town of Seattle by exploring neighborhoods while exercising. Bring your shoes!

The third lesson I learned is that, if you’re in leadership, your team is watching. If you skip your workouts and eat trashy food because you won’t take the time to prioritize your health, they’ll feel pressure to do the same. On the other hand, if you take time for the workouts and nutritious meals, you give your teammates permission to do the same. Your habits can be contagious—in good or bad ways. Importantly, in the example above, the CEO’s permission to exercise and eat well was exactly the kind of leadership that allowed me to make better choices.

I’ve stuck with those choices and habits since that early day in my career.

Sure, I’ve adjusted my habits over time. When I turned 40, I resolved to stretch after every workout as I realized that I needed not only strength and cardiovascular health, but also flexibility. I’ve also had to reduce calories each year as my body has changed. I’ve shifted my diet.

I’m not saying anything new here, I realize, and yet I need to say it. Leadership is full of intense joy, constant tests, and occasionally deep stress. No handbook of principles is going to make you a great leader if you’re too unhappy or mentally muddy to arrive on the leadership stage with a clear head. Healthy habits are pretty simple, so don’t make them complicated. The point is that you simply need to make them non-negotiable.

Start now and never stop.

[1] Johnson, Bayard. Damned Right. Black Ice Books, 1994.

It was summer. I fell asleep at 10:30pm. My brain turned on at 1:00am. Our financial forecast said the company would be out of cash in three days. In fact, we only had $3,000 in the bank, which was a rounding error from zero for a company that typically spent over $1,000,000 per month. We averaged nearly as much revenue, but customers pre-paid their bills annually, and our big cash months were behind us. The projection for the next few months was tepid.

We had seen this coming. We worked closely with our board and key investors. We’d been communicating our cash situation to our lenders regularly, and they were in nearly constant communication with us. We’d always shared our cash position in investor communications. And we had taken action. We were managing payables with a tight fist. We studied our receivables regularly. We’d made cut costs again, which meant we’d also cut jobs again. We were nearly complete with a year-long technology migration that would save a million in annual spend. That still wouldn’t be enough. We’d need to cut costs more deeply.

We’d hoped to avoid this moment, but two potential suitors had left us at the altar—not because of anything they found in diligence, but because that’s how the M&A market was being played. In the economic culture of the day, it was common to abandon or re-trade deals in the final minutes as a matter of habit. But we had a contingency plan. We weren’t giving up.

We had prepared a potential recapitalization that would provide the minimum cash to survive more restructuring. It would take a lot of investor communication and require board, investor, and lender approvals. It would push down equity-holders and necessitate another round of significant cost cuts that would jeopardize the long-term survival of the business, but we’d live to see the end of the year, and likely even a couple more. The proposed budget wouldn’t cover my own paycheck, so I was preparing to resign my CEO role and take an unpaid board position, mentoring an existing executive in the business to replace me. Sometimes you just need to survive long enough to find your way out of the dark. Maybe with more time, we’d find the innovation that would change it all.

The recap was on hold, however, because we had yet another offer to purchase the company. It seemed credible.

We had a few options, but the forks in the road were nuanced and all led to a simple reality. The company was in trouble. Investors were not going to realize any upside—every class of equity, except maybe the most recent convertible note, was unlikely to see even a return of capital. Employees were stressed. Customers were asking hard questions, but fortunately our options all centered on an ability to service their contracts. Only our mezzanine debt lender had anything left to gain or lose, so we expected that we could count on them for modest support. However, it wasn’t a rubber stamp. The pathway ahead would be difficult, regardless of which one we chose. Somehow, we had to find the best one.

My head was spinning. It was hard to think clearly. I was mulling over our recent round of layoffs and the impact on morale and productivity we had already absorbed. We had fewer people doing more work, and they were tired. I was tired too, but not tired enough to go back to sleep at 1:00am.

I needed to make sure the company made it through the next three days.

There are times when a few hours of intense thought are worth much more than sleep. It wasn’t bad that I was awake again. Part of me was built for this moment. Indeed, there are times in human history where a bear has chased a person through the woods, and human bodies can be good at pushing hard in times of stress. I’ve been lucky that my biological response is “fight” and not “flight” or “freeze.”

But no human body is built to run from predators all day, every day. This was not my first sleepless night. I couldn’t keep this up forever. We needed an answer to our bigger questions, and first we needed an answer for the next three days.

I spoke to peers regularly. It wasn’t uncommon to hear them say, “Just get out.” The macroeconomic pressures were conspiring against us. We had a great company, but we lacked the scale it took to break out in an increasingly competitive market. My own economic interests had been so diluted that it didn’t make sense to stay for the money.

I stayed for other reasons. We had extremely important customers in critical infrastructure. We had incredible employees. We had a powerful culture based on the meaning of our work. We had good investors. I wasn’t a quitter. I needed to find a viable home for the company. We talked a lot about “landing the plane,” even as we were running out of fuel.

I turned the situation over and over in my head for the next four hours. By 5:00am, I had a plan for my next immediate steps. I wrote them down and then found an hour of sleep.

Without disclosing details, let me simply say that the plan had its intended effect. We avoided the most egregious outcome—bankruptcy. We kept the company solvent and got to the transaction that landed the plane. Customers had a larger home. Our vendors had a home. Some employees had a home, although admittedly not all of us. Our loan obligations were satisfied, albeit with some cooperative creativity.

Sometimes you adjust what you call success. This outcome was not one we had originally envisioned, but it became the best route on a chart covered in dirt roads, dark forests, and cliff-drops.

It had been a long journey. While we had once been accustomed to doubling in size every year, we had turned to simply surviving. While we had once rapidly accumulated new customers, we focused on keeping and servicing our existing ones with care. We maintained our focus on Mission—that never changed; our employees knew their work mattered. But when the focus of available capital flipped a switch in 2021 from growth to profitability, we moved from hiring to cost cutting. We transitioned from bragging about CAGR[1] to fireside chats about difficult decisions. We had impacted many people, and in the end, some of those impacts were painful. We cared for each other as best we could, but it was easy to believe the work sucked.

In truth, the work during that time period was fascinating, but the stress made it hard to see it. Yes, the intense issue-processing was an incredible education. But was hard to celebrate, even when we made the right choices. After so much turbulence, putting the plane on the ground was a relief, but it wasn’t the destination we’d first envisioned. It would have been easy to fall into despair. Much of my own attention had turned to staying in the right state of mind so I could keep doing the work for the right reasons. I needed our team to solve problems, and for that, I needed to lead with a positive mindset. Repeatedly, I focused on what mattered. I focused on our people, our customers, and—as best I could in the circumstances—our investors. I focused on the reasons I cared. Importantly, I focused on my own vitality.

I will use the next sections to talk about basic practices across a few kinds of vitality. Potentially, a true Sage can stay in their “Thrive Brain” through any and all challenges, but for most mortals, there are some basics where care and attention can go a long way to lessen external pressures. Leadership brings unavoidable stress, and if you can get other parts of your life in order, you’ll be more likely to succeed when you need to find your way back to your healthy mindset.

In the next articles, I’ll discuss:

· Taking care of your physical health

· Taking care of your financial health

· Taking care of your “digital health”

· Taking care of your mental health

This basic groundwork is essential. Leadership can be exhilarating, and it can be exhausting. We all have personal issues, but it goes without saying that a poorly maintained body, a personal financial crisis, a stolen identity, or a head full of personal demons is only going to add to your stress.

On the other hand, a foundation of healthy practices can help you face the tough times of leading with a clearer head and positive attitude.

Said another way, upholding your vitality is implicitly part of your job description.

This article is based on a retrospective, anonymized experience from a leadership role in a former company. It is shared for educational and reflective purposes and does not represent financial or legal advice.

[1] Compound Annual Growth Rate

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Managerial Styles

15 years ago, in the Leadership Experience program at ING DIRECT, I had the opportunity to participate in a Managerial Style assessment provided by the Hay Group[1]. At the time, they categorized the styles as Directive, Visionary, Affiliative, Participative, Pacesetting, and Coaching. We talked about the merits of each style, and while my assessment provided personal insights—like my predisposition to Pacesetter and Participative styles (which wouldn’t scale well)—my key learning was that each style has a place and a time where it works well. Conversely, each style has situations where it will struggle. A strong Leader needs to be able to operate in each with fluency, and most importantly, know which style to apply to the current moment.

In 2010, our conversations concluded that a combination of a Visionary style (see my earlier Flannel CEO article on “Setting a Vision”) combined with a Coaching style (see “Accountability, Authority, and Negotiation”) should be foundational for a CEO or Departmental Leader. They scale well and are suitable for moving large organizations forward while allowing space for innovation and problem-solving at the team and team-member level.

However, if you have a Severity 1 Business Continuity incident, which could be a massive earthquake at your headquarters location, a broad system outage, or a gunman in the building, Visionary and Coaching styles are likely to be too slow. These styles tolerate mistakes and allow iterations. A Directive style from a named Incident Commander is probably going to serve you better.

Being Affiliative (the “nice” manager) can amplify Vision Setting and Coaching if used appropriately, but if Affiliative becomes the primary, dominant style, you’ll see accountability and performance suffer. A Leader who amicable but unclear on expectations is likely to see squishy results.

Participative (consensus-building) can work in situations where the team-members are experts and the Leader is unsure of the right answer to the case, but overusing this style can result in slow execution, a sense of ambiguity, and internal politics. Participative styles can destroy risk-taking, as each voting member essentially has a veto right. Sometimes, a Leader needs to make a decision with imperfect information and move forward. In learning organizations that can iterate on solutions, a wrong decision made quickly can be more useful than a better decision made over a long period of time.

These individual insights about styles were extremely helpful to me, but the larger and more critical realization was that a greater Leader is not just one kind a Leader. Leadership requires skill-building in a broad set of capabilities that become the practiced roles you can authentically play on stage. You then need to know what version of yourself to bring out for each act of the play.

Behavioral and Communication Styles

A similar set of learnings occurred when I attended the workshop from Take Flight Learning on their version of the DISC profile. They use memorable birds—the Eagle, Parrot, Dove, and Owl—to represent the four behavioral styles in the DISC Profile. Eagles are assertive; they tend to take charge and provide quick, clear decisions. Parrots are social and optimistic and tend to be jovial. Doves care deeply about people and emotions. Owls want wisdom and appreciate a thorough understanding of the information and solution.

While it’s incredibly informative to know what styles you naturally prefer (who knew I was a Parrot?) and what styles you are amplifying for your current work situation (I was turning up my Owl), the larger insight is knowing that you’ll be surrounded by all four birds. Just as it’s important to recognize your dominant style, it’s imperative that you tailor your communication to the audience.

If you’re an Eagle and you’re talking to an Owl, get ready to dive deeper into data and details than you would like. Or, as an Eagle is prone to do, delegate that communication to someone who will thrive in providing long-winded explanations!

If you’re an Owl talking to a Parrot, find some metaphor to make the work easier to understand and, importantly, exciting. At Critical Insight, I had team members that demanded precise justifications for each decision, but in pitching my Board, I quickly learned to recognize the blank expression that meant I needed to get out of the details and back to the big picture!

If you’re speaking to a Dove, don’t gloss over the people impacts; show that you are already thinking about how to care for the people on the team. Slowing down to listen to how your people feel and simply saying, “I hear you,” can be incredibly powerful, especially if you carry that thoughtfulness forward in the way you manage the group.

One of my most memorable applications of the Take Flight information is for addressing a large room. You’ll likely have all four birds present. In a presentation, it may work well to address the Eagles first—they want quick answers, after all, and they’ll tune out after the first minute anyway. Hit the Parrots next and explain how the next phase of the work is going to be a ton of fun. You can satisfy them in a few minutes, and they will be dreaming afterwards. At this point, it’s natural to spend a few minutes extending the conversation into how the work and purpose are structured to support the team. Get the Doves on board, and the room will lose its edge. You then spend the rest of the time talking to the Owls. The first three birds may not be listening anymore, but they are satisfied already, and they’ll appreciate it if the Owls provide their thumbs-up at the end of the talk. The support of the Owls provides the other birds the validation they need of the analysis behind the strategy.

Using Assessments to Build Skills and Trust

There are dozens, if not hundreds, of assessments you can take on leadership styles, personality types, core motivations, and communication modes. I generally love all of them. As noted, I benefit from the particular insights of each methodology, but more generally I appreciate that these tests consistently illustrate that people have distinctly different ways they like to do their work. People differ in how they communicate and how they want to receive communications. People have differing motivations, and what causes one of us to turn on and dig in may cause another to zone out or burn out.

Doing these tests in a group setting can yield additional benefits of building teamwork as teammates share and understand each other’s quirks, nuances, and differences. If the facilitator is experienced, professional, open, and supportive, assessment exercises can build trust and increase team performance.

Don’t ever use them vindictively, of course. An assessment should never be about discovering someone’s flaws or limiting their career trajectory.

Like leadership styles, some assessments will be more useful to you and your team in certain situations, but it’s great to keep things fresh and use new methodologies over time to grow your insights. In addition to the Hay Group / Korn Ferry and Take Flight methods I discussed above, I’ve enjoyed the Myers Briggs (good for deep personality insights, and you can find this with an easy search), CliftonStrengths (formerly StrengthsFinder, which is a great chance to discover and celebrate a spectrum of natural capabilities that exist across individuals in a team), and even Sparketype (an enjoyable chance to see what kind of work feels like “play” to you).

If you have assessments you recommend, share them with me in the comments below!

Summary

As you grow in your knowledge of yourself, you learn how to lean into your core strengths. As you understand your weaknesses, you understand how to mitigate them. Most importantly, as you begin to understand the spectrum of the ways the people around you think and feel, you increase the likelihood of tuning your leadership to the audience. Just as a mechanic learns to work with different tools and can recognize which gadget is required for which job, a good Leader learns to implement different styles and techniques depending on the moment at hand and the team being led.

[1] Hay Group was acquired by Korn Ferry in 2015. You can see a more recent mention of these leadership styles, with slight updates, in this 2024 article: https://www.kornferry.com/insights/special-edition/leadership-u.

From Visions to Annual Planning to Recurring Rituals, we’ve put together a system for both driving the organization forward and motivating the people doing the work. Along the way, we covered related topics including leading through listening, negotiated accountability, and leading with purpose. With these elements in place, you have the foundation to drive great results.

The next step is ensuring the other structures you put in place do not derail the momentum you’ve established! We don’t want the structure of compensation, HR, governance, meetings, or leadership to break the alignment you’re working so hard to create.

In practice, compensation is one of the quickest ways to mess up a system that is otherwise thoughtful, mission-driven, and high-performing.

In Primed to Perform[1], Doshi and McGregor recommend we maximize intrinsic motivators—play, purpose, and potential—and ensure that extrinsic motivators—economic pressure, emotional pressure, and inertia—do not become the reasons for doing our work. We all understand, of course, that team members need to get paid for their work. Some form of “economic pressure” is inevitable. We cannot make those basic economics disappear, but we can align the “magnetic force” of the compensation structure with the magnetic field created by intrinsic motivators so that the economic pressures fade into the background.

Money does matter. Compensation will not fade into the background if you have thorns of incongruent policies attached to people’s pay. Sadly, the standard practices of many organizations work against the culture they are trying to build, creating background conversations where people are saying, “We say we stand for X, but I’m paid to do Y.” Or, “Management says they want X, but clearly, they are really just about the money.” Or, “I’m not paid to compete with other companies. I’m rewarded when I beat my colleagues.” And always the standard refrain, “Management is so stupid.”

The best of intentions can be rendered ineffective by incongruent policies. Let me describe one exhausting but all-too-common pattern of unproductive behavior. It might feel uncomfortably familiar.

Dodging Decisions for Pay

More than once, I’ve worked in an organization that resisted accountability. I watched a recurring pattern where decisions were perversely elusive. We called it “red tape,” but it was something more sinister.

Here’s the situation. An employee needs a managerial decision for a product launch, marketing plan, strategic project, or some other key action. They email the person they think is in charge.

Sometimes, that email is just ignored. The person in charge is “too busy” and pretends to miss the email. They claim it gets buried in their inbox too quickly.

If they do respond, it may be just as bad. Instead of answering the request and providing a decision, that person will send back a list of questions asking for more detail. The originating employee will provide the detail, but that will prompt the person in charge to ask even more detailed questions and maybe send a recommendation to gather other preliminary approvals first.

The original request for a decision has now led to the requirement to first gather other decisions.

That’s pretty shitty already.

Worse, however, this pattern becomes fractal. Each decision request results in a request for more detail which results in a requirement to gather even more preliminary decisions. Soon, a single decision is a morass of organizational complexity where no one seems ready to take authority and accountability, but everyone is ready and authorized to delay or defer the decision.

Is the organization really set up to require so many broad approvals? Is this the result of working in a heavily regulated industry with too many auditors? Is this some kind of thoughtful risk-reduction strategy? If so, it isn’t working, because organizations that can’t make decisions run the bigger risk of becoming stale and irrelevant.

Having worked in more than one organization with this recurring issue, I am going to diagnose this as a compensation issue. Let me explain.

In these organizations, there were spot bonuses for strong performance. Annual bonuses were spread unevenly as managers sought to reward employees who showed “more merit.” Annual increases were tied to a stack ranking process. The desire was to reward performance. However, these rewards were tied first and foremost to manager evaluations, which really meant the rewards were given to those employees that convinced their managers they were “looking good.” The pay-for-performance structure turned out to be not about business performance, but stage performances.

The resulting employee behaviors were predictable. Employees, above all else, wanted to “show up” as competent. They wanted to demonstrate deep subject-matter expertise. They especially wanted to avoid mistakes or embarrassment.

Asking a ton of detailed questions “shows off” deep knowledge. When the ego is activated by the first set of questions, it goes fully professorial and asks even more detailed questions subsequently, showing off even more expertise.

Forcing preliminary approvals creates a cover-your-ass trail of other people to blame if the results of the decision go awry.

Every real decision involves balancing risks. No decision-maker can perfectly predict the outside environment. In a stack-ranking environment, people want to avoid accountability for outcomes they don’t control. Decisions create the risk of looking incompetent. A decision-maker may “show up” as cavalier. Decisions seem very bold. Decisions are risky.

When your manager’s opinion about you is going to drive your next paycheck, there is a natural aversion to failure. In that compensation structure, it’s better to show off expertise while avoiding taking real action. The fractal pattern of “I need more detail” and “I need preliminary approvals from other teams” is pernicious.

Indeed, you can expect this non-productive behavior to result whenever you:

· Award spot bonuses based on a manager “noticing” good performance.

· Award annual bonuses unevenly based on a manager’s subjective opinion of who “had more impact.”

· “Stack rank” employees against each other in a zero-sum game.

· Make any employee’s compensation tied to a game theory in which they need to “show up” as “better” than their peers.

Don’t get me wrong—people sometimes do great things and generate more impact. This should be acknowledged! In feedback sessions, managers and peers should absolutely celebrate good performance. Start business meetings by calling out “Good news and good jobs!”

Don’t tie compensation to these moments. Good performance should drive good outcomes, and a positive shout-out is a coaching moment. A shout-out is a chance to say, “You’re doing something that is probably going to create great results!”

And then tie compensation to those objectively measured results, not to the behavior which subjectively “showed up” well.

And, if a team collaborates to produce those results, compensate the entire team for those results.

Don’t stack rank them. Let your team compete with the outside competition, not each other.

Rewarding behavior—and especially a “managers perception of behavior”—immediately becomes a game of vanity over substance.

Rewarding outcomes, however, encourages action.

Aligned Compensation Structures

While we want to avoid compensation structures that derail the focus we’ve put into our Vision and Plan, and we certainly want to avoid the type of gamesmanship described above, we almost certainly need to pay our employees as they help us achieve our Vision and Plan. You can’t avoid compensation structures, so make the best one you can.

Over the last eight years, I worked closely with Joe Massey (

https://www.thepeopletide.com

) on building a system of best practices for aligned compensation. I describe that here and want to acknowledge Joe’s influence in designing the underlying elements.

I will describe compensation in two buckets:

· Salary

· Variable Compensation

I will then discuss how these are adjusted in clearly defined moments:

· Annual Raises

· Market Adjustments

· Promotions

Let’s dive in.

Salary

Because we are working from a Vision, a Plan, and ideally a breakdown of Departmental Plans and Team Plans, we have the key components needed to describe the roles we need to perform the work. At Critical Insight, we described these roles in documents called “Performance Profiles.”

Performance Profiles primarily illustrated the outcomes we were seeking from each role. We pulled those directly from the Annual Plan, Departmental Plan, and Team KPIs.

The Performance Profile would typically include some indication of the activities we expect will drive those outcomes, but as discussed earlier, a strong information worker should be free to change their activities continuously if they have new learnings that highlight better activities to bring about their intended outcomes.

Less so, the Performance Profile might discuss skills that would be helpful in producing the desired activities and outcomes. This part of the Performance Profile could be brief or even absent.

Notably, a “Performance Profile” replaces a “Job Description.” A Job Description that describes skills, certifications, degrees, or required experience levels might potentially illustrate the type of person that is likely to succeed in driving the desired outcomes, but shouldn’t that all be flexible? Isn’t it easier and more direct to simply describe the outcomes we expect? Clear expectations of outcomes also make it easier to evaluate whether a team member is fulfilling the expectations of a role over time.

Indeed, by focusing more on the desired outcomes and less on a resume of skills, we may attract a more diverse set of candidates. For example, someone advancing in their capabilities quickly after getting their AA and a two year associate degree might be selected over someone with a more “prestigious” background. We are looking less for pedigree and more for a demonstrated ability and willingness to drive the outcomes the organization needs.

Because those outcomes presumably have value to the organization, the role is associated with a salary. That salary is informed by market forces as well as the value of the desired outcomes to the organization.

Ideally, the salary band is narrow. You can create more levels within the job family if you want to provide varying levels of salary to correspond to differing levels of outcomes.

Regardless, you want to ensure that people producing the same outcomes are paid the same salary.

Variable Compensation

Sometimes you want variable compensation to highlight and reinforce the things that are important. While the Business Reviews we discussed in “The Drumbeat of Recurring Rituals” give team members a forum to review KPIs, you can reinforce interest and attention to those KPIs by tying those same measures to variable compensation. If you choose to put variable compensation in place, however, do so in a measured fashion. People in staff-level roles may feel like their impact on key measures is pretty arm’s length, and they likely crave stability in their own compensation. You’d want to make variable compensation a small percentage of their total compensation. People that have a more direct impact on KPIs are often more excited to be rewarded when they achieve the intended results. Senior management and, often, sales roles are more likely to feel positively incentivized by variable compensation.

Assuming that your Vision and Plan describe what “winning” looks like to the organization, you can simply tie bonus and commission calculations to the same KPIs in your Plan. The overarching principle is to make team members “win” when the organization wins. You want any economic “pressures” to fully align with the Vision, Plan, and organizational structures you’ve built to drive internal motivation.

If you’ve got KPI measures down to an individual level, which is possible with something like a clearly defined sales territory, then the variable compensation structure (for instance, a sales commission) can be tied to that individual KPI.

Importantly, if results are created by a team, then keep variable compensation tied to the team KPIs. Let the team win or lose together. Variable compensation doesn’t have to be individual if the results are not individual.

It’s that simple.

Use the KPIs from your Plan to drive variable compensation. When the company wins, the team wins.

Example of Variable Compensation Calculations

As an example, at Critical Insight, each employee had an On-Target Earnings (OTE) made up of a base salary and a target variable compensation amount. General staff had most of their compensation in salary, with only a couple of percentage points of variable compensation. As employees took on more senior roles in management, consulting, or sales, the variable compensation portion became a larger percentage of their OTE.

We had four KPIs that drove our variable compensation:

· Bookings of New Customer Subscriptions

· Retention of Existing Customer Subscriptions

· One-Time Revenue (that wasn’t subscription-based)

· EBITDA (Earnings before interest, taxes, depreciation, amortization)

All of these metrics were in our core financial statements. They were the same metrics our shareholders cared about.

The only thing that changed for staff was the weighting. If you were in Operations, then Retention was weighted higher. If you were in marketing, then Bookings was weighted higher. If you had a defined sales territory, then your commission was based on Bookings for your territory. If you were in the back office or in Director+ management, EBITDA was given more weight.[2]

At the end of each period (quarterly for most), we would calculate percent achievement against target using actual results. We applied the weighting defined for each role and added the scores together. This weighted achievement score was then multiplied by the on-target bonus amount to calculate the actual bonus.

If the company made target, the bonus was at target. If the company missed target, the bonus was lower. If the company beat target, so did the bonus—the bonus was not capped.

We were all pulling oars to take the boat in the same direction and achieve the same results. The target amount and weighting differed by role, but regardless, if the company won, the employee won.

It was that simple.

And, it was consistent.

Annual Increases

We gave everyone the same annual raise. It was as easy as, “This year, based on the economic performance of the company and the labor market we see, we are giving all team members a 3% raise.”

Market Adjustments

Certain job families have different market pressures. Assuming efficient markets, the market rate for a role is proportional to the value created by that role in a typical organization. You may decide that you need to do a market compensation study and adjust roles in your organization to what you see in the market. It’s okay to layer on a market adjustment to the annual increase or even make an adjustment mid-year.

This should still be a team-based approach. You should adjust all people in the job family in a similar manner.

Promotions

I believe promotions are the right time to reward the advancing individual contributions to the organization. As individuals enhance their skills and support stronger outcomes, you can reward this with a promotion.

In fact, if promotions are the primary way to reward the growing contributions of team members, you can increase the frequency of these recognitions by defining more levels of Performance Profiles within a job family.

Any promotion should be the result of an objective process in which a new role, described by a Performance Profile with associated advanced outcomes, is announced based on the needs of the organization.

Any employee should be allowed to apply for the role. You can also consider opening the new role to outside parties, but you always let existing employees apply. An interview process should occur based on objective criteria, and the best candidate that is qualified should be selected.

Is this stack ranking? In some ways, it is. However, there are some key differences.

Whereas stack-ranked compensation decisions typically reek of subjectivity, favoritism, secrecy, and a win-lose, zero-sum game where a limited budget is split among team members, a promotion is a win-win scenario where the organization needs more output and a promoted individual is celebrated for their advancing capabilities.

If an employee is selected, they should be told why. Similarly, if an employee is not selected, they should be given detailed reasons so they can consider whether they want to address any gaps in their capabilities to produce advanced outcomes. If the organization opens a similar role in the future, they can apply again.

The promotion is public, not secret. Team members will see the role change in the HR system. They’ll probably see it on LinkedIn. Internally, promotions should be celebrated in team meetings and town halls.

Promotions may involve competition between team members, but they are done occasionally and in a highly visible, hopefully objective manner.

Summary

Ideally, compensation is fair, aligned to the Vision, and clearly understood so that it fades into the background and does not become the reason for doing the work. A best practice is to author Performance Profiles that describe the desired outcomes and activities that come from your Vision, Plan, Departmental Plans, and Team KPIs. That Performance Profile is associated with a salary and, potentially, variable compensation. Any variable compensation is based on clear organizational KPIs so that when the organization wins, the team member wins.

You do not ask managers to subjectively stack-rank individuals to calculate differential compensation, as stack ranking encourages vanity, favoritism, and optics over outcomes.

Raises are applied consistently to all staff. Market adjustments are performed when needed in a consistent manner to all members of a job family. Promotions are a chance to highlight and celebrate individual growth by aligning advancing skills to enhanced outcomes through the promotion to a higher-level role described by a more senior Performance Profile.

[1] Doshi, Neel and McGregor, Lindsay. Primed to Perform: How to Build the Highest Performing Cultures through the Science of Total Motivation. HarperCollins, 2015.

[2] Because there was a lot of detail behind what it took to produce EBITDA, staff at a Director level or above were expected to drive efficiency and performance. They had three decomposed KPIs that corresponded with the three revenue metrics but directly influenced EBITDA: Customer Acquisition Cost (per subscription dollar produced), Operating Margin (for servicing subscription customers), and Operating Margin (for servicing one-time projects).

While your Vision sets the stage for the work, you almost certainly need to decompose and organize the work and then execute across numerous interim milestones on the way to the overall goals of your Plan. How do we check in along the way to ensure we’re heading the right direction? How do we organize the work to allow team members to thrive and innovate? What is the right balance between structure and white space?

While each organization demands different answers to these questions, and those answers will always change over time, I’m going to approach some common answers from two directions:

· You want to support the organization’s needs by breaking down the Vision into executable work

· You want to support your people by building up from their intrinsic motivators

There is a lot of flexibility in how your finally structure the work, but I will propose a simple, consistent scaffolding over whatever you put in place: the “Performance Cycle.” We’ll show how multiple types of work can be done in a Performance cycle while illustrating a consistent set of “rituals” to set a rhythm for the people in the organization. Indeed, every organization has a drumbeat that comes from the actual habits and events that drive the work. Consistent rituals help teams work as a cohesive whole, executing against the overall Vision.

The needs of your organization and the intrinsic motivators of your people are distinct, but they are deeply related. Indeed, we already stitched these together while “Setting a Vision” (see also “Frontline Flannel”).

If your Vision contains a Mission that is compelling and includes Values, a clear Ideal Customer Profile, and a Core Promise that supports the Customer and the Mission, then the work is going to feel purposeful.

If your people are being supported and coached, the work is more likely to be done efficiently to the benefit of the organization, and your people are likely to feel like they are moving forward on their own career paths.

And if people are in the right jobs and are grounded in your Mission in a manner that they feel grounded in the flow and rhythm of their daily work, they are likely to feel like the work is fun.

Recognizing the two sets of needs are related, let’s dig into each part separately.

First, let’s think about how to meet the needs of your organization by structuring work around the Vision.

Resourcing outcomes

In “Annual Planning,” we negotiated Departmental Plans that provided resources to Departmental Leaders to produce outcomes to move the organization towards the Vision. Those resources included authority, budget, and often headcount. The desired outcomes came in two sets: KPI Targets (including key financial results) and Major Milestones. If you are a frontline manager and are not supported by a Departmental Plan, you can make a team Plan that names the desired outcomes you have for your team within the context of your role in the organization.

The structures we implement must connect the resources to the outcomes.

The “right” structure depends on the details of your organization and Vision, and you as a Leader are being paid, in large part, to design, refine, and manage that structure. With the assumption that we need people to do the work (and at a minimum, the Departmental Leader is a person), there are a spectrum of ways we can design the work. I will delineate four typical buckets:

1. Open Outcome-Seeking: This work is defined by quantifiable financial or KPI outcomes. The execution could require the intelligent design of underlying core capabilities if they do not exist, or at minimum, the thoughtful execution of a domain of potential activities. If you built a Plan that included Major Milestones, you already this type of work in your planning exercise—you named milestones that considered some future financial state of the business. That thoughtful work of seeking financial outcomes through adapted project goals is likely to continue throughout the year. For example, a Senior Manager or Product Manager may create entirely new teams or software capabilities to achieve a future financial outcome. The level of experience and innovation required in this type of work can vary dramatically, but this type of work is defined by setting a target quantifiable outcome and giving the team broad guardrails within which they can take actions they design themselves. Your job as the leader is to set the targets and let the team organize themselves around the work, and while you may provide coaching along the way, success is defined by the outcome. In this type of work, you are not prescribing actions.

2. Design Work: This work is typically defined by a Major Milestone from your Plan. You’ve named some milestone and set “definitions of done” which you want the team to achieve. Their work is fundamentally the creation of even more detailed, clear requirements or specifications for someone or something else to build against (likely a team of type 3 below, although sometimes an individual does type 2 and 3 work simultaneously). This work may demand a Product Manager, high-level Engineer, Architect, or some other kind of Senior Manager. Your job as a leader is to be clear on the definition of done and negotiate resources and timeframes. Success is defined by achieving the definition of done within the negotiated time frame. You may monitor and coach the team and provide clarifications for high level requirements, but you are not prescribing how the work gets done.

3. Skilled Labor: This work is based on clear requirements or specifications but requires strong engineering or construction skills to execute. There are likely best practices but not necessarily prescribed processes. This type of work typically requires a human who is likely to use tools appropriate for the job, which increasingly may include AI assistants. This work is sometimes the direct domain of AI or AI-supported robots, but most commonly you’ll have a human supervising the automated elements of the work.

4. Standardized Work: The work will be based on structured inputs and should predictably and repeatably produce consistent outcomes. As this type of work matures, it is likely described by Standard Operating Procedures (SOPs). This type of work can increasingly be done by computers or robots, but in many cases, the work involves nuanced decision-making, broad physical dexterity, or human-to-human interactions that are better done by a real person.

Your organization is likely to utilize a variety of styles of work, even in a single team, and you can design the right amount of structure around the work to match the needs of your organization. Your Plan gives a high-level beacon of what you are trying to do. You may additionally author a detailed business plan or operating plan. It’s your job as a Leader to look at your Plan and organize your teams and resources around the work.

If the work is repeatable, you may author Standard Operating Procedures (SOPs).

You may ask a junior sales rep to perform type 4 standardized work and operate from scripts and a defined stage-gate sales funnel. Alternatively, you may simply hand a senior sales rep a quota and, as type 1 work, give them significant degrees of freedom in planning out their approach to lead generation, discovery conversations, and deal-closing activities. You could take this to a team level and combine the work, giving a team of an Account Director, a Sales Development Rep, and an Account Manager a territory with an overall recurring revenue target and ask them to manage the complexity of lead generation, new sales, and existing customer retention within their group.

You may directly perform type 2 design work and create a backlog of work items and use them in a Kanban process to manage priorities and drive towards iterative execution. You may name a Product Manager to mature a backlog which they give to a skilled engineering team. You may add rigor and predictability with Backlog Grooming, Spring Planning, and other Scrum or Scaled Agile tools. You may additionally ask a Project Manager to create a waterfall project plan and track a staged series of major phases.

Your effort to describe the way you want the work to get done is a core element of Leadership. You’ll want to carefully balance the capabilities of your team and give them the right amount of freedom while still ensuring the work is aligned to the Vision.

Notably, I am dodging religious debates about methodologies. Is Agile dead? Is it so embedded in our thinking today that our zealous debates about it are no longer helpful? Do you need to iterate to find your way forward? Do you need more planning? Is speed or quality more important for this phase of your team’s work? What is the impact of getting it wrong? What is the cost of delaying the start of construction in order to allow more time for planning? As a Leader, these are the debates and decisions you are hired to make. There is no perfect answer. The best answer always depends on your circumstances.

I propose, however, that you can use a Performance Cycle with all of these types of work to set a consistent drumbeat for the organization. The Performance Cycles utilizes a consistent set of rituals that support your people while giving continuous visibility to you, as their Leader, on the progress of their work.

Let’s look more deeply at the Performance Cycle and its rituals as we begin to also incorporate the needs and motivations of your people.

Performance Cycles

Performance Cycles establish the “measure” of music, allowing a “drumbeat” in which your team’s work comes to life. To extend the metaphor, the right time signature creates a rhythm that allows the team to improvise the human “jazz” of designing, creating, constructing, and innovating within the work you need them to do.

A Performance Cycle is punctuated by simple rituals that define the structure of the cycle. The heart of the Performance Cycle is the space in which the work gets done, but the music is consistently defined by the end of a measure and the beginning of the next. To support your people, you create rituals that support:

· A celebration of what was done in the prior cycle

· A reflection on the overall performance with a right-sized Debrief to identify new learnings

· A moment to plan the next cycle

While not a “ritual,” you also define a structure to support the continuous work in the execution phase of the Performance Cycle:

· A work-tracking structure, clarifying what happens when work moves from the plan to “in progress” and then to “done”

Your “rituals” can be in a single meeting, a set of meetings, or a shared set of communications. The rituals can be in person, on video, or in a set of asynchronous messages occurring in a set period of time. They can be daily, weekly, bi-weekly, or some other time period that you find appropriate. They can even be nested, with shorter Performance Cycles operating inside longer-range Performance Cycles. A ritual is not, however, a blend of things that may or may not happen over an undefined number of days or weeks. You want to create rituals that establish a “drumbeat.” We do these things in a regular rhythm because they give structure and support our people in a learning environment in which they continue to get better at the work over time.

Let’s take a deeper look at these simple rituals.

The first part is a wrap-up of the prior Performance Cycle and a celebration of the work we recently completed. For anything that has been marked as “done” since the prior time you held this ritual, take a moment to acknowledge the work! Call it out. Let people feel endorphins from marking the completion of things along the way.

As we wrap up the prior cycle, we also lift our heads up and think about how the team is performing. The ritual should include a right-sized “Debrief” to allow space for higher order learnings. What’s going well? What issues are being discovered? What are the root causes? Are there things we want to do more often? Are there things we need to change? A right-sized Debrief may not include time for deep analysis, so you may simply call out the “bright spots” or “issues” and write them into a “parking lot” for future analysis. We’ll talk later about “Issue Processing” as an additional ritual that gives time and space for unpacking what’s underneath these items.

We then look at our upcoming work and do some planning. We should ensure we generally know what each team member will be working on. What tasks are assigned to them? What is their plan for completing those tasks?

Planning can have multiple forms, and this is where you want to honor the type of work being done. If we are supporting standardized work and the team is operating from SOPs, we can plan around expected volumes. We can talk a bit about where the organization is going and how our standardized work is supporting it.

If we are applying skilled labor, we may talk about the design, requirements, or specifications for the next phase of our work. We may assign certain tasks to certain individuals. We may consider external factors, like expected interruptions, large group meetings, weather, the availability of special tools, or the quality of our materials.

If we are doing design work, we can set goals for how far we expect to go on our design. We can decompose high level milestones into more detail planning milestones.

If we are seeking a particular financial or quantifiable target, then we can plan the activities we will undertake in the next execution cycle as we seek the desired outcomes.

In all of this, we are applying any learnings from prior Debriefs. Importantly, many teams have a mixture of types of work, and hence the planning session may have multiple components. A team working from SOPs may realize that a particular SOP needs to be refined, and as part of the next performance cycle, a team member that typically does standardized work may instead rewrite the SOP, taking on what is arguably design work.

Finally, as we enter the execution phase of the Performance Cycle, we want to have an agreed place where team members record the status of their work. This can be as simple or complex as it needs to be. Most simply, if a team member picks up a new work item, they can mark it as “In Progress.” When the satisfy the conditions for completion, they can mark it as “Done.”

You can create this drumbeat of a Performance Cycle around any of the four styles of work I noted above. If you have multiple styles of work occurring, the Performance Cycle can provide consistent structure. Assuming you have many teams in your organization, a common Performance Cycle duration can set a consistent tempo for the full organization. Notably, the rituals ensure you’re not just doing the work but also celebrating the work, continuously improving, and planning. A defined Performance Cycle allows real work to get done but also keeps your team from working on auto-pilot.

Measuring Outcomes

We assumed you had a Plan with KPI targets and Major Milestones. The Plan also indicated the resources needed to produce those outcomes. If these things are in place, then it should be relatively straightforward to delegate accountability for those outcomes to the teams that are supporting them.

You’ll likely need to decompose your targets into quarterly, monthly, and/or weekly targets. With these things in hand, you can use the drumbeat of the Performance Cycle to regularly, transparently report progress against the targets.

Undoubtedly, this transparency will highlight areas where the team is under- or over-performing. That information is a critical element to the part of your Performance Cycle ritual in which you reflect and identify new learnings!

Business Outcomes vs Supporting Activities

As you get to the team level, you’re likely to decompose higher-level KPIs and major milestones into supporting activities. Let’s take a moment to delineate business outcomes from supporting activities.

Business outcomes should be pretty obvious. They are clearly measurable. Ideally, they show on your profit-and-loss statement. Revenue derived from customer contracts is a business outcome. Any dollar value from newly signed contracts is a business outcome. Salary and benefit expenses paid to employees create a business outcome. Expenses paid to third parties create a business outcome. Capital committed or received from investors or lenders is a business outcome. Ideally, these can be measured frequently. Some financial metrics are measured monthly, but many can be measured weekly or even daily. Don’t let anything vague or incomplete be called a business outcome.

That said, business outcomes are exactly that—they are the outcome of the work we do in the organization. We undertake activities in the business with the intent of driving those outcomes. Many times, those activities are common and frequent. It’s good and acceptable to name and measure the activities we are undertaking with the hope of supporting our intended business outcomes. At a high level, this process of determining what we want to do to achieve a high-level business outcome is exactly the “type 1 work” we described above.

Activities may include project work, to which we can clearly assign “definitions of done”. Major Milestones are fundamentally business activities which we believe will support our higher order outcomes in current or future periods. Alternatively, activities may be quantifiable—for instance, the number of outbound calls made by our sales team or the number of tickets worked by our IT team. We may find efficiency metrics that help us do more of these quantifiable things in less time or for less cost. The analysis of effort is likely to produce a wealth of key performance indicators (KPIs). It then becomes useful to measure these KPIs regularly and set targets for where we want those measures to be in the future. This can and should be part of the metrics your team measures and reports out.

It’s imperative, however, that we delineate business outcomes from activity metrics. In business, we will constantly come across situations in which the activity did not produce the intended outcome. Debriefs are a great way to learn from these situations. Corrective actions will likely change the activities we choose in the future. In fact, as we saw in “Accountability, Authority, and Negotiation,” these activities lie at the heart of the negotiations we make in our accountability process—we promise to perform activities when we commit to producing a certain outcome. But if that outcome is not achieved, our learning process should take over. An accountable team member may not always produce the intended outcome, but we hold them accountable to being good negotiators of commitments, which means that we assume they will incorporate learnings and adjust their resources, activities, and commitments continuously.

For these reasons, activity metrics should be clearly delineated from business outcomes. Activities can be named, measured, and reported to illustrate transparent accountability. At the same time, leaders should be free to change those activities when needed, holding the desired business outcome stable.

To summarize, activity metrics are helpful in as much as they support and achieve business outcomes, but they are only important in that context and should never be considered important in isolation. And, they may change.

Core business reporting should focus on the outcomes.

Weekly or Monthly Business Review (WBR / MBR)

We’ve set our teams up for regular accountability. We’ve got a clear Plan that includes target business outcomes and named activities that are being tracked and measured. With these tools in hand, we can meet regularly to review our progress against the Plan. I like to do this in a Weekly Business Review (WBR).

A WBR is a great chance to report and celebrate progress against the Plan, show activity achievements, highlight whether those activities are producing the intended outcomes, and illustrate any learnings that the team is incorporating into the plan.

I like the WBR to be inclusive of Leaders across the organization. It is a forum for upholding mutual accountability. The information allows Leaders to understand the pulse of other departments so they can better understand how their own activities and outcomes are combining with others in supporting the overall Plan.

While I like the WBR to be weekly, you may discover some issues with a recurring weekly agenda. Some metrics may be repetitive or even unchanged on a weekly basis. A weekly presentation by every team can be cumbersome and generate undue busy work. You may find that individual team reports are highly useful but a full set of cannot be covered every week in a reasonable amount of time. Finally, you are likely to have some measures (especially financial results) that are produced monthly instead of weekly. For these reasons, I’ve often used a WBR that consists of two core sections:

· A weekly review of essential outcome and activity metrics that matter to the entire organization (“top of house” metrics)

· A staggered monthly presentation from a subset of the teams. For example, in Week 1 of each month, you have teams A, B, and C present. In Week 2, it’s D, E, and F. In Week 3, it’s G and H. In Week 4, it’s I and J. In the occasional month with a Week 5, you keep the meeting short and do only the top of house agenda.

If you set up a WBR, here are a few additional best practices:

· Start every WBR with an open opportunity to call out “good news and good jobs.” Let team members celebrate wins and recognize each other!

· Let the data stand for itself. Ask presenters to be transparent and don’t be afraid of balancing what’s good with what sucks. Remind everyone you are a learning organization, and accountability is about competency in negotiating commitments more than it is about being right every time.

· Use the WBR as a training ground for your less experienced leaders. Ask hard questions. If they are glossing over key issues, call them out. Find a way to give them feedback on their presentations: ensure they establish context for their presentation (for example, always tie back to the Annual Plan that they are working from); help them hit the “right” amount of detail and show trends against targets and not just a stream of numbers; help them engage the audience.

This cadence of WBRs with monthly overlays means the WBR is also the MBR. Financial results from the prior month are communicated in a consistent week the following month.

Quarterly Business Review (QBR)

In the “Annual Planning” section, we talked about revisiting Departmental Plans quarterly to check on progress, do a Debrief, and incorporate learnings into a revised forecast. The WBR provides continuous visibility into progress and learnings. A larger Quarterly Business Review (QBR) can be helpful at a team or Department level. At a minimum, I like to have Departmental Leaders meet quarterly to talk about the Annual Plan as a whole.

The general format for a QBR is a lot like the rituals of a Performance Cycle. In fact, a QBR is fundamentally a ritual that defines a large-scale Performance Cycle in which the WBR cycles are nested, while the WBR is a larger cycle in which the various teams’ Performance Cycles are reported.

The QBR is essentially:

· A celebration of what was done in the prior quarter

· A review of the quarterly results against the targets set in the Departmental Plans

o A formal Debrief, which is likely to produce a list of things to repeat and corrective actions to take

· Issue processing (see below)

· Potential adjustments to the Departmental Plans and associated Annual Plan for the organization

o A detailed decomposition of the future Plan into the next quarter’s weekly, monthly, and quarterly KPI targets and Major Milestones as well as targets for any consistent activity metrics

Facilitating Issue Processing

In a learning organization, you perform regular Debriefs with each Performance Cycle. Oftentimes, the Debrief can result in immediate learnings that the team can take to its immediate planning cycle. However, oftentimes Debriefs illustrate key issues or bright spots that warrant a deeper discussion. To keep the rituals of a Performance Cycle moving forward within their scheduled time, it’s helpful to have a “Parking Lot” for things to discuss later.

A Parking Lot can feel like a black hole where management hides things they are afraid to tackle unless there is an explicit structure to deal with those items. Borrowing again from Traction[1], I am going to suggest you call this Parking Lot the “Issue List” and schedule regular time for “Issue Processing”. This can happen at the team level if the team has the resource and authority to process its own issues, but teams should also have a way to escalate their issues to managers with higher levels of authority. Thus, while Issue Processing may be occurring deeper in the organization, it should at minimum be supported at the executive team level.

While we don’t want the “Issue List” to be a black hole where things are thrown away, it’s also worth admitting that some issues are more important than others and there is never enough time to deal with every issue every time. For this reason, Issue Processing is a time-bound exercise that requires prioritization. Here’s the way we did it at Critical Insight:

· Issues were stored in an ordered list we could access centrally. Departmental Leaders could contribute to the list whenever needed.

· At the beginning of Issue Processing, we’d review the list and ask Departmental Leaders to choose and label the issues they felt were most urgent. We’d move these to the top of the list.

· We’d decide on one issue to process first. This was my job. I made the decision with the input I’d just received from the Departmental Leaders, but fundamentally, some single person needed to choose a single issue to process first. I took that accountability.

· We’d discuss the issue, borrowing from Problem Management concepts to clarify what problem we were really trying to solve and then ask why, digging into root causes. In practice, it’s extremely important to ask for actual singular examples of the issue. You don’t want to process some vague concept of a generalized gripe someone has about the organization. You need to process real issues.

· Based on that discussion, we’d identify at least one of a few things:

o An overall “aha” moment which resulted in some immediate learning and likely a change of perspective, with potentially no action items necessary

o Clear corrective actions which we could assign to an individual or a team

o A need for more data, a deeper analysis, or additional expertise, in which case we’d create an action item to continue to process the issue and assign an owner

· Once any action items were assigned, we’d mark the Issue in the Issue List as complete. The action items were then tracked separately.

Of course, implicit to the process above was a Performance Cycle for my executive team. The Departmental Leaders and I met weekly and included a Kanban board of the commitments we had made as individuals. While many action items could be delegated to team boards and were tracked there, Departmental Leader individual commitments were tracked on our own centralized board.

1:1s

While the rituals of a team in a performance cycle create an opportunity for reflection, learning, and improvement, it’s imperative that every individual has a chance to meet 1:1 with their own manager. This is your chance to check in with your people, understand how they’re doing, hear their ideas, answer their questions, and give them coaching.

As we think about coaching, let’s step back to talk about the design of your teams.

Structuring Teams

Teams do the work in Performance Cycles. The teams are, of course, designed to complete the organization’s work, and a key element of each Departmental Plan should be a summary of the structures that each Departmental Leader will use to accomplish the work. The design of the team has a significant impact on its success in producing outcomes. The resulting teams may include multiple people with the same skill or they may include interdisciplinary skills.

As we identify the desired teams, we want to assign the right people to each team while honoring the “Intrinsic Motivators” discussed in Primed to Perform[2]:

· You should assign team members that will find the work to be “fun”—i.e. work that creates a desirable “flow state” for them

· You should tie the team’s work to the purpose of the organization—and if you’ve done your work on the Vision and the Plan, that connection can and should be communicated frequently

· You should help each team member get better over time, and as such, move them forward on their own career path

This latter point highlights the need for “coaching” to be a key element of the leadership structure and style. Coaching is most often provided by a team member’s manager.

It’s sometimes easiest and cleanest to match the reporting structure of the organization to the structure of the team so that a single manager is clearly accountable for all the members of a team and, by reference, thus ultimately accountable to named business outcomes. However, if the team structure is clear and the delegated business outcomes are also clear, then it’s possible to have the leadership structure deviate from the team structure.

For example, in baseball, a single team will have a pitching coach, a catching coach, and so forth. These positions are playing on the same team, seeking the same overall outcome (winning!), but they have specialized coaches. Similarly, you may decide that the “coaching” needs of your team are best supported by a leadership structure aligned to the particular skill of the team-member. If the team members have interdisciplinary skills, you may choose to have each team member report to a “coach” for their particular skillset.

This can be as flexible as you want. Again, as we also see in baseball, you may decide to have “coaching” be an occasional overlay—such as a hitting coach that works on a particular skill but is not the player’s primary coach.

Don’t make it too complicated. The simplest answer is usually the best, but recognize that the “coaching” element of leadership is one of the most important factors to consider when designing your organizational chart. It’s okay if that management structure differs from the team structure.

1:1 meetings

You’ll find plenty of best practices for the agenda for 1:1s, but here are a few things I want to call out.

First, 1:1s are not meant to be lackadaisical or optional. I’ve seen managers miss, cancel, and move 1:1s in the last minute. As a manager, you are taking responsibility for leading your direct reports in their continued improvement. Schedule 1:1s as recurring meetings. Make them weekly. Take time to look ahead on your calendar and deal with collisions. We all have travel, outside meetings, and one-time events that collide with the recurring elements of our calendar. Show your direct reports that you care by doing the basic homework of managing your own damn calendar—and if you don’t have the time, hire someone (or get an AI bot) that will do it for you.

Second, take time to give feedback. Part of coaching is highlighting what a player is doing well and where they can improve. Make sure you focus on positive feedback. Telling a team member what they are doing right can have a bigger impact than pointing out mistakes. Take the time to say, “I really appreciate that you followed through on this commitment,” or, “I was impressed when you applied this insight,” or, “I am excited about the teamwork you’re showing.” Positive feedback goes a long way to encouraging the right behavior and making the workplace an enjoyable, productive zone where people thrive. In the times when you need to suggest corrections or changes, you’re much more likely to get an engaged response if you’ve built a trusted relationship through prior positive feedback.

You don’t have to reserve positive feedback for 1:1s! Positive feedback given publicly in front of other team members can be particularly meaningful. Oftentimes, positive feedback may be for the team as whole.

Constructive or corrective feedback, however, should generally be reserved for 1:1 situations. A possible exception is if you’re asking the team to work together on some kind of change.

Periodically, make sure you leave time to ask the bigger questions. What other support or training does your team member want? Are they in the right role? Are they building towards their desired future role? Do they understand the Vision and how they fit in? What questions do they have about the organization?

Summary

We use Performance cycles as the confluence of two core agendas. In the Performance Cycle, we align the organization’s need to move forward on the Plan with our team member’s needs to be supported in an environment where they grow by doing work that is interesting, purposeful, and coached. Teams are designed to realize the Vision and Plan. Consistent rituals support the celebration of work, the continuous improvement of our teams, and the necessary planning to ensure we’re incorporating learnings and focusing on the right work. By measuring outcomes and activities against the targets set in our Plan, we support transparency, learning, sharing across teams, and mutual accountability.

[1] Wickman, Gino. Traction: Get a Grip on your Business. Expanded Edition, BenBella Books, Inc. 2011.

[2] Doshi, Neel and McGregor, Lindsay. Primed to Perform: How to Build the Highest Performing Cultures through the Science of Total Motivation. HarperCollins, 2015.

If you are a frontline leader, you may not have the authority of the CEO. Ideally, you have a CEO or President who has created a Mission-based culture and provided the components of a Vision. Hopefully you participate in regular planning exercises, negotiating your expectations against the resources you are provided.

But you may be operating beneath a leader that shoots from the hip. You may have a boss that is directive, telling you their expectations as they make it up along the way. You may be operating in an environment that feels less structured and more demanding.

I get it. I’ve been there.

The good news is that companies and organizations that operate in the right space can succeed under all kinds of leadership styles. You may be in an economically compelling situation even if you don’t sense a mature, structured approach to how work gets done. Depending on the season of your life, you may be in exactly the right place, even if you wish for more structure. And if you’re not in the right place, reach out and try to find it somewhere else.

Regardless, and importantly, if you are a frontline leader, you have a team of people working with you that also crave purpose, structure, and vision. Your leadership at your level remains critical. Use your tools there. Focus on what you own and create an ecosystem where people thrive within the domain you manage. Instill the best culture you can within the microcosm of what you influence and control. Your ability to change the entire organization may feel limited, but you can certainly make incremental improvements within your own domain. That’s always important, and your people will benefit from that attention.

If you don’t have a Vision that has been provided at the organizational level, you can create one for your own team. Your job may not be inventing an organization-wide Vision with Mission, Values, Ideal Customer Profile, and Core Promise, but you can borrow from what you’ve heard. You probably know what some of these things are, even if they haven’t been cohesively organized into a single document. Some of the elements can be local to your team. You are certainly allowed to work with your frontline team and determine the values you want to use in your daily work. Take what you’ve heard from the top, fill in the gaps, and build a compelling structure so your own team can thrive. Then negotiate commitments from your team members within that smaller vision.

Within your organization, I can’t recommend you try to push structure upwards. You may agree that accountability should be based on negotiation, and you may want to negotiate your commitments with your boss using the tools I discussed in the Annual Planning section. There is a way to do this, but it’s not by imposing change upwards. You probably don’t have that authority. However, you can use those tools within the domain of your authority. You may present a plan back to your boss that shows your commitments and resources. If they ask for something new, you can show how the plan shifts as priorities change. Don’t do this vindictively—simply show how you intend to execute.

If you lead by example, management above may take notice. Maybe they’ll even adopt some of your practices. But don’t make this your primary goal. You may be disappointed. Focus on what you can do from the role you’re in.

The next sections will focus on practices you can use at any level of leadership. Coming up, we’ll talk about “The Drumbeat of Recurring Rituals,” “Leadership Styles,” “Making Decisions with Imperfect Data,” and “Vitality.”

I also admit that I’ve discussed with some of you the real issue that conversations about Leadership and Vision can be difficult and feel less meaningful at a time when so much volatility is occurring in the nation. How do we form a Vision when so much outside our organization is changing? How do we create structure when we see structures breaking down around us? Even if you’re a CEO or Senior Leader, you may feel like a frontline leader today. Ideally, like your organization, the nation can benefit from national leadership that creates a compelling Vision. Unlike your organization, however, the nation is a democracy, and your vote and voice have power that should transcend hierarchy. Inside the hierarchy of an organization, pushing structure upwards can yield limited success. Inside a democracy, pushing upwards is a moral imperative, although you may choose to do that as an individual and not as a representative of the organization you lead—that is a decision you must make. And at the same time, how you lead the people on your team remains critically meaningful and important. A dialogue about great leadership is worthwhile always, and especially at times of volatility. Your steady leadership may provide some of the best support your people need.

I am going to focus on building out an Annual Plan, although organizations with a faster or slower pace could use these same exercises on a different schedule.

In summary, Annual Planning is the simultaneous exercise of:

• Decomposing the Vision into actionable work assigned to Departments

• Naming Leaders for the Departments that will do the work

• Negotiating the Departmental Plans that establish:

  • Expectations for outcomes that include financial results, KPI targets, and major milestones

  • Approved resources that include budget, headcount, and authority, as well as the structures the Leader will use to organize the work, drive incremental results, and regularly report against the plan

• Checking for completeness by ensuring the overall organization’s Plan is fully supported by the set of Departmental Plans (i.e. that there are no gaps) and that the Plans do not overlap (i.e. Leaders are individually accountable and there is no joint ownership of key results), and related, that the Annual Budget matches the resources and expected results from the aggregated Departmental Plans

Let’s dig into these interrelated topics.

Decomposing the Vision

The primary activity of Annual Planning is the negotiation of the Departmental Plans with the key Leaders that will manage them. Before you can negotiate these plans, of course, you need to know what Departments are needed.

In many cases, your Departments already exist. You may have existing Operations, Finance, Product, and Technology organizations. You may separately have a People Operations or Human Resources team, or maybe a Shared Services back-office team. You may split Operations into separate business units with individual General Managers. There are numerous best practices for dividing up the organization’s work. The key question to ask is, “What does the organization need in order to realize its Vision and Plan?” You don’t need to go with the status quo. While organizational changes require thoughtful communication and detailed change management, Annual Planning is a good time to ask if the organization is properly structured. You know your Vision best. Make sure you discuss, debate, and decide on the best structure to realize your Vision.

In previous sections, I mentioned the Gino Wickman’s book, Traction[1]. He has an exercise for determining what Roles are needed in the organization. I am using the idea of Departments much in the same way as he describes Roles, although I am choosing the term, Department, because it is also a useful construct for considering Departmental Plans and Budgets.

Ideally, you are able to determine the necessary Departments by working back from the Vision and Plan, but it’s worth noting that your Departments may change over time as the organization’s needs and maturity evolve. While you don’t want to design your Departments based on the Leaders you already have on the team, some skillset matching makes sense, and indeed, your Departments will necessarily resemble your Leadership Team. There are some best practices and rules, however, that you can use to avoid the “status quo” inertia of organizing around what you already have.

First, Departments are ideally autonomous and relatively independent. Some dependencies between Departments will always exist, but those dependencies ultimately mean that Departmental Leaders need to negotiate commitments between each other. You want to keep this to a minimum. A few explicit dependencies are easy to call out and negotiate. An intertwined set of negotiated asks and offers between Departments is going to feel like red tape.

Second, it’s totally okay to have multiple Departments be managed by one person. Thus, you can go through the academic exercise of breaking the Vision into many areas of work, envisioning many Departments. You can then group Departments under single Leaders. Simply put, it’s quite reasonable to have smaller, relatively independent functions move between existing or even new Leaders, so long as each area has clear ownership afterwards.

The corollary, however, is that you do not want to have two people responsible for the same thing. If two people are responsible for the same result, then neither of them are really accountable. You do not want a single Department to have more than one Leader. In Traction language, a single Role should never be held by more than one person. Again, you can get more granular and clarify two related Departments that have mutual dependencies, but try to keep it as simple as possible.

Once you’ve defined your Departments, summarize them with simple, bullet-point areas of ownership and accountability. Make sure the Departments you create are clearly defined.

Naming Leaders

As you design your Departments, you’re assigning them to Leaders on your team. You may find that you need a new Leader, in which case you can name a temporary Leader to own the area until that new hire is completed and onboarded. That temporary Leader may be you.

To state the obvious, you want to match skillsets to needs. A Leader should have the experience, willingness, and capacity to own their Department(s).

What should be obvious but is sometimes overlooked is that a Department with headcount needs a Leader that is dedicated to leading people! Technical expertise will not suffice. In fact, even leadership expertise is useful only if the Leader is committed to the time and effort of using those skills. Motivating, coordinating, and managing people is a significant commitment. If the Department requires this capability, make sure the bullet list includes that scope and ensure your Leader is capable and willing to commit to that work.

Building the Departmental Plans

What are we trying to produce?

The overall goal of Annual Planning is to move the organization towards the Vision. Once you’ve named your Departments and Leaders, the output of Annual Planning should be a set of negotiated Departmental Plans that each contain:

• Definition of the Department

• Outcomes

  • KPI Targets, including expected financial results

  • Major Milestones

• Resources

  • The desired Authority

  • The desired Budget and Headcount

  • Dependencies

• The intended structure of the work

This can all fit on a single page or maybe two.

Here’s a brief description of each section.

We talked about the bullet-list definition of the Department above.

We went over Key Performance Indicators (KPIs) in the “Setting a Vision” discussion. To summarize, if results are quantifiable, then define the measures and set targets. KPIs are typically derived from the core elements of the financial statements, and the Departmental Plan should include any revenue and expense targets owned by the Department. When we get into rituals and team measures in the next section, I’ll dig more into more ideas for defining team-level KPIs that support the primary financial targets.

We also discussed Major Milestones in “Setting a Vision”. For results that are project-based and potentially qualitative, such as producing new capabilities or functions, you can define project milestones with “definitions of done” that are as clear as possible. Needless to say, the Major Milestones should directly support the long-term Vision that has been named for the organization.

We talked about Authority as a resource in the “Accountability, Authority, and Negotiation” section earlier. To summarize, be explicit about the authority the Leader will have to make autonomous decisions.

Desired resources, of course, also include expenses that may be used to purchase third party services, support headcount expenses, or procure capital. Some organizations will separately budget OpEx (operating expenses) and CapEx (capital expenses that are capitalized and depreciated over time).

I like to call out headcount explicitly, even though the salary and benefits are also included in expenses, given the additional commitment an organization must make to hiring, retaining, motivating, managing, and potentially terminating employees. Again, if a Leader will lead people, make sure to be explicit about that commitment.

Dependencies are resources that the Leader needs to complete their Plan which are not directly managed by them. Dependencies should be called out and negotiated with the other Leader who has the authority and resources to satisfy the dependency, and assuming the dependency is material, that other leader should include the required output on their own Departmental Plan.

Finally, I like to ask each Leader to include some explanation of the structures they will use to organize their work. I’ve dedicated the next section to this topic and will talk more about structure and performance cycles there, but at a high level, the explanation of the structure should make it obvious how the resources will be used to produce the intended outcomes in a manner that can be measured and adapted along the way. The structure highlights one of the ways the Leader will exercise their authority. Very few plans are perfectly described up front. Most plans involve information workers iterating forward in a learning environment. When explicitly described, the structures will highlight the Leader’s intended approach.

How do you facilitate the creation?

Ultimately, each Departmental Plan is a negotiated commitment between the Departmental Leader and the CEO or President. Because the Leaders are working together to support a common Vision, and because they may have mutual dependencies, the Departmental Plans also represent inter-team commitments. For these reasons, I like Annual Planning to be a collaborative exercise in which each Leader presents their plan to the full team of Leaders. These presentations allow for feedback that each Departmental Leader can incorporate. Much like we discussed in the “Leading through Listening” section, the goal is not only to have solid plans but to immerse your Leadership Team in a planning session that builds teamwork, understanding, and excitement for the path towards the Vision.

The Plans could conceivably be drafted by you first and handed to your team for negotiation, but I generally prefer to have my Leaders produce their own drafts. I provide a consistent template that lays out my expectations for what the plan should contain, and that template helps the various Leaders maintain a consistent approach. I ask each Leader to produce a draft Departmental Plan which they bring to an Annual Planning exercise. (As a tactical reality along the way, I ask Leaders to provide early drafts in a common location so I can check on their progress and ensure they are on pace to completing their draft on time and with a consistent approach.)

Annual Planning is then the exercise in which each Leader presents and refines their plan. The room can react along the way, asking clarifying questions and providing feedback.

Checking for Completeness

There are a few extremely important pieces of feedback you are looking to generate. While I like to allow this feedback to occur along the course of the exercise, I also like to have a dedicated final session to ask exactly these questions:

• Are there gaps in the Departmental Plans? Does anyone in the room see a key requirement of the Vision that is missing in the Departmental Plans?

• Is there unnecessary work being done by Departments? Is there waste?

• Is there overlap in the Departmental Plans? Is there redundant work? Is there a key result that has unclear ownership because it appears to be owned by multiple people?

• Are there dependencies that need to be named? Often, a discussion may uncover assumptions that need to be explicitly named and discussed as negotiated dependencies.

• Are there learnings from prior Debriefs that need to be incorporated? This is a good time for Leaders to hold each other accountable to the lessons of the past.

• Do the aggregate KPIs of the Departmental Plans—both revenues and expenses—add up to the desired Annual Budget?

The reconciliation of the Departmental Plans to the Budget may be a detailed follow-up exercise. In many years, I asked my CFO to perform this work offline and reach out to Departmental Leaders to resolve any discrepancies. Once that homework was completed, I would revisit the updated Departmental Plans and Annual Budget with the Departmental Leaders as a team. This final meeting of the Annual Planning exercise was where the commitments were formalized. I would then submit the Budget to the Board of Directors for further discussion and approval.

A Chance for Team Building

Of course, Annual Planning can also be an excellent time for other team-building exercises. It makes sense to bring the team together in-person at an “offsite” where the team can share meals and extra-curricular experiences together. This may be a great time for training or other introspective exercises.

Putting the Annual Plan to Use

Annual Roadshow

When an Annual Plan is complete, you have an excellent opportunity to get the entire organization aligned. Find the right forum for your organization—maybe it is a town hall, a series of Departmental town halls, or a physical tour of your various offices—and schedule a roadshow well in advance so your team members can attend.

Capital One does an excellent job at this. The entire organization participates in a series of annual strategy roadshows in which the CEO and various other executives cover detailed nuances of the strategy and plan. In fact, these roadshows take an entire day for most staff and multiple days for senior leaders! To reach the entire organization, the CEO does multiple sessions across key sites. This roadshow is a foundational part of Capital One’s culture.

However you do it, your roadshow should remind the team of the Vision. It should explain the overall Plan, how it ties to the Vision, and what commitments are being made. You may ask the Departmental Leaders to present their Departmental Plans in detail or simply summarize highlights. What are the goals? What are the KPI Targets? What Major Milestones need to be achieved? When you make the plan transparent and get the entire organization aware of its details, you enable information workers to creatively engage in supporting the plan.

Improving the Plan in a Learning Organization

We talked about Debriefs and creating a learning culture as a key aspect of “Accountability” in the prior section, and we’ll talk about team rituals and regular business reports in the next section, but at a high level, I like the concept of a quarterly deep dive into results so that the organization can incorporate learnings and steer appropriately.

A Quarterly Business Review is a great way to get a read on how your Departments are doing against the Annual Plan. It’s a good time to celebrate great results and learn from places where the organization is missing targets or milestones. The goal is not so much to look backwards but to steer your direction as you look forward.

Once you’re aware of any new learnings, the Annual Plan and supporting Departmental Plans can be revisited quarterly. If exogenous events or significant new learnings mean the original annual plan needs to be updated, these quarterly refreshes give permission to incorporate needed changes.

As these changes occur, you may have an updated Financial Forecast. A Forecast is not the same as the Budget. In almost all cases, you’ll continue to report your financial results against your original Budget. However, in rare cases, significant learnings require a major change of direction. Especially if the Board of Directors or other governing body decides to make a significant change in resources, such as asking Leadership to significantly adjust hiring or spend, a Revised Budget may be warranted. This is a discussion you’ll need to have within whatever governance structures exist for your organization.

Summary

Annual Planning is an excellent opportunity to further align your Leaders and people through the co-creation and sharing of Departmental Plans that support, inform, and improve the Vision and Plan over time.

[1] Wickman, Gino. Traction: Get a Grip on your Business. Expanded Edition, BenBella Books, Inc. 2011.

In oversimplified, stark language, I assumed accountability went as follows. “Here are your goals. I need you to achieve them.” We give a sales rep their quota. We give a technology team a product launch initiative. We give our company an EBITDA target. And then, we try to hold people accountable. That doesn’t always go well. We’re stuck with childish phrases we are ashamed to mutter. “I told you to do it, and you didn’t. Do you want this job? If you do, you’d better improve next time.”

Like a young parent, I originally thought my job was to set the rules and hand out consequences when the rules were broken. Without getting into the issues of parenting, let me simply say that in business, this directive and reactive approach is unlikely to yield desirable outcomes.

Admittedly, almost all businesses have a hierarchy of decision-makers. Those decisions include who to hire and, indeed, who to let go. This decision-making power is central to corporate governance and accountability.

If we are trying to lead information workers, however, and hoping to encourage creative, adaptive, problem-solving performance, we need to look more carefully at what results we are expecting.

Let’s consider an absurdity. Imagine a leader telling their team member, “I need to you to flip this coin a dozen times, and all dozen times I need the coin to show heads instead of tails.”

When the employee fails, should the leader fire them?

Of course not. This simplistic hypothetical absurdity immediately illustrates a core challenge with accountability. The issue with the coin-flip example is not the employee’s results. The central problem is the manager’s assumptions of what good results should look like.

Critically important in this example, a team member that would accept that job expectation of a dozen “heads” would not be the kind of team member we want in our organization.

Both the manager and the employee in this example are wasting resources and time. That’s not the kind of creative, problem-solving team we need in today’s businesses.

A better accountability might start with a question: “If I ask you to flip a coin 12 times, can you produce heads every time?” The employee may offer to do so if they have a special coin with heads on both sides. That’s an example of creative, out-of-the-box problem solving. It’s also a simple request for better resources.

Or the employee may say, “Yes, I can do that approximately one of every 4000 times—is that acceptable?”

Or maybe the employee says, “Given that I can only do that about every 4000 times, maybe we should put in some contingency plans for the times I do not. I have some ideas on how to mitigate that risk.” That response already seems to ring the accountability bell, but it’s notably NOT because they executed against the original demand.

Negotiation as an Accountability Practice

As we move from ridiculous to reasonable, we see accountability begins with a negotiation, not commands. A good leader begins with a conversation. A good team member demonstrates accountability before they even begin the work by competently negotiating the resources available against the intended results.

Some of my favorite thinking about accountability comes from the “Creating Mutual Value” work by Peter Luzmore, founder of Synthesis LLC. He delineates the “performer”—a team member that is doing work—from a “customer”—the team member for which the work is being done. These are equal roles—no hierarchy is implied.

His cycle of performance begins with a request from the customer, or alternatively an offer from the performer.

An explicit negotiation then takes place. The negotiation defines the conditions of satisfaction—what we often call “definition of done” in agile language—and the “by when”. Negotiation also establishes the resources that will be available to the performer. By definition, negotiation may take some time, and there may be some back and forth between the customer and performer before they finalize the resources, the timeframe, and the criteria for what “done” looks like. Negotiation ends when there is a commitment made between the performer and the customer.

Only after this negotiation and commitment does the performance stage occur, which is then followed by the completion stage.

If these stages are honored, then accountability finally makes sense in the completion stage, because by that point, the parties have mutually agreed to what resources are available, how much time should be allowed, and what results are considered acceptable.

Without negotiation, accountability lacks meaning because we can’t understand if the resources were adequate, if the results were reasonable, if they were done on time, or if the Performer had the competency to achieve the results.

If you want accountability, you need to allow negotiations to occur in your leadership hierarchy.

Debriefs

If you want negotiation skills to improve over time, you need a learning environment. One of the best learning moments is at the end of a performance cycle, when results are apparent, and you can ascertain whether a commitment has been met or not. Negotiation skills improve when team members have a chance review the results against the negotiated commitment. If that commitment was specific in its measurements and “definition of done” and had a clear timeframe, then it should be relatively easy to determine if the results met the commitment.

You may call these moments debriefs, retrospectives, or post-mortems. In this facilitated session, you dig into root cause and decompose those causes by asking “why” multiple times until the team really understands what contributed to the results, positively or negatively. Once these root causes are understood, you can identify the good things that you want to repeat and even amplify. You can also identify issues that you want to address through some kind of corrective action.

It’s worth saying “out loud” that you are supporting a learning organization. The goal is to improve through analysis, not to punish by establishing blame. The way you introduce and lead a debrief, and the things you do with the root causes you identify, are key to establishing a culture of trust and respect that must accompany a learning environment.

As noted above, debriefs are just as important when results have been successfully achieved. Don’t use a debrief as a punishment. Take advantage of wins to celebrate success and, importantly, find the core things your team can do to repeat or even exceed prior positive results.

If you want a decent discussion on debriefs, see Debrief to Win by Robert "Cujo" Teschner[1]. You can also explore the simple “Five Whys” concept utilized by the Toyota Corporation.

Revisiting Accountability

If we go through this full cycle, then accountability becomes a rich conversation about whether a team member, provided with the agreed resources, will be able to produce the negotiated results. In the case that the team member does not produce the intended results, we enable a thoughtful conversation about what results were not achieved and a deeper discussion about why. What was the root cause? Were the resources inadequate? Was the timeline inadequate? Was the execution of the team member flawed in some way? Were there outside forces that were not anticipated?

This root cause analysis enables a path of taking corrective actions, and while the termination of the team member’s employment remains on the table, that ultimate decision occurs in the context of a broader set of information. Notably, accountability is not a “one time” moment, but a component of a learning organization’s commitment to continuous improvement.

With this foundation in place, accountability can be decomposed into a few core expectations:

· First, you and your organization must be committed to providing resources and completing corrective actions for external factors that impact results, or alternatively accepting negotiated expectations that incorporate these external impacts. Negotiation, and hence accountability, must be a two-way exercise.

· You ask people to do what they say they will do. Peter Luzmore discusses the “Components of Building Trust,” and “reliability” is certainly key. If the root cause of poor results is simply that a team member didn’t do the work due to a pure lack of initiative (and not due to imposed interruptions or other root cause factors that can impact someone’s ability to do the work), then the person may not be a fit. This is rarely the case. People almost always want to do a good job, and if they don’t, it’s worth digging deeper to understand if the culture of the organization is creating a motivation issue for employees.

· You expect people to be competent at negotiating commitments that are realistic, and even more importantly, that they use the learnings of debriefs to improve their competency over time. This is the centerpiece of accountability. “Competency” is the core component of trust. While we probably wouldn’t hold a team member accountable for not rolling heads 12 times in a row, if our team member continues to commit to such a result, then it becomes clear that the team member is not competent in that area of the business. Their incompetence is not in their ability to generate results (who can produce 12 heads in a row on command?) but in their ability to set expectations and negotiate commitments.

· You ask people to be competent at negotiating commitments that are compelling. If your team member is achieving their commitments but those commitments are lackluster, you can enter the next negotiation cycle with a higher bar for your expectations of what “done” looks like.

Pairing Accountability with Authority

Authority is the ability to make and manage decisions within a given domain. It may include the ability to make strategic decisions, to balance revenue decisions, to trade one cost for another, to hire people, to promote people, or to fire people. As decision-making is almost always a process of balancing risks, authority is the granted ability to manage, mitigate, accept, and trade off risks.

Ultimately, we want to always pair authority with accountability. They should never be separated. Authority is really a resource you give to leaders. A leader is granted authority as a resource—alongside, for example, headcount or budgeted expenses. That full set of resources must be explicitly tied to a set of committed results to which the leader agrees to be held accountable.

Executive authority and accountability are obviously not an exception. Executive accountability should be based on a regular practice of negotiating resources, including their level of authority, against committed outcomes. I like to host annual planning exercises in which each executive is asked to produce a plan. That plan should include their “ask”—the headcount and budget resources they will manage, as well as the authority to make and manage decisions within that domain. The plan should also include specific results. I will dig more deeply into annual planning and the components of an executive’s departmental plan in my next section.

Summary

Accountability is not a directive activity coming from “up high.” It is the two-way process of negotiating commitments against resources that include the level of authority that is being granted. Accountability improves over time in a learning organization. Debriefs that identify root causes to both positive and negative results are an essential tool for continuous improvement. When the organization and each team member demonstrate competency in incorporating those learnings, accountability thrives.

[1] Teschner, Robert "Cujo": Debrief to Win: How America's Top Guns Practice Accountable Leadership...and How You Can, Too! RTI Press. 2018.