Effectiveness – Charles D. Schrock

Accountability – the 3 lines of defense

If you have any connection to “risk management”, you have probably heard of the “three lines of defense” model.

The first line of defense (“FLD”) makes the risk decision at the point of its occurrence. Sweep the floor or don’t sweep the floor. Turn on the lights or don’t turn on the lights. Make the sale or don’t make the sale. Recruit this volunteer or don’t.
The second line of defense (“SLD”) sets policies regarding the risk. In many organizations, that’s a separate group with technical expertise. Maybe it’s the “Plant Safety Committee” that interprets and implements OSHA rules for the factory. Or it’s the “Information Security Group” that interprets and implements data security procedures.
The third line is the independent review, often by internal audit, to provide an independent and objective view .

Now let’s put this in the context of “goals”. As described in an earlier post, there really are only two kinds of goals within an organization. There are “mission goals” and “mitigation goals”.

As a reminder, mission goals are those that directly, intuitively, and obviously align with the overall mission. These goals are things like sales goals, production goals, brand recognition goals, financial reporting goals, cash management goals, etc.

Mitigation goals are the “anti-mission” goals. These detract from the mission goals, but in a necessary way. As an example – “Sure we want to maximize sales, but we will not do it in a deceptive manner.” “Sure we want to manage cash flow, but we won’t illegally hide funds in off-shore accounts.”.

If the organization is big enough, mitigation goals are owned by a separate unit with the right expertise. Maybe it’s the Legal Department, or Compliance, or Credit, or something similar.

And now we arrive at the point of this post – Accountability. Effective organizations thrive on accountability. Who are we choosing to entrust with that goal ? That’s accountability.

In the case of mitigation goals, these are always owned by a second-line-of-defense unit. It has to be their responsibility to assure that these bad things aren’t taking place. Part of the SLD’s responsibility is to define, and push down, procedures that will guide the first line of defense. The content of these policies and procedures must be clearly owned by the SLD unit. If they don’t achieve the mitigation goal, that’s SLD’s failure. They better be monitoring to determine if their strategy (policies, procedures) are achieving the desired results or not.

FLD, on the other hand, is responsible for executing those procedures. Period. If the procedures aren’t really very well-designed that’s not FLD’s problem. Remember, FLD’s primary role is to achieve their mission goals, not the various mitigation goals. But – to be clear – the FLD is responsible for following company policy – and that includes performing whatever mitigation procedures the SLD defines.

So, that’s it. It’s easy to assign accountability for mission goals. But mitigation goals will always create a tension – a push/pull – with those mission goals. That’s why it’s important to segregate these goals to a specific SLD group with the appropriate interest, expertise, and authority to make it happen. And they must understand that their role is “anti-mission” – and for good reason.

So what happens if the mitigation procedures are so onerous that they severely impact the mission goals? This is where FLD’s self-interest kicks in. If FLD is not achieving their goals and they contend that it’s due to onerous SLD mitigation procedures, it becomes FLD’s responsibility to raise the flag and ask for a reevaluation. But whether to comply with the mitigation rules? Not their option. They cannot pick and choose which mitigation rules they will recognize. If they choose to ignore the procedures, they have to pay the price for knowingly ignoring and acting contrary to policy.

One last point. If the mitigation procedures are negatively impacting a mission goal, and there’s nothing that can be done about it, FLD leaders have every right to petition for an adjustment of their particular mission goal. For example, let’s say that a food delivery service has the goal of delivering 500 free meals a week to the needy in their community. And they use volunteers to drive and deliver those meals. Subsequently, a mitigation procedure says that volunteer drivers may not have any driving infractions for the prior 5 years. That will obviously have an impact on recruiting volunteer drivers, perhaps making the mission goal impossible. Accordingly, it’s entirely appropriate for the individual who is accountable to deliver 500 meals to reopen that discussion and negotiate resetting the goal to, say, 300 meals per week. This illustrates the fact that mitigation always has a cost. That doesn’t make it inappropriate. But like any constraint it needs to be transparently considered in strategic planning.

Is it Improvement or Innovation?

I’m working on a project that deals with the concept of “innovation” – big surprise, right? Who isn’t?

So, as I’m getting down some thoughts, I figure that I need to know the right definition of the word “innovation”. Wow – did that start me down a hole.

You aren’t your role – but you need to accept it

I know a guy – a good guy. He was a great Chief Technology Officer at his company. Then, he got promoted to CEO. He was just next in line.

So he hired a new CTO to fill his old role. Now the company has two CTOs. But still doesn’t have a CEO. You see, this guy would love to be a good CEO. But that’s just not how he’s wired. He can’t fill the role. I’m paraphrasing Ken Harrelson who said that a good baseball manager figures out what a player isn’t any good at – and then doesn’t ask them to do it.

If you have integrity, you need to accept ownership of your limitations. If you can’t (or simply don’t want to) fill the role that you’re being offered then don’t take it. If you hate working for big companies, don’t apply for that job. And if you’re not a motivational people-person, don’t take that CEO role. Your success relies on your ability to fill your new role, not your last one.

If you’re not authentic and choose to ignore your limitations, you’re just giving everyone else the opportunity to figure it out for themselves pretty quickly.

Easy isn’t bad

I was wasting a few minutes the other day, playing Minesweeper on my phone. I had it set to a difficulty level of “Easy”. This means it has fewer “hidden” mines within the total grid. So, you’re less likely to accidentally hit a mine and lose the game.

When I won – I win most on the Easy setting, of course – it congratulated me for winning an “Easy” game. That ticked me off a bit, and I had to consider why.

First, I prefer “Easy” mode because there are fewer random bad events (the hidden mine that I couldn’t possibly know about). So, the Easy setting allows me to use my skill to win (or lose) the game, rather than be blown up randomly by hidden mines. I was more in control.

I admit that my bristling over winning an “Easy” game is purely an emotional response – as if there’s some flaw in wanting the game to be “easier”.

But isn’t that the whole point of strategy and planning in any setting? Isn’t our goal to win more often? To make the game “easier”?

I have spent a lot of time thinking about the topic of risk management over the past few decades. One thing I know – if you want to lower risk you invest time and energy to remove uncontrollable bad events from your strategy. You create backup plans. Or you purchase insurance coverage. Or you create a prototype to test your design before you put it in production. Or if you’re an athlete, you train obsessively.

I guess my conclusion is that we should embrace (not be embarrassed by) the process of making the game easier – before we start.

Objectives and Key Results

OKRs – Here’s what you need to know.

OKRs are another management concept that continues to gain a following. I’m sure you’ve read at least a little about them. Maybe a consultant has tried to sell you on the value of implementing them for your team.

Quick refresher – this is a management idea implemented by Andy Grove at Intel in the 1970’s. It has also gained traction as one of Google’s management tools. Here’s some information from the source – John Doerr’s TED talk. John has been using and promoting OKRs his whole professional life. Apparently, to good effect.

First off, it’s a useful concept. Useful – meaning that it’s simple, practical, complete, and sustainable.

Now let’s put that into context.

In general terms, humans have always i) set goals, ii) developed a plan to achieve those goals, and iii) monitored progress and made adjustments as needed. Sometimes this process is explicit and documented. Other times it subconsciously flashes by in a millionth of a second.

OKR doesn’t change this 3-step process. It’s just an expanded way to view that first component – goal setting. Expanded? Before showing how OKRs are different, here’s what they’re different from.

Have you ever heard of SMART goals? This is an approach to goal-setting, suggesting that any goal must have certain attributes to be of any real use. It must be:

SPECIFIC
MEASURABLE
ACHIEVABLE
RELEVANT
TIME-BASED

So, that means that if my boss gives me a goal, it needs to tick off all of these boxes to be SMART. But, there are some glaring holes. Like – Why should I care about this goal? Where’s my ownership? Does this goal strengthen my overall sense of engagement? And should I take any personal responsibility to actually build value for my organization – or do I just need to hit my measurements?

SMART goals were intended to eliminate vague and unmeasurable goals. They do that pretty well. But no matter how SMART they are, rigid top-down goals are a pretty poor way to move a team forward in a meaningful way.

Here’s where OKRs expand this process.

Instead of my boss telling me what my SMART goals need to be, she talks about what the organization is trying to accomplish. What its strategies are. What it’s headed. Then, she asks how I can contribute to this.

How do I respond? Maybe I respond with an idea that I’ve been thinking about for months. Some pet idea that I think could make a difference. It’s an aspirational idea of how I can better provide value, taking advantage of my unique strengths and experiences. If she agrees, that’s my Objective. Then, we talk about what I’m actually going to do. How I’m going to track it. And when things are going to be done. These are my Key Results.

This approach provides two levels of goals (remember that 3-step process?) First up – I had that idea that provides value in some meaningful way (my Objective). Then, only after we agree on that, do we talk about measurable activities (my Key Results). The SMART approach can be applied to my key results. SMART cannot be applied to my objectives.

Did you notice the fundamental difference between i) my boss handing me a bunch of SMART goals, and ii) developing OKRs? It’s not the outcome. I still end up with a bunch of SMART goals. But these SMART goals come with context. My context. My commitment to provide value. And these flow from conversation. Conversations create transparency and engagement. Conversations align higher strategy with my willingness and ability to contribute. Rather than my boss assuming that she knows how I can best contribute, OKR brings me into the picture.

There’s more benefit than what I just described. And there are plenty of resources to help you dive deeper. But this gives you the overview. And, shares what I believe to be the chief benefit.

As Seth Godin has written, “You’re smarter than they think you are.” Any time an organization can build that simple concept into its DNA, it’s a good thing.

The Ability to Think

Is there anything more important to our societal well-being than the ability to think and reason clearly? And has it ever been harder than today – where intentional lies can be spread more broadly and more rapidly than ever before? Deep fakes, with an intentional goal of confusing and disrupting, are already becoming common .

The ability to discern what is a fact versus what is probably true versus what is simple rumor – that is a critical skill. And it’s only the starting point for our ability to contribute to our mutual well-being. The ability to clearly think and reason – that’s a skill that needs to be taught broadly to all people, not reserved for the clever few who attempt to lead (or mislead).

This is hard. Real, indisputable, facts are rarely the centerpiece of our important beliefs. What’s probably true is usually based on a preponderance of other evidence that may or may not be well-supported. But just because we might have heard a rumor hundreds of times does not elevate it to anything more than a well-circulated rumor.

So, it seems that the central question that we should ask ourselves and others, often, is – “why do I believe this to be true?”

Team Attributes

Here’s what I’m wondering – to build an effective team I’m thinking that I need to assure four specific attributes – Focus (the team members shouldn’t get distracted), Transparency (the team members freely share information internally and externally), Accountability (the team members accept responsibility in pursuit of their goals), and Resiliency (the team makes adjustments when it has setbacks and gets right back to work). Your thoughts?

Accountability

Every goal has exactly one owner. Period. You need to be really clear on this. When goals are shared by more than one person, you lose accountability.

Team goals, for instance, are not shared by all of the team members. Only the team leader has the responsibility to deliver team results. The team members? They should be expected to use their skills to deliver whatever specific tasks are assigned to them within their role as team members. Of course, every assigned task should support the team leader’s goals.

So, what about a highly engaged team member? They may feel empowered, even compelled, to “go the extra mile” beyond whatever is specifically assigned to them. Nothing wrong with that, of course. Maybe a teammate drops the ball. It’s perfectly OK for all of the other team members to have their back. But there is a big difference between doing a little extra to help everyone succeed and taking over the team leader’s goals. An engaged team member can be passionate, engaged, and bring donuts to the team meeting. But only the team leader gets to set the agenda. If everyone feels like they own the goal, then they’ll have their own strategy. And, that’s not a team. Get this wrong and you lose all sense of responsibility and accountability.

What do sales commissions say about your organization?

Here’s something that’s been on my mind for a while. Sales. Sales teams. Salespersons. I think I have an idealized view of how that should work. But maybe not a practical view. Here’s an example. I know of a sales leader – a really good guy. He works hard. He’s paid well. He knows his industry and knows how to bring in the business. Mostly, he’s great at recruiting good, experienced salespeople to work on his team.

But … I guess there’s always a “but”. He has a very transactional view of the world. In his sales world, it’s always about a commission. If you want to sell more of “A”, you have to structure your commissions so this salesperson will lean toward “A”. If you want this salesperson to also make a referral to another part of your company, he’s convinced there’s no way that will happen unless you pay a separate commission for that, too. I laughingly believe, in his view of the world, a salesperson won’t open the door for a young family struggling with 3 children unless you pay them a commission.

At first, I thought these individuals had an inherently different view of the world than I do. That they are transactional. Mercenary. Pay me. I really don’t care about anything or anyone except me.

But, I wonder if maybe the organization’s culture and strategy aren’t the real culprits, here.

Let’s suppose some fictional organization provides a service. For this discussion, let’s say lawn care. They might have slogans that they care about helping their customers have the most beautiful lawns in the neighborhood. They say that they truly care about their customers and will always go the extra mile. That it’s all about building long-term relationships. But, in practice, they never really differentiate. They show up and mow your lawn. Same as every other lawn care company who, by the way, also promises the same “unique” value proposition. We’re the tidiest. We’re the most responsive. We care more about your lawn. Yada Yada.

In that case, how could you possibly expect your sales team to be anything but transactional? They really have nothing to sell except their smile and price list. They know the company doesn’t have anything unique to offer. Oh, you might try to convince prospective customers that you’re special and unique. But your sales team knows better. They’ve been around the block a few times.

I’ve read that people will naturally do whatever they think is right – to help a customer or to help their employer. That’s human nature. But commissions distort this natural order. Commissions exist to persuade someone to do something that they wouldn’t otherwise do.

So – following that to its conclusion – if your sales are predicated solely on commissions, does that imply that your sales team wouldn’t otherwise be willing to promote your solution to someone? Of course, I’m assuming that you’re paying a good, competitive wage. But, shouldn’t they believe in what you do? Shouldn’t they work for you because they believe that your solution is the best way to help others solve some tangible problem?

If you’re unsure about whether your sales team really loves you and believes in you — or they just love your commissions — that’s a problem. Having the highest commission rates is a lousy excuse for a strategy.

Like I said at the beginning. I may have this all wrong. What are your thoughts?

Chief Vision Officer

What is the role of a CEO? For some reason, this has been on my mind the past few weeks. I’ve known a few CEO’s. They have ranged from larger-than-life pioneers in their industry to others who are highly trustworthy stewards but seemed unable to articulate a vision or direction for their company.

So, what’s the role of a CEO? First off, I’m really only talking about their public role. I’m not talking about one-on-one behind closed doors, when they must also be a manager. But in public, I think the single most important role is to set a vision for where their organization is going. Then, along with others (maybe everyone in the organization) the CEO should assure that there is a strategy to get there. By strategy, I mean a clear recognition of their organization’s particular strengths. Then, utilizing those strengths, the strategy describes a series of objectives, a path with discernible way-points, that will lead to that very clear vision.

The CEO needs to keep reinforcing this vision and strategy. The CEO should begin every discussion with the vision. The CEO should publicly reinforce the unique strengths that support the strategy. The CEO should make clear and transparent assignments to a few key roles to enact the strategy. And the CEO should share objective measurements that show whether the strategy is working.

In my view, the CEO should not be talking about anything that takes the team’s eyes off the vision. They should not be talking about short-term financial results. They should not be talking about the competition. They should not be talking about marketing. They should not be talking about sales results. They should not be talking about investors or funding. These things should all be left to someone else in the organization whose specific job is to translate the strategy into action. In other words, those discussions should be left to those few key roles that I mentioned earlier. The CEO should restrict their public role to vision and strategy.

In Simon Sinek’s book “The Infinite Game” he makes a case for the top person’s title to be “Chief Vision Officer”.

Agree or disagree?