A New Playbook?
The issue with top-down decision making
On a recent podcast Brian Chesky, co-founder and CEO of Airbnb, laid out his “new playbook” for product development at Airbnb. In which, he shares how he now believes the CEO of any tech company should be the chief product officer and how he reassigned product managers as program managers. He has also shifted away from traditional growth channels like paid growth, instead “betting that if they just build the best possible product and tell people about it, growth will happen.” The product teams now operate from just one single roadmap across the entire company with Chesky staying very close to every design and every feature.
Listening to this podcast I became increasingly concerned about how this was going to be interpreted by other frustrated tech CEOs who wanted product development to move faster. Marty Cagan, founder of SVPG, has written an excellent two-part article (Alternatives to Product Managers, Alternatives to Product Leaders) responding to many of the issues that Chesky raises regarding the best way to build a product. If your CEO or GM brings up Chesky’s points, I would encourage you to not engage in that conversation until they have read Cagan’s articles. This counter-perspective by Cagan is from someone who has not just personally built great product teams but also coached thousands of tech companies on how to do so successfully. So, in this article, I want to focus on just one aspect of Chesky’s top-down approach, that is taking away autonomy from the product teams and how damaging that can be to their morale.
Chesky’s chief complaints with Airbnb’s previous playbook or product development methodology were slowing progress and leaders not in the details. Two quotes from the podcast that seem to capture this sentiment are:
And then suddenly a fast-growing company becomes a big slow moving bureaucracy. This is a general arc that winds up happening.
And so I basically got involved in every single detail and I basically told leaders that leaders are in the details. And there's this negative term called micromanagement.
Chesky’s new playbook approach is top-down decision making. He states in the podcast, “I stopped pushing decision-making down. I pulled it in.” Now he might be the best person in the world to be making those decisions but there are several problems with this approach. Three major issues with this approach are scaling, morale, and innovation. First let’s cover off on scaling.
Scaling here refers to emulating what can be done at one size at a size that is 2x or 10x or more from that original. An example of this is how an organization might hire if there are only 5 people in the entire company. In this case, everyone at the company can speak to a candidate and we can make a unanimous decision. At 500 people in the organization, we can’t have everyone speak to candidates and we certainly can’t get everyone’s unanimous approval before we make an offer.
As we think about scaling this single person decision making model, we quickly run into problems. Having one single decision maker who can’t possibly be available for everyone all the time will eventually slow down decision making. Slowing down decision making slows down progress and thus slows down product development. When the decision maker can’t be there people start inferring what they want and whoever can make the best argument for “what would leader X decide” wins. No large organization that runs efficiently can operate this way. Take a look at very large organizations like the military. While you might not want to emulate everything within the military, leadership and decision making at scale are something that they do exceptionally well. Leaders in the military also aren’t completely removed from the details, which was one of Chesky’s complaints. If you were around during the Reagan era you might recall one of his favorite terms, trust but verify. As a leader you don’t have to be in every single detail if you trust your team members and periodically verify their decisions.
While these issues with scaling this top-down decision making model is concerning, it’s by far not my biggest concern with this new playbook. The bigger issue is the impact it must have on a team’s morale. Borrowing again from SVPG, empowered product teams are the key to building great products that our customers love and as Cagan states, “The litmus test for empowerment is that the team is able to decide the best way to solve the problems they have been assigned (the objectives).” Not being able to make decisions is not empowering for teams and can lead to huge morale issues.
In his book, Smarter Faster Better, Charles Duhigg states, “a prerequisite to motivation is believing we have authority over our actions and surroundings. To motivate ourselves, we must feel like we are in control…When people believe they are in control, they tend to work harder and push themselves more.” A story that Duhigg tells is about a nursing home in Little Rock, Arkansas where the staff noticed a certain group of residents who were defiant of the rules. This group swapped food in order to decide their own menus for meals and even went so far as to use a crowbar to decide the layout of furniture in their rooms. This group was referred to as subversives and they tended to live longer and be happier. Rosalyn Kane, a gerontologist and social work scientist at the University of Minnesota, wrote with colleagues in a paper “Cognitively intact nursing home residents attach importance to choice and control over matters such as bedtime, rising time, food, roommates, care routines, use of money, use of the telephone, trips out of the nursing home, and initiating contact with a physician.” As explained in How People Learn II: Learners, Contexts, and Cultures (2018) from National Academies of Sciences, Engineering, and Medicine:
“One possible reason why exercising choice seems to increase motivation is that the act of making a choice induces cognitive dissonance: a feeling of being uncomfortable and unsure about one’s decision. To reduce this feeling, individuals tend to change their preferences to especially value and become interested in the thing they chose.”
Duhigg restates this concept as, “Motivation is triggered by making choices that demonstrate to ourselves that we are in control. The specific choice we make matters less than the assertion of control.”
Taking away autonomy from a team is very likely to have a detrimental impact on their morale. There are folks who like to be “order takers” but in my experience these are people who are not highly motivated by the mission and instead just want to do a job, without regard to how their work impacts the greater world. If you want a team that is excited, energized, and highly motivated to not only accomplish something but to do it to the best of their abilities, you want a team member who wants the autonomy to make decisions. The book, Drive by Daniel Pink, introduced the idea that autonomy, mastery, and purpose were the true motivating factors that drove us. Taking away one of these critical three components is certainly going to lead to long term issues with team morale.
The third major issue with this top-down playbook is the impact that it has on innovation. A major source of innovation for digital services is the engineers closest to the actual technology and the designers closest to the users. Take as an example, a company like Netflix who is known for having sustained innovation over decades. This didn’t happen because Reed Hastings, co-founder of Netflix, made all of the decisions. In fact, just the opposite happened. Netflix created the ecosystem for innovation through its robust organizational culture of freedom and responsibility. From their perspective, freedom and responsibility are the gateways to creativity. As articulated in a profile piece on Netflix’s innovation secrets in The Economists, “Encouraging original thinking and not telling employees what to do in the innovation process requires that the team members are highly talented, self-disciplined, and aligned on the vision and objectives of the tasks at hand. A leader should provide all the information so the team members can make great decisions and accomplish their work without oversight and process controlling their actions.”
This notion that empowered teams drive innovation is not new. In 1997 research was published in Small Group Research that demonstrated a significant relationship between leaders empowering behavior and evaluations of team innovation. This work built on the work of others such as the 1987 book The empowering manager by Peter Block and the 1986 work of Warner Burke, Leadership as Empowering Others. More recently a 2023 article, Leadership Styles and Innovation Management, stated unequivocally, “Evidence proves that autocratic and transactional leadership styles have a negative impact on innovation and transformational and democratic leadership impact innovation positively.”
In evaluating Chesky's "new playbook" for Airbnb, it's clear that this approach, while intended to streamline processes and enhance product development, raises significant concerns about scalability and team morale. The shift to a top-down decision-making model, where a single individual holds the reins, poses a risk of slowing down the very progress it aims to accelerate. As organizations grow, the need for distributed decision-making becomes crucial, a lesson well-understood by large, efficient entities like the military. Furthermore, the impact on team morale cannot be underestimated. The loss of autonomy and empowerment, as highlighted by various experts like Cagan and Duhigg, directly undermines motivation and innovation. Successful teams thrive on the autonomy to make decisions, a sense of mastery over their work, and a clear understanding of their purpose. Lastly, the impact of an autocratic leadership style on innovation has been well researched and practiced. Companies such as Netflix purposefully made great strides to ensure they fostered a culture of empowerment that led to innovation. Ignoring these fundamental drivers can result in disengagement and a decline in performance as well as innovation. Thus, while Chesky's methods may offer some immediate benefits, their long-term effectiveness and sustainability, particularly in a dynamic and collaborative industry like tech, remain questionable.