Leadership Principles - Part 2

Informing Teams, Making Decisions, and Leading by Example

Last week we introduced six leadership principles that I was taught in the military and that resonate across various contexts. The principles discussed were Know Yourself and Seek Self-Improvement, Technical Proficiency, and Know Your People and Look Out for Their Welfare. This week we discuss Keep Team Members Informed, Make Sound and Timely Decisions, and Set the Example and Take Responsibility. Together these six serve as foundational elements for effective leadership. Each principle highlights a different facet of what it takes to lead successfully and ethically in any environment. Let’s dive in.

Keep Team Members Informed

In the realm of leadership, the principle of "Keep Team Members Informed" is crucial for fostering a transparent and trusting work environment. This principle asserts that leaders should consistently share key information with their team, providing them with the necessary context to understand their roles and the broader business goals. Effective communication builds a team's confidence in their leadership and aligns efforts towards common objectives.

Effective leaders understand that keeping team members informed goes beyond mere updates; it's about creating an environment where information flows freely, promoting an inclusive and proactive workforce. This transparency ensures that team members are aware of changes, challenges, and strategies, enabling them to make informed decisions and contribute meaningfully to the organization's objectives.

Another key for keeping team members informed is using the opportunity to share insights into how you and other leaders think. Providing your perspective on information or sharing another leader’s perspective is much more powerful than just relaying information. These insights allow team members to understand how you think through problems and what types of decisions you might make in the future based on this information. This also allows your team members to make independent decisions that would support your overall goals without having you involved in everything.

The U.S. military uses a five paragraph operations order for issuing directives to subordinate units. The five paragraphs are: situation, mission, execution, sustainment, and command & control. One of the most important parts of this plan is the first statement under execution, known as the commander’s intent. This intent section succinctly describes what constitutes success for the operation. Included is information such as implications, purpose, acceptable risk, etc. The reason this statement is so important is that when things don’t go as planned, everyone knows what is most important and can make independent decisions towards that intent. And, things never go as planned. There are a number of widely used quotes that attest to this. The military often quotes the 19th century Prussian military commander, Helmuth von Moltke, “No plan survives first contact with the enemy.” A more humorous version provided by Mike Tyson, “Everyone has a plan until they get punched in the mouth.” 

Effectively informing your team members requires more than just a one way flow of information. Many of you have heard the trope that “communication is a two way street.” While a bit kitschy, it does convey the importance of not just talking to someone or sending them a document without giving or requiring them to respond. Most leaders would always give people the chance to ask clarifying questions or even voice an opinion, but what about requiring them to do so? Back briefing is a technique that leaders can use to ensure that others have heard and understood the information. This can be as simple as asking people what they heard or what is their next step. I like to use this technique when providing constructive feedback or other times when I really want to ensure the individual has heard what I’m trying to communicate. As the parent of a teenanger, I employ this technique when I really need to convey information and I’m not sure my son is listening. 

Satya Nadella, the CEO of Microsoft, is a leader who has demonstrated the importance of keeping team members informed. Since taking over as CEO, Nadella has transformed Microsoft’s culture from one of internal competition to one of collaboration and transparency.

Under Nadella's leadership, Microsoft shifted its focus towards a growth mindset, a concept that encourages learning from experiences and being open to change. Nadella’s approach involves open communication channels and regular updates to employees about company goals, technological advances, and market strategies. He emphasizes the importance of each team member's understanding of how their work contributes to the company’s overall success.

Nadella implemented more frequent communication within Microsoft, including regular Q&A sessions, town halls, and online forums where employees at all levels are encouraged to voice their opinions and ask questions directly to senior management. This level of openness is intended to make employees feel valued and involved in the company’s direction.

One notable instance of effective communication under Nadella's leadership was the announcement of Microsoft's focus on cloud computing and the introduction of Azure. Nadella provided clear and detailed explanations of why the company was making this strategic pivot, what the expected challenges were, and how each department could contribute. This not only kept employees well-informed but also helped to align their efforts towards a common goal.

Satya Nadella’s leadership at Microsoft illustrates how keeping team members informed can lead to significant positive changes in a company. By ensuring that all employees understand the company's strategic direction and their role in it, Nadella has fostered a sense of community and purpose at Microsoft. This has not only increased employee engagement but has also been instrumental in the company's recent successes.

"Keep Team Members Informed" is a fundamental leadership principle that can dramatically impact an organization’s culture and performance. Leaders like Satya Nadella show that through effective communication, it is possible to transform a company’s internal dynamics and drive better business outcomes. Leaders aiming to enhance their team’s performance and commitment should prioritize open, consistent, and meaningful communication. In doing so, they can ensure that every team member is not just a worker but a well-informed stakeholder in the organization’s journey.

Make Sound and Timely Decisions

The principle of "Make Sound and Timely Decisions" is fundamental in leadership, encapsulating the need for leaders to balance decisiveness with thorough analysis. This principle emphasizes that the quality of decisions, along with the speed at which they are made, can significantly influence the effectiveness and responsiveness of a team or organization. Effective leaders understand the importance of making informed decisions quickly to maintain momentum and capitalize on opportunities.

Despite so much literature on decision making from practitioners and scholars, we’re still very far away from being great decision makers. This is in part because we’re so terrible at risk assessment. We are also very averse to losing things we already have, which negatively impacts our decision making. Much has been explained with system one and system two thinking thanks to Nobel Memorial Prize recipient, Daniel Kahneman and others. So much is stacked against us but as leaders we make decisions every day that impact not only ourselves but often lots of other people as well. Jeff Bezos wrote one of his early annual shareholder letters about decision making:

Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. 

Effective decision-making involves understanding the stakes and consequences of each choice. Leaders must weigh the need for a rapid response against the risk of insufficient analysis. The goal is to avoid hasty decisions that haven't been fully thought through, as well as paralysis by analysis, where overthinking delays action unduly.

Angela Merkel, the former Chancellor of Germany, is renowned for her pragmatic and effective decision-making style, particularly in times of crisis. Her leadership through various global and domestic challenges provides a clear illustration of making sound and timely decisions.

During the Eurozone crisis, Merkel faced immense pressure to stabilize the economy and maintain the integrity of the euro. The decisions required were complex, involving delicate negotiations with multiple countries, each with its own interests and economic realities. Merkel's ability to quickly assess the economic data, forecasts, and potential outcomes led to decisive actions that were crucial in navigating the crisis. Her approach involved crafting solutions that balanced immediate financial stability with long-term economic reforms.

Another significant challenge was the refugee crisis in 2015, where Merkel decided to open Germany’s borders to thousands of refugees fleeing conflict in the Middle East and Africa. This decision, while not completely supported by everyone, was made under immense time pressure and required Merkel to anticipate both the immediate humanitarian impact and the longer-term social and political consequences. 

In 2015 and 2016, Germany saw a massive influx of asylum seekers, totaling around 1.25 million. The situation, described by then Interior Minister Thomas de Maiziere, was one of occasional loss of control, and his successor, Horst Seehofer, referred to it as a "reign of injustice." Despite the challenges, political figures like Irene Mihalic of the Greens defended Chancellor Merkel's decision to keep borders open, suggesting that closing them would have led to worse chaos in Europe.

Five years later, assessments of how Germany handled the refugee crisis vary. De Maiziere believes there has been significant progress, and his colleague Sensburg thinks Germany has managed the crisis well overall. However, Mihalic sees the integration of refugees as an ongoing effort that offers great potential benefits for Germany's labor market and demographic shifts. Supporting this view, the German Institute for Economic Research (DIW) acknowledges progress but emphasizes the need for continued effort from both refugees and the host society.

Merkel's decisions during these crises were not only timely but were also underpinned by a deep understanding of the complexities involved. Her leadership exemplifies how making informed and swift decisions can lead to positive outcomes, even in the most challenging situations.

"Make Sound and Timely Decisions" is a critical leadership principle that has a direct impact on an organization's ability to effectively respond to challenges and opportunities. Leaders like Angela Merkel demonstrate that with the right blend of speed and thoroughness, it is possible to make decisions that advance organizational goals and address urgent needs effectively. Aspiring leaders should aim to enhance their decision-making skills by developing a balanced approach that values both quick action and careful analysis. This principle not only drives success but also inspires confidence among team members and stakeholders, solidifying the leader’s role as a decisive and capable guide.

Set the Example and Take Responsibility

One of the most influential principles in leadership is to "Set the Example and Take Responsibility." This principle underscores the importance of leaders acting as role models, embodying the behaviors and values they expect from their teams. It also emphasizes the need for leaders to own their actions and decisions, particularly when things do not go as planned. This approach not only builds trust and respect but also establishes a culture of accountability and integrity within the organization.

Leading by example is about more than just doing the right thing. It's about demonstrating commitment, integrity, and the willingness to do the hard work alongside your team. When leaders model the behavior they expect from others, it sets a powerful standard and motivates everyone to follow suit. Taking responsibility, especially in challenging situations, reinforces a leader’s credibility and dedication to the team’s goals.

As a leader, you of course want to set a great example by producing high quality work, but what happens when you make a mistake? Leaders own up to their mistakes and do what’s necessary to make them right. What if you miss a deadline that impacts one of your team members? You don’t ignore that and let them suffer. You speak to your boss or whoever else is necessary to fix the situation. When your team sees this behavior or knows that you will do this whenever necessary, they will trust you in all other decisions. At Etsy we have an amazing culture that makes it very easy for people to admit to mistakes or unintended consequences of their actions but unfortunately not every part of our lives is like this. What makes this easier to do in hard situations is to practice it in forgiving environments. 

In the military, during training, people are expected to self admit mistakes or decisions that don’t go as planned. Doing so builds the muscle that when needed during higher stakes situations, that is the default behavior. While you might get away with ignoring or covering up small issues in training, when they count the impact and consequences are magnified. If you miscount, misjudge, misread, or miscalculate, you own up to it so you and your team can immediately begin rectifying the situation. 

The other part of taking responsibility for your actions is owning up to your role in conflicts. When disagreements escalate and affective conflict arises, leaders step back and admit the role they might have played in the situation. Rarely have our responses not played some part in escalating a situation. Did we get defensive? Did we stumble into an already sensitive topic? Admitting our role often helps deescalate the situation and gives the other people opportunities to see and admit their role. 

Alan Mulally, former CEO of Ford Motor Company, is an exemplary leader who demonstrated the principle of "Set the Example and Take Responsibility" during his tenure. When Mulally joined Ford in 2006, the company was facing severe financial difficulties and was on the brink of bankruptcy. His leadership was pivotal in turning the company around without resorting to the government bailouts that its competitors relied on during the financial crisis.

Mulally was known for his hands-on leadership approach and insistence on accountability. One of his notable initiatives was the implementation of the Business Plan Review (BPR) meetings. These weekly sessions required Ford’s executives to report on their progress against the company's strategic goals, fostering a culture of transparency and direct communication. Mulally himself actively participated in these meetings, not only leading them but also openly discussing challenges and setbacks, thereby setting a powerful example of accountability.

Mulally often emphasized the importance of teamwork and was known for his motto, "Working Together." He personally demonstrated commitment to this ethos by being approachable and consistently involved in the day-to-day operations of the company. He made it a point to be accessible to employees at all levels, which encouraged open communication and a collaborative work environment. His leadership style was not just about delegating but being part of the team, showing a deep commitment to the company's success.

During the financial crisis, Mulally made significant decisions to stabilize Ford, including mortgaging the company’s assets for $23.5 billion, which provided Ford with a much-needed cash buffer to avoid bankruptcy and government bailouts. He was transparent about these risky moves, openly communicating the potential consequences and taking full responsibility for these decisions. His willingness to make tough choices and stand by them played a crucial role in Ford’s recovery, demonstrating his commitment to taking responsibility.

Under Mulally’s leadership, Ford experienced one of the most impressive turnarounds in automotive history. By the time he retired in 2014, Ford had become profitable again and had restored its reputation as a leading global automaker. Mulally’s example of leadership and his accountability had a lasting impact on the company and its culture.

Alan Mulally's tenure at Ford is a testament to how effective it is for leaders to set the example and take responsibility. His approach not only helped save a major American company but also inspired a culture of accountability and collaboration that continues to influence Ford today.

"Set the Example and Take Responsibility" is a critical leadership principle that resonates across all levels of an organization. As leaders we need to set the example because our team members are always watching but this doesn’t mean we aren’t going to make mistakes. When we do, we need to admit them and work to fix them. Even if you ignore all the other principles that we’ve talked about -- make sound & timely decisions, keep team members informed, know your people & look out for their welfare, be technically proficient, and know yourself & seek self improvement -- setting the example and taking responsibility is the cornerstone of leadership. Think about how young leaders are often depicted in movies and novels, e.g. the character Katniss Everdeen in The Hunger Games. They and their peers are usually faced with some sort of challenge. The leader doesn’t give an uplifting speech or take time to get to know everyone. The leader picks up a tool, steps forward, and gets to work. Before long everyone has joined in the work/fight/rebellion. This is what leadership is built upon. Once we’ve mastered this, then we can refine it with all the other principles.

Conclusion

The principles discussed – Know Yourself and Seek Self-Improvement, Technical Proficiency, Know Your People and Look Out for Their Welfare, Keep Team Members Informed, Make Sound and Timely Decisions, and Set the Example and Take Responsibility – serve as foundational elements for effective leadership. Each principle highlights a different facet of what it takes to lead successfully and ethically in any environment.

Leaders like that we have covered in this series – Nelson Mandela, Ursula Burns, Howard Schultz, Satya Nadella, Angela Merkel, and Alan Mulally – exemplify these principles in action, demonstrating that effective leadership transcends industries, cultures, and challenges. These leaders have shown that knowing oneself, mastering the relevant skills, caring genuinely for team members, communicating openly, making informed decisions swiftly, and leading by example are not just theoretical ideals but practical necessities that drive real-world success and positive change.

The integration of these principles fosters a leadership approach that is both empathetic and effective, balancing the needs of the team with the demands of the environment. As emerging and established leaders alike strive to embody these principles, they create more cohesive, resilient, and motivated teams capable of achieving great accomplishments.

Ultimately, leadership is a journey of continual learning and adaptation. By embracing these six principles, leaders can navigate the complexities of their roles with confidence and integrity, inspiring those around them to rise to their own potential. The true measure of these principles is seen not just in the success of the leader, but in the empowerment and achievements of their teams.