Trust and Ownership - THE AGILE CULTURE: LEADING THROUGH TRUST AND OWNERSHIP (2014)

THE AGILE CULTURE: LEADING THROUGH TRUST AND OWNERSHIP (2014)

Chapter 2. Trust and Ownership

The Big Ideas

Image To maximize productivity, a leader needs to build ownership within the team and act as an enabler rather than a controller.

Image To enable the team, the leader must trust the team and create a culture of trust.

Image Individuals and teams perform best when they understand “why” they are doing what they are doing.

Image Working honestly with ambiguity builds trust and ownership, improving team productivity.

Some Teams Do Better Than Others

I always thought I was a trusting, collegiate style of leader until Human Resources organized a survey of those who worked for me.1 Their view of my natural style was slightly to the right of Attila the Hun!

1. As a reminder, if a story or experience involved all three authors, we use we in telling the story. If only one of us was involved—in this case, Paul—we use I.

I have been working on improving the effectiveness of our development teams for many years—trying to find ways to deliver more value to our customers. I quickly recognized that iterative approaches with motivated and empowered teams were far more effective than the command and control method that I had used, and, I might add, with good success for many years. When I thought about it, it seemed strange to me that I hadn’t realized this myself. I struggled to understand why it was not obvious that I should have built full ownership within the teams that worked for me.

I started by wondering what I had feared, why I hadn’t given the teams more control over what they were doing. The answer came quite quickly. I was simply afraid that if I trusted them they might not deliver! I was scared! The command and control processes had worked well for me. Why should I give them up? Indeed, it was because of them that I had been promoted and had been offered many good opportunities.

I thought about the good managers I had worked for and who had trusted and supported me. Of course, I assumed, this was because they “knew” that I had ownership and therefore they could trust me. What had they seen that I had not?

I recalled Geoff, who gave me a senior management position in his lab.

“Paul, there are only three things you need to do:

1. Build a great team.

2. Explain clearly what you need them to do.

3. Make them coffee. (Get them what they need to succeed.)”

Geoff practiced what he preached and was a joy to work for.

I took all of this input and went back to thinking about the relationship between my trust of the team and the degree of ownership of delivery that they had, and it crystallized in the Trust-Ownership Model I describe here. With that said, let’s dive a bit more into this concept.

As we have worked on improving business effectiveness with small and large companies, we have run free-form brainstorming sessions with many teams and hundreds of managers from first line to executives. We ask what behavior they would like from their leaders to help them be more effective. The normalized results are shown in Table 2.1.

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Table 2.1 Normalized Results of Brainstorming Sessions

What do teams want from their leaders in order to be more effective? Trust—the clear winner by a factor of two, followed by Vision and Strategy. Even when the survey was done at different management levels, there was no difference in the responses. Everyone wants to be trusted by their leaders.

Additionally, we asked middle and senior managers another question: what they felt their teams needed from them. The winner was . . . Guidance! Interestingly, those who answered the questions immediately recognized the inconsistency of their positions. This disconnect between what we feel we need and what, as leaders, we feel our teams need is the core of the issue that faces us today. In an ever-increasingly dynamic and complex world, what is the role of the leader? What is the responsibility of the team? How can we combine trust and ownership to improve agility and results—and in significant ways?

Above all, everyone (including leaders) believes that they can be more effective when trusted by their leaders, but leaders feel their teams need more guidance. How can we work this out?

The Trust-Ownership Model

If a member of the team asks the leader a question, does the leader simply tell the team member “what” to do and “how” to do it? Or is it better to trust the person to figure out “how”? What if the situation is an emergency and requires an immediate solution? Does the leader still offer guidance or is it better to quickly solve the problem? Also, what is the best way to develop talent on the team? By having the leader tell everyone how to do everything? Not likely. And, if the team is not improving, how can the organization hope to become a market leader?

To try to make sense of the interplay between trust and ownership and also to help both teams and leaders assess where they are and define a path to success, we have developed a Trust-Ownership Model to make the issues clear and to help leaders understand not only “what” they need to do to make their teams more effective, but also “why.”

To streamline the text in the remainder of this chapter we will use the shorthand terms of Leader and Team.

By Team we mean the individuals and teams that actually do real work to create customer and business value. Sometimes this will be a single individual, but more often it will be a group of individuals who are doing this work together. It is not an organizational entity. It is an inclusive term that encompasses all individuals who actively create value even if they report to other parts of the organization.

By Leader we mean to include team leads, managers, senior professionals, and the business processes and tools they create to control their subordinates’ activities. Leaders should be considered to be any person or process that has organizational power over Team. For example, an expense processing system is an instance of Leader because it implements the wishes of some executive in the organization.

In the Trust-Ownership Model we explore the interrelationship between the amount of trust that the Leader or organizational process has in the Team and the level of ownership and commitment that the Team has to the success of the project or business. Figure 2.1 provides a visual representation of the model.

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FIGURE 2.1 Trust-Ownership axes

On the vertical axis we note the amount of trust that the leader or business process has in the team or employee. Here trust is the opposite of control. Complete trust is equivalent to no control while complete control equals no trust.

Higher up the graph indicates that the behavior of the leader or business process demonstrates trust in those who are doing the work, allowing teams and individuals to take appropriate action as needed and own those actions.

As Leaders (including processes) move closer and closer toward control, we see much more management tracking, controlling, checking, and telling teams how to do their work. Teams spend more time documenting, reporting, and asking permission—wasting valuable time the team could spend on delivering business value.

Additionally, all decisions are made by the leader, manager, or system, causing a backlog and even more delay. The Leader has become the bottleneck, stalling work as the team waits for direction from the Leader.

Along the horizontal axis we look at the level of commitment and ownership of the team or individual who is doing the work. The left end is characterized by an attitude of “I’ll only do what I’m told,” while the right side represents the case where the individual is fully committed and does whatever is needed to meet the business goals that have been understood and agreed upon.

To simplify our discussion, we break the space into four quadrants (shown in Figure 2.2) and consider the activities and behaviors of the Leader and Team in each. We look at slightly extreme behaviors to make the salient points clear, but we do need to recognize that this is a simplification. In reality there are no actual boundaries. The degrees of trust and ownership, together with the behaviors, vary continuously along the axes.

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FIGURE 2.2 Trust-Ownership Model

We label the quadrants as

1. Failure (black)

2. Command and Control (yellow)

3. Conflict (red)

4. Energy and Innovation (green)

Now let’s step through each quadrant.

Failure

In the upper-left quadrant, the Leader completely trusts the Team but the Team just doesn’t care; the Team has no ownership or commitment to delivery. The Leader has abdicated responsibility to the Team but the Team feels no ownership of the outcome and is waiting for direction. No one is interested in delivering what the business needs, just delivering what they are told to deliver. Failure is inevitable.

I once worked with a team who didn’t even know who their product manager was. They had funding for three people but absolutely no idea what their customers wanted. In the absence of any insight into the business goals, they were just doing what they felt like doing. The team was enjoying the freedom, but its members were frightened about their future. They were sure that once someone noticed them they would be in deep trouble.

For a committed Leader this quadrant is a very scary place. No Leader ever wants to fail. So, this fear of failure causes the Leader to take control. Note that this says nothing about the Team’s actual sense of ownership. The Leader’s fear, and possibly previous experience, requires him to take ownership because he fears the Team will not deliver. This, too, was my starting point at the beginning of the chapter.

Leaders act on the fear that Teams are not committed by moving to the Command and Control quadrant.

Command and Control

Unfortunately, this is a very common situation for Leaders. Driven by the fear of failure and a lack of trust in the Team, the Leader takes control.

Some years ago I was working with a senior vice president and was asked to prepare a series of communications for her. We discussed what was required, and I spent considerable time gathering the data and preparing the communications. We got together for what I thought would be a final review . . . and she tore it to shreds. She found fault with everything. She decided on a completely different form of report and rendered all the work I had done useless. A little later she did the same thing again and her team told me that this was just her normal way of working. The end result was predictable. I stopped doing good work for her. When anything was needed I just spent a few minutes putting something together in the full knowledge that she would change it all anyway. I don’t know if she ever noticed.

Think about the leaders you have had in the past or have now. Did any of them tell you “what” to do and “how” to do it? Correcting you at every step of the way?

In the Command and Control quadrant the Leader’s mindset can be described in the following way:2

2. A leader in this quadrant is defined by exhibiting any of the characteristics.

Image The Team is less committed than I. This is a particularly insidious but very pervasive belief in business and is often self-fulfilling. It is almost certainly untrue for the entire Team. It often is simply a reflection that it is the Team that has to face up to the realities of creating and validating a solution, while the Leader has little or no responsibility. If the Team identifies issues (not enough time, a lack of involvement by decision-makers, et cetera) that need to be addressed by the Leader, the Leader views this as lack of commitment. It may not be true, but perception often creates social reality.

Image I’m the Leader. I know what needs to be done and how. This is a very dangerous assumption. While Leaders can be expected to have considerable self-confidence, they are often not aware of all the implementation implications. How did Leaders get into their leadership role? They got there by solving problems and delivering a great product. They have developed their skills of problem solving over years, and with their experience, often they do have great insight. However, even where Leaders have valid prior experience it is unlikely that their ability and knowledge outweigh the combined current knowledge of the Team. To compound this, recent research by Dachner Keltner at Berkeley and Deborah Gruenfeld at Stanford University suggests that as people gain power they tend to make decisions in less rigorous ways.

Image The Team cannot be trusted. Many Leaders and organizations don’t trust their people. Think of expense reports that require endless documentation to support every penny spent. What about purchase requests that require at least four levels of approval? This attitude is a hangover from the industrial era when it was assumed that employees were essentially lazy and would always follow their own selfish agendas. Strangely, in some leaders this belief applies not only to those below them in the organization but also to those above. Such leaders seem to believe that they are the only people capable of acting with integrity! In other cases, these leaders control out of fear—fear of those above them in the organization. For them, the drive for control is their only real chance to save themselves.

When Leaders think this way, it naturally leads to a set of behaviors built on their assumptions. In order to feel more comfortable that the business commitments will be met, the Leader often does the following:

Image Requires a detailed plan for everything. This Leader wants to have everything worked out in advance so that he can critique it and be certain that all issues have been addressed. One team had to detail their efforts for every 15 minutes for two years! Seriously. In doing this, Leaders force plans to be inflexible and waste a lot of the Team’s time doing detailed planning and estimating without honestly acknowledging that there is so much uncertainty that the plans are, at best, a guess. Remember, “It’s a bad plan that admits of no modification” (from Publilius Syrus, 63 BC).

Image Tells the Team exactly “what” to do and “how” to do it. This may be done via formal process; direct instruction; detailed plans, regulations, or objectives; detailed metrics; or implemented tooling. This vastly limits innovation and reduces—or possibly eliminates—the Team’s ability to respond quickly to out-of-line situations. This behavior clearly tells the Team that the Leader has ownership of this project and that they do not. And, to make things even more controlling, the Leader tells the team “how” to do the work by defining every action, every step, and every method.

Image Asks for regular detailed status. Because the Leader does not trust the Team he must know the status of every aspect of the work at all times. This way, the Leader can personally assess progress, identify issues, and direct action. Again the Team is given to understand that they are just agents of the Leader like pawns in a chess game. In many organizations this can lead to key Team members spending considerable amounts of their time creating reports and explaining progress details to the Leader rather than adding value to the project.

Image Inspects and checks every aspect of the activity. As with status, the Leader is afraid of uncertainty and will put in place inspection and review processes that check up on the Team. The Team goal changes from meeting business or client needs to getting past the Leader’s checklist. When a Leader has (possibly outdated) technical skill combined with directive behavior, the damage to the project can be considerable.

Image Makes all key decisions for the Team. This slows down the delivery process considerably. The Team must ask for a decision: Should they do this or that? Where the situation is complex, they will often need to prepare multiple options for the Leader’s decision. Waiting for a decision cuts deeply into the Team’s progress.

Image Punishes failure visibly. Built on the assumption that the Team cannot be trusted, the Leader feels it necessary to motivate Team members by punishing any that do not come up to the Leader’s expectation or conformance to the defined plan. Many Leaders believe that this motivates the Team to deliver more.

All of these behaviors ensure that the Leader will have a full calendar: reading status reports, checking against expectations, checking each activity, and punishing the Team. And there is always a queue of people at the door asking for permission to take action. The Leader is a bottleneck, delaying the progress of the Team.

When Leaders act in this way it is not in isolation. Teams quickly learn what is expected and focus on making the Leader happy rather than providing value. The behavior of the Leader actually generates corresponding behaviors in the Team. The Team avoids decision-making. The Teamalso thinks less and innovates less. The Team complies. But, rather than turn off their brains, some members of the Team—probably those most important for long-term success—get frustrated and find ways to move somewhere else.

So the Team learns to

Image Believe that they don’t need to understand the business. If their Leader does not value this knowledge there is no need to spend any effort understanding business or customer needs.

Image Only do what it’s told. All the Team has to do is follow the Leader’s direction. This is the way to be rewarded and avoid punishment. Do what the Leader requires and no more.

Image Believe that if something should fail, it must be the Leader’s fault. Naturally this must be true if the Leader makes all the decisions. The Team has done its job as long as it has done what the Leader directed. The result is not the Team’s responsibility. It is easy to see just how corrosive this viewpoint is.

Image Not innovate or take risks. In a command and control environment there is no place for individual innovation and risk taking. These behaviors only have a downside for the team unless permission is given in advance by the Leader.

Image Keep quiet about any issues. Because the Leader checks everything, the Team’s goal becomes to get past the Leader’s checks. Nothing more. There is no benefit to the Team in exposing themselves to criticism or punishment by pointing out issues that might be attributed to them. The use of problems as opportunities for learning is completely lost.

Image Blame others for failures. Finally, the Leader has created an environment where individuals play the blame game. If punishment is the norm then individuals are incented to identify faults in others rather than work together to overcome problems that occur in any project.

The Leader’s untrusting behavior has actually taken ownership away from the Team. In this situation the Leader is teaching the Team that the Leader is responsible and not them. The Leader may in fact be more comfortable with this, but overall the Team is demotivated and project delivery slows. Most command and control environments operate at less than their optimum possible productivity. In order to avoid this situation, Leaders must rethink their role. Rather than being the ones who know everything and own every decision, the focus shifts to defining direction and creating the environment in which others will learn and make decisions. We dive deeper into this in subsequent sections of the book.

Figure 2.3 captures this Learning Spiral in a visual way.

1. The Leader’s assumptions and underlying beliefs shape the way she acts.

2. The Leader’s behavior teaches the Team what is valued and what is important.

3. The Team’s understanding guides the way that they act.

4. The Team’s action unsurprisingly reinforces the Leader’s original assumptions.

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FIGURE 2.3 The Learning Spiral

Recognize that this Learning Spiral can work both positively and negatively. In the preceding examples, we showed how the Leader’s negative views of the Team lead to a disempowered Team that just follows orders. In this situation everyone is dumbed down.

Now consider the possibility of a positive spiral. The Leader’s trusting approach and behavior teach the Team that self-reliance and ownership are valued, and these behaviors surface in the Team. This can work even for the fearful Leader as long as he acts in a trusting way, and the resulting Team behavior will help calm the fears and reward the Leader’s trusting behavior.

Back to the negative spiral: We have all seen many instances where teams and individuals say, “I know this is madness, but it’s what the leader or process or checklist requires.”

Some years ago we worked with a large company that had produced a comprehensive checklist running to over 140 pages of criteria that projects had to fulfill in order to ship to the customer. A project manager was explaining to a director about a solution that had caused significant problems for customers and for the company in the marketplace after shipment.

“Were you aware of these problems?” his director asked.

“Yes, I knew the issues were there when we shipped it.”

“You let it ship with errors?” The director was shocked. “Why didn’t you fix the problems or at least warn the business?”

“It passed all the criteria, so we shipped it. If the issue is not on the checklist, it’s not my problem, and it’s not my job to decide what goes in the checklist.”

The project manager felt that he had done his job well and wanted to be congratulated!

In the Command and Control quadrant, a Leader’s untrusting attitude drives bad Team behavior, which reinforces the original untrusting attitude: a negative spiral that leads teams to the far lower-left corner of the Trust-Ownership Model and as far away from Energy and Innovation as possible.

“How many of you have ever worked for a micromanager?” is a question I often ask when I speak to a group. Usually, everyone in the room raises their hands.

“For those that have, how many of you enjoyed it?” All hands drop.

“What made it so bad?” The answers range from “I felt like my manager was telling to me to turn off my brain” to “If he wanted it done his way, why not just do it himself?”

A command and control environment kills both motivation and innovation. In this environment, persons are essentially told to turn off their brains, show up, shut up, and do what they are told. How motivated can someone be in such a situation? How much innovation will there be if only one person—the Leader—is allowed to think and create?

Most individuals and teams do care about what they are doing and do feel a strong sense of ownership. So what happens if the Team is actually pretty well motivated and really is committed to the delivery of the project but the Leader can’t let go of Command and Control? We get conflict.

Conflict

This quadrant is characterized by continuous conflict between the Team and the Leader. Here the Team is committed, feels ownership, and wants to make progress but is continually held back by the Leader.

The Team is continually frustrated over spending scarce resources doing work that is not adding value to the customer: creating status reports, justifying positions, documenting options and recommendations for the Leader to choose between. Teams without trust also spend time discussing and documenting details with the Leader.

I was called in to help a project in this situation. The command and control leader had created a huge specification for an IT solution and wanted a full commitment to the complete delivery by a certain date, because he felt he had been let down by his IT team in the past. The team felt that there was considerable uncertainty in both the requirements and the solution and felt that it could not commit to the solution as defined. The result was a series of acrimonious meetings over many months and the project eventually ground to a halt and was abandoned. I helped the leader and the team to start again using an iterative process and coached the leader on how to build a culture of trust (See Chapter 3, Building Trust and Ownership).

Once iterations started, the leader was delighted to see the delivery of real value and began to understand the commitment of the team. To build confidence with the leader, the team relocated itself to the leader’s business area. The end result was outstanding for everyone. The team delivered a solution very rapidly and went on to provide a series of enhancements that transformed their area of the business. The leader told me that the actual implementation of the first solution cost less than the write-off cost from the original contract negotiations.

Teams cannot stay in the Conflict quadrant. Either the Leader learns to let the Team have ownership and the Team moves towards the Energy and Innovation quadrant or the Team gives up and lets the Leader take ownership away from them, moving into the Command and Control quadrant.

Energy and Innovation

This is the place where both leaders and teams want to be. This is where things get done well and fast.

Here the Team understands the business and customer requirements and is working toward delivering the solution as rapidly as possible. Here the Leader has confidence in the Team and works at a more strategic level to help enable the Team to be more effective. The Leader is a resource for the Team for bigger issues and also has more time to think strategically about the marketplace and future opportunities. This is a wonderful place to be. As we have worked with individuals in many companies, everyone who has ever worked in or with such a team has told us that it was a delightful experience that they will never forget.

Who loves an audit? Once I was responsible for the internal audit program in our business, and it was a pain. We would plan a series of audits that visited each of the director’s areas during the year. We were not welcome, seen as a painful distraction, and our findings were always disputed. Things had to change.

With the help of Colin, my lead auditor, we devised a completely new program. I announced to the board that there would be no more mandatory internal audits. We would arrange an audit only if a director invited us and asked each to name a person in their organization who would become their contact. Training would be arranged for that person and, in time, this would enable them to audit each other. Audit findings would no longer be reported to the board; they belonged to the directors for them to use as they saw fit. We would report only the training progress of their contact and the number of audits each director had requested.

The result was dramatic. Ownership was seen to be clearly with the directors and no longer with the internal audit function. We were welcomed in each area. We were seen as supporting and helping them meet their external audit readiness, and most important, the number of findings in external audits by prospective customers and the corporate team fell significantly.

In this quadrant, the negative spiral of behavior we saw in Command and Control is replaced by something much more positive. Here, the Leader’s view can be characterized as the following:

Image The Team is committed to deliver what is needed. They are a fully vested part of the business. They understand our strategy and direction. They know we work in a competitive marketplace and know who our competition is. They care.

Image The Team knows the actions that need to be taken. The Team is skilled and knowledgeable. Collectively, they have the ability to deliver what is needed. If problems arise they can find effective solutions.

Image The Team can understand the importance of this project. We have jointly discussed and agreed to the business, market situation, and customer goals. The Team understands and will engage and do the best work possible with the resources that they have.

Image The Team can be trusted. They act with integrity and honesty. They meet their commitments.

From these beliefs the Leader builds a new set of behaviors that reflect a positive attitude toward the Team. The Leader knows that she needs to build the Team’s capabilities and motivation. So the Leader

Image Helps the Team take ownership and doesn’t take it back. The Leader must not only state, but her actions must continually reinforce, ownership within the Team. The Leader is a valuable resource for the Team.

Image Conveys the vision, the value, and the urgency. To reinforce ownership in the Team, the Leader has to give the Team as much understanding as possible of the overall project goals and context. This has to include the vision for the project and the competitive and business environment. If the Team is to be able to take appropriate and rapid decisions in line with the Leader’s understanding of business and customer needs, the Team needs as much background information as possible.

Image Helps the Team focus. Prioritization is always a challenge for any project. It is critical that everyone come to a common view of the most important features and capabilities to be delivered within the limited timescale and resources. The Leader needs to be an active part of that discussion with the Team without taking ownership away from the Team. The best place for the Leader to do this is as part of the planning activities and in all the demonstrations of the deliveries.

Image Connects the customer with the Team directly. One powerful way in which the Leader can help the Team take ownership is to find ways of building an ongoing dialogue between the Team and key prospective customers and users. This allows the Team to continuously refine the delivery at every level to ensure that it provides maximum value when shipped.

Image Enables the Team. The Leader has to take a more strategic view of improving the capabilities of the Team. She needs to ensure that the Team is staffed and skilled, that it has the tools and resources to be effective, and that the overall organization supports rather than hinders the Team’s delivery action. The Leader must become a resource for the Team.

Image Has time for strategic thinking. The preceding activities will typically take significantly less of the Leader’s time and effort than full-time project management. This frees the Leader to focus on longer-term business and market issues.

When a Leader acts in this way, the Team will respond by moving toward attitudes and behaviors that reflect the Leader’s approach, taking ownership of delivering a solution that delights customers.

The Team does the following:

Image Takes ownership. The Leader’s approach encourages and enables the Team to do the right thing. They have been shown the customer and business needs and have the authority to act quickly and decisively.

Image Is accountable. The Team understands that the responsibility and accountability are theirs. There is no safety net. They have signed up to deliver what they have committed to get done.

Image Can optimize what it does. The Team can act quickly within the business constraints when issues are identified. The Team has the authority to modify its approach based on learning through the development cycle.

Image Stands or falls together. By being given ownership, enormous peer pressure for boundaryless behavior is engendered in the Team. By creating an environment like a small entrepreneurial company, the Leader helps the Team form into a cohesive, self-managing group.

The Trust-Ownership Model shows us that most Leaders and Teams reside in either Command and Control or Energy and Innovation. The Failure and Conflict quadrants are not stable, and Leaders and Teams cannot stay in them for any length of time. In Failure, where no one cares and no one delivers, the business will eventually cancel the project. Teams in Conflict eventually give up and hand control back to the Leader, losing productivity.

So what is the alternative? In Chapter 3, Building Trust and Ownership, we cover how to move from Failure, Conflict, and/or Command and Control into the green—Energy and Innovation.

Why Purpose Matters

We talk about, we think about, we debate about, and we hope for high-performing teams. Teams made up of individuals who are focused, motivated, and innovative. But focused on what? Motivated to achieve what? Innovative in getting to what? Owning what?

As we consider the Trust-Ownership Model, we optimize performance when teams and individuals “own” delivering results. But what results? Results aligned to purpose. We strongly believe—almost to the point of dogma—that a condition of becoming a high-performing team is to understand purpose. Purpose is the “why” and “what” of our work. When we understand purpose and align to it, we match the tens, scores, hundreds, and thousands of decisions we make to the goals of the project, the goals of the product, and the goals of the organization. If the purpose is nebulous or just plain wrong, it is either difficult to feel ownership for the results or we waste our ownership on activities that won’t make a meaningful difference. For us, the word purpose indicates the real needs of the business—cutting through the opinions and territorialism and focusing on what will generate meaningful business value.

One of the critical tasks for a leader seeking to move organizations, teams, and individuals into the Trust-Ownership green zone of Energy and Innovation is to clearly communicate, explain, and make clear the business purpose and goals. The goal of this critical activity is to articulate the purpose so teams can own delivery of the results—so they can filter and manage their activities to deliver work that directly supports purpose. This leadership role is very different from the historical role of leaders—which was often to lock purpose away and direct people to perform various tasks that they thought would deliver the business goals. In the agile, networked, innovative organization, the leader ensures that purpose is well understood so the teams can make decisions that lead to high-performance and desired results.

My team faced an enormous project backlog—new development, legacy enhancements, implementing agile methods, shifting resources into different roles such as business analyst and quality assurance, new software selection, and system implementations. It was difficult for them to fully understand this massive list of projects. Which ones were more important than others? Which ones required creativity? Which ones could be purchased rather than built, and so on? Without this understanding, they struggled with feeling ownership for the projects and their results. Working the portfolio would keep them busy, but would it keep them engaged and result in meaningful accomplishment? In my leadership role, I knew the best, fastest way to shift into a mode of accomplishment was to help the team understand the “why” of each project. To do this, I first had to get some clarity on the “why” myself. I met with my management team peers, and we defined three high-level organizational objectives. For our online, nonprofit university, these were the objectives:

Image Improve graduation rates—this is our primary measurement of the success of our students.

Image Improve operational excellence—we want to make sure that we become more efficient and provide improved service levels as we grow.

Image Become an employer of choice—we want the university to have an innovative, high-trust culture.

I then met with the various project teams and explained why these objectives mattered to the future of the organization. If we improved graduation rates, our continued growth and success would be ensured. If we improved operational excellence, we would grow efficiently and not end up with complex, wasteful processes and practices that frustrated us and reduced our organizational agility. If we were the employer of choice, we would always be able to attract and retain the right people, and they would enjoy their work more each day. With this understanding in place, we mapped each and every project in the portfolio to one of these objectives.

Why were we redoing our entire analytics? Because the rebuild would give us information we could use to improve graduation rates. Why was there a project to implement a document management system? To improve operational excellence by automating a manual process that was becoming a bottleneck. We understood the “why” of everything on our backlog—all that work that we still needed to get done.

One of our projects was to outsource the management of our network. This was a very divisive project. The network administration team felt that this was the first step toward eliminating their jobs. As a result, they felt no ownership for the project and were doing what they could to slow down and discourage moving the project forward. But there was a very good “why” for this project (at least from my perspective). The team could not support many of the other projects in the portfolio because they spent the majority of their day in tier 1 and tier 2 support of the network—doing basic things like moves, adds, and changes. This type of work would be fine in the absence of all of the other projects that required their skills. What I had failed to do was explain why this project was important and how it would help us achieve one of the three objectives. So, I recovered my senses and met with the network team. I started by explaining the three objectives and how they mattered to the present and the future of the organization.

“How might this outsourcing project support any of the three objectives?” I then asked.

The silence was resounding.

I rephrased my question and tried again. “What are some ways we can achieve these objectives?”

Again nothing.

Because I had the time, I waited it out. Finally, one of the junior administrators ventured a connection.

“If we spend less time on the basic monitoring and management, we can work on the network upgrades we know will solve some of the nagging problems. I suppose that will improve operational excellence.”

I wrote that one on the whiteboard and waited a bit more.

“Sometimes, we are too busy to respond to some of the basic and repetitive jobs like adding a person to the network—while they wait for us, they cannot do their work. Having someone else around to do those things would mean they get done faster—which improves operational excellence and also makes this a better place to work.”

With these and a few other ideas, the energy rose and the group was soon discussing how best to manage the outsource relationship. The team completely took over the ownership of the project and kindly asked me to butt out. They now claim it was their idea and has been one of the most successful projects they ever initiated.

Later in the book, we introduce and describe tools we use to identify purpose—the “why” and “what” that help teams develop ownership. We use these tools to both define and infer how the organization creates competitive advantage. Thus, any person or team, at any level in the organization, can align to what generates business value. When this is clear, we start moving into the green of the Trust-Ownership Model.

The Trust-Ownership Model helps us recognize where we are and things we can do to change our results by designing a different operating system. The tools we describe in the other chapters of this book are things we can all use to accelerate the transition.

You Cannot Defy Gravity

It is time to face reality. And that reality is that the world has changed dramatically in the past decades and is continually changing at a rapid rate. First, computer technology came along. Then Al Gore invented the Internet and the world started getting connected. All that connection created globalization. Globalization meant that anyone anywhere could affect our businesses and business rules. Combined with ever-increasing technology innovation, the world is now much more dynamic, much more competitive, and a whole bunch less certain.

Yet, we strive for certainty. Many of our traditional management processes—from financial analysis to project management—are designed to create certainty. But in this age of rapid change and the resulting ambiguity, do these management practices work? Or do they merely create the illusion of certainty?

We were recently asked by the chief information officer (CIO) of a large, global company to help him and his staff figure out how to use iterative methods in the face of a capital budgeting process that required a five-year, predictable planning horizon. The CIO explained,

“We have to create a five-year cash flow projection for each of our major projects. We have no idea how to do that now that we are using iterative methods. We have been trying different things but can’t get anything that is acceptable.”

“Acceptable to whom?” we asked.

“To the CFO and the capital budgeting process. Before a project gets approved, we have to define the five-year costs and benefits for the project. But using iterative methods, we don’t know what the final product will look like until we get past the approval stage. Prior to approval we can define an initial set of features and functions, but those might change during the project. If those change, the cash flows might also change.”

One of the CIO’s directors spoke up, “We are stuck. We cannot get approval without accurate cash flows, but we don’t know the actual cash flows until after the project is approved and we have done a fairly large number of iterations.”

What an interesting dilemma. The CFO requires a five-year cash flow so that the company can determine the net present value (NPV) of the IT projects. But using iterative methods, the final state of the IT project might be a bit (or more than a bit) different from what was initially planned, thus invalidating at least a portion of the five-year cash flow projection. Ideally, using such methods improves the NPV of the project as the project team adjusts to customer feedback and focuses on the features that generate the most value. But that is not the issue. The issue is that the CFO and company want to know, with certainty, what will be delivered and what the impact will be over the next five years. The CIO and his staff wanted to figure out how to deliver certainty while still using iterative methods.

We offered a different perspective and approach.

“When was the last time you gave a five-year cash flow projection that turned out to be accurate?” we asked.

The members of the team thought for a few moments and looked at each other. Finally, one brave person said, “We don’t know—we’ve never looked at it.”

“Has anyone ever looked at it? Does the CFO or his staff ever do a post-project analysis to see whether or not you got your five-year cash flow projections right?”

“I don’t think so—at least no one has ever asked us for the data they would need to make the assessment.”

“In that case, does it really matter what the impact is of using iterative methods on the CFO’s process? I am not trying to be critical or flippant, but does it really matter what numbers you use in your five-year cash flow projection at all? It seems to us that because no one ever looks at it, make the number whatever you want. Or why do it at all?”

This conversation was making the CIO very uncomfortable. He and his staff spent a lot of time refining estimates to generate “good” numbers for the capital budgeting process. This process was one of the company’s critical management methods. But was it doing any good? Did it make any difference in what the company did or did not do? Even worse, if there never was any real follow-through, how easy was it to game this process by inventing somewhat inflated cash flow projections in order to boost a project’s NPV?

Sensing the challenges we had just presented to the CIO and his staff, we attempted to work toward a solution.

We are not saying that your estimates and this process are invalid. However, a useful process needs to recognize that the future is uncertain. I suspect it is nearly impossible to define what will be happening in the marketplace in one year—let alone in five years. Think back on how technology has changed in just the past year. Then in the past five years. When you proposed a project five years ago did you understand how data analytics would change? Or mobile? Or social? When you proposed a project one year ago, how much certainty did you have about not only technology but the competition? How has the company’s focus changed in the past year? What ideas and processes did new employees or leaders bring with them? No, we are not saying that planning is not useful. Planning is very useful. Planning lets us sort through the range of things that might happen and prepare ourselves for what might change. Rather, we are saying that the planning process needs to recognize the impossibility of certainty. So instead of planning that anticipates no changes, accept ambiguity and incorporate it into your planning. In fact, if you recognize the harsh reality that almost nothing is certain, you break through to a higher level of organizational agility and leadership.

This is a strong and potentially unsettling concept—that by embracing ambiguity, we can improve results. How is this possible? Let’s walk through the logic.

Ambiguity Is a Reality

It really is impossible to know the future. Some years ago, for one of my son’s elementary school science projects, we tracked the accuracy of the local weather forecast. Every morning, we opened the weather forecast and recorded what the forecast said about the high and low temperatures and sky conditions for that day and then three and five days in the future. We then recorded the actual temperatures and sky conditions on those days. We considered the forecast accurate if the predicted temperatures were within three degrees of the actuals and if the sky conditions were within one grade of the actual sky conditions. (For example, if the forecast predicted sunny and the actual skies were partly cloudy, the forecast was accurate. But, if the actual skies were cloudy, the forecast was wrong.)

We conducted our experiment for an entire month. Over that time period, the same-day forecast was, as you might expect, reasonably accurate. The same-day forecast was on target over 70 percent of the time. The three-day accuracy was not as good, clocking in at around 50 percent accurate. The five-day forecast was the least accurate—barely over 30 percent.

Now, as a society, we have invested lots of resources to improve and refine our ability to forecast the weather—we make multiple decisions in our lives and in society based on the weather. We have lots of intricate, advanced systems to track weather and project the future weather. In spite of this significant investment, the forecast for the same day was wrong nearly 30 percent of the time. Are you kidding me? Wrong nearly 30 percent of the time? To predict what is going to happen over the next 18 hours? And what about the three-day accuracy? We have weather satellites that can see what is looming three days away and yet we get it wrong almost 50 percent of the time? Admittedly, the weather is a difficult system to predict—there are many variables that come into play. But our business environment is also an incredibly difficult system to predict. Will a customer, today, make a decision to purchase or not to purchase? Will the critical resources on our most critical project decide to have a bad day? Will that technology we are depending on not work? Will a human somewhere along the critical decision path change his mind?

The harsh reality is that we are immersed in ambiguity and uncertainty. At a minimum, accept this. Even better, embrace this reality and operate accordingly. If we refuse to embrace ambiguity, we increase the likelihood that we will be wrong more often than we need to be.

Embrace Ambiguity and Incorporate It into All We Do

We can build an appreciation for ambiguity into our leadership, plans, and processes. One of the most powerful tools for embracing ambiguity is using iterative methods. Agile software development is an example of such iterative methods. So is Stage-Gate for product development. Using these methods, we embrace the notion that we don’t know the future and will get to the future in a step-wise fashion, learning from customers and the market and correcting as we go. We make global plans that define a goal or an objective. But we follow a path that takes small steps toward that goal—small steps so that we can pause, get feedback, learn, evaluate, and reorient ourselves after each step. This reduces our chances of being wrong about the product, the technology, the market, and everything because we incorporate feedback and learn and adapt.

Learn as We Go

There is value in learning. If, in our plans, we assume we are correct and will go from point A to point B with no variations, we are also assuming that there is no chance to learn and act on what we learn until after we arrive at point B. But in an environment populated with innumerable variables and changes, we can learn critical lessons along the way and make corrections. By embracing ambiguity, we embrace learning. Over time, individuals and organizations that learn and adapt get things right more often and things wrong less often.

All of this sounds fine, but in a world that seeks certainty, what can a leader or team do? We have found that a very good starting point is to experiment. Experiment with more frequent planning—and see if it improves results. Experiment with iterative methods and see if they make a difference. Experiment with delaying commitments until you know enough and see if that leads to success.

Dealing Honestly with Ambiguity

When I was in high school, we used to do physics experiments such as measuring how a spring extended when weights were added. When I wrote up the final report, I was expected to make estimates of the amount of error in the measurement or I was likely to receive an F. That was in high school and yet executives and managers running small and large businesses continually ask for certainty in their decision-making process.

Does the following sound familiar?

“How long will it take to deliver this?”

“Hmm. I don’t know for sure as I haven’t looked at it in detail but I’d guess four to six weeks.”

“Okay, I’ll take the four weeks.”

Or

“What revenue do you expect from this investment?”

“Well, we don’t know for sure yet as we haven’t yet had any statistically valid customer feedback, but I’d guess around $10 million plus or minus 20 percent.”

“Okay, we’ll accept your commitment of $12 million.”

Or

Some time ago I was discussing with the CFO how his company made investment decisions. I asked whether the company asked for uncertainties or error estimations in inputs to the decision.

“Oh no. The engineers and business teams are always trying to add plus or minus figures to their numbers and dates, but I’ve told the staff to remove all of them. We need aggressive commitments.”

What that CFO and other leaders need to realize is that this approach is guaranteed to make the team set less aggressive targets. If the business will not honestly accept uncertainty, then teams and individuals will always adjust their estimates to give themselves some buffer.

Building an organization where honest acceptance of uncertainty is the normal behavior is one of the essential foundations of both good leadership and getting teams and individuals to take ownership of the effective delivery of business value.

In an organization that practices honest acceptance of uncertainty you see the following behaviors:

Image Individuals and teams share as much information as possible. Openness is the norm.

Image Individuals and teams face up to the real situation and consequently can take the most effective action to deal with problems.

Image There is no game playing or manipulation.

Image Problems are discussed openly with a view to identifying the most effective solutions. There is no blame game.

Image Uncertainty is both acknowledged and accepted.

Image It is all right to identify and voice risks. It is also all right to take chances as long as they are visible and understood by all.

The Leader’s Role

Effective leaders build this environment by example. They deal honestly with uncertainty and ambiguity in a way that is visible and obvious to their teams—and encourage their teams to do the same.

Effective leaders do the following:

Image Acknowledge the difference between opinion and fact. Many discussions get heated because people tie themselves to opinions.

Image Accept, and practice, changes of position and opinion as new information arrives. This demonstrates that they are part of a learning culture.

Image Expect success, accept mistakes, and avoid blame.

Image Recognize that a plan is just a current outlook. The project will make the maximum progress that it can, and it is highly unlikely to exactly match any plan. Don’t force an aggressive plan. If one is needed, ask the teams to work out the best one they can. Join in the discussion and accept the risks.

Image Do not ask for certainty and commitment where it is not possible. Otherwise, teams think they are being set up and will, at the very least, add large buffers to protect themselves.

Image Consciously consider risks. Effective leaders recognize they cannot prevent all risks. They accept risk where appropriate. If an accepted risk comes about, they accept the cost of rework.

Image Where firm dates or sizes are needed for interlocks between parts of the organization, they look for alternative mitigation rather than requiring dishonest uncertainty or spurious accuracy.

Please note that even when leaders embrace ambiguity it will take some time for the team culture to mirror the leader’s behavior. Even a single instance of negative behavior can do real damage and encourage the team to fall back to game playing.

In summary, actively embracing and leveraging ambiguity and uncertainty provide valuable competitive advantage.

If the future is uncertain (and it almost certainly is), plan big but take small steps.

Take a hard and honest look at your processes to determine which ones ask for certainty when certainty is not possible—these processes are likely time and resource wasters.

To honestly deal with ambiguity requires a deep culture change—and this starts with leaders and the examples they set.

A Foundation of Integrity and Honesty

Let’s pause for just a moment and talk about integrity and honesty. How do you define integrity? Pollyanna defines it as the opposite of manipulation. Paul defines it as an unflinching view of reality, and Niel defines it as holding to your standards—even under the most intense pressure. Everyone has a different take but basically it is honesty.

In the Trust-Ownership Model, integrity and honesty matter. Why? We cannot create or maintain a trusting environment if we do not operate with integrity and honesty! It is that simple. If the leader is not trustworthy, how can there be trust? If the organization lacks integrity, how sustainable is the team’s ownership of the results?

Likewise, integrity and honesty mean that we are honest about reality. This includes not only reality about our current results and what we must do in order to change those results but also the reality about our operating environment. And that reality is that we live in an environment of low certainty and high ambiguity.

If you think you can sustain a profitable company without integrity, think Enron, think about the mortgage bankers who caused the 2008 financial collapse, or think about the businessman who bought $15 novelty golf ball detectors and sold them around the world as bomb detectors for $30,000 each and is now in prison for a long stretch. While these are extreme cases, we don’t trust people who don’t have integrity, by definition. I trust people who are honest, and people who have integrity are honest.

We operate in a highly competitive marketplace. If we do not improve, we will fail. Without integrity, we cannot face the real issues in our companies that are holding us back from growth and innovation. And if we don’t face them honestly, we can’t figure out how to fix them. I worked with a team whose management was continually concerned about their productivity. After spending just a little time with the team, it was clear to me that they were trying to operate with just a few old development servers, and that “overnight” builds were not complete until lunch the following day. The problem was not the attitude or professionalism of the team, but the procurement process that surrounded them. It was fixed in less than 24 hours.

Identifying and facing up to the real issues in the organization enables each of us to work toward solving, or at least mitigating, the real issues we are faced with.

If we are to build a collaborative, committed organization, everyone needs to avoid game playing or manipulation. If individuals or organizational processes do not act with honesty and integrity, it will become known. In this situation it is virtually impossible to build fully engaged teams who are committed to the business’s success. The team’s response to this behavior is to learn to play games in return, making it impossible to come to a joint reliable understanding of estimates or risks.

In Summary

An organization will be stable only if trust and ownership are in balance. The team is trusted and the team takes ownership. Command and control does work, but is far less effective than a high-trust, high-ownership organization.

To deliver maximum value, leaders must overcome their fear of failure and trust their teams. And they need to actively help their teams take ownership of the delivery rather than taking control and directing their teams on how to deliver.

The leader’s initial assumptions about the team shape the team’s behavior in line with the leader’s assumptions. If the leader assumes the team cannot be trusted, then the team will not have ownership.

Moving up and to the right, to the green, will not happen automatically, but there are a set of simple behaviors and attitudes, detailed in this chapter, that will build ownership and commitment in the team. We’ll cover how you move through the model in the next chapter.

In addition, teams must be aligned with the business goals of the organization. And everyone must deal and be allowed to deal honestly with ambiguity.