Have you ever wondered why some organisations do not prosper despite the fact that they have the best of skills on board as compared to others in their own industry?
One of my favourite leadership thought leaders, John Maxwell, talks of the concept of the “lid”, the limit on the abilities of leaders to create value in a given situation.
Maxwell illustrates the fact that an organisation, with the same set of resources and opportunities, will prosper differently depending on the leadership that is in place. Regular readers of this column remember an instalment we published in the recent past about the need to change players when the game changes.
Maxwell talks of Dick and Maurice McDonald’s venture that started as a small outfit in Pasadena in the US to be the present day McDonalds restaurants that are all over the globe.
He points out that despite the success the brothers had in running their business, they failed at the point when they thought of growing their business empire through franchising, yet the restaurants later flourished through franchising without them.
The reason for the brothers’ failure was attributed to their lack of leadership necessary to make the envisaged larger enterprise sustainable, thus this was above their lid.
Maxwell points out that the brothers were good single restaurant owners and not necessarily suitable for a bigger franchised operation. The conclusion is that these entrepreneurs were good managers and not leaders. They focused at making the systems they used more efficient, were good at cutting costs and increasing profits.
Press the pause button and let us look at exactly what calibre of leaders is expected to be successful in business enterprises. Are we not having the situation of boards of directors that look out for new leaders for enterprises who possess the attributes of being good on cutting costs, making systems efficient and creating profits? Is that what leaders should be made of? Before you think I have lost the track, let explain.
Those attributes are good for running a business, however they are the very “leader lid” that keeps the leaders from growing the businesses. Focusing of these will certainly reduce leaders to managers. Like the governance systems of a good enterprise, the leader should be surrounded by technocrats who know how to run several areas of the entity.
When the franchising business was floundering under the control of the McDonald brothers, Ray Kroc who had bought into one of the franchised restaurants made a marvel of his operation. Kroc was a success to the extent that he bought the entire franchise rights from the brothers and the business has grown to be the world’s leading global food service retailer with over 36 000 locations serving approximately 69 million customers in over 100 countries each day. The franchising side has been the biggest driver of the growth with more than 80% of McDonald’s restaurants worldwide owned and operated by independent local business people in each country.
The leadership lid on franchising that was not passable for the McDonald brothers would have kept this business much smaller than what it is, that is assuming it would have survived from 1955 to today. The growth of the business needed the “leader” Kroc to have taken over from the “managers” Dick and Maurice.
It is amazing to note that one of the secrets to Kroc’s success was that he hired the best talent available. I bet I will buy you lunch* (subject to terms and conditions) if you disprove the hypothesis stating that leaders who have failed to grow their business enterprises are predominantly pre-occupied with cutting costs and controlling every small aspect of their business.
Apologies, did I call this group of people leaders? No I made a mistake, I meant these “managers” who are being wrongly placed into “leadership” roles in business.
Let me repeat what Maxwell said about the leadership lid concept; I do so in quotes so that you may realise that these are the words of the thought leader on whose wisdom I build my argument.
“Leadership ability is the lid on personal and organisational effectiveness. If a person’s leadership is strong, the organisation’s lid is high. But if it’s not, then the organisation is limited. That’s why in the times of trouble, organisations naturally look for new leadership … When a company is losing money, it hires a new CEO … When a sports team keeps losing, it looks for a new head coach.”
I see the truth of these words playing out in the business world on a daily basis. I see beyond these words for as Isaac Newton said, “If I have seen further it is by standing on the shoulders of giants.”
I stand on Maxwell’s shoulders.
Let us look at the leadership lid concept and change of leadership from a safe space of sports. I would not be wrong to assume that most people have a sport or two that they follow to some extent. When the team they support keeps losing, fans voice their disgruntlement through advocating the need to replace the coach.
The fans and the team owners know that in most instances the players are the best they could get onto their team sheet.
Maxwell chronicles the discussion he had with Don Stephenson who was the chairman of a hospitality group in San Diego about what his company always did to turn around companies. Don indicated that they would go into the business and train all staff to improve service to the customers and then they would fire the leader. Asked why they just fire the leader without assessing their capability first, Don said that the decision to fire the leader all the time was premised on the thinking that if a leader had been good, they would have been no need to turn around a company that they had been at the helm of.
Are you still wondering why a company that has good talent on board struggles to make money? The answer is what Don provided; fire the leader and train the people. Every losing team in sport will fire the coach, train the existing players and bring more good players on board and a turnaround kicks in.
Even when not in a defined turnaround, organisations should not wait long to remove leaders who have reached their leadership lid. Here are a few pointers that a leader has hit their mark and are no longer holding the fort for the growth of the business.
The first sign is that of being disorganised. The next sign is lack of decision making acumen.
Finally, and yet the most important sign, is the lack of strategic focus. Is it time to fire some leaders? Is it time for some leaders to do the honourable thing and leave organisations to flourish while they pursue other career interests? Remember there is always a leadership lid for every leader.
Sam Hlabati specialises in Systems Thinking and Reward Management. He holds the following certifications: Senior Professional Human Resources®, Global Remuneration Professional®, Certified Compensation Professional® and an MBA in Systems Thinking. You can join the discussion through email on firstname.lastname@example.org and follow on twitter @samhlabati.