Wielding an Empire

One day, you walk into work. Instead of your comprehensible handful of employees, you’re now a Fortune 500 CEO. Congratulations! You’re now managing the equivalent of a small city, completely dependent on your words, whims and deeds. 100,000 souls on your shoulders.

Time to figure some things out.

You have no chance of being directly involved in any piece of work. Odds are, the person doing the work, and the people you get to talk to, are galaxies apart. This is when you must figure out how to be effective. (The sooner, the better.)

Until you’ve received hundreds of emails a day and have a calendar booked solid with 30-minute meetings every day for 30 days straight, you won’t understand the mindset of someone who has an incredible scarcity of time. Embedded within this scarcity of time is a scarcity of mindspace. When you’re this busy, you’ll be handling hundreds of issues. The last thing you’ll want or need is to duplicate efforts. One person responsible for x is all you could (or should) handle.

Even if two people are truly responsible for every piece of a project, there will be a better outcome if one person owns the outcome. It’s a painful part of human nature, but it’s true. As such, even if the project owner does nothing and his three peers complete all the work, the accountability aligned with the responsibility ensures that the project owner will feel the pain and will therefore drive the task forward.

Incorporating selfishness and efficiency is better for individuals and better for companies. Like many problems people point to in corporations, the one person rule is a feature, not a bug.

Having one person accountable for outcomes is “the one weird trick” of every successful organization. At the close of every meeting at Apple, one question is asked. Who’s the PRI (personally responsible individual) on this?

In a meeting with your Fortune 500 executive team, you learn that sales are below expectations. Product X has been slow out the gate, and the lack of expected velocity is hurting your overall sales. What do you do? You know very well that your head of revenue isn’t the one who created the product. You know that your VP of Product’s direct report’s report’s report is likely the one who would know what’s going on with Product X. But a Caesar can only crush a peasant so many times. So instead, you hold your head of sales accountable. Your script might go something like this: “John, I need you to figure this out. If X isn’t working, make the overall portfolio work, and hit these numbers. Talk to Jackie if you need to, but you’re the one who owns this.”

Yes, it might grate to have someone responsible who isn’t actually doing any of the work. Why not have the person contributing the most work be held accountable? Work-contribution and accountability-bringing are two different skills that are at best orthogonal and at worst negatively correlated. There’s a certain level of confidence that an organization needs to have in an accountable executive. Many contributors simply don’t have this.

Feedback loops combined with accountability structures are the magic that makes capitalism and markets work. This applies to companies as well. The feedback loops empirically show how one is doing relative to their goals. The accountability structure forces change in response to the feedback. To quote Ray Dalio, “evolve or die.” You can easily see the truth of this by imagining no feedback loop and no accountability structure—take government bureaucracies as a prime example, where there’s no real way to judge performance, and even if there was, performance doesn’t matter.

Building an accountability structure in a large organization is a challenge. Direct oversight is impossible with hundreds, never mind thousands, of employees. There’s also a natural tendency for people, particularly smart people with a lot at stake, to try and dodge accountability whenever possible. (See Modeling and Forecasting.)  The inevitable consequence of this is again, to force upon one person more accountability than they likely deserve. It’s a truth universally acknowledged that team leaders and executives get far more credit than they deserve when things go well, and far more blame than they deserve when things go poorly. Hence, the strong desire for executives to find “breakout companies” or “rocketships” that they can hop on.

An interesting consequence of accountability is forced delegation. By having one person accountable, functioning organizations will definitionally push all of the work and responsibility relevant to this underneath them. I can strongly recall an experience sharing project details with my CEO when he stopped me, shouting, “No, I don’t want to know this! I don’t have space. This is your responsibility.” Deliberate ignorance of details sounds crazy, but only after experiencing information overload can I appreciate the necessity of it.

Heavy is the burden of leadership. When a person goes into a fight or flight response, their vision literally narrows, as the body conserves resources to deal with the threat directly in front of them. As a leader fighting for your company, you can only focus on the things that absolutely, unquestionably matter—and focus is critical. The scale of managing a 100,000-head company is beyond the scope of human comprehension. The number one rule for you as a CEO is to be effective. Being effective means making the machine run effectively. And the effectiveness of the machine is typically contingent upon trusting your capable team to execute the myriad mechanisms that keep it humming.

Founders make this mistake with board members all the time. Once institutional capital is raised, the board exists to monitor their investment and give extremely high-level insights. Boards don’t want nuance or uncertainty. Confidence, as always, remains the crux of the matter. I recall sharing some of the messy statistical details of one of my attribution models in a board meeting. The lead member interrupted me and said, in the kindest way possible, “We don’t care about this. How well is it working? Will we hit our forecast?” It’s hard to overstate the necessity and impact of keeping confidence. Have it, and you have freedom to do what you will. Lose it, and not only is it near impossible to get back, but you should also begin looking for a new role.

Where does it make sense to deal with multiple people? Some organizations follow a structure of co-leads, similar to co-founders. Co-CEOs. Two heads of your APAC segment. This can work in the context of extreme alignment, where both people know their fates are completely linked (accountability), and their work will be judged together (feedback). In a certain sense, you’re then treating two people as one. But without those two things, it simply won’t work. Other questions around matrixed organizations and highly cross-functional teams with multiple leaders are simply iterations upon the same theme. Link accountability and feedback, and there’s a chance of it working. Separate them, and you’re in for a painful ride.