To understand the difference between a great company and a mediocre one, take a look at its people. Do they know their roles? Are they cast in the right roles? Are they clear on the results the company is trying to achieve? Do they know their decision-making authority? Do they work collaboratively and build trust with one another?
SMUD Case Study
In the early 2000s, energy deregulation took place in California, triggering shock waves across the state. So how did the different utilities respond?
At the Sacramento Municipal Utility District, the board of directors and management team saw the changes coming and focused on long-term energy contracts. As a result, SMUD maintained stable rates. SMUD also built a suite of cleaner, cheaper generation facilities. In contrast, Pacific Gas & Electric reacted more complacently. Pressured by the legislature, PG&E sold off its generation facilities. To preserve its profits, PG&E entered into short-term energy contracts. These decisions sent PG&E scrambling when energy prices spiked.
PG&E began hemorrhaging money and in 2001 went bankrupt. Meanwhile, SMUD kept its electricity rates 25 percent lower than PG&E, and outperformed PG&E in every other meaningful category.
One could argue that these different outcomes were a result of external pressures. But SMUD had a dynamic management team. People were able to ask tough questions of one another. SMUD’s leaders were focused on the long-term needs of their customers. PG&E’s management team, on the other hand, didn’t take a long-term perspective. It was preoccupied with preserving what it had. Unfortunately, the world had changed—and the failure to recognize that wound up costing PG&E ratepayers billions of dollars.
High-performing organizations don’t occur by accident.
The story of SMUD illustrates the value of hiring talented people, arming them with clear goals, and giving them the leeway to do their jobs. Because SMUD invested in a deep bench of talented managers and employees, it minimized bureaucracy and built a culture of engagement, trust, and innovation. Over the long run, this has saved SMUD millions of dollars.
Chapter 3 focuses on the value of leading through others. You’ll learn how to hire effective people, put them in the right roles, and empower them to lead—all of which helps build a system of trust.
One of the distinctions between good leaders and so-so leaders is the way in which they build effective teams. Southwest’s “ten-minute turn” illustrates what happens when you build effective teams and enable them to push the boundaries. Initially, it was considered impossible to turn a jet around for another flight in under thirty minutes. Today, each Southwest jet is fueled and serviced, has its tires changed, and is ready to go in ten minutes. Initially, Southwest had to do it because it had only three jets for four routes. Today it does it because it can—and because it provides tremendous competitive advantage.
Patrick Lencioni has defined an effective way of thinking about the habits of highly effective teams. We use his model in our work. Working with a team, we start at the bottom of the chart and keep clarifying until all five habits are in place.
Five Habits of Highly Effective Teams
1. Attention to results: Team members regularly monitor their progress toward achieving the results. They don’t gloss over their performance, but talk about it.
2. Accountability: Team members hold each other accountable for their performance. When someone underperforms, the team tells them immediately and in direct, honest terms.
3. Commitment: Everyone adopts a common goal or set of goals and commits to achieving them. Goals are defined simply enough to be easily grasped, specific enough to be actionable.
4. Creative conflict: People ask tough questions of one another and challenge each other’s assumptions. They probe an argument until they are satisfied.
5. Trust: Team members open up to each other. They admit their mistakes, weaknesses, and concerns without fear of reprisal.
When any of the five habits are missing, then trust is broken. There’s no shame in admitting it. Effective leaders don’t let their teams stay broken for long. They take the time to communicate and regenerate the sense of team trust. They get the critical issues on the table. They work through the checklist of five habits. They invest time and energy into making their teams effective again.
The Concept of “Ubuntu” for Team Building
There’s a concept of community in South Africa that’s called “Ubuntu.” It emphasizes the interdependence of each member.
It recognizes a person’s status as a human being, entitled to unconditional respect, dignity, value, and acceptance. But it also entails the converse. Each person has a corresponding duty to give respect, dignity, value, and acceptance to every other member of the community.
The key to leading through others is to orient yourself toward this Ubuntu ideal—viewing other people as having needs and concerns equal to your own.
When you lead through others…
- You make it a priority to model respectful communication.
- You get the right people in the right roles—and don’t settle for less than the best.
- You lead through influence rather than authority.
- You take responsibility for making sure that people have the coaching and training they need to perform at their highest level.
- You show people that you value their time by managing meetings effectively.
- You develop effective teams by laying out operating principles.
- Ultimately, you watch the dynamics carefully, benching the players who are not meeting expectations, and giving those who are ready to play a chance at a starting role.
Theodore Roosevelt said:
“The best leader is the one who has sense enough to pick good men to do what he wants done, and self-restraint enough to keep from meddling with them while they do it.”
When you do all these things, you build a system of trust: by placing your trust in others, they will place their trust in you.