People leverage and System leverage

Leverage means using something to maximum advantage outside of the financial world. It is often used to describe human capital. For example, new hires in a company ideally provide leverage to their managers. And, supporting functions provide leverage to their sales teams.

I find two kinds of leverage in organizations – people leverage and system leverage. The underlying concept is similar. Leverage provides for a stronger support system for execution. However, while people leverage focuses on people to provide the support system, system leverage relies on processes and systems.

Imagine you are the one woman customer service center specialist. Your company is growing quickly and you decide to hire someone. The guy you just hired provides you immediate leverage. He takes all the basic stuff off your plate and allows you to focus on more strategic stuff. Soon, you could expand this to a team of three. This is a classic example of people leverage.

However, let’s assume your first hire does a little more than you asked him to do and creates a really good FAQ resource for your customers. All of a sudden, you may not need to hire three people. That resource has helped provide system leverage. It allows you to operate at a higher level without adding people to the organization to solve the problem.

There are a couple of important takeaways once we understand this difference. First, most organizations intuitively understand people leverage. However, there aren’t enough that get system leverage. The best organizations and teams have fantastic processes and systems that enable their people to perform at a high level. This is often what makes large corporations tick. There are many large corporations whose human capital potential are definitely not being utilized. However, thanks to the strength of their systems, they still deliver impressive results. Of course, the truly great corporations have both.

Second, when you and I are hired to a new job, we provide automatic human leverage. We might even provide our manager the leverage created by two hires if we were very good. However, there is no better multiplier than when we build systems. Looking for inefficiencies in how we operate and solving them by putting systems, tools and processes in place is among the highest impact things we will do.

Magnets, glue, and iron filings – why groups work and when they fail

My model for any group/tribe of people – a family, a team, a community, or a company – involves magnets, glue, and iron filings. The analogy is not perfect but I do find it very helpful in understanding why groups work and when they fail

The magnet is the leader of the group. And, there generally always is a leader. This is the person who attracts people to his/her magnetic field. Magnets typically do this because they have the ability to articulate a vision for the group or tribe. They manage to stay magnets when they repeatedly demonstrate that they care more for the people within the tribe than themselves, and when they deliver on that vision (a happy family, a high performing team, a responsible company, etc.). The magnet is essentially a “giver” function. It is impossible for a magnet to be a “taker” – such magnets don’t last long. Bully leaders can either keep the illusion for a short while or will have to keep shifting groups as their magnetism wears off over time.

The next component are those who join the group for some personal benefit. I call this bunch “iron filings.” No group would exist without them. These are the folk who make the group a group. These are employees in a company who want a good salary, team members who want the group to succeed so they might go to the next more successful group, friends who want to be in a group that is “cool” or has the most fun. The iron filing is a “taker” function. Your focus, as an iron filing, is to get more than you give.

The final component are the glue. The magnet realizes very quickly that she needs the glue if she wants the group to go somewhere (and the group always has to go somewhere). Iron filings tend to fall off really quickly if they don’t feel taken care of. And, the glue do just that. They are the community builders. They nullify the magnet’s hard decisions, they ensure everyone is taken care of, and they generally make the group a great place to be. Over time, some of them become responsible community managers and ensure the group’s spirit is in good health. They are the ultimate givers and no group can exist without them. A smart magnet knows that it is the glue that makes the group possible. In some ways, the magnet may be the personality (that brings people in) but the glue is the character (that ensures they stay there). There is no limit to the amount of glue around a magnet. Incredible teams or groups of people often just have the magnet and glue.

There are a few implications when you consider this model. I’ll share 3 –
1. Successful operating teams have magnets and glue work really well with each other. The magnet is the CEO or visionary and the glue is the COO or details person. One cannot exist without the other. Successful families have this too – the visionary and the executor make for a wonderful team. In some ways, the strength of a magnet is in attracting and retaining the glue.

2. This also explains why succession planning is very hard in companies. There are very few magnets that are capable of attracting strong magnets to their group. It takes a tremendous amount of security and confidence – in short, extraordinary leaders do that. As a result, top management teams rarely have a good successor in the immediate management team. General Electric famously by-passed their top management team to pick a magnet from the next level. His name was Jack Welch.

3. We play different roles in different situations. We are capable of playing all 3 roles and have probably done so in different groups. However, this is perhaps a nice way to check in about which role we play in which group. If we’re just behaving like iron filings, perhaps we want to consider becoming the glue. And, if we don’t like the idea of being the glue within a specific team or organization, perhaps it is a sign to move to a different group?

Willing to meet someone half-way

If something goes wrong because of a mistake made by 2 people, the quickest remedies occur when both folks are willing to admit they made a mistake. “Sorry, I screwed up. What do we need to do to fix it?”

However, most large corporations make a game of this. Instead of using mistakes as an opportunity to reflect and get better, they start playing the blame game. That’s how we build an environment with decreasing trust levels since people are afraid to apologize on an email because they believe it’ll be taken out of context. It is a legitimate fear.

However, it also serves as a great test for a team’s culture – how willing is someone on the team to meet someone else at the half way mark? How willing are 2 people on the team to look others in the eye and say – “Sorry, we screwed up. And we’re going to work hard to fix it.”

Perhaps that ought to be the trust marker as we build our own teams. Great relationships are made of people willing to meet the other half-way. Great teams are no different.