Strategy. Innovation. Brand.


Inverting The Benefits Ladder

Enjoying my benefits.

Enjoying my benefits.

I’ve just passed a major birthday, which qualifies me for a number of government benefits, including social security and health care. While I appreciate the benefits, I also have to wonder: why do so many government benefits go to old people as opposed to young people?

The benefit system helps people – like me – who have already had plenty of opportunities. I’ve had years to work and save money for my retirement. I know that not everyone has had the same opportunities. I worked hard but I also got lucky. I know that many other people weren’t so lucky.

And that’s my point. Instead of paying people after they’ve retired, let’s invert the benefits ladder and invest in people from the beginning. Here’s an analogy – we’re all given small boats at birth. By chance, I got a boat that’s well built and seaworthy. My friend, Chuck, on the other hand, got an unstable, leaky boat. Chuck’s out at sea when his boat starts to sink. That’s OK – as long as he can swim to shore, we’ll give him a pension that will keep him alive.

Wouldn’t it be better to spend the money up front and get Chuck a boat that’s as seaworthy as mine? Note that this doesn’t ensure that Chuck will be successful. He might still get swamped. Luck will still play a role in Chuck’s life. But we’ve shifted the odds. Chuck has a better chance to succeed but he still needs to work hard.

Here’s how an inverted plan might work. When a child is born – let’s call her Susie — she automatically gets a bank account. Each year, the government puts, oh say, $10,000 in it. No one can touch the money until Susie turns 18. She then has $180,000, which she can use to start a business, go to college, learn a trade, or be a ski bum. It’s up to her. She can ask her parents for advice or not – it’s her money.

The government then says, in effect, “OK Susie, we helped you get off to a good start – now it’s up to you.” The government might offer some savings plans – somewhat like social security – but they’re voluntary. Susie is now launched. She has to make her own choices and take responsibility for her own welfare. She has every incentive to work hard and invest wisely.

I’m attracted to an inverted plan because it touches on so many American values. We say that all men (and women) are created equal. The inverted plan gets us all off on equal footing regardless of the accidents of birth. We’re also an individualistic culture and admire people who pull themselves up by their own bootstraps. The inverted plan gives people better bootstraps and the incentive to pull hard.

The plan also helps us resolve difficult issues about who deserves help. We’re a generous country. Indeed, according to the World Giving Index, America is the most charitable country in the world. But we like to give to those who are deserving. Deciding who deserves help is a thorny question that gets tangled up in questions of age, gender, social class, geography, ethnicity and so on. It also leads to never-ending debates about the “safety net” that may or may not have turned into a “…hammock that lulls able-bodied people to lives of dependency and complacency…”

My plan resolves the questions of the “deserving poor” – we simply agree that all children are deserving. Grown-ups, on the other hand, can take care of themselves. All we need to do is to protect them against the failure to launch.

So, I suggest that we consider an inverted plan. Let me know what you think. In the meantime, I’ll be lying in a hammock enjoying my government benefits.





Developing Leaders Through Broccoli

Leadership potential

Leadership potential

When I worked for Lawson in Sweden, we ran a leadership development program called the Greenhouse (or Växthuset in Swedish). Students participated in yearlong projects that stretched their skills and got them out of their comfort zones. They swapped roles, did stints in different departments, and spent a lot of time with customers, including some disgruntled ones.

The students were overwhelming positive about the program. But I always wondered if it was effective. After all, it’s not so hard to get good evaluations from students.

Did we really develop better leaders? Or did we just select natural leaders and show them a good time for a year? And, if they were better leaders, what were they better at? Were they better, for instance, at acquiring and integrating other companies (which was part of our strategy)? Or did they improve their ability to promote innovation? Or did they improve their ability to implement financial controls during economic turbulence? Or what?

Could they really be better at all these things? Which ones were most important? I thought about all this as I read a recent McKinsey report, titled “Why Leadership Development Programs Fail”. According to McKinsey, they fail for four reasons. Let’s look at each.

1) Overlooking context – McKinsey calls it context but I call it strategy. Many leadership programs are decoupled from company strategies. McKinsey notes, for instance, that programs often “…rest on the assumption that one size fits all…” and consist of “…a long list of leadership standards…” and “…corporate values statements.”

McKinsey suggests that managers ask a simple question, “What, precisely, is this program for?” For instance, one of Lawson’s strategies was to target specific verticals (and ignore others). So the Greenhouse curriculum helped students understand how to identify and develop verticals. On the other hand, we probably didn’t give enough emphasis to acquisitions, another part of our strategy.

The key is to ask what skills are needed to execute the strategy successfully. There may be only two or three. Make sure the students work specifically on those behaviors.

2) Decoupling reflection from real work – retreats are nice but they don’t change behaviors. Indeed, McKinsey estimates that adults retain only 10% of what they learn in lectures. Instead of lectures, focus on workshops, collaborative projects, and exercises that require students to learn by doing.

We created fictional exercises for the Greenhouse. The students, for instance, had to “sell” a major contract to a “customer” who was using a competitor’s software. That’s not bad but, of course, real projects are better.

3) Underestimating mind-sets – to become good leaders, students will often need to learn new skills and change their behavior. Yet, changing behavior is one of the most difficult teaching objectives imaginable.

Let’s say, for instance, that your strategy is to decentralize authority and push decision-making outward and downward. Your leadership program should reflect this. But, if the student’s mind-set is I have to be in control at all times, you’ll need to change the mind-set before you can change the behavior.

How do you change mind-sets? Remember the broccoli tip. If you can convince a kid to eat broccoli, you can convince a manager to delegate effectively.

4) Failing to measure results – leadership development programs are often exciting (and even fun) and so they get high marks from the participants. But that’s not the point. More importantly, what happens to the participants after they leave the program? Do they rise in the ranks? Do they depart for other companies?

You’ll still have the selection versus value-added conundrum. Did the program actually add value or did you simply select natural leaders to include in the program? The only way to sort his out is to put a few randomly selected in the mix and see how they fare.

I have a lot of faith in leadership development programs. The bottom line: tailor the program to your strategy. If you don’t have a strategy, work on that first.

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