Hard Times or Good, the Opportunity’s the Same



Transcript below, for those of you who prefer reading over listening!

When you’re driving disruption, what we would call creating confusion deliberately, it feels great. When you’re affected by the disruption, it feels terrible. But the opportunity in both instances is similar or the same.

Can you talk a little bit about how a founder or CEO, finding themselves in the midst of this disruption that feels thrust upon them rather than created by their own hand, might navigate that to achieve their goals? I’ve heard you describe moments like this as an opportunity to have people reach their finest hour. Can you talk about what CEOs can do in service of that?

First of all, I want to be clear that there’s a lot of literature, talks, and experts out there on this whole concept of mindset. And the whole thrust of the mindset debate is that human beings are pretty much logical or rational, and if they could just shift their mental model, they would understand or do something better.

This is really not how the human mind works. We’re not computers– we can’t swap out the operating system. When we get into a situation that is frightening to us, but may not be frightening to others, that’s because of deeply embedded things in our subconscious. So I’m caveating what I’m about to say, which is that in this particular case, you do need to start with a particular predisposition to what’s about to happen. I call it the pony principle.

The pony principle is based on a joke about a kid who gets a pile of manure for Christmas, because the parents want to teach this kid a lesson about what life is really like. They wake up on Christmas morning to find this kid gleefully digging through it. When they ask what the heck he’s doing, he says, “with all this manure, there’s got to be a pony in here somewhere!”

To the extent that we can get help – not just change our mindset – but get help to constantly find reference points for the idea of finding a pony in here somewhere…that’s where we start opening ourselves up to figuring out what is available to us.

As an example, managers in general are terrible at difficult conversations. We don’t like disappointing other people, and we’re a very social species, so we’re not going to have a lot of conversations where we feel uncomfortable because we’re making somebody else feel uncomfortable.

The net effect of that is we build cancerous cultures where people don’t know how they’re being evaluated, and they don’t know the standards they’re being held to, and the behaviors that are expected of them. So they end up doing things that they think are going well, because they’re not getting feedback, and ultimately receive terrible messages in the form of negative reviews or getting fired… which is incredibly disorienting, and frankly, not treating people like human beings. Because to be in a good relationship with another human being, you need to be communicating well.

The pony principle at this particular point in time, relevant to conversations, starts with: okay, I’ve got a lot of people. I am a leader of a fast growth organization that’s heading into these economic headwinds, these disruptions, these really confusing times… Angie, I love how you described the confusion as coming at me – I’m not driving, and it’s being driven at me, and that feels terrible. But the gift is the same. And so how do I orient myself to be open to what this is telling me? That’s the deployment of the pony principle: okay, this feels like a pile of crap, but there’s got to be a pony in here somewhere.

The second point with regards to communication is: okay, how am I going to use this to start working through the issues that may have gotten us to this bad place in the first place? A lot of conflict avoidance ends in bad hires. This is a very practical way that conflict avoidance ends up affecting businesses. The hiring manager is in bad straits, needs to get a role filled fast, and gets some bad feedback from somebody on the interview panel, or the board doesn’t like this candidate…rather than trying to understand that and dig into it, and find out what may be missing, it’s papered over and ignored. And they think, “no, this is going to be okay. This hire is going to be great.”

What the stats show is roughly 40% of the time, that’s wrong. It’s worse than blackjack odds. When you’ve got a bad hiring process, you’re probably going to make a bad hire. And dealing with that bad hire is going to be incredibly conflicted and fraught, because nobody likes to admit they made a mistake, and nobody likes to deal with the mistake they’ve made once they’ve made it. This is especially true in hiring. And so in the past, again, the way corporate waste builds up is you make a bad hire, you don’t deal with it and you don’t have to because you just hire more people around that hire. Because an ineffective or unproductive employee requires more work from others than if they were the right hire or being properly managed.

Where’s the pony? Let’s take the hiring situation and talk about how we’re going to spend an extra five minutes to get in sync with the people who have negative feedback about what they’re seeing, and ask some follow-up questions to that and say, okay, what we can’t afford right now is to make a bad hire – by the way, I don’t think we can ever really afford to make a bad hire. But let’s say right now, you’re especially attuned to it – I can’t afford to make a bad hire, so I really want to take an extra turn on this, and I want to take an extra turn on the feedback and understanding that feedback. Now to be clear – and this is why I think having a coach or mentor to help you with clarity is so crucial – what you’re probably going to do now is try to avoid the conflict of making a decision whatsoever. And so you’ll use what I’m saying to be like, oh, we have to slow things down, we have to go into hiring freezes or pauses….Those are all just excuses for a bad hiring system.

What I’m really trying to say is, if in the past, your fear of conflict would have driven you not to have tough conversations about whether a hire is right or not, whether we can afford this hire or not, now is a good time to practice that. If giving feedback is hard for you, now’s a good time to practice that. I’m sure that sounds counterintuitive. Don’t you know, Jeff, I can’t afford to lose anybody right now. I’m going to lay off half my team, so I can’t possibly afford to lose anybody who remains. No. You’re in a slow spiral downward.

What you should be saying is, good management produces good results, good results produce good companies. And so, what is the way to realize that now is the time for me to practice good management? It’s exactly the wrong time to say I can’t afford to be a good manager because I can’t afford the time or I can’t afford to upset anybody. This means your company’s going to get worse and worse, and you’re banking on everything changing and returning to the cheap money days, when you could just go back to papering over your problems and accumulating debt. That’s nowhere on the horizon that anybody I know can see. Now is the time to really practice and say, okay, I want to have the tougher conversations.

We can talk to you and teach you how to have those conversations. We’ve got our template for those. But I think right now is the perfect time, especially if you’re saying things like, we’re going to have to reduce in size, to prioritize the discipline of good management, the effect of good management, the habit of good management, because it produces great companies over time. It’s the wrong time to move away from that.

Jeff, I think I hear you saying that the pony in this particular pile of manure is the imperative to practice good management is clear, in a way that it may not have been in what people were calling more boom times or bull markets. Because it was easier to paper over the practice of bad management, leaning into things like avoiding conflict, not having tough conversations, not making the tough calls about what projects to kill. Is that right?



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