Sunday, June 5, 2016

Two Minds Are Better Than One: The Theory of Twin Leaders

Management processes are developed over time to facilitate, enable and ensure success. Organizations create departments around functions and identify managers to lead. Organizations are also corporations with departments, all headed by CEOs as singular leaders conducting corporate management in the quest for success. Organizational practice, over time, also got concerned about vesting singular powers in individual managers and leaders, and has tried to use departments as mutually critical of each other while requiring them to be collaborative.  Individual managers and leaders are trusted to deliver through such singular power or face consequences later (Google Nest is a recent example). Concerns are delayed recognition of failures has led to organizations being layered vertically and horizontally with departments that oversee each other.

The zig-saw puzzle of ‘trust and verify’ is reflected in several organizational structures. Production produces but Production Planning counts while Quality verifies. Accounting records and Finance tallies. Internal audit checks veracity of all these processes. This has been the traditional structure. It has not stopped some business failures and occasional malfeasance. Investors and regulators became concerned, and new departments such as compliance, risk management and ethics came into organizational mainstream. There is another dimension too. In early days, all departments used to be consolidated into just two broad divisions: technical and commercial. Over time, not merely due to increasing scale but also due to avoid departmental cartelization, every department (almost) started getting a C suite officer. Despite all this, looking at the broad range of business failures one would wonder if the management processes, as they have evolved, provide an infallible solution.

Which two?

The efforts to find the right balance continued to extend, and that too to the higher levels of organizations. The Chief Executive Officer (CEO) or Managing Director (MD) is required to hive off day to day operational responsibility to the Chief Operating Officer (COO). The roles of Chairman and MD are now expected to be different. MD and CEO are expected to operate under the superintendence and guidance of a board of directors with diversity of experience. The Board itself is divided into independent (non-whole-time) directors and non-independent (whole-time) directors, independence being related to material pecuniary relationship with the company of a director over a sufficiently long period of time. In further addition, the Chief Financial Officer (CFO) is expected to report also to the Board. An audit committee of select directors of the Board acts as an independent reviewer of accounts, interacting with external and internal auditors. And, there exist other board committees for investments, risk, compliance, and so on.  

The audit committee also acts the ultimate stop for the whistle blowing mechanism in the company and as an ombudsman of sorts. There are many further nuances, both from regulatory and company perspectives, which are expected to support the endless divisions and superintendence. All these mechanisms expect remediation to be carried out only by the CEO and the other C suite officers who alone have the day to day knowledge and execution capability. The audit committee and the board may go through all the internal audit recommendations but will only have to look at the CFO and CEO to implement the remediation plan. In battles between heads of production and purchase, production and sales, finance and all other departments, only those respective departments have to implement corrective processes. All this discussion leads us to wonder if different functions, departments or responsibilities that are headed individually are the solution (or the problem?) and something else is the problem (or solution?).  

Root cause 

The root cause for bad performance is usually bad decision or bad execution, or both. Without addressing the root cause for bad performance mere structural redefinition would not help. Better processes do help to an extent but essentially, individuals need to be better at decision making and execution. There is one reason other than leadership skills as to why leaders do make bad decisions or do turn bad at execution. That reason is that leaders are also human! We may aim to achieve precise and clinical leadership through various efforts of leadership development. However, leaders as humans are subject to pressures, internal and external as well as biases, internal and external. While it is part of leadership skill set to be confident and objective (which should address issues of pressure and bias, respectively) it is indeed humanly impossible to be extraordinarily virtuous. It is, therefore not uncommon to see even seasoned leaders wilt under pressures of the Street or get mesmerised by their own pet ideas.

When the issue is within the native profile of human behaviour, there is only a limited alleviation that organizational structures and processes can offer to offset the impact of pressures and biases; particularly when such structures are in the nature of dividing responsibilities, and reviewing decisions and actions sequentially.  The key here is that the primary decision or execution is singular by an individual; so is the secondary review of decision or execution. Though review by a board is plural it is also a post-facto delayed quarterly review of singular decisions or actions. It is important to enable challenges, debates and superior outcomes in decisions and actions. This cannot be achieved just through a discussion between the boss and his subordinates as the former eventually displays positional power and the latter eventually succumb to career growth issues. This cannot be through peer level discussions either as peer groups tend to eventually “live and let live” rather than aim at the best outcome.

Two minds

It is often said, “Two minds are better than one”. In fact, the concept of synergy lies in being “One plus One becoming Three, rather than an arithmetical Two”. The first is a typically social adage that implies that two minds can bring to the table viewpoints that would not be obvious to just one person. The second is a typically corporate adage implying that when two minds get together some sort of catalysis takes place. There is a saying related to individual experience that plays spoilsport though: “I am in two minds”! In corporate setting, indecisiveness is frowned upon. This has been one evolutionary reason why singular authority has been encouraged in all organizations. As we have seen in the earlier sections, this concentration of power has the potential to lead to inappropriate decision making or execution. A bold new experiment could be to have two leaders responsible for a single function. For example, key functions such as Finance, Operations and Commercial could have two equally titled top executives lead each of them. All decisions could be taken and executed only by the two together.

The rationale for two minds taking one decision or supervising one execution is clear: two minds are better than one, especially when the function is too complex to decipher or when multiple solutions require multiple viewpoints. Having two equally endowed executives enables each of them to overcome their pressures and biases through the critical thinking of others. Having another powerful co-sharer of decision making and execution enables the two member team take bold decisions which each individually would not probably be taking. There are, of course, risks that the two leaders could form a conveniently colluding cartel rather than critically thinking team. As long as this two member team concept is not limited to just one function but covers a few other important functions besides the CEO role itself, the risks of such cartelisation would be low. There would be higher costs associated with the concept but can be overcome with greater infallibility and greater value building through such pooling of strengths.

Left and right

The general approach in a Twin Leader deployment could be to select them based on complementary domain skills. For example, of the two to head the commercial function, one could be a sales oriented leader and another a marketing oriented leader. Of the two, heading the finance function, one could be a growth oriented fund raiser and another precision oriented cost accountant. In the operations domain, one could be a production expert and another quality expert. At the level of CEO itself, one could be conceptual and another analytical or one could be thinker and another implementer. The logic is that by putting together these skills at the leadership level one gets the best domain leadership capability. There is much to support such a skill based approach. There is another approach too that could be very viable that is rooted in neuroscience.

Ever since Roger Sperry, the 1981 Nobel Laurate, brought out the concept, lot of research has focused on lateralization of brain through left brain and right brain functionalities. Right brained individuals are expected to be more intuitive, thoughtful and subjective while the left brained ones to be more logical, analytical and objective. It is not that the two sides of the brain are completely compartmentalized; the brain does work together with the various parts of the brain including the left and the right conversing through the corpus callosum which joins them. The point here is that the twin leader approach has an enormous potential to bring together not only complementary domain skills but also a winning fusion of intuitive and logical, thoughtful and executional, and subjective and objective skills that are so essential to accomplish top-class leadership. If organizations look beyond the immediate costs of twin leadership approach, the organizational value that could accrue would be immense.

Posted by Dr CB Rao on June 5, 2016       

No comments: