While attending a weeklong executive training session several years ago, I met a very wise man that taught me an invaluable concept. I was attending a session on quantitative modeling for allocating company resources. The central idea was that managers could use complex algorithms to determine the most impactful use of corporate resources.
The class was being taught at the Kellogg School of Management at Northwestern University. There were about 50 people from all over the world in attendance. We spent all day in class, had meals together and learned a great deal from the shared experiences of the group. Mostly large international corporations were represented.
The professor had some very fascinating financial models and real world examples. I took pages and pages of notes. I had to brush up on my calculus for some of the work. I found the questions that people asked and the business problems they were trying to solve to be very enlightening.
As engaging as the entire experience was, the most valuable lesson came while sharing a meal with a few of the attendees. One gentleman was the head of an international container shipping company. He explained how he made a major change in how he managed his executive team that fundamentally improved how they allocated their biggest asset, their ships. For years he had his executive team broken down by geographic shipping line. Each executive had their own line and was financially rewarded by their own individual line's performance. He said that this model worked well for the most part, but there was always tension because certain execs tended to hoard their ships which could have been put to better use on other lines within the company.
He changed the entire executive team's reward system to be based on total company performance. After the change, one of his key executives left the company because he had the highest performing line, but he had also been holding on to some of the best ships that could have been used more profitably in other lines. The change put all company segments on a shared set of goals. My wise classmate gave me one of those looks with a knowing smile and said, "I should have done that years earlier."
Many companies have internal competing and conflicting objectives. The bigger the organization, the more likely that there will be overlapping and often competing interests. You cannot eliminate them. What you can do, and I encourage our managers to do this, is cultivate a sense of togetherness across the entire organization. I call it, "We Win When We Win." Sounds obvious. But when making decisions about rewards, resource allocation, internal promotions and such, it is a powerful guide.
If you make a decision that results in the company winning, or being better off, then that is a good decision. Sometimes those decisions will result in a short-term resource being used by one group over another, but in the long run that is good for the entire team. Even better is knowing and teaching that we win when our customers win. A decision that helps a customer is a decision that helps us. The two concepts fit together and can really enable a management team to make effective decisions.