“Good management consists of showing average people how to do the work of superior people.”John D. Rockefeller
When I was transitioning from solopreneur/freelancer to business owner/leader, it required difficult lessons in leadership. Everyone wants to be a leader but very few want the sacrifices that come with it.
Former Secretary of State Colin Powell once remarked that being responsible sometimes means pissing people off. My personality had to rebuild itself with new priorities. Being someone’s friend took a back seat, replaced by being their leader.
This doesn’t mean that you can’t be friendly with the people you manage. But the toughest part for me was knowing the boundaries — if someone was on my payroll, getting paid to do an important job, they needed to know and I needed to know that our friendship was less important than them doing their job.
[As an aside, this is why I began to avoid hiring friends; when there is history of friendship, the lines get blurry & blurred lines lead to crossed lines]
My firm The Wealthy Consultant published a playbook several months ago called “8-Figure Teams.” It’s a multi-day workshop that breaks down org charts, personality profiles, management practices, offsites, quarterly reviews etc — and one of models it teaches is “T3” teams.
I developed this model while going through a growing spree at one of my first businesses. We were hiring people as fast as we could manage. Every month there were more new clients than the month before, and we were overwhelming our staff.
It dawned on me one day that there was no way our original staff could remain creative, innovative, or competitive if they were constantly dealing with new fires. So I split the team into “tiers” and started hiring middle-level management. This eventually led to the installation of an OKR (Objectives & Key Results) system, with a third tier added to the hierarchy: assignments.
- Objectives (big outcomes & accomplishments)
- Key Results (milestones or markers that must be accomplished by a certain date)
- Assignments (individual projects or tasks that contribute to key results)
Here is the coolest part:
Your “T1” team integrates into your objectives. Your “T2” team integrates into your key results. And your “T3” team integrates into the assignments. The easiest way to mentally compartmentalize this is by organizing these tiers into outcomes.
In my early years, I would hire someone and then fail to give them expectations or outcomes. This led, of course, to missed expectations & failed outcomes. A few years into my entrepreneurial journey I learned to clearly communicate expectations & outcomes before I hired someone.
T1 expectations: these people make decisions and set the objectives for their department and the company.
T2 expectations: these people create the “how” by setting up key results and assigning the projects out to the T3 staff. They are also responsible for managing the T3 staff & the work progress, whereas T1 staff is responsible for overseeing T2 staff & replacing them when necessary.
T3 expectations: these people are primarily in the day-to-day, doing the work and completing the projects and assignments.
In a startup, you will have a single human wearing a T1, T2, and T3 hat. They do all three. But as the organization scales, you begin to separate the outcomes into respective levels (tiers). One of my main management principles is called “Division of Labor.” This is when you go from everyone being responsible for everything to a more sophisticated org chart.
When Division of Labor is installed, people are forced to focus on their lanes and let other leaders focus on their lanes. This is a hard switch to make but we consult organizations all the time on how to do this properly. It’s not a black & white “overnight” switch, but rather a deliberate switch of culture. A great business can go from “startup” (everyone is responsible for everything) to T3 teams & Division of Labor in about 18 months.
Let’s talk about culture.
I learned culture by messing it all up. One time years ago an employee came into my office and told me they had to quit. I asked them why. They were doing a great job and I didn’t see any reason for them to leave. They told me they couldn’t sleep and their doctor had encouraged them to find new work — their blood pressure was too high and they connected it back to the stress of working for me.
That’s not a great conversation to have.
I began to pendulum swing. I got soft and empathetic. I stopped holding people accountable because of course I didn’t want people to not be able to sleep. It took me a few years to realize that this is not a “This or That” but rather a Both/And spectrum.
High performance teams enjoy pressure — they need pressure. But they also must have what Google researchers call “Psychological Trust.” In layman’s terms, they need the pressure but they need to know they’re not going to be axed if they miss something or make a mistake.
There’s a famous story about the IBM founder Thomas Watson. One of his employees made a mistake that cost IBM $600,000 in new business. The employee came to Watson’s office and tendered his resignation. Watson looked at the young man and said, “I’m not going to fire you — I’ve just invested $600,000 into you, so that you never make that mistake again!”
A great team makes plenty of mistakes. Trust me, it’s not a great team if they’re not making mistakes. But they don’t make the same mistakes over and over again. That’s called incompetence and you can’t tolerate it.
Everything I’ve learned from culture I have learned from trial & error or through studying great CEOs. Kim Scott has a great book called “Radical Candor.” I highly recommend it. Ray Dalio’s book “Principles” has great material in it on culture.
But today I’ll give you a few lessons from my studies & my experiences that will help you build a culture of high performance.
Don't pay as much attention to people's conclusions as to the reasoning that led them to their conclusions.
It’s less important that someone be right all the time — and much more important that they have a proper system for thinking through the pros & cons. Everyone misses sometimes; you want the misses to be due to uncontrollable events, not incompetent thinking.
Hiring is a high-risk gamble that needs to be approached deliberately.
No matter what, you’re going to hire the wrong people, miss out on the right people, and if you’re learning — you’ll have decisions you regret. Take it as it comes and keep on going. List out your lessons in a notebook and update your “thesis” often.
Evaluate accurately, not kindly.
My dad always told me, “I’m not here to be popular.” I didn’t understand that until I started inheriting leadership. The goal is the TRUTH, and the truth is not always nice.
Understand the power of a “cleansing storm.”
The best thing for your organization is to experience turnover from time to time. The old guard leaves and a new guard brings in fresh, innovative perspectives. This is why “retention” is a horrible way to measure culture — you want your culture to spit out bad fits (and this includes people who were once a great fit but are now falling beneath the standard).
The clarity of your words gets measured at the other person’s EAR, not at your mouth.
This means that if your team is not understanding something, it’s your fault, not theirs. It also means that great instruction must often be repeated over and over again. By the time you’re tired of saying it, people are just beginning to get it.
Great teams are made when things are hard.
This is true and it will always be true. Soldiers are a sacred bond because they go through shit together. I remember in 2022 & 2023, one of my firms was investigated by the FTC. We got so big, so quickly, that we became a target. Whether or not I agree with them is not the point, the point is how our team rallied together. They became tight knit and formidable during that season.
Lastly, I want to share a question that I read 5 years ago.
When I read it, I knew the answer was no.
Today I can confidently say that across all organizations, for almost every position, the answer is yes. If you cannot answer this affirmatively, you have concentration risk and it’s worth fixing.
”Can you name the two people you would call right away to talk to about taking the place of your top performers should they leave?” — Patty McCord (Netflix)