Just weeks after the attacks of 9/11/2001, we held our regularly scheduled quarterly board meeting with our venture capital populated Board of Directors.
As a financial application software company, our sales had already been hobbled by the dot com implosion. After the attacks, virtually all of our new client sales came to a screeching halt. It wasn’t just us, business in general stopped for an extended period of time.
I fully expected this meeting to take on a somber tone, which it did. However, I was surprised when upon presenting our financial performance for the quarter, which decidedly did not meet our plan, I was told that although I clearly had good reason for missing our numbers, I was fully expected to come up with a plan that would “make it up.”
Although it wasn’t my first time serving as a CEO, I was pretty surprised at the lack of a free pass granted by my board under these extraordinary circumstances.
It was at this moment that I was reminded that results were what I was hired to generate and despite the abrupt and profound changes in the macro economic environment, my job was to figure this whole mess out, make adjustments and recover. No excuses. The buck stopped with me.
This situation reminded me of this quote I had read that was attributed to Steve Jobs while at Apple: “When you’re the janitor,” Jobs has repeatedly told incoming VPs, “reasons matter.” He continued: “Somewhere between the janitor and the CEO, reasons stop mattering.” That “Rubicon,” he has said, “is crossed when you become an executive.”
The reasons for missing the numbers that quarter were clear to me as well as to my board. They didn’t really matter. I owned the responsibility for accomplishing our results. As the CEO, I had authority to take whatever actions were required
Like in most companies, the responsibility for our new revenue generation was squarely in the hands of the VP of Sales. This was a responsibility that came with that territory. So, he had work to do.
The idea of distributing the responsibility to him or other executives is generally a straight forward task for most CEOs and seems pretty clear to executives hired into these roles. But often there is a gap between the responsibility they have and the authority they require to achieve their goals.
Authority is very different than responsibility. While responsibility, like my Board reminded me, can’t be abdicated even with good reason, it does require the appropriate authority, or the empowerment to make the decisions required to fulfill your responsibility.
Virtually all results are dependent upon having sufficient authority to make decisions required to achieve results.
For example, my Sales VP may accept a plan to accelerate revenue growth to get back on his sales quota track. But, to do so will require the hiring of several additional sales people.
It may require engaging a sales training company, a new CRM system, and an additional budget for travel. Without the authority to make those expenditures, the expected results may not be possible.
Experienced executives (including CEOs) negotiate for this authority in advance of signing up for their goals.
In my role as CEO in a company in which I replaced the founder, one of the key issues I required, was the unfettered authority to (re)populate the executive team with what I deemed to be the right people required to accomplish agreed upon goals.
Some of the executives were old friends of the founder. And one, was his brother. So, this negotiation was tricky but I knew would be important.
Without that authority, it wasn’t clear to me how I could be responsible for accomplishing what I was signing up to do.
The failure to align responsibility and authority is a germ that can infect any organization.
Elon Musk is notorious for projecting the blame on missing a goal onto people who didn’t even know they had the responsibility, let alone the authority, to fix the problem.
Wired magazine reported that Musk once fired a young engineer, whose name he didn't even know, for reasons he didn't explain.
A source who heard the conversation told Wired that one evening at 10 p.m., Musk called the engineer over and pointed at a machine saying, "Hey, buddy, this doesn't work," and asked if the engineer was responsible.
Confused, the engineer asked Musk to explain what he meant. "Did you f***ing do this?" Musk asked again, and when the engineer said he wasn't sure what Musk was referring to, Musk called him a "f***ing idiot" and told him: "Get the f*** out and don't come back!" According to that article the engineer was summarily terminated.
Behavior like this coming from the top causes everyone in the organization to take precautions not to get caught by surprise.
At Tesla, most of the authority is retained by Musk himself. This is true even after the company hired a new Board Chairperson ostensibly as Musk’s boss. According to an internal email that Musk sent, only he can grant the authority to use certain acronyms in the company.
It is rumored that employees avoid walking past Elon’s desk out of fear of randomly being held accountable. This causes people to spend more time covering their butts than actually doing anything useful, not to mention all the time wasted taking circuitous routes.
It’s debilitating to not have sufficient authority to get your job accomplished.
In one of the companies at which I worked, everyone felt that to do anything that was the least bit consequential, they needed to ask the founder.
This “may I” mentality had worked fine when the company only had a few employees. But as we grew, it had the effect of causing every decision to be run by the then CEO/founder, slowing decision making and causing a bottleneck that would ultimately retard the company’s future growth.
No one believed they had the necessary authority, even if perhaps they did.
Not being clear on who has responsibility can also be a problem.
Did you ever send an email to a group of people from whom you requested a certain response? Were you frustrated when you not only didn’t get the desired results, but you didn’t even get an answer to your email?
Put yourself in your recipients’ shoes. Did each think one of the others would both answer and handle this issue? Did they hope (expect) it was someone else’s responsibility?
Some of the best companies in the world are really good at this alignment. They push not just responsibility down to the level of workers dealing with customers, but also give them the requisite authority to back that up.
The Ritz Carlton empowers all of its workers with the authority to fix customer problems without having to ask their bosses for permission.
Similarly, Zappos enables it's customer support and sales people to offer accelerated benefits to customers beyond their current frequent-customer status, without having to ask for permission.
Of course, it is hard to ensure that everyone with authority will do the right thing. Organizations need to weigh the cost of delays and wasted cycles while employees request permission to accomplish a simple task or get their supervisor involved in accomplishing something they could have easily handled themselves.
Somewhere the line must be drawn without putting the company at risk.
No matter what your particular view is on delegation, being clear on who is responsible for what and ensuring they have the requisite authority to accomplish that task, is what will ensure your organization will function at its highest efficiency.