5 Simple Steps to Running an Effective Team

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The passing this week of legendary investor, and personal hero, Charlie Munger had me reflecting on many of the pieces of wisdom I’ve picked up by being a Munger fanboy over the years.

While there are many, which will continue to crop up in my writing, this week in particular I’m struck by Charlie’s love of simplicity. Munger built his life around 3 simple joys:

1. Reading books

2. Spending time with interesting people

3. Making money with his mind (aka investing)

The title of this newsletter is Simple, Not Easy. That title was inspired by my Dad, about as big a Munger devotee as you can find, and pays homage to many of Munger’s teachings. So as the year comes to a close I wanted to re-visit some of my thoughts on the five simple foundations of leading an effective team:

1. Hiring

2. Culture

3. Training

4. Coaching

5. Accountability

While I’ve written about many of these items in the past, they represent my simple, but far from easy, principles for running an effective team.

Running a business vs. changing it

It’s important to note at the outset of this post that these five foundations are most useful with respect to running a business rather than changing it. That is, when your primary focus as a leader is tactical execution rather than strategic changes. If you have a defined goal, and are working to pursue it with vigor these foundations will serve you well. If you’re evaluating acquisitions, new product lines, entry into new markets they’ll be less applicable.

Hiring

I’ve written individual articles on hiring at multiple points in this newsletter but it’s worth repeating, the individuals who comprise your team are the core of your success. Hiring great people is 90% of the battle and the other 4 foundations are about harnessing their skills and talents to achieve your team’s goals as efficiently as possible.

As Shane Parrish reminds us, “more often than not, the person is the problem, not the incentive system. No incentive system turns mediocre into extraordinary.” All problems are people problems, when you hire for your team remember that you are either giving that team a headwind or a tailwind. Act accordingly and work to put the best team on the field.

Culture

If hiring is the foundation of an effective team the culture you build is a close second. Culture is incredibly important because after hiring one of the most important jobs of a leader is retention. If you turnover your team every 12 months no one on it will ever be able to truly become an expert and the median level of competence across that team will suffer.

There are four items to keep in mind when setting out to build a world class culture:

1. Identity

2. Recognition

3. Compensation

4. Mobility

Each item represents an important leg of your team’s culture, but they are ordered sequentially in order of importance. As a leader, you are responsible for being a steward of your team’s identity. When your team has a cohesive identity they move from being just individuals working a job to members of a team working together to drive success.

The best way to cultivate a strong identity as a team is to work to create a purpose statement, team values, and core competencies / standards of excellence. A team with a clear purpose, values, and standards for what exceptional looks like is one that will attract and retain A-players.

Training

After you’ve hired great people and built an effective culture your focus as a leader needs to turn to making that team better by leveling up their skills. The primary difference between training and coaching is that training occurs in a one to many format while coaching is done one to one.

Training should always be linked to the standards of excellence you created as part of your team’s unique culture and be rooted in brilliance in the basics. What 20% of your team’s job, if executed at a consistently high bar, will drive 80% of your results? Start with exhaustive training of these items that is delivered in a coherent manner during onboarding while also revisited with 2.0 and 3.0 sessions to build on these basics.

Training is also an important place to explore the intersection between running an effective business and changing it. If you have a new strategy which relies on changing the underlying skillset of your team, a comprehensive training program for that team is the manner in which you’ll deliver it.

Training programs are, by design, focused on increasing the median level of performance of your team in whatever skill you’re looking to teach. Do not get caught up in working to develop a perfect training program, it doesn’t exist. Rather, be clear on what the minimum level of proficiency looks like (just because it’s the minimum doesn’t mean it isn’t a high bar, remember you’ve already hired world class performers) and develop a training curriculum around it.

Coaching

If training is the one to many approach for upleveling your team then coaching is the one to one. It is the finishing school which relies on your unique insights as a leader to develop a bespoke approach to improving the last 10% of your team members’ skillsets to bring them from good to great.

Effective coaching is the hallmark of great leaders because once you’ve hired for excellence it is your job to bring that excellence to the next level. My favorite approach to effective coaching is rooted in leading from the front. The best way to do so is through disciplined practice and application of the skill you are coaching your team member on by applying the DPAR framework:

• Demonstrate

• Practice

• Apply

• Refine

This framework is executed in a loop which is run until your team member masters the skill you’re working on before moving on to a new skill. High quality repetition, both practice and real world application, is the key to successfully coaching a team member on the development or improvement of a skill.

Accountability

All high performing teams I’ve been part of have a culture of ownership and accountability. Your job as a leader is to balance effective empowerment (Tom Murphy’s, “hire great people and leave them alone”) coupled with accountability (Ronald Reagan’s, “trust but verify”).

This balance of empowerment and accountability can be a challenging one to strike as it requires a unique level of both confidence and maturity for an individual or a leader to display. As a leader, you facilitate effective accountability by having a high, “say / do ratio” yourself and acknowledging when you fall short, while being clear about what you plan to do to correct this shortcoming.

To create a culture of high accountability on your team ensure your accountability is standardized, public, and consistent.

As Patrick Lencioni reminds us, “failing to hold someone accountability is ultimately an act of selfishness.”

It is selfish because it undoubtedly creates inequity among your team as you allow bad behavior from some while confronting it in others. It is selfish because it means you fall short of your responsibility to bring the best out of your people. It is selfish because you would rather protect your own ego and avoid conflict than admit when a team member of yours falls short of the standard, it is as much your fault as it is their own.

Do the hard work of being an effective leader and hold your people, and yourself, accountable when you fall short of the standard.

Conclusion

So, as we march toward the close of the year ask yourself how you can simplify your leadership to more effectively lead a high performing team. Do you spend most of your time as a leader on hiring, culture building, training, coaching, and accountability? Or are you constantly chasing the next shiny object of this new strategy or that new strategy as you avoid the focused work of consistent greatness?

What are your simple foundations for leading a great team? How can you reorient yourself to be more focused on those items to close this year and begin a new one?

As Charlie reminds us, “simplicity has a way of improving performance through enabling us to better understand what we are doing.”

What are you doing as a leader? Can you simplify it to improve your team’s performance?

See y’all next week.