Improve “How” We Make Decisions To Avoid Repeating The Past.

Dear Reader,

A functional executive told me this week, “I have to fill in the template for strategic planning. But it shouldn’t take very long.” Based on some other tidbits, including the use of words like forecasting and budgeting, this well-funded group didn’t seem to be changing “how” they think as part of strategic planning, which typically leads to repeating the past.

Before we dive in, if you missed the last edition on territory management as a process, you can catch up here.

Each company can think about its path forward in three ways. The first path is that everything we are doing today works, and we will continue to do exactly what we’re doing today – just more of it. In 20 years, I have not met a company where the present state is good enough, whether the group recognizes it or not. The desire or need for improvement is never in question. So, let’s just assume companies of a reasonable scale want to improve.

In a second path, we accept that things aren’t working well and acknowledge that radical changes are needed based on what’s not working. This approach might sound logical because we are learning from history, which is important. The question, though, is what we are learning from history. If we take away biased lessons, we will repeat history, only with different people or things around us.

The second path is suboptimal, and the reason is what Einstein meant by saying, “We cannot solve our problems with the same thinking that created them.” Major outcomes will not change if we continue using the same problem-solving mindset and approaches while merely changing the “widgets” we choose. This second path focuses on what we do, as opposed to changing “how” we think about what we do.

Without changing “how” we think, our “what” decisions will repeat the past.

The third path is foundational maturity change. This path starts with the correct fundamental assumption that we created our problems, and our problems are a result of how we solve them in the first place. This is particularly applicable in a company setting because if the correct foundations are in place, tactical mistakes self-correct quickly, just like how we overwrite a typo.

Let’s replace our company with our home. Let’s say we look back at the year and feel that we have been living in a messy home and don’t like it.

Under path 1, we’d continue to live in filth, which none of us wants to. Under path 2, we make a tactical decision and say, “I will get a cleaning service to come in every week to clean my place.” Okay. Where is the problem-solving here? We have started with the assumption that we are generally not at fault for our messy home. This is typical of most planning efforts that fail to grasp its true power. The “what” decisions become another line item to spend money on.

The reality of a disorderly home is likely that it’s merely a symptom of many other disorderly aspects of our lives, most of which a cleaning crew cannot help with. Even with a cleaning crew, our place might be messy six days a week. A foundational shift in how we maintain our home implies a change in how we look at actions that create the mess. Such a change may address how we use our time, what activities we prioritize, and other intrinsically valuable life changes.

Without improving how we problem-solve, we are likely to change one executive for another, one tool for another, one feature for another, and none of these changes are likely to improve the intrinsic trajectory. Let’s use aspects of how we choose and utilize people in our company as examples to reflect on the importance of foundational maturity.

“How” do we think about roles?

Most companies have “Analysts,” “Product Managers,” “RevOps Managers,” and all sorts of branded titles. The truth is that most “analysts” don’t analyze anything; they are early-career grunt workers. So, what do we call people who do real analysis? The famous world-saving Tom Clancy character, Jack Ryan, is also an “Analyst.”

Is a “senior manager” really “senior” at managing? Many are individual contributors.

Title inflation and broad categorizations increasingly leave us in scenarios where the nomenclature associated with a person’s work has little to do with their ability, interest, or what the person actually does.

The best outcomes happen when we focus on the specifics of a person’s work and how each person can create value that strongly correlates to sustainable customer value.

What if we zoom out to care about the whole company, give the Office Space line a positive spin, and ask, “What would you say you do here?” That’s a shift in how we think about connecting people to value creation.

Job title-based staffing is highly inefficient because it is a generic categorization. The resource will be forced to do many activities outside their core skills, which is inefficient. The company will also fail to tap into each resource’s core strengths that lie outside the boundaries of the generic categorization.

Unfortunately, “roles” are often used interchangeably with "job titles," but that was not their original intent. Roles are meant to describe responsibilities that directly sync with mature processes. Calling a role “Pick-Pack-Ship-Scheduler” is a path to hiring, staffing, and managing the correct person, rather than framing it as a generic “Supply Chain Manager.”

This change is not a renaming exercise. It is a mindset shift to base the organization’s design on mature operations rather than silos or perceived importance.

“How” do we think about hiring?

Maybe it’s because I grew up in 1980s India, where finding a job that people held on to for dear life was a common theme in many movies. So, it's hard for me to stomach watching hiring efforts where the people involved treat it as a chore, and the thinking resembles getting groceries delivered.

A common hiring pitfall is the overuse of technology by recruitment teams and candidates. Recruiting teams often rely too heavily on automated application screening software, prompting candidates to exaggerate their applications. If a hiring team cannot respect a candidate’s interest and effort in submitting an application by actually reading it, why should a candidate be expected to maintain professionalism toward the hiring team? This war of attrition leads to poor outcomes for everyone involved.

Recently, I watched the CEO of a professional education organization tell a group of public company executives, “We tell our students to pepper their résumés with keywords from the job posting to get past automated Applicant Tracking Systems.” The room seemed unsurprised. This scenario highlights the hiring practices that contribute to unproductive ecosystems.

An efficient organization implies a supervisor has no more than six to eight direct reports and is likely only looking to hire one or two new people at any given point in time.

So, why isn’t every application reviewed carefully by a human?

If the excuse is “We get thousands of applications,” maybe it’s because the application form is too light!

Buying new tech, hiring a new recruiter, or using a new recruitment agency is unlikely to change the quality of talent because these are all “what” decisions, based on the same historical mindset that treats hiring like grocery shopping. Changing how we view hiring is a maturity shift.

“How” do we think about skill?

A common self-identification approach on professional social media platforms is “ex-company.” I understand the underlying psychology behind branding ourselves this way. I also accept the need for a collective—the company—to consider or choose people based on such associations. But after 20 years of observing various organizations and interacting at a deeper level with people who don’t even consider themselves “professionals,” it’s quite obvious that large portions of people at popular brands are average, while there are incredibly talented individuals doing things that most people overlook.

The association-based skill attribution is the same fallacy that Moneyball busted. The question to ask isn’t whether someone was associated with the New York Yankees or whether they make a “pop” when they hit the ball. The real question is whether they can consistently do things that drive our engine to the outcomes we desire.

Skill isn’t about the popularity of what everyone else thinks. “Skill is the set of ingredients that have the potential to create value,” which is the definition I framed in my book, Congruence.

Imagine that we need someone to entertain us with juggling skills. While it’s true that we cannot meet everyone who says they can juggle, the prevalent approach to hiring is based on storytelling about past associations. A shift in how we think about skills might be:

Do we want people who spend more time practicing their juggling skills or people who practice their stories about juggling and their association with famous jugglers?

Sidebar: Anti-money laundering failures won’t improve until “how” parties think changes.

This week's biggest story on my radar was the $3 billion fine imposed on TD Bank by US authorities due to persistent anti-money laundering control failures. It allowed drug cartels to use the bank as an ATM service for millions of dollars while bank employees knew it was happening, and some even took bribes.

Since 2013, the bank has been flagged for lacking effective money laundering controls to meet the conditions of the US Bank Secrecy Act. Meanwhile, TD Bank, one of the 15 largest US banks, was planning to acquire First Horizon Bank and had significant growth plans. So, the company was not idle.

According to CBC News, the bank spokesperson stated: “When we became aware of these matters, we took action against these employees, coordinated efforts with the [Department of Justice], and have supported their work to bring these criminals to justice. More broadly, where our program was ineffective, we have held those leaders accountable and are taking action to drive the changes and meet our obligations.”

But FT reports several employee comments like, “Another [employee] joked that failure to fix anti-money laundering issues was simply the bank living up to its slogan as ‘America’s most convenient bank.’”

So, which is it? Was all this just a few employees, or was it a systemic issue? This reflects the second path I described earlier. Issues are brushed aside as tactical and addressed by replacing people or creating basic controls to check audit boxes. How the organization thinks about meeting regulatory requirements or its philosophy around anti-money laundering doesn’t seem to have changed since the findings in 2013 or even after the $3 billion fine.

Maybe the fact that the $3 billion fine is less than 30% of TD Bank’s annual profit and no personnel were criminally held accountable implies that real change isn’t demanded. The CEO is only stepping down next year after a three-year investigation that led to the $3 billion fine last week.

Does the US government really want change? The US has over 4,000 licensed banks, and the authorities could pull any bank’s license. What is the threshold for pulling a license? Is the US government looking to address AML issues, or does it prefer to collect billions in fines as "donations" to offset the $34 trillion US national debt?

While the precise answers may not impact our daily lives, understanding these dynamics can inform our work. Although a $3 billion fine and “admission of guilt” sound significant, nothing may change at the company level or in the US government’s AML prospects unless there is a shift in how the collective thinks about drug trafficking, money laundering, the role of banks, and the US government’s choice to conveniently collect fines rather than cancel bank licenses.

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John Oommen | Congruence Architect.