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Posted: January 09, 2013

Work their brains, too

Centralizing brilliance is folly

Todd Ordal

As Apple’s stock price slid last year, I wondered if it was caused by the eventual retreat from “the one big brain” — in the form of Steve Jobs — to the next phase, led by mere mortals.

Centralizing brilliance is rarely a good business model.  The brilliance of Apple was an anomaly, though a darn good one for quite a few years.

A couple examples in recent business history highlight the challenge of trying to centralize brilliance or the brilliance of decentralizing brilliance.

Oops! Misplaced $1.6 billion … If anyone had a good argument for relying on his own brilliance, it was Jon Corzine from MF Global. Having previously “run” Goldman Sachs and then been elected as both governor and senator from New Jersey by spending $100 million, you’d expect him to have a healthy ego. Mr. Corzine went “all in,” betting $6 billion on European sovereign debt, apparently ignoring his subordinates’ counsel. When you know you’re the smartest guy in the room or perhaps the state of New Jersey, excepting Tony Soprano, that seems logical. …

3, 2, 1, Go! CrossFit is an exercise program taking the world by storm. Although one could certainly describe the founder, Greg Glassman, as a headstrong, tyrannical character, he realized he needed to make sure the folks on main street running the gyms, called “boxes” in the CrossFit world, needed to win rather than “corporate.” He fostered a cultlike atmosphere, where hard-core ex-military special-forces types and stay-at-home moms work out together and get their butts kicked.

Not a typical franchise, Glassman licensed the brand to the box owners and let the folks in the field innovate — equipment, exercises and business practices. We’ll see how it plays out given the rapid growth rate and the fact that Reebok recently invested. However, dispersing the brainpower has worked pretty well so far. There were 49 boxes in 2001. At the end of 2012, there were more than 5,000.

Not just meatballs! Sweden, long admired for its blonds and meatballs, is now succeeding in banking. A recent article in The Wall Street Journal highlighted Svenska Handelsbanken for its United Kingdom success. A top official from the United Kingdom’s central bank finds its business model “fascinating.” The trick? The company lets local managers make most of the business decisions. Radical, dude! Even more radical, it seems the managers are “… held to account if the loans they make go bad.” Holy lutefisk, Batman! What a concept!

Another friend used to say, “When you hire a pair of hands, you also get a brain.” My experience is that the organizations that most effectively engage the minds of their people—along with their hands—go the furthest. If you really know everything, you’ll only need their hands; but trust me, they won’t stay long.

Todd Ordal is President of Applied Strategy LLC. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He speaks, writes, consults and advises on issues of strategy and leadership. Todd is a former CEO and has led teams as large as 7,000. Follow Todd on Twitter here. You can also find Todd at http://www.appliedstrategy.info,  303-527-0417 or todd@appliedstrategy.info

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Readers Respond

Todd -- apologies for the delayed post -- point well made on the "looks like" from an American perspective. AND...even better point on establishing the rules. If we Americans would take a few extra minutes to learn the rules to "international" games like rugby, cricket, or soccer/futbol, we'd be much better acquainted to the flow of those sports. All that said, you're right -- strat planning and understanding is best done deliberately, using everyone's brain. And that takes communicating the rules to all levels. PS...CrossFit is a successful model partially b/c a franchisee can only own one Box at a time. No regional monopolies -- the strategy (personal attention to CrossFitters) is built into the structure (each owner only allowed to have one Box). By Grizzly Adams Jr. on 2013 02 02
Dear Grizzly, When I said, "...looks like" I meant it literally. I don't know a scrum from a scab, but the process of crafting strategy (i.e. Who is involved and what do they do?), does require some rules. Everyone in a mob trying to grab a funny object and banging heads makes for good sport, perhaps, but I've seen this approach applied to strategic thinking/planning and you just get a headache. By Todd Ordal on 2013 01 16
Does always brain matter in business? What about passion in your job? By Houseclearance on 2013 01 15
Sounds like Todd doesn't understand the positions and assignments of Rugby. Business--and life--is much more like rugby (fluid, dynamic) than american football (stop. go. stop. wait for the stupid refs. go. stop. ...). By Grizzly Adams Jr. on 2013 01 15
Hi Dave--Both. There has to be good process to do that, however, so that it looks more like American football vs. rugby. Everyone is not engaged in everything. By Todd Ordal on 2013 01 09
Does a company engage the staff brain on strategic thinking, or just tactical? By David on 2013 01 09
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