To Win Big, Stop Managing the Scoreboard

NEW YORK ( TheStreet) -- The main task of a mechanical engineer is to build a machine that consistently produces outputs that are efficient (i.e., cost per unit) and effective (i.e., produces what is supposed to produce).

The core task of a leader is the same: Build a strong organization that consistently produces outputs that are efficient and effective.
Coach Bill Walsh is hoisted on the shoulders of San Francisco 49ers players after a win in the 1985 Super Bowl. His method of team building can be applied to business management.

Bill Walsh, the former head coach of the San Francisco 49ers, was a master organization builder. He defined his team as a collection of eight positions (for instance, an offensive line and linebackers) and believed that by the end of a first season as coach, the team must be best in the league in two positions, with winning and losing being minimally important. At the end of the second season, the team must be best in four positions and Walsh will begin to worry about winning and losing. By the end of the fourth season the team will be a dynasty. To Walsh, the head coach's role is very clear: build the best organization in the NFL. When his machine is right, the results will take care of themselves.

Unfortunately, too often in the corporate world, rather than building a great machine, managers spend their time managing the scoreboard. They discount to get a sale before the month closes; they delay bill payments to improve profits -- whatever it takes to make the score look better than it actually is.

It's easy to spot managers who manage the scoreboard. Their focus is on today. They spend their days running from fire to fire rather than systematically reducing fire hazards. They don't manage their business; their business manages them.

It's also easy to spot strong managers. For sales managers, simply ask, "Tell me how you spend your week." A great sales manager will answer, "On Monday, I hold pipeline reviews from 9 to noon. We have a set agenda and each rep gets 45 minutes. On Tuesday afternoon I go on customer visits -- my real purpose is to assess and coach the reps ..." Improving the machine is only possible when managers maintain control of their business.

During the dot-com boom, I was a member of the leadership team of AT&T's ( T) largest business unit. At the end of each month our leadership team held a one-day business review. Every review was the same. The business unit president would freak out about the financial results and yell, "What happened last week! Can anybody tell me! I need a full explanation. We are below plan. Get your numbers up now!"

The problem with this approach is twofold:
  • We all knew when we were below plan and we knew the consequences for failure. Can you imagine Walsh telling a quarterback again and again that he needs to complete his passes? That's leadership with no value.
  • The sales cycle on our deals was 12 to 18 months. The root cause of last week's problem did not happen last week. In the end, our leadership team never created a real plan to improve the sales capabilities; we spent almost all our time together managing the scoreboard.

To be fair, our president was under heavy pressure from his boss, Mike Armstrong, AT&T's CEO. Of course, Armstrong was not happy with poor monthly results, but worse, he never believed our unit was under control -- and he was right. Every month, the unit president promised that next month would be different, but we did nothing of substance to change the trajectory. I wondered why Armstrong let our president leave his office each month without a legitimate plan. He seemed complicit in the charade. In the end, Armstrong and AT&T failed and the company was sold to SBC.

Driving real improvements through capabilities
A real recovery begins, as Jack Welch famously said by, "Accepting reality as it is and not as you want it to be." We want it to be someone else's fault. And we want the fix to be easy. Experienced HR professionals will tell you that almost every manager request for performance improvement support is either: a training class or a change to the pay system. Both absolve the manager of fault, and both are easy.

If your HR partner responds to a request for training by running off to find training, he's not a business partner, he's a servant. A good HR partner will identify a root cause and build a complete solution that changes daily behavior. A training class, by itself, almost never changes behavior. And if people come to work after a week of training and they don't do something different from the week before, there is no value to anyone.

Here's the most important point: Building a highly effective organization is very difficult and time consuming. Daily firefights and time spent managing the scoreboard leave little time for capability building. Many want a quick win. Quick wins are easy and ... quick. For example, "Creating an accountable culture? Let's just issue a statement of desired behaviors." No way will that change behavior and, if there is no behavior change, there is no value to anyone.

A rocket needs enough energy and speed to break through the atmosphere. Almost enough energy produces the same result as no energy at all: The rocket ends up back on earth. The same is true with organization improvements. Accept reality: Building an effective organization is difficult and time consuming. Managers who choose this high road are well-advised to follow Yoda, "Do or do not ... there is no try."

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Hall is managing director of Human Capital Systems (www.humancapitalsystems.com), a firm that designs systems for improving workforce performance. He is also an instructor in Duke Corporate Education's teaching network and author of The New Human Capital Strategy. Hall was formerly a senior vice president at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness. During his tenure, IBM was twice ranked No. 1 in the world in Hewitt/Chief Executive magazine's "Top Company for Leaders." Hall completed his Ph.D in industrial-organizational psychology at Tulane University, with a dissertation on people management practices of Japanese corporations.