João Alves

March 26, 2021

Go big, or go home! Or... the leadership paradox

We live in a World of change. Not only that, but due to technology's improvements, the pace of innovation increased dramatically in the last 50 years. For instance, before, we had a significant software version every year or two. Now, most software pieces update daily. Some of them, consumed as a service (SaaS), constantly get updates and test different features with different customer sets. 

The same is true for companies. In a globalized market, where people share best practices, lessons learned and leverage more, better or cheaper technology, the pace of change can get hard to handle. 

When we talk about change, we usually think about leaders that can drive them. People that take risks, bold decisions and inspire us to do the same. We think about how Satya Nadella changed Microsoft by embracing Open Source Software. Or we think about how Steve Jobs came back to Apple to drive the company towards being a money-making, innovation-driven oiled machine.

No one ever got fired for choosing IBM

Bold moves don't come for free. They come with risks. Most of the times, the alignment between leadership incentives and risk-taking are non-existent. As people have more and more influence in organizations, they usually also earn more money. The number of positions available in the market is lower as you go up the ladder. For instance, how many VP of Engineering positions are available in Barcelona compared to Engineering Managers or Software Engineers? These facts incentivize risk-aversion. So people default to conservative decision-making. There are fewer chances to be fired, right? It creates a paradox: you hold a higher position, you have more power to make significant changes, but your incentives are to keep a high profile/status/salary. Worse than that: most bonus schemes are tied to quarterly/yearly results. It incentivizes short-term (and safer) bets. 

Going one step forward, that is McKinsey's raison d'être. They send an army of consultants to your company to put together a few slides that say what your workers and middle managers were screaming. Does it sound like a broken system? Well, it is a broken system!

No one ever got fired for choosing IBM.

People in the tech industry repeated it over and over again. The bottom line is that optics matter more than results. Will I look like a fool in the next board meeting if my <insert idea> goes bad? What if I don't do anything and surf the wave when it comes?

We've recently seen a lot of this sentiment when it comes to making decisions regarding remote work. There are a lot of unknowns and questions to answer. So, a lot of leaders are delaying their decisions to avoid being in a difficult position. The truth is that there are also risks associated with not taking risks. However, these are usually more difficult to quantify; hence they're hindered by some senior leadership and company boards. 

How can we change it?

What can companies do to incentivize risk-taking, even at senior leadership levels? I think it starts with compensation schemes that tackle short but also long term opportunities. 

In a more personal — and privileged — take, I'd say that any senior leader shouldn't be afraid of losing their job. This lack of fear is key to turning around a company, entering a new market, or converting a 10.000 employee's company to remote-first. Go big, or go home!