Theory of Incremental Advantage

Foresight

Foresight is the achievement of painstaking inquiry and the disciplined application of reason to acquired knowledge, in order to perceive a previously unseen pattern, reason, need, opportunity, or predictive behavior.

Where Loyalty Should Stop

Managers should try to instill loyalty among the ranks of their employees. The team members should be loyal to their companies and their customers. However, it is important to realize that intense loyalty invites single-mindedness. When single-mindedness drowns out calls for caution or the pointing out that mistakes may be made, will often be made. The gravity of past success was largely attributable to the space shuttle Challenger's disaster. The systematic downgrading of technical problems and aggregating of mistaken assumptions that were reinforced with every successful shuttle mission led the seven astronauts to their doom.Waiving launch constraints had become routine at NASA, and every dodged bullet reinforced NASA's false confidence.

Personality is Not a Determinant of a Leader's Success

In our work with hundreds of CEOs, we did not find any commonality of personality. Some of the most successful leaders are shy and introspective, some are affectionate and gregarious, some are charismatic while others are detached from the people they work with. There is no particular personality strain that leads one to become super successful. As long as an individual falls within a fairly wide range of what is considered normal behavior, these attributes play a very minor role in how well an executive does his job.

Many people believe that charisma is a major contributor to success. Others believe that enthusiasm in communicating goals to the staff is of paramount importance. However, it is the clarity of thinking behind an initiative which motivates people to enthusiastically pursue a task. No amount of charisma will charm the troops if a manager is leading them off a cliff.

Critical Thinking

Critical thinking is not something that can be taught. However, critical thinking is a skill that all of the most successful business leaders must possess. Critical thinking is an imperative trait to seek out when making managerial hiring decisions. Justin Menkes in his erudite book Executive Intelligence, hit the nail on the head when he wrote that "differentiating essential objectives from less relevant concerns, critically examining the accuracy of assumptions about what needs to be done, and appropriately considering the probable effects of an action all play a role in determining the right decision at the right time." The best business leaders always look skeptically at the data they are given, not just in terms of accuracy, but also in terms of relevance and sufficiency regarding the issues being considered.

Recognizing Hidden Agendas

Effective leaders must be perceptive enough to recognize hidden agendas. They must gauge how these agendas may conflict with one another, and anticipate the probable effects and likely unintended consequences of a chosen course of action. They must understand how those involved will likely react, and they weigh this information appropriately in their response.

Enlisting Others

David Dwight Eisenhower said, “Leadership is the art of getting someone else to do something you want done because he wants to do it.” Assuming that you have put forward a sound argument, others will come to agree with you and thereby adopt your viewpoint as their own. This is an essential and effective means of persuasion because it does not deny anyone's right to make up his or her own mind.

Do Not Micromanage the Incentivization of Your Team Members

Many management consultants claim that you should design an elaborate reward system that doles out carrots for nearly every positive action taken by your employees. Address a customer's complaint, get a $5 calling card. Follow up on a sales lead, get $10. Not only this, but these management gurus content that managers are supposed to deliver these carrots in theatrical ways. Some management consultants are wowed by examples of supervisors donning clown costumes, serenading employees by playing the air guitar, treating the administrative team to Starbucks on "Filing Friday's", and having the manager push the Employee of the Month through the office on the bosses chair.

This is utter non-sense. It is your responsibility to recruit and retain employees who take pride in their work, who wish to work in a professional atmosphere and who respect their colleagues, superiors and place of employment. Bribing people to complete every facet of their responsibilities proof positive that the necessary respect and professionalism are lacking. Having supervisors making asses out of themselves is no way to engender respect throughout the organization or for the management team.

If you overly incentivize your employees, you will forfeit the respect that you are due and the obedience that you deserve in your own right. Too many external incentives can diminish internal motivation. Good employees take pride in their work. They understand how their work fits into the firm's big picture. They understand the importance of getting their job done. They like the satisfaction of accomplishing the objectives inherent in their jobs. Too many external rewards can displace employees sense of control.

Treating employees like a class full of day care infants is indicative of bad management. Do the proponents of microincentivization really believe that it is a good use of the company's time to discuss when to treat employees to coffee? To have middle management dress up in clown clothes? They risk sliding down the slope of having to explain to one employee why they didn't get a Starbucks when someone else did.   

Providing a Sense of Mission

Leaders must impress upon their employees that their company strives to serve a mission more noble than simply producing products and profits. Many employees want to feel like they are contributing their hard work to something bigger than themselves and the mission of most companies. Highly talented employees have options in terms of employment. After they reach a certain level, money becomes less of a motivating factor.

Whatever it is that your company does, there is a way to find a noble cause for it to pursue. For example, Southwest Airlines champions "Democratizing the skies" and "Giving people the freedom to fly."

Peter Drucker once wrote of a defense manufacturer that produced fighter planes for the American air force during World War II. Employee morale was extremely low and nothing seemed capable of re-energizing the workers. Management tried everything - bonuses, overtime, flex-time, recognition awards, allowing employees to choose their own incentive packages cafeteria-style. Eventually, someone stumbled upon the problem: The employees never saw the final product. They never saw the magnificence of the fighter jets. They never could visualize the contributions they were making towards the war effort. Once the workers saw the fighter jets, they took enormous pride in their work for they understood that their jobs entailed a noble mission.

Leaders Must be Optimists

One indication as to the importance of optimism is that in 18 of 22 U.S. presidential elections from 1900 to 1984, the optimistic candidate won.

In 1996, a team of researchers investigated the link between healthy thinking and longevity among 2,000 Finnish men. The team classified participants into three groups, a “pessimistic” group, whose members expected the future to be bleak; an “optimistic” group, whose members had much higher expectations about the future; and a “neutral “ group, whose members held expectations that were neither especially positive nor especially negative. They then monitored the groups over six years and found that the men in the “pessimistic” group were far more likely to die from cancer, cardiovascular disease, and accidents than those in the “neutral” group. In contrast, those in the “optimistic” group exhibited a far lower mortality rate than those in the other two groups.