Louise Francesconi was president of one of the legacy Howard Hughes companies during a period of consolidation within its industry. The company’s chief competitor had recently purchased the company Louise led. After the purchase came a directive: Louise and her executive team had to cut $100 million from the cost side of the business. They were given thirty days. This directive came with an implied “or else.” Louise asked us to help them with this challenge.
You can imagine the pressure on Louise and her leadership team. The acquiring company’s executives were about to determine their immediate career opportunities. Cutting $100 million was their job interview.
So the members of Louise’s team had no choice but to deliver, not just on this group directive, but also in their individual capacities as leaders of separate product lines. Not surprisingly, this created tension within the team: the executives focused on how they each could preserve their own parts of the company, implying that their colleagues should shoulder the bulk of the cost-cutting burden. They did not say this directly to one other, but it became clear as they each briefed the team on what they themselves could do to cut costs. They all offered token cuts in their operational areas, combined with well-prepared arguments for why further cuts would be damaging to the company. To a person, they agreed that the only way to cut $100 million was to lay off a bunch of people. And each of them wanted those layoffs to come primarily from others’ parts of the business.
The situation wasn’t going anywhere, and Louise grew frustrated. She knew they were going to find $100 million to cut. They had to. But it was going to be painful, and she worried about what that might do to her team and the company going forward.
In our work with organizations, we have seen this kind of impasse many times. At its heart, the problem is pretty simple: incentive structures, company metrics, career goals, and personal egos all conspire to keep people focused on themselves and their own perceived needs and challenges, usually to the detriment of the team and the enterprise. In short, organizations and their people get inwardly focused, and as a result, they get stuck.
Fortunately for Louise and her team, they found a way to get unstuck. Two very important incidents occurred that enabled this to happen. The first was that the group began to consider who would be affected by layoffs if that was the route they decided to go. On a flip chart, these executives began listing those most likely to be affected. As each category of persons was added to the list, the team discussed what layoffs would mean for that group.
Early on, this conversation felt strained. They were talking about people, not because they were inclined to, but because they’d been asked to. But as the list of names and groups grew, they broke into a discussion that began to engage them. They started to really consider those who would be put at risk. What would this mean for the union? What would this mean for family members of people who might lose their jobs? What would this mean for the community? As they realized the difficulties that layoffs would present, they gradually became committed to finding alternatives to layoffs where possible.
This was a shift in their shared mindset. It led to a second breakthrough. The Arbinger consultant who was working with Louise’s team asked the executives to pair up. They were each to spend the next two hours meeting one-on-one with two or three of their colleagues. The assignment was twofold. First, they were asked to learn as much as they could about one another’s areas of the business. Second, over the course of this sharing, each was to think about what he or she could do to help the other preserve the vital parts of his or her segments of the business. The task was not to help their colleagues to cut their budgets but rather to identify what they each could do to help the colleagues save— that is, preserve—their budgets.
Asking people to figure out what they could do to keep their colleagues from having to cut money might seem an odd way to cut $100 million. However, surprising things started to happen during these one-on-one meetings. As colleagues learned more about their team members’ respective parts of the business, they found themselves wanting to help their colleagues with their challenges. They began offering to make some cuts in their own areas of the business to preserve key parts of their colleagues’ areas.
As one of Louise’s executives learned more about the work of his colleague, he started to wonder if it wouldn’t make good business sense, and save a great deal of money, if he folded his own division into his colleague’s. Consider what this meant: a leader who reported directly to the president of the company was considering stepping down a level and reporting to someone who, up to that moment, was his peer. He shared this idea aloud.
Like SWAT team members mixing baby bottles, this is the sort of thing that doesn’t happen very often. The reason it doesn’t is because people can’t consider such a move from the perspective of the kind of mindset that normally prevails in organizations—especially in pressure-filled situations like the one Louise and her team were in.
This single move, where one executive folded his portion of the business beneath one of his colleagues, saved the company $7 million. This was the first of a number of collaborative steps that enabled them to cut the full $100 million while improving rather than harming the organization. A challenge that had the potential to divide the team or result in indiscriminate cuts that could have damaged the business over the longer term ended up becoming the impetus for innovative thinking that made the business healthier and better.
The way Louise and her team came together to meet the challenge of cutting $100 million became their mode of working together. They began collaborating this way year after year. Early on, the members of her executive team needed a full day to collaboratively set the annual goals for their highly complex organization. After a couple of years, they were able to pull this off in half a day. Ultimately, they found they could complete the process in an hour, as the annual goal-setting work became simply an extension of the way they worked together on a daily basis. Over this period, they doubled the business at a time experts thought it couldn’t grow more than 5 percent.
Let’s examine some key differences between the way Louise’s team initially tried to tackle the challenge of cutting $100 million and how they later were able to accomplish their goal. Diagram 5 shows these differences.
Diagram 5. Louise’s Team
The team had a collective target result. They needed to cut $100 million in costs. In the beginning, they were understandably concerned about their own futures with the company. All were strongly motivated to preserve their own positions and status in the organization. With this mindset, they could consider only those options that would advance their own agendas. We illustrate this by pointing the behavior triangle at the person. We call this way of operating an inward mindset.
When they broke free from the constraints of self-concern, the team members were able to consider options that hadn’t occurred to them when their mindsets were inward. Focusing together on the collective result, their mindsets turned outward. We illustrate this by pointing the behavior triangle at the collective result.
Notice how people think about and do different things depending on their mindset. With an inward mindset, people behave in ways that are calculated to benefit themselves. With an outward mindset, people are able to consider and behave in ways that further the collective results that they are committed to achieve.
These two mindsets—an inward mindset on the one hand and an outward mindset on the other—form two ends of a continuum, as illustrated in diagram 6. Consider, for example, an organization in which every person operates with an inward mindset and where the practices, policies, and processes continually invite the same. No organization is completely this way, but consider this extreme case as the left end of the mindset continuum. Then consider an organization composed of people, processes, and practices that are entirely outward. Again, no single organization operates with a completely outward mind-set, but consider that possibility as the extreme right end of the continuum.
In our work, we both assess and invite clients to self-assess where they are on this continuum. We do this to get a baseline against which to measure progress. It is interesting to see how people rate their own organizations. If an entirely inward mind-set is 0 on the scale and an entirely outward mindset is 10, a relatively small percentage of groups assess their own organizations at higher than 5 on this continuum, with most self-assessing at somewhere between 2 and 4.
On average, people rate themselves more highly on this continuum than they rate their organizations. So within a company you end up with the following incongruity: employees rate themselves as 7s but the organization as a 3. This is a manifestation of the problem of self-deception that we wrote about in Leadership and Self-Deception.
Diagram 6. The Mindset Continuum
Whatever the scores are, the objective is to move individuals and organizations further to the right on the mindset continuum. Why? Because accountability, collaboration, innovation, leadership, culture, and value to customers all improve as organizations increasingly apply an outward mindset in their strategies, structures, systems, processes, and day-to-day work.
