I have noticed a pattern in the 20 years I have been an entrepreneur, advisor, and CEO.
Every time there is something wrong with a company, there is a recurring problem.
Either someone is not doing their job, or they didn’t know it was their job.
It’s more common than you think.
A problem with sales? Well, either the head of sales is not executing, or he/she didn’t know they signed up to implement a new strategy.
A problem with the product? Well, it’s probably because someone is not doing something they should be doing or they didn’t realize they were responsible for solving the problem.
Now, the question is: Why does this happen?
In this third installment of Tribe Vibes, our series about culture and teams, we’ll explore the answer.
The Pricing Project
To explain, let me draw from my own experience with it at one of my companies.
A few years into our enterprise software company, we were having a pricing challenge. The problems were as follows: (1) We are viewed as being too expensive, (2) After closing a customer and several implementations in, our license pricing was not increasing. It seemed to stall even though we had more penetration in the account. This was becoming an existential issue for us, so I made it the main topic of our next strategic offsite meeting.
At the offsite, we had the entire “7-box” management team there. We had a healthy discussion about the root causes of the issue. We then brainstormed several ideas for how we might design our pricing model differently. And, we developed a set of areas we needed to research further. In the end, we all agreed that we needed to make a change to our pricing and do it soon.
Problem solved, right?
A quarter passed, and our pricing remained unchanged. I was perplexed. Why didn’t we have a new pricing model? Why wasn’t all the research we needed to make a decision completed yet?
The answer was simple. While everyone left the offsite with specific tasks, no one was clearly in charge of the pricing problem.
We were a victim of the bystander effect.
We’ve all experienced this phenomenon. I live in New York and witness it all the time. Someone is lying on the street or a subway floor holding their chest. They might be groaning and reach up in the air, “help me, my chest.”
You see them but notice you are among lots of people who also see this person. And, you think, “someone else will probably call for help.”
The bystander effect, or bystander apathy, is a social psychological claim that individuals are less likely to offer help to a victim when other people are present; the higher the number of bystanders, the less likely it is that one of them will help.
This bystander effect is not just prevalent in Queens, New York, or on the subways. It can happen anywhere, including inside your own company.
Because I didn’t name one person to be in charge of the pricing initiative, it failed. When I asked the team who they thought was responsible for dealing with this emergency, they each thought one of their colleagues was leading it.
When the New York Times interviewed the 38 witnesses of Kitty’s (stabbing) murder, they all thought someone else had already called the police.
Diffusion of responsibility is the number one problem most CEO’s encounter in their companies. And, many don’t even realize they have it.
This was a real learning for me.
To create a culture of accountability, you must make it clear who is in charge.
In 2011, Adam Lashinsky wrote an article for Forbes that sought to get to the bottom of what makes Apple so successful. After countless interviews, he found a pattern…
At Apple, there is never any confusion as to who is responsible for what. Internal Applespeak even has a name for it, the “DRI,” or directly responsible individual. Often the DRI’s name will appear on the agenda for a meeting, so everybody knows who is responsible. “Any effective meeting at Apple will have an action list,” says a former employee. “Next to each action item will be the DRI.” A common phrase heard around Apple when someone is trying to learn the right contact on a project: “Who’s the DRI on that?”
DRI is a way to avoid the diffusion of responsibility.
Six steps to creating a culture of accountability:
Build trust among the team
Always name a directly responsible individual
Encourage colleagues to call each other out and keep one other accountable
Develop a system for tracking objectives and measuring results
Create a Responsible, Accountable, Consulted, Informed matrix (RACI) for critical projects, roles, and decisions in your company.
Without trust, there is no team cohesion. A trusting team feels empowered to work together to solve problems and help each other succeed. It also gives them the courage to call each other out when team members are not keeping their promises. Anchor it with a healthy habit of setting and tracking objectives and key results (OKRs). Finally, as the chief, you should take charge and remove members who consistently fail.
If a team member does not know they are responsible for something, it’s likely your fault as the leader. Always make sure it’s clear the team knows what to do and, most importantly, who is in charge. There can only be one.
After the pricing project debacle, I would end each meeting with two questions: (1) Do we know what to do? — is the plan and course of action clear?; (2) Who is the lead on the project? — essentially the DRI.
The pricing project was later lead by our CFO.
I was particular about naming him as the DRI. It led to the creation of a new pricing model that we all agreed on — which was a vast improvement — and the formation of a new pricing committee.
Do all of your projects, tasks, and objectives have DRIs?
John Belizaire is a serial entrepreneur, advisor, and investor. He is also the founder and managing editor of CEOPLAYBOOK — an online publication dedicated to exploring what it means to be a startup CEO. Connect with him on LinkedIn and Twitter. Subscribe to his popular newsletter — Mental Candy — read by over 500 CEOs.