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The Law of the Lid and why Leadership can’t be taught

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The greatest danger for most of us is not that we aim too high and we miss it, but we aim too low and reach it. – Michelangelo

The Journey

Why do some people stay employees all their life?  Why do some people become self-employed and start businesses?  Why do some small businesses stay small businesses?  Why do businesses that start out as single-owner sole proprietorship stay that way and never become employer businesses?  Why do some companies grow to global enterprises while others never even have a nationwide presence?  Why are there enduring “Mom and Pop” businesses while at the time a single Wal-Mart store in Rogers Ark.  can grow to 8,400 stores, 2.1 million employees, and 400 billion dollars in revenue over 4 decades?

The answer to the question above lays in many parts – timing, circumstances, resources, and perhaps, just dumb luck and serendipity.  There is one aspect that one can ferret out of the numerous aspects that determine how far an individual, team, organization, or company gets on the journey to “success” – for whatever definition of success one chooses to define.

What is “The Lid”

The “lid” is a term used by John C. Maxwell.  Here is how he explains it

Leadership is always the lid on personal and organizational effectiveness. The lower an individual’s ability to lead, the lower the lid on his potential. The higher the leadership, the greater the effectiveness. Your leadership ability–for better or for worse–always determines your effectiveness and the potential impact of your organization. If you want to grow your church or company, you need to lift your lid.

A few years ago, I met Don Stephenson, the chairman of Global Hospitality Resources, Inc., an international hospitality advisory and consulting firm. At the time, his company took over the management of hotels and resorts that weren’t doing well financially. I asked him to explain how they did it.

Don said that whenever they went into an organization, they always started by doing two things: First, they trained all the staff to improve their level of service to the customers; and second, they fired the leader.

“You always fire him?” I asked. “Don’t you talk to the person first–to see if he’s a good leader?”

“No,” he answered. “If he’d been a good leader, the organization wouldn’t be in the mess it’s in.”

And I thought to myself, Of course. It’s the Law of the Lid. To reach the highest level of effectiveness, you have to raise the lid–one way or another.

The good news is that getting rid of the leader isn’t the only way. You can also do it through personal growth and development. 

To further illustrate the Law of the Lid, Maxwell tells the story of the McDonald Corporation.  Which, if you didn’t know, if it wasn’t for Ray Kroc,  would not be the global corporation that it is today.

If the McDonalds corporation was left to the McDonalds brothers – Dick and Maurice,  McDonalds would be a single restaurant on the corner of 14’th and E streets in San Bernardino California.

Here is the story of Dick and Maurice McDonald as told by Maxwell

Let me start by telling you a story that illustrates the Law of the Lid. In 1930, two young brothers named Dick and Maurice moved from New Hampshire to California in search of the American Dream. In their search for success, the brothers tried out a few business opportunities in and around Hollywood. In 1937, they struck on something that worked. They opened a small drive-in restaurant in Pasadena.

Dick and Maurice’s tiny drive-in was a great success, and in 1940, they decided to move the operation to San Bernardino, fifty miles east of Los Angeles. Their business exploded. Annual sales reached $200,000, and the brothers found themselves splitting $50,000 in profits every year–a sum that put them in the town’s financial elite.

As times changed, so did they. In 1948, they streamlined everything, reducing their menu and emphasizing service with speed. And their profits soared. The two young men had the golden touch.

Who were these brothers? Their names were Dick and Maurice McDonald. They had hit the great American jackpot, and the rest, as they say, is history, right? Wrong! The McDonalds never went any farther because their weak leadership clamped a lid on their ability to succeed.

It’s true that the McDonald brothers had one of the most profitable restaurant enterprises in the country. Their genius was in customer service and kitchen organization. But when they tried marketing the McDonald’s concept to open other franchises in 1952, their effort was a dismal failure. The reason was simple. They lacked the leadership necessary to grow their organization. Dick and Maurice were good restaurant owners and efficient managers. But they were not leaders. At the height of their success, Dick and Maurice found themselves smack-dab against the Law of the Lid.

In 1954, the brothers hooked up with a man named Ray Kroc, who was a leader. He soon struck a deal with Dick and Maurice, and in 1955, he formed McDonald’s System, Inc. (later called the McDonald’s Corporation).

Kroc immediately bought a franchise to use as a model and prototype to sell other franchises. Then he assembled a team and built an organization. The “lid” in the life and leadership of Ray Kroc was obviously much higher than that of his predecessors. Between 1955 and 1959, Kroc opened 100 restaurants. In 1961, for the sum of $2.7 million, Kroc bought the exclusive rights to McDonald’s from the brothers, and he proceeded to turn it into an American institution and global entity.

Today the company has more than 21,000 restaurants in no fewer than 100 countries. Leadership ability–or more specifically its lack–was the lid on the McDonald brothers’ effectiveness.

So, there are a couple of points to make

  1. The Law of the Lid sets the limit of effectiveness of an individual, team, organization, company, or for that matter – a society, culture, or a nation.  (If we extend Maxwell’s concept to the extreme.)
  2. According to Maxwell, Leadership can be taught. (“The good news is that getting rid of the leader isn’t the only way. You can also do it through personal growth and development. “)

Number one is true’; Number two is “maybe” and “usually not”

Here’s why

The “Law” of pre-cognitive assumptions

I am going to invent my own law  based on an idea I learned from Thomas Sowell.  The idea is that of “pre-cognitive assumptions”.  Sowell uses this in the context of understanding political ideologies.  I believe it can be applied to understanding why, for some people, “the lid”, can not be raised as Maxwell suggests, by any amount of personal growth and development.

The idea is simple.  Everyone has a set of beliefs that exist at a level of consciousness beneath the level of rational argument.  That is, beliefs about integrity, self-interest, empathy, respect, risk-taking, success, achievement, life goals, organizational goals – all of this, exists at the level that is unreachable by rational debate and justification.  That is, these beliefs, precede rationality and no rational argument can persuade an individual otherwise than the limits that these pre-cognitive assumptions permit.

Why teaching leadership is futile

The Law of pre-congnitive assumptions applied to leadership is that there is nothing you can do to persuade a person that held positions on the items cited above are “wrong” and therefore teaching leadership is generally futile where these fundamental pre-conceived notions and values can not be altered.

“Live the simple life, now”

Unlike Maxwell, I do not have an elegant story like the one about McDonalds to illustrate my point.  However, I do watch some (pseudo) reality television and the show Wife Swap.  If you don’t know what this is, here is a quick summary.  Go to the previous link for more information

Each week from across the country, two families with very different values are chosen to take part in a two-week long challenge. The wives from these two families exchange husbands, children and lives (but not bedrooms) to discover just what it’s like to live another woman’s life. It’s a mind-blowing experiment that often ends up changing their lives forever.

On a recent episode the “swap” was with an affluent and non-affluent family.  For the affluent wife that found herself in the non-affluent family, no amount of rational argument could convince them that this way of life and the values held were not the preferred way to live.  The same with the other wife and the other family.

What characterized the non-affluent family was “Live the simple life, now”.  For the affluent family, the focus was on achievement from business down to competitiveness in their children’s school and sports activities.  The affluent family lived in a large house in the suburbs.  The non-affluent family lived in an 800 square foot house and went to the soup kitchen to supplement their food budget.  The was no rational argument that could be made to convince either family that their underlying set of values and preconceived notions of success and failure was not the preferred way to live. 

Leadership can’t be taught

Here is part of the story told my Maxwell from above

Don said that whenever they went into an organization, they always started by doing two things: First, they trained all the staff to improve their level of service to the customers; and second, they fired the leader.

“You always fire him?” I asked. “Don’t you talk to the person first–to see if he’s a good leader?”

“No,” he answered. “If he’d been a good leader, the organization wouldn’t be in the mess it’s in.”

And I thought to myself, Of course. It’s the Law of the Lid. To reach the highest level of effectiveness, you have to raise the lid–one way or another.

The good news is that getting rid of the leader isn’t the only way. You can also do it through personal growth and development. 

Does Maxwell really think that Dick and Maurice McDonald could be “redeemed” from their lack of vision and capacity to build teams and execute  by some sort of “training”?  Does he think that the most expedient way to grow the McDonalds corporation to restaurants in 119 countries would be by sending Dick and Maurice McDonald to a training camp?

What had to happen for the McDonalds Corporation to end up where it is today was for Ray Kroc to replace Dick and Maurice McDonald.  This is exactly what happens, over and over, when board of directors replace CEO’s of an underperforming companies.  A board  does not send the CEO to a sort of training camp on leadership.  The most expedient method is simply to replace the leadership team.  And if the board does not replace the executive team then, in some cases, the shareholders will replace the board of directors.  The ultimate stakeholder are the shareholders and the customers.  Every other part of the company is expendable and replaceable in the preservation of the interests of the shareholders and customers.

It is typical of those responsible for funding talent management and executive education in corporations to take the stand that…  “We are not going to expend resources on people who do not ‘have it’ – we will spend money on people who are already good and make them better.”.  So, there is a “cut” necessitated by limited resources and limited time.

Conclusion

So back to the beginning …

Why do some people stay employees all their life?  Why do some people become self-employed and start businesses?  Why do some small businesses stay small businesses?  Why do businesses that start out as single-owner sole proprietorship stay that way and never become employer businesses?  Why do some companies grow to global enterprises while others never even have a nationwide presence?  Why are there enduring “Mom and Pop” businesses while at the time a single Wal-Mart store in Rogers Ark.  can grow to 8,400 stores, 2.1 million employees, and 400 billion dollars in revenue over 4 decades?

Can you teach leadership as Maxwell suggests?

Can you teach a person to have an inspiring vision of the future for an organization, company, society, or for a nation to one who has no vision other than a replay of the present into the future?  Can a person who fundamentally lacks integrity and trustworthiness be instructed to have integrity?  Can a person who lacks empathy with other people be taught this emotional attribute and to have respect for other people?  Can a person that lacks the ability influence people and get them to participate really have any followers?  Can a person who is fundamentally insecure be “taught” to have confidence to the point that they can share power, empower others, and build the next generation of leadership?  Can a person who craves security be taught to take risks into an uncertain future?  Can a person who fundamentally thinks about themselves above all else be capable of sacrifice and putting others, the organization, the society, or the nation above their own personal self interests?

The Leadership Factory – Leadership On-Demand?

If leadership at all levels could be taught then there could be a leadership factory that could churn out as many corporate CEO’s as needed; as many cultural leaders as needed; and as many national leaders as there are countries that choose to develop a leader on-demand from the global “Leadership Factory”.

And we all know, “leadership on demand” is not possible.  If it were so, corporate CEO’s and executive leadership teams would not be able to demand and receive  the double-digit million dollar compensation packages that these folks achieve simply due to the scarcity of  this level of leadership capability throughout society and the inability to create them “on-demand” in some sort of “personal growth and development” program as Maxwell suggests. 

This last data point, the compensation levels of executive management driven by scarcity,  I believe, demonstrates that “teaching leadership” is not that easy and only works on certain individuals that have a certain matrix of pre-congnitive assumptions and emotional IQ that positions them for these leadership roles.  Only then, does executive education and coaching “work” by enhancing the capabilities that the individual already possesses.

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Written by frrl

June 1, 2010 at 2:25 am

2 Responses

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  1. I think leadership can be taught. The reason why companies would rather replace the CEO instead of putting him/her to some leadership training camp is because it takes time. Its not a one week boot camp then you can build a modern Rome the next day. It’s much efficient to replace the person with a better leader. Besides, if the production and profits of a company is plummeting, the company can’t afford the time and money to put the CEO through leadership training, it’s much quicker to find another person to be CEO. The replaced person, up to his/her choice, can work on what they need to improve and find another opportunity.

    jakephucmai

    October 12, 2014 at 2:36 am

  2. I think that each of us has a personal level of potential, and without disciplined development in that area, we run the risk of staying average and never reaching our full potential. We are not likely to see leaders like George Washington, Abraham Lincoln, or John F. Kennedy developed just by reading a book or going to a seminar.
    Some leaders are born. Others can grow to lead. The military is a visible example of teaching leadership. Take a person that does not have a Loud personality and Train how to lead squads, and flights, and companies. We can be more that what we are, but we need to grow into that potential.

    Grant

    March 7, 2011 at 7:12 am


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