#124- Is Your Organization Rules-Based or Culture-Based 

John (Intro): I have been on a quest to learn everything I can about leadership obsessed with what makes the best leaders so good. After running companies small and large for the last 20 years, today I speak on stages all across the world to audiences who are interested in that same question. My name is John Laurito and I'm your host. I invite you to join me on this journey as we explore this topic: What makes the best leaders so good? Welcome to Tomorrow’s Leader

John: All right, welcome to today's episode of Tomorrow's Leader, where we dive deep on all things leader related, related to leading yourself and leading others. I am John Laurito, your host. And today's question is, is your organization talking to you leaders out there? Is your organization a rules-based organization or is it a culture driven organization? Pause. Let me let you think about that for a minute. I don't know. Is it a rules-based or culture-based organization? And here's what I mean by that. Now, for me and leading many organizations over many years, there were times where my organizations were one over the other. It's hard to have them be both. 

John: And here's what I'm talking about. I think about a company like McDonald's. McDonald's is a very rules-based organization. They have specific processes, instructions, rules for every single thing that is done, from how the bathrooms are cleaned, to how the fries are made, to how the kitchen is cleaned and everything, how their customers are received, and how they come in and how they're served and how their order is taken. The whole thing, everything is down and it's written down in books so that that process is repeated over and over again. And in reality, that works great for a chain like McDonald's because they need to have that consistency all across the world. No matter what McDonald's, you go and you've got that similar experience and a lot of franchises work that way. It's a rules-based type of environment simply because you can't have deviation. 

John: They figured out a formula that works great. Now let's do it. It's kind of like that recipe. OK, I found that recipe. That's perfect. You know, a recipe is just a simple rule sheet, right? It's here's how much you put in and what ingredient. And you do this and you put the oven on for this amount of time. I mean, that's what a recipe is. So when you find that formula that works for some of these types of businesses that then franchise, yeah, it becomes a rules-based organization. But in many cases, those rules can really slow down growth and hamper performance. 

John: So what I'm talking about here, and I'll give you an example of this, rules tend in organizations to stifle creativity. They don't tend to allow people to take risks or feel that they can take risks. They stop, in some cases using their noggin and stop using their brain. In many cases, they stop being enthused and inspired, and motivated, and it ultimately slows down growth. And I've seen this many, many times that over periods of time where I ran organizations where I'm like, OK, well, we come up with a situation that we hadn't faced before and we had to make a decision about it. So it's like, all right, well, let's make a rule about this so that if this comes up again, we don't even have to make a decision about it. It's already done. It's in the rulebook, so to speak. And it seemed actually like a pretty good concept. And in some situations, it could be, you know.

John: I was in financial services. So you have compliance. Compliance and regulation. Those are rules. Say you can't do this, you have to do this. But in every part of an organization to have rules dictating exactly how things should be done. Now, that is different than having a process or a system that's a repeatable process or system. You've heard me talk about the fact that you absolutely need that when you're doing something more than once, but rules too many rules ultimately don't allow people to do the type of work that they really can do and want to do. And it prevents them from reaching their ultimate potential in an organization from reaching their ultimate potential. And I give you a great example. I was at a really top-end hotel resort and I was traveling. It was a conference. And this was a very, very well known resort. Again, very, very top end and beautiful, gorgeous place. The service was exceptional. 

John: And one of the things that was interesting as I was going that was we were in one of these, you know, dinner events and whatnot, and there were stations of food and all that kind of stuff. And there was a carving station. This guy was carving, you know, big slabs of beef. And there was a line going up to him. And, you know, I'd get up there and I get my beef. And I asked them, you know, he can you tell me where the bathroom is? And he literally, like, looked at me with this exasperated look, almost like a deer in headlights a little bit, and sighed and said, sure, let me take you. And he put down his silverware, his carving knife. And now there's a big line behind me. And I'm like, no, no, no, no, no, no, no, don't do that. Just tell me where it is. He's like, no, no, no, no, no, no, no. I'll show you where it is. I'll walk you there. I'm like, no, seriously, dude, please don't do that. You got these people behind me that want this steak. Please just stay here. Just tell me where it is. He's like, I have to take you there. It's our policy, so and I'm like, I feel horrible. Everybody in the lines like what the, I mean was ridiculous. And he walked me, no joke, like, all the way to the other side of the hotel. I mean, it was like not like right around the corner was literally all the way down this hallway and then another hallway. I'm like, dude, honestly, man, I feel horrible and I really wish you didn't do this is like you don't understand. This is part of our policy. If somebody asks us where the bathroom is, we don't tell them. That's our way of giving great service. We show them, we take them there. And I'm like, yeah, OK. 

John: But in this situation, you then took 10 people that were in line behind me and gave them less service in an effort to try and give me better service, which I didn't even one. And it was simply because you were following a rule. Right. And it was just something, not his fault. Right. And not even the organization had great intentions with this. But there's a great example where rules get in the way of doing the right thing. This was clearly not the right decision. 10 people were negatively affected to supposedly positively impact one person, which it didn't. All it did was kind of embarrass me and make me feel bad. And, you know, I was the guy that, you know, I'm like, it's just, you know, so it kind of sucked. 

John: So there's an example where rules can get in the way. He knew deep down inside that was not the right decision. He just felt he needed to do it. Now, I'll contrast that there's a lot of organizations that do a great job of building the right culture so that their employees or their associates feel like they are actually empowered to make the right decisions. You know, another great hotel, hotel chain, Four Seasons. What's interesting that started, I think it was in Canada as a motel and they quickly realized, wow, this is just the service level that they took this motel to was just from another planet and it just exploded into the top end hotel and resort chain. That it is. And it's interesting, they did a few things. One is they taught

their employees. They basically got them together and said, listen, you are empowered to make decisions. We want you to do things. They are going to you're going to try new things. You're each kind of each hotel we're going to kind of look at is like a laboratory. So we want you to try new things. And if you find things that actually work, we want to know about it so that we can share it and spread it, and make sure some of the other hotel locations do the same thing. But you don't have to feel like you're locked in this box. 

John: So, for example, if you see that there is a wait at the front where the check-in is and everybody's trying to register, which happens a lot of times, you go to a conference or something, everybody's kind of flying at the same time. You get like, you know, half an hour, an hour. You're waiting in line to check-in. Well, they're empowered to change the process, even do whatever they need to do to alleviate that problem. They don't have to follow the process as a team. If there's a way at that moment to expedite it and provide better service, they're allowed to do that. They're also encouraged to take risks and not worry about failure or anything like that. They actually the CEO gave out an extended stay, I believe it was is owned by Four Seasons. And the CEO of that organization gave each employee when he started a get out of jail free card, which is really cool. And the concept was, listen, this is your get-out-free card. I expect you to use it. And if you use it, I'll give you another one. 

John: Bottom line is, I don't want you to worry about penalties for mistakes. The only way we are going to grow and get great is if we take risks and you take chances. And when you do that, yes, you will make mistakes and you will fail. If we're not failing and we're not making mistakes, we're not stretching, stretching the envelope. We're not pushing the envelope. We're not taking chances. We're not thinking creatively. We're not really pushing ourselves to get to our potential. What a great way to set the right culture. Right. So when you have an organization that is a leader and you drive the right culture, what happens is it allows people to make better decisions. It allows people the freedom to really do what they're capable of doing. 

John: You know, I've seen so many people that I've worked with that, you know, if I gave them a kind of a playbook and said, hey, here, I just want you to execute this playbook, that's it. I've already come up with all the strategies and the tactics. I just want you to execute this playbook to a tee. Don't deviate, don't experiment, don't take a risk. I just want you to execute this playbook to a tee. What happens is I'm not there's no way I'm going to get the best out of this person, first of all, no real A-player is going to put themselves in that situation. They're not going to succumb to that. They're not going to feel good. Maybe they'll do it for a brief period of time. But eventually, they're going to say, you know what, I'm not here just to execute a playbook. I want the ability to make decisions and to think and to lead and to reach my potential and push myself and fail and, you know, all that stuff that's important. But I still see organizations do that. 

John: A lot of times I see that playbook mentality from even some great, phenomenal organizations, not just the franchises. I see this in organizations all the time. And what happens is that frustrates the players. And then we're surprised when those players go somewhere else and oftentimes they don't go somewhere else because they're being offered a better package or more money. Actually, they're going somewhere else because they're actually offered the ability to tap into more of their potential and their brainpower. They have more power and they have more autonomy and independence and flexibility.

That's literally the only difference. I actually know many leaders that have made that move where it was either a lateral move income-wise or even in some cases less, because they got more with that. When people feel that they're not growing and they're not making the impact that they truly can make, they will go somewhere else. No doubt. It's just a matter when at some point that will eat at them enough and they'll say, I can do more, I can go farther, I can make a bigger impact. 

John: I just have to find the organization that allows me to really do what I'm capable of doing. That's like having a car that's, you know, 600 horsepower car. But you can only go on a 30 mile per hour road. That's not going to be much fun. And that's really not testing the limits that are doing. You might as well have a car that, you know, might as well have a golf cart. I mean, it's like it's not really that car is just is too there's too much capability in that car. It's on the wrong road. Needs to be on a racetrack. So your people oftentimes are like that, too. Do you have your race cars driving on, you know, suburban development streets of twenty-five school zone streets? You know, if that's the case, it's just not going to work temporarily will. But it's not. Think about that for a minute, you know, what is the organization that you are developing? Is it more of a rules-based culture or is it a rules-based environment or is it a culture driven organization? 

John: There's a lot to driving the right culture, but when you do that, you have a set of principles and values and guidelines and core values that people ultimately understand, buy into, believe are aligned with. And ultimately, that's how they make decisions. They know what the vision is of the organization and they know ultimately and they're aligned in the right way and they're empowered to make decisions and ultimately they're making decisions that are in alignment with that. Now, you run the risk as a leader of having variation and mistakes made and all that. But that type of organization, when there's a really strong culture and it's clear and it's well defined, and it's something that's really developed intentionally, sometimes there are cultures that come kind of accidentally, but with deliberate, deliberate intention. Here's the culture I'm looking to build. When you do it as a leader, you can almost step back and that's where you allow that's as a leader where you can trust the fact that whether you're there or not, that the organization will run as well without you as it will with you. That's when you have a culture based organization. 

John: So we're going to talk more about this. I'm going to have other episodes where we talk about, OK, because I've got a lot of questions about that. How do you actually build a culture like what is what comes into that? What are the things you say and do? And the behaviors are reward and how does that actually work? I'm going to go through that. I'm going to take an episode that's specifically dedicated to how do you build a winning culture. I'm going to go through the good, the bad, the ugly, everything and give you some good stories to tie into that, too. So with that said, I hope you didn't notice we had a little bit of a battery malfunction. So the middle of this went out. Hopefully, you're listening to it and saying, wow, I didn't even know because the production quality was so good. I didn't know that they screwed up like that. So in any event, I did. 

John: So hope you enjoyed today's episode. I hope this was helpful. Please message me. Let me know what you got from it. Maybe some takeaways as well as other challenges you having that I can help with. I'd love to do an episode. I won't even mention your name if you don't want me to. I will just do an episode on your situation or your case or your issue or

challenge that you're having. I'll put some thoughts out there and be happy to do that. Go down below review, make sure you subscribe like share all that kind of good stuff and we'll see you next time. Thanks, everybody. Take care. 

John (Closing): Thanks for joining us on today’s episode of Tomorrow’s Leader. For suggestions, or inquiries, about having me at your next event, or personal coaching, reach me at john@lauritogroup.com Once again, that’s john@lauritogroup.com. Thanks! Lead on!

 

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