Two Standard Deviations

The following is an excerpt from my new book, Leadership Starts (and Ends) in Your Head…the rest is detail.

Chapter 4.  Maintain Two Standard Deviations

I had lots of statistics classes in college. We learned a ton of formulas for measuring things like economic order quantity, measuring cycle times, and the differences between mean, median, mode, and midrange. We learned how to calculate the probability of certain outcomes and how various outcomes relate, or don’t relate, to each other. These are all great, and each has its place.

One of my operations management classes (which came after finishing the statistics prerequisites) showed us a nice set of measurements and formulas for determining if something is “in control” or not. Funny thing is, I don’t remember the actual formulas, but I definitely remember the lessons.

If you take a series of measurements of something like cycle time (the time it takes to produce a widget, for example), you can plot these measurements on a graph. By calculating the average (which might actually be the mean, midrange, or mode—I can’t remember), you can then derive the standard deviation. If your cycle-time measurements in this example are all within two standard deviations of the average, then your system is, by definition, “in control.”

I’ve probably botched it in terms of the statistics, and that isn’t the important thing here. The key lesson is that everything you do as a manager should be within two standard deviations. The standard-deviation measurement is a metaphor for your behavior, your reactions to good and bad news, your response to competitive threats, and the way you conduct your life in general. By maintaining two standard deviations, people around you can rely upon that aspect of your character. They need to know, and rely upon knowing, that you will be measured in your response, your feedback, and your approach to business issues.

This means that you won’t be the type of manager who storms around the office, yelling at people when bad news arrives. You’re also not the person who runs around whooping it up and hugging everyone when good news comes your way. When a competitor makes a move that potentially damages your organization, you will exercise restraint in your emotional response.

Does this mean you become a robot? I sometimes say that I am a robot in a work setting, but I am joking when I say it. As a manager, you are by no means a robot. You can be happy, sad, angry, afraid, sick, and tired, or any other range of emotions. But you are the one in control of each of these emotions.

The two-standard-deviations rule provides a lot of leeway in your behavior, both positive and negative. You will become a more subtle and thoughtful operator if you keep two standard deviations in mind as you move through your day and your career.

Those who work with you, report to you, and rely on you will appreciate this two-standard-deviations philosophy. Volatility in a work setting stifles creativity. Who will take the risk of being creative when his or her manager is a powder keg, waiting to blow up at the first sign of a mistake? Creativity breeds innovation but also carries the risk of failure. A failure that no employee will risk if his or her manager’s response to failure is to blow up and start yelling.

Such an environment also stops the flow of honest and accurate information. Employees will adjust the flow of information to a volatile manager in an attempt to yield a positive response. The content of the information becomes secondary. The delivery becomes the primary concern for the employee. This leads to information being skewed, manipulated, or shielded from the unreasonable manager. Without an accurate information flow, decisions and strategies will not be as effective, and may be wrong altogether.

Employees take on the style and demeanor of their managers. Not just their direct managers, but all the way up the chain of management to the top of their organizations. While this adoption isn’t 100 percent, obviously, the adoption is quite evident.

A volatile or out-of-control manager will have an employee base that is similarly volatile. An environment that lacks trust will develop. Trust is the bedrock of any team. Without an environment of trust, the multiplying power of the strong team is eliminated. Without trust, working across organizational boundaries is nearly impossible. The organization becomes a group of disconnected islands, often lobbing shells at each other, instead of focusing on delivering results for the organization.

One hundred people who are working separately will never lift a thousand-pound boulder, but one hundred people working together and trusting each other will be able to lift it. Maintaining two standard deviations in your approach to management will lead to honest and accurate flows of information, promote a trusting environment, and leverage the power of a strong team of employees. Harnessing this power is the key to management success and the success of your organization.

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© 2014 Bob Dailey.  All rights reserved.

 

 

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