Nordstrom's Employee Handbook

I've talked a few times in the past about the American luxury department store chain Nordstrom (see my post "The Tire Story").  The corporate culture at Nordstrom is legendary for its focus on customer service (see Robert Spector's excellent book, The Nordstrom Way).  Part of that culture starts with Nordstrom's famous employee handbook, which is remarkable in its simplicity yet powerful in the tone it sets.  It's handed out to every new employee upon hire and simply states, "Our number one goal is to provide outstanding customer service.  Rule #1: Use your good judgement in all situations.  There will be no additional rules."

While it is true that every new employee is handed a postcard with this information, there is a lot more to the story than just the famous "Rule #1".  All companies, even Nordstrom, have to comply with employment related rules and regulations, so the actual employee handbook includes more information than "Rule #1".  Still, the concise statement and single rule drive the corporate culture and makes clear what is expected of all employees when it comes to customer service.  

I see a lot of parallels between Nordstrom's "Rule #1" and the High Reliability Organization principle of Deference to Expertise.  How about you?

"Do not command more than is necessary..."

As I mentioned in a couple of previous posts (see "Friction and Leadership" and “The Art of Action”), I recently finished a book called The Art of Action by Stephen Bungay.  The book is in essence a guide to improving how we, as leaders, can navigate through our VUCA world (though Bungay does not use that specific term) by aligning our teams, delegating effectively, and making better decisions.  In his book, Bungay draws upon lessons from military history, specifically from two nineteenth century Prussian generals - Carl von Clausewitz (who wrote the classic treatise on strategy On War) and Helmuth von Moltke (the Elder). 

Bungay talks about a concept that he calls "directed opportunism", which is a leadership approach that combines strategic direction with the flexibility to take advantage of unforeseen opportunities.  Bungay states that leaders first need to set a clear overall goal or mission, i.e. the "direction".  However, they also need to provide enough autonomy and freedom for their teams to respond to changing circumstances and pivot, if necessary, to take advantage of new opportunities (the "opportunism").  "directed opportunism" is all about agility, flexibility, and adaptability.  Front-line leaders are empowered to make decisions that are consistent with the mission or goals of the organization, though within limited guardrails.  "Directed opportunism" as defined and explained by Bungay reminds me a lot of the High Reliability Organization principle of "Deference to Expertise".

Bungay begins the chapter on "directed opportunism" with a quote from von Moltke, who said, "Do not command more than is necessary, or plan beyond the circumstances you can foresee."  Bungay writes, "It is a melancholy fact that a disproportionate number of fundamental organizational innovations have their origins in disaster.  Only the prospect of perdition, it seems, releases real creativity and radical change." For the Prussian military, the disaster that released their creativity and set in motion their subsequent transformation occurred on October 14, 1806, at the Battle of Jena-Auerstedt. 

The Battle of Jena-Auerstedt was actually two separate battles fought on the same day between the French forces commanded by Napoleon I and the Prussian forces commanded by Frederick William III.  Napoleon's French Grande Armée exploited the so-called "fog of war" (which Clausewitz called "friction") - uncertainty about the enemy's plans, movements, and strengths - through a combination of clear objectives, rapid maneuvering, and quick decision making and annihilated the outmatched and largely outdated Prussian army.  The Prussian army's defeat would later result in the reduction of Prussia to half its former size at the Treaty of Tilsit in July 1807.  

Clausewitz survived the battle and recommended a number of key reforms, which were largely carried out by von Moltke.  First, and perhaps most importantly, military leaders were to be selected based upon merit, not on heritage.  Second, a Prussian War College was created to train officers to fight like Napoleon did at Jena-Auerstedt.  Third, and perhaps most relevant to the current discussion, a greater emphasis was placed on the outcome of a mission rather than the means and ways of achieving it, providing greater flexibility for officers to adapt to the situation at hand.  Here was the beginnings of what was subsequently called Auftragstaktik, which is now known as mission command.

Simply put, the concept of directed opportunism as practiced then and now allows organizations to remain agile and adaptable while still working toward a long-term goal.  Instead of rigidly adhering to a pre-set plan (see also "Plans are useless, but planning is indispensable"), leaders empower their teams to make decisions on the ground, where the real-time information and context are more readily available (what David Marquet calls "pushing authority to information" rather than the more traditional approach of "pushing information to authority").  "Directed opportunism" encourages initiative, responsiveness, and creativity, enabling teams to adjust to challenges and capitalize on unexpected opportunities without straying from the overall strategic intent.

Bungay lists a number of key aspects of "directed opportunism", which include:

1. Clear strategic intent.  A shared sense of purpose or goal should guide decision-making throughout all levels of the organization.

2. Decentralized decision-making.  Leaders have to trust and empower their teams to make decisions and act independently within the framework of the overall mission objective ("deference to expertise with guardrails").

3. Flexibility and Adaptability.  Flexibility and adaptability are absolutely vital in the dynamic, fast-changing, VUCA world of today.  As long as leaders are keeping their sights on achieving the overall objective, they can change their tactics based on new information and real-time insights.  

4. Exploiting Uncertainty. Leaders should see uncertainty and change as opportunities rather than as obstacles (see an interesting discussion on the explore/exploit trade-off here).

Directed opportunism balances a clear strategic direction with the freedom to act opportunistically.  Bungay's preferred term describes a leadership approach that is known by many other terms.  But what's important here is that they all describe the approach that is necessary for organizations to be successful in our VUCA world.