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‘‘Although there are some differences between managing non-profit institutions and for-profit companies, a common set ofunwritten rules defines decision making in the executive suiteof almost any organization. Bob Frisch understands those rules,and in Who’s in the Room? he clearly describes both why theyare so pervasive and the detrimental impact they can haveon your management team dynamics. More importantly, hepresents a straightforward approach to making the rules of howyour organization makes critical decisions more transparent andeffective.’’—Charles Roussel, CEO, College of American Pathologists

‘‘CEOs—and the people who work for them—are going to betalking about Who’s in the Room? This important new bookaddresses how decisions really get made. It takes the issue of topteam effectiveness out of the realm of traditional team buildingand into questions of process and structure and required flexibility.It provides a practical guide to raising your impact as a leader.’’—Gretchen W. McClain, CEO, Xylem Inc.

‘‘Who’s in the Room? offers executives unique insights into howexecutive decisions really happen. Frisch draws on his experienceand shares stories of how senior leaders make decisions, usekitchen cabinets, and unleash employee energy. He also offersguidance on structures, processes, and roles for high-performingteams. The book is pragmatic and relevant for any executivewho realizes that much of today’s work has to be done throughrelationships and collaboration.’’—Dave Ulrich, professor, Ross School of Business, University of

Michigan; and partner, The RBL Group

‘‘Companies, and the numerous issues that arise around decisionmaking, are always much more complex and dynamic than thewhittled-down portraits typically offered by the media and inbusiness school cases. Here, Bob Frisch does the opposite of

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that. Instead of over-simplifying reality to make solutions moreaccessible, he provides a more sophisticated and elegant set offrameworks to directly acknowledge the complexity of organiza-tions, and specifically how people act within them. The result isa book which is engaging, and most importantly, practical.’’—Eric Korman, senior vice president, strategy and business

development, Ralph Lauren Corporation

‘‘Are you in the room when your company’s important decisionsare made? Do you have the right people in the room whenyou need advice on key decisions? Bob Frisch’s deep experienceand insightful analysis will help you build stronger teams andmake better decisions. Who’s in the Room? is essential reading foranyone in, or aspiring to, the senior executive suite.’’—Charles Fine, professor, MIT Sloan School of Management;

and author, Clockspeed

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Who’s

in the

Room?

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Who’s

in the

Room?

How Great Leaders Structure and Managethe Teams Around Them

BOB FRISCH

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Copyright © 2012 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-BassA Wiley ImprintOne Montgomery Street, Suite 1200, San Francisco, CA 94104-4594—www.josseybass.com

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any formor by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except aspermitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the priorwritten permission of the publisher, or authorization through payment of the appropriate per-copy feeto the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400,fax 978-646-8600, or on the Web at www.copyright.com. Requests to the publisher for permissionshould be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street,Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best effortsin preparing this book, they make no representations or warranties with respect to the accuracy orcompleteness of the contents of this book and specifically disclaim any implied warranties ofmerchantability or fitness for a particular purpose. No warranty may be created or extended by salesrepresentatives or written sales materials. The advice and strategies contained herein may not besuitable for your situation. You should consult with a professional where appropriate. Neither thepublisher nor author shall be liable for any loss of profit or any other commercial damages, includingbut not limited to special, incidental, consequential, or other damages. Readers should be aware thatInternet Web sites offered as citations and/or sources for further information may have changed ordisappeared between the time this was written and when it is read.

Some of the discussion in Chapter Four of executive teams as legislatures has been adapted from‘‘Off-Sites That Work,’’ by Bob Frisch and Logan Chandler (Harvard Business Review, June 2006, pp.117–126), and ‘‘When Teams Can’t Decide,’’ by Bob Frisch (Harvard Business Review, November 2008,pp. 121–126).

Some of the discussion in Chapter Seven of testing walls and fences has been adapted from ‘‘WhenTeams Can’t Decide,’’ by Bob Frisch (Harvard Business Review, November 2008, pp. 121–126).

Some of the material in the extended discussion of the Marquis de Condorcet’s voting paradox inChapter Four has been reprinted with permission from ‘‘When Teams Can’t Decide,’’ by Bob Frisch(Harvard Business Review, November 2008, pp. 121–126). Copyright © 2008 by Harvard BusinessPublishing; all rights reserved.

Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directlycall our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at317-572-3986, or fax 317-572-4002.

Wiley also publishes its books in a variety of electronic formats and by print-on-demand. Somematerial included with standard print versions of this book may not be included in e-books or in print-on-demand. If the version of this book that you purchased references media such as CD or DVD thatwas not included in your purchase, you may download this material at http://booksupport.wiley.com.For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data

Frisch, Bob.Who’s in the room: how great leaders structure and manage the teams around them /

Bob Frisch. -1st ed.p. cm.

Includes index.ISBN 978-1-118-06787-1 (hardback); ISBN 978-1-118-17007-6 (ebk);

ISBN 978-1-118-17008-3 (ebk); ISBN 978-1-118-17009-0 (ebk)1. Decision making. 2. Senior leadership teams. 3. Chief executive officers.

4. Executives. I. Title.HD30.23.F755 2012658.4′022-dc23

2011039775

Printed in the United States of America

first editionHB Printing 10 9 8 7 6 5 4 3 2 1

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Contents

Introduction: Who’s in the Room? 1

PART ONE: FROM PROBLEM TO PORTFOLIO 5

1 Most Companies Are Run by Teams withNo Names 7

The Myth of the Top Team

Illusion and Reality

The Problem That Isn’t There, But Won’t Go Away

2 Team Building Won’t Solve the Problem 21When the Shrinks Go Marching In

After the Shrinks Have Gone

3 Don’t Blame the Boss 29In Search of the Ideal Leader

Inside the Box

Do the ‘‘Rights’’ Thing

4 Four Fundamental Conflicts at the Heart ofSenior Management Teams 41

Mission Control Versus Knights of the Round Table:

Functional Specialists or Reflections of the CEO?

The Team Versus the Legislature: The Representative

from Finance, the Senator from Operations

The House Versus the Senate: Are Some More Equal

Than Others?

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viii contents

The Majority Versus the Majority: The Impossibility of

Deciding

Maybe the Problem Is That There Is No Problem

5 Case Study: How One CEO Transformed His TopTeam 57

The Past as Prologue

Moving from a Single Top Team to Multiple Teams

The Team That Sits Together Works Together

Tailoring the Structure to Suit Your Needs as a Leader

6 Best Practices: Design an Organization ThatDelivers the Outcomes You Need 73

The Three Centers of Gravity

Flexing in Five Dimensions

The Portfolio and the Payoff

PART TWO: THE SENIOR MANAGEMENTTEAM UNBOUND 91

7 Engage the Senior Management Team in ThreeCritical Conversations No Other Team Can Have 93

8 Align the Senior Management Team Around aCommon View of the World 99

The Starting Point: Aligning Around Trends

Clustering Trends into Drivers of Change

Understanding Capabilities and Assets

Walking the Boundaries of the Company: Testing Walls

and Fences

Defining and Selecting Opportunities

9 Prioritize and Integrate Initiatives to Hit theStrategic Bull’s-Eye 119

Asking the Nearly Impossible: Prioritizing Initiatives

The Real Source of the Difficulty

Changing the Conversation

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CONTENTS ix

It’s All Relative

Hitting the Bull’s-Eye: Making Initiatives Work

Together

10 Move from ‘‘Should We Do This?’’ to ‘‘How Do WeDo This?’’ 145

It All Depends: Why Initiatives Fail

Putting on the Brakes: The Value of Parochialism

The American Red Cross: Managing Dependencies at

the Speed of Disaster

Going from ‘‘Should’’ to ‘‘How’’

Fixing What’s Actually Broken

11 Tailor Your Portfolio of Teams for TopPerformance Now 167

Thinking It Through

Putting the New Approach into Motion

Repurposing the SMT

Who’s in the Room?

Acknowledgments 179

The Author 183

Index 185

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For Iris

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Who’s

in the

Room?

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IntroductionWho’s in the Room?

At the heart of every organization chart lies a myth.At the top there’s the boss. Directly beneath are the boss’s

direct reports—anywhere from five to fifteen people who meetregularly as the senior team. Whether at the corporate, divisional,functional, or departmental level, this team almost invariably hasa name that suggests its lofty status: Executive Committee, Man-agement Council, Operating Committee, Senior ManagementTeam. Like the gods on Olympus, the members of this augustbody are presumed by most managers to spend their time togetherdiscussing profound thoughts and making all of the organization’struly momentous decisions.

The reality is that they don’t—any more than they weartogas and sandals.

The senior team may be consulted or informed, but the mostimportant decisions are rarely made by a group like this sittingaround a conference table. Instead, the organization’s leadertypically calls in an inner core of intimate advisers—a kitchencabinet—along with any other individuals who might shed lighton a specific situation. It is this team with no name—ad hoc,unofficial, and flexible in makeup—that is the group in the roomas the actual decisions get made. Yet we all persist in believingthat the senior team should be the forum for decision making.

It can be a destructive belief.I have spent the past twenty-nine years consulting to organi-

zations of all kinds, from Fortune 500 companies to family-heldbusinesses to the U.S. Department of State. I’ve earned overeight million American Airlines AAdvantage miles facilitating

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2 who’s in the room?

strategy discussions with senior executive teams in fourteencountries on five continents. Over and over during those years Ihave seen the confusion and conflict caused by the way decisionsget made. Executives on the senior team resent the boss’s endruns. They feel shut out of the big decisions, and this leads todoubts and insecurity about their own status. Will they be con-sulted before the next major decision is made or only informedafter? Will their opinions be solicited, and how much weight willthey carry?

Meanwhile, the boss is often frustrated by the apparentparochialism of individual team members and the seeming inabil-ity of subordinates to get anything done without having the bosssitting in on every discussion. The team is said to be dysfunctional.Blame is plentiful on all sides.

But this blame is misplaced. Most of the world’s best execu-tives make decisions in ways that don’t show up on an organizationchart or a process flow diagram. When it comes to critical deci-sions, they implicitly understand the inherent limitations of theformal executive team. They tacitly acknowledge that it’s desir-able for the boss to have the ability to vary who is in the roomwhen major decisions are being made. And they instinctivelyknow exactly whom they want with them in the room for eachspecific decision.

My purpose here is to make explicit how leaders of man-agement teams actually work—and why they work in theseparticular ways. This book is grounded in a simple truth: having asmall cadre of trusted advisers in the room when each big decisionis made is the way most leaders run their organizations, and whenthe real nature of the executive team is fully understood it willalso be clear that this approach is the best way.

Senior teams have undeniable strengths, and they are ina unique position to do things that no other group in theorganization can do as well. Making big decisions isn’t one ofthem—for very good reasons that will be dissected here. Unlessthe senior team’s limitations are understood and its genuinestrengths put to work, the blame and frustration on all sides will

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INTRODUCTION: WHO’S IN THE ROOM? 3

continue. The organization will have the approach half right:ad hoc decision making by the few. But it will also have theapproach half wrong because it will fail to fully leverage the realpower and competencies of the many.

My hope is that by understanding the nature of executivedecision making, executives and the members of their seniorteams can stop beating up themselves and each other. They canstart improving the ad hoc decision-making process that probablyalready lies near at hand, and they can focus the executive teamon what it does best. This outcome doesn’t require organizationaloverhauls or irrelevant team-building exercises. It requires onlyan acceptance of reality and a willingness to refine that realitywith a few simple steps that can be taken tomorrow.

For almost three decades, I’ve seen company after companytrying to overcome what it sees as a lack of executive teameffectiveness. Days, weeks, or even months of effort are wastedwith little or no result. This book is meant to help you andyour executive team—and similar teams at any level of yourorganization—to reframe the problem, to help you to stopseeing it as an issue of individual or group behavior and tostart seeing what’s really happening in both your formal teammeetings around the leadership table and in your meetings withyour kitchen cabinet. Once you do, it’s unlikely you’ll lookat your team in the same way ever again.

It’s time to send the psychologists packing. Time to stophamstringing yourself and selling the members of your executiveteam short. And time to free decision making and decisionmakers throughout your organization from the tyranny of theorganization chart.

The organization will get faster, better decisions and a higherlevel of organizational alignment in executing against those deci-sions. Team members, and the people who work under them, willachieve new levels of effectiveness—and even fulfillment—inbeing unleashed to do what they do best. And you and otherleaders in the organization will see a dramatic drop-off in peoplecoming into your offices and asking, ‘‘Why wasn’t I in the room?’’

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part one

FromProblem

to Portfolio