Ego Free Leadership

by Brandon Black

  5.Align on your collective goals. One of the fallacies of Us vs. Them dynamics is that each side believes its goals and interests are in competition with the other. Seeing beyond one team’s priorities and articulating common goals with an opposing group helps heighten our awareness of what is really at stake. We all have a deep desire to be connected to a larger cause, and clarifying this with others is inspiring.

  The Investment Committee Us vs. Them meeting occurred almost three years into Encore’s work with LaL. Why? Shouldn’t they have fixed this issue in the first month?

  Individual and cultural dysfunctions and discord heal in stages. Unhelpfully, people often assume that these issues will go away once we identify them. They oscillate between resignation—“these interpersonal issues are intractable”—and aggravated impatience—“these issues should be gone already; what’s taking so long?” These patterns build up over decades, and it takes time to reverse them. Self-awareness and personal mastery are skill sets we build with commitment and practice.

  “There was a cumulative effect of doing this work on ourselves so consistently over time,” Brandon explained. “We got better at it. Initially, we couldn’t even talk about issues. Then we grudgingly admitted them. Then we called them out without stigma or overreaction. By that day in the Investment Committee, we had built the emotional maturity to be direct about the dynamic and move through it.”

  Creating Constructive Communication

  BRANDON

  I finalized bonus recommendations for the leadership team and presented them to the Compensation Committee of the board in early January 2009. Although we didn’t achieve all our financial goals, I believed the team deserved to be paid 100 percent of their bonuses. We had overcome many obstacles, were weathering the worst recession in decades, and had legitimate explanations for performance shortfalls. The board accepted my recommendations.

  Given what they approved for my team, I assumed I would be treated similarly. They had a different perspective.

  “As the CEO,” a committee member told me, “it is ultimately your responsibility to ensure we achieve our financial targets and deliver returns to our shareholders. Our stock is down to $6 per share. Since we failed, your bonus should reflect that shortfall.” They knew our misses had nothing to do with anything under Encore’s control. It wasn’t my fault the financial markets melted down and banks were temporarily paralyzed. Moreover, we had prepared for just this time. January 2009 was on track to be our highest collection month ever. I tried to understand their logic, but couldn’t.

  Worse, I began to recognize a troubling trend of events that started in the fourth quarter of 2008. Shortly after George replaced Carl as chairman, he held a series of meetings with select board members. I was not invited. Then, several strategic recommendations I made during board meetings weren’t approved. Rather than accept my explanations, George and those select members had begun to question me in great detail about the operations of the company. In between the board meetings, I was surprised by offensively curt emails from certain board members. Now my bonus. A former boss once told me that successful executives are able to draw a curve with only a few data points. Here, I had plenty, and they were all pointing in the same direction.

  Debt collection was uninspiring, my stock options were worthless, the board was meddling and incompetent—most of their ideas were off base and their scrutiny was anything but helpful—and now they weren’t recognizing my worth by underpaying me. Despite all the progress we were making as a team, maybe it was time for me to move on.

  Shayne and I had a coaching call scheduled for the next day. I almost canceled but decided to use him to help plan my transition. “I’ve had enough of this,” I told him as he picked up the phone. “Too much has happened over the past six months that I can’t tolerate.” I gave him a quick recap of the evidence. “I think it’s time for me to leave Encore.”

  “Whoa, I don’t recall talking about any of this.”

  “I was too focused on doing whatever it took to navigate the financial crisis. Evidently, while I was doing that, the board was second-guessing my decisions and talking behind my back. It wasn’t until my conversation around compensation that I put two and two together.” I vented to Shayne about the board’s focus on unimportant details, not valuing the strategies Paul and I had developed, and their inflated view of their own value.

  “Slow down,” he said, “what’s going on?”

  “Facts don’t lie, Shayne. They’re going to scapegoat me.”

  “OK,” he paused, “so you’re afraid.”

  I almost hung up the phone. Despite my anger, though, I realized his voice wasn’t aggressive. As we talked more and I thought about his comment, I realized that behind my anger there was fear. Fear they didn’t think I was the right CEO, fear of being fired. The fear that maybe I really wasn’t capable. Acknowledging this was both unpleasant and somehow calming.

  “You’ve talked in the past about regretting how you left Capital One,” Shayne continued. “Didn’t something similar happen there? You blamed them for doing things wrong and got so angry you left? Do you think you could be repeating the same pattern here?”

  I didn’t like that idea. But each angle I took came back to the same tension: I was scared they would tell me I wasn’t good enough. “I think that’s right,” I admitted. “The more I blame the board for what’s not working, the less it’s my fault when I’m asked to leave.” And that was exactly what happened at Capital One.

  “When we leave a job,” Shayne said, “or sever a relationship, we think we’re escaping unwanted circumstances or people. But our internal challenge in that situation just keeps repeating itself. You will leave jobs again and again, with similar consequences, until you face this difficulty differently.”

  I thought about the years of heartache I felt after leaving Capital One. My departure put the company in a difficult predicament and led to a protracted lawsuit over a non-compete agreement. The situation forced my coworkers to choose between their friendship with me and their relationship with their current employer. Many distanced themselves from me, and I was hurt. After nine years of working there, my legacy at Capital One consisted of lost friendships and mentors. All my doing. I had just reconnected with my former boss, Nigel, after not talking to him for almost a decade. I was grateful he took my call and was open to rebuilding our relationship—and that I was able to apologize for what had happened.

  “I don’t want to do that again,” I said. “But what am I supposed to do? Just pretend these things didn’t happen?”

  “Instead of vilifying the board, you could go see them and put your perceptions and concerns squarely on the table.”

  The idea of telling the board my fears seemed crazy, and yet I was determined not to create a destructive departure at Encore. I needed to clear the air.

  Shayne helped me prepare for the conversation by outlining my fears and goals. I wanted both to state my perceptions without being accusatory and to remain open to their perspective. We isolated my greatest fear—being rejected—and then turned it on its head. If I was able to accept any outcome, including being told I wasn’t the right person for the job, then I could avoid being defensive. After a follow-up discussion, I was ready.

  I arranged a meeting with several key board members in the Century City office of one of them, just west of downtown Los Angeles. Driving up, I wondered, who sets up a meeting to facilitate their own execution? I kept driving anyway.

  I started our discussion by telling them I had struggled with several board decisions. I laid them out and then explained how I had interpreted them. Shayne had drilled me on clearly distinguishing between the facts I had collected and my conclusions about them. Any deviation and I knew I would come across as accusatory and belligerent.

  After some hesitation, I asked point-blank the question most troubling me: Were they planning to replace me as the CEO? If so, I assured them I would handle it professionally and do what was best for t
he company. I paused, both scared and ready to hear whatever they had to say.

  They thanked me for coming and putting the topic on the table. “We didn’t make these decisions because we want somebody else as CEO. You are the person we want running Encore. But there’s a lot going on right now, and we want to be more involved. As a board, we’ve collectively experienced a great deal and have different perspectives. We need you to explore all possibilities, not just advocate for what you believe is right. While you’re correct on many fronts, you have blind spots and need to learn to rely on others.” We spent an hour going through the details of their feedback. I thanked them and left the office.

  On the way out of the elevator, I called Dana, who had been giving herself an ulcer, to tell her I still had a job. We talked for most of my drive back to San Diego. For the first time in weeks, I was able to focus on something other than my job status. And I was excited to get back to work.

  SHAYNE

  Our egosystem and brain can convince us of anything, regardless of its veracity. We can make—I myself have done it countless times— any number of important decisions with profound conviction, only to realize later it wasn’t really what we wanted or was based on incorrect perceptions.

  Brandon was on the verge of such a decision when we spoke in early 2009. The only telltale sign that his ego was on full alert was his emotional state. He was feeling at the mercy. Instead of following his gut, however, Brandon sought to be curious about his anger, and ultimately he was able to link it back to his ego threats.

  Equally important in Brandon’s shift was his ability to connect tangibly to the costs he would create if he persisted in his reaction. Having understood the role his egosystem played in his departure from Capital One was instrumental. Brandon’s understanding of that conflict had evolved from “they did this to me” to “I was threatened by the changes, lashed out to protect myself, and ultimately damaged important relationships.” This is different than flipping from “it’s their fault” to “it’s my fault.” Assigning blame to our self is just as much an egosystem reaction as is blaming others. We are still not in a learning space—although the guilt, in a strange way, makes us feel better because beating ourselves up gives us the ego benefit of proclaiming that we know better without actually changing anything. Instead, Brandon recognized his responsibility for his response to Encore’s board members through empathizing with his previous frailties.

  Identifying how we contributed to past failures in life means the difference between developing wisdom and repeating the same patterns over and over again. Had Brandon not come to terms with his true motivations in leaving Capital One, he could have blindly repeated them at Encore. In fact, he had already started. Seeing that the last time he fell into this pattern it damaged his legacy and severed relationships for a decade provided Brandon with a dose of emotional clarity. It allowed him to be guided by what he truly wanted, not by what his egosystem feared. Although he was anxious, Brandon was irrevocably committed to creating a constructive conversation with the board. At a profound level he preferred hearing that he wasn’t capable of being CEO, and leaving Encore productively, than proving it wasn’t his fault and leaving destructively.

  This shift happened before he knew the outcome. He couldn’t control what the board members said or did. They might have told him he wasn’t the guy. He could only choose what essentials guided him and what quality of relationship he was committed to creating. He “let go of the outcome” while staying firmly committed to his goal.

  This wasn’t an easy conversation to create. Brandon could have sugarcoated how he truly felt about the situation and, as a result, not really obtained resolution. Or presented his conclusions and frustrations as facts, causing an escalation. Or fished for reassurance that he was the right guy, likely prompting a less than honest response from the board. Being constructive, but also relentless, is a delicate balance. We have identified five crucial aspects of such constructive communication: being vulnerable, empathetic, direct, exploratory, and caring (VEDEC).

  CONSTRUCTIVE COMMUNICATION

  Vulnerable, Empathetic, Direct, Exploratory, Caring (VEDEC) contrasted with our ego’s default self-protective strategies.

  Reactive Authentic (VEDEC)

  Protect Myself Vulnerable

  Critical or Harsh Empathetic

  Avoiding (being vague or sugarcoating) Direct (and Specific)

  Being Right (I Know) Exploratory (or Curious)

  Indifferent or Reserved Caring

  1.Vulnerable. Whenever we are guarded—acting to cover our natural, human vulnerability—we behave in ways that trigger other people’s egosystems. By sharing our ego threats as our own discomfort, we pacify others and give them elements to help them understand us. When we put our core fears out in the open, we no longer have anything to protect; this allows others to empathize with how we are feeling.

  PRACTICE Share your fears about yourself and your intentions for the conversation.

  2.Empathetic. When we walk in another person’s shoes, understanding how we could feel and behave as that person does, it helps us see beyond the other person’s behaviors. It also makes us aware of how we would feel if we were on the receiving end of our own reactions and judgments.

  PRACTICE Help the other person name his/her feelings/experience.

  3.Direct. Being direct is a delicate aspect of constructive communication. Being direct is not expressing our judgments in an abrasive fashion. That is unloading our emotional tension with the intent of overpowering the other person and usually shuts others down without actually providing useful content. On the other hand, many leaders sugarcoat their message or make general statements, hoping the other person will get the message. This often leads to the conclusion that the person doesn’t want to listen, when in fact the message wasn’t really delivered. Being direct is stating our observations in specific language, without agitation or judgment.

  PRACTICE Ask the other person to summarize what he or she heard to see how clear, direct, and specific you have been in delivering your message.

  4.Exploratory. A key antidote for our addiction to being right is showing a willingness to explore ideas. Instead of advocating for or defending your own point of view, be curious; find out what information you might be missing. What do others think and perceive? What is their context? What do they see that you don’t?

  PRACTICE A Clarify what the other person really means.

  PRACTICE B Challenge and expand your own perception.

  5.Caring. Caring is the intention to support another person’s well-being and development. When someone feels vulnerable or threatened, it matters whether we are harsh or indifferent—or invested in our relationship with him or her. As with vulnerability, it helps to create a safe space for both parties.

  PRACTICE Clarify why you care about providing feedback to the other person. What’s at stake for him or her?

  The challenge is to practice these five skills in unison. Having an exploratory mindset without directness leaves the conversation with no spine. Directness without care or empathy leaves us cold, making the message harder to hear. When we are able to integrate these different aspects of ourselves, even the most delicate conversations become possible.

  CHAPTER 6

  YOUR EGO LOVES AN ENEMY

  The Destructive Effects of the “Offensive” Ego

  BRANDON

  “What should we bid?” asked Amy a few weeks later in an Investment Committee meeting in February 2009.

  For the past three years, the answer to that question had been simple: “It doesn’t matter because we won’t win anyway.” But now everything was different.

  “The question is how low should we bid,” said Paul. “The last thing we want to do is overpay.”

  Paul’s response summed up how we all felt. The financial collapse after September 2008 had decimated our industry. We believed that only one or two competitors were able to bid on this opportunity; a year earlier, that number had b
een closer to twenty. At Encore we had stayed disciplined for a long time and now it was finally going to pay off. The time we spent creating a new, positive dynamic in the IC was producing immediate returns. Our conversations were both blunt and exploratory, and we felt supremely confident our decisions would take full advantage of the upcoming opportunities.

  If only our shareholders felt as confident. They were still convinced Encore was going down in flames. Most believed that the economic collapse was impacting our customers more than other financial institutions, and they were forecasting a dramatic drop in our revenues. Paul and I were constantly fielding questions and assuring our shareholders that we had planned for just this window of opportunity. Despite that, our stock price continued to free-fall. While the economic crisis brought the overall market down 35 percent, Encore’s stock was trading below $4. It had lost 80 percent of its value in six months. I may have solidified my status with the board, but it didn’t make me feel secure. I’m a huge sports fan and know that when teams lose, the manager gets fired.

  Despite the market’s lack of faith, my executive team was firing on all cylinders. Nobody panicked or quit. Historical enemies, our Finance and Operations teams finalized an activity cost database that tracked every operating activity and assigned the cost to each individual account. This allowed our Decision Science team to build incredibly precise profitability models. Instead of fighting over who was right, departments were using each other’s expertise to raise our game to a new level.

  Most significant, total collections in India were up 200 percent. The pilot team formed in 2008 to manage higher-quality consumer accounts continued performing on par with the domestic call centers. It was no fluke. Given that, our HR team was diligently working on hiring plans for both India and the United States, and there were no lingering discussions about the merits of expanding our presence in India. Several domestic call center leaders volunteered to spend months in India helping out. We were starting to shine.