The four functions of every leadership decision

Leadership is combining people, resources, and decisions in ways they wouldn’t combine on their own. The leader is the process whereby raw “materials” are transformed into some desired end. That transformation is the “Production Function.”

This Production Function has four key components: Allocation, Information, Motivation, and Execution. We call them AIME. These aren’t steps you follow in sequence, but rather four things happening at the same time. They influence each other in every decision you make.

We can see these in one example from Spencer’s experiences in the Army.

Every afternoon in Afghanistan, Spencer sat in the Joint Allocation Meeting (the JAM) where leaders decided which missions they could fly that night. Twice as many missions were requested as helicopter assault forces could fly. The commander absorbed intelligence reports of varying quality, weather forecasts, and urgent requests from ground force commanders. He looked at Spencer: “How many do you have?” Spencer would give the number, which wasn’t enough to cover all the demands. The commander had to decide which missions would fly.

That single decision touched all four functions. Allocation: which missions get resources tonight. Information: what’s the necessary, reliable information needed when everyone says their mission is critical. Motivation: ground commanders learned that inflated requests ruined the signal, so tonight’s decision shaped tomorrow’s honesty. Execution: once the mission was decided, tasks and roles were clearly defined. People understood what their role was and their latitude for addressing the inevitable disruptions to the plan. All four functions were present in that one meeting.

Allocation

Allocation means deciding where limited resources go when there is not enough for everything. In Spencer’s case, this scarcity was stark and forced careful thinking about where to use each helicopter to its highest value.

Information

Information means reading the signals that tell you what is actually happening, and being open to learn things that contradict your existing view. One way for understanding truth is through people’s choices. People communicate constantly through their choices, whether they intend to or not; what they actually do when they have to choose reveals what they value.

Spencer’s brother-in-law asked a question that stuck with him. Spencer and his wife couldn’t make it to his nephew’s birthday party. His brother-in-law didn’t argue or guilt-trip, but instead just asked: “What else you got?”

He wasn’t asking for a reason; he was asking what mattered more.

Leaders need to seek and identify that kind of signal constantly. Broadly speaking, they do that in three ways:

• Reading the information in front of them, given by signals and people’s choices
• Eliciting information by creating an environment that rewards and encourages truth-telling
• Creating information by seeing choices as experiments

Motivation

Motivation comes from the vision people hold of who they want to be and the life they want to live. Leaders can influence that vision through example and creating strong cultures. They can also learn what people value and align their values with the goals of the organization.

A simple example of this that has stuck with Spencer came from his father. In his younger and more defiant years, after a bad night ended in a fight, Spencer’s father handed him a keychain with the letter C on it and asked what he thought the C stood for. Spencer was eighteen. He guessed “average guy, you know, a C student.” But that wasn’t right. Then he guessed the obvious: “Clouatre.” His father said, “No. It stands for conscience, and I’m tired of managing yours.” Three days later, Spencer enlisted in the Army, hoping to change who he was to be more in line with what he expected of himself.

Motivation comes from wanting to be a certain kind of person. The leader’s job isn’t to manufacture that desire, but rather to make the gap visible so others can act on it themselves.

Execution

Execution is largely about ownership: who owns which choices, who has independence to make those choices, and then providing an environment that allows for prudent risk-taking.

The U.S. Army formally adopted Mission Command as doctrine in 2003, but it had been training to the standard since the early 1980s, drawing on the German Army’s Auftragstaktik: the commander supplies the intent, the subordinate owns the means.

In February 1991, Eagle Troop of the 2nd Armored Cavalry Regiment was advancing east through a sandstorm in southern Iraq when its commander, Captain H.R. McMaster, came over a low rise and saw a forward brigade of the Iraqi Republican Guard’s Tawakalna Division dug in just ahead. He engaged on his own judgment rather than stop to request instructions, and his troop moved with him.

Twenty-three minutes later, Eagle Troop had destroyed 28 tanks, 16 armored personnel carriers, and dozens of other vehicles with no Americans killed. Subordinate tank commanders had chosen targets and adjusted formations on their own, and the troop had pushed past its original limit of advance because everyone understood what the squadron commander wanted: to break the enemy’s ability to fight in this sector. The decisions were made in the moment by the people closest to them, because the doctrine and the training had already settled who owned which choices.

The leader’s work in Execution is to shape who owns what, who has the latitude to act when the situation changes, and to clearly convey the intent.

Where to Start When Something’s Off

These components of leadership can help to quickly diagnose the most prominent source of failure. For example, even though the debriefing in the JAM didn’t use AIME explicitly, the types of issues they would look at align with AIME well: was the unit over-extended (allocation)? Had they operated on incomplete information, and if so, was it the failure of intelligence or of missing information that hadn’t been volunteered for some reason (information)? Or were decisions delayed for approval, or was there a lack of clarity in the intent (execution)? From there, the team could drill down on the right solution.

So the four functions give you a place to begin. Walk through them in turn: the resources applied to a problem, the information the team has to work with, the gap each person sees between their contribution and how it provides value to them, and whether people have the appropriate amount of ownership over the problems they’re solving.

Consider the most persistent challenge on your team, a relationship, or in achieving your current goals. Which of these four is most out of balance?

— Aaron and Spencer