Spending, Saving and Investing Leadership Capital

Anyone who has seen Jocko Willink knows why people listen when he talks. The retired SEAL Team Commander along with his also notable co-author Leif Babbin just released their latest book, The Dichotomy of Leadership. One of the many concepts that struck me was the idea of “leadership capital.”

Jocko explains it as a metaphorical bank account that exists between a leader and his team. Every action has a debit and a credit. Since leaders are responsible for setting the team’s mission, they need to stay extra aware of what they’re spending capital on. Obsess too much over minor details and you won’t have enough left to ask for something big. Only make big moves and you’ll leave everyone in a state of waiting for the next fire drill. Based on his training of numerous SEAL Team Leaders, Jocko advises that internalizing this concept can take significant practice and attention.

Because it’s a debit and credit system, we also should remember that capital flows in both directions. Team members have responsibilities too, and should equally be aware when they’re asking for a lot of little things, or saving up (by completing a lot of little things) to make a significant ask of leadership. The difference is only who is setting and guiding the mission. As they say in the book, by understanding the accounting of leadership capital we can more effectively lead both up and down the chain of command. 

Whether with our teams, our clients, or even within our company, the rules apply. Next time we’re asking for that 18th piece of signed paperwork from a fatigued client, or asking a prospect to finally take the plunge and move those assets over to us – we should pause and consider what the balance of the leadership capital account looks like. Have we asked too much over too short a period of time or did we not yet put the time in to build trust for such a big ask? Before we ask management with help on an issue, have we demonstrated an ability to fulfill the other smaller tasks they have asked of us? These are important details.

The ultimate litmus test is how well the mission has been communicated. When we are leading, and therefore responsible for setting the vision, there is nothing more important than continuously communicating the reason why. With a north star in place, every transaction has a purpose. If we don’t get that piece of paper signed, how are we supposed to make sure that college education goal gets funded? If we don’t get this clearance from compliance, how are we supposed to continue to deliver on our other prospecting efforts? The mission is all that matters.

Frustrations and failures arise from misunderstanding the mission and how leadership capital is allocated. With awareness, we can keep everyone on the same page and validate that their actions are critical to realizing success.  Like financial capital, we have to spend, save and invest our leadership capital wisely or else we risk losing it.

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