What happens when an executive doesn't follow this model? One of several things we've all seen before, depending what the executive does instead.
If the executive makes their own decisions and forces them downstream: the executive doesn't have enough information to make good decisions in detail, so the decision won't be optimal. And there won't be much buy-in from people downstream. This also encourages politics: people whisper in the executive's ear to bend it one way or the other. It encourages "brown-nosing."
If the executive chooses not to be involved in conflicts that are "not important enough; you figure it out": political power games ensue. Whoever can force their way will win, killing morale. Or half the people do one thing and half do the other, and the company loses focus.
If the executive accepts escalations, then tries to make a tie-breaker decision: non-optimal decisions get made, because again the executive is, out of the three people, the least qualified to decide. Offhand, you might think this is fine, if the decision isn't very important anyway. That part is true. But the indirect effects are disastrous: it allows the two leads to abdicate resonsibility. They don't have to remind themselves what's good for the company, because you did it for them. It lets them be selfish. It lets disagreement fester. It leaves at least one side not fully bought in.
(I'm wary of "disagree and commit" for this reason. Real people don't commit when they strongly disagree; they only pretend to. In service of a value like "move fast and break things" it can work, because speed overrides wisdom or consistency. That's a legitimate value, like any other, if it serves your strategy.)
If the executive brings in more people to discuss the issue: this is something the two leads should have done already. If they didn't, they are failing at their job, and need to learn how to do it better. Step one is the executive sends them a message: "Go back. Include these additional people/groups in your decision. Come back when you've thought it through properly." If it continues, people have to get fired, because they are bad at making decisions.
According to the book, which makes a pretty compelling case, the only other responsibility of an executive is to enforce company values.
What does that mean? It means if someone in the company isn't acting "right" — not acting ethically, not following the conflict resolution algorithm above, playing politics — then they need to be corrected or removed. Every executive is responsible for enforcing the policy all the way down the chain, recursively. And the CEO is responsible for everyone. You have to squash violators of company values, fast, because violators are dangerous. People who don't share your values will hire more people who don't share your values. It's all downhill from there.
Real values aren't what you talk about, they're what you do when times get tough. That means values are most visible during big, controversial decisions. The executive ratifying a decision needs to evaluate that decision against the set of organizational values. Do the two leads both understand our values? Is the decision in line with our values? If not, tell them so, explicitly, and send them back to try again.
One of the book's claims, which I found shocking at first, was that in a large organization, executives don't set strategy. Not even the CEO sets strategy. Why? Because it's an illusion to believe you can enforce a strategy.
Employees, including executives that report to you, follow company values first and foremost. (This is by definition construction. If they don't, you fired them, see above.) Of course, they're human, so as part of that, they'll be looking out for themselves, their friends, and the people in their organization.
Maybe one of your organizational values is "do what your boss says." That's a thing you can do, and you can enforce. It works. The military works like that supposedly (although I have no experience with the military). But command-and-control is not very efficient for knowledge workers, because of the fundamental problem that for any given situation, the people who know the most about it are the people at the bottom, not the people at the top.
If the people at the bottom can't agree what to do, then great! That's why we have a hierarchy. Use the decision process above until the answer is obvious.
But if the person at the top is trying to "set a strategy" by making operational decisions, those decisions will be based on insufficient facts, because there are simply far too many facts for one person. That means, if your decisions should be based on facts, you will make worse decisions than your subordinates. That's scary.
So what, then? A company just drifts in the void, with no strategy?
Not exactly. It's harder than that. What executives need to do is come up with organizational values that indirectly result in the strategy they want.
That is, if your company makes widgets and one of your values is customer satisfaction, you will probably end up with better widgets of the right sort for your existing customers. If one of your values is to be environmentally friendly, your widget factories will probably pollute less but cost more. If one of your values is to make the tools that run faster and smoother, your employees will probably make less bloatware and you'll probably hire different employees than if your values are to scale fast and capture the most customers in the shortest time.
Why will employees embrace whatever weird organizational values you set? Because in every decision meeting, you enforce your values. And you fire the people who don't line up. Recursively, that means executives lower down the tree will do the same, because that itself is one of the values you enforce.
Unless it's somehow impossible to hire people who agree with your values, you can assemble an organization that aligns with them. It might be a terrible organization that ruins your business, but then ... well, those values weren't a good choice.
I can't believe nobody told me this before. It's all so simple, and it's all been documented since the 1980s.
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