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The 20-80 Leadership Rule: A Lesson from a Shark

April 1, 2012

Updated April 25, 2013

I’m a big fan of CBC’s Dragon’s Den and ABC’s Shark Tank. Dragon’s Den has established a massive, almost cult-like following in Canada. And it has served as a catalyst to entrepreneurship and getting Canadians talking about it.

However, although I’m a Canadian and have watched Dragon’s Den loyally since its inception, I prefer Shark Tank. The entrepreneurs who pitch their ideas at the Sharks are consistently better and there is less juvenile behavior among the Sharks compared to its Canadian counterpart.

During a Shark Tank episode last year, which involved the biggest potential deal in the show’s history, the Sharks started a brutal bidding war for what first appeared as a whimsical idea. But it turned out that the entrepreneur was serving a global market and his sales were about to explode. The entrepreneur was asked to step outside while the Sharks talked among themselves. Three Sharks combined from two previous separate offers; one Shark had withdrawn while another had his own offer.

The entrepreneur returned to the tank and for the next several minutes agonized over which of the two offers to accept. One offer involved selling the company for $4 million, while the combined offer dealt with increased equity in the company plus royalties.

Daymond John, one of the Sharks who joined two others for a combined offer, summed it up nicely when he stated to the entrepreneur: Life is 20-80; 20% is problems you confront; 80% is how you respond.

The entrepreneur made a decision and accepted the combined offer, which included Mark Cuban and Kevin O’Leary. Only the entrepreneur could control how he responded and in the context of what he believed was the best deal for him.

Daymond’s 20-80 comment got me thinking about the implications for leadership. How true it is about the importance of how each of us reacts to challenges or crises in our personal lives. This is what defines us as leaders or potential leaders, because HOW we respond to a specific problem is watched carefully by our co-workers, friends, family and others in our community.

Let me give two contrasting examples to illustrate the 20-80 leadership rule.

Public Servants Cowering in Fear:
Since concluding my career with the Government of Canada in 2010 after three decades, I’ve been doing contract research and writing on a variety of topics. It’s certainly liberating to produce deliverables but yet not have any skin in the game. I simply walk away when I’m done, satisfied in knowing that I helped a client.

One gig I had in 2012 wrapped up just as the government released its March 2012, budget, whose centerpiece was shrinking the public service by 20,000-plus jobs over the next three years.

I went through enough downsizing efforts during my career, and I found it interesting to watch how former colleagues and those at my client department reacted to the 2012 cuts. Handwringing, whining by the unions and political opposition parties, and anxiety by managers seem to be common traits in the public service.

Whether you manage a budget in government or are simply one of the countless faceless bureaucrats, the 20-80 rule applies: as an employee you’re confronted not only with the prospect of being declared surplus, you also face having to deal with watching co-workers get the axe, even if you in the end are “saved.” You’ll then have to deal with what’s called “survivor syndrome,” which for some people can produce significant stress.

How you react in this environment tests your personal leadership, resilience and change adaptability.

RIM’s Implosion: From Crackberry to No-Berry to May-Berry
Research in Motion (RIM) is one of Canada’s greatest technology success stories. RIM, the maker of the venerable Blackberry (of Crackberry fame), yet consumer-rejected Playbook, replaced Nortel as Canada’s high-tech darling.

The sky was the limit for RIM. Hubris became a defining trait among RIM’s co-CEOs and management team. And that hubris was accompanied by an appalling detachment from what was happening in the tech world. Apple’s booster-fueled growth by Steve Jobs and the rapid entry of Google’s Android operating system, adopted by numerous competent tech manufacturers, caught RIM’s management with its pants down around its ankles.

Shit happens – big time when you’re a company that thinks it has reached the pinnacle of never-ending success.

And up until the recent launch of Rim’s Z10 smart phone in early 2013, it appeared that the company was on the verge of an implosion. That may still happen at some future point; however, for now RIM has a lifeline with its new soon-to-be-released line of smart phones, the Q10 being one of them.

So where does the 20-80 leadership rule come into play?

Managers and staff at Rim have zero control over external events that have been bombarding the company. Nor do they have much, if any, control over senior management’s decisions. However, they do have complete control over how they react to events within their work settings. Moaning about evil Apple or copycat Android does little to address RIM’s innovation challenges. Nor does reminiscing about the good old days when the Blackberry was king.

If RIM does fail in the end, then each employee needs to figure out for himself or herself how they wish to position themself for the future. And if RIM has a long-term future, what will the company look like?

A few questions for you:

How are you as an individual dealing with the crap that’s thrown at you at work?

Do you cower in fear?

Or do take control of what surrounds you and make something constructive of it?

Self-empowerment is an incredibly motivating force. Only YOU can empower yourself. For your boss to say that he or she is empowering you means that you are still within their power.

Your personal leadership is defined by how you practice the 20-80 leadership rule.

Thanks, Daymond, for your insight.

Truth is the easiest thing to sell.
– Daymond John

Photo by Jim Taggart (Willis Tower, Chicago)

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