Stewards and Game Players

Over the years, I have found that the decision makers employed by business owners to manage their organizations fall into two major categories: those who view their organization as if it were a living entity and those who view it as if it were a game.

Those viewing their organization as a living entity act as if they were given stewardship of the organization during a particular period of its life. We’ll call these individuals stewards. Their objective is to pick up where the previous steward left off and provide the organization with the guidance and nurturing necessary to continue its development until the time comes to transfer their stewardship of the organization to another individual.

Those viewing their organization as a game (we will call these individuals game players), see their organization as a contest in which they must run up the highest score from the time they begin the game until they are either dismissed or find another game to play. They are not concerned with anything that took place before they began playing the game or anything that takes place after they finish the game. They care only about the score they run up during their tenure.

Perhaps a good analogy is to look at an organization as a team of young baseball prospects and the decision maker as its manager. The steward-manager will take into account the athletes’ intellectual, emotional, and physical maturity, visualize the long-term objectives of the team, and manage to a set of interim goals that will keep the team moving toward its long-term objectives. The steward-manager will build on what previous managers have accomplished and do nothing that would jeopardize the success of the team after his or her own tenure as manager has ended.

The game player-manager, on the other hand, will risk the long-term health of the young prospects by pumping them full of steroids to make them stronger and faster during his or her tenure. The game player-manager will teach the young, fragile-elbowed pitchers to break off curves, screwballs, and split fingers despite the risk of permanent damage to their still developing arms. The game player-manager will do everything possible to win as many games as possible by as big a margin as possible until his or her tenure as manager ends. To a game player-manager, neither the condition of the team nor any individual team member at the end of his or her tenure is of any consequence.

For reasons that may be apparent, most of the stewards I’ve encountered work for family-owned companies. This does not mean that all family-owned businesses are managed by stewards or that all publicly-owned businesses are managed by game players, it simply means that true stewards tend to work for this type of organization where real long-term results are more important than illusory short-term results. Whether family members or hired guns, these decision makers see the organization as a living entity that needs to be guided and nurtured in a way that will allow it to survive and grow over the long-term and generate wealth for the family for generations to come.

Unfortunately, the short-term “managing to the scoreboard” perspective of most twenty-first century business organizations puts a much greater premium on the abilities of the game player than on those of the steward. The long-term health of the organization is sacrificed for the illusion of short-term success. The business’ decision makers have no intention of being around long enough to suffer the long-term effects of their short-term game playing so they don’t care.

The accounting profession has been an unintentional co-conspirator in the quest to stamp out stewardship. After all, accountants are the ones who created “the scoring system” that our game players use to gage their success. They are the ones who have created the rules and regulations that define the incentives used by decision makers to guide their actions. They are also the ones who promote the belief that a one-dimensional, GAAP-based view of the world through a rearview mirror gives decision makers and investors a valid window into an organization’s past and future economic success.

Game players do not need to know or understand the nuances of their business – they just need to know how the game will be scored and manipulate affairs in a way that will give them a high score. Stewards need to know “the truth” about every facet of their business including its internal operations, its markets, its investment requirements, its customers, its suppliers, and its competitors. To know “the truth,” stewards need decision-support information that is of much greater quality than the inadequate and inaccurate half-truths provided by GAAP-based financial accounting.

The Profitability Analytics Framework provides a roadmap for developing the comprehensive package of economically accurate and relevant decision support information required by those decision makers who view themselves as stewards and whose goal is to guide their organizations toward an economically successful and sustainable future.