#377: Past performance is no guarantee of future results.

A leadership lesson reinforced from the Presidential debate.

I’ve been a Motley Fool reader, subscriber, and investor since the days of their printed newsletter. Before there were blogs emailed to our inboxes and even the Internet, this financial newsletter has given me advice on and off for 31 years. In each article, blog, or podcast, you will read or hear this warning:

I’ll come back to this at the end of this article.

I’ve waited a bit since the presidential debate between President Biden and former President Trump. I wanted to see what reactions were around the country and reflect on the leadership lessons that could come from the event. Regardless of what side of the aisle you sit on, or if you are like me, completely independent, we witnessed an impactful event. Many of the segments from the debate will be replayed in the future, as often as Reagan’s joke about not exploiting his opponent’s youth and inexperience.

For today's article, I want to focus on one lesson I learned the most about leadership.

The Law of the Inner Circle

John C. Maxwell writes about the Law of the Inner Circle in his 21 Irrefutable Laws. John writes mainly about how you can grow into a leader with a strong inner circle.

“A leader's potential is determined by those closest to him.”

To select those in your inner circle, you must trust their advice, and they should have various skills. This makes sense and will help us make better and more informed decisions.

One of the key things about this group is that they should not benefit from your success. There will be many people riding your coattails as you rocket to prominence. This special group must be independent of that. They need to provide objective advice that they do not benefit from.

Why am I bringing this up after the debate? Did the inner circle fail or did the President fail to have an Inner Circle?

Inner Circle Failure

Are the president's closest advisors married to his success? Are they objective and independent, with no self-interest? If they had the best interest of Mr. Biden and the country, they would have stressed months ago that he not seek re-election.

The world has been observing the President since he was elected three and a half years ago. They can see with their own eyes that age has gotten the better of him. Over a year ago, nearly 70% of the country stated he was too old to run. Why, then, were his most trustworthy advisors convinced that he would make it?

Is it that he had no Inner Circle at all?

If Mr. Biden hadn’t listened to his advisors and let his ego get the best of him, he would not have implemented this law. James Carville, a political consultant was quoted, “Mr. Biden doesn’t have advisors around him; he has employees.”

Leaders must have people around them that they listen to. No matter what your position in life is, you need to have checks and balances. It is imperative that you select people who will always tell you the truth and that you respect their opinions.

Contingency planning

A leader must have a predetermined strategy in place if they become incapacitated. Your inner circle should help you devise and design a succession plan. There should be a quality control plan in place that checks performance characteristics. In manufacturing, we call them tolerance bands. We aren’t always operating at nominal strength, but what are the steps to contain that problem when operating outside our tolerance band?

In a manufacturing facility, the most powerful position in the plant is not the Plant Manager. It is the Quality Control Manager. The quality control manager can stop the line when parts aren’t being produced within specification. If they see something that is off-quality, they do not need anyone’s permission, they press the red button. Your inner circle must be given the power to stop the line or, like our elderly parents, take away the car's keys.

One of the most important aspects of this select group of individuals is that you ask them to put the company first, just like the quality control manager. What might not be good for the plant today will be the right thing to do for the company in the long run.

Past performance is irrelevant

How does the quote I use at this article's onset fit in? Past performance is no guarantee of future results?

We have been hearing about Mr. Biden’s career and that he has given 50 years of his life to public service. Those are past results, and they do not guarantee that he can continue to deliver in the future. Deserving is not the issue here. No one deserves a leadership role. It must be earned, yes, but tomorrow’s capability is much more important than yesterday’s accomplishments.

Have you lost a step

There will come a time when you aren’t as fast as you once were. It’s that simple. Just because you could run a 7-minute mile ten years ago does not guarantee you could do it again today. Don’t use this as justification to stick around. If you just finished a 10-minute mile, that is your new baseline. You have to ask yourself if that is good enough.

How fast are you today?

Who is watching and monitoring your results?

When you are in the heat of it all, who is that person who can pull you out of the race?