To be clear, I’m not saying financial incentives lack impact. Indeed, the evidence from economics makes clear: People do respond to incentives (even if they are not the primary source of motivation for the best people). To ignore the influence of incentives is to ignore human nature. And that leads me to a key point: The wrong incentives are not merely benign; they can be outright dangerous. If you’re trying to build a great company guided by a deeply held set of values, you simply cannot afford to have incentives that reinforce behavior incompatible with your core values, or worse, that reinforce the behavior of the wrong people and drive away the right people. Indeed, the wrong incentive system can encourage people to do the wrong things and perhaps even throw a company into crisis.

And because competencies are unmeasurable, it is impossible to prove or disprove the assertion that everyone who excels in a particular job possesses a particular set of competencies. It is equally impossible to show that people who acquired the competencies they lacked outperformed those who did not—that, in other words, well-rounded people are better. These two statements together are the foundation for most of what companies do to develop the talents of their people, yet each of them is unfalsifiable—you will find no academic papers in any peer-reviewed journal proving the necessity of possessing certain competencies, and no proof that acquiring the ones you lack nets you any increase in performance. Both of these assertions, despite the good intentions that created them, are conjured from thin air—and we can never know if they are correct.

The strong instinct of most corporate leaders, faced with the teeming diversity not just of gender, race, and age but of thought, drive, and relationship inside their organizations, is to look for some way to exert control—to rein it all in, to impose conformity on the chaos, and thence to be able to understand what’s going on, and to shape what will happen next. And so companies have spent, and continue to spend, large quantities of time and money trying to work around each person’s uniqueness—and this is where these models bubble up from.

As he [Ken Iverson] explained in his book, Plain Talk: Lessons from a Business Maverick,

Most of today’s corporations were conceived as command-and-control organizations. The founders of integrated steel mills, for example, clearly assumed that the “genius” of the organization resided almost completely in management … In contrast, we built Nucor under the assumption that most of the “genius” in our organization would be found among the people doing the work. 2 3 From the outset, we shaped our business to let employees show management the way to goals that once seemed unreachable.

I was also told that a brand-new CEO shouldn’t be trying to make huge acquisitions. I was “crazy,” as one of our investment bankers put it, because the numbers would never work out and this was an impossible “sale” to the street.

The banker had a point. It’s true that on paper the deal didn’t make obvious sense. But I felt certain that this level of ingenuity was worth more than any of us understood or could calculate at the time. It’s perhaps not the most responsible advice in a book like this to say that leaders should just go out there and trust their gut, because it might be interpreted as endorsing impulsivity over thoughtfulness, gambling rather than careful study. As with everything, the key is awareness, taking it all in and weighing every factor—your own motivations, what the people you trust are saying, what careful study and analysis tell you, and then what analysis can’t tell you. You carefully consider all of these factors, understanding that no two circumstances are alike, and then, if you’re in charge, it still ultimately comes down to instinct. Is this right or isn’t it? Nothing is a sure thing, but you need at the very least to be willing to take big risks. You can’t have big wins without them.