Balancing Understanding and Competence: A Guide for Executive Leadership

01-What is “understanding”?

My understanding of “understanding” refers to:

  1. Having the ability to make value judgments, distinguishing between right and wrong, discerning between significant and insignificant, recognizing long-term and short-term considerations, and distinguishing between capability and luck.
  2. Demonstrating a sense of “public interest,” prioritizing decisions and actions based on the company’s interests.

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Executives with these qualities are adept at looking beyond themselves, which makes it easier for them to have self-awareness, find their own positions, and strike a balance between the company’s interests and their personal interests.

Working with “understanding individuals” may not always be pleasant in the short term, but it can be highly effective in the long run.

02-Is competence the same as understanding?

Some individuals may be very intelligent and highly skilled in their professions but lack understanding.

Others might be exceptionally competent, excelling in entrepreneurial spirit, tactical breakthroughs, and inspiring others. However, highly competent individuals may not necessarily possess understanding.

Some people may consider “understanding” to be a part of competence, which could significantly underestimate the value of understanding. Zeng Guofan once said, “In all great undertakings, knowledge takes precedence, and ability comes second,” emphasizing the importance of knowledge over ability. While he lived in a different era, this principle remains relevant.

In my opinion, it is valuable for executives to separate and consider “understanding” and “competence” as distinct qualities, treating them as equally important. This perspective is meaningful for identifying and hiring executives and for personal development.

In summary, for executives, both “understanding” and “competence” are equally important.

03-Should understanding be emphasized for middle-level managers?

For middle-level managers, it is more appropriate to primarily assess and develop them based on their abilities and results.

Overemphasizing “understanding” at the middle level could have drawbacks. Firstly, it might lead to the phenomenon of promoting individuals who exhibit a remarkable level of “understanding” at a young age but haven’t undergone sufficient training and testing of their capabilities in middle management. Such individuals may possess a superficial kind of “understanding” and may even resort to opportunistic behavior.

Would you trust someone’s “understanding” if they haven’t been tested in tactical breakthroughs? Don’t forget, “The core responsibility of executives is to achieve tactical breakthroughs in the right direction.”

Secondly, excessively emphasizing “understanding” at the middle level can encourage the development of individuals with “sophisticated selfishness.” These individuals tend to prioritize their personal interests over those of the company when balancing the two (they invest more energy in career planning than in getting things done). They are skilled at anticipating the needs of their superiors, excel at self-preservation, and lack simplicity and straightforwardness. When such middle-level managers are promoted to higher executive positions by founders or top executives lacking discernment, they often tend to be obsequious upward and ineffective downward.

Therefore, this article primarily emphasizes the issue of “understanding” in the context of senior executives.

04-What problems can arise from executives who lack understanding?

One of the more obvious issues is that they are prone to problems in terms of direction and goal-setting.

This is relatively easy to understand: if they lack the ability to make value judgments, differentiate between good and bad, distinguish between big and small, and discern between long-term and short-term considerations, how can they have a strong sense of direction?

The second aspect is that their lack of value judgment can lead to poor decision-making in personnel matters.

The third aspect is that executives who lack understanding are more susceptible to common human weaknesses such as emotions, narrow-mindedness, self-centeredness, and arrogance. They may find it difficult to collaborate effectively with other executives and may become entangled in interpersonal politics and disputes.

The fourth aspect is less commonly considered but equally important: executives who lack understanding may struggle to handle the “endings” of relationships, often leaving a mess in their wake.

This fourth aspect is worth discussing in more detail.

05-Executives who understand are adept at handling the “endings” of relationships.

Ending a relationship is often much more difficult than beginning one.

For example, some executives who were instrumental in the company’s early stages may find it challenging to continue making significant contributions in a new phase. What should be done in such cases?

Among these entrepreneurial executives, those who understand are more capable of positioning themselves effectively in the company’s new stage, willing to play supporting roles, and may even gracefully exit when necessary, becoming an external insider (a role that is easier to comprehend).

When dealing with new executives, those who understand are more willing to assist them in their success, provide political support for the changes they lead, and even help them “challenge the old executives.”

Of course, these more understanding entrepreneurial executives have judgments about what kind of new executives can lead the company to the next level. Understanding executives naturally possess sensitivity and discernment when it comes to individuals who prioritize personal interests over the balance between company and personal interests.

For example, some newly hired external executives who “don’t understand” often fail to identify the company’s strengths and immediately criticize its shortcomings. If the company is so terrible, why did you come here? Are you here to contribute or to prove your intelligence? Such externally hired executives often face difficulties.

Handling the endings of relationships is not only applicable to entrepreneurial executives. Executives at any stage will face issues related to stepping down or exiting. Executives who understand do not create chaos when ending relationships, and they do not destroy the value and reputation they have previously built solely for the sake of their own presence.

06-No one can understand everything or consistently understand everything.

For instance, a tech genius who is very knowledgeable in technology and skilled at making judgments related to technology may easily become “uncomprehending” when trying to analyze management and organizational issues using technical logic. Just because you were an academic overachiever and the biggest “official” position you held during your academic years was class representative, and your social circle consisted of a few top students, does that mean you’ll suddenly become a management genius?

It is not only difficult for a person to understand everything, but it is also challenging to consistently understand everything. Everyone will encounter periodic cognitive bottlenecks, and everyone will have moments of confusion.

Precisely because no one can understand everything or consistently understand everything, an executive must cultivate their “ability to be led,” allowing others to help them gain a better understanding.

Even founders or top leaders cannot understand everything. Founders or top leaders also need to find knowledgeable “true executives” to continually enhance their understanding. As the saying goes, even a hero needs help from three companions.

It can be said that a lack of “being led” is also a significant manifestation of “not understanding.”

07-Is it easy to become an “understanding person”?

Clearly, it’s not easy.

Being understanding is a combination of knowledge, abilities, talents, experiences, and enlightenment.

However, understanding can be improved through effort and hard work.

Moreover, the good news is that you don’t need to be exceptionally intelligent to become an understanding person.

How can you become more understanding?

I’m not an expert, but here are a few suggestions to get you started:

  1. Get involved and gain practical experience. Observing and thinking alone won’t make you more understanding.
  2. Don’t just practice; learn to step back, observe, reflect, debrief, and summarize.
  3. Learn to collect feedback. Others often see you more clearly than you see yourself.
  4. Engage in a dialogue with yourself at the level of values and underlying assumptions. Ultimately, it all comes down to “value judgments.”
  5. Seek perspectives from people who have a good understanding of you but are not directly involved (similar to having a “personal board of directors”).
  6. “Understanding” is closely related to simplicity and straightforwardness. People who don’t understand tend to complicate things unnecessarily and make them seem mysterious. Stay simple and straightforward, avoid pretentiousness, and simplicity will encourage understanding.

Many people are more understanding than we are, both in history and in the present. We should learn from these understanding individuals.

Are you an understanding person? How many “understanding people” do you have in your executive team?

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