Don't Be Sucked In By Player-Coach Leadership

Episode #403 Don't Be Sucked In By Player-Coach Leadership

THE TECH SECTOR CAN’T RESIST A FAD

The tech sector loves a management fad, and over the years they’ve tried them all. But the unquestioning adoption (and eventual discarding) of these wondrous new management trends doesn’t seem to discourage them from trying the next one that comes along.

The latest trend is the player-coach model; the idea that managers should roll up their sleeves, write code alongside their teams, and justify their existence through individual contribution rather than leadership.

It’s now official policy in Coinbase that there would be no such thing as a “pure manager”, despite the fact that the business is 5,000 people strong and has five layers of hierarchy below the CEO.

Unsurprisingly, this comes with the news that 700 managers are being laid off.

The thing that fascinates me is that the argument isn’t entirely wrong. Bloated bureaucratic layers are a genuine problem, and leaders who add no value deserve to be cut.

But there’s a world of difference between pruning dead wood and setting the forest on fire. One is surgical, the other reeks of panic.

In this newsletter, I pull this apart from a few different angles. I start by looking at the fundamental misconceptions that drive fads like player-coach leadership; I give you a view from an industry insider; and I leave you with a practical list of the five things that you should be thinking about in your own business, before you get sucked into the next manager-free fad.

ARE MANAGERS REALLY EXTINCT?

When I read the US business media every day, I look for trends in reporting. And when it comes to the tech sector, the hits just keep on coming.

Business Insider got my attention with two articles: The Most Layoff-Prone Jobs, and my favourite, Managers Are Going Extinct. Both of these reference a recent move to the player-coach model.

Coinbase chief executive, Brian Armstrong, announced that the crypto firm would cut 14% of its staff. That’s roughly 700 employees. And, of course, he singled out managers for special attention.

Armstrong’s all-staff missive was taken directly from the standard tech layoff playbook. It cites the advances in productivity from AI, the need to adapt to unpredictable and volatile markets, and the quest for greater agility.

Armstrong was unambiguous in his views on the value of management roles. There would be no such thing as a “pure manager” in Coinbase going forward.

He said, “Every leader in Coinbase must also be a strong and active individual contributor“, and he described the new breed of managers as player-coaches, delivering more value by getting their hands dirty alongside their teams.

This is the classic misunderstanding about what it means to lead from the front (but more on this shortly).

This is just one example of many. In the last 12 months, major layoffs have been imposed at Meta, Microsoft, Intel, Google, Spotify… the list goes on.

And there’s plenty of data around now, not just on the number of manager layoffs, but also the reduction in job ads for management positions.

I must admit, I was somewhat heartened to see a rebuttal in Fortune Magazine, with its valiant rearguard action in defense of leaders. It was titled Silicon Valley’s Player-Coach Fantasy Misses the Point of Good Managers. Hooray.

This article posited that you shouldn’t criticise what you don’t understand. There’s a huge difference between building great leadership capability that enables teams to deliver turbocharged performance and just having layers of bureaucracy.

Leaders who know how to deliver performance and are driven by a relentless passion for improvement create a multiplier effect that’s impossible to achieve organically.

But bureaucratic leaders, which many organisations promote and nurture, just slow things down and create unnecessary barriers for their teams.

If your organisation is full of bureaucratic layers, then I would absolutely support radical change; but not simply by getting rid of the layers completely. Instead, I’d probably try to work out how to build my leadership capability so that I could uplift company performance.

Without good leadership, objectives are unclear, accountabilities are vague, and outcomes are much more dependent on luck than I would ever be comfortable with.

THE PRACTICAL EFFECT OF PLAYER-COACHES

Once you get into the detail, you’ll find the headline is a little bit sensational. For a 5,000-person company, Armstrong said there would be no more than five layers below him.

Well, fair enough: five layers isn’t ridiculous, but it does make me wonder how much coding Armstrong is doing himself. At some point, leaders at higher levels have to focus on different things.

For a CEO, of course, focusing on the future is critical. The perpetuation of the business and the maximisation of resources are fundamental to a CEO role. And there’s no way you can run a 5,000-person company without leaders at some level focusing on capital efficiency and financial performance.

But it does strike me that a lot of tech CEOs seem to have common characteristics:

• They’re incredibly entrepreneurial and risk tolerant;
• Founders who’ve succeeded due to their own individual brilliance, also seem to have a blind spot, because they’ve never seen the evidence of what great leadership can do;
• They’re very hands-on themselves; and
• As their success has come from their business acumen and smarts, they never focused on becoming great leaders.

They don’t value leadership perhaps as much as they should, because they’ve never experienced the night-and-day difference that great leadership can make to a company.

Is the tech sector actually different though?

Let’s start with the massive overvaluation of tech stocks. Tech companies haven’t had to be efficient because investors are betting on a hockey stick of unicorn proportions.

There is so much capital washing through these businesses that short-term revenues and profits are viewed differently than they are in more mature, less volatile industries.

AI DEVELOPERS DISRUPT… THEMSELVES

Then there’s the fact that the very first industry targeted for disruption by AI was the tech industry itself.

The obvious use case for AI developers to work on was… coding. They know how coding works, so they had both the technical expertise and the domain knowledge to create an AI agent that could code. But this isn’t necessarily the case for other industries and other use cases.

For example, those same AI developers have no clue about what a lawyer does in her day job, so they’d need expertise from that field to be able to code and train the AI on legal work.

You could say the same thing about marketing, asset management and risk and operations; basically anything that’s not coding. So we can expect the tech industry to disrupt itself first and foremost.

Given Coinbase’s six-layer business (CEO plus 5 layers), at some point in the hierarchy, you’re going to be creating pure managers. Not at the frontline, of course, and maybe not even into the middle… but at the top few levels, anyone who’s undertaking technical work would be, in my book, downright dangerous.

If you have 1,000 people under you, it’s almost impossible to be a great leader and a great technician. But at the frontline, there’s always a need to dip down into individual contributor work from time to time. The question is, at what point and at what level does this become counterproductive.

AN INDUSTRY INSIDER’S THOUGHTS

Things have changed a lot since my early career in IT. I was working as a software developer in the finance sector in Sydney. The huge mainframe computers of the 1980s would struggle to keep up with an iPhone 17, in both processing speed and storage capacity.

So, being a little out of touch these days, I turned to one of our No Bullsh!t Leaders with up-to-date insights in the tech sector.

Alek Lipski has over 20 years’ experience in tech. He’s VP of engineering for a US-based company, but he’s based in Poland. So not only was Alek able to give me the tech sector overlay from a No Bullsh!t Leader’s perspective, but also some of the nuances between the US and Europe.

He made five insightful observations on the player-coach model, which I’ve adapted slightly for this newsletter.

1. The generalist is showing the way.

After a recent downsizing in his business, it wasn’t the deep specialists who thrived; it was the generalists who could code, and use AI, and talk to a client; and switch between contexts without falling apart. That combination of skills are still quite rare, and should be highly valued.

2. The player-coach idea sounds great… until someone has to make a hard call.

Nobody writes about what happens when an individual’s performance slips. A player-coach whose head’s down building, is often the last person to notice under performance… the last person to hold their teammates to a higher standard… and the last person to make a hard decision. This accountability gap is real.

3. Good managers are worth it.

If you have a manager who can make everyone on a team of 5, say, 10% better, this delivers a serious uplift in output. But if a manager has, say, 50 people, it’s almost impossible to identify and address underperformance until it’s already taken root. No matter what you call them (player-coaches, org leads, etc) the effect is the same: diffused accountability where the work is being done.

4. AI enables leaders, it doesn’t replace them.

With AI, you can have almost instant visibility of performance data, and you can easily differentiate between individuals. This shifts the manager’s role from collecting evidence to acting on that evidence.

Understanding the value behind the data, being able to communicate with the team, keeping people on track, maintaining the standard, and motivating each individual is a set of skills that AI won’t replace anytime soon.

The managers who are going to thrive are the ones who were always good at the human side but were buried in status updates. Now they’re going to be freed up to multiply value.

5. You can’t just copy a trend and hope it’s going to work.

When Spotify introduced the tribe model, it was widely mimicked in the tech industry… and beyond. Since then, the companies who adopted it have quietly dropped it. It wasn’t the structure itself that failed, but the assumption that you can copy a structure without replicating the culture that it was built on.

We tend to follow trends without fully understanding how to adapt them to our own specific context.

Alek’s final word? The jury is out on whether this so-called revolutionary org model is going to be adopted, or whether it will hit the graveyard after the first reality check.

I suspect that reality check is not too far away.

5 KEY QUESTIONS TO CONSIDER

If you don’t believe in the intrinsic value of leadership, the player-coach model sounds OK. But if you know how powerful leadership can be for unlocking individual talent and driving team performance, you’ll probably want to avoid the fads that the tech industry is so famous for.

Does your company value the leaders at each level, as a critical link between business strategy and execution? Or does it see its managers as little more than administrative paper shufflers?

Here are five questions you can ask yourself before you decide on any major changes to who does what in your business:

1. Does every layer in your structure have a unique purpose?

In defense of de-layering, really good leaders understand how important it is to maintain efficiency and performance in their org structure.

Every level must have a unique purpose… it must have a unique set of deliverables… and it must focus on a unique time horizon. If those three things aren’t clearly different between layers, then you probably have too many layers.

2. How big is the span of control at each layer?

If you’re confident you have the right number of layers, the bigger consideration is span of control (which is just a fancy name for how many direct reports you have). I took this issue on a few weeks ago in Ep.396: How Many Direct Reports Is Too Many?

As the theory goes, a leader should ideally have between 6 and 12 direct reports. And in my book, I think there should be fewer direct reports at higher levels.

As the work becomes more complex, you need to allocate more time to each direct report to ensure the best outcomes. Your leadership becomes less directive and more thoughtful.

Leaders who drive performance spend a lot of time with their direct reports so it’s important that you have the bandwidth to do this for each individual.

3. Do you have clear percentages set for technical work?

It might be entirely reasonable to expect a frontline supervisor to do some hands-on work, but you wouldn’t expect the same of a CEO, would you?

So, what happens to the leaders in the layers in between?

If you decide that it’s appropriate for a manager to still do some hands-on work, be clear about how much. For example, “Frontline leaders should allocate 40% of their time to technical tasks and 60% to leadership work.”

Otherwise, when they’re faced with a choice of doing either technical work or leadership work, they’re going to opt to be individual contributors. Why? Because that’s the easiest path.

Many professions still require people at relatively senior levels to keep their technical skills current. Law, consulting, and education come to mind. If you’re in a situation where you think your senior people are more valuable for their technical skills, then you likely have a capability problem… and all you’ll ever be able to expect is billable hours.

4. Do you understand what it means to lead from the front?

In the player-coach model, leading from the front means rolling your sleeves up and getting your hands dirty; doing what everyone else in your team does but only better.

In my book, this is just dipping down. Leading from the front is about behaviours, values, and energy:

• Having a single-minded focus on value creation;
• Eliminating activity for its own sake;
• Maintaining an uncompromisingly high standard of performance;
• Not shirking responsibility or making excuses;
• Putting company first, team second, and self-third.

Leading from the front is not about doing someone else’s job for them; it’s about building their capability so that you don’t have to.

5. Is it clear to your leaders what you expect of them?

If you expect managers to be paper pushers with no value-add, and no performance imperative, then you don’t need a lot of them. In fact, if that’s the case, maybe you should just hire an EA with a broad mandate to handle the administrative burden.

But if you want leaders who have both the skill and the will to lead, well, that takes time and energy.

That kind of leadership starts at the top and filters down through the business. If you signal to your team that technical skills matter above all else, and rob from their leadership bandwidth to do it, you’ll get what you focus on.

Once your leaders understand the lay of the land, they’ll do what they think you want them to do. And if that’s producing more widgets, well, they’ll produce more widgets. But this comes at the expense of their leadership work.

And if you ever question their leadership performance, they’ll have a perfect excuse to offer, “The dog ate my homework boss, but you’re the one who told me to feed it to him.”

WEAK CEOs BREED WEAK LEADERS

In summary, a lot of people look to the tech sector to see emerging trends, because those companies appear to perform so well. The industry’s fairly unique, though, and it’s prone to overvaluation and bubbles.

There are also a massive number of failures that don’t get publicised.

The fierce competition for talent and capital means that trends sweep through the industry like a tsunami. With such a focus on technical skills, it’s little wonder that they embrace the fads that emerge from the industry’s top-tier performers.

The only way I can see the player-coach model increasing value or improving performance is if the leadership is already weak.

And the people at the top probably can’t even see the irony: if leadership is weak, that weakness started in the corner office.