Tobias Lütke

Hello to every unicorn in the galaxy.

I meant to share insights from Shopify’s CMO but then learned that he was fired a few years ago. 😀

Instead, I dug into the brain of Tobias Lütke, Shopify’s CEO.

(click the link and follow him on Twitter, he’s good)

Anyway.

Shopify’s mission is noble: to make entrepreneurship a viable path for millions of people.

Today we’re going to examine 2 contrarian ideas from interviews with Tobi that I think you’ll find provocative and valuable.

Here they are:

1. Micromanagement is good.

2. All companies are terrible.

Let’s dive in…

Or click here to watch the full YouTube interview.

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Micromanagement Isn’t Always Bad

If you’ve ever been micromanaged by an extremely competent person, you can both hate it and acknowledge that it’s actually beneficial for both you and the company.

In my own experience, micromanagement can work to establish the caliber of execution that’s expected and sets the standard for everyone.

It gets people moving more quickly and applying their best effort in a crunch.

However, it can be quite unpleasant to experience.

If you’re being micromanaged it’s probably because you either don’t have the skills or trust of your manager to produce the desired result.

The real trick is to know whether it’s skills or trust.

It can be hard to admit that you don’t have the skills.

But that’s how you grow.

Here are the key concepts that explain Tobias Lütke's beliefs about micromanagement in more detail:

Micromanagement is necessary when the stakes are high.

Lütke says that if a team is "driving the car" towards a "cliff," a leader must "micromanage the steering wheel" to prevent a catastrophe.

Micromanagement is acceptable for onboarding and building trust.

When a new executive joins, Lütke believes the leader should work closely with them initially before granting more autonomy. Trust must be actively built.

Leaders can never fully abdicate responsibility.

Even after delegating, leaders still share responsibility for the outcomes. Therefore, they must stay involved to an appropriate degree.

The goal is to "share responsibility" thoughtfully.

Lütke wants leaders to find the right balance - they should empower teams and "share responsibility" but not to the point of zero involvement.

Skilled micromanagement enables a unified vision.

When done well, micromanagement allows a company to operate like "a book written by a single author" with cohesive logic and consistent patterns.

Mechanisms like design systems balance micromanagement with autonomy.

By codifying key standards and decision frameworks, leaders can scale quality without having to micromanage every detail.

Micromanagement does not mean disempowerment.

Lütke still wants executives to take ownership and apply their expertise. The goal is to "make the best choices" together based on everyone's input.

Companies Are Generally Inefficient

I wrote a post a while back about why smaller teams often win.

I’ve experienced the inefficiencies that ooze into business as you grow.

Responsibilities are shared.

Ownership is diminished.

Ambiguity becomes the norm.

Let’s see why Shopify’s CEO thinks companies are generally inefficient:

Companies waste time on low-value activities.

Lütke observes that in most companies, "there's so many memos that no one reads, so many meetings that should be an email."

Lack of clear priorities leads to inefficiency.

Without a strong sense of what matters most, companies waste effort on "local maxima optimizations" rather than focusing on global impact.

Insufficient customer focus breeds inefficiency.

When companies lose touch with customer needs, they invest in the wrong areas. The "distance to frontline becoming bigger has probably killed more companies" than anything else.

Incentive misalignment causes inefficiency.

Problems arise when employees optimize for "different incentive hierarchy than the team." What's good for individuals is not always good for the overall company.

Politics, bureaucracy, and process become proxies for inefficiency.

These are "proxy words" that really mean "this sucks" and indicate underlying inefficiencies that need to be addressed.

Employees closest to the work should own efficiency improvements.

Those on the frontlines are best equipped to "identify true problems" and "create processes or systems with subsystems that actually are effortless." Top-down solutions tend to fail.

Efficiency requires constant discipline.

Lütke says any leader who believes their company has achieved perfect efficiency is deluded. Continuous improvement is an endless journey that requires relentless focus.

For the full interview where I extracted these insights, see below:

Takeaways You Can Use

Here are some good questions to reflect and then act on:

Micromanagement

1. Are there high-stakes decisions or projects where your team might be headed towards a "cliff" if you don't intervene?

2. When onboarding new leaders, do you spend time upfront to build trust and alignment before granting full autonomy?

3. In areas where you've delegated responsibility, are you monitoring key decisions and outcomes?

4. Have you established clear principles, guidelines, and systems that help your team to act autonomously while keeping a cohesive, unified direction?

5. What tools and processes could you put in place to ensure quality and consistency?

Inefficiency

1. Are you spending significant time on low-value activities, meetings, or communications that don't contribute to your core priorities and customer needs?

2. Do employees have clarity on your top company priorities, and are they empowered to make trade-offs to focus their efforts accordingly?

3. Are you staying closely connected to your customers and allowing their input to guide your decisions and investments?

4. Have you aligned incentives and metrics across the organization to ensure that individual success maps to collective success?

5. Are you actively looking for inefficiencies and bottlenecks, and letting employees solve them?

That’s it for today.

I hope this helps you in your growth journey.

-Brian