Leaders manage complex work systems. Does it follow that leadership frameworks also need to be complex? Simple conceptual frameworks can sometimes inform important and complex systems. Think of Adam Smith's "invisible hand" or Benjamin Graham's concept of value as a guide for stock selection. Think of Maslow's Need Hierarchy. This article reviews the dynamic tension between two simple concepts - Asset Enhancement versus Liabilities Reduction.

In the early 1970's, Arthur F F Snyder, former Vice Chairman of Boston's US Trust, became a legend because he was willing to lend money to a new technology company called Prime Computer Company. Other bankers saw risk at Prime Computer, while Snyder saw an opportunity. When asked his philosophy behind the risky venture that scared other bankers away, Snyder took out a sheet of paper and wrote:

Snyder said these two words were more than the fundamental building blocks of the Basic Accounting Equation. It also was a statement about human nature. What he meant was that some people gravitate towards asset enhancement as a way of providing value to organizations. Such people often see the world as one with full of opportunities. Their weakness is that they are prone to fall in love with their overly optimistic assessments. In terms of the Big Five Personality Dimensions, such people would be high on Openness and Extraversion.

But liabilities reduction is also a critical value. People who gravitate towards this side tend to see the world as full of threats. Their weakness is that they are tone deaf to value, lack vision, and place too much weight on threat. Using the Big Five, such people are low on Openness, high on Stability, and low on Extraversion.

Effective Executive Magazine, Asset Enhancement, Complex Systems, Liabilities Reduction, Prime Computer Company, Basic Accounting Equation, Optimistic Assessments, Corporate Strategy, Organizational Boundaries, Ccustomer Retention, American Companies.