The Law of the Lid:

Leadership Ability Determines a Person’s Level of Effectiveness

The Law of the Lid helps others understand the value of leadership.

The lower an individuals ability to lead, the lower the lid on his potential.
The higher an individuals ability to lead, the higher the lid on his potential.

The McDonald Brothers

In 1930, Dick and Maurice McDonald move from New Hampshire to California in search of the American dream. Seven years later they end up opening a drive in restaurant in San Bernardino and see some serious success.

They see that times are changing, and in 1948 they streamlined the menu, and created an assembly line style kitchen they dubbed the Speedy Service System. By the mid-1950’s they are wealthy business owners.

They begin getting 300+ requests per month from other restauranteurs want to learn their systems. They decide to franchise the McDonald’s restaurant…and It was a dismal failure.

The brothers we’re great thinkers and managers, but they were not leaders.

“At the height of their success, Dick and Maurice found themselves smack-dab against the Law of the Lid.”

Partnering with a Leader

In 1954 the McDonald brothers partnered up a man named Ray Kroc, who ran his own company making milkshake machines.

Kroc strikes a deal with the McDonald brothers and forms McDonald’s Systems, Inc. (Later called McDonald’s Corporation).

Kroc bought the rights to McDonald’s and opened his own franchise. He used that restaurant to sell other franchises, and he began to recruit and hire the sharpest people that he could find the build McDonald’s into a nationwide entity.

In 1961, for the sum of $2.7 million, Kroc buys out the exclusive rights to McDonald’s from the brothers, and proceeded to grow it into a global entity.

In the years that the brothers attempted to franchise the restaurant, they sold the concept just fifteen times, and only ten of those buyers opened restaurants.

In four years after buying out the McDonald brothers, Ray Kroc had opened 100 restaurants. Four years after that, had opened a total of 500 McDonald’s.

Success Without Leadership

On the left, you have a visual representation of someone that is dedicated to success, but not caring about, or thinking about leadership (potentially the McDonald brothers). Notice how low the level of effectiveness is!

In order to get to a 10, you would essentially have to kill yourself due to the lack of effectiveness.

Of the right, you have a visual representation of someone who is equally dedicated to success, but  is a seven on leadership ability. This alone makes them 600% more effective!

This is because leadership has a multiplying effect.

To Change the Direction of the Organization, Change the Leader

Leadership ability is always the lid on personal and organizational effectiveness. If a person’s leadership ability is high, then the organization’s lid is high. But if it’s not, then the organization is limited.

That’s why, in times of trouble, organizations look for new leadership.

Getting rid of the leader isn’t the only way to improve the organization. Just as there is a lid, there is also a way to raise it. That is the subject of another Law of Leadership however (The Law of Process).

Notable Law of the Lid Quotes:

“At the height of their success, Dick and Maurice McDonald found themselves smack-dab against the Law of the Lid.”

“The higher you want to climb, the more you need leadership.”

“The greater the impact you want to make, the greater your influence needs to be.”

“Personal and organizational effectiveness is proportionate to the strength of leadership.”

Applying the Law of the Lid to Your Life

-List out your major goals, then determine which ones require the participation or cooperation from other people. For those goals, leadership ability will greatly impact your results

-Ask others around you to rate your leadership ability. Speak with your boss, your spouse, two peers at work, and three subordinates about your leadership ability. Ask them to rate you on a scale of 1-10 in each of the following areas:

• People Skills
• Planning and strategic thinking
• Vision
• Results

Average together your scores and find two important things

1. Your area of strength – This will be your “Strength Zone” and the area that you get most of your effectiveness from. Live here!
2. Area(s) of weakness – This will be an area that you naturally struggle and will need to grow in, and more importantly recruit the assistance of others in.

Next Up…The Law of Influence