How we got here and why leadership is an economics problem

Great Is Good Over Time

Aaron and Spencer explore LTC (R) Josh Richardson's experiences and leadership lessons within the Leadership Economics framework, from the pace of trust to knowing when to stay the course or pivot, and why great is just good over time. Episode three of Leadership Economics, and our first guest. Retired Army Lieutenant Colonel Josh Richardson is a West Point graduate, a Ranger, and a 75th Ranger Regiment veteran who now directs the General Wayne A. Downing Scholarship Program and helps build cultures of safety in American plants and factories with DEKRA. He joins Aaron and Spencer to put the playbook to work on a real career, from pickup basketball as a market to the pace of trust, the explore-versus-exploit problem of when to stay the course or pivot, and his closing philosophy that great is just good over time. What we cover * Pickup basketball as a market: coordination, reading people, and being the role player who makes the team better * The pace of trust: why trust between strangers cannot be rushed, and why it is built in drips and lost in buckets * Trust and lived experience: the Antonio story, and why "trust the system" is a harder hurdle for some than for others * West Point as a pressure cooker: preparation as the muscle to keep going, and why time and experience make the leader * Explore versus exploit: when to stay the course and when to pivot, a problem with no clean mathematical answer, and the place of free will * Rules of the game: why leaders should expect people to test the rules, Douglas North, and the 1982 Ewing goaltending call * Tactical patience at scale: why large organizations struggle to mentor person to person, and the tension between moving fast and pacing yourself * A different lens on leadership: building a culture of safety so everyone goes home, and why great is good over time Mentioned * Jonathan Haidt, The Coddling of the American Mind * Douglas North, on institutions and the rules of the game * Kevin Plank (Under Armour), "trust is built in drips and lost in buckets" * The 1982 NCAA championship, Patrick Ewing's goaltending and Michael Jordan's game-winner * The General Wayne A. Downing Scholarship Program * DEKRA Strategic Consulting Featured guest: * Josh Richardson — Josh retired in 2023 after 23 years of Army service including assignments leading units in the 75th Ranger Regiment, 82nd Airborne Division, and NATO Allied Rapid Reaction Corps based out of Innsworth, England. He currently divides his time between two ventures: he is a Principal Consultant with DEKRA Strategic Consulting where he develops leaders to drive success through a culture of safety excellence; he also serves as the Director (Operations) for the General Wayne A. Downing Scholarship Program where he deploys a non-profit investment to build leaders to serve at the highest level of U.S. national security and defense. (DEKRA Organizational Safety and Reliability [https://www.dekra.us/en/organizational-safety-reliability/overview/], General Wayne A. Downing Scholarship Program [https://ctc.westpoint.edu/education/downing-scholars-program/], Madison Policy Forum [https://madisonpolicy.org/], Combating Terrorism Center at West Point [https://ctc.westpoint.edu/], CTC Sentinel [https://ctc.westpoint.edu/ctc-sentinel/]) Subscribe to the newsletter — one short essay every other Tuesday: leadershipeconomics.com [https://leadershipeconomics.com/]

The 6 Principles of the Economic Leader

Aaron and Spencer turn the AIME framework into a working playbook, walking through the six economic principles every leader actually uses: opportunity cost, marginal thinking, incentives, trade and trust, information, and command and control. Episode two of Leadership Economics. Aaron and Spencer build on the AIME framework from the pilot and lay out the six economic principles that turn it into a working playbook — the tools every leader actually reaches for. The episode walks through each principle with examples ranging from the sunk-cost trap of a deteriorating boat to a randomized Army recruitment experiment that saved tens of millions of dollars. What we cover * A quick AIME recap (Allocation, Information, Motivation, Execution) and why the framework needs a playbook of working principles underneath * Principle 1: trade-offs and opportunity cost — every choice closes other doors * Principle 2: marginal analysis — sunk costs are sunk; the next dollar is the only one that matters * Principle 3: incentives matter, and they go far beyond money — culture, identity, and meaning all signal what people pursue * Principle 4: trade is a win-win, and it runs on trust — markets and relationships work the same way * Principle 5: information clears the market — read what people are doing, build structures that surface honest signals, and design real experiments * Principle 6: command and control — the centralized-vs-decentralized trade-off and the principal-agent problem in mission command Mentioned * Ray Dalio, Principles — radical honesty as a cultural mechanism for surfacing bad news * Black Hearts and the West Point MX400 leadership curriculum — mission command, principal-agent failure, decentralization * Carl von Clausewitz — the fog of war as a metaphor for information under uncertainty * Adam Smith — the invisible hand and coordination through self-interest Subscribe to the newsletter — one short essay every other Tuesday: leadershipeconomics.com [https://leadershipeconomics.com/]

How we got here and why leadership is an economics problem

In the pilot, Aaron and Spencer argue that great leaders are quietly good economists, and introduce AIME (Allocation, Information, Motivation, Execution) as the four focal points of a leader's job. The pilot episode of Leadership Economics. Aaron and Spencer trace how the framework took shape. Spencer brings the operational side, a career flying assault helicopters and teaching at West Point. Aaron brings the academic side, an economics dissertation on incentives. Together they lay out the case for treating leadership as an economics problem and introduce the AIME framework (Allocation, Information, Motivation, Execution) as the four focal points of a leader's job. Every future episode will return to one or more of those pillars. What we cover * Why the leadership shelf is full of books but short on a definition * Why first principles thinking, the way Newton built physics, beats pattern-matching from observed greats * Spencer's path from enlisted combat engineer to special operations aviation to the West Point Economics Department * Aaron's dissertation on teacher performance incentives, and the puzzle of why big financial incentives so rarely work * The Joint Allocation Meeting (JAM) in Afghanistan, a single decision that touched all four AIME functions at once * A first look at AIME: Allocation, Information, Motivation, Execution Mentioned * Adam Smith and David Hume, the intellectual lineage of treating human behavior with rigor * The Hero with a Thousand Faces (Joseph Campbell), Aaron's closing reference to the "coordinated soul" Subscribe to the newsletter — one short essay every other Tuesday: leadershipeconomics.com [https://leadershipeconomics.com/]