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Excellence

L E A D E R S H I P

THE MAGAZINE OF LEADERSHIP DEVELOPMENT, MANAGERIAL EFFECTIVENESS, AND ORGANIZATIONAL PRODUCTIVITY

WINTER 2011

Employee
Relations
by Zannie Giraud Voss
and Glenn B. Voss

Smart
Negotiations
(Part Three)
by Robin L. Pinkley

SMU Cox Collins


“Leadership Excellence is an exceptional
way to learn and then apply the best and Executive Education Center
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—WARREN BENNIS, AUTHOR AND
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w w w . L e a d e r E x c e l . c o m
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A Gain- Gain Approach to Profitable
CUS TOM SO LU T I O NS
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April 27 – April 28, 2011 No matter what knowledge or skills you need, we
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Excellence
L E A D E R S H I P

THE MAGAZINE OF LEADERSHIP DEVELOPMENT, MANAGERIAL EFFECTIVENESS, AND ORGANIZATIONAL PRODUCTIVITY


VOL. 28 NO. 1 SMU COX SCHOOL OF BUSINESS EDITION W I N T E R 2 0 11

Lucky Catch

In natural environments, the hunt for food—to sustain life


and limb—often consumes much of the day. In an Alaskan
stream where miners once discovered gold, two hungry
wolves try their luck at fishing for trout. Great leaders may
not strike gold, but they sustain the precious pack.

GARY HAMEL JIM COLLINS SHARON ALLEN ANN RHOADES


Extreme Makeover Enduring Greatness Visible Hands Built on Values
Start your revolution in Get the right leaders Model ethical leadership. .13 Base culture on the
management innovation. . 3 in the right positions. . . . .8 behavior of A players . . .17
ROBIN L. PINKLEY
TOM PETERS RICHARD DAFT ROLAND DEISER
Smart Negotiations
What Matters? Your Inner CEO Increase in efficiency Creative Leadership
What will you remember Take control now of and effectiveness. . . . . . .14 These are prized
and be remembered for?. .4 your inner elephant. . . . . . 9 performing artists . . . . . .18
LANCE BERGER AND
MARCUS BUCKINGHAM TERRY R. BACON DOROTHY BERGER WORLD BUSINESS FORUM
Strong Leadership Power and Influence Talent Management Jim Collins: Great Results. .19
Live and lead from your Influence people to follow You need a winning creed, David Gergen: Role of Leader. .19
unique strengths . . . . . . . 5 your leadership. . . . . . . . 10 strategy, and system. . . . 14 Jack Welch: Achieving and
Sustaining Success. . . . . . .20
SALLY HELGESEN JOSEPH S. NYE, JR. ZANNIE GIRAUD VOSS Carlos Brito: Building a
Contextual Intelligence AND GLENN VOSS Performance Culture. . . . . . .20
Dance of Power Joseph Grenny: Execute
More women are now It engenders more Employee Relations
effective leadership. . . . . .11 on Your Strategy . . . . . . . . .20
taking the lead. . . . . . . . . .6 Find the right mix Al Gore: New Global Deal. . 21
for your culture. . . . . . . .15 A.G. Lafley: Gain Customer-
DONALD SANDEL MUHTAR KENT
Centric Growth. . . . . . . . . . 21
Leading People Women Power PETER BLOCK Renee Mauborgne: Blue
It is not the same as You won’t get where you Enterprising Economy Ocean Srategy. . . . . . . . . . . 22
driving them. . . . . . . . . . . .7 want to go without it. . . 12 Community is key. . . . . .16 James Cameron: Innovation. .22
Volume 28 Issue 1
E . D . I . T . O . R ’ S N . O . T . E Leadership Excellence (ISSN 8756-2308) is
published monthly by Executive Excellence

Leadership Uncertainty Publishing, LLC (dba Leadership Excellence),


1806 North 1120 West, Provo, UT 84604.

Editorial Purpose:
Welcome to the world of VUCA. Our mission is to promote personal and organi-
zational leadership based on constructive values,
sound ethics, and timeless principles.

Basic Annual Rate:


US $99 one year (12 issues)
by Frank Lloyd three quarters of the respondents expect Corporate Bulk Rates (to same address)
these modest increases or no change. Ask about logo and custom editions
and foreign bulk rates.
The national results for CLOs follow those

H AVE YOU HEARD OF VUCA


(Volatile, Uncertain, Com-
SMU found locally among HR leaders and
trainers. Over 98 percent were evenly split
plex, and Ambiguous). I learned on projecting no change or modest increases (less
Article Reprints:
For reprints of 100 or more, please contact the
editorial department at 801-375-4060
or email CustomerService@LeaderExcel.com.
Permission PDF US: $50.
this acronym from the Economist Intelligence than 20 percent) in spending on manage-
Unit. To many economists, VUCA perfectly ment training. This is on top of two years of Internet Address: www.LeaderExcel.com
captures the global economic outlook. How- more than 10 percent decreases. Thus, even Submissions & Correspondence:
ever, VUCA also suggests that no one can con- those who are projecting increased spending All correspondence, articles, letters, and
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fidently predict how the economy will perform in won’t return to pre-recession levels in 2011. Editorial Department, Executive Excellence,
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801-375-4060, or editorial@LeaderExcel.com.
said of the Great Depression in the 1930’s: “I sionals agree on how to focus their limited
don’t know any more about this than an economist!” investment in human capital. Over two-thirds Customer Service/Circulation:
For information on products and
Leaders appear to be as uncertain as of local HR leaders who project increased services call 1-877-250-1983 or
economists in responding to a VUCA world. spending intend to focus it on their high email: CustomerService@LeaderExcel.com.
A national CFO survey conducted by Deloitte potentials. However, they expect to do most Executive Excellence Publishing:
identified strategic ambiguity, changing regula- management development in-house, using Ken Shelton, CEO, Editor-in-Chief
Sean Beck, Circulation Manager
tory requirements, and major change external providers for outside
initiatives as their top job stresses. UPCOMING LEADERSHIP expertise and third-party view- Contributing Editors:
AND MANAGEMENT Chip Bell, Warren Bennis, Dianna Booher,
Performance pressures came in a dis- CERTIFICATE points rather than to achieve Kevin Cashman, Marshall Goldsmith, Howard
tant fourth. While 46 percent of PROGRAMS economies through outsourcing Guttman, Jim Kouzes, Jim Loehr, Tom Peters,
Norm Smallwood
the CFOs reported that they are CERTIFICATE PROGRAM IN
or flexible staffing. Not surpris-
focused on revenue growth in the MANAGEMENT ingly, then, leadership is by far The table of contents art is a detail from
L u c k y C a t c h (image cropped) © Bonnie Marris,
near term, optimism and forecast- Plano Campus the most important content area and is courtesy of the artist and art print pub-
February 9 – April 27, 2011 lisher Greenwich Workshop.
ed operating results were highly followed by topics that reflect
variable. They identified the econo- CERTIFICATE PROGRAM IN the need for focus and efficiency. For additional information on artwork by
LEADERSHIP
my as the one potentially high-impact The four areas where CLOs Bonnie Marris, please contact:
Greenwich Workshop
Dallas Campus
risk area that worries them most. February 8 – April 26, 2011 say spending will have the most 151 Main Street
Saymour, CT 06483
Locally, the annual SMU Cox impact are: leadership and execu- 1-800-243-4246
CEO Sentiment Survey reports that leaders tive development, compliance, business www.greenwichworkshop.com
continued to feel negative impact of the recession skills, and career development, including Full view of table of contents art.
in 2010. In 2010, 44 percent of CEO’s saw industry and job or role specific skills. Of
improvement in the economy, but 34 percent course, many CLO’s expect to invest in tech-
experienced a decline. In the coming year, nology infrastructure, including learning
fewer CEO’s than last year expect the local, and content management systems, content
national or global economies to improve. authoring and virtual classrooms, mobile
The outlook for individual businesses is and portal technologies. The share of learn-
mixed with many expecting both revenues ing budgets devoted to technology is
and costs to increase, squeezing profits. expected to increase from about 19 percent Copyright © 2011 Executive Excellence Publishing.
No part of this publication may be reproduced or
However, this is highly variable with 44 per- in 2010 to only 20 percent in 2011. transmitted without written permission from the
cent of respondents expecting capital expen- In a VUCA world, leaders are rightly cau- publisher. Quotations must be credited.

ditures and wages to remain flat but 34 tious about investing in growth. Prudence
percent expecting them to increase, and 48 dictates that they hoard cash and reduce debt.
percent foresee staffing levels to remain flat However, VUCA demands that management
with 32 percent projecting an increase. development leaders manage their human capital
What are Chief Learning Officers saying investment portfolios to prepare a deep pool of
about their plans for investing in human flexible and adaptive leaders and to develop
capital? One survey conducted in spring capability in business acumen, strategic
2010 indicated that about as many firms thinking, organizational and interpersonal
planned to increase spending on training as skills. Sound investments in these areas will
planned to decrease it. More recently, CLO create the maximum benefit from limited re-
magazine’s Business Intelligence Board sources and enable them to respond to a
found more CLOs expecting an increase in VUCA world and do more with less. LE
budgets than in 2010, but the increases are Frank Lloyd, Ph.D., is Associate Dean of Executive Education at
expected to be small (4 percent), and about SMU Cox School of Business. Visit www.SMU.edu.

2 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
MANAGEMENT INNOVATION early warning system for critical issues.
Later, Vineet opened up a My Problems
section where he solicited advice on
Extreme Makeover the big thorny issues he wrestled with.
3. Service level agreements. When
Eng a g e i n m a n a g e m e n t i n n o v a t i o n . Vineet asked front-liners, “What have
the enabling functions, like HR and
finance, done to help you create value
by Gary Hamel most experts would regard as a quixot- in the value zone?” he was often met
ic—how can you create a company with silence. The solution: a web-based
that feels more like a community than Smart Service Desk where any employee

M ANY OF THE TOOLS


and methods we
use to manage people
a bureaucracy and operates more like
a democracy than a hierarchy?
The world has become too complex
could open a service ticket if they had a
complaint with a staff group. Once
opened, the ticket could only be closed
are ill-suited to the challenges in today’s for the CEO to play the role of vision- by the concerned employee, once their
creative economy. Often, legacy manage- ary-in-chief, argues Veneet. Instead, the issue had been resolved. Staff functions
ment practices reflexively perpetuate CEO must become a management archi- were charged with dealing with open
the past—by over-weighting the views tect—someone who continually asks, tickets within 24 hours, or the ticket
of long-tenured executives, by valuing What are the principles and processes that gets escalated up the line. This system
conformance over creativity, and by turn- can help us surface the best ideas and made staff departments more account-
ing tired nostrums into sacred truths. unleash the talents of everyone who works able to those in the value zone; leveled
We all know there are downsides to here? Today, as never before, the world the playing field for employees, as
management-as-usual, but are there any needs leaders who refuse to be seduced their concerns now get handled quick-
good alternatives? We can dream about by the fatal allure of the familiar. ly and efficiently; and generated data
organizations where employees challenge used to improve internal policies.
their bosses, where honesty trumps defer- S i x M a j o r I n n o va t i o n s 4. Open evaluations. HCLT employ-
ence, and where the pyramid is turned Vineet and his team pursued the ees rate (anonymously) the performance
upside down—like we can dream about path of management innovation one of any manager whose decisions impact
world peace and cold fusion. But that craggy step and jagged handhold at a their work. These ratings are published
doesn’t mean they’re achievable. time, making six key changes: online. This visibility challenges man-
Skepticism is understandable. After agers to be more responsive and to ex-
all, the technology of management varies ercise their authority judiciously. The
little from firm to firm. Hence, it’s easy number and scope of reviews received
to assume that the management status are indicators of managers’ zone of in-
quo is also status optimus—that while fluence. This feedforward process is not
there may be other ways of managing connected to compensation and pro-
and leading, there are no better ways. motion decisions—it is purely devel-
Before accepting this premise, we opmental—but there are few hiding
should remind ourselves that dogma places left for mediocre managers.
often masquerades as truth, and that we 5. MyBlueprint. As the CEO, Vineet
are often comforted by the deception. Many was asked to weigh in on hundreds of
leaders would prefer a lazy ramble 1. Transparent financial data. Vineet unit-level plans each year. Recognizing
along gentle contours of the tried-and- realized it’s hard to feel empowered if the limits to his time and expertise, he
true than a hard scramble up the rocky your manager has data you don’t. So, challenged colleagues to develop an
incline of the untested and unproven. HCLT’s IT team enabled every employee online, peer-based evaluation process.
Vineet Nayar, CEO of HCL Technol- to have a detailed set of financial met- The solution: MyBlueprint. Last year,
ogies since 2005, however, is a scram- rics for their team and all teams. Sudden- 300 managers posted their business
bler—one who has fomented a fervent ly, poorly performing teams had incent- plans or blueprints online. More than
revolution in management practices. ive to improve, and high-performing 8,000 employees reviewed the plans.
I first met Vineet in 2008, when he ones to stay on top. And, employees The result was a torrent of advice and
participated in a conference I’d orga- now had positive proof that the com- counsel, highlighting chances for
nized in California. Half a minute into pany trusted them with strategic infor- cross-unit collaboration and helping
our first conversation, he said: “We tell mation. Need to know became right to know. leaders to learn from interested peers.
our employees, ‘You are more impor- 2. Open and honest feedback. Vineet 6. Employee first councils. The goal
tant than your manager.’ Value gets and his leadership team set up an online here was to help employees connect with
created between the employee and the forum and encouraged employees to ask team members who shared similar inter-
customer, and management’s job is to tough questions and offer honest feed- ests and passions. Supported by a web-
enable innovation at that interface.” back. Nothing was censored; every based platform, this initiative rapidly
Vineet’s fervor was palpable—and post, however virulent, was displayed. spawned communities around cultur-
a little weird. Revolutions don’t usually While some managers bemoaned the al, recreational, and job-related issues.
start with the monarchy. I wondered, fact that the company’s soiled laundry Each Council elected its own leader.
was he backing up his revolutionary was now online, employees lauded the Vineet’s team also launched 32 issue-
rhetoric with action? As I dug deeper, forum as a symbol of HCLT’s commit- specific councils that quickly became a
I discovered that he is. In his illuminat- ment to transparency and as another vital source of new ideas and strategic
ing book Employees First, Customers way to hold top management account- insights. These are then transferred to a
Second, he chronicles a journey that able. The U&I portal also served as an dedicated group to execute (now 20 per-
L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 3
cent of HCLT’s revenue comes from them). LEADERSHIP MEMORIES to avoid compromising your and your
The notion of reverse accountability is team’s character and integrity.
now rooted within HCLT. There’s still • A sense of time honorably spent.
a hierarchy, but its role is diminished. What Matters? • Expressions of simple human kind-
Says Vineet, “At HCLT, we are trying Start making memories. ness and consideration—no matter
to democratize our company.” how harried you may have been.
Vineet Nayar and his team had the • Knowing that your demeanor and
guts to commit HCL to a goal—reverse expression of character always set the
by Tom Peters
accountability—that was both excruciat- tone—especially in difficult situations.
ingly difficult and eminently worthwhile. • Rarely letting your expression of

Ta k e B o l d I n n o vation in Stages
HCLT proves that it is possible to
A T AGE 68, ALTHOUGH I enthusiasm/determination flag—the
try to be forward- rougher the times, the more your ex-
focused, I have a frequent pressed energy, optimism, and humor.
change management DNA— without urge to sum things up. As I look back, I • The earned respect of your peers.
blowing up the existing management find that certain memories stand out. I • A stoic unwillingness to badmouth
system, without having a detailed mas- know my own story—and have talked others—even in private.
ter plan at the outset, and without tak- to many others. When you look back at • An invariant creed: When something
ing inordinate risks. If you’re a would- what really matters—it’s rarely the num- goes amiss, the buck stops with me; when
be management renegade—this means bers. Yes, you must be profitable to sur- something goes right, it was your doing.
that you’ve just run out of excuses. vive. Still, my summing up statement is • A naïve belief that others will rise to
Bold innovation is usually a multi-year, more about the basics of human behavior the occasion if given the opportunity.
multi-staged process—for three reasons: and character than about the angle of • Eschewing trappings of power
1. In established firms, it’s impossi- incline of a market share graph. (strong self-management of tendencies
ble to start from scratch and hazardous What follows then is my attempt to toward arrogance or dismissiveness).
to move too quickly. Innovators rarely identify the memories that matter—or •Intensity, even driven, but not to the
have a clean sheet of paper—and must will matter—for you as a leader: point of being careless of others.
ensure that the business keeps running • People you developed who went on • Willingness to be surprised by ways
while testing new practices. So, the to stellar accomplishments. of doing things that are inconsistent
transformation at HCLT is still a work in • Two or three people you developed with your certain hypotheses.
progress; but, if a $2.5 billion company who created stellar firms of their own. • Humility in the face of others, at
can invert the pyramid and live to tell • The long shots you bet every level, who know more
about it, we must admit: there are alter- on who surprised them- than you about “the way
natives to the management status quo. selves—and your peers. things really are.”
2. Radically-minded management • The people who later • Biting your tongue on a
innovators don’t have the benefit of a say, “You made a difference thousand occasions—and
roadmap. To do a six-sigma rollout, in my life—your belief in really listening—and being
you can buy a manual; but to invert me changed everything.” delighted when you learn
the pyramid, you’ll have to venture off • The sort of/character of something new.
the well-trod path of management people you hired (and bad • Unalloyed pleasure in be-
orthodoxy, tramp through unexplored apples you chucked out ing informed of the fallacious-
terrain, and occasionally get stuck in despite some stellar traits.) ness of your beliefs by a per-
the mud—it often takes several itera- • A few projects you dogged- son 15 years your junior.
tions before a bold, new policy initia- ly pursued that still make you smile and • Selflessness—a reputation as a per-
tive produces the hoped-for results. changed the way things are done inside son who helps out despite personal cost.
3. We’re talking about people, not or outside the company or industry. • Having been as thoughtful and
widgets. On any given day, some of us • The supercharged camaraderie of a respectful, or more so, toward enemies
will be selfish, grumpy, egotistical, or great team aiming to change the world. as toward friends and supporters.
mendacious—and a few people are • Belly laughs at some of the stupid- • Always being first of service to your
most of these things most of the time. insane things you and your mates tried. internal and external constituents (em-
Yes, there’ll always be jerks, but in an • A consistent record of having ployees, customers, vendors, community.)
organization committed to becoming invariably said, “Go for it!” • Treating servant leadership as holy
more transparent and less hierarchical, • Not intervening in the face of loss— writ (and preaching SL to others).
there are fewer of them over time. knowing that developing talent means • Creating the sort of workplace
So, while an extreme management tolerating failures and allowing people you’d like your kids to inhabit.
makeover is possible, it can’t be done to work out of their self-created mess. • Being a certifiable nut about quality,
overnight or without setbacks. The new • Dealing with one or more crises safety, integrity, regardless of costs.
doesn’t instantly or magically supplant with particular/memorable aplomb. • Resigning a few times rather than
the old. Even after years of diligent • Demanding/demonstrating civility, compromise your bedrock beliefs.
effort, vestiges of the old, legacy model regardless of circumstances. • Seeking perfection just short of the
(overbearing bosses, under-loved employees, • Turning around dreadful situations paralyzing variety.
and petty turf wars) will remain. But over —and watching people rise to the occa- • A self- and group-enforced standard
time, these become the exceptions. LE sion and acquire a new sense of purpose. of Excellence-in-all-we-do and Excellence
• Leaving something of lasting worth. in our behavior toward one another. LE
Gary Hamel is a Fellow of the World Economic Forum and the
Strategic Management Society and the author of The Future of • Having almost always put quality Tom Peters is the best-selling author of The Little BIG Things.
Management. Visit www.garyhamel.com. and excellence ahead of quantity. Email tom@tompeters.com or visit www.tompeters.com.
ACTION: Innovate your management practices. • Times when you did the right thing ACTION: Start making your leadership memories.

4 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
LEADERSHIP STRENGTHS —their own strengths, the strengths of
superiors, colleagues, subordinates;
and on the strengths of the situation.”
Strong Leadership As leaders try to do more with
fewer people, they need to engage
Live and lead from strengths. each person’s strengths, and do it at
scale across the organization. The
strengths movement isn’t about mak-
by Marcus Buckingham
catch the moments that invigorate you, ing people happier—it’s about making
and cradle them—concentrate on them, organizations more productive. The
celebrate them, look at them from new best companies are made up of great

S INCE USING YOUR


strengths makes
you feel strong, pay
angles, follow where they lead, and
you’ll make the right decisions for you.
The challenge of life and leadership
teams. And those teams have individ-
uals who know their strengths, take
them seriously, and offer them up to
close attention to how you feel as you is not to juggle—the challenge is to catch: the organization.
complete your day-to-day tasks. to select a few clear, strong moments
When you notice yourself at work (or from each aspect of your life, reach for What Sets Great Companies Apart?
at play), you find that you experience those, and draw them in to you. Every company is made up of sepa-
strong-moments—times when you feel To live a more fulfilling life, you need rate teams, and the performance of
invigorated, inquisitive, or successful. to identify the specific moments (in each those teams, no matter how successful
Those moments are clues to your per- part of your life) that renew your ener- the company may be, varies widely.
sonal strengths. gy and bring you joy, and go after them. And for the individual employees, the
To help you recognize the signs of You want to imbalance your life toward experience of the team trumps the
strength, here’s a simple acronym SIGN: creating more of those moments. You experience of the company. What then,
S—Success: Do you feel a sense of accom- can’t do everything, so don’t fall into determines the experience of the indi-
plishment about finishing this task? the trap of trying. Instead, find the vidual? Often it’s their managers and
I—Instinct: Do you instinctively look moments in each aspect of your life leaders. As we often hear: People join
forward to performing this task? G— that invigorate you, and imbalance your companies, and quit managers.
Growth: Are your synapses firing? Are life toward those things. Managers and leaders play a signif-
you mentally focused? N—Needs: Does icant role in creating a culture wherein
this task fulfill one of your needs? individuals can thrive, discover their
If you feel these feelings while talents and have an opportunity to use
doing a task, then that activity is like- their best selves daily. Great leaders
ly one of your strengths. and managers help people to identify
As a leader, you need to discover and leverage their unique strengths
your strengths and then do more of most of the time.
what most invigorates you and what Again, the opportunity for individ-
you do best. You can attain high satis- uals to play to their strengths most of the
faction in your life and leadership time is the key factor that shows the
when you figure out what strengthens greatest correlation to outstanding per-
you—and then make decisions that formance in the widest range of busi-
enable you to play to your strengths ness outcomes, including profits,
instead of worrying about things that I t ’s A b o u t R e s u l t s productivity, customer satisfaction,
weaken you. In fact, you can push The truth is, people are not your great- and safety and employee retention.
your current job, no matter what it is, est asset—unless they’re in position to Teams whose members play to their
in the direction of your dream job. leverage their greatest strengths, those strengths most of the time are: 50 per-
The more you use your strengths, the things they do well consistently and cent more likely to have lower
more satisfying your job will be. energetically. employee turnover; 38 percent more
Many people feel the need to be Individuals and teams playing to likely to work on high-productivity
well-rounded in their life and their their strengths outperform those who teams; and 44 percent more likely to
leadership. Performance reviews often don’t in every business metric. In fact, earn higher customer satisfaction
consist of a brief pat on the back for the single best predictor of a consis- scores. And yet, again, fewer than 20
areas that are working well and then a tently high-performing team is the percent of people say that they do.
substantial focus on “areas of oppor- answer to this question: At work, do Worse, fewer than 25 percent say that
tunity.” The problem with focusing on you have the opportunity to do what you their manager even discusses their
what doesn’t work is that attention do best everyday? Teams with individu- strengths in performance reviews.
amplifies everything. If you focus on the als who do massively outperform teams Strong managers and leaders identi-
problem with the intent of fixing it, with people who don’t—they are more fy and leverage their own strengths
despite your best intentions, that profitable, more productive, less likely and then create a fully engaged
problem is magnified. Instead, shift to quit, less likely to have accidents on strengths-based team. LE
your focus and ask, “What’s working the job—the list goes on—and yet only
Marcus Buckingham is founder of TMBC, a management
well, and how can I get more of that?” 12 percent of people play to their consulting company, leadership expert, speaker and
You are innately wise. When you strengths at work most of the time! bestselling author of First, Break All the Rules; Now
Discover Your Strengths and Find Your Strongest Life.
make poor decisions, you haven’t lis- Have we forgotten what Peter Visit www.TMBC.com.
tened to your intuitions or yearnings Drucker wrote some 50 years ago: The
enough. Listen to yourself carefully, Effective Executive builds on strengths ACTION: Discover and play to your strengths.

L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 5
LEADERSHIP DANCE laborative skills and making their words
consistent with their actions. Women
have an advantage in a world that val-
Dance of Power ues authenticity over positional power.
The ability to lead effectively derives
from self-knowledge. To quote Sun
Women are taking th e lead.
Tzu: Knowing the other and knowing one-
self, in one hundred battles no danger. Not
body problem, for without the focus on knowing the other and knowing oneself,
by Sally Helgesen
sports, how can leadership be embodied? one victory for one loss. Not knowing the
It’s an important question, since mani- other and not knowing oneself, in every

I S LEADERSHIP AN ART OR
science? Are women
fit for top leadership
festing a leadership presence (and exert-
ing physical influence) is essential.
battle certain defeat.

Strozzi addressed the gap by devel- Women Lead the Dance


roles? These questions have long been oping a physical yet non-athletic program Women are particularly well suited
debated. Your answers likely deter- of leadership training suited to an era to the new dance of leadership—and yet
mine whether you believe leadership in which the definition of what a leader many stumble as leaders. Zoe Cruz and
capability can be developed and who looks like is evolving. His methods are Sallie Krawcheck were the most power-
you think is best suited to lead. also apt for cultures of networks and ful women on Wall Street. It was specu-
Richard Strozzi-Heckler has built a teams. In top-down organizations, lead- lated that both would become CEOs of
distinctive career based on the propo- ers can exert power by virtue of posi- their powerhouses—Morgan Stanley
sition that leadership is neither art nor tion; in decentralized networks, people and Citigroup. Instead, Ms. Cruz was
science, but rather a practice that can won’t follow unless they buy into what ousted and Ms. Krawcheck demoted,
be developed. A leader can build fluency is proposed. Hence, the emphasis on leading to hand-wringing about how
and muscle through the regular exercise walking the talk also suggests that a women seem be losing ground as leaders.
of disciplines that require physical and leader’s principles must be embodied. Having studied female leadership
mental effort. “People change through • Lieutenant Colonel Fred Krawchuk, for two decades, this women flounder as
practice,” he says. “You can be smart, operations commander for the U.S. leaders narrative has a familiar ring.
but if you just talk about something, Army in the Pacific, notes: “In the mili- While the progress women have made
you never learn to do it. Practice as leaders has not been rapid or
requires being systematic, performing smooth, the impact women are having on
a sequence of movements over and what we perceive to be desirable in our
over until it becomes part of your leaders continues to grow. The real story
physical being, part of who you are.” is about influence (not numbers).
Strozzi shows how wisdom can be Women are comfortable with direct
made manifest through movement. communication, relationship-building,
Drawing on a lifetime study of martial diversity, and emotional intelligence—
arts and Eastern philosophy; decades skills best suited for leaders today.
of training in competitive sports; and I prefer to focus on what women have
stints as a marine, soldier, firefighter, to contribute, rather than how they need
psychologist, and professor, Strozzi to change or adapt. For decades, women
has created an eclectic but disciplined tary, as in business, we place too much were urged to conform to a masculine
and replicable program for helping value on being action-oriented. We leadership style—to start using football
leaders develop the physical presence, think leaders are the guys who say, metaphors in meetings, take up golf,
fine-tuned awareness, bias for action, ‘Let’s just get it done.’ But that short- and pull rank on subordinates in order
and precise articulation of purpose changes thoughtfulness and reflection. to keep them in line. Leave your values at
that inspire confidence and trust. How do we merge these qualities? We home and play the game was the message.
In the Western tradition, the physical develop awareness. If we can be fully This conventional wisdom was based
component of leadership has been identi- present with other people and ground- on three assumptions: 1) organizations
fied with athletic prowess. Athletics have ed in ourselves, we can integrate obser- wouldn’t change simply because women
been viewed as a vehicle for building vation with our capacity to act.” had entered them in massive numbers;
character, instilling self-discipline, or • Nancy Hutson, who retired from 2) changes wrought by networked tech-
imparting the habits of command that Pfizer as senior VP for global R&D, nologies wouldn’t change organization-
come from captaining a team. Hence, sounds a similar note: “Working with al structures or reshape people’s expect-
we often assume that athletic excellence body, language, and mood helps us be ations of their leaders; and 3) women’s
auto-translates into skilled leadership. more aware of ourselves, more attuned handicaps as leaders would outweigh
But the equation between sports and to others, as we build trust (not just whatever advantages they might confer.
leadership, and the metaphors it has assume it). Richard’s emphasis on prac- I saw these assumptions as false. As
inspired, seem outdated and culture- ticing leadership rather than being a organizations undergo rapid changes
specific in today’s diverse global orga- leader also subverts the hierarchy, since as demographics, technology, and eco-
nizations. Changing demographics being a leader is all about position.” nomics of work shift, women face a his-
and technologies have made competi- Web technologies, shifting demo- toric opportunity to influence if they will
tive sports less relevant and inspired a graphics, and deregulated global mar- honor and develop their distinctive strengths.
backlash that finds one expression in kets requires leaders who are comfort- In my research, I find that talented
the exaltation of the nerd. able being at the center rather than being and confident women leaders have seven
This leaves leadership with a mind- at the top, exercising intuitive and col- characteristics in common: 1) they place
6 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
a high value on relationships and judge LEADERSHIP PEOPLE that we forget: we should be leading.
the success of their organizations based And by creating an unhappy workforce,
on the quality of relationships within things turn from bad to worse. Clearly,
them; 2) they prefer direct communica- Leading People those who ignore this fact do so at their
tion; 3) they are comfortable with It’s different than driving them. peril. When the economy improves and
diversity, having been outsiders them- jobs are plentiful, people will remem-
selves and knowing what kind of value ber how their leaders behaved. Smart
fresh eyes could bring; 4) they are by Donald Sandel leaders care for their employees during
unwilling (and unable) to compart- difficult times, take advantage of the
mentalize their lives and so draw upon talent supply that exists, and raid com-
personal experience to bring private-
sphere information and insights to
their jobs; 5) they are skeptical of hier-
A CLASSIC STORY FROM
the early days of the
American Revolution
petitors for disengaged superstars.
Some 50 years ago McGregor posit-
ed his theory about X and Y leaders:
archies and surprisingly disdainful of occurred at the Battle of Bunker Hill. • Theory X leaders assume that most
the perks and privileges that distin- Two great American soldiers, General people dislike work, lack ambition, and
guish hierarchical leaders and establish Israel Putnam and Colonel William desire no responsibility and account-
their place in the pecking order; 6) they Prescott, had both led and fought gal- ability. Leaders who see their employ-
preferred leading from the center lantly. It was an epic struggle of strategy, ees in this counter-productive way have
rather than the top and structure their courage, and grace under fire. Though disengaged workers and low retention
organizations to reflect this; and 7) they the Americans gave up ground, it was rates and struggle to motivate staff.
ask big-picture questions about the seen as a victory, as they inflicted serious • Theory Y leaders assume that people
work they do and its value. damage upon the world’s greatest mili- tend to be ambitious, self-motivated,
Such skills and strengths of women tary force, and raised American hopes. and not only accept responsibility but
leaders are now highly desirable. Net- As Prescott was leaving the field, he seek it. Managers with this view know
worked technologies, the knowledge approached Putnam, and asked him that satisfaction comes from doing a
economy and demographics of global- why he had not given his flank more good job and that employees are large-
ization all support the skills, talents, support with his men. “I could not ly self-directed and thrive in autonomy.
and presumptions that women bring. drive the dogs,” Putnam answered. To Daniel Pink notes: “Today economic
Twenty years ago, relationship- which Prescott said, “If you could not accomplishment, not to mention per-
building was considered a soft skill drive them, you might have led them.” sonal fulfillment, depends not on keep-
that a leader, who had to be tough, That’s a valid response to ing our nature submerged
could not afford. Now, as leaders seek to all leaders. We can’t aspire but on allowing it to sur-
connect more directly with customers and to victory by driving our face. It requires resisting
stakeholders and motivate employees, an people. Organizations are the temptation to control
ability to nurture strong relationships is bricks and mortar, spread- people—and doing all we
essential. Technology today facilitates sheets and policies, and can to reawaken their
and demands direct communication can’t accomplish anything deep-seated sense of per-
while undermining hierarchy, a plus without their people. Lead- sonal autonomy.”
for those who enjoy leading from the ers who focus on the orga- Service, innovation, and
center rather than the top. And in a nization, and forget about excellence emerge from a
global economy, comfort with diversity people are not leading at all relationship of trust between
has become essential. As work and (there’s a big difference be- employee and manager.
home become harder to separate, com- tween driving dogs and leading people). And this seldom happens by accident.
partmentalizing becomes a liability. Some leaders blame the economy You may have a finance or operations
Also, the tough-guy approach to for their not focusing on people: We’ve strategy, but the ultimate value propo-
leadership is in disrepute these days, as just got to make the numbers. But focus- sition is an executed people strategy.
tyrants and bullies are brought in for ing on people is not a response only to My advice: Hire well. Set clear expec-
censure. Organizations today feel com- good times, but a strategic approach tations. Look for teachable moments.
pelled to state how they value relation- that understands that it is through our And then get out of the way. Our great-
ships and support diversity. Leaders people that work gets done, that mar- est accomplishments, inventions, and
compete to take a greener, more holistic ket differentiation occurs, and that cus- innovations come from the innate desire
approach—emphasizing sustainability tomers return. As Kerry Killinger, CEO to do so, not to satisfy a corporate goal
and contribution and acknowledging of Washington Mutual, stated: “Great or a superior’s demand. Order me to
the need to nurture the human spirit. leaders know that they can’t just meet create and I’ll get something done;
Inclusive has become a buzzword, and short-term earnings expectations and allow me to create and I will amaze.
weblike a description of how things work. manage the bottom line: They must cre- “I am not big on the dignity of office
As more women are reaching posi- ate a great environment for their people.” stuff,” writes Tony Blair, in his mem-
tions of authority and influence, they Many smart leaders miss this corre- oirs; “I rested my authority on motivat-
are having a profound impact on how lation between people and earnings, en- ing and persuading people, not on
organizations are led and on what gagement and customer satisfaction: If you frightening them.” What is required
leadership qualities are valued. LE help make me a happy employee, I will take from leaders is the courage to let go, to
better care of customers and put discretion- trust, and then to be amazed. LE
Sally Helgesen is a speaker, advisor, and author of five books,
including The Female Vision: Women’s Real Power at Work, ary effort back into the organization. En-
Donald Sandel is a leadership consultant, speaker, and author.
The Female Advantage and The Web of Inclusion. Visit gaging employees and showing them Email dsandel@wowway.com or call 847-392-5114.
www.sallyhelgesen.com.
that you care need not break the bank.
ACTION: Enable more women to lead the dance. Some of us today are so busy driving ACTION: Lead your people to victory.
L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 7
LEADERSHIP GREATNESS • They are incredibly ambitious—but
their ambition is first and foremost for
the institution and its greatness, not for
Enduring Greatness themselves. They are comfortable with
the idea that their companies will tick
on without them, reaching even greater
Look now for the right leaders.
heights. The fact that most people will
walls and thereby endure for decades, not know that the roots of that success
by Jim Collins perhaps centuries. Yes, all products, trace back to them is not an overriding
services, markets, and even specific concern. They set the standard of build-
solutions to social problems eventually ing an enduring great organization and

M ANY PEOPLE HAVE


argued that it’s
time to give up on the idea
become obsolete. But that does not
mean that the organizations that pro-
duce them must become obsolete.
will settle for nothing less, yet channel
ambition into the organization and its
work, setting up successors for even
of building great companies that endure. When you’ve built an institution greater success in the next generation.
One technology pundit cornered me at with values and a purpose beyond just • They look in the mirror, not out the
a conference and deemed the whole making money—when you’ve built a window, to apportion responsibility for
build to last premise absurd: “We live in culture that makes a distinctive contri- poor results, never blaming other people,
an era when nothing can be built to last. bution while delivering exceptional external factors, or bad luck; and yet they
Everything is in flux; nothing can be sus- results—why would you capitulate to look out the window, not in the mirror,
tained.” He invoked Joseph Schumpeter, the forces of mediocrity and succumb to apportion credit for success of the
the great economist who wrote about to irrelevance? And why company—to other people,
the “perennial gale of creative destruc- would you give up on the external factors, and good luck.
tion” wherein technological change and idea that you can create • They may earn a very
visionary entrepreneurs give birth to something that not only good living, but they don’t
new things that obliterate old things, lasts but deserves to last? work for money. Making a
only to see those new things become The best leaders never point company great has little to
obliterated by the next generation. out the window to blame do with how you compen-
I’ve been through versions of the external conditions; they sate leaders and everything
creative-destruction argument dozens look in the mirror and say, to do with who you com-
of times, with smart people. And one “We are responsible for our pensate. If you have the
of their favorite arguments invokes the results!” Those who take right people, they’ll do
Fortune 500: If you examine the list personal credit for good everything in their power
over time, you find tremendous churn. times but blame external events in bad to make the company great, no matter
But if we look through another lens, times simply do not deserve to lead. how difficult the decisions. Level 5 lead-
we can see a different story, a story of No law of nature dictates that a great insti- ers are revolted by the idea of leaving
well-founded hope—even clear exam- tution must inevitably fall. That most do unrealized potential on the table; they
ples of enduring greatness. We also find fall—and we cannot deny this fact— are driven to create excellence for its own
companies that overcame oppressive does not mean you have to be one of them. sake—never satisfied because there is
mediocrity or worse to achieve sustain- always a higher standard to work toward.
ed success. We also find companies that Celebrities vs. Level 5 Leaders Leaders whose dedication goes up and down
fell from greatness, but then regained There is perhaps no more corrosive depending on their incentive compensation
their footing, standing defiant against trend to the health of our organizations are simply the wrong people for the job. If
the forces of creative destruction. than the rise of the celebrity CEO, the boards would stop lurching after high-
Just because a company stumbles— rock-star leader whose deepest ambi- profile, egocentric celebrities and turn
or gets smacked upside the head by an tion is self-centric. In contrast, every instead to the disciplined, workmanlike
unexpected event or new challenge— good-to-great company has had a leaders who produce true greatness
does not mean that a company must remarkable leader at the helm during over time, we’d see better companies.
continue to decline. Companies do not the pivotal years. These Level 5 leaders If we allow the celebrity model of
fall primarily because of what the have a paradoxical blend of traits: leadership to triumph, we’ll see the
world does to them or because of how • They’re somewhat self-effacing indiv- decline of organizations. If good is the
the world changes around them; they iduals who deflect adulation, yet who enemy of great—and I believe it is—the
fall first and foremost because of what have an almost stoic resolve to do what- current trends in leadership give the
they do to themselves. Whether you ever it takes to make the company great. decided edge to the enemy. Still, I remain
prevail or fail, endure or die, depends They demonstrate unwavering resolve to optimistic. Smart people see the dangers
more on what you do to yourself than do whatever must be done to produce of entrusting our future to self-serving lead-
on what the world does to you. the best long-term results, no matter ers who use our institutions to advance their
Throughout history, the greatest how difficult, yet act with quiet, calm own interests. Also, I am convinced that
companies have used adverse times to determination and rely principally on the seed of Level 5 leadership is widely
their advantage. Just because Joseph inspired standards—not an inspiring dispersed. When it is identified, culti-
Schumpeter’s creative-destruction personality—to motivate. They channel vated, and encouraged, it can flourish.
argument proves correct for most busi- their ego needs away from themselves And if it does, so will our organizations. LE
nesses does not mean that the compa- and into building a great company.
Jim Collins is the best-selling author of Good to Great: Why
nies that create those businesses must They create superb results, yet demon- Some Companies Make the Leap . . . And Others Don’t. This
fall and die—after all, you can practice strate a compelling modesty, shunning article abridged from his articles. Visit www.jimcollins.com.
creative destruction inside your own public adulation and never boastful. ACTION: Get the right people in your pipeline.

8 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
ETHICS WISDOM give the elephant more strength. So,
clear your head before making a deci-
sion or pushing the email send button.
Your Inner CEO If you are procrastinating, your elephant
is feeling low-level anxiety. The elephant
Lead with your best wisdom. is easier to manage when relaxed. To
calm down, try sitting quietly by the
task; soon you’ll start to work again.
by Richard Daft is meant to be the follower, not the leader. 4. Slow down your reactions. To
The elephant needs guidance to over- avoid overreacting to bad news, delay
come its reactions and impulses. Things your reactions. You might count to 10,

E VERY LEADER AT TIMES go better when you put your inner CEO in
will fail to follow his charge. For example, Richard Anderson,
or her best intention. CEO of Delta Air Lines, learned to con-
wait one minute, or wait 24 hours. One
executive learned to ignore his response
1 to bad news and waited for response 2,
For example: “I promised myself and trol his emotional reactions, to be even if it meant responding the next
my boss that I’d delegate the hiring patient and not lose his temper. His day. His response 2 was always wiser.
decisions, and then overrode my sub- inner CEO realized that everything he did Jeffery Katzenberg installed a five-sec-
ordinate’s decision, causing two peo- was an example, and when he lost his ond delay on his reactions so others could
ple to quit.” “I put off my quarterly temper it would squelch debate and express their views first. It enabled a
report until the last minute.” “When send the wrong signals. Carol Bartz, more robust and effective dialogue.
something ticks me off, I overreact.” CEO of Yahoo, had a bad habit of inter- 5. Create a mental picture. Visualizing
“I’m overly critical of people, and they rupting people. She had to learn to a desired behavior in your mind powerfully
don’t appreciate it, but I can’t stop.” take a breath, to shut up and listen. impacts your elephant. Imagine how
In the case of HP’s recent CEO, who you want to give a speech, or handle a
fudged travel expense reports to hide How to Control Your Inner Elephant difficult conversation, and you’ll pro-
the first-class airfares of an attractive The challenge for leaders, once they vide vivid visual instruction to your
vendor, his impulse overpowered his know what they should be doing differ- elephant. Mental rehearsal often is as
better judgment. Most leaders who fail ently, is how to change themselves to effective as physical practice for improv-
are good at the cognitive stuff—vision, eliminate a flaw or bad habit. When ing performance. Repeatedly visualize
strategy, ideas—but things often break doing a dreaded task, and you’ll more
down at execution—their actions do calmly and smoothly flow through it.
not follow their stated intentions. 6. Repeat a mantra. Try offering a
suggestion to your elephant in the form
Executive vs. Elephant of a well-crafted mantra—telling the
These managers knew the preferred elephant what to change. Repeating “I
action, but some internal force pulled am appreciating others more,” “I am
them toward less desirable behavior. listening more carefully” or “I am dele-
Leaders usually know what they should gating more responsibility,” 20 times a
do, so why aren’t they doing it? Accord- day can reprogram your way of think-
ing to neuroscience, the brain has two leaders learn to strengthen their inner CEO ing and produce a striking change.
sometimes-conflicting parts. The inner and control their elephant, they’ll do what 7. Provide detailed structure. Go to a
CEO is the higher part that sees the they know is best. But under stress, a fat camp and you’ll exercise and eat
objective big picture with a balanced leader might repeat old patterns. Here healthy. Why? The camp structures your
approach to determining the best action. are eight ways to control your elephant. time. Inner elephants also respond to ex-
The lower part is the inner elephant with 1. Review the day. Spend 10 minutes plicit, detailed instructions from the inner
its ego, unconscious impulses, emo- in the evening reviewing the behaviors CEO. So, get everything you are doing
tions, and lifelong habits. The strength that worked and did not work during out of your head onto paper, and iden-
of the leader’s elephant may pull him the day. At first, it is hard to remember tify key steps and a deadline for each task.
or her toward micromanaging, putting what happened, but with practice you These steps are implementation intentions
things off, tactless remarks, insisting on will remember everything. As you replay that enable your elephant to comply.
always being right, overreacting, find- incidents in your mind, you’ll discover 8. Try meditation. Meditation quiets
ing fault (rather than appreciating, lis- more of the desired behavior repeating the active mind. To meditate, focus
tening, or focusing). Such behavior can itself the next day while the undesired your attention on an anchor object or
overpower the wisdom of the inner CEO. behavior will appear less often. phrase—or watch your breathing or
Most leaders have received feedback 2. Consult with one person. Consult- slowly repeat a word or phrase that
from 360 reviews about what works and ing with just one person before making has meaning for you.
doesn’t work in their leadership style. a decision or taking action will enlarge As your inner CEO takes control of
Leaders often know what they should your elephant’s thinking. Consult with your inner elephant, you’ll be more in
do, how to do it, and why they should several people, and your perspective flow, more fulfilled, your rough edges
do it. Yet when their intentions and be- will become large and balanced. Try softening, while becoming the best
haviors refuse to align, the unwanted consulting on every decision for one leader that lies within you. LE
actions of the inner elephant take priori- day—and watch your point of view
Richard Daft is the author of The Executive and the Elephant:
ty over the wisdom of the inner CEO. expand, along with your wisdom. A Leader’s Guide for Building Inner Excellence and is the
The challenge for leaders is to devel- 3. Calm down. An agitated elephant Brownlee O. Currey, Jr. Professor of Management in Vanderbilt
University’s Owen Graduate School of Management.
op the inner CEO to take command of is harder to control than a calm one.
the elephant. The lower part of the brain Anger, fear, frustration, and craving all ACTION: Take control of your inner elephant.

L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 9
LEADERSHIP POWER shielded from effective scrutiny, partic-
ularly if their boards are inept and their
influence extends to the people expect-
Power and Influence ed to be watchdogs for the public trust.
The failure of boards (think Enron) to
Get others to follow your lead. exercise effective oversight led to the
Sarbanes-Oxley bill. We’re still debating
just how much new regulation of banks
by Terry R. Bacon of (then) Czechoslovakia, spoke of the and investment houses is necessary to
temptations of political power. He noted prevent the blind excesses (spurred by
that the privileges and perks of high self-interest) that fueled the damaging

D OES MIGHT MAKE


right, or are people
in power largely govern-
office have a devious allure, and that a
leader can become so used to them that
he loses his perspective: “He becomes
recession in 2008-2009. Clearly, unbri-
dled power in too few hands is a recipe
for disaster, particularly when the peo-
ed by the better angels of their nature? a captive of his position, perks, and ple in power are more motivated by
Is any use of power immoral? Consider office. What apparently confirms his self-interest (Bernie Madoff) than the
just a few of the atrocities in the past identity, and existence, in fact subtly collective good (Adam Smith).
90 years of human history: the Turkish takes that identity and existence away After studying the need for power,
genocide of Armenians circa 1919; the from him. He is no longer in control of David C. McClelland and David H.
Nazi genocide of six million Jews circa himself, because he is controlled by Burnham conclude: “Top managers
1944; the millions of Russians and something else: by his position and its must possess a high need for power—a
Chinese killed by Stalin and Mao to exigencies, consequences, aspects, and concern for influencing people; howev-
consolidate power; the killing fields in privileges.” Noting that “there is some- er, this need must be disciplined and
Cambodia; the mass killing of thing treacherous, delusive, controlled so that it is direct-
Muslims in Bosnia; the genocide of the and ambiguous in the temp- ed toward the benefit of the
Tutsis by the Hutus in Rwanda; or the tation of power,” Havel institution—not their per-
slaughter of innocents in Darfur. argues that politics requires sonal aggrandizement.”
Muckraker Lincoln Steffins argues, pure people because “it’s easy This, then, is the challenge:
“Power is what men seek, and any to become morally tainted.” how to attain and use
group that gets it will abuse it.” And Since, as Shakespeare power wisely and in a dis-
James Madison, one of the Founding said, “the abuse of great- ciplined way, how to exer-
Fathers of the United States and its ness is when it disjoins cise power without abusing
fourth President, said, “The essence of remorse from power,” any- it or allowing its focus to be
government is power; and power, one who attains a position the elevation of the leaders’
lodged as it must be in human hands, of power needs to resist the self-interests.
will ever be liable to abuse.” And, treacherous temptations of power and Power is not innately immoral; none-
British statesman Edmund Burke remain morally sensitive and alert to theless, power can distort the power
warned, “The greater the power, the the self-delusions that can distort char- holder, especially when that power is
more dangerous the abuse.” acter. Of course, this is easier said than absolute and unchecked, and it can lead
We’ve all observed the corrupting done, particularly in cultures where the him or her to justify acts which, seen in
nature of power and the potential for exercise of power is Machiavellian. As the clear light of history and unbiased
abuse when any power is concentrated Steve Forbes observed, “As more money observation, are clearly immoral.
in too few hands with too few checks flows through Washington and as Wash-
and balances. The beatific view of ington’s power to regulate our lives I n f l u e n c e G o n e Aw r y
human nature inherent in the Golden grows, opportunities and temptations Some gurus claim that if you follow
Rule is either distorted or corrected by for graft, influence peddling, and cut- their principles, you can influence any-
the more perverse version: “He who ting corners grow exponentially. Power one to do anything: you can get anyone
has the gold makes the rules.” breeds corruption.” Indeed, power corrupts; to like you, love you, and find you irre-
Some believe that power, by its very and absolute power corrupts absolutely. sistibly attractive; you can take control
nature, is immoral, and that whenever Business leaders also face many of any situation, win every competition,
people have any degree of control over temptations to abuse power. Hence, we and gain the upper hand every time;
the lives of others, they’ll likely abuse see scores of con men and corrupt lead- you can get anyone to say yes to what-
that power. Sadly, we’ve seen ample ers whose aims are self-serving, whose ever you propose within minutes.
evidence in recent years—from former victims often include close family When I read such claims, I’m reminded
Merrill Lynch CEO John Thain spend- members, and whose abuse of power of what Abraham Lincoln said: “You can
ing $1,400 on a wastebasket while his entrusted to them ruins investors and fool some of the people all of the time, and all
firm was collapsing, to former Boeing damages or destroys companies—from of the people some of the time, but you can’t
CEO Harry Stonecipher’s ouster after Tyco’s Dennis Kozlowski, Adelphia’s fool all of the people all of the time.”
being caught in an improper sexual John Rigas, and Société Générele’s The idea that you can influence any-
relationship with a female executive— Jérôme Kerviel to Billie Sol Estes, one to do anything is nonsense. People
that people in positions of power, no Enron’s Jeff Skilling and Andrew may not be moved by your influence
matter how smart they may be, can Fastow, HealthSouth’s Richard attempt for many reasons. In his book
often not resist the siren’s call of greed Scrushy, Wall Street’s Bernie Madoff, What Leaders Really Do, John Kotter
or the abuse of their positions. and Countrywide’s Angelo Mozilo. writes: “Some people may be uncoop-
In 1991, during his acceptance of the Unlike politicians, business leaders erative because they are too busy, some
Sonning Prize, Václav Havel, president are often out of the public eye and because they are not capable of helping,
10 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
and others because they have goals, val- CAPABILITY CONTEXT secretary. And many a government
ues, and beliefs that conflict with those official who becomes a university presi-
of the manager; therefore, they have no dent has trouble adapting to the flat
desire to help or cooperate.” Also, the
Contextual Intelligence power structure of academic life.
people you’re trying to influence may It’s crucial for effective leadership. Contextual intelligence is an intu-
not care about what you want them to itive diagnostic skill that helps a leader
support. They may disagree with your to align tactics with objectives to create
opinion, idea, suggestion, proposal, or by Joseph S. Nye, Jr. smart strategies in new situations. It
point of view. They may not need what implies a capability to discern trends in
you are selling, accept your reasoning, the face of complexity and adapt while
or be inspired by what you are saying.
They may be distracted, or disregard you.
Salespeople spend more time study-
T HE RECENT PUBLICA-
tion of George W.
Bush’s memoirs raises
shaping events—the ability to intuit move-
ments and seize them. More prosaically,
like surfers, leaders with contextual
ing and practicing methods of influence, again the role of contextual intelligence in intelligence have the judgment to adjust
yet even the best of them can’t sell their leadership. President Bush famously des- to new waves and ride them to success.
products or services to every customer cribed his leadership role as “the decider.” Contextual intelligence allows lead-
all the time—because some customers But deciding how to decide is as impor- ers to adjust their style to the situation
won’t be persuaded for reasons that may tant as making the final decision: what and to their followers’ needs. It enables
have more to do with the customers should be the composition of the group them to create flows of information that
and the situation than the salesperson. the leader turns to; what is the context educate their hunches. It involves the
One subtle way people try to influ- of the decision; how will information be political skill of not only sizing up group
ence others is by appealing to authority. communicated; and how much control politics, but of understanding the posi-
Such legitimizing is so ubiquitous that does the leader maintain over the deci- tions and strengths of various stake-
we often don’t recognize it. When you sion? Get such factors wrong and you holders so as to decide when and how
try to influence someone by legitimiz- may be decisive, but decisively wrong. to use transactional and inspirational
ing, you essentially say, “Trust me, Bush described his leadership as having skills. It is the self-made part of luck.
believe me, or obey me because some three core components: outline a vision, In unstructured situations, it’s often
authority says you should.” The author- build a strong team, and delegate much of the more difficult to ask right questions than
ity could be a parent, boss, police officer, process to them. Analysts who examined to get right answers. Leaders with con-
judge, cleric, or teacher whom the other Bush’s decision-making on Iraq argue textual intelligence provide meaning
person would consider an authority. that neither he nor those to by defining the problem
Legitimizing occurs when someone whom he delegated knew that a group confronts.
wears or displays the symbols of law the complexities. Without They understand the ten-
or authority—a police officer’s uniform contextual intelligence, being a sion between the different
and badge, a judge’s robes and gavel, a decider is not enough! values involved in an issue,
military person’s uniform and insignia Understanding context is and how to balance the
of rank, the robes of a monk or cleric, vital for effective leadership. desirable with the feasible.
and so on. People also legitimize when Some situations call for auto- Contextual intelligence
they cite a person’s title, position, or cratic decisions, others re- consists of cognitive analyt-
role; by citing a group representing quire the opposite. Leaders ic capabilities and of tacit
authority; by citing achievements or must operate in myriad con- knowledge built from expe-
honors; by citing previous works, texts, but it’s vital to under- rience. Tacit knowledge
precedents, or publications; by citing a stand culture, distribution of power tends to be implicit and inarticulate, or
person of renown or something that resources, followers’ needs and demands, expressed in rules of thumb. In some sit-
person said; or by citing an agreement, time urgency, and information flows. uations, street smarts are more important
behavioral norm, moral, tradition, law, Ronald Heifetz argues that if the sit- than school smarts. In novel situations,
regulation, or accepted standard. uation calls for technical and routine solu- judgment matters more than experience.
One advantage of legitimizing is that it tions, the leader may clarify roles and Contextual intelligence also requires
can influence people quickly. Civilization norms, restore order, and provide a emotional intelligence. Without sensi-
would not function well without legit- solution. But if the situation requires tivity to the needs of others, pure cog-
imizing to regulate behavior and choic- adaptive change, the leader may let con- nitive analysis and long experience
es. A major draw-back to legitimizing is flict emerge, challenge unproductive may prove insufficient. Jimmy Carter
that many people are antiauthoritarian norms and roles, and let the group feel had good cognitive skills, but was
to some degree and resist some types of external pressures so that it learns to often faulted on his contextual intelli-
authority. Their degree of compliance master the adaptive challenge. This gence. As one wag put it, he was better
depends on how much they respect the may require delaying decisions and using at counting the trees than seeing the forest.
authority being cited and whether they followers’ anxieties as a learning experience. The best leaders transfer their skills
believe their compliance is necessary or Half of General Electric’s high flyers across contexts. Leaders who have a
advantageous to them. The less respect who went on to become CEOs of other fixed repertoire of skills are limited in their
people have for authority, the less companies had disappointing records. responses to new situations. They need
they’ll be influenced by legitimizing. LE Why do some leaders succeed in one con- to develop broader bandwidth and tune
text and fail in another? One answer is carefully for different situations. LE
Terry R. Bacon is author of The Elements of Power (AMACOM
Books) and Elements of Influence: The Art of Getting Others to “horses for courses.” Some run better
Joseph S. Nye, Jr. is University Distinguished Service professor
Follow Your Lead (forthcoming). Visit www.terryrbacon.com on a dry track and some in mud. Many at Harvard and author of The Powers to Lead (now an Oxford
and www.kornferryinstitute.com; Terry.Bacon@kornferry.com.
a good CEO turns out to be a disap- University Press paperback). Visit www.hks.harvard.edu.
ACTION: Influence people to follow your lead. pointment when appointed as a cabinet ACTION: Enhance your contextual intelligence.

L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 11
LEADERSHIP WOMEN that values personal sustainability, and
Empower women to recharge the world. driving employee engagement.
We see a direct correlation between women’s One concern for our women employ-
empowerment and national GDP growth, ees globally is work-life balance. To ease
Women Power business growth, environmental sustainabil-
ity, and improved human health, to name
some of the burden, we initiated flexi-
ble-work arrangements and provided a
I t w i l l r u l e t h e w o r l d . a few things. The family, community, global framework and tool kits for our
and social implications are vast. Our business units around the world.
consumer research points to women as the In addition, we’ve grown the num-
household opinion elites. Women deter- ber of women in upper management
by Muhtar Kent
mine what comes into the home and in positions, and our female employee engage-
what quantity and frequency. Women ment rate is now higher than our overall

D RIVING INTO WORK account for most purchase decisions


one morning, I got for our beverages. In fact, they repre-
stuck in traffic and sent 70 percent of all grocery shoppers.
engagement rate. Today, women hold top
leadership positions in our finance group,
make up half of our Public Affairs and
tuned into a report on the radio about So, at Coca-Cola, we can’t grow our Communications leadership team, and
China’s rise in the world. Some econo- business or reach any of our long-term about half of our legal team. We have
mists predicted that China would soon goals without greater women’s eco- women in our top science and regulato-
eclipse Japan as the world’s second nomic empowerment and entrepre- ry, quality and HR positions. Our Euro-
largest economy. It already has—five neurship worldwide. In fact, no business pean operations are led by a woman,
years ahead of most projections! or economy will grow without this. and our operations in my native coun-
No one chronicles the economic rise Growth projections for China, India, try, Turkey, is run by a woman.
of nations better than Yale professor Africa, and North and South America We have aggressive metrics embed-
Fareed Zakaria. In The Post-American can’t be met without women’s econom- ded into our 2020 Vision—our growth
World, he writes about the nations that ic empowerment. The only way a pro- path forward. We are expecting to dou-
will drive the 21st century economy, jected billion people will rise to middle ble our volume and revenue, to be among
and the implications for America. class in the next 10 years; the only way the greatest places to work, and to be even
I think there’s another way of look- the world will grow $20 trillion dollars more consumer focused, more community
ing at this. I’d say that the real drivers richer; the only way more nations will focused, and more environmentally focused.
of the Post-American World won’t be We can’t do any of that without greater
China, India, or Brazil—or any nation. participation of women at our senior
The real drivers will be women: women ranks. For Coca-Cola, this is mission
business, political, academic and cul- critical. The keen insights women bring
tural leaders, entrepreneurs, and inno- to our business are profound. As more
vators. Women are the most dynamic and women worldwide gain economic
fastest-growing economic force today. They power, we need to be there to ensure
control over $20 trillion dollars in spend- the right shopper insights, the right
ing worldwide (an economic impact mix of products, and the right market-
larger than the US, China, and India ing and merchandising strategies.
combined. In the U.S., women-owned 2. Bring more women-owned busi-
businesses account for $4 trillion dollars nesses into our supply chains. Because
in GDP—this would constitute the rise out of poverty and become politi- of our global reach and influence, we
fourth-largest economy in the world! cally stable —will be by women achiev- can be powerful agents of constructive
Today, one in 11 working-age women ing gender parity. If we fail in this change. One exciting program at Coca-
is involved in entrepreneurship. regard, the world’s economy will fail. Cola is our Micro Distribution Center
The 21st century is the Women’s Cen- We still see too many roadblocks— (MDC) network in Africa. This enables
tury. As we look for ways to restart and cultural, educational, political, financial, and entrepreneurs to set up MDCs on behalf
reset the global economy, the solution technological—to women’s empowerment. of our company in areas where poor
lies right in front of us. In the words of As President Obama’s Ambassador for roads and infrastructure make it diffi-
World Bank President Robert Zoellick, Global Women’s Issues Melanne Verveer cult for delivery trucks to travel. They
gender equality is “smart economics.” said about the lack of access to capital distribute our products to retailers, often
I’ve been managed by women all of for women entrepreneurs: Too many of by bicycle or pushcart. Most of our sales
my life—beginning with my mother— the best business ideas die in bank parking in Kenya, Tanzania, Uganda, Ethiopia
and I like to think they’ve done a won- lots. That’s got to change, and it will change. and Mozambique are the result of this
derful job. As a business leader and model. Almost 1,000 of these businesses
someone who has the responsibility of Three Things We can Do in Africa are owned by women. Rose-
creating shareholder value for the I see three ways that business, gov- mary Njeri has run a MDC in Nairobi
world’s most recognized brand, I feel a ernment, academia and non-profits can for 10 years. She now employs 16 peo-
sense of urgency in ensuring that con- help generate female empowerment: ple and has educated her three children.
ditions are ripe for women to thrive 1. Accelerate women’s leadership Consider the multiplier effect of such
around the world. Call it self-interest within our walls. I serve as chair of our actions. Today, we work with 10 million
or enlightened self-interest—creating a company’s Women’s Leadership women-owned or operated business-
climate of success for women globally Council, which we initiated three years es—from suppliers and distributors to
is simply smart business for a con- ago. The program is built around three retailers—that derive a major portion of
sumer-products company. In fact, it’s focus areas: building a leadership their profits from Coca-Cola.
smart business for any company. pipeline, creating an enabling culture Recently we committed to help em-
12 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
power 5 million women entrepreneurs ETHICS EXAMPLE dent collaborators who work in teams
by the year 2020. I have seen the power (or cyberspace) with ease. However,
and conviction of our system, and their moral values may not be strong.
when we put our mind to something
we achieve results. To achieve this,
Visible Hands We must fix this disconnect, by con-
necting with them on their terms. At
we’ll partner with other companies,
Be an example of ethics. Deloitte, we’ve revamped our Ethics in
governments and civil society organi- Action training for new hires by mak-
zations to bring all of our skills and by Sharon Allen ing it online, interactive, and attractive.
resources to bear to help break down 2. Short-termism. Milliennials are
the barriers that small businesswomen less likely to stay with a company for
face—barriers like access to credit,
peer networking, and basic training.
We’ll give high potential women in
A DAM SMITH WROTE
about the invisible
hand that drives free
five or more years—and twice as likely
to leave within one year—than older
counterparts. The pressures that come
our system a chance to champion and markets. I believe that another invisible with expectations of continuous growth
manage this work. We can transfer so hand drives free markets—the shared can cause leaders to be short-sighted,
much business knowledge to emerging language of ethical values that enables driven by short-term goals. The hid-
entrepreneurs: basic accounting, busi- people to conduct business with each den costs become visible when a stable
ness planning, marketing, merchandis- other, where a deal can be sealed with a workforce, long-term investment, and
ing, customer service, and legal handshake and your word is your bond. a sustainable business disappear. I see a
advice—to name a few areas. Ethical leaders help create robust link between short-termism and unethical
And we’re encouraging all Coca- markets where trust and integrity can conduct. The nature of short-termism
Cola associates—men and women—to prevail. But often, we see headlines disdains the work that long-term rela-
support women small business owners via that tell of decision-makers who failed tionships take while embracing the pay-
one-on-one mentoring and training. This to consult with their ethics and compli- back of quick, impersonal transactions.
initiative will also reach millions of ance officers or with their own moral The mortgage crisis is an example.
men. All boats will rise. As our suppli- compass, and who made choices that Whether it was the borrower seeking
ers and retail customers gain greater took them dangerously off course. the loan, the banker making the loan,
skills and empowerment, their busi- Today, we face a challenging econo- or the broker packaging and selling
nesses will reflect this, and Coca-Cola’s my—because of choices made by cer- risky obligations, the only glue that held
business will reflect this. We are all in tain leaders. All leaders are entrusted them together was the transaction. Some
this together. As women rise in their with a mission, and many might call it enlightened
communities—the communities rise to people count on their lead- self-interest. I call it a recipe
new heights of prosperity and health. ers to help build an ethical for unethical behavior.
3. Stay committed to sustainability future. Ethical behavior 3. Trust. Trust seems to
initiatives. Recommit to sustainability keeps us connected. Every be in short supply: 34 per-
programs—educational, environmen- day, people decide who to cent of employees will likely
tal, human-health, cultural, and eco- follow. It is crucial that look for a new job when the
nomic-development initiatives. All of they cast their ballots for economy improves; of those,
these touch and influence women’s you and what you stand 48 percent cite loss of trust
empowerment and entrepreneurship. for. But you have lots of in their employer and lack of
In the communities we serve in 206 competition for their transparent communication
countries, we’ve learned that everything votes—especially from role from their leaders as their
is interrelated. Water is central to our models in popular culture. reason. Like ethics, trust is good busi-
future. Water is also a women’s economic The power of role models cuts both ness. Low trust is expensive. You build
empowerment issue. For example, in ways—good and bad. Twenty years relationships of trust through direct,
Mali, we dug a well in a rural village ago, two powerful role models in busi- regular, and open interactions. At
so that women wouldn’t have to spend ness weren’t even in business. They Deloitte, our ethics campaign includes
eight hours a day hauling water. This portrayed on film a style or creed that training called the Power of One. It rec-
enabled them to reinvent their lives— some would later adopt. For 13 seasons ognizes the importance of our choices
and start their own catering business. on Dallas, J.R. Ewing (Larry Hagman) and behaviors and how we each have
Smart organizations will see that took business ethics on a race to the the responsibility to act with personal
the 21st century is the Women’s Century. bottom—doing whatever it took to crush integrity to sustain the public’s trust.
Women’s economic empowerment and his competitors. Now, Michael Douglas An unethical culture can bring down
entrepreneurial growth will drive the reprises his role as corporate raider an enterprise. So, draw the connection
world’s economy to new heights. For Gordon Gekko in Wall Street II: The between ethical behavior and the value of
all of us—the implications will be vast. Money Never Sleeps. We all recall his the enterprise. Ensure that how you con-
Everyone’s success will be contingent iconic speech to shareholders: “Greed duct business is worthy of the value
upon women’s success. This is not a bat- is good. Greed is right. Greed works.” your customers expect and represents
tle of the sexes—this is a battle for preserv- the values of the enterprise. You can be
ing and enhancing the world’s economic, Overcome Three Disconnects more than an invisible hand. Through
environmental and social fabric. LE To build an ethical future, leaders the influence of your example, give
need to overcome three disconnects: people reasons to follow you. LE
Muhtar Kent is Chairman and CEO, The Coca-Cola Co. This
article is adapted from his speech at the Yale World Fund 1. Generational. Young people today
Sharon Allen is Chairman of the Board, Deloitte LLP. This
Lecture and used with permission of Vital Speeches of the Day. are fascinating. Some refer to them as article is adapted from her speech at the Ethics and Compliance
Visit www.VitalSpeeches.com.
Generation Me. I prefer to focus on their Officers Association meeting, Sept. 22, 2010.
ACTION: Empower women in your workforce. strengths. Millennials are smart, confi- ACTION: Be the visible hand of high ethics.
L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 13
COMPETENCY NEGOTIATION minimize your weaknesses. Be trust- MANAGEMENT TALENT
worthy, but verify what you’re told.
While most people are trustworthy,
Smart Negotiations many are not, and you can’t tell by Talent Management
Take 10 steps toward gain-gain. looking at them or talking to them. Create a sustainable advantage.
Believe what you say and say what
you mean. Use the power of conviction
by Robin L. Pinkley and transparency. Be responsive but
not too available. Trust your instincts.
Play by the rules you ask them to play by.

I N THE FIRST ARTICLE OF


this series on mas-
tering negotiations, I
Step 6: Manage the other party. Make
the deal worth their while, while making
them play by their own rules. Get guaran-
discussed the importance of a Master tees, not promises—rebates, not volume by Lance Berger and Dorothy Berger
Plan and Perspective. The second arti- discounts. Use the power of principled
cle outlined the Process. In this article,
I examine 10 steps that you can follow
to simplify and organize the planning
persuasion, based on reciprocity, scarci-
ty, authority, consistency, consensus and
making friends to influence people.
T O CREATE A SUSTAINABLE COMPETITIVE
advantage, leaders must first create
a culture of excellence. These are charac-
approach for a negotiations process Discounting does not produce a friend- terized by creativity, innovation, sus-
and help you keep your eye on the prize. ly relationship—but a friendly relation- tainability, engagement, achievement,
Step 1: Never forget your true goal ship reduces the need to discount. collaboration, diversity, and ethics. The
—to maximize your gain. Remember Step 7: Exchange information before primary way to create such a culture is
ME comes before WE, but you need you exchange value. Don’t sell any deal to implement a proactive talent manage-
them to get there. Only you decide if until you know what can and should be sold. ment (TM) process with three elements:
you move, how much and in what way. Listen with your ears, not your mouth; 1. Creed. A TM creed is composed of
Step 2: Prepare or don’t play. Learn and don’t interrupt. Also listen with your a widely publicized set of core princi-
all you can about the other party, includ- body (to manage them) and your mind (to ples, values, and mutual expectations
ing personal information, and keep a manage you). Challenge your assump- that guide behavior. Collectively, the
clearing house of notes for the future. tions and take notes to see what’s missing. stated principles depict the type of cul-
Learn about the context in which the When they finish, pause to collect your ture an organization strives to create to
other party functions—industry, cus- thoughts and enable them to say more. achieve its unique portrait of success.
tomers, vendors, partners, Acknowledge what you’ve The principles of the creed are embed-
competitors. Use connectors heard. Repeat key points, and ded in both the TM strategy and sys-
to your advantage. Create express empathy and understand- tem by incorporating its doctrines into
viable alternatives and deter- ing, not agreement. Ask ques- selection criteria, competency defini-
mine how you can decrease tions. Model good behavior tions, performance criteria, and internal
their real or perceived best and set rules. Don’t apologize selection and development processes.
alternative. Know your value for the need for you (and them) Johnson&Johnson states: “Our Credo
to them and how to reduce to obtain value. Prepare to is more than just a moral compass. We
their perception of the value respond to questions that you believe it’s a recipe for success.” Microsoft
they bring you. Create a living, do not want to answer. Don’t expects its values to guide behavior and
dynamic MAP to guide you with posi- ask questions if you don’t know what shine through in all interactions. Most
tions, interests, priorities, and pre- to do with the answer, or if they incent companies have updated their creeds to
pared reactions to resistance or games. the other party to lie. Prepare to say no include social responsibility, sustainability,
Plan your bidding and counter bid- and explain why. Provide solutions, not ethical behavior, innovation, and creativity.
ding strategy. Practice and role play. just problems. How you say something can Starbuck’s creed includes Six Guiding
Step 3: Empathize with the other have more impact that what you say. Principles: 1) Provide a great work envi-
side, don’t sympathize. Put yourself in Step 8: Time is on your side. Share ronment and treat each other with re-
their shoes—and head. If something your time deadlines, but not your time spect and dignity; 2) Embrace diversity
doesn’t make sense, ask how you’d feel costs. To maintain momentum—feed a as an essential component in the way we
in their shoes and how you can use this conversation, starve an impasse. Use a do business; 3) Apply the highest stan-
information. Consider how you’d respond time-out when needed to think, get dards of excellence to the purchasing,
to what you are saying and what would them to move, or reduce emotion. roasting and fresh delivery of our cof-
motivate you to say what they’re saying. Step 9: Consider implications for the fee; 4) Develop enthusiastically satisfied
But don’t lose sight of the prize—ME future. What precedent will this deal set customers all of the time; 5) Contribute
comes before WE. Invest in the per- and how it will impact the future deals? positively to our communities and our
son by being personal, but not by Know what happens if the other side environment; and 6) Recognize that pro-
giving up value. Be firm about value, doesn’t follow through—is this part of fitability is essential to our future success.
but flexible in the form of that value. the agreement? Is the deal enforceable? 2. Strategy. A TM strategy makes explicit
Step 4: Teach them to empathize with Step 10: Refine and learn. This Gain- the investments made in the people who are
you. Use the language of the other party Gain approach increases your effective- believed will best help it achieve competitive
and what they’ve said—put it in their ness, and creates a coordinated team effort excellence. A TM strategy views a work-
terms. Emphasize “I’m just like you.” that sends a consistent message. LE force as a portfolio of human resource
Step 5: Manage yourself. Take a hard, Robin L. Pinkley, Ph.D., is Professor of Management and Organ- assets that are differentiated based on
honest look at yourself and develop izations at SMU Cox School of Business. Visit www.SMU.EDU. an assessment of each person’s current
strategies to use your strengths and ACTION: Make your negotiation more effective. and potential contribution to success.
14 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
The criteria for selecting the people PERFORMANCE CULTURE Communal sharing—the idea of
who will receive different investments group unity, solidarity, being part of a
are rooted in the talent creed. The TM
strategies of most high-performing
Employee Relations clan—is working together as a team and
the absence of opportunistic behavior.
organizations contain three directives: Stars, stripes and soccer players. Think of Japan in the 1980s with its
1. Cultivate the people who will make model of group work in quality with
the biggest contribution now and in the accompanying long-term benefits.
future. They seek and inspire others to As part of their recession recovery
superior accomplishments, and embody plan, German workers shared in cut-
the creed, core competencies, and values. backs in hours worked (30-hour work-
Their loss or absence inhibits growth weeks) rather than losing jobs. Many
because of their impact on performance. attribute Germany’s quick exit from
2. Retain key position backups. Gaps in recession to their shared effort.
by Zannie Giraud Voss and Glenn Voss
replacement activity for incumbents in Emphasizing authority ranking or
key positions are disruptive, costly, and
distracting. Key positions should be
staffed by, and have replacements who
C ULTURE SETS A TONE FOR PERFORMANCE.
How employees relate to each other
affects performance, and competitive
market sharing may lead to decreased
performance. Consider incorporating
other models in specific ways or areas
exceed performance expectations, devel- advantage. Four relational models form to increase performance. Perhaps it’s a
op others, and role-model the creed. the building blocks of human relation- boost in R&D by communal sharing,
3. Allocate training, rewards, education, ships: market pricing, authority ranking, or incentives added through market
assignments, and development based on the communal sharing, and equality matching. pricing to increase innovation.
actual and potential contribution of people. Giving a reward for good behavior or A critical element of corporate effec-
To properly allocate funds, you must outstanding performance is market pricing tiveness is finding the right model and
classify employees based on their actual —creating stars. Authority ranking is mix. There’s no magic bullet. Authority
ability (or their potential) to add value central command where leadership ranking and market pricing should be
on the basis of three criteria: their perfor- and control prevails—building respect done in moderation. In the German
mance and competencies, their leadership for those with stripes. The communal culture, there’s a lot of authoritarian-
and development of others, and their model- sharing idea relates to whether we are ism. Having communal sharing doesn’t
ing of the creed. acting in unity, as a group—training mean authoritarianism or hierarchy does
3. System. You next need a TM system soccer players. Equality matching is simi- not exist. It’s a balancing act.
—procedures and processes for imple- lar to democratic voting and In contrast to Germany is
menting the creed and strategy. The best equal shares—and is less the lack of balance evident in
TM systems have: assessment tools (com- effective in the workplace. U.S., U.K. and Irish financial
petency assessments, performance Firms develop idiosyncratic firms. In the recession, they
appraisals, potential forecasts, and suc- models that enable cooperation, relied heavily on market
cession and career planning); multi-rater impacting the ways employ- pricing. Extreme market pric-
assessments; and diagnostic tools that ees interact and are motivated. ing leads to the star system.
identify: high-potential employees, key To sustain cooperative behavior, It’s difficult to set up that sys-
position backups, key positions with no all firms must develop some tem without alienating the
back-ups, positions with surpluses. behavioral norms and basic bottom and middle levels.
Developmental resources are allocated assumptions about human relationships, Topping up a CEO’s salary while the
based on the actual and potential contri- such as how decisions are made, and rest of the firm’s HR budget languish-
bution of employees to success. contributions and roles defined. es does not set a positive tone.
Monitor and fine tune your TM sys- Performance can be measured in terms In balancing authority or market pric-
tem. Use three measures: Quality: Is the of workforce retention, revenues from ing, low authoritarianism might be seen
strategy delivering results as measured innovation, and sales revenue. Retention as a lack of leadership and direction.
by the pipeline of top performers and is a key performance indicator since And, without market pricing, employees
highly qualified backups for key posi- employees hold the firm’s knowledge, may not be incented to perform better
tions? Timeliness: Does the system work create value and innovation, and rep- relative to colleagues and competitors.
in a stated time frame or is it viewed as resent a firm’s most critical resource. You need to know when to use which
too protracted as a decision-making Employee relationship norms have dif- model. If improved retention is needed,
process? Credibility: Are managers and ferent implications for cooperation, for example, know where you are in
employees engaged by the system? Do information sharing, and creativity. relation to these different models, and
people believe that the system is fair? Innovation that increases performance modify. One firm may make decisions
Our TM model consists of three linked can be determined by measuring rev- by consensus (communal sharing), but
elements: creed, strategy, and system. The enue streams generated by intellectual distribute pay raises based on individ-
model requires that the principles of the property. Employee behaviors ultimately ual contribution (market pricing).
creed be embedded into the TM strate- affect customer purchase decisions, mak- Another may rely on strong authority to
gy and system by incorporating its doc- ing sales revenue an indicator of per- make decisions, but engage in commu-
trines into selection criteria, competency formance relative to customer markets. nal sharing when developing products.
definitions, performance criteria, and Firms perform better—in terms of The challenge is to find the best blend
development processes. LE workforce retention, revenues from of stars, stripes and soccer players. LE
innovation, and sales revenue—the Zannie Giraud Voss, Ph.D., is Chair and Professor, MA/MBA,
Lance and Dorothy Berger are partners in Lance A. Berger & Arts Administration SMU Meadows School of the Arts and
Associates and coauthors of The Talent Management Handbook more they emphasize communal sharing, Cox School of Business. Glenn Voss, Ph.D., is Associate
(McGraw-Hill). Visit www.lanceberger.com. while placing moderate emphasis on Professor, Marketing SMU Cox School of Business.
ACTION: Fine tune your TM strategy and system. authority ranking and market pricing. ACTION: Create the best mix for your culture.

L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 15
PERFORMANCE CONVERSATIONS For example, we talk of the child as
a product of the School System, starting

Enterprising Economy early the migration of the child from


citizen to consumer, from family and
community life into system life. We
It is based in competent community. count on the School System to perform
many family functions—to feed, disci-
The place to look for care is in the pline them, and provide custodial care.
dense relationships of neighbors and The same dependency goes for other
community groups. We have a compe- family functions—like health, entertain-
tent community if we care about each ment, nutrition, employment, mental
other, and about the neighborhood. well-being, elder care, and environment-
Together, our care manifests a vision, al stewardship—all have been outsourced
by Peter Block and John McKnight culture, and commitment that can to professionals. All are organized in sys-
uniquely assure our sense of well-being tems designed to deliver these func-

T HE COMMUNITY IS the natural nest for and happiness. This source of satisfac-
hatching new enterprise—the
birthplace and home of small busi-
tion is complete in and of itself—not
dependent on the next purchase.
tions in efficient, low-cost, consistent ways.
We made the leap from being citizens
to being consumers in a culture that sells
ness, which provides the largest No business, agency, or government the idea that a satisfied life is deter-
growth in employment. Friends and can fulfill basic community functions. mined first by defining and promoting
family often provide the capital and If we don’t know our neighbors, aren’t needs and then figuring out how to
sweat equity to start a business. active in local community life, pay oth- fulfill them. We create a larger market
The culture of a local community is a ers to raise our children and service by determining that families and com-
key factor in nurturing entrepreneur- our elders, and try to buy our way into munities are filled with needs that are best
ial spirit. A community where local a good life, we pay a big price. We serviced by systems and professions.
people feel they are a center of enter- produce a weak family, careless com- Consumerism offers purchased solu-
prise creates the vision and support. munity, and a nation that tries hope- tions to being human, providing a sub-
The culture encourages people to initi- lessly to revive itself from the top stitute for what could come naturally
ate enterprises, members use their buy- down. Reversing this situation is diffi- to families and communities. This is the
ing power to support local enterprises, cult because of the power of systems to more profound cost of the consumer pro-
and they put their savings to work in make consumers out of citizens. mise, the denuding of community capaci-
community credit unions and banks. ty. The institutional counterfeit of
Their dollars circulate, providing compassion and support is a two-part
the economic support that parallels and package: first, the spin of optimism
strengthens local social support. Some backed up by a purchase; and, second,
communities even have a local currency the denial when it does not happen.
to incentivize support of local economy. For example, in advertising we are
A related economic power of a con- promised immortality, eternal youth,
nected community is access to jobs. One- and happiness. This promise is elegant,
quarter of job seekers get information moving, entertaining. At the end, ways
from relatives, friends, and neighbors. the product could hurt us are described in
Strong community connections spawn small print or spoken rapidly—accen-
new enterprises, sustain them, and pro- By seeing the consumer ecology for tuate the positive, eliminate the nega-
vide primary access to employment. what it is, we can become citizens again. tive. We call this spin. Responses of spin
Without these functions, the economy We can shift our thinking and decide and denial are designed to keep organi-
becomes a land of large-scale institu- who we take ourselves to be: producers zations on course. Systems can’t allow
tions unable to sustain a local work- of our own future, or purchasers of what sorrow to become personal. When sys-
force (and so large they’re destined to fail others have in mind for us. Consumer tems lift the veil of denial and spin to
to serve any interests but their own). society begins when what was once the apologize or express sorrow, it is either
In consumer ecology, care is co-opted province or function of the family and because they’re forced to by law, or it
by systems; businesses, agencies and community migrates to the marketplace. is long after any consequences.
governments. Insurance agencies send It begins with the decision to purchase The effort to find a fix for our humanity
letters to tell us they care about us. what might have been homemade or only forces us into counterfeit promises
Charities ask us to give money to pay produced locally. This is how citizens and unsatisfying results. Often we
for the care of people. Government yield their power to the lure of consumption. believe that if we do more of what does
pays hospitals and medical profes- Consumption is like an addictive drug. not work, it will finally work. This is the
sionals for their service (Medicare). In The market promises what it knows dilemma of the consumer economy: it
each case, they are providing a paid won’t be fulfilling. This defines its leads to a place where when we reach a
service—not care. Systems offer services counterfeit nature––trying to make some- limit and still are unsatisfied, we think,
for pay. Genuine care can’t be paid for— thing appear to be gratifying or satisfying if only we had more we would be success-
it is given, free of charge. You can pay when it is not. The fact that dissatisfac- ful or satisfied—more police, physicians,
for services for your mother in a nurs- tion persists after achieving the good life teachers, services, stuff. This is not a
ing home, but she may lose the care of means the good life is not satisfying. Un- solution—it’s an addiction. Consumerism
family, friends, neighbors, faith, and functional families and incompetent is not simply an economic system—it
service groups. They become visitors to communities signal that we’ve reached can be considered an ecology. It impacts
a service system; she becomes a client. the limits of consumer satisfaction. how we relate to each other; it shapes
16 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
our relationship with food, work, music, ETHICS VALUES when they feel ill-used themselves.
ritual, religion––all elements of culture. Organizations that are best in customer
And for this ecological system to work, service also treat their employees best.
we have to participate in the effort to Built on Values The service you provide for your cus-
purchase what matters and persist at tomers will never be greater than the
it, despite the lack of results. This con-
Inspiring a values-rich culture. service you provide to your employees.
sumptive ecological system produces 3. Success is doing the right things
hollowness in our lives, even for those by Ann Rhoades the right way. Well-defined values can
who are winning at the game. help you, and your employees, make
better decisions. In values-rich compa-
Hold Six Conversations
To achieve an enterprising economy,
hold Six Conversations that Matter:
T HE BEHAVIOR OF LEAD-
ers tells the real values
of a company. Often, the
nies, the front line is where most deci-
sions about customer service are made.
So, empower front-line people with tools
1. Invitation conversation. Transform- values as they are lived bear little resem- and knowledge to handle problems
ation occurs through choice, not man- blance to stated values—sanctified in a personally and immediately. The win is
date. Invitation is the call to create an mission statement. Some leaders believe a happy customer who did not have to
alternative future. What is the invita- that all they need to do is proclaim a speak to a supervisor. By defining your
tion we can make to support people to set of values and culture will magically values and the behaviors based on them,
participate and own the relationships, change, but that does nothing to retool you simplify decision making: “Does
tasks, and process that lead to success? the values that control actions on the that make sense in light of our values?”
2. Possibility conversation. This fo- front line. Changing those inherent values is all you have to ask yourself.
cuses on what we want our future to be as takes more effort and can’t be done by 4. People do what they are incented to
opposed to problem solving the past. any leader or executives acting alone. do. Reward the right behaviors to achieve
It frees people to innovate, challenge A culture that works for your company— desired outcomes. This is made easier
the status quo, break new ground, and and fits with your leadership, values, with values-based performance metrics.
create new futures that make a difference. products, customer desires, and Also, your values will be perceived as
3. Ownership conversation. This con- employee aspirations—can only arise hollow unless you base compensation and
versation focuses on whose organization organically. You either encourage the rewards on expressions of the behaviors that
or task is this? It asks, “How have I con- behaviors you want in your culture, or go with the values. Hiring and perfor-
tributed to creating current reality?” they don’t happen. As leaders, we tend mance appraisal methods, too, must be
Confusion, blame and waiting for to identify our values and revised to select people who
someone else to change are a defense build our cultures on shared display these values. And you
against ownership and personal power. behaviors, but there is no must be courageous to fire
4. Dissent conversation. This gives reason why the people in those who don’t, including
people the space to say no. If you can’t our companies can’t do it on long-time employees and
say no, your yes has no meaning. Give their own. The key is identi- executives; otherwise,
people a chance to express their doubts fying your best employ- they’ll render your ideal
and reservations, as a way of clarifying ees—your A Players—and culture impossible.
their roles, needs, and yearnings with- spread their values by hir- 5. Input = Output. You get
in the vision and mission. Genuine ing people who share those out of something what you put
commitment begins with doubt, and values and motivating all into it. Values maintenance
no is an expression of people finding employees to live those val- —continuous improvement
their space and role in the strategy. ues every day in their behaviors. —is as important as values creation.
5. Commitment conversation. This We call this the Values Blueprint way You’re never fully done with culture
conversation is about making promises of changing culture. I’ve seen it create change; you must be vigilant that no one
to peers about your contribution to the culture change in many organizations backslides into old ways. This requires
success. It asks: What promise am I will- (teams can also use this blueprint to monitoring of progress, as well as val-
ing to make to this enterprise? And, what create islands of excellence, even when ues-based leadership development and
price am I willing to pay for success? It is top leaders are not ready to buy in (you succession planning.
a promise for the sake of a larger pur- can lead them to it by getting results). The culture you want can be built on
pose, not for personal return. I find that six principles inform suc- shared, strategic values—and financial
6. Gifts conversation. Rather than cessful values-based culture change: responsibility. Identifying shared values
focus on deficiencies and weaknesses, we 1. You can’t force culture—you can —and acting on them—creates a healthy
focus on the gifts and assets we bring only create environment. A culture is the culture. Those values should also be vet-
and capitalize on those to make the best culmination of the leadership, values, lan- ted in terms of responsible fiscal man-
and highest contribution. Confront guage, people, processes, rules, and other agement. Happy-talk values that result in
people with their core gifts that can conditions, good or bad. Leaders are most spending money on questionable pro-
make the difference and change lives. instrumental in creating the environment grams are not sustainable values. A
Other conversations may also be impor- and provide the most direct influence on values-rich culture is likely to save mil-
tant, but these six are vital to shift to a it. However, they can’t create culture— lions of dollars. Values are most critical
future where each citizen, employee, or in- only the right conditions for it to arise. when making tough decisions—that is
dividual chooses to take responsibility and 2. You are on the outside what you are when they illuminate the way forward. LE
own their role in shaping the future. LE on the inside—no debate. You can’t cre- Ann Rhoades is a director of JetBlue Airways and P.F. Chang’s and
Peter Block and John McKnight are co-authors of Abundant ate a great customer service organization if president of People Ink (www.peopleink.com), and coauthor with
Nancy Shepherdson of Built on Values.
Community (Berrett-Koehler). Visit www.AbundantCommunity.com. you treat employees badly. You can’t
ACTION: Hold these six conversations. force people to treat customers well ACTION: Build on the values of your A Players.

L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 17
CHANGE CREATIVITY competitive differentiators. Product
quality as a decisive success factor is
decreasing as even more complex products
Creative Leadership turn quickly into commodities, and quality
and reliability are just tickets for market
Leaders are performing artists. entry. We outsource easy-to-imitate ele-
ments of the value chain to low-cost
by Roland Deiser our connected, fast-changing world. To countries. What remains is the complex
master the strategic innovation challenge, task of orchestrating the many elements of
companies need a culture of agility and a global network of partners and alliances

C REATIVITY IS CENTER
stage, due to two
trends and five drivers.
learning that supports high performance
and reinvention. They need: enabling
structures, mechanisms, processes, and poli-
and to create differentiation through design,
branding, reputation management, and cus-
tomer engagement strategies. As these
Trend 1 is the rise of the Creative cies that encourage and support creative intangible product attributes increase in
Class and importance of creative talent dialogue and experimentation; principles importance, so does the role of creativi-
in a knowledge economy. In his book that help to address disruptions and discon- ty and intangible asset management.
The Rise of the Creative Class, Richard tinuities with creativity, courage, and intu- 5. Creative talent—and its appropri-
Florida says that this class includes not ition, just in time, with a minimum of red ate management—make all the differ-
only artists (writers, painters, actors, tape, across boundaries; and highly efficient ence. The responsibility to think and act
musicians) but everybody for whom cre- processes. Design can no longer be based strategically must become pervasive, not
ativity is an essential element of professional on a mechanistic understanding of com- restricted to the C-suite. And strategy
life. This includes knowledge workers mand and control that relies on hierarchi- and innovation need active engagement
who produce or deal with intellectual cal power differentials. It must provide of the external stakeholder network.
capital, such as software developers, spaces that foster entrepreneurship and This requires a radical rethinking of tradi-
advertisers, designers, architects, engi- enable people to live and explore their tional talent management. Members of
neers, scientists, inventors, consultants, potential. Crafting and implementing the creative class are smart, self-reliant,
educators, and others. About 30 per- such designs is an architectural chal- and motivated to live their dreams and
cent of the workforce belongs to this lenge that requires high creativity and a realize their potential. They need an en-
class—and their share is rapidly rising. deep understanding of system dynamics. abling environment—a creative, flexible,
The number becomes even larger if we non-bureaucratic culture—to thrive. The
include entrepreneurs and all who have ability to attract, lead, and retain creative tal-
leadership responsibility in networked ent boosts your creative competence and
organizations. Their work is creative, too. yields a decisive competitive advantage.
Trend 2 is the rise of Creative Com- Strategy, organization, innovation,
petence as a critical success factor. This branding, and people are driven by the
competence grows in importance as creative imperative. Meeting this chal-
practices like strategic management, lenge requires a comprehensive approach to
innovation, organizational design, tal- managing organizations and the stakeholder
ent management, and the ability to network. Developing and sustaining cre-
lead in networked organizations are ative competence requires designs that
dominated by the creative paradigm. 3. Innovation is king. Companies need enable the power of networks within
to develop innovation competence. In the and beyond boundaries. It calls for a
Five Major Drivers last century, the focus was primarily on new culture of leadership that shapes hor-
Five drivers also boost creativity: product innovation (R&D). Today, products izontal, non-hierarchical relationships
1. Strategic management is now cre- are a small part of the innovation challenge. without relying on formal power and
ative art, not exact science. In environ- The most innovative product develop- control. It requires courageous leaders
ments that are unpredictable and driven by ment can’t compensate for bureaucratic who can: deal effectively with the diffi-
disruptive change, market analyses and and silo cultures that can’t collaborate cult egos of creative spirits; keep them
predictions based on the extrapolation effectively in the flat world of global in check while nurturing their potential;
of trends quickly become obsolete. value networks. We need a more com- support their aspirations; respect their
Today’s realities call for creating a just- prehensive view of what innovation desire for independence; and experi-
in-time strategic management process that capability means, with an emphasis on ment with innovative business models.
pervades the company and includes the rel- design and business model innovation, These are major challenges for leaders
evant stakeholders of the enterprise system. together with the leadership capability who are driven by numbers, measurable
Rather than limit strategic discourse to that can manage these innovation ele- KPIs, and an obsession to plan and con-
secretive strategy departments, leaders ments in an integrative way. Then, vir- trol. The transition is hard, as it touches
need to foster creative strategic dialogue tually all employees—and stakeholders the essence of management and leadership. It
across boundaries and at all levels. —become potential participants in the requires courage to let go and rely on the
They need to identify and capitalize discourse about the way things are done. power of horizontal collaboration, sup-
on opportunity spaces that can redefine This new innovation imperative requires ported by new ways of governance
the rules of the game. Strategic leader- people with a creative spirit who think based on trust and engagement. LE
ship is primarily a creative challenge. laterally, collaborate in networks, and
Roland Deiser is a Senior Fellow at the University of Southern
2. Creative organizational design is have the cognitive and emotional abili- California, Chairman of European Corporate Learning Forum,
the new strategic weapon. Hierarchical ty to challenge the status quo—traits and author of Designing the Smart Organization (Jossey Bass).
Visit www.rolanddeiser.com.
control, functional silos, and an obses- that we find in the creative class.
sion with formalization are obsolete in 4. Design and brand are the major ACTION: Cultivate creative leadership.

18 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
WORLD BUSINESS FORUM or death. Companies can fall into late their leaders feel that they are under
stage 4 and come back when leaders assault. Ideally, key staff members
AS A SPECIAL SUPPLEMENT TO emerge and break the cycle of despair, should deal with the onslaught of
LEADERSHIP EXCELLENCE THIS MONTH, I but you can’t come back from Stage 5. information, and the CEO should focus
INCLUDE MY EDIT OF THE EXECUTIVE Ask yourself: Would there be a clear on running the business. That buffer
SUMMARY OF PRESENTATIONS AT THE void if we left the planet? If you don’t space between the barrage of informa-
2010 HSM WORLD BUSINESS FORUM have the answer, you’ll go away. At tion and the work at hand is important.
(NEW YORK CITY, OCT. 5-6; VISIT WBFNY.COM OR each stage, symptoms become increas- Jeff Immelt, CEO of General Electric,
HSMGLOBAL.COM). ingly evident. Recovery is still possi- tends to do all his knowledge-gather-
ble—until the condition is terminal. ing and then go off to contemplate.
To assess priorities and then align Slowing the pace led to a historic
them, do your diagnostics. Don’t focus decision and cemented the friendship
Jim Collins: on your career; focus on building a between President Franklin Roosevelt
SUSTAINING GREAT RESULTS pocket of greatness. How many key and British Prime Minister Winston
seats are on your bus? What percent- Churchill. In World War II, Roosevelt

I SEE FIVE STAGES OF AN age is filled with right people? What


unhealthy company: are you doing to raise that percentage?
Stage 1. Hubris born of success. Bad Double your questions-to-statements
went by ship to Morocco, and then
Churchill persuaded him to take an
extra day to see the most beautiful sun-
decisions taken with good intentions ratio. The first question is: How is our set at the top of a mountain in
are still bad decisions, and the antidote world changing, and what are the bru- Marrakech. Later that deep bond con-
is for leaders to have a special brand of tal facts? What’s on your brutal facts tributed to some critical decision-mak-
humility and extreme ambition for the list? Turn off your electronic gadgets ing. That bonding and understanding
cause—not themselves. Great leaders and create white space—one day every of your partner is very important, as is
have the guts to cut off their arm if it two weeks. Create a “stop doing” list. the time to reflect. During the War, the
has cancer—they make that sacrifice You can only manage your time, not British were in desperate need of
with the stoic will to do whatever it your work. Stop giving titles. The right destroyers. Everyone thought that
takes to make their enterprises great. people for key seats understand they Roosevelt was going to have all these
Stage 2. Undisciplined pursuit of do not have a job—they have responsi- meetings to make a decision; instead,
more. Everybody loves you for your bilities. Set a Big Hairy Audacious Goal he took a few days to go sailing on the
overreaching—until you fall. Great for at least 15 years in the future. LE Chesapeake. That’s when he came up
enterprises are more likely to die of with the Lend Lease idea.
indigestion than starvation. Packard’s Leaders don’t have that luxury of
law, named after David Packard, founder time anymore. Whereas Roosevelt took
of Hewlett-Packard, states: “If you allow David Gergen: CHANGING an extra day in Morocco, I recall a trip
growth in revenues, growth in scale, ROLE OF THE LEADER that I took to the Middle East with then
growth in new adventures to exceed President Bill Clinton to see the King of
your ability to have enough of the right
people in the key seats to execute on that
growth brilliantly, you will fall.”
T HE ROLE OF THE LEAD-
er is different today.
Many of us grew up at a time when a
Morocco. We flew into Morocco at 2
a.m.; had coffee with the King until
4:30; and flew right back.
Stage 3. Denial of risk and peril. CEO or a General Patton was a lone I asked the President whether he
Never mistake faith for facts, as the opti- individual who sent down messages thought it was wise to be moving at
mist is at risk of dying of a broken heart. from Mount Olympus. It’s no longer pos- this pace and making decisions so
Admiral James Stockdale told me that sible to get results by ordering people quickly. He didn’t even spend a day in
as a prisoner of war he survived exten- around. In a crisis, you need to have Morocco. He said he had no choice.
sive torture when others didn’t command and control; but, in general To make a first-class country, leaders
because he was a realist who didn’t rely on you need to be able to influence and per- need to identify the best successors and
false hope. His message is known as The suade. Even young officers have to see empower them, and to look for diversi-
Stockdale Paradox: You must never con- if you’re willing to take the bullet. ty of opinion because there is a danger
fuse faith that you will prevail in the While General Patton was sending in insulated thinking.
end—which you can never afford to messages out, today’s leaders are man- When looking ahead, I predict
lose—with the discipline to confront aging a constant two-way stream of strong ties will develop between social
the most brutal facts of your current information. General David Petraeus is responsibility as a leadership priority and
reality, whatever they might be. one leader who has mastered virtual the sustainable health of the U.S. economy.
Stage 4. Grasping for salvation. Even connection and communication. You The Chinese are eating our lunch on
with the aid of a heroic leader or game- can write him on a BlackBerry, and renewable energy. We invent the solar
changing magic bullet, many compa- you’ll get an answer within an hour. panels, and they are being built in
nies still fail in this stage. The antithe- He is open to feedback and conversa- China. They provide cheaper labor and
sis is building a culture of discipline, by tions from the troops. He doesn’t use it also the subsidies are in violation of the
consistently pushing in an intelligent to manage or lead, but to stay World Trade Organization, yet we
direction without stopping. There’s informed and connected. However, haven’t turned the screws on them. I
not one big push, but overnight success- there’s a danger in being connected to end with a rallying call: China created
es are about 20 years in the making. Have volumes of electronic information. It’s one million jobs, and our factories are
the discipline to look inside and focus harder to lead organizations because of shutting down. This country will be in
efforts; find what you can be the best the blogosphere that exists today. big trouble. Our biggest challenge is
in the world at—or leave it for others. People are spreading rumors, lies and whether the U.S. will go into decline or
Stage 5. Capitulation to irrelevance vicious comments to the point where not. It’s a question of leadership response. LE
L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 19
action against chronically underper- rienced with hiring and keeping the
forming teachers. right people. After multiple acquisi-
Jack Welch: I launched the Jack Welch Management tions and mergers, I’ve identified the
ACHIEVING SUCCESS Institute to help advance online educa- one difference between my company
tion and teaching courses on leadership, and the newly acquired one—it’s the

W HEN LACKLUSTER hiring, firing and other management


performance and essentials. To fix the U.S. education sys-
a consistent deficit of proven results tem, we have to challenge the tenure
Dream-People-Culture platform. If you
hire and train right, competitors can’t
duplicate your business. The difference
confront your organization—regard- system, reward teachers on merit, not in what you say and what you do is
less of the market you serve—you shy away from paying superior teach- what makes the difference. Making the
have to take action, stick to your con- ers a lot more money, and effectively right decision isn’t always the easy decision.
victions, and make the tough decisions weed out the worst teachers. I would • Culture. It’s mission-critical to create
to get ahead. We’d all like the world to make education look like some of the a culture of ownership. You want peo-
be just the way we like it, but when charter schools where exciting people ple to feel that they own the business.
the chips are down—be it because of come to work; they are rewarded and As a leader, you’re more likely to think
the economy or other challenge—lead- cheered for their work and respected If I’m an owner, failure is not an option.
ers might see their customers com- by everyone, and the students are the We tend to express more recklessness
plaining, competitors charging ahead products and not the teachers. LE in a rental car than we do in our own
with new offerings, and underperfor- car. After all, we’ll have to pay to fix
ming employees bringing other peo- the scratch or dent on our own car. You
ple’s morale and productivity down. don’t want your employees to treat
I insisted that GE’s underperformers
Carlos Brito: BUILDING A their job or their company like a rental.
be moved out. You have to see employ- PERFORMANCE CULTURE Creating that sense of ownership
ees straight on. You have to be can- will ensure that when an employee
did—you can’t hope that Joe or
Cynthia will get better. Sometimes,
those lessons reveal, “The difference
I T’S COMMON TO HEAR
people refer to a com-
pany’s successes or failures the same
makes a decision, it will be done in the
company’s best interest.
People and dreams can be combined
between candor and abrasiveness is way one would talk about a sports to form a powerful ownership culture
close”. The higher you are, the more team. Both require a dream for success, that will prevent taking short cuts.
candid you can be. The lower you are, being composed of the right people, Building a company takes time, brick
the more abrasive you are. You have to having them rally around the dream, by brick. There are no shortcuts to
anticipate the world being worse for you and then creating a culture of ownership. building a performance culture. Instead
than it appears in the current moment. As CEO of Anheuser-Busch InBev, I of developing their own people, many
That last part may be what’s required find that three elements are critical to companies hire from the market almost
to force tough decisions about people. building a high-performance culture: all the time. This is a mistake. Develop-
These days, I see leadership devel- • Dream. Companies are formed by ing your own people is key. LE
opment rating low on the corporate people. And if the people in a compa-
priority list. But it shouldn’t be that ny all go in different directions, the
way because when you get the best company can’t move forward. Our
players, you win. What gets in the way company has to have a dream—to be Joseph Grenny:
of that mandate, so often, are day-to- the best beer company in a better EXECUTE ON STRATEGY
day operations and leaders’ insecurity world. Dreaming small or dreaming
about bringing on the best talent. Great big takes the same energy, so dream big.
leaders promote and hire people who
are smarter than they are.
The analogy of a high jumper is rel-
evant when setting your company’s
A FTER LEARNING SOME-
thing new, you’ll
likely confront resistance when you try
The succession process that I helped dream and the expectations of people. to implement new ideas and strategies.
to orchestrate before my departure from No matter how high the bar is set for a The challenge begins when you return
GE has not fulfilled its primary role: to high jumper, the athlete gets just high to the office and encounter people who
prepare the next generation of leader- enough to clear it. The same could be are unwilling to change. You then need
ship. So, I wonder: Where was the said for that of any corporate depart- to exercise influence.
leadership development? Where was ment or team. It’s about the coach Consider this influence problem:
the succession plan and process? putting pressure on the athlete. We You’re the manager at Air Nippon air-
Part of the reason I was well known should never be afraid to test the lim- ways. If passengers used the restroom
for GE’s performance measurement of its. Keep raising the bar to dream, and before boarding the plane, they could
employees was because it conflicts be public about it. lighten the load by 240 pounds, reduce
with the approach that so many other • People. You have to worry about the carbon footprint, and reduce fuel
companies take: People spend more getting the best people. Great people and materials costs. How do you get
time trying to make the bottom 10 per- attract other great people and chal- that to happen? Is it your inclination to
cent okay than celebrating the top 20 lenge them. Similarly, mediocre people influence people monetarily by charg-
percent of their performers. attract mediocre people. Leaders can’t ing them to use the restroom on the
Business leadership examples be afraid to hire individuals who you plane or subconsciously by playing
would be equally powerful if applied think with training and time, might be waterfall sounds in the boarding area?
to education. The education system better than you. You need to spend By examining your response, you
needs to focus on how it can deliver time getting to know your people. can determine what aspects of influ-
better student outcomes by reducing Don’t leave people to HR alone; it’s ence you tend to rely on, and you may
the influence of unions and taking your responsibility. I have much expe- also see some gaps in your thinking.
20 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
There are two big reasons people do Many of us are likewise feeling fine. support. P&G acquired the 1,500-prod-
what they do: because they want to do uct Max Factor color cosmetics line in
The climate crisis is the biggest chal-
something (motivation) and because lenge to sustainable capitalism and our the 1990s. The P&G team ranked them
they are able to do something (ability). way of life. But the word crisis, in by sales, profit and margin, discontin-
Leaders tend to develop motivational Chinese or Japanese, has two charac- ued the poorest performers and devel-
strategies that don’t increase ability. ters: danger and opportunity. The climateoped new offerings that were ultimately
We’ve identified six sources of influ- crisis is one of the most dangerous, but much more profitable and successful.
ence. 1: Personal motivation: Do I want it also shows the biggest opportunity. Innovation has to be the centerpiece
to do it? 2: Personal ability: Can I do it? The global economy is still dependent for a business to thrive for two cen-
3: Social motivation: Are others encour- on an oil market dominated by the turies, as P&G has. In the last decade,
aging me to do it? 4: Social ability: Are Persian Gulf, and the thought of it the business grew organically six per-
others helping me to do it? 5: Structural being disrupted or under control of thosecent on brand and product innovation
motivation: Is the environment right for who could use it as a geopolitical weaponalone. Such innovation has two inten-
me to do it? 6: Structural ability: Does is disturbing. tions: to create even more value for our
the environment support me doing it? Abandoning the 100-year-old pollut- current users and to bring in new
Leaders who understand behavior ing technologies of the past to prepare users. We served two billion of the
from each source of influence can for a sustainable 21st century could nearly seven billion people in the
develop the most effective influence break our dependence, put people to world. We then doubled the number of
strategies. Leaders who use all six of work, and save the economy; but col- customers to four billion in less than a
these sources of influence are 10 times lectively we suffer from inertia—the decade. We want to serve another bil-
more likely to secure change. You can help enemy of change. I attribute the inertia lion in the next five years.
people link the behavior that is being in part to our inability to imagine P&G’s longevity hinges on its ability
asked of them and their own core values something that’s unprecedented. We to anticipate market changes while learn-
by using engaging stories or recreating tend to think if it didn’t happen in the ing from the missteps of the past. I evalu-
powerful personal experiences. ate new inventions that could threaten
past, it’s not likely to happen in the future.
What works to change behavior? I see major contributors to the cli- brands, and even categories. I also
Whether you’re trying to amp up your mate crisis: global population explosion,evaluate new inventions P&G could
career, get your finances in order, lose which taxes resources; the dramatic partner with to improve our products
weight, beat an addiction, or save a expansion of power-draining technolo- for more customers. New inventions
struggling relationship, you can use gies; and the way we think about capi- can be both threats and opportunities.
four proven change strategies that will talism. The population has quadrupled; My two big do-overs show how instinct
keep you on course without falling in my lifetime, 62 years, we’ve gone plays a role in CEO leadership.
back in your old ways: 1) Identify cru- from 2 to 6.8 billion. I’ll see it go to nineFirst, P&G was ready to swap one of
cial moments, moments of greatest its unreleased pharmaceutical drugs
billion. I attribute the increase in popu-
weakness, when enacting the right lation to the education of girls, empow- for Claritin, when at the last minute the
behavior will have an enormous effect erment of women, fertility manage- head of P&G Health Care advised me
on results; 2) Create Vital Behaviors: If ment, and higher infant survival rates. not to do it. Every bone in my body
you set rules in advance, you’re more said we should go ahead, but I
Capitalism is the most efficient form of
likely to change your behavior when a organizing economic activity. It unlocks deferred to experience and expertise. In
crucial moment hits; 3) Engage all six human potential. It has a set of organic,hindsight, I should not have. Claritin is
sources of influence: harness the six ubiquitous incentives. However, we are the second largest over-the-counter
influence strategies that determine how overdue in addressing capitalism’s drug introduced over the last decade.
people behave; and 4) Turn bad days into structural problems, specifically the (P&G’s Prilosec is the largest.)
good data so that you learn from your short-term thinking that recently Second, after a great acquisition
failures and adjust. With these strate- brought down the financial system. with Gillette, P&G had an opportunity
gies, you can create robust change. LE That same lack of vision prevents long- for another large deal, but couldn’t
range environmental planning. make it happen. There were three own-
LE
ers. I had the deal done with the major-
ity owner, but couldn’t get it done with
Al Gore:
either of the minority owners.
THE NEW GLOBAL DEAL A.G.Lafley: CUSTOMER During economic instability, compa-
CENTRIC GROWTH nies are more likely to play it safe

T HE LATE COMEDIAN
Minnie Pearl told
of a farmer who was involved in a car L EADERSHIP IS ABOUT
making difficult
rather than invest in risky innovation,
yet P&G’s longevity is a perfect exam-
ple of weathering every external condition
accident. When the farmer went to choices. When I had to sacrifice two and thriving. For those without authori-
court to sue for damages, the lawyer beloved and profitable brands— ty or executive sponsorship to initiate
asked him whether it was true he said Noxzema and Clearasil—I equated it or champion customer-centric innovation,
he felt fine right after the accident. The to letting go of my children. But if I say, just do it. Nobody told me to
farmer began to tell a long story of the products are not part of a company’s watch people and learn why people do
events, culminating with the other car growth strategy and can’t capture a what they do—I just decided to just do
hitting him and his cow. When police market-leading position, human and it. Get your customers involved in co-
arrived on the scene, they saw the operational resources have to be designing and co-creating new prod-
injured cow and mercifully shot him. focused elsewhere. Companies can bet- ucts and services and ask for forgiveness
“So when the police asked the farmer ter turn their attention to innovation later. Charge ahead and find someone
how he felt, he said, “I feel fine.” when not maintaining products on life to let you run your own experiment. LE
L e a d e r s h i p E x c e l l e n c e W i n t e r 2 0 1 1 21
Counter the response “we don’t need couldn’t overcome the obstacles ahead.
Renee Mauborgne: to change” by using harsh operational Execution of a creative vision. Added
and market realities to render the sta- to the mix was a game-changing vision
BLUE OCEAN STRATEGY
tus quo indefensible; 2) limited that was nearly unexplainable, and thus
resources: Redirect resources from cold harder to get people on board. Innovation

W HEN SO MANY LEAD- spots—areas of highest consumption of


ers are making resources that add no value—to hot
the case for creativity, I question where spots, areas that have the greatest
drove the movie. My intent from the start
was to change the digital creation of
characters. The risks of doing something
management should spend its time— impact on performance in your blue new with Avatar were not as great as not
on enhancing productivity or on ocean strategy; 3) motivational hurdle: doing something new that would excite
enhancing creativity? On the one Identify the kingpins, the key influ- audiences. I wanted to push my team to
hand, the importance of optimizing encers, and bring them into the strate- develop the movie technology wave of
asset utilization, costs, quality, cycle gy process, engage them with fair the future. One revolutionary innova-
time and logistics is critical to today’s process—engagement, explanation, tion—the enhanced 3D technology—
enterprise. But growth, new business and expectation clarity—and leverage wasn’t enough, and creating 10-foot-tall
development, innovation and future their influence and respect to motivate people was an even harder invention.
strategy are crucial as well. In fact, the others to effectuate the blue ocean Perseverance and patience pay off.
more senior the position, the more strategic shift; and 4) the political hurdle: The investment in people, technology,
important the role as steward of the Recruit a consigliore; find out who is and capital resources plus energy and
future. The higher up you go—the likely to fight a new strategy and who time mounted in the high-risk environ-
more money you make—the more supports it; create a coalition of angels; ment. From concept to screen took 15
your role as leader is building the future and circle the devils so their power is years, although there was a decade
of your company. And, the role of cre- squelched. LE when the project was untouched. I was
ativity is crucial not just for companies 3 1/2 years into the project before see-
to build their future but for solutions ing the first shot. I don’t think you ever
to the world’s macroeconomic chal- James Cameron: know if something is going to be a hit.
lenges—like energy, water, and pollu- INNOVATION AND PASSION It’s hard to know. I knew we were
tion—where big trends demand crea- doing something unique. There are
tive solutions by businesses to be met. risks involved in trying new things,
So, how will we close the gap
between the aspirations of people and our
ability to support them without creative
C AN SOMEONE WHO
pushed teams to
great achievements through a demand-
but the biggest risk is not to be bold. You
have to break away from the pack.
Audiences are jaded. It must be the
shifts? Simply making incremental ing leadership style reform and get the must see film. The reward is all the
improvements and enhancing produc- same high-quality results? I had to sweeter because of my propensity to
tivity won’t allow us to multiply the adapt my leadership style from dictator- set goals ridiculously high and fail at a
resources that we have to make it sus- ial to one that was more respectful and level higher than everyone else. LE
tainable for all of us. The creativity of empowering. I wasn’t always a good
our strategic thinking will enable us to leader when I worked with people to Other speakers offered insights:
overcome and shape these strained get the best out of them. These skills Steve Levitt, author of Freakonomics:
structural conditions. That is the aren’t innate for me, and I had to be “Create a culture of experimentation (to
essence of blue ocean strategy. open to learning. Now, when conflict understand root causes and influences).”
Is the blue ocean strategy right for arises, my inclination is to solve the Joseph Stiglitz, former chief econo-
you? If you are like most companies, problem, rather than make a recrimi- mist at the World Bank: “With the end
you are stuck in a red ocean, facing nating moment out of it. I turn it back of the stimulus, the economy is getting
heightened competition, dwindling on myself. Did I hire the right person? weaker; something else needs to be done.”
profit margins, and commodity-type Yes. Then maybe I didn’t communicate Vijay Govindarajan, author of Ten
competition. How will you respond? it well or they didn’t understand. This Rules for Strategic Innovators: “To build
Efficiency alone—productivity gains— new leadership style lent Avatar a an effective strategy, you must excel at
will not get you out red oceans. Only sense of fun, authorship and ownership managing the present, selectively forgetting
the creativity of your strategic thinking in an environment where people felt the past, and creating the future.”
will enable you to shape and overcome like they had permission to make mis- Nando Parrado, author of Miracle in
these unfavorable conditions. So strategy takes but were now less likely to do so. the Andes: “Sometimes you don’t know
needs to go beyond just reaching the Putting the right cast, technical and what you’ll do or say until you have to
industry best practice threshold by creative teams together is critical. Blend- do or say something.”
improving productivity. Blue ocean ing the people I know I can count on Bill McDermott, co-CEO of SAP: “To
strategy pushes the creativity frontier with new recruits who can push and make big things happen, start with the
of new demand and shapes existing challenge me has become my first step. vision and strategy and focus on results.”
unfavorable structural conditions into Avatar operated more like a family than Charlene Li, coauthor of Groundswell:
new frontiers, where markets are cre- a conventional business team, binding “Encourage people to take risks, create
ated and demand is strong. the team together for 4.5 years—longer internal sandboxes where they can learn,
Blue ocean strategy is the bridge than most film productions. Managing grow, and think about strategy.”
that links creative ideas to commercial the stress, keeping up morale and main- Martin Lindstrom, author of Buyology:
success. It addresses both effective taining the enthusiasm over this “The challenge for marketers is to con-
strategy formulation and execution. To extended length of time was difficult, nect with an emotional marker in the
get started, you need to overcome the particularly when people worked all brain of the consumer and make an
four hurdles: 1) the cognitive hurdle: hours and had crises of faith that they emotional connection to your brand.”
22 W i n t e r 2 0 1 1 L e a d e r s h i p E x c e l l e n c e
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