The Mark of a Winner

The following article is from the book “Leader to Leader” by the Drucker Foundation. Noel Tichy is a professor of organizational behavior and human resource management at the University of Michigan, and director of the Global Leadership Program, an executive-development consortium of thirty-six companies. He consults to corporations around the world and is the author of numerous articles and books including “The Leadership Engine”, written with Eli Cohen.

What separates winning organizations from the also-rans? I have spent twenty-five years studying both winners and losers from the inside out for an answer. Not surprisingly, winning organizations share certain financial attributes. Companies consistently ranked in the top quartile of the Standard & Poor’s 500 maintain annual revenue growth of 12% and a 16% operating return on assets, according to Columbia University School Professor Larry Seldon. In contrast, gains achieved by simply slashing payroll and expense are seldom sustained in the long run. Likewise, erstwhile winners who fail to keep pace with change and thereby destroy billions of dollars in shareholder value are severely punished (witness John Akers of IBM, Bob Stempel of GM, James Robinson of American Express, and Kay Whitmore of Kodak). The early 1990’s were a watershed time in business when these and other leaders were sent home for poor leadership.

At the same time, several companies have been setting new records for financial performance, enriching shareholders, building communities, and providing greater opportunities for employees. Companies such as General Electric, Allied Signal, PepsiCo, Intel, and others are led by men and women who personally and methodically nurture the development of other leaders, at all levels of the organization. Even if you, as a leader, are smart enough to anticipate and prepare for massive economic and social shifts, you cannot respond to the ground-level demands of the moment without the energy, commitment, and ability of people throughout the organization. Effective leaders recognize that the ultimate test of leadership is sustained success, which demands the constant cultivation of future leaders.

This has important implications for the work you do every day. For one thing, all the money your organization invests in “leadership development” – usually the province of outside trainers and consultants – means little without an equal investment of your own time and effort. Yet the benefits of investing your time will accrue to you as well as to your organization.

If the long-term success requires having more leaders at more levels than your competitors have, than teaching, coaching, and cultivating others becomes a strategic imperative for senior executives. For example, during the first eighteen months of his tenure as CEO of AlliedSignal, Larry Bossidy put 86,000 employees through a development program he helped to design. He spoke to 15,000 people the first year – presenting his vision, explaining markets and strategies, engaging in debates – in short, teaching. In the process he helped increase the market value of his company 400% in six years. Likewise Andy Grive at Intel, Jack Welch at GE, Gary Wendt at GE Capital, Roger Enrico at PepsiCo, Lew Platt and Hewlett Packard, Bill Pollard at ServicesMaster, and hundreds of other business, community, military, and religious leaders understand that their success depends on others, and that leading and teaching are inextricable. They spend hundreds of hours a year working with their colleges – sometimes just five or ten at a time – to share ideas, identify needs, and develop hands-on business expertise.

Three Keys for Leading

The ability to develop the leadership of others requires three things: a teachable point of view, a story for your organization, and a well defined methodology for teaching and coaching.

Teachable Point of View

To succeed as a leader you must be able to articulate a defining position for your organization. You must be able to talk clearly and convincingly about who you are, why you exist, and how you operate. This means you need to have ideas on products, services, distribution channels, customers, and growth. These ideas need to be supported by a value system that you articulate, exemplify, and enforce.

But you also need something I call e-cubed: emotional energy and edge. Winning leaders seem naturally to generate positive emotional energy in others. They also have the edge to face reality and make tough yes or no decisions. That is their unique burden – not to call in consultants or convene a task force, but at critical moments, when forced to act quickly, to make the difficult choices only they can make. IT often makes them the most unpopular people in their organizations, which is why those who need to be liked are seldom effective leaders – at least not in times of crisis. But leadership is the ability to see things as they really are and to mobilize an appropriate response. You can make those decisions and engender that response only if you have clear ideas and values. All three components of leadership – good ideas, appropriate values, and positive energy and edge – are part of the package you present to those you hope to develop. How you apply these essential elements of leadership has changed in important ways in recent years (see Table 26.1).

Table 26.1.     The New Way of Leadership

Leaders of winning organizations use ideas, values, emotional energy, and edge to develop future leaders throughout the enterprise. Winning leaders combine a teachable point of view with a special focus on and personal role in the development of others. Here is how the new dimensions of leadership differ from the old.

Old Way New Way
Ideas Coaching is on day to day problems rather than on larger business issues. Development programs are theoretical, based on cases taught be professors Coaching is based on the leaders own ideas, challenging people to create their own point of view.   Development programs are practical, based on real business issues.
Values Leaders proclaim organizational values, which are often superficial messages for the masses. Leaders help people integrate their personal values with the values of the workplace – and explain the paradoxes when values collide.
Energy Programs deliver a sugar high – by the time people return to work, it’s gone. “Programs” are ongoing – leaders teaching underlying frameworks for motivation.
Edge Professional trainers focus on time management and priority setting, not on tough decision making. Leaders themselves help people tackle such dilemmas as what to do with people who do not meet performance or value standards.
Leadership Focus Leadership focuses on a collection of technical skills in strategy, finance, and so-on. Leadership focus on hard and soft issues and on personal leadership stories.
Senior Executive Role Senior Executives sponsor development programs, parading in and out of them periodically. Senior executives are active participants, leading all or substantial portions of leadership development programs.

Living Stories

The basic cognitive form in which people organize their thinking is the narrative story. Individuals, families, organizations, communities, and nations all have tales that help make sense of themselves and the world. There are three kinds of stories that leaders can tell. There’s the “who I am” story in which leaders describe themselves. The late Roberto Goizueta, as chairman and CEO of the Coca-Cola Company, often talked about his early experiences: being forced to leave Castro’s Cuba and start over in a new country with $40 in cash and a hundred shares of Coca-Cola stock. He told stories of how as a young boy he would spend days reading and talking with his grandfather, Marcelo, who founded a sugar and real estate empire. Marcelo’s lessons on the importance of cash and simplicity, among other virtues still guided Goizueta decades later. “I am a great believer in cash flow,” he said. “Earning is a man-made convention, but cash is cash. The larger the company is, the less it understands cash flow.”

There is the “who we are” story, in which you articulate for your constituents what their identity is. Chairman and CEO Phil Knight’s stories at Nike are all about winning. He named his company after the Greek goddess of victory. He used his stories of competing as a runner to explain the thrill of competition and winning. Nike is not a company to him. It is a vehicle for furthering the aspirations of customers, both famous and unknown. His message – that every employee helps customers to be winners – helps create an organization in which everyone knows what they are aiming for and what the company represents.

But the most important leadership tale is the “where we are going” story. Martin Luther King’s “I Have a Dream” speech mobilized energy around powerful images of social equality – black and white children holding hands in a transformed world.

Winning business leaders use the power of story telling as effectively as our most gifted public leaders. Goizueta increased the market value of his company thirty fold in fifteen years; no business leader in history has done a better job of growing shareholder value. Goizueta did this by finding a way to energize people about the story of the company. He reminded people that the human body requires sixty-four ounces of liquid each day and that on the average Coke provides just two of those ounces. His message to the troops was clear: let’s get going. Further, Goizueta put individual managers at the center of his stories. The best managers are those who walk into a building and see not where Coke is but where it isn’t. It is this ability to find opportunity, he told his listeners that will make the company a winner in the future.

Dramatic storytelling is the way people learn from, and connect with, one another. That is why CEO’s – Bill Gates, Andy Grove, and Bill Pollard – write books. It is more for the benefit of their constituents than for the general public.

Teaching Methodology

To be a great teacher you have to be a great learner. Most effective teachers – and leaders – will tell you that they grow as much as those they teach and lead. The process of teaching can be quite simple; it starts with having a conscious system for interacting with people. Jack Welch, for instance, spends a half-day every couple of weeks teaching, wrestling with issues, and challenging his people at Crotonville, GE’s leadership development center. Rear Admiral Ray Smith visits graduating classes of the Navy SEAL underwater demolition programs, and participates in the same physical training as SEAL candidates half his age. Larry Bossidy writes two or three page letters to the heads of all AlliedSignal’s businesses after every strategy session, operating review, and people review.

You must be mechanical in your approach to teaching. To make a difference, you must have the self-confidence to be vulnerable to others; you need to share your mistakes and doubts as well as your accomplishments. When Roger Enrico, for instance, goes off-site with ten of his senior executives for five days, he’s not afraid to reveal himself. He cannot hide behind his position. It’s one thing for a CEO to come in, deliver a canned speech to a training class, and escape. You can’t live with your troops off-site for five days, sixteen hours a day, and be anything but genuine. Phonies and martinets will be found out by the end of day one.

Learning to Teach

Articulating your ideas and values, developing a teachable point of view, and developing stories that bring your views to life are all learnable skills. For instance, in helping people I work with develop stories about their experiences, I often ask them to “think about a time in your life when you made something happen through other people that wouldn’t have happened without you. Run the video of your life and pick the proudest moment you’ve had as a leader.” It could be a church, community, athletic, or work activity, but I have yet to find someone who doesn’t have a proud moment. If you ask people to pair up and tell their story to someone else, and then talk about why it was an n example of good leadership, they all uncover some basic tenets of leadership: “I had a vision. I persisted. I embodied in my own actions the message I was trying to create. I was able to enroll people. I fought through resistance.” Implicitly we know what good leadership is, and people in all walks of life can become more motivated to work on leadership by remembering when they felt proud, when they’d been in a tough situation where they could lead.

If you ask me, however, as a coach simply to repeat this exercise throughout your organization in lieu of you, the leader sharing your own values, ideas, and stories with people, you are probably wasting their time and your money. Outside consultants – and I am one – are the last people who can develop the long-term leadership talent in your organization. That is the job of recognized leaders, with a proven record of success, who work with their colleagues every day.

The current conventional wisdom in leadership development programs is to develop a set of competencies fro what a good leader is and then figure out a way to develop people around those competencies. At the end of the day the competencies that get developed in these programs look pretty similar – having integrity, building trust, demonstrating towering competence, knowing how to overcome resistance……..What’s missing is the leaders teaching colleagues, not leaving the teaching to others or talking about somebody else’s values. People want their leader to look them in the eye and say “Here is where our company is going and here is what we need from leaders in order to get there.”

Practice What You Teach

The military has understood this for years. After the end of the Cold War, General Wayne Downing transformed the mission, training, and appraisal of the elite Special Operations Forces (SOF). He could change the mind-set of his troops from Rambo-like warriors to “quite professionals” because he had credibility. The credibility came from living his personal ideas and values (which he developed as an SOF office in Vietnam) and bringing to life the story of where SOF was heading. Admiral Smith, in his mid fifties, is out there the last week of SEAL training doing the physical training and explaining to recruits the importance of what they’re doing. Religious institutions have been clear on this approach to pastoral training. Medical educators know that you cannot put a professor in the operating room to demonstrate surgical techniques. You need someone who has hands-on creditability, and a teachable point of view about how to develop others’ capabilities. That doesn’t mean there is no role for professors and consultants, but it does mean there is not a leading role for them.

When Andy Grove shares with the new hires his ideas about where the industry is going, he is learning and teaching. The young engineers know far more than he does about some of the current technology. They have ideas that he has not even considered. By being in class with those new hires he bypasses layers of hierarchy; the closer the hierarchy gets to him, the more it thinks like him. So Grove has developed his own pipeline to get new ideas. At the same time, Grove is teaching the engineers based on his experience of decades at Intel – both his successes and his failures. He is teaching the engineers about Intel and its industry so that they can channel their ideas. To spread learning throughout the organization, Grove asks other experienced managers to teach – and bases part of their bonus on whether or not they do.

Leaders of traditional, hierarchical organizations don’t get these kinds of opportunities. In short, to compete in the twenty-first century, leaders need to build not just a learning organization but a teaching organization – one with the capacity to build leaders. They need to create an environment where leaders are teaching leaders.

Making Training Pay

Most leadership training springs from the question, are leaders born or made? And is designed to prove that the latter is the correct answer. It’s and age-old and essentially pointless debate. It’s like asking whether athletes are made or born. The answer is obviously, both. With coaching, commitment and hard work, there isn’t any group of people who couldn’t improve their ability to play tennis, golf, or basketball.   There aren’t many, however, who are going to be world-class performers. The same with leadership. Any organization that takes the time to get more leadership out of people is going to be far ahead of its competitors. Are all managers candidates for the top job? Of course not. But can they be a lot better than they are now? Absolutely. We can all hone our ideas and better articulate our values and improve our capacity fro making yes-no decisions. So it’s worth the effort to develop everyone.

Losing organizations make the mistake of handicapping their field of potential leaders and investing their training and development resources only in those they think will go furthest. Inevitably they pass over a lot of talent. Winning organizations often bet their hunches, too, but they typically wait longer to do it. They look at broad leadership skills, not just at success with particular projects. And most important, they continue to invest in the development of everyone else, including those they don’t expect to rise to the top. Winning companies’ more inclusive approach helps get the best out of everyone – and keeps late bloomers and mavericks contributing long after others might have written them off.

Leaders who invest themselves personally in the process of developing future leaders are also building the most precious of organizational assets. The long-term success of leaders cannot be measured by whether they win today or tomorrow. The measure of their success will be whether or not the company is still winning fifteen years from now, when the next generation of leaders has taken over.

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