Read an Excerpt
The Leader-Driven Organization
Winning Is About Leadership
- Winning organizations have leaders at all levels
- Producing those leaders is what separates the winners from the losers
Leaders Have Ideas, Values, Energy and Edge
- Ideas and values guide their decisions
- Energy and edge get them implemented
Without Leaders, Organizations Stagnate
- They can't keep pace with changing markets
- They don't add shareholder value
In August 1991, Bill Weiss, the CEO of Ameritech, walked into my office with a problem. The company he headed was an old-style Baby Bell telephone company that suddenly found itself having to compete in a new, fast-moving telecommunications industry. In order to survive, it needed to expand its product mix, change its bureaucratic operating style and establish a new working culture based on intense competition rather than stifling regulation. After listening to Weiss describe the situation at Ameritech, my colleague Patricia Stacey and I came to a clear conclusion. "Bill," I told him, "you are 62 years old and retiring at 65. I don't think we should be talking about your leading any kind of transformation. Your agenda is to find a successor, make sure he or she is in place and get out of the way. You'll have to turn it over to that person to do the transformation."
Weiss was polite but firm. "I can't do that," he replied. "We'll lose two or three more years while that person is getting his or her act together. That would be catastrophic, because within five years, we've got to either transform this company or find our markets rapidly shrinking. Until now, our leaders have been unwilling tocontemplate anything but gradual change. We've got to find a way to radically reform and reorient our company. We'll have to deal with succession in that context."
Within six months of this meeting, two of the key potential CEO successors had left Ameritech, and four new potential successors from within the organization were leading a massive cultural change effort called Breakthrough Leadership. The company had also created a temporary organization to run parallel with the operating company. This temporary organization was designed to simultaneously screen and develop leaders for Ameritech's future, as well as to develop the vision, values and strategy for the new Ameritech. It involved hundreds of leaders and task forces, and intensive development activities throughout 1992. In 1993, this was expanded to thousands of Ameritech managers.
By May 1994, when Weiss retired, the company had been totally reorganized into new business units, and a new CEO was in place: 47-year-old Dick Notebaert. It had thousands of reenergized and motivated employees. And it was primed to take off in the new telecommunications world. From 1993 through 1996, Ameritech outperformed its peers, providing a 19.0% annual return to investors versus 13.9% for the Standard & Poor's Telephone Index. For 1996, Ameritech posted net income of $2.13 billion, on revenue of $14.9 billion.
Bill Weiss is gone from Ameritech now. When he retired, he even left the board so that Notebaert would have the freedom to run the business on his own. But Weiss gave Ameritech a lasting legacy: In a very short time, he had positioned the company to be a winner by developing a team of leaders who would continue to invest in developing other leaders. In his last three years, he gave a bravura performance of leadership, and he left the company not only in the hands of a strong successor, but also with a keen appreciation for and a culture of leadership.
Weiss himself readily acknowledges that he wasn't always a great leader. He became chairman in 1984, but for the first seven years of his tenure, he just tinkered, "because our performance was solid and life was comfortable." But finally he saw that big things had to change if Ameritech was going to survive, and someone had to make those changes happen. "I have to admit my first efforts were at gradual change, incremental change," he says. "I had to start thinking in terms of radical change; revolution, if you will. I should have done it sooner."
Bill Weiss may have been a slow starter, but Ameritech is on a winning trajectory today because he came to understand a secret about winning organizations and winning people: Winning is about leadership. Winning individuals are leaders, people with ideas and values, and the energy and guts to do what needs to be done. And organizations are winners because they have good leaders, not just at the top, but at all levels. Winning companies value leaders, they have cultures that expect and reward leadership, and they actively put time and resources into developing them. Winning companies win because they have lots of leaders, and they have lots of leaders because they deliberately and systematically produce them. This is what separates the winners from the losers.
Most people in business will tell you that developing leaders is an important activity, and that organizations must carry it out in a thoughtful and systematic manner. The reality, however, is that while there is much talk and much surface activity, very few organizations do a good job of it. They talk a good game, but when the chips are down, they don't follow through very well.
Some companies don't do a good job developing leaders because they don't try very hard. Some have good intentions, but they just don't commit the time and resources necessary to do it. Others, such as General Motors, Digital Equipment and Westinghouse, like to talk about leadership but actively discourage it by punishing people who dare to think independently. And still others, such as AT&T, have committed huge amounts of time and resources to elaborate well-enforced human resources development processes, but they have been largely taught by consultants and academicians who aren't leaders themselves. So what they have tended to produce are very articulate managers who are masters of the latest "business-speak" and the fads and fashions of management gurus. But they end up acting like civil servants and bureaucrats, not leaders....
