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Praise for the Next Generation Business Handbook
"Subir Chowdhury has created a masterful reference tool for all those who intend to gain insights on business leadership requirements in the years ahead."
J. D. Power III, Founder and Chairman
J. D. Power and Associates
"The need for effective next generation business leaders is high, and the challenges facing them are great. This book is a valuable resource for emerging leaders."
John J. Donahoe, Worldwide Managing Director
Bain & Company
"This compelling handbook weaves the best thinking on contemporary leadership and business strategies into a cogent, practical, and stimulating framework for all of us on a leadership learning journey."
Robert G. Riney, COO
Henry Ford Health System
"Chowdhury’s Handbook is critical reading for future leaders in our increasingly diverse and rapidly transforming world."
Eleanor M. Josaitis, CEO and Cofounder
Includes Section Introductions from the following thought leaders:
In the field of leadership, there are hundreds, if not thousands, of pieces authored by thought leaders, business leaders, political leaders, and sports leaders. Most emphasize different leadership attributes, but still it is rare to find effective leaders like Jack Welch of General Electric (GE), Sam Walton of WalMart, or Herb Kelleher of Southwest Airlines. After the collapse of Enron in late 2001, leaders around the world have faced a major challenge in reestablishing trust with their employees, stockholders, and customers. Enron's former chairman and CEO Kenneth Lay, once recognized as an effective leader by the press, is now branded as a "liar." But Enron isn't alone. Throughout the year 2002, the Wall Street Journal reported on senior leadership's "nonleader" behaviors in respected organizations like ABB, Tyco International, and WorldCom. The biggest price these organizations paid by their breach of trust is their most important asset-people.
I begin this chapter by identifying the crucial characteristics of effective leadership. But it's not enough simply to possess the attributes of a good leader. You must also recognize the importance of the people in your organization and of fostering a workplace environment that challenges them in positive ways and empowers them to succeed as well. After all, ifyour employees don't succeed, how can your organization?
Let's examine the effectiveness of a leader. Rather than redefining leadership, I have emphasized some of the most critical attributes leaders must possess to be effective:
Taking timely action
In their 1995 internationally best-selling book The Leadership Challenge, James Kouzes and Barry Posner report that honesty is the number one characteristic of an admired leader. According to their survey of several thousand business and government executives from four continents, nearly 90 percent of constituents want their leaders to be honest; this is a message that all leaders must take to heart. It is very difficult to measure honesty, as it is a subjective behavior. But people-internal or external-observe their leaders' behaviors every single day. All too often, business leaders lose sight of the importance of honesty and value as they focus more closely on the bottom line. It seems that the faster we advance toward technology and quick success, the more leaders mistakenly assume that subjective behaviors like value may not be critical. More than ever, customers as well as the workforce will study their leaders' behaviors more closely. It has been proved time and again that stockholders will punish those leaders who breach that trust. Enron, for example, was once widely referred to as America's seventh-largest company. But the lack of integrity displayed by CEO Kenneth Lay, who tolerated ethical lapses by subordinates, even overriding the company's own code of ethics to permit the CFO to form debt-disguising partnerships, led to the collapse of the organization. Consider also the obstruction of justice of Enron's auditing firm, Arthur Andersen, over the destruction of documents related to its Enron audit-a once-formidable accounting firm crippled by poor integrity.
Former GE chairman Jack Welch puts it simply: "People may not have agreed with me on every issue-and I may not have been right all the time-but they always knew they were getting it straight and honest. It helped to build better relationships with customers, suppliers, analysts, competitors, and governments. It set the tone in the organization." The distinction between being right and being honest is an important one. You cannot always be right, nobody is. But you can always be honest, and in the eyes of your customers, stockholders, and employees, that's an important characteristic in a leader.
When Honeywell chairman and CEO Larry Bossidy appoints a new business manager, the first thing he discusses is integrity. All companies should be focused on hiring talent who possess a high level of integrity. Especially these days, with such easy access to technology, more and more people may be tempted toward unethical behavior. The World Wide Web alone, accessible by virtually everyone, can easily be exploited for unethical purposes. Just look at the growing number of dubious Web sites, spam attacks, and viruses distributed daily. Something as simple as e-mailing off-color jokes to fellow employees might be regarded as suspect. It may seem obvious, but ask yourself whom you would rather hire: a candidate who has many years of experience but who demonstrates questionable regard for diversity or a recent college graduate who spends weekends volunteering at a nursing home? Of course, it's not always that cut-and-dried, but ask questions during the interview process with the aim of gauging your candidate's values. Talk about hobbies, family, travel, whatever you feel will give you a glimpse of where this person's values lie. The astute interviewer can pick up the signals from such discussions. All companies need to focus more on integrity and appropriately punish breaches of integrity, sending the message to the organization that such breaches will not be tolerated.
Commitment with emotion is key to success. In India, it is called sadhana. When the famous sitarist Ravi Shankar was learning sitar from his guru, he didn't leave his room for many days until he learned the basics. He devoted all his time to sitar. That takes emotional commitment. Throughout history, you see the greatest successes coming from those who exhibited undying commitment. This is more visible in history and the arts, but effective leaders like Michael Dell, Rick Wagoner, and Bill Gates are also emotionally committed to their endeavors. They have to be-they have their own mission and commitment. Rather than randomly jumping into different initiatives, effective leaders focus on their own beliefs. It's their emotional commitment that has helped them succeed. Think about it. If they did not have this commitment, if they did not love their work, could they possibly have achieved their present success?
Sumner Redstone, CEO of Viacom and author of A Passion to Win, says, "I've always wanted to win. I think winning is everything. Throughout my life I've had an obsessive drive to be number one. That doesn't mean I've always been number one. But that's what drives me-a desire to be the best at what I do." He tells of the hotel fire in which he was badly burned-and then of being in the heat of negotiating and deal making-and yet at age 78 of being in perfect health. "The question isn't whether you are subjected to adversity and conflict during your life," he says. "The question is how you deal with it. If you really want to succeed, you have to be passionate and have a commitment to excellence in performance. If you have both of those, and some intellectual capacity, nothing is impossible."
Successful leaders want to create organizations that will dominate the economic landscape. They are passionate about making a contribution to society and creating a business culture of enlightenment. They want to create and deliver real value to their customers and shareholders. They have a "love it or leave it" philosophy. They don't do things only because they want to hit revenue numbers; rather, they "just do it" because they have emotional commitment. Michael Dell had a dream of beating IBM while IBM was the giant in the computer market. Without emotional commitment, he could not have succeeded.
The success of GE is largely credited to retired CEO Jack Welch's leadership; his strategy included creating an "emotional bond" with his employees. GE's Six Sigma initiative is not just a CEO-driven quality initiative. It is a management philosophy from top to bottom. Everyone has been learning the language of Six Sigma's revolutionary five-step process: define, measure, analyze, improve, and control (DMAIC). Welch personally made sure that the Six Sigma philosophy was understood all over the company, from the very bottom to the very top. The results suggest that it works. GE reported record results in 2000: revenues grew 16 percent; earnings grew by 19 percent. The point is not that Welch implemented Six Sigma; the point is that he was passionate about what he was doing and that passion seeped into the organization in a big way.
Emotional commitment makes the difference between typical managers and effective leaders. Average managers are nine-to-five performers; effective leaders strive for excellence regardless of the clock. They want to be winners in everything they do, whereas average managers may not share that winning mentality. Traditional managers are contractually obligated to do their jobs; effective leaders are mentally obligated. Leaders are risk takers, whereas traditional managers are risk averse. Above all, effective leaders are always emotionally committed. And fostering this commitment throughout your organization only makes it stronger.
Most managers don't have a winning mentality because they don't have a sense of ownership. If you own something, then you don't want to lose it. Profit sharing, reward, recognition, and bonuses are key ingredients to seed ownership within employees. In GE's Six Sigma initiative, "black belts" receive rewards for completing projects successfully and saving GE's bottom line. Contrast this level of commitment with that of many failed dot-coms whose founders admitted to starting a business just to go public or to be bought out. How could they succeed with this mentality?
There is tremendous competition for everything, and the only way you can compete is to do something different or do something common differently. The strong comeback of Apple Computer is mostly credited to its effective leader, Steve Jobs, who characterizes himself as well as his organization with a simple motto: "Think Different." No other computer manufacturer had ever thought of using multicolored plastic bodies for personal computers before Jobs's iMac. Its success is not necessarily due to the product innovation or better performance but rather to the "think different" strategy. Upon the same strategy, the United Kingdom's most admirable entrepreneur and leader, Anita Roddick, built her cosmetics empire, The Body Shop. Roddick's world headquarters lobby in London displays this declaration: "Small chest, flabby thighs, large hips, thick lips, BIG DEAL-love your body."
Dell Computer Corporation is one of the world's leading manufacturers of computer systems. One key to its success lies in its direct business model. Michael Dell, of Dell Computer Corporation, comments:
A lot of favorable economics occur when you take time out of the process. Dell's model has about eight days of inventory. One competitor has 81 days of inventory and 40 more days of inventory in their distribution channel- 16 weeks more than our eight days. A competitor with that level of inventory can't compete with Dell and make any money doing it. As a result, our business is growing fast, and our profitability exceeds that of all of our major competitors combined.
We define the customer experience from the order delivery process, to the setup, use, and operating experience. We've developed a set of metrics that take these customer measures and tie them to our goals and to every employee's profit sharing and incentive compensation. The next frontier of competition is in the area of customer service quality. We're constantly looking for breakthroughs, such as our direct business model, that change the dynamics of the game. Finding a new way to deliver a better customer experience and more value at less cost is a good strategy.
One way to achieve a new perspective is to reach out to your employees and listen to what they have to say. Do not restrict their thinking. Instead, be open to all employee suggestions, whether they differ from yours or not. Trust that your employees, regardless of their position, have gleaned their own competency through experience and that they bring varied, and valuable, knowledge to the table. You have a lot to learn from those who report to you. Spend some time listening to your employees and understanding why they think the way they do. By doing so, you may be able to look at your product or organization from a new perspective.
Taking Timely Action
The most important thing that effective leaders do is take "timely action." Leaders can be successful if they act on their unique idea at the right time. The secret of success is not necessarily the idea itself but rather the implementation of the idea. The attitude of "Just do it"-the slogan of Nike's founder and chairman, Phil Knight-is necessary for success, regardless of the industry you're in. The value of a great idea without implementation is zero. If you have a powerful idea, and you are talking about it but taking no action to implement it, someone else will likely have a similar idea and win while you remain stuck in place. If you are not an implementer, find a partner who is. The leader who takes timely action often does not have to tell people what to do but rather asks the right questions so others can figure out what they need to do. Larry Bossidy and Ram Charan call this process execution. In their recent book Execution, they state, "Leading for execution is not about micromanaging, or being hands-on, or disempowering people. Rather it's about active involvement- doing the things leaders should be doing in the first place." They define execution as a discipline and integral to strategy, as a core element of an organization's culture, and as the major job of the business leader.
Chrysler's PT Cruiser and 3M's Palm Pilot are still the leaders in their product lines due to timely action. Many companies may try to copy them, but none has had similar success. Proactive actions characterize market leaders. Michael Dell comments, "We've learned that we can't just follow the other guys. That approach won't create a lot of value. We try to find our own way and do things better. We are building our own path."
The action at Dell is centered on customers, as Michael Dell reports:
We maintain an intense focus on the customer, even as we grow. Today, Dell is still ranked number one in customer satisfaction surveys. Our account teams work face-to-face with all of our large customers. We work with our suppliers to deliver materials on a pull basis. Instead of waiting to build a machine until we have all the materials in the warehouse, and then guessing what people will buy, we focus on how fast the inventory is moving. If we can shorten that time, not only will we save our customers a lot of money, but also they'll get a superior product that meets their precise requirements.
If you are passionate about your idea, regardless of what it is, you must act on it, or chances are, you will lose it. Many people have ideas, and some have more relevance than others. But once you establish that your idea is worth pursuing, move forward with it.
Now that we've discussed the leadership attributes of an effective leader, let's reexamine the two other critical elements with which leaders must deal every day: people and the workplace.
Effective Leadership and People
Leaders must know their talented people, and leaders must have the right talent at the right place. Jack Welch emphasized, "Getting the right people in the right jobs is a lot more important than developing strategy. This truth can be applied to all kinds of businesses." Sumner Redstone of Viacom is known as the consummate champion of talent and content. "I believe that talent is king because people don't watch TV, they watch talent, content, programming. The way you manage talent is to let them run their businesses to a large extent. If you have confidence in the talent of your managers, you do not intrude every time they make a decision." Beyond capability in talent, Redstone looks for character and loyalty. "I look for someone I can trust, and who trusts me. And, I look for confidence, competence, and commitment."
As mentioned previously, you always want to hire the best talent with the highest level of integrity you can find. But hiring the best talent isn't easy. I have identified seven secrets of talent, which you can easily remember using the acronym SECRETS:
1. Search for the dream. The dream is the vision. Talented people celebrate each success but then quickly move on to the next challenge, the next dream.
2. Evaluate your strengths and weaknesses. Talented people are not afraid to acknowledge their weaknesses. It is the only way they can be addressed and turned into strengths.
Excerpted from Next Generation Business Handbook by Subir Chowdhury Excerpted by permission.
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SECTION I: LEADERSHIP.
Part One: Leadership and the Business Environment.
1. The Effective Leader.
2. Using Organizational Culture as a Leadership Tool.
3. Leadership and Innovation.
4. Leadership and Destructive Self-Confidence.
Part Two: Leadership and Learning.
5. Leading by Analogy.
6. Career Imprinting and Leadership Development.
Part Three: Leadership and Employees.
7. Leading by Doing.
8. Leadership to Improve Performance.
9. Managing Leadership Images.
Part Four: Leadership and the Workplace.
10. Leadership in the Virtual Workplace.
11. Leadership in a Branded World.
12. Managing a Self-Managed Team.
13. The Merchandising of Leadership.
SECTION II: STRATEGY.
Part One: Strategies for Competitive Advantage.
14. Quality Strategy.
15. Competing on Social Capabilities.
16. Dynamics of Competitive Interaction.
17. Strategic Advantage and the Dynamics of Organizational Competence.
Part Two: Strategic Planning and Renewal.
18. To Plan or Not to Plan?
19. Mastering Strategic Renewal.
Part Three: Strategies for the Networked Economy.
20. Value Creation in the Networked Economy.
21. Global Strategy in an Internet Era.
Part Four: Strategies for Business Expansion.
22. Symbiosis or Parasitism?
23. Globalization and Management Attention.
Part Five: Strategies for Nonprofit Organizations.
24. Strategy Dynamics for Nonprofit Organizations.
SECTION III: CUSTOMER MANAGEMENT.
Part One: Relating to the Customer.
25. Understanding Customer Needs.
26. Strengthening Customer Relationships.
27. Building Customer Interface.
28. Avoiding Traps in Customer Relations.
29. Customer Relations Online.
Part Two: Experience with the Customer.
30. Customer Experience.
31. Coping with Critical Criticism.
32. Growing Pains.
33. Persuading with Emotions.
Part Three: Managing the Customer.
34. Strategic Customer Management.
35. Designing Supply and Distribution Channels.
36. Managing Global Customers.
SECTION IV: ENTREPRENEURSHIP.
Part One: Entrepreneurial Behavior.
37. The Effective Entrepreneur.
38. Entrepreneurial Opportunities.
39. Nature of Entrepreneurship.
Part Two: Entrepreneurship and Finance.
40. New-Venture Finance.
41. Untangling Service-for-Equity Arrangements.
42. Business Planning.
Part Three: Entrepreneurship and Strategy.
43. Playing Entrepreneurial Judo.
44. Success for New Ventures.
Part Four: Entrepreneurial Management.
45. Entrepreneurial Mind-Set in Multinational Corporations.
46. Sustaining Rapid Growth.
Part Five: Entrepreneurship and Economics.
47. Income Disparity and Entrepreneurship.
SECTION V: PEOPLE MANAGEMENT.
Part One: People-Management Strategy.
48. Talent-Management System.
49. Living Strategy.
50. Changing Foundations of People Management.
Part Two: HR Management.
51. Returning Human to HR Management.
52. Change Management and HR Practices.
53. What Really Matters in HR Management?
Part Three: People and the Organization.
54. The Four Thrusts Driving Corporate Renewal.
55. Creating the Family-Friendly Organization.
56. Transforming the Process of Staffing toward Innovation.
57. How Old You Are May Depend on Where You Work.
58. Tomorrow’s Global Workforce.
SECTION VI: NETWORKED BUSINESS.
Part One: Organizations in the Networked ERA.
59. The Power of Networked Business.
60. Managing Networked Organizations.
61. Beyond ‘‘Synergies’’.
62. From Extended Enterprise to Orchestrating a Team of Companies.
63. Digital Networked Business.
Part Two: Network Strategy.
64. Strategic Connections.
65. Technological Mediation as Strategy.
66. Seamless IT Alignment.
67. Seizing the Value of Online Auctions.
68. Building a Platform for E-Business.
About the Leader.
About the Next Generation Business Thinkers.