Steve Jacobs is chairman and senior partner of The Continuous Learning Group (CLG) consultancy. He has worked with senior executives for decades, advising them on ways to achieve new performance, culture change, and lasting competitive advantage. His counsel is sought by Fortune 100 corporate leaders and he speaks frequently at corporate and conference events. Steve holds an interdisciplinary bachelor of arts degree from the University of California and a master’s degree from Harvard University.
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THE BEHAVIOR BREAKTHROUGH
Leading Your Organization to a New Competitive Advantage
By STEVE JACOBS
Greenleaf Book Group PressCopyright © 2013 Continuous Learning Group, Inc. (CLG)
All rights reserved.
THE QUIET REVOLUTION
It's unbelievable how much you don't know about the game you've played your whole life. —MICKEY MANTLE
What's the secret to superior execution? Is it brilliant strategy? Better processes? Superior technology? No. None of these suffices individually, nor do they suffice in combination. To perform well over the long term, to make everyone's valiant efforts work and "stick," you need another ingredient, something basic and seemingly ordinary: behavior. New results require new behavior. It's that simple—and that difficult.
The Kurrizzo ore-processing facility was a high-tech plant in a third-world setting. The company's new asphalt roadway curved along the river into the dusty community where most workers lived. Fresh paint and flower urns greeted visitors at the office building. But the tranquil appearance was deceiving.
Dodging bullets on the way to the plant wasn't an everyday routine for the workers, but it happened often enough that the workforce was wary. Tribal conflict plus an unstable government formed the backdrop for the Kurrizzo complex as it sweltered in the equatorial heat.
If there were problems outside the plant, there were plenty inside as well. Safety, reliability, and utilization lagged; the facility was plagued by frequent shutdowns, workplace injuries, and environmental incidents. In addition, lists of action items generated by audits were incomplete, turnover among skilled workers was high, and community relations were poor.
"The Kurrizzo facility has high potential if you can fix it—and we're confident that you're the one to do it, Dave." That's what the executive team members at corporate said when they discussed the assignment with him. "It's your overseas P&L opportunity. If all goes well, you'll be back here in a few years well positioned for your next big step. This assignment will make your career ... or break it."
Dave parked his Land Rover in the space marked Ejecutivo Principal and surveyed the plant as the morning shift changed. It hadn't taken long for him to confirm all the stories he'd heard. An attitude hung in the air, an attitude of "us versus them." Distrust pervaded communication between employees and managers as well as between groups. Employees and contractors flaunted safety rules, striding through the complex without hard hats, safety glasses, or other protective gear. They knew the rules; they simply did not follow them. And production goals were seldom met.
Dave interviewed people to learn the history of employee relations here and formulated a plan with his management team. They launched a back-to-basics campaign to address the conditions that had eroded labor-management trust and people's performance over the years. He and his management team established new processes, stressed the importance of getting the fundamentals right the first time, developed project plans, and emphasized supervisors' responsibility for improving morale. And to ensure clear focus, Dave used benchmarks for world-class performance in similar facilities, and he set targets for improvement in production, safety, reliability, and environmental compliance.
After a lot of hard work, Dave and his team were confident that they had established the right ingredients for a turnaround. And nothing happened.
More precisely, there were a few positive signs here and there. "It was a start," Dave recalled, "but not enough. After six months, safety hadn't improved, and our environmental violations were increasing. Worse still, we'd suffered a serious fire and plant shutdown. Attitudes had begun to improve, but performance had not."
Employees and managers still put production ahead of safety and environmental concerns, and managers still used many of the same leadership practices—which had become leadership habits—that had been in place for years. When Dave asked colleagues why nobody heeded safety procedures, they replied wistfully, "You can't expect them to worry about hard hats and work safety when they're worried about getting shot on the way home."
Here, then, was a mission-critical initiative that should have succeeded but didn't—all because Dave and his team had neglected the daily, ingrained behavior of plant workers and managers. Dave and his team had worked hard and meant well, and they assumed their actions would lead automatically to new employee behavior. They didn't. Dave had left to chance the crucial ingredient of changing people's behavior.
How much more effective and profitable might their efforts have been had Dave and his team worked to change employees' behavior systematically? How much more progress could they have made by improving their own skill in motivating the behavior change that the plant needed?
BEHAVIOR: THE NEGLECTED GAME-CHANGER
This book introduces you to a neglected game-changer in the world of business: Behavioral Leadership®. Behavioral leadership focuses on crafting desirable shifts in everyday habits, behaviors, and routines. Based on Applied Behavioral Science, a discipline that has been researched and taught in major universities for decades, behavioral leadership puts to work the principle that new results require new behavior, and significant new results—those that confer a broad and significant competitive advantage—require the right new behaviors, and the right few behaviors, that endure over time.
Unfortunately, almost all organizations overlook the essential role that targeted behavior change over time plays in achieving superior results. As a result, promising new initiatives never get off the ground or stall in midair, resulting in wasted resources and subpar performance. Consider the following:
A market-leading insurance company painstakingly analyzes the best practices of its highest-performing salespeople, holds dozens of meetings to spread these best practices throughout the sales force—and nothing happens. Some salespeople attempt a few of the practices, but not consistently, not completely, and not for very long.
A mining company invests in state-of-the-art handheld electronic trackers so its employees can improve equipment reliability—and nothing happens. Their main reliability metric—Mean Time Between Failures (MTBF)—doesn't budge, and the company doesn't realize the considerable cost savings it had anticipated.
An equipment manufacturer redesigns its operations from start to finish to better compete with foreign manufacturers, deploying the smartest teams and the best designs—and again, you guessed it, nothing happens. The project bogs down because line employees continue to perform their jobs in the same inefficient and unhelpful ways.
Each of these real-life organizations expended considerable resources getting strategy, process, and technology right, yet they stopped there, leaving to chance everyday behaviors on the part of workers, managers, and leaders. The chronically disappointing performance that followed had smart, well-meaning executives scratching their heads, wondering what else they could do to move the needle.
These are not isolated examples. One recent study found that nearly 80 percent of strategic initiatives fail to achieve their goals, according to the executives who sponsor them, with 40 percent of the potential return left on the table. A 2008 Harvard Business Review survey of 125,000 participants at companies in more than fifty countries found that three out of every five companies rated their organization as weak at execution. Yet another study found that 64 percent surveyed did not believe their companies would close the gap between their strategies and their ability to execute them.
SOFT STUFF? ASK THESE CEOS ...
Behind these numbers lurk some familiar attitudes. Most executives disregard behavior and related subjects like leadership skills and culture because they view them as "soft stuff." Executives seeking to improve field sales performance, for instance, might hire new salespeople or design a new field sales compensation system, but they generally don't emphasize what the field sales managers can do differently, or what top performers are doing that others are not.
To understand how deep leaders' prejudices run, consider what happened at a forum of thirty Irish technology CEOs. The Irish government had challenged the CEOs to achieve five to ten times growth in export turnover (i.e., revenue growth in international sales) and had invited them to participate in an executive program custom-designed by Stanford University's Graduate School of Business. A number of the executives were reluctant to leave their businesses three times within a year for a full week, and they were very pointed in their demand for real-world topics of practical value, like strategy, mergers and acquisitions, and international finance. Also, they were very clear that they wanted to avoid "fluff."
At the end of the first week, the group did something unusual. It was a Friday night, but rather than take time off, executives reconvened in the classroom where they were spending long daytime hours. The CEOs decided to review each of their respective thirty companies and identify which topics, out of the several they had covered that week, provided the most significant competitive advantage for accelerated international growth. One by one, the CEOs stood at the whiteboard and checked off topics that had personally resonated with them.
A surprising pattern emerged. Two—and only two—of the more than a dozen topics were identified by all thirty CEOs as most relevant to accelerated growth for their company: leadership and culture.
This news occasioned an audible gasp among those in the room. These executives had arrived a week earlier very clearly focused on strategy, international selling, and other topics they considered to be the "meaty," important stuff. They certainly didn't expect to conclude that topics like leadership and culture, which relate to how people behave, would serve as their most important drivers going forward.
THE MISSING CAPABILITY: BEHAVIORAL LEADERSHIP
Companies have it in their power right now to create leadership habits and cultural conditions that drive superior results. Yet given ingrained attitudes, it comes as no surprise that most executives don't—or can't—shape their own behavior or others' behavior very well.
In 2008, Lominger International surveyed 4,200 leaders around the globe to discover how leadership competencies and priorities varied by region. The most prominent general finding: Strengths and weaknesses in leadership skills were much more similar than different. Out of sixty-seven competencies, seven of the ten weakest (highlighted in Figure 1) were all-important leadership behaviors such as "motivating others," "confronting direct reports," and "managing vision and purpose." Coming in dead last was "developing direct reports and others."
The Lominger International study of global leaders highlighted another finding: Managers rated themselves as being more skillful than their coworkers did. Researchers summarized this result by citing a 2007 Businessweek article stating that "90 percent of managers think they're among the top 10 percent of performers in their workplace." Having worked with 360-degree feedback data from Fortune 100 companies for more than two decades, we can attest to the pronounced tendency of leaders to overrate themselves.
Even when leaders do recognize their weaknesses in shaping new behavior, they don't improve unless they apply conscious effort; in fact, none of us do. In 2004, Dr. Edward Miller, dean of Johns Hopkins University School of Medicine and CEO of their hospital, gave a talk at a private conference at Rockefeller University, the New York City medical research center. As he related, a number of research studies had investigated how well coronary bypass patients adhered to diet and exercise regimens designed to prevent the need for another (very painful) surgery. The research found that 90 percent of patients had returned to their prior unhealthy habits within eighteen months.
No, that is not a typo: 90 percent! In the workplace and throughout our lives, instances in which people know what behavior is desirable in a situation, but choose to do something else, are so commonplace that they frequently escape our notice.
A NEW COMPETITIVE ADVANTAGE
The widespread neglect of behavior in organizations creates a tremendous opportunity for transformative business leaders—those elite few who are willing to invest the time, focus, and energy to do something new to achieve something great. John Sullivan, CEO of Cadillac Fairview, a premier Canadian commercial real estate company, puts the opportunity this way:
Our industry competes on tangible things like physical assets, capital investments, and acquisitions. None of our competitors are thinking about behavior as a source of competitive advantage. And even if they were, we have a head start that we don't intend to relinquish. [Behavioral leadership] will put new distance between us and them for years to come.
Everyday behavior is so important—and so neglected—that in the years ahead, competitive advantage in any industry or geography will flow as much from behavioral leadership as from new strategies, processes, or technologies. In fact, behavioral leadership techniques will get your existing strategies, processes, and technologies working to their full potential by reducing the hidden human barriers that so often scuttle them.
In a global business environment, disciplined attention to behavior will also help businesses solve and avoid disruptive cultural clashes. As more businesses turn to innovation as a path to growth, a focus on behavior will help companies embed deep cultures of creativity and openness on the ground level, enabling innovation to persist over time.
In effect, the decades-old science of behavior has the potential to trigger a quiet revolution in companies that apply it. We use the term revolution because for many companies, behavioral leadership is a fundamental shift in focus that leads to significant shifts in performance. Though subtle, behavioral leadership is a catalyst for profound new insight that drives new action and new results.
This revolution is a quiet one nonetheless. Behavior change prowess isn't flashy and it isn't likely to capture headlines like other advances such as, say, genomics or nanotechnology. Behavior change isn't instant or effortless (though first-year returns are routinely extraordinary). And practitioners are not eager to publicize this source of advantage precisely because, as one senior leader put it, "this really, really works!" For a growing number of companies, however, the fact that behavioral leadership is flying below the radar is part of its appeal.
The transformation afforded by behavioral leadership is no less sustainable or lasting for being so quiet. Quite the contrary. Competitors often match pricing strategies quickly, buy themselves the new technology that has given lift to the first adopter, and duplicate others' lean processes within months. But as John Sullivan points out, they have to develop the ability to foster and leverage behavior, and this takes time and focus. The more competitors try to take shortcuts, the longer it will take them.
Revolution is a dramatic word, but here it's appropriate. In the few leading-edge companies that have applied it, behavioral leadership has helped them avoid executional miscues and attain game-changing increases in value. Consider the following:
One major airline saw an 85 percent jump in customers' intent to repurchase—especially helpful at a time of financial challenges for the company.
A large hospital was able to roll out a technological innovation in only ten days, as opposed to the historical track record of three years, resulting in impressive savings in time and cash.
A health-care insurance company saw a key measure of customer experience improve an average of 26 percent while return on investment for building the behavioral leadership capability was 438 percent within the first eighteen months.
These are not isolated examples. In the next chapter, we'll describe some of the spectacular returns a few leading-edge companies across industries and geographies have already realized, including superior execution, highly engaged employees, and sustained business impact.
We've designed the rest of the book to explain these results to you and to suggest how you can achieve similar ones for your own company. Chapters 3 and 4 take you behind the scenes, exploring what innovative leaders have come to understand about behavior, while chapters 5 through 9 convey how these leaders' new understanding has helped them alter core business processes and functions for better performance and profitability. Chapter 10 reveals how behavioral leaders are extending this capability throughout their organizations to sustain high performance and seize new competitive advantage over the long term.
A number of executives with whom we work strongly prefer "substance over sizzle," and this principle guides The Behavior Breakthrough. Grounded in hard science, the book offers scores of real-life examples of notable companies that have applied behavioral leadership and achieved significant successes. Our goal: to provide a comprehensive, detailed, and reader-friendly introduction to applying behavioral leadership in proven and practical ways.
THE POWER OF YOUR NEW EYES
French novelist Marcel Proust once observed, "The real voyage of discovery lies not in seeing new landscapes, but in having new eyes." Applied Behavioral Science and the behavioral leadership discipline are powerful in part because they allow leaders to reassess their own vexing business challenges with new eyes. This new insight drives new action and new results.
Remember Dave's challenge from the beginning of this chapter? Behavioral leadership methods enabled him and his team to identify the key behavior changes that would accelerate business performance as well as the leadership skills and processes most essential to encouraging this behavior change. Leaders were able to see through new eyes what was keeping employees from acting as owners and operators of their business, and they were able to chart and implement a fundamentally new path.
Dave and his team first acknowledged that the inconsistent plant results owed ultimately to inconsistent behavior among frontline employees as well as supervisors and leaders. Next they examined why this inconsistent behavior was occurring, and they found that the existing behavior made sense from the perspective of plant personnel. Although the senior team had communicated safety, reliability, and environmental compliance as top priorities, other actions of theirs implied that production was the real number-one concern.
Excerpted from THE BEHAVIOR BREAKTHROUGH by STEVE JACOBS. Copyright © 2013 by Continuous Learning Group, Inc. (CLG). Excerpted by permission of Greenleaf Book Group Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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