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Robert Townsend: Townsend's Third Degree in Leadership.
William T. Esrey: Leadership in the Next Century.
Warren G. Bennis: Leaders and Visions: Orchestrating the Corporate Culture.
PRINCIPLES OF MANAGEMENT.
Andrew S. Grove: Elephants Can So Dance.
Peter F. Drucker: The Rise of the Knowledge Worker.
Richard Branson: The Virgin Iconoclast.
MARKETING AND BRAND-BUILDING.
Akio Morita: Moving Up in Marketing by Getting Down to Basics.
Howard J. Morgens: Advertising from a Management Viewpoint.
CORPORATE CITIZENSHIP BRINGS SUCCESS.
Robert D. Haas: Ethics: A Global Business Challenge.
Raymond V. Gilmartin: An Ethics Prescription for Success.
Charles B. Wang: What CEOs Don't Know.
THE DRIVE FOR QUALITY AND PROFITS.
Joseph M. Juran: Strategies for World-Class Quality.
Jim Koch: Brewing Up Growth: An Innovator's Tale.
Rebecca P. Mark: Risky Business.
BREAKING THROUGH BUREAUCRACY.
Lawrence A. Bossidy: Why Do We Waste Time Doing This?
Emmanuel A. Kampouris: A Case Study in Reengineering.
Tom Peters: Letting Go of Controls.
Credits and Sources.
One of The Conference Board's primary research studies in 1999 was the CEO Challenge, a survey in which chief executive officers (CEOs) were asked to select the top three marketplace and the top three management challenges in the next year from a list of about 15 issues in each category. According to 29 percent of the 656 responding CEOs, "Engaging employees in the company's visions/values" is one of their top three management challenges. To engage employees, leaders must have an inclusive philosophy that, for example, destroys any divisive walls between headquarters and other groups in the organization. Toward that end, Robert Townsend, retired chairman of Avis, Inc. and author of the best-selling book Up the Organization, states in the opening essay of Part I that one of his top leadership principles "is to fight the them-and-us lines that separate people in a company." One of Townsend's tricks was to have headquarters staff work the car rental counter to better appreciate the frontline troops. Another concern gleaned from the survey: 24 percent of the respondents said that "developing and retaining potential leaders" is one of their top three challenges. To retain potential leaders, business guru Warren G. Bennis declares that the CEO must create a vision with clear direction that is "compelling, plausible and attractive." The vision must include real and tangible elements so that it is truly inviting, according to Bennis. Today, a clear vision is more important than ever to navigate a sometimes murky future; just consider that 43 percent of the CEOs participating in the survey said that "changes in type/level of competition" is one of their top three marketplace challenges and 41 percent placed "industry consolidation" in their top three. All of the authors in Part I offer leadership advice to meet today's and tomorrow's challenges in a rapidly evolving business environment.
I 'm going to try to give all of you a Ph. D. in leadership. The first lesson is: To hell with centralized strategic planning. If you don't have a good leader, it's all nothing; it's just a bunch of papers flying around.
Let me tell you what leadership is not. In some companies the chief executive has retired on the payroll, and there aren't any leaders. The companies are run by strong planning departments, strong purchasing departments, strong human-resources departments, and strong management-information services. What generally happens in those strong staff organizations is that you get very mediocre performance from otherwise able people down the line.
Some companies have gotten out of that trap. I'll give you one: Kollmorgen, 5,000 people, 16 divisions, had a marvelous management-information system with a 360 computer to tell everybody in the company wherever a sparrow fell. The whole company was so mesmerized with information that nobody did anything. And, bless his heart, Bob Swiggett [the CEO], practically over the dead body of the Harvard Business School, which was telling him to centralize management-information services, shot the 360 computer between the eyes. He called up his 16 division presidents and said, "I am instituting a return-on-net-assets incentive compensation system for all of you; I want you to think of your divisions as your own, run them as if you owned them, and telephone in 10 numbers every month so that I can consolidate a P& L and a balance sheet."
Well, the organization came to life. It became much more profitable, a good, fun place to work. It turned around fast, without any consultants. They didn't have a strategic-planning department to think about it for three years; they just did it.
Brunswick, a little company, sold its crown jewels to avoid a takeover and was left with three businesses that Wall Street thought were very dull--outboard motors, fishing tackle, and bowling. Fortunately, they put in charge of the company a guy who thought those were exciting businesses, and he also had a strange philosophy:
Profits are made in the divisions, not at corporate headquarters. So when he became CEO, he eliminated the group vice-presidents concept--and there went 400 people--and he reduced corporate staff by two thirds--there's another 400 people. He took the division managements and sent them back to the fields, where they would be near the companies they were running. Then he leased out two thirds of the crystal-palace space so that nobody would ever get back in there, and then he gave nine shares of stock to every employee. And he never wrote a memo, never made a speech, and the company turned around on a dime, and it's a lean, happy organization. And much to Wall Street's amazement, the stock went from 5 to 35. They didn't have a strategic-planning department.
The second point about leadership I learned while working for American Express many years ago. I was a security analyst, and I worked for a boss who was very typical of bosses then and maybe now. He was tall, he was handsome, he was ambitious, intelligent, articulate, and he was never there when we needed him. He took credit for everything we did that was any good and blamed us for everything that went wrong. We spent all our time coming in late and leaving early and bitching about the conditions. We were all under-paid; we didn't have the right mix of people.
All of a sudden he died, and the company in its infinite wisdom named me head of the investment department. I called everybody in and said, "I don't know anything about management; I'm very uncomfortable. But one thing's for sure: We don't have to talk about what's wrong; we haven't been doing anything else since I've been here. Why don't you people form a partnership and be the best investment department you can," I said, "and I'll try to get us the proper pay, the proper titles, the proper machinery, and the proper mix of people." And they said, "That's a pretty good idea, because you're a lousy analyst anyway, and we won't miss you."
So I did. I started to go around. And these people started coming in early and doing good work and making good decisions. And I remember once that Bobby Clarkson, who was chairman of the board, stopped me in the hall and said, "Townsend, that was a good bond swap you made last week." And I said, "Bond swap? I don't know anything about a bond swap. I don't even get to read The Wall Street Journal." I said, "I'm working full time to get bowls of rice for my peons, so they don't starve on your front steps and embarrass you."
Well, gradually we started getting what we should be paid, and the titles we should have, so we could go in to interview top management. And I got more and more power from their performance, and one day Charlie Cuccinello, who invested our traveler's-check float, which was billions of dollars in short-term securities, came to me. "If I had one of those new Japanese calculators," he said, "instead of the hand-crank machine I've been using" (his predecessor used an abacus--this was an old company), "I could make us a ton of money." I said, "Charlie, you're right, you're absolutely right. Why didn't I think of that? I'll go get you one." Listen, that's what a leader does. He doesn't say, "I'll call in one of my three secretaries and dictate a purchase requisition, which will sit in some out-box for three days and when it gets back to me for my signature I'll be in Europe, so it will wait until I get back and will just miss the monthly purchasing meeting, and it will be two months later when it is returned to me, rejected." I said, "I'll go get you one."
So I get in the elevator and go down to the fifth floor to the purchasing department, and say, "Hi, my name's Townsend. I work up on the 14th floor and I need an electronic calculator, and here's the make and model number." And the man on duty says, "Is it in your budget?" And I say, "No, it isn't--because I made my budget out last October, and I only found out I needed it today. So I've come to my purchasing department for help." The purchasing man says: "If it's not in your budget, you can't have it."
I was carrying my resignation around, so I pulled it out--it was battered. I said, "Would you please sign this," and he looked at it and he read it and said, "Why should I sign that? That's your resignation, and you don't work for me." I said, "Because when I leave here I'm going up to the president's office, to whom I report, and I'm going to resign. He may ask me why I'm resigning, and if he does, I'm going to tell him it's because some stupid son of a bitch in the purchasing department won't give me a machine that would pay for itself the first two and a half minutes that we owned it. And if he asks me which stupid son of a bitch in the purchasing department, I want to show him your name."
Well, we got the machine. But that's not the point. The real point is that I was using the power that those people in the investment department were giving me not to get goodies for myself, but to get things for them, to enable them to do the job even better. If you ever break that circle and start stealing the goodies that come from their performance, they'll find out about it before you will, and they'll stop cooking and they'll stop trying, and you won't know what turned the organization off.
What I was really doing, though I didn't know it at the time--and this is the lesson that belongs in your leadership kit--was eliminating their excuses for doing lousy work. An excuse may be just "I'm underpaid," or "I'm undertitled," or "We don't have the right machinery," or "We really don't have the right kind of people here," or "We don't have an economist." I was eliminating their excuses.
At Avis I discovered another principle of leadership, which is to fight the them-and-us lines that separate people in a company. These lines are easy to see. There are the people you trust and the people you don't trust. The people you don't trust park outside the gate, have to punch a time clock, and have to get coffee out of a coffee machine. The people you trust park inside, don't punch the time clock, and get free coffee. You want to fight those lines.
One of the interesting lines in America is that the difference in salary between the CEO and the highest-paid blue-collar worker is 36 to 1; in Japan it's 7 to 1. Now that's a them-us line that I find hard to swallow, knowing what chief executives don't do for their companies.
The way we got around it at Avis was that we had a rental-agent school taught by our finest rental agents, ladies in red uniforms. It was a tough school, at O'Hare airport, with an exam every night. I made the whole management go through it, as an absolute condition of employment. We had to study, and we had to spend two or three hours renting cars at the airport.
I went through it, too. One night, I had my trainee button on and was renting a car and trying to get the right keys with the right agreement--this was before the computer did this. I was trying to get the figures in the right boxes when my customer said, "Can't you hurry up? I'm on a real bummer of a trip." I said, "Give me a break, I'm a trainee." I kept on doing it, and I dropped the keys, and he said, "You're certainly the worst trainee I ever saw. Where did they dig you up from?" And I said, "You want to know something really sick? I'm the president of the company."
I tell you, when we got back to headquarters we were so proud of those ladies out there on that firing line and the difficulty of the job that they were doing that we started wearing red jackets around the executive office as a sign that we were part of their team. When we went into a city, we'd look at them with different eyes; they were our heroines now, instead of being the dopes who were renting cars. Them and us. Get rid of those lines; it's not an act, it's a career. You have to fight it like the weeds in your garden--continuously.
As you know, I've recommended that you fire all your management consultants, all of them. Promise them a bonus if they'll get off the premises by 5 P. M., and another bonus if they won't submit a report. Let me explain this to you.
Let's say we've got three divisions in a mythical company, and you are the chief executive. You've already gone to four board meetings a year, so you're already in that mode. You have three divisions and one of them is sick. It's old Joe's division. He keeps reorganizing, missing his targets, reorganizing, missing his targets. It's time to face up to the fact that old Joe is no longer the guy to run that division.
So you say to your board: "I'm going to go over and run old Joe's division for three months, and I'll see what's going on." You tell old Joe to go skiing in Vail or go to Palm Springs and play golf with Gerry Ford or something. You say that when he comes back there will be a job with equal pay and benefits, but it sure as hell will not be running this division.
And then--and this is very important--you actually go over and sit at Joe's desk. You don't bring anybody with you, like your secretary, to make your life comfortable; you go sit at old Joe's desk. You call everybody in who reported to old Joe, and you say: "Now, you people know a lot about this problem. I'm your new division president, by the way. You know a lot about it, and you all have different views about what it will take to make this thing cook. I'm going to call you in one at a time and ask you for your help. But I don't want your goddamn private grievance committee; I don't want to hear about any goddamn coffeepots. I want you to tell me how to save this division and make it a credit to the company, because if we can't do this in a relatively short period of time, I'm going to shut the mother down."
Now that's motivation. Contrast that with the normal approach of the big company, in which the chief executive is too lazy to get out of his office and give up all those comfortable surroundings. He calls McKinsey & Company and drops six Harvard Business School graduates on these poor beleaguered people. Then they know they're in trouble. They might love to solve the problem themselves. But now you have to educate six people who don't know anything about the business.
Now let's go back to the alternative. You are sitting in old Joe's chair and you may have to call in your people one at a time, three times each, but at some point you'll wake up and they will have given you the plan of how to turn that thing around. Then you call everybody in and say, "This is the plan you've given me, this is what you want to do, and, Bill, you are the obvious one to be division president. So you sit up here and run the division and carry out this plan; if you want to change it tomorrow because you run into something, change it. I just want you to save this division and make it a credit."
In six months those people will be 10 feet tall, and they will have forgotten that you were ever there. And it's all very proper that they do so, because they really did save the division themselves, and you'll be back in your own office with your cockamamy outside directors.
For the final part of your Ph. D., I'm going to tell you from my experience the characteristics of a leader. This is something that's very important and very difficult and misunderstood. They come in all shapes and sizes and colors and sexes; some are bright, some are dull, some are articulate, some can't speak a whole sentence, some are Type A's, some are lazy and laid-back. You cannot recognize them physically. Charisma is not generally associated with a true leader, in my opinion. It is more associated with the opposite: the corporate politician, who is what is the matter with our country. There are too many of this type in our corner offices.
Now here are the characteristics of a real leader to help you identify them and become one, if that is your desire. They have their personal ambition under control; they seem to get their kicks out of seeing their own people succeed and their own organization succeed. They are visible or available to their people, and they are good listeners. Listening is a very painful thing because, depending on how much pain they're in, you may have to listen to your people say something four or five times until they get that look in their eyes that says, "By golly, he really understands." When they get that look, you can say, "Fred, I understand what you're saying. Now get the hell back to work and do it my way." Then they'll go back home and sleep like babies and tell their spouses, "At least the son of a bitch listened."
That takes the anger out, but it's very painful to the listener. That's why you need a new CEO every five or six years, because after five or six years he or she can't listen anymore.
A good leader is decisive. This is why you shouldn't have lawyers or accountants or MBAs in a corner office. They want to get the last shred and scrap of information; they're happy with numbers and words, and they don't trust people. They need more information, and by the time they've collected all the information for the decision, the timing is off and they might as well forget the whole project.
At some point a good leader with inadequate data will say, "Ready, fire, aim--and if it doesn't work we'll correct it, but at least the timing is right to start with what we have." A good leader sees the best in his people, not the worst; he's not a scapegoat hunter. He sees winners, and he uses "the rule of 50 percent," which makes him high on promoting from within. The rule is that if you have anybody in your organization who looks like 50 percent of what you need for a job and who has the support of the people around her and wants the job, give that person the job and she'll grow the other 50 percent.
The corporate politician with no faith in his people hires a search firm, and they wind up bringing in an electric blue suit. He raises salaries all around, and a year later you're still teaching him the business. A good leader is simplistic, not complex. He makes things seem simple. He's persistent. If he can't convince his people and he really thinks it ought to be done, he'll find a different way to come at them until either they convince him, or he them.
He's fair and has a sense of humor, and he has humility. If you ever become chief executive, remember: You are still the same lovable, stupid, lazy slob you were the day before you got the job, and don't try to rush out and buy a whole lot of three-piece suits to fool people.
You're not going to fool anybody. You got there on your program, so stay on your program. But just remember to work a lot harder, and work for your people.
About the time of my first meeting with the board at Avis, General Sarnoff did what all outside directors do: They try to impress the other outside directors with how smart they are. He said, "I would like a run of all the cars we have in Avis, by the location and model number." I thought of the weeks that that would take our accounting department to run down, and I said to him, "General, if I don't need that statement to run the company, you sure as hell don't need it to be an outside director of the company." Bless his heart, the general turned purple; it was a joy for me to behold it.
But what I was doing was protecting my people, so they could get on with what the company was really trying to do. It was also in the first 100 days I was hired; I wouldn't have dared to do that six months later. You're bullet-proof in your first 100 days; the man who hired you can't fire you without looking stupid.
I suppose the best way to tell a leader is if you find a place where people are coming to work enthusiastically and they're excited to come to work and would rather work there than anywhere else, you can bet they've got a leader. Well, there's your Ph. D. in leadership. Good luck and God bless.
We have a divided government in Washington with one party controlling Congress and another controlling the White House. The president retains his popularity despite relentless attacks from the media and political foes. He has visited China, and the entire Asian continent is on our minds for other reasons as well. The news of the day focuses on antitrust activity at the Justice Department, progress toward true European union, and hopes for peace in Northern Ireland.
The year is 1972, and the president is Richard Nixon. This scenario raises the question: Are we making any progress? The cynical answer is no, and some say things are getting worse. Yet, despite its ups and downs, the world is on the whole more competitive and prosperous. National and world leaders are better equipped than ever to cope with today's thorny and dangerous economic and political issues.
The recent track record of U. S. corporate leaders has been impressive. Over the past decade, they have:
A primary enabler of these gains is advanced telecommunications. New technology has provided the speed and has broadened the capabilities to make employees more effective and our companies more profitable. For example, a newspaper ran a story about a group of IBM computer programmers employed at a Beijing university. At the end of the day, the Chinese programmers send their work over the Internet to other IBM facilities. Programmers in the United States and Europe work on it and then electronically send it to workers in India, who pass it back to Beijing by morning, and then the cycle repeats itself. This kind of ability has changed the economics of business.
Use of modern communications can, of course, be much more comprehensive than this. For example, Cisco, the global leader in networking products, has developed a wide and intricate web of suppliers, contract manufacturers, and assemblers. Using the company's extranet--an extension of a corporate intranet--outside contractors directly monitor orders from Cisco customers and ship the assembled hardware to buyers, often without Cisco ever touching the product.
As one informed observer said, Cisco can be considered the quintessential outside-in company. It has mastered how to source talent, products, and momentum from outside its own walls. A recent article in Business Week identified Cisco as a model of the corporation of the future. Business leaders would do well to study this model, not necessarily as a precise formula for success and not because Cisco is in the telecommunications industry, but because of how it uses communications to manage in an innovative way, tying diverse groups of people into one very flexible organization.
The leaders of future-oriented companies will need to be innovative users of communications. The power of communications is going to grow phenomenally, and it will yield potential opportunities to redefine business. For example, every day the Sprint network electronically transmits data equivalent to all 17 million books in the Library of Congress. In just two years, the telecommunications networks in the United States will carry more electronic data traffic than voice. By 2003, voice traffic could be less than 2 percent of the total traffic that is carried. Additionally, the World Wide Web is the fastest-growing communications technology in history. To reach an audience of 50 million people, it took the Internet just 4 years, compared with 13 years for television and 38 years for radio.
With these facts in mind, one might be tempted to think that technological change is just a straight, upward trajectory--a rocket that you simply jump onto and you will be okay. To the extent that technology shapes leadership imperatives, a very simple message would be to be prepared to lead as we have in the 1990s, but at a much faster pace. That would be very bad advice, indeed.
The shift in our leadership challenge is much more profound than it appears on the surface. Leaders need to prepare for a change in emphasis that our experiences and education have not fully prepared us to consider.
The heart of this shift lies in the fact that technological changes are making the modern organization more far-flung, complex, decentralized, and diverse. At the same time, information is exchanged and communicated in enormous volumes and at breathtaking speeds. These trends are likely to continue and thus raise a number of questions:
Knowing the answers to these questions could define the difference between those who survive and thrive, and those who do not. The best answers can come from the people within our organizations, but they may emerge only over time. How well we answer these questions may determine how well we respond to the profound challenge of how to direct and manage a profusion of relationships between hundreds or thousands of people involved in running our business without impeding them.
That challenge may not be as overwhelming as it first appears. The answer comes down to giving people clear objectives, and then providing them with the right tools and incentives to break down the barriers of time, distance, and culture. In doing so, they can get the job done in a way that is right for the business.
How can leaders open the gates of communication and collaboration between diverse organizations, including suppliers, distributors, and customers, so that creative solutions will emerge naturally and continuously and by applying as little force as possible to elicit these solutions? Global One, Sprint's global alliance with two of the world's leading telecommunications companies--Deutsche Telekom and France Telecom--may provide an instructive example.
Sprint and these two companies agree that you should never underestimate the challenge of operating a multicultural business enterprise in a very dynamic industry. In the end, working through our organizational differences is going to make us better and a more effective global competitor, but it takes an unbelievable amount of energy, devotion, and patience. All of us have had to change our perception of what it takes to be strong leaders. We have learned to put relationships among ourselves as executives as well as among employees at a much higher level of priority. We have to arm employees with timely access to accurate information if they are to effectively communicate and learn from one another and grow together. These are very top priorities of our global partnerships and increasingly for Sprint itself. Our experience is not unique; it is just one manifestation of an aspect that can be found in corporations across the gamut of business enterprises.
As businesses are being intimately linked in the global economy, and as they partner with competitors (and compete with partners), we become more and more reliant on each other. But within this crush of activity is a great potential for an organization to learn. To learn quickly and to respond effectively to the marketplace, people within organizations must break out of their traditional, rather comfortable confines--confines that, in fact, have become somewhat limited in geographic or cultural breadth. Rather, they need to communicate with one another clearly and frequently.
For example, the ultimate success of Global One will come as people throughout Sprint, Deutsche Telekom, and France Telecom communicate often and on a much larger scale. The answer to managing a far-flung, diverse business effectively is found in the people who are already within your company and within the companies of your partners, vendors, and distributors.
Leaders in this environment will have to work differently if they are to succeed. Leaders of the future must:
Today's advances in telecommunications are not just more of the same. We are now introducing technologies that offer more than just increased speed and capacity. They offer capabilities that are also different in what they can do for you.
For instance, in the summer of 1998, Sprint introduced ION, the integrated, on-demand network. With ION, a home or business will be able to conduct multiple phone calls, receive faxes, run new advanced applications, and use the Internet at up to 100 times faster than a 56-kilobit modem--all through a single connection. Even the distance between local and long-distance will disappear because distance becomes irrelevant when communications travel at the speed of light. In short, you will be on the network all the time, and you will have blazingly fast communications speeds in your arsenal.
ION technology means that people are going to have a remarkable new tool for communicating. It will enable us as never before to develop very close, more productive, personal relationships that will collapse both space and time because it will allow people to share so much more all at once. Capabilities like this are going to change what we can do at our businesses. Thus, the leadership challenge increases.
As telecommunications instantaneously, intimately, and intricately interconnect us, it can take us well beyond what had been our limited horizons. It will allow us to communicate not just faster and more frequently, but more fully as human beings with special talents, perspectives, and ingenious ideas. The best, most effective, and most influential leaders of the future will be those who recognize and employ that power effectively. They will be the ones who will learn how to unleash and direct that power to the fingertips of a dispersed, diverse, and global workforce. They will be the ones who will welcome and promote a significant decrease in corporate viscosity, creating a highly fluid and very flexible organization while at the same time acting to develop team-work and learning that ties the organization into one unit that moves in the same direction--your direction.
Suppose one were an artist and asked to portray a business leader in his proper posture, how would one go about it? I believe I would do it by showing him standing on a podium, a baton in his hand, confronting a hypothetical orchestra comprising all of the various talents that he must effectively bring together if his presumably large and complex business were to pursue a harmonious and successful course.
A good conductor need not be able to play the bassoon or the trumpet or the bass viol, but he must recognize the potentialities of the instrument and the character of the performer and deal with them in such a way that he produces an ensemble which is harmonious and effective. In the same sense, a business leader need not have expertise in science or in law or in marketing, but he must understand their significance. He must know and be able to measure the capacities of the individuals who will carry on in these various fields. And he must acquire the spiritual qualities which will induce the people under his direction to put forth their best efforts in the interests of the enterprise as a whole.
I have come to the conclusion that differences in managerial competence are due not to one person, nor to the few geniuses that cross the stage from time to time, but arise out of the creation of an atmosphere that induces every person connected with the enterprise, no matter what his position, to perform his task with a degree of competence and enthusiasm measurably greater than what could be called his normal expectations.
Business success then can be measured by summing up the small increments of extra effort on the part of all the people who are joined together in a given enterprise. If one looks at the question quantitatively, it would seem inescapable that five percent or so extra performance on the part of, let us say, 90,000 people will far surpass extraordinary competence in a small executive group.
The important qualifications that make for high competence in business leadership are intangible rather than tangible. They involve such things as the ability to deal with people sympathetically and understandingly, the ability to recognize competence in others, and the courage to weed out incompetence when necessary. They involve the ability to stimulate high performance at all organizational levels and to insure unity of purpose among individuals differing widely in temperament and experience. It is simply not possible to define these characteristics in any quantitative way.
Because business equates success or failure with profitability, the superficial conclusion is that profit is the sole objective. If this were true, the role of business leadership would be vastly simplified. All of us know, however, that profit is only one of many factors influencing corporate decisions. Business leadership must, of course, be concerned with profit, but the difficult decisions, and those calling for the highest level of insight and judgment are those involving the conditions under which profit may be realized.
Profit under what conditions? The grab for a quick killing is the mark of the worst kind of leadership, for it places immediate profit above the long-term interest of the organization and can lead ultimately only to disaster. The successful leader will define objectives within limits that his organization will find consistent with professional pride, personal satisfaction, and public esteem. He will take into account all parties at interest--employees, customers, shareholders, and his country, finding the way to an equitable distribution of the fruits of progress. The leader who establishes viable guide lines compatible with human values and public policy will insure to himself and his organization the essential backing and support of his associates, his subordinates, and his nation.
Business leadership has a far more important role than has been the case in past generations, since business leadership holds in effect the key to the stature of a nation in the world's political arena. The implication seems clear that industrial leaders can no longer insulate themselves from public affairs; they can no longer consider their responsibilities as dealing solely with the profit and loss position of their enterprises.
They must accept responsibility at highest levels of national policy and must form an association with leaders in government that is at the same time harmonious and purposeful. For government leadership would be weak indeed if it did not have strong industrial sinews behind it. In short, the problems of a nation's government are in a very real sense the problems of its business establishment. Neither can proceed in a given direction without the sympathetic support of the other.
By this I do not mean that business leaders should seek political office, nor should they necessarily attempt to insert themselves at the council table of their governments. There must, on the other hand, be complete understanding and harmony between leaders in both fields if there is to be national unity and continued national strength.
To sum up, it seems to me that any philosophy of business leadership must take into account not only the size and complexity of modern enterprise, but the influence it has come to exercise in determining national well-being and national stature. Management competence can no longer be equated to distinction in particular technical or nontechnical disciplines, but must embrace those larger and more spiritual qualities that make for inspired leadership of diverse groups of individuals dedicated to a common cause. No longer can business leaders concern themselves solely with their own enterprises--they have a larger role to play in national and even in international affairs.
It takes more than a natural disaster to incite the powers that be in the automotive industry to radically depart from their set ways; it takes a Japanese invasion. By the early 1980s Japanese car manufacturers had a lock on the small car market in the United States, prompting General Motors (GM) to create their vaunted Saturn division. The plan was to set up a new factory in a new place, but transplant GM people. Richard LeFauve, who was at the helm for ten years, knew not all would be open to change due to past corporate oppressiveness. He reflected, "The classic corporate statement was, 'We're going to make all these improvements and eliminate all these jobs. So we'd like you to help us. . . .' And you wonder why employees don't want to change. The change has to make their jobs more exciting." So when Saturn set up its Tennessee operation with 6,000 transplanted GM people, it asked for their input in designing the best operation. Although Saturn was founded in 1984, LeFauve wasn't made president until 1986. With the sudden change in the executive suite, the fledgling company's employees immediately questioned GM's commitment to Saturn, because part of the plan was to build a tightly knit team-based culture. LeFauve was up front with them, "I believe you will find that I am a team player, for I have believed for a long time that cooperation is the way we will beat our competitors--not confrontation." The early years were not easy; besides keeping the team together, his GM counterparts were jealous of all the attention Saturn received. Finally, the first car rolled out of the factory in 1990. After ten years with Saturn, LeFauve moved on to other responsibilities in GM, and in 1997 he was charged with developing standard management and engineering practices across GM; in other words, the unconventional, team-oriented management style at Saturn was recognized as a success. LeFauve discusses how "each individual is an agent of change" in the aptly named Leaving the Comfort Zone. One of his conclusions is that leaders "must show some humility and accept that you do not know all the answers."
Saturn was less a new product than an entirely new way of doing things: our novel relationship with the United Auto Workers (UAW) union, the notion of suppliers as partners, and our emphasis on making the experience of buying a new car enjoyable. Each of these initiatives had a learning curve and the common denominator of an organizational learning effort that management, the union, and rank-and-file employees went through together. One result: Rather than having new procedures and standards imposed on employees from the outside, each individual is an agent of change, and union leaders educate union members. That gives us credibility in convincing our people to leave the comfort zone. It is credibility that will help sustain and drive the process of change in the future.
The key to change is a shared vision of the future. And at Saturn, the key word is "shared." You can ask anybody in our organization, "Where are we going?" The response would be the same. But it is also important for us to convince our managers that simply telling employees what to do--even repeatedly--does not necessarily get the message across. In some cases, in fact, telling evokes confrontation.
The answer is to begin an education process together. It is similar to voting in a presidential election. Someone who voted is able to say, "I may not have selected that candidate to win, but at least I participated in the process." Participation creates a sense of identification and support.
Certainly, training also plays a big part. At Saturn--at the insistence of the UAW, no less--we commit 92 hours a year to training. That means 5 percent of the time we are participating in a learning process.
One of the first things the union wanted to teach was the history of the UAW. As a manager, I thought that would be a complete waste of time. But sitting across the table from people you had learned to distrust over the years, learning about their background and discovering that you have the same problems, helps to generate respect and support--for them and for the learning experience.
Along the way, other difficulties arose. Management felt we could not spare 92 hours to sit in a classroom. So someone came up with the idea that teachers should receive double credit. Not only did that improve management support for training, it also enhanced the educational experience, because you really learn when you teach.
Some of this training is technical, but a lot of it is social. It focuses, for example, on how to make decisions as a team. If Saturn is going to have self-managed teams--a key to employee empowerment and increased productivity--we have to spend time teaching our people how to identify and solve problems, and how to come to a consensus. You have to develop a common vocabulary.
The critical point is that you may have doubts about whether and how much learning needs to occur. But ultimately, companies need to make time for the process or face the loss of a significant competitive advantage.
Properly conceived, a learning organization creates the opportunity for employees to have some fun. From a business perspective, it has been exciting for us to watch many of the things we have learned at Saturn circulate back into the broader General Motors environment. Based partly on the Saturn experience, GM is developing a corporate-wide vision called the "Plan to Win." We are going to teach that plan to more than 1,800 top GM managers, then help them teach it to others.
Learning enables you to identify the need for ongoing change, and an awareness of what to do about it. In the small car group, for example, we determined we had people in Germany, Detroit, and in Saturn itself engineering cars simultaneously. These were essentially the same cars; they might have looked slightly different in size and shape, and maybe they had different brake lines. Does the consumer really care what the car's brake lines look like? Obviously not. The consumer just cares that the brakes stop the car. So why were we engineering it three times? Why didn't we engineer it once and use it across the organization?
In order to rectify this situation, we had to bring people together and create a vision. One of the first things we did was to break down the cultural barriers between different areas. It was interesting to watch the disciplined Germans interact with the more relaxed Americans. We may not see the project's results until after the year 2000, but the end product may be something really special in small cars.
Many business people look at learning as a "soft" skill, or "goody-goody" stuff that you might do if you really had the time and money, but that is short-sighted. Learning is an immensely important business decision, and the results are superior.
What are the lessons for leaders who must generate a common experience and drive the learning process? You must show some humility and accept that you do not know all the answers. But take heart; the people around you probably do. You need to bring them together, get to work, and enjoy the journey.
I believe that the single most important determinant of corporate culture is the behavior of the chief executive officer. He or she is the one clearly responsible for shaping the beliefs, motives, commitments, and predispositions of all executives--from senior management to the operators of the organization.
What is this corporate culture that the CEO shapes and sustains? First and foremost, a corporate culture presents a shared interpretation of organizational events so that members know how they are expected to behave. And it generates a commitment to the primary organizational values and philosophy--the vision that employees feel they are working for and can believe in.
"Shared vision" is the significant element in that system. The idea of corporate culture, or any culture, has to do with significance, with a web of meaning that allows people to make sense of their organization. Successful companies have a very deep set of symbols and beliefs that create meaning, a shared vision, for its employees. And leaders create and transmit that meaning, that vision, so that people identify with it, or "enroll" in it.
Perhaps a brief definition of leadership will highlight its role in corporate culture.* In studying leaders, I made a very rough distinction: I defined leaders as people who do the right thing, and managers as people who do things right. Management has to do with efficiency, with making things run properly. Leadership, in contrast, is concerned with identity--why we are here; what our business is; what our destination, goals, mission and values are. In an era of transition, that function of leadership--of vision--is very important.
Without exception, all of the leaders I had an opportunity to get to know were "pragmatic" dreamers, people with a realistic sense of destiny and identity. The late President John F. Kennedy presented an admirable illustration of what I mean by vision when he talked about having a man on the moon by the end of the 1960's, which actually came about. As that example implies, a vision is more than just another interesting idea. A lot of people have attractive but unrealizable dreams. But Kennedy's idea of a man on the moon by the end of the decade worked for several reasons. First, it recognized a barely discernible, but deeply felt, public aspiration. Second, the technological know-how to achieve it existed. Third, because he had correctly sensed public sentiment, he got the political support to fund the program. Leaders' visions are pragmatic.The leaders I studied were very diverse in their personalities and styles. Even their managerial philosophies ranged widely from participative management philosophy to an autocratic attitude. But there are some common characteristics of leadership that bear directly on corporate culture.
I spoke to executives from both the profit and not-for-profit sectors, governmental agencies and corporations, and they all seemed to have a set of guiding concepts that enroll other people. When these leaders spoke about their organizational vision, they caught your attention. When they were involved with or talking about their organization's goals they were obsessive and passionate. But outside of that all-consuming interest, they could be as dull and boring as the next person.
A leader's appeal, that is, has nothing to do with an innate or charismatic power of appeal. A leader creates a new social reality that is compelling, plausible and attractive. A leader's vision invites other people into that social reality; it takes people to a new place. Vision is really an interactive process between a leader and followers--the stakeholders and the work force.
Vision is crucial for a company. Without a clear vision, the organization is either dreamless, with no direction, or it has so many different visions that people have no consistent understanding of their direction. In companies buffeted by changes, takeovers, and what not, it can be very difficult to know which vision is the real one or what the vision will be next month. In that situation, people can feel lost, even catatonic: They do nothing, hoping that the turmoil will all blow over.
Having a shared vision is absolutely essential if an organization is to be effective. It creates alignment among employees and motivates them. People would much rather have lives with a sense of purpose and direction than lives of aimless diversion.
Creating that kind of vision entails more than simply communicating it; it means turning the abstract into something real and tangible. Leaders have an almost obsessive drive not just to create but also to transmit that vision. They are able to do that because they can communicate meaning.
(The distinction between information and meaning is important here, because all of us are inundated with information, ambushed by data and discrete facts. What we need is meaning.) Leaders have a knack for using analogies and other kinds of creative explanations to get the meaning across.
Furthermore, leaders convey meaning by example. That is, the leader's style pulls rather than pushes people along. A pulled style of influence works by attracting and energizing people to enroll in an exciting vision of the future. It motivates through identification, rather than through rewards and punishment. Leaders articulate and embody the ideals toward which the organization is striving.