Read an Excerpt
WHAT MAKES GREAT LEADERS GREAT
Management Lessons from Icons Who Changed the World
By FRANK ARNOLD
The McGraw-Hill Companies, Inc.Copyright © 2012Carl Hanser Verlag Munich
All rights reserved.
Harness the Power of a Business Mission
"Our Mission: At Microsoft, our mission and values are to help people and businesses throughout the world realize their full potential....
Our Values: As a company, and as individuals, we value integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments, providing results, and striving for the highest quality."
These are Microsoft's business mission and values today. When Microsoft was founded in 1975, it also had a business mission that took the company pretty far: "A computer on every desk and in every home...." The foundations for Microsoft's meteoric rise were laid in 1981, when Bill Gates (born in 1955) licensed IBM to use his MS-DOS operating system. A decisive element for Microsoft's future success was the contractual clause stating that only Microsoft was entitled to license third parties wishing to use the operating system. It is definitely no exaggeration to describe that decision by Bill Gates as one of the best management decisions ever made. Even the attempt to pull it off was a bold and truly brilliant gambit because at the time Microsoft was a relatively small, unknown software company from Seattle, whereas its partner, IBM, was the most powerful giant in the computer sector. The audacity shown by Bill Gates and his then business partner, Paul Allen, to secure for themselves exclusive rights to re-award licenses for their software, indicates just how farsighted their approach was.
They saw clearly something that IBM had evidently overlooked, namely that the computer sector was about to undergo a fundamental change. And in that change, software, rather than hardware as in the past, would become decisive from the consumers' point of view. By winning IBM as a partner, Gates succeeded in imposing a universally applicable standard for software applications. MS-DOS was duly installed on every PC supplied by IBM, giving Microsoft a huge market share within a very short space of time. And the introduction of Windows 3 merely added to that momentum. As more and more suppliers of hardware forced their way into the PC market, they too used Microsoft's operating system. In other words, for Bill Gates harnessing the might of IBM was the most direct way of realizing his dream and fulfilling Microsoft's business mission.
An effective business mission undoubtedly indicates that the organization in question has very clearly understood what its business is all about. To achieve that, it must acquire a profound understanding in three areas—needs, strengths, and convictions—and base its actions on certain assumptions.
Taking needs first of all, an understanding of the respective needs and context can be gained by asking the following questions: Who is our customer? Who should be our customer? What does our customer pay us for? What does the customer gain from us? But also: Who is not a customer of ours and why not? Of course, answering these questions is anything but easy. More to the point, the answers themselves are far from obvious. In fact, it is only by discussing differences of opinion about those answers that an understanding can be reached and which people in an organization can then duly share and sustain.
The second essential building block of a business mission entails understanding your own strengths and core skills. The questions to be answered here are: What can we do better than anyone else? Where do we outperform others by at least a little bit? In which domain might we even be a market leader? The answers point to strengths the company can build on and also identify domains in which positive results can be achieved. At the same time, though, they indicate which strengths need to be consolidated to attain—or retain—a leading position and also highlight any areas where there is need for improvement. Moreover, these same answers spotlight any weaknesses that may currently be preventing the organization from fulfilling its potential.
The third component of a business mission is about understanding people's convictions and recognizing what the organization deems to make sense. The questions to address here are: Why is it important for the market that we do this? To which cause or task do we want to commit? Why does what we do make sense? What makes it worthwhile? Which values do we wish to embrace as guiding principles?
Systematically deliberating and working through the three building blocks presented above can help to prevent an organization from defining its business mission only superficially or inaccurately. Whether the outcome of those deliberations can be neatly summed up in an elegant slogan is of secondary importance. If it can, great, though this is by no means essential. Instead, the main aim should be to gain a clear view of what the organization in question is all about. For this reason, you will be better off carefully formulating a few clear sentences that prove to be effective and of practical use rather than using an impressive, but ineffectual slogan. In other words, what counts is craftsmanship, not showmanship.
On closer inspection, the version of Microsoft's old business mission from 1975 cited above is not even complete, because in full it read: "A computer on every desk and in every home, running Microsoft software." Adding that brief final phrase makes a big difference, and even Bill Gates himself could have had no inkling that one day his dream would be fulfilled and lead his company to success. We can only wish him similar success in his current work in the Bill & Melinda Gates Foundation, which helps people lead healthy, productive lives.
ACTION POINTS AND FOOD FOR THOUGHT
* Does your organization have a clear business mission? Is everyone aware of it? Does everyone practice it? If not, what can you do to prompt serious, extensive discussion of the three building blocks of an effective business mission?
* What can you do to ensure that your organization's business mission is actually implemented? What results do you plan to achieve within the next six months? Who can help you achieve them?CHAPTER 2
Create Customer Value
Former IBM CEO Lou Gerstner (born in 1942) is said to have been one of the best managers of his generation. Many people rank him alongside Jack Welch, Bill Gates, or Andy Grove. And a look at what Gerstner achieved at IBM, where he masterfully engineered one of the most stunning turnarounds in business history, more than justifies the claim that he genuinely earned his place in such illustrious company. The major lesson to learn from him is how important it is to focus a business totally on generating customer value.
In 1993, IBM was in a bad way—such a bad way, in fact, that Intel CEO Andy Grove struggled to find words to sum it up: "It's hard to describe how beaten down that company was." The computer giant, leader in its industry at the time, had previously reported what was at the time the biggest-ever annual loss posted by a company: $8.1 billion. Then, in April 1993, Lou Gerstner was appointed CEO of IBM. One of his first—and most important
Excerpted from WHAT MAKES GREAT LEADERS GREAT by FRANK ARNOLD. Copyright © 2012 by Carl Hanser Verlag Munich. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.