Results-Based Leadership
Book by Dave Ulrich, Jack Zenger, Norm Smallwood
Book Review by Herb Rubenstein
Introduction
The authors focus on the selection and development of leaders in organization. The book makes the strong argument that people skills and other “soft” and intangible factors account for much of the true value of today’s organizations. This book review summarized the key points made in each chapter.
Chapter 1: Connecting Leadership Attributes to Results:
1) Leaders matter:
a) A recent Conference Board study found only 54% of companies felt they had the leadership necessary to respond to change and only 8% of company executives rated the overall leadership in their company as excellent. Other studies point to the leadership gap as the number one pressing people issue in the business world..
b) Currently there appears to be a chasm deepening between what is expected of leaders and what they produce.
2) Effective leadership = attributes plus results. It takes both:
a) Focusing exclusively on results risk the lack of sustainable results
b) Focusing only on attributes risks lack of results
3) Building better leaders through attributes:
a) Leadership attributes fall into three categories: ARE-KNOW-DO
i) Who leaders ARE (values, motives, personal traits, character)
ii) What leaders KNOW (skills, abilities, traits)
iii) What leaders DO (behaviors, habits, styles, competencies)
b) GE has defined leadership competencies—bundles of leadership behaviors—to improve leaders. Their approach to leadership development is based on four essential tasks:
i) The organization recognizes the importance of leadership to its business success; thus senior management strongly commits to doing what is needed to build the next generation of leadership
ii) GE has in place a specific process for developing leadership talent …succession planning aligned with corporate strategy.
iii) GE defines leadership attributes
behaviorally, for the benefit of future leaders. Leaders must make the numbers and live the values (defined in the GE Leadership Effectiveness Survey—LES)
iv) GE uses the leadership competencies stipulated in the LES to integrate a number of management practices with the purpose of building quality of leadership…e.g., annual 360-degree feedback
4) Key elements of leadership:
a) Sets direction. (vision, customers, future):
i) Leaders position their firm for and toward the future…predict and juggle numerous influences on the future. Define the future of a company (or department) in ways that excite participation. Leaders allocate resources to make the future happen.
ii) Leaders understand external events; focus on the future; turn vision into action
b) Mobilizes individual commitment (engage others, share power):
i) Leaders turn vision into accomplishments by engaging others, translating future aspirations into the day-to-day behaviors and actions required of each employee, and building commitment to alignment.
ii) Must build collaborative relationship; share power and authority; and manage attention.
c) Leaders engender organizational capability (build teams, manage change):
i) Organizational capability refers to the processes, practices and activities that create value for the organization. Thus leaders must be able to translate direction into directives, vision into practice, and purpose into process.
ii) Leaders must be able to demonstrate at least five abilities:
(1) Build organizational infrastructure
(2) Leverage diversity
(3) Deploy teams
(4) Design HR systems
(5) Make change happen
d) Demonstrate personal character (habits, integrity, trust, analytical thinking):
i) Leaders must become a fully integrated human being. Followers need leaders they trust, relate to, and feel confidence in—credibility.
ii) Leaders must generate spirit, trust, love, grace, warmth, intimacy and deploy servant leadership approaches when appropriate
iii) Leaders must practice what they preach; posses and create in others a positive self- image, and display high levels of cognitive ability and personal charm.
5) The pitfalls of leadership attribute models:
a) Studies of who “leaders are” (their attributes) and what leaders have done in the past presents problems to predicting their success in the future.
b) Tailored attribute models are more important than generic models. They should reflect the unique challenges of the firm
c) Behavior based attribute models are more effective than theory-based models.
d) Line-created and owned attribute models are more important than HR-created models.
e) Leadership attribute models need to be used, not just created. Leaders should deploy them into staffing, training, compensation, communication and other management practices.
f) Leadership attribute models must define qualities of all leaders, not just those at the top echelon.
6) Building better leaders through results:
a) Lucent HR VP Vicky Farrow asks managers at all levels to devise personal leadership agendas as part of their career plans
i) What results do you need to achieve? (zeros in on business strategy)
ii) On a scale of 0-100, how able are you to produce those results today?
iii) What must you learn and do to make these results happen? (directs them to attributes)
b) HP, Southern Company, and others focus on both what to accomplish (results) and how to accomplish it (attributes)
c) Charm or charisma doesn’t suffice; leaders who get results without knowing why can’t replicate. Those to get results because the end justifies the means repel others, make fatal mistakes or burn themselves out.
7) Benefits of results-based leadership…can be realized everywhere throughout an organization, at all levels. It frees productivity from the constraints of hierarchy and the limitations of position:
a) Such leaders must continually ask/answer “what is wanted?”…understand audience/needs and how to meet them.
b) Such leaders define their roles in terms of practical action
c) Such leaders assess their effectiveness by measuring achievements against goals.
Chapter 2: Defining Desired Results:
1) Leaders who aren’t getting the desired results aren’t truly leading:
a) Thus leaders must answer the “so that?” query…make sure no attribute exists in isolation from desired result.
b) Four areas, employee, organization, customers and investors must be analyzed in order to assess whether leaders focus on desired results. They determine how much leaders will achieve within and around each desired result area.
2) Desired results are balanced; they don’t build success in one dimension by ignoring (or tolerating failure in) another:
a) An important question to ask is: to what extent do my results balance success across employees, organization, customers and investors?
b) How much attention does my unit pay to each result? What actions support or sustain each desired result?
c) Martinez at Sears: employees 1st, customers 2nd, and investors 3rd. Dunlap at Sunbeam: investors 1st must be dominant.
d) Appropriate balance is driven by the unique circumstances of the business.
e) Few single leaders possess equal skill or interest in all four areas; that leader must build a team that collectively covers all the bases.
3) Desired results are strategic; they ultimately contribute to distinctiveness and competitive advantage for their organization:
a) A question to ask is of a leader is to what extent do the results produced through the leadership align with strategy and purpose of the organization. Specifically, each result must be linked to one of the following:
1) Business focus (e.g., product, customer, technology, product capability or distribution)
2) Customer value (e.g., low cost, quality, speed, service or innovation)
b) Leaders must have the ability to attain the right results when a critical mass in an organization agrees to a strategic direction and invests the time, energy and money necessary to make it happen. Without such clarity, leaders neutralize each other or hedge their bets leading to mediocrity
c) J&J turn away a promising mosquito repellent lotion because it didn’t fit their mission (doctors, nurses, patients, mothers)…focus was clear.
d) Leaders searching for the low hanging fruit, easy fixes and “something for nothing” often result in their taking their eyes off the ball, the great opportunities.
e) Strategic Clarity Quiz (1 = seldom; 5 = sometimes; 10 = often): For your organization, put a score next to each item:
1) There are multiple, competing visions for where my organization is headed.
2) At strategy meetings, I hear a lot of motherhood statements about “being the best” or “having the lowest costs and highest levels or service and quality.”
3) The organization leaders talk about having multiple “world class” functions, reasoning that, if we’re the best at everything, we’ll have the best overall company (also known as the “let’s be super!” strategy)
4) Our organization practices “budgetary socialism”, investing time, money, and other resources equally across projects, divisions, departments, etc.
5) Our strategy statements are expressed primarily in financial terms: net earnings, ROI, stock price, etc.
6) When asked the question—what does this organization need to do really well over the next five years?—most employees respond, “I don’t know,” or the answer varies from group to group.
7) Our strategy is recorded in a thick binder, somewhere.
8) Management readily changes its guiding principles. We’ve already done BPR, TQM, HP teams; this year we are doing strategy.
9) After the senior management team devises a new strategy, it is ratified, copied to fancy paper, matted, framed and hung on every conference room wall, but otherwise largely ignored.
10) We tend to follow the strategies set by the industry leader. Score of 10 is ideal; 100 is very bad.
f) Business focus describes what makes the organization tick at the elemental level. It is an inward focus and shows leaders where they need to build organizational capabilities. It usually falls into one of five dimensions:
1) Product focus…design a product, manufacture it, and find as many customers as you can to sell it to. E.g., Ford Truck; Harley Davidson (selling the ability for a 43 year old accountant to dress in black leathers, ride through small towns and have people be afraid of him)
2) Customer focus…concentrate on learning the needs of a specific set of customers extremely well and then find ways to fulfill those needs through a wide variety of products and services. E.g., J&J, Nike (the high performance athlete)
3) Technology focus…finding as many products as possible for a unique and valuable idea or product. E.g., 3M (coating & bonding process)
4) Production capability…strive to keep existing assets running at full capacity. E.g., Delta.
5) Distribution focus…build channels and then attempt to sell products and services appropriate to their distribution system. E.g., Nu Skin.
g) Customer value proposition turns attention outward. This explains why customers buy your product. Every company mush reach industry norms on all value propositions, but must clearly anchor your value proposition to establish distinctiveness in customer eyes. Five typical value propositions include:
1) Low-cost (price). E.g., Champion Paper
2) Quality. E.g., Mont Blanc pens
3) Speed (getting products to the customer). E.g., Federal Express
4) Service (flexibility and services of value to customers). E.g., Caterpillar.
5) Innovation (cutting edge products). E.g., HP printers.
Methodology for gaining strategic clarity on strategic criteria:
(1) Have leader or team allocate 100 points across five business focus options (across the columns)
(2) Do the same thing for value propositions (across rows)
(3) Identify the cell with highest combined scores
(4) Examine your units desired results using the four results areas
4) Desired results are lasting: they won’t sacrifice long term success for short-term gains. Classic examples are Exxon Valdez and J&J Tylenol. The following approaches help managers to establish and maintain criteria for managing this balance:
a) Achieve clarity on which results should receive short term and long term emphasis
b) Satisfice…recognize that some results are more important than others and that in some cases, a minimum standard may be sufficient.
c) Connect…recognize the connections between one result and another so as to focus on the antecedent result in the short term, knowing that longer term results will follow. E.g., Sears on employee satisfaction leading to market share gain.
d) Link to values…ask, what is the right thing to do in this case?
e) Accept change…if there has been a structural change in the marketplace.
f) Communicate, communicate, communicate…about trade-offs, priorities, values and connections.
5) Desired results are selfless; they will work to benefit the larger whole, not just their own group or area, and build capability. Hence leadership requires a high degree of collaboration with others (both leaders and followers) to make the right trade-offs. These only come from appropriate use of power and from making the whole greater than the sum of the parts.
a) Appropriate use of power. Good leaders do not use power or influence for personal rather than organizational purposes. They insist on everyone playing by the same rules. They make sure the management system has integrity. They don’t betray trust nor are driven by excessive ambition.
1) People need to develop the belief that their organization is fair. This belief develops when good performance is rewarded and abuses of trust or performance are not tolerated. It also grows when leaders act to align or match results with those required of other individuals or the organization as a whole.
b) Make the whole more than the sum of the parts.
1) NASA exercise on what items would be needed if stranded on the moon…finds that the team result is better than the individually completed result.
Chapter 3: Employee Results: Investing in Human Capital:
1) What is human capital and why does it matter?
i) Human capital (intellectual capital or individual employee knowledge) consists of the true value of its people and what they produce. Subtract the fixed assets from a company’s market value and that will give you a sense of the human and intellectual capital of the company.
b) Human capital can also be defined in terms of what is inside the heads and hearts of the people who work in an organization, what the employee can do for the corporation
c) Definition: human capital = employee capability x employee commitment.
i) Need to build both dimensions…e.g., average skill level and average length of service.
d) Human capital is underutilized. Organizations do not know what all of their people know. Service excellence derives from solid customer relationships, which are made possible through the capability and commitment of employees forging those relationships.
e) Human capital is one of the few assets than can appreciate, rather than depreciate.
f) Human capital is portable. Employees have essentially become volunteers; they give commitment when they feel an emotional bond with a firm.
g) Human capital has been both mismanaged and under-managed (downsizing, increasing gap between average pay and top management pay)
h) Human capital requires a different way of thinking about careers…moving to other companies due to stress/demands
i) Human capital within a firm correlates with customer perception of the firm. (front line employees)
j) Human capital draws everything else together. It is like muscle tone: use it or lose it.
2) What is employee capability? Technical know-how? Social know-how?
a) How to measure employee capability?
i) Individual assessment.
(1) Quantitative rating using education, training, talent, intelligence, etc. or based on a 360 feedback
(2) Qualitative measures such as value if employee left, who used the output of the employee, comfort with employee representing you to senior management, etc
ii) Collective assessment.
(1) Quantitative measures such as training and development expenses as percent of total expenses; reputation with head hunters; years of experience in profession; employee satisfaction index; position back up ratio; acceptance to offers
(2) Qualitative focus such as skills the customer value; reputation for developing future leaders; new hire reputation; competitors hires; etc.
b) How to build employee capability…the “six B’s”:
i) Buy—works best when talent is available and accessible but it carries great risk (grass is greener; alienation). Works when the acquired talent is so qualified that other employees both feel and express their delight with the hire
ii) Build—investing in the development of the current work force, helping them find new ways to think about and do their work. E.g., Motorola, GE use action learning, tied to business results, etc. but the risk is its expensive
iii) Benchmark—send front line and executives to visit organizations that excel in a given work process…and the adapt and extend what they find
iv) Borrow—using outside vendors to bring in new ideas, frameworks, and tools. Risk is becoming dependent on consultants.
v) Bounce—removing individuals who fail to perform up to standards. Requires careful, responsible planning and management
vi) Bind—concentrates on retaining employees critical to the firm’s success (at all levels).
3) What is employee commitment? Represents how people will behave…devoting their emotional energy and attention to their firm.
a) Past machine view of (interchangeable) people led to adversarial relations and apathy. The only way firms can capture commitment is by treating workers in ways that respect their individuality; they want flexibility in hours and assignments.
b) How to measure employee commitment:
i) Work force productivity—ratio of output (sales, volume, etc) per unit of input (headcount, employee costs)…compare with other groups and do trends
ii) Organizational climate—follow these general principles:
(1) Assure anonymity or confidentiality
(2) Provide specific feedback that takes into account the trends in the responses
(3) Train leaders to conduct sessions with their employees to share info and enhance the leaders understanding of what the climate data means for their group
(4) Make appropriate changes in response to issues
(5) Let people know what policy changes derive from the climate assessment process, to make sure the explicit link between their participation and workplace improvements
(6) Repeat survey regularly
(7) Focus on the general direction of the scores’ movement, not the absolute starting point or the current numbers.
iii) Employee retention…ideal level is some (not zero, <10%). Exit interviews, timing, performance levels, etc.
c) How to build employee commitment? (but employees must meet and exceed performance standards):
i) Work arrangements—flexibility…hours, location, dress code, benefits
ii) Work impact—working on the kinds of projects you want to
iii) Growth opportunities—commitment increases when employees do work that they can learn from
iv) Rewards—receiving public affirmation of a job well done
v) Community—relationship with peers, supervisors, executives remains one of the biggest predictors...respect, appreciation.
Chapter 4: Organization Results—Creating Capabilities:
1) Defining organizational results:
a) Organizations don’t think and do; people think and do. Yet, organizations constrain how people think and do…and leaders lead organizations.
b) Human capital vs. organizational capital. Leaders who get organizational results ensure that:
i) The organization produces more than the individual parts.
ii) That achievements outlive the energy and actions of any one individual
iii) That organizational accomplishment takes precedence over any one individual
iv) That the organization operates with an internal culture, shared among all employees, about how to accomplish their work
v) That an external identify or culture distinguishes the organization to its customers, potential customers, suppliers and competitors.
c) Organization as a structure or as a system…Amoco Star, 7 S’s of McKinsey
d) Organization as capabilities:
i) Integration; capabilities mean not individual competence or management systems, but an organization wide commitment
ii) Add value to customers; capabilities derive from how those outside the firm define value
iii) Maintain continuity; capabilities remain stable over time.
iv) Offer uniqueness: capabilities must be difficult for competitors to copy
v) Engage employees; capabilities create meaning for an employee
vi) Establish identity; capabilities delineate the organization’s identify for customers, employees and investors. (e.g., SW airlines)
Converging and emerging theory of organization…capabilities across boundaries. Key questions for organizations:
(1) Strategy: core competence: what are the core competencies necessary to accomplish our strategy?
(2) Organization theory: organization types (e.g., market, bureaucracy, clan, adhocracy)
(3) Quality: what processes need to be managed to ensure customer quality (e.g., order to remittance, customer interface)
(4) Organization Development/change: culture: what culture do we need to accomplish our goals?
(5) Human Resources: High-performing work systems: how do our HR practices coalesce to create high-performing work systems?
(6) Consultants: disciplines, critical success factors: what are the disciplines or critical success factors for us to succeed?
(7) Organizational capabilities must align with strategy requirements and management actions
2) Common critical capabilities that are the focus of results based leadership:
a) Learning—the ability to innovate, generate ideas and leverage knowledge:
i) How critical is it for my unit to learn and share knowledge?
ii) Experiment, look outside the organization for ideas, hire individuals who think differently, reduce fear of failure, facilitate dialogue on ideas, rewards for sharing, continuous improvement in processes and work systems, encourage learning at all levels—can be measured as either an end or a means.
b) Speed—the ability to act with agility and to have the capacity for change (moving quickly, reducing cycle time, being responsive and acting flexibly):
i) How critical is it for my unit to move quickly, change, and adapt?
ii) Reduced cycle times, manage by looking to the future, expressing discomfort with the status quo, acting without complete knowledge, sensing customers’ future expectations, communicating directly with employees, using personal credibility to make change happen.
iii) Capacity for change index. What are the critical success factors for change?
(1) Leading change: who is responsible?
(2) Creating a shared need: who do it?
(3) Shaping a vision: what will it look like when we are done?
(4) Mobilizing commitment: who else needs to be involved?
(5) Modifying systems and structures: how will it be institutionalized?
(6) Monitoring progress: how will it be measured?
(7) Making it last: how will it get started and last?
c) Boundarylessness—the ability to collaborate in teams and across organizational units and to act as a virtual organization:
i) Remove boundaries by paying less attention to the category in which the individual works and more attention to the competencies the individual possesses.
ii) Ensure the widespread sharing of information, enhance skills through training and development, delegate and share authority, clear rewards to encourage sharing across all boundaries, collaboration (vs. competition), sharing (vs. hoarding), life-long skill building (vs. single event training), flexibility (vs. territoriality), and relationships built on trust, not roles.
d) Accountability—the ability to have discipline, to re-engineer work processes and to create employee ownership, all for results:
i) Discipline requires getting the work done with rigor and consistency, meeting scheduled commitments and following through on plans and programs to deliver promises.
ii) Process accountability may require re-engineering how work gets done, reducing redundant efforts and driving down costs at every level
iii) With accountability comes ownership, as individuals feel responsible for accomplishing work.
iv) Build through making sure employees know what is expected of them and follow up to ensure that employees perform according to those expectations
v) Accountability Index. To what extent do my employees do the following?
(1) Follow disciplined processes in getting work done
(2) Feel ownership for the goals of the organization
(3) Work to remove bureaucracy
(4) Drive out costs at every level
(5) Eliminate redundancies
(6) Meet commitments
(7) Commit to quality in all work activities
(8) Accept responsibility for getting the work done
(9) Receive rewards tied to meeting goals on time and within budget (10)Experience clear expectations for who has to do what to get the work done.
3) Leaders who attain organization results—making these four capabilities a priority— might consider using the four steps below:
a) Align (the four) capabilities with the firm’s strategy
b) Improve capabilities
c) Measure capabilities
d) Take action…organization becomes less a matter of structure and systems and more a matter of capabilities.
Chapter 5: Customer Results: Building firm equity:
1) Concept of firm equity:
a) Based on the combination of:
i) Brand identify…firms with strong brands receive a premium price (Coke, P&G)
ii) Corporate culture…firms with strong cultures achieve higher results because employees sustain focus both on what to do and how to do it. (Nordstrom)
b) Customer results follow from high firm equity. When leaders achieve firm equity, customers are not only satisfied, but committed; customer intimacy increases; and unity occurs between the employees and customers.
c) When re-engineering efforts or other change in management initiatives inside a firm help create positive images among customers outside the firm, an increase in firm equity results.
2) Myth 1: The customer is always right. Reality: Some customers are more right than others:
a) Leaders need to know how not to pay attention to the “not” customer (i.e., anyone who does not fit the profile of the primary or target customer). E.g., Harley Davidson dirt bike.
b) Don’t chase two rabbits. Trying to be all things to all customers prevents leaders from creating firm equity; more attention paid to targeted customers, on the other hand, builds firm equity in the right customers (“lifetime” customers).
c) Customer segmentation to learn why customers buy your products and how to capitalize on that knowledge. Consider the following segmentation categories:
i) Price. SW Airlines
ii) Image. Harley
iii) Geography. Wal-Mart started with rural stores
iv) Taste. Coke has 16 taste segments
v) Technology. Dell’s direct delivery and tailoring
vi) Channel.
d) To identify which customers you want to retain (keep at any cost), attain (focus on, go after), contain (keep but not at any cost) and abstain (not work hard to keep), plot overall revenue in the market area vs. purchases from target company. High/high: retain; low/high: contain; high/low: attain; and low/low: abstain
3) Myth 2: Delight all customers. Reality: Delight targeted customers:
a) Leaders obtain customer results and build firm equity by understanding—and making sure employees understand—why customers buy products and services and by ensuring that customers have experiences consistent with their intent.
b) Understanding targeted customers provides the foundation for culture building and for positioning the firm as a brand.
i) Domino pizza (speed); Caesar’s (low price); Sbarra (higher quality, chairs) but none of these can totally ignore their performance in other dimensions.
c) Defining the organization’s value proposition:
i) Step 1: assess your firm’s current ability in terms of its primary value proposition. Begin by asking employees to spread 100 points across the alternative value propositions (cost, speed, service, quality, innovation, other) according to their perception of how critical each is to targeted employees. Then ask them how well we do delivering each of the value propositions.
ii) Step 2: invite targeted customers to assess value proposition. Do the same thing. Then compare the results with your employee’s results.
iii) Step 3: assess competitors on value propositions. Begin with an assessment of the key value proposition thought to be the focus of the competitor and solicit both employees and customer’s answers. Ask them to spread 100 points and then assess performance.
d) Measuring customer value:
i) Begin by taking the customer’s viewpoint and ask
(1) What would I (target customer) define as value?
(2) How would I know that one firm created more value on a given proposition than another firm?
(3) What will keep me committed to using the products and services of this firm?
ii) Examples:
(1) Cost…price vs. cost in use (e.g., Scott increased revenues by developing proprietary dispensers to reduce custodian time to refill paper towels)
(2) Speed…product introduction vs. how quickly the customer receives use of the product (e.g., GE railroad car repair focused on time out of service vs. time to repair)
(3) Service…response time to customer need vs. received on time and installed/consumed.
(4) Quality…defect-free vs. others
(5) Innovation…number of patents vs. percentage of revenue from products created in the preceding 5 years. (3M) Or, time to break even (HP)
4) Myth 3: Customer connection comes from collecting customer data:
a) Typical data may mislead managers into thinking they know customers better for a number of reasons.
i) Data collected is post hoc, reflecting what customers think after they have done or attempted to do business with the company
ii) Customers don’t know what they don’t know (e.g., minivan)
iii) Data evolve too slowly to keep pace with changing customer expectations
iv) Representative sample?
b) Leaders need to find imaginative ways to connect with customers so that customers become completely committed and satisfied:
i) Four elements of customer relationships, each indicating increasing customer intimacy: sales, marketing, partnering, and influencing.
ii) Four typical ways to connect with customers: market research and technology (e.g., data links), customer interactions and values.
(1) Customer interaction on a regular basis (or become customers yourself)
(2) Recruiting the right people and encouraging them to do what they were hired for
(3) Reward systems…tying rewards to customer feedback (airlines)
(4) Development…rotation programs that put employees in close contact with customers (e.g., government relations). Novations’ competency model for customer focus…it takes time…:
(a) Stage 1: depending on others—seeks to understand the company’s customer groups and their needs (internal customers, end users, distributors, resellers).
(b) Stage 2: contributing independently—incorporates a solid understanding of the team’s customer into own work; shares customer knowledge with colleagues
(c) Stage 3: contributing through others—well worked with key customer groups; influences the team to translate customer needs into work products and services that add value.
(d) Stage 4: organizational leadership—sets corporate direction for providing excellent service to existing customers and for reaching new customer groups; influences the way the business interacts with its customers.
(5) Governance…how work gets done in the organization. Might include customers on task forces and project teams, or on communications and information sharing activities.
iii) The questions are how well do we do each of these interactions and what can we do to improve?
Chapter 6: Investor Results: Building Shareholder Value:
1) Results-based leaders must demonstrate the ability to make decisions and act in ways that build investor confidence (investors recognize that there are factors outside the control of leaders that will influence share price).
1. Example: Oxford Health Plans got out of control…pride, greed, arrogance
2. Investors interested in now leaders attend to three issues:
1) Costs: how can leaders reduce costs within a firm?
2) Growth: how can leaders increase revenues?
3) Management equity: how can leaders increase the perceived quality of management within the firm?
2) Managing costs:
1. Approaches to reducing costs:
1) SW Airlines…one type of plane, outsourcing, delivering fewer services
2) Union negotiations, two-tier employees, changes in work rules, multitasking
3) ABC to identify costs and BPR to reinvent processes from top-down
2. The leader’s role:
1) Ensure that difficult-to-achieve savings are not undermined by costs that creep back in. (e.g., GE workout program)
2) Encourage all employees to identify and find ways to improve efficiency (act as if you are the owner).
3) Achieving growth:
1. Positive investor results through growth.
1) Advantages of focusing on growth over cost-cutting
(1) Growth has no upper limit
(2) Growth excites and invigorates a workforce
(3) Growth provides long term benefits while cost-cutting is short term oriented
2) Three forms of growth
(1) Geographic (e.g., US banks; global growth)
(2) Product (e.g., full-service banking, Merck acquiring Medco)
(3) Customer intimacy (financial services industry broadening their product lines to serve the wealthy client; frequent flier miles)
2. The leader’s role:
1) Senior leaders take an active role in acquisitions, creating and funding growth strategies
2) Build a growth culture using the following (increase the desire to win/fear of failure ratio):
(1) Emphasize the future, not the past
(2) Emphasize the possibility, not the constraints
(3) Reach customers outside through the employees inside
(4) Encourage risk taking and discourage political protecting
(5) Reward collective, not individual, successes but maintain clear individual accountabilities and keep heroes visible.
(6) Look for alternatives before seeking closure
(7) Ensure a high level of personal freedom and trust
(8) Encourage debate before consensus
3) Hire for growth…magnet employees (TI), create loyal alumni (McKinsey)
4) Keep the next generation of customers in mind…”lighthouse” customers, who preceded the industry in expectations and demands.
5) Organize for growth…creating virtual organizations to go after “white space” opportunities. (MSFT data base on employee interest and project areas)
6) Train for growth…
4) Creating management equity:
1. Top investors say—beyond financial rigor and analysis, making good investment decisions requires insight into the quality of a firm’s management.
2. Comparing companies in the same industry—their p/e ratio—helps to quantify the value of leadership
3. Look at what companies leaders do if they leave for some reason.
1) Fisher: MotorolaEastman Kodak
2) Bossidy: GEAllied Signal…many others have left GE to lead other companies; their arrival often has increased the value of the receiving company’s stock. (Glen Hiner, Owens Corning in 1992; John Trani, Stanley Works, 1997; Harry Stonecipher, McDonnell Douglas, 1994; Stanley Gault, Goodyear, 1991)
4. Assessing the quality of management:
1) Employee capability. To what extent do investors perceive that this firm’s managers are demonstrating capability and are able to attract industry thought leaders to work in the form?
2) Employee commitment. To what extent do investors perceive that managers inspire, motivate, and engage other in their agenda?
3) Discipline and accountability. To what extent do investors have confidence in the ability of this firm’s managers to deliver what they promise and to make tough decisions?
4) Learning. To what extent do investors perceive that this firm’s managers have the capacity to learn?
5) Change. To what extent do investors perceive that this firm’s managers have the capacity to change, adapt, and work flexibly?
6) Connections and relationships. To what extent do investors perceive that this firm’s managers have sound relationships with critical stakeholders (including suppliers, customers, and investors)?
7) Focus. To what extent do investors perceive that his firm’s managers are able to focus through clear vision?
8) Personal ownership. To what extent do current managers have their personal net worth in the firm through stock ownership?
9) Experience and industry knowledge. To what extent do current managers have industry experience and knowledge?
10) Customer equity. To what extent do current managers understand and build firm equity with targeted customers?
5) Improving management’s equity is every leader’s job:
1. Understand your industry. Make sense out of the world and set direction
2. Live within budgets. Never surprise Wall Street; maintain consistent growth and earnings. Leaders feel personally accountable for meeting growth and cost targets.
3. Build performance management systems to support shareholder value. Set the right standards, distribute rewards and provide feedback
4. Lead by example
5. Communicate with investors…about strategy, goals, performance against goals, and unforeseen activities.
6. Create a values mind-set, then align employee behavior to that mind-set.
Chapter 7: Becoming a Results-Based Leader:
Suggestions that can be implemented right now by any leader occupying any position and will modify behavior and improve performance…
1) Begin with an absolute focus on results. What are the results that my organization needs and expects from my group? What results am I getting now?
2) Take complete and personal responsibility for your group’s results. No buck passing, especially when things go poorly.
3) Clearly and specifically communicate expectations and targets to the people in your group. When results are clear, priorities fall into place more readily and the creative energies of group members can be productively applied. Big hairy audacious goals.
4) Determine what you personally need to do to improve your results. Many activities can be delegated. Some can not—activities requiring the executor have a certain title/level; those where the fundamental nature requires the leader; the tough decisions, especially around people and conditions of employment.
5) Use results as the litmus test for continuing or implementing leadership practice. Command & control management doesn’t get results; flatter and less hierarchy does get results. Other ideas
a) Intensifying focus
b) Streamlining work processes
c) Changing organizational structure
d) Revising compensation systems
e) Outsourcing certain activities now performed internally
f) Sponsoring organizational culture change interventions, such as GE “workout”
g) Encouraging employee development activities
h) Clarifying vision, values, and mission
i) Improving measurement systems.
6) Engage in personal development activities and opportunities that will help you produce better results. Outside lectures, simulations, 360 degree feedback, etc. “I will do so that will happen.” Principles to consider:
a) Choose concrete, practical content that was well researched and has been proven conceptually sound
b) Choose job related activities
c) Choose personalized, tailored leadership development activities
d) Choose active rather than passive processes
e) Choose ongoing activities or activities with a number of sessions
f) Select development activities with immediate application
g) Select measurable activities that allow participants to see how well they are learning and applying the lessons received
h) Make sure every development activity connects to a clearly defined result
7) Know and use every group member’s capabilities to the fullest and provide everyone with appropriate developmental opportunities
8) Experiment and innovate in every realm under your influence, looking constantly for new ways to improve performance
9) Measure the right standards and increase the rigor with which you measure them
10) Constantly take action; results won’t improve without it.
11) Increase the pace or tempo of your group
12) Seek feedback from other in the organization about ways you and your group can improve your outcomes
13) Make sure that your subordinates and colleagues perceive that your motivation as a leader is the achievement of positive results and not personal or political gains.
14) Model the methods and strive for the results you want your group to use and attain.
Chapter 8: Leaders Building Leaders:
1) The paramount responsibility for leaders building leaders rests with the top executive in an organization.
2) The virtuous cycle of attributes and results…attributes “so that” results are achieved “because of” certain attributes
a) Starting with attributes: link attributes to results (so that…)
i) Step 1: Derive the attributes needed to accomplish strategy. (career architect)
ii) Step 2: For each attribute, ask the leader to identify the results that can or should occur by completing the statement “attribute…so that…”
(1) Understand external events so that they identify target customers and create unique value propositions for each target customer better than competitors
(2) Turn vision into operational outcomes so that the organization can respond more quickly than competitors
(3) Build collaborative relationships so that employees feel more committed to their work teams
(4) Posses cognitive ability and personal charm so that investors experience credibility with the management team
iii) Step 3: evaluate the attribute-result statements for balance of attention and energy across the four results areas.
b) Starting with results: link results to attributes (because of…):
i) Step 1: operationalize the results requires to make strategy happen. Balanced scorecard.
ii) Step 2: define the attributes required to make each happen
(1) Create a learning organization because of the ability to share knowledge from one unit to another
(2) Increase revenue because of the capability of encouraging change and innovation
iii) Step 3: assess the attributes most difficult for the individual leader
3) The 90-day plan for leaders in training…answer the following questions:
a) Where should I spend my time?
b) With whom should I meet?
c) What questions should I ask?
d) What information should I collect, seek, or track?
e) What projects or initiatives should I support of sponsor?
4) Leadership development with results in mind…its through direct experience:
a) Job assignments
b) Coaching
c) Mentoring
d) Succession planning
e) Action learning
f) 360-degree feedback
g) Specific skill training
h) Performance appraisal
i) Formal training, in-company or off-company
j) Technology-based best practice
5) Roles for leader developing leaders:
a) Spend time on results…pay attention to, talk about, continually emphasize and strive to define and deliver results
b) Have passion for results
c) Have a focus on results
d) Ask results-based questions:
i) What are you trying to attain?
ii) How balanced are the results you are after? Do you have the right balance for your business strategy?
iii) How able are you to attain these results?
iv) What do you bring to these results that will help you attain them?
v) What do you lack that would help make these results happen?
vi) What do you need to learn more about or do differently to get the results you desire?
6) Chief Learning Officer brings to the task of building the next generation of leaders four mutually enhancing sets of skills: business, its strategy, performance, etc; change, how to make it happen, etc; knowledge management and learning; and HR, especially training and development.
7) All leaders have the responsibility of investing in their successors…
a) Help the next generation of leaders to define their results
b) Offer the next generation opportunities to deliver results
c) Be a teacher by learning from failures and successes
d) Let go (finally)
Conclusion
Leaders must ask “What is it we need to deliver for the organization?” as a first, key question. Each organization should have its own leadership brand and be able to explain it to people down the line and across the industry. There are seven things that the authors find that helps build commitment at the individual level. They are:
1) Vision
2) Opportunity
3) Incentives
4) Impact
5) Community
6) Communication
7) Entrepreneurship
These elements must be spread widely throughout an organization. Structure is not as important as capabilities. A structure should be created around the capabilities of an organization, and not vice versa. Organizations must look at themselves “vertically”- how do they share information, opportunities, responsibilities up and down the organization and horizontally – how well do they move things and coordinate things from department to department, or function to function.
Regarding best practices, it is better for organizations to “adapt” rather than blindly “adopt” best practices from other organizations. Looking at the intangibles of a company and maximizing the value of the people and these intangibles will give people in the organization new respect, new tools, a new sense of their being the lifeblood of the organization.