Why Does Culture Matter?
Is your company a culture of innovation? Commodity? How about technical expertise or service? Getting to the core of this culture will help you become effective in the organization, whether you just stepped in or you are a long-time employee.
Winning With Change Leadership
Are successful leaders going to excel, regardless of the times in which they lead? Some may say yes. After all, Jack Welch lead General Electric through both solid and turbulent times, right? But hold on a moment.
In the last two years, we have seen countless top executives stumped (and many of them have later failed) when trying to maneuver through this changing environment. At the same time, some companies have taken the recent rough waters and, even given a shrinking industry or seemingly impossible sales slump, have turned their companies around.
Let’s look at some of the characteristics that are embraced by leaders (and their organizations) in changing times.
Using Organizational Memory
In less turbulent times, lessons learned in the past could be called on as wisdom for decisions made in the present. These days the past should not be counted on for the wisdom it once offered. The playing field has changed, and you will not be able to count on those lessons to lead you through. Of course, they still have value. They just can’t lead the way anymore.
Innovative leaders do still use the past to inform decisions, but they don’t count on those old lessons to show them the way.
Remaining Committed to Change
Being committed to change could mean that you are continuously changing. Consider those organizations that are always bouncing from one production methodology to another, continually trying out new supply chain management systems or can’t seem to get enough of the latest management fads. No, remaining committed to change means making a change and committing to it. The new direction may not be the panacea that you are looking for, but you won’t know until you have given the new plan time to take hold.
Learning at the Speed of Light
The world is changing at a faster pace than ever before. Imagine the significant changes we’ve seen in how we use technology in our daily business, even in the last eight to 10 years! Ask yourself what you need to learn, and how you can push yourself into new knowledge areas. This will keep you growing and evolving. Most of all, it will mean that you will be more prepared for making the next set of decisions that come your way.
Tapping the Group Genius-or the Hidden Genius in the Group
Change is not best made alone. Let’s face it; you may be the leader in your department or organization, but you need the troops to get involved. These days, the most powerful contributions often come from the most unexpected places. You may find a hidden genius in your group or a collective genius, aka: your customer!
Your change leadership mindset gives you the tools to consider ideas from every corner, in order to address the current climate with a large dose of courage, informed risk-taking and ambition.
Highly effective executives are not automatons who simply do do do. For example, recently a CEO coaching client of mine said that he just started to realize that when he was anxious he has a tendency to increase the amount of questions he asks his subordinates about their progress towards meeting their goals. He hadn’t realized that his “give me all the details” questions were his way of managing (reducing) his anxiety. Once he realized that, we worked out some other more effective ways for him to deal with his anxiety. He learned how to calm himself in a way that didn’t burden his direct reports. Net result, he backed off of his employees and they were able to get their jobs done…much better. Plus…they stopped accusing him of “micro-managing.”
Self-awareness leads to understanding the real issues or root causes, which enables effective responses, rather than ineffective reactions. In fact, the more self-aware you are and the more adept you become at understanding and managing your emotions, the better able you will be to respond both tactically and strategically.
How? Think ABC (my thanks to the late Albert Ellis, Ph.D.,, and other cognitive psychologists).
A = something that happens, an event.
B = your interpretation of what happened (the why behind what happened).
C = your reactions (emotionally, etc.).
B (not A) determines C.
Our interpretations of what happens to us determine to a great degree our emotional reactions and our subsequent behavior. Becoming more self-aware can help you understand your typical interpretation of events. Once you understand your typical interpretation you can decide if it is a useful (functional) interpretation. Or, as Dr. Phil would say, “Is it working for you?” If, for example, you end up feeling anxious or angry, then you might want to challenge your interpretations and try other, hopefully more rational or functional interpretations.
Research has shown that optimistic peoples’ interpretations of events tend to be more positive no matter what the circumstances. Optimistic people interpret the world as being half full. For example, as one CFO client of mine who became a CEO told me, “We have it good here (in the U.S.), what do we have to complain about? I’ve been all over the world and I wouldn’t trade our problems for anyone else’s.” So for him, when things go sideways (A) he tells himself (B) that “it could be worse,” and (C) as a result he remains calm and optimistic, which allows him to think and act more strategically and creatively.
Becoming more self-aware and learning how to challenge your less effective interpretations is hard because…the catch 22…it takes self-awareness. That’s why trying to change thinking patterns and behavior is virtually impossible to do on one’s own. “Even the sharpest of knives can not scrape its own handle,” I once heard a famous Jazz musician say. We need accurate feedback to become aware of our dysfunctional patterns and we need to practice developing and using alternative interpretations. We can only change our thought patterns and behavior through burning new thoughts and experiences into our memory through experience (practice). Good intentions and New Year’s resolutions burn nothing.
Developing alternative interpretations is a challenge because it can be provocative. You may feel uncomfortable at first. Level 5 Leaders do not surround themselves with clones who just parrot the party line. It’s been my experience that high performing executives are well-rounded, usually quite erudite and are able to mix it up with you. Conversations with them feel more like a fun game of tennis or basketball with an A player. Volleys and passes come at you hard but they like them returned just as hard. So, if you want to develop self-awareness…put yourself into situations where you will be challenged in your thinking. Don’t go just where it is comfortable. Become an active learner. Ask for constructive feedback. Challenge yourself.
At the beginning I said I would outline five “preliminary” steps to become a Level 5 leader. Collins stated that he didn’t want to “trivialize” the concept by attempting to outline a “10-step list” to become a Level 5 leader. He also has not been trained in helping people become high-performance leaders. I don’t want to trivialize it either however…as in most things that we do there are always steps one can take to develop a skill. There really can be no excuse for not working at it if you want to play at the top of your game. Leadership is an art and a skill that can be learned but, it takes commitment and practice and more than five preliminary steps.
In 2004 I wrote a couple of articles about Jim Collins’ book “Good to Great” in which he related that the top leaders of the companies that made his list of “great” companies “embodied a paradoxical mix of personal humility and professional will.” In light of the fallout from the recession, I think that his observation is even more relevant and important today. He called these leaders – “Level 5 leaders” based on a 1 to 5 scale he outlines in his book. In this briefing I will outline five preliminary steps you can take to become a Level 5 leader.
According to Collins there are five attributes that typify the Level 5 Leader:
- They are self-confident enough to set up their successors for success.
- They are humble and modest.
- They have “unwavering resolve.”
- They display a “workmanlike diligence – more plow horse than show horse.”
- They give credit to others for their success and take full responsibility for poor results. They “attribute much of their success to ‘good luck’ rather than personal greatness.
Humility as a personality characteristic in our corporate leaders has perennially been in short supply and I firmly believe that with a little more humility, many of the poor decisions leading up to the market crash might have been averted. I recall listening to Kerry Killinger, former CEO of Washington Mutual, speak at a Rotary Club of Seattle meeting where he bragged about how well WAMU was doing. I left that meeting saying to myself, “that guy is too full of himself.” In less than two years WAMU became the largest bank failure in history and vanished along with the jobs of hundreds of employees who had trusted his judgment.
The challenge that most senior executives face in becoming a Level 5 leader is that the key personality attribute that they embody, humility, is counter intuitive for most executives. As we grow up in our careers we have to prove our worth one way or another. Usually that is by producing results and…., judging from what executives tell us…, being sure that we are credited for those results. Most employees move into the managerial and executive ranks because they have demonstrated their smarts and have achieved results that can be clearly link to their efforts.
Furthermore, in many companies employees are often ranked for performance appraisal purposes and receive raises based on their ranking. The incentive is to outperform others and to be sure that your boss knows it. People generally do that for which they are rewarded and humility won’t get you far in those types of situations. Turning down the “I” volume is hard in companies where humility is not rewarded. Microsoft, for example used this system until recently after finding out it was counterproductive.
In addition, Boards of Directors are notoriously known for hiring “charismatic” leaders with the mistaken belief that those folks can perform miracles. It all adds up to making it very difficult for executives to turn down the “I” volume as they move up through the ranks.
So, if you are a senior executive and believe that you want to cultivate Level 5 leadership attributes in yourself and your employees, the first thing you have to do is embrace the concept yourself. You need to be sure that you put the brakes on the “I” speech and learn how to say “we” and “they.” You have to trust that if your team/company does well that those who count (not the media who love the Donald and Martha) will know that you helped shepherded the success.
Secondly, you have to be sure that you institutionalize teamwork, team credit and employee development by developing compensation systems that reward accordingly. I added employee development because Collins also found that all Level 5 leaders set up their successor for success by developing them and by delegating so that they learned how to be successful.
Thirdly, Level 5 Leaders hire highly competent people (“get the right people on the bus”), help develop and then set direction for their organization and then keep everyone focused “with unwavering resolve,” while resisting telling people “how” to do their jobs. If you’ve been a high performing individual contributor you will need to learn how to trust that others can do things just as well, maybe even better, although perhaps differently than you would have. That’s called exercising good self-control.
That leads to the fourth step. Level 5 leaders exercise good “self-control.” They know how to manage their emotions so that they have more control over their reactions. For example, they hold back from putting in their two cents worth too soon in problem solving and other tactical endeavors when they interact with their subordinates. Self-control means that your actions and reactions are more strategic.
Lastly, exercising good self-control requires self-awareness. Read more about developing self-awareness in the next blog entry.
The Ethical CEO
Do CEOs care how history will judge them? Do they care if they leave a positive legacy, one where employees, customers and the community at large remember them with respect and admiration?
Judging from the media reports of some high-profile CEOs, one would think that CEOs are only interested in the accumulation of personal wealth, regardless of how they go about making it and how others may perceive them. However, contrary to the unfortunate, and sometimes accurate, images of extravagant, narcissistic and selfish CEOs, most do care and try to ‘do right’, but it’s not easy.
I recently conducted an informal survey of my colleagues and fellow members of the Society of Consulting Psychology of the American Psychological Association. Like myself, they provide executive coaching services to CEOs throughout the world, and the results were clear.
Most CEOs (greater than 90% of our clients) want to be successful and respected. Rarely do we ever encounter a CEO who is as self-centered and unconcerned about their legacy as those found in the press. Most CEOs want to be successful, but not at any cost.
On the whole, CEOs diligently try to make business decisions and take actions that are guided by their values or moral code. Rather than just being solely interested in ROI, they add ROR to the evaluation, or return-on-respect.
For example, one of my executing coaching clients is an entrepreneurial co-founder of a privately held US-based company that turned down a $350m dollar acquisition offer. One of the main reasons that it turned it down was because of how the acquirers were planning on laying off 15 Dublin-based staff that had helped take the company from zero to $350m in seven years, and refused to give a reasonable six-month severance package.
This issue caused my client to reflect and rethink the sale. Ultimately, he came to the conclusion that he would rather build a company that could become the best of class and that would continue to provide jobs long into the future. He decided to forgo the short-term payoff for a long-term adventure. Not many of us would turn down $350m.
The challenge for most CEOs is two-fold. Firstly, there is very little overt discussion of, much less support for, doing right. Investors generally do not judge the success of their portfolios by how well respected their companies are. They primarily assess value by the financial ROI or stock valuation. ROR isn’t even considered. That means that the CEO, for the most part, is on his or her own when it comes to supporting a business environment that will leave a positive legacy. The phrase, ‘It’s lonely at the top’ takes on even greater meaning for any CEO who is concerned about corporate responsibility.
Secondly, most executives are preoccupied in the beginning stages of their ventures just trying to ensure that their business survives. Therefore, concern about one’s legacy generally surfaces if the CEO has a strongly held set of guiding moral principles to begin with, if they have built a successful company and the legacy question has room to bubble up into their consciousness, or if they are engaged in discussions with a trusted advisor who brings the topic up.
It’s not uncommon during consulting sessions with my CEO clients for them to ask me for guidance on how to handle a business decision that has potentially ethical or moral consequences. For example, one of the most common issues that I’ve helped CEOs work through, especially during these tough economic times, is whether or not to lay people off.
More than one CEO has told me that he has lost sleep grappling with that dilemma. It can be challenging sorting out an ethical way to handle this common dilemma and most executives simply follow the general practices of other companies without asking if there is a more socially responsible way to do it. When one is willing to reflect and consider alternatives rather than simply doing what is the common practice, however, creative solutions can emerge.
For example, one alternative to laying people off that a number of executives have taken has been to institute a reduction in work hours across a company so that everyone takes a hit but no one is laid off. This creates a positive effect; as the economy improves, you are able to meet higher production needs simply by increasing work hours for employees without having to recruit and train new ones.
Steps forward
Below are a few steps you can follow if you want to take the road less travelled and be successful and respected.
To begin with, you must develop and embrace your own set of guiding principles or values. Regardless of the source of inspiration or guidance, be it based on religion, non-sectarian moral teachings or philosophy, one has to develop and follow a set of values that guide business decisions and actions. Otherwise, you will be susceptible to being influenced by the desires and needs of others, such as investors.
For example, one of the most well-known set of non-sectarian-based guidelines is Rotary International’s FOUR-WAY TEST. The test, which has been translated into more than 100 languages, asks the following questions about things thought, said or done:
• Is it the truth?
• Is it fair to all concerned?
• Will it build goodwill and better friendships?
• Will it be beneficial to all concerned?
The next step is to develop a few close relationships with like-minded people with whom you can commiserate and offer mutual encouragement, advice and support. It is hard to do the right thing without some mutually respectful intellectual and emotional support. The support can come from fellow CEOs, trusted advisers, respected friends or members of the clergy.
I recently heard Board of Trilogy International Partners chairman John Stanton and CEO Bradley Horwitz speak at a business luncheon about how they were developing wireless businesses in countries such as Haiti and Bolivia. They said they were trying to be “responsible corporate and community citizens” and were clear that by helping people become financially independent and successful, they were contributing to the general well being of the host countries.
In recognition of its efforts, Trilogy International Partners was presented the Award for Corporate Excellence by US Secretary of State Hillary Clinton in December 2009. Trilogy was chosen for its extensive corporate responsibility programs offered by its wireless telecommunications subsidiary in Haiti, Voilà, as well as its transparency in its business practices.
After the recent disaster in Haiti, the Trilogy management team, based in Bellevue, Washington, US, rushed aid to assist their 575 Haitian employees and families and restore communications. Doing the right thing consistently over time requires great commitment.
The last step is for CEOs is to institutionalize the guiding principles within the business. The ideal of corporate responsibility cannot reside only in the mind and heart of the CEO; it must become part of the fiber of the organization. It starts at the maligned level of corporate values statements. Too often, company ‘values’ are nothing more than words on a plaque or website.
For value’s to become embedded into the corporate psyche requires the company’s most senior executives to hold each other accountable for upholding the company’s standards.
The performance management and compensation system must also be held accountable, with employees rewarded for expressing the company’s values or disciplined, including firing, for not upholding them. Imagine what might have happened at Enron if Kenneth Lay had developed and enforced a set of values that promoted and honored corporate responsibility, not just profits at any price.
The road less traveled of responsible corporate and community citizenship is a challenging one. Being successful and creating a legacy you can be proud of are not mutually exclusive. It takes thoughtfulness and courage to follow the ‘right’ road, but the ROR is immeasurable.
By Carl Robinson PhD – Advanced Leadership Consulting, Business Psychologist
Originally published on CEO – Chief Executive Officer Website
