Blog Archives

The Best Leaders Model Their Stated Priorities

Leaders Model Stated Priorities

Everyone is a boss-watcher. “Other people take their cue from the leader—not from what the leader says, but what the leader does,” says Colin Powell.

The leader is always in a glass house. People listen to the words, but what really interests them is what the boss does. People carefully track what questions he asks, what reports she asks for and reads, what meeting agenda priorities he sets, what resources she allocates, whom he criticizes, what thrills or angers her, whom he lauds, whom she promotes, whom he assigns to which project, and whom she visits and hangs out with.

People observe these things, and then, regardless of the boss’s words they draw conclusions about what’s really important, what’s truly urgent, what must be the top priorities, and who the leader is. When the leader’s words and deeds match, the leader’s credibility and influence go up in their eyes. When they don’t, credibility and influence are diminished. This is such a powerful and predictable process that leaders have no neutral actions. Each action or decision has great symbolic impact.

Too often, leaders aren’t aware that they’re being observed, and that colleagues have long memories. Some leaders think nothing about promising something and not delivering, or stating a priority and not “living” it. If an executive states that being customer-centric is a priority, but he is not spending more time with customers, then he’s not walking the talk He’s not doing the work of leadership. If she doesn’t personally insure that capital allocation, performance metrics, sourcing, logistics, scheduling, information systems, and compensation reflect a customer-centric priority, she’s not walking the talk She’s not doing the work of leadership. In both cases, it’s not likely that innovative, proactive customer-centric work will be done.

In contrast, effective managers know that their glass house offers enormous leverage in boosting performance, as well as their own credibility and influence—but only if they become the ultimate role model. For example, if a leader talks about honesty, candor, open-door communication, collaboration, or risk-taking, then that leader more than anyone else—must model and support those virtues. The leader must not only be honest and candid, but also ensure that employees who do the same are properly acknowledged, rewarded, and protected. When people see these actions, they know that they can count on their leader, and are more likely to cultivate those virtues themselves. The leader’s power and integrity are enhanced in the process.

Effective managers become the ultimate role model

How powerful is the “glass house effect”? Well, consider how it might be applied to a current vexing national problem. Over the past 24 months the integrity and liquidity of our capital markets have been assailed by a wave of scandals revolving around fraudulent financial reporting, sleight-of-hand accounting, piracy in the executive suites, and incestuous self-serving relationships among accountants, consultants, analysts, and investment bankers. The effect not only extends the economic recession, but it also breeds doubt and cynicism about the market system.

When President Bush spoke about corporate malfeasance, about righting wrongs and putting the bad guys away, few question his sincerity. But to take advantage of the “glass house” effect, he could use the “bully pulpit” of his office to do the following:

  • Talk frankly about honesty, full disclosure and transparency in reporting.
  • Decry phony revenues, bogus earnings, spinning IPO’s, cozy analyst investment banker relationships, and risk-free executive compensation.
  • Cite high-profile examples of greed and deceit, express serious concern, and offer inspirational alternatives.
  • Refer to abuses in governance and underscore the fiduciary responsibility.
  • Discuss accountability for illegal activity, including civil litigation, criminal prosecution, and imprisonment.
  • Tell new SEC head William Donaldson to aggressively pursue corporate corruption and market abuses to avoid conflict-of-interest charges.
  • Tell us that his new team will be packed with people of impeccable independence, integrity, and competence.
  • Raise the SEC’s annual funding as the agency copes with many cases. Leaders define their agenda by the resources they allocate to it.
  • Insist that the agency aggressively pursue corporate corruption.

Great leaders mobilize people to do extraordinary things with simple ideas. During the 20 years that Jack Welch transformed GE, he was only committed to a few strategic priorities: globalization, total quality, boundaryless, de-bureaucratization, and e-commerce. None of these initiatives were new. Many companies had similar objectives. But Welch demonstrated a fanatic obsession with driving each initiative, and held his managers accountable for achieving results. GE people knew where their CEO stood. Welch’s approach was aligned with Powell’s advice: “Figure out what is crucial, and stay focused” When people see that resolve, they “get” what their mindsets and behaviors ought to be.

Great leaders clearly state their principles and goals and follow through. They live the principles, own the goals, and ensure that everyone is aware of it. If you’re a leader, learn to use your visibility to your advantage.

Tagged
Posted in Management and Leadership

Putting Your Creativity to Work and Improving the Bottom Line

Fostering Creativity at Work

Fostering Creativity at Work When the going gets tough, many companies cut costs, cling to tradition, and stay under radar. Such reaction is short-sighted. There are lessons to be learned from companies like HP, Virgin, Disney, and other innovators who not only stay the course through uncertainty, but excel. The most innovative companies don’t take cover—they get going. They embrace creativity and innovation in both good times and tough times.

Creativity helps us reinvent when faced with opportunity and survive when faced with challenges. Creative people find new solutions and enjoy a timeless advantage.

What characterizes a company? Its people, process, values, size, resources—or maybe it’s an unorthodox approach to business.

Few companies even begin to embrace the power of creativity and reinvention. Yet we see bold possibilities. We see signs of a new era where creativity drives the bottom line—where business escapes tradition and embraces new practices that nurture the cultural creative mindset.

A Time for Unleashing Your Creativity at Work

Rule-breakers tend to be the more nimble upstarts.

Jack Welch, former CEO of General Electric, said: “Today business is about the resiliency of ideas. It’s about rallying people and the ideas of people.” Companies don’t simply want to make a better product; they want to dramatically transform their culture to lead their industry. The best organizations are committing more people, resources, time and money to increasing creativity and innovation. It’s a smart investment.

Look at Eli Lilly. Instead of churning constantly inside the company to generate new ideas, they’ve reinvented scientific research and created a free market of ideas. The company founded Inno-Centive, a web-based community of problem-solvers and solution-seekers. They tap scientific minds worldwide to create solutions for financial reward.

Success can no longer be sustained with incremental improvements; we must find new sources of growth to leap forward in much wider measure.

Why is Creativity Important in the Workplace: Creativity and the Bottom Line

Creativity and the Bottom Line Although it is difficult to measure creativity’s impact on the bottom line, we see that four benchmarks make or break the bottom line:

  1. Profitability. A creative company produces more great ideas that impact the bottom line. Better product = sales; efficient method = savings; better service = more customers. Hanes recognized this when they reinvented the T-shirt. The Hanes Tagless Tee shirt is the first innovation in the industry in 10 years.
  2. Industry leadership. Leading companies innovate for the long-term. They are visionary, looking at the future with a wide lens. Today’s rapid pace of change means companies can no longer deliver the same products and services in the same way for long. As technology services evolved, IBM, Compaq, and Intel all had to transform their business models. Fox News helped reinvent the cable news industry, repositioning itself as a lively, in-your-face opinion page. And it became the number-one cable news outlet. Innovate or get left behind.
  3. Retention. A more creative culture equates to happier employees. Creative companies embrace more humanistic values, like leadership support, risk tolerance, individual expression, and intrinsic motivation. Peter Coy, Business Week columnist, writes: “In the Creative Economy, the most important intellectual property isn’t software or music or movies. It’s the ideas inside employees’ heads. Leaders create an environment that makes the best people want to stay.”
  4. Motivation. When people feel their ideas are valued they contribute more to the company. Creative companies have a people-first approach, embracing attributes like autonomy and personal challenge. Winnebago discovered this with their innovation program. Every Friday, Winnebago CEO Bruce Hertzke hands out dividend-savings checks and has his photo taken with employees who have made revenue or savings suggestions. Over 10,300 ideas have been implemented, and employees have received $500,000 for their ideas. Employee creativity saved the company $5.5 million in the first year alone. Yet people are primarily motivated by intrinsic reward.

Leaders must balance financial rewards with recognition, rewarding work, and enrichment from the culture. Brainstorming is just one technique. It even has variants. Such methods can be useful in creating food for thought. Also has the advantage of including staff and encouraging an innovative thinking environment—if done well.

Finally, let’s not forget basic business survival. Creativity is required to innovate but it’s also necessary to keep the pipeline full and move forward.

Fostering Creativity at Work: The Ultimate Measure of Value

Executives who are committed to increasing creativity and innovation must first accept this universal rule: Creativity requires a new mindset, which is produced only from cultural transformation.

Leaders must accept that development of human capital requires a greater investment than other types of capital—in terms of money, time, and commitment. The ultimate measure of a company’s value is its people. In creativity, everything comes down to people. Dick Brown, CEO of EDS, puts it this way: “Most business leaders are more comfortable with numbers. While I am very numbers-focused, you can’t change a business with numbers. Numbers are the end result. You change a business by changing the behavior of its people.”

Yet it’s not enough to hire a few creative people or hold an off-site meeting in hopes of finding an innovation “quickfix.” Leaders must rebuild the culture, align the systems, and develop the knowledge of the company. Leaders must care for, nurture, and sustain the culture. They must rediscover their child-like imagination, find their passion, surprise people, and be a little unorthodox.

Guiding Strategies for Enhancing Creativity at Work

Strategies for Enhancing Creativity at Work Here are some strategies to guide the creative leader:

  • Nurture creativity from the top down and bottom up by finding champions in the ranks of junior positions and senior executives.
  • Encourage “skinned knees” by developing a risk-tolerant culture that values the mindset of creativity and rewards both behavior and results.
  • Enact intrinsic and extrinsic rewards for creativity that value the balance of knowledge and imagination.
  • Redesign structures to allow for free flow of ideas. Divisions often work differently from one another. Create venture groups, autonomous communities, and flexible innovation processes.
  • Allow employees to venture out and learn about the world they serve. Many innovations fail because people don’t understand the customer.
  • Create new ways of learning and reward it. Jack Welch says, “You raise the collective intellect by learning, sharing learning, and acting on that learning.”
  • Increase accountability and recognition for breakthrough ideas that create new sources of growth.
  • Create a new language for creativity that infuses the culture with fresh, simple, goal-focused vernacular.
  • Walk the talk. Deliver on the vision and promises through committed action. Redesign performance measurement and talent management in line with innovation.
  • Surprise people. Do new things in new ways and be curious, energetic, passionate, and open-minded. Use this research as the basis for highly focused idea-generation sessions.

The most creative companies aren’t always the cutest companies. Creativity does not equal whimsy—or any other idiosyncrasy of the extinct dot-com cultures. Fun is an important part of it; people can’t be inspired when they’re bored in tedium. Yet creativity is so much more. In fact, it’s really hard work. The common thread is that inspiration strikes people in different ways at different, and often unexpected, times.

Tagged
Posted in Business and Strategy Leaders and Innovators

GE Capital Aviation Services: A Fantastic Asset for General Electric

GE Capital Aviation Services: A Fantastic Asset for General Electric

Of the 12 firms that constituted the initial Dow Jones Industrial Average in 1896, General Electric Company (GE) is the only one yet on the list. For more than a century, it has been one of the most successful companies in the world, well-liked for its products, culture, and series of dedicated chief executives.

In 2015, GE assertively moved to wind down GE Capital, which was a considerable but volatile driver of earnings. After selling large portions of its financial business over the past few years, General Electric (GE) has finally shed the “too big to fail” designation. This is for the most part completed, and the residual specialty finance segments have understandable ties to the company’s principal industrial business, such as aircraft leasing. Investors should gain from a much smaller, better-capitalized GE Capital over the long run. Barclays analyst Scott Davis calls one remaining piece of GE Capital, GECAS, GE Capital Aviation Services, “a fantastic asset.” Barclays explains,

GECAS is a fantastic asset, making up more than half of the GE Capital verticals’ asset base and almost 3/4 of its profits/cash. Aircraft leasing is a lucrative and relatively stable business with favorable cyclical and secular market dynamics. The market is becoming an oligopoly with increasing concentration amongst a few key players, and GECAS is the clear leader. Large global players benefit from significant advantages, including large discounts to the latest next-gen aircraft and valuable relationships with top-tier airline customers. From a cyclical perspective, air traffic growth remains strong and lower oil has resulted in strong airline customer profitability. There are also secular tailwinds from a growing global middle class, as well as airlines increasingly choosing to lease their fleets.

'General Electric and the Pursuit of Profit' by Thomas F. O'Boyle (ISBN 0375705678) During the Jack Welch tenure, General Electric benefited from the evolution of financial services in the American economy and the growth of GE Capital. That strategy backfired in 2008 with the arrival of the financial crisis. General Electric had no competitive advantage in financial services. If anything, their risk controls were even inferior to those at other large financial institutions.

Barclays also says GECAS is an asset that’s underappreciated by investors: “We estimate that GECAS will help deliver ~$1.3–1.4B in run-rate free cash flow going forward… not an insignificant amount relative to GE’s ~$9B Industrial FCF in 2016.”

Tagged
Posted in Airlines and Airliners Business and Strategy

CEOs Want Executives Who Look, Act and Sound Like a Leader

A CEO’s job is to keep his people interested in staying, and working, and growing and prospering with this company.

Larry Bossidy, the retired CEO of AlliedSignal took this philosophy a step further and extended it to the people he moved into senior management positions. Bossidy said, “I want to find leaders who are human beings, and who have an interest in being successful for themselves and want to share that success with others. If I can get people like this, they’re easy to lead.”

Bossidy has said that he is looking for the following characteristics when filling up the executive ranks at his company:

  • Positive people, to begin with. CEOs like to see people with smiles on their faces. Business is difficult. It’s so much better to greet the world with a smile on your face. You can’t show me people with great accomplishments who are negative people.
  • CEOs like to see ambitious people who want to get something done.
  • 'Execution' by Larry Bossidy, Ram Charan (ISBN 0609610570) CEOs look to see if they can contain their ego. Do CEOs see a person who can work well with others? Do CEOs see a person who’s shown some interest in others? Are these the people who can share their knowledge with other people and do it gracefully and willingly? Or are they very self-centered, very ambitious, but not necessarily to the benefit of anybody else?

Under Bossidy, AlliedSignal purchased and became Honeywell. Honeywell is a prominent engineering services and aerospace systems company. Before AlliedSignal, Bossidy spent 30 years working his way up the executive ranks at General Electric, where he was a protege of Jack Welch.

Tagged
Posted in Education and Career Mental Models and Psychology

Creating a Winning Corporate Strategy: Jack Welch’s 5 Key Strategy Questions

During his adored tenure as Chairman and CEO of General Electric, Jack Welch created a strategy development framework that was implemented across the vast organization. managers across General Electric used the winning corporate strategy model to gauge their businesses and make decisions about where to go next.

'Winning' by Jack Welch, Suzy Welch (ISBN 0060753943) Jack Welch advocated that strategy is not something that should be left to the management and strategy consultants. He called strategy “a living, breathing, totally dynamic game.” In his book “Winning” (with wife Suzy Welch,) Jack Welch declares the key to success is to “pick a general direction and implement like hell.”

For Jack Welch, strategy was a “killer idea” or a “winning value proposition” that can provide any organization a general direction for durable competitive advantage. He described strategy as a living, breathing story about how your organization is going to win. In this pursuit, strategy should be a tool, that is agile and can change over time, but it is not arbitrary or indiscriminate.

Jack Welch's Questions for Strategy Planning

Jack Welch’s Questions for Strategy Planning

'HBR's 10 Must Reads on Strategy ' by Harvard Business Review (ISBN 1422157989) Conceptualizing and developing a successful business strategy lies not in having all the right answers, but rather in asking the right questions. Creating a winning corporate strategy is the process of asking (and answering) the question of what needs to change and why? Jack Welch proposes a rapid, practical questioning procedure to come up with a winning corporate strategy by probing for answers to five key questions:

  1. What does the competitive playing field look like?
  2. What have our competitors been up to lately?
  3. What have we done lately?
  4. What future events or possible changes keep us up at night with worry?
  5. And, given all that, what’s our winning move?

Theme 1: What the Playing Field Looks Like Now

  • Who are the competitors in this business, large and small, new and old?
  • Who has what share, globally and in each market? Where do we fit in?
  • What are the characteristics of this business? Is it commodity or high value or somewhere in between? Is it long cycle or short? Where is it on the growth curve? What are the drivers of profitability?
  • What are the strengths and weaknesses of each competitor? How good are its products? How much does each one spend on R&D? How big is each sales force? How performance-driven is each culture?
  • Who are this business’s main customers, and how do they buy?

Theme 2: What the Competition Has Been Up To

  • What has each competitor done in the past year to change the playing field?
  • Has anyone introduced game-changing new products, new technologies, or a new distribution channel?
  • Are there any new entrants, and what have they been up to in the past year?

Theme 3: What You’ve Been Up To

  • What have you done in the past year to change the competitive playing field?
  • Have you bought a company, introduced a new product, stolen a competitor’s key salesperson, or licensed a new technology from a startup?
  • Have you lost any competitive advantages that you once had—a great salesperson, a special product, a proprietary technology?

Theme 4: What’s Around the Corner?

  • What scares you most in the year ahead—what one or two things could a competitor do to nail you?
  • What new products or technologies could your competitors launch that might change the game?
  • What M&A deals would knock you off your feet?

Theme 5: What’s Your Winning Move?

  • What can you do to change the playing field—is it an acquisition, a new product, globalization?
  • What can you do to make customers stick to you more than ever before and more than to anyone else?

Strategy Questions for Global Competition for Resources and Market-Access

Strategy Questions for Global Competition for Resources and Market-Access

'Playing to Win: How Strategy Really Works ' by A.G. Lafley, Roger L. Martin (ISBN 142218739X) In the context of global completion, both for resources and access to markets, leaders need to identify factors and attributes that will shape the future of globalization. Such a framework should provide guidance to those who will make, influence, and predict decisions about the global economic structure and develop a game plan to succeed in an increasingly global environment. Here are Jack Welch’s five strategy questions modified for the global nature of business.

  1. What does your global competition look like over the next several years?
  2. What have your competitors done in the last three years to upset these global dynamics?
  3. What have you done to them in the last three years to affect those dynamics?
  4. How might your competitor attack you in the future?
  5. What are your plans to leapfrog the competition?

Applying a strategy-development framework can help companies focus their activities and goals in ways that are more efficient and lead to a more powerful approach to growing their business. The framework helps analyze the dynamics of the current line of attack, reveal the forces currently influencing the global competition. The framework works by, in part, by recognizing that the strategy must not only be understood by everyone in the organization, but must be acted on by everyone.

Recommended Reading: Best Books for Strategy Planning

Recommended Reading: Best Books on and by Jack Welch

Tagged
Posted in Business and Strategy