In the last article, I shared a framework for the mind-set of leaders that I developed from my observations of leaders over 35 years of my career across the globe. This article, the second in the series, explores the first three aspects of the element,Compete to Win in some detail. Here is a brief re-cap of the framework of leadership from the last article:

Compete to Win.

“… if I had to single out one element in my life that has made a difference to me, it would be a passion to compete.”Sam Walton, founder of Wal-Mart.

Competing is the key to a leader’s mind. Leaders are competitive beings. They love to find arenas where they can compete against themselves or the records of others. In the minds of most leaders, it is a necessary condition to have a standard or a record against which to push to motivate them to action.This is almost like necessity of pushing against the wind to gain lift in order to fly. They have a paramount need to play, compete, take risk, grow themselves, discover themselves – this is their idea of having fun…

“I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”– Jeff Bezos of Amazon.com

“Does making money excite me? No, but I have to make money for my shareholders. What excites me is achievement, doing something difficult.” – Dhirubhai Ambani, Founder of Reliance Group

Their motivation to achieve seems to come from competing with standards of excellence in order to better them and establish new records.They are obsessed with betterment that comes through competing against established standards and norms. For example,

“Paying the highest wages, while having the lowest wage costs.” - Jack Welch, former CEO, General Electric

It is very important to understand that their competition is with records or standards that are mostly measurable– market share, profits, margins, sales growth, costs, winning a contract and so on. It is not competing against people. Often, the standard that the leader chooses to compete with is carefully defined in a way that makes action possible.

See the motivation for Dhirubhai Ambani to move from trading into manufacturing: “I was constantly thinking of going into manufacturing. My desire was motivated by the fact that we were not able to produce and supply a quality fabric to the export market.”

Most successful leaders consider it a necessity to have strong and thriving competition for the betterment of industry as a whole and to spur innovation.

“Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes.” – Bill Gates
It is nice to have valid competition; it pushes you to do better.– Gianni Versace, Designer and founder of Versace fashion house.

Look at the attitude of Sam Walton, founder of Wal-Mart, “Of course, Wal-Mart wouldn’t be what it is today without a host of fine competitors, most especially Harry Cunningham of Kmart, who really designed and built the first discount store as we know it today, and who, in my opinion, should be remembered as one of the leading retailers of all time”.

Another characteristic that I have observed in leaders is that they compete to WIN. They don’t enter into plays that they have no hope of winning.

“If you have don’t have competitive advantage, don’t compete” – Jack Welch.

The outcome is far from certain, but they go in with hope and feel they have a right to win. This idea of having a right is another key factor in a leader’s playbook – they build capability, seek advantages they have, make them stronger in order to feel in their minds that it is their game to win or lose. This doesn’t mean they are always successful. They take risk – albeit calculated, moderate risk; a level of risk that makes them stretch and grow in their capabilities. This combination of trust in their right to win and the knowledge that they are taking a calculated risk gives them the attitude of- “Hope of Success” versus “Fear of Failure”. It is a fine form of calibration – how much risk versus the degree of advantage they have to manage risk – each leader arrives at the right balance through much trial and error; through many failures and successes. Learning from such performance feedback is another hallmark of leaders. In fact, such leaders actively seek and solicit such feedback in order to grow their capabilities.

This drive for competition, this tendency to see work and world as an arena full of opportunities for competing and winning manifests itself in the types of goals they set for themselves and their businesses. There are broadly three types of betterment/ competitive goals that leaders set for themselves and their followers.

Competing with existing standards of excellence

Leaders often set goals that seek to better the existing records; be the best of the pack; be the first in a field of endeavor. Such goals provide the motivation they seek to drive their own as well as their followers’ performance.

“We want to give the best customer service of any company in the world.” (Thomas J. Watson Jr. of IBMin 1963).

“Walk into a Chase branch and we can give you so much quicker, better and faster. Like in Wal-Mart”. (Jamie Dimon, CEO J.P.Morgan-Chase)

Almost always, these standards have been established by others and it is often easy to mistake the competition as personal. However, it is important to note that this is their “External Focus” and not personal animosity toward other leaders. Many times though, competition does degenerate into personal animosity and such tales of corporate battles on the basis of interpersonal competition are many in business. However, when focused on competition with standards, this type of goals – those that have external focus most typically find expression in being better than others in  various aspects of a business and in the end, take an entire industry to another level through the competition, and he innovation it takes to win.

“If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful.” Jeff Bezos of Amazon.com

Often, most externally focused goals are about customers – acquiring customers, serving customers and earning customer loyalty in a fashion superior to competition. Another leader who set some memorable such goals is AG Lafley, CEO of Procter & Gamble. He directed his company to win two moments of truth with consumers – the first moment of truth occurs in the retail store where the consumer shops. If the consumer chooses a P&G product over competing products, it is a win for P&G. The second moment of truth occurs when the shopper uses the product and is so delighted as to become a loyal consumer. That is the second win. Such type of goals direct the energies of the organization into coming up with better ways to serve customers and as a result win against competitors. And, in general they are more motivating to employees and generate better action than goals such as, “highest share of the market”, “Largest selling brand”. Such goals are aspirational but it is difficult for employees and managers to figure out intuitive action plans to achieve them.

Competing with own record of excellence

“I loved the feeling of freedom in running, the fresh air, the feeling that the only person I'm competing with is me.” - Wilma Rudolph, US Olympic Athlete, winner of 3 Gold Medals

“I am never fully satisfied with any Microsoft product.” – Bill Gates

“Meeting deadlines in not good enough; beating deadlines is my expectation.” – Dhirubhai Ambani

Another manner in which leaders set up goals to compete and motivate themselves is to beat their own records; do better than last quarter; find ways of improving results that are already records in the history of their business – sales, profits, margins, inventories, costs; nearly any aspect of a business that has evolved over the years provides tremendous opportunities for improvement goals.

Such goals have two advantages – firstly, they move the envelope forward one step at a time; they keep up the forward momentum of the business. They have the added advantage in that the past record is easily understandable to managers and it is easier for them to find ways of doing better – they know the work and they produced the previous results.

This type of goal is one of the primary drivers of continuous improvement that so many companies strive for in every aspect of their operations. While it sounds almost intuitive to have numerous such goals in a business, the trick always lies in setting up a realistic, achievable and measurable goal for the company to strive toward. Too high or too low an improvement goal is not motivating for the leader or for the employees.

Most successful leaders that I have observed set up these goals on the basis of a longer term objective or vision of where they want to see their company. Once they develop a long term objective for the company’s position within their industry, they develop a “glide path” of progress toward that objective that is defined in a series of measurable goals that are spelled out by year and by quarter. When Jack Welch declared that GE would be #1 or #2 in every business they competed in, he established a time line for that strategy and set up goals that were stretching, yet achievable for his managers and employees.

Such glidepaths and phased approach to improvement makes performance feedback, celebrations of success and investment in gradual building up of capability possible. Without such an approach, many leaders invested heavily in capabilities (e.g. technological up-grades, particularly in manufacturing; hiring of top talent without challenging projects, etc.) that were not necessary and led to drain of resources. Lack of detail behind the long term goals and the lofty speeches to employees only led to disbelief and distrust within the organization.

Create Unique Accomplishments

“An iPod, a phone, an internet mobile communicator... these are NOT three separate devices! And we are calling it iPhone! Today Apple is going to reinvent the phone. And here it is.” – Steve Jobs

Apple created a unique interface between machines and people that so many companies try to copy. They integrated into one machine the functionality of multiple products. They made products that were not “open architecture” like PC and other platforms were, but met or exceeded user needs in such machines by a great degree compared to other platforms. Jobs’ genius was to marry every aspect of the looks of design of Apple products with what they did – there wasn’t any design for design’s sake which was unique in his industry.

“What we want to be is something completely new. There is no physical analogy for what Amazon.com is becoming.” – Jeff Bezos

Amazon’s story is amazing. The novelty and uniqueness of their market place, their business model, the new approaches to warehousing and delivery, including potential future use of drones must stand as a unique accomplishment in e-Commerce that has so many trend setters. Jeff Bezos’ motivation is clearly spelt out in the above quote – he wants Amazon to be something completely new!

“Actually, as an entrepreneur, I think nobody has money problems, only a lack of ideas. People keep lamenting about a lack of money, but in most cases it is money-making ideas that they need to mobilize funds.” – C K Ranganathan, Chairman, CavinKare

It is easy to think that technology industry has more opportunities for such uniqueness versus others. Here is an example from consumer products industry - in 1983, C K Ranganathan of CavinKare created something unique in the Indian market by starting to manufacture and market shampoos in small sachets that opened up beauty products to a large portion of Indian consumers, many of whom could not afford to pay the cost of full bottles of shampoos marketed by multi-nationals. He was not the first in the field – Godrej was already selling Velvette shampoo in sachets. He was not the inventor – his father built the machine that made their sachets. Ranganathan’s unique accomplishment was to create an activity system of marketing, distribution, etc., that made the product accessible to hundreds of millions of Indian consumers at an affordable price point. Today, nearly every FMCG company operating in India has sachet business. This format was taken to dozens of other countries as a way of making such products accessible and affordable.

This is the third way leaders motivate themselves and their followers – setting goals for creating unique accomplishments in their industry. Often, the accomplishment lies in the way the leader brings together their capabilities, the competitive situation, the consumer and customer to craft a unique approach for betterment of their business.

In a non-business arena, India’s Aadhaar – the biometric ID project is a unique endeavor in the way it brings together available technologies and ideas for a truly unique individual identity that exists on the cloud – no other country has such a system.

In summary, leaders are competitive beings. They love competition for the energy, the lift, the motivation it gives them. Their competition is with standards of excellence (= setting new records) and not with people. Their competition manifests in goals that they set up for the betterment of their business. They do it in three ways – competing with external standards; competing with own record of excellence and striving to create unique accomplishments. They choose their arenas carefully – they compete where they have an advantage; they take only moderate, calculated risk. They go into the battle to win – they play to win; not to avoid losing.

In the next piece we will examine the way successful leaders think about Creating Winning Conditions in their businesses. Often many people call it the Winning Culture.