Becoming Better Leaders – Creating Conditions for Winning
In the last article, we discussed how leaders compete to win as well as their motivations and drivers. An entrepreneur evolves into a leader by developing the ability to build an organization that has the right people with right attitudes to achieve on-going success vis-à-vis the vision and the goals. The way we talk about success is that it is on-going – not a short term success but building an institution that continues to be successful in accomplishing and furthering the original vision for which it was formed.
When they act, in my opinion, leaders think about this ability in its broadest sense – how to create the “Machine” that keeps winning. Narrower definitions would be “Organization building”, or “Winning Culture”, and so on that represent essential elements of the overall thinking framework but not its entirety.
Peter Drucker says in his book – Management : Tasks, Responsibilities, Practices, “A manager has the task of creating a true whole that is larger than the sum of its parts. One analogy is the task of the conductor or a symphony orchestra, through whose effort, vision and leadership individual instrumental parts become the living whole of a musical performance.”
Jim Collins, in his book Good to Great says of Level 5 leader: “Demonstrates an unwavering resolve to do whatever must be done to produce the best long term results, no matter how difficult; Sets the standard of building an enduring great company; will settle for nothing less”.
Choose and Commit: This is the very first element of a leader’s framework for creating conditions for winning. In a nutshell, this is all about choosing a path and committing resources to start the journey of winning. This is a conscious decision making process whereby a leader defines his/ her stage/ arena that excludes pursuit of other opportunities and other “plays”. Choice and Commitment has the following 3 areas of action:
1. Defining a mission
2. Formulating strategies
3. Investing in capabilities for competitive advantage
Defining a Mission: The purpose or mission of a business serves two functions – it unites the employees and focuses their energies; and it serves as a beacon to attract the right type of talent. Mission also provides the primary source of motivation to employees; this is the cause for which they would strive. This is a major act of choice on part of the leader. Here is a simple yet easy to follow suggestion from Peter Drucker on this:
“Talk to one customer every day this week. Ask them how they see your company, what they think of it, what kind of company they believe it is and what they want from it. Use this feedback to better define your company’s mission”.
Whether it is a mission statement or a slogan or a vision – whatever this called, a leader thinks of mission as a motivating and clearly guiding set of words for his/ her followers. A leader also knows that for a mission to be a living, guiding set of words, it has to link clearly to investment of resources, selection of people and evaluation of results for success or failure. For instance, Bristol-Meyers Squibb’s mission is, “To discover, develop and deliver innovative medicines that help patients prevail over serious diseases”.The implications for major activity focus and investment are clear – i.e. R&D; hiring of outstanding scientists; research into serious and life threatening diseases; delivery of medicines to patients, etc. A clear mission statement conveys choices that have been made and areas of endeavor that have been excluded – as a result, acts as a clear guide for what to do and what not to do – in this case, everything outside of medicines for serious diseases. W. Edwards Deming, the quality pioneer once said, “It is not enough to do your best; you must know what to do, and then do your best”. Over time, it is clear that this type of clarity of mission also attracts the right talent to the organization who can see what skills and talents are valued and how they fit.
Formulating Strategies: Once a leader defines his/ her mission, comes the next step of deciding “Where to Play” and “How to Win”. This is the act of formulating strategies – the market place segments or product or service categories (the playing fields) where the leader sees the most opportunity to win and lead; and investment decisions (in capabilities) as to how to win against competition in those playing fields.
Examples of “Where to Play” –
- High-income segment of customers in metropolitan areas will be our prime targets.
- Compete in the value segment of the regional market for cooking oils; introduce innovative higher end products, riding on leadership in basic products.
- Leading supplier to the top 10 retailers in the country
The aim of “How to Win” is to define the type of competitive advantages that the business needs to develop in order to win in those market segments or product/ service categories. Examples of “How to Win”:
- Innovation stream for supplying products and services to high-income customers
- Fast, flexible, reliable delivery network that can deliver custom service package that high end customers demand
- Cost leadership in order to compete for leadership in value segment
- Excellent supply chain to satisfy the product delivery demands of top 10 retailers
Leaders typically think in terms of “What” (product, service, customer, etc) first and then “How” (competitive advantages, capabilities) to win.
Investing in capabilities: In the minds of leaders, acquiring the capabilities needed to execute the chosen strategies is an integral and nearly parallel process to that of strategy formulation itself. This is because choice of a strategy also is dependent upon the cost, speed and feasibility of acquiring the needed capabilities – since resources are limited, all strategies are not equal. Capabilities are typically of two types – what people/ talent bring; and that which needs to be built as organizational process or system. While they are inter-related, it is important to recognize the difference and invest appropriately. For example, superior data crunching capability is a function of the right equipment/ process and the right talent to run them and produce results. Certain capabilities transcend these two factors - for example, strong, durable customer relationships that a company has is a capability that has been built by many people, over time and is a part of the institution itself. Successful leaders seek to identify and leverage such institutional strengths as competitively advantageous capabilities.
Most successful leaders, throughout history have focused on finding, recruiting and growing the best talent they could. Here is the inscription on the tombstone of Andrew Carnegie –
“Here lies a man
Who knew how to enlist
In his service
Better men than himself”
Lot has been written on the subject of talent management. Successful leaders seek to ensure that they have the best possible talent for their business; that their capabilities are used for the best purposes/ projects in the business; and that their knowledge and skills are grown continuously to prepare them for bigger challenges. As Admiral Chester Nimitz (US Navy Commander of Pacific in WWII) once said, “Leadership consists of picking good men and helping them do their best”.
Often, leaders who are not entirely clear in their thinking invest irrationally in capabilities that they don’t often are not ready for – e.g. capital expense for “optimistic” manufacturing capacities; latest IT equipment and software; “professional” marketing and sales managers; etc.
Since most business leaders have a fairly clear understanding of their core capabilities (e.g. innovation, low-cost manufacturing process, low cost finance, etc.) when they start out, we can only assume that these excessive investments are a failure to manage the balance between short and long term. Investing way ahead of the right time and in technologies, processes and talent that are today’s fads in market place are the primary reasons for going off-target. Once a high cost, high quality but more than necessary IT technology has been put in place, it is difficult to avoid the distractions such capabilities pose. Case in point is the experience of so many businesses that invested too early in expensive ERP systems before they were ready. The investment right-off’s and related downsizings are both a source of distraction and demotivation for employees.
Focus on Execution: With direction and capability in hand, a clear action plan, well thought-out, “socialized” amongst the key players in execution, discussed, reviewed, and revised often before the start of execution seems to be the hallmark of the way successful leaders mobilize for execution. This process of thinking, talking and revising often takes time.
As Abraham Lincoln once said, “Give me six hours to chop down a tree, I will spend the first four sharpening the axe”.
An interesting aspect of this “socialization” is the discussion that occurs as to how this plan contributes to the overall mission or purpose of the business – as a result, more alignment amongst key players is achieved than otherwise. Many leaders avoid this aspect of action planning, choosing to “Tell” or “Deploy” their action plans to their followers, thereby robbing themselves of a majority of the energy and goodwill of their managers to work toward the mission or purpose. Many other leaders who take pride in being action oriented often follow, “Ready, Fire, Aim” and not, “Ready, Aim, Fire” which is a recipe for re-work. Successful leaders recognize the cost of rework – when a plan is revised mid-way through execution and a directional shift happens, the cost of delays, demotivation, conflict, etc. take away all the profit from that pursuit, besides making talented and successful people feel like failures.
Though it sounds very common place, committing resources to a plan is one of the fundamental ways to ensure successful execution. As Peter Drucker said, “Unless commitment is made, there are only promises and hopes; no plans”. And, further, “A plan needs to be tested by asking managers, “Which of your best people have you on this work today?” The manager who comes back and says, “But I can’t spare my best people now. They have to finish what they are doing now before I can put them on to work tomorrow,” is simply admitting that he does not have a plan.”
While learning from performance is the hall mark of successful execution, continuously revising action plans will not lead to success – too much change and revision while in executing a plan only leads to confusion.
“We trained hard—but it seemed that every time we were beginning to form up into teams we were reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing, and what a wonderful method it can be for creating the illusion of progress while actually producing confusion, inefficiency, and demoralization.” (Attributed to Roman Satirist, Petronius Arbiter 27 – 66CE, quoted by Robert Townsend in his book “Up the Organization”)
Another necessary element of successful execution is measurement. Unless, 1) anticipated results from the action plan are published and widely understood; 2) a measurement system of measuring progress is put in place; and 3) individuals are free to self-measure their performance against these milestones, everything ends up being a success (or failure). Also, in the lack of a measurement system, people and organizations often measure only success or failure – not progress. This is one of the causes for demotivation and abandonment of plans. As long as people have a sense of progress being made, they will move forward. Progress milestones also make it easy to celebrate quick an short term wins as the time horizon for most business plans is months, if not quarters and sometimes years. It is crucial that all 3 aspects – anticipated results, measurement system and ability of people to self-measure be put in place since only then can there be a consensus in the organization as to if the executed planwas ultimately a success or not. Building strong execution muscle in an organization also involves in creating a culture where there is a consensus on success or failure and less dependence upon a declaration from the top.
So, the hallmarks of Focus on Execution in a leader’s mind tend to be – a) “Socializing” the plan; b) Commitment of necessary resources; c) Learning from performance feedback; and d) a system for measurement of progress.
A Culture of Performance: Successful leaders who have built large, enduring and successful organizations talk about creating “Meritocracies” in their businesses. This is a combination of two factors – performance being the sole or main criterion for recognition and progress; and a “collegial” culture that seeks to convey a message of high performers working together on a high performing team.
Firstly, performance as the sole evaluating criterion has the merit of applying the same criterion that owners/ shareholders use to evaluate a business – thereby ensuring that performance becomes the culture of the business. Secondly, since performance can be measured, most people-related decisions can be made on the basis of data rather than on factors such as antecedents (age, gender, race, the college the person went to, relationship to “Family”, etc.) or personal “qualities” (social skills, emotional intelligence, IQ, etc.). Thirdly, talented and high performing people feel that they have “earned” their reward and recognition through their own efforts to generate appropriate and importantresults. Lastly, since performance culture is data based, a high degree of differentiation can be introduced between different degrees of performance for reward and recognition. Given the right type of people, this differentiation serves as a measure of motivation and not to the contrary as talented people tend to compete with standards of excellence (performance) just as leaders do. In many instances, people who are not competitive in a high performance culture self-select themselves out of that organization.
While the concept of basing people-related decisions on the basis of performance is easy to visualize, it is difficult to implement. Jack Welch of GE who thought about his company’s culture as a meritocracy focused on some of the following aspects (among many other things) to nurture and grow this culture:
· Stretch – an annual budget process that emphasized stretch.
· Aligning Rewards with Measurements
· Differentiation amongst performers
· Appraisals all the time
· Celebrations
The second aspect of a culture of performance is “Collegiality”. It is a feeling of camaraderie and informality that one experiences while working with peers who signed up for the same mission. It is a product of working in high performing teams where everyone is of a high caliber, skilled in different areas, competitive yet collaborative in support of the mission. Usually in cultures of high performance, while reward is performance based, recognition, at least the type that is most sought-after comes from peers. In such culture while hierarchy exists to serve as the basis for making decisions of increasing complexity, informality works across the levels to ensure that it is one team that performs at the highest level possible.
Often, reflecting the failure of leadership thinking and effort, culture in many less successful companies and particularly in developing markets lacks this “collegiality” and is either excessively bureaucratic or hierarchical.
Always present: Finally, a leader who focuses on creating winning conditions is always present in action – in the thick of it. Many leaders and many texts tend to call this – “Role modeling”. There has been a lot of controversy about leading from the front and leading from behind in recent years. Peter Drucker recalls a high school assignment where they had to read books on WWI and discuss. One of his fellow students asked, “Every one of these books says that the Great War was a war of total military incompetence. Why was it?” Drucker says that, their teacher’s response was, “Because not enough generals were killed; they stayed behind the lines and let others do the fighting and dying”. Effective leaders are always in the thick of the fight; they thrive being in the center of action; in the middle of all the conversations that are critical for goal achievement; they are always evaluating; appraising; rewarding; celebrating. They work alongside their employees; they work 80 hour weeks just as their top performers do; they have a clear set of tasks and duties that they need to perform at the same high levels of performance they expect from others. In the minds of such leaders, they are such an integral part of their teams, quarterbacking the team that their teams can’t win without them. This in no way detracts them from delegating, coaching, developing others. It is their love of action that makes them present every day, every minute in the business.
Often, degeneration in morale can be directly linked to the “absence” of the, in a figurative sense. In today’s flatter organizations, this “being present” is of more importance than ever as the leader and his/ her performance; their integrity; their values; their lifestyles are visible to ever increasingly larger parts of their organizations. “Spirit of the organization is created from the top”. It is also a truism that trees die from the top.
In the next installment, we will consider how leaders tend to develop others in their organizations into leaders themselves.