What separates winning organizations from the also-rans? I have spent 25 years studying both winners and losers from the inside out for an answer. Not surprisingly, winning organizations share certain financial attributes. Companies consistently ranked in the top quartile of the S&P 500 maintain annual revenue growth of 12 percent, and a 16 percent operating return on assets, according to Columbia University Business School professor Larry Selden. By contrast, gains achieved by simply slashing payroll and expense (call for Al Dunlap) are seldom sustained in the long run. Likewise, erstwhile winners who fail to keep pace with change and thereby destroy billions of dollars in shareholder value are severely punished (call for John Akers of IBM, Bob Stempel of GM, James Robinson of American Express, Kay Whitmore of Kodak ... ). The early 1990s were a watershed moment in business, when these and other corporate leaders were sent home for poor leadership.
At the same time, several companies have been setting new records for financial performance, enriching shareholders, building communities, and providing greater opportunities for employees. Companies like General Electric, AlliedSignal, PepsiCo, Intel, and others are led by men and women who personally and methodically nurture the development of other leaders, at all levels of the organization. Even if you, as a leader, are smart enough to anticipate and prepare for massive economic and social shifts, you cannot respond to the ground-level demands of the moment without the energy, commitment, and ability of people throughout the organization. Effective leaders recognize that the ultimate test of leadership is sustained success, which demands the constant cultivation of future leaders.
This has important implications for the work you do every day. For one thing, all the money your organization invests in "leadership development" -- usually the province of outside trainers and consultants -- means little without an equal investment of your own time and effort. Yet the benefits of investing your time will accrue to you as well as to your organization.
If long-term success requires more leaders at more levels than your competitors, then teaching, coaching, and cultivating others becomes a strategic imperative for senior executives. For example, during the first 18 months of his tenure as CEO of AlliedSignal, Larry Bossidy put all 86,000 employees through a development program he helped design. He spoke to 15,000 people the first year -- presenting his vision, explaining markets and strategies, engaging in debate -- in short, teaching. In the process he helped increase the market value of his company 400 percent in the past six years. Likewise Andy Grove at Intel, Jack Welch at GE and Gary Wendt at GE Capital, Roger Enrico at PepsiCo, Lew Platt at Hewlett-Packard, Bill Pollard at ServiceMaster, and hundreds of other business, community, military, and religious leaders understand that their success depends on others, and that leading and teaching are inextricable. They spend hundreds of hours a year working with their colleagues -- sometimes just 5 or 10 at time -- to share ideas, identify needs, and develop hands-on business expertise.
The ability to develop the leadership of others requires three things: a teachable point of view, a story for your organization, and a well-defined methodology for teaching and coaching.
Teachable point of view. To succeed as a leader you must be able to articulate a defining position for your organization. You must be able to talk clearly and convincingly about who you are, why you exist, and how you operate. This means you need to have ideas on products, services, distribution channels, customers, and growth. These ideas need to be supported by a value system that the leader articulates, exemplifies, and enforces.
But you also need something I call e-cubed: emotional energy and edge. Winning leaders seem to naturally generate positive emotional energy in others. They also have the edge to face reality and make tough yes-or-no decisions. That is your unique burden -- not to call in consultants or convene a task force, but at crucial moments, when forced to act quickly, to make the difficult choices only you can make. It often makes you the most unpopular person in the organization, which is why those who need to be liked are seldom effective leaders -- at least not during times of crisis. But leadership is the ability to see things as they really are and to mobilize an appropriate response. You can only make those decisions and engender that response if you have clear ideas and values. All three components of leadership -- good ideas, appropriate values, positive energy and edge -- are part of the package you present to those you hope to develop.
Living stories. The basic cognitive form in which people organize their thinking is the narrative story. Individuals, families, organizations, communities, and nations all have tales that help make sense of themselves and the world. There are three kinds of stories that leaders can tell. There's the "who I am" story in which leaders describe themselves. Roberto Goizueta, chairman and CEO of the Coca-Cola Company, often talks about his early experiences: being forced to leave Castro's Cuba and start over in a new country with $40 in cash and 100 shares of Coca-Cola stock. He tells stories of how as a young boy he would spend days reading and talking with his grandfather, Marcelo, who had founded a sugar and real estate empire. Marcelo's lessons on the importance of cash and simplicity, among other virtues, still guide Goizueta decades later. "I am a great believer in cash flow," he says. "Earnings is a man-made convention, but cash is cash. The larger the company is, the less it understands cash flow."
There's the "who we are" story, in which you articulate for your constituents what their identity is. Chairman and CEO Phil Knight's stories at Nike are all about winning. He named the company after the Greek goddess of victory. He uses his stories of competing as a runner to explain the thrill of competition and winning. Nike is not a company to him. It is a vehicle for furthering the aspirations of customers, famous and unknown. His message -- that every employee helps customers to be winners -- helps to create an organization in which everyone knows what they are aiming for and what the company represents.
But the most important leadership tale is the "where we are going" story. Martin Luther King's "I Have a Dream" speech mobilized energy around powerful images of social equality -- black and white children holding hands in a transformed world.
Winning business leaders use the power of storytelling as effectively as our most gifted public leaders. Goizueta has increased the market value of his company thirtyfold in 15 years; no business leader in history has done a better job of growing shareholder value. Goizueta has done this by hiring managers who are entrepreneurs and risk takers -- and by finding a way to energize people about the story of the company. He reminds people that the human body requires 64 ounces of liquid each day, and that on average Coke provides just two of those ounces. His message to the troops is clear: let's get going. Further, Goizueta puts individual managers at the center of his stories. The best managers are those who walk into a building and see not where Coke is but where it isn't. It is this ability to find opportunity, he tells his listeners, that will make the company a winner in the future.
Dramatic storytelling is the way people learn from, and connect with, one another. That is why CEOs -- Bill Gates, Andy Grove, Bill Pollard -- write books. It is more for the benefit of their constituents than for the general public.
Dramatic storytelling is the way
people learn from one another.
Teaching methodology. To be a great teacher you have to be a great learner. Most effective teachers -- and leaders -- will tell you that they grow as much as those they teach and lead. The process of teaching can be quite simple; it starts with having a conscious system for interacting with people. Jack Welch, for instance, spends a half-day every couple of weeks teaching, wrestling with issues, and challenging his people at Crotonville, GE's leadership development center. Rear Admiral Ray Smith visits graduating classes of the Navy SEAL underwater demolition programs, and participates in the same physical training as SEAL candidates half his age. Larry Bossidy writes two-or three-page letters to the heads of all AlliedSignal's businesses after every strategy session, operating review, and people review.
You must be methodical but not mechanical in your approach to teaching. To make a difference, you must have the self-confidence to be vulnerable to others; you need to share your mistakes and doubts as well as your accomplishments. When Roger Enrico, for instance, goes off-site with 10 of his senior executives for five days, he's not afraid to reveal himself. He cannot hide behind his position. It's one thing for a CEO to come in, deliver a canned speech to a training class, and escape. You can't live with your troops off-site for five days, 16 hours a day, and be anything but genuine. Phonies and martinets will be found out by the end of day one.
Articulating your ideas and values, developing a teachable point of view, and developing stories that bring your views to life are all learnable skills. For instance, in helping people I work with develop stories about their experiences, I often ask them to "think about a time in your life when you made something happen through other people that wouldn't have happened without you. Run the video of your life and pick the proudest moment you've had as a leader." It could be a church, community, athletic, or work activity, but I have yet to find somebody who doesn't have a proud moment. If you ask people to pair up and tell their story to someone else, and then talk about why it was an example of good leadership, they all uncover some basic tenets of leadership: "I had a vision. I persisted. I embodied in my own actions the message I was trying to create. I was able to enroll people. I fought through resistance." Implicitly, we know what good leadership is, and people in all walks of life can become more motivated to work on leadership by remembering when they felt proud, when they'd been in a tough situation where they could lead.
However, if you ask me, as a coach, to simply repeat this exercise throughout your organization in lieu of you, the leader, sharing your own values, ideas, and stories with people, you are probably wasting their time and your money. Outside consultants -- and I am one -- are the last people who can develop the long-term leadership talent in your organization. That is the job of recognized leaders, with a proven record of success, who work with their colleagues every day.
Developing leadership talent is
the job of leaders themselves.
The current conventional wisdom in leadership development programs is to develop a set of competencies for what a good leader is and then figure out a way to develop people around those competencies. At the end of the day the competencies that get developed in these programs look pretty similar -- having integrity, building trust, demonstrating towering competence, knowing how to overcome resistance.... What's missing is the leaders themselves teaching colleagues, not leaving the teaching to others or talking about somebody else's values. People want their leader to look them in the eye and say, "Here is where our company is going and here is what we need from leaders in order to get there."
The military has understood this for years. After the end of the Cold War, General Wayne Downing transformed the mission, training, and appraisal of the elite Special Operations Forces. He could change the mind-set of his troops from Rambo-like warrior to "quiet professional" because he had credibility. The credibility came from living his personal ideas and values (which he developed as a Special Operations Forces officer in Vietnam) and bringing to life the story of where SOF was heading. Admiral Smith, in his midÐ50s, is out there the last week of SEAL training doing the physical training and explaining to recruits the importance of what they're doing. Religious institutions have been clear on this approach to pastoral training. Medical educators know that you cannot put a professor in the operating room to demonstrate surgical techniques. You need someone who has hands-on expertise, credibility, and a teachable point of view about how to develop others' capabilities. That doesn't mean there is no role for professors and consultants, but it does mean there is not a leading role for them.
There is a role for professors and
consultants -- but not a leading role.
When Andy Grove shares with new hires his ideas about where the industry is going, he is learning and teaching. The young engineers know far more then he does about some of the current technology. They have ideas that he has not even considered. By being in class with those new hires, he bypasses layers of hierarchy; the closer the hierarchy gets to him, the more it thinks like him. So Grove has developed his own pipeline to get new ideas. At the same time, Grove is teaching the engineers based on his experience of decades at Intel -- both his successes and his failures. He is teaching the engineers about Intel and its industry so that they can channel their ideas. To spread learning throughout the organization, Grove asks other experienced managers to teach -- and bases part of their bonus on whether or not they do.
Leaders of traditional, hierarchical organizations don't get those kind of opportunities. In short, to compete in the 21st century, leaders need to build not just a learning organization but a teaching organization -- one with the capacity to build leaders -- into the fabric of the organization. They need to create an environment where leaders are teaching leaders.
Most leadership training springs from the question, "Are leaders born or made?" -- and is designed to prove that the latter is the correct answer. It's an age-old -- and essentially pointless -- debate. It's like asking whether athletes are made or born. The answer is, obviously, both. With coaching, commitment, hard work, there isn't any group of people who couldn't improve their ability to play tennis, golf, or basketball. There aren't many, however, who are going to be world-class performers. The same with leadership. Any organization that takes the time to get more leadership out of people is going to be far ahead of its competitors. Are all managers candidates for the top job? Of course not. But can they be a lot better than they are now? Absolutely. We can all hone our ideas and better articulate our values and improve our capacity for making yes-no decisions. So it's worth the effort to develop everybody.
Losing organizations make the mistake of handicapping their field of potential leaders and investing their training and development resources only in those they think will go furthest. Inevitably, they pass over a lot of talent. Winning organizations often bet their hunches, too, but they typically wait longer to do it. They look at broad leadership skills, not just success with particular projects. And, most important, they continue to invest in the development of everyone else, including those they don't expect to rise to the top. Winning companies' more inclusive approach helps get the best out of everyone -- and keeps late bloomers and mavericks contributing long after others might have written them off.
Leaders who invest themselves personally in the process of developing future leaders are also building the most precious of organizational assets. The long-term success of leaders cannot be measured by whether they win today or tomorrow. The measure of their success will be whether or not their company is still winning 15 years from now, when a new generation of leaders has taken over.
Copyright © 1997 by Noel M. Tichy. Reprinted with permission from Leader to Leader
, a publication of the Leader to Leader Institute and Jossey-Bass.
Tichy, Noel M. "The Mark of a Winner" Leader to Leader. 6 (Fall 1997): 24-29.
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