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ExcellenceL E A D E R S H I P

THE MAGAZINE OF LEADERSHIP DEVELOPMENT, MANAGERIAL EFFECTIVENESS, AND ORGANIZATIONAL PRODUCTIVITY

JANUARY 2011

“Leadership Excellence is an exceptionalway to learn and then apply the best and latest ideas in the field of leadership.”

—WARREN BENNIS, AUTHOR ANDUSC PROFESSOR OF MANAGEMENT

MakeoverMakeoverExtremeExtreme

and Influenceand InfluencePowerPower

Matters?Matters?WhatWhat

Management InnovationManagement InnovationGary HamelConsultant

ExcellenceL E A D E R S H I P

THE MAGAZINE OF LEADERSHIP DEVELOPMENT, MANAGERIAL EFFECTIVENESS, AND ORGANIZATIONAL PRODUCTIVITY

GARY HAMEL

Extreme MakeoverStart your revolution inmanagement innovation. . 3

TOM PETERS

What Matters?What will you rememberand be remembered for?. .4

MARCUS BUCKINGHAM

Strong LeadershipLive and lead from yourunique strengths . . . . . . . 5

SALLY HELGESEN

Dance of PowerMore women are nowtaking the lead. . . . . . . . . .6

DONALD SANDEL

Leading PeopleIt is not the same asdriving them. . . . . . . . . . . .7

JIM COLLINS

Enduring GreatnessGet the right leadersin the right positions. . . . .8

RICHARD DAFT

Your Inner CEOTake control now ofyour inner elephant. . . . . . 9

TERRY R. BACON

Power and InfluenceInfluence people to followyour leadership. . . . . . . . 10

JOSEPH S. NYE, JR.Contextual IntelligenceIt engenders moreeffective leadership. . . . . .11

MUHTAR KENT

Women PowerYou won’t get where youwant to go without it. . . 12

SHARON ALLEN

Visible HandsYou can model moreethical leadership. . . . . . .13

MARK THOMPSONAND BRIAN TRACY

Best Leaders, Worst TimesChoose your response. . .14

LANCE BERGER ANDDOROTHY BERGER

Talent ManagementYou need a winning creed,strategy, and system. . . . 14

LARRY HOCHMAN

Leadership in ActionWe are sick and tired ofempty promises. . . . . . . .15

PETER BLOCK

Enterprising EconomyCommunity is key. . . . . .16

ANN RHOADES

Built on ValuesBase culture on thebehavior of A players . . .17

ROLAND DEISER

Creative LeadershipThese are prizedperforming artists . . . . . .18

WORLD BUSINESS FORUM

Jim Collins: Great Results. .19David Gergen: Role of Leader. .19Jack Welch: Achieving andSustaining Success. . . . . . .20Carlos Brito: Building aPerformance Culture. . . . . . .20Joseph Grenny: Execute on Your Strategy . . . . . . . . .20Al Gore: New Global Deal. . 21A.G. Lafley: Gain Customer-Centric Growth. . . . . . . . . . 21Renee Mauborgne: BlueOcean Srategy. . . . . . . . . . . 22James Cameron: Innovation. .22

VOL. 28 NO. 1 JANUARY 2011

Lucky Catch

In natural environments, the hunt for food—to sustain lifeand limb—often consumes much of the day. In an Alaskan

stream where miners once discovered gold, two hungrywolves try their luck at fishing for trout. Great leaders may

not strike gold, but they sustain the precious pack.

WHAT IS 20/20 VISION?According to the

American OptometricAssociation, 20/20 vision refers to normalvisual acuity (clarity or sharpness of vision)measured at a distance of 20 feet. If youhave 20/20 vision, you see clearly at 20 feetwhat should normally be seen at that dis-tance. If you have 20/100 vision, you mustbe as close as 20 feet to see what a personwith normal vision can see at 100 feet.• 20/20 vision is not necessarily perfect vision—

only an indication of clarity of vision at adistance. Other vital vision skills includeperipheral awareness (side vision),eye coordination, depth perception,focusing ability, and color vision.

Some people see well at a distance,but can’t bring nearer objects intofocus. This may be due to hyperopia(farsightedness) or presbyopia (loss offocus). Others see close items, butcan’t see things far away. This may becaused by myopia (nearsightedness).

An eye exam by a doctor of optometrycan diagnose causes and prescribe lenses, avision therapy program, ocular medication,or other treatment to improve your vision.Visual acuity also depends on the sharpnessof retinal focus within the eye and the sensi-tivity of the interpretative faculty of the brain.

LLeeaadd wwiitthh 22002200 VViissiioonnThe year 2020 is near—only nine years

away! While that’s a bit farther out than 20feet, can you see it clearly? I’d argue that20/20 vision for authentic leaders means this:• 20/20 leadership vision suggests that you

(and your team) see clearly what you willbe in the year 2020 in January 2011. Again,2020 vision is not necessarily perfect vision—but indicates clarity of vision at a distance,in this instance, of time. Also, the other vitalvision skills—including peripheral awareness,eye coordination, depth perception, focusingability, and color vision—apply.

Do you have a clear vision of what you’llbe in 2020? Can you see a way to get there?Is this vision widely shared? In fact, does it(in part at least) develop outside the C-suite?Does this vision—and the acuity of its courseof action—inspire innovation, sacrifice, loy-alty, integrity, performance, and desired results?

If you are myopic, you may not seebeyond the year (quarter or month). If far-sighted, you may not see what you need todo today and tomorrow to get there.

An eye exam (vision assessment) by acreative doctor of option-metry can diagnosecauses and prescribe lenses or vision thera-py program to enhance acuity, sharpen theretinal focus, and heighten the sensitivity ofthe interpretative mental faculties.

CChhaammppiioonn EExxcceelllleennccee 22001111Your best path to Vision 2020 starts with

Excellence 2011. This year, use the LE prod-uct properly. This entails four steps: 1. Startby reviewing the Leadership Excellence Guide and

Personal Excellence Plan. 2. Accesscontent from our three monthlymagazines and Instant Consultanton-line searchable archive of arti-cles in support of your develop-ment objectives. 3. Apply the best,most relevant ideas using applica-tion tools. 4. Report progress to anaccountability partner or coach.

One-on-one coaching is rated themost effective method for develop-

ing management and leadership skills,according to a survey by the AmericanManagement Association (AMA).Individual one-on-one coaching outrankedmentoring, professional development train-ing, in-house job training, and job rotation.“Organizations are looking for the best wayto develop the four Cs—communication,critical thinking, collaboration, and creativi-ty—and other core competencies,” saidSandi Edwards, Senior VP for AMACorporate Learning Solutions. “One-on-onecoaching is the most effective way, but it’salso the least efficient for organizations facedwith developing a large and diverse popu-lation. So the question is how best to workwith managers to bring out their innateabilities and to discover new ones, and todo it quickly with little waste. Inevitably,organizations must rely on a mix of trainingmethods. (Arlene Bein, abein@amanet.org).

I invite you to consult with our LeadershipExcellence Guide (LEG), explore a few attrac-tive development options, see how to inte-grate Leadership Excellence with your coachingand mentoring (and other LD programs orprocesses) and then invest in Excellence. LE

I t s t a r t s w i t h E x c e l l e n c e 2 0 1 1 .

by Ken Shelton

Volume 28 Issue 1

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Contributing Editors:Chip Bell, Warren Bennis, Dianna Booher, Kevin Cashman, Marshall Goldsmith, HowardGuttman, Jim Kouzes, Jim Loehr, Tom Peters,Norm Smallwood

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Sharing Vision 20/20E . D . I . T . O . R ’ S N . O . T . E

2 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c eEditor since 1984

Leadership Guide

most experts would regard as a quixot-ic—how can you create a companythat feels more like a community thana bureaucracy and operates more likea democracy than a hierarchy?

The world has become too complexfor the CEO to play the role of vision-ary-in-chief, argues Veneet. Instead, theCEO must become a management archi-tect—someone who continually asks,What are the principles and processes thatcan help us surface the best ideas andunleash the talents of everyone who workshere? Today, as never before, the worldneeds leaders who refuse to be seducedby the fatal allure of the familiar.

SSiixx MMaajjoorr IInnnnoovvaattiioonnssVineet and his team pursued the

path of management innovation onecraggy step and jagged handhold at atime, making six key changes:

1. Transparent financial data. Vineetrealized it’s hard to feel empowered ifyour manager has data you don’t. So,HCLT’s IT team enabled every employeeto have a detailed set of financial met-rics for their team and all teams. Sudden-ly, poorly performing teams had incent-ive to improve, and high-performingones to stay on top. And, employeesnow had positive proof that the com-pany trusted them with strategic infor-mation. Need to know became right to know.

2. Open and honest feedback. Vineetand his leadership team set up an onlineforum and encouraged employees to asktough questions and offer honest feed-back. Nothing was censored; everypost, however virulent, was displayed.While some managers bemoaned thefact that the company’s soiled laundrywas now online, employees lauded theforum as a symbol of HCLT’s commit-ment to transparency and as anotherway to hold top management account-able. The U&I portal also served as an

Extreme Makeover

MANY OF THE TOOLSand methods we

use to manage peopleare ill-suited to the challenges in today’screative economy. Often, legacy manage-ment practices reflexively perpetuatethe past—by over-weighting the viewsof long-tenured executives, by valuingconformance over creativity, and by turn-ing tired nostrums into sacred truths.

We all know there are downsides tomanagement-as-usual, but are there anygood alternatives? We can dream aboutorganizations where employees challengetheir bosses, where honesty trumps defer-ence, and where the pyramid is turnedupside down—like we can dream aboutworld peace and cold fusion. But thatdoesn’t mean they’re achievable.

Skepticism is understandable. Afterall, the technology of management varieslittle from firm to firm. Hence, it’s easyto assume that the management statusquo is also status optimus—that whilethere may be other ways of managingand leading, there are no better ways.

Before accepting this premise, weshould remind ourselves that dogmaoften masquerades as truth, and that weare often comforted by the deception. Manyleaders would prefer a lazy ramblealong gentle contours of the tried-and-true than a hard scramble up the rockyincline of the untested and unproven.

Vineet Nayar, CEO of HCL Technol-ogies since 2005, however, is a scram-bler—one who has fomented a ferventrevolution in management practices.

I first met Vineet in 2008, when heparticipated in a conference I’d orga-nized in California. Half a minute intoour first conversation, he said: “We tellour employees, ‘You are more impor-tant than your manager.’ Value getscreated between the employee and thecustomer, and management’s job is toenable innovation at that interface.”

Vineet’s fervor was palpable—anda little weird. Revolutions don’t usuallystart with the monarchy. I wondered,was he backing up his revolutionaryrhetoric with action? As I dug deeper,I discovered that he is. In his illuminat-ing book Employees First, CustomersSecond, he chronicles a journey that

early warning system for critical issues.Later, Vineet opened up a My Problemssection where he solicited advice onthe big thorny issues he wrestled with.

3. Service level agreements. WhenVineet asked front-liners, “What havethe enabling functions, like HR andfinance, done to help you create valuein the value zone?” he was often metwith silence. The solution: a web-basedSmart Service Desk where any employeecould open a service ticket if they had acomplaint with a staff group. Onceopened, the ticket could only be closedby the concerned employee, once theirissue had been resolved. Staff functionswere charged with dealing with opentickets within 24 hours, or the ticketgets escalated up the line. This systemmade staff departments more account-able to those in the value zone; leveledthe playing field for employees, astheir concerns now get handled quick-ly and efficiently; and generated dataused to improve internal policies.

4. Open evaluations. HCLT employ-ees rate (anonymously) the performanceof any manager whose decisions impacttheir work. These ratings are publishedonline. This visibility challenges man-agers to be more responsive and to ex-ercise their authority judiciously. Thenumber and scope of reviews receivedare indicators of managers’ zone of in-fluence. This feedforward process is notconnected to compensation and pro-motion decisions—it is purely devel-opmental—but there are few hidingplaces left for mediocre managers.

5. MyBlueprint. As the CEO, Vineetwas asked to weigh in on hundreds ofunit-level plans each year. Recognizingthe limits to his time and expertise, hechallenged colleagues to develop anonline, peer-based evaluation process.The solution: MyBlueprint. Last year,300 managers posted their businessplans or blueprints online. More than8,000 employees reviewed the plans.The result was a torrent of advice andcounsel, highlighting chances forcross-unit collaboration and helpingleaders to learn from interested peers.

6. Employee first councils. The goalhere was to help employees connect withteam members who shared similar inter-ests and passions. Supported by a web-based platform, this initiative rapidlyspawned communities around cultur-al, recreational, and job-related issues.Each Council elected its own leader.Vineet’s team also launched 32 issue-specific councils that quickly became avital source of new ideas and strategicinsights. These are then transferred to adedicated group to execute (now 20 per-

by Gary Hamel

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 3

MANAGEMENT INNOVATION

Eng a g e i n m a n a g e m e n t i n n o v a t i o n .

cent of HCLT’s revenue comes from them).The notion of reverse accountability is

now rooted within HCLT. There’s stilla hierarchy, but its role is diminished.Says Vineet, “At HCLT, we are tryingto democratize our company.”

Vineet Nayar and his team had theguts to commit HCL to a goal—reverseaccountability—that was both excruciat-ingly difficult and eminently worthwhile.

TTaakkee BBoolldd IInnnnoovvaattiioonn iinn SSttaaggeessHCLT proves that it is possible to

change management DNA— withoutblowing up the existing managementsystem, without having a detailed mas-ter plan at the outset, and without tak-ing inordinate risks. If you’re a would-be management renegade—this meansthat you’ve just run out of excuses.

Bold innovation is usually a multi-year,multi-staged process—for three reasons:

1. In established firms, it’s impossi-ble to start from scratch and hazardousto move too quickly. Innovators rarelyhave a clean sheet of paper—and mustensure that the business keeps runningwhile testing new practices. So, thetransformation at HCLT is still a work inprogress; but, if a $2.5 billion companycan invert the pyramid and live to tellabout it, we must admit: there are alter-natives to the management status quo.

2. Radically-minded managementinnovators don’t have the benefit of aroadmap. To do a six-sigma rollout,you can buy a manual; but to invertthe pyramid, you’ll have to venture offthe well-trod path of managementorthodoxy, tramp through unexploredterrain, and occasionally get stuck inthe mud—it often takes several itera-tions before a bold, new policy initia-tive produces the hoped-for results.

3. We’re talking about people, notwidgets. On any given day, some of uswill be selfish, grumpy, egotistical, ormendacious—and a few people aremost of these things most of the time.Yes, there’ll always be jerks, but in anorganization committed to becomingmore transparent and less hierarchical,there are fewer of them over time.

So, while an extreme managementmakeover is possible, it can’t be doneovernight or without setbacks. The newdoesn’t instantly or magically supplantthe old. Even after years of diligenteffort, vestiges of the old, legacy model(overbearing bosses, under-loved employees,and petty turf wars) will remain. But overtime, these become the exceptions. LE

Gary Hamel is a Fellow of the World Economic Forum and theStrategic Management Society and the author of The Future ofManagement. Visit www.garyhamel.com.

ACTION: Innovate your management practices.

by Tom Peters

to avoid compromising your and yourteam’s character and integrity.• A sense of time honorably spent.• Expressions of simple human kind-

ness and consideration—no matterhow harried you may have been.• Knowing that your demeanor and

expression of character always set thetone—especially in difficult situations.• Rarely letting your expression of

enthusiasm/determination flag—therougher the times, the more your ex-pressed energy, optimism, and humor.• The earned respect of your peers.• A stoic unwillingness to badmouth

others—even in private.• An invariant creed: When something

goes amiss, the buck stops with me; whensomething goes right, it was your doing.• A naïve belief that others will rise to

the occasion if given the opportunity.• Eschewing trappings of power

(strong self-management of tendenciestoward arrogance or dismissiveness).•Intensity, even driven, but not to the

point of being careless of others.• Willingness to be surprised by ways

of doing things that are inconsistentwith your certain hypotheses.• Humility in the face of others, at

every level, who know morethan you about “the waythings really are.”• Biting your tongue on a

thousand occasions—andreally listening—and beingdelighted when you learnsomething new.• Unalloyed pleasure in be-

ing informed of the fallacious-ness of your beliefs by a per-son 15 years your junior.

• Selflessness—a reputation as a per-son who helps out despite personal cost.• Having been as thoughtful and

respectful, or more so, toward enemiesas toward friends and supporters.• Always being first of service to your

internal and external constituents (em-ployees, customers, vendors, community.)• Treating servant leadership as holy

writ (and preaching SL to others).• Creating the sort of workplace

you’d like your kids to inhabit.• Being a certifiable nut about quality,

safety, integrity, regardless of costs.• Resigning a few times rather than

compromise your bedrock beliefs.• Seeking perfection just short of the

paralyzing variety.• A self- and group-enforced standard

of Excellence-in-all-we-do and Excellencein our behavior toward one another. LE

Tom Peters is the best-selling author of The Little BIG Things.Email tom@tompeters.com or visit www.tompeters.com.

ACTION: Start making your leadership memories.

AT AGE 68, ALTHOUGH Itry to be forward-

focused, I have a frequenturge to sum things up. As I look back, Ifind that certain memories stand out. Iknow my own story—and have talkedto many others. When you look back atwhat really matters—it’s rarely the num-bers. Yes, you must be profitable to sur-vive. Still, my summing up statement ismore about the basics of human behaviorand character than about the angle ofincline of a market share graph.

What follows then is my attempt toidentify the memories that matter—orwill matter—for you as a leader:• People you developed who went on

to stellar accomplishments.• Two or three people you developed

who created stellar firms of their own.• The long shots you bet

on who surprised them-selves—and your peers.• The people who later

say, “You made a differencein my life—your belief inme changed everything.”• The sort of/character of

people you hired (and badapples you chucked outdespite some stellar traits.)• A few projects you dogged-

ly pursued that still make you smile andchanged the way things are done insideor outside the company or industry.• The supercharged camaraderie of a

great team aiming to change the world.• Belly laughs at some of the stupid-

insane things you and your mates tried.• A consistent record of having

invariably said, “Go for it!”• Not intervening in the face of loss—

knowing that developing talent meanstolerating failures and allowing peopleto work out of their self-created mess.• Dealing with one or more crises

with particular/memorable aplomb.• Demanding/demonstrating civility,

regardless of circumstances.• Turning around dreadful situations

—and watching people rise to the occa-sion and acquire a new sense of purpose.• Leaving something of lasting worth.• Having almost always put quality

and excellence ahead of quantity.• Times when you did the right thing

What Matters?Start making memories.

LEADERSHIP MEMORIES

4 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

catch the moments that invigorate you,and cradle them—concentrate on them,celebrate them, look at them from newangles, follow where they lead, andyou’ll make the right decisions for you.

The challenge of life and leadershipis not to juggle—the challenge is to catch:to select a few clear, strong momentsfrom each aspect of your life, reach forthose, and draw them in to you.

To live a more fulfilling life, you needto identify the specific moments (in eachpart of your life) that renew your ener-gy and bring you joy, and go after them.You want to imbalance your life towardcreating more of those moments. Youcan’t do everything, so don’t fall intothe trap of trying. Instead, find themoments in each aspect of your lifethat invigorate you, and imbalance yourlife toward those things.

IItt’’ss AAbboouutt RReessuullttssThe truth is, people are not your great-

est asset—unless they’re in position toleverage their greatest strengths, thosethings they do well consistently andenergetically.

Individuals and teams playing totheir strengths outperform those whodon’t in every business metric. In fact,the single best predictor of a consis-tently high-performing team is theanswer to this question: At work, doyou have the opportunity to do what youdo best everyday? Teams with individu-als who do massively outperform teamswith people who don’t—they are moreprofitable, more productive, less likelyto quit, less likely to have accidents onthe job—the list goes on—and yet only12 percent of people play to theirstrengths at work most of the time!

Have we forgotten what PeterDrucker wrote some 50 years ago: TheEffective Executive builds on strengths

Strong Leadership

SINCE USING YOURstrengths makes

you feel strong, payclose attention to how you feel as youcomplete your day-to-day tasks.When you notice yourself at work (orat play), you find that you experiencestrong-moments—times when you feelinvigorated, inquisitive, or successful.Those moments are clues to your per-sonal strengths.

To help you recognize the signs ofstrength, here’s a simple acronym SIGN:S—Success: Do you feel a sense of accom-plishment about finishing this task?I—Instinct: Do you instinctively lookforward to performing this task? G—Growth: Are your synapses firing? Areyou mentally focused? N—Needs: Doesthis task fulfill one of your needs?

If you feel these feelings whiledoing a task, then that activity is like-ly one of your strengths.

As a leader, you need to discoveryour strengths and then do more ofwhat most invigorates you and whatyou do best. You can attain high satis-faction in your life and leadershipwhen you figure out what strengthensyou—and then make decisions thatenable you to play to your strengthsinstead of worrying about things thatweaken you. In fact, you can pushyour current job, no matter what it is,in the direction of your dream job.The more you use your strengths, themore satisfying your job will be.

Many people feel the need to bewell-rounded in their life and theirleadership. Performance reviews oftenconsist of a brief pat on the back forareas that are working well and then asubstantial focus on “areas of oppor-tunity.” The problem with focusing onwhat doesn’t work is that attentionamplifies everything. If you focus on theproblem with the intent of fixing it,despite your best intentions, thatproblem is magnified. Instead, shiftyour focus and ask, “What’s workingwell, and how can I get more of that?”

You are innately wise. When youmake poor decisions, you haven’t lis-tened to your intuitions or yearningsenough. Listen to yourself carefully,

—their own strengths, the strengths ofsuperiors, colleagues, subordinates;and on the strengths of the situation.”

As leaders try to do more withfewer people, they need to engageeach person’s strengths, and do it atscale across the organization. Thestrengths movement isn’t about mak-ing people happier—it’s about makingorganizations more productive. Thebest companies are made up of greatteams. And those teams have individ-uals who know their strengths, takethem seriously, and offer them up tothe organization.

WWhhaatt SSeettss GGrreeaatt CCoommppaanniieess AAppaarrtt??Every company is made up of sepa-

rate teams, and the performance ofthose teams, no matter how successfulthe company may be, varies widely.And for the individual employees, theexperience of the team trumps theexperience of the company. What then,determines the experience of the indi-vidual? Often it’s their managers andleaders. As we often hear: People joincompanies, and quit managers.

Managers and leaders play a signif-icant role in creating a culture whereinindividuals can thrive, discover theirtalents and have an opportunity to usetheir best selves daily. Great leadersand managers help people to identifyand leverage their unique strengthsmost of the time.

Again, the opportunity for individ-uals to play to their strengths most of thetime is the key factor that shows thegreatest correlation to outstanding per-formance in the widest range of busi-ness outcomes, including profits,productivity, customer satisfaction,and safety and employee retention.

Teams whose members play to theirstrengths most of the time are: 50 per-cent more likely to have loweremployee turnover; 38 percent morelikely to work on high-productivityteams; and 44 percent more likely toearn higher customer satisfactionscores. And yet, again, fewer than 20percent of people say that they do.Worse, fewer than 25 percent say thattheir manager even discusses theirstrengths in performance reviews.

Strong managers and leaders identi-fy and leverage their own strengthsand then create a fully engagedstrengths-based team. LE

Marcus Buckingham is founder of TMBC, a management consulting company, leadership expert, speaker and bestselling author of First, Break All the Rules; Now Discover Your Strengths and Find Your Strongest Life. Visit www.TMBC.com.

ACTION: Discover and play to your strengths.

by Marcus Buckingham

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 5

LEADERSHIP STRENGTHS

L i v e a n d l e a d f r o m s t r e n g t h s .

body problem, for without the focus onsports, how can leadership be embodied?It’s an important question, since mani-festing a leadership presence (and exert-ing physical influence) is essential.

Strozzi addressed the gap by devel-oping a physical yet non-athletic programof leadership training suited to an erain which the definition of what a leaderlooks like is evolving. His methods arealso apt for cultures of networks andteams. In top-down organizations, lead-ers can exert power by virtue of posi-tion; in decentralized networks, peoplewon’t follow unless they buy into whatis proposed. Hence, the emphasis onwalking the talk also suggests that aleader’s principles must be embodied.• Lieutenant Colonel Fred Krawchuk,

operations commander for the U.S.Army in the Pacific, notes: “In the mili-

tary, as in business, we place too muchvalue on being action-oriented. Wethink leaders are the guys who say,‘Let’s just get it done.’ But that short-changes thoughtfulness and reflection.How do we merge these qualities? Wedevelop awareness. If we can be fullypresent with other people and ground-ed in ourselves, we can integrate obser-vation with our capacity to act.”• Nancy Hutson, who retired from

Pfizer as senior VP for global R&D,sounds a similar note: “Working withbody, language, and mood helps us bemore aware of ourselves, more attunedto others, as we build trust (not justassume it). Richard’s emphasis on prac-ticing leadership rather than being aleader also subverts the hierarchy, sincebeing a leader is all about position.”

Web technologies, shifting demo-graphics, and deregulated global mar-kets requires leaders who are comfort-able being at the center rather than beingat the top, exercising intuitive and col-

Dance of Power

IS LEADERSHIP AN ART ORscience? Are women

fit for top leadershiproles? These questions have long beendebated. Your answers likely deter-mine whether you believe leadershipcapability can be developed and whoyou think is best suited to lead.

Richard Strozzi-Heckler has built adistinctive career based on the propo-sition that leadership is neither art norscience, but rather a practice that canbe developed. A leader can build fluencyand muscle through the regular exerciseof disciplines that require physical andmental effort. “People change throughpractice,” he says. “You can be smart,but if you just talk about something,you never learn to do it. Practicerequires being systematic, performinga sequence of movements over andover until it becomes part of yourphysical being, part of who you are.”

Strozzi shows how wisdom can bemade manifest through movement.Drawing on a lifetime study of martialarts and Eastern philosophy; decadesof training in competitive sports; andstints as a marine, soldier, firefighter,psychologist, and professor, Strozzihas created an eclectic but disciplinedand replicable program for helpingleaders develop the physical presence,fine-tuned awareness, bias for action,and precise articulation of purposethat inspire confidence and trust.

In the Western tradition, the physicalcomponent of leadership has been identi-fied with athletic prowess. Athletics havebeen viewed as a vehicle for buildingcharacter, instilling self-discipline, orimparting the habits of command thatcome from captaining a team. Hence,we often assume that athletic excellenceauto-translates into skilled leadership.

But the equation between sports andleadership, and the metaphors it hasinspired, seem outdated and culture-specific in today’s diverse global orga-nizations. Changing demographicsand technologies have made competi-tive sports less relevant and inspired abacklash that finds one expression inthe exaltation of the nerd.

This leaves leadership with a mind-

laborative skills and making their wordsconsistent with their actions. Womenhave an advantage in a world that val-ues authenticity over positional power.The ability to lead effectively derivesfrom self-knowledge. To quote SunTzu: Knowing the other and knowing one-self, in one hundred battles no danger. Notknowing the other and knowing oneself,one victory for one loss. Not knowing theother and not knowing oneself, in everybattle certain defeat.

WWoommeenn LLeeaadd tthhee DDaanncceeWomen are particularly well suited

to the new dance of leadership—and yetmany stumble as leaders. Zoe Cruz andSallie Krawcheck were the most power-ful women on Wall Street. It was specu-lated that both would become CEOs oftheir powerhouses—Morgan Stanleyand Citigroup. Instead, Ms. Cruz wasousted and Ms. Krawcheck demoted,leading to hand-wringing about howwomen seem be losing ground as leaders.

Having studied female leadershipfor two decades, this women flounder asleaders narrative has a familiar ring.While the progress women have madeas leaders has not been rapid orsmooth, the impact women are having onwhat we perceive to be desirable in ourleaders continues to grow. The real storyis about influence (not numbers).Women are comfortable with directcommunication, relationship-building,diversity, and emotional intelligence—skills best suited for leaders today.

I prefer to focus on what women haveto contribute, rather than how they needto change or adapt. For decades, womenwere urged to conform to a masculineleadership style—to start using footballmetaphors in meetings, take up golf,and pull rank on subordinates in orderto keep them in line. Leave your values athome and play the game was the message.This conventional wisdom was basedon three assumptions: 1) organizationswouldn’t change simply because womenhad entered them in massive numbers;2) changes wrought by networked tech-nologies wouldn’t change organization-al structures or reshape people’s expect-ations of their leaders; and 3) women’shandicaps as leaders would outweighwhatever advantages they might confer.

I saw these assumptions as false. Asorganizations undergo rapid changesas demographics, technology, and eco-nomics of work shift, women face a his-toric opportunity to influence if they willhonor and develop their distinctive strengths.

In my research, I find that talentedand confident women leaders have sevencharacteristics in common: 1) they place

by Sally Helgesen

6 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

LEADERSHIP DANCE

W o m e n a r e t a k i n g t h e l e a d .

that we forget: we should be leading.And by creating an unhappy workforce,things turn from bad to worse. Clearly,those who ignore this fact do so at theirperil. When the economy improves andjobs are plentiful, people will remem-ber how their leaders behaved. Smartleaders care for their employees duringdifficult times, take advantage of thetalent supply that exists, and raid com-petitors for disengaged superstars.

Some 50 years ago McGregor posit-ed his theory about X and Y leaders:• Theory X leaders assume that most

people dislike work, lack ambition, anddesire no responsibility and account-ability. Leaders who see their employ-ees in this counter-productive way havedisengaged workers and low retentionrates and struggle to motivate staff.• Theory Y leaders assume that people

tend to be ambitious, self-motivated,and not only accept responsibility butseek it. Managers with this view knowthat satisfaction comes from doing agood job and that employees are large-ly self-directed and thrive in autonomy.

Daniel Pink notes: “Today economicaccomplishment, not to mention per-sonal fulfillment, depends not on keep-

ing our nature submergedbut on allowing it to sur-face. It requires resistingthe temptation to controlpeople—and doing all wecan to reawaken theirdeep-seated sense of per-sonal autonomy.”

Service, innovation, andexcellence emerge from arelationship of trust betweenemployee and manager.

And this seldom happens by accident.You may have a finance or operationsstrategy, but the ultimate value propo-sition is an executed people strategy.

My advice: Hire well. Set clear expec-tations. Look for teachable moments.And then get out of the way. Our great-est accomplishments, inventions, andinnovations come from the innate desireto do so, not to satisfy a corporate goalor a superior’s demand. Order me tocreate and I’ll get something done;allow me to create and I will amaze.

“I am not big on the dignity of officestuff,” writes Tony Blair, in his mem-oirs; “I rested my authority on motivat-ing and persuading people, not onfrightening them.” What is requiredfrom leaders is the courage to let go, totrust, and then to be amazed. LE

Donald Sandel is a leadership consultant, speaker, and author.Email dsandel@wowway.com or call 847-392-5114.

ACTION: Lead your people to victory.

ACLASSIC STORY FROMthe early days of the

American Revolutionoccurred at the Battle of Bunker Hill.Two great American soldiers, GeneralIsrael Putnam and Colonel WilliamPrescott, had both led and fought gal-lantly. It was an epic struggle of strategy,courage, and grace under fire. Thoughthe Americans gave up ground, it wasseen as a victory, as they inflicted seriousdamage upon the world’s greatest mili-tary force, and raised American hopes.

As Prescott was leaving the field, heapproached Putnam, and asked himwhy he had not given his flank moresupport with his men. “I could notdrive the dogs,” Putnam answered. Towhich Prescott said, “If you could notdrive them, you might have led them.”

That’s a valid response toall leaders. We can’t aspireto victory by driving ourpeople. Organizations arebricks and mortar, spread-sheets and policies, andcan’t accomplish anythingwithout their people. Lead-ers who focus on the orga-nization, and forget aboutpeople are not leading at all(there’s a big difference be-tween driving dogs and leading people).

Some leaders blame the economyfor their not focusing on people: We’vejust got to make the numbers. But focus-ing on people is not a response only togood times, but a strategic approachthat understands that it is through ourpeople that work gets done, that mar-ket differentiation occurs, and that cus-tomers return. As Kerry Killinger, CEOof Washington Mutual, stated: “Greatleaders know that they can’t just meetshort-term earnings expectations andmanage the bottom line: They must cre-ate a great environment for their people.”

Many smart leaders miss this corre-lation between people and earnings, en-gagement and customer satisfaction: If youhelp make me a happy employee, I will takebetter care of customers and put discretion-ary effort back into the organization. En-gaging employees and showing themthat you care need not break the bank.

Some of us today are so busy driving

Leading PeopleIt’s different than driving them.

by Donald Sandel

LEADERSHIP PEOPLEa high value on relationships and judgethe success of their organizations basedon the quality of relationships withinthem; 2) they prefer direct communica-tion; 3) they are comfortable withdiversity, having been outsiders them-selves and knowing what kind of valuefresh eyes could bring; 4) they areunwilling (and unable) to compart-mentalize their lives and so draw uponpersonal experience to bring private-sphere information and insights totheir jobs; 5) they are skeptical of hier-archies and surprisingly disdainful ofthe perks and privileges that distin-guish hierarchical leaders and establishtheir place in the pecking order; 6) theypreferred leading from the centerrather than the top and structure theirorganizations to reflect this; and 7) theyask big-picture questions about thework they do and its value.

Such skills and strengths of womenleaders are now highly desirable. Net-worked technologies, the knowledgeeconomy and demographics of global-ization all support the skills, talents,and presumptions that women bring.

Twenty years ago, relationship-building was considered a soft skillthat a leader, who had to be tough,could not afford. Now, as leaders seek toconnect more directly with customers andstakeholders and motivate employees, anability to nurture strong relationships isessential. Technology today facilitatesand demands direct communicationwhile undermining hierarchy, a plusfor those who enjoy leading from thecenter rather than the top. And in aglobal economy, comfort with diversityhas become essential. As work andhome become harder to separate, com-partmentalizing becomes a liability.

Also, the tough-guy approach toleadership is in disrepute these days, astyrants and bullies are brought in forcensure. Organizations today feel com-pelled to state how they value relation-ships and support diversity. Leaderscompete to take a greener, more holisticapproach—emphasizing sustainabilityand contribution and acknowledgingthe need to nurture the human spirit.Inclusive has become a buzzword, andweblike a description of how things work.

As more women are reaching posi-tions of authority and influence, theyare having a profound impact on howorganizations are led and on whatleadership qualities are valued. LE

Sally Helgesen is a speaker, advisor, and author of five books,including The Female Vision: Women’s Real Power at Work,The Female Advantage and The Web of Inclusion. Visitwww.sallyhelgesen.com.

ACTION: Enable more women to lead the dance.

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 7

walls and thereby endure for decades,perhaps centuries. Yes, all products,services, markets, and even specificsolutions to social problems eventuallybecome obsolete. But that does notmean that the organizations that pro-duce them must become obsolete.

When you’ve built an institutionwith values and a purpose beyond justmaking money—when you’ve built aculture that makes a distinctive contri-bution while delivering exceptionalresults—why would you capitulate tothe forces of mediocrity and succumbto irrelevance? And whywould you give up on theidea that you can createsomething that not onlylasts but deserves to last?The best leaders never pointout the window to blameexternal conditions; theylook in the mirror and say,“We are responsible for ourresults!” Those who takepersonal credit for goodtimes but blame external events in badtimes simply do not deserve to lead.No law of nature dictates that a great insti-tution must inevitably fall. That most dofall—and we cannot deny this fact—does not mean you have to be one of them.

CCeelleebbrriittiieess vvss.. LLeevveell 55 LLeeaaddeerrssThere is perhaps no more corrosive

trend to the health of our organizationsthan the rise of the celebrity CEO, therock-star leader whose deepest ambi-tion is self-centric. In contrast, everygood-to-great company has had aremarkable leader at the helm duringthe pivotal years. These Level 5 leadershave a paradoxical blend of traits:• They’re somewhat self-effacing indiv-

iduals who deflect adulation, yet whohave an almost stoic resolve to do what-ever it takes to make the company great.They demonstrate unwavering resolve todo whatever must be done to producethe best long-term results, no matterhow difficult, yet act with quiet, calmdetermination and rely principally oninspired standards—not an inspiringpersonality—to motivate. They channeltheir ego needs away from themselvesand into building a great company.They create superb results, yet demon-strate a compelling modesty, shunningpublic adulation and never boastful.

Enduring Greatness

MANY PEOPLE HAVEargued that it’s

time to give up on the ideaof building great companies that endure.One technology pundit cornered me ata conference and deemed the wholebuild to last premise absurd: “We live inan era when nothing can be built to last.Everything is in flux; nothing can be sus-tained.” He invoked Joseph Schumpeter,the great economist who wrote aboutthe “perennial gale of creative destruc-tion” wherein technological change andvisionary entrepreneurs give birth tonew things that obliterate old things,only to see those new things becomeobliterated by the next generation.

I’ve been through versions of thecreative-destruction argument dozensof times, with smart people. And oneof their favorite arguments invokes theFortune 500: If you examine the listover time, you find tremendous churn.

But if we look through another lens,we can see a different story, a story ofwell-founded hope—even clear exam-ples of enduring greatness. We also findcompanies that overcame oppressivemediocrity or worse to achieve sustain-ed success. We also find companies thatfell from greatness, but then regainedtheir footing, standing defiant againstthe forces of creative destruction.

Just because a company stumbles—or gets smacked upside the head by anunexpected event or new challenge—does not mean that a company mustcontinue to decline. Companies do notfall primarily because of what theworld does to them or because of howthe world changes around them; theyfall first and foremost because of whatthey do to themselves. Whether youprevail or fail, endure or die, dependsmore on what you do to yourself thanon what the world does to you.

Throughout history, the greatestcompanies have used adverse times totheir advantage. Just because JosephSchumpeter’s creative-destructionargument proves correct for most busi-nesses does not mean that the compa-nies that create those businesses mustfall and die—after all, you can practicecreative destruction inside your own

• They are incredibly ambitious—buttheir ambition is first and foremost forthe institution and its greatness, not forthemselves. They are comfortable withthe idea that their companies will tickon without them, reaching even greaterheights. The fact that most people willnot know that the roots of that successtrace back to them is not an overridingconcern. They set the standard of build-ing an enduring great organization andwill settle for nothing less, yet channelambition into the organization and itswork, setting up successors for evengreater success in the next generation.• They look in the mirror, not out the

window, to apportion responsibility forpoor results, never blaming other people,external factors, or bad luck; and yet theylook out the window, not in the mirror,to apportion credit for success of the

company—to other people,external factors, and good luck.• They may earn a very

good living, but they don’twork for money. Making acompany great has little todo with how you compen-sate leaders and everythingto do with who you com-pensate. If you have theright people, they’ll doeverything in their power

to make the company great, no matterhow difficult the decisions. Level 5 lead-ers are revolted by the idea of leavingunrealized potential on the table; theyare driven to create excellence for its ownsake—never satisfied because there isalways a higher standard to work toward.Leaders whose dedication goes up and downdepending on their incentive compensationare simply the wrong people for the job. Ifboards would stop lurching after high-profile, egocentric celebrities and turninstead to the disciplined, workmanlikeleaders who produce true greatnessover time, we’d see better companies.

If we allow the celebrity model ofleadership to triumph, we’ll see thedecline of organizations. If good is theenemy of great—and I believe it is—thecurrent trends in leadership give thedecided edge to the enemy. Still, I remainoptimistic. Smart people see the dangersof entrusting our future to self-serving lead-ers who use our institutions to advance theirown interests. Also, I am convinced thatthe seed of Level 5 leadership is widelydispersed. When it is identified, culti-vated, and encouraged, it can flourish.And if it does, so will our organizations. LE

Jim Collins is the best-selling author of Good to Great: WhySome Companies Make the Leap . . . And Others Don’t. Thisarticle abridged from his articles. Visit www.jimcollins.com.

ACTION: Get the right people in your pipeline.

by Jim Collins

8 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

LEADERSHIP GREATNESS

L o o k n o w f o r t h e r i g h t l e a d e r s .

is meant to be the follower, not the leader.The elephant needs guidance to over-come its reactions and impulses. Thingsgo better when you put your inner CEO incharge. For example, Richard Anderson,CEO of Delta Air Lines, learned to con-trol his emotional reactions, to bepatient and not lose his temper. Hisinner CEO realized that everything he didwas an example, and when he lost histemper it would squelch debate andsend the wrong signals. Carol Bartz,CEO of Yahoo, had a bad habit of inter-rupting people. She had to learn totake a breath, to shut up and listen.

HHooww ttoo CCoonnttrrooll YYoouurr IInnnneerr EElleepphhaannttThe challenge for leaders, once they

know what they should be doing differ-ently, is how to change themselves toeliminate a flaw or bad habit. When

leaders learn to strengthen their inner CEOand control their elephant, they’ll do whatthey know is best. But under stress, aleader might repeat old patterns. Hereare eight ways to control your elephant.

1. Review the day. Spend 10 minutesin the evening reviewing the behaviorsthat worked and did not work duringthe day. At first, it is hard to rememberwhat happened, but with practice youwill remember everything. As you replayincidents in your mind, you’ll discovermore of the desired behavior repeatingitself the next day while the undesiredbehavior will appear less often.

2. Consult with one person. Consult-ing with just one person before makinga decision or taking action will enlargeyour elephant’s thinking. Consult withseveral people, and your perspectivewill become large and balanced. Tryconsulting on every decision for oneday—and watch your point of viewexpand, along with your wisdom.

3. Calm down. An agitated elephantis harder to control than a calm one.Anger, fear, frustration, and craving all

Your Inner CEO

EVERY LEADER AT TIMESwill fail to follow his

or her best intention.For example: “I promised myself andmy boss that I’d delegate the hiringdecisions, and then overrode my sub-ordinate’s decision, causing two peo-ple to quit.” “I put off my quarterlyreport until the last minute.” “Whensomething ticks me off, I overreact.”“I’m overly critical of people, and theydon’t appreciate it, but I can’t stop.”

In the case of HP’s recent CEO, whofudged travel expense reports to hidethe first-class airfares of an attractivevendor, his impulse overpowered hisbetter judgment. Most leaders who failare good at the cognitive stuff—vision,strategy, ideas—but things often breakdown at execution—their actions donot follow their stated intentions.

EExxeeccuuttiivvee vvss.. EElleepphhaannttThese managers knew the preferred

action, but some internal force pulledthem toward less desirable behavior.Leaders usually know what they shoulddo, so why aren’t they doing it? Accord-ing to neuroscience, the brain has twosometimes-conflicting parts. The innerCEO is the higher part that sees theobjective big picture with a balancedapproach to determining the best action.The lower part is the inner elephant withits ego, unconscious impulses, emo-tions, and lifelong habits. The strengthof the leader’s elephant may pull himor her toward micromanaging, puttingthings off, tactless remarks, insisting onalways being right, overreacting, find-ing fault (rather than appreciating, lis-tening, or focusing). Such behavior canoverpower the wisdom of the inner CEO.

Most leaders have received feedbackfrom 360 reviews about what works anddoesn’t work in their leadership style.Leaders often know what they shoulddo, how to do it, and why they shoulddo it. Yet when their intentions and be-haviors refuse to align, the unwantedactions of the inner elephant take priori-ty over the wisdom of the inner CEO.

The challenge for leaders is to devel-op the inner CEO to take command ofthe elephant. The lower part of the brain

give the elephant more strength. So,clear your head before making a deci-sion or pushing the email send button.If you are procrastinating, your elephantis feeling low-level anxiety. The elephantis easier to manage when relaxed. Tocalm down, try sitting quietly by thetask; soon you’ll start to work again.

4. Slow down your reactions. Toavoid overreacting to bad news, delayyour reactions. You might count to 10,wait one minute, or wait 24 hours. Oneexecutive learned to ignore his response1 to bad news and waited for response 2,even if it meant responding the nextday. His response 2 was always wiser.Jeffery Katzenberg installed a five-sec-ond delay on his reactions so others couldexpress their views first. It enabled amore robust and effective dialogue.

5. Create a mental picture. Visualizinga desired behavior in your mind powerfullyimpacts your elephant. Imagine howyou want to give a speech, or handle adifficult conversation, and you’ll pro-vide vivid visual instruction to yourelephant. Mental rehearsal often is aseffective as physical practice for improv-ing performance. Repeatedly visualizedoing a dreaded task, and you’ll morecalmly and smoothly flow through it.

6. Repeat a mantra. Try offering asuggestion to your elephant in the formof a well-crafted mantra—telling theelephant what to change. Repeating “Iam appreciating others more,” “I amlistening more carefully” or “I am dele-gating more responsibility,” 20 times aday can reprogram your way of think-ing and produce a striking change.

7. Provide detailed structure. Go to afat camp and you’ll exercise and eathealthy. Why? The camp structures yourtime. Inner elephants also respond to ex-plicit, detailed instructions from the innerCEO. So, get everything you are doingout of your head onto paper, and iden-tify key steps and a deadline for each task.These steps are implementation intentionsthat enable your elephant to comply.

8. Try meditation. Meditation quietsthe active mind. To meditate, focusyour attention on an anchor object orphrase—or watch your breathing orslowly repeat a word or phrase thathas meaning for you.

As your inner CEO takes control ofyour inner elephant, you’ll be more inflow, more fulfilled, your rough edgessoftening, while becoming the bestleader that lies within you. LE

Richard Daft is the author of The Executive and the Elephant:A Leader’s Guide for Building Inner Excellence and is theBrownlee O. Currey, Jr. Professor of Management in VanderbiltUniversity’s Owen Graduate School of Management.

ACTION: Take control of your inner elephant.

by Richard Daft

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 9

ETHICS WISDOM

L e a d w i t h y o u r b e s t w i s d o m .

of (then) Czechoslovakia, spoke of thetemptations of political power. He notedthat the privileges and perks of highoffice have a devious allure, and that aleader can become so used to them thathe loses his perspective: “He becomesa captive of his position, perks, andoffice. What apparently confirms hisidentity, and existence, in fact subtlytakes that identity and existence awayfrom him. He is no longer in control ofhimself, because he is controlled bysomething else: by his position and itsexigencies, consequences, aspects, andprivileges.” Noting that “there is some-thing treacherous, delusive,and ambiguous in the temp-tation of power,” Havelargues that politics requirespure people because “it’s easyto become morally tainted.”

Since, as Shakespearesaid, “the abuse of great-ness is when it disjoinsremorse from power,” any-one who attains a positionof power needs to resist thetreacherous temptations of power andremain morally sensitive and alert tothe self-delusions that can distort char-acter. Of course, this is easier said thandone, particularly in cultures where theexercise of power is Machiavellian. AsSteve Forbes observed, “As more moneyflows through Washington and as Wash-ington’s power to regulate our livesgrows, opportunities and temptationsfor graft, influence peddling, and cut-ting corners grow exponentially. Powerbreeds corruption.” Indeed, power corrupts;and absolute power corrupts absolutely.

Business leaders also face manytemptations to abuse power. Hence, wesee scores of con men and corrupt lead-ers whose aims are self-serving, whosevictims often include close familymembers, and whose abuse of powerentrusted to them ruins investors anddamages or destroys companies—fromTyco’s Dennis Kozlowski, Adelphia’sJohn Rigas, and Société Générele’sJérôme Kerviel to Billie Sol Estes,Enron’s Jeff Skilling and AndrewFastow, HealthSouth’s RichardScrushy, Wall Street’s Bernie Madoff,and Countrywide’s Angelo Mozilo.

Unlike politicians, business leadersare often out of the public eye and

Power and Influence

DOES MIGHT MAKEright, or are people

in power largely govern-ed by the better angels of their nature?Is any use of power immoral? Considerjust a few of the atrocities in the past90 years of human history: the Turkishgenocide of Armenians circa 1919; theNazi genocide of six million Jews circa1944; the millions of Russians andChinese killed by Stalin and Mao toconsolidate power; the killing fields inCambodia; the mass killing ofMuslims in Bosnia; the genocide of theTutsis by the Hutus in Rwanda; or theslaughter of innocents in Darfur.

Muckraker Lincoln Steffins argues,“Power is what men seek, and anygroup that gets it will abuse it.” AndJames Madison, one of the FoundingFathers of the United States and itsfourth President, said, “The essence ofgovernment is power; and power,lodged as it must be in human hands,will ever be liable to abuse.” And,British statesman Edmund Burkewarned, “The greater the power, themore dangerous the abuse.”

We’ve all observed the corruptingnature of power and the potential forabuse when any power is concentratedin too few hands with too few checksand balances. The beatific view ofhuman nature inherent in the GoldenRule is either distorted or corrected bythe more perverse version: “He whohas the gold makes the rules.”

Some believe that power, by its verynature, is immoral, and that wheneverpeople have any degree of control overthe lives of others, they’ll likely abusethat power. Sadly, we’ve seen ampleevidence in recent years—from formerMerrill Lynch CEO John Thain spend-ing $1,400 on a wastebasket while hisfirm was collapsing, to former BoeingCEO Harry Stonecipher’s ouster afterbeing caught in an improper sexualrelationship with a female executive—that people in positions of power, nomatter how smart they may be, canoften not resist the siren’s call of greedor the abuse of their positions.

In 1991, during his acceptance of theSonning Prize, Václav Havel, president

shielded from effective scrutiny, partic-ularly if their boards are inept and theirinfluence extends to the people expect-ed to be watchdogs for the public trust.The failure of boards (think Enron) toexercise effective oversight led to theSarbanes-Oxley bill. We’re still debatingjust how much new regulation of banksand investment houses is necessary toprevent the blind excesses (spurred byself-interest) that fueled the damagingrecession in 2008-2009. Clearly, unbri-dled power in too few hands is a recipefor disaster, particularly when the peo-ple in power are more motivated byself-interest (Bernie Madoff) than thecollective good (Adam Smith).

After studying the need for power,David C. McClelland and David H.Burnham conclude: “Top managersmust possess a high need for power—aconcern for influencing people; howev-er, this need must be disciplined and

controlled so that it is direct-ed toward the benefit of theinstitution—not their per-sonal aggrandizement.”This, then, is the challenge:how to attain and usepower wisely and in a dis-ciplined way, how to exer-cise power without abusingit or allowing its focus to bethe elevation of the leaders’self-interests.

Power is not innately immoral; none-theless, power can distort the powerholder, especially when that power isabsolute and unchecked, and it can leadhim or her to justify acts which, seen inthe clear light of history and unbiasedobservation, are clearly immoral.

IInnfflluueennccee GGoonnee AAwwrryySome gurus claim that if you follow

their principles, you can influence any-one to do anything: you can get anyoneto like you, love you, and find you irre-sistibly attractive; you can take controlof any situation, win every competition,and gain the upper hand every time;you can get anyone to say yes to what-ever you propose within minutes.When I read such claims, I’m remindedof what Abraham Lincoln said: “You canfool some of the people all of the time, and allof the people some of the time, but you can’tfool all of the people all of the time.”

The idea that you can influence any-one to do anything is nonsense. Peoplemay not be moved by your influenceattempt for many reasons. In his bookWhat Leaders Really Do, John Kotterwrites: “Some people may be uncoop-erative because they are too busy, somebecause they are not capable of helping,

by Terry R. Bacon

1 0 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

LEADERSHIP POWER

G e t o t h e r s t o f o l l o w y o u r l e a d .

secretary. And many a governmentofficial who becomes a university presi-dent has trouble adapting to the flatpower structure of academic life.

Contextual intelligence is an intu-itive diagnostic skill that helps a leaderto align tactics with objectives to createsmart strategies in new situations. Itimplies a capability to discern trends inthe face of complexity and adapt whileshaping events—the ability to intuit move-ments and seize them. More prosaically,like surfers, leaders with contextualintelligence have the judgment to adjustto new waves and ride them to success.

Contextual intelligence allows lead-ers to adjust their style to the situationand to their followers’ needs. It enablesthem to create flows of information thateducate their hunches. It involves thepolitical skill of not only sizing up grouppolitics, but of understanding the posi-tions and strengths of various stake-holders so as to decide when and howto use transactional and inspirationalskills. It is the self-made part of luck.

In unstructured situations, it’s oftenmore difficult to ask right questions thanto get right answers. Leaders with con-textual intelligence provide meaning

by defining the problemthat a group confronts.They understand the ten-sion between the differentvalues involved in an issue,and how to balance thedesirable with the feasible.

Contextual intelligenceconsists of cognitive analyt-ic capabilities and of tacitknowledge built from expe-rience. Tacit knowledge

tends to be implicit and inarticulate, orexpressed in rules of thumb. In some sit-uations, street smarts are more importantthan school smarts. In novel situations,judgment matters more than experience.

Contextual intelligence also requiresemotional intelligence. Without sensi-tivity to the needs of others, pure cog-nitive analysis and long experiencemay prove insufficient. Jimmy Carterhad good cognitive skills, but wasoften faulted on his contextual intelli-gence. As one wag put it, he was betterat counting the trees than seeing the forest.

The best leaders transfer their skillsacross contexts. Leaders who have afixed repertoire of skills are limited in theirresponses to new situations. They needto develop broader bandwidth and tunecarefully for different situations. LE

Joseph S. Nye, Jr. is University Distinguished Service professorat Harvard and author of The Powers to Lead (now an OxfordUniversity Press paperback). Visit www.hks.harvard.edu.

ACTION: Enhance your contextual intelligence.

THE RECENT PUBLICA-tion of George W.

Bush’s memoirs raisesagain the role of contextual intelligence inleadership. President Bush famously des-cribed his leadership role as “the decider.”But deciding how to decide is as impor-tant as making the final decision: whatshould be the composition of the groupthe leader turns to; what is the contextof the decision; how will information becommunicated; and how much controldoes the leader maintain over the deci-sion? Get such factors wrong and youmay be decisive, but decisively wrong.

Bush described his leadership as havingthree core components: outline a vision,build a strong team, and delegate much of theprocess to them. Analysts who examinedBush’s decision-making on Iraq arguethat neither he nor those towhom he delegated knewthe complexities. Withoutcontextual intelligence, being adecider is not enough!

Understanding context isvital for effective leadership.Some situations call for auto-cratic decisions, others re-quire the opposite. Leadersmust operate in myriad con-texts, but it’s vital to under-stand culture, distribution of powerresources, followers’ needs and demands,time urgency, and information flows.

Ronald Heifetz argues that if the sit-uation calls for technical and routine solu-tions, the leader may clarify roles andnorms, restore order, and provide asolution. But if the situation requiresadaptive change, the leader may let con-flict emerge, challenge unproductivenorms and roles, and let the group feelexternal pressures so that it learns tomaster the adaptive challenge. Thismay require delaying decisions and usingfollowers’ anxieties as a learning experience.

Half of General Electric’s high flyerswho went on to become CEOs of othercompanies had disappointing records.Why do some leaders succeed in one con-text and fail in another? One answer is“horses for courses.” Some run betteron a dry track and some in mud. Manya good CEO turns out to be a disap-pointment when appointed as a cabinet

Contextual IntelligenceIt’s crucial for effective leadership.

by Joseph S. Nye, Jr.

CAPABILITY CONTEXTand others because they have goals, val-ues, and beliefs that conflict with thoseof the manager; therefore, they have nodesire to help or cooperate.” Also, thepeople you’re trying to influence maynot care about what you want them tosupport. They may disagree with youropinion, idea, suggestion, proposal, orpoint of view. They may not need whatyou are selling, accept your reasoning,or be inspired by what you are saying.They may be distracted, or disregard you.

Salespeople spend more time study-ing and practicing methods of influence,yet even the best of them can’t sell theirproducts or services to every customerall the time—because some customerswon’t be persuaded for reasons that mayhave more to do with the customersand the situation than the salesperson.

One subtle way people try to influ-ence others is by appealing to authority.Such legitimizing is so ubiquitous thatwe often don’t recognize it. When youtry to influence someone by legitimiz-ing, you essentially say, “Trust me,believe me, or obey me because someauthority says you should.” The author-ity could be a parent, boss, police officer,judge, cleric, or teacher whom the otherperson would consider an authority.

Legitimizing occurs when someonewears or displays the symbols of lawor authority—a police officer’s uniformand badge, a judge’s robes and gavel, amilitary person’s uniform and insigniaof rank, the robes of a monk or cleric,and so on. People also legitimize whenthey cite a person’s title, position, orrole; by citing a group representingauthority; by citing achievements orhonors; by citing previous works,precedents, or publications; by citing aperson of renown or something thatperson said; or by citing an agreement,behavioral norm, moral, tradition, law,regulation, or accepted standard.

One advantage of legitimizing is that itcan influence people quickly. Civilizationwould not function well without legit-imizing to regulate behavior and choic-es. A major draw-back to legitimizing isthat many people are antiauthoritarianto some degree and resist some types ofauthority. Their degree of compliancedepends on how much they respect theauthority being cited and whether theybelieve their compliance is necessary oradvantageous to them. The less respectpeople have for authority, the lessthey’ll be influenced by legitimizing. LE

Terry R. Bacon is author of The Elements of Power (AMACOMBooks) and Elements of Influence: The Art of Getting Others toFollow Your Lead (forthcoming). Visit www.terryrbacon.comand www.kornferryinstitute.com; Terry.Bacon@kornferry.com.

ACTION: Influence people to follow your lead.

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 1 1

Empower women to recharge the world.We see a direct correlation between women’sempowerment and national GDP growth,business growth, environmental sustainabil-ity, and improved human health, to namea few things. The family, community,and social implications are vast. Ourconsumer research points to women as thehousehold opinion elites. Women deter-mine what comes into the home and inwhat quantity and frequency. Womenaccount for most purchase decisionsfor our beverages. In fact, they repre-sent 70 percent of all grocery shoppers.So, at Coca-Cola, we can’t grow ourbusiness or reach any of our long-termgoals without greater women’s eco-nomic empowerment and entrepre-neurship worldwide. In fact, no businessor economy will grow without this.

Growth projections for China, India,Africa, and North and South Americacan’t be met without women’s econom-ic empowerment. The only way a pro-jected billion people will rise to middleclass in the next 10 years; the only waythe world will grow $20 trillion dollarsricher; the only way more nations will

rise out of poverty and become politi-cally stable —will be by women achiev-ing gender parity. If we fail in thisregard, the world’s economy will fail.

We still see too many roadblocks—cultural, educational, political, financial, andtechnological—to women’s empowerment.As President Obama’s Ambassador forGlobal Women’s Issues Melanne Verveersaid about the lack of access to capitalfor women entrepreneurs: Too many ofthe best business ideas die in bank parkinglots. That’s got to change, and it will change.

TThhrreeee TThhiinnggss WWee ccaann DDooI see three ways that business, gov-

ernment, academia and non-profits canhelp generate female empowerment:

1. Accelerate women’s leadershipwithin our walls. I serve as chair of ourcompany’s Women’s LeadershipCouncil, which we initiated three yearsago. The program is built around threefocus areas: building a leadershippipeline, creating an enabling culture

Women Power

DRIVING INTO WORKone morning, I got

stuck in traffic andtuned into a report on the radio aboutChina’s rise in the world. Some econo-mists predicted that China would sooneclipse Japan as the world’s secondlargest economy. It already has—fiveyears ahead of most projections!

No one chronicles the economic riseof nations better than Yale professorFareed Zakaria. In The Post-AmericanWorld, he writes about the nations thatwill drive the 21st century economy,and the implications for America.

I think there’s another way of look-ing at this. I’d say that the real driversof the Post-American World won’t beChina, India, or Brazil—or any nation.The real drivers will be women: womenbusiness, political, academic and cul-tural leaders, entrepreneurs, and inno-vators. Women are the most dynamic andfastest-growing economic force today. Theycontrol over $20 trillion dollars in spend-ing worldwide (an economic impactlarger than the US, China, and Indiacombined. In the U.S., women-ownedbusinesses account for $4 trillion dollarsin GDP—this would constitute thefourth-largest economy in the world!Today, one in 11 working-age womenis involved in entrepreneurship.

The 21st century is the Women’s Cen-tury. As we look for ways to restart andreset the global economy, the solutionlies right in front of us. In the words ofWorld Bank President Robert Zoellick,gender equality is “smart economics.”

I’ve been managed by women all ofmy life—beginning with my mother—and I like to think they’ve done a won-derful job. As a business leader andsomeone who has the responsibility ofcreating shareholder value for theworld’s most recognized brand, I feel asense of urgency in ensuring that con-ditions are ripe for women to thrivearound the world. Call it self-interestor enlightened self-interest—creating aclimate of success for women globallyis simply smart business for a con-sumer-products company. In fact, it’ssmart business for any company.

that values personal sustainability, anddriving employee engagement.

One concern for our women employ-ees globally is work-life balance. To easesome of the burden, we initiated flexi-ble-work arrangements and provided aglobal framework and tool kits for ourbusiness units around the world.

In addition, we’ve grown the num-ber of women in upper managementpositions, and our female employee engage-ment rate is now higher than our overallengagement rate. Today, women hold topleadership positions in our finance group,make up half of our Public Affairs andCommunications leadership team, andabout half of our legal team. We havewomen in our top science and regulato-ry, quality and HR positions. Our Euro-pean operations are led by a woman,and our operations in my native coun-try, Turkey, is run by a woman.

We have aggressive metrics embed-ded into our 2020 Vision—our growthpath forward. We are expecting to dou-ble our volume and revenue, to be amongthe greatest places to work, and to be evenmore consumer focused, more communityfocused, and more environmentally focused.We can’t do any of that without greaterparticipation of women at our seniorranks. For Coca-Cola, this is missioncritical. The keen insights women bringto our business are profound. As morewomen worldwide gain economicpower, we need to be there to ensurethe right shopper insights, the rightmix of products, and the right market-ing and merchandising strategies.

2. Bring more women-owned busi-nesses into our supply chains. Becauseof our global reach and influence, wecan be powerful agents of constructivechange. One exciting program at Coca-Cola is our Micro Distribution Center(MDC) network in Africa. This enablesentrepreneurs to set up MDCs on behalfof our company in areas where poorroads and infrastructure make it diffi-cult for delivery trucks to travel. Theydistribute our products to retailers, oftenby bicycle or pushcart. Most of our salesin Kenya, Tanzania, Uganda, Ethiopiaand Mozambique are the result of thismodel. Almost 1,000 of these businessesin Africa are owned by women. Rose-mary Njeri has run a MDC in Nairobifor 10 years. She now employs 16 peo-ple and has educated her three children.

Consider the multiplier effect of suchactions. Today, we work with 10 millionwomen-owned or operated business-es—from suppliers and distributors toretailers—that derive a major portion oftheir profits from Coca-Cola.

Recently we committed to help em-

by Muhtar Kent

1 2 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

LEADERSHIP WOMEN

I t w i l l r u l e t h e w o r l d .

dent collaborators who work in teams(or cyberspace) with ease. However,their moral values may not be strong.We must fix this disconnect, by con-necting with them on their terms. AtDeloitte, we’ve revamped our Ethics inAction training for new hires by mak-ing it online, interactive, and attractive.

2. Short-termism. Milliennials areless likely to stay with a company forfive or more years—and twice as likelyto leave within one year—than oldercounterparts. The pressures that comewith expectations of continuous growthcan cause leaders to be short-sighted,driven by short-term goals. The hid-den costs become visible when a stableworkforce, long-term investment, anda sustainable business disappear. I see alink between short-termism and unethicalconduct. The nature of short-termismdisdains the work that long-term rela-tionships take while embracing the pay-back of quick, impersonal transactions.The mortgage crisis is an example.Whether it was the borrower seekingthe loan, the banker making the loan,or the broker packaging and sellingrisky obligations, the only glue that heldthem together was the transaction. Some

might call it enlightenedself-interest. I call it a recipefor unethical behavior.

3. Trust. Trust seems tobe in short supply: 34 per-cent of employees will likelylook for a new job when theeconomy improves; of those,48 percent cite loss of trustin their employer and lack oftransparent communicationfrom their leaders as their

reason. Like ethics, trust is good busi-ness. Low trust is expensive. You buildrelationships of trust through direct,regular, and open interactions. AtDeloitte, our ethics campaign includestraining called the Power of One. It rec-ognizes the importance of our choicesand behaviors and how we each havethe responsibility to act with personalintegrity to sustain the public’s trust.

An unethical culture can bring downan enterprise. So, draw the connectionbetween ethical behavior and the value ofthe enterprise. Ensure that how you con-duct business is worthy of the valueyour customers expect and representsthe values of the enterprise. You can bemore than an invisible hand. Throughthe influence of your example, givepeople reasons to follow you. LE

Sharon Allen is Chairman of the Board, Deloitte LLP. Thisarticle is adapted from her speech at the Ethics and ComplianceOfficers Association meeting, Sept. 22, 2010.

ACTION: Be the visible hand of high ethics.

ADAM SMITH WROTEabout the invisible

hand that drives freemarkets. I believe that another invisiblehand drives free markets—the sharedlanguage of ethical values that enablespeople to conduct business with eachother, where a deal can be sealed with ahandshake and your word is your bond.

Ethical leaders help create robustmarkets where trust and integrity canprevail. But often, we see headlinesthat tell of decision-makers who failedto consult with their ethics and compli-ance officers or with their own moralcompass, and who made choices thattook them dangerously off course.

Today, we face a challenging econo-my—because of choices made by cer-tain leaders. All leaders are entrustedwith a mission, and manypeople count on their lead-ers to help build an ethicalfuture. Ethical behaviorkeeps us connected. Everyday, people decide who tofollow. It is crucial thatthey cast their ballots foryou and what you standfor. But you have lots ofcompetition for theirvotes—especially from rolemodels in popular culture.

The power of role models cuts bothways—good and bad. Twenty yearsago, two powerful role models in busi-ness weren’t even in business. Theyportrayed on film a style or creed thatsome would later adopt. For 13 seasonson Dallas, J.R. Ewing (Larry Hagman)took business ethics on a race to thebottom—doing whatever it took to crushhis competitors. Now, Michael Douglasreprises his role as corporate raiderGordon Gekko in Wall Street II: TheMoney Never Sleeps. We all recall hisiconic speech to shareholders: “Greedis good. Greed is right. Greed works.”

OOvveerrccoommee TThhrreeee DDiissccoonnnneeccttssTo build an ethical future, leaders

need to overcome three disconnects:1. Generational. Young people today

are fascinating. Some refer to them asGeneration Me. I prefer to focus on theirstrengths. Millennials are smart, confi-

Visible HandsBe an example of ethics.

by Sharon Allen

ETHICS EXAMPLEpower 5 million women entrepreneursby the year 2020. I have seen the powerand conviction of our system, andwhen we put our mind to somethingwe achieve results. To achieve this,we’ll partner with other companies,governments and civil society organi-zations to bring all of our skills andresources to bear to help break downthe barriers that small businesswomenface—barriers like access to credit,peer networking, and basic training.

We’ll give high potential women inour system a chance to champion andmanage this work. We can transfer somuch business knowledge to emergingentrepreneurs: basic accounting, busi-ness planning, marketing, merchandis-ing, customer service, and legaladvice—to name a few areas.

And we’re encouraging all Coca-Cola associates—men and women—tosupport women small business owners viaone-on-one mentoring and training. Thisinitiative will also reach millions ofmen. All boats will rise. As our suppli-ers and retail customers gain greaterskills and empowerment, their busi-nesses will reflect this, and Coca-Cola’sbusiness will reflect this. We are all inthis together. As women rise in theircommunities—the communities rise tonew heights of prosperity and health.

3. Stay committed to sustainabilityinitiatives. Recommit to sustainabilityprograms—educational, environmen-tal, human-health, cultural, and eco-nomic-development initiatives. All ofthese touch and influence women’sempowerment and entrepreneurship.In the communities we serve in 206countries, we’ve learned that everythingis interrelated. Water is central to ourfuture. Water is also a women’s economicempowerment issue. For example, inMali, we dug a well in a rural villageso that women wouldn’t have to spendeight hours a day hauling water. Thisenabled them to reinvent their lives—and start their own catering business.

Smart organizations will see thatthe 21st century is the Women’s Century.Women’s economic empowerment andentrepreneurial growth will drive theworld’s economy to new heights. Forall of us—the implications will be vast.Everyone’s success will be contingentupon women’s success. This is not a bat-tle of the sexes—this is a battle for preserv-ing and enhancing the world’s economic,environmental and social fabric. LE

Muhtar Kent is Chairman and CEO, The Coca-Cola Co. Thisarticle is adapted from his speech at the Yale World FundLecture and used with permission of Vital Speeches of the Day.Visit www.VitalSpeeches.com.

ACTION: Empower women in your workforce.

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 1 3

was an A&W root beer stand! Proctor& Gamble began as one of 18 candlemakers in Cincinnati. Hewlett Packardlaunched a product to make urinalsflush automatically and a shock machinefor dieters that were busts. Boeing’s firstplanes bombed, flunking Navy trials.

After inheriting his dad’s $2 millionshortening business in India, with fitsand starts in the soap business andeven hydraulic cylinders, Azim Premjieventually converted Wipro into a $5billion technology powerhouse. Hispersonal net worth is $17 billion.

What do these great organizationshave in common? Leadership. Even ifyou have a mediocre start and bad tim-ing, a great leader with a great team willprevail. In difficult economies, yourefforts as a leader stand out even more.

Why? In tough times, your competi-tors are focused on survival, not on yourcustomers. They pay less attention toquality, slash back service, invest less ininnovation, and ignore their people. Ina crisis, great leaders reconnect with whatmade them great in the first place. It’s atime to re-ignite your spirit and findbetter ways to delight your customers.

Your willingness to lead effectivelycan have a greater impact on the suc-

cess of your team or yourorganization than any othersingle factor. To be successfulas a leader, you need a com-bination of two things: char-acter and competence. Youneed to be a person whobelieves in what you’re doing.

MMaaxxiimmiizzee YYoouurr PPrrooffiittssDon’t be daunted by a

challenging economy and fierce competition.Even in the toughest arenas, innovative,profitable businesses abound. Yours canbe one of them. Take these steps imme-diately, and measure your progress.• Become a great leader—and get

extraordinary results from everyone.• Develop a great business plan—and

structure to maximize every resource.• Surround yourself with great people

who are motivated to give their best.• Offer a great product or service—

identify exactly what your market needs.• Design a great marketing plan—pos-

ition yourself as the preeminent provider.While your competitors duck and

cover—cutting costs and slashing per-sonnel—turn your business into a great,profitable, and sustainable company. LE

Mark Thompson, coauthor of Success Built to Last, is former ChiefCustomer Experience Officer at Schwab. Brian Tracy is authorof How the Best Leaders Lead. They are coauthors of Now, Builda Great Business! (AMACOM). Visit www.briantracy.com.

ACTION: Maximize your profits this year.

Best Leaders, Worst Times

TO CREATE A SUSTAINABLE COMPETITIVEadvantage, leaders must first create

a culture of excellence. These are charac-terized by creativity, innovation, sus-tainability, engagement, achievement,collaboration, diversity, and ethics. Theprimary way to create such a culture isto implement a proactive talent manage-ment (TM) process with three elements:

1. Creed. A TM creed is composed ofa widely publicized set of core princi-ples, values, and mutual expectationsthat guide behavior. Collectively, thestated principles depict the type of cul-ture an organization strives to create toachieve its unique portrait of success.The principles of the creed are embed-ded in both the TM strategy and sys-tem by incorporating its doctrines intoselection criteria, competency defini-tions, performance criteria, and internalselection and development processes.

Johnson&Johnson states: “Our Credois more than just a moral compass. Webelieve it’s a recipe for success.” Microsoftexpects its values to guide behavior andshine through in all interactions. Mostcompanies have updated their creeds toinclude social responsibility, sustainability,ethical behavior, innovation, and creativity.Starbuck’s creed includes Six GuidingPrinciples: 1) Provide a great work envi-ronment and treat each other with re-spect and dignity; 2) Embrace diversityas an essential component in the way wedo business; 3) Apply the highest stan-dards of excellence to the purchasing,roasting and fresh delivery of our cof-fee; 4) Develop enthusiastically satisfiedcustomers all of the time; 5) Contributepositively to our communities and ourenvironment; and 6) Recognize that pro-fitability is essential to our future success.

2. Strategy. A TM strategy makes explicitthe investments made in the people who arebelieved will best help it achieve competitiveexcellence. A TM strategy views a work-force as a portfolio of human resourceassets that are differentiated based onan assessment of each person’s currentand potential contribution to success.

Maximize your profits in any market.

TIMING IS OVERRATED! THE BEST LEADERSoften either start or lead organiza-

tions at the worst possible times. “Youare called when you are needed most—when it’s really worth it—not whenit’s convenient,” said Alan Mulally,CEO of Ford. “The honor is to serve!”

This courageous leader didn’t justaccept a job at Ford; he leapt at a hugeopportunity to make a differencewhen the company needed him most.

Visionaries have a surprising knackfor diving in at the least propitioustimes. When you look at the environ-ment in which they embraced theirorganizations, they chose the worst.Everyone thinks they had iteasy and perfectly set. Nothingcould be further from the truth.Oprah Winfrey, Walt Disney,Bill Hewlett and DavidPackard, Tom Watson atIBM—and even ThomasEdison when he created hisvision for General Electric—all launched their dreams in mis-erable markets. FedEx, SportsIllustrated, Hyatt, Wikipedia, MTV,Trader Joe’s arrived just in time forawful recessions. Google incorporat-ed just in time for the tech bubble toburst at the end of the last century.

Wang Chuanfu started a battery-maker called BYD (Build Your Dream)after the dot-com crash when no onecared about the ex-professor’s fantasyof a green, emission-free electric car.Warren Buffett bought 10 percent ofBYD last year, making Chuanfu a bil-lionaire and China’s richest person.

Many long-lasting organizationsnot only were born in bad markets,they also had lackluster products inthe beginning. The list of short-lived,false starts for great companies is long.There are many legendary examples:Sony’s first product, a rice cooker, wasunreliable (its first big launch, a taperecorder, also failed). One of Fortune’smost admired companies in 2010,Marriott, didn’t start as a hotel—it

1 4 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

Talent ManagementCreate a sustainable advantage.

PERFORMANCE PROFITS MANAGEMENT TALENT

by Mark Thompson and Brian Tracy by Lance Berger and Dorothy Berger

to hide—you will be exposed.The best leaders are not those who

simply have the vision thing. Unless theemboldened vision is coupled with thecourage to take action, their sugar-likevision high will be evanescent. Visionwithout courage is meaningless.

The best case studies showcase howcourageous leaders boldly take action tobuild tangible platforms for ongoingsuccess. These platforms often supporta core principle of a specific businessmodel. Since durability and longevityare rare in today’s throw-away society,we should pay attention to the cumula-tive power of repetitive actions thatyield undeniable growth and profit,particularly in endangered industries.

For example, many people thoughtthat the business model of travel agentswould expire, buried by do-it-yourselfon-line travel sites. But one companydebunked that notion. Virtuoso, thelargest seller of luxury travel (annualsales of $5.2B), is a network of travelagencies (350 world-wide employing6,000 advisors), supported by 1,600global travel suppliers. Its unique valueis based on the quality of relationshipsbetween travel advisors and the travel

suppliers that work togeth-er in the Virtuoso network.

For two decades, leadersthere have known that astrategy based on action, not onhope, was needed to build andgrow these relationships, at atime when customer demandsand expectations aboutbooking travel were chang-ing. A yearly event calledTravel Mart was initiated to

bring together travel advisors and sup-pliers. This year, at the Bellagio Hotel inLas Vegas, 3,500 people from 65 differ-ent countries came. During this four-day event, 312,000 four-minute appoint-ments were conducted. This event is anexample of Leadership in Action and ofcreating Value For Life for each business,and for their customers. Businesses arebuilt on the quality of personal relation-ships. What actions are you initiating,as a leader, to build relationships thatare comparable to this exercise?

In an era when trust and confidencein leaders have collapsed, when cus-tomers have many choices, your actions,not your words, will determine your fate.People are sick of words, of promisesmade and not kept. Your ability to buildand maintain successful relationships isthe key to your success as a leader. LE

Larry Hochman is the author of The Relationship Revolution(Wiley). Visit www.larryhochman.com.

ACTION: Under-promise and over-deliver.

WE OFTEN THINK THATthe three most pro-

found words in any lan-guage are I Love You. But for leaders,Shakespeare’s three words Action IsEloquence are more apt. We are sick ofwords, sick of rhetoric, sick of PR spin,sick of purposely contrary talking-head instant responses, and sick andcynical of promises made and not keptby our leaders. One ubiquitous expres-sion of our time is Blah, Blah, Blah.

We want our leaders to stop the flowof words, and to simply deliver. Wewant the Kabuki play-acting to stop.With so much information available toleaders about our individual needs,desires, demands and hopes, why domost people believe no one is payingattention to what really matters to them?

Nothing threatens rela-tionships more than brokenpromises, except, of course,lies. Broken promises betraytrust; lies multiply the rot.Customers and citizens bothnow equate broken promis-es with lies told to them.This is a dangerous devel-opment. The Promise Gap iswidening and is a directthreat to every enterprise.The Gap is simply the differencebetween what leaders say they will doand what actually is done; the differencebetween action and words. You don’tneed a complicated business model (orMBA) to explain this, or understandthe impact today of getting this wrong.

Our cynicism about our leaders inbusiness and government is defined bythe Promise Gap. The recession hasmade our cynicism go nuclear, with acritical-mass of explosive anger and rageat the incompetence and the lies as theglobal financial system approachedmeltdown. The capacity of customersand citizens to punish is now unlimit-ed: We all see how fast just one brokenpromise can be communicated.

Vigilance over this Promise Gapdemands that you, as a leader, becomeobsessed with under-promising and over-delivering, and that you know thatyou’ll be judged by your actions, notjust by your words. You have nowhere

Leadership in ActionClose the promise-performance gap.

by Larry Hochman

LEADERSHIP ACTIONThe criteria for selecting the peoplewho will receive different investmentsare rooted in the talent creed. The TMstrategies of most high-performingorganizations contain three directives:

1. Cultivate the people who will makethe biggest contribution now and in thefuture. They seek and inspire others tosuperior accomplishments, and embodythe creed, core competencies, and values.Their loss or absence inhibits growthbecause of their impact on performance.

2. Retain key position backups. Gaps inreplacement activity for incumbents inkey positions are disruptive, costly, anddistracting. Key positions should bestaffed by, and have replacements whoexceed performance expectations, devel-op others, and role-model the creed.

3. Allocate training, rewards, education,assignments, and development based on theactual and potential contribution of people.To properly allocate funds, you mustclassify employees based on their actualability (or their potential) to add valueon the basis of three criteria: their perfor-mance and competencies, their leadershipand development of others, and their model-ing of the creed.

3. System. You next need a TM system—procedures and processes for imple-menting the creed and strategy. The bestTM systems have: assessment tools (com-petency assessments, performanceappraisals, potential forecasts, and suc-cession and career planning); multi-raterassessments; and diagnostic tools thatidentify: high-potential employees, keyposition backups, key positions with noback-ups, positions with surpluses.Developmental resources are allocatedbased on the actual and potential contri-bution of employees to success.

Monitor and fine tune your TM sys-tem. Use three measures: Quality: Is thestrategy delivering results as measuredby the pipeline of top performers andhighly qualified backups for key posi-tions? Timeliness: Does the system workin a stated time frame or is it viewed astoo protracted as a decision-makingprocess? Credibility: Are managers andemployees engaged by the system? Dopeople believe that the system is fair?

Our TM model consists of three linkedelements: creed, strategy, and system. Themodel requires that the principles of thecreed be embedded into the TM strate-gy and system by incorporating its doc-trines into selection criteria, competencydefinitions, performance criteria, anddevelopment processes. LE

Lance and Dorothy Berger are partners in Lance A. Berger &Associates and coauthors of The Talent Management Handbook(McGraw-Hill). Visit www.lanceberger.com.

ACTION: Fine tune your TM strategy and system.

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 1 5

The place to look for care is in thedense relationships of neighbors andcommunity groups. We have a compe-tent community if we care about eachother, and about the neighborhood.Together, our care manifests a vision,culture, and commitment that canuniquely assure our sense of well-beingand happiness. This source of satisfac-tion is complete in and of itself—notdependent on the next purchase.

No business, agency, or governmentcan fulfill basic community functions.If we don’t know our neighbors, aren’tactive in local community life, pay oth-ers to raise our children and serviceour elders, and try to buy our way intoa good life, we pay a big price. Weproduce a weak family, careless com-munity, and a nation that tries hope-lessly to revive itself from the topdown. Reversing this situation is diffi-cult because of the power of systems tomake consumers out of citizens.

By seeing the consumer ecology forwhat it is, we can become citizens again.We can shift our thinking and decidewho we take ourselves to be: producersof our own future, or purchasers of whatothers have in mind for us. Consumersociety begins when what was once theprovince or function of the family andcommunity migrates to the marketplace.It begins with the decision to purchasewhat might have been homemade orproduced locally. This is how citizensyield their power to the lure of consumption.

Consumption is like an addictive drug.The market promises what it knowswon’t be fulfilling. This defines itscounterfeit nature––trying to make some-thing appear to be gratifying or satisfyingwhen it is not. The fact that dissatisfac-tion persists after achieving the good lifemeans the good life is not satisfying. Un-functional families and incompetentcommunities signal that we’ve reachedthe limits of consumer satisfaction.

Enterprising Economy

THE COMMUNITY IS the natural nest forhatching new enterprise—the

birthplace and home of small busi-ness, which provides the largestgrowth in employment. Friends andfamily often provide the capital andsweat equity to start a business.

The culture of a local community is akey factor in nurturing entrepreneur-ial spirit. A community where localpeople feel they are a center of enter-prise creates the vision and support.The culture encourages people to initi-ate enterprises, members use their buy-ing power to support local enterprises,and they put their savings to work incommunity credit unions and banks.

Their dollars circulate, providingthe economic support that parallels andstrengthens local social support. Somecommunities even have a local currencyto incentivize support of local economy.

A related economic power of a con-nected community is access to jobs. One-quarter of job seekers get informationfrom relatives, friends, and neighbors.

Strong community connections spawnnew enterprises, sustain them, and pro-vide primary access to employment.Without these functions, the economybecomes a land of large-scale institu-tions unable to sustain a local work-force (and so large they’re destined to failto serve any interests but their own).

In consumer ecology, care is co-optedby systems; businesses, agencies andgovernments. Insurance agencies sendletters to tell us they care about us.Charities ask us to give money to payfor the care of people. Governmentpays hospitals and medical profes-sionals for their service (Medicare). Ineach case, they are providing a paidservice—not care. Systems offer servicesfor pay. Genuine care can’t be paid for—it is given, free of charge. You can payfor services for your mother in a nurs-ing home, but she may lose the care offamily, friends, neighbors, faith, andservice groups. They become visitors toa service system; she becomes a client.

For example, we talk of the child asa product of the School System, startingearly the migration of the child fromcitizen to consumer, from family andcommunity life into system life. Wecount on the School System to performmany family functions—to feed, disci-pline them, and provide custodial care.

The same dependency goes for otherfamily functions—like health, entertain-ment, nutrition, employment, mentalwell-being, elder care, and environment-al stewardship—all have been outsourcedto professionals. All are organized in sys-tems designed to deliver these func-tions in efficient, low-cost, consistent ways.

We made the leap from being citizensto being consumers in a culture that sellsthe idea that a satisfied life is deter-mined first by defining and promotingneeds and then figuring out how tofulfill them. We create a larger marketby determining that families and com-munities are filled with needs that are bestserviced by systems and professions.

Consumerism offers purchased solu-tions to being human, providing a sub-stitute for what could come naturallyto families and communities. This is themore profound cost of the consumer pro-mise, the denuding of community capaci-ty. The institutional counterfeit ofcompassion and support is a two-partpackage: first, the spin of optimismbacked up by a purchase; and, second,the denial when it does not happen.

For example, in advertising we arepromised immortality, eternal youth,and happiness. This promise is elegant,moving, entertaining. At the end, waysthe product could hurt us are described insmall print or spoken rapidly—accen-tuate the positive, eliminate the nega-tive. We call this spin. Responses of spinand denial are designed to keep organi-zations on course. Systems can’t allowsorrow to become personal. When sys-tems lift the veil of denial and spin toapologize or express sorrow, it is eitherbecause they’re forced to by law, or itis long after any consequences.

The effort to find a fix for our humanityonly forces us into counterfeit promisesand unsatisfying results. Often webelieve that if we do more of what doesnot work, it will finally work. This is thedilemma of the consumer economy: itleads to a place where when we reach alimit and still are unsatisfied, we think,if only we had more we would be success-ful or satisfied—more police, physicians,teachers, services, stuff. This is not asolution—it’s an addiction. Consumerismis not simply an economic system—itcan be considered an ecology. It impactshow we relate to each other; it shapes

1 6 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

PERFORMANCE CONVERSATIONS

by Peter Block and John McKnight

I t i s b a s e d i n c o m p e t e n t c o m m u n i t y .

when they feel ill-used themselves.Organizations that are best in customerservice also treat their employees best.The service you provide for your cus-tomers will never be greater than theservice you provide to your employees.

3. Success is doing the right thingsthe right way. Well-defined values canhelp you, and your employees, makebetter decisions. In values-rich compa-nies, the front line is where most deci-sions about customer service are made.So, empower front-line people with toolsand knowledge to handle problemspersonally and immediately. The win isa happy customer who did not have tospeak to a supervisor. By defining yourvalues and the behaviors based on them,you simplify decision making: “Doesthat make sense in light of our values?”is all you have to ask yourself.

4. People do what they are incented todo. Reward the right behaviors to achievedesired outcomes. This is made easierwith values-based performance metrics.Also, your values will be perceived ashollow unless you base compensation andrewards on expressions of the behaviors thatgo with the values. Hiring and perfor-mance appraisal methods, too, must be

revised to select people whodisplay these values. And youmust be courageous to firethose who don’t, includinglong-time employees andexecutives; otherwise,they’ll render your idealculture impossible.

5. Input = Output. You getout of something what you putinto it. Values maintenance—continuous improvement

—is as important as values creation.You’re never fully done with culturechange; you must be vigilant that no onebackslides into old ways. This requiresmonitoring of progress, as well as val-ues-based leadership development andsuccession planning.

The culture you want can be built onshared, strategic values—and financialresponsibility. Identifying shared values—and acting on them—creates a healthyculture. Those values should also be vet-ted in terms of responsible fiscal man-agement. Happy-talk values that result inspending money on questionable pro-grams are not sustainable values. Avalues-rich culture is likely to save mil-lions of dollars. Values are most criticalwhen making tough decisions—that iswhen they illuminate the way forward. LE

Ann Rhoades is a director of JetBlue Airways and P.F. Chang’s andpresident of People Ink (www.peopleink.com), and coauthor withNancy Shepherdson of Built on Values.

ACTION: Build on the values of your A Players.

THE BEHAVIOR OF LEAD-ers tells the real values

of a company. Often, thevalues as they are lived bear little resem-blance to stated values—sanctified in amission statement. Some leaders believethat all they need to do is proclaim aset of values and culture will magicallychange, but that does nothing to retoolthe values that control actions on thefront line. Changing those inherent valuestakes more effort and can’t be done byany leader or executives acting alone.

A culture that works for your company—and fits with your leadership, values,products, customer desires, andemployee aspirations—can only ariseorganically. You either encourage thebehaviors you want in your culture, orthey don’t happen. As leaders, we tendto identify our values andbuild our cultures on sharedbehaviors, but there is noreason why the people inour companies can’t do it ontheir own. The key is identi-fying your best employ-ees—your A Players—andspread their values by hir-ing people who share thosevalues and motivating allemployees to live those val-ues every day in their behaviors.

We call this the Values Blueprint wayof changing culture. I’ve seen it createculture change in many organizations(teams can also use this blueprint tocreate islands of excellence, even whentop leaders are not ready to buy in (youcan lead them to it by getting results).

I find that six principles inform suc-cessful values-based culture change:

1. You can’t force culture—you canonly create environment. A culture is theculmination of the leadership, values, lan-guage, people, processes, rules, and otherconditions, good or bad. Leaders are mostinstrumental in creating the environmentand provide the most direct influence onit. However, they can’t create culture—only the right conditions for it to arise.

2. You are on the outside what you areon the inside—no debate. You can’t cre-ate a great customer service organization ifyou treat employees badly. You can’tforce people to treat customers well

Built on ValuesInspiring a values-rich culture.

by Ann Rhoades

ETHICS VALUESour relationship with food, work, music,ritual, religion––all elements of culture.And for this ecological system to work,we have to participate in the effort topurchase what matters and persist atit, despite the lack of results. This con-sumptive ecological system produceshollowness in our lives, even for thosewho are winning at the game.

HHoolldd SSiixx CCoonnvveerrssaattiioonnssTo achieve an enterprising economy,

hold Six Conversations that Matter:1. Invitation conversation. Transform-

ation occurs through choice, not man-date. Invitation is the call to create analternative future. What is the invita-tion we can make to support people toparticipate and own the relationships,tasks, and process that lead to success?

2. Possibility conversation. This fo-cuses on what we want our future to be asopposed to problem solving the past.It frees people to innovate, challengethe status quo, break new ground, andcreate new futures that make a difference.

3. Ownership conversation. This con-versation focuses on whose organizationor task is this? It asks, “How have I con-tributed to creating current reality?”Confusion, blame and waiting forsomeone else to change are a defensesagainst ownership and personal power.

4. Dissent conversation. This givespeople the space to say no. If you can’tsay no, your yes has no meaning. Givepeople a chance to express their doubtsand reservations, as a way of clarifyingtheir roles, needs, and yearnings with-in the vision and mission. Genuinecommitment begins with doubt, andno is an expression of people findingtheir space and role in the strategy.

5. Commitment conversation. Thisconversation is about making promisesto peers about your contribution to thesuccess. It asks: What promise am I will-ing to make to this enterprise? And, whatprice am I willing to pay for success? It isa promise for the sake of a larger pur-pose, not for personal return.

6. Gifts conversation. Rather thanfocus on deficiencies and weaknesses, wefocus on the gifts and assets we bringand capitalize on those to make the bestand highest contribution. Confrontpeople with their core gifts that canmake the difference and change lives.

Other conversations may also be impor-tant, but these six are vital to shift to afuture where each citizen, employee, or in-dividual chooses to take responsibility andown their role in shaping the future. LE

Peter Block and John McKnight are co-authors of AbundantCommunity (Berrett-Koehler). Visit www.AbundantCommunity.com.

ACTION: Hold these six conversations.

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 1 7

our connected, fast-changing world. Tomaster the strategic innovation challenge,companies need a culture of agility andlearning that supports high performanceand reinvention. They need: enablingstructures, mechanisms, processes, and poli-cies that encourage and support creativedialogue and experimentation; principlesthat help to address disruptions and discon-tinuities with creativity, courage, and intu-ition, just in time, with a minimum of redtape, across boundaries; and highly efficientprocesses. Design can no longer be basedon a mechanistic understanding of com-mand and control that relies on hierarchi-cal power differentials. It must providespaces that foster entrepreneurship andenable people to live and explore theirpotential. Crafting and implementingsuch designs is an architectural chal-lenge that requires high creativity and adeep understanding of system dynamics.

3. Innovation is king. Companies needto develop innovation competence. In thelast century, the focus was primarily onproduct innovation (R&D). Today, productsare a small part of the innovation challenge.The most innovative product develop-ment can’t compensate for bureaucraticand silo cultures that can’t collaborateeffectively in the flat world of globalvalue networks. We need a more com-prehensive view of what innovationcapability means, with an emphasis ondesign and business model innovation,together with the leadership capabilitythat can manage these innovation ele-ments in an integrative way. Then, vir-tually all employees—and stakeholders—become potential participants in thediscourse about the way things are done.This new innovation imperative requirespeople with a creative spirit who thinklaterally, collaborate in networks, andhave the cognitive and emotional abili-ty to challenge the status quo—traitsthat we find in the creative class.

4. Design and brand are the major

Creative Leadership

CREATIVITY IS CENTERstage, due to two

trends and five drivers.Trend 1 is the rise of the Creative

Class and importance of creative talentin a knowledge economy. In his bookThe Rise of the Creative Class, RichardFlorida says that this class includes notonly artists (writers, painters, actors,musicians) but everybody for whom cre-ativity is an essential element of professionallife. This includes knowledge workerswho produce or deal with intellectualcapital, such as software developers,advertisers, designers, architects, engi-neers, scientists, inventors, consultants,educators, and others. About 30 per-cent of the workforce belongs to thisclass—and their share is rapidly rising.The number becomes even larger if weinclude entrepreneurs and all who haveleadership responsibility in networkedorganizations. Their work is creative, too.

Trend 2 is the rise of Creative Com-petence as a critical success factor. Thiscompetence grows in importance aspractices like strategic management,innovation, organizational design, tal-ent management, and the ability tolead in networked organizations aredominated by the creative paradigm.

FFiivvee MMaajjoorr DDrriivveerrssFive drivers also boost creativity:1. Strategic management is now cre-

ative art, not exact science. In environ-ments that are unpredictable and driven bydisruptive change, market analyses andpredictions based on the extrapolationof trends quickly become obsolete.Today’s realities call for creating a just-in-time strategic management process thatpervades the company and includes the rel-evant stakeholders of the enterprise system.Rather than limit strategic discourse tosecretive strategy departments, leadersneed to foster creative strategic dialogueacross boundaries and at all levels.They need to identify and capitalizeon opportunity spaces that can redefinethe rules of the game. Strategic leader-ship is primarily a creative challenge.

2. Creative organizational design isthe new strategic weapon. Hierarchicalcontrol, functional silos, and an obses-sion with formalization are obsolete in

competitive differentiators. Productquality as a decisive success factor isdecreasing as even more complex productsturn quickly into commodities, and qualityand reliability are just tickets for marketentry. We outsource easy-to-imitate ele-ments of the value chain to low-costcountries. What remains is the complextask of orchestrating the many elements ofa global network of partners and alliancesand to create differentiation through design,branding, reputation management, and cus-tomer engagement strategies. As theseintangible product attributes increase inimportance, so does the role of creativi-ty and intangible asset management.

5. Creative talent—and its appropri-ate management—make all the differ-ence. The responsibility to think and actstrategically must become pervasive, notrestricted to the C-suite. And strategyand innovation need active engagementof the external stakeholder network.This requires a radical rethinking of tradi-tional talent management. Members ofthe creative class are smart, self-reliant,and motivated to live their dreams andrealize their potential. They need an en-abling environment—a creative, flexible,non-bureaucratic culture—to thrive. Theability to attract, lead, and retain creative tal-ent boosts your creative competence andyields a decisive competitive advantage.

Strategy, organization, innovation,branding, and people are driven by thecreative imperative. Meeting this chal-lenge requires a comprehensive approach tomanaging organizations and the stakeholdernetwork. Developing and sustaining cre-ative competence requires designs thatenable the power of networks withinand beyond boundaries. It calls for anew culture of leadership that shapes hor-izontal, non-hierarchical relationshipswithout relying on formal power andcontrol. It requires courageous leaderswho can: deal effectively with the diffi-cult egos of creative spirits; keep themin check while nurturing their potential;support their aspirations; respect theirdesire for independence; and experi-ment with innovative business models.

These are major challenges for leaderswho are driven by numbers, measurableKPIs, and an obsession to plan and con-trol. The transition is hard, as it touchesthe essence of management and leadership. Itrequires courage to let go and rely on thepower of horizontal collaboration, sup-ported by new ways of governancebased on trust and engagement. LE

Roland Deiser is a Senior Fellow at the University of SouthernCalifornia, Chairman of European Corporate Learning Forum,and author of Designing the Smart Organization (Jossey Bass).Visit www.rolanddeiser.com.

ACTION: Cultivate creative leadership.

by Roland Deiser

1 8 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

CHANGE CREATIVITY

L e a d e r s a r e p e r f o r m i n g a r t i s t s .

or death. Companies can fall into latestage 4 and come back when leadersemerge and break the cycle of despair,but you can’t come back from Stage 5.Ask yourself: Would there be a clearvoid if we left the planet? If you don’thave the answer, you’ll go away. Ateach stage, symptoms become increas-ingly evident. Recovery is still possi-ble—until the condition is terminal.

To assess priorities and then alignthem, do your diagnostics. Don’t focuson your career; focus on building apocket of greatness. How many keyseats are on your bus? What percent-age is filled with right people? Whatare you doing to raise that percentage?Double your questions-to-statementsratio. The first question is: How is ourworld changing, and what are the bru-tal facts? What’s on your brutal factslist? Turn off your electronic gadgetsand create white space—one day everytwo weeks. Create a “stop doing” list.You can only manage your time, notyour work. Stop giving titles. The rightpeople for key seats understand theydo not have a job—they have responsi-bilities. Set a Big Hairy Audacious Goalfor at least 15 years in the future. LE

ISEE FIVE STAGES OF ANunhealthy company:

Stage 1. Hubris born of success. Baddecisions taken with good intentionsare still bad decisions, and the antidoteis for leaders to have a special brand ofhumility and extreme ambition for thecause—not themselves. Great leadershave the guts to cut off their arm if ithas cancer—they make that sacrificewith the stoic will to do whatever ittakes to make their enterprises great.

Stage 2. Undisciplined pursuit ofmore. Everybody loves you for youroverreaching—until you fall. Greatenterprises are more likely to die ofindigestion than starvation. Packard’slaw, named after David Packard, founderof Hewlett-Packard, states: “If you allowgrowth in revenues, growth in scale,growth in new adventures to exceedyour ability to have enough of the rightpeople in the key seats to execute on thatgrowth brilliantly, you will fall.”

Stage 3. Denial of risk and peril.Never mistake faith for facts, as the opti-mist is at risk of dying of a broken heart.Admiral James Stockdale told me thatas a prisoner of war he survived exten-sive torture when others didn’tbecause he was a realist who didn’t rely onfalse hope. His message is known as TheStockdale Paradox: You must never con-fuse faith that you will prevail in theend—which you can never afford tolose—with the discipline to confrontthe most brutal facts of your currentreality, whatever they might be.

Stage 4. Grasping for salvation. Evenwith the aid of a heroic leader or game-changing magic bullet, many compa-nies still fail in this stage. The antithe-sis is building a culture of discipline, byconsistently pushing in an intelligentdirection without stopping. There’snot one big push, but overnight success-es are about 20 years in the making. Havethe discipline to look inside and focusefforts; find what you can be the bestin the world at—or leave it for others.

Stage 5. Capitulation to irrelevance

their leaders feel that they are underassault. Ideally, key staff membersshould deal with the onslaught ofinformation, and the CEO should focuson running the business. That bufferspace between the barrage of informa-tion and the work at hand is important.Jeff Immelt, CEO of General Electric,tends to do all his knowledge-gather-ing and then go off to contemplate.

Slowing the pace led to a historicdecision and cemented the friendshipbetween President Franklin Rooseveltand British Prime Minister WinstonChurchill. In World War II, Rooseveltwent by ship to Morocco, and thenChurchill persuaded him to take anextra day to see the most beautiful sun-set at the top of a mountain inMarrakech. Later that deep bond con-tributed to some critical decision-mak-ing. That bonding and understandingof your partner is very important, as isthe time to reflect. During the War, theBritish were in desperate need ofdestroyers. Everyone thought thatRoosevelt was going to have all thesemeetings to make a decision; instead,he took a few days to go sailing on theChesapeake. That’s when he came upwith the Lend Lease idea.

Leaders don’t have that luxury oftime anymore. Whereas Roosevelt tookan extra day in Morocco, I recall a tripthat I took to the Middle East with thenPresident Bill Clinton to see the King ofMorocco. We flew into Morocco at 2a.m.; had coffee with the King until4:30; and flew right back.

I asked the President whether hethought it was wise to be moving atthis pace and making decisions soquickly. He didn’t even spend a day inMorocco. He said he had no choice.

To make a first-class country, leadersneed to identify the best successors andempower them, and to look for diversi-ty of opinion because there is a dangerin insulated thinking.

When looking ahead, I predictstrong ties will develop between socialresponsibility as a leadership priority andthe sustainable health of the U.S. economy.The Chinese are eating our lunch onrenewable energy. We invent the solarpanels, and they are being built inChina. They provide cheaper labor andalso the subsidies are in violation of theWorld Trade Organization, yet wehaven’t turned the screws on them. Iend with a rallying call: China createdone million jobs, and our factories areshutting down. This country will be inbig trouble. Our biggest challenge iswhether the U.S. will go into decline ornot. It’s a question of leadership response. LE

THE ROLE OF THE LEAD-er is different today.

Many of us grew up at a time when aCEO or a General Patton was a loneindividual who sent down messagesfrom Mount Olympus. It’s no longer pos-sible to get results by ordering peoplearound. In a crisis, you need to havecommand and control; but, in generalyou need to be able to influence and per-suade. Even young officers have to seeif you’re willing to take the bullet.

While General Patton was sendingmessages out, today’s leaders are man-aging a constant two-way stream ofinformation. General David Petraeus isone leader who has mastered virtualconnection and communication. Youcan write him on a BlackBerry, andyou’ll get an answer within an hour.He is open to feedback and conversa-tions from the troops. He doesn’t use itto manage or lead, but to stayinformed and connected. However,there’s a danger in being connected tovolumes of electronic information. It’sharder to lead organizations because ofthe blogosphere that exists today.People are spreading rumors, lies andvicious comments to the point where

Jim Collins:SUSTAINING GREAT RESULTS

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 1 9

WORLD BUSINESS FORUM

David Gergen: CHANGING

ROLE OF THE LEADER

AS A SPECIAL SUPPLEMENT TO

LEADERSHIP EXCELLENCE THIS MONTH, IINCLUDE MY EDIT OF THE EXECUTIVE

SUMMARY OF PRESENTATIONS AT THE

2010 HSM WORLD BUSINESS FORUM(NEW YORK CITY, OCT. 5-6; VISIT WBFNY.COM OR

HSMGLOBAL.COM).

AFTER LEARNING SOME-thing new, you’ll

likely confront resistance when you tryto implement new ideas and strategies.The challenge begins when you returnto the office and encounter people whoare unwilling to change. You then needto exercise influence.

Consider this influence problem:You’re the manager at Air Nippon air-ways. If passengers used the restroombefore boarding the plane, they couldlighten the load by 240 pounds, reducethe carbon footprint, and reduce fueland materials costs. How do you getthat to happen? Is it your inclination toinfluence people monetarily by charg-ing them to use the restroom on theplane or subconsciously by playingwaterfall sounds in the boarding area?

By examining your response, youcan determine what aspects of influ-ence you tend to rely on, and you mayalso see some gaps in your thinking.

action against chronically underper-forming teachers.

I launched the Jack Welch ManagementInstitute to help advance online educa-tion and teaching courses on leadership,hiring, firing and other managementessentials. To fix the U.S. education sys-tem, we have to challenge the tenuresystem, reward teachers on merit, notshy away from paying superior teach-ers a lot more money, and effectivelyweed out the worst teachers. I wouldmake education look like some of thecharter schools where exciting peoplecome to work; they are rewarded andcheered for their work and respectedby everyone, and the students are theproducts and not the teachers. LE

WHEN LACKLUSTERperformance and

a consistent deficit of proven resultsconfront your organization—regard-less of the market you serve—youhave to take action, stick to your con-victions, and make the tough decisionsto get ahead. We’d all like the world tobe just the way we like it, but whenthe chips are down—be it because ofthe economy or other challenge—lead-ers might see their customers com-plaining, competitors charging aheadwith new offerings, and underperfor-ming employees bringing other peo-ple’s morale and productivity down.

I insisted that GE’s underperformersbe moved out. You have to see employ-ees straight on. You have to be can-did—you can’t hope that Joe orCynthia will get better. Sometimes,those lessons reveal, “The differencebetween candor and abrasiveness isclose”. The higher you are, the morecandid you can be. The lower you are,the more abrasive you are. You have toanticipate the world being worse for youthan it appears in the current moment.That last part may be what’s requiredto force tough decisions about people.

These days, I see leadership devel-opment rating low on the corporatepriority list. But it shouldn’t be thatway because when you get the bestplayers, you win. What gets in the wayof that mandate, so often, are day-to-day operations and leaders’ insecurityabout bringing on the best talent. Greatleaders promote and hire people whoare smarter than they are.

The succession process that I helpedto orchestrate before my departure fromGE has not fulfilled its primary role: toprepare the next generation of leader-ship. So, I wonder: Where was theleadership development? Where wasthe succession plan and process?

Part of the reason I was well knownfor GE’s performance measurement ofemployees was because it conflictswith the approach that so many othercompanies take: People spend moretime trying to make the bottom 10 per-cent okay than celebrating the top 20percent of their performers.

Business leadership exampleswould be equally powerful if appliedto education. The education systemneeds to focus on how it can deliverbetter student outcomes by reducingthe influence of unions and taking

rienced with hiring and keeping theright people. After multiple acquisi-tions and mergers, I’ve identified theone difference between my companyand the newly acquired one—it’s theDream-People-Culture platform. If youhire and train right, competitors can’tduplicate your business. The differencein what you say and what you do iswhat makes the difference. Making theright decision isn’t always the easy decision.• Culture. It’s mission-critical to create

a culture of ownership. You want peo-ple to feel that they own the business.As a leader, you’re more likely to thinkIf I’m an owner, failure is not an option.

We tend to express more recklessnessin a rental car than we do in our owncar. After all, we’ll have to pay to fixthe scratch or dent on our own car. Youdon’t want your employees to treattheir job or their company like a rental.

Creating that sense of ownershipwill ensure that when an employeemakes a decision, it will be done in thecompany’s best interest.

People and dreams can be combinedto form a powerful ownership culturethat will prevent taking short cuts.Building a company takes time, brickby brick. There are no shortcuts tobuilding a performance culture. Insteadof developing their own people, manycompanies hire from the market almostall the time. This is a mistake. Develop-ing your own people is key. LE

IT’S COMMON TO HEARpeople refer to a com-

pany’s successes or failures the sameway one would talk about a sportsteam. Both require a dream for success,being composed of the right people,having them rally around the dream,and then creating a culture of ownership.

As CEO of Anheuser-Busch InBev, Ifind that three elements are critical tobuilding a high-performance culture:• Dream. Companies are formed by

people. And if the people in a compa-ny all go in different directions, thecompany can’t move forward. Ourcompany has to have a dream—to bethe best beer company in a betterworld. Dreaming small or dreamingbig takes the same energy, so dream big.

The analogy of a high jumper is rel-evant when setting your company’sdream and the expectations of people.No matter how high the bar is set for ahigh jumper, the athlete gets just highenough to clear it. The same could besaid for that of any corporate depart-ment or team. It’s about the coachputting pressure on the athlete. Weshould never be afraid to test the lim-its. Keep raising the bar to dream, andbe public about it.• People. You have to worry about

getting the best people. Great peopleattract other great people and chal-lenge them. Similarly, mediocre peopleattract mediocre people. Leaders can’tbe afraid to hire individuals who youthink with training and time, might bebetter than you. You need to spendtime getting to know your people.Don’t leave people to HR alone; it’syour responsibility. I have much expe-

2 0 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

Jack Welch:ACHIEVING SUCCESS

Carlos Brito: BUILDING A

PERFORMANCE CULTURE

Joseph Grenny:EXECUTE ON STRATEGY

There are two big reasons people dowhat they do: because they want to dosomething (motivation) and becausethey are able to do something (ability).Leaders tend to develop motivationalstrategies that don’t increase ability.

We’ve identified six sources of influ-ence. 1: Personal motivation: Do I wantto do it? 2: Personal ability: Can I do it?3: Social motivation: Are others encour-aging me to do it? 4: Social ability: Areothers helping me to do it? 5: Structuralmotivation: Is the environment right forme to do it? 6: Structural ability: Doesthe environment support me doing it?

Leaders who understand behaviorfrom each source of influence candevelop the most effective influencestrategies. Leaders who use all six ofthese sources of influence are 10 timesmore likely to secure change. You can helppeople link the behavior that is beingasked of them and their own core valuesby using engaging stories or recreatingpowerful personal experiences.

What works to change behavior?Whether you’re trying to amp up yourcareer, get your finances in order, loseweight, beat an addiction, or save astruggling relationship, you can usefour proven change strategies that willkeep you on course without fallingback in your old ways: 1) Identify cru-cial moments, moments of greatestweakness, when enacting the rightbehavior will have an enormous effecton results; 2) Create Vital Behaviors: Ifyou set rules in advance, you’re morelikely to change your behavior when acrucial moment hits; 3) Engage all sixsources of influence: harness the sixinfluence strategies that determine howpeople behave; and 4) Turn bad days intogood data so that you learn from yourfailures and adjust. With these strate-gies, you can create robust change. LE

Many of us are likewise feeling fine.The climate crisis is the biggest chal-

lenge to sustainable capitalism and ourway of life. But the word crisis, inChinese or Japanese, has two charac-ters: danger and opportunity. The climatecrisis is one of the most dangerous, butit also shows the biggest opportunity.The global economy is still dependenton an oil market dominated by thePersian Gulf, and the thought of itbeing disrupted or under control of thosewho could use it as a geopolitical weaponis disturbing.

Abandoning the 100-year-old pollut-ing technologies of the past to preparefor a sustainable 21st century couldbreak our dependence, put people towork, and save the economy; but col-lectively we suffer from inertia—theenemy of change. I attribute the inertiain part to our inability to imaginesomething that’s unprecedented. Wetend to think if it didn’t happen in thepast, it’s not likely to happen in the future.

I see major contributors to the cli-mate crisis: global population explosion,which taxes resources; the dramaticexpansion of power-draining technolo-gies; and the way we think about capi-talism. The population has quadrupled;in my lifetime, 62 years, we’ve gonefrom 2 to 6.8 billion. I’ll see it go to ninebillion. I attribute the increase in popu-lation to the education of girls, empow-erment of women, fertility manage-ment, and higher infant survival rates.

Capitalism is the most efficient form oforganizing economic activity. It unlockshuman potential. It has a set of organic,ubiquitous incentives. However, we areoverdue in addressing capitalism’sstructural problems, specifically theshort-term thinking that recentlybrought down the financial system.That same lack of vision prevents long-range environmental planning. LE

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 1 1 2 1

Al Gore:THE NEW GLOBAL DEAL

support. P&G acquired the 1,500-prod-uct Max Factor color cosmetics line inthe 1990s. The P&G team ranked themby sales, profit and margin, discontin-ued the poorest performers and devel-oped new offerings that were ultimatelymuch more profitable and successful.

Innovation has to be the centerpiecefor a business to thrive for two cen-turies, as P&G has. In the last decade,the business grew organically six per-cent on brand and product innovationalone. Such innovation has two inten-tions: to create even more value for ourcurrent users and to bring in newusers. We served two billion of thenearly seven billion people in theworld. We then doubled the number ofcustomers to four billion in less than adecade. We want to serve another bil-lion in the next five years.

P&G’s longevity hinges on its abilityto anticipate market changes while learn-ing from the missteps of the past. I evalu-ate new inventions that could threatenbrands, and even categories. I alsoevaluate new inventions P&G couldpartner with to improve our productsfor more customers. New inventionscan be both threats and opportunities.My two big do-overs show how instinctplays a role in CEO leadership.

First, P&G was ready to swap one ofits unreleased pharmaceutical drugsfor Claritin, when at the last minute thehead of P&G Health Care advised menot to do it. Every bone in my bodysaid we should go ahead, but Ideferred to experience and expertise. Inhindsight, I should not have. Claritin isthe second largest over-the-counterdrug introduced over the last decade.(P&G’s Prilosec is the largest.)

Second, after a great acquisitionwith Gillette, P&G had an opportunityfor another large deal, but couldn’tmake it happen. There were three own-ers. I had the deal done with the major-ity owner, but couldn’t get it done witheither of the minority owners.

During economic instability, compa-nies are more likely to play it saferather than invest in risky innovation,yet P&G’s longevity is a perfect exam-ple of weathering every external conditionand thriving. For those without authori-ty or executive sponsorship to initiateor champion customer-centric innovation,I say, just do it. Nobody told me towatch people and learn why people dowhat they do—I just decided to just doit. Get your customers involved in co-designing and co-creating new prod-ucts and services and ask for forgivenesslater. Charge ahead and find someoneto let you run your own experiment. LE

THE LATE COMEDIANMinnie Pearl told

of a farmer who was involved in a caraccident. When the farmer went tocourt to sue for damages, the lawyerasked him whether it was true he saidhe felt fine right after the accident. Thefarmer began to tell a long story of theevents, culminating with the other carhitting him and his cow. When policearrived on the scene, they saw theinjured cow and mercifully shot him.“So when the police asked the farmerhow he felt, he said, “I feel fine.”

LEADERSHIP IS ABOUTmaking difficult

choices. When I had to sacrifice twobeloved and profitable brands—Noxzema and Clearasil—I equated itto letting go of my children. But ifproducts are not part of a company’sgrowth strategy and can’t capture amarket-leading position, human andoperational resources have to befocused elsewhere. Companies can bet-ter turn their attention to innovationwhen not maintaining products on life

A.G.Lafley: CUSTOMER

CENTRIC GROWTH

CAN SOMEONE WHOpushed teams to

great achievements through a demand-ing leadership style reform and get thesame high-quality results? I had toadapt my leadership style from dictator-ial to one that was more respectful andempowering. I wasn’t always a goodleader when I worked with people toget the best out of them. These skillsaren’t innate for me, and I had to beopen to learning. Now, when conflictarises, my inclination is to solve theproblem, rather than make a recrimi-nating moment out of it. I turn it backon myself. Did I hire the right person?Yes. Then maybe I didn’t communicateit well or they didn’t understand. Thisnew leadership style lent Avatar asense of fun, authorship and ownershipin an environment where people feltlike they had permission to make mis-takes but were now less likely to do so.

Putting the right cast, technical andcreative teams together is critical. Blend-ing the people I know I can count onwith new recruits who can push andchallenge me has become my first step.Avatar operated more like a family thana conventional business team, bindingthe team together for 4.5 years—longerthan most film productions. Managingthe stress, keeping up morale and main-taining the enthusiasm over thisextended length of time was difficult,particularly when people worked allhours and had crises of faith that they

WHEN SO MANY LEAD-ers are making

the case for creativity, I question wheremanagement should spend its time—on enhancing productivity or onenhancing creativity? On the onehand, the importance of optimizingasset utilization, costs, quality, cycletime and logistics is critical to today’senterprise. But growth, new businessdevelopment, innovation and futurestrategy are crucial as well. In fact, themore senior the position, the moreimportant the role as steward of thefuture. The higher up you go—themore money you make—the moreyour role as leader is building the futureof your company. And, the role of cre-ativity is crucial not just for companiesto build their future but for solutionsto the world’s macroeconomic chal-lenges—like energy, water, and pollu-tion—where big trends demand crea-tive solutions by businesses to be met.

So, how will we close the gapbetween the aspirations of people and ourability to support them without creativeshifts? Simply making incrementalimprovements and enhancing produc-tivity won’t allow us to multiply theresources that we have to make it sus-tainable for all of us. The creativity ofour strategic thinking will enable us toovercome and shape these strainedstructural conditions. That is theessence of blue ocean strategy.

Is the blue ocean strategy right foryou? If you are like most companies,you are stuck in a red ocean, facingheightened competition, dwindlingprofit margins, and commodity-typecompetition. How will you respond?Efficiency alone—productivity gains—will not get you out red oceans. Onlythe creativity of your strategic thinkingwill enable you to shape and overcomethese unfavorable conditions. So strategyneeds to go beyond just reaching theindustry best practice threshold byimproving productivity. Blue oceanstrategy pushes the creativity frontierof new demand and shapes existingunfavorable structural conditions intonew frontiers, where markets are cre-ated and demand is strong.

Blue ocean strategy is the bridgethat links creative ideas to commercialsuccess. It addresses both effectivestrategy formulation and execution. Toget started, you need to overcome thefour hurdles: 1) the cognitive hurdle:

Counter the response “we don’t needto change” by using harsh operationaland market realities to render the sta-tus quo indefensible; 2) limitedresources: Redirect resources from coldspots—areas of highest consumption ofresources that add no value—to hotspots, areas that have the greatestimpact on performance in your blueocean strategy; 3) motivational hurdle:Identify the kingpins, the key influ-encers, and bring them into the strate-gy process, engage them with fairprocess—engagement, explanation,and expectation clarity—and leveragetheir influence and respect to motivateothers to effectuate the blue oceanstrategic shift; and 4) the political hurdle:Recruit a consigliore; find out who islikely to fight a new strategy and whosupports it; create a coalition of angels;and circle the devils so their power issquelched. LE

2 2 J a n u a r y 2 0 1 1 L e a d e r s h i p E x c e l l e n c e

Renee Mauborgne:BLUE OCEAN STRATEGY

couldn’t overcome the obstacles ahead.Execution of a creative vision. Added

to the mix was a game-changing visionthat was nearly unexplainable, and thusharder to get people on board. Innovationdrove the movie. My intent from the startwas to change the digital creation ofcharacters. The risks of doing somethingnew with Avatar were not as great as notdoing something new that would exciteaudiences. I wanted to push my team todevelop the movie technology wave ofthe future. One revolutionary innova-tion—the enhanced 3D technology—wasn’t enough, and creating 10-foot-tallpeople was an even harder invention.

Perseverance and patience pay off.The investment in people, technology,and capital resources plus energy andtime mounted in the high-risk environ-ment. From concept to screen took 15years, although there was a decadewhen the project was untouched. I was3 1/2 years into the project before see-ing the first shot. I don’t think you everknow if something is going to be a hit.It’s hard to know. I knew we weredoing something unique. There arerisks involved in trying new things,but the biggest risk is not to be bold. Youhave to break away from the pack.Audiences are jaded. It must be themust see film. The reward is all thesweeter because of my propensity toset goals ridiculously high and fail at alevel higher than everyone else. LE

James Cameron:INNOVATION AND PASSION

Other speakers offered insights:Steve Levitt, author of Freakonomics:

“Create a culture of experimentation (tounderstand root causes and influences).”

Joseph Stiglitz, former chief econo-mist at the World Bank: “With the endof the stimulus, the economy is gettingweaker; something else needs to be done.”

Vijay Govindarajan, author of TenRules for Strategic Innovators: “To buildan effective strategy, you must excel atmanaging the present, selectively forgettingthe past, and creating the future.”

Nando Parrado, author of Miracle inthe Andes: “Sometimes you don’t knowwhat you’ll do or say until you have todo or say something.”

Bill McDermott, co-CEO of SAP: “Tomake big things happen, start with thevision and strategy and focus on results.”

Charlene Li, coauthor of Groundswell:“Encourage people to take risks, createinternal sandboxes where they can learn,grow, and think about strategy.”

Martin Lindstrom, author of Buyology:“The challenge for marketers is to con-nect with an emotional marker in thebrain of the consumer and make anemotional connection to your brand.”

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