the mark of a winner
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The Mark fi B Y N O E L M . T I C H Y
W hat separates winning organizations h m the also-rans? I have spent 25 years studying both winners and losers h m the inside out for an answer. Not surprisingly winning organizations share certain financial attributes. Companies consistently ranked in the top quartile of the S&P 500 maintain annual revenue growth of 12 percent, and a 16 percent operating return on assets, according to Columbia University Business School professor Larry Selden. By contrast, gains achieved by simply slashing payroll and expense (call for Al Dunlap) are seldom sus- tained in the long run. Likewise, erstwhile winners who f d to keep pace with change and thereby destroy billions of dollars in shareholder value are severely punished (call for John Akers of IBM, Bob Stempel of GM, James Robinson of American Express, Kay Whitmore of Kodak . . . ). The early 1990s were a watershed moment in busi- ness, when these and other corporate leaders were sent home for poor leadershlp.
At the same time, several companies have been setting new records for financial per- formance, enriching shareholders, building communities, and providing greater oppor- tunities for employees. companies like General Electric, AlliedSignal, PepsiCo, Intel, and others are led by men and women who personally and methodically nurture the development of other leaders, at all levels of the organization. Even if you, as a leader, are smart enough to anticipate and prepare for massive economic and social shifis, you cannot respond to the ground-level demands of the moment without the energy, com- mitment, and ability of people throughout the organization. Effective leaders recog- nize that the ultimate test of leadership is sustained success, whlch demands the constant cultivation of hture leaders.
This has important implications for the work you do every day. For one thing, a l l the money your organization invests in leadership development-usudy the province of outside trainers and consultants-means little without an equal investment of your
Copyight 1997 Noel M. Tichy
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own time and effort. Yet the benefits of investing your time will accrue to you as well as to your organization.
If long-term success requires more leaders at more lev- els than your competitors, then teaching, coaching, and cultivating others becomes a strategic imperative for senior executives. For example, during the first 18 months of his tenure as CEO of AUiedSig- nal, Larry Bossidy put all 86,000 employ- ees through a development program he helped design. He spoke to 15,000 people the first year-presenting his vision, ex- plaining markets and strategies, engagmg in debate-in short, teaching. In the process he helped increase the market value of his company 400 percent in the past s i x years. Likewise Andy Grove at Intel, Jack Welch at GE and Gary Wendt at GE Capital, Roger Enrico at PepsiCo, Lew Platt at Hewlett-Packard, Bill Pollard at Service- Master, and hundreds of other business, community, military, and religious leaders understand that their success depends on others, and that leading and teaching are inextricable. They spend hundreds of hours a year working with their colleagues- sometimes just 5 or 10 at time-to share ideas, identlfy needs, and develop hands-on business expertise.
Three Keys for Leading
he ability to develop the leadership of T others requires three things: a teach- able point of view, a story for your organization, and a well-defined methodology for teaching and coaching.
Teachable point ofview. To succeed as a leader you must be able to articulate a defining position for your orga- nization.You must be able to talk clearly and convinc-
ingly about who you are, why you exist, and how you operate. This means you need to have ideas on products, services, distribution channels, customers, and growth. These ideas need to be supported by a value system that the leader articulates, exemplifies, and enforces.
But you also need something I call e-cubed: emotional energy and edge. Winning leaders seem to naturally generate positive emotional energy in others. They also have the edge to face reality and make tough yes-or-no decisions. That is your unique burden-not to call in consultants or convene a task force, but at crucial moments, when forced to act quickly, to make the difficult choices only you can make. It often makes you the most unpopular person in the organization, which is why those who need to be liked are seldom effective leaders-at least not during times of crisis. But leadership is the abllity to see things as they really are and to mobilize an appropriate response. You can only make those decisions and engender that response if you have clear ideas and values. All three components of leader- ship-good ideas, appropriate values, posi- tive energy and edge-are part of the package you present to those you hope to develop.
Living stories. The basic cognitive form in which people organize their thinking is the narrative story. Individuals, families, organi- zations, communities, and nations all have
tales that help make sense of themselves and the world. There are three kinds of stories that leaders can tell. Theres the who 1 am story in whch leaders describe themselves. Roberto Goizueta, chairman and CEO of the Coca-Cola Company, often talks about his early experiences: being forced to leave Castros Cuba and
start over in a new country with $40 in cash and 100 shares of Coca-Cola stock. He tells stories of how as a young boy he would spend days reading and talking with his grandfather, Marcelo, who had founded a sugar and real estate empire. Marcelos lessons on the impor- tance of cash and simplicity, among other virtues, still guide Goizueta decades later. I am a great believer in cash flow, he says. Earnings is a man-made conven- tion, but cash is cash. The larger the company is, the less it understands cash flow.
Theres the who we are story, in which you articulate for your constituents what their identity is. Chairman and CEO Phil Knights stories at Nike are all about winning. He named the company after the Greek goddess of victory. He uses his
fold in 15 years; no business leader in hstory has done a better job of growing shareholder value. Goizueta has done this by hiring managers who are entrepreneurs and risk takers-and by findmg a way to energize peo- ple about the story of the company. He reminds people that the human body requires 64 ounces of liq- uid each day, and that on average Coke provides just two of those ounces. His message to the troops is clear: lets get going. Further, Goizueta puts individual man- agers at the center of h s stories. The best managers are those who walk into a building and see not where Coke is but where it isnt. It is this ability to find
opportunity, he tells his listen- ers, that will make the com- pany a winner in the future.
Dramatic storytelling is the way people learn from, and connect
stories of competing as a runner Dramatic sto y t e l l i n . with, one another. That is why - - to explain the thrill of competi- CEOs-Bdl Gates, Andy Grove,
Bill Pollard-write books. It is tion and winning. Nlke is not a is the iuay people learn company to him. It is a vehicle from one another. more for the benefit of their
for furthering the aspirations of customers, famous and un- known. His message-that every employee helps customers to be winners-helps to create an organization in which every- one knows what they are aiming for and what the com- pany represents.
But the most important leadership tale is the where we are going story. Martin Luther Kings I Have a Dream speech mobilized energy around powerful images of social equality-black and white children holding hands in a transformed world.
Winning business leaders use the power of storytelling as effectively as our most gifted public leaders. Goizueta has increased the market value of his company thirty-
constituents than for the general public.
Teaching methodology. To be a great teacher you have to be a great learner. Most effective
teachers-and leaders-will tell you that they grow as much as those they teach and lead. The process of teaching can be quite simple; it starts with having a conscious system for interacting with people. Jack Welch, for instance, spends a half-day every couple of weeks teaching, wrestling with issues, and challenging his people at Crotonville, GEs leadership development center. Rear Admiral Ray Smith visits graduating classes of the Navy SEAL underwater demolition pro- grams, and participates in the same physical training as SEAL. candidates halfhs age. Larry Bossidy writes two- or three-page letters to the heads of all AlliedSignals
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businesses afier every strategy session, operating review, and people review.
You must be methodical but not mechanical in your approach to teaching. To make a Werence, you must have the self-confidence to be vulnerable to others; you need to share your mistakes and doubts as well as your accomplishments. When Roger Enrico, for instance, goes off-site with 10 of his senior executives for five days, hes not afiaid to reveal himself. He cannot hide behind his position. Its one thing for a CEO to come in, deliver a canned speech to a training class, and escape. You cant live with your troops off-site for five days, 16 hours a day, and be anything but genuine. Phonies and martinets d be found out by the end of day one.
through resistance. Implicitly, we know what good leadership is, and people in all walks of Me can become more motivated to work on leadership by remember- ing when they felt proud, when theyd been in a tough situation where they could le