CONTENTS
From Writing
to Leading: How John A. Byrne Is
Remaking Fast Company
Magazine
publishing is a tough business. The competitors are many, advertising
revenues are subject to economic vagaries, and time-strapped,
media-saturated readers can be hard to satisfy issue after issue. John
A. Byrne has spent his entire professional life in magazines, so if
anyone knows the business, he does.
Byrne also knows a lot about corporate management. He covered that beat
for a long time for BusinessWeek, and in 2001 he co-authored a
best-selling book on leadership, Jack: Straight from the Gut,
with Jack Welch, former CEO of General Electric. In addition, Byrne
knows what can happen when leadership goes awry; in 1999 he wrote
Chainsaw: The Notorious Career of Al Dunlap in the Era of
Profit-At-Any-Price, a book about the rise and fall of Al "Chainsaw"
Dunlap, former CEO of Scott Paper and Sunbeam.
These days, though, Byrne finds himself in
something of a new position. He is still involved with magazines -– this
time with Fast Company -- but now he’s editor-in-chief, not a
writer. Appointed to the leadership post last year, he must, for the
first time in his career, worry about the success of an entire
enterprise, not just a tight deadline for a cover story.
Byrne's
task is made more complicated by the fact that he is trying to turn
around a one-time high-flying publication that fell on hard times after
the dotcom bubble burst in 2000. Co-founded in 1993 by former Harvard
Business Review editors Alan Webber and William Taylor in
partnership with real estate investor and publisher Mortimer B.
Zuckerman, Fast Company's premiere issue appeared in November
1995. It found its voice at the same time that ideas about the so-called
new economy were starting to gather force at the beginning of the dotcom
boom. Little wonder that Fast Company took off - and fast. By
1996 it was being published bi-monthly. In 1997, Advertising Age named
it the "Startup of the Year." In March 2000, Ad Week named Webber
and Taylor its "Editors of the Year," acknowledging that advertising
revenues had been almost $40 million two years in a row. Webber said he
saw Fast Company as more than a magazine; it was "a movement of
people shaping the New Economy."
With dot-com fever at its peak, Gruner + Jahr USA ,
a division of German media giant Bertelsmann, bought Fast Company
for a price that observers reckoned to be between $360 million and $490
million. The timing could hardly have been worse -- at least for Gruner
+ Jahr USA . The ownership change came just as the Internet and
technology bubbles burst, and the New Economy subsided with a whimper.
As dotcoms went belly-up and technology stocks plummeted, the
advertising market for magazines began to dry up. Publications like
Red Herring and Industry Standard, which had thrived during
the boom, began to shut down. While Fast Company, like Time
Warner's Business 2.0, survived, it had to cope with a slow
economy, a flat advertising market as well as declining newsstand sales.
After some two years of economic agony, Webber and Taylor called it
quits. In April 2003, Byrne came on board as editor-in-chief.
Byrne will be one of the presenters at the
Eighth Annual Wharton Leadership Conference on June 2 in
Philadelphia . He spoke recently about his new management challenges
with Michael Useem, director of Wharton’s Center for Leadership and
Change Management, and Knowledge@Wharton editors. The Center for
Leadership and Change Management is a co-sponsor of the conference with
the Center for Human Resources and Wharton Executive Education.
An excerpt from the interview appears below, and
the complete interview is available
here.
Useem: You have often written about
leadership when you were at BusinessWeek. You wrote about the
leadership of one top executive, John F. Welch, in your book Jack.
So having thought about it and written about it, what is it like now to
go into a position where you are indeed the leader?
Byrne: My very first experience was to be
brought up to Boston, to stand in front of everyone and be introduced as
the new leader, and to give bad news immediately. It was that we would
be moving the editorial operations from Boston to New York . I said,
"Look, I’m really excited to have this job, and to help try to engineer
a turnaround of the magazine. But at the same time, I’m also genuinely
sad because many of the people [here] are [not] going to be on that
journey with me."
I think they appreciated the honesty immediately. I can’t be anything
other than honest. I knew there was great anxiety about what was going
to happen [in Boston] because the company that owns Fast Company,
Gruner + Jahr USA, also purchased Inc. magazine and moved Inc.
to New York. Inc. had already been in New York, so everyone was
worried that the same would happen to Fast Company, but no one
had told them what the story was going to be. So within a day of
accepting, I had to go and deliver very horrible news.
I want to create a culture at Fast Company
that lives the values we espouse in the magazine: very open and honest.
Everyone has a say, no matter where that person is on the totem pole. I
don't believe in a dictatorial leadership style; it’s quite a consensus.
I’ll give you a few examples of the things I’ve done. I have argued that
everyone, no matter how junior, should learn from this experience in a
way that they typically would not at most magazines. I initiated what we
call an ‘autopsy’ in every issue, where we invite a third-party critic
and then the entire staff sits in a room and listens to this person go
through one page after another of the most recent issue. The idea is to
learn from our mistakes. I don’t know how many people would be willing
to sit and have everyone on the staff hear their leader critiqued in the
way that I’ve been critiqued in that room. But one of the benefits we
can provide in the magazine, since we’re much smaller than Fortune
or BusinessWeek, is to be able to do this -- and not behind
closed doors but in front of everyone. So far we’ve had everyone from a
long-time reader to an advertiser, to an entrepreneur who reads the
magazine to a former colleague of mine who used to work at Fortune,
The New York Times and BusinessWeek come in and rip us
apart. It’s been an interesting and valuable experience for everyone.
Another thing I’ve done more recently is to ask 11
of the most senior people at the magazine to critique me. I signed up
for one of these online assessments where people are invited to
anonymously critique me. You’re asked different questions in 12
different categories to get a report card. I actually wrote it up, and
that’s going to be in the next issue. We will publish some of my grades,
which were not all that good.
Knowledge@Wharton: What were your strengths
that they identified?
Byrne: These questionnaires tend to ask some
questions that are silly, I think, but they get at certain important
points. For example one of the questions asked is, ‘Does your boss love
his job?’ I got an A-minus for that. Of the two worst grades I got, one
was, "Is your boss preparing you to take over his job?" I got a bad
grade on that, which surprised me, considering I’m doing the autopsies
and because my leadership style is to be inclusive. The other thing is
we are in a turnaround mode. The focus really has been on improving the
product and less on grooming people to replace me because, for gosh’s
sake, I’ve only put out eight issues. I joined the magazine in late
April [2003] but for two months I just got to know everyone. I didn’t
touch the editorial of the magazine or operate the magazine. I basically
recruited new staff. I planned the move to New York . I got to know
everyone I needed to get to know well so that I could make quick
decisions and get to New York with the least stress.
The other poor grade I got, with which I totally
agree, was planning. I tend to be very spontaneous, to be not someone
who has neatly piled papers in his office. In fact, that’s sort of the
symbol for me. I had a little coaching session on my grades, and I told
everyone who was asked to evaluate me what I would do in relationship to
my low grades. So I immediately thanked them for my high grades and
said, ‘OK, here’s what we’re going to do about planning.’ I put in more
structure, including more set meetings every month to improve
communications and to make the internal planning inside the magazine
more transparent to greater numbers of people....
Useem: John, a very personal question: What
led you to decide to leave BusinessWeek and take the job at
Fast Company?
Byrne: This was a great opportunity. I never
really wanted to be an editor because all my life I’ve been a reporter
and a writer and I loved it. And when I was at BusinessWeek for
nearly 18 years and Forbes before that for four years and
Fairchild [Publications] for five years, I always thought that I had one
of the best jobs in the world. Part of that was just going out and
interviewing and living in the skin of people whom I interviewed, and
vicariously experiencing their lives without having to take the risks
that they were assuming. But when the chance came to actually run my own
show and run Fast Company, I thought about it and I said, ‘You
know, I’ve been writing about this stuff all my life. I think it would
be great, really great, to try to run my own organization and do
something special here.’
When Fast Company was launched nine years
ago, Bill and Alan, the founding editors, came to me before the
magazine was a reality and they only had a prototype in their hands and
they were looking for money and staff . . . and they asked me to join. I
seriously considered it at the time. I just thought it was a fabulous
idea. Ultimately, I didn’t go for a couple of different reasons. So when
they came back to me when they were ready to leave, almost eight years
later, I admired what they had achieved. I realized that since the
bubble burst, they were in trouble, and I just wanted to do something
different and help them out.
Useem: As you think back on the many people
you have profiled in books and in magazine articles, are there one or
two of those executives or managers who stood out in your mind in
helping you think through what you would do if you did become
editor-in-chief of Fast Company?
Byrne: I think Roy Vagelos at Merck, about
whom I wrote a cover story, was the quintessential leader of that
company when it was in its heyday. Here’s why: Because he had a
scientific background, he knew intimately what that company was all
about. As a journalist, obviously, I know a lot about reporting, I know
a lot about the craft, having practiced it for so many years. So as an
editor, I think I have a different perspective from most editors. Most
editors come up through the editor ranks. They’re journalists for a
short period of time and then they take the career path to be managers
and editors, as opposed to being a writer as I have been. So they’re a
little different. I think Roy Vagelos used his scientific expertise to
great advantage at Merck. He was a true consensus leader as well, which
I am. He is one of the guys I really most admire for what he achieved
and accomplished at Merck and because of his background being similar to
my own.
Now, obviously, Jack [Welch] is an incredible
leader. There were lots of things that Jack taught me; [one was] to be
very decisive because a bad decision is better than no decision. I think
what Jack did throughout his life is very instructive for any leader,
which is this: He made sure that he got the maximum number of at-bats.
He was at GE when it was a true bureaucracy and he was plodding his way
through that bureaucracy. He probably made 10 decisions, 20 decisions,
for every one that a typical GE manager made. I think that that is so
essential. That bias for action -- to immediately decide what to do and
how to do it, even when you’re not comfortable with the decision -- is
extremely important. In small organizations, I think that’s even more
important than big organizations in some cases because your hands are
involved in a lot more things. If you don’t make decisions quickly,
nothing ever happens. That’s one key thing.
The other key thing is to be blunt and honest about
how you feel without regard to how your decisions affect people. In
other words, you can’t be timid about making someone unhappy or mad.
That’s your job, to get things done. For a consistent manager, the
toughest thing is to be tough. I’ve done some research on this. People
who are more confrontational, it’s easier for them to be managers and
leaders because it’s easier to tone it down than tone it up. For me, I’m
toning it up. It’s hard. It’s harder to tone it up into being more
deliberately confrontational. But you have to be. If you aren’t, you’re
not going to have any results.
Knowledge@Wharton: John, you said that you
spent some time initially hiring a senior team and some good people,
writers and editors. How did that work out? And are there any decisions
that you’ve regretted? Have you had to make even more changes? What kind
of staff do you have around you?
Byrne: I’ve learned so much in the last nine
months it’s just remarkable. I’ll give you an example. When I first came
in, my first impulse was to hire against my weaknesses. Because I was
never really an editor, I wanted to hire someone who I knew would be a
terrific line editor, for example, and who could write terrific
headlines and cover language, because I had never done that. And because
I’m not by nature confrontational, I wanted to hire someone close to me
who was that way, who would get the trains to run on time.
Ultimately, what I figured out is that you never
hire to cover your weaknesses; you hire to leverage your strengths.
Because I’m more naturally communicative, because I’m more naturally a
people person and because I think people more naturally overestimate
their weaknesses – if they’re self-aware at least -- then what happens,
if you hire for your weaknesses, you only compound your weaknesses
because you don’t get better. You rely on other people to do that for
you. The other thing that happens is those people that you’re more
willing to accept weaknesses can, in fact, offset your strengths. So
I’ve adjusted. That was a real learning experience for me…
Useem: It sounds like your having the time
of your life and you haven’t looked back. Is that correct?
Byrne: That is totally true. I haven’t had
this much fun since I was editor of my college weekly. It’s puzzling
because I never wanted to be an editor. But I’m having so much fun. I
can’t wait to get to work. Twelve hours go by and I’m looking at the
watch saying, "Where did the day go?" It is so much fun.
Note: If you are a Wharton
Leadership Digest subscriber and wish to attend the
Eighth Annual Wharton Leadership Conference on June 2, 2004
when John Byrne is speaking, you will receive the discounted,
early-bird rate by clicking
here; indicate that you are a Wharton Leadership Digest
subscriber when you register.
What Went Wrong: Why
CEOs Fail
By David A. Nadler, CEO and
Chairman, Mercer Delta Consulting
In collaboration with the
University of Southern California’s Marshall School of Business Center
for Effective Organizations, Mercer Delta Consulting recently completed
a study of critical interest to CEOs, senior leaders and board
directors: an examination of the roots causes of CEO failure.
The research was based on
in-depth interviews with people who were close observers of eight
different cases of CEOs who failed, supplemented by analysis of
secondary accounts of forty-five other cases of CEO failure at major
U.S. and European corporations. It focused mainly on early career
failures involving promising chief executives who seemed “just right”
for the job but failed in their early years.
The results revealed several
major factors that impact a CEO’s ability to succeed:
Legacy
Actions of Outgoing CEOs. Three particular legacies can derail
incoming CEOs. First, some CEOs, weary of the job prior to actually
stepping down, don’t tackle difficult issues or address significant
changes towards the end of their tenures, leaving a host of big problems
for the new CEO. Second, narcissistic CEOs either don’t want to give up
their posts and thus handle succession poorly or refuse to nurture and
groom competent internal replacement candidates. And third, outgoing
CEOs want to leave on a “high note” and make big strategic mistakes (a
high-visibility acquisition; heavy investment in a new product or
technology; a dramatic change in the company’s strategic direction) that
the incoming CEO has to correct.
The
Succession Process. Poorly planned and executed succession
processes, insufficient probing of a candidate’s ability to perform in a
CEO role, and/or an over-reliance on either external executive searches
or internal “grooming” of potential successors can set the stage for CEO
failure.
CEO
Orientations. We discerned two distinct CEO orientations – the
different sets of issues to which he or she is drawn and where his/her
interests, enthusiasm, and capabilities tend to lie. CEOs tend to be
either content oriented, focusing on the substance of the
company’s business, or context oriented, with a primary focus on
environment and culture, values, and purpose. (Note: The distinction
here highlights the extremes, and most CEOs demonstrate a mix of content
and context orientations – though typically with a clear tendency
towards one or the other.)
Determining a CEO’s orientation enabled us to identify a common pattern
in the cases of early career CEO failure that we studied. In each case,
failed CEOs followed outgoing CEOs with very strong context
orientations, while the incoming CEOs had strong content skills.
These new CEOs could not sustain the contexts created by their
predecessors and, consequently, could not marshal the full capabilities
or forces of the organization.
Fortunately, both the outgoing
and incoming CEOs and the Board of Directors can take certain steps to
minimize the risk of CEO failure:
CEOs,
early in their tenure, should create development plans and opportunities
for promising internal candidates. They should make context skills a
critical variable for candidate selection, use the board as a resource
to assess candidates, and manage the entire succession process carefully
and consistently. CEOs need to position their successors with all key
stakeholders.
CEO
candidates should reflect carefully on their own experiences and,
throughout the course of their careers, seek out opportunities to
develop their context skills. Before accepting a position, candidates
should invest the necessary time in due diligence; examine closely the
tenure of the outgoing CEO; and assess, through interviews, the quality
of the outgoing CEO’s executive team.
Incoming CEOs should gauge the
extent to which their predecessor is prepared to let go, determine the
level of support they’ll need from that predecessor, and perform an
intense self-assessment to determine what other organizational support
he or she will need.
Finally,
boards should take an active hand in succession, focus on developing
internal candidates, beware of external CEO searches, and continue to be
sensitive to context management once a new CEO is installed.
Note: David Nadler can
be contacted at
david.nadler@mercerdelta.com.
Leadership In an
uncertain era:
The Wharton West Leadership
Conference
By Kate Cheney, Freelance Writer
The threat of terrorism at home and abroad. Distrust of business
executive integrity. Shareholders flexing their muscles like never
before. Company assets shrinking. “In these conditions,” said Lewis
Platt, chairman of Boeing, “leadership is more important than ever.”
“Leading in an Era of Change and Uncertainty,” Wharton West’s first
leadership conference, was held in San Francisco on March 23. Twelve
guest speakers and 100 registered participants from companies such as
Hyperion, Printronix, Venturist, and Inovant spent a day examining how
great leadership can best be developed and applied in business today.
Professor Eric Clemons, co-author of The Marine Corps Way: Using
Maneuver Warfare To Lead a Winning Organization, spoke about the
need to build a strategy that is robust, whether under the fog of war or
under the uncertainty of business competition. He examined the
fundamental principles for building a sound strategy, one that deploys
resources in the most efficient manner. He also emphasized the
importance of integrity in every strategic decision. “Integrity is
neither a luxury nor a cost of doing business, but a source of
sustainable competitive advantage," he concluded.
“Corporations are nothing but a group of people, and so the ethical tone
at the top is critical,” said presenter and Enron whistleblower Sherron
Watkins, who had approached Enron CEO Ken Lay about problems with the
firm’s accounting practices prior to its collapse. “I thought I was
handing Ken Lay his ‘leadership moment,’ but he chose not to seize it.”
Russell Ackoff, Wharton professor emeritus and chairman of INTERACT,
discussed systems thinking and problem solving as effective tools for
today’s leaders. “The whole cannot function without its essential
parts,” said Ackoff. “In business, there has to be different ways of
looking at the same problem other than where it originated, or else you
are just fixing the part and not the whole.”
“Confidence in systems thinking is important right now, said Richard
Colburn, a conference participant and a first-year student at the MBA
Program for Executives at Wharton West. “You can get knowledge from
anywhere, but not the wisdom of a Russ Ackoff. You have to hear him
speak.”
Despite differences in speakers’ personal backgrounds and leadership
styles, common themes to emerge from the conference included passion,
adaptation, leadership tone, systems management, trust and integrity,
metrics, and – above all – open communication.
Participants got the message loud and clear. According to Juli
Matthews, vice president of Printronix, “Times are changing; our company
is changing, too. What I’ve heard today makes me realize that we need to
learn how to adapt to these changes.”
Note: Kate Cheney can be contacted at
Kate@EndOfTheSidewalk.com. A full summary of the conference is
available
here. The Wharton School is offering its annual
Philadelphia leadership conference on the same topic – Leading in an Era
of Change and Uncertainty – on June 2, 2004, and information on the
conference and online registration for it are available
here.
What makes the difference:
Intelligence, Creativity, and Wisdom
Drawing on extensive research of his own and
colleagues, Robert Sternberg argues that the three key components of
leadership are wisdom, intelligence, and creativity.
Sternberg’s research and that of others
suggests that both analytical and practical intelligence – especially
tacit knowledge, that experience-based knowledge that allows one to
adapt to and mold one’s personal environment – are good predictors of
leadership performance. His studies also confirm that creativity –
defined as a capacity to generate ideas that are novel and appropriate
to the task as hand – is correlated with leadership effectiveness. And
finally, his investigations reveal that wisdom – a combination of
reasoning, judgment, long horizons, and related capacities – forecasts
leadership success as well.
Sternberg holds that the capacities of
intelligence, creativity, and wisdom can all be learned, and they are
best taught by asking students and managers to make and learn from
repeated decisions in which application of the capacities is required
for reaching the right outcome. He also notes that an act of will is
important: creative people are often so not because they were endowed
that way but rather because they actively choose to be so.
Source: Robert J.
Sternberg, “WICS: A Model of Leadership in Organizations,” Academy
of Management Learning and Education, December, 2003.
Danish Leadership:
Video Interviews with Public and Private Leaders of Denmark
A Danish organization – LinKS
(Leadership in the Knowledge Society) – has posted short interviews with
two dozen leaders in Denmark, including chief executives, newspaper
editors, government officials, and political luminaries. Responding in
English to the question, “What will be the key influence on leadership
in the near future,” the video clips with their brief responses can be
viewed with high-speed internet connections by
clicking here.
Social Impact Management:
Building an Agenda
Erica D. Coleman, Wharton MBA
Student
The Wharton School has
increasingly focused on developing leaders who are prepared to take
responsibility in the private, non-profit, and public sectors. To that
end, the school launched its Social Impact Management (SIM) initiative
in 2002 to bring faculty, students and outside groups together for the
purpose of devising fresh ways for civic organizations, public agencies,
and business enterprises to solve persistent social problems. The SIM
initiative is concerned with sustainable development and social
enterprise; corporate citizenship and social responsibility; social
venture capital and philanthropy; and non-profit management and business
ethics. Its initiatives include:
o Establishing the
SIM Venture Fund, aimed at spurring the creation of programs and events
around social impact management by student organizations (such as a
recently funded project on how European regulation affects company
social responsibility).
o Partnering with the
World Bank and United Nations to sponsor conferences (including
forthcoming meetings on environmentally-sound technologies,
globalization, and poverty in Istanbul on May 31-June 1 and in
Philadelphia on September 17-18, 2004).
o Awarding $10,000 to
support the creation of a student consulting project on social impact
management and endowing two SIM fellowships for MBA students.
o Facilitating the
placement of graduates in international development agencies.
o Creating a lecture
series and course on social entrepreneurship.
o Sponsoring an
annual symposium for students, faculty and outside organizations on
social impact management.
Note:
Erica Coleman can be reached at
coleman4@wharton.upenn.edu, and
information on the Wharton Social Impact Management Initiative can be
found here.
Leaders We Would Like to Meet:
Firefighter Lynn Biddison
Wildland firefighters
Jim Cook (U.S. Forest Service) and Mark Linane (Ventura
County, Ca., Fire Department) recently interviewed Lynn Biddison, who
began his firefighting career in 1943:
Q: What is the most
important characteristic for a leader? A: To be a good leader
you need to be out in front. Don’t ever ask anyone to do something you
won’t do yourself. I’ll give you an example from a fire in 1958 on the
Sierra National Forest. I was called up as a Line Boss. The fire was
in the Kings River Canyon and was giving them fits. We had a bunch of
Indian crews from New Mexico and Arizona and they didn’t want to go down
in that canyon at night. I couldn’t really blame them as nobody really
knew what the fire was doing down there. So I went ahead on down over
the rim to check it out. After I came back up we had no problem getting
the crews to go down there and tie the line into the river.
Q: What handful of
“lessons learned” would you give to leaders today? A: Establish
a rigorous training plan for your people…. Next, encourage people to
have pride in themselves, their equipment, and their facilities…. The
last thing I would say is to work hard to become the very best you can
be at what you do…and it only takes only another 2 or 3% of effort to be
your best. And remember, no matter how high you go, don’t forget how
you felt as an on-the-ground dirt firefighter looking up at management.
Note: The complete
interview – conducted as part of the National Interagency Fire Center’s
leadership development program
can be found
here.
Asleep at the Wheel or Leading the Way?
Developing the Next Generation of Leaders
By Robert P. Gandossy, Global Practice
Leader for Talent and Organizational Consulting, Hewitt Associates
Talk to executives everywhere and the single
biggest issue in front of them is simple and overwhelming. Leadership.
Not enough leaders, weak and unethical leaders, and leaders not
developed fast enough. And unless things change fairly dramatically in
many companies, the problem will only worsen.
When it comes to leadership, complacency is
rampant in all too many places. Instead of searching for and developing
top talent, many companies have spent the last few years immersed in
downsizing and cost cutting. The long-term consequences of this could
be devastating. Inside many companies, employee morale stands at a
record low. One out of every six knowledge workers is actively looking
for a new job. And Hewitt’s studies on employee engagement shows that
one out of every two employees is disengaged at work. It is simply not
possible to create vibrant, growing businesses with that level of
disengagement. This widespread feeling among employees will be hard to
turn after years of neglect. With a more robust economy (and more
hiring) on the horizon, some companies could face a flood of exiting
employees, further shrinking their pool of future leaders.
Many organizations are ill prepared to meet
the future leadership challenges. Take a look around you. If you’re
like most corporations around the world, 40 to 70 percent of your senior
executives are eligible for retirement in the next five years. As aging
Baby Boomers leave the workforce, there are simply not enough people to
replace them. In most developed nations, we will see at least a 15
percent drop in the number of men and women of “key leader age” -- those
in the 35 to 44-year old range. In countries like Japan and China, the
problem is even more acute. I have recently returned from China and, I
must say, the growth and investment is impressive, but so, too, are the
leadership challenges. Turnover among management talent is as high as
40 percent in some sectors. An executive at a consumer products company
with over 12,000 employees in China told me they have no Chinese general
managers declaring, “we can’t keep potential candidates despite 200
percent retention bonuses.” Although his company has had success
growing leaders elsewhere, he said, “We can’t get it right in China and
we’re running out of answers.”
While some companies are asleep at the
wheel, our research shows that the best companies for leaders are not.
There are three broad characteristics, or what we have called the Three
Truths of Building Great Leaders:
Leadership Truth #1: CEOs Provide Leadership and
Inspiration
Without the passionate and visible commitment of the
CEO, developing great leaders is not possible. It seems intuitive that
CEO involvement would be a critical success factor, but “involvement”
takes on an entirely new meaning in the realm of growing great leaders.
This is not head nodding, passive support. It is
often a passionate, “in your gut” belief that it is one of the single
most important roles for the top executive. And it is the way to
better results. The financial consequences are compelling: when a CEO is
actively involved in leadership development, the organization averages a
22 percent return to shareholders over a three-year period. Without
direct leadership from the top, the numbers drop to an astonishing
negative 4 percent. They spend the time because they know there is
a direct link to results; running the business is building leadership
capability.
Leadership Truth #2: Top Companies Have a Maniacal
Focus on the Best Talent
It begins with a strong talent pipeline. Many of
these companies have built a respected marketplace image, reputations
for developing talent, and innovative and selective recruiting
processes, ensuring a full and powerful pipeline. Southwest Airlines
receives over 200,000 unsolicited applicants per year; they may only
hire 5,000 – 2 percent of those that apply. Procter & Gamble brings in
hundreds of interns every summer from leading business schools and hires
1200 new grads globally each year. And they’ve done this for decades.
GE sells careers – not jobs – and their reputation as a leadership
factory ensures them a strong talent pool to select several thousand
recent grads annually and hundreds more from competitors, consulting
firms, and the military.
Once hired, they spend the same time and care
identifying and developing the best. They focus on matching leaders
with jobs, providing cross‑functional experiences and global or regional
assignments that promote strong development. They invest in discovering
what matters in preparing people for certain roles. IBM, for instance,
not only understands the critical experiences needed for developing
candidates for key jobs, they understand the sequence in which
these experiences should occur.
Leadership Truth #3: Top Companies Put in Place
the Right Programs, Done Right
Many firms can build a good leadership development
program. But, even the most soundly designed leadership practices can
be undermined by inconsistent implementation or lack of integration with
other leadership processes. What sets the best firms apart from the
rest is not just careful design of the right process but a relentless
dedication to executing these flawlessly. And that means ensuring what
they do is integral to the business.
GE’s performance and succession planning
process, known as Session C, has been a model for companies throughout
the world. Session C provides a forum for leaders to discuss GE’s
talent and the opportunities to strengthen it, but as importantly, it
provides a place for candor and debate, for calibration of standards and
business priorities, and the reinforcement of cultural norms and values.
GE’s formula for winning the war for talent is not
that complicated, but few have achieved and sustained what they have for
so long. Their building blocks are simple: hire outstanding talent,
create an intense performance culture, and rigorously assess performance
and promotability. Words to many. But at GE, they back it up. They
continuously evaluate performance – formally and informally and ensure
differentiation in pay and opportunities between the best and the least
effective. They “sell” careers and they have the infrastructure – and
the discipline – to do what they say.
The three truths are important, but they don’t quite
capture all of it. There’s more. There are a number of
subtleties, nuances, an intensity and pervasiveness of feeling, small
patterns that account for some substantial differences between top
companies and those below them. The CEO is important in developing
great leaders, but it goes well beyond them – everywhere you turn, the
importance of finding and developing talent permeates the organization.
It is a way of operating. Leaders and managers willingly “give up”
their best people to grow the organization, to build capability. They
regularly take calculated risks – individually and organizationally – to
move people out of their comfort zones to test new skills, strengthen
others, and build the confidence needed for senior executive roles.
This movement of talent across businesses, functions, and geographies
creates a powerful web, a network that facilitates learning, a
connectivity that fuels speed and communications, and a pride in the
larger whole, not its parts. Individuals develop strong ties and a
desire to give back to the organization and to the people that helped
them, took the time to coach, support, and provide opportunities for
them.
As we look to the future, the challenges are daunting
and the opportunities are great. Top companies are well on their way to
preparing themselves – and their people – to meet these challenges head
on. They are a step ahead of the rest and they are not complacent. No
executive we met felt they had it nailed. None have checked “developing
leaders” off their priority list. That is yet one more differentiator
for the best companies and the best leaders – they are less cynical,
less complacent, always uncomfortable, and always aware that there is
more work to be done.
Note: Robert P. Gandossy is a global leader at Hewitt
Associates. He is the co-author (with Marc Effron) of Leading the
Way: Three Truths from the Top Companies for Leaders (Wiley, 2004)
and the forthcoming Leadership and Governance from the Inside Out
(edited with Jeff Sonnenfeld).
Copyright 1996-2004, Wharton Center for Leadership and Change Management
University of Pennsylvania.
