CONTENTS
Leading Uncertainty and Change: Wharton Leadership Conference on June
2, 2004
Dangerous Business: Lessons for Leading from the New York Fire
Department
Governing Boards: What Makes for Effectiveness
Directors and Executives: What Makes for Diversification and
Acquisitions
Women Take
Flight: Leadership and Flying
Leading Uncertainty and Change:
Wharton Leadership Conference on June 2,
2004
The Wharton Leadership Conference in Philadelphia on June 2 is focused
on "Leading in an Era of Uncertainty and Change," and its speakers
include John Byrne, Editor-in-Chief of Fast Company;
Jamie Gorelick, National Commission on Terrorist Attacks Upon the
U.S.; and Richard Myers, Chairman of the U.S. Joint Chiefs of Staff.
The conference agenda can be found
here, and online registration is available
here.
Dangerous Business:
Lessons for Leading from the New York Fire Department
By
John Salka, Battalion Chief, New York Fire Department
Can business leaders really learn anything from the
officers of the New York Fire Department? After all, much as you might
talk about "putting out fires" around the office, there's not much
chance that you'll be asked to lead your people into a burning board
room. Go a little deeper, however, and you might be surprised to find
that the differences between business organizations and the FDNY are
mainly superficial. Like any successful organization, from the Marine
Corps to General Electric, the FDNY owes its more than 100 years of
excellence to a leadership tradition focused on resolving the same
fundamental obstacles and concerns, and reaching similar goals in terms
of serving their customers, as most for-profit companies.
Ironically, the insights that the FDNY can offer
today's business organizations have never been more applicable. Though
technology has certainly improved since the days when Times Square was
an orchard and fires were fought with leather buckets, for the most part
firefighting succeeds or fails due to fundamental qualities such as
teamwork and leadership. Unlike most industries, the lessons of mass
production and mechanization, of time-and-motion studies, could not be
applied to putting out fires. The job was, and is, a matter of taking
highly-trained and capable individuals (who habitually operate in tense,
chaotic environments and don't respond well to rigid, top-down
management styles) and organizing them into effective teams.
If that makes firefighters sound something like
today's highly-specialized knowledge workers, and firefighting like the
fast-paced, ever-changing business environment in which they work, it
should. Furthermore, unlike many organizations, which seem roiled every
five years or so by a new management paradigm, the FDNY can be seen as a
kind of leadership workshop, where for more than two centuries, we've
focused on shaping and refining an effective leadership approach.
Generally speaking, people are curious about
firefighting. For instance, they often want to know if we're scared, or
what it's like to run into a burning building. However, the questions I
get from leaders in other kinds of organizations are much more along the
lines of: "How do you get the men and women who report to you to follow
you into such dangerous situations?" Of course, this is really a
question about the specific leadership approach that makes such a thing
possible, and is usually followed by a second question, one that is no
less pressing for being implied: "Is this something that I can use in my
own job?"
The answer to the second question is "Yes,
absolutely." And the answer to the first is by following something I
call "The Leadership Triangle." The name has its basis in fire
terminology, but essentially, it's a shorthand description for the three
fundamental components of the leadership approach that I've adopted
while in the FDNY. These concepts come into play every time I face a
crisis, need to resolve a situation, or simply interact with my people.
You Can't Put Out a
Fire with an Axe
The first principle focuses on trusting your people
and allowing them to do what they're good at. More than that, however,
it means allowing them to do what they're good at in the manner that
best suits them. Here's an example: Despite what you may think, things
are pretty quiet whenever we pull up at a fire. There are no shouted
orders or rapid-fire commands, no hysterical displays of
"follow-me-boys" leadership. Instead, our people immediately go to work,
often without any direction from their officers. Firefighting being what
it is, it's simply not practical to indulge in micromanaging and
hovering; as leaders, our role is to prepare and train our people for
their jobs, and then provide them with the trust that enables them to do
that job. If we've done our part, then every firefighter on the
apparatus will understand his role and how it contributes to the larger
goals of the team.
The phrase, "You can't put out a fire with an axe,"
actually has its roots in the rivalry between engine companies (the guys
with the hoses) and truck companies (the firefighters who, with their
hooks, power saws, and axes, engage in search-and-rescue). Engine guys
use it to remind the "truckies" that, even though they may get all the
glory with their dramatic, nick-of-time rescues, the engine companies
are the ones crawling around in the smoke and cinders putting the fire
out. However, I started using it to mean that you need to get the right
person on the right job -- for instance, you would no more use an engine
guy as part of a truck company than you would put a salesperson to work
designing software. In other words, use your people according to their
abilities. Spend time discovering what they excel at, and then put them
in positions where they can do the organization and themselves the most
good.
Follow the Smoke
So what should I be doing, then, as a leader in
these situations? I'm not getting in their way or micromanaging them;
rather, I'm trying to help them by gathering information and assessing
the nature of the situation at hand. To do this, I observe, I ask
questions of my officers who are close to the situation, and I also open
myself up to feedback from the front-line firefighters. The more
accurate my characterization of the problem my people are facing, the
better equipped they'll be to handle it. I call this leadership point,
"Following the smoke."
In my case, of course, the smoke is often very
real, and by tracking it to its source, we can uncover the fire and kill
it. For you, the smoke may be quarterly reports, weekly sales numbers,
or customer feedback. Strive to be receptive to all information,
particularly data or observations that seem to contradict your
assumptions. Because no matter what form your smoke takes, it's your
best opportunity to face the real problems facing your organization.
Ignore it, and you may be allowing a small fire to turn into an
unstoppable inferno.
Give Them "The
Pipe"
The FDNY emphasizes the importance of leadership at
every rank. While this certainly sounds like a nice thought, and many
companies might express a similar philosophy, in the fire service it's
more than an aphorism: it's a necessity. As I'm outside evaluating the
situation and formulating a plan, my junior officers have taken their
teams inside the building to begin their preliminary attack and search
procedures. As a leader, I can only be successful when other people take
on leadership roles and responsibilities. If I had to be everywhere at
once inside that burning building, with a fire that's jumping from floor
to floor in the blink of an eye, we'd be in a lot of trouble. Therefore,
it's essential that the officers, as well as the senior men (the most
experienced firefighters in the company), be leaders in their own right.
This enables them to support the more junior firefighters, guide the
team, and supply me with constant updates so I can do my job
effectively.
Leadership at all levels doesn't just happen. Since
leadership is not an "on-demand" quality, it's essential that existing
leaders in an organization take the time to develop those who show
leadership potential. You can do this in your organization by delegating
responsibility to those below you. Start giving likely candidates the
freedom to make mistakes and discover their own style; at the same time,
use these mistakes as opportunities to educate, and not simply to
criticize. In engine companies, the nozzle end of the hose is often
referred to as "The Pipe," and manning the nozzle is a leadership role.
That's why I call this process of building leadership among your people
as "giving them The Pipe."
Ultimately, I think it's clear that these three principles really have
nothing to do with my specific field -- firefighting -- and everything
to do with smart, effective leadership. By putting these principles --
to work, you can inspire your people to follow you anywhere, even if it
happens to be into a burning building.
Note: John
Salka is the author with Barret Neville of First In, Last Out:
Leadership Lessons from the New York Fire Department (Porfolio/Penguin,
2004). John Salka can be reached at
john@fivealarmleadership.com, and Barret Neville at
barret@nevilleagency.com.
Governing Boards: What
Makes for Effectiveness
By
David A. Nadler, CEO and Chairman, Mercer Delta Consulting
Mercer Delta Consulting,
in conjunction with University of Southern California's Marshall School
of Business Center for Effective Organizations, recently
conducted a corporate board survey to assess how the boards of major
U.S. public corporations operate today and how their practices are
changing in light of new governance legislation, regulations, and
guidelines. While directors indicated that boards last year increased
the time they spent monitoring their companies' financial performance
and accounting and governance practices, there seems to have been little
change in the amount of time boards spend on succession planning, senior
leader development, director education and training, and board
assessment. Further, only 41% of directors responded favorably when
asked to rate the effectiveness of the new governance practices in
improving overall board performance, and a mere 12% of directors
responded favorably when asked to rate the effectiveness of new
governance practices in improving company performance. These findings
underscore a hidden danger of governance reform: misdirected management
effort. When the reforms become a valuable end in themselves, they can
easily lead to a massive waste of time, energy, and focus. To re-direct
wasted effort, our survey pinpoints specific areas where focused work is
needed.
The survey results are based on responses of 249
directors drawn from over 200 corporate Boards, 86% of whom were outside
directors, 12% of whom were inside directors, and 2% were unspecified.
Specific survey results indicate that corporate
directors:
Think Their Boards are Effective.
Overall, 90% of directors surveyed expressed positive views regarding
their boards' effectiveness, including fiduciary oversight and -- to a
lesser extent -- strategic oversight.
Do Not Think Their Boards Devote Enough
Attention to CEO Succession. Nearly 40% feel that their boards are
not devoting enough time to CEO succession planning, and only half rated
their boards favorably when it came to effective succession planning.
Spend More Time Formally Evaluating CEO
Performance and Compensation. 79% reported that their boards have
formal evaluation processes for CEO performance, up from 67% in 2001;
86% said they measure the CEO's performance against a set of
mutually-agreed-upon (the CEO and board) targets set at the beginning of
the year, and 88% include formal feedback sessions with the CEO.
Believe Their Boards Have the 'Right' Mix of
Competencies. 90% indicated that their Boards have the appropriate
mix of skills and experience to contribute meaningfully, but directors
were less positive when asked to rate board member competencies in
specific areas.
Feel Sufficiently Independent from Management.
88% percent rated their boards favorably in regards to their
independence from management.
See Increasing Separation of Executive and
Director Roles. 15% reported that their boards have a non-executive
chair who is not a current or former employee of the company (up from
10% in 2001), and 46% said their boards have an independent director who
serves as lead or presiding director, a 14% increase from 2001.
Consider Their Boards' Committee Structures
Effective. A vast majority (90%) rated their boards' committee
assignments favorably in utilizing members' skills and experiences.
Feel They Get Adequate Information from
Management. Generally positive regarding the information management
provides to carry out their work, only 28% of directors rated favorably
their boards' independent (outside of management) company information
channels.
Have Productive Relationships with Senior
Management. 86% feel they have adequate exposure to key senior
managers, 90% "work well" with senior management, and 73% feel that
their expertise and experience are utilized by senior leaders.
Are Increasingly Evaluating Their Boards'
Effectiveness, but Not at the Individual Director Level. 56% of
directors reported that they formally evaluate their boards'
performance, up from 42% in 2001, but only 24% said that their Boards
regularly evaluate individual directors, up from 19% in 2001.
Note: David Nadler can be contacted at
david.nadler@mercerdelta.com.
directors and Executives:
What Makes for Diversification and Acquisitions
The functional backgrounds of executives and
directors influence are known to influence their decisions on a range of
company practices, including diversification and acquisitions. But the
impact of that background may differ markedly depending on whether the
individual is the chief executive or a director.
Drawing on a sample of 200 firms listed in the
Fortune 500 from 1985 to 1985, Michael Jensen and Edward Zajac
expected that financial backgrounds among CEOs would lead to greater
diversification and acquisition since they tended to prefer such growth,
in contrast to CEOs with production backgrounds who more often looked to
internal growth. The researchers found systematic evidence in support
of this forecast: Replacing a non-finance CEO with a finance CEO, for
instance, was associated with more than $100 million annual additional
spending on acquisitions.
The investigators also predicted that non-CEO
directors with financial backgrounds would be less drawn to
diversification and acquisitions than non-CEO directors with other
backgrounds. The researchers argued that non-CEO directors with
financial backgrounds would be especially skeptical about whether
diversification and acquisitions would enhance shareholder value. Here
too the evidence confirmed the forecast.
The prior functional experience of directors and
CEOs affects their views on critical company decisions -- but in the
case financial experience as it bears on diversification and
acquisitions, with opposite consequences.
Source: Michael Jensen and Edward J. Zajac,
"Corporate Elites and Corporate Strategy: How Demographic Preferences
and Structural Position Shape the Scope of the Firm," Strategic
Management Journal, v. 25, 2004, pp. 507-524.
Women Take
Flight:
Leadership and Flying
By
Sue P. Stafford (right),
pilot and airfield owner, and Linda Fritsche Castner
(left), pilot and Simmons
College
Airplanes and business
leaders may seem like an unlikely pairing, yet the flying of airplanes
holds a surprising power to instruct. We know this from research we
conducted over the past year through a workshop that combines
traditional classroom instruction with experiential activities, aircraft
ground instruction, and flight time for women who have not flown
before. The workshop also includes guided discussion to assist
participants in transitioning their newly developed "pilot in command"
perspectives to their personal lives. Our research confirms that the
workshop experience leads to empowerment.
The workshops -- entitled
Women Take Flight -- have included two dozen women of diverse ages and
background. We found that the experience did little to develop
self-reliance. In fact, most participants reported themselves to be
fairly self-reliant before the workshop started! But all participants
reported an increase in empowerment, self-esteem, and self confidence.
Said one participant, "Every time I take a risk, I feel more confident
about myself in general. This confidence is partly because I feel that
others will respect me more and partly because I proved that I could
push my own conceived limitations and that helps me to believe that I
can surpass other limitations yet to be encountered."
It would appear that when
participants with a desire for self-development experience an
emotionally challenging learning process, as in the Women Take Flight
workshops -- they can enhance their self-respect and sense of personal
empowerment. We have consequently renamed the workshop Leaders Take
Flight, and we are now testing whether flying experience can help both
men and women build the courage to take managed risks, a capacity to
navigate by establishing clear intentions and setting firm directions,
and an ability to make fast and accurate decisions and to communicate
and coordinate with others.
Note:
Linda Castner and be reached at
upupaway@ptd.net.
Copyright 1996-2004, Wharton Center for Leadership and Change Management
University of Pennsylvania.
