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Summer, 2009,
Volume 13, Numbers
8-10
Beginning this summer, the Wharton Leadership Digest
presents a single summer issue focusing on the Wharton
Leadership Conference held annually in June.
Leading in a Dynamic and Unpredictable World: Wharton’s
13th Annual Leadership Conference
Meghan Laska
Dupont’s CEO Ellen Kullman: Four Principles for Moving
Ahead During Turbulent Times
Knowledge@Wharton
Hollywood’s Peter Guber: Spinning Memos into Tales
Knowledge@Wharton
Peter Guber Podcast: Sharing Stories, Not Just
Information, to Communicate Effectively
Knowledge@Wharton
BP’s Fiona MacLeod: A Change Agent Sees Change
“Addiction”
Knowledge@Wharton
Presidential Historian Richard Norton Smith: Ten Ways
to Judge a President
Knowledge@Wharton
Leading in a
Dynamic and Unpredictable World: Wharton’s 13th
Annual Leadership Conference
By Meghan
Laska
Business leaders
today are facing all kinds of challenges ranging from
volatile markets and intense competition to the need for
massive restructuring programs and, in some cases, the
possibility of terrorist attacks. Whether they work in
public service, for nonprofits, or for private
corporations, they are leading teams around the world in
a period of great uncertainty, increased risks, and
higher stakes.
Top leaders
recently gathered at Wharton’s 13th Annual
Leadership Conference, sharing their experiences and
strategies heading organizations in an unpredictable
world. The June 16 event featured speakers such as Beth
Brooke, global vice chair of Public Policy,
Sustainability, and Stakeholder Engagement at Ernst &
Young; Lt. Colonel Todd Henshaw, professor and director
of Leadership and Management Programs at the U.S.
Military Academy at West Point; and Fiona MacLeod,
president of Convenience Retail in the U.S. and Latin
America for BP Products.
 What
is it like to be a leader in today’s great recession?
“It’s really hard,” Brooke candidly told the packed
audience. However, despite the difficulties of the
current economic environment, she maintained that the
keys to growth are always innovation and
entrepreneurship. “It never changes. It takes leadership
from the top to create a culture and mindset to allow
innovation to flourish throughout an
organization,” she said.
To do this,
Brooke explained that leaders first must focus on
building constituencies with stakeholders such as
employees and policyholders. “If you don’t, then you are
a sitting duck, especially in bad economic times because
in bad times, everyone gets innovative,” she said. “You
have to be innovative, nimble, and adaptive, and to do
that, you need to engage your stakeholders.”
Brook pointed to
IBM as an example of a company with great shareholder
engagement. IBM took the wisdom of crowds to the
extreme, she said, holding “jams” to engage employees
around the world in a form of group brainstorming to
help build constituencies and introduce collaborative
innovation.
“If you hit a
key leadership moment and you haven’t laid the
groundwork for engaging constituents, you’ll miss
opportunities, you won’t have credibility, no one will
follow you, and no one will listen,” said Brooke. “It
has to be done continuously and consistently.”
The second step,
she noted, is recognizing the value of diversity through
“inclusive leadership.” As research has shown that
diverse teams outperform homogenous teams, “we need to
create diverse teams to build in innovative
capabilities,” she said. “A byproduct of innovation and
inclusiveness is that you develop leadership. The
companies with reputations for getting this right are
companies people want to work for.”
Brooke recalled
how a leadership moment presented itself last fall when
conversations about the financial crisis failed to
address the lack of diversity on Wall Street as a
contributing factor. “We had all of these new
regulations …, but if you build diversity into
leadership and into boards, then you have built in a
mechanism to manage risk,” she said. “So we produced a
report putting together existing research on why
diversity matters and tried to change the conversation,”
she said, noting that the report was released at the
World Economic Forum in Davos. Although that wasn’t part
of her day job, she succeeded in bringing visibility to
an important topic.
 Henshaw also
spoke at the conference about a project that wasn’t part
of his typical day-to-day job either, but that
highlighted what it means to be a “leader” in another
part of the world. He explained how on a recent trip to
Afghanistan – where his goal was to help recruit
leadership faculty at the National Military Academy – he
met several people leading smaller teams to help
stabilize their country in the midst of the uncertainty
and chaos.
Those leaders,
he said, all face the risk of terrorist attacks just by
going to work every day, they operate in an environment
of hopelessness, and they have access to extremely
limited resources. Whether they work for the military,
the government, or nonprofit organizations, they all
face the same challenges yet are motivated by a sense of
purpose to the point where their roles have become an
identity rather than a job, observed Henshaw.
Leaders are not
necessarily those with the greatest following,
resources, or responsibility, he added. In many cases,
“small teams contribute small drops” that ultimately
have a great impact. “Leadership is about getting and
keeping people on board, especially when joining
requires selflessness and sacrifice,” he said.
In her
presentation, MacLeod agreed that getting people on
board is a significant part of leadership all over the
world. She explained that so many “change programs”
adopted by businesses fail because employees don’t “own”
the new system, lack the tools and training necessary to
implement the changes, and morph back to the old model
after the change consultants leave.
The solution,
she said, is to get it right in the first place by
engaging employees to sustain change and removing the
“reverse gear” by providing training programs. MacLeod
explained that leaders must clearly state – without
jargon and flipcharts – what is not working and give
employees a sense of what the future looks like if the
changes are not made. Then, they need to plan a strategy
to stay fit, focusing on reinforcements such as employee
rewards for continuous improvements.
She told the
audience about how she experienced this first-hand a
decade ago while helping a sales and marketing division
in New Zealand become more competitive in a changing
business environment. The changes included a 60 percent
reduction in the workforce as well as a renewal of the
workers’ competitive spirit. The key, she said, was
emphasizing that if they made these changes, they would
be fit to fight.
“Everyone had to
take steps every day to stay competitive in their part
of the business to prevent backsliding,” said MacLeod.
“We broke the change addiction cycle by making it stick
and planning to stay fit with a plan that would outlive
the next boss.”
Note:
The conference is described at
http://leadershipconference.wharton.upenn.edu.
Dupont’s CEO
Ellen Kullman: Four Principles for Moving Ahead
During Turbulent Times
Knowledge@Wharton
The impact of
the financial crisis began to hit DuPont about a month
after the collapse of Lehman Brothers in September 2008.
Sales volume slid, good customers cancelled orders and
employees were gripped by fear and uncertainty.
 As
the environment worsened and sales fell by up to 50% in
some units, DuPont CEO Ellen J. Kullman ordered two
traumatic restructurings. Perhaps more importantly for
DuPont’s future, Kullman also concluded that the company
faced a “new reality” requiring fundamental changes if
it were to remain successful.
Her challenge
was balancing the need for immediate action to maintain
the company’s financial stability during the crisis,
while focusing on strategic objectives that would
preserve the company’s leading market position in the
future. Among the highest hurdles: Motivating employees
to work on the things they could control and avoid
becoming paralyzed by the market’s volatility.
Speaking at the
recent 13th Annual Wharton Leadership Conference,
co-sponsored by the Center for Human Resources and the
Center for Leadership & Change Management, Kullman
described how she changed the company’s thinking about
its business model, while reinforcing its 200-year-old
culture of innovation. “The question is, given the
megatrends in the world and given the new economy, what
changes do we have to make to continue to be successful?
... There is no playbook for what we are experiencing
today,” said Kullman, 53, a 20-year DuPont executive who
became CEO in January.
In April, DuPont
announced first-quarter earnings of $0.54 per share, 59%
lower than a year earlier, reflecting a severe decline
in industrial demand due to the global recession. The
company increased its 2009 fixed-cost reduction goal to
$1 billion and reduced capital spending by $200 million
in an effort to preserve cash and better position the
company for economic recovery.
Kullman’s first
step was “understanding the dynamic relationship between
what should not change ... and what has to change – and
having absolute clarity on that.” Deciding what would
not change was easy: the company’s commitment to science
and innovation as primary drivers of growth since its
founding in 1802 as a maker of black powder. Deciding
what to change was far more difficult.
Kullman
identified three trends that would transcend the current
crisis and provide a strategic framework for the
company’s annual $1.4 billion investment in research and
development – increasing agricultural productivity,
reducing dependence on fossil fuels and protecting
lives.
Four
Principles
But organizing
the company to respond to these long-term trends during
a period of extreme uncertainty required strong
leadership and specific initiatives “to change the way
we think,” said Kullman, who joined DuPont in 1988 as a
marketing manager for medical imaging, and was named
executive vice president and a member of the office of
chief executive in 2006, and president in October 2008.
Prior to joining DuPont, Kullman, who has a B.S. in
engineering from Tufts and a master’s in management from
Northwestern, worked at GE.
She shared four
leadership principles that she has implemented to guide
DuPont through the financial crisis since October 2008.
The first
principle: Focus on what you can control. Kullman
realized she needed to shift the company’s attention
from what was going wrong to the immediate action
required to protect DuPont’s financial position as
revenues fell dramatically. “Last October, I saw a lot
of people who looked scared and didn’t know what to do,”
she said. So, she directed DuPont’s management to
“figure out those ... things we can do something about,
and get about doing them.”
“We realized
that what we had to protect ... mostly was our financial
stability and flexibility, so we had to focus on cash.
We’re a company that spent 207 years focused on earnings
and the cash seemed to show up. All of a sudden, it’s a
new world and we had to adjust every single business
person’s mindset around the notion that earnings are
nice, but cash is more important,” Kullman said.
To preserve
cash, she issued four financial directives: Maximize
variable contribution dollars, drastically reduce
spending, zero-base capital expenditures, and
significantly reduce working capital. Maximizing
variable contributions required “a tremendous amount of
coaching” to teach the sales force how to think about
pricing in a downturn and how to engage with customers
who “didn’t want to talk.”
Promoting
DuPont’s innovations – 901 new product launches last
year and a record 500 in the first quarter of this year
– proved an effective way to generate sales and increase
variable contributions. “There’s nothing like a new
product, a new innovation that allows you to go out and
talk to that customer,” she said.
One approach
involved finding new markets for existing products, such
as selling an engineered polymer designed for India’s
railways to China. “We needed to get our people in India
working with our people in China,” Kullman said. The
interaction resulted in an $18 million order. Another
involved introducing improved versions of widely-used
products, such as Kevlar for bullet-resistant vests and
Nomex for fire-resistant suits. DuPont is hoping that
U.S. economic stimulus programs could create a market
for upgrading the equipment of “firefighters ... police,
and even the military.”
The second of
her leadership principles for the crisis has been to
“adopt a new trajectory by rethinking your business
model.” For DuPont, that meant “getting people to think
differently” about a business model that had always
measured success based on plant capacity and capital
investment: “We invent, we build, we make, we sell,”
Kullman said. The change has involved developing
service-based models providing new ways to engage with
customers and monetize products. Although it is
difficult to get people who are very successful to
embrace change, she has found that they are willing to
try new models when markets are in disarray and when
there’s uncertainty about what will work in the future.
Kullman led a
new trajectory 11 years ago when “we decided to take our
safety capability and see if we could create a business
out of it.” It wasn’t easy. “We spent 200 years trying
to figure out how to create a very safe environment for
our people. We have lots of methodologies ... but we
didn’t know how to sell it, how to create a contract
around it. Believe me, the lawyers were really concerned
about our liability.”
The new venture
started as a pilot with a small team that brainstormed
with Wharton faculty and “made a lot of mistakes” in
initial customer pitches over six months before
“figuring out a value proposition that played.” The
service was a logical extension of DuPont’s industrial
businesses because “our sales force is calling on plants
that have serious issues around safety [in which] we can
help.” Result: In addition to annual revenues in the
hundreds of millions of dollars, DuPont’s safety and
protection business creates “relationships with
customers around the world that we can leverage” across
all of the company’s business lines.
More recently,
DuPont’s applied biosciences unit developed a
high-performance plastic polymer, grain Hytrel, made
from renewable agricultural sources that addressed the
auto parts industry’s need for sustainable products. As
a newcomer, DuPont was able to win business from a
demanding global parts maker, Denso Corp., by providing
“real innovation” in sustainability that “they think is
important to their future.”
The ability to
address broader customer needs through high-value
services – going beyond the traditional “make-sell”
business model – is critical in deciding which new
technologies will receive funding, Kullman said. But how
do you incite the change required for new trajectories
in a global organization with 60,000 employees in more
than 70 countries? Kullman recommends a viral approach,
starting with a small pilot program in one area,
generating interest, and communicating its success to
other parts of the business. “If you try to change
everybody at once, you’re changing nobody, so you really
have to start in one area, or a couple of areas, and
show success.”
Getting
Employees’ Attention
Kullman’s third
crisis leadership principle: Communication is key. “I’m
a firm believer that there is a direct correlation
between growth and the success of our communication.
When we have an aligned team that understands” very
clearly what the goals and the tradeoffs are, “that’s
when things can absolutely happen,” Kullman said.
“The first step
is really getting their attention, and that’s a very
hard thing to do with all the noise” in the world today,
she said. But getting through to employees is vital
because their natural tendency is to “hunker down,”
hoping the crisis will pass and “everything will go back
to normal.”
In announcing
two restructurings within five months since December
2008 – unprecedented at DuPont – Kullman insisted that
her leadership team “get out in front of the troops”
with a consistent message. “It’s not something they can
delegate.” She personally went to plants in Germany and
Ohio where there were layoffs and “answered very tough
questions about the deal [employees] thought they had
with DuPont.”
If company
leaders aren’t willing to “get out and communicate on
the really tough issues, then the credibility our
organization has in the decisions we are making is
always going to be called into question,” Kullman said.
There is a risk
that business leaders will grow tired and stop
communicating after delivering the message five or six
times. “We think they’ve heard it and move on to another
message, [but] all we’ve done is confuse them. It takes
15 or 16 engagements [for employees to understand] that
this is what we need to do and this is where we need to
go.” Economic uncertainty has made the task more
difficult, “but I think maintaining that communication –
the strength and alignment around it – is more critical
in today’s environment.”
The last of her
four crisis leadership principles is to maintain pride
around the company’s mission. “There’s nothing like a
bad economy to get people confused about what their
mission is. They start thinking their mission is to
reduce cost. That’s a tactic, that’s not our mission,’
Kullman said.
During informal
weekly meetings with employees, Kullman said she was
amazed that the “number one question was about whether
we are going to stick with our mission.” She quickly
realized that “people are scared [and] people want
direction.” Making sure that people understand the
mission – and linking their daily activities to the
company’s broader purpose – is essential to reducing
fear, maintaining morale and keeping employees
motivated, Kullman said.
DuPont’s mission
is “sustainable growth,” defined as increasing
shareholder value by reducing the company’s
environmental footprint – and that of its customers,
Kullman said. The mission includes “denominator
strategies,” such as reducing waste and fossil fuel
usage at its chemical plants. It also involves
“numerator strategies,” such as inventions supporting
biofuels, photovoltaics and other forms of renewable
energy, or hurricane-resistant building materials that
help save lives.
“It’s really
critical that we maintain the focus on the mission and
keep reminding people of it. People have a lot of pride
in the mission and they want to understand that the
mission is not going to change, even though the world
around it has changed tremendously. You’ve got to
capture that heart and soul,” Kullman said. “That’s how
we’re going to be successful.”
Note:
Published in Knowledge@Wharton, June 24, 2009
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2273.
Hollywood’s Peter
Guber: Spinning Memos into Tales
Knowledge@Wharton
It should be no
surprise that when it comes to leadership, movie mogul
Peter Guber’s thoughts turn quickly to storytelling.
After all, storytelling is the business in which Guber
emerged as a leader.
 At
the recent 13th Annual Wharton Leadership Conference,
co-sponsored by Wharton’s Center for Human Resources and
the Center for Leadership & Change Management, Guber
noted that the best way to communicate with and motivate
employees is to tell them a story – to repackage an
enterprise’s vision, goals and challenges into a
narrative that audiences can understand, embrace and
share. (In a separate podcast
interview with Steve Ennen, managing director of the
Wharton Interactive Media Initiative, Guber explains why
in a corporate setting, stories are more memorable and
engaging than slide presentations, memos or sales
pitches.)
“What is the
magic that I found?” Guber asked his audience. “It’s the
God-given ability to tell oral stories. You have to get
someone else to do something. Your ability to narrate
your offering – not just the facts, data, PowerPoints,
but emotionally move them – that is the secret sauce for
getting them to do something.” Guber, 68, professes that
he discovered the secret late in his life, only after
purposefully trying to tease out a common thread in the
things that have worked for him.
Born in Newton,
Mass., Guber began his career in 1968. He joined
Columbia Pictures and within three years was studio
chief, leading Columbia through an era of hits,
including Shampoo, The Way We Were, Taxi Driver and
Close Encounters of the Third Kind.
He was named
chairman and CEO of Sony Pictures in 1989. Under his
tenure, the studio released Basic Instinct, A League of
Their Own, A Few Good Men, Sleepless in Seattle and
Groundhog Day. He formed Mandalay Entertainment Group in
1995, designing it to be a multimedia studio with
projects in film, television, music, video games and web
sites, plus ownership of minor league baseball teams. He
is also a professor at the UCLA School of Theater, Film
and Television, and hosts a cable TV show, Shootout, on
which he interviews entertainers.
Along the way,
he noted, he has had his share of failures. “Winston
Churchill said that success can be measured by moving
from failure to failure with enthusiasm. By that
standard, I have been a giant success. I have had some
of the most cataclysmic and highly public failures you
could possibly imagine. I had a major league hockey team
in Las Vegas, the 16th largest market. The audience
didn’t give a puck, and nobody did very well.... I made
movies like Bonfire of the Vanities, where people tried
to walk out even when they showed it on planes.”
Guber said he
has learned that to lead and succeed, you need to manage
three inevitable “states”: fear, uncertainty and change.
Everybody has fear, he says, “but does it catalyze you
or paralyze you? You cannot afford in leadership today
to be risk averse. You cannot. Otherwise you’ll just be
out of business.” And even while embracing risk, he
said, it is important to keep in mind that certainty is
an illusion. “As soon as you’re certain, you calcify all
the thinking. Uncertainty is the cauldron in which
creativity lives.”
Anyone Can Do
It
Uncertainty
makes for a complicated business environment, but
leaders can help employees embrace the goals mandated in
that environment, Guber suggested, adding that the tool
to do so is available to all. “Narrative bonds
information to an emotional experience,” he said. There
is no need to be in the movie business to tell effective
stories. Everyone is “a factory of old stories. So when
you want your tribe, your group, your human resources
people, your executives, your customers, your
shareholders to do something, you have to remember
you’ve already got something playing on the record
machine in your head.”
He doesn’t
suggest conjuring up random anecdotes. Rather, the goal
should be to form narrative out of a situation at hand,
and make others feel like characters in the drama. It’s
about giving others a story to imagine and tell others
as they embark on a project.
Guber feels
there’s an element of magic in transforming people’s
thinking in such a manner, and he used MAGIC as an
anagrammatic device to drive home his idea. MAGIC, he
said, stands for Motivating your Audience to a Goal
Interactively with great Content.
To illustrate
Motivation, he told the story of how, while running his
own firm in the 1980s, he got Warner CEO Terry Semel to
finance the movie, Gorillas in the Mist. “It was a movie
nobody wanted to make,” Guber said. “She leaves a man
for a gorilla. The gorilla dies. She dies. Shot in the
Congo.” Semel’s response: “It’s too expensive; it’s too
far and who’s going to want to see a movie about a
gorilla?” So Guber told Semel he had the story wrong.
“It’s about shining a light on the fact that these
creatures are only one click away in the gene pool from
us. We’re their partner on this planet. It makes a case
for who we are.”
Guber offered to
put his own money into the project – and this, too, was
part of his storytelling. “If you want to move somebody,
you have to be congruent: You’ve got to have your feet,
your heart, your wallet and your tongue going in the
same direction. As soon as they see those things going
in different directions, you don’t seem authentic.
Authenticity must shine through.” Finally, with Semel
still refusing to fund the picture, Guber lay down on
the floor in the executive’s office, as if a gorilla
himself. Eventually, Guber says, Semel relented, saying
that if Guber could stick to his budget, he could make
the movie.
The A in MAGIC
is for Audience, Guber said. Think of your listeners,
even in business, as an audience. Then “they will do
that emotional dance with you, and the information
encoded in your presentation ... will find resonance. It
will be nested in that emotional experience. They will
remember it. And it will be actionable.”
He recalled how,
in 1989, the company he headed, Columbia Pictures, was
being acquired by Sony. Employee morale at Columbia was
fizzling; many expected the company to be broken up or
resold quickly by the Japanese giant. He needed a way to
unite his staff – and says he got an idea from Columbia
Pictures’ own classic, Lawrence of Arabia. That epic was
about pulling disparate groups together around a
seemingly impossible goal (to defeat the Turks in the
city of Aqaba). He showed the movie to his employees and
made Aqaba a buzzword in the company to give people a
sense of purpose. Many successes followed, “and the
company is still owned by Sony,” he said.
The G is MAGIC
for Goal, he added. “Goals are very important, and it’s
okay to be very up front with them.”
The I is for
interactivity. Make your audience part of the story and
give them stories to remember. “We’re doing the Frank
Sinatra story now,” he noted, setting up an example. “We
got the rights to do it, with Leonardo DiCaprio and
Martin Scorsese. Frank Sinatra was a beast, a tough guy.
But he would be up on stage, with maybe 2,000 people in
the audience, and then he would pick out some woman and
start singing to her. Everyone was jealous, even the
guys. And then, in the third act of his performance, he
would bring her up and have her sing a song with him.”
Give your audience a story to remember and to tell,
Guber said, and the story will live on. “They will tell
somebody else their experience, not yours.”
The C in Guber’s
magic formula is for Content. “That’s’ the Holy Grail,”
he said. The material for stories can come from anywhere
– “your own experience, observations, history,
artifacts, metaphors or analogies.” Collect stories,
bank them away and make them part of your business
leadership life, he advised.
“We don’t teach
it in medical school. We don’t teach it in law school.
Most of the teaching is content regurgitation, not about
emotional resonance,” Guber stated. “But you have to
move people’s hearts before you move their wallet or
their minds.”
Note:
Published in Knowledge@Wharton, June 24, 2009
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2270.
Peter Guber
Podcast: Sharing Stories, Not Just Information,
to Communicate Effectively
Knowledge@Wharton
You want to
communicate a corporate message effectively? Turn it
into a story, says Mandalay Entertainment Group chairman
Peter Guber. A consummate storyteller – his films, such
as Rain Man, Batman, The Color Purple, Midnight Express,
and Flashdance, have earned more than $3 billion in
worldwide revenue and more than 50 Academy Award
nominations – he argues that stories are more memorable
and engaging than slide presentations, memos or sales
pitches. He was interviewed for Knowledge@Wharton
by Steve Ennen, managing director of the Wharton
Interactive Media Initiative. An edited transcript
follows (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2269).
Knowledge@Wharton: Good morning, Peter. Thank you
for joining us here at Knowledge@Wharton as part of your
participation in the 13th Annual Wharton Leadership
Conference.
Peter Guber:
My pleasure indeed.
Knowledge@Wharton: You gave a great presentation to
a packed room ... about story telling as a form of
leadership.... Maybe you can give us a quick recap of a
few of the high points, the “MAGIC” aspect maybe.
Guber:
The conceit that I’ve come to believe in over the past
40 years of my career – in virtually every part of
storytelling, from writing books and speaking and
teaching and being a newscaster and being a talk show
host for 533 interviews and making thousands of movies
and television shows – is that we are all wired as
storytellers. The amazing thing is we’re all born as
storytellers and story-listeners and somehow we don’t
venerate its value. It’s only later in our life that we
... wonder why this [leadership strategy] is working or
why it’s not working. My mission is to ... empower
[people] to be better storytellers [and better] story
listeners for the purpose of realizing their own
success....
Knowledge@Wharton: Is it more of an individual
philosophy, or does it come from the perspective of
leading a company or an enterprise?
Guber:
It’s not my own individual philosophy.... I didn’t
invent it.... It’s really recognizing that [storytelling
is] the way our tribe works..., the way our society
works. That the organizing principle of our society is
language that gives us social organization, gives us
tactics and strategy and allowed us first as a creature
coming out of the jungle of woods to climb up the food
chain because we weren’t as fast as a rhinoceros or a
lion or an elephant or as big or as tough. So our
organizing principle was to have language that allowed
us to communicate the values and rules and beliefs of
the tribe to work together to accomplish our goals that
are, in this case, a company or a service provider or
whatever it is. Nobody is wired to remember information.
They’re really not. What’s actionable is when
information is encoded or embedded into a narrative and
it’s emotionally rendered. They hold the information in
a different way and it becomes memorable, more
actionable, and definitely virally marketable.
Knowledge@Wharton: So is that a good form of
leadership? How can you actually take these stories and
communicate them to a large organization, and bind and
coalesce them into one mission?
Guber:
Every great leader is a storyteller.... And I don’t know
how you can really be a good leader ... without having
that as part of your portfolio. Now some people do it
without knowing fully what they’re doing. They’re just
natural storytellers. But we’re all natural
storytellers. They’ve just let it come to the forefront
more willingly. Everybody could take 10, 12, 15 strokes
off [their] game by just recognizing ... the tools that
you could use to shine the light on your innate ability
and, therefore, fulfill your destiny and your mission
and get other people to join you and participate in your
goals.
Knowledge@Wharton: Clearly it’s motivational and
it’s even manageable. I can see that in some of the
sports teams that your company’s involved with. What
about a multinational corporation? How can you execute
on that story?
Guber:
When you have a multinational corporation you [must]
realize there ... are stories that cross the lines of
different societies – and some that don’t. Sometimes you
have to find the aesthetic equivalent ... that empowers
the group [in] the same way a particular story such as
“The Three Bears” and “Little Red Riding Hood” do in
ours. Obama got elected as Barack Hussein Obama in the
United States with a very traditional American story and
[he] narrates those stories really well and knows how to
take his policies and issues and narrate them into
manageable personable stories that people can listen to
and hear, and are moved emotionally [to] tell other
people. Yet if he were to go to Afghanistan, the mere
translation of that story using content as metaphor, he
would have to find some other framing devices to get
that emotional reaction. But it’s still the same
tool.... The idea of recognizing what’s interesting to
your audience may be different in different cultures....
And if you’re interested in it ..., you’ll connect with
their heart. We see it with leadership across the world.
We see it with Nelson Mandela who was able to incite,
enthuse and involve people of different cultures. We see
it with different types of leaders. We even see it with
despots.
So the idea is
that story telling, and the ability to narrate your
offering, is agnostic. It’s a tool. The gun doesn’t kill
people. People using the gun kill people. Using the gun
saves people. Using the gun hunts for food. So it’s not
the gun. And so therefore narrative of the story is a
tool and it’s used [with] purposefulness. We’re talking
about purposeful business storytelling for leadership
... and that’s the indicia that we try to shine a light
on. How do we do that? And really we’re all wired for
that. We just have to put the switch at a higher level.
Get a little more bass, a little more volume. Get a
little more practice with it – and you get tremendous
results.
Knowledge@Wharton: As a business leader, how do you
communicate that story to mid level managers and not
just one, but many across the country. How do you make
sure everybody is hearing the same story and falling
into the allegory and moving forward with that?
Guber:
The idea is you move people’s hearts and emotions before
you move their feet [or] their tongue. What narrative
does is it excites a group of people to a common course
of action and makes them the really good narrator [of]
the really good story. [It] makes them apostles or
advocates of the story. If you have to tell ... the
story to every one of your 3,500 employees in 54
countries, it’s asinine. It doesn’t make sense. Yes, you
could ... broadcast it. Broadcast can help. But ... what
really helps is when someone lays their hands on
somebody else – and I didn’t mean metaphorically – and,
as an apostle and an advocate, as a viral marketer [and]
a first mover, tells you their experience. They render
that experience to you. So you try to use narrative to
excite and move these other people to move other people.
That’s really the secret.
So when General
Motors is designing a new campaign to say that the car
business isn’t over and GM isn’t over, it [is]
interesting. The first story they told was to their own
employees ... not to the media and not to the
marketplace. They told their employees.... And they had
to be very transparent and they had to be able to say,
“We goofed. We missed it. We started late. We had our
accent on the wrong syllable.” So the idea is they were
vulnerable and pathetic and they told a story – there
were several stories told – about the folks who ...
[started] General Motors and how they couldn’t see what
was going to happen, but they believed. And they used
that founder’s story as a way to re-energize the belief
and the legacy for the company, but not a legacy for bad
behavior and poor performance and a lack of
consideration for all the environmental elements that
were going on that the car company was obviously
indifferent to. So it’s a challenge because you have to
recognize that in every narrative experience, there’s
just so much advertising you do. You need the people who
have the experience and receive the benefit to take that
benefit and their experience of it and retail it in
their own language as their experience to other people.
That’s what viral advocacy is about.
Knowledge@Wharton: Is success of viral advocacy in
this scenario measurable?
Guber:
Well, it is measurable. The metrics of performance [are]
measurable. You can [ask] how many automobiles were
sold, how much health care has performed, what is the
[recidivism] ... in prisons. You can look at any series
of businesses or enterprises and have them measurable.
The question is, “Are they measurable against that
particular event that you believe made that delta
change?” That’s the question. If all of a sudden more
people are buying Cheerios now than they did last year,
and you have a story you told that Cheerios isn’t just
about weight – it’s about good health because of your
heart and lower cholesterol – and you tell stories about
people who have really performed and enhanced their life
[with] it, you can say, “Look, we have a 14% increase in
Cheerios sales.” But you have to look and ask..., “Is
that completely as a cause and result of this campaign?
Or is it a cause and result of [a] price point change?
Is it the marketplace? It’s impossible often to say
exactly what it is, but you could see the Mini Cooper go
from 0.001 recognition and 0.0001 purchases in America,
and then [after its appearance in] James Bond or [The
Italian Job] made it cool to drive the Mini Cooper and
then [Mark Wahlberg said] it was a really fun car to
drive, suddenly it wasn’t 0.0001 anymore. Well, I don’t
know what else they were doing differently at that time.
So you’d say, “There must be a pony here. Something’s
going on here.”
It’s very hard
sometimes to lay it exactly out there. But ... if you
get that improvement, it’s more than likely you can find
[the movie appearances and endorsement] was one of the
major sources. Narrative ignites – or it’s a kindling
instrument. It ignites the pilot light and then oxygen
fans the conflagration by ... people embracing it. And
so what you really have to recognize is there’s no way
that information can do it. If you think about stories
changing the world, it’s constantly that. We had
Vietnam. There were 90 million, trillion stories written
about Vietnam, but none more poignant than the little
girl running with the napalm on [her]. They’ll tell you
the story of Vietnam. Or the [photo of] policemen
shooting the guy in the head. That’s a story. A picture
is an artifact. That’s a story just like words are.
Sometimes they’re even more powerful than all the words.
So the idea is it’s an incitement – an incitement to
action. And when it’s purposeful, when it’s aimed at
doing that, but it’s also generous and vulnerable by the
teller, it’s very powerful.
Knowledge@Wharton: You mentioned a couple times ...
the viral aspect. It’s not just the story told by a
company or brand, but now you have to deal with a lot of
other voices and a lot of other storytellers out there
thanks to the interactive media. What’s your take on how
that role builds into the overall story?
Guber: I
think [the] old THX ad that played in the movie theatres
that said “the audience is listening” is one generation
behind. The audience is talking now. And so they’re
listening and talking back and talking not just back to
you, but they’re talking to each other. So you have to
depend upon that for success. It’s not an incident that
happens accidentally. It may look like it happens
accidentally – and it’s even better if it looks like it
happens accidentally – but that has to be what
purposeful storytelling is. It’s to move people’s hearts
so that they move their feet. Yell fire, and people get
scared that they’re going to die and they move their
feet. You don’t have to tell them, “Move your feet, run
for the door.” They know that. So what you need to do
with purposeful narrative is recognize three things:
What’s going to
be interesting to the audience emotionally?
How [do you]
bond and bind your call to action to it?
And ... be
willing to surrender control. You tell your story and
you have to surrender control. You won’t move
everybody.... If it moves enough people [to] lay hands
on other people and say ... it’s the most exciting thing
[they have] ever heard of, this is wonderful about this
company or [they] can’t believe [company] really cares
about me. If you move that, that experience moves
somebody else. So you can’t depend upon changing
everybody’s heart and mind and wallet at the same moment
with a single story. You hope that it has this viral
[quality] that [lets it] be told and retold, and other
people reach other people in different experiential
ways. That is the power, [when] the story migrates
through a class or group of people to create an
organizational belief system.
If you think
about it, we all grew up and we still grow up with
religious beliefs, rules and stories. And all the tribes
that we all belong to [over] thousands of years ... had
rules, values, and beliefs. What were they encoded in?
The stories. They call them the Koran. They call them
the Bible. They call then the Torah. They call them the
manifesto. Even the communistic manifesto – they’re all
bound in that. They’re stories. Why are they stories?
Because people can then code the information and then
tell them to each other. And I think that business has
to recognize that leadership depends upon inciting your
management team and your middle level managers and the
people in the field to an action that’s coherent. It’s
driven in the same direction. They don’t have to speak
it the same way, but the heart of the story is the same
way. And it’s not that it’s easy or hard. It’s the only
way. It’s not like there’s another way. If you give them
just the information, they won’t remember it a day
later. They just won’t.
Knowledge@Wharton: That’s why a story behind it had
to move them at an emotional level as well as a vision
level.
Guber:
100%.
Knowledge@Wharton: So the other question that comes
to mind ... is now that the tribes are online, the idea
of surrendering control can often be troubling to any
company as they see that conversation and that story
diluted and diversified. What’s your response to that as
the tribes move online?
Guber: Control
is an illusion. You don’t control anybody. You can try
controlling yourself. You can ask somebody who is
smoking to stop smoking, drinking to stop drinking; [to]
stop hitting their wife, stop yelling at their kids;
stop driving fast. Whatever it is. It’s very, very
difficult. You really can ... inflict pain on somebody,
enough pain that [you will] force them not to do it. But
not to not want to do it. What you have to recognize is
that you provide navigational stakes, you provide
emotional incentives. That’s what stories do. You
provide the herding mechanism of social proof of other
people doing it and getting value from it. And you
surrender control. There will always be abhorrent people
[who] want other products, [who] want to do it
differently, [who] don’t like your management style,
[who] don’t like your story. There are always people
like that. But you aim towards the center of the target
and ... you fire it and you hope like hell it hits the
target – hopefully the bull’s eye, or enough bull’s eyes
that cumulatively together they create the result. And
then other people carry the flag.
That’s really
the magic in it because the other people tell their
story of the story and their ownership of it and your
ability to surrender it and let them own it.
Surrendering proprietorship and letting somebody own it
is the key. That’s really the key. Even if it’s a
collaborative story, a tribal story. Allowing them to
own it. You look how the Bibles morphed. You look at all
the great stories that have held cultures together and
then driven people to wars. It’s in the telling. It’s in
the rendering. You can say ... it’s an art form. There
are some people [who] are more effective at it than
others. But anybody can take 10, 12, 15 strokes off
their game and change their result. You’re not going to
become John Grisham or Jack Welch or Barack Obama –
likely not. But you don’t have to. If you can change
your game 10, 12, 15, 20, 25% – [you’ll find] more joy
and more success.
Knowledge@Wharton: How has story telling changed
with all the digital media – with the blogs and the
YouTubes...? Viral is a tough strategy of containing and
controlling the messages, [which] as you mentioned are
ridiculous a lot of times. But how [has] the actual art
of storytelling changed?
Guber:
The art hasn’t changed at all. Zero. Not one percent.
The craft has changed. And the tools that enable it have
changed. So if you think of the food chain starting out
with a shaman in front of a fire, forget that. [Think
of] a shaman in front of a cave with no fire talking to
... the tribe and telling them not to go into the woods,
and telling them the story of the woods. That story
changed when new technology came. But with new
technology, somebody around the flickering of fire
picked up a [skull] of a buffalo and put it on his head
and danced around the fire and the fire cast flickers
images on the cave wall and all the young people
screamed and yelled, and they wanted to listen to his
story rather than the other shaman ... who just stood
there and drawled on about it. So the prop was born.
We’ve had a
consistent change of technology. The spaces between them
have been long and far and distant over our [history].
It’s only in the last millisecond that we’ve seen the
change in trajectory and momentum of tools like the
telegraph, like the telephone, like the television, like
the radio, like the Internet, like satellite
distribution, like mobile. That’s only in the last ...
second. And these tools have changed the availability of
resources for people to tell stories and reach
audiences, but they haven’t changed the resourcefulness.
In other words, the inside of you.... If I put the
microphone in front of you and you have nothing to say,
and you don’t understand who the audience is [or] what
your role is, ... or who ... you’re talking to and how
to incite their imagination and move their hearts – the
microphone isn’t going to do it. Nobody says “hey, I
just heard a bunch of 0s and 1s. Can you believe – I
heard 10,450,000 0s and 1s.” They’d rush you and take
you to the nuthouse. You heard the oohs and aahs. You
heard the brawl analog.
So the idea is
at the end of the day, all technology is a cold comfort
unless it enriches the palate of the artist, that’s the
teller, you and me, the businessman, the service
provider, the human resource person, or it enriches the
palate of the audience. They get it better. They can do
more with it. They can hold on to it. They can replay
it. They can listen to it in different places. They can
talk to other people. They can play bits and pieces.
They can reformat it. They can use it like YouTube on
their own.
All those things
... shorten the distance between the artist and the
audience, between the teller and the listener, whatever
words you want to use between the management and ...
employees, between the board of directors and the
shareholders, whatever it is. It shortens the distance.
Or it deepens the resonance. Or it makes the tools
available so they can talk to each other better or get
feedback. All those things.
But at the end
of the day, we’re all analog. Our evolutionary framework
is not changed. Carl Sagan, the astrophysicist who I did
Contact with, said an amazing thing. He said ... if you
took a ... Stone Age man just when he was born – maybe
for the six or seven months before he was born you
nurtured [his] mother well so they weren’t malnourished
or the like. But you did that. You took that Stone Age
person who knew nobody except for the Stone Age culture
he lived in and you brought him to New York, Boston,
Philadelphia, and [raised him] in a rich cultural smart
environment, [he] could be a super scientist, great
artist, great anybody. We have not changed. We have not
really changed very much. Our evolutionary path has not
changed. We’ve grown a little taller. We’ve lived a
little longer. But the idea about our tribal nature is
that the veneer of civilization is so thin – you tell
the wrong story and you get Hitler. You don’t serve
bread in Chicago for three days, you get a bread riot.
So the idea is that stories incite the population, the
people, the companies and managements, the small groups
and everything to do the damnedest of things. We are
subject to it.
So the idea is
we want to learn not just to be a good steward – not
learn – we want to improve our ability to be a good
storyteller for our own success.... but there’s another
side to it: To be a good story decoder. A good story
listener. So that we’re listening to our chairman, our
CEO, our human resource person, and we can ask them
fundamental questions. Are they being empathetic? Do
they hear me? Is there a generosity in there? Do they
have skin in the game? Are they congruent with their
message? Whatever it is, we become a good story
listener. And, therefore, we become a better
businessperson, a better business partner. We can ask
questions that can draw it out. If they’re not really
good enough in that frame to draw out the real
information that we need inside the story, [we need to]
know we’re getting what we need....
There’s some art
and there’s some craft in it – storytelling is what
you’re born with. You’re born with it. You’re born that
way. Just look at all your ... little kids. They just
love it. They ... can see it over and over and over and
over again. They love it. They love the certainty. They
love the variety. They love the telling. They learn the
rules of the road from it. Why would we surrender it in
business? Why wouldn’t we engage that tool ferociously
to move our management, to move our employees, to move
our shareholders and board of directors, to deal with
the media who only deal with stories? The media isn’t
even interested in the facts. They just want the story.
And it’s their story they want. So if you don’t know how
to tell a good story, they’re going to tell their
story.
Knowledge@Wharton: You’ve brought this concept down
into a very manageable acronym – MAGIC. It’s something
you can measure in a lot of cases. Maybe you could – in
the short time that we have left – you could give us a
little insight into MAGIC.
Guber: I
used the word MAGIC ...s because people think stories
are always magic. They think it’s the ultimate sleight
of hand. It’s really not about state of the art
technology; it’s about state of the heart technology.
The idea is you’re moving people’s hearts. What I wanted
to try to do was just to look at some of the tools and
resources and navigational stakes, and ... put them in a
simple way so I could just think about it quickly; just
before ... you go into your meeting with your employees
or your human resource person, before you talk to two or
three people or before an oral narrative, before you
talk to a customer or a service provider or the media or
your shareholders or whatever it is. So I tried to use
MAGIC as a tool, to just say is there a magic? Yes, the
magic is here in your heart. And what does that mean?
You have to
motivate. M. You have to motivate. You’ve got to be
motivated first. Tell yourself your own story. Make sure
you are motivated because they will see if you’re not
authentic. If your authenticity doesn’t shine through,
if you don’t have the right intention, you aren’t going
to get the audience’s attention. There’s no chance.
Zero. They’ll get it before you even speak the first
word. So that’s the first thing, motivating them. And
then when you motivate the person you’re listening to,
you are trying to get ... their attention and you want
to be congruent. You want to show them that you have
skin in the game, that you have your “alignment of
interest” as they say in business school. Or another way
of saying it is that your heart, tongue, feet and wallet
are going in the same direction. Because when they see
that lack of congruence there’s a lack of authenticity
and they don’t believe what you say. Your words are
resting on an empty palate.
The next thing
is Audience. Understand. If you think of the one
listener, the person listening to you as an audience,
you render an experience to them. You try to engage them
emotionally, not intellectually. You may have
intellectual content, it can’t be an empty calorie, but
the idea is you’re engaging them emotionally. You’re
creating a palate on which this information is to rest.
So you look at A for Audience. Think of them as
interactive. Think of it not as me, but we. Think of it
as that connection.
Then G, your
goal. All storytelling narrative is goal oriented. If
you’re a lawyer, you want your client [to be found] not
guilty. If you’re a doctor, you want [patients] take
their medicine and feel a certain way.... If you’re a
politician, you want them to vote for you. If you’re
talking to a customer, you want them to buy your
product. If you’re talking to an employee, you want them
to sell the message the way you want them to sell the
message or behave a certain way or join the tribe or
whatever it is. So your goal, being transparent is
important. If it’s generous, if it looks like it’s we’re
in it together – it’s a ‘we, not a me’ situation. It
becomes more compelling. You feel it’s not being done to
you; it’s being done with you.
And then I.
Interactive. All narrative, all storytelling is
interactive. Just think of what’s happening in
interactive media and why it’s so compelling. Because
you can talk back. But not just back to the talker, the
leader, the CEO, the human resource person – but to
other people. In fact, it’s encouraged. In fact, that’s
what good story telling does. It creates a viral
advocacy amongst the listeners so interactivity is
really important and it gives more of the sense that you
engage or the more likely it is to be memorable.
And then C.
Content. You always have to remember you have to have
good content. But it comes from everywhere. It comes
from your own experience. Say, “Let me tell you about
what happened to me yesterday.” And then people are
rendering a first person experience. It can be history.
“Look what happened. Cortes burned the boats so that no
one would return and they would fight Montezuma.” You
tell that story. Or it can be in an artifact, the
baseball. Barry Bond’s baseball tells the story of
steroids. Tells the story of triumph. Tells the story of
overcoming things. Lots of different stories enmeshed in
it. Or it can be a completely synthetic story ... where
you put the elements together that are, if you will, an
illusion. It can be like “The Three Bears.” Telling a
fantasy story. But all of them at their heart are
designed to make people, folks who are listening to it,
have an emotional reaction. If somebody says to you, I
heard a story, it made me think. You’re listening to a
flop. It’s got to move your heart and then make you
think. They go first to where it’s your heart or your
gut and they migrate up to your head and then they
migrate to your wallet and your feet. So you get the
other kind of action. If you aim at their wallet or
their feet, you ain’t going to get them to dance or pay,
unless they’ve got a gun to their head. And that won’t
work.
Knowledge@Wharton: Well, you’ve certainly given us a
lot of great content here in our conversation and we
appreciate your time with Knowledge@Wharton.
Guber:
Thanks for inviting me.
Note:
Published in Knowledge@Wharton, June 24, 2009http://knowledge.wharton.upenn.edu/article.cfm?articleid=2269.
BP’s Fiona MacLeod:
A Change Agent Sees Change ‘Addiction’
Knowledge@Wharton
 After
20 years of experience leading change management
programs in the U.S., Europe and New Zealand, BP
executive Fiona MacLeod has concluded that the corporate
world is “addicted” to serial change management programs
that consume massive resources but ultimately fail to
solve the problems they aim to address. “What really
struck me is why so many of these change management
programs fail,” only to be followed by similar
initiatives within one or two years, often before the
original program is completed, said MacLeod, president
of BP Convenience Retail USA & Latin America.
At the recent
Wharton Leadership Conference, co-sponsored by the
Center for Human Resources and the Center for Leadership
& Change Management, MacLeod urged her fellow leaders to
ask themselves: “How can we ... free ourselves from our
addiction to episodic change and move to a much more
healthy habit of continuous business improvement?” She
compared the phenomenon to a yo-yo dieter who loses
weight only to put it back on because he has not come to
understand what’s causing his weight gain, or has failed
to adopt the healthy lifestyle that would keep the
weight off.
London-based BP
is the third largest global energy company and one of
six so-called “big oil” companies, with vertically
integrated operations to drill for, refine and market
petroleum products. Globally, BP reported revenues of
$367.1 billion in 2008. Its ampm stores in the United
States and Latin America – the name is a reference to
the fact that they are open day and night – were
launched by ARCO, the old Atlantic Richfield Co., a U.S.
oil refiner and marketer that BP purchased in 2000. BP
gasoline is marketed under the ARCO brand on the West
coast of the United States. The company also uses the BP
brand in North America and elsewhere, and the ARAL brand
in Europe. In addition to gasoline, the markets offer
the usual assortment of convenience store goods.
No ‘Big
Splashes’
Many change
management programs are doomed to failure because “the
change we are putting in place is not sustainable – and
sustainability is absolutely crucial,” noted MacLeod,
who is based in La Palma, Calif. Change initiatives
wither in an organization for several reasons:
* New
leaders are often more concerned with “making a big
splash” than with following through on a long-term plan
to monitor change and keep the program on track.
*
Organizations often revert to old habits because
employees do not understand why change is needed, or
they lack the tools and training required to sustain the
new approach.
* Nothing
changes because ownership of the change rests with an
external team or consultants, rather than with the
leaders responsible for running the business.
MacLeod urged
managers to attend to “the soft side of change” by
putting in place programs to fully engage leaders and
employees in the process of creating change and
sustaining it over time. “As business leaders, we’re
very good at the rational part” of change: Identifying
what’s wrong and how to fix it. But the soft side of
change management – in terms of really engaging people –
is just as important. If people get it intellectually
but don’t get it emotionally, I don’t believe the change
will be sustained.”
To be engaged,
employees must understand the case for change. Managers
should provide data showing what’s not working and how
the change will fix the problem. “Develop your killer
slide to make your business case whenever you give a
presentation. It’s not only why you’re changing, but
what it’s going to look like when you’re done. People
need to have a sense of what the future looks like, so
be very clear on that,” MacLeod advised.
Business leaders
must own the change agenda and take responsibility for
following through on implementing every step in the plan
and tracking results to make sure that change continues
over time. “Never assume that leaders get it.... We need
to take probably 10 times as long in engaging,
empowering and educating our leaders than we actually
think we do,” MacLeod said.
Getting the
commitment of leaders is essential to avoid the common
pitfall of turning change management into a charade.
“You have a workshop, learn some change management
jargon, you maybe do some team building, and have a pile
of flip charts ... and actually none of the [steps] are
properly measured or followed through and it ends up
being a waste of time.”
It’s important
also to shift the emphasis of change management from
“big splashes” to “everyday performance improvement.”
You can prevent the typical reversion to old habits by
providing tools and training required to continually
measure progress toward specific change objectives. “Put
written charters and contracts in place. These contracts
need to be in people’s performance reviews, not
something separate,” MacLeod said. “You need to
constantly look at them and discuss them with people.”
Changing the
culture to reward the desired behavior is critical to
success. Make “heroes of our day-to-day deliverers, not
those who make the biggest splash. You reward people on
how they treat the customer, how they make decisions,
how they simplify the business..... And crucially, all
of this has to be done in the spirit of open
communication and respect.... If [people are] uncertain
and they don’t feel respected, the change will never
stick,” MacLeod said.
Since joining BP
in 1988, MacLeod has specialized in business
transformation, developing the required breadth of
skills in a variety of marketing, HR, supply and
distribution roles across the UK and Europe. She has led
operational, strategic and marketing elements of the
retail business, and most recently led the restructuring
of BP’s European marketing businesses. A native of
Scotland with a Master’s degree from Glasgow University,
MacLeod was tapped to head the U.S. convenience retail
business in 2006, providing her biggest challenge yet:
Restructuring the business and transforming the brand
for about 1,800 stores from California to Pennsylvania.
MacLeod’s
project was part of a broader BP reorganization
initiative announced in October 2007 to improve the
company’s efficiency and narrow its performance gap with
competitors. When MacLeod embarked on her restructuring
program, she had to figure out what was wrong and, more
importantly, why three previous initiatives had not
worked. She did not want to make the same mistakes.
“The key thing
was making our business purpose clear,” MacLeod said.
“We thought we were there to fill up lots of stand-alone
convenience stores and tie up lots of capital, when
actually our purpose was to monetize the gas we made at
our refineries and make sure we had a secure position in
the marketplace for the long term. The question was...
how could we put that change in place in a way that
would stick.”
She chose a bold
plan that would require wrenching change. Among BP’s
1,800 retail outlets nationwide, 800 were company-owned
and operated. She would change the business model to
100% franchised with a revamped ampm store brand and new
marketing programs to compete more aggressively.
Selling 800
stores to franchisees would eliminate 10,000 jobs at BP,
virtually all of the people employed in BP’s convenience
retail business. The total included 9,500 store
employees and an additional 500 support staff at two
headquarters. For the store employees there were no
guarantees they would be hired by the new franchise
owners. MacLeod and her team faced significant people
management hurdles in readying the stores for the
conversion process in only 18 months. She would have to
motivate store employees to reduce overhead and improve
operations, even though they faced “huge uncertainty”
about future employment. “Our people were displaying the
classic signs of change fatigue.... People were very
jaded” and lacked confidence that they could make things
better, she said.
“Confidence is
absolutely crucial in making change stick. If people are
confident in their leadership, themselves and the
business purpose, you are way more likely to get a
change that is sustainable and actually turns into
continuous improvement,” MacLeod noted. To build
confidence, her team drafted a business case and showed
it to the “biggest cynics” in the organization, asking
them for a critique and to suggest how to make it work.
MacLeod said she built trust by speaking directly to
store employees, explaining how the plan would help them
beat the competition, and showing that “we had genuine
empathy for what they were going through.”
So that
employees would know what was expected and see their
progress, her team communicated month-by-by month
performance objectives, including specific plans to
reduce overhead costs. “We focused every single day on
engaging our people,” using town hall meetings, small
team meetings and the web to promote continuous
improvement, MacLeod said. To prevent backsliding, she
offered employees retention bonuses that would be paid
at the time the store was sold to the franchisees if the
stores were delivered to their new owners with strong
financial controls and safety records. “People were very
motivated to make sure the business continued to run in
a very healthy way.”
Celebrating
success, recognizing achievement and making people feel
good about the business were important tools for
sustaining momentum. “People got rewarded for
simplifying and improving things. Importantly, it’s as
much – if not more – about the recognition of your peers
than it is about financial rewards,” MacLeod said.
Know Your
Destination
Organizational
design helped to lay the foundation for change. “I put
my winning, end-state organization in place from day
one” rather than waiting to decide which employees would
stay to support the franchises and which would leave,”
MacLeod stated. “We had people who knew they would be
leaving in 18 months and they stayed motivated for the
entire period because we had been very straight with
them. People want and expect clarity from their
leaders.” Planning was critical to reduce risk as the
team rolled out new concepts. “We did lots of road
mapping and tested our plans before we went to market,”
MacLeod said.
In the end,
tracking measures showed that employees improved and
simplified operations throughout the conversion period,
producing $700 million a year in cost savings. Selling
the stores freed $1.2 billion in capital for BP to
redeploy more productively. Pulse surveys showed morale
steadily improved, even though 70% of those responding
knew they would lose their jobs, according to McLeod.
“The thing I’m most proud of is how our people
responded.... You can do some really tough things as
leaders and you can do them in a way that people feel
valued and respected.”
She noted that
“it’s very easy to get addicted to the change pattern by
not getting the change right in the first place, not
making the tough calls or bold decisions up-front, maybe
going for something half-way, and then allowing things
to slip back.”
Ultimately,
MacLeod said, not just corporations, but the global
economy depends on leaders to break the cycle. “The
economy needs businesses that are clear on why they
exist, clear on what their business model is, and have
measures in place to know when they need to make
adjustments. We need organizations that can manage
continuous improvement in a predictable way.”
Note:
Published in Knowledge@Wharton, July 08, 2009
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2280.
Presidential
Historian Richard Norton Smith: Ten Ways to
Judge a President
Knowledge@Wharton
 Corporate
leaders in the United States often draw leadership
lessons – good and bad – from the examples set by
American presidents. But in looking to the White House,
it’s important to recognize that history’s take on
presidential performance is subject to change, according
to presidential historian Richard Norton Smith, who
spoke at a recent Wharton Leadership Conference. He
offered 10 rules for presidential evaluations that stand
the test of time.
For
example, he said, Dwight D. Eisenhower was considered
something of a do-nothing president, ranking below
Chester A. Arthur, during the dynamic Camelot era of
John F. Kennedy. In contrast to the PR-driven Kennedy,
Eisenhower used to say, “The job of the president is to
persuade, not to publicize.” Indeed, the Supreme
Commander of the Normandy invasion was so subtle and
self-effacing as president that historians judged him
mediocre.
Nearly 50
years after Eisenhower left office, however, scholars
are revising their opinions. His presidential papers
revealed a skilled political operator who worked quietly
behind the scenes, but was driven by policy,
organization and intellectual rigor. Despite pressure to
rescue the French, he kept the U.S. out of Vietnam in
1954, reasoning with prescience that the cost of war in
Southeast Asia would far outweigh any strategic
benefits.
“There is
no single rule for assessing presidential performance”
said Smith, who addressed the recent 13th
Annual
Wharton Leadership Conference, co-sponsored by the
Center for Human Resources and the
Center for Leadership & Change Management.
“Eisenhower illustrates better than anyone the need for
each generation to revisit its assumptions” in light of
new evidence, the performance of succeeding presidents
and the perspective that comes with time.
“Americans
have been revising their estimates of presidents for as
long as we have had presidents,” said Smith, who has
published biographies of Thomas E. Dewey, Herbert Hoover
and George Washington, and is the presidential scholar
in residence at George Mason University in Fairfax, Va.
People forget that the revered Washington “was in fact
an enormously controversial president” who was burned in
effigy and denounced as a “betrayer of the Revolution”
while he was in office.
Bouts of
historical revisionism and counter-revisionism explain
why assessments of the nation’s leaders “bounce around
like corn in a popper,” Smith said. For example, Arthur
M. Schlesinger, Jr., the Kennedy and Nixon historian,
favored “transformative” presidencies with charismatic
leaders promoting a more powerful federal government,
exemplified by Teddy and Franklin Roosevelt. A more
nuanced approach, evaluating leaders in the context of
their time rather than in hindsight, has kindled
reappraisals of Gerald Ford, Ronald Reagan and even
Calvin Coolidge – all of whom tended to be underrated
because they were modest advocates for a more limited
role for government.
“The
presidents who promise freedom from government” – Thomas
Jefferson, Coolidge and Reagan – “are as legitimate in
their own time and place as the presidents who, in
effect, promise freedom through government” –
the Roosevelts, Woodrow Wilson and Lyndon Johnson, Smith
said. “You can take a Coolidge seriously now, something
you couldn’t do before Ronald Reagan.”
10
Rules to Judge a President
Smith
offered his personal list of “10 rules to judge a
president” as a more objective approach avoiding the
distorting effects of changing societal values, such as
the pro-government activism of the New Deal and the
1960s:
1)
History rewards the risk-takers.
The list of presidents and the
bold initiatives that pushed them up in the rankings are
obvious, including Thomas Jefferson (the Louisiana
Purchase), Harry Truman (stopping Communist aggression
in Korea), Lyndon Johnson (Civil Rights Act of 1964),
and Richard Nixon (dialogue with Red China).
But risk
taking does not always conform to our notion of a
“swashbuckling, agenda-setting executive” that began
with Teddy Roosevelt 100 years ago. “Sometimes, doing
nothing is the most difficult form of leadership of
all,” Smith said. He cited George H.W. Bush’s diplomatic
refusal, despite strong pressure, to attend “the photo
opp of the century,” the destruction of the Berlin Wall
that symbolized Soviet domination of Eastern Europe.
“By not
rubbing Mikhail Gorbachev’s nose in the humiliation of
the demise of the Soviet empire, he made it possible for
Gorbachev to go along with a peaceful integration of
Germany and for the Soviet Union to support Bush’s
coalition in the First Gulf War,” Smith said, noting
that few would have predicted Soviet acquiescence to
these American initiatives.
2)
A president who actively campaigns for his historical
place is engaged in a self-defeating exercise.
Warren G. Harding
hoped to be “the best loved” president and came to
office in a landslide victory after promising a “Return
to Normalcy” following World War I. In the end, Harding
couldn’t extricate his administration from the Teapot
Dome bribery scandal and quickly fell into obscurity,
widely ranked among the worst presidents.
Smith said
he found it “profoundly disturbing” that Bill Clinton
pondered his legacy aloud with former advisor Dick
Morris, who later wrote a memoir that included critical
observations of the former president. According to
Morris’s book, Clinton wondered if the fact that he had
not led the nation during a time of war would diminish
his ranking among the presidents. Surprisingly,
“Clinton’s reputation and the significance of his
presidency have risen significantly,” Smith said.
“Clinton’s presidency is being weighed, as each
president is ultimately, against his successors” – in
this case, against George W. Bush’s record of war,
deficit and economic crisis.
Clinton’s
most important legacy may be his success in “moving the
Democratic Party to the middle of the road to a point
where it had fiscal credibility and a muscular foreign
policy, without surrendering its fundamental social
justice principles,” Smith said.
3)
There is no single theory of presidential success.
Proponents of
the “strong presidency” as a prerequisite for greatness
often cite Teddy Roosevelt’s concept of stewardship:
“The president was free to do anything he wanted that
was not expressly forbidden by the Constitution,” Smith
said. He offered an alternative theory valuing
presidents who viewed stewardship as protecting
taxpayers and who did not seek power by expanding
government – a theory underlying reappraisals of
Coolidge, Truman and Ford.
Derided as
“silent Cal” (Dorothy Parker, when informed of his death
in 1933, famously asked: “How could they tell?”),
Coolidge deserves reappraisal “for his authenticity as
much for his ideology,” Smith said. An introvert who
battled with “paralyzing shyness,” Coolidge’s “reticence
was matched by his canniness.... He created a public
persona that held the world at bay while allowing him to
indulge in a humor as sharp as Vermont cheddar.”
Coolidge’s honesty and lack of an overpowering ego
should be all the more valued in an age “when so much of
our public life is riddled by fakery, when candidates
without ideas hire consultants without scruples,” Smith
said. “For lack of a better word, I would say that
Coolidge was grounded,” exhibiting a strength of
character that he said Truman, Ford and Reagan also
possessed.
4)
Presidents can only be understood within the context,
conventions and limitations of their time.
Invariably ranked
among the greatest presidents, the populist Andrew
Jackson fell from grace during the time period when
historians realized that millions of Americans – women,
blacks and Native Americans – had been politically or
economically marginalized. Social activism led to a
revisionist view that “changed the lens through which we
viewed Jacksonian America.” Smith argues for a more
objective approach in dealing with the past, “to
understand someone in the context of their own time and
not make the mistake of applying our conventions to an
earlier time.” Those who judge presidents do not have
license to simply dismiss earlier generations; instead,
“the obligation is ours to try to understand them.”
5)
If presidents are governed by any law beyond the
Constitution, it is the law of unintended consequences.
Although
Woodrow Wilson wanted to be the father of the “new
freedom,” his idealistic vision was overtaken by the
massive increase in government regulation and spending
required by World War I. “In his second term, events
beyond his control overwhelmed him. Foreign war,
domestic upheaval, shameful outbreaks of racial and
ethnic intolerance mocked his idealism and reordered his
priorities,” Smith said.
6)
Presidential power, although awesome on paper, is based
largely on moral authority.
Franklin Roosevelt and Ronald
Reagan understood how to use moral authority to achieve
their objectives, although their goals were
diametrically opposed. Broadcasting fireside chats to
generate hope through the New Deal, Roosevelt banked
“emotional credit and credibility” that he used
throughout his presidency to win support for creating
the modern social welfare state. Similarly, Reagan
gained enormous influence through his response to the
assassination attempt in 1981. “His legend began when
millions saw a side of Reagan they never knew existed –
the jokes that he cracked [and] the grace that he
displayed,” Smith said.
7)
The president requires a talent for making useful
enemies.
History’s most admired presidencies were often locked in
struggles with adversaries who gave them power.
“Roosevelt and Reagan had a genius for exploiting their
opponents, whether European dictators in the 1930s or
the Evil Empire that haunted [Reagan],” Smith said.
8)
Every great president marches to the beat of his own
drummer.
Reagan personified the principle that great leaders “are
essentially mysterious figures,” with capabilities not
fully understood. Reagan’s national security adviser,
Robert McFarlane, remarked: “He knows so little and
accomplishes so much.”
9)
The challenge posed by any crisis is equaled by the
opportunity for leaders to forge an emotional bond with
the people they lead to gain moral authority and
expanded powers.
Franklin Roosevelt, having
rescued democratic capitalism, “was all but immune from”
right-wing attacks accusing him of Stalinesque power
abuses. Lincoln was called an “incipient dictator” for
suspending habeas corpus barring
unlawful detention, but Americans never doubted his
belief that he had to suspend one clause in order to
save the rest of the Constitution.
10)
Greatness, like beauty, is in the eye of the beholder.
Social and
economic conservatism had their heyday under Reagan,
demonstrated when Clinton declared the era of big
government was over and produced balanced budgets. But
the Reagan consensus that “markets were sacred” and
“Wall Street invariably knew better than government
regulators” has been repudiated, “at least
provisionally,” by the financial crisis that led to
Democratic sweeps of Congress and the presidency. “All
of that is up for grabs,” Smith said, although it’s too
soon to predict what will replace “the age of Reagan.”
How will
historians rank George W. Bush? Much will depend on what
happens in the Middle East, where two unresolved wars
continue to weigh on his legacy. “If 30 years from now
there is some semblance of stability and democracy, then
deservedly or not,” historians may take a very different
view of the Bush presidency, Smith noted. Still, he
doubted that Bush’s reputation would undergo the
dramatic reappraisal that has benefited Eisenhower. “I
don’t know whether, when we look at the Bush papers,
we’ll discover the same surprising wisdom,
sophistication and concealed gifts that we now associate
with Eisenhower.”
Note:
Published in Knowledge@Wharton, July 22, 2009
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2294.
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