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Gary HamelLeadership Consultant

ExcellenceL E A D E R S H I P

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

JANUARY 2009

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

—WARREN BENNIS, AUTHOR ANDUSC PROFESSOR OF MANAGEMENT

Master InnovationMaster Innovation

Interview withGeorge Borst

Interview withGeorge Borst

AlignCore Values

AlignCore Values

Beinga LeaderBeing

a Leader

T h i s i s s u e s p o n s o r e d b y

MarshallGoldsmith

ExcellenceL E A D E R S H I P

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

KEN SHELTON

Best and Worst LeadersWe need to be clear aboutauthentic leadership. . . . . 2

GARY HAMEL

Innovation MastersOld dogs really canlearn new tricks . . . . . . . . 3

MARTHA CARLSON

Women LeadersThey tend to embody four traits. . . . . . . . . . . . . .4

JIM COLLINS

Align Action and ValuesPut some teeth intoyour statements . . . . . . . . 5

A.G. LAFLEY

InnovationYou can change the gameusing IQ and EQ. . . . . . . .6

ALICIA BASSUK ANDMARSHALL GOLDSMITH

Meaning at WorkAdd both primary and secondary factors. . . . . . . .7

KEVIN CASHMAN

Being a LeaderWith self-awareness yougain executive presence . .8

JIM BRAMANTE ANDLAWRENCE OWEN

Making Change Work Learn from those who areextremely successful. . . . . 9

DON SCHMINCKE

Strategic PlanningDelusionFour common dangersthreaten your ascent. . . . 10

MICHAEL T. KANAZAWA

Doing More On Less

You can now generate double-digit results. . . . .11

MICHAEL WINSTON

Antitrust SuitsMany “suits” or so-calledleaders destroy trust . . . .12

DEBORAH GARAND AND

JUDITH GLASER

Leadership Integrity You need to hardwire it into your culture. . . . . . . 13

TOM GRIFFIN

Great LeadersLink all learning to performance. . . . . . . . 14

STEPHEN M. R. COVEY

Building TrustEmulate the behaviors of high-trust leaders . . . .15

WILLIAM A. COHEN

Leadership LawsLearn from Drucker’sfavorite book . . . . . . . . . .16

BILL BIRNBAUM

Tough TimesFocus on your key success factors. . . . . . . . . 17

BOB SCHWIETERMAN

Skip the MirrorLook to others to learnmore about yourself . . . .17

LANCE SECRETAN

Moral CourageYou need it to make breakthrough results. . . .18

GEORGE BORST

Authentic LeadershipBuild relationships of trustwith constituents. . . . . . .19

VOL. 26 NO. 1 JANUARY 2009

Best and Worst Leaders

We sometimes forget thatall three pigs were proac-tive and enterprising. All

built shelter and hadsome provision. But only

Practical Pig’s brickbuilt-to-last structurestood the test of time

when good times endedand recession set in.

RECENTLY, I WAS ASKED BYMissy Smith of Publishing

Executive to answer somequestions about leadership.

Why and how did you get involved inleadership? In 1983, I was recognized asEditor of the Year in higher education andwas fired for it. Out of work and tired ofpoor leadership, I decided to start LeadershipExcellence, in partnership with the topthought leaders of the day.

Why is good leadership important? Reador watch the news. Bad leaders create havoc,waste, corruption, loss, crises, and in extremecases devastation and death. In contrast, goodleaders create sustained work and benefits.The difference between them can be as wideand deep as the Grand Canyon; their resultsas measured in profits or losses can soar intothe billions; their relationships as measuredin trust and tenure range from high and life-long to low and tenuous.

What characteristics make for a goodleader? I’ve written extensively on this topicin my books. However, I’m not fond of list-ing “Boy Scout” virtues (I’ve known toomany “scout” leaders who mouth such plati-tudes and then abuse people). Good leaders,above all, are consistent, reliable, responsible,open, direct. They do what they say; andhow and why they get results matter asmuch to them and what, who and when.

What actions or duties are required of aleader? They are duty-bound to see a desired(better) future and engage people in creatingit. To treat people with respect. To cultivatetrust. To keep focused on what matters most.And when the work is done, to have fun andshare the recognition and rewards.

If you’re a top executive, why do you needto demonstrate strong leadership skills?Otherwise, you won’t have a company. Ifyou can’t lead people and manageresources, you go out of business. Sadly,many so-called leaders and managers today

have sold out. They no longer operate asself-sustaining, independent entities; hence,they lose their voice and viability—andeven lose a customer orientation.

How can a strong leader guide his or hercompany during rough times? First, be astransparent as possible, treating people asresponsible adults who share in the problemand solution. Show and tell people what’s atstake (survival, life as we know it, everythingwe hold near and dear). Present the facts.Invite their energy and ideas. “Strong” lead-ers often appear “soft” on people, hard on theproblem. They break down silos, entitlementmindsets, us-vs.-them thinking, inequities,and blame games. Rough times often causethem to share ownership.

What happens when good leadership islacking? The culture is soon characterized bypolitics, favoritism, cronyism, nepotism, chaos,corruption, egotism, depression, dependency,boredom, mediocrity, low engagement, victimmindset. Good leaders often bring energy,excitement, optimism, hope, vision, direction,and action to situations. They restore trustand open communication. They rebuild trans-parency and credibility with all constituents.

What advice do you have for people whowork in a leadership role? Huddle up. Openthe books. Share the outlook. Address thechallenges. Set the new direction. Invite par-ticipation. Gain buy-in. Share the sacrifice.Recognize and reward the right people. Sendthe right signals. Communicate more. Connectwith key employees and customers regularly.Set high standards and goals. Focus on exe-cution excellence in every role. Measure afew key success factors weekly and make peo-ple’s performance visible. Keep recruitingand upgrading the team. Go for what consti-tutes a meaningful win to your people.

LLiisstt ooff BBeesstt aanndd WWoorrssttIn our list of 2008 Best and Worst Leaders,

we made selections based on this criteria:track record, decisions and actions, testsand standards, responsibility and account-ability, relationships, and results. LE

by Ken Shelton

Volume 26 Issue 1

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Best and Worst LeadersE . D . I . T . O . R ’ S N . O . T . E

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

BEST LEADERS

Barack Obama, president electAlan Lafley, CEO, P&G Ann Mulcahey, CEO, XeroxJonathan Schwartz, CEO, Sun

Microsystems

John Rooney CEO, U.S. CellularSteve Jobs, CEO, AppleWarren Buffet, Berkshire HathawayJeffrey R. Immelt, CEO, GEEric E. Schmidt, CEO, GoogleFred W. Smith, President, FedExWilliam C. Weldon, CEO, J&J

Gary C. Kelly, CEO, Southwest AirJim Sinegal, CEO, CostcoBrian Walker, CEO, Herman MillerD. Scott Davis, CEO, UPSJohn T. Chambers, CEO, Cisco SysGeorge W. Buckley, CEO, 3MDanny Wegman, CEO, Wegmans

James D. Weddle, ManagingPartner, Edward Jones

Arthur D. Levinson, CEO, GenetechIrwin M. Jacobs, CEO, QualcommLou Gentine, CEO,Sargento CheeseLakshmi Mittal, CEO, Arcelor MittalArthur D. Levinson, CEO, Genetech

WORST LEADERS

Dick Cheney, Vice PresidentDonald Rumsfeld, Sec. of Def.

Angelo Mozilo, CEO, Countrywide Gavin Newsom, Mayor, SF, CA Ben Bernanke, Fed Res ChairHenry Paulson. Sec of Treasury

Rick Wagoner CEO, GM Robert Nardelli CEO, Chrysler Alan Mulally CEO, Ford Henry McKinnell, CEO, Pfizer

Barney Frank, CongressmanChris Dodd, SenatorChristopher Cox, SEC ChairmanRod Blagojevich, Illinois Governor

The d i ff e rences can be l ike n ight and day.

range, it returned to earth, bouncingsoftly on the grass.

Jeepers. I had just hit a ball fartherthan a Barry Bonds home run—and itfelt good, that sudden, effervescentjolt of positive reinforcement. In thatfirst euphoric moment, I had no ideaI had just inhaled a drug more pow-erful than crack, but I knew I wantedmore of that grin-inducing buzz thatcomes when you succeed, even inter-mittently, at something darn-nearimpossible.

Like addicts of all sorts, my crav-ing has cost me dearly. The new clubsevery 18 months or so, the countryclub dues, and the dollars and daysconsumed by coaches, golf schools,and training aids.

The golf swing has been called

“the most difficult move in sports”—a gross understatement. To send yourball rocketing precisely toward its tar-get, you must think of nothing but thetarget, while resisting the temptationto look at the target; you must keepyour arms and hands relaxed, whiletorquing your torso like a taut rubberband; and you have to accelerate theclub head from a standstill to morethan 90 miles an hour in less than asecond, while resisting the temptationto “swing hard.”

And yet, with a bit of application,a middle-aged Boomer with a mod-icum of athletic ability can become arespectable golfer. And once or twicea round, this diligent, well-trainedamateur will hit a golf shot that is theequal of anything you’re likely to seeon the PGA Tour.

This fact brings me neatly to mymain point: Despite the old adage tothe contrary, gray-haired dogs reallycan learn new tricks.

Innovation Masters

NO SPORT DELIVERSless adrenaline

per unit of time thangolf. For years, that simple fact keptme off the links. When compared tohurling myself down a black dia-mond ski run or diving on a wreck,the idea of spending the better partof a day struggling to propel a smallball toward a pint-sized hole, with adevice ill-suited to the task, seemedto me both pointless and effete.

Yet there I was recently, hackingmy way around two beautiful golfcourses: Kauri Cliffs and CapeKidnappers, both of which haveviews across the Pacific from NewZealand’s North Island. And then Iwas off to join a week-long golf orgyin Palm Springs.

My journey from sneering skepticto helpless addict began a decadeago when I set out to write a coverstory for Fortune on the Internet. Toimbue the piece with a bit of firstperson veracity, I visited eBay’snascent website and, more or lessrandomly, entered a bid for a set ofgolf clubs. So confident was I thatmy low-ball offer would soon bebested, I didn’t bother to check backin on the auction. A few days later, Iwalked into my office and discov-ered an elongated box propped upin one corner. “Oh crap,” were thefirst words out of my mouth when ashiny set of Wilson irons tumbledout of the package.

Nevertheless, within a few days Iwas down at the Stanford Universitydriving range with a bucket of ballsat my feet and a 7-iron in my hand.My first swing slammed into theground a foot behind the ball, send-ing an electric shock up my arms.Another hideous spasm and the golfball was whizzing sideways, pro-voking startled stares from my fel-low range rats. Ten, 20, or 50 lungeslater, I connected—and with awhizzing sound sweeter than the airintake on a Ferrari F430, that littlewhite orb started to soar. Up it went,suspended in the sparkling autumnsky. And then, 160-yards down-

OOlldd DDooggss,, NNeeww TTrriicckkssYour company can dramatically

improve its innovation performance!With the right tools and training, youcan teach “ordinary” employees howto be extraordinary innovators.

And yet few CEOs put everyemployee through an intensive train-ing program aimed at boosting theirinnovation skills. Sure, companieshave electronic suggestion boxes,slush funds for new ideas, elaboratepipeline management tools, andinnovation awards—but in theabsence of a cadre of extensivelytrained and highly skilled innova-tors, much of the investment in inno-vation enablers will be wasted.

Imagine that you coaxed a keen,but woefully inexperienced golferonto the first tee at Pebble Beach.After arming the tyro with the latesttitanium driver, you challenge him tosplit the fairway with a monsterdrive. You promise the neophyte a$100 bonus every time he hits a longbomb that stays out of the rough,and another $100 for every holewhere he manages to break par.

But what you don’t do is this: Youdon’t give him any instruction—nobooks, no tips, no coaching, no videofeedback, and no time off to perfecthis swing on the practice range.Given this scenario, how many 200-yard drives is our beginner likely toland in the fairway? How long is helikely to stay avidly devoted to thetask at hand? And what kind ofreturn are you likely to get on the$2,000 you spent on a bag full ofhigh-tech clubs and the $450 youshelled out for a tee time? Theanswers are: Not many, not long, andnot much. And no one who knowsanything about golf would ever setup such a half-assed contest.

IInnvveesstt iinn IInnnnoovvaattiioonnI’m dumbfounded by the fact that

so few executives invest in the inno-vation skills of their frontline employ-ees. The least charitable explanationfor this mind-boggling oversight:senior managers subscribe to a sort ofinnovation apartheid. They believethat a few blessed souls are genetical-ly equipped to be creative, whileeveryone else is a dullard, unable tocome up with anything more excitingthan spiritless suggestions for SixSigma improvements. A more charita-ble reading: CEOs and corporate HRleaders simply don’t know how toturn on the innovation genes that arefound in every human being.

by Gary Hamel

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 0 9 3

CHANGE INNOVATION

I s i n n o v a t i o n e a s i e r t h a n g o l f ?

Obviously, you can’t teach some-one to be an innovator unless youknow where game-changing ideascome from. You need a theory ofinnovation—like Ben Hogan’s theoryof the golf swing. A few years’ back, I and several colleagues analyzedmore than 100 cases of business inno-vation to understand why some indi-viduals, at certain points in time, seeopportunities that are invisible toeveryone else.

PPaayy AAtttteennttiioonn ttoo FFoouurr TThhiinnggssWe learned that successful innova-

tors have ways of seeing the worldthat throw new opportunities intosharp relief. They have developed,usually by accident, a set of perceptu-al “lenses” that allow them to piercethe fog of “what is” in order to seethe promise of “what could be.”How? By paying close attention tofour things that usually go unnoticed:

1. Unchallenged orthodoxies—thewidely held industry beliefs that blindincumbents to new opportunities.

2. Underleveraged competencies—the “invisible” assets and competen-cies, locked up in moribundbusinesses, that can be repurposed asnew growth platforms

3. Underappreciated trends—thenascent discontinuities that can beharnessed to reinvigorate old busi-ness models and create new ones.

4. Unarticulated needs—the frus-trations and inconveniences that cus-tomers take for granted, andindustry stalwarts have thus farfailed to address.

I’ve learned that these modes ofdiscernment can be taught to anyonewho is genuinely eager to “see differ-ently.” As individuals experience see-ing the world in new ways, and astheir novel insights get shared andcross-tabulated, an organization’scapacity for innovation soars.

SSeeee wwiitthh FFrreesshh EEyyeessThe first and most important step

for any company intent on building acapacity for continuous, game-chang-ing, innovation is to teach its peoplehow see what’s around them withfresh eyes. Until your company stepsup to this challenge, it will be filledwith innovation hackers whose ideasrarely find the fairway. LE

Gary Hamel is director of the Management Lab and visitingprofessor strategic and international management at theLondon Business School. Adapted with permission fromGary Hamel’s Management 2.0 blog for Harvard BusinessSchool Publishing. Visit www.garyhamel.com.

ACTION: Invest wisely in innovation.

by Martha Carlson

tact and judgment. A successful womanrecognizes that things left unsaid areoften more powerful than what is said.• Fearlessness. Our behaviors are moti-

vated either to fulfill our needs for sat-isfaction or to defend our sense ofsecurity. When we are motivated bysecurity, whether with respect to ourrelationships or our sense of compe-tence and self-worth, we act out of fearand thus compromise our effectiveness.When we are motivated to fulfill ourneed for satisfaction, we set aside ourfears and focus on what we want toachieve—and are more likely to attainit. Fearless leaders take calculated risksand discern the cost/benefit of thoserisks. If (and when) a successful womanleader fails, she realizes a closed dooronly opens windows of opportunity.• Focus. As women, we may believe

we are the consummate multi-taskers—doing good work for our business,family, community, and friends. But tobe effective and to sustain our progresstoward our aspirations, we must stopmulti-tasking and make a deliberatechoice to focus. While we may be ableto do many things at once, we can onlydo justice to one thing at a time. By

being clear on the activitiesand actions essential to oursuccess and fulfillment andmaintaining singular focus,we increase the odds ofachieving our goals tenfold.• Energy. We can’t achieve

success by burning our-selves out—working lon-ger, compromising sleep,and depleting our wellness.We must attend to what

brings us energy in the physical, emo-tional, mental, and spiritual sense. Thisincludes getting adequate sleep andexercise, dealing with negative emo-tions, fueling positive emotions, priori-tizing tasks and activities, and thenallocating time and energy to the mostvaluable ones.

One exemplary woman businessleader is Marilyn Carlson Nelson,chairman of Carlson Companies. Sheembodies the characteristics of authen-ticity, fearlessness, focus, and energy.

These four characteristics applyequally to women and men. None areinherently feminine or masculine.Neither men nor women have a lockon effectiveness and fulfillment. Thisgives me confidence in the growingforce of women in leadership. LE

Martha Carlson is Co-Principal and Executive Coach at TheBailey Consulting Group, and facilitates The Exchange, AForum for Women Leaders. Visit www.thebaileygroup.com.

ACTION: Cultivate these four characteristics.

AS WOMEN LEADERS,we live in historic

times. Women are nowtaking top leadership roles and posi-tions in many places and shaping theworkplace as never before.

In the U.S., women now account for46 percent of the total labor force, and51 percent of all workers in high-pay-ing management, professional, andrelated occupations. And women out-number men as financial managers,medical and health services managers,accountants and auditors, budget ana-lysts, property, real estate, and humanresources (to name a few).

However, few women are found inthe top earner, board member, officerlevel, or senior leadership roles. Itseems that there is a double standardfor women leaders: if theyact consistent with genderstereotypes, they are consid-ered too soft. If they take ontraditionally male character-istics, they can’t win either.When women exhibit tradi-tionally valued leadershipbehaviors, such as assertive-ness, they tend to be seen ascompetent but not person-able. And women often facehigher standards of performance expec-tations at lower levels of reward.

FFoouurr CChhaarraacctteerriissttiiccssWe are at a critical juncture for the

future of women in leadership. As afemale executive coach, my job is tocommunicate the characteristics thatwill sustain their effectiveness and ful-fillment as they navigate the waters ofleadership. Here’s what I find:• Authenticity. Authenticity is being

self-aware, understanding yourstrengths, weaknesses, desires, andfears and converting this self-awarenessinto a business tool, and choosing howyou will leverage the positive and com-pensate for the negative. Success isachievable if you realize that you donot need to be a man or act like a manto be effective. You must be yourselfand act with integrity. An authenticwoman leader sometimes recognizesthat authenticity itself may be veiled by

Women LeadersThey embody four traits.

LEADERSHIP WOMEN

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

visitor could drop into your organi-zation from another planet and inferthe vision without having to read iton paper.

Creating alignment is a two-partprocess. The first is identifying andcorrecting misalignments. The secondis creating new alignments, or what I call “mechanisms with teeth.” I’mgoing to discuss the process as itapplies primarily to core values, butthe same basic process applies to creating alignment with purpose and BHAGs.

CCoorrrreeccttiinngg MMiissaalliiggnnmmeennttssIdentifying misalignments means

looking around the organization,talking to people, getting input, andasking, “If these are our core values

and this is fundamentally why weexist, what are the obstacles that getin our way?” For instance, manyorganizations say they respect andtrust their people to do the rightthing, but they undermine that state-ment by doing X, Y, and Z. The mis-alignments exist not because thestatements are false: these companiesbelieve what they say. The misalign-ments occur because years of ad hocpolicies and practices have becomeinstitutionalized and have obscuredthe firm’s underlying values.

For example, say an organizationlaunches a new service without coor-dinating its internal processes, creat-ing problems for customers. To makesure it doesn’t happen again, man-agers institute a sign-off process foreach new service that’s introduced.The policy remains embedded inoperations long after people have for-gotten why it was created. At some

Align Action and Values

EXECUTIVES SPENDtoo much time

drafting, word-smithing, and redrafting visionstatements, mission statements, val-ues statements, purpose statements,aspiration statements, and so on.They spend nowhere near enoughtime trying to align their organiza-tions with the values and visionsalready in place.

Studying and working closelywith some of the world’s mostvisionary organizations has made it clear that they concentrate primar-ily on the process of alignment, noton crafting the perfect “statement.”Not that it is a waste of time to thinkthrough fundamental questions like, “What are our core values?What is our fundamental reason forexistence? What do we aspire toachieve and become?” Indeed, theseare very important questions—ques-tions that get at the “vision” of theorganization.

Yet vision is one of the leastunderstood—and most overused—terms in the language. Vision is sim-ply a combination of three basicelements: (1) an organization’s fun-damental reason for existencebeyond just making money (oftencalled its mission or purpose); (2) itstimeless unchanging core values;and (3) huge and audacious—butultimately achievable—aspirationsfor its own future (I like to call theseBHAGs, or Big Hairy AudaciousGoals). Of these, the most importantto great, enduring organizations areits core values.

Okay, all fine and good to under-stand the basic concept of vision.But there is a big difference betweenbeing an organization with a visionstatement and becoming a trulyvisionary organization. The differ-ence lies in creating alignment—alignment to preserve an organiza-tion’s core values, to reinforce itspurpose, and to stimulate continuedprogress towards its aspirations.When you have superb alignment, a

point, many people in the organiza-tion begin to grumble about theorganization’s elaborate sign-offprocess, recognizing its inconsisten-cy with the notion of respect andtrust for the individual. The first taskfor leaders, then, is to create an envi-ronment and a process that enablepeople to safely identify and elimi-nate these misalignments.

I recommend working collabora-tively with people throughout theorganization. Ask each individual toidentify something in his or herdaily work that is inconsistent withthe organization’s core values.Randomly sort the individuals intogroups of three to six and ask eachgroup to come up with the threemost significant misalignments per-taining to each core value. Let’s sayyou had 24 people involved—fourgroups of six. Each of the fourgroups comes up with three mis-alignments for each core value. Loand behold—what do you find?Typically, each group has identifiedthe same misalignments. Thisprocess allows your organization toquickly identify—without pointingfingers—the four or five most signif-icant misalignments. Once you’veagreed the emperor has no clothes,you can begin to dress him.

CCrreeaattiinngg NNeeww AAlliiggnnmmeennttssIt’s one thing to eliminate mis-

alignments that exist but shouldn’t.It’s another to create something thatdoesn’t yet exist but ought to. Justbeing consistent is not enough. Truealignment means being creativelycompulsive. It means going over the top.

Consider, for example, GraniteRock Company, a small construc-tion-materials outfit that won theBaldrige award in 1992. The compa-ny espouses continuous improve-ment in customer satisfaction. Theytell their customers, “If there’s any-thing about an order you don’t like,simply don’t pay us for it. Deductthat amount from the invoice andsend us a check for the balance.”They call it shortpay; I call it a thornin the laurel or a mechanism withteeth. While many successful organi-zations rest on their laurels, GraniteRock does the opposite. Theydevised a system that makes it diffi-cult, if not impossible, to becomecomplacent about continuouslyimproving customer satisfaction.Would Granite Rock be inconsistentwithout shortpay? No, but telling

by Jim Collins

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 0 9 5

PERFORMANCE ALIGNMENT

P u t s o m e t e e t h i n t o y o u r s t a t e m e n t s .

customers, “If there’s anything youdon’t like, don’t pay for it,” goes waybeyond what other organizations nor-mally do.

Likewise, 3M could simply say,“We don’t get in the way of innova-tors.” Fine. But that’s very differentfrom creating mechanisms—likerequiring that 30 percent of revenuesbe generated by new products—toactually stimulate innovation. By insti-tuting these reinforcement mecha-nisms, Granite Rock and 3M bringtheir values to life.

To take another example, it’s easyto say, “We ought to do more trainingof new people when they come in thedoor so they’ll learn our value sys-tem.” But that’s not creating align-ment. Alignment would be to enact aprocess in which “Within their first 48hours on the job, all new employeeswill go through an eight-hour orien-tation process to learn what this orga-nization is about. They’ll study itshistory and philosophy. They’ll meetwith a senior executive.” That’s con-crete and specific—two requirementsof an effective alignment mechanism.It also has teeth.

Suppose one of your core values isencouraging employee participationand creativity, and therefore youwant to encourage input and ideasfrom people throughout your organi-zation. So you create a suggestionbox. Is that alignment? Yes, it is analignment mechanism, but to make itan effective mechanism, you must takethe concept much further. Instead ofsticking a suggestion box off by itselfin some hallway, consider puttingsuggestion boxes in every hallway,corridor, conference room, and lunchroom—anywhere people might bewhen they get an idea.

And don’t stop there. Add thecommitment that every submission,anonymous or signed, will beresponded to publicly within 48hours in the form of a statement spec-ifying what will be done and who isresponsible for getting it done. Andbeyond that, perhaps give recogni-tion, prizes, or bonuses for the bestideas and suggestions or even give“thanks for the input” prizes random-ly to a subset of all suggestions, nomatter how valuable. Now, that’salignment. LE

Jim Collins is a student and teacher of enduring great compa-nies, and the best selling author of Built to Last: SuccessfulHabits of Visionary Companies and Good to Great: WhySome Companies Make the Leap . . . And Others Don’t. Visitwww.jimcollins.com.

ACTION: Align values and actions.

by A.G. Lafley

critical choices required by cleargoals—choices that result in winningwith customers and against competi-tion. Putting innovation at the centerof your thinking enables you to seestrategic choices in a different light.

4. Unique core strengths. Once youchoose where to play, focus on how towin by building on, enhancing, anddeploying your unique core strengths.These enable you to play successfullyand are consistent with what yourcompany does best. They create andsustain competitive advantage and canbe integrated to meet unforeseen needs.

5. Enabling structures. The execu-tion of a strategy and deployment ofunique core strengths require thedesign of a structure that supportsinnovation at the center of the busi-ness. There’s no one best way to struc-ture an innovation-centered company;managers simply need to design struc-tures and processes that bring in andcommercialize outside ideas.

6. Consistent and reliable systems.Innovation is creative but not chaotic.It is a systemic way of moving fromconcept to commercialization. It haswell-defined success criteria, mile-

stones, and measures. It isintegrated with the main-stream of managerial deci-sion-making, particularlythe choices of where toplay, specific time-basedgoals, and key performanceindicators. Innovation isalso linked with revenuegrowth, cost targets,resource allocation, peopledevelopment, promotions,

performance appraisals, and rewards.7. Courageous and connected culture.

In an innovation-centered company,managers and employees have no fearof innovation, since they know how tomanage its attendant risk. Innovationbuilds their mental muscles, leadingthem to new core competencies. Theculture of innovation helps the organi-zation to be agile and not only adaptto change, but also cause change.

8. Inspiring leadership. Leaders linkall the drivers of innovation, energizepeople, and inspire them to newheights. Leaders set stretch goals thatare achievable. They exercise both theirIQ and EQ, enabling them to work withdiverse people and convert their creativ-ity into practical results. They seek toknow consumer needs and try to bal-ance possibilities and practicalities. LE

Alan G. Lafley is CEO of P&G and coauthor of The GameChanger (Crown Business). Visit www.pg.com.

ACTION: Drive innovation with these elements.

LEADERS OFTEN DECIDEon a strategy—what

markets to pursue andproducts to make—then turn to inno-vation to support it. This is the wrongway around. Leaders need to put inno-vation at the center of the business inorder to choose the right goals andstrategy. The CEO must also serve asthe CIO—the chief innovation officer.

Innovation is the real “game-chang-er”—the real source of sustainablecompetitive advantage and the mostreliable engine of sustainable growth.

At P&G, we ask ourselves: how canwe put innovation at the center of allwe do? How can we turn innovationinto more consistent, more decisive,and more sustainable competitiveadvantage? How can we manage theassociated risks? How canwe see and take advantageof the opportunities inno-vation might offer us?

We look at what webelieve are the key enablersof an innovation strategy—drivers that create an inno-vation-led operation, buildan innovation culture, andresult in game-changinginnovations that touch moreconsumers and improve more lives.

EEiigghhtt EElleemmeennttssTo drive innovation, leaders must in-

tegrate eight elements with operations. 1. Motivating purpose. Innovation-

centered companies are inspiringplaces to work. People there are moti-vated by a higher purpose and values.Having a purpose that’s higher thandelivering numbers gives meaning towork and unifies an organization.

2. Stretching goals. Goals influenceevery choice. Identifying a few criticalgoals creates clarity in focusing on stra-tegies that win and align everyone’senergy. To create game-changing inno-vation, leaders need to set growth goalsthat are stretching but achievable withsustained innovation, driven by leaderswho see it as the way to change the game.

3. Selected strategies. Once goals areset, you have to figure out how toachieve them. Strategies are the few

InnovationI t changes the game.

CHANGE INNOVATION

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

Her HR director introduced her to thechairman of a non-profit. Sofia is now onthe board, and her employer makes contri-butions through its foundation. In herannual review, Sofia is credited with beinga strong civic leader who represents thecompany well. She has organized her divi-sion to spend one day each quarter provid-ing service with the non-profit. Sherequires her staff to engage in this serviceto receive the highest ranking.

Companies that act philanthropicallythrough foundations or community ser-vice activities contribute tomeaningful work. Manycompanies have paid com-munity service time that isapproved by managers.Guidelines for a minimumnumber of community ser-vice days encourage fullparticipation and discour-age managers from punish-ing their teams for missingwork to spend the dayhelping the cause of their choice.

2. Healthy culture. Marco is an EVP ata technology company. Dressed in jeansand a sweater, Marco and his daughter ridetheir bikes to his work each morning. Afterhe drops her off at the onsite daycare facilityat 9:30 a.m., Marco walks to his office. Onthe way, he exchanges smiles and high-fiveswith his staff. After four hours of intensework, Marco spends his lunch hour at acompany-sponsored meditation session.

More difficult to measure is thehealth of the culture and the extent towhich the culture feels like it is a goodfit. This is manifested in myriad ways:from openness in communication, tonapping policies, to dress codes, onsitedaycare, flex hours, and warm interac-tions. Companies that attend to thesesecondary contributions may offerhealth club use during lunch hours,meditation, executive coaching, andping-pong tables to encourage play.

3. Ethical alignment. Jane is the CEOof a non-profit. She’s aware that the Chair-man has made some decisions that areatypical in the non-profit world. Jane talksto several board members, including theChairman. They schedule an emergencyphone conference to openly discuss the eth-ical implications of the Chairman’s actions.

Leaders want to associate withorganizations with which they are eth-

Meaning at Work

WITH SO MANY OF US LEADING A24/7 work life, we’re searching

for meaning in our work. Gone are thedays of the 35- to 40-hour work weekand the month-long yearly vacation.We’re tied to our jobs via technology allday, every day. Without a purpose forall this work, it loses its allure quickly—and even the best leaders burn out.

Increasingly, leaders are focusingbeyond effectiveness, productivity,and compensation, and are striving tofind more meaning in their work.Historically, leaders sought opportuni-ties in organizations that were stable,prestigious, and well-funded. Theyworked for one or two organizationsbefore they retired. Today’s leaderschange companies more frequently—in search not only of prestige andcompensation, but also deeper mean-ing from their professional life.

PPrriimmaarryy aanndd SSeeccoonnddaarryy FFaaccttoorrssMeaning in the workplace is

derived from both primary and sec-ondary factors.

To some, meaning comes directlyfrom the work they do. These are “pri-mary meaning” factors. If the purposeof their work is to feed the hungry or toeducate children, their need for mean-ing through work may be satisfied.

For others, the content of the workis less important in terms of meetingtheir quotient for meaning, and other“secondary meaning” work factors aremore highly valued. They satisfy theirmeaning quotient in a multi-facetedway. Secondary work factors arebecoming more common drivers forfinding meaning through work.

NNiinnee SSeeccoonnddaarryy MMeeaanniinngg FFaaccttoorrssFrom our experience developing

leaders, we’ve learned that nine sec-ondary meaning factors are vital to re-cruit, retain, and develop leaders:

1. Philanthropy and community ser-vice. Sofia is the COO at a large bank.

ically aligned. Leaders can engage inhealthy debate around sensitive ethicaldecisions. They may not be in agree-ment, but they have a shared under-standing of ethics as central to theirbusiness practices.

4. Mentoring. Robert is the manager ofa tool factory. Between meetings with dis-tributors, Robert receives an email from afactory supervisor who has received a callfrom HR regarding an opportunity forpromotion. Robert calls the supervisor andshares his perspective and helps the super-visor prepare for the meeting. After themeeting, the supervisor calls Robert tothank him for his support.

Mentoring is a major secondarymeaning factor. When an executive hasa connection with one or more seniormanagers who helps develop her orhis skills and champion her or his suc-

cess, the executive is morelikely to develop mean-ingful relationships, feelmore connected to theorganization, and developfeelings of camaraderieand loyalty. In turn, thementor feels that he or sheis contributing to the suc-cess of another individualand derives secondarymeaning.

5. Creativity. Michelle is a buyer at aretail firm. Along with all salaried employ-ees, Michelle is required to spend 10 per-cent of her work week on innovation. Shespends her innovation time with a pro-grammer in the IT division; together theydevelop a new application for the website.

The ability to be creative at workalso creates meaning. Employees areencouraged to collaborate across divi-sions, are given seed-funding toexplore new product ideas, are givenopportunities to experiment, and evensupported in using a significant per-cent of their week towards innovation.

6. Big future vision. Daniel is the GMof a media company. He meets twice a weekwith experts in the media field to brain-storm ideas about the way that people willengage with media over the next 10 years.

Leaders want to be part of a bigvision. Beyond growing a company ormeeting goals, they want to improvethe quality of life for other people, posi-tively impact global relationships, createa new way for business to be conduct-ed, and invent ways to influence thegreater good. When strategy is alignedwith a vision, it supports a culture inwhich employees want to do their partto achieve the big vision.

7. Multiple perspectives. Juliet is apartner at a private equity firm. In select-

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 0 9 7

PEOPLE MEANING

S e e p r i m a r y a n d s e c o n d a r y f a c t o r s .

by Alicia Bassuk and Marshall Goldsmith

ing the best candidates for funding, Julietgains significant expertise in each field.

Leaders have access to more infor-mation, knowledge, and expertise andwant to engage with multiple perspec-tives. This can be in the form of out-side experts advising on key projects,collaboration with leaders in otherfields, conferences in which leadersshare their key lessons learned, jointpublications, and assignment of multi-ple responsibilities over time.

8. Exposure to others. Alex is a Direct-or at a hospitality firm. When he suggests anew location for a hotel, a team memberwho grew up there shares insights. Thegroup investigates the new perspective firstto understand it and then to integrate thedata to apply it effectively to future projects.

Leaders are enriched by exposure topeople with different backgrounds andlifestyles. There is a stimulation andfullness that comes with working withleaders who were raised and live invarious communities and are active indifferent activities. True exposuremakes for more vigorous debate and amore curious environment.

9. Public engagement. Isabella is theeditor of a magazine. She is in the finalstages of writing her second book. In theQ&A portion of her talk, a conferenceattendee asks a provocative question thatpushes her ideas in a new direction.

Something extraordinary happenswhen a leader shares her ideas in apublic forum and engages largegroups. Inevitably a new idea comesfrom someone in the audience, and theidea can then grow organically. It isstimulating and rewarding, and gener-ates energy for rigorous thinking.

Organizations that do not supportleaders who value secondary meaningfactors risk losing them and being un-able to compete. In organizations thatsupport meaningful work experiences,the culture enables more of them.These secondary meaning factors self-perpetuate and attract and retain like-minded, meaning-seeking leaders.

Companies that provide maximumsecondary meaning factors foster cul-tures in which loyalty—a tertiary mean-ing factor—develops. Ultimately, find-ing meaning at work is a question ofquality of life. Leaders realize that theyspend their most productive wakinghours at work, and that making thosehours meaningful is crucial. LE

Alicia Bassuk is the author of Monday Morning LeadershipHandbook. E-mail alicia@ubicastrategy.com or visit www.ubi-castrategy.com. Marshall Goldsmith is the co-founder of MarshallGoldsmith Partners. Visit www.MarshallGoldsmithLibrary.com.

ACTION: Implement secondary meaning factors.

by Kevin Cashman

in the silence between our thoughts, thespace between problem and analysis.As we go within, the power of thoughtis greater. Our deeper thoughts havemore energy and power. As the mindsettles down, it becomes more orderly,more able to comprehend and to han-dle challenges. We can go beyond theissues, combine seemingly unrelatedvariables, and come up with new solu-tions or perspectives.

If we want to do more, we need tobe more. As Emerson wrote, “We buthalf express ourselves, ashamed of thatdivine which each of us represents.”We can take more time to reflect and tobe. Since leaders lead by virtue of whothey are, we need to expand the depthof our character.

FFoouurr PPooiinnttss ooff AAwwaarreenneessssIn leading with presence, keep these

four points in mind:1. Take your own journey into Being.

Find your own path to unfold Being.It’s your road, and only you can travelit and judge what vehicles will helpyou on your journey. Consider medita-tion, prayer, reflection, music, nature,exercise—whatever resonates with you.

2. Resolve life challengesby going to a deeper level.Problems rarely are solvedon their own level. Learn togo to a deeper level to viewthings in a more comprehen-sive way. As your mind set-tles down yet remains alert,you can better sort throughand organize your life.Experience the power of

uniquely open, relaxed moments whenthe complex becomes simple, and theunsolvable is solved.

3. Learn to meditate properly. If youresist reflection or meditation, thenyour need to do so is probably great.Allow the resistance, but still spendtime to meditate. As you experience thebenefits, the resistance will subside.

4. Integrate some reflection into yourlife. Commit to a lifestyle that valuesmore solitude, reflection, and medita-tion. Take some “Being Breaks” to getreacquainted with yourself. Enjoy thesolitude. Go on walks. Sort out yourpriorities. Experience the silence. Re-ducing the noise and enjoying naturecan help you to settle down and recon-nect with yourself. Reflection is not anescape, but a process of preparing for amore dynamic, masterful life. LE

Kevin Cashman is senior partner and CEO advisor withKorn/Ferry Leadership and Talent Consulting and author ofLeadership From the Inside Out. Visit leadershipfromtheinsideout.com or e-mail kevin.cashman@kornferry.com.

ACTION: Gain awareness to lead with presence.

GOOGLE PLANS TOinvest one percent

of its equity, profits, andemployee time in fighting climatechange, advancing the economy, andcreating warning systems for naturalor man-made disasters or pandemics.It might well be the greatest case studyever of leaders’ Being—delving deeplyinward to unearth new possibilities.

Just how deep did Google go? Teammembers organized twice-weekly med-itation sessions in their Mountain View,California headquarters with guest vis-its from Tibetan monks and mind-sci-ence researchers. Google.org directorLarry Brilliant is the same man who ledthe WHO’s effective smallpox immu-nization campaign on the recommen-dation of the guru he studied underwhile living in a monasteryin the Himalayas.

Explaining why he hasmaintained his intensivestudy of self and its connec-tion to comparative religions,Dr. Brilliant said, “It’s theonly game in town. Why doanything else?”

Meditation, prayer, andenjoying life’s simple plea-sures are more than just means to copewith the stress of the C-suite. Theytransform our state of awareness, helpsize up big issues, and lead to high-impact problem solving—enhancingour drive for external success withawareness of deeper values.

BBeenneeffiittss ooff SSeellff--AAwwaarreenneessssIf leadership is the act of going be-

yond what is, it begins by going be-yond what is within us. Our inner calmattracts others by communicating asense of comfort and thoughtful coun-sel. It translates into executive presence—a confidant demeanor that is not easilyshaken by external circumstances. Be-ing centered equips us to deal withchange, enables us to refresh ourselvesand achieve more with less effort, andgives us the mix of energy and calm-ness we need to achieve better balance.

Like flashes of intuitive insight,awareness of Being—this inner peace orspirit—comes to us in quiet moments—

Being a LeaderLead more with presence.

ETHICS CHARACTER

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

project. Changing these aspects takestime, patience, and consistent, continu-ous activity. Be prepared to continuethese activities from project to project.

Lesson 2: Solid benefits, solid meth-ods. Use a systematic approach to changethat is closely aligned with formal projectmanagement methods.

Increased project complexity andattentiveness to hidden, softer dimen-sions of change is accelerating themovement of formal change manage-ment in the project mainstream and itsintegration into project management.

Putting solid methods into practicebegins with allocating resources to es-tablish a change method aligned withthe project management approach.Then it must be used consistently.Developing a standard change methodshould include three practical steps:

• Separate, but integrate. Managechange as its own formal work streamwithin each project. Integrate it intoproject management and manage itwith the same rigor.• Keep all eyes on “the prize.” Control

the scope of the change effort to remainfocused on clearly defined activitiesthat spur the realization of benefitsdefined by the original business case.• Get consistent. Develop and promote

a standard change method that can beapplied consistently from project toproject. Communicate this widely andmonitor its adoption.

Lesson 3: Better skills, better change.Use resources appropriately, includingcommunicating top management sponsor-ship, assigning dedicated change managersto projects, and empowering employees toenact change.

For teams involved in change,enabling skills and engagement acrossthe organization should be a priorityto help build the capabilities to sup-

Making Change Work

IN LIGHT OF PRESSING REALITIES, MANYleaders desire pervasive change, and

try to make changes, but few manageto do it well. In our study, we learnedthat on average 41 percent of projectsare broadly successful (meeting pro-ject objectives within planned time,budget, and quality constraints). Buteven within the 41 percent that suc-ceed, the top 20 percent are supremelysuccessful. From these “change mas-ters,” we extract four lessons:Lesson 1: Real insights, real actions.

Strive for a full, realistic understanding ofupcoming challenges and complexities,and follow them with appropriate actions.

Changing an organization requireschange simultaneously at many lev-els—and organizations tend to build“immunities” to disruptive influences.Early awareness and consequentaction can help to address the naturalresistance of an organization tochange. Some practical steps include:• Hook into the history. Give change

leaders access to historical data, peo-ple surveys, culture assessments, and“war stories,” as well as to the peopleinvolved in previous projects if possi-ble. Learn from both good and badexperiences and seek insights into the“soft” aspects of organizational change.• Open your eyes wide! Examine the

project’s scope and expected outcomescarefully. Assess the dimensions of thechange—people, culture, behavior,and organizational aspects, as well asprocess and technology impacts. Berealistic in defining what change isneeded and communicate the reality.• Plan and adjust. With a thorough

understanding of project complexities,build a change plan to address them.As the plan is communicated, tested,and executed, be prepared to revise itfrequently to handle the unexpected.• Take a long view. Be prepared to

build and execute plans to address the“soft stuff,” which may extend wellbeyond the formal end date of the

port continuous change. Some practi-cal suggestions include:• Lead from the top. Set direction, allo-

cate resources, and establish culturefrom the top. A change sponsor shouldbe visibly involved in setting direction,publicly communicating at all levels,using different techniques and media,and allocating the right skilled re-sources to the change effort.• Involve the people. Emphasize

employee involvement to ease resis-tance to change, at both individual andgroup levels, and establish mecha-nisms to encourage that involvement.• Communicate or fail. Promote honest

and timely two-way communication tobuild trust and commitment to changeprograms and leaders, and reduceresistance. Use multiple channels anddifferent media. Understand the audi-ence and how it likes to communicate.• Get the right skills—everywhere. Enable

rapid development of internal skills tokeep pace with external changes. Con-sider establishing a permanent change-management capability.

Lesson 4: Right investment, rightimpact. Allocate the right amount ofchange management—neither too littlenor too much—by understanding whichtypes of investment can offer the bestreturn in terms of greater project success.

Organizations need the right bud-get to build strategic capabilities andintegrate them into processes andstructures. Investing a little more perproject can greatly improve results.Change Masters consider money spenton change management as an invest-ment. Some practical ideas include:• Tackle complexity before it tackles you.

Invest upfront in gaining and actingupon insights that can help you avoidand overcome both expected andunexpected hurdles during the project.• Remember to emphasize the human

touch. Invest in skills by using well-trained change managers more consis-tently and enable widespreadcommunications that engage employ-ees across all organizational levels.• Put some method into your madness.

Invest in establishing standardizedmethods to build more effective andlong-term capabilities that supportchange efforts, and to remain vigilantabout project spending overall.

By excelling in all four changeareas, change masters attain an 80 per-cent success rate in their projects. LE

Jim Bramante is Managing Partner-Americas for IBM GlobalBusiness Services. Email james.p.bramante@us.ibm.com.Lawrence Owen is VP, Strategy & Change Consulting, IBMGlobal Business Services. Email owenl@us.ibm.com. Visitwww.ibm.com/gbs/makingchangework.

ACTION: Apply these four lessons.

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

CHANGE LESSONS

L e a r n l e s s o n s f r o m t h e b e s t .

by Jim Bramante and Lawrence Owen

can experience the same effect—a free-dom to take risks and pursue innova-tive strategies. What decision is yourstrategy team avoiding? What longoverdue actions would they take todayif the company was really dying?

Selfishness. At high altitudes, selfish-ness kills people when new strategiesare needed to deal with injuries, equip-ment malfunction, limited resources,and threats of avalanche and weather.In strategic planning, selfishness killsnew ideas and covers problems as exec-utives let personal agendas drive strate-gy development. Then resources getmisallocated, decisions become watereddown, and commitment wanes.

High-altitude leaders drive from afervor and zeal for achieving strategicresults that rises above selfishness.

They inspire a higher passion in othersby creating a compelling saga andaligning people on strategic executionvia a shared drama. Passion is profit.When passions are greater than selfishagendas, creative strategy emerges. Isyour team driven by a passionate sagaor just empty words in a mission state-ment? Or are they just going throughperfunctory planning retreat activities?

Tool seduction. In mountaineering,tool seduction endangers climbersevery time they dress in the latest gearbut apply the wrong techniques andbehaviors to the challenge. In theiroverconfidence (or naiveté), they endup lost on a storm-ravaged slope fordays while experienced climbers are atbase camp watching the weather.Facilitators packing the latest tools andprocesses for strategic planning bogdown progress and distract teamsfrom focusing on vital issues.

Tool seduction detours the planning

Strategic Planning Delusion

THOUSANDS OF CEOSvoice frustration

with strategic planningefforts. It’s not that spending time onstrategic planning is bad, but whatshould executives do differently?

An answer can be found in a uniquelab, the death zone—altitude above26,000 feet where lack of oxygen threat-ens long-term survival. Here, climbersresemble executives. They live passion-ately while confronting impossibleodds. Some are deeply humble, whileothers are psychotic narcissists. Theycome with all levels of competence,from naive wannabes to elite athletes.And when put to the test, climbersreact like executives: sometimes hero-ically, other times self-destructively.

Remarkably, executives who createand execute great strategies in the faceof extreme challenges—high-altitudeleaders—walk a different path. Theysucceed by recognizing and survivingspecific dangers found at higher levels.

FFoouurr DDaannggeerrssFour dangers threaten leaders when

they engage in strategic planning:Fear of death. Last year at 26,500

feet on K2, an experienced Sherpaslipped off the edge into the darkness.He would fall for several minutesbefore hitting the glacier below. Allthe climbers stopped as the fear ofdeath gripped them. This jeopardizedwhat could be a successful summit.

The same happens in strategic plan-ning. Unconscious anxiety about thedeath of a project, product line, salestarget, market, career, or strategic goalcauses executives to freeze. When thishappens, strategic breakthroughs arejeopardized as managers shirk greatdecisions, avoid taking risks, stop chal-lenging each other, and resist changes.

High-altitude leaders free up strate-gic thinking by embracing death. Thisunleashes innovation versus preserv-ing the status quo, creates new oppor-tunities versus resisting the inevitabledeath of a cherished product or mar-ket. Many leaders call it “dying beforebattle.” Companies facing bankruptcy

process from real strategic thinking intoa labyrinth of mechanical, analyticalprocesses. This explains why moststrategic plans aren’t strategic, but tacti-cal (even though they have a “strategicplan” cover). Executives possessed bytool seduction confuse strategic plan-ning with analysis; contrary to KenichiOhmae’s observation that true strategylies beyond analysis—it exists in thedomain of intuition. Why do companieswho drive superior market perfor-mance often ignore industry expertanalysis and advice? Experts onlyknow what is already known. Your jobis to out-intuit what is known.

High-altitude leaders aren’t seducedby tools, or anything that might dimin-ish intuition. Do your planning team’stools support creative transformation ofyour beliefs, or distract you with fill-in-the-blank, analytical processes? Do yourtools enable you to act decisively, or clogyour shelves with interesting, but irrele-vant, information? Avoiding tool seduc-tion fuels team passion for the challengeahead instead of derailing the team withuseless meetings, lingo, and processes.

Cowardice. Cowardice stops teamsfrom challenging the status quo, hold-ing each other accountable, and expos-ing weaknesses. This danger happensas soon as planning team members aretoo afraid to confront previous viola-tions of accountability or take neces-sary risks with each other. It causesstrategy failures by stopping the essen-tial act needed for effective strategicplanning—telling the truth. Cowardiceeats truth. Lack of truth eats strategy.

Initially telling the truth can upsetpeople, but good planning teams loveit—and it drives accountability to newlevels. The alternative of keeping thetruth at unspeakable levels only pro-duces collateral damage—dead-weightideas and doomed projects. High-alti-tude leaders bravely engage in thetruthful communication necessary forinnovating strategy. Does your teamseek the truth about a situation orchoose avoidance, denial, and silenceto avert possible discomfort, anger, orretribution? Do team members whis-per about issues outside the meeting?

Being aware of dangers that emergein strategic planning helps you reachhigher summits in strategic thinkingand not slip into tactical distractions.The intuitive strategies that resultdrive higher market-share penetration,profitability, and commitment. LE

Don Schmincke is a speaker and co-author of High AltitudeLeadership with Chris Warner. Visit www.HighAltitude-Leadership.com.

ACTION: Avoid these four common dangers.

by Don Schmincke

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

LEADERSHIP STRATEGY

F o u r c o m m o n d a n g e r s t h r e a t e n y o u r a s c e n t .

the VP of Operations placed a big boxof papers on the boardroom table andexplained it was all documents receivedin one month requiring action.

Clearly nobody could implement allof the orders—much less read them all—in a month. Every manager was facedwith the choice of what to read, whatto ignore, and what to implement. Ifexecutives didn’t prioritize, the fieldmanagers had to, because they couldnot do it all. The point of many of theprograms was to drive consistent cus-tomer experiences across the chain ofstores, but inconsistent follow-throughhad the opposite effect. More with lesshad gone beyond its limit of effective-ness, leaving a major gap betweentheir big ideas and desired big results.

PPoowweerr ooff ‘‘MMoorree OOnn LLeessss’’In challenging conditions, you feel

the urge to reduce budgets, lay offemployees, and call on those whoremain to step up, work harder andlonger, and do “more with less.” Whenthese employees complain, you maythink that they would prefer to simplydo less work. However, they are callingon you to set priorities so they can stilldeliver their best work.

The idea of doing “more on less” isto reduce the dispersion of tasks andinitiatives, focusing only on the mostcritical priorities, and then putting extraeffort against those. It is about doingmore work, not less, but on just a fewselect high-impact areas. This concen-trates resources, aligns teams towards asmaller and common set of objectivesand initiatives, and allows teams todeliver breakthrough results faster.

You might reduce your portfolio ofR&D projects to just 10 big ideas. Doingmore on less is not about reducingworkload or spending—it is about

Doing More On Less

ONE POPULAR BUTreviled phrase in

business is “do morewith less.” Your budgets are cut andstaff reduced, but the work to be doneremains the same. This is no solution.

Once doing more with less referred toautomating tasks with IT solutions,reducing headcount, and increasingoperating throughput. However, it’sbecome a throwaway phrase thatallows leaders to dodge setting pri-orities and spread resources andinvestments thin. This results in poorexecution and undermines the abilityto turn big ideas into big results.

On the margin, taking on a fewextra tasks to help in a resource-con-strained environment can be neces-sary. However, when not kept incheck, a lack of focus can result in cor-porate attention-deficit disorder: toomany projects and competing priori-ties exist, lots of new projects and ini-tiatives get started, and nothing iscompleted. Resources becomestretched thin, no single effort hasenough attention and focus to drivereal impact, and the organizationbecomes gridlocked. As new strategicinitiatives and change efforts are lay-ered on top of overloaded systems,results suffer further. Thus, two thirdsof strategic change efforts fail toaccomplish their stated goals.

Although revenue growth and exe-cution of strategy are the top concernsof leaders, team members who aretold to just do more with less complainabout the lack of focus and priorities.

DDeelluussiioonn ooff ‘‘MMoorree WWiitthh LLeessss’’The idea of doing more with less is

seductive because it seems to enableleaders to get more work out of peoplewithout giving up anything. However,there’s a limit to what these people candeliver with excellence.

At one company, the executive teambecame frustrated with field leadersand their inability to get their teams toquickly execute programs deemed criti-cal to success. They called a manage-ment team meeting to review thesituation. When the meeting started,

accelerating results by concentratingresources on important initiatives.

To generate breakthrough resultswith constrained resources, you needto ask, “Are we trying to get the mostor best out of our people?” You can’toptimize for both.

BBee aa ‘‘MMoorree OOnn LLeessss’’ LLeeaaddeerrThe use of the phrase “more with

less” as a substitute for making toughdecisions on priorities is a bad habit.We need a replacement idea—doing“more on less.” To make this ideawork, leaders must accept the respon-sibility and risks of calling out truepriorities. Employees must also speakup when they are driven past thepoint of productive focus.

What is often missing are the tiesbetween the strategy to high-priorityinitiatives to tactical commitments tobudgets to success metrics to personaljob responsibilities. When these ele-ments aren’t managed, they get dis-persed, and focus becomes diffused.The key elements to managing a more-on-less organization are:• Confront reality: Take a critical look

at the business before starting thestrategy development process, includ-ing external views and employeeviews, providing the fact base for mak-ing decisions on priorities• Focus the strategy: From all possible

growth ideas, select a critical few initia-tives with the highest potential impact.• Align: Align the executive team,

operating plans, and budgets to supportfull execution on priority initiatives.• Engage: Engage all employees in

translating the strategy and top initia-tives into meaningful personal com-mitments to action at their level.• Execute: Establish regular reporting

on a scorecard for the top initiatives,hold quarterly reviews to assess pro-gress, ways to accelerate, and barriers.Tie the personal commitments into theperformance management systems.

GGeenneerraattee DDoouubbllee--DDiiggiitt RReessuullttssBy following this approach, you can

generate double-digit results in grow-ing new revenues, reducing costs, andimproving engagement. Maintainingfocus, clear priorities, and alignmentof resources requires consistent effort.Doing more on less unleashes excel-lence in execution and enables you toturn big ideas into big results. LE

Michael T. Kanazawa is a coauthor of BIG Ideas to BIGResults: Remake and Recharge Your Company, Fast(FT Press) and CEO of Dissero Partners. Visit www.bigideastobigresults.com and www.disseropartners.com.

ACTION: Do more on less.

by Michael T. Kanazawa

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

MANAGEMENT STRATEGY

T u r n b i g i d e a s i n t o b i g r e s u l t s .

Credibility determines one’s perceivedand actual ability to lead. Credibilitycomes from the integrity that causesothers to place their trust in the leader.Integrity involves a reliability thatenables followers to know that theleader will, within reasonable bound-aries, be predictable. A leader who isunpredictable will soon lose followers.

Many executives, managers, andsupervisors fail in their leadershipresponsibilities because they lose cred-ibility, either in a dramatic event or ina series of damaging actions, byputting their interests above the inter-ests of their constituents. One execu-tive put it well: “People don’t give youtheir trust; they only lend it to you.”

AAnn OOfftt--TToolldd TTaalleeI wish this tale were but of one lone

institution. Alas, it’s a tale about many.Seven years ago, we were shocked

when award-winning Enron turnedout to be little more than a cash-shred-ding pyramid scheme. The crucial fail-ing for investors was Enron’s use ofopaque, “mark-to-market” accounting.The problem surfaces when the marketis uncertain or difficult to assess, andso assets are marked to a model, oftenbased on generous assumptions.

In the end, we learned that Enron’saccounting was mark-to-fairy-tale, withthe company booking enormous gainsfrom assumed future profits on schemesthat sounded great, but had little chanceof producing anything besides head-lines. The misbehavior of Enron’s KenLay and WorldCom’s Bernie Ebbers,gave us our many sweeping reforms.

Why didn’t we learn our lessonsabout fantasy accounting after Enron?That scandal supposedly ushered in anera of corporate responsibility and

Antitrust Suits

THERE HE IS, THECEO—expensive

suit, commandingsmile, persuasive communicator, com-pelling story—standing up front,imploring our continued support. Themedia is wrong, we are told. We willrise again. In fact, we will be biggerand more profitable than before. Wewill be the “last firm standing.” Weare asked to wear tokens and symbolsof our undying loyalty to the cause.

We see him again on TV, beinginterviewed, and his response is thesame: The industry is facing hugeheadwinds, but our company will befine. Yes, we have borrowed to thelimits of our credit. However, ourincomparable leadership, unmatchedbusiness model, and “valued-employ-ees” will save the day. We have comethrough tougher challenges.

But we know the truth. We listen tothe rhetoric, but the reality is far differ-ent. Something inside us has died. Thisdistortion proves what we have longknown—employees are not valued atall. We are pawns in a larger game. Themotivations at the top are not as stated,not meant to benefit our various con-stituents—shareholders, employees,and communities. They are selfish anddriven by greed. Our belief system hasbeen shattered by The Antitrust Suit.

There was a time when peoplewould have walked through the gatesof hell for this individual. But the veilof this Wizard has been pierced. Walkbehind the curtain. There isn’t muchthere—all smoke, mirrors, and a litanyof “trust me” and “it will be fine.”

We’re told by the Antitrust Suit tostick with him, and we’ll make mil-lions. We’re told that those who havedone so before are wealthy now. Fewpeople still believe him. Over time, allrealize the truth. It is over. It is done.

CCrreeddiibbiilliittyy LLoossttIf I were to pick the one characteris-

tic essential to leadership it would becredibility—meaning that the leadersays what he is going to do, and doesit. The leader keeps his promises.

Credibility is the soul of leadership.

accountability. We all thought that itwould happen, but it didn’t. In fact,things actually got worse. Last year’sversion, the implosion of real estate,got downright ugly. Alas, this dream’s“income” wasn’t actually matched byreal cash flows, just bank loans—thisEnron-like “income” was all hot air.

Many stocks have been decimated.The losses at those companies mostdirectly victimized by their own hous-ing-bubble ineptitude—such as BearStearns and Fannie Mae—are easy tounderstand. But, the losses extend farbeyond that. These tales represent cor-porate culture (at its worst). And leaveus with chills down our spines at thehorror of the deceit and arrogance.

Indeed, we’ve discovered manycompanies built on the sands of deceit,fraud, power, and greed.

Dick Thornburgh, examiner in theWorldCom bankruptcy proceedings,says companies aren’t doing enough topromote accountability, transparency,and compliance—responsibilities thatusually fall on corporate directors, in-house and outside counsel, and inter-nal and external auditors. “Had gate-keepers of Enron, and WorldCom beenmore effective, shareholders would nothave suffered the huge losses.”

After such scandals as Enron andWorldCom, Congress hastily passedthe Sarbanes-Oxley Act (SOX) to pro-tect U.S. capital markets and sharehold-ers. “While SOX may have increasedinvestor confidence in the short-term,ongoing compliance with its require-ments, as well as the heavy finesimposed by the SEC, have provedextremely expensive for some compa-nies,” said Michael Missal, lead counselto Thornburgh in the WorldCom case.

The past is often prologue.Confidence in the disciplines in oureconomy is at historic lows. Clearly, westill lack disciplined governance onaccountability, transparency, and com-pliance. Other examples abound:• May 2008 marked the end for the 85-

year-old financial powerhouse BearStearns. Problems appeared in July2007 after two of the company’s hedgefunds imploded. After months of heavywrite-downs due to the subprime mort-gage crisis, rumors swirled. In March2008, JP Morgan offered $2/share forthe company and in late May the fifth-largest investment bank was no more.• Arthur Andersen’s (1913 to 2002)

downfall was its role as Enron’s audi-tor. In 2002, the firm surrendered itslicenses to practice as CPAs after beingfound guilty of criminal charges,resulting in the loss of 85,000 jobs.

by Michael Winston

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

ETHICS CREDIBILITY

T h e y k i l l e n t e r p r i s e s .

and looking good in the eyes of others.If we believe that we “walk into our

words,” what are those words? If youlisted them today, would they reflectthe highest tenets of leadership? Thereis power in leaders who adhere totheir values. You feel that power in theconviction of their words and actions.They trust themselves. Through per-sonal strength and courage, trust isgrounded within the self-assuredknowledge of their ability to adhere totheir convictions. No one is given theright to impute this leader’s integrity.

Leaders also need to expand con-versations across all boundaries andseek honest perspectives concerninghow we live integrity through corpo-rate responsibility, accountability, andleadership direction.

Transparency. Transparency—beingfree of all pretense and deceit—pavesthe way to open dialogue based upontrust in management and in the infor-mation. Good business is predicatedon solid principles. Businesses arecomprised of many interconnecteddepartments, each dependent upon theflow, accuracy, and transparency ofdisseminated information. Transparen-

cy is essential when youare setting a new course ordesiring to improve pro-ductivity and profitability.One decision made by“shaving truth” or blatantdeceit begins small andthen snowballs. As moredecisions are made basedon the dishonest approach,the snowball gains speedand mass until it becomes

unmanageable and systems begin tofail. Transparency keeps us honest.

Candor. Candor means a dispositionto open-mindedness—a freedom frombias, prejudice, and malice. Candorenables us to listen receptively to otherperspectives while engaging in interac-tive dialogue. Dynamic leaders appre-ciate the contribution of others. Theyleave their egos behind, harnessing thepower of being secure within them-selves while promoting innovation,collaboration, and a heightened senseof “team.” Transparency affords thetrust, and candor fosters openness.

By adhering to a personal code ofhonor, leaders can raise the bar forthemselves and for others. LE

Deborah E. Garand is President of Integrity Integrations, speaker,and board member of The Women’s Congress. Visit www.integri-tyintegrations.com. Judith E. Glaser is CEO of BenchmarkCommunications, co-founder of the Creating WE Institute, andauthor of Creating WE and The DNAof Leadership. Visitwww.creatingwe.com and www.creatingweinstitute.com.

ACTION: Lead with integrity.

OF THE TOP 20 CHARACTERISTICS OFadmired leaders, integrity is select-

ed first 90 percent of the time. Integritymeans an uncompromising adherenceto a code of values and ethics. Integrityasks you to reach higher. Integrity isabout honor and about “doing goodover feeling good.” Integrity speaks toour ethical fiber, and our sense of whatis right for a company, society, andhumanity—not just what is right forme, the individual.

Integrity challenges you to makesacrifices and to do the “right” thingwhen, in fact, it may stand in your wayof greater wealth, jeopar-dize your status, or riskyour career. Integrityrequires humility. Humbleleaders know that everyonehas a different approach,value system, and reasonfor doing what they do.Integrity seeks to under-stand all perspectives, andweigh consequences beforemaking a decision.

Companies succeed or fail basedupon the integrity of its leaders andemployees. Integrity is the basis fortrust—the gauge through which weread and commit to action.

HHaarrddwwiirree IInntteeggrriittyy iinnttoo tthhee CCuullttuurreeYou can hardwire integrity into the

culture in three ways:Conversations. Leaders must first

have a conversation with themselves,asking themselves the hard questionsof personal accountability, grounded intruthfulness to oneself and all othersinvolved. Many executives becomeimbued with self-importance, narcis-sism, or over-evaluation of attributes orachievements. If we lead through ouractions, our conversations must ensurethat we “walk the talk.” We will theninspire others through our own exam-ple. We will care less about the preser-vation of self-image, impressive“bottom-lines,” pleasing the “street,”

Leadership IntegrityHardwire it into the culture.

ETHICS INTEGRITY• Remember E.F. Hutton? “When E.F.Hutton talks, people listen,” chimed itsslogan. Well, people stopped listeningwhen E.F. Hutton & Co. was caughtcheck-kiting and money-laundering. • AIG and Lehman Brothers debacles

still have people shaking their heads.Malfeasant practices continue to

choke our economic system. Wedeserve better—and we shoulddemand it of ourselves, and of those inwhom we place great trust and power.

Two decades ago, James Kouzesand Barry Posner reported that themost essential element in successfulleadership was “honesty.” Also in thetop ten traits were “straightforward”and “fair-minded.” Clearly, someCEOs did not get the memo.

What can we do to repair the erod-ing standards of leadership? We mustturn up the heat on our leaders—andhold ourselves to the highest stan-dards—out of faith that it’s the rightthing to do, not out of fear of legalconsequences. Let us model leadershipthat exudes these qualities: • The vision to spell out what we will

do for those who depend upon us.• The drive to share that vision with

those who share a stake in our success.• The courage to challenge the status

quo, stimulate change, and make deci-sions that move us forward.• The ability to inspire individuals

and teams to action to achieve goals.• The foresight to empower people to

learn new skills and stretch capabilities.• The wisdom to translate knowledge

into value-added performance.• The willingness to recognize accom-

plishments and celebrate successes.• The integrity to serve as examples

in actions that reinforce basic values.Implementing new strategy requires

leaders who can energize operations;inspire people; personify the purpose,values, culture, and character; inspirecommitment to the strategy and goals;and secure the allegiances required tomake any bold purpose succeed. Thebest leaders evoke trust. They matchtheir words with their deeds and keeptheir promises. They pass the true test ofleadership—translating their promisesand commitments into consistent, pur-poseful action. Without character andintegrity, an organization is “built tofail.” As Edward R. Murrow said: “Tobe persuasive, we must be believable; to bebelievable, we must be credible; to be credi-ble, we must be truthful.” LE

Michael G. Winston has worked 25 years as a business leader,change agent, strategist, and leadership development officer forfive esteemed Fortune 50 companies. E-mail winstonmg@aol.com.

ACTION: Stand up to the antitrust suits.

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 0 9 1 3

by Deborah Garand and Judith Glaser

We have validated the componentsof the model at every level. Core com-petencies and behaviors are set foreach of the five roles: leader as self,leader as teacher, leader as relationshipbuilder, leader as strategist, and leaderas results driver. This model was thenembedded into other strategic HRprocesses, such as performanceappraisal, talent review, and successionplanning, making it an operationalpriority, ensuring implementation,and creating accountability.

We can’t empower until we createthe capability first, so our servant-leader philosophy at its core is aboutcreating capability and then havingleaders lead from this perspective inevery interaction with a peer, associate,customer, supplier, or anybody else.

Because learners crave dialogue andlearning often is the offshoot of discus-sion, we create a safe space for conver-sation by immersing leaders in four-day learning programs. We know thattransformation often happens throughsubstantive dialogue. The light maynot go on for me today or tomorrow,but it may the next day—not necessar-ily through the instructor but througha side conversation, peer coaching, ora guest speaker talking about theirpersonal experiences.

With discussion comes the need forreflection. We make time for cogita-tion. In all of our work, people engagein active learning and have chances topractice what they learn, and thendemonstrate competence of that learn-ing. A big part of our servant-leaderprogram is action reflection. Our leaderstake the time to engage in reflection.

In all of our programs, we build intime for purposeful reflection. We be-

Great Leaders

AS AN INFANTRY OFFI-cer in the U.S.

Army, I learned thislesson: Great leaders are born of strongcharacter—now the foundation of theleadership model at U.S. Cellular.

Character separates good fromgreat leaders; and it’s what differenti-ates and defines you. To succeed as aleader at U.S. Cellular, you have to bestrong of character, highly ethical, andauthentic. Our leadership develop-ment (LD) model is effective becauseit’s predicated on a specific set of prin-ciples, values, and behaviors that havewithstood the test of time.

After 14 years at Texas Instruments,I took a position at SBC-Ameritech,where I met John E. Rooney, who even-tually became the president and CEOof U.S. Cellular. About 10 months later,I was offered a job at U.S. Cellular,where I helped put the dynamic orga-nization (DO) into practice, whichstarts with effective leadership.

Working with John Rooney and themanagement team, we develop pro-grams that impact strategic businessinitiatives and prepare people to beleaders. We are continually looking athow we can develop better leaders.

U.S. Cellular is a place where learn-ing and the business are harmonized.I’m involved in developing culture,fostering change and alignment, andcreating higher capability. U.S. Cellular,with 8,700 employees, employs a ser-vant-leader strategy. We encourageleaders and associates to move beyondself-interest and embrace a more syner-gistic vision of high personal and teamperformance. Our leadership modelgrew organically, as each senior leadercontributed to its five tenets.

At the heart of our model is whatwe call leader as self—being a leader ofhigh integrity and high character.Leadership starts and ends with self,so that’s our center point. To drive thepeople results, you’ve also got to bean extraordinary relationship builderand a great teacher. To drive the busi-ness results, you have to be a goodstrategist and a superior results driver.

lieve that meaningful reflection leadsto more purposeful action. We createways for people to dialogue, reflect onwhat they’re learning, and then decidehow this applies to them and whatthey can do differently as a result.

The ideal of the learning organizationworks with our goal to become adynamic organization. If the leaders areeffective, the associates and customerswill be satisfied, and ultimately, thebusiness will be successful. As our CEOJohn Rooney says, “You can’t managethe results unless you manage the thingsthat go into producing those results.”The DO business model emphasizes val-ues and principles, as well as leadershipskills. We need leaders who engage,teach, and motivate their people.

Because of the close alignmentbetween the learning organization’sphilosophy and the company’s vision,I enjoy a close relationship with seniorofficers. We engage in powerful con-versations with our senior officers, andI get lots of direction from them abouttheir goals, needs, and wishes. Again,the first two components of the busi-ness model are leadership effectivenessand associate satisfaction. To deliver onthat, I need and receive access to ourmost senior leaders.

To measure how we’re doing, weconduct an annual Culture Survey,enabling associates to give feedback,and voice to the issues preventing cus-tomer satisfaction. The most successfulyear in terms of business results was2007, and it also was U.S. Cellular’shighest performance on the CultureSurvey. In that survey, 97 percent ofU.S. Cellular’s associates participated,and of those, 97 percent said, “I amproud of what we are accomplishing.”

While we have all the financial mea-sures of any other telecom, we pay moreattention to two key measures that driveour success—the internal measure ofhealth, satisfaction, and vitality, theCulture Survey; and the external mea-sure of customer satisfaction. We deploya third-party vendor to contact cus-tomers after they’ve had an interactionwith U.S. Cellular, and we ask them toevaluate how effective that interactionwas. The CBI data and metrics indicatewhere we need to teach better and cre-ate more capability in our associates.

As we look to the future, we wantto institute more e-learning activities,improve the business model, and linklearning to performance. LE

Tom Griffin is VP of organizational learning and chief teachingofficer at U.S. Cellular. Visit www.uscellular.com.

ACTION: Link your learning to performance.

by Tom Griffin

1 4 J a n u a r y 2 0 0 9 L e a d e r s h i p E x c e l l e n c e

LEADERSHIP CHARACTER

D e v e l o p c h a r a c t e r i n t h e m .

leader without mutual trust. As WarrenBennis notes, “Leadership withoutmutual trust is a contradiction in terms.”

HHooww CCaann LLeeaaddeerrss BBuuiilldd TTrruusstt??Job 1 of any leader is to inspire trust.

Trust is confidence, born of characterand competence. Character includesyour integrity, motive, and intent.Competence includes your capabilities,skills, results, and track record.

With the focus on ethics, the charac-ter side of trust is now the price ofentry in the global economy. However,the differentiating (and often ignored)side of trust—competence—is equallyessential. You might think a person issincere, even honest, but you won’ttrust that person fully if he or shedoesn’t get results. And the opposite istrue. A person might have great skills

and talents and a good track record,but if he or she is not honest, youwon’t trust that person either.

The best leaders frame trust in eco-nomic terms. In a low-trust culture,leaders can expect negative economicconsequences. Everything takes longerand costs more because of the stepspeople need to take to compensate forthe low trust. When these costs arecounted, leaders recognize how lowtrust becomes an economic matter.

The dividends of high trust can alsobe quantified, enabling leaders tomake a compelling business case forbuilding trust, even making the build-ing of trust an explicit objective. Likeany other goal, building trust shouldbe focused on, measured, and trackedfor improvement. It must be clear thattrust matters to managers and leaders,that it is the right thing to do, and thesmart economic thing to do. One wayto do this is to make an initial baselinemeasurement of trust, and then totrack improvements over time.

Building Trust

TRUST IS DECLININGeverywhere—in

our personal relation-ships and in our culture and organiza-tions. Only half of employees trusttheir senior managers and leaders,and only 28 percent believe CEOs area credible source of information.

We are now experiencing a crisis oftrust and confidence in the financialmarkets. This compels us to ask: Isthere a measurable cost to low trust? Isthere a tangible benefit to high trust?And how can leaders build trust andreap the benefits of high trust?

Most leaders don’t know how toquantify the costs of low trust or mea-sure the gains of high trust. For many,trust is intangible. They don’t knowhow to assess the trust level or how toimprove it. Yet, the costs of low trustare very real—and often staggering.

One estimate put the cost of com-plying with federal rules and regula-tions—put in place due to lack oftrust—at $1.1 trillion (11 percent of thegross domestic product). The averageAmerican company loses 6 percent ofits annual revenue to fraudulent activ-ity. We see similar effects for the otherdisguised low-trust “taxes” as well.

When trust is low, in a company orrelationship, it places a hidden “tax” onevery transaction—every communica-tion, interaction, strategy, and decisionis taxed, bringing speed down and dri-ving costs up. Distrust doubles the costof doing business and triples the time ittakes to get things done!

Leaders who are trustworthy andoperate with high trust experience theopposite of a tax—a “dividend” that islike a performance multiplier, enablingthem to succeed in their communica-tions, interactions, and decisions, andto move with incredible speed. High-trust companies outperform low-trustcompanies by 300 percent!

The ability to create, grow, extend,and restore trust among stakeholders isthe critical competency of leadership.Fortunately, engendering trust is acompetency that can be learned andapplied. You can get good at it, measureit, improve it. You can’t be an effective

The trust transformation starts withbuilding credibility at the personal level.The foundation of trust is your person-al credibility. Your reputation is a reflec-tion of your credibility, and it precedesyou in any interaction or negotiation.High credibility and a good reputationenable you to establish trust fast—speed goes up, cost goes down.

I see four Cores of Credibility thatwork in tandem—Integrity, Intent,Capabilities, and Results. You can builda culture of high trust by clarifyingwhat constituents want and what youcan offer them. Then practice behaviorsthat build trust. Next, extend trust toyour organization. The combination ofthat credibility and behavior and align-ment results in a culture of high trust.

For example, Warren Buffett, thetrusted CEO of Berkshire Hathaway,completed an acquisition of McLaneDistribution (a $23 billion company)from Wal-Mart in record time. Thedeal was made with one two-hourmeeting and a handshake. In 30 days,it was completed. High trust yieldshigh speed and low cost.

BBeehhaavviioorrss ooff HHiigghh--TTrruusstt LLeeaaddeerrssEffective leaders use 13 behaviors to

build and maintain trust: Talk straight,show respect, create transparency,right wrongs, show loyalty, deliverresults, get better, confront reality, clar-ify expectation, practice accountability,listen first, keep commitments, andextend trust first. When you adoptthese behaviors, you make depositsinto your “trust accounts.” However,these behaviors need to be balanced(i.e., talk straight needs to be balanced byshow respect). Any behavior, pushed tothe extreme, becomes a liability.

You can always boost your self-trust(the confidence you have in yourself—in your ability to set and achieve goals,to keep commitments, to walk yourtalk), and your relationship trust (theability to create and increase the trustaccounts you have with others and toinspire trust in others).

The job of a leader is to extend trustfirst—not a blind trust but a smart trustwith clear expectations and strongaccountability. Trust determines thequality of our relationships, communi-cation, projects, ventures, services, andproducts. It changes the quality of pre-sent moments and alters the trajectoryand outcome of future moments. No-thing is as fast as the speed of trust. LE

Stephen M. R. Covey is the CEO of CoveyLink Worldwide801-756-2700 and the author of The Speed of Trust: The OneThing That Changes Everything.

ACTION: Experience the speed of trust.

by Stephen M. R. Covey

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 0 9 1 5

LEADERSHIP TRUST

H o w t h e b e s t l e a d e r s d o i t .

him general and commander.There is never a reason for inaction.

We must do what needs to be done,even if difficult and hazardous.Xenophon told himself: “Don’t juststand there, do something!” and hedid. Because he was ready to act, hisfellow Greeks made him their leader.

FFoouurr BBaassiicc PPooiinnttssOnce commander, Xenophon called

the new generals together and in-structed them in leadership:• Set the example. If you’re downheart-

ed, your men will be cowards. If you’reprepared to meet the enemy and call onyour soldiers to do their part, you canbe sure they will try and be like you.• You need to be braver than most men,

and to be the first to do hard work.• Be in control and exercise discipline.

When no one exercises control, noth-ing useful ever gets done. • Get your soldiers thinking about the

positive action each must take to suc-ceed; otherwise, they will think about“what is going to happen to me?”

These statements closely parallel myeight universal laws of leadership: De-clare your expectations; show uncom-mon commitment; expect positive re-sults; put duty before self; get out infront; maintain absolute integrity; knowyour stuff; and take care of your people.

Xenophon lived these eight princi-ples. When one soldier complainedthat he had to walk and carry a shield,Xenophon jumped from his horse, tookthe man’s shield and pushed him out ofthe ranks. Xenophon led the pace andencouraged others while not only carry-ing the shield but wearing his cavalrybreast plate as well. When the goingwas light, he led on horseback, butwhen the terrain was difficult or it wasimpossible to ride, he dismounted and

Leadership Laws

DESPITE HIS MANYcontributions to

management, PeterDrucker didn’t write much on leader-ship until late in his career. He said:“The first systematic book on leader-ship, the Kyropaidadaia of Xenophon, isstill the best book on the subject.”

Peter found Kyropaidadaia andAnabasis, another book by Xenophon“fascinating.” Both are 2,000 years old.Drucker felt that every modern “cut-ting-edge” leadership concept had beendescribed in these two books.

Xenophon was a member of a10,000 man Greek army hired by thePersian pretender to the throne, Cyrusthe Younger, to defeat his brother inthe fourth century B.C. Cyrus thoughtthat with these trained troops hecould defeat his brother’s superiorforce and seize the throne.

At first things went well, but in acrucial battle in Persia, Cyrus theYounger was killed. The Greek gener-als were invited to negotiate their sur-render but were instead murdered. TheGreek Army was now stranded leader-less, surrounded by hostile forces.

In The Persian Expedition, Xenophonexplains how he came to be comman-der and the fight to return to the BlackSea against overwhelming odds. Thisfamous march took five months. It is astory of courage, improvisation, disci-pline, self-sacrifice, and leadership.

After his return, Xenophon became awriter and historian. In Kyropaidadaia hedescribed the leadership education ofCyrus the Great. The central message ofboth books is leadership.

IInnaaccttiioonn WWoorrssee TThhaann NNoo AAccttiioonnAfter the Greek generals had been

killed, there was confusion, fear, andinaction in the Greek camp. No onewas in charge. Xenophon asked him-self: “What am I doing here doingnothing? Am I waiting to become a lit-tle older? If I don’t take action, I’llnever become older—I’ll be dead!” Hestepped forward and told his com-rades what needed to be done. Hespoke convincingly, and they elected

led on foot from the front. When somesoldiers were disheartened because theGreeks had no cavalry, he remindedthem of something that centuries laterGeneral George S. Patton told his army:“Wars may be fought with weapons,but they are won by men.”

Xenophon said: “Ten thousand cav-alry only amount to 10,000 men. Noone has ever died in battle by beingbitten or kicked by a horse; it is menwho do whatever gets done in battle.”

The same can be said of any humanendeavor—it is men and women whoget the job done. So if your workers areconcerned about your comparativelack of resources or with the situation,remember Xenophon—it is people, nothorses, that win battles or campaigns.Resources count, but they are not thedeciding factor—people are.

Xenophon took care of his peoplefirst. He kept his word to them and henever exploited his position as com-mander to his own personal benefit. Itwas just the opposite. He risked hisown wellbeing to ensure that promisesmade, even by others, were fulfilled.

CCaarrrroott--aanndd--SSttiicckk MMoottiivvaattiioonn NNoott BBeessttCyrus the Great of Persia held the

power of life and death over his fol-lowers. He could reward, punish, andmotivate in any way. Cyrus’ father ask-ed him what he thought was the bestway to motivate his subjects. Cyrusanswered: “That which especiallyincites to obedience is the praising andhonoring of one who obeys and thedishonoring of the one who disobeys.”

Cyrus’ father agreed that this wasone way to gain obedience. “However,”he continued, “when people think thatthey may incur harm in obeying, theyare not so ready to respond to thethreat of punishments or to be seducedby gifts.” He told Cyrus that there wasa superior way in which people wouldobey “with great pleasure,” even whendanger was present: The leader had onlyto take care of his subordinates better thanthey would take care of themselves, and toensure that he took care of them even beforehis own interests. Who would not wantto follow and obey a leader who doesnot eat until his soldiers eat first? Wesupport those who lead this way.

The basis of leadership—the laws ofintegrity, commitment, duty, and more—are all there. In your leadership, youcan learn from Xenophon. LE

William A. Cohen is President of the Institute of Leader Arts. Hewas Peter Drucker’s first executive Ph.D. graduate, a retiredMajor General from the U.S. Air Force Reserve, and author of AClass with Drucker (AMACOM). Visit www.stuffofheroes.com.

ACTION: Observe these timeless leadership laws.

by William A. Cohen

1 6 J a n u a r y 2 0 0 9 L e a d e r s h i p E x c e l l e n c e

LEADERSHIP LAWS

I t w a s D r u c k e r ’ s f a v o r i t e b o o k .

Of course, you can’t ignore all ofyour other activities—you must con-tinue to operate all aspects of yourbusiness. But you need to pay specialattention to your key success factors.Again, if you are very good at yourkey success factors—those activitiesthat matter most—you can be okay atall other activities and still be success-ful. All other activities are forgiving ofmediocrity—key success factors are not.

EExxaammpplleess ooff KKeeyy SSuucccceessss FFaaccttoorrss• In the real estate development

industry, the two key success factorsare selecting land and maintainingfinancial liquidity. If every other activi-ty were just average, but the land werewell located and the firm maintainedadequate liquidity, the companywould do well. Sure, a developershould strive to deliver a well-con-structed product with good financing.

But nothing determines suc-cess more than building onthe right piece of land andmaintaining cash liquidity.• In the computer software

business, the key success fac-tors are establishing efficientchannels of distribution andproviding after-sales support. • In strategy consulting, the

key success factors are communicatingwith executive decision makers andhelping management teams thinkdeeply about the enterprise.

Not every competitor in an industryhas the same key success factors, sincethese depend on market position. Alow-price provider’s key factors relateto cost control. For a company in a high-quality position, key factors relate toproduct quality and customer service.

AAbboouutt CCuutt--BBaacckkssDuring a downturn, many man-

agers trim expenses or lay off peopleevenly across functional departments.This practice proves that the manage-ment team is unaware of their key suc-cess factors. You must avoid cuttingback on resources that support yourkey success factors, since they are theheart, brain, and nervous system of theenterprise. Identify them and protectthem at all costs. If you must cut back,do it sooner rather than later. If youdon’t make the tough decision in theshort term, you may not have a longterm to worry about. Don’t wait tomake the tough decision and then runout of cash. Cut back early. LE

Bill Birnbaum is President of Birnbaum Associates and authorof Strategic Thinking. Visit www.BirnbaumAssociates.com.

ACTION: Focus on your key success factors.

Tough Times

AS A KID, MY MOTHERused to tell us to

always check the mirrorbefore going to school. She wanted toensure we weren’t wearing a stainedshirt or have food in our teeth. Andwhile I now have a family that pointsout such things to me, I still look at myreflection each morning.

Many leaders use this self-reflectingapproach to assess their performance.They rely on their perspective, person-al experiences, and belief systemswhen charting their future leadershipcourse. They wrongly assume the skillsand behaviors that brought them to asenior position will continue to work.

Managers attain greater responsibili-ties based on demonstrating specificfunctional or “hard” skills; however,effective leadership is based more oninterpersonal or “soft” skills. Manynew managers fail because they lackinterpersonal skills. The Hay Groupreports: “The higher people move up,the more likely they are to overratethemselves and develop blindspots thathinder their effectiveness as leaders.”

TRAMCOM’s research shows a dis-connect between a manager’s view oftheir own abilities and the view of thepeople with whom they work—partic-ularly in interpersonal skills and effec-tive leadership. The study involved 166executives, 337 managers, and 377 staffemployees. It asked managers to ratetheir abilities and asked executives andstaff to rate the managers with whomthey work. The findings included:• More than half of managers select-

ed “effective communication” as oneof their greatest strengths. Yet nearly78 percent of staff and 85 percent ofexecutives said communication skillswere a deficiency among managers.• 56 percent of managers said they

had not promoted someone due to thecandidate’s poor interpersonal skills.• 85 percent of executives had wit-

nessed an executive-level leader fail orderail due to poor interpersonal skills.

This research makes a compellingcase that many leaders lack interper-sonal skills. As leadership expert SusanWest wrote: “When it comes to being agood manager or leader, you must

Focus on key factors.

NOW IS A TOUGH TIMEto be in business:

the economy is weak,consumers are retrenching under theburden of higher prices, and the creditcrunch is tightening. The decline inhome prices, along with a weak stockmarket, has consumers feeling poor-er—because they are poorer. And sinceconsumer spending accounts for 70percent of total spending, consumerretrenchment hurts the economy.

When the economy is weak, youmust identify and focus onactivities that determine yoursuccess—your key successfactors. These activities arespecific to your industry andorganization. If you are verygood at these activities, youcan be “okay” at all otheractivities and still succeed.

Unfortunately, many man-agers are unaware of the activities thatare critical to their success. Don’tmake this error. Determine and thenfocus on your key success factors.

DDiissccoovveerr KKeeyy SSuucccceessss FFaaccttoorrssTo determine those key activities,

list two or three activities in answer tothe question: “For our organization tobe successful, we must be especiallygood at which specific activities?”

First ask your management team tospend a few minutes thinking aboutthe question and writing their individ-ual answers. Then have each personread their answers. Discuss differencesof opinion, and arrive at a consensus.

This exercise is quite challenging.Narrowing the list to just two or threekey activities requires serious, in-depth thought and discussion and adeeper understanding of the enter-prise. It’s a process of self-discoverythat yields long-term benefit.

Limit your list of key success fac-tors to two or three. You’ll be temptedto include six or eight activities—understanding the customer, produc-ing a low-cost product, managingexpenses, hiring good people, devel-oping innovative marketing programs.But just focus on a few (two or three)key success factors.

by Bill Birnbaum

Skip the MirrorLook to others to learn of self.

by Bob Schwieterman

MANAGEMENT SUCCESS PEOPLE SKILLS

L e a d e r s h i p E x c e l l e n c e J a n u a r y 2 0 0 8 1 7

master the hard skills of your job aswell as the soft skills of interpersonalrelations. Interpersonal skills must be afocus of your leadership development.”

Because most leaders believe theyhave strong interpersonal skills, theyneed to see an objective measure oftheir skills (often in the form of a multi-rater or 360-degree assessment). Afterthey complete a questionnaire aboutthemselves with input from colleagues,direct reports, and boss, they need tosee an evaluation of their interpersonalskills and behavioral preferences,showing strengths and weaknesses aswell as highlighting areas where theirself-ratings are different from thoseprovided by others. The report willidentify specific areas that can limit theleader’s interpersonal effectiveness andperformance. Areas that can be affectedby interpersonal shortcomings includethe person’s ability to establish rapport,give and receive feedback, communi-cate, or manage/delegate work assign-ments effectively.

An objective report showing thatthe leader’s self-perception of theirabilities differs from others providesopportunity for improvement. Whilesome people will shrug off the data,most leaders find the information to beeye-opening and use it as a launchingpad for personal improvement. It cre-ates a highly “teachable moment.”

Leaders recognize they’re not beingas effective with others as they want.One-on-one coaching or workshoptraining programs are effective ways toexplore interpersonal effectivenessissues and build specific skills.

You can improve your interpersonalskills by identifying the behavioralpreferences of others and work in away that makes them comfortable.

Take these four basic steps:1. Know yourself—understand your

behavioral preferences.2. Control yourself—don’t let those

preferences dominate interactions.3. Know others—note the behavioral

preferences of your key relationships.4. Do something for others—accom-

modate preferences of key relationships.You can easily learn these skills and

quickly see results. Often, just makingan effort to work better with othersincreases productivity.

Interpersonal skills never becomeobsolete. Apply the principles of effec-tive relationships to keep moving tonext levels of leadership. LE

Bob Schwieterman is general manager of The TRACOM Group’sPerformance Consulting Division. Call 303-265-6143 or visitwww.tracomcorp.com.

ACTION: Improve your interpersonal skills.

by Lance Secretan

for learned journals, training executives,and coaches have a similar vested inter-est in dragging out the process of lead-ership development. As an expertteacher on leadership and inspiration, Ihelp organizations and individualsachieve the same rapid, radical break-throughs in a remarkably short periodof time—just as we do in skiing. Thesecret to making a breakthrough in lead-ership or skiing is the same—courageand trust. It amazes me that so manyskiers remain average or mediocre yearafter year, when they do not need to be.I’m equally amazed to see the samething happen in organizations.

Perhaps we’re losing the strength ofour courage muscles. In choosing howwe lead, we exercise self-imposed limi-tations. Yet people regularly achievebreakthroughs in their experiences—the meaning and fulfillment of theirwork, the results they inspire from peo-ple, the fortunes they make from doingwhat they love—and we all have the

power to do the same. AsBuckminster Fuller said, wemust “dare to be naïve.”

Each winter, leadersfrom around the world visitwith me in Colorado tolearn how to ski and leadbetter. Both can be achievedin a fraction of the time weexpect—if we have passion,willingness to learn andchange, a desire to improve,

and a belief that there are no limits. Wemight call this courage.

In teaching and leading others, youmust earn and build trusting relation-ships with followers. Trust creates aloving space in which experimentationand challenge can occur, in which youcan let go of “certainties.” This leads tochange—and in change there is power.It takes little courage to cling to thestillness of the status quo. Movementand change, which involves letting goof the familiar while embracing thenew, require courage.

As Maya Angelou put it: “One isn’tnecessarily born with courage, but oneis born with potential. Without courage,we cannot practice any other virtuewith consistency. We can’t be kind, true,merciful, generous, or honest.”

Paradoxically, safety comes from theadventurous and the exciting, not fromthe failing systems of the past. In thisway, we sacrifice what we are for whatwe can become. LE

Lance Secretan is an expert in leadership development andauthor of ONE: The Art and Practice of ConsciousLeadership. Visit www.Secretan.com.

ACTION: Cultivate the courage to change.

COURAGE IS MENTALor moral strength to

venture, persevere, andwithstand danger, fear, or difficulty.Inspirational leaders embody mental,moral, and spiritual courage. Follow-ers abhor cowards and love leaderswith mettle—it’s that simple. Andsmart leaders do what works.

We use the word courage to describefirefighters, police, and paramedics attheir best and also to describe whistleblowers who expose corruption. In thefirst instance, a person’s life is in dan-ger because of the physical risks; in thesecond case, people arerisking their jobs by tellingthe truth—one is physicallycourageous, and the otheris morally courageous.

In corporate life, we areinfrequently required todisplay physical courage;but we are required to dis-play moral courage daily.

Breakthroughs cannot bemade without enormouseffort sustained over time. In everyfield, entrenched, traditional beliefspresent insurmountable hurdles toachieving the remarkable. This think-ing is old-fashioned and unnecessary.

For some, skiing is dangerous andfrightening. As an expert teacher of ski-ing, I run a Leadership Summit programin which we enable skiers of intermedi-ate ability to overcome their fears sothat they can ski moguls (bumps) intheir first half day and double blackdiamond runs (experts only) by the endof the day. Many teachers say this isimpossible, but we do it all the time. Wedo this because we use skiing as ametaphor—as it goes on the mountain,so it goes at work. The U.S. ski industryincludes 600 resorts, 29,000 professionalski instructors, and 26,000 ski patrollers,all of whom have a vested interest inkeeping a skier or snowboarder on aslow learning track. It helps maintain acontinuing flow of repeat business, butit doesn’t lead to rapid, radical break-throughs in skiing ability.

The “business” of leadership has thesame inbuilt inertia—hundreds of thou-sands of consultants, academics, writers

Moral CourageIt’s the hallmark of leadership.

LEADERSHIP COURAGE

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

sion adds value by identifying whoshould be buying Toyota and targetingthe message to attract these people. Onthe finance side, we add value by boost-ing customer loyalty. We bring peopleback to the Toyota/Lexus dealers moreoften. All that we do—getting into thecredit card business for redemption andpoints, or getting into lease retention orretail retention programs, or personaliz-ing the billing statements—we are try-ing to develop more loyalty. We alsoadd value through the funding side.We’re now one of the few AAA namesleft in America. So even in this difficultfunding market, we are able to accessfunds and make credit available.

How did you avoid the “lendron”mess of the home loaners?

We’re not immune from that mess.Our credit losses and residual valuelosses from the declining used carmarket and off-lease vehicles havegone up as well. But the big issue fac-ing the market in recent months iscredit availability. We’ve seen so manybanks exit from the retail and leaseauto finance business. We’ve seenGMAC and Ford cut way back on leas-ing. GMAC announced that they’reonly going to approve FICO scoresover 700. And yet in the first sixmonths of this fiscal year, despiteToyota sales being down 15 percent,our absolute volume is up 58,000 con-tracts. That’s because we have the abil-ity to fund in a tight credit market.

Why is that?Any investor in this marketplace is

very nervous. Whether you’re a pen-sion fund manager or an individualinvestor, everybody is nervous. Andwhen people are nervous, they eithersit on the sideline, or there is, what

Authentic Leadership

When did ToyotaFinancial

Services start?Our marketing name is Toyota

Financial Services, but we started as afinancial services company in May1983 as Toyota Motor Credit Corp.Since then, we have grown from eightassociates to 3,000 with $85 billion inmanaged assets. TFS is part of thefinancial services operations for ToyotaFinancial Services Corp. (TFSC), a sub-sidiary of Toyota Motor Corp.

Why have you enjoyed such success?I give most of the credit to the

Toyota products. Our great productsadd 15 points to my IQ. As long as Iknow that I’m borrowing those 15points, I’m okay. When leaders thinkthat any good fortune is all because ofthem, they get in trouble. So, Toyota hashad a great run—both on the productside and sales side. In the finance com-pany, we had two choices. We couldjust grow with Toyota, which was arobust growth rate, or we could seekways to add incremental value.

How do you add value?One of our strategic goals is to in-

crease Toyota loyalty. One statistic welike is that if you buy a Toyota andfinance with us (TFS) versus payingcash or financing with a bank, there isa 50 percent increase in the odds thatyou’ll go back to the Toyota dealer.

How can you add that much value?We keep in touch with customers.

We tell them what’s going on at Toyotain our monthly billing statements. Ifthey are leasing the vehicle, four or fivemonths before the lease expires we callthem and tell them what their optionsare. By staying in close contact withour customer, we steer them back intoanother Toyota or Lexus.

So, in effect, you change the Toyotavalue proposition?

Yes, but again, it starts with greatproducts. The engineers, designers,and assembly workers add value byproducing a quality car. The sales divi-

they call in the investment world, a“flight to quality.” We’re among only aselect few companies that have thehighest possible short- and long-termcredit ratings in corporate America thataccess the funding market daily. So inthis difficult credit environment, weare still able to access funds. It’s not ascheap as it was a few months ago.

Why the dramatic fallout in funds?There are two reasons. First, the banks have backed off on

auto loans because their losses in theAsset-Backed mortgage market havedrained their capital. So their leverageratio has gone way out of whack. Theycan’t grow the way they want to grow.

Secondly, for many of our competi-tors, their primary source of funding isthe asset-backed market. And withwhat happened in mortgages, theasset-backed security market for carsand credit cards virtually disappeared.So where GMAC or Ford or somewell-known banks would do an ABSdeal of $1 billion, that market sudden-ly disappeared, and they didn’t havenew assets they could draw down on.So they weren’t able to access funds;hence, they had to either tighten theircredit standards or reduce lending, orboth. Some chose to get out of leasing.

ABS is the most expensive form offunding. And since we’re an AAA-rated organization, we can do unse-cured term lending much cheaper. So,we’ve gone to a lot of smaller deals.We found that if we could customizeour funding to the needs of insurancecompanies or pension fund managers,we could get much better rates. So thatkeeps our funding costs low; and inthis credit market, we can still fund,just not as easily or cheaply.

What makes you effective as a leader?I try to build relationships of trust

across borders and boundaries, depart-ments and divisions. Toyota encour-ages building these relationships. SoI’m constantly communicating with allentities within the Toyota family andwith the dealer organization. I partici-pate in many of their meetings, andtalk to their people about where we areon funding and credit issues. I’m alsopart of the Toyota North AmericanPresidents Organization. All the presi-dents meet every two months. I canassure you that everybody is wellaware of our issues, challenges, andgoals—and I’m well aware of theirs.

Building relationships of trust formsthe bedrock of Toyota. Toyota is, afterall, a Japanese company. Some U.S.

Interview withGeorge Borst

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

LEADER OF THE MONTH GEORGE BORST

B u i l d s t r o n g r e l a t i o n s h i p s o f t r u s t .

make mistakes, I tend to not give oth-ers enough time to do their analysis.

How do you gauge who to involve andwhat to reveal?

I believe in involvement, transparen-cy, and authentic communication. Itend to err on the side of revealing toomuch rather than try to hide things. Ithink people want to know who theirleader is. I think it’s okay for leaders toshow some vulnerability, to show thatthey’re human. People want to knowthere is a real person there. If leadershave enough self-confidence that theycan show vulnerability and show whatthey’re learning and where they’vecome from, people respond favorably.

How do you communicate authenticity?Leaders often announce the strategy

or plan and then assumeeverybody understands itand is committed to doingit. You have to repeat themessage early and often. Iget out of the office, visitmy associates, and buildrelationships and a reputa-tion. The big mistake thatsome leaders make is creat-ing a “podium persona”that is not the same as whothey really are. People know whensomebody is giving them spin.

Does the feedback/feedforward processspur improvement?

Feedback is vital, and my coachMarshall Goldmith’s “feedforward”process facilitates self-awareness andgrowth. Five years ago, I went back toschool to pursue a master’s degree inleadership. One demand of leadershipis building a constituency by extend-ing yourself into many other parts ofthe organization and building aware-ness of what you’re doing.

For example, recently I learned thatour Remarketing Managers were meet-ing 45 miles away in Laguna Niguel. Inthis credit crunch and collection envi-ronment and funding crisis, I didn’twant to travel an hour and a half eachway in LA traffic. But I figured, “This isimportant; these men and womencome in from around the country.” So,I went there and told them where weare as a company, what our profit chal-lenges are, what we are doing to cutexpenses. Then, I said, “I invested thistime because what I need is unfilteredfeedback. I need you to tell me what’sgoing on, what we’re doing right, andwhat we’re doing wrong. And I don’tcare if what you ask me is politically

incorrect—I need to know what’s onyour mind.” What I learned made thetrip more than worthwhile.

How do you build trust?When you seek feedback consistent-

ly, you build a balance sheet, an emo-tional bank account, with the associates.You build up your asset side so whentough times come you can add to theliability side and still retain some networth. If you don’t build trust withpeople and you’re not authentic andthey don’t know who you are, you canquickly become bankrupt.

Quarterly, I host an ice cream social.We randomly pick 15 people who res-pond to an invitation, get them in theroom, and cite two rules: You can’t quoteyour boss by name, and you can’t bad-mouthanybody after the meeting. You can say any-

thing you want about me.I’m amazed at what I get

out of this. As soon as peo-ple know that it’s safe tospeak up, they will tell youwhat is on their minds. Ifyou can stay connected,you can look at the busi-ness from their side of thehouse. All of our associateswant Toyota to do well, butyou still have to answer

these two questions: “What’s in it forme?” and “How does this impact me?”By addressing those questions, you goa long way in getting collaboration,alignment, and consensus.

What advice do you give to leaders?In tough times, you can’t over-com-

municate. People want to know whatis going on, and they want to be partof the solution. We all know what thechallenges are. And if you can clearlycommunicate this in a transparent andauthentic way, people will want towork with you to get to the solution.

In this market, people are nervousabout benefits being cut or losing theirjobs or bonuses. But if you can clearlycommunicate what needs to be done,you keep people focused on helping allof us get there. People feel much betterwhen they’re working toward a solu-tion. Action is the antidote for anxiety.

When they are participating in thesolution, they feel better about them-selves and about their contribution. Ifwe as leaders can motivate and coachpeople to make discretionary contribu-tions, we’ll get to better solutions ofour problems much faster. LE

George Borst is CEO of Toyota Financial Services. Visitwww.toyotafinancial.com.

ACTION: Show transparency and authenticity.

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

vendors don’t understand how to dobusiness with Japanese companiesbecause in a typical vendor/manufac-turer relationship, you go in, makeyour presentation, and the lowest priceor best value proposition wins. ButToyota wants to get to know you for awhile before you win any business. Somany people give up, and they say, “Ican’t afford to keep traveling to Japanwithout walking away with an order.”But once you get inside that circle oftrust, good things happen fast. That’swhy Toyota has such great relation-ships with its suppliers—we wantthem to be successful too.

Is anything lost in translation?I don’t believe we have bad leader-

ship in America; however, the styleand approaches are very different—and both can work well. The Toyotaapproach is one of consensus manage-ment. Toyota invests the time up frontto get everybody’s opinion and under-standing—even people who are onlytangentially involved weigh in at thebeginning. Initially this process candrive you crazy because it’s so time-consuming, and so many people haveso many opinions. But once the deci-sion is made, the execution is usuallyexceptional. In a sense, Toyota tries tocreate chaos at the start of the project;other companies can get quickerapprovals or make faster decisions,but then other departments and orga-nizations weigh in and say, “You didnot think about this” or “This impactsus this way.” Thus, they create chaosafter the launch. I think that differenceaccounts for some of our success.

Are you a convert to Japanese style?I respect it and understand it, and I

try to be a blend of both Japanese andAmerican styles. Toyota puts emphasison the details, and I’ve learned thereis dignity in the details. I’ve takensome Gallup strength tests and findthat my strengths fall in the area ofstrategy and execution. One thing Ilearned early is you can have thegreatest strategy in the world andwant it done tomorrow. But if youdon’t respect the details—if you don’tlet the people who are strong in ana-lytics have the time and the space andget out of their face so they can dotheir jobs—execution will suffer. Ithink one of the key leadership traitsis self-awareness. I recognize this im-patience in myself, and force myself tostep away and let the analytical piececome together. Sometimes it drives mecrazy, but it serves me well. When I

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