Smart Leadership, Part 2
- Author: Eric Jackson
- Posted: April 19, 2007
- Category: Talent Management, Business Matters
- Tags: Center of Excellence, Leadership Training, Performance Management, Succession Planning
- Comments:
This week I draw to a close this four-part excerpt from the book Why Smart Executives Fail, co-authored with Sydney Finkelstein. In the book we examine why smart executives fail, the early warning signs for corporate disasters, keys to leadership success and failure, learning from mergers and acquisitions and lessons for board of director effectiveness.
In the last post — Smart Leadership, Part 1 — I started out with the first four skill-sets that describe the Three Pillars of a “Smart Organization:” Smart Leadership:
The first commonality we found across Smart Organizations was that they possessed “Smart Leadership” at the Executive Team and Board levels. The “smart” label doesn’t reflect their collective IQ (although all would have scored highly). Instead, what made their teams and boards “smart” was a combination of certain individual skill-sets that each officer and director possessed, none of these organizations had “Imperial CEOs” with thousands of faceless followers. Rather, they had teams, boards, and leaders throughout the organization who were the stars of the show. These officers and directors had skill-sets, knowledge, attitudes and behaviors that were in place in “Smart Organizations” but were conspicuously absent in successful companies who later headed towards failure.
Here are the balance of skill-sets from last week’s post…
Skill-set 5: Projecting Authentic Leadership
We found that leaders at “Smart Organizations” weren’t particularly fussed about how they or their organizations came across to others. It was much more important that they were clear on their own set of values and what their organizations stood for. Whether others “got that” or not was inconsequential to them. As a result, they came across as authentic. Examples include Mark Hurd at HP, Sam Walton at Wal-Mart, and Brian Roberts at Comcast. “Not-so-Smart Organizations’” leaders were very conscious of their and their organizations’ image in the media. Great time, energy, and resources were spent crafting just the right media image. In some cases (think Carly Fiorina), the effort probably ended up doing more harm than good.
Skill-set 6: Facing Reality
The officers and directors from “Smart Organizations” had no trouble seeing themselves and their organizations for what they were at that moment. Even if they were already #1 in their market, they knew their weaknesses, as well as their competitors’ key strengths.
An example of wanting to stay ahead of the curve is Robert Polet, new Chief Executive at Gucci Group. He recently took the unprecedented step of applying standard business practices (such as focus groups, hiring outside consultants, and using industry benchmarks to increase the rate of inventory turnover in their stores) to the formerly highly cloistered organization that structured itself around the single vision of its former creative head, Tom Ford. And, although some longtime employees reacted to Polet’s ‘facing reality’ tools “as if he’d used foul language,” Gucci Group’s sales are up 13% in the last quarter.vii By contrast, leaders at “Not-so-Smart Organizations” saw themselves as dominating their environments. One emerging leader who feared his organization had an over-inflated sense of how dominant they were in their market expressed his concerns this way, “we are a kitten, who looks in the mirror and sees a lion.”
Skill-set 7: Desire to Learn from Mistakes
Most organizations (and people) typically have a hard time admitting they have made mistakes. In fact, psychologists have demonstrated how cognitive biases often push people to persist in supporting bad decisions - even when we know logically that they do not make sense (throwing good money after bad). That’s why most organizations’ executives and directors don’t want to hear about organizational mistakes. They want to hear success stories and see the financial indicators heading in the right direction.viii
Sometimes, admitting a mistake is tantamount to an executive wearing the Scarlet Letter in front of the group. Yet, “Smart Organizations” don’t run from mistakes; they embrace them. They understand that their future competitive advantage lies in their accurately understanding why a current venture or division or product has failed. And then taking corrective actions. In the case of Wal-Mart, although they were highly successful in the United States, some of their initial international forays were not as successful. Their mistake? Applying the US store model, exactly as is, to these new markets. Their push into Argentina was especially painful. Yet, they learned from this experience in time to prepare for entering China, where Wal-Mart offers such local delicacies as barbecued pigeons, live frogs, and snakes of purported higher quality than that available outside the store at the local street market.
Skill-set 8: Personal Accountability
Beyond the skill-sets listed in last week’s post and above, there was one more, which was found in spades among officers and directors in the “Smart Organizations” we examined: Personal Accountability. These men and women took their roles and responsibilities very seriously. They did not accept simple answers to complex questions. They would push to further understand an organizational breakdown, or question an already successful process or division.
Isadore Sharp, Chairman & CEO of Four Seasons Hotels and Resorts, has been responsible for driving this aspect of the firm’s culture within its executives and employees for the last 35 years. One concept that epitomizes personal accountability has been etched into the culture as “The Golden Rule.” Interviewed for this article, he explained the importance of this skill-set, and how it filters up to the Four Seasons’ officers and directors:
“The Golden Rule’ is at the heart of our operating principles, and is part of every aspect of our business. Hotel staff is empowered to serve guests by making instant decisions, guided by the idea that one should treat others as one would be treated. Executives are similarly empowered, and with empowerment comes responsibility. In that way, we are all personally accountable for our role in the company’s success.
Series Conclusion
To have Smart Leadership in your software organization - and take the first steps towards building a “Smart Organization” - you must first understand its components, which we have outlined in this article. The 8 key skill-sets must be assessed on a regular basis to make sure that leadership retains its vitality and open-mindedness that characterizes smart organizations and is so often the downfall of the not-so-smart organizations. It is only through careful attention to an early warning system that smart leaders and smart organizations can remain smart. And it is precisely this early warning system that is at the heart of early prevention for companies that wish to avoid mistakes and breakdowns.
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