You’re about to learn a few of the guiding principles shared by great leaders and managers to constantly reinvent themselves and build extraordinary companies. Set aside any temptation to dismiss these principles as only being common sense.
After two decades spent screening and studying more than 200,000 companies for my books on speed, productivity, growth, performance, and reinvention and having studied the best and worst examples of business leadership, I’ve concluded that in many businesses the most common thing about common sense is how uncommon common sense is.
I begin every speech I give by asking the audience to raise their hands if they’d like to do better financially. Every hand in the room always gets raised. Then I ask them to raise their hand again if someday they’ll want a promotion or a new set of challenges. Again, every hand always gets raised. Finally, I ask them to shout out the answer to my final question. “Do you want to make more money and have more responsibility sooner or later?” The room always rings to the rafters with the shouted word, “Sooner!”
Unless a company’s annual overall financial performance is growing by double-digits there’s no way for people to earn more money and there’s no growth or promotions for anyone either. When talented workers realize the only way for advancement is throw someone under a bus or wait for them to retire or die they’ll eventually depart for greener pastures elsewhere.
Mike Long, the CEO of Arrow Electronics, who has grown the company he leads into a $22 billion powerhouse by being a quintessential reinventor, sums it up best when he says, “I’m surrounded by the most talented bunch of people in the world. Unless I keep buying companies and inventing new businesses, eventually they’ll run out of opportunities for growth here and leave. If they leave they’ll either become my competitors or join my competitors,” He added, “it’s the job of the CEO to stay ahead of their people, keep them challenged, and constantly provide them opportunity for growth.”
Double-digit growth allows companies to attract, keep, and grow the right people; it improves the fortunes of families, allows for reinvestment in the business, turns vendors and suppliers into valued partners, keeps the attention of investors, makes communities better places, and generously rewards shareholders.
The graveyard of failed businesses is littered with the bleached bones of leaders who destroyed their companies by an inability to let go of yesterday’s breadwinners, personal ego, same-old-same-old, and conventional wisdom.
Yesterday’s breadwinners are those products or services that once represented the lifeblood of the company and provided the bulk of its revenues and profits but now languish. Most leaders and companies rationalize their continued existence as representing the firm’s legacy or kid themselves into believing that they’re still paying their own way. In reality, most require too much time and too many resources to justify their continued existence. Smart leaders let go of yesterday’s breadwinners.
When the boss’s ego requires that he or she be the smartest person in the room and requires that their idea(s) always win, doom is just around the corner. Mel Haught, CEO of serial reinventor Pella Corporation, says, “Any boss who has to be the smartest person in the room hijacks the dialogue, signaling ‘correct comments’ and conclusions that stifle good ideas.” Great leaders set their egos aside, are humble and understand that their job is to attract people smarter than they are and with better ideas than they possess, and then get out of the way and gently steer the ship.
Same-old-same-old takes place when companies pay scant attention to something until it’s broken. Then, in a flurry of self-important and dramatic executive directives, someone is dispatched to fix one problem while somebody else is sent to fix another and someone else to fix another. Constantly sending people off to solve problems distracts everyone in the organization from the goal of constant growth. Great leaders understand that one of their most important responsibilities is to constantly analyze every person, product, and process and address them before they become broken so that always being in fire-fighting mode doesn’t become an accepted way of doing business.
Google’s pending $12 billion acquisition of Motorola’s mobile phone business has been in the news a lot recently but most business journalists failed to connect the dots on the real story taking place at Google.
In the past two years the company has purchased nearly 200 other companies. That’s an average of two per week. And each represents a small bet. From social gaming to joint ventures with NASA, from daily deal companies to digital video and voice recognition, the company knows their future depends on constantly forging ahead into new businesses.
When Starbucks took a nosedive its former CEO Howard Schultz returned, took back the reins, and embarked on a nonstop program of reinvention. In less than two years the company made more than 100 small bets including; new store designs, the testing of wine and beer sales, a move into instant coffee, an entire line of desserts, a significant emphasis on tea, and the introduction of oatmeal across the chain. Not surprisingly many of the small bets became big hits and the combined revenues of Schultz’s many small bets quickly recaptured the revenues that had been lost.
Dan DiMicco, the CEO of America’s largest steelmaker, is proud to point out that the company doesn’t have an R&D Department. “Why would we need one?” he asks. “We have 20,000 people who work together and we try every idea that everyone has.” “If it works,” he says, “we quickly scale it across the company and if it doesn’t work we simply move on and try the next idea.” DiMicco adds that the belief at Nucor is that if something is worth doing it’s worth failing at the first time around.
Great leaders are able to stay ahead of their customers’ changing needs and wants by continually offering a dizzying array of new products and services – by constantly making lots of small bets and being prepared to seize on those that work.
Conventional wisdom dictated that knowledge was power and as such most leaders maintained an iron grip on all the knowledge in order to ensure their continued importance. That included limiting the number of people who knew the firm’s strategy. Signing non-disclosure agreements became a rite of initiation into the inner sanctum.
Truly great leaders understand that execution – not knowledge – is power and that the best way to ensure execution is to make certain that everyone understands the strategy and their role in its achievement.
JM Smucker, a hundred-year-old manufacturer of jams and jellies doing $500 million in annual sales with product leadership in one cutthroat grocery category, has grown in the past decade to nearly $6 billion in revenue and leadership in nine grocery categories. Co-CEOs Tim and Richard Smucker attribute much of their success to a small booklet they publish titled, The JM Smucker Strategy, that’s required reading and study by everyone who works for or with the company. “How could we possibly have fellow workers, partners, and shareholders not know and understand our strategy?” they wonder.
Great leaders make certain that everyone – at every level of the organization – knows the big strategic objectives and their role in accomplishing them.
Great leaders get everyone to think and act like the owner
Thinking and acting like an owner means the person has some skin in the game. Thinking and acting like the owner means they have everything in the game.
Thinking and acting like an owner means working hard. Thinking and acting like the owner means it’s the only thing they want to do.
Thinking and acting like an owner often leads to a sense of entitlement. Thinking and acting like the owner means acknowledging there’s still a lot of work to be done, the journey has just begun, and that it simply makes good sense to be frugal.
Great leaders understand that in order to build an organization designed to achieve continuous growth and stay ahead of their customers’ needs requires everyone thinking and acting like the owner.
Charles Koch, Chairman and CEO of Koch Industries, the world’s largest privately held company, says that, “The only way to get people to think and act like the owner is to teach them how what they do creates economic value and how to measure and improve it.” Koch maintains that every job within a company must lead to the creation of value and if it doesn’t; there’s no need for the position to exist.
Authentic leaders don’t buy into the view that leadership is about suiting up in a coat of armor, mounting a stallion, slapping it on the flanks, and galloping off in search of villages to pillage and plunder in order to get their picture on the cover of business magazines.
They believe in service over short-term self-interest, don’t have a need for power over others, are committed to the preservation and development of the people who give their business value, and are nurturing, authentic, mentoring, and selfless.
Steward leaders are accessible, keep their hands dirty by spending most of their time listening to customers, have a noble set of guiding principles for making decisions, have no need for superficial distinctions, and are committed to making what they take over better for all the stakeholders.
The guiding principles of highly successful leaders who are committed to embracing constant radical change and reinvention and building extraordinary companies are little more than common sense. Unfortunately, for many business leaders and their companies, the most common thing about common sense is how uncommon common sense really is!
Jason Jennings is a researcher and one of the most successful and prolific business and leadership authors in the world and his greatest thrill is helping lead individuals and companies to their full economic potential. His latest book for Penguin Putnam, The Reinventors – How Extraordinary Companies Embrace Constant Radical Change, was released in May 2012. His previous bestselling books on business and leadership include It’s Not the Big That Eat the Small – It’s the Fast That Eat the Slow, Less Is More, Think BIG – Act Small, and Hit the Ground Running – A Manual for New Leaders. For more information on Jason, go to jason-jennings.com.