Tag Archives: Leadership

The Effective Executive: The Definitive Guide to Getting the Right Things Done by Peter Drucker

Summary

Most management books deal with how to manage others but this one deals with how to manage oneself; how to lead by example. Effectiveness is not natural and has to be learned and practiced deliberately. Being effective means doing the right things well

Key Takeaways

Jim Collins did the foreword to this edition and highlights his 10 Key Lessons
1. First, manage thyself
2. Do what you’re made for what you can be world class at. To work on exclusively what you’re bad at is foolish and irresponsible but you must address weaknesses which stand in the way of maximizing your strengths and achieving your full potential
3. Work how you work best and let others do the same
  1. You must focus on people’s strengths and build around that and not on their weaknesses. Find people who are better than you and who can deliver in specific areas bring them into your fold
4. Count your time and make it count. This requires the discipline to schedule your time into blocks. The most effective people do one big thing at a time and don’t let distractions seep in. Create unbroken ‘think time’ blocks during your most lucid time of day and do them with regularity. Create chunks for people and random tasks which must get done. Attend only meetings that matter
5. Prepare better meetings by having clear reasons for the meeting and having disciplined follow ups.
6. Don’t make 100 decisions when one will do. Inactivity can be very intelligent behavior
7. Determine what your distinctive impact can be in an organization – the one decision, behavior, or action that might not have happened if you were not there
8. Stop what you would not start. Most people are too busy to work on truly important things so you must have a stop doing list and refine and rethink your daily tasks and objectives
9. Run lean. An organization is like a biological organism in that the internal mass grows faster than what shows externally – the volume increases as a cube of the linear dimension but the surface area only as the square. You must fight and hold back internal growth which doesn’t help drive profits and goals.
10. Be useful. Over success. Over wealth. Over fame. Be useful.
The best executives have personalities all over the map but Drucker found 9 shared traits
1. They ask what needs to be done.
  1. You must prioritize this list every couple years. Once you tackle the biggest priority, you must redo the process. Can only focus on a maximum of two at any given time
2. They ask what is right for the enterprise
3. They make an action plan.
  1. This must include the name of the person who is accountable, the deadline, who this effects directly and must be made aware, who should be told even if they’re not effected
4. They take responsibility for the decisions
5. They take responsibility for communicating the decisions
6. They are focused on opportunities rather than problems
7. They run effective and productive meetings
  1. End once the purpose has been accomplished. Announce the purpose of the meeting at the beginning. Sum up what happened, action items, who is accountable, deadlines, send to everyone involved
8. They thought and said “we” rather than “I”
9. Listen first, speak last
The shift from manual labor and work to knowledge work is why the demands of executives today is so different than before
Effectiveness is so important and must be learned. Especially in today’s knowledge-based economy. Knowledge work is not graded on costs or quantity but on results. Managers in the knowledge based field are those whose decisions have an outsized impact
Hindrances towards effectiveness include being part of the system itself and not having enough perspective, not being willing to give up a lifetime of habits and work, not letting others step up, and not delegating enough.
Events should not drive what an executive does. Rather, key criteria which help inform results and contributions should be his main focus. The truly important things are not the trends – they are what cause the trends and is why you should never focus on the events but on what lies behind them
Effective executives have these skilsl
1. They know where their time goes
  1. Effective executives start with their time not with tasks because they know time is a limiting factor
  2. They record their time, they manage their time, and then they consolidate their time into long chunks.
  3. What can you do away with totally, what can you delegate?
  4. Don’t waste others’ time
  5. Reduce recurrent and predictable decisions
  6. Avoid overstaffing
  7. Reduce poor organization such as too many meetings
  8. Reduce poor information (wrong form or just wrong)
  9. Consolidated time is the key. Most executives don’t have more than 25% of their time at their disposal but if they come in chunks, it’s usually enough. Even if it was 75% but broken up, you’d never get anything done.
  10. It is hard and rare to over-prune
2. They focus on results rather than effort
  1. The focus on contribution over effort is the key to this whole book. This is what drives how you spend your time and the decisions you make. As a leader you must make a focus on contribution rather than effort the norm. This helps with communication, getting people to go all-in
3. They understand what is expected of them and how they can get there
4. They focus on and build on strengths not weaknesses – both theirs and others’
5. They focus exclusively on areas where their focus will have outsized returns.
6. They know that they have to do the most difficult and important things first and that there’s no time for the second things
7. They make effective decisions and know that a few, big important decisions are the way to go. Many, rushed decisions lead to mistakes
Although there are very many personalities, the one thing they had in common when making decisions was that they were slow and deliberate in personnel decisions
Well managed business are boring and quiet. Crises have been anticipated and routinized.
Try to contribute in 3 areas: direct results, adding to culture and values, building the next generation
You must be able to see through the eyes of others and understand how they will use your output. This will help you use common language, put information in a usable form, etc. A generalist is simply a specialist who can translate their knowledge to a universal audience
You must always think and put tasks first and not personnel or else you will get politicking clash of personalities
Jobs must be big and demanding for executives to see how they live up to it. You must judge the people you are considering by their strengths and what they would need to reasonably fulfill this job and you must have clear expectations and definitions of success
With every strength comes a weakness so you must focus on and understand how does a person’s strength translate to a weakness
Staff for opportunities and not for problems
You should remove incompetent men. Not only because of their lack of results, but because if they stayed on, it would hurt the rest of the culture. This is not a slight on the man but a slight on the leader who put him in the position to begin with
George Marshall focused on strengths but also on weaknesses. He put Eisenhower in a position to learn about strategy and, even though he was never great, he was able to appreciate its importance later on
Managing upwards is as important as managing downwards. You must make the strengths of your boss productive as their success and promotions will help you as well. Knowing yourself, and your strengths and weaknesses, and how to make your strengths productive is equally as important. This is an attitude as much as a skill
The key skill is concentration on the first and most important things first and only doing one thing at a time. Effective executives also make sure that the organization as a whole focuses on one thing at a time. They review the past and anything which isn’t an emphatic yes, is curtailed or done away with completely, leaving time to focus on the most important things. Organizations need to stay lean and muscular just as biological organisms do
Fresh eyes which give fresh perspective is vital
Setting priorities and posteriorities (a list of what not to do) is more about courage than knowing what to focus on. You must be future-focused – rather than looking at the past, you must look at opportunities rather than problems, you must be willing to set your own agenda and make your own decisions rather than relying on others, and aim high for things which will truly make a difference rather than playing it safe
Effective executives ultimately make effective decisions. They take their time, know what’s truly important, focus on a few things at any one time, and know that quick decisions are sloppy and not impressive
Effective decisions have these common traits
1. Is this a generic or a specific situation and problem?
  1. As generic problems can have rules and principles to deal with where a specific problem must be dealt with individually.
  2. Executive executives don’t make many decisions because they don’t have to they figure out which problems are generic and through their rules and principles are able to adapt to situations quickly and effectively
2. They asked themselves if they would be able to live with the decision for a long time. If not, they keep on working on the solution
3. They asked them selves, “what are the specifications of the problem they are trying to solve, what are the objectives, and how will they know if their decision has been a good one?” These are the boundary conditions – the minimum results necessary that must be achieved
4. They ask what is right rather than what is acceptable
5. They ask and figure out how to turn the solution and question into action. Asking who has to know is as important as understanding the capacity of the people involved in acting out the decision. You must build the execution of the decision into the decision itself which is very difficult
6. There has to be a feedback loop. This has to be built into the decision to continuously test the assumptions and the actions as they face reality. You cannot get too removed from the process. You must touch the medium and see if yourself how the actions are being carried out and the reactions to it
What is the criteria necessary to determine success and how do you measure that? The effective executive assumes that the traditional measure is wrong otherwise they probably wouldn’t be in this predicament.
The best executives consider alternatives and this causes dissension and disagreements which is very healthy and can lead to the better decisions and outcomes
You must begin with trying to understand and only then trying to figure out what is right and what is wrong. Like a first-year lawyer is assigned to argue the other side’s case before they’re allowed to think about their own, we must truly understand all sides before making a decision
The last question an effective decision maker asks is, “is the decision even necessary?” Better to not act at all if not needed. Act or don’t act. Don’t hedge or go halfway. Only act if your decisions and your actions are needed and important – if things will work out without your involvement, leave them be
Above all, what is needed is courage. Courage to focus on what you think is right and ignore what you don’t believe will make a difference
Don’t just say this was a great book figure out how it will change how you act and behave. That is the sign of a great book

What I got out of it

Loved this book. So much to gain from reading and re-reading – focus on where your time goes, manage yourself first, know how you work best, focus on contributions rather than effort, know what your role is and how you can most impact the organization, few and deliberate decisions, have the courage to not follow the crowd, encourage dissension and sharing of opinions…

My Life and Work by Henry Ford

This teacher’s reference guide is a bit unique in that it was only one book rather than several but I enjoyed it so much and got so much out of it that I wanted to make a more formal write-up. As always, I have attempted to put together something which is (hopefully) a manageable, actionable and digestible introduction to Ford’s thinking and business philosophy.

On Henry Ford

*The vast majority of the content is from the books and not my own words. I’ve simply distilled, compiled, and added a few notes.

Sam Walton: Made in America by Sam Walton and John Huey

Summary

Sam Walton recounts his background and Walmart’s path to retail dominance

Key Takeaways

Sam’s Rules for Building a Business
1. Commit to your business. Believe in it more than anybody else. I think I overcame every single one of my personal shortcomings by the sheer passion I brought to my work. I don’t know if you’re born with this kind of passion or if you learn it. But I do know you need it. If you love your work, you’ll be out there every day trying to do it the best you possibly can and pretty soon everybody around will catch the passion from you – like a fever
2. Share your profits with all your associates, and treat them as partners. In turn, they will treat you as a partner and together you will perform beyond your wildest expectations. Behave as a servant leader in a partnership. Encourage your associates to hold a stake in the company. Offer discounted stock, and grant them stock for their retirement. It’s the single best thing we ever did
3. Motivate your partners. Money and ownership alone aren’t enough. Constantly, day by day, think of new and more interesting ways to motivate and challenge your partners. Set high goals, encourage competition, and then keep score. Make bets with outrageous payoffs. If things get stale, cross-pollinate; have managers switch jobs with one another to stay challenged. Keep everybody guessing as to what your next trick is going to be. Don’t become too predictable
4. Communicate everything you possibly can to your partners. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. If you don’t trust our associates to know what’s going on, they’ll know you don’t really consider them partners. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors
5. Appreciate everything your associates do for the business A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told how much somebody appreciates what we do for them. We like to hear it often and especially when we have done something we’re really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free – and worth a fortune
6. Celebrate your success. Find some humor in your failures. Don’t take yourself too seriously. Loosen up, and everybody around you will loosen up. Have fun. Show enthusiasm – always. When all else fails, put on a costume and sing a silly song. Then make everybody else sing with you. Don’t do a hula on Wall Street. It’s been done. Think up your own stunt. All of this is more important, and more fun, than you think, and it really fools the competition. “Why should we take those cornballs at Walmart seriously?”
7. Listen to everyone in your company. And figure out ways to get them talking. The folks on the front lines – the ones who actually talk to the customer – are the only ones who really know what’s going on out there. You’d better find out what they know. This really is what total quality is all about. To push responsibility down in your organization, and to force good ideas to bubble up within it, you must listen to what your associates are trying to tell you.
8. Exceed your customers’ expectations. If you do, they’ll come back over and over. Give them what they want – and a little more. Let them know you appreciate them. Make good on all your mistakes, and don’t make excuses – apologize. Stand behind everything you do. The two most important words I ever wrote were on the first Walmart sign: “satisfaction guaranteed.” They’re still up there, and they have made all the difference
9. Control your expenses better than your competition. This is where you can always find the competitive advantage. For 25 years running – long before Walmart was known as the nation’s largest retailer – we ranked number one in our industry for the lowest ratio of expenses to sales. You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient
10. Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there’s a good chance you can find your niche by going exactly the opposite direction. But be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way. I guess in all my years, what I heard more often than anything was: a town of less than 50,000 population cannot support a discount store for very long
  1. I can tell you this, though: after a lifetime of swimming upstream, I am convinced that one of the real secrets to Walmart’s phenomenal success has been that very tendency. Many of our best opportunities were created out of necessity. The things that we were forced to learn and do, because we started out underfinanced and undercapitalized in these remote, small communities, contributed mightily to the way we’ve grown as a company. Had we been capitalized, or had we been the offshoot of a large corporation the way I wanted to be, we might not ever have tried the Harrisons or the Rogers or the Springdales and all those other little towns we went into in the early days. It turned out that the first big lesson we learned was that there was much, much more business out there in small-town America than anybody, including me, had ever dreamed of
Walmart’s Strategy
1. That method was to saturate a market area by spreading out, then filling in. In the early growth years of discounting, a lot of national companies with distribution systems already in place – Kmart for example – were growing by sticking stores all over the country. Obviously, we couldn’t support anything like that. But while the big guys were leapfrogging from large city to large city, they became so spread out and so involved in real estate and zoning laws and city politics that they left huge pockets of business out there for us. Our growth strategy was born out of necessity, but at least we recognized it as a strategy pretty early on. We figured we had to build our stores so that our distribution centers, or warehouses, could take care of them, but also so those stores could be controlled. We wanted them within reach of our district managers, and of ourselves here in Bentonville so we could get out there and look after them. Each store had to be within a day’s drive of a distribution center. So we could go as far as we could from a warehouse and put in a store. Then we would fill in the map of that territory, state by state, county seat by county seat, until we had saturated that market area
2. We never planned on actually going into the cities. What we did instead was build our stores in a ring around a city – pretty far out – and wait for the growth to come to us. That strategy worked practically everywhere
3. There’s no question whatsoever that we could not have done what we did back then if I hadn’t had my airplanes. I bought that first plane for business, to travel between the stores and keep in touch with what was going on. But once we started really rolling out stores, the airplane turned into a great tool for scouting real estate. We were probably 10 years ahead of most other retailers in scouting locations from the air, and we got a lot of great ones that way. From up in the air we could check out traffic flows, see which way cities and towns were growing, and evaluate the location of the competition – if there was any. Then we would develop our real estate strategy for that market. I loved doing all this myself
4. A key transition point was moving from variety store to discount store
5. 2 cornerstones of Walmart’s philosophy – we sell for less and satisfaction guaranteed The idea was simple: when customers thought of Walmart, they should think of low prices and satisfaction guaranteed. They could be pretty sure they wouldn’t find it cheaper anywhere else, and if they didn’t like it, they could bring it back. No matter what you pay for it, if we get a great deal, pass it on to the customer. And of course that’s what we did
  1. Building this consistent customer trust is vital, think it also applies to Costco and Amazon in certain ways
6. As much as we love to talk about all the elements that have gone into Walmart’s success – merchandising, distribution, technology, market saturation, real estate strategy – the truth is that none of that is the real secret to our unbelievable prosperity. What has carried this company so far so fast is the relationship that we, the managers, have been able to enjoy with our associates.
7. We didn’t pay our associates much in the beginning. It wasn’t that I intentionally was heartless. I wanted everybody to do well for themselves. It’s just that in my very early days in the business, I was so doggoned competitive, and so determined to do well, that I was blinded to the most basic truth, really the principle that later became the foundation of Walmart’s success. You see, no matter how you slice it in the retail business payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margin. That was true then and it’s still true today. Back then, though I was so obsessed with turning in a profit of 6% or higher that I ignored some of the basic needs of our people and I feel bad about it. The larger truth that I failed to see turned out to be another of those paradoxes – like the discounters’ principle of the less you charge the more you’ll earn. And here it is: the more you share profits with your associates – whether it’s in salaries or incentives or bonuses or stock discounts – the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers are at the heart of Walmart’s spectacular profit margins, and those customers are loyal to us because our associates treat them better than salespeople in other stores do. So, in the whole Walmart scheme of things, the most important contact ever made is between the associate in the store and the customer
8. The idea for sharing profits and benefits had come up even before we went public, not from me, but from Helen. The decision we reached around that time, to commit ourselves to giving the associates more equitable treatment in the company, was without a doubt the single smartest move we ever made at Walmart.
9. One of the most successful bonuses has been our shrink incentive plan, which demonstrates the partnership principle as well as any I know beyond just straight profit sharing. As you may know, shrinkage, or unaccounted-for inventory loss – theft, in other words – is one of the biggest enemies of profitability in the retail business. So in 1980, we decided the best way to control the problem was to share with the associates any profitability gained by reducing it. If a store holds shrinkage below the company’s goal, every associate in that store gets a bonus that could be as much as $200. This is sort of competitive information, but I can tell you that our shrinkage percentage is about half the industry average. Not only that, it helps our associates feel better about each other, and themselves. Most people don’t enjoy stealing, even the ones who will do it if given the opportunity. So under a plan like this, where you’re directly rewarded for honesty there’s a real incentive to keep from ignoring any customers who might want to walk off with something, or worse, to allow any of your fellow associates to fall into that trap. Everybody working in that store becomes a partner in trying to stop shrinkage, and when they succeed, they – along with the company in which they already hold stock – share in the reward.
  1. Use human nature to work for you – in this case he was able to align incentives to get people all-in and to become self-policing
10. Keeping so many people motivated to do the best job possible involves a lot of the different programs and approaches we’ve developed at Walmart over the years, but none of them would work at all without one simple thing that puts it all together: appreciation. All of us like praise. So what we try to practice in our company is to look for things to praise. Look for things that are going right. We want to let our folks know when they are doing something outstanding, and let them know they are important to us. You can’t praise something that’s not done well. You can’t be insincere. You have to follow up on things that aren’t done well. There is no substitute for being honest with someone and letting them know they didn’t do a good job. All of us profit from being corrected – if we’re corrected in a positive way. But there’s no better way to keep someone doing things the right way than by letting him or her know how much you appreciate their performance. If you do that one simple thing, human nature will take it from there
  1. What the pupil must learn, if he learns anything, is that the world will do most of the work for you, provided you cooperate with it by identifying how it really works and identifying with those realities. – Joseph Tussman
11. “When I started working at Walmart in West Texas, we could anticipate a store visit by the chairman with the same sense you get when you’re going to meet a great athlete, or a movie star, or a head of state. But once he comes in the store, that feeling of awe is overcome by a sort of kinship. He is a master of erasing that ‘larger-than-life’ feeling that people have for him. How many heads of state always start the conversation by wanting to know what you think? What’s on your mind?
  1. It is great to be great, but it is even better to be human. – Will Rodgers
  2. Walt Disney also had this capacity to put people at ease – if he wanted to…
12. And, as I’ve said, we’ve certainly borrowed every good idea we’ve come across. Helen and I picked up several ideas on a trip we took to Korea and Japan in 1975. A lot of the things they do over there are very easy to apply to doing business over here. Culturally, things seem so different – like sitting on the floor eating eels and snails – but people are people, and what motivates one group generally will motivate another
13. A strong corporate culture with its own unique personality, on top of the profit-sharing partnership we’ve created, gives us a pretty sharp competitive edge. But a culture like ours can create some problems of its own too. The main one that comes to mind is a resistance to change. When folks buy into a way of doing things, and really believe it’s the best way, they develop a tendency to think that’s exactly the way things should always be done. So I’ve made it my own personal mission to ensure that constant change is a vital part of the Walmart culture itself. I’ve forced change – sometimes for changes sake a lone – at every turn in our company’s development. In fact, I think one of the greatest strengths of Walmart’s ingrained culture is its ability to drop everything and turn on a dime…Part of this constant change helps keep people and competitors a little off balance
14. Small merchants need to avoid coming at us head-on and do their own thing better than we do ours. It doesn’t make sense to try to underprice Walmart on something like toothpaste. That’s not what the customer is looking to a small store for anyway. Most independents are best off, I think, doing what I prided myself on doing for so many years as a storekeeper: getting out on the floor and meeting every one of the customers. Let them know how much you appreciate them, and ring that cash register yourself. That little personal touch is so important for an independent merchant because no matter how hard Walmart tries to duplicate it – and we try awfully hard – we can’t really do it
  1. Like Paul Graham advises, attack incumbents orthogonally. Start small, start cheap, start obscure, start with actions that might not scale, in areas which are looked down upon. You’ll build such a loyal customer base that before your competitors know it, you’re on their heels
15. I loved it. So many times we overcomplicate this business. You can take computer reports, velocity reports, any kind of reports you want to and go lay out your counters by computer. But if you simply think like a customer, you will do a better job of merchandise presentation and selection than any other way. It’s not always easy. To think like a customer, you have to think about details. Whoever said ‘retail is detail’ is absolutely 100% right. On the other hand it’s simple. If the customers are the bosses, all you have to do is please them.
16. Distribution and transportation have been so successful at Walmart because senior management views this part of the company as a competitive advantage, not as some afterthought or necessary evil. And they support it with capital investment. A lot of companies don’t want to spend any money on distribution unless they have to. Ours spends because we continually demonstrate that it lowers our costs. This is a very important strategic point in understanding Walmart – Joe Hardin
17. I would go so far as to say, in fact, that the efficiencies and economies of scale we realize from our distribution system give us one of our greatest competitive advantages
18. For a long time Sam would show up regularly in the drivers’ break room at 4AM with a bunch of donuts and just sit there for a couple of hours talking to them. He grilled them. What are you seeing at the stores? Have you been to that store lately? How do the people act there? Is it getting better? It makes sense. The drivers see more stores every week than anybody else in this company. And I think what Sam likes about them is that they’re not like a lot of managers. They don’t care who you are. They’ll tell you what they really think.
19. Being big poses some real dangers. It has ruined many a fine company – including some giant retailers – who started out strong and got bloated or out of touch or were slow to react to the needs of their customers. Here’s the point: the bigger Walmart gets, the more essential it is that we think small. Because that’s exactly how we have become a huge corporation- by not acting like one. Above all, we are small-town merchants, and I can’t tell you how important it is for us to remember – when we puff up our chests and brag about all those huge sales and profits – that they were all made one day at a time, one store at a time, mostly by the hard work, good attitude and teamwork of all those hourly associates and their store managers, as well as by all those folks in the distribution centers.
20. So we know what we have to do: keep lowering our price, keep improving our service, and keep making things better for the folks who shop in our stores. That is not something we can simply do in some general way. It isn’t something we can command from the executive offices because we want it to happen. We have to do it store by store, department by department, customer by customer, associate by associate
21. Push responsibility down to those touching the medium – That makes it management’s job to listen to those merchandisers out in the stores. We have these buyers here in Bentonville – 218 of them – and we have to remind them all the time that their real job is to support the merchants in the stores. Otherwise, you have a headquarters-driven system that’s out of touch with the customers of each particular store, and you end up with a bunch of unsold workboots overalls and hunting rifles at the Panama City Beach store, where folks are begging for water guns and fishing rods and pails and shovels; and at the Panama City store in town you’ve got a bunch of unsold beach gear stacked up gathering dust. So when we sit down at our Saturday morning meetings to talk about our business, we like to spend time focusing on a single store, and how that store is doing against a single competitor in that particular market. We talk about what that store is doing right, and we look at what it’s doing wrong
22. We believe that we have to talk about and examine this company in minute detail. I don’t know any other large retail company – Kmart, Sears, Penney’s – that discusses their sales at the end of the week in any smaller breakdown than by region. We talk about individual stores. Which means that if we’re talking about the store in Dothan Alabama or Harrisburg, Illinois, everybody here is expected to know something about that store – how to measure its performance, whether a 20% increase is good or bad, what the payroll is running, who the competitors are, and how we’re doing. We keep the company’s orientation small by zeroing in on the smallest operating unit we have. No other company does that. – David Glass
23. If you had to boil down the Walmart system to one single idea it would probably be communication, because it is one of the real keys to our success. We do it in so many ways, from the Saturday morning meeting to the very simple phone call, to our satellite system. The necessity for good communication in a big company like this is so vital it can’t be overstated.
Sam does not consider himself reflective or one to dwell on the past
His passion to compete is what sets him apart
His father was totally honest and the best negotiator he had ever seen – him and the counterparty always parted as friends
Had several hard jobs as a kid during the Great Depression. Like Disney and many others, was a paper boy which taught him the value of a dollar and this became part of the Walmart culture
Supremely competitive with a great bias for action but his best talent was as a motivator.
“Exercising your ego in public is definitely not the way to build an effective organization. One person seeking glory doesn’t accomplish much; at Walmart, everything we’ve done has been the result of people pulling together to meet one common goal – teamwork – something I also picked up at an early age”
Thinking you have the right to win often turns into a self-fulfilling prophecy
Sam was one of the masters of “going positive and going first”
1. I learned early on that one of the secrets to campus leadership was the simplest thing of all: speak to people coming down the sidewalk before they speak to you. I did that in college. I did it when I carried my papers. I would always look ahead and speak to the person coming toward me. If I knew them, I would call them by name, but even if I didn’t I would still speak to them. Before long, I probably knew more students than anybody in the university, and they recognized me and considered me their friend
2. “I guess Mr. Walton just had a personality that drew people in. He would yell at you from a block away, you know. He would just yell at everybody he saw, and that’s the reason so many liked him and did business in the store. It was like he brought in business by his being so friendly
Somehow over the years, folks have gotten the impression that Walmart was something I dreamed up out of the blue as a middle-aged man, and it was just this great idea that turned into an overnight success. It’s true that I was forty four when we opened our first Walmart in 1962, but the store was totally an outgrowth of everything we’d been doing since Newport – another case of me being unable to leave well enough alone, another experiment. And like most other overnight successes, it was about twenty years in the making. Of course I needed somebody to run my new store, and I didn’t have much money, so I did something I would do for the rest of my run in the retail business without any shame or embarrassment whatsoever: nose around other people’s stores searching for good talent. One way he lured the best people in, especially early on, was to give away a percentage of the profits
Early goal was to be the best, most profitable variety store in Arkansas within 5 years. That happened
Early lesson: you can learn from anybody, especially competitors
Was always iterating and experimenting – this may be Sam’s most important contribution. “Every crazy thing we tried hadn’t turned out as well as the ice cream machine, of course, but we hadn’t made any mistakes that we couldn’t correct quickly, none so big that they threatened the business
What Walmart realized more clearly than anyone else and what they built around and exploited is that you can lower the mark-up and margin so that the volume makes up for less profit per item
Always sought out competition – “Bentonville was the smallest of the towns we considered, and it already had three variety stores, when one would have been enough. Still, I love competition, and it just struck me as the right place to provide I could do it all over again
Was a keen observer
1. “As soon as Sam moved the store from Newport to Bentonville, he had a nice big sale, and we put barrels full of stuff all around the floor. Those elderly ladies would come in and bend way down over into those barrels. I’ll never forget this. Sam takes a look, frowns, and says: ‘One thing we gotta do, Charlie. We gotta be real strong in lingerie.’ Times had been hard, and some of those underthings were pretty ragged.” – Charlie Baum
2. “I remember him saying over and over again: go in and check our competition. Check everyone who is our competition. And don’t look for the bad. Look for the good. If you get one good idea, that’s one more than you went into the store with, and we must try to incorporate it into our company. We’re really not concerned with what they’re doing wrong, we’re concerned with what they’re doing right, and everyone is doing something right.” – Charlie Cate
I guess we had very little capacity for embarrassment back in those days. We paid absolutely no attention whatsoever to the way things were supposed to be done, you know, the way the rules of retail said it had to be done
“Two things about Sam Walton distinguish him from almost everyone else I know. First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I’ve ever known. And once he sees he’s wrong, he just shakes it off and heads in another direction”
After a tornado tore down a key store – “We just rebuilt it and got back at it.” No feeling sorry for oneself. Just facing what reality hands you and making the most of it
Distribution was an absolute key to Walmart’s success
I guess I’ve stolen – I actually prefer the word “borrowed” – as many ideas from Sol Price as from anybody else in the business. For example, it’s true that Bob Bogle came up with the name Walmart in the airplane that day, but the reason I went for it right away wasn’t that the sign was cheaper. I really liked Sol’s Fed-Mart name so I latched right on to Walmart.
Many of these larger stores were bright stars for a moment, and then they faded. I started thinking about what really brought them down, and why we kept going. It all boils down to not taking care of their customers, not minding their stores, not having folks in their stores with good attitudes, and that was because they never really even tried to take care of their own people. If you want the people in the stores to take care of the customers, you have to make sure you’re taking care of the people in the stores. That’s the most important single ingredient of Walmart’s success
Academy Men vs. NCOs (non-commissioned officers) – the early fellows didn’t want me hiring any college men. They had the idea that college graduates wouldn’t get down and scrub floors and wash windows. The classic training in those days was to put a two-wheeler – you know, a cart that you carry merchandise on – into a guy’s hands within the first thirty minutes he came to work and get him pushing freight out of the back room. They all came out of these variety stores with the same background and the same kind of philosophy and education. And we looked for the action-oriented, do-it-now, go type of folks
I can name you a lot of retailers who were originally merchandise driven, but somehow lost it over the years. In retail, you are either operations driven – where your main thrust is toward reducing expenses and improving efficiency – or you are merchandise driven. The ones that are truly merchandise driven can always work on improving operations. But the ones that are operations driven tend to level off and begin to deteriorate. So Sam’s item promotion mania is a great game and we all have a lot of fun with it, but it is also at the heart of what creates our extraordinary high sales per square foot, which enable us to dominate our competition
Sam was never one to scoff at change if it was correct. He began as a dime store man so at first he wanted to make a certain percentage of profit on everything. But he came around to the idea that a real hot item would really bring customers in the store so we finally started running things like toothpaste for 16 cents a tube. Then we’d have to worry about getting enough of it in stock
Thrived on change and no decision was ever sacred
One thing I never did – which I’m really proud of – was to push any of my kids too hard. I knew I was a fairly overactive fellow and I didn’t expect them to try to be just like me. Also, I let them know they were welcome to come into our business, but that they would have to work as hard as I did – they would have to commit to being merchants.
One reason he fell in love with his wife Helen is that she was always her own woman, forming her own opinions and making her own decisions
I have always had the soul of an operator, somebody who wants to make things work well, then better, then the best they possibly can
Some folks no doubt figured we were a little fly-by-night – you know, in the discount business today but out selling cars or swampland tomorrow. I think that misunderstanding worked to our advantage for a long time, and enabled Walmart to fly under everybody’s radar until we were too far along to catch
Anybody who has ever known anything about me knows I was never in anything for the short haul
I always had great curiosity and would openly ask competitors how they operated and thought about their business. I always questioned everything
I think it must be human nature that when somebody homegrown gets on to something, the folks around them sometimes are the last to recognize it
I guess what’s annoying to executives – to anybody who tries to spend their time managing a company as big as this – is these money managers who’re always churning their investors’ accounts. You know, the stock will go from $40 to $42 and they’ll rush in there and say, “Hey, let’s sell this thing because it’s just too high. It’s an overvalued stock.” Well, to my mind, that doesn’t make much sense. As long as we’re managing our company well, as long as we take care of our people and our customers, keep our eye on those fundamentals, we are going to be successful. Of course, it takes an observing, discerning person to judge those fundamentals for himself. If I were a stockholder of Walmart, or considering becoming one, I’d go into ten Walmart stores and ask the folks working there, “How do you feel? How’s the company treating you?” Their answers would tell me much of what I need to know
The point is, all those analysts may have had perfectly logical theories about why a 20% increase would be a disaster for us. But they failed to see that in a big economic downturn, when everybody is suffering, Walmart’s fundamental strengths would keep us going strong. And we would look great compared to everybody else
What’s really worried me over the years is not our stock price, but that we might someday fail to take care of our customers, or that our managers might fail to motivate and take care of our associates. I was also worried that we might lose the team concept, or fail to keep the family concept viable and realistic and meaningful to our folks as we grow. Those challenges are more real than somebody’s theory that we’re headed down the wrong path
If you asked me am I an organized person, I would have to say flat out no, not at all. Being organized would really slow me down. In fact, it would probably render me helpless I try to keep track of what I’m supposed to do, and where I’m supposed to be, but it’s true I don’t keep much of a schedule. Except for reading my numbers on Saturday morning and going to our regular meetings, I don’t have much of a routine for anything else. I always carry my little tape recorder on trips, to record ideas that come up in my conversations with the associates. I usually have my yellow legal pad with me, with a list of ten or fifteen things we need to be working on as a company. My list drives the executives around here crazy, but it’s probably one of my more important contributions
“When Sam feels a certain way, he is relentless. He will just wear you out. He will bring up an idea, we’ll all discuss it and then decide maybe that it’s not something we should be doing right now – or ever. Fine. Case closed. But as long as he is convinced that it is the right thing, it just keeps coming up – week after week – until finally everybody capitulates and says, well, it’s easier to do it than to keep fighting this fight. I guess it could be called management by wearing down.” – David Glass
One way I’ve managed to keep up with everything on my plate is by coming in to the office really early almost every day. 4:30am wouldn’t be all that unusual a time for me to get started down at the office. The early morning time is tremendously valuable: it’s uninterrupted time when I think and plan and sort things out
“I think one of Sam’s greatest strengths is that he is totally unpredictable. He is always his own person, totally independent in his thinking. As a result, he is not a rubber-stamp manager. He never rubber-stamps anything for anyone”
As famous as Sam is for being a great motivator – and he deserves even more credit than he’s gotten for that – he is equally good at checking on the people he has motivated. You might call his style: management by looking over your shoulder
I’m always asked if there ever came a point, once we got rolling, when I knew what lay ahead. I don’t think that I did. All I knew was that we were rolling and that we were successful. We enjoyed it, and it looked like something we could continue. We had found a concept, certainly, that the customers liked. Even back then, I always said at the first sign of it getting out of control, the first time our numbers don’t come through as they should, we will pull in and put our arms around what we’ve built. Up to this point, of course, we haven’t had to do it
We keep our prices as low as possible by keeping our costs as low as possible
Incumbents of a new model almost always drive out or are acquired by the old guard. What happened was that they (KMart, etc.) didn’t really commit to discounting
I have played to my strengths and relied on others to make up for my weaknesses
Sam and top executives always had and encouraged a ‘bias for action’
Most of us were too busy in the stores to even think about where it was all leading
Have to give people responsibility, trust them and then check on and help them
Sharing information and responsibility is key to any partnership.
1. Scarcity of any kind leads to “hoarding” where people will not feel secure in their environment and will not be all-in
Submerge your own ambitions and help whoever you can in the company
Everybody likes praise and we look for every chance to heap it on them
The secret to successful retailing is to give your customers what they want
Customers (eventually) vote with their feet
Decision process – On something like the Kuhn’s decision, I try to play a “what-if” game with the numbers – but it’s generally my gut that makes the final decision. If it feels right, I tend to go for it, and if it doesn’t, I back off
Once I decide I’m wrong, I’m ready to move onto something else
I’ve always been a delegator – trying to hire the best people for our stores
Sam’s ‘Beat Yesterday” Ledger book – Sam kept a ledger book to monitor and compare their performance to earlier versions of themselves during the early years of Walmart
1. Is there a way to transfer this ‘Beat Yesterday’ ledger book to compare current self to younger self? Journal, decision book, mistakes made, what you’ve learned, how you would’ve handled a situation differently?…
Enlightened self-interest
1. We’ve been able to help our associates to a greater degree than most companies because of what you’d have to call enlightened self-interest; we were selfish enough to see in the beginning the value to the company of letting them share the profits
2. You may have trouble believing it, but every time we’ve tested the old saying, it has paid off for us in spades: the more you give, the more you get.
Win/Lose – the Japanese are right on this point: you can’t create a team spirit when the situation is so one-sided, when management gets so much and workers get so little of the pie
Great ideas come from everywhere if you just listen and look for them. You never know who’s going to have a great idea
One of the most powerful forces in human nature is the resistance to change. To succeed in this world, you have to change all the time
A lot of folks ask if a Walmart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone – probably hundreds of thousands of someones – with good enough ideas to go all the way. It will be done again, over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business

What I got out of it

One of my favorite business books of all time. Absolute focus on the customer, willingness to change, profit sharing with associates, gestures of appreciation, enlightened self-interest, willing to be different, going positive and going first. Will reread immediately

Legacy by James Kerr

Summary

The author describes some of the history of the New Zealand All Blacks and some of their habits, rituals and cultural traits that have lead to their incredible success

Key Takeaways

The First 15: Lessons in Leadership
1. Sweep the sheds – never be too big to do the small things
2. Go for the gap – when you’re on top of your game, change your game
3. Play with purpose – ask why, take nothing for granted and make no assumptions
4. Pass the ball – leaders create leaders
5. Create a learning environment – leaders are teachers
6. No dickheads – follow the spearhead
7. Embrace expectations – aim for the highest cloud
8. Train to win – practice under pressure
9. Keep a blue head – control your attention
10. Know thyself – Only by knowing yourself can you become a great leader
11. Sacrifice – find something you would die for and give your life to it
12. Invent a language – the most cohesive teams have their own jargon
13. Ritualize to actualize – rituals help reinforce and align key beliefs
14. Be a good ancestor – plant trees you’ll never see, think longer-term than anybody else
15. Write your legacy – this is your time
When an opposing team faces the New Zealand All Blacks doing the haka, they know they are facing more than 15 individuals but a culture and identity and one of the most cohesive group working towards a collective purpose they have ever encountered
The challenge is to always improve. Always get better. Even when you are the best. Especially when you are the best
The team cleans up after themselves when they travel as it reinforces self discipline, humility and the fact that they take care of themselves, they don’t rely on anybody else.
Character triumphs over talent. Winning takes talent. To repeat it takes character.
Focus on getting the culture right and the results will take care of themselves
A key competitive advantage of the All Blacks is to manage their culture by attaching the players’ meaning to a higher purpose
Humility allows one to ask difficult questions such as “how can we do this better?” And reach results which might be uncomfortable
Leaders create leaders by passing on ownership and responsibility
Leaders must be prepared to change even when, and maybe especially when, they are at the pinnacle of their game. The goal of the leader is to know when one needs to reinvent oneself
Leaders must enable mastery through the culture and environments they create
The “non essential critical” are the dozens of small things which seem inconsequential but collectively can make all the difference
True focus is saying no to everything except to what will help you achieve your main goal
Leaders are teachers. Your legacy is what you teach others
The first step in learning is silence. The second step is listening
Constant repetition of affirmation is important to reach any goal. The story you tell yourself about your life eventually becomes your life
If you expect the best, more often than not you seem to get it
Train to win. Practice under pressure and practice more than you ever play. The competition should seem easy in some ways compared to how you practice. No matter what you do, it’s either reps or mileage. There are no shortcuts and nobody can ever do it for you
Knowing how to act under pressure is key. It is the result of a long term mental training program. Many want to be successful but few are truly willing to put in the work
Being aware of how you feel when you’re in flow and confident and when you’re tight and nervous can help you switch out of pressure and into flow
Better people make better All Blacks – someone who is a genuinely good person has a better chance at becoming great than someone who isn’t
Know thyself is wisdom as old as written human history. Development of authentic self is the essence of a great leader
Champions do more than seems necessary to most people
Language is an incredibly important part of a great culture as it helps to sufficiently and explicitly align people’s culture with that of the organization. Shrewd leaders create a unique language as cultural shorthand expressed via mottos, mantras, phrases and metaphors. Proper use of language becomes pure oxygen to a team and aids in communication of the vision and cultural norms
The ability to draw a metaphor is a mark of genius as it exhibits an ability to draw connections that are often overlooked or ignored
A society grows great when people plant trees whose shade they will never see. Be a great ancestor
Leave the jersey (or company, team, organization) in a better place than when you arrived
Service is the rent you pay while here on earth
“Be more concerned with your character that your reputation for your character is who you truly are while your reputation is merely what others think you are.” – John wooden
The best example a great leader can set is the way he lives his own life
Let someone else praise your virtues
The ability of the person is reflected in the questions they ask
Look for a leader who can bring people together

What I got out of it

Some great, universal principles into how to achieve a great culture leading to sustainable and outsized performance

Flight of the Buffalo: Soaring to Excellence, Learning to Let Employees Lead by Ralph Stayer and James Belasco

Summary

All leaders face a challenge of leadership. The old models and paradigms no longer work. How leaders develop, and live a new model of leadership, is and will be the critical success factor for most every business. What leaders really want in the organization is a group of responsible, interdependent workers, similar to a flock of geese. I could see the geese flying in their “V” formation, the leadership changing frequently, with different geese taking the lead. I saw every goose being responsible for getting itself to wherever the gaggle was going, changing roles whenever necessary, alternating as a leader, a follower, or a scout. And when the task changed, the geese would be responsible for changing the structure of the group to accommodate, similar to the geese that fly in a “V” but land in waves. I could see each goose being a leader. Crafted in the crucible of realtime leadership experience, that paradigm is built around the following leadership principles: • Leaders transfer ownership for work to those who execute the work. • Leaders create the environment for ownership where each gperson wants to be responsible. • Leaders coach the development of personal capabilities. • Leaders learn fast themselves and encourage others also to learn quickly.
PS – a lot of kindle highlights here but there are a lot of gems. Worth reading the book in its entirety

Key Takeaways

“They don’t care how much you know, until they know how much you care about them.”
I learned that how you say things is often as important as what you say.
Ken Blanchard, who taught me to concentrate on making the pie bigger not on how to get the biggest slice.
I discovered that I as the leader had to change first, before I could get anyone else to change.
Partnerships require advance thought about the impact of any action on the other person. That’s difficult, particularly if you guess wrong.
I had to learn how to listen and really hear. I had to learn to work with others and trust them. I had to learn to appreciate their contributions as much as or more than my own. I had to learn the value of learning and how to systematically accomplish it.
I know it is easy to talk about being different. It is a lot harder to be different.
“In most situations I am the problem.” My mentalities, my pictures, my expectations, form the biggest obstacle to my company’s success. Understanding that I am the problem allowed me to learn how to become the solution.
Again and again I came back to the following insights:
1. In most instances “I am the problem.” My desire to be the head buffalo, my wanting to rescue people, my previous success, all got in the way of successfully handling the current situation. Nothing constructive happened until I recognized me as the obstacle and changed my behavior.
2. The customer is the boss, not the internal organizational boss. For too long I insisted that the person in the corner office had to be served first, with data, with deference, with swift response to requests. We didn’t make the progress I knew we had to make until we started serving the customer first.
3. Think strategically. I used to begin with what we could be and then manage forward. We struggled to make inches of progress and usually finished out of the money. It wasn’t until I began with what we must be for customers and managed backward from that, that we won gold medals.
4. Practice the intellectual capitalism leadership style. Create the conditions where the intellectual capital holders assume responsibility for delighting their customers. Everyone must be a leader before there’s effective leadership in the new organization.
5. Leading is learning. I languished until I realized that learning faster was the key to my survival. Maximizing everyone’s learning is the key to my organization’s success. My organization didn’t soar until everyone became an avid learner.
What do I know that just isn’t so?
The awful truth about leadership—each person must write his or her own personal cookbook.
Management’s job was to establish the conditions under which performance served both the company’s and the individual’s best interests.
This became a self-fulfilling prophecy—the less I expected of my people, the less they delivered.
Now I know that I must empower people for the new level of performance—not order it. The best way to empower people is to ask: What am I doing or not doing, as a leader, that prevents them from assuming responsibility and performing at the new level?
Don’t stop with vision. Vision alone is no solution. Everything is execution.
I also came to realize that my first reaction is usually wrong.
People Rise to the Challenge—When It Is Their Challenge
1. NOTE: Must make your idea their idea
Being a leader requires continual learning.
See leadership as a personal, emotional journey. Understand it happens in your gut before it happens in your or anybody else’s head.
Leaders Add Value by Helping People Feel Powerful Rather than Helpless The leader is powerful when he/she figures out how to achieve what needs to be done. People are very different in organizations led by leaders who feel they know how to do what needs to be done. They feel powerful in having the control and influence necessary to do whatever it takes to get the job done. They see themselves as the instruments of their own destiny. They are connected to the organization’s success and failures because they know they are responsible for it. They are all working to achieve a common vision.
I learned to change from being a victim to being responsible by asking myself, “What am I doing or not doing that causes the situation I don’t like?” Restating the problem into factors that I control helps me feel, and be, powerful.
It is easier to complain about what we don’t have than to give up what we do have.
When I asked him why he hadn’t mentioned his need to me several years earlier, his answer was classic. “You never asked what we needed. You were so busy selling your solution that you didn’t hear what we wanted.”
The principal tools of production today are not machinery and equipment. Neither is it solely the brainpower of the managerial leadership. Rather, the tools of production are the ideas and talents (the intellectual capital) of the scientist, the machinist, and the programmer. Therefore, the possessors of the intellectual tools of production, the people, will come to exercise effective power.
We’ve all grown up learning to follow authority: first our parents, then our teachers, and then our bosses. The first and probably most often reinforced lesson we learn is “Do as you are told by the person in charge.” Now, however, the “person in charge” is the person who formally reports to you. In this topsy-turvy world, as a leader you actually work for the people who work for you. In the past, as leaders we planned products, budgets, facilities—the concrete financial aspects of the business. The assumption was that the people would go along with the plan. I learned the hard way that assumption was no longer safe. In addition, I must plan for the mind-sets and mentalities of the people, if I want the financial plan to work. Our leadership tools haven’t changed significantly, but the focus of their use has. The primary purpose of strategic planning is not to strategically plan for the future, although that’s an important purpose of the exercise. It is primarily to develop the strategic management mind-set in each and every individual in the organization. The purpose of the process is not only to produce a plan. It is to produce a plan that will be owned and understood by the people who have to execute it. I discovered that the leader has a new set of responsibilities. The leader, at every level in the organization, must strive to implement these four principles: 1. Transfer ownership for work to those who execute the work. 2. Create the environment for ownership where each person wants to be responsible for his/her own performance. a. Paint a clear picture of great performance for the organization and each person. b. Focus individuals on the few factors that create great performance. c. Develop the desire for each person to own—be responsible for—his/her own great performance. d. Align organization systems and structures that send a clear message as to what is necessary for great performance for the individual and the organization. e. Engage individuals—their hearts and minds, as well as their hands—in the business of the business. f. Energize individuals around the focus of the business. 3. Coach the development of individual capability and competence. 4. Learn faster. a. Learn themselves. b. Create the conditions under which every person in the organization is challenged to continually learn faster.
I’ve learned that my job is to work hard to understand what it takes to (1) win today and (2) create the circumstances where I can win tomorrow.
QUESTION: What do I have to learn to lead in this new age? LEADERSHIP SOLUTION: Learn the new paradigm today—and get ready to learn a new one tomorrow.
Helping people regain their own authority and power to respond appropriately in work and life is a leadership skill of the highest order.
The Person Doing the Work Must Own the Responsibility
For people to want to own the responsibility, and stop being victims, I had to change my behavior. I loved rescuing people. I loved solving problems. The result? People were lined up waiting to be rescued. People kept bringing me problems to solve. My people did just what I wanted them to do. If I wanted to play head buffalo, they were more than willing to play buffalo herd member. When I realized that rescuing people and solving problems is a permanent job, I understood the error of my thinking. People would never learn to take care of themselves because I was always there to take care of them. People would never learn to solve their own problems because I was there to solve them for them. I’d take this job with me to the grave. Suddenly, the overwhelming task didn’t seem as attractive as it once had. As Rosa Parks was too tired to move to the back of the Birmingham bus and thus started a revolution, so did my weariness start a revolution in my company. If I was going to have a gaggle of geese, I realized, then I’d have to stop playing head buffalo.
QUESTION: How can I get people to do it right the first time? LEADERSHIP SOLUTION: The person who does the job must own the responsibility for doing it correctly.
As the leader of my organization I am responsible for creating the environment that enables each person to assume responsibility for his or her own performance. The people own the responsibility for delivering great performance. I am responsible for creating the environment where this ownership takes place.
If You Want Ownership Behavior, Pay for It
All of my leadership efforts directed toward transferring the ownership paid off. Despite the external chaos, the people were able to keep focused on delivering great performance for their customers.
QUESTION: Am I creating owners or dependents? LEADERSHIP SOLUTION: If you want them to act like it’s their business, make it their business.
I’ve learned that coaching is about providing support and guidance. Coaching is very person-centered. Great coaches know that teams with the best skills and competencies have the highest winning percentages. The primary purpose of coaching is to develop the individual’s skills and competencies. A coach helps you do what you know you must do!
My football coach put it best. He told me, “You didn’t come to this university to learn how to play football. You came here to learn how to be a better person. So this season you’ll learn to be a better person by learning how to be a better football player.”
I learned that great coaches did more than ask questions and not give answers. Great coaches had to provide guidance so people could find the “right” answer. So I sought to provide more guidance.
One day it finally hit me: The real expert in great performance is the customer. Everything begins with delighting the customer. That’s why every one of our job descriptions begins with this statement: “The things I do to get and keep customers are …” Things really improved when I modified my focus to ask, “From the customer’s point of view, what is great performance?” The coachees finally had a way to get their questions answered from the true expert in what they had to do. They felt more focused and secure.
In the best of all worlds, what is great performance for your customers?
What do you want to achieve in the next two to three years?
How will you measure your performance?
Measurement is the motivator for improvement. Resist the temptation to define the measurements for the person. Make certain that he or she owns that responsibility. Wrestling with the “How will I know when I do it?” question helps the individual learn about what he or she really wants to accomplish. It is not uncommon to find that clarifying measurements often changes the objective. The expert in answering this question is often not the individual alone, but the individual in conjunction with his/her customer. Again, this drives the individual back to discussions with the customer.
What things do you need to learn in order to reach your goals?
What work experiences do you need to help you learn what you need to achieve your goals?
Learning is something you do, not something you are told. People don’t learn chess by watching. They need to begin playing in order to learn the game. As a coach you need to be able to see all the decisions, problems, and actions that need to be done as opportunities for yourself and others to learn and grow.
QUESTION: Is the person becoming more capable? LEADERSHIP SOLUTION: Focus on developing the person, not the scoreboard.
I learned the hard way that leaders learn fast—or they don’t complete the journey. Leaders need to keep on learning. The world changes so fast that we need to keep learning new things so we can cope. The rapid pace of change drives the need for continual learning.
Speed is essential. The gold medal goes to the swiftest. Rapid change requires rapid learning. Success has always depended upon learning, but in the past the change was slower, so we could take longer to learn. As the pace of change quickens, the race belongs to the swiftest learner.
Success is a valuable teacher, providing you don’t get lulled into complacency by her succulent fruits. I’ve learned that what got me to where I am will not get me to where I need to go.
QUESTION: Am I learning fast enough? LEADERSHIP SOLUTION: It’s never fast enough.
The Leading the Journey model is based on four leadership activities: 1. Determining focus and direction 2. Removing the obstacles 3. Developing ownership 4. Stimulating self-directed action
There are two kinds of obstacles: those that are found in the systems, structures, and practices, and those that are found in the mind-sets of the people.
I learned that system/structure factors produced these troubling mind-sets. I learned to focus my efforts on the context obstacles, so I can affect the powerful determinants of behavior.
Newton discovered the law of gravity. He was correct, except in one situation. Everything does flow downhill. Except in an organization, where ownership flows uphill. We call it upward delegation. The result? Managers own all the wrong problems.
1. NOTE: except if you invert the hierarchy pyramid as it should be with the leadership on the bottom acting as servants
Vision is the beginning point for leading the journey. Vision focuses. Vision inspires. Without a vision, the people perish. Vision is our alarm clock in the morning, our caffeine in the evening. Vision touches the heart. It becomes the criterion against which all behavior is measured. Vision becomes the glasses that tightly focus all of our sights and actions on that which we want to be tomorrow—not
Vision is the most sought-after executive characteristic.
More important, vision paints a picture of what your organization must be if it is to survive. The essence of executive vision is saying, “Here’s where we have to go, and here’s a general road map for how we will get there.”
We must manage backward from the future, rather than forward from the present.
Vision flows from extensive contact with customers and suppliers. It does not flow from some mystical insight into the future gained by consulting one’s gut (no matter how golden) or one’s astrologer. There’s no substitute for direct feedback from the people who make the marketplace.
“In the best of all worlds, from the customer’s perspective, what is great performance?”
“Wealth, like happiness, is never attained when sought after directly. It always comes as a by-product of providing a useful service.”
Clarity is power. Clarity motivates people to use the vision as a criterion to evaluate their actions. People ask, “Does my action support the vision?” The answer must be clear. Vision provides the tight focus on thinking strategically. It insists that everyone direct his or her energies toward creating the tomorrow we want. Brevity helps. Use a short, simple, easy-to-understand statement of your vision to gain clarity and empower its use as a decisional criterion.
People need to see the personal benefit from their vision of great performance.
Actions must reflect the vision. I learned that the leader must live the vision, or no one else will. People watch what we do as leaders and follow. They notice most what we do, not what we say. They follow most what we do, not what we say.
of our definitions of leadership is to “get people to do the right things.” The right things are everything that must be done to deliver great performance from the customer’s point of view.
Focus everyone in your company on owning the responsibility to find out what his or her customers want and then on consistently delivering that great performance.
The question asks about the product from the supplier’s point of view. What a waste! It doesn’t matter what the supplier thinks he’s selling. It only matters what the customer believes he’s buying.
In Leading the Journey we need a destination, and there’s no better destination than the customer’s location.
Location is more than just a geographic spot. I learned the hard way that it is also a state of mind.
The easiest and most direct way to find out where the customers’ heads are is to find out from the customers themselves.
Leaders Design Systems and Structures That Help Keep the Focus on the Location
Notice the partnership approach. Notice the shift in emphasis from what I have in my bag (or can get from my factory) to what the customer needs. My job now is not to sell my products. It’s to help the customer achieve his/her goals.
What happens before a customer call will often determine what happens during the call and after that call. We’ve learned to prepare the ground before we attempt to plant the seed. We take three significant preparation steps before every partnership interview. First, we search the data bank of the information service to which we subscribe for significant trends, developments, and issues in the industry and the company. We identify a few significant issues to serve as a launching pad for discussion and the tangible demonstration of our interest in and knowledge about their business. We know we’ve succeeded when we hear such statements as “We didn’t know that.” Or “How did you find that out?” We intend to bring substantive and, we hope, new information to the interview. Second, we plumb our own internal data base to identify the personal interests and issues of the people with whom we’ll be talking. We gather and track personal information about all customers. Our data base contains such important data as birthdays, anniversaries, names of family members, favorite sports, colors, vacation spots, and other personal information. We shape what we present and how we present it to meet the personal preferences of the listener. Third, we call in advance to review the purpose and agenda for the meeting. We ask customers what they want to accomplish in the meeting and how they will know when they’ve achieved it. We inquire about their preparation and what preparation they expect from us. We clarify expectations and get on the same wavelength. No surprises or blindsides.
We begin by working to understand the customer’s business. We pose a version of the following general directive: • Tell me about your activity. We follow up with these more specific questions: • What are the few keys to success in your unit? • What is your unit’s advantage in the marketplace (why do customers buy from you?), and how do you contribute to that advantage? • What is great ICBIH (I can’t believe it’s happening) performance for your unit, and for yourself, for the coming year?
What current/future developments will change the way you and your unit do business? We follow with a subset of more specific questions, such as: • What developments are impacting both your department’s activities and the company’s? • What do you see coming in the future that will change the way you and your company do business? • What do you and your unit plan to do to prepare for these coming events so you are ready before they occur?
What are the biggest problems you face? We follow with a specific question: • What prevents you from being a great performer?
How can we help you? We follow up with the more specific questions: • How can we help you be a great performer today? • How can we help you remove the obstacles that prevent you from being a great performer today? • How can we help you prepare to be a great performer in the future?
Based on the above, how would you define great performance for me in the coming year that will best contribute to your great performance?
What would I have to do this week to earn a rating from you of 10 out of 10 for perfect contribution to your great performance?
QUESTION: Are you a supplier or a partner? LEADERSHIP SOLUTION: Sit with the customer, or don’t get in the door.
Anticipate Problems Rather than Solve Them
What will it take to have a profitable textile business? 2. What will it take to never be surprised again?
most new developments occur from outside an industry.
I need to help people look for developments outside our current fields, in parallel fields that pose both threats and opportunities to the areas in which we currently function.
I established a system called scan, clip, and review. We borrowed it from John Naisbitt and from the CIA. In academic circles it’s called content analysis. It’s simple and works like this: Everyone in the company scans ten periodicals he or she does not normally read each month. These range from highly technical journals to such popular periodicals as Prevention, Rolling Stone, andMother Jones Good Earth Journal. Each person clips all articles he or she thinks are interesting regarding future trends and puts them in a file folder. People clip advertisements, articles, opinion letters, anything they think will have any potential impact on the business in the future, no matter how farfetched it may seem at the time. The entire company is divided into seven-person interdisciplinary, interdepartmental “review cells.” Monthly, people circulate their file folders of clipped articles to the other members of their review cell, so that everyone reviews the clippings in all seven file folders. Quarterly, the seven members of the review cell meet and discuss the important trends they noticed in the clipped material they reviewed. The discussion is built around three questions: 1. What is the future event that will have the greatest impact on our business? 2. What will happen when that event happens? 3. What can we do now to prepare for that event? We use a process called a future wheel, which is shared throughout the company. Every six months, the trends are reviewed and appropriate changes in strategy are made.
We get lots of ideas. Imagine having seven hundred people all scanning, clipping, and reviewing! We don’t get blindsided anymore. We hear the footsteps. Our customers come to us to find out what’s coming. We get lots of discussion about appropriate actions. And we get lots of commitment to a future course of action once the discussions are done.
I learned that successful leaders ask the following thinking-strategically questions: • What do we really want to create for our customers? • What will it take to create what we want?
Thinking incrementally is an American disease. We learned it early in life. Our parents were always admonishing us, “Try a little harder. You’re almost there. Just a little bit more.” The mentality was reinforced in the classroom: “Eighty-eight percent is almost an A. Study just a little bit more and I’m certain that you can get it.”
It’s not that thinking incrementally is bad. It’s just that in that thought process you begin from where you are now and add a little more to it. The view from your current position includes the limitations of all of your current assumptions, your current paradigms, your current prejudices. All of that baggage clouds your vision of what’s possible in the future.
Thinking Strategically Manages Backward from the Future
Leaders who engage in thinking strategically begin with where they want to go. Then they look backward from the future and ask, “What will it take to create that new tomorrow?” It’s the looking back from tomorrow that gives thinking strategically its power, because that perspective helps you escape the limitations of today’s situation.
Begin with the End in Mind—the Federal Express Example Federal Express knows the importance of thinking strategically. They begin from the end state they want to create: “Absolutely, positively, it has to be there on time.” With that end state firmly in mind they ask the strategic-thinking question “What will it take to get it absolutely, positively there on time?”
QUESTION: What will it take to create what I really want? LEADERSHIP SOLUTION: Ask for enough or you will get less than you need.
I have found that too many people “settle” instead of reach. I’ve learned how expensive that can be. I also learned that my task in Leading the Journey is to help people focus high enough. I need to encourage individuals to “reach” for great performance for their customers, rather than “settle” for acceptable performance. Part of providing focus and direction to my organizations is to keep all the noses pointed straight up.
Leaders must keep helping people prepare for the next match, rather than savoring the win from the last match.
Dealing with customers provides a bear hug on reality.
Getting better at delivering great performance for your customers is the only answer to the “How high is up?” question.
Here are a few measures I’ve discovered are essential to any business. Without drowning in accounting details, get the following figures. Monitor them as vital signs of your organization’s financial health: 1. Track on a frequent (weekly and monthly) basis: • Cash on Hand and Projected Cash Flow. There are three essentials in any business: cash, cash, cash. All businesses are cash businesses. There are two ways to track cash. The first is using a funds flow analysis. There are many good ones available.
ExpensesOrders. Increasing expenses often go hand in hand with increasing orders. But often, expenses continue to increase after sales level out. Monitoring this ratio of current expenses to current orders (which will be future sales) will ring an early-warning bell and help you prevent expense inflation and profit deterioration. The ratio also tells you when you can expect future cash problems.
Receivables. Nothing is more insidious than not collecting the cash that customers owe you.
Sales ÷ Working Capital. This critical ratio shows the stretch in your working capital. (Working capital is current assets—cash and accounts receivable—minus current liabilities.) Working capital supports sales. With too little working capital, you grow yourself to bankruptcy. Typically, each dollar in working capital supports eight dollars in sales. When your ratio is below 5:1, you are likely not using your cash well and are not earning good enough margins. When your ratio exceeds 15:1, you may be technically bankrupt.
Track on a less frequent (semiannual/annual) basis (primarily for the banker): • Current Ratio (Current assets ÷ current liabilities). This short-term solvency ratio tells you (and your banker) whether you have the short-term funds to pay your short-term liabilities. Ratios of 2:1 are considered good. That means there are two dollars in current assets for every one dollar of current liabilities. When the ratio falls below 1.5:1, the bankers get nervous. When it falls below 1:1, they start looking at pulling the line.
You need to really know your costs. How? Use a real-time direct costing system. Assign every penny you spend to a product, a customer, a function.
One of the biggest fallacies going around is that customer service doesn’t cost, it pays. The cost of serving some customers can pay you right to the bankruptcy court.
The key to financial health is getting everyone to make financial decisions as if they were spending their own money out of their own checkbook. Too many people spend a “budget” of someone else’s money. Witness the spending sprees at the end of each year.
Love your enemy as your best friend. Enemies are very valuable. They help you organize and focus on what must be done. Part of the leader’s job is to use competitors’ actions as a way to focus individuals on great performance for their customers.
Competitors easily become the greater enemy against which we can all rally. Why fight with the person in the next office when there’s someone outside the gates looking to destroy us all? In most organizations, the people may not agree on much among themselves except that they all dislike the competitor. I learned to use my competitors as a weapon to keep everyone in my organization, including myself, from getting complacent. I learned to use the competitor as a rallying point to focus everyone on great performance, and continuously raise the standards. One of the leader’s best friends, therefore, is the competitor who’s planning to steal your lunch.
You can find out about your competitors without resorting to unethical or illegal means. Competitors will tell you if you just ask. Competitors’ salespeople love to brag about “conquests.” Let them, and pay attention when they do. Clipping services can collect trade and other news. Often research and technical journals tip off a competitor’s plans long before any specific product announcement. Many companies “test” customer response to proposed products. Often your current customers, who are their potential customers, are included. Stay in touch with them to find out what competitors are planning.
As the leader I work to keep the competitor clearly in the forefront of everyone’s thinking.
Watch Your Neighbors. Customers and Suppliers Can Become Competitors. Beware of Left Field
Analyze your position vis-á-vis your competitors. Every marketplace player—you and your competitors—has strengths and weaknesses. Identify your strengths and weaknesses compared with your competitors. Understand your current market situation, and you improve the chances of your success.
Examine your principal competitors and their current strategies. Identify your standing vis-à-vis those competitors from your customers’ perspective in terms of: 1. Cost structure: Do you have higher or lower costs than your competitors? Check out such things as comparable salaries, locations, cars, number of employees, competing bids. 2. Differentiated value of the product/service you provide: How do your customers see the value of the product/service you provide in comparison with your competitors? How would your competitors’ customers answer this question? 3. Price: How do you compare with your competition on price? Are you lower priced, about the same, or higher priced than your competition? 4. Delivery: Do you deliver on time more or less frequently than your competitors do? What would your customers answer? What would your competitors’ customers answer? 5. Quality: How does your quality compare with your competitors’? How would your customers answer this question? How would your competitors’ customers answer this question? 6. After-sales support: How good are you at being there to solve customer problems after you’ve made the sale? How would your customers answer this question? How would your competitors’ customers answer this question about them?
Most firms practice the cruelest form of deception—self-delusion. They continue to tell themselves that everything is all right, right up the steps of the bankruptcy court. The inward focus is responsible for more business failures than anything else. Above all, this is a leadership failure.
See it from the customer’s point of view. Great products are great only when customers buy them.
The report would be shared with everyone, answering four questions: 1. What are we doing right that we should continue? 2. What are we doing wrong that we should either stop or improve? 3. Who is our chief competitor for that customer’s business? 4. What do we have to do to win the customer’s business?
I learned that building close relationships with customers is a tonic for arrogance.
We won in the marketplace because we were willing to go the extra mile for our customers (witness the survey), and we had the guarantee.
“How can I maximize both value for my customers and profit for myself?” The answer? Create value. Customers don’t buy price; they buy value. What is value? Like beauty, it is in the eye of the beholder. So I learned to ask my customers to tell me what value was for them. And guess what? They told me with clarity.
“You never asked,” he said. “Your people were so busy selling me that they had no time left over to listen.” So much for being smarter than the customer. Without knowing what value is for customers, it’s impossible to deliver it consistently.
Value Is Solving the Customer’s Problems
Value Is Doing It Better than Anybody Else
Choose the right customer problem on which to focus. What is the right problem? The right one is the one that drives the customer’s buying decision. Inevitably, there’s one overriding problem, the solution to which will encourage your customer to buy from you and not your competitor.
QUESTION: Do our products and services stand out head and shoulders above our competition? LEADERSHIP SOLUTION: Stay tuned in to customers and do whatever it takes to create value for them.
One of the most powerful value-added strategies I’ve discovered is to identify the most profitable niche we can successfully serve, and then dominate that niche.
Find Niche Applications for Commodity Products Find the crack—the crevice—that piece of unfulfilled demand. That’s what successful niche players do.
Using locals, who understand and can relate to the customers, is one way to ensure the customer focus to identify value-added strategies.
Minimize Your Dependence on Any One Customer or Product
I learned that niche players usually survive by following the “avoid the big guys” strategy.
How do we do that in the face of such awesome foreign competition? It’s obvious! Pick a niche in which low-cost labor doesn’t count and where we can move faster than our competition.
a niche player in a tough industry, we survive by avoiding competition. That’s good advice in any industry.
customers once lost are hard to get back.
The basic niche player’s strategies: • Avoid the big boys. • Be flexible. • Find upscale applications for commodity products. • Stay close to your customer. • Avoid dependence upon a few products and/or customers. Focus your people on these value-added strategies. That’s the way you Lead the Journey using the intellectual capitalism paradigm. QUESTION: What do my customers want that they are not now getting? LEADERSHIP SOLUTION: Niches are gold mines. Find them and start digging.
Price competition almost always means that customers don’t see enough differentiation among products, so price is the only way to distinguish.
Pictures Create Feelings—and That’s What Customers Really Buy
The Product Name Must Paint the Picture
Everything must contribute to creating the picture. Everything. The operant question must be “How does this activity or action contribute to the picture we want customers to have of our organization?” Each person needs to think strategically and then own the responsibility to do whatever it takes to please customers.
If You Don’t Lose 20 Percent of Your Business on Price, Your Prices Aren’t High Enough
He told me, “I learned years ago that the secret to success in my business was not winning most of the bids, but losing the ‘right ones. I only want to win the ones that I know I will do well on. I’m willing to walk away from business that is marginally profitable. I don’t need marginal business. I need the profit. I’ve learned that being the high bidder is the way to succeed.”
Successful companies differentiate themselves by adding real value for their customers. Helping customers see the real value you bring marks the difference between high and low profits. The question is “What is real value from the customer’s perspective?”
Our measurement of great performance was to have the highest selling price and the highest market share.
The professor used the case to illustrate his point that price was an important determiner of value. Selling a Cadillac at Chevrolet prices would probably sell fewer Cadillacs, he said.
QUESTION: Do your prices reflect your great performance? LEADERSHIP SOLUTION: What your customers are willing to pay tells you what they—and you—think about your products.
The new way to add value is through business partnerships.
The New World Order: Partnership, Not Domination The giants have learned that it takes both size and flexibility to meet rapidly changing customer demands. Healthy smaller firms, surrounding the giant, provide the flexibility to focus and capitalize on the giant’s size.
learned that unless both parties work as hard for the partner as they work for themselves, they are both doomed to fail.
The win/win game not only involves finding partners “out there.” It also involves building win/win partnerships within the organization.
Focus and direction allow your people to deliver great performance for your customers. Knowing the “right” direction is the first step. The second step is to identify and remove the obstacles that prevent you from achieving great performance.
Focus on Those Obstacles You Control or Directly Influence
Obstacles Come in Two Areas: Systems and Mind-sets While most of us are drawn to the mind-set obstacles of motivation, communication, and teamwork issues, the biggest obstacles are organizational obstacles, like the systems and structures. I’ve found that the systems and structures dramatically affect the mind-sets of everyone else.
QUESTION: How can I identify and remove those obstacles that prevent great performance? LEADERSHIP SOLUTION: Ask your people what prevents their great performance. Get to work on those obstacles.
Systems are the most powerful drivers of performance.
Attitudes are shaped by the environment within which people function. The environment is made up of the systems and structures in the organization. Although I could not change attitudes directly, I could change them by changing the environment. I learned that incorrect attitudes are a symptom of incorrect systems, structures, and practices.
Performance Management System How are the standards of performance determined in your organization? How does your current system compare to the following model? 1.Manager determines the overall parameters/objectives. Define the playing field.
You as the leader establish the parameters, the overall objective, the vision. You need to articulate great performance standards for the overall organization. You need to be certain that everyone’s nose is pointed in the same direction. 2.Set standards between performers and customers. We need to ensure that standards are set between performers and their customers. Each performer must meet frequently (weekly) with his or her customers to agree on standards of great performance. Then the performer must meet with other performers to coordinate activities with them. The leadership job is to make certain that this standard setting and coordination take place on a regular basis. 3.Reduce the expectation to a specific, measurable number. What gets measured gets produced. For a long while I measured sales and wondered why there was so little profit. Everyone’s attention was focused on getting that order. Delivering it profitably, or selling it at a price that would make money, was always an afterthought. People love to be measured. But measure the “right” stuff. The right stuff is that which creates great performance for customers. The right stuff is what helps you keep learning. The right stuff is what helps you continuously improve. Do you have a performance management system where performers define, with customers, specific numeric standards of performance? Every machine operator, every janitor, every secretary, must know exactly what great performance is for their jobs. If your current system does not do that, you have a serious obstacle.
Information System Does every person in your unit know how he or she is performing? At the end of every day? Every week? If people don’t know how well they are doing relative to some target, you can’t ever expect them to do it well. To back up your performance management system, you need an information system that tells every performer frequently how well he or she is doing in creating great performance for his/her customers.
Makes performance visible to every…
Real data in real time. The data must be real data. Not sanitized accounting/financial data. And it needs to be in real time. Real time means “Now!” We need an information system similar to that in the game of golf. How long…
Based on continuing conversations between performers and customers. Customers are the best source of feedback on performance. The best information system structures-in continuing conversations between performers and customers. These two systems form a loop—the performance management system and the information system. Both rely upon a stream of performance-based conversations between…
Reward System Unfortunately, I succumbed to the folly of rewarding “A” while hoping for “B.” In the past, my reward system focused on attendance. I paid people to show up and then worried why they didn’t perform. I learned that if I wanted quality, I had to reward quality. If I wanted service, I had to reward service. The performer is the best person to determine what needs to be rewarded, and what is an effective reward. Begin with the performer-customer established standards of great performance, the performer-customer established feedback mechanisms, and…
Assure the consequences of behavior. Performance must have consequences. Performance must matter. It must be clear that “them that does it, get it, and them that don’t do it, don’t get it” or get a…
Pay for results, not…
Too many people are rewarded for working hard, rather then getting the “…
Blend monetary rewards (such as gain sharing, profit sharing, onetime bonuses, merit increases) and nonmonetary rewards (such as recognition, promotion, job assignments, autonomy). We can find as many ways to reward people as there are people. We don’t suffer from a lack of ways to reward. We suffer from a lack of imagination in identifying what turns people on, and in ways to distribute rewards fairly and equitably. Many leaders wrestle with “equity” issues: “Is this reward system fair?” They also struggle with “motivation” concerns: “Will these rewards motivate the behavior we need?” Both of these concerns can be dealt with by involving performers in designing the reward systems. As long as leaders own the responsibility for designing reward systems, they will also own the responsibility for making them “fair” and “…
Once a month money will be paid out to all that have achieved their Great Performance weekly goals.
1. NOTE: goal gradient effect respected
If you don’t expect, measure, and reward great performance, you’ll never get great performance. In short: • Does every person know at the start of every day what great performance is for him/her? • Does every person know at the end of every day if he/she has been a great performer? • During the day is everyone motivated to do whatever it takes to be a great performer because he/she knows that he/she will be rewarded on the basis of performance?
Systems are powerful message carriers that too often prevent the achievement you want. Structures do also.
Does your organization structure meet the following model? If not, you have structural obstacles that prevent your achieving great performance. 1. Decentralize decision making to the point of customer contact. Those closest to the customer should make the decisions about servicing that customer. When that isn’t the case, you get organizational “handoffs,” a major obstacle.
Multidiscipline teams where everyone is present. Parkinson’s law was written based upon the absence of teams.
Simplification of processes and procedures. The only things that grow automatically seem to be weeds—and administrative procedures. Stem administrative procedure growth by emphasizing continual simplification of processes and procedures. One organization eliminates every policy and procedure every year. Anyone wishing to continue a policy or procedure must reapply for it de nouveau. They call it zero-based administration. 4. Focus on one customer, one product, one product/market combination. Structure focuses people on serving a homogeneous collection of customers. This focus develops expertise in what customers want/need and facilitates a customer focus throughout the organization.
Does your structure encourage the decentralization of decision making to the level of direct customer contact? Does it facilitate the use of multidiscipline teams to solve customer problems? Does it force continual simplification and focus?
Measurement becomes one more way in which leaders focus the organization in the “right” direction, consistently providing great performance for customers. Measurement is a powerful leadership tool when the performers and customers establish the measures.
People Who Know How Well They Are Doing Will Do Well People need measurements to excel.
People want so much to measure their performance that if they aren’t given a way to do that, they will develop their own.
Your operators must be the experts on your process, because they are the only ones who can control it.
The only people who could ever produce great products were those who actually made them.
1. NOTE: touching the medium
Here is the plan they developed: The people write down every customer-driven change they make. They count the aggregate number and then categorize them to spot trends. When they see trends, they review the internal systems and structure to see if they are aligned with where the market is going. They discuss among themselves what it will take to do better. They measure how long it takes to make the improvements and spot the trends. They track it against past performance. Their plan works. We seem to be one or two jumps ahead of our competitors. Sure it’s difficult. But isn’t it worth it? What’s the alternative?
GREAT PERFORMANCE FOR THE PRESIDENT 1. Coach of strategic thinking Measure: Number of helpful contributions I make to the strategic thinking of others. Indicated by member/customer evaluations of the president in the monthly surveys. A rating of 10 is expected. 2. Learning and growth Measure: Attainment of 100 percent of the president’s educational goals. 3. 100 percent of the people believe they own the right problem and are capable of handling it. Measure: As indicated by ownership comments on the weekly reports. 4. Coach of personal development. Facilitator of learning for everyone in the company. Measure: 100 percent of direct reports attain 100 percent of their educational goals and report complete satisfaction with their development. 100 percent of all employee-partners attain 100 percent of their educational goals and report complete satisfaction with their development. 5. Ensure that all transactions are characterized by caring and integrity. Measure: Measured by employee responses of being important, respected, valued, and cared about personally on the quarterly all-employee survey. Other indicators are number of personal messages exchanged, number of personal celebrations acknowledged.
I discovered that when people perform better, they are happier. My experience is that everyone wants to excel. Everyone enjoys winning. Everyone loves being part of a winning team. Winning reinforces itself. Everyone takes pride in his/her accomplishments. That is why most everyone loves sports. Sports give instant feedback on performance. We all share a deep desire for feedback on our performance.
QUESTION: Do all the people in your company know how well they’ve done before they go home every night? LEADERSHIP SOLUTION: People perform what they measure—help the performers to measure the “right” stuff.
It sounds so simple. Get the information to the people who use it. It’s common sense. Unfortunately, it’s not common practice.
1. NOTE: touching the medium
One of my biggest leadership tasks is to remove the obstacles to great performance. One of the biggest obstacles I encountered was this misdirection of information. The company dramatically improved when I clarified who needed what information.
The past can’t be managed. It is already gone. I saw that I needed to help people manage the work they did today, not yesterday.
the leader’s job isn’t to develop the information. Rather, the leader’s task is to focus the people who use the information, and help them develop the system to get them the information they need.
Leading the Journey requires that I remove the obstacle of the misdirection of information. Inevitably, that means that the performers get more of the information they need to control and direct the organization in both the present and the future.
QUESTION: Are you managing the past, the present, or the future? LEADERSHIP SOLUTION: Help the right people get the right information and they will do the right things.
People obstacles are most often symptoms, not causes. Like Odysseus, we are pulled right to the rocks as we struggle to answer the siren song of people issues.
The Best Way to Get Teamwork Is to Give the Team Work
If I’ve learned anything in the last twelve years, it is that “I” can’t fix “them” until “I” fix “me” first. Then I must change the systems and structures to require teamwork. The obstacle isn’t simply a lack of teamwork. The obstacle is my leadership mentality, the actions that flow from it, and the systems and structures that prevent the teamwork.
The president immediately got his executives together and they designed the “Improvement Audit” program. Three years later the program is going strong. Every division is visited twice a year by teams drawn from the other divisions. There’s been a direct savings of more than 21 percent, and the president told me, “I’ve never seen such teamwork.” Changing the audit and reward systems changed the mindsets, which changed the behavior.
QUESTION: What systems are causing my people problems? LEADERSHIP SOLUTION: Change the systems to change the people.
Until great performance is everyone’s responsibility, it will be no one’s.
In today’s intellectual capitalism world, the performers must be responsible for their own performance. The success or failure of the business must rest with the individuals who possess the critical capital. The leader’s job is to determine the direction, remove the obstacles that prevent focus, and then get the intellectual capital holders to develop ownership for moving in that direction. From firsthand experience, I know how tough it is to achieve this mentality. I also know how necessary it is.
QUESTION: Who’s in the best position to be responsible? LEADERSHIP SOLUTION: Get the right people to own the right responsibility.
Again I found that the more I solved other people’s problems, the more problems they’d bring to me. I had worked myself into a fulltime “solve other people’s problems” job.
My experience has taught me that the key to organizational success today is in getting the people to want to own the responsibility for their own performance.
What is the problem? I ask because how you define the problem will largely determine how you go about solving it.
Keep the two levels of ownership separate. Keep the responsibility for performance with the performer, and the responsibility for empowering with the leader.
Empowerers proactively empower: asking questions, organizing data to confront people with reality, bringing customers and performers together to discuss standards of great performance and feedback on actual performance against those standards.
Being the cold shower of reality, drawing the line in the sand that I did by calling the emergency meeting, is not enough. Nor is insisting upon tough standards, which I did in reminding everyone of our responsibilities for all those lives. In addition to those actions, and asking questions as I did at the beginning of the meeting, a leader’s proactive empowering responsibilities go beyond all of those. Freddie helped me learn that leaders also have to support the people in their needs and be ready to coach them, to help them, when they are ready to accept and execute their responsibilities.
Leaders continue to coach and support because they are genuinely interested in that individual’s success.
Freddie also helped me learn that ownership and responsibility are not zero sum games. I can transfer ownership and get other people to assume responsibility without diminishing my own ownership and responsibility in the situation.
Ownership is not a fixed pie. In fact, it is an expanding pie. The more I transfer ownership to others, the more ownership I possess myself.
Conversations are the vehicles leaders use to develop ownership. Use all instances, even seemingly insignificant cases, to precipitate discussion and learning about great performance.
The leader’s main task concerning this ownership issue can be summarized in four letters, FCLP. F is for focus. C is for conversation. L is for learning. P is for performance.
In every possible situation, Focus Conversations on Learning about Performance.
When the leaders stop conferring benefits, people assume responsibility for delivering great performance for their customers.
QUESTION: Do your people want to own the right responsibility and be great performers? LEADERSHIP SOLUTION: The desire for owning the responsibility for great performance comes from within.
Leadership isn’t processing papers. It’s about making things happen.
Great Leaders Prevent Problems, Not Solve Them
Stop rewarding people for bringing me problems and start rewarding them for solving their own problems. To accomplish that, I changed a number of systems and structures. Saying what needs to be done is simple. Doing it is anything but simple.
We need substantially different actions to get us substantially different results.
The “right” actions are those that meet the following criteria: 1. Deliverable: some specific, concrete, and tangible action. A meeting. A plan. A program. Answers the question ‘What will be done?” 2. Measurement: an indicator that helps you know when you have accomplished what you set out to do. Answers the question “How will we know when we have done it?” 3. Date: It must have a date by when it will be done. Answers the question “By when will it be done?” 4. Person responsible: Names the person who is going to be responsible for getting it done. Answers the question “Who will do it?”
Your continuing leadership task: Help everyone in your organization identify what’s crucial and not crucial, and be dispassionate in dumping the noncontributors. Eliminate the “fat.”
Another way to eliminate nonessentials is to think about your business as a raider would. Challenge yourself and your people: “Does this activity contribute at least 20 percent to the bottom line—or growing fast enough that it will in a few years?” If the answer is no, then get rid of it.
Simplifying operations is another way to save costs. In an effort to solve problems, it’s easy to get caught up in drafting procedures. The procedure lasts long after the problem has been solved, outlives its usefulness, and becomes part of a growing bureaucracy. I empower my people regularly to attack their own procedures. They do this in two structured ways. First, we declare all systems null and void every year.
Second, every week everyone writes a “5/15” report, no longer than one page, which takes fifteen minutes to write and five minutes to read. That report answers three questions: “What did I accomplish this week?” “What remains to be done next week?” “What needs to be fixed/changed/eliminated?” Anything that needs fixing/changing/ eliminating must be handled before the end of the next week.
The people track the following data every month. Use these figures, or others of your own choosing, regularly, and you will run your business rather than your business running you. • Cash on hand and projected cash • Sales calls made to targeted customers • Customer moves through the sales cycle • Customer service rating for each person • Sales/orders • Quality levels • Weekly goal accomplishments
The standard of performance is set by the poorest performer, not the best. People look to the leader for clues and a model of great performance. The leader sets the standard for performance by what he/she will and won’t accept.
I learned that others would do much more if I expected more and accepted less.
QUESTION: Do you like what you see in the mirror? LEADERSHIP SOLUTION: Your organization is a reflection of what you accept.
Why don’t people “just do it”? Because the systems and structures usually prevent them by building in long approval cycles and multiple approvals. If it takes several months of meeting and nine different signatures to get anything done, it’s much easier to decide not to do anything.
In my organization I make certain that risk-taking is part of the standards of great performance for each individual and that taking risks is rewarded, even the risks that don’t succeed. Ensure that systems empower the “just do it” mentality.
Speed gave them focus. Henry learned in this hare and tortoise race, it is speed on the track that wins.
Do What You Do Best-Give Away the Rest to Someone Else
The old story is forever new in its relevance and unfolds in varying experiences. Challenges lead to actions, which lead to learning, which uncovers more challenges. What is new becomes old. What we thought was the same has changed and is different. These endless challenges and changes make getting up in the morning worthwhile.
Begin by Asking the Thinking-Strategically Questions • What skills, attitudes, and behaviors of people are required to deliver great performance? • What positions give me the maximum leverage to infuse these skills, attitudes, and behaviors throughout the organization?
Choose carefully. Don’t compromise. Here are some techniques I’ve found that work for me: 1. Preparation is vital. Review your profile before you talk to anyone. 2. Ask open-ended questions, such as: • What would you redesign about your last job, and why? • How would your references answer the following question … ? 3. Take good notes. You’ll likely forget otherwise—count on it. 4. Ask tough questions like: • What are your weaknesses and how do they show up in performance? • What would you do differently now, in light of what you’ve learned? 5. Hold multiple interviews and get independent judgments from each interviewer. 6. Involve everyone who’s going to be involved with that person: customers, suppliers, peers, employees.
Organization structure eliminates people’s weaknesses. So organize around people’s weaknesses. As people grow and develop new strengths, and weaknesses emerge, reshuffle the boxes. That’s why organizing is really a process of constantly reorganizing.
I Never Heard of Anyone Lying on His Deathbed Who Said, “I Fired That Person Too Soon”
The premium is on learning fast enough to cope and to stay ahead of the pack. Learning is the key. Faster is the pace.
I became a student of everyone and a follower of no one.
Most of us overestimate the value of what we currently have, and have to give up, and underestimate the value of what we may gain.
Learning New Leadership Patterns Isn’t What You Know, It’s What You Do
Mostly, I learned that I learned a lot more by doing than I did by reading or listening to lectures. Doing presents me with the opportunity to learn. Get on with the doing. The more you do, the more you have the opportunity to learn. Widen the scope of doing. Go up in hot-air balloons. Go down in submarines. Take the risk to speak up and stand out.
The worst mistake may be the best learning opportunity.
Knowledge is nothing without action. Nothing changes until you do something. What you do will directly determine what you learn.
Anything Worth Doing Is Worth Doing Poorly—At Least in the Beginning
Doing it just right is not what’s important. Starting is. You can’t start getting better until you start.
Since the greater risk is in doing nothing, you can minimize the risk by starting.
Mistakes tell us that whatever we’re doing is not working. They tell us something is wrong. Most of the time we look for “something” other than ourselves. The lengths to which I’ve gone to avoid making a mistake or own up to one I made illustrate my propensity to avoid feedback.
I learned two important leadership lessons from this mistake. First, focus on the skills required to do the job that needs to be done. Background is secondary and relevant only as it supports performance in this job.
Even though fear and excitement trigger very similar physiological phenomena, we perceive fear negatively and excitement positively. When we permit the negative emotional feelings of fear to overcome us, we miss out on great learning opportunities which excitement presents us.
What’s the Worst Thing That Could Happen to Me-and What Can I Do About It if It Does?
1. NOTE: fear setting
I most often discover that the worst that can happen isn’t nearly as terrible as I initially feared, and I can do much to cope successfully with it if it does.
Examining the worst possible scenario and seeing that there are creative ways to deal with it successfully helps to reduce the fear of the new and the different.
Sharing my fear helped to both disarm any opposition and to avoid cover-up behavior.
Use Fear to Increase Performance Fear is a wonderful stimulant. It quickens the mind, sharpens the senses, heightens performance. I’ve learned to focus the stimulant on doing better, rather than worrying about doing worse.
When fear runs through my system, I ask myself, “What can I do to remove the potential causes of failure?” “What can I do to ensure* success?” I’ve evolved rituals to answer these questions constructively.
QUESTION: What’s the worst thing that can happen and how can I handle it? LEADERSHIP SOLUTION: Use your fear to mobilize your resources and stimulate your performance.
Why do I get angry with that person, that topic, that situation? The answer to those questions tells me about myself, my best contributions to my organizations, and what I need to learn to Lead the Journey. One of my greatest teachers is my own anger, because it helps me learn more about myself as a leader. What I get angry about is what I need to learn more about. As tough as that insight is to swallow and digest, it is very valuable to my learning.
What About You Reminds Me of What I Don’t Like About Me?
In an effort to kill two birds with one stone, or more precisely, tone down two loud braggarts at the same time, I enlisted Ben to help me accomplish my changes. I asked him to watch me for loud bragging and self-centered kinds of behaviors. I arranged a signal for him to tip me off when I was slipping into the unwanted behaviors.
Elicit the Right Help in Changing— Some Help Is No Help at All
Focus on Performance to Overcome Anger
Most of the time I discovered that open confrontation and discussion of the issues resulted in swift improvement.
Anger tells a leader that he/she is shirking responsibilities. He/she is avoiding facing up to key performance issues. Anger is the red warning light that says, “Engine needs service.”
“What is causing my anger in this situation?” I think it’s my impatience. I see, or I think I see, what needs to be done and I want to move on to the action phase. While others seem not to be ready yet, I sit and stew, and stew, and stew in frustration.
1. NOTE: reminds me of me
At its root, I discovered, anger is fear in another disguise. Why was I angry at Ben? I was afraid that he would ruin my business. Why was I angry during the selection process? I was afraid that I would waste too much time and not get to the “important” items I felt I had to do. I was also afraid that without me the best person wouldn’t get chosen. The fear, a.k.a. anger, showed me my lack of faith in both the process and the people. Anger was revealing my fears and raising them to an action level.
QUESTION: What is my anger telling me that I need to learn about myself and what I’m doing? LEADERSHIP SOLUTION: Listen to your anger and learn from it.
Stubbornness often signals to me that I may be disguising my real concerns.
There’s another cause that’s worthy of a leader’s stubbornness: great performance. In too many instances, people are willing to “settle” for average, okay, or good performance. They want to avoid the stress and strain and unknown of “great” performance.
The first step in handling a divorce is to gather up the courage to act. In AA terms, this is called “hitting bottom.” I’ve learned some ways to “raise the bottom” so the fall isn’t quite so far.
Keep the responsibility for performance with the performer.
Getting customers to say, “I want this. I don’t accept that,” is an excellent way to introduce reality and authority into performance discussions.
the stream of continuing conversations about great performance serves as an early-warning signal to potential causes of divorce.
I learned in the customer case discussed just above that how you handle the divorce is as important as the completion itself.
Business reflects, and is a reflection of, life. How we handle business is how we handle life. Business is life.
I had learned from business that you can’t “give” people things and have them value the things they get. They only value the things they earn.
The great teachers in this classroom of business are mistakes, divorce, fear, anger, and stubbornness. In every business setting, these great teachers are present and ready to teach me. Sometimes I am not ready to learn.
The dominant theme in my life now is learning. Learning more and faster is the only true competitive advantage. I work to instill that love of learning throughout my organization, and my life.
We have several systems that foster that love of learning. We set aside a sum of money for each person to spend any way they wish on their learning. We pay for scuba diving lessons as well as calculus instruction. Learning is learning. Learning the discipline to master scuba diving carries over into mastering the discipline of making better sausage and writing better computer code.
People in organizations obsessed with learning will succeed.
As a thirsty person seeks out a water fountain, I’ve learned to seek out experiences. I deliberately put myself in new situations.
Tomorrow Belongs to Those Who Prepare for It Today
While action matters, it’s the right action that matters most.
There are always a thousand reasons not to do what ought to be done. There is only one reason to do it: because it is the right thing to do. The right thing to do always means choosing the morally correct alternative. Ask yourself, “Could I explain my actions on 60 Minutes and be believed?” Only take those actions that could be defended and believed under harsh public scrutiny. The success of any organization depends upon what its people are willing to do. Mobilize this incredible people power by doing what’s morally right.
Don’t confuse the risk of failure with the fear of failure. Fear is a great teacher. Use that teacher to learn what you must learn. Do not be like Hamlet, who was immobilized by his fears. Learn to go through your fears as a runner goes through the wall of pain.
Effective leaders let their actions speak so clearly that you don’t have to hear their words.
Reflect on the content of this book. It defines my morality. It is about learning, focus, and customers. It’s about accepting responsibility. And it is especially about great performance. I believe that we all have a moral imperative to strive to become as great a performer as we can possibly be.

What I got out of it

A great business and management book. Your people have to know you care, give away ownership and responsibility, push down decision making as far as possible to those who know it best, create win/win scenarios, establish a culture of trust

The Carolina Way: Leadership Lessons From a Life in Coaching by Dean Smith

Summary

A detailed overview of University of North Carolina basketball coach Dean Smith’s philosophy. One of the best books on leadership I’ve yet come across

Key Takeaways

Smith gave his players the same 3 goals each year – play hard, play together, play smart as these were the only things each player had in their own control
1. Play hard – Insist on consistent effort. Focus on the effort and the end will take care of itself. The final result, especially in a competitive situation, is often outside your control, but the quality of your team’s effort is not. Create a system that demands effort, rewards it, and punishes its absence
2. Play together – Play unselfishly. Don’t focus on individual statistics. Recruit unselfish players, reward unselfish play and punish selfish play and showboating
3. Play smart – Execute properly. Understand and consistently execute the fundamentals. Drill the fundamentals, reward their execution and punish their absence
Making winning the goal can actually get in the way of winning. Rather, winning should be the byproduct of success
Honesty was the basic foundation for everything Coach Smith did
Coaches are part benevolent (open-minded) dictator and part servant to the player. Honest and fair and plays no favorites. Pushes but understands different situations. Disciplinarian but understands that all individuals are not the same. Requires people to look at team goals but he understands that individuals have their own goals and needs too. Listens to players in one-on-one meetings and hears suggestions but when it comes time to approve the overall picture, he must be a firm leader with a clear vision and strong convictions
His players worked so hard because they saw that he worked harder than any of them did. Coach Smith made players feel good about sacrificing for the greater good – power of incentives and rewards
His philosophy didn’t allow for a star system. It was all about the team
Great leaders take the blame for losses and dole out credit for victories
1. Blaming others for mistakes not only doesn’t correct it, but compounds it
Believed in following a process rather than dwelling on winning or worrying about consequences
Genuinely cared about his players – Honesty, integrity, discipline administered fairly, not playing favorites, recruiting the right people, effective practice and training, and caring are foundations that any organization would be wise to have in place. The most important thing in good leadership is truly caring
The most effective leaders have the talent to create a sound strategy for their teams or business; knowledge of the importance of recruiting good people who wish to improve their personal skills and believe in the companies’ or teams’ philosophy; understand that whether they like it or not, they lead by example; belief in the importance of being light enough on their feet to adapt to changing conditions; and the ability to honor their commitments, admit their mistakes and take responsibility for their failures
Rituals help greatly in team building
Constant iteration and experimentation at Air Force Academy was a great learning experience for Smith. This type of risk appetite was natural to Smith at this time because he was new, young and had nothing to lose. Not falling into the trap of complacency as one gets older and more successful is vital
Tore down freshmen to break habits and then built them back up as team leaders
Never had the same team two years in a row but was still so consistently successful! Disguise weaknesses and accentuate strengths and always adapt based on personnel. Didn’t fear change even in the middle of the season
1. His coaching system was that he had no system because each team was different
Aimed for players to be quietly confident, it must be earned
Getting to the top is very difficult, staying there is even harder. You prepare for that pressure through deliberate practice
Never allowed anyone but players and the coaching staff into the locker room. This created a space of total trust and love where everyone could be open and honest with each other in the midst of competition
Map is not the terrain. They had their own statistics that they followed and praised
Basketball is simply an extension of Smith’s philosophy of life
Keep poise and have options when things go poorly
Mistakes – recognize it, admit it, learn from it, forget it
Fundamentals of basketball are the fundamentals of good character, of life. Many of the same skills are necessary for success regardless of the endeavor you choose
Best leaders are absolutely devoted to their people
Winning should simply be thought of as a byproduct of the process. This is the best way to win as it gets you in a healthy frame of mind
Nation’s leading scorer rarely plays for a ranked team and never for a championship team
Good businesses tend to die because senior leaders lose touch with the outside world, the important stakeholders. Executives spend too much time working and not enough time thinking. They should delegate more to create more. Work on the important things first; your people and their skills are the important things
Don’t let winning get you to overlook mistakes – process over outcome
Sole focus on winning (profits) actually leads to lower chance of winning
Crises bring each of us face to face with our inadequacies
Skill of being a gracious loser is vital for leaders. Must see an opportunity in every loss
Part method teaching – can better understand whole if it is broken down into smaller, manageable parts
Hiring well makes managing easy
If treated correctly and this advice followed, players become the best recruiters
People will only change when they see it will benefit them
If the hard work is also fun, performance will be enhanced greatly
Must first provide first rate employee experience before can get first rate customer experience
There is a real strength derived from depending on one another
Avoid the formation of cliques at all costs
High performing teams – individual peak performance, selflessness, high morale, no fear of failure, mutual care and support
Specific coaching and understanding of role is vital – also what one’s role is not
Never substitute because of a player’s mistakes – would lead to scared playing and public embarrassment
Teamwork hard to build because of society’s fascination with individual success and the emphasis it places on winning no matter how it is achieved
Smith was a master at tailoring his teaching method to each individual
Never underestimate the power of appreciation
Smith institute the tired signal with his players – this made them play all out until they needed a quick break. To overwork is to underperform
Everyone is important
Take care of the small things without getting bogged down by minutiae – punctuality, no swearing, clean and matching uniforms, no scoreboard gazing (worry about the process and not the outcome and stay in the present), hyper focused on end of game situations, set the pace by being the aggressor, not the reactor,
1. Great leaders are adept at identifying and tending to the crucial details. The smartest use of their time, effort and money is to spend far more of them in the planning stages than one thinks necessary
One-on-one meetings very important as it opens up the lines of communication, builds trust and shows you care
One of the best ways to teach is for all leaders and workers to mentor younger associates. Solve for problem of not getting to it after retiring or because too busy by doing your teaching on the job
Success is the byproduct of intelligent, sustained effort
People accept punishment if it is fair and consistent
On confidence
1. Think through what the worst possible outcome could be concerning the project being worked on
2. Predict the probability of that worst-case scenario’s happening
3. Develop a plan to implement if the worst does occur
4. If the worst outcome becomes reality, assess whether it can be survived
5. Once the task begins, give the best possible performance. Since that’s all anyone can do, enjoy the challenge
6. If failure results, learn from it, forgive yourself and move on to the next task
On continuous learning
1. Most people say best learning experiences come from mistakes by why wait? A smarter strategy is to learn on a continuous basis from daily events. Each lesson might be a small one, but soon the lessons will accumulate to become something meaningful and important in your life
2. Achiever’s Brain Book – an accessible notebook to write in throughout the day. In spare minutes write down key things you’ve learned and at the end of the day add the three major experiences of the day (decisions, projects worked on, meetings attended, interactions) Analyze what was done in those three instances and what the impacts or consequences were. Then establish actions based on what you’ve learned that will positively affect your future behavior
3. The key to continuous learning is to articulate one’s inarticulate knowledge. Do it continuously, draw lessons from daily experiences. Lessons don’t arrive on command, but you can budget a little time in your life to step back and get the perspective that leads to insight
Don’t waste time looking back. Learn from mistakes/regrets, make sure they never happen again and spend time planning what’s next
Importance of change – Smith’s success came partly from his ability to adapt and change better than anyone else. He knew where to place his players on the court to get the most of each man’s ability. Leaders should select for their team’s individuals who have proved capacity to change (curiosity, listen well to ideas different from their own, humble, resilient, test new ideas, willing to admit they’re wrong?)
The importance of the bottom half of the roster – often one of the hardest things is finding the right kind of leader to be the 11th and 12th men on the team. In the best of worlds, these two would know in advance that they wouldn’t play much but would work hard in practice and meetings to make the team better

What I got out of it

Focus obsessively on process and things you can control, the most important thing in high performing teams is genuine caring, constant iteration, adaptation and non-dogmatic ideals are needed when you have a different team every year!, Achiever’s Brain Book

Shoe Dog: A Memoir of the Creator of Nike by Phil Knight

Summary

Phil Knight recounts the formation, history, culture and vision of one of the most widely recognized brands in the world

Key Takeaways

Knight ran track at Oregon and says that runners truly run because what happens when they stop scares them. Knight decided early on that he would never stop, no matter what
Nike started off with running shoes and the thesis originally came to Knight while he was st Stanford business school. Japanese cameras had undercut German ones and he argued that the same may happen with American running shoes. Wanted to travel the world before chasing this business dream and had to convince his dad. His father valued being respected more than anything and thought this was the case because of his inner chaos, which came through via alcohol. Phil hated to sell and was worried about trying to convince his dad but eventually he succeeded. Knight spent months planning his world travels and invited his best friend, Carter. The plan went off the rails quickly as they decided to stay in Hawaii for several months. Carter found a girlfriend and Knight decided to later move onto his world travel plans. He headed to Japan and was heavily influenced by Zen Buddhism and focused on forgetting the self, non-linear thinking, simplicity, minimalism and being fully present
Knight met with a Japanese shoe manufacturer and won their business, representing them in the Western US. He described the tension between himself and the Japanese due to remnants from WWII
Our work is the holiest part of us
Greece was the highlight of the trip and the image of The Temple of Nike, the goddess of victory always stood out to Knight
The track coach at Oregon, Coach Bowerman, was a huge inspiration for Knight and was obsessed with shoes and continuously tried modifying, iterating and innovating them. His father and his coach were extremely stingy with praise and Knight sought their approval more than anything. Bowerman and Knight became partners in Knight’s new venture which he named Blue Ribbon. Phil got success rather quickly and though he was terrible at selling, he didn’t feel he was selling the shoes because he truly believed in them and in the good running can have on people
His mother was very athletic, a trackophile, quiet but very tough and very supportive of Phil. How he describes the quiet support from his mother is beautiful and inspiring
The art of competing is the art of forgetting, forgetting the pain, the competitor, the strategy, the self
Bowerman was an innovator. He focused as much on rest as training, he experimented with nutrition and electrolytes (predecessor to Gatorade), tore apart shoes, tried new materials (early polyurethane) and believed everyone with a body is an athlete
Was fascinated by shoguns, samurai, tycoons. Churchill, Kennedy and Tolstoy specifically
Knight took a job at PwC in case Blue Ribbon didn’t work out. “My life was totally out of balance but I didn’t care. I loved it. I wanted more imbalance. Or at least a different kind. I wanted to spend every minute working at Blue Ribbon…I wanted work to be play and I wanted what everyone wants, to be me full time.”
His first employee, Jeff Johnson, was selling prodigious amounts of shoes and created an office which aimed to be a runners paradise with books, comfortable seating, and inspiring images
The key to negotiations is to know what you want, what you need to leave feeling whole
Hired a lot of ex-runners, fanatics, whom were paid on commission. They worked like crazy because they believed in the vision
Phil spends a lot of time lost in his thoughts, going down mental wormholes, trying to figure out problems, was messy, spacey, competitive, laissez fair management to the point he was unresponsive
Once the business took off, Knight’s father was no longer so skeptical and in fact used him as a sounding board to hash through problems
Woodell’s parents loaned $8,000, their life’s savings, to Phil when the company had liquidity problems
The Japanese shoe manufacturer, Onitsuka, attempted a hostile takeover in 1971. Phil started looking for alternative manufacturers and found one in Mexico called Canada. The first shoes out of this factory were soccer cleats disguised as football cleats and was worn by Notre Dame’s QB
A shoe dog is somebody who is wholly devoted to the designing, buying, making, selling of shoes
Knight describes Bowerman as the Edison for shoes and athletics. There had been no true innovation in outer souls since the Great Depression but Bowerman soon came upon a rubberized and waffle-like sole which changed the industry forever
Blue Ribbon had always dealt honestly with their customers and salesman to the point that when they introduced the first Nike shoe, although the quality was suspect, the salesman believed Blue Ribbon when they said it was worth trying and that they’d improve over time. They got great sales right away and shows the power of dealing honestly with stakeholders
No matter the sport, no matter the endeavor, all out effort toils at people’s hearts. Was referring to Prefontaine in the American championships. The energy for ovation, passion and so forth from the crowd in this race exemplified exactly what Knight stood for and wanted his company to become. “Sports allow others to take part in and feel like they have lived at least a little in the life of others. Sports at its best allow the spirit of the fan to merge with the spirit of the athlete and this is the oneness that all great mystics discuss.”
It became apparent early on that to beat our competitors it was necessary to have the best athletes wearing the Nike swoosh. They got several Blazer basketball players early on as well as college and Olympic athletes. This soon evolved and they got world famous athletes such as Steve Prefontaine and Ilie Nastase and others. It is obvious how much pride Knight takes in his products to the point that he feels like he is living vicariously through his athletes and everyone of their victories is a little bit of a Nike victory as well
Nike was highly levered and had supplier issues for a long time and they soon decided that the best way to solve this issue was to work with the retailers and get a six-month commitment. This would help improve lead time and funding for operations, lowering their liquidity issues
Fear of failure would never be the reason the company went under. They had every expectation to fail but this would not hamper them from acting, deciding, telling the truth or doing whatever was necessary to make Nike as successful as possible
Blue Ribbon really took off once the waffle trainer was made. Another step change came when they introduced new colors and people began seeing it as not only an exercise shoe but as an everyday shoe as well. Soon after, Blue Ribbon re-incorporated under the Nike name
Everyone on the management team was a reject, a disappointment in some way and they were all trying to solve for it
Rob Strasser was one of the best negotiators because he didn’t care what he said or how he said it, he was totally honest. His negotiation skills were well used when dealing with the professors who came up with the shoe air injection process
They ran into issues with some of their shoe designs but customers forgave them because nobody else was trying anything new and Nike always apologized and did the right thing. Nike soon became a statement more than just a brand
For a long time Knight didn’t believe in advertising as he thought a great product would speak for itself
Knight and the exec team were very reluctant to go public but it soon became inevitable in order to fix their cash flow and leverage issues
When all you see is problems, you’re not seeing clearly
Adidas had the edge for a long time because their size allowed them to offer better deals to their professional athletes. Today, however, the tables have completely turned
Amazing to hear that more than a decade after Nike was started they were one of the most successful and fastest growing sports companies but were close to bankruptcy and had a burnt out and depressed management team
Nike became the first American company to do business with China in the early 1980s and ended up sponsoring the Chinese Olympic team
Phil spends a lot of time talking about his family, Penny and their two sons Matthew and Travis. Matthew died young in a scuba diving accident and Phil recounts his regret of not being a better and more present father
The sweat shop scandal was unjust but Nike used it as impetus to improve their factories and processes. They removed 97% of carcinogens by adapting a water based binding agent and gave it away to their competitors, eventually becoming the gold standard for factories. They also established The Girl Effect to help young women get out of poverty

What I got out of it

Prime example of how a business should be thought about – it was Knight’s calling. He wanted to be a source of good, help third world countries modernize and make athletes even greater. One of the better business books and biographies I’ve read in some time

Peak: How Great Companies Get Their Mojo From Maslow by Chip Conley

Summary

Chip Conley, founder of a boutique hotel chain called Joie de Vivre, describes his business principles and how they can help you reach your full potential and self-actualize

Key Takeaways

Peak companies create the most loyal relationship with consumers, employees, shareholders and other key stakeholders
By properly applying Maslow’s hierarchy of needs, you and your company can reach its full potential
Most companies are organized based on a certain premise of human nature but most companies aren’t even aware of this
Companies have a habitual tendency to focus on the tangible and focus on financial results over relationships but more companies are starting to focus on the more intangible
Karmic Capitalism – Good businesses create good karma because they properly deal with key stakeholders, act in good faith and think about second and third order consequences
Must see all relationships as a type of account where you deposit and withdraw favors, goodwill, trust, emotions and more
Both profits and highest personal development are best reached when not aiming directly for them. Rather, they come as a result of a collection of other activities which you can guide and inspire but not control
Relationships truly do create the greatest wealth in life. Today, the only sustainable competitive advantage in the new age economy is loyalty from customers, employees, investors and all other stakeholders
Employee pyramid – Companies often don’t understand what motivates their employees. Money is the base motivation but recognition and finding meaning in one’s work are the higher and more sustainable motivators
Customer pyramid – customer satisfaction is at the base of the pyramid but by tapping into customer’s desires and unknown desires companies can engender great loyalty and trust
Investor pyramid – A strong rate of return is the base of the pyramid but above that are aligned relationships and at the top collaborative ones. The relationship is the core of interactions rather than solely making money
Conley survived a very difficult period after the bursting of the tech bubble and 9/11. To make it through this difficult time, he took a different approach and cut his salary to zero, got top management to agree to a two-year 10% decrease in salary and all salaried employees agreed to a two-year pay freeze. Unusual in business but makes a lot of sense if you think about it – in the hotel industry, bellmen and other salaried employees often have the most direct contact to customers but are almost always are the least motivated and secure in their jobs. They often aren’t as friendly to guests as they can be since they are worried about paying bills or being fired
One of the largest differentiators between a good company and a great company is the motivation of the employees
One of the important and impactful perks Conley gives his employees is a one month paid sabbatical for every three years of service. The employees love this because they get to travel and learn and come back refreshed, renewed, with extra motivation and are more loyal to the company than ever. They also offer a $200 per month subsidy for fitness classes such as yoga or a gym memberships or for any other hobbies that the employees want to do
Customizable employee benefits and perks are increasingly important and can go along way in making employees feel valued and recognized
Employee turnover and satisfaction is correlated more highly than nearly anything else to their relationship with their direct supervisor
Great institutions set up rewards programs and incentives to help them achieve their goals and objectives. You get what you reward for
Employee recognition should be given in person and feedback should be direct and immediate. Praise should be given in front of others, in person and should be immediately available so that there is instant gratification
Creating non-monetary, fun incentives to reach a goal, such as the CEO shaving his head in front of everyone, is a great way to reward and motivate people. This is especially true during difficult times
Moving from a one-size-fits-all culture to a one-size-fits-one
Can best understand a customer’s desires from memory, editorial inferences based on memory and customer’s behavior and patterns and comparison with other customers (like Netflix and Amazon)
Help customers meet their highest goals, give customers the ability to truly express themselves, make customers feel like they’re part of a bigger cause, offer customers something of real value they hadn’t even imagined

What I got out of it

I really like Conley’s focus on some more intangible factors like goodwill, trust, employee motivation and meaning rather than solely profits

Visual image of Chip’s 3 pyramids and heart

Personal History by Katherine Graham

Summary

Katherine Graham, long time CEO of The Washington Post, recounts her story, her struggles and her rise to running this acclaimed newspaper

Key Takeaways

Never forget or underestimate the role of chance in your life
Parents had impossibly high standards but she receives good emotional support from parents where siblings didn’t
Father bought the Washington Post in an auction
Single most strengthening thing in her life was her fathers unconditional love and belief
It is much more fun to fight to get to the top to fight to keep at the top
Married Phil Graham in 1940 and he was adamant that if they married he wouldn’t accept any of her family’s money. He was able to cut through formality and connect with anyone, regardless of age, race, career, etc. Phil would soon join the Post anyway as Graham’s fathers deputy and soon take over the business. He worked so hard and put so much pressure on himself that he soon had a nervous breakdown. He worked closely with LBJ to pass the Civil Rights Act
Relationships work best when there is most equality
Katherine soon found out that Phil was having an affair
Phil committed suicide after a bout of depression in the family’s home. Katherine found him and that was one of the most traumatic experiences of her life. Sometimes you don’t decide, you simply move forward
Her friend gave her the confidence to believe that she could truly run the company after her husband died
She knew a lot about publishing but began learning the rest by nibbling at the edges, making many mistakes and learning from them. She had to overcome her insecurities and many ingrained assumptions about women which were prevalent at the time
The Post decided to go public in the early 1970s and Buffett bought about 10% of the company shortly after
The Pentagon Papers scandal quickly brought the post attention and credibility as it refused to stop publishing papers which were damaging to the government
The Post’s Woodward and Bernstein soon staged one of the most impressive investigative journalist efforts of all time in unlocking the Watergate Scandal. Graham’s courage and confidence during these times again propelled the Post to great national fanfare. A union strike soon destroyed some of the presses but Graham was able to quickly start printing again using other non union facilities. This was some of the most stressful times of her life and Buffett offered camaraderie at this time. He said he was looking for the tipping point of when she would lose the company for being down for too long
Katherine turned over the role of Publisher to her son Don so she could focus on CEO duties. She stepped down as CEO in 1991 and was considered one of the best CEOs in the country and the Post one of the most respected companies

What I got out of it

Amazing how Katherine was able to rise above her doubts, insecurities, stigmas around women, etc. in order to become one of the best CEOs in recent history!

The Beautiful Game – Tribute to the San Antonio Spurs

Absolutely beautiful montage to Gregg Popovich and the San Antonio Spurs – teamwork, humility, sense of humor, ability to enjoy other’s success, work ethic, growth outside of basketball, complete trust, greatest success is found in building strong, lasting, trusting relationships

The Rabbit Hole

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Tag Archives: Leadership

The Effective Executive: The Definitive Guide to Getting the Right Things Done by Peter Drucker

My Life and Work by Henry Ford

Sam Walton: Made in America by Sam Walton and John Huey

Legacy by James Kerr

Flight of the Buffalo: Soaring to Excellence, Learning to Let Employees Lead by Ralph Stayer and James Belasco

The Carolina Way: Leadership Lessons From a Life in Coaching by Dean Smith

Shoe Dog: A Memoir of the Creator of Nike by Phil Knight

Peak: How Great Companies Get Their Mojo From Maslow by Chip Conley

Personal History by Katherine Graham

The Beautiful Game – Tribute to the San Antonio Spurs

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