Shareholder Value No Longer The Holy Grail For Business Leaders

Companies will increasingly drop their focus on maximising shareholder value in favour of longer-term goals because of the damage the financial crisis has caused to corporate reputations, according to the head of Britain's largest business lobby group.

Speaking at the RSA in London, Richard Lambert, director-general of the CBI, forecast that "Jack Welch capitalism" was "drawing to a close".

Mr Lambert said there was an increasing recognition among companies that the consequences of the financial crisis could be poorer relations between companies and the public and increased regulation. Therefore, he added, business leaders are gaining a greater appreciation of the fact that protecting their reputation can avoid these results, which threaten to impact the long-term performance of companies. This means an increasing focus on longer-term goals that aid suppliers, customers, employees and communities, as well as shareholders. 

Mr Welch, a former chief executive and chairman of General Electric, was a champion of improving returns to shareholders in the 1980s, as US businesses faced up to the threat of competition from Japan. However, according to Mr Lambert, even he now believes shareholder value is "the dumbest idea in the world".

The CBI leader said: "If you concentrate on maximising value to shareholders over the short term, you put at risk the relationships that will determine your longer-term success. One of the strongest messages coming through from our member companies is their concern about business reputation, and the declining trust in business.

"They recognise that public confidence in business has been shaken by the events of the last two years. They worry that business is in danger of being seen as the problem rather than the solution.

"A positive outcome from all this, they suggest, will require a change of mindset, behaviour and communications."

For more, see - http://www.telegraph.co.uk/finance/businesslatestnews/7539653/Shareholder-value-no-longer-the-Holy-Grail-suggests-CBI-director-general.html

Shareholder Value No Longer The Holy Grail For Business Leaders

From the Basketball Court to the Boardroom - Leadership Lessons

As CEO of Telstra, Australia's largest telecommunications company, David Thodey is responsible for simultaneously managing the company's waning land-line business and its booming wireless operations.  Here is what he says about sport and business:

‘You're a keen fan of basketball. What lessons do you take from the court to the boardroom?

You need good teamwork, good attack, good defense. You need to have good ball skills and really know what you are doing.

You need to be able to rely on your team mates and you need to have a strong bench. Also, know your competitors. There's lots of analogies there.’

For the full interview, see:
http://online.wsj.com/article/SB10001424052748704353404575114791966557902.html?KEYWORDS=telstra

From the Basketball Court to the Boardroom - Leadership Lessons

Why Flattery is Effective

Forget rational argument: to achieve lasting business victories, you'd do better to spend your time complimenting people on their dress sense, writes Andrew O'Connell. Rational persuasion lasts only until a better counter-argument comes along, O'Connell notes, but subconscious "gut feelings" -- like the irrational sense of well-being that follows even an obviously insincere complement -- are harder to shake off. For more, see - http://blogs.hbr.org/research/2010/03/why-flattery-is-effective.html

Why Flattery is Effective

Empowerment, Vision and Positive Leadership

Empowerment, Vision and Positive Leadership: An Interview With Alan Mulally, Former CEO, Boeing Commercial--Current CEO, Ford Motor Company:

http://jmi.sagepub.com/cgi/rapidpdf/1056492609355749v1?eaf

Empowerment, Vision and Positive Leadership

Winners Learn From Failure

Resilience (learning from failure) is one of the values of Positive Leadership. Here is what Michael Jordan has to say about 'failure':

Winners Learn From Failure

A Positive Communications Environment Predicts Team Success

An atmosphere of negativity can adversely impact business outcomes. Research published in 2004 has examined the communication patterns of business unit management teams engaged in strategic planning (Losada and Heaphy, 2004).

Results showed the single most important factor in predicting business unit profitability and customer satisfaction – a factor four times more powerful in predicting team success than any other factor – was the ratio of positive comments to negative comments among team members.

Positive comments are those that show support, helpfulness, or appreciation. Negative comments express disapproval, blame or criticism. The researchers concluded, 'we need to have teams within organisations that are able to tap into the liberating and creative power of positivity'.

In a 2004 discussion of innovative ideas for management, Harvard Business Review editor Bronwyn Fryer noted the difficulties associated with the traditional problem-solving management approaches and the growing interest in creating positive, strengths-based organisational environments.

He argued that ‘‘companies where the focus is on amplifying positive attributes such as loyalty, resilience, trustworthiness, humility and compassion – rather than combating the negatives – perform  better, financially and otherwise.’’ Fryer concluded that ‘‘a positive workplace atmosphere is worth developing . . . and it may be the foundation of true organisational success’’ (Fryer, 2004).

What is your communications environment like?

A Positive Communications Environment Predicts Team Success

Talent Management and March Madness

Millions of Americans are in the final stages of watching the NCAA College Basketball Tournament at present – the so called ‘March Madness’. This year, the Final Four includes a number of surprise teams from the original cast of 65. 

There are some broader lessons about talent management in the results so far. For the most part, the teams that have made it to the Final Four or who exceeded expectations earlier in the tournament have top scorers who are more experienced players. 

Take a look at the Final Four. The top three scorers for both Duke and Michigan State are two juniors and a senior. For West Virginia University, it’s a senior and two sophomores. For Butler, it’s a junior and two sophomores. When you look at the stats for the two big ‘Cinderella’s of the tournament, Cornell and Northern Iowa, there are five seniors and one junior making up the top trios of those teams. In contrast, number one overall seed, Kentucky’s top three was made up of two freshmen and a junior. 

The point here is that great teams need time and experience to gel. So, with that in mind, here’s a quick list of talent management lessons that can help keep your team from being “one and done.”

Recruit for the long run: Do your best to keep your recruiting pipeline active and full of players who bring talent and the capacity for longer term growth.

Build teams, not just stars: It’s great to have some superstars on your team, but they’re going to be even more effective when integrated into a system focused on smooth handoffs and high production.

Keep teaching: Raw talent is just that. Raw. The best teams are those that get consistent coaching and teaching over a longer run period so that skills are refined and taken to the next level.

Coach for resilience: The best teams exhibit grace under pressure and have the resilience to bounce back from deficits. Good coaches nurture that quality by running drills on high pressure situations (think of the need for a game winning inbound pass with 1.8 seconds left) and by reminding experienced teams that they’ve been there before.

Talent Management and March Madness

Social Media and Leadership

Open Leadership: How Social Technology Can Transform the Way You Lead (J-B Warren Bennis Series) by Charlene Li argues that a new organisational structure is required to accommodate and benefit from the culture of sharing that social media has fuelled over the last four years. The information flow we all experience daily can no longer be organised into neat org-chart silos. Instead, it demands a new kind of leadership — one based on letting go of the command-and-control model and embracing openness and relationship building.

Information sharing and dialogue, both internal and external, are key to the openness Li prescribes. But how can leaders be open in a world where they need to be in control? “If you think you are in control, you’re fooling yourself. As soon as you start listening, you realise you’re not in control.” Li proclaimed. “And letting go will yield more and better results.”

Here’s a distilled version of the five steps she laid out for achieving open leadership:

1. Have an open — but not undisciplined — strategy. Align openness with your organisation’s strategic goals. Examine your 2010 goals, pick one in which both openness and social media can have an impact, and start there.  “Every organisation is both open and closed. You must be strategic with what you are open about and not,” Li advises.

2. Understand the upside. Clearly define your goals.  What is the value of an open approach — beyond ROI?  Customer lifetime value, for example, should include the value of new customers that come from referrals, the value that their new insights bring to your product offering and the value of their word-of-mouth support. New customers who come with valuable networks — which you can then tap into — are the most valuable. The more open and engaged you are, the more you’ll be able to get value out of these expanded networks.

3. Find and gather support from others who are realists/optimists. Seek out leaders on your team who are open, rather than the pessimists or worried sceptics who are conditioned to default to a command-and-control mindset. The stakes for embracing openness are high, but the costs of not engaging optimistic allies are also high.

4. Manage risk with ‘sandbox covenants’. Clearly define the outlines and risks of your experiments so your team members feel secure rather than threatened by change. At the same time, be sure to let them know that these experiments in openness are not going to stay small forever.

5. Embrace failure. In same way you have a success file, keep an accessible failure file.  This is an important way to stay authentic and open to the fact that not everything succeeds.  Team members will recognise that all true relationships involve failure and success. 

Social Media and Leadership

Leaders Stand for Something

Eleanor Roosevelt, wife of President Franklin Roosevelt, consistently emerged from public opinion polls as the most esteemed American woman of the mid-20th century, and one of the most highly regarded and inspirational women in the world. Though born into a world of extraordinary privilege, she was admired by people of all races and classes. One columnist called her "the most influential woman of our times."

Two features stand out in her life: First, how comfortable she appeared to be with herself and, second, how clear and outspoken she was about her values and principles. This clarity was especially striking because many of her beliefs were not widely shared by society of the time.

She did more than speak though. When the Daughters of the American Revolution refused in 1939 to let Mariam Anderson, the black contralto, sing in Philadelphia's Constitution Hall because of her race, Roosevelt publicly resigned from that then-august organisation. It was a step that might today seem little more than politically correct, but then it required great courage and created considerable comment.

Values are at the heart of Positive Leadership. As GE CEO, Jeff Immelt says: ‘The future belongs to leaders who want to win without ever losing track of their own values.’

Values are simply what you consider most important in life, as revealed not only by your claims and statements but also, especially, by your decisions and deeds. When we ask people “What are your values?” they sometimes have difficulty answering. But no one has trouble with the questions, “What’s important to you?” or "What are you passionate about?" They’re all the same thing.

Values, or guiding principles and beliefs, can range from the highest ethical and moral aspirations – for freedom and equality and justice, for example – to such basic requirements as safety and comfort. Values can be psychological states, such as closeness and communities, or needs, like the desire to win or excel.

Every time you make a choice – when buying something in a shop or deciding to take a new job or asking someone to be your spouse – you’re reflecting your values, what’s important to you.

So, in fact, all of us have dozens of values, if not more. But when we speak of values here we mean the few that are absolutely core to you, the ones around which you construct your life and make large, life-shaping decisions.

The reason values are critical is that they define you. To know you, to follow you, someone must know what’s important to you. That’s why values reside at the heart of Positive Leadership.

Without knowing a leader's values, those in the leader's group have no way of knowing or predicting what he or she will do. Without a clear set of values, clearly expressed and lived, a leader can only ask others to follow blindly, something most people rightly hesitate to do.

All of us can be inspiring as leaders. Most of us won't have a public persona like Eleanor Roosevelt's. And most of us are unlikely to face a crisis in which we're asked to condone or support racial prejudice. But we will have to face different situations where remaining ourselves, fully authentic, will be difficult, and holding true to who we are and what we believe will make us inspiring to the people who work for us. 

Leaders Stand for Something

What Leader-Coaches Do To Help Their Teams Win

Watching the recent Six Nations rugby championship makes you think about what coaches do to help their teams win. If your coach is any good, he or she does all of the things listed below:

• Makes sure you know the rules of play
• Gets you in shape
• Drills you on plays
• Plays to your strengths
• Defines your role
• Challenges you to improve
• Boosts your confidence
• Builds team camaraderie
• Helps you win during the game
• Thinks long-term about the team’s needs

A leader-coach also does all of these things. Consider for a moment: drilling you on plays and helping you win during the game.

When your actions affect hundreds of people, you need to be drilled in advance so you’re prepared to do the right thing: how to communicate, who needs to be in the loop, what pitfalls to avoid, how to detect early signs of trouble. A leader-coach will take his or her team through simulations and exercises designed to get you prepared. At HSBC Bank, for example, managers are drilled on how to handle cross-border disputes. At Sprint, IT managers are drilled on crisis management. It’s easy to see how this investment can pay off. At Sprint, dozens of network problems are headed off each day because their teams are prepared.

Leader-coaches also help you win while you’re playing the game. They provide real-time feedback as you’re handling an issue, offering support and giving useful insights. Their doors are open, they keep their heads, they offer perspective. 

What Leader-Coaches Do To Help Their Teams Win

Have the Courage to Follow Your Heart and Intuition

“Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” Steve Jobs, Founder Apple  

Have the Courage to Follow Your Heart and Intuition

Leaders Need to Focus on More than the Bottom Line

We hear the economy is on the right track. The dark clouds are lifting. Leadership is praised. But really, wasn’t it leadership – or lack of it – that landed us in this mess?

When banks were handing out mortgages for a smile and a signature, then bundling exotic instruments with unknown global impact, where were senior leaders to put a stop to it?

When accelerators started sticking worse than gum on a shoe, where were Toyota leaders to stomp the brakes?

Recent research on key leadership questions, including: what constitutes effective leadership in the 21st century? how has leadership changed to keep pace? what are today’s leadership best practices? leads to some interesting conclusions:

Our study found that leaders have focused on financials, both before and now during the recession – with a kind of tunnel vision on the bottom-line. Asked about their top challenges, U.S. leaders selected “cost pressures,” followed by “growing the business,” and “driving sales.” Beyond that finding, three of five U.S. leaders in the study (60.8 percent) rated bottom-line business results as more important than any other leadership concern.

This focus on financials begets lopsided leadership prone to errors in judgment and action. Take another area of leadership action: diversity. Before the recession, encouraging diversity was all the rage. But last year, when U.S. leaders were asked to rate practices in six critical “zones of leadership,” more than half (51.8 percent) ranked diversity the least important zone (with similar results in three of the four global regions surveyed).

The many possible reasons for this result include perceptions that diversity is “political correctness” (rather than a critical way to leverage human potential), that “people at bottom are the same” (blinding leaders to the unique gifts of diversity), and that diversity, while important, is low-priority in a down economy.

Exacerbating these misperceptions is a global reluctance to reflect – defined as the leader’s skill and will to step back and ask, “What role could I be playing in the problems I’m facing?”

The poor ratings for diversity also likely reflect the fact that it’s harder to manage diverse people, that some countries surveyed (e.g. China) have very little diversity, and (let’s face it) that ethnocentrism still lives.

Whatever its causes, this result reveals a pernicious blind spot among today’s leaders about the meaning and, yes, the bottom-line value of diversity. For companies with global operations, the research does predict that renewed focus on diversity may happen sooner rather than later: these businesses identified their most pressing challenges in the broad area of diversity, notably in “creating virtual workplace structures” and “succeeding with mergers and acquisitions.”

To survive our economic maelstrom, however, leaders would do well to leverage the unique contributions of diverse people, driving innovation and honing a competitive edge in a shrinking global workspace.

Looking forward, the research revealed that long-term success will take a new leadership mindset. While business is one undeniable focus for most leaders, success in the 21st century requires leaders who can assess their own strengths and liabilities in several “leadership zones,” adjust current strategies, and adopt new strategies. Only then will they be ready for the unknown challenges and opportunities to come.

For more, see - http://www.achieveglobal.com/LeadershipResearchAG/

Leaders Need to Focus on More than the Bottom Line

Meg Whitman Builds a Team

Former eBay CEO Meg Whitman talks about leadership and the role of gender:

Meg Whitman Builds a Team

How James Cameron Leads

If you sat through the endless list of credits for Avatar, you saw that it took about 3,000 people to make the film, which has now grossed more than $2.5 billion worldwide, shattering box office records, earning three Oscars and reinventing cinema for the digital age. The boss of all those people was director James Cameron.

While researching her book, The Futurist: The Life and Films of James Cameron author Rebecca Keegan watched the director's often controversial management style up close. One of Hollywood's most innovative filmmakers, Cameron is also one of its toughest taskmasters, a man who ran notoriously grueling sets for movies like The Terminator, Aliens and Titanic. After Titanic, Cameron spent years away from the movie business indulging a lifelong passion--deep ocean exploration. The experiences he had leading groups on the open sea tempered the director's management style. But working for Cameron is still roughing it by Hollywood standards. From her seat on the Avatar set, these are the rules Keegan believes Cameron manages by:

Break New Ground

"It's Avatar, dude, nothing works the first time," read a whiteboard in the spare Los Angeles warehouse that served as the sci fi film's motion capture soundstage. Breaking new ground is Cameron's raison d'être — nothing interests this man unless it's hard to do. But innovation has also become a way of bonding his teams, both on Avatar and on his deep sea expeditions. "We're out in the wilderness working far beyond the borders of the known," Cameron says, comparing his CG and undersea projects. "We're doing extraordinary things that outsiders would not even understand." For Cameron, a sense of exploration isn't just personally enriching, it's a crucial tool for motivating and uniting his teams.

Firing Is Too Merciful

Everyone who has been part of Cameron's cast and crew has bitter war stories about working for him, and yet they all seem to forget them when they're clutching Oscars and cashing cheques. Many Cameron alumni will share a story from their first film with him, a day they were sure they were going to be fired, almost hoped for it. But Cameron rarely fires people. "Firing is too merciful," he says. Instead he tests their endurance for long hours, hard tasks, and harsh criticism. Survivors tend to surprise themselves by turning in the best work of their careers, and signing on for Cameron's next project.

Lead from the Front

Cameron is almost comically hands-on. He does things elite directors don't do — hold the camera, man the editing console, sketch the creatures, apply the makeup. The truth is, he would do nearly every job on a movie himself if he could. But any film, much less one as ambitious as Avatar, relies on collaboration. Forced to lean on others, Cameron sets the pace. Among his 3000-strong stable of artists and engineers, he's the first to try a new challenge, the last to quit at the end of the day, and the hardest to please.

Good Enough Isn't

Avatar took more than twice as long to make as an average film. Much of that added time was due to the film's Herculean design demands and its reliance on untested technologies, but some of it was thanks to Cameron's perfectionism. Hours were spent on the smallest details, like getting alien sap to drip precisely right. A column in one special effects shot annoyed Cameron. After 15 minutes debating its placement while teleconferencing with weary Weta Digital artists in New Zealand, he declared, "That column is worth $50 million of the domestic gross!" shaking his head at his own obsessiveness. It's hard to argue with Cameron's nitpicky style, however, when audiences thrill to immerse themselves in the richly detailed worlds he creates.

Hire 'People' People

Aware that he can be a hard man to work for, Cameron wisely surrounds himself with amiable deputies. "I have my bad days, and on my best days I'm no Ron Howard," he admits. Cameron's closest associates, his producer, Jon Landau, and the head of his production company, Rae Sanchini, are management savants. They know when an exhausted crew needs a pep talk, when a wounded artist's ego needs soothing, when an anxious studio executive needs reassurance. And — a talent never to be underestimated — they know when to order the pizza, and tell the boss to quit for dinner!

How James Cameron Leads

Commitment is a Key to Success

There is no question about it: Commitment is a key to success whether it's in business, personal and professional growth, or sports.

What made Larry Bird one of the best players in basketball? He was considered slow, and many thought he could not jump. Sometimes it almost looked like he was playing in slow motion. But Larry Bird succeeded as a player because he was totally dedicated to success. He practiced more, played harder, and had more mental toughness than most of his competitors. He got more out of his talents than almost anyone did.

The same was true with Tom Watson, the great golfer. Tom was nothing special at Stanford, considered just another kid on the team. But his coach still talks about him, saying, "I never saw anyone practice more."

You see, the difference in physical skills between athletes doesn't tell you much. It's the quality of their commitment that separates the good players from the great. People who are committed to success are willing to do whatever it takes, as long as it doesn't harm anyone else. Everything they do reflects their commitment. 

Ask yourself the following questions and think about your answers: "How strong is your commitment - to your career, your relationships, your personal growth? How much of your time and energy do you give these things? Do the results you get reflect your level of commitment?"

Now, how do you feel about those answers? 

Commitment is a Key to Success

Leaders Must Communicate With All Means At Their Disposal

Albert Mehrabian, a social scientist who worked at both UCLA and at MIT studied what elements of expression create credibility. In one of his books, Silent Messages: Implicit Communication of Emotions and Attitudes, he reported the results of a study in which business people were evaluated by listeners in three areas: the words they said, the tone of their voice (meaning they way they spoke -- pitch, volume, warmth, etc.), and their body language.

Surprisingly, the most important determinant of credibility was body language – how the speakers looked, whether they appeared confident, grounded and sure of themselves. The second most powerful determinant of credibility was tone of voice. Did the voice, for example, radiate confidence and clarity? The least important determinant of credibility was the actual words the speakers said.

Mehrabian's results bring to mind Emerson's aphorism that "What you do speaks so loudly, I can hardly hear what you say."

 Mehrabian discovered that the words (content) accounted for only an amazing seven percent of the speaker's credibility. The voice – tone, pitch, etc. – accounted for 38 percent, and body language for an astounding 55 percent.

If you're not thinking of using every tool of expression at your command, you're probably falling far short as an effective communicator. In fact, you should be thinking about how you can use all those tools – words, voice, body, including what you might call "stagecraft" or "theatrics" – to communicate a coherent, powerful message.

Leaders Must Communicate With All Means At Their Disposal

Leadership Decisiveness is About Timeliness

Anne Mulcahy is chairman and former CEO of Xerox. She is a director on the boards of Catalyst, Citigroup, Johnson & Johnson, and the Washington Post Company, as well as chair of the board of trustees for Save the Children. Here is what she has to say about the leadership style she had to adopt at Xerox in order to ensure high quality decision making:

‘At Xerox. ..[we]..established a group-assessment process, which helped us avoid what I call lazy people decisions, that is, biases against confrontation that could have marginalised the effectiveness of our team. You need to look for people who can strike the hard balance between courage and learning—people who have audacity in their convictions and know when to be unyielding but who are also good listeners and capable of adapting. That is the single most important leadership trait, outside of pure competence.....

Decisiveness is about timeliness. And timeliness trumps perfection. The most damaging decisions are the missed opportunities, the decisions that didn’t get made in time......

These days, everyone is risk averse. Unfortunately, people define risk as something you avoid rather than something you take. But taking risks is critical to your decision-making effectiveness and growth, and most companies have taken a large step backwards because of the current climate. I was CEO of Xerox for five years before we really got back into the acquisition market, even though we knew we needed to acquire some things rather than develop them internally. But we got very conservative, very risk averse, and also too data driven. By the time we would reach a decision that some technology was going to be a home run, it had either already been bought or was so expensive we couldn’t afford it.

Decisions have shelf lives, so you really need to put tight timeframes on your process. I would so much rather live with the outcome of making a few bad decisions than miss a boatload of good ones. Some of it flies in the face of good process and just requires good gut. So when trying to take bias out of decision making, you need to be really cautious not to take instinct, courage, and gut out as well.’

Leadership Decisiveness is About Timeliness

The Positive Leadership Strategy For Growth Programme

Positive Leadership is committed to helping its clients accelerate the delivery of their key business goals.

A key way in which we help transfer experience, knowledge and connections to our clients is through the Positive Leadership Strategy For Growth Programme.

This programme offers clients a breakthrough opportunity to enhance the impact of leadership on company results. The programme is delivered by the Positive Leadership principals and their associates and involves exposure to and engagement with highly successful business people, entrepreneurs and elite athletes. The innovative coaching and mentoring approach and practical strategy execution support which we offer provides inspiration, knowledge and skills tailored to your specific business.

A critical element of the success of this programme comes from its concentration on aligning leadership strategy with business strategy and its focus on assisting clients in the execution of their strategic goals, particularly in situations of pressure.

For further information on this programme please contact graham.watson@positiveleadership.co.uk

The Positive Leadership Strategy For Growth Programme

How Not to Lead in a Crisis

Toyota's ever-widening problems are a tragic case study in how not to lead in crisis.

Under the media spotlight, Toyota CEO Akio Toyoda, grandson of the founder, went into hiding and sent American CEO Jim Lentz to make apologies. Meanwhile, he let serious product quality issues spiral out of control by understating safety risks and product problems. This left the media, politicians, and consumers to dictate the conversation, while Toyota fumbled the responses.

Disingenuous quasi-apologies and disjointed plans for resolution have been Toyota's substitute for crisis response. As accounts pour in about declining quality, the company parades out relatively unknown mid-level managers to quell the firestorm.

It won't work. "You live by the sword; you die by the sword." Toyota's weapon of choice has always been quality, a competitive advantage that prompted many Americans to stop buying GM and Ford brands. Toyota can only regain its footing by transforming itself from top to bottom to deliver the highest quality automobiles.

When terrorists laced Tylenol capsules with cyanide in the mid-1980s, Johnson & Johnson CEO Jim Burke understood his company credo challenged him to put the needs of customers first. Although J&J was not responsible for these problems, Burke nevertheless recalled every Tylenol product from the market.

This is not a crisis of faulty brakes and accelerators, but a leadership crisis. During Chrysler's 1980s crisis, CEO Lee Iacocca took charge, restoring consumer trust and prosperity. When General Motors emerged from bankruptcy last summer, Chairman Ed Whitacre became the trustworthy, determined face of the company's comeback.

Toyota needs a credible leader with a strong, cohesive plan. Mr. Toyoda seems to be anything but. His uninspired words of optimism from Davos recently only unnerved customers and U.S. regulators. Meanwhile, Ford and GM are working hard to regain the market share they lost at Toyota's expense.

How can Akio Toyoda get Toyota back on track? 

Here are some recommendations from Harvard Professor Bill George, based on his recent book, Seven Lessons for Leading in Crisis (J-B Warren Bennis Series):

'1: Face reality, starting with yourself. Faced with multiple reports of accidents from sticking accelerators, Toyota blamed the problems on stuck floor mats and panicky drivers. Instead, Toyota should acknowledge that its vaunted quality system failed. CEO Toyoda should take personal responsibility by saying that he pushed too hard for growth and neglected quality. By admitting his errors, he gives every Toyota employee permission to acknowledge mistakes and to get on with correcting them, instead of denying reality.

2: Don't be Atlas; get the world off your shoulders. Toyoda cannot expect to solve problems of this magnitude himself. Instead, he needs a crisis team reporting directly to him, working 24/7 to get problems fixed—permanently. He also needs outside counsel, as he appears to be listening only to insiders who are defensive about criticism. He should add the world's top quality experts to his fix-it team and listen carefully to their advice.

3: Dig deep for the root cause. When Toyota's problems first surfaced, the company blamed a symptom—loose floor mats—and exonerated the accelerators. Instead, management should have required its best engineers to get to the root cause of this problem and every other quality problem being reported. This is basic engineering and quality discipline.

4: Get ready for the long haul. These problems won't just fade away. In fact, they are likely to get worse before getting better. Just as the seeds were sown over the past ten years by placing growth ahead of customer concerns and quality, digging deep into problems will likely uncover more quality concerns that will take years to resolve. Toyota must invest heavily in corrective actions while its sales shrink and profits implode, requiring major cash resources until its reputation can be restored.

5: Never waste a good crisis. For all the pain Toyota is experiencing, this crisis provides a unique opportunity to make fundamental changes required to restore Toyota quality. The crisis is melting away the denial and resistance that existed in recent years. Employees are ready for new direction, and they are willing to make radical changes to renew the company. With Toyoda's leadership, Toyota automobiles can be restored to the world's highest quality.

6: You're in the spotlight: follow True North. In a crisis, people insist on hearing from the leader. Akio Toyoda can't send out public relations specialists or his American executives to explain what happened. Having lost sight of his company's True North—its values and principles—Toyoda must come out of hiding, take personal responsibility, and subject himself to intense questioning by regulators and the media. Then he should make a personal commitment to every Toyota customer to repair the damage, including buying back defective cars.

7: Go on offense; focus on winning now. Coming out of this crisis, the market will never look the same. GM and Ford are rapidly regaining market share, while the confidence of Toyota's loyal customers is badly shaken. Toyota cannot wait until all its quality problems are resolved. It must play defense and offense simultaneously. To win, Toyota has to offer advanced features and superior quality, better value for consumers, greater safety, and improved fuel efficiency.'

This is a challenging menu, and this crisis is the true test of Akio Toyoda's leadership. Is Toyota up to these challenges? Recent evidence would seem to suggest that albeit belatedly, Toyota is indeed getting back on track.

How Not to Lead in a Crisis

Presence v Charisma in a Leader

Where the charismatic leader attracts attention to himself or herself, the leader with presence stays focused on the moment, and on what needs to be done. Presence isn't about the person but about being present for the problem that needs to be solved.

The leader with presence is like the actor. His immersion in the urgency of what is brings others in; it compels them into sharing his agenda. There's none of the manipulation involved in charisma, for what matters is the situation and the leader's ability to become infused with it, to own it, to make it a matter of utmost concern. 

Where charisma ends in adulation, presence leads to action. The lesson is that when we become besotted with charismatic people, we should beware. Far better to look in a leader for those Mandela-like qualities of presence, to believe that the person you're beholding is there to get something done because it's more important than he is. 

Presence v Charisma in a Leader

What's the Talk Like Where You Work?

What's the talk like where you work? Do people put each other up or do they run each other down?

You know, the way we talk to ourselves and to each other has a powerful effect on what we are able to accomplish.

In organisations where the talk is negative, where people gossip about each other and take every opportunity to complain and moan about problems, and where people take a perverse kind of pride in shooting down each other's ideas, productivity suffers enormously. But productivity isn't the only thing that suffers. It feels just plain awful to work in an environment like this, doesn't it? And it takes a tremendous toll on your energy and even on your health in the long run.

But in highly successful organisations, it's a different story. If you walk around these companies, you will see innovation, risk-taking, and creativity everywhere you look. You will see people who feel personally accountable for the success of their colleagues as well as their own success.

You will see people who feel like they are on the same team working toward a common goal, and you'll hear it in the way they talk to each other. Players on a winning team help each other, respect each other, and build each other up. And, their talk focuses not on problems, but on solutions. 

What's the talk like where you work? If it's often negative, what could you do to change it? 

What's the Talk Like Where You Work?

We are entitled to better from those who would be superior

'Entitlement means that you get – or get off with – something simply because of who you are.... We are all too sadly familiar with the sense of entitlement felt by many MPs..... They saw themselves as deserving leaders, not dutiful servants..... We, the “different type of people” in the crowded end of life’s train, admire our leaders, great sportsmen and celebrities. But we support them on the implicit understanding that they keep their end of the deal. We will look up so long as they don’t look down. We will offer respect so long as their standards of behaviour are as high as our own. It’s little enough to ask – and we’re entitled.'
Colette Douglas Home, The Herald, 23 February 2010

We are entitled to better from those who would be superior

Top Company Secrets of Leadership Development

Quality of leadership within a company helps meet the expectations of investors, customers, and employees, and sets the stage for growth, so developing the next generation of effective leaders is perhaps the most important undertaking of a forward-thinking company.

Based on recent research, here are six components that differentiate the top company approaches versus the less successful companies.

• Centralised efforts. Top companies centralise their management of talent. Top talent is owned by corporate not by a function, business or geography — the term is "corporate property." This simple logic makes a huge difference in the variety of experiences leaders have in top companies because businesses, geographies and functions can't deprive their best talent from moving across boundaries in order to optimise that organisation.

• Top executive involvement. If you want to develop leaders, you need to involve leaders. Former P&G CEO and now Chairman A.G. Lafley conducts his own senior leadership development programme. Lafley invites each participant to the programme personally. Members of P&G senior executive team teach, coach and mentor these leaders every month. In addition, these same senior executives sponsor the recruiting efforts at targeted universities.

• Focus on a few key processes. Top companies for leaders live by the precept of finding and hiring top talent vs. fixing and developing mediocre talent. If you hire great people, you are a lot more likely to find some great leaders. Once you've got the right talent in the door, you need robust performance management with lots of feedback. Finally, you need to expose these people to a variety of development experiences that build knowledge, perspective and skills.

• Make it a strategic focus. Top companies are never laissez faire about leadership development — they see the infusion and growth of talent as crucial to strategic success and they are unrelenting in their approach to building talent. Their leadership development is centralised and intentional about developing a series of experiences that build good functional leaders and general managers.

• Build leaders and leadership. Leadership capability increases as HR systems such as performance management, compensation and job assignments are linked across organisation boundaries, and are intentional about building the right kind of leaders. Most companies are primarily focused on building individual leaders through assessment of individual leader competencies and training and development to improve those competencies. Top companies for leaders also build robust leadership capability that supports a culture of integration and opportunity to develop from within.

• Create value for inside and outside stakeholders. Top companies develop leaders who have the desired competencies to deliver on their strategy and the competencies to ensure customer delight. Competencies are the means to deliver results and value to stakeholders not the end state of development. Top companies desire to build leaders not to just become better people, but to become better people who know how to provide value to employees, customers, investors and other stakeholders.

For more, see - http://blogs.hbr.org/cs/2010/02/leadership_development_secrets.html

Top Company Secrets of Leadership Development

Leadership and Hiring Creative People

Saatchi CEO Kevin Roberts gives job-seekers tasks: take three photos of things that will change the world or list all the ways to use a paper clip in two minutes!

Leadership and Hiring Creative People

Leadership is a Key to Winning

Scotland’s ‘outstanding victory in Dublin only goes to emphasise that the story of Scotland's season was one of missed opportunities, potential unfulfilled, effort unrewarded and the players left feeling every bit as frustrated as the rest of us.....Aside from a sprinkling of world class players, the Scots also lacked leadership......With the lack of leadership apparent the team shot themselves in the foot all too often in this series with mindless penalties, yellow cards and wrong options....’

Iain Morrison, Scotland on Sunday, 21 March 2010

Leadership is a Key to Winning

Ford CEO Alan Mulally on the 'liberating clarity' of his mission

Ford CEO Alan Mulally talks about asking his company the right questions, communicating well and 'competing with the best in the world' :

Ford CEO Alan Mulally on the 'liberating clarity' of his mission

Physical Fitness is a key to Leadership, and not just for soldiers

Gen. David Petraeus has a clear view of leadership, as Maj. John Patrick Gallagher recounts in the book Leadership Lessons of the White House Fellows: Learn How To Inspire Others, Achieve Greatness and Find Success in Any Organization by Charles Garcia. One day when Petraeus was a colonel in the 82nd Airborne Division, he asked his soldiers to name the number one leadership priority of the brigade.

Integrity? Marksmanship? No, the correct answer turned out to be physical fitness. The brigade thought Petraeus was joking, until the colonel began leading his soldiers through an intensive 75-minute exercise drill every morning. And soon his point became clear: The workouts drove the brigade to greater alertness and energy, as well as more pride in themselves and their unit.

As Gallagher puts it, "Self-discipline and being able to perform under pressure and exist outside our comfort zone would be the key that unlocked our success."

The word "exercise" derives from a Latin root that means "to maintain, to keep, to hold off." That means we should exercise to maintain our health, to keep our sanity and to ward off the temptations that lead us down unhealthy paths. Do you spend enough time walking, jogging, swimming or lifting weights?

 What we consider "exercise" today is really a natural part of life, but in our current world, we have to make a conscious effort to make it part of our daily routine. Just a few generations ago, walking was a major form of transportation! Our evolution from hunters and gatherers, who walked to get from one area to another, to a sedentary automobile/train/plane civilisation has forced us to look at exercise in a different way.

Physical Fitness is a key to Leadership, and not just for soldiers

Most Student-Athletes “go pro in something other than sports”

'Success is peace of mind which is a direct result of self-satisfaction in knowing you did your best to become the best you are capable of becoming.' Coach John Wooden

For more on the making of this advert, see - http://www.ncaa.org/wps/wcm/connect/public/ncaa/about+the+ncaa/who+we+are/tv+spots+landing+page/making+of+a+psa

Most Student-Athletes “go pro in something other than sports”

It's What You Learn After You Know It All That Counts

The sporting highlights of basketball stars including Michael Jordan, Dwyane Wade, Candace Parker and Kevin Durant are showcased in advert for Gatorade, narrated by the UCLA coach John Wooden:

It's What You Learn After You Know It All That Counts

Leaders Have Energy

Some people become leaders no matter what their chosen path because their positive energy is so uplifting. Even in tough times, they always find a way. They seem to live life on their own terms even when having to comply with someone else's requirements. When they walk into a room, they make it come alive. When they send a message, it feels good to receive it. Their energy makes them magnets attracting other people.

Just plain energy is a neglected dimension of leadership. It is a form of power available to anyone in any circumstances. While inspiration is a long-term proposition, energy is necessary on a daily basis, just to keep going.

Three things characterize the people who are energisers.

1. A relentless focus on the bright side. Energisers find the positive and run with it.

2. Redefining negatives as positives. Energisers are can-do people. They do not like to stay in negative territory, even when there are things that are genuinely depressing. "Positive thinking" and "counting blessings" can sound like naïve cliches. But energisers are not fools. They can be shrewd analysts who know their flaws and listen carefully to critics so that they can keep improving. Studies show that optimists are more likely to listen to negative information than pessimists, because they think they can do something about it. To keep moving through storms, energisers cultivate thick skins that shed negativity like a waterproof raincoat sheds drops of water. They are sometimes discouraged, but never victims.

 3. Fast response time. Energisers don't dawdle. Energisers don't tell you all the reasons something can't be done. They just get to it. They might take time to deliberate, but they keep the action moving. They are very responsive to emails or phone calls, even if the fast response is that they can't respond yet. This helps them get more done. Because they are so responsive, others go to them for information or connections. In the process, energisers get more information and a bigger personal network, which are the assets necessary for success.

The nice thing about this form of energy is that it is potentially abundant, renewable, and free. The only requirements for energisers are that they stay active, positive, responsive, and on mission. Are you an energiser?

Leaders Have Energy

Live for Ideas

“Be daring, be different, be impractical, be anything that will assert integrity of purpose and imaginative vision against the play-it-safers, the creatures of the commonplace, the slaves of the ordinary.”  

Cecil Beaton

Live for Ideas

Cathie Black on Leadership

Cathie Black, Hearst Magazine's president on her management style and learning from media's titans:

Cathie Black on Leadership

Compassion is an important Leadership Skill

National Hockey League Hall of Famer Mark Messier, considered one of the greatest leaders in team sports history,  once said, "to lead you have to have the trust of the players (people), and to do that you have to find a way to connect with them, to find common ground with every individual. It's a people issue (not a sports or business issue). The way to find that common thread is through compassion.  With compassion the appeal to the person is much deeper than the old hard line reprimand."

Compassion is an important Leadership Skill

Leadership Skills Undervalued in M&A Transactions

We were pleased to see this new report by the Hay Group The Silver Bullet of Success: Winners and Losers in the M&A Game. The report is about how intangible capital is critical to the success of M&A. Below are the major points of the paper (quotes in italics) with our comments on each one:

Companies underestimate intangible capital : Executives typically value intangible capital - including culture and customer relationships - at just 30 per cent of market capitalisation, not the 75 per cent that analysts expect.

This finding has a very strong correlation with recent data from accountants Ernst & Young which shows that on average, 70% of the average deal is intangible but only 23% is linked to identified intangibles like customer lists and technologies. That leaves 47% as ‘unidentified’ goodwill.

Buyers risk damaging deal value: By underestimating intangible value, they allocate insufficient resources to protecting it during integration. Just 38 per cent of companies conduct cultural due diligence.

If you cannot identify 47% of the value of a company that you are purchasing (and probably have a similar information gap about your own company), it’s no surprise that mistakes will be made.

Other findings include:

• Management of intangible capital influences integration success: Companies that reviewed intangibles during due diligence are more than twice as likely to consider their merger a success compared with those who did not.
• Poor management of intangible capital has major consequences: Executives struggle with cultural integration, leadership changes, understanding the target company’s customers, governance.
• Dealing with intangible capital is considered to be more challenging in cross-border transactions.
• Two thirds of respondents (66 per cent) believe an increased focus on intangible capital would improve merger success.
• Most business leaders (61 per cent) plan to increase their focus on intangibles but need guidance on how to capture data about intangible capital during M&As.

Hay details a list of intangibles that are relevant to M&A. For example, organisational capital is described in terms of shared values, effective governance, agility, channels of information flows and effectiveness of the organisation to deliver on the strategy. These all describe aspects of effective structural capital.

It is also worth considering the basic components of organisational capital which include core processes, databases, captured knowledge, culture and intellectual property.

This approach is an important first step to understanding an organisation’s intangible capital. When we assemble a first-level description of intangible capital, we focus on making an inventory of the “assets” that support revenue generation. These include the employee competencies (human capital), the key external relationships (relational capital) and the processes that support a company getting paid/creating value for its customers.

This approach makes a more direct connection between the financial and the intangible value of a company. It also helps if you want to link intangibles to financials. Because companies invest in building these intangible assets, looking at that investment is an effective and quick way to understand what is going on in that 70% of the operation that is intangible.

Once you have an inventory, then you can decide how to measure intangible asset effectiveness.  The options are financial measures, non-financial indicators and assessments. Most of the items on the Hay list are assessment criteria which would be great ways to measure the strength, outlook and risk of the intangible assets identified.

They have the bottom line right. If 70% of the average deal is intangible, then it’s time for analysis of intangibles to be an integral part of every M&A process.

This is exactly the approach that successful Scottish businessman, Jim McColl takes - http://business.scotsman.com/business/Jim-McColl-warns-firms-are.6150046.jp  

Leadership Skills Undervalued in M&A Transactions