Episode Transcript
Speaker 1 00:00:07 This week I want to talk about leadership because we're in a very precarious time in the business world and in the economy, and we are starting a massive new research program on what we call irresistible leadership. And I want to give you some thoughts on that topic, why it's important, why it's changing, and then a little bit about what we're doing. So most of you know the leadership development and the leadership assessment market is gigantic. There are, according to Amazon, 65,000 books on leadership in the Amazon Library. Probably many, many more than that. There are probably three to 400 vendors that do leadership development, leadership assessment. And I've gotta believe 25 or 30,000 articles have been written on leadership over the years. And what's happened, of course, is it's a very big, complicated topic. And everybody who's been a leader or worked in a company as a leader has an opinion about what great leadership is.
Speaker 1 00:01:03 And so it's a spiky space with lots of good ideas, constantly being reinvigorated by new companies. But there's a theme to what's going on. And so let me tell you about the theme and why I think it's important now. And I'll tell you a little bit about what we've learned. And then I want to talk about the research you're doing. So if I go back to 2008, the last time we had a big recession, for the last 15 years, virtually every company has been focused on two things, growth and digital innovation and creation. So there's been no shortage of digital ideas. We call it the four levels, from digital adoption to digital transformation, to digital disruption, to industry transformation. And you've seen that in a gwi research and every company's been doing that and that that has created a need for skills and roles in engineering and product management and agile and all sorts of really important changes in the way we operate businesses.
Speaker 1 00:01:58 But it's mostly been about growth because if you look at the GMP and you look at the stock market, and you look at most of the factors of growth up until the pandemic, it was pretty much growth year after year, zero interest rates, unlimited access to capital, hire people as fast as you can, easy to raise money, pretty good opportunity to go public if you're a good sized company. And then bang, we had the pandemic. And during the growth cycle, the human capital issues, the leadership issues, the engagement issues were a sideline. And as I was just talking to somebody about today, this is, you know, human-centered leadership is not a new idea. It's been around as long as I've been alive, but it wasn't the center of business during growth, it was a contributor. So companies would hire a bunch of people and they would train them and they would engage them because they didn't wanna lose them.
Speaker 1 00:02:48 But you know, if they left, they would just hire more. And then the pandemic changed all that. And what happened during the pandemic, which you've all been experiencing in your personal lives and your business lives, is we, we woke up one day and we realized, wow, if we don't take care of the people in the company, we don't have a company and we need to transform where we sell, how we sell, what vehicles we use to deliver things where people work, how people work, and what managers do, and how managers support people. And so we've had a three year lesson in human-centered leadership, empathy, caring, flexibility, forgiveness, all of those things that were never in the leadership models prior to this entered the domain right before the pandemic. As I may have mentioned before, we had a CH O meeting out here in California. We had about 50 or 60 CHROs, and we were talking about a whole bunch of things.
Speaker 1 00:03:41 And I had somebody from the Greater Good Science Center at uc, Berkeley talk about happiness and what are the drivers of happiness. And they have this wonderful model and it talks about awe and listening and care and forgiveness and all sorts of interesting psychological ideas. And I asked the CHROs, how many of you use any of these words in your corporate mission statement or your leadership models? And nobody raised their hand. Nobody was really thinking about these psychological issues. Well, now everybody's thinking about them because we have 81% of employees burned out mental health as one of the biggest challenges in employee retention and engagement. Productivity is now entering the the conversation. So we went through this three year wake up call in human centered leadership. By the way, not everybody got it. Lots of companies tell me they still haven't really grappled with human centered leadership and they're trying to get everybody to go back to the old way of working.
Speaker 1 00:04:33 I think Elon Musk is a good example of that. But something else is about to happen. Coming into 2023, it's very clear that we're going to have a slowing economy. You may or may not be able to call it a recession, but things are not gonna grow at this rate. The inflation has forced every federal reserve in every country to raise interest rates. That is going to reduce the amount of capital that is gonna reduce the amount of demand. Capital goods are gonna be more expensive, and companies are going to have to figure out how to do more with less and to get more out of their people. So suddenly this new theme of leadership coming out of all this empathy and flexibility we had during the pandemic is productivity. And sounds like an easy concept, but it's not. As I talk about a lot in my book, productivity is a design problem.
Speaker 1 00:05:24 You can't just say to people, I want you to work a few extra hours and expect to get more out of them. In fact, if you read the research from the four day work week, you might wanna tell 'em to work a few less hours to get more work out of them or redesign the jobs they're in, or invest in more automation or change the nature and the hierarchical nature of the team or re-skill them. Those things that we thought were kind of optional, nice to have things during the growth cycle of the economy are now going to be really important knobs to turn, turn during this new phase of productivity. Now, the funny thing about productivity as a leader is the simplest way to improve productivity is to lay a bunch of people off. Within one day your productivity goes up, it's pretty easy.
Speaker 1 00:06:09 Of course, you also stop growing. You probably lose a lot of your innovation, your customer service might decline and your retention might get worse. So it actually isn't a good idea, but it sounds like a good idea. So we've gotta build a leadership model and a leadership conversation that reflects the growth cycle of the economy before the pandemic, the human-centered leadership lessons we learned during the pandemic and the new world of productivity and growing in a profitable way in a world that isn't gonna grow as fast as we thought. And by the way, let's add one more dimension to that. As I talked about a lot when I was in Europe, the workforce is also not growing either. The number of workers is peaking or flat to declining in many parts of the world, the labor participation rate is low and dropping. A lot of people have decided they don't wanna work so hard or they don't wanna work at all for various reasons.
Speaker 1 00:07:08 And people are having fewer children even though they are living longer. So the number of people you have to hire or replace the people that you're possibly trying to switch out is declining, making it harder. So this all gets back in many ways to my book and a lot of the research we've done the last four or five years that we need to find ways to design the company, design the team, design the operations to be more productive, not just squeeze people or tighten the screws, try to get more out of them. Now, what does that mean to leadership? There's a couple things I've learned about leadership, having run a couple of companies and been in some big, big companies and all sorts of other companies, I like to say there's really two measures of a great leader. Number one, they get great results. So whatever style or methodology or philosophy they use, if the organization performs better and grows and thrives, then whatever you're doing is working and you're a good leader.
Speaker 1 00:08:08 That's obviously a very, very complicated equation. If you read the book CEO Excellence by the McKinsey folks, I've been reading it, you can listen to the conversations of a lot of CEOs and you realize a lot of that success comes from human capital decisions on who to put into what role, how to have meetings, how to hold people accountable, how to create new roles and so forth. The second though, more softer side of leadership is great leaders have followers. And I will never forget, I I first heard that from Colin Powell and it always occurred to me, somebody else said it to me a long time ago, many of us became leaders by accident. We didn't wanna be leaders, we were thrust into leadership through a battlefield promotion. Or maybe we just jumped into an opportunity and it turned out to be bigger than than we thought.
Speaker 1 00:08:55 And the next thing you know, we have a bunch of people following us. And those are situations where the leader is looking around and saying, what am I doing? And what can I do to create even better followership than I had before? And these are things like inspiration, mission, purpose, value care, investment in people, the soft stuff and the hard stuff. And the soft stuff has to go together because leaders have to do both. Now the second dimension of leadership that we're gonna be studying in this research is this idea that leadership philosophies, or what I call management philosophies tend to go in faddish waves. In the 1980s and 1990s, when I started my work as an analyst, every company wanted to copy ge. Everybody wanted to go to Crotonville, everybody wanted to hire people that had worked in the GE system. Well, we now know that the GE system wasn't as good as everybody thought it was.
Speaker 1 00:09:51 And there's all sorts of books now written on why it failed and what happened during the various reigns of ge. Then we entered a world of collaborative leadership, conscious leader, situational leadership. Leaders should be empathetic. Leaders should be caring, they should manage by walking around the old Hewlett Packard idea. And that was very big in the last decade because we had a lot of young people earning the workforce. We had a lot of growth, we had a lot of innovation, a lot of technology and leaders needed to be spiritual leaders. And in a sense, human leaders, not just business leaders. I think this new world is gonna be something different because we've really got a combination of all of this. There's no question that leaders have to be technology savvy. There's no questions that leaders have to know the business. There's no questions that leaders have to be savvy about organizations and organizational design, but they also have to think about sustainability, climate health, the society, the politics.
Speaker 1 00:10:48 You can't ignore that stuff anymore. I don't run a big company, I run a small company. But if you run a big company and you run a ground with Congress or have to testify on some social issue that's going on in the country, you do business. You can't just say, I'm not interested, I'm staying out of this. You don't have any choice. Look at Disney, look at Facebook, look at everybody. So this is a, this is a new era of consciousness or what I call citizenship that's entered the leadership domain. Now, the third area I wanna talk about in our irresistible leadership research is this idea of a general manager or not. And when I entered the HR domain in the mid two thousands, early two thousands, everybody was reading Roshan's book on the leadership pipeline. And the idea of that book, and many of the succession management practices of the time was, we're gonna build general managers, we're gonna move people around, we're gonna do a lot of job rotation.
Speaker 1 00:11:42 General Mills used to do this, GE used to do this, lots of companies did this. And through this regular rotation process, we're gonna build these superstar general leaders that can run our company someday or do amazing things. And that there's a lot of value in that. And it makes a lot of sense. In fact, Neith Electric does this, Microsoft does this. Microsoft's latest philosophy is, if you wanna get promoted, don't look for a promotion, look for a lateral assignment because we want you to know how Microsoft works. We want you to know what the customer operations are like. We want you to know what sales is like. We want you to understand marketing, we want you to understand channels, we want you to understand engineering. The more you understand those things, the more value you're gonna be to us. But the idea of a general manager is really a flawed idea.
Speaker 1 00:12:28 And let me give you two stories that'll explain. The first story is a long conversation I had many years ago at Cisco. Cisco Systems. Cisco is a very sophisticated company that, a very sophisticated and does leadership strategy and they used to rotate people around. And there's lots of business units and business areas in that company. And the woman at the time who was heading leadership development said to me, we had done a lot of studies of leadership at Cisco and we found that moving people around between all these different businesses was not working. Because ultimately what we discovered when we looked at the data is that there were four archetypes of leaders, startup leaders who could build things from scratch, who could incubate and innovate and build a business that didn't exist before and get it off the ground. Growth leaders that could take a business that was running and really accelerate it and turn it into a multi hundred million dollar billion dollar business through sales and marketing and growth, profitability leaders that could take a very big business that wasn't profitable and really fix it or improve it to make it a high profitability, highly efficient, highly productive business.
Speaker 1 00:13:34 And the fourth were turnaround leaders who she said were really good at going into situations where things weren't working in either fixing them, selling them, splitting them up, or deciding what to do with them. And she said, what we found is that when we moved people between these four archetype roles, they didn't always do very well in some of the other scenarios. So rather than do that, what we decided is let's take the startup leaders and put them into startup situations. And when the comp, when those businesses get big enough, let's turn them over to growth leaders and let the startup guys work on the next set of startups. And you can see where this is going. It's, it's a way of creating organizational growth by focusing on leader's strengths. And I think that's a really important concept here. Everybody has different strengths. My strengths are different from Bell Pesters strengths, our coo, very different.
Speaker 1 00:14:26 In fact, we don't do the same things. We don't approach problems the same way and complimentary to each other. We manage to make pretty do on good decisions. That's the way companies work. This old idea that you're gonna have one general manager's gonna know everything about everything, it's just not true. Great leaders know that and they understand that taking advantage of people's strengths is part of the equation. The second story is a story about ge. And I do admire ge. Ge. I mean, I read most of the books on GE many, many times. There were lots and lots of great lessons there about how to run a big complicated company for all the financial things happened. So one of the heads of leadership development at the time told me we had this problem that GE was becoming, as she put it too general, not enough electric, in other words, as a play on the name, we were moving people around so much that their problems and their mistakes were never catching up to them.
Speaker 1 00:15:22 So somebody would have a job as a general manager or a business unit leader in some part of ge. They would do a bunch of things, they'd change a bunch of things around, maybe mess it up, and then they'd rotate to a new job because they're a hapo and somebody else would've to clean up the mess. And she said, we saw this all over the company and we realized this is a problem. We gotta stop people in their tracks and force 'em to stay in one place for a while because businesses are complicated. You pick any business you're in, whether you're in consumer energy, tech, finance, retail, whatever, it's complicated. It's way more, even my company is way more complicated than most people understand. And you're not gonna figure it out in two years and make all sorts of good decisions about it. That's essentially what happened to our business at Deloitte is so many people rotated in and out of it that there was nobody left who really understood it.
Speaker 1 00:16:11 So in your leadership model, you have to also accommodate the fact that there's going to be specialists that are going to be very good at different things. I, I distinctly remember one of the meetings I was in when I was at Deloitte was at the Cleveland Clinic and we were talking about succession management and they were, you know, playing around with nine box grids and figuring out how to use them. And after getting to know the company a little bit better, I said, well, you know, at a bare minimum, I think you have four completely different leadership models. You have a leadership model or a nine box grid for clinical roles. You have a leadership model and a nine box grid for science and research roles cuz it's a research institution. You have a leadership model for operational roles like IT operations, financial operations, customer operations and so forth.
Speaker 1 00:16:56 And you have a leadership model and nine box grid for senior executives who have p and l. Now, I'm not saying you need four different frameworks, but if you throw that all on one grid, you're gonna have an awfully hard time figuring out who goes into what slot. So we have to reflect that in these models that as much as you'd like to have one model, which most companies do, and that's a very important cultural thing to do in the actual implementation of what we call irresistible leadership, you're going to have people of different strengths being taken advantage of because of those strengths in different ways and driving the business in the way that they think is appropriate. The final thing I'll say about leadership before I talk about the study is this idea of job crafting or roles. Now one of the things I talk a lot about in the CEO excellence book is defining the critical roles.
Speaker 1 00:17:47 And you do have to to define or at least figure out which are the roles in your company that have outsized value and outsized impact. Cuz some jobs are more followership roles and some jobs are more leadership roles. Once you figure that out, what are the really, really critical roles? You try to figure out the characteristics of the people that are gonna be the best in those roles. And low and behold, no matter how hard you try to do that, when you put those people in those roles, they do different things because human beings are all different. Every one of us comes to every problem with a slightly different perspective based on our experience, our skills, our background, our upbringing, and we bring a unique constellation of ideas and approaches to solving the problem. So the purpose of a leadership program, the purpose of a leadership model is not to force everybody to be the same, which by the way is the way it used to be at IBM when I worked there, which is the reason I never really got promoted.
Speaker 1 00:18:47 It's really to allow people to be themselves in the framework of the culture and the context of our company. And one of the things I've learned over the years is that you'll go to two different companies in exactly the same industry and they have completely different strategies. Generally speaking, I've found that in most industries there are three big strategy categories. There's innovative companies that win by having better r and d, better products, better features, new ideas that other companies don't have. There's companies that are cheaper and more scalable, they are low cost producers. They might sell the same thing as their competitor, but it's cheaper and easier to buy. And so they win the market because of their value and their price performance. And the third are what I call customer intimate companies that decide they're gonna build a broader, more complete solution and they look at the whole ecosystem and they don't sell products and services independently.
Speaker 1 00:19:46 They sell integrated solutions across a broad range of offerings. In most industries, you pick the same industry and you'll find companies in all three of those categories and they aren't gonna all wanna have the same leadership model. So my point here is that the leadership model that you eventually decide to use should reflect the strategy of your company and what's unique about it against your competition. When I find five companies using the same leadership model, all of which are competing with each other, I'm thinking, you're not getting much value out of this. You're not really using the model to drive your company's competitive advantage, you're just using it to build maybe better managers. And I don't think that's really what leadership is all about. Okay, so what are we doing? So we're launching a project in partnership, by the way, with BetterUp who's helping us with it to identify what we call irresistible leadership.
Speaker 1 00:20:40 The word irresistible is one of our brand attributes. It's something we believe in. We believe that there is no limit to the performance of an organization or an individual. That's why we like the word irresistible. And what we're doing is we're looking at leadership models, we're looking at existing leadership development strategies, assessment strategies and CEO level perspectives on leadership across hundreds and hundreds of companies. You can join us in two ways. You can take the survey that I'll link to in the podcast and you can find it on our website. And if you join the survey and you participate in the survey, we'll make sure you get a copy of the results when we're final and you can offer to be interviewed. We are interviewing dozens and dozens of companies right now, generally trying to interviews C level executives, c h o, people in charge of leadership development or assigned senior leaders that you decide we might wanna interview for this research.
Speaker 1 00:21:37 And what we're gonna do over the next couple of months is we're gonna pull this together with the help of better up into some really interesting findings. My hypothesis, which tends to usually be right, not always, is that we're going to find some very interesting new dimensions of leadership that are gonna help you. We're not gonna try to give you a leadership model and write it into a book and say, do this because we don't think that's really even the right idea. But we're gonna give you some really good guidelines, some really good direction, and then some tools to help you build next generation leadership strategy in a next generation leadership development strategy. We will probably launch this at our conference next June, maybe earlier if we get it done in time. And I think it's a fascinating project and I look forward to talking to you about it. So anyway, that's kind of my podcast for this week. I hope this gives you some things to think about. And uh, please reach out to us if you'd like to talk over the holidays, working on predictions, working on a lot of cool stuff for next year, which I'll be telling you about in January. And have a wonderful holiday over the next couple of weeks. Thank
Speaker 0 00:22:40 You.
