(This is an extract from September’s Taking The Lead, the monthly email newsletter from Leaders in London, published today).
Carly Fiorina led the merger of HP and Compaq before being given the order of the golden boot, but has since had her reputation re-built by results: Thanks to her HP strategy, Hewlett-Packard overtook IBM last year as the world’s largest technology company. Tom Peters, the business guru and a past Leaders in London speaker, now refers to her as his “CEO Hero”. Fiorina likes to quote Lao Tsu:
“A good leader is he whom people revere.
An evil leader is he whom people despise.
A great leader is he of whom the people say
‘We did it ourselves’ “
(Or she, of course). Yes, we’ve used that before here, as it’s my favourite leadership quote.
Fiorina is talking about embedding leadership within the system. At the moment, a lot of companies are dealing with the downturn by pulling leadership – as in decision-making about the future of others – back behind closed doors. Those outside the doors wait to learn their fate; who will be cut, who will stay.
The lesson of every downturn is lost on subsequent managers going through this same process; the approach destroys morale and lowers performance, the very attributes that will get you through the downturn. Smart leaders have open conversations with the workforce and enroll them in helping to find efficiency savings, cut costs, abandon inefficient old ways of working and move to new ones.
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This is an excerpt from September’s Taking The Lead, the monthly email newsletter from Leaders in London. If you like it, you can subscribe using the link on the right. If you already subscribe it should land in your in-box any minute.
Carly Fiorina also reminds us that you will navigate best through the current turbulent economic conditions if your attention is kept outward, on forward indicators, rather than being sucked into the classic mistake of looking inward and focusing almost exclusively on resource reduction (cuts) without paying enough attention to what’s coming. Fiorina says you need to watch four leading indicators:“The leading indicators of any business are
1. Customer satisfaction
2. Rate of innovation
3. Diversity of your management team
4. Ethics”
Now, that’s really interesting because, apart from the first one, most companies would have rolled those bottom three, or at least the bottom two, up into the category of ‘nice to have in good times, but time to ignore them and bare our teeth now’.
Why Diversity? “If everyone thinks in the same way…something important is going to be missed, some problem ignored, some risk under-estimated. The only antidote to the dangers of ‘group think’ is a diverse team sitting around the table,” says Fiorina.
And Ethics? The FT reported recently that regulators are on the lookout for a rise in questionable behaviour as companies take whatever measures they can to protect themselves from the downturn. If you sail close to the edge, argues Fiorina, inevitably someone in your organization will cross the line. And, in a transparent age, you’ll be sunk.
* * *
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Some sectors of the economy have been hit harder by the downturn than others. This is always the way. Leaders in those sectors are possibly, for the first time in their career, looking at how to avoid failure big time. It’s easy to ride the wave of a buoyant economy and look successful. It’s only when the tide goes out, as Warren Buffett likes to say, that you find out who’s swimming naked.Also, to be fair, you can be a very good leader and also fail. Failure isn’t a sign of bad leadership. A long, glittering, successful career, likewise, can just be a sign of adeptness at avoiding trouble rather than brilliance as a leader. But, that’s for another post.
So, if you are looking to make big change in response to changed economic conditions, what framework of change to choose? Past Leaders in London speaker Allan Leighton tells us you have two paths to choose:
Failure, he says, comes to CEOs who rely almost exclusively on Theory E. Here’s how it works:
“CEOs who believe in Theory E (the Economic theory of firms) focus their energies on achieving economic value through restructuring. They believe that change should be driven from the top and that people, culture and organizational arrangements are not a priority.
“CEOs who employ Theory O (Organizational) strategies for change, on the other hand, believe in the development of the organization’s human potential. Rather than change driven from the top, Theory O strategies for change involve employees in identifying barriers and creating better ways to run the business.”
Source: Allan Leighton, explaining Harvard Professor Michael Beer’s theory of the need for balance between the two theories, and how Leighton uses this approach in his companies, from his book Allan Leighton on Leadership. You can watch clips of Allan Leighton and other 2007 speakers, to give you a taste of what to expect from Jack Welch, Carly Fiorina, Daniel Goleman and our other 2008 speakers, on Leaders in London TV.
‘The Dean of Leadership’, according to the FT, Warren Bennis, on emotions, leadership and good judgement. In this two minute clip Bennis references Carly Fiorina, who is coming to talk to us at Leaders in London. Daniel Goleman will also be helping us become better at this critical area of leadership with his one day optional workshop on Emotional Intelligence for Leaders. Click on the small triangle bottom left if clicking on the big ‘play’ triangle in the middle does nothing.
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