Part III. Your Leadership Challenge
We have formulated an extraordinary future and a business challenge. In this section, we are going to look at what it means to become an extraordinary leader who can live up to it. It is become abundantly clear that in the last decade, Boards of Directors gave away the keys to the kingdom to chief executives who were using the wrong leadership model. We hope to offer here in this section some ideas of what the right model for leadership might be. It is one that is based on taking a stand for an inspiring vision and empowering values that will bring out the best in those around you, will do something useful in society, as well as will positively impact the bottom-line.
It is aircraft that played a crucial role in winning World War II-but the defeat of the enemy almost also resulted in the demise of the Boeing Company. Boeing had been a company that created bombers, and when the War ended, its revenues sunk more than ninety percent. Everyone predicted a future that was dire for the company-that is with the exception of its new chief executive, Bill Allen, an unassuming attorney who had refused the job at first saying he wasn't qualified.
Allen placed a stake in the ground at one of his first meeting with employees when he said that Boeing wasn't a company that built bombers; it was a company whose designers built extraordinary flying machines. He stated his strategic intention as early as 1952 to transform the commercial airline industry. The first challenge involved in realizing this goal required taking the risk of investing heavily. He took a lot of heat for this, when many said that Boeing was a "bomber company" and had no business being in the commercial market. People said the new chief executive didn't know what he was doing.
Allen kept up a front as a strong chief executive in public, but admitted in private to being stung by the barbs and continued to be haunted by doubts about his qualification as the company leader. Yet he remained steadfast in his commitment for a new future for Boeing. He declared publicly that it was his belief that Boeing could change the rules of the entire industry, as well as make a contribution to the national interest, which would also be in Boeing shareholder's interest.
In so doing, he went through a kind of leadership transformation emerging as a visionary leader rather than a soft-spoken lawyer. He had reached out to the public, as well as to employees with an inspiring vision and empowering values that sent the organization into high gear. Under his leadership, Boeing not only built the 707, but also 727, 737, and 747-the most successful aircrafts in commercial airline history.
At one Board meeting, a board member said that, if the 747 was too big a project for Boeing to take on, it could back out. Allen took a stand again: "Back out! If Boeing Aircraft Company says it will build this plane, we will build it, even if it takes all of the resources of the entire company." He remained true to this stand and became a giant in the face of it, even though he was surrounded by dwarfs who thought small-in short-term time spans, nickels per share, and with a narrow purpose.
The moral of the story: like Bill Allen of Boeing, a leader needs to back up an enormous business challenge with a significant leadership challenge. Allen's leadership challenge was not only taking a stand for an inspiring vision and empowering values in driving key projects, such as the 747 and other planes, but also admonishing himself: "Don't talk to much. Let others talk in the face of opposition."
An example of this was when he stood before the House Congressional subcommittee in 1956 facing charges that military aircraft companies had inflated their profit margins at the cost of the taxpayer. Allen listened carefully to everything the Congressmen said. Then without notes or an attorney whispering in his ear to plead the Fifth Amendment and without any hint that he was not personally accountable for the issues that were raised, he took the floor. When he was done speaking, there wasn't a question in anyone's mind that Boeing had done anything to gouge the government by beefing up executive salaries. In fact, the company had taking a stand for the future of the country by sinking profits back into research and development. The reaction of the subcommittee would be beyond belief that day: they burst into a spontaneous standing ovation.1
Declare an Extraordinary Future that Will Call for Extraordinary Leadership
Inspiring stuff! We have asked you to declare an extraordinary future based on inspiring vision and empowering values, like illustrated in the story above. You have formulated a strategic intention and significant business challenge that represents a quantum leap for your organization. Now we are going to ask you to look at your significant leadership challenge or how you will need to develop as a leader to reach your goals.
Our stand as Your Masterful Coach in a Book is to see who you are as your commitment to achieving an extraordinary future, rather than seeing who you are as someone who needs remedial attention. Thus we'd like to start this discussion with you by standing in your innate potential to be extraordinary, extending you an 'A,' rather than a 'B' or a 'C.' That is to say, in our eyes, you are probably a fine leader just the way you are with nothing added or taken away. At the same time, in declaring an extraordinary future for your business, you may have created a gap between who you are as a leader today and who you will need to be to bring it to pass.
We'd like to ask you to think about what this gap might be, perhaps using some 360º feedback, as well as asking yourself, "Who do I need to be as a leader to fill this gap?" Answering this question usually involves declaring new ways of being for yourself as a leader that represents what's missing that, if provided, would make a difference. It also involves shedding winning strategies that are the source of your success, but at a certain point become a limitation.
Acknowledging that Extraordinary Leadership is Missing is the First Step in Calling it Forth
In my coaching work with executives I often like to say, "Let me talk to you about extraordinary leadership from the 50,000 foot level, drawing on examples and making distinctions from business, government, and history rather than from the fifty foot level where everything we say about leadership has to fit the corporate context and every day reality." For example, I once talked to John Nelson, chief executive of the EMG Corporation, a Fortune 500 company, and his group. John is a highly principled, battle-hardened chief executive who had begun to make the shift to leader from administrator during a hostile take over bid and was now ready to work with his team to create an extraordinary future.
John faced a personal leadership challenge of transforming his command and control approach to a more inspiring and empowering approach. He was also interested in getting through the transaction process of recent deals involved in getting a big investment bank to buy a certain class of company shares and bringing about some real change. In his own words, "There has got to be a better way to run this company."
He had asked me to talk to him and his group about extraordinary leadership. I began my talk, "Leaders see life as much more than accumulating wealth and power and doing a series of deals. They see an opportunity to make a difference and dare to take a stand, working to bring about real change."
"Frankly," I continued looking into the eyes of people in the room, "Leadership often shows up as missing in corporations like this one. If we can acknowledge that leadership is missing and see that as an opportunity rather than a threat, than we can begin to call forth the leadership that is needed and wanted at EMG." As I began speaking, John Nelson's hand literally began shaking, he knew I would say some things that would shatter the very foundations of how they were as leaders, as well as their basic paradigms about leadership.
I told the group, "I want to take a stand for the next few hours in which you commit yourself to the possibility of an extraordinary future. In the context of this stand, ask yourself what will it take for you to be an extraordinary leader."
I continued, "There is a way of inquiring, of engaging in questions that is actually transformative with respect to the questioner and that is the way of inquiring that we intend to engage in here. Let's starts by engaging in three questions: 1) Are you a leader or a power wielder? 2) Do you presently show up as a ordinary transactional leader playing 'let's make a deal,' or as a transformational leader who inspires and empowers people to bring about real change? 3) What does it take for one person to transform into a leader? How would you have to be different, think different, act different?
Look in the Mirror! Are You a Leader or a Power Wielder?
Many so-called leaders I have come across in government and corporations are not leaders, but power wielders. Think of political leaders: Joseph Stalin, Kim Jong II of South Korea, Slobodan Milosevic, Saddam Hussein. And think of company leaders: "Chainsaw" Al Dunlap of Sunbeam, Kenneth Lay of Enron, and Dennis Kozlowski of Tyco. These leaders' game has been to gain, use, and retain power and, in most cases, done in the pursuit of their own self-interest, with scant regard for their followers.
The scandals of the early 2000's showed chief executives with a twisted sense of ethics, living off the fat of the land with gold plated bathrooms and company paid for Impressionist art collections, who were more concerned with making money for themselves than making a difference for the company, its employees, or customers. The consummate example is the Enron leaders who were dumping millions of their own company shares, while telling employees to hold onto them to keep the price up.
Many of these "so called leaders" remind me of the story of the emperor who had no clothes. Most of them would tell you that they are exceptional leaders, but if you ask them the following question, you would probably get blank stares: "If you are a leader, where are your followers?" In truth, over the twenty-five years I have been doing coaching, I have met few leaders whose "people" would walk through fire for them because they believed in who they were and what they were up to. The typical comment I hear about the company leadership is something like, "They are very ambitious and only out for themselves."
What is leadership? The fact is that leadership arises not in the mere pursuit of power and wealth, but in response to throbbing human needs and human wants. People who stand out as leaders are those who see an opportunity to make a qualitative contribution to the world and dare to take a stand. Think about the following leaders: Washington, Jefferson, Madison, Churchill, FDR, JFK, Martin Luther King, Nelson Mandela, Mother Theresa, General Johnson (of Johnson & Johnson), and Sam Walton (of Wal-Mart). Now think about the leaders in your company. Are they leaders or power wielders with you and others as their targets? A good question to ask yourself is: "If you are a leader, where are your followers?" The proof is in the pudding.
One of the most important qualities leaders can have, whether in politics, business, healthcare, or in any field, is to be able to get down off their high horse and empathize with people who are in dire straights. FDR, a member of patrician class, experienced deep compassion for the plight of the ordinary people during the Great Depression. He told people during his 1936 convention address, "I join with you in meeting this great challenge of the Depression, as if it we are engaged in a great war and I commit to you that we will know only victory."2 These four words: "I join with you" electrified the convention and engaged the people who participated as partners for Roosevelt's entire term.
A good example of a chief executive whose success came from being a leader rather than a power wielder is David Packard of Hewlett-Packard (HP). He said early in his career that he wasn't interested in being a member of the chief executive club. Back in 1949, at 37-years-old, he attended a meeting of business leaders. Breaking into a sweat as he heard these leaders talk about how they could squeeze more profit out of their companies by always demanding more of employees, he soon erupted. He said a company has a greater responsibility than making money for its executives and shareholders. "We have a responsibility toward employees to recognize their dignity as human beings."3
At a time when most chief executives occupied lushly carpeted, walnut paneled offices, Packard sat at a plain metal desk in an open work space with the rest of his engineers. He became famous for creating the HP culture based on "management by walking around" and on giving each individual a meaningful role, making HP a very profitable company. Packard, who became a billionaire, lived in a humble house he and his wife built in 1957, and his idea of a good time was to get together with friends in Silicon Valley and string barbed wire. He also made huge donations to Stanford University, refusing in his lifetime to have any buildings named after him.
The greatest business leaders who create the greatest companies are those like David Packard: those who have empathy for their employees, customers, and communities. They know, for example, what it is like for a businessperson like yourself to work in an environment where you have to jump through a lot of hierarchal and bureaucratic hoops to get anything done. They know what it is like to go on a business trip in a cramped economy seat on a transatlantic flight where there is no room for your knees, or how it is to stay in your hotel room in Prague and not be able to get the news because you don't speak Czech, or to call home because your cell phone doesn't work overseas.
Such leaders see the throbbing human needs and human wants of their employees, customers, and communities as a call to leadership. As a result, they take a stand to provide what is missing that can make a difference. Jack Welch had a personal hatred of hierarchy and bureaucracy for its stultifying effects on people and thereby took his organization through "work outs" designed to get the people talking to their bosses. Ted Turner came up with 24-hour cable news available to anyone almost anywhere around the globe in English. Richard Branson came up with the idea of the "super" economy trans-oceanic airline seat, big enough for your knees and for not much more than $1500, rather than $8000 for business class.
Are You a Transformational or Transactional Leader?
Frank Tomey, a leader at General Electric (GE) with a business the size of a Fortune 500 company told me his business challenge (which actually came down from GE's new CEO, Jeff Immelt) was to dramatically grow his business with a yearly goal of a ten percent increase in growth and a twenty percent ROCE (return on capital employed). He said that reaching this goal would not only required some bold business moves but also a passionate organization where "edge," the ability to make tough yes/no decisions (something that existed today) was balanced with "compassion" or caring about people. He said, in order to do this, his leadership challenge was to transform himself from a "dealmaker" to a "leader."
In 2003, I had the opportunity to attend a Renaissance Weekend with 200 fascinating and intriguing people. Some former guests included three U.S. presidents, while this Renaissance Weekend included U.S. Senators, army generals, a Nobel Prize winner in physics, chief executives of big companies, ambassadors, architects, artists, educators, doctors, students, and others. After holding a session on the topic, "Insights from a Masterful Coach," I walked out of the conference room to a patio area and saw an elderly gentleman with "extreme gravitas" reading the New York Times.4
The name on the nametag rang a bell, so I walked over to a table where he was sitting and said politely, "Are you the James MacGregor Burns that wrote about the difference between 'transactional' and 'transformational' leadership?" Burns smiled and said, "I am", which triggered a stimulating, engaging, and profound conversation about leadership that spanned the far reaches of human history, political science, government, and business. I found Burns' use of historical examples of people like Washington, Jefferson, Lincoln, and FDR refreshing. So many business articles are written as if the only leaders in the world are Jack Welch, Andrew Grove, Bill Gates, and Warren Buffet.
Transactional Leaders Practice the Art of the Deal
According to Burns, 'transactional' leadership is the ordinary, day-in, day-out kind practiced in all organizations. Says Burns, "Transformational leadership involves negotiating, dealing making, and brokering." For example, a U.S. president may say that, if you vote to pass my Star Wars project, I will lobby for a new shipyard to be located in your state. It might involve one CEO approaching another for a merger deal where there is a golden parachute payoff of twenty million for both, or an executive telling a direct report, "I need you to take on the job of cleaning XYZ division up," and the ambitious direct report responding, "If I do that for you, what will you do for me?" The acid test, according to Burns, is what good comes from all these transactions.
An excellent example of a leader with excellent transactional skills is the retired chairman Sandy Weil who merged Citibank and Travelers and created what is the biggest financial services company in the world. Yet, most would argue that the bank is merely bigger not better. Transactional leaders may have a certain genius, but they come and go in most organizations, replaced by other transactional leaders. If you look back and try to find a legacy that a transactional leader has left after their tenure, it is often difficult to find.
On a day-in, day-out basis, transactional leadership is practiced in every organization and involves the normal performance contracts that are backed up by carrots and sticks: "Meet these goals and we well reward you with a ten percent increase in pay and perhaps, if you are lucky, a promotion." Such leadership falls short of getting people to give their emotional commitment to something, but is effective to some degree in getting compliance. It is said that, while people are paid a lot to do a good job, the best work is often done by volunteers. This usually has do with transformational leadership and the principles behind it.
Transformational Leaders Bring about Fundamental Change
Transformational leaders are extraordinary leaders who have been touched by an inspiring vision and empowering values. They see an opportunity to make a difference and dare to take a stand. They engage people by speaking and listening in such a way that frames human grievances, needs, and wants. They empower people by touching them with new possibilities and converting these to bold and unreasonable action. As such, they mobilize people to bring about the introduction of a new order of things.
Burns pointed out that there have been many examples of transformational leaders in human history, yet there is none better than the founding fathers of the United States, Washington, Jefferson, and Madison. They were steeped in the empowering ideas of the "philosophies" of the eighteenth century enlightenment: the right to life, liberty, and the pursuit of happiness. They saw an opportunity to make a difference against the hand of tyranny and took a stand by signing the Declaration of Independence. The Declaration was one of the most powerful calls to leadership in history.
Transformational leaders often inspire followers through a higher vision or purpose to choose service over self-interest. One of my favorite examples of transformational leadership is Admiral Horatio Nelson, who outgunned by Napoleon's ships ten to one at the Battle of Trafalgar, won the day by brilliantly positioning his ships and inspiring his men about how important it was to defeat the despot Napoleon, even thought many lives would be lost. Nelson was known for treating common seaman with a great deal of personal consideration.
Other examples of transformational leaders include such charismatic leaders as Abraham Lincoln, Mao Tse Tung, Mahatma Gandhi, FDR, JFK, Nelson Mandela, and Martin Luther King. The acid test of a transformational leader, however, is not that they are charismatic or possess other leadership traits, but that they bring about a profound change.
It is important to point out that there is a difference between transformation and change. Change represents replacing one thing for another. Transformation represents an alteration of substance. A transformation occurs when a caterpillar changes into a butterfly, a despotic government into a democratic society, a buggy whip plant into an auto assembly line.
As to the examples of leaders above, each brought about a transformational change. Lincoln freed the slaves, Mao transformed China from a feudal society to a modern one with a future, FDR "ended" the Great Depression and put his stamp on the United States government for decades, Nelson Mandela almost single-handedly put an end to apartheid.
There are many examples of transformational leaders in business who stood for the kind of inspiring vision and empowering values that result in a great enterprise, and who both made a difference in their organization and the world around them. Think back to 1981. It was the year that Chrysler almost went into bankruptcy. Lee Iacocca would soon be a national icon, author of a best-selling book, star of hundreds of TV commercials, and everyone's image of an ideal chief executive who turned around his company's sinking fortunes.
The same year, the stock of Fannie Mae also hit the skids and a different kind of chief executive was hired to save the shaken mortgage lender. This man, David Maxwell, would not become a national hero like Lee Iacocca, nor even a name that most people would recognize even today. Yet by the time both of these men hung up their skates and retired, Maxwell had increased the value of his stock at a rate that more than double what Iacocca achieved for Chrysler.
It is said that Maxwell was inspired, yet not inspiring, and more deliberative than dazzling. "He took a burning house and not only saved it, but also turned it into a cathedral."5 Some of his moves, such as selling off ten billion in unprofitable mortgages, were classical transactional stuff. Yet his brilliance was reframing the company around the mission: "Strengthening America's social fabric by democratizing home ownership."
He reasoned that, if Fannie Mae were able to deliver on this, people who traditionally would never know the American dream of home ownership-single parent families, minorities and immigrants-could easily discover the satisfaction of living under a roof that they owned. If leadership is an art, than Maxwell is a master painter. Under his direction the company not only became highly successful, but millions were able to claim their stake to the American dream.
Leadership Requires Both Transformational and Transactional Skills
Now that we have framed transformational and transactional leadership, let's be clear that, while we have been talking about transformational and transactional leadership, the most successful leaders seem to have some combination of both orientations and that the lack of either can be limiting. Mao and Gandhi were both transformational leaders with limited transactional skills which made their approach more confrontational than collaborative and limited what they could achieve to some degree.
Roosevelt had the combination of both skill sets. First of all Roosevelt was not afraid to take a stand. As Burn says, who could forget his speech at Madison Square Garden to an aroused crowd in the midst of a depression, with opposition swirling around him from big business, the Republicans, and the Supreme Court? "Government by organized money is just as much a tyranny as government by an organized mob. Never before have so many stood together in hatred of a candidate. Let me tell you, I welcome their hatred." Roosevelt not only enacted a great deal of transformational legislation, but was constantly wheeling and dealing with Congress and the courts to get it passed.
Transformational leaders must pass three acid tests: 1) has high vision and principles that mobilize followers to bring about the introduction of a new order of things, 2) brings about a lasting transformational change that makes a difference in their world, and 3) creates a climate or environment that brings out the best in those around them.
Transactional leaders must: 1) create a powerful agenda and identify partnerships needed to achieve it, 2) be good at building coalitions based on interests, not positions, and 3) be effective deal makers. This could involve back and forth negotiating to pull off a big merger or to get "buy in" on a transformational process change, or the day-in, day-out brokering and contracting one needs to do to make something happen among diverse people and departments in a large project. See diagram III.1.
[Insert diagram III.1 Leadership Requires Both Transformation and Transactional Leadership Skills]
What Does it Take to Transform into a Leader?
It is our experience that thousands of people possess the innate gift of leadership but never discover or express it because they look for it in the wrong places. They study leadership characteristics and traits hoping to somehow get these leadership qualities into themselves through the paradigm of understanding. This paradigm produces lots of information and little impact on people's leadership ability. In fact, the ability to discover and express your own leadership ability comes about as a result of you as an individual recognizing the opportunity to make a difference and taking a stand. The classic example is Rosa Parks, the civil rights leader who refused to move to the back of the bus.
What does it take to actually transform one person into a leader? Most people ask the question, "Are leaders born or made?" My answer to that is both. There are certain people who seem to naturally possess leadership ability, the ability to be agents of change. However, these people are often only able to call themselves forth as leaders when faced with a "change ready" situation that becomes an alchemical cauldron for leadership transformation. People like Abraham Lincoln in the dark days before Civil War, FDR in the middle of the Depression, JFK during the Cuban Missile crisis are examples of this.
An excellent business example of how inspiring leadership often emerges as a result of "change agent" and a "change ready situation" and dares to take a stand is James Burke of Johnson and Johnson. If you ask people to tell you the single most important act of chief executive courage that they can think of, it might be Burke's decision to pull all bottles of Tylenol off the shelves in 1981 after discovering that a few bottles had been tainted with poison, a decision that cost the company hundreds of millions in earnings.
His leadership challenge came when he gathered twenty executives in a room and banged his fist on a copy of the Johnson and Johnson credo. Written by General Johnson in 1936, it said, "We declare these truths to be self evident, that our first responsibility is to the mothers and all others who use these products." As the twenty executives in the room fretted and bit pencils wondering what to do about the Tylenol crisis, Burke told them here is the credo, we are either going to live by it or tear it off the wall. The group rallied behind him. Up until this time Burke had been thought of as an able administrator, but in the twinkling of an eye, his words caused the group to rally behind him and he was transformed into a leader.
Formulating Your Leadership Challenge
Let's get back to you. Are you ready to formulate your leadership challenge based on everything we have said here? In this work, it is more important to pay attention to what you can declare as possible for yourself, rather than to pay attention to your present job title, situation, or historical evidence. Answer the following questions, keeping in mind the principle, "Get it so that it is eighty percent right, then iterate."
· In order to reach my (company) business challenge of:
· I am committed to the possibility of (describe the leader you intend to be):
· I am committed to giving up:
· The transformational leadership skills I need to develop are:
· The transactional leadership skills I need to develop are:
· From this point on, I will draw my identity as a leader from my commitment; the stand that I am taking here is:
[Note to designer, leave space to write]
The Chapters of this Section
Once you have articulated your leadership challenge, and have resolved to become a new kind of leader, you will be ready to read the next section of Your Masterful Coach in a Book. In chapter one, Be an Extraordinary Leader, you will learn to expand yourself beyond old success strategies that may now be limiting to you. In chapter two, The Power of Taking a Stand, you will learn how to take a stand and speak listen and act in a way that matters on a day in, day out basis. In the third chapter, Lateral Leadership, you will learn how to reach your difference making goals by building successful coalitions. In chapters four and five, Stop Being a Victim of Your Calendar; Start Doing Your Real Job, and Turn Key Meetings into Turning Points, you will learn how to leverage your personal effectiveness by spending your time more wisely, as well as distinguish the big game meetings and come home with a "W".