Issue 8 (emailed version), Thursday 14 September, 2000
Made in New Zealand - twice winners of the America's Cup

"If you want to silence a room of executives, try this small trick. Ask them, 'Why would anyone want to be led by you? Without fail, the response is a sudden, stunned hush. All you can hear are knees knocking. "
Robert Goffee and Gareth Jones, HBR Sep-Oct 2000


Welcome to issue eight of EDGE FIRST, an email magazine dedicated to making you a better leader, by providing:
- provocative thinking about what it means to be a leader
- the tools, techniques and best-practices that drive leadership improvement
In this issue
Fastfacts - CEO migration
Quick case study - Anita Roddick - leader as social advocate
Management vs leadership - doing things right, or doing the right things?
The HBR rules, OK? - mu-shin, Hamel revisited, peer groups, and the shapeless, shameless Semco

To access Portable Document Format (.pdf) files you'll need Adobe'sฎ free Acrobatฎ Reader.
Fastfacts: CEO migration
- 63.2% of CEO's at major corporations have had the job for less than five years
- 84.9% of major corporations recruited their new CEO from within. The largest percentage – 23.4% – from COO
- Among externally recruited CEOs, 38.1% were already CEOs.
Fast Company October issue, p96
Quick case study
The leader as social advocate: building the business by building community
From an interview with Anita Roddick, legendary founder and co-chair of The Body Shop International. BSI Fastfacts: >1,700 stores, 48 countries; 1999 sales >US$900m (ฃ606m). Roddick has won numerous business, leadership, and philanthropic awards including the Order of the British Empire. She is author of Body and Soul. This article abstracted from Leader to Leader No 17, Summer 2000.

A key skill of leadership is 'finding one's voice,' said L2L's anon interviewer, “articulating the ideas, values, passions, and aspirations that can inspire commitment. One of the clearest, sometimes loudest, voices in corporate leadership is Anita Roddick.

“Since opening her first shop in 1976 she has built one of the world's most recognized retail brands. Recognized for its independently audited social and environmental practices, the company sources many of its ingredients directly from producers in developing countries, creating sustainable local economies. It has campaigned for human rights, fought the animal testing of cosmetics, and contributed money and personnel to nongovernmental organizations in Kosovo, Romania, Brazil, and elsewhere.”

Interview hi-lites (severely summarised):

Q – The mission of The Body Shop is, in part, the pursuit of social and environment change. You seem to make almost no distinction between a business and a social institution. Is that a realistic model for others?
Roddick – yes. And what's interesting is that while many nonprofits are acting more business-like, more like commercial firms, many commercial firms are adopting an almost non-profit agenda - looking beyond the bottom line to how the business is perceived in the local community.

The big question, she says – the one few business leaders want to ask – is: does the growth of the business presuppose the destruction of the planet? Does our need for growth harm the environment? Does it automatically mean that we will alienate humanity in every way?

Her answer? No (surprise). But while growth in itself is a real problem, the two agendas, business and social, can work together.

Q – Isn't asking business leaders to look beyond the narrow confines of the business itself asking them to do something that they were not hired to do?
Roddick – no. I'm asking businesses to seriously look at some old business practitioners, like the Quakers, who were incredibly successful business people, cared about their community, never paid themselves more than they needed to, and saw business as a community of peoples and the protection of those peoples. They measured success in a different way. I think there's a resurgence of that way of thinking as an antidote for the belief that profits are everything.

Q – OK, so how do you measure success?
Roddick – by looking beyond the financial. What about measuring success by the joy in the workplace? Or by meeting environmental and social standards? These measures are out there: people are working on them. But most business leaders are afraid to consider them. I feel, she says, that there is a real tyranny in measurements. Business is no longer about honourable trade, the buying and selling of a product. Instead it's become a financial science, and its language is necessarily confining. So when you challenge the language of business – by bringing in other ways to measure success, for example – you're challenging the very foundation of business. It drives economists nuts.

Q – Still, business leaders are accountable for financial performance. What are the benefits to business of social engagement?
Roddick – it's to do with the development of the human spirit. When anything comes from the heart – any energy, any action – it comes with a passion that is unstoppable. My staff do not go home dreaming of moisture creams. They go home absolutely riveted when they come back from a project in Bosnia or Kosovo. The experience has changed their values. When you have a process of education that goes on in a company – not educating to sell but a bigger education – people don't want to leave you.

It's also, she said, about providing a safe area where you can practice things that you're not taught at school: advocacy, activism. There's nothing more joyous in retailing – which is a freaking dull industry [her words], mostly populated by women, by the way – than to engage in the community, to do volunteerism on company time. “So where's the benefit? There's a passion that persuades, that binds both customers and employees to you, that sparks innovation. And in our case, in the business of skin and hair care, we don't advertise, but we garner an enormous amount of attention on some of our actions, whether liked or not liked. We're not an anonymous company because we stand for something – and we are claiming a territory where the competition won't follow.”

Items:
>> The leader has to have a moral agenda. If the leader is only saying we want to be the biggest or the most profitable company in the world, forget it. When you do that, there's no leadership. There's nothing more to aspire to.
>> …you have to live and breathe with the troops, not just the top guys. My greatest hope in the organization is to reach a level where I can absolutely inspire young people, mostly female, to have a voice.
>> Principles and profits are not in conflict. If profits dip, it's because you're not running your business smartly enough, or your products don't hold the same fascination, or you've got a distribution system that's strangling you.
>> There's a poverty of praise in organizations. So another aspect of leadership is praise. We perpetuate our vision and values by living them.
>> I hope that when the epitaphs are being written, they will say that this was one of the first companies to try to change the language and the behaviour of business, that brought a social engagement to everything it did, and shouted this from the rooftops.
Resources
COMMUNITY STANDARDS: Cynthia Typaldos, president and CEO of RealCommunities, has built a site for aspiring community builders. Does your community meet her standards?

WITH JUSTICE FOR ALL? Labor organizer Jane McAlevey is forcing companies in Connecticut's ultraprosperous Fairfield County to confront a moral challenge that they would prefer to ignore -- and, in the process, she is forcing all of us to confront our personal sense of justice.
Management and leadership
There's been a discussion at UKHRD about the differences between management and leadership. We cut and pasted a few items, then thought … naa, you all know that stuff. But then. Maybe it's OK to be reminded about first principles from time to time. Indulge.

>> David Thornicroft - One of my favourite quotes is "Managers do things right, leaders do the right thing" - Warren Bennis. I have a newspaper article somewhere which analysed contemporary political leaders in these terms. They found that most are managers (Major, Blair, Clinton, even Thatcher to some extent) but the one who shone out as a leader was Nelson Mandela.

Here are some more ideas: Peter Drucker (The Concept of the Corporation, 1946) 'Management is the job of setting objectives and organising resources to achieve the satisfactory performance of the organisation.'

Frederick Wilmslow Taylor (Scientific Management, 1946), Managers should analyse the tasks that their workers have to do and find ways of doing them more efficiently. "The principal object of management should be to secure the maximum prosperity for the employer coupled with the maximum prosperity for each employee."

John Adair (Effective Leadership, 1983), leading is about a sense of direction, managing is about handling, controlling. Managers should concentrate on 3 issues: the task, the team and the individual.

Rosabeth Moss Kanter (When Giants Learn to Dance, 1989). There are 2 basic models of manager:
- the corpocrat – a corporate bureaucrat, conservative resource preserver, who lives by and controls the organisation through established & detailed rules
- the cowboy – a maverick who challenges the established order, who wants to seize every opportunity, question every rule, and who motivates and controls through personal loyalty

>> Ken Teal - I have always viewed management as a process and leadership as a skill. Individuals may have their capabilities enhanced in both these areas but teaching people to manage is easier than teaching them to lead.

This month's edition of the Professional Manager (Journal of the Institute of Management) contains a couple of interesting articles - in one of these Alan Thompson (Managing Director of Toshiba Computer Systems) is quoted thus: "Management is mechanical - it is about resource allocation, efficiency, optimisation ... and there are processes you can follow to help you manage effectively. Leadership is different - it's about vision and fire and winning hearts as well as minds".  

In the same article attention is drawn to research which suggests six distinctive leadership styles - Coercive, Authoritative, Affiliative, Democratic, Pace Setting and Coaching.

>> Mick Connolly - a while back, on this network, I came across a simply but yet effective anecdote about the definition of the above. 'When Noah persuaded a group of people living in the middle of the desert that they really needed to help him build a ship and got it done. That was leadership. Management was making sure the elephants didn't get to see what the rabbits were up to on the voyage."
The HBR rules, OK?
We're unashamed fans of the Harvard Business Review. The sub hurts, but it's worth the pain. Here's some reasons why:

>> In her lead into the September-October issue, senior exec editor Suzy Wetlaufer talks about the paradox of the karate mind-set called mu-shin: look at everything, see nothing. Absorb the world in all its messy details, but keep your mind free, uncluttered. Masters of karate consider the acute mental clarity created by mu-shin a pre-requisite for flawless execution – for victory. But it's incredibly hard to achieve.

If you're an executive, she said, you try to do this every day – you look at everything; you have to: the erratic movements of the market, the unexpected comings and goings of key employees, the aggressive gambits of competitors. And yet to act intelligently, you must see nothing: be blind to the distractions so that – in that moment of simultaneous dark and light – one or two answers become blindingly clear … and competitive victories are won.

>> So you believed Gary Hamel! To keep up, to avoid being displaced by the swarming entrepreneurial upstarts of the new economy, big companies will have to learn to 'bring Silicon Valley inside,' or die, he said. Wrong, says Amar Bhide (ibid, p26-27). Just as the opposite view (Joseph Schumpter, Capitalism, Socialism and Democracy, 1942) – that the 'perfectly bureaucratized giant industrial unit' would kill entrepreneurship – was also wrong. Large firms and small start-ups are not mutually exclusive. Rather, the relationship is symbiotic. They need one another. Aaaah.

>> Forget about the firm – what about you? What do you need? Help? But you're the chief, right. The leader. You know all the answers. No? OK, well done, you've owned up. Here's what to do. Turn to page 32 of the September-October issue and read about CEO peer groups.

>> I own a $160m South American company, and don't know what business it's in, wrote Ricardo Semler (ibid, p51-). In this quirky, much studied but never copied firm, employees choose what to do, where and when they do it, and even how they get paid. And in the new economy, Semler reckons his company – Semco – can teach other organizations a thing or two.

Semco has quadrupled its revenues over the past decade, expanding from 450 to 1,300 employees, and greatly diversified – from a 'pure and simple' manufacturer of things like pumps, industrial mixers and dishwashers into a higher-margin services company (which accounted for 75% of business last year) and next, into e-business (with more than 24% of next year's revenues to come from internet initiatives). Clever strategising? Hell no – no strategy at all!

Here's Semler's six lessons – things he's learned about creating an adaptive, innovative and free-form organization:
Forget about the top line – it's not growth, it's survival that matters, says Semler. Not every business is meant to be huge. Semco doesn't set revenue targets – units are allowed to reach their natural size, maybe even see a top-line decline, as long as the bottom line stays healthy. Rather than push for size, Semco encourages its people to branch out – to start new businesses.
Never stop being a start-up – every six months, Semco is deliberately re-invented. Every business unit starts from a zero base and justifies its continued existence. All managers are evaluated anonymously by all workers who report to them, and the ratings are posted in public. You force new business ideas and new hires to go through rigorous evaluations, Semler says, why not existing businesses and staff?
Don't be a nanny – treat staff like wards of the state, and that's how they'll behave, Semler says. They'll just do what they're told, and not with much spirit. Semco has no set work hours, no assigned offices or desks, no dress codes, no employee manuals, no HR rules and regulations. People even choose how they get paid (from a menu of eleven options, from a fixed salary to pure commission based on company performance). But if people screw up, they get the blame, and because everyone is re-hired every six months, they know their jobs are always at risk.
Let talent find its place – cure the talent-churn problem by letting people decide where they best fit. All Semco's new hires go through a process called lost in space, spending up to six months floating around the company until theu find a place they fit – and there they stay. Turnover is less than 1%, in spite of aggressive targeting by headhunters.
Make decisions quickly and openly – decision-making is quick and transparent, as you'd expect. Not only are all board meetings open, there are two seats reserved for the first two employees to arrive.
Partner promiscuously – to find and fire up new businesses quickly you need help. I can't think of a single new business we've started without some kind of alliance, Semler says – whether to gain access to software, draw on experience, bring in new capabilities or just to share risk.
In the next issue (27-28 September) - More from the HBR: why should anyone be led by you; disruptive innovations in health care; mapping strategy ... and much more!
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Emailed version - published 1200 hrs Thursday 14 September