There’s a well-known parable about a wealthy CEO who took an extended business trip. He left his company in the hands of his three VPs, and gave each of them a portion of the net assets to manage in his absence. Based on what he knew of their capabilities, he gave the first one, we’ll call her Pat, $50 million. The next one, Chris, was given $20 million, and the last, Joe, was given $10 million. When the CEO returned, he asked for a report of their activities and earnings during his absence. Pat proudly showed him how she had doubled the assets entrusted to her, and now she had $100 million. Chris was pleased as well to show that she now had $40 million. Joe by now realized he had fallen far short of his CEO’s expectations. He was afraid to take a risk in losing his leader’s money, after all he couldn’t afford to pay it back, so he did absolutely nothing with it. Nothing. Joe didn’t even try to increase it, or put it in an interest bearing bank account. You can imagine what the CEO did with Joe after that. He likely didn’t have a job.
Now Pat and Chris could probably tell some interesting stories about their journey to doubling their assets; things they learned along the way both about themselves and their business strategies. They likely had some failures, but they were able to effectively manage through them.
Rut vs. Risk
Joe was afraid to take any type of risk with the valuable resources he had. He simply sat on them. Hopefully he had an idea of a business strategy he could try, something he wanted to do, but unfortunately he didn’t know how to do it or was afraid to take the risk. And by doing nothing, he effectively lost ground.
My husband and I recently realized that we would soon have to repair or replace the circular concrete driveway in
front of our home. We thought it would last a lot longer than this. Instead, after only 14 years, several concrete slabs are sinking; weeds are creeping up in the spaces between them; a large crack is running through one, courtesy of a heavy delivery truck; another slab is scaling; and the snow plows that are a staple of Michigan winters has left scrape marks on other parts.
We never thought this would happen because they look so strong and thick. We could wait another year or two, but the situation will only get worse. What we thought was a solid foundation with high structural integrity, wasn’t resilient enough to withstand a variety of above and below ground pressures. What if the quality or thickness of the concrete had been stronger? What if we had ensured that heavy vehicles didn’t pull into the driveway? What if we carefully used a walking snowplow each winter instead of hiring a heavy truck to plow it (not!). In hindsight it was hard to predict we’d be in this spot, but we now need to look at options to repair or replace all or a part of the driveway.
Fortune 500 Foundation
As I reflected on this disappointing situation, I happened to look at Fortune Magazine’s recently released list of the top 500 global companies. Their total revenue declined for the first time since 2010 by 11.5% to $31.2 trillion, and profits shrank by 11.2% to $1.48 trillion1. Once strong sectors (such as Oil) and other stalwart corporations have stumbled, and are struggling to find their new footing. Companies that placed in the top 100 in the prior year, have now been displaced from the list.
CEOs and individuals in business leadership roles are frequently confronted with the dichotomy of making decisions to ensure the long term health of their companies, while maximizing short term profits. Their management roles compel them to lead the organization as if they are owners, but in reality, these organizations are owned by and at the mercy of investors and customers who determine the value of their products and services.
In a recent survey conducted by Fortune Magazine, 77% of CEOs said it would be easier to manage their companies if they were private¹. This feedback comes in a climate of increasing numbers of activist investors who purchase a significant amount of company stock, then proceed to make recommendations to the board and company leadership on how they should run it to increase value. To be fair, all such suggestions are not bad, and some have led to considerably positive results in the bottom line of these companies. But these CEO owners may find that their company’s mission and purpose are no longer aligned with where others want them to go.
Customers also have a powerful voice in shaping corporate strategies and decisions. Pepsi worked hard over several years to reformulate its diet cola to remove aspartame, thereby meeting the needs of people who wanted to move away from artificial sweeteners. However, many other diehard Diet Pepsi drinkers didn’t like the taste with the sucralose replacement, and complained loudly. So Pepsi recently announced that the old aspartame formula would return to the market, and they will sell both versions to meet the needs of all those customers. Oh, and did I mention that their sales volume slumped more than 10% during one of the quarters that the aspartame formula was off the market?
What disciplines do you practice to make your leadership successful?
Leadership can be learned, but it requires discipline to be effective. It requires identifying and establishing a pattern or system of constructive behaviors, then repeating them, until they become habits that are ingrained into your routine.
Leadership disciplines are controlled behaviors designed to accomplish specific objectives. They are determined based on the individual leader’s personal style and skillsets, their roles and responsibilities, and the culture and needs of the organization where they function in a leadership capacity.
Leadership roles and responsibilities are all relative. The ability to effectively hold a leadership role in a Fortune 100 company, a family owned business, a mid-sized non-profit, city government or as an entrepreneur is different for each person. But the need for discipline is consistent across every setting.
Leadership is establishing a relationship with others, to influence behaviors, to accomplish a goal. Thus leadership discipline is important because no matter the size of the team, everyone is watching and to some degree imitating the leader. And because everyone is watching the leader, it’s important to model the right behaviors. These behaviors are determined by the results the leader wants to accomplish.
Athletes provide a great example of the need for discipline. They come in all shapes and sizes, from little league superstars to multimillion dollar professionals. But each have to learn the disciplines of their respective sport in order to improve their skill level, and to be competitive. There are four key steps to this discipline. Continue reading
We frequently talk about purpose in the context of individuals or organizations, but there are other areas where identification and understanding of purpose is critical. One such instance is in the context of leadership, and Isadore Sharp, founder and Chairman of the iconic Four Seasons Hotel brand provides a great example.
Sharp finished college with an architecture degree and joined his father’s construction business in the Toronto area. After building several motor hotels, he recognized that his passion lay not in constructing and owning hotel buildings, but in providing a premier guest experience and level of customer service. He wanted to “welcome customers and treat them like guests coming into our home.” 1 So Sharp shifted from being a hotel owner-operator into managing hotel properties. His priority is a commitment to the Golden Rule, where employees and guests alike are treated with respect. Along the way he had to examine the behavior of his senior leadership team and part company with those who couldn’t lead by example. As a result, with 96 properties in 41 countries and annual revenues in excess of $4B, both customer and employee retention is high, and they’ve been on the list of 100 Best Places to Work for 18 consecutive years.
Sharp understands that his leadership purpose was to provide a premier level of hospitality and service. And over time, he recognized the importance of building the right team around him, whose perfomance aligned with that purpose. He fulfills his purpose based on leadership strengths of treating guests with respect and sincerity, and providing the right location and environment for a first class stay. He consistently embeds it into every aspect of his organization’s processes, rewards and behaviors; and believes that a true leader influences not from a position of power, but from a position of respect.2 His leadership purpose and strengths, then work together to accomplish his leadership goal of generating a reasonable profit that benefits the company, hotel owners, customers and employees.
Leadership purpose forms the “why” of your leadership. Are you seeking a leadership role simply because of the power, position, people or profits? Or are you leading because of the purpose, mission and vision that you are pursuing, no matter the size of the role? Leadership strengths are the capabilities and critical success factors necessary to operate in your purpose. And leadership goals are the results you accomplish in your work. Continue reading