February 14, 2012 by Eric Sass and Tom Varian
As CEO, the essence of your job is to lead the company to higher levels of performance. And the essence of leadership is connection.
These were two of the core messages emerging from more than 300 personal interviews conducted with top executives in renowned companies like Analog Devices, Chevron, DHL, Ford, Four Seasons Hotels, ING, Northrop Grumman, Proctor & Gamble, PepsiCo, Toyota, Travelocity and Wal-Mart. We learned that great CEOs lead from the top, decisively choosing the company’s course, but they communicate from the center, openly sharing their own aspirations and passions while gathering unfiltered employee input.
Daniel Vasella was adamant about what CEOs must do to drive innovation and growth. “It is the CEO’s duty,” he said, “to be a platform where people can meet to share best practices and learn from each other.” From the moment Novartis was created via the merger of Ciba-Geigy and Sandoz in 1996, Vasella set out to build a winning performance culture across the new pharma giant. He was broadly visible, earning trust through open and authentic two-way communication. He then leveraged that trust, pushing his people to do “the slightly impossible.” The company Vasella shaped as Chairman and CEO continues to grow, even in these difficult economic times. In 2010 Novartis posted double-digit gains in net sales (14 percent) and net income (18 percent) while winning 13 new product approvals and generating 16 new submissions for regulatory approval. Novartis continued to post solid growth and innovation gains in 2011.
Vasella understood that leadership is personal. When you invite your people to connect with you on a human level, you earn the right to lead them out of their comfort zone to tackle big challenges. As important, the example you set encourages employees to communicate back to you – asking you questions and constructively challenging your assumptions – and with each other, sharing best practices and accelerating learning. By engendering such productive interaction you create fresh potential for business performance.
“I like to open it up to questions – anything people want to ask me,” said Ed Zore, CEO of Northwestern Mutual from 2001 to 2010. “The first time I got together with a group and said ‘Come on, give it to me,’ they didn’t believe I was serious. They were very timid. The next time, they were brave enough to ask questions. And the time after that, they started asking questions about anything and everything. When they realized they could ask anything they wanted, everybody started to ask questions. I love it when somebody tells me they disagree with me. You might be right. I might be right. But now we have something to talk about.”
“I came up through an organization that had a command-and-control leadership style,” recalled Al Carey, CEO of Frito-Lay North America (2006 – 2011). “Then I watched senior leaders at FLNA, PepsiCo, and Yum! Brands who operated more like servant leaders, where the most important person is on the front lines, closest to the customer. When I saw these leaders in action, I really liked it and saw a tremendous improvement in results.”
Engage and Focus
Improving results, of course, is what great CEOs do. Connecting the company to the CEO enhances several fundamental drivers of business performance.
Engagement. CEOs often underestimate their capacity to influence how people feel about the company. Even if you do not see yourself as particularly charismatic, if you’re the CEO, employees want to hear from you. Reach out with the right intent and your people will respond. “Only by earning people’s trust and respect will you gain influence over them,” counseled Isadore Sharp, the Founder and CEO of Four Seasons Hotels (1961 – present). “People will do what you ask not because they have to, but because they want to. They want to prove to you that they can do it.”
CEOs across our research base say that to engage people, you must speak from the heart. “You have to believe in what you’re saying. I mean really believe it,” said Dennis Nally, global chairman of PricewaterhouseCoopers since 2009. “That may sound trite. But I think when you believe in what you say, people will feel it and see it as not just a bunch of nice words.”
Focus. Great CEOs take responsibility for creating companywide focus because clarity is essential to operational success. They articulate a compelling CEO agenda that states clearly what the business aims to accomplish and what employees must do to make it happen. “If in battle your airplanes want to do something different than the ships and ground forces, you don’t have the maximum effect,” explained Ron Sugar, CEO of Northrop Grumman (2003 – 2010). “The same thing happens in business. Sometimes you get all these different agendas going on because people don’t have a common business picture.”
Intelligence. Connecting personally to your company gives you unfiltered access to what people on the front lines are seeing, and what your customers and vendors are thinking. “Employees are our ambassadors,” said A.G. Lafley, Chairman and CEO of Procter & Gamble from 2000 to 2009. “If they don’t believe we’re doing the right thing, we usually hear about it because that’s part of our values. When we have dissonance, we’ve got to hear it, and we’ve got to resolve it.”
“You need to create a safe environment for people to speak up or you’re not going to know what’s going on,” concurs Alan Mulally who, as CEO of Ford Motor Company since 2006, is widely hailed for leading the automaker’s remarkable turnaround. “Including everybody is as important as developing a compelling vision and plan of action,” Mulally says, “because at the end of the day, I don’t know how we’re going to get it done. But I know we have a process in place to include everybody, and that gives me a lot of confidence.”
Perspective. Free flowing, two-way communication also provides the CEO a much needed reality check. “In a CEO position you can surround yourself with people who tell you how great and infallible you are. The problem is, you’re not,” said Michelle Peluso, CEO of Travelocity from 2003 to 2009.
Learning. Business performance is closely tied to an organization’s ability to quickly learn and adapt. The best CEOs take the lead in promoting learning and in tying learning to the business agenda. “I personally teach a week-long course for middle managers,” said Steve Reinemund, Chairman & CEO of PepsiCo from 2001 to 2006. “The purpose is to light the fire in every individual. It’s not razzmatazz stuff. It’s basic leadership. They can choose one or two areas to develop themselves personally. If learning isn’t built person by person and from the inside out, there isn’t anything there.”
“I really enjoy the education, teaching, coaching and interaction with people,” said Bill Johnson, CEO of H.J. Heinz Co since 1998. “I can learn more about an individual from watching her fix a mess than I can from watching her do something that’s worked well in the past.”
As CEO, you bear ultimate responsibility for the company’s performance, yet your capacity to drive results is limited by a simple mathematical fact: You are but one person, while your company is many. The advent of social media and sophisticated electronic communications platforms can dramatically alter that equation. In a very real sense, you can now be everywhere at once, creating the sustained focus, active engagement, dynamic discussions, productive creativity, and practical learning your company needs to compete and win in today’s complex economy.
The opportunity to use new media to guide, energize, and engage your company is compelling. For the new generation of employees, it is second nature to collaborate, learn and share online. Their perceptions are profoundly influenced by electronic exchange. And most are now quite accustomed to “knowing” people electronically. In fact, many of their most significant relationships can be with people they rarely see in person. Chances are, most of your people now routinely use the Internet to gather useful knowledge and to engage in online experiences they find personally valuable.
The natural next step in this evolution is to craft secured, private internet platforms that foster continuous two-way communications between the CEO and the company at large, closely tie learning to the business strategy, and promote the active exchange of knowledge and innovation via private social media.
We crafted such a platform with the CEO of a geographically dispersed, $3.6 billion global service corporation. The CEO took the reins in 2008 with a mandate to accelerate business growth. He and his top team first articulated a strategic framework that captured: “Where our company is headed, what is expected and what is accepted, all on a single piece of paper.” Next, he set out to bring the strategic framework to the company and make it actionable. “It’s not easy to communicate strategic direction to 25,000 employees working in 30 different countries,” he says. “I saw that we could leverage modern communications technology to engage each employee in a dialogue, while also making the communication highly personal.”
“I sent a personal message each month to the entire company via our private online platform,” the CEO explains. “It was always about the business, but I spoke from the heart. I would share my perspectives about what our company could accomplish and how we might fulfill our potential. Each of my messages offered a communication link any employee could use to send me questions, insights and suggestions,” he says. “I wanted to make communicating with the CEO easy and unintrusive so more people would approach me. I paid close attention to the messages employees sent me, and I often shared their thoughts in my subsequent messages to the company.”
Significantly, each CEO message included links offering employees meaningful opportunities to grow, personally and professionally. The platform provided immediate access to relevant learning and leadership tools they could tap to shape their own personal development path. The CEO pointed to certain tools he wanted employees to apply, and encouraged them to experiment with the tools while the reasons for taking steps to grow and develop were still fresh in their minds. Other links in the platform invited people to share innovations, ideas and lessons learned with each other via private social network forums, with each forum sponsored by a senior leader.
The process for producing the platform required less than an hour of the CEO’s time each month. Employee surveys conducted after one year clearly demonstrated that the platform increased employee engagement, promoted practical learning, and accelerated execution of the company’s strategic framework. In 2009, the first full year under the CEO’s watch, the company achieved record sales. Revenue increased a further 32.2 percent in 2010.
Drive Your Agenda
Your CEO agenda is unique. Perhaps you aim to expand internationally… Enter new lines of business… Renew growth in a down economy… Achieve a step change in operating efficiency… Dramatically improve customer relationships… Or simply accelerate the drive toward your ongoing business goals. Whatever you hope to accomplish, to make it happen, you’ll need your people to be focused, engaged, creative and adaptive. Communicate from the center to access insights you can gain no place else, and to connect your company to your CEO agenda.
Source: Chief Executive.net
Author believes that a more precise understanding of what exactly gives someone good judgment may make it possible for people to learn and improve on it. He interviewed CEOs at a range of companies, along with leaders in various professions. As a result, he has identified six key elements that collectively constitute good judgment: learning, trust, experience, detachment, options, and delivery.
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