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The Smart Manager Interview: Jason Jennings and Laurence Haughton

The Smart Manager Interview: Jason Jennings and Laurence Haughton

by Jason JenningsMay 2015

You write that “companies should build a culture of urgency and growth”—what prompted you to choose this as the premise of your book?

When any business fails to grow (even for a short time) and the outlook is grim. 54% of companies that stall will get stuck. And 93% of those who get stuck discover it’s fatal – they are divested, bankrupted or they slowly shrink to insignificance. 

So when I interviewed 900 executives last year (11,000 over the last dozen years) and asked, “What’s keeping you awake at night?” the answer is almost unanimous. “I worry that we lack the urgency we need to grow,” they tell me.

Executives are afraid that too many employees will sit on their hands instead of implementing the new plans and strategies for growth. “It’s hesitation and half-hearted execution that’ll kill us, not the competition.” 

Nucor Steel is a company that’s grown fast and sure - enough to pay dividends for 167 quarters in a row. I asked Chairman Emeritus and former CEO Dan DiMicco, “What’s your secret for consistently achieving both urgency and growth?” “It’s not a secret Jason,” he said, “Our strategy is our culture and our culture is our strategy. It’s simple. But in business as you know, simple is difficult.”

That’s why my head of research Laurence Haughton and I were prompted to research and write this nine-point roadmap on creating urgency and growth in a nanosecond culture. We wanted to share what we’ve learned from remarkable leaders in highly durable, high-speed businesses.

         

Does not the culture of urgency bring in its wake a pressure to perform? Wouldn’t it have a negative impact on performance?

This “pressure to perform” is simply a fact of business life today. It’s inescapable. And fifteen years of intense study has shown us what really what makes the workday more stressful is not urgency.

•      A lack of clear direction makes the day stressful.

•      Seeing good customers leave makes the day stressful.

•      Finger pointing makes the day stressful.

•      Bureaucracy makes the day stressful.

•      Being micromanaged makes the day stressful.

•      20/20 hindsight from headquarters makes the day stressful.

When you create culture of urgency you can actually take a lot of that pressure off.

We found less strain, less anxiety, less exhaustion at the high-speed companies we studied because they create a more predictable and productive workplace focused with a clear direction, guiding principles and the determination that job 1 is to keep and grow the right customers. Yes, there is the pressure to preform but helpful feedback from managers, clear accountability, no second-guessing, and great leadership turns performance pressure from a mountain into a molehill. 

Turnover is, in our minds, the acid test of a culture. When people feel stressed out by the demands, the pressure or the obstacles at a company they either quit or they quit caring.

High-speed distributor W.W. Grainger has twice the employee longevity of its competitors. High-speed analytics and intelligence software maker SAS turns over 80% fewer employees than the average software company (saving them $85 million a year). And those supposed disenfranchised, disloyal, job-hopping Millennials destined (we’re told) to change employers 20 times during their careers… generation Y fits in, feels accomplished/appreciated, and are crazy loyal to SRC Holdings, the high-speed group of seventeen operating companies from Springfield, Missouri. All the companies we studied keep their people longer and have great morale.

         

The only chance at creating a culture of urgency is to unite everyone around a purpose. How uphill a task is to make your head and heart meet and arrive at a meaningful purpose?

It’s harder than it sounds. From the early days we are taught that being businesslike means being practical, organized, methodical, unemotional, and coldly efficient. We’re taught we must cut our heart out of our business decision-making. But that old school definition of businesslike misses the incredible innovation and motivation that occurs when executives reconnect their heads with their hearts.

“It begins as a lump in the throat, a sense of wrong, homesickness, lovesickness,” wrote Robert Frost. “It is an effort to find fulfillment.” Frost was explaining his purpose as a poet. But after fifteen years of interviewing and observing business leaders we’ve found the vast majority began their enterprise or their careers as an effort to find fulfillment; to right wrongs, feed their souls and do good.

Stan Bergman, the CEO at Henry Schein, who grew up in South Africa under apartheid, is a terrific example. He told us how he connected his career with his heart.

“My parents made sure I knew what was going on, as the South African government was quite good at insulating white people from the reality of their policies. I got to see the evil right in front of me and compare it to the good I saw my father, a doctor, do to help others. Thankfully for me, what you see at home is what drives you. So when I came to the U.S. and was introduced to Henry Schein, I saw what the former owners were doing to make a difference in the world. They were all extremely generous and involved in many causes. The company led the effort to help change generic-drug laws, making lifesaving drugs available for more people, among many other noble efforts. That connected with me. All of us at Henry Schein feel the sense of wrong and are alert to the injustices of our society, and fixing those injustices became our common purpose, along with a commitment to our customers, suppliers, and investors and to growth.”

Today Henry Schein has nearly $10 billion dollars in sales with more than 800,000 loyal clients. Henry Schein does well,” Bergman says, “because we do good.” 

In the book we give simple practical steps and many examples to follow so any leader who wants to find and then unite everyone around their purpose can do it.

         

Big data and analytics equip companies with more options to know the customer, adapt, and change strategy accordingly. Doesn’t this reduce chances of falling prey to the forces of the ‘immutable law of suckage’?

We believed “big data” would keep business from the clueless decision making and dropped balls that cause so many good customers to think, “This sucks.” But the early returns haven’t met expectations. “Fewer than 5% of companies reported that their executives agree on the most fundamental data point of all… specifically what customers need,” said the MIT Management Review. And if you ask the actual customers, as Bain Consultants did after 80% of firms gave themselves a “superior rating” in customer satisfaction, you’ll find out that 92% of their customers say, “Superior? I don’t think so.”

One of the pioneers in big data, Proctor and Gamble, showed us you need more than terabits of data and reams of million dollar surveys to know the customer, adapt, and change your strategy to better fit the changes in the market.

P&G’s credentials in the world of big data are impeccable; 7,000 research associates led by 1,000 PhDs, an R&D budget 50% higher than their nearest competitor (a whopping $2 billion dollars), and another $400 million spent on 20,000 studies involving 5 million customers over 100 countries. But finding transformational-sustaining innovations and avoiding the immutable law of suckage takes a unique extra effort.

P&G, like many other companies, organizes off-site conferences for the 130,000 members of its global workforce. But instead of golf, spa visits, or team-building whitewater-rafting excursions, P&G takes care of conference business between seven thirty and noon and then all attendees spend the afternoon outside the hotel listening and learning. Every executive, including the president and the CEO, line up in teams of two and are driven to meetings with customers. Half the teams visit retailers and the other half will see consumers in their homes.

They don’t talk about products… they really don’t talk at all. They spend time listening to the thoughts and aspirations, hearing stories about the children, their challenges and what might make their lives easier and their families happier.

By late afternoon, all the teams complete their home visits and gather again in the hotel ballroom. Then one by one, the teams take the stage and report. But it’s not reported in terms common to data analysts and PhDs. Instead every team shares what they saw and heard in the form of a story: no analytics and no numbers, just compelling slices of life, complete with pictures taken on smartphones.

“There needs to be an emotional component as well,” P&G believes. Stories and first hand interactions between customers and executives turn big data into the practical wisdom that neutralizes the immutable law of suckage.

         

Transparency is the first step towards ensuring employee engagement and trust. How do leaders develop the ability to have candor and be inclusive?

The ability to have candor and to be inclusive begins in your head… with your fundamental beliefs about the nature of people. “If you believe in an essentially monstrous version of human nature, you’ll withhold information, block initiative, and police property instead of protecting people,” says Rebecca Solnit. Solnit researched human reaction in crisis and found their behavior under stress doesn’t match the bad press we’ve heard about human nature in events like Hurricane Katrina.

Think about your mindset.

Do you believe most people are trustworthy?

      Do you believe most people welcome responsibility?  

      Do you believe most people prefer work to being idle?

      Do you believe most people want to learn?

      Do you believe most people won’t resist change if it’s handled right?

The most neutral and methodical sociological studies, Solnit concludes, says you can have “enormous confidence” in the good side of human nature.

One of the high-speed companies in the book is so confident about the good nature of their people that they have opened the books to every employee. Once a week, at all the operating units, the entire workforce sees sales, profits, costs, key ratios every number that slower companies keep under lock and key and reveal only to those with a “need to know.” That’s radical transparency.

But not all leaders have the authority to open their company’s books. So we dug in and found eight easy steps that any manager can take.

One of the simplest and most powerful steps for greater engagement and trust is to get rid of all the jargon, buzzwords and pseudo intelligent babble that turns what executives say and write into useless and confusing gobbledygook.

“I possess a comprehensive understanding of team development and individual enfranchisement, incremental planning, and crisis accountability while promoting forward-thinking solutions in meeting desired objectives,” wrote an MBA in a technology company we know, when he was applying for a promotion.

I’m sure you have rolled your eyes at a lot of the same gibberish in meetings with MBAs or from consultants at an offsite. We think everyone in business should follow the dictum Einstein delivered to his fellow scientists, “If you can’t explain your theory to a child, it is probably worthless.”

         

 “The CEO must also be the chief grit officer.” Could you elucidate this point? Also, how does a company fight the general dislike for systemization among employees?

We define grit as “the ability to maintain momentum long after the mood has passed.”

Years ago we thought if someone lacked grit; they lacked character. So we focused on techniques that uncovered candidates with exceptional levels of character. It was a hard slog. There aren’t many people like that to choose from.

Then we began seeing the new studies into how children get the grit to overcome obstacles, delay gratification, master self-control and develop above average persistence. We realized that grit could be taught and then must be nourished. Building on studies by Dr. Walter Mischel (author of The Marshmallow Test) and many others we shifted our focus from finding the few extraordinary people to leadership practices that keep regular people from feeling out of the mood and therefore losing their momentum.

Showing respect, making it okay to make mistakes, eliminating bureaucracy and most importantly getting rid of all the negativity and “skunking” that dominates our business culture are all things that the CEO must do as the chief grit officer.

The Marshmallow Test also reintroduced us to the answer for persistence (in systemization or any other thing that’s good for people but hard to swallow). Mischel writes, “Study suggests it’s a good idea… to model them in your own behavior.” If you want systemization to cascade through every level start at the top and then make it crystal clear to the EVPs and SVPs that they must lead by example.

         

You write, “Stewards are made, not born.” What does the journey to stewardship entail?

“To understand the entrepreneurs’ mind,” wrote a Harvard professor,
“you should look at the juvenile delinquent.”

“Self interest seeking with guile” (guile meaning slyness, deviousness, or cunning) is expected practice in business, concluded a Nobel Prize winning economist.

Those are just two examples of thousands that feed that dominant cultural theme – business is filled with venal, deceitful, Machiavellian monsters. The winning formula for executives, we hear and read is, “It’s all about me, me, me”.

But many business leaders have decided to throw off that old stereotype. They’ve realized that lasting satisfaction and greater business success comes when leaders feel it’s not mostly about them, and instead accept that “it’s mostly about other people.” And as they practice that simple guiding principle their journey to becoming a steward begins.

You can follow any of a thousand unique steps on your journey. But they are each the result of deciding it’s mostly about your responsibilities… to lead others and leave behind a better world.

“You could get tempted to bend the numbers,” the CEO of Goodrich Corporation told us. “It’s not worth it. I’d rather be fired for not producing.”

“I play the players I have. I’m not one of those leaders who take on a new situation believing I have to sweep the place clean,” Humana’s CEO explained.

“We take care of our suppliers,” the two leaders at the top of J.M. Smucker said.“If we don’t we won’t have long-term growth.”

“Workers see a lot more than they’re given credit for,” Harris’ CEO believed. “They know if you are genuine and if it’s all about you or if it is about us.”

Our study of great stewards produced a big surprise. Nearly every steward learned what to do I'm part, from having a bad boss.

Early in his career CoBank’s CEO Engel was working for Marine Midland (which eventually became HSBC) and attending his first senior leaders’ meeting. The CEO asked each of the division heads onstage with him to give a summary of his or her business unit’s performance during the previous year. “Each stood up, talked about how well their business unit had done, how they’d exceeded their plan and each had a great story. When they were done,” Engel says, “the CEO stood up, lowered the head on his six-foot-six-inch frame, and announced the company has just had one of its worst years ever.”

“I was stunned,” recalls Engel. “I went to school to be accountant and I learned that one plus one equals two and if you add a series of positive numbers, like one plus two plus three and so on, that you’ll eventually end up with a positive number, not a negative, money-losing number. All those supposed leaders had gamed the system and won and probably got big bonuses while the bank lost. That day I promised myself that for me it would never be about individual wins but the entire team winning. What kind of person would enjoy winning if their team loses?”

It’s “monkey see, monkey do” for many executives as they rise through the ranks. “My boss never made things clear for me,” I’ve heard more than one CEO say. “I went to the school of hard knocks. I had to learn to figure it out. Adversity was good for me. So I’m not going coddle my people,” and then, inevitably, they add some nonsense like “What doesn’t kill you will make you stronger.”

A steward learns what not to do from that bad boss. Stewards don’t repeat the bad behavior of a flawed father, mother, teacher, or boss. They learn from the missteps of others and do what will help their people, even if that wasn’t done for them.

         

Heading a high-speed company puts on the CEO a host of complex responsibilities—identifying a purpose; ensuring employee engagement, transparency, and inclusion; being accountable and ensuring prosperity. Do you think the CEOs of today are equipped to handle such a complex task? How would one prepare for this role?  

Yes! We are incredibly optimistic that leaders today are equipped to handle this complex task. But that’s not us seeing the world through rose-colored glasses.

I interview and swap stories with thousands of business people every year for my books and keynotes. My head of research interviews executives and devours the latest findings in anthropology, medicine, organizational psychology, history, and behavioral economics. We both find lots of proof that our world is getting it more together and being optimistic is not at all the same as being naïve.

How does one prepare? Get a front row seat at your company. Have someone hold up a mirror to you as you lead. Keep your hands dirty (meaning stay engaged). Welcome accountability. Don’t be the kind of executive whose twenty years of experience is really 2 years repeated ten times. Have a big heart. And remember, be brave - if you wait for something to be obvious before you act… it’ll be too late to make any money from it.

         

Can you name one company that most fits your definition of a high-speed company?

I can, but if you ask anyone I would name they will tell you “we’re a work in progress.” They’re all humble. They all fit the definition of a high-speed company. And they’ve all seen that success is always a two-edged sword.

•              In 1988 one in four beers sold in America was a Budweiser. Now it is one in every twelve.

•              Between 1990 and 1999 The Gap grew sales double digits every year. Since 2004 sales have stalled.

•      Seven years after Howard Schultz left the day-to-day at Starbucks he critiqued his successors, “We’ve made a series of decisions that have led to the watering down of the Starbucks experience.” These decisions, he concluded, “took away the soul.”

Every other high flyer that’s plummeted to earth over the last four decades, proved the wisdom of the adage, “Those the gods wish to destroy they first call promising.” 

We know that nothing beats the feeling of winning, putting up big numbers and leaving the competition in the dust. But stewards also are aware that success makes risk takers risk adverse and empowers the yes men at headquarters to sweep uncomfortable facts under the rug.

So it is a work in progress at Procter and Gamble, CoBank, Henry Schein, Nucor Steel, Arrow Electronics, WW Grainger, O’Reilly Automotive, The J.M. Smucker Company… all the high-speed organizations we’ve studied. Their leadership takes to heart the timeless wisdom of Franklin, Grove and Solo.

“Doubt of your own infallibility,” wrote Ben Franklin.

“Only the paranoid survive,” wrote Intel’s Andy Grove.

“Great kid… don’t get cocky,” advised Han Solo.

         

What do you think is the biggest takeaway—the most valuable leadership lesson—your book promises?

There are so many lessons we were thrilled to learn and can share. Like, the secret of leading change from Kurt Vonnegut. Also what we learned studying Starbucks during some dark days (when they lost their soul) and how a story of Native American folk wisdom will guarantee the culture you create never dies – that’s a terrific lesson. My head of research really loves the solution to our accountability crisis. Communication, systemization, and the immutable law of suckage… there’s a lot we love. 

Reviewers have told us that we’ve succeeded in our primary goal for this book… to put valuable takeaway on every single page.

But we don’t duck direct questions so here is our pick, the lesson we learned that really took our breath away.

It came late in the game, long after we had invested twelve months on our conclusions. We were on the phone with Bob Engel and sharing some of what we discovered in other interviews when he said, “Yes that’s true. When we gave our people the why, they gave us back the how.

That was a true “aha” moment. Engel gave us a lesson we’ll value forever (and maybe the theme for the next book). I’ll tell you why.

Over the last forty years business schools and consultants have taken a piece of simple common sense – don’t manage your business by impulse and emotion, every minute planning saves you ten - to exaggerated levels. 

How exaggerated has planning become in 2015? Big companies spend 200,000 man-hours in planning and budgeting for every billion dollars they do in revenues. 200,000 hours is about 96 full time bean counters and strategy officers.

That means that companies like Kmart, General Motors, Lehman Brothers, Motorola and others invested millions to billions of their cash planning a intricate path for the success that never came. (In 2003 a major automaker ran the numbers and figured their planning process cost them $1.2 billion a year.)

Effective planning can save you time and money. But as the North American President of IKEA told us, “Exaggerated planning is death.”

•      Exaggerated planning wastes time. 80% of meeting time these days addresses only 20% of what’s important.

•      Exaggerated planning causes executives to become rigid and lose flexibility as they blindly administer the “500 page plan from headquarters.”

•      And it contributes to “paralysis by analysis,” where our worry over being wrong ties individual initiative into knots.

Instead of exaggerated plans high-speed companies like CoBank have figured out the why and created guiding principles that act as boundaries for quick decisions and improvising. The science of serendipity, where chance has led to great innovation shows there is a lot of value in Engel’s simple revelation. There’s proof as well in the many random paths astute executives have taken to incredible growth opportunities. “Play your own game” we learned long ago from Petco among others. There are many roads to glory.

But mastering the fundamentals of leading the high-speed company takes the speed bumps off whatever the road you choose. “Fortune favors the well prepared mind,” Louis Pasteur observed. The same is true in business. Bloom of Stanford and Van Reenen of The London School of Economics have studied 10,000 organizations in 20 countries and have found good management practices makes a hell of a difference across all industries.

Give your people the why and they will show you the how.

 

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