Dawn of the Leadership System

Ed Catmull is the President of Disney Animation Studios and one of the co-founders of Pixar. He is also the author of “Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration.” This book outlines the management practices that created Pixar, one of the world’s most creative and innovative companies. So, I think it wise that when he describes a word in the context of the employee experience, management, leadership, and innovation, it is worth paying attention. That word is one I never once heard in my MBA program. It is not a word we hear used in discussions of organizational management or leadership. Yet he uses it freely and openly. It is the word “love.” In discussing the need for open debate, candor, in a process called brain trust, he states, “frank talk, spirited debate, laughter, and love.”

There it is. Love. Unfortunately, we equate love with romance or deeply felt personal emotions. Therefore, we don’t usually use it in the context of leading high performing companies or teams. I think it is time we change this because I heard the same word from two senior U.S. Army officers. One was a thirty-four-year veteran, Army Ranger, and member of the Special Forces. The other was a 32-year veteran, holder of multiple purpose hearts, and a 4 Star General by the name of Barry McCaffrey. When I asked both officers how the Army approaches leadership, they immediately talked about servant leadership and then spoke of love in the next breath.

I confess it is a word I am not comfortable with when used in the context of organizational leadership. It is a little “squishy” for me. Yet when one of the most highly decorated generals to have ever worn the uniform and when one of the giants in the world of technology speak of love (not the romantic stuff) in the workplace I think it is time to bring the word into our conversations regarding leadership.

The U.S. Army has a core value, “put the welfare of the nation, the Army, and your subordinates before your own.” Is there a better way of describing love than this? What would happen if the leaders in our healthcare institutions, manufacturing companies, or technology firms were taught to “put the welfare of your customers, your firm, and your subordinate before your own?” It makes me wonder how fast customers would be stampeding to your doorstep.

But how to do this? Can treating subordinates in loving ways be left up to every leader or manager’s goodwill or personal values? Something tells me no. Love is such a high calling that it requires a designed system so that every leader or manager knows exactly what it looks like.

The Morality of Excellence

When Paul O’Neil became CEO of Alcoa, he told the workforce that he would negotiate with them on anything except their safety. O’Neil made safety the lens through which every process and system could be measured. The result, workplace accidents went down and continued to go down long after he retired. O’Neil left behind a leadership system that required leaders to look out for the safety of the workforce. He considered it wrong that a worker would ever be in a place of having to work and worry about their physical safety.

I frequently hear researchers, pundits, PhD’s, and just plain folks talking about the high moral value of taking care of the workforce. It is a good argument, but incomplete. During O’Neil’s tenure as CEO, the market valuation of Alcoa surged from $3 billion to $27.5 billion, and net income rose from $200 million to $1.5 billion, while also making Alcoa one of the safest places to work in America. When Paul retired, it was safer to work in an Alcoa foundry with 2000 (F) liquid aluminum flowing around than in the back office of an insurance company shuffling paper. There is no conflict between caring for the workforce and economic returns. A high level of engagement in the workforce will drive economic returns.

Now let’s talk about another kind of morality—the morality of excellence. In twenty-five years of consulting, I have never met one worker who was excited about going to work every day for a mediocre organization. Yet, I have met many leaders who were just fine with average. When leaders accept mediocre as acceptable, they force it onto their workforce. They rob them of the opportunity of being on a championship-caliber team. It is abusive of a workforce that is craving to be proud of where they work. This is immoral. However, in an all too rare occurrence, I have seen organizations intentionally engage every member of the workforce around a singular common value. It might be respect, relationship, service, safety and even love. In these rare organizations, not only do they get the best out of their workforce, but they lay the foundation for humans to flourish.

The Value of Values

The U. S. Marine Corps is one of the world’s elite organizations. Who are they and what is their identity? Their values. They create their identity through their core values – Honor, courage, and commitment. These three core values define a Marine. The result? “The values of the Marine Corps guide our actions and intensify our fight so that every battle we face—we’re able to face down.

Why is it that thirty years after wearing the uniform, Marine veterans stand with pride when the Marine Corps Hymn is played? Being a Marine is still their identity. Once a Marine, always a Marine. Semper fidelis = always faithful.

What can private organizations learn from the Marines? Let’s see:

I have had the privilege of working with hundreds of different organizations. I think each of them had some sense of their core values. Could anyone in the organization recite them? What is typical is the response I received from the assistant director of communications department who wrote the values as well as their mission statement. “just a minute … ya ah… they will come to me in a minute… ah”. I interviewed dozens of senior leaders, in this organization and not one could articulate their mission, vision, or core values. How unfortunate. They could have given their workforce great pride if anyone would have bothered to talk about them, let alone integrated them with their work.

In contrast, the U.S. Marine Corps regularly takes young men and women, trains them to identify with and perform an inherently dangerous job according to these values – honor, courage, and commitment. Furthermore, they begin their leadership training on the first day of boot camp, and this training is defined by fourteen behaviors/traits. It is all integrated into a designed system of leadership.

Next Jump is also one of the world’s elite organization. They are a technology firm, yet their technology does not define them. Their values, or more specifically, their mission, defines them – Changing Workplace Culture. They sell technology, but they identify themselves as an organization that is changing the experience of the workplace.

So, what are the lessons:

  1. Create an organizational identity and workforce engagement around transcendent values.
  2. Train, coach, and mentor every new hire, and every recruit relentlessly in the execution of these values.
  3. Self-doubt and lack of self-confidence is a universal human ailment. High performing organizations build the confidence of their workforce through their core values. Next time you are in a public gathering and the Marine Corp Hymn is played look around. Aging veterans will stand with pride with tears streaming down their faces. They remain – Semper fidelis (always faithful).

Of course, this means that values must be more than a poster that goes up in the break room. Values must be built into the systems and processes of their daily operations. Starting with the system of leadership.

Why Elite Organizations Focus on – the Experience of the Employee

I have been a customer for, shall I say it? Sprint, for twenty years. Two years ago, I upgraded my old Windows phone for a new Apple phone.

While the phone works great, my experience with Sprint was one from hell. I seldom use the word hate. I now freely say I hate Sprint, (I am neutral on T-Moble since I could walk to their world headquarters from my home). The agent serving me grossly misled me as to what I was receiving. When the bill came, it was four times what it should have been. In my first call to customer service, the agent knew precisely what had happened. I had been scammed, and said so plainly. Of course, he was powerless to do anything but refer me back to the store and an offer to file a report to the regional manager. Both of whom never returned calls or were always unavailable. Additional calls to customer service brought more of the same. Agents who were powerless to do anything other than refer me back to the store and make a report to the regional manager. A month after the transaction, my complaint was resolved. However, I was told that the fault was my own, but out of their respect for my customer loyalty, they would honor my request. They consented to take back the junk I did not want but was told was “free” so I should advantage of the offer (it was not free).

While the customer experience is a recurring theme in business writing and research, there is another experience that is becoming part of our organizational thinking – the employee experience. I have often wondered about the experience of those agents who work in stores that service and sell mobile phone technology. Every time I go into my Sprint store, there is a new set of agents. From my limited observation, turnover is high. It causes me to ask the question if the company has such little regard for my experience as a customer, what is it like working for them? So, I Googled it. The first response I found said this:


Pros
Free subpar cell service, decent benefits, good incentives, great hours
Cons
Unethical Department of the company. Most reps are lying to customers and cheating the company to boost their comp. 5-10 New employees coming in weekly almost if that tells you anything. Don’t believe you can make even $50k if you have any moral compass at all. That title is reserved to those willing to do what they have to do to put the numbers up in most cases.

Forward-thinking organizations are beginning to realize that the employee experience is critical for a quality customer experience. Based on years of research, the authors of The Employee Experience: How to attract talent, retain top performers, and drive results state: how do companies who consistently win their customers loyalty and affection?

“They build brands that seem impervious to harm. What is their secret? It’s right in front of them…It’s your employees. They are the secret to thrilled customers who boost profits, provide referrals, and who keep coming back.”

But there is a deeper question here. What kind of leadership does it take to build an employee experience that is consistently deployed across the organization? Can relying on the generous good will of individual leaders do the trick? My own research says no, the highest performing organizations design systems of leadership and then train, coach, and mentors every leader how to provide an experience their employees are wanting – growth, opportunity, development, respect, and meaning.

Why Elite Organizations Design Routines

They are to so simple; we overlook them. In our technical sophistication, we assume anything routine should be changed. Yet we are all creatures of habits and routines. Charles Duhigg, in his book The Power of Habit: Why We Do What We Do in Life and Business discovered the power of simple routines. He calls them “keystone habits.”

In their book titled Evolutionary Theory of Economic Change, Richard Nelson and Sidney Winter, both of Yale University concluded ten years of research, with this statement, “In our evolutionary [organizational] theory, these routines play the role that genes play in biological evolutionary theory. They are a persistent feature of the organism [or enterprise] and determine its possible behavior.”

  • I found in my study of high-performing organizations that they design their routines rather than let them evolve. For example:
  • A manufacturing organization makes Lean/kaizen a daily affair and trains every worker to conduct their own kaizen.
  • An award-winning hospital makes standard Lean work for every leader and manager and requires that the results be publicly reported on every Friday afternoon.
  • The U.S. Marine Corp requires the highest-ranking officer to eat last in the cafeteria.
  • A Native American healthcare organization requires Personal Development Plans for every leader and manager, not as a focus of discipline or “growth,” but to connect everyone to strategy, mission, and vision, and
  • An elementary school principal engages her neighborhood, and every fall before school starts, 75-100 volunteers prepare the school for students.

Organizations that consistently perform at the highest levels make routines of excellence. When they do, they create a performance-based culture that is the norm rather than the exception. I like what Admiral William H. McRaven, put it. “If you want to change the world, start off by making your bed.”

How Elite Organizations Maintain a Competitive Edge

Scaling Leadership

I had finished a tour of a manufacturing company. They design and manufacture custom commercial and retail furniture. Their size prohibits them from being a household name, but many of their customers are well known globally. What I had witnessed was breathtaking and pure inspiration. We put a lot of trust on first impressions, so here is mine:

  1. People are smiling. I arrived twenty minutes before the tour began, just as workers were coming to work. It sounds simple enough, but virtually everyone that walked in the door looked over at where I had parked my car and smiled at me. 
  2. Whiteboards were everywhere. But not the simple whiteboards that hang on a wall. They had desks made of whiteboard material. Large floor to ceiling movable walls were made out of whiteboard material. When the walls were structural, they had sprayed walls with a coating so that workers and guests could write on them. Dry Erase markers were abundant. 
  3. No bosses and supervisors. This is not to say there was no leadership. Quite the opposite. They just dropped a lot of titles for the more common “mentor.”

The tour itself was a model of the Toyota Production System. They have implemented it so well that by all rights, they should not even be in business. They are in an area of some of the highest labor and home values in America. Yet they easily compete with competitors in the American South and internationally where labor is substantially cheaper. They do it because they are singularly obsessed with the elimination of waste and the creation of value for their customers.

Yet during the tour, I did hear one word about leadership. So, when the tour was over, I asked if there was a broad purpose or intent to their leadership. Todd, the production manager, got up from his chair, squared his shoulders to me, and said, “we practice servant leadership.”

Anyone taking their tour, of which 40,000 people have done, will see and hear kaizen or what many will call Lean. However, from my perspective, what I saw that made it work so effectively, was a system of leadership where leaders and managers are trained in how to be mentors, coaches, in short servants to those who are on the front lines to find and eliminate waste. 

Many organizations, consultants, and theorists espouse lean. However, what I saw, and from my own experience, to make Lean work, leaders must know how to coach and mentor, they must know how to serve. What I had witnessed was a system that had scaled these core values throughout the company. They were not just the values of the president or a few senior executives. Servant leadership, coaching, and mentoring were practiced at all levels. It was a system, and everyone was trained in how to execute the system.

How Elite Organizations Design Their System of Leadership

Organizational Genetics for Scaling Leadership

No organization in the world takes leadership as seriously as the military. In the chaos of war, good leadership is not the difference of a few pennies of EPS (earnings per share). Good leadership is a matter of life and death. I’m reading General Jim Mattis’ book, Call Sign Chaos.

General Mattis grew up in Richland, Washington, hiking the Cascade Mountains, and exploring the west. He joined the US Marines after graduating from a small college in Washington State, where he was an average student. He would rise to the rank of General, serving as the commander of the United States Central Command and then going on to be the nation’s Secretary of Defense. Stories of his personal leadership, of leading and serving his fellow soldiers, are legendary.
However, in reading his book, I am struck by the subtitle, Learning to Lead. Both the content and the subtitle leads me to two observations:

  1. Personal leadership is a skill that is ever-evolving and growing. There is always room for growth.
  2. Organizationally, there is a code, an organizational DNA, to which the US Marines trains its officers.

Dr. Barbara Kellerman has been researching and writing about leadership for over 25 years. She currently teaches at the John F Kennedy School of Government at Harvard University. In her book, Professionalizing Leadership, she addresses both these observations when she states:

Let me state this as plainly as I can: Learning to lead in the American military is unlike learning to lead anywhere else in America. Learning to lead in the American military is better. Learning to lead in the American military is harder, broader, deeper, and richer. And it is longer. In the American military, learning to lead lasts a lifetime.

What gives the military the ability to train better officers is a kind of genetic code, an organizational DNA to which they teach and develop military leadership. This is what allows the US Marines to scale their principals, core values, intent, and objectives across a workforce of 200,000 active and reserve Marines. The US Army does the same only the scale is ten times larger with a workforce of 2,000,000 active and reservist. Both services begin with a foundation of servant leadership. Their system gives them the ability to scale these core principles across the breadth of their workforce.
For example, some of their training is amazingly simple. In the cafeteria, the highest-ranking officer eats last. It is a rule, and by making it routine, they build servant leadership into institutional muscle memory. Do they do it correctly, of course not. By building simple routines into standard work, they create an organizational DNA that demonstrates that leaders are servants to their subordinates.
It was Christmas, 1998. Location, Marine Corps Combat Development Command headquarters at Quantico. A young Major was assigned to the Duty Station. He is young, married, and with a family. Then Brigadier General Jim Mattis decides he should be with his family on Christmas and takes his place. For us non military types this may not sound like much. Corporately, it might be likened to the COO of a S&P 500 corporation taking security duty so the guard can spend Christmas with his family.
How does the American Military develop these kinds of leaders? They train them to a genetic code, a sort of organizational DNA that begins with the purpose of servant leadership.

Why Elite Organizations Design Their System of Leadership

Dawn of the Leadership System – Part 1

It was in October of 1987. Place, New York City. The keynote speaker was slim, silver-white hair, confident, and articulate. He had just been named CEO of an industrial giant that was troubled. Quality was suspect, profits not what they should be, labor unrest, and he was an outsider, a government outsider. His first words were these, “I want to talk to you about worker safety. Every year numerous Alcoa workers are injured so badly that they miss a day of work”. Paul O’Neil hardly made a confidence-building speech to the financial community at his introduction as the new CEO of Alcoa Aluminum.

It is fitting that we pause to remember. He passed away just a few days ago at the age of 84. By anyone’s measure, Paul O’Neil ranks as one of the great corporate leaders in a generation. Over the 13 years of Paul’s guidance, Alcoa’s market valuation surged from $3 billion to $27.5 billion, and net income rose from $200 million to $1.5 billion, while also making Alcoa one of the safest places in America to work. When he retired, it was safer to work in an Alcoa foundry with 2000-degree(f) liquid aluminum flowing around than it was to work in the back office of an insurance company shuffling paper.

The question is, how did he do it? Was it his charisma, charm, ability to see into the future, or strategic brilliance? Or was it something more fundamental? More structural? As I have studied his leadership, it strikes me that he designed a structured system of leadership, then trained, modeled, coach, and required every leader and manager to lead according to its requirements.

Donella Meadows, one of the giants in Systems Theory, says, “The least obvious part of the system, its function or purpose, is often the most crucial determinant of the system’s behavior.” By making workforce safety, the purpose of his system of leadership, every leader, manager, production lead, and coordinator had a singular transcendent purpose, safety of the workforce. When corporate meetings, operational or at the Board level, begins with the safety report, everyone goes on notice, safety is critical. When O’Neil gives out his personal phone number and tells the workforce to call him if their supervisor is not listening about their ideas to improve safety, everyone knows, safety is essential. When plant managers understand they will be fired if they do not report to O’Neil an accident resulting in a day of work off work, safety is recognized as critical.

The result? Safety became the lens through which every process and procedure could be evaluated and improved. Instead of costing Alcoa money, Alcoa enjoyed the best economic returns in its history.
The first step in designing a leadership system is to determine its purpose, which always will include the employee experience. For Alcoa, it was the safety of the employee. Determining the purpose is likened to harnessing the iceberg’s unseen power, the part that is below the waterline. It is this mass that determines the course and speed as it drifts the ocean currents.

So, the first step in designing a system of organizational leadership, determine what it is to produce. As Meadows describes, every system has three parts. The most important of which, is the purpose.

Why Elite Organizations Have a Passion for Engagement

Developing the Causal Relationship to Strategy

In January 1994, the United States Navy formally commissioned the USS Santa Fe, its newest nuclear-powered fast attack submarine. Five years later, despite being one of the more modern ships in the fleet, her operating performance put her at the bottom of the fleet.

Reenlistments were low, officer retention was zero, and training program effectiveness was rated at “not effective.” She was the ship every sailor wanted to avoid.

Captain David Marquet, author of the book, Turn the Ship Around, tells the story of spending a year preparing to command the USS Olympia, an older but one of the best performing ships in the fleet. In his training, he learned every system, button, lever, valve, and sailor in preparation of taking command. His superior technical knowledge of the ship would be the platform of his leadership. However, in a last-minute change, he was assigned to the USS Santa Fe. The Santa Fe was a different ship, with a different reactor, with a different acoustical system, and with different personnel. Leading from a foundation of superior technical knowledge was not going to work.

In his book, Captain Marquet tells the story of taking the ship out on its first training cruise as Captain. He ran a standard drill to test the crew’s ability to operate on battery power, simulating a reactor that went offline and had to be restarted. In true Navy tradition, he tells the Navigator, who had two years’ experience on the ship, to speed up, “ahead two thirds.” Who, in turn, ordered the Helmsman “ahead two thirds.” Who should have turned a dial to read two thirds. Except nothing happened. On this ship, there was no two thirds on the electric motor. Captain David Marquet had given a command that could not be carried out, to a subordinate who knew it could not be carried out, but went ahead and issued the command to another subordinate who could not carry it out.

He had to design a new system of leadership. A system that would engage every sailor to be “independent, energetic, emotionally committed and engaged men thinking about what we needed to do and ways to do it right.” In short, Captain Marquet’s strategy to improve the performance of the USS Santa Fe was to engage 135 sailors to be fully engaged.

A year later, the USS Santa Fe received the best performance scores in its history, and a year after that, the best scores in the history of the Navy. Which begs the question,
Can engagement of the workforce, be THE strategy to achieve business objectives?

I do not believe the engagement of the workforce can always be THE strategy to achieve business objectives. However, there is ample evidence, which shows that organizations that consistently achieve their business objectives enjoy a highly engaged workforce. From my research, they make engagement a strategic priority by creating a causal link between the engagement of their workforce and their business strategy.

Gallup reports that an engaged workforce will generate:

● 41% Lower absenteeism.
● 58% Fewwe patient safety incidents, (healthcare application).
● 24% Less turnover in high-turnover organizations.
● 59% Less turnover in low-turnover organizations.
● 28% Less shrinkage.
● 70% Few safety incidents.
● 40% Fewer defects in quality.
● 10% Higher customer ratings.
● 17% Higher productivity.
● 20% Higher sales. and
● 21% Higher profitability.

Clearly, there is plenty of reasons to make an engaged workforce a strategic priority. The only question is how.

Creating Cultures of Collaboration

Pixar is arguable one of the most creative and innovative companies on the planet. Their blockbuster animation hits include Toy Story (1,2,3, and 4), Finding Nemo, and The Incredibles. In his book on the history of Pixar, CEO ED Catmull writes about a routine called The Brain Trust.

This is a regular event that for creative writers, producers, and technicians to come together to collaborate work on a story. The essential elements of these events are “frank talk, spirited debate, laughter, and love.” These are so important to the culture that Steve Jobs, an early investor and larger than life personality did not attend because of his propensity to overshadow all others. Furthermore, even the placement of the chairs is arranged in such a way to encourage collaboration and candid perspectives. Pixar has built a culture and leadership system that respects and values candid communication and their workforce views.

In contrast, I recently came across an article published by FastCompany titled, 6 Ways To Communicate With More Authority, (1-11-16). The message was how to be heard within your company, and while somewhat predictable, the ideas were no less valid. The six methods are:

METHODSUPPORTING IDEA
Decide On Your Convictions. “You need to have a strong conviction in your ideas before asking others to consider them.”
Don’t Hedge.“Never lead with an apology.”
Stand Your Ground.“the ideas most worth sharing are likely to be at least a little controversial.”
Be Willing To Challenge Others. “…they (senior leaders) like it when people challenge each other and share contrary views”
Always Show Respect.“Ultimately, the best way to show respect for upper-level managers is by sharing your best ideas with them.”
Be Authentic.“There’s no need to resist corporate culture in your effort to become a more powerful communicator.”

While each of these methods is valid, there is another perspective. Why do individual contributors and emerging leaders need to be coached in these methods in the first place? The fact that writers need to write about having your voice heard is a statement that leadership is broken, disrespectful, and unwilling to listen to competing ideas.

For example, if someone lower in the organizational power rankings needs must stand their ground, it means that those in the higher power rankings don’t respect the perspective and voice of those with less power. In the same way, if one must work on being authentic, could it mean that the culture leadership does not value authenticity?

Collaboration, open communication, respect of the workforce, “our people are our most important asset” are all widely accepted values and principles of management. Yet Gallup still reports that nearly two-thirds of the workforce is either actively sabotaging the workplace or contribute little to innovation and value creation. Why is there such a disconnect between what we know will create thriving workplaces, yet there is so little implementation?

Jeffrey Pfeffer of Stanford University is a leading critic corporate leadership and programs that are designed to develop leaders. In his book, Leadership BS, he states, “When leaders’ own jobs and salaries depend on how well they look after others, they will do so. Until then, relying on leaders’ generosity of spirit or the exhortations of the leadership literature is an ineffective and risky way to ensure that leaders take care of anyone other than themselves.”