W. Edwards Deming, who in 1982 started off his 14 Points for Management with this simple proposition: “Create constancy of purpose.” It’s been more than a quarter century since Deming formulated his principles, but his advice has as much meaning today as it did then, a time when we were also mired in the throws of a deep recession.
As a recruiter of senior management for Lean Enterprise companies and a long-time student of leadership, I’ve been giving a lot of thought to what kind of talent and standards will serve us best now and going forward. Because from my point of view, managing change in a leadership role dovetails with constancy of purpose. That’s why I’m focusing this issue entirely on how effective leaders confront change.
I often attend and speak at industry events and conferences focused on Lean, Green, leadership and management innovation. It’s a chance to hear and interact with some of the brightest people around. Case in point: The 2009 National Human Capital Summit earlier this year in Scottsdale.
Among others, I heard Gary Hamel present “A Blueprint for 21st Century Leadership.” Inspired, I went home and cracked open his widely praised book, The Future of Management, which he co-authored with Will Breen. In it, he nails the issue of the constancy of change: “If you accept the lessons gleaned from 700 years of military conflict and a century-plus of industrial competition, it is management innovation that yields the biggest, longest-lasting performance advantages…Hence the most important question for any company is this: Are we changing as fast as the world around us?”
I have assembled a set of qualities which I believe are crucial for a successful leader to exhibit during times of rapid change. Let’s call them the Six Standards for Managing Change.
1. Embrace Change. It’s inevitable. It’s reality.
Too often, so-called leaders look change in the face and shrink from it. But truly successful individuals see change for what it really is – opportunity. More from Hamel: “Turns out that in an age of wrenching change and hyper-competition, the most valuable human capabilities are precisely those that are least manageable[az2] . Nerve. Artistry. Élan. Originality. Grit. Non-conformity. Valor. Derring-do. These are the qualities that create value in the 21st century.” These are the characteristics that create the passion for winning in business.
Another of the speakers at the Human Capital Summit was the CEO of online shoe retailer Zappos, Tony Hsieh. I had a chance to speak with him afterwards and we’ve corresponded a few times since then. Tony is quite vocal about how Zappos Core Values impact on their culture, brand and business strategy. Number 1 is “Deliver WOW through service.” And second is “Embrace and drive change.” Since 2000, Zappos revenues have risen to over a billion dollars annually, and the company remains profitable even in today’s difficult economic environment.
So how do you manage change for profit?
2. Assume nothing and question everything.
This is your opportunity to get everyone on your team to start thinking. Just remember that the right questions are just as important as the answers. Be certain that your questions aren’t structured to lead to an expected response, or you risk not getting at the real answer. Then listen.
Shortly after taking over as Procter &Gamble Chairman and CEO in 2000, A. G. Lafley announced that by the end 2010, fully half of all new P&G products and technologies would have to come from outside the company. Far from doing away with the company’s legendary R&D efforts, he wanted to supplement them. To do so, he urged everyone to rethink the process. As a result, P&G reached out – way out. Embracing the emerging concept of “crowdsourcing.” they approached global communities of talent and innovation such as NineSigma, Yet2.com, Innocentive and others to seek solutions to problems. A Knowledge@Wharton article in December 2007 advised that a third of the dozens of problems posed on Innocentive have been solved. And that “the company was deriving 35 percent of its ideas from outsiders. Meanwhile, R&D productivity has soared 60 percent. A whopping 80 percent of its product launches are successful, compared to 30 percent for the consumer-products industry as a whole.”
That’s what you get when the right questions result in the right answers.
3. Get down in the trenches.
You won’t find the answers sitting behind a desk in the corner office. Go out and talk to people. Employees, customers, vendors. Lean executives already understand the critical necessity for going to the “Gemba.” The answers will come from the people on the ground, close to the action. Someone will figure out the right thing to do. The right way to do it. And the right person to get it done.
Living proof of how this works? As reported in a Wall Street Journal article in March, Subaru of Indiana has focused on Green initiatives for 20 years. As Alan G. Robinson and Dean M. Schroeder reported, “With employees at every level of the plant looking for ways to save energy, reduce waste and generally make processes more efficient, one measure of its success is a 14% reduction in electricity consumption on a per-car basis since 2000. An even bigger achievement: It has not shipped any waste to a landfill since May 2004.”
More validation. One of this year’s “Shingo Prize for Operational Excellence” winners, E-Z-Go (Textron), made massive improvements across the entire organization by examining the details of nearly every single process in its Augusta, GA manufacturing business. Since 2006, this “Gemba” effort has resulted in over 10% energy usage reduction, while plant water consumption decreased by more than 85% since 2003. VP of Quality/Six Sigma Westy Bowen credits E-Z-Go’s enterprise level transformation to the power of each team member’s passion for persistently challenging the status quo at every level across the organization. How’s that for getting Lean & Green?
And be decisive, but not inflexible. When you embark on your Lean & Green initiative leave plenty of room for people to get creative in the execution. Standardization works, but there’s a time and place for standards. Allow for a little chaos in the early stages. It’s amazing what can happen.
4. Show integrity. Always.
There are few absolutes in life. But integrity is one of those things that isn’t measurable in percentages. Either you have it, or you don’t. As a leader, you set the tone for entire organization by establishing and maintaining a culture of integrity and trust. And it can be every bit as sustainable as any Green initiative. Even more so.
A recent Thomas Friedman column in the New York Times quoted Dov Seidman, the CEO of LRN, which helps companies build ethical cultures: “There is nothing more powerful than inspirational leadership that unleashes principled behavior for a great cause.” What makes a company or a government “sustainable,” Seidman added, is not when it adds more coercive rules and regulations to control behaviors. “It is when its employees or citizens are propelled by values and principles to do the right things, no matter how difficult the situation. Laws tell you what you can do. Values inspire in you what you should do. It’s a leader’s job to inspire in us those values.”
When new leadership was needed at then-struggling Nordstrom in 2000, the board withstood criticism in selecting several fourth generation family members including Blake Nordstrom as CEO. While he might have placed responsibility for the chain’s problems on his predecessors, he told the Seattle Post-Intelligencer, “It was evident to my cousins and me that [our fall] was our fault – not the culture’s fault, but us personally.” They then set out to turn around the company and re-instituted their traditions of making hiring decisions based on values and character. As it says in The Nordstrom Way, “We can hire nice people and teach them to sell, but we can’t hire salespeople and teach them to be nice.” By the way – Zappos recruits for cultural fit (values and character) first, and skill sets second.
In a May interview with Adam Bryant of the New York Times, Wal-Mart Vice Chairman Eduardo Castro-Wright talks about walking this kind of talk. “There’s nothing that destroys credibility more than not being able to look someone in the eye and have them know that they can trust you. Leadership is about trust.” Sounds a lot like integrity to me; anyone else see a pattern here?
5. Be Transparent.
WYSIWYG is a good thing when applied to leadership. Make sure that people can see you are genuine and that you aren’t hiding behind a facade. A prime example of how this can work is on display every day at W. L. Gore & Associates. Best known for GoreTex, the company is a manufacturer of technology products for the electronics, industrial, fabrics and medical markets. In the culture at Gore, traditional titles don’t exist. There are no “employees,” only thousands of “associates.” Word has it that “leader” is a designation that is bestowed on certain associates when their co-workers decide they have earned it by accomplishing what they set out to do. People become leaders by earning the respect of their peers, something that can only be achieved by being real. So at Gore, you’re only a leader if others are willing to follow you. And they won’t be willing if they see that you’re not what you purport to be.
6. Inspire leadership in others. And recognize it.
Gamal Aziz, president of MGM Grand Hotel & Casino has sustained its place as the second most profitable hotel on the strip after the Bellagio into 2009. But ask him who deserves the applause and he credits the employees now more than ever. He told BusinessWeek, “Employee engagement in times of difficulties and severe economic climate is far more profoundly important now…It’s their decisions, their actions, their attitude that really make the difference.“
Castro-Wright, in that same NY Times interview said that he had long ago read something in his very early career days: “…you can accomplish almost anything in life if you do not care who takes credit for it. So I’ve tried to do more of that.” And he does that by empowering customers and Wal-Mart associates to offer their recommendations on the practical, down-to-earth requirements that drive Wal-Mart’s business success.
Indeed, it is President Harry S. Truman who gets the credit for having said “It is amazing what you can accomplish if you do not care who gets the credit.” This from a man who had that famous sign on his desk in the Oval Office that read “The buck stops here.” Harry knew when to recognize the contributions of others, when to take responsibility for making the hard choices, and of course, when to “Give ‘em hell.”
Constancy of purpose – constancy of change.
Deming tells us to “Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business and to provide jobs.” All worthy objectives for any organization, at any time. But as we all know, times change, markets change, people change, and even our changes change.
Recently, the While House announced the creation of a Chief Performance Officer position to monitor the impact of change and the people responsible for getting stuff done. I believe that this office could be a powerful, positive force by actually understanding what’s working, what’s not, and why. I’m going to keep an eye on how Jeffrey Zients performs in this new role (I encourage Mr. Obama to give me a call if Jeff doesn’t work out). Maybe we need a Chief Performance Officer in every organization. What do you think?
In closing, here’s a message from Winston Churchill, a master at confronting change and adversity, which I’ve always found inspirational: “Never give in. Never give in. Never, never, never, never–in nothing, great or small, large or petty–never give in, except to convictions of honor and good sense.”
Change is not giving in. It’s finding the way to win. Let’s find it together.