Leading at Light Speed by Eric Douglas

Developing Good Governance

Thu, 17 Sep 2009 05:38:42 GMT

I worked recently with the Board of Directors of a large public power company. They needed stronger governance systems. I talked about how effective boards work. I detailed our approach.

"With our framework," I told them, "the board expresses exactly what it wants the organization to achieve in the form of policies. By defining what it expects in writing, and by regularly monitoring those policies, the Board can do its job, staff can do its job, and the organization can achieve high levels of performance."

"But we already have policies," one board member said.

"You do have policies," I said. "But those policies are not the board's policies. They are a mixture of state and federal policy, with a lot of your staff's policy thrown in for good measure. I'm talking about a separate set of policies that express only what the Board wants the organization to achieve."

"Why would we need that?" said another board member. "Our policies seem fine to me."

"Because it would enable the board to communicate as a board," I said. "Right now, you communicate as individual board members. But the board of directors is a single entity, and the board needs to say what it wants. Otherwise, your staff has to guess. And that leads to all sorts of mischief and mayhem."

"Maybe we like it that way," said one board member. "We can then tell them to do what we want."

"Is that really how you want to communicate?" I asked. "What if you had 20 bosses, all telling you different things? How long would you last in that organization?"

I let that sink in. "Look, the best boards in the country use this framework. I've seen the results. It enables the organization to be clear about its priorities, clear about its measures of success, and clear on how it's going to evaluate the general manager or CEO. That's good governance. All boards should aspire to it."

"Well," said one board member. "Maybe we just like doing it our way."

At least that's honest, I thought to myself. Out loud, I asked, "How many of you would like to move toward this framework? How many of you would like to try this?"

A few hands went up, and then a few more. I looked at the one board member who was most vocally resistant. Slowly his hand went up, too. I looked around. All the board members were raising their hands.

"All right," I said. "It looks like you have made a decision. Let's figure out what you want to do next."

Strategic Change Management

Wed, 09 Sep 2009 00:43:12 GMT

I have written before about the “First Five Percent.” That’s my approach to strategic change management that says the quality of the first five percent determines what happens in the rest of the process.

I was in Los Angeles last week, working with a large association, on a strategic plan for their organization. It was the beginning of a year-long process to create a high-performing organization. One of the rules of the First Five Percent is to engage as many people as possible early on. You never know who has the good ideas. The more people you engage early on, the quicker you can identify the best thinking and the hidden resources.

There were 300 people in the room, including board members, chapter leaders, and local officers. The agenda was flexible. Depending on how the first exercise went, I was prepared to go in different directions to assure high levels of participation. The first question I posed was this: "Think about where you want the association to be in two years. Tell me the specific changes you want to see and your measures of success."

They worked on this question for 60 minutes and wrote down their responses on flip chart paper. Each group then reported out. I then asked them: "What did you hear yourselves say? What did you agree on?"

Everyone called out what they heard. "Increase membership." "Fill our vacancies." "Create a new business line." Their juices were flowing.

"How would you measure success?" I asked. They shouted out what they'd heard. I listed four specific measures of success. I asked if they all agreed. Everyone raised their hands.

They took a quick break for lunch. While the room was quiet, I thought about my next move. I looked over all of their reports, and decided I should simply tap into their energy. I listed 12 goals on flip chart paper. Each goal came from them, like "Double our membership" or "Increase our political clout." I posted these goals on the walls of the room. When they came back from lunch, I said: "Take a look around the room. These are your goals. Find a goal you feel passionate about. Go stand by that goal. For those of you who are passionate about some other goal, there are blank pieces of paper."

The group divided itself into teams around each goal. I asked them to develop an action plan for each goal and then report out. During the report-outs, I identified key issues that needed to be resolved and facilitated a discussion around each issue. When people drifted off topic, I invoked the two-minute rule ("Anything important can be said in two minutes") and they got back on course. We wrapped it up at 4 p.m.

I asked people to tell me what they liked about the meeting. "It was energizing," someone said. "Great ideas!" several people said. "Your guidance," someone said. "The two minute rule!" several shouted. "We're excited to be building our organization," a woman said.

"And what would you like to change?" I asked.

"That we have to leave!" a man shouted. Everyone laughed.

Our Change Management Model

Sat, 29 Aug 2009 05:16:43 GMT

When people ask me to describe our change management model at LRI, I tell them it boils down to three principles.

Principle number one: focus on the first five percent. What you do to gather champions, set expectations, how extensively you engage stakeholders, and how well you paint a picture for people of the decision-making process will go a long way toward guaranteeing a successful outcome. Let me emphasize the importance of engaging many people early on - those who will be affected by the decision and those whose expertise can help. Even when ideological stances are strong, early engagement is always the better approach (as opposed to shutting people out of the process).

Principle number two: Focus on defining the root problem. Solutions don't matter unless you define the problem correctly. We emphasize a systems approach. Too often people say things like: "We need better products," or "we need more sales, or "staff isn't working hard enough," without looking at the reasons why. Very often, the answer lies in looking in the mirror - at what you're doing or not doing. One systems approach is to look at the organization's core values - the things essential for its success. You can make tough decisions look easy if you ground them in well-understood core values.

Principle number three: Find a good guide. An experienced guide can set the tone, keep an open mind, identify key issues, articulate points of agreement, and keep things moving. A guide should be able to offer models and examples from other organizations. The courage to handle uncertainty and adversity is also important, along with a healthy sense of humor. Good, experienced guides are hard to find. But they are absolutely essential to our change management model.

Staff or Management?

Fri, 28 Aug 2009 03:56:43 GMT

The chief executive of a non-profit organization asked me to come to a meeting of her management team to talk about the performance of staff. When I arrived, she ushered me into a conference room. The four other members of the management team were already at the table. "We want to tell you what's going on," she said.

"First, the staff doesn't seem very motivated," said one vice president. "I wish they would just do their jobs."

"Everyone's feeling overwhelmed," said another v.p. "They don't show any initiative," said another.

The conversation continued. As they continued to criticize their staff, I picked up a few more clues. The CEO said she was trying to be more democratic in making decisions. A senior v.p. said he hadn't met recently with staff because of his workload.

I jotted some notes in my notepad. "Management or staff?" I wrote. I decided to trust my instincts. "Look, here's what I think is going on," I told the management team. "I think the problems with your staff begin with you. I am guessing you are not communicating very well. Your meetings don't have clear action items. Your delegations to staff aren't clear."

"Change happens in three ways," I said. "It can be top down, bottom up, and inside out. In this case, I think the change you're hoping to see in your staff begins with you."

I paused. They were looking at me. "Can you help us?" one said.

"Sure," I said. "We can provide you tools to help you manage decisions better and run meetings more effectively. We can begin next week."

"That would be great!" they said. "Would you draw up a proposal for that?" said the CEO.

They were all smiles as I left the meeting. It was a good reminder: Don't always believe what your clients tell you!

Fixing Corporate Boards

Sat, 30 May 2009 14:27:24 GMT

There's a good piece in the New Yorker this week called "Board Stiff." The writer, James Surowiecki, makes the case that corporate boards still aren't doing a very good job minding the store for shareholders. Despite "reforms" like increasing the number of outside directors and increasing the ethnic diversity of corporate boards, he argues, the boards of publicly traded companies still aren't effective in anticipating problems or preventing business meltdowns. The main reason, he cites, is that board members still rely on their CEOs for information. There's no clear autonomy or ability to challenge the CEO's thinking.

One reason is that the CEOs of publicly traded companies still play the largest role in selecting directors, which results in a loyalty system that makes it difficult to rock the boat. Directors don't have enough power or time to really direct; instead, they typically see their most important job as selecting the CEO. It's not until there's a crisis of confidence in the CEO that the Board steps in, and by then it's too late.

I've worked extensively with corporate boards. I've also worked extensively with the boards of many other types of organizations: non-profits, public agencies, universities, and cooperatives. One thing stands out: the CEO typically doesn't serve on those boards. That confers some clear advantages:

First, it's a lot easier to clarify the roles of the Board and the CEO when there's clear separation of powers.
Second, it enables the Board to structure its work so that it truly understands the issues of the company and can set overall direction and policy.
Third, it forces the Board to be held accountable. It can't fall back on the excuse that "we relied on the CEO."

That's a powerful case. But implementing a CEO-less board of directors runs up against a counter-veiling force: the ability of CEOs, under the current system, to control their boards and not be governed by them. That, fundamentally, is what stands in the way of fixing corporate boards.

Traits of Successful CEOs

Wed, 20 May 2009 05:59:41 GMT

A recent study measured successful CEOs for the Big 5 personality traits (openness, agreeableness, conscientiousness, extraversion, and stability) and found the closest correlation with conscientiousness. The authors of the study, Steven Kaplan, Mark Klebanov and Morten Sorensen (“Which C.E.O. Characteristics and Abilities Matter?”) relied on detailed personality assessments of 316 C.E.O.’s and measured their companies’ performances. So where do you think you are on the conscientiousness scale? Here are some sample questions:

I am always prepared.
I am exacting in my work.
I follow a schedule.
I get chores done right away.
I like order.
I pay attention to details.
I leave my belongings around. (reversed)
I make a mess of things. (reversed)
I often forget to put things back in their proper place. (reversed)
I shirk my duties. (reversed)

Regardless of whether you think you score high or low on this scale, you should not leap to the conclusion that these are the most important traits of successful CEOs. On the contrary, I can point to dozens of case studies in which passion, honorable behavior, and humility played a much greater role in defining successful leaders and successful companies. The real difference between the successful and not-so-successful CEO has nothing to do with personality. It has to do with traits that are learned, like persistence, efficiency, analytic thoroughness and the ability to work long hours. It would be easy to miss this point if you were inclined to put too much faith in nature, not nurture.

The Pygmalion Effect

Fri, 01 May 2009 05:40:05 GMT

The waitress who came to our table didn't make eye contact. She took our order without smiling. As we got our food, I noticed she was treating other customers testily, too.

"I wonder why she waits on tables," my lunch companion said to me. "She clearly isn't enjoying it."

"I wonder about her manager," I said.

We started talking about techniques for converting lackluster employees into first-rate ones. He told me a story about a fast-food business he had managed when he was younger. The cashier in the drive-through window was a woman who never smiled. He sent her to customer service training, but he couldn't get her to change her attitude.

"What did you do?" I asked.

"I told every employee they had to collect data on how well they were doing their jobs. For each employee, I set up a measure that would improve their performance."

"What did you tell her?"

"In her case, I told her to count how many smiles she received from customers each day."

"That's brilliant!" I said. "Did it work?"

"I saw the improvement right away. Because she was measuring smiles, it made her more conscious of what I expected her to do. When she smiled, she found that people smiled back. In a week she was a completely different employee."

That's a great example, I said, of the Pygmalion effect. People perform better when they are expected to perform better.

My friend asked me if I had written about it.

It's a basic part of managing well, I said. Your attitude toward other people affects how they perform. By communicating to her the way you did, you raised her awareness and helped her perform better. Nice going.

That woman could charm the buns off a hot dog, he said with a smile.

Governance and Performance

Tue, 03 Mar 2009 04:43:10 GMT

I was talking about good governance with an elected official, a member of a city council. "What do you do to encourage good governance?" I asked him.

"I ask people what's going on. I ask employees at all different levels how they're doing. That's how I find out which departments are well managed, and which are not."

"Really?" I asked. "Is that how you spend your time?"

"I think that's why the people elected me - to find out what's going on." He said the city charter permitted him to "get whatever information he wanted from whomever he wanted." He could call a parks employee, ask why the grass hadn't been watered, and expect the employee to tell him.

"Who would let the city manager know?" I asked.

"It's not my job to tell the city manager," said he said. "I assume the employee will tell him."

"But couldn't that lead to chaos?" I asked.

"I don't know."

"What about determining the overall direction of the city, and setting long-term policy, and setting performance goals for the city. Isn't that the city council's role?"

"We don't have performance measures," he replied.

"Well, that explains a lot." I smiled. "Listen, you have no formal feedback mechanisms. So you've had to go out and invent your own. I can understand that."

He nodded. "Do you know how I measure whether the streets are being cleaned? I put a newspaper in the gutter and then check a day later to see if it is still there."

Imagine what would happen, I said, if the city council did define performance measures. "Then you could focus on measuring performance, not as individuals inventing your own measures, but using agreed-upon measures. That would create alignment at the top - and lead to a clear understanding of everyone's role."

The city councilman grinned. "That would be a good trick." He said his goodbyes and left.

Yes, I thought to myself. It is a good trick.

Good People, Bad Partners

Sat, 28 Feb 2009 16:58:02 GMT

What makes good people be bad partners? Over the past month I've witnessed the dissolution of a law firm's 15-year partnership. It began when one of the senior partners filed for divorce. The timing was unfortunate. It came just weeks before two high-powered associates were scheduled to buy shares. A buy-in signals the value of the stock. Fearing the repercussions, the senior partner (the one with the looming divorce) announced he wanted to put the deal on hold. "We have to wait," he told his colleagues. Secretly, he was holding out for more money.

Fast forward two months. Five partners split away, forming a new firm, taking several associates with them, including the two who were scheduled for the buy-in. The senior partner became one of four shareholders in the firm. Three months later, the firm filed for bankruptcy, citing an excess of debt and an inability to draw in new investors.

Could this have been prevented? Of course. With the appropriate governance mechanisms, the firm could have put in place systems to deal with conflicts such as these. It requires trust to build those types of systems - and a desire to make those decisions long before trouble occurs. Most important, everyone needs to assume responsibility. In this case, they hadn't. And that made all the difference.

A Balanced Scorecard for Public Agencies

Wed, 14 Jan 2009 00:00:52 GMT

I work with a lot of public agencies and their Boards of Directors. Typically, my focus is on helping these Board develop a high-level scorecard that the Board can rely on for measuring the organization's performance. This, in turn, will accelerate the organization to attain higher levels of performance.

The important thing about the scorecard is that it has to be balanced. It has to balance all the aspects of what is essential to the organization's success - from financial sustainability to customer satisfaction, from product reliability to ethical integrity.

The organization's core values are the things that, if the organization could speak for itself, it would say are most important to it. Each of them can be measured. A balanced scorecard will look at 8-10 different categories of core values and assign metrics and targets to each of them. A tool on our website called Developing Core Values explains this in detail.

An unbalanced scorecard, in contrast, will have too many metrics. They won't be focused on outcomes, but rather on outputs. Too many of them will fall into one category, like financial. Other core values, like integrity or environmental stewardship, may be neglected.

What I Learned at Disneyland

Sun, 04 Jan 2009 03:26:58 GMT

My family and I just came back from four days at Disneyland. Christmas to New Year's is always the busiest time at the Magic Kingdom. But despite the huge crowds, people were smiling and having fun. We all know that Disney Corp. is a master of integration, with classic cartoon characters, movies, theme parks, hotels, and cruise ships woven together into a seamless spectrum of products and entertainment. We also know that Disneyland is a place where the child in us can come out and run free. I watched a couple from Japan, both in their 30s, with no children in tow, behave like little kids at the sight of Minnie Mouse.

But what I realized is that Disney is not only in the integration business. It's also in the transportation business. Disney makes people happy by transporting them back to a state of childlike happiness. There's no other place that does that half as well. Whether singing along with audio-animatronic pirates or getting your photo taken with Eeyore, every moment is designed to transport you back to a happy memory from childhood.

It got me to thinking that every company needs a similar "transportation" strategy - a strategy for transporting people to a happier place mentally and emotionally. That strategy will be driven by a deeply ingrained vision of how you want to make people feel.

So ask yourself: "What is our transportation strategy? How do we want to make people feel?" Whether a bank, a restaurant, or clothing store, every company should have one. If not, your customers will see you as a commodity, and value you accordingly. In these economic times, that's a risk you can hardly afford to take.

Citigroup's Crisis

Mon, 24 Nov 2008 03:09:04 GMT

It is inevitable that you will at some point in your career face a situation that requires extraordinary courage under fire. For Citigroup, the world's largest financial services company, that time is now. So far, the response is not impressive.

Part of the explanation may be the insular nature of the Citigroup's culture. According to The New York Times, Citigroup's CEO Charles Prince worried about the risk posed by mortgage-backed securities in 2007, but received assurances that Citigroup's balance sheet was in good shape. How wrong can you be? Now Citigroup's new CEO Vikram S. Pandit is facing his biggest test.

There are two rules to follow in a crisis. Rule number one is this: Protect other people first; customers, employees and citizens. Not your shareholders or yourself. Protect the public and your customers, and the shareholders will follow. Why? Because the company's long-term reputation and goodwill are more important than any short-term risk to shareholder value or your own job security. Rule number two is a corollary to the first: Be prepared to reframe and expand your level of responsibility. In other words, accept responsibility even if you're not at fault. This may feel counter-intuitive, especially when someone else is clearly culpable. But reframing and expanding your level of responsibility will help lead you out of the crisis.

Consider this well-known example. In 1989, the oil tanker Exxon Valdez went aground in Alaska's Prince William Sound. Eleven million of oils spilled onto pristine shoreline. In the immediate aftermath, Exxon's CEO Lawrence Rawl was slow to accept responsibility. Instead he issued a flurry of press releases stating that the company was investigating the accident. The opportunity to quickly contain the spill was squandered. Hundreds of miles of coastline were fouled. Public furor built and the company’s reputation plunged. Several weeks passed before Rawl grudgingly announced that the company would take responsibility for the clean up. Eventually, thousands of workers and volunteers were mobilized to mop up the oil, save the wildlife, and minimize the damage to the extent possible. But Exxon’s public image was left in tatters because its immediate response was too slow. William Reilly, then head of the Environmental Protection Agency, said Rawl’s response was “a casebook example of how not to communicate to the public when your company messes up.” Rawl’s reputation never recovered.

In contrast, when a container of Odwalla apple juice contaminated by the bacteria e coli resulted in the death of a child in 1996, CEO Greg Stepensall stepped in right away and assumed personal responsibility. He recalled every Odwalla product. He paid out huge sums to the families affected by the tainted products. He held regular press conferences to ensure the public knew what was going on and how the company was responding. For more than a year, Odwalla retooled its production lines, adding flash pasteurization to ensure no future incidents could occur. Sales fell 90 percent but Odwalla survived with its reputation intact.

As the Exxon Valdez and Odwalla examples show, leaders have a clear choice in how they frame their response to a crisis. On the one hand, they can respond out of a “protect ourselves” mentality, as Exxon did in the Exxon Valdez disaster. Or leaders can think and act out of a larger ethical context, as Odwalla did. Citigroup has committed the financial equivalent of that catastrophic oil spill. Let's see how they respond.

Accelerating Trust

Fri, 07 Nov 2008 17:10:56 GMT

Studies over the past few years have shown that trust can grow quickly among people from different backgrounds, given the right circumstances. As I've written before, high levels of trust is one of the cornerstones of great organizations. These new studies provide insights into exactly what kind of communication accelerates the growth of trust.

A New York Times article details this research. When two strangers are brought together for four, hour-long sessions and engaged in trust-building exercises, the results can be surprisingly long-lasting. In the first hour-long exercise, people share their responses to a list of questions, ranging from "would you like to be famous? In what way?" to "If you could change anything about the way you were raised, what would it be?"

In the second hour-long meeting, one pair competes against another in a series of games. In the third hour-long session, they talk about whether they are proud of their heritage and family background. Finally, in the fourth session, members of each pair take turns leading the other through a maze while blindfolded.

This research has fascinating implications for trust-building exercises in an organization. Our firm will often facilitate exercises with team members in which we ask them to talk about their proudest moment, or their scariest moment, and what they like most about the team, and what they like least. A second exercise consists of games in which teams compete against each other to fill a trash can with ping-pong balls and other silly tasks. A third session focuses on creating a shared vision of team success. And a fourth session often consists of trust-building exercises, such as leading a blindfolded partner through an obstacle course set up in the office.

These may seem trivial. But the research has shown the results to be long-lasting. These kinds of exercises create relationships "as close as any relationship the person has," said Art Aron, a social psychologist at Stony Brook University who developed the program described in The Times article ("Tolerance Over Race Can Spread, Studies Find"). http://www.nytimes.com/2008/11/07/us/07race.html?scp=3&sq=racial%20tolerance&st=cse

Obama’s Leadership Style

Tue, 04 Nov 2008 19:51:21 GMT

I've studied the leadership styles of America's presidents for the past 15 years. I particularly pay attention to the types of people that presidents like to have around them. It says a lot about a man’s (or a woman’s) character to know whether they encourage a difference of opinion, or whether they like to be surrounded by "yes" men. It’s a tipoff to whether a president has an open, curious mind, capable of learning and adapting, or whether a president is essentially intolerant of dissent.

Nixon and Reagan were famous for surrounding themselves with people who thought like they did. George Herbert Walker Bush, in contrast, invited a variety of opinion. Clinton is famous for changing his mind frequently - and being too undisciplined.

Reading The Sunday New York Times this week, I'm remembering the old McCain, the pre-campaign McCain who was always up for a good intellectual fight. Maureen Dowd's column asks pointedly, where did that McCain disappear to? I also remember the current President Bush in his Texas days, when he was seen as a uniter, not a divider. How did Texas George transmogrify into Guantanamo George? (For that matter, how did he wind up with Karl Rove and Dick Cheney?)

Obama is keenly aware of his place in history. He's run a very disciplined campaign, a campaign that thinks strategically, looks at every option carefully, makes tough choices, and then executes. We need the same in the White House. We need to see the same Obama that we've come to admire during the campaign. The next few weeks will be interesting to watch as President Obama begins to assemble his team. It will tell us a lot about what we can expect over the next four years.

The Leader Coach

Mon, 20 Oct 2008 02:22:17 GMT

Watching the baseball playoffs makes me think back to the times when I played on teams in school. In particular, it makes me think about what coaches do to help their teams win. If your coach was any good, he or she did all of the things listed below:

Make sure you know the rules of play
Get you in shape
Drill you on plays
Figure out your strengths
Define your role
Challenge you to improve
Boost your confidence
Build team camaraderie
Help you win during the game
Think long-term about the team's needs

A leader-coach does all these things. I want to focus on two here: Drilling you on plays and helping you win during the game.

When your actions affect hundreds of people, you need to be drilled in advance so you’re prepared to do the right thing: how to communicate, who needs to be in the loop, what pitfalls to avoid, how to detect early signs of trouble. A leader-coach will take his or her team through simulations and exercises designed to get you prepared. At HSBC Bank, for example, managers are drilled on how to handle cross-border disputes. At Sprint, IT managers are drilled on crisis management. It’s easy to see how this investment can pay off. At Sprint, dozens of network problems are headed off each day because their teams are prepared.

Leader-coaches also help you win while you’re playing the game. They provide real-time feedback as you’re handling an issue, offering support and giving useful insights. Their doors are open, they keep their heads, they offer perspective. I’ll never forget how one of my first bosses helped me deal with deadline pressure. “Look,” he said with a grin. “The beauty of the business is that everyone forgets what you did after 24 hours. So if you screw up, you can make it right in a hurry."