The Duties of a Leader

"The goal of thinking hard about leadership is not to produce great or charismatic or well-known leaders. The measure of leadership is not the quality of the head but the tone of the body."  

--Max Dupree

In 1993 I had the privilege of attending a conference sponsored by Leadership Network in Orlando, Florida. This was an opportunity to learn from better minds about sound behaviors related to leadership and management.

On the program were two men of distinction who have had a lasting impact on many individuals--Dr. William Bridges and Max Dupree.   

Dr. Bridges, who passed on February 17, 2013, at age 79, was known for his pioneering work, transforming the way people think about change. The title of his first book, Transitions, was written after the loss of his wife, Mondi. It has sold over a million copies.  

The thesis for Dr. Bridges' teaching is simple: It's essential to understand transition (internal) as a way for organizations to be successful when undertaking change (external).

"It's not the change--it's the transition"

Harvard-educated, Dr. Bridges was low-key in his approach to transition--always with practical applications. The context for that presentation in 1993 was that the topic of change was all the rage. Books were flying off the shelves (few e-books then) from experts telling all who would listen that their businesses needed to change and offering ways to make that happen.  

William Bridges reminded us that if you want to be a champion for change, it's critical to allow for the emotional and psychological responses (transitions) that employees, and organizational cultures, go through at different speeds.  

An important insight.

An absence of corporate jargon

Next came Max Dupree, author of the best-seller Leadership is An Art, first published in 1989. Mr. Dupree died on August 8, 2017, at 92.  

Mr. Dupree was a chief executive officer of the office-furniture maker Herman Miller, Inc., Zeeland, Michigan, from 1980 to 1987. He was also the son of the company's founder, D. J. Dupree, who started the business in 1923.

The signature thought in Leadership is An Art:

"The first duty of a leader is to define reality. The last is to say thank you. The leader must become a servant and debtor between the two. That sums up the progress of an artful leader." 

Max Dupree's writing was informed by his work in the family business and his Christian faith.  

Suggesting corporate leadership embrace "oddballs" and form "covenantal bonds" with employees was outside the mainstream for management books nearly three decades ago.   However, his clear thinking and fresh ideas resonated with many. Leadership is An Art sold over 800,00 copies in hardcover and paperback, influencing a generation of business and nonprofit leaders. 

Character-shaped principles 

Here are principles that guided Mr. Dupree's life:

1. The signs of outstanding leadership appear primarily among the followers. Are the followers reaching their potential? Are they learning? Serving? Do they achieve the required results? Do they change with grace? Manage conflict?

2. Try to think about a leader, in the words of the gospel writer Luke, as "one who serves."

3. Leadership is a concept of owing certain things to the institution. It is a way of thinking about institutional heirs, a way of thinking about stewardship as contrasted with ownership.

4. The art of leadership requires us to think about the leader-as-steward in terms of relationships; of assets and legacy; of momentum and effectiveness; of civility and values.

Leaders should leave behind their assets and a legacy.

5. People are the heart and spirit of all that counts. Without people, there is no need for leaders.   

6. Leaders are responsible for future leadership. They need to identify, develop, and nurture future leaders.

7. Leaders owe a certain maturity. Maturity is expressed in the sense of self-worth, a sense of belonging, a sense of expectancy, a sense of responsibility, a sense of accountability, and a sense of equality. 

Another way to think about what leaders owe is to ask this question: What is it without which this institution would not be what it is?

Final thoughts from Max Dupree

No doubt humility plays a role in the progress of an artful leader. At least, that was my impression after hearing from Mr. Dupree.  

What do his closing words below say to you?

"In a day when so much energy seems to be spent on maintenance and manuals, on bureaucracy and meaningless quantification, to be a leader is to enjoy the special privileges of complexity, of ambiguity, of diversity. 

"But to be a leader means, especially, having the opportunity to make a meaningful difference in the lives of those who permit leaders to lead."

Strategist.com

(C) Bredholt &  Co.

   

An Address about Justice

"The essence of justice is mercy."

--Edwin Hubbel Chapin

Here's a commencement address delivered on June 3, 2017, by U.S. Supreme Court Chief Justice John G. Roberts, Jr.  It's given at the Cardigan Mountain School, Canaan, New Hampshire.  Chief Justice Roberts' son, Jack, is in the graduating class.

Cardigan is a school of privilege where graduates are going to hear from the Chief Justice about the need to experience "injustice" at some point in their lives: 

"I hope you will be treated unfairly, so that you will come to know the value of justice."

The wisdom in his speech is helpful for all ages.

It's 18 minutes long but may be worth your time viewing.

Strategist.com

(C) Bredholt & Co.

Tracking the U.S. Economy

"Stocks opened at a record high Monday, June 19, 2017, with the Dow Jones Industrial Average topping 21,453 as tech stocks rebounded from a lackluster prior week." 

--NBC News

We keep reading headlines about the Dow Jones Industrial Averages hitting new records. 

What's the Dow?

The Dow is a stock index made up of widely traded large companies created by Dow Jones & Company editor and co-founder Charles Dow in May 1896. From that beginning, only General Electric remains on the list.

There are nearly 100 indices (Nasdaq, Russell Indexes, Standard & Poor's). But the Dow Jones Industrial Average seems to get most of the attention. 

Ever wonder what companies make up the Dow 30? Here's a look at the current list:

MMM 3M

AXP American Express

AAPL Apple

BA Boeing

CAT Caterpillar

CVX Chevron

CSCO Cisco

KO Coca-Cola

DIS Disney

DD E I du Pont de Nemours and Co

XOM Exxon Mobil

GE General Electric

GS Goldman Sachs

HD Home Depot

IBM IBM

INTC Intel

JNJ Johnson & Johnson

JPM JPMorgan Chase

MCD McDonald's

MRK Merck

MSFT Microsoft

NKE Nike

PFE Pfizer

PG Procter & Gamble

TRV Travelers Companies Inc

UTX United Technologies

UNH UnitedHealth

VZ Verizon

V Visa

WMT Wal-Mart

Source:  CNN Data Dow 30

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Remembering Harry Handley 1939 - 2014

"Statistics are no substitute for judgment."

--Henry Clay

I recently received word that a former colleague and friend, Harry Handley, passed away. 

Harry would be at or near the top if I created a list of brilliant people personally known. Our meeting not long after I arrived in Central Florida in 1982 was providential. A company I owned, CRA Research Group, was looking for new business and expanding its services. Prospective clients wanted greater access to database marketing information, which was Harry's specialty.  

Harry Handley (1939-2014)

Walt Disney Attractions would not be on our client list were it not for Harry's unique problem-solving skills. His was a cluttered desk but an uncluttered mind.  

A former NASA engineer and research director for ABC, Harry was a teacher, not just a demographer and statistician. One of the more important lessons he taught was to "qualify" quantitative data. Understand the numbers by knowing who or what values those numbers represent.  

Time and again, he used the illustration of focusing too much on large numbers (100,000) and not enough on qualifying the characteristics of households, even if a smaller number (10,000) represented greater profit potential.   

Why do some businesses believe casting a wider net is better for prospecting?

Because they want to cover all the possibilities. However, that tends to be a misguided approach to marketing and costly. Attracting the right customers, not chasing the wrong ones, is a better way. (See the decision by General Motors CEO Mary Barra to exit Russia, Europe, and India in favor of more profitable markets.)        

My time with Harry pre-dated the Internet and social media. It was a different era, to be sure. Yet finding the right demographics, household characteristics, and motivations for purchasing remain building blocks for successful marketing campaigns in a digital age.  

A problem with big data is that few know what to do with it. Algorithms, where computers learn and repeat human behavior, can also magnify misbehavior. And the automation of reasoning carries risk.   

Therefore, when appropriate, add to data the need for human judgment.

Such was the wisdom of Harry Handley.   

Strategist.com

(C) Bredholt & Co.

 

   

Making a Course Correction

"If you do not change direction, you may end up where you are heading."

--Lao Tzu

When should C.E.O.s change strategy?   

In his book Strategic Thinking, George Morrisey writes, "You change strategy whenever you determine that the one you are following is no longer likely to lead you in the appropriate direction."

Organizations tend to change direction for one or more of the following reasons:

• To pursue new opportunities
• Fill performance gaps
• Take advantage of new technology
• New ownership or management
• Respond to crises  

For some, it's a matter of corporate A.D.D.--they can't stay in one place very long.

Regardless of why revisions are made, living in a digital world may shorten the lifespan of your business model (i.e., assumptions about how you plan to make money).

What can we learn from the evolution of strategies?

The bumpy road ahead

One example of how bad things were during the Great Recession ten years ago was the disastrous condition of the U.S. auto industry. At the end of 2008, Ford Motor Company was just months from running out of cash. Congress threw the three significant automakers a taxpayer lifeline. General Motors and what is now Fiat Chrysler decided on a bailout. Ford chose to save itself. Even mortgaging its blue Ford oval.  

Alan Mulally arrived at Ford in 2006 from Boeing Commercial Airplanes, where he was C.E.O. After an assessment of the situation, he and others put together a strategy around unifying global operations, transforming a lackluster product lineup, and changing a culture of infighting and backstabbing. This strategic roadmap, created in crisis during the now celebrated "Thursday" meetings, was designed to save the company and keep Ford in the hands of the Ford family.  

One Ford was the mantra under which employees carried out what has been described as one of the greatest comebacks in business history.

Why change Ford's strategy?

With the rise of electric and self-driving vehicles, Mr. Mulally's successor, Mark Fields, is doubling down on a Two Fords strategy recasting the company as an automaker and transportation services provider.

The single mission and message of former C.E.O. Mulally (One Ford) is moving to a broader mission aimed at taking on new Silicon Valley competitors such as Tesla Motors, Alphabet's Google, and now, Apple. In addition, rumors of Amazon getting into self-driving automobiles are beginning to surface.

Tesla delivered 76,230 electric vehicles in 2016, is losing money, yet has a market cap of $53 billion, more than G.M. ($49 billion) and Ford ($44 billion), as investors are treating Tesla as a tech business, not a manufacturer.

All major auto companies, including Ford's crosstown rivals GM and Fiat Chrysler, are hedging their bets on what they believe is likely to be a very different transportation future, one not imagined in Detroit a decade ago.

Update: 

On May 19, 2017, Ford's Board of Directors fired C.E.O. Mark Fields. Instead, it installed Jim Hackett, head of Ford Smart Mobility, as C.E.O.  Hackett was previously C.E.O. of Steelcase, and Interim Athletic Director at his Alma Mater, the University of Michigan.

Blue light specials

Although the $155 billion department store industry has often proved its critics wrong, the onsite retail shopping experience may be at a breaking point. While e-commerce has been expanding for a decade through smartphones and other devices, department stores, and apparel chains are not keeping up.

Full-service stores have declined for two decades, with consumers moving to off-price retailers such as T. J. Maxx and Dollar General, which plans to open 1,000 stores this year.  

The U.S. Labor Department reported 60,000 job losses in February and March of this year in the retail sector, with significant retailers scheduled to close over 3,000 stores in 2017.  That number includes chains such as Macy's, J.C. Penney, K-Mart, Sears, H.H. Gregg, and Payless Shoe Stores.

Even Polo Ralph Lauren, with its affluent customers, is not immune to closing its store on Fifth Avenue in New York City due to declining sales and profits at the company. 

Why the consolidation?

Over-expansion would be on the list. Newer shopping centers. A shift in where discretionary dollars are spent--from products to services. Harried households are too busy to drive to a mall. However, online shopping is a significant disruptor of retail, making it easier for consumers to bulk purchase non-perishable goods (diapers) and, sometimes, with free delivery, all from the convenience of home.

The future could be warehouse distribution centers replacing malls in urban areas.

Think Amazon.

Walmart announced last month a new discount program covering 10,000 items for customers who order online and go to the store or pickup. That promotion expanded to one million items in June of this year.

Others, like Target and Office Max, are fighting back with technology, personal service, in-store pickups, and smaller stores. Costco uses groceries to distinguish itself and does well against Amazon.  

Macy's new C.E.O., Jeff Gennette, says his company is a "sea of sameness in what it sells today." His plan--cutting back on fashion basics to make room for higher-priced and trendy clothing. Macy's will offer more options for bargain shoppers going to outlets and other discounters to cover both ends of the shopping spectrum.

It could be that Macy's real estate is worth more than its retail operations.

Hey-hey!

The sports business is not immune to changes in strategy. Most often, those decisions take place on the field of play by the team manager. What about the front office?   

After a 108-year wait for a World Series Championship, the Chicago Cubs won it all in 2016 in one of the tremendous series-ending finales of all time against the Cleveland Indians. Talk about a "hey-hey!" moment, to quote the late Cub's announcer, Jack Brickhouse.  

Did that long drought end with good pitching?  

Theo Epstein, the Cubs President of Baseball Operations, big on statistics during his time with the Boston Red Sox, decided to move from quantitative to qualitative methodologies. Instead of an overreliance on analytics, Epstein went for a three-pronged, holistic approach:  (1) hiring for character, (2) limiting how data is used, and (3) building stronger relationships among the core players, thus avoiding isolation.

Together with the 2015 National League Manager of the Year, Joe Maddon, Epstein's primary focus on character proved a winning strategy for 2016--and hopefully beyond.

Back to basics

Here's breaking news: McDonald's will return to its original identity as an affordable fast-food chain and "stop chasing after people who will rarely eat there."

"Our greatest opportunities are at the core of our business," Chief Executive Steve Eastbrook said recently. The tighter focus appears to be paying off with better-than-expected first-quarter sales globally and in the U.S.

McDonald's has lost around 500 million food orders in the U.S. in the past five years as it tried and failed to widen its customer base. The company offered different menus, adding more salads, snack wraps, and oatmeal, to no avail.  

Interestingly customers weren't leaving for fast-casual chains such as Panera. Instead, they were going to other fast-food chains like Burger King.  

So the new strategy is "not to be different but be better," says corporate strategy vice president Lucy Brady.  

McDonald's reached that conclusion by talking to its customers. Getting feedback (even from non-customers) is one way to help determine the proper course correction. Better to discover opinions firsthand and put them into the mix than to cook up strategies in isolation, far from the dwindling crowds.

Gaining clarity on a business's true identity, as McDonald's seems to have done, is a significant first step in closing the strategy-execution gap.

Strategist.com

(C) Bredholt & Co.

  

The Struggle with Strategy

"No worthwhile strategy can be planned without taking into account the organization's ability to execute it."

--From Execution by Larry Bossidy and Ram Charan

It's pretty standard that when things go wrong in corporate life, there's a tendency to blame the marketplace, disruptive actions by competitors, timing, and even government regulations. Each of these factors can and does weigh against the best strategic plans. Those plans are attempts to identify, hopefully in plain language, the desired future for the organization and how to make it happen (strategy defined).  

However, there may be something more critical than rounding up the usual suspects.  

"The single greatest reason companies get into trouble is because CEOs are bad at strategy," says Cesare R. Mainardi, adjunct professor of strategy at the Kellogg School of Management and a former CEO of Booz & Company.   

Writing in The Wall Street Journal, Professor Mainardi quotes two statistics from a global study about leadership capabilities:  

"81% of the time when major shareholder value is destroyed, it's because of bad strategy decisions (Ron Johnson, former CEO at J. C. Penney). And only 8% of all executives are good at strategy and execution--that is, betting on the right strategy and doing the right things to make it happen (Jeff Bezos, current CEO at Amazon)."

Day-to-day matters

"If things go sideways, it is most likely the strategy and execution decisions made day-in and day-out," Mainardi concludes.

The apparent self-deception facing an enterprise is that it often appears to be doing all the right things, focusing on growth, pursuing excellence, reorganizing for change, and creating a lean structure. Yet that list often proves to be nothing more than imitative rhetoric.

"Conventional wisdom is actually a trap ... it creates a huge gap between a chosen strategy and the ability to deliver it," the study notes.  

In their best-selling book referenced above, Bossidy and Charan point out that "execution requires a comprehensive understanding of a business, its people, and its environment."   It means top management is to be clear--but not too clear--about strategy, focusing on the objective while not defining the day-to-day execution method.       

Roger Fisher, former director of the Harvard Negotiation Project, put it this way: "Distant visions and hard work are both required, but unless what you do today is related to where you want to end up, you will never get there."     

The idea of mutual accountability for results may be too uncomfortable for some. If so, it explains, in part, why the strategy-execution gap is not broached more often in corporate and business unit discussions.   

Closing the gap

What are ways to help close that gap?  

Professor Mainardi offers the following:

1.   Commit to an identity. Stop endlessly chasing growth. Invite it. Define one's self by what one does--not just what one sells. A genuinely differentiating identity is built on bespoke, difficult-to-build capabilities.  If a leader chooses to be true to their company's identity day in and day out, they can build a great company.

2.   Translate the strategic into the everyday. Stop the endless benchmarking. Focus on building the handful of unique, cross-functional capabilities that deliver on strategy. Leaders must roll up their sleeves and be close enough to the execution to become the architect and chief builders of the qualifications needed.

3.   Put culture to work. Stop fighting a company's culture and blaming it for undermining strategy. Start putting it to work instead. No culture is perfect. The key is identifying and leveraging the parts that work in a company's favor.

4.   Cut costs to grow stronger. Stop making the classic mistake of going lean everywhere. Most companies waste 20% to 40% of their budget on expense items that have nothing to do with their strategy.

5.   Shape the future. Stop constantly reacting to market changes. Agility is overrated. It has unfortunately become code for throwing out strategy and chasing any opportunity one thinks might work. The best way to own the future is to be the one to shape it.

Strategist.com

(C) Bredholt & Co.

A Homecoming

While standing in line to board a Southwest Airlines flight at Orlando International Airport recently, I heard the sound of applause behind me in Terminal A concourse near our gate, 128.  

Turning around, I observed about two dozen U.S. soldiers quickly disembarking their Southwest plane at gate 126.  Passengers waiting to board the outbound flight at that location were giving them a rousing ovation. 

Now looking in that direction, passengers for our flight began applauding as well.  The display of appreciation was catching as other passengers in gate areas on both sides of the concourse were doing the same--expressing thanks to these American troops coming home.  

There was no way to tell where the service men and women were deployed, but that didn't matter. A few that were tearfully met by family members seem to indicate that wherever it was, the time away was likely an extended separation.  

As the soldiers moved down the concourse, other passengers, perfect strangers waiting for their flights, noticed the troops, and they, too, responded with enthusiastic applause.  

What began as a spontaneous show of appreciation at one gate continued as a wave of recognition until the soldiers turned the corner near the trams, which would take them terminal side to loved ones anxiously awaiting their safe return.

This was a spontaneous and uplifting moment in a world of staged and superficial events.  

Welcome home.

Strategist.com

(C) Bredholt & Co.