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The Guiding Principles of Truly Great Leaders

By Jason Jennings


Following a speech I delivered in Hong Kong, an elderly Chinese woman I’d noticed sitting front and centre in the audience approached me. During my presentation she’d appeared to be listening intently and by her occasional nods and smiles I gathered she’d agreed with my content, so I extended my hand and said, “I hope you enjoyed the speech.”

She smiled and said, “Yes, I thought it was good,” adding, “but it was really only common sense.” My heart sunk a bit; I’d been hoping for a more exciting compliment.

 

Jason Jennings’ latest book for Penguin Putnam, The Reinventors – How Extraordinary Companies Pursue Radical Continuous Change, will be released in April 2012. His previous bestselling books on business and leadership include It’s Not the Big That Eat the Small – It’s the Fast That Eat the Slow, Less is More, Think Big, Act Small and Hit the Ground Running – A Manual for New Leaders. His website is www. jason-jennings.com. 


However, her smile widened (and so did mine) when she added, “But I want to point out that the most common thing about common sense is how uncommon common sense really is!”

You’re about to learn the six guiding principles used by great leaders and managers to constantly reinvent themselves and their companies. Set aside any temptation to dismiss them as being only common sense. Leaders and companies who make the following guiding principles an integral part of their DNA will have set themselves up for continuous growth and reinvention.

These six principles are the distillation of my work and that of my various research teams during the past ten years as we screened and studied more than 200,000 companies for our books on speed, productivity, growth, performance and reinvention.

Great leaders are committed to double-digit revenue and profit growth
I begin almost every speech by asking the audience to raise their hands if they’d personally like to do better financially. Every hand in the room always gets raised. Next I ask them to raise their hand if they’ll want a promotion or changed responsibilities someday. Again, every hand always gets raised. Finally, I ask them to shout out the answer to my final question: “Do you want to do better financially and have more responsibility sooner or later?” The room always rings to the rafters with the shouted word, “Sooner!”

However, unless a company’s annual financial performance is growing by double digits there’s no way for people to earn more money and there’s no room for growth or promotions. When talented workers realize that the only way for advancement is if they throw someone under a train (which is the cause of most office politics) or wait for colleagues to retire or die, they’ll eventually depart for greener pastures.

Double-digit growth allows companies to attract, keep and grow the right people. It improves the fortunes of families, allows for reinvestment in the business, turns vendors and suppliers into valued partners, keeps the attention of investors, makes communities better places and generously rewards shareholders.

Great leaders let go
The graveyard of failed businesses is littered with the bleached bones of leaders who destroyed their companies through their inability to let go of yesterday’s breadwinners, their own personal egos, the same-old same-old and conventional wisdom.

Yesterday’s breadwinners are those products or services that once represented the lifeblood of the company and provided the bulk of its revenues and profits but now languish. Most leaders and companies rationalize their continued existence as representing the firm’s legacy or kidding themselves that they’re still paying their own way. In reality, most require too much time and too many resources to justify their continued existence. Smart leaders let go of yesterday’s breadwinners.

When the boss’s ego requires that he or she be the smartest person in the room and that their ideas always win, doom is just around the corner.

Great leaders set their egos aside. They understand that their job is to attract people who are smarter than they are and who have better ideas than they do, and then they get out of the way and gently steer the ship.

Same-old same-old takes place when companies pay scant attention to something until it’s broken. Then, in a flurry of self-important and dramatic executive directives, someone is dispatched to fix one problem while somebody else is sent to fix another and someone else to fix another. Constantly sending people off to solve problems distracts everyone in the organization from the goal of constant growth. Great leaders understand that one of their most important responsibilities is to constantly analyze every person, product and process and address them before they become broken, so that always being in firefighting mode doesn’t become the accepted way of doing business.

Most businesses want to achieve unconventional results. Unfortunately, the same basic mathematical equations apply to everyone. Conventional wisdom = conventional results (if you’re lucky) and unconventional wisdom = unconventional results.

Jason JenningsGreat leaders make lots of small bets
Google’s recent twelve billion dollar acquisition of Motorola’s mobile phone business has been in the news, but most business journalists failed to connect the dots on the real story taking place at Google.

In the past two years the company has purchased nearly 200 other companies. That’s an average of two per week. And each acquisition represents a small bet. From social gaming to joint ventures with NASA, and from daily deal companies to digital video and voice recognition, Google knows its future depends on constantly forging ahead into new businesses.

When Starbucks took a nosedive, its former CEO Howard Schultz returned, took back the reins and embarked on a non-stop program of reinvention. In less than two years the company made more than 100 small bets, including new store designs, testing wine and beer sales, moving into instant coffee, launching an entire line of desserts, emphasizing tea and introducing oatmeal across the chain. Not surprisingly, many of the small bets became big hits, and the combined revenues of Schultz’s many small bets quickly recaptured the revenues that had been lost.
Dan DiMicco, the CEO of one of America’s largest steelmakers, is proud to point out that his company doesn’t have an R&D department. “Why would we need one?” he asks. “We have 20,000 people who work together and we try every idea that everyone has. If it works, we quickly scale it across the company and if it doesn’t work we simply move on and try the next idea.”

Great leaders are able to stay ahead of their customers’ changing needs and wants by constantly making lots of small bets (in the form of new products and services) and being prepared to seize on those that work.

Great leaders make certain that everyone knows the strategy
Conventional wisdom dictated that knowledge was power, and as such, most leaders maintained an iron grip on all the knowledge to ensure their continued importance. That included limiting the number of people who knew the firm’s strategy. Signing non-disclosure agreements became a rite of initiation into the inner sanctum.

Truly great leaders understand that execution – not knowledge –  is power and that the best way to ensure execution is to make certain that everyone understands the strategy and their role in its achievement.

In the past decade, co-CEOs Tim and Richard Smucker have grown their company, JM Smucker, a 100-year-old manufacturer of jams and jellies, from $500 million in annual sales with product leadership in one cutthroat grocery category to nearly $6 billion in revenue and leadership in nine grocery categories. They attribute much of their success to a small booklet they publish – The JM Smucker Strategy – that’s required reading for everyone who works for or with the company. “How could we possibly have fellow workers, partners and shareholders not know and understand our strategy?” they wonder.

Great leaders make certain that everyone – at every level of the organization – knows the big strategic objectives and their role in accomplishing them.

Great leaders get everyone to think and act like the owner
Thinking and acting like an owner means the person has some skin in the game. Thinking and acting like the owner means they have everything in the game.

Thinking and acting like an owner means working hard. Thinking and acting like the owner means it’s the only thing they want to do.
Thinking and acting like an owner often leads to a sense of entitlement. Thinking and acting like the owner means acknowledging there’s still a lot of work to be done, the journey has just begun and it simply makes good sense to be frugal.

Great leaders understand that in order to build an organization designed to achieve continuous growth you need to have everyone thinking and acting like the owner.

Charles Koch, the Chairman and CEO of Koch Industries, one of the world’s largest privately held companies, maintains that “The only way to get people to think and act like the owner is to teach them how what they do creates economic value and how to measure and improve it.” Koch maintains that every job within a company must lead to the creation of value, and if it doesn’t there’s no need for the position to exist.

Great leaders are good stewards
Authentic leaders don’t buy into the view that leadership is about suiting up in a coat of amour, mounting a stallion and galloping off in search of villages to pillage and plunder in order to get their picture on the cover of business magazines.

They believe in service over short-term self-interest. They don’t have a need for power over others, are committed to the preservation and development of the people who give their business value and are nurturing, authentic, mentoring and selfless.

Steward leaders are accessible, keep their hands dirty by spending most of their time listening to customers, have a noble set of guiding principles for making decisions, have no need for superficial distinctions and are committed to making what they take over better for all the stakeholders.

The total truly is greater than the sum of the parts
I agree with the woman in Hong Kong: these six guiding principles for leadership are little more than common sense. It would be tough to find fault with a commitment to double-digit growth, letting go of ego and yesterday’s breadwinners, making loads of small bets and scaling those that work, making certain that everyone knows their role in the achievement of the big strategic objective, getting everyone to think and act like the owner and being a good steward in everything undertaken.

But, like the old saying goes, the most common thing about common sense is how uncommon common sense really is!

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