Unlocking the Heart and Soul of Remarkable Leadership, Keith Merron
Remarkable Leadership

Archive for November, 2010

The Consciousness of a Leader

Tuesday, November 23rd, 2010

There is a general truth about leadership that few leaders get, and yet it’s crucial to understanding their role in an organization. It is simple: the culture of an organization is a reflection of the consciousness of the leadership. This means

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that the attitudes, beliefs, personalities and inner paradigms that the leaders hold will inevitably show up in the organization and its culture and ultimately shape its dynamics. You can see it almost all organizations. Steve Jobs is brash, bold and creative and so, too, is Apple. Bill Gates is brilliantly strategic and aggressive and so, too, is Microsoft. Herb Kelleher is quite playful while his COO, Colleen Barrett, is quite organized; Southwest Airlines is a rare combination of the two.

This general truth plays out an important drama not to be missed. So often, I get CEOs who ask me to help them strengthen their organization and its culture. They say to me, “Keith, I’m troubled by how so many people don’t take initiative. Would you help me create an organization guided by a greater sense of personal responsibility?” What they don’t often get is that the dynamics they seek to change are a reflection of their own tendency toward a command and control style of management where their micromanagement tendencies snuff the life force out of the very culture they want to change. They create organizations centered around themselves and wonder why people don’t take more initiative. Or consider the charismatic leader filled with vision and wonderful ideas. Underneath the organization’s brilliant marketing machine is a culture of scattered initiatives where so much falls through the cracks and lack of coordination among efforts runs rampant.

Recently I heard a story that is a wonderful example of this truth. One of my partners was invited to do an analysis of an organization to determine the reasons why current and potential

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customers choose to either no longer buy their products or not buy in the first place. It turns out that one of the key reasons sales are lost or never gained is due to the attitude of sales people who believe that the customer should buy no matter what. If a sale is dropped it is often explained as an inability on the part of the customer to understand the value of the product. In other words, the customer is blamed. Many customers say they don’t like the pushy nature of the sales people. When my partner shared this information with the leadership of the organization, the President immediately went on a rampage (one of many he is noted for) to chew out the sales force in general, and the particular sales people who were the greatest perpetrators. In other words, he blamed them. What he could not nor would not take into account was that his tendency to blame created a fear-filled and pressure-filled environment in which the sales force paid it forward toward the customer. The more the President blames the sales force, the less likely anything will change for the positive because he sets the tone for the entire organization. His own leadership behavior style and the paradigms he holds about leadership create these patterns in the first place.

As difficult and painful as it might be, all leaders would be do well to look in the mirror when feeling frustrated with their organization, its results, and its counterproductive patterns, for almost always they are a reflection of themselves in a very meaningful way.

A Breath of Fresh Air

Monday, November 1st, 2010

In a world of bloated CEO salaries that cause many employees to shake their heads in anger and disbelief, wondering how someone who leads a company that is downsizing and/or not producing well can collect such a massive salary and get a bonus t

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o boot, Netflix CEO Reed Hastings is a breath of fresh air. His company has grown dramatically in the past few years and has seen a 250% increase in shares the past 12 months. In spite of his inspiring leadership, he earns only $2.7million a year, which is extraordinarily modest by Silicon Valley CEO standards. And he gets no bonus at all. Instead, his wealth rises and falls with the company’s stock price. For his pay, he takes $1million in cash and the remainder in stock options, which over the past 7 years he has exercised faithfully every two weeks in 20,000 share increments. What this means is that as the company has prospered, so has he. The opposite is also true. If the company falters, he will falter economically as well. By tying his income to the company’s profitability and growth, he has done what so few CEOs do directly: take full responsibility by placing himself in a position to experience the effects of his actions. While many talk about their sense of responsibility, he acts on it. Other CEOs have done the same, notably, Jim Senegal of Costco, whose work-a-day ethic gives his employees reason to trust him.

What many CEOs don’t seem to get is that trust is at the core of leadership; you can’t create an exceptional culture without it. And taking a raise in salary and a bonus when the company is not growing or prospering sucks the wind out of an employee’s trust in leadership. In contrast, Hastings has created an exceptional culture at Netflix in part because he acts in a trustworthy way with respect (or in regard to) to his own compensation.

Many a cynic will challenge the notion that trust in leadership goes hand in hand with results by pointing to companies that have done well financially and whose leader is an arrogant S.O.B. There are enough companies led by terrible culture leaders that one could say that culture is not directly related to performance. But the research does

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not bear this out.

All social science research shows patterns. They do not show absolute correlations, so of course, there will be outliers. Notable among them is Oracle, led by the mercurial Larry Ellison whose troubling leadership behavior is legion. Years ago, he trumped up the revenue figures of his firm through clever accounting in order to keep the stock price from falling. I have known many people who have left the company because they did not trust him or his ways of operating. And yet the company prospers. Why? Not because he is a great culture builder. It is for other reasons, mostly having to do with a highly aggressive approach to the market and good products. He makes no apology for his style. And so, of course, you can point to his leadership and the company and say, “You see, there is no direct correlation between effective culture leadership and results.” Thankfully, the Ellison’s of the world who get results in spite of their questionable leadership are few and far between. Although there are outliers, there is still a powerful and resounding correlation between conscious and effective culture leadership and long-term results. Trust is at the core of leading an effective culture. You need go no further than the stock price and results of the 100 best companies to work for, or the book, Built to Last by James Collins and Jerry Porras.

Culture eats strategy almost all the time, and trust is crucial. Hastings of Netflix is showing the way, as is Jim Senegal of Costco, Howard Schultz of Starbucks, Carol Bartz of Autodesk, and many more. I tip my hat to them all.