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Executive Times |
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2005 Book Reviews |
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You’re In
Charge---Now What? By Thomas J. Neff and James M. Citrin |
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Rating: ••• (Recommended) |
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Click on
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Structure Thomas Neff and James Citrin of Spencer Stuart have collaborated on a new book
geared to executives taking on new leadership roles, titled,
You’re
In Charge---Now What? The authors present an eight point plan for success: 1.
Prepare Yourself During the Countdown 2.
Align Expectations 3.
Shape Your Management Team 4.
Craft Your Strategic Agenda 5.
Start Transforming Culture 6.
Manage Your Board/Boss 7.
Communicate 8.
Avoid Common Pitfalls While
I usually hate these forced point—plans, there seems to be a lot of sound
advice in You’re In
Charge, and the authors claim the advice comes from their interviews with
50 successful executives, some of whose stories and anecdotes are presented
throughout the book, including recollections of what went wrong for some of
them. Here’s
an excerpt, from the middle of Chapter 5, “Culture Is The Game,” pp. 154-161: FIGHTING TO
CHANGE A LEGACY CULTURE The
issue of trying to transform a culture, especially a deeply embedded one from
many years of the corporate equivalent of geological layering, extends well
beyond your first hundred days. Sometimes it takes years. The critical point
for the early days in a new role is to be highly sensitized to the issue,
make an effective cultural assessment, and plant the seeds for the long-term
change you are committed to achieving. Arthur Martinez confronted an
intractable legacy culture at Sears when he became chief executive of Sears
Merchandise Group in 1992 and once again when he became chairman and CEO of
Sears, Roebuck & When
How
well did he succeed? “Oh,
boy.” “The
positive energy that came of out my early days made some people—and me—think
that we had that culture issue fixed. The unfortunate fact, though, was that
there was deep-seated resistance to change—a feeling of ‘This guy will be
gone in three years and I’ve had my job for twenty, so why should I change?
With three hundred thousand employees, the problem is inevitably in the
middle. It was relatively easy to get the top management in line—if not, I
could fire them—but I couldn’t do that far into the organization. I couldn’t
personally determine, for example, who in the tax
or logistics department was obstructing progress.” Martinez
started with a bang, closing 125 retail stores and laying off 35,000
employees out of a then-payroll of 325,000—and in the process earning the
nickname “the Ax from Saks.” But a combination of inertia and resistance
hobbled his efforts: “It became harder as we went along, especially as our
momentum slowed down, because people started to revert to old behavior
patterns. Rather than the new culture taking hold and accelerating momentum,
after four years it started to slow down, and I realized we hadn’t changed
all that much. We had calmed the surface, but underneath there was massive
reluctance to profound organizational change.” Alan
Lacy, Sears’s former CFO who succeeded “Because
we had such an illogically designed structure, no one had any accountability
or authority As we transition to a new structure, accountability is very
clear. The metrics are clear. The expectation that people will improve their
performance is there. And in fact, the teamwork environment is much better,
and it’s a much more customer-driven culture than before. “I
thought I got good traction from the beginning, and it continued to build. We
have made wholesale changes to the business; we have one-third fewer salaried
management than we did eighteen months ago. We had gotten used to running the
business with an average group of people. Coupled with good talent
management, that meant we could quickly force-rank our employees and figure
out who was in the bottom third, and largely speaking, we got rid of the
bottom third pretty quickly. “When you go through that degree of
structural change,” Lacy adds, “in hindsight it turned out to be more of an
opportunity for cultural change than I thought. We disoriented people so
much that we couldn’t go back; things were so different that people lost most
of their reference points, so they couldn’t regress to the old ways because
there was nothing remaining to regress to. In fact, we could accelerate the
pace of change and make the change stick better.” CHANGE
LEADERS SOMETIMES TAKE ARROWS IN THE BACK Why
has Lacy been able to make progress while Still, whether first in or second,
being a change leader is a perilous proposition. “New change agents don’t
make it through the entire process most of the time,” says Robert Tiliman, former CEO of retail giant Lowe’s. “They
normally get assassinated because they build up so much ill will among other
people within the corporation that they subsequently are ostracized.” The bottom line is that in order to
minimize your risk, you need to really familiarize yourself with the subtleties
and idiosyncrasies of the culture, understand the power bases, recognize that
a mandate from above may not automatically ensure a mandate from below, and
not try to change the world in your first hundred days. Patience is often an
essential virtue when it comes to cultural transformation at a large scale. At
Schneider National the culture change was done at a deliberate pace,
carefully orchestrated by a management team that sought to change itself as a
way to change the organization. CEO Chris Lofgren explains, “From the
company’s roots and even into the early nineties, we were a very strong
operational company. Our predominant product was the truckload product. Over
time we have broadened our service offering. Part of our challenge was that
there was an almost exclusive practice of promotion from within. As a result,
we didn’t have all the leaders or the diversity of perspective we would need
five years from now. To accomplish the growth trajectory we put forth, we
couldn’t develop the necessary human capital quickly enough; so we would need
to attract them from the outside and retain them. It’s critical to the
health of any high-growth organization to do this in a balanced way. Balance
is paramount when bringing talent from the outside, because there are a lot
of capable people in the organization. So it’s more of a rounding out than a
wholesale change.” Lofgren
himself epitomizes that rounding out of the company’s culture. He came to
Schneider as an outsider in 1994; today he is its CEO. AN
INVITATION TO CHANGE As
Lou Gerstner says, “Changing the attitude and behavior of hundreds of
thousands of people is very, very hard to accomplish. You can’t simply give a
couple of speeches or write a new credo for the company and declare that the
new culture has taken hold. You can’t mandate it, can’t engineer it. “What
you can do is create the conditions for transformation. You can
provide incentives. You can define the marketplace realities and goals. But
at some point you have to trust. In fact, in the end, management doesn’t
change culture. Management invites the work-force itself to change the
culture.” There
are many ways to word that invitation to make it even more compelling. Adopt New Measures of Success. One
of the most effective ways to get people to change their behavior is to
change their measures of success. This step can be done in the relatively
early days of a new leadership position. To instill a performance culture at
Gillette, for example, Jim Kilts instituted a review system that was linked
directly to the P&L and market share and backed it up with a robust
incentive program. These are not general objectives. Instead, managers are
told, “Here’s your budget target, and here’s your market share target.
They’re metrics that can be measured. So if you’re hitting your numbers, you
win, and if you win, you’ll get paid more in bonus than in the past. And if
you don’t win, you’re going to get significantly less,” Kilts explains. Choosing
the measures, defining the relevant market, and establishing performance
metrics is more easily done in some businesses than others. In consumer
products, such as Gillette’s razors and Duracell batteries, the markets are
well defined and carefully measured by firms such as A. C. Nielsen and IRI.
In other businesses, however, the lines are not as clear. At
Gap Inc., for example, Paul Pressler realized in
his early days that the management team needed a common set of metrics to
create more shared accountability for overall corporate performance and
shareholder value. Existing metrics focused on performance within each brand,
without creating a strong link to corporate financial goals. This approach
reflected the company’s historically decentralized approach to managing the
business. As a result, the management team was accustomed to maximizing
performance within its respective divisions, but was less focused on
ensuring that what was good for a particular brand was also good for the
company as a whole. While this decentralized approach had worked well for the
company throughout most of its history, it had unintentionally created too
much internal competition and ineffective use of corporate resources and
capital It also contributed to the Gap, Banana Republic, and Old Navy brands converging their designs and going after the same customer
segments. To change behavior, Pressler implemented
a new compensation structure for his executive leadership team that
incorporated incentives for corporate performance as well as divisional
results. “I got a lot of resistance initially,” Pressler
recalls. “People asked, ‘How am I to be held accountable for something I
don’t control?’” Pressler’s response: “You do.
We’re a team, sharing responsibility and accountability for what’s best for
our brands and for our company. We will set our agenda and determine our
priorities together.” The result: “We still had to learn how to work
effectively as a team, but this helped us begin to change our thinking and
our actions.” Institute New Operating Processes. You
can also encourage and reinforce the new behaviors by making changes in the
operating process, such as instituting regular staff meetings with clear-cut
agendas. As described in Chapter 3, Ed Breen set up what he calls the “Jack
Welch calendar” at Tyco: consistent operating meetings with all the lines of
business, a leadership development process, and a strategy process. “You
spend eight to ten hours with a team, pounding questions at them, and you
learn really quickly who knows what and who’s behind,” he says. This
is in addition to the hour-long staff meeting every Monday morning with all
the direct reports to discuss what’s going on, spotlight items of major
importance, and follow up on the previous week’s to-do list. “The team has
come to really value it,” says Breen. “They feel more involved and get to
know what everyone else is doing. And it’s a great way to spread best
practices.” Choose a New ManagementTeam. Making
changes in your management team is another way to begin changing the culture.
This requires a delicate touch. Many leaders coming from the outside bring a
trusted confidant who can leverage and amplify the change strategy. Jim
Kilts, for example, routinely rides with a three-person posse composed of
longtime associates Peter Klein, who became senior vice president of strategy
and business development; John Manfredi, senior
vice president of corporate affairs; and Joe Schena,
vice president of planning. Gary Kusin refused to
take on the top job at Kinko’s unless he could bring along Dan Connors as
strategy chief. It is, however, all too easy to create
resentment if you bring in a personal SWAT team. When Jim McNerney
left GE to become CEO of 3M, fears that 3M would become “3E” were somewhat
alleviated because he did not arrive with an army of GE executives in tow. Set New
Expectations. You
can also invite the management team itself to make the necessary changes.
When Bill Schleyer became CEO of Adelphia Communications, the troubled cable company had
to change its culture. It was in bankruptcy, and criminal charges had been
filed against the former CEO. Almost exactly on the date that would mark his
first hundred days on the job, Schleyer threw a
metaphorical bucket of cold water on the senior management at Adelphia to get them to take notice of the new order. “We
had our first meeting of forty members of senior management in April 2000, to
roll out our strategy. Under the previous CEO, Adelphia
made all decisions at the top. In fact, managers were given incentives not to
make decisions and were reprimanded when they did. I said, ‘From now on you
will be held accountable for results against the aggressive targets we’ve
set. If you can’t operate in that environment, you need to get out of the
room right now.’ That’s a strong statement: This is the behavior we need, and
if you can’t handle it, you need to leave. But we can’t be as patient as we
normally would like to be. Urgency is one of our core values now. We have to
achieve industry-level performance in short order. If we emerge from
bankruptcy and aren’t operating at industry level in terms of performance and
profit margins, we’ll be vulnerable.” Identify Change Leaders. You
can search out the people who want to change and make them ~ your microphone
to broadcast the new philosophy. When Gary Bridge arrived at Cisco Systems to
lead the company’s highly regarded Globa Internet
Business Solutions Group, he found “a couple of raging wars going on. People
wouldn’t share resources and were spending as much time knocking each other
down as they were building up their own case. The team had taken control of
the part of their lives they could control, and they’d gone back into their
silos.” So he assessed which of the top leaders shared his vision and would
have the credibility of the broader organization to become leaders by example
and spokespeople for the new approach. This worked, according to Bridge,
because “if you went below the top management level, there was this really
skilled group of people that hungered for something new. I also spent a
tremendous amount of time on getting the team out of their proverbial caves
into common spaces, establishing a common vocabulary so they could learn to
listen to each other. I made sure that I didn’t arbitrarily join sides but
that all of my decisions were very fact-based, and I always explained why I
did what I did.” And these messages were similarly expressed by the other
leaders of the division. “Team building was number one and getting people in
proper assignments with the proper metrics. Number two, I was consistently
told that Cisco is a place that lives on stories of your customer successes.
It’s a customer-obsessed company. And this is one of its hallmark strengths.” Lead by Example. Critical
to all aspects of leadership and to cultural change in particular is
modeling the behavior you want others to emulate. “If employees don’t see
the key changes in what you say and do and in your behaviors and mannerisms,
it’s hard to change the culture,” says Tyco’s Ed Breen. “The culture reverts
to what it was. If you’re coming into a situation where you need to change
culture or reinvigorate it or, in my case, create one, you’d better be
demonstrating it real quickly.” Readers looking for sparkling new
insights aren’t likely to find them in You’re In
Charge. What’s to be found and used is a structure and a thoughtful
approach to taking on new responsibilities. There’s timeless wisdom in You’re In
Charge than can be distilled down to: listen, learn, underpromise,
overdeliver. Now, get to
it. Steve Hopkins,
March 23, 2005 |
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ã 2005 Hopkins and Company, LLC The recommendation rating for
this book appeared in the April 2005
issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/You're
In Charge.htm For Reprint Permission,
Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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