Lead by Example
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Lead by Example
If you want your people to do something, regardless of your past actions or how many good ideas they hear, spend a lot of time doing it yourself, and they will believe you. Take a lesson from the late Ray Kroc, McDonald's CEO. When Kroc visited a McDonald's restaurant, he first wandered around the parking lot picking up the trash. He did the same thing in the restaurant. Then he would talk to the manager about the importance of cleanliness.
Companies that use talk to guide action often are led by those who know the industry and have done the work. Consider the SAS Institute. The $1 billion software firm has enjoyed 25 years of revenue and profitability growth, and Fortune consistently ranks it as one of the best places to work in America. At SAS, nearly every senior executive is a working manager, doing a job and managing others. This extends to cofounder and CEO James Goodnight, who devotes much of his time leading product development teams. By doing programming and development work, SAS executives have credibility with those they lead. People can't complain about a boss who does not understand their problems when the boss faces those same problems. And because they know the work, SAS executives talk about things that are closely linked to action. They are not likely to be fooled by smart talkers.
Finally, the best leaders realize that an uninformed but powerful person can undermine performance by asking irrelevant questions and demanding constant updates. As William Coyne, who led R&D at 3M for many years, put it, "When you bury a seed in the ground, you don't dig it up every week to see how it is doing."
CEO William Ryan is renowned for transforming the Banknorth Group in Maine into a powerhouse financial institution. Last year, I asked Ryan to name the most insidious cause of the smart-talk trap. His answer: reporting quarterly profits. Ryan says the relentless focus on short-term numbers and analyst opinion pressures executives to do things that look good now but undermine long-term performance. He suggests there would be far less hollow talk and useless action if companies could do financial reporting just once or twice a year. This is intriguing given the current scandals. Companies need credible accounting, but if we demand it too often, their ability to act wisely will suffer.
Robert I. Sutton is a professor of management science and engineering at Stanford University, and author of Weird Ideas That Work: 11 1/2 Practices for Promoting, Managing and Sustaining Innovation. Sutton also co-leads Stanford's Center for Work, Technology and Organization. His next column will appear in October.
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