Homework Tomorrow morning

Less than a generation ago, the subject of leadership rarely arose in discussions about how to run a business or in books on busi- ness management. Leadership was widely assumed to apply only to military affairs or statecraft.

Today that situation is almost totally reversed. The business departments of the nation’s bookstores are well stocked with books on executive leadership, and the shelves are amply replenished with fresh titles each publishing season. Leadership courses, leadership workshops, leadership seminars, and even leadership wilderness retreats are offered to senior business execu- tives by a wide range of universities, colleges, and professional associations. The more advanced graduate schools of business are even beginning to include a few elective courses in leadership in their MBA curricula.

For all of leadership’s newfound popu- larity, however, the bulk of the contemporary literature on this topic still fails to come to grips with two issues essen- tial to a full understanding—and a competent exercise—of leadership.

The first issue is what I call leadership without portfolio—that is, the exercise of leadership by persons well below the senior executive ranks, usually with little formal authority, and often with no specific assign- ment. The second issue is power as a component of effective leadership. Only a small minority of today’s academic researchers seem to be facing the controver- sial issue of power, while the popular authors appear to be ignoring it almost totally. Any treatment of leadership that ignores either of these elusive elements is likely to leave business students unprepared for some of the most serious challenges and opportunities they are likely to encounter in the workplace.

The intent of this chapter, then, is twofold: first, to introduce the concept of leadership without portfolio into your prepa- ration as future business managers; second, to reawaken an appreciation of the impor- tance of power in the actual work that managers do.

L E A R N I N G L E A D E R S H I P Where It Is Taught and Where It Is Not

What the Business Schools Do Not Tell You about Leadership

Two decades ago the School of Business Administration at Northwestern University changed its name to the J. L. Kellogg School of Management. Kellogg graduates began receiving Master of Management degrees, and the old degree title, Master of Business Administration, was dropped.

That particular change in business school nomenclature, along with similar changes that followed at other institutions, acknowledged a simple but often ignored truth of organizational dynamics—admin- istrators do not manage; that is, they do not make policy. The most an administrator can do is take a policy made by a manager and, literally, administer it to subordinates who apply the policy in carrying out their work. An administrator is a sort of organi- zational bellhop, someone who totes ideas and policies from those who originated them to those who need to implement them. Administrators do not run businesses. Managers do.

About three quarters of a century elapsed between the emergence of manage- ment as a subject of scientific research and the adoption of the word “management” as an element in business school names. Even after management made the transition from

Chapter 1: Leaders and Leadership 17

Chapter 1

Leaders and Leadership How They Emerged from History and How They Emerge within Today’s Organizations

Harry J. Bruce CEO

Illinois Central Railroad

“I sit here all day trying to persuade people to do things they ought to have sense enough to do without my persuading them. . . . That’s all the powers of the presidency amount to.”

Harry Truman

a researcher’s curiosity to the core of the business school curriculum, it still took 50 years before institutional names began to reflect the change. As veteran management consultant, author, and teacher Peter F. Drucker points out,

Management as a discipline . . . was first dimly perceived around the time of the First World War. It did not emerge until the Second World War and then did so primarily in the United States. Since then it has been the fastest-growing new function, and the study of it the fastest- growing new discipline. No function in history has emerged as quickly as has management in the past 50 or 60 years, and surely none has had such worldwide sweep in such a short period.1

Ironically, now that the word “manage- ment” at long last is finding a place over the doors of the nation’s business schools, an even newer concept—leadership—is knocking on those same doors and asking for admission. Business school researchers say they are now learning how to identify and analyze business leadership, and the top business schools claim they are even beginning to teach it.

Will “leadership studies” become the next great advance in the way future busi- ness executives are trained for the decision-making role? Are we on the brink of understanding as much about leadership as we know—or claim we know—about management?

While exciting things are happening, some restraint is probably in order. One reason is that the vocabulary of leadership is still under discussion, with a multitude of academic and popular researchers still debating what exactly it is that leaders do and what those activities should be called. Leadership studies are still a long way from where managerial studies stood in 1916, when French industrialist and business writer Henri Fayol declared that the four functions of management are to plan, orga- nize, coordinate, and control.2 Fayol’s nomenclature was adopted widely in the world of business and in business schools. No such agreement on nomenclature cur- rently prevails in the study of leadership.

Another reason is that academic research into business leadership is still quite young, and formal instruction in leadership skills and behavior for MBA candidates is even younger, with only a few of the leading schools offering specific courses in leader- ship. Stanford University’s Graduate School of Business, which introduced the subject

of leadership into the MBA curriculum during the late 1980s with a series of lec- tures by author and retired executive John Gardner, has now begun offering a formal course, Learning to Lead. The new course is not required, however, and enrollment is restricted to those currently holding jobs while attending classes. The Harvard Business School offers one mandatory leadership course, Leadership and Organi- zational Behavior, in the first year of its MBA curriculum. Students with a strong interest in the subject may pursue it further in several elective courses.

At most business schools, however, the academic study of leadership receives only token representation in the curriculum, while practical training in leadership behav- ior, skills, and attitudes is usually absent altogether. Most MBA programs still deal with leadership in cursory fashion—usually in a brief, more or less obligatory chapter buried deep in a textbook, or in an occa- sional guest lecture by a visiting CEO. As a rule, U.S. business schools devote nowhere near as much attention to developing lead- ership skills as they do to teaching number crunching, marketing, or strategic planning. While students may be exposed to certain kinds of thinking and theorizing about lead- ership, they are not systemically trained to exercise leadership the same way they are taught to use other business school skills.

The gap between the teaching of leader- ship and the teaching of more commonly accepted business skills is not hypothetical. It has been documented by Indiana Univer- sity Professor Paul J. Gordon and St. John’s University Professor Larry W. Boone in an unpublished research paper presented to the International Academy of Management at its December 9, 1994, meeting in Philadelphia. In a nationwide survey of deans of collegiate schools of business, the two scholars asked, “Regarding each of the business programs offered by your school, what relative emphasis (expressed as a per- centage) is placed on each of the following 12 educational objectives?”

The responses to the lengthy question- naire were statistically significant and instructive. Core competencies, such as accounting, economics, finance, marketing, law, and management, received a number- 1 ranking in both undergraduate and grad- uate programs (38.7 percent and 36.0 percent, respectively).

When asked to rank the other 11 pos- sible objectives of a business school

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BEST-USE CORRELATIONS

Before you spend a single dollar, euro, or yen, your team must orga- nize itself and decide who will lead it. In Marketplace, as in the real world, a business cannot reach its maximum potential without good leadership. Thus the first chapter in this book, corresponding to your first quarter of simulation play, focuses on leadership and on taking the first steps in getting your start- up launched.

Cultivate the Characteristics of a Good Leader Chapter 1 provides a compelling review of what it takes to be a good leader. The Marketplace environment gives you plenty of room to put chapter principles and your own lead- ership skills to the test. Be advised leaders earn the willingness of others to follow by showing (1) concern for the task and (2) consideration for the people involved in the task.

Leadership without Portfolio Leadership without portfolio, a con- cept introduced in Chapter 1, is particularly relevant to Marketplace play because no one person on your team is given the authority to lead. In Marketplace, lack of formal authority to lead should not limit anyone’s ability to lead.

Rotate Leadership In Marketplace, natural breaks in the play of the game allow team mem- bers to rotate in and out of the leadership position. The first oppor- tunity to lead occurs during the startup phase of the business, Q1 through Q4; the second, during the preparation of the business plan and during negotiations with venture capitalists, Q5; the third, during the growth phase of the business, Q5 through Q8; the fourth, during the preparation and presentation of a report to the Board of Directors, which occurs at the end of simula- tion play.

education, the deans scored leadership skills ninth in undergraduate programs and sev- enth in graduate programs, with relative emphases of 4.1 percent and 5.8 percent, respectively.3

Interestingly, when the deans were queried about the course material included in nondegree programs, such as advanced management courses for senior executives, leadership rose to third place in the total 12-factor analysis. This appears to confirm the widespread existence of a misguided belief that leadership studies are best saved for the latter stages of a managerial career.

The late William Oncken, Jr., sharpened the focus of this ongoing debate in 1984 when he wrote:

Textbooks in organizational development consistently declare that managerial lead- ership begins at the top, but they just as consistently don’t specify where the top is. The impression is therefore conveyed, whether intentionally or not, that effec- tive managerial leadership is not possible at lower organizational levels if it is not already being practiced at the higher levels.4

Oncken gives additional illumination with a humorous medical metaphor: Pic- ture yourself on an operating table about to have your appendix removed under a local anesthetic. Just before the doctor has opened your abdomen, the electricity goes off, and the room is plunged into darkness. You hear the doctor saying through the gloom to the nurse, “Well, that does it! If top management doesn’t do its job, we can’t do ours. Guess we’ll just have to leave the patient as is while we sit it out in the coffee shop until the lights come on. Let’s go.” Before they could leave, you would be screaming, “Is there a pro in the house?”

What is a pro? A doctor who knows what to do if and when the lights go out— no matter whose job it was to see that they didn’t. In management you often do not find out who the pros are until the lights go out. Leadership, at your level, begins with you.5

Leadership Can Be Learned

The omission of leadership studies from the business school curricula is puzzling. We know something about what leadership is, and we know some ways to teach it—at least to those who have shown some basic aptitude for it. The U.S. armed services con- tinually conduct research into the nature of leadership, and they regularly recycle both

their academic research results and the bat- tlefield experience of their personnel into the training of future officers and noncoms. Courses in leadership theory and programs offering practical training in leadership behavior are a standard part of the curricu- lum, not only at the three service academies but also in the Officer Candidate Schools (OCS) and Reserve Officer Training Corps (ROTC) programs. The military would not consider a future officer’s preparation complete if the candidate had acquired pro- ficiency only in such technical specialties as gunnery, engineering, aeronautics, or navi- gation. The ability to lead is considered essential, and all future officers are specifi- cally trained to fill leadership roles.

Yet MBAs, who typically enter their first jobs with two years more college credit than the military officer, still join the business world with virtually no formal leadership training or experience. Instead, they are expected to pick up their leadership tech- niques and develop their leadership abilities as best they can on the job.

Can leadership be taught and learned as a discipline, or is it simply an innate talent that will manifest itself inevitably in those who have it and will never appear in those who do not, no matter how intensely they are trained? Yes, leadership is a talent, and as such it will be distributed unevenly among the population. But there is no rea- son to believe that leadership potential will inevitably ripen into full leadership with- out some sort of formal education and training. The curriculum of the military academies is premised on that assumption. It is also premised on the idea that those who select themselves for leadership devel- opment and who are screened for leadership potential will benefit the most and experience the greatest development of that potential once they get appropriate training and discipline.

All of which is to say the obvious: Lead- ership can be taught, but only to those who have the innate ability and desire to learn it.

There is a less obvious corollary to this statement, however: Leadership not only can be taught to certain people but also needs to be taught. If not properly cultivat- ed and restrained, leadership ability— particularly when coupled with strong ambition—can run out of control, destroy- ing careers, institutions, and reputations. We will see a sobering example of untrained and unrestrained business leadership at the end of this chapter.

How the Service Academies Teach Leadership

What makes it possible for the U.S. mili- tary to teach leadership to people in their teens and early twenties? Students enrolled in the nation’s service academies do not just pick up leadership by observing and mod- eling the behavior of their superiors on the parade ground or the gunnery range; they study it—formally and rigorously, in theory and practice—in each of the four years of undergraduate work leading up to commis- sioning. Cadets or midshipmen entering a service academy today can expect to: • Study theories of leadership in textbooks

and training manuals and discuss leader- ship concepts in class.

• Read, analyze, and discuss biographies of well-known leaders.

• Undergo repeated psychological testing to identify leadership potential and track its development.

• Undergo practical training designed to develop leadership attitudes and skills, including teamwork, communications, self-reflection and self-correction, and both giving and receiving counseling.

For more than a decade, the Depart- ment of Defense as well as the individual armed services have funded research at some of the nation’s top universities in an effort to better understand the dynamics of leadership and to improve the leadership training of future officers. In addition to exploiting the latest breakthroughs in for- mal behavioral studies, the academies have opened their classrooms to the burgeoning collection of popular leadership literature.6

Col. George B. Forsythe, the director of undergraduate studies in the Department of Behavioral Sciences and Leadership Studies at West Point, says that academic research, popular self-help literature, and biographies of great military, political, and business leaders all seem to point in the same direction: Leadership development begins with self-development, including introspection, reflection, self-monitoring, and self-correction through the develop- ment of sound habits. These personal attitudes and behaviors, once they are refined and developed through repeated practice, enable the student to build out- ward from an understanding of self to an understanding of others. The resulting feel for how one’s own attitudes and behavior influence others can be parlayed into pow- erful leadership. The ability to develop

Chapter 1: Leaders and Leadership 19

oneself through self-observation—and then move on to observing and developing oth- ers—can now be taught as a skill. “A lot of the work being done today in adult devel- opment suggests that how well you do in problem solving has to do with how well you take perspective on yourself and your situation in the world,” Col. Forsythe says.7

The armed forces now train their future officers to do exactly that.

Forsythe’s counterpart in leadership studies at the U.S. Naval Academy, Marine Corps Col. Paul Roush, agrees with this approach. “The first thing a leader has to know is himself,” he says. “You have to understand yourself and become personally effective before you can begin learning to understand others and become organiza- tionally effective.”8

Because the Academy’s midshipmen, who carry a full schedule of tough engineer- ing courses and sleep only about five hours a night, do not have the time to learn about themselves through conventional forms of introspection, the Academy’s leadership curriculum accelerates their acquisition of self-knowledge with some tools that have emerged from several decades of research.

The Myers-Briggs Type Indicator, a widely used psychological assessment tool, helps midshipmen recognize the psycholog- ical type to which they belong and their preferred modes of mental functioning. At the beginning of the freshman year, they learn whether they are predominantly right-brain intuitives or left-brain analytical types, whether they are predominantly extroverted or introverted, and whether their interactions with others are primarily oriented toward thinking or feeling, judg- ing or perceiving.9 They learn that leadership ability is found among members of all the types, and they undergo leader- ship-development exercises that do the best job of developing their strengths and over- coming their weaknesses.

The latter is a particularly important benefit of armed services leadership train- ing. Lacking an explicit program of leadership development, many individuals with leadership potential will follow the path of least resistance, using and develop- ing the leadership skills in which they already feel confident while ignoring weak or underdeveloped areas. Leadership train- ing for military officers, by contrast, helps each future leader to identify his weak points so they can be overcome or at least offset or minimized.

As they progress through their four years of study, midshipmen retake the Myers-Briggs in a more complex and sophisticated format known as the Expand- ed Analysis. The results of this follow-up test deepen their self-knowledge and pro- vide senior midshipmen with insights that help them guide the younger midshipmen’s development. As midshipmen rise to upper-class ranks, they in turn become counselors to the classes following them. The entire experience—counseling and being counseled repeatedly using a rolling set of psychological test results—gives the midshipmen a priceless resource for devel- oping their abilities to lead others. Col. Roush explains:

Counseling is a critical part of what we do here. It’s organized so that the upper class works with the plebes to set up goals and develop systems of getting feedback. What it does is provide a way to take what you learn in a classroom and then do something with it. It might be a simple goal like wearing the uniform properly, or running a mile and a half in a specific time, or achieving a certain level of performance in an academic sub- ject. You and your senior-class counselor work out the goal together and then monitor your progress toward it.10

The armed services focus intensely on understanding the personal attitudes and behaviors required for leadership, and they work hard to devise classroom studies and training exercises that will develop 18-year- old plebes—freshmen Army and Air Force cadets and Navy midshipmen—into bud- ding leaders by the time they reach the age of 22.11

What would happen if future business managers were trained to become leaders as explicitly and purposefully as military offi- cers? Would the leadership-training exercises of the military travel well to academia?

One person who should know is Col. John Kirchenstein. He retired in 1978 after a 35-year career in the U.S. Army and joined the School of Business at the Univer- sity of Tennessee, Knoxville, where he is now assistant to the dean.

“My definition of leadership is to get someone to do something cheerfully that they really don’t want to do—such as charg- ing up a hill against a dug-in enemy,” says Col. Kirchenstein.12 Col. Kirchenstein insists that business situations call for lead- ership very similar to what works in the military and that the leadership-training programs used in the armed services are

sorely needed by the business schools. Col. Kirchenstein continues:

I would train the [MBA] students in group activities the way military officer candidates are [trained]. I would have them role-play as members of teams solv- ing various management problems and scenarios. I would have them assemble teams of, say, five people to solve a par- ticular business problem. And I’d rotate the leadership position on the team so everyone could have a chance to be the boss. Then I would grade the whole team—not the individual players—on its performance. The absence of this path in the business school curricula of today is detrimental to one’s aspiring to become a “master” of business.13

Leaving MBA Students Out of the Loop

What the MBA schools do not teach about leadership is disturbing. Even more disturb- ing, however, is what they do teach. Apparently, most MBA candidates in U.S. business schools are left with the impression that they will not even need to exercise leadership until they have reached the peak of the corporate pyramid. The business world itself has long been aware that leader- ship emerges and develops even at the lowest and most obscure levels of the cor- porate pyramid. My own career, like that of many others, contradicts the notion that leadership happens only “at the top.”

I was fortunate enough to receive leader- ship training during the early 1950s, when my superiors in the U.S. Army plucked me out of the ranks for aptitude testing, identi- fied me as having leadership potential, and sent me to Officer Candidate School.

When I left the Army and joined the United States Steel Corporation as a 28- year-old staff assistant, I put my leadership training to work immediately, much as would a second lieutenant in the Army, where leadership is expected from all offi- cers regardless of rank.

Later in my career, acting as a senior executive, I made it a priority to identify leaders at the lower levels of the organiza- tion and to encourage them in developing their leadership abilities on behalf of the company. Most effective CEOs do the same. Leadership is not something senior managers reserve for themselves; if they are worth their salaries, they are identifying, promoting, training, and encouraging lead- ership among their subordinates at all levels of the organization. One of the ways they do this is by watching for those subordi-

20 Part 1: Before You Start in Business

nates who exercise what I call “leadership without portfolio.”

Open any textbook of case studies used in a typical MBA program and examine the cast of decision makers. Almost without exception, those who appear in the cases occupy positions at the highest level of the corporation—the office of the chairman and chief executive officer, the president, and the senior vice presidents. “Here and only here,” the case studies seem to say, “is where the leaders are found. Here and only here is where organizational leadership takes place.” All leadership is depicted as originating at the top and cascading down- ward through the organization. Viewers of the televised management course Taking the Lead are left with this impression when the narrator announces in the first episode:

Occupying the top rungs on the organi- zational ladder are the senior-level managers, the vice presidents, presidents, CEOs, in short, those charged with the responsibility not only of managing, but of leading, of charting the long-range course of the organization as a whole.14

No wonder MBA students get so little exposure to leadership training. The busi- ness schools assume it will be years before their graduates will be required to use it. This is precisely the point Bill Oncken was making in 1984.

Fortunately for the young MBA candi- date interested in developing as a leader, the local bookstore and the public library have a wide selection of self-help books on lead- ership and personal development. Warren Bennis and Burt Nanus’s Leaders: The Strategies for Taking Charge, Phillip Crosby’s Running Things, Stephen R. Covey’s best- selling The Seven Habits of Highly Effective People, and The Leadership Challenge by James M. Kouzes and Barry G. Posner rep- resent just a small sample of recent publications that offer real value to students who want to learn more about leadership and are seeking ways to develop their own leadership potential.

Even these books, however, are not addressed to MBA students; their authors seem to assume that only a senior manager would be interested in the subject of leader- ship, or that only a senior manager—or entrepreneur—would be in a position to benefit from leadership training and use it to improve his or her effectiveness on the job. The business schools appear to be sav- ing these texts for older executives who return to school for advanced studies. Per-

haps they assume that leadership studies and leadership training would only be wast- ed on MBA candidates.

Secret of “Leadership without Portfolio”

Contrary to what the case studies suggest, there is good news for the young MBA recipient heading out into the corporate world. If you have leadership ability, you can find a way to use it at any level of a business organization—even in your first job, even if you have no formal authority, even if you work in an organization that insists on a crisp distinction between the roles of manager and leader. Ronald A. Heifetz, a psychiatrist who directs the Lead- ership Education Project at Harvard University’s John F. Kennedy School of Government, writes:

Rather than define leadership either as a position of authority in a social structure or as a personal set of characteristics, we may find it a great deal more useful to define leadership as an activity. This allows for leadership from multiple posi- tions in a social structure. A president and a clerk can both lead.15

There are those leaders who have the authori- ty and responsibility to command. And then there are others who lead without this portfo- lio of formal authority. When a subordinate exercises leadership without portfolio success- fully, superiors take notice. “If this individual could accomplish this much without authori- ty,” they reason, “just think what he or she could do with a little authority.”

At this point the fledgling leader is awarded a promotion, a new title, and a measure of formal power to command some of the organization’s resources. By dispensing this kind of recognition, the organization signals it is now willing to share some of its authority with a person who has demonstrat- ed an ability to use it constructively and responsibly. Leadership without portfolio has earned its just reward: a portfolio.

How early in a person’s life can leader- ship activity emerge? Warren Bennis, who began studying the phenomenon of leader- ship at MIT in the 1950s and now is Distinguished Professor of Business at the University of Southern California, says his first encounter with leadership occurred in childhood, when he observed a critical dif- ference between his older twin brothers.

“When we were growing up, one of my brothers was the archetypal natural leader, able to talk his teenage peers into doing

things that parents never dreamed of, includ- ing ditching school for long periods of time,” Bennis writes. “My other brother was the exact opposite, an innate follower without power, or even voice, within the group.”16

What really piqued Bennis’s curiosity about that early experience was that his two brothers were identical twins, “alike in almost everything but their ability to lead.”17 His fascination with the difference in their personalities was one of the factors that drove him to make the study of leader- ship his life’s work.

I call this type of leadership leadership without portfolio because when it occurs in an organization, it can spring up at even the earliest stages of a career, with or without the blessing of higher authority, irrespective of title or formal position in the organ- ization, and usually without a formally prescribed job assignment or set of duties.18

The term is roughly analogous to the British expression “minister without portfolio,” defined by the dictionary as “a member of a ministry who is not appointed to any specific department in a government.”19

Historically, prime ministers or monarchs appointed ministers without portfolio when confronted with some sort of nonroutine problem requiring an original solution by a person with a get-things-done reputation.

Even in cases where formal authority has been conferred on an individual, those who exemplify real leadership typically exceed their authority, exploring new areas of achievement and probing for new possibili- ties that they were not specifically authorized to undertake. This kind of lead- ership is acknowledged to exist even in the military, where lines of authority are rigidly structured and officers are given not just authority but also command.

The purpose of the rest of this chapter is to supply you with what even the best MBA programs still leave out—practical information on how to develop your own leadership potential right from your first day on the job by exercising leadership without portfolio.

L O C U S O F L E A D E R S H I P Why Leaders Are Found at the Bottom As Well As the Top of the Organization, and Why Leadership Appears at the Beginning, As Well As the Peak, of a Career

Why do the textbook authors fail to advise young MBAs that they can begin a career of

Chapter 1: Leaders and Leadership 21

leadership in their very first entry-level position? Probably because they confuse leadership with authority, the formal power that legitimizes the behavior of those in the organization.

But leadership and authority are not the same. Leadership can occur separately from authority, and in individuals with strong leadership ability, leadership usually mani- fests itself well before the individual has had the chance to acquire formal authority. Leadership is an attribute (Heifetz would say an “activity”) of individuals; authority is an attribute of organizations. Authority is conferred by organizations upon those indi- viduals who have earned it through displaying leadership. “Leadership is the process of influencing others in order to accomplish the organization’s goals,” says West Point’s Col. Forsythe. “Most people would say it comes from some power above and beyond formal authority.20

The idea of leadership as an activity that emerges from some source other than the organizational chart is implicit in the title of John P. Kotter’s 1985 monograph, Power and Influence: Beyond Formal Authority.21

Kotter notes that recent trends have drawn so many new players and new functions into the business environment that traditional lines of corporate authority are stretched too thin and too far to connect all the partici- pants effectively. The result, he says, is a growing number of “power gaps,” which can be filled only by the efforts of individuals exercising leadership functions without con- ventional forms of authorization. These trends are making people more and more dependent on government officials, technical experts, key subordinates, other departments in their firms, key customers, important sup- pliers, major unions, the business press, and so forth without automatically giving them additional ways to control these groups. As a result, they are turning individual contribu- tor and management jobs into leadership jobs—jobs in which there is a sizable gap between the power one needs to get the job done well and the power that automatically comes with the job.22

Almost all of us can recall at least one person in our lives who displayed leader- ship in ways not specifically conferred by authority. Consultant and former CEO Phillip Crosby says he “began to recognize that some people could lead and others couldn’t” when he was still in grammar school in Wheeling, West Virginia. “The principal would walk into the room, and in

a few moments everyone was involved in something she had suggested,” Crosby writes in his book Running Things. “There were no obvious commands or finger pointings—it all seemed sort of sponta- neous. We fell in happily and participated. Very few of the teachers could make it hap- pen that way; they needed to rely on authority, and that didn’t always work.”23

Both the teachers and the principal had formal authority to run a classroom; the authority was conferred by the state along with the teacher’s certificate to anyone who had passed the required teacher’s college courses. But while the state could confer authority, it could not bestow leadership. It was up to each individual teacher to bring her own leadership abilities to the job. Evi- dently, Crosby’s principal was one of the few who did. No doubt that is why she was promoted to principal.

Crosby says he noticed the distinction between leadership and authority again dur- ing his World War II naval service, when he served under two successive skippers aboard the same vessel. Both had the authority that went with their rank, but only one turned out to be a leader. He writes:

I was on a ship that was an absolute joy. We loved every minute of it, the com- modore kept pointing out our performance to the others in the squadron, and I seriously toyed with the idea of a naval career. Then a new cap- tain arrived. Suddenly, everything changed. It became a dismal place to live and work. Nothing was appreciated, nothing was ever right. We were guilty until proven innocent and then suspect- ed of being devious at that. It was a terrible experience.24

Why the discrepancy? If the Navy can’t make a man a leader, who or what can? If gold bars can’t confer leadership, where does it come from? What, exactly, is this thing called “leadership,” and why does it so often spring up in places where it has no formal authorization to exist—leadership without portfolio?

What Leaders Do

Leaders Go First So Others May Follow What exactly is it that leaders do? What does it mean to be a leader? The dictionary defines “lead” as “to go first; to be in advance . . . to take the directing or princi- pal part.” A “leader” is “one who leads . . . a guiding or directing head, as of an army, movement, political group.”25

Leadership starts people moving. Move- ment is going to take place; more than one person is involved; one of those people will make the move earlier than the others and, in doing so, will ease or expedite the move- ment of those who are to follow. This movement is in some sense difficult; many of those involved feel reluctant to under- take it; and the movement is unlikely to take place unless one of the group initiates the process and helps the others to realize that they can do it too.

The existence of followers is implicit in the definition of leader and helps distin- guish leadership from a related but still separate concept—initiative. The dictio- nary defines initiative as “the ability to think and act without being urged.”26

Leaders have this ability, of course, but so do many other people who are not leaders. Self-employed people display initiative when setting their own deadlines and com- pleting projects on schedule without prompting. But if a self-employed person works alone, this initiative functions in a vacuum. It does not influence, much less inspire, organize, or coordinate the work of others. But when a leader moves, others move with the leader and because of the leader.

Today, of course, leaders do not literally lead people geographically from one place to another, like Moses leading the Israelites to the Promised Land. The movements that modern leaders initiate are metaphorical. Leaders now initiate change.

Leaders Build Organizations In the business world, however, there is more to leading than simply setting an example that others follow through imita- tion. Leading is not the same as pioneering or serving as an example for others to fol- low. A pioneer is someone who does something for the first time; those who fol- low a pioneer merely repeat what the pioneer did (e.g., establish a homestead on the American frontier). A person who serves as a role model or exemplar performs much the same function: People watch the model in action and then say to themselves, “If that person can do that, I can too.” They then model the behavior of the per- son who set the example.

Those who follow a leader in business, however, do not simply repeat what the leader did. While the followers of a business leader pursue the same organizational goal as the leader, they reach the goal by per-

22 Part 1: Before You Start in Business

forming widely differing tasks and assign- ments, to which they bring a widely differing range of skills, aptitudes, training and experience. While effective business leaders usually have something of the pio- neer or role model in them, it is not their pioneering or role modeling alone that makes them leaders. It is their ability to articulate a goal that will inspire collabora- tive effort, plus their ability to create and run an organization in which individuals of differing abilities and temperaments each contribute to the attainment of the goal.27

To do this, leaders focus intently on the needs and sensibilities of their followers. They observe and listen closely for cues as to what approaches will win the followers’ support for the leader’s ideas, projects, and methods. Good leaders seem to have a tal- ent for sensing which approaches will work on different types of people—and in which situations.

But talent alone is not sufficient for the task of bonding with followers, enlisting their support, and then coordinating the multitude of personalities, abilities, tasks, and timetables that characterize a modern business organization. Leaders have to work at getting to know their followers, and they have to work just as hard at assigning them the appropriate tasks.

Pulitzer Prize-winning author Garry Wills writes:

The leader needs to understand his fol- lowers far more than they need to understand him. This is the time-con- suming aspect of leadership. It explains why great thinkers and artists are rarely leaders of others as opposed to influences on them. The scientist absorbed in the solution of a problem does not have the energy or patience to understand the needs of a number of other people who might be marshaled to deal with the problem.28

The leader has to understand something else as well—the importance of the correct fit between the leader and the situation. The biographical record of great historic figures, as well as the growing body of empirical evidence from academic studies of organizational behavior, makes it clear that there is no such thing as a universal leader type.29 The military has long recog- nized that a general who displays brilliant tactical leadership on the battlefield does not necessarily make an equally brilliant strategist when promoted to the general staff. Coincidentally, the business world is

replete with anecdotal, journalistic, and academic evidence of entrepreneurial exec- utives who proved to be highly gifted in the leadership skills needed to pilot a company through the start-up and lift-off stage of growth but seemed to run out of leadership tricks—and even interest—when their companies had to enter the corporate phase of the growth trajectory. One of the things leaders must do, therefore, is know them- selves well enough to make sure they place themselves in the appropriate leadership sit- uations so that their abilities are not squandered.

Real Origins of Leadership

In his 1938 book, The Functions of the Executive, New Jersey Bell Telephone Company President Chester I. Barnard set forth a radical idea that still ignites contro- versy among some academic students of organizational behavior. Barnard claimed that the ultimate source of authority resides not within the individual who carries authority, or even with the organi- zation that conferred it upon him—what he called the authority of position—but with the subordinate individuals on whom authority is supposed to act. Those who successfully wield authority, Barnard wrote, are able to do so because their sub- ordinates concede them that privilege.

“[I]t is obvious that some men have superior ability,” Barnard says. “Their knowledge and understanding regardless of position command respect.” When follow- ers detect this ability, Barnard writes, they tacitly agree to allow themselves to be led by the person who has it. “This,” he says, “is the authority of leadership.”30

If we are to believe Barnard, then, the authority embodied in leadership represents something of a paradox: It becomes effective only when a signal from the top down meets an appropriate response from the bottom up. The leader more or less gets permission to be leader from the people being led.

Fifty-five years after Barnard wrote those words, James M. Kouzes and Barry Z. Pos- ner echoed them in Credibility: How Leaders Gain and Lose It, Why People Demand It. “Loyalty,” they write, “is not something a boss can demand. It is some- thing the people—the constituency— choose to grant to a leader who has earned it. The people’s choice is based not upon authority, but upon the leader’s perceived capacity to serve a need.”31

One of my favorite authorities on this voluntary relationship between the leader and her followers is the late Louis B. Lund- borg, developer of the VISA card and eventually chairman of the Bank of Ameri- ca. Toward the end of his career, Lundborg contributed a column called “Executive Sur- vival Kit” to Industry Week magazine. In one of those columns he wrote: “In the most bare-bones definition, a leader is one whom others will follow willingly and voluntarily. That rules out tyrants, bullies, autocrats, and all those others who use coercive power to impose their wills on others.”32

Lundborg identifies eight personal qual- ities that enable leaders to elicit this voluntary cooperation. He says people will follow the person who they feel: • Knows where he’s going. • Knows how to get there. • Has courage and persistence—will not

run away or back down from danger, opposition, or discouragement.

• Can be believed. • Can be trusted not to sell their cause out

for his personal advantage. • Makes the mission seem important, excit-

ing, and possible to accomplish. • Makes them feel capable of performing

their role.33

Lundborg also says “a true leader has one quality that may not have to come into play very often, but that quickly identifies him when it does”:

If things have gone wrong in the compa- ny because people under an executive’s command have made mistakes or per- formed badly, he might try to clear his skirts by criticizing those subordinates— to the board of directors, to investors, to the press. But the real leader does not hide behind others. He says one way or another: “I was responsible for what these people were doing, and I knew what they were doing” (or “I should have known what they were doing”), so don’t blame them—blame me.34

Finally, Lundborg distinguishes the true leader from another type he calls the “driv- er,” or “take-charge guy.” Like the leader, the driver “gets the job done.” But only the leader, he says, gets the job done while building morale—an organizational intan- gible that Lundborg considers essential. “Even in ordinary circumstances, good morale can have a tonic effect, and a mea- surable effect on productivity,” he writes. “But when survival is threatened—in a

Chapter 1: Leaders and Leadership 23

company or a country—morale is more than a tonic; it is a lifesaver.”35

The question is how leaders do this. What strengths and abilities do they project to win this kind of implicit permission from their followers, particularly when the leaders are at the start of their careers and have little formal authority from the organ- ization?

To answer those questions we first have to understand where the idea of leadership came from and what kind of circumstances brought it into existence.

L O G I C O F L E A D E R S H I P How the Human Race Gradually Switched from Hereditary Rulers to Chosen Leaders to Ensure Competent Management of Governments, Armies, and Businesses

Mortimer Adler, the former University of Chicago chancellor who compiled and edit- ed the Great Books of the Western World series, says he deliberately left leadership off his list of the 102 Great Ideas because the great thinkers of classical Greece and Rome were not strongly attracted to it as a subject for discussion and philosophizing. For them, leadership just did not add up to the kind of full-fledged idea or concept they found in Truth, Virtue, Duty, or Beauty. Adler’s publisher, Peter Norton, chairman of Encyclopedia Britannica, Inc., says, “leadership, as we understand it, is very much a 20th-century word.”36

The late Ralph Stogdill made a similar observation in his massive Handbook of Leadership, now edited by his former stu- dent, Bernard M. Bass:

Leadership appears to be a rather sophis- ticated concept. Words meaning head of state, military commander, princess, pro- consul, chief, or king are the only ones found in many languages to differentiate the ruler from other members of society. A preoccupation with leadership as opposed to headship based on inheri- tance, usurpation, or appointment occurs predominantly in countries with an Anglo-Saxon heritage. The Oxford Eng- lish Dictionary (1933) notes the appearance of the word “leader” as early as the year 1300. However, the word “leadership” did not appear until the first half of the nineteenth century in writings about political influence and control of the British parliament.37

The idea of leadership, in other words, had to evolve historically—away from the

ancient hereditary authority of kings and toward a more rational system in which authority is awarded only to those who first display some sort of proven ability to per- suade others to follow them. The ancient custom of passing on the kingdom to the eldest son of the previous king did not always result in the selection of a strong, wise, or able ruler. Statesmen began looking for a way to identify ability wherever it occurred, spontaneously, with or without lineage or authority dictated by custom. Military men sensed a similar need to change the way they selected the leaders of their armies. They realized that officers who made it to the top through cunning, poli- ticking, or ruthless eliminating of rivals did not necessarily have the ability to train, develop, rally, and inspire troops to victory on the battlefield.

Despite the failure of Plato and Aristotle to concern themselves with leadership in the ancient world, we have evidence of at least one example of it in the figure of Pericles (495–429 B.C.), the legendary sol- dier-statesman who presided over the Golden Age in which Athens rose to become the military, economic, and cultur- al center of Mediterranean civilization.

It is no mystery why 5th-century Athens should have produced one of the first—if not the first—personalities that a modern student of organizational dynamics would recognize as a leader, rather than a ruler, monarch, tyrant, or dictator. Athens was a democracy—the first democracy of which we have record. All freeborn adult males in the city-state—about 60,000 of them— were the sole source of legitimate power. The Athenians would not follow a leader they themselves had not freely chosen, and they would not permit their leaders to carry out a program—including a military cam- paign—unless it was first approved by this assembly of citizens. As Yale University his- torian Dr. Donald Kagan points out in his recently published study of the Pelopon- nesian War:

The sovereign in Athens, which made all decisions on policy—foreign and domes- tic, military and civil—was the assembly. All male citizens were eligible to attend, vote, make proposals, and debate. The assembly met no fewer than forty times a year in the open air, overlooking the marketplace beside the Acropolis. . . . This was the body that had to approve treaties of peace and declarations of war. Whatever strategic decisions were taken had to be proposed, discussed, and

debated in the open before thousands of people, a majority of whom must approve every detail of every action. For any expedition, the assembly voted on its target and purpose, the number and spe- cific nature of ships and men, the funds to be spent, the commanders to lead the forces, and the specific instructions to those commanders. The Council of Five Hundred, chosen by lot from the Athen- ian citizenry, prepared bills for the assembly’s consideration but was totally subordinate to the larger body.38

In fact, says Kagan, the Athenians were so democratic that even their military lead- ers had to stand for election annually.

The most important offices in the Athenian state, among the few filled by election rather than by lottery, were those of the ten generals. Because they com- manded divisions of the Athenian Army and fleets of ships in battle they had to be military men; because they needed to be elected for a one-year term, and could be reelected without limit, they had to be politicians. In the fifth century, most generals had skills in both directions, although some were stronger in one direction than the other. These men could and did impose military discipline on campaign, but they were not very potent in the city. At least ten times a year, there were formal opportunities for them to face complaints against their conduct in office, and at the end of their terms they had to make full accountings of their behaviors in office, military and financial. On each occasion they were subject to trial if accused and serious punishment if convicted.39

In such an intensely democratic envi- ronment, where both civil and military figures were held to standards of account- ability far more severe than our own, and where any sort of dictatorial tendencies were instantly detected and quashed, only someone exhibiting genuine leadership could be expected to attract the loyalty and support of the people and to maintain it over a sufficient span of time to build enduring institutions of civilization.

Without using a term such as “leader- ship without portfolio,” Kagan shows how—in a democratic environment—an individual with no particular title or authority can emerge into the public con- sciousness and win sufficient support to become the people’s de facto leader.

[T]he assembly was the government. Sometimes, however, a general would gain so much political support and influ- ence as to become the leader of the

24 Part 1: Before You Start in Business

Athenians in fact, if not in law (emphasis added). Such was Cimon for the seven- teen years between 479 and 462, when he appears to have been elected general each year, to have led every important expedition, and to have persuaded the Athenian assembly to support his policies at home and abroad. After the departure of Cimon, Pericles achieved similar suc- cess over an even longer period.40

As the Encyclopedia Britannica says of Pericles, “His integrity, ability and experi- ence enabled him to dominate the assembly and impose his will alike in domestic and foreign policy. He inspired the citizens with his unqualified loyalty to Athens and with his ambitions for its future.”41

In Pericles, Kagan finds all the traits and behaviors of the democratically chosen leader in full flower. With only a token amount of military force at his disposal, subject to almost weekly scrutiny in the assembly, and vulnerable to recall in each annual election, Pericles nevertheless man- aged to remain as leader of the Athenians almost continually over the 32 years from 461 B.C. until his death in 429 B.C. Under his leadership, Athenian civilization pro- duced masterpieces of architecture, navigation, mathematics, commerce, art, literature, drama, and philosophy that are still studied and appreciated 2,500 years later. The Athenians were under no com- pulsion to undertake such tasks. As Kagan makes clear, they followed Pericles volun- tarily because his vision, integrity, and credibility—as well as his responsible use of the power with which they had entrusted him—inspired them to pursue the grandeur that he was the first to imagine and communicate.

Pericles was one of those rare people who place their own stamp on their time. An Athenian aristocrat, he first became a democratic political reformer, and then the leader of the Athenian democracy. He personally commanded armies and navies, negotiated treaties, selected the sculptors and architects who beautified the Acropolis, and counted among his friends and associates the leading artists, poets, philosophers, and historians of his age. It is hard to think of any political leader who ever had so direct and versa- tile a role in guiding the life of his people. For three decades . . . he seems to have been general each year, to have assisted the election of some of his associ- ates, to have conducted those campaigns he thought necessary, and to have gained the support of the Athenians for his

domestic and foreign policies. It is important to note, however, that he never had any greater formal powers than the other generals and never tried to alter the constitution. He was still subject to the scrutiny provided for in the constitu- tion and required a vote in the open and uncontrolled assembly to take any action. He did not always get what he wanted and, on some occasions, his ene- mies persuaded the assembly to act against his wishes, but an accurate de- scription of the Athenian democracy . . . was that it was a democracy led by its first citizen. Pericles was influential not because of any hidden power or the con- trol of armed force, for he had none. The Athenians followed his lead because of his reputation for intelligence, wisdom, ability, honesty, and patriotism; because of his remarkable talents as a public speaker; and because of the success and popularity of his policies and leadership. Thucydides introduces him into his his- tory as “Pericles son of Xanthippus, the leading man in Athens at that time and the ablest in speech and action.”42

Two elements in Kagan’s treatment of Pericles merit particular attention. The first is his observation that “Pericles was influen- tial not because of any hidden power or the control of armed force, for he had none.” This comes very close to suggesting that even in his position at the center of the Athenian democracy, Pericles was without substantial portfolio. He led not because he had a lofty title, wore a splendid robe, occupied luxuri- ous quarters or controlled armed men, but because his vision, honesty, and record for accomplishment persuaded growing num- bers of Athenians to follow him voluntarily.

The second noteworthy element in Kagan’s treatment of Pericles, however, is what is not there: Kagan calls Pericles a “great leader,” crediting him for “the popu- larity of his policies and leadership.” He says of Pericles that “the Athenians followed his lead,” and he creates in his portrait of Pericles a virtual textbook example of a real leader in action. The theme of leadership runs like a golden thread through Kagan’s entire treatment of the great Athenian. Yet the words “lead,” “leadership,” and “leader” are not listed in the index of Kagan’s other- wise exhaustive, absorbing, and often dramatic 573-page book.

This is a phenomenon we must expect to encounter repeatedly in trying to raise our consciousness of leadership. While the idea of leadership is important, it is also elusive. Like particle physicists recording

the passage of electrons through a cloud chamber, we notice not the thing itself, but the effects it leaves in its wake. Or, to use another laboratory analogy, identifying and describing leadership is like identifying and describing a biological specimen under a microscope. When we first look down the barrel of the scope, we do not see anything unless we have some idea of what to look for. Only after we adjust the lenses—some- times repeatedly—does the subject of our inquiry come into focus.

Examples of leadership are available in an increasingly broad and diverse spectrum of publications. One of the best, however, can be found in one of the world’s oldest printed (and hand-inscribed) texts, the New Testament. My appreciation of this story recently was sharpened after I heard it retold as a lesson in leadership by Dr. Joe Stowell, president of Chicago’s world- renowned Moody Bible Institute. Like any dedicated Christian, Dr. Stowell acknowl- edges Jesus as Redeemer and Savior. But as the chief executive officer of an admired and successful organization, he sees Jesus as well in the role of leader.

Dr. Stowell calls his version of the story “Staying on Mission.” He adapted it from John 21:3–17. Jesus, the leader of a devel- oping religious movement, has been grooming a senior staff in his organization, the Disciples. They have been following his lead, learning his message, repeating his Parables, understanding his vision, and helping develop a formal plan to propagate the new faith among an ever-widening cir- cle of potential believers. This is a tight group, a loyal staff made up of second-level leaders, any one of whom should be able to step forward and take over the top leader- ship position should anything happen to the incumbent.

Suddenly all hell breaks loose. Treachery, divisiveness, suspicion, rejection, and denial rip through the organization. The leader’s worthiness to head a growing religious movement has come into question. Demor- alized for the first time by doubt, the senior staff wavers. As loyalty falters, some of the team begin carrying false reports to the civil authorities, hoping to curry favor with the powerful to assure favorable treatment for themselves should the new religious move- ment fail (many a chief executive can relate to this scenario).

The situation deteriorates. The leader, Jesus, is arrested, tried, and put to death. Leaderless now, the senior staff crumbles.

Chapter 1: Leaders and Leadership 25

Peter, supposedly the strongest and most qualified second-in-command, drops the ball. Instead of pulling the team together and reestablishing leadership, he says, “Well, that’s it. We never realized those doctrines could get us in so much trouble. Let’s just file for moral bankruptcy and return to our old ways and our old jobs.” In effect, he and the other team members go off message, off calling, and off mission. They are in business for themselves now, not for the Cause. The once-focused team is now little more than a gang, a group held together more by their mutual need for massed strength than by any conviction of what to use it for. They pile into their frail boats and head out for what they know best, fishing with their old boss, Peter. They fish all night but catch nothing.

As dawn breaks, they see and hear a fig- ure on the shore calling out, “Hey fellas, how’s the fishing?”

“No good!” they answer. “Well, throw your nets on the other side

of the boat and see what happens,” cries the figure.

They comply, and this time the nets are filled to bursting.

Peter swims to shore to greet the visitor. He discovers the man is Jesus. He has lit a small fire and cooks up a mess of fish. (As an aside, Dr. Stowell observes that this event was the “Last Breakfast.”)

Jesus puts his arm around Peter’s shoul- der, looks him straight in the eye, and says “What’s the problem? Didn’t you and the others on the team understand my vision?”

“Oh, yes,” says Peter. “Then why are you out fishing instead

of carrying my message throughout the land to all who need to hear it? Why isn’t the organization moving forward? I want you to get back on vision, back on mission, and back on plan.”

The rest, as they say, is history. Clearly, great religious movements have developed over the ages because strong-willed, dynam- ic people of immense conviction persisted in carrying a simple but powerful message out to the masses of the spiritually starved. Different in philosophy or theology though they may be, these leaders have a common bond: They possess a clear vision of where they want to go and what they expect to achieve. They understand their goal clearly and can articulate clearly to their followers both the mission and the means by which it will be accomplished. They have developed a plan, a testament of purpose that directs

the processes of the organization in an orderly flow toward their final goal.

Connection of Leadership and Power: An Embarrassment of Riches

Why do we have such trouble focusing on leadership, even when we sense very strong- ly that it is present among us and that we need it? We have such trouble because lead- ership is—among others things—about power, a word that stirs deeply ambivalent feelings in the politically correct, antiau- thoritarian American psyche that developed in the wake of the Vietnamese War, the Watergate scandal, and other abuses of power. Because leadership is about power, many people today find it embarrassing.

Consult some of the recent best-sellers on leadership, particularly the self-help guides to business leadership, and you will discover an amazing absence: Despite thou- sands of words about leaders and leadership, there is almost no discussion— or even mention—of power.

Some of the top leadership books, including Michael Maccoby’s The Leader, Charles C. Manz’s Superleadership: Leading Others to Lead Themselves, and Burt Nanus’s The Leader’s Edge, do not even list “power” as an entry in the index.43 The most unin- tentionally amusing example of such an omission occurs in John P. Kotter’s other- wise useful and informative 1985 book, Power and Influence: Beyond Formal Author- ity. Power is missing from the index, even though it is the first word in the title. Nor is power actually defined in Kotter’s book. It is not even discussed until Chapter 7, where it makes its entry as part of the term “power base.”

This reluctance to come to grips with the question of organizational power appears to be endemic in much of the cur- rent popular leadership literature. In several recent books, the word power appears only as the root of the New Age buzzword “empowerment” (with little or no explana- tion of why the new version is good while its antecedent is bad). No general theory of power is introduced, and no relationship between power and leadership is suggested. Power seems to be almost as big a taboo in leadership books of the 1990s as sex was in books about marriage prior to the mid-50s.

“Power is America’s last dirty word,” writes Rosabeth Moss Kanter. “It is easier to talk about money—and much easier to talk about sex—than it is to talk about power.”44

Yet just as marriage cannot be discussed realistically without mentioning sex, leader- ship cannot be studied effectively without reference to power. Effective leaders must deal in power because it is both their stock in trade and the raw material out of which they craft their accomplishments. Leaders attract and pool the personal power of many individuals and put it to work.

So what is the big problem with power? The answer is simply that power, like the money that people entrust to capitalists, is subject to abuse. When such abuses are exposed, as they are very dramatically in today’s hyperbolic media, many people begin to confuse the abuse of power with power itself. All power—and all who wield power—then become suspect. A person who seeks and uses power without apology is regarded as something of an embarrass- ment, regardless of the ends toward which the power is directed.

Kagan writes: To many in the modern world, power has an unpleasant ring. It seems to imply the ability to impose one’s will upon another, usually by the use of force. Power is felt inherently to be bad. That, however, is an unduly restricted understanding. In itself, power is neutral. It is the capacity to bring about desired ends, and these may be good or bad. It is also the capaci- ty to resist the demands and compulsions of others. In this latter sense, power is essential for the achievement and preser- vation of freedom. In the Kingdom of Heaven, we are led to believe, human beings will not require power, but in the world in which we all live, it is essential, and the struggle for it inevitable.45

One academic who has not tried to avoid the issue of power in his research and writing is Jeffrey Pfeffer, professor of Organizational Behavior in the Graduate School of Business at Stanford University. Professor Pfeffer forth- rightly titled his 1992 monograph Managing with Power: Politics and Influence in Organiza- tions, and the index to his 389-page work lists “power” repeatedly—with eight entries under “Power and performance,” four under “Power dynamics,” six under “Power in organiza- tions,” and 15 under “Sources of power.”

“That we are ambivalent about power is undeniable,” Pfeffer writes. “It is as if we know that power and politics exist, and we even grudgingly admit that they are neces- sary to individual success, but we nevertheless don’t like them.”46

The reasons for that ambivalence, Pfeffer says, are multiple. First, the American edu-

26 Part 1: Before You Start in Business

cational system trains youngsters to become strong individual contributors—stars, if you will—but slights the importance of manag- ing one’s ego and joining in collaborative efforts that can be led only by the powerful. Second, American culture confuses ends with means, leaving many people unable to distinguish between power and the ends to which it can be directed. The untutored mind can easily be led to believe that power and the abuse of power are the same thing (“the same strategies and processes that may produce outcomes we desire can also be used to produce results that we consider undesirable”).47

Finally, Pfeffer even indicts the New Age movement for blinding people to the sim- ple truth that without power (including its acquisition, manipulation, and direction through politics), organizational effort yields no results.

[O]rganizations, particularly large ones, are like governments in that they are fun- damentally political entities. To understand them, one needs to under- stand organizational politics; just as to understand governments, one needs to understand governmental politics. Ours is an era in which people tend to shy away from this task. As I browse through bookstores, I am struck by the incursion of “New Age” thinking, even in the busi- ness sections. New Age can be defined, I suppose, in many ways, but what strikes me about it are two elements: (1) self- absorption and self-focus, which looks toward the individual in isolation; and (2) a belief that conflict is largely the result of misunderstanding, and if people only had more communication, more tolerance, and more patience, many (or all) social problems would disappear. These themes appear in books on topics ranging from making marriages work to making organizations work. A focus on individual self-actualization is useful, but a focus on sheer self-reliance is not likely to encourage one to try to get things done with and through other people—to be a manager or a leader. . . . One can be quite content, quite happy, quite fulfilled as an organizational hermit; but one’s influence is limited and the potential to accomplish great things, which requires interdepen- dent action, is almost extinguished.48

Kagan’s and Pfeffer’s readings of the con- temporary American response to power are something I can confirm from personal experience. In the six years since I began teaching graduate courses in business, I have noticed a curious phenomenon in the

lecture hall. Whenever I refer to power as one of the concerns of business leaders, sev- eral of the students visibly wince. The mere mention of power seems offensive to them. They seem disappointed that it keeps turn- ing up like a bad penny. They make me feel like some kind of bull in the china shop who does not realize that power is out of fashion now, as if we had all agreed to put powerseeking behind us and move into some kind of postpower era of enlightened self-interest.

The truth is that there is no postpower era, because nothing has been discovered that can take the place of power as a fuel for organizational effort. Power, like matter and energy, may change its form but cannot go out of existence. Kagan, too, feels that we needlessly endanger ourselves when we let our fear of the abuse of power prejudice us against the very notion of power itself. When he was interviewed on the Cable News Network’s Charlie Rose Show, he told the host:

In the first place, I’m convinced it’s all about power, and that’s a naughty word in the minds of most people. It shouldn’t be. It’s a neutral word. Power is some- thing everybody needs. Power is the ability to do what you want and the abil- ity to prevent somebody else from imposing his will on you.49

What Kagan is trying to do here is to relegitimize a venerable concept often mis- understood or dismissed in modern politically correct America. It is the idea of power as morally neutral, an objective force of nature like fire or electricity that is nei- ther good nor bad in itself but can be directed to good or bad ends by the human beings who use it.

Is fire good or bad? As posed, the ques- tion is meaningless, because fire is simply a natural phenomenon. If it is out of control and burns down my house, it is bad. If it is under control in my furnace and keeps my house heated to 70 degrees Fahrenheit, it is good. The only question is whether the phenomenon of combustion is being managed and directed for appropriate ends—human good.

As with fire, so with power. In the com- petent hands of a humane individual who understands both its upside and downside, power can be an indispensable force for human good. But to be effective as a leader, such an individual must be realistic about power. She must not have a knee-jerk dis- dain for it; rather, she must genuinely want

it, must have the ability to acquire it, must have a respect for both its useful and its dangerous properties, and must have skill in using it. No matter how humane or decent the ends to which power may be directed, somebody must first take it (i.e., persuade many others to give up a share of their individual power and place it in the collective savings pool under the control of a leader who can apply it where needed for solving collective problems). Kagan told Charlie Rose:

I’m talking about leaders. . . . The indi- vidual human beings who are making the decisions are extraordinarily important, and the differences between them are essential. So I would hope that out of this thing there would emerge pictures of important individuals performing in their role as decision makers.50

Kagan feels that Britain’s wartime Prime Minister Winston Churchill exemplified this ideal of a democratically chosen leader whose followers agreed to commit their individual power to him because they felt he would manage it judiciously and deploy it effectively to ends they felt were necessary:

Winston Churchill is a truly amazing man. It’s not that he was right all the time, because he sure as hell wasn’t right all the time. But as a matter of fact, he was right in the critical moment . . . when he finally gained power after it looked like it was almost too late, he had this marvelous capacity to say, “Okay, let’s forget all that now. Let’s all get together. Let’s work together for the common cause.” And he was able to do that and hold them together throughout that terrible war.51

“ . . . when he finally gained power.” This is the connection between leadership and power. The leader is able to lead not only because he understands his followers and makes his vision theirs, but because he first acknowledges the reality of power, moves resolutely to take it when the possibility opens to him, and masters the dynamics of applying it on behalf of his followers’ inter- ests. He doesn’t lose precious time in philosophical doubts about whether power is good or bad. If he’s good, if his followers are convinced he’s good, and if all are con- vinced their cause is good, all can be confident that the power they share will be directed by the leader toward good ends.

Although Kagan’s ideas about power developed out of his research into statecraft, politics, and warfare, I find them equally applicable to business—as well as to

Chapter 1: Leaders and Leadership 27

government, the armed forces, and non- profit institutions. Because it is needed everywhere, leadership exists everywhere (though never, apparently, in adequate amounts). Leadership is not a substitute for power or some New Age successor to power; it is a more effective and humane way of exercising power.

Yet even when leadership is present, it often goes unnoticed. This is perhaps due to its association with power, from which so many contemporary Americans wish to avert their eyes. Another reason is that so much leadership is conducted in a way we have not been trained to recognize—without portfolio.

Leadership without portfolio, then, is not an isolated or accidental phenomenon; it is an integral part of the way leaders develop, emerge, win recognition, and begin to acquire power and authority based on abili- ty rather than accident of birth, ritualized succession, or brazen usurpation. There most certainly is a logic to leadership. Lead- ership is not just a set of abilities that certain individuals display; it is also an organizing principle, a newer and more log- ical way to make sure authority is given only to those who have shown they can use it wisely and effectively.

Just knowing that leadership can operate without a portfolio is a valuable lesson for anyone entering a business career and feel- ing the first stirrings of leadership potential. But how do you know whether what you are feeling is leadership potential? What is it that actually makes someone a leader?

Bennis and the “Four Competencies”

Since the late 1950s, a small group of researchers, many of them trained in the Systems Thinking and Organizational Learning Program at MIT’s Sloan School of Management, has been asking those very questions. Warren Bennis is one of them. He says leaders display what he calls the “four competencies of leadership.” Bennis defines those competencies as management of attention, management of meaning, man- agement of trust, and management of self. (Note: The following discussion of Bennis’s four competencies is a paraphrase of mater- ial found on pages 78–95 of An Invented Life.)

Management of attention, Bennis’s term for what other writers often call “vision,” is evident in the way leaders draw others to them, hold their attention, and inspire them.

“I cannot exaggerate this difference,” Bennis told a Chicago Tribune reporter.

“It’s as if they’re drawing people to them, but it’s not necessarily the quality we think of as charisma. It’s a kind of laser-beam intensity they get when talking about their vision. When they’re talking about some- thing else they can be as boring as the next person.”52

Bennis says leaders are able to manage other people’s attention because they pro- ject a strong conviction both that they know what needs to happen next and that it can happen. Leaders use this sense of con- viction to captivate others and involve them in the project. When followers sense that a leader has a vision as well as a plan for achieving it, they experience a rallying effect that focuses their efforts on the leader’s goal and maintains that focus over the long term.

The techniques the leader uses to man- age other people’s attention can vary depending on the leader’s personality and the situation: Leaders may inspire, charm, cajole, flatter, manipulate, listen carefully, urge, even threaten or humiliate in an effort to focus their followers’ attention. Seasoned leaders skillfully employ several techniques in turn as necessary. But it is not the tech- niques that make the leader; it is the leader’s vision and the leader’s conviction that the vision can be achieved. The techniques are best understood as tools that leaders use to involve followers in their vision and com- municate to them the leader’s feelings of excitement and urgency.

Bennis says leaders exert a similar capti- vating effect through the management of meaning, perhaps a more precise expression for what so many other writers mean when they tell us that leaders are “good commu- nicators.” Management of meaning, Bennis says, means leaders project a sense that they understand the real underlying patterns that make apparently unrelated elements form a coherent, understandable whole. Bennis says that when leaders discover meanings and communicate them to their followers, the followers respond with another burst of organized energy, enthusi- asm, and focus.

Bennis finds Ronald Reagan an exem- plar of this management of meaning:

The reason is that Reagan uses metaphors with which people can identi- fy. In his first budget message, for example, Reagan described a trillion dol- lars by comparing it to piling up dollar bills beside the Empire State Building. . . . In contrast, President Carter was boring.

Carter was one of our best-informed presidents; he had more facts at his fin- gertips than almost any other president. But he never made the meaning come through the facts. . . . An assistant secre- tary of commerce appointed by Carter . . . told me that after four years in his administration, she still did not know what Jimmy Carter stood for. She said that working for him was like looking through the wrong side of a tapestry; the scene was blurry and indistinct.53

Bennis’s management of trust means that the leader can be trusted to adhere to a con- stant theme or motif. Bennis says even though leaders may have to adjust some aspects of their approach periodically in response to changing conditions, they con- tinue to project to their followers a strong signal that they remain true to certain underlying principles, even if those princi- ples are not always articulated. Bennis also calls this trait constancy and says followers find it assuring and empowering. When people sense they can trust a leader to remain constant in his or her loyalty to a principle, they will follow that person because they know they will not be betrayed. He writes:

When I talked to the board members or staffs of these leaders, I heard certain phrases again and again: “Whether you like it or not, you always know where he’s coming from, what he stands for.” In fact, a recent study showed that people would much rather follow individuals they can count on, even when they disagree with their viewpoint, than people they agree with who shift positions frequently.54

There’s another, much older word for what Bennis is describing here—integrity. He feels this quality is largely responsible for the stunning successes of former British Prime Minister Margaret Thatcher. Many disagreed with her, but no one ever seemed to be puzzled about what she stood for.

Bennis’s fourth leadership competency, management of self, shows up in the works of other students of leadership as well. Ben- nis defines it as “knowing one’s skills and deploying them effectively. . . . Leaders know themselves; they know their strengths and nurture them.”

Management of self, Bennis suggests, is not the same as self-confidence, which sometimes appears in people who have nothing in particular to be confident about—a form without content. Real lead- ers, he says, have real abilities and know what they are. Because they know and trust

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these abilities, they do not lose momentum by engaging in pointless soul-searching or agonizing when they make a mistake. They pause just long enough to learn from the experience, and then move ahead again. As one leader told him, “A mistake is just another way of doing things.” This ability, too, builds trust in followers. Just as they feel secure in committing to a leader who knows and sticks to principles, so too do they feel secure in the hands of someone who knows and sticks with his strengths.

The leadership attitudes and behaviors identified by Bennis and his colleagues in decades of formal academic studies are echoed in the anecdotal recollections of those who have worked alongside acknowl- edged leaders. For example, when former Michigan Governor and American Motors Chairman George Romney died in the summer of 1995, media interviews with his former associates revealed that Romney had captivated them with the very same traits described by Bennis. He had a clear and unflinching conviction, even in the 1950s, that Americans needed and wanted smaller, more fuel-efficient cars. He communicated that conviction eloquently and tirelessly. And he communicated it so clearly and unequivocally that no one ever doubted his sincerity or confused his conviction with a mere opinion.

“You always knew what he stood for,” a former colleague told Detroit News-Free Press columnist James V. Higgins.55 John Conde, one of AMC’s former public rela- tions executives, recalled that Romney’s great talent was for “getting people fired up.” “Romney was pretty good at getting attention called to himself,” Conde told Higgins. “He was a great communicator. I never saw anybody who knew how to make the dealers as enthusiastic as he did.”56

Another anecdote that throws some light on the nature of leadership is told by senior Business Week writer John A. Byrne in his 1993 book, The Whiz Kids. Byrne’s book tells how ten World War II Army Air Corps statisticians led by the legendary Col. “Tex” Thornton sold themselves in a pack- age deal at war’s end to young Henry Ford II, who had just assumed the presidency of the Ford Motor Company from his aging grandfather, Henry Ford. The Whiz Kids, whose advanced number-crunching tech- niques helped rescue Ford from two decades of bad management, included not only Thornton (who went on to form Lit- ton Industries), but also Robert S.

McNamara (chosen by President John F. Kennedy to become Secretary of Defense), and Arjay Miller (who became president of Ford and then dean of the Graduate School of Business at Stanford University).

As Byrne makes clear, however, it was Thornton’s leadership, not his technical skills or even his intelligence, that made the package deal happen. While all of the Whiz Kids were brilliant—their pioneering wartime statistical work had given the Army Air Corps unprecedented control over its planes, personnel, and equip- ment—it was Thornton who held the group together throughout the four-year war, and it was Thornton who held it together after the war and proposed the daring idea of offering themselves and their skills as a group to a single employer. In the ultimate display of chutzpah, Thornton sent a cold-canvass telegram to Henry Ford asking for an interview. (He got it, and the Whiz Kids got hired.)

No one was surprised, therefore, when after Ford agreed to hire the ten men, com- pany psychologists who administered a battery of tests to the Whiz Kids found objective evidence that Thornton was their leader, even though his intellectual gifts were inferior to those of the other team members.

It was revealing to Ford . . . to look over the results of Tex’s exams. The tests showed him to be dead last in mental ability and among the lower half of the group in knowledge. Tex, though, topped the others in outstanding leader- ship qualities. The evaluator noted that the results showed “exceptional under- standing of human nature and ability to evaluate others” as well as the “presence of strong motivation and drive.”57

Four “Competencies” or Seven “Habits”?

In The Seven Habits of Highly Effective Peo- ple, management consultant and educator Stephen R. Covey does not specifically set out to address the issue of leadership.58 But since leaders are among the highly effective, it is worth looking at Covey’s Seven Habits to see how they apply to leaders.

Covey divides his Seven Habits into chronological groups. The first group con- sists of three habits that make up what Covey calls “private victory.” These habits are something similar to Bennis’s manage- ment of self. They are character-building habits, self-mastery exercises designed to

strengthen the individual so she can act independently.

Independence is not an end in itself in Covey’s scheme, however; it is the precursor of interdependence—the ability to interact effectively with others, particularly in the world of work. Covey says the three habits making up private victory must be in place before an individual can go on to become highly effective in an organizational setting. Covey identifies the habits leading to pri- vate victory as:

• Be proactive. Effective people do not wait to react to developments or to be told what to do. They exercise initiative and originality because they have cultivat- ed a highly developed sense of being responsible. They do not engage in blam- ing or excuse-making and see themselves as conditioned more by their own will and judgment than by the environment.

• Begin with the end in mind. Effective people first develop a strong vision of how something ought to be before they act. They have a strong ability to visualize the final or ideal form in which an idea will be realized. They virtually see a pic- ture of what they want to create.

• Put first things first. Effective people get things done without wasting time because they have cultivated the ability to see the order in which things have to happen. Because they set priorities and schedule their activities correctly, they rarely have to go back and repeat a step in a process.

Once these three habits of private victo- ry are firmly in place, Covey says, the individual can proceed to develop the three habits of “public victory,” or organizational effectiveness: • Think win–win. Just as a poorly per-

forming athlete will tend to beat himself before his opponent can, so too can a business lose out to a rival because the competitive drives of its employees are being pitted against one another in an endless series of internecine power strug- gles and turf battles. Highly effective managers overcome this organizational centrifugal force by deliberately working to build trust and cooperation. They focus people on the broad-based endur- ing gains that emerge from collaboration rather than the short-term advantages that accrue from political infighting. They make sure their organizations com- pete with the competition, not with themselves or their customers.

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• Seek first to understand . . . then to be understood. Highly effective people diagnose before they prescribe. Although they have powerful knowledge and skills, they take the time to ask plenty of ques- tions and do the required research before they apply their skills to the treatment of a problem. Covey calls this approach “the mark of all true professionals” and “the key to effective interpersonal communication.”

• Synergize. Effective people know how to combine elements in a way that makes the whole add up to more than the sum of the parts. They get people with differ- ent viewpoints together to work on a problem. They detect relationships between ideas that appear to be unrelated. They even combine the elements of their own psyches synergistically, using “both the intuitive, creative, and visual right brain and the analytical, logical, and ver- bal left brain” so that “the whole brain is working.”59

Covey’s seventh habit, sharpen the saw, is a kind of self-administered continuing educa- tion program. Highly effective people periodically revisit their three private and three public habits and work at sharpening them. They never consider any of the habits supporting their effectiveness as finished.

Although Bennis and Covey use differ- ent nomenclature and differ in the number of categories they set up, their schemes have much in common. In particular, they both focus on the power of a coherent, well- thought-out and well-articulated vision to inspire and motivate others. So does almost every other writer on leadership. Whether you call it management of attention, vision, or begin with the end in mind, the effect seems to be the same. Before leaders begin a project, they are able to visualize the form and dimensions of the final outcome. They know how things are supposed to be. They know what they want to create. They know and trust their own ability to establish an orderly sequence of steps that will make the vision real. And because they know these things, they are able to communicate the vision—and the excitement associated with it—to the followers who must help the leader turn vision into reality.

Notice, too, that neither Bennis nor Covey says anything about formal author- ity being essential to the leadership process. Neither does the dictionary. All three sources tacitly acknowledge the possibility of leadership without portfolio.

STA M I N A A N D P E R S I ST E N C E Leadership’s Overlooked Foundations?

Which qualities and attributes most accu- rately mark a leader? According to Pulitzer Prize-winning historian and author Garry Wills, one of the most common leadership traits is plain old physical stamina—the bodily strength and staying power to keep going at a task that wears others down.

It may seem a prosaic thing to say that a leader needs great physical stamina. When people talk of a leader’s qualities, they prefer to mention such things as vision, self-confi- dence, “charisma” or such. But great students of leadership, from Machiavelli to Clause- witz, have said that physical endurance ranks very high among the requisites.

It is easy to see why. The best brain, the greatest charm, is useless if a person’s ener- gies are zapped after long spells of effort. A general must have his wits about him even after sleepless nights. Classical authors knew this when they praised Caesar and Mark Antony for their ability to make clear-eyed decisions when their own aides were brain dead from continued trials.60

Where does the leader’s physical en- durance come from? Is it inborn? Is it acquired? Does it develop as some sort of by-product of leadership?

This question fascinated Dr. Mihaly Csikszentmihalyi, the Hungarian-born director of the University of Chicago Department of Psychology. In his book Flow: The Psychology of Optimal Experience, Dr. Csikszentmihalyi documented a mental phenomenon that gives some people an apparently inexhaustible supply of energy and an almost uncanny ability to find the easiest and fastest way to accomplish a task. The phenomenon is called “flow” because people who experience it in their work do not feel themselves to be engaged in an effort against resistance; rather, they feel carried forward toward their goal as if on a current of “deep but effortless involvement.”61

Some of these people will tell you, “I know I’m doing hard work, but I don’t feel as if I’ve ever really done a day’s work in my life.” They really love what they are doing. They love it and they do not want to quit. They have so much focus that they engage in very little wasted effort, so there is no cause for fatigue. They do not seem to have this split consciousness that most people do in their work—the kind that tells you, “I want to do this job but I also wish I were somewhere else.”62

Dr. Csikszentmihalyi, however, does not identify flow solely with leaders. He says it is found in virtually all of those whom Stephen Covey identifies as “highly effective people.” He has identified the flow phenomenon in corporate executives, small-business proprietors, artists, musi- cians, and even farmers. One of his subjects was a welder in a railroad-car fac- tory on the south side of Chicago who continually dazzled his colleagues and superiors with his seemingly effortless out- put of fast, high-quality work. The welder found every aspect of his work fascinating, was totally absorbed in it, and even had the ability to make the work more exciting to his less-inspired co-workers. Yet for all his output, he would leave the plant at the end of the day almost as fresh as when he arrived. His stamina seemed to be a prod- uct of his fascination and focus, not the cause of it. Dr. Csikszentmihalyi says that in his research for his latest book, he found the same level of flow in the CEO of a major Italian insurance company. The man was 84 years old!

While stamina is normally defined as a physical attribute, it has a mental equiva- lent in perseverance, another trait of leaders and other high achievers. The dictionary defines to persevere as “to persist in any busi- ness or enterprise undertaken; to pursue steadily any design or course once begun; to be steadfast in purpose.”63

Leaders, in other words, are among the few who just do not give up. A classic example is Winston Churchill, who endured not just public displeasure, but something close to official disgrace for his bungled military strategizing in World War I. Despite nearly 20 years of political ban- ishment—and despite devastating episodes of depression he called “black dog”— Churchill persisted in learning the lessons of European history and warning his fellow Britons of the growing threat to their coun- try. He succeeded only at the last hour, serving his nation—and probably saving it—as its wartime prime minister. Rejected in favor of a Socialist at war’s end, he bat- tled his way back into power in 1951 at the age of 77 and served until a stroke disabled him at the age of 81.

An even more amazing demonstration of perseverance in the face of seemingly insu- perable obstacles is that of Abraham Lincoln. Like Churchill, he suffered periodic bouts of debilitating depression. But the number of personal and professional reverses Lincoln

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encountered seems to be even greater than what Churchill endured. Moreover, Lincoln lacked the family wealth and social status that kept Churchill afloat even when his pro- fessional fortunes were in limbo. Unlike Churchill, Lincoln had to earn a living in a preindustrial, frontier economy. Lincoln tri- umphed in the end, of course, but the scale of his stamina and perseverance becomes apparent only when we review his depress- ingly lackluster résumé and total up the failures he endured virtually every other year before he finally was elected President. Con- sider these failures (and some successes) and the ages at which he experienced them:

Failed in business—22

Defeated for state legislature—23

Again failed in business—24

Elected to legislature—25

Sweetheart died—26

Had a nervous breakdown—27

Defeated for speaker—29

Defeated for elector—31

Defeated for Congress—34

Elected to Congress—37

Defeated for Congress—39

Defeated for Senate—46

Defeated for Vice President—47

Defeated for Senate—49

Elected President of the United States—51

If Lincoln and Churchill seem too lofty to serve as personal role models, consider a more approachable figure.

In the Depression year of 1930, this 40- year-old man in Corbin, Kentucky, was struggling to support his wife and three children.64 Driven by a strong work ethic, he had earned his own living since the age of 12 when his stepfather literally kicked him out of the house. Yet despite his persis- tence, nothing he did seemed to work out for long. During the 1920s he had lost three good jobs in disputes with superiors. Finally realizing that he could succeed only if he worked for himself, he started a busi- ness that furnished acetylene-gas lighting systems for farms, only to see the venture fail when Delco developed a superior sys- tem that used electricity. He took a job selling tires but was laid off when the com- pany had to downsize during the Depression. He opened his own business again, this time a tiny service station in Nicholasville, Kentucky, but he lost all his money when the hardscrabble farmers who

patronized it could not pay for the gasoline he had sold them on credit.

Still unwilling to quit, he started yet another filling station, but this time with a difference. His new business was located in Corbin, a small town, but an important stop for tourists navigating U.S. 25 between Detroit and Cleveland in the North and Atlanta and Miami in the South. This strategic repositioning brought in trade that might otherwise have been missed.

The other breakthrough was his realiza- tion not only that he was good at selling to people, but also that he liked to take care of them—especially to cook for them. To the service station he added a tiny, scrupulously clean dining room in which he served deli- cious recipes he had learned from his mother. Famished tourists fed up with the roadside greasy spoons of the day quickly spread the word about the crisply managed little gas station-café in Corbin, and the business thrived. Within a few years, it had become a larger filling station, a larger restaurant, and a motel. In 1935 Gov. Ruby Lafoon named the 45-year-old entrepre- neur a Kentucky Colonel for his contributions to the state’s economy and reputation, and in 1939 the oasis at Corbin won one of the coveted spots in Duncan Hines’s Adventures in Good Eating.

Business sagged somewhat when gaso- line rationing crimped the nation’s motoring habit during World War II, but at war’s end the business grew again, and by the early 1950s the restaurant had expand- ed to 142 tables. It appeared that all the striving had finally had paid off.

But fate has a way of kicking its favorites. In the mid-50s the federal govern- ment announced that due to traffic congestion in Corbin’s bustling downtown, U.S. Route 25 would be rerouted around the city core on a new bypass. Ironically, the booming food-and-lodging business that had fueled much of Corbin’s traffic conges- tion was about to be stranded. The restaurateur had to sell his property at auc- tion to cover his debts. At the age of 66 he was forced to start all over again.

And start over he did, though all he had left was a monthly Social Security check of $105 and his customers’ favorite recipe—a specially spiced version of fried chicken steamed in a pressure cooker to reduce cooking time. Taking the recipe and a pres- sure cooker on the road, he served the dish to restaurateurs and offered to franchise it

to them by packaging and shipping them his specially flavored flour for breading the chicken. Unable to afford the price of a motel room, the former motel owner slept in his car during his grueling sales trips.

One by one, restaurateurs signed up to serve the famous recipe. By 1960, there were 400 franchisees in the United States and Canada. In 1964, with his format a nationwide fast-food hit, the 74-year-old owner sold his business for $2 million and a lifetime job promoting the business through broadcast commercials and per- sonal appearances. He continued working and growing richer until his death in 1980 at the age of 90.

In case you haven’t guessed, the perse- vering restaurateur was the legendary Colonel Harland Sanders. His company, Kentucky Fried Chicken, now a division of PepsiCo, Inc., is approaching $8 billion in annual sales. Like Lincoln and Churchill, the Colonel kept trying and trying even when old age and common sense would seem to argue otherwise. Clearly he had perseverance, and he probably had stamina as well.

As Wills concludes: “It is not the stuff of inspirational literature, but it gets the job done.”65

Making Sense out of the Leadership Trend

It is exciting and encouraging to see the question of leadership finally being addressed by so many business writers, retired CEOs, academics, and military thinkers. American business has had a rough time in the last two decades and needs all the leadership it can get. Fresh ideas may be arriving just in time.

However, there is also a downside to this excitement. The first signs of a shallow trendiness have already begun showing up in our fascination with leadership. A whole series of leadership books, ranging from serious academic studies to the breeziest pop psychology self-instruction guides, has poured from the publishers’ presses in the last decade. Each source offers its own inventory of leadership attributes. If you find Bennis’s “four competencies of leader- ship” or Covey’s “Seven Habits” too demanding, you can embrace the “ten ingredients” being touted by California sales executive Danny Cox or the “thirteen heroic strategies” worked out by New York consultant Emmett C. Murphy.66 Even the

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professional football coaches are joining in with leadership sound bites for the desper- ate executive. Here’s one forgettable goody: “I think goal-setting is overrated.”67

Alternatively, you can dispense with the contemporary leadership literature alto- gether and join the neoclassicists who claim to have rediscovered the secrets of leader- ship in the writings of the ancients. During the early 1980s, when U.S. business and industry first began waking up to the threat of Japan’s growing economic power, Miyamoto Musashi’s The Book of Five Rings, dating from 1645, was republished and touted as the true samurai source of Japan’s modern industrial effectiveness. Other advocates of Eastern wisdom cited The Art of War, a 2,000-year-old treatise by the Chinese general Sun Tzu. “Absorb this book and you can throw out all those con- temporary books about management leadership,” enthused a reviewer for Newsweek.68 Meanwhile, the more conven- tional observers of leadership continued to uphold the heroes of the more familiar Western tradition—Julius Caesar subduing the Gauls in 52 B.C. or Alexander the Great pursuing Darius the Persian across the Mid- dle East between 335 and 330 B.C.

To those students who wish to review the careers and study the strategies of these shoguns and emperors, I say “enjoy.” Before attempting to apply their strategies in a modern setting, however, please keep in mind that the heroic leaders of ancient and medieval times enjoyed at least one advan- tage not available to today’s business leaders, with or without portfolio: They could enforce their orders with draconian punishments up to and including death. History tells us that when Alexander con- quered Thebes in 335 B.C., he burned down every house in the city, killed 6,000 people, and sold the remainder into slavery. These actions make moot the question as to whether Alexander’s leadership abilities made people follow him “willingly and vol- untarily.” Clearly, the lessons in leadership left to us by ancient leaders need to be taken with a grain of salt.

The student of leadership probably should employ another grain of salt in eval- uating leadership courses, leadership workshops, leadership seminars, and even leadership wilderness retreats now prolifer- ating in lush variety as Americans become more concerned about who is in charge of their business and governmental organiza- tions. “Being picked for a sexy new

leadership training program sure beats working,” notes Inc. magazine columnist J. Case. But Case also warns his readers not to expect too much from “all sorts of nutty training programs” to which big firms send their managers in hopes of turning them into leaders.

“In one such program, teams from Gen- eral Foods Corporation found themselves trying to build rafts and sail down a river, first under nit-picking managerial inspec- tion and then on their own,” Case writes. “Which rafts sank and which ones floated? No, you tell me.”69

Case wrote that column in 1987. Since then the leadership-training trend has swollen in size and taken on dubious fea- tures that have left much of the field looking like a cross between a cult and a racket. In 1992 the trend even picked up a federal subsidy in the form of something called the Dwight D. Eisenhower Leadership Devel- opment Program—an amendment to the Higher Education Act that offered $10 mil- lion in grants to colleges and universities able to convince the U.S. Department of Education that they could teach leadership.

Fortunately for people who take leader- ship seriously, when DOE bureaucrats assembled an academic jury to judge the grant applications, one of the jurors turned out to be the skeptical and insightful Dr. Benjamin DeMott, Mellon Professor of Humanities at Amherst College, who immediately blew the whistle on the scam in a Harper’s magazine article titled “Choice Academic Pork.”

DeMott branded the federal leadership grants a “fiasco,” a “turkey,” and “a con- tender, arguably, for the title of worst-conceived taxpayer-financed program in the history of the republic.” The day he spent judging grant proposals with 18 other academics, DeMott said, introduced him to “the leadership-studies cult, a . . . perfect specimen of late-twentieth-century aca- demic avarice and a precise depth-gauge of some recent professorial descents into pap, cant, and jargon.”

In some respects the leadership cult resembles a real culture. It possesses a dis- tinct language. It honors heroes and texts comparatively unknown to the general public. It consistently defines past and present reality on its own terms. And it displays a strong determination to enlarge the spheres of its influence.70

DeMott said that as he and his fellow academics reviewed the proposals from a

variety of institutions seeking federal lead- ership grants, the panel members grew “noisy and irritable.” A letter of greeting from the federal bureaucrats had implied that the meeting would address such ques- tions as “What is the definition of leadership? How and why does one teach leadership? To whom should leadership be taught? When and where?”

“You tell us,” DeMott retorted when he realized that neither the organizers nor the grant applicants were facing those issues. In fact, the grant applications were so poorly worded and spelled, so lacking in scholarly rigor, and so burdened with the jargon of pop psychology that DeMott and his fellow jurors gloomily began to suspect that the grant program was little more than a scheme to funnel federal funds to second- rate academics. None of the grant proposals showed any real grasp of what leadership was or how it could be formally taught. At last, one juror exploded in frustration:

This is bullshit. . . . Nobody can teach this stuff. You can’t have a curriculum. All you can do is some hands-on out in the community. Identify people and go out and do something, for Christ’s sake.71

Viewed in context, the wacky, federally financed “leadership-development program” in which DeMott found himself ensnared may be just one more in a growing list of trends that regularly sweep through the busi- ness community on the wings of the great American media machine. I’m old enough to remember when Philip Crosby first sold International Telephone & Telegraph Chair- man Harold Geneen on his zero-defects concept. I can also remember T-groups, The- ory X and Theory Y, the Peter Principle, management by objectives, sensitivity train- ing, and a host of other fads touted as solutions to making organizations more pro- ductive and managers more effective.

Some of these trends succeeded in bring- ing about change—at least for a time. Others seem to have disappeared as quickly and mysteriously as they came. Let’s be careful about the way we approach leader- ship. It is a subject we have only begun to study. It is also a subject far too important to be trivialized in a bumper-sticker cliché like “Managers do things right; leaders do the right things.” Such shallow reduction- ism only reinforces the suspicion that much of today’s alleged interest in leadership real- ly represents a thinly disguised attempt to pussyfoot around the question of power in the accomplishment of organized work.

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Leadership is tacitly posited as a substitute for power or as a successor to power, rather than an enlightened way of using power.

Dr. DeMott was right to resist the siren song of this new-and-improved power-free leadership. So was the skeptical and sardonic columnist J. Case. Both recognized that what they saw being offered as leadership was not the classic leadership of a Pericles, a Churchill, or a MacArthur, but only a pathet- ic latter-day shadow—“Leadership Lite.”

Simplified Leadership Scheme

I find a great deal of merit in the leadership traits and elements worked out by Bennis and Covey. Because they overlap, and because students need a simple, practical, and easy-to-remember scheme to help them develop their leadership skills on the job, however, I also feel a need to combine the best of Bennis and Covey and then distill the result down to a small number of salient factors on which the student of leadership can focus.

Covey is right on target when he lists proactivity and an eager display of initiative as essential qualities of a budding leader. For a second factor, I like Bennis’s management of attention. On close inspection vision turns out to be very similar to Covey’s begin with the end in mind. Leaders have the capacity to see the design, shape, and configuration of the objective. This is what other writers mean when they talk about how subordi- nates grant leadership power to those they sense have the capacity to see where the organization will be going and why it ought to go there in the first place.

For a practical and simple way to schematize and memorize complex materi- al, it is hard to beat the old Rule of Three. The human mind just naturally seems to embrace ideas that are broken down into three related components, particularly if the components can be alliterated—reduced to three words that all begin with the same sound. The Rule of Three causes the mind to elbow aside any elements that add up to a greater number. In distilling Bennis, Covey, and other leadership writers down to a simple, alliterative Rule of Three scheme, I arrived at the following elements of leadership: recognition, response, and renewal.

Recognition Every writer on leadership mentions this one, because anyone who understands

human motivation realizes that members of an organization are more likely to follow a superior who recognizes their performance.

This recognition cannot be expressed adequately in monetary or other material gratification. All of us like to hear the sim- ple words, “Well done.” This is the psychic income that nourishes the ego and satisfies our appetite for approval. People with lead- ership ability quickly learn that approval and recognition of good performance win follower loyalty.

Another, more subtle reason that a will- ingness to recognize good performance is such a powerful leadership lever. Most members of an organization immediately grasp a willingness to share credit as the sign of a strong, secure personality that they can trust and rely upon. Comedy writer Alan Zweibel, a longtime friend and col- league of the late “Saturday Night Live” star Gilda Radner, told interviewer Larry King that other performers loved working with Radner because she never hogged the lime- light as so many show business people do. She gave her fellow performers the “space” to shine before the public. People wanted to work with Radner because they knew her efforts would help them do their best. A similar observation was made two genera- tions earlier by associates of Jack Benny. They recalled that on most of the radio comedy shows of the 30s and 40s, the writ- ers always wrote their funniest lines for the star to deliver. Benny did not accept this practice. If a supporting player’s line got a terrific laugh during rehearsal, Benny never followed the standard show-biz procedure of having it rewritten for himself. The result was that the top stars in the industry were always eager to work with him because he made them look good.

Response Response is the continuous feedback of information that nourishes organizational effectiveness the way the circulation of the blood nourishes the body. Good leaders listen and talk to everyone in their circle— subordinates, superiors, customers, vendors, and peers within the organization. They collect, channel, funnel, and distribute information in whatever way seems to make the work flow more easily and effectively, keeping the boss informed about details of the unit’s operation while keeping all mem- bers of the unit current on the needs, wants, and observations of management.

Keeping yourself and your organization informed may seem too mundane to quali- fy as a leadership strength, but it works. Organizations thrive on accurate informa- tion—and shrivel without it. Becoming an effective two-way communicator is one of the quickest ways to win recognition as somebody who can get things done.

Renewal Covey talks of sharpening the saw. Other observers of organizational behavior talk of periodic re-education and updating of skills. Tom Peters suggests that you “‘re-pot’ yourself every 10 years.”72

All are excellent admonitions, but they still skirt a sensitive issue that can be almost too tricky to talk about with your col- leagues in the workplace. I refer to nothing less than the ugly truth that Henry David Thoreau disclosed when he wrote, “The mass of men lead lives of quiet despera- tion.”73 Although Thoreau made his famous statement in Walden in 1854, when America was still an agrarian society, it is just as relevant in today’s industrial and postindustrial economy. Perhaps even more so, for today many jobs in management and the skilled professions provide people with such a high level of material security that they are loath to risk a change in their sta- tus or activity for fear of losing some material advantage.

People who keep their eyes and ears open in a typical modern corporation will soon encounter people—some of them at very lofty levels in the organization, includ- ing even the CEO—who have begun to grow sterile from having exhausted the per- sonal-growth potential of their job. Remember that even the most exciting and challenging jobs have a shelf life. When that shelf life comes to an end, it is time to move on to another position, usually with a different employer.

The management writers are correct when they say we should sharpen our saws, go back to school and get that extra degree, or perhaps drop out of the corporation entirely and start that entrepreneurial busi- ness we have always dreamed about.

But sometimes renewal can go forward without such radical measures. Taking that vacation—and making sure those under your direction take theirs—is a simple way to make sure you and your colleagues periodically regain perspective. Short sab- baticals, temporary transfers to other departments, and refresher courses, including

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courses in subjects outside your specialty, can be useful as well. But most important is your willingness to engage in serious self-reflection and self-monitoring to make sure you do not slip into denial when the first wispy shudders of discontent, boredom, or burnout begin to manifest themselves. As the armed services have learned in their efforts to train future officers, self-monitoring and self-reflection are essential to leadership. There is no more important subject upon which a leader can reflect than the possibility that this job might be leading to quiet desperation. When that sensation comes, do not ignore it. Face it, reflect, and act. As long as you do not hide from the problem, you are almost certain to make a correct career move.

While you are reflecting on whether your own personal growth is coming to a halt, take a look around and see whether the same syndrome is afflicting any of your colleagues or superiors. In poorly led orga- nizations, less than optimal performance is not only tolerated but also sometimes secretly welcomed by insecure superiors who fear the emergence of competence and initiative. In these low-performance work- place cultures, a display of leadership— particularly leadership without portfolio—is viewed as a threat by entrenched superiors trying to protect their jobs.

The typical business student would be surprised at how many organizations actu- ally enshrine mediocrity in their managerial ranks. Mediocre people are attracted to one another and help one another maintain their positions in an organization through a kind of mutual blackmail. They say to each other, in effect, “I won’t tell anybody how mediocre you are if you don’t tell anybody how mediocre I am.” Thus, mediocre sub- ordinates are attracted to a mediocre superior and serve him loyally because they know that the culture he enforces will pro- tect them against the challenges and demands of a high-performance workplace. The superior, in turn, can rest assured that no subordinate will engage in the kind of competent or innovative behavior that would call attention to the boss's own lack of performance. Each party has a vested interest in maintaining the mediocrity of the other.

Fortunately, it is easy to tell if you are in such a workplace. The sense of futility and fatigue in the environment is almost palpa- ble. Suggestions for action are ignored. Innovations are stifled. Every manager seems empowered to say no, but nobody in

the organization has the authority to say yes. Expressions such as “we don’t do it that way here” or “nobody ever asked that ques- tion before” are the standard answer to proposed innovations.

If you seem to be in such a work envi- ronment, resist the urge to go into denial. Your intuitions are probably correct. Exam- ine your surroundings—and yourself— honestly. If you find that your employer is enforcing a culture of mediocrity, get out before you find you have become a part of it.

Leadership and Core Competency

Much of the popular literature on leader- ship focuses on leadership “traits” or leadership “behavior,” as if the correct mix of these attributes were all that were neces- sary for a person to be recognized as a leader. My own observations and experi- ence, however, suggest that there may be one other element—not exactly a leader- ship trait, but perhaps a catalyst—that enables leadership traits to take effect. It is that simple piece of professional property known as core competency.

The fact is, nobody is a leader in a vacu- um. You have to be a leader at something. Even the lowest-level leaders without port- folio start out with some basic skill or with a mastery of some core discipline that assures others of their ability. An entry-level management trainee comes to the first employer having mastered the fun- damentals of at least one complex disci- pline—perhaps industrial engineering, accounting, law, or computer science. Once an individual demonstrates a core compe- tency in the workplace, it becomes much easier for that individual to project leader- ship ability and have it acknowledged by others.

L E S S O N S I N L E A D E R S H I P Eight Examples of Leadership in the Workplace

Discussions and definitions of leadership behavior will always abound, but the real definition of leadership is in the doing— the activities and results of those who lead. In the end, nothing helps us understand leadership like the chance to observe a leader in action. This is why, in addition to their studies of leadership theory and their training in leadership behavior, midship- men at the U.S. Naval Academy must read about the lives of leaders and identify the

attitudes and actions that gave their leader- ship its real-world form.

Most examples of leaders in action show us well-known soldiers and statesmen over the course of their entire professional lives. The following nine examples are much shorter and are specifically tailored for use by students preparing to enter business. Each example has been selected to show leadership in a corporate context.74 Each has been selected to show a lower-level manager, often at a very early phase of his or her career, in a specific situation in which he or she demonstrated leadership without portfolio.

Although the examples of leadership set forth in the following profiles are instruc- tive and in some cases inspiring, readers should keep in mind that these cases are not intended to portray any of the subjects as a total leader personality or as some sort of leader for all seasons. Most case histories reveal leadership to be episodic, even ephemeral; the leadership touch can come and go mysteriously, depending on, among other things, the individual’s stage of de- velopment and the opportunities he encounters. An individual may, as Lee Iacocca did, toil for years in a routine job before displaying a burst of leadership that catches the eyes of superiors and sends that person on an upward trajectory. Or an indi- vidual may display dazzling leadership in one job only to lose the magic in another. After John Sculley moved from PepsiCo to Apple Computer, he never quite regained the leadership touch he had developed in the soft-drink business.

Some of the variables that seem to influ- ence the development of leadership are luck, timing, and the willingness to perse- vere in a company or industry one cares about deeply until one’s moment comes. In addition to a gift for leadership, training in leadership, and an appetite for leadership, the potential leader must sense how to get into the right place and stay there until the right time. Bill Knight, for example, was fortunate to have chosen the railroad indus- try at a time when it had a strong need for his particular abilities. It was a business he loved and felt strongly about, and his devo- tion almost certainly helped to bring out leadership abilities that might not have ripened in a different environment. Lee Iacocca has said repeatedly that he loves automobiles and the automobile business. It seems hard to believe he would have dis- played the same kind of leadership he

34 Part 1: Before You Start in Business

manifested at Ford and Chrysler in an industry that did not provide him the mys- tique he found in making and selling cars. A similar mix of luck, timing, and personal inclination may also have been a factor in the perfect match between World War II veteran Harry Gray and fledgling defense contractor Litton Industries when they met in the early 1950s. Litton was entering its corporate buildup phase just as Gray was entering his own personal and professional buildup phase. Gray came to Litton with the precise mix of battlefield savvy and business experience the fledgling company needed.

Why a particular individual becomes a leader in a particular time and place will probably always remain something of a mystery. The following profiles, therefore, are nothing more than what they purport to be: individual lessons in leadership. They do not add up to a general theory.

1 . D I A N E M . B E T T I “I couldn’t stand it; I had to do it another way.”

Diane M. Betti has recently been promoted to Vice President and General Manager for quality and six sigma in General Electric Company's Medical Systems Information Technology Division (Milwaukee, Wiscon- sin). Prior to this, she was the global sourcing manager for the same division, in which position she led more than 100 employees in six locations worldwide as head of the company’s Americas Sourcing team. How did she manage to rise so high on the corporate ladder? Her B.S. in accounting from Boston College and MBA in finance from Babson College only par- tially account for her success. Many managers can boast of equal or superior academic credentials yet have not risen as far or contributed as much as Betti. What makes her different?

It could be leadership without portfolio, something Betti displayed back in the mid- 1980s—well before she had ever heard the expression. But to understand what she did and why it was so daring, you have to ask yourself a number of questions about today’s business environment: How did U.S. industry make the transition from managing by paper to managing by com- puter? Did it “just happen”? Was it some sort of “natural evolution”? Was it a work- place technique that “emerged” as computer manufacturers and software developers

approached businesses with new products and new ways of getting things done?

All of those things no doubt happened, but they still cannot explain how modern business made the transition to the auto- mated workplace we know today. To really understand how the conversion took place, you have to understand leadership without portfolio as it was exercised by young man- agers who saw the potential of the new technology—but had to fight to get it accepted in the workplace.

Diane Betti was one of them. In 1985, at the age of 31, after working as a financial analyst for Fram Corporation, Burroughs Corporation, and the automotive division of the Boeing Company, Betti was named to her first management job, the highly respon- sible and demanding position of Manager of Cost Control for the B-1B supersonic bomber that the Boeing Company’s North American Aircraft Division was building for the U.S. Air Force. The job required that Betti maintain a “Big-Picture” perspective and a fixation on detail at the same time, a balancing act for which few people—even the most intelligent and industrious—are suited. She and her 40 direct reports faced the daunting task of tracking the true pur- chasing costs of all of the parts and supplies needed to build the giant bomber and then writing up their findings every three months in a report for top management.

“My team and I would spend four weeks, 10 to 12 hours per day, six days a week to capture, analyze, and estimate the total cost of the material of the B-1B,” Betti said. “We would manually capture every Purchase Order that had been established and interface with hundreds of buyers to evaluate what changes in costs had occurred in each of the POs during the quarter. Then our team would summarize the year-to-date and the full-year estimate of the costs.”75

One of the elements that made this task so daunting was that it was essentially man- ual. Computerized spreadsheets capable of embracing the full range of parts and sup- plies needed to assemble the bomber were not yet commercially available.

“We would manually fill out 20 pages of 14-column spreadsheets (41 lines, each rep- resenting a different cost element) and attempt to summarize the information for review by management so we could under- stand the impact of each cost change on the total program,” Betti said. “Remember: Our goal was to bring this program in on schedule and under cost.”

Betti found herself increasingly frustrat- ed by the huge amount of manual work the process required and the low level of accu- racy that resulted.

“This process was arduous and thank- less, and because it was manual, it was not particularly accurate,” she said. “In no way did it approach the accuracy of the Six Sigma process that is now becoming rou- tine. It was fraught with errors, and it was time-consuming. By the time we had com- pleted the reporting there was little time for analysis or validation of the data. I went through one iteration after another. I spent a lot of hours, and my people spent a lot of hours, and as we used up those hours we had to decide whether to hit the numbers or hit the deadline. The best that I could do was inform management of ‘approximate’ changes.”

But when Betti began discussing “an- other way,” she met resistance or incomprehension from employees spouting the typical line: “But we’ve always done it that way!”

“My group leader told me that was how we had done it for the first six quarters of the program and it was good enough for the rest of the program,” she said. Besides, management had not demanded any improvements, so why fix something the front office thought was working?

Betti bristled at that attitude. The first feeble rays of leadership without portfolio had begun to illuminate her thinking.

“I told my group leader that because I didn’t have a better alternative for the cur- rent quarterly estimate that I would do it the old-fashioned way one more time. But I also told them that when the time arrived for the next quarter’s review, I would have an alternative.”

Making good on that promise was not easy in an era when the first personal com- puters had just begun to find acceptance in the workplace and little was available in the way of custom software. Like legions of would-be innovators before her, Betti found that it is hard to innovate without the necessary resources, and hard to com- mand the necessary resources without authority from top management.

“In a rapid ramp-up environment there are few ‘free’ resources for those who want to introduce change into the workplace,” Betti said. “In 1985 there were few personal computers in our organization. Information Technology had most of them, and even they only had six. And

Chapter 1: Leaders and Leadership 35

there was a significant wait for any pro- gramming changes.”

Betti simply commandeered the resources she needed, including time out of her personal schedule. Betti had neither the authority nor a mandate to do what she was doing. In true leadership without portfolio fashion, she just did it because she saw what needed to be done and could not wait for a commercial solution to “emerge.”

“Five days a week I finished my 10-hour day and went upstairs to the IT Depart- ment and worked at night for another four,” she said. “On Saturdays and Sundays I spent 10 hours each. No one asked me to do it, and I didn’t tell anybody I was doing it—except for the request for time from IT, since I was using their computers. I wrote a computer program in Lotus 1-2-3 to sum- marize the costs and write summary and exception reporting for management review and cost containment for the program.”

This was not an easy task in the early days of the personal computer and the Lotus spreadsheet.

“With only 256K of RAM, and the huge volume of data that had to be entered, I had to break the programming into six segments per report and spread it across the six PCs,” Betti said. “At night I would have all the computers working at once, printing, sav- ing, and crunching numbers. To eliminate repetitive operations I programmed macros that consolidated like functions under a sin- gle keystroke for each of the three reports I had designed. Each report was obtained by running 1⁄6 of the data on each of the six PCs. In six weeks I had a great new process!”

What resulted was a breakthrough, a demonstrably better way of collecting, proc- essing, and analyzing the huge amount of data making up the B-1B purchasing process. Upper management, along with the skeptical members of Betti’s own department, now understood that a better way was possible and that it could deliver meaningful results.

“The next quarter was significantly dif- ferent,” Betti said. “We still had to do the manual review with each of the hundred buyers, since they had no computerized input to our process. But now there was time to ensure accuracy of data, and also to do some analysis. Each member of my team filled out a form. I would then input the data into an entry section on my reports.

“With only 10 hours needed to go from data input to report generation, we now had three reports plus adequate time to analyze

them,” Betti said. “Instead of just reporting data, we now had the luxury of understand- ing it so we could put it to practical use. The data we had collected, organized, and analyzed had been transformed into infor- mation that helped us make mid-course corrections that reduced the cost of purchas- ing materials for the B-1B. It was this new ability to get out ahead of the curve and anticipate changes that gave us dramatic new power to control costs. Ultimately, we were able to bring about a 35 percent reduc- tion in our departmental head count, a 50 percent reduction in cycle time, and over $300,000 in savings per year.”

2 . H A R R Y J . B R U C E “How could I contribute anything?”

In many ways I was typical of the young men who began their careers in corporate America during the Cold War days of the late 1950s. After leaving the U.S. Army and finishing college, I joined the United States Steel Corporation in Pittsburgh as a trainee in January 1959. After an eight-week course in the fundamentals of steelmaking, I was assigned to the office of the vice presi- dent of transportation. I had none of the formal authority or insignia of rank that I’d recently enjoyed as an Army officer. My uniform with its bars and brass hung in the closet at home. I went off to work in the standard corporate gray flannel suit.

In fact, it would be disingenuous to pre- tend that I embarked on this new job brimming with confidence about my prospects for the future. The truth was, I had serious doubts about the decision I had just made. Instead of envisioning the new worlds I was about to conquer, I wondered silently just what a person of my back- ground could bring to a company like U.S. Steel, which at that time was considered one of the largest and most successful cor- porations in the industrialized world and seemingly had all the answers. How could I contribute anything to a company that already dominated its industry, an integrat- ed industrial giant that knew everything there was to know about mining the raw materials, making them into steel, and sell- ing and shipping the final product to thousands of customers?

Fortunately, I still retained one souvenir from my Army days—my leadership train- ing and the urge to put it to good use.

I was fortunate in another regard. My immediate superior was Dr. Gayton Ger-

mane, a Stanford University professor on a three-year sabbatical. Neither of us had a clear mandate from top management, so we decided to search for ways to improve the flow of raw steelmaking materials. The next three years served as a classic example of how much leadership a person can exercise without portfolio, especially when the boss enthusiastically endorses creativity.

In his book, The Common Denominator of Success, E. M. Gray writes, “The success- ful person has the habit of doing things failures don’t like to do.”76 That’s a more- or-less accurate description of how I began my career at U.S. Steel. I looked for trans- portation problems that were not being solved, transportation opportunities that had been overlooked, and transportation projects that had not been managed well or had suffered from inadequate follow-up.

And I found plenty. The first was a pro- gram for automating the movement of materials within steel mills by using radio- controlled off-highway vehicles and rail cars. Westinghouse Air Brake Company had made a presentation on the subject to U.S. Steel executives, but something about the presentation was off the mark, and the idea was not being pursued. Picking up the dropped threads, I spent three weeks ana- lyzing the steel-making process to deter- mine where automation was logical. Then I detailed my findings in a report illustrated with charcoal sketches prepared by my wife. The sketches showed how ingot molds, coke-transfer cars, and ore trains could be moved from point to point within a steel mill under the control of a central monitor.

This time both U.S. Steel and Westing- house became enthusiastic, the project recovered its momentum, and a booklet was issued under the title: The Future of Automated Movement Control in the Iron and Steel Industry. As a result of the recom- mendations in the booklet, a prototype automated transporter for use in steel mills was built and tested.

Because I had virtually no formal authority to do what I did in that first job, and because nobody ever ordered me to do it, my accomplishment represented a true example of leadership without portfolio. I exercised my own initiative, organized my own project, and carried someone else’s incomplete original idea through to a satis- fying result. Because the logic of leadership was in operation, my successful manage- ment of the project triggered a favorable response from my superiors. News of my

36 Part 1: Before You Start in Business

accomplishment percolated up the chain of command, and a small measure of recogni- tion and authority came back down.

After forty years playing a variety of leadership roles, I can now share with stu- dents methods that helped me. First and foremost, I learned the most important step in getting a job done was in the recognition of a problem. Once I recognized and focused on the problem, I usually could think of someone who could work it out better than I could.

3 . J O H N S C U L L E Y “I was given neither an assignment nor an office.”

Launching a career by exercising leadership without portfolio is not unusual. Students would be surprised how many executives can report a similar experience at the start of their careers. John Sculley, the Pepsi-Cola marketing mastermind who made a highly publicized switch to the CEO position at Apple Computer in 1983, recalls just this type of episode in his 1987 book, Odyssey.

Sculley writes that when he left an advertising agency job to join Pepsi in 1967 as that company’s first MBA, his new employers actually had no job ready for him; the position of manager of product development in the marketing department failed to open up as scheduled, and Sculley was shunted across Park Avenue to vegetate in the market-research department for what turned out to be nine months before his predecessor finally left. “I was given neither an assignment nor an office,” he writes.77

What at first appeared to be a dead end actually turned out to be the runway from which Sculley launched the most amaz- ing career in the history of the soft-drink industry. What Sculley found was a market- research department sitting on years and years of highly meaningful research into consumer preferences, none of which the marketing department had ever used. Sculley decided to make himself master of this potentially valuable but long-ignored material.

I was disillusioned but determined to take advantage of my time. So I would arrive each day, find a place to sit, and begin to sift through every research file I could find. I just sat there all day and read every piece of paper the research department had on file. Most of it was related to consumer behavior. What became clear was that I was in an essen-

tially meaningless department. Little of its work was utilized by the higher-ups. The researchers went off and researched, then the sales and marketing staff went off and made their own decisions, inde- pendent of each other.78

When the post for new product devel- opment finally opened up, Sculley was in the catbird seat. He knew more about con- sumer preferences than anyone else in the company. His nine months of poring over research files, combined with his six- month training program delivering soft drinks and snack foods for bottlers in Pitts- burgh and Phoenix, had given him the knowledge and confidence to launch suc- cessful new products, and he shortly brought out his first one. “It was an incred- ibly exciting idea, and it became very successful,” he writes. Sculley’s display of leadership without portfolio had turned nine months of would-be exile into the start of a successful career in the highly competi- tive food and beverage industry.

4 . B I L L K N I G H T ( 1 9 2 9 – 1 9 9 6 ) “Everyone trusted and followed him.”

Leadership is not displayed only by those destined to reach the CEO level. I have found leadership ability in a variety of peo- ple at different levels of the organization chart, including a number who never intended to try for the top position. One of them was Bill Knight, a man I got to know at the Illinois Central Railroad.

Throughout the time I knew him, Bill Knight held the title of engineering super- intendent in Memphis, Tennessee. He was responsible for the maintenance and safety of all the railroad’s track and bridges between Memphis and New Orleans, including branch lines that radiated west to Baton Rouge and southeast to Gulfport, Mississippi, and Mobile, Alabama.

Despite the name “engineering” in his title, Bill had never been to engineering school. He almost certainly would have made an excellent engineer if he had had the opportunity. But Bill was from rural Missis- sippi, where few families had the money to send a child to college in 1945, the year 16- year old Bill hired on at the railroad.

Despite Bill’s lack of formal education, it was immediately apparent to his superiors and subordinates alike that he was a natural leader. He had several hundred men under his jurisdiction, most of them track laborers and their supervisors, and it was always a

delight to see him interact with his crews. They genuinely respected and esteemed him and took satisfaction in knowing they were doing the job the way he wanted it done.

One reason for this loyalty may have been that Bill did not use the tough-guy approach typical of officials in his position. The old-time railroad track bosses often maintained control by verbally chewing their subordinates up and spitting them out, and sometimes by getting physical as well. Bill did not need to use that approach because he had something better—an abili- ty to lead.

A major component of Bill’s ability was his encyclopedic knowledge of his job. In addition to having a strong natural grasp of engineering problems, he had invested large amounts of time in getting to know and understand the parts of the railroad under his jurisdiction. He worked incessantly and asked questions wherever he went, absorbing details until he seemed to know every classi- fication yard, every length of rail, every tie, and every spike in the hundreds of miles of line entrusted to his care. What Bill Knight exemplified in his style of leadership was a core competency so vast that it amounted to virtual mastery of his subject. Subordinates and superiors alike were awed by his knowl- edge and came to depend upon it.

Perhaps more important to his effective- ness as a leader, we all understood that Bill cared deeply about the safety and effective- ness of the railroad plant and about the success of the railroad company. Because he radiated this kind of concern, everyone trusted him and everyone followed him. He may not have had a CEO’s vision of what the railroad needed to become, but he had a vision of how a well-maintained main line should look, and he communicated his vision effortlessly to the people who had to keep that line in shape. Bill regularly mur- dered the King’s English, but nobody ever mistook his meaning. He was a natural communicator who used his attitude as well as words to get his meaning across, and he always knew what he wanted.

All of Bill’s leadership skills became apparent to me within a short time after I first joined him on a track-inspection trip. But I did not understand the full extent of his abilities until the day I realized he had virtually read my mind.

It happened in the mid-1980s when we were vigorously pursuing a program of downsizing the railroad, which had grown over the years through a series of poorly

Chapter 1: Leaders and Leadership 37

planned mergers and acquisitions into nearly 10,000 miles of tangled, sprawling main and branch lines that seemingly led to everywhere and nowhere and had been losing money for two decades. We eventu- ally sold much of this trackage to local short-line and regional railroad entrepre- neurs, who operated it much more successfully than the IC could have. But some of the trackage was totally unneeded and would never have attracted a buyer. For example, the railroad owned three dif- ferent main lines between Memphis and Jackson. There was no way all of them could be operated profitably, so we were greatly relieved when the Interstate Com- merce Commission gave us permission to abandon one of the redundant routes. That meant we could take up the rail and ties and reuse them at points on the railroad where they were better needed.

But recycling unused materials was not the only reason to dismantle the extra Memphis-Jackson line quickly. Under the law, if a railroad abandons a route and another company wants to operate it, the new operator gets to run its trains over the rail that is in place.

Shortly after the ICC gave us permission to abandon, I casually mentioned to Bill Knight, “You know, we ought to get out there and pull that track up pretty soon before somebody else decides to use it.”

Without a word, Bill took my offhand remark for an order. Without telling me, he ordered a crew and equipment into opera- tion, and that same night, in the middle of a prolonged and violent thunderstorm, his men dismantled seven miles of track in rural Mississippi. Part of the work took place just across the road from a small-town diner, where the patrons peered through the plate-glass windows in astonishment at the scene that appeared intermittently before them whenever lightning flashes interrupt- ed the darkness. One of them became alarmed and called the state police.

The next morning the governor of Mis- sissippi called me and asked, “Mr. Bruce, what the _____ were your people doing out there?” After my explanation reassured him that we had ICC permission to take up the track, he replied, “Mr. Bruce, if you’re going to do that sort of thing again, would you please not do it in a blinding thunder- storm?”

Bill Knight was not totally without port- folio when he pulled up that track. It was one of his duties as engineering superinten-

dent. But in deciding to do the job imme- diately, and in knowing his crews would agree to do the job for him in darkness and rain, he was a true leader. Only someone thoroughly trusted by both his subordinates and his superiors can undertake such extra- ordinary action.

5 . L E E I AC O C C A “I came up with a better plan.”

Everyone who follows American business now knows the story of Lee Iacocca, the brilliant developer of the Ford Mustang who in the early 1980s went on to save the moribund Chrysler Corporation from what all the experts said was certain extinction.

Most of those who recognize Iacocca’s name and achievements, however, know them only secondhand—from media cover- age of the high spots of his career. A much more complete catalogue that includes numerous low spots is available to readers of his 1984 autobiography, Iacocca. A care- ful reading of that book shows that Iacocca’s 1964 success with the Mustang and his 1983 turnaround at Chrysler actually were foreshadowed as early as 1956, when he was a lowly assistant district sales manager in Ford’s badly floundering Philadelphia dis- trict. In that capacity, Iacocca used leadership without portfolio not only to turn around his district’s dreadful performance but also to launch his own spectacular climb to the top of the U.S. auto business.

“While sales of 1956 Fords were poor everywhere, our district was the weakest in the country,” says Iacocca. After a futile effort to turn the 1956 Ford’s new safety features into a selling point, he says, “I came up with another—and, I hoped, bet- ter—plan. I decided that any customer who bought a new 1956 Ford should be able to do so for a modest down payment of 20 percent, followed by three years of monthly payments of $56. This was a payment schedule that almost anyone could afford, and I hoped that it would stimulate sales in our district. I called my idea ‘56 for 56.’”

“At that time, financing for new cars was just coming into its own,” Iacocca says. “‘56 for 56’ took off like a rocket. Within a peri- od of only three months, the Philadelphia district moved from last place in the country all the way to first. In Dearborn, Robert S. McNamara, vice president in charge of the Ford Division—he would become secretary of defense in the Kennedy administration— admired the plan so much that he made it

part of the company’s national marketing strategy. He later estimated it was responsi- ble for selling 75,000 extra cars.

“And so, after ten years of preparation, I became an overnight success.” Iacocca says. “Suddenly, I was known and even talked about in national headquarters. I had toiled in the pits for a good decade, but now I had a big break. My future looked a lot brighter. As a reward, I was promoted to district manager of Washington, D.C.”79

But there was more. Before Iacocca and his wife could move into their new house in suburban Washington, he was promoted again and brought to headquarters in Dear- born to be national truck marketing manager. Within a year he was put in charge of car marketing, and in March 1960, he took over both functions, setting the stage for the legendary and highly prof- itable Mustang project of 1962–64.

Why was Iacocca’s “56 for 56” payment plan an example of leadership without port- folio? Iacocca barely hints at the reason when he writes, “At that time, financing for new cars was just coming into its own.” According to a retired Fortune 500 CEO who was an executive at Ford headquarters during the mid-50s, Iacocca actually had no authority to design the financing pack- age that ignited his career climb. Most customers who financed the purchase of a car in the mid-50s did so through a bank, not through a dealer.

“Iacocca was one of 35 district sales managers, and it was unheard of at that time for a district sales manager to get involved in financing,” the Ford veteran said. “The district sales manager never messed around with the financing of a product. Any change in that area originated at corporate headquarters.”80

Considering that Iacocca was only an assistant district sales manager, his decision to originate a new financing policy at the bottom rather than the top of the organiza- tion, and with no prior review from headquarters, appears considerably more risky than he suggests in his book. It fully merits being called leadership without port- folio. (What it would have been called if it had failed is anybody’s guess.)

6 . R AY TO W E R “My disclosure was met with total apathy.”

As the retired President/Chief Operating Officer of Chicago-based FMC Corpo-

38 Part 1: Before You Start in Business

ration, Ray Tower has enjoyed—and earned—all the power, perquisites, authori- ty, and status that go with the office.

But it was not always that way. In 1955, as a 30-year-old eastern district sales manag- er for one of the company’s chemical divisions, Tower had little power and little authority, and his first effort to get himself more was rebuffed by his superiors. FMC, or Food Machinery and Chemical Corporation as it was known then, was a typical 1950s American corporation—rigid, stratified and, by today’s lean-and-mean standards, proba- bly overstaffed as well. As Tower tells it, “To place my position in perspective, the chain of command was chairman, president, executive vice-president/division general manager, vice-president/marketing, general sales manager, and then me. At that time there were four chemical divisions and about 16 machinery divisions.”81

Soon after assuming his job, Tower realized his department was missing some- thing—a formal training program for the new salesmen it was hiring. The only preparation the salesmen were given for their jobs was shadowing (i.e., traveling for several weeks with an experienced salesman and learning to “do what I do, say what I say”).

“I suggested to the general sales manager and the VP of marketing that we should create a sales training program for our divi- sion and the other chemical divisions as well,” Tower says. “They didn’t buy the idea at all and discouraged me from pursuing it any further.”

For many—perhaps most—young exec- utives, a bright idea like Tower’s would have died right there. But not for someone exercising leadership without portfolio. “I felt so strongly about the need for such a program,” Tower says, “that I devised one on my own and put it into effect in my division. I also told my bosses that I had done so. My disclosure was met with total apathy.”

But not for long. “Some months later, the general sales

manager burst into my office, saying, ‘Give me a copy of that sales training program that you told me about.’ I handed him my manual, and he took it and left hurriedly without explanation.”

Some time later the reason for all the excitement became clear: Corporate man- agement had suddenly become interested in training programs. Headquarters was con- ducting a thorough review—actually an

audit—of all training programs used in all of the divisions.

“Rather than admit that they had no such programs,” Tower says, “our staff appropriat- ed mine and passed it off at the corporate level as a division-wide operation. Later, the same general sales manager who had twice discouraged my efforts to initiate a sales pro- gram sheepishly admitted that the corporate people had told him ‘our’ sales training pro- gram was one of the best submitted for review. In fact, our staff was complimented highly for its forward thinking.”

Ray Tower’s recollection of an early career triumph merits several observations.

First, the unexpected and resounding vindication of Tower’s effort to lead without portfolio, while gratifying, is not typical. Young people seeking to exercise such lead- ership should be advised that many such efforts do not succeed—at least not on the first try—and that even when success occurs, appreciation can be slow to develop.

Second, an often unappreciated feature of leadership without portfolio is that the fol- lowers are as likely to come from the leaders’ superiors as from their subordi- nates. While Tower was leading the sales force under him toward better training, he was leading the company’s top managers to a better appreciation of formal training for salesmen and ultimately to a change in the corporate policy on training. Perhaps we should say of leaders that they are not so much found at the top as at the center.

Finally, while an episode of leadership activity is relatively easy to narrate in retro- spect, there can still be a good deal of mystery about just why it worked. Leaders often are strongly but unconsciously intu- itive about possibilities for change and often time their moves to gain maximal leverage on what others in the organization are not yet thinking—but are about to think. Heifetz says effective leaders have a sensitivity about when an issue is ripening to a state in which it can safely be brought up for discussion, and the best leaders know how to pace and sequence this ripening process. They orchestrate an issue so they can jump aboard the wave just as it is build- ing to a crest.82 Did Ray Tower unconsciously realize that top management at FMC was beginning to grow dissatisfied with the company’s sales training efforts? Did he sniff a change in the corporate atmosphere that his immediate superiors had missed? Did a strong intuition, finely honed by sales and managerial experience,

signal to him that sales training was an idea whose time was about to come?

In business, as in acting or comedy, tim- ing can be everything. Everything, that is, except making your boss look good. And Ray Tower got that right, too.

7 . G A I L MC G O V E R N “Staff for great performance and staff for chemistry.”

Leadership without portfolio often means getting things done even when nobody knows what should be done. That’s what Gail McGovern did at AT&T Corporation in 1992, when she put together a team that solved a problem the “experts” had called hopeless.

The problem AT&T faced was the potential erosion of one of its most lucra- tive lines of business: the toll-free 800 numbers the company had originated in the 1960s. Under a Federal Communica- tions Commission ruling scheduled to take effect May 1, 1993, business customers using AT&T 800 service would be able to switch their accounts to discount long-dis- tance carriers, such as MCI or Sprint, and take their old 800 numbers with them.

This was a radical and—for AT&T— dangerous departure from conventional practice. Although telephone deregulation had ended AT&T’s long-distance mo- nopoly in 1984, the 800 business had effectively been sheltered by an FCC rule prohibiting “portability” of 800 numbers from one carrier to another. AT&T cus- tomers who switched their toll-free business to a discount carrier had to get a new 800 number, a move that threatened to confuse and alienate customers trying to contact the business over its toll-free line. A new num- ber also could sock the subscriber with heavy one-time costs for new stationery, business cards, brochures, display advertis- ing, and broadcast commercials, all of which would have to reflect the switchover. As long as 800 customers faced those costs and risks, AT&T’s business was safe from lower-priced competitors. New businesses setting up their first toll-free line might go with a discounter, but established business- es in AT&T’s portfolio would find it too costly to switch.

Now all of that was about to change, and the penalty to AT&T promised to be steep. As the originator of 800 service dur- ing the comfortable days of monopoly, AT&T had a 20-year head start on its

Chapter 1: Leaders and Leadership 39

competitors, who were not legitimized until 1984. That head start had left AT&T with by far the largest portfolio of 800 customers—tens of millions, in fact—but it also had left AT&T with the most to lose. Industry experts said 800 service was just a commodity, a look-alike product always vulnerable to competition from the lowest-cost supplier. Nor could AT&T join the discounters in price-cutting. As the original universal long-distance provider, it had the largest embedded infrastructure base and hence the highest costs. AT&T had to be seen as a premium provider meriting higher rates or face the loss of its business.

“Internal AT&T analysts had conclud- ed the telephone giant would lose 10 percentage points of market share in toll- free business once customers got ‘portability’ in May 1993,” noted the Wall Street Journal. “[T]op executives were resigned to losing a huge block of cus- tomers.”83 McGovern, the 39-year-old director of Outbound Networking Ser- vices, was not resigned. She sensed that the endangered 800 service might still be res- cued from the deregulated discounters, and she wanted to try. She did not know exact- ly how the rescue could be effected, but a leader is not necessarily a person who has all the answers. A leader is a person who can inspire a team to come up with answers and get it to work.

And McGovern had a record for doing just that. Holder of a B.A. in theoretical mathematics from Johns Hopkins and an M.B.A. from Columbia, she had risen rapidly through the ranks after joining the Bell Telephone Company of Pennsylvania as a computer programmer in 1974. By 1980, she was district manager for long- range systems planning at then parent AT&T’s headquarters in Basking Ridge, N.J., and over the next 12 years she earned six more promotions. With a tremendous drive to solve difficult problems and a strong record for assembling and managing successful problem-solving teams, McGov- ern clearly had the marks of a leader.

Perhaps most important, she had the will to tackle problems that others dis- missed as hopeless. The last characteristic is strongly associated with leadership without portfolio, and with her promotion to Vice President-AT&T 800 and Business Appli- cation Services in January 1992, McGovern got her chance to show how leadership without portfolio can work.

Her first job was to assemble a team. It was a task she relished and understood well.

“One of my fundamentals is: Staff for great performance and staff for chemistry,” she said. “Find people with a wide diversity of thought who enjoy learning from one another. Each 800 team member in a key position was a leader in his or her own right. When that happened, even the peo- ple who were responsible for technology started coming up with good marketing ideas, and the people in marketing started seeing the possibilities in technology.”84

The team quickly grasped something that previous discussions of the problem had missed: AT&T was having trouble fig- uring out how to protect its 800 business because it did not really understand what the business was. The company’s manage- ment needed to have a clearer understanding of what toll-free telephone lines meant to the businesses that used them.

At the team’s request, the McCann- Erickson advertising agency interviewed 3000 businesses that used 800 service— AT&T’s and the competition’s. But the agency did not ask those customers to fill out a questionnaire. Instead, the interview- ers showed the customers a series of dummy television commercials for the toll- free services of all three major carriers and then asked their opinions.

The interviews revealed something no one at AT&T had suspected: If customers were shown an appropriately structured and dramatized commercial, they began to develop suspicions about the reliability of the toll-free services of AT&T’s Johnny- come-lately competitors.

“The interview showed that when AT&T talked about the reliability of its 800 service, the people believed it much more than when we discussed any other attribute of AT&T and much more than what any of the competitors’ commercials attributed to their companies,” McGovern said. “They showed that when we talked about reliability they believed us, but they did not believe the competitors’ commer- cials when they talked about reliability.”

Acting on what the team had discovered, AT&T began blitzing prime-time television with commercials that brought to life the importance of reliability to users of 800 numbers. One commercial featured a dramatized interview with a merchandise- catalogue executive whose company stood to lose thousands of dollars worth of orders

for every minute its toll-free customer- order line was out of service. Another focused on a factory manager who had to shut down a production line when a suppli- er’s disabled 800 line made it impossible to order a vital spare part. Each commercial concluded with a cut to the darkened inte- rior of an AT&T dispatching center and an electronic map of AT&T’s vast network of land lines, satellite links, and microwave stations. The authoritative voiceover assured viewers that regardless of techno- logical glitches or natural disasters, AT&T’s redundant capacity so far exceeded that of its competitors that no customer’s 800 line would ever be down for more than a few seconds. Every company using AT&T ser- vice would remain in touch with its customers 24 hours a day.

Not content just to salvage AT&T’s 800 business, the campaign reached out to busi- nesses using AT&T’s competitors, telling them their 800 numbers would soon be portable into the AT&T system, where they would find higher reliability. AT&T’s vast embedded base of transmission lines had been transformed from a high-cost mill- stone into a competitive edge.

“We showed them that customers held hostage on an inferior network now had the freedom to migrate to AT&T,” McGovern recalled. “We ran commercials with Aretha Franklin belting out ‘FREE-DOM!’”

The discovery of the previously unsus- pected “reliability issue,” along with the commercials developed to exploit the issue, proved a huge success—and not just with 800 customers who saw the commercials on TV.

“When we brought these results back to our team it really gave them something to rally around,” McGovern said. “The news really raised morale. We told all our people, ‘The customers really want reliability.’ And we changed all our advertising to stress reliability.

“At that point it really became fun,” she said. “We did spreadsheet analyses to show what businesses lost with each missed call. It became a rallying point for the team.”

Acting on what they now understood about the importance of reliability, AT&T’s top executives began advising their golfing partners to move their companies’ 800 numbers from discount carriers to AT&T. McGovern’s team also designed an incen- tive program to reward salespeople who persuaded Sprint and MCI customers to switch their 800 numbers to AT&T. The impact on sales effort and creativity was like the kick from an afterburner.

40 Part 1: Before You Start in Business

“An employee in Minneapolis sat down with the Yellow Pages from all over the coun- try and photocopied 19,000 vanity numbers—800 numbers that spelled some- thing,” McGovern said. “We ran a computer check to see which numbers weren’t ours and then started contacting those that belonged to the competition. That employee won a free trip for two on the Q.E.2. We held a sales rally at headquarters on the night before portability started, and when her voice was piped into the auditorium she got a three- minute standing ovation.”

The business results generated by McGovern’s team exceeded all expectations. “They said we’d lose 10 share points the first year,” she said. “We lost two points, and since then our 800 business has been growing 20% a year. We just landed the Internal Revenue Service account. Their call volume is phenomenal.”

McGovern’s leadership in the 800 porta- bility crisis was acknowledged by her superiors when, later in 1993, she was pro- moted to Vice President-Strategic Planning for the Communication Services Group. In the next two years she received three more promotions, the latest being Executive Vice President-Consumer and Small Business Division.

“They say if you take a job no one else likes you’ll propel your career,” she said. “I personally enjoy the challenge of attacking unsolved problems. It’s not just about win- ning the final reward. It’s about the process of getting to a solution. You’ve got to enjoy walking into a room where different per- sonalities are disagreeing about what to do and there’s no sense of direction, and you start to help those people act as a team and start developing a way of solving the prob- lem. I always liked that.

“I wish I could say the ideas are mine,” McGovern concluded, “but the ad agency was incredibly creative and the team mem- bers just kept coming up with fresh ideas.”

The mysterious interaction between a leader without portfolio and the followers who produce the results hardly could be better described.

8 . H A R R Y G R AY “What the hell do you know about electronics?”

Harry Jack Gray, who retired as Chairman, President, and Chief Executive Officer of United Technologies Corporation in 1985, exemplifies the concept of leadership with-

out portfolio. As is typical of this type of leader, however, his exercise of leadership without portfolio remains virtually invisible because it manifested itself largely in the early and more obscure phases of his amaz- ingly successful career. But while the latter stages of Gray’s career are impressive, they are not necessarily instructive in showing us how—while still young—he began his rapid and decisive ascent to the pinnacle of corporate power.

Born in Georgia in 1919 and orphaned at an early age, Gray graduated from the University of Illinois in 1941 and joined the U.S. Army. He was promoted to cap- tain at the age of 24 and commanded an infantry company that performed with dis- tinction in the grimmest single campaign endured by U.S. forces in the European Theater, the Battle of the Bulge in Decem- ber 1944. The Army awarded him both the Bronze Star for valor and the Silver Star for his achievements at the Battle of the Bulge as well as Normandy.

On his discharge in 1946, Gray returned to his alma mater and in 1947 was awarded a master’s degree. He moved to Chicago and became sales manager of a dealership specializing in heavy-duty trucks and relat- ed industrial equipment. By giving him the opportunity to work on large-scale techni- cal projects, this job helped Gray to hone his analytical skills, including a rare ability to see the implications beyond the facts. From 1950 to 1951 he worked in a sales position with another employer before moving to the job where he first displayed leadership without portfolio.

It happened after Gray joined Greyvan Lines, a Greyhound Corporation subsidiary specializing in household-goods moving. As executive vice president, Gray noticed that the company was assessing warehouse charges based on how many square feet of floor space a customer’s goods occupied. Yet the operative figure, as he saw it, should have been cubic capacity. If Greyvan were to begin costing and charging based on three dimensions instead of two, he reasoned, rev- enues would improve dramatically.

Like so many cases of leadership without portfolio, Gray’s approach represented a fresh rethinking of a conventional, unquestioned practice that had become so endemic to an entire industry that only an outsider—and a very self-confident one at that—could grasp its fundamental absurdity.

Management accepted Gray’s suggestion that its schedule of warehouse charges be

recomputed based on cubic capacity, and Greyvan’s bottom line began improving immediately.

Unfortunately, Gray’s did not. When he approached his boss, Orville Caesar, with a request that his innovation be recognized with additional compensation in the form of a stock option, Caesar rebuffed him.

Gray promptly resigned. Although still a young man, he was experienced enough to understand that further advances in his career were unlikely unless he was part of an organization that recognized and rewarded leadership. Gray’s perception that profits lay hidden in the distinction between floor space and cubage, along with his advocacy of a new schedule of charges reflecting that distinction, represented the performance of a task he had assigned him- self rather than a job his superiors had designed for him. Risk taking, innovative thinking, and ambition clearly were part of his persona, along with a tidy share of courage already demonstrated in the way he led his men against stiff Wehrmacht resis- tance in wartime Belgium. His next employer had to be congenial to a man of his temperament. With no particular employer or job in mind, but with his heart full of confidence in his skills and his will- ingness to take risks, Harry Gray left Chicago and headed for the West Coast.

Although his original plan had been to settle in San Francisco, Gray soon realized that California’s best job market in the Korean War era lay among the fast-growing aerospace and defense industries that had sprung up in the Los Angeles basin. Among the most exciting was Litton Industries, a tiny start-up venture headed by “Tex” Thornton, organizer of the legendary “Whiz Kids” who had redesigned—and shaken up—the managerial system at the Ford Motor Company.

Gray’s first interview with Thornton was so spirited that it came to the brink of con- frontation. Thorton’s interview style was to downplay a candidate’s previous accom- plishments in order to buy the applicant at the cheapest possible price. It was not the best approach to use on Gray, who knew his worth and was not eager to have it trashed by someone unfamiliar with his record.

“We’re an electronics firm,” snarled Thornton. “What the hell do you know about electronics, anyway?”

Gray bristled as he shot back, “More than you knew about cars when you went to work for Henry Ford.”

Chapter 1: Leaders and Leadership 41

Thornton backed down and Gray was hired. His assignment was to help the fledg- ling company publicize itself. He was to interview the engineers and executives, learn about the new technologies they were developing, and then write news releases and stories about Litton’s advanced prod- ucts and get the publicity placed in a variety of media. Trained in journalism, but with a strong subspecialty in engineering, Gray had good story sense that enabled him to turn dry technical reports into exciting sto- ries about the way high technology was revolutionizing the nation’s armed forces.

If Gray had done nothing more than fulfill that assignment, he no doubt would have enjoyed a gratifying and well-paid career at Litton. Fortunately, he brought more to the task than a combination of engineering and story sense. He brought leadership without portfolio. As he talked with the engineers in their labs and drafting rooms, Gray began to venture beyond his original assignment, obtruding himself into areas such as product design, testing, mar- keting, finance, and logistics.

Why, he asked, were certain products being developed in the first place? Where had the ideas come from? How did the company know whether markets for these products existed? Which executives or engineers were sponsoring the projects? In response to what kinds of pressures and opportunities was the company acting? What were the chances the products would work? If they did work, could they be manufactured and sold at a profit? What about the competition? Were they working on similar products?

Gray became particularly intrigued when Litton engineers announced plans to develop a battlefield X-ray machine to be used by the Army’s MASH units in Europe and Korea. If successful, the device held great promise; wounded personnel could be examined and treated with less delay if they did not have to be evacuated from the immediate battle area to be X-rayed. But as Gray began interrogat- ing the engineers, he realized the device carried a significant downside risk as well.

Because the device derived its energy from radioactive thulium instead of elec- tricity, Gray inquired whether it could generate enough current to take X-ray pho- tos repeatedly. Nobody knew.

“Better check it out first,” Gray advised. The engineers returned with calculations showing that thulium, with a half-life of six months, would be able to power the machines for only about three months at a

time, after which an expensive and cumber- some “refueling” procedure would have to be conducted under unpredictable battle- field conditions. Gray recommended the project be scrapped.

Gray’s display of leadership without port- folio was not universally welcomed at first. “What makes you think you know what the military needs?” asked Thornton, who felt his connections in the Pentagon made him an authority on defense contracting.

“You may know some generals, but you don’t know the battlefield arena,” Gray replied.

Again, Thornton backed down. His business instincts overcame his ego once he realized that Litton’s veteran of the Battle of the Bulge and Normandy knew what he was talking about. The X-ray project under- went an agonizing reappraisal and was dropped when it became clear that the device could not be developed in a practical or profitable way.

Harry Gray had found his niche. He had become a “corporate proctologist,” one of those rare critics who have the nerve—and the skills—to peer into the dark recesses of the product-development process that most exec- utives prefer to avoid. He asked dangerous questions, probed tender areas, and risked bruising powerful egos in order to learn the truth about what the company was doing.

It is not a task that every critic can get away with. Fortunately, Gray had the poise, diplomacy, and people skills to perform his investigatory review and oversight functions without making too many enemies. He knew how to disagree without being dis- agreeable. Thornton soon realized that Gray’s abilities were saving Litton millions of dollars in potentially wasted effort while helping to identify the best projects in the conceptual stage and keep them solidly on track—from the development phase, through testing and prototype rollout, to ser- ial production. When Gray joined Litton in 1954, the company was losing money on sales of $100,000 a year. When he left in 1971 to join United Aircraft (later United Technologies), Litton was profitable, annual revenues were $2 billion, and Harry Gray had risen to the rank of senior vice president.

T H E L I M I TAT I O N S O F L E A D E R S H I P Why Leadership Alone Is Not Enough

What is required is that we unite with others in order that all may complement and aid one another through holding together. But such

holding together requires a central figure around whom others unite. To become a center of influence holding people together is a grave matter and fraught with great responsibility. It requires greatness of spirit, consistency, and strength. Therefore let him who wishes to gather others about him ask himself whether he is equal to the undertaking, for anyone attempting the task without a real calling for it only makes the confusion worse than if no union at all had taken place.

— I Ching (Book of Changes), c. 500 B.C.85

The latest crop of leadership books offers many useful insights into the nature of leadership, the identification of leaders, and the development of their skills. If these books do nothing more than show us exam- ples of real business leaders in action, they will have served a very useful purpose.

The popular enthusiasm for leadership studies and leadership training carries within it a potential for excess—an overemphasis on leadership at the expense of less glamorous organizational skills such as core competen- cy—and perhaps at the expense of such indispensable personal traits as character and judgment, which can play a serious role in determining whether leadership will be effective. Some of the leadership advocates seem to be overpromising, as if leadership were a sort of universal solvent that makes other attributes irrelevant. The pop-psych writers seem particularly infatuated with the concept of the leader and the leader’s vision, to the virtual exclusion of such banal but essential details as whether the leader has a business plan or even an appointment calen- dar. At the same time, all but a small minority of very serious leadership analysts seem unin- terested in the potentially troublesome relationship between leadership and power.

Ask the average person to name a great leader and the typical response will be a statesman or military commander. Churchill is a common response of Ameri- cans familiar with modern history. MacArthur would be another. Those whose sense of leadership reaches deeper into his- tory might volunteer more ancient names: Elizabeth I, Charlemagne, Suleiman the Magnificent.

Others will unfurl the honor roll of business titans who began emerging with the Industrial Revolution. “What about Rockefeller?” they might say. “The petrole- um empire he built is bigger than ever and central to our modern mobile existence. What about Andrew Carnegie and J.P. Morgan and Henry Ford and Alfred P. Sloan? What about Steve Jobs and Bill

42 Part 1: Before You Start in Business

Gates and Lou Gerstner? These people for- ever changed the way we live.”

Nobody would argue with any of those choices. All of them had a leader’s vision, and each of them was able to translate that vision into reality by building, inspiring, and managing an organization.

But there is another kind of leader that nobody likes to talk about: a Hitler, a Stal- in, a Milosevic. Actually, people do like to talk about them, but most of us are reluc- tant to admit those people are successful leaders. Whatever we may think of them, however, and despite our disapproval of the goals they pursued or the means they employed, they too were leaders. Each had a vision, and each had the persuasive pow- ers and organizational skills to inspire millions to join them in making it real. They represent the dark side of leadership. They remind us that leadership can be a toxic substance if it has no moral anchor.

The world of business leadership has its problem children too, but their regimes rarely end in bloodshed and mayhem. Bankruptcy, wasted capital, broken promis- es, lost jobs, and ruined careers are a more typical legacy. Business seems to be different from statecraft and warfare in at least one essential way: It has a built-in self-correcting feature that tends to limit the damage and remove the malefactor. As business leaders fail, boards, shareholders, creditors, and even the media take action. Errors and over- reaching committed by careless business leaders usually trip them up and expose them before they can cause the kind of dam- age wreaked by a well-armed tyrant with access to all the powers of a nation-state.

The “self-correcting” component found in business may even extend to the errant leader himself. Unlike tyrannical warlords and dictators, who typically go down in flames without ever realizing the nature of their excesses, a failed business leader occa- sionally may come to his senses. In the case of Chris Whittle, cited later, we will actually see a failed leader recover from his excesses, regain his psychological balance, and devel- op the necessary resources of character to reapply his leadership skills successfully.

First, however, let’s look at a failed leader who did not make it.

“Chain-Saw Al” Dunlap: The Moonbeam Who Wrecked Sunbeam

In 1994, Albert J. Dunlap began making history as the new CEO of Philadelphia-

based Scott Paper Company. His ruthless cost cutting, which included the elimina- tion of thousands of jobs, brought millions of formerly wasted dollars to the bottom line. It also earned him the nickname “Chain-Saw Al” in the business media, which loved his tough-guy attitude and his seemingly bottomless stock of outrageous and quotable opinions. After less than two years at Scott, Dunlap left when the company merged with Green Bay, Wiscon- sin–based Kimberly-Clark Corporation. He published his memoirs, Mean Business, and his flinty opinions became even more pop- ular on the talk-show circuit. “Most CEOs are ridiculously overpaid,” he wrote in his best-selling bio, “but I deserved the $100 million I took away when Scott merged with Kimberly-Clark.”

The media ate it up, and so did corpo- rate America. Both love a tough guy, and both love simplistic solutions. “Chain-Saw Al” supplied both. In his next job, as CEO of troubled appliance maker Sunbeam Corporation, Dunlap seemingly did the impossible by attracting even more media attention than he had at Scott, firing thou- sands of workers and claiming that his methods were turning the company around on a dime.

At first he seemed to be right. The num- bers said Sunbeam’s fortunes were rebounding. Then, in 1998, after less than two years at Sunbeam, Dunlap was fired after the company’s board and the Securi- ties and Exchange Commission alleged he had committed fraud. Income had been inflated by booking merchandise as “sold” when in fact it had merely been advanced to dealers who had never ordered it. Sales that should have been recorded in a later quarter had been telescoped into the previ- ous quarter. The books had not been debited when merchandise was returned unsold. Critical expenses went unrecorded. Worse, the nonexistent “profits” had been used to justify big bonuses paid to Dunlap. Mean Business slid off the best-seller lists, and the invitations to appear on talk shows ceased. Sunbeam filed for Chapter 11 bankruptcy and withheld Dunlap’s bonus. Dunlap, who has not had a job since, sued for its restoration.

But the story was not over. On July 16, 2001, New York Times reporter Floyd Nor- ris revealed that Sunbeam was not the first company at which Dunlap had issued inflated profit statements while failing to report expenses.86 According to a pair of

lawsuits unearthed from the National Archives, when Dunlap headed Nitec Paper Corporation of Niagara Falls, New York, in 1976, he was awarded a bonus for produc- ing an annual profit of $5 million. After Dunlap was fired for what the Times called his “grating” management style, an auditing team from Arthur Young & Company found he actually left Nitec with a $5.5 million loss. Nitec filed for bankruptcy in 1982. Amazingly, Dunlap’s term at Nitec never appeared in his résumé, and neither Spencer Stuart, the blue-ribbon headhunter firm that recruited him for the CEO post at Scott, nor Korn-Ferry International, which recruited him for the Sunbeam job, ever asked him about the gaps in his employ- ment history. In addition to missing his firing from Nitec, both firms also over- looked Dunlap’s dismissal from the job he held just prior to Nitec, as CEO of Max Phillips & Son, a paper mill in Eau Claire, Wisconsin. Court records show he was fired from that job because he “had neglected his duties and spoken so disparagingly of his boss that he hurt the company’s business.”

The Dunlap revelations of 2001 sent a major shock through the pricey executive- recruiting industry. Spokesmen at Korn- Ferry and SpencerStuart were hard pressed to explain how their researchers managed to miss Dunlap’s long record of fraud, firings, and personality problems.

But the most puzzling aspect of the Dunlap case went unremarked by the Times. According to the thumbnail vita that accompanied the article, Dunlap, born in Hoboken, New Jersey, in 1937, was a 1960 graduate of the U.S. Military Academy! Apparently, even West Point’s vaunted lead- ership training cannot catch all the misfits.

Management consultant Peter J. Druck- er has described a type he calls the “counterfeit executive,” an individual who knows how to wear the right suit, flash the right smile, bandy the latest business buzz- words, and get into the right clubs. From head to toe he looks and sounds exactly like a successful executive. The only problem is his record; on examination he turns out to have no skill in managing businesses suc- cessfully. His sole skill set is his ability to do a good executive impression. When his board finally discharges him, he simply moves on and fools a new headhunter firm and a new board of directors. “Chain-Saw Al” Dunlap sounds like a textbook example of Drucker’s “counterfeit executive,” with one important new wrinkle: He had a

Chapter 1: Leaders and Leadership 43

remarkable talent for using the media to enhance his image—until the auditors and the press caught up with him.

Leadership Comeback: The Fall and Rise of Chris Whittle

The October 31, 1994, issue of The New Yorker contains a sobering feature article that ought to call a number of our assump- tions about leadership into question. “Grand Illusion,” by Pulitzer Prize-winning Wall Street Journal reporter James B. Stew- art, tells the story of the rise and fall of Chris Whittle, the young publishing genius from East Tennessee who rocketed to fame during the 1970s when he and his partner, Phillip Moffitt, rescued the moribund Esquire magazine and turned it into a high- ly profitable bible for “the new American man” of the 1980s.

A decade later, after he and Moffitt sold Esquire for $30 million, Whittle struck out on his own and created the Channel One television network that cabled daily news- casts (and commercials) into public schools. His growing empire also included the Med- ical News Network, an interactive TV service for physicians’ offices, and Special Report, a wall-mounted, illustrated monthly medical newspaper that appeared in doc- tors’ waiting rooms. Hailed as a visionary with almost magical powers of persuasion, Whittle signed Time, Inc. in 1988 as a $40 million partner in his company, an investment Time, Inc. and successor Time- Warner ultimately ran up to $185 million. In 1992, in need of additional financing, Whittle sold a $175 million stake in Whittle Communications to the Dutch conglomerate Philips Electronics. At about the same time, he announced the most audacious coup of his career. As business and academic circles marveled, Whittle revealed that he had hired Yale University President Benno Schmidt to run the Edison Project, a new business designed to build, manage, and operate a nationwide network of privately funded, for-profit elementary schools that would outperform—and even- tually replace—the public schools.

Yet by the summer of 1994, Stewart reports, Whittle Communications was in forced liquidation, its vast assets largely dis- sipated and its financial backers groping to account for the whereabouts of their invest- ment capital. Only when a consortium of lenders led by the Bank of New York demanded an accounting did it become

apparent that Whittle’s corporate empire had been overstating its revenues and underreporting its obligations, perhaps for years. Whittle’s board of directors did the right thing under the circumstances. They removed him from his post as CEO.

What happened? It is not enough to dismiss Whittle as a

charlatan. His admirers and his detractors agree that he had terrific energy and persis- tence, vast intelligence, genuine vision, and a superb ability to communicate his vision to others and motivate them to work with him to achieve it. People not only believed him but also joined him when he announced that he wanted to create an electronic network that could put news of the latest medical discoveries into doctors’ offices. They willingly invested their careers or their money with him as he planned a cable TV service to bring current events into grade school classrooms. His plans for a privately owned and managed high- performance/low-cost school system galvanized some of the nation’s brightest minds into joining his organization. And while bright minds pledged him their efforts, two legendary corporations put hundreds of millions of dollars in equity into his companies. Several top banks extended him a $150 million line of credit. None of this would have happened if Whit- tle had not displayed at least some of the elements of leadership. Selling skills alone could not have done it.

For all his leadership ability, it seems that Whittle fell prey to the classic ego haz- ard of the leader: He began believing in the legend of his own infallibility, assuming he could do no wrong, as if everything done by a leader were predestined to be right. He began treating leadership as if it were some kind of shortcut to success, rather than what it really is—a slow, careful, and painstaking process of nurturing and build- ing an organization to perform a mission with excellence.

In hindsight, those who worked for Whittle or had invested with him should have seen the signs. Immediately after receiving the first $40 million capital infu- sion from Time, Inc., Whittle bought and renovated a 16-acre estate in Long Island’s exclusive Hamptons for his personal use. At the same time he bought and redecorated a $12-million Manhattan townhouse and leased two corporate jets, which he often used for personal trips, at an annual cost of $8 million.

Most astonishing of all, he erected a cor- porate headquarters campus of four-story colonial-style buildings in Knoxville, even though the bulk of the company’s employees and operations were in New York and Los Angeles, and Knoxville itself had a surplus of first-class office space available at fire-sale prices due to the savings-and-loan crash.

But that was not the end of the story. Instead of following the usual CEO-dis- charge script by either fading away quietly or staging a guerilla campaign of lawsuits and press releases in an effort to get back into power, Whittle entered into a period of serious self-examination and reflection in an effort to understand the nature of his mistakes and correct them. When you hear him talking about it, you can understand why so few people do it.

“I’ve never been through anything so painful,” he says today. “It was pretty rough.”87

Whittle says he got through his ordeal by sticking with a pair of tried-and-true self-management strategies.

“The first was that I took the blame myself,” he says. “It’s been a trait of mine since I was very young—and I don’t know where this came from—but when trouble comes I don’t look for other people to blame. Also, ever since the age of 30 I’ve seen a ther- apist twice a week. I’ve had this ‘coach’ for a long time. It really helped during the stress.”

By focusing on his own errors and using a professional therapist as a guide, Whittle was able to pinpoint where he went wrong and why. It turned out to be the old story of the successful leader who overreaches him- self because he assumes he cannot be wrong.

“From 1970 to about 1990 I had 20 very good years in the publishing and media businesses,” Whittle says. “I started a company from scratch in 1970, and it grew and began making profits in 1974. I was viewed as very successful.

“Then, in the early 90s, I began to trans- form what had largely been a print company into an electronic publishing company,” he says. “We placed three big bets. Channel One was the first. Today it’s in 12,000 mid- dle and high schools—40% of the middle and high schools in the country. Medical News Network was next. It placed the latest medical news directly on the doctor’s desk. Number three was Edison.

“Basically, what happened was that I became overcommitted,” Whittle says. “Therein lies the story. It was not wise to place those three bets simultaneously.”

44 Part 1: Before You Start in Business

Starting up three large pioneering ven- tures demanded more of Whittle’s time and attention than any of his previous business- es. Publishing news and information over two electronic networks turned out to be very different from publishing magazines, and making Edison into a profit-making player and a quality leader in the education industry was entirely distinct from advertis- ing to students. The learning curve for his three new businesses was far steeper than anything Whittle had ever encountered before, yet it was not until the board fired him that he was able to step back and admit he had been struggling ever more intensely over a period of more than two years.

Why did it take so long for Whittle to acknowledge that he had been over- whelmed by his creations?

“When you’ve had a 20-year run and most of the things you’ve tried have gone right, you can easily come to believe that all of the things you do will go right,” he says. “And that’s not real. Just because you know how to do all these things doesn’t mean you’re infallible. I had always succeeded, so I thought I always would succeed.”

Whittle’s willingness to acknowledge and learn from his mistakes marked him as an unusual leader, and probably as a leader due for a comeback. But even a veteran expert on business leadership hardly would have anticipated the way he would do it— by exercising leadership without portfolio at an age when most successful executives no longer find it necessary.

“My board fired me in 1994,” Whittle says. “So I said, ‘O.K., guys, I’m not CEO any more, and I’m not getting paid, but I’m not going to stop working.’”

How could Whittle do that? Because he was the majority shareholder in Whittle Communications, he could not be barred from the premises. So every day he came in to work at no salary. To make sure he would succeed this time he deliberately avoided the error he knew had brought him down the last time: trying to accomplish too much. He focused on only one business— the Edison Project—and he focused on only one aspect of that business—raising capital.

“What I really did was return to what had originally made me successful: tremen- dous focus, persistence, and not being spread too thin,” Whittle says. “I just came in every morning and raised money for the Edison project. Medical News did not work out, so to cover its debt I had closed it and

sold Channel One. I focused totally on Edi- son and even resisted the board’s urging that we go into other businesses.

“I think most people would have just left, turned the page, and gone on to the next chapter,” Whittle says. “The reason I stayed was Edison. It was the most impor- tant idea I’d ever had.”

And he is still polishing that idea, as Edi- son gradually closes in on its goal of being a profitable company. On February 20, 2001, The Wall Street Journal reported that Edison had 113 schools under management, 40 percent of them with unionized employees, and was under consideration to take over 11 distressed school districts in Pennsylvania. It also noted that Whittle is chief executive of Edison. He’s back in the front office and getting paid again.88

“I took my lumps just like everybody else,” Whittle says of his ordeal. “We made mistakes trying to do too much, and we paid for it. Then we went back to work.

“Periodically, good leaders get them- selves in trouble by thinking they’re better than they are,” he adds. “The recovery from that is to go back to the fundamentals. There are examples of leaders who have done that. I hope I am one. But the tale is not yet told.”

“The heart that’s been broken and mended is stronger than the heart that’s never been broken at all,” runs an old say- ing meant to console maidens betrayed in amour.

Perhaps the same might be said of lead- ership. Is it possible that the strongest and most reliable leader of all could be the one whose leadership skills have been wounded, treated, and—over time—healed?

Perhaps that too is a tale not yet told.

C O N C L U S I O N A properly designed, constructed, and pro- grammed machine will perform its functions with impressive accuracy. Because of the limitations inherent in all devices and in the materials from which they are made, that machine will from time to time break down and fail. But the trained technician can repair or rebuild the machine, or even replace it with a better one. The task for which the machine was designed will con- tinue to be performed.

Leadership is infinitely more complex. Fortunately, people are not monotonous, robotlike, task-performing devices. That’s what makes the leader’s job so exciting and

so frustrating. The human beings who make up organizations bring with them into the workplace all the unpredictable vagaries that mortal existence can bestow. They come with their cultural, racial, eth- nic, religious, and family backgrounds. They come with their unique personal his- tories. They come with their strengths, weaknesses, talents, passions, aversions, personalities, health, intelligence, and lan- guage. They come with their prejudices and biases, some cultural, some personal. And each comes in one of two packages—male or female.

This is the material—literally, the human resources—with which the leader must have the capacity to work. Unlike the inanimate machine which this same human species has created, humans themselves are dynamic, organic, living creatures that make the leader’s job complex and difficult.

The activities of leadership in working with human beings are in one sense like the game of golf: It is not how well you manage your best shots, but how well you manage the relentless succession of misplaced drives and bad lies, most of them caused by your own ineptitude.89 If golf is not your game, pick another sport, because the principle is the same. Every serious baseball fan realizes that, while home runs can be spectacular crowd pleasers, most games are won by the team that does a consistent job of cranking out base hits and limiting its errors. In foot- ball, the spectacular pass completions and 40-yard touchdown runs drive the crowd wild, but it is the slow and frustrating accre- tion of yardage, first down by first down, that puts teams in position to score repeat- edly and go on to win championships.

Such is the daily life of leaders, because leaders come to the party with the same complex mixture of vague and ill-defined personal baggage as followers. Unlike the followers, however, the leaders must give shape and definition to their own attributes before trying to manage the attributes of the others. They must carry on their own struggles and those of their organizations simultaneously.

For some students, this business of lead- ership may prove dark and daunting. But those willing to take up the challenge are promised the most exciting and fulfilling experience of all time.

Chapter 1•End Notes

Chapter 1: Leaders and Leadership 45

46 Part 1: Before You Start in Business

Chapter 1•End Notes

1. Peter F. Drucker, “The Age of Social Trans- formation,” The Atlantic Monthly, November 1994, p. 72.

2. Henry Mintzberg, “The Manager’s Job: Folklore and Fact,” Harvard Business Review (March–April 1990): 163.

3. Paul J. Gordon and Larry W. Boone, “Edu- cating the Educators: B-School Faculty Development Practices Relating to Institu- tional Mission per 1991 AACSB Accreditation Standards.” (Presented at the International Academy of Management, “A New Paradigm for 21st-Century Enter- prise,” Wharton School of the University of Pennsylvania, December 9, 1994.)

4. William Oncken, Jr., Managing Manage- ment Time (Englewood Cliffs, NJ: Prentice Hall, 1984): 60–61.

5. Ibid. 6. Paul Roush, Col., USMC, United States

Naval Academy, telephone interview, August 9, 1994.

7. George B. Forsythe, Col., United States Mil- itary Academy, telephone interview, July 20, 1994.

8. Roush, telephone interview. 9. An excellent layperson’s introduction to the

Myers-Briggs test can be found in Maj. Gen. Perry M. Smith, Taking Charge: A Practical Guide for Leaders (Washington, DC: National Defense University Press, 1986): 85–86.

10. Roush, telephone interview. 11. Forsythe, telephone interview. 12. Personal letter to Harry J. Bruce, October

17, 1994. 13. John Kirchenstein, Col., telephone inter-

view, November 4, 1994. 14. Taking the Lead: The Management Revolu-

tion, Episode 101, “Management at Work: The Managerial World” (Pasadena, CA: INTELECOM Intelligent Communica- tions, 1993).

15. Ronald A. Heifetz, Leadership without Easy Answers (Cambridge, MA: The Belknap Press of Harvard University Press, 1994): 20.

16. Warren Bennis, An Invented Life: Reflections on Leadership and Change (Reading, MA: Addison-Wesley, 1993): xiii.

17. Ibid. 18. In John P. Kotter’s The Leadership Factor

(New York: The Free Press, 1988), he recog- nizes the same distinction when he establishes two categories of leadership: “leadership with a capital ‘L,’” which is the classic type emanating from the chief execu- tive officer, and “leadership with a lower case ‘l,’” the less conspicuous type active at lower levels in the organization. Kotter insists that both deserve to be acknowledged as leader- ship because both display the two earmarks of leadership he identifies in many empirical

studies: vision combined with a well- managed organization that successfully implements the vision. “In other words, the effective leadership of a project team located ten layers below the CEO in a large corpora- tion and the effective leadership of the overall corporation by the CEO both seem to share some fundamentals in common: a good vision and strategy backed up by suffi- cient teamwork and motivation” (p. 19).

19. Random House Dictionary of the English Lan- guage, unabridged ed. (New York: Random House, 1967): 913.

20. Forsythe, interview. 21. John P. Kotter, Power and Influence: Beyond

Formal Authority (New York: The Free Press, 1985).

22. Ibid., 26. 23. Phillip Crosby, Running Things (New York:

McGraw-Hill, 1986): ix. 24. Ibid., xi. 25. The Random House Dictionary of the English

Language, unabridged ed. (New York: Ran- dom House, 1967): 814.

26. Webster’s New World Dictionary of the Ameri- can Language, 2d college ed. (New York: New World Dictionaries/Simon & Schuster, 1984): 725.

27. Kotter, in Leadership, comes to virtually the same conclusion. Based on his and Paul Lawrence’s 1972 study of 20 big-city may- ors, plus more recent work by Bennis, Levinson and the Center for Creative Lead- ership, Kotter writes (p. 20): “Effective Leadership in Complex Organizations” con- sists essentially of two fundamental activities: “Creating an Agenda for Change” and “Building a Strong Implementation Network.”

28. Garry Wills, “What Makes a Good Leader?” The Atlantic Monthly, April 1994, p. 69.

29. Cf. Kotter, Leadership, 29. 30. Chester I. Barnard, The Functions of the

Executive, 30th anniv. ed. (Cambridge, MA: Harvard University Press, 1979): 173.

31. James M. Kouzes and Barry Z. Posner, Credibility: How Leaders Gain and Lose It, Why People Demand It (San Francisco: Jossey-Bass, 1993): 9.

32. Louis B. Lundborg, The Art of Being an Executive (New York: The Free Press, 1981): 85. Cf. Kotter, Leadership: “[Leadership is] a process of moving a group (or groups) of people in some direction through (mostly) non-coercive means” (p. 16); and “‘Good’ leadership moves people in a direction that is genuinely in their real long-term best interests. It does not march people off a cliff. It does not waste their scarce resources. It does not build up the dark side of their human nature. In this sense, one could say Adolf Hitler displayed strong leadership at times, but not effective leadership” (p. 17).

33. Ibid., 86. 34. Ibid., 87. 35. Ibid. 36. Letter to Ralph Gilbert, September 20,

1994. 37. Ralph Stogdill and Bernard M. Bass, Manu-

al of Leadership: A Survey of Theory and Research (New York: The Free Press, 1981): 7.

38. Donald Kagan, On the Origins of War and the Preservation of Peace (New York: Double- day, 1995): 25–26.

39. Ibid., 26. 40. Ibid. 41. Encyclopedia Britannica, vol. 7 (Chicago:

Encyclopedia Britannica, Inc., 1966): 609. 42. Kagan, Origins, 27. 43. It should be pointed out in fairness, howev-

er, that Nanus and his collaborator Warren Bennis earlier noted the absence of the power issue in contemporary leadership lit- erature and addressed that absence in a manner remarkably forceful for academics: “However, there is something missing,” they wrote. “POWER, the basic energy to initiate and sustain action translating intention to reality, the quality without which leaders cannot lead . . . power is at once the most necessary and the most distrusted element exigent to human progress . . . power is the basic energy needed to initiate and sustain action, or, to put it another way, the capaci- ty to translate intention into reality and sustain it.” Warren Bennis and Burt Nanus, Leaders: The Strategies for Taking Charge (New York: Harper & Row, 1985): 15–17.

44. Rosabeth Moss Kanter, “Power Failure in Management Circuits,” Harvard Business Review (July/August 1979): 65.

45. Kagan, Origins, 6. 46. Jeffrey Pfeffer, Managing with Power: Politics

and Influence in Organizations (Boston: Har- vard Business School Press, 1992): 15.

47. Ibid. 48. Ibid., 8–9. 49. The Charlie Rose Show, January 13, 1995,

Transcript No. 1291, 1. 50. Ibid., 5. 51. Ibid. 52. Stevenson Swanson, “Leading question:

What kind of people do others follow?” Chicago Tribune, November 29, 1984, p. 1.

53. Bennis, Life, 140. 54. Ibid., 82. 55. James V. Higgins, “Romney: Iacocca of His

Day,” Detroit News-Free Press, July 28, 1995, p. 2A.

56. Ibid. 57. John A. Byrne, The Whiz Kids (New York:

Currency Doubleday, 1993): 98. 58. Stephen R. Covey, The Seven Habits of

Highly Effective People (New York: Simon & Schuster, 1989).

59. Ibid., 275. 60. Garry Wills, “Gingrich’s Energy Helped

Ideas Pay Off,” Chicago Sun-Times, January 7, 1996, p. 32.

61. Mihaly Csikszentmihalyi, Flow: The Psychol- ogy of Optimal Experience (New York: Harper & Row, 1990): 49.

62. Mihaly Csikszentmihalyi, telephone inter- view, February 26, 1996.

63. Webster’s New Twentieth Century Dictionary of the English Language, unabridged, 2nd ed. (New York: Prentice Hall, 1983): 1337.

64. All information on this subject appears in “Colonel Sanders: From Corbin to the World,” Bucket magazine, 22, no. 1, 1980, pp. 3–7.

65. Wills, “Gingrich’s Energy.” 66. Emmett C. Murphy, with Michael Snell,

The Genius of Sitting Bull: 13 Heroic Strate- gies for Today’s Business Leaders (Englewood Cliffs, NJ: Prentice Hall, 1993).

67. Don Shula and Ken Blanchard, Everyone’s a Coach (New York: HarperBusiness, 1995).

68. Sun Tzu, The Art of War, trans. Thomas Cleary (Boston: Shambala, 1991): back cover.

69. J. Case, “Desperately Seeking Leadership,” Inc., December 1987, pp. 20, 22.

70. Benjamin DeMott, “Choice Academic Pork: Inside the Leadership Studies Racket,” Harper’s, December 1993, pp. 61–62.

71. Ibid. 72. “Tom Peters on Excellence: Want Success?

Step Right up and Try Your Luck,” San Jose Mercury News, April 1, 1991.

73. Henry David Thoreau, Walden (New York: Barnes & Noble, 1993): 7.

74. The material making up these examples of leadership came from a variety of sources. Bill Knight was personally known to the author. Material on John Sculley came from his 1987 autobiography, Odyssey, co- authored with John A. Byrne and conversations the author and Sculley had in Hong Kong April 2002. Harry Gray’s recol- lections of his work at Greyvan Lines and Litton Industries and Ray Tower’s recollec- tions of his work at FMC Corporation were related by these sources in personal inter- views with the author. Information on Diane Betti and Gail McGovern came from correspondence and interviews between these sources and the author. The material on Lee Iacocca’s first career successes at Ford is from his 1987 autobiography, Iacocca, co- authored with William Novak.

75. Interview with author, August 8, 2001. 76. E. M. Gray, “The Common Denominator

of Success,” in Covey, 148–49. 77. John Sculley, with John A. Byrne, Odyssey

(New York: Harper & Row, 1987): 13. 78. Ibid. 79. Lee Iacocca, with William Novak, Iacocca

(New York: Bantam Books, 1984): 39–40. 80. Personal communication. Source requested

anonymity. 81. Personal communication. 82. See Heifitz, Leadership, 116, 117, 129, 168,

170, 207, 208.

83. Joseph B. White and Carol Hymowitz, “Watershed Generation of Women Execu- tives Is Rising to the Top,” Wall Street Journal, February 10, 1997, p. A6.

84. Telephone interview, April 22, 1997. 85. Richard Wilhelm and Cary F. Baynes, trans.,

I Ching (Book of Changes), 3d ed., Bollingen Series XIX (Princeton, NJ: Princeton Uni- versity Press, 1990): 36.

86. Floyd Norris, “An Executive’s Missing Years: Papering over Past Problems,” New York Times, National Edition, July 16, 2001, 1.

87. Telephone interview with author, August 12, 2001.

88. Daniel Golden, “For-Profit School Man- agers Discover Teachers’ Unions Can Be Allies,” Wall Street Journal, February 20, 2001, p. B1.

89. For this sobering but useful insight, I am grateful to Lou Biago, golf professional, Lake Toxaway Country Club, N.C.

Chapter 1: Leaders and Leadership 47