EXECUTION PART 3: Building Block One: The Leader’s Seven Essential Behaviors

What exactly does a leader who’s in charge of execution do? How does he keep from being a micromanager, caught up in the details of running the business? There are seven essential behaviors that form the first building block of execution:

• Know your people and your business.

• Insist on realism.

• Set clear goals and priorities.

• Follow through.

• Reward the doers.

• Expand people’s capabilities.

• Know yourself.

KNOW YOUR PEOPLE AND YOUR BUSINESS

Leaders have to live their businesses. In companies that don’t execute, the leaders are usually out of touch with the day-to-day realities. They’re getting lots of information delivered to them, but it’s filtered presented by direct reports with their own perceptions, limitations, and agendas, or gathered by staff people with their own perspectives.

The leaders aren’t where the action is. They aren’t engaged with the business, so they don’t know their organizations comprehensively, and their people don’t really know them.

LARRY: Suppose a leader goes to a plant or business headquarters and speaks to the people there. He is sociable and courteous. He shows superficial interest in his subordinates’ kids how well they’re doing in school, how they like the community, and so on. Or he chats about the World Series, the Super Bowl, or the local basketball team. He may ask some shallow questions about

the business, such as “What’s your level of revenue?” This leader is not engaged in his business.

When the visit is over, some of the managers may feel a sense of relief, because everything seemed to go so well and pleasantly. But the managers who are any good will be disappointed. They’ll ask themselves, What was the point? They had prepared for tough questions good people like to be quizzed, because they know more about the business than the leader. They’ll feel frustrated and drained of energy. They didn’t get a chance to make a good impression on the leader and the leader certainly didn’t make a good impression on them.

And of course, the leader hasn’t learned anything. The next time he makes prognostications about the company, the press or the securities analysts may be awed, but the people in the business will know better. They’ll ask each other, “How on earth could he say those things so confidently when he doesn’t have a clue about what’s happening down here?” It’s kind of like the American politicians who used to visit Vietnam, look around a bit, talk to the top brass in the military command, review some statistics, and then proclaim that the war was being won and they could see the light at the end of the tunnel. Right! When I go to a plant, it’s because I’ve heard some things about the manager, and I need to confirm what I’ve heard about her. If I’ve heard she’s effective, I’m going to try to reinforce her abilities. I’ll have an in-depth discussion. I know she’s going to do some good things, but I may leave her with a couple of thoughts she didn’t have. If I’ve heard she’s ineffective, I’ll be making a decision about whether she can do the job or not. And I want to see what kind of a team she has, so I may just poke around at questions to get a clearer and more informed impression.

Next I meet with as many people in the plant as I can. I spend half an hour taking them through a slide presentation about where the company is. Then I take questions for an hour. I can sense from the questions and the dialogue

how well the manager normally communicates with her workforce. If nobody asks me questions, I know this is not an open community. If people are afraid to ask me a tough question like “What’s your bonus going to be this year?” I know this isn’t going to be a free exchange.

The union leader’s there too. He hears my story and asks if there will be any more layoffs. My answer is, “We haven’t decided that. Customers help decide whether or not a plant stays open. In this case we had to become cost competitive and fast. That means plant productivity has to dramatically improve.” The point is that when you probe, you learn things and your people learn things.

Everybody gains from the dialogue. And you dignify the leadership at the plant level by allowing them to expound on the business.

Here’s a typical example of such a trip. A few months after I returned to Honeywell, I went to a plant in Freeport, Illinois, that makes sensors. It was an old Honeywell business, not on the cutting edge of contemporary practices, except that it had a very productive Six Sigma effort and a very productive digitization effort.

Nobody had asked the leadership to institute these things. They just decided they were the right things to do. The manager who ran the plant was very smart. “Your organization looks fine,” I told him, but there

 problems too. We talked in depth about his staff. “How long have these people been here or in the same job?” I asked. Too many of them had been there too long. “These are good people,” I said, “but let’s move them, promote them, so you can bring in some others once in a while to get some new insights. You’ve got to bring in some other people once in a while to get fresh thoughts, or you’re always basically washing yourself in the same dishwasher. In other words, you’ve listened to all of the ideas of the people in the place, and you miss out on the fresh perspective of newcomers.”

Then I asked why his quality staff reported to manufacturing. “That’s like putting the fox in charge of guarding the chicken coop,” I said. “I want quality to be

analyzing manufacturing.” Then I asked, “Why isn’t the business development man here? You want to do some acquisitions, and he’s off doing something else today, but he really should be here talking with me.” He gave me a

lame answer. Then he took me through the products that the plant produces and did a nice job.

But he had missed his forecast. “We didn’t see the downturn coming,” he said. When I asked him why, he wasn’t sure he told me he used a system based on the industrial production index, which has a 74 percent correlation with his business. I probed and found out that it was 74 percent in hindsight it’s not predictive. We talked about it a bit, and he agreed he’d try to find something

that would be more helpful. But less than the index itself, I was interested in the way he thought about how it predicted the revenues in his business.

Then I talked to his staff along with him. When I met with him again afterward, I said, “You’ve got nine plants for a $600 million business. You’ve got to have fewer.”

He knew that, but now he had to decide which ones to close. Also, the plants made everything needed to produce the products. “You’ve got to outsource some of this stuff to other companies who can do it more cost-effectively,” I told him. “And by the way, decide what to outsource before you decide which plants to close, because we want to know what the final footprint will look like.”

People in the meeting had told me they had made some technological breakthroughs. But they didn’t have a patent attorney, so I asked who protected the intellectual property. I asked about e-auctions and told the manager that he had to be buying some stuff that way these days; it was less expensive. He admitted they were behind the curve there. Finally, the company had a hodgepodge of systems (a common problem, by the way). I told him he had to make these systems talk to each other without spending a fortune. He told me he’d figure out how.

Here’s the good news, though. I was trying to revive the company’s Six Sigma program, which had been let go in my absence. But this manager’s Six Sigma program was right on top of things. It needed a little work, but he had plenty of black belts people with the highest expertise in the discipline. His people were working on the right projects, and they had all the right metrics for customers. His digitization effort was very nice too. And again, he did it all with no influence from headquarters. That was impressive.

Here’s what we both came away with about how to make the business better. He had to get some mix in people so they didn’t all go brain-dead talking to each other. He could not have so many plants. He had to do more outsourcing to get his costs competitive. He had to protect his intellectual property that was our competitive advantage. He needed to start using e-auctions so he

could purchase in a more intelligent way. And he had to figure out how best to integrate his systems.

I left him with a few critical challenges, but he was a very impressive guy in a bad year. He was doing the right things, and he knew what to do about what he hadn’t done.

_ _ _

What did the visit accomplish?

RAM: First, both parties came away with a clear agreement about what the manager needed to do to make the business better. Second, it was a great coaching exercise. Larry’s tough questions got the manager to see the realities of his business more clearly and connected them with the external environment. The manager and his people saw the CEO-level view of competitive advantage. And the dialogue schooled them in how to think about the business in a more rigorous and analytical way. Third, Larry encouraged and motivated the plant team, creating energy. This is the modus operandi of a consistent process that makes a company more competitive.

The key word is “consistent.” Leaders who are connected have distilled the challenges facing the business unit they are visiting into a half dozen or fewer fundamental issues. These challenges do not change much over short periods of time, and the way leaders like Larry master the total company is through a short list that cut across multiple business units.

Being present allows you, as a leader, to connect personally with your people, and personal connections help you build your intuitive feel for the business as well as for the people running the business. They also help to personalize

the mission you’re asking people to perform.

Dick Brown’s personal connections at all levels of the organization at EDS fostered a degree of commitment and passion that simply wouldn’t have existed otherwise. We know of no great leaders, whether in business, politics,

the military, religion, or any other field, who didn’t have these personal connections.

LARRY: As a leader, you have to show up. You’ve got to conduct business reviews. You can’t be detached and removed and absent. When you go to an operation and you run a review of the business, the people may not like what you tell them, but they will say, “At least he cares enough about my business to come and review it with us today. He stayed there for four hours. He quizzed the hell out of us.” Good people want that. It’s a way of raising their dignity. It’s a way of expressing appreciation and a reward for their extensive preparation.

It’s also a way to foster honest dialogue, the kind that can sometimes leave people feeling bruised if they take it personally. But the dialogue should not be mean-spirited. Let’s assume you have a heated debate with somebody. You disagree with what he’s doing, but then you both resolve it one way or another. You can write the man a note and say, “Great discussion yesterday about the growth plan for your group. Appreciate your setting forth your views and your candor and insistence that we confront reality.” You’re not going home mad, and you don’t want him going home mad. You’re trying to promote the ability to intellectually debate important points. It doesn’t matter who wins or loses. The fact that the debate happened and a resolution occurred is good in itself.

At Honeywell, after I do a business review, I write the leader a formal letter summarizing the things he agreed to do. But then I also write a personal note to the leader and say, “Gary, nice job yesterday . Productivity is not up to standards, and you need to work on it. Otherwise things are going great.” It’s just a note, takes five minutes. But those cards are all over the company people show them around, and they save them.

If a manager is having trouble, you don’t want to threaten to fire him—you want to help him with his problem. The personal connection makes that easier too.

So you keep working on the personal connection every way you can. And then when he calls you up one day and says, “I’ve got another offer to go to another company,” you know him; he knows you. And you say, “Well, Sam, why do you want to do that? You’re doing well here. You’ve got a good future,” and so on. Most times you can keep them. Absent that personal connection, you’re

just a name.

Making a personal connection has nothing to do withstyle. You don’t have to be charismatic or a salesperson. I don’t care what your personality is. But you need to show up with an open mind and a positive demeanor. Be informal, and have a sense of humor. A business review should take the form of a Socratic dialogue, not an interrogation. All you’ve got to prove is that you care for the people who are working for you. Whatever your respective personalities are, that’s the personal connection.

The personal connection is especially critical when a leader starts something new. The business world is full of failed initiatives. Good, important ideas get launched with much fanfare, but six months or a year later they’re dead in the water and are abandoned as unworkable. Why? Down in the organization, the managers feel that the last thing they need is one more time-consuming project of uncertain merit and outcome, so they blow it off. “This too will pass,” they say, “just like the last bright idea of the month.” Result: the company wastes time, money, and energy, and the leader loses credibility , usually without The leader’s personal involvement, understanding, and commitment are necessary to overcome this passive (or in many cases active) resistance. She has not only to announce the initiative, but to define it clearly and define its importance to the organization. She can’t do this unless she understands how it will work and what it really means in terms of benefit. Then she has to follow through to make sure everyone takes it seriously.

Again, she can’t do this if she can’t understand the problems that come with implementation, talk about them with the people doing the implementing, and make clear again and again that she expects them to execute it.

RAM: In the mid-1990s, a friend told Jack Welch about a new methodology for making a quantum increase in inventory turns in manufacturing operations. Relatively few business leaders back then understood what a powerful tool faster inventory turnover was for generating cash and increasing return on investment. GE, the friend said, could generate cash if it could increase its inventory turns across the company. He gave Welch the name of a leading practitioner of this methodology, Emmanuel Kampouris, the CEO of American Standard. At that time in the mid

1990s American Standard had achieved in some plants as high as forty inventory turns compared to the average of four at most companies.

Welch was excited by the idea, but he was not content to get just the concept—he wanted to understand the workings personally. Rather than sending some of his manufacturing people out to investigate it, he paid a visit to Kampouris and spent several hours with him.

Then he followed through to learn the hows at ground level. He accepted an invitation to speak at American Standard. During the dinner that followed, he sat between two of Kampouris’s plant managers, one from Brazil and one from the U.K., whose plants had achieved annual inventory turns of 33 and 40, respectively. Welch spent the whole evening questioning them closely about the details—the tools, the social architecture, how they overcame resistance to the new methodology.

Didn’t the chairman of GE have better things to do with his time? Absolutely not! By involving himself deeply and personally with the subject, Welch learned what it would take to execute such an initiative at GE. He learned what skills and attitudes would be required of people, and what resources would be needed. Thus he was able to get the necessary changes rolling quickly throughout his huge company. By the time W elch retired in 2001, inventory

turns had doubled, to 8.5.

INSIST ON REALISM

Realism is the heart of execution, but many organizations are full of people who are trying to avoid or shade reality.

Why? It makes life uncomfortable. People don’t want to open Pandora’s box. They want to hide mistakes, or buy time to figure out a solution rather than admit they don’t have an answer at the moment. They want to avoid confrontations. Nobody wants to be the messenger who gets shot or the troublemaker who challenges the authority of her superiors.

Sometimes the leaders are simply in denial. When we ask leaders to describe their organization’s strengths and weaknesses, they generally state the strengths fairly well, but they’re not so good on identifying the weaknesses. And when we ask what they’re going to do about the weaknesses, the answer is rarely clear or cohesive. Theysay, “We have to make our numbers.” Well, of course you have to make your numbers; the question is how you are

going to make your numbers.

Was it realistic for A T&T to acquire a bunch of cable businesses it didn’t know how to run? The record shows it wasn’t. Was it realistic for Richard Thoman to simultaneously launch two sweeping initiatives at Xerox without being able to install the critical leaders? Clearly not. How do you make realism a priority? You start by being realistic yourself. Then you make sure realism is the goal of all dialogues in the organization.

LARRY: Embracing realism means always taking a realistic view of your company and comparing it with other companies. You’re always keeping an eye on what’s happening in companies around the world, and you’re measuring your own progress, not internally, but externally.

You don’t just ask, “Have I made progress from last year to this year?” You ask, “How am I doing vis-à-vis other companies? Have they made a lot more progress?” That’s the realistic way to look at your station. It’s shocking to see how many people don’t want to confront issues realistically. They’re not comfortable doing it. When I took over at AlliedSignal, for example, I got two different pictures from our people and our customers. While our people were saying that we were delivering an order-fill rate of 98 percent, our customers thought we were at 60 percent. The irony was, instead of trying to address the customer’s complaints, we seemed to think we had to show that we were right and they were wrong.

At the roundtables I hold when I go out to visit facilities, I ask people, “What are we doing right in this business, and what are we doing wrong in this business?” Then I’ll ask, “What do you like about Honeywell, and

what don’t you like?” Some people just have gripes, while others go after me personally. But most have good information and insights. I make notes and take them up afterward with the manager.

When I visit management classes at the training center, I talk for ten minutes, answer questions for a half an hour or so, and then go around shaking hands with everyone and asking them the same questions I ask at the roundtables. And so people leave with the understanding that realism matters. They go back and tell their bosses, “Well, you know, I saw Bossidy. I told him what was wrong.” And their bosses will know that I know.

Learning takes place on both sides. I may learn, for example, that lack of collaboration between two businesses prevents generation of new revenue from customers.

Or that an important initiative is not getting a high enough priority in some business units. On the other side they find out about the company as a whole where I see real progress and where I’m dissatisfied.

SET CLEAR GOALS AND PRIORITIES

Leaders who execute focus on a very few clear priorities that everyone can grasp. Why just a few? First, anybody who thinks through the logic of a business will see that focusing on three or four priorities will produce the best

results from the resources at hand. Second, people in contemporary organizations need a small number of clear priorities to execute well. In an old-fashioned hierarchical company, this wasn’t so much of a problem people generally knew what to do, because the orders came down through the chain of command. But when decision making is decentralized or highly fragmented, as in a matrix organization, people at many levels have to make endless trade-offs. There’s competition for resources, and ambiguity over decision rights and working relationships.

Without carefully thought-out and clear priorities, people can get bogged down in warfare over who gets

what and why. A leader who says “I’ve got ten priorities” doesn’t know

what he’s talking about he doesn’t know himself what the most important things are. You’ve got to have these few, clearly realistic goals and priorities, which will influence the overall performance of the company. For example, Lucent’s main goal in 2002 is to survive until demand for its products comes back. Its debt is so high that its debt rating has been lowered, and it has come close to violating covenants with lenders. So Lucent’s first priority is to conserve cash. This translates into keeping receivables and inventories to a minimum, selling assets that are not really needed, outsourcing manufacturing, and reducing costs. Its second priority is to focus on customers so it can build a durable revenue base. This priority is on the minds of everyone, and has a huge influence on day to day behavior.

Along with having clear goals, you should strive for simplicity in general. One thing you’ll notice about leaders who execute is that they speak simply and directly. They talk plainly and forthrightly about what’s on their minds. They know how to simplify things so that others can understand them, evaluate them, and act on them, so that what they say becomes common sense. Sometimes it takes a new pair of eyes to clarify priorities.

In August 2000, the world’s largest retail chain in its category named a new CEO. The chain was losing ground to competitors. Caught up in the excitement of “revolutionary” ambitions, it had pursued e-commerce and other new non-store ventures, and had lost its focus on executing the core business. Its stock price had fallen by twothirds over the past year.

The senior management team urged the new CEO to grow the business by building more stores. But the CEO, who had risen through the company as a block-and-tackle execution-oriented person, felt the company was already chasing too many possibilities. He made improving the performance of existing stores his top priority, and focused his people on raising gross margins and comparable sales (improving same-store sales from year to year).

He took three steps to translate these goals into actions. First he sat down with his ten direct reports to explain the goals and discuss their implementation—how they could be met, what obstacles had to be overcome, and how the incentive system had to be changed. Then he gathered his roughly top 100 merchandising and store executives for a two-day session. He taught them about the anatomy of the business, explaining directly and simply such things as what had happened to sales growth and why; what factors, such as logistics flow, were affecting the cost structure; and how harmony between the merchandising people and the stores was missing and what the consequences were. He set clear targets for the next four quarters and discussed with them how to meet the targets.

Before the executives left, each had a ninety-day action plan and clear agreement on following through. Finally, he conducted a similar two-day session for several hundred merchandising and store managers.

As of December 2001, the chain’s gross margins had improved dramatically, and its stock price had doubled.

FOLLOW THROUGH

Clear, simple goals don’t mean much if nobody takes them seriously. The failure to follow through is widespread in business, and a major cause of poor execution. How many meetings have you attended where people left without firm conclusions about who would do what and when? Everybody may have agreed the idea was good, but since nobody was named accountable for results, it doesn’t get done. Other things come up that seem more important, or people decide it wasn’t such a good idea after all. (Maybe they even felt that way during the meeting, but didn’t speak up.)

For example, a high-tech company was hit hard by the recession of 2001, suffering a 20 percent decline in revenue. The CEO was reviewing the revised operating plan for one of his most important divisions. He congratulated the division president on how well he and his people had reduced its cost structure, but noted that the business would still fall short of its target for return on investment. And he offered a possible solution. He’d recently learned about the importance of velocity, and suggested that the division could make real gains by working with its suppliers to increase inventory turnover. “What do you think you can do?” he asked the purchasing manager. The manager replied that with some engineering help, he thought

he could make substantial improvements. “I’d need twenty engineers,” the manager added.

The CEO turned to the engineering vice president and asked him if he would assign the engineers to the task. The vice president hemmed and hawed for half a minute. Then he said, in chilly tones, “Engineers don’t want to work for purchasing.” The CEO looked at the vice president for several moments. Finally he said: “I am sure you will transfer twenty engineers to purchasing on Monday.” Then he walked toward the door, turned, and looked at the purchasing executive, and said: “I want you to set up a monthly videoconference with yourself, engineering, the CFO, and me and the manufacturing manager to review the progress of this important effort.”

What did the CEO do here? First he surfaced a conflict that stood in the way of achieving results. Second, by creating a follow-through mechanism, he ensured that everyone would indeed do what they were supposed to. This included the division president, who had sat passively on the sidelines until the CEO delivered his ultimatum. And the CEO’s action sent a signal through the rest of the company that others, too, could expect follow-through actions.

REWARD THE DOERS

If you want people to produce specific results, you reward them accordingly. This fact seems so obvious that it shouldn’t need saying. Y et many corporations do such a poor job of linking rewards to performance that there’s

little correlation at all. They don’t distinguish between those who achieve results and those who don’t, either in base pay or in bonuses and stock options.

LARRY: When I see companies that don’t execute, the chances are that they don’t measure, don’t reward, and don’t promote people who know how to get things done.

Salary increases in terms of percentage are too close between the top performers and those who are not. There’s not enough differentiation in bonus, or in stock options, or in stock grants. Leaders need the confidence to explain to a direct report why he got a lower than expected reward.

A good leader ensures that the organization makes these distinctions and that they become a way of life, down throughout the organization. Otherwise people think they’re involved in socialism. That isn’t what you want when you strive for a culture of execution. You have to make it clear to everybody that rewards and respect are based on performance.

In part 4, we’ll explain why so many companies don’t reward the doers, and how those that execute do.

EXPAND PEOPLE’S CAPABILITIES

THROUGH COACHING

As a leader, you’ve acquired a lot of knowledge and experience even wisdom along the way. One of the most important parts of your job is passing it on to the next generation of leaders. This is how you expand the capabilities of everyone else in your organization, individually and collectively.

It’s how you will get results today and leave a legacy that you can take pride in when you move on. Coaching is the single most important part of expanding

others’ capabilities. You’ve surely heard the saying, “Give a man a fish, and you’ll feed him for a day; teach a man how to fish, and you’ll feed him for a lifetime.” That’s coaching. It’s the difference between giving orders and teaching people how to get things done. Good leaders regard every encounter as an opportunity to coach.

RAM: The most effective way to coach is to observe a person in action and then provide specific useful feedback. The feedback should point out examples of behavior and performance that are good or that need to be

changed.

When the leader discusses business and organizational issues in a group setting, everybody learns. Wrestling with challenging issues collectively, exploring pros and cons and alternatives, and deciding which ones make sense

increases people’s capabilities both individually and collectively if it’s done with honesty and trust.

The skill of the coach is the art of questioning. Asking incisive questions forces people to think, to discover, to search. Here’s an example I observed in a planning review at a major American multinational company. The head of

one of the largest business units was explaining his strategy for taking his division from third place in its European market to first. An ambitious plan, it depended on making sharp and swift market share gains in Germany. “That

was an inspiring presentation,” said the CEO after it was over. But, he noted, Germany was the home base of the unit’s most powerful global competitor , which was four times its size. “How are you going to make those gains?” he asked. “What customers are you going to acquire?

What products and what kind of competitive advantages will you need to beat the German competitor and gain and sustain market share?”

The division head didn’t have answers to these business questions. The CEO then turned to evaluating organizational capability. “How many salespeople do you have?” he asked. “Ten,” the leader answered. “How many does

your main competitor have?” The answer I could barely hear the man, he was so sheepish “Two hundred.” The CEO’s last question was more of a statement. “Who runs Germany for you? Wasn’t he in another division until a

few months ago? How many levels are there between you

and the person running Germany?”

With a few simple but critical questions, the CEO had exposed weaknesses in the strategy that would have made it a certain failure in execution. Many CEOs would have ended the dialogue there, leaving the business leader chastened and miserable. And in doing so they would have missed an important opportunity to coach all the leaders at the meeting, helping them with both their personal growth and the company’s growth. But this CEO’s aim was to educate his team on planning realistically.  “There may be a way to make this plan work,” he observed. “Instead of trying a broad assault, why not segment the market and look for the competitor’s weak spots, winning on speed of execution? Where are the gaps in his product line? Can you innovate something that will fill them? Can you identify and focus on the customers

who are most likely to buy such products?”

At the meeting’s end, the leader energized by the challenge agreed to rethink the plan and return in ninety days with a more realistic alternative. And everybody learned an important lesson about the anatomy of the

strategy process.

The same principles apply to coaching an individual privately.

Whatever your style  whether it’ s gentle or blunt your aim is to ask the questions that bring out the realities and give people the help they need to correct problems.

LARRY: Let’s say you’ve got a person making all the numbers, making all his commitments, but his behavior is terrible. Charlie’s working people seven days a week, he hollers, and he won’t hire a woman. You call him in and say, “I love you, Charlie, but the things you’re doing are going to preclude you from making numbers down the road. People aren’t going to put up with this nonsense anymore. You’ve got a couple of choices. I’m going to be your coach. I’m going to talk to you myself. And I want this behavior changed, or you’re not going to go any farther, or you’re going to have to leave.”

Charlie may argue that his behavior’s not so bad. You give him the evidence: “Okay, I’ve got ten people here who say it is bad. Are they all wrong? You don’t keep them in here on weekends? I’ve got a logbook with dates that says all your people are in here Saturdays and Sundays. I’ve told everybody around here, ‘I don’t want

you in here every Sunday.’ Is that a lie?” “No.” “Well, then your behavior is bad, right?” “Right.” “Now, let’s think about how we’re going to fix it. This isn’t a disaster, but you’ve got to fix it.”

Sometimes people like Charlie do fix it and sometimes they don’t. If they don’t, you’ve got to get rid of them, because ultimately it will affect results. So it isn’t just numbers; it’s behavior.

Education is an important part of expanding people’s capabilities if it’s handled right. Many companies are almost promiscuous about it, offering cornucopias of generic courses in management or leadership and putting far too many people into them.

In one company I know every bonus-eligible manager went through the executive development program. It was an absolute waste of time for 50 percent of them. You need to make judgments about which people have the

potential to get something useful out of a course and what specific things you’re trying to use education to accomplish, in order to expand the capabilities of the organization.

At Honeywell our learning strategy is based on the kind of organizational capabilities people need. Some of these include tools people have to master Six Sigma, digitization, managing the flow of materials through a work cell

by self-directed teams. Some are broader, having to do with executive development. Here the best learning comes from working on real business problems. We ask people look to at three or four issues facing the company, and we form them into teams to work on those issues.

Keep in mind that 80 percent of learning takes place outside the classroom. Every leader and supervisor needs to be a teacher; classroom learning should be about giving them the tools they need.

KNOW YOURSELF

Everyone pays lip service to the idea that leading an organization requires strength of character. In execution it’s absolutely critical. Without what we call emotional fortitude, you can’t be honest with yourself, deal honestly with business and organizational realities, or give people forthright assessments. You can’t tolerate the diversity of viewpoints, mental architectures, and personal backgrounds that organizations need in their members in order to avoid becoming ingrown. If you can’t do these things, you can’t execute.

It takes emotional fortitude to be open to whatever information you need, whether it’s what you like to hear or not. Emotional fortitude gives you the courage to accept points of view that are the opposite of yours and deal with conflict, and the confidence to encourage and accept challenges in group settings. It enables you to accept and deal with your own weaknesses, be firm with people who aren’t performing, and to handle the ambiguity inherent in a fast-moving, complex organization.

RAM: You surely have noticed that the best leader is often not the most brilliant person in the outfit, or the one who knows most about the business. What gives this person more confidence to be a leader than others who are demonstrably better in one dimension or another?

Here’s a clue. A certain executive lacked an essential quality that he needed to be a strong leader. He was the CEO of a large company I worked with, who had two executive vice presidents reporting to him. One VP, responsible for about 60 percent of the company’s business, was an old and trusted colleague, completely loyal to the CEO. But he was faltering. In his gut, the CEO knew it, but he was unable to make the tough decision to let him go. (It wasn’t the first time the CEO had faced this issue and frozen; that other time somebody else cleaned up the mess.) Eventually the board ordered the CEO to get rid of him. With that, the power passed to the board, and the inevitable consequence was that the CEO himself went shortly thereafter.

This man was smart and pleasant to people, and he knew the business. But he didn’t have emotional fortitude.

On the contrary, he had an emotional blockage that kept him from dealing forthrightly with the inadequacy of his executive vice president. Psychologists know that some people are limited, even crippled, by emotional blockages that prevent them from doing things that leadership requires. Such blockages may lead them to avoid unpleasant situations by ducking conflicts, procrastinating on decisions, or delegating with no follow-through.

On the darker side, they may drive the leader to humiliate others, draining energy and sowing distrust.

Emotional fortitude comes from self-discovery and self mastery. It is the foundation of people skills. Good leaders learn their specific personal strengths and weaknesses, especially in dealing with other people, then build on the strengths and correct the weaknesses. They earn their leadership when the followers see their inner strength, inner confidence, and ability to help team members deliver results, while at the same time expanding their own capabilities.

A solid, long-term leader has an ethical frame of reference that gives her the power and energy to carry out even the most difficult assignment. She never wavers from what she thinks is right. This characteristic is beyond honesty or beyond integrity, beyond treating people with dignity.

It’s a business leadership ethic. Leaders in contemporary organizations may be able to get away with emotional weakness for a brief time, but they can’t hide it for long. They face challenges to their emotional strength all the time. Failure to meet these challenges gets in the way of achieving results.

Getting things done depends ultimately on performing a specific set of behaviors. Without emotional fortitude, it’s tough to develop these behaviors, either in ourselves or in others. How can your organization face reality if people don’t speak honestly, and if its leaders don’t have the confidence to surface and resolve conflicts or give and take honest criticism? How can a group correct mistakes or get better if its members don’t have the emotional fortitude to admit they don’t have all the answers?

Putting the right people in the right jobs requires emotional fortitude. Failure to deal with underperformers is an extremely common problem in corporations, and it’s usually the result of the leader’s emotional blockages. Moreover, without emotional fortitude, you will have a hard time hiring the best people to work for you. Because if you are lucky, these people will be better than you are; they will bring new ideas and energy to your operation. A manager who is emotionally weak will avoid such people out of fear that they will undercut his power. His tendency will be to protect his fragile authority. He will surround himself with people he can count on to be loyal and exclude those who will challenge him with new thinking. Eventually, such emotional weakness will destroy both the leader and the organization.

In our years of working and observing in organizations, we have pinpointed four core qualities that make up emotional fortitude:

AUTHENTICITY: A psychological term, authenticity means pretty much what you might guess: you’re real, not a fake. Your outer person is the same as your inner person, not a mask you put on. Who you are is the same as what you do and say. Only authenticity builds trust, because sooner or later people spot the fakers.

Whatever leadership ethics you may preach, people will watch what you do. If you’re cutting corners, the best will lose faith in you. The worst will follow in your footsteps. The rest will do what they must to survive in a muddy ethical

environment. This becomes a pervasive barrier to getting things done.

SELF-AWARENESS: Know thyself it’s advice as old as the hills, and it’s the core of authenticity. When you know yourself, you are comfortable with your strengths and not crippled by your shortcomings. You know your behavioral blind sides and emotional blockages, and you have a modus operandi for dealing with them you draw on the people around you. Self-awareness gives you the capacity to learn from your mistakes as well as your successes. It enables you to keep growing.

Nowhere is self-awareness more important than in an execution culture, which taps every part of the brain and emotional makeup. Few leaders have the intellectual fire power to be good judges of people, good strategists, and good operating leaders, and at the same time talk to customers and do all the other things the job demands. But if you know where you’re short, at least you can reinforce those areas and get some help for your business or unit. You put mechanisms in place to help you get it done. The person who doesn’t even recognize where she is lacking never gets it done.

SELF-MASTERY: When you know yourself, you can master yourself. You can keep your ego in check, take responsibility for your behavior, adapt to change, embrace new ideas, and adhere to your standards of integrity and honesty under all conditions. Self-mastery is the key to true self-confidence. We’re

talking about the kind that’s authentic and positive, as opposed to the kinds that mask weakness or insecurity the studied demeanor of confidence, or outright arrogance.

Self-confident people contribute the most to dialogues. Their inner security gives them a methodology for dealing with the unknown and for linking it to the actions that need to be taken. They know they don’t know everything; they are actively curious, and encourage debate to bring up opposite views and set up the social ambience of learning from others. They can take risks, and relish hiring people who are smarter than themselves. So when they encounter a problem, they don’t have to whine, cast blame, or feel like victims. They know they’ll be able to fix it.

HUMILITY: The more you can contain your ego, the more realistic you are about your problems. You learn how to listen and admit that you don’t know all the answers. You exhibit the attitude that you can learn from anyone at any time. Your pride doesn’t get in the way of gathering the information you need to achieve the best results. It doesn’t keep you from sharing the credit that needs to be shared.

Humility allows you to acknowledge your mistakes. Making mistakes is inevitable, but good leaders both admit and learn from them and over time create a decision making process based on experience.

LARRY: No one does the leader’s job flawlessly, believe me. You’ve got to make mistakes and learn from them.Yankees manager Joe T orre got fired three times during his career. Now he’s looked upon as the icon of the game. He learned some things along the way.

In his book, Jack: Straight from the Gut, Jack Welch freely admits he made many hiring mistakes in his early years. He made a lot of decisions from instinct. But when he was wrong, he’d say, “It’s my fault.” He’d ask himself why he was wrong, he’d listen to other people, he’d get more data, and he’d figure it out. And he just kept getting better and better. He also recognized that it’s not useful to beat other people up when they make mistakes. To the contrary, that’s the time to coach them, encourage them, and help them regain their self-confidence.

How do you develop these qualities in yourself? There are, of course, books on the subject, some of them useful. Many companies, including GE and Citicorp, include self-assessment tools in their leadership development programs. But the ultimate learning comes from paying attention to experience. As people reflect on their experiences, or as they get coached, blockages crumble and emotional strengths develop. Sometimes the ahas also come from watching others’ behavior: your observational capabilities make you realize that you too have a blockage that you need to correct. Either way, as you gain experience in self-assessment, your insights get converted into improvements that expand your personal capacity.

Such learning is not an intellectual exercise. It requires

tenacity, persistence, and daily engagement. It requires reflection and modifying personal behavior. But my experience is that once an individual gets on this track, his or her capacity for growth is almost unlimited.

The behavior of a business’s leaders is, ultimately, the behavior of the organization. As such, it’s the foundation of the culture. In the next chapter, we present a new framework for changing the culture of an organization.