DOES IT MAKE SENSE TO TALK ABOUT “LEADERSHIP STYLES”?

My conversations with groups of MBA and Engineering students are proving to be a rich source of topics and reflection for me. At a recent meeting with University of California Haas Business School students, I was asked about my leadership style. I was unable to answer. This bothered me, and the more I thought about it the more I felt something was fundamentally wrong with the question itself.

I have reached a tentative conclusion: The moment we try to talk about leadership styles, we are missing the essence of what leadership is all about.

We can talk about personal styles, behavioral traits, or management styles. But when it comes to leadership, because the range of behaviors and actions we need to access and apply at any particular moment is vast, it is unlikely to fit neatly into a simple classification. Which behavior we use is a function of the nature of our team, the nature of the dialogue, and the circumstances we face in each situation.

I actually envision the leadership process as an “energy vector.” The leader injects his or her energy and “purpose” into the vector, stimulates the team to add their own energy, insures that the vector is pointing in the desired direction, and foresees some of the hurdles that the vector needs to overcome to reach its destination. I know this sounds amorphous, but that is what leadership is: a continual course adjustment as we move towards the goal, a continuous dance in the face of changing circumstances. And in the end, it is all about people, which means that the leader needs to be ultra-sensitive to human dynamics, sharply tuned into each team member’s strengths and weaknesses, strains and stresses and, in particular, anything that may be blocking them from doing their best.

It also means that leadership is not just the purview of a select few, born with all the “equipment” to lead. In fact, it is in all of us, if we could only “unbottle it.” Barry Posner and James M. Kouzes say it well in the Preface to their very well known book on leadership The Leadership Challenge (James M. Kouzes, Barry Posner, San Francisco: Jossey-Bass, 2008, xii): “What we have discovered, and re-discovered, is that leadership is not the private reserve of a few charismatic men and women. It is a process ordinary people use when they are bringing forth the best from themselves and others. When the leader in everyone is liberated extraordinary things happen.” This is exactly what I heard recently at a talk given by Sully Sullenberger, the pilot who landed the US Airways plane on the Hudson on January 15, 2009. He defined heroes as “ordinary people doing extraordinary things.” He certainly displayed leadership in that extraordinary 240 seconds from engine failure to landing.

In his book Build The Bridge As You Walk On It (San Francisco: Jossey-Bass, 2004,) Bob Quinn of the University of Michigan raises an interesting view of leadership: Quinn considers leadership to be a “state” into which a person enters (or leaves), rather than a predetermined characteristic of an individual. As circumstances demand, the individual may rise to the leadership need, the leadership occasion, tapping into a wide range of personal traits. In the process, the leader is always balancing between contrasting behaviors, his own and that of his team. Too much of the extremes can be detrimental. Thus, someone who is too visionary, without the right balancing influence, can be unquestioning, ungrounded or deluded. Someone who is too practical can be pessimistic, destructive, hopeless. It is the leader’s job to navigate these extremes and to insure all actions harmonize in pursuit of the goal.

Key to all of these views of leadership is that the leader needs to display passion, using the energy that comes with his or her convictions and commitment to sweep others into the “leadership vector.” In doing so, one of the main roles of the leader is to absorb uncertainty, balancing the different risk tolerances of the team members. As the individual with the greatest understanding of the full picture (limited as that picture may be), the leader unburdens team members from worries that will get in their way, permitting them to concentrate on applying their unique skills in the execution of their tasks. Which brings me back to the Sully Sullenberger situation… From his description of that incredible day, his team had total trust in him and he in them. What is startling is that he had met his copilot only a few days before. Granted, his reputation preceded him, yet I find it fascinating that in spite of this prior lack of personal interaction, the two individuals were totally tuned into each other. They were completely vested in the moment; the dramatic circumstance removing any barriers of ego or self-interest, which so often artificially get in the way of what we are capable of accomplishing.

THE LEADERSHIP COVENANT: DOES IT APPLY TO COMPANIES WITH HIGH TURNOVER?

Last week I had the pleasure of speaking to a group of 13 MBA students from the Ohio State University Fischer College of Business. They are on a six-week internship program at a number of Silicon Valley companies. The gathering was also attended by two well-known and successful Silicon Valley entrepreneurs and by the Director of the OSU Center for Entrepreneurship. One of the entrepreneurs asked an important question, which prompts this post.

The subject of the question relates to my concept of covenant introduced in Letter 3: “Absorbing Uncertainty: the Entrepreneurial Covenant.” The central concept of that Letter is the role the entrepreneurial leader plays in absorbing uncertainty in an organization. The leader, with the broadest understanding of the organization and its business, is expected to have the greatest capacity for absorbing uncertainty. Putting their trust in the leader permits people with valuable skills but perhaps more limited capacity for uncertainty to operate in the inherently risky environment of an entrepreneurial organization. Offloading uncertainty onto the leader frees these organization members to focus on their jobs. They are giving the leader “trust packets,” and each time the leader accepts such a “packet” a covenant is established between leader and team member — an intangible bond that becomes part of the fabric of the organization. While this concept of trust packets and covenant comes from my experience of building companies in technologically complex industries such as pharmaceuticals and energy, where innovation is an intense multi-disciplinary process often taking many years before commercial success, I have generalized it.

So, the question I was asked:

Has the nature of this covenant changed over time, as organizations have shifted from the tradition of a career with a company measured in decades to the standard more typical of today, whereby organizations have a much more fluid employment pattern?

This question applies particularly to Silicon Valley, where annual turnover of 10+% is not unusual, and where engineers and scientists move to different companies every year or two. It brings up a plethora of issues I have wondered about often: How can we build a lasting organizational culture if there is high turnover? How do you harness the energy of a team if the individuals consider themselves temporary? Does the concept of allegiance apply? How do you develop esprit de corps when each employee is more interested in accumulating a ”portfolio of stock options” than in being passionate about the company’s vision? How do you build a company identity when one-third of the personnel turns over every few years?

It seems reasonable to suggest that the special bond between the entrepreneurial leader and his or her team should be different when the individuals are only engaged for a temporary specific mission as opposed to absorbed with a long-term shared vision for a company. The argument is that the nature of the link — the fabric — is different when the employee anticipates a short association rather than an enduring career within the organization. Nevertheless, my answer to the question I was asked is unequivocal: the covenant into which the leader enters is the same regardless of the nature of the organization. Sure, there may be situations where a professional arrangement is short term from the beginning. But even then, the leader expects full dedication that transcends just the details of the transaction, and a special connection needs to be made between the leader and the individual if one expects the best out of the service. I believe this applies to external attorneys and consultants as well, although it is all the more true when we make a full-time hire. The moment I engage someone to join my organization, I am not thinking of that individual’s departure. I am thinking of how he or she can be part of my dream. I describe the concept of the company, highlighting the unique role I expect the individual to play, and enter into a relationship which, at that moment, has only one possible outcome: success. Whether a person will re-consider the decision later is something neither of us can predict at that moment. I am not hiring that person on the basis of doubt, but of positive expectation.

The important factor to realize: the covenant is about “relationship” rather than “transaction.” Of course there are transactional elements in any hiring relationship – after all, there must be clarity of roles, tasks, skills, reporting, compensation. But at a deeper level, it is about the individual getting excited about the mission of the company, putting trust in the leadership, and then diving fully into the action. That is the essence – and the fun – of being in an entrepreneurial organization. And in making this happen, the leader fills a crucial role at the “apex of a pyramid of trust,” as he or she builds this fabric of relationships – both internal and external.

I do accept that people will move on. It has happened to me often in building companies, and at times it has distressed me – especially when I put my trust in someone only to find that a “better offer” woos the individual away. It is a burden the entrepreneur must carry: we cannot expect everyone to be “grabbed” as deeply by the excitement of the dream as we are. But I still proceed as if everyone is fully in the game, even if this sometimes leads to what I call the “asymmetry of the covenant.” When I find I’ve made a mistake in hiring someone — especially a senior executive — and I ask this person to leave, I go out of my way to make it easy. I consider what effect my decision has on the person’s family and career. So, for example, I go the extra mile to give the individual time to find another position. On the other hand, so often when a senior executive is lured by “a better offer,” the notice that I am given is very short – presented with the argument that the other opportunity “needs to know immediately.” I find that to be very asymmetric, but have reconciled it as part of the leadership predicament.

When I hear of the high turnover rate in Silicon Valley I remind myself that there are many companies here and elsewhere that do have long-term employment. The extreme may be Lincoln Electric, a model we might do well to study. See for example Koller, Frank (New York: PublicAffairs, 2010) Spark: How Old-Fashioned Values Drive a Twenty-First-Century Corporation: Lessons from Lincoln Electric’s Unique Guaranteed Employment Program.

THE BOARD EXPENSE GUIDELINES PARADOX

Unquestionably, the tone of a company is set by the top leadership. In Letter 5 “The Pull of Hubris” I talk about a company’s atmosphere, the air all employees breathe. I propose that it is made up of a special kind of oxygen, an oxygen that “comes from the very top of the organization.” When this oxygen begins to be tainted (as I believe visibly happened with a number of companies a few years ago) it can affect the whole organization – often without anyone being aware of it until it is too late.

So, how appropriate is it for top executives to receive what might be considered special treatment when the company at-large is being asked to be frugal? How does one draw the line between expenses that conserve performance capacity,– such as flying first class to ensure that an executive is rested when reaching a far away city to engage in a difficult and crucial negotiation– versus the travel and entertainment policy for the rank and file that insists on the cheapest fares? A tough balance.

It is not surprising that the question arises with the Board of Directors, as well. And here I have always found myself in a conundrum. While I was CEO, I applied the principle that if I wanted to fly first class or stay at a particularly luxurious hotel I paid the difference out of my own pocket unless it applied to all my senior management for a particular situation. But for the Board, I maintained the philosophy that I was privileged to have high powered Board members serving my company, and would do everything in my power to make their time with us as comfortable – and attractive – as possible. So I insisted that our Board members fly first class, and arranged for them to stay at the best hotels. Was I irresponsible? Did I squander shareholder money?

In Footnote 31 of the book I presented my “Rule of 3” to attract a Board member:

First, get the person excited about the vision;

Second, assure them that association with my company will never tarnish their reputation (this assurance is best done by pointing to who else has agreed to serve;) and,

Third, be super-respectful of board members’ time.

I should have added a Fourth rule:

Make the Board member as comfortable as possible so as to take away any hindrance to his or her fully focused presence and engagement in your company’s affairs while they are with you.

In the same footnote 31 I talk about the imperative of getting the best of the best on your Board. A Board offers a unique opportunity to harness enormous experience – often well beyond what you can afford to hire into your company. So when the CEO draws on a Board member’s time, principally at in-person Board meetings, you want to extract all the accumulated wisdom of the individuals’ extensive business experience.

Most Board members I have attracted do not “need the job” nor are they doing it for the payment. They do it because they enjoy sharing their experience by guiding companies whose missions they value and whose management they respect. They could be doing many other things with their time, and often we are asking them to interrupt other activities, travel many hours to be with us for only a day or two, and then “work them” hard when they arrive.

My philosophy: make it a pleasure for them to come. The price is well worth it!

Do you Agree? Disagree? Am I missing something?

How to build an excellent Board of Directors

From several readers of my book it has come to my attention that not everyone reads the Notes at the end of the Book. I have included in the Notes both the references to quotes as well as some additional reflections that, while important, I did not feel contributed to the flow of my Letters. One in particular (Note 31) deals with Boards of Directors and I will reproduce it here as I think it contains some interesting guidelines for Board formation.

“Lessons to keep in mind with boards: (1) Always build a board that is bigger than you need. (2) Strongly opinionated executives with a proven track record are good to have on the board—as long as you have several, and they respect one another. Their opinions will balance and optimize the outcome. The critical factor is not their individual strengths but the composite. (3) Even the board member who at times seems most difficult and “marginal” makes a contribution at the right time. (4) Management of the board requires a strong CEO and a strong chair. Good teamwork between CEO and chair is critical. (5) Follow the key “rule of 3” to attract a board member: First, get the person excited about the vision; second, assure the candidate that association with your company will never tarnish his or her reputation (this assurance is best done by pointing to who else has agreed to serve; and third, be super-respectful of board members’ time. (6) Do not shy away from internal referrals when looking for new board members. High quality attracts high quality. The power of “interlinking” is healthy.”

Passion and meditation

Camille, thank you for your comment to my “Family Influence” post. You touch on something that has always been important to me, and I tried to include that message in the book: being a businessman is no different from any other worthy calling. To do anything right we need to have passion. A good teacher has passion. A good cleric has passion. A good entrepreneur has passion. That passion provides us with the deepest energy to persist, overcome, create, touch. And to be able to channel our passion properly we need to have a level of self-awareness, which in my case was aided by my practice of meditation. You are a dance teacher and a journalist. I have seen some of your work. It comes from a deep place within you, and that is what makes it powerful and, very importantly, enables you to reach people.

The challenge of finding close business companions

The other topic in the book discussion on April 25th was prompted by Letter 8, “The Companions in the Journey,” where I talk about the joy – and necessity – of having a close partner in the entrepreneurial adventure. Several in our discussion group pointed out how difficult it was for them to find a lasting partner. They argued that ego and the need for control got in their way time and time again (probably their own as well as potential partners.) Nevertheless, I still feel that a close relationship with someone who complements our weaknesses and shortcomings is essential for success, and that all leaders must make an effort to find those close companions on the journey. The challenge is how to indentify them, and, when we do, how to make them feel like more than just employees or “associates” but true co-drivers of the company’s future. I would love to hear what you have found works – or does not – in making this happen.

Family influence in shaping entrepreneurs

Last night I had my first Letters to a Young Entrepreneur book discussion! Several topics became the focus of the conversation. This is an intimate group of friends that have been meeting for years to discuss books, and last night’s choice was Letters. One of the participants, prompted by the “Introduction” section in my book, questioned the role of family influence in shaping entrepreneurs. For me, my father’s explicit attitude that difficulties were always viewed as challenges became a key to my approach to the vicissitudes of growing a business. One of the other participants, a very successful advertising entrepreneur, had a similar experience. Throughout her business career she remembered her father’s words: “while others stand and watch, you act.” The bumps on the road, far from causing her to slow down or even desisting, became the opportunities to do better and to get ahead. In my book I have many examples of how this attitude was important for me. In fact I consider seeing the glass half full to be a hallmark of the entrepreneur. I welcome hearing of your own experiences in this regard.

WELCOME TO A CONVERSATION about “Letters to a Young Entrepreneur”

In Letters to a Young Entrepreneur, I share some of the highlights of my entrepreneurial journey. On this website, I continue to offer reflections on my leadership experiences, and very much welcome your comments, critique and suggestions. Most importantly, I invite you to share your own experiences and insights, as well.

My hope is that through this dialogue we will all benefit from our common entrepreneurial adventure, and perhaps provide some new approaches to the challenges we all face as we embody our dreams.