CHAPTER 1
A NEW PARADIGM: IN A WINNING
CULTURE, EVERYONE LEADS
OUTSIDE THE WORLD OF WOMEN’S collegiate soccer, Coach Anson Dorrance may not be a household name. But anyone who has even the slightest appreciation for women’s soccer—or any high-level soccer league for that matter—knows Coach Dorrance of the University of North Carolina (UNC) as a fierce competitor who has created a remarkable culture of winning. The seven-time National Coach of the Year not only has become one of the greatest collegiate soccer coaches of all time, he is also recognized as simply one of the greatest coaches ever in any sport. Period. At one point, his teams achieved a 103-game unbeaten streak. As of this writing, his teams have earned a .935 winning percentage, and thirteen different women he has coached have won a total of twenty National Player of the Year awards. And this individual achievement has translated to team achievement, as UNC’s women’s soccer teams have won twenty-one national championships (and counting). When legendary UNC men’s basketball coach Dean Smith was asked about Carolina’s preseason number one ranking in football and what it was like for a sport other than basketball to be ranked number one, he replied, “This is a women’s soccer school. We’re just trying to keep up with them.”1
Coach Dorrance creates the framework for engagement and synergy, and the athletes integrate their individual contributions into that framework. His athletes understand their respective roles. They take ownership of their individual part of the team and weave it into the overall team scheme. They quickly realize the level of commitment required for Coach Dorrance’s system, and they work daily to live up to that commitment.
Coach Dorrance clearly attracts extraordinary talent to his program. There is a legacy of winning, a culture of peak performance that acts as a magnet for top talent. But most collegiate athletic programs have amazing talent. Great short- and long-term results require more than that. They require leadership at every level. They require a common language. They require all stakeholders to have clarity around goals and top priorities. They require a system for accomplishing these goals. They require trust and loyalty among (and beyond) the team. In short, they require a winning culture. That is what Coach Dorrance has established. His results are not simply one and done. He has sustained them for more than thirty years.
While this example highlights the importance of a winning culture under a highly effective leader, the sports arena is certainly not the only place this applies. This same type of culture, where people get excited about you and your product, can happen in the department or organization you’re leading, too. You can raise your team from ordinary, good, or even great to extraordinary by focusing on how to get all team members to take ownership of their roles.
Think about what it feels like to be part of a winning team, one that achieves success again and again. You might have experienced this on the athletic fields or courts. Perhaps it was with a musical group or academic team, or even on a work assignment. Think about how engaged you felt, about your level of accountability, about how you acted toward your teammates or colleagues, about the results you achieved. MIT lecturer Peter M. Senge makes this observation about that experience in his book The Fifth Discipline:
When you ask people about what it is like being part of a great team, what is most striking is the meaningfulness of the experience. People talk about being part of something larger than themselves, of being connected, of being generative. It becomes quite clear that, for many, their experiences as part of truly great teams stand out as singular periods of life lived to the fullest. Some spend the rest of their lives looking for ways to recapture that spirit.2
After thirty years of partnering with some of the greatest organizations and leaders worldwide, we know that there are a handful of things that make them remarkable. Think of top-notch organizations you know—ones you would (and do) recommend wholeheartedly to others, sometimes passionately. Why? What makes them so unique? What causes you to feel so strongly about these organizations? In our experience, they share the most powerful, hard-to-replicate, and sustainable competitive advantage—a winning culture.
WHAT IS CULTURE?
Many definitions of culture have been advanced throughout the years, but for our purposes we will define it as the collective behavior of your people (what the majority of your people do the majority of the time); the nature of the language and relationships within the organization; and the spoken and unspoken values, norms, and systems at work therein. Winning cultures are filled with superb people who deliver as promised time after time. They give you someone and something to trust. Winning cultures are unique, deliberately designed and maintained, and rare.
A CULTURE EXPOSED WITH THE RISING TIDE
Let’s visit a culture we have been privileged to work with over the past seven years: Western Digital. Our work with Western Digital (WD) began with FranklinCovey training the WD leadership team in the principles of our book The 7 Habits of Highly Effective People. Porntip Iyimapun, our FranklinCovey partner in Thailand, met with the leadership at WD and identified that the company’s purpose in bringing us in was to create a culture with principles as the core operating system. This initial work with WD’s leadership team was followed by years of additional training by internal facilitators and champions, targeted at all levels of the organization.
CULTURE: the collective behavior of your people (what the majority of your people do the majority of the time); the nature of the language and relationships within the organization; and the spoken and unspoken values, norms, and systems at work therein.
Just as an individual’s character is tested the most when it is under pressure, an organization’s culture is exposed during times of crisis. The culture at Western Digital was tested one humid summer and early fall.
The 2011 rainy season in Thailand was the heaviest in fifty years. The flooding started in July in the north, and within two months the highly populated southern region around Bangkok was underwater, with near panic as people struggled to find high ground. Thirteen million were displaced and more than eight hundred died. It was called the fourth most expensive disaster in history.
Sue was working in Bangkok as the devastating flood approached. As she describes it, “It was so strange and unnerving to experience this always-bustling city in a ghostlike, eerily quiet, suspended state. Every day the sandbags around my hotel rose higher and higher until they were at least eight feet high. People were parking their cars on elevated expressways hoping to save them from the inevitable washing away of familiar streets and alleyways. It felt like a very bad version of the Chicken Little nursery rhyme—you knew the flood was coming, you just didn’t know when or where. The day-after-day foreboding was unbearable, as was the deep and profound sense of doom.”
By October 15, the flood had driven hundreds of thousands of workers out of the massive Bang Pa-In Industrial Park, a high-tech manufacturing center north of Bangkok. WD’s hard-disk manufacturing facility went under nearly six feet of water, devastating an operation that requires a zero-dust environment because a single speck of dirt can destroy a product. It was a calamity.
When it was all over, experts estimated that it would take a billion dollars and at least seven months of cleanup to get even part of the WD factory back on line, while much of the high-end equipment would require years to replace. Some market reports even predicted the end of the company, which would leave nearly 35,000 workers without jobs. The effects were immediate and global, as high-tech manufacturing everywhere ground to a halt without the key components from Thailand. It was called “the monsoon felt around the world.”
But Western Digital’s leaders didn’t want to take years to get back to work, so they took things into their own hands. They immediately spread the word that there would be no layoffs—they were a team and they were going to get on their feet together. The safety of their people came first; crews were organized to help the most stricken employees and their homes. On day two, they hired Thai navy crews to salvage irreplaceable equipment and get it to dry land for refurbishing.
Meanwhile, the plants of other big companies in the industrial park, with their workers laid off, lay rusting and drowning in mud. Six months after the flood, 284 factories remained closed and nearly 165,000 people were still out of work. One observer wrote, “Workers clad in ghost white stood around shuttered factories, like the idle employees of a suspended space program.”3
But at Western Digital, the work went on nonstop. The fact that everyone remained on payroll certainly made a difference, but rebuilding the business themselves came naturally to these remarkable workers. Tens of thousands, many still trying to cope with the crisis at their homes, showed up to revive their plant. Some traveled miles each day from refugee centers, often in small boats or on water oxen for hours a day, determined to show up for work.
Many found themselves doing jobs they had never done before—hard, muddy manual labor. Company leaders rolled up their sleeves and labored alongside office workers used to the comfort of a desk job. Workers who had never met before formed teams and solved problems on the spot.
The result? On November 30, only forty-six days from its closing, only fifteen days after the waters receded, Western Digital reopened the plant, and within a year it reclaimed the number one position in the market. The firm remained profitable through everything, and even managed to acquire one of its top competitors. Observers were astonished that it hadn’t taken billions of dollars and many years to recover. All it took was a superb team willing to wade through mud for each other. (A video clip at www.franklincovey.com/uca will introduce you to the Western Digital culture as the company navigated the 2011 flood.)
A CULTURE THAT SINKS WITH BAD LEADERSHIP
Let’s look at a different story of culture and the behaviors, language, and results it produces.
Jan and her sister were in the garden enjoying a cup of coffee, when her sister’s husband, Tom, joined them. As he sat down, he glanced at his smartphone: “One year, three months, two days, six hours, four minutes, and … exactly thirty seconds until I retire!”
“What are you talking about?” Jan asked. Tom was bright and able and had years of great work ahead of him, or so she thought.
“I’ve got an app on my phone that counts down to the moment I retire.”
Jan knew this must be a joke. “You’re not going to retire, Tom. With your background, your company will hire you back as a consultant—and pay you five times as much.”
“No,” Tom responded. “You don’t get it. At the last second on the countdown I can retire with all my benefits, and I’m not working for that company one second past that.”
“Why not?”
“My company used to be a great place to work,” he said. “I loved everything about it, but two years ago things really changed. We got a new boss, and he came down and told us how things were going to be from now on. Some of us had been around for a few years, so we asked, ‘Do we have any say in all this?’ I also remarked, ‘We have appreciated the loyalty we have felt from the company over the years. Should we continue to expect that?’ And he gave us this look … well, let’s just say it’s a look I’ve gotten familiar with. The new boss then said, rather curtly, ‘If you want loyalty, go get a dog.’ ”
Now, what is Tom’s true retirement date? Despite what his smartphone says, he “retired” two years ago. That is when he stopped giving his best to his work, when he ceased being fully engaged. He’s been physically on the job, he does what’s expected, but nothing more. Tom could have given fifteen or twenty more years—perhaps his finest years—but the firm that used to have his body, mind, spirit, and passion will not benefit from that contribution.
He will give his best to something else.
Could there be a stronger contrast in cultures between the ineffective company that Tom has “retired” from and the highly effective team at Western Digital?
THE CHALLENGE OF HUMAN CAPITAL
Just under a century ago, top business leaders in North America formed an organization called the Conference Board. Its purpose was to get at the truth about what makes business work, and it’s still going strong. A scientific enterprise, it’s a quiet place that collects data and dispassionately crunches it in an effort to find out what’s really going on with the economy.
For many years, the Conference Board has surveyed prominent business leaders across the globe to identify their most critical challenge. Its most recent answer might surprise you:
What does that mean? Human capital? Don’t they mean financial capital? Why are they worried about human capital? Why is that a top-of-mind issue?
In today’s world, with all its attendant challenges, moving pieces, and barrage of information, the key factor between the organizations that will sustain success and those that don’t will be the ability to engage one’s people to bring their very best. It is the ultimate competitive advantage.
From our experience, gained from the thousands of organizations that have engaged us to help them achieve results where behavioral change is required, we have found that leaders across the globe agree that engaging their talent is their top priority now. They know about the dramatic difference between a Western Digital team and the world of a person like Tom—and how that difference matters more than anything. The ultimate competitive advantage belongs to organizations that can get the best contribution possible from the best people they can find. In simple terms, it means inspiring and motivating people to bring the best they can give—to the point where they will wade through mud for each other!
It begs the question—why is there no “outbreak” of great cultures if so many are aware of both the problem and the opportunity?
Let’s explore one of the problems: The majority of working people are unengaged or actively disengaged from their work. According to the Gallup Organization, it’s 70 percent, and if you factor out leaders and managers, the number approaches 80 percent.4 That means leaders have failed to motivate and inspire nearly eight out of ten of their workers.
We’re talking about literally tens of millions of people like Tom—each one unique, one of a kind, with talent and skill and passion and great contributions to make—who are mentally and emotionally retired.
When Stephen R. Covey spoke to huge audiences around the globe, he would always ask, “How many of you honestly believe that the vast majority of the people in your organization possess more intelligence, talent, capability, creativity, and resourcefulness than their present jobs require or even allow?” In every case, nearly every hand went up.
Why is this so? Because too many business leaders don’t know how to engage people. They don’t understand that their job is to establish a framework (or operating system, which we’ll discuss in Chapter 2) that allows people to contribute their very best—consistently and compellingly. According to the survey on global CEO performance by Stanford University’s Center for Leadership Development and Research, engaging people is rated the “top weakness” of CEOs. Some leaders, like Tom’s boss, actively discourage people, but most simply don’t have the skill to lead people. After reviewing the Stanford study, Forbes Magazine concluded that “CEOs are doing a lousy job when it comes to people management.”5
Leaders know they’re not doing a good job managing their people, and it troubles them. They need to know that the job they now must do is to capture the hearts and minds of their people—to build a team like the one at Western Digital. It’s the biggest job they have, but they don’t know how to do it. And it’s not just the CEO’s problem; leaders at all levels struggle with it, particularly those who are new in their supervisory roles.
A client of ours, a top leader of a Shanghai engineering firm, opened up to us: “When I graduated from law school, I came out with the very best academic, analytical, research, and legal tools. But what I was not trained on, and what I was not prepared for on day one, was how to coach and engage my people. My first day on the job I had a boss, I had direct reports, I had peers I needed to work with; but I had absolutely no training on how to inspire them or help them to improve performance. Everything I do has to be done with other people. I have to achieve goals with other people. Everything depends on what I was never taught to do.”
What this client described is the reason there hasn’t been an outbreak of winning cultures. While culture makes all the difference, too many companies leave building their culture to chance. In speaking with thousands of leaders on this subject, we were reminded of a quote by acclaimed management expert Peter Drucker: “Culture eats strategy for breakfast, and it’s only when you fully understand what this means that you’ll lead a successful company.”
THE PEOPLE BEHIND THE ACTIVITIES
You and your people are your organization’s only sustainable competitive advantage. No matter what business you’re in, when the people quit work for the night, your competitive advantage quits, too. And the brains of a contributor like Tom can shut down any time, even in daylight. “But,” you say, “what about my brand? My secret formula? My cost structure? My international partnerships? My Super Bowl commercial? Aren’t they competitive advantages?”
Obviously, competitive advantages can come from many sources, but none of those advantages exist apart from what people actually do. Your brand, your formula, your cost structure—whatever your resources and capabilities—are all the product of people working together. If they don’t work well, your advantage is gone.
In his monumental work, Competitive Advantage, Michael Porter reasons it out this way: “Is a firm a collection of activities or a set of resources and capabilities? Clearly, a firm is both. But activities are what firms do, and they define the resources and capabilities that are relevant … Activities are observable, operational, and directly connected to cost and differentiation.”6 In other words, your competitive advantage comes from activities, and activities are the things people do.
A firm can have a unique brand, but if people don’t do the things needed to leverage it, sustain it, and live up to it, it will evaporate. A firm can have an enviable cost structure, but if your people couldn’t care less about maintaining it, the whole thing is a house of cards. The behavior of people is the ultimate source of your competitive advantage.
No matter what you think your competitive advantage is, people create it, sustain it, leverage it, and make it work. If they are as engaged as the people of Western Digital, they will pull the company out of the mud if they have to. But if they are like Tom—unexcited about the company, uncaring, indifferent, even alienated from it—your competitive advantage will disappear. If they are not giving their best efforts to your strategy, you can forget about differentiating yourself in the marketplace. If there are enough Toms in your firm—and the evidence shows there are many Toms, despite what you may think and no matter how often they smile at you as you pass—your competitive advantage is over. As Porter says, “Seeing the firm as a collection of activities makes it clear that everyone in a firm is part of strategy.”7
The sum of what everyone does every day is called “culture,” what the majority of the people do the majority of the time. It’s a reflection of a company’s collective behaviors, the language and behaviors of its people, and the spoken and unspoken values, norms, and systems that exist.
According to Harvard professor Clayton Christensen, “It is common to describe culture as the visible elements of a working environment: casual Fridays, free sodas in the cafeteria, or whether you can bring your dog to the office … Those things don’t define a culture. They’re just artifacts of it.”8 Culture is much deeper: It’s the habitual, instinctive behaviors of people that make up a culture. And those behaviors go even deeper than that: They are rooted in people’s character.
Culture is the reason a Western Digital worker wades through flood waters to get the job done. Culture is the reason a Honda line worker stops the workflow if she spots a quality problem. Culture is the reason top-rated Southwest Airlines ground crews run to meet an arriving plane. Culture is the reason why, if your purchase gets stolen from your doorstep, Amazon sends you another one—immediately and at no cost.9
But culture is also the reason a great potential contributor like Tom comes to work every day, smiles and nods, and contributes nothing.
Stephen R. Covey once said, “A high-trust culture is the only sustainable competitive advantage.” More will be said about how to establish a high-trust culture in Chapter 6, but the behaviors we have mentioned at Western Digital, Honda, Southwest, and Amazon are the behaviors of highly engaged people in a hightrust culture: It’s just what they do.
And that kind of culture doesn’t just happen. A leader’s main job is to build that kind of culture—and to model it, because the behavior of the leader determines the culture. As author Ram Charan said to us once, “The culture of any organization is simply the collective behavior of its leaders. If you want to change your culture, change the collective behavior of your leaders.”
CHANGING PARADIGMS
To gain the only sustainable competitive advantage that counts—a great culture—you need to go deep. Human behavior is the product of human character and mindset. It’s the product of paradigms—the ways people see themselves and the world around them. To change the culture, you have to change people’s paradigms.
Shawn tells this simple example of what we mean by a paradigm that drives behavior: “When my wife and I were newly married, we shared one car. She would drop me off at school in the morning before going to her job several miles in the other direction. Then she would drive back at noon to take me to my afternoon job and return to hers. At the end of the day she would circle back and we went home together. We put a lot of miles on our car that semester.
“One day I needed to be at school early and had a lot of pressing projects at work in the afternoon, so we went carefully over the schedule that morning. She agreed to be prompt picking me up at lunch. So I walked confidently to meet her in the parking area at noon—my wife was nowhere in sight. Forced to wait, I got exponentially more impatient as the minutes passed. This was before mobile phones, and I had no way of contacting her. After about an hour and fifteen minutes, she arrived and explained that she’d had to handle a crisis at work. I was left to swallow my frustration and deal with it.
“Because of the time lost that day, the next day’s schedule was especially tight and even fuller than the day before. I now had no margin for error, so when I stepped into the parking lot I knew she’d be there this time. She wasn’t—and my temperature rose. I waited and waited and waited. I worried that maybe something had happened to her. Another crisis at work? But after an hour, I determined that if nothing had happened, something would happen once she finally showed up!
“Then, after two hours and fifteen minutes of pacing and fretting and fuming—a stunning insight! I had driven the car myself that day! My wife was waiting for me! I gulped hard, trying to think of something to say to her.
“We both chuckle about it now. The point is, I had perceived the situation in a way that didn’t fit with reality; and when my paradigm suddenly shifted, my behavior shifted, too. I went from fuming and snarling to groveling and whimpering. That’s the power of a paradigm shift.”
Sue remembers when she was promoted to head the department where she had been working: “I was delighted, and my many former peers now reporting directly to me seemed delighted, too, that one of their own had been recognized. Nervous and eager to prove myself in my new role, I operated from a paradigm of control, asking that all decisions be run by me as we became comfortable with our new roles. The truth was, I really wanted all of my direct reports to do things exactly as I had done—after all, that’s what got me promoted. From their perspective, I went from understanding comrade to micromanaging control freak. They just stopped contributing. At times I felt as though they had stopped thinking, and that I needed to be at every meeting injecting energy into every conversation. It took months before I realized it was my paradigm that was creating bottlenecks everywhere. I had slowed down production, disengaged bright and competent leaders, and results were suffering.”
Paradigms drive practices. For example, if you’re part of a culture that believes in cutthroat competition, you’ll probably do anything to bring down your competitors. If, like Sue, you manage within a culture of micromanagement, you’ll stifle people and suffocate their potential. In the end, a paradigm based on a false principle will fail you. Your practices or behaviors will bring you down.
Clayton Christensen says, “A culture can be built consciously or evolve inadvertently.”10 Which do you prefer for your team or workgroup or organization? You can consciously build a culture like Western Digital, or you can let it evolve into a disengaged team of Toms.