Chapter 20. Is Your Organization Driven by Dynamic Leaders?

Larraine Segil

A crisis of meaning has morphed the Western world in the first decade of the millennium. Every leader or aspiring leader is reevaluating the meaning of his or her own life and the purposes of his or her organization. Although outwardly, not much may have changed, internally, every person has been touched in some way or another by a multitude of earth-shattering events that occurred in this first decade of what some predict will be the century of the human clone, human habitation of Mars, and the complete digitization of the workplace. The events of terrorism of September 11, 2001, festering wars, and tribal battles, all of which create global effects of local terrorism; the economic challenges for Argentina; the business opportunities in China that continue to be elusive for some and explosive for others—these are just some of the events that are beginning to shape this century.

Some new leaders grew out of panic and fear; other anointed leaders failed to live up to expectations. However, in every organization, group, or community, we consistently applauded the characteristics of those quiet heroes who showed great versatility, flexibility, determination, and focus of purpose—those who promoted change.

Are you someone who wants to identify the issues that need to be changed not only in your organization, but also in the lives of those around you? Are you willing to make change happen? If so, the challenges you will encounter are real—but not insurmountable.

The problem is that most people don't want to recognize or accept change. Many organizations ignore the issues that prevent them from profitable change As such, today's manager must exhibit a special kind of leadership; he or she cannot avoid or deny the issues that are most difficult. This special kind of leadership must exist not just in the person at the top of the organization, but at all levels of management.

Over the past 10 years, my work helping clients to develop strong alliances has identified the trickle-down effect of these challenging relationships from CEOs and senior management, to middle and evolving managers, to supplier and purchasing groups, to all functions of the organization (including sales and marketing, human resources, engineering, research), and to a variety of service organizations and functions.

I began to examine what kind of special leadership could be applied to both simple and complex tasks and relationships. Based on my research into more than 250 companies, I have pinpointed the traits these change agent leaders possess—what I call "The Ten Essential Traits of a Dynamic Leader."^[1] These personal characteristics include

• Fearlessness
• Completion

• Commitment
• Inspiration
• Assuredness
• Penetration
• Intelligence
• Energy
• Integrity
• Perception

In this chapter, I focus on the intersection between commitment and alliances.

Nothing will destroy a good alliance faster than a deficiency of leadership. In alliance parlance, we call it executive sponsorship. This means that there is a senior executive in the organization who is going to put his or her reputation and power of persuasion on the line with the middle managers who are implementing the alliance. However, too often, senior executives participate in the alliance formation stage—for example, as golf partners! These are high-level discussions in which all appears possible and much is promised, but when it comes to the nitty gritty of implementation, these same senior managers and their support systems are nowhere to be seen.

Recently, I was advising the alliances group for a Fortune 500 company. A talented perceptive leader, a vice president who had been with the company for a number of years, led the team. She understood the corporate resource games that were played and had reached the end of what she could tolerate.

"Its all about commitment," she said. "Senior management gives the mandate for an alliance—and appear to be behind it. However, once the deal is done, the announcements are made, the glory moment is over, and we are giving our troops their marching orders, resources just dry up. Where is everyone when the press conference is over and the hard work begins?"

What was upsetting this executive was not the work or the alliance. Certainly alliances can be aggravating, since one cannot control the behavior of the alliance partner. However, in this case, it was not the partner that was the problem. The issue was that when this vice president looked for the support of a senior manager to provide the resources that would back up the "golf course" commitment, it was not there. This is not uncommon. The result? Two outcomes, neither of which were good for the company.

First: The Alliance Issue

The only reason to have an alliance is to achieve a result. That result has to be clearly defined by all parties. This may sound simplistic, but it is remarkable how few alliances are governed by clear, flexible, and mutually negotiated metrics. A few examples of metrics are

• Time to bring the product or service to market;
• Amount of revenues or market share increase (or not!);
• Specifics regarding capital invested by each side;
• Actual products shipped;
• Knowledge transferred—a difficult intangible to measure, but it can be done; and
• The ability to sell more to the common customer of both or all partners.

These metrics will support the definition of success for every partner. The metrics need to be changed as the parties change. For example, measuring the market opportunity means also understanding the opportunity cost of not doing the alliance. As new competitors enter the marketplace or other competitors drop out, the picture changes for all players, and the metrics mapping the costs and benefits from a relationship must be adjusted—that is, if anyone is paying attention to the strategic implications of an alliance.

This brings me to the second issue. In the example above, the disappointed vice president had given representations to the partner, as had her senior executive. As a consequence, the partner (a smaller company) was thrilled to have such a large and prestigious partner and had dedicated a high-energy team to the alliance. However, the vice president could not deliver. She did not have the senior executive's mandate to those in sales who would be held accountable for the relationship. In fact, they were not accountable. This partner had not been considered by them to be an important partner, although the customers that both partners were hoping to get more business from were significant. The problem lay at the feet, not the head, of senior management. Only the corporate alliance team had been told to go forward and make the alliance, not the sales team, who had responsibility for actually implementing it. Thus, the larger company could not deliver. The result? The smaller company became extremely frustrated, the larger company's reputation as a partner worth having was sullied, and the vice president, after many similar events in years past, left her employer and took years of contacts and expertise to its competitor.

This was a completely avoidable outcome. Had there been alignment between the verbal commitment of the executive sponsor, the allocation of resources and metrics, and the sales team that would be charged with implementing, the corporate alliances group would not have been left hanging. This happens rather too often with many groups at corporate levels.

What could have been done differently? The senior executive should have obtained buy-in and given a clear mandate to the sales group that this alliance was important, was expected to bear results, and that budgetary allocation of resources had to be dedicated to its fulfillment. His unwillingness to do that sent a clear message: This company is not serious about partnering, so "caveat, partner!"

Second: The Leadership Issue

The vice president in the example above was a fine leader. She embodied many of the personal characteristics examined in my book Dynamic Leader. What she did not have, however, were many of the organizational characteristics that would have made her successful in that company, or in any company. Without the organizational characteristics to support and reward, nurture and encourage dynamic leaders, the personal frustration level grows so high that those desirable, hirable people leave. This is exactly what happened. A competitor was willingly standing by to snatch up this valuable resource, and soon she was in a new position at a higher salary.

The lack of leadership is manifest in many acquisitions. After one false start in the integration of two large automobile companies, it looks as if the second attempt at integration is going to work.

In March 2001, DaimlerChrysler was in a mess. Jurgen Schrempp, the company's outspoken CEO, had made some unfortunate statements about Daimler's acquisition of Chrysler that caused the morale in the U.S. operations to plummet. Although many consider that an acquisition is not an alliance, I prefer to classify it as the most integrated of all alliances. In my first book on alliances,^[2] I describe in detail a management tool called "The Pyramid of Alliances."^[3] On the very top is the acquisition or merger. Since our definition of an alliance is "a business relationship for mutual benefit between two or more parties who have complementary and compatible business interests and goals," the acquisition becomes the most intimate of those business relationships. The major failure statistics of acquisitions (over 80 percent fail to give the results expected by the parties, according to my research into 250 companies in January 2001) leads to the firm conclusion that post-merger integration issues are generally poorly planned and even more poorly implemented; hence our characterization of an acquisition as a highly integrated alliance.

In the DaimlerChrysler example, Dieter Zetsche, the new CEO of the U.S. division, took immediate and aggressive action. He knew that they could no longer pretend that this was a merger of equals. Instead, he bet on honesty and went forward with the takeover. He closed down a number of plants, changed the senior management, inserted some of his own key people, and started to change the culture. He ate in the cafeteria and shared some of his own personal challenges in being away from his family. He was a man comfortable with his own convictions and with a belief in self that carried him through the tough decisions that would affect the lives of so many people. His willingness to be fearless was tempered by his ability to be "of the people." The very appointment of Herr Zetsche to his position indicated a strong commitment from corporate headquarters in Germany. They had to make this acquisition work. Two of the versatile traits of dynamic leaders were strongly in play in this example—fearlessness and completion.^[4] The organizational characteristics were there to bolster the individual efforts: a good management team, a mandate from corporate, communication to the middle managers, and although the news was difficult to accept, the moves were in the direction of saving and turning around the company. Most people would rather have a job than not, so complaining and poor morale started to diminish as the turnaround plan evolved.

Commitment

Dynamic leaders care intensely about what they do. For these leaders, commitment is about emotional vesting, perseverance, and passion. The sense of reward they derive from their accomplishments feeds more than their pocketbooks—it feeds their souls.

The word emotion is used with restraint in business, because it is often equated with weakness and instability. Emotional vesting does not mean losing emotional control. It means that the individual has strong and passionate expectations for positive results. It means working with commitment and using multiple resources, such as internal alliances. It means that the desire for success is high—and so are the rewards.

Cal James, CEO and president of Kaiser Permanente Company's Permco, was ready to retire when the opportunity came to lead the organization. He was a most unusual leader in what had been a hierarchical organization. He did away with the two administrative assistants who had worked for the CEO before him and took care of basic tasks like email himself. He asked for most communications to be on line. He sat in the back in the meetings. I presented a program on alliances for his top management team, and he was there the whole time. He set an example, not by words, but by actions. A quiet, intense, and intellectual person, he saw himself as an extension of the corporate commitment to doing good things for the community—whether it was their health, as was the mandate of the organization, or their general well being. Cal donated his weekends (bringing his family along) to community outreach for the homeless and less fortunate. His employees saw his commitment, and many of them joined him.

Commitment does not evidence itself necessarily with what a leader does only at work—it is what that person stands for as a human, as a member of a community, as well as a corporate citizen. In the first decade of the millennium, the world seems to have become a much smaller place. Wars and feuds thousands of miles from home touch the very center of all of our beings, and leadership in a company, whether domestic or global, cannot turn its attention from community and macro-events, or those same events will come to roost in our own backyards. So too, Cal James felt his involvement with community was key to his participation in a health services organization.

Similarly, Royal Dutch Shell is committed to the world in which the company operates. Shell is the largest corporate investor in multiple diverse locations worldwide. Hundreds of its executives participated in the custom-designed alliance programs that I presented at Shell USA. When I expressed my delight at the commitment to the company to Jerome Adams, then president of the Shell Learning Center, he agreed.

"Shell has always taken care of its people. This is a tradition that goes back many years to early in our history. Many of our employees are placed in difficult parts of the world, uncomfortable living conditions, to say the least, and they are committed to the company and our mission. We must take care of them. That is why you will see people with very long tenure here at Shell, it's a mutual relationship, under your definition, a real alliance!" All the companies that partner with Shell are exposed to the integrity that the company brings to those they serve, both internal and external to the organization.

Consider these insights from Nigel Newton, chairman and CEO of Bloomsbury Publishing PLC in London, England, publisher of The Harry Potter Series. "If you try too hard to improve your failure rate, you become afraid of your inbox, terrified by the proposals made by authors and their agents. You end up either having no output or a book that is so bland that no one will want to read it. Discovering J. K. Rowling has reminded me of the sheer fun of knowing long before anyone else that you have something that will change the world." Newton's commitment to unknown authors and his ability to attract and inspire entrepreneurial, risk-taking editors has meant that this independent publisher is competing successfully on a global level.

Becoming a dynamic organization like Bloomsbury Publishing is critical to motivate people to work smarter, happier, and more productively. These are the reasons everyone is searching for ways to reward, inspire, and provide opportunities for innovation.

Commitment means applying patience. George Fisher, former Chairman and CEO of Eastman Kodak, had a vision of where he wanted Kodak to go, but even he could not control the changes in the market, and adapting a large and still-political organization is like turning a destroyer on a dime. Says Joerg Agin, former president of the entertainment division of Kodak, "He knew what it takes and went through the rigors of making sure everyone in the organization was committed to making that happen. He dedicated the resources and he had the patience to wait. That was one of his most important capabilities. He had patience. He never lost sight of the end and the vision."

In my many conversations with George Fisher, it was clear to me that his commitment went much further than just turning the company around. He was committed to his employees to the extent that he delayed terminating large numbers of them until he could give them and the company the very best chance for success.

"I feel good about the fact that thousands of our employees had jobs for another two years, and that terminating them earlier would not have made the difference. Top-line growth is as critical as cutting expenses. Sometimes it is as important not to do something as it is at other times to take decisive action. I believed, some may disagree, that this was the right thing to do at the time."

A man of solid ethics, strong commitment, and well-reasoned cautious beliefs, George Fisher contributed a great deal to Kodak in his sojourn there. Yet, one of the most lasting parts of his legacy was what he left behind at Motorola where he had been Chairman and CEO: his unwavering belief in what was right and what was wrong—and actions that followed his belief system. I examine this characteristic in my book Dynamic Leader as well as in Fast Alliances: Power your E-business, which deals with the world of alliances online—integrity.

You cannot succeed in relationships with other companies or with your employees over the long term if you or your organization lacks integrity. That means you say what you are going to do and you do it. It is indeed the real meaning of trust in alliances. Since many partnering arrangements involve partners who may collaborate in one sense while competing in another, you may never totally trust a partner/competitor. However, if they say what they are going to do and they do what they said, you can have a very successful alliance with them! Look, for example, at Lotus/IBM. It partners with competitors all the time, and in order to do so effectively, it separates the partner teams from physically walking around Lotus/IBM's ordinary operations—the result is that partnering can take place with all team members knowing what they should and should not be talking about or working on and no knowledge is transferred by "walking around."

Alliances and leadership are inexorably intertwined. My research in alliances through my work at Caltech, where for the past 20 years I have presented the two-day alliances program for its executive education group, has proven that alliances require alignment with corporate goals and clarity of direction. This can happen only where leadership is established—but more importantly, where that leader and his or her team are held accountable for their actions, not their words. Further recent research into leadership issues at Caltech leads me to conclude that leadership accountability, as well as the metrics of the alliance and the resources to support it, are essential elements of both organizational and alliance success.