Paul Fireman was born in Boston, and, true to his Yankee roots, he's a tell-it-like-it-is straight shooter. With an accent like that of Matt Damon's character in Good Will Hunting, he comes across as a regular guy, although with energy and enthusiasm that set him apart. Fireman is genuine, funny, and without airs; he's always ready with jokes, stories, and parables. His warmth turns passionate when he talks about sales, marketing, and entrepreneurship.

As a teenager, Fireman developed a love for golf, working as a caddy. He now owns golf courses, and according to Forbes is one of the seven hundred richest people in the world. What makes his story so unique is that he built an empire through personal entrepreneurship, turned it over to "professionals," watched it decline, regained control, and rebuilt it through empowering others—and all, as Lao Tzu said, with people feeling that they did it themselves.

In 1979, Fireman, looking for a business opportunity, went to a trade show in Chicago and met a representative from a British athletic shoemaker called Reebok. The original Reebok company handmade four hundred pairs of track and field shoes a year. Intrigued by the product, Fireman became a distributor during the height of the running craze in the United States and, thanks to his sales savvy, he could tell the company had huge potential, so he bought it out in 1984.

After Fireman bought Reebok, the company teetered on the edge of bankruptcy. Fireman obtained $75,000 from a friend and put this capital into research and development. Fireman and his team discovered that people hated (though they also accepted) that buying new running shoes meant breaking them in—suffering the blisters that came with the process. Studying the love-hate relationship runners had with their shoes, Fireman discerned an unmet and unarticulated market need. The company's response was an alternative that they called the aerobic shoe—made with soft leather, lighter, and already broken in.

As Fireman tells the story: "We went to market, and retailers were intrigued, but not quite sure it was right, so no one would be the first to buy them. We ended up taking $50,000 worth of shoes to gyms in California and began to think of deals, like two weeks free at a gym with purchase of the shoes. We also gave free shoes to gym instructors."

The gambit paid off big-time. The instructors liked the shoes, people asked about them, and within four weeks Reebok had sold out its inventory.

After an eighteen-month ad campaign, the young company had 43 percent of the market share. Every six months, their business doubled, eventually surpassing Nike's market share in 1987 and becoming the dominant force in the market. Fireman described the company at that time as "perfectly aligned, working in one fluid motion, and at 98 percent productivity—it was beautiful."

Fireman's early success was due to entrepreneurial grit, personal passion, test marketing, and slow-to-respond competitors. He was the central focus in the company, trying to manage and direct everything himself. When the company went public, the board began to worry that Fireman was in over his head, especially as the company pushed into foreign markets. In 1987, Fireman did what some other entrepreneur-CEOs were doing in the 1980s. Like Apple's Steve Jobs; Ben Cohen and Jerry Greenfield, the icecream icons; and Mitch Kapor, the founder of Lotus, Fireman turned over control of the company to "professional management." Telling the Wall Street Journal that he "needed extra support," he named Harvard MBA Joseph LaBonte as Reebok's president and head of operations. Within two years the company's growth slowed, and Nike regained the number one spot.

During the next decade, Reebok had five presidents—all "professional managers"—and the result was cultural revolt and loss of market share. Without clear leadership or a common sense of a future, in Fireman's words, "we had no future." Execution suffered. Manufacturing encountered one glitch after another—such as when the company's Indonesian factory produced thirty thousand pairs of shoes for volunteers at the Atlanta Olympics, all a half size too small. Even product design faltered, as when the company launched a running shoe named Incubus, only to discover later that the name refers to a mythical demon who has sex with women in their sleep. For a company that built its success on women's shoes, these were major setbacks.

The new reality was about execution, and that had never been Reebok's, or Fireman's, forte. Years later, Boston Magazine quoted an analyst as saying: "Fireman [had] a hundred ideas at a time, with a hundred people under him telling him that they are all brilliant. And so you [had] this company where everyone is running around in a million different directions." Morale was down. In a game where sports ruled the day, Reebok was, in the words of the same Boston Magazine article, "coming up on halftime in what may be the final contest. And to hear some people tell it, [Fireman] is down by 20 points and has lost his shooting touch."

In the late 1990s, Fireman saw only one solution to preserve Reebok's future, and he had to take action. Fireman took back total control of the day-to-day operations of the company.

At the time, Business Week asked, "Can Paul Fireman put the bounce back in Reebok?" Fireman knew the person at the top needed to epitomize the values and passion of the company. The problem confronting Reebok was, in his words, that "we ran out of oxygen with new products, had no new development, and we were bogged down with self-imposed issues. We were fighting ourselves."

Throughout his career, Fireman's style had been to take bold action, guided by his values, instinct, and salesmanship. Unlike many successful entrepreneurs, Fireman was honest enough to know he was at the limit of what he knew. He sought to provide a new kind of leadership at Reebok, to return the company to what he called its "previous purity." Fireman wanted to create the future for Reebok. As he sought something new, he contacted Steve in 1994 and was captivated with the idea that leaders empower others to rewrite the future. Fireman said, "I knew the company was going in the wrong direction. We needed help in working together, and then we could move to changing products and R&D. We needed to change our process."

In 1995, he initiated the process of rewriting the company's future. He put together a group of diverse people from throughout the company—people whom other people listened to, regardless of their level in the hierarchy. He started the first meeting of what came to be called the Long-Range Planning Group by saying, "I'm offering you the opportunity to share with me the accountability of the entire enterprise. I'm inviting you to be accountable for the way Reebok is today, and how it can be tomorrow. I'm offering you the chance to take on this accountability, and share it with me, and that includes designing the future of Reebok and enrolling others and working toward alignment."

The design of the process ultimately involved five hundred people and created a five-year future for the company. One person involved in the process remarked, "In other companies, I'd get statements of future goals, and they were just words on a paper, like things I was supposed to do. But now I own the future, as though I wrote every word of it."

This feeling was widespread. Fireman was beginning to exercise leadership that empowered others to rewrite the future. During this intense, sometimes argumentative, often inspirational process, senior management began to work together. Fireman said they "were finally on board, were more positive, and were finally leading. We were able to change the 'professional management' culture back to alignment. We reinvigorated ourselves."

Fireman's leadership brought cutting-edge product design and development into daily discussions. Fireman said, "When I took over corporate leadership we had no future. I took the process and used it to get alignment. I worked with the two most important groups—marketing and R&D."

As Fireman told us:

In 2005, seeing further consolidation in the industry and a way to compete head-to-head with Nike, Fireman led the sale of Reebok to Adidas for $3.78 billion.

The question facing people who want to provide leadership is this: how can they join the ranks of Paul Fireman, and others we've met in this book: Malcolm Burns from New Zealand Steel, Brad Mills from Lonmin, and Doug Young from Northrop Grumman?

Each of the Three Laws of Performance has a message for leaders. Each has a leadership corollary—a corollary that guides what leaders do and, more important, shapes who they are for others. Just as scientists and engineers use the laws of physics to send a rocket to the moon, leaders can use the Three Laws to elevate performance even in situations that seem impossible.

As introduced in previous chapters, the First Law of Performance is how people perform correlates to how situations occur to them. From this, we get the following leadership corollary:

Fireman's inclusion of many diverse stakeholders in creating the future of Reebok had a remarkable effect. Their view of each other, the company, and the possibilities for the future completely shifted, from a view based on resignation and cynicism to one of excitement, passion, and commitment. "Compliance" was replaced with authentic expressions of ownership and authorship for the future of the company.

Fireman told us: "A great leader inspires people to align, allows for alignment to occur. We struggled until we were aligned, over and over, until we knew who we were and what we were doing." During one of these alignment sessions, Fireman asked the group, "Standing in the future, looking back, what's missing?" The group concluded that seven projects would be needed. Five hundred people joined these seven groups, each establishing its own name, mission, measures of success, and process, as follows:

Participating in these projects was voluntary; that is, they were taken on in addition to each person's current job. Imagine how their sense of what was possible in working at Reebok must have shifted. The project names alone capture some of Reebok's spirit—competitive and fun—and show the spirit of partnership at work on the problems of execution.

Fireman notes, "Each step of the way was discovery—discovery of unmet markets, unexpressed customer needs, unresolved problems, how to build an ethical company in an industry known for unethical labor practices, and discovery of leadership—the type that would be required to serve the customers and empower the employees." People we interviewed in the company said they felt like pioneers. Even more remarkable was how people perceived their leaders, the future design process, and themselves.

Looking back, Fireman summarizes his two times at the helm of Reebok: "I feel that there were a lot of people who achieved things that they wouldn't have imagined possible in their life."

It's worth pausing and asking yourself whether you can say the same about your company, career, and life.

Most readers of this book are looking for radical elevations in performance in their organizations, going beyond fixing what's wrong or making things incrementally better. Leaders who empower others to rewrite and realize futures can transform any situation, no matter how "impossible" it may seem.

As a leader, you can't control or determine how situations occur for others, but you do have a say. Take a moment and ask these questions:

Fireman not only had something to say about how situations occurred to people, but he also tapped the power of language to make an impact. The Second Law of performance is how a situation occurs arises in language. From this, we get the second corollary:

There's a story that illustrates this corollary:

Archimedes proved that some things that occur as immovable aren't. The key to performance, as we saw in Chapter Two, lies in language. The levers and pulleys that make even impossible situations malleable live in the conversations that exist or can exist in an organization.

Consider that an organization can be viewed as a network of conversations. While we're not arguing that this assertion is a true statement, we are suggesting it is a useful perspective for leaders to take. Again, our starting point is that an organization is its network of conversations.

It's useful to think this through. Is there anything that matters that isn't done through conversations? Conversations produce innovations. Conversations are the vehicle for delivery of services. Conversations coordinate activities.

Strategic plans, maps, memos, e-mails, pictures—these are all aspects or elements of conversation. Management meetings, department meetings, board of directors meetings are nothing more than extended conversations.

In most organizations, the network of conversations is noisy, conflicted, filled up with gossip and chatter that makes new futures impossible because they project a probable and default future that people are living into.

From the perspective of the Three Laws, leadership is empowering others to rewrite the already-existing default future and to realize goals that weren't going to happen. From this definition, 100 percent of leadership happens through conversations that pull people into the game, not through sitting back and creating visions that then need to be sold. Leaders who master using future-based language have power that others don't have.

There are two elements that the conversational environment needs to include to achieve breakthrough performance. The first is an ongoing and company-wide commitment to resolving any and all incompletions, as we saw in the last chapter. The result is an organization-wide "blank space" into which a new future can be created.

When thousands of people in a company clear out their individual and collective default futures, it's not the same company anymore. Imagine if, in your organization, everyone had cleared out their issues, so that there were no old grievances at work. Imagine your personal life—your family and friends—in the same condition.

As Paul Fireman told us: "When you work with people in leadership, as manager at the top, or as an employee, there are conversations that you don't agree with. If you don't get them cleared up, they just keep surfacing until you either get chaos where good people leave, or become bureaucratic."

In our experience, Fireman is on the mark. When people's futures are filled up with decisions from the past, managers tend to produce policies, procedures, rules, and systems designed to prevent the negatives that happened before—lawsuits, strikes, employees who steal, managers who abuse the privilege of their positions—from ever happening again. Organizations become multiperson versions of the man from Tintaya, described in the last chapter.

Leaders manage, and master, the conversational environment by working with people to resolve any incompletions they have. This process moves past issues from the future to the past, creating a blank space into which the new future can be created.

Leaders also work with other people to bring group rackets into the open so they can be discussed and resolved.

When Fireman regained day-to-day control of Reebok in the 1990s, his job was to get everyone's default future cleared out, so that a new future became possible.

In addition to creating a blank space, mastering the conversation environment means implanting the second key element: integrity. As our Barbados Group colleagues Werner Erhard and Mike Jensen are fond of saying, "Without integrity, nothing works."^[6] Integrity creates a condition of workability; without integrity, effectiveness is diminished and displaced by broken promises and lack of accountability.

What is integrity? Webster's New World Dictionary defines it as "the quality or state of being complete; unbroken condition; wholeness; entirety," which we'll summarize as "whole and complete." Think of integrity not as a moral or ethical issue, but as a factor in workability. You don't want to drive over a bridge that lacks integrity—that isn't whole and complete. Doing so doesn't work, and it puts you in peril.

Leadership can't empower others to rewrite and realize new futures when the conversational environment isn't whole and complete. When people make commitments and then don't follow through, the situation is left incomplete and divided. To use one example from Reebok, what if the leaders on the "75 or Else" project committed to the goal—saving $75 million—and then ignored the project and went about their workdays as if nothing had happened? Investors would become frustrated. Employees, cynical. Such a situation doesn't promote workability.

Leaders spark and foster conversations for integrity, conversations in which:

The last bullet point often stops people. They ask, "How can integrity demand that I do even what I haven't committed to?"

There are many things you have probably never formally agreed to—not stealing money, or not creating off-balance sheet partnerships à la Enron. These may sound absurd, but consider that coauthor Dave Logan interviewed people who had been at Enron, and several said, "We never agreed to not do those things!" From the outside, such justifications seem insane, but the view from the inside is different. According to the First Law of Performance, how those situations occurred to the people involved correlated perfectly with the actions they took. Integrity didn't appear as a relevant issue to them.

Leaders constantly generate integrity by fostering conversations that make it alive and important for people.

Integrity, as we define it, is not simply keeping one's word—it is honoring one's word. What's the difference? When a person knows he won't be able to keep his word, he honors his word by making that situation known to all the people who will be affected. He deals with the consequences of not keeping his word, cleans up whatever messes have been created, and makes new promises that restore workability to the situation at hand.

What do leaders do when people don't do what they say they are going to do? Author Peter Block told us: "The rest of the team has to confront you with their disappointment. They have to let you know that you have let them down.... Maybe some covenant has been violated and so you must leave." Leaders do whatever is required to establish and maintain integrity as part of the conversational environment, starting with leading the person to restore his integrity.

We earlier defined integrity as "whole and complete." How does this definition relate to honoring one's word? Because how situations occur to people arises from language, it follows that a person occurs for herself and for others inside of the word she gives. When her relationship to her word is inauthentic, divided, and incomplete, then her relationship with herself is inauthentic, divided, and incomplete. If she wants to restore her sense of herself to one of being whole and complete, her pathway is through honoring her word.

As we mentioned earlier, having integrity is not a matter of morality or ethics. It's also not about being perfect. It's about making things work. Throughout the course of our lives, everyone—the authors of this book included—has participated in situations that lacked integrity, and each time we found that things didn't work. We took on dealing with our past breaks in integrity, from little white lies to big white lies in our relationships, to the excesses of the counterculture of the 1960s and 1970s, to gaming the system and doing what was expedient instead of what worked. As we learned these distinctions of integrity and applied them to our personal lives, clarity replaced confusion, and the opportunity to contribute to others became real. Cleaning up situations that lacked integrity was often difficult but always made an inordinate difference in workability. And the same lessons can be found over and over again in organizational life.

Integrity, then, as defined from the Three Laws, means honoring one's word, and it becomes the approach that creates workability.

Paul Fireman's mission required workability, so it's no wonder that integrity was a big part of the conversations that he sparked. One senior vice president at the time said, "Are we willing to stand by the principles [to which] we have committed? It's all good to speak of them, but what are the consequences if we don't? What will we face? We all want this—working and relating to each other—and those who are not willing or able to live within those boundaries shouldn't be here. The company has to make this commitment."

Another senior vice president added: "Our objective is to take five hundred people ... [and] work as a high-performance team and get someplace that doesn't seem possible."

Take a moment and reflect on the conversational environment in your business and life. Specifically, you might ask:

In Chapter Seven we'll return to one idea in this corollary we haven't addressed: mastery. Mastering the conversational environment requires thinking from an unfamiliar place. Although mastery is a challenging commitment, the payoff in terms of performance, and of satisfaction for everyone involved, makes it more than worthwhile.

With the environment tended to, we now turn to the essence of leadership and the corollary to the Third Law of Performance: future-based language transforms how situations occur to people.

(The Three Laws of Performance and the Three Leadership Corollaries are presented together in the Appendix.)

Ray Anderson is a leader who epitomizes this third corollary. Although he had not been exposed to the Three Laws, we see the effect he had when he rewrote the future of his company.

As founder and chairman of Interface, the world's largest maker of modular carpet, he was enjoying the success of the company he built. In 1994, one of his sales representatives handed him a book, Paul Hawken's The Ecology of Commerce. In Anderson's own words:

One needs only to see Anderson interviewed or read about him to get a sense of who he is. He used future-based language to launch the next phase of Interface, and in a real sense he became that future. Since stepping down from the CEO role, he has been on a tear, making speeches, encouraging other corporate leaders to establish a goal of zero harm to the environment.

Early in our work, we sat with our editor, Warren Bennis. In talking about the Third Law of Performance, he became quiet, as if thinking about what it meant. After a moment, he said a few words that stuck with us: "Cicero talks, and people marvel; Caesar talks, and people march." Throughout time, when leaders speak, people are moved to action. This third corollary gives us insight into how ordinary people have become remarkable leaders by becoming the essence of the future.

Leaders create conversations from the Third Law, composed of future-based language, to invent futures for the organization that didn't previously exist. However, leaders don't rewrite the future by themselves—they create the space and provide the "listening" for that future. When the future coalesces, leaders have a way of knowing it; it's like the future goes "clunk" for them, like tumblers in the combination lock to a safe. Articulating what they just experienced becomes a matter of self-expression. Because leaders are intentional about giving others a say in how the future occurs for them, often the work of rewriting the future is done through an empowered group of people. These people own the future because they are its coauthors. There is no implementation problem (a big problem for organizations). Because the group has coauthored the future, you could say this future is implemented in the very being of the coauthors themselves.

Because leaders listen for a future that inspires them, they can trust their intuition. It's that certainty—that leaders will know the future when they hear it—that gives leaders from the future a remarkably strong compass. Leaders of such organizations, like Fireman, are that future, appearing as inspiring and energetic. Their power comes not from their personalities but from the future that is their mandate, their guide, and their reason for being. Rather than trying to figure out which future will call forth committed action, they trust this experience of the pieces coming together, going "clunk" for them. This ability is what we mean when we say that "leaders listen for the future."

How exactly does this ability develop?

Leaders listen for the future in the same way a physician searches for an effective diagnosis. The doctor examines the patient, blood work, X-rays, and history of present illness and reviews all the information. Most important, the physician listens to the patient and listens for a diagnosis, which eventually goes "clunk." Likewise, the leader looks at the present situation from a number of different perspectives, taking into account such aspects as finances, products, market position, competition, culture, and aspirations of employees. If the leader has tended to the environment (especially clearing out the default future and maintaining integrity), the leader has the space to listen for a future. This is leadership that literally has everyone talking—putting forward ideas, testing them, making proposals and counterproposals. Eventually, something goes "clunk" for the leader. It's as though the future appears in that moment for her.

It's a future that goes far beyond today's best practices of casting a vision and getting buy-in. The experience is that, in the moment, people begin to live into the future. It isn't a "someday, maybe" vision, but a future that is real in the moment. It compels action, because it transforms how situations occur for people.

Throughout this book we've seen leaders who listened for the future of their organizations. Brad Mills was listening for a future at Lonmin—he didn't write it himself, but he created the space in which others could act as coauthors. Malcolm Burns did the same at New Zealand Steel. So did Paul Fireman at Reebok, and Ray Anderson at Interface.

A leader who taps into the Three Laws listens for a future that will transform everything in the present. A leader listens for a future that is not predictable, probable, linear, and was not going to happen anyway, and which compels inspired action.

Take a moment and ask yourself these questions:

Every leader we've examined in this book so far has had one thing in common: a present situation that appeared difficult, hard, even impossible. Every one sought to fix a set of problems—union relationships, finances, even vision for the company.

Instead of fixing the problems in patchwork fashion, they transformed those situations by rewriting the future. Let's look at this idea from another angle.

Imagine a play called My Life, or perhaps My Company.^[7] In this play, you are the star, and your character is well rehearsed.

Remember Shakespeare's famous metaphor in As You Like It: "All the world's a stage"? What if he wasn't speaking in metaphor? What if your life and company weren't like a play, but were a play? Life would be nothing more than scenes, characters, and conversations with other characters.

Is that really any different from life as we know it? Is there anything that matters other than scenes, characters, and conversations?

Aristotle said every play has three acts: a beginning, a middle, and an end.

The first act of the play called My Life or My Company is your past. The second act is the present. The third act is your future. Most of us are hoping for a future that contains more power, satisfaction, richness, vitality, and success than the present—a future we intend and hope to get to "someday."

Of course, we never actually get to the "someday future." That is why it is a "someday future." It's someday, but not now. We live in the present and are always only in the present.

This "someday future" is part of the third act of the play. It's not the whole of the third act, but it is a critical part. It is presented in the lines in which your character expresses your deep hopes and wishes for the future, as if desiring it hard enough will bring it about. The joke of life is that we keep running after this illusion called the "someday future," which never comes. And then we die.

If you look deeply into the third act of your play, into the part that lies behind the hope, you will see that who you are and what is possible is already written. You will see that all of the decisions that you made about yourself and your life are already there in the third act. Where did these decisions come from? From the first act of your life. How you decided to deal with life in the first act of your play is still alive and well; it lives in the third act. And even though we never really get to the third act, what's written there creates our experience of the second act.

Is there anything we can do about this seeming trap? Are we doomed to live out a second act that perfectly matches a third act that we don't want while pursing a "someday future" that never comes?

We know we can't rewrite the first act. That's already been played out.

We can't rewrite the current act—that's being played out right now. We can, though, rewrite the third act.

To rewrite the third act, we have to take several steps. First, we have to clear out of the third act everything that's already there, moving it back to the first act where it belongs. This creates an empty space into which something new can be written. In this process, the illusionary "someday future" disappears, as it existed only as part of projected hopes and fears from the past. Second, we have to build integrity into this rewriting process. To rewrite a new third act, we have to see our relationship to what we write as a matter of honoring our word.

The third act you write has to be consistent with the first act. For example, if you lost your legs in the first act of your life, you can't declare yourself to be a ballet dancer in the third act. But within that constraint of consistency, there are many possible futures—many possible third acts. What if we could write that third act not just with ourselves, but with others? Leadership is creating the environment in which people can write their third act together—a third act in which the authors can see their personal concerns, and the concerns of the others, fulfilled.

As we involve others, we listen for a future, not bound by present situations. When it goes "clunk," a new third act takes shape. It compels others, and us, as we live into it. The very nature of the second act, the act that you're currently in, transforms, from difficult or impossible to vibrant. It shifts from going through the motions to being filled with possibilities. This new third act is not a "someday future" but a future that you have in the present moment.

People who have gone through this process say your new third act lights up your life. Will this new third act ever become reality? Who knows? The real future is completely uncertain. But until the end comes (usually as a rude surprise), you will have a new kind of second act, with a compelling and invented future.

The question facing you as a leader is this: will you empower others to rewrite that future with you and, in so doing, create a new type of organization?

This new type of organization is the subject of the next chapter.