Category: Leadership

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Victor Vroom: Motivation and Decision-making

Why do people make the choices they do at work, and how can managers and leaders make effective decisions? These are two essential questions for managers to understand. They were both tackled with characteristic clear-thinking and rigour by one man.

Victor Vroom

Short Biography

Victor Vroom was born in 1932 and grew up in the suburbs of Montreal. Initially, he was a bright child with little academic interest – unlike his two older brothers. Instead, his passion was big-band jazz music and, as a teenager, he dedicated up to 10 hours a day to practising Alto Sax and Clarinet.

Leaving school, but finding the move to the US as a professional musician was tricky, Vroom enrolled in college and learned, through psychometric testing, that the two areas of interest that would best suit him were music (no surprise) and psychology. Unfortunately, whilst he now enjoyed learning, his college did not teach psychology.

At the end of the year, he was able to transfer, with a full year’s credit, to McGill University, where he earned a BSc in 1953 and a Masters in Psychological Science (MPs Sc) in 1955. He then went to the US to study for his PhD at the University of Michigan. It was awarded to him in 1958.

His first research post was at the University of Michigan, from where he moved to the University of Pennsylvania in 1960 and then, in 1963, to Carnegie Mellon University. He remained there until receiving a second offer from Yale University – this time to act as Chairman of the Department of Administrative Sciences, and to set up a graduate school of organisation and management.

He has remained there for the rest of his career, as John G Searle Professor and, currently, as BearingPoint Professor Emeritus of Management & Professor of Psychology.

Vroom’s first book was Work and Motivation (1964) which introduced the first of his major contributions; his ‘Expectancy Theory’ of motivation. He also collaborated with Edward Deci to produce a review of workplace motivation, Management and Motivation, in 1970. They produced a revised edition in 1992.

His second major contribution was the ‘Vroom-Yetton model of leadership decision making’. Vroom and Philip Yetton published Leadership and Decision-Making in 1973. He later revised the model with Arthur Jago, and together, they published The New Leadership: Managing Participation in Organizations in 1988.

It is also worth mentioning that Vroom had a bruising experience while pursued through the courts by an organisation he had earlier collaborated with. They won their case for copyright infringement so I shall say no more. The judgement is available online. Vroom’s account of this, at the end of a long autobiographical essay, is an interesting read. It was written as part of his presidency of the Society for Industrial and Organizational Psychology in 1980-81.

Vroom’s Expectancy Theory of Motivation

Pocketblog has covered Vroom’s expectancy theory in an earlier blog, and it is also described in detail in The Management Models Pocketbook. It is an excellent model that deserves to be far better known than it is. Possibly the reason is because Vroom chose to express his theory as an equation: bad move! Most people are scared of equations. That’s why we at Management Pocketbooks prefer to use the metaphor of a chain. Motivation breaks down if any of the links is compromised. Take a look at our short and easy to follow article.

The Vroom-Yetton-Jago Model of Leadership Decision-making

This one is  a bit of a handful. Vroom has expressed some surprise that it became a well-adopted tool and, more recently, noted that societies and therefore management styles have changed, rendering it less relevant now than it was in its time. That said, it is instructive to understand the basics.

Decision-making is a leadership role, and (what I shall call) the V-Y-J model is a situational leadership model for what style of decision-making a leader should select.

It sets out the different degrees to which a manager or leader can involve their team in decision-making, and also the situational characteristics that would lead to a choice of each style.

Five levels of Group Involvement in Decision-making

Level 1: Authoritative A1
The leader makes their decision alone.

Level 2: Authoritative A2
The leader invites information and then makes their decision alone.

Level 3: Consultative C1
The leader invites group members to offer opinions and suggestions, and then makes their decision alone.

Level 4: Consultative C2
The leader brings the group together to hear their discussion and suggestions, and then makes their decision alone.

Level 5: Group Consensus
The leader brings the group together to discuss the issue, and then facilitates a group decision.

Choosing a Decision-Making Approach

The V-Y-J model sets out a number of considerations and research indicates that, when a decision approach is chosen that follows these considerations, leaders self-report greater levels of success than when the model is not followed. The considerations are:

  1. How important is the quality of the decision?
  2. How much information and expertise does the leader have?
  3. How well structured is the problem or question?
  4. How important is group-member acceptance of the decision?
  5. How likely is group-member acceptance of the decision?
  6. How much do group members share the organisation’s goals (against pursuing their own agendas)?
  7. How likely is the group to be able to reach a consensus?

A Personal Reflection

I have found both of Vroom’s principal models enormously helpful, both as a project leader and as a management trainer. I find it somewhat sad that, in Vroom’s own words, ‘the wrenching changes at Yale and the … lawsuit have taken their emotional and intellectual toll.’ Two major events created a huge mental and emotional distraction for Vroom in the late 1980s. At a time when he should still have been at the peak of his intellectual powers, he was diverted from his research. I think this is sad and wonder what insights we may have lost as a result.

 

Pocketbooks you might Like

The Motivation Pocketbook – has a short introduction to Vroom’s Expectancy Theory, which it refers to as ‘Valence Theory. It also has a wealth of other ideas about motivation.

The Management Models Pocketbook – has a thorough discussion of Expectancy Theory, and also Motivational Needs Theory, alongside eight other management models.

 

 

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Indra Nooyi: Flawless Execution

Indra Nooyi is neither a ‘business thinker’ nor a successful entrepreneur. She is a great example of talent and hard work combining to reach the top. As CEO of Pepsico, her leadership offers some great lessons for leaders and managers.

Indra Nooyi

Short Biography

Indra Krishnamurthy was born in Chennai (then, Madras) in southern India, in 1955 and studied Physics, Chemistry and Maths at Madras Christian College, earning her Bachelor’s degree in 1974. She then secured an MBA from the Indian Institute of Management Calcutta (now Kolkata), before working as a product manager in India for two international corporations.

In 1978, she moved to the US, to study for a Masters in Public and Private Management, at Yale. During that time, she also did an internship with leading consultancy firm Booz Allen Hamilton. When she completed her Master’s, she went to work for another consultancy, Boston Consulting Group, as a strategy consultant. She followed this by two further appointments in industry, before moving to Pepsico in 1994, as their Chief Strategist. 

With successful major projects to her name, she was promoted to President and CFO in 2001 and, when that continued, along with substantial profit growth, she emerged as the successful candidate for CEO and was appointed in 2006.

Five Business Lessons from Indra Nooyi

Nooyi’s success with the business has been won in the face of adverse market conditions. This offers us some important lessons.

1. Acknowledge Hard Truths

The first lesson is her early determination to face up to the hard truth that junk food and sugary drinks are unhealthy, yet these accounted for a large part of Pepsico’s business. Her alternative would have been to carry on regardless, and see her market fall away.

2. Embrace the Zeitgeist

Following on from this, she followed the trend of health awareness, rather than fighting it. Although the strategy has shifted again, Nooyi completely re-organised Pepsico’s business into three categories:   ‘fun for you’ (such as potato chips and regular soda), ‘better for you’ (diet or low-fat versions of snacks and sodas), and ‘good for you’ (items such as oatmeal). Now, she is embracing a new and more nuanced approach, evolving her strategy with the times.

3. Lead with your Strategy

As a former strategy consultant and Chief Strategy Officer, this may not be surprising, but it is a lesson. When she took over as CEO, sales were dropping substantially – for Pepsico and many of its competitors. She could easily have focused on stripping out costs and delivering profit for a few years and then, when all the fat was gone from the business (and much of the muscle too), she could have moved on, leaving the problem for the next CEO. But Nooyi set out a long term strategy that her board accepted. They also accepted that: ‘there will be hiccups along the way, but you have our support, so go make it happen.’ The effect on shareholder dividends has been pleasing to most.

4. Engage with Difficult Stakeholders

Pleasing to most; except, possibly to investor Nelson Peltz, who took the role of activist investor and called for a major demerger, that Nooyi rejected. She also saw it as a major distraction. But rather than fight it or ignore it, she chose to engage positively: the two sides agreed to appoint an adviser to Peltz’s Trian Partners as a ‘neutral’ nominee to the board. She was able to argue her case rationally, with a stakeholder who was now in a position to listen.

5. Demanding Standards

Finally – and Nooyi is far from the only person in our Management Thinkers series to have this characteristic – she exhibits total attention to detail and demands both flawless execution of the smallest details, along with a brutally rapid response to any shortcomings. This is especially so where the brand is at stake.

In her own words

There are some great videos of Nooyi speaking about herself and her work on the Makers website.

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John Kotter: Leadership and Change

John Kotter was a star academic from an early age and is now regarded as one of the leading thinkers, researchers and consultants on organisational change. He is equally known for his earlier work on leadership. But for Kotter, the two cannot be separated:

“Leadership produces change.”

Kotter says. And change is the function of leadership.

John Kotter

Short biography

John Kotter was born in 1947, in San Diego, California. He moved to the east coast to gain his bachelor’s degree in electrical engineering from MIT (1968), his SM in management from MIT’s Sloan School of Management (1970), and a DBA from Harvard in organisational behaviour (1972).

Kotter stayed on at Harvard, becoming a tenured professor at 33, in 1980, having already published four books. It was his 1982 book, The General Managers, and the accompanying Harvard Business Review article, that started to make his name outside of academic circles. This set out the need for a general manager to master both the competencies needed to run their business and the relationship-building skills needed to extend effective networks throughout the wider organisation.

In a series of books, Kotter established himself as adept at distilling direct observation of what happens inside an organisation, into general principles that others can learn from. Key books include:

In 2001, Kotter retired from his full time faculty role and became professor emeritus, retaining Harvard Business School’s Konosuke Matsushita Chair of Leadership, which he has held since 1990. in 1997, he published a biography of the Japanese entrepreneur who endowed the chair: ‘Matsushita: Lessons from the 20th Century’s Most Remarkable Entrepreneur‘.

Kotter’s current activity focuses around Kotter International, the consultancy he co-founded in 2008. He is reputedly one of the most in-demand and highest paid speakers on the US corporate speaking circuit, with fees allegedly starting at $75,000. You can hear a flavour of him as a speaker on his YouTube Channel.

Leadership and Management

Kotter’s observations led him to concur with Warren Bennis that there are differences between management and leadership. While managers’ roles include organising, controlling, planning and budgeting, Kotter argued, in A Force for Change, that there are three principal roles for a business leader:

  1. Setting direction for the future of their business
  2. Aligning their people to that direction
  3. Motivating and inspiring people to move in that direction

For Kotter, then, leadership is all about change. More than most of his contemporary leadership commentators, Kotter veers towards the ‘leaders are born’ end of the scale, arguing that the best exhibit traits that go beyond what they can learn: energy, intellect, drive and integrity. But he does acknowledge that experiences shape leadership, noting that diverse and tangential career opportunities help shape leaders beyond the narrow confines of management.

Leading Change

Kotter’s transformative book (and the most reprinted ever Harvard Business Review article that accompanied it: Leading Change: Why Transformation Efforts Fail) was ‘Leading Change‘. This set out to show that managing change is not enough; change needs to be led. The book is widely regarded as a classic in the business/management field and was one of Time Magazine’s 25 most influential business management titles (along with books by many of the Management Thinkers covered in this blog series).

in the article and book, Kotter sets out an 8 step process for leading change, and argues that companies fail to deliver successful transformation when they do not pursue all of the steps, in the sequence, with sufficient attention. These steps embody much earlier thinking – in them, we can see the shadow of Kurt Lewin’s Freeze Phases, for example. What makes them particularly valuable is the clarity with which Kotter sets out the tasks leaders face, and the illustrative examples he gives.

In 2002, he co-authored Heart of Change with Deloitte Consulting’s Dan Cohen, in which they focus on case studies to illustrate this further. I have a strong memory of Cohen presenting at a US conference I attended towards the end of my time with Deloitte. The clarity of this approach rang out for me.

To further clarify, Kotter then co-authored Our Iceberg is Melting with Holger Rathgeber. This book turned the whole 8-step process into an allegorical tale of a penguin who becomes aware of global warming and needs to influence change among his compatriots. Would that more climate campaigners could learn some of these lessons. I guess this book was targeted at the market that made Spencer Johnson’s ‘Who Moved my Cheese?‘ (another Time top 25 book) such a huge success. Whilst Cheese focuses on the personal effects of change, Iceberg teaches how to lead change.

The Eight Steps

  1. Establish a sense of urgency
  2. Create a guiding coalition
  3. Develop a vision and strategy
  4. Communicate the change vision
  5. Empower employees for broad-based action
  6. Generate short-term wins
  7. Consolidate gains and produce more change
  8. Anchor new approaches in the culture

Accelerate

2010’s book ‘Buy-In‘ set out to help leaders make their case, but it was Kotter’s latest, 2014 book, ‘Accelerate‘ that has moved his thinking forward. Yes, Kotter International uses slightly new terminology around the 8 steps, but the main change that Accelerate introduced was a greater sense of urgency to the process, the consequent need for concurrency of the steps, and a determination that complex organisations need to introduce elements of a more agile, entrepreneurial approach.

The comparison of the older and more recent approach is this:

Leading Change’s original 8-Step Process

  • Lead change in a rigid, sequential process
  • Create a small, powerful core group to drive change
  • Function within a traditional hierarchy
  • Focus on doing one new thing very well and then move onto the next thing

Accelerate’s new thinking

  • Run the eight steps concurrently and continuously
  • Form a large cohort of volunteers  from throughout all levels and divisions of the organization to drive the change
  • Create a network of change agents that can act in an entrepreneurial way, outside the traditional hierarchy, to respond in a more flexible, agile way
  • Constantly look for opportunities, and set up initiatives to capitalise on them rapidly

Kotter has stayed at the forefront of thinking about organisational leadership. He now argues that constant disruption from turbulent market shifts is the biggest challenge business leaders face. And agility is the skill they need. Perhaps not surprisingly, his HBR article ‘Accelerate!’ is another of their most widely requested reprints.

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James MacGregor Burns: Transforming Leadership

I first became aware of the ideas of James MacGregor Burns in the late 1990s, and they literally transformed my understanding of Leadership. I am not alone: an earlier generation reading Burns’ 1978 book Leadership was likewise affected. His academic rigour, effortless prose and new approach led directly to the massive growth in leadership courses in business schools, first in the US, and then globally.

James MacGregor Burns

Short Biography

James MacGregor Burns was born in 1918, in Melrose, Massachusetts and grew up in Burlington. He graduated from Williams College in 1939 and went to Washington DC as a congressional intern. During America’s Second World War, he served in the pacific campaign, and documented soldiers’ stories. He was also decorated several times.

After the war, he gained his masters degree and PhD in Government from Harvard, before returning to Williams College to teach. He remained there for his whole career.

Burns was a prolific author, first coming to prominence as author of an influential biography of FD Roosevelt, The Lion and the Fox, in 1956. He was to follow this with a second volume in 1970, Roosevelt: The Soldier of Freedom, which won him a Pulitzer Prize the following year. He also engaged in politics directly, standing as a Democrat candidate for Congress in 1958. This is how he came to know JF Kennedy; a relationship which led to his 1960 biography, John Kennedy: A Political Profile.

Politics interested Burns deeply. His first book, Congress on Trial: The Legislative Process and the Administrative State (1949), was widely praised. However, through that medium, he became interested in the nature of leadership. He argued that it was poorly understood and needed to be studied. More than that, he said, we need to educate ourselves to become better leaders.

It was as an historian and political biographer that he first approached the topic of leadership, but his accomplishment was to develop unifying ideas about leadership that were equally valuable in the social and political arena, and in the business and managerial arena. His 1978 book, Leadership, is regarded as a classic and triggered much subsequent research, thinking, and writing.

This is so much so, that the University of Maryland renamed its Academy of Leadership after him and there is an endowed professorial Chair in his name at Harvard (Barbara Kellerman is currently the James MacGregor Burns Lecturer in Public Leadership). Of his subsequent writing on leadership (of which there is much), 2003’s Transforming Leadership: A New Pursuit of Happiness is, perhaps, the most important. My copy has an exceptionally high ‘post-it count’ meaning I have found much in it of value.

Burns continued working into his 90s. His last book, Fire and Light: How the Enlightenment Transformed Our World, was released in 2013, just a year before his death in July 2014.

Burns on Leadership

Without a doubt, Burns’ main contribution to thinking on leadership was to distinguish two patterns of leadership: transactional and transforming. This distinction is an empirical one, based on his observations. By setting it out clearly, he spurred a generation of researchers to develop the concept of what he called transforming leadership, but which has come to be better known as transformational leadership.

Transactional Leadership

This creates a relationship between leaders and their followers, based on reciprocity – the exchange of support or action by the followers for rewards like recognition, praise, ratings, pay, or status. This kind of leadership works when both sides feel they are getting a fair deal from the other. Much business and managerial leadership takes this form. So too does the run-of-the-mill political leadership, where, in democracies, politicians exchange promises for votes, and in more autocratic systems, these promises and favours are exchanged for support of the powerful and acquiescence of the masses.

Transformational Leadership

This relationship is founded on a drive in the leader to create change. Burns identified two primary sources of that drive: a lust for power, or a sense of vision or values. I suggest our perception of this difference often reflects our sympathy for the vision. Burns assesses Hitler as driven by power, but he may have argued it was a vision.

Setting aside factional arguments, transformational leaders establish their leadership by building trust with their followers that means the transactions can be more one sided: followers act or support the leader through loyalty, rather than exchange. To do this, the leader must engage both the rational and emotional concerns of their followers – hearts and minds. This allows them to link up power bases from many sources, to strengthen their cause.

Burns saw transformational leaders as using their leadership to*:

  1. establish their long-term vision
  2. empower their followers and hand over to them a measure of control
  3. coach and develop their followers to transform their capabilities
  4. challenge the prevailing culture, to catalyse change

Commentators often mis-characterise the distinction as being about change: transformational leaders create change, while transactional leaders work within the status quo. This is not how Burns saw things – certainly not by the new century when he wrote Transforming Leadership. The difference is the type of change. Transactional change substitutes parts, whilst transformational change is a wholesale change at a fundamental, structural level. It is also driven by values, rather than by pragmatism.

Perhaps the most astonishing conclusion that Burns drew was that transformational leadership will have a transforming effect on both the leader and the followers. Done properly, each will raise the others to higher levels of motivation and moral (within the compass of the leader’s vision) action.

This leads to The Burns Paradox: “If leadership and followership are so intertwined and fluid, how do we distinguish conceptually between leaders and followers?”**

The resolution that Burns offers is that we need to start to take a more subtle and complex systems view: leadership creates change, but in the right circumstances, the concepts of leader and follower melt away. Forget the current anti-capitalist overtones. This sounds very much like self-governing, collective-responsibility principle of pure anarchism to me. And I like it.

*  This list was echoed by Bernard Bass who, more than anyone, developed Burns’ ideas on transformational leadership. He was to articulate some important differences (like the possibility for co-existence of transformational and transactional leadership in one leader). He set out four roles for transformational leadership:

  1. Inspirational motivation
  2. Idealised influence
  3. Individualised consideration
  4. Intellectual stimulation

** Transforming Leadership, chapter 10.

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Sheryl Sandberg: Lean In

300th Post

Women are not on top.  Yet.

By far the majority of the top roles in politics, not-for-profit and corporate life are shared among fifty per cent of the population, and that cannot be good for society. One of the women who has achieved a leading role in business is Sheryl Sandberg, and her book and movement, Lean In, are an attempt to prompt, stimulate and support the change we need.

Sheryl Sandberg

Short Biography

Sheryl Sandberg was born in 1969, in Washington DC, but her family moved to Florida when she was an infant, so she grew up in North Miami Beach. A strong performer at school, she went to Harvard in 1987, graduating with a BA in economics, in 1991, as the top student in her year. While at Harvard, she co-founded Women in Economics and Government.

After a short stint working at the World Bank, Sandberg returned to Harvard to take an MBA, which she was awarded in 1995. After a year with management consultants McKinsey and Company, Sandberg returned to the public sector in 1996, as Chief of Staff to the US Secretary of the Treasury.

Her big move came in 2001, when she was appointed VP of Global Online Sales and Operations at Google – the year it received its patent for Larry Page’s PageRank mechanism and just a year after Google first started selling advertising.

During her tenure at Google, Sandberg first met Mark Zuckerberg who quickly became convinced she would make an excellent Chief Operating Officer for Facebook, which he had founded in 2004. Over the next year, they got to know one another better and he made her a job offer in 2008. She negotiated hard and came to work for Facebook. Her main brief at the outset was to make Facebook profitable, which she achieved in 2010. In 2012, the Board of Directors invited her to join the Board.

During the years from 2010, Sandberg became an increasingly prominent public figure, advocating compellingly for more women leaders in all walks of life. Her 2010 TED talk, ‘Why we have too few women leaders’, has been watched over five million times – you can see it at the bottom of this post. In 2013, Sandberg released her first book, ‘Lean In: Women, Work, and the Will to Lead‘, which she co-authored with Nell Scovell. It focuses on the reasons why so few women (proportionally) reach leadership positions in business, and some of the things that need to change, to redress the balance. It has been hugely successful, selling well over a million copies.

Magazines and newspapers like Time, Fortune, Forbes, The Wall Street Journal and The Financial Times repeatedly place Sandberg high in their top lists of powerful and influential people.

What is Lean In about?

The core thesis that Sandberg puts in Lean In is that, whether you are a woman or a man who cares about genuine equality, complaining and making excuses won’t get you to where you want to be. There are barriers to women achieving their leadership goals and we need to address them… as a society and as individuals.

These barriers clearly start with systematic and individual cases of sexism and discrimination, and the realities of harassment that women face at work. Sandberg recounts Frank Flynn’s Howard / Heidi experiment. In this, he took a case study about successful entrepreneur, Heidi Roizen. He gave the unaltered case study to half of a student group, while the other half received the identical case study with just a change of name to Howard Roizen, and changes to pronouns. He asked the students to rate their impressions of Roizen and students were much harsher in their assessments of Heidi than of Howard. They rated her as equally competent and effective but they did not like her and, crucially, they would not hire her, or even want to work with her. There is an in-built bias that we have, that women who are assertive are aggressive and we extend that to dislike of them.

The second big barrier that Sandberg acknowledges is the real desire many women have to put a lot of their energy into their home life and she concludes that the solution is not for women to value this aspect of their lives less, but for their male partners to contribute to it more.

Finally, and most controversially with some commentators, is an implicit acceptance by women of discriminatory stereotypes of women. This, she argues, leads women to have lower confidence in themselves – with higher incidence of ‘imposter syndrome’, and therefore to set lower expectations for themselves. Men are far more adept at faking capabilities they don’t have and benefit systematically from more promotion based on expectation than women receive. Women need far more to demonstrate achievements before being promoted.

Sandberg says we need to break down the societal barriers and women who choose to, need to address their personal barriers and strive for leadership roles. She acknowledges that her message will be easier to act on for women with the privileges of education, wealth and status, but points out that any progress will increase the prominence of women, make their leadership more common and therefore ‘normal’, and add their voices to public debate. This can only open up greater opportunities for the many women lacking the advantages that she herself had, early in her life.

Why we have too few women leaders

Sheryl Sandberg looks at why a smaller percentage of women than men reach the top of their professions — and offers 3 powerful pieces of advice to women aiming for the C-suite.

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Sandberg’s talks about her experience of speaking at TED and her book Lean In with journalist Pat Mitchell, in So we leaned in … now what?

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Also on the board of the Lean In organisation Sheryl Sandberg co-founded with Rachel Thomas, Debi Hemmeter, and Gina Bianchini, was her husband Dave Goldberg. He died far too young, in May 2015. Ms Sandberg’s public expressions of her grief have been dignified and thought-provoking. We can do nothing more than offer our genuine condolences for a loss that must still be raw.

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Warren Buffett: Oracle of Omaha

At the start of every year, many thousands (possibly millions, globally) of people look forward to some New Year reading, from the richest writer in the world. Don’t rack your brains for a best-selling multi-billionnaire novelist though: the writer is Warren Buffett, the Oracle of Omaha*.

Warren Buffett

Short Biography

Warren Buffett was born in 1930, in Omaha, Nebraska. By the age of six, he was trading in soft drinks and dreaming of becoming rich. When he was 12, his father won a seat in Congress and the family moved to Washington DC, where Buffett took on five paper rounds a day and earned the equivalent of a full time wage. He saved his money and, at 14 invested it in farmland in Nebraska, which he then rented out.

His academic career started at 17, at Wharton, but he quickly left, in search of a more practical and less theoretical education. He found it at Columbia Business School, where one of the leading thinkers in investing, Ben Graham, lectured. Graham’s ideas had a profound effect on Buffett’s investment strategies from then until now, focusing as they did on underlying value in all of its aspects.

Let’s skip lightly over the stellar performance of Buffett Partnership, Ltd – his stock investment business that managed other people’s funds, which ran from the mid 1950s to 1969. He closed it down to focus on investing through Berkshire Hathaway. At first it was a textile business that Buffett acquired in 1965.  It eventually closed all its mills in 1985, but by then it was the core of a diverse portfolio of businesses. Its shareholders profit from massive stock performance that frequently outstrips industry averages by a wide margin, generated by Buffett’s choice of outright acquisitions and stock purchases.

Once a year, at the start of the year, Buffett writes a long letter to his shareholders. It explains carefully Buffett’s assessment of the year past and the future of the business. It combines folksy humour, wry metaphor, and deep insight. It is widely read not just by investors and analysts, for whom it is a professional interest, but by folk like me, who see it as a fascinating exercise in communication, combined with a source of interesting insight.

What can we learn from Warren Buffett?

There are very many websites and articles purporting to extract lessons from one of the world’s most successful and penetrating business minds. What a surprise! But I am determined to add another, because I won’t be thinking about investing; that’s not my thing. Instead, I am going to focus on what I think day-to-day managers and business leaders can learn about doing your job well.

Keep it Simple

Buffett likes investing in simple businesses that he can fully understand. As a manager, keep it simple and don’t take on something you don’t understand. So, if you need to take on something you don’t understand, then make it your urgent business to understand it.

Character / Integrity / Reputation

They all amount to the same thing. Buffett puts an astronomical premium on these. As well as his annual letter, Buffett issues a biennial memo to the CEOs of the businesses Berkshire Hathaway owns, his ‘all stars’. These are not published but frequently leak onto the web. Here are two extracts from the most recent (December 2014), which clearly makes his point.

The top priority — trumping everything else, including profits — is that all of us continue to guard Berkshire’s reputation… As I’ve said in these memos for more than 25 years: “We can afford to lose money — even a lot of money. But we can’t afford to lose reputation — even a shred of reputation.”

Sometimes your associates will say “Everybody else is doing it.” This rationale is almost always a bad one if it is the main justification for a business action. It is totally unacceptable when evaluating a moral decision.

Select for leadership on track record, and then trust your leader

This is Buffett’s approach and it applies to any manager who appoints supervisors, or any leader who appoints managers. Experience matters – look for evidence. When you get the right person, trust them enough to give them the autonomy that will allow them to add to your leadership, rather than be subordinate to it.

Merit is all that matters

This one is simple: Buffett rejects all judgements based on gender, race, or age. So too should you. The person that has the skills and energy to excel in a role is the person for the job.

Rational decisions

Trust the numbers too. Do everything you can to understand the nature of cognitive bias. Study the facts and work hard to eliminate any other influence over your choices. You will get things wrong, just as Buffett has done on many occasions. But each time he does, he analyses it and discusses it in clear objective tones without a trace of blame for anything other than his failings in judgement. He takes away the lessons and uses them.

Trends not Headlines

Buffett rejects knee-jerk reactions to headlines and focuses on the big picture underneath them. When he is ready he makes decisions rapidly, but he won’t be hustled.

The only memo to his all stars that is on the Berkshire Hathaway website is also the most astonishing piece of business communication I have seen. Two things strike me as remarkable. The steadying calm and confidence with which it is written, and the remarkable strength that a business would need to have for its CEO to be able to say the things he does. It is a short note, so to reproduce anything valuable from it would doubtless be morally a breach of copyright even if it stayed on the right side of the law, so do have a look at it. The context may be obvious when I tell you the memo was issued on 26 September, 2001. The message from Warren Buffett is on the Berkshire Hathaway site.

Read Voraciously

Warren Buffett and his business partner, Berkshire Hathaway Vice-Chairman Charlie Munger, both set aside large chunks of their working day to read. They read all sorts of stuff and the breadth and depth of their reading gives them both profound understanding and a wide context. This commitment to learning is what you need if you are to grow in wisdom and make sound decisions more often.

Obsess over detail

There isn’t much to say about this but to note that the big picture is all very well and an appealing target for leaders’ attention, but the details are often where the differences get made. The skill, of course, is to figure out which details (see paragraph above for the best technique).

Delegate everything that is not strategic

In Buffett’s case, deciding how to invest Berkshire Hathaway’s assets is the strategic role he fills. Everything else – and in particular the operation of the Berkshire Hathaway businesses, he delegates completely. While he makes himself available to his All Stars for a conversation 24 hours a day if they need it, he does not require them to communicate with him more than once every two years. At that time, each is required to put one name in a sealed envelope and send it to him. This name is that of the most suitable successor, should the business CEO be suddenly unable to fulfil their role.

Right, that’s me done, I’m off to do the ironing. ‘Delegate it’ you say. ‘Indeed’, says my wife!

 

* Although Buffett is also known as the Sage of Omaha and the Wizard of Omaha, Oracle is the term he himself favours.

 

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Jamie Oliver: Chef Businessman

There are many celebrity chefs, and many of them operate successful businesses, so choosing one to feature as one of our management thinkers is tough. But British chef, Jamie Oliver, more than fits the bill. For nearly twenty years, he has maintained the love of the public in the UK, avoiding mis-steps as he took his celebrity career to the US, retains fierce loyalty of people who have worked for and with him, and continues to grow his businesses steadily, whilst contributing significantly to some major philanthropic initiatives, many of which he has led.

Jamie Oliver

Short Biography

Jamie Oliver was born in Essex in the UK, in 1975. He grew up in Cambridge, where his parents ran and continue to run a pub. It was in their kitchen that he first learned the skills of cooking, which developed at catering college and started to take wings when Oliver spent time in France, learning the basics of classical cuisine.

Returning to England, he worked for renowned UK-based Italian chef Antonio Carluccio, where he met long-time friend and cooking mentor, Gennaro Contaldo. From there, he moved to a role as sous chef at Fulham’s River Cafe, where he appeared, unscripted, in a one-off 1997 documentary about the restaurant, and caught the eye of numerous TV producers. After five offers, he signed a deal that led directly to two series of The Naked Chef; a title that reflected his ideas of simplicity in cooking, rather than an alternative to traditional chefs’ whites.

This kicked off a hugely successful TV and recipe book career that continues today, with the addition of massively profitable mobile apps and his own YouTube channels with nearly 2 million subscribers between them. Perhaps his most notable television endeavours are:

  • The 2002 Jamie’s Kitchen,in which he took fifteen seemingly unemployable young people and trained them to be chefs in a restaurant, Fifteen, that subsequently won awards. The model has been replicated in several places and continues to train new cohorts of apprentices under the aegis of the charitable Jamie Oliver Food Foundation
  • The 2002 Jamie’s School Dinners which saw him campaigning for better food in Britain’s schools. This has led to other public health campaigns in the UK, US and Australia. In 2013, Oliver was made Honorary fellow of the Royal College of General Practitioners in recognition of his food health campaigning
  • The same year also saw the first of many culinary travelogue programmes – a format that is particularly popular in the UK. This one took him to Italy and a cuisine he seems particularly attached to
  • Other food campaigns include Atlantic fish stocks, pig farming and poultry

But hey, this is the Management Pocketblog!

Reading about Jamie Oliver’s business nous, it is hard to select a shortlist of admirable management lessons that we can learn from him. These range from the obvious, like seizing opportunities that arise, assessing choices shrewdly, and trading on an endearing personality, to those which are hard for most of us to generalise to our own practice, like keeping a large proportion of your business interests within your family and network of close and trusted friends and colleagues. One might also have added, until recently, maintain a large share of the equity in your business (I believe Oliver owns around 80% in total of his many businesses at time of writing). However, in early June 2015, the press started to report that he is trying to raise significant equity capital to fund a major global expansion of some of his restaurant brands.

So what to focus on?

Jamie Oliver is a public personality, but he has used his charm and charisma shrewdly. He has avoided all manner of scandals that attach to celebrities (including other British celebrity chefs) and seems by all accounts to be a genuinely nice and decent chap, who inspires great loyalty. Many of his close business advisors and staff have been with him from very early on, and many people rush to praise him in the press. On the other hand, there seem to be very few public feuds. This has allowed Oliver to take his personality as the basis for all of his brands, many of which have his name attached to them: most recently, Jamie Oliver’s Food Tube – his primary YouTube Channel.

What are the elements of his personality-based leadership and management approach that can be emulated, if you put the work into them? I think there are five:

  1. Care
    Care passionately about what you do, whether it is your core business, your campaigns, or your appearances in public. And don’t be afraid to let your enthusiasm engulf those around you. This is charisma. And care also about the people around you. This attitude of Oliver’s has clearly rubbed off on many of the people who give interviews and quotes about him.
  2. Inspire
    Set out a vision that you truly believe in with a passion and you can engage people to follow you. Choose your fights wisely, but do be prepared to take on a big fight, if it is important enough to commit everything. You may lose, but Oliver shows that dedication and passion can mean that a catering college educated son of publicans, with little academic background can do better than win the ear of Prime Ministers, he can create an environment where senior politicians can barely afford not to take him seriously.
  3. Work Hard
    Without a doubt, Oliver works hard. His is not a glitzy celebrity without substance. He puts in the hours and models what he expects his followers to emulate. He doesn’t tell, he shows. He doesn’t enforce standards, he sets them for himself.
  4. Learn
    At every stage, Oliver has learned from his experience and grown with that learning. This is wisdom: to become more than you were yesterday, to learn from your mistakes, to shift your approach, and to come back again and again. He has made very commercial misjudgements, but when he has done, he has acted decisively, rather than hesitating, and moved on.
  5. Have Fun
    It is hardly possible to imagine Jamie Oliver without a smile. Even in the serious portrait shot at the head of this blog, he seems to me to be about to smirk. His sense of fun is a big part of his personality and his brand, but more than that, I suspect it is a major resource for him, in maintaining his resilience.

The Power of Food

Jamie Oliver being serious, passionate, and provocative about the impact of food on health: Teach every child about food.

[ted id=765]

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Rosabeth Moss Kanter: Change Master

Rosabeth Moss Kanter is one of the foremost academics working in the management arena. Her academic CV is second to none, and it is the sophistication of her insights and the depth of her research that have earned her the huge respect she has garnered. But hers are not merely incremental ideas – her work has charted some of the biggest issues facing organisations from the 1970s to today.

Rosabeth Moss Kanter

 Short Biography

Rosabeth Moss was born in 1943 and grew up in Cleveland, Ohio. She was educated at the elite Bryn Mawr College, where she studied English and Sociology, where she also met her first husband, Stuart Kanter.  She graduated in 1964 and went on to earn an MA and PhD in Sociology, at the University of Michigan.

Following her PhD, Moss Kanter’s first academic appointment was at Brandeis University, as Assistant Professor of Sociology. She stayed there until 1977, during which time her first husband died and she married Barry Stein, with whom she later (1977) founded a management consultancy, called Goodmeasure Inc, to sell her consulting services to many of the largest US corporations.

1977 was a key year for Moss Kanter. She also moved to become a Professor of Sociology and Professor of Organisational Management at Yale, where she remained until 1986, when she moved to Harvard Business School as a Professor of Business Administration. From 1979 to 1986, she was also a Visiting Professor at the Sloane School of Management at MIT.

The centrality of 1977, however, is because it was the year that saw the publication of the first of Moss Kanter’s books – and one that made a huge impact. It was lauded in its own right and has been seen, in retrospect, as the first of a triptych of connected and hugely important works. We will look at them below.

As well as being an academic and consultant, Moss Kanter has a slew of prestigious awards,and is also notable as the last academic to edit the Harvard Business Review (1989-92) and as an advisor to presidential candidate Michael Dukakis.

But it is the breadth and depth of Moss Kanter’s work we need to focus on. And there is so much of note that we need to get started right away.

Moss Kanter’s Big-three Works

1977 saw the publication of a revolutionary book; ‘Men and Women of the Corporation‘. It analyses the distribution of power within a large US corporation and how white men dominated, leaving women and ethnic minorities disempowered. Her research demonstrated that it was not the behaviours of women and minorities that created this power gap, but the very system within which they worked, and the structures of power and opportunity. At the time, this was a revolutionary insight. Moss Kanter showed the importance of creating change to empower everyone.

With the great pressures for change that she identified, we can see a logical progression in Moss Kanter’s next book, 1983’s ‘The Change Masters: Corporate Entrepreneurs at Work‘. Shockingly, this astonishingly good and important book is out of print; to me, it is her most important. It describes how some companies and some individuals master the process of change through integrating and innovating, moving right to the edge of their capabilities, and benchmarking themselves against their aspirations, rather than against the status quo in their market place.  She refers to ‘New Entrepreneurs’; change masters within a business that radically improve it, rather than leaving and starting afresh somewhere else. They transform vision into reality. Once again, the concept of empowerment features strongly, as does the need for joined up networks of communication, and decentralisation of resources.

The third book in the triptych looks at the changes US corporations needed to make to remain competitive in the global environment of the 1980s and 90s. Published in 1989, ‘When Giants Learn to Dance‘ likens the global economy to a sporting competition. What struck me was her articulation of seven skills that characterise the most successful ‘business athletes’;

  1. ability to get results without authority, through influence alone
  2. competing positively, through co-operation, rather than negatively through aggression
  3. maintaining the highest ethical standards
  4. self confidence tempered by humility
  5. an understanding of the importance of process for getting things done
  6. relationship building, across functions, departments, and organisations
  7. achievement focus – what McClelland would describe as a high nAch

More Recent Work

It is only space, not a critique on the works themselves, that prevents me from detailing Moss Kanter’s works, from 1992’s ‘The Challenge of Organizational Change‘ to ‘Move: Putting America’s Infrastructure Back in the Lead‘, published a few months before this blog, in spring of 2015. Along the way, there have been:

A Summary of Moss Kanter’s Themes

Rosabeth Moss Kanter is notable as an academic of business, but her approach has always remained a staunchly sociological one. Her focus on empowerment has followed closely on that of previous thinkers in humanistic management and particularly echoes the work of Mary Parker Follett, whom she admires greatly. Like Follett, she takes a very much integrative attitude, valuing holistic management structures, rather than segmented corporations. This is a theme that comes out strongly in both Change Masters and Giants. She describes these as characteristics of a ‘post-entrepreneurial firm’, where innovation is the principle benefit of combining the the strength of a large organisation with the agility of a small one.

Her writing is characterised by three admirable characteristics that are often not found together: subtle and complex ideas, detailed research evidence, and a highly readable writing style.

The Advanced Leadership Initiative

I want to end with a short reference to Harvard University’s Advanced Leadership Initiative, which Moss Kanter leads, as Chair and Director. It aims to prepare ‘a leadership force of experienced leaders who can address challenging national and global problems in their next stage of life’. These are men and women who, after their primary income-earning years, want to contribute to community and public service for their next years of life, using the skills they already have, to make an impact on significant social problems, in health, welfare, children, and the environment. I know little more about it than this, but what a wonderful initiative. A kind of lower-key version of The Elders, I guess.

 

 

Moss Kanter talks about leadership as being about leading positive change in this 17 minute TED talk, ‘Six keys to leading positive change‘.

And more…

There is a good selection of short videos and articles by Rosabeth Moss Kanter, on some of her latest thinking, on the Big Think website.

 

 

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Kim Cameron: Positive Deviance

Positive Psychology is an important component of modern workplace thinking and has become a powerful force in organisational thinking with its off-shoot, ‘Positive Organisational Scholarship’. At the forefront of this rapidly developing field is Kim Cameron.

Kim Cameron

 

Short Biography

Kim S Cameron was born in 1946 and earned his bachelors and masters degrees in sociology and social psychology at Brigham Young University in 1970 and 71. He went on to take higher degrees in Administrative Sciences at Yale, gaining an MA in 1976 and his PhD in 1978.

From there he held a number of academic posts, at the Universities of Wisconsin, Colorado, Brigham Young, and Case Western, before taking his current dual post as Professor in both the School of Education and the Ross School of Business at the University of Michigan in 2001.

There, he co-founded the Center for Positive Organizational Scholarship; now the Center for Positive Organizations. This is the hub of Cameron’s research on Positive Organizational Scholarship, with a mission to help design high-performing organisations that bring out the best in people.

There was clearly a sea-change in Cameron’s thinking in the run-up to this. Between 1980 and 1988, he co-wrote five books on management and organisations, followed by a gap of 15 years, before ‘Positive Organizational Scholarship: Foundations of a New Discipline‘ came out, co-edited with Jane Dutton and Robert Quinn. This is a collation of 23 scholarly papers that set about defining the discipline. This is brought up to date by the mammoth Oxford Handbook of Positive Organizational Scholarship, which Cameron co-edited for publication in 2012.

What is Positive Organizational Scholarship?

Positive Organizational Scholarship (or POS) is a synthesis of many strands of research and thinking:

  • the organisational process that produces extraordinary outcomes (‘Positive Deviance’)
  • Organisational Design (OD)
  • Leadership
  • Positive Psychology
  • Creativity
  • Appreciative Inquiry (AI)
  • Citizenship behaviours and community psychology
  • Ethics and prosocial behaviour

Together, these things examine how to harness and develop human strengths in an organisational setting. At the core is the idea of ‘positive deviance’ and it advocates a focus on noticing, celebrating, and institutionalising behaviours, attitudes and processes that lead to extra-ordinary positive results. This is in contrast to a lot of organisational behaviours that currently focus around under-performance and finding corrective procedures.

This more familiar approach can certainly bring a poor organisation up to a baseline adequate standard of performance. POS suggests that to achieve excellence, organisations and their leaders and managers need to switch to an ‘affirmative bias’ and start to endorse the best, rather than critique the poor performances.

Culture Change

Back in 1988, Cameron co-authored Paradox and Transformation: Toward a Theory of Change in Organization and Management with Robert Quinn, but it was Making the Impossible Possible: Leading Extraordinary Performance – the Rocky Flats Story that caught my attention (having been recommended it by project management blogger Positive Deviance.

This book searches out lessons to learn from the spectacular transformation of the project to clean up a highly contaminated nuclear site at Rocky Flats, Colorado. In the book, the authors, Cameron and his PhD student, Marc Levine, assert that a huge transformation in performance was generated by simultaneously pursuing four conflicting strategies.

They use the ‘Competing Values Framework’ developed by Cameron’s long-time collaborator, Robert Quinn. This suggests that organisations have a prevailing culture dictated by their values, along two dimensions of:

  1. Either: efficient internal processes or competitive external positioning
  2. Either: flexibility and adaptability or stability and incrementalism

The four cultures that result are oriented towards prevailing behaviours:

  • Clan Culture – internal/flexible – oriented towards collaboration
  • Adhocracy – external/flexible – oriented towards creation
  • Market culture – external/stable – oriented towards competing
  • Hierarchy – internal/stable – oriented towards control

The positive deviance that led to the phenomenal objective success* of the project was ascribed by Cameron and Levine to building an environment that equally valued all four elements of culture, and therefore demonstrated collaboration, creativity, competition, and control at the same time.

 

* Closure and decontamination of the facility was forecast to take 70 years and cost $36 billion. Out-turn cost was $6 billion, and the project was complete in 10 years

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Barbara Kellerman: Leadership Triangle

From the 1970s to the present day, the study of leadership has mushroomed. And one of the foremost academic researchers is Barbara Kellerman, who first became interested in dominance and power at a young age, but discovered a dearth of literature on the subject. Since the mid-1970s, she has been a prolific contributor to that literature.

Barbara Kellerman

Short Biography

Barbara Kellerman took her BA at Sarah Lawrence College, graduating in 1969 and moved to Yale for postgraduate studies, first for an MA in Russian and East European studies, and then for an MPhil and PhD in Political Science, which she earned in 1975.

She stayed in the academic, taking up the study of leadership, with posts at Fordham, Tufts, Fairleigh Dickinson, George Washington, Maryland, and Uppsala Universities. In 1998, she was one of the founders of The International Leadership Association, a membership organisation that brings together people with practical and academic interests in leadership.

In 2000, Kellerman founded the Harvard Kennedy School’s Centre for Public Leadership, which she led until 2003, before stepping down to become its Research Director. Since 2006, she has been the James MacGregor Burns Lecturer in Public Leadership at the John F. Kennedy School of Government, Harvard University, and is also a a visiting scholar and professor at several other institutions, including The Tuck School of Business, and New York University.

Barbara Kellerman on Leadership

Kellerman has researched and written extensively on leadership, putting forward many challenging and compelling ideas. Her 2012 book, The End of Leadership, takes on the ‘leadership industry’, challenging it to really critique the results it achieves.

Kellerman takes a very ‘liberal arts’ view of leadership and is a strong advocate of a great books approach of reading widely and eclectically about leadership from leaders and commentators. Her book Leadership: Essential Selections on Power, Authority, and Influence provides her selection of readings and commentaries.

Her eclectic and innovative approach is nicely illustrated by her book Bad Leadership: What It Is, How It Happens, Why It Matters. It is an unusual approach to study the characteristics and problems of poor leadership – but instructive. Kellerman is foremost a teacher about leadership, rather than a teacher of leadership.

… and Followership

Another narrative in The End of Leadership picks up from her earlier work and emphasises the role of followership and how the balance of power between leaders and the people they would lead has shifted. Her work on followers is every bit as important as that on leaders, and in many ways far more innovative: compare the volume of literature on each!

In Followership: How Followers Are Creating Change and Changing Leaders, Kellerman discusses the essential role of followers and classifies them into five types, depending upon their level of engagement:

  1. Isolates
    These followers blend into the background and fail (or refuse) to engage. They do nothing to support changes and so entrench the status quo.
  2. Bystanders
    Like Isolates, Bystanders refuse to participate, but unlike them, they do, at least, maintain an awareness of events. They are often the silent majority who also contribute to maintaining the status quo.
  3. Participants
    These followers get involved in either supporting or opposing their leaders, and so are important stakeholders to further engage. This is particularly so, because their motivations are led by their own agenda, rather than those of their leader.
  4. Activists
    These followers do not just get involved; they take a lead in pursuing their agenda. They are often highly motivated and energetic, with strong convictions and a desire to lead for themselves. Where they support a leader, they become powerful allies, able to lead parts of a change autonomously.
  5. Diehards
    The strongest emotions lie with diehards, who are prepared to do whatever it takes to support or overthrow their leader. They are rare, but can be fanatical, giving them a significant importance.

The Leadership Triangle

In The End of Leadership, Kellerman describes leadership as an equilateral triangle, with three equal sides:

  1. the Leader
  2. the Followers
  3. the Context

The context represents all of the other stakeholders, the culture, the environment, the technological and process resources and constraints and anything else the leader and followers must interact with. Vitally, Kellerman argues that context changes and therefore leadership and followership must necessarily change too, in response. The impact of changes in technology and shifts in world politics are causing ideas of leadership to evolve continuously.

This is what fascinates Kellerman, and her books and writing are always thoughtful. Her latest book, Hard Times, examines the challenging context of today’s United States, looking at how that context is shifting to create new norms and expectations.

Barbara Kellerman describing her work

From the Leadership Industry

The Leadership Pocketbook

 

 

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