Gerstner Secrets of Leadership
Lou Gerstner became president of American Express in 1985 at the age of 43. He dismissed the speculation that his success was the product of being a workaholic. Gerstner said, “I hear that, and I can’t accept that. A workaholic can’t take vacations, and I take four weeks a year.”
As I write this, I’m in Wyoming with the family enjoying Yellowstone and Jackson Hole thinking, “Can I somehow achieve the level of impact of Lou Gerstner with the right work-life balance?” What keeps people from having to cancel vacations, modifying schedules to take budget calls, or work while the family sleeps?
From 1998-2001, Mike Lawrie, CEO of CSC (where I work today), was General Manager for IBM’s business in Europe, the Middle East and Africa. Overlapping Mike’s tenure, Lou was chairman of the board and chief executive officer of IBM from April 1993 until 2002 when he retired as CEO in March and chairman in December. You can only guess that many of the tricks that Lou used to turn around IBM, were taught to many of his executives who were paying attention, like Mike. I share some of my perspective from what I’ve, in turn, learned….some of what I believe to be “Gerstner Secrets of Leadership”.
In general (again, if you are paying attention), I’m convinced that you can learn from several generations of the most advanced leaders. I have enjoyed watching and participating in what I am now convinced is one of the most basic and yet most important components of leadership – a proper “management system“. Not sure why they don’t call it a “leadership system”….but here are some of my observations which I believe can be applied to any size enterprise.
The Wrong Management System
I first have to describe what I believe is a “typical” management system, run by “typical” leaders (or in many cases dysfunctional management systems by people who don’t lead, but simply manage).
There are many organizations which have been built based on the principal that a few people are “in the know”, while the rest of the organization is somewhat in the dark, waiting to be told what to do. In this situation, many do their job without having any appreciation or understanding of how their actions fit into the bigger picture.
The organization has no understanding of what the vision is, their exact role, and most importantly their ability to participate in being a part of the change. Those who know me, know that I prefer to lead with cultural change first, and my mantra of involving my staff in that change in an open and transparent way.
Many organizations are filled with people who manage by keeping information to themselves….thinking that either “knowledge is power” (so this is an intentional activity) or that “it’s none of your business” (somewhat less intentional). Why share what you are thinking or what you are doing with others when it’s not their job to know or, heaven forbid, have an opportunity to challenge your thinking?
Have you ever heard, “this is my responsibility, not yours….there are many other things you are not involved in – because your role is “xyz”. Let me handle this – ok.” or “There is no need to share this, that is part of the P&L that I run.”? I have heard these exact words from peers in the past. It’s a great example of the type of the behavior which is empowered within an organization that is run “hierarchically” versus one that is run “collaboratively”. I believe that this type of behaviour should and can be corrected with the right leadership…..starting with the right management system.
In many environments, a leader either intentionally or unintentionally is acting as the gateway for information. Leaders, by default, have more access to what is happening within the organization.
In a dysfunctional environment, dysfunctional leaders are a sponge for any/all information of how the business is being run…but it stops there. Information only flows in a single direction. These leaders are typically very hard to schedule time with, they are always traveling, visiting with other leaders within the business. Sound familiar?
When something important in the business happens, a member of the team will communicate it up to the leader. The leader may or may not pass on that information to others. In many cases, if they do, it’s to an “inner circle” of people in a small “clique”….those who have an immediate need for that information. Others find out through “the grapevine” later, if they are lucky. If there is no real forum for communication, a broadcast of and discussion about this information is challenging. Sound familiar?
Take a large IBM-type of organization where there are several lines of business (LOB), regions with geographic leadership, and industries with domain-specific leaders. This is a very typical matrix model for large and mature companies. So lets study a dysfunctional model a little more.
In this model, an LOB leader will take it upon themselves to engage with other LOB leaders, regional leaders, and industry leaders…depending on the need, and/or who has more political power and knowledge. These LOB leaders can speak very intelligently to their business, of course, and “manage up” very well. They educate themselves well on the aspects of the business, which they should. But it usually stops there.
In a dysfunctional organization, the rest of the organization is clueless, and is always trying to “read the minds” of their leadership, playing constant catchup. Some succeed in this type of organization by becoming part of the “inner circle” or being aggressive in their attempts to align. Efficiency is low and execution marginal. Direct reports get frustrated, many leave, and those who remain are heard saying, “I haven’t had a chance to meet about the quarterly objectives. I don’t know where he/she is…I think they are traveling to Italy, Switzerland, and then Turkey.” Sound familiar?
Don’t get me wrong. Getting out of the office and engaging the organization is good. Meeting with others in the organization and/or customers is absolutely necessary. In fact, if you’re not spending at least a third if not half of your time in front of customers, partners, industry, you’re much too “internally focused”. We use the phrases “outside in” and “inside out”.
As a leader; however, before you leave home, you have to make sure you take care of business at home first, providing your staff with the proper framework to promote communication, transparency….and in a way that creates the most high-performing team, and builds trust. A high-performing team trusts each other the same way a Navy SEAL team might trust each other when going into battle. When your team has the fundamentals in place, THEN go on your roadshows. But not until you have the right management system in place FIRST. This is where most leadership falls on its face…no matter how big or small the organization is.
Have you ever been in the position where you have new boss (a CEO in a small company, or a VP/EVP in a larger company) who spends their first nine months on the job doing an organizational assessment, devising a strategy, and then beginning the execution of their strategy….all with no formal one-to-one meetings, only a few senior team meetings where each direct report had 10 minutes to share status, a couple all-hands meetings, and maybe an annual offsite planning meeting with only two-thirds of the team? If you are reading this and saying to yourself, “So, what’s wrong with that? Seems typical to me.” You are in a great position to learn from Lou Gerstner, Mike Lawrie, Jack Shemer and the like.
The Right Management System
In my humble opinion, the Gerstner-type of organization has a management system which doesn’t allow this type of behavior to persist. So what would a high-performing, “next-gen” management system look like?
Here’s an analogy. Imagine an organization where the leader is a conductor of an orchestra. Imagine the orchestra where each musician is playing an instrument, but couldn’t hear each other…or intermittently heard each other….and they all couldn’t see the conductor from where they were sitting. The conductor might move into a line of sight to give them a quick bit of direction and then disappear. How might that sound?
Members of a high-performing team must be able to hear each other, and get regular direction from their leaders. Strong leaders enable communication and transparency and provide a system that forces collaboration between members of the team and collaboration with others outside their line of business.
In such an environment, knowledge transfer is key…NOT knowledge hoarding. Discussion and challenging each other openly and frequently is required, not forced communication through email or ad-hoc phone calls. A strong communication pattern allows the team to hold each other accountable to each other’s success, not a focus on themselves and “my P&L”.
When information enters into this system, especially important and timely information, that information travels extremely fast. Ask any member of the team and they are ALL in “the know”, not just one or some minor set of individuals. This team is high-performing and can address critical, time-sensitive issues fast. The level of trust is high, because there are no secrets. And equally as important, the team feels like they are a part of the change, impact, and a team itself. This builds a healthy culture.
When leaders don’t have a strong management system, the staff becomes dysfunctional at best.
Typical Excuses From Poor Leadership
You might have heard, “Why do we need 1to1s for our team? We have well-experienced executives and they can reach out to me when they need to discuss something important. Everyone has my cell phone and knows I’m available day, night, weekday, or weekend.”
Or maybe you’ve heard, “We can’t afford to have the senior team come together so often. Time is money. You should know what you have to focus on, and if you don’t, come and talk to me.”
“We can’t afford to have the global team together each quarter for business review and planning. We’ll do this once a year for budgeting, and can find time together during other events over the year.”
So what is the right time commitment and meeting cadence? What type of management system is appropriate? Personally, everyone who has worked directly with me over the past 15 years, has heard me say, I only need 5% of your time as a team on average. I have a very specific management system for CEO’s of startups (a role I’ve had many times, for many years).
Senior leaders of larger organizations; however, are expected to spend 20% and maybe up to 30% of their time internally focused. It becomes even more important that people have access to you, and to each other as a senior team.
From my experience, in a large IBM-like organization, I will spend 20-25% of my time in meetings which I can book a year in advance. Yes, A YEAR IN ADVANCE. That doesn’t mean that you set times in your calendar which never change (although a strong CEO will never reschedule), but you at least know what kinds of meetings and their cadence which you generally want to keep consistent (so others can plan their customer visits, vacations, etc. accordingly, and not have to cancel, rearrange, or augment).
Successful leadership starts with understanding this, and establishing the right meeting mix and cadence that drives communication and transparency.
An Example Management System
When I took over a business unit of a modest size on a Thursday, we were working as a team on our management system the following Tuesday. Why? Because I knew, without the proper structure in place, I would immediately become part of the problem….especially in a fast-moving, fast-changing organization. I knew that establishing the right amount of connective tissue among the team was the biggest gift that I could give them.
Lets study the example of an EVP that runs a Line of Business (LOB) of several thousand people with several component businesses, many geographic regions (a global company), with offerings which address multiple industries. As an EVP, you report to the CEO and are part of a larger “CEO office” with other EVPs. So how would one balance their time across their own LOB, other LOBs, regional leadership, industry leadership, and the CEO?
I believe you need to target 25% of your time on creating a meeting structure that involves the “internal team”, leaving another 75% for customers, partners, industry, your own creative/strategic time and, of course, overhead (things like eating, traveling, preparing for meetings, email). So, with several thousand people under your leadership, your LOB team of 16 executives (Operations, CTO, Strategy, Sales, Marketing, HR, Regional GMs x5, Practice GMs x4, Offerings), here’s how my management system looks after tweaking things a bit:
- Management Meeting Time: 24%
- Customer Visit Time: 33%
- Industry / Partner: 15%
- Strategic/Self Dev: 10%
- Other (Travel, OH): 18%
In this example, you have four categories of “management system” time:
- Your own LOB Senior Leadership Team
- CEO Senior Leadership Team
Here’s a deeper view into a proposed management system for those interested.
LOB Component of Your Management System
Your internal LOB meeting structure might look like (this is own your senior team):
- EVP & Senior Team 1to1s: 30 minute, monthly calls with your direct reports.
- Practice & Regional LOB 1to1s: 30 minute, biweekly calls between your practice and regional GMs (you force this to happen)
- LOB Team Mtg – Issue Resolution: 60 minute, weekly issue resolution meeting with entire senior team
- Daily Ad-Hoc Issue Resolution: 15 minute, daily standup dial-in calls (3x, not including Mondays or your team meeting days)
- All-Hands: Monthly all-LOB-hands 60 minute update call
- Quarterly Business Review / Strategy: 1Q – 3Q, 3-day offsite
- Annual Strategy / Budgeting: 4Q, 3-day offsite
Believe it or not, this is 10% of your time! Imagine how your staff would feel, if you created this level of connection/communication and at the expense of only 10% of your total time budget! Most people agree with this, EXCEPT, the daily standups (more on that later).
Regional Component of Your Management System
Lets use the example of a US-based company where the “regions” are outside of the “Americas”, and include Central & Eastern Europe, South & West Europe, UK & Ireland, ANZ, AMEA, and India (7 regions all together). Here is a proposed meeting structure:
- LOB & Regional EVP/VP Leadership 1to1s: Interlocks with regional peers spending 30 min per month per region (not incl f2f)
- LOB Regional Staff & Regional Leadership 1to1s: Your own regional GMs and their local regional leadership (EVP/VP) meet 30min biweekly (you encourage this to happen)
- Regional Staff 1to1s: Your own regional GMs and their immediate staff 30min biweekly (you encourage this)
- Regional Team Mtg – Issue Resolution: Regional GMs operate an issue-centric meeting like yours, 1 hr weekly (you encourage this)
- Quarterly Business Review / Strategy: Regions have their own QBRs (with in-region leadership)
- Annual Strategy / Budgeting: Regional-specific involving your staff
- All-Hands: Regional-specific involving your staff
In this case, you (the EVP) will not participate in all of the above. However, you’ll make sure these meetings are established. For example, if you have 1to1s with your regional GMs, but they do not have 1to1s with their local leadership, then you’re failing. It’s YOUR job to make sure the overall management system is in place.
For the EVP, this takes up 1.5% of your overall budget, not including actual face-to-face (f2f) visits to the region. However, when you take trips abroad for weeks at a time, I include this management meeting time as part of the 1to1s, customer visits, strategy, etc. You may plan to spend one week in a any given region, two regions per quarter as part of your “roadshow” calendar. However, those always involve a much broader agenda, and should not compromise the above for both you AND your team.
Industry Component of Your Management System
Engagement with industries might involve:
- LOB & Industry EVP/VP Leadership Meetings: You will want 1to1s minimally each quarter with each of your industry leaders for an hour (review your quarterly business plan highlights with them…and I don’t just mean TCV, Revenue, and OI)
- LOB & Industry Senior Teams: This is a 1/2-day as a part of the LOB QBR where you engage an industry leadership team and work them into business planning.
- Quarterly Business Review / Strategy: These are the QBRs that the Industries hold themselves (you may join)
- Annual Strategy / Budgeting: These are held by Industry leaders (who may ask you to join)
So, your Industry organizations will have their own QBRs and Annual budget planning meetings. What you want, is to steal a part of their time for your team to engage with the industries in a coordinated way. If you have 6 industries, how do you make sure that your organization touches ALL of them in a thoughtful way (ideally, you don’t want uncoordinated / random engagement with others)? I, personally, like to make sure that my team touches 2 industries per quarter as part of my QBR. Therefore, I invite last least one Industry group (or up to two) to my QBRs. That means that a 3-day QBR agenda would have 2 days of LOB/Practice+Regional content, and 1 day of Industry content. Novel huh? Forced cadence for the organization as whole. Most “leaders” don’t get this. They just leave it up to their senior team to engage the organization randomly (why not, they are well paid executives…who should be able to figure this out, right?).
For the EVP, this equates to a little over 2% of your time budget.
CEO-Office Component of Your Management System
For the EVP, plan on another 9%+ of your time budget meeting with the CEO. Meetings might involve:
- Operational Review: Going over the LOB P&L metrics
- Decision Committee: Proposing and agreeing on core changes needed across the organization
- Investment Review: Where you make your R&D investments
- Key Client Review: Agreeing on the proposed contracts for large deals
- Sales/Delivery Excellence: How to improve winning and delivering
- Deal Committee: M&A opportunities
- Alliance Review: Partnership traction/strategy
- HR Steering: Cultural/talent change
- Financial Review: Managing costs
- CEO & EVP/VP 1to1s: Real-issue discussions
You many not be involved in all of these meetings, but in a healthy organization, the cadence is strong. In a high-performing organization, the cadence is not only strong, but the dialog is hard..meaning that the CEO teases out the real issues from the team, and doesn’t just spend time talking, or asking their staff to provide status.
Your 1to1s can be the most important
As one example, lets dive into the mechanics of 1to1 meetings. First of all, this includes EVERYONE. I don’t place any less or more value on the role around the table. That means that HR and Marketing are at the table. In a dysfunctional organization, many of the “shared” functions are left out of the “strategic” meetings.
Therefore, in my example this includes Operations, CTO/RD&D, Strategy, Sales, Marketing, HR, Regional execs, Practice leads, and Offerings. In my example, this consists of 16 people and, to some, might seem unmanageable. This is a huge time commitment for just 30min every two weeks. You might hear yourself asking, “Why can’t I do this in an ad-hoc basis”?
This meeting creates the connection between you and your team in a way that is hard to value at first. I argue, that this can NOT be replaced with ad-hoc meetings over lunch, in the bathroom, in the hallway. No, this is a meeting where you talk about the topics that are important to your members, individually…and it can range quite a bit, meeting to meeting. Topics may include:
- Performance Rating / Comp (are you feeling valued?)
- Objectives for the Quarter (obstacles to accomplishing?)
- Career Goals (how to develop / invest in yourself?)
- Peer issues (problems with others in the org?)
- Company blocker / issues (things in general I can help change?)
- How can I improve?
- Tactical Items (hot topics?)
I keep copious notes on my 1to1s that I refer back to each time I have a meeting. It’s like having our own personal “psych session”. Sometimes for me, sometimes for the team, sometimes for both of us. I also make any/all conversation fall into the “cone of silence” where it never goes beyond us, unless told otherwise. These occur biweekly to once per month, depending on the size of the organization.
“Real Issue” Team Meetings
Another “pet peeve”….how to orchestrate your own team meetings. Do you simply go over quarterly status week to week? Do you ask each of your team members to spend 10 minutes, and simply provide them the “microphone” in a “stand-up” kind of way? I think this meeting time is one of the most challenging…because to get your team to “open up” with what is bothering them….what are the key obstacles in their way, is the difference between “management” and “leadership”. Read the five dysfunctions of a team, and get back to me.
Here is how I like to run my weekly senior team meetings (I call them “roundtables”).
- Good news check-in / Larger announcements or news
- Anything holding us back on our quarterly objectives?
- Discussion around “Real Issues”
- Documenting critical action items
If time permits:
- Top priorities for next week
- Customer and employee hassles not already covered
- Discussion around overall quarterly status
- Key events coming up
But the key here….is focusing the majority of the time on “Real Issues”. I, to date, have NOT seen executives focus on this…so I have to explain this a little to make a case for this meeting style.
Definition of a “Real-Issue”:
- A topic that would make your stomach linings churn, if brought up as a team
- Something that you are uncomfortable talking about (especially as a team)
- Event(s) which are affecting your staff and/or organization negatively
Why do executive meeting needs to address “real-issues”?
- Teams (companies) fail based on process (team dynamics) not content (what is actually being talked about)
- Every team “hits a wall”. Great teams work through the “real issues”.
- Every “real issue” that has the potential of “blowing the team apart” is exactly what makes it stronger.
- Reality always wins. It’s our job to get in touch with it.
- There are no secrets in teams, just dysfunctional dynamics thinking so.
Getting your team to share the “real issues” takes time, because it requires them to trust you and each other. This is a topic in of itself.
What do you think? What tricks have you learned and applied to establishing your management system?
A great reference from one of my past executive team members: Roger Neirenbereg at TEDx on “The Music Paradigm”. This is AN ABSOLUTE MUST WATCH.