March 08, 2005
Geoffrey Smart and Topgrading
This is the fourth post about presentations given by speakers at the YPO Inventing Your Future Markets event. To see other posts about this event just look for the Category "YPO Inventing Your Future Markets, March 2005" in the Categories section on the right.
This was my second encounter with Geoffrey Smart, but first a little background on him. His dad, Bradford Smart, wrote the book Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People. I don't think he invented the term "A Player" but his and Geoffrey's consulting practice have given it a lot of press. The book is worth checking out I think, because it gives a good course on interviewing that the Smart's and others that I know claim will dramatically increase your hiring success rate. Verne Harnish, author of Mastering the Rockefeller Habits, contributor to Forbes Small Business and the leader of his own very successful firm, Gazelles, is a big fan of Topgrading. Verne's a good friend who's helped me with Gold Systems, plus he has got me in front of Jim Collins not once but twice, so I tend to listen to him!
Now for my story. Near the end of the dot com boom we were trying to raise another round of VC money. We got through a lot of tough but interesting interviews, pitches and planning sessions with a local VC firm. I was feeling pretty good about it. The last step was to meet one other partner and be interviewed by Geoffrey Smart. Geoff came off as a nice guy with no tricks and a real interest in learning more about me. He put me through his "Chronological In-Depth Structured Interview" In the end Geoff recommended against me, feeling like I had not shown that I had what it would take to hire the best people. At the time I was really disappointed, but in fact he was right. It was a problem that I had been struggling with. Too many times I had hired the wrong person and then made the problem worse by waiting way too long to deal with the problem. It has taken me years to get better at this, and this particular interview and disappointment was one of the kicks in the pants that I needed to get better.
So I would still recommend that you check out Topgrading. And Geoff, if you happen to read this, I came up after your presentation to thank you but the line was too long to get to you before the next presentation. No hard feelings, and I now look back and I'm very thankful for how things worked out. I'm very happy with my current investors, and you helped me be a better leader. Thank you for your thoughtful and honest appraisal and good luck with your efforts to teach other leaders to do the same. I think we'd have a different conversation this time around.
General Charles C. Krulak, USMC (Ret)
This is the third post about presentations given by speakers at the YPO Inventing Your Future Markets event. To see other posts about this event just look for the Category "YPO Inventing Your Future Markets, March 2005" in the Categories section on the right.
General Krulak began his 35 year career in the Marines on the ground in Viet Nam. His stories about leadership under fire with people dying all around him came across as sincere from a man who seemed to care very much for his people and who had come to believe that war is a terrible thing to be avoided at almost any cost. He commented on the current war and said that it is impossible to fight ideas with guns.
He finished his career as Commandant of the Marine Corps and a member of the Joint Chiefs of Staff. In an interview where he announced his retirement, he said he was going to go surfing. Apparently that didn't last long, because he went on to be a leader at MBNA, holding several positions including Senior Vice Chairman and CEO of MBNA Europe.
He continues to draw on his military career for leadership lessons. Apparently in the Marines, a leader has control of a Tactical Area of Responsibility, or TAOR. Everything in it belongs to the leader who owns that TAOR. No matter what happens, good or bad it belongs to that leader, no excuses. I have a saying "Leaders give credit and take responsibility" and I believe the General would agree with that. He would not want to hear one of his leaders blaming a member of their team for causing the team to fail to meet an objective.
He said that "The only thing you own is your integrity and you, and you alone, can give it away. Once given away it is very hard to get it back." He defines character as selflessness, great moral courage, great integrity.
Someone in the audience asked him what his greatest failure was. He said it was having a singular, laser focus on his career early in his career to the exclusion of everything else including his family. Fortunately he says he figured that out before it was too late and he turned it around. The interesting thing is that he said that when he put more balance into his life, his career took off.
Finally he said that even in battle there is always time to think it through. Even if it causes turmoil as people around you are demanding a decision. He said that being a decisive leader has nothing to do with time.
It's impossible to know someone in such a short time, but I left the presentation feeling that General Krulak is a good man. I might disagree with some of his politics, but I believe he's a good man with good lessons to share and it was a pleasure to hear him speak.
Dipankar Chakravarti, Director of the Marketing Doctoral Program, Leeds School of Business
This is the second post about presentations given by speakers at the YPO Inventing Your Future Markets event. To see other posts about this event just look for the Category "YPO Inventing Your Future Markets, March 2005" in the Categories section on the right.
Dipankar Chakravarti is like many of the Professors at the CU Leeds School of Business. He's an experienced business person first who at some point in his career discovered his passion for teaching others and researching the problems of business in the real world. He's a Ph.D. now, but he started out as an electrical engineer and worked in a factory in India.
Like Frances Hesselbein before him, Dr. Chakravarti is a fan of Peter Drucker, and recommended two of his books specifically. They are Innovation and Entrepreneurship and Practice of Management. He also quoted Clayton Christensen several times and said that "The incumbent's road to failure is paved with good management." I know from experience that it is so hard to find the balance between "fast and loose" and "process and procedure." The problem is that "innovation undermines established resources, processes and value systems." In other words, innovation is a threat and established businesses become very good at eliminating threats of any kind.
The financial deck is also stacked against innovation because "ROI criteria breeds fear of small early numerators and large early denominators." ROI means big returns over small expenses, so a focus on ROI is going to make it harder to innovate. (Of course if the returns over expenses equation is less than one for long, it makes it hard to stay in business!)
Dr. Chakravarti says that if you are trying to innovate, the focus should not be on management or measurement.
There are three main areas where innovation can be successful.
- Simple new products or services to attract new customers that could not play before. Lower prices or new channels or new communications modes are used to get to these customers.
- Upmarket innovations to attract under served customers. Broader, more complex functions and price premiums get to these customers. Who knew that there was a group of coffee drinkers that wanted more than a cheap cup of coffee? Starbucks figured that out.
- Low-end innovations that serve previously ignored customers with simpler, more affordable offerings. Similar to number one, but this is delivering the same products as before but cheaper.
Dr. Chakravarti cautioned us to avoid a couple of typical mistakes. When you are innovating you're going after an incumbent. You might be introducing a totally new product or concept, but you are taking revenue from someone who's gotten used to getting that revenue. Competing on price with the incumbent is a bad idea unless you've found a way to create a much better margin for yourself. In a pure price war, the incumbent wins. Also you must resist the urge to malign the incumbent's image which will only provoke a predatory attack.
He suggests we look for ways to transcend industry and market boundaries to get to different elements of the buyer chain and different user groups. He suggested tying in complementary product and service offerings. In other words, expand what you're doing before going after entirely new markets.
Most people would probably say that the market loves innovation, but it doesn't. Markets resist new ideas. The market is a foe of initial adoption, but because our world is becoming highly networked, once an idea starts to take off it can spread faster than in the past because the network effects kick in.
I liked one of his quotes - "Innovation is difficult because it tries to change things."
Once again I feel like I haven't done this presentation justice. Dr. Chakravarti made great points and did it in a way that was often funny and clever. Innovation isn't easy and the market actually works against it in the early stages.
March 03, 2005
Frances Hesselbein, Girl Scouts CEO, Drucker Foundation and Presidential Medal of Freedom
The first speaker at the YPO Inventing Your Future Markets event today was Frances Hesselbein. She is the Chairman of the Leader to Leader Institute, (Formerly the Peter F. Drucker Foundation for Nonprofit Management) Yes, THAT Peter Drucker. She was CEO of the Girl Scouts from 1976 to 1990 and received the Presidential Medal of Freedom in 1998, the nation's highest civilian honor. If you think you've done a lot, read her bio and then set your sights higher. I believe that even if I had not known her accomplishments, I would have still felt like I was in the room with a great person. There was something about her that is hard to describe and I wasn't the only one to feel it.
She opened with a quote:
Be careful of your thoughts
for your thoughts become your word.
Be careful of your words
for your words become your actions.
Be careful of your actions
for your actions become your habits.
Be careful of your habits
for your habits become your character.
Be careful of your character
for your character becomes your destiny.
Her message was one of hope and our ability to make the world a better place for all people, but she quoted John W. Gardner as a caution: "This nation could die of comfortable indifference." She challenged this room full of CEOs to serve other people and to shine a light in the darkest corners. She said that Peter Drucker is "not a pessimist, but he is very sober about the future."
Ms. Hesselbein is known for flattening organizations and driving decision making down into the organization. She called it circular management and it is flat, flexible and fluid. At the Girl Scouts she did away with the typical org chart. She mentioned several times that she believes the power of language is indispensable. Regarding the org chart, if you are truly going to be flat, flexible and fluid, you can not use words like subordinate, boss, and even up or down in the organization. That doesn't mean there isn't clear accountability however, but it is more to the team than to a boss.
She quoted George Bernard Shaw as saying he wanted to be "thoroughly used up when I die." Ms. Hesselbein has had a long distinguished career, but I would bet that she accomplishes more in the next 20 years than most of us will in our entire lives.
She is very concerned, but also optimistic about the youth of the world and their future. It costs $80,000 a year to incarcerate a 16 year old boy, and we're going to pay for it one way or the other if they don't see a future. She wrapped up by quoting Peter Drucker who would say at the end of an event like this, "What are you going to do on Monday?" Her challenge was to "Do something about the education of children."
I wish my writing ability was up to the task of conveying her message. The leadertoleader.org website is a great place to go for more of her vision and some great writing on making your company and the world a better place. Her latest book is Hesselbein on Leadership and her co-author is Jim Collins, author of Built to Last and Good to Great. That Jim Collins is her co-author should tell you something about this amazing person too.