BE OBSTINATELY UNCOMPROMISING. BE THE BAD, GREAT LEADER!

A brick-wall of a leader, a hard-line character, one who is inexorable and believes in little practical approach to setting targets is not a real contender for being voted a 'great' leader. Who is? He who is willing to compromise on his decisions, adjusts to situations, is kind to his followers, pays heed to (rather, respects) in-house warning and critics outside, and in the real sense, fits into the ‘participative’ or ‘delegative’ jacket – one that Kurt Lewin made famous in 1939. So you think. Good morning. World War II is long over. And the world of capitalism has undergone a sea change. Truth is – an uncompromising, bad leader of yesterday, is a great leader today. Call him the bad, great leader!

Born in Brazil to Lebanese parents, this individual didn’t know a word in Japanese when he was given the charge of rescuing one of Japan’s biggest auto companies. For him, the Japanese tradition-bound environment was wilderness. “The company wanted results, but it didn’t want change. Every idea I had was resisted. The Japanese people would propose something else to avoid my decisions,” he once said. From his schooling days at Beirut, he was known to be a person addicted to have matters his way. He did just that at the company. He closed down factories in a country where they are considered a religious place. He fired people in a culture that encouraged lifelong employment. He altered the hierarchical structure which till then was built on the oldest guy being promoted first. "Every single thing went against their values. It was a complete clash with the culture. I had a lot of criticism,” he recalls. Discussing his attitude, a 2012 McKinsey paper states: "He rewired the company’s culture. Sceptics pronounced his efforts doomed.” When he took over, the company had lost money for seven years. He fixed the bleed and got the company into the black in just a year. Today, the company is Japan’s fourth largest company (with $119.2 billion in revenues in FY2011), bigger even than Honda Motors, and well on track to capture 10% of the world’s auto market by 2016. Call him the straight-faced Carlos Ghosn, CEO of Japan’s Nissan Motors. “Leaders of tomorrow are going to have to be incredibly secure and sure of themselves,” says he. He was inflexible. Many at Nissan hated him for that. But today, he has become a comic book hero in Japan – and he still doesn't know fluent Japanese!

Another automaker, another CEO. When he joined the company in September 2006, it was drenched in losses and labour issues, losing $1,400 per vehicle sold. He was totally new to the world of cars. But, he was resultoriented. Then, the company was known to be a maker of gas-guzzling pick-up trucks. He did everything that would have made the company’s founder roll in his grave. The CEO forced his company’s R&D team to line up fuel-efficient hatchbacks, even went ahead to pledge the company’s assets and sell its iconic brands. On his first day at office, he questioned his engineers where the Taurus brand had disappeared. “We killed it. We made a couple that looked like a football. They didn’t sell very well,” answered one. Imagine the CEO's reply: “What do you mean, you killed it? You’ve got until tomorrow to find a vehicle to put the Taurus name on because that’s why I’m here!” He had no proof to substantiate his demand. But he wasn’t to change his decision. He’s a shame to the clan of 'kind, compromising' leadership preaching monks. Even today, he forces his decisions on his employees, only because he believes he is right. Today, every employee in the company’s America office walks around with a card that has goals printed on one side. When quizzed on why the compulsory badge, he said, “I wrote it. It’s what I believe in.” When he walked in, the company was in a mess. In two years leading to FY2008, it lost $27.5 billion. In the next three years, it earned $29.5 billion! And its m-cap is up by 220% since he walked into Ford. The unbending leader? Alan Mulally.

A decade and half back, he was the biggest symbol of failure in America. Today, he is adored. In the early days of his stint as CEO at the company, he realised that a certain supplier wasn’t doing quick work with spare parts supply. He demanded speed. The shipper refused saying that it did not have to! He was referring to a contract that the company had signed with the supplier. What did the metal-headed leader do? He broke the contract, despite his purchase manager warning him that this would invite a lawsuit. The CEO’s response: “Just tell them if they fu@# with us, they’ll never get another fu@#in’ dime from this company, ever.” A legal notice did arrive. But his decision stayed and a new supplier was hired! “I can push my employees further than they thought possible, and I won’t rush any product out the door without it being perfect,” said the CEO. You might have heard of how a CEO once fired an employee because she entered the wrong elevator and was asked about her job description which didn’t amuse him. It was him – Steve Jobs. And for you dear reader, if you feel that being single-minded and so inflexible earns no love from employees, jump off. Jobs called his employees “sh!theads” when they didn’t live up to his expectations. But they loved him. One employee who worked in the Mac development team while explaining about how Jobs would abuse anyone who compromised on what he believed was the right thing said, “I consider myself the absolute luckiest person in the world to have worked with him.”

Sometimes, being resolute means being illogical with setting targets for your team, displeasing your employees, firing a handful, altering culture, disappointing your customers, terrorising your shareholders et al. But when you read on the how great CEOs managed successful turnarounds like IBM’s Sam Palmisano, Continental Airlines’ Gordon Bethune, Ericsson’s Carl-Henric Svanberg, Sprint’s Dan Hesse, Marvel’s Peter Cuneo, Merck’s Richard Clark, you sense one common flavour. That these stars believed in what they thought was the right medicine for cure – being uncompromising. All of them fired employees, cut down supply, forced changes on products that they thought best and didn't bend in to demands of insiders or outsiders.

Decide, and don’t compromise on your decisions or demands. You didn’t become the CEO because the board & shareholders assumed your thoughts were wrong. And that is true for leading a start-up, a company in trouble or a well-established firm to growth. Be obstinately uncompromising!

MOTIVATION 3.0: THE “810 SQUARE-FOOT FENCE” TRICK

A unt Polly’s 810 square-foot fence – does it ring a bell? With the glaring exception of only a few, most would not even come half-a-century close to considering a certain section of Mark Twain’s work (The Adventures of Tom Sawyer) worthy of an award for proving a “strategic guide” for CEOs who desire to understand some truth behind “employee motivation”. That may be a strange choice of literary work, but actually, Tom played the real CEO – a leader who made a work that seemed “hollow” and “a burden”, appear to be a “fantastic privilege” to his friends (call them “employees” if you will). In the end, CEO Tom not only ended up delivering some high-quality whitewashing strokes on Aunt Polly’s fence, but did that several times over! A quick lesson for leaders – for tasks to be completed, have your employees not feel obliged to complete them. This is Motivation 3.0.

Why Motivation 3.0? The Sawyer effect got work done with no real material benefit to the workers. This runs contrary to the old-school ‘Motivation 2.0’ theory that taught how monetary incentives made an employee work more efficiently and with greater sincerity. Truth of modern day capitalism is that nothing makes an institution outperform rivals and create newer benchmarks than a batch of “intrinsically motivated” employees. 

In the early 2000s, if you were given an option to choose a successful encyclopedia model a decade down the line, which one of the following would you choose: Project #1 – to be funded by the $20 billion-plus-a-year topline earning Microsoft, which would motivate professional writers (managed by highly-paid managers) to contribute by doling out handsome sums to them, or, Project #2 -  an online encyclopedia created by mostly unqualified individuals, who would be paid nothing and supervised by none? Project #1, would be the obvious intelligent choice. Right? Welcome to 2012. Project #1, which was born out of “extrinsic motivation” called the MSN Encarta has been discontinued. Project #2, is called Wikipedia! As of date, the “non-monetised, controversially-error-laden and unprofessionally edited” encyclopedia, has 20-plus million articles, contributed by 31 million-plus "unpaid hobbyists” who are registered users worldwide. A model of success in the modern world, unlike the Encarta, whose fortune was destroyed because it hinged its hopes on the materially motivated contributors.

In the fall of 2003, X, a certain mobile operating system (OS) maker had captured 88% of the global smartphone market. The developers of the OS were highly-paid, localised engineers, while the company that ran the OS was proud of the fact that in those days, its OS was the only one that ran exclusively on ARM processors. The company even had a batch of “chosen, comprehensively-supported” 3rd party app developers. That year saw the birth of an OS platform, Y, developed by the Open Handset Alliance. That basically meant that the product was created  by thousands of “unpaid” app-developers. For them, it wasn’t the dollars per app that was of value. It was intrinsic motivation. Today, X’s market share has fallen to 16.9% (source: Gartner, Nov 2011) and the handset maker which patronised it for years together, dumped it in favour of Windows Mobile 7 in late 2011. Y on the other hand has grown to capture 52.5% of the global market. X is of course the bug-laden Symbian OS. Any guess what Y is? 

Linux – which today powers 25% of all corporate servers, Firefox – which has more than 150 million users, Apache web server – which controls 52% of the corporate server market, and many more, are more examples of how “non-monetary” motivation of employees can lead to bestselling products in the modern world. In a paper by MIT Professor K. Lakhani and BCG’s Bob Wolf, titled, “Understanding Motivation and Effort in Free/Open Source Software Projects”, they prove that, “Academic theorising on individual motivations has posited that extrinsic benefits are the main drivers of efforts. We find, in contrast that, intrinsic motivation is the strongest and the most pervasive driver.”

So how should CEOs proceed to make sure their employees are intrinsically motivated? First and foremost – get rid of extrinsic motivators. Verbal rewards work best. Academic studies prove this fact. One behavioural study by Profs. Cameron, Banko & Pierce of the University of Alberta, titled, “Pervasive Negative Effects of Rewards on Intrinsic Motivation” proves that, “On high-interest tasks, verbal rewards produce positive effects on free-choice motivation and self-reported task interest. Negative effects are found when the rewards are tangible, expected.” Studies by Frederick & Ryan, Deci & Ryan, Nikos, Hodgins & Rath and many more during the past two decades, have proven how intrinsic motivational factors not only encourage the employees to work longer hours, but also deliver greater levels of satisfaction and competency, when compared to extrinsic motivational factors that only bring about a higher level of anxiety and reduce their self-esteem.

Some would note though that public companies, do dole out volumes of stock options to employees across the board. But this cannot be taken as an excuse to encourage loosely-linked bonuses, for this abovementioned practice is only meant to ensure a greater share price appreciation for the real owners of a public company – the shareholders. Also, for sales teams, extrinsic motivation is considered important. But if a CEO continues to be 100% pro-extrinsic and 0% pro-intrinsic, what you will have left behind are non-loyal employees, willing to jump ship any hour given an extra dollar in bonus. 

Tom Sawyer was created 136 years back. But his relevance to today’s CEOs & leaders on how to motivate their employees stays. Master the “810 square-foot fence” trick and you have a world-beater of a loyal team, willing to work with you for more than just that extra dime! It’s worth the effort, I say.

A SUCCESSFUL ENTREPRENEUR 'ALWAYS' STARTS WITH A GREAT 'FIRST' IDEA – THAT’S HOGWASH!

Failures test an entrepreneur’s character. So do poor ideas. Interestingly, some of the best visionary corporations that continue to thrive today, actually began with a big dash of poor ideas. This is a lesson for those willing to ride the entrepreneurial bandwagon – you don’t really need an E=MC2 formula every time to start a venture that bears the potential to become a world-beating business corporation. To begin the dream is most necessary; albeit with an ordinary idea, but with a vision. History is proof. Ideas which have seemed almost foolhardy at first blush, have often marked the beginning of entrepreneurial expeditions, which have led to ecosystems that prevail – and ready for primetime – decades after the founder CEOs have stepped aside.

In September 1945, a 37 year-old engineer named Masaru Ibuka rented a 110 square feet windowless, third-floor space in a World War II-bombed-out Shirokiya Department Store. All he had was a precious $1,600 in savings and seven people who trusted that he would put his engineering experience to take a blockbuster of an idea to market. The company was christened Tokyo Tsushin Kogyo (Totsuken). For weeks, the employees, along with Ibuka, discussed on what business the company should enter. Clearly, Ibuka had a company, but was short of any great idea to begin with. Three months later, the company’s first product – the electric rice cooker (which mostly prepared undercooked or overcooked rice) had become a failure. This is what the company’s website has to say about the idea: “It was a memorable first failure for Ibuka and his staff.” His second idea too – the wire recorder – was a failure. Today, Totsuken is called the $86.65 billion-a-year topline-earning Sony Corporation.

Many instances of notable entrepreneurial bets that began with a whimper of a failed idea, exist. In the summer of 1972, Paul and William  got together to launch their maiden business venture. They wanted to create a product that measured traffic patterns by measuring the count of car wheels that were supposed to run over pressure-counting tubes. Two continuous years of hard work followed. Using Intel's eight-bit microprocessor, and with some help from an electrical-engineering undergraduate, they got the first prototype of the machine ready for $1,860 (which overshot their budget of $1,500). Twelve months later, with efforts to sell the product to various customers and counties in both North and South America, guess how many orders they had received. Zero. There were some rare orders and three years post-release, William's and Paul's first entrepreneurial idea had resulted in losses amounting to net losses of $3,494. "Traf-O-Data was a flawed business model. It hadn’t occurred to us to do any market research. We closed shop shortly thereafter. Traf-O-Data remains my favorite mistake because it confirmed to me that every failure contains the seeds of your next success," confesses Paul. The very year Traf-O-Data was unofficially shut, these two first-time failed entrepreneurs, started work on another project (the name of which was kept as a portmanteau of microcomputer and software). It is today called the $70 billion-a-year topline earning giant Microsoft. 

When Dave and Bill got together in August 1937 to start a company, they had no idea about what they would be selling. This is how the company's website quotes Bill: “When I talk to business schools occasionally, the professor of management is devastated when I say we didn't have any plans when we started. We were just opportunistic." All of their first five ideas became classic business failures for the company, but thanks to their vision, the company today, has become the largest IT company in the world, having sold $358.95 billion worth of products and services in the past 3 years. We call it HP. There are more names: He was fired by Editor of Kansas City Star newspaper because "he lacked imagination and had no good ideas," and his first cartoon series idea was an outright failure. We call him Walt Disney. When William, a 25 year-old American, offered to sell his first idea called the Bluebill to the US Navy, he got rejected. The Bluebill was killed. Today, William's then-startup is known as Boeing Co. Even Henry Ford’s first company called Detroit Automobile Company. It was shut down in 1901.    

Umpteen entrepreneurial success stories also come to mind when we imagine people who became entrepreneurs with ordinary ideas. Paul Calvin’s first business idea made his start-up (Galvin Manuf. Corp.), a struggling repair service provider of service battery eliminators for Sears. Today, his company is called Motorola. Even Sam Walton began his venture as small retail outlet. Ordinary ideas, but the vision was intact. 

So what is expected to make entrepreneurs successful? The solution – David McClelland’s Theory of Needs, which states that those with a high need for achievement, tend to avoid both high-risk and low-risk situations. Don’t be confused. The very entrepreneurs whose names we called, were/are those with a moderate appetite for risk, but a high appetite for determination and toil. These were/are visionaries who realised in time that the "first" idea an entrepreneur has, is seldom the best. And that's their first true secret of success. 

DISCOVER THE DIAMOND IN YOU!

I  have often wondered about that one secret potion that can turn any human into a success icon, perhaps a leader who gets counted as motivational & successful real-life tale that generations continue to talk about. Prof. Arindam Chaudhuri, our Group Editor-in-Chief, in his best-seller ‘Discover the diamond in you’, puts it as the 9Ps of success (Passion, Positive Energy, Performance, Perseverance, Personality, People Skills, Perspective, Principles & Patriotism). Lee Iacocca, The father of the Ford Mustang, on the other hand, through his book titled ‘Where Have All the Leaders Gone?’, lays out his cards in the form of the 9Cs (Curiosity, Creative, Communicate, Character, Courage, Conviction, Charisma, Competent & Commonsense). But what if I were to choose one of them all? We could play with permutations and combinations, but let  us keep it simple. Add up the 4th P (Perseverance) and the 4th C (Character – described by Iacocca as the fire in your belly and the real want to get something done) and you end up with two words – Hard Work. This is ‘the’ ultimate secret to discovering the diamond in you.

Even passionate people fail – whether entrepreneurs or hired managers. But those who continue working hard – sans fear of making new mistakes – are those who become motivational parables. This is what makes a true CEO. A successful leader leads by example – by working harder than the pack. Why? They know that with hard work, everything can be worked upon. Your personality, your people skills, your emotions and even the energy inside you – everything can change. 

Steve Jobs is a CEO whose name-calling we relish while describing a success icon. His return to Apple in late-1997 made possible innovations that continue to inspire billions around the world. Since his second term began at Apple as its CEO, the company has added $361.45 billion to its shareholder wealth – a massive increase of 11,659.7% as of date. Many call his power to innovate in quick-time his strength. It wasn’t (and isn't still; forget about innovating, how easy is it to carry around a cancer-stricken pancreas and even think clearly?) It had to be incremental yet magical. And that meant toil. Here is what Steve Jobs once said when questioned about how he managed innovation at Apple – “You'd be surprised how hard people work around here. They work nights and weekends, sometimes not seeing their families for a while. Sometimes people work through Christmas to make sure the tooling is just right.” Obviously, even today, this 16-hours-a-day working CEO, despite being on his third medical leave, expects sweat and excellence from his folks at Apple. While talking about Jobs’ work habits, Terry Hou (Chairman and founder of the $37.64 billion-worth companies Hon Hai and Foxconn) said in a June 2011 shareholders' meeting in Taipei, "I have often asked myself if I would have worked as hard if I was as ill as Steve Jobs…I would have stayed home. But I am not Steve Jobs." Even Jobs’ old employees have sued him for making them work too hard. One instance being that of David Walsh who worked as a senior network engineer at Apple for 12 years until 2007. A year after he quit, Walsh filed a complaint in a district court in Southern California alleging that Jobs adds the “senior” tag to the titles of employees only to make them work harder. For that it does not pay overtime or give real promotions. Walsh claimed that he was made to work more than 8 hours a day and once every 6 weeks, for 7 continuous days, he would have to be on compulsory on-call duty 24x7. He demanded a class action lawsuit. The court dismissed his application [proving Jobs right in the process]. 

How did Alan Mulally turn around the worst affected automaker in Detroit into a $9.28 billion profit-maker (in 2009 & 2010)?  How did Jack Welch turn GE into the world’s most valuable company with a market value of $477.41 billion (when he left in 2001)? How did a poor-Chinese-boy-turned-billionaire-gentleman Li Ka-shing build the Hutchinson Whampoa & Cheung Kong empires out of a small plastic-making factory? Many examples, one answer – hard work. For Mulally, Welch and Ka-shing, from the day they began their careers or entrepreneurial venture, a “normal” day at work meant anywhere between 15-16 hours. It still does. And that is the secret which helped them discover and become the diamond they are today. And for those CEOs who desire to lead the best team in the world, all they require to do is lead by example and work harder than ever before. And others will follow. For this is how the parable of a "real diamond" reads.