Steve Jobs

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Little Changes CEOs Make Can Lead to Big Ones

 

Trash cans and toilet paper. You wouldn’t expect CEOs to concern themselves with such mundane items. Aren’t they supposed to concentrate on managing the company’s resources, developing and implementing long-term strategies and communicating with the board of directors?

Yes, of course. But part of their overall strategy may need to include small changes in the workplace that can lead to big shifts in employee outlooks and increased productivity in the workplace.

Suzanne Sitherwood has been CEO of Laclede Gas Company since 2012. An article in the Wall Street Journal yesterday, “CEOs Sometimes Use Small Changes as Wedge for Broad Transformation,” detailed a few of the design changes she made when she took over to foster an interactive atmosphere.

These included moving into her assistant’s office, installing a round table for management meetings to foster “a sense of unity and equality” and keeping her office door open. And she banned the use of individual trash cans in offices.

Yes, that’s right. Trash cans were taken out of individual offices and moved to communal areas to encourage staffers to meet face to face. So instead of tossing a crumpled-up piece of paper into the bin by your desk, you had to get up and walk into the main area, where you just might run into a co-worker doing the same thing.

That’s one of the more creative ways I’ve heard of encouraging interaction among employees. Steve Job’s tried to institute another not-so-popular idea when he built the Pixar headquarters. He wanted to design the building with only one set of bathrooms in the atrium, rather than the usually placement of being tucked off to the side. (Fortunately for the employees in offices located far away in the wings of the building, he was overruled.)

Both these CEOs know that attention to small seemingly insignificant details like these can lead to bigger changes in their companies. Laclede Group, now rebranded as Spire, was once considered a conservative, unexciting utility. After Sitherwood took over, she turned that image around. The company made two major acquisitions of other gas utility companies, and increased the stock more than 50 percent.

A little change that that led to a major turnaround for me had to do with toilet paper. I was brought in to manage a computer parts company in Texas after the bank had forced the egomaniacal, ineffective CEO out. Although he was highly educated, he didn’t know diddly about how to treat employees.

His wife, affectionately known to the employees as the Dragon Lady, was the COO. It didn’t take me long to find out what she had done to earn this nickname. She was rationing coffee and toilet paper.

My first day there, a meek-looking secretary shyly approached me and asked for $20 to buy the daily allotment of coffee and toilet paper. I’d actually never heard the term “daily allotment of coffee and toilet paper” outside of a war-time situation. It seems Dragon Lady had limited how much of these items employees were allowed to use.

My decision was easy in this case. Banish the daily allotment – toilet paper and coffee for everyone! That one small change signaled to the employees that they mattered to the company. That one small gesture changed everything. The employees regained their faith in the company and they all begin working together to save it. We stabilized the company, sold it in six months, and all the employees kept their jobs.

There’s one change designed to improve office morale I find a little questionable. Last year President Nobuaki Aoki of the MK Taxi company in Kyoto, Japan, installed six personalized vending machines in his company.

These machines have his photo on them and in addition to snacks, dispenses sound bites in his dialect like “Groom yourself well and smile,” “Good job,” and “Thanks for working hard again today.” The idea, of course, is to boost employee morale. But I’m guessing these words mean a lot more coming from a supervisor rather than a machine.

Think about small changes in your office that could boost employee morale. But think twice about the vending machine.

 

 

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The Willingness to Be Unpopular

I believe in always conducting business with integrity and treating everyone with respect. I’ve quoted Henry Kravis before, with whom I’ve had the pleasure of working. “If you don’t have integrity, you have nothing. You can’t buy it. You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing.”

But despite the fact I play fair and treat people well doesn’t mean I’m universally loved — far from it. In a career as a Turnaround Authority, you have to make many unpopular decisions. If you want to be everybody’s friend, you’ll never make it in this business. It’s like that quote by Harry Truman, “If you want a friend in Washington, get a dog.” The same goes in the turnaround business.

To be an effective leader, you have to be willing to be unpopular at times. I’ve been so unpopular at times that I’ve been shot at – twice! When you catch people not doing what they are supposed to do or need to reduce staff or benefits, people get unhappy.

But good leaders often have to make decisions that upset people. Take a look at Abraham Lincoln, considered one of our finest presidents. He was also one of the most unpopular. The press hated him and characterized him as a buffoon. He received death threats, one of which was printed in a Mississippi newspaper with a reward of $100,000 offered for his “miserable, traitorous head.” Members of his own party hated him. There is even a book called “The Unpopular Mr. Lincoln: The Story of America’s Most Reviled President.” When he died, a paper in Texas said,  “The world is happily rid of a monster that disgraced the form of humanity.”

A truly great CEO will make unpopular decisions for many reasons — to save the company, to ward off competition, to prepare for future changes in the marketplace. In 2004, the industry thought Verizon CEO Ivan Seidenberg was bluffing, and even worse, crazy, when he unveiled his unpopular plan to lay down fiber-optic cable across the country to the tune of $24 billion. Verizon is now the nation’s top carrier.

When Howard Schultz came back as CEO of Starbucks in 2008, he took responsibility for the bad situation the company was in, despite the fact he hadn’t been at the helm during the previous eight years. The share price was down 50% with news sources claiming Starbucks was no longer relevant and would be killed off by McDonald’s.

Because the cost was so high at a tough time in the company’s history, his decision to fly 10,000 store managers to New Orleans for a conference was an unpopular one. But he credits that conference with turning the company around. “If we hadn’t had New Orleans, we wouldn’t have turned things around. It was real, it was truthful, and it was about leadership,” he said in an interview in the Harvard Business Review.

And let’s talk about one of the most unpopular CEOs of this century: Steve Jobs. He was fired from his own company at the age of 30. Rather than wallow in defeat, he created a new company, Pixar Animation Studios. In 1996, he returned to Apple, became its CEO the following year and created products like the iPod, iPhone and iPad.

Think about those examples the next time you have to make an unpopular decision. As the former prime minister of the UK Tony Blair said, “Leadership can be an unpopular business. The art of leadership is saying no, not yes. It is very easy to say yes.”

And look at it this way, odds are you won’t get shot at.

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How to Encourage Innovation in the Workplace

This is the second in a three-part series on Innovation. The first in the series, “Innovation Distinguishes Between a Leader and a Follower,” provided some examples of companies like 3M that have stayed successful for decades by continuing to innovate. These next two parts focus on the steps to encouraging innovation.

In my last post, I wrote about the need for businesses to continually innovate. As Steve Jobs said, “Innovation distinguishes between a leader and a follower.”

But innovation isn’t something you can just mandate, like telling your employees they need to schedule their lunch hours at certain times. And it’s not just adding a line item to your budget under the column “Innovation.”

Ironically, results from innovation and creative thinking are often not related to the amount of money spent. As Steve Jobs also said, “Innovation has nothing to do with how many R & D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R & D. It’s not about money.”

So what did he say it is about? “It’s about the people you have, how you’re led, and how much you get it.”

After reading my last post, I hope you get the need for innovation. So let’s talk about how to hire people that will help you innovate.

Hiring the Idea Generators

Any manager knows there are differences between the people who excel at coming up with ideas and those that excel at execution of those ideas. A successful company will have a combination of both at all levels. And never has it been more important to find those idea people.

As Richard Florida, an American urban studies theorist, said, “Access to talented and creative people is to modern business what access to coal and iron ore was to steel-making.”

Consider Walt and Roy Disney, co-founders of Walt Disney Productions. Walt was the big idea guy, while Roy’s expertise was in finance. “Walt had this idea [for Walt Disney World]. My job all along was to help Walt do the things he wanted to do. He did the dreaming. I did the building,” he once told reporters.

But it’s a lot easier to review a resume and determine if someone can handle the financial area of your company. How can you scout for people good at generating ideas?

There’s no particular college degree that would indicate a person’s creativity. Some of our generation’s best innovators famously didn’t finish college — I bet you can name three right away. (Think Facebook, Apple and Microsoft.)

And the people who did come up with great ideas aren’t always recognized for them. Ironically, the person who invented the fire hydrant remains unknown because the patent was lost in a fire at the patent office in D.C. in 1836.

Here are a few tips to find and hire these Idea Generators:

Ask your current employees

The people you have on staff, particularly the more creative ones, probably already know some people they admire as idea generators and would like as co-workers. Let your staff know of your efforts, recruit among their recommendations and offer a referral bonus

Tailor your interview questions to identify them

Ask questions that will reveal a candidate’s creative past. Ask for ideas they have come up with and implemented at previous workplaces or any organizations with which they have been involved. You may find someone who volunteers at an organization who came up with a killer fundraising idea.

Add innovative features to the interview process

A friend’s son recently underwent an hour-long interview exclusively devoted to brainteasers. In a previous post, “Tips on Hiring from the Corner Office,” I wrote about a company that leaves a candidate with a calculator, pencil and a sandwich and returns in two hours. That’s for analysts positions at a $2 billion hedge fund, but you get the idea. Just as you are judging your candidate, they are judging the innovation of your company starting with the way in which you hire people.

Present an environment that encourages creativity

Idea generators want to know they will be in an environment that will foster their creativity, not stifle it. For tips on how to create such an environment, read the third part of this series.

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Innovation Distinguishes Between a Leader and a Follower

That’s a quote from the most famous innovator in recent history — Steve Jobs. To be successful, a company has to continually innovate. Here are just a few examples of companies that did and are thriving.

Will Housh was a member of the third generation of a family-owned HVAC business. While it was successful, he saw that e-commerce was coming to the HVAC industry while others in the business were unwilling to embrace the new technology. “Even though our family business was generating sales of more than $12 million in a good year, just how sustainable are mom-and-pop businesses in the age of the Internet?” he wrote in the article “How to Make an Unpopular Decision.”

He saw the industry changing. Customers were starting to use the Internet to connect with contractors and get lower prices. So he started an online and retail business, eventually selling his grandfather’s company to focus on his new business, Housh Inc.

“Whereas our old school HVAC business never made more than $12 million in annual revenue, Housh, Inc. has doubled revenue annually in the past three years and expects $20 million in revenue for 2014. In 2011, our business had three employees–it now has more than 20,” he wrote.

In 1909, James McGraw, a former schoolteacher and founder of The McGraw Publishing Company, and John Hill, founder of The Hill Publishing Company, merged their companies to form McGraw-Hill Publishing Company. Despite being primarily known as a textbook company, it was always at the forefront of changes in technology in education.

In 1989, it introduced the first computerized publishing system to instructors who could use it to customize their textbooks. In 2006 it became the first to offer online assessments and in 2009, it created a Center for Digital Innovation, launching McGraw-Hill Connect, an all-digital teaching and learning exchange for higher education. In 2013, McGraw-Hill completed a sale of its education division to Apollo Global Management for $2.5 billion. It’s doubtful a textbook company could have generated that kind of sale.

3M started as the Minnesota Mining and Manufacturing Company to mine a mineral deposit for grinding-wheel adhesives. It struggled in its early years but then invested in technical innovations, such as the world’s first waterproof sander. In 1925, a lab technician invented masking tape, followed years later by cellophane tape, both with the brand name Scotch. (Fun fact: the story goes that the lab technician asked a painter to test an early version of the masking tape and it fell off. He told the lab technician “Take this back to your stingy Scotch bosses and tell them to put more adhesive on it.”)

Ensuing years brought new electro-mechanical products, with the pharmaceutical, radiology and energy control markets added in the 1970s and 1980s. Last quarter, 3M set a record with $8.1 billion in reported sales.

Continued innovation is vital to the success and growth of a company. As the physicist William Pollard said, “Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.”

In the next column, I’ll discuss ways to encourage innovation at your company.

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Admit Your Mistakes

“The CEO of Apple says a leader should admit when he’s wrong.”

“That won’t work for me because I’m never wrong. The best I can do is admit when other people are wrong.”

“That sort of misses the point.”

“Well, I humbly admit you’re wrong.”

— A Dilbert cartoon by Scott Adams

A friend was interviewing a woman for a high-level position in his company and asked a fairly typical question. “What was a mistake you made and how did you handle it?”

“Well, I’ve never made a mistake,” she said.

I would have ended the interview right there. With those six words, that woman revealed that she is not someone I want to hire. She let me know that she did not recognize her mistakes and that when things do go wrong, she’ll either deny them or blame someone else.

Every person and every company makes mistakes. The important part, and the way to judge someone’s integrity and business savvy, is what they do next.

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Steve Jobs would admit when Apple made mistakes. “But we learned from it,” he would say.

I encourage the executives I work with to admit their mistakes. The first chapter of my new book, “How Not to Hire a Guy Like Me,” starts with my encouragement of presidents, CEOs or owners of businesses to admit their mistakes. While my book is based on lessons learned from CEOs’ mistakes, my readers can’t begin to handle the problems facing their own companies until they admit their mistakes.

When Steve Jobs introduced the iCloud in 2011 in one of his famous keynotes, he dealt with the elephant in the room — Mobile Me — straight on and with humor. Everyone in the room knew that Mobile Me had been a failure and had been clobbered by its competitors. The iCloud was the new product Apple was introducing in its place.

As he was introducing iCloud, he said, “You might ask, why should I believe them? They are the ones that brought me Mobile Me. It wasn’t our finest hour — let me just say that. But, we learned a lot.”

Many people, perhaps men in particular, worry that admitting their mistakes will make them look stupid. Well, what happens when they don’t admit their mistakes and they get found out? Then they look foolish and deceptive.

But if you admit your mistakes, people will trust you and respect you as a leader. And trust and respect are important to building strong business relationships with your employees and customers.

I tell a story in the book about a CEO that refused to admit when he made a mistake, choosing instead to gloss it over. That refusal ended up costing the company $8 million. See what I mean about learning from CEOs’ mistakes? That one was a doozy.

We are all going to make mistakes. They can actually be turned into opportunities. As Albert Einstein said, “Anyone who has never made a mistake has never tried anything new.”

The most important part is admitting the mistake and then to follow Steve Jobs’ example: learn from it. And move on.

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Trust Your Gut

The freelance writer is a man who is paid per piece or per word or perhaps.
— Robert Benchley

In my job as a Turnaround Authority, I’m just like any other freelancer or contract worker. If I don’t work, I don’t get paid. I enjoy holidays and vacation time just as much as the next guy, but my bank account doesn’t grow during my time off.

I’ll go to great lengths to get new business. I once flew to Paris on a day’s notice at the request of a former client who said he needed me to meet face-to-face with someone at a manufacturing operation where he was experiencing a problem.

But there are other times when I’m offered work a lot closer to home. Work that would pay really well. And I turn it down.

Here are a few of the reasons I turn down work.

• I’m being asked to do something illegal or unethical. Not agreeing to do something illegal is an obvious one. But the ethical area is not always so clear cut to people. (I have a great story for that one that I’ll share later.)

• I don’t think the person trying to hire me is really committed to making the changes that will be necessary to meet the desired goals. Sometimes it’s someone who has a big ego and I can tell he or she won’t want to implement the changes I’ll be suggesting. I don’t want to set myself up for failure.

• I sense a personality conflict. I get along with just about everybody, but every now and then I’ll meet someone and I can tell right away that our relationship will not be smooth sailing. Many of my jobs involve working closely with key personnel at a company and it’s much easier to accomplish our goals (and more enjoyable) if we have good working relationships.

• I don’t trust the person who is trying to hire me. Sometimes this is based on just a sense I get about someone when I speak with him or her on the phone or meet with them in person.

Other than being asked to do something illegal or unethical, the rest of these reasons are pretty much based on my instinct. After almost 30 years in this business, I feel like I’ve learned to read people pretty well.

It really comes down to one thing: I trust my gut. If I make a decision against what my gut tells me to do, 99 percent of the time it turns out badly.

George Zachary, a partner with Charles River Ventures who has had more than $1 billion in returns on investments in companies that include Twitter, Trulia and Shutterfly, believes in trusting his gut too.

“Listening to my gut is the right thing to do for me. It doesn’t mean it’s going to work out.  But it does mean that’s what I should follow,” he said in an interview recently. “That’s my passion. When I’ve done that it has worked well. When I’ve followed my brain and not my heart it’s resulted in disaster and failure every time. I’ve had no success operating from making a rational decision or a decision based on fear. It’s all come from listening to my gut and intuition.”

The late Steve Jobs shared a similar philosophy during his Stanford Commencement speech. “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

It always works for me as well. My gut told me to go to Paris for a three-hour meeting. And that was the right decision. I didn’t make a lot of money on that trip — I only billed him for the time I spent in the meeting. But 18 months later when that client needed help again? He called me.