1 Week 4 DQ LaShundra Small Jack Welch Management Institute JWI 510 Professor Frank Casty January 25, 2022 2 In order to develop a successful team that functions within the same objectives, purpose, and commitments as the business, it is critical to consider the contributions of all members. Through the exchange of ideas and the collaboration of team members at work, diversity allows team members to communicate more effectively. As both workers and managers learn additional abilities and experiences that aid in the planning and executing business operations, diversity contributes to the formation of new views. Diversity is also essential for fostering innovation and creativity inside a business; this, I believe, is very significant since it contributes to developing workers' talents and skills, resulting in a high-performing team. Employees have a variety of talents and experiences and various viewpoints based on their diverse origins (Ibarra, 1). This is critical in developing a high-performance team that guarantees that all workers are motivated to succeed. Diversity is crucial to team performance. Diversity in ideas and experiences leads to an in spark creativity and innovation. It is critical to creating an environment where everyone feels comfortable sharing their thoughts. There is a lack of diversity in today's organizations in the workforce; this can result from the lack of education in diversity and cultural awareness and external factors such as bias and discrimination. Organizations must have an effective strategy for diversity to recruit and retain employees to help their organization become more competitive against competitors. Some of the challenges that diversity efforts face: 1. Recruitment. If you have a diverse workforce, you will get a variety of perspectives on a topic or problem. However, if your workforce is all white men from uppermiddle-class families, it might be challenging to get different points of view. Increasing diversity means reaching out to different groups — for example, sponsoring scholarships for women and 3 minorities in STEM courses or holding on-campus events where students from different backgrounds can meet and talk with one another. 2. Retention. If someone joins your company with hopes of advancing their career but does not feel they have the opportunities to do so -- or feels they are not being treated fairly compared to their peers -- she may leave your organization for one that will give her a better chance of fulfilling her aspirations. For example, if you built a house on top of the sand, it would ultimately cave in beneath the weight of the foundation. When faced with the challenges of a competitive marketplace, a business based on a foundation of homogeneity and complacency would inevitably fail. Any company that wants to prosper in today's society must have a diverse workforce. Currently, my employer is attempting to undertake a large-scale cultural change. The firm faces various challenges, including bringing a diverse staff together to achieve one common goal and coordinating resources. Workers from various backgrounds find it challenging to get their voices heard. My organization's leaders and managers must work hard to create an inclusive and open environment where employees can grow and develop. I recently discussed this with my supervisor, and together we developed a list of recommendations for our senior management on improving workplace diversity. Our list included: • Leverage diverse job boards. • Offer diverse mentorships. • Conduct diversity training. • Create an inclusion council. 4 • Reward diverse referrals. • Celebrate employee differences. Diversity of thought can be the difference between a team succumbing to groupthink and achieving better results. Creating diverse work teams is about recognizing that great talent is blind to race, ethnicity, gender, religion, or socioeconomic status. Hopefully, organizations will see past their employees' differences and realize that all people can work together to drive their respective companies forward regardless of their backgrounds. 5 References 1. Ibarra, H., Rattan, A., & Johnston, A. (2018). Satya Nadella at Microsoft: Instilling a growth mindset. London Business School case no. LBS CS-18-008 (London: London Business School, 2018). Herminia Ibarra Aneeta Rattan Anna Johnston LBS Ref: CS-18-008 HBP: LBS128 June 2018 Satya Nadella at Microsoft: Instilling a growth mindset In early 2018, Satya Nadella celebrated his fourth anniversary as the CEO of Microsoft. Under his stewardship, Microsoft has gone from a company perceived as a Windows-centric lumbering giant to a $700 billion market cap tech player whose strategic bets on artificial intelligence (AI) and cloud computing were paying off (see Exhibit 1). After a decade of flat growth under Nadella’s predecessor, the company’s share price soared to an all-time high in June 2018. Nadella remembered February 4, 2014 vividly in his book Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. It was the day he took charge of a company widely portrayed by its own employees as plagued by internal knife fights, bickering and inertia. In his mind, the company’s ability to make great technology was never lost. However, a culture of internal competition and “not invented here” mentality had focused employees on a narrow vision of performance over customers and increasingly expansive market opportunities. An engineer, Nadella thus set out to change the human system at Microsoft. Four years later, he prided himself on the company again becoming a magnet for top engineering talent, a world-class competitor among the heavyweights of the tech industry, and valued partner to companies undergoing their own digital transformation (see Exhibit 2). “People often ask how it’s going,” said Nadella. “My response is very eastern: We’re making great progress, but we should never be done.” 1 The “lost decade” Just 17 days after founder and technical whizz Bill Gates handed over the reins to Steve Ballmer in 2000, the stock market crashed. In the decade that followed, a culture that crippled innovation flourished at Microsoft. Professor Herminia Ibarra, Professor Aneeta Rattan and Anna Johnston prepared this case based on public sources and interviews with Jill Tracie Nichols and Joe Whittinghill. London Business School cases are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2018 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, photocopying, recording or otherwise without written permission of London Business School. This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. LBS128 Microsoft’s infamous “stack ranking” performance management system pitted employees against each other every six months. Like a stack of LEGO bricks, employees were essentially slotted into top, good, average, below average and poor positions. The forced distribution meant that one in 10 people would always receive a poor rating, regardless how much they contributed. As one product manager remembered: “If you don’t play the politics, it’s management by character assassination.” Management practices like the stacking system killed collaboration: developers feared that giving away their best ideas could damage their position. Employees prioritised what would help them get the highest ratings over the quality of their work. “I was told in almost every review that the political game was always important for my career development,” reflected one former Microsoft engineer. Ultimately, “staffers were rewarded not just for doing well but for making sure their colleagues failed.” (See Exhibit 3.) A wave of external competition crashed down on the firm, causing talent to jump ship. By 2004, thanks to the rapid growth of upstart firms such as Google, some of Microsoft’s most talented employees were leaving faster than they could be replaced. “Instead of a culture that said, ‘Let’s experiment and see which ideas work,’ the culture is one of, ‘Let’s kiss enough ass so maybe they’ll approve of our product’,” said one Microsoft executive who eventually quit in 2009 to work for Google 2. A former engineer said it was like “designing software by committee.” 3 Microsoft’s product development process lagged: Bing failed to extinguish Google search, and Zune couldn’t compete with Apple’s iPod. In 1998, for example, a group of executives passionate about bringing an e-book to market were waved away by Gates and told to report into an Office-run division. “Potential market-busting businesses, such as e-book and smart phone technology, were killed or delayed amid bickering and power plays.” 4 Ballmer aggressively opposed open-source innovation, calling Linux a “cancer that attaches itself in an intellectual property sense to everything it touches.” The industry labelled him “shortsighted”. Morale plummeted. By 2011, Ballmer’s Glassdoor rating among his own employees was just 29%. Despite climbing to 46% the following year, it still lagged behind others at that time: Google CEO Larry Page’s approval rating was 94% and Mark Zuckerberg’s was 99%. After the tech bubble burst and with the stock price flat, “People realised they weren’t going to get wealthy,” one former senior executive said. “They turned into people trying to move up the ladder, rather than people trying to make a big contribution to the firm.” Meanwhile, companies like Google were paying employees up to 23% above the industry average. 5 By 2014, the Microsoft that Nadella inherited was fading toward irrelevance, heralded the press. The tech industry had shifted from desktop computers to smartphones – from Microsoft’s Windows to Apple’s iPhone and Google’s Android. Apple and Google had soared to record market valuations; Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 2 LBS128 Microsoft’s stock price had stalled, despite the fact that revenue had tripled and profits had doubled during Ballmer’s reign as CEO from 2000 to 2014. 6 As industry analyst Jan Dawson summarised: “It was an enormously profitable company. They were in no danger of going out of business soon – it was just a question of whether they’d go into permanent decline.” 7 Satya Nadella The consummate insider, Nadella grew up professionally in the Microsoft that Gates and Ballmer created. The India-born cricket enthusiast started working at Microsoft in 1992 when products were saved on disks and the world was powered by Windows 3.0. A computer scientist by training, Nadella moved through a range of leadership roles, including heading up R&D for Online Services, and ultimately becoming executive vice president of the Cloud and Enterprise group. He recalled taking risks along the way: I distinctly remember Steve saying, ‘Hey, look, you know if you go to Bing and you don’t do a good job or succeed, it might just be your last job.’ But at the same time, his own intellectual honesty and how he talked about that job made it, you know, very enticing. It was tough to refuse to go there to learn. And it’s clear that if I had not gone and learned… and if I had not run the cloud infrastructure business, I’m sure the board would have not seen me as a candidate even for CEO. 8 Reflecting on important influences in his life, Nadella cites his formative experiences: “It’s the language, routines and mindset of my parents back in India and my immediate family in Seattle that helped form me and still guide me today.” 9 In particular, he traces the roots of his ideas about leadership to the birth of his first child, Zain, who was premature, weighed just three pounds, and had cerebral palsy. “Empathy, we learned, was invisible and was a universal value,” said Nadella. “And we learned that empathy is essential to deal with problems everywhere, whether at Microsoft or at home; here in the United States or globally. That is also a mindset, a culture.” 10 Taking charge As Microsoft’s new CEO on February 4, 2014, Nadella scripted a letter to all employees (see Exhibit 4): Today is a very humbling day for me. It reminds me of my very first day at Microsoft, 22 years ago. Like you, I had a choice about where to come to work. I came here Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 3 LBS128 because I believed Microsoft was the best company in the world. I saw then how clearly we empower people to do magical things with our creations and ultimately make the world a better place. I knew there was no better company to join if I wanted to make a difference. This is the very same inspiration that continues to drive me today. He spoke of focusing the company on its core values, but through a new lens. “We need to prioritise innovation that is centred on our core value of empowering users and organisations to ‘do more’.” As Nadella reflected on what needed to shift, he set his sights on what he himself called “a vague and amorphous term”: Microsoft’s culture had been rigid. Each employee had to prove to everyone that he or she was the smartest person in the room. Accountability – delivering on time and hitting numbers – trumped everything. Meetings were formal. If a senior leader wanted to tap the energy and creativity of someone lower down in the organisation, she or he needed to invite that person’s boss, and so on. Hierarchy and pecking order had taken control, and spontaneity and creativity had suffered. 11 “We all knew something was going to be different when he assigned the Leadership Team to read [Marshall Rosenberg’s] Nonviolent Communication: A Language of Life: Life Changing Tools for Healthy Relationships,” recalled Phil Spencer, Head of Xbox. 12 Microsoft president and chief legal officer Brad Smith, a 24-year company veteran, agreed this was a clear indication that Nadella was going to transform “not just the business strategy, but the culture as well.” 13 Nadella devoted much of his first year to listening and learning from others: I heard from hundreds of employees at every level and in every part of the company. We held focus groups to allow people to share their opinions anonymously as well. Listening was the most important thing I accomplished each day, because it would build the foundation of my leadership for years to come. To my first question, why does Microsoft exist, the message was loud and clear. We exist to build products that empower others. That is the meaning we’re all looking to infuse into our work. I heard other things as well. Employees wanted a CEO who would make crucial changes, but one who also respected the original ideals of Microsoft, which had always been to change the world. They wanted a clear, tangible and inspiring vision. They wanted to hear more frequently about progress in transparent and simple ways. Engineers wanted to lead again, not follow. They wanted to up the coolness. We had technology the press would fawn over in Silicon Valley, such as leading-edge artificial intelligence, Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 4 LBS128 but we weren’t showing it off. What they really demanded was a road map to remove paralysis. 14 Nadella’s to-do list for the first year included preparing Microsoft for a mobile- and cloud-first world, building “new and surprising partnerships” and working to ensure they could truly empower every person on the planet as their new mission stated. In the spring of 2014, despite a contentious historical rivalry with Apple and lack of traction with their own Windows phones, Microsoft made Office available on all iOS devices, including the iPhone and iPad. The next year, the global launch of Windows 10 originated in a tiny village in Kenya. “Articulating our core raison d’etre and business was a good first step. But I also needed to get the right people on the bus to join me in leading these changes,” Nadella said. He wanted a senior leadership team (SLT) that would “lean into each other’s problems, promote dialogue, and be effective”. “I don’t mean yes-men and yes-women,” he explained. “Debate and argument are essential. Improving upon each other’s ideas is crucial. I wanted people to speak up. ‘Oh, here’s a customer segmentation study I’ve done’. ‘Here’s a pricing approach that contradicts this idea’. It’s great to have a good, oldfashioned college debate. But there also has to be high quality agreement.” 15 To her surprise, Nadella selected Jill Tracie Nichols, Ballmer’s communications lead 2009–2014, as his chief of staff in 2014. When she questioned why, Nadella told her: “I’ve seen you work with others and you treat them well. You show respect. I want my office to be about the culture we are trying to create and not about power.” 16 Peggy Johnson, a seasoned Qualcomm executive, became head of business development. Her job would be to forge ties with former Silicon Valley rivals, such as Dropbox. “Satya was already on a regular cadence of visiting the Valley, which was new for the CEO of Microsoft,” said Johnson. “And he said to me, ‘I want you to be outside of Redmond as much as you are inside of Redmond’.” Kathleen Hogan, who had experience at McKinsey and Oracle, would transition from leading Microsoft’s global consulting and support business to partnering with Nadella on leading the cultural transformation as chief people officer. Kurt DelBene, who “was handpicked by President Obama to fix Healthcare.org” and once upon a time led the Office division, returned as chief strategy officer. Chris Capossela headed up marketing and Scott Guthrie, an engineer who had worked with Nadella in building the cloud business, would lead Cloud and Enterprise, Microsoft’s “fastest growing business”. “Over time, these changes meant that some executives left,” recalled Nadella. “They were all talented people, but the senior leadership team needed to become a cohesive team that shared a common world view… We needed everyone to view SLT as his or her first team, not just another meeting they attended. We needed to be aligned on mission, strategy and culture.” 17 Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 5 LBS128 The 2015 annual executive retreat offered another opportunity to convey that things were changing. “One aspect of the off-site really bugged me,” admitted Nadella. “Here we were with all this talent, all this bandwidth, and all this IQ in one place just talking at each other in the deep woods. And frankly, it seems like most of the talking was about poking holes in each other’s ideas. Enough.” Nadella broke tradition by inviting the founders of companies Microsoft had recently acquired in the year prior, such as Mojang, the maker of Minecraft. As Nadella said: These new Microsoft leaders were mission-orientated, innovative, born in the mobilefirst and cloud-first world. I knew we could learn from their fresh, outside perspective. The only problem was that most of these leaders did not officially “qualify” to go to executive retreats given the person’s level in the organisation. To make matters worse, neither did the manager, or even their manager’s manager… Inviting them was not one of my more popular decisions. But they showed up bright-eyed, completely ignorant of the history they were breaking. They asked questions. They shared their own journeys. They pushed us to better. 18 Another change “not universally loved” was scheduling customer visits during the retreat. Despite some “eye-rolling and groaning,” executives from different business lines were shuttled off together to visit customers. The invigorated executives ended up talking for days about what they had learned and what that meant for the future of Microsoft. “The transformation was under way,” concluded Nadella. From know-it-alls to learn-it-alls At Microsoft’s July 2015 global sales conference in Orlando, Nadella revealed a fresh company mission: “To empower every person and every organisation on the planet to achieve more.” The original mission enshrined by Gates was “a computer on every desk and in every home.” After covering business plans, including building an intelligent cloud platform, with the spotlight on his face, Nadella talked about his children and what learning each of their special needs had meant for him and his wife, Anu. Nearing the end of the speech, he turned to talking about the Microsoft culture: We can have all the bold ambitions. We can have all the bold goals. We can aspire to our new mission. But it’s only going to happen if we live our culture, if we teach our culture. And to me, that model of culture is not a static thing. It is about a dynamic learning culture. In fact, the phrase we use to describe our emerging culture is ‘growth mindset’, because it’s about every individual, every one of us having that attitude – that mindset – of being able to overcome any constraint, stand up to any challenge, making it possible for us to grow and thereby for the company to grow.19 Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 6 LBS128 In early 2015, Anu had given him a best-selling book by Stanford psychologist Carol Dweck entitled Mindset: The New Psychology of Success. She had found it helpful in thinking about creating conditions for success for one of their daughters who has learning differences, but suspected it might also give Nadella some ideas for Microsoft. People who operate with a fixed mindset, the theory says, are more likely to stick to activities that utilise skills they’ve already mastered, rather than risk embarrassment by failing at something new. People focused on growth make it their mission to learn new things, understanding that they won’t succeed at all of them at first. 20 This rang true for Nadella, who seized on the ideas to forge a plan for Microsoft. “Dweck divides the world between learners and non-learners,” explained Nadella, “demonstrating that a fixed mindset will limit you and a growth mindset can move you forward.” 21 Microsoft’s culture change, he concluded, would centre on “the belief that everyone can grow and develop; potential is nurtured, not predetermined; and anyone can change their mindset”. 22 They would shift from being “know-it-alls” to “learn-it-alls.” Nadella told Hogan that the primary things he wanted her to help him on was evolving the culture. At an offsite with 180 executives divided into 17 teams, they started a dialogue on what kind of culture they wanted to have. The 17 leaders became Hogan’s “culture cabinet,” charged with defining growth mindset for Microsoft. 23 After much debate, and consultation with experts like Dweck, the group articulated three pillars, all in the service of making a difference in the world: Customer obsession. We need to obsess about our customers. At the core of our business must be the curiosity and desire to meet a customer’s unarticulated and unmet needs with great technology. This was not abstract: We all get to practice each day. When we talk to customers, we need to listen. We need to be insatiable in our desire to learn from the outside and bring that learning into Microsoft. Diversity and inclusion. We are at our best when we actively seek diversity and inclusion. If we are going to serve the planet as our mission states, we need to reflect the planet. The diversity of our workforce must continue to improve, and we need to include a wide range of opinions and perspectives in our thinking and decisionmaking. In every meeting, don’t just listen – make it possible for others to speak so that everyone’s ideas come through. Inclusiveness will help us become open to learning about our own biases and changing our behaviours so we can tap into the collective power of everyone in the company. As a result, our ideas will be better, our products will be better, and our customers will be better served. One Microsoft. We are one company, one Microsoft – not a confederation of fiefdoms. Innovation and competition don’t respect our silos, so we have to learn to transcend those barriers. 24 Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 7 LBS128 Throughout 2015 and 2016, Nadella spoke widely about the importance of mindset. “The CEO sets the tone for the culture,” explained Nichols. “Gates and Ballmer were super-smart, driven and hardcharging. Their model was ‘precision questioning:’ picking apart ideas in meetings to test their validity and the presenter’s conviction, and that approach flowed through the organisation. Satya models being curious, seeking to learn as people bring him new ideas and information. 25 Grounding the pillars “We made big intentional changes that would grab people’s attention,” said Hogan, “like changing the performance review system ... and small changes like giving people a list of 10 inclusive behaviours and asking them to pick one and discuss it.” 26 “We never believed that there would be one thing that would change the company. It would be a lot of things, big and small, reinforcing the change,” echoed Nichols. 27 Customer obsession required employees to get up from their chairs and into the field. Dorothee Ritz, Microsoft’s general manager for Austria in July 2015, encouraged her team to speak with customers on their turf: One account manager spent a week out on a street with police officers, trying to understand when and where remote data could help them. Another account manager spent two days in a hospital to observe first-hand and understand what it would really mean to become paperless. 28 After a year of experimenting with “immersive experiences”, Ritz selected a set of key customers (whom she calls partners) across industries ranging from car manufacturing to retailers to hospitals. Fifteen executives from Microsoft went on-site to talk to their customers about their challenges. 29 “Getting to know each other in the context of solving a partner’s problems was more meaningful than ropes exercises or off-site discussions,” explained Ritz. 30 The commitment to making Microsoft a safe and inclusive place was less about training than the behaviour modelled by senior managers. For example, when Xbox sponsored a party at the 2016 Game Developer’s Conference, featuring scantily-clad women dancers 31, Xbox head Spencer made a swift apology. “What made it easier for me to hold myself accountable was really believing in the growth mindset piece of our culture.” 32 And, to ensure the numbers reflected the intentions, diversity targets were set for senior management. 33 The infamous stack-ranking performance system was abolished, replaced by “continual feedback and coaching” 34 and a compensation process that put more influence in the hands of managers. Instead of basing rewards such as bonuses on an algorithm driven by employee ratings, managers are given a budget for compensation that they can hand out as they see fit. Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 8 LBS128 Microsoft’s annual Hackathon, OneWeek, is an example of the new “one company” ethos. Employees are invited to step away from their work and concentrate on a hack: a problem that, when solved, could benefit people, business, society or the environment. People team up, plot a business plan, create a prototype and then pitch it company-wide; winning hackathon teams are funded to build their projects. At first, people wondered if OneWeek was worth the effort. But the potential to reach millions of people around the world held a strong allure. On September 26, 2017, Nadella’s book, Hit Refresh was released, and every employee received a copy with a letter inside (see Exhibit 5). “Writing it was more for employees and to advance culture than anything else,” said co-author Nichols. 35 Nudges and small reminders engage all 125,000 employees with the new culture. For example, leaders close meetings with a reflection, “Was that a growth-mindset or fixed-mindset meeting? Why?” Nadella issues monthly videos reviewing his top few learnings, prompting groups across Microsoft to discuss their own learnings. Visitors to Redmond have been welcomed by elevator doors decorated with the Chinese symbol for “listen”. Employees in the canteen are reminded to be lifelong learners when they wipe their face – thanks to the napkin holders. Role-modelling the change Eight months into his tenure, Nadella gave the keynote speech at the Grace Hopper Celebration of Women in Computing, an annual event for women in the tech industry. During the Q&A, Dr Maria Klawe, a computer scientist and former Microsoft board member, asked Nadella what advice he had for women seeking a pay raise who are not comfortable asking. He advised patience, and “knowing and having faith that the system will actually give you the right raises as you go along.” Nadella’s comments went viral, provoking outrage. He was mocked publicly as ignorant of welldocumented gender pay gaps, and his stated commitment to diversity was questioned. Instead of waiting for the furore to settle, Nadella said, “I was determined to use the incident to demonstrate what a growth mindset looks like under pressure.” 36 By email, the CEO told his employees he had “answered that question completely wrong”. Nadella explored his own biases and asked his executive team to do the same. It made an impression with his top team, including Hogan, who said: “I became more committed to Satya, not less. He didn’t blame anybody. He owned it. He came out to the entire company and he said, ‘We’re going to learn, and we’re going to get a lot smarter’.” 37 There were plenty of other opportunities to learn from public mistakes. Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 9 LBS128 In March 2016, researchers at Microsoft’s Future Social Experiences (FUSE) Labs unveiled Tay, an AI-based chatbot. Tay soon became a powerful reminder that “AI can (and often should) behave in ways human creators might not expect”. 38 Twitter trolls discovered that if they “pummelled Tay’s account with racism, sexism and other hateful rhetoric – a scenario Microsoft had not accounted for – she would spew some of it back.” 39 In just 24 hours, the bot tweeted 96,000 times in an “increasingly vile fashion”. Microsoft’s public AI experiment “failed by its own standards”. It was a “humiliation,” the press scorched. Undeterred, Nadella wrote to Tay’s creators, “Keep pushing, and know that I am with you.” In December 2016, Microsoft launched Zo, a bot similar to Tay, but designed to be more “troll-resistant.” Reflecting on what he described as the most difficult lesson he had learned, at the 2016 Game Developer’s conference Xbox chief Spencer echoed his boss. “When we make mistakes – and we bump, or collide, into each other – the easy way is to retreat, maybe even to deny there’s a problem. Instead, I think we have to be humble. I think we have to be active learners – read, educate ourselves, try to understand other people’s journeys, and read some more. And then, better informed, I think we commit to leading with deliberate purpose.” 40 Four years on Today, Microsoft is once again a magnet for top engineering talent, rated as one of five best AI companies for employees 41, and Nadella has a Glassdoor employee approval rating of 95%. “Our industry doesn’t respect tradition,” said Nadella, “it respects innovation.” His first four years have seen a number of bold tech decisions; for example, investments in quantum computing and mixed reality, and innovations such as HoloLens, a holographic computer that enables people to interact with holograms. Today, over 95% of Fortune 500 companies choose Azure, Microsoft’s cloud computing service. Azure has announced 50 regions globally, with 40 generally available today – more than any other major cloud vendor. The company has embraced Linux, the open-source Windows rival “rather than clinging to Windows like a security blanket.” Nadella’s $26 billion deal for LinkedIn, which combines LinkedIn’s 500 million professional users with the 85 million people who use Office 365, “gives Microsoft a formidable data hoard for its AI operations.” 42 “After years of intensive focus,” Nadella said of the culture change, “we began to see some encouraging results.” Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 10 LBS128 Employees told us they felt the company was heading in the right direction. They felt we were making the right choices for long-term success and they saw different groups across the company working together more… But we also saw some trends that were not as encouraging. When asked whether their vice president, or group leader, was prioritising talent movement and development, the results were worse than they’d been before our culture-building project began. Even the most optimistic workers will become discouraged if they are not being developed. I had set a clear mission and envisioned an empowering culture. Employees and senior leaders were on board, but we had a missing link-middle management. 43 Expecting 125,000 people to take a learning-oriented approach to their work is a significant task. Not everyone gets it right away. “It’s a lot like love, grace, or forgiveness,” said Nichols. “Words don’t describe it until you experience it.” At a meeting of 150 Microsoft executives that Nadella convened to discuss developing high potentials, he shared a story. One of his managers had told him that five of his team members didn’t have a growth mindset. “The guy was just using growth mindset to find a new way to complain about others,” Nadella told the group. He declared the whining over. “To be a leader in this company, your job is to find the rose petals in a field of shit.” 44 “Cultural transformation is hard and demanding work,” agreed Spencer. “Four years into it, it’s still sometimes incredibly slow and incredibly painful to get everyone on board, much less to admit our own biases.” 45 The future In September 2017, at Microsoft Ignite, an annual conference for developers and IT professionals, Nadella closed with an ambition: The core soul of our company is to empower every person and every organisation on the planet to achieve more. That means we want to democratise the access to technology. I was reminded of a poem I’ve read by Vijay Seshadri, the Pulitzer Prize-winning poet from 2014, called Imaginary Number. The last line goes: ‘The soul, like the square root of minus 1, is an impossibility that has its uses.’ It definitely does. We all seek to unlock the unimaginable and solve the impossible. That’s the quest we are on. 46 Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 11 LBS128 Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 12 LBS128 Exhibits Exhibit 1: Evolution of Microsoft’s share price Source: Macrotrends Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 13 LBS128 Exhibit 2: Top players by market share and revenue growth in cloud computing, Q2 2017 Source: Synergy Research Group Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 14 LBS128 Exhibit 3: Organisation-chart cartoon courtesy of Manu Cornet Source: http://bonkersworld.net/ This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 15 LBS128 Exhibit 4: Satya Nadella’s first letter to employees as Microsoft CEO From: Satya Nadella To: All Employees Date: Feb. 4, 2014 Subject: RE: Satya Nadella – Microsoft’s New CEO Today is a very humbling day for me. It reminds me of my very first day at Microsoft, 22 years ago. Like you, I had a choice about where to come to work. I came here because I believed Microsoft was the best company in the world. I saw then how clearly we empower people to do magical things with our creations and ultimately make the world a better place. I knew there was no better company to join if I wanted to make a difference. This is the very same inspiration that continues to drive me today. It is an incredible honor for me to lead and serve this great company of ours. Steve and Bill have taken it from an idea to one of the greatest and most universally admired companies in the world. I’ve been fortunate to work closely with both Bill and Steve in my different roles at Microsoft, and as I step in as CEO, I’ve asked Bill to devote additional time to the company, focused on technology and products. I’m also looking forward to working with John Thompson as our new Chairman of the Board. While we have seen great success, we are hungry to do more. Our industry does not respect tradition — it only respects innovation. This is a critical time for the industry and for Microsoft. Make no mistake, we are headed for greater places — as technology evolves and we evolve with and ahead of it. Our job is to ensure that Microsoft thrives in a mobile and cloud-first world. As we start a new phase of our journey together, I wanted to share some background on myself and what inspires and motivates me. Who am I? I am 46. I’ve been married for 22 years and we have 3 kids. And like anyone else, a lot of what I do and how I think has been shaped by my family and my overall life experiences. Many who know me say I am also defined by my curiosity and thirst for learning. I buy more books than I can finish. I sign up for more online courses than I can complete. I fundamentally believe that if you are not learning new things, you stop doing great and useful things. So family, curiosity and hunger for knowledge all define me. Why am I here? Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 16 LBS128 I am here for the same reason I think most people join Microsoft — to change the world through technology that empowers people to do amazing things. I know it can sound hyperbolic — and yet it’s true. We have done it, we’re doing it today, and we are the team that will do it again. I believe over the next decade computing will become even more ubiquitous and intelligence will become ambient. The coevolution of software and new hardware form factors will intermediate and digitize — many of the things we do and experience in business, life and our world. This will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data, and intelligence from machine learning. This is a software-powered world. It will better connect us to our friends and families and help us see, express, and share our world in ways never before possible. It will enable businesses to engage customers in more meaningful ways. I am here because we have unparalleled capability to make an impact. Why are we here? In our early history, our mission was about the PC on every desk and home, a goal we have mostly achieved in the developed world. Today we’re focused on a broader range of devices. While the deal is not yet complete, we will welcome to our family Nokia devices and services and the new mobile capabilities they bring us. As we look forward, we must zero in on what Microsoft can uniquely contribute to the world. The opportunity ahead will require us to reimagine a lot of what we have done in the past for a mobile and cloud-first world, and do new things. We are the only ones who can harness the power of software and deliver it through devices and services that truly empower every individual and every organisation. We are the only company with history and continued focus in building platforms and ecosystems that create broad opportunity. Qi Lu captured it well in a recent meeting when he said that Microsoft uniquely empowers people to "do more." This doesn’t mean that we need to do more things, but that the work we do empowers the world to do more of what they care about — get stuff done, have fun, communicate and accomplish great things. This is the core of who we are, and driving this core value in all that we do — be it the cloud or device experiences — is why we are here. What do we do next? Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 17 LBS128 To paraphrase a quote from Oscar Wilde — we need to believe in the impossible and remove the improbable. This starts with clarity of purpose and sense of mission that will lead us to imagine the impossible and deliver it. We need to prioritize innovation that is centered on our core value of empowering users and organisations to "do more." We have picked a set of high-value activities as part of our One Microsoft strategy. And with every service and device launch going forward we need to bring more innovation to bear around these scenarios. Next, every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this. Finally, I truly believe that each of us must find meaning in our work. The best work happens when you know that it’s not just work, but something that will improve other people’s lives. This is the opportunity that drives each of us at this company. Many companies aspire to change the world. But very few have all the elements required: talent, resources, and perseverance. Microsoft has proven that it has all three in abundance. And as the new CEO, I can’t ask for a better foundation. Let’s build on this foundation together. Satya Source: Microsoft Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 18 LBS128 Exhibit 5: Satya Nadella’s letter to “the two families that have shaped my life” Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 19 LBS128 References and Notes 1 Fast Company. (2018). Satya Nadella: The C In CEO Stands For Culture. [online] Available at: www.fastcompany.com/40457741/satya-nadella-the-c-in-ceo-stands-for-culture 2 Fortune. (2018). Microsoft’s office: Why insiders think top management has lost its way. [online] Available at: http://fortune.com/2011/03/31/microsofts-office-why-insiders-think-top-management-has-lost-its-way/ 3 Eichenwald, K. (2018). How Microsoft Lost Its Mojo: Steve Ballmer and Corporate America’s Most Spectacular Decline. [online] The Hive. Available at: www.vanityfair.com/news/business/2012/08/microsoft-lost-mojo-steveballmer 4 Eichenwald, K. (2018). How Microsoft Lost Its Mojo: Steve Ballmer and Corporate America’s Most Spectacular Decline. [online] The Hive. Available at: www.vanityfair.com/news/business/2012/08/microsoft-lost-mojo-steveballmer 5 Bergen, J. (2018). Google pays 23% more than industry average, and then there’s the perks - Geek.com. [online] Geek.com. Available at: www.geek.com/news/google-pays-23-more-than-industry-average-and-then-theres-theperks-1390323/ 6 Paragraph excerpted from Fast Company and adapted by case writer to include chronology. (2018). Satya Nadella Rewrites Microsoft’s Code. [online] Available at: www.fastcompany.com/40457458/satya-nadellarewrites-microsofts-code 7 Jackdaw Research. (2018). Media. [online] Available at: https://jackdawresearch.com/media/ 8 Harvard Business Review. (2018). Microsoft’s CEO on Rediscovering the Company’s Soul. [online] Available at: https://hbr.org/ideacast/2017/09/microsofts-ceo-on-rediscovering-the-companys-soul.html 9 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. William Collins, p.92. 10 Ibid, p.93. 11 Fast Company. (2018). Satya Nadella: The C In CEO Stands For Culture. [online] Available at: www.fastcompany.com/40457741/satya-nadella-the-c-in-ceo-stands-for-culture 12 Phil Spencer (2018). 2018 Dice Keynote Transcript. [online] Slideshare.net. Available at: www.slideshare.net/PhilSpencer/2018-dice-keynote-transcript 13 Fast Company. (2018). Satya Nadella Rewrites Microsoft’s Code. [online] Available at: www.fastcompany.com/40457458/satya-nadella-rewrites-microsofts-code 14 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. William Collins, p.75-76. 15 16 Ibid, p.81. Interview with Jill Tracie Nichols, Satya Nadella’s Chief of Staff 2014–2017 and co-author of Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone, London, May 1, 2018 17 Ibid, p.80. 18 Ibid, p.83. 19 Ibid, p.93-94. 20 Fast Company. (2018). Satya Nadella Rewrites Microsoft’s Code. [online] Available at: www.fastcompany.com/40457458/satya-nadella-rewrites-microsofts-code 21 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. William Collins, p.92. Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 20 LBS128 22 23 Microsoft.com. (2018). Empowering Our Employees - Microsoft Corporate Social Responsibility. [online] Available at: www.microsoft.com/en-us/about/corporate-responsibility/empowering-employees Interview with Kathleen Hogan. www.youtube.com/watch?v=4kf7mhkG6cM 24 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. William Collins, p.101. 25 Interview with Jill Tracie Nichols, Satya Nadella’s Chief of Staff 2014–2017 and co-author of Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone, London, May 1, 2018 26 Interview with Hogan www.youtube.com/watch?v=4kf7mhkG6cM 27 Ibid. 28 Cable, D. (2018). Alive at Work: The Neuroscience of Helping Your People Love What They Do. Harvard Business Review Press, p.168. 29 Ibid, p.169. 30 Ibid, p.170. 31 BBC News. (2018). Xbox apologises for go-go dancer party. [online] Available at: http://www.bbc.co.uk/news/technology-35861212 32 Phil Spencer (2018). 2018 Dice Keynote Transcript. [online] Slideshare.net. Available at: www.slideshare.net/PhilSpencer/2018-dice-keynote-transcript 33 The Verge. (2018). Microsoft says it will tie executive bonuses to diversity hiring goals. [online] Available at: www.theverge.com/2016/11/18/13681738/microsoft-diversity-goals-executive-bonuses-women-in-tech 34 McKinsey & Company. (2018). Ahead of the curve: The future of performance management. [online] Available at: www.mckinsey.com/business-functions/organisation/our-insights/ahead-of-the-curve-the-future-of-performancemanagement 35 Interview with Jill Tracie Nichols, Satya Nadella’s Chief of Staff 2014–2017 and co-author of Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone, London, May 1, 2018 36 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. William Collins, p.113. 37 Fast Company. (2018). Satya Nadella Rewrites Microsoft’s Code. [online] Available at: www.fastcompany.com/40457458/satya-nadella-rewrites-microsofts-code 38 West, J. (2018). Microsoft’s disastrous Tay experiment shows the hidden dangers of AI. [online] Quartz. Available at: https://qz.com/653084/microsofts-disastrous-tay-experiment-shows-the-hidden-dangers-of-ai/ 39 Fast Company. (2018). Satya Nadella Rewrites Microsoft’s Code. [online] Available at: www.fastcompany.com/40457458/satya-nadella-rewrites-microsofts-code 40 Phil Spencer (2018). 2018 Dice Keynote Transcript. [online] Slideshare.net. Available at: www.slideshare.net/PhilSpencer/2018-dice-keynote-transcript 41 Chamberlain, D. (2018). Who’s Hiring AI Talent in America? - Glassdoor Economic Research. [online] Glassdoor Economic Research. Available at: www.glassdoor.com/research/studies/ai-jobs/ 42 Fast Company. (2018). Satya Nadella Rewrites Microsoft’s Code. [online] Available at: www.fastcompany.com/40457458/satya-nadella-rewrites-microsofts-code 43 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. William Collins, p.117. 44 Ibid, p.119. Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 21 LBS128 45 Phil Spencer (2018). 2018 Dice Keynote Transcript. [online] Slideshare.net. Available at: www.slideshare.net/PhilSpencer/2018-dice-keynote-transcript 46 News.microsoft.com. (2018). [online] Available at: news.microsoft.com/uploads/2017/09/Satya-Nadella-transcriptIgnite-2017.pdf Copyright © 2018 London Business School This document is authorized for use only by Lashundra Small in Leadership in the 21st Century at Strayer JWMI BB SaaS, 2022. Page 22 JWI 510: Leadership in the 21st Century Lecture Notes Week 4: Building High-Performance Teams Welcome to Week 4. Real leaders build great teams. They achieve breakthrough results by working through the teams they manage, not by doing everything themselves. Still, many managers are quick to assume that teams are always the best way to get work done. Remember this, though: working in teams is not a virtue in itself, and it is certainly not a guarantee of success. In today's world, with employees spread out across time zones and continents, creating a high-performing team takes thought and planning, and you need a framework for success. What is a Team? In their book, The Wisdom of Teams, Jon Katzenbach and Douglas Smith make an important distinction between a real team and a working group (1992). They define a real team as “a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable.” Sadly, few teams work this way. Most of what people think of as teams are actually working groups. A single leader defines the tasks to be performed – sometimes with member input, sometimes not – and participants mostly work on their own. There is nothing wrong with working groups. In fact, they can be a fast and efficient way to get work done. Real teamwork, on the other hand, requires something altogether different. Teams should only be created when they can accomplish something bigger and better than a group of individuals working on their own. Before you form a team, make sure it has the right purpose, structure, and ground rules to get the job done. Forming-Storming-Norming-Performing In 1965, Bruce Tuckman proposed a model of organizational behavior called Forming-Storming-NormingPerforming. This model is particularly helpful in understanding the stages that groups go through when working together. Forming Individuals spend time becoming familiar with other members. Because they don't know each other well, they avoid conflict and controversy. Usually, this is a short, but comfortable, stage. Little tends to get done because members are more focused on themselves than the team. At this point in the process, the leader needs to help the group understand the task and set goals. © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 1 of 5 JWI 510: Leadership in the 21st Century Lecture Notes Storming Team members stop being polite and begin to experience conflict, due to a lack of vision or role clarity. Frustration and competition cause morale to fall. While painful, this is an important period for the team to create its identity. We'll consider how to establish a common goal and define clear roles and operating rules that can help teams move through this stage more quickly. Norming Team members sort out their personal conflicts and shift their focus to work. The team becomes more integrated and establishes its culture. At this point, leaders will be able to give up some of their decisionmaking power to let the team assume greater control. Performing This is a steady state in which the team begins to function at an optimal level. Team members become interdependent and capable of diagnosing and resolving problems on their own. Leaders shouldn't sit back and relax during this stage, however. Even the highest-performing teams slide back into earlier stages when under stress. Leaders must continually monitor goals and performance. How to Develop Your Team When selecting and coaching your team members, keep these notes in mind: • Avoid yes-people who will just agree with you about everything. • Diverse perspectives are valuable, and even open conflict can be good, if valued for the lessons it offers. Buy-in increases if there has been some disagreement. • Select individuals who have a range of leadership and decision-making styles. Think of what you learned with the DiSC assessment. • You need team members who can acknowledge their weaknesses and who can ask for help when needed. They have to let their guard down and build trust in each other. • Hoegl (2004) found that the best size team is 4-5 members, since, in larger teams, communication becomes difficult and decision-making grows unwieldy. • Spend time up front to articulate and agree on matters like purpose, approach to getting work done, and the benefits of reaching the goal. • Ask for input and do not dictate answers. Collective goals are more likely to be achieved. • Consider having a team charter to establish these goals and to educate others about these goals. © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 2 of 5 JWI 510: Leadership in the 21st Century Lecture Notes Performance It is also critical to be clear about roles and not to just divide up tasks. Each team is usually going to have a leader, who sets the vision, defines roles, communicates goals and progress, and keeps the project and team on track. There will also be team members who help set goals, assess and share strengths and weaknesses, keep others accountable, and commit to decisions even when they do not support them. There will also be individual contributors who are assigned a particular task. They are responsible for providing the necessary work or information, while keeping the team's goals in mind. Agreeing on ground rules in advance allows a team to run more efficiently. Ask these critical questions: 1. How will conflict and disagreement be handled? 2. How will decisions be made? 3. How will results be measured? If you are going to create a team charter, consider including these operating procedures. Organizational researchers have found several ways that effective leaders remove impediments to high performance and motivate a team to greater achievements. Foster Commitment: • Speak in terms of "We," not "I;" create shared and ambitious goals • Help people understand the personal and group benefits of working together • Realign rewards toward team outcomes rather than individual ones • Monitor commitment level, as squabbling and fatigue can erode dedication • If team members lose interest, find new challenges and roles for them Encourage Information Sharing: • Recognize employees who freely exchange information, especially if it is sensitive or challenging • Share as much information as you can with the team, to model the level of transparency you expect • If you need to rely on information from other teams or departments, recruit team members who have the appropriate knowledge, or bring in experts as individual contributors and reward them appropriately © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 3 of 5 JWI 510: Leadership in the 21st Century Lecture Notes Avoid Groupthink: Janis (1972) coined this name for what occurs when a group becomes so close-knit that members fail to critically analyze or evaluate their decisions. Innovation and creativity are stifled when teams become so inwardly focused that they fail to look at reasonable alternatives and are unwilling to express concerns about the group's views. If this happens: • Make your team aware of the symptoms • Give authority to non-conforming opinions • Consider integrating new members for fresh perspectives • In fact, you may even want to designate one or two groupthink watchdogs to play devil’s advocate and challenge assumptions Address Performance Issues: • Diagnose problems by gathering information and getting a full picture • Explain to team members how to remedy situations, including removing obstacles and unnecessary distractions • Define success and make consequences clear • Make your role explicit • Offer training or additional knowledge, and consider additional coaching, if needed You may be called on to lead a geographically diverse or even a virtual team. Companies set up remote teams to save costs, respond quickly to changes in the marketplace, and leverage talent from multiple geographies. Conventional wisdom dictates that teams dispersed across locations, cultures, and functions have lower levels of performance. Recent studies, however, show that, if managed well, these far-flung teams can outperform groups that are located together (Siebdrat, Hoegl, & Ernst, 2009). While many of the same rules of teamwork apply – setting common goals, defining clear roles and agreeing on operating procedures, etc. – recognize that virtual teams face unique management challenges. The most significant issues center on engagement and communication. Remember, healthy relationships among team members build cohesion, increase engagement, and ultimately make your job easier. Effective teams also provide a way for members to spontaneously communicate. Tools like instant messaging or other social technologies can create a virtual water cooler that allows people to interact informally. © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 4 of 5 JWI 510: Leadership in the 21st Century Lecture Notes All teams conclude their work at some point. Disbanding a team can be stressful, particularly if the future is uncertain for members. But don't let emotions make the end unpleasant. Reflect together on what worked and what didn't. Share these lessons with the broader organization, so that others can learn from the team's experience. No team's time together is free of obstacles. Whether your team is close at hand or spread out across the globe, it must be carefully tended to, in order to thrive. Remember, teams are not silver bullets. They have the potential to produce extraordinary results, but many fall short, due to poor management and a lack of cohesion. By choosing the right people, agreeing on shared objectives, clearly defining who does what, and setting up ground rules, leaders can avoid – or at least mitigate – many of the inherent risks of teamwork. And when obstacles do present themselves, your team will be better equipped to overcome them and excel. Your Leadership Journey • If you are new to leadership, consider how you can form more trusting relationships within the team. • If you are a team leader, consider whether a team charter would be beneficial to your team. • If you are a senior/veteran leader, consider how you can build better trust in all layers and teams within your organization. © Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 5 of 5 1/25/22, 5:26 PM As Corporate Boards Pursue Diversity, Director Training Programs Spring Up - WSJ This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. https://www.wsj.com/articles/as-corporate-boards-pursue-diversity-director-training-programs-spring-up-11640946604 BUSINESS As Corporate Boards Pursue Diversity, Director Training Programs Spring Up Law firms, universities, existing board members offer classes to prepare and broaden the pool of candidates By Emily Glazer Follow and Theo Francis Follow Dec. 31, 2021 5:30 am ET U.S. companies are turning to programs aimed at preparing women and people of color for corporate board roles in a bid to comply with calls from regulators and investors to diversify their directors. Law firms, universities and current directors of companies have launched new or expanded programs over the past few years to coach prospective board candidates, offering training on topics from corporate governance to committee work. Some programs are free or sponsored by companies, while others can cost thousands of dollars. Sponsors are hoping to broaden the pool of people who are ready to fill board roles beyond former chief executives to other qualified business leaders. They also can match candidates with board openings, as companies’ boards are still largely white and male with roles often filled through professional networks of existing directors. Some companies may soon face penalties if they don’t have a certain number of women or people of color on their boards. California could start assessing fines to companies based in the state that don’t abide by its rules after Dec. 31. Nasdaq-listed companies will be required to publish a standardized template of board-level diversity statistics starting in 2022, and must have at least one diverse director—or explain why they haven’t—starting in 2023. Institutional investors and proxy advisers have also said they may vote against director nominees if the company’s board isn’t sufficiently diverse. https://www.wsj.com/articles/as-corporate-boards-pursue-diversity-director-training-programs-spring-up-11640946604?mod=Searchresults_pos6&pag… 1/5 1/25/22, 5:26 PM As Corporate Boards Pursue Diversity, Director Training Programs Spring Up - WSJ “The progress we’re seeing is as much about investor pressure and engagement on the issue as it is legal mandates,” said Marc Goldstein, head of U.S. research for Institutional Shareholder Services, a proxy advisory firm. “Even if we see the California mandate struck down…the pressure isn’t going to go away on companies.” The diversity push helped fuel turnover among corporate boards, with companies in the S&P 500 adding more directors in 2021 than in any year since 2004, according to data from Spencer Stuart. Nearly three-quarters of new independent directors are women or belong to racial or ethnic minority groups, the recruitment and advisory firm said, adding that nearly half of those directors were serving on a board for the first time. An event during a recent board boot camp for women run by longtime corporate director Maggie Wilderotter, seated on left. PHOTO: KATE NEDOROSTEK/GRAND RESERVE INN Given the influx of first-time directors, the National Association of Corporate Directors in 2020 introduced a program called Accelerate to help connect diverse candidates with board opportunities. It has about 415 people in the program and roughly 25% of participants have secured a public, private or nonprofit board seat, said Stephanie Mullette, NACD’s senior vice president of membership. Large companies including Amazon.com Inc., Microsoft Corp. and Zillow Group Inc. have provided financial support to the Black Boardroom Initiative, an effort started in June by law firm Perkins Coie LLP. The first cohort, about two dozen people, attended sessions through November about mergers and acquisitions, shareholder activism and cybersecurity risks among other topics, said Pat Ogawa, a Deloitte executive and initiative co-founder. https://www.wsj.com/articles/as-corporate-boards-pursue-diversity-director-training-programs-spring-up-11640946604?mod=Searchresults_pos6&pag… 2/5 1/25/22, 5:26 PM As Corporate Boards Pursue Diversity, Director Training Programs Spring Up - WSJ “It’s not just training, like you had to go to take Corporate Governance 101 at business school or law school,” Mr. Ogawa said. The program, he added, is more about giving candidates tools to find their path to a board seat. Lisa Nelson, a former Microsoft executive, joined three programs over the past 18 months that offered mentoring and other support to women interested in joining corporate boards. Ms. Nelson, who previously co-founded and led Microsoft’s venture fund, said she built many connections over her decade-plus with the tech giant, but also wanted to expand her network. She now sits on six boards, including one for Astra Space Inc., a Californiabased publicly traded company she was introduced to through longtime corporate director Maggie Wilderotter. Ms. Nelson participated in a board boot camp for women run by Ms. Wilderotter. “I call it a club, and you have to figure out how to get invited to the club,” said Ms. Nelson, who also started citing her background as Asian-American and Pacific Islander as one of the ways she distinguishes herself. “That’s the hard part for many people,” she said. ‘I call it a club, and you have to figure out how to get invited to the club.’ — Lisa Nelson, a former Microsoft executive Jan Fields, who serves on several corporate boards, said there is more competition when companies are seeking diverse candidates so she has sought to cast a wider net, such as using recruiting companies or tools like a director database from governance-data firm Equilar Inc. She said Equilar’s database has helped her connect with younger candidates who are high-level executives, though often not CEOs, and may be first-time board members. “It used to be if I called somebody and said we’re interested in you for a board, they’d jump right on it,” said Ms. Fields, who is chair of the nominating and governance committee of women’s clothing retailer Chico’s FAS Inc. “Today they’re mulling offers from two or three others, or they’re deciding if they even want to go and be a part of a company.” https://www.wsj.com/articles/as-corporate-boards-pursue-diversity-director-training-programs-spring-up-11640946604?mod=Searchresults_pos6&pag… 3/5 1/25/22, 5:26 PM As Corporate Boards Pursue Diversity, Director Training Programs Spring Up - WSJ A few months ago four board opportunities arose simultaneously for Maggie Chan Jones, founder and CEO of Tenshey Inc., which focuses on advancing gender equality in the workplace. Ms. Chan Jones recently finished Harvard Business School’s corporate director certificate program geared toward current board members and said she found the program helpful as a newer director. “Representing women of color on boards also comes with our own pressures and public expectations because there are so few of us and you want to represent in the best possible way,” said Ms. Chan Jones, who is on two boards. Maggie Chan Jones, CEO of Tenshey, recently finished Harvard Business School's corporate director certificate program. PHOTO: JIYANG CHEN PHOTOGRAPHY Despite recent director additions, a little over three-quarters of S&P 500 board members are white and 70% are men, according to Spencer Stuart. Changing board demographics is something that is likely to take years at current rates. Companies boosting their diversity often are adding new seats rather than replacing existing directors, Spencer Stuart found earlier this fall. A PricewaterhouseCoopers survey found that 60% of executives said a reluctance among directors to retire makes it harder to increase board diversity. Starting Saturday, public companies based in California must include at least one director who identifies as Black, Latino, Asian, Pacific Islander or Native American or as gay, lesbian, bisexual or transgender. A separate state measure already requires those companies to have at least one woman on their boards. Both rules allow for $100,000 penalties for initial violations, and both face legal challenges. https://www.wsj.com/articles/as-corporate-boards-pursue-diversity-director-training-programs-spring-up-11640946604?mod=Searchresults_pos6&pag… 4/5 1/25/22, 5:26 PM As Corporate Boards Pursue Diversity, Director Training Programs Spring Up - WSJ A spokesman for California Secretary of State Shirley Weber declined to comment, citing pending litigation. In 2021, women made up half of all new directors added to California companies’ boards, according to a mid-December report from California Partners Project, an advocacy group for gender equality. After those appointments, about 30% of the 6,225 public-company board seats were held by women, the group found. Write to Emily Glazer at emily.glazer@wsj.com and Theo Francis at theo.francis@wsj.com Appeared in the January 3, 2022, print edition as 'Board-Diversity Drive Sparks New Training.' Copyright © 2022 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. https://www.wsj.com/articles/as-corporate-boards-pursue-diversity-director-training-programs-spring-up-11640946604?mod=Searchresults_pos6&pag… 5/5 6 Hiring WHAT WINNERS ARE MADE OF S before business audiences, I get a question that totally stumps me, as in: I have no clue about the right answer. A couple of years ago at a convention of insurance executives in San Diego, for instance, a woman stood up and said, “What is the one thing you should ask in an interview to help you decide whom to hire?” I shook my head. “The one thing?” I said.“I can’t come up with one. What do you think?” “That’s why I’m asking you!” she replied. The audience roared, certainly because I was so floored, but also because they could probably relate. Hiring good people is hard. Hiring great people is brutally hard. And yet nothing matters more in winning than getting the right people on the field. All the clever strategies and advanced technologies in the world are nowhere near as effective without great people to put them to work. OMETIMES WHEN I APPEAR — 81 — YOUR COMPANY Because hiring right is so important—and so challenging— there is a lot of territory to cover in this chapter. ■ First, we’ll take a short look at three acid tests you need to conduct before you even think about hiring someone. ■ Next we’ll lay out the 4-E (and 1-P) frame- work for hiring that I have used for many years. It’s named after the four characteristics it contains, which all begin with E, a nice coincidence. There’s a P (for passion) in there too. ■ After that, we’ll explore the four special charac- teristics you look for when hiring leaders. The previous chapter was about what you do when you are a leader—the rules of leadership, as it were. This section is about how to hire leaders in the first place. ■ Finally, I’ll answer six FAQs (frequently asked questions) about hiring that I get during my travels—plus that “impossible” one from that insurance executive in San Diego. After all, I’ve had a couple of years to think it over! THE ACID TESTS Before you even think about assessing people for a job, they have to pass through three screens. Remember, these tests should come at the outset of the hiring process, not right before you’re about to sign on the dotted line. — 82 — HIRING The first test is for integrity. Integrity is something of a fuzzy Over time, many of us word, so let me tell you my defini- develop an instinct for tion. People with integrity tell the integrity. Just don’t be truth, and they keep their word. They take responsibility for past afraid to use it. actions, admit mistakes, and fix them. They know the laws of their country, industry, and company—both in letter and spirit—and abide by them. They play to win the right way, by the rules. How can you test for integrity? If a candidate comes from inside your company, that’s pretty easy. You’ve seen him or her in action or know someone who has. From the outside, you need to rely on reputation and reference checks. But those aren’t foolproof. You also have to rely on your gut. Does the person seem real? Does she openly admit mistakes? Does he talk about his life with equal measures of candor and discretion? Over time, many of us develop an instinct for integrity. Just don’t be afraid to use it. The second test is for intelligence. That doesn’t mean a person must have read Shakespeare or can solve complex physics problems. It does mean the candidate has a strong dose of intellectual curiosity, with a breadth of knowledge to work with or lead other smart people in today’s complex world. Sometimes people confuse education with intelligence. I certainly did that at the start of my career. But with experience, I learned that smart people come from every kind of school. I’ve known many extremely bright people from places like Harvard and Yale. But some of the best executives I’ve worked with have attended places like Bryant University in Providence, Rhode Island, and the University of Dubuque, in Iowa. GE was lucky to have all these people on its team. — 83 — YOUR COMPANY My point is that a candidate’s education is only a piece of the picture, especially when it comes to intelligence. The third ticket to the game is maturity. You can, by the way, be mature at any age, and immature too. Regardless, there are certain traits that seem to indicate a person has grown up: the individual can withstand the heat, handle stress and setbacks, and, alternatively, when those wonderful moments arise, enjoy success with equal parts of joy and humility. Mature people respect the emotions of others. They feel confident but are not arrogant. In fact, mature people usually have a sense of humor, especially about themselves! As with integrity, there is no real test for maturity. Again, you have to rely on reference checks, reputation, and most important, gut. THE 4-E (AND 1-P) FRAMEWORK The 4-E framework took years for me to solidify. No doubt other people have other frameworks that work very well in building winning teams. But I’ve found this one was consistently effective, year after year, across businesses and borders. The first E is positive energy. We just talked about this characteristic in the chapter on leadership. It means the ability to go go go—to thrive on action and relish change. People with positive energy are generally extroverted and optimistic. They make conversation and friends easily. They start the day with enthusiasm and usually end it that way too, rarely seeming to tire in the middle. They don’t complain about working hard; they love to work. They also love to play. People with positive energy just love life. The second E is the ability to energize others. Positive energy is the ability to get other people revved up. People who — 84 — HIRING energize can inspire their team to take on the impossible—and enjoy People with positive the hell out of doing it. In fact, peo- energy just love life. ple would arm wrestle for the chance to work with them. Now, energizing others is not just about giving Pattonesque speeches. It takes a deep knowledge of your business and strong persuasion skills to make a case that will galvanize others. A great example of an energizer is Charlene Begley, who started with GE as a financial management trainee in 1988. After several years in various jobs, Charlene was selected to run GE’s Six Sigma program in the transportation business. That’s where her leadership really began to shine. Galvanized by her intensity, her team really got its Six Sigma program on the corporate radar screen. It’s hard to unpick Charlene’s ability to energize because it’s a brew of skills all mixed together. She is a great communicator, who can clearly define objectives. She’s dead serious about work, but she doesn’t take herself too seriously. In fact, she has a good sense of humor and shares credit readily. Her attitude is always upbeat: no matter how hard the job, it can get done. Charlene’s ability to energize that Six Sigma team was one of the key characteristics that got her out of the pile and set her on GE’s fast track. After Six Sigma and a couple of other leadership roles, she was made head of GE’s corporate audit staff and eventually became CEO of GE Fanuc Automation. Today, at thirtyeight, Charlene is CEO and president of GE’s $3 billion rail business. The third E is edge, the courage to make tough yes-orno decisions. Look, the world is filled with gray. Anyone can look at an issue from every different angle. Some smart people can—and will—analyze those angles indefinitely. But effective — 85 — YOUR COMPANY Effective people know when to stop assessing and make a tough call, even without total information. Little is worse than a manager who can’t cut bait. people know when to stop assessing and make a tough call, even without total information. Little is worse than a manager at any level who can’t cut bait, the type that always says, “Bring it back in a month and we’ll take a good, hard look at it again,” or that awful type that says yes to you, but then someone else comes into the room and changes his mind. We called these wishy-washy types last-one-out- the-door bosses. Some of the smartest people that I’ve hired over the years— many of them from consulting—had real difficulty with edge, especially when they were put into operations. In every situation, they always saw too many options, which inhibited them from taking action. That indecisiveness kept their organizations in limbo. In the end, for several of them, that was a fatal flaw. Which leads us to the fourth E—execute—the ability to get the job done. Maybe this fourth E seems obvious, but for a few years, there were just the first three Es. Thinking these traits were more than sufficient, we evaluated hundreds of people and labeled a slew of them “high-potentials,” and moved many of them into managerial roles. In that period, I traveled to personnel review sessions in the field with GE’s head of HR, Bill Conaty. At the review sessions, we would refer to a single page that had each manager’s photo on it, along with his or her boss’s performance review and three circles, one for each E we were using at the time. Each one of these Es would be colored in to represent how well the individual was — 86 — HIRING doing. For instance, a person could have half a circle of energy, a full cir- Some of the smartest cle of energize, and a quarter circle people I hired had real of edge. difficulty with edge. Then one Friday night after a weeklong trip to our midwestern For several of them, businesses, Bill and I were flying that was a fatal flaw. back to headquarters, looking over page after page of high-potentials with three solidly colored-in circles. Bill turned to me. “You know, Jack, we’re missing something,” he said. “We have all these great people, but some of their results stink.” What was missing was execution. It turns out you can have positive energy, energize everyone around you, make hard calls, and still not get over the finish line. Being able to execute is a special and distinct skill. It means a person knows how to put decisions into action and push them forward to completion, through resistance, chaos, or unexpected obstacles. People who can execute know that winning is about results. If a candidate has the four Es, then you look for that final P—passion. By passion, I mean a heartfelt, deep, and authentic excitement about work. People with passion care— really care in their bones—about colleagues, employees, and friends winning. They love to learn and grow, and they get a huge kick when the people around them do the same. The funny thing about people with passion, though, is that they usually aren’t excited just about work. They tend to be passionate about everything. They’re sports trivia nuts or they’re fanatical supporters of their alma maters or they’re political junkies. Whatever—they just have juice for life in their veins. — 87 — YOUR COMPANY HIRING FOR THE TOP The three preliminary acid tests and the 4-E (and 1-P) framework apply to any hiring decision, no matter what level in the organization. But sometimes, you need to hire a senior-level leader— someone who is going to run a major division or an entire company. In that case, there are four more highly developed characteristics that really matter. The first characteristic is authenticity. Why? It’s simple. A person cannot make hard decisions, hold unpopular positions, or stand tall for what he believes unless he knows who he is and feels comfortable with that. I am talking about self-confidence and conviction. These traits make a leader bold and decisive, which is absolutely critical in times when you must act quickly. Just as important, authenticity makes leaders likable, for lack of a better word. Their “realness” comes across in the way they communicate and reach people on an emotional level. Their words move them: their message touches something inside. When I was at GE, we would occasionally encounter a very successful executive who just could not be promoted to the next level. In the early days, we would struggle with our reasoning. These executives demonstrated the right values and made the numbers, but usually their people did not connect with them. What was wrong? Finally, we figured out that these executives always had a certain phoniness to them.They pretended to be something they were not—more in control, more upbeat, more savvy than they really were. They didn’t sweat. They didn’t cry. They squirmed in their own skin, playing a role of their own inventing. Leaders can’t have an iota of fakeness. They have to know themselves—so that they can be straight with the world, energize followers, and lead with the authority born of authenticity. — 88 — HIRING The second characteristic is the ability to see around corners. Every leader has to have a vision and the ability to predict the future, but good leaders must have a special capacity to anticipate the radically unexpected. In business, the best leaders in brutally competitive environments have a sixth sense for market changes, as well as moves by existing competitors and new entrants. The former vice-chairman of GE, Paolo Fresco, is a gifted chess player. He carried that skill into every global business deal he made over the course of thirty years. Somehow, because of his intuition and savvy, he could put himself in the chair of the person across the table, allowing him to predict every move in a negotiation. To our amazement, Paolo always saw what was coming next. No one ever came close to getting the better of him—because he knew what his “adversary” was thinking before the adversary himself knew. The ability to see around corners is the ability to imagine the unimaginable. The third characteristic is a strong penchant to surround themselves with people better and smarter than they are. Every time we had a crisis at GE, I would quickly assemble a group of the smartest, gutsiest peo- The best leaders in ple I could find at any level from brutally competitive within the company and sometimes from without, and lean on them environments have a heavily for their knowledge and ad- sixth sense for vice. I would make sure everyone in market changes. They the room came at the problem from can imagine the a different angle, and then I would have us all wallow in the informa- unimaginable. tion as we worked to solve the crisis. — 89 — YOUR COMPANY These sessions were almost always contentious, and the opinions that came at me strong and varied. And yet, my best decisions arose from what I learned in these debates. Disagreement surfaced meaningful questions and forced us to challenge assumptions. Everyone came out of the experience more informed and better prepared to take on the next crisis. A good leader has the courage to put together a team of people who sometimes make him look like the dumbest person in the room! I know that sounds counterintuitive. You want your leader to be the smartest person in the room—but if he acts as if he is, he won’t get half the pushback he must get to make the best decisions. The fourth characteristic is heavy-duty resilience. Every leader makes mistakes, every leader stumbles and falls. The question with a senior-level leader is, does she learn from her mistakes, regroup, and then get going again with renewed speed, conviction, and confidence? The name for this trait is resilience, and it is so important that a leader must have it going into a job because if she doesn’t, a crisis time is too late to learn it. That is why, when I placed people in new leadership situations, I always looked for candidates who had one or two very tough experiences. I particularly liked the people who had had the wind knocked clear out of them but proved they could run even harder in the next race. The global business world today is going to knock any leader off her horse more than once. She must know how to get back in the saddle again. HIRING FAQS Finally, let’s look at the six FAQs—frequently asked questions— I’ve received about hiring over the past several years. At the end of — 90 — HIRING them, I will try (at last) to answer the insurance executive from San Diego about the one best question to ask in an interview. As I said earlier, I’ve been thinking about it for a long time now. 1. How do you actually interview somebody for a job? My immediate answer to this question is: don’t ever rely entirely on one meeting! No matter how pressed for time you are or how promising someone looks, make sure every candidate is interviewed by several people. Over time, you will find that there are some people in your organization who have a special gift for picking out stars and phonies. Rely on them. (Bill Conaty, my HR head, was a master at this. Whether it was with a handshake, a smile, or a way of talking about their family, job candidates were transparent to him.) And listen when a trusted colleague tells you that his or her gut is negatively responding to a candidate. That uh-oh feeling is usually a sign that the candidate is not what he seems. At some point in the interview process, when it’s your turn, make sure you exaggerate the challenge of the open job; describe it on its worst day—hard, contentious, political, full of uncertainty. As you crank it up, see if the candidate keeps saying, “Yes, yes, yes!” If he does, you should worry that he has few other options, if any. You may even be his sole hope of employment. Be impressed if the candidate I particularly liked the starts peppering you back with hard questions like, “How soon do you people who had had the expect the results to be achieved?” wind knocked clear out or “Do I have enough people to of them but proved they make this happen?” Be even more could run even harder in impressed if she asks you about the company’s values. The difficulty of a the next race. job will bring good candidates to — 91 — YOUR COMPANY the edge of their seats with curiosity and firm self-confidence, not overenthusiastic acquiescence. Finally, after all the talking is done, don’t check just the references the candidate gives you. Call around—but you know that. When you do, don’t allow the conversation to be perfunctory. Stop yourself from doing something natural—just hearing the good news you want to hear. Force yourself to challenge anything that sounds like lawyer-speak. Use your chits. Promise you won’t repeat what you hear. Doing that, you’ll get what I did more times than I can count: “You’ve got to be kidding! We were happy to get rid of that guy!” 2. I just need to hire someone for technical expertise. Why do I need to bother with the four Es? Obviously, hiring a person who is both a technical star and demonstrates the four Es would be very nice! But if you’re really just desperate for a person with a certain specialty—say, a computer programmer or a research scientist—then I’d be satisfied with energy and passion, along with a bucketful of raw intelligence, great prior experience, and, of course, integrity. You need that with any person you hire. 3.What if someone is missing one or two of the Es? Can training fill in the gaps? Any candidate you hire in a managerial role must have the first two Es, positive energy and the ability to energize. Those are personality traits, and I don’t think they can be trained into someone. And frankly, I would encourage you not to hire any team member—manager or not—without a good dose of positive energy. People without it just enervate an organization. Edge and execution, on the other hand, can be developed with experience and management training. Time after time, I’ve seen people learn how to make tough calls and deliver results. The GE audit staff offers numerous examples. Every year, it brings on board about 120 people, primarily from GE’s financial management training program, but about a quarter from other — 92 — HIRING functions, such as engineering and manufacturing. The typical new hire in auditing has about three years of experience with the company. Their first year, these “new kids” travel to GE businesses around the world as members of three- to six-person audit teams. After twelve weeks of grueling analysis, they return to the headquarters of the business they’ve just audited to present their findings to the CFO and CEO. Often, they’ve got plenty to tell, some of it not so pretty. Early on, these young auditors are tentative, holding their comments while the more senior members of the team run the show. But over time, usually three to five years, I’ve seen these auditors develop an edge that is razor sharp. It comes from observing their more experienced teammates, lots of coaching, and plenty of practice. They also develop an incredible knack for execution. After all, they are responsible for making sure their recommendations have been implemented. If they haven’t, all hell breaks loose—and that’s a good teacher. The proof that edge and execution can be learned is clear: several CEOs of GE’s biggest businesses and a vice-chairman are veterans of the audit staff development process. 4. Can a person get ahead in business without the four Es or passion? Absolutely yes. A person can reach great heights just by being very smart. Or just by the sheer ability to get things done. We can all think of examples of these individuals. Many are the inventors and entrepreneurs of the world, and usually they run their own shows. But within an organization, I just haven’t seen too many who have sustained success, especially as leaders, without the four Es and passion. 5. I’ve always tried to hire people who can hit the ground running.What do you think about that as a decisive factor? — 93 — YOUR COMPANY When hiring, you have to make a trade-off. Do you hire someone to get a job done fast, or do you hire him based on his potential for growth? My advice is: try to pick the second option. I didn’t always feel that way. The first time I hired managers was when I was twenty-eight years old and I needed to build a functional team. I hired a PhD who was a peer of mine to be manager of R & D. For marketing, I hired a good fellow who was smart and was there, and for manufacturing manager, my selection was an experienced hand. I’d seen him in action in another part of the same division. Although I didn’t think of it at the time, most of these people had no future beyond the jobs I had just put them in. Our business was growing rapidly, and they didn’t have the skills to grow with it. In fact, by the time the business was four years old, all of them were gone and we were filling the positions again. With my first shot at hiring managers, I didn’t know any better. I just wanted to get the job done. But I eventually learned that it pays to go for the high-potentials who can grow with the business or are capable of moving up elsewhere in the organization. Hiring a highly skilled “blocker”—someone who will hit the ground running but has no future beyond the open position—is tempting because it solves an immediate need. But blockers soon become enervating. A good rule of thumb is They get bored by the familiarity of the not to hire someone work or, as in my early case, swamped by its challenges. Their people get disinto the last job of his or her career, unless it’s couraged because they see their bosses going nowhere, which makes them to be head of a function wonder about their own opportunities. or CEO. A good rule of thumb, then, is not to hire someone into the last job of his or — 94 — HIRING her career, unless it’s to be head of a function or CEO. Don’t beat yourself up 6. How long does it take to if you get hiring wrong know if you’ve hired right? Ususome of the time. Just ally within a year—and certainly within two—it is pretty clear if remember, the mistake someone is getting the results you’d is yours to fix. hoped for. It’s relatively easy to notice when a person lacks the energy and execution you anticipated. But the ability to energize and the capacity for edge sometimes take longer to show up in a new environment. People want to fit in before they start rousing the team to a cause or making the tough calls. But as I said, within two years at the most, if an employee is still falling short of your expectations, it is time to admit your mistake and start the process of moving the person out. If you have been doing your job and giving honest evaluations along the way, the employee shouldn’t be surprised, and an equitable severance package will likewise soften the blow. Hiring right is hard. I’d say as a young manager, I picked the right people about 50 percent of the time. Thirty years later, I had improved to about 80 percent. My point is: don’t beat yourself up if you get hiring wrong some of the time, especially when you’re starting out. Situations change. People change. You change. But just remember, every hiring mistake is yours. You have to fix it, not an HR person you call in to do your dirty work. Take responsibility and make sure the ending is candid and fair. And now for our San Diego question. What is the one thing you should ask in an interview to help you decide whom to hire? If I had just one area to probe — 95 — YOUR COMPANY in an interview, it would be about why the candidate left his previous job, and the one before that. Was it the environment? Was it the boss? Was it the team? What exactly made you leave? There is so much information in those answers. Keep digging and dig deep. Maybe the candidate just expects too much from a job or a company—he wants a boss who is entirely hands-off or teammates who always agree. Maybe he wants too much reward too fast. Or maybe she’s leaving her last job because she has just what you want: too much energy to be held back, so much ability to energize she wants to manage more people, too much edge for a namby-pamby employer, and such a strong ability to execute she needs more challenge. The key is: Listen closely. Get in the candidate’s skin. Why a person has left a job or jobs tells you more about them than almost any other piece of data. ■ Your goal in hiring is to get the right players on the field. Luckily, great people are everywhere. You just have to know how to pick them. It’s so easy to ju...
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