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The Cycle of Leadership
Noel M. Tichy
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The Cycle of Leadership
Noel M. Tichy
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About This Book
In The Leadership Engine, Noel Tichy showed how great companies strive to create leaders at all levels of the organization, and how those leaders actively develop future generations of leaders.
In this new book, he takes the theme further, showing how great companies and their leaders develop their business knowledge into ?achable points of view,?pend a great portion of their time giving their learnings to others, sharing best practices, and how they in turn learn and receive business ideas/knowledge from the employees they are teaching.
Calling this exchange a virtuous teaching cycle, Professor Tichy shows how business builders from Jack Welch at GE to Joe Liemandt at Trilogy create organizations that foster this knowledge exchange and how their efforts result in smarter, more agile companies, and winning results. Some of these ideas were showcased in Tichy?s recent Harvard Business Review article entitled, ? Ordinary Boot Camp."
Using examples from GE, Ford, Dell, Southwest Airlines and many others, Tichy presents and analyzes these principles in action and shows how managers can begin to transform their own businesses into teaching organizations and, consequently, better-performing companies
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Topic
BetriebswirtschaftSubtopic
LeadershipOne The New DNA of Winning: A Virtuous Teaching Cycle
ā¢ The Virtuous Teaching Cycle
ā¢ Everyone Gets Smarter
ā¢ Figure 1
ā¢ The Teaching Organization
ā¢ Worldās Largest Teaching Infrastructure: GE
ā¢ Brains and Alignment
ā¢ The Key is Interactive Teaching
ā¢ Networking Requires Teaching
ā¢ Winners Must Be Big, Fast and Smart
ā¢ Itās About Collecting and Sharing Knowledge
ā¢ Leadership Benchmarks
ā¢ Simultaneity and Return on Time
ā¢ Making the Most of Every Minute
ā¢ A Virtuous Teaching Cycle: David Novak and Yum! Brandsās Strategy
Chapter One
The New DNA of
Winning: A Virtuous Teaching Cycle
ā¢ Winning Organizations Are Teaching Organizations
- Everybody teaches. Everybody learns.
- Practices, processes, values all promote teaching.
ā¢ They Are Built Around Virtuous Teaching Cycles
- Teaching isnāt one-way. Itās interactive.
- Interaction generates knowledge. It makes everyone smarter.
ā¢ They Create Attributes Needed in the Knowledge Economy
- Maximum use of everyoneās skills and talent.
- All-level alignment needed for smart, speedy action.
For fifteen years, Jack Welch drove the GE transformation from his teachable point of view that every business in GE needed to dominate its market. āNo. 1, No. 2, fix, close or sell,ā was the mantra by which every GE executive lived or died. Then, in 1995, a group of middle managers in a class at GEās Crotonville leadership development institute sent Welch a startling message. The No. 1 or No. 2 vision, they told him, was stifling growth. Instead of scrambling to grow, leaders in GE were gaming it. GE was missing opportunities because its business leaders were defining their markets too narrowly so that they could be No. 1 or No. 2.
Welchās response to this āpunch in the nose,ā as he described it, was to revise his thinking. In not very long, he came out with a new declaration: Define your business in such a way that you have less than 10% market share. Then direct your creativity and energy to finding new ways to attract customers. This change in outlook, according to Welch, was a major contributor to GEās double-digit rates of revenue growth in the latter half of the 1990s.
This story illustrates what I call a āVirtuous Teaching Cycleā at work. In the process of teaching, the teacher, Welch, learned something valuable from the students, which made him smarter and prompted him to go out and teach a new idea. Such interactions are an essential reason why GE has been so successful over the past two decades and why it is likely to remain one of the worldās most valuable companies for some time to come.
Jack Welch handed over to Jeff Immelt a world-class Teaching Organization in which everyone teaches, everyone learns and everyone gets smarter every day. The Virtuous Teaching Cycle is the dynamic process that keeps it working. Jeff Immelt, the new CEO of GE, is a product of that Teaching Organization, and he believes that the most important core competency of a GE leader is to be a teacher.1
ā¢ ā¢ ā¢
In Fort Benning, Georgia, my colleague, Eli Cohen, while doing the research on The Leadership Engine book, watched a platoon of Special Operationās Rangers conduct a raid on a terrorist camp. The Rangers team entered a compound of terrorists (actually, army role players) who were well armed and also had chemical weapons. As the simulation unfolded, Eli saw that it was anything but the well-orchestrated ballet he expected. It was chaos. But, such simulations arenāt, as some people might think, opportunities to become perfect in choreographed maneuvers, which seldom if ever work on the battlefield. Instead, theyāre meant to season soldiers to make split-second decisions in difficult circumstances. They are designed to develop functioning leaders, able to accomplish their mission despite the obstacles, rather than lock-stepped martinets. So, after the exercise came the After Action Review.
In the After Action Review at Fort Benning, one of the NCOs said:
Donāt forget: What gets the job done is bold, aggressive leadership. Nothing went according to plan. We were supposed to face a chain-link fence: We faced triple-strand razor wire. The enemy wasnāt supposed to have night vision goggles, but they did, so we were compromised before we breached the fence. Our radios were supposed to work: They didnāt.
Thatās going to happen. But we got it done because some men stepped up and made decisions. When the alpha leader went down, his team leads took charge. When the communications didnāt work, the lieutenant didnāt fiddle with the radio or yell at his communications specialist. He ran around to find out what was going on and gave orders. When the fence turned out to be razor wire, the bravo squad leader changed his approach and commandeered two men to help get everyone into the compound.
Throughout the After Action Review an observer facilitated the dialogue, asking questions such as: āWhat were the conditions that caused you to do this? Why did you make that decision? Knowing what you know now, what would you have done differently?ā
In a later conversation, General Pete Schoomaker, former head of SOF, explained the process to us. After an exercise āwe stop and say, āNow letās go back to the beginning.ā So, we go through the mission phase by phase, using a formal process called an After Action Review. From privates to generals, everyone who had anything to do with the operation sits down and reviews what happened.ā Everyone contributes and learns from the others. It is a Virtuous Teaching Cycle.2
The Virtuous Teaching Cycle
In The Leadership Engine, I wrote about the importance of leaders developing leaders. A key theme of that book was that winning companies win because they have leaders at all levels, and those companies have leaders at all levels because their top leaders make developing other leaders a priority. They personally devote enormous amounts of time and energy to teaching, and they encourage other leaders in the company to do the same. This book builds on that work and adds a critical element.
Winning leaders are teachers, and winning organizations do encourage and reward teaching. But there is more to it than that. Winning organizations are explicitly designed to be Teaching Organizations, with business processes, organizational structures and day-to-day operating mechanisms all built to promote teaching.
More importantly, the teaching that takes place is a distinctive kind of teaching. It is interactive, two-way, even multi-way. Throughout the organization, āteachersā and the āstudentsā at all levels teach and learn from each other, and their interactions create a Virtuous Teaching Cycle that keeps generating more learning, more teaching and the creation of new knowledge. Virtuous teaching cycles are what keep people in winning companies getting smarter, more aligned and more energized every day. Teaching Organizations make them possible.
Figure 1 on page 5 captures the essence of the thesis presented in this book: Namely, the key to creating knowledge and aligning people in organizations is this Virtuous Teaching Cycle embedded in an ever expanding spiral. This interactive teaching, engaging more and more of an organizationās members, expands knowledge while it also aligns people. Examples in the book include GE, which has 15,000 full-time teachers called black belts, who take two years off from their regular jobs to teach Six Sigma3 (the 3.4 defects per million quality methodology). The black belts teach all 300,000 employees how to use the tools of Six Sigma, and the employees then teach the black belts by applying the Six Sigma methodology to projects that generate new knowledge and new products, streamline processes and enhance quality. Other examples include how Virtuous Teaching Cycles are being used by biotech firm Genentech to improve and accelerate the launch of new biotherapeutics via interactive teaching in the commercial organization, by the consulting firm Accenture to gather and share information among partners around the world, and by Home Depot to forge partnerships with its suppliers and customers.
Everyone Gets Smarter
It takes very tough-minded and disciplined leaders to create these virtuous spirals. All too often, the spirals found in organizations are the opposite kind. Command-and-control hierarchies, with their cram-down, one-way communication, create vicious cycles in which information is hidden, gamesmanship is raised to a high art, and trust is destroyed. As a result, the leader learns nothing, the organization gets dumber, and there is an ever expanding spiral of knowledge destruction and misalignment.
Figure 1
Creating value is still the game. Despite all the turmoil in the worldāfrom the 9/11 tragedy and ensuing war on terrorism, to the bursting of the new economy bubble with Enron as the poster child for that era, and a worldwide recession, coupled with incredible advances in digitization, biotech and other technological innovationsāthe fundamentals of leadership and business have not changed. Successful leaders add value. No matter what level or what type of organization, the true measure of a leader is whether he or she has made the assets under their control more valuable today than they were yesterday.
A leader is given stewardship over assets, in the form of people, capital, information, and technology. Their job is to make them more valuable and to keep making them more valuable into the future.
For the leaders of publicly traded companies, the long-term market capitalization of the company is the indicator. I use as my barometer the research of Professor Larry Selden at Columbia University. He found that the companies consistently in the top quartile of the S&P 500āwhom I count as the winnersāmaintain annual growth rates of 12% in revenue and a 16% operating return on assets. These numbers are not just financial abstractions. They are the real measure of whether a company is pleasing customers and making a profit, the two things that ultimately determine whether it stays in business and employs anybody.
For non-publicly traded organizations, the same rules apply. The metrics are a bit trickier, but they hold. I like to teach people that as a professor at the University of Michigan Business School, I have the same assignment as the CEO of a publicly traded company. As a leader, I must figure out how to add value, how to make the Business School assets more valuable tomorrow. There are two ways I can do that. One is profitable new revenue, which could be achieved through new executive programs, new degree programs, expanding our services, etc. The other is better asset utilization, being more productive off the same asset base, such as leveraging more student throughput through larger classes, better use of technology, etc. The point is, all leaders must drive these two dimensions.
While there is no ānew economy,ā there are some new rules. What it takesāthe assets and the abilities needed to grow profitably-have changed drastically in recent years. There is a new environment. Technology has accelerated globalization. Intangibles have replaced physical goods as the primary conveyors of value. Change has revved up to a fast, pass-and-shoot continuum.
In this new fluid, rolling game, the assets needed to win are people with brains and energy. They must be aligned and empowered, able to quickly figure out what needs to be done, and then get it done, efficiently and effectively. Old, football-style teams with a coach on the sidelines calling the plays are doomed. Basketball and soccer are the new metaphors. Winning still means scoring, but there is no time for huddles, no pauses for strategizing, and set patterns wonāt work.
In this environment, the key to winning is a leaderās ability to raise the collective intelligence of his or her team and keep its members aligned, energized and working to please customers. This last element is a critical one. In todayās world, a companyās people are its most important value-producing assets. Their brains create the ideas and intangible goods that draw customers to their door. To keep creating new value for the customers, team members must get smarter every day. But pulling them off-line for training more than intermittently is not an option. The teaching, the learning, the aligning and the energizing must be done on an ongoing basis while they are on the job, doing things to please customers.
The Teaching Organization
The way to do this, which we will describe in this book, is by building a Teaching Organization, one in which everyone is a teacher, everyone is a learner, and reciprocal teaching and learning are built into the fabric of everyday activities. The CEO must assume the role of head teacher. He or she must set the direction, shape the culture and share the valuable insights and knowledge in his or her head.
But while it is critical that everyone in the organization, from the top down, teach, the teaching cannot be one-way. It must be interactive teaching, where the leader who is teaching is at the same time drawing on and learning from the knowledge and experience of the students. As in the GE and SOF examples, the people on the front lines often have valuable information ahead of senior management. Capturing and utilizing that information can create significant competitive advantages for the leaders who figure out how to do it.
In a Teaching Organization, the learners at all levels are also teachers, both up to the leaders above them as well as down into the organization where they lead others. This creates a Virtuous Teaching Cycle, a self-reinforcing teaching and learning process that is what keeps winning organizations learning and improving every day.
This is not a New Age, feel-good approach to winning. A real Teaching Organization is anything but a soft, touchy-feely kind of place. The Teaching Organizations we describe are interesting, fun, enjoyable places to work, but thatās because they engage the brains of the workers and allow them to contribute to a winning team. A Virtuous Teaching Cycle generates smarter team members, who become aligned and emotionally energized through the interactive teaching and learning process. This, in turn, is w...