The Real-Life MBA

The no-nonsense guide to winning the game, building a team and growing your career

Jack Welch, Suzy Welch

• Publisher: Harper Thorsons
• Year: 2015
• ISBN:
  9780007594382
• Topic: Business
• Subtopic: Decision Making
• Index: Business

1. Taking the Grind Out of the Game

A few years ago, the two of us took a trip to Las Vegas. Not to play the tables; that’s not our thing. No, we were in Las Vegas to speak to the International Council of Shopping Centers, 60,000 members strong.

It just so happened that the speech was early in the morning, so we arrived the night before, and with an open evening, like good tourists we decided to get tickets to a show. A famous singer was in town, and so off we went, one of us being very enthusiastic, the other being very accommodating.

Cue the 50-piece orchestra and the colored smoke machines. What a production. Big hair, power ballads, backup singers dangling on wires from the ceiling, and an eye-popping procession of costume changes.

Yet, less than an hour in, one of us was fast asleep.

Rattled awake, here’s exactly what he said:

“What’s the score?”

That, in three words, is a person who loves sports—and business.

They’re the same thing, aren’t they? Both are intense and full of fun. They’re hard; they’re fast. They’re a nonstop grapple filled with strategy, teamwork, nuance, and surprise.

And in sports and business alike, the players are in it to win.

A brand manager wallows with his team about how to position a product out of engineering that just might blow sales through the roof. Three friends from college ditch Wall Street to start a microbrewery or launch a new app. A manufacturing manager wakes up one morning with a great idea about how to increase yield at his factory. An HR executive interviews six candidates for a job that should have been filled three weeks ago and, at last, one seems perfect.

People work all day, every day, trying to make their organizations and lives better. Trying to help their families, their employees and colleagues, their customers, and the communities where they operate.

And in working, people give their lives meaning. Not all of its meaning, of course. Life, with its vast depth and richness, certainly exists outside work. But work can give our lives a goodly portion of its purpose.

Whi ch is why it’s such a terrible thing when companies or teams are stuck in work situations that are buzzing with sound, action, and (occasionally) fury, signifying nothing. Nothing, as in no forward motion, no growth, no winning. Not even a decent shot at it.

That’s not competing. That’s not fun. That’s not business.

That’s just a grind.

Such a dynamic is, however, all too common. As we mentioned in the introduction, we’ve spoken to about a million people around the world since 2001, almost exclusively in Q&A sessions. These individuals have worked at companies large and small, old and new, in heavy industry and in gaming, retail, and finance. They’ve been entrepreneurs, senior executives, MBA students, and individual contributors. Across all these varied sessions, several people in the audience usually ask something like, “Why is it so darn hard to get everyone on the same page?” or describe a work scenario where so many people don’t seem to be playing on the same team, with results beginning to show for it. More evidence, too: probably a third of the nearly 1,000 MBA students in our business school, most of whom are in their thirties and forties and working in managerial jobs at good companies, report experiencing some sense of gridlock at work.

What a mess. And yet, this dilemma is not only fixable, it can be prevented.

All it takes is alignment and leadership.

They’re equally important; indeed, we’d assert that neither can really happen without the other.

And there’s no better way to start The Real-Life MBA than by digging into both.

All Alignment, All the Time

Now, we understand that the importance of alignment is not going to be news to most people reading this book. The concept has been out there in the management stratosphere for a long time, lauded by gurus, professors, pundits, and consultants alike.

The problem is that, in reality, at companies of every ilk, the relentless application (and discipline) of alignment can fall by the wayside.

Work—that infernal to-do list—gets in the way.

We get that. Work feels like it should come first, especially in today’s daunting economic environment. A cranky client, an employee who needs coaching, a competitor’s new technology hitting you blindside, a PR disaster erupting on Twitter. All these can happen in a day’s work, and sometimes even on the same day.

But the fact is, if you want to get off the grind, alignment has to come before, during, and after “the work.” It has to be happening all the time. It has to be part of what “the work” is.

All of which begs the question, the alignment of what exactly?

The answer is mission, behaviors, and consequences.

Mission pinpoints an organization’s destination—where you’re going and why, and equally important if a mission is to succeed, what achieving it will mean for the lives of each and every employee.

Behaviors describe, well, behaviors—the ways in which employees need to think, feel, communicate, and act in order to make the mission more than a jargon-laden plaque on the wall gathering dust and spawning cynicism.

Consequences put some teeth into the system. We’re talking promotions and bonuses (or not) based on how much employees embrace and advance the mission and how well they demonstrate the behaviors.

Maybe these elements sounds obvious to you; as we said, this is not a new topic. Or maybe just the opposite. As we also said, true alignment’s a rarity.

Either way, we can assure you of one thing: When alignment happens, there’s no more running in circles. There’s progress; that’s what happens when grind gets out of the game.

Alignment in Action

Without doubt, stories about alignment’s transformative power can be found in every industry, but none offers quite the treasure trove of examples as private equity. Think about it. Any business of interest to a private equity (PE) firm is almost by definition undervalued. It’s suffering from bad leadership or caught up in a changing market; it’s a family business without a succession plan, or a corporate division that’s simply been neglected, orphaned by its successful parent company. In each case, the organization is sputtering.

Now, it does happen that PE firms do get lucky, find a hidden jewel, polish it up, and get out fast with a big gain, or they buy an existing winner from another PE company, which has to sell it to satisfy the financial expectation of its investors. But those cases are in the minority. In the majority of cases, PE firms acquire the struggling business and set about doing the hard work of finding good leaders, and, almost invariably, their first and most important job is getting alignment straightened out.

Take the case of the Dutch conglomerate VNU.

Back in 2006, VNU was closing out a decade of decent, although hardly spectacular, results. In his annual letter, CEO Rob van der Bergh said he was pleased with the company and described VNU, which owned properties such as Hollywood Reporter and the Nielsen ratings company, as “healthy.” Private equity, however, saw untapped opportunity, and a consortium of six firms swooped in and bought it up for $12 billion, hiring veteran business leader Dave Calhoun as CEO.

With a stellar career that had landed him as vice chairman of GE at age 45, Dave had managed many large businesses, but nothing like the morass of brands and products he suddenly found himself running. “When I got there, the mission was, ‘We’re the leader in market intelligence,’ ” Dave recalls. “That sounded good, but what it meant in practice was, do your own thing in your fiefdom. There was no sense of overall meaning.”

Dave and his team immediately set out to change that. They dropped the name VNU, reclaimed the name Nielsen for the entire company, and made it clear that Nielsen—the new Nielsen—existed for one coherent purpose: to measure what consumers watched and bought. Nielsen was going to be the best company in the world at knowing everything about consumer viewing and buying habits all over the world.

Exciting, right?

The best missions are like that: aspirational, inspirational, and practical.

Aspirational as in, “Wow, sounds amazing—I love the idea of trying to get there.”

Inspirational as in, “Great—I know we can do that if we stretch and try.”

Practical as in, “OK, sounds reasonable—I’m going to work with my team to get it done.”

And here’s the kicker. Remember how we said well-wrought missions let each and every employee know what’s in it for them? Nielsen’s nails that challenge. It promises growth—product growth, services growth, global growth—and all the career opportunities that come with it.

Another quick but illuminating mission-making example from PE is Nalco, the diversified industrial company that was bought out in 2007. In 2008, its new owners hired CEO Erik Fyrwald, who inherited 12,000 employees, $4 billion in revenues, strong cash flow, negligible growth, and a mission that could have been paraphrased as, “We’re in the water business, that’s nice.”

Erik spent his first 90 days traveling to Nalco business units and its customers, seeking the company’s killer app, if you will, a way in which to spark change and build a competitive advantage.

To his surprise and delight, he found it in a product that Nalco had developed six years previously, a water usage quality optimization system called 3D TRASAR. About 4,000 units were already being commercially leased, and Erik soon discovered that their customers loved them, passionately describing to him how the Nalco product saved water and helped prevent EPA fines like no other product.

Erik brought the news back to his leadership team, and, invigorated by the 3D TRASAR’s promise, they decided to set a goal of 20,000 leased units within two years. That ambitious target, in turn, galvanized the entire organization. R&D turned its focus to improving the product’s features, creating 26 patents to meet customer needs and slow any copycat competitor moves. The sales team introduced new training, goals, and incentives. At the same time, a new 3D TRASAR service center was built in India, staffed by 40 “water doctors,” engineers assigned to monitor units around the world, spotting and resolving problems before customers even noticed them.

And so the company’s new mission was born: “We deliver clean water to Nalco’s customers in a way that makes our customers more economically successful and the world more environmentally sustainable.”

Did that mission rouse Nalco to hit its goal of 20,000 units within two years? It did indeed.

“People suddenly knew why they were coming to work,” as Erik puts it. “They were excited about helping our customers succeed in a way that helps save the world. They saw a future for themselves. You cannot believe the great ideas that started popping.”

That’s the beauty of a good mission. It gets everyone focused and fired up.

And that’s when behaviors start to matter.

Matter a lot.

If a mission is a company’s destination, behaviors are its transportation, the means of getting there.

We all know what this connection doesn’t look like, right? A company spouts a mission that talks about customer focus, for instance, but in real life, its frontline employees hate customers. OK, maybe they don’t hate-hate them, they just disdain them for getting in the way of what they’d rather be doing, like getting home by five. Or a company has a mission that crows about speed to market, but its managers have, let’s say, a high tolerance for bureaucracy. Or a company has a mission all about delivering innovation, but the people who run things demote or fire anyone who takes a risk and fails.

Not good.

Good is when the alignment between mission and behaviors is seamless. In a company with a mission about customer focus, employees ooze empathy. They hand out their cell phone numbers so they can be reached after hours. They take complaints about poor service personally. If they had their druthers, they’d go home with every product and try it themselves to make sure it was working perfectly.

Maybe we exaggerate a bit, but you get what we mean. Mission and behaviors have to be two links in the same chain.

Now, if you’ve ever read our books or columns, you may be wondering at this point why we keep using the word “behaviors” instead of “values.” After all, for about a decade, we’ve invoked the word “values” in the same context. “Values” was, you might even have thought, our favorite word.

It was. But we’ve found “values” can be a confusing word. It’s too abstract. Too often, people hear “values” and they think you’re talking politics or culture, as in “family values.”

No.

Plain and simple, we’re talking about how people behave at work and how their behaviors bring the company’s mission to life. So “behaviors” it is.

And, to return to the topic at hand, the only reason to talk about behaviors at work is that leaders need be very public, very clear, and very consistent about what kind of behaviors are needed in order to achieve the company’s mission.

Back to the Nielsen story. Right after Dave Calhoun announced Nielsen’s new mission, he also announced the three behaviors that would make it come to life. The first was open-mindedness.

That was a change, to put it mildly. “People thought we were a market research company,” Dave explains, “and what kind of people succeed at a market research company? Really smart people who perfect their algorithms and don’t want anyone to see those algorithms because they could steal them.

“But if we were going to dominate the space of knowing everything about the consumer, we needed people who were open to data from every source and willing to work with everybody, not just the people who understood their algorithm.”

The second behavior was a passion for integration. Nielsen’s growth lay, Dave believed, in its people loving—not liking, loving—the process of mixing, matching, and synthesizing market research coming at them from every angle, largely thanks to the explosion of big data.

Growth also lay in Nielsen’s capacity to make sense of all this information for their clients, and so the third behavior identified to drive Nielsen’s success was simplicity.

“The digital world is getting overwhelming; all the data out there can just about drown you,” Dave explains. In such situations, people often find a way to argue two sides of a case. That just muddies the waters for everyone. “If we can make a recommendation to a client in a simple, understandable way, and with conviction, we will always win.” (And win they certainly did. Over Calhoun’s six years as CEO, the company’s market capitalization tripled.)

Erik Fyrwald and his team at Nalco similarly established the key behaviors necessary to drive the company’s new mission. The first was a crusading passion for saving water. Not an “Oh, that’s kind of cool” kind of passion, a “Can I tell you what I do at work? I save the world by conserving water” kind of passion. “We wanted people who got really excited every morning when they turned on their computers and saw their meters,” Erik explains. And by that he means the meters all over Nalco’s intranet that constantly showed how much water the company was saving cumulatively and per customer.

The second behavior was a hunger for growth. Not single-digit growth, either. Nalco’s mission, Erik determined, called for growth junkies, people who saw opportunity with customers previously considered out of reach and in markets that scared everyone else away. In 2009, when most companies in Nalco’s space were backpedaling in China for fear of its economic deceleration, the company brought in a strong, proven growth leader to run Asia. He moved the company’s headquarters from cozy Singapore and built a new building in Shanghai, complete with a customer and employee training center, a technology hub, and sales and marketing facilities. Employment jumped from 200 to 800, with Nalco’s increased commitment enabling them to recruit outstanding candidates, Chinese engineers who wanted to improve the environment through water treatment and productivity in the heavy manufacturing industries.

Around the same time, Nalco also unleashed its oil and gas unit to aggressively pursue global growth in water-related chemistry applications. (To get a barrel of oil, you also need to deal with four barrels of water to be separated, cleaned, and safely returned to the environment.) The company was quickly able to expand its business with customers doing deepwater drilling in the Gulf of Mexico, but it also moved to successfully forge new and productive relationships with customers farther afield, in locations including western Siberia, Kazakhstan, Azerbaijan, Nigeria, Angola, and Malaysia. “Our oil and gas leader was an incredible role model of entrepreneurship and pursuit of growth,” Erik notes, “and he got his team to feel the same.”

Clearly, his example, and that of many other believers within the organization, took hold. By 2010, Nalco’s revenues and earnings were both growing in the double digits.

Making It Real with Consequences

With mission and behaviors in place, all that’s left for alignment is the piece of the system we’re calling “consequences.” Maybe that sounds punitive, but it isn’t. Sure, consequences can be negative, as in demotions or removals. But far more often, consequences can be positive, as in raises and bonuses. Either way, though, our point is the same. You can huff and puff and holler all you want about mission and behaviors, but if there aren’t organizational mechanisms to reinforce them, you’re like the proverbial tree falling in the forest.

No one hears you.

Now, the loudest negative consequences mechanism, obviously, is letting people go. Most leaders hate using this tool, and they should if they’re normal human beings, but sometimes when there’s an obvious mission or behaviors disconnect, it’s neces...