So, I’m watching an old movie this weekend, “In Harm’s Way.” It’s about a U.S. naval Captain (John Wayne) who has his career derailed after the attack on Pearl Harbor. After an interminable time as a desk-jockey doing little important, the Navy realizes they need this guy to go out and win battles.
Enter Admiral Nimitz, played by Henry Fonda. He invites all the muckety-mucks to a men’s-only dinner and cigar party (my kind of place), where he gives Wayne his official promotion to Rear Admiral, effectively acknowledging the Navy’s error.
Nimitz says, “The Navy, we all know, is never wrong, though sometimes it’s a little weak on being right.”
Feel free to substitute your, my, or any of a number of other names for “The Navy” above. Sometimes we forget that doing the short-term “right” is not always the same thing as doing the right thing. In other words, sometimes we’re a little weak on being right.
Now, typically when people — ok, ok, “consultants” — use an example like this, the conversation goes in an expected, typical direction. I’d like to use a different example.
For instance, a top sales guy is unable to complete various required reports in a timely manner. Someone (usually HR) convinces us that we need to “be consistent;” if we discipline others for this egregious — nearly heinous — act, we are summarily forced to do the same thing with this top sales performer.
I say that’s a load of bunk. Absolute, positive, cowardly crap.
And it is cowardly.
Take the courage… use it, find it, or make it, to NOT fall victim to being a little weak on being right. Do the right thing, even if (maybe even particularly if) it seems unfair to average or mediocre performers. Worry about the high-performing sales guy in question; spend zero time being concerned about all those others who only wish you would treat so deferentially.
After all, who can argue with Admiral Nimitz?? Or Henry Fonda?? Certainly not The Duke…??
Damn, United. Just last month, we upgraded your abysmal 2015-2016 shenanigans to an “almost.” And this is how you repay us? With that colossally bone-headed move?
Assuming our readers haven’t been living under a rock, or in Tibet, or someplace where no signal of any kind could penetrate the local ether, United Airlines screwed up. In a nutshell, they tried to remove a passenger after confirming his boarding, and surprise! The passenger didn’t want to get off the plane. United gate agents must have decided that “no doesn’t mean no,” so they called the gestapo airport security, who apparently decided “Hey, let’s just drag him off…?!”
And the whole thing was recorded. Not much wriggle room for any sort of spin story-telling. In fact, I won’t insult you by showing—for the 2 millionth time—that video. Just picture it in your head.
It’s received so much publicity, we weren’t even going to address it here. Sort of like the “that’s just too easy” line of thinking. But then we realized… the lesson here isn’t about some gate agent’s poor judgement, or even the idiot security dude’s MMA moves on an elderly doctor. I won’t even raise the ire of many reading this by reminding that that same elderly doc should have disembarked when ordered to do so and fought his fight later.
Nope, this fiasco is all about—and only about—leadership. In this case, failed leadership. For example:
Someone screwed up way back when. Allowing the aircraft to fully board before saying “Hey, wait a minute, we’ve got to get these four crew members on board.” Mistake #1, and the lack of a process, or lack of a followed process, is a leadership issue.
Someone decided those four United employees were worth removing paying passengers from an already-boarded aircraft. That sort of decision-making comes from the belief they will be supported by leadership. That’s mistake #2, and another leadership issue.
Apparently, a gate agent decided, after three passengers disembarked, that the hold-out passenger warranted calling security, undoubtably knowing something bad might happen. Again, fully expecting to be supported by leadership in that decision and causing mistake #3.
Seriously, either that one security guy has serious issues, or he was trained so poorly he thought standing on another seat to remove a seated passenger with his lates MMA moves was the next step in the checklist. Either way, a leadership misstep that provided the impetus for mistake #4.
The only truly unforced error during the entire situation: Munoz’s comments. First, supporting employees in the face of that video without further investigation, then with the horrendous “reaccomodating” remark, then finally with a too-late sincere-sounding apology.
Look, I get it. Munoz was left a pile of dung from Smisek’s departure. I really do get it. He likely has invested hundreds of hours, if not more, in trying to improve relationships with various categories of employees, agents being just one of them. I get all that. But as CEO of a customer-facing organization, you don’t get to make knee-jerk statements. Ever. When you unwisely do so, it’s on you.
As the other Kevin’s mom likes to say, “You kind of brought that on yourself.”
Oscar Munoz is April’s Leadership Laggard. And the vote wasn’t even close…
CEO John Stumph blamed the creation of over two million fraudulent bank and credit card accounts on individual rogue employees – more than 5,300 of them who were summarily fired.
Claiming that “there was no incentive to do bad things,” Stumph defended the head of community banking, Carrie Tolstedt, as the “standard-bearer of our culture” and justified her $125 million retirement payout.
Turns out he also exercised 1.5 million stock options (worth just $83 million) the month before the company was hit with $185 million in fines for the deceptive practices.
Now:
Stumph is now the ex-CEO, Tolstedt got fired instead of retired, three other senior executives were fired for cause, eight remaining senior executives forfeited their 2016 bonuses, and Wells Fargo’s reputation stopped its free-fall.
Unsurprisingly, it turns out Mr. Stumph wasn’t paying very close attention to the community banking business unit or its Senior EVP. Last week, Wells Fargo released the report of its directors’ investigation into the cross-selling practices, laying the blame squarely on Stumph’s blind spot when it came to Tolstedt, Tolstedt’s controlling management style that actively discouraged dissention, a couple of dishonest regional VPs, and lax corporate oversight.
The extremely decentralized organizational structure favored the business units and led to the creation of fiefdoms in the company with “substantial deference” to the feudal lords and ladies. Without effective checks and balances, Community Banking was able to mask the signs – like high attrition and under-funding of new accounts – that something was seriously amiss. Changes in the reporting chain and new corporate control functions introduced by the Board should realign accountability and responsibility.
The Board allowed itself to be misled about the extent of the problem, but they get credit for bolstering their oversight responsibilities, creating an Office of Ethics, Oversight and Integrity (albeit, just after the nick of time), and for setting aside funds to make it right by the customers rather than forcing arbitration. And, while it’s not all about the money, the $180 million they clawed back from ex-senior executives and withheld from current members of the Operating Committee will almost cover their fines.
As tempting as it may be for some to paint the new CEO, 29-year Wells Fargo veteran Tim Sloan, with the same brush as Stumph, but Sloan hasn’t shied away from accepting responsibility for himself and the rest of the senior leadership team, he’s engaging with Wells Fargo employees in an effort to regain their trust, and so far he’s re-hired back about a thousand of the 5,300 employees that were fired.
The Wells Fargo scandal was a direct result of failed leadership, but leading is a journey, not a destination. They’re not out of the woods yet, but we’re definitely seeing signs that the Wells Fargo senior leadership is serious about rebuilding lost trust with their customers and shareholders. We wish them well at the annual stockholders meeting next week.
Net Result: While John Stumph’s place on the Laggards list is secure, Tim Sloan and the current Wells Fargo senior executive team are looking more like Leadership Leaders every day.
CEO John Watson commented on the oil pricing impact with a Captain Obvious remark: “…we maybe have gotten a little sloppy in the past few years.” I think, given the 200K+ headcount slashing that occurred in the industry, “sloppy” may not have been the word I would have used.
Now:
He mentioned several things they should have been doing already. The good news is that they certainly seem to be doing those things now. Watson outlined his plan by saying they needed to focus on five things:
First, finish project under construction which reduces spend and brings on new revenue.
Second, reduce capital expenditures and focus on work that’s profitable lower prices.
Third, lowering operating expenses by getting more efficient at everything.
Fourth, complete planned asset sales.
And finally, do all of this while operating safely and reliably.
Frankly, in all fairness to Watson and Chevron, they knocked this outta the park. In 2016, Capex reduced by over $11B; 2017 spend will be another $2.5B less, and those projects have a two-year horizon for cash flow. Revenue is up $8B, and earnings up almost $1B; Opex and SG&A down over $2.5B. They maintain over $7B in cash, the stock price has more than recovered from the 2015 decline, and they continue to outperform every competitor.
And if simply brilliant financial and operating results aren’t enough, there’s this: John Watson says the reason he has stayed with Chevron for 36+ years, is “every time I said, ‘Well, gee, I wish I could do something else,’ I was moved on to some other part of the company.”
“If you have to leave a company to get a new challenge, I think that’s a really sad statement,” Watson says. “I think it’s a missed opportunity for some companies to not try to retain their workforce and keep them stimulated over time.”
True words—we would do well to replicate that thinking in other organizations.
Sort of a “Heckuva job, Brownie,” only this time for real. Way to go, John… good on ya. You’ve led Chevron from a 2015 Milquetoast to a 2017 Leadership Leader.
Albert Einstein once said that the definition of insanity is doing the same thing over and over yet expecting different results. Organizational Transformation breaks through that insanity. It’s not about working harder—I remember working with several clients during the economic challenges of recent years, and helping them realize that working harder can only “fix” problems when not working hard caused the problems in the first place.
And who was going to admit they weren’t already working hard?
Transforming an organization is not simply improving results, no matter how significant. Organizational Transformation is about being a different organization, not just a better one. It’s change on steroids… that “step-change” that leapfrogs an organization into an entirely different—and better—place.
Organizations wanting to adapt, change, or transform cannot force such change through simple technical modifications like reorganization, reengineering, or the like. You certainly cannot “save” your way there, nor create a budget or forecasting model that will do it. No, you can’t “spreadsheet” into transforming an organization.
This isn’t a quantitative exercise. If it were, I’d develop a do-all Excel spreadsheet for “Transforming Your Organization.” You would simply plug in your numbers, hit “calculate,” and out would come your winning formula for successfully transforming your organization. I would charge a bazillion dollars, have a private island in Tahiti, and wouldn’t invite any of you to come visit.
Don’t we wish…
To fundamentally transform an organization, you must first embrace a new way of leadership performance to better understand and address challenges and interpret business movements.
How does that happen? In my view, Organizational Transformation needs three elements to succeed:
A clear direction, with equally clear expectations and specific goals. If you don’t know—or can’t clearly articulate—where you’re going, don’t expect to see a throng behind you;
An engaged workforce; we’ll need massive quantities of discretionary effort, and the ability to discern positive directions without incessant oversight. That only comes from a workforce willing to do the right thing for the organization, with or without your immediate presence;
Changed leadership. To change a culture—we must start with leaders. That’s just the reality. Leaders capable of moving the proverbial needle closer to transformation must first transform themselves, focusing less on operational leadership and more on focusing on flexibility, collaboration, and “collective” leadership.
There’s nothing inherently simple about Organizational Transformation, but neither is it beyond the reach of any organization. It takes vision, fortitude, and resolve. In other words, you’ve got to want it—really want it—to get it. Start there, move forward.
We’ve been publishing our Leaders & Laggards coming up on two years, give or take. It’s been fun, if not sometimes a bit of effort. And I can’t say we always agree with who wins what, though generally we find common ground. Especially on the Laggards—they frequently make it pretty damned easy.
We thought it might be time for an update, so that’s what we’re going to do for the next few months: give you a clear Leader or Laggard (just one), then spend the rest of the space updating you on how a couple of those nefarious prior laggards are doing now, presumably after having some time to see the error in their ways and appropriately repent. Or not. So, without further ado…
Ok, this is a bit of a reach for a Leadership blog, but not really. Tipping — gratuities for service employees — has reached entitlement status, not much different than many current, regular employees.
This is interesting to me, as my wife and I are active consumers. We eat out frequently, do the Starbucks thing, and utilize service providers all the time in our daily lives — as do many of you.
Tips are extra – something on top of a bill for receiving something, literally, “extra.” I’ll tip 20-30% for outstanding service in a nice restaurant, particularly one that we frequent regularly. The level of service provided, then, is truly top-notch.
I’ll even tip 15% for mediocre restaurant service. If the server is neither abusive nor neglectful, I assume they are simply poorly trained, and will mention something to the manager – but still leave a respectable 15% tip. Let them be abusive or (in my mind) purposefully disrespectful, and fuhggetaboutit. I’ll leave the big “0” when necessary to make a point. No more scaling down from 15% or so.
We tip regular service providers, such as stylists, delivery people, etc., usually around 10%, depending on level of service and extenuating circumstances. Tips are both a reward for current service, and a notice of future tips for FUTURE service, so we use them judiciously.
But, and here’s the crux of this post, those tip jars in all the coffee joints and related places… are you kidding me??? I’m going to get out of my car, walk into the shop, wait in line, order and pay, then wait in line for my $4.25 triple-venti-nonfat-no-whip-mocha, and then put money in a tip jar??
What the hell for??
When pigs fly…
They recently opened a new Starbucks in my small hometown of Spring, Texas. The drive-in window – YES, THE DRIVE-IN WINDOW – has a tip jar on the little ledge that sticks out.
After giving my order, I tapped on the glass. The nice young lady slid open the window, and I said, “Excuse me, it seems you’re out of mints,” while gesturing toward that ridiculous tip jar.
IN THE DRIVE-IN LANE OF STARBUCKS!
And we wonder if this “entitlement” thing is real??
You didn’t have to do anything amazing in the last month or two to be our Leadership Leader for January. You just needed to demonstrate clear, personal leadership… and Muhtar Kent has been demonstrating it for years. He’s about to turn over the CEO reins of Coca-Cola, and we thought it appropriate to use him as reinforcement to what you leaders have been beat over the head with for years.
Disclaimer: my wife really likes Coke.
Kent, who was with Coke from 1978 to 1999 and returned in 2005 to take the helm in 2008, gets what being a leader is all about. And he understands that leadership development isn’t about unhappy participants sitting in a training room checking their iPhones. And it’s not about this unnamed group of sleepy yahoos, either.
Kent has described leadership development as a combination of “head knowledge and heart knowledge,” and the company’s development program is the kind that works – a group of high potentials who learn how to be a part of a leadership team, taken out of their comfort zone, exposed to pieces of the enterprise they didn’t know existed, and given company-related challenges to address during a six-week program. A contiguous six-week program.
Say what?? Six non-stop weeks away from work, away from most emails and calls. Not a half-day here and there over the course of a couple of years, but 30+ days without being at the office.
How is that even possible? It’s a simple matter of priorities, and leader development seems to be quite the priority at Coca-Cola with Muhtar Kent.
Coca-Cola‘s moved up 30+ places on the Fortune 500 since Kent became CEO (a place it hasn’t seen since 1997), and Coca-Cola currently sits at #15 on Fortune’s World’s Most Admired Companies list. Not surprisingly, Kent believes that the leadership culture gives the company a sustainable, long-term advantage.
Having started in the company driving around Turkey selling Coke, Kent says that “leadership is all about creating value in whatever you do—and whatever role you are in—and leaving something better than you found it.” No magic sauce, no fancy programs, just people-oriented leadership.
“Ultimately, leaders are judged by what they leave behind.” – Muhtar Kent, CEO, Coca-Cola Company
Congrats, Muhtar, you’ve left behind a culture that appreciates the critical contribution that leadership makes to a company’s success. We salute you as this month’s Triangle Performance Leadership Leader.
Leadership Milquetoast
Steve Ells, Founder and CEO, Chipotle
Chipotle… Foodie’s version of Tex-Mex, or petulant adolescent?
A refresher for those living under or near a rock: A highly publicized E.coli outbreak sent Chipotle’s results in a tailspin around October 2015, followed by a norovirus problem in December of that same year. In total, six illness outbreaks. Since then, the stock has dropped nearly 50 percent.
Chipotle HAS done some good things to rebound: implementing cutting-edge food safety protocols, increasing third-party audits, and — supposedly — pushing hiring levels to ensure good customer service during these labor-intensive changes.
What they haven’t done, is simply step up and say “we screwed up, we’re sorry, and we’ll do better.” Chipotle’s founder and CEO Steve Ells has apologized, a couple of times (though only grudgingly for the norovirus fiasco), but what hasn’t occurred is accepting full accountability for making some serious mistakes. It’s not enough to say “I’m sorry.” Accountability means you also say “we made mistakes.” Real mistakes, and we’re trying to get better.
The problem is how companies—executives—deal with mistakes, not the mistakes per se. And in this, Ells has screwed up royally. Since the E-coli debacle, here’s what he has blamed for Chipotle’s crappy financial performance:
Ells tried to saddle Monty Moran, Co-CEO for a time, for “not keeping it simple.”
Here’s the real deal: Chipotle and Ells (sound like the show Rizzoli and Isles) have done many of the things necessary to fix their food safety problems. But they need to fix their customer problem, and that’s not just about food safety. If Ells could get that through his burrito beans, he’d be better off. Without accepting full, unqualified accountability, it’s a missed opportunity.
Until then, he—and Chipotle—are our Leadership Milquetoast.
Layoffs are almost always attributable to poor leadership. In fact, they are so ubiquitous that merely laying off employees — no matter how tragic — hardly rises to the occasion of being awarded our leadership laggard.
However, in this case Macy’s CEO Terry Lundgren managed to dodge his way into dubious honors.
It’s one thing to say that our business model needs tweaking. Or that our direction may need to shift based on demographics, spending patterns, buyer preferences, yada yada yada. It’s another thing altogether, Mr. Lundgren, to say ”I’m sorry, there’s nothing I could do about it.” And that’s exactly what he did.
Seems Mr. Lundgren would have us believe that all of retail suffered this most recent holiday season, and that Macy’s was simply one of many impacted by this terrible economic event.
Oops. It just ain’t so.
You see, retail sales are up by almost 4% in 2016 over 2015. And in fact, several retailers did quite well, posting respectable increases in sales during 2016 and the most recent holiday season.
Online sales continue to increase, this year by another 12%. Newsflash: this is not new. Brick-and-mortar stores have had plenty of notice that they must shift their model to address this changing buyer. Just because you failed to do so, doesn’t mean you get to blame your failure on the economy as a whole.
So, while layoffs are certainly nothing new, and retail has always been a cyclical, precarious environment, the fact remains that nationwide sales increased, many stores succeeded (think Amazon, Walmart, Target, etc.), and Macy’s continued decline is a tragedy of their own making.
Look, I’m no saint. I’ve had to lay off people, sometimes a lot of people, and that represents failure on my part and the part of my fellow leaders. Again, as I mentioned earlier, layoffs are generally the direct result of poor or misguided leadership. That’s bad enough, but a travesty occurs when that same leadership decides to dance a jig around exactly who or what is responsible for that decline in sales.
And to Terry Lundgren, regarding his “not my fault” stance, I say liar, liar pants on fire.
And bestow upon him this month’s Leadership Laggard.
Take the courage… use it, find it, or make it, to NOT fall victim to being a little weak on being right. Do the right thing, even if (maybe even particularly if) it seems unfair to average or mediocre performers. Worry about the high-performing sales guy in question; spend zero time being concerned about all those others who only wish you would treat so deferentially.
