How Great Leaders Think

by Lee G Bolman

Mulally’s second major HR challenge was rebuilding the commitment and morale of Ford’s workforce in a time of downsizing and dismal business results. At headquarters, he was a master of leading by wandering around. He often skipped the executive dining room to eat in the company cafeteria, standing in line with his tray and chatting up accountants or sales analysts. He popped into meetings where he wasn’t expected and asked, “What are you guys talking about?” Ford lifers who had waited forever for a CEO who would listen to them started sending emails to Mulally; he answered them all and sometimes followed up with a telephone call.13 One engineer showed up at Mulally’s office with a pile of schematics, including drawings for more than a dozen different hood structures. He wanted to show the new chief just how muddled Ford’s design and engineering were. The drawings confirmed what Mulally already suspected. He asked if there was a way to reduce the complexity. When the engineer said yes, Mulally put him in charge of the effort.14

  To reach the thousands of employees beyond Detroit, Mulally traveled to locations around the world, asking questions and reinforcing the message that Ford was coming back. He issued every employee a wallet card that carried the essence of the plan going forward: “One Ford. One Team. One Plan. One Goal.” He loved to pass out the cards every chance he got.15

  Symbolically, Mulally’s biggest challenge was to change the perception that Ford was on a path to oblivion because it had become too bloated, bureaucratic, and self-absorbed to understand or adapt to the realities of the twenty-first century. As he sought a more hopeful story about the future, he followed the lead of wise symbolic leaders such as Lou Gerstner at IBM (whose story we told in Chapter One). He looked back to the past. Mulally combed Ford’s corporate archives, believing that a key to Ford’s future was a return to the principles that had made it great in the first place. He hit pay dirt with an ad that Henry Ford had run in 1925 in the Saturday Evening Post (the most widely read publication in America at the time). Under a picture of an American family standing atop a grassy knoll next to their Model T, the caption read, “Opening the highways to all mankind.” In the text, Henry Ford outlined his vision: “A whole-hearted belief that riding on the people’s highways should be within easy reach of all the people.”16 That ad gave Mulally the touchstone he was looking for. He wrote stream-of-consciousness notes about what needed to happen: pull stakeholders together, form tight relationships with the board and the Ford family, respect the heritage, implement reliable discipline and a business plan, and include everyone. Then he took another sheet of paper and sketched his “Alan Legacy”:17

  Clear, compelling vision going forward

  Survive the perfect storm

  Develop a profitable growth plan, global products, and product strategy

  A skilled and motivated team

  Reliable, ongoing Business Plan Review process

  A leader and leadership team with “One Ford” vision and implementation tenacity

  “One Ford” may sound simple, even simplistic, but for Mulally it was a powerful mantra and polestar. He never tired of repeating and reinforcing the message. It meant replacing chaos, parochialism, and political infighting with simplicity, teamwork, and unity—worldwide.

  Mulally’s efforts worked, though more slowly than he had initially hoped. Just as Ford began to turn the corner, the recession of 2008 devastated the auto industry worldwide. But Ford was better prepared than its crosstown rivals. Mulally, Bill Ford, and Ford’s chief financial officer had made a prescient decision in 2006 to bet the company by borrowing all the money they could—some $24 billion. They foresaw that Ford’s credit rating would get weaker and the borrowing window might close if the economy tanked. General Motors CEO Rick Wagoner told them they were crazy and would regret the decision.

  But two years later, the economic crisis forced both General Motors and Chrysler to beg for U.S. government bailouts to stay in business. Ford had the cushion it needed to avoid taking taxpayers’ money. That became a huge marketing edge. After losing market share for thirteen straight years, Ford gained share in 2009, turned a profit in 2010, and achieved its highest profits in more than a decade in 2011. Mulally turned sixty-five in 2011 amid speculation about when he would retire. Board chair Bill Ford expressed the hope that he would stay forever, and Ford announced late in 2012 that Mulally would stay in his job at least until 2014.

  Mulally’s achievements at both Boeing and Ford have earned him a reputation as one of the great turnaround leaders in business history. He did it by seeing and responding to key issues in every frame. Politically, he recognized the need to negotiate workable agreements with all the many stakeholders whose support was vital and whose opposition could have been fatal. He created many venues for airing differences, building relationships, and crafting agreements that gave him the support and resources he needed to move forward.

  In terms of structure, he recognized that Ford’s existing architecture was preventing it from taking full advantage of the talent of its people and the strength of its brand. He developed a simpler, tighter global structure and implemented new processes for the top team that clarified where Ford was going and how it would get there.

  On the human resource front, Mulally became a coach who recognized the importance of talent in key positions and of morale throughout the ranks. He asked questions, listened, made communications more transparent, and helped restore employees’ pride in their company.

  Symbolically, Mulally recognized that constituents both inside and outside the company needed something to hang on to while sailing through the turbulence. He went back in time to legendary founder Henry Ford to identify and resurrect beliefs and principles that had once made Ford great. Like other great symbolic leaders, he updated a historic legacy, creating the mantra of “One Ford.” He became the storyteller and healer providing historical roots, direction, and inspiration going forward.

  CONCLUSION

  Innovation inevitably generates issues that reveal the limits of a leader’s control. In implementing necessary changes, leaders can make a difference, but they need to attune their strategy to a comprehensive understanding of their organization’s circumstances. Sometimes, an organization needs fresh ideas and strategies from outside, but leaders often have a better chance if they look within an organization for ideas and energy. The frames can help leaders think ahead, anticipating obstacles to change: incompetence, confusion, conflict, and loss. Each lens also provides support by guiding leaders in responding to those challenges. Leaders who can move fluidly across the roles of coach, architect, politician, and healer can address the full range of challenges that any change effort will encounter. They are the leaders who, like Alan Mulally, can see what needs to happen and orchestrate a change process that gets it done.

  NOTES

  1. Machiavelli, N. The Prince. G. Bull (ed.). New York: Penguin Classics, 1961, p. 27. (Originally published 1514.)

  2. Cohen, M., and March, J. G. Leadership and Ambiguity. New York: McGraw-Hill, 1974, p. 203.

  3. Edelman, M. J. The Symbolic Uses of Politics. Madison: University of Wisconsin Press, 1977, p. 73.

  4. Hindo, B. “At 3M, a Struggle Between Efficiency and Creativity.” Bloomberg Businessweek, June 10, 2007, http://www.businessweek.com/stories/2007-06-10/at-3m-a-struggle-between-efficiency-and-creativity.

  5. Ibid.

  6. Conlin, M., and Greene, J. “How to Make a Microserf Smile.” Bloomberg Businessweek, Sept. 9, 2007. http://www.businessweek.com/stories/2007-09-09/how-to-make-a-microserf-smile.

  7. “2011 World’s Best Multinational Workplaces.” Great Place to Work. http://www.greatplacetowork.com/best-companies/worlds-best-multinationals/the-list/1509-2011.

  8. Hoffman, B. G. American Icon: Alan Mulally and the Fight to Save Ford Motor Company. New York: Crown, 2012, pp. 136–137.

  9. Ibid., p. 88.

  10. Ibid., p. 142.

  11. Ibid., p. 106.

  12. Ibid., p. 109.

  13. Ibid., pp. 103–104.

&n
bsp; 14. Ibid., p. 104.

  15. Ibid., pp. 247–248.

  16. Ibid., pp. 133–134. The ad is pictured among the photographs on pp. 214 and 215.

  17. Ibid., pp. 134–135.

  Chapter 13

  Searching for Soul

  Leadership Ethics

  The frames or leadership lenses help leaders think better and make better decisions. But many of the decisions they face require choosing among imperfect options. This is the kind of situation that James E. Burke, CEO of Johnson & Johnson (J&J), faced in 1982 when news arrived that bottles of Tylenol, one of the company’s most profitable products, had been poisoned. On the one hand, he could pull the product from store shelves at a huge cost; on the other, he could take the chance that the tampering incident had been limited to the few bottles that were discovered. But then more people could die. Burke decided to pull the product, because a value in the J&J Credo calls for putting people—“doctors, nurses, hospitals, mothers, and all others we serve”—ahead of corporate profits.

  Burke’s dilemma is an example of deeper existential questions that lie beyond the important leadership tasks of thinking and doing. What ethical ideals will inform your leadership? What faith will sustain you through the inevitable dilemmas, frustrations, and vicissitudes you will face? Each of the frames can help you understand how organizations work, but each also embodies a philosophy about what’s significant—about values and soul as well as effectiveness.

  Companies swept up in ethics scandals year after year often seem to have lost touch with any values beyond the “morals of the marketplace,” which often translate to no morals at all. Recent examples of companies that have apparently gone adrift of their ethical moorings include Rupert Murdoch’s media empire (phone hacking); Wal-Mart (bribing officials in Mexico); an investment company in Japan ($2 billion fraud); many of the world’s big, brand-name banks (manipulating interest rates, deceiving customers, stonewalling investigators, and so on); and J&J (putting profits ahead of patients).

  Thirty years after the Tylenol crisis, J&J continued to display the Credo on its website, proclaiming proudly, “Our Credo is more than just a moral compass. We believe it’s a recipe for business success.” But by 2012, a series of lawsuits, product recalls, and customer complaints suggested that the Credo was at risk of becoming more lip service than serious commitment. In 2010 and again in 2012, the company had to recall children’s Tylenol. In 2011, J&J pleaded guilty to bribing European doctors. In 2012, judges in multiple states ordered J&J and a subsidiary to pay fines totaling some $2 billion for minimizing or hiding the dangers associated with an antipsychotic drug. The New York Times reported that “consumer confidence in Johnson & Johnson, once one of the most trusted brands, has dipped in recent years as the company recalled dozens of products, including millions of bottles of children’s Tylenol and other medications, as well as artificial hips and other products.”1

  Where did J&J go astray? When a business has similar problems across different units and even different continents, the signs point to the leadership—in this case to CEO William Weldon, who earned a spot on multiple lists of the worst CEOs of the year in 2010 and 2011. Inside the company, Weldon was viewed as “a tough competitor who hates to lose,” but he did not engender the kind of veneration that J&J employees had for his predecessors, James E. Burke and Ralph Larsen.2 Management professor Eric Gordon observed, “There was a time when people really believed in [the Credo] and took great pride in it. But those days are long gone.”3 Gordon saw Weldon’s relentless focus on the bottom line as the source of the company’s many woes. “Bill Weldon sets the priorities and the culture for the company,” he said, and the problems reflect “people trying to get their bonuses, hit their numbers and keep their job.”

  Contemporary business leaders often experience brutal pressures for short-term results and shareholder value, which too often lead them to lose sight of a simple truth: drifting away from your ethical core carries many costs, financial as well as personal and spiritual.

  SOUL AND SPIRIT IN ORGANIZATIONS

  What J&J lost becomes clear if we compare it to the medical devices giant Medtronic. Like J&J, Medtronic states its core purpose as serving patients rather than shareholders. Its CEO from 1989 to 2001, Bill George, is an advocate of authentic leadership and critic of short-term thinking. His position on Medtronic’s mission was clear: “Medtronic is not in the business to maximize shareholder value. We are in business to maximize value to the patients we serve.”4 This principle was rooted in Medtronic’s original mission statement, developed by founder Earl Bakken in the 1960s. To reinforce the message, Bakken created the “Mission and Medallion Ceremony.” He met personally with every new employee, reviewed the mission, shared stories of how it played out in practice, and gave the employee a bronze medallion that carried an image of a patient rising from the operating table and walking into a full life. That tradition continued even as Medtronic grew much larger. During his term as CEO, Bill George conducted medallion ceremonies for thousands of employees around the world—sometimes at 2 a.m. for night-shift workers.

  Do such noble sentiments make a difference in practice? Bill George thought so. In one case, shortly after he promoted a very talented executive to head Medtronic’s European operations, George learned that the individual was maintaining a secret account in a Swiss bank, presumably for making payments to doctors. When George asked him about it, the executive argued that American values shouldn’t be imposed in Europe. Not American values, George responded, but Medtronic values, and they were the same everywhere. Although it was painful, he asked the executive to resign, released details to regulators in both the United States and Europe, and publicized the incident so that people inside and outside the company understood Medtronic’s unyielding ethical position.

  How did Medtronic’s squeaky clean approach work out for shareholders? During George’s tenure, Medtronic’s share price increased at a rate of 36 percent per year, and its market capitalization rose from $1 billion to $60 billion. Of course, there were other fast-growth companies operating in the same period. Enron and WorldCom, for example, also shot up very fast—only to crash into bankruptcy in 2001, the same year Bill George retired from Medtronic, which kept right on growing.

  Some people have such strong ethical convictions that it matters little where they work, but most of us are at greater risk of losing our way. We are social beings, attuned to cues and expectations from our workplace and our colleagues about what to do in the face of moral dilemmas. In recent years, one organization after another has lost its soul in the race for innovation, growth, a rising share price, and big paychecks. An organization that loses track of any redeeming moral purpose cannot provide credible ethical guardrails for its employees. The results are often painful.

  Can an organization have soul? Many doubt it, but there is growing evidence that it is a critical element in long-run success. A dictionary definition of soul uses terms such as “animating force,” “immaterial essence,” and “spiritual nature.” For an organization, group, or family, soul can also be viewed as a resolute sense of character, a deep confidence about who we are, what we care about, and what we deeply believe in. J&J had it, but lost it. Medtronic kept it and prospered. Leadership makes the difference.

  In forcing out the European executive with the Swiss bank account, Bill George demonstrated two key characteristics of leaders with soul: clarity about values, and willingness to act on them even when faced with a painful moral quandary. Ask yourself how clear you are about your own values as a leader. What values do you hold dear? Could you summarize them in a brief, personal credo? Every leader and organization needs to choose and commit to personal and collective ethical principles. We believe that the frames can offer guidance and stimulate reflection for leaders who aspire to create spiritually anchored communities. Each frame implies both a central value and a leadership “gift” that can help breathe soul into an organization’s daily life. Exhibit 13.1 summarizes our
view.

  Exhibit 13.1. Change: Barriers, Leader Roles, and Strategy

  Frame Leadership Ethic Leader’s Contribution

  Structural Excellence Authorship

  Human resource Caring Love

  Political Justice Power

  Symbolic Faith Significance

  THE FACTORY: EXCELLENCE AND AUTHORSHIP

  The structural frame, with its emphasis on finding the right design for the task at hand, implies a value of excellence. Almost every leader and organization strives for excellence, but flawed products and mediocre services keep reminding us that the hunt does not always bag the quarry. One reason is that excellence requires more than pious sermons from top management. It demands commitment at all levels of an enterprise. How do leaders foster such dedication? As we have put it elsewhere, “Leading is giving. Leadership is an ethic, a gift of oneself.”5 Critical for creating and maintaining excellence is the gift of what we refer to as authorship:

  Authorship turns the classic organizational pyramid on its side and provides space within boundaries. Leaders increase their influence and build more productive organizations. Workers experience the satisfactions of creativity, craftsmanship, and a job well done. Authorship transcends the traditional adversarial relationship in which superiors try to increase control while subordinates resist them at every turn. Trusting people to solve problems generates higher levels of motivation and better solutions. The leader’s responsibility is to create conditions that promote authorship. Individuals need to see their work as meaningful and worthwhile, to feel personally accountable for the consequences of their efforts, and to get feedback that lets them know the results.6

  Southwest Airlines and Zappos offer two compelling examples of authorship. In both, associates are encouraged to be themselves, have fun, and use their sense of humor. On Southwest you might hear required FAA safety briefings sung to the music of a popular song or delivered as a stand-up comedy routine. (“Those of you who wish to smoke will please file out to our lounge on the wing, where you can enjoy our feature film, Gone with the Wind.”) Too frivolous for something as serious as a safety announcement? Just the opposite: it’s a way to get passengers to pay attention to a message they usually ignore. It’s also a very good way for flight attendants to have fun and feel creative rather than being mechanically scripted by mandated routine.