Advice From the Top

by Del Leonard Jones

   A business is like a group of jazz musicians organized under the extreme pressure of time. People won’t get along, but they should always try.

   Leaders mature. Children are responsible for themselves. Adults are responsible to families, neighborhoods, communities, country and world. Ascension to maturity is tied to responsibility and the magnitude of what we choose to take on. This ladder leads from personal artistry to humanity itself.

   Jazz is the most flexible art form in the history of the planet because it believes in individuals. It believes in the human power to create wonderful things, and it embraces that instead of attempting to administrate it away with senseless titles and useless hierarchies.

  Did you know?

  Marsalis got his first trumpet at age 8. By 14, he was invited to perform with the New Orleans Philharmonic.

  Entered The Juilliard School in New York in 1979 to study classical trumpet but left to pursue jazz. In 1997 became the first jazz artist to receive the Pulitzer Prize in music.

  Only artist to win Grammy Awards in both classical and jazz.

  Named one of America's Best Leaders by Harvard's Kennedy School of Government.

  Wrangling for business

  — Mackey McDonald, VF CEO 1996-2006 on branding and marketing

   Consumers are both emotional and rational. The statement made by a man who wears Wrangler jeans is that he is practical, down-to-earth and value-driven. Some buy for comfort, some for value, some are looking to appeal to the opposite sex.

   Build lines into different activities. Jeans are worn while camping, skateboarding and going to church. North Face is for mountain climbers and those in Central Park who wish they were mountain climbing.

   Subscribe to services that provide information on fads and trends. Talk to people to get inside their heads. Why do people skateboard? What needs aren't being met? Marketing is science.

  “Lifestyles drive trends, not movie stars.”

   To compete with Amazon, retailers will have a greater selection, but they won't have the inventory for people to walk out of the store with their purchases. Merchandise will be shipped to their home in hours or days. Buyers want to see what apparel feels like and how it looks.

   A J.C. Penney store near a college campus should have a much different mix of products than a store in the suburbs.

  Did you know?

  McDonald was an observation pilot in Vietnam.

  Wore jeans to work, size 36/32. He put a sports coat on to dress up.

  Golf handicap: 15. Favorite course: Augusta.

  VF is a giant Fortune 500 apparel company that owns Wrangler, Lee, Rustlers, JanSport, Lucy, The North Face, Timberland and others.

  Pointers from across the pond

  — Nancy McKinstry, Wolters Kluwer CEO 2003-present on business in Europe

   The U.S. system works in America, and the Dutch system works in the Netherlands. Global organizations create hybrid systems that blend across borders.

   English, already the language of business, has been made more so by the Internet.

   European executives like to talk politics, economics and culture. Discuss only business at lunch and you won't be invited back.

   America has more female executives than Europe. Contrary to beliefs, it’s easier in the U.S. for women to combine a career and family.

  “Schools don’t provide lunches. Parents, usually mothers, pick their children up an lunchtime. Stores close early and don’t open on Sundays, which makes it difficult for working mothers.”

   European companies are more formal. Executives aren’t addressed by first names. The phrase, “our company is aggressive,” has a negative connotation.

   Europe is not one market. Cultures vary from country to country. Use local management on the ground. A big challenge is finding managers with a local mindset and global expertise.

   There are more similarities between the U.S., Germany and Holland than there are between those countries and Southern Europe, where decision-making is more collaborative, and long-term business relationships are essential to success.

   Create enough flexibility in the labor force to manage the peaks and valleys in business. This is more difficult in Europe because of regulations regarding layoffs.

   Employees everywhere are generally committed to getting the job done, regardless of geography or culture.

   European and U.S. companies will focus more on China and Asia going forward.

  Did you know?

  McKinstry runs, bikes and golfs.

  Born in Connecticut. Favorite vacation spots: Bailey Island, Maine and Paris.

  Her husband, an anesthesiologist, commutes to his job in New York.

  Throwing a Hail Mary

  — Joe Moglia, TD Ameritrade CEO 2001-08 on the leadership lessons of football

   Football teams have losing seasons from time to time. That's seldom an option in business.

   In football and business, a loss is more painful than a win is gratifying. A football game is more emotional, but a season is equivalent to a year of running a firm.

   Analyze the odds of success and what happens if the plan fails. Don’t forget to assess the risk of being wrong.

   There’s no risk in a Hail Mary pass. That's a last-ditch effort. Business risk is more like an all-out blitz. Prepare and analyze to know tendencies of yourself and the opponent.

   The book Perimeter Attack Offense describes how to attack the cornerback, safety and outside linebacker. Those players have dual run-pass responsibilities. The key is to make those players hesitate, even for a fraction of a second, to give a two- or three-inch advantage to the offense. Create similar advantages in business, such as technology, to give your team an edge.

   In football and business, when you come up against a team of equal or greater strength, you need a scheme to outplay them. If your scheme is better on paper but you can't execute, you'll lose.

   The most ingenious game plans fail if no one is blocking and tackling. When two teams execute, the team with a better game plan wins.

  “To succeed, you need four qualities: spiritual soundness, dedication, courage and love.”

   Love is the willingness to sacrifice for the betterment of others – the team, the organization. It's not the emotions you feel when you ask your wife to marry you.

   Spiritual soundness is the ability to have peace of mind, to be comfortable with who you are, understand your strengths and acknowledge your weaknesses. It's a comfort level with yourself.

   In football and business there are star performers. Convince the stars that the only way to succeed is to reach team goals.

  “It’s no good to lead the team in scoring if the team doesn’t make the playoffs.”

   The star quarterback won't be effective if he's on the ground due to lousy protection. In business, if your star running back doesn't recognize the importance of his blockers, you need another back.

   You can have good athletes playing the wrong position. Move underperforming employees to where they can be successful.

  Did you know?

  Moglia quit as TD Ameritrade CEO to become head coach at Coastal Carolina. Collegiate record: 51-15.

  High school and college football coach for 16 years before joining Merrill Lynch in 1984. Top broker by 1988.

  First stock: Chrysler, bought at age 19. Lost money.

  Leadership lessons of the nuns

  — Thomas Monaghan, Domino’s Pizza founder on how to juggle faith, wealth and politics

   If you want to be successful over a long period, have an idea why you were born and what life is about. Nobody can function without thinking that through.

   Live by Christ’s teachings. Be a straight arrow.

   Nuns teach that honesty is the best policy. Treat suppliers fairly, teach the golden rule to your people. The idea of cheating on your wife should be unthinkable.

  “Surveys show that
the most religious profession is the military. Businessmen are No. 2. The media are at the bottom.”

   The word bankruptcy should not be in the vocabulary. If you’re hopelessly insolvent, pay every dollar you owe.

   When people trust you, all you need is a handshake.

   Strong families provide a foundation from which to operate a business. Some ignore their families, are workaholics and never home. They have no purpose in life, which will eventually hurt the business.

   Money is neutral. It prints Bibles and pays for priests, hospitals, orphanages and soup kitchens.

  “The nuns told us that money was the root of all evil. But it’s the love of money that’s the root of all evil.”

   Don’t live like a pauper, but don't engage in ostentatious things. Simplify life. No more airplanes, no more yachts. It's a big relief.

   Read Mere Christianity by C.S. Lewis.

   Wealthy or not, put God first. Pray to God to ask his will for you. Listen and follow.

  “Dominos had franchisees near college campuses who thought they were injured by my pro-life position, but it helped business more than it hurt. For every customer lost, we gained many.”

   Pride is the greatest of sins. You're a successful capitalist if you've served other people, you've served your employees, you've served your customers. Don't create an empire and an imperial life.

   Faith doesn’t cause war. War is hunger for power. Extremists use religion to justify atrocities.

   Most customers don’t care about controversy.

  “I don’t consider myself a liberal or a conservative. I’m for free enterprise, small government, less taxes. I’m a believer in the plight of minorities. The Earth was created for our use and not abuse.”

   Become rich by seeing that rich is not important. If you were brought up poor and embarrassed by holes in your shoes, get that out of your system.

   Getting rich is enjoyable. Giving it away, fulfilling.

  Did you know?

  Monaghan grew up in foster homes and a Catholic orphanage after his father died on Christmas Eve 1941. He was 4. His mother decided she could not take care of her two sons.

  Founded Domino's with brother James, who traded his share for a Volkswagen Beetle.

  Wanted to be a priest as far back as the second grade. Dismissed from the seminary for being too mischievous, but says the real reason was because he did not write home enough.

  Met his wife while delivering a pizza.

  Sold Domino’s in 1998 for $1 billion. Bought antique cars, yachts and the Detroit Tigers baseball team. Says he is now invested “in helping people get to heaven,” through the Ave Maria Foundation.

  What comes down must go up

  — James Morgan, Applied Materials CEO 1977-2003 on leading through economic slumps

   Downturns once trickled in gradually over a couple of quarters. Everybody has the same information now, and that leads to abrupt ups and downs. Don’t be a deer in the headlights. Things unravel quickly. Develop the skill of anticipation.

  “Problems show up like rocks in a bay when the tide is out.”

   Develop a navigation plan. When the water is up, you don't know where the rocks are. Use downturns to improve.

   Recessions are different, but the response is similar. Shrink travel, inventories and population.

   Get bad news out of the way early: pay cuts, days off without pay. Layoffs are painful. Rip the Band-Aid and get everyone focused.

   Instruct managers to meet with employees worldwide. Give an explanation for what happened, why and what the near-term outlook is going to be.

   Communicate so that there will be no surprises if business doesn't pick up. Give employees reason to trust information that comes from management. Spell out what it will take to get through the tough period.

   Prepare for the upswing during tough times. Focus on long-term strategy. Build a strong balance sheet that leads you to take risks. Employees and investors want to believe in a solid plan. Spend on research and development. Get new products out.

  “Like in football, this is the time to establish good field position.”

   Catch competitors off guard and get a big play.

   Good people are available in recessions. Look for strategic hires. Avoid laying off talented workers, and continue with a college graduate hiring program.

  “Great companies are built in tough times.”

   In good times, scramble to keep up with demand. In bad times, get close to your customers. Make sure you know what they want, what they need.

  Did you know?

  Morgan’s wife Becky Morgan was a California state senator for nine years.

  Has a pond with koi, ornamental Japanese fish. Avid skier.

  Give choking companies the Heimlich maneuver

  — Anne Mulcahy, Xerox CEO 2001-09 on leading through a disaster

   When a company’s in trouble, customers and employees need to see quick action. Make commitments, execute, build credibility. Don’t disappoint.

   Be decisive. Even with an incredible brand, people don’t have unending patience.

   When there’s no growth in the industry, focus on pirating business from competitors.

   Shareholders used to receive a separate message but communication has become aligned in a world of transparency. Employees stay with the company for the same reasons investors invest and customers choose to be patrons. Convince all stakeholders that you're competitive and best in class and a leader in the marketplace.

  “We retained our research and development expenses of 5% to 6% of revenue. In the last six quarters we introduced 27 new products. We refreshed our whole portfolio”

   Research often brings ideas that aren’t a good fit. License that technology.

   Customers want relevant products. They won’t pay for anything they don't consider to be of value. Offer options without bells and whistles.

   Demonstrate that your products save time or money.

   Beware of emotional attachments. Xerox all but abandoned the copy business. Stay adaptive.

  Did you know?

  Mulcahy took over at Xerox when the company was $17 billion in debt and in the middle of an accounting scandal.

  Grew up with four brothers and says she learned to embrace competition.

  In 2002, Xerox’s 700 patents put it among the top 10.

  When a new product gives customers a heart attack

  — James Mullen, Biogen CEO 2000-10 on marching through disaster

   Nothing in business is more risky than drug development and it stays fraught through the life of the product. Even with FDA approval, drug companies have limited information on side effects down the road.

   If something might be unsafe, let the rope out gradually. It doesn't matter if you are a biotech company or Chipotle.

   To avoid a Vioxx-like disaster, stay ever-alert. Have safeguards in place for the integrity of the organization.

   Understand complexity. Knowledge accumulates at a dizzying pace. It will be a long time before that turns around.

  “The human genome project has accelerated information 100-fold in 10 years.”

   It's called research and development because the answer is unknown at the start. A negative result is valuable if it tells you what path not to follow.

   If innovation requires failure, don’t blame innovators who fail. Avoid self-inflicted failure.

   Learn from mistakes and broadcast them throughout the organization so they aren’t repeated.

   Cost, quality and speed are at odds with each other. Start with quality, then achieve a quick timeline and trim costs.

   Think things through, measure what you do, find root causes of problems, correct them, and don't do it again.

   Keep a balance between having defined ground rules and a culture where researchers can poke around. That’s how great discoveries are made. But they can’
t be turned loose to bark up any tree.

   Recruit researchers with a curiosity to learn what's going on in other disciplines such as patent law or the manufacturing process.

   All employees want to know what they’re supposed to be doing, how their work is measured. That’s more important to knowledge workers.

   It's easy to tell if applicants have the technical skill and experience to perform a job. It’s tougher to determine if they are going to be a great contributor and collaborator and function on a team. Spend time interviewing for those aspects.

  “I hired a German sales force without understanding five words of German. I picked out the best reps by watching how they interacted with their peers, the body language and the rest.”

   Guard against the "not invented here" syndrome. It's critical to look outward for ideas.

   CEOs don’t have to be innovative. They have to be good at spotting ideas and creating the environment for those ideas to be tested.

   Innovation requires incentives. If a drug company is expected to give away a cure for AIDS, then a cure for baldness will more likely be invented.

  Did you know?

  Mullen planned on becoming a medical doctor when he got to college, but wanted to use science to solve problems.

  It takes $1 billion and 15 years to develop the average new drug. One in 1,000 compounds tested makes it to human trials, and one in five of those emerges as a drug.

  Greatest breakthrough in medical history: "It’s still penicillin.”

  Overcoming resistance to change

  — Bob Nardelli, Home Depot CEO 2000-07 on taking over a successful company