Leaders to Leader

Lessons from the Great American Leaders & How They Apply Now

Leaders focus on enhancing the customer’s ‘experience’

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Across the broad spectrum of products, services and industries, and the span of over 200 years, the great leaders shared a mutual focus to greatly enhance their customer’s “experience.” This incorporated the concept of “ruthless efficiency” to drive down costs, improve quality and increase efficiencies through innovation and continuous improvement. This resulted in better products at lower costs. This generated their record of growth and success through the practice of overwhelming and eliminating their competition, who couldn’t match their performance.

Edward Harriman (Union Pacific) illustrated this attitude.

“Walking some Southern Pacific track one day with one of his finest officers, Julius Kruttschnitt, Harriman’s restless eye seized on one of the bolts holding a rail in place. ‘Why does so much of that bolt protrude beyond the nut?’ he asked abruptly.

‘It is the size that is generally used,’ replied Kruttschnitt.

‘Why should we use a bolt of such a length that a part of it is useless?’ persisted Harriman.

‘Well,’ admitted Kruttschnitt, ‘When you come right down to it, there is no reason.’

After walking a bit farther, Harriman stopped suddenly and asked, ‘How many track bolts are there in a mile of track?’

Kruttschnitt did a quick calculation and ventured a figure. ‘Well,’ snapped Harriman, ‘in the Union Pacific and Southern Pacific we have about eighteen thousand miles of track and there must be some fifty million bolts in our system. If you can cut an ounce off from every bolt, you will save fifty million ounces of iron, and that is something worthwhile.

Change your bolt standard.’” [1]

Contrary to today’s focus on shareholder value, the great leaders attributed their success to the maintenance of a fanatical focus on the well being of their customers. The customer is the key constituency and is placed first, even at the expense of the stockholders.

Common sense told them that before profits there needed to be sales. And happy customers generated sales. Any actions that diminished the customer experience would be detrimental to the health of their businesses. Jeff Bezos (Amazon) stated,

“Customers want three things; the best selection, the lowest prices, and the cheapest and most-convenient delivery. At Amazon, all decisions flow from those fundamentals.”

When leaders lose their focus on building their business, and maintain a balance with their constituencies, their professional credibility suffers. Many who attain prominent positions are faced with numerous temptations, which come with the trappings of power. These can become the impetus that destroys their credibility and in certain instances, their careers.

Focusing on the attainment of their personal agenda, including prominence, personal notoriety, and popularity often tops the list of problematic behaviors. Some leaders are enamored with politics and the possibility of political office, while others are consumed with personal interests and activities.

Carly Fiorina (Hewlett-Packard) fell into this trap as she was accused of acting like a rock star during her tenure as CEO. “Some critics said she became caught up in high-level strategy and high-profile marketing events to create buzz (such as appearing on stage at a trade show with pop singer Gwen Stefani a month before her firing), rather than homing in on the nitty-gritty operational issues…” [2]

James Cayne (Bear Stearns) was participating at a championship bridge tournament as his company faced imminent financial collapse in 2007. He was later accused of being more focused on his bridge activities than his company in the critical period leading up to the financial disaster.

“On July 12, chatting with visitors over lunch, Mr. Cayne seemed less interested in discussing the markets than in talking about a breakfast-cereal allergy and his stash of unlabeled Cuban cigars. On another occasion, he told a visitor he pays $140 apiece for the cigars, keeping them in a humidor under his desk. Five days later managers of both funds informed investors their holdings were virtually worthless.” [3]

Undoubtedly, many problematic leaders feel if their companies are performing well, they are free to pursue their own interests. In the case of Carly Fiorina, her personal focus was transparent and she was severely criticized in the press and in the company. This undermined her credibility, which ultimately led to the loss of her validity, and authority to lead. Her actions alienated her constituencies, who ultimately abandoned her when she needed them. She lost her professional credibility.

“CEOs can grow arrogant. They stop listening to trusted advisors and begin to breed negative energy, reflecting that back on the company. ‘Roger Smith became shorthand for a generation of managerial puppetry,’ says Jeffrey Sonnenfeld, president of the Chief Executive Leadership Institute and an associate dean at the Yale School of Management.

To be sure, when highly visible CEOs make bad decisions or fail entirely, their companies suffer as well. ‘Personal actions, such as political decisions, take on more weight,’ says Peter H. Coors (Coors) ‘What we might do personally would have an impact on the company.’” [4]

P.T. Barnum (Barnum & Bailey Circus) offered sound advice, which is just as applicable today as it was then, when he said,

“Engage in one kind of business only, and stick to it faithfully until you succeed… When a man’s undivided attention is centered on one object, his mind will constantly be suggesting improvements of value… There is good sense in the old caution against having too many irons in the fire at once.”

References:

  1. Klein, Maury, The Change Makers (Henry Holt and Company, New York, 2003) p 128-129
  2. Zapler Mike, Analysts: Carly Fiorina Long on Vision, Fell Short on Execution at HP (Oakland Tribune) April 21, 2010
  3. Kelly, Kate, Bear CEO’s Handling of Crisis Raises Issues (The Wall Street Journal) November 1, 2007
  4. Benezra, Karen and Gilbert, Jennifer, The CEO as Brand — Their Names Are Synonymous With Their Companies’ Products — And That Presents A Slew of Unique Challenges (Chief Executive) January 1. 2002

For more information on this topic, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It by Timothy F. Bednarz (Majorium Business Press, Stevens Point, WI 2011).

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

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