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Lessons from the Great American Leaders & How They Apply Now

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The Importance of Intellectual Honesty

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Louis Gerstner - IBM

Louis Gerstner – IBM

Before leaders can assess risks they must be intellectually honest to completely comprehend the reality surrounding their circumstances. A noteworthy illustration of the practice of intellectual honesty is  (IBM), who was appointed to turn around the floundering company. “He spent his first few months visiting all of IBM’s facilities all over the world taking the opportunity to explain to his concerned employees that his intention was to help the company recover, while at the same time preparing them for forthcoming tough decisions. He also spoke to customers, competitors, consultants, and analysts. Gerstner came to several conclusions:

  • Customers wanted to be provided with solutions to their problems not sold hardware.
  • Computer networking had the potential to transform the way people worked and required different hardware and software to that which IBM was producing.
  • IBM’s products were not the best in the market.
  • The existing plans to split the company were inappropriate because the company could gain many advantages through better integrating what it did.
  • Cost cutting was essential and, despite a reduction of 20 per cent in the workforce over the last six years, more employees would have to go.” [1]

Before Gerstner could transform IBM, he had to face a foreboding sense of reality. The five conclusions he arrived at provided a sobering picture of the reality of what IBM was facing. Without being intellectually honest about what he was dealing with, Gerstner would not have been able to succeed to the degree he did at IBM.

John D. Rockefeller (Standard Oil) also exhibited a high degree of intellectual honesty. Rockefeller’s greatest gift… was the ability to keep a clear head. Hope never skewed his calculations. ‘Look ahead,’ he advises. ‘… Be sure that you are not deceiving yourself at any time about actual conditions.’ He notes that when a business begins to fail, most men hate ‘to study the books and face the truth.’[2]

David Packard (Hewlett-Packard) exhibited a similar characteristic. “Even though Packard is… remembered as a gruff, straightforward man who wasn’t afraid to point out what was wrong and suggest improvements. When he returned to HP in the early 1970s after his stint as deputy secretary of defense and found the company on the verge of borrowing $100 million to cover a cash-flow shortage, he immediately met with employees and gave them what came to be known as a ‘Dave Gives ‘Em Hell’ speech. Packard lined up the division managers in front of employees and told them, ‘If they don’t get inventories under control, they’re not going to be your managers for very long.’ Within six months, the company once again had positive cash flow, to the tune of $40 million.” [3]

Jack Welch (General Electric) made the following observations concerning investment opportunities, which are risks, since the outcomes are never known and can be difficult to accurately predict. He noted, “The facts are, not all investment opportunities are created equal. But some leaders can’t face that reality, and so they sprinkle their resources like cheese on a pizza, a little bit everywhere. As a result, promising growth opportunities too often don’t get the outsized infusions of cash and people they need. If they did, someone might get offended during the resource allocation process. Someone, as in the manager of a weak business or the sponsor of a dubious investment proposal.” [4]

Sam Walton (Wal-Mart) incorporated and institutionalized intellectual honesty into his company. He observed, “From the very start we would get all our managers together once a week and critique ourselves – that was really our buying organization, a bunch of store managers getting together early Saturday morning, maybe in Bentonville, or maybe in some motel room somewhere. We would review what we had bought and see how many dollars we had committed to it. We would plan promotions and plan the items we intended to buy. And it worked so well that over the years, as we grew and built the company, it just became part of our culture. I guess that was the forerunner of our Saturday morning meetings (where company managers get together and review what they’ve seen in the stores that week). When we made a bad mistake – whether it was myself or anybody else – we talked about it, admitted it, tried to figure out how to correct it, and then moved on to the next day’s work.” [5]


[1]  Johnston Robert, IBM – Creating a Customer-Focused Organization (Warwick Business School, 2007)

[2]  Baida Peter, Rockefeller Remembers (American Heritage Magazine, September/October 1988, Volume 39, Issue 6)

[3]  O’Hanlon Charlene, David Packard: High-Tech Visionary (CRN, November 8, 2000)

[4]  Welch Jack, Bosses Who Get It All Wrong (Business Week, July 23, 2007)

[5]  Sam Walton in His Own Words (Fortune Magazine, June 29, 1992; from: “From Sam Walton: Made in America” by Sam Walton and John Huey)

Excerpt: Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Majorium Business Press, Stevens Point, WI 2011)

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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 © 2013 Timothy F. Bednarz, All Rights Reserved

You Can’t Hope Your Problems Away

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Managers are overwhelmed and burdened with many tasks and responsibilities in a constant quest to improve results. It is easy for managers to ignore the many challenges that confront them while hoping that issues will resolve themselves. However, rather than disappear, unmet challenges create a new set of problems that can represent a deepening morass from which managers must extricate themselves.

Problems and challenges are a regular and ongoing occurrence: some surface as daily tactical problems and issues, while others are more complex, time-consuming and strategic in nature. In all forms, problems can overwhelm the manager and sap their productivity.

Managers must create a systematic approach to problem solving to allow time for their regular duties and responsibilities. Without a detailed, time-focused approach that allows managers to break challenges down into more manageable components, they will quickly feel overwhelmed by the enormousness of the demands facing them.

The manager who hopes that problems will go away on their own will be faced with the following consequences:

Closely Controlled Information

The flow and control of critical information is a management issue. Many managers base their personal power on how they manage and control information made available to their people. Yet the free-flow of information to frontline employees is essential for success. Managers who attempt to micromanage their employees and limit the information fed to them, contribute to undermining the efficiency of the team.

Employees are hindered when they are not given the information they need to be competitive. Without the information and authority to make decisions on the spot, their efforts can be negatively impacted by delays. When decisions are pushed up the line for managers to make, bottlenecks are often created and critical decisions are not made in a timely manner; potential results include lost productivity or poor customer service. At a time when customers are increasingly demanding, this can be extremely problematic. Rather than make employees more effective by streamlining the process, managers often erect additional barriers that hinder performance.

Related: Power Must Be Shared for Organizations to Grow

Loss of Critical Skills

In response to slow economic conditions, many companies cut their discretionary spending and slash training budgets. Rather than focus on the development of skills that can have a direct bearing on the success of a company, many allow skills to become outmoded and ineffective during slow periods. Consequently, companies experience an additional decline in performance, which then necessitate further cuts.

Rather than focus on reducing training budgets, managers should seek to sharpen employee skills to achieve the same objectives. Studies have shown that a 2% increase in customer retention over the previous year’s performance levels will result in a 10% reduction in operating expenses. This is due to the additional retained business impacts of economies of scale.

Disconnection Between Company and Customer Base

With the changes in purchasing habits of customers and a closer examination of the roles and returns that specific products or services offer managers, those who fail to meet critical challenges can find themselves increasingly disconnected from their customer base.

Employees who fail to understand their clients’ profit economies and who are not attuned to the rapidly shifting complexion of business will find it increasingly difficult to meet their customers’ needs. As companies neglect training, they rob their people of critical skills at the apex of change.

Related: When the Process of Change Spins Out of Control

Inefficient Use of Resources

Not only are companies more demanding, but the use of various new methods and technologies have made for more diverse methods of collecting and disseminating information. The use of face-to-face meetings is in many circumstances no longer the most efficient use of resources. Phone and Web conferencing can supplement traditional meetings and free managers to pursue more essential activities.

Additionally, if managers fail to focus on the desired outcomes of their business processes and the behaviors required to achieve those goals, they are, once again, inefficiently using their resources. Failure to align desired behaviors and goals with compensation plans will result in a failure to meet objectives and negatively impact the organization.

Minimizing Profit Potential

The failure to meet new and ongoing challenges through heightened training can result in the minimization of profit potential. Employees who do not understand the profit economics of their products/services cannot comprehend how they might impact and improve the profitability of their own efforts.

Related: Seven Productive Responses to Change

Deterioration of Growth

Managers who neglect to deal with a new problem are either in denial of the situation or hope it will resolve itself. However, a failure to meet challenges will create a domino effect across the entire organization. All challenges are interconnected: each impacts the other. If solutions are not addressed in tandem, they risk failing. Consequently, when managers fail to meet the issues facing them head-on, they can easily undermine their unit and organization’s growth. The hazard is always present, but the consequences manifest themselves in increments, and the impact is only truly felt over time.

Excerpt: Risk Management: Pinpoint Sales Management Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011) $ 18.95 USD

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

The Value of Personal Experience and Expertise

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Admiral Hyman Rickover on an Inspection Tour

The value of experience and expertise in evaluating potential risks cannot be overstated. As has been previously addressed, the great leaders endured a “crucible period” of disappointment, frustration, failure and adversity. These shaped their experiences and expertise and prepared them to adequately assess risks that were placed before them.

A case in point of this was J.P. Morgan (J.P. Morgan Bank). “There can be no doubt that Morgan was a dreamer, occupying his time thinking of grand schemes and larger than life business deals. But, he never lost himself in the clouds. He knew that in order to achieve success on the scale that he dreamed of, he needed to take practical and concrete steps in that direction. Thus, through education and taking on junior positions at investment firms and banking houses, Morgan took the time he needed to gain the experience that would enable him to realize his dreams.” [1]

J.C. Penney (J.C. Penney) observed, “The greatest misfortune that can befall a man is to be placed in an advanced position without having earned the experience below it. Business progress is like climbing a ladder. It must be ascended rung by rung.” [2]

Admiral Hyman Rickover (U.S. Navy) having built the U.S. nuclear navy, while directly interviewing and hiring over 10,000 officers during his career asserted, “A cause of many of our mistakes and problems is ignorance.” [3] He stated in a 1981 speech at the Columbia University School of Engineering, “Our factories and companies are increasingly being bought, sold, and operated by professional administrators, lawyers, and financial experts who have little understanding of their products, the technology involved, or the needs of customers. As these professional ‘managers’ reach top corporate positions, others emulate them and avoid technical education in favor of management studies. In my opinion, our universities should emphasize the importance of a solid grounding in substantive learning and downgrade so-called management science. What it takes to do a job will not be learned from management courses. It is principally a matter of experience, the proper attitude, and common sense – none of which can be taught in a classroom.” [4]

The lessons extracted from experience and expertise is vital in the task of assessing risks. Individuals intuitively seem to know exactly where the roadblocks and detours are and how to avoid them. They possess the wisdom to understand the consequences of past mistakes and faulty decisions and utilize the knowledge gained to their advantage.

Excerpt: Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Majorium Business Press, 2011)

If you would like to learn more about the value of experience and expertise of the great American leaders through their own inspiring words and stories, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It. It illustrates how great leaders built great companies, and how you can apply the strategies, concepts and techniques that they pioneered to improve your own leadership skills. Click here to learn more.

Copyright © 2011 Timothy F. Bednarz, All Rights Reserved


[1]  Carmichael Evan, How He Built an Empire: J.P. Morgan’s Success Factors (evancarmichael.com)

[2]  Penney J.C., Lines of a Layman (Channel Press, Great Neck, NY, 1956) p. 105

[3]  Admiral Rickover H.C., Thoughts on Man’s Purpose in Life (speech presented at the San Diego Rotary Club, 1977)

[4]  Admiral Rickover H.C., Doing a Job (management philosophy speech at Columbia University School of Engineering, 1981; CoEvolution Quarterly, 1982)

Written by Timothy F. Bednarz, Ph.D.

November 29, 2011 at 11:09 am

The Importance of Intellectual Honesty

with 5 comments

Lou Gerstner - IBM

Before leaders can assess risks they must be intellectually honest to completely comprehend the reality surrounding their circumstances. A noteworthy illustration of the practice of intellectual honesty is Lou Gerstner (IBM), who was appointed to turn around the floundering company. “He spent his first few months visiting all of IBM’s facilities all over the world taking the opportunity to explain to his concerned employees that his intention was to help the company recover, while at the same time preparing them for forthcoming tough decisions. He also spoke to customers, competitors, consultants, and analysts. Gerstner came to several conclusions:

  • Customers wanted to be provided with solutions to their problems not sold hardware.
  • Computer networking had the potential to transform the way people worked and required different hardware and software to that which IBM was producing.
  • IBM’s products were not the best in the market.
  • The existing plans to split the company were inappropriate because the company could gain many advantages through better integrating what it did.
  • Cost cutting was essential and, despite a reduction of 20 per cent in the workforce over the last six years, more employees would have to go.” [1]

Before Gerstner could transform IBM, he had to face a foreboding sense of reality. The five conclusions he arrived at provided a sobering picture of the reality of what IBM was facing. Without being intellectually honest about what he was dealing with, Gerstner would not have been able to succeed to the degree he did at IBM.

John D. Rockefeller (Standard Oil) also exhibited a high degree of intellectual honesty. Rockefeller’s greatest gift… was the ability to keep a clear head. Hope never skewed his calculations. ‘Look ahead,’ he advises. ‘… Be sure that you are not deceiving yourself at any time about actual conditions.’ He notes that when a business begins to fail, most men hate ‘to study the books and face the truth.’[2]

David Packard (Hewlett-Packard) exhibited a similar characteristic. “Even though Packard is… remembered as a gruff, straightforward man who wasn’t afraid to point out what was wrong and suggest improvements. When he returned to HP in the early 1970s after his stint as deputy secretary of defense and found the company on the verge of borrowing $100 million to cover a cash-flow shortage, he immediately met with employees and gave them what came to be known as a ‘Dave Gives ‘Em Hell’ speech. Packard lined up the division managers in front of employees and told them, ‘If they don’t get inventories under control, they’re not going to be your managers for very long.’ Within six months, the company once again had positive cash flow, to the tune of $40 million.” [3]

Jack Welch (General Electric) made the following observations concerning investment opportunities, which are risks, since the outcomes are never known and can be difficult to accurately predict. He noted, “The facts are, not all investment opportunities are created equal. But some leaders can’t face that reality, and so they sprinkle their resources like cheese on a pizza, a little bit everywhere. As a result, promising growth opportunities too often don’t get the outsized infusions of cash and people they need. If they did, someone might get offended during the resource allocation process. Someone, as in the manager of a weak business or the sponsor of a dubious investment proposal.” [4]

Sam Walton (Wal-Mart) incorporated and institutionalized intellectual honesty into his company. He observed, “From the very start we would get all our managers together once a week and critique ourselves – that was really our buying organization, a bunch of store managers getting together early Saturday morning, maybe in Bentonville, or maybe in some motel room somewhere. We would review what we had bought and see how many dollars we had committed to it. We would plan promotions and plan the items we intended to buy. And it worked so well that over the years, as we grew and built the company, it just became part of our culture. I guess that was the forerunner of our Saturday morning meetings (where company managers get together and review what they’ve seen in the stores that week). When we made a bad mistake – whether it was myself or anybody else – we talked about it, admitted it, tried to figure out how to correct it, and then moved on to the next day’s work.” [5]

Excerpt: Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Majorium Business Press, 2011)

If you would like to learn more about the intellectual honesty of the great American leaders through their own inspiring words and stories, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It. It illustrates how great leaders built great companies, and how you can apply the strategies, concepts and techniques that they pioneered to improve your own leadership skills. Click here to learn more.

Copyright © 2011 Timothy F. Bednarz, All Rights Reserved


[1]  Johnston Robert, IBM – Creating a Customer-Focused Organization (Warwick Business School, 2007)

[2]  Baida Peter, Rockefeller Remembers (American Heritage Magazine, September/October 1988, Volume 39, Issue 6)

[3]  O’Hanlon Charlene, David Packard: High-Tech Visionary (CRN, November 8, 2000)

[4]  Welch Jack, Bosses Who Get It All Wrong (Business Week, July 23, 2007)

[5]  Sam Walton in His Own Words (Fortune Magazine, June 29, 1992; from: “From Sam Walton: Made in America” by Sam Walton and John Huey)

Written by Timothy F. Bednarz, Ph.D.

November 22, 2011 at 9:33 am

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