Tag Archives: leadership

Leadership by competitive advantage

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“Everyone is tested by life,but only a few extract strength and wisdom from their most trying
experiences. They’re the ones we call leaders.”

Warren G. Bennis and Robert J. Thomas

The above quote from the Harvard Business Review Sep 2002 article leads me to call the ‘wisdom’ as a competitive advantage.

Let me bring in a few other classical reference frames from religious texts.

Quoted from Sanskrit Hindu literature “God’s songs’ circa 1st century AD: Whenever the balance is broken, restoring force springs forth.

Story of Gideon from the Bible, circa BC 1100 : ‘Gideon rises from the ranks and file of Israelites and takes charge as their leader. He and his modest motley band of warriors annihilate 120,000 enemies in no time.

To use a principle from finance, perfect competition marks a certain stasis and results in very low returns. Incentives for doing business disappear, until – this one is important – someone comes up with a competitive advantage in terms of technology or cost savings. The competitive advantage sets up a monopolistic condition that generates what is termed as ‘abnormal profits’, which are what people actually want!

I am trying to draw a parallel for the above phenomenon in sociology: whenever stasis becomes too boring or protracted, abnormal things happen and challenge the status quo. New balances will be restored in hitherto unimaginable ways. However, significant changes will have happened in the process. The protagonists in leading such changes have an intellectual competitive advantage.

I think this is becoming way too serious matter! Let me leave the theorizing here. Actually I am trying to simply say that leaders emerge from most unexpected quarters with novel ways of solving vexing issues. These leaders emerge in every situation, big or small.

Leadership and money

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http://m.theglobeandmail.com/globe-investor/investor-community/trading-shots/why-marissa-mayer-yahoos-59-million-ceo-is-worth-it/article11347927/?service=mobile

Globe and Mail reports huge earnings for S&P 500 CEOs, the average is in the vicinity of $10 million per annum. Larissa Meyer, until a couple of years ago worth only a million a year is laying claim to close to $60 million this year.

Is this food for thought?

Earlier this year I confronted a question in graduate business school classroom. ‘Why is there a proliferation of leadership literature in google searches in recent years?’

Neither the students nor the elderly professor mentioned astronomical bonus earnings of CEOs as a possible lure. The standard business school version is that leadership is not only about creating shareholder wealth. In reality, though, that is the paramount question.

I remember President Obama taking up issue with Wall Street for what he thought were excessive bonuses in 2009 when the US and global economies were struggling to recover from the Lehman Brothers collapse.

http://www.nytimes.com/2009/01/30/business/30obama.html?_r=0

The companies were giving away $20 billion in bonuses at that time! Unconscionable? Well, in the light of economic theories that we learn, I think not! Why do I think so? It is the theory of why picking up a hypothetical $100 bill from the road is not advisable! Paradoxical as it might seem, this theory is the core of corporate finance theory that in a mature market there are no arbitrage or free money opportunities. It is well night impossible to find free money, so the question of picking up $100 doesn’t even arise!

However, free money, or ‘abnormal profit’ as it is called, is available when a company enters a monopolistic regime with a competitive advantage either in innovation or in cost savings. The CEOs and business leaders are supposed to be bringing in this cutting edge and the compensation for generating such a competitive advantage has to be really super high, don’t you think?

In other words, there is no super company that churns out profits unless someone is paid super bonuses as sufficient incentive to innovate.

The bottom line is, the leader creates wealth for the shareholders and takes away a sizeable chunk for himself or herself. Everyone is happy. Only the outsiders who are neither the shareholders nor the CEOs themselves will complain. Unfortunately, Obama is in that group.

Seek to understand and then be understood

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It is surprisingly easy to read, repeat, speak and even pass an exam on complex topics and then totally be unmindful of it. We all do that all the time. Any doubts?

The example that comes to my mind is a scene from a humorous movie where the wimpy heroes have the mandate to find a stolen golden crown. They pass by the crown in the road as it literally rolls in in front of them, but they only run away from its path! The audience would always have a laugh. Little do they realize that most of us do the same thing in real life.

Steven R. Covey’s book Seven Habits of Highly Successful People states my title as one of them. I have read it, memorized it, talked about it, but for years little did I realize that it is about me making a change. Seek to understand what we see and then make sense of it before ever opening the mouth to speak about it is a conscious decision many of us have to make, with me at the top of the list.

Speaking about this book, a very interesting anecdote comes to mind. A very devout Salafi muslim professor, who thinks his religious way is the only way for the world started reading this book. He was so thrilled that he told me that if he had ever got this book in his early youth, life would have been different for him. I don’t think he ever meant leaving is fundamentalist world view and embrace a more inclusive world view. Far from it. He meant that he would have been a more successful person in terms of money and fame.

Come to think about it, it is hard to miss Covey’s very important points in the beginning. Everyone will be fascinated by a picture of a lady there, which he calls as either an old lady or a young lady, depending on how you look at it. Most people see only one perspective, not both. I have tested it on many people and verified this fact for myself. Seeing different perspectives of a question requires one to move the frame of reference, which is very difficult without conscious effort. Different perspectives just do not apply to the professor, there is just one correct perspective!

Another thing that goes as background material in the book in the first few pages is about, what Covey calls as increasing the circle of one’s influence. My salafi friend has the world view that everything happens to him, people are out to get him and his religion, that the only course open to him is to protest in all possible ways, etc. He would never even think that he, not others, is the only author of his own future.

So much for the difference between the theory and its practice. The theory may be so very simple and clear, but people practice the opposite of it, while also happily reciting from the theoretical text.

A new HR Model to look at

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Tim Ferris author of various popular books on lifestyle design has made this observation about himself.

The number of people he employs? Zero.
The number of employees working for his company? 200 -300.

He also points out that he has transcended the two differing management styles – participative and authoritarian – by eliminating the human component in the management of business completely.

Just think about this.

We are being told that it is not good to say bad things about your boss or company to the new employer. It is also true that the new employer will value reference from the current employer very strongly. Therefore, an employee facing discrimination or harassment at work is more likely to remain silent about it than ever speak out.

The above condition is now accepted in Human Resources market as the de facto norm. However, a cursory look at the above paragraph makes it clear that this cannot be a good model.

Tim Ferris’s alternate way of using internet to build a virtual company where everyone is accountable to himself is a great idea of the future.

Where have all the leaders gone?

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I have been through this situation:

Leadership is about excelling oneself and getting noticed. Then at some point, sooner rather than later, there comes a call to take leadership roles from someone with power. It is usually a call to action, directly or indirectly. Now the the decision is open to the person whether to accept the challenge or not.

It is surprisingly true that there are vacant leadership positions almost everywhere. It is not about filing an HR vacancy. It is about showing that you can do something particularly well, and lo and behold, there are powerful people out there who want to give you more and more responsibilities.
It is the courage to take the challenges and also grow that makes or breaks a successful leader.

More often than not, people tend not to take up responsibilities. It is easy to criticize, easy to be a pedant journalist writing about niche topics, easy to be a professor analyzing case studies..The list goes on. But the surprising thing that I notice is that many of these so-called experts actually refuse to take leadership positions. Or they don’t care.

That is the essence of Lee Iacocca’s question above, which I quoted elsewhere.

Bringing up the leader

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Consider the following guidelines for effective leadership.

Don’t criticize, condemn, or complain.

Never say, “You are wrong.” However, if you are wrong, admit it quickly.

Talk about your own mistakes before criticizing.

If the other person has made a mistake, indirectly point to it, and allow him to save face. Make the fault seem easy to correct. Make him/her happy to take your advice to make corrections.

If there is a new idea, gently plant it in the listener and let him/ her even claim it as his/ her own.

Try honestly to see from the other person’s point of view.

Ask questions instead of giving direct orders.

Forgive the mistakes and never bring them up once they have corrected the mistakes. Never brand them for those mistakes.

When making corrections, let the purpose always be noble, such as company objectives or the the other person’s achievements.

Smile as often as you can. Always respect the other person.

Do you agree that these are good guidelines? Well, they are not my own.
” How to win friends and influence people” is the title of the world-famous self-help book that sold millions since it was published in the 1930s. These ideas and suggestions are the basis for the book.

Now I will throw down a challenge. Can you find any leader or manager from your personal experience who follows the above guidelines?

Guess what! I have had many managers in my career, and none of them qualifies as a paradigm of virtue according to the above guidelines. Worse, I have had a couple – I would call them Bob and Tosh – who used coercion, threats and abusive language to deal with people.

On leadership, management and happiness

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The following write up is a collection of some loaded thoughts I gleaned over the last few weeks. The thoughts have been in my radar for a few years, but listening to Tony Hseih’s audio book ‘Delivering Happiness’ made me to consolidate the ideas into an interwoven compendium. Tony Hseih is the founder of the successful internet shoes retailer Zappos.com. I am indebted to different sources for the wisdom in the following words. None of them are my original findings. But I have made the observations and can vouch for the truth of these statements.

For success there are four things required – competence, communication and teamwork combined with passion.

There are three keys to effective teamwork – cooperation, communication and information sharing.

There are five elements of effective management – ask for concerns and suggestions, share information, treat with respect, do not micromanage, compliment on good work.

There are four important keys to effective leadership – vision, communication and passion plus effective management.

Managers and leaders must have demonstrated ability for making judgments, problem solving and effective communication.

Managers must have a culture of openness, win-win, flexibility and objectivity.

Era of coercive, reactive management based on fear is gone. The employer is not superior to employee anymore; they are both equal cogs in the wheel of successful business.

Managers and leaders must be able to confront those who do not have the above culture with emotional calmness. Managers and leaders must have a high emotional quotient.

Hiring must be a careful choice based on careful evaluation of cultural fits. Success occurs when the employees live their convictions and culture rather than do anything different from their own beliefs and culture. The reason for this is the premise that people do not like to edit their behavior for the sake of jobs anymore although it used to be the case in the past. Behaviour based interviewing is, therefore, a critical part of hiring.

Firing cultural misfits is a better option than trying to change their culture.

In order to succeed leaders must have a purpose that is greater than self-serving interests.

The key to happiness is being able to give happiness first. Customer is not king. Understanding customer satisfaction is very important for survival of business. However, to achieve happiness choose to work to deliver happiness to customers, workers and vendors alike, not just for the customers.

Wisdom from Jeff Bazos, founder of Amazon: “I know only a few things, they are – obsess over customers, tell them what they need, never be complacent.” I have paraphrased the ideas from my memory of his audio presentation.

Wisdom from Tony Hseih, founder of Zappos: “culture of delivering happiness to vendors, customers and organization is the key to doing great as a service company.”