CULTIVATING ELEGANCE
THE ROLE OF THE CEO
A CEO does three basic things:
- Calls the game. This is the realm of strategy. You have to know why the business exists, where it is going, and how you intend to get there.
- Staffs to win. You are responsible for those who report to you, the executive staff. To win the game, you must put together a championship team.
- Motivates. You have written a play and casted it. Now you have to keep the group together and focused on achieving the organizational goals.
As CEO, you are much like a coach. You call the game, choose the right combination of people to win the game, and make them feel good so they stay with you and come together as a team. Calling the game is the technical part of running a business. Staffing to win and motivation are the human aspects.
A business is the process of satisfying a human need at a profit. You can satisfy a need with a product or service, but in order to make money you must satisfy a human need. This is why a business person must be somewhat of a sociologist. You have to be interested in how human beings develop needs. The best way to make a lot of money is to use technology to satisfy a latent need, a need that was never satisfied because the technology didn’t exist to satisfy it. If you satisfy a need and don’t make money, it’s philanthropy. If you make money but don’t satisfy a need, you’re a crook. The only way to be a business person is to satisfy a need and make money.
In order to satisfy a need, you have to be able to identify it. Identify a need and a market that no one has yet exploited, match it with the new technology to do so, and you have the best chance of making a lot of money. But when you make a lot of money, you attract competition that will try to take the business away from you. If you don’t want competition, plan to fail, because nobody competes with a failure.
As CEO, you need to be able to describe your edge over the competition. In order to do that, you have to understand the relationship between your business, the needs of your customers and the competition. Needs disappear and the competition changes, so your edge can disappear. You can’t ever rest upon your success. No bonanza lasts forever. When you get on top of the world, get ready to fall.
The highest quality of a CEO is to be anticipatory. You look for money when you don’t need it. You change direction before the storm hits. The key is to do this when everything is running smoothly because that’s when the world comes after you. Above all, when competition becomes fierce, you have to know where you are.
What is the “edge?” Your edge can be price, quality, service, distribution, location—any number of things. Whatever it is, you must know what it is for your business. If you know what your edge is, you know what to do when the competition takes it away.
CHANGING NEEDS
There comes a time to outgrow tradition and get rid of ideas you grew up with. The first time we face competition is in sports. Our parents say, “It doesn’t matter whether you win or lose, it’s how you play the game. Give your best and be fair and honest.” Yet in sports, the expertise or power between competitors is minimized so the result is unpredictable. If you can predict the outcome, it’s not sport.
The problem is that we grow up and think that business is a sport, which it is not. Get rid of the idea that business is a just one big contest. Don’t start the game unless everything is stacked in your favor or unless you enjoy throwing money away. Never start a business unless you have an edge.
All progress comes from technology. Then we create philosophies that describe the changing human sociological values that develop as a result of new technology.
What do the following have in common?
- ATMs
- Condos
- TGIF Bars
- 7-11 Stores
- Small Japanese cars
- Women’s rights
All resulted from the one new technology: the contraceptive pill.
Several thousand years ago, society invented marriage. The goal was to make sure that when people got together with the opportunity to have a child, society made it a serious business to make sure they stayed together. Falling in love is a spontaneous condition that occurs when the right conditions exist. In marriage, what happens fortuitously you have to promise to do for the rest of your life. The ceremony, the gifts, etc. are all designed to pressure people to stay in
marriages.
When the pill was developed in the late ‘50s, people could relate more broadly without worrying about any aftermath. Because the activity of sex is so pleasant, people did it more broadly and more frequently, and the divorce rate skyrocketed. This created a market of single people, who have different needs from families. All the above—condos, singles bars, etc.—all came about as a result of people seeing a new need and trying to satisfy it.
But, as with every business, these needs are changing. The baby boomers are getting older and having families. Supermarkets are staying open 24 hours a day. All of a sudden 7-il’s edge is gone. General Motors and Ford have finally awakened and are making good small cars. Japanese car makers are now feeling the heat. Their edge, too, is rapidly disappearing.
If you are successful, over time you become very sensitive to your edge over the competition and what is happening to the need you satisfy. If you get this early enough, you have time to regroup when danger threatens. But thinking you will always have a steady, secure marketplace is the beginning of your downfall. While this kind of instability is threatening, it is also the fun part of business. It forces you to think and become creative and develop new ideas. Life is a process of discovery. The changing nature of business enhances that process.
ACCEPTING RESPONSIBILITY
To be an effective CEO, you must have two personal traits. You must:
- Be driven to honor personal agreements. As a CEO, you must have the reputation of being a man of your word. If not, you get the opposite reputation, which hurts you with your peers and your subordinates. If you want to succeed, honor your agreements. This attribute has to be something inside your soul, so that you feel badly if you said something but it doesn’t come true.
- Accept responsibility (and failure) with comfort. It takes a mature attitude to accept responsibility even when you screw up. Effective CEOs recognize and accept that they are going to fail some of the time and they accept responsibility for it.
Most religions say that the purpose of a person is to banish evil for the sake of good. In reality, you can never banish evil because one can’t exist without the other. All opposites coexist within a closed system. All you can say is how much evil you will accept in your life. This doesn’t mean you condone evil, but to believe you can banish it is ludicrous. When you accept evil as ever-present, you feel differently about it. In the same manner, being successful and failing are inseparable. No matter how good you are, in some places you will fail. So don’t take it personally when you fail. Accept it and move on.
We grow up with a strong wish to succeed. But something is wrong when we think success is the only thing that matters. When something doesn’t turn out great, accept responsibility for it knowing that it is only the other side of success. Life is curly, so don’t try to straighten it out.
If you come home from work and your spouse asks, “Why did you forget to stop for milk?” answer, “Because life is curly.” Your forgetting it today is equivalent to your remembering it yesterday. Although you want people to succeed and you motivate them to be the best they can be, in the back of your mind you must also expect them to fail. Depending on your reaction to their failure, they will either feel guilty, which is a terrible, immobilizing feeling, or they will rise to the occasion and try to correct it.
Accepting responsibility goes with the mature growth of people. Unfortunately, we seem to never want to take responsibility in this country. Part of that is an outgrowth of Freudian psychology, which taught us that our psyches are subject to earlier conditioning. If we have problems, our parents and other authority figures are at fault. When we feel we aren’t responsible, we begin to feel that nobody is responsible. So we learn not to fix problems but to justify their existence.
But sooner or later we have to say, “Regardless of what happened to me, it’s time to grow up and take responsibility.” When you take responsibility, you can say, “I made a mistake, that’s what happened. What you see is what you get.” It feels wonderful to take responsibility. It provides a great sense of freedom. Instead of blaming others, you run the company in a very up-and-up, understanding, realistic fashion.
In business and in life, we have to develop priorities because certain things count more than others. If we could do everything, there wouldn’t be a need for priorities. But we can’t, and there isn’t enough time to do all the things we want to do. For CEOs, setting priorities means knowing your #1, #2 and #3 biggest challenges. Knowing who you are and knowing your executive staff, what are the three biggest things you have to worry about?
MOTIVATING PEOPLE
Many CEOs reach their position based on technical skills or expertise. But when you succeed to this level, people change the game on you. Now, instead of getting things done yourself, you have to get them done through others. Instead of being responsible for what you do, you now have to be responsible for what others do. This requires the acquisition of new talents and skills, but many CEOs never realize this critical point.
Compounding this problem is the fact that we grow up with an unrealistic idea of what authority is all about. As children, our parents told us what the rules were. In school, our teachers set the rules. We were always a subordinate to somebody. We learned that in order to succeed we had to follow and be obedient. When we become the boss, the only way we know how to be the boss is to set the rules and tell others what to do, which doesn’t do a thing to motivate adults.
Most people have a very difficult time making this transition. Some never get it right. Most people take their titles too seriously and hurt other people. They don’t understand that people do a better job if they feel like doing it. Feeling like doing it is not the same as being afraid of what is going to happen if you don’t do it. Fear is not a motivator.
Motivation is a condition where you, as the leader, cause a self-generated desire in your people to do what you want them to do without giving an order. Motivation is fundamentally the process of seduction, of making people like you. It involves finding out who the person is, what they like and what their needs are. Motivation is an artful process. You can’t just follow a procedure and expect it to happen.
To motivate others, you have to outgrow the idea that success depends on following the existing structures. You succeed by developing a judgment as to how you change course, depending on the outside influence. Give up the idea that you will one day find the magic formula. You can’t learn by following instruction. You have to do it, fail, start again and develop a judgment. Then you know how to do it.
The secret to success is developing a judgment. When you manage a company, never follow a plan. Of course you have a plan. But your mindset is no-plan and a plan at the same time. This way, when a bright employee comes into your office with a new idea, you don’t throw them out of the office because it violates the plan. All success comes when you have the courage to violate the plan. When you are willing to change direction when the outside world tells you to, you succeed.
People do a better job when they feel like doing it. The challenge is getting them to feel like doing it. We all go to school and learn first principles, statements as to what the world is like that were discovered by people who came before us. When something is designed improperly, it has redundant material. For example, if you design a bridge appropriately, it has the characteristic of elegance, meaning it has maximum strength and minimum material. An elegant organization is one where everyone works at their best without anyone standing around being redundant. An elegant life is one lived with a minimum of clutter and emotional baggage. Anything we do and feel that isn’t appropriate anymore is clutter.
If you have only what you need, you’re just alive. Growing old is not an achievement, it is inevitable. Growing old and having a lot of jazz while you grow old is success. To do that, optimize the design and remove the clutter. Become a professional “liver.” Don’t worry about things that don’t matter.
Manage in a way that you have learned the art of it. If you want to persuade or manipulate someone, do it so expertly that nobody knows you are doing it. In that way, you achieve whatever your goals are with a minimum of effort.
Think back to when you were six years old. Chances are the authority in your life was fearsome and critical. It seemed like all the boss did was tell you when you were wrong. This becomes so enmeshed in your psyche that when you become the boss, you criticize people. Every time you feel authoritarian, you criticize. In reality, the only way to have a winning team is to preserve the ego and self-esteem of your people. They have to feel supported by you. It’s okay to criticize as long as you do it in a way that the other person feels you think well of them.
Remember that failure and success are inseparable, so don’t show surprise when your people fail. You can show a certain amount of aversion to it, but you must treat it in a way that the other person keeps their self-esteem. If someone comes to your office to talk about themselves and they leave feeling badly about themselves, you have failed. Failing at something is very human. You don’t have to love it, but you have to be able to understand it and do the appropriate thing so the other person feels inspired not to do it again.
When we were children, authority was also arbitrary. Our parents told us what to do without explaining the reason. As a result, we learned that once we’re in authority, we don’t have to explain what we do. Yet, being arbitrary does nothing to motivate people.
Never be late for any meeting you call. Not once, no matter how busy you are. If you can’t afford to be on time, you are either over your head or disorganized. If you do come late, nobody will say anything. When you’re the CEO, you never hear the truth. Having people sit around and wait for you doesn’t do much to motivate them. Never take phone calls during meetings unless somebody dies.
Other examples of being arbitrary:
- Having a reserved parking spot
- Having a key to the executive washroom
- Giving blind orders
- Stupid policies
To motivate people, forget about tradition and what your parents told you. Study human nature, find out what turns people off and avoid those behaviors.
Hard work is involved in success but it doesn’t cause it. Working hard involves doing things you don’t like or putting in a lot of effort. We grow up with the idea that if something takes longer, it is usually better. As a result, we grow up thinking that effort is everything. You must outgrow that idea. In business, it doesn’t make any difference that you tried. The only thing that makes a difference is achieving your objectives. Tell your people you pay for results,
not effort, and you want a company motivated to accomplish, not practice.
As CEO, you must worry about the welfare of your people, but only in terms of winning the battle, not in terms of being morally correct. Don’t concern yourself with what people do away from the job. Worry only about what values they bring to the organization and what they bring to the job. If someone doesn’t do something they’re supposed to do, it’s more important to know why they didn’t do it.
Don’t let your people get away with activity-oriented answers. “I’m doing the best I can” or “I’m trying” don’t cut it in business. Get a commitment from your people on whether what you ask them to do will happen or not. If you’re about to jump out of an airplane with a parachute, you don’t want to know that the packer tried his best. And it doesn’t matter if he worked all day Saturday packing your parachute. All that matters is that he got the job done.
The modern leader rules by competence, not fear. Instead of being critical, become supportive. Instead of being arbitrary, become rational. Instead of demanding hard work, encourage involvement. Understand the extreme power of making work fun. Make humor and pleasure an integral part of your workplace. Instead of saving money, make it. Break the piggy bath and invest the contents.
You will be remembered when you do what you don’t have to do. When someone gets a $10,000 bonus, throw in a bottle of Dom Perignon. The person will remember the champagne far longer than the bonus because they don’t expect it.
The most cherished things in this world are not the result of a command. You can’t order someone to have love or affection for you or show loyalty and respect. You can’t command people to become team members. To get these things, you must cultivate them, just like growing lemons. Find out what the tree needs, provide it, and the fruit will fall into your hands without having to give an order. That is a professional manager, a person who understands human nature and goes with it rather than against it. Treat people in a way they can flourish naturally. Treat them in a way that you like to be treated.
As CEO, learn the technical aspects, watch out for competition and watch the edge. Don’t worry about always following your plan. Develop a judgment as to how you change direction to suit the outside world. Worry about having all the things you don’t need and be concerned about developing lasting human relationships.
When you treat people as your friend, they become motivated to do the job and feel good about what they do. Do these things and you will be successful, but do them obliquely. Don’t demand them. Find out what causes them and cultivate them. Do all these things and you will make a lot of money. More important, you will be able to spend it with a happy heart.