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Previously successful leader + failing company = ? July 25, 2008

Posted by John M McKee in "John M McKee", Action Plans, Business, Coaching, Personal Success, Veracity.
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“Can someone who’s been successful in one industry apply their skills in another and get the same results?”

That was the question I was discussing with a guy who had formerly led one of America’s best known companies. A highly intelligent and personable man, he and I were having dinner. This was a topic of interest to both of us. Me as a leadership coach, him because of his personal situation.

Many management gurus argue that one’s leadership style will always be just as effective regardless of the organization or industry in which an exec finds themself. Others make the case that industry-specific understanding and background is critical for any new leader hoping to create success where non exists. My dinner companion and I were aware of both sides of the debate of course. We noodled on a couple of companies / individuals:

1. Ford Motors & ceo Alan Mulalyy – previously the evp of Boeing, he was largely credited with that company’s resurgence against rival Airbus. For a hiring bonus of $18.5m, he came to Ford in 2006 with the intention of combining an outsider’s clear perspective (to an company which was very internally focused), new manufacturing mindset (he’s an engineer himself), and set about applying his management style in fresh territory.

2. Chrysler and ceo Bob Nardelli – moved to the auto sector also, in 2007, from Home Depot where he had applied the Six Sigma approach to a company known for its entrepreneurial flavor. He was credited with doubling the sales of the chain during his tenure and left it with a total personal earnings of over $230m.

So here were apparent management superstars moving into an industry that, at least in the US, is failing and flailing. At the time of writing, Ford has just reported its largest quarterly loss ever at $8.7B. Chrysler doesn’t report earnings any longer but the rumors persist that its owners would dearly love to sell it quickly.

Both executives have made major expense cuts by closing factories and buying out employees and executives. But neither have been able to boost the top line – revenue – enough to offset the massive re-organization costs however. And when it comes to looking at the future of the industry, with small and highly desirable cars or new technology products employing hybrid or hydrogen; neither have much to point toward that says their company’s current results are about to change dramatically.

Are their crappy results due to factors beyond their control? After all everyone knows that the auto industry sucks, right? Hard to say from the outside, but there’s little to indicate that these execs brought new ideas, effective leadership, or even employee / dealer excitement to companies who desperately need those.

So maybe they just aren’t leadership superstars, perhaps they were just guys who were good at their former jobs. Despite some challenging back and forth, my dinner companion and I didn’t resolve the question above. And how these 2 executives are viewed by history is yet to be seen.

But this much I know:

1. Great managers are not always great leaders. But they can usually make quick profit improvements by taking out the knife and cutting. And they’ll get immediate applause from Wall Street for a few earnings reports.

2. Great leaders don’t always produce great results in the short term. They often take longer to show their worth to the company. That’s because they are looking at factors (people, quality) which can only be grown and encouraged. Wall Street gets cranky when it doesn’t see instant gratification.

Last year I identified 12 Critical Characteristics of Great Leaders. One of them is that great leaders live their lives “on purpose’. They know what they stand for. They make their organizations a reflection of their own values and principals. Consequently, their organizations are more effective and more efficient than before they arrived. And the organization becomes faster and better as a result. This pays off for all stakeholders.

So, if you’re a board director reading this: When you are hiring someone to save the place, look for an executive who has a Purpose for her or his life. Hire them. Support them for at least 2 years to get your organization turned around. You won’t regret it.

john

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Comments»

1. Ritu - July 29, 2008

I agree that even the greatest people will not be so great in all situations. Take Steve Jobs for example. His stint at NeXT was not very successful.

Even the greatest leaders will be put in situations that will require them to make bad decisions. Most notably, meeting the expectations of Wallstreet and stockholders is the hardest job of CEOs. These expectations make them look at short term results and not make the right strategic decisions for the longer term survival and success of the business.

But most successful leaders will have qualities that will make them successful in most situations. Great leaders will always leave their mark on the company, hopefully a good one most of the times.

2. JimmyMac - July 29, 2008

John,

Once again you’re right on the mark.

The “need” to “beat the street” is a killer for many companies. The short term “quick fix” is the bane of many companies as it stifles innovation, risk taking, and the entrepreneurial spirit that made many of these companies great.

As Ritu notes great leaders will leave their mark on a company because good leaders typically, while listening to the “street” have a longer term plan and strategy and are working that plan to success.

JM


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