#421  from Innovative Leader Volume 8, Number 9          September 1999

Building the Teaching Organization
by Noel Tichy, Ph.D. and Patricia Ricci

Dr. Tichy is Professor of Organizational Behavior and Human Resource Management and director of the Global Leadership Program at the University of Michigan Business School.  He is author of several books including The Leadership Engine: How Winning Companies Build Leaders at Every Level (Harper Business Publications, New York, 1997) and Every Business is a Growth Business (Random House, New York, 1998).  Ms. Ricci is a Research Associate at the University of Michigan Business School.

In the early 1990’s, companies across the globe were fumbling all over themselves to find the right tools to deal with globalization, technological change, and consumers’ increasing demands.  Many of these failed miserably; the poor financial results caused the removal of senior leaders at major corporations, including IBM, GM, American Express, Kodak, and AT&T.  In contrast, several companies thrived during the same time frame. The winning firms had steady revenue growth and rapid stock price appreciation.  But to get to this point, to be able to lead, the winning companies separated themselves from the also-rans by concentrating on the task of building leaders at all levels of the organization. 

We examined some of those failures and compared them with such successes as General Electric, Intel, and Compaq.  We concluded that the capital markets were only partly right; leadership was the problem, but the markets were wrong to focus on only top management.  In the companies we studied, sustained success was a function of leadership throughout.  Winning companies win because they have solid leaders not only at the top, but also at all organizational levels.

It is no accident that Jack Welch of GE has over a half dozen viable candidates for his CEO job, which he will relinquish in the year 2000. He began revamping the leadership development practices at GE over 15 years ago.  He teaches several times a month at GE’s leadership development center. He grades his people all the time and writes developmental coaching letters to his senior people. He is obsessive about leadership development.  Contrast this with no succession plans at IBM, AT&T, or Kodak.  Andy Grove at Intel spent years developing his successor Craig Barrett and has a similar focus to be a developmental teacher and leader.

There is no blueprint for an ideal teaching organization.  Companies have different values, different goals, and therefore leaders at organizations must personally involve themselves in the process to insure the correct message is being spread.  As a leader begins to teach, he or she will realize that leadership is autobiographical.  Events in a person’s life culminate to form a personal view of the world, political opinions, and religious beliefs.   Similarly, a leader formulates a teachable point of view on leadership.  Personal experiences, whether it be captaining a high school volleyball team or heading a multinational division, build beliefs about leadership, organization, and management.  A leader may not be an academic genius, but rather is a person who can extrapolate important learnings and skills from situations.

The experiences of a leader and lessons learned come together in a teachable point of view on leadership.  This encompasses the most important aspects of leadership and enables the leader to preach what he or she has learned, continuing to develop the future leaders through all levels of the organization.  A leader holds strong view on values, inventive ideas, demonstrates a high level of emotional energy and edge.  These factor together to form the teachable point of view. 

Ideas

Business is built on ideas that make money in the market place.  These are marketable ideas: improved products, services, distribution channels and customer service.  It is the leader’s responsibility to insure that there are ideas and that everyone is taught them.

Values

Values of an organization are more than a list hanging on the wall in the form of a mission statement.  Values are deeply rooted in the organization, guiding employees to fulfill the goals of the organization with integrity.  When a leader is confident in the value system, employees will be trusted to “elicit decisions and actions desired by the company.”

Values emanate from the top of the organization.  The actions of leaders will provide guidance as to how employees should act in certain situations.  Furthermore, these values must be supportive of and explicitly linked to the business ideas.

Emotional Energy

Emotional energy, while similar to physical energy, requires more of a leader. Leaders with emotional energy believe in their ability to make a difference and have the ability to energize those around them.  The high-energy levels exerted by leaders inspires creative energy; spurring new ideas and driving performance.

A leader must also demonstrate an ability to abandon the old and grow the new.  Avoiding the reality of changing markets and continue to focus on old ideas and goals is the biggest mistake a leader can make.  Almost as bad, some companies accomplish one goal and get too caught up celebrating to develop new patterns for growth.  Emotional energy allows a leader rejuvenate the organization by creating new opportunities.  By establishing a constant cycle of improving ideas, a leader will enable the company to continue healthy growth and success.  The injection of energy by a leader creates an environment in which people constantly thrive to find the better way.

Edge

Edge is the ability to see reality and act on it; it is more than having strong values and ideas, but edge gives a leader the strength to uphold them when they are challenged.   At crucial moments, a leader needs edge, not consultants or task forces, to make difficult decisions.  Leaders are rarely the most popular people in the organization, especially during times of crisis, but they can mobilize the appropriate response.  With clear ideas and values, rough decisions can be made and responses will be properly engendered.

World Class Leaders/Teachers

Sustainable success requires more leaders at more levels than exist in the competitors’ ranks.  Teaching, coaching, and cultivating others therefore becomes a strategic imperative for executives.  The components of leadership--ideas, values, emotional energy and edge--are part of the package presented to the next generation of leaders.  Successful leaders at large firms and energetic start-ups demonstrate similar characteristics.

Two examples of tremendous leadership capability represent one of America’s oldest firms and one of the newest: Jacques Nasser of Ford and Joe Liemandt of Trilogy Development Group.

The automotive industry is highly susceptible to the rapidly changing global industry. When Nasser took over Ford in January 1999, he readily admits to Ford’s vulnerability.  He realizes Ford needs a way to combat global competition; to be able to “leverage technology and efficiencies around the world” while at the same time, executing plans a local level.  Concerned with the inevitable levels of resistance he faces, Nasser did the only logical thing: he began to teach.

To insure all 350,000 employees on six continents fully understand his message, Nasser undertook the major task of developing leaders in at all levels, all over the world.  And instead of hiring a consulting firm to develop improvement programs, Nasser encourages managers to teach throughout the organization.  The Business Leadership Initiative began at Ford two years ago with the intention of creating leader-teachers throughout the organization.

Teams study problems within Ford during 100-day projects aimed at lowering costs or improving products.  One group, for example, discovered a way to wash Kevlar gloves used in factories and saved the company over $100,000 per year.  Another project team found a way to save almost $500,000 on extended travel assignments by renting apartments and using cell phones. 

The individual projects may seem almost inconsequential when compared to Ford’s overall cost structure, but when added together, the benefits are invaluable.  55,000 managers across the world are being trained in business skills and, more importantly, on leadership skills.  The teachers who come out of the BLI program will be able to develop new leaders.  These leaders will then continue the process until all 350,000 employees are working towards redefining Ford.

The same degree of personal involvement in the development of leaders is necessary for a CEO of a multinational, multibillion dollar business as from a CEO of a rapidly growing software design firm.  Trilogy is led by the 30-year-old entrepreneur, Joe Liemandt.  His passion for growing the front-office software design firm is as great as his vigor for developing his employees.

Liemandt dropped out of Stanford during his senior year to pursue his idea; the intensely competitive industry would not wait the nine months necessary to graduate, so Liemandt pushed his books aside and created Trilogy.  Now with estimated revenues of $200 million, the firm pursues the hottest talent graduating from Stanford, Harvard, MIT, and Michigan to continue the phenomenal growth trends.

As Nasser has learned to do, Liemandt injects thousands of dollars recruiting and training the hotshot graduates.  And to insure that the money is well spent, he personally involves himself in the intense training program dubbed Trilogy University.  The “unorthodox orientation program,” as Fast Company describes it, acclimates the newest Trilogians to the intense culture and the fast-paced software industry.  It offers a crash course in programming, marketing, and product development.  There are no books, only hands-on experience.  The only professor is Liemandt.

Throughout the course, Liemandt’s exuberance spreads around the company like wildfire.   New recruits arrive at 8 a.m. and do not leave until past midnight, and rarely complain.  In order to inspire creative energy and risk-taking, characteristics vital to growing Trilogy, Liemandt assigns groups the task of developing or improving upon a product.  With little instruction, groups are on their way.  No student of TU could possibly misunderstand his message.

Company size and company scope aside, a leader must personally involve himself or herself in the development of the people.  Leaders teaching values and ideas with emotional energy and edge are imperative to a successful, growing firm.  The ultimate legacy of a leader is the leaders he or she leaves behind.