Would you describe yourself primarily as teacher, consultant, or writer?
I do mix of these things. I teach on the executive programmes of companies. I facilitate at the top management level for off-site events, and I do corporate governance work. The reason you have difficulty pigeon-holing me is that most people have one silo and I was lucky enough to see the issues that general managers face. So my main focus is strategy, leadership, organisation, and the board.
You are better known inside corporate America’s boardrooms than outside. Is that deliberate choice?
I have avoided publicity. I only recently began to write books. My reputation is based entirely on word-of-mouth. That means you have to contribute every day. So wherever you go, people must see value every time they work with you. The value comes from converting ideas in way that is useful to the companies I work with. So the distinguishing characteristic is that I’m not going there saying here are some tools, what are your problems? I’m going there saying let me see what your problems are and how can I help you? That’s the difference.
You’ve been described as peripatetic. But how much time do you actually spend on the road each year?
I’m on the road 100 percent of the time, and this is my 26th year. I have an office, but no home. I book into hotel wherever I happen to be.
Your work has very practical focus. Is that because you do lot of hands-on consulting?
I was teaching at Harvard and Northwestern when I began to form my ideas. But most of them were difficult to translate into practice. So I began to look at the situation, the industry, the global economy factors, and develop specific solution. Most theories really are impractical.
Other thought leaders approach the world with ready-made theory which they then apply to situation. You’re saying you do the reverse?
I first want to find out the issues company is facing, what are the challenges, and then work through to the solutions, which is the most rewarding part.
You encourage executives to think like street vendor. Why is that?
Every listed company has to answer the same basic questions. What’s your margin? What’s your growth? What’s your inventory turns? What’s your cash flow? What do you know about customer needs? Why do you succeed against competition? They are the same business questions that street vendor has to understand. If you master the relationship between these things, that is the nucleus of any business. Then you must learn how to scale it up. So whether you are GE or Toshiba or any other company, it’s exactly the same thing. But if you don’t master the nucleus then you will have difficulty mastering the scale.
So, is running big company fundamentally different to managing shoe business in India, or is management universal?
There are universal questions – the ones I mentioned earlier. The difference is scale, complexity and the sheer size of the organisation. That’s huge difference. But when it comes to final decisions they all have to match the same five or six things.
Your book Execution is sub-titled The Discipline of Getting Things Done. But isn’t execution inseparable from management, rather than discipline in its own right?
That’s good question. People talk in terms of theories, and visions, and missions, and strategies. They use phrases like high level, but getting it done requires something more. There is discipline, routine, tools you can use, to achieve flawless execution. But it cannot be done without leaders and managers mastering the discipline.
What’s the key difference between companies that have an execution culture and those that don’t?
Everyone talks about culture, but if you don’t operationalise it then it doesn’t happen. Culture is not enough. Leaders must drive execution, but you have to go down further and say what are the various pro-cesses in the company that combine to create the culture. Which of these processes are working and which are not? What is working to deliver financial results, what is not working? Then how do you improve those processes that are not delivering results – what is your execution methodology?
Doesn’t that lead to company focused on numbers to the exclusion of everything else?
No. Over time it comes down to the orientation of the people side – the social system. That’s where many businesses fail. In the book we’ve tried to make the crucial link between the numbers and the social system.
You’ve worked with many business leaders over the years, including some big names. What are the most essential attributes of modern CEO?
Everyone has their own theory. But in my opinion the key is if you have long-term CEO or leader – someone who has been in the job more than four or five years – the most critical skill is selecting the right people for the right jobs. That is more important than strategy. The other part is choosing which direction to go in. These two things are critical.
Another area of your expertise is CEO succession. Why do so many CEO successions fail?
There are two major causes. In most companies that pretend to have succession planning, the succession planning process is bankrupt. It is politically highly charged and there’s lot of history. But there is no useful dialogue to calibrate it, and that’s why it doesn’t work. In many companies there is no succession planning.
In IBM, for example, there was fantastic succession planning in the 1970s and 1980s and it failed to produce successor and so an outsider was brought in. The flaw in that system was that it did not pay attention to identifying business-like, profit and loss type genes. Therefore it did not succeed. Lou Gerstner comes in – he knows what he’s doing because he’s done it at American Express. He was able to re-architecture that and produce successor from within IBM.
In most cases where companies are forced to bring in someone from outside it is because the company’s situation has deteriorated so badly. Before Gerstner arrived, IBM came very close to disaster.
You’ve written lot about why CEOs fail. Are they still failing for the same reasons today or are there new causes?
The main reason is the same. It is failure of execution.
We also have more CEO failures. Why is that?
If you’re not training these people and you’re not selecting them properly through succession planning then what do you expect? Business schools don’t train for leadership. They train for tools and techniques and frameworks. No business school can train leaders. Leaders are trained in the military, in sport, in the political arena, and through work. But business schools are incapable of producing leaders.
Is that great failing of business schools?
They don’t claim they are creating leaders. They select leaders and give them some tools. So it’s not failing. They are very clear about it. The best training is still the military. It is the job of companies to develop leaders – to give them experiences of leadership, and then to assess and rate them and then move them around. Companies have to do that and most companies have not done so. So why wouldn’t you expect to see higher failure rates?
And in many cases when companies select leaders they get seduced by intellectual capacity. Intellectual seduction means they appoint very bright individual who makes great presentations. This person appears able to get their arms around the issues but when it comes to getting things done, they don’t have the necessary skills.
