CHAPTER ONE
Become a Great Leader
āFaith is not simply a patience that passively suffers until the storm is past. Rather, it is a spirit that bears thingsāwith resignations, yes, but above all with blazing serene hope.ā
āCORAZON AQUINO
Leadership is the most important requirement for business success. In simplest terms, leadership is the willingness to be accountable for results, and then to fulfill that responsibility, no matter what the external situation or pressure.
A leader is someone who is willing to do what it takes to get great things done. It doesnāt happen on the first or second try. Leaders expect to fail over and over. They donāt like it, but they donāt quit when things donāt work out. In fact, it is during difficult economic times and major crises that your character as a leader really stands out.
Why? In tough times, your competitors run for safety and survival instead of focusing on their customers. They pay less attention to quality. They slash back service and invest less in innovation. They cut back on staff at all levels. As a result, there are more great people actually available to work with you.
It is usually in a crisis that organizations reconnect with what made them great in the first place. In a crisis, leaders must make bolder decisions that will make them great in the future. It was said that āthe North wind made the Vikings.ā In times of crisis, you have an opportunity to reignite your spirit and find better ways to delight your customers.
Your Leadership Matters
Today, more than ever, your leadership is needed. It is now time for you to step up in a new way. It is time for you to counterattack, to move forward, to innovate, to find better, faster, easier, cheaper ways to get results.
What you choose to do todayāright now, in this marketācan have more of an impact on your company and career than at any other time. Epictetus wrote: āCircumstances do not make the man; they only reveal him to himself.ā
Your ability to take charge, make hard decisions, accept responsibility, and lead effectively can have a greater impact on the success of your team or your organization than any other single factor. Everything that you do to become a more effective leader has a multiplication effect on your entire organization.
The Best and the Worst of Times
People often complain about the economy or the competition being tough, but many of the best leaders started their organizations at the worst possible time or steered them through the most difficult circumstances.
The 1970s plunged America into an era of āstagflation,ā with a combination of high interest rates, inflated gas prices, and miserable stock and real estate markets. It was considered a lost decade, much like the recent one we just endured.
Yet the 1970s were a time when great entrepreneurs did the unthinkable. Amid terrorist threats, massive bankruptcies, long gas lines, deregulation, and market bubbles, entrepreneurs like Charles Schwab, Steve Jobs, and Herb Kelleher each came to an extraordinary conclusion.
They decided: This is a great time to build a company!
Timing Is Overrated
Whether you are a Nobel Laureate like Muhammad Yunus or Nelson Mandela or an entrepreneur like Richard Branson or Oprah Winfrey, you donāt wait for the āright timeā to start something. Alan Mulally didnāt just accept a job at Ford; he leaped at a huge opportunity to take the helm and make a difference when the company and his country needed him most.
Visionaries have a surprising knack for diving in at what appear to be the least propitious times. When you actually look at the environment in which they embraced their organizations, they often chose what competitors considered to be the worst possible time. Many people, looking from the outside, think these visionaries had it easy and perfectly set. Nothing could be further from the truth.
Opportunity in a Crisis
Walt Disney, Bill Hewlett and David Packard, Tom Watson (of IBM), and Thomas Edison (when he created his vision for General Electric)āall launched their dreams in miserable markets. FedEx, Sports Illustrated, Hyatt, Wikipedia, MTV, and Trader Joeās opened their doors just in time for awful recessions that defeated many other organizations. Even Google incorporated just in time for the tech bubble to burst at the end of the last century.
Leon Charney bought his first building the night Jimmy Carter lost his reelection bid to Ronald Reagan in 1980. Interest rates were in the double digits, and real estate was a bust. He plowed his rental income into twelve surrounding buildings, investing in 1.4 million square feet at Times Square. It never occurred to him that heād become a billionaire and, today, one of the newer members of the Forbes 400 list, despite the current epic real estate slump.
Wang Chuanfu started BYD (Build Your Dream) after the dot-com crash to make advanced battery products when no one cared about the ex-professorās fantasy of a green, emission-free, battery-powered electric car. Warren Buffett bought 10 percent of BYD in 2008, making Chuanfu a billionaire and Chinaās richest person.
False Starts
Many long-lasting organizations not only were born in bad markets, they also had unpopular products in the beginning. The list of short-lived, false starts for great companies is very, very long. It seems that business success is built on earlier failures.
There are plenty of legendary examples. Appleās Newton PDA was too bulky and expensive to succeed way back in 1993, but it paved the way for Research in Motion to bring the Blackberry to market and for Nokia to make smart phones a huge success long before Appleās iPhone.
Hewlett-Packard is at the top of its game today, growing at a feverish pace and overtaking rival Dell to become No. 1 in market share in PCs. But it didnāt start out that way. Among its first electronic products was a device to make urinals flush automatically and a āshockā machine for dieters. Both were busts.
Humble Beginnings
One of Fortuneās most admired companies in 2010, Marriott, didnāt start as a hotel; it was an A&W root beer stand. Procter & Gamble began as just one of eighteen candle makers in Cincinnati.
Finnish engineer Fredrik Idestam started a wood-pulp mill on the banks of the river Nokia and found great success making toilet paper, then expanded to manufacturing rubber boots and generating electricity. In 1981, that same company, Nokia, invented the worldās first multinational cellular network, and today it is the largest mobile phone and digital camera maker.
Technology powerhouse Wipro started as a shortening business in India, which then through fits and starts entered the soap business and even made hydraulic cylinders. Azim Premji eventually converted Wipro into a $5 billion IT company, and his personal net worth today is approximately $17 billion.
Try and Try Again
Charles Schwabās first half dozen ventures didnāt reach his high hopes. But finally he created a discount brokerage business that was such a hit that it was acquired in the 1980s by Bank of America, which at the time was the worldās largest bank. Unfortunately, that deal didnāt generate the business that everyone imagined, so Schwab stretched to buy his company back a few years later for more than four times the price for which he sold it!
To reduce his debt in the leveraged buyback, he took Schwab public on the New York Stock Exchange, but just weeks before the Great Crash of 1987. The stock fell by more than 70 percent in a day and didnāt recover to its initial public offering (IPO) price for about five years.
Success Against All Odds
Chuck Schwab credits his perseverance to parents who witnessed the Great Depression. They cultivated his ambitions to help millions of people achieve their own financial independence. Despite tough times, great families launch many leaders like Schwab, but not as often as you would hope. Many of the great ones had neither the timing nor the families to give them a good start.
Major General Gale Pollockās earliest memories are of her dad threatening her with guns and knives. She was eleven when she confronted her alcoholic father. āMen donāt hurt women and daddies donāt hurt their daughters!ā she declared, facing up to him and choking back tears. Every moment of truth for this woman has been a conscious choice to change things for the better. As a young teen, Pollockās mentorāwho had encouraged her during her dangerous early days with her dadācame back from Vietnam with his legs blown off. She was devastated, but turned that anger into action. She signed up as an Army nurse who would later become the first woman to lead the Army medical system.
When controversy broke in 2007 about the quality of health care in military hospitals, she was recruited to jump on that grenade as surgeon general, with a high possibility that she would fail and her career would be destroyed. She took heavy fire, but she turned the legacy of the Army hospitals around.
Character and Competence
What do the people weāve described here have in common? Leadership.
To be successful as a leader, you need a combination of two ingredients: character and competence. You need to be a person of integrity. Someone people trust and are willing to follow.
To be trusted in business, you must be trustworthy. You must believe in yourself, your company, the essential goodness of your products and services, and in your people. You need to believe that you are offering an excellent product or service in every way, one that makes a difference in the lives of your customers. You must lead by example and inspire others to join you in the exciting project of building a great company.
At the same time, you must become excellent at the key capabilities and functions of leadership and set yourself on a course of continuous improvement throughout your career.
āYou need the humility to remind yourself that youāve got to get better at everything you do,ā insisted Amazon founder, Jeff Bezos, when we spoke with him. āI donāt know about you, but Iām never done growing my company or myself.ā
Level 5 Leadership
Management guru Jim Collins uses the phrase ālevel 5 leadershipā to describe the characteristic of the best leaders, those who build great companies. The most fascinating and distinguishing characteristic of level 5 is an often misunderstood trait: humility.
As it happens, humility doesnāt actually mean...