insigniam quarterly winter 2013 - disruptive leadership

VO L U M E 1 , I S S U E 4 | W I N T E R 2 013

REINVENTING AN

ENTERPRISESolvay’s CEO Jean-Pierre

Clamadieu talks about building a

new company after a merger.DISRUPTIVE

LEADERSHIPWHO IS INVENTING THE RULES IN YOUR MARKET?

Building Circles of TrustSimon Sinek explores

how to lead so that

people can thrive.

Survival at the Tipping PointCan a focus on results

instead of revenues

transform your business

in a time of uncertainty?

The last couple of decades proved to us that winning as an executive required the ability to effectively and quickly

manage change. Agility and speed were the passwords into the winner’s circle.

But, if yesterday’s winners were the masters of change management, then who are the winners of tomorrow? How

do you gain a competitive edge in a world where leaders and enterprises have already developed the ability to

embrace and integrate ongoing change?

Today, to lead among leaders is to be the person who sets the course, changes the rules, and rewrites conventions,

the person who invents the rules of the game.

— JENNIFER ZIMMER PARTNER, INSIGNIAM

LETTER

JJean-Pierre Clamadieu, the new CEO at Belgian chemical company Solvay

who appears on our cover, is very clear and direct about a keystone to being

successful as a disruptive leader.

“You are not a transformational hero who is carrying the weight of the

transformation on your own shoulders,” he told us. “You need to have a

strong team around you who have the ability to support the changes.”

It’s sometimes hard to think in those terms, especially when considering the

responsibilities that leaders are faced with. But person after person told us that

disruptive leadership is not a solo act. The vision for your enterprise’s future

may be yours — and you have to have a bold vision — but it takes a team of

people who have bought into that vision to make it a reality, because that’s

what disruptive leaders do.

• They ask tough questions. Not “why didn’t we” questions but “why can’t

we” questions.

• They present a bold vision, one that seems impossible on its face.

• They align everything in the enterprise to turn that vision into a reality.

• They inspire everyone on their team and in their organization to make

that vision happen.

So if you are still trying to shoulder the burdens of leadership alone, stop.

Look around you and see who you are surrounding yourself with? Are they,

as our own Nathan Rosenberg asks in this issue, committed to your vision for

the future or merely complying with your directives?

Shideh Sedgh Bina

Founding Partner, Insigniam

WINTER 2013 INSIGNIAM QUARTERLY 1

LEADERSHIP ISN’T A SOLITARY JOURNEY

WINTER 20132 INSIGNIAM QUARTERLY

18HARNESSING THE POWER OF COOPERATIONSimon Sinek introduced the Golden Circle. He

suggested we Start With Why. Now, with a new

book coming in January, he looks at how we can

create an environment where people thrive.

26SURVIVAL AT THE TIPPING POINTHow do you move forward when the road ahead

is uncertain? For one North Carolina healthcare

provider, it was focusing on what they do, not what

they earn.

36THE FOUR WAYS OF BEING THAT CREATE THE FOUNDATION FOR GREAT LEADERSHIP, A GREAT ORGANIZATION, AND A GREAT PERSONAL LIFEWerner H. Erhard and Dr. Michael C. Jensen

46PROFILES IN LEADERSHIPWhat does a modern leader look like? We asked

some of today’s top executives their thoughts on

leadership, the challenges leaders face, and why

being disruptive is more important than ever.

FEATURES

DISRUPTIVE LEADERSHIP IS NOT A SOLO ACTJean-Pierre Clamadieu

says that in a changing

world disruptive leadership

is what will take Solvay to

the next level.

COVER STORY30

TABLE OF CONTENTS


EDITOR-IN-CHIEF Shideh Sedgh Bina

[email protected]

EXECUTIVE EDITOR Nathan O. Rosenberg

[email protected]

CHIEF FINANCIAL OFFICER Ralph Gotto

DIRECTOR OF WORLDWIDE Karen Turner

CLIENT SERVICES [email protected]

DIRECTOR OF SPECIAL PROJECTS Alexes Fath

PUBLISHER Gordon Price Locke

[email protected]

MANAGING EDITOR Jarrett Rush

[email protected]

CREATIVE DIRECTOR Kyle Phelps

[email protected]

ASSISTANT ART DIRECTOR Emily Slack

PRODUCTION MANAGER Pedro Armstrong

IMAGING SPECIALIST John Gay

ACCOUNT SERVICE MANAGER Jas Robertson

EDITORIAL QUERIES

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Insigniam Quarterly is published by D Custom, 750 Saint Paul Street, Ste. 2100, Dallas, Texas 75201. Copyright 2013 by Insigniam. All rights reserved. Letters to the editors may be sent to Insigniam Quarterly c/o D Custom, 750 Saint Paul Street, Ste. 2100, Dallas, Texas 75201. No part of this publication may be reproduced in any form or by any means without prior written permission of the publisher and Insigniam. Printed in the U.S.A. Magazine patents pending. For subscriptions, please visit www.insigniamquarterly.com.

Q U A R T E R LY

VOLUME 1, ISSUE 4 | WINTER 2013

“To be disruptive is to acknowledge the fact that we need to

change and that we need to accept and make moves that

sounded impossible yesterday.”— JEAN-PIERRE CLAMADIEU, SOLVAY

THE TICKERLeadership stories, books, and great ideas

TOP LINELeadership by the numbers

BLOOD, SWEAT & TEARSWhat is your destination, and are people clear on where

you are going?

BOARDROOM POVWhat is your appetite for risk?

DISRUPTIVE LEADERSHIPNathan Owen Rosenberg, Insigniam

Disruptive leadership is the art and science

of creating the future.

GLOBAL LEADERSEffective leaders share the same characteristics, no

matter where they call home.

TO EVOLVE YOUR BUSINESS, TAKE OTHERS ON YOUR JOURNEYHugh Jones at Sabre Airline Solutions shares how a

shift in perspective is transforming his enterprise.

IQ BOOSTJon Kleinman, Insigniam

Own all of your actions — both what you did and did

not do — that lead to an outcome.

04

08

10

14

22

52

56

DEPARTMENTS

On the coverSolvay’s Jean-Pierre Clamadieu

says leaders must acknowledge

the need to be disruptive.

VO L U M E 1 , I S S U E 4 | W I N T E R 2 013

REINVENTING AN

ENTERPRISESolvay’s CEO Jean-Pierre

Clamadieu talks about building a

new company after a merger.DISRUPTIVE

LEADERSHIPWHO IS INVENTING THE RULES IN YOUR MARKET?

Building Circles of TrustSimon Sinek explores

how to lead so that

people can thrive.

Survival at the Tipping PointCan a focus on results

instead of revenues

transform your business

in a time of uncertainty? Insigniam and its publisher, D Custom, distribute this editorial magazine to share the opinions and insights of companies and their leaders on impactful global business issues. Insigniam Quarterly’s inclusion of a company or individual does not indicate that they are a client of Insigniam. Remuneration is not provided for editorial coverage. Individuals appearing in Insigniam Quarterly have done so with direct consent, or provided consent by a designated authorized agent in addition to being disclosed on the magazine’s audience and purpose.

56

THE TICKERTHE TICKER

LEAPFROGGING INTO DISRUPTIVE LEADERSHIP

Disruptive leadership requires leaders to fundamentally

disrupt the mindset that has often led to success thus far.

Author and speaker Soren Kaplan quickly admits that

business schools and traditional management training

absolutely do not prepare managers to put disruptive

leadership techniques into action. Managers rise through

ranks where predictability and control are rewarded, not

disruption and innovation. Business schools simply don’t

prepare leaders to be misunderstood or criticized nor

how to handle that sort of dissonance.

To guide people trained for predictability and control

in the art of disruption, Kaplan crafted the five-step

acronym LEAPS: Listen, Explore, Act, Persist, and Seize.

Disruptive leadership requires embracing the unknown

and ceding control in favor of the opportunity to gain new

insight or uncover opportunities, Kaplan says in his 2012

book, Leapfrogging: Harness the Power of Surprise for

Business Breakthroughs.

1 / L I S T E NListen to yourself, not just conven-tional wisdom.

2 / E X P L O R EWork to escape your comfort zone, and get the management team out of its comfort zone.

3 / A C TEncourage lead-ers to take small, simple steps and be ready to adjust rather than control how things unfold.

4 / P E R S I S TUrge leaders onward in spite of failures and reframe them as opportunities to learn from.

5 / S E I Z EEncourage leaders to be agile and flexible to take advantage of unan-ticipated events.


Advocates for change should have

more sympathy for people in positions of

authority, argues Ron Heifetz, co-founder of

Cambridge Leadership Associates and author

of Leadership without Easy Answers.

People in positions of authority feel enormous

pressure to act like they know what they are

doing, he says. Further, leaders are expected to

protect people from painful change, rather than

prepare a team for a period of sustained dis-

equilibrium and experimentation while the

group seeks out new answers, Heifetz says.

Organizations should also distinguish

authority and leadership, in order to foster

greater experimentation and disruptive

leadership. Authority is formal power that

comes from a title. It provides direction and

order. Leadership is more inspirational. It’s

closely tied to ‘why’ something is being done,

and is not necessarily tied to the person

in the highest position. Distinguishing the

differences between these two will help

enterprises recognize and reward leadership

exercised from a wide range of perspectives

— not just the authority granted in an

organizational chart.

SYMPATHY FOR AUTHORITY

HCL Technologies, an Indian information technology company,

has distinguished itself in the competitive world of South Asian IT

businesses by putting its employees first, even ahead of its customers.

The move — begun in 2005 — is built around disrupting a key

corporate and service business tenet that customers come before

workers.

The aim of the new effort was to build trust between managers and

workers, and make managers — even up to the C-suite — accountable

to everyone in the organization.

Fast forward eight years, and the employees who were put first are

now leading version 2.0 of the program. The second phase includes a

program to link employees on HCL’s own internal social networking

platform, companywide events focused on making a difference for

customers, and encouraging social responsibility across the company.

HCL has more than 85,000 employees in 31 countries, and

produced the equivalent of $4.6 billion in revenue in its most recent

fiscal year.

MAKING EMPLOYEES THE FOCUS, EVEN AHEAD OF CUSTOMERS

85,000

31

4.6

EMPLOYEES

COUNTRIES

REVENUE(IN BILLIONS)

BY THE NUMBERS

http://www.hcltech.com

ALGORITHM

HEURISTIC

MYSTERY

EXPLORE

EXPLOIT

THE TICKER


Innovative thinking in business typically resists

standardization and formulas, but Roger Martin, Premier’s

Chair in Productivity & Competitiveness and Director of

the Martin Prosperity Institute at the Rotman School of

Management at the University of Toronto, has articulated

a methodology for combining analytics and intuition to

grow business.

Martin describes a “knowledge funnel” for business

success that flows from mystery (or problem) to heuristic

(rule of thumb) to algorithm (repeatable formula).

That process may lead to results, but doesn’t guarantee

continuing success, as Martin cautions in his 2009 book,

The Design of Business: Why Design Thinking is the Next

Competitive Advantage.

For leaders to have continued success they must provide

their enterprise with room to fail, and not simply lead the

company into exploitation mode, he cautions. Exploitation

itself — getting the most out of what you know how to

do today — is not necessarily bad, but leaders looking to

institutionalize innovation must establish a culture (and

compensation structure) that encourages exploration

and provides room to fail. By finding and defining new

problems, or mysteries, leaders will lead their companies

back to the widest part of the knowledge funnel.

FIND THE FORMULA, THEN FIND THE NEXT PROBLEM

America needs more business statesmen—men and women who are at the forefront of public policy debates to ensure the country’s collective long-term growth and fiscal health. CED Trustees represent the reasoned, nonpartisan voice of business on major public policy issues. If you are interested in becoming a CED Trustee please contact Mindy Berry, [email protected].

www.ced.org

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TOPLINE

BY THE NUMBERSCOMPILED BY GEOFF WILLIAMS

ORVILLE AND WILBUR WRIGHTOn December 17, 1903, the famous

brothers opened up the world. By creating

the first successful airplane, they gave

the everyday person the ability to travel

everywhere in the world. Today there are

93,000 flights each day worldwide.

JOHN WALSONIn 1948, by running a cable from an antennae he’d installed in the mountains above his Pennsylvania

home so he and some of his customers could receive a stronger TV signal from the stations in

Philadelphia, the owner of the Mahanoy City General Electric appliance store invented cable television,

ultimately changing how we think of television and the networks.

HERB KELLEHERThe Texas lawyer co-founded

Southwest Airlines in 1967.

Where the Wright brothers made

air travel possible, Kelleher helped

make it affordable.

A SHORT TIMELINE OF DISRUPTIVE LEADERS

Industry analysts said Henry Ford was crazy to drop the price of his Model T, but profits went from $3 million in 1909 to $25 million in 1914.

Ford’s U.S. market share rose to 48

percent in 1914 after they dropped

the price of the Model T to $99.

$99PRICE OF A MODEL T IN 1914

$220PRICE OF A MODEL T IN 1909 48%

8 INSIGNIAM QUARTERLY WINTER 2013

THE NUMBER OF CARS FORD MADE IN 1914 WITH ONLY 13,000 WORKERS.260,720

KEVIN SYSTROM AND MIKE KRIEGERWhen cameras were first added to cellphones, they

were not good for taking more than a grainy image.

Fast forward a few years and the cameras were

upgraded, but they were still little more than a nice

feature, an add on. That is until 2010, when Systrom

and Krieger introduced the world to Instagram.

SERGEY BRIN AND LARRY PAGE

The two computer science students changed how we

search the Internet when they founded Google in 1998.

With Google Drive, Google Glass, and myriad other

products, they continue to innovate how we interact with

our computers, our phones, and the Internet.

STEVE CHEN, CHAD HURLEY, AND JAWED KARIMBefore this trio founded YouTube in 2005, the Internet was not a place for

video. The site — purchased by Google in 2006 — proved, though, that

video can work on the web and helped bring about original web series from

the networks and major studios, changing our viewing habits and where we

watch our favorite “television” shows.

$3.6 billion in annual revenue

The pertinent numbers for Netflix, a company that has been an undisputed disruptive leader since it was founded in 1997

33 million members

Countries with Netflix

Countries without Netflix

COUNTRIES40


WWINTER 201310 INSIGNIAM QUARTERLY

BLOOD, SWEAT & TEARS

WHAT IS YOUR DESTINATION?When aligning a clear strategy, accountability and communication are keys to success.BY JEFF BOUNDS

When Virginia Albanese took the

helm as president and CEO of FedEx

Custom Critical in June 2007, the

time-sensitive, custom shipping arm

of the logistics and transportation

giant was at a crossroads.

It was working to protect its

core business in a mature market,

grow its new truckload brokerage

division, and also determine how

best to work with the other FedEx operating companies.

Trying to do so many things meant that managers had competing

priorities. One manager would tell an employee to do one thing,


QUALITIES OF A DISRUPTIVE LEADER

Here are some traits of

top executives who can

bring positive, wholesale

change to an organization,

according to Virginia Alba-

nese, president and CEO of

FedEx Custom Critical.

NOT SATISFIED WITH THE STATUS QUO

A disruptive leader “is not

interested in riding out the

wave,” Albanese says.

COMPETITIVE“They want to win, they

want to grow,” she says.

OPEN TO CHANGEThey must also be open

to the intense labor that

comes with the kinds of

discussions Albanese

had with her staff. “Having

discussions like that and

doing nothing with it is very

demoralizing to the staff.

But the execution is a lot of

work.”

OK WITH FAILURENobody likes it when

things don’t go as planned.

“But you must be open to

the fact that some ideas

won’t work,” Albanese says.

“If it’s not going to work,

say it.”

while another manager would have requested that same employee do something

different, and both directives were supposed to be the most important.

Ground-level employees were feeling the dissonance above them in the

management and executive ranks.

“People had good intentions,” Albanese says. “It’s not like they had rogue

ideas. But everyone had differing opinions on what the priority was, on what

needed to be accomplished.”

CREATING TEAM ALIGNMENT

Albanese had to create alignment. Priorities needed to be made clear. That’s

no small feat at even the smallest of organizations, but it’s especially difficult for

a business unit that currently has roughly 600 employees and 2,500 contractors

and drivers.


BLOOD, SWEAT & TEARS

BY THE NUMBERS

600

26%

EMPLOYEES

2,500CONTRACTORS AND DRIVERS

GROWTH

Albanese and her team created a three-point plan to get FedEx Custom Critical’s

troops on the same page.

è First, Albanese gathered her executive team to figure out what the

business’ priorities were, and what they weren’t.

è Second, she had similar discussions in off-site meetings with managers

of FedEx Custom Critical.

è Finally, Albanese and her team created a communications plan to get the

word out to the rank and file — and to make those employees realize

that, finally, every manager and executive was operating with the same

priorities. The plan included everything from motivational meetings in

arena-type settings to one-on-one sessions with individual employees.

Once those meetings were completed, Albanese had employees sign a wall in

the company cafeteria at FedEx Custom Critical’s base in Green, Ohio, to show

that they understood the mission moving forward and would live up to the new

way of doing things. She changed the screen savers on employees’ computers to

reinforce her messages. She even had managers hand out $5 bills to workers who

could recite, without prompting, what the new plan was all about.

REFOCUSING ON CUSTOMER SERVICE

A big part of Albanese’s vision was about improving customer service.

When Albanese first became CEO, she recognized that agents needed

more solutions for their customers. While customer service was always strong,

employees did not always have a full portfolio of potential solutions for prospective

clients. For instance, personnel nearly always recommended the same fix to

customers’ shipping problems: “exclusive use” trucks, vehicles that customers

can call whenever they need to move a high-value item such as artwork, factory

machinery, or pharmaceuticals. But what if the customer would be best served

by, say, using the air transport services of another FedEx arm?

Under the new plan, agents who took calls from prospective clientele were

trained to suggest a full gamut of FedEx services, not just the ground-based

offering that FedEx Custom Critical provides. That has resulted in a positive

change in the variety of shipments that the unit is booking, including air and

other avenues for getting high-value freight from point A to B.

And if that means revenue goes to other areas of FedEx and not Albanese’s

unit, well, so be it.

“When customers are happy, they’ll come back to you again and again,” she

says. “We made sure that people understood that giving the customer the right

solution at the right time will get them to call back again. Customers want

solutions. They don’t just want what you’ve got.”

So far, those customers do appear to be calling back. FedEx Custom Critical

has grown 26 percent since Albanese became CEO until the fiscal year ended

May 31, 2013.

And customers appear to be happier with how FedEx Custom Critical treats

them. Internal metrics, such as the “service quality index,” are up. (Called SQI

for short, these metrics measure how quickly a customer’s call is answered,

on-time pickup and delivery service, and the availability of equipment when

customers call.)

“Virginia is one of those rare breeds of leader who can create vision and

strategy, inspire people to bring their best to their jobs, and be creative while still

demanding high performance,” says Insigniam founding partner Shideh Sedgh

Bina. “Throughout the time we have worked with her and her organization

it is evident that she does that all with the customer front and centermost.”

While the bulk of the improvement initiative was done in about two months,

Albanese says the process will never end. From the cafeteria wall to kickoff

meetings for each fiscal year, FedEx Custom Critical is constantly working on

ensuring that everybody knows the company strategy and the desired outcomes.

“We continue to communicate in a variety of ways,” Albanese says. “From

our daily email to all employees showing the previous day’s business results to

regular leadership meetings, videos, and town hall meetings, we strive to ensure

everyone knows how we are doing and where we are going.”


HOW TO LEAD DISRUPTIVELY

Executives who want

to bring positive change

to their organizations had

better be ready to roll up

their sleeves, according to

Virginia Albanese, president

and CEO of FedEx Custom

Critical. “This is hard work,”

she says.

Here are some tips from

Albanese on how to be a

disruptive leader.

• ENSURE you have solid

leaders in place who

can not only formulate

strategy, but execute

on it as well. These

leaders must be able to

communicate the strategy

well and have the trust of

their employees.

• DEVELOP a plan that’s

clear and concise.

Everyone in the

organization needs to be

able to understand and

get on board with it.

• ASSEMBLE a

terrific strategy for

communicating your

plan consistently and

repeatedly.

• CLEAR ACCOUNTABILITY for

each team member is

vital. Each member of

your organization must

understand where he or

she fits into your plan

and why their particular

positions are vital.

“WE MADE SURE THAT PEOPLE

UNDERSTOOD THAT GIVING THE CUSTOMER

THE RIGHT SOLUTION AT THE RIGHT TIME

WILL GET THEM TO CALL BACK AGAIN.”

T

THE BOARDROOM

Though he likes to refer to himself as a “reformed

banker,” Dennis McCuistion, former CEO of Texas-

based The American Bank, still finds himself regularly

having professional conversations with financial industry

executives. Like just the other day, when McCuistion,

now director of the Institute

for Excellence in Corporate

Governance at the University

of Texas at Dallas, was at a

roundtable meeting with, as

he puts it, “a whole mess of

board directors” from banks

located around the country.

“So,” McCuistion recalls, “I

say to them, ‘As directors, wouldn’t you all agree that

you’re pretty much change agents? And wouldn’t you

agree that you’re mainly there to encourage the manage-

ment team to make a positive disruption in leadership, at

least from time to time?’ Well, they all nod their heads

Having a disruptive leader isn’t enough. For successful and

effective change, the board needs to be willing to take a

chance and potentially lose now in order to gain later.BY JOE GUINTO

WHAT IS YOUR APPETITE FOR RISK?



and say, ‘Yes, sure, of course.’ So then I ask them, ‘So how

come you all sit in the same chairs at your board meetings

every month? Do you really value change, or do you just

say you value it?’ ”

Too often, the answer to that question — whether from

directors in the financial industry or other industries — is

not what CEOs who believe in the power of disruptive

leadership would like to hear. “Many boards,” McCuistion

says, “especially those with entrenched membership, con-

sider change abhorrent, unless — and this is a big unless —

there is a problem with the company’s performance. That’s

unfortunate. Because it’s often better to have change, even

radical change, before you get into problems.”

That was certainly the case at one company where

McCuistion was a board director. From 2003 to 2007,

McCuistion, who has hosted his own PBS business talk

show for the past 24 years, was a board member at Affili-

ated Computer Services. That company, founded in 1988,

started out as a data processing firm with modest revenues.

But by the time McCuistion joined the board it had $4

billion in annual revenue and had morphed into a business

processing outsourcing company. Three years after he left

his directorship, ACS had hit $6.5 billion in revenues and

was acquired by Xerox in a blockbuster merger.

“Virtually the entire strategy of that company was

changed — successfully — four different times in a 22-

year period from its founding to the time it was acquired

by Xerox,” McCuistion says. Why? Not because financial

results were poor. Far from it. ACS was highly profitable

during each major shift in strategy. But management fore-

saw changes coming in the marketplace for information

technology and data processing services and decided to

get out ahead of those changes rather than, as McCuistion

puts it, “waiting for the company to go in the dumper.”


THE BOARDROOM

MAKING THE CHANGE

Making the changes at ACS required, as it does with every

company, the active participation of the board. So how did

management get directors to go along with four corporate

reinventions even when the bottom line was solid? For one

thing, McCuistion says, ACS was able to assemble a board

that understood the company and its marketplace.

“The biggest problem you have as a CEO,

and I have been there a few times in my life,

is that it is the loneliest position there is,” Mc-

Cuistion says. “Who do you talk to? Often,

when you talk to your management team,

they just tell you what they think you want to

hear. So, when you’re a CEO who is propos-

ing change, you need the board to assist in a

dialogue about what the changes need to be

and to understand the upside of the strategy you’re proposing

and the risks inherent in the strategy. Then the board can

make an informed decision about whether to accept this

kind of disruption to business as usual or not.”

In a way, assembling a board of directors that gets your

business may seem obvious. But it isn’t always done. Take the

case of one major company in McCuistion’s backyard —

Plano, Texas-based J.C. Penney. The retailer suffered a major

meltdown under the disruptive leadership of former Apple

executive Ron Johnson, who came into J.C. Penney seeking

to do nothing less than reinvent the American department

store. Instead, J.C. Penney saw its revenues cascade by $4

billion and its stock value fall by more than half before the

board finally terminated Johnson just 18 months into his

tenure. Of those 12 board members, just two had hands-on

experience in the retail industry.

“Was there significant industry expertise on this board —

people who would know something about what the retail

business is?” McCuistion asks. “You need some people on a

board who have ‘been there and done that,’ and I think that

may have been where J.C. Penney’s board lost their way.”

YOU NEED SOME PEOPLE ON A BOARD WHO HAVE ‘BEEN THERE AND DONE THAT,’ AND I THINK THAT MAY HAVE BEEN WHERE J.C. PENNEY’S BOARD LOST THEIR WAY.”


TAKING THE RISK

Still, to the credit of J.C. Penney’s board, they were will-

ing to OK a radical reinvention of a 100-year-old company.

But how do directors, as McCuistion says, accept that they

should “change seats” sometimes even when that means

accepting the risk that comes along with disruptive leader-

ship plans? McCuistion has a few thoughts on that.

1 ESTABLISH A CORPORATE “RISK APPETITE.”

“Risk appetite is a phrase that has only come into the

corporate governance vernacular in the last five years,” Mc-

Cuistion says. “It means the board has to decide how much

risk it is willing to take to better compete. That helps the

management team know what they’re likely to sell to the

board when they propose a change.”

2 SET A TOLERANCE LEVEL FOR RISK.

At J.C. Penney, the board’s risk appetite was clearly large.

But it doesn’t seem to have set a “tolerance level,” or spe-

cific parameters that would quantify that appetite for risk.

“As a director, when change is proposed, you have to be

able to say to the senior management, ‘OK, we’re willing

to make this change, and here’s what we’re willing to let

that change cost us,’ ” McCuistion says. “Maybe that’s a

10 percent decline in sales over six months or a specific

loss of revenue or profit over a year. But it should be

specific, because that lets management know what their

performance benchmarks are. And if those aren’t hit, then

management knows that either the board is going to pull

back or they’re going to have to come back and re-sell the

board on a new strategy.”

3 MEASURE THE CHANGE PERFORMANCE.

On ACS’s board, McCuistion was on the audit commit-

tee, which meant he had oversight of the company’s vora-

cious appetite for mergers and acquisitions. ACS’ board had

a specific tolerance level for the risk it was willing to take

in those acquisitions and monitored them carefully for a

year-long period before fully folding the acquired company

into ACS. “Directors have to be able to regularly monitor

what’s going on when you’re making big changes,” Mc-

Cuistion says. In fact, McCuistion says that being able to see

how changes are unfolding can sometimes give the board a

bigger risk appetite. That was the case at ACS. “The more

we were able to watch and see that these acquisitions were

going well, the more confidence we had in management’s

proposals,” McCuistion says.

A RADICAL RISK

$34 $14NOVEMBER 2012

STOCK PRICE WHEN RON JOHNSON WAS HIRED

% DECREASE OF THE STOCK PRICE DURING RON JOHNSON’S TENURE

THE NUMBER OF MONTHS RON JOHNSON WAS CEO AT J.C. PENNEY

APRIL 2013STOCK PRICE WHEN RON

JOHNSON WAS FIRED

48%

$4,000,000,000THE AMOUNT REVENUE DROPPED BY

The board at J.C. Penney approved the radical vision

of former CEO Ron Johnson, but it never set a

tolerance level for what it could cost the company.

17

* *

* STOCK PRICES ARE ROUNDED TO THE NEAREST DOLLAR

18 INSIGNIAM QUARTERLY WINTER 2013SSimon Sinek can predict your future. By simply walking

through the hallways, he can tell whether your business will

succeed or fail. That’s because Sinek believes an organization’s

future doesn’t hinge on its stock ticker, but in the attitudes and

culture of its employees. Do people feel safe at work? Sheltered

from perceived danger? Do they know, deep down, that the

leaders have their best interests in mind

and will take care of them?

In his first book, Start With Why,

Sinek examined how focusing first

on why an enterprise exists can better

inform both what it does and the how it

does it, thus creating a more successful

and compelling company. The book

and his TED talk — viewed almost 13 million times —

launched Sinek into the spotlight as a modern philosopher

for executives, entrepreneurs, and organizational leaders. His

latest book, Leaders Eat Last: Why some teams pull together and

others don’t, coming out in January, delves into the who of any

organization — its people — and how leaders can create an

HARNESSING THE POWER OF COOPERATIONSimon Sinek introduced the Golden Circle. He

suggested we Start With Why. Now, with a new

book coming in January, he looks at how we can

create an environment where people thrive.BY STACEY CLOSSER

INSIGNIAM QUARTERLY 19WINTER 2013

environment built for success.

Sinek began his pursuit by asking a series of questions

about leadership and how it intersects with the very nature

of humanity. Sinek says he wanted to know under what

circumstances do humans best function? What he discovered

was that people are designed to work as a community. When

we look out for one another, we all benefit. As Sinek explains,

even our chemical make-up rewards us for this behavior with

feelings of fulfillment, acceptance, and safety.

So to answer his question of “What makes a great leader,”

Sinek had to determine: “In what environment does

cooperation naturally thrive, and how do you create that

environment as a leader?”

This is what Sinek says he learned.

DANGER IS NOT THE DANGER

In the time of the cave man, danger was constant.

Unpredictable weather, predatory animals, limited resources,

and hostile geographic phenomena threatened humanity’s

very survival. Quite literally, life was not safe. This was the

reality of the world then, and it remains the reality today. Even

though predatory animals are

now most often observed in

enclosures, Sinek says that

other dangers have emerged,

especially in business — the

fickleness of Wall Street,

a waver ing economy,

unpredictable world events,

aggressive competitors, and

new technologies that render

businesses obsolete.

For example, McDonald’s leaders could not have predicted

that a small sandwich chain would pass it as the largest fast food

restaurant in the world, but that’s what Subway restaurants

has done. In 1982, Subway founder Fred DeLuca set a goal

of the chain opening 5,000 stores by 1994. The company hit

that mark by 1990. Today the number of stores is approaching

40,000, and the company is shooting for 100,000 by 2030. And

now the sandwich chain is the top choice for workers at lunch,

passing McDonald’s in the first quarter of 2013.

These outside dangers cannot be controlled by the


individual employee. Within this

chaotic environment resides your

organization. If you’ve built it properly,

Sinek says, the company offers a ring

of safety engineered to help not just

investors, board members, and C-level

executives, but the entire enterprise.

A circle of trust that reaches the

outermost edges of an organization

ensures that the company will survive

and thrive. Why? Because people, all

people, function best in environments where they feel safe.

If leaders create a hostile work environment within the

organization, Sinek says employees will be forced to protect

themselves from internal dangers as well. Think about it: If

you’re an employee and you’re constantly worried you’ll lose

your job, you’re less likely to take risks, be innovative, push for

change, or promote a colleague’s ideas.

Employees who do not feel protected at work feel vulnerable,

self-interested, cynical, paranoid, and stressed — for biological

reasons. Managers can’t just instruct their teams to trust one

another and cooperate. Those are not things people decide to

do, but rather the natural result of team members feeling safe

and having a shared value set. Those are things that can only

be developed over time. “There’s no app that can speed that

up,” says Sinek.

DEFINING THE CIRCLE OF TRUST

Sinek says leaders have two responsibilities when

maintaining a healthy circle of trust. First, they’re responsible

for determining how porous the circle is. Who is allowed to

join? By what criteria are new employees measured? Hiring

managers must give value to candidates’ overall character as

Simon Sinek’s mission is to help people wake up every

day inspired to go to work and return home every night

fulfilled by their work. His first book, Start With Why, offered

the essential starting point, explaining the power of focusing

on WHY we do what we do, before getting into the details of

WHAT and HOW. Start With Why became an instant classic,

with a loyal following among Fortune 500 companies,

entrepreneurs, nonprofits, governments, and the highest

levels of the U.S. Military.

Now Sinek is ready to reveal the next step in creating

more productive organizations. He explains, in simple

terms, the biology of trust and cooperation and why they’re

essential to our success and fulfillment. Organizations that

create environments in which trust and cooperation thrive

vastly out perform their competition. And, not coincidentally,

their employees love working there.

But “truly human” cultures don’t just happen; they are

intentionally created by great leaders. Leaders who, in hard

times, would sooner sacrifice their numbers to protect their

people, rather than sacrifice people to protect their numbers,

are rewarded with deeply loyal teams that consistently

contribute their best efforts, ideas, and passion.

As he did in Start With Why, Sinek illustrates his points

with fascinating true stories from many fields. He implores

us to act sooner rather than later, because our stressful jobs

are literally killing us. And he offers surprisingly simple steps

for building a truly human organization.

LEADERS EAT LAST: WHY SOME TEAMS PULL TOGETHER AND OTHERS DON’T

“LEADERS HAVE TO MAKE THE PRIORITY THOSE WHO ARE RESPONSIBLE FOR THE COMPANY’S SUCCESS, AHEAD OF THOSE WHO SIMPLY BENEFIT FROM THE COMPANY’S SUCCESS.”

INSIGNIAM QUARTERLY 21WINTER 2013

In studying the leaders who’ve had the greatest

influence in the world, Simon Sinek discovered

that they think, act, and communicate in the

exact same way — and it’s the complete opposite

of what everyone else does. Sinek calls this

powerful idea The Golden Circle. Imagine three

concentric circles. In the outermost ring is the

‘What.’ It’s what you do. The second ring covers

“How” you do it. The innermost ring, the bullseye,

is the “Why.” Sinek’s Golden Circle provides a

framework upon which organizations can be

built, movements can be led, and people can be

inspired. And it all starts with why.

Any organization can explain what it does;

some can explain how they do it; but very few

can clearly articulate why. Why is not money or

profit — those are always results. Why does your

organization exist? Why does it do the things it

does? Why do customers really buy from one

company or another? Why are people loyal to

some leaders, but not others?

Starting with why can help inform an

organization’s what and how. Using examples

ranging from the Wright brothers to Apple

Computers to Martin Luther King, Jr., Sinek shows

how this process works in big business and small

business, in the nonprofit world, and in politics.

Those who start with why never manipulate, they

inspire. And people follow them not because they

have to; they follow because they want to.

well as their résumés. Even if a company hires all the Ivy League MBAs

in the world, it’s no guarantee they will create a cooperative company.

The second thing leaders determine is the size of the circle of trust.

Sinek says that when the circle is extended to all employees in an

organization everyone feels secure and is inclined to look after the

customers and clients.

Sinek references the universal travel experience of having a front-

line employee being totally unreasonable because “those are the rules.”

How many times have you heard someone say, “Sorry, sir, I have to

follow the rules, otherwise I’ll lose my job?” Sinek asks. Compare

that to the employee who is empowered to make decisions that will

directly impact customer satisfaction.

Company leadership is responsible for looking after its people, who

will then, in turn, take care of customers.

“Leaders have to make the priority those who are responsible for

the company’s success, ahead of those who simply benefit from the

company’s success,” says Sinek. Sometimes that means taking a financial

hit to save the jobs of your loyal employees or giving them the benefits

they deserve. To get those results, leaders often have to go to battle.

Employees at Costco don’t get paid double their Sam’s Club

counterparts by coincidence. Someone had to go to battle for

that. And guess what, those investments have translated into higher

productivity and sales for Costco.

HONORING THE SOCIAL CONTRACT

Humans are anthropologically engineered to support the idea

that the alpha, or leader, reaps more rewards because he or she takes

on more of the risk. Sinek says he found that people are perfectly

comfortable with someone more senior getting a bigger paycheck,

a nicer car, bigger office, or more attractive spouse. There are huge

perks with being the alpha, but it does not come for free. When danger

appears on the horizon, the alpha is expected to rush in to meet it.

That is the cost of leadership.

“This is why we are so viscerally offended by some of the CEOs

of investment banks who have such ridiculously, disproportionately

high salaries,” Sinek says. “It has nothing to do with the money. It

has to do with the fact that they have violated a deeply ingrained

social contract. We know that they did not sacrifice themselves for

their people to get that money. In fact, we know that sometimes they

sacrificed their people to get the money. And that’s what offends us.

It’s not the money. It’s the failure to uphold the very definition of

what it means to be a leader.”

A leader protects those in their group and offers them a circle of

safety. It is a decision, and Sinek says to not be surprised when it’s hard

work. Being in charge does not grant you the right to do less, but gives

you the responsibility to do more. Sometimes that requires you to put

your own reputation or even career on the line. But the reward is a

dedicated workforce that feels safe, cooperates, survives, and thrives.

WHAT IS THE GOLDEN CIRCLE?

WHAT

HOW

WHY


ARE YOU GETTING COMMITMENT OR COMPLIANCE?Disruptive leadership is the art and science of creating the future.BY NATHAN OWEN ROSENBERG

his issue of Insigniam Quarterly is all about

disruptive leadership. But at the risk of

contradicting ourselves, Insigniam

consultants would tell you that the

term disruptive leadership is redundant.

The effective practice of leadership is

disruptive.

But too many companies confuse leadership with

management and leadership with title or position. They equate

these — no distinction.

Management and leadership are both important disciplines

for any executive, but they are in no way the same. Leadership

has nothing to do with title or position or an organizational

chart. And yet too many companies impute leadership intent

and leadership practices onto someone just because of that

person’s title. The sad truth is that the most effective leader

may be far from the C-suite.

THE NEW LEADERSHIP PARADIGM

Until recently, managers and executives were not expected

to be leaders. When I went to the United States Air Force

Academy, only two other institutions of higher learning

taught leadership as an academic subject: the U.S. Military

and Naval academies. Today, it is a subject in virtually every

MBA program and is taught in many undergraduate programs.

Why the change? In the post-war era up until close to the

end of the century, there was so much demand for goods and

services that all an executive had to do was keep the enterprise

well functioning. In fact, in many cases, disrupting the status

quo was antithetical to good business practices.

In today’s marketplace, that is nearly the opposite of what an

executive should do. Effective leadership changes a company’s

trajectory and disrupts the status quo. Predictable performance

is not enough.

Every company has competitors, many of which are unseen

because they are not the traditional competitors. Every company

has others working to put it out of business. If leaders do not

disrupt their business, someone else will.

For big luxury automakers, the big competition is coming

from a company that did not even exist 10 years ago, Tesla.

These are companies that were thought to be bulletproof. They

are in an industry with a barrier to entry that is so high almost

no one new could get in. Yet, here’s Tesla.

While the company will not pass any of its more established

competitors anytime soon, it is growing more quickly than the

market leaders. The company’s stock opened the year trading at

roughly $35 a share. By the end of October the share price was

over $160. With a 2013 sales estimate of 21,500 vehicles, it is

nipping at the heels of the Lexus LS600H, a direct competitor.

At Insigniam, we say that the executive function is to create

a previously unimagined future for the enterprise and then to

empower and enable the people of the enterprise to fulfill that

future. In other words, leaders unhook from the predictable

future of their companies and invent and implement new,

exciting futures for their enterprises, putting the enterprise on

a new trajectory.

THREE LEADERSHIP PRACTICES

Elon Musk heads Tesla; he also is the CEO of a private space

transport company and co-founded PayPal. He is obviously a

leader. His way of thinking about the future is consistent with

the first of three traits that all disruptive leaders have.

è Leaders aren’t looking for the future; they’re

creating it.

The future is unknowable, but that does not stop all too

many executives from trying to forecast what the future will

bring. (That is an analyst’s work.) Leaders determine what they

want the future to be, and then determine what must happen

to create that future. They identify the possibilities and what

they need to do to wrestle them into reality.


T

2002 2003 2004 2007 2008 2009 2010 2011 20122005 2006

6 BILLION

4 BILLION

2 BILLION

800 MILLION

600 MILLION

400 MILLION

200 MILLION

THE POWER OF A BOLD VISIONAsk most anyone what caused the decline and

bankruptcy of Blockbuster, the movie rental chain,

and they will probably answer “Netflix.”

While the subscription-based movie rental company

definitely helped bring Blockbuster down, it wasn’t the

reason that Blockbuster failed. No, Blockbuster failed

because of a lack of vision. Leaders there failed to see

what the leaders at Netflix and Hulu saw — the Internet

would fundamentally alter the way that people consume

movies and television.

BLOCKBUSTER

NETFLIX

HULU


è In the face of uncertainty, disruptive leaders

move forward.

It is our nature: when we encounter uncertainty, we freeze.

Disruptive leaders have learned to overcome those instincts.

Uncertainty does not stop them. Instead, they move forward.

That is not to say that they are reckless. They are always

questioning to keep from going down a blind alley, and, even, to

stop digging when they find themselves in a hole. They maintain

a good contention between confidence and questioning. But,

they are biased towards action, as Tom Peters says.

è Disruptive leaders enroll others in their future.

In a breakfast of ham and eggs, the chicken contributes,

but the pig is committed. Leaders have conversations to gain

the authentic commitment of others. Commitment is not

compliance. Leaders are willing to give up control to allow

others to choose. In most large corporations, it would be rare

for someone to tell her boss that she will not do something

asked of her. She is complying, not committing. Almost every

corporate culture is a culture of compliance. Until you have

a culture where it’s OK to say, “No,” you will never have any

way of knowing if you have real commitment.

THE MANY FACES OF DISRUPTIVE LEADERSHIP

Most companies are set up to protect the business model.

They are set up to protect key sources of income. No one wants

to disrupt those things. In actuality, that is exactly what they

need to do. Maintaining the status quo over time is a sure route

to failure. A lack of disruption is a lack of leadership.

Leaders understand this. In the recent industrial past, we see

leaders who had a willingness to revolutionize and radicalize.

JACK WELCH

As head of General Electric, Welch laid down the

challenge for his people: General Electric will be No. 1 or

2 in a market segment or we will get out of the business.

KONOSUKE MATSUSHITA

The founder of Panasonic put a laser focus on quality,

setting a goal of creating perfect products — a

commitment that most American executives could not

get out of their mouths at the time.

There are also examples of disruptive leaders who are not so

obvious, because an effective leader is not a personality type

or a set of qualities. Disruptive leadership is not a particular

leadership style. As we have said, it is all about bringing a created

and proprietary future into the present.

One quieter leader who is in the middle of disrupting his

industry right now is Ray Conner at Boeing. An executive vice

president and the president and chief executive officer of Boeing

Commercial Airplanes, Conner is not a loud, charismatic

leader. He is just a solid executive who stuck his neck out for

the future that he saw in Boeing’s 787 (an airplane that I will

stick my neck out to say that it will change commercial aviation).

Conner and his colleagues took on the multiple aspects of

bringing a new airplane to market. The 787 took ideas and

possibilities explored in a failed breakthrough project and gave

them another chance to see the light of day. The new plane is

constructed mostly of composites making it more fuel efficient.

The cabin is pressurized to a lower pressure, meaning fewer

headaches, reduced dizziness, and less fatigue for passengers.

The launch of the 787 has not been without big problems

that have cost both Boeing and its customers. However, Boeing

stock is up well over 50 percent since the grounding of the 787

fleet in January. Much of that increase can be attributed to

growth in the commercial division.

This is an airplane that will revolutionize the market, and

it is all because Conner and other Boeing executives created

a future, and he and the people of Boeing committed to that

future — stood for it. And, in the end, that’s the most important

thing that a disruptive leader can do.

2002 2003 2004 2007 2008 2009 2010 2011 20122005 2006

6 BILLION

4 BILLION

2 BILLION

800 MILLION

600 MILLION

400 MILLION

200 MILLION

Blockbuster files for bankruptcy in September 2010. It posts a net loss of $569 million for the year

Netflix launches streaming service

2011DISH Network pays approximately $321 million for Blockbuster when the company’s assets are auctioned off at bankruptcy court.

2013DISH announces it will end Blockbuster’s on-demand video service and close the remaining 300 retail stores by early 2014.

SURVIVAL AT THE TIPPING POINTHow do you move forward when the road ahead is uncertain? For one North Carolina healthcare provider, it was focusing on what they do, not what they earn.

When the young son of two nurses at North Carolina-

based Cone Health suffered a serious head injury in

a skateboard accident earlier this year, the company’s

staffers went out of their way to make sure the boy got the best

care possible, even volunteering their time to drive the boy to an

out-of-state rehabilitation center every weekend. Cone Health

CEO Tim Rice used that story, told in a 12-minute video, to

open a corporate board retreat this past fall.

“When the video ended — and you better have had a tissue

handy at that point — I told the board that our people, and the

kind of care they give, is why we’re here,” he says. “And we need

to remember that as we begin the discussions about our future.”

Those discussions were not easy ones. Cone is just one of the

many U.S. healthcare providers dealing with an unprecedented

upheaval in their nearly $3 trillion industry. The federal

Affordable Care Act, budget cuts at the state and local level, and

a soft economy has prompted a wave of industry consolidation

and a cascade in revenues. Among the biggest hits to revenue

is an overhaul of Medicare.

Revenues are expected to fall by $379 billion nationwide in

the next eight years, a time that most analysts say will be marked

by deflation in most healthcare costs. As a result, healthcare

companies are merging at a heated pace, not just to expand

market share, but to slash costs in an effort to make up for

the expected revenue loss. One healthcare research firm found

that industry mergers have more than doubled from 2009

to 2012, and another reports that one-fifth of all the nation’s

5,000 hospitals are likely to seek mergers in the next few years.

Meanwhile, the industry is also shifting its focus to a more

proactive model of patient care — one focused on preventing

illness and injury.

Taken together, all of that change could make any healthcare

executive feel a bit ill. How do you lead when your entire world

is being disrupted, when your whole industry is in the middle

of a massive transformation? For Cone Health’s leaders, there

are a few key ways they’re trying to do just that.

NO. 1 // IN TOUGH TIMES, TAKE BETTER

CARE OF YOUR CUSTOMERS AND THE BOTTOM

LINE WILL TAKE CARE OF ITSELF

Four years ago, Cone executives looked over their profitable

bottom line and their years of solid revenue growth and

decided that those numbers weren’t sufficient. The company’s

leadership felt Cone Health needed a new direction.

“At that time we were producing pretty good margins,” Rice

says, “and the board was saying ‘What are you worrying about?’

But we saw a freight train coming our way. We believed we’d

be taking in $125 million less per year than we had been taking

in if we didn’t do something to get in front of changes in the

marketplace.”

So Cone Health embarked on a total cultural transformation.

The goal: Put patients and providers first and compete on

performance — on how well patients do under their care —

on a national basis.

BY JOSEPH GUINTO


“The decision by the Cone leadership to invest in ensuring

it has the right culture to provide exceptional care while

adapting and innovating flew in the face of common sense,”

says Shideh Sedgh Bina, Insigniam co-founding partner.

“Common sense says that when facing looming shortfalls

you focus all of your attention on

efficiencies and cost cutting. Yes,

the Cone leaders had to make

some tough fiscal decisions, and

they did that while reinventing

the very core of their culture.

Now that takes guts — and

wisdom.”

Today, the entire healthcare

industry is steering in that same

direction. Doctors, hospitals,

and pharmacists are all seeing

their financial rewards tied to

making their patients better, not

just providing treatment.

And consumers of healthcare

are about to become better able

to comparison shop among the

providers who give the best care

to their patients. According to a

study published in 2013 by the

Healthcare Innovation Center

at Oliver Wyman, by next year,

some 85 million consumers

with $600 billion in purchasing

power may be shopping for their

own healthcare, and many of

them “will be making their own

decisions about coverage for the

first time.”

That means hospitals will have to compete not with the care

provider down the street or across the state, but with providers

across the country. Walmart is already making that happen

for its workers. It provides travel expenses to some workers

who are willing to seek out top care providers nationally.

So how does Cone compete with providers in, say, Cali-

fornia? Through a key core principle. The company’s top goal,

set during its cultural transformation, is not to boost profits.

It is, simply, to rank among the top decile of all hospital

organizations nationwide in terms of what is known as Triple

Aim Performance: patient experience, quality of care, and cost

management. As a result of that effort to be in the top decile

in Triple Aim, the company has dramatically increased patient

safety, employee engagement, employee retention, and has

boosted its scores in key areas of patient satisfaction by a rate

that’s six times better than the average hospital nationwide. From

there, they hope, that profits and growth, even in the turbulent

future, will follow.

“This is a business, and

financial results matter,” Rice

says. “But providing top care is

still the key context for gauging

everything we do. And that has

been really embraced by our

clinicians. Tell me what surgeon

goes into surgery in the morning

and says, ‘I’d like to do an average

surgery’?”

NO. 2 // HONESTY

IS THE BEST POLICY, OR

TREAT EMPLOYEES LIKE

GROWNUPS

After decades of solid revenue

and profit growth, this year Cone

has struggled just to break even,

which is why Rice’s board retreat

discussions were not easy. Cuts

and changes to Medicare outlays

at the federal and state level cost

the company $30 million just this

year. As a result, Cone laid off 150

people and left another 150 open

positions vacant. Those were

the first layoffs in the company’s

history.

So how did the executives spin

that news to their employees? They didn’t spin it at all. They

just told them.

“Our employees are smart people,” Rice says. “And we

treat them that way. We all feel the pain of the layoffs. But

if we can tell people the ‘Why’ behind any decision we’ve

made, they’ll understand it. Sure, there have been some people

sniping. And with more than 10,000 employees, you’re going

to have that. By and large, though, people have accepted what

we’re doing because we’ve tried hard to be transparent and

over-communicate the ‘why’ behind our decisions.”

That “over-communication” is one result of the company’s

cultural transformation. “We’ve established an increased level

of trust and an increased level of communication across the

With an uncertain future, leaders at Cone Health — like Terry Akin and Tim Rice — decided to tranform the healthcare network’s culture from one focused on revenues to one focused on results.


organization that is key in times like these,” says Terry Akin, Cone’s

president and chief operating officer.

“The core of the new Cone is a bold and inspiring future — the

opportunity to transform healthcare itself in service of a healthier

community,” says Jen Zimmer, a partner at Insigniam who worked

with Cone on its transformation. “When the enterprise is mobilized

in service of something bigger than its own survival and the leaders

lead in an authentic manner almost anything can be said and heard.”

NO. 3 // WHEN THE INDUSTRY IS STRUGGLING,

DON’T FOCUS TOO MUCH ON THE PRESENT — THE

FUTURE STILL MATTERS.

Cone executives say they are pushing innovation and risk-taking

now, even though the industry is in a period of uncertainty. Or,

perhaps, because the industry is in a period of uncertainty.

“We have immediate financial issues to deal with,” Rice says.

“And we will deal with those. But our focus has to be on the future,

because this business, a year from now, won’t look like it does today.

A lot of things we think of as providers may be very different in the

very near future. We may not need to do near as many amputations

because we’re controlling diabetes better now. We may not need

near as many beds in the ICU because more patients are sent home

to use home monitoring equipment now. We need to start planning

out the breakthroughs that can happen in the industry and planning

for what that’s going to change in terms of what a hospital looks like.

“The message we’re communicating to our board, to our leadership

team, and to our people is that the tipping point for our industry is

no longer coming. We’re at the tipping point. And we have to stay

out in front of the changes that are coming.”

Akin says that’s why the company has been combining forces with

other regional healthcare providers in recent years, including 2013,

and has been tasking leaders at all levels of the organization to find

ways to simultaneously cut costs and improve patient outcomes.

“We have wanted to avoid being in reactive mode,” he says. “We

want to define and shape our future rather than have it shaped for us.”

NO. 4 // REMEMBER, AND REMIND YOURSELF

OFTEN OF, THE CORE MISSION.

Cone begins every executive meeting with a patient story — the

same kind of story it told at the start of this fall’s board retreat. The

reason: to remind leaders that their business exists for one reason, to

care for patients.

“In times of stress, and we’re all going through the financial stresses

in this industry right now, the numbers can be a huge distraction

from the reasons we’re here,” Rice says. “But for our patients and

our people, we can’t let that happen.”

$3 TRILLION

$379 BILLION

85 MILLION$600 BILLION

10,000

HEALTHCARE INDUSTRY

FACTS & FIGURES

REVENUES IN THE HEALTHCARE INDUSTRY ARE EXPECTED TO FALL

IN PURCHASING POWER WILL BE

BUYING THEIR OWN COVERAGE

CUSTOMERS WITH

NUMBER OF CONE HEALTH EMPLOYEES

IN THE NEXT 3 YEARS


DISRUPTIVE LEADERSHIP

IS NOT A SOLO ACT


JEAN-PIERRE CLAMADIEU SAYS THAT IN A CHANGING WORLD DISRUPTIVE LEADERSHIP IS WHAT WILL TAKE SOLVAY TO THE NEXT LEVEL.

BY CHRIS WARREN


labs to also include how efficiently manufacturing

plants operate and how flexible and responsive customer

relationships are managed. And it is in the successful

formulation, articulation, and implementation of these

changes that Clamadieu sees the essence of disruptive

leadership.

“To be disruptive is to acknowledge the fact that we

need to change and that we need to accept and make

moves that sounded impossible yesterday,” he says.

While that may sound revolutionary to some,

Clamadieu believes periods of disruptive leadership are a

fact of life for companies that want to thrive in a quickly

changing and complex global economy.

“There could be some situations where you develop

such a successful business model that you think the most

important thing is to not change a bit of it,” he says. “My

feeling is that those situations are not common today.”

Clamadieu’s efforts at disruptive leadership at Solvay

ean-Pierre Clamadieu is willing to make a bet. The chief

executive officer of Solvay SA is certain that if you asked

employees at the chemical giant’s Brussels headquarters

how much the firm has changed since his tenure began

in May of 2012 you would get remarkably consistent

answers.

“They would say that they barely recognize the

company,” says Clamadieu, who previously was chairman

and CEO of the French chemical company Rhodia, which

he helped lead back from the brink of insolvency before

navigating its acquisition by Solvay in September of 2011.

Although Clamadieu disputes that perception —

“People tend to overreact to change,” he says — he happily

acknowledges that he has been a disruptive leader of this

venerable, 150-year-old institution, which has more

than 29,000 employees worldwide and a broad product

portfolio that includes essential and specialty chemicals,

polymers, and vinyls.

Indeed, during the course of his time at the helm of

Solvay, Clamadieu has outlined and begun implementing

a number of fundamental changes to how the company

operates, many of which have profound implications for

how individuals do their jobs. For example, Clamadieu

has dispensed with Solvay’s traditionally centralized

decision making.

“We are quite large, and we’re dealing with a lot of

businesses in many geographies,” he says. “We are only

going to be successful by empowering the people very close

to the battlefield and then holding them accountable.”

Clamadieu says he has also worked on extending

innovation at Solvay beyond the research and development

J


have yet to reach the two-year mark, but he already has a

number of practical tips for other executives considering a

similar approach.

HAVE A CLEAR VISION

The global chemical industry had total revenues of

$3.6 trillion in 2011 and is expected to grow 47 percent

by 2016. When Clamadieu was first appointed CEO of

Solvay, his marching orders from the board of directors

were very clear. It’s a mandate that he can recite without a

moment’s hesitation.

“We want to be a global leader in the chemical

industry and be one of the companies that participates in

the reshaping of this industry,” he says. “And to achieve

that we need to be among the best performing chemical

companies.”

Being able to clearly and concisely enunciate a big

picture vision, says Clamadieu, is vital because it provides

a context as well as a purpose for

all the disruptive changes that are

necessary in order to achieve it.

In other words, it helps people

understand why meddling with

the status quo — in everything

from procuring raw materials to

marketing to operations — matters.

Not coincidentally, having clarity also helps focus

executive decisions about what changes and disruptions

are truly required.

“You have to develop one simple idea of where you

want to go and what you want to achieve collectively and

make sure all the strategies and elements are aligned with

this vision,” he says.

DON’T GO IT ALONE

Among certain circles, there is a romantic notion that a

Jean-Pierre Clamadieu’s charge when he took over leadership of Solvay was to make the company a leader in the global chemical industry and play a role in its reshaping. Clamadieu knew that would require disruptive leadership.


CEO can be a disruptive and transformational leader all

by him or herself. Clamadieu disagrees.

“You are not a transformational hero who is carrying

the weight of the transformation on your own shoulders,”

he says. “You need to have a strong team around you who

has the ability to support the changes.”

Building a strong leadership corps is one of Clamadieu’s

strengths, says Katerin Le Folcalvez, a partner at

Insigniam. One of the many things that she says helps

Clamadieu stand out as a leader is his careful hiring and

focus on finding people with the right attitude in addition

to the right skills.

“He surrounds himself with people who share with

him the ability to question their own ways, turn over

every stone, and challenge themselves,” says Le Folcalvez.

Clamadieu says there are a number of things he and his

executive team did that have helped encourage Solvay’s

tens of thousands of employees to support the changes.

One is simply not to change course frequently, either

in the communication of the company’s vision or in the

strategy to achieve it.

Jean-Pierre Clamadieu says that for disruptive leadership to work, leaders need a team of people around them who support the vision of the future everyone is working towards. “You are not a transformational hero who is carrying the weight of the transformation on your own shoulders.”

JEAN-PIERRE CLAMADIEU’S PRINCIPLES OF DISRUPTIVE LEADERSHIP7 Have a clear bold vision: Be able to state a big-

picture vision for the enterprise.7 Don’t go it alone: Surround yourself with a strong

team that supports change.7 Be visible and accessible: It’s important for people

to hear about the vision from you — repeatedly and often.

7 Be persistent with big ambitions: Do not settle for solid results. Keep working until big, transformational goals are met.


“It’s important that you show some consistency in the

way you act,” he says.

Equally important is to have the patience to let what

can feel like drastic changes sink in and be accepted and

embraced by the employees who will implement them.

“You need to give people time to understand what you

want to do so that they’re willing to move alongside

you,” he says. “Otherwise, you are not a leader. You’re

just sitting alone in a room making nice presentations.”

BE VISIBLE AND ACCESSIBLE

These days, Clamadieu spends about 50 percent of his

time visiting Solvay facilities and employees around the

globe. He does this because he knows just how important

it is for as many of his colleagues as possible to hear about

the company’s vision and the need for disruptions from

him personally.

“Part of disruptive leadership is understanding that when

people hear about it they are a bit lost and the first thing

you need to do is reassure them and help them understand

what is being done and why,” he says.

Interestingly, Clamadieu says that

those conversations are easier in some

places than in others. For instance, he

says that Brazilians generally are quick

to embrace change while Europeans are

more instinctively suspicious.

“Their first reaction is often to be on

the defensive,” he says.

Regardless of the initial reception,

Clamadieu says he always tries to make

the company’s overall vision relatable

and exciting for each individual.

“Yes, you may have been doing things

like this for 10 years and now that job is

disappearing but we will find something

new for you that allows you to make a

new contribution,” he says. “And that

change could and should mean personal improvement and

personal development. It’s very important to show that this

transformation is not just for stock management, but that it

can also bring opportunities to people.”

BE PERSISTENT

Even though Clamadieu is exceptionally proud of

the progress Solvay has made since he became CEO —

net sales in 2012 were up 2 percent from 2011 to €12.4

billion (approximately $16.8 billion) and net debt went

down from €1.8 billion (approximately $2.4 billion) in

2011 to €1.1 billion (approximately $1.4 billion) in 2012

— he still sees much work to be done. For instance,

in his travels to company outposts he has been asking

employees at all levels whether they have felt the impact

of the new emphasis on decentralized decision making.

“People say, ‘No, we haven’t, because you have given

more authority and empowered my boss and he has

become a bit worried because with that empowerment

comes responsibility,’ ” he says. “They say their bosses are

too focused on their own issues to empower those under

them, so it will take time to make sure decentralization

doesn’t stop.”

SELLING DISRUPTION

In some ways, Clamadieu’s own transition from leading

Rhodia from the brink of bankruptcy to taking over the

reins of Solvay has been surprisingly seamless.

“I used to say that at Rhodia we were facing a liquidity

crisis, but the root cause was a trust crisis; it was internal,

the employees not trusting the leaders

and where the company was going,”

he says. “Although we had to rebuild

the balance sheet, we also had to

rebuild trust and the way to do that

was not that different from today:

setting a goal, explaining how we get

there, and making progress quarter by

quarter.”

In some ways, being a disruptive

leader focused on change was actually

easier for Clamadieu at Rhodia than it

is at Solvay.

“When you’re in an emergency

situation, people don’t ask why we need

to change. They understand that you

are on the side of a cliff and absolutely

need to turn the steering wheel in a

different direction,” he says. But at Solvay, which has a

strong balance sheet and no large, immediate challenges

Clamadieu has had to make a stronger case for disruption.

“The challenge is a bit bigger for the CEO to explain

why the situation needs disruptive management,” he says.

“In our case, it is because the world is changing.”

Clearly, Clamadieu has made his case well. And it’s a

job he relishes. “I would not lead a company that didn’t

need big changes,” he says. “I wouldn’t want to take a

mundane CEO job.”

TO BE DISRUPTIVE IS TO ACKNOWLEDGE THE FACT THAT WE NEED TO CHANGE AND THAT WE NEED TO ACCEPT AND MAKE MOVES THAT SOUNDED IMPOSSIBLE YESTERDAY.


GREAT LEADERSHIP, A GREAT ORGANIZATION & A GREAT PERSONAL LIFE

The four ways of being that create the foundation for

BY WERNER H. ERHARD AND MICHAEL C. JENSEN

1

n this paper we argue that the

four ways of being we identify as

constituting the foundation for

being a leader and the effective

exercise of leadership are also the

the foundation for an extraordinary

organization and the foundation of

an extraordinary personal life.

We start with a brief overview of each of these four

foundations before going into an expanded discussion of each.

AN OVERVIEW

è Being Authentic

Being authentic is being and acting consistent with who you

hold yourself out to be for others, and who you hold yourself

to be for yourself. When leading, being authentic leaves you

grounded and able to be straight with others without the use

of force.

è Being Cause In the Matter of Everything In Your

Life

Being Cause in the Matter is a stand you take on yourself and

your life. A stand is a declaration you make, not a statement of

fact. Being Cause in the Matter is viewing life from and acting

from the stand that “I am cause in the matter of everything in

my life.” Being willing to view life from this perspective leaves

you with power. You are never for yourself a victim.

è Being Committed to Something Bigger than

Oneself

Being committed to something bigger than oneself is the

source of the serene passion (charisma) required to lead and to

develop others as leaders and the source of persistence (joy in

the labor of) when the path gets tough.

è Being A Person or an Organization of Integrity

In our model, integrity for anything is the state of being

whole, complete, unbroken, sound, in perfect condition1. For

a person and any human organization, integrity is a matter of

that person’s word or that organization’s word being whole

and complete — nothing more and nothing less. Integrity is

required to create the maximum opportunity for performance

and quickly generate trust.

A WORD ABOUT VALUES

In our discussion here we are not concerned with values

— that is, we are not concerned with what is considered good

as opposed to bad, or right as opposed to wrong. We advocate

these four principles not because they are “right,” but simply

because they are in each individual’s personal self-interest

and in each organization’s self-interest. These insights into the

actual nature and function of the four aspects of the foundation

for great leadership, great organizations, and a great personal

life create workability, trust, peace, joy, and private and social

value. They provide a path for individuals, organizations, and

societies to realize much of what people generally think ethics

and morality produce. And, if we look at the state of the world

around us, obviously that latter path has not worked.

FOUNDATION ONE: BEING AUTHENTICBeing authentic is being and acting consistent with who you

hold yourself out to be for others, and who you hold yourself

to be for yourself.

Surprisingly, there is nothing authentic about any attempt

to be authentic. Any attempt to be authentic on top of our

inauthenticities is like putting cake frosting on cow dung,

thinking that will make the cow dung go down well. In any

case, the attempt to be authentic is a put on and therefore

inauthentic.

One cannot pretend to be authentic. That, by definition, is

inauthentic. Remarkably, the only path to being authentic is

being authentic about one’s inauthenticities. Being authentic

is being willing to discover, confront, and tell the truth about

your inauthenticities — where you are not being genuine, real,


I

1See Erhard, Jensen, and Zaffron (2009), “Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics

and Legality.” Harvard Business School NOM Working Paper No. 06-11. Available at SSRN: http://ssrn.com/abstract=920625

Dr. Michael C. Jensen is the Jesse Isidor Straus Professor of Business Administration, Emeritus at Harvard Business School. He has played an important role in the academic discussion of the capital asset pricing model, stock options policy, and corporate governance.

Werner H. Erhard is recognized worldwide as a business, management, and humanitarian leader. He has consulted for numerous corporations and charitable and governmental agencies.


EDITOR’S NOTE: The following article is excerpted by the authors from an academic paper on which they are working. While different in style and length from our typical IQ article, you can be sure that it is worth your time to read and, even study, this article. Erhard and Jensen are making a significant contribution to the field of leadership development and the effective exercise of leadership. Moreover, their work reinforces, illuminates, and expands the principles and practices that Insigniam’s clients have found so valuable:

è At the core of Insigniam’s leadership development work is the notion that leadership starts with taking a stand — the access to which is your word. In particular, Jensen and Erhard’s seminal work to define integrity as “working as your word” elevates that notion and extends it in multiple dimensions.

è One highly effective supply chain executive who has worked with Insigniam for a decade says that his most impactful learning is that, if he touches or sees it, he is responsible (a leader is responsible); that discovery is harmonic with the authors’ foundation of being cause in the matter of everything in your life.

or authentic. Specifically, being authentic is being willing to

discover, confront, and tell the truth about where in your life

you are not being or acting consistent with who you hold

yourself out to be for others, or not being or acting consistent

with who you hold yourself to be for yourself.

Most of us think of ourselves as being authentic; however,

each of us in certain situations, and each of us in certain ways,

is consistently inauthentic.

SOME EXAMPLES OF OUR INAUTHENTICITIES

We as persons and in our organizations desperately want

to be admired. For many, admiration is the most valuable

coin of the realm. Almost none of us is willing to confront

just how much we want to be admired, and how readily we

will fudge on being straightforward and completely honest in

a situation where we perceive doing so threatens us with a loss

of admiration. We will do almost anything to avoid the loss of

admiration — stretch the truth, manipulate the facts, hide what

might be embarrassing or unpleasant or even awkward and,

where required, outright lie.

We also all want to be seen by our colleagues as being loyal,

protesting that loyalty is a virtue even in situations where

the truth is that we are acting “loyal” solely to avoid the loss

of admiration. And, in such situations, how ready we are to

sacrifice authenticity to maintain the pretense of being loyal,

when the truth is that we are “being loyal” only because we

fear losing the admiration of our close colleagues, subordinates,

or bosses.

In addition, most of us have a pathetic need for looking

good (and in certain situations this shows up as wanting to be

liked), and almost none of us is willing to confront just how

much we care about looking good — even to the extent of

the silliness of pretending to have followed and understood

something when we haven’t.

Each of us is inauthentic in certain ways. While this may

sound like a description of this or that person you know, it

actually describes each of us — including you the reader and

each of us authors. We are all guilty of being small in these ways

— it comes with being human.

If you cannot find the

courage to be authentic about

your inauthenticities, you can

forget about being a great

leader or having a great personal

life. And an organization that

cannot be authentic about it’s

inauthenticities will experience

great conflicts, costs, and inevitably loss of reputation.

Great leaders, great organizations, and those who lead great

personal lives are noteworthy in having come to grips with

these foibles of being human, not eliminating them, but being

the master of these weaknesses.

IS BEING AUTHENTIC IMPORTANT TO BEING A LEADER?

Quoting former Medtronics CEO and now Harvard

Business School Professor of Leadership Bill George: “After

years of studying leaders and their traits, I believe that

leadership begins and ends with authenticity.”2

To be a leader and to have a great organization and to have

a truly great personal life, you and your organization must be

big enough to be authentic about your inauthenticities and

your organization’s inauthenticities. This kind of bigness is a

sign of power, and is so interpreted by others. Being a leader

requires that you be absolutely authentic, and true authenticity

begins with being authentic about your inauthenticities; and

almost no one does this.

THE ACTIONABLE ACCESS TO AUTHENTICITY

As we have said, the only path to authenticity is being

authentic about your inauthenticities. In order to achieve this

you must find in yourself, that “self” that leaves you free to

be authentic about your inauthenticities. That “self,” the one

required to be authentic about your inauthenticities, is who

you authentically are.

And you will know when this process is complete when you

are free to be publicly authentic about your inauthenticities,

and have experienced the freedom, courage, and peace of


2George, Bill. 2003, p.11. “Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value”. San Francisco: Jossey-Bass.

IF YOU CANNOT FIND THE COURAGE TO BE AUTHENTIC ABOUT YOUR

INAUTHENTICITIES, YOU CAN FORGET ABOUT BEING A GREAT LEADER OR HAVING A GREAT PERSONAL LIFE.

2mind that comes from doing so. And this is especially so when

you are authentic with those around you for whom those

inauthenticities matter (and who are likely to be aware of them

in any case).

FOUNDATION TWO: BEING CAUSE IN THE MATTER

By “Being Cause in the Matter” we mean being cause

in the matter of everything in your life as a stand you take

for yourself and life, and acting from that stand. To take

the stand that you are cause in the matter contrasts with it

being your fault, or that you failed, or that you are to blame,

or even that you did it.

It is not true that you are the cause of everything in

your life. That you are the cause of everything in your life

is a place to stand from which to view and deal with life,

a place that exists solely as a matter of your choice. The

stand that one is cause in the matter is a declaration, not an

assertion of fact. It simply says: “You can count on me (and,

I can count on me) to look at and deal with life from the

perspective of my being cause in the matter.”

BEING CAUSE IN THE MATTER MEANS YOU GIVE UP THE RIGHT TO

BE A VICTIM

When you have taken the stand (declared) that you are

cause in the matter of your life, it means that you give up

the right to assign cause to the circumstances or to others.

That is you give up the right to be a victim. At the same

time, taking this stand does not prevent you from holding

others responsible.

As we said, it is not true that you are the cause of

everything in your life. Being cause in the matter does not

mean that you are taking on the burden of or being blamed

for or praised for anything in the matter. And, taking the

stand that you are cause in the matter does not mean that

you won’t fail.

However, when you have mastered this aspect of the

foundation required for being a leader and exercising

leadership effectively, you will experience a state change in

effectiveness and power in dealing with the challenges of

leadership and living a great personal life (not to mention

the challenges of creating a great organization).

In taking the stand that you are the cause of everything

in your life, you give up the right to blame others or the

environment. In fact, you give up the right to blame the

circumstances for anything that is going on with you or

your organization.


3

4

FOUNDATION THREE: BEING COMMITTED TO SOMETHING BIGGER THAN ONESELF

What we mean by “being committed to something bigger

than oneself” is being committed in a way that shapes one’s

being and actions so that your ways of being and acting are

in the service of realizing something beyond your personal

concerns for yourself — beyond a direct personal payoff. As

they are acted on, such commitments create something to

which others can also be committed and have the sense that

their lives are about something bigger than themselves. This is

an important aspect of a great personal life, great leadership, and

a great organization.

BEING COMMITTED TO SOMETHING BIGGER THAN ONESELF IS

THE SOURCE OF PASSION

Without the passion that comes from being committed to

something bigger than yourself, you are unlikely to persevere

in the valley of tears that is an inevitable experience in the lives

of all true leaders. Times when nothing goes right, there is no

way, no help is available, nothing there except what you can

do to find something in yourself — the strength to persevere

in the face of impossible, insurmountable hurdles and barriers.

And, by the way, every great personal life includes having to

come to grips with one or more of these profound challenges.

When you are committed to something bigger than yourself

and you reach down inside you will find the strength to

continue (joy in the labor of).

EXAMPLE OF A VALLEY OF TEARS THAT ALMOST EVERYONE

EXPERIENCES: THE MID-LIFE CRISIS

At some point in life we all stop measuring time from the

beginning and start measuring it from the end. It shifts from

how far have I come to how much time and opportunity

do I have left?

No matter how good you look, no matter how good

you’ve gotten your family to look, and no matter how

much wealth, fame, power, and position you have amassed,

you will experience a profound lack of fulfillment — the

incompleteness, emptiness, and pain expressed by the common

question: Is this all there is?

Let us be clear: There is nothing inherently wrong with

wealth, good looks, fame, power, or position, but, contrary

to almost universal belief, they will never be enough. And

facing up to that leaves people and organizations disoriented,

disturbed, and lost. No matter how good you look or how

much you have personally amassed,

it will never be enough to avoid

this crisis. Dealing with the crisis of

“Is this all there is?” lies in having a

commitment to the realization of a

future (a cause) that leaves you with a

passion for living.

This principle, being committed

to something bigger than oneself,

applies to corporate entities as well as

to human beings. Value creation for

both is the scorecard for success. Value creation is not the source

of corporate or personal passion and energy. Being committed

to something bigger than oneself is the source of that passion

and energy. Every individual and every organization has the

power to choose that commitment — there is no “right

answer.” It is creating what lights up you and your organization.

FOUNDATION FOUR: INTEGRITY — A POSITIVE MODEL

Definition: We use the first two definitions of integrity from

Webster’s New World Dictionary: 1. the quality or state of

being complete; unbroken condition; wholeness; entirety 2.

the quality or state of being unimpaired; perfect condition;

soundness.

We use the phrase “whole and complete” to represent

our definition of integrity. Defined this way, integrity is


VALUE CREATION IS NOT THE SOURCE OF CORPORATE OR PERSONAL PASSION AND ENERGY. BEING

COMMITTED TO SOMETHING BIGGER THAN ONESELF IS THE SOURCE OF

THAT PASSION AND ENERGY.

a positive phenomena, not a virtue. There is nothing

inherently good or bad about it, it is just the way the world

is. (We show how morality and ethics are related to our

definition of integrity below.)

An object has integrity when it is whole and complete.

Any diminution in whole and complete results in a

diminution in workability. Think of a wheel with missing

spokes, it is not whole and complete. It will become out-

of-round, work less well, and eventually stop working

entirely. Likewise, a system has integrity when it is whole

and complete.

The Law of Integrity states: As integrity (whole and complete)

declines, workability declines, and as workability declines, value

(or more generally, the opportunity for performance) declines.

Thus, the maximization of whatever performance measure you

choose requires integrity.

Attempting to violate the Law of Integrity generates

painful consequences just as surely as attempting to violate

the law of gravity. Put simply (and somewhat overstated):

“Without integrity nothing works.” Think of this as a

heuristic: If you or your organization operate in life as though

this heuristic is true, performance will increase dramatically.

And the impact on performance is huge: easily in the range

of 100% to 500%.


INTEGRITY FOR A PERSON (OR AN ORGANIZATION)

In this positive model, integrity for a person is a matter of a

person’s word, nothing more and nothing less. You are a man or

woman of integrity, and enjoy the benefits thereof, when your

word is whole and complete. Your word includes the speaking

of your actions as in “actions speak louder than words.”

HONORING YOUR WORD

While keeping your word is fundamentally important in life,

you will not be able to always keep your word (unless you are

playing a small game in life). However, you can always honor

your word. Honoring your word is:

1. Keeping your word, OR

2. Whenever you will not be keeping your word, just as

soon as you become aware that you will not be keeping your

word (including not keeping your word on time) saying to

everyone impacted:

i. That you will not be keeping your word, and

ii. That you will keep that word in the future and by when, or

that you won’t be keeping that word at all, and

iii. What you will do to deal with the impact on others of the

failure to keep your word (or to keep it on time).

YOUR WORD DEFINED

WORD 1 – WHAT YOU SAID: Whatever you said you

will do, or will not do (and in the case of do, doing it on

time).

WORD 2 – WHAT YOU KNOW: Whatever you know to

do, or know not to do, and if it is do, doing it as you know it

is meant to be done (and doing it on time), unless you have

explicitly said to the contrary.

WORD 3 – WHAT IS EXPECTED: Whatever you are

expected to do or not do (unexpressed requests) and in the

case of do, doing it on time, unless you have explicitly said

to the contrary.

WORD 4 – WHAT YOU SAY IS SO: Whenever you

have given your word to others as to the existence of some

thing or some state of the world, your word includes being

willing to be held accountable that the others would find

your evidence makes what you have asserted valid for

themselves.

WORD 5 – WHAT YOU STAND FOR: Whether

expressed in the form of a declaration made to one or more

people, or to yourself, as well as what you hold yourself out

to others as standing for (formally declared or not).

WORD 6 – MORALITY, ETHICS, AND LEGALITY: The Social Moral Standards, the Group Ethical Standards

and the Governmental Legal Standards of right and wrong,

good and bad behavior in the society, groups and state in

which I enjoy the benefits of membership are also my word


3Erhard, Werner and Jensen, Michael C., 2013. “Four Ways of Being that Create the Foundations of A Great Personal Life, Great Leadership and A

Great Organization — PDF File of Powerpoint Slides” (September 12). Harvard Business School NOM Unit Working Paper No. 13-078. Available at

SSRN: http://ssrn.com/abstract=2207782


4Alloway, Tracy and Kara Scannell (2013). “Jury finds Tourre Defrauded Investors”, Financial Times,

August 1. http://www.ft.com/cms/s/0/18098490-f86a-11e2-b4c4-00144feabdc0.html#axzz2f5BKytNd

WITHOUT INTEGRITY NOTHING WORKS.

(what I am expected to do) …unless I have explicitly and

publicly expressed my intention to not keep one or more of

those standards, and I am willing to bear the costs of refusing

to conform to these standards (the rules of the game I am in).

NOTE: These six categories define one’s Word, they do not

define integrity.

THE BAD NEWS

We can say with great confidence that no one (including

us authors) is a person or organization completely in

integrity. That self-satisfied view is one of the causes of

the universal lack of integrity in the world. To repeat:

the common belief that we have made it as people and

organizations of integrity is one of the major factors

contributing to the systemic worldwide lack of integrity.

The fact is integrity is a “mountain with no top,” so we

had better get used to (and grow to like) climbing. Even

when people (and other human entities, such as banks,

corporations, partnerships, and other organizations) have

some general awareness of the damaging effects of out-

of-integrity behavior, for the most part they fail to notice

their own out-of-integrity behavior. As a result, they end

up attributing the damage from their out-of-integrity

behavior to other causes. They systematically believe that

they are in integrity, or if by chance they are at the moment

aware of being out of integrity, they believe that they will

soon get back into integrity.

However, the combination of 1) generally not seeing

our own out-of-integrity behavior, 2) believing that we are

persons of integrity, and 3) even when we get a glimpse of

our own out-of-integrity behavior, assuaging ourselves with

the notion that we will soon restore ourselves to being a

person of integrity keeps us from seeing that in fact integrity

is a mountain with no top. To be a person of integrity (or

bank or other organization of integrity) requires that we

recognize this and “learn to enjoy climbing.” Knowing

that integrity is a mountain with no top, and being joyfully

engaged in the climb, leaves us as individuals with power,

and leaves us known by others as authentic, and as men or

women of integrity (or organizations of integrity). While

counterintuitive, owning up to any out-of-integrity behavior

and dealing with it with “honor” actually leaves one showing

up for others as a person of integrity. Recognizing that we

will never “get there” also opens us up to tolerance of (and

an ability to see and deal productively with) our own out-of-

integrity behavior as well as that of others.

THE COSTS OF DEALING WITH AN OBJECT, PERSON, GROUP,

OR ENTITY THAT IS OUT OF INTEGRITY

Consider the experience of dealing with an object that

lacks integrity. Say a car or bicycle. When it is not whole and

complete and unbroken (that is a component is missing or

malfunctioning) it becomes unreliable, unpredictable, and

it creates those characteristics in our lives. The car fails in

traffic, we create a traffic jam, we are late for appointments,

fail to perform, disappoint our partners, associates, and

firms. In effect, the out-of-integrity car creates a lack of

integrity in our life with all sorts of unworkability fallout.

And this is true of all our associations with persons or

entities that are out of integrity. The effects are huge, but

generally attributed to something other than the lack of

integrity.

In the Appendix to Erhard and Jensen (2013)3 we apply

these principles to the Goldman Sachs’ experience with

its Abacus Mortgage Backed Securities Scandal in which

Goldman violated 7 of its 13 Goldman Business Principles

(their word to their clients, employees and the world).

Goldman employee Fabrice Tourre was found guilty of

defrauding investors. See Alloway and Scannell (2013)4. In

addition, Goldman paid a $550 million fine to the SEC

for its actions surrounding its Abacus mortgage backed

securities, a record at that time. Applying the principles laid

out in this paper to Goldman’s actions we conclude that

Goldman was: 1. Out of integrity because it did not honor

its word: violating in part or in whole, 7 of its 13 “Goldman

Sachs Principles.” 2. Inauthentic because it was not true

to what it holds itself out to be for itself, its employees, its

clients, and the public and 3. Not committed to something

bigger than itself. (We could find nothing in the Goldman

literature indicating that it was committed to anything

bigger than itself.)

What does a modern leader look like? We asked some of today’s top executives their thoughts on leadership, the challenges leaders face,

and why being disruptive is more important than ever.

PROF ILES IN LEADERSHIP



here has been a shift in what’s expected of leaders over the last 30 years. No longer can a leader just keep a steady

hand on the rudder of an enterprise. Today, leaders are expected to cut a new path in the marketplace for their

organization, to disrupt business as usual. They are expected to have a bold vision of the future and marshal

the forces that it will take to get there. No one understands the shift in what it means to be a leader better than

those who are actually leading. That’s why we talked to several of today’s top leaders and asked them about the

challenges they face, how they overcame them, and the importance of disruption. What we found out was eye

opening, and educational. These leaders had several characteristics in common. They are not just visionary,

they are at work making sure a particular future is possible. The future they seek is bold, compelling,

and captures the very essence of winning. They take time to build trust and bring people along

— speaking authentically and operating with consistency and integrity. They encourage inventive

and unorthodox action. They build their company’s culture, then they build it some more.

— Shideh Sedgh Bina

WHAT ARE SOME OF THE UNIQUE CHALLENGES

THAT LEADERS TODAY FACE, AND HOW SHOULD

THEY ADDRESS THEM?

Resources are much more limited in my industry today than

before. Regulations cover nearly everything and are changing

constantly. Currency fluctuations have a massive impact on

international businesses. These issues can be addressed by

developing and following a long-term vision for the business

and building the capability in the organization to understand

the strategy, know each unit’s role in delivering this strategy,

and setting up processes which enable action, with a clear

understanding of each unit’s freedom to act.

WHAT ARE THE THREE OR FOUR FACTORS THAT ARE

MOST CRITICAL TO MANAGING AS A DISRUPTIVE

LEADER? HOW DO YOU ADDRESS EACH ONE?

Having a clear vision of the future — Requires long-

term focus on the key factors to deliver.

Challenging employees to be better than they think

possible — Supporting rebels and people with the commitment

to deliver.

Forgiving mistakes and learning from them —

Requires clear examples to be credible.

IN A RECENT INSIGNIAM EXECUTIVE SENTIMENT

STUDY, 87% OF EXECUTIVES SAID THAT

INNOVATION WAS CRITICAL TO THEIR CONTINUED

COMPETITIVE ADVANTAGE, YET ONLY 15% FELT

THEIR ORGANIZATIONS WERE WELL PREPARED

TO DELIVER THE REQUISITE INNOVATION. IN YOUR

OPINION, WHY IS THERE SUCH A DISPARITY?

The speed of business is accelerating. Most organizations

thrive on what they have done well in the past. This difference

creates the issue. Few organizations support and reward

innovation in a clear way.

CAN YOU QUICKLY SHARE SOME OF YOUR

LEADERSHIP CHALLENGES AND HOW YOU

ADDRESSED THEM?

When I started in my new job, most people believed our

most advanced development project was too late and too

expensive to develop. I identified the key success factors with

a cross-functional team approach and challenged them to deal

with the issues. A year was cut from the time, and cost reduced

significantly. As a result, a partnership deal was possible which

delivered significant short-term revenue.

WHAT HAVE YOU DONE TO CREATE THE

CONDITIONS FOR SUSTAINED INNOVATION IN YOUR

ENTERPRISE?

Not enough! More process is needed and the support of the

true innovators should be clearer to the whole team.

D R . D A V I D E B S W O R T HCEO, GALENICA LTD. // CEO, VIFOR PHARMA // CHAIRMAN OF THE EXECUTIVE COMMITTEE, GALENICA AG




THEY ADDRESS THEM?

Businesses of all sizes and types face a number of challenges

today. While some of the issues aren’t new, the combination and

complexity of the issues can make them particularly difficult.

For example:

Pace of ChangeMarket changes occur much more rapidly than in the

past. As a result, leaders must be able to effectively manage

change and quickly adjust business models to adapt to market

dynamics. We have more data than we know what to do with.

However, today’s leaders must be able to adapt constantly

and be extremely nimble in order to move business forward.

GlobalizationAlmost every company must deal with globalization. Even

if they choose not to operate globally, they may have global

competition or global suppliers — and more than likely,

customers and/or employees representing different global

regions of the world. It’s imperative to ensure employees

throughout the organization are aware of and are sensitive

to cultural diversity among colleagues, customers, and

suppliers. At Omni Hotels & Resorts, we leverage our

affiliation with the Global Hotel Alliance to remain

competitive in this space.

Employee Recruitment & RetentionToday’s workforce has much higher expectations for work/

life balance, workplace flexibility, benefits, workplace

culture, and career advancement opportunities. Creating an

environment that thrives on dynamic change will address the

needs of the company and its employees.

Social MediaI just read that Google found nearly 60 percent of people talk

more online than they do in-person. Crowds are naturally

forming online so that today a single unhappy customer can

become a weapon of mass persuasion. As a result, a company’s

reputation is more difficult to manage than ever. Companies

must be flexible in how they communicate with customers,

whether it be via phone, email, on Twitter, Facebook,

Pinterest, Instagram, YouTube, or using a Vine video.

Essentially, we must be prepared to listen and communicate

to each audience in the manner they prefer.

WHAT ARE THREE QUALITIES THAT A DISRUPTIVE

LEADER MUST HAVE?

To keep up with the rapid pace of change, disruptive leaders

must possess three important qualities:

1 Intellectual curiosity: Disruptive leaders like to learn.

They are intellectually curious and proactively investigate new

things, identify and solve never-seen-before problems, and apply

new ways of doing business. They are willing to be proactive

and responsibly experimental, discovering innovations others

may not see.

2 Fierce competitive nature: Competition is tough, and

conditions can be unpredictable and unforgiving. Disruptive

leaders must be fierce, focused, and goal driven. They must

ensure their organizations have a deep knowledge of their

competition and a thorough understanding of what it will take

to take the top position.

3 A thick skin: I’ve heard it said that a diamond can’t be

polished without friction. That same principle applies in business

today. Disruptive leaders can’t maximize their potential without

being tested by adversity. Disruptive leaders are unafraid of

calculated risks, using obstacles and setbacks as opportunities to

polish their strategies and skills. We live by the mantra “when

others see obstacles, Omni sees opportunities.”

WHAT IS A LEADERSHIP LESSON YOU HAD TO

LEARN THE HARD WAY?

I was assigned my first leadership role at a relatively young

age. As a result, I felt a tremendous pressure to prove myself and

demonstrate my ability to succeed on my own. I had difficulty

asking for help from my peers and coworkers. But I’ve learned I

cannot be all things to all people, and I cannot sustain the growth

and success of my organization by myself. I’ve developed the

ability to find the right people, put them in the right places, and

rely on them to help build and sustain the company. You need

to surround yourself with people that know more than you!

T O M S A N T O R ACHIEF MARKETING OFFICER, OMNI HOTELS & RESORTS

7

7

7

7


WHY SHOULD LEADERSHIP DISRUPT BUSINESS-

AS-USUAL?

For me, being disruptive is precisely the difference between

leadership and management. A manager motivates and brings

together the teams. A leader embodies a vision and transforms

business. Both are important, but if you really want to transform

— and it is essential for a company to be able to transform —

you need leadership.

WHAT DOES A DISRUPTIVE LEADER LOOK LIKE?

A disruptive leader catalyzes collective energy. He/she knows

how to listen and is able to detect, to interpret weak signals.

He/she is open minded and curious of everything. But most

importantly, a disruptive leader has his/her own style. Being a

leader has to do with your personality, not with a defined role.

There is no recipe to be a good leader, you have to be yourself.

You have to accept who you are and draw from your inner

resources to really impact. Being who you are also means you

have to know the difference between being popular and able

to draw others with you because you embody a vision. If you

want to be a leader, you have to distance yourself from being

popular, because when you see and anticipate things, when you

move fast, when you face big transformations, you can be quite

alone sometimes. But it doesn’t mean you have to stay alone!

Someone that stays alone is a pioneer, not a leader.



THEY ADDRESS THEM?

The speed at which businesses transform makes

information more and more complex, situations more and

more interdependent. It makes information all the more

difficult to capture and integrate. We can’t think and act

anymore as we used to do, using forecasts and perspectives

to anticipate the future. In fact, we don’t know what the

world will be in 10 years. Therefore, a leader cannot be just

a visionary, he has to be the one who makes the future

possible. Another challenge is the change in our collective

culture and ways of working. In a world where the networks

have an increasing role and the new generations at work

are constantly interconnected, the traditional “vertical”

management style will not work anymore.

WHAT ASPECT OF LEADERSHIP SURPRISED YOU?

IS THERE ANYTHING THAT’S HARDER THAN YOU

THOUGHT IT WOULD BE? IS ANYTHING EASIER?

One of the things I discovered is that not everyone wants to

be a leader. It really has to do with who you want to be. On

the other hand, the easy aspect of leadership is that you only

have to be yourself. Being a leader has much more to do with

who you are than with what you do. I remember a speech I did

once, and I had a standing

ovation at the end. All I had

done was talk about my

experience as a woman and

a leader! In my generation,

women still tried to imitate

men’s leadership. I feel that

nowadays the context has

evolved. It is much more

conducive for women to

express who they are. By

being yourself, you accept

who the others are. One of

the things I love is discussing

with leaders from other

cultures, you have a genuine

respect on both sides for

who the other is, what his

or her background is.

WHAT IS A LEADERSHIP LESSON YOU HAD TO

LEARN THE HARD WAY?

That nothing can ever be taken for granted. This is something

I learned some years ago when I was working in a French

minister’s cabinet. I had set up a disruptive program aimed at

combating illiteracy. It was innovative, and the results were

extremely positive. I thought that this program, being both

innovative and successful, would be extended even though

the political majority had changed. But the program’s expense

caused the new minister to suppress it. What I learned from that

is that you always have to keep in mind that things can change,

and that no improvement is guaranteed to last forever.

M U R I E L P É N I C A U DGENERAL MANAGER OF HUMAN RESOURCES, DANONE

IN A WORLD WHERE YOU CANNOT KNOW WHAT TOMORROW WILL LOOK LIKE, WHERE INFORMATION AND KNOWLEDGE PERMANENTLY EVOLVE, WE NEED TO RADICALLY CHANGE THE WAY WE PREPARE OURSELVES.


CAN YOU QUICKLY SHARE SOME OF YOUR

LEADERSHIP CHALLENGES AND HOW YOU

ADDRESSED THEM?

I came to lead UKTV because I saw a business with huge

potential to grow and be a serious player in the media industry.

When I joined, I could see the opportunity ahead and talked

excitedly about how we could grow and be more successful

and more creative by being more commercially focused. I had

a clear ambition to do more of what we did, with incredible

content and brands, and I had the excitement and energy to

make it happen. I talked about the future with the intention of

my vision being contagious… but learned quickly that people

valued their creative heritage and were fiercely protective of it.

I knew I needed to quickly build the trust of the people — it’s

the foundation of any high performing organization. … I care

about each individual and spend as much time as I can engaging

with people at every level about what’s happening in the business

and their wider lives. I took the time to explain that I saw our

future as having a balance of creativity and commercial focus —

that one could not operate without the other, and I intentionally

shared more about how much I valued the creative heritage.

WHAT ASPECT OF LEADERSHIP SURPRISED YOU?

IS THERE ANYTHING THAT’S HARDER THAN YOU

THOUGHT IT WOULD BE? IS ANYTHING EASIER?

Experience tells me that the most critical role I have as a leader

is creating the right culture for people to bring their best each

day and thus deliver outstanding work. I’m really proud of our

latest accolade at UKTV that we are the only British broadcaster

to ever be recognized by Best Companies to Work for, picking

up a special award in 2013. ‘Culture eats strategy for breakfast’

has never been a truer saying.

IN A RECENT INSIGNIAM EXECUTIVE SENTIMENT

STUDY, 87% OF EXECUTIVES SAID THAT

INNOVATION WAS CRITICAL TO THEIR CONTINUED

COMPETITIVE ADVANTAGE, YET ONLY 15% FELT

THEIR ORGANIZATIONS WERE WELL PREPARED

TO DELIVER THE REQUISITE INNOVATION. IN YOUR

OPINION, WHY IS THERE SUCH A DISPARITY?

Innovation is becoming a buzzword, and, although I’m a

great believer that innovation is critical for continued success,

the disparity exists because people in organizations don’t see

the link between the aspiration to be innovative and what they

have the power to do in their everyday work.

The risk with innovation is that it feels so big that only a

few people can take responsibility to create a bright, new and

shiny ‘innovation.’ If we talk about inventiveness and help people

to understand what that means, it’s much more tangible. Being

inventive is about looking at new or different ways to do what we

do today as well as new ideas or products that feels like big leaps

for the future. Most major innovations come from connecting

a number of smaller ones, and encouraging everybody to think

about it just increases your chances of a real breakthrough.

WHAT HAVE YOU DONE TO CREATE THE

CONDITIONS FOR SUSTAINED INNOVATION IN YOUR

ENTERPRISE?

In UKTV, I’ve created a culture where we give people the

space to find new ways of approaching their work, busted silos

so that people know what the impact on others will be of a

new idea, encourage the idea generator to own it through to

delivery, celebrate success,

and learn positively from

failure. We invest time in

mentoring and coaching

individuals to help them

grow confidence in creating

new breakthroughs.

Our recruitment,

development, and appraisal

processes are all designed to

support our belief that we’re

a challenger brand with big

potential. We hire people

with the right values fit and

develop them so that they can be the best. My mantra is that

this is the place people will do the best work of their careers.

We don’t leave innovation to chance. One of my first initiatives

was to sponsor an ‘innovation fund’ where anybody could

easily access funds and mentoring to make great ideas happen

without going through the formal business case process. For me,

innovation doesn’t need definition or structure — it needs fuel.

IT ALWAYS SURPRISES ME HOW MUCH FULFILLMENT I RECEIVE FROM HELPING PEOPLE DO MORE THAN THEY THOUGHT WAS POSSIBLE.

D A R R E N C H I L D SCEO, UKTV


WHAT DOES A DISRUPTIVE LEADER LOOK LIKE?

The demonstration of disruptive leadership in a company

represents a positive force to embrace change. A successful

leader should revisit the company’s problems and opportunities

from time to time. Instead of looking at them in the same way,

leaders should reframe them using multiple perspectives.

Disruptive leaders should be open to taking risks since risks

amount to more than just possible threats to normal business

operations; taking calculated risks can also help a company create

new paradigms. Disruptive leaders should not avoid making

mistakes, but should view failure as a way to unveil existing

weaknesses and achieve better overall performance. As the old

saying goes, “Failure is the mother of success.”

HOW DO YOU GAIN A COMPETITIVE EDGE IN

A WORLD WHERE LEADERS AND COMPANIES

HAVE ALREADY DEVELOPED THE ABILITY TO

EMBRACE AND INTEGRATE ONGOING CHANGE?

In today’s business world, many leaders and companies

have already developed the ability to embrace and integrate

ongoing change. In order to further differentiate ourselves,

I lead my team by constantly focusing on creating business

breakthroughs. Also, people should keep stretching their

boundaries beyond their comfort zones so that they can

grow and develop.

CAN YOU QUICKLY SHARE SOME LEADERSHIP

CHALLENGES AND HOW YOU ADDRESSED THEM?

Fresh markets exist in every community in Hong Kong. They

provide convenient shopping venues and gathering points for the

community, but they have long been perceived as old-fashioned

and dirty, especially compared with the antiseptic environment

of modern supermarkets. This perception has led to a general

presumption that the development potential of fresh markets

is limited.

Markets are indispensable to our daily lives in Hong Kong, and

they are of utmost importance to our unique culinary culture.

As one of the key fresh market owners, we play a critical role in

preserving and revitalizing this unique component of traditional

Hong Kong culture.

Instead of following the traditional way of operating fresh

markets, we have adopted new strategies to revitalize this

traditional yet distinctive industry and to improve public

perception.

One innovative approach to fresh market operations can be

found at Tai Yuen Market, our first fresh market enhancement

project. The market was transformed into something unique,

with modern facilities, professional management services, a

hygienic environment, and various types of stalls.

In the past, fresh market operators only provided a place for

tenants to manage their own businesses, and they did not offer

any type of support for tenants. At The Link’s fresh markets,

tenants are treated as business partners. Not only are they offered

space for a stall to run their business, but we also provide value-

added support and services.

For example, many fresh market tenants lack experience in

promoting and publicizing their stalls, and they are mired in

decades-old mindsets about how to run their businesses. To

address these issues, we established The Link Tenant Academy,

which provides various seminars and workshops to keep tenants

abreast of the latest information and offer tips about marketing

successfully to customers and running a successful business. The

Link also organizes a multitude of different holiday-centered

activities throughout the year with tenants, which helps build

mutual trust between the company and its tenants.

The Link’s fresh market revitalization efforts have improved

fresh markets’ business environments and helped sustain the

development of this important part of Hong Kong culture.

Additionally, The Link’s efforts have improved the quality of

life for people in local communities who rely on fresh markets

for their daily necessities.

G E O R G E H O N G C H O YCEO, THE LINK MANAGEMENT LTD.

The Link has revitalized fresh markets in Hong Kong, making the traditional shopping venues viable.


Effective leaders share the same

characteristics, no matter where

they call home.

BY GEOFF WILLIAMS

AVOIDING THE GLOBAL

CLICHÉ TRAP

A Paris-based consultant and partner with Insigniam, Le

Folcalvez’s global background is rich and deep. With French

parents and lineage (her grandmother was active in the French

resistance during WWII), Katerin was raised in the Caribbean,

educated in England and Germany, lived

and worked for seven years in Hong Kong,

joined Insigniam in California for several

years and has led the company’s Paris-

based European practice for 13 years.

She has worked extensively with senior

executives in countries as diverse as China,

Indonesia, Japan, Turkey, Portugal, Spain,

Russia, and Kazakhstan.

That first-hand experience has allowed

her to identify what she calls the “cliché

trap.” In an effort to be thoughtful and

inclusive, some executives latch onto a

misguided stereotype and find themselves

a stranger in a strange land. Like almost

all stereotypes, these beliefs come from

painting with too broad a brush. Even countries in the same

regions of the world can be quite different culturally.

“If you want to talk about leadership in Asia, consider

that you have countries like China, South Korea, Indonesia,

India, and they don’t share much history or a culture,” says Le

Folcalvez. “They really have nothing in common with each

other. We should kill, once and for all, the attempt to generalize

and find regional leadership traits. It’s way too limiting and

simple. A Belgian person is different from a Sicilian and they

are both European.”

CONCENTRATE ON UNIVERSAL QUALITIES OF LEADERSHIP

True leaders have qualities that aren’t a product of one

region or country but are innately human, Le Folcalvez says.

It is something easily forgotten, because

it is a very human characteristic to want

to slap labels on people in order to make

communication easier.

“If you look at Li Ka-Shing, Asia’s

wealthiest citizen and a generous

philanthropist, and the way he built

his fortune, his traits are universal,” Le

Folcalvez says. “He is committed, highly

demanding of himself and authentic. …

The true spine of a leader is universal and

independent of their cultural background.”

Instead of trying to find the little things

that may be different about leading in a new

country, focus on those characteristics of

leadership that are universal. Le Folcalvez

says successful leaders, regardless of nationality, tend to share

four characteristics. They:

› Demand excellence and high performance from

those around them.

While it might be expressed in different ways in different

parts of the world, a demand for excellence and relentless drive

for high performance is a common trait in all potent leaders.

› Never compromise on quality.

People who have managed to get their company out of

the unknown, no matter where they were, have based their


“THE BEST LEADERS HAVE AN AGILITY AND CURIOSITY AND APPRECIATION

FOR THE ENVIRONMENT THEY’RE IN.”

COMPANIES IN ASIA PERFORM BETTER WITH HANDS-ON MANAGERS.

EMPLOYEES IN NORTHERN EUROPE THRIVE IN A FAST-PACED ENVIRONMENT AND DO WELL WITH CHANGE.

FEMALE LEADERS OFTEN FLOUNDER IN MALE-DOMINATED MIDDLE EASTERN COUNTRIES.

IT’S ALL CONVENTIONAL WISDOM, AND IT’S ALL WRONG, SAYS KATERIN LE FOLCALVEZ.

WINTER 2013

turnarounds on higher quality than the competition.

› Are agile and curious; always open to learning

and to unlearning what they already know

Universally, disruptive leaders are never satisfied with the

now. They want to know what is next, curious about the future

and what they will need to know moving forward. They want

to understand what makes people and systems around them tick:

colleagues, employees, customers, markets.

› Develop and grow leaders

Whether in politics or business, leaders are interested in

building a legacy. The leaders they leave behind them are that

legacy. In effect the best leaders are also teachers.

CHALLENGE WHAT YOU THINK YOU KNOWLe Folcalvez says that once a leader has a commitment to

lead somewhere all of that leader’s intelligences — cultural

intelligence, social intelligence, emotional intelligence,

historical intelligence, etc. — have to come to the forefront

for that person to be effective in an environment where he or

she is not a master.

While cultural traits may give

leaders a general idea of how to deal

with a culture, whether in terms of

management or in terms of leadership,

these tips and techniques are never the

whole story. Leaders can not be slavishly

beholden to the clichés. They have to

get interested in who they have in front

of them, the unique individuals they are

working with. Leaders have to make sure

that those people know where the leader

wants the company to go and that future

has been conveyed.

“There are volumes of literature

about leadership styles in different

parts of the world, and, at least to

me, the overwhelming feeling after

reading them, is that a lot of it is shallow

generalization,” says Le Folcalvez.

For instance, Le Folcalvez says, you often hear that in Asia

the focus for leaders is on execution and not creative thinking.

In effect, they want to be told what to do. But Le Folcalvez says

that she has met as many Asian executives who are innovative

thinkers and enjoy challenges as in other parts of the world.

In fact, the pace of change in Asia forces Western executives

doing business there to questions all their assumptions about

how things should be done!

Another oft-repeated cliché, one which amuses Le Folcalvez:

“You’ll meet people who are very culturally savvy, and they’ll

tell you that when you’re in Asia, people don’t like to lose face,

so you have to make sure you don’t offend them. Well, I don’t

know anyone who enjoys losing face anywhere in the world.

Nobody likes to be slammed by their boss or put down in

public.”

Le Folcalvez also says that she frequently hears how in the

Middle East the respected leaders are loud, charismatic, and

authoritative. “Again, I know very respectful, low-key leaders

who are very successful.”

DON’T LOOK TO OTHER LEADERS AS ROLE MODELS.

It is tempting to emulate the leadership styles of those who

have the ultimate leadership positions. But the leadership

characteristics that German Chancellor Angela Merkel or

Brazilian President Dilma Rousseff employ won’t necessarily

work for anyone else. They operate in a political domain that

is very different and distinct from the business domain with its

own rules and dynamics. Besides, as Le Folcalvez points out,

“Unfortunately, in most of the countries that I’ve worked in,

including my own, France, people don’t

have that much respect for political leaders.”

Even when considering the most

successful global business leaders, do not

take too much direction from how they

do business. There are many factors that

influence what a leader does including

cultural ones. True learning comes from

observing who the leader IS — their values,

their commitments.

ADAPTATION SHOULD BE A CORE COMPETENCY.

Good leaders, the ones who hopscotch

across the globe, are also highly adaptable,

Le Folcalvez says, and invest time in learning

the history and the philosophy behind each

nation’s educational system, two lynchpins

to truly understanding how a country ticks.

“The best leaders have an agility and curiosity and ap-

preciation for the environment they’re in,” Le Folcalvez says.

“There’s a general manager of a company I know, and I’ve

seen him in the Czech Republic, Japan, and Russia, three

very different environments, and every time he comes into a

country, he is able to put aside all his reference points, and he gets

immersed in his new environment to understand how things

work, and then he adapts. What is very interesting about him

is that when it comes to a country’s culture and way of doing

business, he never judges — and never compares.”

INSIGNIAM QUARTERLY 55

“WE SHOULD KILL, ONCE AND

FOR ALL, THE ATTEMPT TO

GENERALIZE AND FIND REGIONAL

LEADERSHIP TRAITS. IT

REALLY DOESN’T MAKE ANY SENSE.”

WWhen Hugh Jones joined Sabre Airline Solutions as the

company’s president in 2011, he was joining an organization

that had experienced significant market-leading growth.

Still, the company was facing the daunting task of continuing

the growth of its software portfolio in the face of a finite

market — there are roughly 800 airlines globally.

An airline software and consulting solutions company

that helps airlines market, sell, serve, and operate — basically,

anything an airline needs to run other than the aircraft

and the runway — Sabre Airline Solutions had recently

signed agreements with several airlines, including LAN,

Virgin America, Etihad,

Philippine Airlines,

and JetBlue. While

Travelocity saw revenue

constriction, the company’s airline software division helped

push Sabre Holdings revenues past the $3 billion mark,

according to several analyst reports.

When Sabre Holdings went private in 2007, Sabre

Airline Solutions brought in roughly $250 million. When

Jones took over, that number was closer to $400 million.

Today, revenues are roughly $600 million, according to a

source familiar with the company.

So, if things were going well, then why was new leadership

brought in? Sometimes it takes a new perspective to take

the next steps. That’s what Jones has been tasked with.


Hugh Jones at Sabre Airline Solutions shares how a

shift in perspective is transforming his enterprise.BY JARRETT RUSH WITH GORDON PRICE LOCKE

TO EVOLVE YOUR BUSINESS, TAKE OTHERS ON YOUR JOURNEY

As we wrap up the first year of publication of Insigniam

Quarterly we sat down with Jones and talked a bit about

Sabre Airline Solutions. Not surprisingly, our conversation

lined up with the themes of each of the first four issues of

IQ — innovation, enterprise transformation, strategy and

growth, and disruptive leadership.

INNOVATION: SHIFT FROM AN INSIDE-OUT

VIEW TO ONE THAT’S

OUTSIDE-IN

One of the changes that

Jones has made at Sabre Airline

Solutions has been foundational to

the way the company approaches

business. It’s a cultural shift from

a deal-led mentality to a market-

led mentality and it starts with

rethinking how the company

packages its offerings.

The company has three main

software solution groups in its

portfolio, 13 solution families, and

up to 120 individual software and

services offerings, depending on

how you want to define them. To

maximize a portfolio of that size

you have to make sense out of it

all, to find the leverage of having

these assets.

“To us that’s a fundamental

shift, or transformation, in what

we are trying to do,” says Jones.

“It really does kind of shift you

from an inside-out to outside-in

[approach]. Therefore, you begin the process of surveying

the market, talking to customers, and understanding the

trends, what does the competitive set look like, what are

your capabilities?”

It’s the inside-out approach that Jones says keeps so many

companies from executing on innovation. For example, in

this year’s Insigniam Executive Sentiment survey, 87 percent

of the leaders we spoke with told us that innovation was

vital to the success of their enterprise. Still, only 15 percent

said they were ready to execute on that innovation.

Jones says the chief problem those companies are having

is one of perspective. Coming up with a good idea isn’t

hard, Jones says. Most companies have lots of those. The

problem is companies are trying to shoehorn these good

ideas into a market that doesn’t want or need them. The

ideas solve a problem that doesn’t exist. It’s innovation from

an inside-out perspective, and that’s why the execution is

such a headache.

“I think one of the things that companies struggle

with is taking an idea from the inside and trying to find

a market for it,” he says. “Just having an idea isn’t good

enough. Perhaps a better approach is determining what

market problem are you trying to

solve, or what problems do your

customers have that they would

find value in someone solving on

their behalf?”

It’s that need to problem solve

that has Jones innovating the

perspective at Sabre Airlines

Solutions. Shifting to a portfolio

model allows the company to

offer the client end-to-end

solutions, instead of solving just

single problems. You have more

ownership of their technology.

“We are always evolving

our solution strategies and

culminating in a new portfolio

strategy for the business, and that,

to me, is the ultimate customer

promise we’ve been pursuing

with Airline Solutions. How do

you take an incredible set of assets

and gain as much leverage out of

them that you can, and, at the

same time, solve your customer’s

issues, creating value for them in

a way that you haven’t been able to do it before?”

TRANSFORMATION: PAINT A CLEAR PICTURE

OF THE FUTURE AND HOW TO GET THERE

Jones says a fundamental shift in the organization’s

culture from one mentality to another is the kind of move

that sometimes needs to be seeded with new blood. It

doesn’t mean wholesale changes in personnel, but often to

get a change like this to take root there needs to be new

employees who can lead others in the organization through

the transformation.

“In changing a culture of an organization in order to

facilitate a transformation, you have to show them what it

looks like,” Jones says, “not only the future, but you have


“IN CHANGING A CULTURE OF AN ORGANIZATION IN ORDER TO FACILITATE A TRANSFORMATION, YOU HAVE TO SHOW THEM WHAT IT LOOKS LIKE, NOT ONLY THE FUTURE, BUT YOU HAVE TO SHOW THEM ALONG THE WAY TANGIBLE EXAMPLES OF WHAT IT MEANS.”


to show them along the way tangible examples of what

it means.”

It’s placing signposts along the way to let people know

that the transformation is still on course, that things are still

moving forward in the direction that they are supposed to

that makes a transformation ultimately successful. That’s

especially important in an organization that faces immense

competitive pressure, like Sabre Airline Solutions.

Even though the company was already heavily penetrated,

there was still room for growth.

But growing like Jones wanted to

grow — doubling the business in

four years — was going to take a

transformation, a shift in approach,

a divergence from business as usual.

If there’s one thing we’ve learned

from a year of producing Insigniam

Quarterly and talking to world-class

leaders, it is that people matter.

And perhaps saying we learned

that people matter is unfair. We

have known that people matter.

But finding out just how much of

a role leaders believe people play in

all aspects of a business’ success was

eye opening.

For Jones and many other leaders,

the key to transformation is people

believing in the future that the

leader sees for his or her company.

The people who are going to be

executing the transformation have

to buy in, and getting them to buy in is the job of the leader

whose vision the company is following.

“There’s no secret sauce here,” Jones says. “What do you

want the future to look like? Can you paint what that future

looks like? What are those tangible steps that can get to

that future, and how do you align people to those steps?

Then as you’re moving through them, you obviously have

to have the capabilities and the folks to get you there, how

do you communicate the successes and communicate the

failures? And use those again as examples of ‘this is what

we are striving for’ in that transformation. ‘This is what we

are trying to avoid’ in that transformation.”

STRATEGY AND GROWTH: PLAN THE

EXECUTION AS WELL AS THE STRATEGY

If the goal for Sabre Airline Solutions was growth, the

organization had questions that needed to be answered.

> How does the company scale more effectively and

still support its customers and keep them happy?

> How does it maintain employee satisfaction?

> How to help people understand “What is my part

in our future?”

The answer, in short, was not just strategy but strategy

execution. Jones and other leaders had to plan on how

they were going to address all of these concerns, answer

specifically all of these questions.

But they also had to plan how

they were going to get the

strategy, once it was developed,

and take it out of the Powerpoint

and actually execute on it. It

couldn’t be business as usual.

This is where Insigniam has

played a role with Sabre Airline

Solutions over the years, helping

leaders arrive at a future state

view through the ambition and

purpose of desired growth.

That Powerpoint loop is one

that Jones says is easy for leaders

and their employees to get caught

in. You create your Powerpoint

explaining your strategy and

how you will execute on it. Then

you create a second Powerpoint

explaining why you haven’t been

able to execute. It created a cycle

without results and only reasons.

At Sabre Airlines Solution the execution is built into

the strategy, including what the execution looks like, the

work streams needed to make that successful, and the

organizational structure that needs to be in place.

And once the strategy execution begins there are four

areas that need focus, Jones says.

Getting quality right. Too often companies dig a hole

for themselves by not giving quality the attention that it

deserves. Before execution on new products and services

can begin, you have to make sure what you are already

doing is top-notch.

Developing the needed capabilities. Are there things

that you need to be able to do as an organization to make

the strategy successful? Can you do those things? If the

answer is no, then hire the people you need or train the

people you have.

“THE CHALLENGE FOR AN ORGANIZATION THAT IS OPERATING FAIRLY EFFECTIVELY IS HOW DO YOU GET THEM TO RALLY AROUND DOING SOMETHING DIFFERENT WHEN THEY’VE BEEN SUCCESSFUL IN GETTING THERE.”


The biggest challenge for leaders in 2014,

Hugh Jones says, will be the competition for

talent.

Markets have improved. Salary costs have

been on the rise. But given a budget with a

single-digit percent increase, it’s hard to attract

world-class talent. Plus the Affordable Care Act

is increasing healthcare costs substantially. How

do leaders manage securing top talent with a

budget only growing incrementally?

Jones, president of Sabre Airline Solutions,

likened the task to Moneyball, referring to the

book and movie that chronicled the Oakland

A’s baseball season where the team’s general

manager had to build a winning team with a tiny

payroll.

How do you manage a finite budget but still

secure the talent you need to be successful?

The trend has been to look off-shore, but that

may not be the case anymore. Now the smart

move may be to bring the talent back to the

United States.

“Is there a move

toward on-shoring

versus off-shoring? I

think the options are

beginning to open

up more,” Jones

says. “Where it

was ‘Do I need to

globally source my

talent in eastern

Europe, or India,

or in Asia’ to now

‘Is it more effec-

tive for me to

be sourcing my

labor in South

Carolina?’ ”

THE TOP CHALLENGE FOR LEADERS IN 2014: COMPETITION FOR TALENT

Implementing a pilot program. Elevate one

product, Jones suggests. Make it one of your big

initiatives. Say “We are going to do it right with this

one product.” Elevate it as a way to demonstrate it

can be done.

Emphasizing alignment. Bring leaders

together often. Make sure everyone is still on the

same page with the transformation and the change

management process that comes with it.

DISRUPTIVE LEADERSHIP: DISRUPT

GRACIOUSLY AND WITH PATIENCE

Jones is running into the same problem that leaders

of many successful organizations have, motivating his

people that change and transformation is necessary.

Success can breed complacency, mainly, Jones says,

because why fix something that doesn’t appear to

be broken?

It’s like a car. It may be running great now, but

there’s that little knock, that ping that disappears

once you take it into the shop. If you don’t address

that small problem right away, or at least have a

strategy to deal with it before it becomes too big,

then you are asking for a larger headache. That’s

what Jones and his leadership team are doing. And

it’s something that Jones says a disruptive leader does.

“We are thinking three years out, five years

out, at this point in time, and what we need to be

investing in now in order to generate a return in

those time frames,” Jones says. “We are looking well

in advance of what has to happen, so the challenge

for an organization that is operating fairly effectively

is, how do you get them to rally around doing

something different when they’ve been successful

in getting there?”

You do it by being willing to ask questions that

the organization’s never been asked before. You

come in with a plan, an open mind, and the patience

to realize that change takes time. As much as you

may want it to, an enterprise can’t turn on a dime.

Some leaders will come in swinging hammers and

breaking glass. Often the organizational antibodies

will try and kill those leaders. Luckily for Sabre

Airline Solutions, Jones is not one of those leaders.

“Jones is graciously disruptive,” says a former

executive with the company. “He came in asking a

whole new set of questions, forcing his employees

and leaders to arrive at a new set of answers.”

IQ BOOST

OWN ALL OF YOUR ACTIONS — BOTH WHAT YOU DID AND DID NOT DO — THAT LED TO AN OUTCOME.BY JON KLEINMAN

Accountability is a condition — one in which people are required or expected to act consistent with their commitments and be responsible for their actions or decisions, including a response to circumstances .

All too often, people account for their unfulfilled promises by giving a circumstance-based explanation for why the result wasn’t produced — “The economy is bad, all of our competitors are not meeting their numbers either,” or “The competition has better pricing. We just can’t compete.” Sometimes having a good story about why a result was not produced is often just as acceptable as actually producing the result.

When someone is being accountable they are able to lay out the actions they took and the actions they did not take that led to an outcome. This includes responding to the inevitable circumstances one encounters. Specifically addressing what you did or did not do to effectively respond to these events and circumstances needs to happen when you fulfill your commitment and when you don’t.

Over time, this will allow you to build power and sustain strong performance when you have been effective and identify the root cause of the breakdown when you are not effective.

How accountable are you? How accountable is your organization?

Jon Kleinman is a partner at Insigniam based in New Jersey. His interests include what shapes behavior and action, and how work environments enhance or detract from people’s ability to perform.


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By marrying breakthrough performance and innovation, we have helped our clients document, in aggregate, more than 50 times ROI on management results that they consider critical and essential to the success of their enterprise.

DID YOUR LAST CONSULTANT DELIVER?50X

RETURN ON INVESTMENT

ARE YOU READY TO SEE RESULTS LIKE THIS? Then visit insigniam.com/client-roi for more information, or call +1 610 667 7822 to talk to one of our consultants.

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