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“How am I doing

as a leader?” asks
Larry Bossidy, CEO of
AlliedSignal in a meeting
with his operating
mangers. “The answer is,
how are the people you
lead doing? Do they
learn? Do they visit
customers? Do they
manage conflict and
initiate change? Are they
growing and being
promoted?

“When you retire, you


won’t remember what you
did in the first quarter of
1994, or the third. You’ll
remember how many
people you developed –
how many you helped have
a better career because of
your interest and
dedication to their
development. When
you’re confused about how
you’re doing as a leader,
find out how the people
you lead are doing. You’ll
know the answer.”

Andy Grove, CEO of Intel:


Roger Enrico, CEO of
PepsiCo; Jack Welch, CEO
of General Electric; and
Admiral Ray Smith of the
U.S. Special Operations
Command agree with
Bossidy. All are respected
leaders of successful
organizations that
constantly outthink and
outmaneuver their
competitors. Though those
leaders have been

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instrumental in their PepsiCo . A few years ago joust with each other. He
companies’ success, they in the Grand Cayman also offers his own views
have also built large pools Islands, Roger Enrico, then and experience. Says
of talent. They have vice chairman of PepsiCo, Welch, “I’ve gone to
contributed to their woke at dawn to gather his Crontonville every two
organizations’ success by thoughts. At 8 a.m., he weeks for 15 years to
personally developing began a five-day interact with new
leaders at all levels. leadership program for [employees], middle
nine of PepsiCo’s highest- managers, and senior
Once upon a time potential executives. The managers. Haven’t missed
Here’s what you would see sessions went on until a session.”
if you visited Grove, evening, as Enrico taught
Enrico, Welch, and Smith his point of view on how to U.S. Navy SEALs.
leading their businesses. grow a business. Then, he Recently in Coronado,
asked participants to come California, Rear Admiral
Intel. In Santa Clara, up with ideas for their Ray Smith, a Navy SEAL
California, Andy Grove is business, facilitating their since the Vietnam War,
teaching Intel managers discussion to help shape was visiting a graduating
how to lead in an industry their ideas. The results of class of the SEAL’s six-
in which the product those and other sessions month selection program,
(semiconductors) doubles have been 100 better- BUDS. Of the 100
in capacity every 18 prepared leaders and, candidates that enter this
months. In Grove’s according to one observer, elite program, only 20
teaching sessions, he “some of the biggest percent remain to graduate,
discusses the role of business ideas that due to the great physical
leaders in detecting and PepsiCo has had in the past and mental demands.
navigating turbulent several years.” Throughout the day,
industry shifts – shifts that Smith, in his fifties,
many companies fail to General Electric. In participated in the same
survive. Why does Grove Crotonville, New York, physical training as the
take the time to do this? Jack Welch, CEO of SEAL candidates in their
Because he believes that General Electric, is twenties. At the end of the
having leaders at all levels teaching a development day, he talked informally
of Intel who can spot program for some of GE’s with them, as someone that
trends and who have the senior leaders. He asks has been where they are, to
courage to act will enable them, “If you were named impress on them the
Intel to prosper while other CEO of GE tomorrow, leadership duties of
companies falter. So, what would you do?” becoming a SEAL – the
Grove is dedicated to In such programs, Welch conduct, honor, and
imploring and encouraging uses that question to teamwork required of
people across Intel – orchestrate a no- holds- them.
middle managers barred discussion. He
salespeople, engineers, and jousts with participants, Staggering success
others – to lead in their and hones their analytic
individual businesses. abilities and leadership We [the authors]
instinct by having them uncovered those best

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practices during several increase in shareholder on thousands of missions
years of research. We value. In other words, we in more than 100 countries
wanted to combine our wanted companies that had every year. The operation
expertise in leadership rewarded their investors in Haiti in 1994,
with the watershed with rising share prices exemplifies the forces’
changes taking place in that consistently increasingly complex role
every corner of the outperformed market in the worked. In that
business world on every averages. We looked for deployment, 1,000 Green
continent. These changes companies as General Berets operated in villages
are so great that they’ve Electric, Hewlett-Packard, and towns across Haiti,
rocked even the most Intel, and ServiceMaster. covering 90 percent of the
stable companies and We also examined some country. Their mission
affected people nonbusiness organizations was to ensure the smooth
everywhere. known for being successful running of Haitian
in their missions, including communities and teach
For the past decade, the Special Operations Haitians about democratic
investors have asserted that Forces, a branch of the government. Though
anything short of U.S. military made up of problems still exist in
transformational leadership elite units such as the Navy Haiti, the SOF gave the
would be dealt with SEALs, Army Rangers, new Haitian government a
harshly. In fact, they have and Green Berets. We head start on forming a
suddenly and violently rounded out our search at workable democracy.
overthrown leaders at Focus Hope – an inner-
previously stable city, not- for-profit Focus: Hope turned an
companies because those organization in Detroit that urban area bombed out by
leaders failed to change runs one of the most Detroit’s 1967 riots into a
ahead of the times. advanced job-training vibrant economic
American Express, institutions in the world. community. The
Westinghouse, Eastman organization feeds 51,000
Kodak, IBM, and General The long-term success of people each month, and its
Motors all changed their many of those Machinist Training
leaders in the hope of organizations is staggering. Institute has 1,500
recapturing their halcyon General Electric, for graduates, who came from
days. example, has the world’s the streets and now ha ve
highest market value at well-paying jobs.
Against that backdrop, we more than $175 billion.
set out three years ago to ServiceMaster has By studying those
write The Leadership averaged a 25 percent organizations, we wanted
Engine: How Winning return to shareholders for to show how a company
Companies Develop the past 25 years. Intel wins by developing leaders
Leaders at All Levels owns 90 percent of the at all levels. Midway
(HarperCollins, 1997). We microprocessor market, through our research, we
started by looking for outwitting several smart had an insight that should
winners in the capital competitors to attain its have been blindingly
markets – companies that dominance. The Special obvious: Leaders must
had sustained superior Operations Forces deploys develop leaders. In those

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winning organizations, we parts geared to drive a dynamic, compelling story
found that developing company forward through to others. These stories
leaders at all levels was a leadership. create a case for change, a
critical priority, pursued vision of where the
with the same zeal as new The best way to get more organization is going, and
products, new customers, leaders is to have leaders an understanding of how to
and competitive edge. In develop leaders. At the get there. Once leaders
those organizations, companies we studied, have a story, they take
leaders felt it was their job leaders passed on their bold actions that bring
to develop others, and they own experience to others, about massive and lasting
did it personally instead of who were expected to use change.
delegating the task to it and develop their own
consultants or professors. leadership styles. Those points are common
As we examined how other sense, and many
companies could replicate To develop others, companies and leaders
their success, we leaders must have a follow them, or some
developed our own point teachable point of view. version of them. But the
of view on why and how to A teachable point of view great companies follow all
develop leaders. is a leader’s opinion on of them all of the time. In
what it takes to win in his those companies, the
Winners are judged by or her business and what it leadership role of
sustained success. In takes to lead other people. executives and managers is
publicly traded companies In the companies we different than at other
that means sustained studied we observed that companies. And the role
success in adding value for acquiring a teachable point of HRD professionals is
shareholders. Though of view involved in-depth different. (See the box,
many people would accuse preparation by the leaders. Are You Developing
Wall Street of being Once they had a teachable Leaders? To learn more
shortsighted, the stock point of view, they thought about the differences and
market is the true measure of creative ways to find their implications.)
in the long run of whether teaching and learning
you are growing a business opportunities. They tried Leaders at all levels
or wasting capital. to turn every interaction In slower, more predictable
with their people into a times, command-and-
Winning companies have learning and teaching control hierarchies weren’t
leaders at every level . event and often set aside such a bad idea. They
Companies don’t do time to teach leadership provided a simple system
things, people do. At outside of scheduled for consistent decision
successful companies, activities. making: All questions
leaders constantly sense were passed up the ladder
change, excite others about Leaders create stories to the same small group of
change, and implement about the future of their people, and their decisions
change faster than their organizations . A were handed back down.
competitors. That is what teachable point of view Not in the current wired-
we call, the Leadership becomes the basis for together global
Engine – a system with all leaders to present a marketplace, pleasing

5
customers and making a to make a decision in a
profit are functions of nanosecond – without
quick thinking and agile advisers, pollsters,
action. politicos, or even a radio
that works.
In the time it takes for a
question to be passed up During the past five years,
the ladder and a decision the military has more than
handed back down, a quadrupled the number of
customer may have gone The need for quick assignments conducted by
elsewhere, or the thinking and instant the Special Operations
opportunity may be lost. responsiveness applies to Forces. In 1995, those
all organizations. The forces were deployed on
Says Larry Bossidy, CEO Special Operations Forces, more then 2,700 missions
of AlliedSignal, “Everyone for example, is replacing in more than 137 countries.
else in the world is doing the U.S. military’s In most cases, the
the same things we are. traditional hierarchical deployments weren’t the
For AlliedSignal to leadership style with traditional jobs of warfare
succeed, it must get there something more but had to do with
faster with better-prepared appropriate for the new projecting American or
people. “ People ready to roles it fills in the world. multilateral foreign policy.
initiate change. Soldiers in those units are Consequently the leaders
as likely to be deployed on of those special units have
The importance of speed a crowded urban street as had to redirect leadership
and customer in a foreign invasion force. development toward new
responsiveness is not new. A young leader confronted types of missions in which
“How Managers Can by an angry crowd of leadership at all levels is
Succeed Through Speed” Bosnian or Haitian citizens critical.
was the cover story in a doesn’t have time to
1989 issue of Fortune. contact his or her superior Leaders developing
But, by past standards, the for instruction. leaders
degree of responsiveness If an organization needs
and speed required now is Such soldiers, most under leaders at all levels, what is
astounding. age 30, have to think not the secret to achieving
only about specific orders that?
Says Dick Notebaert, and the physical safety of
chairman of Ameritech, their units, but they also Winning organizations are
“The only differentiator in must consider geopolitical distinguished from losing
the marketplace is speed of ramifications. An act to ones by their extraordinary
action.” He says that the maintain a unit’s safety or success at teaching people
only way to get speed is to a checkpoint’s security to be effective leaders.
have leaders - people may hinder a peacekeeping Great leaders are great
prepared to make smart alliance or result in teachers. In organizations
decision and implement condemnation from the with leaders at all levels,
them efficiently. international community. experienced and
These soldiers often have accomplished leaders do

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Are You Developing Leaders? look at history and various
The challenge to have personally to developing fields of endeavor, you see
leaders develop leaders leaders, making that that’s true. Institutions and
has profound commitment public, and moveme nts succeed over
implications for the heads making sure others are the long term not because
of business, line equally committed. It of their core competencies
managers, and human also means making sure or use of modern
resource professionals. A that leadership management tools, but
company’s future is too development programs because they continuously
important to outsource. provide a rapid return on regenerate leadership at all
Yet, when it comes to investment. Innovative levels. Such leaders
developing leaders, many programs, such as the reinvent cultures,
companies rely on ones described in this competencies, and tools at
consultants or executive article, can have an critical times. Jesus,
education programs. immediate financial Gandhi, and Martin Luther
For leaders to benefit – as in King Jr. understood that.
develop leaders, Ameritech’s case, $700 They were strong leaders,
executive and managers million in cost savings but without disciples to
must completely re- and revenue growth . spread their missions
examine their most Innovative programs like during their lifetimes and
potent tool – their the one at Shell Oil after their deaths, their
calendars. They must develop leaders while legacies would have been
take an active role in adding momentum to and short- lived.
developing their invigorating changes
teachable points of view already taking place. One of our favorite
and in coaching people. For HRD examples of leaders
That may involve professionals, there’s an developing leaders is the
spending a 100 days urgent message: Your Chicago Bulls basketball
running a program, like role in developing leaders team. Though many
PepsiCo’s Roger Enrico must change. You can people attribute its success
did. It may involve no longer be the to talented athletes, coach
writing books and contractors that develop Phil Jackson tells a
teaching regularly, like leaders for other people different story in his book,
Intel’s Andy Grove. It or the buyers of Sacred Hoops. Jackson
may involve using consulting services that felt that player Michael
business forums as aim to do the same. Too Jordan’s talent couldn’t be
teaching events, like Jack often, those have become improved, so he focused
Welch does at GE. Or it empty promises. HRD his efforts on making
may mean seizing people have an incredible Jordan a true leader of the
teachable moments, like opportunity to help install team. And it worked. Five
Admiral Smith did with a tradition of leaders years after joining the
SEAL graduates. developing leaders. league and the same year
Executives, HRD Specifically, HR Jackson became head
people, and others have professionals must coach of the Bulls, Jordan
to link their initiatives for identify key leaders to began to see his role not
developing leaders with teach, help them create a only as a high scorer, but
the immediate priorities point of view, and design
of their
the businesses.
teaching. When youThat approaches for them to
means committing teach. 7
also as a leader whose job conservative in our hiring. make tough decisions.
was to raise the level of For a long time, we grew You can only learn that
play of other team but didn’t hire anyone. from people that have been
members. After that, the When our sales were about there.”
Bulls began their record three times what they had
run of championship been, we hired more Intel’s culture of leaders
seasons. people. developing leaders isn’t
limited to senior leaders or
We don’t man to suggest “In the past three years, classrooms. Even though
that it isn’t possible to we’ve practically doubled the middle manager we
build a successful in size. Half of our spoke with had only
organization without managers have never been recently been promoted, he
generating new leadership through downsizing. We saw teaching as a big part
– at least, successful for a are losing some of the of his job.
while. Such autocrats as hungry, paranoid culture. He continued: “At every
Harold Geneen at ITT, Ed So, every leader – from facility, we have
Hennessey at AlliedSignal, CEO Andy Grove to orientation programs
and Edzard Reuter at experienced managers – is taught by people like me –
Daimler Benz built highly required to teach, and part folks that have been
acclaimed corporations of their bonuses is based around a while. We teach
through their own forceful on whether they do it. a bit about the company
initiatives. But they didn’t and the culture. I teach a
see the need to develop “It’s not a big part of the class on how to initiate and
other leaders. In fact, they bonus, but it was Andy’s manage constructive
actively discouraged way of saying, ‘This is conflict. The real learning,
people’s leadership efforts. important, and we want though, comes on the job.
Consequently, their you to do it.’ Most don’t When my people aren’t
companies didn’t have the do it because of the money confronting an issue, I
resources to steer them [but] because it’s confront them. I support
through complicated times, embarrassing to get dinged them if that’s what they
and they have experienced for not doing it. need, but I make sure they
crises in recent years. confront [the issue].
“All of the guys that teach
While having a discussion are busy so, in some ways, “When I see a chain of e-
with a middle manager at they wish they didn’t have mail messages, I know
Intel, we started to discuss to. But they know it’s people aren’t confronting.
Intel’s success. It was like important [that] managers When I see an e- mail with
pushing a button. For 30 that have ‘been there’ a big long tail floating
minutes, the manager laid teach others. Otherwise, across my screen, I tell
out a case for why teaching you end up like IBM. Its people, ‘I’ll stay the whole
is important and who ought teaching was done by time in the meeting you
to teach: people that weren’t leaders need to have but we’ve got
or weren’t even in the to confront this.”
“At Intel, we had tough company. When things
times in the late 1980s. changed, IBM’s senior At General Electric, Jack
That led us to be people didn’t know how to Welch’s Work-Out

8
program has been the of its missions and its better in the 45- minute
world’s largest teach- in. detailed rehearsals and raid. At the end of the
More than 200,000 of preparations. While at briefing, a senior
GE’s employees have Fort Benning, we watched noncommissioned officer,
engaged in two-to three- a simulated mission during a 20-year veteran,
day sessions led by a which a platoon entered a reminded the leaders of
junior, middle, or senior compound of terrorists their most important
manager. The managers (actually, army personnel) mission.
teach GE’s bus iness model who were well-armed and
and tools for teamwork and also had chemical “Everything we just
change, such as process weapons. discussed will let us do our
mapping. They also jobs quicker with fewer
launch projects designed to As the simulation casualties,” said the NCO.
reduce costs and practice unfolded, we saw that it “But don’t forget: What
new cultural behaviors. was anything but the well- gets the job done is bold,
orchestrated ballet we aggressive leadership.
Leaders under fire expected. It was chaos.
Other organizations have Such simulations aren’t, as “Nothing went according
their own ways of ensuring some people might think, to plan. We were supposed
that leader develop leaders. opportunities to become to face a chain- link fence;
In the Special Operations perfect in choreographed we faced triple-strand
Forces, only the best and maneuvers. Instead, razor wire. The enemy
brightest people are asked they’re meant to season wasn’t supposed to have
to become instructors. But soldiers to make split- night-vision goggles, but
every person that makes it second decisions and risk they did, so we were
into an elite unit is their lives based in those compromised before we
expected to develop other decisions. In other words, breached the fence. Our
people. the simulations are radios were supposed to
designed to develop work; they didn’t.
Recently, we spent two leaders.
days at Fort Benning, “That’s going to happen.
Georgia, with the U.S. After the mission, a dozen But we got it done because
Army’s First Ranger of the platoon and squad some men stepped up and
Battalion of the 75th leaders gathered at a tent made decisions. Whe n the
Ranger Regiment on a visit deep in Fort Benning’s alpha-squad leader went
arranged by Col. David wooded landscape. Black down, his team leaders
Abrahamson, a ranger at camouflage still covered took charge. When the
the United States Special their faces. Despite their communication didn’t
Operations Command. fatigue, they met to work, the lieutenant didn’t
critique the operation fiddle with the radio or yell
It was during that visit that while it was fresh in their at his communications
we saw in action a culture minds. specialist. He ran around
of leaders developing to find out what was going
leaders. The Special For two hours, they on and gave orders. When
Operations Forces is discussed everything that the fence turned out to be
known for the complexity they could have done razor wire, the bravo-squad

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leader changed his discussed the threats and the 1,000 managers into
approach and opportunities from better leaders by making
commandeered two men to accelerating changes in the them teach and develop
help him get everyone into telecommunications others. Senior leaders
the compound. industry. They also taught developed the 1,000
managers about managers. Then, the 1,000
“When you leave tonight,” Ameritech’s response – a managers developed their
the NCO told the group, renewed focus on growth, staffs while running the
“you can and should work a reorganization into action projects.
with your men to correct customer–focused units,
the little things. But before and an aggressive drive for When we integrated that
you correct actions, cost leadership. The senior work with our research, we
remember to strike a leaders also introduced and made an important
balance. Never do helped people deal with a connection: The most
anything to discourage that massive culture change to powerful experience is
bold, aggressive leadership focus on customers, to when leaders teach their
initiative.” encourage risk taking and own points of view. You
initiative, and to break can’t just hand leaders a
A teachable point of internal barriers and deck of slides and tell them
view bureaucracy. Last, to go forth.
The idea of having leaders managers received tools in
develop leaders has been teamwork, problem For two years, we have
formulating for years. In solving, and change used a particular approach
the late 1980s, Noel Tichy management. in more than 40 workshops
and Patricia Stacey, a at organizations such as
principal of Action The 1,000 managers were GE Capital, PepsiCo, the
Learning Associate in Ann challenged to return to Special Operations Forces,
Arbor, Michigan, worked their work units and do Royal Dutch/Shell, Ford
at General Electric two things: Hold Motor, and Royal Bank of
Medical Systems to design workshops with their Canada. In the approach,
its Work-Out program. people to explain participants benchmark
Later at Ameritech, Ameritech’s strategic and other companies and
HaperCollins, and Shell cultural shifts and launch leaders, and the y examine
Oil, leaders were asked to action projects for their own experiences.
develop leaders. practicing new behaviors, Then, they’re asked to
such as working across state their points of view
For example, at Ameritech organizational boundaries. on leadership and how to
in 1993, 1,000 managers win in their businesses,
participated in a program, The action projects were
called Breakthrough, to both learning opportunities The approach focuses on
develop their leadership and a financial benefit, in helping leaders do two
skills. To kick off the the form of $700 million things: Develop a
experience, senior through cost savings or teachable point of view
executives taught three-day new revenue. and create a business-
workshops to 50 managers Breakthrough also helped oriented story that is
at a time. The executives develop the executives and linked to their experience

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as a leader. We have Edge. Leadership is about Says Mark Helprin of the
helped leaders develop making tough yes-no board of editors at the Wall
their points of view in four decisions. Winning Street Journal, “The classic
critical leadership areas: leaders face reality, and business story is much like
ideas, values, edge, and they make decisions about the classic human story.
energy. people, products, There is much like the
businesses, customers, and classic human story. There
Ideas . A business starts suppliers. They don’t is a rise and fall, the
with ideas about services waffle. And they’re overcoming of great odds,
or products in the willing to make decisions the upholding of principles
marketplace. Those ideas with imperfect data. despite the cost, questions
lead the business to of rivalry and succession,
produce and deliver value Energy. Winning leaders and even the possibility of
to customers. Ultimately, are motivated, and they descent into madness.” We
that can be linked to motivate others regarding couldn’t agree more.
success in the capital change and transition.
markets ( for publicly Leaders must teach people Leaders take the
traded companies). how to energize others, foundation of a point of
Leaders must be able to face-to-face and through view and build stories
explain to all stakeholders large-scale organizational about beating the
how the business succeeds efforts. competition, satisfying
in creating value. customers, and other
Business stories successes. Ekhard Pfeiffer
Values. Winning Leaders with a point of is leading Compaq
organizations have leaders view have views about Computer with a story
that can articulate values budgeting, planning, about becoming the
explicitly and shape values investing capital, and a computer company of the
that support business ideas. host of other things. Great future – the leading
Such leaders avoid using leaders take a point of company in wiring
abstract terms, focusing view and use it as a spring together the world.
instead on operational board to action. First, a Compaq plans to do that
values that affect the leader engages other by providing the servers
business. For example, people by translating his or that run corporate
GE’s Jack Welch her point of view into a networks and the PCs that
articulates the value of dynamic story. In his enable people to become
“boundarylssness” in order book, Leading Minds: An more productive. For
to facilitate speed-to- Anatomy of Leadership families, Pfeiffer wants
market, the generation of (Basic Books, 1995), Compaq to be the Proctor
ideas, and the sharing of Harvard professor Howard & Gamble of new digital
best practices. Andy Gardner says that stories homes by providing all of
Grove values constructive are the basic human the necessary tools for
conflict because Intel’s cognitive form. Most work, play, and
markets move too fast to people think, recall, and communication via
waste time on wishy- communicate with stories. computers. So, Compaq is
washy feedback. investing in partnership
with such companies as toy

11
and appliances makers to actions that transform their breakthrough performance
create the exciting new organizations. in an increasingly
products. competitive world. They
For example, at Royal spelled out some specific
In another example, Jack Dutch /Shell, Tichy and threats, such as the
Welch’s story is to create Stacey worked with the growing scarcity of oil
the “world’s most exciting four-member Committee supplies and the increasing
enterprise in which ideas of Managing Directors on presence of cheap retail
win and people flourish transforming the company. outlets for gasoline that
and grow – in which the The CMD took on that were stealing market share
excitement from their work challenge when the across Europe. They
lives is transferred to their company was at the height described the desired
whole lives.” All of of prosperity. In 1994, future as Shell being “ the
Welch’s actions – from Royal Dutch/Shell made top performer” and as
delayering to re-jiggering more than $7 billion, up to satisfying the “ interests of
GE’s portfolio – aim to 33 percent from the customers, shareholders
give employees a sense of previous year. But the and employees.” And they
ownership so they will committee members felt discussed how they would
feel excited about the that the aggressive pace of achieve that.
business and the ir work. change in the business To further the
world overtake the transfo rmation the CMD
We use the term story company eventually, if launched a series of
rather than vision on they didn’t act. They intensive workshops
purpose. Organization s wanted to change before involving all of Shell’s
that want to stay ahead of they had to. The CMD separate business. It also
the competition have to act needed to create a story engaged Shell’s top 50
quickly and decisively. that would make other leaders in an intense
That means that leaders people in the company feel development and change
must offer more than a the same urgency to process, bringing them
vision or static snapshot of change. To launch that together in Amsterdam for
where an organizatio n effort in July 1995, Tichy, a workshop in a
wants to be. They must Stacey, and their magnificent old church
also foster motivation and colleagues Michael Brimm converted to a conference
action. They do that by and Phil Mirvis conducted hall.
creating stories. a two-day, off-site meeting
with the CMD. That The workshop was
Leaders’ stories have these session, and several that designed to shock,
elements: followed, surfaced the energize, and mobilize the
4 A case for change members’ teachable points executives. Chairman Cor
4 An idea where the of views and stories. Herkstroter broke with
organization is headed Shell tradition by not
4 How it will get there Drawing from their roots opening with a speech.
as career executives at Instead, he dove into a
Based on those stories, Shell, the CMD members tough exercise. He asked
leaders take irreversible settled on a story that each executive to write a
focused on the need for letter of resignation from

12
SHELLS’S HIGH-TEST PROGRAM

Jerome Adams, head of Shell values, edge, and energy. competitiveness,


Oil’s Learning Center, has Ideas. market share, and
his own leadership story. Participants new markets.
The Learning Center, Adams completed Another was
insists, can never be a exercises Intel’s shift to the
traditional management designed to microprocessor
development center. It must develop an market. They
always be a lever for Shell’s intellectual also examined
continuous transformation. framework. how Larry
That means that First, they Bossidy uses a
Adams creates cutting-edge looked at the combination of
programs linked closely to outside strong ideas and
the company’s business business environment and personal coaching to develop
priorities. His programs theorized about major shifts leaders by providing
focus on implementing the taking place in markets and direction about where
Shell Business Model across with customers and AlliedSignal is going and
its operating companies and competitors. Then, they giving the leaders enough
enhancing leaders’ abilities to looked inside the company to independence to lead their
drive change and engage see how they could align own units. The results of that
others in driving change. their businesses accordingly. loose-tight approach are
The program for Before working on dozens of better leaders in
Shell’s top 200 leaders their own issues, participants charge of AlliedSignal’s
furthered Adam’s agenda by benchmarked several business units and a market
issuing a daunting challenge: companies to see how they value of nearly $20 billion,
Participants were not shifted their business up form $3 billion in just five
assigned to learn a leadership frameworks. One example years. The benchmarking
model. They were there to was Compaq Computer’s was led by facilitators, who
develop their own model in shift from producing a described the actions of such
the form of a teachable point premium product to leaders as Pfeiffer, Grove,
of view. To do that, they emphasizing cost and Bossidy.
worked through Values. On day 2,
various elements of participants saw the front
leadership and then lines of other organizations
tied them together in a through videotapes,
story. The result was watching other leaders try
that they were better to integrate their values
able to lead their into their work. For
businesses and coach example, they saw how
others. managers at ServiceMaster
During the balance their values about
three-day program, developing others with the
participants necessities of running a
worked on each business.
element of the From there, it was
teachable -point-of- time for the leaders to deal
view model: ideas, with their own values.
Each reflected on which of
their values were most

13
important to them. Next, Adams took an unusual taking immediate actions.
they dealt with conflicts, approach in this part of the They related their annual
helped by other participants program. He invited reports and stories to each
and the facilitators. For community and military other in groups of four.
example, the leaders leaders to talk about their The program ended
struggled with conflicting leadership. For example, by exemplifying the lesson
values on the importance of from inner-city Houston, he that leaders develop other
people and the economic brought a woman that had leaders: Participants coached
need for a lean organization. sold all of her possessions each other on the content and
Edge. Next, participants and dedicated her life to presentation of their stories.
developed their providing homes for elderly
organizational and personal people without shelter.
stories, focusing on leading The participants took
change. They examined away important lessons.
several academic change Many said, “I have 700
models, including Lewin’s people and an operating
Unfreezing-Change- budget of three-quarters of a
Refreezing mode; and billion dollars, and I’m still
Tichy’s Three-Act Drama. struggling how to get this
The video done. She isn’t sure how
benchmarks captured leaders she’ll make payroll next
engaged in massive change week, but look at her passion
programs, including Bill and enthusiasm, and what she
Weiss and Dick Notebaert at has been able to accomplish.”
Ameritech and the late Adams capitalized on
Michael Walsh, former CEO the contrast in participants’
of Tenneco. Participants realization by getting them to
were challenged to develop help each other think about
their business, using the how they could foster passion
benchmarks and each other’s in themselves and their
coaching to develop action company.
plans. The plans focused on As the experiences at
how each would create a Royal Dutch/Shell, Shell Oil,
sense of urgency and a and Ameritech show, after
compelling story, and how leaders create a teachable
each would take the first point of view, they must act
steps toward change. to bring it alive. So,
Energy. Even the best participants spent the last day
leadership stories are doomed of the program integrating
if the audience is unprepared their teachable points of view
for them. Shell, a company into stories.
that had been through two First, they wrote an
years of change before the annual report for the coming
program, had its fair share of year, describing what they
cynics. To overcome their were going to do to actualize
resistance, Adams and his their personal and
staff used the final learning organizational stories.
module to focus on the Projecting only 12 months
importance of leading with ahead was done on purpose
passion. to focus participants on

14
the “old” Royal clear targets for revenue Special Operations Forces,
Dutch/Shell to submit to growth and return-on- and Intel, the idea of
the CMD. He also asked capital, and gave leaders developing leaders
the executives to explain employees new tools for is the way to do business.
why they were resigning. meeting the targets. Other companies face a
challenge in creating a
The group was silent. The CMD and 50 leaders teaching culture.
Then, a few people agreed that Shell required a
laughed, thinking it was a shift in its culture. The At Shell Oil, that challenge
joke. When Herksroter new Shell, they decided, has been part of a broad
returned to his chair to would reward executives transformation initiated by
gather his thoughts, they that focused externally CEO Phil Carroll. (Shell
realized he was serious. rather than internally and Oil is a subsidiary of Royal
Everyone began to write. that fostered individual Dutch/Shell and operates
After 20 minutes, accountability and independently within the
Herkstroter asked the initiative instead of parent company.)
executives to divide into painstaking consensus. To
four groups, with a CMD assist that shift, leaders ran In 1993, Carroll begun
member leading each one, their own action- learning working with Tichy and
In each group, people read programs, and they Stacey. In October of that
their resignations letters changed evaluation and year, Carroll convened a
aloud. reward systems to reflect three-day, off- site meeting
new financial and cultural of his top team, facilitated
That exercise engaged the priorities. by Tichy and Stacey , to
50 leaders emotionally. work on Shell Oil’s future.
Most were 25-year The story at Royal From the outset, their
veterans of Shell. It was Dutch/Shell continues to discussions were thorough
unsettling and eye-opening evolve. Each month, and holistic. Carroll and
for them to have to resign leaders teach the story to his team (known as, the
and describe why. more people and propel the Leadership Council) had a
Intellectually, it was the change further . sense of their place in the
start of them internalizing Herkstroter is clear that it’s company’s history. Shell
a story for the case for a journey in progress. He Oil had been delivering
change. says, “The story reflects substandard returns. The
aspirations we know we Leadership Council felt
Next, the executives may not live up to in every that it had to turn the
received 360 feedback and case, but can feel certain business around or face
participated in outdoor we should be aiming irreversible decline. The
team building. Throughout towards.” The company’s council members delved
the workshop, the CMD efforts are paying off; it into their points of view,
and the 50 leaders refined earned about $9 billion in debating the external and
the Shell story spelling out net income in 1996. internal reasons for Shell’s
how the company would poor performance and
use five business lines to A teaching culture wrestled with solutions.
oversee its global In such organizations as
businesses. The story set General Electric, the

15
The catalysts for
the new story was Carroll and his
a writing exercise team also
at the off-site reinvented
meting. To ensure Shell’s
that everyone governance and
confronted the capital
issues and structures,
contributed to the working with
dialogue, every Larry Selden, a
council member finance professor
worked on his at Columbia
personal version of University
the story. Each Business School,
spent and hour to create the
writing a mock Shell Business
Fortune article Model. They
describing Shell launched
Oil three years in operating
the future and how companies, free
it got there. Then, of bureaucratic
each read his story centralization.
to the entire group Those companies
. Next, Tichy and are responsible
Stacey helped the for their use of
council members capital and
coalesce around a manage their
common story. In businesses
that story, Carroll and his through irreversible independently.
team described the Shell actions. In 1994, Carroll
Oil Company as on a convened a three-day An internal team of 16
journey to becoming the session of Shell’s top 200 change agents, the
premier company in the leaders. He announced the Business Transformation
United States, providing formation of four teams Team, was created to help
superior financial returns, that would meet for six Shell leaders implement
and being a great place to months to work on the business model. The
work. Behind that strategic issues. Later, the team was launched on a
statement were detailed Leadership Council began fast-track-development
descriptions of how the developing leaders to run process designed by Tichy
company would get there the new Shell. Hundreds and Stacey.
through cultural shifts and of managers attended
new targets for financial workshops taught by By the end of 1995, the
performances. senior leaders and then strategic initiatives, action
returned to work to spread projects, and business
The Leadership Council the word and launch action model were in place.
brought its story to life projects. Carroll and his team had

16
restructured Shell and the Learning Center rather program helped
created a new language than build a new one. accomplish that by helping
around leadership that each leader develop a
emphasized urgency and The Shell story teachable point of view.
change. For the fiscal When Adams diagnosed
year, Shell Oil delivered to the situation at Shell Oil, Shell’s top 200 senior
its parent company more he saw a need to help leaders gathered, 50 at a
than $1.5 billion in net leaders develop their time, at the Learning
income, the highest in 10 teachable points of view Center. The three-day
years. and stories. Based on his workshops were facilitated
experience with other by Adams and two outside
It’s at this stage that a lot large-scale faculty, Phil Mirvis and
of companies and leaders transformations, Adams Ram Charan. Participants
lose momentum. But thought Shell was at a worked on the elements of
Carroll was determined critical juncture. Though a teachable point of view:
that this transformation results had improved, the ideas, values, edge, and
would be total and long changes were taking a toll. energy. For each element,
lasting. He took steps to There had been layoffs, we attempted to seed ideas
ensure that and, as a result. and employees were with participants and
Shell continued its record working longer and harder. compel them to cultivate
performance by delivering their own points of view.
$2 billion in new income Says Adams. “I had the First, they examined their
in 1996, the highest ever at sense that trust in senior own experience in the
the company. leadership throughout all context of Shell and their
of Shell Oil Company had units. The facilitators
One of Carroll’s key steps been eroding. Some presented videotaped
was creating the Shell employees were caught up benchmarks of leaders at
Learning Center, which in downsizing, but the other companies that had
like GE’s Crotonville, is a perception was that senior faced situations similar to
lever for continuous leaders weren’t [affected. the one at Shell. Those
transformation at Shell by In fact,] though there used “video benchmarks” were
developing leaders at all to be 24 people at the top, taken from a database that
levels. Carroll recruited there were now 10. But had compiled during the
Jerome Adams from the [mis]perception had led previous two years. The
USF&G to lead the to this eroding trust.” video benchmarks feature
Learning Center. Adams interviews and footage
had experience developing In order to support Adam’s shot in internal meetings at
leaders at West Point, leadership agenda, we [the the benc hmarked
GE’s Crotonville, TRW, authors] designed a companies, showing their
and USF&G. He quickly program for Shell’s leaders in action. For the
saved Shell tens of leaders. Its dual aim was Shell workshop, we culled
millions of dollars by to deal with the trust issue relevant examples from
forming a partnership with and increase the leaders’ the database. After the
the Woodlands Conference skills as change agents to benchmarking ,
Center in Houston to house further Shell’s participants developed
transformation. The solutions for their own

17
situations and coached and leadership team. We have happened across
each other. told them, ‘You are no Shell is that leaders are
longer a through-put telling more ‘I’ stories. It
The result was 200 leaders system… to the gas used to be that [we] would
that developed teachable station. We want you to insulate [ourselves] from
points of view and created run the refinery as a change. We would talk in
(or refined) their business.” the third person –
leadership stories. The ‘management thinks’ or
stories became powerful That change required Shell ‘the company wants to.’
tools for leading leaders to state their Now, the focus is on
continuous change by business cases for action in leaders personalizing the
detailing why leaders and a way that they hadn’t message from an
the business needed to been asked to before Says intellectual and emotional
change. Adams, “Many of the standpoint. By doing that,
refinery CEOs told me that people are dealing more
That filled a void for many the program was a valuable with true feelings and
leaders at Shell. Says learning tool for them and beliefs. We quickly move
Adams, “Many leaders can helped prepare them for to a less superficial level
use the Shell business that new role. “ (See the that is rooted in reality.”
model to say in the box, Shell’s High- Test
language of finance, ‘Here Program.) Charles Dunagan, vice
is the gap between where president of marketing and
we are and where we Several months after the sales for Shell Chemicals,
should be.” But Adams program, we conducted notes that to lead in his
cautions, “That isn’t a interviews with unit, he was required to put
case for action that touches participants. Here’s what “personal stakes in the
everyone in all parts of an we learned. ground” with his story.
organization. Our program
helped Shell leaders create To transform a company, “With where we are today
a case for action by leaders need a teachable and the amount of change
connecting with folks point of view. In the past that has to take place,”
differently.” They did it, two years, Shell Oil has says Dunagan, “we have to
Adams says, through undergone immense interact in deep
leadership stories that change and the pace is relationships that are
illustrate the direction of accelerating. Alan sustainable. People have
the business and the Kirkley, CEO of Shell’s to have a personal story
leaders’ personal stories. refinery near New Orleans, that is powerful in terms of
has the job of leading this true conversations opposed
The program helped Shell newly independent to a one-way exchange.”
leaders with some company. To do that, he
immediate changes. Says has focused on developing Developing oneself is the
Adams, “We had recently and delivering personal first step. A company
created six new companies point of view. needs leaders at every
by making our refineries level. At Shell, the 200
separate entities, each Says Kirkley, “One of the leaders that participated in
headed by its own CEO more powerful things that Adams’s program had to

18
continue to develop other Leaders in the Shell percentage of customers.
leaders. The program gave program explored issues And our financial
those 200 leaders the about balancing one’s life, performance was sub par.
opportunity to examine the and many tied their I said that if we continued
business and their personal personal leadership stories to do things the same way,
experiences in depth. It to their personal we’d get similar results. If
also enabled them to development as youths. we wanted different
deliver their teachable Though that can be useful, results, we needed to do
points of view and stories, a dialogue has to start from things differently.”
receive feedback on them, this standpoint: “We are
and refine them. The here to improve this For Dunagan, starting in
experience also gave many company’s performance. that context made the
Shell leaders the Leadership is the key to transition to his personal
confidence they needed to that, and we will explore story easier. “For all of
develop and coach other all facets of making us,” he says, “there is a
leaders. ourselves better leaders.” financial incentive. The
rewards are better if you
Irv Doty, who leads a unit Adams says that the Shell are number 1 than number
of more than 100 people, program was grounded in 5. But more importantly,
says, “I think that I had the context of the business. being on a winning team is
been perceived as a typical “This was not personal much more satisfying than
Shell manager in that I therapy [or] development being average. It’s
came across as though I for development ’s sake. certainly important to me
had all of the answers. This was development in to be among winners.”
When I tried to open up the context of furthering
and talk personally about business objectives by Tough-love feedback is
an issue rather than say making people more crucial . Each of the
‘here’s the answer,’ it was capable. We purposefully modules in Shell’s
powerful. It caused me to focused first on the program featured an
engage in a dialogue with question, ‘What is the element of peer coaching.
others that resulted in business framework?’” Participants presented
mutual learning on all ideas or situations on
sides. My coaching Dunagan agrees. “The which they wanted advice
approach turned from what introduction to any from each other, their
I call, ‘the technical leadership story has to peers. Everyone was told
approach’ to [issues come from the overall to be honest. Though such
regarding ] transformation, business context because feedback wasn’t always
style, and effectiveness. that’s where everyone is easy to hear, many people
[Now,] I focus more on connected. benefited from it.
coaching people in
leadership.” “When I told my story, I Andy Grove has built a
said that we were finishing culture at Intel that places
Start with the hard stuff. third at best. Employee a high value on feedback.
Developing a teachable satisfaction was average. He points out that it’s
point of view and a story is We were preferred better to share your ideas
a highly personal exercise. suppliers for a fairly low with other people at your

19
company and let them participants to return to
criticize them. It may hurt, middle management Now the central challenge
but not as much as when programs to teach and for senior executives is to
customers do it. facilitate modules on create a company that wins
Shell’s transformation. In continuously. Jack Welch,
Cathy Lamboley, vice those modules, the leaders who has run General
president of Shell’s told their personal stories Electric for almost 17
commercial products about why they thought the years and led it to
group, used the program as transformation was unprecedented levels of
a forum to gain insight important, what they were success, describes his
from other leaders about doing about it, and what challenges as “making this
some plans she was they were struggling with. 100-year-old company
thinking of implementing. younger every day.” In
At companies in which other words, while GE
She says, “It was useful to leaders develop leaders, a chugs along delivering
get feedback. I talked with key role of HRD people is earnings increases quarter
people off–line and during to help leaders craft their after quarter, Welch is
the exercises. It gave me teaching approaches. That focusing on how he can
time to reflect and benefit requires HRD staff to play renew and invigorate GE’s
from the conversations. I a different role by 200,000 people around the
went back and made some collaborating with the world.
quick moves.” leaders and “driving” a
cultural mindset in which In that context, most of
Leaders will develop leadership and teaching are what has been done in
others if given an intertwined. leadership development
approach. The program falls drastically short. It
showed participants how to A shifting agenda has been too rote, too
develop leaders. The The agenda for leadership backward- looking, and too
starting point for each of development has shifted theoretical. It has rarely
them was to meet with drastically during the past been tied to a business’s
their teams and tell their several years. The 1980s immediate needs nor has it
business and personal was an era of radical prepared leaders for the
stories. In that context restructuring, spurred by challenges of the future.
they engaged their teams, many mergers and Companies that win now
asking for their reactions acquisitions, and the and that develop leaders so
and comments. Through decline of many leading they can win in the future
that process, the leaders companies. The idea of take a different approach.
arrived at a common story. developing leaders seemed Their leaders personally
Then, they helped their to fade in the face of fear and actively develop
teams write their own of the future and the leaders. This article has
stories for their units. pursuit of quick fixes. The described companies that
early 1990s will probably do that and companies that
Another way Adams began be remembered for are beginning to do that,
ingraining the idea of management fads that such as Shell Oil.
leaders developing leaders emphasized processes and
at Shell was to ask the 200 culture over leadership.

20
Larry Bossidy of ……………………………
AlliedSignal says that no Eli Cohen is research Text and Graphics taken
director at the University from original publication
matter how effective a of Michigan Business in Training &
leader is, he or she has no School, 700 E. University, Development, May 1997.
idea what kind of change, Ann Arbor, MI 48109.
or how much, a successor Phone 313/763-4563. Illustration by James
will bring to an Noel Tichy is a professor Endicott.
organization. If that’s the of organizational behavior
case, we should all hope and human resource
that we have prepared our management and academic
successors well. director of the Global
Business Partnership at
the University of Michigan
Business School. Tichy is
coauthor, with Stratford
Sherman, of Control Your
Destiny or Someone Else
Will: How Jack Welch is
Making GE the World’s
Most competitive
Corporation (Doubleday,
1993).

21