October 2011

  • The Art and Science of Finding the Right CEO

    Boards Magazine Article

    Reprint: R1110C

    Choosing a new CEO is the most important job of a company’s board of directors. No other decision has such a profound impact on a firm’s strategy and performance. Yet the topic of succession often gets shoved aside by concerns that seem more pressing. No one pays attention until the CEO’s departure is imminent—and by then it’s too late to adequately vet and train a replacement.

    A.G. Lafley, in contrast, began pushing the directors at P&G to begin the search for his successor as soon as he took office as CEO. From then on, the first board meeting of the year was devoted to that issue. In this article, Lafley describes the rigorous processes P&G established to ensure that it would always have a slate of strong internal CEO candidates. Among other things, P&G set up many opportunities for direct, in-depth interaction between the board and candidates; established clear leadership criteria and continually measured people against them; and developed various scenarios the company might face and identified who could best steer the firm in each situation. Lafley himself took responsibility for seeing that the company developed as many potential CEOs as it could. He became P&G’s head leadership coach, responsible for training its top 500 executives.

    P&G’s disciplined approach paid off by producing not only a first-rate successor but a contingent of senior executives who’ve led the company to tremendous growth.


  • How to Hang On to Your High Potentials

    High potential employees Magazine Article

    Reprint: R1110D

    Despite high unemployment, the war for talent rages on. Only 15% of companies in North America and Asia feel they have enough qualified potential successors to fill their top jobs, and the picture is only slightly better in Europe. The best weapon companies can wield are programs that develop their “high potentials”—the people they hope to develop into their future leaders.

    In a large-scale study of how companies assess and manage their rising stars, the authors have identified some guiding principles for developing high potentials. To begin with, all talent programs should clearly define what “high potential” means to them. Great performance is not enough; you must also envision yourself as a senior executive, have the right motives (the desire for positive impact), and possess leadership attributes such as the ability to derive insight and engage others. Firms also need to align their candidate selection to their strategy: A low-cost company will not need the same kind of talent as an enterprise bent on global expansion.

    This article describes emerging best practices in executing high-potential programs, including the latest thinking on how to nominate and assess participants, design effective job rotations and stretch assignments, provide thoughtful rewards and incentives, and communicate about the program with the rest of the organization.


  • Making Yourself Indispensable

    Leadership development Magazine Article

    Reprint: R1110E

    Peter Drucker and other leadership thinkers have long argued that leaders should focus on strengthening their strengths. How should they do that? Improving on a weakness is pretty easy and straightforward: You can make measurable progress by honing and practicing basic techniques. But developing a strength is a different matter, because simply doing more of what you’re good at will yield only incremental improvements. If you are strong technically, becoming even more of a technical expert won’t make you a dramatically better leader. If, however, you use what the authors call “nonlinear development”—similar to an athlete’s cross-training—you can achieve exponential results. Your technical expertise will become more powerful if, for instance, you build on your communication skills, enabling you to explain technical problems both more broadly and more effectively.

    The authors, all from the leadership development consultancy Zenger Folkman, present a step-by-step process by which developing leaders can identify their strengths (through either a formal or an informal 360-degree evaluation), select appropriate complementary skills (the article identifies up to a dozen for each core strength), and develop those skills to dramatically improve their strengths—making themselves uniquely valuable to their companies.


  • The CEO of Heinz on Powering Growth in Emerging Markets

    Brand management Magazine Article

    The developing economies are now a primary focus for consumer-oriented businesses, says Johnson, who put together Heinz’s first long-term strategy for those markets soon after becoming CEO, in 1998. The strategy emphasizes four “A’s”: applicability (the product must suit the local culture), availability (sales channels must be relevant to the local population), affordability (very small packages of a product may be crucial for these customers), and affinity (local customers and employees must feel close to your brand). Sometimes Heinz takes its brands into a market and tries to grow them organically; more often it looks to acquire solid brands with good local management that will get it into the right channels. That means a second layer of due diligence regarding how the company goes to market, the tax system, the regulatory environment, currency trends, and the political climate in comparison with what exists in the United States.Reprint: Reprint:


  • The Sustainable Economy

    Finance and investing Magazine Article

    Reprint: R1110B

    Like most holy grails, sustainability as a firm’s most dependable route to financial high performance has seemed a goal always beyond reach. The problem is simple. Businesses are rarely obliged to pay for the full toll their operations take on the world. Because many of these impacts have been hard to gauge with any precision—or to assign to individual businesses with fairness—their costs have remained external to businesses’ accounting. That means it’s generally cheaper for consumers to buy a product that has a worse impact on the environment than the equivalent product that does less harm. But what if we could get to the point where the lowest-priced T-shirt was also the one doing the least harm to the planet and society?

    Three trends, each gathering force on its own, are now converging to make that goal a reality: (1) The values of many vital natural resources traditionally considered priceless are being quantified so that they can be factored into economic equations and individual firm’s accounting. (2) Socially responsible investing has matured beyond negative screening to become a value-seeking discipline generating positive impetus for change. (3) Industries are converging on standard indices for rating products’ sustainability and seeking improvements throughout their value chains.

    Patagonia’s Yvon Chouinard and Rick Ridgeway team up with sustainability consultant Jib Ellison to explain those trends and how their convergence is driving a new era in sustainability. According to the authors, progress in each area spurs progress in the others, to the extent that the long-sought alignment of a firm’s prosperity with the best interests of the planet seems not only possible but inevitable.


  • Shaking Things Up at Coca-Cola

    Growth strategy Magazine Article

    Reprint: R1110F

    When Muhtar Kent took the helm at Coke, in 2008, he had two top priorities: to establish a long-term vision and to restore growth in North America. The vision called for doubling Coke’s business in 10 years—something “not for the fainthearted,” Kent says, “but clearly doable.” In this edited interview he talks about the role of social media (Coke has 33 million Facebook fans), which today get 20% of the company’s total media spend; the importance of creating sustainable communities to preserve the future of the business; and Coke’s commitment to water neutrality by 2020—which means giving back a liter of water for every one the company uses. As the CEO of a company with 140,000 employees, Kent says, “you can only influence.” He takes a low-key approach, treasures the team, and loves to visit supermarkets and observe customers.


  • Lean Knowledge Work

    Managing people Magazine Article

    Reprint: R1110G

    Many manufacturing companies and some service firms have reaped considerable benefits by applying variations of the Toyota Production System, a method for making operations “lean” through relentless efforts to increase quality and efficiency and eliminate waste.

    But conventional wisdom holds that lean principles don’t lend themselves to knowledge work, which involves judgment and expertise, not the sorts of repetitive, easily specified tasks found on an assembly line. The authors’ research, including multiyear studies of some 1,800 projects at the Indian IT services giant Wipro, challenges this thinking. Knowledge work can be made lean, Staats and Upton argue, if managers draw on six principles:

    • Continuously root out all waste.
    • Strive to make tacit knowledge explicit.
    • Specify how workers should communicate.
    • Use the scientific method to solve problems quickly.
    • Recognize that a lean system will always be a work in progress.
    • Have leaders blaze the trail.

    Applying these principles demands sustained investment and a grassroots reinvention of how work is performed. But the benefits are considerable: ever-increasing productivity and job satisfaction, and a system that will be hard for competitors to replicate.


  • Designing Breakthrough Products

    Innovation Magazine Article

    Reprint: R1110H

    Thanks to the collaboration the internet has made possible and the open innovation it has spurred, we live in a world where ideas and solutions are abundant. The main challenge facing innovation managers today is how to take advantage of this wealth of opportunities, says the author, a professor of innovation management. He contends that being first to launch a new technology is less important than being first to envision its greatest untapped market potential. Most companies focus on employing new technologies to better serve customers’ existing needs. Those that have technology epiphanies strive to create products and services that will provide customers with a completely new reason to buy a product: Think of Nintendo’s Wii, Apple’s iPod, and Swatch.

    Verganti explains how companies can systematically produce technology epiphanies. He illustrates the process with the story of Philips Electronics’ creation of Ambient Experience for Healthcare, a system that uses LED displays, video animation, radio-frequency identification sensors, and sound-control systems to relieve the anxiety of patients undergoing CT, MRI, and other scans.


  • Have You Restructured for Global Success?

    Emerging markets Magazine Article

    Reprint: R1110J

    The organizational structures of many multinational corporations are inadequate to the task of capitalizing on opportunities in emerging markets. Locating customer-facing processes in each country—and even using transnational structures that exploit location-specific advantages—just doesn’t cut it anymore. So argue Kumar and Puranam, of London Business School. The authors show how the growth of China and India as lead markets and as talent pools, coupled with advances in technology, enable companies to optimize their organizations by segmenting R&D both vertically and horizontally, thereby creating T-shaped structures.

    The greatest challenge of the T-shaped structure is managing integration across countries. The solution is to allow your corporation’s center of gravity to shift eastward. That means globalizing the top management team, moving headquarters outside the home country, and genuinely valuing the cultural shifts that those two changes require. Companies such as GE, Intel, and AstraZeneca have had some success in these endeavors, and all multinationals have the potential to secure the advantages of deploying a T-shaped structure.


  • The Relationship You Need to Get Right

    Collaboration and teams Magazine Article

    Reprint: R1110K

    Effective sponsors can help catapult junior talent into top management tiers, and good protégés can greatly expand the reach and impact of senior leaders—but the relationship works only when both parties recognize that it’s a mutually beneficial alliance, a truly two-way street.

    Seeking to better understand this crucial dynamic, the authors, from the Center for Work-Life Policy, surveyed and spoke with thousands of professionals. Their findings constitute an invaluable guide. Sponsors should, among other things, advocate for their protégés’ promotions, coach them, call in favors for them, and help them make connections. Protégés must be loyal, contribute 110%, and bring complementary skills and networks to the table. No matter what your career level, such relationships are lifelong projects to be carefully cultivated, consistently nurtured, and periodically refreshed.