June 2007

Leadership
The big-picture philosophy of CEOs

By Joe Pisciotto
Staff Writer

“The only thing that does not change is change itself.”  “Nothing endures but change.”

These nuggets of wisdom are widely attributed to Heraclitus, the Ancient Greek thinker who many believe was the first in the West to expound a truly robust system of philosophy. While Heraclitus didn’t pen these exact phrases, they do clearly sum up his philosophy of a world in flux that can often appear paradoxical.

What does this have to do with business in the 21st Century? Everything.

Everyone in business today knows all too well that change is constant, natural, and unforgiving; and no one knows this better than the executives and decision makers who lead their companies through turbulent, ever-changing waters. The individuals who have the greatest potential to succeed understand how to stand out while simultaneously surrendering to the current.

The April 16 edition of The Wall Street Journal ran interviews with a few such individuals in “The Journal Report.”  An editor at the paper, Lawrence Rout, points out that these CEOs (and most CEOs) have one thing in common: they see things in a “big picture” sort of way.

The CEOs interviewed were: Steve Bennett of Intuit; Larry Montgomery of Kohl’s; David Brandon of Domino’s Pizza; Edward Zore of Northwestern Mutual Life Insurance; and Robert Evans of Churchill Downs.

These individuals wouldn’t be where they are if they didn’t have a grasp on the big picture. However, buried within these interviews (and the big picture) the astute reader will find that these CEOs have a few things in common that at first glance might seem to be nothing more than commonsense aspects of leadership. But the business world is difficult to navigate, and people can easily overlook the obvious or fail to see the nuances of good leadership. For both existing and upcoming leaders, these CEOs therefore offer important insights into three key interrelated areas: change, values, and people.

Change

Change is the most important variable in the great experiment of a business. Almost every one of the CEOs talked in one way or another about two types of change: the kind you initiate (innovation) and the kind that just plain happens to you.

Customers’ demands change, employees change in many ways, the market has its ups and downs, and government regulators in a volatile political environment can create unforeseen ripples in the fabric of business.

Good leaders understand that change is inevitable. The top leaders, though, know how to respond to that change by adapting their company/people to it.

All the CEOs interviewed say that it is important to innovate quickly.

Bennett has taken it a step further with a company operating value he implemented at Intuit: “Think smart, move fast.”  To him, that means being simultaneously rigorous and innovative, not haphazardly decisive.

Zore sees things in much the same way. He believes it’s important to expand and innovate, but not out of some knee-jerk reaction to change or a desire to get on the latest bandwagon. 

No matter how careful or thoughtful, any innovation carries the potential for failure. For Evans, if you’re not doing enough to potentially fail, then you’re probably not going to succeed.

Also, many of the CEOs recognize that people who are invested in the existing system are going to see change as a criticism of the way they do things. At the same time, company leaders must continually create unique, competitively superior solutions to important customer problems if they wish to grow their business. Opposing interests can often make being a leader difficult.

Brandon sums it up succinctly: “Change is hard.”

But the best leaders persevere.

Values

Most of the CEOs agree that organizational change (or any kind of business success) cannot be implemented without some sort of guiding principles. In other words, leaders must maintain a set of values, even under the most difficult circumstances.

Business, according to Zore, is about more than just products or services. Leaders who stand for something and get their employees behind them will give their company a greater chance to succeed.

At Intuit, they make it explicit with 10 established “operating values.” And Bennett wasn’t afraid to tweak the list when he became CEO.

Values are vitally important because first, you want your employees to buy in to them as part of a broader vision for the company, and second, employees both knowingly and inadvertently convey those values to customers in some way.

People

When boiling down a business, it’s all about employees and customers: they are the de facto enablers of change and values. Each CEO that was interviewed recognizes that he is only one person; alone, he knows he couldn’t accomplish much. Good leaders know they have to surround themselves with talented people and reward them accordingly.

Nearly every CEO interviewed says that it’s important for leaders to spend time with employees on the front lines of the business, with customers, or in the marketplace in general. For Bennett, time spent in this manner “is the best way to understand what’s really going on in your organization.” 

Bennett also believes that employees have a direct stake in the company, and they want to know the details of its operation.

Montgomery says you should always strive to “create value for your customers, associates, shareholders, suppliers and the communities in which you do business.”

For these CEOs, business is fundamentally people-driven.

The Challenge

If Heraclitus were around today, he might make for a successful CEO. Not only did he understand the omnipresence of change, but he was also one of the first to pragmatically realize that change was especially important to ponder inasmuch as it affected human beings. He also realized that, along with constant change, there lurks a logos, an underlying coherence or logic. Leaders in today’s business world have to face this seeming paradox of forces daily. 

The CEOs interviewed in The Journal are in many ways the product of 2,500 years of philosophical thought on change. Whether they end up being successful CEOs at their current companies isn’t really the point; the point is that they have proven to be successful leaders at many levels.

They offer business leaders of all stripes some food for thought.