What Makes Great Leaders Great: Management Lessons from Icons Who Changed the World (BUSINESS BOOKS) - Hardcover

ARNOLD

Hardcover

ISBN 10: 0071770518 ISBN 13: 9780071770514

Publisher: McGraw Hill, 2011

Synopsis

Master the skills that icons throughout history have used to achieve the highest levels of success

“This is an intelligent, knowledgeable presentation of management. The pragmatic approach of learning from icons makes the book extremely worthwhile reading for up-and-coming and experienced managers alike.”
―Dr. Helmut O. Maucher, Honorary Chairman of the Board, Nestlé

“Embracing a broad variety of successful personalities from all walks of life, this analysis of management skills makes for interesting reading and provides a great source of inspiration."
―Dr. Josef Ackermann, Chairman of the Management Board and the Group Executive Committee, Deutsche Bank AG

“Arnold cleverly explains the keys to successful management with references to real-life challenges successfully overcome by iconic leaders. This entertaining book is insightful, thought-provoking, and of immense practical value.”
―Fred B. Irwin, President, American Chamber of Commerce in Germany

“Profound management know-how and coverage of a wide range of valuable issues provide great inspiration for anyone seeking to apply effective management principles in practice.”
―Professor Klaus Evard, founder and former President of the European Business School

“Management know-how translates into knowledge of how to succeed in all levels of life, and everyone can learn to be successful. That is the simple premise behind this book.”
―Frankfurter Allgemeine Zeitung

What do Barack Obama, Steve Jobs, Pablo Picasso, and Napoleon have in common?
EXCELLENT MANAGEMENT SKILLS

It doesn’t matter what your field of expertise is, whom you know, or how educated you are. If you have powerful management skills, you will succeed; if you don’t, you’ll hit the ceiling sooner rather than later.

In What Makes Great Leaders Great, bestselling author and leadership expert Frank Arnold gathers 56 icons from various fields―from business and sports to politics and pop culture―to reveal the specific management skills they used to reach the top.

For every line of work or personal goal, effectively applying these management skills will lead to ultimate success. All the people in this remarkably diverse group figured out what they needed to know to manage their rise to the top―and executed it with superb skill. What Makes Great Leaders Great includes:

• Bill Gates on harnessing the power of a business mission
• Nicolaus Copernicus on questioning every assumption
• Phil Knight on fine-tuning the right strategy
• Michael Dell on making the customer your number-one priority
• Michelangelo on focusing on a single objective
• Joseph Schumpeter on practicing creative destruction
• Roger Federer on self-motivation
• Hippocrates on behaving responsibly
• Steve Jobs on implementing ideas
• Ray Kroc on envisioning the future
• Gen. George Patton on clearly defining assignments
• Warren Buffett on demanding effective management
• Stephen Hawking on making the best use of your time
• Pablo Picasso on fostering life-long creativity
• Muhammad Yunus on looking beyond your own interests

Learn from the best in the business―and history―how to leverage your skills, knowledge, and talent to reach levels of success you never dreamed possible.

About this title

About the Author

Frank Arnold is the CEO of ARNOLD Management, a management consultancy specializing in activating corporate intelligence. A leading consultant, bestselling author, and keynote speaker on management issues, he is also a columnist and regular contributor to leading German-language business magazines and newspapers.

Excerpt. © Reprinted by permission. All rights reserved.

WHAT MAKES GREAT LEADERS GREAT

Management Lessons from Icons Who Changed the World

By FRANK ARNOLD

The McGraw-Hill Companies, Inc.

Copyright ©2012 Carl Hanser Verlag Munich
All rights reserved.

ISBN: 978-0-07-177051-4

Contents

Preface
Introduction
PART 1 MANAGING ORGANIZATIONS
CHAPTER 1 Harness the Power of a Business Mission
CHAPTER 2 Create Customer Value
CHAPTER 3 Make Effective Decisions
CHAPTER 4 Recognize the True Nature of the Problem
CHAPTER 5 Make the Right Compromise
CHAPTER 6 Just Do It! Keep Fine-Tuning the Right Strategy
CHAPTER 7 Structure Your Organization Around the Customer
CHAPTER 8 Be Productive
CHAPTER 9 Demand Effective Management
CHAPTER 10 Understand Profit, Strive for Independence
CHAPTER 11 Harness Information
CHAPTER 12 Understand Your Sphere of Action
CHAPTER 13 Recognize Inflection Points and Utilize Performance Indicators
CHAPTER 14 Secure Feedback
PART 2 MANAGING INNOVATION
CHAPTER 15 Implement Ideas
CHAPTER 16 Remember, Innovations Are Rarely Welcomes with Open Arms
CHAPTER 17 Question Every Assumption
CHAPTER 18 Innovate Systematically
CHAPTER 19 Exploit Success
CHAPTER 20 Practice Purposeful Abandonment
CHAPTER 21 Practice Creative Destruction
CHAPTER 22 Combine Existing Know-How with Other Knowledge to Create 
Something New
CHAPTER 23 Exploit Opportunities Arising from New Technologies
CHAPTER 24 Recognize the Future That Has Already Happened
PART 3 MANAGING PEOPLE
CHAPTER 25 Focus on a Single Objective
CHAPTER 26 Create a Perfect Whole
CHAPTER 27 Be Results Driven
CHAPTER 28 Draw on Your Strengths
CHAPTER 29 Manage by Objectives
CHAPTER 30 Plan Meticulously
CHAPTER 31 Be True to Your Own Values
CHAPTER 32 Surround Yourself with Good People
CHAPTER 33 Create a Culture of Effectiveness
CHAPTER 34 Nurture and Develop People
CHAPTER 35 Invest in Training
CHAPTER 36 Seek Wise Dialogue Partners
CHAPTER 37 Clearly Define Jobs and Assignments
CHAPTER 38 Establish Effective Cooperation
CHAPTER 39 Recognize the Most Important Promotion
CHAPTER 40 Embody Integrity
CHAPTER 41 Harness the Potential of Women
CHAPTER 42 Make Intelligent Use of Your Time
CHAPTER 43 Perfect Your Own Working Methods
CHAPTER 44 Create Trust
CHAPTER 45 Make a Life Plan: What Will Your Most Important Contribution 
Be?
CHAPTER 46 Be Demanding of Yourself and Strive for Perfection
CHAPTER 47 Find Meaning; Then Use It!
CHAPTER 48 Harness the Power of Discipline
CHAPTER 49 Motivate Yourself
CHAPTER 50 Derive Enjoyment from Your Profession
CHAPTER 51 Think Constructively
CHAPTER 52 Act Responsibly
CHAPTER 53 Foster Creativity All Life Long
CHAPTER 54 Assume Responsibility
CHAPTER 55 Look After Yourself
CHAPTER 56 Commit Yourself to More Than Just Your Own Well-Being
Epilogue
Bibliography
Notes
Index

Excerpt

CHAPTER 1

Harness the Power of a Business Mission

LEARNING FROM

Bill Gates

"Our Mission: At Microsoft, our mission and values are to help people andbusinesses throughout the world realize their full potential....

Our Values: As a company, and as individuals, we value integrity, honesty,openness, personal excellence, constructive self-criticism, continual self-improvement,and mutual respect. We are committed to our customers and partnersand have a passion for technology. We take on big challenges, and prideourselves on seeing them through. We hold ourselves accountable to ourcustomers, shareholders, partners, and employees by honoring our commitments,providing results, and striving for the highest quality."

These are Microsoft's business mission and values today. When Microsoft wasfounded in 1975, it also had a business mission that took the company prettyfar: "A computer on every desk and in every home...." The foundationsfor Microsoft's meteoric rise were laid in 1981, when Bill Gates (bornin 1955) licensed IBM to use his MS-DOS operating system. A decisive element forMicrosoft's future success was the contractual clause stating that onlyMicrosoft was entitled to license third parties wishing to use the operatingsystem. It is definitely no exaggeration to describe that decision by Bill Gatesas one of the best management decisions ever made. Even the attempt to pull itoff was a bold and truly brilliant gambit because at the time Microsoft was arelatively small, unknown software company from Seattle, whereas its partner,IBM, was the most powerful giant in the computer sector. The audacity shown byBill Gates and his then business partner, Paul Allen, to secure for themselvesexclusive rights to re-award licenses for their software, indicates just howfarsighted their approach was.

They saw clearly something that IBM had evidently overlooked, namely that thecomputer sector was about to undergo a fundamental change. And in that change,software, rather than hardware as in the past, would become decisive from theconsumers' point of view. By winning IBM as a partner, Gates succeededin imposing a universally applicable standard for software applications. MS-DOSwas duly installed on every PC supplied by IBM, giving Microsoft a huge marketshare within a very short space of time. And the introduction of Windows 3merely added to that momentum. As more and more suppliers of hardware forcedtheir way into the PC market, they too used Microsoft's operating system. Inother words, for Bill Gates harnessing the might of IBM was the most direct wayof realizing his dream and fulfilling Microsoft's business mission.

An effective business mission undoubtedly indicates that theorganization in question has very clearly understood what its business is allabout. To achieve that, it must acquire a profound understanding in threeareas—needs, strengths, and convictions—and base itsactions on certain assumptions.

Taking needs first of all, an understanding of the respectiveneeds and context can be gained by asking the followingquestions: Who is our customer? Who should be our customer? What does ourcustomer pay us for? What does the customer gain from us? But also: Whois not a customer of ours and why not? Of course, answering these questionsis anything but easy. More to the point, the answers themselves are far fromobvious. In fact, it is only by discussing differences of opinion aboutthose answers that an understanding can be reached and which people in anorganization can then duly share and sustain.

The second essential building block of a business mission entailsunderstanding your own strengths and core skills. The questions to beanswered here are: What can we do better than anyone else? Where do weoutperform others by at least a little bit? In which domain might we even be amarket leader? The answers point to strengths the company can build on andalso identify domains in which positive results can be achieved. At the sametime, though, they indicate which strengths need to be consolidated toattain—or retain—a leading position and also highlight any areaswhere there is need for improvement. Moreover, these same answers spotlight anyweaknesses that may currently be preventing the organization from fulfilling itspotential.

The third component of a business mission is about understanding people'sconvictions and recognizing what the organization deems to make sense. Thequestions to address here are: Why is it important for the market that we dothis? To which cause or task do we want to commit? Why does what we do makesense? What makes it worthwhile? Which values do we wish to embrace as guidingprinciples?

Systematically deliberating and working through the three building blockspresented above can help to prevent an organization from defining its businessmission only superficially or inaccurately. Whether the outcome of thosedeliberations can be neatly summed up in an elegant slogan is of secondaryimportance. If it can, great, though this is by no means essential. Instead, themain aim should be to gain a clear view of what the organization in question isall about. For this reason, you will be better off carefully formulating a fewclear sentences that prove to be effective and of practical use rather thanusing an impressive, but ineffectual slogan. In other words, what counts iscraftsmanship, not showmanship.

On closer inspection, the version of Microsoft's old business mission from 1975cited above is not even complete, because in full it read: "A computer onevery desk and in every home, running Microsoft software." Adding that brieffinal phrase makes a big difference, and even Bill Gates himself could have hadno inkling that one day his dream would be fulfilled and lead his company tosuccess. We can only wish him similar success in his current work in theBill & Melinda Gates Foundation, which helps people lead healthy,productive lives.

ACTION POINTS AND FOOD FOR THOUGHT

* Does your organization have a clear business mission? Is everyone aware of it?Does everyone practice it? If not, what can you do to prompt serious, extensivediscussion of the three building blocks of an effective business mission?

* What can you do to ensure that your organization's business mission isactually implemented? What results do you plan to achieve within the next sixmonths? Who can help you achieve them?

CHAPTER 2

Create Customer Value

LEARNING FROM

Lou Gerstner

Former IBM CEO Lou Gerstner (born in 1942) is said to have been one ofthe best managers of his generation. Many people rank him alongside Jack Welch,Bill Gates, or Andy Grove. And a look at what Gerstner achieved at IBM, where hemasterfully engineered one of the most stunning turnarounds in business history,more than justifies the claim that he genuinely earned his place in suchillustrious company. The major lesson to learn from him is how important it isto focus a business totally on generating customer value.

In 1993, IBM was in a bad way—such a bad way, in fact, that Intel CEO AndyGrove struggled to find words to sum it up: "It's hard to describe howbeaten down that company was." The computer giant, leader in its industry atthe time, had previously reported what was at the time the biggest-ever annualloss posted by a company: $8.1 billion. Then, in April 1993, Lou Gerstner wasappointed CEO of IBM. One of his first—and most important—decisionswas not to implement the plan drawn up by his predecessor John Akers, whichwould have carved up IBM into smaller units. Instead, Gerstner opted to keep thegiant intact and derive the greatest possible competitive advantage from thecompany's wide range of products, services, and know-how. One of the biggestchanges made by Gerstner at IBM was that from that time on, the companyuncompromisingly focused on customers and customer value: As Gerstnerhimself explained: "In the spring of 1993, a big part of what I had to dowas get the company refocused on the marketplace as the only valid measure ofsuccess. I started telling virtually every audience ... that there was acustomer running IBM, and that we were going to rebuild the company from thecustomer back."

Lou Gerstner's decision to reintroduce such an uncompromising focus oncustomer orientation and make IBM once again concentrate on generatingcustomer value proved vital to the company's successful comeback. Hisextensive rationalization program, which initially entailed cutting costs,banked on a fundamental strategic change of tack, shifting the emphasisprimarily onto service provision and concentrating on the Internet. His massiveinvestments in research and development sent out an unmistakable messagethat IBM was really serious about meeting customers' requirements. The path hechose to take to put the spotlight firmly back on customer value andmeeting customers' needs and requirements applied a principle thatThomas Watson, Sr., who for decades called the shots at IBM, would have beenproud of. Watson had always made generating customer value his top priority.Consequently, Lou Gerstner's biggest achievement may well have been that hereminded IBM that it was IBM, reiterating the true essence of what the companywas actually all about. Gerstner's highly readable book Who Says ElephantsCan't Dance? gloriously illustrates that some elephants can indeed dance.

As the highly influential management thinker Peter F. Drucker put it in hisseminal 1954 book The Practice of Management: "There is only one validdefinition of business purpose: to create a customer." Ever since, thisvaluable nugget of knowledge has been available to everyone, yet most people areeither unaware of it or simply allow it to slip their mind. Customers are thefoundations on which everything has to be built because they secure thecompany's existence and safeguard jobs. German billionaire manufacturer ReinholdWürth perfectly summed this up by saying: "It's my customers, not me, whoemploy my staff." If only more company bosses adopted this attitude towardtheir customers! And Würth speaks from experience, having turned the Würth Groupinto a global market leader with some 60,000 employees on its payroll.

So the question you need to begin with is this: What does your customerregard as value? This question is far too seldom asked, often because topexecutives believe the answer is clear, whereas in actual fact the conclusionreached inside a company is more often wrong than right. Instead oftrying to guess the correct answer, managers should instead workout a viable response by regularly talking with their customers andat the same time closely monitoring what they actually buy. After all,customers will often say one thing, but actually go on to do somethingcompletely different. Lou Gerstner and other leading CEOs used to regularlyspend substantial amounts of their time interacting directly with theircustomers. Gerstner led by example, which is why he chose not to delegate thistask.

The only way Gerstner could see of fulfilling his aim of creating a companyobsessed with generating customer value was, as he put it, to "look attechnology through the eyes of the customer." Doing that necessitatesmaintaining highly intensive relations with customers and dealing with theirproblems and wishes in the greatest possible depth. It was for this same reasonthat Alfred P. Sloan, the legendary CEO and chairman of the board of GeneralMotors, used to serve as a lowly car salesman several times a year.

The above-mentioned Würth Group, too, sets standards around the world for itsintensive contacts with customers and systematic dialogue with its target group.Essentially, customers never buy products or services, but rather thevalue they derive from them. It is crucial to understand this value, notonly to target marketing effectively and systematically innovate, but also todecide which activities and product features can be dispensed with.Customers see no loss in doing without something that does not create valuefor them. It is important to understand this because saving these costsfrees up resources that can then be deployed to deliver genuine value tocustomers.

In addition, it is becoming increasingly important to understand whatnoncustomers deem to be of value. Even when companies enjoy such adominant position in their market, as IBM did in the mainframe and PC sectors,there are still vast swaths of the market that elude them (and let us not forgetthat the towering dominance of IBM was actually something pretty exceptional).For a company to acquire a 30 percent market share is a major entrepreneurialachievement, but it also means that 70 percent of customers are buyingelsewhere. Why? What do noncustomers regard as value? You need tounderstand these non-customers, because it is always changes starting withthem that have a lasting impact on your sector.

Lou Gerstner once brilliantly summed up the required approach by saying:"IBM is a solutions company. We start with a customer's business problem,and work back to the right combination of technologies and expertise." Isthere any better way of living up to Peter F. Drucker's definition of businesspurpose, as cited earlier in this chapter?

ACTION POINTS AND FOOD FOR THOUGHT

* What does your customer regard as value? What can you do to gain a closerunderstanding of your customers and their views on perceived benefits?

* What do noncustomers regard as value? What will you do to ensure that youunderstand your noncustomers better in the future?

* What will you do to launch an intensive debate about these issues within yourorganization? And which results are to be achieved within the next three months?

CHAPTER 3

Make Effective Decisions

LEARNING FROM

Alfred P. Sloan Jr.

Alfred P. Sloan Jr. (1875–1966) is one of those managers who canbe said, with certainty, to have transformed the world of management. From 1923to 1946 Sloan was CEO of General Motors, and from 1937 to 1956 he chaired thecompany's board. Under his 33-year stewardship, GM managed to expand massively,and it steadily built up its market share. In Sloan's day his analytical powers,his grasp of the problems of running a business, his farsightedness, and hisexceptional judgment were all viewed as key contributors to the success andgrowth of GM and were considered largely responsible for the headway theautomotive giant made under his leadership. That appraisal still stands today.From Sloan we can learn how to make effective decisions.

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Excerpted from WHAT MAKES GREAT LEADERS GREAT by FRANK ARNOLD. Copyright © 2012 by Carl Hanser Verlag Munich. Excerpted by permission of The McGraw-Hill Companies, Inc..
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Edition details

• Publisher: McGraw Hill
• Publication date: 2011
• Language: English
• ISBN 10: 0071770518
• ISBN 13: 9780071770514
• Binding: Hardcover
• Number of pages: 320