I recently argued that in industries such as distribution and logistics (Amazon, FedEx, UPS), process manufacturing (Exxon), insurance (Aetna), restaurants (McDonald's), and retail banking (Bank of America, Citibank, Wells Fargo), continuous process improvement is essential. I also argued in my last post that the CEO has a critical and unique role to play in process improvement, enabling a company's activities to be redesigned across functions and divisions. If the CEO doesn't play this role, process improvement stays comfortably within functional boundaries. For example, marketing optimizes its activities for its own benefit and the sales and customer service functions do likewise. The end-to-end process of customer acquisition and retention — getting rid of duplicate activities and information across marketing, sales and customer service — isn't touched.
But if board members conclude that their company's vitality depends on process improvement, what kind of CEO should they choose?
A recent Fortune article on John Reed, the former co-CEO of Citigroup, reported that a decade ago he tried to convince the newly formed Citigroup board (the result of the $70 billion merger of Citicorp and Travelers Group in 1998) to bring in a new CEO and that both he and Travelers' CEO Sandy Weill should leave. "After a lot of yack-yack, the board chose to leave Sandy in," says Reed. "I argued against that — not because I disliked Sandy, but because I didn't think he was the right guy to run the combined entity. He did not, from my point of view, have the skills to run the big company that we had produced. He wasn't a process manager. He ran the place by people and personalities. The company was too big for that."
How can a company avoid Citigroup's misstep and establish beforehand whether the CEO has the aptitude to lead process improvement? A consulting friend, Susaan Straus, points to cognitive preference as an important factor. Drawing on her work with business leaders, she has developed the following categorization of how people prefer to think:
But they have very little interest in how to get the ideas put into operation. For that they have underlings — even high-level underlings. Typically, these executives focus on the "what" and the "what if" and not the "how," which of course is the realm of process people. They are not going to unfold their strategies below a very high level of abstraction. Why? Because it isn't their sport. It's not what got them where they are. It is, in fact, their blind side. Not because they're not smart, but rather because they're not interested.
Meanwhile, the folks who love to do process improvement are hiding in the middle levels. They are viewed from the top as solid, reliable, good soldiers but not "leadership material." I've seen this in the organizations where I've consulted. We all have. The folks who thrive on "how" and "why" and understand the people aspects enough to actually implement the process change once it's identified don't have the clout to be heard by the seniors. Senior executives must make a real effort to listen to the process-focused communication from below — but it's not their native tongue.
As I think about companies that compete on consistent, low cost, reliable operations, most have or had leaders who were process innovators, such as Herb Kelleher at Southwest Airlines, Sam Walton at Wal-Mart, Ray Kroc at McDonalds, Jeff Bezos at Amazon.com, and Fred Smith at FedEx. Before he was co-CEO at Citigroup, John Reed came out of IT and operations. In companies where process excellence is a competitive advantage, he's the kind of candidate CEO that more boards should be looking for. Boards need to ensure that an operations orientation is a key criterion for succession planning in organizations where process improvement is a strategic imperative.
Request: What mix of conceptual, analytical, people, and operations interests do you see in senior leaders? Is the balance right in your organization?
Brad Power (bradfordpower@gmail.com) is a consultant and researcher in process innovation. His current research is on sustaining attention to process management — making improvement and adaptation a habit (even fun?). He is currently conducting research with the Lean Enterprise Institute.
But if board members conclude that their company's vitality depends on process improvement, what kind of CEO should they choose?
A recent Fortune article on John Reed, the former co-CEO of Citigroup, reported that a decade ago he tried to convince the newly formed Citigroup board (the result of the $70 billion merger of Citicorp and Travelers Group in 1998) to bring in a new CEO and that both he and Travelers' CEO Sandy Weill should leave. "After a lot of yack-yack, the board chose to leave Sandy in," says Reed. "I argued against that — not because I disliked Sandy, but because I didn't think he was the right guy to run the combined entity. He did not, from my point of view, have the skills to run the big company that we had produced. He wasn't a process manager. He ran the place by people and personalities. The company was too big for that."
How can a company avoid Citigroup's misstep and establish beforehand whether the CEO has the aptitude to lead process improvement? A consulting friend, Susaan Straus, points to cognitive preference as an important factor. Drawing on her work with business leaders, she has developed the following categorization of how people prefer to think:
- Conceptual: Reads signs of coming change; sees the "big picture"; recognizes new possibilities; tolerates ambiguity; integrates ideas and concepts; communicates through analogy and metaphor; inspires with visions of the future.
- Analytical: Gathers facts; focuses on the bottom line; maintains emotional distance; argues rationally; measures precisely; considers financial aspects.
- People: Recognizes interpersonal difficulties; intuitively understands how others feel; picks up non-verbal cues; empathetic; persuades, teaches, influences. According to John Reed, this was Sandy Weill's thinking preference.
- Operations: Approaches problems practically; stands firm on issues, perseveres; maintains a standard of consistency and quality; provides stable leadership and supervision; develops detailed plans and procedures; implements projects in a timely manner; keeps financial records straight. This is the preferred style of proficient process improvers.
But they have very little interest in how to get the ideas put into operation. For that they have underlings — even high-level underlings. Typically, these executives focus on the "what" and the "what if" and not the "how," which of course is the realm of process people. They are not going to unfold their strategies below a very high level of abstraction. Why? Because it isn't their sport. It's not what got them where they are. It is, in fact, their blind side. Not because they're not smart, but rather because they're not interested.
Meanwhile, the folks who love to do process improvement are hiding in the middle levels. They are viewed from the top as solid, reliable, good soldiers but not "leadership material." I've seen this in the organizations where I've consulted. We all have. The folks who thrive on "how" and "why" and understand the people aspects enough to actually implement the process change once it's identified don't have the clout to be heard by the seniors. Senior executives must make a real effort to listen to the process-focused communication from below — but it's not their native tongue.
As I think about companies that compete on consistent, low cost, reliable operations, most have or had leaders who were process innovators, such as Herb Kelleher at Southwest Airlines, Sam Walton at Wal-Mart, Ray Kroc at McDonalds, Jeff Bezos at Amazon.com, and Fred Smith at FedEx. Before he was co-CEO at Citigroup, John Reed came out of IT and operations. In companies where process excellence is a competitive advantage, he's the kind of candidate CEO that more boards should be looking for. Boards need to ensure that an operations orientation is a key criterion for succession planning in organizations where process improvement is a strategic imperative.
Request: What mix of conceptual, analytical, people, and operations interests do you see in senior leaders? Is the balance right in your organization?
Brad Power (bradfordpower@gmail.com) is a consultant and researcher in process innovation. His current research is on sustaining attention to process management — making improvement and adaptation a habit (even fun?). He is currently conducting research with the Lean Enterprise Institute.
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