Keyword: Bill Gates

The New York Times Magazine had a wonderful cover story yesterday about Toyota and their path to world dominance.  This is a great read for most of corporate America, a modern day tale of the tortoise and the hare.

There are many interesting parts of this wonderful article, from the discussion about the creation of the new Tundra full-sized pickup to the parade of companies that try to learn from Toyota’s methods.  But to me the most interesting part is the discussion of the company culture and how their consistent drive for improvement (kaizen) is pervasive.

It seems to me that most of the truly great stories of organizational success are not ones of meteoric rise, they are the result of long slow burns that finally pay off.  As in the world of Hollywood, it seems to me that most “overnight successes” really have decades long histories of pain, tribulation, and persistence.

Even in the rocket-ship ride of the .com era, where most rockets tumbled into the sea, or exploded on the pad, and yet a few hung on to achieve greatness, I can’t think of a truly successful example that didn’t have a long, painful gestation.  The two most oft cited examples of Amazon and Google in fact had their rough childhoods, and painful adolescences, and neither has yet existed long enough to know whether adulthood will suit them well.

In my own experience at Microsoft, the best and most venerable products were ones that were definitively not successes in their first iterations.  Be it Windows, Excel, Word, Internet Explorer, or SQL Server, virtually all Microsoft products of any note were born of a desire to patiently chase down the competition and do what they did better.  The dogged and relentless pursuit of the competition was a key aspect of the company culture, and resulted in version 3 (or 4, or 6…) eventually overtaking the rival.  This happened so much that we used to refer to ourselves as the world’s best “tail-light chasers”.

Which gets me back to Toyota.  The company recognizes, like few do, that developing and nurturing a culture is a key part of making an organization hum.  I talk a lot about mission statements, and how valuable they (and visions) are to organizational success.  Toyota sees that almost instinctively.  To wit:

Toyota’s overarching principle, Press told me, is “to enrich society through the building of cars and trucks.” This phrase should be cause for skepticism, especially coming from a company so adept at marketing and public relations.  I lost count of how many times Toyota executives, during the course of my reporting, repeated it and how often I had to keep from recoiling at its hollow peculiarity.  And yet, the catch phrase — to enrich and serve society — was not intended, at least originally, to function as a P.R. motto.  Historically the idea has meant offering car customers reliability and mobility while investing profits in new plants, technologies and employees.  It has also captured an obsessive obligation to build better cars, which reflects the Toyota belief in kaizen, or continuous improvement.  Finally, the phrase carries with it the responsibility to plan for the long term — financially, technically, imaginatively. “The company thinks in years and decades,” Michael Robinet, a vice president at CSM Worldwide, a consulting firm that focuses on the global auto industry, told me. “They don’t think in months or quarters.”

I love their mission statement (“to enrich society through the building of cars and trucks.”), and will discuss that more soon, but what strikes me most is that last part: “they don’t think in months or quarters”.  Neither do most successful organizations.  They think in terms of what’s right in the long term, and let the current quarter and stock price fall where it may.

When Microsoft was most successful (under Bill Gates and Frank Gaudette’s leadership) it did too, offering essentially no “guidance” to the market.  It seems they may have strayed lately from this view, when a comment from Steve Ballmer sends the stock reeling, and that’s a shame.

The point here is that Toyota and most other great companies, didn’t get there overnight but over decades, don’t plan for tomorrow but forever, and don’t try to justify their actions but rather their philosophies.  This seems to be an anachronism in this go-go, always rushing, instant gratification world.  Bummer.

I had some errands in town this morning, so I stopped in the local diner for breakfast.  Nice, pleasant place with a good veggie omelet.  Unfortunately today, it was not quiet.  Twice, neighboring people took calls on their cell phone and loudly discussed the most personal of business, for the benefit and annoyance of the entire restaurant.

I now know quite a bit about “Jack”, the local car mechanic, and his personal financial situation, his financial relationship with his wife, the pending trade-in of his toolbox, how much it’s worth, how much his new one is going to cost, the delivery dates, his weekly payment, and on and on.  This incredibly loud conversation itself became the conversation at a half-dozen other booths.  And Jack was oblivious.

The other conversation was both briefer and more discreet, although I know when to go rob the person’s house today, as both he and his wife will be gone at a meeting.

All of this made me think back to my post last week about the spying scandal at Hewlett-Packard.  I wonder just how much of the leaking that went on at HP was of this variety — not intentional, not malicious, just inadvertent.  I wonder just how hard it really is to get extremely confidential information these days, without even really trying.

But most of all, I wonder if Ms. Dunn and the others on the HP board spent a great deal of money, time, energy, and corporate focus on the silly witch hunt for the leakers.  How much did it really matter if HP’s laundry was out in the open?  How much did it really damage the company if people knew that the company board was concerned about the performance of the CEO and wanted to fix it?  In reality, wouldn’t the time and energy have been better spent on fixing the problems with the company rather than the quixotic hunt for the source of the leaks?

This sends me back around to the whole issue of focus.  The HP board was facing a major concern over company performance, and just like me in the diner this morning, they were distracted by another issue.  It was an issue that may have seemed to matter at the time, but in reality, it was a sideshow.  Someone, somewhere on the board or in the HP leadership chain should have said “hey wait, this isn’t the real issue, let’s get back to that”.

That is hard, though.  Very hard.  Keeping your focus on the main issues is both one of the main characteristics of great leaders, and lack of it is the downfall of many failed ones.  George Bush is single-minded, and that gets some of his highest praise (not from me…  but that’s another issue…).  Bill Gates is excellent at it, something I’ve seen personally.  And, in my experience, we all could use practice at it.  I know I’m guilty of being easily distracted, more often than I’d like to admit.

So how do you do it?  You need to have a regular practice of asking yourself “am I focused on the right things?”  You need to have some formal list of priorities (a “to-do” list on a yellow pad, an electronic task list, whatever) that is carefully ordered and regularly updated.  And you need to encourage those around you to speak up and say “ahem…  aren’t we supposed to working on this?”  It takes hard work, diligence, and formal processes.

Not getting distracted will make you a better leader, and will benefit not only you, but the organization as a whole.  Put this one at the top of your priority list.

Warren Buffett with the Gates

It is no secret that I find Warren Buffett a remarkable man.  I have been fortunate enough to have dinner one seat away from him; he captivated the table with nothing more than large doses of common sense.  His ability to take complicated problems and give clear, simple insights is fun to be around.  It’s much more than that grandfatherly wisdom you hear it portrayed so frequently.  He is a brilliant man with a gift for reducing complexity.

So when he stunned the philanthropical world yesterday, I was smiling from ear-to-ear.  This move was in complete character for him.  And it reflected a sentiment that he has expressed and shared with his friend Bill Gates for many years:

With great wealth comes great responsibility.  Wealth derives from society so it should be returned to society.

I heard Bill express these same sentiments years ago, and it spawned the creation of the Bill and Melinda Gates Foundation.  Further, I know it was one of the things that he and Melinda found in common as they first dated.  For Warren to follow suit is not a surprise, only the timing and method were unexpected.

The details of Warren’s largesse are well known by now, and available elsewhere.  What strikes me as interesting is the leadership that this shows.  In perfect Buffett style, there is a leadership lesson to be found here, even for those of us without billions to give.

I’ve long felt Warren has lessons to give in his “delegation almost to the extent of abdication” approach.  I like it so much, that I’ll discuss it more elsewhere.  With this contribution he leads by example, by off-loading the giving to the more capable Gates Foundation.  He explains that the reason he has given so little in the past is that he simply is better at accumulating than giving.  And he now has a friend who will be devoting himself to effective giving.  A perfect match.

But more interesting to me in this donation is the resounding rebuff of the “do as I say, not as I do” crowd.  He is thumbing his nose at the CEOs who constantly flount their good deeds, but in fact give little more than “couch change.”  Time and again we see CEOs and their companies going to great lengths to make a big deal of each and every small gift they give, working hard to get the most PR mileage they can from each miniscule effort.  The PR wire is thick with photos of CEOs holding up oversized checks for $10,000 — from a person worth 100,000 times that much.  Rarely do you see any of these people give more than a tiny fraction of their wealth, preferring instead to amass it for…  ummm…  their children?  Or their ego?

Here Warren leads by doing.  He’s giving away the vast majority of his wealth (something like 75%) to a charity that can do great things with it.  And while he’s still alive no less.  No waiting for the inevitable probate fight, just handle it now, while he’s sentient, and before any kids’ expectations are mis-set.

Sure he did it with some fanfare, but it’s the largest charitable gift in history.  He has a right to toot his own horn.  And if it plays as he hopes, others will follow.  So making a big event is part of the mission.

The lesson for the rest of us is in the core value of leading by example.  As a leader, you need to ask yourself: “do I lead by example or by fiat?”

One of my clients was very passionate about having people show up on time.  He had very specific time limits and penalties for people who showed up late for the start of the work day at 8:45am.  And with Seattle traffic as unpredictable as any in the country, the sanctions got invoked quite frequently.  Yet he often wandered in around 10:00.  The smell of hypocracy was ripe in the air, and the employees resented it deeply.  All my admonitions to the contrary, he continued to insist that they “do as I say, not as I do.”  Today, the company is in Chapter 7 bankruptcy. [OK, not because of this, specifically…]

In any case, here again, Warren is leading by example.  Rather than saying how important it is for people to give, he simply gave away most of his fortune.  And in a field that can’t help but make the world a better place.  How neat is that?  Thanks, Warren, for both the gift, and the leadership.

Bill Gates

With the announcement today that he’s going to step aside, a load of my Bill Gates memories have flooded back for me.  Forgive me while I share those with you.

I’m a fortunate man; I’m among a very small group of people who’ve had the priviledge of working closely with Bill Gates.  When I was VP of HR, he and I had a number of private and quite frank conversations about key members of the Microsoft leadership team.  We worked together to set compensation, decide assignments, and make tough corrective choices.

I’ll never forget the time we worked on his own salary together — it was almost comical.  I had to implore him to take a reasonable number that even vaguely reflected his peers at the top of the Fortune 500.  There I was, trying to convince the world’s richest man to take a reasonable salary.  The company was moving to deemphasize stock and put more weight on salary; I wanted him to lead by example.  To his credit, he pushed back relentlessly and I ended up recommending to the board’s compensation committee a number about 33% lower than what I thought was right.

Bill is a very special person, with legendary business insight to be sure, but it is coupled with a remarkable sensitivty and concern for his key associates.  He treats them much like family-members, with all the good and bad that goes with that.  Yes, his blow-ups are legendary, and he can carve new orifaces with the best of them.  But more often than not, he is concerned about their welfare, about their family, about their mood and attitude.  He values loyalty above most other things, and does not handle defection well at all.

I can think of no one in the world for whom I have more respect, and I know his presence at Microsoft will be sorely missed.  Although well divorced from the day-to-day in recent years, he always served as a settling and humanizing force in the company.  In the face of Steve Ballmer, a legendarily gruff and difficult manager (which I can personally confirm), this influence should not be underestimated.

I will have much to say about the future of the company in the hands of the new management team, but that will have to wait.  Now I’m just too busy enjoying reliving the time I had working with one of the most special people in the world.