Taking People With You: The Only Way to Make Big Things Happen Paperback (13 page)

I’m confident that following the Strategy, Structure, Culture model, in the right order, will pay off for you, as well, as you pursue your Big Goal.

My mentor, Andy Pearson, was a master at establishing truth in his business. When he was chairman of our company, there was something he used to say over and over again, like a motto: “See the world the way it really is, not how you wish it to be.”

Andy was one of the most tough-minded leaders I’ve ever known. He had a knack for getting quickly to the heart of any issue, and he never minced words. I remember one of the first business meetings we had at Yum. A senior executive presented this chart with a big arrow pointing upward, showing that our return on invested capital had risen from 3 percent to 5 percent. The reality was, the bar graph on the chart looked a lot more impressive than the actual results, which were, in fact, way below our cost of capital. Andy, who clearly wasn’t born yesterday, just looked at him and said in that straightforward way of his, “Listen pal, I want you to know that this is the last time in this company that we will ever celebrate mediocrity.”

To start working toward any goal, first you need to define reality for yourself and for your team. Too many people have a tendency to sugarcoat things, but that doesn’t help improve performance. Andy may have prided himself on his toughness (
Fortune
magazine once named him one of the “top 10 toughest bosses in the world,” a designation that he felt honored by, even framing the magazine’s cover and hanging it in his office), but he didn’t say what he said just to be negative. He said it to give framework to the facts—a 2 percent jump is certainly better than a loss, but it was more like doing a curb chin-up rather than a real
one. It wasn’t exactly the kind of accomplishment that any of us should be writing home about.

I think defining reality is relatively easy in situations where you’ve got issues and problems, because I think most of the time those problems are evident to the organization. Actually, it’s liberating for the organization for the leader to define it, because often people think that those subjects are taboo, that we can’t talk about those kinds of things. What’s harder is where a business is doing well. It’s very easy in an environment like that for people to get complacent. What’s just as important, though, is to define reality in that situation, because all sorts of studies have shown that the most successful companies are those companies that reinvent themselves even when they’re doing well.

—
GRAHAM ALLAN, CHIEF EXECUTIVE OFFICER, YUM! RESTAURANTS INTERNATIONAL

This is a crucial role of any leader. In business, we tend to be inundated with lots of facts and figures, but what do they really mean? It’s the leader’s job to create the context and present the story of that data. Are we doing 2 percent better than last year? Yes. But does that mean we’re doing well? Are we beating our competition? Can we be doing better? What should we be aiming for? Telling it like it is means more than just presenting the facts; it means showing what they mean—and what they could mean in the future—for your business or for any task you’re working on.

Your strategy starts by getting everyone on the same page, but you can’t stop there. You can’t just tell people how bad things are and then leave them be. You can’t even tell them how good things are and then leave them be. You must define reality while also showing people where that reality can take them. Defining reality and creating hope go hand in hand here. As Napoléon Bonaparte once said, “A leader is a dealer in
hope.” Or put another way by a less controversial figure, the late author and philosopher Sydney Banks said, “Never forget that hope is a very important ally that leads to miraculous things.”

Creating hope means showing people where the facts in front of them could lead. If things are bad, people need to understand that, but they also need to know that things can get better. And if things are good, people need to understand that, too, and be congratulated for their part in the success. And then they need to be reminded that there will be a lot of work ahead to keep things going in the right direction.

Where necessary, you may also have to give people reason to move toward the hopeful reality you’ve shown them by establishing urgency or “creating a burning platform.” People don’t really change until there is enough pain to force them to change, but you better believe that if they’re standing on a platform that’s on fire, they will be seriously motivated to jump. When your business is in a really bad place, you’ve already got a burning platform. But if you’re doing OK, you will have to create a totally different reason to motivate people to raise the bar.

In
chapter 2
of this book, I asked you to take a hard look at yourself: what your values are, what your strengths and weaknesses are, how people perceive you, and how you perceive yourself. Now it’s time to do the same thing with your business. Take that same analytical eye and turn it on your business with brutal honesty.

But what does “reality” mean exactly? One of the best ways to approach this is to dig for insights in four key areas:

1. Customer Reality:
   Nothing should motivate you more than what your customer is telling you. You can find out what your customers are thinking by using formal methods, like customer satisfaction surveys, focus groups, or problem detection studies. But you should also use some informal methods. Talk to customers directly as often as you can. Make an effort to see what they
   see. If you’re in a retail business, make unannounced visits to your stores so you can see the place the way your customers do; if you’re in a manufacturing business, take home and use your own products; if you work as a manager in a call center, spend some time answering the phones; and so on.
     One of the best tactics I’ve used for helping my team understand the customer is to create a shared experience by going out as a group and paying visits to our restaurants. I’ve even arranged bus tours
   with customers and team members together, where we visit locations and then share our thoughts about what we experienced. It’s a great way to bring team members together and get them on the same page about what’s happening in your business.
   
2. Team Reality:
   Ask questions of your team members: What’s working? What’s not working? What would you do if you were me? Someone once told me the most powerful way to motivate people is to listen to them. I couldn’t agree more. In fact, I think “What do you think?” is the most powerful question you can use to engage people.
     
   You have to remember when you ask people questions like this, however, that your position as leader can make you intimidating. It’s important to be as approachable as possible so that people feel comfortable telling you the truth. Approach people as equals, like you’re one of them, because you are. One of the best pieces of advice I’ve ever gotten came from Jack Byrum, the Dallas image consultant I worked with early in my career: “Don’t look up, don’t look down. Always look straight ahead when dealing
   with people.”
     Another method for getting to the truth of your team reality is to encourage healthy debate. Business author and former vice chairman of GE and CEO of Allied Signal Larry Bossidy talks about the importance of valuing “truth over harmony,” meaning that it’s more important to encourage an atmosphere where everyone puts their cards on the table than one where everyone agrees.
   
3. Competitive Reality:
   Know your enemy and see how you stack up in comparison. You have to keep the performance of your competitors front and center in your mind. In my business, for example, after our
   first ten years, we had quadrupled our stock price. That’s a real accomplishment, but it wasn’t the whole story. We were doing a great job of expanding our business and adding new stores, but as I mentioned earlier, McDonald’s was doing an even better job of growing sales from its existing restaurants. We clearly still had work to do, and that one fact gave us both a goal (to outperform McDonald’s) and a focus (to increase sales from our established restaurants).
   
4. Financial Reality
   : This one is pretty obvious, but you have to know your numbers and compare them to past performance as well as to what’s possible for the future. There’s nothing more sobering than the cold hard facts of where you stand, with your peers and against your competitors. That’s why every successful business I know racks and stacks from top to bottom the financial results of its people and business units. The best performance shows what’s possible; the worst performance puts the right kind of pressure on the pride and survival instincts required to improve. Every business, every enterprise, every project needs a financial scorecard if money is anywhere in the equation—and it usually is.
   

Right now, we have a terrifically big barrier at Pizza Hut because this bad economy has put a spotlight on the fact that we are premium priced; people can’t afford us. That’s pretty easy to explain. I stood up at our fall business conference and told all of our key operators and franchisees, “I know you all have opinions about why our sales might not be what they should be. Listen to the customers. The customers are telling you in very plain language we’re too expensive. Now we have to go out and do something about it.” The outside-in perspective of customers saying “you are too expensive” really hit home with those guys. They went home, and they actually did something about their pricing, and now we have the best value perception in our category.

—
SCOTT BERGREN, CHIEF EXECUTIVE OFFICER, PIZZA HUT

One of the first things I did is, I asked the leaders, How do you think you’re performing versus the competition? The first thing you want leaders to do is recognize the truth, the whole truth, and nothing but the truth. A lot of them make excuses, but literally, and I’m really not kidding, our margins were half of our competition’s. I wanted people to acknowledge that our performance was terrible. And then, when you dug deeper, it was terrible by branch, it was terrible in expenses, it was terrible by product. It was terrible on all these different levels. To me, the first thing was just acknowledging that.

—
JAMIE DIMON, CHAIRMAN AND CEO, JPMORGAN CHASE, DEFINING REALITY WHEN HE FIRST JOINED THE COMPANY AFTER BEING HEAD OF BANK ONE

Use the explanations on the preceding pages as examples and then define the reality of your situation as it applies to your Big Goal. What is your reality in each of these four key areas?

1. Customer Reality
   
2. Team Reality
   
3. Competitive Reality
   
4. Financial Reality
   

Part of what you’re digging for when you gather data on your four kinds of reality is not just a picture of where your company is today; you’re also looking for evidence that the goal you’re trying to accomplish can be done or that the future you’re picturing is possible. If, for example, your company is in a position where it needs a big turnaround fast, you want to find proof that silences those who don’t believe it’s possible. You never want your people to feel that they have to follow you in blind faith. Instead you want to ground them in as much substance as possible to show it can be done.

This proof can come in different forms. Laying out your game plan is crucial, to give people confidence in your methods (more on this in
the coming chapters). You should present evidence that the strides you’ve made are working, and keep doing this as you make more along the way. Also look for examples of others who have had similar successes. When I was watching the Orange Bowl national championship football game in 2000, I was really impressed to see that Oklahoma coach Bob Stoops had crowded the sidelines with all-Americans from past Oklahoma championship teams. This gave his players hope and confidence that helped carry them to victory.

You simply have to have hope. If you find yours is waning, you need to look for ways to restore it for yourself and your team. Having hope wasn’t always easy when Yum! Brands was first spun off from PepsiCo. PepsiCo was, and still is, a successful, well-respected company that we had all signed up to be part of. Then one day we woke up to find that they had decided to shed our brands because we’d been a drag on their earnings. That signaled to most people that PepsiCo leaders didn’t have a lot of faith in the ability of our brands to make money. If they had, why would they have gotten rid of us? That’s a dubious beginning for a new company.

John Weinberg, the late and truly great former chairman of Goldman Sachs, was on our board of directors at the time, and one day he came in and said he wanted to share something with me. He showed me a sheet of paper that spelled out the ten characteristics that Goldman Sachs had identified for high-quality companies. We looked at it together and realized that our new company lived up to every single characteristic on that page except for two things: We didn’t have a track record of growth, obviously, because we were just starting out, and we didn’t have a strong balance sheet because our spin-off from PepsiCo had come with a boatload of debt. But we knew that, with time, we could get those things right. That gave me hope, so I shared the sheet with everyone on my team to give them hope too, using data to show how we lived up to most of the characteristics. It helped us believe that we had a
realistic
opportunity to be a high-performing company in the future. And that was the kind of hope we needed.