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Wednesday, October 6, 2010

How centered leaders achieve extraordinary results

Executives can thrive at work and in life by adopting a leadership model that revolves around finding their strengths and connecting with others.

McKinsey Quarterly
OCTOBER 2010 • Joanna Barsh Josephine Mogelof and Caroline Webb


centered leaders article, organizational development, transformational change, life satisfaction, organizational transformation, Organization
…[The] global financial crisis and subsequent economic downturn have ratcheted up the pressure on leaders already grappling with a world in transformation. More than half of the CEOs we and our colleagues have spoken with in the past year have said that their organization must fundamentally rethink its business model.
Cover of Cover via AmazonOur work can help. We have conducted interviews with more than 140 leaders; … Through this research, we distilled a set of five capabilities that, in combination, generate high levels of professional performance and life satisfaction. We described this set of capabilities, which we call “centered leadership,” in the Quarterly in 2008 and subsequently in a book, How Remarkable Women Lead.1
Five capabilities are at the heart of centered leadership: finding meaning in work, converting emotions such as fear or stress into opportunity, leveraging connections and community, acting in the face of risk, and sustaining the energy that is the life force of change. A recent McKinsey global survey of executives shows that leaders who have mastered even one of these skills are twice as likely as those who have mastered none to feel that they can lead through change; masters of all five are more than four times as likely.2 Strikingly, leaders who have mastered all five capabilities are also more than 20 times as likely to say they are satisfied with their performance as leaders and their lives in general (for more on the research, see “The value of centered leadership: McKinsey Global Survey results”).
While such results help make the case for centered leadership, executives seeking to enhance their leadership performance and general satisfaction often find personal stories more tangible. Accordingly, as this article revisits the five dimensions of centered leadership—and their applicability to times of uncertainty, stress, and change—we share the experiences of four men and one woman, all current or former CEOs of major global corporations.

Meaning

We all recognize leaders who infuse their life and work with a sense of meaning. …[Meaning] has a significant impact on satisfaction with both work and life; indeed, its contribution to general life satisfaction is five times more powerful than that of any other dimension.
Whatever the source of meaning …, centered leaders often talk about how their purpose appeals to something greater than themselves and the importance of conveying their passion to others (for more on conveying meaning to others, see “Revealing your moment of truth”). Time and again, we heard that sharing meaning to inspire colleagues requires leaders to become great storytellers, touching hearts as well as minds. These skills are particularly applicable for executives leading through major transitions, since it takes strong personal motivation to triumph over the discomfort and fear that accompany change and that can drown out formal corporate messages, which in any event rarely fire the souls of employees and inspire greater achievement.
Avon LogoImage via WikipediaAvon Products CEO Andrea Jung described how meaning and storytelling came together when her company faltered after years of rapid growth. … Suddenly, it became harder for her to see where her momentum would come from. What’s more, she had to streamline her cherished community.
To remain true to her personal values, Andrea rejected the “more efficient” approach of delegating to managers the responsibility for communicating with employees about the restructuring and of sharing information only on a need-to-know basis. Instead, she traveled the world to offer her teams a vision for restoring growth and to share the difficult decisions that would be required to secure the company’s future. The result? Employees felt that Andrea treated them with honesty and humanity, making the harsh reality of job reductions easier to accept and giving them more time to prepare. They also experienced her love for the company firsthand and recognized that both she and Avon were doing all they could. By instilling greater resilience throughout the organization, Avon rebuilt its community and resumed growth within 18 months.

Positive framing

Positive psychologists have shown that some people tend to frame the world optimistically, others pessimistically.3 Optimists often have an edge: in our survey, three-quarters of the respondents who were particularly good at positive framing thought they had the right skills to lead change, while only 15 percent of those who weren’t thought so.
…When faced with too much stress (each of us has a different limit), the brain reacts with a modern version of the “fight, flight, or freeze” instinct . … This response equips us … not for coming up with creative solutions. Worse yet, in organizations such behavior feeds on itself, breeding fear and negativity that can spread and become the cultural norm.
When Steve Sadove took over Clairol, in 1991, for example, the company had been shell-shocked by a significant decline in sales volume. “I remember going to a very creative person, who did all the packaging and creative development,” Steve told us, “and saying, ‘Why don’t we do anything creative?’ He opened some drawers in his desk and started showing me all of this wonderful work that he’d done. Nobody was asking for it; people kept their head down in that culture. So part of my role as the leader was to create an environment that was going to allow innovation and creativity and make it OK to fail.”
Fortunately, we can all become aware of what triggers our fears and learn to work through them to reframe what is happening more constructively. Once we have mastered reframing, we can help others learn this skill, seeding the conditions that result in a safe environment where all employees are inspired to give their best.4
Steve found ways to stimulate creativity, such as exploring opposing points of view in discussions with colleagues. …[He] convinced others that speaking up wasn’t just tolerated but encouraged. He helped colleagues reframe the way they reacted to dissent, … Steve and his team introduced a winning hair care brand, Herbal Essences, and ushered in a golden period of growth for Clairol.

Connecting

With communications traveling at warp speed, simple hierarchical … are becoming less and less effective for leaders. For starters, leaders depend increasingly on their ability to manage complex webs of connections ... Further, leaders can find the volume of communication in such networks overwhelming. While this environment can be challenging, it also allows more people to contribute, generating not only wisdom and a wealth of ideas but also immeasurable commitment.
The upshot: CEOs have always needed to select exemplary leadership teams. Increasingly, they must also be adept at building relationships with people scattered across the ecosystem in which they do business and at bringing together the right people to offer meaningful input and support in solving problems.
Nieman Marcus in Fashion Mall Las Vegas July 2009Image by mrkathika via FlickrMacy’s CEO Terry Lundgren learned firsthand about the power of connecting the internal community in 1988 when, 15 months after joining the retailer Neiman Marcus, he became its president and CEO. Shaking things up was core to his role:…Employees greeted him with widespread skepticism. “They were all thinking, ‘Who is this 37-year-old guy who is going to tell us how we should run our fantastic business?’” So Terry held a town hall meeting in the library across the street from company headquarters, in downtown Dallas. He invited anybody who wanted to come. The first time, he recalls, “I had only about 30 people show up! I thought it was going to be a little bit bigger than that, but I tried to be very direct and use the time mostly to listen and respond.” He kept holding meetings, noting that “it really moved the needle quickly in terms of getting things done in that company.” By the time Terry left, the twice-a-year meetings filled a 1,200-seat auditorium.
NEW YORK - OCTOBER 28:  (L-R) Macy's Inc. Chai...Image by Getty Images via @daylifeToday, as Terry leads Macy’s, he connects the dots internally and externally in many ways, from scheduling a monthly breakfast with new managers to forming relationships with peers who have led companies through change. Terry has also emphasized corporate connectivity, regrouping Macy’s stores into 69 districts, each tasked with creating “My Macy’s” for its customer base. …Terry’s top team believes its efforts to connect managers more closely to one another and to customers, through enhanced information sharing and product offerings tailored to local needs, help explain the company’s trajectory.

Engaging

Of survey respondents who indicated they were poor at engaging—with risk, with fear, and even with opportunity—only 13 percent thought they had the skills to lead change. …[Risk] aversion and fear run rampant during times of change. Leaders who are good at acknowledging and countering these emotions can help their people summon the courage to act and thus unleash tremendous potential.
But for many leaders, encouraging others to take risks is extremely difficult. …What’s more, to acknowledge the existence of risk, CEOs must admit they don’t, in fact, have all the answers—…
Dangerous Risk Adrenaline Suicide by Fear of F...Image by epSos.de via FlickrDoug Stern, CEO of United Media, has a number of ways to help his people evaluate risks and build their confidence about confronting the unknown. … Doug follows an explicit process anytime he’s facing a new, risky project (for example, selling some of his company’s assets). The process helps everyone—…prepare by devising risk mitigation strategies using these steps:
  • asking the team to imagine every bad scenario, even the most remotely possible—…
  • giving everyone a chance to describe those scenarios in detail and then to “peer into the darkness” together
  • devising a detailed plan for countering each nightmare—…
Once fears have surfaced and been dealt with, the team has a protocol in place for every worst possible scenario and a set of next steps to implement.5

Managing energy

Sustaining change requires the enthusiasm and commitment of large numbers of people across an organization for an extended period of time. All too often, though, a change effort starts with a big bang …only to see energy peter out. The opposite, when work escalates maniacally through a culture of “relentless enthusiasm,” is equally problematic.6 Either way, leaders will find it hard to sustain energy and commitment within the organization unless they systemically restore their own energy (physical, mental, emotional, and spiritual), as well as create the conditions and serve as role models for others to do the same. …
While stress is often related to work, sometimes simple bad luck is at play, as Jurek Gruhn, president of Novo Nordisk US, can attest. Nine years ago he was diagnosed with Type 1 diabetes. Working for a world leader in diabetes care, Jurek was no stranger to the illness … “My first reaction was, ‘You may have Type 1 diabetes, but you could also have a lot of other diseases that are much worse.’” So, he told us, “I went to the hospital for two or three days of testing and then went back home. We had our Christmas break. After that, I was back in the office. My wife, who is a physician, said to me, ‘That was a quick process!’ I basically took on my disease as a task.”
Run to change DiabetesImage by Siebuhr via FlickrJurek realized that one key to living a normal life with the disease is to embrace life, at work and at home. “A healthy lifestyle is important. I have five kids: … Sometimes they completely drain my energy, but they can energize me a lot. …I eat breakfast now every day, I exercise much more, and I started rock-climbing on a regular basis.” Everything improved—his physical condition, mental focus, emotional satisfaction, and spirit. He even learned to face what drained him most—unhealthy conflict at work—by addressing it directly and quickly, much as he handled his diabetes.
Even for leaders without such a challenge, Jurek sets another valuable example: “I saw this comedian who said that a man’s brain is filled with boxes, and one of them is empty. Well, when the day’s really tough in the office, I go into my empty box for 10 or 15 minutes and I do nothing. If I completely switch off for a short period of time, I get my energy back. Now, I’m not switching off every 15 minutes after working for 15 minutes… But I do not work weekends unless I really have to. And I’m not one who wakes up and the first thing is the BlackBerry. No way!”
Centered leadership is a journey, not a destination, and it starts with a highly personal decision. We’ll leave you with the words of one executive who recently chose to embark on this path: “Our senior team is always talking about changing the organization, changing the mind-sets and behavior of everyone. Now I see that transformation is not about that. It starts with me and my willingness and ability to transform myself. Only then will others transform.”


About the Authors

Joanna Barsh is a director in McKinsey’s New York office, Josephine Mogelof is a consultant in the Los Angeles office, and Caroline Webb is a principal in the London office.
The authors would like to thank Aaron De Smet and Johanne Lavoie for their extraordinary contributions to this work.

Notes

1 Joanna Barsh, Susie Cranston, and Geoffrey Lewis, How Remarkable Women Lead: The Breakthrough Model for Work and Life, New York: Crown Business Publishing, 2009.
2 The online survey was in the field from July 6 to 16, 2010. It garnered responses from 2,498 executives representing all regions, industries, functional specialties, and tenures. Respondents indicated their level of agreement with statements representing various dimensions of the leadership model. We then aggregated their answers into degrees of mastery of each dimension.
3 Martin E. P. Seligman, Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment, New York, NY: Free Press, 2004.
4 Michael A. Cohn et al., “Happiness unpacked: Positive emotions increase life satisfaction by building resilience,” American Psychological Association, Emotion, 2009, Volume 9, Number 3, pp. 361–68.
5 Psychologist Gary Klein has developed and applied in a variety of settings a similar approach that he calls the “premortem.” For more on this technique, and on the broader problem of executive overconfidence, see “Strategic decisions: When can you trust your gut?” mckinseyquarterly.com, March 2010.
6 Edy Greenblatt, Restore Yourself: The Antidote for Professional Exhaustion, Los Angeles, CA: Execu-Care Press, 2009.
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