Wanted: A New Breed of Leader.
When Stuart Skorman needs to hire executive talent, he looks for a certain quality. "Hunger," says the CEO of the Hungry Minds online learning company. "The most important single quality of an Internet CEO or president is a hunger to succeed--and I don't say that just because our company is named Hungry Minds." Hunger, he explains, "is what you are paying them for--to make this thing work, no matter what. When investors give you checks or employees give you their careers, you've got to have somebody at the head of the thing saying, 'I'm here 24 hours a day if you need me.'"
Skorman's criterion underscores a key fact: everyone expects a lot of a leader in the New Economy. Indeed, there is a growing sense that effective leaders must have more than just good managerial skills and functional experience in areas such as finance or marketing. They must also have certain personal attributes that will allow them to contend with constant change, drive innovation, and inspire and motivate the knowledge workers and independent-minded employees who are at the heart of the New Economy.
In short, the New Economy is changing our concept of what it takes to be a good leader--and the business world is working hard to paint a portrait of this emerging ideal. In a recent survey of management professors at 16 graduate schools, Worthington Brighton Press came up with a list of a dozen attributes for new leaders, including "a high level of self-awareness," "a knowledge of human motivation" and "the capacity and willingness to think boldly." Similarly, in a report from the Korn/Ferry International recruiting firm, a number of new leaders described themselves as being "communicative," "passionate," "rule-breakers" and "paranoid." There is also a sense of urgency in pinning these attributes down because, as the report says, the demand for New Economy executives "is rapidly outstripping the supply, while the time to get the resources onboard and up to speed is greatly decreasing."
WHAT DOES IT TAKE?
To a large extent, the defining attributes of the new leader stem from having to deal with the speed of business in the New Economy. That speed leads to overwhelming workloads, high pressure, the need to deal with a wide range of tasks, rising expectations of customers and an overarching belief that business can no longer be controlled in the traditional sense--that it must, instead, be guided and influenced.
Not surprisingly, a key attribute for leaders in this environment is the ability to make decisions with incomplete or vague information. Strategy can no longer be set and then executed over several years; today, the leader must pick a course without excessive deliberation and fact-finding, put it into action with only part of the answer in hand, and then constantly adjust the strategy as events unfold.
"It's really a matter of making a meaningful decision and then reevaluating that decision the next day as you get more data. That's the mind-set you need," says Tuck Rickards, executive director of the Russell Reynolds Associates recruiting firm. "Some people are comfortable with that, some people aren't. But if you can't lead a company that way, you are not going to be successful when the world changes every day."
The New Economy also places a premium on a leader's ability to form relationships quickly--be it with alliance partners or employees and colleagues. "A common leadership trait in dot-coms is that leaders don't rely on bureaucracies and empires," says Rickards. Instead, they tend to "think about what needs to get done and what resources internally and externally they can galvanize at a moment's notice to get it done." The ability to build relationships is important because it not only speeds things up, it also lets the leader bring the best people to bear on a problem -- wherever they are. And in a world where there is always too much for one person to do, it also allows the leader to share responsibilities with other executives.
Tom Doorley, a partner with Deloitte Consulting-Braxton Associates, has studied leaders and successful companies in both the Old and New Economies. One striking difference he has noted is the increased amount of time that new leaders spend on the road talking to customers and employees. "The Old Economy leader might be spending more time doing things that are in the general category of investor relations, public service and general image," Doorley says. The New Economy leader, on the other hand, focuses on things that are more closely tied to the operations of the company -- and on being "much more hands-on."
Effective leaders bring a kind of evangelical zeal to these efforts, Doorley continues. "They tend to believe they are destined to own the market, that their enterprise has figured out the best possible solution for that customer problem, or the best possible use of that technology." That confidence and enthusiasm are vital, because the New Economy leader often has to overcome confusion -- if not downright skepticism -- in getting people to buy in to new business models and new products.
The hands-on approach allows the leader to stay in touch with a fast-changing business landscape. "People who are successful [New Economy] leaders always have questions, and they always question their own decisions. They never get too cocky, and are always looking for what their competitors have done," says Rickards. 'You need that thirst to learn, and to take what you have learned and incorporate it into your business to make it better."
REWARD THE PERFORMERS
Staying close to the front line helps effective leaders cultivate another important attribute, says Doorley. "They're good at understanding where value is created. The culture of a New Economy company is demanding and performance-oriented. So you have to know where the performers are. You have to know which products and technologies are the winners, which teams are responsible for them and which individuals are most effective on those teams--and be sure those people are rewarded. If you lose that thread of who the performers are, then you have problems."
The leader should not be there on the front line to baby-sit, however. Quite the opposite. Innovation and speed require empowered employees, and that points to one of the most striking qualities of the new leader: He or she knows that "it's no longer bad to fail," says William Nussey, president and CEO of iXL, an Atlanta-based strategic Internet services company that often helps Old Economy companies make the transition to the New Economy.
The thing to remember is that you can get away with a certain amount of failure now. "In the Old Economy, the speed of business was slow, so the implications of failure were high," Nussey says. "If you executed the wrong manufacturing plant, you paid for it for years and years and years." In many areas of the New Economy, however, "if you make a mistake, the speed of business will allow you to correct the mistake in a time frame where you don't have to live with it for a long time. That's why it's actually OK to fail now."
"The question isn't whether or not you failed, but whether or not you learned," Nussey adds. "Companies need to go from a risk-management point of view to being a company that learns well." He says that the willingness to accept and embrace risk--to "fail fast and move on"--may be one of the most important qualities of the new leader, and one of the New Economy's lasting contributions to the way businesses are run.
THE BEST OF BOTH WORLDS
The New Economy has come a long way in a short time, and to a large extent, it is beginning to mature. Companies are moving beyond the early "Gold Rush" days of doing business online, and getting down to the serious work of building a sustainable, profitable business. As a result, the concept of new leadership is starting to be tempered by a more deliberate view of what it takes to move people and organizations forward.
Many New Economy companies are entering a period where "speed is important, but it needs to be balanced by thoughtfulness, planning, procedures, structure, budget, predictability," says Chris Larsen, the CEO of E-Loan, an online financial services company based in Dublin, Calif. "While you don't want to bring in hierarchy and bureaucracy, you do need to bring a level of discipline to the company." As a result, many dot-com firms are now hiring senior executives from the bricks-and-mortar world to help instill more order.
Vision--one of the oldest of the leadership qualities--also stands out in assessments of new leadership. In a fast-changing company, a vision provides stability and purpose. "If a company is growing with the New Economy--which means that it is growing several times faster than the typical company in the Old Economy--you are bringing in new people all the time, making acquisitions and forming alliances," says Doorley. "Therefore, it is very important that the vision be developed and clarified by leadership, and that it is in fact embedded in the organization. That needs to be a key role of the leader or leaders--to be talking to people and reinforcing the message, and making sure they understand it."
"Leadership involves coming up with, instilling and reinforcing values that will last 100 years. You're trying to think about the long term while you are trying to move quickly in the Internet environment," says Larsen. "Building a great company takes a long time."
"It's not just about putting in neat codes or acronyms," he continues. "It's about steering people, keeping them excited. Yes, this is about the transformation of industry, and it's disruptive innovation-that's still true. But at the end of the day, you are trying to build a long-lasting company."
New Policies for MetLife Managers
Being proactive has always been a good business attribute, but in the New Economy, it has become a necessity. That's the thinking behind Robert H. Benmosche's leadership at Metropolitan Life Insurance Co. It's also the thinking behind his decision to take the New York City-based company public at a time when it appeared less than ideally positioned for such a move and the market seemed to show little interest in the shares of Old Economy businesses.
"We have to have a corporate structure that gives us maximum flexibility going forward," says the chairman and CEO of MetLife. "Things are happening so fast in the New Economy. We wanted to make sure we'd have the stock currency and corporate flexibility to move quickly."
Change is on the horizon as the regulatory walls preventing direct competition among insurers, bankers, brokers and other financial institutions start crumbling. Mergers and acquisitions will play a major role, and Benmosche's decision gives MetLife a war chest to get in the game.
Critics of MetLife have castigated its corporate culture, calling it somnolent, stodgy and out of date. In order to transform the company into a nimble global competitor, Benmosche, who was wooed away from Paine Webber by former CEO Harry P. Kamen in 1995. must convince MetLife's 41,000 employees to shake off that culture and expand the variety of products sold by its 10.100 agents.
A key to achieving that goal is improving the leadership and management skills of MetLife's associates. "We have to teach our people how to be visionary and how to set their own mission," Benmosche says. "We have to get people to bring decision-making further down into the organization."
To make that happen, the company is relying on a program called the MetLife Management Workshop-an intense five-day training course in which Benmosche participates personally. The company is targeting the top 5% of its non-sales personnel--some 2,000 people from every part of the business--for the program. So far, about 1,200 executives and managers have completed the course.
"We teach where our company is going and the way we want individuals to operate as managers and leaders within the company," Benmosche explains. The course defines leadership and management and looks at the tools participants can use to become effective leaders. One very difficult session focuses on performance management, preparing the managers for a new collaborative process which the company goes through at the end of the year.
"Management teams have to get together and decide who is in the top 30% [of employees they are responsible for], who is in the middle 50% and who is in the bottom 20%," he says. "In order to have your top 80% recognized and compensated appropriately. you have to identify the bottom 20%."
So far, the process has been very successful both for retaining valuable employees and prompting less productive ones to move on.
"The message is that careers will be at risk if the company does not do well," Benmosche says. "Effort is important, but in the end, if you don't get the results, it doesn't count."
Michael J. McDermott
Leading in a Meritocracy
In the New Economy, companies need to be run as meritocracies that reward high performers. That sounds straightforward, but from a leadership perspective, it's not always so easy.
"The idea of a meritocracy opens up a lot of subjectivity that's hard for many traditional managers to deal with," says William Nussey, president and CEO of iXL in Atlanta, In a sense, the old approach to promoting and rewarding people let leaders hide behind the numbers a bit, he explains. "The old school says, 'He's been here for 15 years or has this level of education'--those are indisputable facts." That approach, he says, put less strain and stress on leaders as they promoted people.
In a New Economy meritocracy, though, the leader can't rely on that kind of data; even financial performance provides an incomplete view. In part, that's because people need to be brought along quickly to keep up with rapid growth. "Often, you don't have time to realize the results of the initiative you've put in place, so you have to promote people...on softer qualifications," says Nussey. What's more, financial measurements may miss a lot of the qualities that are valuable in the New Economy. "Maybe you executed a plan and the revenue came in at half of what you expected--but you changed the process and hired six great people who are key to our future. Is that a glass half empty or a glass half full?
"You can see people really, really struggle with these things," he continues. "They look for the hard facts, and they do need to do that. You always start with those. But they tend to exclude softer issues because it's difficult."
Executives can also feel pressure from peers and employees in making such judgments, Nussey adds. You might plan to give Sam a raise or promotion, but another employee might point to his better numbers. "You have to look that person in the eye and say, 'I believe that while his numbers weren't quite as good as yours, Sam has longer-term potential--so I am going to give him the promotion, not you.' And I will tell you, that is a darn hard thing to do."
Six Qualities of Leadership
Russell Reynolds, an executive recruiting firm, has developed an assessment tool called WebDNA that looks at whether candidates have six critical qualities that characterize New Economy leaders:
1 They recognize opportunity. They are quick to jump on business concepts, new business models and innovative operating tools that can help their business.
2 They radiate vision. They actively project their beliefs about their business and make it a priority to communicate their vision persistently to the entire organization.
3 They have an "80/20 mindset." They believe that it is better to be 80% right today--and act-than to wait until you're 100% right tomorrow. They rely on experience and insight to fill in the blanks around incomplete information.
4 They get the "right stuff" done. Seeking value from all activity, they keep themselves from getting distracted by tasks and side issues that have little payoff.
5 They are organizational improvisers. They develop variations of standard business and organizational models in order to build fluid organizations that are responsive to customers and competitors. They are willing to move people around to get the right people in the right place.
6 They are learning-obsessed. They make sure that they are constantly in the feedback loop, and continually seek data to assess business models, evaluate trends and learn.
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|Publication:||Chief Executive (U.S.)|
|Date:||Aug 1, 2000|
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