Leadership Lessons

Books in Brief: ‘Flying Blind’ and the Crisis at Boeing

September 24, 2022 By Nagesh Belludi Leave a Comment

Bloomberg investigative journalist Peter Robison’s thoroughly researched Flying Blind: The 737 MAX Tragedy and the Fall of Boeing (2022) offers noteworthy lessons about corporate responsibility and leadership problem-solving.

In a nutshell, starting in the late 1990s, Boeing shifted from a company run by engineers who emphasized product integrity to one run by MBA-types who prized shareholder value over long-term product planning. Inspired by General Electric’s Jack Welch, the company embraced cost-cutting, outsourcing, financial engineering, union-busting, and co-opting regulators. These miscalculated strategies culminated in the 737 MAX disasters and disgraceful corporate responses.

Recommendation: Read Peter Robison’s Flying Blind, but be wary of the author’s broad-brush political biases, which, I found, sidetracked from the storyline. The internal organizational tensions that led to corporate deception and the fateful consequences of federal regulators’ consigning design approvals to Boeing are particularly interesting.

Key Takeaway: Negligent engineering to minimize costs and adhere to a delivery schedule is a symptom of ethical blight.

Dear Customer, Speak Early and Have it Your Way!

September 12, 2022 By Nagesh Belludi Leave a Comment

Development of the Boeing 777 Program: 'Working Together' Initiative

At the heart of every successful product is the ability to address a real need or circumstance of struggle—a “job to be done”—in consumers’ lives. Identification of this “job” happens early in the innovation process, as it forms the core insight around innovation development and execution.

Feedback-Influenced Design is a Key Point of Differentiation

Long before its current mess, Boeing was once the pioneer in aspects of product development. No example illustrates Boeing’s inventive stills than the groundbreaking Boeing 777 program, particularly in its use of iterative, paperless computer-aided design, assembly process-planning, and agile product development. Not only that, the Boeing 777 program offers the most high-profile examples of companies tapping consumers as never before to help them create new products.

Knowing very well that the secret to long-term success starts very early in the innovation process, director of engineering Alan Mulally led a “working together” initiative to organize product development around customer input. (Mulally left Boeing after not being named CEO in 2006 and engineered a dramatic turnaround at Ford Motor Co.)

Alan Mulally: Boeing 777 Program's Director of Engineering and Later Vice-president and General Manager

Concept Testing at Every Stage of Development

In the late 1980s, just as the 777 program was being launched, Mulally made a consequential decision to involve its major potential customers in the development of the aircraft specifications. Mulally made up a “gang of eight” comprising All Nippon Airways, American Airlines, British Airways, Cathay Pacific, Delta Air Lines, Japan Airlines, Qantas, and United Airlines. At the group’s first meeting in January 1990, Mulally’s team distributed a 23-page questionnaire asking what each customer wanted in the design. Within two months, Boeing and the airlines decided on a basic design configuration.

The “working together” initiative was a radical departure from the bureaucratic project organization. Internally, Boeing had become bureaucratic and department-focused. Specialists in various departments would design their parts. Then, it was up to the manufacturing team (the system integrators) to figure out how to make it all come together. It was a “throw-it-over-the-wall” environment where the disconnect was a persistent problem.

Having customer input implied that development was centered on customer needs. This would also tear down the walls between departments—designers, suppliers, and assemblers usually separated by organizations or development phases would now be engaged collaboratively and talking and collaborating in real-time.

Boeing and the In an industry where manufacturers classically designed aircraft with only token customer input. Rather than presenting the market with what Boeing perceived as their idea of what was required, customers had direct input. Over the decades, the Boeing 777 became one of the world’s most successful commercial aircraft and continues to be the workhorse of many a customer fleet.

Idea for Impact: Create Something People Want

Whether selling products or services, fast food, or experiential travel, the most innovative companies organize their offerings around customers’ needs. From the very beginning, they tap consumers as never before to help them create new products, and they’re embedding customer knowledge into the business. Early and frequent feedback is one way to cope with the pressure for shorter product cycles and to be prudent about not investing time and resources in unpromising ideas. It also augurs well for the experiences-over-possessions shift in consumer values.

The Best Advice Tony Blair Ever Got: Finding the Time to Think Strategically

June 28, 2022 By Nagesh Belludi Leave a Comment

The Best Advice Tony Blair Ever Got from Bill Clinton: Finding Time to Think Strategically Former British Prime Minister Tony Blair reminisced, at a 2012 event at the Stanford Graduate School of Business, how easy it is to get so absorbed by the pressures of doing that you rarely ever disentangle yourself from the chock-full of activities and the clutter that can choke strategic thinking.

As the leader of the Opposition, when I went to see him in 1996 at the White House, he explained that one of the hardest things when you get into the government is finding the time to think strategically. It’s being able to create the space so that you’re focused on what you really know counts because otherwise, he said, the system will take you over. You’ll be in meetings from 8:00 in the morning till 10:00 at night, and you think you’re immensely busy, but the tactics and the strategy have all got mixed.

What happens in leadership is that things come at you the whole time. If you’re not careful, you’ll spend your time dealing with one situation after another. You lose your strategic grip on what’ll determine if you’re a successful government. Many of these crises are real, and you must deal with them. But when you judge your government in history, no one will remember any of them. You’ve got to create the space to be thinking strategically all the time to change the world.

Idea for Impact: It’s your strategic thinking, more than any other single activity, that can influence what you’ll achieve as a leader. Find ways to create more “head time” amid the busyness.

Book Summary: Jack Welch, ‘The’ Man Who Broke Capitalism?

June 23, 2022 By Nagesh Belludi Leave a Comment

The Man Who Broke Capitalism (2022) by New York Times columnist David Gelles contends that the pernicious greed spawned by former General Electric CEO Jack Welch is exceptionally responsible for exposing the structural failings of capitalism in recent decades.

The danger inherent in any ideology grows stronger when it starts to thrive because it swiftly morphs into temptation—a voracious appetite for ever better “returns” in the present case. Welch was indeed the most visible catalyst and a much-imitated champion of brutal capitalism. But Gelles’s narrative draws his book’s lengthy subtitle (“How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America”) excessively, thrusting ad nauseam the well-founded thesis against Welch’s ploys and “the personification of American, alpha-male capitalism.” See my previous articles (here, here, and here) about how the faults of Welch’s strategy become evident many years after his retirement.

Gelles does an agreeable job of outlining the socioeconomic paradigm that has made modern western capitalism’s shortcomings ever more apparent. Starting with influential economist Milton Friedman’s decree in the ’70s that the one and only social responsibility of a business is to maximize profits, Gelles explains the revering of Welch’s “downsizing, deal-making, and financialization” strategy. Without balance, it provided short-term benefits for shareholders, but the long-term well-being of corporations and society lost out. A sense of restraint is most pertinent to the power of capitalism.

Summary of 'The Man Who Broke Capitalism' by David Gelles Capitalism isn’t irretrievably bound to fail, as Gelles rightly argues, but it needs to be rethought. It’s morally incumbent upon the social order to inhibit the embedded incentives that create powerful tendencies towards short-termism. Gelles offers no more realistic, objective insights than the familiar solutions prescribed by our career politicians.

Overall, Gelles’s pro-Fabian polemic falls short of a fair-minded assessment of the epoch’s economic forces. Indeed, many of Welch’s tactics were timely and necessary, but he pushed them farther and longer. Too, Gelles fails to study counterexamples of many corporate leaders who’ve thoughtfully copied Welch’s playbook and helped their businesses and communities prosper, not least because they were restrained enough to avoid Welchism’s blowbacks.

Recommendation: Speed Read The Man Who Broke Capitalism for a necessary reappraisal of the legacy of Jack Welch. There isn’t much eye-opening here, but author Gelles affords a relevant parable about the power of restraint and the time- and context-validity of ideas.

How to Lead Sustainable Change: Vision v Results

June 2, 2022 By Nagesh Belludi Leave a Comment

In the Drucker Foundation’s Leader to Leader (1999,) Harvard Business School professor John Kotter proposes one of my favorite visuals on the essence of noticeable results that bear witness to a leader’s vision of change:

How to Lead Sustainable Change: Vision v Results

This illustration encapsulates why some organizational change initiatives succeed while others never get off the ground or break down after a while. Kotter observes,

Results and vision can be plotted on a matrix that has four dimensions. Poor results and weak vision spell sure trouble for any organization. Good short-term results with a weak vision satisfy many organizations—for a while. A compelling vision that produces few results usually is abandoned. Only good short-term results with an effective, aligned vision offer a high probability of sustained success.

Idea for Impact: The only way a leader can produce a well-paced, sustainable, and transformational change is by mobilizing the people around her to appreciate the benefits for them in her vision of the desired future. Ongoing results oblige visibility into progress and will catalyze the organization’s commitments.

Read Kotter’s Leading Change (1996,) an influential missive on change management.

Nuts! The Story of Southwest Airlines’ Maverick Culture // Book Summary

May 30, 2022 By Nagesh Belludi Leave a Comment

Kevin & Jackie Freiberg’s Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success (1996) is a popular tome about the history and culture of Southwest Airlines and the fun-loving antics of its colorful co-founder and CEO Herb Kelleher (see my tribute.)

Despite its Pollyannaish tone and repetitive narratives, Nuts| is a very enjoyable cheerleaders’ account of how an underdog overcame roadblocks and thrived in a competitive industry.

Nuts| focuses on the people-oriented culture that Herb and his secretary Colleen Barrett established based on Herb’s well-known dictum, “The business of business is not business. The business of business is people.” To Herb, Southwest was a cause—never just a company. The Freibergs write,

If there is an overarching reason for Southwest Airlines’ success, it is that the company has spent far more time since 1971 focused on loving people than on the development of new management techniques. The tragedy of our time is that we’ve got it backwards. We’ve learned to love techniques and use people. This is one of the reasons more and more people feel alienated, empty, and dehumanized at work. Many organizations today would be surprised at how much more people would be willing to give of themselves if only they felt loved.

Southwest Airlines---Employee Culture

Nuts| is dreadfully out-of-date. Southwest and the airline industry have changed a lot since the mid-90s. Southwest even stopped handing out peanuts to protect passengers from peanut-related allergies.

The miracle at Southwest Airlines could keep on only so long. As long as Herb was the CEO, employees would go the extra mile for the sake of Herb. Until his retirement in 2001, Herb preserved Southwest’s unique cost structure and work rules. Kelleher’s successor, Jim Parker, presided over mounting labor tensions and quit after just three years. CFO Gary Kelly replaced Parker in 2004. Bob Jordan became CEO in 2022.

The going has not been smooth for Kelly. Southwest has become more like the other carriers regarding employee relationships and cost structure. The rehabilitated legacy airlines and a new breed of ultralow cost carriers have chipped away gradually at many of Southwest’s apparent competitive advantages. Yes, customers still rave about Southwest’s friendly staff, unpretentious service, and flexibility in travel planning. However, Southwest hardly ever has the lowest fares on most routes. In fact, Southwest’s average fares have outpaced the industry by 12% since 2009.

Miracle of Southwest Airlines: Employee Culture

Recommendation: Speed-read Nuts! … it’s full of original insights, upbeat stories, and concrete suggestions for principle-centered leadership and how to inspire people to achieve incredible results. Here are the key takeaway lessons:

Even a little respect goes a long way. Give employees responsibility and entrust them to take that responsibility.
Set the ground rules—and let employees be creative. “Culture is one of the most precious things a company has, so you must work harder at it than at anything else.”
Give your employees some skin in the game, and they’ll go the distance. Southwest claims, “We have credibility because we tell people what we’re going to do and then we do it.”
Empower workers to make decisions at the customer level. Employees who feel they have leeway in their jobs to make the “right decision” depending on circumstances are happier, more confident, and more productive. They’ll even give extra—because they believe their work has special meaning and is not just a job.
Make sure people feel they can be themselves and have opportunities to express individuality.
See yourself as a motivator and a positive force. When things go wrong, accentuate the positive and focus on a path to a solution. It’s an approach that employees will admire and want to emulate.
Build a sense of community. Foster the feeling of a “family” in which employees can count on each other professionally and personally.
Recognize that employees have lives outside of work. Celebrate every milestone to establish and strengthen relationships. The walls of Southwest’s headquarters are covered with pictures and commemorative plaques of picnics, community service awards, customers’ commendation letters, service employee milestones, and tributes to important cultural events.

The Tyranny of Best Practices

May 9, 2022 By Nagesh Belludi Leave a Comment

By all means, acquaint yourself with the management practices of Dell (in supply chain management,) Toyota (quality control,) Ryanair (working capital,) or whatever company is the present-day shining exemplar of the pertinent best practices. But beware of the risks of taking their best practices out of context and applying them to your business.

The Tyranny of Best Practices - Deceptively Simplistic Solutions Some advantages are unlikely to be accrued by borrowing fashionable ideas from other companies. It makes sense, for example, to study how Apple’s innovations have changed the world, but the visionary in Steve Jobs can’t be replicated.

Best practices can offer deceptively simplistic solutions. Some of them aren’t implementable—even relatable. You can try replicating Google’s policy of allowing employees to spend 20% of their time on their own ideas; that initiative isn’t likely to transform a company designing gasoline engines.

Many of the basic principles of innovation are universal. But management methods succeed—or fail—in a specific context. A company’s industry, maturity, location, and leadership structures influence this context. Unless you develop a thorough understanding of all the factors that have contributed to others’ success, there’s a risk that you’re learning the wrong lessons.

Idea for Impact: You can’t truly become another company. You can only become a better version of yourself, not an inferior version of someone else. Be inspired by others’ best practices, but don’t imitate them blindly.

Don’t Be A Founder Who Won’t Let Go

January 17, 2022 By Nagesh Belludi Leave a Comment

Don't Be A Founder Who Won't Let Go You’ll never get a potential successor to take your job if you’re going to be peering over her shoulder constantly and talking to employees directly about what they’re doing.

When you have a case of the founder’s syndrome, you’re addicted to running the show, and you’ll have a hard time separating yourself from the company you’ve built. When there are conflicts, you’re often at the center of it and hold your vision and experience over the leadership’s heads.

In the long run, your compulsion to have a say in all the nitty-gritty of your company will undermine the future of the very company that you’ve devoted your life to. The best thing you can do for its future is to back off and give your successor real control.

Establish a timetable to disengage yourself from the operating decisions and set some firm rules about this transition. Spend increasingly more time away from the business and pursue other interests. Start to envision a world in which your next ventures or leisure activities will become the principal focus of your life.

Idea for Impact: Know when your work is over and when it’s time for you to move on to other things. Grooming exceptional talent to take over the business you’ve built and gradually letting go of control is one of the most challenging things a founder will ever do. If done well, it’s the most transformative you can do for your business.

Why Amazon Banned PowerPoint

December 23, 2021 By Nagesh Belludi Leave a Comment

One of the distinctive features of the Amazon management system is its use of the long-form to facilitate decision-making. Jeff Bezos has claimed that banning PowerPoint presentations—more specifically disallowing bullet points for sharing ideas—as Amazon’s “probably the smartest thing we ever did.”

Since June 2004, Bezos has forbidden bullet points and PowerPoint at a senior leadership level. Instead of presentations, teams are expected to iterate an approach to sharing information that involves writing memos of running copy, usually a “six-page, narratively-structured memo.” Meetings typically begin in silence as all participants sit and read the memo for up to half an hour before discussing the subject matter.

Ram Charan and Julia Yang’s The Amazon Management System (2019) reproduces the original email from Bezos explaining this dictum:

Well-structured, narrative text is what we’re after, rather than just text. If someone builds a list of bullet points in Word, that would be just as bad as PowerPoint.

The reason writing a good four-page memo is harder than ‘writing’ a 20-page PowerPoint is because the narrative structure of a good memo forces better thought and better understanding of what’s more important than what, and how things are related.

PowerPoint-style presentations somehow give permission to gloss over ideas, flatten out any sense of relative importance, and ignore the interconnectedness of ideas.

Using memos may seem counterintuitive in an age when communication is increasingly visual. However, long-form has a way of forcing rigor to think through ideas properly, reconcile viewpoints pro and con, iron out logical inconsistencies, and consider second-order consequences.

Bezos’s approach is brilliant not just because sentences and paragraphs enable a certain clarity in thought and exchange of ideas. It also inhibits some of the usual shortcomings of brainstorming meetings, viz., interruptions, biases that initiate groupthink, and the tendency to reward rhetorical ability over substance. Forcing all meeting attendees to read the memo in real-time prevents them from pretending to have read it before a meeting and then bluffing their way through the meeting.

Idea for Impact: Think complex, speak simple, decide better.

Bullet points and “decks” are often the least effective way of sharing ideas. Having a narrative structure allows you to clarify your thinking and provide a logical, sequenced argument to support your ideas.

Book Summary of Verne Harnish’s ‘The Greatest Business Decisions of All Time’

December 6, 2021 By Nagesh Belludi Leave a Comment

The Greatest Business Decisions of All Time (2012) is a flatfooted anthology of 18 engaging—and oversimplified—business stories that influenced the course of business. Edited by management consultant Verne Harnish, this tome contains long articles by nine Fortune magazine journalists.

Apple and the Return of Steve Jobs. The 1996 decision by Apple’s board of directors to bring back Jobs revived the company, transformed the consumer electronics industry, and made Apple one of the most valuable companies in the world.
Zappos and Free Shipping. Zappos’s decision to offer free shipping and 365-day free returns lured more mainstream buyers onto the internet. Other retailers had no choice but to provide free shipping (albeit with some restrictions) and absorb the costs.
Samsung and Global Immersion. In the early 1990s, Chairman Lee Kun-Hee instituted a policy to send his brightest young employees on international sabbaticals that exposed them to the local cultures and build business networks. This program later fuelled Samsung’s global ambitions.
Johnson & Johnson and the Tylenol Comeback. Consistent with the company’s “patients come before profit” credo, CEO James E. Burke set the benchmark for crisis management when he decided to pull Tylenol off the shelves nationwide and create a tamper-proof bottle at the cost of $100 million. Johnson & Johnson cemented its reputation for responsible management.
3M’s 15% Free Time Rule and Innovation. 3M Company CEO William McKnight’s extraordinary idea of giving employees free time for “experimental doodling” yielded such innovative products as Post-It notes. 3M quickly diversified its portfolio and entered many consumer- and industrial-businesses. 3M inspired Google’s 20% rule.
The “Intel Inside” Marketing Campaign. To forestall the commoditization of the computer chip, CEO Andy Grove shifted Intel’s image from that of a microprocessor company to that of a producer of a coveted, brand-name product that stood for performance. Intel became a household name that consumers sought when they purchased a computer.
General Electric’s Jack Welch and Crotonville. Welch transformed GE’s sprawling management-training institute in Crotonville, New York, into a focal point of learning for the company.
Bill Gates and His “Think Weeks.” The Microsoft founder’s twice-yearly retreat in rural isolation allowed him to read, reflect, and map out ideas—away from the distractions and the noise of business life.
Softsoap and Impeding Competition. A small Minnesota company called Minnetonka Corp. developed liquid hand soap in the early 1980s. When Softsoap started flying off the shelves, deep-pocked behemoths like Procter & Gamble began to prototype their own variants. Minnetonka’s CEO Robert Taylor developed a smart strategy to block his giant competitors and keep his company’s market share. He purchased the entire U.S. supply of plastic pumps used in the liquid soap bottles for one year—that’s 100 million units from the only supplier. By the time his competitors had access to the plastic pumps, Taylor’s Softsoap’s brand was well established.
Toyota and the Quality Revolution. Toyota’s institutional obsession with waste-reduction, zero defects, and process improvement has transformed manufacturing and inspired excellence in every service industry—including hospitals.
Nordstrom and Customer Service Excellence. Nordstrom built its brand on “above-and-beyond” customer service and problem-solving. The entirety of the Nordstrom Employee Handbook fits on a 5×8 card and contains precisely one rule, “Use the best judgment in all situations. There will be no additional rules.”
Tata Steel and Labor Relations. During a turbulent period of India’s leading steelmaker, Managing Director Jamshed J Irani confronted a bloated cost structure by reducing his 78,000-strong workforce to 40,000 by 2005. In keeping with the Tata Group’s rich philanthropic legacy, Irani offered decent pension plans and invested in labor welfare.
Boeing 707 and the Jet Age. Boeing’s decision to develop the Boeing 707 at the cost of $185 million (more than the company’s market capitalization) “remade a company, an industry, and the very culture of its time.” The 707 was the first transatlantic commercial jetliner in an era of prop planes. It kicked off the Jet Age, revolutionized air travel, and established Boeing as a dominant airliner manufacturer.
IBM and the Customer-Centric Makeover. In 1993, Lou Gerstner became CEO and embarked on an “Operation Bear Hug” to launch new communication pipelines between top executives and IBM’s customers. This helped transform IBM from an inwardly focused bureaucracy to a customer-centric market-driven innovator.
Sam Walton and Walmart’s Saturday Morning Meeting. Walton’s energetic 6:00 A.M. meeting was a pep rally, merchandising workshop, and financial update—all rolled into one. He brainstormed with his store managers on how to improve things week after week and helped metamorphose Walmart from a single, small-town variety store in 1962 into the world’s largest retailer.
Eli Whitney and the Dawn of American Technology. Whitney’s invention of the “saw gin” that worked well with short-staple cotton helped transform Southern agriculture (and sustain the institution of African slavery!) Whitney then popularized the use of interchangeable parts in making firearms.
Bill Hewlett and David Packard and the “HP Way.” The essence of Hewlett-Packard’s management philosophy was an openness and respect for the employees. With a framework of principles and the simplicity of their management methods, they established many progressive management practices that prevail even today.
Henry Ford and the Factory- and Wage-Revolution. When Ford introduced the moving assembly line, his fledging factory was confronting a dispirited workforce, declining workmanship and quality, absenteeism, and annual labor turnover of 370 percent. Then Ford decided to raise wages from $2.50 to $5 a day. The following week, Ford Motors had more than 26,000 job applicants. Ford increased production rates and slashed the per-unit cost of the Model T. Annual labor turnover fell to 16 percent, and Ford’s profits doubled within two years. Every time Ford increased the productivity of car production, he continued to raise wages. His well-paid workers had more to spend—and could afford the very cars they built.

Recommended: Quick read. The Greatest Business Decisions of All Time is a concise and entertaining read, especially if you like getting into heads, the thoughts, and the motivations of well-known business luminaries. The 18 case studies lack rigor and are beset with recency biases, narrative fallacies, and a misplaced sense of causes and effects. Some stories, e.g., the Softsoap one, aren’t well known.

Daniel Gross’s Forbes Greatest Business Stories of All Time (1997) is significantly more engrossing and instructional.

Leadership Lessons

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Feedback-Influenced Design is a Key Point of Differentiation

Concept Testing at Every Stage of Development

Idea for Impact: Create Something People Want

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Idea for Impact: Think complex, speak simple, decide better.

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