Q On the topic of leadership, what do you find with your research and your many years of experience guiding cultures… What are the common characteristics of the great leaders, those who have really found their calling?

A Great leaders have a kind of interesting paradox about them. On the one hand they are leaders who are quite tough, they have high expectations, they have a clear vision, they inspire excellence because they challenge others to greatness, so we want to follow them, because they are calling something out of us we might not see in ourselves. Great leaders have a kind of personal humility which we admire, a sense in which they really connect with us personally. Then the third characteristic that all great leaders have in common, and it’s shared by great teachers is passion.

Q Is the skill of listening actually one way a leader gathers ideas and comes up with the answer?

A We’ve been talking about the same qualities of a good leader for probably thirty years now, but the one that has changed I think is the ability to listen to and integrate diverse ideas. If you look at the literature thirty years ago it wasn’t talked about very much, because in a simpler time, with less competition, slower business cycles, you could afford to be the smartest person in the room. The leader could make most of the decisions and be right most of the time. In a more complex, changing, rapid-fire environment, the solutions are often complex and require the ideas of many, many people.

Q What do you find motivates people to say ‘aha! I think I get that now. You mean if I did x, then people will bring ideas to me and we would be more motivated.’ Are there eureka moments that you’ve seen with people in your work?

A We need to do more field trips, take our leaders, or often our front line people to other places where it’s being done really well and suddenly the light bulb goes on. It’s one thing to talk about how another company has a better focus on quality and fixing things, it’s another to go visit and see it up close. I find that is often a big eureka moment for leaders and for front line people.

Q One of the things that you bring out which might be more surprising to some people is risk. Why does risk play an important role, why do people want risk? We often hear people don’t want risk, or change, and yet you’ve identified it as one of the things that really motivates people.

A Risk also relates to the concept of change. People always talk about how people resist change. What I believe is actually true is that people don’t resist change. They resist change for which they see no purpose, or for which they feel uninvolved, like victims. And it’s a fundamental shift in mentality, because the truth is, when I ask people to tell me about the best times in their career, people never tell me it was that year when we were on autopilot, and nothing new was happening, and we weren’t changing anything. What people said is it was that year we implemented that quality system, and we were all learning and growing, and man, sometimes I had to work 20 hours, but what a difference we made.

What we need to remember is that when it comes to risk, when we’re out there on the edge, creating new things, innovating, this is a high for people. The human brain, as we know from neuroscience, is hard-wired for novelty. When novel ideas come in, when we’re learning things, our brain is firing all kinds of chemicals, happy cocktails. If people are resisting change in your company, it’s a pretty good chance it’s not because they’re a bunch of dullards who don’t want to do anything new. It’s probably because they either don’t trust you, and don’t know why we’re doing this, or, they are really not feeling engaged in it, they feel like it’s just some orders coming from on high and they don’t really feel like they’re a part of it.

Q I’ve heard exactly that, people don’t like change, from some senior people who have also created great companies. What does this say is the first step when a leader wants to go out and introduce something new, what’s their basic first step that will have people think that this example of change might be a good idea?

A The first step is to share as much information with people as possible, so they understand why change needs to happen. When Harley-Davidson made their big turnaround in the early 1980s when they were about to go out of business, one of the first things they instituted were these workshops for front-line people where they would begin to show them how Harley-Davidson made money. What was the profit chain? How did the things that they did influence the success of the company? How did Harley-Davidson compare with its competitors? Because at the time their quality and turn-around times were pathetic, compared with Honda and their Japanese competitors. The former CEO of Harley-Davidson used to joke that it took them twice as long to make decisions at Harley Davidson than their competitors, but that they implemented change three to four times faster than their competitors did.

There is a great lesson there: make sure people understand the case for change. You don’t have to get where everyone agrees with it, but make sure everyone understands it: here’s why we’re doing it. The second thing is to engage people in doing the change. Recently a telecommunications company I was working with decided to outsource decided it was the right thing to outsource certain call-centre jobs overseas. They did a very smart thing. They went to the front-line people in their call centres and they made the case for it. They said: This is why we need to do this. This is why from a business model if we don’t do this we’re in trouble. Here’s the thing: we want you to help us shape this. Tell us, what parts of the job you don’t like doing that you’d love someone else to be doing, that are too routine, too boring. Ultimately, they wound up being able to outsource more jobs than they estimated they could with the leaders sitting in a room by themselves. And, when they finally implemented it mostly through attrition and some other means, so only a few people lost their jobs.

Q What would you say to some who is considering coming to the AME conference?

A What is the value of learning? If you look at corporate turnarounds some of the most successful ones of our generation, let’s take General Electric as an example. What’s one of the first things Jack Welch did when he became CEO of this huge bureaucracy? One of the first things he did was he spent almost a billion dollars to reinvent their corporate training centre. What did Harley-Davidson do, when they turned around, the first thing they did, they started putting their employees through training and learning. But the nice thing about these kinds of conferences is that there will be an immediate benefit. They’re going to come and learn again from the experience of others. And where else can you send your people to do a giant field trip but to a conference like this, where they are going to get to interact with all these companies that are doing interesting things, all in one place. Also the motivation that comes. I’ve seen so many people, they go to these conferences and they come back so much on fire for their own companies, because they come back with ideas and feeling energized. That’s part of engagement, remember, brain, hard-wired for novelty.

Q You mentioned GE and Harley-Davidson and Southwest where they went to learning, this ‘soft issue’ in order to drive financial value. If you create this culture where people are happy, and engaged, why again does that mean that investors make money?

A You can have a great strategy but without the people who will effectively execute it, you don’t have a chance. What are the sources of competitive advantage in today’s marketplace? There are only, in most cases, a very few: you either have a cost structure that is lower than your competitor’s so you can offer your products at less of a price or at the same price at a greater profit margin; you can have either better quality or service, so that your customers choose you because the product and the service is better than others; or you come up with more innovative ideas, like Apple is doing right now. They’re just coming up with innovative product after innovative product. All of this is born in a culture where people can speak up, where they feel inspired by the company where they are willing to do discretionary efforts, and to work hard.

So I think what you really see now is that these engaged employees become the ticket in this more competitive environment in a way it wasn’t, twenty or thirty years ago where you could have a more protected market in many cases. You look at what I call the chain of profitability: people who care, they stay longer, they’re good ambassadors for the business, they cut costs, they improve quality, they bring their ideas. The cycle just continues just to grow. Then there is the vicious cycle, which is disengaged people who do not trust the company, they begin to waste more and more time whining and wondering what the scoundrels are up to. They begin to hold back their good ideas, they go along with stupid things because they are afraid to speak up.

Here’s the thing: it will not improve your profitability three months from now. If you want to have profits three or six years from now, then invest in your culture, invest in your people and they will get you in this virtuous cycle that will get you where you are going.