Monday Mornings with Madison

The Evolution of Business Role Models – Part 2

Certain people rise above regular folks to become so successful, well-known and admired in their field of expertise that they become a household name.  They become icons.  This is true in every area from aeronautics to haute cuisine.  There are few who don’t now the names of the great aviators Charles Lindbergh and Amelia Earheart.  And most everyone knows the names of chefs Julia Child, Wolfgang Puck, Gordon Ramsey and Emeril Lagassi.  These individuals possess certain qualities, talents and skills that catapulted them into a stardom of sorts.  They are the doers, movers and shakers and innovators of the times.  We draw inspiration from these icons.

However, even icons change.  Today’s leaders have evolved from the strong, authoritarian traditionalists and business tycoons of the 20th century – think Henry Ford, John P. Morgan, John D. Rockefeller, and Walt Disney — into the innovative mavericks and mavens of the 21st century.  We are mesmerized by edgy leaders such as Elon Musk, Founder of Tesla Motors and SpaceX, Tony Hseih, Founder of Zappos, Fred Smith, Founder of Federal Express, and Sir Richard Branson, Founder of Virgin Atlantic Airways.  So what sets these icons apart from past business role models and what can we learn from them?

Yesterday’s Business Leaders

In the past, leaders shared many similar traits that are, in part, becoming somewhat passé today.  Leaders of yesteryear believed that their power came from their position of authority.   It was a top-down approach to leadership in which the rank-and-file followed edicts from the top without little or no input or involvement.  Decisions were made by leaders and then communicated down the rungs.

With those types of leaders, information was shared on a need-to-know basis, and most people (even in the higher levels of management) did not need to know such things as profits and losses, gross and net sales, and sales structures.  Resources were allocated in a paternalistic manner, only after a strong case was made proving the need.   Such leaders seldom took the time to listen or solicit feedback from employees, who were considered as replaceable as cogs in a machine.  The purpose of teamwork was to increase productivity, not inspire innovation.

Today’s Business Icon DNA

With the acceleration of changes in business and the emergence of the information age, that type of leadership is being replaced.  Instead, a new model of leadership has emerged that is focused on collaboration, teamwork, transparency, open communication, openness to ideas, and feedback.  These leaders are risk-takers, willing to fly in the face of convention to try innovative concepts.

Consider Fred Smith, Founder of Federal Express.  While attending Yale University in 1965, Mr. Smith wrote a term paper for an Economics class that outlined his idea for a company that would guarantee overnight delivery of small, time-sensitive goods, such as replacement parts and medical supplies, to major U.S. cities. The professor was not impressed and gave Smith a grade of C for his work. But Smith’s idea stayed with him.  In 1970, after returning from military service in Vietnam, Smith decided to revisit the idea he had written about in his economics paper.

Open to new ideas, Smith’s business plan called for a fleet of planes that would pick up packages for delivery. The planes and cargo would be flown at night, when air traffic was minimal; packages would then be dropped at a central location or hub, where they would be sorted. From there the parcels, using both ground and air, would be routed to their destinations within a 24-hour period. Smith chose Memphis as the hub city because of its central location, moderate climate, and labor resources. Smith also wanted the company to own its own planes in order to bypass federal shipping regulations.  His plan required a lot of collaboration, teamwork, transparency and communication.  He had exactly the leadership style needed for a company heading into the age of speed and innovation.

Today’s business models share three main characteristics that distinguish them from those of the past.

1.  They see opportunities where others see problems.

Today’s new business leader doesn’t actually see challenges and obstacles; only opportunities.  They look at problems as opportunities to create business solutions.  Where other saw the hassles and headaches of owning so many planes and dealing with so many airports as an insurmountable obstacle, Smith saw an opportunity to revolutionize the logistics industry.

And then there is Zappos.  Tony Hsieh, Zappos’ Founder, did not view the customer’s hesitation to buy shoes online as a problem.  He viewed it as an opportunity to become the first e-commerce company to offer free shipping both ways in order to help alleviate customers’ concerns if the shoes they ordered didn’t fit.

2.  They are risk-takers, not worried about failure.

Today’s new business icon views success as the culmination of repeated failures.  Consider Elon Musk.  Musk founded two cutting-edge tech companies: Tesla Motors and SpaceX. At Tesla, he’s focused on bringing fully-electric vehicles to the mass market.  Consumer Reports gave an early assessment that the Model S is one of the best-performing vehicles it had ever tested. At SpaceX, Musk is trying to revolutionize space technology to enable people to live on other planets.  The company has a $1.6 billion contract with NASA to resupply the International Space Station, and funding rounds have valued the company north of $10 billion.

But Musk’s iconic success has not been without failures. In June 2015, one of SpaceX’s Falcon 9 rockets exploded two minutes after launch, resulting in a total loss. Six months later a Falcon 9 rocket was able to successfully land upright after visiting space, but when SpaceX tried to land a rocket on a floating ocean barge in January 2016, one of its legs didn’t lock and the rocket tipped over and exploded.  Also in 2015, Consumer Reports pulled its “recommended” rating about the Tesla Model S after 1,400 owners, who responded to its annual reliability survey, said it suffered from a variety of issues from leaky sunroofs and general rattling to problems with the drive train, center touch-screen console, and power equipment. The publication forecast that owning a Tesla is likely to involve a worse-than-average overall problem rate, a step down from the previous year’s “average” prediction.

Notwithstanding, Tesla is following up its Model S sedan with an electric SUV, the Model X. Deliveries are expected to begin in the second half of 2016.  And SpaceX is hoping to send people to Mars by around 2025.  Clearly, the failures and set-backs that Musks’ companies’ products have faced have not stopped him.  While an older generation of business icons would have attempted to justify the mistake by lumping it into a larger context and burying the financials, today’s new business icons own mistakes, address them and continue undeterred.  In that regard, they are more like scientists than businessmen.

3.  They seek perspective, not answers.

Today’s new business role model does not look for answers.  Instead, they seek to understand by seeing things from many perspectives.  In times of crisis and constant change, answers are seldom recognizable or available.  While many can identify when a problem exists, most struggle to solve the problem.  But today’s business icon understands that perspective precedes answers.  He or she seeks perspective from mentors, customers, employees, stakeholders, influencers, etc.

Consider Mary Barra, CEO of General Motors.  In now her third year as head of the U.S.’ largest auto-maker, Barra led the $156-billion-in-sales company out from under the shadow of its 2014 ignition-switch recall. Barra spent $2.9 billion on recalls, which dropped 2014 profits 26%.  Notwithstanding, she overcame headwinds from weak international markets with the sale of expensive trucks and SUVs which soared.

But first she had to deal with the ignition-switch problem.  She ignored the past GM template for handling those types of situations— minimizing their importance, fighting them, dragging them out, and settling grudgingly. Instead, she recognized that the company had a culture problem, and saw an opportunity to attack it. So she took the direct opposite of the GM approach.  Mind you, she is a GM-lifer and her father was a GM-lifer too.  She told employees that “I never want to put this behind us. I want to put this painful experience permanently in our collective memories.”  She sought various perspectives, including visiting with the families of the victims.  She apologized publicly and profusely, and set up a compensation fund for them before any legal liability had been established. GM’s response was unprecedented in terms of candor, cooperation, transparency, and compassion.  But it started by seeking perspectives before coming up with answers.

To become a great leader, business owners and managers would be wise to emulate the iconic business leaders of today by being daring, bold, innovative, and authentic.  They would also do well to be mindful and inclusive, developing engaging work environments.  They should emphasize teamwork and collaboration over hierarchy and authoritativeness.   They should recognize the power of group and hold in high regard the perspectives of others.  They should also value and prioritize the customer experience.  Those who adopt these qualities today are likely to become the business icons of tomorrow.

Quote of the Week

“Strive not to be a success but rather to be of value.”
Albert Einstein


© 2016, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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