Episode #565 People-First Leadership In Japan

Alan Mulally has had a very successful career at Ford and Boeing. Over his 45 years as a leader, he developed an approach called “Working Together: Principles, Practices and Management System”. His number one principles is “People first….Love them up”. This type of declaration is simple to make, but not that easy to live when you are facing quarterly reporting of results and the full glare of the stock market. We see so many cases of CEOs firing people, the stock price getting a big boost and that axing of the people turning into many millions of dollars for the CEO personally, as part of their stock-based remuneration package.

Mulally believes that “working together” must be based on a supportive culture propping up the headline. Culture alone won’t do it, though. His system has a governance aspect directing how the leadership team should work together and which maps out how to create value. His review process is central to translating aspirations into realities. The basis of all of this is the philosophy of building a “people first” culture, which is driven by the company structure and the management processes adopted. He insisted that as part of that “people first” idea that “everyone is included”.

He arrived at a formula in three parts, which all operate in lockstep and which generates profitable and or successful growth for all. To get to that end game, Part One is “everybody knows the plan”. When you read this idea, like me, you might be thinking “so what?. Of course, everyone knows the plan because I have told them already – end of conversation”.

When we dig a bit deeper in our thinking, though, we recall that just because we have told people the plan doesn’t mean they accept it, agree with it, or want to execute on it. At the top levels of the company, we come up with the purpose and strategy and then we expect everyone else to deliver what we have envisaged. A Town Hall presentation and a broadcast email may have detailed the plan and we think everyone knows what to do.

Where we fall down is in the follow-up to make sure the message actually got through. We are all business minimalists, shaving time off activities wherever we can, because we are super busy, all the time. We need to double check that what we think people know is fully understood and they are beavering away on it as we expect.

Part Two requires that everyone knows the status of the plan. Often, though, access to sensitive information in companies can be restricted. Not everyone may see the real numbers and the full picture. My predecessor never showed the Profit and Loss numbers to the team. When I took over, I decided to make the financial situation totally transparent. The only protected numbers are salary and commission information relating to individuals. If they wish to share that information amongst themselves, then that is their choice.

Part Three is everyone knows the areas that require special attention. Business is lumpy. Some parts of the business are flying and other parts are limping along. Again, sharing such sensitive information may be restricted. We need to keep referring back to what we stated was the purpose and strategy for the enterprise and keep measuring how well we are delivering against what we have set out for ourselves.

If things are going well, we feel motivated to do more. If things are not going well, we are motivated to try harder to turn things around. When things are not going well, this situation begs the question about how much open knowledge of the pain should be shared. There is the fear for the leader that if the full extent of the problem is made known, the more capable people, who always have options, will exercise them and leave. This is a tricky balance, and there are no clear parameters for leaders to follow. I would suggest that the leader share enough to galvanise the team to action without scaring the daylights out of everyone and people start abandoning ship.

Mulally’s viewpoint is based on many years of hard-won experience. It is straightforward in its formulation. The daily execution against the plan, though, is another question. This is the role of the leader, to take ideas and turn them into living breathing systems which can maximise the potential of the people in the firm.