9789152325476 by Smakprov Media AB

PERCY BARNEVIK on LEADERSHIP

Sanoma Utbildning

Mailing address: Box 30091, 104 25 Stockholm, Sweden

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Visiting address: Alströmergatan 12, Stockholm, Sweden Website: www.sanomautbildning.se www.ekonomionline.se E-mail: info@sanomautbildning.se Order/Information about educational materials Phone: +46 (0) 8587 642 10 /+46 (0) 8587 642 50 Fax: +46 (0) 8587 642 02 Translation: Lena Hörberg Project Manager: Rolf Johansson Graphic Design: Jonas Olsson, Mobile Design Cover: Trons, TT Nyhetsbyrå & Jonas Olsson, Mobile Design

Percy Barnevik – on Leadership ISBN 978-91-523-2547-6 First published 2013 in Sweden by Sanoma Utbildning as Ledarskap – 200 råd © 2014 Percy Barnevik and Sanoma Utbildning AB, Stockholm First edition First printing

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or over 45 years in the business world and then also in charities, I have held a leadership position, often ultimately responsible, the person with whom the buck stopped. I have devoted myself to leadership every moment of my career. To make decisions in good, and bad, times has been my daily work. There is already a comprehensive literature about how to lead companies. This includes practical examples from companies and advice for managers from consultants. University texts have, as a rule, a more theoretical direction and deal to a large extent with strategic thinking and quantitative models. What is often missing, is advice on efficient execution, based on practical experience from the business world. When it comes to good leadership it is important to provide practical illustrations and examples, since general advice can easily be seen as trivial. With examples you also remember the advice better. In my experience, the difference in execution is what primarily separates successful companies from the less successful ones. Questions of organisation, delegation, motivation, follow-up and similar matters may seem too simple and trivial to attract academics. On many occasions when I was interviewed by teachers, research people or journalists I have been asked what (secret) strategy really lies behind the success of a particular company. When I answer they seem almost disappointed that the recipe sounds rather simple and self-evident. “Everybody” knows that decentralisation and delegation is important, that the focus should be on the customer, that personal development should have high priority etc. Similarly, the importance attached to having clear

Sanoma Utbildning

Mailing address: Box 30091, 104 25 Stockholm, Sweden

preface

targets, to following up, to rewarding people who perform well etc. is well-known. Nevertheless, only certain companies live up to these self-evident prescriptions, while others do not. Why? It depends on differences in execution. This is what I try to illustrate in my many small examples. The advice is based on my own experience and not least on my own mistakes. It relates primarily to big companies like Sandvik and asea/abb where I held senior management roles for some 30 years, including the positions of ceo and Chairman. As an external Chairman and Board member, I also obtained an insight into how you lead companies in other businesses, like construction, pharmaceutical, automotive, chemistry, oil and financial services. I have gleaned ideas from other ceos, like Jack Welch of General Electric, as well as from a few authors within management, like Jo Owen and Henry Mintzberg. It is an irony of destiny that I have worked in the world’s biggest companies but as of ten years ago, now work with some of the world’s smallest companies – a million small companies led by poor but energetic women. I can safely say that the same rules apply in charities, like Hand in Hand, as in the companies. Someone has to make decisions, someone must take the lead, someone must be responsible. This is, by the way also true for organisations such as schools, hospitals, public and voluntary organisations. I have been inspired by meeting so many young people at universities and in business, who are very interested in practical advice on leadership. This has been my most important reason for writing this book. When I look back, I could have personally made great use of the advice – some 50 years ago when I started my

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career. However, a reader who has worked in companies for at least five to ten years, may reap the greatest benefits since he or she is able to relate to the advice in their own position, in their own business. If my advice can contribute to some degree in making leaders a little more effective and making organisations run a little better – then I have achieved my goal. I want to call this a humble and personal, sometimes an easygoing, handbook in leadership.

London, February 2014 percy barnevik

preface

London, February 2014 percy barnevik

the role of a leader

1 “Responsibility– your own and that which you delegate to others – the main theme of my career”

Leader

The job of a leader is not for everyone. Much of the advice in this book about leadership derives from my own career to a great extent. I read somewhere that the number of applicants for positions involving leadership in Sweden has halved in the last few years. It is probably the sheer size of the work load that is putting people off. Below are fourteen attributes: 1. Be totally self-confident. When a crisis looms, take control, take responsibility and make decisions. Control your destiny or someone else will – the title of one of Jack Welch’s books says it all. 2. Be unreasonable by setting high goals for yourself and others. Get out of the “comfort zone” forcing yourself and others to “over deliver” and to put in place new radical measures. 3. Be ambitious with clear objectives and a plan for how to get there. “Stretch targets” must become a part of your personality. 4. Use your time rigorously and ruthlessly. Focus, delegate, and control your agenda. Much of the advice in this book deals with this. 5. Live with the politics. You will not achieve a substantial career unless your actions are successful. However, you need to understand the politics: who decides what and which boss do you wish to work for? 6. Defend your territory, choose your battles and make sure your results are visible.

the role of a leader

1 “Responsibility– your own and that which you delegate to others – the main theme of my career”

Leader

the role of a leader

7. Work all the time, and everywhere. 8. Sleep anywhere and whenever. (With regards to working and sleeping I was myself rather extreme). 9. Learn to communicate clearly and efficiently both verbally and in writing. 10. Build a strong and good relation to your boss. In order to be effective with your employees you also need to be effective upwards. Always deliver. 11. Be forever positive and constructive, including when dealing with obstructive individuals. You are better off keeping to yourself what you really think about them. 12. Build teams – pick competent people who complement each other; build a strong sense of trust and loyalty between them and you. 13. Humility and sincerity – traits of great leaders. 14. Walk the talk – this worn out expression says quite a lot about what strong leadership represents. Do you show kindness also to those at the bottom of the company hierarchy? When you are the last person to leave in the evening, do you switch off the lights? However, the strength of the leader is not everything. It is important to emphasise the so called emotional intelligence of a leader. An example is how quickly a leader’s mood at any given time can spread to the work force. Employees who are tense and intimidated may be pushed to reach targets temporarily, however, not in the long term. The expression “smile and the whole world

the role of a leader

smiles with you” really does ring true. A depressed and inconsiderate boss creates a poisonous atmosphere causing staff to achieve less. A positive leader is a good leader. Fundamental to good leadership is ultimately whether you are aware of your strengths and weaknesses and also have the ability to show humility in front of your staff. To lead from the front was characteristic for successful historical Commanders. However, the tricky bit is to get the soldiers to follow. A typical example of what not to do is what the Italian general did in a battle against the Austrians during the First World War. He drew his sword, leaped out of his trench, ran towards the Austrians screaming “Avanti”. He then looked back towards the soldiers who stood up in the trenches applauding and yelling “bravo”. A similar story is about the Vice Presidents who said to the ceo “We stand behind you – far behind you”.

the role of a leader

Leadership

Quality of leadership can be measured by the staff’s achievements. A good leader manages to get the most out of his or her staff. A leader inspires, shows how good they can become and helps colleagues realise their full potential. You could say that the leader transmits energy or rather releases dormant energy and capacity within others. In the same way, the leader does not develop staff but rather helps them to develop themselves. Before you take on the role of leader, you need to grow and once you have become a leader you need to help others grow. A good description of leadership is: “Success requires greater effort than what most employees are prepared to make, however, no more than most are capable of. The difference is good leadership”. The British poet, Christopher Logue, wrote about leadership: Come to the edge It’s too high come to the edge And they came And he pushed And they flew I saw a cartoon of a boss who was tired of hearing about all the good attributes a leader should have. He finally said: “I do not think I have any of those qualities but I do possess something that is very important – I own the company.”

Leaders are always seen in relation to the ones he or she leads. One must mention however, that a good leader is also competent in managing upwards. Everyone has a boss, even a ceo, whose superiors are the Chairman and the Board of Directors. If the leader is not successful in being heard by those above him or her, then his subordinates will also suffer.

the role of a leader

What you need to do is to find the right boss for you and then practise the following: always deliver, offer solutions, not problems or surprises, be positive and avoid excuses, be loyal and give alternatives. Learn from your boss as even the worst kind will have something to teach you, otherwise he or she would not be a boss. Remember also: “You do not always know who is right, but you do know who makes the final decision”. Your boss can accept several mistakes, however, never a lack of loyalty. A defensive boss told me once ”Don’t outshine me, don’t outsmart me, don’t outflank me”. So do not do that. A leader, in his or her role downwards and upwards, could be said to simultaneously represent two parties – the company and the staff. In strongly dedicated teams, staff can take over from the manager. His or her role will then solely be to protect the team, like a union representative. However, do remember in this instance to keep your company hat on. This can be combined with a strong commitment to your group. In the same way that good leaders boost the achievements of everybody, bad leaders can have the opposite effect. As a rule, the negative effect ends up being greater than the positive one. I recently read in a Swedish report that 40 per cent of employees consider that their boss does a poor job, which they feel ruins morale. Therefore, if it is important to lift up good leaders, it is even more important to remove poor ones. My old friend and adviser, Henry Kissinger, defined leadership as “the art of making people do what they would never otherwise do”. I also wish to quote the old Chinese philosopher Lao Zi (7th century bc). “The best type of leader is the one who you barely know exists. Not that good if people obey and praise him. The worst kind if people hate him.”

the role of a leader

Leadership

the role of a leader

Leadership environment

Staff should be respected and recognised. Every leader must create an environment where the employee feels respected and recognised. Being polite promotes an atmosphere of courtesy throughout the whole team. Apologise when you have made a mistake. In the middle of all the stress of a demanding situation, it is important to have a sense of humour so that people relax. Focus entirely on the person you are talking to, switch off your mobile telephone. During a conversation I had with George Bush (Senior) at a cocktail party, his eyes flicked around looking at other people as if he was preparing for the next conversation. Bill Clinton, on the other hand, looked me deeply into the eyes during our meetings and gave me a sense of being significant. He was also very well briefed, not just about the subject we were discussing, but also about me as a person. Do not turn up late for meetings – to do that means that you are stealing time from those who are waiting for you. Please also remember that lost time can never be regained, as opposed to money, which can be. I am irritated by late arrivals, in particular in large cities where people tend to blame the traffic. It is prudent to assume there is time consuming traffic in most cities which is why you need to allow for margins as a matter of course. Having worked in Sweden and the United States, I was used to arranging gatherings outside of work where wives (and children) took part, sometimes in our own home. Our working tempo was high with a lot of business trips and family life suffered for many of us. However, contacts between spouses who stayed at home strengthened the sense of belonging with the company.

the role of a leader

This kind of socialising did, however, not go down so well in Latin countries, Switzerland and Germany. There, the home is regarded as a sanctuary and one’s private family life is a completely separate world to that of the corporate existence. Following the merger of abb, I hosted a dinner with the new managers which included spouses. It turned out that several of the wives of the management at Brown Boveri had never met each other in spite of their husbands having been part of the same management team for years. The same thing applied to private residential telephone numbers. Sometimes not even managers’ secretaries had access to these as it was taboo to disturb at home. However, I changed all that. They even had to have fax machines installed at home, which they thought was outrageous and an intrusion of their homes. As leader, however, you have to take this type of cultural differences into account.

Responsibility

Your own and that which you delegate to others – the main theme of my career. To take responsibility as well as give responsibility to as many individuals as possible has been a major theme throughout my life. Assuming responsibility is stimulating for the individual and provides more job satisfaction. I remember the times during military service when I was given the responsibility for a platoon and then announced “I take command”. More people become mobilised to take responsibility and make their own decisions when you delegate responsibility. The resulting increased activity brings about a boost throughout the whole company.

the role of a leader

Leadership environment

the role of a leader

Responsibility

the role of a leader

Delegation

To delegate does not mean to abdicate. With increased delegation comes an increased need for control. The ultimate responsibility remains namely with the person who delegates. Delegation allows for the decision making process to take place as far down in the company as possible. The closer to operations that decisions are made, the better it is. The largest catastrophe in military history was perhaps the Charge of the Light Brigade, in which almost everyone was killed. It took place during the Crimean War and the order had been given by a highly ranking British officer who had not even seen the terrain for himself. One sometimes wonders why it is so difficult to get leaders to delegate. Most managers understand that their work load will become impossibly large without delegating some of it. The main reason for this is that the manager considers that the subordinate is not doing a good job. Sometimes unresolved issues return to the manager. A distraught manager once said that there was even more for him to do after he had delegated. To delegate or not to delegate was like being stuck between a rock and a hard place. So, what should you do? You often find that the person who is at the receiving end of the delegating does not possess enough information to carry out the task well. The one who delegates must put this right. Otherwise, delegating becomes “dumping”.

There exists, unfortunately, also a trick called “Upward Delegation”. This can, for example, happen when meeting a member of staff in the corridor who in passing mentions a problem to you and asks for your advice on how to solve it. If you take on that task, then suddenly the employee has delegated the task to you.

the role of a leader

When this happens a few times you will be overloaded with the duties of your employees and will not have time to carry out your own. Delegation constitutes the most comprehensive hand-over of responsibility. The least comprehensive involves instructing the employee directly. Instructions often tell you about what you can and cannot do and thereby limit individual initiative. asea was an instruction company when I arrived there in 1980. Operations were largely driven by instructions. Someone said jokingly that if you put a scare crow in the ceo’s chair instead of me, the business would carry on as usual, all by itself, at least for a year or so. Then there is coaching, with which you help the employee to find solutions to a problem, a solution which the employee “owns” all along. Your function is to be a sounding board. Throughout the process you help increase his/her self-confidence by praising good results.

the role of a leader

Delegation

the role of a leader

Trust

It takes a long time to build trust and no time to lose it, after which it is virtually impossible to re-establish. Trust is dependent on the behaviour of the leader: be sincere, honest, predictable; practice what you preach which includes showing respect for your people. Trust is at the top of the list for how employees wish to relate to their leader. It also creates cohesion within the organisation.

Walk the talk

Set a good example in all areas. This is one of a number of expressions which mean the same thing – to be a good role model for your staff and practice what you preach. Therefore it is not a good idea, although I did so myself, to hold the positions of ceo and Chairman at the same time, since I have always pointed out the disadvantage of this. When you need to develop your staff, start with the staff closest to you. When you need to reduce costs, begin with your own and those of your closest department. If you want your managers to spend more time with clients, then do the same yourself. Mark Twain said it is wonderful to do the right thing and even more wonderful to tell others to do the right thing – and a lot easier.

the role of a leader

Team building

If you wish to achieve something “big”, begin by creating a “big” team. As a young controller at Sandvik, I once stormed into the Italian subsidiary to improve results. The boss, Jan Huss, was an elderly gentleman, slightly “laid back”, with a large wine cellar and poor grasp of the numbers. I did not understand how the company could show such profits year after year with, in my view, such a weak leader. Eventually I understood. Jan’s strength consisted of choosing competent staff which he developed further. He built a successful team. The other managers complemented him. The leader does not have to be the best, but the team needs to be the best. In sports, the expression is to play “in a team”. To play “as a team” is something else. The famous footballer Zlatan Ibrahimovic is said to play “for” the Swedish national team but when it comes to Paris Saint-Germain, he plays as “part of” a team. We have a lot to learn from prominent sports coaches. What is it that makes their team win the championship year after year? Sir Alex Ferguson at Manchester United Football Club was the best coach in English football history. He was able to create a great team spirit among the primadonna football players. This included the so called “hairdryer treatment” involving Alex verbally reprimanding a player at a distance of 15 centimetres. We are sometimes fascinated by the image of the Lone Ranger, but that image is not a true picture. A Chinese proverb says “Behind the strong man, stand always other strong men”. An important step in my own development as a leader was the insight that the team could achieve that which you were unable to achieve on your own. Effective team building became the basis for success. Obstacles for team building are your own ego or insecurity, which manifests itself in the need for control.

the role of a leader

Trust

Walk the talk

the role of a leader

Team building

the role of a leader

Power

Is not about the right to give orders, it is leadership exercised through persuasion. Power is hard currency in an organisation. If a boss simply gives orders, one of two things could happen. Either the employee carries out the order or he/she does not. In the first case passive resistance may make the order ineffective. In the second case, the non-compliant employee needs to be disciplined in order for the boss to enforce his authority. Rather, exercising power means persuading employees that a particular direction is the right way forward. Hiring someone to simply follow orders is a waste of their capabilities. It is also an insult to their intelligence.

Positive attitude

In a world full of crises and cynicism it is important for leaders to maintain a positive attitude. Good leadership is positive. Cynicism thrives easily in a world where the media constantly delivers news about war, accidents and crises. Instead of being cynical, a successful leader sees possibilities where others see problems, and focuses on strengths instead of weaknesses. A true leader does not look back but looks forward to take control of what lies ahead. Outwardly, Winston Churchill appeared implacably positive in spite of regularly being tormented by deep bouts of depression. This is illustrated by the following classic quotes from the Battle of Britain and the threat of a German invasion in 1940: “We shall fight in France and on the seas and oceans; we shall fight with growing confidence and growing strength in the air.

the role of a leader

We shall defend our island whatever the cost may be; we shall fight on beaches, landing grounds, in fields, in streets and on the hills. We shall never surrender ...” and “... if the British Empire and its Commonwealth last for a thousand years, men will still say, ‘This was their finest hour.” In a less heroic arena, in the commercial market where companies battle, the same principles apply. The real test of a leader is his or hers response to a setback. A leader who admits defeat, gets depressed or feels let down by his or her staff, is not a very good leader. A leader learns from mistakes, reacts positively and carries on towards new challenges.

Humility and sincerity

The combination of humility and sincerity are traits of great leaders. Being humble does not mean that you have to drive a cheap car, wear modest clothes and always fly economy class. What it does entail, however, is self-awareness, knowing one’s limitations, and an ability to acknowledge one’s mistakes. In contrast, the arrogant leader thinks he or she always knows best, in particular following a promotion to a top position. I would like to quote an old Chinese proverb: “The person who considers he is right half the time is smart. The person who considers he is right three quarters of the time is smart as well as lucky. The person who considers he is right all the time is a fool.”

the role of a leader

Power

Positive attitude

the role of a leader

Humility and sincerity

the role of a leader

Prestige

An obstacle to great leadership. Prestige stops or delays a boss from dismissing an employee who he himself hired by mistake. Or indeed stops a leader from selling or closing down a business which he recently bought or in which he invested. Nobody wants to admit to this but too often when you peel away the fabricated explanations, prestige is found to be the culprit. The desire for more prestige and a higher status often goes wrong. An example of this is the ceo who builds a conglomerate or takes on too many tasks outside the main company he works for. The upward spiral in ceo salaries is not always related to good performance or financial needs. As ceo salaries are published, it is important for many of them to be high up on the list, in particular as many ceos are competitive by nature. The Board feels pressurised into matching what a similar company pays their ceo. How do you avoid this detrimental behavior? Self-awareness and being honest with oneself is of course the best solution. Further it is vital to have people around who “tell it as it is”.

the role of a leader

New bosses

Specialists who become bosses face many pitfalls. It can be a shock for a specialist, who is used to doing things himself now to lead others, especially if they have not been trained beforehand. Often in the beginning, the new boss relies on their formal authority and simply gives orders. He or she becomes self-important. This authoritarian approach is rarely successful and few employees follow the directives. One unfortunate new boss described that he “felt like a hostage in the middle of a company consisting of terrorists”. He had really enjoyed the specialist work he did before, which had made people listen to and like him. “Now, nobody listens to or cares about me”. A new boss has to learn to lead by persuasion and not by command.

Tough bosses

These individuals are usually unsuitable for the top job. It is a myth that tough bosses are needed to manage staff cuts, winding down businesses etc. Being tough in those circumstances would probably mean not showing any emotion and acting ruthlessly, which would be wrong. In the past, the business magazine Business Week used to run a very silly competition in which they nominated “The Toughest Boss of the Year”. One year Al Dunlap, an American with the nickname “Chainsaw Al”, won the title. A journalist asked him how it felt to be so hated by members of his own organisation. To this Al replied “If you need a friend, buy a dog”. Al was also the person who came up with the expression “It is my way or the

the role of a leader

Prestige

the role of a leader

New bosses

Tough bosses

the role of a leader

highway”. In a different interview, another American, clearly an unsuitable ceo, said that dismissals were necessary in order to keep staff on their toes. “From time to time you have to shoot someone in the courtyard”.

the local mafia, the Camorra. They promised to kill me. This lead to a number of security arrangements, among them bullet proof vest in Italy and X-ray equipment for detecting letter bombs at the head office in Zürich.

In Sweden one time the boss at Boliden said to an employee following a difficult discussion: “Over there is the door, and over there is the window”. The office they were in was on the sixth floor. When an employee was about to get dismissed at Scandinavian Airlines, he was asked whether he knew who had the equivalent job at British Airways. The employee did not know the answer. “Nobody” was the reply from the boss at sas.

My own security arrangements were on the other hand not very successful. For example, I changed my name every time I moved to a new country to work in order to confuse the terrorists. In Switzerland my name was Dr. Peter Bark and in Italy it was Dottore Pietro Ballani. And when I moved to England I became Peter Barlow.

Nothing can be worse than allocating a tough boss to a difficult situation, such as dismissals. In contrast, an empathetic leader is very much needed at such a time. It is possible to combine em pathy with having to make tough decisions. This is when company policies are put to the test, for example, those to do with hiring and firing staff. It is important to display compassion in such a situation, not least for the sake of those who remain employed in the company. My own reputation, particularly in Germany, Italy and Switzerland, was certainly not the best following the big merger of abb. In these countries, several factories had to be closed and 20,000 jobs disappeared during the first two years. In Germany, I was compared to the Swedish “hero” king Gustavus Adolphus, who many Germans hated. They reminded me that he was eventually shot dead at the battle of Lützen during The Thirty Years War; the same would happen to me. In Italy there was also some trouble after I had to close a factory in Naples with some 2,000 employees. This factory was protected by

During one of the first days in London, I was out shopping for something which needed to be delivered to my home address. The sales assistant asked me “Your name, Sir?” I was unable to answer as I could not remember the new name. The assistant, a little impatient, repeated her question, “Your name, please!”. Then I had to tell her the truth and replied “I’ve forgotten my name”. The lady looked at me stunned, whereupon I said “No, now I know where I can find my name!” and looked into my little notebook which I found in my breast pocket. “My name is Dr. Peter Barlow”. However, by now my credibility was completely gone and the purchase transaction did not take place. There were also plenty of caricatures of and stories about me depicting how terrible I was. I remember one in Switzerland: Barnevik knocked on the door to Heaven. S:t Peter, however, quickly referred him down to Hell, where he belonged. After a while, The Devil asked for a talk with God and said “What kind of person have you sent me? He has closed half the furnaces as he feels we have too much capacity. In addition, he has fired thousands of little devils. And now he is proposing a merger between Heaven and Hell. Take him back.”

the role of a leader

to lead change

27 “Change is necessary – the obstacle is resistance by individuals who do not believe it is possible. Benchmarking is the most powerful tool that exists to break down the resistance”

Change is necessary

The obstacle is resistance by individuals. As Aristotle observed, it is probable that improbable things will happen. Change is inevitable – you need to keep moving forward. It is like riding a bicycle. If you stop, you fall over. The reality is that if you stand still, you are in fact going backwards, namely if other people around continue to move forward. If you stand on an escalator going down, you have to climb quickly enough in order to get up. An almost permanent revolution is required. There is a saying “When you are through changing, you are through”; in other words, when you stop making changes you are finished. You should also start making the changes before you have to. The somewhat boastful title of my memoirs is I want to change the world. I therefore feel a bit embarrassed when I am reminded that Socrates said “let he who wants to change the world first change himself” as I have hardly changed myself. In spite of my focus on change, I am conscious that an organisation can overdose on change. People nod wearily as soon as there are new calls for change, and carry on as normal. They hope that the demands for change will disappear with time. The rather rude expression bohica (Bend Over, Here It Comes Again) reflects the discomfort of long suffering employees waiting for yet another management imposition. It can be likened to having a stomach full of gases – if you wait for a while, the discomfort disappears. Therefore, you need to prioritise those changes which need to take place immediately over those which can wait. This is also the case with rolling out various initiatives. You must not implement too many at any one time if you expect dedication