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"The adherents of the status quo never had it so bad. There has always been a conflict between those who feel their values are eternal and those who feel they are relative."
 - R Kostelanetz

"The world is in a constant state of flux."
 - Heracleitus, the Greek philosopher.

ight gigantic American companies dominated the steel industry in 1960. Their total market value: $55-billion. Today, it's down to $13-billion, and falling.

Where did the value go?

It migrated.

It sought greener pastures in other companies and other sectors of industry that found better ways of responding to customer needs and priorities. It migrated, for example, to Nucor, a min-mill that uses low-cost technology and cheap raw materials and can, therefore, offer steel at much lower prices.

The value also moved to aluminium and plastics producers who offered manufacturing customers better suited to their drinks cans or car parts. It also migrated to Japanese Mills, where superior manufacturing process designs allowed for the production of quality steel at lower prices.

How could new and often small competitor steadily plunder the customer base so painstakingly built up by the big steel producers?

By better business design that focuses on customer priorities.

When the design remedies don't match your business problem, you modify the business problem, not the design.
As Thomas Carlyle, the Scottish historian and social philosopher, put it: "Nothing is more terrible than activity without insight."

How you design your business reflects your choice of  products to manufacture or services to provide, how you deliver them to customers in a way that gives them what they want and still allows your company to profit.

It was Samuel Gompers, an American labour leader in the early 1900s, who said: "The worst crime against working people is a company which fails to operate at a profit.

Best business designs

In the business world, higher revenues, profits and market share, leading to higher market value, migrate to companies with the best business designs. To ensure that these values migrate your way:

  • design your business to respond efficiently to customer priorities;
  • keep a wary eye on competitors who, by better design, attempt to entice your customers away, and
  • analyze value migration trends that indicate their next destination in your sector of industry.

Value migration is an inevitable cycle. And it's coming soon to your industry, so...

Be prepared

To help you sharpen your defenses and initiate appropriate action:

  • respond to customer priorities, and
  • overcome institutional memory.


In the past, technology gave you the competitive advantage. If you invented a successful product, customers sought you our. DEC, for example, invented the VAX computer. The company's market value grew by billions of dollars. One product, Tagamet, tuned SmithKline into a multi-billion dollar pharmaceutical giant. And Xerox introduced the photocopier and watched its market value soar by $11-billion.

In the industrialised First World, innovations followed one another in rapid succession. They changed the way we thought of our companies, our markets, our competitors. And they changed the way we thought of ourselves.

Business journalist Mark Roman, general editor of Success in 1987 wrote: "Every time a manager rolls out of bed and gulps down his morning coffee, he'd better be prepared to face a world that is dramatically different from the one he fell asleep in."

Brains in the boardroom

Until the Technological Revolution and its successor, the Information Revolution, doing business was a process that remained relatively constant. The brains in the boardroom strived to devise strategies and systems that fitted the world in which they operated. Many, trained in the "old school" of business management, can't or won't adapt to their methods to deal with the new, infinitely more complex business environment."

Managing in this environment," says international business consultant and author Richard Foster, "requires a new orientation."

Rather than tightening central control, he suggests that companies fragment themselves into self-sustaining divisions, each responsible for innovating within its own niche. This usually means predicting trends and catering for them with technical innovations.

One company that does that with outstanding success is the mighty Sony Corporation in Japan.

The powers-that-be in Sony watched the fast growing trend in fitness. A growing army of international health fanatics jogged or cycled along roads and by-ways in their hundreds of thousands. They needed a device that would take their minds of the pain of the slog.

What better than a go-anywhere, miniature audiotape player? The thought led to the birth of the now legendary Walkman.

"Nobody liked the idea," he recalled. "But I had a hunch that the portable stereo player would be successful and popular despite scepticism within my own company."

Morita was so certain of his hunch that he offered to resign his chairmanship if Sony failed to sell 100 000 Walkman units during the first year of production..

He didn't have to. By 1987, Sony had sold more than 20-million Walkmans in more than 70 different models.

Morita and Sony co-founder Masaru Ibuka often discussed the concept of developing their company as an innovator that would design and manufacture high-tech products.

"Merely building radios," he said, "was not our idea of the way to fulfil these ideals." Sony set out to make its products better, smaller and more efficient by adapting and using the latest advances in technology, especially electronic technology.

Rapid imitation

But, in many sectors of industry, the rate of breakthrough technological innovation is slowing. And even breakthrough innovation doesn't give you much of an advantage anymore because of rapid imitation from competitors. For example, Sony no longer has an exclusive hold on the market for in-the-pocket, go-anywhere stereo systems.

Invent and develop a radically new product and you'll have all your competitors offering something similar in no time at all. And it may be even cheaper.

Also bear in mind that innovation isn't easy. Before you can innovate, you must understand what type of business you're in. Superficial knowledge isn't good enough. Your comprehension must be total. This knowledge must include:

  • first-rate intelligence about your competitors' activities;
  • the ability of your company's research and development department;
  • your company's manufacturing capability, and
  • what the consumer wants and needs.

 Robert Taylor, founder of Minnetonka Inc, which launched the wildly successful On Tap Beer Shampoo and marketed Calvin Klein's Obsession, offered these suggestions:

  • keep your antennae tuned into consumer needs;
  • listen to consumer complaints;
  • conduct constant, informal research into new product concepts, and
  • understand the driving forces behind consumer purchasing decisions.

An old maxim, still echoed by some people in business, says there's always room in the consumer-dominated marketplace for improved versions of existing products.

Like the mousetrap.

Zero sales

Indeed, an inventor designed and built a better mousetrap. Field tests, so to speak, proved that it's performance was far superior to the conventional mousetrap. Moreover, it was infinitely reusable and could be retailed at only twice the price of the use-it-once and throw-it-away variety. After you caught your second rodent, catching further mice didn't cost a cent.

But no-one bought it. Sales were zero.

The inventor had overlooked an important detail. He found that no-one wanted to remove a squashed mouse from the trap. People would rather through the whole contraption and the corpses of its victims away.

"Build a better mousetrap and the world will beat a path to your door," proclaims the hoary adage.

Forget it. It's probably one of the most useless pieces of old wives' wisdom. To get ahead and stay ahead, you've got to thing revolution not evolution.

In a product development and customer service, aim to make things 100% different. Ten or 20% better just isn't good enough.

If you improve what ever you offer in small, incremental steps, the world won't race to get to your doorstep. It'll yawn. To overcome the consumers' ho-hum mindset, jolt them into action by revolutionising what you do. Make the changes radical.

Completely redefine your product category.

Look at Nando's. It didn't try to upstage Kentucky Fried Chicken by offering fried chickens under another brand name. Nando's developed its own unique recipes to produce chickens that are unquestionably different.

When you offer a truly unique product, it will automatically differentiate itself from the competition to find its own niche in the market.

There's also another way.

Deliberately alter the consumer's perception of your product without, in fact, changing the product itself.

Some years ago Swatch Watch successfully did just that. When it decided to enter the market for low-cost timepieces it faced formidable opposition from Timex, which had all but completely sewn up the low end of the market. So Swatch designed watches with trendy new-wave faces and straps. Instead of inexpensive and reliable Timex-style timekeepers, they became affordable fashion statements.

Competitive Advantage If your product is well-designed, works perfectly, is popular with consumers and outsells all its competitors, immediately discontinue manufacturing it.
So success doesn't depend on inventing a better mousetrap - even one that promises radically improved performance. The route to success is creating, developing and constantly honing better methods of responding to customer priorities. It's up to you to find out what they need; what they're willing to pay for. Think along the lines of distribution systems that save customers time or production processes that lead to products of undoubtedly better quality.

 The key to competitive advantage? It's creating offerings that match your customers' priorities.

Overcome institutional memory

If you find that you're losing value to your competitors, don't lay the blame on the current economic climate or anything else. Blame yourself. Chances are that you're responsible.

Thomas Watson, who founded the computer giant IBM, reputedly often spoke to his regimented, suited executive troops in simple, homely terms;

"We must never feel satisfied," he told them. "There is no such thing as standing still."

And when he was in a rah-rah mood, he rallied his managerial lieutenants with such rousing proclamations as: "Hire the best people. Give them top notch training. Treat them well. And expect loyalty."

Business historians claim that IBM was built on the best of American middle-class values during the 1950s and 1960s. Young men with executive potential were recruited from selected universities. They were hard-working and clean living. But independent thought, according to some critics, was discouraged.

 Insular company

"The ideal IBMer," said a former executive, "was ambitious, impressionable and easily moulded. And the company was insular. When you were in IMB, that's where life began and ended. You were expected to keep within the confines of your allotted department and strictly toe the rigid company line."

IBM's rigidity led it into deep water. Set in its ways and unable to quickly react to marketplace changes, it saw its formerly dominant grasp on the market slipping. For example, it could have protected its position by selling computers through the mail as Dell did. And the big steel producers, whose dominance of the market at one stage looked unbreakable, could have safeguarded their markets by starting a separate mini-mill network as Nucor did.

But they failed to take value-protecting steps.


Because industry leaders tend to suffer from "institutional memory".

This affliction prevents them from thinking outside the bounds of their past experiences and successes. The ability to buy computers by mail-order and scrap metal mini-mills had never existed before. Therefore industry leaders believed that they were irrelevant.

They overcame institutional memory

However, some large companies found ways to defeat institutional memory. For strong, forward-looking leaders like Jack Welch, of General Electric, and Andy Grove, of Intel, the phrase "we've always done it this way" is meaningless.

James Bryant Conant, the celebrated American scientist, said:"Behold the turtle. He only makes progress when he sticks his neck out."

Intel's Grove stuck his neck out - all the way. He wasn't afraid to abandon memory chips, the product on which he'd built his company, in favour of processor chips to create one of the most powerful companies in the computer industry. The phrase "Intel inside" has come to be synonymous with leading edge personal computer technology.

Other big-name companies also developed structures or processes that continuously combat institutional memory. 3M constantly searches for interesting products that will carry it into the future. And Shell's scenario planning always looks ahead - far ahead. In South Africa, the Anglo-Dutch petroleum giant, ever cognisant of customer needs, pioneered the off-highway Ultra City "fill up and refresh" complexes.

Following their lead, you can wage your own war against the retarding effect of institutional memory by:

  • visiting customer conventions, not their own, to acquire new slants on what the industry is thinking and new perspectives on what customers are thinking, and
  • changing their diet of conventional information by seeking out small, remote competitors in addition to keeping a wary eye on the main opposition.


If you want to create new business designs that will help ensure your success in the future, break with the past. It takes courage, but you can do it. You'll have to if you want to stay in the race.
The Past The past is valuable if used as a guidepost, but dangerous if used as a hitching post.

It's easy to tell you that you must create a new design for your business. But creating it is a different story. To give you a kick-start, here are four practical suggestions that really work:

  1. Bring your customers directly into the design process. While the design of your business will always benefit from close customer contact, your customers will be of greatest value when you're in the throes of developing a new business design.
  2. Save time and resources by borrowing models and precedents from other industries. Even familiar or seemingly unremarkable business design elements can generate tremendous value when you combine them in an original way to suit your needs.
  3. Acquire the relevant core competencies. When you develop fundamental assumptions for a new business design, you may discover that customers no longer value your core competencies. Don't be afraid to go beyond what exists to find competencies for the future.
  4. Protect the design of your business from falling into the traditional organisation trap. A radical new business design can be overwhelmed in the existing structure of your business. That's why Honda, Toyota and Nissan sell their luxury cars through separate dealer networks.

To get your business on track to a successful future ...

Redesign it from top to bottom

Cutting to the quick, follow my four suggestions for a fast business makeover.

  1. Lacerate hierarchy.
  2. Develop a free market.
  3. Lead on principals
  4. Make mistakes.

Lacerate Hierarchy

Replace traditional corporate hierarchy with more indirect methods of leadership. This leads to greater freedom, better allocation of resources and a strong force for focusing on the common good. Giving your employees more scope to lead creates an organisation that is ready to meet any challenges that tomorrow will throw at it.

This means totally restructuring your company's management structure until it is no longer structured. The old-fashioned, authoritarian manager has become a dinosaur. Even Peter Drucker says that he's no longer comfortable with the word "manager" because it implies subordinates.

"You have to learn to manage in situations where you don't have command authority, where you are neither controlled nor controlling", he points out.

He add that management textbooks still discuss the managing of subordinates.

"But, " he observes, "you no longer evaluate an executive in terms of how many people report to him or her. That standard doesn't mean as much as the complexity of the job, the information it uses and generates, and the different kinds of relationships needed to do the work."

Cubicle dwellers

In the traditionally structured company, each employee operates in a cubicle. Peter Day, the presenter of the BBC Radio 4's programme, In Business, refereeing to comic strip character Dilbert, a nerdish middle management admin worker, says: "The cubicle marks the boundary of his power and influence within this huge and nameless company."

Dilbert describes himself as "the king of my cubicle". His loyal subjects are "Mr. Computer, Mr Stapler and the Binder family".

The archetypal middle manager, Dilbert is a reminder of why companies need to re-engineer. Too many people are boxed up in little cubicles in which they perform their given functions for year after year without any idea of how they or their functions slot into the overall scheme of things. Indeed , their only function appears to be how to go about frustrating attempts to improve customer service by intercepting and delaying messages destined for the decision-makers.

Some years ago, the late Professor C Northcote Parkinson published his now famous law: "Work expands to fill the time available for its completion" One of the many equally famous corollaries states: "In any administrative organisation, the administrative staff will increase each year by a known percentage, irrespective of the work - if any - to be done."

Then there was the Peter Principle, first made public by a Canadian doctor, Lawrence Peter: "Managers are promoted to just above their level of competence."

Now Scott Adams, the cartoonist creator of Dilbert and former cubicle inhabitant, "has put forward a new principle: "People get promoted to management because they're incompetent at doing the job they're originally supposed to do."

Promote incompetent employees

The middle manager-turned-cartoonist notes that traditionally structured corporate bureaucracies single out the most incompetent employees for promotion to management without even passing through the 'temporary competent stage'.

He says that this actually makes sense. In a perverse way.

"In the old days, the manager had to be the smartest one because the manager had to know how to be manager, plus understand all the jobs of the people below.

"You want your smartest person to be the computer programmer, the person doing the heart surgery, the person piloting the jet. And you want your least intelligent person to be the person asking for status reports and doing team-building exercises and doing the hiring and firing.

"I mean, you know, these are fairly moronic jobs. So it kind of makes sense."

The trouble is that in the real world the guys in these "fairly moronic jobs" can stifle progress and kill customer delight stone dead. Today's management gurus reckon that they're the layers of lard that clog corporate arteries. Current thinking urges business to siphon off this fat to make the distance between the point of customer contact and to corporate brass as direct and short as possible. The decisions made by this in-between layer should be made by those at the coal face ...those who deal directly with the customers.


Americans have coined a word for bleeding off the blubber. Downsizing. It's a synonym for job-chopping. The objective: to create a lean, flat, cost-efficient corporate structure.

So, if you're going to survive in the new economic climate in which you will face cut-throat competition from highly efficient global competitors, you're going to have to trash the red tape and deadwood.

According to Laurance Kuper, managing director of Competitive Strategy, corporate inertia is likely to stunt any attempts to face the harsh reality of global competitions.

He says that local business people have the choice of either drastically revitalising their companies and repositioning them to achieve greater efficiency or "shoring up comfort zones to no-profit positions right at the tail end of global competitiveness".

Most South African companies, he observes, have chosen the latter course.

You don't have to follow the herd. You can make it happen for your company and customers by demolishing those tacky little boxes ... those suffocating little cubicles, and giving your organisation a flat, streamlined look.

But you don't have a lot of time.

The advance units of the foreign business invasion troops are already on our soil. Re-engineer your company for greater efficiency and total customer delight this year. Next year could be too late.


Begin by unleashing the spirit of enterprise in your organisation. As recent changes in South Africa's political mainstream thinking show, the free market seems an indispensable institution for improving productivity and prosperity. As Adam Smith wrote, the free market's "invisible hand" guides entrepreneurs, while pursuing their own selfish ends, into serving the needs of their customers and, thus, the common good.

By introducing a free market principle in your organisation, you can directly motivate and inspire your followers to find the most efficient, effective ways to serve the group.


There's a name for this sort of organisation: intraprise -- short for intracorporate enterprise. And the way it functions is easy to understand. You don't force employees to the monopolistic staff services. Let them choose among service providers -- and them become the providers if they want to. That's what the US Forest Service did with great results.

The Forest Service controls 127 national forests divided into two regions. The foresters employed by the service had access to only one of the centres, depending on the region in which they operated. Since each centre was a monopoly in its region, service standards were far from acceptable. The foresters -- the service centres' internal customers -- often complained about the poor quality of the service they received from the centres, which adopted a take-it-or-leave-it attitude.

Two options

Forest Service executives initially considered two options. They could define and lay down acceptable standards of service for the technical centres or they could attempt to improve matters by bringing in new management teams.

They did neither. They did something better.

They let the foresters -- their internal customers -- choose which technical centre they wanted to call in irrespective of which thhhhhey operated in. This transformed the centres into cost-effective, customer-focused organisations.

What does this mean for your company? Simply stated, your business becomes a collection of entrepreneurs who sell their services to your core business. Like virtual organisations, your business will have a small hierarchy responsible to top leaders for accomplishing missions.

With one important difference.

Free internal market

Virtual organisations buy components and services that create value for customers from outside suppliers. In a free intraprise system, buyers can choose from groups outside the company or suppliers who are part of the free internal market.

There's no doubt that intrapreneurship encourages innovation. Basically it's a concept that fosters entrepreneurial behaviour within an organisation. But John Naisbitt, who penned Megratrends and Reinventing the Corporation, warns that while boardroom barons pay lip service the idea, many get cold feet when it comes to committing themselves to intrapreneurship. The path to success, they point out, is littered with "innovative failures".

Naisbitt cites Levi Strauss as one example. Although generally known as a company with a progressive management philosophy, it was forced to scrap its Fashion Portfolio offshoot, which targeted the more fickle and high end of the fashion market. The post-mortem revealed Fashion Portfolio's focus contradicted Levi Strauss' overall marketing strategy.

Executives in the United States agree that intrapreneurship leads to innovation. In fact, a study of 500 top company executives by Arhur Young and Company found that most respondents believed that innovation should be a corporate priority. However 50% of them said that the high innovation mortality rate precluded the implementation of any form of intrapreneurship in the corporations for which they worked. More than 66% of the respondents also said that their companies lacked coherent plans for the implementation of innovations.

The situation on the corporate landscape hasn't changed much, particularly in South Africa.

A study by Arthur Young and Company some years back of more than 500 executives in the United States found that while 75% of the respondents believed innovation was a corporate priority, 50% said their companies cited innovative failure as a cause to shun intrapreneurship. More than 66% of the respondents added that their companies lacked coherent plans for the implementation of innovations. The situation on the corporate landscape hasn't changed much, particularly in South Africa.

Corporate pinnacle

For innovation to happen through intrapreneurship, the people at the corporate pinnacle must empower those down the line to take independent action internally. This requires dedication, patience and vision. You'll probably have to stick with employee-mooted projects for at least five years before, if ever, they turn to a profit. That's takes the kind of guts that doesn't often bloom in conventional, pyramid structures.

But the results can be worthwhile. At Ford, it led to the development of the popular Mustang and at IBM, the personal computer.

At Northwestern Bell, which encourages independent thinking, active intrapreneurs must perform their normal jobs until their brainchildren take off. Venture capital is provided by the company, but they don't part with the cash easily. Intrapreneurs have to thoroughly research their pet projects and draw in-depth venture plans, projects sales growth and, if necessary, call in technical experts to support their proposals before Northwestern Bell will agree to underwrite the financial side.

How do you recognize a potentially successful intrapreneur on your payroll? He or she will be a person who revels in taking measured risks. They're prepared to start small and gradually unfold their ideas. This means that you can keep the initial funding lean to minimize your losses if the project flops.

Its a good idea to form a separate company for any new intrapreneurial venture. Its less intimidating for those working on the internally generated, innovative project. And if it fizzles out, your core company saves face.


Leaders of the future will be the people who create cultures or value systems based on principles. Or so says Stephen R Covey, author of
The Seven Habits of Highly Effective People.

Creating such cultures will be tremendously exciting for the people who create them. But only if they have the vision, courage and humility to learn and grow.

Winterhur Insurances managing direct and CEO peter Spalti lists what he considers to be the six most important leadership qualities. As a leader worth following, you must have the ability to:

  1. Define goals. Leaders don't only set goals. They show their followers how to achieve them. This requires the imagination to interpret visions and implement them at a practical level. For success, you need the ability to recognize and the will to search for and implement effective solutions.
  2. Motivate colleagues. This requires the ability to recognize the personal and professional needs of your colleagues as well as limits of their capabilities. Don't do anything that may curb the innate desire of most people to do their best. Encourage it by taking a personal interest in each individual who falls within your area of jurisdiction.

    Motivation, according to Spalti, doesn't mean only offering that incentives related to performance or dishing out pats on the back. Nothing should detract from the resolute implementation of ideas and the demanding of results.
  3. Manage competently. Design plans according to the tasks that have to be accomplished. This means setting priorities and organizing the smooth flow of functions necessary to archive predetermination objectives. It also means finding the right people for the right jobs and delegating sufficient authority to make each task a personal challenge to employees.
  4. Communicate effectively. To be a leader, you must have the ability to communicate essential information so that it is easily understood. And since effective communication is a two-way process, you'll also have to cultivate the ability to listen ---- really listen with empathy to anyone who can offer valid and pertinent information, from the office cleaner to suppliers to customers.
  5. Exemplify a value system. As a leader, you are a role model/ this means that you have to build an aura of credibility and trust around you. If you want to inspire confidence in your employees ability, you have to exude a positive attitude yourself. Its your job to lead the way by example by transmitting clear signals of your declared values.
  6. Welcome change. The economic environment as well as the society in which it operates are undergoing rapid and drastic change. As a leader you must consciously strive to adapt to these never-ending changes and even anticipate them. Its your duty to question traditional values and methods and seek innovative approaches to new problems.

Spälti also cites integrity as vital leadership quality. An effective leader values dependability and honesty both in himself and others. He says integrity is a prerequisite for your acceptance and respect as a leader. It allows you to criticize your employees without jeopardizing their sense of justice, understanding and goodwill.

Those with a passion of learning --- through listening, seeing, emerging trends, evaluating successes and mistakes and absorbing the lessons that conscience and principles teach --- will have enduring influence. These leaders wont resist change. They'll embrace it.

Four character traits

John Garner, former Secretary of the United States Department of Health, Education and Welfare, has pinpointed our characters traits, which he believes differentiate leaders from traditional managers.

True leaders, he says:

  • Think long-term and see beyond today's crises and the monthly or quarterly reports;
  • Have an interest in the company that goes far beyond tasks on which they are currently engaged --- they want to know how all the company's departments dovetail and constantly reach beyond their specific sphere of influence;
  • Heavily emphasize the benefits of vision, values and motivation, and
  • Don't accept the status quo.

If you want to become a new leader, Jan Carlzon suggests that you learn to listen, communicate and educate. He describes the new leader as an emotionally expressive and inspiring person who can create the right atmosphere rather than make all the decision himself".

Don't preach - do

When Peter Drucker was a high school pupil in the mid-1920s, his history teacher told the class to read a number of books on military campaigns during World War I. When called on to discuss the books in class, one pupil said: "Every one of these books says that the Great War was a war of total military incompetence. Why?"

The teacher, who had been wounded in the war, shot back without hesitation: "Because not enough generals were killed. They stayed way behind the lines and let others do the fighting and dying."

You'll never get to lead the band if you can't face the music.
If you're an effective leader, you don't preach from behind. You lead from the front. Sure, you may delegate many tasks. But you never delegate what you can do with excellence - the one thing that makes all the difference ... the thing that sets standards ... the one thing you want to be remembered for. That thing you do.

To quote from The Bible: "If the blind lead the blind, both shall fall into the ditch. (Matthew 15:14)

Cultivate leadership behaviour

If you want to be an effective leader:

  • Don't ask: "What do I want?" Ask: "What needs to be done?"
  • Then ask: "What can and should I do to make a difference?"
  • Constantly ask yourself: "What are my company's missions and goals? What constitutes performance and results?"
  • Learn to tolerate diversity in people. Don't search for clones of yourself. Ask yourself: "Do I like or dislike this person?"
  • Be intolerant when it comes to a person's performance, standards and values.
  • Don't be afraid of strength in your associates. Glory in it.
  • Submit yourself to the so-called mirror test. Make sure the person whose reflection you see in the mirror in the morning is the kind of person who you want to be, who you respect and believe in. The type of person who does things because they're right rather than because they're popular ... the type of person who doesn't do things that are mean, petty or sleazy.

Two qualifications

British Premier John Major cites two qualifications which he believes are vital to good leadership.

"First," he says, "good leaders have the courage of their principles and clear, long-term objectives and goals. Second, good leaders never forget the people who work for them.

"The difference between passive obedience and active loyalty can make the difference between success and failure. From manager to messenger they're all individuals with their own hopes, their own self-esteem and their own interests. A good leader remembers that and behaves accordingly."

Spälti uses the word "leadership" to define the abilities an individual possesses so that he or she can convince other members of a team to act in concert to achieve set goals.

"Leaders," he says, "distinguish themselves from managers in that they do not understand 'leading' in terms of simply supervising the execution of a task of the 'managing' of an affair by means of a set of doubtlessly useful management techniques. "To leaders, 'management' means guiding people, motivating them and spurring them on to new achievements."

Consultant and speaker Gifford Pinchot believes that more leaders, rather than managers, will be needed as the percentage of knowledge workers in organisations increase. He lists as important things that need to be done: innovating, seeing things in new ways and responding to customers by changing the way things are done.


Businesses of stumble and even collapse because timid leaders send signals that discourage risk-taking. IBM founder Thomas Watson had the right approach to risk. While discussing IBM's competitive challenges, he once said: "We don't have enough people out their making mistakes."

Bishop W C Magee put it this way: "The man who does not make mistakes does not usually make anything."

While many bosses will harshly discipline employees who make mistakes or, perhaps, even axe them, there's one chief executive who actually rewards people who err. He's Steve Ettridge, the chief executive officer of a Temps & Company, a temporary employment agency in Washington. A bookkeeper apparently transposed an employee's Social Security number with his hourly wage. The employee could believe his eyes when he received a $5,5-million pay cheque.

Most heads of companies would have at least docked the bookkeeper's pay.

Not Ettridge.

A bonus

In fact, he gave her a $250 bonus. Indeed, he reportedly gives everyone who makes a major foul-up a cash bonanza.

"Mistakes," he maintains, "are only failures if you can't learn from them. And you can't learn from the if you don't talk about them."

Now Ettridge and the bookkeeper double check the payroll before making out cheques. He says his philosophy of rewarding errors stems from the early days of Temps, when he could only afford to hire people who had just left college.

"They worked hard," he recalls, "but they made a lot of mistakes."

He says he usually discovered their errors too late to correct them. So he urged his employees to admit their mistakes so that the could be timeously corrected. To encourage them to own up, he called a staff meeting and put $250 on the table. He told them it was up for grabs by anyone who owned up to a major faux pas.

It's worth noting that turnover at temps rocketed from around $100 000 a year to more than $25-million in the six years since he introduced reward-for-mistakes concept.

Although famed Olympic decathlon athlete enjoys winning -- who doesn't? -- he claims that what thrills him most is the way he reacts when he's beaten. "To my mind," he says, "the great champions are the ones who react to defeat in a positive way.

"I'd much rather climb into the head of someone who's lost, and see what made that person come back to be a victor, than to climb into the head of a winner.

"You can probably learn more from failures. That somebody wins all the time does not necessarily mean they are successful."

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  Authors Note
1. Keep your customer base healthy
2. Introduce fresh makeover ideas for better business
3. Power drive motivation
4. Control your business workout regime
5. Meet the challenge of corporate change
6. Keep your focus
7. Update your circuit
8. Come out fighting
9. Cultivate sparring partners
10. Avoid Regressing
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