Chapter 1: Your Sweet Spot in Time
In a crisis, be aware of the danger—but recognize the opportunity.
—John F. Kennedy
I am a big believer in starting with the end in mind.Therefore, let’s lay out, right up front, what this book is about: This book deals with leadership, especially leadership in mid-market firms. In the leadership arena things have changed massively from the 20th century. The COVID-19 virus is an extreme example of the kind of major challenges we anticipate for leadership in the next ten years.
I’ll be dealing with this new era. In particular, we have cross-generational leadership where five generations can learn from each other. Events big and small affect groups differently. We need to focus on leadership at every generational and organizational level to produce the best overall leadership in modern organizations. Those companies that develop their leadership talent at every level will be more successful in dealing with “regular” changes and surprise changes, whether short term like a competitive threat or longer term like the COVID-19 threat.
I use the phrase “The Leadership Decade” throughout this book because the decade of the 2020s is a major tipping point where leadership must finally make changes from Industrial Age methods to Information (Digital) Age methodologies.
By applying the new concepts we discuss here, this book will be your strategic advantage. Consider:
- Leadership is the biggest strategic differentiator for attracting and retaining top talent.
- The team with the best talent usually wins.
- Strong leadership responds better in a crisis.
- Top talent outperforms mediocre talent—from a productivity, revenue, and profit standpoint—by as much as 800%.
- Investing in leadership development provides an exponential return on shareholder value.
- By 2024, there will be $8.452 trillion of globally unrealized revenues because of the lack of available talent.1
- Organizations with quality succession plans realize up to 20% more in EBITA (earnings before interest, taxes, and amortization).
- Organizations with wide and deep leadership communicate more effectively.
Planning Your Business Future
Business leaders who continue to develop their leadership skills and the skills of others will retain the talent necessary to meet growth and revenue goals and tackle unforeseen challenges. Leadership is a skill everyone agrees is important, yet few companies or leaders really work on continually upgrading their own leadership abilities, let alone building systems of leadership development into their company’s DNA.
To be fair, many organizations believe they are building leadership development into their DNA. The problem is that most organizations are taking a traditional approach. They believe time is on their side and that there is no need to take an aggressive approach to develop the next generations of leaders. Too many organizations believe that they have plenty of time and they can slowly pass leadership development down from generation to generation.
For anyone who believed time was on their side, the events in the first quarter of 2020 shattered that idea. The global pandemic illustrated not only the need for proactive investment into building organizational leadership DNA—it also illustrated the global interconnectedness and the speed of change in the 21st century.
Consider this 90-day timeline:
- December 31, 2019—Health authorities in China said they saw dozens of cases of pneumonia of unknown cause.2
- January 11, 2020—First reported death in China caused by coronavirus.
- January 20, 2020—World Health Organization confirms first cases outside of China.
- January 21, 2020—First confirmed coronavirus case in the United States.
- January 30, 2020—World Health Organization declares a global health emergency.
- February 2, 2020—First known coronavirus death outside of China.
- February 11, 2020—WHO officially names the coronavirus COVID-19.
- February 29, 2020—The United States records its first COVID-19 death.
- March 13, 2020—United States declares a national emergency.
- March 20, 2020—Record unemployment claims filed.
- March 27, 2020—$2.2 trillion US stimulus package signed into law.
- March 30, 2020—Highest United States jobless rate recorded since the Great Depression.
…and so on through the rest of the year.
While the global COVID-19 pandemic may be an unusual circumstance, it is not an extreme case regarding the speed of change. The global economies are interconnected, technology and social media provide instantaneous information, and markets will shift much more quickly in the future.
COVID-19 impacted the global economy in unique ways, and it should be viewed as a warning sign. January 1, 2020 marked the day we were 20% of the way into a new century. This new century will be defined by the speed of change. This speed will also require an aggressive and intentional investment into developing leadership DNA across the board for all businesses.
Time is not on our side.
A New Perspective on Business Success
Traditionally, the purpose of a business is to make a profit for shareholders. (For privately owned businesses, the shareholders are a more restricted group, but the definition holds.) In modern practice, many businesses value other assets in addition to profits, such as customer satisfaction, social value, and employees. Many of these resources can improve profits in the long run. For instance, happy employees treat customers better, stay with the company longer, and take more initiative. These can all increase profits and lower costs.
Every business will focus on the pursuit of profits and other goals as described above. But I’d like to introduce another definition of business success: To accomplish any other goals, a business must survive and reproduce itself.
In the history of modern business, there has never been a time like the present when circumstances have aligned so perfectly for mid-market business leaders to impact their business’s bottom lines and shareholder value by making adjustments that are completely within their control. The current Leadership Decade is about achieving breakthrough growth, driving exponential shareholder value, and leaving a lasting leadership legacy.
Seize the Moment
Business leaders who recognize the current situation can seize the moment.
This book is about becoming a force in your industry, market, geographical area, and business sector. This book is about creating long-term shareholder value and shareholder wealth. This book is about developing your leadership skills and the leadership skills of others.
Throughout this book, I will contend there is nothing—literally nothing—a leader can do to improve results, productivity, revenue, profits, and shareholder value more than developing their Leadership Decade skills and the leadership skills of others.
As a business leader within a midsize organization, you are currently in a “sweet spot in time.” You have the opportunity to attract and retain the best talent available on the planet. You can attract and retain talent that historically joined Fortune 500 organizations and did not consider small- to medium-size businesses as career opportunities.
You Can Have Top Talent
As a business leader within a midsize organization, you have the opportunity to attract and retain the best talent available on the planet. The Leadership Decade is not just about attracting top talent; it is also about retaining your current talent. Turnover is costly on so many levels. The Leadership Decade is about having your current talent turn a deaf ear when the recruiters come calling.
If you ever find that you’re the most talented person in the room, you need to find another room.
— Austin Kleon, Steal Like an Artist
The current situation requires that leaders understand the importance of being leaders. This sounds obvious, but it requires a deep understanding of The Leadership Decade and the willingness to be a strong, visionary, and courageous leader. This book is not for leaders who are faint of heart or who lack the courage necessary to lead their organizations into the future.
The Leadership Decade is about senior leaders accepting the challenge of becoming chief leadership officers, aligning their organizations appropriately, and developing their own leadership skills and the skills of others.
The Evolution of Leadership
Few have explored how followers can act as proactive partners in the leadership process.
— Laurent M. Lapierre, Professor, University of Ottawa,
in CEO magazine
The idea of evolution is something everyone is familiar with, even if just in passing. It is often difficult to see when things are evolving. It is a gradual process. Most times, it is only recognized in the negative. That is, when things fail to evolve, they become extinct. We all tend to notice extinction.
ev • o • lu • tion
The gradual development of something, especially from a simple to a more complex form.
For organizations to continue to survive, they must continually evolve. Your survival depends upon evolution. Survival does not occur because organisms (or people and organizations) live forever. They live because they reproduce a stronger next generation.
Business leadership, for the most part, has remained fairly stagnant for the last 100 to 150 years. However, in the last 20 years or so, there has been a revolutionary change in followership. The evolution of leadership has not kept pace with the revolutionary demands of followers. According to Smarp.com:
- Employee engagement increases productivity in the workplace. Engaged employees outperform their peers who are not engaged. Overall, companies with high employee engagement are 21% more profitable.
- Employee engagement improves morale in the workplace.
- Employee engagement reduces absenteeism. In fact, a Gallup study shows that highly engaged workplaces saw 41% lower absenteeism.
- Engaged employees provide better customer service.
- Low employee engagement is a costly problem! It costs businesses $4,129 on average to hire new talent, and around $986 to onboard the new hire. That means you lose over $5,000 each time an employee walks out the door, not to mention the unquantifiable cost of losing an experienced employee!3
High turnover rates and disengaged employees are just two symptoms of the failure of leaders to evolve.
- According to Gallup.com, 80% of employees are not engaged.
- BambooHR.com found that 31% of employees had quit a job within six months of being hired.
- WillisTowersWatson.com found that 50% of companies worldwide have trouble retaining their best, most productive people.
The Leadership Decade is simply the next natural step of leadership evolution. To start the process, leaders have to first confront the question of, “Why do we exist?”
Why Do You Exist?
Extinction is the rule. Survival is the exception.
— Carl Sagan
The first step in understanding The Leadership Decade is for leaders to think deeply about how and why their organizations exist. This strategic thinking should really be focused on three levels.
The first level is a practical point. Businesses exist to create a profit and shareholder value. In a market economy, businesses survive by being profitable. For this reason, business leaders must focus on profitability and long-term shareholder value.
The second level is a bit more conceptual. Businesses exist to provide some sort of intrinsic value. How does your organization contribute to the greater good? It could be as simple as providing the best product, price, or service. Or it could be as sophisticated as having a deeper impact on the community, employees, and customers. This answer—depending upon the organization—could be deep, sophisticated, and strategic; or simple and practical; or a combination of both.
The third point is the one I want to focus on first. Your organization exists because, strategically, the business perpetuates itself. The word perpetuate means “to preserve (something valued) from oblivion or extinction.”
In order for anything (organisms, the human race, organizations, and so forth) to survive, they must focus on growth, sustaining themselves, and reproduction. At the most basic level, organizations exist in order to perpetuate themselves (reproduce).
Up until now, most organizations have understood this concept strategically. A constant focus is placed, consciously or unconsciously, on reproducing success. In order to perpetuate themselves, businesses constantly focus on things like product development, customer service, sales, employee satisfaction, product cycle time, employee productivity, and so on.
Every business understands that to survive and grow they must reproduce methods that drive revenue and profit. Business strategic plans, whether they are written on a napkin or are in a 4-inch binder, address this reproduction.
Business leaders spend hours thinking through how they will develop the next product to perpetuate and reproduce their product line. Hours will be spent on revenue development, profit maximization, market penetration, sales development, and so forth. Business leaders do this in order to reproduce successful results and perpetuate the business.
In short, at some level, all business leaders understand that they get to exist because they can reproduce positive results. Failure to produce positive results drives businesses to bankruptcy—in essence, extinction.
VOICE OF EXPERIENCE
President/CEO — InterWest Insurance
Keith Schuler has been the president/CEO of InterWest Insurance Services, an insurance leader in the California region, since 2008. As an industry leader, Keith has recognized that what will continue to keep his team above the competition are the skills and capabilities of his people.
InterWest has grown at a rapid rate over the past half decade. The team has more than doubled in size. With such growth, Keith and his senior team realized that they would need a nimble leadership group to be able to execute the things necessary to keep the organization on the same trajectory. Over the past few years, InterWest has implemented a sophisticated leadership development program. Keith says that in the next year or so, “At least 10% of our organization will have gone through this program, and we are hoping that even the folks who haven’t will be elevated by some form of osmosis.”
Over 10% of the organization going through a development program seems like it may be a bit much. Why has Keith set this lofty goal? A situation happened that opened his eyes to the stark reality that every organization probably will face in the future. “For years we had a core team of senior leaders who had all been in the company for thirty-plus years. This group of folks had a lot of responsibility and made a majority of the decisions. Then, our COO informed us of her plan to retire—which was much earlier than we had all anticipated. This is what opened my eyes to the fact that ‘leadership’ shouldn’t just be a few people (core team). Aside from that, with the growth that was happening, we didn’t have the capacity to make every decision. What got us here is not what will take us to the place where we are going. In order to get to that place, we need to develop a pipeline of nimble leaders who have the bandwidth to make decisions in a quick and efficient manner.
“We had people in quasi-leadership roles, which they could be effective in, but their ceiling was a certain height. We realized they needed to be surrounded by others and needed to develop their personal skill sets around communication and decision making.” Transforming someone from an individual contributor to a leader does not happen overnight. The recognition of this challenge and then a plan to develop these leaders is what helped InterWest grow into what they are today.
The Leadership Decade — The Missing Link
In the evolutionary process, which is universally understood in a practical sense, many organizations have failed to evolve in one critical area—leadership development. This is not to say organizations have not spent time or money on leadership development. Leadership development is a multibillion-dollar industry, and many organizations spend significant dollars hoping to achieve the right results.
My contention is that much of this expenditure produces few of the desired results. I use the word expenditure purposefully. Too often, leadership development is seen as an expense and is treated as such. More on that later.
The desired result is growing and reproducing leaders in order to perpetuate and improve the business. Not only does growing and reproducing leaders perpetuate businesses, it also drives tremendous shareholder value. There is quite literally nothing a business can do to drive a greater ROI (see Chapter 9).
Develop your leaders into a competitive advantage.
—Gene Morton, Leaders First
For many organizations, leadership development is task-oriented and has a “check the box” approach. Rarely, if ever, does leadership development rise to the same strategic level as other areas of the business. Reproducing great customer service, sales results, employee satisfaction, revenue, and profits are well documented in strategic plans. Reproducing leaders tends to fall to a subpoint in a strategic plan, if it is mentioned at all. With The Leadership Decade, the emphasis on leaders is highlighted.
The missing link, and a critical realization for today’s leader, is to understand the importance of growing and reproducing leaders at all levels of the organization. By “all levels,” we mean all levels from the top to the bottom, across all generations.
Transcending the Generations
Millennials have gotten considerable attention in the last decade, and many of us have studied how and why they are so “different” (see our book Gen Y Now: Millennials and the Evolution of Leadership). Studying how each generation leads and how they respond to being managed is valuable. But it’s important to remember that there are wide differences within each generation, as well as those between them. Simple stereotypes and guidelines are not enough for the great leadership you want, and for leadership continuity (see Chapter 6).
According to Inc. magazine, “A family owned business may be defined as any business in which two or more family members are involved in the majority of ownership or control lies within a family…According to the US Bureau of the Census, about 90% of American businesses are family owned or controlled. These businesses account for half of the nation’s employment and half of the gross national product.”
It is particularly important for family businesses to invest in leadership development for family and nonfamily members. Simply because owners have the family name does not mean their leadership is where it needs to be or is respected across the board. This can be especially true for second- and third-generation leaders taking over the business.
At different stages of life, events affect people differently. In the 1990s, when Baby Boomers were the dominant generation and there were, at most, three generations working, understanding generational reactions was not very relevant. With five generations now in the workforce, it is valuable to extrapolate how events have affected each generation in unique ways.
The Leadership Decade is about understanding these significant events and how they have impacted their followers. Previous leadership models never needed to consider these impacts. In previous generations, when one generation may have dominated others in the marketplace, the impacts of crises or major world events may have been minimized. Comments like, “This isn’t as bad as….,” or, “As compared to XYZ this is nothing,” or maybe even simply, “Get over it,“ were tolerated—maybe even expected as the norm.
In today’s workplace, with five generations all contributing significantly to revenue generation, it is incumbent upon leaders to consider the impact of organizational crises from the perspective of each generation on their team. In the Industrial Age, crises called for employees to adapt to what leaders demanded. In the Information Age, crises call for everyone to adapt to one another, and now the demand for leaders to adapt to their employees is more important than ever before.
In the age-range table, let’s look at three major 21st century events and the ages for each member of the various generations. As a leader, you can ask yourself how the various ages would have perceived the various major events. For example, on 9/11 the oldest Baby Boomer was 55 and the oldest Millennial was 21. The youngest Baby Boomer was 37 on September 11, while the youngest Millennial was only one.
Maybe even more startling is that on 9/11, the OLDEST of our newest generation of employees, Gen Z, may not have even been born.
When the United States declared a national virus pandemic emergency in March 2020, the oldest Baby Boomer was 74 and the oldest Millennial was 40. Likewise, the youngest Baby Boomer was 56 while the youngest Millennial was 20.
It is safe to say there would be dramatically different reactions and impacts for each of these generations based upon their ages at the time of an event. Never before in the history of the workforce has it been incumbent upon leaders to understand their followers in this way. Major events have always had a lasting impact on generations, and 9/11, the Great Recession, and COVID-19 will be no exception (see transparency superpower in Chapter 11).
The Generational Inflection Point
History will show that March 2020 proved to be an inflection point for businesses around the world. Up until then there had been a tug of war across the generations. On one side, you had traditional Industrial Age concepts pulling against the other side, which championed more Information Age concepts.
1. Mathematics: a point of a curve at which a change in the direction of curvature occurs.
2. Business: a time of significant change in a situation; a turning point.
Traditional concepts like career ladders, going to the office, presence equals productivity, and pay your dues were in a tug of war with concepts like job jumping,
remote work, work/life blur, and looking for what’s next.
Since many senior leaders in organizations in the early 2000s tended to be younger Traditionalists, Baby Boomers, or older Gen X, they structurally and culturally tended to win the tug of war. Younger Gen X and Gen Y employees would then vote with their feet and leave. They were not in significant enough leadership positions to win the tug of war. They left to find better structures and cultures.
In March 2020, all of that changed. No longer were there debates in boardrooms about the advantages of a remote workforce—it was forced upon them. Almost overnight, businesses began to work remotely and leverage technology. Organizational learning and remote leadership became an immediate focus, and not every company was ready.
Suddenly, nearly everyone in the business world (and even those long retired), regardless of generation or technical expertise, instantly knew what Zoom was. Zoom became a household name overnight.
The full impact of the virus and remote working may not be known for years to come. Sociologists will study the impact for decades. However, one thing is certain—businesses will never go completely back to “the way it was.” In addition to virtual business meetings, people from all generations, to some degree or another, took part in things like virtual happy hours, virtual Bible studies, virtual book clubs, virtual family reunions, and just virtual friendly catching up. Technology and virtual communication became a reality overnight.
Video Conferencing Transcends the Generations
In April 2020, The Lily (a publication of The Washington Post) published an article, “She’s 93 and taking her book club to Zoom”:
Connie Beskind’s book club has been meeting once a month for at least 20 years. And now, because of the stay-at-home policy in her home state of Connecticut, the club, like others all over the country—has started meeting virtually.
“I got such a kick out of the fact I was so high tech,” the 93-year-old said.
Beskind and the other members of her club—whose ages range from 65 to 97—logged onto video conference app Zoom…
“One of my dear friends is older than I am—she was nodding off,” Beskind said. “She’s 97, so she was entitled to nod off in her chair. But, on the other hand, she was able to Zoom.”
A Permanent Inflection Point
This inflection point is not just about a virtual workforce or virtual meetings. A new normal will be established in many, many areas. Leaders will need to lead folks who are “stuck” with Industrial Age philosophies while also guiding people who are firmly in the “Information Age” culture.
In addition to leading individuals with different viewpoints of the work world, leaders will also need to guide teams that have very different viewpoints. This leadership may be needed on the shop floor, in the boardroom, or when guiding individuals spread across the globe.
This inflection point will demand a new understanding of leadership. Leaders at every level of an organization will need to adapt to the realities of this inflection point. Leaders must understand that the Information Age requires a constant adaptation to the needs of the employees. Senior leaders will need to continually “sharpen their saws” and develop new leadership skills. Organizations will need to invest in leadership at every level to adequately arm leaders for a new generation of followers.
While the various generations tend to prefer different leadership styles, aspects of all leadership styles have value for all generations. If you take the best leadership and management techniques for each group, you can improve your leadership for other groups in your business, no matter what generation they are. This would include components like better communication, ongoing feedback, and clear paths for advancement.
The definition of inflection point says it all. Successful organizations will end all of the tug of wars. We are all, as business leaders, at a point of the curve where the change of direction occurs. This is a significant time of change and a turning point. The Industrial Age is completely over. Constant adaptation is the new normal, and leadership will never be the same.
Great Leadership Can Attract Leaders
If you develop your leadership to attract all generations, your company will have a striking advantage. Do you have a reputation for developing leaders? For improving people’s skills? For empowering employees? If you do, then top talent will flock to your company. Even if some employees leave, they will spread your reputation to help attract others. And when they find that other companies don’t provide the environment you do, some will return with new skills and stories about why you are better.
That Was Then
In order to understand the concept of leadership development across the board, let’s take a moment to look at how past organizations have often evolved in their leadership development thinking and processes.
Most organizations, especially mid-market companies, have looked at leadership development as a function of tenure and skills. People tend to be promoted because of time within an organization and technical expertise. However, tenure and technical expertise do not equal leadership skills. Most leaders stick with what made them successful originally, which is typically what they learned from their leader role models.
Because of this tenure-based decision-making process, most organizations, culturally and quite subconsciously, develop a “pay your dues” mentality. In order to get ahead, you must pay your dues, bide your time, be patient, and keep your head down—to name just a few unspoken cultural realities for most organizations.
For most mid-market companies, people climbed the ladder because of tenure or skills (more on that in Chapter 4). To be blunt, leadership was reserved for “the gray hairs.”
Our company, Solutions 21, started in 1994. I cannot tell you how many times in our work with clients we have seen the best-skilled technician be promoted to the manager of the group. Organizations take their best “welders” and make them managers of the welders. The truth of the matter is that these individuals never wanted to be managers but took the role because it was the next step on the ladder (and pay scale).
Getting to the top has an unfortunate tendency to persuade people that the system is OK after all.
— Alain de Botton, philosopher
In this example, what is required are people skills, not welding skills. Tenured, experienced welders have been working on welding expertise for many years, not people skills. They may have never developed their communication, coaching, mentoring, or really any leadership skills, along the way. Once these top welders become managers, the people reporting to them get left behind. They become an afterthought.
In addition to the lack of leadership, these new welding managers also fail to pass along their knowledge and expertise. What tends to happen is that when there is a difficult weld to accomplish, these managers step in to perform the task. People are told to watch and learn.
The problem is, this is not how adults learn. Knowledge transfer is not accomplished, so no one except the experienced welding manager knows how to complete many difficult tasks. Knowledge is not reproduced.
The result is often disastrous. A business loses their best welder, and this individual drives all of the best welders out of the organization. A true lose/lose situation. No one is ever happy, nor does the organization reproduce leadership or drive knowledge transfer in any way, shape, or form. I will talk at length about knowledge transfer in Chapter 10.
This Is Now
If you look at your company as an organism that needs to reproduce its DNA to survive in the long run, then recruiting and training the best people is a meta goal that will produce all the normal successful outcomes like profits, customer service, social good, and so on. But the most important part of your DNA is in multiskilled leadership.
As just mentioned in the example with welders, while we tend to think of leadership as for those at the “top,” leadership occurs at all levels of an organization. You don’t want employees who just get by to get paid. You want people at all levels who grow as leaders in their business areas and lives. These people take ownership of what they do and are invested in everything they see and touch.
In normal times, this ownership and investment will pay huge dividends. In challenging and unprecedented times, having strong leadership spread across all levels will provide that much more strength to an organization’s foundation.
In crises, next-generation leaders who have been proactively developed will have gained insight into how to respond appropriately. While critical situations will always provide new leaders with new challenges, folks who have been developed proactively will not enter the arena unarmed.
The Leadership Decade requires strong, visionary leaders at the top, with the managerial courage to lead their organizations into the future. This includes creating other leaders at all levels. It is going to require strong leaders to understand we have reached the inflection point. Industrial Age philosophies must be replaced with bold new thinking.
If strong visionary leaders realize the tug of war is over, then they can quickly evolve their organizations to take advantage of this historical “sweet spot in time.”
Note to HR Professionals
For human resource professionals reading this book, I want to make a note early on. Historically the attraction and retention of talent fell exclusively to human resources. While this is still a key function for human resources, the equation has changed dramatically. As you will see in this book, the demographic numbers have shifted. New generations of employees who are being recruited 24/7 and have choices beyond anything previous generations ever experienced, are changing the equation.
New generations of talent have decided to seek out strong leaders when making career choices. This will have a dramatic impact on who is attracted to an organization and also on how talent is retained. The equation for attraction and retention will no longer be the sole responsibility of human resources.
Many times we have seen top talent attracted to an organization only to leave a short time later. Most likely this is not a reflection of human resources and their ability to source talent. More likely the short tenure is a direct reflection on the managers of the new hires. People quit people. The Leadership Decade is about human resources partnering with other senior leaders to create a culture for attracting and retaining top talent. To do this, you will need complete buy-in from the top.
The Leadership Decade is not a human resources issue, it is a leadership issue that CEOs across all industries recognize as the number one challenge they face. Survival depends upon businesses understanding the strategic value of attracting and retaining talent.
As a human resources professional, it is your challenge to drive this new level of understanding. Talent retention and acquisition is not an HR issue, it is a leadership issue.
…how effective an organization is at finding, developing and managing its workforce often ends up being the difference between…a top-notch company, or simply a marginally successful one.
— AEM Industry Advisor (Assoc. of Equipment Manufacturers)
Since the dawn of the Industrial Revolution, there has never been a better time in history for midsize businesses to attract and deploy extraordinary talent. In order to do this, you must focus on perpetuating your organization by growing and developing leadership at all levels. I already discussed the importance of reproducing each aspect of your business in order to sustain the organization. In the next chapter, I’ll focus on growing and developing leaders.
2 At this date, there is some question as to the validity of the data released by China.