An acquaintance of mine coined the title phrase of this article in a discussion we were having regarding creating success in wholesale distribution. At the time, I perceived that to be “consultantese,” another cliché to be used in the speaking arena. However, since that original perception, I have come to realize a deeper meaning in those words.
“It’s time to stop thinking about power and politics
and start applying principle and process.”
Principle and process form the baseline of effective leadership. Power and politics are old school and have traditionally led to ultimate failure. We have experienced many unfortunate examples of this kind of failure recently, including Enron, Tyco and WorldCom. Behind each of these failures stands a towering figure: a CEO or business leader who may have embraced power and politics over principle and process. Most of the CEOs of these failed companies were considered great leaders at one time. That is scary. Remarkably, many of their qualities fit the definition of effective leadership. Leaders that cause this kind of destruction can’t reach the position of power they attain without demonstrating admirable qualities. Generally, they are very intelligent individuals. Perhaps, however, there came a time when their focus shifted more to power and politics than principle and process.
Power and politics in the business world can lead to devastation if principle and process are ignored. Principle is built on integrity. Process keeps execution within the realms of ethical business practices.
When a CEO begins to believe their primary purpose in life is to instill a belief in their vision, doing everything possible to get everyone to buy into it, with a paranoid belief that those who don’t rally to the cause are undermining that vision, they have lost sight of principle and process. This practice is not only unnecessary, it is destructive. A true leader welcomes a challenge to their vison. It creates a balance, a reason to reflect upon personal values, intuition, and to make sure the vision has foundation. Effective leaders don’t need 100% endorsement of their vision to carry out its execution, but what they cannot afford to give up is the right and responsibility of the executive staff to question and challenge that vision.
The National Association of Wholesalers (NAW), funded by its Distribution Research and Education Foundation (DREF), did a series of interviews with seven of the most successful CEOs known in wholesale distribution. Listening to those interviews and reviewing the transcripts is what cleared my thought process and provided real meaning to the phrase:
“It’s time to stop thinking about power and politics and start applying principle and process.”
Leadership Models & The Ego Factor
Effective leaders are driven by a model. A model is a tool used to predict future outcomes of current decisions. Effective leaders build their models on the sum of their experiences, knowledge and deeds, as well as their mistakes.
An emphasis on power and politics is more likely to occur if personal objectives are ego-driven rather than profit-driven, based on principles, integrity and ethics. Being ego-driven often leads to putting personal needs ahead of business needs.
During his DREF interview, Steve Kaufman, former CEO of Arrow Electronics, stated that he did not invent the phrase “Servant Leadership,” but he leans heavily toward that methodology.
“The academics tell us a leader’s role is to serve those people that report to him. He or she is not a dictator but their ultimate role is to serve, to allow those people to achieve their goals. It’s a style that starts by asking: What do you want to accomplish, rather than telling them what you want to accomplish. I would say that the servant leadership model is the one that I like.”
Larry Spears, CEO for Greenleaf Center for Servant Leadership said, “We are beginning to see that traditional autocratic and hierarchical modes of leadership are slowly yielding to a newer model, one that attempts to simultaneously enhance the personal growth of workers and improve the quality and caring of our many institutions through a combination of teamwork and community, personal involvement in decision making, and ethical and caring behavior.”
Putting power and politics ahead of principle and process creates failure. This ego-driven situation can lead to a death spiral which often leads to panic response management. A restructuring plan is often adopted. However, in an ego-driven situation, this restructuring is more apt to occur from the bottom up versus the top-down.
In other words, revenue producing functions or revenue producing people may be prematurely cut. These people or functions may, at a minimum, be covering their variable expense and contributing toward fixed expense to some degree. Eliminating a revenue producing function creates a redistribution of allocated fixed cost which may now jeopardize the profitability of some other segment or division. This may create pressure to close more branches or business segments, or cut deeper into other revenue producing functions, thus creating “The Death Spiral.”
Focusing on principle and process indicates the right approach is to view restructuring from the top-down, including taking a serious look at corporate and/or family overhead.
Success Culture
Wholesale distribution organizations increasingly will be characterized by a large and incredibly complex set of independent relationships between highly diverse groups of people. To be successful, you must determine how to get active involvement, innovation and creativity out of your employees. Success depends on more than just “best practice” success drivers. Success demands a superior level of leadership — a level that requires deep commitment. This commitment will not flourish in workplace environments where the leaders worry about power and politics.
During his DREF interview, Chuck Steiner, former CEO of Branch Electric, said,
“Refinements to industry practice, refinements to operation, excellence in what you do [and] continuous improvement aren’t words. They’re a way of life. When you understand that they’re a way of life, then the change that you have in the way you perform is beyond comprehension because you just wind up operating at a different level, and if you can find a way to capture that in the culture of your business, in the culture that you emanate to your people, then as this culture structure changes, you have an opportunity for a superior level of excellence, and that’s what in the end it’s all about. Excellence breeds a high level of profitability.”
Companies that put power and politics ahead of principles and process will create a culture within the workplace that breeds distrust and paranoia. Most employees devote a major portion of their lives to the job. Many “live to work” instead of “work to live.” They need more from their job than just a paycheck. They deserve an environment that encourages initiative and empowers them to use that initiative. They need leadership that understands listening to their employees is a prerequisite for success. Executive management has responsibility for the direction and results of the organization. The key role of the executive team is to establish and execute company strategy. The single most important determinant of long-term success is effective leadership. Effective leaders understand communication is critical to the success model. That concept is based on principle. Every employee must understand and support the company strategy. Managing for growth and success requires that leadership focus with laser light clarity on the determined activities that are going to produce the desired results. Focus from the leadership ensures that the process necessary to achieve the predefined activities required for success are in place and operational.
Leadership in Action
Successful leaders believe in principle and process. They take the time to listen, imagine and investigate numerous alternatives. With the others’ involvement they forge creative solutions to difficult problems. They challenge their people to stretch, go beyond their previous boundaries and think outside the box. Successful leaders feed off their employees and allow their employees to feed off of them. They give credit where credit is due. They give recognition as a means of gaining respect. They believe individuals can make a difference. Through these methods, they learn to create new insights and possibilities. They insist upon best practice and a process that defines responsibilities, provides clarity and embraces accountability.
Successful leadership means creating a sense of urgency, getting mutual commitment to action. Action steps are always clearly defined, precise and backed up by a commitment to the process necessary for execution. Often, due to the personification of the leader’s own personality and charisma, employees are eager to leap into action – without forethought. A successful leader recognizes this possibility and takes the necessary steps to avoid this pitfall by teaching precision in planning. They are clear and explicit. They communicate with encouraging clarity that commands ownership by everyone involved in the commitments made.
Randy Larrimore, former CEO of United Stationers, stated in his DREF interview,
“I think you need to realize that the Leader, the President or CEO puts their pants on just as you do in the morning, and they make mistakes. The trick is to make fewer mistakes than the next guy. I think it’s easier sometimes to apply knowledge that you’ve gained [from] someplace else to an industry that hasn’t done some of those things. You can almost become a bit more of a hero by transferring lessons learned than trying to invent new lessons.”
The successful leader is constantly building advantages into his or her organization. The belief is that you don’t always have to be better than your competition, but you must be different. This concept demands creativity and innovations. However, this creativity and innovation must be built into the plans and the process that support it. It must be distinctive, yet it must be manageable and predictable. This could involve anything from new technologies to market segmentation to development of new channels. It is all about improvement and finding newer and better ways of doing things. It involves cross-activity integration of process and people. Activities must be linked across the entire value chain. Understanding this concept is critical to leadership success. Yes, as I have learned to believe, it is essential that leadership understands:
“It’s not about power and politics, it’s about principle and process.”
