Seven leadership lessons of Next Generation Companies

Executives like Jack Welch and Larry Bossidy have been lionized in the press and academic circles for their aggressive attitude, relentless focus on bottom line performance and stellar financial results. While these leaders and the companies they run offer many valuable lessons, the management philosophies they represent and the practices they espouse are not right for every company. Super Jack’s ‘rank and yank’ approach to pruning the bottom 10% of the workforce every year may have kept GE staff on their toes but it created enormous headaches in hordes of companies that bungled its implementation.

Tony DiRomualdo

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But there are alternatives to lean and mean management approaches despite their enduring popularity among CEOs and Wall Street. The experiences of a few path-breaking companies offer lessons many companies would do well to consider. While none of these organizations is perfect, all of them succeed by practicing a fundamentally different way of doing business than their more conventional peers. Here are seven vital lessons that Next Generation Companies (NGCo’s) teach us about how to succeed on both business and human terms:

1. Make people central to your business strategy. People are integral to performance. NGCo’s recognize the value of their employees and their role in delivering high performance. Southwest Airlines has the largest market capitalization of any airline in the world and ten times greater than any of its domestic competitors. Their business model is as lean as it gets, but their management philosophy and practices succeed in making nice a commercial virtue.

2. Deliver a unique and complementary value proposition to customers and employees. NGCo’s are laser-focused on what matters most to customers and employees. Everything about how they do business is explicitly geared toward emotionally involving their customers and their employees. Harley Davidson sponsors weekend rides for its customers, enthusiasts, and employees. The rides originate at its dealers and a nominal fee is charged. Proceeds are donated to local charities. As customers and employees ride together, they build bonds around the Harley experience and serving a local need at the same time.

3. Manage people for long-term sustainability. NGCo’s invest in capabilities and people for the long-term. Staff is treated as assets to be grown and nurtured, not production inputs to be used up or sold. Fetzer Vineyards has adopted organic cultivation methods to sustain the land upon which the quality and capacity of its products are so dependent. It takes the same approach with its people by giving everyone a stake in the business and a say in how it is run.

4. Treat talent management as a core competence. NGCo’s recognize the importance and value of their employees – all of their staff, not just the stars. They employ complete and integrated people management processes and practices that engage their employees and build and sustain commitment in the entire workforce. Men’s Wearhouse uses its talent management system to get exemplary performance out of workers many of its competitors would shun.

5. Trust peer commitment to drive performance excellence. NGCo’s understand that treating people well is good for business, but just because they put people first doesn’t mean they sacrifice profits. The difference is that they rely on employees to drive each other to excellence not management hierarchies and complex appraisal methods. Whole Foods lets teams hire and fire and decide how to split performance bonuses among their members.

6. Demonstrate emotionally intelligent leadership. The leaders of NGCo’s are cut from a different cloth than their peers in competing firms. Their inner motivations and management styles are frequently atypical in corporate settings. NGCo leaders embody the values and behaviors of the organization. Executives such as Sally Gore of W.L. Gore Associates and James Goodnight of SAS lead through example rather than command and control.

7. Have the courage to be different. NGCo’s are eager to learn from others but they are fanatical about doing things that fit their culture and business strategy. They are not afraid to be different – to carve out a unique personality and way of operating for their business.

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Tony DiRomualdo is a business researcher, writer, and advisor with Next Generation Consulting. He works at the intersection of people, business strategy, and information technology to help companies create a committed and high performance workforce. Tony can be reached at [email protected].

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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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