Lead by Asking

by Peter Bregman and Howie Jacobson

October 26, 2000

Three of the world's largest companies are struggling their way into the digital age they helped invent. AT&T made headlines recently with a gigantic breakup and restructuring plan. Xerox is slashing costs, after recently flubbing a restructuring of its sales force and failing to capitalize on its technological innovations. Lucent Technology announced earnings warnings for the fourth time this year as its stock price tumbled 75% from its 52-week high.

No company can predict the future, especially given the speed of technological innovation and the Internet roller coaster. AT&T, Xerox, and Lucent all made bets that didn't pay off. And their leaders are being blamed for it. AT&T chairman C. Michael Armstrong is being chided for a grandiose vision that ignored customers and partners. Former Xerox CEO Rick Thoman was forced out in May, replaced by Chairman Paul Allaire, after sales force changes led to mass customer defections. And Lucent's board just replaced CEO Richard McGinn with Henry Schacht after the company dragged its feet on the switch from traditional telephone-switch networks to fiber optics.

Their experience raises three questions for leaders of any big organization: "How do you increase your chances of making a good strategic bet?" "Once you have bet, how can you increase the chances of making it work out?" and " If you made a bad bet, how can you move nimbly enough to recover?"

The answers to all these questions lie in the same advice: You are not alone. Get help from the collective energy and wisdom of the people who work in your organization.

Unfortunately this is one of the hardest things for leaders to do. In an informal study conducted in a leading New York investment bank, the main factor that derailed the success of new MBA recruits in their first year of work was their unwillingness to ask for help from the people who worked for them. If it is hard to ask for help as a new employee, think how much harder it is when you are the CEO and everyone is looking to you for the answer.

It's natural to look to leaders to fix the problems. AT&T, Xerox, and Lucent have announced restructurings, created by and led from the top, which they promise will reconnect them to their core competencies, to their customers, and to their shareholders.

Natural, but wrong. Making perfect predictions and fixing problems is not what effective leaders do. Rather, they harness the power of individuals by spreading leadership and ownership throughout the entire organization. They create a cadre of leaders on every level who ask themselves every day, "What can I do to make this company succeed? And what help do I need from those around me?"

To increase the chances of betting right, top leaders must involve the entire organization in the process of creating a new vision and strategy. Who works in the company? Who understands the company best? Who, ultimately, will make the company successful? Employees at every level. They are closer than the CEO to markets, to customers, to the rest of the world. A grand vision from above ignores the most valuable asset of any organization: the smarts of its people. People throughout the hierarchy should be involved in creating and owning the vision.

To be honest, we're not positive that AT&T, Xerox, and Lucent made such bad bets. We think it's possible that they made sound strategic decisions that they just couldn't implement. In the traditional command-and-control style of management, the leaders made decisions and then focused on communications and trainings aimed at "convincing" people to act in accordance with those visions. AT&T never successfully challenged AOL as an Internet provider because it blew its implementation. Thoman was probably on to something when Xerox tried to change the way its sales force operated. But taking salespeople away from their jobs and sticking them in training classes for weeks angered them as well as their customers. Lucent has demoralized its workforce and frustrated its customers on many occasions by lurching from project to project and stigmatizing, rather than supporting, struggling employees.

In these companies, people's day-to-day actions didn't match the vision, because they didn't own the vision. Instead of mandating and micromanaging, effective leaders share the vision, trust their people, and give them appropriate tools, capability, and structures.

Once a bet goes bad, how does a company recover? By finding out early and acting quickly. Again, this requires leadership that elicits and acts on the contributions of every employee. The people on the front lines of AT&T, Xerox, and Lucent knew that things were going wrong long before the CEO did. Well before earnings estimates and revenue projections were completed, the raw data - the stories - were experienced by salespeople, customer service representatives, client relationship managers, technical staff, and others. They knew what was going on. Companies ignore this data at their peril. Yet it is the rare organization that trusts people enough to ask, and is trusted enough to get honest answers in return.

Early warning isn't enough. Many large companies just aren't nimble enough to make the necessary changes. Hierarchy, bureaucracy, process, defensiveness, and fear combine to allow smaller, faster competitors to step in and exploit mistakes and missed opportunities. Many big companies rely on command-and-control change management because they think it's the most efficient way of aligning everyone behind the change. That's wrong. Great leaders empower the people who first see the trends to make the necessary changes as soon as they identify the need. The conversation happens when the leaders' most important job is to ask employees, "What do you need to help make this a great company?" When employees get this message, their company's problems become a motivating challenge, rather than a demoralizing emergency that someone else caused. While AT&T, Xerox, and Lucent frantically search for things to sell and spin off, there are two assets that they would do well to keep and cultivate: the collective energy and wisdom of their people.

Peter Bregman is CEO and Howie Jacobson is Director of Voice for Bregman Partners, a change consulting firm based in New York and California. Contact Information:Tel 212-961-9280 Fax 212.656.1099