Recently I came across an article posted on the online version of the Wall Street Journal. In the article, which was titled, W. L. Gore: Lessons from a Management Revolutionary, management author, Gary Hamel, interviewed Terri Kelly, the CEO of W. L. Gore and Associates. This extremely profitable and innovative company is known for not having a formal hierarchy or titles, but it does have leaders. At one point, Mr. Hamel asked how someone became a leader at W. L. Gore. Here’s how Ms. Kelly responded: “One of my associates said, ‘If you call a meeting, and no one shows up, you’re probably not a leader, because no one is willing to follow you.’ At Gore, the test of leadership is that simple: are others willing to follow you? We use a peer review process to identify the individuals who are growing into leadership roles.” This means that at W. L. Gore, your right to lead is based on your ability to attract followers. This is true leadership. Under the traditional management model which is used by most companies, the right to lead comes with your title. This is “hit-or-miss” leadership and it’s mostly “miss.” This gives the leadership advantage to companies like W. L. Gore.
Several years ago, Joe Nocera of The New York Times wrote an article about Herb Kelleher, the then CEO of Southwest Airlines. One of the things Mr. Kelleher commented on was what it actually means to put employees first. As he put it, “We’ve never had layoffs…We could have made more money if we furloughed people. But we don’t do that. And we honor them constantly. Our people know that if they are sick, we will take care of them. If there are occasions or grief or joy, we will be there with them. They know that we value them as people, not just cogs in a machine.” This simple, yet profound formula for success has result in happy employees, loyal customers and contented shareholders for four decades. Sounds to me like it works.
Southwest Airlines has been profitable every year but one since it started 40 years ago. The reason for its success is that Southwest has its priorities in the right order. At Southwest, front line employees come first, customers come second and shareholders come last. The reason is that if front line employees feel they’re being treated well, they’ll take very good care of the customers. If the customers feel they’re being treated well, they’ll not only come back again and again, they’ll also tell others about their wonderful experiences, which is what creates value for the shareholders. This is a very simple formula that consitently produces amazing results. It’s mind boggling that more companies don’t use it
I’ve received a number of emails recently saying something to the effect of, “I can’t wait to see the new management “style” you’ve been talking about. Just to set the record straight, I discovered a completely new “method” or “model” of managing, not a new style of managing. Style deals with things like “hard vs. soft” or “people oriented vs. work oriented” without changing the fundamental framework or “model” that’s used for dealing with people. As Douglas McGregor put it more than 50 years ago in his excellent book, The Human Side of Enterprise, a new management style is the equivalent of putting old wine in a new bottle–the look is different, but the outcome is the same. My new management model is a complete change in this fundamental framework–not just a new bottle, but new wine as well. This model is exciting because it captures all the magic contained in the success stories of companies like Southwest Airlines, Google, USAA, JetBlue, Zappos, SAS and W. L. Gore & Associates.