Leadership lessons from big business

• print
• normal font
• large font

By Peter Switzer
Published on 05/03/2010 15:03PM

On a daily basis, I talk to those at the top of their game, but how did they get there? And, more importantly, how can you get there too?
Let me let you in on a not-very-well-kept business secret. Great leaders are made, not born.
As the leader of your business, it’s up to your business culture to manufacture such leaders — you have to give those following you the faith that they can forge their own path for the benefit of your business; to ask what and why, not how and when.
So, how can you make great leaders that will benefit your business?
Your management style is crucial — this can make or break your potentially star players.
Much has been written about the perils of micro-management — yes, it may ensure the task is done, but it more often than not robs those being managed of confidence and self-belief. As former US President Dwight ‘Ike’ Eisenhower said: “You do not lead by hitting people over the head — that’s assault, not leadership.”
And, as Texan business great Henry Ross Perot wrote, “inventories can be managed, but people need to be led”.
Leadership is not about finding a parade and getting in front of it. Rather, it’s about charting the route for the parade — knowing where it’s going to go and how it’s going to get there.
To get an idea of the power of good leadership, let’s look at one business that has boasted a broad and varied portfolio for almost a century — and is still going strong — Wesfarmers. So, what is the secret to their success?
I recently caught up with Wesfarmers’s CEO Richard Goyder — and he proves there are many lessons small business can learn from those at the top end of town.
Wesfarmers, as a business, is going gangbusters, thanks to the insight of Goyder and his team.
The Wesfarmers story (and their share price!) proves no matter what industry you’re in — and Wesfarmers are in many with retail and resources among them — the secret to success is astoundingly simple — good management. Or, more accurately, good leadership.
“In retail business, you want a very strong service culture, in a mining business, you want a very strong safety culture. There are differences, and not a lot of synergies,” explained Goyder of the Wesfarmers business model.
“But what we bring as a group to these diverse set of businesses is a very good set of systems, operating systems and processes. And so each business in the group can just get on with things and focus on running their business for the benefit of their shareholders.”
When Wesfarmers made the move to acquire Coles, it was a highly controversial one. Yes, Coles was a great brand, but it was plagued by a chequered history, unlike others in the Wesfarmers stable.
But Goyder was confident that he and his team could make this good brand great, and, more importantly, profitable.
“We felt that, with good management, we could make a significant improvement to the business,” Goyder told me. “And if we did that, that would create value for our shareholders.”
But what made Wesfarmers think they could make the ailing business work, where so many others had failed?
Goyder said it was simple — “It comes back to people.”
In short, Bunnings boasted a collection of “very experienced retail executives” and Wesfarmers were confident they could turn the business around to their benefit.
“At the end of the day, you’ve got to back yourself,” said Goyder. “We did that. We knew to be successful with Coles, we’d have to bring really good management to bear.”
Interestingly, accountability is one of Wesfarmers core values. As they say, with power comes responsibly. And this includes the responsibility to take risks.
This is what business boils down to — and “it’s not that complicated,” says Goyder.
“A key part of it is getting the right management in place and I’m really confident … we’ve now got excellent teams running these businesses and they’re making a positive difference.”
One of these executives is K-Mart’s Guy Russo — who worked under Peter Ritchie at McDonald’s and came to Wesfarmers with Ritchie’s — and other high flyers’ — blessings. Russo is a great example of how great leaders are made.
K-Mart’s issue was delivering on customers’ needs, and as Goyder said, “if there’s one thing McDonald’s do really well, it’s understanding what the customer wants”.
“Guy’s an exceptional individual. He’s been brave and he’s been courageous in his short time at Kmart so far, and he’s really starting to make a positive difference … and it’s not just one person, but leadership shows the way. He’s put in a new leadership team and the whole 25,000 employees are now aligned to what Guy is trying to do to the business.”
This said, Goyder and his team are far from complacent — and this should serve as a lesson. He assured me he would continue to invest in management, no matter the conditions.
“If we do the right thing, then we think things will take care of themselves.”
Oh, and as a last point — in Wesfarmers’ 95-year history, Goyder is only the seventh CEO. So, once you’ve found – or rather, made — a good leader, it pays to hang onto them. After all, leaders in your business are an investment, not an expense.