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Beyond Leadership

September 4, 2014HFI

Beyond Leadership: Understanding the Vital Role of Wealth Creators

When Lou Gerstner joined IBM in April 1993 it was in trouble. The share price had fallen by 70% over the past five years; its mainframe hardware business was obsolete; and the analysts were speculating on its break up. Gerstner led a turn around that created more than $40 billion in shareholder value and reinvented IBM as a global leader in IT services within four years. The turnaround established Gerstner as a paragon of corporate leadership. But for all his vision and ability, he clearly didn’t manage this all by himself. So who else is needed to create wealth in organizations? What kinds of people are needed to drive through change and to support a leader in realizing their vision?

​A small number of individuals have an inordinate impact on the success of an enterprise… we call them the Wealth Creators

After more than 80 years of research, the leadership literature describes the role of the leader as being to inspire through the articulation of a vision (Bennis, 1983, 1996) and to establish an appropriate culture (Schein, 1985). Indeed Schein goes as far as to suggest that the “…only thing of real importance that leaders do is to create and manage culture”. This then begs the question, who actually makes it all happen? Of course this is supposed to be management’s role. But not all management is equal.

Thirty years of our own research at Human Factors International has led us to the conclusion that a small number of individuals have an inordinate impact on the success of an enterprise. These individuals are often not in leadership roles and may display few if any of the characteristics of leadership. Yet they are the driving force in realizing their leader’s vision and so creating wealth for the organization and its shareholders. For this reason we call them the Wealth Creators.

In IBM Gerstner established a vision of an integrated IT service organization and developed a culture that was positive towards experimentation creativity. But it was left to others to take an idea and make it a reality, and so deliver, at least in part, Gerstner’s vision.

Having cut his teeth at American Express, Gerstner envisioned IBM as a service business. He saw the importance of networks and realized that supporting them would be an increasingly complex and important job. This was a market that IBM could excel in. A few months after Gerstner took over, an IBM programmer by the name of David Grossman met with one of IBM’s managers, John Patrick, and opened his eyes to the potential of the fledgling internet. Supported by Grossman’s technical capability, and encouraged by Gerstner’s vision, Patrick assembled a group that drove IBM into e-business. When Gerstner heard about the venture he was supportive, but he wasn’t directly involved at any time, he didn’t need to be. Patrick drove the initiative with cunning and zeal, borrowing resources where he needed them and finding ways around every obstacle, bending a few rules and upsetting a few people along the way. When Gary Hamel interviewed Patrick for his 2000 article “Waking Up IBM”, Patrick said “If you don’t occasionally exceed your formal authority, you are not pushing the envelope”.

Patrick exhibits all of the characteristics of a Wealth Creator: persistence, resilience, refusal to be done down, drive and energy, and an overwhelming confidence that they will succeed. Another quote from Patrick: “If you believe it, you’ve got to be out there constantly talking about it, not sometimes, but all of the time. If you know you’re right, you just keep going” (Hamel, 2000). Wealth Creators are often difficult to work with. They don’t take no for an answer, and they can be single minded in the pursuit of their goals. Some are inspirational, but many are not. They succeed through dogged determination and often upset a few apple carts along the way. But our research has found that they are vital to the long term success of a business.

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​“Disengaged Wealth Creators can even become a danger to the business”.

​Until now this role has not been significantly recognized. At Human Factors International we have been successful in helping many companies in Europe and North America to identify potential Wealth Creators and then support them appropriately. Because they can be so single minded, they have to be carefully managed, otherwise they can be disruptive and their value lost. Disengaged Wealth Creators can even become a danger to the business.

Some years ago we were working on a succession plan for a large and well respected architectural practice. The business had been founded in 1912 and won numerous awards for its landmark buildings across the country. But by the 1990’s the competitive landscape was changing and the leadership team were not keeping up. Human Factors International carried out a talent audit and identified only one Wealth Creator within the business. Chris was competitive, driven, ambitious, commercial and strategic. We recommended that he be quickly promoted to the board and given the role of driving forward change within the business. However Chris was only 30 years of age and was several rungs down the hierarchy. That was a major sticking point for the existing leadership team. They were adamant that he needed to work his way up through the ranks. How could such a young and inexperienced man be given such a position of responsibility? They couldn’t see it, and dismissed our findings.

The following year, frustrated with his lack of progress and finding that he couldn’t make headway in an increasingly antiquated business, Chris left and started his own practice. Within three years he had become a major competitor, winning many of his previous company’s clients and generating more than double the revenues. That trend continued until the original business folded in 2004.

Who in your business is driving the delivery of the vision? And what are you doing to support and manage them? Recognizing your Wealth Creators could make all the difference between stellar success and abject failure.

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