Antonio Nieto-Rodriguez (antonionietorodriguez.com) is the world’s leading champion of project management. He is Director of the Program Management Office at GlaxoSmithKline Vaccines and chair of the Project Management Institute. He is author of the bestselling The Focused Organization.
When he is running workshops with senior management teams, Antonio asks them to write down their company’s top three initiatives and then list their replies on a flipchart. No matter where he is in the world, the responses include more than three initiatives — often far more than three. “When I reveal the list, there is a moment of silence in the room and a certain embarrassment. If the executives of the firm do not know the company’s priorities and are unable to focus on what is key, then they cannot expect this focus from their employees,” he told us.
Nieto-Rodriguez believes this lack of focus can also be explained by the pressure on many CEOs to show results quickly. Consequently, they often invest in many initiatives, thinking that they will increase their chances of success. The more balls you have in the air, the more you will catch. Right?
Well, no, actually. As Antonio points out, the reality is that human beings tend to be unfocused. A Harvard University study reported that at any given time 50 percent of the population is unfocused. Half of a company’s staff are not focused on their work. The study also showed that those people who were focused on their tasks were happier than those who were unfocused. Whatever people were doing, whether it was working or reading or shopping, they tended to be happier if they focused on the activity instead of thinking about something else.
“The fact is that nature tends to disorder, and that being focused requires discipline, order, energy and effort. We humans have mixed feelings about expending energy, even if we know it will bring us pleasure,” says Nieto-Rodriguez. His work suggests a solution based on FOCUSED as a useful acronym:
F—Fewer projects, rather than many. A focused organization that is able to effectively select and prioritize its projects and invest in just one or two good initiatives at a time clearly outperforms organizations that take on too many projects. The few projects that are selected are linked to one or several strategic objectives and are fully supported by top management.
O—Organized staff. In a focused enterprise, the staff is organized in such a way that all personnel know what is expected of them. They do not waste time on activities that are not part of their core skill set; rather, they focus on their key strengths and core capabilities instead of trying all the time to improve their weaknesses.
C—Competitive mindset. The focused company competes with the outside world rather than internally. Internal competition, which is so negative in the long term, is eliminated because all of the organization’s effort is placed on doing what it does best. The CEO and top management explicitly identify rival organizations, often referring to them in their speeches and communications to the company.
U—Urgency. Creating a sense of urgency is a competitive advantage. Urgency is also needed to focus people and encourage them to give their best performance.
S—Strategic alignment. Every initiative should be linked to one or several strategic objectives. Any initiative that is not so linked should be immediately cancelled. This alignment is necessary to ensure that the company achieves its stated goals.
E—Excellence. A focused organization applies the highest standards to everything it does, and its products and/or services are known for their quality. Sustainable excellence requires attention to the details of every aspect of the organization: values, quality of employees, internal and external processes, products, and customer service.
D—Discipline. Discipline should not be seen as something negative that inhibits innovation. Rather, innovation depends on discipline. Companies should clearly distinguish between the time set aside for creativity and time allocated to strategy execution. Focused organizations are able to make this distinction and to move from the creative phase to the execution phase very quickly. If companies spend too much on innovation, they will be too late by the time they decide to execute their strategy. The challenge for the CEO and the company’s entire management team is to find the right balance between discipline and creativity/flexibility.
For Antonio Nieto-Rodriguez, focus is the route to successful strategic execution. “The benefits of becoming a focused organization are significant and varied,” he says. “Everybody in the focused organization, from the CEO to the accounts payable employee, knows the direction in which the organization is going, which two to three initiatives are the most important for that year, and the business case for these few critical initiatives. And the benefits can appear very quickly on the company’s bottom line, particularly on the cost side. Costs are reduced when irrelevant projects are cancelled, which can add up to huge savings. There are many more likely benefits. The question is whether your organization can continue to ignore them.”
But what does this look like in practice? An exemplar of the merits of focus was Jack Welch when he was CEO of General Electric.
By the end of the 1980s GE was a leaner and fitter organization after a healthy dose of downsizing instigated by Welch. Any complacency which may have existed had been eradicated. In retrospect, Welch’s greatest decision may have been to go in with all guns blazing. Dramatic, though relatively short-lived change, was preferable to incremental change. “Shun the incremental and go for the leap” was Welch’s advice. No half measures.
Having proved that he could tear the company apart, Welch had to move onto the second stage: rebuilding a company fit for the twenty first century. The hardware had been taken care of. Now came the software. Again, focus was the key.
Central to this was the concept of Work-out which was launched in 1989. This came about, it is reputed, after a chance question was asked by Professor Kirby Warren of Columbia University. Warren asked Welch: “Now that you have gotten so many people out of the organization, when are you going to get some of the work out?” At this stage 100,000 people had left GE. Welch liked the idea of getting the work out. The idea turned into a reality. With typical gusto, Welch brought in 20 or so business school professors and consultants to help turn the emergent concept into reality. Welch has called Work-out, “a relentless, endless company-wide search for a better way to do everything we do”.
Work-out was a communication tool which offered GE employees a dramatic opportunity to change their working lives. “The idea was to hold a three-day, informal town meeting with 40 to 100 employees from all ranks of GE. The boss kicked things off by reviewing the business and laying out the agenda, then he or she left. The employees broke into groups, and aided by a facilitator, attacked separate parts of the problem,” explains Janet Lowe in Jack Welch Speaks. “At the end, the boss returned to hear the proposed solutions. The boss had only three options: The idea could be accepted on the spot; rejected on the spot; or more information could be requested. If the boss asked for more information, he had to name a team and set a deadline for making a decision.”
Work-out was astonishingly successful. It helped begin the process of rebuilding the bonds of trust between GE employees and management. It gave employees a channel through which they could talk about what concerned them at work and then to actually change the way things were done. It broke down barriers. The gales of destruction were past. Creativity was in the air.
Welch the destroyer became Welch the empowerer. Work-out was part of a systematic opening up of GE. Walls between departments and functions came tumbling down. Middle management layers had been stripped away in the 1980s. With Work-out, Welch was enabling and encouraging GE people to talk to each other, work together and share information and experience. At first surprised, they soon reveled in the opportunity.
“In the early 1990s, after we had finished defining ourselves as a company of boundaryless people with a thirst for learning and a compulsion to share, it became unthinkable for any of us to tolerate – much less hire or promote – the tyrant, the turf defender, the autocrat, the big shot. They were simply yesterday,” noted GE’s 1997 Annual Report.
Work-Out worked. Back in 1981 as Jack Welch began life as CEO, GE had total assets of $20 billion and revenues of $27.24 billion. Its earnings were $1.65 billion. With 440,00 employees worldwide, GE had a market value of $12 billion. By 1997, GE’s total assets had mushroomed to $272.4 billion and total revenues to $79.18 billion. Around 260,000 employees – down a staggering 180,000 – produced earnings of $7.3 billion and gave the company a market value of $200 billion.
Welch moved from arch destroyer, corporate enemy number one, to potent creator. “The most acclaimed SOB of the last decade is the most acclaimed CEO of this one,” announced Industry Week in 1994. The corporate demon king of the eighties was transformed into the role model for twenty-first century management. “The two greatest corporate leaders of this century are Alfred Sloan of General Motors and Jack Welch of GE. And Welch would be the greater of the two because he set a new, contemporary paradigm for the corporation that is the model for the 21st century,” says the University of Michigan’s Noel Tichy, a long-time observer of the Welch managerial style.
Focus is unrelenting. Work-Out didn’t bring Welch’s revolution at GE to an end. The next stage was the introduction of a wide ranging quality program. Entitled Six Sigma, it was launched at the end of 1995. “Six Sigma has spread like wildfire across the company, and it is transforming everything we do,” the company reported two years on.
People were the bread and butter of Jack Welch’s managerial style. People matter — or were made to feel as though they matter. Said Welch: “We are betting everything on our people – empowering them, giving them resources, and getting out of their way.”
Welch invested in people firstly by simply spending time with them. He calculated that he spent around half of his time with GE people, getting to know them, talking to them about their problems and, yes, no doubt berating them if performances are down. It was calculated that he knew around 1,000 people by name with a good idea of their job responsibilities.
And Jack Welch wanted the best people. He wanted to recruit them and retain them because it is good for his business. “The reality is, we simply cannot afford to field anything but teams of A players,” he said. “What is an A? At the leadership level, an A is a man or woman with a vision and the ability to articulate that vision to the team, so vividly and powerfully that it also becomes their vision. An A leader has enormous personal energy and, beyond that, the ability to energize others and draw out their best, usually on a global basis. An A leader had edge as well: the instinct and the courage to make the tough calls – decisively, but with fairness and absolute integrity.”
And, clearly, Welch expected people to perform. He insisted that rewards packages were geared to individual as well as corporate achievements and ensured that rewards were carefully monitored and differentiated from business to business and person to person. The message was that if you win we all win.
Janet Lowe, Jack Welch Speaks, John Wiley, 1998
Charles R Day & Polly LaBarre, ‘GE: Just your average everyday $60 billion family grocery store’, Industry Week, 2 May 1994
John Byrne, ‘How Jack Welch runs GE’, Business Week, 8 June 1998
Antonio Nieto Rodriguez, The Focused Organization, Gower, 2012
This was originally published in What we mean when we talk about strategy by Stuart Crainer and Des Dearlove (Infinite Ideas, 2016).