Cubic Leadership Model and Iconic Business Leaders

Management literature is filled with several leadership models which capture multiple skills and styles that are required of a leader. Yet there is a gap in the understanding of the uniquely contextual nature as well as certain common facets of leadership that are expected at the apex level of organizations, say as a Chief Executive Officer (CEO). This paper proposes a cubic leadership model relevant for the CEOs and illustrates its relevance and applicability through three iconic business leaders.

Leadership Cubes and Sub-cubes

The cubic model of leadership at CEO level is three dimensional, covering operating results, management processes and intellectual competencies. Each of the three primary dimensions has, in turn, three critical components. The resultant combinations uniquely differentiate a CEO’s overall leadership model.

On the result-orientation dimension, a CEO has three typical profiles: revenue driver, profit maker and value builder. A revenue driving CEO often seeks to develop and manage large businesses, driving primarily turnover. He or she is scale and scope oriented. Although, often profitability is seen as a function of revenue, some CEOs emerge as predominantly profit makers rather than revenue drivers. A profit oriented CEO achieves this by taking the right strategic decisions, timing the strategic decisions right, establishing market positions, striking remunerative alliances, creating and licensing intellectual property and swinging lucrative financial deals. Less visible, but equally important is a smaller but important set of CEOs who build institutions for future value. A value building CEO aggressively diversifies into newer business horizons periodically.

In respect of the process dimension, three facets of a CEO emerge: the visionary, the strategist and the implementer. The visionary CEO continually drives his organization towards newer horizons. The strategist CEO extends the vision into a strategy which can convert aspirations into achievements. Implementer CEO tends to be extremely task oriented. An implementer CEO is highly sensitive to the fact that even an indifferent vision or strategy gets enhanced by effective execution while a superior vision and strategy can become sub-optimal if execution is poor.

The intellectual dimension of a CEO encompasses three sub-dimensions, the Mentor, the Communicator and the Networker. A CEO’s domain knowledge, expertise and years of achievement naturally positions him well as a coach and mentor. The mentor CEO thus plays a major role in competency development in his organization. A CEO has also to be a communicator who articulates vision and strategy and emphasizes execution across the organisation. An articulate CEO when externally focused becomes a networker, connecting his organization with a host of customer and collaborator organizations.

Leadership cubes of different hues

The nine sub-dimensions discussed above occur in different combinations shaping the CEO leadership profiles in several synergistic and differentiated ways. For example, implementation, execution, communication and revenue driving facets particularly go well together. Aspects such as communication, networking, alliance building, competency leveraging and profit making synergize well. Mentoring and articulation of a vision, strategy development and organizational communication also have natural mutuality.

Strategy development and execution would be required for good communication and execution skills to convey the requirements across the organization and drive organizational performance. A visionary and strategist CEO would also be a value builder as he would recognize the importance of building organizational infrastructure for the future. Several meaningful and synergistic leadership cubes could thus emerge.

Each CEO would eventually develop his own balance of performance, leadership and competency dimensions. Profiling of successful CEOs could reflect a normal distribution, with a peak area of about 70 percent for driving revenue and profit growth. The outlying areas, on either side, of about 15 percent each could deal with value building and smart delivery. Variations to this distribution usually relate to the evolutionary stage of an organization. A firm in its early growth phase would require the CEO to focus in a preponderant manner on infrastructure and value building. A firm in its mid-growth phase would require the CEO to focus on revenue and profit generation. A mature corporation, on the other hand, would require the CEO to leverage the organisational capabilities to take the company to the a higher growth trajectory by building the next level of value and mentoring the employees for change management.

Certain unique global leaders, however, reflect an all-encompassing coverage of the multiple dimensions and sub-dimensions of the leadership cube. Three legendary leaders bring out the relevance of the cubic model, with common characteristics and subtle variations depending on the CEO, the industry and the firm.

Three cubic legends

Three iconic leaders, Jack Welch, Bill Gates and Carlos Ghosn epitomize the diverse yet integrated facets of a global CEO. Each leader represents an entirely different industrial or business setting; Jack Welch as the head of the largest multi-product global conglomerate, Bill Gates as the head of world’s most powerful software firm and Carlos Ghosn as the turnaround czar of the global auto industry. Yet, the model of leadership cubes comprehensively and meaningfully describes each of these three exemplary CEOs, in pertinent dimensions and their combinations.

Jack Welch : Jack and master of all

Jack Welch, a brilliant doctoral chemical engineer, was a veteran of General Electric (GE), having joined GE in 1960. He quickly rose in the hierarchy, becoming GE’s youngest Chairman and CEO in 1981. He was at the helm of GE for two decades, transforming it into an outstanding global company. Jack Welch’s legendary leadership qualities are well-documented. Jack is a fascinating personification of the leadership cube.

On the competency dimension, Jack Welch was an outstanding intellectual, communicator and networker, all rolled into one. He transformed GE into a competency based organization. He was a communicator par excellence, who effectively communicated his key ideas to rest of the organization, not only by delivering messages but also by persistently repeating them over and over, and ultimately securing the buy-in across the organization. More importantly, he created and institutionalized a learning environment in GE, including by setting up the famed leadership development institute at Crontonville. He networked globally, representing the collaborative and energetic face of GE to other firms and other nations. For example, he has been an early pioneer in spotting the capability of India as a futuristic base for R&D and business process outsourcing.

On the leadership dimension, Jack was a visionary who dreamt big, strategised to the finest detail and implemented for precise outcomes. His vision was that GE as a global player should have nothing less than the No. 1 or No. 2 status in whatever product or service it operates in. Such a vision set the tone for an aggressive strategy and effective execution. Fusing his envisioning and communication capabilities, he motivated the entire organization to own his vision. On the strategy front, he adopted a straight-to-action, street-smart format which focused on business viability and growth, with aggressive divestment and acquisition moves. The vision and strategy were seamlessly rolled into execution by focusing on effective project implementation and operational excellence, including the famous six-sigma practice.

As a result of the unique synergy between the competence and leadership dimensions, GE under Jack Welch delivered significant shareholder value. Revenues and Profits grew dramatically. Non-value adding businesses were divested, value adding facilities were established and business productivity enhanced across the organization. GE’s market capitalisation increased from USD 12 billion in 1981, the year of his taking over as the CEO, to USD 280 billion in 2001 when he passed on the baton. The rise of GE to the status of the most admired company under Jack Welch clearly points to the relevance of the cubic model of a CEO.

Bill Gates : Gateway to software leadership

Bill Gates, the chairman (and until recently the chief software architect) of Microsoft Corporation is yet another personification of the leadership cube. Microsoft, established by Bill Gates and Paul Allen as a two-man enterprise in 1975, has grown to revenues of USD 44 billion, employing more than 55,000 people in 85 countries. The technology-savvy manner in which Gates amalgamated competence and leadership into business deliverables has been largely responsible for the astounding growth and competitive stamina of Microsoft.

Domain knowledge and technology vision enabled Gates drive the software revolution and weave a virtual monopolistic global business around it for over twenty five years. Gates’ vision of user-friendly personal computing has been central to the success of not only Microsoft but the entire software industry. Though not as passionate on communication as Jack Welch, Gates has been eminently successful in propagating his mission to continually advance and improve software technology and to make it easier, more effective and more enjoyable for people to use. By establishing unique mission-critical projects and domain-dominant technologies, he catapulted Microsoft into a leadership position globally.

Gates may be seen to differ from Jack Welch in that he has chosen to play a lead role only in certain critical facets of the CEO cube. He has, for example, co-opted a powerful leader in Steve Ballmer to drive the strategy, execution and networking aspects of his business. This brings out that the cubic model would work equally well with a synergistic combination of two chief executives, complementing the skills of each other to deliver greater value for the company.

The deliverables of the cubic model of leadership for Microsoft are evident in terms of an ability to grow its software business despite hostile regulation and intense competition (from open source and Internet initiatives), a capacity to build value through new convergence platforms and a smartness to leverage technology and market dominance for customer value.

It is a moot point if an excessive focus on revenue and profit generation by Gates has also resulted in the organization becoming a trifle smug and unprepared for competitive changes such as the Internet. It is however to Gates’ credit that he has recently redefined his own role and nurtured a new generation of technology experts in the context of the shift to the Internet as the core of new age communication and computing. He also laid out a new path for leadership by extending his visionary leadership skills for the benefit of global healthcare. These moves by Bill Gates only reinforce the model of a global CEO being a truly multifaceted, innovative and adaptive personality in terms of a leadership cube that is based on responsibility, leadership and competence.

Carlos Ghosn : From lows to highs, always

The third icon in the context of the cubic model, Carlos Ghosn, represents an entirely different CEO personality, but encompasses the same underlying cubic dimensions. Every company Ghosn has been associated with, be it Michelin of South America, Michelin of North America, Renault of France or Nissan of Japan has been a case study in corporate misdirection, strategic confusion or operational erosion, until he has taken over the company. He brought all these companies, each with a different national and cultural milieu, onto impressive growth tracks.

A Masters degree holder and an intellectual initially inclined to pursue a doctoral study, Ghosn joined the troubled Michelin South America in 1978 and became a chief operating officer in 1985 when he was just thirty. Since then there has been no looking back for him as he turned around companies; slashing costs, streamlining operations and enhancing revenues and profits. In 1999, he moved to Nissan as its chief operating officer from the position of executive vice president in Renault, the French auto major which took a 44 percent stake in Nissan. At that point of time, Nissan was in dire straits. It had a staggering USD 22 billion in debt and slid to a low domestic market share of 19 percent from the peak of 34 percent it achieved in 1974. Its global market share declined from 6.6 percent in 1991 to 4.9 percent in 1999. During that eight year period, Nissan made losses in all the years, except one.

While Carlos had a clear revival plan that turned around Nissan, it was his leadership model that worked as the underlying growth engine. He came to Nissan with complete automobile domain knowledge but was prepared to construct a customized plan for Nissan from a zero base, learning all he could of Nissan. In this process, he communicated intensely with employees at all levels and in all locations, networked with vendors, dealers and customers and developed strategies and execution plans which had solid ownership at all levels of the organization. He institutionalized domain expertise, communication and networking in the organization through cross-functional teams.

Carlos had a lucid and transparent vision which was backed by clear strategy and effective execution. His three-year Nissan Revival Plan which started in 2000, achieved dramatic reductions in debt and operational costs while boosting sales and profits, a year ahead of schedule. Given the unique cultural factors of Japan, Carlos had to network with government leaders, industry insiders, media professionals and opinion makers to effectively communicate his revival plan and win their acceptance. Equally important was the need to network with vendors to slash costs and to communicate with employees to accept plant closures and job cuts. At the same time, he used his technical and managerial skills to encourage the design of new leading edge products, simplification of complex manufacturing structures and building of new brand identity, thus dramatically repositioning Nissan in the marketplace.

The results were dramatic; he took the company from a USD 5.6 billion loss in fiscal 2000 to a USD 2.5 billion profit in the very first year of his revival plan. He followed up the Nissan Revival Plan with the Nissan 180 Plan and Nissan Value Up Plan, each equally successful. Prior to the economic meltdown which hit all companies, including the legendary Toyota, Nissan had an operating margin of 10 percent, higher than Toyota’s 9 percent and BMW’s 7 percent. It was not surprising, therefore, that Carlos was chosen to head the USD 55 billion Renault while retaining the CEO position at the USD 88 billion Nissan, thus running simultaneously two globe-spanning giant auto makers, an altogether industry first. The subsequent move to rope in Nissan and Renault in a trans-border rescue attempt for the beleaguered General Motors (GM) was driven essentially by the desire of the investors to access Carlos’ legendary turnaround skills for the benefit of GM. Had this happened, probably GM would not have been in the beleaguered state that it is now. The saga of Carlos Ghosn underlines the integrating power of the global CEO model.

Summing Up

There is an instructive lesson that arises from the study of leadership cubes and certain exemplary leaders. One person at the helm, the CEO, can make all the difference to an organization. Each of these iconic CEOs discussed here reflects the leadership cube that integrated competency profile, leadership styles and responsibility foci, albeit in subtle variations, but in a synergistic industry leading performance template.


References


1. Gates, Bill with Collins Hemingway (1999), “Business@ the Speed of Thought:. Using a Digital Nervous System”, Warner Books, New York.

2. Magee, David (2003), “Turnaround: How Carlos Ghosn Rescued Nissan”, Harper Collins Publishers, New York.

3. Slater, Robert (2000), “The GE Way Field Book” McGraw-Hill, New York.

4. Welch, Jack with Suzy Welch (2005), “Winning”, HarperCollins Publishers, London



Posted by Dr CB Rao on April 20, 2009