RIDING THE WINDS OF CHANGE
March 27, 1986
F.G. (Buck) Rodgers Author, The IBM Way
The President, Harry T. Seymour, Chairman
Reverend Sir, distinguished head table guests, members and friends of The Empire Club of Canada: It is my pleasure to welcome as our guest speaker today Francis Grover (Buck) Rodgers, author of The IBM Way and former Vice-President of Marketing with responsibility for IBM's worldwide marketing activities.
I has been said that IBM stands for "I've been moved" because of its seemingly frequent transfers of employees. That is, "people have perceived IBM to be an impersonal monolithic organization that disregarded the rights and feelings of its employees: a company with no wild ducks, its representatives all cloned to fly in formation."
Founded in 1914, as the computing-tabulating-recording company, IBM employs 400,000 people worldwide and generates annual sales in excess of $50 billion and net earnings of close to 7 billion.
As summarized in the 1985 annual report:
"IBM's operations are primarily in the field of information-handling systems, equipment and services to solve the increasingly complex problems of business, government, science, space exploration, defense, education, medicine, and many other areas of human activity"
IBM's products, therefore, "include information-processing products and systems, programme products, telecommunications systems, office systems, typewriters, copiers, educational and testing materials, and related supplies and services." Forty-three per cent of all product sales occur in overseas markets.
Thomas J. Watson Sr., the founder, built IBM around three fundamental principles: the individual must be respected; the customer must be given the best possible service; and excellence and superior performance must be pursued.
How rigourously are these principles pursued today? According to Rodgers, trainees see the company's code of behaviour at work, in the office and in the field, during their very first week on the payroll.
How does the constant pursuit of these principles impact upon IBM's results? The 1985 annual report states that: "In a trying year for our industry. . .as well as our company. . .IBM's resilient performance stands out and reaffirms the fundamental soundness of our business. . .There is reason for continued optimism about IBM's long-term prospects in the underlying and growing need to manage information and improve productivity in virtually every aspect of human activity. . .In part, our confidence is built on IBM's product line-already strong and growing stronger as a result of continuing investments in research, development and engineering.
"As a result of our history of continuing investment in more efficient plant and equipment, unit manufacturing costs reached an all-time low last year. . ."
Buck Rodgers served IBM for thirty-four years, taking early retirement in 1984 to pursue his many other interests, including the authorship of The IBM Way. For the last ten years of his career, he was Vice-President of Marketing, with responsibility for IBM's worldwide marketing activities.
Rodgers provides a few insights into his character, in his book, and I quote three of them:
"I like people!"
"I feel good about myself!"
"For me. . .to be given responsibility is an honour."
His book's overwhelming message, initiated by Thomas J. Watson Sr. in 1914 and referred to earlier in this introduction, is that every company must have a firm framework of goals and beliefs, constantly reinforced among its employees.
Ladies and gentlemen, it gives me great pleasure to introduce F.G. (Buck) Rodgers, author of The IBM Way, who will address us on the subject, "Riding the Winds of Change."
Ladies and gentlemen, I'm delighted and really honoured to be with you here today for several reasons. First, because of the great respect in which The Empire Club is held. Second, I know that many of you in this room happen to be customers of the IBM Corporation and, since I did run IBM's worldwide marketing, I would be remiss if I didn't acknowledge that. So, if you remember nothing of what I'm going to say here today-and I know that possibility does exist-would you remember the words "Thank you very much"?
"What you are thunders, for I cannot hear what you say." That quotation from Emerson simply says it is not words that get things done in this world of ours. It is action, tactics, strategy, implementation. It's inspection, it's measurement, and, above all, it is recognition.
That's why I think the book, In Search of Excellence, is so successful in America, in Canada, and around the world. Perhaps The IBM Way will do as well. It emphasizes nothing new, but hits a nerve from the point of view that it is attention to detail, it's doing things right the first time, it's being part of a people-caring operation, and, above all, being market-driven, that allows us to be successful and hopefully to ride the winds of change.
If there's any one thing I learned in the 34 years I was with the IBM Corporation, it's that change is always with us and change can also be very psychological. To the fearful individual, change is threatening because that person always thinks things are going to get worse. To the person who is hopeful, change is encouraging, because that person thinks things may get better.
But, to the individual who has a belief in himself or herself, change really is a stimulus because that person still feels that, in this world of ours, one person can make a difference. Every day, each of us in some way looks for those difference-makers. The old adage still holds that there are three types of people: those who make things happen, those who watch things happen, and those who ask "What happened?" Nobody really wants to be in the latter category, so what are some of the changes you and I had better be able to understand? If you can't articulate change either from an internal or an external point of view, then change controls you. Rather than the more preferable way of you and me controlling it.
I've travelled the world for the IBM Corporation, maybe in 100 of the 130 countries in which we do business. In any place you want to name, the first thing I see is preoccupation with the quality of life. It's fashionable to challenge the work ethic. But what I think is really happening today is that people are saying:
"I want to give a fair day's work for a fair day's pay. In the process, I don't want to sacrifice family and I want to be involved in social responsibility type of activities."
On that latter point, you and I have a "civic rent" to pay in our lifetime. Each of us has to decide in our own way what that civic rent is. Maybe it's involvement in mental health programmes, or drug abuse programmes. For my part, in the last twelve to thirteen years, I have been lecturing on some of the major campuses of America and I've been picketed in some of the finest schools down there, as a matter of fact. Wherever I go, there is nobody I run into, no customer of IBM, none of you in this room, none of my kids, who want to be told how anymore. But you sure do demand to know why.
For instance, at IBM, if we're ever questioned on price or terms and conditions, which has occurred, and you or your people respond by saying, "That's policy" or "That's the way it's always been," you're taking your organization down the road to being a dinosaur. People today want to be able to go home at night, look into a mirror, and say: "What I did today was worthwhile."
We have long left what was known as "The Decade of the Sixties" and the early Seventies-the "Me" generation... "I am I," and moved into what I've called the "Be" generation. You can be anything you want, depending on your own skills and your own capability.
The second change that's taking place is a movement from a vertical to a horizontal concept of managing. If I were to show the IBM Canada organization-or, heaven forbid! the IBM Corporation's organization-or take any of yours and display it here, it is typified by a vertical structure.
But you and I know how things get done, and that we interface with people, so the Eighties and the Nineties will be known as a time when management moved to a horizontal concept where you deal with people on the basis of what they know, rather than where they sit in the hierarchial structures of a business.
If you've ever had any futurists here at your meeting, they call this the "world of the knowledge seekers." Now, to me it's nothing more than when I had a problem at IBM. I went to where I got the most accurate and timely response. I couldn't care less where that person sat in the management structure. It is a respect for a person's intellect and a person's capability.
Another management change I've seen on a worldwide basis is that nobody wants to deal with information historically. I couldn't care less about numbers from yesterday; I am more interested in what is happening today. I've coined this phrase "occurrence management." People build into their organization the capability to find problems and take corrective actions, but the smart operators find out where the strengths are within their companies. For example, if a product is selling well in Dallas and not in Seattle, the heck with Seattle! You go to Dallas and find out what they're doing right, then spread that over areas of weakness.
Now a thing that's driving both change in lifestyles and the way you and I manage is productivity. What do most people think about when they hear the word "productivity"? Working harder? Working longer and under increased pressure? That's not what it is. The dictionary says productivity means producing abundantly.
C. Jackson Grayson, formerly dean of the Southern Methodist University's business school and now head of the American Productivity Centre, says "Output over input." Peter Drucker, who writes and teaches on business methods, calls it "the first test of management."
I'm going to give you one that's anonymous: "Productivity is the untapped potential generated by the creative interchange of new ideas, new technology, and good people who are skillfully and consistently managed" And I stress the "skillfully and consistently managed." Where there has been a lack of, or a drop in, productivity, I don't necessarily tie that back to a lack of Research and Development. It may happen every now and then. It may be due to educational training.
Too often in the United States and in Canada, we forget that the greatest asset is people and that it's important to make them feel that what they're doing is significant. You try to motivate people so you can raise the productivity levels, which in turn affects the bottom line. Then you wind up having some fun in the process.
One of the things that is driving productivity up and affecting lifestyles and management styles is technology. In 34 years, I have lived through the vacuum tube, the transistor, solid-logic technology, and now we're talking about other techniques.
I was talking to some people from Research not long ago and they were discussing the current injection logic circuit. It switches information in seven pico-seconds. It's the speed of light! You cannot go any faster than that. Fortunately, they were Nobel Prize winners and they said:
"Don't worry. We'll find a way to circumvent that limitation."
Perhaps the greatest technological breakthrough in this decade will be the ability to speak to a machine and have it respond. So the next five years will dwarf the last ten in technological innovation. But, like everything else, it comes back to how creative and innovative you and I are.
So against change there had better be some things that you and I don't change. Now, to put this into perspective, if we were to go back to 1947 and take the top one hundred companies in America and ask yourself where those same companies are today, would you be surprised to know that only sixty remain in that select circle?
Now, if you really want to go back in time to the Industrial Revolution and take the top twenty-five corporations in America and ask where they are today, would you be surprised to know that only two remain? One of them because it merged with six others. Three are gone. And when I say "gone" I mean for a long long time. The rest are still functioning, but they're nowhere near any leadership role.
So people ask: How does one organization with the same product line, the same cyclical environment, succeed when another fails? Now, they say those that succeed have a charismatic leader or put more bucks back into research and development, more back into education and training, or didn't get fat, dumb, and apathetic as an organization. They stayed light on their feet and understood that the customer came first. All those factors are valid.
It is said that those who lost their way and dropped by the wayside failed to perceive what was really happening. Everybody here might know Parkinson's old law. I'll give you Rodgers' new law today. It says that, once an organization reaches a certin size, it can exist for an indefinite period solely talking to itself before it dies. Meaning the business failed to perceive why it was in business. Complacency, the most insidious disease of any organization, large or small, takes hold.
I submit to you that the real difference between success and failure-and I don't care what size you want to talk about in companies-is simply how well that organization develops the talents and energies of its people, regardless of the positions that those individuals hold.
Look at any institution or organization that has weathered the test of time, and you will see that they owe their success to having a set of beliefs and principles that was clear and understandable within the organization and, more importantly, became visible to the people who dealt with that company. Now, if that's the case, what is the magic?
I still believe that, in this world of ours, there happens to'! be magic. Magic is what Harry talked about. It comes from adhering to and practising three principles. The first is simply respect for the individual. Boy, is that easy to say and very difficult to maintain!
Now what do I mean by that? Respecting the individual is, returning phone calls and getting away from this game of phone roulette that goes on. I call you and you call me and we never meet; somebody's in a meeting and some day we may get together.
Respect for the individual is that very person in your organization, and I don't care where they are, knows that at some time their management is going to sit down and give them an evaluation from the standpoint of first saying:
"Here's what I expect you to do. Here are your goals and objectives."
From which, after a period of time, they will be evaluated. Respect for the individual is paying people on performance and for what they actually achieve. One of the greatest prides in the IBM Corporation, with 400,000 employees, is that no employee has ever been laid off. People say, well, if I was as big as IBM, I might be able to do that, too.
The fact is that you get to be big because you perform these things on a day-today basis. Respect for the individual is getting out of your office and walking down to somebody else's-which would surprise someone anyway, if that was done-and just saying thanks for what was accomplished. You can take that from the simplest approach, common sense orientation, to the most sophisticated concept you can think of to motivate people.
The second thing you say as an organization is that you're going to give the best service of any company in the world. Not the best in insurance, not the best in computers, not the best in real estate-you decide you're going to compare yourself to the best.
Pick who those companies are in Canada. Pick who they are on a worldwide basis. Then analyse what those companies do and see how you stack up against them. And that sets a tone of excitement within an organization.
I don't know what it's like here in Canada, but I tell you that in the United States when we get good service, we're surprised by it. It ought to be the other way round. And it doesn't involve putting complex things in place or a great expense.
How much money does it take, when an organization receives a complaint, to respond to that complaint in twentyfour hours? I didn't say to solve the problem in twenty-four hours. I'm just talking about someone calling.
I can tell you that at IBM it's mandatory to respond to a complaint within that time frame, by wire, by phone, by letter or in person. You tell someone you heard them, then you come back with a time frame for giving those people an answer.
I live in Connecticut and, on the turnpike where I live, which goes all the way up from New York to Boston, McDonald's has replaced Howard Johnson's as restaurant stops. I have nothing against Howard Johnson's, but since McDonald's has been on the turnpike (since last May) business is up 50 per cent.
One reason is that McDonald's inspects its restrooms every thirty minutes. I happen to be a friend of Dave Thomas who runs Wendy's, a restaurant similar to McDonald's. Now you know where I eat.
I was with Dave at Purdue University the other day and he said:
"I never went to college, but I've got more apron time than anyone else in this room."
What did he mean? He understood the customer.
I was with Sam Walton who owns Walmart. He is reported to be the richest man in America. He meets with his three thousand store managers across the country. What he does is he gets in his airplane, one of his few luxuries, every Monday and comes back Thursday night-and so do all his other officers. And where do you think they are? They happen to be in the stores, interfacing with the people there, and the customers.
I happen to be on the board of Milliken, one of the largest textile manufacturers in America. They don't call their people employees, they call them associates.
So, there are a lot of little things you and I can do to convey the fact that outstanding service and respect for people are what we're trying to attain.
The third thing separating successful individuals and organizations from the rest is that you expect excellence from what people do. For 34 years, every day of my business life, I looked over my shoulder for the footsteps-and some days they were louder than others and you have to have those days as well. Nobody has a right of tenure.
It's fun when you get to a college campus, as I have done, and debate that particular subject. But you and I have to earn our way.
Successful organizations I've seen have similar objectives. Customer satisfaction, sure; opinion surveys and all that. But there are two others worth mentioning. One is-and this is for every first-line manager in whatever function-a voluntary attrition number.
Look at your department and don't expect to lose a percentage of people above a certain number. If you find that number is out of whack, you call the individual in and ask what is happening and what you can do to help. If he can't turn it around, you get somebody else who can. Everyone ought to also have an involuntary attrition number as well and get rid of those people who aren't doing the job. Now, in whose best interest? The best interest of the customer.
That's not callousness. It just says, with respect for the individual, a person only has the right to be told they're not producing, and then given a chance to correct any deficiency and, if they can't, they're gone.
There was an article in Business Week magazine in which supposedly one of IBM's top executives was misquoted-at least, that's what he said. The question was: In IBM's marketing organization, when somebody fails, does IBM in its benevolence and paternalism find another job for them? No, we don't; we fire them. But they have been told that they're not producing and had a chance to correct any deficiencies. Those beliefs and principles produce a purpose.
I don't know how many of you stop and ask, What is the purpose of your organization? If you can't articulate one, I'll tell you what I think it ought to be-creating new customers, maintaining old customers, and making people want to do business with you. I didn't say love you. Not everybody loves IBM. Do I know that! They respect you, no question about that. And they give you the business, because you're giving the customer value.
Now, how do you really make those things come alive? How do you really hold onto beliefs, particularly as the organization expands and grows? Or, if you're in an organization where there is little growth, how do you do that? Then it's an even tougher challenge.
Well, I think you accomplish those things by individual acts of heroism. Now, around the world, in Europe, in Germany, in Japan and in the United States, there's a big debate as to whether we have heroes.
In the United States, there's Lee Iacocca, whether on the cover of Times or of Newsweek. He's certainly held up as a hero. President Reagan sometimes falls in that category, particularly after a summit meeting. (The late President) John F. Kennedy was a personal hero to me.
You've got to have people you can look up to. There are some people in the United States who think that "The Refrigerator" (William Perry of the Chicago Bears) happens to be in that category. There are always people we can learn something from.
But do you know who the real heroes ought to be? You and I. How many times have you sat in a meeting like this, or at your own organization, or where you witnessed lousy service on an airplane or at a hotel, and heard somebody say:
"Why doesn't someone do something?"
Then you remembered that you were someone. One person can still affect what goes on. I never believed I could change the world, but I do believe I can have some affect on those people around me. So, as I was thinking about early retirement from IBM, I thought: I'm going to define what leadership is.
Leadership is the ability of a single individual, through his or her actions, to motivate others to higher levels of achievement with the freedom and opportunity to do so. Leadership, first of all, is the ability to prioritize.
All my life, I've lived with minutes. Do you know how many pounds of paper you and I have to deal with every year? Two thousand pounds. And I know it's right because I read it in an airline magazine. With only five per cent of that worth reading, by the way.
But the secret is to be able to take all the things that immerse us and make a decision every day between what is desirable and what is necessary. If you err on the necessary side, your business is going to prosper. I decided a long time ago, and I don't know when it was, that I would never take on more than five objectives from IBM at a given time, and
I never gave anybody more than five.
Now, when that happens, you've got to be willing once in awhile-when somebody calls you, let's say from the top-to respond with "I don't know."
I've never failed to have that work for me, provided that I got back with an answer within a reasonable time frame. And that's a lot better than hip-shooting an answer and then wondering if you had all the facts and worrying about why you went ahead and said that.
Leadership is the ability never to separate accountability from responsibility. How many times have people been given the freedom to fail, but never held accountable for what takes place? Or worse, people held accountable but never given the freedom to make a mistake?
You and I, in our vocabulary of management, want to delegate. We pass the decision down to somebody with the idea of getting their insight, and then we smother them. We look over their shoulder to the point that all of a sudden their decision gets passed right back to us, which is known as covermanship, and nobody learns a thing in the process. Give people a chance to make a mistake. When the mistakes exceed the pluses, that's when you have your one-on-one type of session.
Leadership is also seeking advice. You're saying, "I didn't need to come here today to learn that. I know why you seek advice."
You seek advice because you want to get some new viewpoint, a clearer perspective.
I do it for two reasons. One, because I've found people brighter than I am in this world, although I hate to admit it. But it's very good every now and then to get a whole new viewpoint.
The other, more fundamental, reason for seeking advice is this: it is the greatest compliment you can pay to anybodysaying you think enough of them to involve them in the problem.
I want you to know I never turned down any money that
IBM gave me, but I have been more motivated-and I think you are, too-when someone says:
"Can you help me with this particular project?"
If you practise this, then, you're halfway home toward resolving a tough problem.
Leadership is also knowing when an extra effort is required. There are a lot of books out today, and people on the lecture circuit talking about peak performance and how you've got to operate at one hundred and twenty per cent every day of your life. I wish I could! I never got to a hundred. I tried, but I knew that in my business and personal life there would be times when an extra effort would be required and I would have the capability to call on my reserve.
For example, I've been running competitively for about thirteen years. When I get into some long distances, there's a French proverb that has helped me:
"One can go a long way after one is tired."
Whether it's an extra day or an extra week, there are times when you're going to have to say to your people and to yourself:
"This is where you and I are going to have to put some blood and sweat into this thing."
But you can't operate that way every day of your life. I don't think it is possible.
Leadership is also maintaining an enthusiastic attitude. I've been a great fan of (the late British Prime Minister) Winston Churchill for years and years. He realized that, if you have to climb the mountain, there'll be problems on the way up. That's not being a pollyanna or naive. You have to be able to say-and want your people to think-that there isn't any problem that cannot be solved or attacked.
In my business life, I have picked people to work beside me who felt that they could overcome any obstacle, rather than people who had more grey matter but never put it to work. That's why there's another proverb that says:
"Age may wrinkle your face, but lack of enthusiasm will wrinkle your soul"
Leadership is also the ability to anticipate, to plan, to think ahead. That's why I talk about understanding the environmental factors. The generals of the world understand what the term "strategy" means: strategy is the craft of the warrior. It is the ability to understand and convey your strengths and weaknesses and look at what the competition can or cannot do before you plan your attack.
Hockey player Wayne Gretszky understands that the word "anticipate" means. His thesis is:
"I skate to where the puck is going to be, not to where it has been"
And it's not a bad philosophy to follow in our everyday activities.
In the United States now, there is a big NCAA basketball tournament going on. I remember listening at this time last year to a colour commentator talking about one of the AllAmericans.
"Do you know why Chris Mullins is such an All-American?" he asked. "He knows where he's going to pass the ball before he gets it."
Every business organization, large or small, ought to have a base plan. It's a plan you're committed to, a plan that you're measured on. But also ought to have what is known as a goal level, one level above that which you're being asked to achieve. And then, you'd better have a risk plan. You'd better have a contingency plan, and you'd better do it in an atmosphere when things are not so hectic, so you're not making foolish decisions in the heat of battle.
Leadership is also winning. That's why you and I keep score. Everybody talks about the fun of competing, of being in the arena, and I'm all in favour of that. But isn't it more fun to win? Winning is living. Every time you win, you're reborn, and, every time you lose, you die a little. When an organization finds itself slipping, and starts to accept and excuse those things affecting the bottom line, then that becomes insidious.
Above all, leadership is one word. If there is one thing I'd like to have you remember above anything else of what I've said today, it is this. About thirteen or fourteen years ago, I was lecturing at the Purdue University campus. There was an open forum with a lot of people from the business school, engineering, and arts and sciences. I can picture yet today the young, attractive woman in the back who raised her hand and said:
"Mr. Rodgers, is there any one thing above all that you would like to have us remember? Is there one word more important than anything else you've said here today?"
I answered that question so quickly then, and I've answered it one thousand times since, the same way. The word is integrity. Where people can count on what you say as well as what you do.
That's why I began my talk with:
"What you are thunders, for I cannot hear what you say."
If you lose wealth, you lose nothing. Losing health means something. But if you ever lose your character or your integrity, you literally have lost everything.
We are living in a very exciting world, a world where things are moving so fast that it takes nerves of steel just to be neurotic. Maybe you don't sense that, but I do. But against change, whether it be the few I've mentioned or others, there had better be some things you and I don't change.
Then we make those things come alive by deciding that we honestly are difference-makers. We have some fun in the process and we avoid what Eric Fromm describes as the "boredom and the anxiety and the meaninglessness of life" that surrounds many of us.
Eric Fromm talks about the person who sits in front of a bad television program and doesn't know he or she is bored. Fromm talks about the fact that we have killings in our streets here in North America-forget about what goes on in Beirut-and you and I have no reflection of religion. Fromm talks about what nuclear holocaust can bring, and you and I have no fear.
Fromm talks about the fact that sometimes we see corruption at the highest level of our government and then people remain apathetic and don't even bother to vote. Or the worst error in life of all, the person whose only goal is material wealth, who doesn't understand his anxieties but his ulcers speak louder than his mind.
So, if I can leave with you the paraphrasing of a poem that I learned a long, long time ago, which I think has applicability to everyone here in this room and what our future holds:
There is an ancient claim
That we win or lose within ourselves. The shiny trophies on our shelves Can never win tomorrow's game. Yet you and I know deeper down There's always a chance
To win the crown.
But when we fail to give our best, We simply haven't met the test. Who could ask more of a woman or man Than simply giving all within our span? Giving all, it seems to me,
Is not so far from victory.
So you and I control our fate. We open up, or we close, the gate On the road behind or the road ahead.
And I simply wish you the best on the road ahead.
The appreciation of the audience was expressed by Bill Karn, a distinguished Past President of The Empire Club.