No one can deny that, whether in the past or in the special times since the economic crisis, leadership development has always been a topic of great concern. In fact, people see leadership as the key to whether an organization can overcome the crisis. Since the second half of 2008, whether it is enterprises, media, or various consulting and training institutions, they have all begun to think and discuss about "leadership in a crisis." In a crisis, what kind of leadership is most important?
Confidence, many enterprises would unanimously say this. Indeed, nothing is more important right now than boosting morale and uniting everyone towards a common goal. But how? More mobilization meetings? Louder slogans? More frequent brainwashing trainings? Or perhaps there are better ways, but have companies truly considered: Can these activities be effective? Are they just creating an illusion of busyness and emptiness? What really gives employees courage and confidence?
"Real urgency," said John Kotter, Professor at Harvard Business School and global leadership and change expert. "Only real urgency can make employees genuinely have the will to succeed from within."
However, real urgency is not something that can be achieved through a few mobilization meetings or training courses when faced with a crisis. It should be the core of leadership within a company for a long time. It's not false busyness, anxiety, or tension, but rather prevention of change and readiness to meet challenges at any time. The leadership that truly leads a company through tough times is not something that appears only when a crisis hits. It should already be deeply embedded in the company culture, as part of its strategy.
In this issue's feature, through an exclusive interview with John Kotter, we will understand how to create real urgency; the cases of Johnson & Johnson and Sanyo will show us how organizations and individuals use leadership to help companies face crises confidently.
Believe that opportunities and crises coexist, true confidence comes from real urgency.
John Kotter: Urgency, the Key Leadership in a Crisis
—Exclusive Interview with Harvard Business School Professor and Global Leadership and Change Expert John Kotter
When we look back at those major historical moments, whether for a country or an organization; whether enduring arduous struggles or growing out of adversity, we see some brilliant names. It is those great leaders who made their organizations stronger and more resilient through storms. This makes us believe that outstanding leadership is the most indispensable factor to navigate through any crisis.
"Change Leadership in a Crisis!" Harvard Business School professor and global leadership and change expert John Kotter came to Beijing in the spring of 2009 with his research findings to interpret the key to leadership in a crisis.
Where does real urgency come from?
Sino-Foreign Management: In your research and earlier published book "Urgency - Changing in a Crisis" (see Sino-Foreign Management May 2009 issue "New Bookshelf"), you repeatedly emphasize the importance of urgency for change leadership. Is this even more important during difficult economic times?
John Kotter: In any situation, real urgency is very important. During tough times, urgency becomes particularly crucial. This is also the opportunity for companies to build genuine urgency. To solve problems brought by the crisis, people need to take action actively instead of endless discussions; to convey confidence in success and a positive attitude instead of mutual complaints and anxiety.
As my book says, there is real urgency in a crisis. Leaders should even create crises to cultivate genuine urgency within the company.
Sino-Foreign Management: You keep emphasizing that leaders must recognize what real urgency is, and you also point out that false urgency is quite confusing.
So, how can leaders determine the difference?
John Kotter: Get out! It’s that simple. I’m serious.
Many leaders just sit in their offices. They don’t go out, don’t go to the factory floor, workshops, or interact with employees. They sit in meeting rooms and assume things, which is one of the most common mistakes in an organization.
Of course, this external communication must be sincere, truly heart-to-heart communication with employees. You can imagine the results of conversations like talking to old friends, absolutely not like having seven or eight people sitting in an office asking each other: What do you think about this question, John? Can you comment on this, Tom?
Getting out of the office and sincerely communicating with your employees doesn't require high skills. Many institutions establish various methods and tools to get employee feedback, but how much of it is real? Only truly understanding your employees' thoughts can help you determine if everything you're doing is correct.
I mentioned that leadership is about making the right choices. Only by getting out of your office will you know if you're doing it right. It's an attitude issue.
Pride, the Great Enemy of Leadership
Sino-Foreign Management: In your new book and research, you list pride and false urgency as the great enemies of real urgency. Meanwhile, in the last six months, as the economic crisis swept the globe, building confidence and boosting morale has been seen by many organizations as the key to overcoming the storm. Currently, is the problem for most companies too much pride or lack of confidence?
John Kotter: The main reason companies fail to build real urgency is because of pride. In my book, you'll see that the best way to identify proud people is not by what they say, but by what they do. Whether in tough times or normal times, pride leads to crises. And under the current situation, this kind of crisis poses even more obvious harm to companies.
In fact, real urgency requires firm belief and practical actions, not just going through the motions. Building confidence is part of real urgency. Urgency isn't just for leaders; it applies to all employees. In companies with real urgency, the founder's enthusiasm never wanes, goals are clear, communication and empowerment are very sufficient. They continuously seek opportunities, rather than just waiting; they act immediately, and everyone has clear objectives.
Sino-Foreign Management: In reality, compared to false urgency, pride is an emotion, even harder for people to detect. How can people identify if their company has become arrogant? What are the common mistakes or manifestations?
John Kotter: In most cases, proud people don't realize they have pride. Pride is an unconscious emotion. Again, the best way to identify proud people is not by what they say, but by what they do.
During tough times, the harm of this emotion becomes greater. Generally speaking, the common mistake of proud people is focusing too much on what they've already done, rather than paying attention to what will happen in the future. At the same time, they don't truly value creative actions. This is also the biggest enemy most companies face in any change era.
Leadership development is not for firefighting. At Johnson & Johnson, how to respond to crises is one of the cores of leadership.
Johnson & Johnson Healthcare won't drive 35 miles per hour on a 65-mile-per-hour road.
Innovation in the Year of Crisis
If using medical devices could be like accumulating airline miles, where reaching a certain number earns more services — how much cost could be saved for patients in a year? Sounds imaginative, but this is indeed just an idea, and it was one of the winning ideas in Johnson & Johnson Medical's Innovation Contest in Q4 2008.
Innovation? Yes, at the end of 2008, Johnson & Johnson positioned the following year as the "Year of Innovation." Innovation is not new, but in the crisis-ridden year of 2009, it took on a bold and unconventional flavor. Compared to most companies focusing on no layoffs and maintaining morale, Johnson & Johnson's pursuit showed a hint of ease and even challenge. However, for Johnson & Johnson Medical, at least, with a first-quarter revenue performance exceeding targets by 7%, there was certainly some justification for this confidence.
"There are industry factors, but the impact of the crisis wasn't so significant. But we haven't relaxed at all. Innovation is specifically targeted at addressing the crisis," said Wang Zhen, Human Resources Director of Johnson & Johnson Medical (China) to Sino-Foreign Management. A more specific definition of Johnson & Johnson's Year of Innovation is "improving work effectiveness and reducing costs."
In 2009, a year without layoffs but with more employees hired than ever before, Johnson & Johnson focused its cost-saving measures on increasing efficiency, covering the entire scope of operations.
"So all the innovations this year are ideas, all about how to improve service quality and enhance work efficiency," said Wang Zhen. This was a big deal for the year, requiring full attention and competition. Thus, the Innovation Committee was born. On one hand, it served as a communication platform, helping employees better understand the purpose and requirements of the Year of Innovation through the committee's work. On the other hand, it acted as a selection body, awarding quarterly and annual prizes to ideas chosen by the committee. Most importantly, the Innovation Committee's work was to fully implement these innovative ideas.
If it were merely about competing for good ideas, it might just seem like a cultural momentum to appear busy due to the crisis; however, only by implementing the results, identifying and solving problems, can strategies truly take effect, allowing employees to feel real power and results. This is culture, more so leadership.
Reacting is Not Leadership
Everything proceeds step by step. Each quarter's "Leadership Acceleration Training Program" continues according to the planned method and pace. "Special courses to address this crisis? No!" said Wang Zhen, "Among Johnson & Johnson's top ten core leadership principles, how to face crises is already one of them." At Johnson & Johnson, crises can occur anytime, anywhere. If you only talk about responding to risks when they come or discussing seizing opportunities when they arrive, that's not leadership.
Cramming at the last minute is always risky. It may seem like dealing with problems as they come, but it's just patching up here and there. Without long-term accumulation and construction, leadership cannot be said to play any role, and response strategies merely dissipate the company's energy.
"If anything needs to be summarized, in the current situation, we highly value accumulating experience and continuing to do the right things," Wang Zhen answered regarding specific training.
In 2009, Johnson & Johnson aims to continue business expansion. "If others are unwilling to continue investing due to the crisis, while we persist in investing, then the returns will be doubled," said Wang Zhen.
A bold strategy, still challenging, yet with ample confidence. "It's cautious optimism," Wang Zhen corrected slightly, another line from Johnson & Johnson's core leadership principles, "you can't be pessimistic, nor blindly confident. Crisis, crisis, danger and opportunity always coexist, isn't Chinese expression beautifully put?"
Precisely because danger and opportunity coexist, Johnson & Johnson emphasizes the discovery and grasp of opportunities in leadership. "We call it forward-looking leadership, paired with cautious optimism, neither blind nor without faith."
The crisis deepens. Within a short year, Hefei Sanyo has greatly transformed. What kind of leadership drives this transformation?
Jin Youhua Ignites Sanyo's Energy
When high-speed growing companies are all stepping on the brakes and conducting 'health checks', who dares to shout for comprehensive expansion, and actually achieves it?
Jin Youhua is one such example.
For over a decade, Hefei Rongshida Sanyo Electric Co., Ltd. (shortened as Hefei Sanyo) quietly grew steadily. In the second half of 2008, they suddenly announced a plan to triple their growth in three years, aiming to reach over 5 billion yuan in sales revenue by 2010 — in 2007, this figure was only 630 million yuan. Whether considering the timing or the size of this ambition, known as the "335" strategic plan, it was nerve-wracking.
But the next year, the annual report was released: gross profit margin 40.38%, net profit margin 12.42%. Sales revenue reached 1.08 billion yuan, increasing by 70.6% year-over-year. Their market share in washing machine sales in China jumped from less than 3% to 5%.
At that time, Jin Youhua had taken over exactly one year prior.
With the crisis deepening, such rapid change in such a short time begs the question: what kind of leadership is driving this efficiency?
Just Doing What Should Be Done
"Hefei Sanyo has grown prudently since its listing, accumulating a lot of energy. Once it triggers a chain reaction, it will release even greater power," Jin Youhua told Sino-Foreign Management, "and I, simply ignited this energy."
Indeed, Hefei Sanyo had solid foundations. As early as 1997, only three years after its establishment, Hefei Sanyo launched the first domestically produced three-dimensional jet water flow washing machine. Over the years, they continued to innovate with numerous technologies, achieving dozens of industry-firsts. While many companies worried about cash flow issues, Hefei Sanyo had four billion yuan securely deposited in the bank, almost unimaginable.
Content with moderate wealth, Hefei Sanyo attracted the attention of many companies. Continuing the status quo would eventually lead to being swallowed up.
Action was necessary! Jin Youhua decided to ignite the energy!
As the highest-ranking external hire at Hefei Sanyo, Jin Youhua clearly did not neglect the power of cooperation. But before "combining", he needed to first do "dividing".
"The biggest thing I did after taking office was to make systems and processes more perfect. The president does the president's job, and the chairman does the chairman's job," Jin Youhua said.
The result of this "division" was that Chairman Jin Youhua took responsibility for strategy and audit supervision, while day-to-day operational management was handled by President Sen Xing — a Japanese national who had worked at Hefei Sanyo for over a decade and was capable of fully leveraging his managerial advantages. Jin Youhua could supervise this process and its outcomes at any time. The two encouraged each other and worked together seamlessly.
"In the company, I don't sign a single cent," Jin Youhua proudly stated, "the chairman shouldn't meddle unnecessarily. Many companies run into problems precisely because of this."
To ignite the passion of senior executives, Jin Youhua used the same approach of "non-interference." However, he carefully maintained pressure on them. This pressure was transmitted through setting goals. Goal management is valuable, but the key is granting adequate authority alongside the goals.
Putting Everything Out in the Open
Without dramatic confrontations or decisive commands, Jin Youhua believed the most appropriate description of corporate management was "mundane." "Corporate management is simply two things: wanting to do something and doing it seriously; and establishing a fair and equitable environment," he said.
After taking over Hefei Sanyo, Jin Youhua quickly established a bidding office. Any procurement needs would first be announced by the bidding office, followed by hiring relevant experts from inside and outside the company to evaluate bids, accepting supervision from any field, with the entire process completely transparent.
Surprisingly, most of the leadership did not participate.
Moreover, bidding and procurement are separate. Bidding constrains procurement, and procurement constrains bidding.
"What is fairness? The key is openness. Society, enterprises, and all employees jointly participate in the implementation of systems, putting systems out in the open and turning them into public actions, thus achieving fairness," Jin Youhua said.
Years of corporate management experience have made Jin Youhua firmly believe that entrepreneurs' actions fall into two categories: one is taking actions to pursue their own ideas, which may deviate from the company's interests; the other is working seriously for the company, rather than entirely for personal gain. The overall corporate cultural atmosphere is obviously similar. But building culture is not an overnight achievement, so "it's not about people, but about systems," Jin Youhua said.
In fact, after becoming the chairman of Hefei Sanyo, a large part of Jin Youhua's efforts went into streamlining processes and improving management systems. First, establish incentive and decision-making mechanisms, and under these mechanisms, promote excellent talents to implement the system to ensure fairness.
Regarding talent, Jin Youhua is never stingy in providing a good platform, but once moral issues arise, he enforces strict discipline without exception.
He believes, "Principles must be upheld."
Only with fairness and justice, everyone's values align, which is to maximize the value and profits of the enterprise. With this aligned value, how could conflicts arise?
Serving as a "Cooperation Messenger"
Dedication to "doing things" and adherence to fairness and justice also earned Jin Youhua respect and trust from the Japanese headquarters. Of course, as the helmsman of a joint venture, Jin Youhua never neglected his role — serving as a messenger between the company and the headquarters.
Upon taking office, Jin Youhua quietly traveled alone to Shanghai. The purpose of this trip was secret negotiations with relevant high-level personnel from Japan's Sanyo to establish mutual trust and seek comprehensive cooperation.
By the spring of 2009, the senior management of Hefei Sanyo visited the Japanese headquarters again for in-depth exchanges: the Japanese side agreed to gradually develop Hefei Sanyo into a global laundry machine manufacturing base for Japan's Sanyo; both sides would collaborate to make Hefei Sanyo the largest white goods joint venture of Japan's Sanyo in China.
Joint ventures between foreign companies and Chinese enterprises are common in any industry, but the latter's most urgent desire — obtaining technology — is often hard to achieve. Some joint ventures appear harmonious on the surface but have underlying tensions, and not a few end up with broken relationships.
Jin Youhua has the ability to rewrite the norm.
"Our joint innovation with Japan's Sanyo now has our own intellectual property rights," he said with pride, "Previously, for patents jointly created by joint ventures, they didn't allow us to file applications, but now we can."
The secret to "being able to" lies in the real ability to digest, absorb, and re-innovate. "When our re-innovation capability is not inferior to theirs (the Japanese side), they naturally give you their technology. Because your capability is strong, if they don't give it to you at this point, it loses its value," Jin Youhua explained.
Asked what the most important aspect of leadership in a crisis is?
His answer: The leader should do what a leader should do, establish a fair and just environment, let the most talented people find their place. Let everyone do what they should do, and take simple work to the extreme. Those who work hard should receive what they deserve.