Making It Happen
Larry Bossidy, Retired Chairman & CEO
Honeywell International

As I was arriving last night, I saw a number of priests and it reminded me of a story.  I had a priest friend who did movie documentaries.  One day he was told that one of his documentaries had won an award, and he was asked if he would come to Hollywood to receive it. He was overjoyed by the prospect, and ventured to Hollywood.

On the way to the hotel, he was stopped in his clerical garb by a young man.  The man asked him, "Are you a priest?,"  and my friend acknowledged that he was.  He was then asked, "Well, what do priests believe in?"  He replied, "Different things, but my order believes in poverty, chastity and obedience.  Poverty: we live the simple life.  Chastity: we give all our love to the Lord.  And obedience: we obey the laws of the Lord."

The young man nodded humbly, and went on his way. 

My friend went to this opulent hotel and was seated at the head table with the best crystal and china.  Just as he was about to partake of an o'er d'oeuvre, there was a tap on his shoulder.  He looked around.  It was the young man.  The fellow said, "Father, if this is poverty, I'd love to meet chastity." 

I am here this morning thanks to the insistent push of my daughter, Lynn.  I’m glad she did, in fact, urge me to come, because I've looked more in depth into what’s been going on, and I think there has never been a better time for an organization such as yours to take the position that you have within the Church. 

With that as a little background, I’d like to set some parameters for my remarks to you this morning. I’ve read the excellent remarks from others before me at this conference, and my goal today is not to re-emphasize those, but rather to talk about the application of some of them.  As many of you know, I've had more experience and devotion to practice than to theory.  So I’d like to couch my remarks in the context of what I see as the unparalleled change occurring throughout the world today.

I say that because of the arrival of globalization, which has had an enormous impact on all of our lives in ways that are both obvious, and not so obvious.  Among the good things, it's basically controlled inflation in the developed world – at least until now.  But it’s also been somewhat disruptive in the sense that it’s commoditized products faster than ever. It has compressed margins for companies that are global players and has, in short, made the world a more competitive place. 

The change that I speak about is everywhere, including the Church.  If you think about it -- and this was one of the thoughts I tried to express in my book [Confronting Reality] – it’s never been a more important time to face reality.  While Americans like to think they are realists, the truth is in many cases they deny reality. Look at key industries in the United States, like the airline industry, the steel industry, the rubber industry, and the commodity chemicals industry, none of which can currently make, on a sustained basis, their cost of capital.

You could argue that if they had dealt with reality ten years ago, they would be in much better shape today.  The point is this: the sooner you recognize reality, the more options you have.  But if it is so necessary, then why do we not do it?  The fact is, reality can be traumatic.  And there are a number of reasons for that.  For one thing, leaders, wherever they may be, are often the recipients of filtered information from people around them, people who think the same way they do.  In other words, they only hear what they want to hear.  As a consequence, they become obsolescent together.  They lose their perspective. 

Then there are the wishful thinkers of the world who believe things will always return to the way they were, even though there are structural changes going on that tell a much different story.  You could argue that the pharmaceutical industry, the most profitable industry I’ve ever been associated with, suffers from this mindset.  There is unprecedented scrutiny from consumers, from Congress, from the FDA.  And yet they are not changing at nearly the rate they are going to have to ensure a successful future.

Finally, there’s the element of fear in some cultures that punishes people who hold unconventional views.  They feel that dissident views are indicative of a bad attitude and, therefore, should not be heard.  When people know that, they don't express their thoughts, and key issues of the day never make it to the table.  The point is this: regardless of where you are, you have to be more sensitive to your current environment.  You have to be more anticipatory as to what is going to happen.  And you have to be more willing to change, even if things are going well. 

Execution is always the primary job of the leader.  Show me a leader who is interested in execution, and I'll show you an organization that is successful.  If done right, it is a way to differentiate yourself in whatever activity you are in.  The integrated business system I refer to is about people, strategy, and operations, and thinking about them in a linked way.  In other words, when you talk about people, you talk about their strategic strengths as well as their operating strengths.  When you talk about strategy, you talk about the ability of people to execute the strategy, as well as their operating capability.  By virtue of linking them, you get a far more robust outcome.

I’ll talk about strategy first, because it has changed the most.  In 1978, McKinsey brought a template into GE, where I then worked, announcing, if you will, strategic planning.  I had some experience in this area at GE Capital, so I was appointed the strategic planner.  I put a book together -- six inches tall -- full of graphs and charts, and we went up to GE headquarters in Fairfield.  I can remember our session, just after lunch.  The executives sitting across the table were barely able to keep their eyes open, and we leafed through this enormous book.  No discussion of strategy, and it was quickly over.  Everybody breathed a sigh of relief.  We closed the book and put it back on the shelf for attention a year later. 

It’s straightforward.  It’s attainable.  And it’s more of a roadmap than a detailed plan.  The people who would execute the strategy are, in fact, involved in its creation, so they can be held accountable.  The strategy – which, by the way, applies as much to parishes and dioceses as it does to business – has been simplified enormously. It essentially comprises three pieces: environment, growth, and productivity.

As most of you know, the Catholic Church’s population has remained at about 65 million people.  But the composition of the Church has changed to the extent that more of the affluent have left, and more of the less well-heeled have joined.  Pope Benedict said in his recent trip to the U.S. that the Catholic Church in America is quite stable, much more, for example, than in Western Europe.  Yet the Pew study indicated that one out of three native Americans is leaving the Church.  The Pentecostals and the Evangelicals are the chief beneficiaries of this loss.  When asked the reason for this, some argue that they are offering programs that are more responsive to the youth or the aged, or whatever the needs of the Church are.  Despite all this, the Catholic Church operates some 637 nonprofit hospitals, striving every day to keep them afloat financially.  It also educates 2.3 million children every day at a cost of about $10 billion or, put another way, a savings to taxpayers of about $18 billion.

Despite their astounding educational contribution, Catholic schools have declined 56 percent in number since 1960, and another 14 percent since 2000.  For each new school that opens, four close, producing significant financial ramifications.  I’d like to emphasize that the environment in your diocese and parish may be quite different from others, and that there are some very positive things occurring alongside those that are troublesome.  That’s why it’s more important than ever that you know the essence of your environment, that you understand exactly where you are. Whatever plans you make must be based on realism. 

The first is to establish a parish committee for the retention of Catholics.  In other words, when people drop out of the Church, do exit interviews to find out why they are leaving.  There's a number of common reasons why they leave, including uninspiring leadership, insufficient activities for youth or the aged, sparse or ineffective laity involvement, and sometimes rundown facilities.  Whatever the reason, it would be nice to identify them and then set up a committee to do something about it.  I think the fact that people leave the Church and we just shake our heads and say, "We can't do anything about it," is a mistake.  I think we should work harder to retain good Catholics. 

Secondly, create a sustainable and energetic effort to raise money in every parish.  At the root of most of the parish problems is insufficient money.  And a major reason is that we don’t have the kind of experienced laity we need to raise funds.  We don’t have the imagination and persistence we need to be successful financially. 

I have a daughter who lives in Paducah, Kentucky, which is not a very wealthy community.  They are trying to keep a Catholic school alive, and to do that they have an auction every two years.  Last year, they raised $300,000 at this event by getting all kinds of donations from across the country, and bringing the whole town together, Catholics and non-Catholics alike.  With that kind of fundraising, they are going to be able to sustain their effort for at least the next couple of years. I think we can do a much better job in the Catholic Church of raising funds. 

Thirdly, I’d like to see every parish and diocese contribute to a nationwide public relations effort by the Church to highlight, publicize and disseminate some of the significant contributions of the Church.  This would be an effective way to offset the avalanche of negative commentary that appears so frequently about the Church.  I don’t think we should just sit around and accept it.  I think we should respond and try to do something about it. 

These three areas, in addition to the strategies that every parish or dioceses should pursue, will not fix the world. But my hope is that they can put us in a little stronger position. 

Another important part of any strategy is productivity.  I'd love to see us have better systems in our churches and in our dioceses as a way to collect data and improve decision-making.  I’d also like to see all dioceses and parishes pool their purchasing power.  We have just done that in the Bridgeport Diocese, where I’m a member, and have made significant progress.  We also need to bring the various employee benefit programs -- many of which are outdated --to a contemporary state, and at the same time look for ways to make our parishes, particularly the schools, run more efficiently.  Productivity applies everywhere.

The Church budget is another area that demands attention. In the business world, the budget is how we assess accountability.  I know that accountability is anathema to many sectors of the Church.  That needs to change.  The budget is full of details, which means when you identify the various sources of revenue and costs, you should be able to identify who is accountable for them.  Then you need to follow up.  I've been involved in preparation of several of these budgets for the past three years.  And it seems that when people miss budgets, they think, “Well, there's not much we can do about it.”  I say, "Well, you were involved in its preparation.  You were involved in its execution.  What happened?"  In business, when you miss a plan, you're asked to come in and chat with us, because we would like to know what is going on.  I think we need to do more of that in the Church.  We can’t just accept the fact we have runaway finances when it doesn’t have to be that way. 

We even have a common chart of accounts now, so we can collect revenues and expenses, and we can analyze the impact across the dioceses and we have made some progress.  We are nowhere near where we can be but I think we are off to a good start.

Which bring me to the subject of people.  Not just the identification of qualified people but, more importantly, the development and candid appraisal of people.  I know that assessment in parishes is looked upon with great disfavor, but the core of any good organization is the ability to assess and develop people.  We use a lot of different methods in business, but whatever way you choose, I think it needs to identify the person's strengths, their development needs, and how you can help them meet those needs.  It does not have to be a negative or punitive act.

If that kind of process is taken down through the organization and everybody participates, organizations get better.  I also believe – and say this with trepidation -- that you should be leery of volunteers.  They are all well-intentioned, but may not be qualified.  Recruit people.  Actively select those you feel can take on the major activities of the diocese or the parish.  But do not let them come to you.  Go to them.  Then provide them with the training and assistance they need. 

When I see what’s going on -- especially in the parochial schools, which I’m familiar with -- I realize we don’t give people a chance to grow.  We don’t expose them to education.  We don’t let them begin to get more expertise in the subjects in which they’re involved.  I think that is a responsibility we have to fulfill. 

Finally, we don’t guide people anywhere near the extent we should in terms of how they play their roles.  We often hear the excuse, “We don’t pay as well as some others.”  Well, I’ve been in places where that has not been an issue.  We’ve been able to find people who can deal with our compensation structure and still bring the expertise that is a requisite to being good.  I would like to think we could move on that front, as well.  That is not enough, though.  We have to have a standard against which we identify and recruit qualified people.  I happen to like people who have an interest in hunting for data, and people who are interested in listening to the views of others.  It’s also helpful to find people who bring clarity to complex situations.  There's an old notion that complexity equals intellect.  The truth is simplicity equals intellect.

In addition, I like people who are interested in change, as opposed to just protest.  I like people who are willing to cooperate.  For example, I had a substantial issue at Honeywell in my closing days.  We were organized in a matrix, which means we had separate functions in finance and marketing and manufacturing.  The manufacturing people and the marketing people did not see eye to eye, nor did the heads of the organization.  I called them together and pointed out that they were hurting the overall results of the business.  We either had too much inventory or too little, and that simply had to stop.  I said, "I'm going to now put metrics in place against which I intend to measure both of you.  So it won't be just you making your own metrics.  You’ll be compared to the joint metrics."  They both nodded their heads and were fine.  We were back three months later and nothing had changed. I told them I would make an unannounced visit, which I did, and still not much had changed.  So I called the marketing and manufacturing heads in and gave both of them severance packages.  I said, "You've both done a good job, but you won't work together."  I had a big guard stationed at the door, and I said, "I want you to turn in your badges and leave the premises right now."  They left.  I sat in my office. 

I am a great believer in succession planning; but I had a backup for neither of them.  At about three o'clock, I got a telephone call from the guard, who said the two guys were trying to get into the building.  I said, "Send them up."  They came into my office, and before I could say anything, they exclaimed, "I think we got it."  I said, "Fine."  We had a little discussion first, then I took back the severance packages.  I said, "The next time we have to do this, there's no turning back."  I can’t promise you that they ever liked each other, but they did work well together, and so did their organizations.  And the overall business result was far better than before.

The point is this: you have to have people who are willing to cooperate.  I like people with flexibility of mind, who are perpetually adaptable to ever-changing circumstances, who are willing to change, and who are not averse to taking risks.  We don’t take enough risks in this country anymore, primarily because of Sarbanes-Oxley and all the other constraints.  Quite the contrary, we punish people who take risks and fail, which is not the foundation on which great companies are built. 

Beyond that, I like to see some emotional strategies in every organization I’m affiliated with.  The first is authenticity.  No fakes, no cutting corners, no multi-ethical environments.  One of the great testimonies to the Catholic Church came out of the memorials given to Tim Russert last week.  He was a truly authentic guy, and a good Catholic who lived his life by his religion. The more people we can get of his ilk, the better off we will be. 

The second emotional strategy is self-awareness.  In other words, people who are comfortable with their own strengths, and not dismayed by their shortcomings.  People who are willing to hire people better than they are in order to get a job done.  Simply put, if you are not experienced in finance, get somebody who is.  If you are not experienced in marketing or education, get people who are.  Then put them together as a team. 

The third emotional strategy is self-awareness -- the ability to embrace new ideas and adjust to change.  How many times have you heard people say, "What you see is what you get."  That's an ill-advised place to be.  You do not want to change your ethics.  You do not want to change your values.  But you do want to change your mind in the face of new facts.  That is how you grow.  People who maintain their positions forever never grow, and the absence of growth ultimately undercuts how far they can go in business.  I always thought that Jack Welch's long tenure at GE was because he believed in renewal, that every five years or so he would go to some distant part of the world and come back re-energized with new ideas.  He was not the same person at the end of his 20-year reign as he was at the beginning because he was always trying to push the envelope and renew himself.  He’d then come back and do the same for the organization. 

Finally, it is important to embrace humility.  When you appoint people to leadership positions, you have to assess how they’re going to handle it with respect to ego.  People with big egos do not listen, and people who do not listen do not learn.  That position often morphs into arrogance and hubris, which cascades through an organization.  It sows the seeds of its destruction. 

I remember as a young boy I was high-spirited and confident; my mother was a very important influence in my life.  Around ten years old, I was boasting about something to her, and she said, "Do you understand humility?  Let me tell you what it means."  She went on, "It's not thinking less of yourself.  It's thinking of yourself less."  I never forgot that.  I don’t mean to say I lived that way every day of my life, because I haven’t.  But you want to have people on your team who can contain their egos, because large egos, if unrestrained, are destructive.  Your goal is to build a culture, regardless of what kind of organization you are.  And that, to a large extent, means the behavior of your leaders.  You don’t create a culture by a plaque or a film or a speech.  It emerges as a consequence of what your leaders do, how they accept and welcome ideas, how willing they are to debate and then resolve things, and how they interact with others.  Interaction is particularly important.  You don’t want an environment where people say, “We have to be careful not to bring this up with Mr. Murphy because he doesn't like discussions on this topic.” 

Culture clearly matters, and you have to make sure you understand yours.  To the extent that you don’t like it, what are you going to do about it? 

Then there are people who are slow to move, who have blind loyalty.  Everybody wants to be loyal.  But at some point in time you have to act in the best interests of whatever organization you’re a part of.  They do not identify or grow or stretch good people.  They do not know the true difference between capable people and those who may not be. And then there’s indecision.  How many people say, "Let's have another meeting,” while under their breath they’re thinking, "But for heaven's sake, let's not make a decision."  Those people are not helpful either.

Finally, you have people who miss commitments all the time without going back to analyze the root cause of their miss.  As a result, their poor performance continues.
 
You see some wonderful characteristics in people who populate good, vibrant organizations.  The first characteristic is energy.  Not just their own energy, but their ability to energize others.  Then there are people who are persuasive and clear.  You don’t mandate anymore.  You have to convince people and then be patient.  If you repeat yourself enough times, you can be effective.

The third characteristic is people with courage and passion who speak up when they have a viewpoint that ought to be expressed, and who also are willing to accede to another view if it is better.  The important thing is that a candid discussion is going on at all times in search of the best answer.  Then there are people with great self-confidence who, even more importantly, can inspire self-confidence to others.  And the more self-confidence your organization and its people have, the better they do. 

Finally, I have always believed you have to be candid.  I’ve tried to live by that principle myself, never saying anything behind someone’s back that I wouldn’t say to their face.  That is how you ultimately build a relationship.  Even though not everybody in your organization is going to hold you dearly to their heart, at least they will say you are honest, fair and candid.
 
At the end of the day, there are six priorities that I think define good leadership everywhere.  The first is that people know enough about their business to participate in its decisions.  They may defer to somebody else with a better idea, but they are involved.  Even if people are followers, they want to make sure their leadership is actively engaged.

The second priority is that they embrace realism in everything they do.  I like to tell a story about Xerox, which was having great difficulty four or five years ago.  They promoted their COO to be the CEO, and he decided to do two things: reduce the number of call centers, and develop separate organizations across the country to sell big equipment and medium-sized equipment. He went out into the field to explain his ideas to people, and the general reaction was, “Our customers are already confused, and if you introduce them to a new salesman and new call center people, things are going to get even worse." He went back and thought about what he had heard from the field, but decided to implement both ideas anyway.  Chaos ensued, and within six months he realized the urgent need to do something else. 

The point is this:  It’s not only important to have a good idea, but to know when to implement it.  So many good ideas go by the wayside because they are put in place at the wrong time.  Rely on realism.  Set clear goals, but not too many.  Organizations with ten goals have no goals.  Have four goals that you can measure the organization against, and then make sure you hold people accountable for their performance.

The next priority is reward the doers.  You may not be able to differentiate through high salaries, but you may be able to do it through promotion and through recognition.  By virtue of that differentiation, the good stay.  Conversely, if you fail to reward the doers, they end up leaving while the mediocre stay put, and your organization deteriorates.

Beyond recognition, I’d like to emphasize the importance of coaching your people.  Take it upon yourself to ask, "Am I making the people that I work with every day better?  Is this organization better today than it was a year ago?  And if not, why not?"  It’s equally important, of course, is to know yourself.  The higher up you go in any organization, the less constructive feedback you get.  No one wants to go into their boss and say, "You're a jerk."  You have to hold yourself accountable.  You have to have your own standards.  You have to measure yourself in a way that keeps you contemporary.  People who do that continue to grow.