FORTUNE Magazine: How one CEO learned to fly

How one CEO learned to fly

Boeing chief James McNerney has now made his mark at three major companies. How? "Help others get better," he says.

By Geoffrey Colvin, senior editor-at-large

October 16 2006: 3:28 PM EDT

Excerpts
I don't start with the company's strategy or products. I start with people's growth because I believe that if the people who are running and participating in a company grow, then the company's growth will in many respects take care of itself.

I tend to think about this in terms of helping others get better.

It generally gets down to a very personal level - openness to change, courage to change, hard work, teamwork.

One of the things I've taken away from that is that I'm unafraid to expect a fair amount from people. It makes them so much better - you're doing them a disservice if you don't.
/Excerpts

NEW YORK (Fortune) -- It's tough to find an executive who has delivered top performance across as wide a swath of business as Boeing (Charts) CEO W. James McNerney. In a 19-year career at General Electric (Charts), he ran GE's Asian operations, its light bulb business and its jet engine business, among others - performing so well that he was a finalist to succeed CEO Jack Welch in late 2000. When he didn't get that job, 3M (Charts) recruited him almost instantly to be CEO; the stock rose 34 percent on his watch. He left 3M to become Boeing's chief in mid-2005, and since then the stock is up 30 percent.

McNerney, 57, spoke recently with Fortune's Geoffrey Colvin about the importance of his father and Jack Welch, how he helps people who work for him grow, why he admires Steve Jobs and much else.

Most people in business and other fields develop for a while and then stop, but a small minority keep getting better for years. Are you conscious of continually trying to develop and improve?

I start with people's growth, my own growth included. I don't start with the company's strategy or products. I start with people's growth because I believe that if the people who are running and participating in a company grow, then the company's growth will in many respects take care of itself.

I have this idea in my mind - all of us get 15 percent better every year. Usually that means your ability to lead, and that's all about your ability to chart the course for [your employees], to inspire them to reach for performance - the values you bring to the job, with a focus on the courage to do the right thing. I tend to think about this in terms of helping others get better. I view myself as a value-added facilitator here more than as someone who's crashing through the waves on the bridge of a frigate.

What have you observed about those who grow and those who don't? Can you tell in advance who they'll be?

No, you can't always tell in advance. It generally gets down to a very personal level - openness to change, courage to change, hard work, teamwork. What I do is figure out how to unlock that in people, because most people have that inside them. But they [often] get trapped in a bureaucratic environment where they've been beaten about the head and shoulders. That makes their job narrower and narrower, so they're no longer connected to the company's mission - they're a cog in some manager's machine.

Do you come across people who think there are some abilities they just don't have in them - think they're simply not constituted to do certain things?

That's a question I think about a lot. Where I've finally landed on that issue is this: The things you expect of people have to be so fundamental that they're independent of people's style, culture ... their function.

So when we talk about the ability to chart the course for yourself and the people you work with, to expect a lot and inspire people, to have the right values, to find a way and deliver results - these are pretty fundamental things. Whether you're an individual contributor in a lab in a far-off place or leading thousands of people in a major services organization, they all apply. And they're compatible with an individual's personality and background.

Before 3M and Boeing, you worked at three of the most famous management-development organizations in the world - Procter & Gamble, McKinsey and GE. Were you trying to put together experiences that would complement one another and make you a more complete business person?

I was conscious of it. I was fortunate to grow up at GE, where that automatically happens to people who are doing well. But if it had not happened to me, I would have raised my hand - because you do need to see more than one thing. It increases your ability to analogize when you see different situations, increases your self-confidence, your situational awareness.

What experiences from your past were most important in your development?

Being GE's Asia leader. I saw the company from the outside in. Jack [Welch] gave me no blueprint, just said, "Asia is the biggest opportunity we've got, and we're not doing much - go figure it out." Tremendously valuable. Another thing I would cite is just working for Welch. He was a hell of a leader - both tough and inspirational. The 3M experience was also a great experience - a group of great people who needed a rejuvenation. A pure leadership challenge.

Besides Welch, which people were most important in your development?

I was lucky to have a great dad. He was a professor and a business leader [CEO of Blue Cross Blue Shield Associations], and he had the Welch characteristic - fearlessness about change, fun with change.

I tend to be inspired by pieces of people. Look at Steve Jobs and his ability to commercialize innovation. That was the struggle at 3M - there's lots of innovation at the company, but how is it commercialized sustainably? That guy is the best I've known at that, and I have enormous respect for his ability to commercialize innovation.

Research finds that great performers in any field tended to receive a lot of early encouragement from their parents.

There was no question that in our house doing well, doing it the right way, school, sports - there was an expectation. One of the things I've taken away from that is that I'm unafraid to expect a fair amount from people. It makes them so much better - you're doing them a disservice if you don't.

I think some of the saddest things in the world are when you don't expect enough from your children. All of sudden they're 21, and they have lower standards than if you'd taken a tougher, higher, bumpier road with them. I pulled that from my father. It probably made me, as my wife tells me, a little overfocused, a little insensitive, a little too goal-oriented, but that's part of the package.

People often draw parallels between sports and other fields. You were enthusiastic about sports - do you see those parallels?

No question, though it's almost trite to say it these days. My sports were team sports, ice hockey and baseball. The whole team dynamic is similar in business. Leadership is earned - the captain earns that role; it's not because he's the coach's son. These are all things we know, but in today's world it's not a bad idea to remind ourselves. When companies lose their way, they lose their way on these fundamental issues of leadership.

Continually pushing oneself to improve is difficult and even painful, and it's largely a mystery why some people do it and others don't. Have you developed any views about that?

[Long pause.] That is such a great question. I do know that there's a restlessness in some people. Go back to Welch. What happened yesterday didn't matter. What happens tomorrow is the only thing that matters, and that's an everyday occurrence.

I don't know if it comes from the toilet training, if your parents do expect a lot of you and you're always restlessly trying to grow and meet their expectations. That's a component. Another is that success and achievement can feed on themselves. It feels good to keep succeeding. It feels great to see the people you work with grow and achieve.

Maybe the ignition happens when you're younger, and then it feeds on itself. The next question is how you give it to people who weren't fortunate enough to have it given to them when they were young. It gets back to leadership attributes - expect a lot, inspire people, ask them to take the values that are important to them at home or at church and bring them to work.

Do those personal issues apply to a whole company?

Yes, institutionally, the ability to be agile enough is the gut issue in leading an organization today. You need a clear-eyed view of what's really happening in your marketplace and with your competition, of what you're really good at and not good at, which has probably changed over the past ten years. How you lead people in a way that makes them feel good about that, because it means job dislocation - that's the gut issue. If you can develop a team with the personal characteristics we talked about, how does that get institutionalized? That's the leadership challenge we're wrestling with at Boeing, and we're bound and determined to get it right.

FORTUNE Magazine: The GE Mystique

The GE Mystique

General Electric matters--but don't just take FORTUNE'S word for it. We asked seven management experts, including four former GE stars, what makes America's most admired company stand out.

by Betsy Morris and Geoffrey Colvin

February 24, 2006: 11:04 AM EST

Excerpts

GE has set a standard in leadership development in a way that all of us have benefited from. It has also set a standard in candor--that is, dealing with reality and rigor in communicating around the company. Everybody has a real chance to know exactly where they are.

GE is the best school of management in the world bar none.

People love being part of GE. It's like the highest state of being. One reason is that GE really is a meritocracy. It really does reward those who deliver. Everybody sees that it is the most successful people who are getting ahead. That inspires people to stay.

People like working for a company where it's all about them, and about making them as successful as they can be.

It's that obsession with people that requires all GE leaders to spend a huge amount of their time on human resources processes--recruiting, reviewing, tracking, training, mentoring, succession planning.

/Excerpts

(FORTUNE Magazine) - Kevin Rollins CEO of Dell

GE is a major customer of Dell (Research).

About three years ago Michael Dell and I met with GE (Research) management and discussed their leadership development programs. We knew that at Dell we were not growing our own leaders fast enough. We were having to hire from outside--and that demoralized our internal folks.

We wanted to study GE's model. So we sent an executive to go through the GE training program, then created a course tailored for our people. It has worked amazingly well. We have maybe 15 or 20 people in each course, once a year. They're taken offsite for two weeks and are immersed; it's all executive-taught. They come away with renewed energy to be a great leader but also renewed appreciation for the fact that Dell wants them to do well. Michael and I have spent a ton of time out there.

What makes GE the gold standard is the consistency of performance over a very prolonged period. I'm sure Jeff Immelt's pulled his hair out many times when people want to know what it was like to work with Jack Welch; and what's he doing that's like Jack Welch; and Jack Welch, Jack Welch, Jack Welch. But Jeff's a great leader and businessman in his own right.

Kevin Sharer CEO of AMGEN

Worked at GE from 1984 to 1989, as a corporate strategist with Jack Welch and as CEO of the Americom satellite broadcasting unit.

GE has set a standard in leadership development in a way that all of us have benefited from. It has also set a standard in candor--that is, dealing with reality and rigor in communicating around the company. Everybody has a real chance to know exactly where they are. There is no puffery. That is buttressed by rigorous, fact-based, honest assessment of the business situation. There isn't an ounce of denial in the place.

In addition, there's a real pride in being part of GE--a common sense of purpose. It's well known but still worth noting that the operations and financial promises are not "we'll give it our best shot" kind of promises. They're really sacrosanct. Finally, GE is aggressive. They think big and they take risks.

GE has been able to display these characteristics over decades, over CEO transitions, through business cycles. I think the sticking power of the place is a large part of why it's so admired. GE is able to just do it again and again.

Clay Christensen Professor, Harvard Business School

Author, The Innovator's Dilemma (1997).

GE is the best school of management in the world bar none. As innovators, though, I don't admire them very much. They have gotten new growth businesses through acquisition, but in terms of internally generated growth engines, they have not been famous for that in the last ten years.

The advantage of a GE-type structure is that every business unit has a finite life. A single monolithic business unit has a very hard time sustaining itself. But if you can create new growth within the corporate umbrella, then the corporation can sustain its prosperity even though the individual business units are dying. The major growth engine at GE has been GE Capital, which has disrupted the traditional banking structure. So it's been a great growth engine. But the fact that it's been a great growth engine in the past means it likely won't be in the future. That's my biggest worry for GE. I don't see a new engine of growth that's comparable to what they've enjoyed in the past.

One challenge is that the bigger a business gets, the less and less interest it has in small opportunities. And all the big growth markets of tomorrow are small today. I look at GE and the result of the past success is that their business units are now huge. So in theory, they can keep the growth going, but I think they'd have to slice the business up again. I've heard nothing about the awareness of the need to do that.

Chris Kearney CEO of SPX

Senior counsel at GE's plastics business from 1988 to 1995.

I went from BorgWarner to GE. BorgWarner was a conservative, well-run company with a history of solid operating performance. Being thrust from that culture into GE was like the scene in The Wizard of Oz where it turns from black and white to color. Your eyes open to a totally different way of thinking and challenging yourself and the organization. I felt I was working with some of the best and brightest businesspeople on the planet.

There's a lot of GE DNA that runs through SPX (Research), with GE people in key positions. What I've attempted to do is to create the sense of empowerment and lack of boundaries I felt at GE. Jack Welch challenged people not to grow incrementally but to create new markets. I've used that phrase here. Last year I was in China visiting one of our smaller businesses that makes home and commercial heating products. I was sitting in this room in this little factory, and they had the shades pulled and the projector on, and they were doing this slide presentation, talking about how many more products they were going to make in China to send to the U.S. I looked at them and said, "You guys need to get up and pull the shades and look out the window. There's a world exploding right here in your own backyard."

That's something ingrained in me from my GE Plastics days--to look at the world differently and figure out what you're not doing.

Shelly Lazarus CEO of Ogilvy & Mather Worldwide

GE board member since 2000.

I remember once, early on in my time on the board, Jeff Immelt was talking about an acquisition. He said now what they had to do was to "GE-ize" it. Everybody in the company knows what that means. To be able to attract talent--that's only the starting point--then to develop it so they have a pick of leaders who all believe in a common cause and are proud to be part of the institution. I think that is the magic.

People love being part of GE. It's like the highest state of being. One reason is that GE really is a meritocracy. It really does reward those who deliver. Everybody sees that it is the most successful people who are getting ahead. That inspires people to stay. It's a virtuous circle. The fact that the rest of the world also looks at GE and says, "My God, they are so successful, what a glorious company"--it just sort of feeds the sense of pride and belief insiders have to start with.

GE leadership spends a great deal of time thinking about people. That's not common. The head of HR comes to our board meetings because he is considered so crucial. People like working for a company where it's all about them, and about making them as successful as they can be.

Larry Johnston CEO of Albertson's (Research)

President and CEO of GE Appliances from 1991 to 2001.

GE's 100-year-plus track record is simply about having the very best people at every single position. That is its No. 1 core competency. No one has better people. No one else's bench strength comes even close. It's that obsession with people that requires all GE leaders to spend a huge amount of their time on human resources processes--recruiting, reviewing, tracking, training, mentoring, succession planning. When I was at GE, I spent over half of my time on people-related issues. When you get the best people, you don't have to worry as much about the execution, because they make it happen.

Another secret that keeps GE ticking is the culture of lifelong learning at the personal level and the concept of always trying to make everything better at the business level. The philosophy is that there is an infinite capacity to improve. Even if you're the best, you can get better. The real winners never stop wanting to get better.

At GE, a thirst exists to search out best practices. That "not invented here" syndrome just doesn't exist there. When I was in the appliance business, we learned a way to improve inventory processes from a tiny company in New Zealand. We ended up rolling it out across the entire company. It was a multibillion-dollar idea. It wasn't something we invented, but our people were constantly on the lookout for those kinds of ideas. That sets GE apart.

Noel Tichy Director, Global Leadership Program, University of Michigan Business School

Head of GE's Crotonville leadership development program from 1985 to 1987.

Jeff Immelt took over in 2001 with a 20-year run ahead of him. That was a tough time--the end of the bubble, 9/11, corporate scandals. He has been abe to look at the situation he is in and zero-base GE. What do we keep? What don't we keep? Jeff's answer was to propose a new set of values--imagine, solve, build, and lead. These fit with his agenda of moving into whole new sets of businesses, from energy to customized medicine. Jeff is doing what his predecessors did before him: transforming GE to fit tomorrow's world.

The stock price often takes a while to catch up to what GE is doing. The Most Admired survey may be a leading indicator; it appears to recognize that this guy--in terms of technology, globalization, and initiatives like eco-imagination and recommitment to GE's R&D tradition--has turned the dial up considerably.

I talk to a lot of CEOs, and they watch Jeff very carefully. He's also a very easy human being to hang out with.

FORTUNE Magazine: What it takes to be great

What it takes to be great

Research now shows that the lack of natural talent is irrelevant to great success. The secret? Painful and demanding practice and hard work

By Geoffrey Colvin, senior editor-at-large

October 19 2006: 3:14 PM EDT

Excerpts

The first major conclusion is that nobody is great without work.

There's no evidence of high-level performance without experience or practice.

...even the most accomplished people need around ten years of hard work before becoming world-class, a pattern so well established researchers call it the ten-year rule.

"The ten-year rule represents a very rough estimate, and most researchers regard it as a minimum, not an average." In many fields (music, literature) elite performers need 20 or 30 years' experience before hitting their zenith.

The best people in any field are those who devote the most hours to what the researchers call "deliberate practice." It's activity that's explicitly intended to improve performance, that reaches for objectives just beyond one's level of competence, provides feedback on results and involves high levels of repetition.

For example: Simply hitting a bucket of balls is not deliberate practice, which is why most golfers don't get better. Hitting an eight-iron 300 times with a goal of leaving the ball within 20 feet of the pin 80 percent of the time, continually observing results and making appropriate adjustments, and doing that for hours every day - that's deliberate practice.

Consistency is crucial.

In a study of 20-year-old violinists by Ericsson and colleagues, the best group (judged by conservatory teachers) averaged 10,000 hours of deliberate practice over their lives; the next-best averaged 7,500 hours; and the next, 5,000.

More deliberate practice equals better performance. Tons of it equals great performance.

Just one problem: How do you practice business?...you create the practice in your work, which requires a few critical changes. The first is going at any task with a new goal: Instead of merely trying to get it done, you aim to get better at it.

Anything that anyone does at work, from the most basic task to the most exalted, is an improvable skill.

Armed with that mindset, people go at a job in a new way. Research shows they process information more deeply and retain it longer. They want more information on what they're doing and seek other perspectives. They adopt a longer-term point of view. In the activity itself, the mindset persists. You aren't just doing the job, you're explicitly trying to get better at it in the larger sense.

Feedback is crucial, and getting it should be no problem in business. Yet most people don't seek it; they just wait for it, half hoping it won't come.

While experts understand an enormous amount about the behavior that produces great performance, they understand very little about where that behavior comes from.

"Some people are much more motivated than others, and that's the existential question I cannot answer - why."

...greatness isn't reserved for a preordained few. It is available to you and to everyone.

Tip Sheet: Perfect Practice

1. Approach each critical task with an explicit goal of getting much better at it.

2. As you do the task, focus on what's happening and why you're doing it the way you are.

3. After the task, get feedback on your performance from multiple sources. Make changes in your behavior as necessary.

4. Continually build mental models of your situation - your industry, your company, your career. Enlarge the models to encompass more factors.

5. Do those steps regularly, not sporadically. Occasional practice does not work.

/Excerpts

(Fortune Magazine) -- What makes Tiger Woods great? What made Berkshire Hathaway (Charts) Chairman Warren Buffett the world's premier investor? We think we know: Each was a natural who came into the world with a gift for doing exactly what he ended up doing. As Buffett told Fortune not long ago, he was "wired at birth to allocate capital." It's a one-in-a-million thing. You've got it - or you don't.

Well, folks, it's not so simple. For one thing, you do not possess a natural gift for a certain job, because targeted natural gifts don't exist. (Sorry, Warren.) You are not a born CEO or investor or chess grandmaster. You will achieve greatness only through an enormous amount of hard work over many years. And not just any hard work, but work of a particular type that's demanding and painful.

Buffett, for instance, is famed for his discipline and the hours he spends studying financial statements of potential investment targets. The good news is that your lack of a natural gift is irrelevant - talent has little or nothing to do with greatness. You can make yourself into any number of things, and you can even make yourself great.

Scientific experts are producing remarkably consistent findings across a wide array of fields. Understand that talent doesn't mean intelligence, motivation or personality traits. It's an innate ability to do some specific activity especially well. British-based researchers Michael J. Howe, Jane W. Davidson and John A. Sluboda conclude in an extensive study, "The evidence we have surveyed ... does not support the [notion that] excelling is a consequence of possessing innate gifts."

To see how the researchers could reach such a conclusion, consider the problem they were trying to solve. In virtually every field of endeavor, most people learn quickly at first, then more slowly and then stop developing completely. Yet a few do improve for years and even decades, and go on to greatness.

The irresistible question - the "fundamental challenge" for researchers in this field, says the most prominent of them, professor K. Anders Ericsson of Florida State University - is, Why? How are certain people able to go on improving? The answers begin with consistent observations about great performers in many fields.

Scientists worldwide have conducted scores of studies since the 1993 publication of a landmark paper by Ericsson and two colleagues, many focusing on sports, music and chess, in which performance is relatively easy to measure and plot over time. But plenty of additional studies have also examined other fields, including business.

No substitute for hard work

The first major conclusion is that nobody is great without work. It's nice to believe that if you find the field where you're naturally gifted, you'll be great from day one, but it doesn't happen. There's no evidence of high-level performance without experience or practice.

Reinforcing that no-free-lunch finding is vast evidence that even the most accomplished people need around ten years of hard work before becoming world-class, a pattern so well established researchers call it the ten-year rule.

What about Bobby Fischer, who became a chess grandmaster at 16? Turns out the rule holds: He'd had nine years of intensive study. And as John Horn of the University of Southern California and Hiromi Masunaga of California State University observe, "The ten-year rule represents a very rough estimate, and most researchers regard it as a minimum, not an average." In many fields (music, literature) elite performers need 20 or 30 years' experience before hitting their zenith.

So greatness isn't handed to anyone; it requires a lot of hard work. Yet that isn't enough, since many people work hard for decades without approaching greatness or even getting significantly better. What's missing?

Practice makes perfect

The best people in any field are those who devote the most hours to what the researchers call "deliberate practice." It's activity that's explicitly intended to improve performance, that reaches for objectives just beyond one's level of competence, provides feedback on results and involves high levels of repetition.

For example: Simply hitting a bucket of balls is not deliberate practice, which is why most golfers don't get better. Hitting an eight-iron 300 times with a goal of leaving the ball within 20 feet of the pin 80 percent of the time, continually observing results and making appropriate adjustments, and doing that for hours every day - that's deliberate practice.

Consistency is crucial. As Ericsson notes, "Elite performers in many diverse domains have been found to practice, on the average, roughly the same amount every day, including weekends."

Evidence crosses a remarkable range of fields. In a study of 20-year-old violinists by Ericsson and colleagues, the best group (judged by conservatory teachers) averaged 10,000 hours of deliberate practice over their lives; the next-best averaged 7,500 hours; and the next, 5,000. It's the same story in surgery, insurance sales, and virtually every sport. More deliberate practice equals better performance. Tons of it equals great performance.

The skeptics

Not all researchers are totally onboard with the myth-of-talent hypothesis, though their objections go to its edges rather than its center. For one thing, there are the intangibles. Two athletes might work equally hard, but what explains the ability of New England Patriots quarterback Tom Brady to perform at a higher level in the last two minutes of a game?

Researchers also note, for example, child prodigies who could speak, read or play music at an unusually early age. But on investigation those cases generally include highly involved parents. And many prodigies do not go on to greatness in their early field, while great performers include many who showed no special early aptitude.

Certainly some important traits are partly inherited, such as physical size and particular measures of intelligence, but those influence what a person doesn't do more than what he does; a five-footer will never be an NFL lineman, and a seven-footer will never be an Olympic gymnast. Even those restrictions are less severe than you'd expect: Ericsson notes, "Some international chess masters have IQs in the 90s." The more research that's done, the more solid the deliberate-practice model becomes.

Real-world examples

All this scholarly research is simply evidence for what great performers have been showing us for years. To take a handful of examples: Winston Churchill, one of the 20th century's greatest orators, practiced his speeches compulsively. Vladimir Horowitz supposedly said, "If I don't practice for a day, I know it. If I don't practice for two days, my wife knows it. If I don't practice for three days, the world knows it." He was certainly a demon practicer, but the same quote has been attributed to world-class musicians like Ignace Paderewski and Luciano Pavarotti.

Many great athletes are legendary for the brutal discipline of their practice routines. In basketball, Michael Jordan practiced intensely beyond the already punishing team practices. (Had Jordan possessed some mammoth natural gift specifically for basketball, it seems unlikely he'd have been cut from his high school team.)

In football, all-time-great receiver Jerry Rice - passed up by 15 teams because they considered him too slow - practiced so hard that other players would get sick trying to keep up.

Tiger Woods is a textbook example of what the research shows. Because his father introduced him to golf at an extremely early age - 18 months - and encouraged him to practice intensively, Woods had racked up at least 15 years of practice by the time he became the youngest-ever winner of the U.S. Amateur Championship, at age 18. Also in line with the findings, he has never stopped trying to improve, devoting many hours a day to conditioning and practice, even remaking his swing twice because that's what it took to get even better.

The business side

The evidence, scientific as well as anecdotal, seems overwhelmingly in favor of deliberate practice as the source of great performance. Just one problem: How do you practice business? Many elements of business, in fact, are directly practicable. Presenting, negotiating, delivering evaluations, deciphering financial statements - you can practice them all.

Still, they aren't the essence of great managerial performance. That requires making judgments and decisions with imperfect information in an uncertain environment, interacting with people, seeking information - can you practice those things too? You can, though not in the way you would practice a Chopin etude.

Instead, it's all about how you do what you're already doing - you create the practice in your work, which requires a few critical changes. The first is going at any task with a new goal: Instead of merely trying to get it done, you aim to get better at it.

Report writing involves finding information, analyzing it and presenting it - each an improvable skill. Chairing a board meeting requires understanding the company's strategy in the deepest way, forming a coherent view of coming market changes and setting a tone for the discussion. Anything that anyone does at work, from the most basic task to the most exalted, is an improvable skill.

Adopting a new mindset

Armed with that mindset, people go at a job in a new way. Research shows they process information more deeply and retain it longer. They want more information on what they're doing and seek other perspectives. They adopt a longer-term point of view. In the activity itself, the mindset persists. You aren't just doing the job, you're explicitly trying to get better at it in the larger sense.

Again, research shows that this difference in mental approach is vital. For example, when amateur singers take a singing lesson, they experience it as fun, a release of tension. But for professional singers, it's the opposite: They increase their concentration and focus on improving their performance during the lesson. Same activity, different mindset.

Feedback is crucial, and getting it should be no problem in business. Yet most people don't seek it; they just wait for it, half hoping it won't come. Without it, as Goldman Sachs leadership-development chief Steve Kerr says, "it's as if you're bowling through a curtain that comes down to knee level. If you don't know how successful you are, two things happen: One, you don't get any better, and two, you stop caring." In some companies, like General Electric, frequent feedback is part of the culture. If you aren't lucky enough to get that, seek it out.

Be the ball

Through the whole process, one of your goals is to build what the researchers call "mental models of your business" - pictures of how the elements fit together and influence one another. The more you work on it, the larger your mental models will become and the better your performance will grow.

Andy Grove could keep a model of a whole world-changing technology industry in his head and adapt Intel (Charts) as needed. Bill Gates, Microsoft's (Charts) founder, had the same knack: He could see at the dawn of the PC that his goal of a computer on every desk was realistic and would create an unimaginably large market. John D. Rockefeller, too, saw ahead when the world-changing new industry was oil. Napoleon was perhaps the greatest ever. He could not only hold all the elements of a vast battle in his mind but, more important, could also respond quickly when they shifted in unexpected ways.

That's a lot to focus on for the benefits of deliberate practice - and worthless without one more requirement: Do it regularly, not sporadically.

Why?

For most people, work is hard enough without pushing even harder. Those extra steps are so difficult and painful they almost never get done. That's the way it must be. If great performance were easy, it wouldn't be rare. Which leads to possibly the deepest question about greatness. While experts understand an enormous amount about the behavior that produces great performance, they understand very little about where that behavior comes from.

The authors of one study conclude, "We still do not know which factors encourage individuals to engage in deliberate practice." Or as University of Michigan business school professor Noel Tichy puts it after 30 years of working with managers, "Some people are much more motivated than others, and that's the existential question I cannot answer - why."

The critical reality is that we are not hostage to some naturally granted level of talent. We can make ourselves what we will. Strangely, that idea is not popular. People hate abandoning the notion that they would coast to fame and riches if they found their talent. But that view is tragically constraining, because when they hit life's inevitable bumps in the road, they conclude that they just aren't gifted and give up.

Maybe we can't expect most people to achieve greatness. It's just too demanding. But the striking, liberating news is that greatness isn't reserved for a preordained few. It is available to you and to everyone.

FORTUNE Magazine: Chaos by Design (Google)

Chaos by design
The inside story of disorder, disarray, and uncertainty at Google. And why it's all part of the plan. (They hope.)


Adam Lashinsky , Fortune senior writer
October 2 2006: 10:46 AM EDT

Excerpts
"...I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don't have any of these mistakes, we're just not taking enough risk."

The company's goal, says Brown, is to determine precisely the amount of management it needs -- and then use a little bit less.

The way to succeed in "fast-paced, ambiguous situations," she tells me, is to avoid creating too much structure, but not to add too little either.

Nurturing such an off-the-wall culture is a luxury only a company that's performing stupendously well can afford, and Google is certainly doing that. Google is generating more than $800 million in cash each quarter.
/Excerpts

(Fortune Magazine) -- Spend just a few minutes on Google's sprawling campus in Mountain View, Calif., and you'll feel it right away: This is a company thriving on the edge of chaos. Google (Charts), age 8, is pulling in $10 billion a year in revenue and is worth about $125 billion, but the vibe is far more freshman mixer than profit-seeking firm whose every utterance is scrutinized for deeper meaning.

The 1.3-million-square-foot headquarters is a mélange of two-story buildings full of festive cafeterias (yes, they're all free), crammed conference rooms, and hallway bull sessions, all of it surrounded by sandy volleyball courts, youngsters whizzing by on motorized scooters, and -- there's no better way to put this -- an anything-goes spirit. It's a place where failure coexists with triumph, and ideas bubble up from lightly supervised engineers, none of whom worry too much about their projects ever making money.
An edgy management style

Take the case of Sheryl Sandberg, a 37-year-old vice president whose fiefdom includes the company's automated advertising system. Sandberg recently committed an error that cost Google several million dollars -- "Bad decision, moved too quickly, no controls in place, wasted some money," is all she'll say about it -- and when she realized the magnitude of her mistake, she walked across the street to inform Larry Page, Google's co-founder and unofficial thought leader. "God, I feel really bad about this," Sandberg told Page, who accepted her apology. But as she turned to leave, Page said something that surprised her. "I'm so glad you made this mistake," he said. "Because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don't have any of these mistakes, we're just not taking enough risk."

When a million-dollar mistake earns a pat on the back, it's obvious this isn't your normal corporation. To figure the place out, I've repeatedly been told the person to see is Shona Brown, the 40-year-old ex-McKinsey consultant who is Google's senior vice president for business operations. That's what it says on her business card, anyway, but she might as well be Google's chief chaos officer. She literally wrote the book on the subject, a 1998 bestseller called "Competing on the Edge: Strategy as Structured Chaos." And fittingly, on the day I'm to see her at the Googleplex, my press escort and I get hopelessly lost. Finding anyone here requires precise navigation and the ability to read color-coded maps. We get so badly turned around -- entering the wrong building's lobby, backtracking through shrubbery to another -- that we arrive 17 minutes late. Even real estate at Google is chaotic.

Click here to read more on Google's leadership

Brown has made a career of arguing that anarchy isn't such a bad thing -- which is why Page, co-founder Sergey Brin, and CEO Eric Schmidt hired her in 2003. A business theoretician in a company dominated by engineers, she considers Google the "ultimate petri dish" for her research, though her job is anything but theoretical. In addition to overseeing human resources (called "people operations"), Brown runs a SWAT team of 25 strategic consultants who are loaned out internally on ten or so projects at a time -- restructuring a regional sales force here, guesstimating a market size there.

The company's goal, says Brown, is to determine precisely the amount of management it needs -- and then use a little bit less. It's an almost laughably Goldilocksian approach that Brown also advocates in her book, co-written with a Stanford business professor. The way to succeed in "fast-paced, ambiguous situations," she tells me, is to avoid creating too much structure, but not to add too little either. In other words, just make it not too hot and not too cold, and you're done. "If I ever come into the office and I feel comfortable, if I don't feel a little nervous about some crazy stuff going on, then we've taken it too far," she says.
A "Googley" approach to business

Crazy definitely trumps comfy at Google. You have to keep your wits about you on campus just to avoid smashing into one of Google's 8,000-plus employees. Meetings typically start on the hour, and young Googlers tend to hover outside scarce conference rooms beforehand. They doodle on hallway whiteboards, contributing inside jokes, such as sinister new ways to expand the company's online advertising program. ("AdSense for Eyelids," reads one.) Celebrity sightings are ho-hum. A couple of years ago I was having lunch at Google's sunny outdoor courtyard when Page and Brin sat down at my table with their guest, comedian Chris Tucker. George Soros lectured at Google the day I met Brown. Google advisor Al Gore shows up often.

Nurturing such an off-the-wall culture is a luxury only a company that's performing stupendously well can afford, and Google is certainly doing that. Two years after going public, its stock is up more than fourfold, and it's so profitable that despite helter-skelter spending on everything from mammoth data centers to worldwide sales and engineering offices, Google is generating more than $800 million in cash each quarter. In the process, Google is thrashing the competition -- in market share, deals won, buzz -- notably Yahoo (Charts) and Microsoft (Charts). It's also cozying up to a growing list of heavyweights you'd think would be warier, including News Corp (Charts)., Viacom (Charts), and ad-agency giant WPP (Charts).

If Google's engine is running fast, then naturally it's also running hot. That sheds light on all kinds of blunders -- many of them dwarfing Sandberg's -- which Google likes to explain away as its Googley approach to business. (Googley being a cloying description these people actually say out loud. Frequently.) The company is figuring things out as it goes, and not quite as effectively as you'd expect from its stellar financial results. Its new products haven't made nearly the splash that its original search engine did. Critics have mocked its self-righteous "Don't be evil" motto when, for example, Google decided to scan copyrighted books for its book search index. Even Google's rocket-ship stock price has been grounded. After a run from $85 in August 2004 to $475 last January, it has puttered around $400 for most of the year. Says Benjamin Schachter, an analyst with UBS: "Investors are saying, 'Enough of what you're going to do. What does it do to the numbers?' "

What concerns investors is whether Google can come up with a second act. There's nothing to suggest that its growth engine -- ad-supported search -- is in trouble. But it's clear from Google's tentative lurches into new forms of advertising and its spaghetti method of product development (toss against wall, see if sticks) that the company is searching for ways to grow beyond that well-run core. It's the reason, for example, that Google requires all engineers to spend 20% of their time pursuing their own ideas. Successful second acts are exceedingly rare in the technology business -- or in any business, for that matter. Microsoft followed Windows with Office. Intel jettisoned its memory-chip line to rule microprocessors. Even Apple, which executed one of the most remarkable rebirths ever with the iPod, had to go through a painful decade to get there.

What emerges from months of interviews with employees ranging from fresh-out-of-college hires to the CEO is that Google firmly believes it has a framework for figuring out the future. It should come as no surprise that the plan is as irreverent, self-confident, and presumptuous as the company itself. Google's executives don't articulate it this way, but the framework can be found in the title of Shona Brown's book: structured chaos. Indeed, along with Googleyness, chaos is among the most important aspects of Google's self-image. Understanding how Google thinks about chaos -- like Page's teachable moment after Sandberg's million-dollar mistake -- is critical to divining where the company goes next. "Are lots of questions hanging out there in the market?" asks Sandberg. "Sure. Because we don't always have an answer. We're willing to tolerate that ambiguity and chaos because that's where the room is for innovation." Good strategy -- if it actually works.

In "Competing on the Edge", Brown describes a sizzling Silicon Valley software company from the 1990s that was confronting the joys and hardships of hypergrowth. She identifies it only with a pseudonym, Galaxy, and it bears a striking resemblance to Brown's current employer, which didn't exist yet. "Galaxy was populated by smart, hip twenty- and thirtysomethings who were chosen for their brains and their attitude," she wrote. "Tour Galaxy and you'll be struck by the college-like atmosphere. Landing a job at Galaxy is hard. The screening process is intense. Once hired, the Galaxy philosophy is to let people 'do their own thing.' " But Galaxy had one glaring weakness: "The firm was living off one set of unusually successful products, whereas the rest of the businesses were much more modest performers."
Finding a follow-up act

What vexed Galaxy is precisely Google's challenge today. For all its new products -- depending on how you count, Google has released at least 83 full-fledged and test-stage products -- none has altered the Web landscape the way Google.com did. Additions like the photo site Picasa, Google Finance, and Google Blog Search belie Google's ardent claim that it doesn't do me-too products. Often new services lack a stunningly obvious feature. Users of Google's new online spreadsheet program, for instance, initially couldn't print their documents. The calendar product doesn't allow for synchronization with Microsoft Outlook, a necessity for corporate users.

Other major initiatives like Gmail, instant-messaging, and online mapping, while nifty, haven't come close to dislodging the market leaders. Much-hyped projects like the comparison-shopping site Froogle (nearly four years in beta and counting) and Google's video-sharing site have been far less popular than the competition. One of Google's biggest misses is its social-networking site, Orkut, which is a hit only in Brazil and -- as Marissa Mayer, Google's 31-year-old vice president of search products and user experience, says with an impressively straight face -- is "very strong in Iran." Sometimes promising new products are buried so deep within Google's sites that users can't find them. "You can only keep so many things in your head," acknowledges CEO Schmidt. "Even if you're the No. 1 Google supporter, you cannot remember all the products we have."

This presents a conundrum: Impose order, and Google becomes just like everybody else; let chaos rule, and run the risk that Google's flailing about hurts its pristine brand and reputation for brilliance. Clarifying its intentions would be a start. "We need to do a better job of communicating which products we expect to be killer apps and which are experiments," Brin told a gathering of journalists in May. There's been progress. In June, Google released its online payment tool, Checkout, as a full-fledged product. Mayer, who has the final word (except for Page) on what appears on Google's home page, has established a war room to piece together a plan for better integrating Google's many products.

It's going to be a battle, though, simply because Googlers are adding features by the bushel -- and more are coming. Niniane Wang, a young engineer who worked on Gmail, is now assigned to a confidential project believed to involve social networking. Louis Monier, a Digital Equipment veteran who launched its AltaVista search engine, recently left eBay to join Google in a top-secret capacity. Katie Jacobs Stanton runs Google Finance, Google Blog Search, and two other projects. This summer she temporarily moved with her husband and three children to Bangalore to get closer to the engineers who built the finance site. Since Google Finance doesn't run ads or any other revenue-generating features, I ask Stanton how long the site can ignore making money. Her response: "Theoretically, forever."

In fact, Google is making money slyly, if slowly, on some of the very products that seem like mere whiz-bang. Consider Google Earth, the ubiquitous cable-news prop and workplace time waster that lets users view incredibly detailed geographic photos from around the world. It started as a satellite-imaging software company called Keyhole. "Sergey [Brin] was playing around with it and got enamored with Keyhole," says John Hanke, Keyhole's original CEO (and now a Google employee) before Google bought it in 2004. "At a staff meeting, he put Keyhole up on one of the projectors and started showing people their houses and flying around." The startup, whose images were confined to the U.S., had been bringing in modest revenue from real estate companies, but that's not what interested Brin. "When we got to Google, one of the first questions Sergey asked was, 'Why can't you look at the whole world at once?' " says Hanke. Two years later the company is integrating ads into Google Earth. Search for "pizza" while hovering above your neighborhood, and you'll get the idea.

Neat toys are about more than creating Web pages on which Google can slap ads. Google Earth has been downloaded more than 100 million times, and embedded in each download is a request from Google to place a toolbar, a Web gadget that includes a search box, permanently on a user's Web browser. That seemingly innocuous query is a gold mine for Google, because the ever present box increases the likelihood users will search on Google. The more people search on Google, the greater the chances someone will click on an advertiser's ads. "We know the lifetime value of a toolbar user," says Mayer, who offers the example to counter the notion that Google isn't trying to profit from its fancy doodads. "So we know how much value we're getting back out of somebody who downloads Google Earth and then subsequently downloads the toolbar."
Strategic Partnering

This virtuous cycle of more users conducting more searches benefiting more advertisers is precisely what makes Google so irresistible to business partners -- even those who feel threatened by it. Martin Sorrell, the chief executive of ad agency holding company WPP, has been outspoken in his fear that Google could obviate companies like his. (Automated ad auctions entail less overhead than armies of schmoozing ad executives, goes the argument.) He titled a section of his latest annual report "Google: Friend or Foe?" In an interview, he suggests the short answer: "The bigger and more successful you get, the more people want to bring you down." But it's not that simple. WPP, Sorrell notes, is Google's third-largest customer, measured by the amount of advertising it purchases on Google for its clients. Sorrell says Google wants to improve its access to WPP's clients, and he's inclined to allow that -- provided there's something in it for WPP. "We represent 20% of media revenue worldwide, and we're definitely not 20% of Google's revenue," he says. "We'll see how we can work together."

Working with Google and grumbling about it is quite in fashion. Viacom's MTV recently signed a deal for Google to distribute its videos to the Web publishers in Google's AdSense network, which lets the publishers run ads supplied by Google's advertisers. Comcast, which has been Google's ideological opponent in an acrimonious legislative battle over government regulation of Net access, is particularly pleased with the revenue it gets from having Google power the search results on its Comcast.net home page for broadband users. In both cases, the older companies profit from Google's superior Internet advertising network. Indeed, after initially scaring "old" media, Google has become the go-to partner for juicing Internet revenues.

Chumminess with the establishment is in the air in mid-August when I meet with Schmidt, two days after Google's announcement of a landmark deal to provide search over numerous News Corp. properties, notably MySpace. (Google guarantees News Corp. $900 million over 3½ years in exchange for an unspecified share of ad revenue.) In our 90-minute interview, I remind Schmidt that at a lunch for journalists in March, he repeatedly mentioned MySpace almost wistfully, seeing how Google had been a bust in social networking.

"We didn't know what to do about it," he says. "Now we know." He explains that Google's new social-networking effort has at least two prongs. The well-known part is the MySpace deal; the other is Google's technology to improve search on social-networking sites, which so far only MySpace has agreed to use. Schmidt's explanation is a bald attempt to declare victory after an obvious defeat, since MySpace trounced Google's Orkut (not including, of course, those triumphs in Brazil and Iran).

The MySpace deal reveals the Google leadership triumvirate's visceral style. The transaction might never have happened, says Schmidt, if Brin hadn't flown to meet with News Corp. executives in Pebble Beach, Calif., where Rupert Murdoch was hosting an A-list bull session on global issues. (Schmidt was vacationing in Europe; Page was in India.) "We sent Sergey because he's very intuitive," says Schmidt. "He goes down there and sort of hangs with them for a while and comes back and says, 'You know, I'm really sure we should do this.' And it's not a numbers argument. It's a feeling of commitment."

Winning MySpace kept the Web's gem of the moment out of the hands of Microsoft and Yahoo, which both privately claim that Google overpaid by several hundred million dollars. Whether that's true won't be known for years. Tim Armstrong, Google's New York-based head of North American sales and the company's point man in the MySpace negotiations, pooh-poohs the notion that Google got taken.

"What people aren't seeing is our ability to model deals," he says. "I would guess that Google was not offering to write the biggest check for this partnership." In any event, the deal created a fan in News Corp., which has steadfastly refused to place any of its Fox shows on Google's video site and yet is positively giddy about its budding advertising relationship. "I actually don't view them as overwhelmingly competitive with us," says Peter Chernin, News Corp.'s president and chief operating officer. "They are trying to sell advertising, and so are we. But at their core I view them as a technology company, and we are an entertainment company. It's a happy and convenient marriage."
Mapping the future

It's great for Google that Murdoch & Co. love it so, but that doesn't change the impression that Google is winging it -- after all, the deal only came together after Brin descended from the clouds to peer into News Corp.'s soul. When I ask Schmidt whether his company actually has a plan, he does what engineers tend to do in situations like this: He gets up and starts drawing on a whiteboard.

A billionaire at 51, Schmidt cuts the typical Silicon Valley figure of somebody's successful, but otherwise average, dad. His khakis-and-oxford uniform is standard, as are his wire-frame glasses and Supercuts-inspired hairdo. Schmidt's doodling, which he's also done recently for the Google board of directors, tells the story of where he sees Google's money coming from for years to come. He draws a series of connected clouds representing the history of the computing industry, from mainframes to minicomputers to PCs to today's mobile devices. The gist of the illustration is that there's practically no money left to be made in computers, not in hardware or software. The money, instead, is all in Web applications, a trend Schmidt had been predicting since his days as chief technology officer at Sun a decade ago. Users won't always be traveling to the Web on the PC, which is why he scribbles lines for cellphones, cable set-top boxes, Treos, BlackBerrys, and so on. Schmidt's most compelling point -- and the most visible glimmer of a method to Google's madness -- is the power behind the not-so-secret data centers Google is building, particularly a 30-acre facility in Oregon whose existence he references without provocation. "That massive investment should translate into the ability to build applications that are impossible for our competitors to offer, just because we can handle the scale," says Schmidt. (Microsoft, Yahoo, and IBM, each of which is spending heavily on similar big iron, would beg to differ.) He's talking about processing-power-sucking Google applications like Gmail and Google Earth -- and unannounced products on the drawing board.

Google has also begun to show how it plans to use that power for advertising services that go beyond search. Brokering video ads for MTV is new terrain, as are the graphical display ads Google plans to sell for MySpace. The company is engaged in an 18-month-old experiment to auction text and graphical ads for newspapers and magazines. It's also in the process of integrating its biggest acquisition to date, a radio-advertising company called dMarc Broadcasting, which Google bought in January for $102 million in cash plus a potential performance-based payout of more than $1 billion. dMarc automates the process for delivering radio ads to about 10% of the country's 10,000 stations. By merging dMarc into Google's AdWords, Google's online system for auctioning search terms, it will offer its advertisers -- who so far hawk their wares in 75 words or less of written text -- the ability to deploy radio ads as well.

It's a bold push. "We see very clear ways to improve advertising for all users," says Armstrong, the sales chief. It's the "all" in his aspirations that frightens anyone in Google's path. Or used to, anyway, before people started noticing that not everything Google does rocks the world. Nick Grouf, CEO of Spot Runner, a well-funded Los Angeles startup that does even more for television advertisers than dMarc does for radio, sees an Achilles' heel. "It's their incredible focus that got them this far," says Grouf. "But all these new initiatives suggest a dilution of that focus."

With so many moving parts, it's natural to wonder if Google is truly a company for the ages -- or whether it's the next Galaxy, that fast-moving, arrogant, one-hit wonder in Shona Brown's book. To believe that Google will find its second act, you have to accept the hubris and the chaos, and that the brainiacs who got lucky once will do so again. Google desperately wants to believe its nonlinear approach is all part of the plan. But as the company's big thinkers are the first to admit, most of the questions about Google aren't answerable. Try as they may, no one can truly control chaos. Top of page
From the October 2, 2006 issue