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Elon Musk – Leading a quest to save the future

Elon Musk – Leading a quest to save the future

47 year old South African born entrepreneur Elon Musk founded X.Com in 1999. X.Com later became Paypal and was sold to Ebay in 2002. After making a cool $165 million out of the deal, Musk turned his focus to new and more ambitious ventures. First he founded Space X, a company designing and manufacturing spacecraft with goals to commercialise space travel and colonise Mars. Then in 2003, he commenced Tesla Motors and started producing zero emission electric sports cars. More recently, Musk convinced Tesla shareholders to acquire his third passion project, Solar City; a business owned by Musk’s cousin, specialising in powering homes, businesses and eventually cities with solar power.1

Elon Musk - Leading a quest to save the future

The lure of a strong vision

Musk wraps all of his companies up in a larger than life vision that attracts and inspires his employees.2 At Tesla Group, people genuinely believe they are saving the planet. At SpaceX, they are on a crusade to give humans a second chance on another planet if earth gets into trouble.3

Musk intimately understands the heady attraction of such ambitious work for highly skilled people. When releasing his electric car patents to the world, Musk openly taunted his competitors: “My vision allows me to hire and retain better people than you will ever be able to hire for any amount of money. They will be smarter, they will work harder and they will stay longer.3

I wrote about the positive effect of workers feeling a higher sense of purpose in my blog ‘Work and Happiness’.

Selecting the best talent

Musk has a reputation for hiring only the best people on the planet to work for him – whether to build a rocket or cook in the cafeteria.4 He believes that bringing on a few leading minds in the field and giving them the freedom to accomplish their responsibilities is better than hiring a lot of people to get a complicated job done. According to Musk, numbers just slow down progress and make a task more expensive to complete.

Apart from wanting the best, Musk also values a positive attitude and an easy to get along with personality. (Watch ‘Elon Musk talks Talent vs. Personality in Employees’).

Musk personally interviewed the first 1000 staff for Space X and even today still interviews every engineer. However, he encountered unique challenges sourcing talent along the way. In particular, it was difficult to entice experienced people away from established aerospace players like Boeing and Airbus. So he went after younger talent; personally scouring PhD programs from a range of universities for individuals who had built something, or had been on a team that had made something from nothing.2

At Tesla, the experience was a little different. Cars hadn’t been done in Silicon Valley before so there were a number of software engineers excited about the prospect of applying their skills to an entirely new product. Tesla also had the backing of a Silicon Valley legend – Google Founder Sergey Brin – to boost the project’s appeal and the credibility of the Tesla brand amongst target applicants. Once again, Musk stayed close to the recruitment of talent,2 even taking to Twitter himself to advertise for engineers for the autonomous vehicle division.5

Recruitment techniques

Musk makes applicants write essays about why they want the role. He also gives them a riddle to solve to test critical thinking. In the interview, Musk is known to play mind games; he barely pays attention to candidates and sits with his back to them2 before spinning around to drill them with questions.6

Musk is a proponent of behavioural interviewing techniques. Unless a prospective employee can break down the solution to a problem in granular detail, he will conclude that they do not really know the answer or have embellished the level of their involvement.6

Intense culture

Job ads on the Tesla careers website come with a warning: “These jobs are not for everyone, you must have a genuine passion for producing the best vehicles in the world. Without passion, you will find what we’re trying to do too difficult.”6

According to Dolly Singh, former Head of Talent Acquisition at Space X, working with Musk is not a comfortable experience as he is never satisfied. He pushes his team so hard they sometimes feel like they are “staring into the abyss”. However, this pressure on performance is deliberate. Musk knows that his staff will exceed even their own expectations if he keeps the heat on.7

And, as Singh points out, “you don’t get to Mars with a bunch of softies.”

Musk describes himself as a nano-manager. Even more intense than a micro-manager, he maintains a hands-on obsession with the tiniest operational and design details.1 And when there is a pressing problem preventing progress, Elon will devote the majority of his time and energy to it.2

Structure and communication

The Musk businesses run on flat structures. Staff are free to contact anyone directly, including Elon.2

At Space X, the engineers (including Musk) physically sit on the manufacturing floor in giant glass cubicles. They have to walk through the floor to get to their office so are forced to look at everything going on and interact with staff.2

Is Musk a modern day superhero?

Musk has been described as a modern day Howard Hughes and even compared to comic book hero Iron Man (aka Tony Stark). There is no doubt he is a physics genius. And, if popular media reports are to be believed, has a penchant for fast cars and beautiful women. However, Musk knows that to achieve his ultimate goal of saving the planet and establishing interplanetary colonisation, it will take a team of superheros. To this end, his approach is quite simple: seek out people who are as talented and driven as he is; ensure that the work environment is as motivating and meaningful as possible; and, establish clear and measurable objectives. Sounds easy, right?

Works Cited

  1. Wartzman, Rick. “Admire Elon Musk All You Want, but Please Don’t Manage like Him.” Fortune.com. Fortune, 21 Jan. 2015. Web. 21 May 2017.
  2. “How Elon Musk Builds Organizations That Can Achieve Anything – Recruiting & Training, Remaking R&D, Setting Strategy.” Innovation Leader. 13 Feb. 2017. Web. 21 May 2017.
  3. Lavoie, Andre. “Want to Hire the Best Talent? Be Like Elon Musk and Set a Strong Vision.” Entrepreneur. 22 July 2014. Web. 21 May 2017.
  4. Carson, Biz. “Elon Musk Is so Obsessed with Hiring, He Even Poached the Best Yogurt Shop Employee from Pinkberry.” Business Insider Australia. 02 June 2015. Web. 21 May 2017.
  5. Burns, Matt. “Want To Work For Tesla? Elon Musk Turns To Twitter To Recruit Engineers.” TechCrunch. TechCrunch, 19 Nov. 2015. Web. 21 May 2017.
  6. Tovey, Alan. “Elon Musk: Have You Got the Drive to Work for Tesla?” The Telegraph. Telegraph Media Group, 20 Nov. 2015. Web. 21 May 2017.
  7. Feloni, Richard. “A Former SpaceX Employee Explained What It’s Like To Work For Elon Musk.” Business Insider Australia. 24 June 2014. Web. 21 May 2017.

Elon Musk image By Steve Jurvetson [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Zhang Ruimin – the would-be unknown leader

Zhang Ruimin took the helm of a struggling refrigerator manufacturer in 1984 when he was just 25. As a leader he won the confidence and goodwill of his workers and reversed the company’s dismal quality record. Since then, Zhang has turned the Haier Group into the world’s fastest growing appliance maker with the largest market share in white goods world wide. 1

Management without bosses

“A leader whose existence is unknown to his subordinates is really the most brilliant one.”
(Ruimin, Zhang)2

Zhang Ruimin

Prior to 2005, Haier’s 80,000 or so employees worked in traditional functions like manufacturing, sales and marketing. However with the advent of the internet, Zhang knew that the existing departmental/functional/silo organisation would be too slow to respond to customer needs into the future. So he began reorganising the way employees worked. 3

Zhang believed that if the company wanted to intimately understand and meet consumer needs, staff needed to be directly connected with the customer. Instead of complying with rules and following a manager, he decided that workers should have the freedom to make decisions led by the users of the things they make – the consumer. 2

ZZJYT’s

No, I’m not cursing in code.

Zhang split staff up into self-managed work units call ZZJYT’s (zi zhu jing ying ti – which roughly translates to independent operating unit) and by 2012 had almost done away with middle management completely. Today each ZZJYT comprises 7-10 people from various functional roles.

These microenterprises operate as independent ventures. Each is responsible for its own hiring, procurement, strategy, production and ultimately profit and loss.

The ZZJYT’s are not permanently assigned to a particular product or role. Instead they are formed through internal competition. If an employee identifies an opportunity for a new product or service, they are free to propose their idea. A vote involving employees, customers and suppliers determines whether the project goes ahead. The winner becomes the project leader.

Once a leader is appointed they can independently handpick a team and find their own manufacturers and distributors (either internally or externally) to produce and sell their product. 3

Beware the catfish

The project leader must work hard to stay ahead of the catfish. That is what the firm calls the person with a rival idea with the second highest number of votes. 3 Once a leader is in place, his or her team appraises the leader’s performance every quarter and votes whether they want to keep them in the position or replace them. 4

Zhang believes this structure creates competition in the organisation while also fuelling entrepreneurship. 3

Remuneration

Zhang believes that employees in traditional organisations tend to focus too much on what their bosses say or think because their pay is determined by them. This is why there is no position-related remuneration at Haier. 5 Instead employees are paid solely based on performance and the results their team achieves.

Ecosystem of talent

In the new generation Haier, talent is provided through an open labour market. Each ZZJYT is given the freedom to innovate by reaching out to customers, prospective employees, collaborators and even competitors.

Employees are free to leave or join ZZJYT’s, however a unit will dissolve after the project is over and talent goes back to the marketplace.

Whilst many businesses will find this concept foreign and unmanageable, for industries like Hollywood, bringing skilled workers together for the length of a project is nothing new. (See http://www.cognology.com.au/are-terms-like-hollywood-and-gig-spelling-the-end-for-the-traditional-employment-model)

The platform

Instead of offering jobs, Zhang says Haier offers everyone a continuing series of opportunities to find jobs via an entrepreneurial platform.4

By definition, platform companies form ecosystems by partnering with, and incorporating technology from multiple corporations to drive innovation and performance. Haier’s powerful internet platform enables limitless collaboration with suppliers, customers, universities, competitors, and other stakeholders.

According to Zhang, eventually there won’t be employees at all. There will only be a platform. 1 (I feel like Keanu Reeves might pop up any second now….)

A natural evolution in the internet age

Zhang Ruimin has been lauded for his accomplishments in management innovation, and yet by some he is still seen as a radical. Haier’s goal of becoming a facilitative platform without traditional employees seems consistent with broader global trends towards open collaboration, greater connectivity and on-demand workforces. I wrote about this last year in my blog http://www.cognology.com.au/what-skills-will-be-most-in-demand-in-2025

We are seeing the dawning of a new age of organisational agility and innovation. Employers and skilled workers alike have much to gain from embracing new ways of working. But it will take a willingness to change and adapt.

References

  1. Kleiner, Art. “China’s Philosopher-CEO Zhang Ruimin.” Strategy Business. 10 Nov. 2014. Web. 08 May 2017
  2. Ruimin, Zhang. “Raising Haier.” Harvard Business Review. 31 July 2014. Web. 08 May 2017.
  3. “Haier and Higher.” The Economist. The Economist Newspaper, 11 Oct. 2013. Web. 08 May 2017.
  4. Mahajan, Neelima. “How CEO Zhang Ruimin Reinvented Haier – Three Times Over.” CKGSB Knowledge. 28 Sept. 2015. Web. 08 May 2017.
  5. “Haier CEO Zhang Ruimin: Challenge Yourself, Overcome Yourself.” Founding Fuel. 18 Oct. 2015. Web. 08 May 2017.
  6. Fischer, Bill, Umberto Lago, and Fang Liu. “The Haier Road to Growth.” Strategy Business. 27 Apr. 2015. Web. 08 May 2017.
  7. “Zhang Ruimin: Driving Haier’s Innovation.” Zhang Ruimin: Driving Haier’s Innovation | CEIBS. Web. 08 May 2017.

Jeff Bezos – an Amazonian chief

With my last blog “Warren Buffett – Not your average billionaire”, I kicked off a series of posts we are dedicating to some of the most successful leaders of our time.

There has been a lot of media coverage lately regarding the imminent launch of an Australian branch of Amazon.com – the world’s biggest online retailer. Not surprisingly, the talk of them setting up shop here has sent local retailers into a spin.

Given its power to disrupt markets and change the way the world shops, I thought it would be timely to take a look at the founder, Chairman and CEO of this tech giant – Jeff Bezos.

Worth an estimated $72.7 billion, Bezos is painted by biographers as part dreamer, part quantitative analyst. As a teenager he imagined himself becoming an astronaut but instead went on to major in computer science at Princeton, before putting his skills to use on Wall Street. In 1994, despite having a successful career and a six-figure salary, he left Wall Street behind to create Amazon.com, a start-up retail business in the emerging and largely uncharted world wide web.

Jeff Bezos quickly proved himself a ‘wunderkind’ with great instincts. He survived the dot.com bust of the late 1990’s and continued building Amazon on the back of his own ingenuity, self confidence, and propensity to think big.

Jeff Bezos

Think like the Chief

As he transitioned from a start-up boss into a leader of tens of thousands of people working across multiple businesses, Bezos became renowned for demanding nothing short of excellence from everyone around him. His expectations are captured in Amazon’s 14 Leadership Principles, and it is said that those who do best at Amazon are those who have internalised these principles and think like Jeff. And when they don’t meet his exacting standards, Bezos doesn’t mince words. For your horror (or amusement) I have included some examples of brutal one-liners that have been attributed to him

  1. “Are you lazy or just incompetent?”
  2. “I’m sorry, did I take my stupid pills today?”
  3. “Do I need to go down and get the certificate that says I’m CEO of the company to get you to stop challenging me on this?”
  4. [After reviewing the annual plan from the supply chain team] “I guess supply chain isn’t doing anything interesting next year.”
  5. [After an engineer’s presentation] “Why are you wasting my life?”

Survival of the fittest

Under Bezos’s direction, Amazon is reported to ‘manage out’ a certain percentage of its work force annually, with leaders required to rank staff and dismiss the least effective performers. [1]

Bezos has been accused by critics of lacking empathy and treating workers as expendable resources, but he has also never hidden the fact his priority is and always has been to create value for the customer.

Cohesion – the enemy of innovation?

A questioning and analytical atmosphere is characteristic of Amazon’s culture. Bezos expects his leaders to openly disagree and argue their perspectives, regardless of how uncomfortable it may make them may feel. [1] To this end, Amazon were early adaptors of an agile feedback system they call the “Anytime Feedback Tool” that enables staff to receive real time input from colleagues who have something to say about their work.

At Cognology we know from our own research that team sizes are expanding and companies are striving to find ways to facilitate greater connection, collaboration and sharing of ideas. In this respect, Amazon seems like a bit of an anomaly. Bezos is famous for his two pizza rule: no team should be larger than can be fed with two large pizzas. Bezos believes that smaller teams guard against groupthink and promote innovation. He has also suggested that cross-team communication can be disastrous for innovation as agreement between teams can limit the creative tension required for new ideas. [2]

Keeping his fingers on the pulse

Sharing his time across various ventures, Bezos cannot physically be present for every key decision Amazon makes. Being a number cruncher at heart, he puts his faith in the company’s enormous data resources and analytics, and expects leaders to use metrics to make almost every important decision.

But Bezos doesn’t just rely on cold hard data. The entrepreneur is also said to regularly scan random customer emails for feedback and complaints. And when an email is forwarded to a leader accompanied by a simple “?” from Jeff, the recipient knows to act. [3]

The heart of a Warrior

Adventure and discovery appear to be in Jeff Bezos’s very DNA. However, his passion for progress goes far beyond selfish interests or the financial benefit of shareholders. Bezos seems driven by a self-imposed higher calling to advance the welfare and development of the whole human race. His vision for the future has compelled him to commit hundreds of millions of dollars to a number of ambitious yet noble ventures like carbonless energy, advancements in neuroscience, and Blue Origin – an enterprise aimed at making space travel accessible to millions of people so that they may one day live and work in space.

Leadership involves choices. Jeff Bezos understands that to be truly great, you must be prepared to make choices that are neither popular nor easy. Without apology Jeff challenges his people to use their gifts, follow their convictions, and walk the path less travelled.

It is perhaps unfortunate that we get many of our insights into business leaders through the media, who (let’s face it) have a tendency to emphasise the sensational aspects of a story. Bezos has certainly received his share of bad press in recent years and if you believe the anecdotes of former staff who claim bad experiences, Amazon is a tough place to work. But given Bezos’s accomplishments and endeavours I can’t help but wonder how balanced the narrative has been.

I watch with interest for if and when Amazon.com comes to our shores.

References

  1. B. Stone, 10 10 2013. [Online]. Available to subscribers: https://www.bloomberg.com/news/articles/2013-10-10/jeff-bezos-and-the-age-of-amazon-excerpt-from-the-everything-store-by-brad-stone
  2. D. Baer, 18 03 2014. [Online]. Available: https://www.businessinsider.com.au/the-strategies-jeff-bezos-used-to-build-the-amazon-empire-2014-3.
  3. R. Sanghani, 15 10 2013. [Online]. Available: http://www.telegraph.co.uk/technology/amazon/10379912/How-Jeff-Bezos-rules-his-Amazonian-empire.html
  4. Jeff Bezos image by Yolo0906 (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

Warren Buffett – Not your average billionaire

This blog will be the first in a series of posts profiling some of today’s most successful business leaders. Each leader is recognised as a trailblazer in their own right; entrepreneurs and visionaries who have dared to challenge the status quo and write their own rules.

This series will explore their different leadership styles and approaches and look at how this has shaped their success.

I decided to kick off with a name you might recognise as being one of the wealthiest and most business savvy people on the planet.

Warren Buffett

Warren Buffett is the creator and CEO of Berkshire Hathaway, a holding company with interests in the likes of Apple, Costco and Coca Cola. [1]

Buffett has been a regular on the Forbes 400 Richest People in America list since 1982, and in 2008 was officially crowned the richest person in the world with a fortune of $62 billion.

Warren Buffett is the stuff of legends and has a cult-like following of investors that hang on his every word. But for me, it is not so much his financial prowess that I’m interested in, but rather how his distinctive leadership style has contributed to his celebrated status in the world of business.

Laissez Faire Management Style

Numerous books and articles written about Warren Buffett refer to his laissez-faire approach to management. A French term, laissez-faire loosely translates to “let them do” -basically let people do as they choose. This label seems fair given what I have come to learn about Buffett’s hands-off approach.

When Buffett buys a business, he leaves the managers alone to run the company the way they would have had he not bought them. Unlike other CEO’s, he doesn’t seek to exert control through traditional corporate plans or strategic meetings, and generally only communicates through his annual letter to the board. [2]

So how has Warren Buffett managed to successfully build an empire with assets worth $621 billion [3] whilst all the time remaining at arms length?

Adapting the Situation to Suit the Leader

Perhaps the secret lies in the corporate culture and operating environment he has carefully cultivated over the last four decades.

Engaging Top Talent
Warren Buffett has been quoted as telling his children “If you want to soar like an eagle in life, you can’t be flocking with the turkeys”. His personal philosophy is to surround yourself with good people whose behaviour is better than yours so that they inspire and challenge you. When hiring managers, Buffett looks for integrity, intelligence, and energy. [4]

Autonomy and Accountability
It stands to reason then that by choosing highly motivated and capable leadership, Buffett has been able to entrust his businesses to the stewardship of others. Handing over full autonomy is fundamental to the way Buffett operates. [2] (For more on the benefits and challenges of autonomy see A Sensible Discussion about Autonomy)

Meaningful Communication
Though Buffett’s communication with his people may be infrequent, his words have impact. He showers praise on the people who work for him in his annual letters but is also generous with advice. He breaks down complex financial concepts in a way that anybody can understand him.

Values-Driven Culture
In Part II of my blog Aligning People I discussed how a group united by values will achieve far more than one that’s driven by other agendas. Interestingly, Buffett only acquires well-led, profitable companies that share his values. He believes that a values-driven culture translates to strong business performance and credits a strong culture with the ability to attract and retain outstanding employees. [5]

If you want to soar like an eagle in life, you can’t be flocking with the turkeys

Authentic Leadership – Living the Values, Walking the Talk.

An ‘aha’ moment for me in my research into Warren Buffett was when I realised that the values he pursues in business he practises in all aspects of his life.

Thriftiness

Berkshire Hathaway only acquires firms with low debt and strict cost control. This reflects Buffett himself who is renowned for his frugal nature. He still lives in the same house he purchased in 1958 for $32,500 and drives himself to work everyday. [6]

Hard Work and Discipline

Lawrence A Cunningham in his book Berkshire Beyond Buffett wrote that,
“Buffett’s own success has been built through hard work, discipline, a no-nonsense acquisition strategy and unwavering adherence to core values”. [2]

Buffett demands the same level of discipline and commitment from his leaders. He asks only that they stay true to their core business and values. In other words, he expects them to keep doing what they know how to do and to do it well. No more, no less. [2]

Integrity and Humility

Cognology has found extensive evidence to suggest that integrity is a key attribute of exceptional leaders. Buffett is passionate about maintaining a reputation for doing the right thing and instructs his leaders to “zealously guard Berkshire’s reputation.” [7]

Buffett is admired for the humble manner in which he openly admits his failures and his willingness to share the lessons he has learnt. In turn he encourages his business leaders to “face up immediately to bad news” and not let problems fester. [7]

But Warren Buffett is not as warm and cuddly as he might seem. He has shown that he is also a man prepared to deal with any leader that has breached what he holds sacred. A Buffett biographer once noted that “when a leader violates corporate values or generates reputational damage, the axe falls swiftly.” [2]

Letting Go

At 87, Warren Buffett has no plans to retire. People will remember Buffett for his extraordinary ability to pick good investments. But in truth, a lot of his success has been due to his ability to identify talent and retain top performers for the long term.

His leadership style has been shaped by his own personality: his honesty, his integrity, his humility, and his other deeply ingrained values. He has succeeded in demonstrating that you don’t have to maintain tight control over your people to do well in business. Success can in fact come from letting go – so long as you have laid the right groundwork to begin with.

References

  1. CNBC, [Online]. Available: http://www.cnbc.com/berkshire-hathaway-portfolio/.
  2. L. A. Cunningham, Berkshire Beyond Buffett : The Enduring Value of Values, Columbia University Press, 2014.
  3. Market Watch, “marketwatch.com,” [Online]. Available: http://www.marketwatch.com/investing/stock/brk.a/financials. [Accessed 09 03 2017].
  4. Vintage Value Investing, [Online]. Available: http://vintagevalueinvesting.com/wp-content/uploads/2017/01/Warren-Buffett-University-of-Florida-Lecture-Vintage-Value-Investing.pdf.
  5. L. A. Cunningham, “The Philosophy of Warren E. Buffett,” The New York Times, 05 02 2015.
  6. A. Mohr, “www.investopedia.com,” 22 07 2016. [Online]. Available: http://www.investopedia.com/financial-edge/0412/the-everyday-lives-of-frugal-billionaires.aspx.
  7. W. Buffett, “berkshirehathaway.com,” 31 12 2014. [Online]. Available: http://www.berkshirehathaway.com/letters/2014ltr.pdf.