Earlier this year I was interviewed by G. Dan Hutcheson for his well-known weVISION video series. The edited video, 30 minutes long, is available for free online, along with a transcript of our chat.

Dan is an old friend, not just of mine, but of the whole semiconductor industry. He is chairman of VLSIresearch, a provider of market research and analysis on the technical and business aspects of the semiconductor supply chain. The industry respects Dan as one of its top experts and marketing voices.

In the interview Dan very generously compared Applied Wisdom to Andy Grove’s Only the Paranoid Survive, noting he would put my book up beside Andy’s “especially if you are in the semiconductor equipment industry.” That’s a real honor.

In the interview, Dan asked me how a CEO can create an ethical organization.

I replied that a company will never be better than its leaders. At Applied Materials we tried to encourage everyone in a leadership position within the whole company, worldwide, that one of their first priorities was to walk the talk and provide leadership in ethical behavior. You need that as part of the trust you require with your customers. You really have to develop trust between your customers and your company. We worked very hard on that and it paid off: we got more business, with good products, and good service and they could trust us to work with them in an honest and ethical way.

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Are you building trust with your customers and within your organization?

When I coach nonprofit managers I often repeat some of my most fundamental management tips and processes. Most of them work for any organization, for-profit and not-for-profit.

As a leader, the character of your organization will never exceed your own. Make sure you exhibit every trait and quality you want your people to exhibit. A culture of trust and respect is vital. If you don’t trust and respect an employee, that person should not be working for you. That is your responsibility. If you set an example of taking responsibility for your own decisions instead of scapegoating, your people will do the same.

In Applied Wisdom I talk about some of the leadership challenges The Nature Conservancy (TNC) faced in the middle of the last decade. One of the proposed solutions was to hire a new CEO, and I was brought into the process.

I thought that TNC would be well-served at that time by a leader who had come from either the management consulting world or investment banking. In both those fields individuals have to parachute into complicated, often high-pressure situations and use an orderly process to analyze what is going on and discern what the options are. That pretty much defined what the next TNC president was going to have to do. Mark Tercek fit the bill and became TNC’s CEO in 2008.

In June of this year The Nature Conservancy announced that it was becoming a founding member of the Climate Leadership Council (CLC), along with over two dozen corporations, nonprofits and distinguished individuals.

The CLC is an international research and advocacy organization with a mission to convene global opinion leaders around new climate solutions based on carbon pricing and dividends. Founding members include former New York mayor Michael Bloomberg, scientist Stephen Hawking, and economists N. Gregory Mankiw and Lawrence Summers. This is the kind of leadership that the TNC under Mark Tercek have become famous for.

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Have you found ways to help your colleagues and staff to embody the principles of the organization?

Not every business practice translates to the nonprofit world, but here are some that do. I hope you’ll find them helpful.  —Jim Morgan

Focus on the Long Haul 
Most leaders are smart, knowledgeable about their business, and committed to their goals. What sets real leaders apart is their ability to maintain the pace. Social transformation, like running a Fortune 500 business, is a marathon—not a 50-yard dash. Keep an eye on important things like taking care of your health and family. Take time to carefully plan your business and personal calendars, and make sure that you’re including time for physical exercise.  This keeps you competitive and available for the next challenge.

Own the Monkey  
Some organizations are particularly susceptible to paralysis by analysis. Take responsibility for your decisions—as we say, “Own the Monkey.” You can always change or adjust your decision later if you have built in concrete review points ahead of time. Remember that decisions build momentum. Look for the “driving forces”—only one or at the most two items are the primary reasons for making a decision a certain way.

Even a well-analyzed decision is often not the most critical part of a decision process. It’s how you manage the consequences of the decision that matters. Practice determining what is the right thing to do for the organization, for your group, for your key stakeholders, and then for yourself.

Plan for 5%
Devote at least 5% of each week to planning. If you can focus your thinking out 3 to 12 months, you reduce the lack of control that builds up from being in a constant reactive mode. You begin to find patterns and to see possibilities and develop contingency plans. Then, review your best ideas at least weekly, prioritize them, and think about when they can be actionable: in a week, a month, 6 months, 12 months or 18 months. Determining when they will be actionable helps you evaluate the quality of the idea, the caliber of the talent, and the resources you have available (and provides a stimulation to get the missing capabilities in place). Then…

“Book It and Ship It”  
Success comes from the implementation of ideas. Time should be spent on organizing, strategizing and planning, but you need to complete the project, hire the person, get the donation, etc. Think about the “top three” priorities. You will have a long list of important things but try to make sure to get your focus on the top three. Think, “10% Strategy/90% Implementation.”

Collaborate Successfully
Leverage each other’s strengths. Enable others to build the capability required. The best management is simplified management by committed people willing to share the credit and be accountable.

Remember the “Six C’s”: 

  • Contact – Network for points of contact
  • Compromise – Make intelligent compromises
  • Contract – Agree to work together
  • Concrete – Ensure that objectives are measurable and concrete
  • Check – Streamline collaborative processes to avoid duplication
  • Close – Meet your commitments

To your success!

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Have you learned lessons at your nonprofit that you think have a much broader application?

At some point in almost every fast-growing company’s life there is a moment when a manager realizes business as usual is not going to cut it. As a leader you have to face facts: Change or fail.

I was reminded of this recently from stories about the ride-sharing service Uber. Among other criticisms, a former employee alleged in a blog post that she experienced sexual harassment from a superior and reported it. She says she was told it was the first that human resources had heard of the issue and that the offending manager was a good performer and would only be warned. She chose to transfer to another work group. After the transfer, though, she met other women who’d had the same experience with the same manager and other managers, and who said they’d reported it.

As word of this employee’s experience spread, other employees and former employees started reporting additional claims about a toxic workplace culture. Uber launched an investigation. I know nothing beyond what I read in the papers about the details of this situation. But from a distance I recognize a familiar scenario, one I’ve seen repeated in company after company in Silicon Valley, where I’ve worked for over 40 years. Energized with a mission and intensely focused on meeting milestones, executives adopt the posture of the three wise monkeys on the archway at the Tōshō-gū shrine in Nikkō, Japan who suggest, “See no evil, hear no evil, speak no evil.”

In my book Applied Wisdom: Bad News Is Good News If You Do Something About It, I talk about the management principles that helped me build the semiconductor equipment company Applied Materials from a small, near-bankrupt player in a crowded field into a multi-billion dollar global corporation with 15,000 employees. I served as CEO for almost 30 years, and we built a corporate culture we were proud of and that delivered bottom-line results.

It’s easy to get caught up in the mythology of changing the world or reinventing a category of technology or business. But the secret of managing success is paying attention to a handful of basic principles that apply in any kind of organization, whether a start-up or an established business, whether of mundane consumer commodities or sophisticated web-based services. In fact, I learned many of these lessons as a kid growing up in Indiana and working in my family’s vegetable canning business.

In a canning plant, you sometimes hear a problem before you see or experience it some other way. You’re suddenly aware of a funny sound in a canning machine, or maybe a clicking along a conveyor belt. But you’re on deadline; the line is working full-speed. What do you do? You stop and fix a small problem before it becomes a big problem. My dad managed the plant that way every day, even when it was tempting to cross his fingers and hope that the problem would fix itself or go away.

At Applied Materials we refined the basics of this idea into a kind of management mantra: “Good news is no news; no news is bad news; bad news is good news—if you do something about it.” Let me deconstruct that in the context of a CEO and a public company’s board.

At many board meetings the bulk of time is spent in CEO-orchestrated cheerleading. The CEO marches out all the accomplishments, the regional sales upticks, the promising advances in the lab, the great new executive team hire, the news that the company’s won some community award. Since the board sets the CEO’s pay, it’s not surprising she or he wants to make sure accomplishments are noted—but, generally speaking, what a waste of a board’s time! Beyond agreeing it’s all great, what is there to do or say about what’s going well? The board’s collective time and experience are wasted.

No news, on the other hand, is ominous. A board exists to help and coach and support a CEO in the difficult decisions of growth and management. If you are not hearing anything from the CEO about difficult challenges, something is wrong. There are always challenges, always competitive threats developing, always less than happy customers, always personnel issues to be resolved. The silence is as loud as the unfamiliar knocking in a canning line motor. If a manager is repeatedly acting inappropriately, you have a problem. Seek counsel. Act. You need to investigate when the problem is still small and keep it from growing.

Bad news can be your best friend. Bad news is what should take up the bulk of a board’s time even when the bottom line is looking strong and the company appears to be thriving. Teaching your organization to take reports or even rumors of trouble seriously the first time, and then investigating and fixing the underlying problem, is how you ultimately build a successful organization that avoids the kind of eruptions and revelations of toxic culture that can chase customers and partners away. Build a culture where reporting a problem is rewarded, not punished.

There’s not a company in Silicon Valley, or anywhere else, whose success represents just a steady path forward and upward. Everyone hits challenges that demand change. The secret is to take your hands away from your ears, eyes, and mouth. Be alert to the bad news, report it, investigate it, and fix the problem.

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Have you found occasions where your organization wouldn’t confront bad news, failing to recognize that bad news can be their best friend?