Leadership Lessons From the Unusual Story of Market Basket

We Are Market Basket

An Uplifting Corporate Story

We often read stories about corporate greed, about slimy executives, about profits at the expense of people. These stories grab headlines because they hit a nerve and fuel anger. I have never read a story quite like We Are Market Basket: The Story of the Unlikely Grassroots Movement That Saved a Beloved Business where employees and customers joined together to demand the return of a fired CEO.

The story may be unique, but it offers powerful lessons and insight into the changing nature of how we view corporations and what we expect as employees.

I recently spoke with the authors, Daniel Korschun and Grant Welker, about this story.

 

Loyalty is Demonstrated Every Day

This story has so many powerful lessons. One of those is about loyalty. What does the We Are Market Basket teach us about loyalty?

Arthur T. and much of the senior management team have been extraordinarily successful at engendering loyalty. But loyalty at this company tends to be viewed as a two-way street. Employees – they call themselves associates – we speak with tell us that they feel loyal to the company and top management because they feel a loyalty to them from that top management. So what we see at Market Basket is people who are reaffirming their commitment to each other over time. The result is these very strong bonds we see. The lesson for managers is that you can’t expect loyalty without making a sacrifice yourself. You’re not going to gain loyalty just by changing the pay or the job responsibilities; it’s something that has to be demonstrated every day.

 

“You can’t expect loyalty without making a sacrifice yourself.”

 

A Respect for Others

Why did Arthur T. inspire such passion and loyalty?

Arthur T. is beloved as the CEO largely because he gives all associates, customers, and vendors respect. He says explicitly that no one person is special at the company, and from what we’ve seen he walks the walk.

But it’s also important to point out his place in the protest. Bringing back Arthur T. was the central demand of protesters, but in our view, they were fighting to save the company’s culture. Reinstating Arthur T. became the critical step in making sure that this New England institution continued to serve those who have known it for years, and sometimes for generations.

Market Basket 

A Lesson for Boards and Corporate Leaders

What does the Market Basket experience teach boards of directors?

Most business schools today teach that the fiduciary responsibility of directors is to look after the interests of shareholders. However, this idea is simply not supported by the corporate code in Massachusetts and many other states. The code states explicitly that the board is to be a steward of the corporation, which includes customers, employees, shareholders, and others. We need to hold our boards to this higher standard.

Leadership lesson: A corporation’s duties extend beyond shareholders to the broader community.

 

A Commitment to the Community

7 Steps to Improve Your Character Habit

build habits reminder - self-development concept - handwriting o

Not too long ago, I had the opportunity to talk with Fred Kiel, the author of Return on Character: The Real Reasons Leaders and Their Companies Win.  His extensive research provides data that proves that character matters.  That same research also indicated that much of the character habits of the world’s best, virtuous leaders are formed in childhood.  Fred offers seven steps to improve your character habits.

Improving Character

It absolutely is possible to improve Return on Character (“ROC”) and raise your character reputation scores.  Your character habits are just that – habits.  And as such, they can be changed.  We all have some personal experience in changing our habits.  Sometimes it’s quite difficult, but it can be done.

We’ve isolated seven steps that work to improve your character habits:

1. Pop the Bubble

The first step you need to take to strengthen your character habits is to get real!  We all live in our own “bubble” – our version of ourselves.  Unfortunately, our view of ourselves is often wrong – we tend to believe our own press.  Everyone rates themselves as having a strong character – we see ourselves as principled people.

“Real knowledge is to know the extent of one’s ignorance.” -Confucius

 

2. Conduct a Cost-Benefit Analysis

Be brutally honest with yourself.  You have acquired your character habits because at some point in your life, they were very beneficial. But in all likelihood, some of the habits learned long ago are now more costly than beneficial.


“Being entirely honest with oneself is a good exercise.” –Sigmund Freud

 

3. Find the Fuel

The only way you’ll go the next step in changing your character is if you believe that the cost of your current habit outweighs the benefit.  You must find the “fuel rod” that will energize you enough to acquire a new habit.

“What keeps me going is goals.” -Muhammad Ali

 

4. Now, Write it Down

The important thing now is to write down what you’ve decided from your cost-benefit analysis.  If you can’t write it down and provide a convincing argument about why you should change, you’re just living in la-la land.  You won’t change anything about your character habits.

“If you do not write it down, you have a wish, not a goal.” -Steve Maraboli

 

5. Focus Your Attention

The Real Reason Leaders Win: Return on Character

Blue Books Graph With Red Arrow

Cash or Character?

Not too long ago, I was asked to give a talk about organizational culture and why it matters. Before I walked up to the podium, one of the attendees cornered me. He wanted me to know his strongly-held position. In an emphatic tone, he nearly shouted:

“Skip, cash matters, not culture, not character, not creativity! Cash is the only thing you can spend.”

How fortunate that my slides started with financials so I could demonstrate the power of culture change. But, what I wish I had was the book that crossed my desk a few weeks ago:  Return on Character: The Real Reasons Leaders and Their Companies Win.  In the most comprehensive study of its kind, Fred Kiel reveals the research that proves that good character wins. We discussed his findings at length and I know many organizational leaders will want to study the results.

 

“Character is the tree. Reputation is its shadow.” -Lincoln

 

 

Studying CEO’s

Tell us just briefly about your study and its methodology. Where did you get the idea, how many CEO’s were involved, etc.?

ROC CoverIn 2005 I and my co-author, Doug Lennick, published a book entitled Moral Intelligence in which we claimed that highly principled leaders obtained better long-term business results than leaders who were not so principled.  The book has done very well, but shortly after it was published we received some pushback. One person said, “Fred, I know you like all of this soft stuff.  But let me give you a little lesson in economics.  The business model is what creates value.  If a business is profitable and makes a lot of money, all that culture stuff will come along with it.  And if it doesn’t, that’s not a big deal as long as management stays legal.  What you talk about is just icing on the cake.  It’s nice but not necessary.  And, besides you don’t have any hard data to back up your claim.”

This really got to me.  He was right about me not having any data to back up our claim that character matters – and that became the call to action for our study.

Over the next seven years we signed up 121 CEOs and their senior teams to participate.  Eighty-four completed the study, so we have complete data sets on these 84 CEOs, their senior teams, and their organizations.  Over 8,500 randomly selected employees completed our surveys about these CEOs and their teams.  We have nearly one million separate data points in our research base.  This is the largest study of this kind to date.

 

4 Universal Character Habits

How do you define character in the Return on Character (ROC) matrix?

We scoured the cultural anthropology research and discovered that humans all over the world share many common practices and beliefs.  Parents all over the world teach their children to tell the truth, keep promises, own up to mistakes, forgive others, and to care for people – at least in their tribe.  We added to this understanding the recent findings from the neurosciences and genetics to come up with our definition of character as it applies to leaders.

The ROC Matrix shows the four universal principles and the character habits that are aligned with these principles.

 

Copyright Fred Kiel; Used by Permission Copyright Fred Kiel; Used by Permission

Lincoln said, “Character is the tree.  Reputation is its shadow.”  Likewise, the habits we all have for how we treat other people is our character reputation.  That’s what we measured in our research – a leader’s reputation for how he or she treats people.

 

Probing the Leader’s Childhood

In several places in the book, you delve into the CEO’s childhood and upbringing.  Why?  What did you find?  Why is the CEO’s life story so important?

If you took the resumes and employment histories of high character CEOs and compared them to low character CEOs, you’d be hard pressed to see much difference. Both groups are competitive, driven to succeed, rational, high energy, and often wicked smart – they know how to command a room and nail an interview.

Where we started to see significant differences was when we surveyed their employees and asked about their behaviors around the 4 universal character habits – integrity, responsibility, forgiveness and compassion. So that begs the question – how did each group come by their different postures around these habits? Where did they get their beliefs about how the world worked and how to succeed in that world?

Turns out the clues are in their childhoods and upbringing.

Leading From The Shadows

Shady image of a business team discussing the latest financial r

When I first became the CEO of a large global company, I could see how dependent I was on others.  My own efforts would be meaningless without many others supporting me.  The top job is often the one in the brightest spotlight, but that person’s success or failure is always the result of a team effort.  Usually a very small group—or even one individual—takes on the key supportive role.

Many people dream of becoming President or the leader of the organization.  Some people realize that they are best suited and happier in a supportive role or as number two.

 

“Success is best defined by yourself, not by others.” -Richard Hytner

 

When #2 is the Key to Success

 

Richard Hytner is deputy chairman of Saatchi & Saatchi, responsible for global strategy and innovation.  His recent book, Consiglieri: Leading from the Shadows, is a celebration of the No. 2 role.  This book made an impression on me because I am dependent on the “No. 2’s” and now better understand the role and the motivations.  I also feel better equipped to coach people who are either not looking for the “No. 1” role or are best suited for the supportive jobs.

Richard was kind enough to answer a few questions for me about his journey.

Richard, becoming No. 1, you argue, is not always the key to success.  Why not?

Success is best defined by yourself, not by others.  So, if becoming the No. 1 is really important to you, give it a go, see how happy it makes you feel and assess – candidly – how others respond to your leadership from a position of ultimate accountability.  You can, however, be enormously successful on your own terms leading from positions other than the overall No. 1, achieving great things and deriving deep personal satisfaction.  Get rid of the No. 1 and No. 2 in your head and simply weigh each job as an opportunity to test every leadership muscle, not only the one that makes the final decision.

image004Tell me about your personal journey.  When did you realize that being less than “No. 1” was where you would be happier and more successful?

I learned early in my career that leadership is a collective endeavor and, as a CEO, I always surrounded myself with the smartest possible people.  It was only when I took a year out, aged 43, to do the Sloan Fellowship program at London Business School that it dawned on me how many brilliant people there were enjoying significant accountability in roles other than the CEO.  Even though it took me a further three years as CEO of Saatchi & Saatchi EMEA to work out that I could and should try leading without the authority of a Chief Executive, it was at London Business School that I woke up or, rather, grew up.

 

“Develop a reputation for being a thinker and a doer, or you will run out of usefulness fast.” -Richard Hytner

 

Understanding Different Leadership Types

 

You define “A” leaders as accountable for the enterprise and “C” leaders as the Consiglieri who counsel, support, and deliver for the A.  What are a few differences of what you term “A” and “C” leaders?  

Selling to the C-Suite

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In a previous post, I shared my opinions on selling to the top of an organization and why it isn’t always the best route to success.

There are obviously times when selling to the top is not only smart, but it’s required. Recently, I was asked about how to approach busy professionals with an idea, product, or service. If you are selling to senior executives, here are a few guidelines that may prove helpful.

 

“Stop selling. Start helping.” –Zig Ziglar

Be prepared.

As a sales leader, knowing your own company and your product is a requirement.  Take it a step further.  You need to know our company, too. When someone obviously hasn’t so much as looked at the company’s Web site, he has already lost credibility.  Don’t flaunt your advanced preparation, but work in ways you think we will benefit from a relationship.

It applies on the phone, too.  I can’t tell you how many people who finally do get me on the line are not prepared.  If you’re ready for the gatekeeper, but not the person you’re targeting, here’s a hint:  Don’t make the call.  Do your homework.

 

“Timid salesmen have skinny kids.” –Zig Ziglar

 

Be clear.

Don’t launch into a stream of acronyms or nonsensical statements.  No, I’m not meeting with you for an hour to learn to “drive efficiencies throughout the organization, maximizing ROI and improving profits.”  Really.  We do that every day, and we know the business and you don’t.  So, be clear on what the benefit is to the organization.  Don’t use complex language designed to impress.

 

“Every sale has 5 basic obstacles: no need, no money, no hurry, no desire, no trust.” –Zig Ziglar

 

Be crisp.

We’re all busy.  Don’t drag it out.  Most executives are incredibly busy and bottom-line oriented.  If you catch my attention, then you will have more leeway and time to make your case.