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Business Guru Ken Blanchard Talks About the Environment of Change

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Aired 6/30/09

How do companies stay competitive during an economic recession? Business guru Ken Blanchard talks about the importance of leadership and healthy relationships with employees during times of change.

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days on KPBS. Talking about change and making it work are two very different things. Companies struggling to survive in today's recession are talking about making big changes in everything from the number of employees they need to the type of products they offer. But many businesses find change doesn't work unless a plan is put into place to manage that change effectively. It doesn't matter how good your new ideas are, unless the people who have to carry them out know what they should be doing and like the idea of doing it. One man who has been teaching business and motivating business managers for years, is now dealing with the subject of making change work. My guest is Ken Blanchard. He's described as a business guru. He is a business trainer and consultant, author of the bestseller, "The One Minute Manager," and co-author of the new book called "Who Killed Change?" And welcome, Ken, to These Days.

KEN BLANCHARD (Author and Business Consultant): Maureen, nice to be with you.

CAVANAUGH: In the interest of full disclosure, I want to mention that KPBS worked with Ken to produce a TV special based on his book called "Gung Ho." We want to invite our listeners to join this conversation. Tell us the kinds of changes taking place in your workplace. And are those changes working, and if not, why not? Call us at 1-888-895-5727, that's 1-888-895-KPBS. Well, Ken, how important, I wonder, is good management during a recession? Now I'm wondering, don't all businesses, aren't they just hanging on during times like these no matter what management is doing?

BLANCHARD: Well, I don't think so. I think management is so important – In fact, Jim Collins, who wrote "From Good To Great," has just finished a book about, you know, why great companies fall essentially. And he said it takes a whole team of people to take a company from good to great but it takes one lousy leader to take it into the toilet. And at this time, I think people look towards leadership, and, you know, I'm sharing with people. There's three things, I think, that leaders need to do in their organizations. Number one, they have to be bearers of hope. You know, I think we've been through things before maybe not as drastic as this but what's the history? Where are we going? You know, if you're not a bearer of hope, then everybody'll be down. I'm always amazed at the – in the Bible that Jesus said over 300 times, 'Fear not,' and so I think you have to be a bearer of hope. Second one, which is very important, is you have to look at your people as your business partner. I think too many organizations, top managers get behind closed doors and say what are we going to do and who shall we let go and all these kind of things. They don't ever involve their people in it. I mean, our business is down. We actually had our best year in the history of the company last year but we could see it starting to head south in November and December and January kind of tanked and what we do always, anyway, is we share the balance sheet with everybody in our company and we, in fact, a number of years ago, brought a guy in from Colorado to teach everybody, include people in the shipping and – area to read a balance sheet. And so we shared it with them, even talked about how we deal with our credit line with the bankers and all, so everybody has the facts and then you say, okay, you know, given that, you know, we're going to have to cut a fair amount of expenses but what also helps is we're going to have to increase the revenues if we can. You know, how can we do it? We had a 30th anniversary celebration at the Hotel Del and it was going to be purely a party but given the situation, we turned in about half of the day to bring an outside group in to work with 350 people on suggestions for cutting costs and increasing revenues and all, so people really feel like they're part of the thing and so as you implement change, they feel that they've had some kind of voice. People will resist change when it's done to them, not with them.

CAVANAUGH: Exactly.

BLANCHARD: And I think that's the whole emphasis in "Who Killed Change." It's a funny – fun "Columbo," "CSI" book, you know, it's the third change killed this week and Detective McNally's going to get to the bottom of this.

CAVANAUGH: What is the third challenge that – for leadership now?

BLANCHARD: Well, the third one is that you need to maintain and be a servant leader. A lot of people say, what is that, the inmates running the prison or trying to please people? No. Servant leadership has two parts. One is setting the vision and the direction. That's part of being a bearer of hope. You know, where are we going, what are we going to try to do, and we need your help. And then the second part—and that's the leadership part of servant leadership—is how do we get there and that's when you really theoretically and in reality turn the traditional hierarchy upside down and now you work for your people. Your job is to help facilitate and cheerlead and support and encourage them to live according to the vision and values and the dream and strategy that you've all set up. And so, you know, this is not a time to become self-serving because enough self-serving leaders got us in trouble, you know, thinking that all the money and power and recognition ought to move up the hierarchy. And, you know, I think the key thing is that leadership is not about you, it's about the people you work with.

CAVANAUGH: Let's go back, if we could, Ken, to talk about the failures that got us into this mess that we find ourselves in in our economy. There – Would you say that you can see that there have been failures of leadership in some of the top companies of the United States that sort of propelled us towards where we are today?

BLANCHARD: Yes, I think, you know, there's two parts of great companies. One is what is the result you get, and the second is what are you doing with your people? And, unfortunately, Wall Street and other operations like that, they think the only reason to be in business is to make money and make profit. And I think a lot of times people take short term risks and do stupid things because it's going to look good to their bottom line. And I think a lot of greed and stuff like that was going on where people were making stupid decisions. I remember when I was young—and this might date me—is, you know, I was actually thrilled when I got approved for a credit card. You know, I mean, that was a big deal. And now my dog could get a credit card. And, you know, I think we've gone way overboard on trying to microtize everything so everybody should have the exact same opportunity without necessarily the work or the resources. And I think that that was all about, you know, getting results and doing this and wheeling and dealing.

CAVANAUGH: But if you look at it one way, the employees on Wall Street were creative enough to come up with these products, these derivatives, to sell and to make great profits for their companies. So in a way, they were very productive and they were very creative but they just went in a very wrong direction. How could management have stepped in and said, you know, this is not – even though this is very lucrative, this is not the way our company should go.

BLANCHARD: Well, I think that's where, you know, you need a company that manages by a set of operating values. Our number one value is ethical, you know, and doing the right thing. Number two is relationships. Number three is success, running a profitable – Number four is learning and we rank order those and when we have an issue we sort of say, let's take a look at this, you know. So, you know, if somebody in our accounting department comes and says, you know, Ken went to four different places this week but we have a contract that says round-trip airfare to each of those places, should we charge everybody a round-trip airfare because, you know, that's what the contract says. So you say, okay, is it legal? I guess that's legal there, but is it fair? You know, if you make that decision, how will it make people feel about themselves? You want it published in a local paper, you know? You need some ways to make decisions that make sense. You know, the classic case years ago is Tylenol when somebody messed with it and some people were killed outside of Chicago. They had a board meeting. The first thing it says, well, let's take it off the market in Chicago. Then a guy on the board says, let me just review our operating values. Number one is the health and safety of our patients. Number two is the wellbeing of our people. Number three is our relationships with our community. And number four is the satisfaction of our stockholders. And if they can tamper in Chicago, why are we going to wait until somebody gets killed in San Diego? You know, we should take it off the total market. I mean, that cost a lot of money. And they're all, why? Because that's a set of operating values. And I think if you don't have any, then it's expediency and all those kind of things and so I've done a lot of work with Southwest Airlines, you know, and I was down there last summer when the gas issue price was a problem before the economy. But, you know, they have a set of operating values, you know, that says, you know, we are warrior spirits. You know, want people to do everything they can but we want a servant heart and a fun-loving attitude. But here's the business we're in, you know, and here's what we're trying to do so that we don't start doing crazy stuff.

CAVANAUGH: I'm speaking with author and business consultant Ken Blanchard. He's the alter – author, that is, of the bestseller, "The One Minute Manager" and co-author of the new book called "Who Killed Change?" We're taking your calls at 1-888-895-5727, and right now we'd like to go to Patrick in Encinitas. Good morning, Patrick, and welcome to These Days.

PATRICK (Caller, Encinitas): Oh, thank you very much.

CAVANAUGH: Yes, how can we help you?

PATRICK: Well, I work in an industry, I'm in the automotive industry. And, let's see, it's run the exact same way that it was run back when it was horse trading, years and years ago. It has the same lingo. It's kind of immune to change. It's – oh, I don't know…

CAVANAUGH: Do you work at an established car dealership? Or…

PATRICK: Yeah.

CAVANAUGH: …a parts…

PATRICK: Yes. Yeah, a car dealership.

CAVANAUGH: Okay, so Patrick is talking about the auto industry and we know that's one of the most troubled industries in America today. What Patrick's saying is, they just don't change.

BLANCHARD: Well, that's why they're in trouble. I mean, how long did we know that the Japanese and all these other foreign companies were beating us to the punch? And what were they doing? And so you have to have four things in mind and we talk a little bit on this, in "Who Killed Change?" If you want to be an organization that wins, you got to be customer focused, you know. What does the customer want? What do they need? You got to be cost effective. You know, you can't be spending money you don't have. But you've got to be fast and flexible, you know, and quickly moving and you got to be learning. And I think that's the problem, you know, is when you operate the way you have for a long time, you become a dinosaur and then you get into a rapid-changing time and you're supposed to be a gazelle but it's pretty tough for a dinosaur to be a gazelle unless they have some leadership that says they really are. But, I mean, look what Saturn did at one time when they were separated. At least nobody knew they were part of General Motors. You know, they really created something that was really kind of special and so Tom Peters called those skunkworks, you know, where you get small groups of people, and I think that's in every industry. We can't sit around. The only people that like change are, you know, babies with a wet diaper, you know, and so we don't like it but we need to be ready for it because the only thing you can count on today is death, taxes and change.

CAVANAUGH: That's so true. And I want to go back to something that you said before because I think this is so interesting, the idea that so many people can be responsible for the success of a company but all you need is one really lousy leader and you can have a company really sort of go into the tank. And I'm wondering, is there something wrong or – or let me put it this way, is it possible that we could do a better job in companies and corporations in choosing leaders? How is it that people rise to a leadership position that don't really know how to lead?

BLANCHARD: Well, it's interesting because when they do that, you know, sometimes people really wonder, you know, and you really – The best predictor of future behavior is past behavior and, you know, that ought to be really checked well. But sometimes, you know, in a financial deal, you know, they'll come in and then they'll bring a leader in from outside that doesn't know the organization, doesn't know the people, and has a big ego and thinks it's all about them. They're usually people from the outside that the people inside didn't have too much to say or to take a look at them.

CAVANAUGH: How important is it for a leader or a management team when they sort of really make a mistake to just say I'm sorry, acknowledge that mistake. How important is that for the company to recover and move on?

BLANCHARD: It's very important. I wrote a book with Margaret McBride called "The Fourth Secret of The One Minute Manager," which is the one minute apology.

CAVANAUGH: Oh, yeah.

BLANCHARD: And we wrote that really when, you know, Clinton was going through his whole thing with Monica Lewinsky, and just sad that the guys like Clinton, Pete Rose in baseball, you know, some of these steroid guys and Richard Nixon and all, when you make a mistake, you know, 'fess up, you know, I really goofed up. I knew Ken Lay for over 20 years, you know, from Enron and called him immediately and said, Ken, what a great opportunity this is for you to have a ministry, you know, I mean, because I knew him well enough that he didn't know what was going on. He was kind of an abdicator rather than a delegator. And he just needed to come forward and say, you know, I really screwed up, it was on my watch, and we'll do everything he can. But his lawyers were telling him this and that.

CAVANAUGH: Umm.

BLANCHARD: And so, I mean, one of the things I like about Obama, you know, and I, you know, have, you know, like everything but is when he makes a mistake, he doesn't blame somebody on his staff. He steps up and takes the hit, you know, I made a mistake, you know, on that, we should've looked at these people a little closer. And – But I'm in charge, you know. And I think – And then it's over with. Remember Shaq, the basketball player, made some comment about Yao Ming, the Chinese player, and he was kidding but some people were offended. He came right out and said, my sense of humor sometimes gets me in trouble but I want to apologize for anything and, boom, everybody forgot about it or at least he can get by it. So when you make a mistake, admit it and then people will rally around. Okay, what are we going to do about that mistake? At WD-40, they call a mistake a learning opportunity.

CAVANAUGH: That's a good way to look at it. I'm speaking with business management consultant and author Ken Blanchard. We're taking your calls at 1-888-895-5727. And we have a caller from Canada on the line. Harry is calling us from Newfoundland, Canada. Good morning, Harry. Welcome to These Days.

HARRY (Caller, Newfoundland): Good morning. Thank you very much. Good morning, Ken.

BLANCHARD: How are you, Harry?

HARRY: Doing well, thank you. How are you?

BLANCHARD: Good.

HARRY: My question, Ken, is in a lot of the work that I do, a lot organizations have the need for change but fear of change has gripped the organization. How can we help leaders overcome the fear of effecting change?

BLANCHARD: Well, I think that what the leadership first has to do when they're talking about change – it's so interesting. Most people want to announce a change and then they want to talk about the benefits. Some interesting research has been done to show that people actually have six concerns around change and three happen before you get to impact. And one is, tell me what you got in mind, and I think people won't be as fearful if they know what you got in mind. You know, where are we now, where do we want to go, what's the situation? And even involve people in setting up the business case. We talk about this in "Who Killed Change?" The second thing they have is, once they know about it, they have personal concerns. You know, how will I survive and all. And you need to create an avenue where they can get those concerns out. It doesn't mean you can solve all of them but, you know, what you resist persists. And if people have no avenue to share their concerns, they're going to gunny sack them and keep them and dump them on later. Third, they're interested in impact concerns. One, how's this going to be done? What's going to go – be first, second, third and all? And all of those, the more you involve people, the better you are. And as I said earlier, that I think people resist change that's done to them, not with them. And I think the biggest thing we say is, you have to increase the amount of involvement in the change process rather than thinking that all your people around you are dumb. And I think that's what they fear is that somebody above is going to act like they know more about your business than you do and you're right there in the action.

CAVANAUGH: Ron is in Alpine and he's on the line. Good morning, Ron. Welcome to These Days.

RON (Caller, Alpine): Thank you for having me. Good morning, Ken.

BLANCHARD: How are you, Ron?

RON: Good. I'm currently – I've taken over the management of a division of a company that's had a long history of failure and we're trying to move from that culture of failure to a culture of success and, frankly, having some difficulty doing that. So, you know, I've looked at a number of issues like systemic dysfunction and learned helplessness. Could you give me some ideas on how you make that – what I guess I will call a quantum leap from failure to success.

BLANCHARD: Well, I think, of course, you know, your first aspect is diagnosis. What's the problem? And a problem exists when there's a difference between what's actually happening and what you'd like to be happening. And identifying those problems would be good to, you know, talk to as many people as you can, you know, because if they know the information, they know that it's – the company's not being successful or hasn't been and people certainly would like to win so, you know, how do you really set up, you know, so that everybody understands, you know, where the gap is between the actual and the ideal. And then, you know, one of the things you need to look at is find out who are the people who are excited about change—we call them early adopters—and see if they can – you can create a kind of a change leadership team with people who are excited about it. But, also, put some of the resistors on the team, the people who are dragging their feet, you know, so that they can be heard so people feel that there's a good cross section of people. Don't try to do it all by yourself. And I think if you, you know, get a good sense of what the problem is, get a good cross-section leadership team that can sort of say, okay, how are we going to kind of do this, and involve people as much as you can, but, you know, sometimes, you know, you got people that are just going to have their feet in the mud all the time and it's going to, you know, you're going to eventually be out of business. With those people, as WD-40 says, you have to share them with the competition, you know, so, you know, don't feel you can save everybody. But I think you need to share the present reality of the situation and that we have to change and I want you with me not against me and how can we do this thing together?

CAVANAUGH: Another caller is on the line from Encinitas. Bijan is on the line with us. Good morning, Bijan, and welcome to These Days.

BIJAN (Caller, Encinitas): Good morning, Ken. Bijan Zhe (sp) from Encinitas.

BLANCHARD: Hi, Bijan, how have you been?

BIJAN: Fine.

BLANCHARD: I feel badly I haven't talked to you in a while.

BIJAN: I'm terrific, thank you. It's a pleasure to hear your voice, definitely, a voice that is familiar to all the world. And the question I have, Ken, that now that we have all these problems and Wall Street and our economy, how can we gung-ho these organizations to path of success? That we can turn the corner and become successful and empower organizations to be successful and our government to be successful?

BLANCHARD: Well, that's an interesting challenge that Obama and a lot of people have but, you know, Bijan, I always say that effective leadership first starts with a clear vision, you know, and kind of maybe with some of these businesses redefine what business they're in in relation to customers. You know, I was working with a big bank recently and they sent me their mission statement and I got in front of the president and all I said, I'm so glad you sent me your mission statement, I've slept so much better since I've gotten it. You know, if I can't sleep, I pick it up and read it. Uh, you know… It couldn't motivate anybody, you know. I said, I think you better consider yourself in the peace of mind business, you know, that if I gave you money I would have the peace of mind that you would try to protect it, maybe even grow it and all. And I think we have to define the business we're in. What's our picture of the future? If we do what we're doing, what would happen there? And then what are our operating values? I think the whole thing starts with a compelling vision that says, people, this is where we're going. Because leadership, Bijan, as you know, is, you know, about going somewheres and if people don't know where you're going – so I think a lot of these organizations just need a redefining of a vision and where they are. And one that he's talking about "Gung Ho," really says that what people are doing is really worthwhile work.

CAVANAUGH: You know, Ken, you talk a lot about management and leaders and how important they are. In my final question to you—we only have a couple of minutes—I wonder, though, it seems to me that the people on the front lines, workers, these days really sort of feel very nervous and not very gung ho because they don't know whether or not this company is going to say goodbye to them or they're going to have to look for a new job or – What do you find employee morale is like now and how do you improve that?

BLANCHARD: Well, you know, I think employee morale is down in places where, you know, the top management doesn't share information and do things behind closed doors. But it's not, you know, unrealistic at this time to have a few worries but you can't let it dominate you, you know. Pain is inevitable and happiness is a choice, I think the Dalai Lama said that. And so I think you got to take a look at, well, what are the skills I have, what could I do? Suppose my job ended here, how am I going to rebound? What can we do as a family and all, and start being proactive in terms of what you're – what you can do and what are some of the options and all and so don't wait for things to happen to you, start thinking things through, gather the family, share the facts with them, you know, and what are some of the options that we might have to do? So be proactive rather than reactive.

CAVANAUGH: It's hard when a company comes with you with a change plan though if you're feeling nervous that way. It would be your advice to just go for it?

BLANCHARD: Well, you know, I think nothing's guaranteed nowadays and so – I wrote a book with Don Shula, the old Miami Dolphins coach, and he said, success is not forever and failure isn't fatal. And he only gave his players 24 hours to bemoan a defeat or celebrate a victory, and then they would, you know, go right on to the next game. And I think that you can't, you know, live in the past and you can't live in negativity, you have to sort of say, okay, what…

CAVANAUGH: What's next?

BLANCHARD: What's next? What am I grateful for? What are the skills I have? Is this the time to maybe go back to school?

CAVANAUGH: Ken Blanchard, I want to thank you so much for being with us.

BLANCHARD: Yeah, thank you so much, Maureen.

CAVANAUGH: Ken Blanchard, the author of "The One Minute Manager" and co-author of the new book called "Who Killed Change?" You can hear this segment again online at KPBS.org/TheseDays.

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