Everything I Thought I Knew about Leadership Is Wrong

To be successful, do you have to punish your customers?

I had the same kind of question about our customers as I did about our people. Looking back on my years at EDS, I was absolutely convinced that we produced real value for our customers that exceeded what we charged them. But I also had to acknowledge that all too often, our relations with customers were unnecessarily strained and difficult.

Of course we delivered what we promised. But there were two problems: we made sure we won virtually every negotiation that decided what would be delivered; and our tone was often paternalistic, almost condescending. Customers felt like they were outgunned at every turn. Too often we made them feel incompetent or just plain stupid -- after all, they had called us to bail them out of trouble, hadn't they? I left EDS thinking not that our aims had been wrong or dishonorable, but that the way we had pursued them -- in truth, the spirit with which I had led the company -- had ultimately diminished both our own organization and our relations with customers.

It wasn't until I had been out of EDS for a year, consulting to several other companies, that I began to get a clear line of sight on this question. As a consultant, I watched other vendors sell their products, many of which were the same ones I had sold. This time, I listened to their presentations with the ears of the purchaser. And what had sounded good when I was on the pitching side didn't sound so authentic from the receiving side. It sounded arrogant, rigid, and high-handed.

I had to acknowledge that at EDS I had encouraged that attitude -- it was a reflection of my own approach to leadership. To be a leader at EDS, you had to be tougher, smarter, sharper. You had to prove that you could make money. You had to prove that you could win at negotiations every time. I used to pride myself on my negotiating skill. I made sure I swept the table clean of every loose penny that was around. It never occurred to me that winning big could be a negative thing. At the time it felt great: business is a competitive sport, and I just cleaned the table!

But you can overplay that hand. A company culture that isn't satisfied with winning but also needs to dominate, that isn't content with getting great results but also has to eliminate everything in its path is fundamentally destructive -- and ultimately self-destructive. After I left EDS, I learned that sometimes it's better to leave something on the table. Sometimes you do better if you leave people with alternatives. You do better if your customer or your competitor doesn't feel taken advantage of. You do better, in fact, if your customer feels like your partner.

Here again, at Perot Systems, I turned to the compensation system to help us live the lesson. We use 360-degree evaluations for our people -- asking boss, peers, and subordinates to participate -- and always include input from our customers. We also ask our customers to give us report cards -- and then we temper bonuses based on customer ratings of how well we support their needs.

But the lesson really struck home when I went to Switzerland recently to put the finishing touches on our strategic alliance with Swiss Bank Corp. It's the biggest deal in the history of our company, a hybrid relationship that goes beyond the bank simply outsourcing its information technology. We are partners. They have an option to own shares in Perot Systems; we have a stake in their information technology subsidiary in Switzerland; together we agreed to a 25-year relationship that transfers management of Swiss Bank's corporatewide information technology infrastructure to Perot Systems.

To brief their own people on this relationship, the top leaders of the bank called a meeting. My only role was to be introduced and say a few words. Almost all of the meeting was conducted in German; finally, at the end, to introduce me, they switched to English. In this first public introduction, what they chose to talk about was our values and our approach to partnering.

At the end of the introduction, the senior Swiss Bank executive took out a Perot Systems card with our values and said, "Five years from now, when we look back at our partnership, we should use these values to judge how well we've done." That one introduction convinced me that what we're trying to do is very powerful and knows no cultural bounds.

The three jobs of the leader.

We should never lose sight of the fact that we're in business to create a first-class organization and to survive. That's what businesses are supposed to do.

At the same time, we need a more expansive definition of victory. There's a much larger calling in business today than was allowed by the old definitions of winning and losing. One hundred years from now, we'll know we were on the right track if there are more organizations where people are doing great work for their customers and creating value for their shareholders. And raising their children, nurturing their families, and taking an interest in their communities. And feeling proud of the contributions they make. These are things you can't measure when winning and losing are only financial metrics.