A Passion for Leadership (25 page)

Abuse and fraud demonstrate a lack of honor and integrity and, as such, can cast the responsible individuals, an entire organization, and its leadership in an unfavorable light. Both are, at minimum, violations of a trust and cannot be tolerated.

Allegations of fraud and abuse make for stirring political rhetoric, but I think their significance in contributing to misspent money and poor performance is greatly overdrawn. Fraud is taken very seriously and regularly punished. In every institution I have led, I have seen employees—including some fairly senior officials—fired and some prosecuted for falsely reporting time and attendance, for false claims relating to travel and other expenses, for misuse of official aircraft and vehicles. More broadly, there are many documented cases of government officials who have taken bribes or been guilty of conflicts of interest, been caught, and sent to jail. Interestingly, government seems more willing to prosecute small-scale thieves (and even more significant ones) than business, where there is a penchant simply to fire a miscreant rather than invest the time, trouble, and money to take him or her to court.

In the overall scheme of things, I suspect the dollar cost of abuse is not significant (especially when compared with waste). I think the term, in the context of “waste, fraud, and abuse,” applies mainly to rule breaking and violations of fiduciary responsibility that do not rise to the level of fraud or criminality. This term applies, in my view, especially to a number of the cases in recent years of senior military officers exceeding propriety when it comes to use of staff for personal errands, improper use of government resources, lavish entertainment, and questionable use of government aircraft for personal purposes. But many others in every bureaucracy—public and private—indulge in these and similar abuses. No one goes to jail for these offenses, as in the case of true fraud, but people do get formal reprimands, lose their jobs, and sometimes must pay restitution.

Leaders in the public sector face multiple budgetary challenges their counterparts in business are spared. Foremost is that the budgets of virtually all public sector organizations are subject to approval by elected bodies. That means great uncertainty from year to year as to how much money a leader and his organization will get. Such uncertainty makes even medium-term planning and strategy formulation tough. Also, elected overseers usually provide little flexibility to change ways of doing business, to deal with new priorities, or to restructure organizations—a particular challenge for the reformer. Perversely, efficiency and careful stewardship of taxpayer dollars more often than not are penalized, not rewarded. If a leader manages carefully and ends the fiscal year without having spent every dollar he was budgeted, the powers that be will likely conclude he was given too much money and will therefore cut his allocation for the next year. On the other hand, the lousy manager who spends his entire allocation and perhaps then some will likely get a sympathetic hearing for an increase in budget next time around.

These challenges are not insurmountable. With patience and the investment of a lot of time, a leader can overcome these obstacles.

Not many leaders see budget cuts as an opportunity, but, to paraphrase the English writer Samuel Johnson, “Nothing focuses the mind like a hanging.” Budget stringencies offer a leader of reform the best chance to refocus the organization, redefine priorities, and—especially when cuts are involved—change outdated, inefficient, and wasteful ways of doing business. All these actions can be done while an organization's budget is stable or during those rare periods when it's growing. But it's a lot harder to make big changes in fat years than in lean years. Because most public bureaucracies are going to have a lot of lean years ahead, reformers will have ample opportunities to put the above-mentioned suggestions to work.

T
he reality of reforming bureaucracies is that when a leader thinks he is done,
he
probably is done. If a leader has implemented everything on his list of reforms and has nothing else to propose, it is time for him to leave. Transformation is an unending process, not a once-in-a-lifetime experience, and that is how a leader must think of it.

The external environment is always changing, creating new challenges and new opportunities at every turn. Additionally, there must be another law of physics that over time even reformed bureaucracies are magnetically drawn back toward their natural state: torpor, complacency, protecting the status quo, inertia, and inefficiency. The most successful businesses continuously reinvent themselves, never resting on their successes. Just look at companies like IBM led by Ginni Rometty, Apple under Steve Jobs and Tim Cook, Amazon and Jeff Bezos, or General Electric under Jeffrey Immelt. But after a period of reform and change, too many organizations in the private sector and nearly all in the public sector fall prey to that putative law of physics: they tend to get comfortable with the new status quo and defend it as passionately as they did the old way of doing things. That means a leader must always have an unfinished agenda in a continuing quest for excellence and success. Like the legendary captain of the ghost ship the
Flying Dutchman,
the reformer never makes port.

The leader of an organization is the engine of change and reform, and his work is never done. If his yellow tablet keeps filling up with ideas, he should keep on truckin'. But if a leader cannot sustain his enthusiasm, energy, and creativity to keep making his institution better, he needs to step aside for someone who can.

Whether leading a bureaucracy for a short time or a long time, the reformer must never lose his zeal for continuing improvement. As he implements his initial agenda for change, he must also be cognizant of changes going on externally—and backsliding internally—and always adding to his to-do list. He must constantly stir the pot in the search for ways his organization can do its job better. He must be disruptive.

A good leader must keep coming up with new perspectives, new ideas, new improvements. I have served on the board of directors of companies where the person in charge has been doing the job for decades and is still the most restless, energetic, and innovative person in the company. A leader has to keep listening, remain open-minded toward new ideas from others, always be on the hunt for better ways to get the job done. She has to keep reinventing herself as well as the organization. She has to look hard in the mirror to be sure she is still hungry enough to lead. Only a committed leader can keep an organization—a bureaucracy—on its toes, continuously adapting, innovating, improving. She has to be continually evaluating subordinates, sending away those she hired who have flagged and who can lift their organization no further, and hiring new potential leaders to restoke the fires of enthusiasm and performance.

At the CIA, I began with fourteen task forces but within weeks saw the need for even more far-reaching change and added ten more areas in need of reform. I returned to Texas A&M from every vacation with a yellow tablet filled with notes on additional changes I thought were needed and on ways to improve on what we were already doing. When given a significant extension as secretary of defense by President Obama, I worked with my team long and hard on “Gates 2.0”—what I was going to do with the additional time I had been given in terms of internal changes and reforms. When I left as DCI and president of Texas A&M, I was just getting warmed up in terms of additional reforms and changes. I worked on such an agenda at Defense for two and a half years before deciding the time had come to pass the baton to a fresh runner.

The best business leaders are always searching for new concepts, new products, new ways of doing business. Brinker International, which owns the Chili's restaurant chain and others (and where I served on the board), proudly displays in the foyer of its headquarters the logos of a number of restaurant brands it has bought and subsequently sold—evidence of the continuing search for innovative concepts and new approaches to expanding the business and a willingness to walk away from unsuccessful initiatives. For nine years, I was an independent trustee (board member) of Fidelity mutual funds, a huge enterprise whose parent organization, led by Ned Johnson, was always testing new investment ideas as well as better ways to serve customers. Johnson's vision, for example, led Fidelity to invest massively many years ago in building the support structure to manage 401(k) investment plans for other companies, and to this day it continues to hold the biggest market share in that business. Who would have thought that Starbucks, a coffee company, would pioneer the use of mobile phone order and pay in a retail environment? Successful business leaders are never satisfied with the status quo. Time and again, at the end of a company's best year ever, I have seen perpetually discontented CEOs warn their boards and employees against complacency and demand new ideas for change and growth.

An acid test for a leader when deciding whether to go or stay is whether he can critically assess the changes
he
has implemented—his ideas—and see ways to improve upon them. If he can cycle back after considerable time in the job and be as tough and objective judging his own handiwork as he has judged that of others, then he probably still has the moxie to continue. If a leader finds himself defending the status quo he created, if he can't look at the people he appointed to senior positions and critically assess whether they are growing and getting stronger and leading effectively or topped out, if he looks at what he has done and those he has appointed and pronounces all is fine and dandy, it's almost certainly time to move on.

The first and continuing responsibility of the leader is to understand the implications of a changing environment for his organization, to anticipate new needs, and to keep developing fresh strategies. The leader's second important responsibility is to look for ways to continuously make the organization more user-friendly, more efficient, and more cost-effective.

Once a leader has carried out his initial set of reforms, often to correct obvious problems, how should he decide what needs to be done next? What should his second act look like? Part of the answer to that is easy: there will always be new problems, and external circumstances will always be changing. His challenge is to figure out how to constantly adapt the organization in response.

A leader in both the public and the private sectors today faces an unprecedented pace of change in technology, workplace culture, customer expectations, and the political and business environment. Particularly as government—local, state, and federal—intrudes further into people's daily lives, their impatience with cumbersome, unresponsive, rigid, and frustrating bureaucracies will only grow. Adapting to this new world is a huge problem for public sector bureaucracies, as we saw so vividly in the scandals surrounding the Department of Veterans Affairs in 2014, the online rollout of ObamaCare, and the response to Hurricanes Katrina and Sandy. That list of unsatisfactory governmental performance is, to vastly understate, incomplete.

In a fast-changing world, the CIA's priority targets for intelligence collection must be adjusted constantly, and the techniques for doing so altered to reflect new technologies and new circumstances. The CIA was slow in detecting the emergence of Islamic fundamentalism in the late 1970s and failed to predict the Iranian Revolution—or the consequent sudden loss of technical collection sites in the northern part of Iran vital to tracking Soviet missile developments, capabilities we quickly recovered through an unprecedented partnership with China. As we moved beyond the Cold War, information about the new threats America faced was often not to be found on the diplomatic circuit, so the CIA had to significantly increase the use of men and women operating independently of U.S. government organizations. The wars in Iraq and Afghanistan led to radically new ways to fuse real-time intelligence and military operations in a virtuous cycle. At the end of 2013, the situation in eastern Ukraine was probably not high on the CIA's list; just a few months later, it was likely near the top. Same thing with the emergence of the Islamic State terrorist group in Syria and Iraq. In the world of intelligence, adaptability is critical.

It's similar for the military. The record of both civilian and military leaders over the past forty years in predicting where we would use force next—or even within the ensuing six months—has been perfect: we have never once gotten it right. Not in Grenada, Haiti, the Balkans, Somalia, Panama, Iraq (three times—1991, 2003, and 2014), Libya, or Afghanistan. As tensions heat up with Russia over Ukraine and with China over the South and East China Seas, we will need to rely on the most modern combat capabilities, hopefully only for deterrence. And as the threat of violent Islam spreads to Nigeria, Kenya, Mali, and elsewhere in Africa, the training and equipment required will be very different from that needed to deal with the militaries of large nation-states. Thus the need for adaptable military capabilities.

Even in a university, new academic programs, new technologies, new financial challenges, the changing needs and interests of students, and the question of whether most four-year degrees are worth the cost require an organizational and conceptual agility now and in the future unheard of in earlier decades.

To better carry out the second task of making the organization more user-friendly, more efficient, and more cost-effective, over the years I saw experiments with one fad after another. Management by objective. Zero-based budgeting. Benchmarking. My approach is simpler and draws on techniques I described earlier. The leader should keep his eye focused on the mission of the organization and remember that it is the people working for him who deliver that mission. He should ask those on the front lines, those who interact with the public or other customers, to identify obstacles to getting their jobs done better and more efficiently.

The Japanese some time ago developed a business practice called
kaizen,
which basically means continuing change for the better in all aspects of an organization—engineering, information technology, financial, commercial, customer service, and manufacturing. Many companies around the world have adopted the practice, which includes a very open process encouraging suggestions for improvements large and small from employees at every level, including especially on the shop floor—the folks on the front lines. Developed for business, the concept of
kaizen
seems to me to have equal value for public sector bureaucracies as well.

The central idea behind
kaizen
is very important: understanding that everything in an organization can always be improved and that people at every level can make a contribution. It is in keeping with my view that the reformer's work is never done. How do you instill in a bureaucracy this notion of ongoing and dynamic change, which is so alien to bureaucratic culture?

As with the Japanese use of
kaizen,
a leader should provide incentives for his employees to come up with ideas on how to improve performance. She shouldn't just put up a suggestion box. She needs to get people at all levels thinking and working as a team—not just in the old rhetorical, locker-room way, but in the way they work together every day. Leaders need to break down silos and stovepipes and get people thinking beyond their own narrow piece of the action, get them thinking about how the organization as a whole can do better. People need to be incentivized to think “outside their lane.”

Managers at all levels should regularly sit down with their folks and talk about ways to do the work more efficiently and better serve the public—the customer. Those managers must be held accountable for continuously seeking out ideas for improvement and implementing those ideas. A leader must publicly recognize and reward employees and managers whose suggestions are implemented. As I said earlier, it is not systems that deliver the mission but people. Using techniques I have described, a leader has to get them on board in his effort to constantly challenge the status quo.

When it comes to management techniques for improving performance, one familiar slogan is to “measure what you value and value what you measure.” Used properly, metrics can be invaluable in tracking and evaluating performance in myriad categories. However, in my experience, the danger is that people get so focused on successful statistical outcomes they fail to see how excessive reliance on numbers can distort reality and lead to unintended consequences.

Because U.S. military headquarters in Vietnam decided the number of enemy killed was an important indicator of success during the war, getting that number as high as possible led to exaggerated body counts and often counting civilian casualties as enemy deaths. These, in turn, misled senior officials into thinking we were doing better than we actually were. In too many universities, the worthwhile objective of increasing minority enrollment often led to a numbers game, where the premium was on the number of such kids admitted with little attention to the likelihood of their being able to graduate. Universities and colleges also manipulate statistics and definitions in order to improve their standing in the rankings. Even the Boy Scouts suffered when, more than twenty years ago, so much emphasis was placed on increasing membership that some Scout councils engaged in fraudulent practices with regard to enrollments just to get the numbers up and be suitably rewarded. Everyone is familiar with complaints about standardized testing in schools as a means to evaluate student progress and teachers, thus leading the latter to “teach to the test” rather than more broadly educating students. In the air force, the demand for near-perfect test scores by airmen in the ICBM force led to widely publicized cheating scandals. In the VA system, numbers were fudged to show that veterans were getting appointments within the fourteen-day goal set by the leadership when, in fact, they were not. And, as I wrote in
Duty,
the military health-care system cited numerous statistical analyses to demonstrate that changing the medevac time in Afghanistan from two hours to one hour wouldn't really matter in terms of survival rates—while ignoring the impact on morale of the soldiers and marines on the front lines. By the same token, in many areas of business, whether in manufacturing or services, increasing gross numbers—in sales or other categories—can mask a decline in quality that endangers the brand (as happened with U.S. car manufacturers in the 1970s–80s).