When Chief Executive magazine and Hay Group released the 2009 rankings of the companies that are best at developing future leaders, 3M MMM jumped to first place from 15th in 2008. What's behind such a move? USA TODAY corporate management reporter Del Jones asked 3M CEO George Buckley, 62. Following are excerpts, edited for clarity and space.
Q: How did 3M in one year pass the likes of GE and IBM in leadership development?
A: Infrastructure was already installed when I arrived. But I didn't always agree with Jim (McNerney, now Boeing CEO). He moved senior people around a lot. They hopped from job to job every year or year and a half. I slowed the pace. They have to be in the job long enough, not only for their successes to visit them, but for their failures to visit them. We all have both. When people move too often, there is more thought given to the next place, not to developing people and developing relationships. I didn't like the merry-go-round. I changed that immediately.
Q: How long should talented people stay in one job?
A: There's a point somewhere around four years where you need to get refreshed.
Q: In this economy, can companies afford the cost of leadership development?
A: Years ago, when I worked at Brunswick, I was asked, "George, it's a tough time right now. Should we be spending money on training? What if these people leave the company?" My answer was, "What if we don't, and they stay?"
Q: What's key to develop leaders?
A: There are things you are born with. You can't develop intelligence. You can't develop morals by law. I learned my value system on the bottom of my grandmother's shoe before the age of 7. I didn't learn them from a statute book. There are things that we can develop. Strategic thinking, for example. There is a difference between a leader and a manager. A leader is as much about inspiration as anything else. A manager is more about process. We try to mix both into our development. In the end, maybe you can't plant leadership in a person, but you certainly can enhance it in a person.
Q: (Former GE CEO) Jack Welch recommended firing the bottom 10%. Do you agree?
A: Maybe Jack and GE got a bit of a reputation on that, maybe unfairly so. I think the concept is right, but it's a little dehumanizing. My analogy is that when you garden, you do the weeding before the feeding. Any organization is like that. It has to be kept vibrant, it has be fertilized, pruned, aerated. When you have identifiable poor performers, it's in the best interest of the organization for them not to work there. Poor performers can build resentment if you have seven people, six of them work hard, and one sloughs off. The economy's in turmoil. They wonder why management doesn't address it.
Q: How has 3M maintained leadership development even while cutting jobs?
A: It's a little like having double vision. One eye has to focus on today. The other eye has got to focus on tomorrow. Another analogy I often use: My head's in the oven, and my feet are in ice water, but on average I feel OK. Organizations don't fail on averages. It's vital these days for companies to watch costs, and watch cash even more than costs. It's more important to invest to differentiate yourself from the competition. In a 2% recession, you have 98% of the business left. In a 5% recession you have 95% of the business left. You have to focus on what's left, not on what's gone. You're unlikely to do that well if you back off on training and leadership development.
Q: (Former Chrysler CEO) Lee Iacocca says there has been a leadership vacuum throughout the economic crisis, in both government and business. Do you agree?
A: Iacocca has a very good point. Why would you want to be a politician? Their lives are scrutinized. Nobody's perfect, yet they are so berated. Why would you want to be a leader of a public company today? A private company, perhaps yes, but a public company? We're seeing a progressive disillusion, shall we say, of what made America great. The kind of things that made people like me come to this country and President Obama's father come to this country. We punish mistakes and don't always reward successes. That doesn't work in companies, and it doesn't work in countries.
Q: Leaders haven't made bad decisions?
A: Leaders make unpleasant decisions. They often face unpalatable choices. Norm Coleman, our local senator (R-Minn.), asked me if it was right to bail out the automotive companies. I said it's not about good choices and bad choices, but making choices that are bad or worse. I wish we weren't rewarding people for what they have done. But leaders had to choose between the unpalatable and the unthinkable. The unpalatable is supporting the banks. The unthinkable is the collapse of the banking system. Leaders aren't given the choice between dandelions and roses. It might be dandelions and chickweed. They are forced to make choices with too little time and too little information. It requires courage and a strong stomach. I might be forced to make a decision in five seconds, which will then be studied for months by a team of 40 lawyers. The job that leaders have is difficult, and there are increasingly few people capable of doing it.
Q: Many CEOs once worked at one of a handful of companies like GE, IBM and Baxter. When you lose a talented leader, do you feel that others are pirating from 3M's farm system?
A: We try to persuade people to stay, but we always celebrate when somebody leaves. When people are in charge of 10, it becomes 10 times harder to get the next promotion. In the end, if you have a great farm system, you are going to have some spillage.
Q: Why not save money on leadership development and recruit top talent from others?
A: I'd sooner own a fish farm than be reliant on catching a few fish.
Q: What's your secret to success?
A: The absolutely best way for me to be successful is to have people working for me who are better. Having that kind of emotional self-confidence is vital to leaders. The people I work with are my friends. How can you possibly be objective if you work with your friends? You build respect in those people because you admire what they do. Having once built respect, you build trust. However hokey it sounds, it works.