EVERYTHING I THOUGHT I KNEW ABOUT LEADERSHIP IS WRONG

MY FIRST JOB AS A LEADER WHEN I CAME TO Perot Systems was to create a new understanding of myself. I had to accept the shattering of my self-confidence. I couldn’t lead anymore, at least not in the way I always had. There was a time during that first year at Perot Systems when I would go home and look in the mirror and say to myself. “You don’t get it. Maybe you ought to get out of this business. You’re like a highly specialized trained beast that evolved during one period and now you can’t adjust to the new environment.

I told myself I was having the same experience as a caterpil-lar entering a cocoon. The caterpillar doesn’t know that he’llcomeoutasabutterfly.All he knows is that he’s alone, it’s dark and it’s a little scary. I came out the other end with a new understanding of leadership. I don’t have to know everything. I don’t have to have all the customer contacts. 1 don’t have to make all the decisions. In fact, in the new world of business, it can’t be me, it shouldn’t be me, and my job is to prevent it from being me.

In my early days at Perot Systems, people came to me and asked for “the plan.” When I told them, I don’t know the plan, they got angry with me. All I would say was. I don’t know the plan. If that disqualifies me from being a leader, then you’d better go get another leader. We’re either going to figure out the company’s future together or we’re not going to do it at all.

I made it clear that there were a whole set of things that I could not do-and that for the good of Perot Systems I wouldn’t do. I couldn’t get us into businesses or out of businesses. I couldn’t set the company’s strategy, delineate the company’s tactics or write the field orders for our competitive battles. I couldn’t decide what products to launch. I couldn’t be that kind of leader. I could do that in the old days at EDS because the competition was stable and I had overpowering knowledge. If I tried to do that today, I’d make every wrong move in the book. The way to be a leader today is different. I no longer call the shots. I’m not the decision maker.

So what is my job as a leader? There are certain durable principles that underlie an organization, The leader should embody those values. They’re fundamental. But they have nothing to do with business strategy, tactics or market share. They have to do with human relationships and the obligation of the organization to its individual members and its customers.

The second job of the leader is to pick the right people to be part of the organization and to create an environment where those people can succeed. That means encouraging others to help develop the strategy and grow the philosophy of the company. It means more collaboration and teamwork among people at every level of the company. I am now a coach, not an executive. When people ask me for a decision, I pick up a mirror, hold it up for them to ! look into and tell them: Look to yourselves and look to the team, don’t look to me.

The third job of the leader is to be accessible. I want to be open to people in a broad range of experiences if they need it, and I want to be accessible for two-way communication that is honest, open and direct.

Today, I travel with my laptop and get e-mai1 from all over the company. I get thou sands of messages per month. Electronic mail is the single most important tool I have to break through the old organization and the old mind-set. E-mail i says that I’m accessible to anyone in our company in real time, anywhere. I am an instant participant in any part of the organization. No more dictating memos that get scrubbed before their formal distribution to the corporate hierarchy. The impact from that kind of direct communication is enormous.

Today I tell the people in Perot Systems that this is the path that we have chosen. It’s the path we’ll all be on for the rest of our lives. It has no destination. There is no sense of arrival. It’s a continuous process.

In a world where the lines between companies, industries and even nations get blurred, a leader builds an effective organization around values and work style. And a leader learns to define success in business as both producing financial strength and generating a team of people who support and nurture each other.

“1 wondered, after 32 years, what happens,” he says. “I wasn’t experienced in retirement.”

What happened was that he received hundreds of unsolicited job offers, but the most resolute was from Perot Systems. David Beirne. a New York headhunter known for pit bull tenacity (“If we could find God’s phone number, we’d call Him-We have no fear,” he once told The New York Times) was dispatched to persuade Cannavino to consider the Dallas company.

Meyerson, meanwhile, followed a low-key strategy. No hard sell.

“He clearly was the right candidate at the right time to come and be my partner,” Meyerson says. “That’s what I invited him to do. I didn’t hire a president. I recruited a partner. I never felt I was in sales mode. That would not have been a smart thing to do. I would describe it as mutual exploration.

“We (Perot Systems) had several characteristics he liked. We were big enough to make a difference, but not so big that he could not put a stamp on (the company). The company has a personality that would be welcoming to a guy like him. My job was to expose him to everything I could in the company-the good, the bad and the ugly.”

Meyerson arranged for Cannavino to talk with each member of the Perot Systems board and with all of the company’s top executives. He offered access to all the company’s information-financial, legal, employee complaints, whatever Cannavino wanted to see.

“If you say yes,” Meyerson told him, “I don’t want you to be able to say you didn’t know what you were getting into, because this is a big challenge.”

SINCE ITS FOUNDING IN 1988, PEROT SYSTEMS HAD grown to a $350 million-a-year business by 1995. Though il was far behind such titans as EDS and IBM”s IT division (both in the $ 12 billion to $14 billion range), Perot Systems was working on ambitious deals that could leapfrog it into the major leagues. One was a strategic alliance with Swiss Bank Corporation that turned Perot Systems into a $600 million company almost overnight.

And it was. for Cannavino, a different kind of technology industry. “There are no soldering irons in this company,” he says. No boxes. No hardware to market. It is a knowledge-based business, he realized, whose greatest assets are people, not goods and property.

“Our most critical assets drive home in die evening and spend time with their families and friends,” he says.

Determined not to make the error that many other executives had made-namely, jumping into companies they knew nothing about and seeing their reputations pay the price-Cannavino spoke with more than 30 of the “senior leaders” from Perot Systems and by October 1995. less than six months into his retirement, accepted the job.

“The real factor in this place.” he says, “the real difference, in the final analysis, was the value card.”

Say what?

He pulls from his shin pocket a piece of red and white plastic, 2 by 3 7: inches, with printing on both sides under the headings “OUR VALUES” and “OUR STYLE.”

The values side addresses such things as serving clients: recruiting, developing and caring for top-quality employees; rewarding stakeholders with strong financial performances; contributing to the community; and operating with integrity.

On the other side of the card, Perot Systems’ style is defined, in part, as operating “in the center of the field of ethical behavior- never on the sidelines”’; encouraging team members “to lake risks, exercise initiative, deliver quality results and never be afraid to make mistakes” and “to create and maintain an atmosphere of mutual trust and respect.” It closes with an admonition to “have fun.”

None of the other companies that had offered him jobs had so carefully formalized and articulated its values and style, Cannavino says.

“That card wasn’t something they got from the rent-a-value store,” he says. “This talks about operating in the center of the field of ethical behavior…not what you can get away with, not close to the edges.”

The card raises an obvious question. Meyerson sought Cannavino out because of his willingness to take chances, the wild-duck ingredient that can counteract a large organization’s tendency toward stagnation. Perot Systems now has 4,500 employees, and that number is headed upward. As the company expands, can Cannavino tolerate from others the brazen risk-taking for which he is renowned?

“’You cannot absolve people from liability.” he explains. “What you want is freedom of action, but there must be accountability. You can’t pay the same bonuses for failing as you do for succeeding. But, the reality is that barring something that violates our value systern or our style, which we won’t tolerate, it’s hard to get yourself in mortal trouble in our company. You can get lined, but you can i get executed.”

As president of the company. Cannavino began to recruit executives with distinct philosophies regarding corporate and management structures. Key among them was James Champy. coauthor of the best selling book Re-engineering the Corporation, who is chairman of Perot Systems’ consulting practices, and Gil Marmol. a former consultant who has studied and written about information technology management. One of Marmot’s studies. which identified six critical leadership attributes of successful companies, was excerpted in the Wall Street Journal and is often used by corporations as a benchmark for measuring executive performance.

These hirings suggest that Cannavino is hell-bent on avoiding the stagnation that often gathers like dead gas around large, successful corporations.

’”Businesses have to reinvent themselves,” he says. “We’re doing that. This business runs on creativity, and you have to have an environment that fosters creativity.”

Meyerson. who ceded the title of CEO to Cannavino in the fall of 1996 but remains chairman of Perot Systems, agrees.

“You can’t be cautious in this business,” he says. “You’re either active or you’re dead.”

The Quick and the Dead-the species of the technology business. Of course, at Perot Systems, there aren’t any S6 million boxes for brazen entrepreneurs to carry off.