High-Tech Toolbox

Well into the information age, many chief executives are still reluctant to embrace computers. But those who have gone high-tech are reaping high yields

April 1 1992 by Ronald E. Compton And Mary Boone


Executive computer use is a bit like adolescent romance-it involves lots of talk but very little action. The truth of the matter is that, even though we are supposedly well into “the information age,” most CEOs, presidents, or chairmen of corporations don’t actually use computers themselves. Why? They do not see a useful connection between computers and leadership.

Executive skepticism about the value of computers is understandable. Few executives have any interest in discovering flashier and more expensive ways of looking at the same reports they now receive on paper. As a result, most CEOs are surprised to learn about the imaginative ways in which some of their peers have begun to use their computers and other high-tech tools.

THE COMMUNICATION CHALLENGE

All top executives face communication challenges, but most hope to avoid the type that faced Thomas Stephens when he became CEO of Manville Corporation. When Stephens took over in 1985, the company, formerly one of the world’s largest producers of asbestos, was already in Chapter 11, facing staggering legal liabilities associated with asbestos litigation. Negotiations for the company’s survival were at a standstill after three years of acrimonious talks between eight warring factions, many of whom lacked the usual financial sophistication of most Chapter 11 negotiating parties. To compound the problem, many of the same people who were financially unsophisticated were also angry. Manville’s future depended upon Stephens’ ability to get these factions to agree on a reorganization plan.

Effective communication was key.

Stephens had to talk to a wide variety of groups and convince them that the proposed plan was in everyone’s best interests. In order to do this, he had to recast complex problems in simple, clear, persuasive terms. This takes more than a silver tongue. Stephens had to get just the right angle on the data, just the right train of logic, and the message had to flow as if by second nature. To prepare for these negotiating sessions, Stephens used a spreadsheet and created his own slides and graphs on his personal computer. Why would a CEO bother to do this work himself? Many would call this staff work, but Stephens called it executive work. “The quality of the presentation is a direct function of how much time and effort you spend in getting ready,” he says.

“Sweat equity. If I prepare it myself, I’m comfortable with it, and it’s going to be of better quality than if I just run into a room with something somebody else prepared for me.”

Stephens says that he used to do spreadsheets by hand in order to gain a deeper understanding of issues, but he describes this work as tedious. “I couldn’t examine nearly as many scenarios as I now can with the electronic spreadsheet,” he says. “I can now look at the information from so many more perspectives. It’s become an extension of my brain.”

By putting together his own presentations, Stephens was more persuasive. His “sweat equity” paid off in being better equipped to deal with a hostile, sometimes ill-informed audience. Because of his tenacious negotiating style and clear, logical presentations, Stephens got the eight warring factions to agree on the reorganization plan.

SHAPING CULTURE

There is some controversy about whether executives shape corporate cultures or whether corporate cultures shape executives. Through the many decisions they make about organizational structure, language, values, methods, and systems, leaders have tremendous power to shape and meld the cultures of organizations.

One of the most important ways in which leaders can influence an organization’s culture is through performance measures, which show people what matters. By creating feedback loops in their organizations with the help of information systems, executives can let people know what is being measured, why it is being measured, and how those people are performing in relation to those measures.

When Bill Esrey came to United Telecom in 1980, plans were already being made to crack the long distance market. In 1984, the company that would later be known as US Sprint was born. Esrey took on the dual role of CEO of US Sprint and CEO of United Telecom in 1988. At then-fledgling Sprint, Esrey found an abundance of energy and activity, but a clear need for direction.

To get people focused, Esrey started to input daily cash figures to the shared information system. By letting people know he was interested in cash, people started to see the management of cash as a priority, he said.

In addition to lacking focus, people in a young company tend to be inwardly driven, responding to internal crises with little regard for what goes on in the “outside” world. Esrey encouraged others to broaden their perspective through two means. He accessed external databases to stay abreast of the competition. Esrey also added this external information to the internal financial data to reflect his managers’ goals and competitive stances. “Now, when you talk to people, they say, ‘Well, here’s the industry standard. Here’s our goal by December, and here are the programs that are going to allow us to get there.’ The systems really helped with that process,” Esrey says.

Esrey is now tying use of the system to the company’s efforts in the area of quality, using it to set and advertise benchmarks for performance.

COACHING

Becoming a people coach is a laudable goal, but how does an executive overcome the constraints that size and geographic dispersion place on his or her ability to lead people?

When co-author Ron Compton became president of Aetna Life and Casualty, he joined then-CEO Jim Lynn in facing the challenge of instituting a massive change in a company of 44,000 people. They wanted to get the company’s goals and objectives aligned, and then coach and empower employees to run the company like entrepreneurs.

First, they captured their vision in a simple phrase: quick, flexible and right. The next step was to take apart the company’s planning process and reengineer it to match the vision. Based on his experiences while running American Reinsurance from 1983 to 1987, Compton created the seven-step Aetna Management Process (AMP).

The next step was figuring out a way to get the message to the troops. They used the regular channels of training programs, speeches, and videotapes. But Compton also decided to condense the planning process into an expert system that could be run on PCs. This system allows employees to plan and organize their ideas by feeding them into Compton‘s AMP framework. In this way, Compton and Lynn are able to “coach” at a distance. The software encourages employees to use a shared framework for thinking through critical issues, while allowing considerable flexibility and autonomy.

BEING WELL-INFORMED

To be respected and effective, leaders must be well-informed-in great detail and with split-second timeliness-about a wide range of topics. As the pace of change within organizations and throughout the external environment increases, this challenge only gets tougher.

There is far more information available to the executive than he or she can possibly manage. As a result, filters are established to help executives get only the information they need. Filters generally take the form of people who select, analyze, and format information for consumption by executives. But the permeability of these filters is important. It is all too tempting to allow people to filter out too much information when there is so much to be dealt with. It is also easy to fall into the trap of trying to manage all the information by not letting others filter enough. Executives need ways of fine-tuning their perceptions.

Information tools can give executives direct control over removing or constructing filters on the information they receive. Bill Esrey of US Sprint explains why hands-on use is so important to keeping executives well-informed: “This is how you really get a feel for what’s going on, rather than simply looking at numbers or statistics. It gives you the pulse of the organization. Information that is received in other ways is often subjected to overzealous editing, or it becomes politicized. Computers give you an ability to overcome the isolation that you feel or that others subject you to.”

ENHANCING PERSONAL THINKING

Executives must make sense out of chaos, come up with creative solutions to problems, balance intuition and logic, find a time and place for reflection, improve the clarity of their analyses, and “link” their minds with those of others. Most of the time, executives react to information rather than interacting with it. What computers provide is a means of making complex information malleable and maneuverable. Instead of receiving or writing a static report on paper, with a computer the executive can shape and mold information, and look at it from different perspectives. This is why the computer is so critical as an executive thinking tool.

When Sandy Sigoloff, former chairman, CEO, and president of Wickes Corporation, joined the $4 billion building supply retailer, the company was $2 billion in debt to 250,000 creditors. Clearly, turning around the company was going to require more than just preparing typical reports.

Moreover, the situation involved not just one Chapter 11, Sigoloff recalls. Wickes was composed of four major Chapter 11s, each with about seven or eight bankruptcies under it. He notes that at the time, the turnaround was the largest nonrailroad reorganization in the history of American business.

Sigoloff and his team were tracking 800 to 2,000 simultaneous events that were time-related and time-phased. With this level of complexity, Sigoloff pronounced paper solutions infeasible. In order to track these complexities, the information systems staff was instructed to create a giant chart that Sigoloff refers to as the “master calendar.” It gave Sigoloff and his management team a visual image of their progress in rescuing the company.

“The master calendar gave all of us a visual image of progress on a week-toweek basis. Dependencies were immediately obvious,” he says. “Everyone understood the repercussions on others if they failed to deliver or missed their deadlines. We could not have managed something as complicated as this without it.”

Now Wickes has turned the corner. Sigoloff says that without computers, he and his team might still be trying to sort out a game plan to exit Chapter 11.

DON’T BUY A COMPUTER

Meanwhile, if you’re reevaluating how you can benefit from a computer, don’t buy one without first considering some potential pitfalls.

First, many people have a vested interest in narrowly defining what actually comprises an executive information system (EIS). It is important to realize that there are a broad range of computing tools available to executives.

In order to effectively choose which of these tools fits your needs, you’ll need to deconstruct your job by making explicit use of a structured method for setting personal objectives. You can either do this yourself, or, instead, have your information systems personnel trained to do the job.

Subsequently, once you have determined your business priorities and information needs, you must evaluate various tools. Again, your assistant should be able to provide simple, understandable, functional descriptions of prospective tools and how they might match the business scenario you describe. At that point, only you can judge the usefulness of the tool.

Many executives are rightfully jaded about computers. The answer is not more technology or fancier interfaces. The answer is a better connection between leadership objectives and computers. Through constructive dialogue with your support people, you will have a better chance of configuring an executive information system that makes sense and delivers value to the organization.


Ronald E. Compton is chairman and CEO of Hartford, CT-based Aetna Life & Casualty, the nation’s largest shareholder-owned insurance and financial services company.

Mary Boone, author of Leadership and the Computer, is managing director of EIS consulting at Ridgefield, CT-based NDMA Inc.