Bob Davids' 30 Top Tips to Stop Being a "Smart Boss"

We need smart people. Our universities are focused on producing just that. Those who come out on top are the smartest and hence succeed in business, law and politics.

It would be easier to agree with the above view if psychologists hadn't already been challenging it for several decades. They found that analytical intelligence - the one taught in schools allowing you to find the right answer for a well-defined problem - doesn't predict success in professional life. Success-measured, say, by your career or salary, while adjusting for age, correlates with intelligence at a mere 0.2.

Needless to say, smart people are not idiots, but they can be fools. "School smarts" regularly do silly things, like the très smart French politician and former IMF president or a bright former U.S. president, who was fond of saxophones, but not exclusively... But what about business leaders?

Sure, most are very intelligent. Yet, when we looked through our 5-year, 30- company study on what made businesses stay at the top of their industries for decades, it wasn't their leaders' superior intelligence. Paradoxically, it actually appeared to be a handicap. This wasn't exactly news either. Tom Peters had already talked of "analysis-paralysis." So how did these leaders stop being smart bosses and, in the process, make their companies sustainable wealth creators?

One of the most wealth-creating leaders we met was Bob Davids. Before starting his current business in 1998, Sea Smoke Cellars Californian winery, he had headed six other companies. The one before Sea Smoke - Radica Games - had grown from zero to 8,000 employees in ten years, becoming the NYSE-traded, 3rd most profitable toy manufacturer after Hasbro and Mattel (it was taken over by the latter).

When Bob said he'd produce a world-class Pinot Noir in Central California, smart people reacted to it as folly. Not only does a world-class Pinot Noir have to be French (just like a world-class baseball player has to be American, right?), but you would have to be an idiot to try to grow this Northern red grape in Tunisian latitudes. Bob's reaction?

AN IDIOT: Every time I've started a business and people told me I was an idiot, I ended up making a lot of money. Si Redd used to say to me, "Boy, you gotta be where they ain't." What that means is that you want to find areas of low competition because high competition means lower margins, and lower margins mean less profit. So we were always looking for places where we could be unique. If the thinking is out-of-the-box, people may not understand because they have not seen it before... Therefore you are an idiot.

When people have never seen anything like it before, they think there's no precedent and hence, there's no prospect of success. But the point is that since there's no precedent, you have the opportunity for success.

And success he had. It's the first winery in history to make Wine Spectator's "100 Best Wines in the World" four years in a row from its first year of existence. If you want to buy a case from Sea Smoke you can, but you'll have to wait for at least three years, and make payment up front.

Bob doesn't attribute his successes to himself but always to the cultures he has built. He's so persuasive in his "why you need to stop being a boss and start being a leader who builds cultures" philosophy, that he has changed the lives of several people simply through one conversation; the latest after an in-flight chat with a top executive of an investment bank. This man soon resigned, started his own company following Bob's philosophy, and has succeeded spectacularly. He introduces Bob to everyone as "the man who changed my life."

From our numerous meetings with Bob we have compiled a list of 30 top tips which perhaps, will change your life.

Here they are, organized from A-to-Z, in a tribute to Robert Townsend, a former AVIS CEO and author of the A-to-Z bestseller "Up the Organization". Townsend, who mentored Bob, called him his best student.

A CHAIN[1]: I would ask young leaders in my companies a version of one of General Eisenhower's sayings: "If I stack a chain on the table and then push it, what direction will it go?" You will get several answers, but the correct answer is: "I do not know." I would then ask, "If I pull the end of the chain which way will it go?" They would all answer, "It will follow you." Eisenhower used this example to show the concept of leading to his troops.

A SCARCE RESOURCE: The biggest shortage in the world is not oil or food - it's leadership. Why is it such a scarce resource? Because egos get involved. Most people in top positions think that they are better than everybody else and that they need something more than anybody else. It's economic assets, it's status, it's all those other things that prevent people at the top from subordinating themselves totally to the people they lead. It is not socialism. Leaders get paid a lot more than those they lead, they get paid for their knowledge and skill... but they are no better as a person.

DOWN: In his book, Townsend writes how people would often say to him: "Mr. Townsend, you're going away for a month, there're gonna be big decisions that'll come up, we are going to need to get hold of you." To which he would reply: "During those times, when you feel you have to get hold of me, when you feel it's critical to get hold of me... I want you to lie down. And when the feeling goes away, I want you to get up, solve the problem and then send me a memo (it was before email) on what the solution was." So, that's what I do. Wish I had come up with this one!!

The measure of good leadership is the company running better when the leader is away.

EVIL: I see so many people who, when given the opportunity to have power, take it. They have a secretary who gets their dry cleaning. They decide they're going to have a special office. They're going to have a special desk. They want to have a car... That's the road to evil. When you have a different standard from the people you're leading, then you are no longer a leader. You just gave up your chance for respect.

You need to understand that you are no different from the people you lead. You have the same value in the organization; you just have a different assignment.

FUN KILLERS: Vice-Presidents.

JOB INTERVIEWS: Candidates have to show skill in interview but the interview is really about whether they fit into the culture. Cultures are built one person at a time.

KARMA: While building a culture, when you get 65-70% of good, clean people, the bad people won't stay. They see that they don't fit in and they leave. If you get to 80% of good-karma people in a culture, the remaining 20% run for the door.

I became the head of a casino once. The casino was a drug hangout, a very tough place. When I arrived the first thing I did was immediately fire all the known drug dealers. Then I started replacing them with good people, one by one. I knew there were still some bad people but when I finally got to about 70% good, the others left on their own.

KEEPING THE CULTURE: My job now is the keeper of the culture. That's my job. I do it by talking to everybody every day, reaching everybody every day: "Hello, how are you, how's it going, what do you need?"

LIMITS TO THINKING: If you focus on what you can't do, you overlook what you can do. Rules tell you what you cannot do. Rules are handcuffs. If you have the right culture, then people are free to think. Rules limit thinking.

LYING: Never create a false deadline. If you are found out you will lose your credibility. Once you set a false deadline then they'll never trust you again. And if they don't meet the real deadline then you have a "Come to Jesus talk" to learn why we missed it.

MAKING A PERSON BETTER: My job is to make every employee a better person. If we can't hold onto them in our company, we shouldn't have them. If they find a better opportunity I'll send them my best wishes. But, I do all I can to keep them.

MBWA IS BETTER THAN MBA: Bob Townsend told me it is better to have a MBWA than an MBA. "Management By Walking Around" is a great Townsend concept of getting away from your desk and listening to as many staff members as you can, the best way to reach the team. A true leader needs to be accessible to all. If the team is large and cannot get to the leader, then the leader needs to get to the employees and that is done by walking around. I had companies around the world so that meant flying around.

MISTAKES: The more things you do wrong, the faster you learn. But if you refuse to acknowledge that it was wrong, you refuse to learn. Is that what you want? The key is to not make the same mistake twice.

MISTAKES, PART II: Catch employees when they are right; teach them when they are wrong. Never catch people when they make a mistake. If you were constantly given orders on how to do your job, constantly controlled, blamed for mistakes, would you respond well to such practices? Why do you think your subordinates will?

MORALE SOUP: Every single thing you do should instil trust in the team. And as a CEO that is the biggest duty you have: morale. You maintain it as long as you don't set a bad precedent. When you set a bad precedent, it is nearly impossible to clean it up. It's like one drop of urine in the soup. One drop is too much and you can't get it out. If you let it in, you have to empty the bowl, steam it and start the soup over again. I struggled to make good decisions that set precedent. I learned to take all the time I could before making these important decisions. A bad precedent could be that single drop.

OFFICER, CHIEF ENTERTAINMENT: Sometimes I was embarrassed to be called CEO (hated being called boss as it implies dictatorship). When someone called me the CEO, I would quip... "Yes, Chief Entertainment Officer," I was deflecting. But, I started to realize that I truly was entertaining... colleagues, customers, government officials.

OPEN BOOK: I always had open book companies: everyone got to look at all the budgets and financial information (except salaries). I wanted everyone to own financial responsibility. When we got into trouble, the staff would own that as well which is what you want: everyone to own and contribute to a solution.

REACHING THE PINNACLE: The worst thing that can happen to a company is that you believe your own bullshit. You really don't want to believe your own bullshit. You want to stay humble and figure out where you are in relation to your competition: "Yes, we're good, but are we the best? Maybe not. So what can we do to get just one percent better?"

SIZE AND FUN: The fun of a business tends to be inversely proportional to the size of the company. The bigger you get, the less fun you have and the more headaches, and the culture starts to fall apart. The perfect number may be 200. When you get past 200, then you have to have another level of management come in and then you get into the vice-president stuff.

THE SMALLEST COMPONENT: The more power you get, the less you can use because, as soon as you use it incorrectly, you lose it all. Power lies in the organization, not within you.

It's like a wall. There are bricks and mortar. And in the mortar there is gypsum, water, sand, and the smallest component of all: lime. Lime provides the glue. So, I'm in the wall; as the CEO, I'm the smallest component. I'm not a brick, I'm not the mortar, I'm not the water, I'm not the sand. I'm that little trace of adhesive that holds the wall together. So, a CEO has to understand he is the smallest component. He does not provide the strength of the wall. The strength of the wall comes from all those people sticking together and the CEO's responsibility is to provide the adhesive so they can stick. But the CEO can't do the work.

SUCCESS AND FUN: Fun is a corollary of success. Fun goes up as profits and success go up. Fun is sharing the success. Fun should therefore be a planned component of success.

We talk openly about having fun, and decisions are made by looking at the fun factor, along with the improving quality factor. The way to kill fun is to establish "dual standards." Fun also may be the best part of success. I have two requests for new recruits: 1. Never raise your voice; 2. Have fun every day!

SUSTAINING GROWTH: Companies can only grow so big as a dictatorship. I call them flashing lights: they're good for a while. Dictatorships can't sustain long term growth. It's like a sick dog left untreated. It dies. You have to have really good communication in a company to grow big. The CEO's job is to use his power in a benevolent manner to build the culture, communication and the foundation, all coming under the auspices of morale. Communication is a morale issue.

TIME HORIZON: A leader needs to be looking from month to year and beyond. All minute to minute, hour to hour, day to day, week to week, month to month stuff - you shouldn't be dealing with that. The people you hired are supposed to be able to deal with that. If you're doing a single thing in that category you are mismanaging your business.

TROUBLE WITH THE CEO: You're in trouble with a CEO when he thinks that money is more important than people. If the people, environment, culture, and morale are good, you have the opportunity to make money. If you focus on money, the lack of morale, the lack of culture will bring you down as a leader. The people in the organization will find a way to get you out. They will. So, you never focus on money. You focus on the people, the culture, and morale. You build them up, and people motivate themselves. When people make a lot of money, then you're successful as a CEO. But if you start with money, you will not end up with money.

TROUT: Rainbow trout never live in ugly places... Fishing is a great way to get business ideas.

UNIVERSAL PEOPLE: It doesn't matter where the people come from, it makes no difference. People are people. And once you get past all the external superfluous cultural issues, once you get down to the point where you get to respect that human being, it doesn't matter whether you are in China or Mexico or anywhere else. When the true meaning of a life comes out of that person, they're able to express themselves as a team member in an environment, then, they contribute. It's not about where they're from.

VISIONARY vs. ENTREPRENEUR: An entrepreneur has the ability to see the future market... like looking a long way down the road-a bit obvious. A visionary sees down the road and around the corner - not at all obvious.

WINNING, WHAT IT MEANS: To know that the business plan is working and the culture is working and to stay out of the way. Basically, just watch all the young people have a lot of fun. You have been successful when you can sit on the sidelines and watch the team win.

WORRIES HANG ON YOUR KEY RING: The size of your key ring is the size of your headache.

X-IT STRATEGY: If you don't have an exit strategy, your job owns you.