CHAPTER 1

THE LAW OF THE LID

Leadership Ability Determines a Person's Level of Effectiveness

The law of the lid will help you understand the value of leadership.If you can get a handle on this law, you will see the incredible impact ofleadership on every aspect of life.

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In 1930, two young brothers named Dick and Maurice moved from New Hampshireto California in search of the American Dream. They had just gotten out of highschool, and they saw few opportunities back home. So they headed straight forHollywood where they eventually found jobs on a movie studio set.

After a while, their entrepreneurial spirit and interest in the entertainment industryprompted them to open a theater in Glendale, a town about five miles northeast ofHollywood. But despite all their efforts, the brothers just couldn't make the business profitable.In the four years they ran the theater, they weren't able to consistently generateenough money to pay the one hundred dollars a month rent that their landlord required.

The brothers' desire for success was strong, so they kept looking for better businessopportunities. In 1937, they finally struck on something that worked. They opened asmall drive-in restaurant in Pasadena, located just east of Glendale. People in SouthernCalifornia had become very dependent on their cars, and the culture was changing toaccommodate that, including its businesses.

The drive-in restaurant was a phenomenon that sprang up in the early thirties, andit was becoming very popular. Rather than being invited into a dining room to eat,customers would drive into a parking lot around a small restaurant, place their orderswith carhops, and receive their food on trays right in their cars. The food was servedon china plates complete with glassware and metal utensils. It was a timely idea in asociety that was becoming faster paced and increasingly mobile.

Dick and Maurice's tiny drive-in restaurant was a great success, and in 1940, theydecided to move the operation to San Bernardino, a working-class boomtown fiftymiles east of Los Angeles. They built a larger facility and expanded their menu fromhot dogs, fries, and shakes to include barbecued beef and pork sandwiches, hamburgers,and other items. Their business exploded. Annual sales reached $200,000, and thebrothers found themselves splitting $50,000 in profits every year—a sum that putthem in the town's financial elite.

In 1948, their intuition told them that times were changing, and they made modificationsto their restaurant business. They eliminated the carhops and started servingonly walk-up customers. And they also streamlined everything. They reduced theirmenu and focused on selling hamburgers. They eliminated plates, glassware, and metalutensils, switching to paper products instead. They reduced their costs and lowered theprices they charged customers. They also created what they called the Speedy ServiceSystem. Their kitchen became like an assembly line, where each employee focused onservice with speed. The brothers' goal was to fill each customer's order in thirty secondsor less. And they succeeded. By the mid-1950s, annual revenue hit $350,000, and bythen, Dick and Maurice split net profits of about $100,000 each year.

Who were these brothers? Back in those days, you could have found out by drivingto their small restaurant on the corner of Fourteenth and E Streets in San Bernardino.On the front of the small octagonal building hung a neon sign that said simplyMCDONALD'S HAMBURGERS. Dick and Maurice McDonald had hit the great Americanjackpot, and the rest, as they say, is history, right? Wrong. The McDonalds never wentany farther because their weak leadership put a lid on their ability to succeed.

It's true that the McDonald brothers were financially secure. Theirs was one of themost profitable restaurant enterprises in the country, and they felt that they had a hardtime spending all the money they made. Their genius was in customer service and kitchenorganization. That talent led to the creation of a new system of food and beverage service.In fact, their talent was so widely known in food service circles that people started writingthem and visiting from all over the country to learn more about their methods. At onepoint, they received as many as three hundred calls and letters every month.

That led them to the idea of marketing the McDonald's concept. The idea of franchisingrestaurants wasn't new. It had been around for several decades. To theMcDonald brothers, it looked like a way to make money without having to openanother restaurant themselves. In 1952, they got started, but their effort was a dismalfailure. The reason was simple. They lacked the leadership necessary to make a largerenterprise effective. Dick and Maurice were good single-restaurant owners. Theyunderstood how to run a business, make their systems efficient, cut costs, and increaseprofits. They were efficient managers. But they were not leaders. Their thinking patternsclamped a lid down on what they could do and become. At the height of theirsuccess, Dick and Maurice found themselves smack-dab against the Law of the Lid.

In 1954, the brothers hooked up with a man named Ray Kroc, who was a leader.Kroc had been running a small company he founded, which sold machines for makingmilk shakes. He knew about McDonald's. The restaurant was one of his best customers.And as soon as he visited the store, he had a vision for its potential. In his mindhe could see the restaurant going nationwide in hundreds of markets. He soon strucka deal with Dick and Maurice, and in 1955, he formed McDonald's Systems, Inc.(later called the McDonald's Corporation).

Kroc immediately bought the rights to a franchise so that he could use it as amodel and prototype. He would use it to sell other franchises. Then he began to assemblea team and build an organization to make McDonald's a nationwide entity. Herecruited and hired the sharpest people he could find, and as his team grew in size andability, his people developed additional recruits with leadership skill.

In the early years, Kroc sacrificed a lot. Though he was in his mid-fifties, he workedlong hours just as he had when he first got started in business thirty years earlier. Heeliminated many frills at home, including his country club membership, which he latersaid added ten strokes to his golf game. During his first eight years with McDonald's,he took no salary. Not only that, but he personally borrowed money from the bank andagainst his life insurance to help cover the salaries of a few key leaders he wanted on theteam. His sacrifice and his leadership paid off. In 1961 for the sum of $2.7 million,Kroc bought the exclusive rights to McDonald's from the brothers, and he proceeded toturn it into an American institution and global entity. The "lid" in the life and leadershipof Ray Kroc was obviously much higher than that of his predecessors.

In the years that Dick and Maurice McDonald had attempted to franchise theirfood service system, they managed to sell the concept to just fifteen buyers, only tenof whom actually opened restaurants. And even in that size enterprise, their limitedleadership and vision were hindrances. For example, when their first franchisee, NeilFox of Phoenix, told the brothers that he wanted to call his restaurant McDonald's,Dick's response was, "What ... for? McDonald's means nothing in Phoenix."

In contrast, the leadership lid in Ray Kroc's life was sky high. Between 1955 and1959, Kroc succeeded in opening 100 restaurants. Four years after that, there were 500McDonald's. Today the company has opened more than 31,000 restaurants in 119countries.

OBSERVE

Leadership ability is the lid that determines a person's level of effectiveness. The loweran individual's ability to lead, the lower the lid on his potential. The higher the individual'sability to lead, the higher the lid on his potential.

Leadership ability—or more specifically the lack of leadership ability—was the lidon the McDonald brothers' effectiveness.

1. Give two examples of steps Ray Kroc took to build the franchise business that theMcDonald bothers didn't take.

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2. How did these actions reflect Ray Kroc's leadership ability?

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3. From your profession or area of service, give an example of a leader who has beenlimited by his or her "lid." How has this leader's "lid" affected the organization?

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4. Do you know someone whose leadership lid seems unlimited?

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LEARN

Whatever you will accomplish is restricted by your ability to lead others. For example,if your leadership rates an 8, then your effectiveness can never be greater than a 7.If your leadership is only a 4, then your effectiveness will be no higher than a 3. Yourleadership ability—for better or for worse—always determines your effectiveness andthe potential impact of your organization.

Let me give you an example of what I mean. Let's say that when it comes to success,you're an 8 (on a scale from 1 to 10). That's pretty good. I think it would be safeto say that the McDonald brothers were in that range. But let's also say that leadershipisn't even on your radar. You don't care about it, and you make no effort to develop asa leader. You're functioning as a 1. Your level of effectiveness would look like this:

[ILLUSTRATION OMITTED]

To increase your level of effectiveness, you have a couple of choices. You couldwork very hard to increase your dedication to success and excellence—to work towardbecoming a 10. It's possible that you could make it to that level, though the Law ofDiminishing Returns says that the effort it would take to increase those last two pointsmight take more energy than it did to achieve the first eight. If you really killed yourself,you might increase your success by that 25 percent.

But you have another option. You can work hard to increase your level of leadership.Let's say that your natural leadership ability is a 4—slightly below average. Just byusing whatever God-given talent you have, you already increase your effectiveness by300 percent. But let's say you become a real student of leadership and you maximizeyour potential. You take it all the way up to a 7. Visually, the results would look likethis:

[ILLUSTRATION OMITTED]

By raising your leadership ability—without increasing your success dedication atall—you can increase your original effectiveness by 600 percent. Leadership has a multiplyingeffect.

DISCUSS

Answer the following questions and discuss your answers when you meet withyour team.

1. How effective will a person be if he increases his leadership but not his work ethic(dedication to success)?

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2. Do you agree with the author's assessment that increasing your leadership is oneof the best ways to increase your level of effectiveness? Explain.

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3. What criteria can be used to determine a person's leadership ability? What aresome clear signs of leadership strengths and weaknesses?

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4. How long does it take you to determine a person's leadership "lid" once thatperson has been put in charge of a team?

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5. Describe signs indicating that a leader has hit his or her lid.

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6. Describe a situation in which your leadership lid negatively affected a project ortask.

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7. On a scale of 1 to 10, how would you describe your leadership? Would yourspouse or colleagues agree with your assessment?

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8. Up to now, how dedicated have you been to developing yourself as a leader? Howwill you increase that dedication?

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APPLY

1. List some of your major goals. (Try to focus on significant objectives—thingsthat will require a year or longer of your time. List at least five but no more than tenitems.) Now identify which ones will require the participation or cooperation of otherpeople. For these activities, your leadership ability will greatly impact your effectiveness.

2. Assess your leadership ability. Review the leadership assessment you took at thestart of this workbook to get an idea of your basic leadership ability.

3. Ask others to rate your leadership. Talk to your boss, your spouse, two colleagues(at your level), and three people you lead about your leadership ability. Ask each ofthem to rate you on a scale of 1 (low) to 10 (high) in each of the following areas:

• People skills

• Planning and strategic thinking

• Vision

• Results

Average the scores, and compare them to your own assessment. Based on theseassessments, is your leadership skill better or worse than you expected? If there is a gapbetween your assessment and that of others, what do you think is the cause? How willingare you to grow in the area of leadership?

TAKE ACTION

Interview someone whom you consider to have a high leadership lid. Ideally this wouldbe the person you listed in the OBSERVE section for: Whom do you know whoseleadership lid seems unlimited? Ask that person the following questions:

1. When did you first see yourself as a leader?

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2. What are some of the greatest challenges you've faced as a leader?

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3. What has contributed to your growth as a leader?

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4. What are you currently doing to grow as a leader?

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5. What is the best piece of advice that you would have for someone who aspires tobe an effective leader?

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CHAPTER 2

THE LAW OF INFLUENCE

The True Measure of Leadership Is Influence—NothingMore, Nothing Less

If you don't have influence, you will never be able to lead others. As psychologistHarry A. Overstreet observed, "The very essence of all power to influence lies in gettingthe other person to participate." If no one is following you, you're not a leader. TheLaw of Influence is about obtaining followers, which makes it the basis for leadership.

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One of my favorite stories that illustrates the Law of Influence concerns AbrahamLincoln. In 1832, decades before he became president, young Lincoln gathered togethera group of men to fight in the Black Hawk War. In those days, the person who puttogether a volunteer company for the militia often became its leader and assumed acommanding rank. In this instance, Lincoln was given the rank of captain. But Lincolnhad a problem. He knew nothing about soldiering. He had no prior military experience,and he knew nothing about tactics. He had trouble remembering the simplest militaryprocedures.

For example, one day Lincoln was marching a couple of dozen men across a fieldand needed to guide them through a gate into another field. But he couldn't manageit. Recounting the incident later, Lincoln said, "I could not for the life of me rememberthe proper word of command for getting my company endwise. Finally, as we camenear [the gate] I shouted: 'This company is dismissed for two minutes, when it will fallin again on the other side of the gate.'"

As time went by, Lincoln's level of influence with others in the militia actuallydecreased. While other officers proved themselves and gained rank, Lincoln found himselfgoing in the other direction. He began as a captain, but title and position did himlittle good. He couldn't overcome the Law of Influence. By the end of his military service,Abraham Lincoln had found his rightful place, having achieved the rank of private.

Fortunately for Lincoln—and for the fate of the United States—he overcame hisinability to influence others. Lincoln followed his time in the military with undistinguishedstints in the Illinois state legislature and the U.S. House of Representatives.But over time and with much effort and personal experience, he became a person ofremarkable influence and impact, and one of the nation's finest presidents.

I love the leadership proverb that says, "He who thinks he leads, but has no followers,is only taking a walk." If you can't influence people, then they will not followyou. And if people won't follow, you are not a leader. That's the Law of Influence. Nomatter what anybody else may tell you, remember that leadership is influence—nothingmore, nothing less.

OBSERVE

Leadership is often misunderstood. When people hear that someone has an impressivetitle or an assigned leadership position, they assume that individual to be a leader.Sometimes that's true. But titles don't have much value when it comes to leading. Trueleadership cannot be awarded, appointed, or assigned. It comes only from influence,and that cannot be mandated. It must be earned. The only thing a title can buy is alittle time—either to increase your level of influence with others or to undermine it.