"Changing the Conversation in Your Company "

In our experience, it's rare for a diverse group of headstrong Executive Education participants from around the globe to agree on anything. Yet earlier this month, when we surveyed a group of leaders who attended the Driving Performance Through Talent Management program at Harvard Business School, 92% agreed that the practice of internal communication "has undergone a lot of change" at their companies "in recent years."

While the sample size in this case isn't large — about three-dozen leaders took part in the survey — these participants make up a highly representative group. They hail from every part of the globe, and from organizations small and large (with head counts that range from about 200 to more than 100,000). They occupy senior positions in fields that include sales and talent management, and they work in industries that range from manufacturing to health care to financial services.

That survey result reinforces a finding that we've observed elsewhere in our research: in company after company, the patterns and processes by which people communicate with each other are unmistakably in flux. The old "corporate communication" is giving way to a model that we call "organizational conversation." That shift is, for many people, a disorienting process. But it also offers a great leadership opportunity.

Our research has shown that more and more leaders — from organizations that range from computer-networking giant Cisco Systems to Hindustan Petroleum, a large India-based oil supplier — are using the power of organizational conversation to drive their company forward. For these leaders, internal communication isn't just an HR function. It's an engine of value that boosts employee engagement and improves strategic alignment.

Broadly speaking, there are four steps that you can take to make your approach to leadership more conversational. (In future posts, we will address each of these points at greater length.)

1. Close the gap between you and your employees. In our survey, we also asked respondents to name the biggest employee communication challenge at their company. In response, one participant cited the need to "move away from top-down communication." Another highlighted a "disparity between the senior management team and middle management due to low transparency." Trusted and effective leaders overcome such challenges by speaking with employees in ways that are direct, personal, open, and authentic.

2. Promote two-way dialogue within your company. One survey respondent lamented "a lack of understanding in management of the need for communication," adding that "the traditional practice" of communication at his or her company "has been one-way." Leaders can show that they appreciate the value of real communication by adopting channels that allow ideas to move in multiple directions across their organization, and by working to create a truly conversational culture within that organization.

3. Engage employees in the work of telling the company story. The need "to get more participation from employees," according to one respondent, is a pressing challenge at his or her company. People in that company "tend to shy away from speaking openly." The practice of organizational conversation alters that dynamic. Where that practice has taken hold, leaders encourage broad-based employee involvement in a wide array of communication efforts.

4. Pursue a clear agenda. One participant expressed concern about a "lack of consistency" in communication. Another mentioned a tendency among top leaders to generate "too much communication." Yet another voiced this complaint: "The strategy is only discussed at the management level and is never cascaded to all staff." To deal with such challenges — to prevent the communication process from becoming diffuse and ad hoc — effective leaders take steps to ensure that their conversation with employees unfolds according to a clear strategic plan. They also seek to align that conversation with organizational objectives.

"Two Lists You Should Look at Every Morning"

I was late for my meeting with the CEO of a technology company and I was emailing him from my iPhone as I walked onto the elevator in his company's office building. I stayed focused on the screen as I rode to the sixth floor. I was still typing with my thumbs when the elevator doors opened and I walked out without looking up. Then I heard a voice behind me, "Wrong floor." I looked back at the man who was holding the door open for me to get back in; it was the CEO, a big smile on his face. He had been in the elevator with me the whole time. "Busted," he said.

The world is moving fast and it's only getting faster. So much technology. So much information. So much to understand, to think about, to react to. A friend of mine recently took a new job as the head of learning and development at a mid-sized investment bank. When she came to work her first day on the job she turned on her computer, logged in with the password they had given her, and found 385 messages already waiting for her.

So we try to speed up to match the pace of the action around us. We stay up until 3 am trying to answer all our emails. We twitter, we facebook, and we link-in. We scan news websites wanting to make sure we stay up to date on the latest updates. And we salivate each time we hear the beep or vibration of a new text message.

But that's a mistake. The speed with which information hurtles towards us is unavoidable (and it's getting worse). But trying to catch it all is counterproductive. The faster the waves come, the more deliberately we need to navigate. Otherwise we'll get tossed around like so many particles of sand, scattered to oblivion. Never before has it been so important to be grounded and intentional and to know what's important.

Never before has it been so important to say "No." No, I'm not going to read that article. No, I'm not going to read that email. No, I'm not going to take that phone call. No, I'm not going to sit through that meeting.

It's hard to do because maybe, just maybe, that next piece of information will be the key to our success. But our success actually hinges on the opposite: on our willingness to risk missing some information. Because trying to focus on it all is a risk in itself. We'll exhaust ourselves. We'll get confused, nervous, and irritable. And we'll miss the CEO standing next to us in the elevator.

A study of car accidents by the Virginia Tech Transportation Institute put cameras in cars to see what happens right before an accident. They found that in 80% of crashes the driver was distracted during the three seconds preceding the incident. In other words, they lost focus — dialed their cell phones, changed the station on the radio, took a bite of a sandwich, maybe checked a text — and didn't notice that something changed in the world around them. Then they crashed.

The world is changing fast and if we don't stay focused on the road ahead, resisting the distractions that, while tempting, are, well, distracting, then we increase the chances of a crash.

Now is a good time to pause, prioritize, and focus. Make two lists:

List 1: Your Focus List (the road ahead)

What are you trying to achieve? What makes you happy? What's important to you? Design your time around those things. Because time is your one limited resource and no matter how hard you try you can't work 25/8.

List 2: Your Ignore List (the distractions)

To succeed in using your time wisely, you have to ask the equally important but often avoided complementary questions: what are you willing not to achieve? What doesn't make you happy? What's not important to you? What gets in the way?

Some people already have the first list. Very few have the second. But given how easily we get distracted and how many distractions we have these days, the second is more important than ever. The leaders who will continue to thrive in the future know the answers to these questions and each time there's a demand on their attention they ask whether it will further their focus or dilute it.

Which means you shouldn't create these lists once and then put them in a drawer. These two lists are your map for each day. Review them each morning, along with your calendar, and ask: what's the plan for today? Where will I spend my time? How will it further my focus? How might I get distracted? Then find the courage to follow through, make choices, and maybe disappoint a few people.

After the CEO busted me in the elevator, he told me about the meeting he had just come from. It was a gathering of all the finalists, of which he was one, for the title of Entrepreneur of the Year. This was an important meeting for him — as it was for everyone who aspired to the title (the judges were all in attendance) — and before he entered he had made two explicit decisions: 1. To focus on the meeting itself and 2. Not to check his BlackBerry.

What amazed him was that he was the only one not glued to a mobile device. Were all the other CEOs not interested in the title? Were their businesses so dependent on them that they couldn't be away for one hour? Is either of those a smart thing to communicate to the judges?

There was only one thing that was most important in that hour and there was only one CEO whose behavior reflected that importance, who knew where to focus and what to ignore. Whether or not he eventually wins the title, he's already winning the game.

"Take Back Your Life in Seven Simple Steps"

1. Start to focus on what you're doing with your attention. You can't change what you don't notice. For three designated hours during the next 24, keep careful track of how frequently you feel compelled to check one or another of your digital devices, and to move between activities.

Begin by getting a notebook or a pad. Each time you feel an impulse to go online — or to shift your attention to something else when you're already online — make a check in your notebook. If you decide to follow your impulse, circle the check you've made.

At the end of three hours, you'll have a clear picture of how intense the pull is on your attention. The number of checks will tell you how frequently you feel distracted, and the number of circles will tell you how often you succumb to your impulse. Just by paying attention, you'll give in less often than you ordinarily do.

2. Take a few minutes every day — either just before you leave work, or just before you go tosleep — to define and write down the two or three most important things you want to accomplish tomorrow, and when you intend to work on them. 

3. Do the most important activity first in the morning, for a designated period of time no longer than 90 minutes, with every digital device you own turned to silent. If you can do this, you'll accomplish more in that time than most people do in an entire day (including you, when you're constantly moving between activities.)

4. Eliminate as much "insecurity work" from your life as possible. My friend Scott Belsky came up with this brilliant phrase to describe the aimless things we do over and over to reassure ourselves we matter — Googling your own name; checking your number of Twitter followers or your Kloutranking; peeking at your website's analytics; and looking up your Amazon ranking if you've written a book.

5. Keep a running list of everything that's on your mind — in order to get it off your mind.Our working memories have very limited capacity, so the more things you're thinking about, the fewer of them you're likely to remember.

I download everything from "to do's," to ideas I'm having, to people I need to email or call, to issues that are bothering me. Writing all this down, as it arises, literally clears space in our working memories for whatever most deserves our attention.

6. Each time you go online to do anything, ask yourself "Is this best use of my time?"Sometimes, of course, it will be. Often, however, it's something you do automatically, or as a way to avoid more difficult work. If you realize it isn't the best use of your time, ask yourself "What is?" — and do that.

7. Systematically, train your attention. A simple way is to read more books, preferably good ones. Deeply focused, uninterrupted reading is a very good way to train and sustain your brain's capacity for absorbed attention.

A second alternative is to practice a breath-counting meditation — in to a count of three, out to a count of six — for two to five minutes several times a day. It's not just a way to teach the brain to focus on one thing at a time, but also a very effective strategy for relaxing physically and emotionally. In as little as one minute of focused breathing, it's possible to completely clear the bloodstream of the stress hormone cortisol.

"Customer Service: How to Handle Pushy Customers"

There's a better way to handle the situation. Here's what to do.

1. Set expectations.

Too often, pushy customers keep pushing because the lines are not clear enough. You can be service-oriented while at the same time being very specific about what you can and cannot do.  Set the expectation up front.

2. Reset expectations at each interaction.

When a pushy customer asks for something unreasonable, outside of an agreement or even impossible, it is your responsibility to re-assert the original expectations. The old adage applies: If you give someone an inch, they'll take a mile. Obviously, even a 4-year-old can figure out how to take advantage.

3. Aim for parity when going outside of the original understanding.

There are times that you will need to make concessions to appease or serve a pushy customer. However, if all you do is what they ask when they have pushed back, you will have trained them to push harder.

Instead, ask for a concession from them as a part of the interaction–maybe a rush charge, or a limit to the number of unpaid revisions, or a volume purchase thresholds for free shipping. They will learn that simple bullying does not change the agreement.

4. Don't threaten.

Threatening a client takes you down a dangerous road. Instead of working through a point  of friction you have now elevated this to a power struggle, causing long-term damage to the relationship.

Customers believe that they have power because they have the money, so they will begin to either threaten back or plot to replace your services–eventually if not sooner. You want to avoid that. So rather than raising threats, seek instead to offer trade-offs and options.

5. Keep records.

This is about clarity and accuracy, as well as protecting yourself. In the future, when the event is less clear in your memory, you want to be able to return all interested parties to the agreements, expectations and tradeoffs.

Pushy customers can be managed, but if you do not set the standard with a firm and fair hand, you might as well just hand them the plate of cookies–and a stool for easier access later.

"How Managers Become Leaders"

Harald (not his real name) is a high-potential leader with 15 years of experience at a leading European chemical company. He started as an assistant product manager in the plastics unit and was quickly transferred to Hong Kong to help set up the unit’s new Asian business center. As sales there soared, he soon won a promotion to sales manager. Three years later he returned to Europe as the marketing and sales director for Europe, the Middle East, and Africa, overseeing a group of 80 professionals. Continuing his string of successes, he was promoted to vice president of marketing and sales for the polyethylene division, responsible for several lines of products, related services, and a staff of nearly 200.

All of Harald’s hard work culminated in his appointment as the head of the company’s plastic resins unit, a business with more than 3,000 employees worldwide. Quite intentionally, the company had assigned him to run a small but thriving business with a strong team. The idea was to give him the opportunity to move beyond managing sales and marketing, get his arms around an entire business, learn what it meant to head up a unit with the help of his more-experienced team, and take his leadership skills to the next level in a situation free from complicating problems or crises. The setup seemed perfect, but a few months into the new position, Harald was struggling mightily.

Like Harald, many rising stars trip when they shift from leading a function to leading an enterprise and for the first time taking responsibility for a P&L and oversight of executives across corporate functions. It truly is different at the top. To find out how, I took an in-depth look at this critical turning point, conducting an extensive series of interviews with more than 40 executives, including managers who had developed high-potential talent, senior HR professionals, and individuals who had recently made the move to enterprise leadership for the first time.

What I found is that to make the transition successfully, executives must navigate a tricky set of changes in their leadership focus and skills, which I call the seven seismic shifts. They must learn to move from specialist to generalist, analyst to integrator, tactician to strategist, bricklayer to architect, problem solver to agenda setter, warrior to diplomat, and supporting cast member to lead role. Like so many of his peers, Harald had trouble negotiating most of these shifts. To see what makes them so difficult, let’s follow him through each of them, as he confronts unnerving surprises, makes unwarranted assumptions, encounters entirely new demands on his time and imagination, makes decisions in ignorance, and learns from his mistakes.

The Seven Seismic Shifts

Specialist to Generalist

Harald’s immediate challenge was shifting from leading a single function to overseeing the full set of business functions. In his first couple of months, this shift left him feeling disoriented and less confident in his ability to make good judgments. And so he fell into a classic trap—overmanaging the function he knew well and undermanaging the others. Fortunately for Harald, this became crystal clear when his vice president of HR gave him some blunt feedback about his relationship with his sales and marketing VP: “You are driving Claire crazy. You need to give her some space.”

Harald’s tendency to stay in his functional comfort zone is an understandable reaction to the stresses of moving up to a much broader role. It would be wonderful if newly appointed enterprise leaders were world-class experts in all business functions, but of course they never are. In some instances they have gained experience by rotating through various functions or working on cross-functional projects, which certainly helps. (See the sidebar “How to Develop Strong Enterprise Leaders.”) But the reality is that the move to enterprise leadership always requires executives who’ve been specialists to quickly turn into generalists who know enough about all the functions to run their businesses.

How to Develop Strong Enterprise Leaders

What is “enough”? Enterprise leaders must be able to (1) make decisions that are good for the business as a whole and (2) evaluate the talent on their teams. To do both they need to recognize that business functions are distinct managerial subcultures, each with its own mental models and language. Effective leaders understand the different ways that professionals in finance, marketing, operations, HR, and R&D approach business problems, and the various tools (discounted cash flow, customer segmentation, process flow, succession planning, stage gates, and the like) that each discipline applies. Leaders must be able to speak the language of all the functions and translate for them when necessary. And critically, leaders must know the right questions to ask and the right metrics for evaluating and recruiting people to manage areas in which they themselves are not experts.

The good news for Harald was that, in addition to assigning him to a high-performing unit, his company had strong systems in place for evaluating and developing talent in key functions. These included well-crafted systems for performance reviews and 360-degree feedback, and for collecting input from corporate functions. His heads of finance and HR, for instance, while reporting directly to him, also had dotted-line reporting relationships with their respective corporate departments, which assisted Harald with their evaluation and development. So he had plenty of resources to help him understand what “excellence” meant for each functionHarald (not his real name) is a high-potential leader with 15 years of experience at a leading European chemical company. He started as an assistant product manager in the plastics unit and was quickly transferred to Hong Kong to help set up the unit’s new Asian business center. As sales there soared, he soon won a promotion to sales manager. Three years later he returned to Europe as the marketing and sales director for Europe, the Middle East, and Africa, overseeing a group of 80 professionals. Continuing his string of successes, he was promoted to vice president of marketing and sales for the polyethylene division, responsible for several lines of products, related services, and a staff of nearly 200.

All of Harald’s hard work culminated in his appointment as the head of the company’s plastic resins unit, a business with more than 3,000 employees worldwide. Quite intentionally, the company had assigned him to run a small but thriving business with a strong team. The idea was to give him the opportunity to move beyond managing sales and marketing, get his arms around an entire business, learn what it meant to head up a unit with the help of his more-experienced team, and take his leadership skills to the next level in a situation free from complicating problems or crises. The setup seemed perfect, but a few months into the new position, Harald was struggling mightily.

Like Harald, many rising stars trip when they shift from leading a function to leading an enterprise and for the first time taking responsibility for a P&L and oversight of executives across corporate functions. It truly is different at the top. To find out how, I took an in-depth look at this critical turning point, conducting an extensive series of interviews with more than 40 executives, including managers who had developed high-potential talent, senior HR professionals, and individuals who had recently made the move to enterprise leadership for the first time.

What I found is that to make the transition successfully, executives must navigate a tricky set of changes in their leadership focus and skills, which I call the seven seismic shifts. They must learn to move from specialist to generalist, analyst to integrator, tactician to strategist, bricklayer to architect, problem solver to agenda setter, warrior to diplomat, and supporting cast member to lead role. Like so many of his peers, Harald had trouble negotiating most of these shifts. To see what makes them so difficult, let’s follow him through each of them, as he confronts unnerving surprises, makes unwarranted assumptions, encounters entirely new demands on his time and imagination, makes decisions in ignorance, and learns from his mistakes.

The Seven Seismic Shifts

Specialist to Generalist

Harald’s immediate challenge was shifting from leading a single function to overseeing the full set of business functions. In his first couple of months, this shift left him feeling disoriented and less confident in his ability to make good judgments. And so he fell into a classic trap—overmanaging the function he knew well and undermanaging the others. Fortunately for Harald, this became crystal clear when his vice president of HR gave him some blunt feedback about his relationship with his sales and marketing VP: “You are driving Claire crazy. You need to give her some space.”

Harald’s tendency to stay in his functional comfort zone is an understandable reaction to the stresses of moving up to a much broader role. It would be wonderful if newly appointed enterprise leaders were world-class experts in all business functions, but of course they never are. In some instances they have gained experience by rotating through various functions or working on cross-functional projects, which certainly helps. (See the sidebar “How to Develop Strong Enterprise Leaders.”) But the reality is that the move to enterprise leadership always requires executives who’ve been specialists to quickly turn into generalists who know enough about all the functions to run their businesses.

How to Develop Strong Enterprise Leaders

What is “enough”? Enterprise leaders must be able to (1) make decisions that are good for the business as a whole and (2) evaluate the talent on their teams. To do both they need to recognize that business functions are distinct managerial subcultures, each with its own mental models and language. Effective leaders understand the different ways that professionals in finance, marketing, operations, HR, and R&D approach business problems, and the various tools (discounted cash flow, customer segmentation, process flow, succession planning, stage gates, and the like) that each discipline applies. Leaders must be able to speak the language of all the functions and translate for them when necessary. And critically, leaders must know the right questions to ask and the right metrics for evaluating and recruiting people to manage areas in which they themselves are not experts.

The good news for Harald was that, in addition to assigning him to a high-performing unit, his company had strong systems in place for evaluating and developing talent in key functions. These included well-crafted systems for performance reviews and 360-degree feedback, and for collecting input from corporate functions. His heads of finance and HR, for instance, while reporting directly to him, also had dotted-line reporting relationships with their respective corporate departments, which assisted Harald with their evaluation and development. So he had plenty of resources to help him understand what “excellence” meant for each functionHarald (not his real name) is a high-potential leader with 15 years of experience at a leading European chemical company. He started as an assistant product manager in the plastics unit and was quickly transferred to Hong Kong to help set up the unit’s new Asian business center. As sales there soared, he soon won a promotion to sales manager. Three years later he returned to Europe as the marketing and sales director for Europe, the Middle East, and Africa, overseeing a group of 80 professionals. Continuing his string of successes, he was promoted to vice president of marketing and sales for the polyethylene division, responsible for several lines of products, related services, and a staff of nearly 200.

All of Harald’s hard work culminated in his appointment as the head of the company’s plastic resins unit, a business with more than 3,000 employees worldwide. Quite intentionally, the company had assigned him to run a small but thriving business with a strong team. The idea was to give him the opportunity to move beyond managing sales and marketing, get his arms around an entire business, learn what it meant to head up a unit with the help of his more-experienced team, and take his leadership skills to the next level in a situation free from complicating problems or crises. The setup seemed perfect, but a few months into the new position, Harald was struggling mightily.

Like Harald, many rising stars trip when they shift from leading a function to leading an enterprise and for the first time taking responsibility for a P&L and oversight of executives across corporate functions. It truly is different at the top. To find out how, I took an in-depth look at this critical turning point, conducting an extensive series of interviews with more than 40 executives, including managers who had developed high-potential talent, senior HR professionals, and individuals who had recently made the move to enterprise leadership for the first time.

What I found is that to make the transition successfully, executives must navigate a tricky set of changes in their leadership focus and skills, which I call the seven seismic shifts. They must learn to move from specialist to generalist, analyst to integrator, tactician to strategist, bricklayer to architect, problem solver to agenda setter, warrior to diplomat, and supporting cast member to lead role. Like so many of his peers, Harald had trouble negotiating most of these shifts. To see what makes them so difficult, let’s follow him through each of them, as he confronts unnerving surprises, makes unwarranted assumptions, encounters entirely new demands on his time and imagination, makes decisions in ignorance, and learns from his mistakes.

The Seven Seismic Shifts

Specialist to Generalist

Harald’s immediate challenge was shifting from leading a single function to overseeing the full set of business functions. In his first couple of months, this shift left him feeling disoriented and less confident in his ability to make good judgments. And so he fell into a classic trap—overmanaging the function he knew well and undermanaging the others. Fortunately for Harald, this became crystal clear when his vice president of HR gave him some blunt feedback about his relationship with his sales and marketing VP: “You are driving Claire crazy. You need to give her some space.”

Harald’s tendency to stay in his functional comfort zone is an understandable reaction to the stresses of moving up to a much broader role. It would be wonderful if newly appointed enterprise leaders were world-class experts in all business functions, but of course they never are. In some instances they have gained experience by rotating through various functions or working on cross-functional projects, which certainly helps. (See the sidebar “How to Develop Strong Enterprise Leaders.”) But the reality is that the move to enterprise leadership always requires executives who’ve been specialists to quickly turn into generalists who know enough about all the functions to run their businesses.

How to Develop Strong Enterprise Leaders

What is “enough”? Enterprise leaders must be able to (1) make decisions that are good for the business as a whole and (2) evaluate the talent on their teams. To do both they need to recognize that business functions are distinct managerial subcultures, each with its own mental models and language. Effective leaders understand the different ways that professionals in finance, marketing, operations, HR, and R&D approach business problems, and the various tools (discounted cash flow, customer segmentation, process flow, succession planning, stage gates, and the like) that each discipline applies. Leaders must be able to speak the language of all the functions and translate for them when necessary. And critically, leaders must know the right questions to ask and the right metrics for evaluating and recruiting people to manage areas in which they themselves are not experts.

The good news for Harald was that, in addition to assigning him to a high-performing unit, his company had strong systems in place for evaluating and developing talent in key functions. These included well-crafted systems for performance reviews and 360-degree feedback, and for collecting input from corporate functions. His heads of finance and HR, for instance, while reporting directly to him, also had dotted-line reporting relationships with their respective corporate departments, which assisted Harald with their evaluation and development. So he had plenty of resources to help him understand what “excellence” meant for each function

"How Tim Cook is changing Apple"

FORTUNE -- In February of this year, a group of investors visited Apple as part of a "bus tour" led by a research analyst for Citibank. The session started with a 45-minute presentation by Peter Oppenheimer, Apple's chief financial officer, and the 15 or so investors who attended the session were treated to Apple's unique brand of hospitality: They met in a threadbare conference room in Apple's Town Hall public conference center at the 4 Infinite Loop building in Cupertino, Calif., where the refreshments consisted of "three stale cookies and two Diet Cokes," in the words of one participant.

All that, save the meager refreshments, is routine for big public companies in Silicon Valley, which use the check-ins as opportunities to communicate with large owners of their stock. What shocked the Apple (AAPL) investors that day was that CEO Tim Cook popped into the room about 20 minutes into Oppenheimer's talk, quietly sat down in the back of the room, and did something unusual for a CEO of Apple: He listened. He didn't check his e-mail once. He didn't interrupt.

After the CFO finished, Cook, at that point chief executive of Apple for all of five months, stood to offer his remarks. He strode confidently to the front of the room and held court in the no-nonsense style that has become his trademark. "He was in complete control and knew exactly who he was and where he wanted to go," says one of the investors. "He answered every question head-on and didn't skirt any issue." Cook even offered some color that went beyond expanding on Apple's already disclosed performance data. Asked his opinion of Facebook (FB), Cook called the neighboring upstart "the one company that is closest to being like Apple," adding that he had huge respect for Facebook, with which Apple could work more closely. (More recently Cook doled out guarded praise for another competitor/partner, saying on a financial results conference call that Amazon (AMZN) is "a different kind of competitor" that has "different strengths" from Apple and that "will sell a lot" of Kindles, the gadget that is increasingly competitive to Apple's iPad.)

Here's what's most remarkable about Cook's appearance that day last winter: Steve Jobs wouldn't have bothered. The legendary company co-founder, who stepped down as Apple's CEO last Aug. 24, six weeks before his death, rarely deigned to meet with investors. That was one of Tim Cook's tasks as chief operating officer. It's a subtle but significant change -- investors now have the CEO's ear for the first time in years -- and it's one of many Cook has instituted at Apple as he approaches his one-year mark at the helm. Taken together -- his rapport with Wall Street as well as government officials, his decision to grant a dividend to shareholders, the creation of a program to match employee gifts to charity -- Tim Cook's stewardship of Apple is beginning to come into focus.

A 14-year veteran of the company, Cook is maintaining, by words and actions, most of Apple's unique corporate culture. But shifts of behavior and tone are absolutely apparent; some of them affect the core of Apple's critical product-development process. In general, Apple has become slightly more open and considerably more corporate. In some cases Cook is taking action that Apple sorely needed and employees badly wanted. It's almost as if he is working his way through a to-do list of long-overdue repairs the previous occupant (Jobs) refused to address for no reason other than obstinacy.

What's clear is that Cook is behaving like his own man, putting his stamp on Apple -- including some moves that will court controversy with the Apple faithful, watchful as they are for the slightest deviation from their perception of the Steve Jobs playbook. Cook consistently pays homage to the legacy of Jobs, but he doesn't apologize for charting a new course. He seems, at the end of the day, to be honoring one of Jobs' dying requests: that Apple's management not ask "What would Steve do?" and instead do what's best for Apple.

Tim Cook at a March event introducing the new iPad in San Francisco

Considering the widespread handwringing over how rudderless Apple would be without Jobs, it is remarkable how steadily the company has sailed along without him. Wall Street in particular has good reasons -- billions of them, actually -- to love the Cook regime. "The numbers speak for themselves," says Katy Huberty, Morgan Stanley's Apple analyst. The company's market value, for example, is up some $140 billion since Cook took over. At a market cap of about $500 billion, Apple is more valuable than Exxon Mobil (XOM) by $100 billion -- despite Apple's shares being down 15% from their peak. In the three quarters since Cook become CEO, Apple has reported $31 billion in profits and shipped 89 million iPhones and 38 million iPads, all exceeding Wall Street's expectations and continuing, by and large, to delight an adoring customer base. "By any quantitative measure, so far his performance is phenomenal," says Bill Shope, a Goldman Sachs research analyst.

Cook can't take all the credit for those results. He took over a company with the momentum of a rocket ship in midflight. What's more, Cook hasn't yet unveiled a significantly new product, the key measure of sustained innovation that observers are intensely watching for. The only major product introductions so far: The iPhone 4S, which features the Siri voice-activated assistant, and an iPad with better screen resolution, both iterations of previous devices.

Yet behind the scenes there are indications of where Cook is leading Apple. Typically these changes play to the new CEO's background and strengths. Cook is the master of operational efficiency, having joined Apple in 1998 to revamp its badly broken system of factories, warehouses, and suppliers. Notably, he strengthened Apple's cooperation with its contract manufacturers in China.

So it was a personal blow to Cook when the New York Times ran a prominent article in January critical of the working conditions in China at Foxconn, the Taiwanese contract manufacturer that assembles most of Apple's products. Though the criticism wasn't new, the exposé painted a bleak portrait of the lives of workers in the factories. Cook's response marked a distinct change in tone from Jobs, who had been dismissive of the severity of the problem. The new CEO not only visited Foxconn personally, he also allowed himself to be photographed doing so. Apple also joined the Fair Labor Association, an industry-financed third-party monitoring group that has the ability to visit factories and report its findings independently. (Apple says its membership in the group had been in the works for a year.)

Nevertheless, Cook's Apple appears to be doubling down on its manufacturing in China. Late last year Apple disclosed for the first time the dollar value of its assets there: $2.6 billion. Given that Apple had just six retail stores in China at the time, the number spoke to the value of the material and equipment Apple has bought on behalf of its suppliers. Apple risks its own capital -- with $110 billion in cash at last count, it has plenty to risk -- as a way of financing massive upgrades in its manufacturing capabilities in Asia, even though its partners will operate the equipment.

More: Steve Jobs: The greatest entrepreneur of our time

Apple generally is mum on what the investments are for, but with disclosed projected capital expenditures of $7 billion in 2012, Apple is gearing up for big growth, analysts assume. "That's got to be for volume," says David Eiswert, a portfolio manager at T. Rowe Price, which owns 24 million shares of Apple. He notes that Apple suppliers like Pegatron and Jabil (JBL)have been buying sophisticated machine tools and that Japanese drill-bit manufacturers say they are moving into consumer electronics. Eiswert says he assumes it is all on Apple's behalf. "The Apple supply chain is doing things no one else can," given its abundance of cash and manufacturing know-how, Eiswert notes. The moves, he and other observers say, have Cook's fingerprints all over them.

Such operational efficiencies have been an underappreciated factor in Apple's success for the past decade; all the attention has been on its beautiful designs and snazzy marketing overseen by Jobs. If anything, Apple under Tim Cook will embrace efficiency to an even greater degree, especially as the company grows bigger and more complex -- to the dismay of those who think techies should rule the roost. "It looks like it has become a more conservative execution engine rather than a pushing-the-envelope engineering engine," says Max Paley, a former engineering vice president who worked at Apple for 14 years until late 2011. "I've been told that any meeting of significance is now always populated by project management and global-supply management," he says. "When I was there, engineering decided what we wanted, and it was the job of product management and supply management to go get it. It shows a shift in priority."

Indeed, allowing anyone to interfere with the creative-genius engineers is anathema to the Steve Jobs ethos at Apple. Sniffs one engineer: "This leads to more sharing of resources, which leads inevitably to fighting, which leads to weaselly excuses." They are normal corporate concerns, in other words, and very un-Apple-like.

It is treacherous to attempt to read too much into potentially isolated changes at Apple in the short time that Steve Jobs has been gone. Yet the scrutiny on the world's most watched company is enormous. As an example, in another much discussed critique, the New York Times used Apple's multinational tax-mitigation policy as a case study of the lengths to which U.S.-based corporations will go to lighten their tax burdens.

No action goes unnoticed when it comes to Apple, no matter how small. A former Apple employee recounts, for instance, a recent lunch with a current Apple engineer. At the end of the meal the ex-Apple worker, now at a Silicon Valley startup, assumed his buddy immediately needed to get back to work. "He said, 'Eh, I have time for coffee if you like.' " The outsider's conclusion: "I think people are breathing now." It's not necessarily a compliment.

Elsewhere there are signs of Apple becoming a more normal company. When Adrian Perica, a former Goldman Sachs (GS) banker, joined Apple several years ago, he was the only executive whose sole remit was dealmaking. Steve Jobs basically ran M&A for Apple. Today Perica heads a department with three corporate-development professionals under him and a staff supporting them, so that Apple can work on three deals simultaneously. Indeed, the vibe, in the words of a former employee, is of an Apple that is becoming "far more traditional," meaning more MBAs, more process, and more structure. (In point of fact, 2,153 Apple employees reference the term "MBA" in their LinkedIn profiles out of a nonretail workforce of nearly 28,000. More than half the employees who reference "MBA" have been at Apple less than two years.)

The ultimate "tell" of tectonic changes at Apple will be the quality of its products. Those looking for deficiencies have found them in Siri, a less-than-perfect product that Apple released with the rare beta label in late 2011, a signal that the service shouldn't be viewed as fully baked. Siri's response time has been slow, meaning the servers and software powering it are inadequate. "People are embarrassed by Siri," says one former insider. "Steve would have lost his mind over Siri."

Obviously, no one can say for sure how Steve Jobs would have reacted to anything that's going on at Apple, and Cook seems increasingly comfortable leading the company where he thinks it should be going. Jobs was opposed to dividends and stock buybacks, for example. Yet Cook repeatedly prepared investors for a coming dividend by stating publicly that he had no "religious" opinion about them. Apple announced on March 19 that it would begin paying a quarterly dividend of $2.65 a share and buy back $10 billion worth of stock.

In many ways, though, Cook's unspoken message is that life goes on and that Apple is still Apple. In mid-April the company took over the Carmel Valley Ranch hotel complex for its first ultra-secretive "Top 100" meeting since Jobs died. The hush-hush conclave is a rare opportunity for top managers -- not necessarily chosen by rank, but rather by the CEO's assessment of who are the most valuable contributors at any given time -- to learn what products and services are on tap for the next year and a half or so. Following tradition, Cook required his executives to travel the 80 miles from Cupertino to the resort on chartered buses so that their comings and goings could be controlled. He also asked several executives to make presentations to the group -- just as Jobs had done.

A difference, according to multiple secondhand reports of the retreat, is that the spirit of the meeting was upbeat and even fun. Cook was said to be in a jovial, joke-cracking mood -- a stark contrast to the grim and fearful tone Jobs engendered at the meetings. Participants left the Top 100 energized about Apple's near-term outlook, presumably having seen Apple's next iPhone and perhaps its long-awaited television product too. One veteran executive was "blown away" by what he had seen, says someone this executive spoke to afterward. Reports another person with access to top-level Apple executives: "People came away totally comfortable with where the company is headed."

Cook also has assumed Jobs' role of outward-facing schmoozer. An influential tech company CEO who met recently with Cook found him to be "down to earth, noncorporate, detail-oriented, and disarming," the latter being a frequent refrain about Cook. "He's casual, grounded, and easy to talk to," says this executive. "I forgot he's the CEO of Apple. And that was not my experience with Jobs." Other signs of a CEO-level glasnost abound. Cook has indicated a willingness to resolve patent litigation with Samsung, an important Apple supplier as well as a competitor. He even made the rounds in Washington, D.C., in mid-May, telling congressional leaders that he intended to be personally accessible to them.

As operations chief, Cook flew so far under the radar that he was practically invisible outside the company. Apple, after all, was a company dominated by one personality, whose persona was tightly wound up with Apple's public and private image. As CEO, Cook has begun to sprinkle his narrative into his comments. In a February appearance at an investor conference hosted by Goldman Sachs, for example, he mentioned that he had worked at a paper mill in Alabama and an aluminum plant in Virginia -- new facts in Cook's story.

Tim Cook, in yellow, visits a Foxconn facility in Henan Province, China, where iPhones are produced.

The personal tidbits serve to humanize Cook, who is intensely private, with few hobbies other than fitness and spectator sports. He vacations at the Canyon Ranch resort in Arizona, where guests who have seen him there say he keeps to himself, often dining alone, reading on his iPad. He said during the appearance at the Goldman Sachs conference that he couldn't live without his Apple TV -- raising the question of what he's watching, given that a year earlier Cook told a shareholder at Apple's annual meeting that if it wasn't on CNBC or ESPN, he hadn't seen it. (Historical trivia of note: The shareholder had asked Cook whether he had seen Mike Daisey's now notorious one-man act The Agony and Ecstasy of Steve Jobs when it was playing in Berkeley. He had not.) Cook also has been showing his dry wit of late, telling investors before the dividend announcement that Apple wouldn't "go have a toga party or do something outlandish" with its cash.

For all his new demonstrations of extroversion as CEO, Cook has kept the news media at arm's length. He has granted few interviews, and Apple declined to make him available for this article. Indeed, Apple seems intent on doling out its new CEO in carefully scripted morsels. Writing in Time's list of the 100 most influential people of 2012, Apple board member Al Gore praised Cook for leading Apple to new heights "while implementing major policy changes smoothly and brilliantly." When queried by Fortune, neither Apple nor Gore would explain precisely what policy changes the former vice president of the United States was referring to.

Even as he tweaks the Apple operating manual, Cook goes to great pains to pledge allegiance to the corporate culture Steve Jobs created. Asked at the Goldman investor forum how his leadership might change Apple and what of its culture he intended to maintain, Cook ignored the first part of the question and focused only on the latter. "Steve grilled in all of us over many years that the company should revolve around great products and that we should stay extremely focused on few things rather than try to do so many that we did nothing well." He called Apple a "magical place" where employees could do "their life's best work."

For their part, most Apple employees seem more than satisfied with Cook. He often sits down randomly with employees in the cafeteria at lunchtime, whereas Jobs typically dined with design chief Jonathan Ive. It is a small difference that speaks volumes about how employees can expect to interact with their CEO. At Apple, Jobs was simultaneously revered, loved, and feared. Cook clearly is a demanding boss, but he's not scary. He's well-respected, but not worshiped. As Apple enters a complex new phase of its corporate history, perhaps it doesn't need a god as CEO but a mere mortal who understands how to get the job done.

"Indian Rupee Recovers From Record Low"

The Indian rupee rose against the U.S. dollar Thursday, passing a key psychological level, but not before it stumbled to touch an all-time low for a seventh consecutive session.

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Indranil Mukherjee/Agence France-Presse/Getty Images

An employee counts rupee notes at a bank in Mumbai, May 16.

The dollar was at 55.65 rupees late Thursday in Asia, compared with 56.00 rupees late Wednesday. It scaled a new peak of 56.37 rupees earlier in the day.

The rupee weakened in early trade as investors region-wide shunned risky assets after European leaders struggled to overcome differences on ways to resolve the euro zone's crisis. The euro hit its lowest in 22 months against the dollar.

But suspected dollar selling by the Reserve Bank of India and buoyant stocks managed to put a floor under the rupee.

Investors moved swiftly to sell out of the greenback after RBI Governor Duvvuri Subbarao said the central bank hasn't ruled out selling dollars directly to oil importers to ease pressure on the rupee.

Such a move could isolate a key source of dollar demand from the market and boost the rupee, analysts say, while expressing concern over the central bank's frequent interventions in the foreign-exchange market.

"Foreign exchange intervention is increasingly becoming counter-productive as it only breeds questions about adequacy of reserves," Indranil Sen Gupta, an economist at Bank of America Merrill Lynch, said in a note.

"Besides, we do not expect the RBI to waste too much precious foreign exchange to fight cross-currency pressures from the U.S. dollar," he said.

The rupee may recover to 50 or 52 to a dollar when the euro climbs to 1.30 or 1.35, he said. The euro was quoting at 1.2582 to the dollar at 1255 GMT.

In the government debt market, bonds gained as state-run fuel retailers increased gasoline prices by 11.5% from Thursday. The benchmark 8.79% 2021 bond ended at 101.87 rupees, up from 101.79 rupees Wednesday.

Economists said the gasoline price move is a step in the right direction, but not enough and the government must raise prices of diesel, kerosene and cooking gas for a meaningful fiscal impact.

"Since gasoline prices are technically decontrolled, the hike will not impact the fiscal subsidy bill," Nomura economist Sonal Varma said.

The government doesn't provide any subsidy on gasoline as oil companies are free to decide the fuel's prices. The government, however, compensates the companies for selling diesel, kerosene and cooking gas at state-set prices that are usually below cost.

Increasing prices of other fuels will make the oil import bill more elastic as consumers ration demand, Ms. Varma said.

"How Managers Become Leaders"

Artwork: Adam Ekberg, Country Road, 2005, ink-jet print

Harald (not his real name) is a high-potential leader with 15 years of experience at a leading European chemical company. He started as an assistant product manager in the plastics unit and was quickly transferred to Hong Kong to help set up the unit’s new Asian business center. As sales there soared, he soon won a promotion to sales manager. Three years later he returned to Europe as the marketing and sales director for Europe, the Middle East, and Africa, overseeing a group of 80 professionals. Continuing his string of successes, he was promoted to vice president of marketing and sales for the polyethylene division, responsible for several lines of products, related services, and a staff of nearly 200.

All of Harald’s hard work culminated in his appointment as the head of the company’s plastic resins unit, a business with more than 3,000 employees worldwide. Quite intentionally, the company had assigned him to run a small but thriving business with a strong team. The idea was to give him the opportunity to move beyond managing sales and marketing, get his arms around an entire business, learn what it meant to head up a unit with the help of his more-experienced team, and take his leadership skills to the next level in a situation free from complicating problems or crises. The setup seemed perfect, but a few months into the new position, Harald was struggling mightily.

Like Harald, many rising stars trip when they shift from leading a function to leading an enterprise and for the first time taking responsibility for a P&L and oversight of executives across corporate functions. It truly is different at the top. To find out how, I took an in-depth look at this critical turning point, conducting an extensive series of interviews with more than 40 executives, including managers who had developed high-potential talent, senior HR professionals, and individuals who had recently made the move to enterprise leadership for the first time.

What I found is that to make the transition successfully, executives must navigate a tricky set of changes in their leadership focus and skills, which I call the seven seismic shifts. They must learn to move from specialist to generalist, analyst to integrator, tactician to strategist, bricklayer to architect, problem solver to agenda setter, warrior to diplomat, and supporting cast member to lead role. Like so many of his peers, Harald had trouble negotiating most of these shifts. To see what makes them so difficult, let’s follow him through each of them, as he confronts unnerving surprises, makes unwarranted assumptions, encounters entirely new demands on his time and imagination, makes decisions in ignorance, and learns from his mistakes.

The Seven Seismic Shifts

Specialist to Generalist

Harald’s immediate challenge was shifting from leading a single function to overseeing the full set of business functions. In his first couple of months, this shift left him feeling disoriented and less confident in his ability to make good judgments. And so he fell into a classic trap—overmanaging the function he knew well and undermanaging the others. Fortunately for Harald, this became crystal clear when his vice president of HR gave him some blunt feedback about his relationship with his sales and marketing VP: “You are driving Claire crazy. You need to give her some space.”

Harald’s tendency to stay in his functional comfort zone is an understandable reaction to the stresses of moving up to a much broader role. It would be wonderful if newly appointed enterprise leaders were world-class experts in all business functions, but of course they never are. In some instances they have gained experience by rotating through various functions or working on cross-functional projects, which certainly helps. (See the sidebar “How to Develop Strong Enterprise Leaders.”) But the reality is that the move to enterprise leadership always requires executives who’ve been specialists to quickly turn into generalists who know enough about all the functions to run their businesses.

How to Develop Strong Enterprise Leaders

What is “enough”? Enterprise leaders must be able to (1) make decisions that are good for the business as a whole and (2) evaluate the talent on their teams. To do both they need to recognize that business functions are distinct managerial subcultures, each with its own mental models and language. Effective leaders understand the different ways that professionals in finance, marketing, operations, HR, and R&D approach business problems, and the various tools (discounted cash flow, customer segmentation, process flow, succession planning, stage gates, and the like) that each discipline applies. Leaders must be able to speak the language of all the functions and translate for them when necessary. And critically, leaders must know the right questions to ask and the right metrics for evaluating and recruiting people to manage areas in which they themselves are not experts.

The good news for Harald was that, in addition to assigning him to a high-performing unit, his company had strong systems in place for evaluating and developing talent in key functions. These included well-crafted systems for performance reviews and 360-degree feedback, and for collecting input from corporate functions. His heads of finance and HR, for instance, while reporting directly to him, also had dotted-line reporting relationships with their respective corporate departments, which assisted Harald with their evaluation and development. So he had plenty of resources to help him understand what “excellence” meant for each function