Part of a series of talks with top-level business leaders

on the subject of learning and performance.

Robert W. Lane, President and CEO
PEOPLE AND THEIR DEVELOPMENT
are key to sustainable growth at John
Deere. Just ask the CEO. For a 169-year-
old company, with 47,000 employees op-
erating on six continents, and sales and
revenue of $21.93 billion in 2005, that
puts a lot of pressure on talent develop-
ment. We talked with CEO Bob Lane
about the link between strategy, learning,
and performance.
Q.Since being elected chairman of the board and chief
executive officer in 2000, youve led a very large, estab-
lished company to be leaner and faster in execution.
Having done that, what lessons do you have to share
with other CEOs and executives about the role that tal-
entemployees with the right skillsplays in achieving
major change?
A. We have a company with a great heritage, great
products, and a market share that is second to none, but
at the time I was elected CEO, we had a good but not
great business. I saw an opportunity to raise the bar to
the next level. So the first thing I did was identify our
strategic objectives. I sensed that the great strength of
this company lay in what its employees could do. I
wanted to be able to make it possible for them to be part
of a great business as well as a great enterprise.That was
the first lesson I wanted to pass on.
The very first day I became CEO, I had an opportu-
nity to speak to our companys top 250 managers. I
had just one slide and it had a number on it: 18,000.
This was the number of John Deere salaried employ-
eesthe people we were going to start to work with.
The idea was that we could all be pulling the same
way, in the same direction.
Most big companies are like us. There are a few ge-
niuses, but most employees are like me; ordinarily tal-
ented. The real mission, I told them, was to figure out
how we would all pull together in a way we never had
before. And it was not going to be random. I told them
we would have a global performance management sys-
tem. It would be online and documented, with each in-
dividual identifying his or her own objectives in
conjunction with their immediate supervisor, and de-
velopment plans aligned to the top business objectives.
Everything would be uniformly documented and con-
sistently reviewed. The process would allow employees
to identify how they could enrich their development to
help their performance and be supported by appropri-
ate learning programs.
Q. How did you know that was the right thing to do?
A. I didnt know for sure that it was the right thing,
but during my years at Deere I had come to really re-
spect the people here. Its not that other companies
dont have good employees: They certainly do. But I
think we are very fortunate that good people self-se-
lect Deere. They know we stand for doing things the
right way. No smoke, no mirrors, no tricks. We play
right down the middle of the field. Thats how we do
Raising the Bar at
Deere& Company
Deere CEO touts high-performance teamwork among his employees.
Copyright ASTD, April 2006
business. If you dont like doing things that way, you
wont like working here. So we tend to get a certain
kind of person, and they tend to stay.
I really felt that if employees knew what needed to
be accomplished, it would be done, but we needed to
set out our vision and direction clearly for them. We
really hadnt done that in the past. There was a gap.
I like to use a U.S. football analogy to explain the
change we made. Even people overseas watch
the Super Bowl, so its a comparison that works. When
the officials mark the line for the first down, it makes
a dramatic difference in understanding the game
because you see how far you have to push to move
10 yards. I would say that when I came on board,
our people were doing a pretty good job. Seven yards
was about what we could do. And that was fine for
the time. But that wasnt good enough for the com-
petitive environment we would be facing. Now
we know we have to continually push for the full
10 yards. And knowing that has helped performance im-
prove dramatically.
Q. Do you feel the existing workforce has the skills
necessary to support Deeres strategic directions? Is that
somewhat of a moving target in a growing global com-
pany?
A.The world is constantly changing. Our products are
becoming more and more sophisticated. Most people
dont realize that tractors today are mobile information
machines guided by satellites. The technology in our
agricultural machines allows you to put the plow in or
spray the crops, in precisely the same place day-after-
day, month-after-month, even season-after-season.
And our tractors can gather information and send it
back wirelessly to a remote computer for analysis.
So weve had to shift our skills for designing, build-
ing, selling, and servicing our products. Weve gone
outside to augment our skills, but we also do a lot of
internal training.
Weve also worked to build our finance skills.
Now that we have our 10-yard gain objective, every
manager in this company knows what the financial
metrics are.
Q. The companys most recent earnings report
speaks about building a more resilient company.
What does this mean?
A. Im glad you noticed that. In spite of Deeres great
strengths, over the years weve tended to get bogged
down when markets get weak. We sell big capital goods.
Almost no one has to buy them at any particular time.
And when times were hard, we had trouble bouncing
back. But we really see ourselves as having restructured
the company in such a way that everyonenot just the
leadershipknows what to do. Good decisions are be-
ing made at all levels of the company because of peo-
ples knowledge and insight about whats going on. If
the business were to turn down, we wont be a big asset-
laden operation that sinks. Well respond much, much
faster to market changes.
We used to have a philosophy of building evenly at
the factory level, which of course meant you had to pro-
duce what you thought people would buy, and if they
werent buying, you had to finance it. To get dealers to
take the product, you had to offer a variety of deals and
terms. Now we try to build much closer to the demand.
Thats taken a lot of work, but as a result, we believe we
have become much more resilient. That hasnt been to-
tally tested yet, but were confident.
Q. When will you feel comfortable that the company
has met its resilience objectives?
A. Our annual report includes our shareholder value-
added metric, or SVA, which is the difference
between operating profits and pretax cost of capital.
If you look at our financial history, youll see that
we lost SVA for five years in a row, and in one year
we lost everything wed made in the whole decade
of the 1990s. We overproduced. Our costs were
too high. Now, even if we got to the bottom of the busi-
ness cycle in all our businesses at the same time, our
goal is to be SVA-neutral. Today, every one of the top
10 percent of our employeesthats about 5,000
employeesknows the metrics and knows exactly
what they have to do.
Our performance management process has given us
global alignment. It took about three years for
this to become systemic and for us to appreciate how
this develops employees and aligns them with business
objectives that cascade from the board of directors on
down.
When I talk to employees, I compare this to two
huge jet engines on a big plane. One engine is ex-
ceptional operating performance, which is thrusting
very well right now. But it needs to be sustained.
The other engine is disciplined SVA growth. We
must prove that we can develop the growth that
creates and sustains earnings over time. That, com-
bined with the investments that are required, will
give us resilience.
The third leg of the strategy is the high octane fuel
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34 TDApril 2006
Copyright ASTD, April 2006
for the engines. And thats the people and how they
work together. I tell employees the only thing that
cant be copied (by our competitors) is us. And how we
work together is extremely difficult to copy.
Q. Its easy to be committed to employee learning
and development when things are going OK. But when
the business turns down, how do you value employee
learning? How do you quantify it?
A. The John Deere Strategy has three parts: excep-
tional operating performance, disciplined SVA growth,
and aligned high-performance teamwork.
To go back to my airplane analogy, we are shifting
focus to the second enginegrowing the business.
Teamwork is a critical part of this, and to get everyone
linked through the performance management system,
there had to be an increase in spending even while we
were restraining expenditures elsewhere.
Instead of cutting across the board, its figuring out
what is most important to do, and what has to be elim-
inated so that employee learning can happen. I dont
make the decisions. Managers understand what needs
to be done, and they understand the investments
needed to train their own people.
Lets take the global performance management
process. We needed extensive education and communi-
cation before implementation. Mert Hornbuckle, our vice
president of human resources, had a one-time dispensa-
tion in his budget to develop the process and tie it into our
global human resources technology system. The process
would also provide supervisory and managerial training
programs and developmental feedback tools, and en-
courage employee development. However, because we
are keeping the organization lean, his 2006 budget is the
same as it was in 2000. He has to get buy-in from the se-
nior officers for the great things he wants to do. And he is
not alone.That happens in each of the enabling functions
in the company. A challenge is to not let the good be the
enemy of the great. A necessary additional expense is al-
ways authorized outside of normal budget. We approach
it in that manner, so that it does not become engrained in
the system as permanent overhead that would lead to
trouble during downturns.
Q. If one of your managers said they needed specific
skills in their people based on the strategy of the organi-
zation, they would have a much greater chance of getting
the additional money than if they werent linking to
strategy. So how are you holding your managers account-
able for linking learning to the organizational strategies?
A. An important concept for us is how we deliver re-
sults. The only word underlined in our strategy state-
ment is how. Heres what it says: Our leaders at all
levels are recognized not only for their ability to deliver
results, but also for how they deliver them. That is
whats distinctive about us. Every company that sur-
vives has to be able to deliver results. We think were
distinctive in that were known for how we deliver
them. Our employees are paid in part based on how
they are supporting our third strategy by developing
teamwork.
We always ask, Do we have what it takes to sustain
our numbers? We implemented a new compensation
system that is focused on sustaining results for the
long term instead of on short-term gain.
Q. You started your career in commercial banking,
and at Deere you held the position of chief financial offi-
cer for two years. How does someone with a financial
background such as yours measure the performance of
learning initiatives? What metrics are important to you?
A. I dont have a specific metric, but I do require
everyone to specify what theyre going to do to devel-
op. Managers identify three developmental objectives
every year. They also have to provide statistics, includ-
ing how many people are bringing new skills and new
perspectives to the workplace.
At lower levels, we do look at cost-effectiveness ra-
tios for training program delivery and utilization.
We used to apply a push approach to training.
Now theres much more of a pull effect. People are
saying, I have to deliver a sustainable business.
What do I have to do to get this done? Weve seen
a big increase in requests for more career and
leadership development and succession planning
tools, for example.
The people who run our hundred or so units
around the world will tell you theyd really like to have
more talent, better talent, more trained talent, and
people who can get the work done. More negotiating
goes on about trading people between units than any-
thing else. Everyone wants the first-round draft choic-
es. The senior officer group spends more time on
employee development than any other single topic.
Q. You served in several positions in Deeres opera-
tions in Europe, Africa, the Middle East, India, and Rus-
sia. How did your overseas assignments shape your
views of how Deere needs to change to stay a world
leader?
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36 TDApril 2006
Copyright ASTD, April 2006
A. Having had the privilege of doing business for
John Deere on every continent, I had a vision that
Deere could be preeminent in virtually every part of
the world. Nearly half our employees are outside the
United States. My travels to our factories and dealers in
India, China, Brazil, and Russia have given me a chance
to connect with global employees. I think people know
I am trying to see the world through different glasses.
Deeres career development process is global with
emphasis on the countries I mentioned. That proba-
bly would not have happened without my own global
experiences.
Our board now includes a European and someone
from Latin America and India. In the history of Deere,
a board would not have had a Peter, Paul, and Mary
because there wouldnt have been a Mary. In fact, it
would have been Tom, Dick, and Harry. By contrast,
the first three directors that joined the board since I
have been chairman are named Dipak (Jain, dean of
the Kellogg School of Management), Aulana (Peters,
former commissioner of the SEC), and Joachim (Mil-
berg, chairman of BMW).
Q. If you had to replace the top learning officer in
the organization, what attributes would you be look-
ing for?
A. I would want that individual to clearly under-
stand the business objectives we are trying to accom-
plish. The only way we can sustain growth is with the
high-octane fuel of employees who are linked to
those objectives, together with senior leaders who
support them. The candidate would have to be able to
defend a budget against other priorities and prove
how learning will continue to contribute to our suc-
cess. That person would need to understand the busi-
ness so that he or she can fight for their programs
and explain how the objectives will be met.
Number two would be empathy for how people re-
ally learn. Theres a huge hunger among most of our
employees to learn. For example, our production
workers today are much more empowered. They un-
derstand SVA and why theyre doing what theyre do-
ing. Theyve blossomed as theyve started to learn,
grow, and develop.
Id also underscore the why. Is there an under-
standing of why its important to put a great empha-
sis on learning and how learning can contribute to
the good of the whole?
Q. What would it take for you to feel maximum
success about your contribution here?
A. I often tell new employees that they are the ones
who will bring about the 200th birthday of this com-
pany. Thats 31 years from now. We want them to de-
velop the skills, aptitude, and knowledge to work in a
totally different, much more competitive world. Im
only leading this company for a very short period in
its long history. If employees are empowered and
trained and have the tools to keep taking the compa-
ny up to the next level, Deere will be viewed as a great
sustainable, global business. That would be the most
wonderful thing.
By contrast, if company performance was to
fall backward after my tenure, and the company was
not resilient, then I will have been a failure. I think
I have been able to play a catalyst role, one appro-
priate for the company at this time in its history
to help take it to the next level, and Im confident
that whoever follows me will have the skills to keep
that going. If succession planning is done well,
the company will move up to the next level. It
will be a great business. Both engines of performance
and growth will be thrusting in a sustainable way
and that high octane fuel of people will be there to
power it on.
But my tenure is not assured. Nearly every day
I look at a magazine headline I first read shortly
after I became CEO. Its dated June 26, 2000. It says
Another One Bites the Dust. Boards to CEOs:
One Strike and Youre Out. In recent years, many
CEOs have failed. Boards do not have any leeway for
letting you off the hook today. You have to perform.
And that means the people have to perform. They
have to know what to do to perform. And thats prob-
ably why more than any other single word, its perfor-
mance that matters.
So its a pretty hard-nosed approach. Its perfor-
mance, and thats the culture. The company is not a
family: Its a team. In a family, when someone isnt
pulling his or her weight, theyre not out of the fami-
ly. But in a high-performance team, everyone has to
pull their weight if they expect to stay on the team.
Everything is under the microscope. Everything is
subject to review. And that means people get devel-
oped. In that environment you cant not develop. You
cant just sit there or you will atrophy and fail.
Interestingly enough, that gets back to the whole
raison dtre of ASTD and its membersthe develop-
ment and training of people. TD
Robert Lane was interviewed by Tony Bingham, president
and CEO of ASTD, and Pat Galagan, ASTDs vice president
of content; [email protected].
TDApril 2006 37
Copyright ASTD, April 2006
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