The Leadership Challenge Instructors Guide

APPENDIX

Appendix, , p. 1
The Leadership Challenge Instructors Guide

RECALLING A PERSONAL BEST LEADERSHIP EXPERIENCE

We have learned from leadership research that experience is the best teacher.
People learn what to do from trying it themselves and/or watching others. We
believe it is important to base our understanding of leadership on the best
experiences, those times when we or others do our absolute personal best.

Take a few moments to write down some notes about your personal best
leadership experience. Dont worrythere is no competition about whose
experience is best or whether there is some all-time best. You will be sharing
your experiences with others in a small group, exploring the behaviors and
actions that make a difference. Heres how to proceed:

1. Briey describe the context of this situation/experience:

2. List the ve to seven most important actions or behaviors you took as a

leader in this situation. In other words, what things did you do as a leader that
made a difference in this situation (use the other side of this page as needed):

3. What words would you use to describe this experience:

4. If you were to contribute a quote on leadership to a book, what would it be:

1987 2006. James M. Kouzes and Barry Z. Posner. Reprinted from The Leadership Challenge, and
used with permission for instructional purposes.

Appendix, , p. 2
The Leadership Challenge Instructors Guide

SUGGESTIONS FOR WORKING WITH INTERNATIONAL STUDENTS

Professor Joe Harder (Darden) turns the Personal Best activity into a
group exercise when working with international students, which, he
says, helps in collectivistic cultures and/or where English is a
problem. I also follow up the general instructions with pointed
questions about the ve leadership practices.

Professor Harder asks students to relate their personal best

leadership experiences in 2-3 person groups. Each small group then
selects one of the members personal bests (using any criterion they
want) to present to a larger group made up of three other small
groups. Finally, each larger group selects one members personal
best to share with the entire class at the next class session. To help
students follow the presentation, one of the group members
prepares a written description in English.

Appendix, , p. 3
The Leadership Challenge Instructors Guide

CHARACTERISTICS OF ADMIRED LEADERS

We look for many special qualities in our leaders. Our research indicates that the attributes listed
below account for most of these qualities. From this list of 20 attributes, please select the six or
seven you most look for in a leader in someone whose direction you would willingly follow.
Just place a check () by 6-7 items; theres no need to rank or rate them.

____Ambitious (aspiring, hard-working, striving)

____ Broad-minded (open-minded, flexible, receptive, tolerant)

____ Caring (appreciative, compassionate, concerned, loving, nurturing)
____ Competent (capable, proficient, effective, gets the job done, professional)
____ Cooperative (collaborative, team player, responsive)
____ Courageous (bold, daring, fearless, gutsy)
____ Dependable (reliable, conscientious, responsible)
____ Determined (dedicated, resolute, persistent, purposeful)
____ Fair-minded (just, unprejudiced, objective, forgiving, willing to pardon others)
____ Forward-looking (visionary, foresighted, concerned about the future, sense of direction)
____ Honest (truthful, has integrity, trustworthy, has character, is trusting)
____ Imaginative (creative, innovative, curious)
____ Independent (self-reliant, self-sufficient, self-confident)
____ Inspiring (uplifting, enthusiastic, energetic, optimistic, positive about future)
____ Intelligent (bright, smart, thoughtful, intellectual, reflective, logical)
____ Loyal (faithful, dutiful, unswerving in allegiance, devoted)
____ Mature (experienced, wise, has depth)
____ Self-controlled (restrained, self-disciplined)
____ Straightforward (direct, candid, forthright)
____ Supportive (helpful, offers assistance, comforting

Copyright1984-2003. James M. Kouzes and Barry Z. Posner. All rights reserved

Appendix, , p. 4
The Leadership Challenge Instructors Guide

LEADERS TELL US . . . A GAME

You can use this game to reinforce concepts from The Leadership Challenge.

Heres a fun, informative game, largely based on other popular games such as Win, Lose
or Draw and Pictionary, that helps reinforce key concepts, ideas, and insights from The
Leadership Challenge.

In preparation, you need to develop a game deck of cards something like 3x5 index
cards, each containing a phrase, title, concept, or key idea--a leadership saying, lesson, or
phrase.

For example:

Leaders liberate the leader within.

You cant do it alone.
Keep hope alive.
If you dont believe in the messenger, you wont believe the message.
Grow big ears.
Trust is a risk game.
Leaders go rst.
You cant light a re with a wet match.
Friends can be good medicine.
There is no freeway to the future.
Leaders turn their followers into leaders.
Nothing enters the mind through an open mouth.
Leaders are great learners.

Leaders Tell Us . . . can be played for anywhere between 30 and 90 minutes, depending
upon the size of the class. Teams can be paired against one another, allowing for multiple
team dyads to play the game within the same time period. For the adventurous, a round-
robin tournament can be played, with teams competing against one another.

Once students have played the game with some supervision (so they have a good
understanding of the rules) they can play it outside of the classroom and then report their
scores at the next class session.

Appendix, , p. 5
The Leadership Challenge Instructors Guide

LEADERS TELL US . . . A GAME, Page 2

Object of the Game

Have fun, celebrate with others, practice encouragement and learn more about leadership
lessons.

Equipment Needed

Die, 3-minute timer, pencil, game deck of cards, marking pens, scoring sheet, large sheets
of paper, masking tape, and/or easel pad.

Preparing to Play

1. Divide class into two teams of equal number. If there are more than 20 people playing,
form three teams; if there are 31-40 people, form four teams.

2. Each team selects a Lead Drawer for the first round; the other members of that team
become the Guessers for that round.

3. The teams roll the die and the team with the highest number plays first. As one team
draws and guesses a saying or phrase, the opposing team watches. Play alternates
between teams.

4. Before a team draws a new saying or phrase, the members select a new Lead Drawer
so that the role is rotated among all the members of the team.

Playing the Game

1. Give the timer, marking pen(s), and deck of game cards to the Lead Drawer.

2. The Lead Drawer secretly looks at the top card in the game deck, then turns over the
timer. The opposing team is responsible for letting everyone know when the time has run
out.

3. The Lead Drawer tries to communicate the word or phrase on the card by sketching it
while his or her teammates guess at what is being drawn. Players shout their guesses and
can guess as many times as they want.

4. The game is over when all the cards have been drawn or when a predetermined
amount of time has elapsed.

Appendix, , p. 6
The Leadership Challenge Instructors Guide

LEADERS TELL US . . . A GAME, Page 3

Rules

The Lead Drawer

Cannot use letters, words or numbers. Symbols such as dollar signs ($), arrows ( ),
plus signs (+), and so on are acceptable.

If part of a saying or phrase is guessed correctly, should write that word next to the
sketch.

Cannot speak while drawing but may gesture to indicate whether a guess is close or
off-track.

May draw an ear (or pull on his or her ear) to mean sounds like, and then draw a
sketch that indicates rhyming word.

May draw a series of dashes ( ) to indicate how many words are in the saying
or phrase, and vertical lines between dashes to indicate the number of syllables in the
word (for example, || for lead-er-ship).

Scoring

The Lead Drawers team gets one point for guessing the word or phrase correctly
before the time runs out.

If the Lead Drawers team does not guess correctly before the time runs out, the
second team gets ten seconds to make one guess to win the point. (If there are more
than two teams, this opportunity continues in turn until all the remaining teams have
made one guess.) A team that guesses correctly gets one point.

The team that gets the most points wins.

Appendix, , p. 7
The Leadership Challenge Instructors Guide

ENVISION THE IDEAL AND UNIQUE FUTURE

This activity is appropriate for older students who are returning to school after having
been in the workforce.

1. Ponder your past. Think back over your life to recall important turning points
significant events that made a difference in the trajectory of your life. Make a few
notes about each moment so that you can later describe it to someone else. Write
down the year in which the event occurred. List at least ten events.

2. Discover the theme or themes. Review the turning points you identified, then answer
the questions below.

Is there a pattern that gets repeated? What is it?

What common threads are woven through the tapestry of your life?

What 2 or 3 themes are being played out in these moments?

What are the ideals that attract you?

What are the dreams that inspire you?

What is unique about your pattern and the manner in which you have followed
this path?

What does all this tell you about what you care most about?

What are the higher-order values that give meaning and purpose to your life and
work?

What do you want to accomplish? Why is it important to you? How will

accomplishing your goals contribute to the long-term well-being of your
organization or to society?

3. Project the future. Imagine that five (or ten) years from now, you are being
interviewed for an article about your accomplishments and contributions. The
interviewer asks the following questions. What answers would you give?
Whats unique about your contributions?

How has your work made a difference? How has it changed the way things are
in your [organization, field, profession]? In your community?

What do you foresee for yourself during the next five (or ten) years?

ENVISION THE IDEAL AND UNIQUE FUTURE, Page 2

Appendix, , p. 8
The Leadership Challenge Instructors Guide

4. Reflect on some specific ways that you can bring your personal themes and the
exciting possibilities that you foresee into your conversations with others. What can
you do to include your themes and exciting possibilities in your one-on-one
discussions? In your team meetings? In your speeches?

Appendix, , p. 9
The Leadership Challenge Instructors Guide

INNOVATION QUIZ

This quick quiz is a good introduction to the topic of Outsight.

In the left-hand column is a list of 12 products or processes. In the right-hand column is a

list of 17 possible sources of inspiration for these products or processes. Your task is to
correctly match the product on the left to its inspiration source on the right. Please wait
for your instructor to start the quiz so that everyone begins at the same time.

Product Source of Inspiration or Need

1. Band-Aid a. College game using pie tins

b. Childrens toy tops

2. FedEx
c. Farm implements

3. Frisbee d. Science fiction movies with flying saucers

e. A better bookmark for church hymnal

4. Hacky Sack
f. Medication for treating heart problems

5. Gyroscope g. Burrs stuck to a pair of pants

h. A way to exercise after knee surgery

6. Liquid paper
i. Naval engineer working with tension springs

7. Martial arts weapons j. Australian childrens exercise ring

k. Fish hook caught in a net

8. Masking tape
l. Observing auto painters painting two-tone cars

9. Post-It-Notes m. How artists painted over their mistakes

n. A spouse who cut her fingers in the kitchen

10. The Slinky
o. Medication for treating arthritis

11. Velcro p. Math class in topology

q. Glue spilled on a note pad

12. Viagra

Appendix, , p. 10
The Leadership Challenge Instructors Guide

THE INNOVATION QUIZ ANSWER KEY

Product Source of Inspiration or Need

1. Band-Aid - n a. College game using pie tins

b. Childrens toy tops

2. FedEx - p
c. Farm implements

3. Frisbee - a d. Science fiction movies with flying saucers

e. A better bookmark for church hymnal

4. Hacky Sack - h
f. Medication for treating heart problems

5. Gyroscope - b g. Burrs stuck to a pair of pants

h. A way to exercise after knee surgery

6. Liquid paper - m
i. Naval engineer working with tension springs

7. Martial arts weapons - c j. Australian childrens exercise ring

k. Fish hook caught in a net

8. Masking tape - l
l. Observing auto painters painting two-tone cars

9. Post-It-Notes - e m. How artists painted over their mistakes

n. A spouse who cut her fingers in the kitchen

10. The Slinky - i
o. Medication for treating arthritis

11. Velcro - g p. Math class in topology

q. Glue spilled on a note pad

12. Viagra - f

Source: About.com (Inventions)

Appendix, , p. 11
The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS

Read this case study, then identify the small wins.

Mint Condition

Take a lesson in change from people who make change for a living. Philip Diehl and his
colleagues at the U.S. Mint have transformed a clumsy bureaucracy into a fast-moving
enterprise with great customer service and a cutting-edge presence on the Web.

Philip N. Diehl makes change -- literally. As director of the United States Mint, he and
his colleagues produce roughly 20 billion circulating coins per year -- those nickels,
dimes, and quarters that jingle in your pockets and feed parking meters. They also
manufacture and sell collectibles, commemoratives, and bullion coins. With annual
revenues of $2.5 billion, 2,200 employees, and four manufacturing plants, the Mint
makes money by making money.

More important, Philip Diehl knows how to make change -- deep-seated, far-reaching,
this-feels-like-a-different-place kind of change. When he took charge of the Mint in
September 1994, the agency lived up to every negative stereotype of a government
bureaucracy. It was inefficient, slow moving, and utterly clueless about the standards of
performance in the business world. One telling example: The Mint's primary
responsibility is to keep an adequate supply of coins in circulation on behalf of its main
customer, the Federal Reserve System. But six years ago, no one at the Mint could tell
you how many coins were in its inventory.

Not that many Mint officials thought it was a big problem. Diehl remembers his first visit
to the agency's headquarters, shortly after he was appointed by President Clinton. "I got
to the building a little after 5 PM, and the hallways were empty. There wasn't a person in
sight. I actually called my wife and told her that there must have been a bomb scare; but
there wasn't. It was just business as usual at this sleepy, 201-year-old government agency
that had lost its passion."

Today, the Mint is exploding every stereotype of a government agency -- and is setting a
standard for performance and improvement that would be the envy of most private
companies. Are you trying to improve customer relations? According to the influential
American Customer Satisfaction Index, the Mint now ranks second only to Mercedes-
Benz North America in customer satisfaction. Are you trying to create new lines of
business from your existing people and assets? The Mint is turning its police force -- the
folks who, among other responsibilities, guard Fort Knox -- into a revenue-generating
unit that sells its services to other federal agencies and to foreign governments. It has also
launched a new product line -- the heralded 50 State Quarters Program -- that is attracting
a new generation of young collectors. What's more, the Mint has gone ".com" in a big
way -- using the Web to generate customer feedback on coin designs and taking the
"eBay approach" to sell collectibles online.
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The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 2

"We've fundamentally changed people's expectations of our performance," Diehl declares

with obvious satisfaction. "We've changed the expectations of our stakeholders on Capitol
Hill. We've changed the expectations of our employees in terms of how they're treated.
And we've changed our customers' expectations of our performance. In the old days, we
shipped fewer than 50% of our orders within eight weeks. Today, if it takes two weeks for
customers to receive an order, they complain. When you change expectations, it's very
hard for an organization to relax and slip back into old patterns of behavior."

Diehl, 48, whose nearly six-year tenure is drawing to a close, believes that the Mint's
transformation is comparable to some of the better-known change programs in a private
sector. It's hard to argue with his assessment. "I was sitting in my staff meeting yesterday
afternoon," he says. "I was listening to my director of marketing describe the huge
demand for our products and all the things we're doing on the Web. We've had three
straight weeks of million-dollar sales on the Web, and I fully expect that we'll soon have
our first million-dollar day. I told the folks who were around that table, 'If this were a
company, a bunch of you would be IPO millionaires -- just based on what we've done
over the past six months.' And that's the remarkable thing about what's happened. People
have achieved this huge turnaround without any of the traditional incentives that
companies use. Folks here get modest bonuses and free jackets. They're not doing it for
the money."

Change Customer Expectations

Philip Diehl cuts an imposing figure. He's tall, with a full head of jet-black hair, a
confident voice, and a slight Texas twang. He arrived at the Mint with an impressive
background: former chief of staff of the Senate Finance Committee and Lloyd Bentsen's
first chief of staff during Bentsen's tenure as secretary of the treasury. In other words,
Diehl could have spent his early days as director of the Mint making bold declarations,
big promises, perhaps even dire threats. But as a change agent who is in it for the long
term, he chose another path.

"I've always been in a hurry," he says. "It's sort of my personal style. But I didn't rush the
changes at the Mint. I started small, with a few initiatives here and there. Then as the
envelope was pushed or as roadblocks appeared, problems were tackled as they cropped
up and progress continued. Big changes have been made over the past six years, but
they've been made incrementally. You do big things by doing lots of small things."

Back in 1994, Diehl and his change-minded Mint colleagues could have taken their first
small steps in just about any direction. Costs needed to be cut. Manufacturing plants
needed to be streamlined. But Diehl's first critical decision was to focus on changes that
got to the heart of the Mint's relationship with its customers. "One of the greatest lessons
I've learned," he says, "is that if you identify a problem that customers really care about,
and then commit yourself publicly to fixing it -- taking that risk is absolutely crucial to
changing an organization. And if you fix the problem, you build an incredible sense of
confidence that the organization can tackle the next problem."
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The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 2

The customer-service problems that needed to be fixed were plentiful, especially on the
collectibles side. Sure, the Mint manufactures dimes and quarters and guards the gold in
Fort Knox. But it also runs a huge mail-order business -- a government version of L.L.
Bean or Lands' End -- with distributors in 45 foreign countries, that sells coins to more
than 1.1 million collectors. Last year, that business alone generated revenue of more than
$1 billion.

But the collectibles and commemoratives operation was big despite the Mint, not because
of it. Its customer-service center in Lanham, Maryland was something out of Charles
Dickens rather than Tom Peters. The center sat on the second floor of a converted
warehouse. Customer-service reps were packed into a dismal space where the heat didn't
work in the winter and the air-conditioning failed in the summer. "It was god-awful," says
Diehl. To make matters worse, the center was housed in the same building as a U.S.
Postal Service regional package-handling facility. Anytime postal workers stumbled on a
strange-looking package, they'd issue a bomb scare, and the entire building would be
evacuated. As a result, it wasn't all that unusual for an incoming call to be answered not
by a U.S. Mint customer-service rep (no matter how frostbitten or heat exhausted) but by
an answering machine.

This dysfunctional environment produced depressing results. The Mint was fulfilling
only half of its mail orders within eight weeks. The rest, jokes Kevin Cullinane, 48,
assistant director for customer care, would take anywhere from eight weeks to infinity.
"That type of performance would bankrupt a private company," says Cullinane. But as a
government agency, the Mint simply ignored the reality of its performance. "There was
no sense of urgency about the problem," says Diehl, "or even a sense that there was a
problem."

The situation got worse still. One reason that the Mint didn't feel a sense of urgency about
its frayed relationships with customers was that it was basically forbidden from
interacting with them. Prior to the Clinton Administration, the Office of Management and
Budget (OMB) actively discouraged agencies from spending money on focus groups and
surveys -- the most rudimentary tools used by private companies to gauge their
performance. "OMB never saw the benefit of having an agency talk to its customers,"
Diehl says half-seriously. "In fact, it suspected that if you were talking with them, you
were conspiring with them -- to get Congress to do something that OMB didn't want
done."

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The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 3

That paranoid mind-set created a bureaucratic maze in which every customer-survey

instrument that the Mint wanted to use had to be approved by OMB -- a review process
that took, on average, six months. So Diehl hit on a simple idea: If the Mint couldn't
survey its customers officially, Diehl himself would do so unofficially. A few weeks after
joining the Mint, he embarked on his own personal fact-finding mission. He went to coin
conventions, talked with the hobby press, found situations in which he could interact with
collectors. He shunned the ceremonial role that the director of the Mint usually played at
these functions (collectors would line up to ask for Diehl's autograph), and did what any
smart politician (and change agent) would do: He worked the room.

Diehl asked questions, listened, and learned. He quickly identified the two most widely
shared complaints about how the Mint did business. One, it took too long to get coins into
its customers' hands. Two, because the Mint required payment up front, it was holding
onto its customers' money for an unreasonably long time.

So Diehl and his colleagues got to work. A task force was formed to work on the two
issues. Three months later, the group had made some progress. But Diehl knew that it
would take more heat to get the fires going: "We had to put our reputation on the line."
He went public with his customer-service agenda. To a very active hobby press, the
general media, and a nervous Mint staff, Diehl promised that from then on, the Mint
would process 95% of its orders within six weeks. That was far from Diehl's ultimate
goal -- but it was a big improvement over existing performance.

His gambit worked. The sense of urgency increased, and a sense of accountability to
external customers kept the pressure up. "Our task force figured out how to meet the
six-week goal," Diehl says. "Then it set a standard for processing 95% of all orders
within four weeks. Over the past five years, we've tightened the standard several more
times. Today, we are delivering 95% of our products within two weeks, and we're
delivering some products within one."

Those tangible achievements touched off a wave of customer-service improvements at

the Mint. Incoming calls to the new customer-service center, located only four miles
(but a world away) from the old facility in Lanham, get answered, on average, in 17.5
seconds rather than in 2 minutes. Letters about problems or complaints get handled
within 3 days, rather than the 42 days it took 3 years ago. Returns or credits get issued
in 3 days versus 31.

Appendix, , p. 15
The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 4

"Five years ago," says Cullinane, "most people at the Mint, and especially the people in
customer service, believed that their job was to protect the assets of the U.S.
government. Before we send you your coins, we're going to make sure that your check
clears, that your credit is good. We really believed that customers were trying to defraud
the government or take advantage of us. Today, we have gone to the other extreme: The
customer is right. The customer is king. We want our service to rank with the best in
business."

It does. A few years into Diehl's tenure, the Mint (along with several other agencies) got
permission to be part of the American Customer Satisfaction Index, an annual poll
conducted by the National Quality Research Center at the University of Michigan
Business School. Talk about a turnaround. The Mint received the best scores of any
agency included in the study. But based on its scores, the Mint would have ranked
second in service among the 200 private-sector companies in the poll -- just behind
Mercedes-Benz North America and tied with H.J. Heinz.

KevinCullinanefeelsthechangespersonally."Theinterestinourproductsisjust
phenomenal,"hesays."Afewyearsago,ifIwenttoapartyandsaidIworkedatthe
Mint,someonemightsay,'Howaboutthosedollarbills?'when,ofcourse,wemake
coins.Today,whenItellsomeoneI'mfromtheMint,youcanseetheexcitement:
'What'shappeningwiththenewquarters?IlovedtheoneforNewJersey!'"

Change How You Think about Change

The first wave of change at the Mint was impressive -- but inadequate. It was certainly
better to answer a customer call in 17 seconds than in 2 minutes. And it was better to
deliver orders in two weeks than in eight weeks. But the challenges at the Mint ran
deeper than what such technocratic fixes could solve. There were fundamental problems
with strategy, marketing, even how the agency defined the business it was in. Put simply,
the Mint had an identity crisis. Was it, essentially, a passive manufacturing organization
that responded to the demands of Congress and the Federal Reserve? Or was it a market-
driven organization that could launch product innovations, introduce new promotional
campaigns, and change the game in a business that it has been in for 200 years? "The
Mint needed a new story to move it into the future," says Diehl. "So the story of the Mint
was retold, starting with its founding by Thomas Jefferson and Alexander Hamilton. The
story reminded people that the Mint was on the leading edge of the industrial revolution
and was one of the first manufacturing companies in the United States. Telling that story
helped to create a new spirit among the staff. It got us further out of our bunker
mentality."

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The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 5

As the leadership of the Mint thought more deeply about the agency's identity and future,
one of its first insights was that its product offerings were flawed -- especially when it
came to collectibles and commemoratives. For one thing, it was selling too many of
them. Five or six times a year, Congress would come up with an idea for a
commemorative coin to raise money for a pet cause. But these programs, based more on
political calculations than on market demand, were highly unpopular with collectors. It
got so bad that in 1995, the coin-collecting community actually threatened to boycott the
Atlanta Centennial Olympic commemorative -- which would be competing with five
other commemoratives in circulation.

"Scarcity drives collectibles," says Diehl. "But we were becoming the coin-of-the-
month club." So he and his crew marched to Capitol Hill to convince Congress to limit
its commemorative coin fix to two per year. "We had finally committed to representing
the interests of our collectors," says Diehl. "And we demonstrated that we were
prepared to defend those interests."

Reducing an oversupply of bad coins simply inspired the next challenge: creating a more
robust market for good coins. The fact was, congressional meddling aside, most of the
Mint's coins weren't very compelling. The themes weren't interesting. The designs, which
almost never changed, weren't engaging. But that hadn't always been the case. Back in
the 19th century, coin designs were ambitious, and they did change frequently -- which is
why collecting had become so popular. But in the 20th century, once the Mint began
putting dead presidents on coins, it became virtually impossible to take them off. Asks
Diehl: "Who's going to propose removing George Washington from the quarter?" Still,
Diehl and his crew understood that unless they changed how the Mint made its change,
their ability to make lasting change at the Mint would be limited.
Enter marketing director David Pickens. Pickens, 53, loves coins. He's been a coin
collector, off and on, since he was eight years old. It was this early love of coins that gave
Pickens a sense of what the Mint's future might hold. "I realized that the Mint could use
its heritage and legacy to make change," says Pickens, whose official title is associate
director for numismatics. "There aren't many organizations that can manufacture to the
Mint's quality levels. Have you heard the term 'mint condition'? Well, this is the Mint! Yet
it has suffered from a lack of strategic imagination and from the stealth marketing that
was done.

"The Mint produces a legacy product that people will be collecting through the next
several millennia," Pickens continues. "There's a mystique to this type of permanence. A
coin has the year on it. It has 'In God We Trust' on it. It's sculpture, art, history. It is a
representation of our culture and civilization. Most of our customers buy our coins and
never intend to sell them. They pass them on to their children or their children's children."

Appendix, , p. 17
The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 6

The more that Diehl and Pickens thought about the Mint's long-term strategy, the more
they rethought the nature of the business itself. They realized that the Mint wasn't just in
the business of selling collectibles. It was also in the business of creating and fostering
exchanges -- exchanges between fathers and sons, between brothers and sisters, between
perfect strangers. "Coin collectors have always known that coins have two functions in
society," explains Diehl. "Primarily, coins facilitate commerce. But more important,
coinage has always been used to tell the story of our nation to its own people, and to
itself. Only by understanding how our customers viewed coinage could we rediscover a
crucial method of using coins to tell our own story."

Adds Pickens, "We had forgotten the magic in our product. People were bored with
coins. We had failed to see what it was that made coining and coin collecting
exciting."

Thus began one of the most successful consumer-product launches of the 1990s. The
Mint's 50 State Quarters Program, unveiled in December 1998, is a long-term initiative
designed to rejuvenate public interest in coins. The program honors each state with its
own special quarter. It involves the public (through the governor's office of each state)
in the design process. Every 10 weeks for 10 years, a new state quarter gets put into
circulation, released in the order in which each state joined the Union -- first Delaware,
then Pennsylvania, New Jersey, Georgia, and so on.

Like most of the changes at the Mint, the initial push for the State Quarters Program
came from collectors. For years, they'd urged the Mint to reintroduce circulating
commemorative pocket change. But Diehl had been skeptical. His early years at the Mint
were tough ones. Even as he was making big changes in Washington, the Mint's
manufacturing operations were struggling to make enough coins. Diehl had neither the
funding flexibility nor the personal desire to stimulate additional demand. Over time,
though, as he sensed the enthusiasm coming from collectors, he realized that the idea was
too good a business opportunity to pass up.

Of course, even a well-designed product needs a well-defined marketing strategy -- a

competency that the Mint had never developed. How would it tell the public -- and
especially kids, most of whom were more interested in Pokmon cards than in coins
-- about this revolutionary new product? Answer: Kermit the Frog. "We were looking
for the right person to introduce the program, and he volunteered," jokes Pickens. In
fact, the Jim Henson Co. contacted the Mint after it got wind of the program, and an
unprecedented public-private marketing alliance was formed. Kermit, the official Mint
spokesfrog, took the agency prime time -promoting the 50 State Quarters Program in
commercial spots during shows like NYPD Blue and Jeopardy, and on such cable-TV
channels as Nickelodeon, Lifetime, Discovery, and the History Channel.

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CASE STUDY: SMALL WINS, Page 7

The results have been stunning. "How many companies have introduced a product that
will sell more than 4 billion units in its first year and will be touched by every person in
this country?" asks Diehl. "When you think of it in those terms, this program is huge.
Even if you only think of it in profit terms, it's huge."

Huge, indeed. It costs the Mint about five cents to make a quarter. It sells the quarter,
through the Federal Reserve Bank, at face value. Translation: The Mint makes an 80%
margin on the sale of every quarter. The baseline demand for quarters averages 1.5 billion
a year. By the end of 1999, the Mint expects to have produced a total of 3.5 billion
quarters, 2 billion above baseline demand. That's real money. But profit isn't the primary
objective. "It would be disappointing if, at the end of this 10-year program, all we have to
show are 10 enormously profitable years," says Diehl. "Our underlying goal is to
rejuvenate coin collecting by getting the interest of a new generation of coin collectors."

Butthelongtermeffectswillinvolvemorethanmoney.The50StateQuartersProgram
hasrefocusedtheMintontheoverallcollectiblesmarket.AndtheexplosionofWeb
basedauctionsiteseBay,Auction.com,Amazon.com,andothersishelpingafast
growingactivitytogrowevenfaster.Infact,24%ofallcoinspurchasedbycollectorsare
boughtonline.DiehlandPickensquicklyrealizedthattomaintaintheagency's
momentum,theMintwouldhaveto".com"itself."Therearen'tmanycompaniesfounded
byThomasJeffersonthataresellingproductsontheInternet,"notesPickens.Thisnow
207yearoldgovernmentagencywouldhavetoembraceecommerce.

Weave a Web of Change

Michele Bartram does not collect coins. But she does wear them. A large gold coin
bordered by black onyx hangs around her neck. Two small gold coins, framed by her
auburn, shoulder-length hair, dangle from her ears. Bartram does, however, collect
piggy banks. Talking a mile a minute, she pulls her collection of antique and brand-new
banks from a bag and lines them up on her already-cluttered desk. One of the banks
even talks, announcing how much change sits in its belly.

Bartram, 35, had been acting assistant director of e-business at the U.S. Mint's Office of
Electronic Information and Products. Translation: She's part of the .com crowd -- one of
the fire-in-the-belly, let's-move-on-Internet-time change agents behind the Mint's recent
embrace of the online world. "I don't want to treat symptoms, I want to solve problems,"
Bartram declares. "And the Web forces you to address problems that have been swept
under the rug for years. That's why it can feel so threatening. My job is to eliminate fear."

Appendix, , p. 19
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CASE STUDY: SMALL WINS, Page 8

Bartram signed on with the Mint in 1995, after spending five years at IBM, and several
more as a marketing consultant based in Spain. From the moment she walked through the
agency's doors, she found herself in the thick of Diehl's change program. She created and
led a task force that introduced database marketing, an initiative that led to the
reorganization of the Mint into three separate business units. The closer she got to the
Mint's customers, the more eager she became to ask them some basic questions: Why do
you collect coins? Do you collect other things too? How did you become a collector? Do
you consider yourself a serious or a casual collector?

Bartram knew that the Web was the best way to get those answers -- and a perfect way to
work around bureaucratic obstacles such as OMB. "If I can serve more of the public
better and faster electronically, then that's my duty," says Bartram. "The Mint's situation
represented one of the best business cases I'd ever seen for using Web-based technology."
And it wasn't that hard for Bartram to make the case. As a government agency, the Mint
has a legally mandated mission not just to serve but also to educate the public -- whether
the public is defined as coin collectors, contractors, vending-machine makers, or a mother
helping her child with a school project on dimes. "If you give people the information that
they want," Bartram notes, "you also have the opportunity to say, 'Hey, if you like dimes,
you might be interested in our collectibles.' "

Last December, she got the perfect opportunity to show how the Web's reach could
create a powerful blend of education and commerce. The Mint had been in the middle of
a tricky product-development program. Congress had passed a law mandating the
creation of a new dollar coin to replace the fatally flawed Susan B. Anthony -- which
was to coins what the Edsel was to cars. (Beginning in 1979, the Mint produced 857
million Susan B. Anthony dollars. Twenty years later, it has yet to exhaust its supply.)
The Mint faced some huge -and hugely delicate -- questions. What woman from history
would replace Susan B. Anthony? How could the Mint embrace its new enthusiasm for
ambitious coin design without raising protests from an ever-cautious Congress? What
marketing strategies would help the new coin fly off the shelves, rather than gather dust
alongside the Susan B.?

The answer to all three questions: Engage the public itself in the design process.
Congress left the choice of who'd be on the coin to Treasury Secretary Robert E. Rubin,
who formed the Dollar Coin Design Advisory Committee to figure it out. Diehl acted as
the chair (but as a nonvoting member) of the committee, whose members included a
member of Congress, an architect, a sculptor, a numismatist, a university president, an
historian, a businesswoman, and an artist. In June 1998, the committee held two days of
televised public hearings and accepted suggestions on who should be on the coin. Out of
19 semifinalists -- women like Betsy Ross, Eleanor Roosevelt, and Harriet Tubman --
the panel selected Sacagawea, the 15-year-old Shoshone leader, navigator, diplomat, and
translator who played an integral role in Lewis and Clark's 1804 expedition from the
Ohio River Valley to the Pacific Ocean.

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CASE STUDY: SMALL WINS, Page 9

In August, the committee invited 23 artists to submit designs of Sacagawea for the
obverse side of the coin. After listening to the feedback of representatives from the
Native American community, numismatists, artists, educators, historians, and members of
Congress, the committee narrowed 121 designs down to 13. Then it was time to return to
the Web. On December 7, 1998 (a day that will live in infamy inside the Mint), Diehl had
Bartram and her colleagues post the 13 designs on the agency's Web site. The site
generated an astounding 11.7 million hits in one day -- followed by 130,000 email
messages over the next two weeks and thousands of letters. "We had more hits on that
one day than we'd had the whole year," says Bartram. "Putting those designs on the Web
spawned an impassioned grassroots effort. We received comments not only from
individuals but also from entire Native American tribes, from local communities, even
from the American School in Japan, which didn't want to be left out of the process. It was
incredible."

The Sacagawea phenomenon was all anyone needed to sense the power of the Web to
shape the Mint's future. Today, the agency is bursting with online initiatives that would
sound familiar in Silicon Valley: digital desktop branding, personalization engines, "My
Mint" functions, online email targeting. But the initiative about which Bartram is most
excited -- the HIP Pocket Change site -- is the one that best reflects the Mint's distinct
history and unique products.

HIP, which stands for "history in your pocket," comprises several services. It's an
educational tool for teachers. It's also a "digital sandbox" where kids can learn about
American history, math, and language arts while they play with coins. Finally, it's a first
step to bringing the Mint closer to the much-invoked (and seldom realized) goal of an
online community. "A real community is created when you invite people in, provide a
framework, give them resources, step back, and then allow them to create a site that they
want and need," says Diehl, who believes the evolution of HIP is one of the best
reflections of the Mint's future business processes -- and the culmination of the changes
that have taken place during his tenure.

For this project, Bartram wrote business plans, won grants, and forged partnerships with
a host of organizations, including the Boy and Girl Scouts of America, the Department
of Education, and the Numismatic Guaranty Corp., which led the community program.
The Learning Space, Washington State's teachers' network, sent a group of teachers to
collaborate with the Mint. Bartram knew that these teachers -who would cocreate the
site and develop lesson plans for other teachers -- would need a crash course in coins.
So she had them meet with coin specialists from the Smithsonian, talk to numismatists,
and go on a field trip to the Philadelphia Mint, where they received a behind-the-scenes
tour of coin production. "While looking at one machine, a guide was explaining that it
cranks out 700 pennies a minute. One teacher looks at me and says, 'Seven hundred a
minute, how many is that in one hour? How many in one day? In a week?' Instant math
lesson!"

Appendix, , p. 21
The Leadership Challenge Instructors Guide

CASE STUDY: SMALL WINS, Page 10

Bartram recently moved on from the Mint, to throw herself headlong into the Web by
building an Internet company for a traditional retailer. But the enthusiasm that she and
her team demonstrated is the best indicator of where Philip Diehl thinks the agency is
going.

"My vision for the future doesn't have much to do with the Mint's products, markets,
performance measures, or efficiency," he says. "It has to do with the relationship that
people here have with their work. My goal is to be part of an organization whose
members are engaged as whole people. I want them to have a sense of purpose,
excitement, and fulfillment. The ultimate performance metric might be to call people on
Sunday night and ask them how they feel about going to work the next day. Are they
really looking forward to Monday morning? If the answer is yes, then people can do just
about anything."

Anna Muoio (amuoio@fastcompany.com) is a Fast Company associate editor. Learn

more about the U.S. Mint on the Web (www.usmint.gov), or contact Philip Diehl by
email (pdiehl@usmint.treas.gov).

Copyright 2004 Gruner + Jahr USA Publishing. All rights reserved. Fast Company, 375
Lexington Avenue.,New York , NY 10017

Appendix, , p. 22
The Leadership Challenge Instructors Guide

Further Reading
GENERAL LEADERSHIP

Collins, J., Good to Great: Why Some Companies Make the Leap and Others Dont.
New York: HarperCollins, 2001.

Editor, Business Leadership: A Jossey-Bass Reader. San Francisco: Jossey-Bass, 2003.

Heifitz, R. A. and Linsky, M.. Leadership on the line: Staying Alive Through the
Dangers of Leading. Boston: Harvard Business School Press, 2002.

Peters, T., The Circle of Innovation. New York, Alfred A. Knopf Inc., 1998.

Peters, T., Re-Imagine! New York, DK Publishing, Inc., 2003.

Schein, E., Organizational Culture and Leadership, second edition. San Francisco:
Jossey-Bass, 1992.

MODEL THE WAY

Abrashoff, D. M. Its Your Ship: Management Techniques From the Best Damn Ship in
the Navy. New York: Warner Books, 2002.

Block, P., The Answer to How Is Yes: Acting On What Matters. San Francisco:
Berrett-Koehler, 2002.

Kouzes, J. M. and Posner, B. Z., Credibility: How Leaders Gain and Lose It, Why People
Demand It. San Francisco: Jossey-Bass, 1993.

Maister, D., Practice What You Preach: What Managers Must Do to Create a High
Achievement Culture. New York: Free Press, 2001

Palmer, P., Let Your Life Speak: Listening to the Voice of Vocation. San Francisco:
Jossey-Bass, 2000.

Pearce, T., Leading Out Loud: Inspiring Change Through Authentic Communications
(new and revised). San Francisco: Jossey-Bass/A Wiley Company, 2003.

INSPIRE A SHARED VISION

Bennis, W., Spreitzer, G. and Cummings, T., editors, The Future of Leadership:
Todays Top Leadership Thinkers Speak to Tomorrows Leaders. San Francisco:
Jossey-Bass, 2001.

Appendix, , p. 23
The Leadership Challenge Instructors Guide

Clarke, B. and Crossland, R., The Leaders Voice: How Your Communication Can
Inspire Action and Get Results! New York: SelectBooks, 2002.

Hamel, G., Leading the Revolution. Boston: Harvard Business School Press, 2000.

Leider, J. and Shapiro, D., Whistle While You Work: Heeding Your Lifes Calling.
San Francisco: Berrett-Koehler, 2001.

Maxwell, J. C. (2nd Ed). Developing the leader within you. New York: Nelson Books,
2002.

Sterling, B., Tomorrow Now: Envisioning the Next Fifty Years. New York:
Random House, 2003.

Wheatley, M., Turning to One Another: Simple Conversation to Restore Hope to the
Future. San Francisco: Berrett-Koehler, 2002.

CHALLENGE THE PROCESS

Blum, A., Annapurna: A Woman's Place, Twentieth Anniversary Edition. San Francisco:
Sierra Club Books, 1998.

Csikszentmihalyi, M., Finding Flow: The Psychology of Engagement with Everyday Life.
New York: BasicBooks, 1997.

Farson, R. and Keyes, R., Whoever Makes the Most Mistakes Wins: The Paradox of
Innovation. New York: The Free Press, 2002.

Foster, R. and Kaplan, S., Creative Destruction: Why Companies that Are Built to Last
Underperform the Market and How to Successfully Transform Them. New York:
Currency, 2001.

Kelley, T. with Littman J., The Art of Innovation: Lessons in Creativity from IDEO,
Americas Leading Design Firm. New York: Currency Doubleday, 2001.

Klein, G., Intuition at Work: Why Developing Your Gut Instincts Will Make You Better
at What You Do. New York: Currency Doubleday, 2003.

Semler, R. The Seven-Day Weekend: Changing the Way Work Works. New York:
Portfolio/Penguin Group, 2004.

Yamashita, K. and Spataro, S. Unstuck: A Tool for Yourself, Your Team, and Your World.
New York: Portfolio, 2004.

ENABLE OTHERS TO ACT

Appendix, , p. 24
The Leadership Challenge Instructors Guide

Blanchard, K., Carlos, J. and Randolph, A., The Three Keys to Empowerment.
San Francisco: Berrett-Koehler, 1999.

Buckingham, M. and Coffman, C., First, Break All the Rules: What the Worlds Greatest
Managers Do Differently. New York: Simon & Schuster, 1999.

Cherniss, C. and Goleman, D., Eds, The Emotionally Intelligent Workplace: How to
Select for, Measure, and Improve Emotional Intelligence in Individuals, Groups, and
Organizations. San Francisco: Jossey-Bass, 2001.

Gladwell, M., The Tipping Point: How Little Things Make a Big Difference. Boston, MA:
Little, Brown and Company, 2002.

Lencioni, P. M. The Five Dysfunctions of a Team: A Leadership Fable. San Francisco:

Jossey-Bass, 2002.

OReilly, C. and Pfeffer, J., Hidden Value: How Great Companies Achieve Extraordinary
Results with Ordinary People. Boston: Harvard Business School Press, 2000.

Stack, J. and Burlingham, B., A Stake in the Outcome: Building a Culture of Ownership
for the Long-Term Success of Your Business. New York: Currency Doubleday, 2002.

ENCOURAGE THE HEART

Blanchard, K. and Bowles, S. High five! The Magic of Working Together. New York:
William Morrow, 2000.

Blanchard, K., Lacinak, T., Tompkins, C. and Ballard, J., Whale Done! The Power of
Positive Relationships. New York: The Free Press, 2002.

Cameron, K. S., Dutton, J. E., and Quinn, R.E. (eds). Positive organizational psychology:
Foundations of a new discipline. San Francisco: Berrett-Koehler, 2003.

Deal, T. and Deal, M. K., Corporate Celebrations: Play, Purpose, and Profit at Work.
San Francisco: Berrett-Koehler, 1998.

Gostick, A. and Elton, C., Managing with Carrots: Using Recognition to Attract and
Retain the Best People. Layton, Utah: Gibbs Smith, 2001.

Kouzes, J. M., and Posner, B. Z., Encouraging the Heart: A Leaders Guide to
Rewarding and Recognizing Others. San Francisco: Jossey-Bass/A Wiley Imprint, 1999.

Ventrice, C. Make their day! Employee recognition that works. San Francisco: Berrett-
Koehler, 2003.

OTHER BOOKS ON LEADERSHIP

Appendix, , p. 25
The Leadership Challenge Instructors Guide

Bronson, P., What Should I Do With My Life? The True Story of People Who Answered
the Ultimate Question. New York: Random House, 2001.

Kotter, J. and Cohen, D., The Heart of Change: Real Life Stories of How People Change.
Boston: Harvard Business School Press, 2002.

Charan, R., Drotter, S. and Noel, J., The Leadership Pipeline: How to Build the
Leadership Powered Company. San Francisco: Jossey-Bass, 2001.

Goleman, D., Boyatzis, R. and McKee, A., Primal Leadership: Realizing the Power of
Emotional Intelligence. Boston, MA: Harvard Business School Press, 2002.

Schwartz, M., ed., Leadership Resources: A Guide to Training and Development Tools,
eighth edition. Greensboro, NC: Center for Creative Leadership, 2000.

Appendix, , p. 26