Posts Tagged ‘Leadership’

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Creating sustainable growth

Thursday, July 28th, 2011

How can we decouple growth from negative social and environmental impacts, asks Anthony Howard. Like all big questions, this is not an easy one to answer. It can be difficult enough to find agreement on the problem we are confronting, let alone the range of solutions to that problem.

The Performance Theatre (TPT) is an annual event that brings together global leaders from business, academia, government and the social sector with world class thinkers to explore answers and encourage responses to big challenges like this. This year’s gathering was held in Beijing, in the context of the new 5 year plan recently announced by China, and against the backdrop of a nation which is confronted by, and confronting, the question of sustainable growth.

Four key themes emerged to run like a thread through the talks, workshops and conversations:

  • Foster authentic leadership
  • Innovate your business model
  • Ask better questions
  • Leverage our commonalities

Authentic leaders have done the hard inner toil to integrate their life and purpose with their work and other pursuits. They are ‘real’ in the same way we attribute authenticity to a genuine diamond, or an original masterpiece. Authentic leadership springs from within such a leader who both knows themselves and knows their people, understanding their strengths and their flaws—and appreciating that this is part of being human, not something that makes one better or worse than the other. One of their finest qualities is that they attribute greatness to their followers more so than themselves, and focus on creating an environment in which their people can flourish. This approach inverts the management pyramid, placing the CEO and management at the bottom, in service of those above. Attitudes like these create the possibility for new solutions.

“Business as usual will not get us where we want,” remarked one of the speakers, calling for a new business model based on human dignity, human rights, ethics and common values. Engaging with this observation creates the possibility for business model innovation across the supply chain, talent practices, supplier relationships and customer engagement. As Gary Hamel and others have noted, while technology has revolutionised the way we do business we still tend to run businesses, and approach people management, in the same way as our predecessors did. Business model and management innovation can create organisations which stimulate growth while using less of the world’s resources. Models that posit business at the service of society and the environment, rather than the reverse, are the starting point in this endeavour.

The only way to find better answers is to ask better questions. For example, with regard to people we can ask “who will grow and develop the most from solving this problem?” rather than the traditional “who is best suited to fix this problem?” GE asked this question when confronting a recall of millions of refrigerators with faulty compressors, and chose Jeff Immelt—who had no experience with refrigerators or recalls. Geoff Colvin of Fortune Magazine says Immelt credits this experience with helping him land the top job at GE.

Or “how can we as a business help society be better socially, economically, and environmentally?” rather than “how can we maximise profits and minimise costs?” Asking this question at Unilever created three significant ten year objectives: “To help more than one billion people take action to improve their health and well-being; to halve the environmental footprint of the making and use of our products; and, to source 100 percent of our agricultural raw materials sustainably.”

Or “how can we restructure manufacturing processes at internet speed—ie every six months or less, not every 10 years?” Haier have created the world’s largest whitegoods manufacturers by asking questions like these combined with innovative management practices.

One of the striking elements of conversations with people from other cultures is our tendency to compare—East/West, investment/consumption, rural/urban, conservative/frank, process/result, collective/individual, contribution/return, quantity/quality—with a consequent attempt to draw lessons from the comparisons. A number of commentators at TPT observed that a better approach is not to compare, but to collaborate, to find and leverage our commonalities. This perspective replaces us/them language with ‘we’ thinking, which is much more conducive to recognising a common humanity and finding common solutions

The challenges we face transcend national borders and directly impact future business success, since business cannot succeed in a community that fails. As such they require a new level of response from business leaders, particularly those who lead organisations which cross national borders. Personal authenticity, courageous innovation, deeper questioning, and enhancing common interest will optimise one’s contribution for the benefit of society, flowing through to sustainable growth and a sustainable enterprise.

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A new global ethic

Friday, March 25th, 2011

Business leaders who embrace societal issues that transcend themselves and their organization will drive change that echoes through history. No longer is it sufficient to work for purely institutional goals such as profit, market dominance and stakeholder return.

It is a great privilege to be part of a moment in history where society and the environment shift from being servants of the economy to the economy being a servant of society and of the environment. That privilege brings a challenge for leaders who have been operating in the old paradigm to not only embrace the shift but show genuine leadership through the transition.

Every institution, and its leaders, has a responsibility to the society in which it resides. At one level that responsibility is to be a good corporate citizen, and to not damage people, the community or the environment. But the deep interconnections between the purpose of the organization, the purpose of its leader, and the needs of the society they inhabit allow the corporation to have an impact on an entirely different level that fosters profound social wellbeing.

There is no shortage of societal challenges that a motivated, purpose driven leader, could positively influence – particularly those beyond the reach or capability of charities. Purpose driven leaders can touch major systemic challenges like effective infrastructure, equality of women, fair pay, trade, cultural and racial harmony, global conflict, cross border worker mobility, access to education, technology and medicine, global financial systems. The list is endless, limited only by the imagination of those who take the time to look beyond the institution and see the wider community of which they are an integral part.

“What meaningful contribution can I make to the world in which I belong?” is perhaps the most compelling question of our age. We cannot fully exist without understanding this purpose. It is more compelling and carries greater societal significance for contemporary business leaders, who have an opportunity to define their time, in the same way that great religious, political or military leaders did in the past.

The focus of great business leaders needs to be bigger than the here and now or the institution towards building a better world, not just a better business. This is done by aligning personal purpose, corporate mission, and societal challenge. Finding this alignment creates an impact point that leverages the contribution of individuals and the enterprise of which they are a part to transform wider societal systems.

Leaders operating by a new leadership ethic will define themselves in a number of important ways. In addition to mastering the art of business and creating sustainable enterprises which operate by timeless values they will exhibit a number of personal traits, including self mastery, global awareness, strength of character and societal involvement.

True leader masters themselves before assuming a role of leadership over others. They demonstrate a deep and broad awareness and understanding of the world, cultures, nations and businesses, gained from moving outside one’s comfort zone and visiting places and people that are not on the normal radar. Their actions are founded on strength of character, exhibited by a set of good habits, such as honesty, integrity and authenticity.

But the big shift is they recognise they can be a catalyst for good, and don’t wait until retirement to act. They make wise choices about where they can have the greatest impact today and align themselves with influential agencies to support them in this work. This is no longer after hours work on the periphery of business. This is core business for great leaders in great firms, which has a positive impact on both engagement and profitability.

Paul Polman, Group CEO of Unilever, is a wonderful example of such a leader. His call to “double the size of the business while using less of the world’s resources” created a compelling vision which is delivering outcomes for the traditional stakeholders of the firm, the communities of which Unilever is a part, and for future generations.

Blake Mycoskie of Tom’s Shoes, giving one pair of shoes to the poor for every pair they sell, is another example. Society needs leaders who will engage and provide leadership on questions like:

  • What kind of world do we want to both live in and leave for our children?
  • Should quality of life come before quantity of profit?
  • How much is reasonable profit?
  • How do we ensure equitable distribution of profit, and recognise and reward all workers appropriately?
  • How do we ensure people are treated as human beings with inalienable rights, rather than as economic assets to be used for productive outcomes?
  • How can we embrace systemic life-cycle thinking in the provision and costing of goods and services?

These questions don’t start with those who enjoy hierarchical positions of leadership. They start with each of us, for we are all leaders in our own right, and cannot stand idly by and allow others to agitate for change. Those who step up and engage with these issues will create an enduring legacy for themselves and their firms.

Today’s societal challenges ask for business leaders of courage and conviction to master the art of being human, and to master the art of running a successful enterprise, while becoming a servant to society by fostering a new global ethic within their sphere of influence.

This is a summary of “A new global ethic”, Journal of Management Development, Volume 29, no. 5

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What makes collaboration work?

Friday, February 25th, 2011

The reality of corporate collaboration is that almost every second alliance fails. Yet some organisations are spectacularly successful at developing alliance cultures. Dr Jochen Schweitzer explains how leadership and governance are key to successful collaboration.

Collaboration is important for many organisations because it gives them access to resources that they would otherwise not have. While executives like the idea of minimising risks through collaboration, they are also attracted to the advantages that they can gain by having access to their partners’ knowledge and experience. With the learning that comes through combining and developing capabilities with external partners, alliances now contribute significantly to developing competitive advantages and achieving strategic objectives for all involved.

Alliancing has many obvious strategic and operational advantages, but the unpleasant reality of corporate collaboration in the last 25 years has been that almost every second alliance fails to achieve the anticipated outcomes. Although the wide spectrum of alliances has been intensively researched, it is not yet clear what really makes collaboration work and what doesn’t.

In my research I’ve been focussing on the issues of alliance governance, the role of alliance leadership and how innovation capabilities develop within alliance teams. In general, success often depends on to what extent the leadership team is able to agree and implement suitable governance structures and engage with the team to foster desired behaviours and work cultures.

Governance mechanisms like organisational structures, roles and responsibilities, decision-making processes or reward systems create work culture. Too often alliances fail because partners are unable to agree on governance to match their individual and joint work cultures. What’s more, organisations often have only limited ways of capturing the knowledge that is created and developing it into competitive advantages for the organisation.

I surveyed more than 400 alliances around the world, asking particularly about how they structure and govern their alliances, and how they perceive the leadership within their alliances. The focus in that study was on finding those factors that would make alliances achieve innovation and allow them to create capabilities that enable them to compete better in their markets. I looked at characteristics like innovativeness and proactiveness of people within the alliances, their ability to work with each other, the extent to which they learned from the alliance, and the extent to which they captured and advanced knowledge.

I also looked at the governance, the actual management structure and the mechanisms that were used to organise the partnership, as well as the leadership behaviour within the alliance.

In alliances as much as in any other type of organisation, leadership behaviour occurs on a continuum: At one end of the continuum we observe transformational (charismatic and inspirational) leaders, who motivate teams often based on their strong vision and outstanding personality. At the other end of the spectrum we have transactional leaders, who base their relationship with the team on the fact that they give people a reward for a certain type of work.

One might assume that a more charismatic leader would help an alliance create more entrepreneurial or innovative abilities, while on the other hand, the transactional leader would be less likely to create innovation. But in fact both types of behaviour are very important to create innovation-type capabilities. The more the leadership team in the alliance is able to show both of these types of behaviour, the more the alliance will innovate.

Alliances fail when they do not achieve the objectives that the partnering organisations agreed upon. Sometimes organisations agree to part ways when they realise this, and other times they stick to it, even though they realise it’s not going to go anywhere. Unsurprisingly it’s difficult to find data about alliances that have failed – it’s a lot easier to find examples of organisations that do really well: Organisations like IBM, Cisco or Hewlett Packard are known for their ability to collaborate at multiple levels with multiple organisations.

The key aspect for an organisation that is looking for innovation through alliances is to gain access to resources within another organisation that it wouldn’t have otherwise. From there on it is all about aligning governance mechanisms for the partnership, work culture and leadership styles with the strategic intention for the alliance.

If a firm is after innovation, there are certain mechanisms and leadership behaviours that work towards innovation. It really is about finding the right combination. Take decision-making. The partnering organisations could agree upon leaving all decisions with the alliance team (a decentralised approach). If the alliance team is flexible and open, there is a greater chance for them to be innovative and come up with solutions. On the other hand, if you leave all decision-making with the partnering organisations and force this mechanism upon the alliance, there is less flexibility, which leads to less innovation within the alliance.

If you then combine that with the type of leadership that you implement, by choosing a predominantly transformational or transactional type of leader for the organisation or the alliance, that again would influence the extent to which innovation takes place or not.

Organisations increasingly seek alliances to achieve innovation objectives and in doing so, they need ways to do it better than they did in the past. That’s why it is important to do the research to find the mechanisms that really make them work.

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Getting the most from next generation workers (part 2)

Friday, February 18th, 2011

In part one, Kelly Bayer-Rosmarin from the Commonwealth Bank of Australia presented two strategies for getting the best from NextGen workers: treating everyone as individuals, and keeping the job interesting and fresh. Here she raises two equally important challenges: creating a fast track, and giving quality performance feedback.

Create a Fast Track

Non-NextGens remember a world where gratification could be delayed. They may remember writing physical letters that were sometimes sent via ship overseas, using telephones with cords and dials and spending hours in the public library to find books and look up facts. In that world, supermarkets were closed on Saturday afternoons as well as Sundays and public holidays, homework was hand-written, and there was no internet, no text messaging, no Twitter.

We all recognise the world has sped up, and NextGens simply do not understand the need for things to take time. Email, mobile phones, Facebook, the internet, extended shopping hours, etc. all provide for a world where the pace of life is not constrained.

Add to that a belief that ability, not tenure, is what adds value to an organisation, and you get a generation of workers who expect to be fast-tracked if they perform. The traditional notion of putting in your time and being rewarded for tenure is just not something appreciated by NextGens; in their world meritocracy is what prevails, and all ideas are equal, whether they come from the senior most or junior most person; those whose ideas and performance merits it, should be rewarded, regardless of their tenure.

So, create a fast track. Deliberately steer high-potential employees towards a greater diversity or depth of experience than others and make it clear they are being fast-tracked. Also make it clear what the expectations are and what they will need to demonstrate in each of their fast-track moves to retain that status and fast-track momentum. The combination of clarity of performance measurement, expectation setting, and orchestration of the set of experiences should help foster great talent for the organisation! And because you are clear about the criteria, it will be a fair system even though some are fast-tracked and others are not.

There are definitely jobs where experience is highly valued and where career milestones may still be appropriate after fixed timeframes (e.g. two years as an analyst before becoming an associate, two years as an associate before becoming a manager, etc). We all know that in reality, some people will soak up what they learn and be highly competent in two years, and others could work there for five years and never be ready for the next step.

So, another way to structure this is to more clearly define the competencies and experiences that should be acquired in the job before moving up. This will provide a framework for directing people’s learning and attention to the key elements of mastering their role, as well as give them interim milestones to achieve along the journey, thus helping the NextGens feel they are making progress.

Figure 1: Fixed timeframes for career progression

Click to enlarge

Figure 2: Progression based on experience / competencies

Click to enlarge

Regular Feedback

Another side effect of the modern culture of instant gratification is that NextGen employees expect immediate feedback (and lots of feedback). Gone are the days of the annual performance review. And that’s probably a good thing. Regular, constructive, clear feedback is critical for developing top talent (as any professional athlete will attest to) and so the onus is on managers to make time to notice what is working and not working and to provide feedback as they observe something, and otherwise in regular one on one meetings. Performance reviews should confirm the items that have been raised and monitor progress, not become meetings where issues are surfaced for the first time.

Most people appreciate praise, and this can certainly be done publicly. Criticism is harder and so I would advise all managers to arm up on the latest techniques (there are numerous ones) for how to provide feedback, coaching, mentoring, and constructive criticism as well as develop action plans. Having a range of techniques in this arena is simply good management, and NextGen managers will become very skilled in using these for their employees. The key is to provide the feedback in a way that the person understands it, is able to effectively respond and takes action to improve.

Conclusion

NextGen staff are highly desirable and can make a difference in your team and organisation. To help them thrive and get the most from their efforts, I have suggested four practical tips:

  • Treat each person in your team in a tailored individual way
  • Keep work fresh and interesting for your staff
  • Create clear expectations of what constitutes outstanding performance and facilitate a fast-track for those who meet those expectations
  • Provide regular high quality feedback for people so they can learn from their job and achieve their full potential

Finally, the best overarching advice is to try to enjoy managing NextGen teams. It is an experience that can challenge you, help you see new ways of working and develop your repertoire of management skills. And I believe those who master NextGen management will be poised to be terrific leaders for the future.

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Integrative Thinking

Friday, February 4th, 2011

A common characteristic among many successful leaders, according to Jennifer Riel and her colleagues at the University of Toronto’s Rotman School of Management, is the capacity to analyse two opposing concepts and quickly formulate a third and superior model. The concept was dubbed ‘Integrative Thinking’ by Roger Martin, Dean of the Rotman School.

Jennifer Riel was recently in Australia to teach an Integrative Thinking masterclass at the UTS Business School and exchange ideas with the Faculty. She sat down with Business21C to talk about the origins of the idea, and how leaders can use Integrative Thinking in their business.

Introducing Integrative Thinking.

When people are given two options and asked to decide between them they will generally take the ‘least damaged’ option. Integrative Thinking encourages the formulation of a hybrid outcome that is better than both of the initial options.

Isadore Sharp wanted to build a business hotel which had the friendly atmosphere of a small hotel, and the amenities of a larger luxury hotel. The challenge of bringing the two together led to a new model that took the best of both ideas.

Recognising the respective advantages of small motels (genuinely warm and friendly staff) and large 1000-plus room hotels (economies of scale and provision of facilities for business travellers), Isadore Sharp, the founder of the Four Seasons hotel chain, settled on a strategy of providing a home-style atmosphere with amenities for corporates – a revolutionary style of hotel in the 1970s.

He wasn’t willing to make a trade-off between ‘small, friendly and uneconomic’ and ‘big, unfriendly, but successful.

A compelling characteristic revealed itself among Sharp and other business leaders that were interviewed by Riel and her colleagues: ‘the ability to hold two opposing ideas in mind and retain the ability to function’. Interviews with over 50 high achievers found that the trait was innate among many of them regardless of their field of endeavour.

While acknowledging that Integrative Thinking is not an easy concept to teach, Riel offers some techniques for incorporating it into the decision making process.

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Top five risks for business in 2011

Sunday, January 30th, 2011

Our risk management systems constantly scan the immediate course ahead to detect those hazards that could put a hole in the ship of commerce, and potentially sink the business. Ongoing dialogue with leaders around the world, combined with environmental scanning and deep reflection, indicate that a number of significant issues will confront business this year. Here is what we believe are the top five risks:

1. One complaint becoming an epidemic

In the latter half of 2010 the power of a mass consumer complaint leveraged by connectivity became evident. Angry customers were able to register online to join a class action over bank fees. Vodafail.com, born out of the frustration of one customer, provided a flashpoint for disgruntled Vodafone customers.

The focus is shifting to insurance companies whose customers, having been adversely affected by floods, feel quite poorly treated. Retailers who have sent Australian jobs offshore by their purchasing policies, and now complain about Australian consumers purchasing products offshore, also risk a disgruntled customer creating a viral campaign.

The lesson is to take each customer complaint extremely seriously, and treat each person as you would want to be treated.

2. Social enterprise overtaking commercial enterprise

We are now witnessing the rise of social enterprises – profit making organisations which emerge in direct response to a particular social need – such as Fair Trade coffee and the Green Pages directory. They keep costs low in order that maximum profit can be directed at the immediate social need and fostering systemic change to eradicate the causes of the problem.

This contrasts with existing business models which have a primary focus on shareholder return. Social enterprises experience explosive growth as customers engage specifically to support the cause – and then tell all their friends.

Twenty first century organisations must look to harmonise social and commercial objectives as new entrants launch to fill a social need and scale too fast for traditional slow moving businesses to respond. They must review their original purpose, recast this in the context of 21st century needs, and align every aspect of the business with this renewed purpose, eliminating the fundamental dichotomy between market acceptance and customer fulfilment.

3. Failure to recognise the normalisation of complexity

During the last decade we have witnessed a never-ending series of natural and man made crises: 911, SARS, bird flu, GFC, devastating fires, hurricanes, cyclones and now floods. Crises are nothing new, but in a less complex and interconnected world we were largely quarantined from their effects by time and geography.

The deep global linkages between people and organisations now mean that our world can change overnight because of the ripple effect of a single major event. Last year’s eruption of a volcano in Iceland brought air transport to and from Western Europe to a complete standstill, impacting industry around the world. Economic shocks will become more frequent because of the complexity and connectivity of the system of which we are a part.

Our fundamental challenge is to work effectively and efficiently in this new normal and deliver results that move us towards our purpose, understanding that doing so will contribute to a sustainable business. Organisations need to develop people at every level of the organisation who are systems thinkers, who are comfortable with complexity, and who can function well in chaos.

4. Increasing self-interest

The crises identified above have deprived many people, organisations and nations of expected income, profits and living standards, creating a sense of scarcity and an inclination to guard what we have. This can drive a protectionist response, whether at a political or commercial level, which easily translates into inadvertently putting profits before people, control before collaboration, and politics before principles.

Self interest reveals itself in the person who takes advantage of a crisis to advance their own cause and further their own career, and in the firm which extracts an unreasonable discount from a supplier. It is not hard to spot in the increasing xenophobia dominating the agenda in many countries.

The solution to self interest is a combination of increased self awareness and social responsibility; appreciating that what is good for the other is ultimately good for me.

5. Wilful ignorance

One effect of living with a tidal wave of information is the capability to be selective about where we source our news. This allows us – both intentionally and unintentionally – to feed our biases and prejudices. Wilful ignorance occurs when we make an active choice to ignore what challenges our thinking, and consume what supports our thinking. One can readily observe increasing divergence between what many people choose to believe and what is actually the case.

Leaders need to carefully and consistently explain their rationale and message, educating and informing people, who may have built up resistance to new data, that will challenge their assumptions.

Conclusions

Although any of these risks taken alone could do serious damage, the combined effect of two or more operating together could be disastrous. For example, wilful ignorance and an epidemic of complaint in a complex world requires attention at the most senior level and a well crafted response to avoid customer backlash, staff disengagement and subsequent loss of value. Smart organisations however, will alter their trajectory ever so slightly to chart a course around and between these obstacles, ensuring they don’t fall foul of them in the first place.

Have you experienced these risk factors (or others) at work? Join the conversation and share your thoughts below.

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