The Great Leadership Taboo

Plenty of CEOs and senior executives scoff at the idea of having anything to gain from leadership development. After all, if you’re running a business or a division of a corporate, you’re evidently accomplished in your role, so why would you need a guiding hand?

It’s an old-fashioned way of thinking and one of the reasons that over half of the Fortune 500 have either burned out or faded away in the past 15 years. As volatility and uncertainty across the business landscape have become the accepted norm, there’s no room for complacency and blind-spots in the top team.

The Human Resources Director is uniquely placed to understand where an individual executive, or the whole ExCo for that matter, may require additional support to help them achieve their goals faster.

With this in mind, Criticaleye polled a selection of HRDs on whether enough is being done to sharpen leadership skills among executives. The results show there is a gulf between how organisations are set up and what HRDs believe is required.

According to the results, 86 per cent identified a lack of leadership capability as a barrier to growth. Thirty-nine per cent said that their existing framework for reinforcing leadership skills is inadequate, while just over half (52 per cent) want to improve what is currently in place.

Matthew Blagg, CEO of Criticaleye, says “the figures clearly suggest that CEOs and leadership teams are not doing enough to ensure they have the right expertise in place for the future”.

Saying the “L” word
So, is there some kind of taboo around the question of leadership development for senior executives, including the CEO?

Orlagh Hunt, Group HR Director for Allied Irish Banks, Corporate Banking, Ireland, comments: “It is difficult to tell people they are not as good as they think they are, and also to get senior executives to focus on development.

“They should see life as a learning journey; no matter what your experience is you should always seek to learn and develop.”

A degree of openness or, to use a popular term at the moment, ‘curiosity’ is not always easy to find. Simon Laffin, Chairman of FlyBe Group, gives the example of trying to persuade a CEO to take on a mentor. “CEOs tend to have large egos…You are totally reliant on the CEO being open to having a mentor or not. I personally would encourage it but some don’t want it,” he says.

Yet our survey identified external mentoring and experiential learning as the most effective tools to support senior executives in performing at the highest level. These were followed by executive coaching, partnering with business schools and external courses.

Elements of a high-performing executive team
Organisations fixed on a hierarchical model are going to struggle in the current environment. An overly directive approach results in poor communication, inflexibility and an organisational culture where information and knowledge are withheld, rather than shared.

Such an environment won’t appeal to the best talent and everything seems to point to successful businesses adopting an agile model. According to the survey, the most important elements of a high-performing executive team include trust, constructive challenge and collaboration – all components of a flat hierarchy.

Another key element identified was a common purpose. Nicky Pattimore, HR Director at Equiniti, comments: “The leadership team has to be aligned with the purpose… we ran workshops with all the senior management team to ensure this. Consistency of messaging is critical and you have to have regular touchpoints with employees across the organisation.”

Difficulties arise when executives pursue their own agendas too aggressively. Indeed, the survey found that a lack of alignment over strategy is the primary reason for senior executives quitting.

Ian Cheshire, Chairman of Debenhams, suggests that the top team must genuinely agree where the future of the business lies. “Alignment comes when people have had the chance to work together and own the strategy. You can’t just hand them a to-do list,” he comments.

The HRD and CEO can create the right degree of openness and collaboration within the executive team, provided they’re willing to make the effort. “There will be moments as a HRD when you are standing alone,” says Orlagh. “All the pressure will be on you to tell the CEO about the issues within the business, largely because the other executives won’t raise it themselves.”

Ultimately, there can’t be any sacred cows or taboos in the executive team, especially when it relates to talent. “Some CEOs don’t find managing individuals within the team and the team dynamics that easy, [whereas other] leaders accept challenge as a natural part of a healthy team dynamic,” adds Orlagh.

“Even if you find it tough, as the HRD, it is important that you are willing and able to challenge. It is important that your relationship with the CEO is such that they know that you are doing it from a desire to enable their success, not from a point of ego.”

What are your thoughts on leadership development? If you have experiences and opinions that you’d like to share, please email marc@criticaleye.com

This article was inspired by Criticaleye’s recent HR Director and CEO Retreats
Find out more about our upcoming Asia Leadership Retreat or read more on Strengthening the Executive Team

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Trust in the Top Team

A business can move so much faster when leaders trust one another and are able to work together towards a common goal. Conversely, when senior executives behave as a disparate collection of individuals, the consequences affect not only the CEO, but the entire business.

As Hera Siu, Managing Director for Greater China at Pearson, says: “You want people to be able to debate and agree to disagree on certain topics, but once they leave the room they [must] present a unified front to the rest of the organisation.

“They should be open to ideas and constantly challenge themselves, so they’re asking: ‘Is there another way to do it?’ If the team is to be effective it will be a living thing and [will] evolve. The loudest member will learn to listen more, while the quiet ones will speak up because trust has been built.”

If senior executives start to prioritise their own agendas and forget what’s best for the business, that all-important alignment can be lost. Matthew Blagg, CEO at Criticaleye, says: “When trust isn’t there, the senior executive team won’t be able to execute their objectives, and that can happen for many reasons, such as when the CEO isn’t capable. Similarly, problems occur when the competencies of one or more individuals are not right, and especially when politics form.”

True north

It’s up to the CEO to articulate the direction of the business and then decide whether the current crop of senior executives have the talent and desire to get there.

Leslie Van de Walle, Criticaleye Board Mentor and Chairman of SIG and Robert Walters, says: “Cracks appear when the business is not performing in-line with the common purpose; some people start doubting the vision or personal agendas creep in.”

This needs to be dealt with swiftly. “If a person has been given a fair chance to realign but they haven’t changed, that person needs to be dismissed or replaced,” adds Leslie. “If you don’t make that decision quickly it taints the rest of the team, or they become disturbed because you’ve not reacted to it.”

Of course, getting the chemistry of the top team right is one of the biggest leadership challenges a CEO will face. Neil Matthewman, has appointed six new senior executives since becoming CEO of Community Integrated Care (CIC) Group four-and-a-half-years ago. He has introduced ‘away days’ and offsite sessions so that executives can discuss strategy and overall performance. Recently, he brought the executives together to run through team development.

“We started to explore behaviours. Getting to know each other is important and we’ve invested more in team-based activities in order to maximise the potential around the table,” he says.

It takes work to ensure that communication doesn’t solely occur in weekly meetings when the focus is on short-term priorities. Gary Kildare, Chief HR Officer at IBM Europe, comments: “There are still many organisations that have appraisal systems and management by objectives; that’s great but it needs to go way beyond that for senior leaders.”

Gary argues that there must be an emotional connection that allows them to feel part of the team: “You may start off a little bit mechanically to ensure that regular discussions and meetings are taking place. Often a bit of forcing needs to happen by the CEO and other senior leaders in the team, but through these sessions you should be building trust, which allows more ideas and information to flow openly.”

It comes back to alignment, clarity of purpose and openness, which enable senior teams to navigate challenges, whether that’s a turnaround, disposal, acquisition or moving into new markets. “There has to be something that pulls them together and not just business as usual,” Gary comments.

If a business is to achieve sustainable success, both the CEO and board have to recognise why it’s important to reassess and appraise the qualities and chemistry of the top team. Matthew at Criticaleye comments: “More conversations need to be had about how long someone will be on the journey for.

“Skills are interchangeable within great teams so if someone leaves − including the CEO − the results are not impacted. It’s a matter of having a succession process.”

By Dawn Murden, Editor, Advisory

What are your thoughts on forming trust in the top team? If you have an opinion that you’d like to share, please email Dawn at: dawn@criticaleye.com

Read more on succession here.

Or, see what Hera Siu from Pearson said about Building a Winning Team in China

https://twitter.com/criticaleyeuk

 

How CEOs Set the Pace in Asia

Reimagining the customer experience is especially difficult for Asia’s CEOs and senior executives. It’s harder for them to justify a radical overhaul of product or service delivery because, unlike those in the more mature markets of Europe and North America, their organisation is likely to be growing rapidly.

But that’s not an excuse to shy away from change. China already has the world’s largest population of digital consumers, with over 550 million mobile internet users and an infrastructure that’s improving through the adoption of 3G and 4G networks. The rise of cloud computing, big data and the Internet of Things is also completely reshaping delivery models in numerous industries, from financial services to retail and healthcare.

At Criticaleye’s Asia Leadership Retreat 2015, held in association with Accenture, Cisco Systems and the China Europe International Business School (CEIBS), the focus was on how regional business leaders are adjusting their strategies to remain customer-focused in the face of new technology.

During the course of the two-day, Hong Kong-based Retreat, five themes emerged that executives need to bear in mind in order to succeed:

We’re entering the next era of digital 

Businesses will lose market share if they don’t provide customers with the latest digital services. Olof Schybergson, CEO and co-founder of design consultancy Fjord, which is part of Accenture Interactive, believes “we are now entering the third phase of digital – it will be as disruptive as mobile was and the web before that”.

A significant element of this new era will be the connectivity of devices, which is why Xiangli Chen, Vice-President & Chief Technology Officer of GE China, argues that success will rely on the ability to integrate information and the industrial internet. “Less than one per cent of the data generated by machines is actually used at present. As this changes, data will become a goldmine.

There’s no question that investment in digital is accelerating. During the first nine months of this year, organisations in the Asia Pacific region invested approximately $3.5 billion in financial technology, this compares to $880 million throughout the whole of 2014, according to a report by Accenture.

Calling design gurus, social hackers and mobile evangelists 

The onus is on organisations to be far more imaginative about recruitment at all levels. John Brisco, Senior Vice President, Chief Information Officer and Chief Operations Officer for Manulife Asia, says the financial services company has introduced new roles in order to disrupt the business’ status-quo, including “design gurus, social hackers and mobile evangelists”.

He said: “They have enthusiasm and are passionate about what they are trying to create; they don’t think within the traditional boundaries. The challenge is to deliver at pace – if you fail to do that, the type of talent you’re bringing in will walk.

It’s all part of a broader, strategic reappraisal of how services are delivered. “The way a life insurer and bank might traditionally go about a project would actually not allow us to win in the future,” said John. “How do we create a mindset that lets us change the speed at which we do things?”

This is not only applicable to those in financial services. Hera Siu, Managing Director of Greater China for education company Pearson, described how she brought in six new people to form her top team, each from a different industry. She explained how “they were tasked with transforming the business by introducing a new service model, and they had to do this while moving at a faster pace than the organisation was used to”.

From Shanghai to Silicon Valley, start-ups are changing the game 

Corporates are paying serious attention to start-ups. David Schillmoeller, Chief Customer Officer of Prudential Corporation Asia, said there is an emphasis on cross-functional collaboration and partnerships that stimulate innovation: “It’s helping with completely new ecosystem propositions – we have a great business model and we believe, by embracing disruption, we can make it better.”

John of Manulife Asia commented: “We are developing a number of different partnerships with a variety of firms. This includes boutique start-ups in Silicon Valley and Shanghai that have pieces of the ecosystem which, in the future, might just differentiate us. We might not do something straight away, but we are creating relationships.”

In Asia, China is the market that really matters

Although China’s GDP may have fallen to 7.2 per cent, it would be foolhardy to suggest its economic power is waning.

Hellmut Schütte, Dean Emeritus of CEIBS, noted that for most companies, China continues to make up over 50 per cent of revenue in the region: “When you look at your global portfolio as a multinational and then survey economic GDP growth over the next ten years, only two countries matter: China and the US. They are the only countries where there will be a significant amount of additional money to grow your business.”

China demands respect. Martin Cubbon, Finance and Corporate Development Director of the diversified conglomerate Swire Pacific, commented: “The first thing you need to acknowledge when you enter a new market, such as China, is the odds are always stacked against you… There is asymmetry of information as the locals will always know more than you.”

It’s important to coolly assess whether an organisation has the right culture for doing business and if the market dynamics are favourable. “In China, you need to be very cost competitive in whatever you do… because seemingly there is never an end to new capacity. No matter how good your product, if you can’t compete on cost you’ve no chance of making money,” Martin added.

There is a renewed emphasis on leadership 

Finding people with the right technical skills is only half of the battle for corporates in the region. Matthew Blagg, CEO of Criticaleye, noted: “There is no doubt that technology is changing the business landscape in Asia. However, I firmly believe that digital is an enabler and that an organisation’s ability to succeed absolutely depends on the leadership qualities of the CEO and their senior executive team.”

Hera of Pearson commented on how important it is to remember that “hiring a team doesn’t mean you have teamwork”. She explained that “you need each team member to work together and have a shared sense of purpose”. As a way of creating this dynamic, she brought in KPIs and a scorecard for the team she had hired, using both quantitative and qualitative information to find out if they were aligned.

For Ian Stone, Criticaleye Board Mentor and Non-executive Director of Chinese internet giant Tencent, it comes back to the CEO and their ability to build trust: “In my experience, the great leaders are able to demonstrate they really know the business to investors and stakeholders. They also respect the knowledge and expertise that’s within the company and, in turn, command respect back.”

By Marc Barber, Managing Editor, Criticaleye

Do you have a view on this subject? If you have an opinion you’d like to share, please email Marc at: marc@criticaleye.com

https://twitter.com/criticaleyeuk

 

Responsible Leadership

Corporates continue to spawn mistrust, and while shortfalls and scandals aren’t new, the reaction to them is. The internet and media play a big part – a story can break at speed, damaging both reputation and profit. As such, CEOs and senior executives are expected to lead in a transparent and responsible way.

According to Will Smith, Vice President for Property & Market Development at Asda, businesses can’t afford to operate in isolation: “If a company wants to be successful in the long term and build a sustainable business, its interests − and the interests of wider society − must ultimately converge. Businesses have to deliver positive returns to shareholders, but they also have to give positive returns to society.”

Jane Griffiths, Company Group Chairman for EMEA at Janssen, the pharmaceutical division of Johnson & Johnson, comments: “The evolution of social media has facilitated greater transparency and enabled people to have a voice on important societal issues. With their social and economic footprint, companies are in a strong position to affect many people so they need to rise to the challenge.”

It’s up to the leaders of large organisations to win back the trust of stakeholders and wider society. Ian Durant, Chairman of bakery chain Greggs and London property company Capital & Counties Properties (Capco), says: “To some extent there has been a loss of trust in business.

“Companies are, in their own ways, working out how best to remind the public and their stakeholders, including customers, shareholders and employees, what they are doing to manage their impact on society.”

Jane Furniss, Criticaleye Board Mentor, Deputy Chair at homelessness charity Crisis and Senior Independent Director and NED of the Solicitors Regulation Authority, says: “People feel that figures of authority can no longer be instinctively trusted. They start from a position of distrust and expect leaders to earn that trust.”

According to Charlie Wagstaff, Managing Director of Executive Membership at Criticaleye, this is reshaping opinions about what makes a good leader. He says: “The so-called ‘Heroic CEO’, who runs an organisation based on hierarchy and, in effect, their own ego, increasingly lacks the skills to drive long-term, high performance.”

Words and actions 

The concept that every company should be a corporate citizen, able to manage its impact on society and contribute in a way positive way, is rising to the fore. “Good citizenship should mean good business… however it’s defined, it needs to run through the organisation and the daily lives of everybody who works there,” says Ian. “It’s about creating the right tone and encouraging the right behaviours.”

Camilla Drejer, Director of Corporate Citizenship for the UK & Ireland at Accenture, says: “Corporate citizenship… needs to exist at every level. It’s not something you can simply mandate; often actions speak louder than words.”

Leaders must translate positive ethos into actionable outcomes. Will comments: “Corporate social responsibility can’t just be what’s on a piece of paper, or in a speech – it has to actually mean something.”

Asda runs its Community Life Programme, which aims to serve its local communities. Under this initiative each store has a staff member called a Community Life Champion, whose role it is to head up activities such as fundraising for local charities or hosting community meetings.

“A couple of colleagues and I did a charity cycle in Northern Ireland; we went to each store and met the Community Life Champion,” Will says. “The links they had in their communities were phenomenal… they had great engagement with charities and local schools, for example.”

Building partnerships and alliances are important. Jane Griffiths explains that in 2014 Janssen launched a new initiative to share clinical study reports through an agreement with Yale University’s Open Data Access Project, increasing transparency around drug trials.

“More collaboration with other industry players, academia, patient advocacy, health systems and governments – which maintain a constant focus on improving trust in our company and industry − is paramount,” she adds.

Leaders need to be actively involved and prove there is authenticity in what they say. Gavin Dunn, Director of BREEAM, an assessment method for sustainable buildings, which is part of BRE (Building Research Establishment), says: “We need to live by our own rules… Cultural change only comes when everyone believes it, not when the CEO says it.

“For us at the top, there is a huge push around health, safety and wellbeing, for instance… At every meeting the CEO asks: ‘What have you done to improve things?’ If this happens at the top and across the company, people will constantly look to improve because they know it’s expected.”

According to Jane Furniss one of the “biggest challenges leaders have is that it’s easy for words to sound hollow and for people to be cynical”.

“Lots of companies have ‘integrity’ listed as one of their values but the behaviour of leaders and employees contradicts that entirely,” she explains. “You have to keep demonstrating that you mean those values by… how you treat those around you and how you live your life, inside and outside of work.”

A double bind 

Good leadership should never be undermined by certain parts of the business. Charlie comments: “Boilerplate statements and marketing slogans will be torn apart in the bear pit of social media if there are inconsistencies with business practices.”

Gavin explains that BRE is in the process of divesting company pension funds from products and services that could be perceived as negative in the future, taking specific action to reduce the company’s exposure to climate change, for example.

There is a greater sensitivity towards supply chains, especially in the food industry – just look at the aftermath of the horsemeat scandal in the UK and Europe. Ian says: “Trust [in] the sourcing of products, where they come from, how they’re made and put together, is an important element in the value of a company. [Leaders] who ignore that, ignore it at their peril.”

This is crucial for an organisation of Asda’s scale, says Will. He explains: “We can improve those systems, which can then flow down to external partners. We have standards, beliefs and values – it would be inconsistent if we didn’t share those, and seek others that share them.”

There is no simple answer or quick solution when it comes to corporate citizenship and responsible leadership; mistakes will be made along the way, especially by companies with thousands of employees spread across the globe.

As Will puts it: “Companies don’t always get it right. When this happens leaders must learn; it must be fixed and we should move on. It’s continual learning… core values should remain consistent but the environment is constantly moving and we have to evolve in order to meet the standard expected.”

By Dawn Murden, Features Editor – Advisory

https://twitter.com/criticaleyeuk

Want to read more on this subject? See Charlie Wagstaff’s article ‘The Corporate Citizen’

The 5 Essentials of Good Strategy

All too often the CEO and their top team are consumed by the day-to-day. Such is the extent to which they’re drawn into the business, they lack the bandwidth to really evaluate strategic goals and assess the future direction of the company. In the worst case scenario, the senior executives actually confuse talking about daily operational issues with deeper discussions about strategy.

Given how rapidly business models continue to change, a lack of forward thinking on boards can prove fatal. Criticaleye spoke to a range of business leaders to find out why strategy must be discussed and how it can be implemented effectively:

1) Create the Time and Space

Every board needs to allocate the time to have robust discussions about strategy. Andy Dunkley, CEO of clothing company Lee Cooper Brands, comments: “It’s certainly not easy to get a good strategy session done properly and get the balance with the operational team and the board.

“You’ve got to go back to basics and define what the company is good at… It’s all about starting off with a sound assessment of where you think you are, reviewing what you’ve done in reality over a period of time, then seeing where you think the opportunities are and consequently what issues will come up as you execute your strategy.”

These should be difficult and, at certain points, uncomfortable conversations. Charlie Wagstaff, Managing Director of Executive Membership for Criticaleye, says: “It’s essential to create an environment where executives are really challenging both themselves and one another about the future direction of the business.

“Far too many senior teams fall into the trap of failing to adequately test assumptions about strategy because they are unable to undertake a robust and candid evaluation of the business model.”

Lupus Maltzahn, Managing Director for Strategy in the UK & Ireland at Accenture, comments: “You don’t want to have full buy-in all the time… Having a way of getting other views, other voices, into the discussion is incredibly important.

“What makes a strategic discussion productive is actively searching for your blind spots. Often, the reason you end up making bad decisions is that you weren’t aware of them.”

This point is echoed by Andy: “The worst thing in the world is when you try and define a vision and everybody just says ‘yes’ – that’s not healthy… It’s very important to have an open and honest session.”

Mark Scanlon, Group CEO of Personal Group Holdings, a provider of employee benefits and financial services, says certain topics will often divide opinion: “We look at potential acquisitions that we have targeted… we’re not an M&A business but it is part of our strategy [for growth]. The discussions we’ve had on acquisitions makes some people uncomfortable and others excited, [but] you have to go through all of the issues.”

2) Build a 360-Degree View

Senior executives need to be honest about what the business is currently achieving and take a long hard look at how their sector is evolving. Simon Oates, Director of Strategy and Communications at Southern Water, says: “Successful companies are agile and responsive… The senior executives are constantly scanning the market and looking for insights. They are not only looking at how their products and services are landing with stakeholders, but how competitors are perceived as well.

“Customer preferences change, so you need to keep refreshing your understanding and knowledge of what you’re trying to achieve with what’s happening externally.”

Dominic Emery, Vice President for Long-Term Planning and Policy at BP, comments: “We always start off with the two bookends of the company strategy, which is around the purpose of the company and our investor proposition… and then everything has to flex within that.

“Useful inputs to our strategic thinking come from our economic, geopolitical and competitive outlook, and government policy. Those are the four primary dimensions when thinking about the opportunities and risks to our overall strategy.”

A similar point is made by Simonetta Rigo, Vice President for Global Brand, Marketing Strategy and Planning at Western Union: “Strategy is ultimately about making decisions on where and how to win, leveraging a combination of analysis, facts and judgement.”

3) Think Ahead 

“It’s important to ensure the demands of the short-term financial imperatives don’t overwhelm the long-term investment imperatives,” Dominic says. “For us, that’s particularly important at the moment, with the oil price the way it is.”

“For example we’ve chosen to reduce our capital expenditure, certainly for 2015, as a result of the reduced oil price. We haven’t decreased it so far that it’s going to compromise the future but enough to enable [us to manage] our cash prudently.”

Charlie comments: “If you simply focus on the short term you may be making decisions and encouraging behaviours which lead to quick wins, but actually harm the business over time.

“Discussing the short, medium and long term will enable you to have a meaningful dialogue and set a clear direction for the future. Then, when internal or external changes occur, you can adapt accordingly.”

4) Execute and Empower

The execution of strategy is where discussions become reality. Mark Astley, CEO of Millennium Global Investments, an institutional asset manager, comments: “Strategy is meaningless unless you can execute and deliver on it. It’s crucial that you have people who can implement strategy… It’s only real if you go and do something.”

No matter how great the strategy is, it will be tested so there needs to be room for adjustment. Andy says: “The key issue is balancing your day-to-day decision making with the strategy you’ve set… We don’t need to re-analyse it, we need to think about the execution and follow that through… You shouldn’t be reinventing your strategy with every decision.”

Lupus comments: “You have a direction of travel, an objective and [then] take the steps to get there. After a number of steps… you might change direction a little bit, calibrate and adjust. You need to mould your course that way.

“The reality is that if you made a successful strategy permanent in the way it is successful today, it would die the day after tomorrow because existing or new competitors have moved on. With that in mind, the question is: how do you keep the good parts of an existing strategy while at the same time ensuring it evolves?”

In order for the strategy to adapt leaders need to delegate effectively. “You have to make a concerted effort to push some of the power downwards in an organisation,” Lupus continues. “Those you devolve power to will sometimes make different choices to the ones you would have made or thought you wanted them to make. Getting comfortable with that, and recognising the strength that lies in that, is important.”

Simonetta says: “Being able to link the deliberate strategy to examples of successful emerging strategies builds champions for change in the organisation and provides a real-life source of learning and insight that would otherwise take longer to validate through research and analysis alone.”

5) Keep Communicating 

Clarity is integral when it comes to strategy. Sandy Stash, Group Vice President for Safety, Sustainability and External Affairs at Tullow Oil, says: “It needs to be written in such a way that it’s clear who’s accountable… You need the right people to understand what their accountabilities are, with the right tools.”

Andy from Lee Cooper Brands says: “It’s good to celebrate achievements as you go but you can’t over celebrate. It’s all about day-to-day decision making to… get it going rather than looking for a perfect strategy.

“Strategy is a step towards a goal but it always moves on. You never get there…. There’s always a journey that you have to motivate people with and move on.”

***

Evidently, there is no magic wand when it comes to developing good strategy. It’s hard work and it’s up to the non-executive directors and executives to ask the hard-edged questions so they are able to have frank exchanges about the future of the business.

As Sandy says: “The strategy is not the Ten Commandments: it should be something that’s evergreen and lives and breathes, influenced by both internal and external changes.”

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeUK

A Flatter, Faster and Fitter Business

Image

Strategic, board-level decisions often fail because they are ground down in the corporate machine. While senior executives must be smarter at overcoming this by engaging middle managers and explaining why certain decisions have been taken, there is also a bigger, systemic question that needs to be addressed around organisational design and culture so that the best ideas are driving a business forward.

Martin Hess, VP of Enterprise Services at IT concern Hewlett Packard, says: “We have taken out tiers of management to flatten the organisation’s structure, because one of the biggest frustrations is that decisions taken at the top basically don’t hit the bottom. Too many tiers of management dilute the message that comes from the top, so you’ve got to find ways in which you can communicate decisions that avoid that dilution.”

It does appear that a point has been reached whereby traditional structures, be they hierarchical or matrix, are proving increasingly inadequate for global businesses. If that is the case, anything that can simplify and bring transparency to the decision-making process should be welcomed.

Julian Birkinshaw, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, comments: “All organisations use, to some extent, business models and management models that they don’t question and have inherited. These are based on order and control, but this ends up constricting an organisation’s ability to function…

“There are alternative models emerging which are bottom-up, relying more on the ability of people to make decisions for themselves and working out a mode of operating that is successful.”

Informed decisions

Much has been written about how data and analytics can inform choices. While there has undoubtedly been a step-change in this field, it shouldn’t be seen as some kind of panacea for making tough calls. Martin says: “You’ve got to avoid the process whereby you filter only the information that supports that decision.

“It’s not a weakness to change. You make decisions based on the data… then you’ve got to create a model that is permeable, allowing other data sources to come in that might influence that decision going forward.”

The focus must be on flushing out any false assumptions you may have.

Simon Dawson, Associate at leadership and organisational change consultancy Transcend, says: “Be aware and open about your biases, both personal and organisational, that might come into play in decision making, whether it’s in interpreting data or having a gut feel about what to do.

“That might include being tainted by negative previous experience; the different perceptions of risk; whether levels of optimism are realistic or how people perceive themselves and each other.”

Caroline Brown, CFO of consulting and software service concern KBC Advanced Technologies, emphasises the need to balance data with personal judgement.  “I’m afraid I tend to go with the gut feel and really interrogate the data that doesn’t agree with that,” she says.

“I’m very sceptical about data most of the time. I wouldn’t go as far as to say [I pick the data that I agree with]… but data that is in contradiction of the gut feel gets interrogated thus, because it starts with the wrong assumptions and probably the wrong inputs as well.”

The volume of information now available means that executives can become lost in an endless maze of data analytics as they attempt to make the ‘right’ decision. “Companies which look at data and are obsessed by it can find themselves in a state of ‘analysis paralysis’,” warns Julian. “They get stuck in inaction, whereas the next era is one of action and conviction.”

For Geraint Anderson, CEO of electrical systems manufacturer TT electronics, it’s a matter of course to be working to clear data points but, he says, “it’s ultimately about whether I feel it’s the right thing to do… then making sure that I can back that up with data where possible”.

The right results

The crux for effective decision-making in any organisation comes down to leadership. “When decisions fail to take hold within an organisation it’s mostly down to culture and lack of communication around the context for the decision,” says Caroline.

Geraint says: “I keep HR directly informed and share and develop decisions and the direction with the rest of my team, bringing them together on a regular basis to assess whether we are still on the right track. It’s vital that you’re coherent and bring decisions together as a team and are not just being dictatorial.”

The common mistake is to announce a change, not communicate it clearly and then fail to revisit it on a regular basis. Clodagh Murphy, MD of Eclipse Internet, a division of KCOM that provides communications services to small and medium-sized businesses, comments: “Decisions often get taken in boardrooms and are cascaded out as ‘just do it’, without taking the time to explain the context of why the decisions have been taken…

“We’ve had bottlenecks where, to some extent, the capability of some of the middle managers just isn’t there to articulate the messages effectively… [and] we’re doing quite a bit around people development to try and overcome some of that.”

If decisions do appear to keep getting ‘stuck’ in a business, ultimately a CEO will need to see this as indicative of a more ingrained weakness around the leadership team, the culture and organisational model. At present, many companies are at a stage of reassessment, wondering how to reduce complexity so that everything is moving faster, but in a way that is based on clearly established values.

According to Julian, “we have now reached a point where an emphasis on collective knowledge has led to sterile decision making, devoid of emotion… Organisations now need to marry knowledge and emotion”.

It may prove to be an unbeatable combination.

I hope to see you soon.

Matthew

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