UARTERLY SUMMER 2015 • VOLUME 1 • NUMBER 2
JOURNAL OF The AMerican management association
Serving Business and Society for Nearly a Century Page 12
The Culture Map
Managing a Modern Global Business
Developing Leaders in a VUCA World
Build Learning into Your Work Routine
Developing Global Skills Page 8
Distributed Leadership: Everyone, Every time, No Exceptions! Page 45
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Summer 2015 Volume 1 • Number 2
JOURNAL OF The AMerican management association
AMA The past, present, and future
AMA: Serving Business and Society for Nearly a Century Since 1923, American Management Association has been helping transform the
way people think, work, and pursue their career goals. In so doing, it has also helped to improve the quality of life for countless individuals and communities.
Build Learning into Your Work Routine Professionals who strive for the CEO chair someday or simply want to be great in their chosen endeavors should build continuous improvement into their work routines as early in their careers as possible. By Joel Trammell
Developing Global Skills Companies generally agree that their leaders need global capabilities, because leadership success depends upon the ability to lead across cultures and geographies.
By i4cp and AMA
The Culture Map: Leading in a Global World Today, we are all part of a global network where we must navigate through wildly different cultural realities in order to succeed. Unless we know how to decode other cultures and avoid cultural traps, we are easy prey to misunderstanding, needless conflict, and ultimate failure. By Erin Meyer
Surviving in the Business That Never Sleeps It is undeniably interesting and exciting to work in global businesses. But the around-the-world excitement comes with a trade-off—an around-the-clock pull to engage and lead. By Scott Mautz
Beware the C-Suite Knowledge Gap Business is more complex and more specialists are needed to stay up-todate with functional best practices. But companies don’t make decisions; people do. When C-suites are siloed, so are decision making, resource allocations, and frontline capabilities. By Frank V. Cespedes
Achieving Influence Across Cultures Despite all the confirmation, literally spanning the centuries, that a manager’s “ability to influence” is a high-priority skill, successful execution remains elusive. By
Beyond Finance: The Evolving Role of the CFO With many measures of the economy improving, companies are shifting from a focus on sustainability to one on growth. CFOs are taking on new duties to help the entire C-suite identify and execute on the right strategies. By Robert J. Arth
Creating a Culture That Connects To thrive in today’s connected global marketplace, organizations must evolve beyond this disengagement and think of themselves as human communities, more akin to living organisms than organizational machines. By Michael Lee Stallard and
Suzanne Bates and Scott Weighart
Katharine P. Stallard
Developing Leaders in a VUCA World VUCA—volatility, uncertainty, complexity, and ambiguity—is changing how global businesses operate and what they need from leaders. By Elissa Tucker
Distributed Leadership: Everyone, Every Time, No Exceptions! Organizations are facing the convergence of three megatrends that are reshaping their value propositions, customer relationships, and talent engagement. By Lior Arussy
Editor’S Pick Getting Wise About Worldly Needs
PERSONAL INSIGHTS Managing a Modern Global Business With global businesses, you have to stay consistent with your global philosophy and process even as you adapt to local needs. By Bev Hendry
OFF THE SHELF Your Visionary Self: Becoming a Leader Followers need to feel something in order to become ignited to follow you. By Rob-Jan De Jong
OUR VIEW International Skills Reflect Broadened Perspective Managing and working with other cultures has become an important topic for organizations. By Edward T. Reilly AMA QUARTERLY I Summer 2015 I 1
Getting Wise About Worldly Needs W
ith debate about the Trans-Pacific Partnership continuing even as we prepare the summer issue of AMA Quarterly to go to press, the topic for this issue—developing global executive capabilities—couldn’t be more timely. (Update: The agreement failed in the Senate, with only 52 votes for it, short of the 60 needed to pass.) While experts discuss whether the TPP will be good for U.S. business, there is no denying the agreement highlights the reality that today’s business is global in nature. This means executive leaders will have to develop global capabilities to achieve the greatest success. This issue contains several articles with a global development focus. Bev Hendry of Aberdeen Asset Management talks about the challenges of managing a modern global business and what it takes to build brand recognition in the United States. Erin Meyer, in “The Culture Map: Leading a Global World,” says we need to navigate through wildly different cultural realities in order to succeed. She outlines a system, the Culture Map, that allows leaders to figure out how culture influences day-to-day collaboration. Michael Lee Stallard and Katharine P. Stallard, in “Creating a Culture That Connects,” discuss how leaders of multinational organizations can engage people who work in diverse businesses and different cultures. Suzanne Bates and Scott Weighart, in “Achieving Influence Across Cultures,” address the challenges facing global leadership today, how current pre-global structures and internal processes are prohibiting companies from competing worldwide, and how leaders need to develop their executive presence to overcome these challenges. Robert J. Arth of Bank of America, in “Beyond Finance: The Evolving Role of the CFO,” says today’s chief financial officers must keep an eye on the financial risks that are more complicated because of global concerns, such as interest rate changes, currency costs, and fluctuating commodity prices. Our cover story shows the evolution of American Management Association, an organization that can help train executives in global leadership capabilities. Additionally, a series of infographics presenting the results of a study commissioned by AMA show that many executives are thinking about how their organizations need to institute this training. As domestic companies find themselves competing on a global scale, leaders will have to become ready to take on those challenges.
JOURNAL OF The AMerican management association
Christiane Truelove Copy Editor
Eileen Davis Graphic Artist
Christina Parisi President & CEO
Edward T. Reilly
AMA Quarterly © (ISSN 2377-1321) is published quarterly by American
Management Association International, 1601 Broadway, New York, NY 10019-7420, Summer 2015, Volume 1, Number 2. POSTMASTER: Send address changes to American Management Association, 600 AMA Way, Saranac Lake, NY 12983-5534. American Management Association is a nonprofit educational a ssociation chartered by the Board of Regents of the State of New York. AMA Quarterly is an independent forum for authoritative views on business and management issues. Submissions. We encourage submissions from prospective authors. For guidelines, write to The Guest Editor, AMA Quarterly, 1601 Broadway, New York, NY 10019-7420 or email CParisi@amanet.org. Unsolicited manuscripts will be returned only if accompanied by a self-addressed, stamped envelope. Letters are encouraged. Mail: Letters, AMA Quarterly, 1601 Broadway, New York, NY 10019-7420; email: CParisi@amanet.org. AMA Quarterly reserves the right to excerpt and edit letters. Names and addresses must accompany all submissions. Subscriptions. Executive and Individual Members of American Management Association receive AMA Quarterly as part of their annual dues, a nonrefundable $50 of which is allocated for the subscription to AMA Quarterly. Single copies are available at $25 plus shipping and handling. Requests should be sent to email@example.com Rights and permissions. ©2015, American Management Association. No part of this publication may be reproduced or transmitted in any form or by any means without written permission. Requests should be sent to Joe D’Amico, at firstname.lastname@example.org Editorial Offices 1601 Broadway, New York, NY 10019-7420 Tel: 212-903-8075; Fax: 212-903-7948 Email: email@example.com Opinions expressed by the editors, contributors or advertisers are not necessarily those of AMA. In addition, the appearance of advertisements, products or service information in AMA Quarterly, other than those of AMA itself, does not constitute endorsement by AMA.
Christiane Truelove Guest Editor, AMA Quarterly
2 I AMA QUARTERLY I Summer 2015
Managing a Modern Global Business Leading a global business is like devoting yourself to winning an Olympic gold medal in multiple categories. By Bev Hendry
You’re trying to excel in different fields that require varying types of preparation, use unique scoring systems, and attract particular audiences. All this, and you only have so much time and so many resources to allocate to the effort. With global businesses, you have to stay consistent with your global philosophy and process even as you adapt to local needs. Each country differs in nearly every facet, including who the core customers are, how well the brand is known, and what the core product demands are.
The view from Aberdeen One of the challenges of managing a global business such as Aberdeen Asset Management is balancing how you do business in one country with how you do business in another. This balancing act isn’t always easy because regional needs can vary significantly. At the same time, you need to maintain a unified global voice and brand. To offer some perspective, Aberdeen has 33 offices in 24 countries—each with its own set of unique business needs and challenges. As a global investment management group, we’re still learning how to meet the demands of our U.S. clients, which aren’t the same as those of our European and Asian customers, who have historically been our larger customer markets. One of the most common differences among countries—and the most overlooked—is the regulatory environment. What is widely accepted in one country might not be remotely acceptable in another. There are also different industry practices, making it vital to tailor products
and marketing to meet these regional needs. The global business model must have a lot of flexibility in it to accommodate these important regional demands. They have a significant impact on how you can do business in that particular territory. We pay substantial attention to U.S. regulations, which have increased in detail since the financial crisis. Because we’re relatively new in America, and the United States is a competitive market with multiple financial centers, we often have to do more to build brand recognition in this market than we do in Europe and Asia, where we are larger and better known. Although we started our U.S. business in 1995, we recognize that we still have work to do to grow our brand awareness here.
One of the ways we do this is through corporate sponsorship of events. We find that it works well for us. We don’t have as big a budget as some other investment firms, so we aim to be as resourceful as possible in how we spend. An example of an event we sponsor is the Scottish Open golf tournament, which is shown on NBC. Outside of the British Open, it’s the only European event that is shown live in America on a major network. Essentially, we are maintaining our presence in Europe while growing our brand awareness in the United States on the same budget.
Acquisitions key to global reach Another challenge we face in trying to AMA QUARTERLY I Summer 2015 I 3
Personal Insights grow our global company concerns strategic acquisitions. Increasing our brand awareness is only one part of the equation. We also have to boost our internal capabilities in order to have the best suite of products to offer our clients. One of the ways we have done this is through acquisitions. While it’s preferable to grow organically, acquisitions can help close any gaps that might exist in our product offerings and give us assets that help us stay competitive. It’s a fast start to improving or adding a strategy. This method of growth has ben-
more concerned with short-term performance than institutional investors are. But this creates an opportunity because these investors’ concern with performance means we can raise assets quite quickly in retail, whereas institutional requires a longer process. On the flip side, because institutional investors are less concerned with short-term performance, they usually stick with us for the longer term. We need to have a good balance between these important customers. Institutional clients and consultants can grow weary of changes in a company.
One of the biggest parts of managing a global business, or any business, is to make your workplace an environment where people look forward to coming to work every day. efited us in the past. Our company was founded in 1983, and four years later, after the stock market crash of October 1987, we lost about half of our assets. We began acquiring companies shortly after that, and those preliminary acquisitions helped get us back on track so that we could grow organically. But making an acquisition isn’t as easy as buying something at the grocery store. The culture of the company you’re looking to acquire has to mesh well with your existing one. In addition to internal dynamics, your customers’ perception of the acquisition also is an important component. Our two sets of core clients are retail investors and institutional investors, and this is where it can be a bit tricky. We’re better known among our institutional base than on the retail side. Both customers are important to us, and they have different needs. For starters, retail investors are much
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How our clients perceive us is vital to our business, so we pay a lot of attention to the companies we’re planning to acquire before we make an acquisition. Spending on sponsorship and marketing efforts, and making strategic acquisitions, are just two pieces to the large puzzle of leading a global firm. Much of the best practices to be gained in effective management are done from the inside at an employee level.
Cultivating the local environment One of the biggest parts of managing a global business, or any business, is to make your workplace an environment where people look forward to coming to work every day. We do this in a few ways, the most pertinent of which is an open office plan and flat management structure. No one sits in an office at Aberdeen. It’s important to treat employees the way you want to be treated and not to
lose sight of that as a senior manager. Senior managers at Aberdeen sit along with other staff, and we believe this setup helps foster an open, sharing culture where anyone can approach anyone to ask questions and start conversations. Equal treatment is central to our culture because we rely on team decision making. This structure is apparent across our regional offices in countries around the world. We all need to grow together as a company. I’ve been with Aberdeen for much of my career, having joined the firm as its 10th employee. I was hired by Martin Gilbert, our CEO, who I knew from our education days more than 40 years ago. A robust company culture is integral to the health of our business. That’s why we work hard to retain our employees. We realize they are a vital organ of our business. We have a diverse set of global employees because we value the differences that contribute to a richer work environment and brighter ideas. We have employees from all over the world, of different backgrounds, skills, gender, and ethnicity. An example of something we’ve done to attract and retain employees is our Graduate Training program. We recruit graduate students and rotate them around the business—often in different countries and departments—to find the correct roles for them. We want them to be able to achieve their life goals at Aberdeen. Leading a global business requires the right products, capabilities, and marketing to sufficiently serve customers. But leading an effective global business is just as much about managing internal relationships and fostering a community within the firm so that employees want to work for us. In essence, when we believe that we have employees who want to work with and stay with us, we are on the road to success. AQ Bev Hendry is co-head of the Americas at Aberdeen Asset Management. He established Aberdeen’s business in the Americas in Fort Lauderdale, moving from his home city of Aberdeen, Scotland, in 1995. A chartered accountant, he is the firm’s chief financial officer.
Build Learning into Your Work Routine By Joel Trammell
AMA QUARTERLY I Summer 2015 I 5
Great CEOs are great learners, with a thirst for knowledge and ideas that they continually apply to their jobs. The challenge for them, and any executive who wants to become a CEO, is finding time to learn and improve skills. It can be done. Professionals who strive for the CEO chair someday or simply want to be great in their chosen endeavors should build continuous improvement into their work routines as early in their careers as possible. Here are 12 tips for professional development that I recommend to current and aspiring CEOs. These ideas apply to all leaders. Some of the tips on this list are adapted from the book Activating Your Ambition: A Guide to Coaching the Best Out of Yourself and Others by Mike Hawkins (Brown Books Publishing Group, 2009). After all, if CEOs can find the will and time to do it, so can you!
12 Ways to Learn Commit to self-improvement. Leaders often cite lack of time as the reason they avoid continuous learning. Those who do make time often are the most successful because they have learned to balance their responsibilities. They also realize that they always have more to learn, no matter how successful they are. Hubris can limit many promising leaders who feel they know everything already. It’s a sure way to stagnation. It is critical to your long-term success to set aside at least a few hours every month for self-development. On a daily basis, incorporate as many of the following tips into your routine as possible. Read regularly. In a September 2014 interview with McKinsey Quarterly, Tom Peters said, “I was at a dinner party recently with a guy who’s probably one of the top 10 finance people in the world. At one point he said, ‘Do you know what the biggest problem is with big-company CEOs? They don’t read enough.’” Reading helps leaders of all kinds be innovative and stay one step ahead of the market. If you haven’t done so already, develop a reading habit. Seek out time to read whenever and wherever you can. Your reading list doesn’t have to be limited to business books. In October 2014, CEO.com examined the reading habits of CEOs such as Bill Gates, Mark Zuckerberg, Tony Hsieh, Elon Musk, and Meg Whitman and found that many read everything from history to fiction to biography. Attend training and development programs. Some skills and knowledge cannot be gleaned from books alone. Even Fortune 500 CEOs can benefit from training and development sessions in everything from communication skills to new technologies. These programs get you out of your bubble and force you to focus on skills and expertise
6 I AMA QUARTERLY I Summer 2015
specific to your job. There are sometimes valuable networking opportunities during these sessions as well. Those who believe they don’t have the time to take a training course are not doing their jobs properly. Write regularly. Regular writing helps you improve the skill, share your expertise with others, and clarify your thoughts for future benefit. There are more venues for expressing yourself today than ever: articles, blog posts, online forums, etc. Even if you are still developing your expertise, you can write about what you know. Chances are, you have a perspective that will benefit someone else. The feedback you receive may help you become a better professional, and the visibility may help build awareness of your expertise in your field. Scrutinize your decisions. Quick decision making is vital to keeping an organization going, but leaders should take the time to do a postmortem on important decisions—those that could have a significant impact on your performance and/or the business. You or someone you designate should actively look for evidence that could prove you were wrong. This willingness to examine past actions for ways to improve distinguishes great leaders from mediocre ones and allows them to provide leadership in their companies for the long haul. Network with peers. Leaders need to network with others who are experiencing the same responsibilities and challenges. Seek out professionals in your community. Establish relationships with the other leaders in your industry. Networking with contemporaries outside your industry can be valuable as well. In fact, speaking with professionals in other industries can give you some creative ideas you may not have been exposed to otherwise. Teach what you learn. There is no better way to deepen your own knowledge of a subject than teaching it to someone else. It makes you think through the material in a different way. Take advantage of opportunities to teach what you know to others both inside and outside your company. This experience will help you improve your presentation skills as well. You may learn as much or more from your “students” than they learn from you. Develop self-awareness. Self-awareness skills are critical to leading effectively. Knowing how you think and react in different situations is extremely valuable. Strive to continually improve in areas such as emotional intelligence, which is how well you read others and gauge their motivations. There are many different self-assessment tools available—from Myers-Briggs to Marcus Buckingham and Donald O. Clifton’s strengths-based assessment in Now, Discover Your Strengths
(Free Press, 2001). Many firms specialize in this area and may offer a free interpretation of your results.
“As soon as you learn a new skill
Solicit objective feedback. If you’re not getting enough feedback about your performance through your company’s formal channels, seek it out in other ways. This can be as simple as asking your supervisors and subordinates. Develop a close relationship with a couple of people in the company you trust to tell you the truth as they see it. There are also surveys you can ask your subordinates to fill out about your strengths and weaknesses, such as those in Peter Friedes’s The 2R Manager (Jossey-Bass, 2002). Tasha Eurich, PhD, has an “Organizational Leadership Assessment” on the website for her book Bankable Leadership that could be insightful (go to tashaeurich.com for the quiz and the book).
or hear about a great idea from
It is critical, if you want honest feedback, to find a way to guarantee that the responses are confidential. You might consider using an online survey tool that can be set up to make all responses anonymous. You could also give the responsibility of administering the survey to another person in the organization, such as someone in human resources. Seek out mentors. Professionals at all levels can benefit greatly from a mentor or coach. They will share expertise, knowledge, and impartial feedback that you might not obtain on the job. Seek out someone who has walked in your shoes and will tell you the unvarnished truth while sharing their own experiences. The experience may also help you become a trusted mentor to someone deserving in the future. Apply your knowledge. Learning without application can soon become useless. As soon as you learn a new skill or hear about a great idea from one of your sources, try to put it in action. Teach your team the concept so you all can use it together. Train your team to expect new ideas on a regular basis. Focus on the skills and experience you will need in the future. If you have a set career path, chances are you know what skills and expertise you are going to need down the line. The question is, are these areas you can start preparing for today? Several disciplines and areas of study that I recommend for current and aspiring CEOs—besides the emotional intelligence and communication skills I have already mentioned—are applicable to leaders at all levels. These areas include game theory, history, and organizational development. In the book Game Theory: Analysis of Conflict (Harvard University Press, 1997), Roger B. Myerson defines game theory as “the area of mathematics that studies conflict and cooperation between intelligent, rational decision makers.” Obviously, this field is applicable to business and can help you make better decisions. It often involves analyzing how to make the best possible decision with incomplete information.
one of your sources, try to
put it in action.” An excellent application of this is Colin Powell’s 40/70 rule, as I wrote about in “Five Responsibilities of a CEO: Make Good Decisions (TheAmericanCEO.com, July 2, 2013). Powell said a leader should make a decision with no less than 40% and no more than 70% of the information available. If they make the decision with less than 40% of the information, they are merely guessing. However, those who are afraid to make a decision and wait for more than 70% of the data delay the decision needlessly. For important decisions, this can grind the organization to a halt. Game theory can help you capitalize on that 70%. In looking at history, consider what Harry S. Truman said: “There is nothing new in the world except the history you do not know.” Great leaders know the histories of their industries and lots of others. They read business-related histories and biographies to understand how different industries developed and draw parallels to today. Knowing your history will make you better able to deal with rapid changes as they occur in your industry and discipline—and will give you some great ideas as well. Organizational and team building are critical. Isn’t it ironic that in school and during our early careers we are judged almost exclusively on our individual work abilities, yet our success as a manager depends almost solely upon our ability to build and manage a team? For a CEO, determining the composition and quality of the executive team is the most important decision he or she makes. This is true of many team and department heads. While you may not always get to choose everyone on your team, you will benefit from studying how to effectively lead teams of differing personalities and motivations. While some of these tips may seem obvious, the real trick is building time into your day to actually do them. It is an investment well worth making in yourself and your company. Great CEOs know this and make time for selfimprovement, and professionals who strive to be great should do the same. AQ Joel Trammell is the author of The CEO Tightrope: How to Master the Balancing Act of a Successful CEO (Greenleaf Book Group Press, 2014) and CEO of Khorus, which provides business management software for executives. He also is chair emeritus of the Austin Technology Council and managing partner of private equity firm Lone Rock Technology Group. Trammell blogs at TheAmericanCEO.com
AMA QUARTERLY I Summer 2015 I 7
Global Skills Companies generally agree that their leaders need global capabilities, because leadership success depends on the ability to lead across cultures and geographies.
To what extent is your organization effective at developing global capabilities in its leaders? Very high extent
Not at all
Adapted from American Management Association report: 2015 Global Leadership Development ÂŠ 2015 AMA & Institute for Corporate Productivity (i4cp).
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Participation on cross-functional teams, organized teamwork, and stretch assignments are seen as most effective for developing global leadership capabilities.
To what extent are the following experiences or assignments effective for developing the capabilities that your organizationâ€™s global leaders need? Participation on cross-functional teams
Organized teamwork on a specific customer issue or project Stretch assignments (e.g. lead a major project or be part of a global project team)
Inclusion in critical meetings
Coaching by experienced global leaders within your organization
Organized visits to customers or partners in geographies / markets your organization serves
Participation on a global task force
Rotational assignment in other businesses or business units
Global rotational assignment
Coaching by external professionals Participation in employee affinity or resource group (race, nationality, culture, religion, orientation, etc.)
High/Very high extent
Chart Illustrations: Ken Corall
Adapted from American Management Association report: 2015 Global Leadership Development ÂŠ 2015 AMA & Institute for Corporate Productivity (i4cp).
American Management Association, in conjunction with i4cp and Training magazine, has conducted its sixth annual study of global leadership development. The 2015 Global Leadership Development Survey includes responses from 1,398 training professionals, human resources managers, and line leaders from 96 countries. They represent 37 industries. AMA and i4cp found that almost half, or 44.7%, of respondents believed that their organization is moderately capable at developing global leaders. Slightly more than 27% credited their organizations with a high capability of developing global leaders (see chart on the previous page). Only 3.1% of respondents stated that they did not believe their organizations had the capabilities to develop global leaders.
When it comes to the essential experiences and assignments needed for developing global leadership capabilities, 57.1% of respondents cited participation on cross-functional teams; 54.7% looked to organized teamwork on a specific customer issue or project; and 52.8% believed in the power of stretch assignments, such as leading a major project or being part of a global team. Slightly less than half, or 47.2%, cited inclusion in critical meetings as being important, and 43.4% looked to coaching by experienced global leaders in the organization. Meanwhile, 42.5% said organized visits to customers or partners in geographies/markets served by the organization was important (see chart on this page). AMA QUARTERLY I Summer 2015 I 9
More than 80% of respondents believe it is important for global leaders to drive business results. To what extent are the following included in your leadership development curriculum?
To what extent are the following important for global leaders in your organization? 81.7%
Driving business results
Focusing on customers
Taking personal responsibility
Exerting positive influence
Leading change initiatives
Positively affecting employee engagement
Managing performance of direct reports
Possessing business acumen
Leading diverse teams
Addressing performance issues of remote teams
Adapted from American Management Association report: 2015 Global Leadership Development © 2015 AMA & Institute for Corporate Productivity (i4cp).
When asked to what extent certain factors were important for global leaders in their organizations, 81.7% of respondents put “driving business results” as the top priority, followed by 80.6% for “focusing on customers,” 77.3% for “communicating clearly,” 73.7% for “building trust,” 73% for “personal responsibility,” and 71.7% for “exerting positive influence.” At the bottom of the list, 49.3% put the priority on “addressing performance issues of remote teams.” But 59.2% put the emphasis on “pursuing self-development,” 63.7% stressed “developing others,” and 65.6% each went for “fostering innovation” and “leading diverse teams. In the middle of the list, 69.4% expressed that “facilitating collaboration” was important, followed by 68% for “leading change initiatives,” 67.6% for “positively affecting employee engagement,” and 65.7% for “managing performance of direct reports.”
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Pursuing self-development 37.2% High/Very high extent
What was seen as important in skills also was seen as important for inclusion in development programs. When looking at what was included in the leadership development curriculum, 69.3% of respondents said their organizations put “focusing on customers” in their programs. For “driving business results,” 67.6% said this was covered in their organization’s leadership development curriculum. “Communicating clearly” is a skill that 67.1% of respondents said was included in the curriculum. Again at the bottom of the list was “addressing performance issues of remote teams,” with 37.2% of respondents saying this was included in their organization’s curriculum. More than half, or 56.6%, did say “pursuing self-development,” was part of the curriculum, actually more than “possessing business acumen,” which just 51.8% said was included. More popular were “fostering innovation,” which 52.5% said was included, and “leading diverse teams,” which 53.7% stated was included.
Budget constraints and limited time are seen as the biggest obstacles to global leadership development training. To what extent do you consider the following to be obstacles to your organization’s effectiveness in global leadership development (GLD)? Budget constraints
Limited time available for GLD training
Inadequate follow-up to reinforce training after GLD has been completed
Inadequate internal resources (other than financial) to deliver GLD programs
Inadequate opportunities for GLD candidates to gain cross-cultural experience Lack of active participation by senior/ executive leaders (teaching, mentoring) in GLD programs Lack of consistency in selection process for global leadership candidates
32.2% 31.7% 31.4%
Resistance among senior/executive leaders to adopt inclusive behaviors
Lack of alignment with organization’s strategic workforce planning initiatives
Difficulty identifying appropriate delivery mechanisms for GLD
Difficulty establishing consistency in GLD program curriculum
Difficulty identifying appropriate GLD content
Lack of alignment with organization’s strategic business goals
High/Very high extent
Chart Illustrations: Ken Corall
Adapted from American Management Association report: 2015 Global Leadership Development © 2015 AMA & Institute for Corporate Productivity (i4cp).
Fifty-eight percent of respondents said their organization’s programs included “managing performance of direct reports,” and 59% said their programs covered “positively affecting employee engagement” (see chart on the previous page).” When asked about the top obstacles to their organization’s effectiveness in global leadership development, the top three cited by respondents were budget constraints (38.9%), limited time available for global leadership development training (38.9%), and inadequate follow-up to reinforce training after global leadership development has been completed (38.1%).
Other concerns cited were inadequate internal resources, other than financial, to deliver global leadership development programs (33.1%); inadequate opportunities for candidates to gain cross-cultural experience (32.2%); lack of active participation by senior/executive leaders in teaching and mentoring in GLD programs (31.7%); and lack of consistency in selection process for global leadership candidates (31.4%). The least area of worry for respondents was lack of alignment with an organization’s strategic business concerns, with just 23.8% citing this as a reason (see chart on this page). AQ AMA QUARTERLY I Summer 2015 I 11
Serving Business and Society for Nearly a Century The past, present, and future of a world leader in talent transformation
American Management Association is established to help managers exchange information and ideas, and work together to solve the challenges they face in business.
Lawrence A. Appley serves as executive director of the War Manpower Commission. He becomes president of AMA in 1948 and serves for 20 years.
AMA holds its first packaging exposition, an event that continues until the early 1980s.
AMA goes beyond its early focus on line functions to include a committee dedicated to personnel subjects.
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AMA’s conference and communication network provides a forum for leaders of trade associations, businesses, and government to respond to the challenges of the Depression.
A major AMA research study on African-American factory workers in 1942 strikes a firm message for equality.
AMA reports on the results of a study on lack of opportunities for women in business.
AMA helps rebuild the peacetime economy with its seminal research study “Greater Productivity Through Labor-Management Cooperation.” AMA launches its first seminars, enabling interaction among expert facilitators and course participants.
ince 1923, American Management Association has been helping transform the way people think, work, and pursue their career goals. In so doing, it has also helped to improve the quality of life for countless individuals and communities. Still going strong, it was the creation of a band of visionary business leaders who thought it was time to form an organization through which managers would exchange information and discuss mutual problems. That basic idea is still at the core of what AMA does, and the company has evolved into a globally recognized leader in talent transformation, offering a vast array of resources to bring the benefits of learning to both organizations and individuals.
The staff of the National Personnel Association in a formal portrait in 1922, one year before it changed its name to American Management Association to better reflect its broad-based mission.
AMA has persisted through almost every conceivable twist and turn, from devastating economic times, to wars, to game-changing technological advances. Playing a pivotal role in establishing sound management training, it has equipped millions of people worldwide with business skills. It has also worked to correct social inequalities, responded to important business needs created by such momentous events as 9/11, and reached out to underserved communities with educational initiatives.
A DISTINGUISHED PEDIGREE AMA came about as the product of two mergers—unifying the prevailing schools of business thinking at the time. In 1913,
the National Association of Corporation Training Schools and the National Association of Employment Managers formed the National Association of Corporation Training. This organization then joined with the Industrial Relations Association of America to become the National Personnel Association. To better reflect its focus on educational services and management development, the group changed its name to American Management Association on March 14, 1923. The organization has succeeded, in large part, because it has maintained a clear focus on this fundamental mission, as well as an ongoing commitment to making a positive social impact while helping businesses succeed.
AMA’s Management Information Service handles 16,000 information requests on specific management issues from members and customers. AMA adds orientations and briefings to its training program offerings.
AMA forms its Supervisory Management Association and launches Supervisory Management, joining AMA’s other periodicals Management Review, Personnel, and The Manager’s Letter.
AMA introduces The Management Course, a four-week program that would become the most influential management program in the world.
Abraham Maslow publishes his research on the hierarchy of needs in AMA’s Supervisory Management magazine. AMA holds 580 meetings, a 60% increase over the previous year, attended by more than 58,000 managers. It also hosts a total of 11 national conferences, with 17,000 executives in attendance.
AMA purchases 66 acres in Saranac Lake, New York to serve as a training venue. The facilities would later become an operations support center, and are now the site of AMA’s customer service, telesales, IT, and finance operations.
AMA’s National Packaging Exposition draws more than 35,000 visitors to the New York Coliseum to view the products of 300 exhibitors.
AMA introduces its international division formed from the acquisition of the International Management Association. President Dwight Eisenhower and Vice President Richard Nixon are speakers at AMA’s special Economic Mobilization Conference held in New York City.
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EXPANDING THE SCOPE By 1929, AMA was a national organization, holding conferences all over the United States. Despite tight budgets during the Great Depression, the 1930s found AMA interests expanding. In 1931, AMA held its first exposition, a practice that continued until the early 1980s. Alvin E. Dodd, AMA’s first full-time president, not only upgraded the quality of AMA’s offerings but also worked to bring them to wider attention in the business community. The timing was perfect. Social Security, minimum wages, collective bargaining, and fair trade issues all influenced AMA programs and publications. The association also began to publish research reports, in addition to its magazine, Management Review. In 1938, AMA’s increasing importance was reflected in the more than 3,800 executives who attended AMA’s seven major conferences that year to explore key business issues.
SERVING THE NATION World War II led to a spurt of activity as executives had new, unexpected challenges and turned to AMA for answers. It became one of the prime channels of communication for the government—particularly the procurement, training, and manpower agencies. AMA’s vice president of personnel, Lawrence A. Appley, served as director of the Placement Bureau of the War Manpower Commission until the end of the war. Appley later served as AMA’s president and CEO from 1948 to 1968—for a record 20 years. During World War II, every phase of AMA’s activities was in some way involved in the war effort. The Training Within Industry (TWI) program was developed by business leaders
who had been active in AMA from its earliest history, and, as the various TWI programs were developed, they became the subject of AMA conferences. The War Production Board used AMA to instruct manufacturers on procurement needs and policies, while the War Manpower Commissioner and the Selective Service Director found AMA an invaluable medium for discussing manpower problems with employers. With its 1948 study “Greater Productivity Through LaborManagement Cooperation,” AMA helped build the peacetime economy. A major AMA study on African-American factory workers in 1942 struck a firm message for equality. A similar survey was done two years later on the lack of job opportunities for women.
GROUNDBREAKING PROGRAMS Until the end of the 1940s, AMA was known primarily for its large-scale conferences, but in 1949 it introduced workshops with fewer participants that combined presentations with group discussions. These programs were so well received that the workshops grew in number, covering subjects such as inventory, collective bargaining, merit rating, and job evaluations. In the early 1950s, AMA introduced theory-based classroom courses to help managers broaden their skills. The first, in general management, was called The Management Course, a four-week program that became the most influential management theory program in the world. Its success led to other additions to AMA’s educational offerings. One of the most intriguing was AMA’s Executive Action course, during which participants spent three weeks exploring the basic motivations of people in business. Among the questions raised
AMA launches Operation Enterprise (OE) to develop and deliver programs on business, management, and leadership to high school and college students. AMA affiliates with the American Institute for Foreign Trade, of Phoenix, Arizona, later renamed Thunderbird after the pilots from the Korean War who trained at the converted airstrip.
AMA opens Management Centre Europe (MCE) in Brussels to expand its global presence.
AMA opens Management Center de Mexico in Mexico City.
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AMA opens the Canadian Management Centre (CMC) in Toronto.
AMA’s book publishing division, AMACOM, is founded. Sales of AMA’s multimedia in-company training program reach the 1 million mark.
AMA launches AMA by Satellite, offering broadcasts of briefings and forums on topical issues.
AMA forms the Institute for Management Competency based on a study of the skills, abilities, and knowledge managers need to succeed.
during the course was, “What makes an effective leader?” Even then, leadership and the challenges it presents were recognized as subjects well worth exploring in order to achieve greater business success. AMA had also learned from the business community that the growing professionalism of management demanded more knowledge and training than could be delivered via any one conference or workshop. Consequently, in 1952, AMA introduced orientations for larger audiences. These proved as successful as the workshops. When the post-World War II economic boom ended, AMA was there to help companies cope with the recession. In 1957, AMA held a special Economic Mobilization Conference that featured President Dwight Eisenhower and Vice President Richard Nixon as speakers, which was the last time both men appeared on a platform together.
AMA President Lawrence Appley (left) shares the podium with U.S. President Dwight Eisenhower and Vice President Richard Nixon. All three spoke at AMA’s Economic Mobilization Conference organized to cope with the post-war recession of 1957. Guests included British Field Marshal Bernard Law Montgomery and Nelson A. Rockefeller, who became governor of New York State one year later.
In its January 21, 1961 issue, Businessweek observed that AMA had attained “unquestionable leadership in the field of management education.” Even more significant achievements lay ahead.
SPREADING THE WORD The 1960s was a decade of great expansion for AMA. Besides its continuing conferences, AMA established Operation Enterprise, a program for high school and college students
AMA’s HR Conference features a lineup of leading national and international thinkers, including Jan Carlzon of SAS, Dr. Norman Vincent Peale, Dr. Kenneth Blanchard, and Dr. Lee Salk.
Henry Kissinger speaks at Management Centre Europe’s top management forum “Global Strategies for the 1990s.”
AMA CEO Tom Horton moderates weekly discussions with thought leaders on the PBS TV series “America’s Challenge: The Quest for Leadership in the Global Economy.”
to help them learn about the world of business. It also added briefings (quick introductions to a topic) to the workshops and orientations it was already conducting. AMA’s in-depth, interactive learning experiences were soon described by the multipurpose term “seminars.” The company also embarked on an ambitious program to provide onsite training to organizations through programmed instruction and video.
AMA opens AMA Japan in Tokyo.
AMA purchases Padgett-Thompson, extending the reach of its training to more cities and additional subject matter. AMA creates its Growing Companies Division to develop seminars that help small to mid-size businesses. To support the effort, AMA also purchases the magazine Small Business Reports.
C. Everett Koop, the former Surgeon General, and Peter Drucker keynote at AMA’s Human Resources Conference. AMA launches its first conference for office professionals, drawing almost 900 registrants, twice the number anticipated.
AMA and Canadian Management Centre, in cooperation with the Juran Institute, sponsor the legendary Dr. J.M. Juran’s farewell series of programs entitled “The Last Word: Lessons of a Lifetime in Managing for Quality.”
AMA serves the Chinese market through the Asia Pacific Management Institute in Shanghai. AMA launches a new line of self-paced CD-ROM learning tools. AMA begins a new series of interactive, satellite-transmitted seminars to go with its already successful AMA by Satellite program.
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To ensure the timeliness of its training, AMA’s staff dedicated itself full time to pinpointing both future and current business management problems. For its faculty, it enlisted the services of top business practitioners who could bridge the gap between theory and real world. AMA also introduced a unique system of councils—advisory groups of business executives and consultants. These councils can be traced back to the days when AMA was an all-volunteer organization with various divisions. Today, there are 10 functional councils that meet twice a year in order to exchange ideas and counsel the AMA staff on future strategy, business initiatives, prospective topics for new programs, and other key issues. The members of these councils bring to them a wealth of business experience and a genuine commitment to the social improvement that can result from economic success. By the end of the 1960s, AMA was conducting public seminars throughout the United States, and had established permanent centers in major U.S. cities, with its headquarters in Manhattan. It also expanded overseas, with a training center in Brussels to serve Europe. Later, AMA centers were opened in Canada, Mexico, Japan, and China. Just as its conferences have included an impressive list of national and international leaders, AMA’s periodicals provided a forum for management thinkers such as Tom Peters, William Ouchi, Noel Tichy, Edward Lawler, and Gary Hamel, often before they achieved mainstream recognition and attention. In 1972, AMA launched AMACOM, its own book publishing division, offering management, business, and personal development titles. In 1973, AMA was recognized as an
AMA opens AMA Latin America in Buenos Aires, Argentina.
AMA moves to new state-of-the-art offices at 1601 Broadway in New York City’s Times Square.
In 1985, AMA by Satellite was launched. In tune with the technology of the time, AMA broadcast briefings and forums on topical issues via satellite. Its 1987 HR Conference featured a lineup of leading national and international thinkers—Jan Carlzon of SAS, Dr. Norman Vincent Peale, Dr. Kenneth Blanchard, and Dr. Lee Salk. In Europe, Management Centre Europe’s Top Management Forum had Dr. Henry Kissinger as keynote speaker. In 1990, then-CEO Dr. Thomas R. Horton was asked to moderate weekly discussions with thought leaders in industry, the press, and education on the PBS TV series America’s Challenge: The Quest for Leadership in the Global Economy. AMACOM’s book program had grown to over 70 new titles annually, and AMA books could be found in 20 different languages. In 1991, AMA purchased Padgett-Thompson, a training organization, to extend the reach of its programs to more cities, customers, and subjects. It also created the Growing Companies Division, charging it with developing seminars that help small to mid-size businesses. One year later, AMA launched its first conference for office professionals. That first conference drew almost 900 registrants, twice the number anticipated, and subsequent conferences attracted steadily increasing numbers of people. In 2002, AMA launched a quarterly journal, MWorld, with original articles by noted consultants, authors, and senior executives, exploring current business issues and trends.
Post 9/11 AMA significantly expands its use of the web, from consolidation and efficiency of back-office systems to marketing, eLearning and email.
Monthly eNewsletters go out to 80,000 members and customers.
AMA offers members and customers a series of current issues breakfast briefings at AMA U.S. centers, on topical issues including governance, ethics, and crisis management.
AMA celebrates its 80th anniversary with an 80th Anniversary Forum on “Meeting the Challenges of Leadership” at AMA’s headquarters.
AMA expands its website, including its members-only web pages, and creates a special section devoted to the career development needs of administrative professionals and trainers.
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educational institution by the Regents of the University of the State of New York. That decade, it also launched Organizational Dynamics, a quarterly journal that soon was regarded as equal in content to the Harvard Business Review.
AMA launches its quarterly journal MWorld for members and customers.
Businessweek names AMA one of the “20 Best Executive Education Programs.”
AMA is awarded a $250,000 grant from Empire State Development to provide business training and development to small businesses in lower Manhattan affected by the World Trade Center attack.
More than 100,000 people worldwide attend AMA seminars. More than 3,000 organizations and 25,000 individuals in 89 countries are members of AMA.
The journal’s name was changed to AMA Quarterly in 2015, and it continues to bring valuable perspectives from today’s leading authorities in business and talent transformation.
EMBRACING THE FUTURE Today, in addition to its continually evolving Classroom and Live Online Seminars, AMA helps build skills and new behaviors for thousands of executives and managers through online events and programs, including webcasts, podcasts, webinars, an eNewsletter, AMA’s YouTube channel, briefings, articles, white papers, eBooks, and AMA Playbook, offering up-to-the-minute business insights on our website and via social media. Thousands of individuals and corporations worldwide enjoy the benefits of AMA membership.
customers are in Beijing or Brussels, Singapore or São Paulo, AMA can craft learning solutions that address any business need. As the business world tries to keep up with the momentous changes the new century brings, AMA strives to demonstrate resiliency, innovation, and exemplary social values. Its best-inclass faculty uses proven adult experiential learning methods to ensure customers receive a measurable return-on-learning to achieve better bottom-line results. Although the world will transform at an ever-increasing rate, AMA’s transformative learning solutions will evolve as well, supporting the globe’s businesses and communities in the most relevant, productive, and positive ways possible. AQ
AMA’s proud tradition of community enrichment is more relevant than ever. Just one example is Operation Enterprise, still thriving after more than 50 years. It provides free business and leadership training to young adults in underserved communities, helping these individuals return to their schools, companies, and communities equipped with the essential tools for business success: sound management, ethical principles, responsible leadership, and effective communication. Operation Enterprise is now training about 15,000 people per year. AMA is expanding its unparalleled resources wherever there is a need to do so. With its footprint in every region of the world—more than 75 cities in over 20 countries—AMA Global is positioned to deliver customized, talent-transforming content quickly and uniformly across multiple locations. Whether
AMA, in conjunction with Human Resource Institute (now i4cp), begins a series of 10 global research studies. AMA introduces blended learning to augment the instructor-led classroom experience.
AMACOM sells 1 million books a year.
Today’s AMA classroom: Attendees participate in a hands-on activity in the Management Skills for New Managers seminar.
AMA introduces Live Online seminars. AMA forms a strategic alliance with FranklinCovey to provide management training based on Dr. Stephen R. Covey’s book, The 7 Habits of Highly Effective People.
AMA introduces its first webcast, “Saying No to Scope Creep.” AMA launches Federal Learning Institute (FLI), a government services enterprise dedicated to educating federal employees and agencies.
Operation Enterprise, AMA’s young adult division, celebrates its 50th anniversary. More than 15,000 students benefit from the program each year.
AMA, in conjunction with P21, conducts the “21st Century Skills Study” that finds four skills critical for the future—critical thinking, creativity, communication, and collaboration.
AMA has 255,000 Twitter followers, 6,000 Facebook fans, 12,000 followers on LinkedIn. AMA offers a new range of flexible learning solutions, including Express Skills Courses.
2014 and beyond
For the sixth consecutive year, AMA is selected as one of the “Top 20 Leadership Training Companies” by TrainingIndustry.com AMA introduces a new Talent Transformation Tool that helps customers quickly gauge their skills across a complete set of 37 organizational competencies.
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Beware xxx the C-Suite xxx Knowledge Gap By
By Frank V. Cespedes
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Big changes have altered the C-suite of American companies. The number of executives reporting to the CEO has doubled since the 1980s, largely driven by an increase in functional specialists (CIO, CMO, and so on), not in general managers responsible for integrating activities across functions. These management changes were noted by Julie Wulf in “The Flattened Firm: Not as Advertised” (California Management Review, 2012) and Raghuram Rajan and Wulf in “The Flattening Firm: Evidence from Panel Data on the Changing Nature of Corporate Hierarchies” (Review of Economics and Statistics, 2006). At the same time, as noted by Jason Karaian in The Chief Financial Officer (PublicAffairs, 2014), the number of Fortune 500 and S&P 500 companies with COOs has decreased to about 35%. Three decades ago, COOs outnumbered CFOs in those firms, but the proportions have flipped. These changes reflect external realities: Business is more complex, available information has increased, and more specialists are needed to stay up-to-date with functional best practices. But companies don’t make decisions; people do. When C-suites are siloed, so are decision making, resource allocations, and frontline capabilities across the organization.
Performance Gaps The shift in the C-suite affects performance fundamentals, and the aggregate results are not good: Strategy. According to Michael C. Mankins and Richard Steele in “Turning Great Strategy into Great Performance” (Harvard Business Review, July-August 2005), studies find that, on average, companies only deliver about 50% to 60% of the financial performance their strategies and sales forecasts promise. Investors are regularly listening to executive teams that overpromise and under-deliver; they become cynical and more demanding. Conversely, there are constant complaints from CEOs about the “pressures” of quarterly earnings. Implementation. On sales efforts, companies in the United States annually spend more than three times their total ad spend, more than 20 times their spending on online ads, and more than 100 times their current spend on social media. Selling is, by far, the biggest part of implementation for most firms. Yet, surveys indicate that less than 50% of employees say they understand their firm’s strategy, and—here’s the perverse part—that percentage decreases the closer you get to the customer in responses from sales and service
people. This data comes from Effectory employee surveys— a database of about 300,000 responses from employees at all levels—as cited by Chris Zook and James Allen in Repeatability (Harvard Business Review Press, 2012). Many companies scored well below 20%. Culture and dialogue. Senior executives often preach teamwork at off-site retreats. But do they focus on team effectiveness where it counts most—in the cross-functional interactions involved in customer acquisition and retention? Problems indeed start at the top. A classic study, described by Maurice Hardaker and Bryan Ward in “How to Make a Team Work” (Harvard Business Review, November-December 1987), asks each of the top 10 executives in a firm to list their company’s top five strategic initiatives. If all 10 cited the same five initiatives, the resulting number per firm would be 5, and if each cited five different initiatives, the number would be 50. The median, after studies with hundreds of companies, is 35. Any firm with 35 “top five” initiatives becomes a “global mediocrity”—pretty good at many things, but not very good at particular things. Strategy requires capabilities that distinguish organizations from competitors in ways that its customers value. Is it a coincidence that as the C-suite has changed, there are more calls for “customer focus” and “year-of-the-customer” initiatives? What was last year? Many managers now spend more time rationalizing results, not building capabilities. As a result, the people in sales and other customer-contact groups become less intellectually honest about what is happening in the market, and strategy discussions are therefore based on less reliable information. It’s a dangerous, downward spiral.
Mind the Gaps C-suite changes have also made a simple statement—“I’m from Corporate, and I’m here to help you”—a perennial punch line in companies. Today’s operating managers often relate to corporate strategy pronouncements as just another presentation or an abstract “vision” or “mission statement” that has little to say about how to allocate money, time, and people. Almost three of every five executives (56%) say their biggest challenges are ensuring that daily decisions align with strategy AMA QUARTERLY I Summer 2015 I 19
and allocating resources in ways that support their company’s strategy, according to a Booz & Company report, “Executives Say They’re Pulled in Too Many Directions and That Their Company’s Capabilities Don’t Support Their Strategy.” On the other side, C-suite executives in more firms often are unaware of the strategic commitments that customer-contact activities in their organizations represent daily and their impact on core issues such as enterprise value. For example, two ways any company increases its valuation is by investing in projects that earn more than their cost of capital and by reducing its cost of capital. Most capital expenditure is driven by revenue-seeking activities with customers: the ability to sell it for more or make it for less. Customer-acquisition efforts directly impact what the company invests in. But fewer C-suite executives know much about sales management practices that determine call patterns and customer-management priorities at their firms. A company’s cost of capital is a function of its debt and the volatility of its cash flows, and financing needs are driven by the cash on hand and the working capital needed to conduct
governance suffers. If just 50% of employees understand their firm’s strategy, that’s better than board members: In a 2013 survey by McKinsey & Company of 772 directors, only 34% believed their boards comprehended their companies’ strategies. Strategic planning. About two-thirds of companies treat planning as an annual event, and the average corporate planning process now takes four to five months. But customers don’t care about this planning, and sales must respond issue by issue and account by account in external market time, not internal planning time. In other words, even if the output of planning is a great strategy (a big if), the C-suite process itself often makes it irrelevant to customercontact activities. Always remember, moreover, that planning is not the same as strategy, and it’s a long way from implementation where it counts most: in the organization’s encounters with current and prospective customers. In many firms, the means of introducing and reviewing business plans often exacerbates the separation of the “strategists” from the “doers” in the field. The typical approach is a kick-off sales
“It’s the C-suite’s responsibility to understand the
market and its customer-management requirements today.”
and grow the business. Most often, the biggest driver of cash-out and cash-in is the selling cycle. Accounts payable are accumulated during selling, and accounts receivable are largely determined by what’s sold, how fast, and at what price. That’s why sales productivity is both a strategic and sales management issue.
Mending the Gaps To bridge these gaps, leaders should start by examining their firms and C-suite meetings in these three areas: Communicating strategy. Most people in any organization spend a majority of their time on near-term operating issues. The aggregate of those decisions determines the real priorities and behavioral values in the firm. Without clarified priorities, people only pick up random cues about strategy, resulting in hit-and-miss implementation. Yet many in the C-suite resist making strategy explicit due to competitor concerns, despite the fact that the strategies of successful firms are usually well publicized. How much has been written about Apple, IKEA, Nike, and others? Leaders have bigger things to worry about than competitors reading their strategy documents if their own people don’t know the strategy and therefore can’t execute it. Also, an unarticulated strategy cannot be tested and contested as market conditions change, and corporate
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meeting followed by a string of emails from headquarters, with periodic reports back to headquarters on sales results. Each communication is one-way, and there is too little of it. The result is that the root causes of underperformance are often hidden from both groups. Customer contact. In any business, value is created or destroyed with customers, not in conference rooms. Strategy is about confronting external market facts, and no market has a responsibility to be kind to any strategy or current sales model. It’s the C-suite’s responsibility to understand the evolving market and its customer-management requirements today, not yesterday. Senior executives cannot do that from headquarters or solely through big-data analytics.
The Performance Cycle Alignment is not a one-shot deal. It’s a replicable series of activities. Figure 1, “The Performance Cycle,” outlines a process for managing the performance cycle from the C-suite to the front line. The first step is a coherent strategy that provides direction about where an organization does and does not play in its market. That strategy must be communicated, simply and consistently, to peers and others deep into the organization. Whatever else people are good at, they are not good mind readers. It begins
FIGURE 1: The Performance Cycle STRATEGY (1) Sets the direction
SET MEASURES AND TARGET BEHAVIORS (2) Translate the direction into mutual performance expectations and rules of engagement across functions REWARD, COACH AND CHANGE (5) Align and change behavior with performance expectations
MONITOR AND EVALUATE (4) Monitor progress and measure effectiveness toward achievement of expectations
with strategy articulation and communication. If the C-suite can’t say it, clearly and concisely, then people throughout the organization will have more trouble understanding and executing it, efficiently and effectively.
Charts: Courtesy of Frank V. Cespedes
Then, the strategy must be translated into actionable tasks and performance expectations, including the “rules of engagement” that condition cross-functional interactions in firms. When the rules are unclear because functions are siloed, the organization is essentially placing tollgates between groups: People must slow down and pay, either in time, money, or decreased coordination. And if the required interactions are time-consuming or difficult, many people will take routes that avoid the tolls and focus on what they can do with minimal interactions, decreasing customer satisfaction. Third, plans for executing tasks must be in place. Plans are more than budgets and checklists—the usual result of strategy meetings. “The numbers” in a business plan should express execution requirements in quantitative terms. If not, they’re basically important-sounding garnish on a pitch—something that good venture capitalists recognize when they evaluate entrepreneurs’ business plans. Rather, plans are actions to affect behavior and achieve performance expectations. Fourth, leaders must measure effectiveness in relation to performance expectations. Without the right metrics, an organization will commit the sunk-cost fallacy, throwing good money after bad. As C-suites have changed, earnings per
PLAN AND EXECUTE (3) Trigger change actions required to achieve performance expectations
share and sales growth have become the two most common measures used by companies with their shareholders and security analysts. But these metrics have a contingent connection to enterprise value and are not accurate reflections of value for all companies. Similarly, key metrics should change as the market or strategy changes so that, in their plans and reviews, managers are motivating the right things for today and tomorrow, not yesterday. Fifth, those metrics must be embodied in how managers and employees are evaluated and rewarded for relevant behaviors and outcomes. Performance reviews are among the most underutilized levers for influencing behavior in many companies. In any organization, it’s human performance that ultimately drives the cycle. Finally, the process must be iterative, as Figure 1 indicates. The C-suite needs contact with customers to avoid a prestigious but otherworldly role, and in many firms the balance is wrong. In surveys, nearly 80% of C-suite executives believed their products were highly differentiated, but only 8% of customers agreed. Meanwhile, in high-performing businesses, senior executives spend at least a third of their time with customers. A character in a John le Carré novel puts it well: “A desk is a dangerous place from which to watch the world.” AQ Frank Cespedes teaches at Harvard Business School and is the author of Aligning Strategy and Sales: The Choices, Systems, and Behaviors That Drive Effective Selling (Harvard Business Review Press, 2014).
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Off the Shelf
Your Visionary Self Becoming a Leader By Rob-Jan De Jong
hen it comes to the important personal dimensions of leadership, and the pivotal role you play yourself in enacting what you stand for, I’m a big fan of the work of Warren Bennis, one of the most eminent thinkers in this field. His landmark book On Becoming a Leader is one I often recommend. In it, Bennis promotes an integrated perspective on leadership consisting of four essential competencies: vision, adaptive capacity, voice, and integrity. Here we’ll explore the relationship between your visionary capacity and Bennis’s concepts of voice and integrity. Followers look to your vision as a guiding light for the decisions they make, the initiatives they start, the priorities they set, and so on. In addition, followers need to feel something in order to become ignited to follow you. But there is a third critical element: the integrity, credibility, and authenticity of the leader. This is what Aristotle meant by Ethos in his memorable triad: “Persuasion is achieved by the speaker’s personal character when the speech is so spoken as to make us think him credible.” This is where your personal character enters the equation. Bennis has asserted that “timeless leadership is always about character, and it is always about authenticity.” And Harvard professor John Kotter has added that acceptance goes deeper than message alone: “Whether delivered with many words or a few carefully chosen symbols, such messages are not necessarily accepted just because they are understood. Another big challenge in leadership efforts is credibility—getting people to believe the message.” For your vision to evoke energy and provide many invaluable benefits, it must be aligned with your authenticity, credibility, and behavioral integrity.
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Your followers will be watching to see if you really mean what you say. Are you really willing to pursue that—possibly unconventional—path? They’ll want to see if you are prepared to make the required sacrifices, change your behavior, live by your vision, and stand by your vision when you’re under pressure. It’s the classic walk-the-talk, practice-what-you-preach thing. This means that the importance of you in your vision cannot be underestimated. You play a critical role in making your vision powerful through the way you show up, the way you behave, and the way you accept the consequences of your words. I’m still astounded to see companies whose leaders preach “putting the customer first in everything we do,” yet keep the five best spots in their parking lot reserved for senior leadership. Companies with deep-rooted beliefs don’t need posters on the wall to remind them of their values. IKEA’s founder, Ingvar
Kamprad, lives and breathes these values in everything he does (or used to do; he stopped his active involvement in the company in 2013, at the age of 89). Costconsciousness is at the core of the IKEA model. Without this, it would be impossible to deliver on IKEA’s enduring intent to make well-designed furniture easily accessible. One of the richest men in the world, Kamprad is known to fly economy class and to take the bus instead of a taxi from the airport to the hotel. His actions, in other words, are in alignment with the values he preaches, which means IKEA has no need for coffee mugs or artistically designed gadgets to spread its core messages and beliefs. The values you live by and emanate are part of your story already. They must also become part of your identity as a leader.
Utzon’s masterpiece The conception of the Sydney Opera House is a fascinating tale of visionary thinking with, at its center, the Danish architect Jørn Utzon. What kind of person, what kind of brilliant mind, and what kind of creative process did it take to design something so beautiful and complex, a structure that half a century later is still considered futuristic and still stands out as one of the most acclaimed and recognizable buildings in the world? When the Sydney Opera House was declared a World Heritage Site in 2007, Utzon became only the second person ever to receive such recognition during his lifetime. And when he was granted architecture’s highest honor, the Pritzker Prize, in 2003, one of the judges declared that “Utzon made a building well ahead of its time, far ahead of available technology, and he persevered through extraordinarily malicious publicity and negative
criticism to build a building that changed the image of an entire country.” The tragic backstory is that Utzon never saw his masterpiece with his own eyes. After spending a few years creating the detailed plans in Denmark, he and his family emigrated to Australia in 1962 to be present during construction. But a redesign dispute with the newly elected Liberal Government in 1965 threw his life upside down. With his payments withheld, Utzon was forced to close his office, lay off his staff, and retreat from the project in March 1966. He returned to Denmark with his family and vowed to never set foot in Australia again. And he never did. For many years, his pivotal contribution was even omitted from the official Opera House history; in fact, during the grand opening by Queen Elizabeth II in 1973, his name was never mentioned. The wrongdoing was only corrected in 1999, when he was approached by the New South Wales government and the Sydney Opera House Trust to help with some necessary redesign work. But at that point, he wasn’t able to travel to Australia anymore due to his age. Utzon passed away in 2008 at the age of 90, having only seen his amazing creation in pictures. But the fascinating question that arises out of Utzon’s story is: What allowed him to invent such an elegant and unique structure, without any real reference points and without the technological means available today? We marvel at his creativity, imagination, and visionary capacity, and speedily file it away as purely a stroke of genius (which it was). But now, let’s instead try to figure out how Utzon’s process of unconventional thinking might have happened. First of all, the architect had a deep appreciation for nature. His designs mimicked nature’s patterns of growth, an approach he called “additive architecture.” He famously said, “If it grows naturally, the architecture will look after itself.” In Katarina Stübe’s impressive photographic testimony to the beauty of the Sydney Opera House and a true tribute to Jørn Utzon’s life (created in cooperation with his son Jan Utzon), Utzon said that “nature knows nothing about compromise, it accepts all difficulties, not
as difficulties as such, but rather as new factors that configure a totality.” Thus, his inspiration came from a source very different from those commonly used for other designs. Before the Sydney Opera House competition, Utzon traveled the world, from China to Africa, with a mind open to vastly different construction principles. He purposefully rid himself of traditional constraints, finding ideas and drawing parallels from nature to feed his imagination. Utzon possessed another crucial quality—one that is held by most (if not all) visionaries. When you hear how he was ousted from his masterpiece project after having relocated his family to Australia, and how he was relentlessly pestered by government officials who seemingly robbed him of his dream, you
completed. The custodian smiled and answered that it hadn’t been completed yet. Jørn turned to his son and said, “This is why I think the Sydney Opera House has been a wonderful event in my life. To have been allowed to conceive the idea of it. To have been permitted to work there for so many years. To know that it is continuing and that people are fond of the building.” Jørn Utzon believed that the building was more important than the architect, and he was proud of his contribution. Some might say that he was too modest, and perhaps he was. But his character and values—his ethos—prevented him from projecting his ego and self-esteem onto the building, and therefore from becoming cynical and negative. The outlook of a visionary is positive, optimistic, and hopeful. In fact, cynicism
Utzon’s open-mindedness, curiosity, and willingness to recategorize his thinking are important aspects of
visionary behavior. might assume that Utzon became a bitter and cynical man. But he didn’t. Instead, he always communicated positively about the project and about the people he worked with, even those who stood in his way. His son Jan has recalled, “He was the most positive person I’ve ever met. He never talked about things or people he did not like. Always only positively about what interested him.” Jan also has recounted an anecdote that speaks to his father’s character. As they walked together around Palma, Mallorca, Jan and Jørn paused to admire the wonderful building of the great Palma Cathedral. His father stopped one of the custodians and asked him when construction of the cathedral had begun. Somewhere in the 12th century, the man replied. Jørn then asked when it had been
is among the biggest drains on one’s leadership, and definitely on one’s visionary capacity. If your strength lies in connecting the dots but your weakness is seeing things early and you’re prone to destructive cynicism, you won’t be seen as a visionary. Even if they suffer life events that give them good reasons to become cynical and negative, visionaries resist these tendencies, as Utzon did. AQ Rob-Jan De Jong is a consultant, speaker, and facilitator with more than 15 years of senior-level experience. He divides his time between strategy consulting, leadership development, and participation in several innovative companies Adapted, with permission of the publisher, from Anticipate: The Art of Leading by Looking Ahead by Rob-Jan De Jong. Copyright 2015, Rob-Jan De Jong. Published by AMACOM.
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Beyond Finance The Evolving Role of the CFO By Robert J. Arth
With many measures of the economy showing sustained improvement, companies are shifting from a focus on sustainability to one on growth. And today’s finance leaders are shifting their responsibilities to better focus on the overall goals of the organization. Consider that virtually all companies (96%) are seeking at least one growth strategy, according to the Bank of America Merrill Lynch “2015 CFO Outlook” (go to http://baml. bankofamerica.com/cfooutlook/2015 to read the full study). But those growth strategies entail risk, whether it relates to executing a merger or acquisition, opening new operations abroad, or developing new products. As a result, CFOs are taking on new duties to help the entire C-suite identify and execute on the right strategies. Financial executives are already making this shift: According to the CFO Outlook study, more than half (52%) of CFOs say they expect to increase time spent on strategic initiatives. In addition, they’re spending more time on strategic activities. According to the study, other popular areas of focus include technological advances (cited by 61%), risk management (60%), data management (59%), human resource issues (49%), and communications strategies (40%). As their role continues to evolve beyond the finance function, CFOs can navigate the C-suite by addressing emerging business needs in three areas: risk management, technological advancements and data management, and human resources.
Risk management Risk management remains the most important job of the CFO, who serves as the ultimate protector of
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the organization’s finances. But evolving business challenges are leading to new risk-management concerns, including data security, corporate reputation, and supply chain management. Many of these risks are impacted by overseas expansion, which may create complicated supply chain issues and new regulatory challenges. To mitigate these risks, CFOs must work closely with other top executives to clearly identify potential issues and understand how these risks could affect the bottom line. CFOs must also keep an eye on the financial risks that are more complicated because of global operations. These include: • Interest rate changes. As companies expand operations to even more countries, CFOs need to focus on something as seemingly straightforward as interest rate changes in more than one geography. • Currency costs. Similarly, finance executives must pay attention to even more exchange rates as goods and services cross country lines. • Fluctuating commodity prices. Commodity prices are much more variable today than even a decade ago, which means CFOs must work with business leaders to understand the real price of products. At the same time, the evolving role of the CFO means that finance leaders must be aware of other issues that could affect the bottom line. These include additional costs to fulfill regulatory requirements, unexpected labor costs, and added time or expense to mitigate political uncertainty in markets.
To stay abreast of all the real challenges facing the organization, CFOs must continue to work closely with an ever-growing list of C-suite executives—including the chief executive officer, chief risk officer, and chief technology officer—as well as local management.
Technological advances and data management Across industries, technology is affecting the ways companies reach and serve customers. At AutoNation, one of the largest automotive retailers in the United States, technology plays a critical role in determining price offerings for new and used vehicles and reaching potential customers through new channels. With people spending more time researching vehicles than visiting traditional dealerships, AutoNation recently piloted a new digital initiative in South Florida to better reach potential customers. In this program, a customer can go online and reserve a specific vehicle at a committed price. The customer can go straight to a specific dealership, test-drive the vehicle, and buy it, instead of spending time negotiating the purchase on-site. As a result, the transaction is quicker and more efficient. Another example is Hartford Hospital, a leading regional healthcare provider in Connecticut that has used technology to drive efficiencies in payment processes. The hospital wanted to shift its outdated, paper-intensive payment processes to a more automated and streamlined solution. By eliminating the manual processes, Hartford Hospital
has benefited from fewer processing errors. Patients now can securely access their information, and fewer are calling customer representatives to resolve issues. With an understanding of a company’s priorities and needs, technological platforms can be used to simplify processes. Companies such as Hartford Hospital and AutoNation show the potential for increased efficiencies, which can improve the bottom line and allow for resources to be invested elsewhere. That being said, while new technologies are helping executives across industries manage business plans, someone has to be in charge of keeping all that data safe. Nearly all CFOs (92%) report that they have a data security plan, according to the 2015 CFO Outlook. In addition to protecting data, financial leaders should work with their teams to collect, analyze, and use technologies and data for their own goals, such as decreasing operational costs and supporting labor needs. Using data research, CFOs can help their companies redeploy their resources toward the most productive areas—leading to higher profitability.
Human resources Human resources is one of the most important areas where CFOs can assist other executives in improving business sustainability and growth. According to a survey by Robert Half Management Resources, more than 8 of 10 CFOs in the past three years said their roles have expanded outside of traditional accounting and finance, with HR and IT the most commonly cited areas. AMA QUARTERLY I Summer 2015 I 25
Technological advances, risk management, and data management are the top strategic activities of today’s CFOs. The leading benefits offered by most companies are health insurance, retirement funding, and other compensation programs.
On one hand, CFOs are involved in HR issues to manage expenses. But as securing the right talent becomes a greater business imperative, CFOs are becoming more involved in talent acquisition and retention strategies. This role is likely to increase in the coming year. According to the CFO Outlook, more than half of American CFOs (52%) report that their company will be hiring additional full-time workers in 2015. For CFOs, this means ensuring that the compensation package is competitive and providing input on the types of positions to be filled. We know from the 2015 CFO Outlook that finance executives are implementing a number of HR strategies, including healthcare insurance plans (96%), retirement funding (92%), bonuses or other compensation incentives (87%), wellness programs (63%), and education funding (54%). Wellness programs and other benefits can help attract employees, which is important in markets where it is becoming increasingly difficult to source the right talent. For instance, health savings accounts are becoming more popular, and more employers are making savings automatic, according to responses from the Bank of America Merrill Lynch “401(k) Wellness Scorecard” (to see the full study, go to http:// benefitplans.baml.com/IR/Pages/digitalscorecard.aspx).
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AutoNation has seen how employee wellness initiatives drive more productivity. The company is focused on prevention and participation, offering free medical screenings to employees and taking on other initiatives, such as a bus tour across 100 cities that connected employees to a registered nurse and wellness “concierge.” Thanks to these initiatives, employees have continued to become more productive and overall healthcare costs have remained flat. Ultimately, it is up to the CFO to ensure that the employment packages are both competitive in the marketplace and affordable for the company. CFOs must work more closely with HR executives to ensure this balance is achieved.
Going forward The role of the CFO will continue to change as business needs evolve. Now, though, this role is increasingly a strategic one, with the continued responsibility of managing the firm’s financial resources. By asserting themselves as drivers of business goals, CFOs can continue to take on a more strategic role within an organization and fuel business success. AQ Robert J. Arth is EVP/Northeast and Canada Commercial Executive at Bank of America Merrill Lynch.
The Culture Map
Leading in a Global World By Erin Meyer
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When Sabine Dulac, a marketing director for a French luxury goods company, moved from Paris to Chicago, she was looking forward to the practicality and efficiency of working in an American environment. A few months later, she left her first performance review with her new American boss, Jake, with a smile on her face. It was the best review of her life, according to Sabine. Yet, her boss thought he had clearly expressed that her performance was under par and that she would need to make many improvements to continue with this team.
The Scheduling Scale Germany
In this case, cultural differences led to confusion and misunderstanding about the evaluation, yet neither Jake nor Sabine was aware of it. Today, whether we work in Dusseldorf or Dubai, Brasília or Beijing, or New York or New Delhi, we are all part of a global network—real or virtual, physical or electronic—where we must navigate through wildly different cultural realities in order to succeed. Unless we know how to decode other cultures and avoid easy-to-fall-into cultural traps, we are easy prey to misunderstanding, needless conflict, and ultimate failure. To help leaders like Sabine and Jake negotiate this complexity, I have built on the work of many in my field to develop a tool called the Culture Map. It is made up of eight scales representing the management behaviors where cultural gaps are most common (communicating, evaluating, persuading, leading, deciding, trusting, disagreeing, and scheduling). By comparing the relative position of one nationality to another on each of these scales, the user can decode how culture influences day-to-day collaboration.
The Culture Map The eight scales on the map are based on decades of academic research into culture from multiple perspectives. To this foundation, I have added my own work, which has been validated by extensive interviews with thousands of executives who have confirmed or corrected my findings. The scales and their metrics are: Communicating. When we say that someone is a good communicator, what do we actually mean? The responses to this question differ wildly from society to society. I compare cultures along the Communicating scale by measuring the degree to which they are high-context or low-context, a metric developed by the American anthropologist Edward Hall. In low-context cultures, good communication is precise, simple, explicit, and clear. Messages are understood at face value. Repetition is appreciated for purposes of clarification, as is putting messages in writing. In high-context cultures, communication is sophisticated, nuanced, and layered.
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Messages are often implied but not plainly stated. Less is put in writing, more is left open to interpretation, and understanding may depend on reading between the lines. Evaluating. All cultures believe criticism should be given constructively, but the definition of “constructive” varies greatly. This scale measures a preference for frank versus diplomatic negative feedback. Evaluating is often confused with Communicating, but many countries have different positions on the two scales. The French, for example, are high-context (implicit) communicators relative to the British, yet they are more direct in their criticism (leading to the confusion Sabine Dulac experienced in her performance review). Persuading. The ways in which you persuade others and the kinds of arguments you find convincing are deeply rooted in your culture’s philosophical, religious, and educational assumptions and attitudes. The traditional way to compare countries along this scale is to assess how they balance holistic and specific thought patterns. Typically, a Western executive will break an argument down into a sequence of distinct components (specific thinking), while Asian managers tend to show how each component fits with all the others (holistic thinking). Beyond that, people from southern European and Germanic cultures tend to find deductive arguments (what I refer to as “principles-first arguments”) most persuasive, whereas American and British managers are more likely influenced by inductive logic (what I call “applications-first logic”).
Leading. This dimension measures the degree of respect and deference shown to authority figures, placing countries on a spectrum from egalitarian to hierarchical. Learning to lead across these cultural differences is one of the great challenges of working in a global economy. Deciding. This dimension measures the degree to which a culture is consensus-minded. We often assume that the most egalitarian cultures will also be the most democratic, while the most hierarchical ones will allow the boss to make unilateral decisions. This isn’t always the case. Germans are more hierarchical than Americans, but they’re more likely than their U.S. colleagues to build group agreement before making decisions. Trusting. Cognitive trust (from the head) can be contrasted with affective trust (from the heart). In task-based cultures, trust is built cognitively through work. If we collaborate well, prove ourselves reliable, and respect each other’s contributions, we come to trust each other. In a relationshipbased society, trust is a result of weaving a strong affective connection. If we spend time laughing and relaxing together, get to know each other at a personal level, and feel a mutual liking, then we will trust each other. Disagreeing. Everyone believes a little open disagreement is healthy, right? The recent Anglo-Saxon business literature certainly confirms this viewpoint. But different cultures have very different ideas about how productive confrontation is for a team or an organization. This scale measures tolerance for
open disagreement and views on whether it is likely to improve or destroy collegial relationships. Scheduling. All businesses follow agendas and timetables, but in some cultures people adhere strictly to the schedule, while in other cultures people treat it as a suggestion. This scale assesses how much value is placed on operating in a structured, linear fashion versus being flexible and reactive.
Cultural Relativity on a Global Team The Culture Map works by positioning cultures up and down each of these eight scales, allowing the manager to tease out the similarities and differences between two cultures on each scale. When you examine the eight dimensions, what matters is not the absolute position of either culture on the scale but rather the relative position of the two cultures. For example, consider what happened when the British consulting group KPMG created several global teams to standardize the implementation of management software systems created by enterprise software developer SAP. One global team was composed primarily of British and French consultants, and throughout their work the British complained that the French were disorganized and chaotic and lacked punctuality. On another team, made up mainly of Indians and French, the Indians complained that the French were rigid, inflexible, and obsessed with deadlines and structure to the point that they were unable to adapt as the situation around them changed.
The Culture Map at Work MANAGEMENT STYLES ACROSS FOUR DIFFERENT CULTURES Germany Low-context
Charts: Courtesy of Erin Meyer
Direct negative feedback
China Japan High-context Indirect negative feedback
Specific SOURCE: ERIN MEYER
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Cognitive trust (from the
head) can be contrasted with affective trust (from the heart). In task-based cultures, trust is built cognitively through work.” Why such contradictory perceptions of the French team members? A quick glance at the Scheduling scale (Figure I on page 28) shows that the French fall between the British and the Indians, leading to opposite perceptions from those two outlying perspectives.
A Change in Leadership Style Leadership styles stem from habits developed over a lifetime, which makes these styles hard to change. For example, in 2010, Heineken, the Dutch brewing company, purchased a big operation in Monterrey, Mexico, and a large number of Mexican employees are now based at its Amsterdam headquarters. One of these is Carlos, director of marketing for the Dos Equis brand, who admits that he struggled during his first year in the position. It didn’t take long for Carlos to realize that the leadership skills he had built over the past decade in Mexico, where more deference to authority is the norm, were not going to transfer easily to the Netherlands. Carlos realized that to lead successfully in a global environment, he would need to unlearn many of the techniques that had made him so successful in Mexico and develop others from the ground up.
Cultural Differences Decoded The map becomes most useful when you look at all the eight dimensions together and begin to recognize potential challenges and opportunities that may arise when two groups collaborate. When Olivier Lafond, a French manager, joined automotive supplier Valeo, he took responsibility for a global team made up of employees based in France, Germany, China, and Japan. He knew that cross-cultural challenges would likely arise. He had assumed the challenge would be to bridge the cultural gaps between the Asians and Europeans. And it was true that the Asian team members often were uncomfortable with the way the French and Germans publicly disagreed with one another in meetings. But Olivier found that otherwise, the Germans and Japanese worked rather well together, whereas there were more challenges between the Chinese and Japanese. The Chinese griped that the Japanese were slow to make decisions, inflexible, and unwilling to change. The Japanese complained that the Chinese didn’t think things through, made rash decisions, and seemed to thrive on chaos.
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After reading the Culture Map, Olivier mapped out the four cultures on the eight dimensions and analyzed the similarities and differences. The results of this exercise explained a lot (see Figure 2 on page 29). As Olivier had noticed on his team, the Japanese and Chinese cultures are both less comfortable with open disagreement and direct negative feedback in public than the Europeans. Reflecting that fact, on scales 2 (Evaluating) and 6 (Disagreeing), the Europeans are on one side and the Asian cultures on the other. When he took a closer look at scales 4 (Deciding) and 7 (Scheduling), Olivier saw the likely source of the frustration on his team. Although in Japan, like China, there is a strong deference to authority (scale 3, Leading), Japan is a consensual society where decisions are often made by the group in a bottom-up manner. That means decisions take longer, as input from everyone is gathered and a collective decision is formed. By contrast, in China decisions are most often made by the boss in a top-down fashion (scale 4, Deciding). Once the decision is made, there is a great rush toward the finish line. The Japanese have a linear-time culture (scale 7, Scheduling). They build plans carefully and stick to the plan. Being organized, structured, and on time are all values that the Japanese share with their linear-time Swedish colleagues. Indeed, on both scales 4 (Deciding) and 7 (Scheduling), the Japanese are rather close to the Swedish culture and quite far from China. In comparison, the Chinese tend to make decisions quickly and to change plans often and easily, valuing flexibility and adaptability over sticking to the plan. In analyzing the culture map he had created, Olivier began to better understand the dynamics on his team and also to determine which aspects of the team’s challenges were related to cultural differences and which were related to simple personality clashes. He began a dialogue with the team about the map, and the team slowly started to develop a method for how they would improve their collaboration. When we work in offices surrounded by others from our own cultural group, it’s enough to have an awareness of basic human psychological needs and motivations leavened by sensitivity to individual differences. But as globalization transforms leadership, we need the ability to decode cultural differences and work effectively with clients, suppliers, and colleagues from around the world. Leaders have always needed to understand human nature and personality differences. What is new is that 21st-century leaders must understand a wider, richer array of work styles than ever before. They have to be able to determine which aspects of their interactions are simply a result of personality and which are a result of differences in cultural perspective. Then they must develop the ability to lead populations that are culturally very different. The Culture Map is a first step. AQ Erin Meyer is a professor at INSEAD and an expert in cross-cultural management. She is the author of the new book The Culture Map: Breaking Through the Invisible Boundaries of Multi-Cultural Business (PublicAffairs, 2014).
Surviving in the Business That
Never Sleeps By Scott Mautz
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It is undeniably interesting and exciting to work in global businesses. But the around-the-world excitement comes with a trade-off—an around-the-clock pull to engage and lead. Late-night or early-morning conference calls are now as much a part of daily business practice as the sticky note. And despite perfectly good videoconferencing capabilities, we all know that nothing beats face-to-face communication—and you can’t see, feel, and understand a local market through Skype. All of this means more extended road trips, odd hours, and host dinners with colleagues, which in turn lead to more and more unnatural living rhythms, less and less time with the family, and less time to breathe. Currency fluctuations, the complex quest for scale, and entrenched local competitors all pale in comparison to this great scourge of operating in a global business. We’re out of whack—running on fumes at times. We’re stripping the “lobal” out of “global” because we’re too tired to really think. When our lives get so out of skew, the significance and meaning we derive from work, and our motivation to give it our all, plummet. It becomes a battle to survive, let alone excel. How in the great wide world do we get our work-life balance back?
Gain some understanding It starts with understanding that the term “work-life balance” is no longer appropriate for the modern, global workplace. This term suggests that work and life are not as intertwined as they are, thanks to email, international communications, and heavier workloads. It implies the two strands could be separated as easily today as when a closing whistle ended a factory worker’s shift. And no two people define “balance” the same way, which stultifies the cookie-cutter measures often used to address the issue. The term “work-life harmony” is more indicative of what to aim for—integrating work and life harmoniously in a mutually supportive fashion that yields a net pleasing effect on the whole. After all, we only have life, work is a part of it, and harmony between the two is worth the pursuit. According to a Towers Watson Gibb workforce study in 2012, 72% of the highly engaged agree with the statement “My organization makes it possible to balance work and personal life,” which garners only 20% agreement among the disengaged. More than ever, global leaders, with disproportionately straining demands, need a laser-focused answer, not generalities, to bring their life back into harmony. I’ve developed a plan, called S.P.E.C.I.F.I.C., that pinpoints what you can do as a global leader to help others, and yourself, make progress toward achieving work-life harmony in this
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increasingly time-challenged global business world. Start with being intentional and holistic in your approach.
Getting Down to S.P.E.C.I.F.I.C.s Simplification. Complexity has a way of creeping steadily into our work lives in small, incremental doses that build up on us over time. We often don’t notice the cumulative effect of each little activity we engage in until we look up and suddenly see that things at work seem way too complex, overwrought, and unproductive. This is exponentially true of global businesses. It is critical to stop and ask two questions: “Why are we doing what we are?” and “Is it worth it?” Use power questions to challenge the status quo of activity. On one of my teams, we encouraged everyone in the organization to ask “Is the juice worth the squeeze?” whenever any new work was about to be created. This question forces you to stop and think about the proposed work and whether or not it’s worthy of the added complexity and effort it’s about to bring (global operations are complex enough!). Another power question we asked was, “How about halftime?” Fellow employees were encouraged to open meetings with the question “How about we do this meeting in half the time?” Setting such a goal forces discipline and gives time back, especially in those dreaded meetings scheduled to span multiple hours. It’s important to note that this charge is not meant to turn each meeting into robotic drills bereft of any human connection, laughter, or fun. The point is not to take the humanity out of the meetings, but to make the meetings more humane. In addition to power questions, you can employ power tools to drive simplification. These include “Save-a-Day” programs, which comb out enough waste during the workweek that employees get back an entire day, and “No Meeting Fridays,” where people focus on getting things done and clearing the way for a free weekend. I’ve seen a “Global Beat-the-Clock” program, where a multiregion leadership team committed to eliminating one late-night conference call a month through an organized, alternative, simple email approach. I’ve come across a “Global Shameless Reapplication” award program that openly celebrates when people effectively share or reapply good work from around the world to avoid reinvention of the wheel. All in all, work-life harmony in a 24/7 business world requires you to simply get serious about simplification.
Productivity self-audit. With a self-critical lens and watchful eye, you can pinpoint unproductive behaviors that drain time and energy. These behaviors or bad habits simply must go. For example, ever been on a global conference call where every
region shows up a few minutes late, has technical trouble connecting, and/or eventually launches into its own unfocused soliloquy? These habits get a 10 p.m. meeting off and running at 10:30 p.m.
Energy-renewing activities. Encourage participation in
activities that will restore energy so that employees have plenty when work starts and ends. Matthew Kelly, in Off Balance: Getting Beyond the Work-Life Balance Myth to Personal and Professional Satisfaction (Hudson Street Press, 2011), takes it further when he says, “Nothing affects personal and professional satisfaction like your energy level—there is no substitute for personal energy.” The options for creating energy-building activities at work are endless. Create a “Down the Drain” program built around eliminating that drained feeling employees can get when they leave work at the end of the day. The program could encourage a healthy lifestyle and might include a voluntary weight-loss challenge. For global trips, include time for the traveler to decompress upon arrival. I can’t tell you how many agendas I’ve seen that go straight from tarmac to get-together. Role-model leaving work at a reasonable hour and share the energizing pursuits you’re engaged in outside of work. Facilitate continual learning and growth as a source of energy. And get the sleep,
regularly do keynote speeches at occasions within my own company and in other companies around the world in pursuit of this inner need. Preparing for these occasions requires extra time at home, but I’ve chosen to forego a few other me-time activities that are less important so that I wouldn’t have to sacrifice family time. On global trips, I bring along my family when I can, offsetting the associated personal expense in other ways within our family budget. I’m trying to live one life, with work and life in harmony and mutually supportive of each other.
In touch with others’ situations. Having manager/employee discussions about work-life harmony is critical. Get in tune with what might be hindering or helping the cause for your employee (or yourself). Then be prepared to make reasonable adjustments to job requirements or deliverables to help lessen the strain. It’s also important to be creative in crafting mutually acceptable approaches to how the work gets done. Flexibility. One of the most common methods for assisting work-life harmony is the commitment to flexible work arrangements. Compressed work weeks, flex hours, less than full-time options, work-from-home options, and location-free jobs are just a few examples. Leaders granting such options are often visibly supportive and even role models themselves for flexible arrangements. They’re also
“Working toward is a herculean task. The family should be enrolled. Co-workers can help.” exercise, and nutrition your body needs. This must become a priority, even on long business trips. Take the time off from work to which you are entitled. Surprisingly, more than half of Americans do not take all of their vacation days, and 30% use less than half their allotted vacation time. And yet, engagement and productivity hover near all-time lows, according to Tony Schwartz in “The Productivity Myth” (Harvard Business Review blog, May 5, 2010).
Choices. Making choices and helping others make them is the most fundamental element of achieving work-life harmony. We all instinctively know this, yet we don’t do enough of it. And it’s getting harder, with so many places we can choose to spend our time on in businesses around the world. But choices must be made based upon reflection and a realization of the kind of life you want to lead. Choices should be informed by keeping what’s truly most important in front of you. It’s not just about saying no; it’s about knowing what to say no to, as part of a bigger, integrated plan. Then it’s about weaving all those choices into one tapestry. For example, I find it vitally important to live every day trying to inspire someone or make a difference in his or her life. I have found ways to weave this driving force in my life into work. I
mindful of creating the right equilibrium between providing flexibility in work arrangements and keeping a sense of community and accessibility (remote workers can admittedly provide a challenge in this capacity). Provisions for flexibility, accompanied by other provisions for accountability for delivering results, need to firmly be in place.
Involve others. Working toward work-life harmony is a herculean task. The family should be enrolled. Co-workers can help by not scheduling meetings at the start or end of business. They can help by respecting that a meeting from 9 a.m. to 10 a.m. ends at 10 a.m., not 10:15 a.m., which can throw off a whole day. The point is to bravely go public with the goal of work-life harmony and enlist all the help possible. Commit. Succeeding with efforts to achieve work-life harmony requires real commitment. It must truly become a priority, as there is perhaps no other goal that will inherently have more barriers, particularly in a global business world. AQ Scott Mautz is the author of Make It Matter: How Managers Can Motivate by Creating Meaning (AMACOM, 2015). He is an award-winning keynote speaker and a 20-plus-year veteran of Procter & Gamble, having run several thriving, global multibillion-dollar divisions along the way.
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Across Cultures By Suzanne Bates and Scott Weighart
Some 200 years ago, a fiery revolutionary named John Hancock had a thing or two to say about business. “The greatest ability in business,” he once remarked, “is to get along with others and to influence their actions.” Of course, Hancock was not merely a radical colonial. He was a lifelong entrepreneur specializing in mercantile trade whose success made him one of the wealthiest men in the Thirteen Colonies. So he apparently knew whereof he spoketh! Today, business executives, analysts, and authors typically echo Hancock’s observation to such an extent that the ability to influence others through executive “presence” is considered by many the secret to business leadership success. The Gartner Group, as just one example, has provided evidence via its numerous studies over the years of what makes companies, and their executives, winners.
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Topping the list of traits that make for effective business leadership is “communication and influence.” In a survey of CIO and IT leaders conducted by Gartner, this attribute ranked second (after “business knowledge and acumen”), while “technical skills” scored a meager number 12 rating. Despite all the confirmation, literally spanning the centuries, that a manager’s “ability to influence” is a high-priority skill, successful execution remains elusive. For that matter, even the definition of “influence” is hard for many leaders to pin down. In our increasingly global marketplace, where the demands of competition emanate from beyond a company’s
national borders, this is no longer a tolerable state of affairs. To understand why, let’s examine three of the most common challenges facing global leadership today: Global Challenge No. 1: How to effectively manage dispersed worksites. A truly global company can no longer house all of its employees under one roof at, say, a headquarters in New York City, Chicago, or Los Angeles. Satellite branches need to be established in London, Paris, Tokyo, or Mumbai. But how does a CEO or senior VP influence branch managers located so far away? Beyond a commandand-control approach, how does managing get done at all? Global Challenge No. 2: How to effectively manage employees who work “remotely.” Similarly, many employees now work from home, a café or library, or another remote location. They do not necessarily come into the home office to settle into their cubicle, at least not for 40 to 50 hours every week. How can leaders on any level manage by influence when their employee is not right there for them to see and to meet with directly? Global Challenge No. 3: How to effectively manage multicultural workforces. The issues of managing globally and remotely are complicated by the vast array of cultural differences that must be addressed today. Command-andcontrol worked fine in previous eras (such as Hancock’s time, when colonialism was in flower), but today’s global leaders must be extremely cognizant of and sensitive to global cultural mores and behavioral patterns. How can one manage by influence in the face of such a wide variety of employee expectations and visceral responses? Recent research conducted by American Management Association has offered a few hints, with one study suggesting that the key to success today may lie in prioritizing and developing what AMA researchers label “global skillsets.” The typical senior-level manager must orchestrate and coordinate
people and tasks that span any number of time zones globally. This means knowing how to align and engage remote, farflung employees from various cultures in a way that drives business outcomes. The strain this puts on managing through influence, versus simply giving orders, has never been more formidable.
Bridging the Leadership Gap Too many organizations have come to realize that their preglobal structures and internal processes only hinder their ambitions to compete worldwide. In short, their modus operandi is not aligned with who and what they need to be today. If such firms could redefine how they’re organized to achieve corporate goals, this would create an effective organization suited to today’s global business challenges. But how do you bridge the gap between where a company’s leaders are now and where they need to be? As with many things in life, this is a daunting challenge but an opportunity as well. The simple truth is that would-be global business leaders must learn how to develop their “executive presence,” or EP. This is an age-old concept that, until now, has been hard to define or develop. Many business leaders and even analysts have viewed EP in an “I know it when I see it” way— not very helpful at a time when powerful executive presence, steeped in the ability to influence rather than bark orders, is a must if a company is to manage its way through day-to-day and quarter-to-quarter global business challenges. Until recently, there has been no way to assess a leader’s level of executive presence. Many observers have claimed that EP is something one is either born with (luckily) or not, meaning it cannot be learned or developed. Yet, by analyzing so-called soft aspects of leadership, based on conclusions from white papers on psychology, leadership, management, communication, philosophy, and social action theory, we’ve been able to cull together a more scientific approach. Our AMA QUARTERLY I Summer 2015 I 35
resulting model consists of three principle dimensions encompassing 15 individual “facets.” As we piloted this comprehensive assessment model with practicing leaders, we learned that the ability to manage by influence can be accurately assessed and is always amenable to change. By using the assessment process to measure the impact and generate specific, actionable advice, leaders can change perceptions and create their own roadmap for success. What we found in our pilots and early work was that leaders were able to make dramatic changes quickly because the gaps were clear and the progress measurable. The qualities that matter most and are highly relevant to global leadership include “inspiring my employees to go above and beyond,” “mobilizing and aligning teams in new ways,” and “lifting organizational performance worldwide.” The best news is that any leader can practice and perfect them.
Character, Substance, Style Our model of assessing executive presence, based as it is on an extensive review of decades of other analysts’ research, consists of three dimensions: character, substance, and style. Each dimension has five facets, or sub-dimensions, for a model total of 15 (see box). Here’s a summary of the dimensions: • Character represents those qualities we develop early in life. Its five facets are Authenticity, Integrity, Concern, Restraint, and Humility. These facets are key to establishing credibility and building trust. • Substance represents qualities we develop as we mature as leaders. The facets here include Practical Wisdom, Confidence, Composure, Resonance, and Vision—a variety of related capabilities that touch on pragmatic and prudent decision making and the social-emotional savvy necessary to react to various people and situations. • Style refers to how we actively approach execution, especially through others. It includes Appearance, Intentionality, Interactivity, Inclusiveness, and Assertiveness. All are related to how a leader sets the tone, engages others, sustains focus, checks alignment, and addresses difficult situations without delay.
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We put this model into full operation with a multi-rater assessment, formally known as the Bates Executive Presence Index or ExPI™. With this assessment, leaders receive valuable feedback from a supervisor, peers, direct reports, and other stakeholders. In addition, we use an interview process to connect the themes we see in others’ perceptions to the leader’s business imperatives and leadership challenges. During the interpretation of the data, we get beyond a report on the ratings to a deep-level discussion of how the leader is showing up, including what is enhancing and what is detracting from his or her presence. The leader sees immediately how these qualities are relevant to driving business outcomes in real-time situations. How can our ExPI give leaders genuine insight into where they excel and where they might need some expert assistance? Let’s take the case of one of our clients, “Carla,” who completed the assessment and worked closely with an executive coach to improve her global impact, with very positive outcomes. A product manager at a Fortune 500 firm, Carla earned high ratings on the “hard” facets of Practical Wisdom and Vision. She was known as a leader with strong technical and business skill, able to bring insight to conversations and get people behind her. She also had strong social-emotional skills in the facets of Concern and Restraint. She cared a lot about people and was able to bring calm to a situation. However, she had a few gaps that would be especially difficult as she moved into a global leadership role. Her ratings on Interactivity, for example, came out quite low for two very different reasons. Consider these results: • Numerous comments were made about Carla’s poor response time when people reached out to her. This behavior came across as disrespectful, suggesting she did not value others and their time. It was especially troubling because she worked with a remote team that didn’t have face-to-face time with her. They wondered whether they “counted” or whether she considered their initiatives and issues important. • Another theme was her lack of visibility with peers outside the Asia-Pacific region or back at corporate headquarters. U.S.-based co-workers especially seemed to feel that Carla did not want to associate with them to the same extent that she did with the firm’s Asia-Pacific management team. When we raised this with Carla, she was surprised and dismayed to think that some on her team felt she was playing “favorites.” • Another “flat side” for Carla arose in the Character dimension in the area of Authenticity. This was a blind spot for Carla, who rated herself far higher than everyone else did. The gap showed up most dramatically over the question of whether Carla’s communication always matched what she was thinking. Many people believed it probably did not. Carla’s coach helped her understand how the gap between
The qualities that matter most and are highly relevant to global leadership include
“inspiring my employees
to go above and beyond,” “mobilizing and aligning teams in new ways,” and “lifting organizational performance worldwide.” her intentions and others’ perceptions had come to be. She learned how her gaps were likely keeping her from building the trust she needed to create change-readiness and changeexecution at a global level. Carla was able to take concrete steps to bridge these gaps and develop a phenomenal relationship with a global team of dispersed leaders. Before long, she was recommended for another promotion. Perhaps most important, Carla’s team was now eager to experiment themselves with new ways of exerting influence. For some, this meant exercising more Restraint (a facet of Character). They consciously slowed down to listen and asked clarifying questions rather than assuming the next step was hurrying off to take action. For others, it was almost the opposite: Those who struggled with Authenticity tried to speak up more to explain the rationale behind their thinking. They also began taking more risks by sharing thoughts and ideas which they might previously have held back.
Global Skillset Action Steps The qualities you bring to global leadership may be different from Carla’s, and as you review the Bates EP Model, you may find yourself wondering whether certain gap areas are muting your strengths and your ability to lead globally. It’s important to know, not guess at, how others perceive your impact. That’s why taking the time to learn through assessment and coaching is so valuable. It is no small challenge to lead teams from afar and across a variety of cultures. You must work extra hard to include them, engage them, inspire them, and move them to act. Knowing when you’ve reach an inflection point—whether you’re beginning a new role or facing greater challenge and complexity—is important. The only sure path to elevating your leadership style to meet such challenges is to open yourself to feedback and spend time reflecting on how to show up as the leader you want to be. As you work to reach this objective, here are three global skillset action steps to observe and implement: • Obtain multi-rater feedback from the people you need to influence. Ask for feedback and listen to peers, direct reports, and supervisors when they give you advice. The best way to do this is through a formal multi-rater assessment such as the one Carla used. Such a model can guide you to fully understand both your blind spots and the strengths you can leverage to reach the level of leader you want to be.
Make sure you have a qualified coach of some kind who can provide you with a competent interpretation of that data, whatever its source. • Stop underestimating so-called soft facets. What differentiates great leaders from everyone else is not so much their business and technical skill but, as we stated earlier (and John Hancock before us!), “the ability to influence.” In leadership, communication is action. Galvanizing people to act happens when the three dimensions and their 15 facets are measured and acted upon. This recipe drives leadership excellence and organizational performance, whether it is global in scope or “merely” local. • Begin with attainable micro-goals. Tackling your biggest goal, such as becoming an inspirational global leader, can be so overwhelming that it knocks you off course before you begin. So start small by setting micro-goals for yourself. These are small steps you can take each day and week to make (small) progress toward your larger goal. It’s akin to committing to a 30-minute per day exercise routine in order to lose one pound per week versus trying to starve yourself to lose 50 pounds in a week. By attaining micro-goals, you will put yourself on a course to true global skillset success. When global leaders appear to be natural, master influencers, their ability to influence others can appear almost magical. This was especially true before we discovered an accurate and scientific means of measuring executive presence. After all, if you can’t assess it, you assume it cannot be copied or addressed. But the most encouraging news is this: We now know that successful global leaders can grow by understanding their impact and taking specific steps to address behaviors that create the wrong perceptions. By slowing down to notice how you’re “showing up” to others, you’ll take the first step toward making a greater impact on the world. AQ Suzanne Bates, an executive coach, author, certified speaking professional, and former award-winning television news anchor, is CEO of Bates Communications Inc. The firm offers strategic communications consulting, executive coaching, workshops, and keynote speeches. Scott Weighart is director of learning and development at Bates Communications, where he creates innovative tools and content to assist the firm’s clients as they work toward mastering powerful communication and leadership skills.
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Creating a Culture That
Connects By Michael Lee Stallard and Katharine P. Stallard
John Young is on the road quite a bit. One particular evening found the president of Pfizer’s Global Established Pharma business on the rooftop of the Mumbai office. He was surrounded by 200 colleagues, being entertained with traditional Indian dances. The surprising twist? The dancers were colleagues, and the younger people in the office who had initiated and planned the special gathering for Young’s visit had called on the Indian tradition of telling Hindu stories through dance to illustrate certain aspects of the Pfizer corporate culture. For Young, it was inspiring to see the common culture that unites some 80,000 Pfizer colleagues worldwide presented in a local flavor. These weren’t words and phrases from a corporate program being parroted back. Rather, he was witnessing the culture being embraced and internalized.
Reframing Employee Engagement A major challenge facing leaders of multinational organizations is engaging people who work in diverse business and local cultures. The Gallup Organization’s research in 140 countries in 2011 and 2012 found that 87% of employees worldwide are either not engaged or are actively disengaged. Clearly there is a problem. Organizations that can learn how to engage employees worldwide can achieve a competitive advantage. In their drive for efficiency and focus on task excellence, most multinational organizations have become machine-like to the people who work for them. This vestige of the industrial age is at the heart of the problem of disengagement. To thrive in today’s fast-changing, hypercompetitive, and connected global marketplace, organizations must evolve
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beyond this disengagement and think of themselves as human communities, more akin to living organisms than organizational machines. To achieve sustainable superior performance, leaders must focus on both task excellence and relationship excellence. When we work with organizations to address relationship excellence, we use the word “connection,” describing it as a bond based on shared identity, empathy, and understanding that moves self-centered individuals toward group-centered membership. Unlike the term “engagement,” which people in many cultures struggle to understand, human connection is universally recognized. For example, in Japan the word ittaikan means “to feel as one body of people.” The French phrase esprit de corps literally means “spirit of the body.” In certain countries in Africa, ubuntu refers to one’s connection to the community.
Your Culture, Your Health There are three types of culture that affect the relational health of an organization and cause it to thrive or eventually die: cultures of control, cultures of indifference, and connection cultures. In cultures of control, people with power, control, influence, and status rule over others. This culture creates an environment in which people fear making mistakes or taking risks. Cultures of indifference are predominant today. In this type of
culture, people are so busy with tasks that they fail to invest the time necessary to develop healthy, supportive relationships.
Benefits from Connecting with Employees
A connection culture, on the other hand, provides the right framework for long-term success and is marked by three elements: shared identity, empathy, and understanding. Shared identity (or “vision”) is how the members of a group think of themselves. It’s based on a mix of vision, mission, values, and reputation. Shared empathy (or “value”) comes about when people care for others, rather than treat them as a means to an end. Shared understanding (or “voice”) is enhanced when good, two-way communication gives people a voice, though not necessarily a vote, in decision making. When these three elements are present, a bond is created which overcomes the differences that historically divided people. This bond creates a sense of connection, community, and unity that is inclusive and energizing, spurring productivity and innovation.
Drawing on research and our experience working with organizations, we see a number of reasons why leaders should make creating connection cultures a high priority. Individuals who feel connected perform at the top of their game. The neuroscientist Matthew Lieberman describes connection as a superpower because it makes people happier, healthier, and more productive. Research shows that people who feel connected experience superior wellness and well-being compared with those who feel unsupported, left out, or lonely. They are more enthusiastic, energetic, and optimistic. They make better decisions and they’re more creative. They also live longer. AMA QUARTERLY I Summer 2015 I 39
Individuals who feel connected give their best efforts. Disconnected and disengaged employees show up for the paycheck and give the minimum level of effort required to keep their jobs. People who feel connected care about achieving results, so they exert additional effort and persevere. Organizations with greater connection, therefore, experience a higher percentage of employees pulling in the same direction. Individuals who feel connected help improve the quality of decisions. Disconnected employees are less likely to communicate the information needed by decision makers to make optimal decisions. People who feel connected because they care about their organization’s performance are willing to speak up and share information that decision makers need to hear, even if they would rather not hear it. Individuals who feel connected actively contribute to innovation. They look for ways to improve the organization and contribute
business, are not afraid to take thoughtful risks, deliver on their commitments, treat each other with trust and respect and work with integrity each and every day. Developing this ownership culture will be key to our success. I am personally proud of Pfizer’s colleagues. Pfizer people care. They embody our humanity and innovative spirit, and are determined to tackle some of the most pressing health care challenges of our time. We are committed to creating an ownership culture that unleashes the creativity of our colleagues around the world. When Pfizer acquired Warner-Lambert in 2000, it adopted Warner-Lambert’s practice of referring to employees as “colleagues.” The word “colleagues” conveys a greater level of respect for people. In comparison, the word “employees” makes people sound more like a means to the end of achieving business results than unique individuals worthy of respect in and of themselves.
“People who feel connected because they care about their
organization’s performance are willing to speak up and share information.”
to the marketplace of ideas, which is important because innovation often occurs when ideas from different domains are combined or synthesized. This cognitive process has been described as “integrative thinking,” “blending,” and “connecting the dots.” When a robust marketplace of ideas exists, people have more ideas to potentially connect that will result in new products, services, processes, and businesses.
Connecting with Colleagues at Pfizer Pfizer, the multinational pharmaceutical giant, has offices in developed and emerging markets around the world. A native of Scotland, John Young joined Pfizer in 1987 and worked in a variety of sales, marketing, and executive management roles before assuming his current position. Given his background and his responsibilities, culture matters to him. With such a global span, Pfizer’s senior leaders have been very intentional in developing the company’s culture and taking steps to enhance connection among people who work throughout its businesses worldwide. Young says Ian Read, Pfizer’s CEO, has had a profound impact on Pfizer’s culture. He praises Read’s transparency. You can see all three elements of a connection culture in this section of Read’s letter to stakeholders the year after he became CEO: In 2011, we thoroughly explored what our culture is and how it needs to evolve. We engaged with leaders across the business and sought the candid input of approximately 11,000 colleagues globally. We concluded that we need a culture where colleagues behave like they are owners of the
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Pfizer explicitly uses the provocative phrase “no jerks” when it comes to behavior. This language clearly communicates that disrespectful, patronizing, condescending, or passiveaggressive behavior is not welcome. People who consistently treat others in this way are agents of disconnection. To make the cultural value of “no jerks” real, several years ago Pfizer launched and trained up to 80,000 colleagues worldwide on “Straight Talk,” an approach to giving and receiving feedback and holding potentially difficult conversations that safeguards relational connection and brings information forward. Pfizer colleagues were given Straight Talk coins they can pull out and place on a table during a discussion when speaking up is necessary. The simple object is a tangible reminder to all present of the “why” and “how” behind the initiative. Although the coins are not used as much these days, Young hears colleagues around the world use the phrase “in the spirit of Straight Talk” before they speak up. He has noted that the Asian region has wrestled the most with what Straight Talk looks like there, given the culture’s deeply embedded value of respect for elders and people in authority. Straight Talk gives them a common language to use and reinforces that it is OK, and actually encouraged, to speak up for the good of the organization. People feel more connected to an organization that is ethical. Pfizer leaders cite “winning the right way” and “performance with integrity” as the “shared responsibility” of all Pfizer colleagues. They encourage people to take responsibility, hold each other accountable, raise concerns, and ask questions, along with “saying no when it is the right thing
to do, regardless of the business impact,” and “maintaining Pfizer’s high standards in everything we do and everywhere we operate.” The leaders in a global business must manage operations in nations where meeting high ethical standards is a challenge due to corruption in the local culture. In some countries, Young spends as much or more time thinking about compliance issues as he does strategy issues. One way Pfizer seeks the opinions of its colleagues is through the annual PfizerVoice survey. Pfizer colleagues rate various aspects of the organization, including Pfizer’s strategy, the division/business unit’s strategy, organization system and structure, and the CEO and executive leadership team. Feedback from the survey helps hold managers and leaders accountable.
Getting Started In our book Connection Culture: The Competitive Advantage of Shared Identity, Empathy, and Understanding at Work (Association for Talent Development, 2015), we describe 15 building blocks to get started in creating a connection culture. Here are three of those blocks: • Hire, develop, and promote for competence and connection skills. Creating a connection culture requires developing a certain mindset in leaders. Education is essential. For an organization to gain the support of its leaders, they must understand what a connection culture is, why it’s important, and how they can create and sustain it. This information must be communicated to all current leaders during leadership training sessions and incorporated into new leader orientation. Organizations that are not intentional about developing culture tend to have a mix of subcultures. Your company can use annual employee engagement and connection surveys as a systematic way to assess connection and hold leaders responsible for creating connection cultures. The survey should ask all employees how their team, department, and organization are doing when it comes to acting in ways that are consistent with the organization’s values. It can be designed to pinpoint where the organization’s values are being met and where connection cultures, cultures of control, and cultures of indifference are found within an organization. Most managers hire and promote for competence but are not as intentional about assessing connection skills. Involve many individuals in your organization’s hiring and promotion processes. Have them compare notes, considering both the values of your organization and the character strengths that increase connection. These include passion for excellence, fairness, honesty, and humility. • Help people develop connection skills. Everyone in your organization needs to develop connection skills. This is especially true for leaders. Managers lead from authority, whereas leaders lead from a combination of authority and connection. It is not unusual for managers who are good at organizing tasks to require help in developing the personal
leadership skills needed to better connect with people and maintain that connection. Develop the habit of emphasizing positives. Psychologist John Gottman first observed that marriages were less likely to survive when the positive-to-negative ratio of interactions dipped below 5-to-1. More recently, psychologist Barbara Fredrickson found that a positivity ratio also applied in the workplace. People need affirmation and recognition, so get in the habit of looking for ways to affirm and serve others. Do this by looking for task strengths and character strengths, which reflect the excellence of a person’s work and the way that person goes about her work, respectively. • Establish knowledge-flow sessions for decision input and idea development. Holding knowledge-flow sessions is a practice that promotes connection through open communications. Begin meetings with positive comments to boost energy and creativity. Share your vision—your thoughts about what actions need to be done, by whom, and when each action needs to be completed. After leading with vision, say something like, “I don’t have a monopoly on good ideas, and we will be our best only when we all share our ideas and opinions.” Encourage dialogue by asking “what’s right,” “what’s wrong,” and “what’s missing” from your thinking. Everyone’s opinions and ideas should be considered, so be sure to ask people who are quiet to share what they think. Listen and consider the ideas put forth and implement good ideas, giving credit where it’s due. People will often have differences of opinion, and leaders should assure those in the knowledge-flow session that creative friction is healthy and actually desirable. With this understanding, employees can hold and voice opposing views without having them grow into combat. The key to maintaining healthy creative friction is to make sure you are trying to “get it right” to promote task excellence, rather than “be right” for the purpose of personal pride. As you consider the culture of your team and overall organization, keep in mind that culture is “local” in nature. While you personally may be operating within a connection culture, are there other leaders in your organization whose colleagues would say they are allowing or even promoting cultures of control or indifference? The average organization engages a mere 13% of its employees. Like Pfizer, create a connection culture and watch what happens. Employee engagement levels will rise, helping to boost your organization’s performance and provide a competitive advantage. AQ Michael Lee Stallard speaks, teaches, and consults with leaders to help them develop connection cultures that improve business results. He is the primary author of Connection Culture: The Competitive Advantage of Shared Identity, Empathy, and Understanding at Work (Association for Talent Development, 2015). Katharine Stallard is a partner at E Pluribus Partners. For additional information, email Michael at firstname.lastname@example.org or see ConnectionCulture.com
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Developing Leaders in a
VUCA World By Elissa Tucker
VUCA—volatility, uncertainty, complexity, and ambiguity—is changing how global businesses operate. It’s also changing what organizations need from leaders. A recent survey of more than 500 business leaders found near unanimous agreement that current business challenges require a different style of leadership. The survey, conducted by the nonprofit organization APQC and sponsored by T.H. Easter Consulting, identified the specific challenges that have heightened VUCA for organizations. Among these challenges are knowledge-based business models, fast-paced technological advances, the globalization of the workforce, and the push toward analytics-driven decision making. The leadership skills most critical to success in this environment include having a focus on cost and results and being able to work in teams, collaborate, think strategically, listen, and adapt (see Figure 1).
Dynamic leadership prevails How do organizations prepare individuals to lead effectively amid the volatility, uncertainty, complexity, and ambiguity that current business trends engender? APQC’s leadership
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research shows that in a VUCA world, a dynamic leadership approach works best. Unlike the traditional approach to leadership—which involves hierarchical structures, command-and-control procedures, and title- or seniority-based authority—the dynamic leadership style is characterized by nonhierarchical organizational structures, collaborative work practices, and distributed authority. Employees working in dynamic organizations possess more of the leadership skills needed for success (as shown in Figure 1), while dynamic leadership organizations have significantly more effective leadership practices and smaller leadership skills gaps (as shown in Figure 2). APQC partnered with the Center for Creative Leadership to learn about these practices. The research produced case studies on five leadership best-practice organizations that use the dynamic leadership approach. Together, these case studies on Cardinal Health, Caterpillar, Ford, Monsanto, and W.L. Gore reveal four success factors for developing dynamic, VUCA-prepared leaders.
Dynamic leadership organizations distribute authority and encourage collaboration. They make leadership everyone’s job, provide leadership development to all employees, facilitate leader connections, and offer incentives for leading dynamically. As a result, power is fluid, knowledge flows, relationships flourish, and motives are consistent.
Factor 1 Make leadership everyone’s job Leading an organization in a VUCA world requires more qualities than can be found in any one individual or exclusive group. It requires a broad view and a laser focus; vast knowledge and deep expertise; logic and creativity; and experimentation and efficiency. Dynamic organizations understand these demands and make leadership part of every employee’s job description. They afford all employees the freedom to decide and act, expecting them to lead as the situation and their expertise dictates. They also make it acceptable for all employees, including those working in formal leadership roles, to pass decision-making responsibility to others who are better suited to lead given a specific challenge or schedule. Cardinal Health considers all employees to be leaders. How
Charts: Courtesy of Elissa Tucker
employees lead and their scope of influence differ by role. For example, the way managers lead at Cardinal Health is different from the way its senior executives lead. At W.L. Gore, all employees take on leadership roles at different junctures. Associates have the freedom to make their own commitments. They commit to projects that match their skills and are accountable to their teammates. Team leaders emerge by following through on commitments and earning credibility with other associates. Even W.L. Gore associates with formal leadership commitments pass leadership responsibilities to others as the situation warrants.
Factor 2 Provide leadership development for all Opening up leadership responsibilities to all employees heightens an organization’s responsiveness, allowing qualified employees to react quickly to market changes. However, leadership dispersal also makes the organization vulnerable to inconsistencies, mistakes, and duplication of work. To counteract this threat, dynamic organizations provide all employees with organizationally consistent yet role-specific leadership development. Using the organization’s mission and strategy, they identify core leadership behaviors for different jobs. They then provide both formal and informal leadership development experiences that teach employees how to use these behaviors in their work. Using its mission and strategy, Cardinal Health codified the leadership behaviors that employees need to demonstrate into three leadership essentials: have a customer-centric focus with deep expertise; build strong relationships, foster teamwork, and develop others; and focus as a genuine leader on getting the right things done. Employees in different roles have different descriptions listed under each essential. For employees working at the AMA QUARTERLY I Summer 2015 I 43
managerial level and above, Cardinal Health has outlined additional leadership essentials. The behavioral descriptions for these additional leadership essentials are tailored to different managerial and leadership roles.
W.L. Gore has five buckets of leadership expectations: leading self, leading others, shaping the vision, leading the culture, and getting it done. The details within these buckets vary for different types of leadership: associate, team leader, business/ facility leader, functional leader, divisional leader, or enterprise leader.
Two leadership behaviors that are valued by all the dynamic organizations are employee networking and knowledge sharing. The dynamic organizations each have an internal networking and knowledge-sharing infrastructure which offers all employee leaders access to people and information that can help them lead. An employee can reach out to any other employee regardless of their roles. In addition, dynamic organizations also make relationship building and knowledge sharing key objectives of their high-potential leadership development programs. Caterpillar has many channels for communicating with employees and for employees to communicate with each other. Employees use an intranet knowledge network to share information, files, and processes. Senior leaders often deliver Caterpillar-specific lectures about leadership and sponsor action-learning projects that expose high-potential employees to the senior level of the organization. High-potential employees expand their internal networks, while senior leaders are exposed and gain access to current knowledge from different areas of the organization. Ford internally develops and delivers most of its leadership development programs so that participants can learn how to lead well within the company’s culture. One of the development programs, the Global Leadership Summit, brings 24 individuals from different divisions and regions together each year to learn Ford’s leadership behaviors. They connect personally and professionally, and learn about different areas of the business.
Factor 4 Offer incentives to lead dynamically Reaping the full benefits of an internal knowledge- and expertise-sharing infrastructure requires full employee participation. Dynamic organizations offer incentives for employees to share knowledge and embody core leadership behaviors. They have alignment between their HR practices and
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the dynamic leadership behaviors that they want to promote. They hire and promote employees with a record of exhibiting organization-specific leadership behaviors. And, they recognize and compensate employees for demonstrating these behaviors in their work. Dynamic organizations fill a high proportion of leadership roles through internal promotion. With relationships throughout the organization, internally promoted leaders are prepared to tap into and contribute to the organization’s collective leadership intelligence. W.L. Gore seeks to hire candidates who are prepared to be empowered, work on teams, and share leadership responsibilities. In its long and intensive interview process, W.L. Gore filters out individuals who believe that leadership involves commanding and controlling others. Rewards at W.L. Gore are focused on an associate’s work contributions as assessed by peers. In selecting associates for formal leadership commitments, Gore looks at whether their people would be willing to follow the associate. The dynamic leadership style is more effective for addressing current business challenges. In fact, APQC’s research shows that dynamic organizations are affected significantly more by these challenges. For example, the dynamic organizations in APQC’s study are more global, operating in an average of 27 countries, compared with 16 for nondynamic organizations. This finding lends support to the theory that it is these current business challenges—and the volatility, uncertainty, complexity, and ambiguity they create—that ultimately are motivating organizations to adopt the dynamic leadership approach. After all, collaboration, sharing, and flexibility, all characteristics of the dynamic leadership style, are particularly valuable for organizations seeking to adapt to new markets, new cultures, and geographically distributed workforces. AQ Elissa Tucker is a research program manager at APQC, a nonprofit benchmarking and best practices organization. She is responsible for developing and executing APQC’s human capital management research agenda. Tucker coedited and contributed to the book Workforce Wake-Up Call: Your Workforce Is Changing, Are You? (John Wiley & Sons, 2006).
Charts: Courtesy of Elissa Tucker
Factor 3 Facilitate leader connections
Everyone, Every Time, No Exceptions! By Lior Arussy
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Organizations and leaders are facing the convergence of three megatrends that are reshaping their value propositions, customer relationships, and talent engagement. Alone, each of these megatrends is a significant challenge. Together, they present an existential threat to the business— or an evolutionary opportunity. By and large, most leaders are neither ready nor equipped to address these changes.
The three megatrends Megatrend No. 1: We live in the transparency era. In the past, organizations were able to create a perfect image of themselves through carefully crafted marketing and public relations activities. As a result, people developed the deliberately designed perceptions the organization wanted them to have. Business aspects such as operations, process, or culture were kept hidden from the public eye. But the days of controlled images are gone. Today, the complete operation, down to details such as the salary of the lowest-paid call center employee, is displayed for all to judge and comment on. Organizations have discovered that this new reality has zero protection from PR fig leafs. In an era of complete transparency, where even one comment in a “closed-door meeting” can cost a presidential candidate his potential presidency, leadership needs to be redefined and new skills developed to deal with the 24/7/365 truth-telling. Megatrend No. 2: Change is no longer an event; it is a life reality. Remember when change management departments would usher in new technology platforms, new regulationbased policies, and other changes? Life was, by and large, quiet, with several peaks of change-related noise. Today, change happens so rapidly we can no longer call it “change.” This term implies some form of normalcy with occasional interruptions. But the interruptions are the new normal. Change needs to be developed as a new skillset for leaders to handle everything from new technologies and evolving customer tastes to upstart competitors that challenge decades-old business models. The speed of change will not allow for traditional debates and decision-making processes. Therefore, leaders must develop new competencies to handle change as a life reality. Megatrend No. 3: The value proposition has been redefined as “purpose and passion.” The evolution of organizations’ value proposition from products to services and then to experiences has reached its ultimate destination: purpose and passion. The quality of products has increased dramatically in past decades, and process efficiencies have been created through programs such as Lean and 6 Sigma. Today’s customers seek purpose-based vendors that match their value system. They want to partner with passionate organizations that deliver authentic value. The definition of
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“value” through purpose and passion brings with it a new challenge for leaders. What is the purpose of the organization, and how do you bring passion to life in a way that will be authentic and appealing? This change is 10 times more difficult when dealing with members of Generation Y, who seem to demonstrate little respect for authority and bureaucracy, and with veteran employees, who are cynical after years of cost-reduction efforts and borderline exhaustion from being understaffed and overworked. Employee engagement surveys have consistently found that only 30% of employees are engaged; the remaining 70% are either disengaged or actively disengaged. Adapting to the transparency era can be a daunting task. Organizations need a new approach to dealing with this convergence of megatrends.
From centralized to distributed leadership Traditional responses to evolving trends usually included some form of senior leadership meeting to discuss and evaluate the options. The chief strategy officer would present the options and, after six months of further deliberation, the CEO would share the “New Vision” with all employees at a town-hall meeting. Everyone was expected to go and execute the new strategy, often with few tools and little guidance. This centralized leadership approach was based on the belief that a few top leaders stir the big organization through their sheer power, insight, decisions, and budget allocation. In this centralized leadership model, a few executives did the leading. The rest followed. When examining the megatrends outlined above, we can conclude that the era of centralized leadership is over. Purpose and passion are not the outcome of a PR campaign, but rather the result of thousands of employees’ performance every day with customers. And in the transparency era, there is no budget large enough to force employees to smile sincerely. Every employee is exposed to the same level of scrutiny. The speed of change requires adoption at the execution level—not only the decision level—of the organization. Embracing change ought to be done faster and occur at every function and department level. Welcome to distributed leadership. We define “distributed leadership” as the practice in which every employee at every interaction is fully empowered to act in the best interest of the customer and the organization. The assumption is that the employees bear full ownership, at the
moment of truth, of making and executing the right decisions. Distributed leadership is not a new package for the old “empowerment” mantra. It is a new foundation for developing, managing, and spurring innovation in the organization through the sum total of everyone’s decisions.
Questions on the path of distributed leadership To approach the distributed leadership challenge, organizations need to examine their leadership platform and determine how ready is it to become a distributed leadership model. The following questions may guide the conversation. I chose not to prescribe a five-step model, but rather address the evolution toward distributed leadership through questions that require each organization to craft its own answers, based on its own DNA and cultural environment. Adapting to distributed leadership requires more than just a rational decision and a plan. It involves emotional concessions and personal realizations on the part of senior executives as to how they see their role and what they seek to get from it. This approach uses questions to provoke new thinking, while allowing each individual to reach his or her own path to distributed leadership. 1. As a leader, how do you define your power? 2. What is the purpose of your leadership? Why are you willing to endure the hardship of leadership? 3. What degree of trust do you have in your employees? What would you trust them to do? What wouldn’t you trust them to do? 4. What is the reason for the lack of trust? Lack of tools? Information? Practice? 5. What percentage of your employees rise up and embrace the challenge of leadership? For those who wouldn’t, why? 6. What percentage of your employees believe that the organization exists to achieve a goal greater than money and profits? 7. What percentage of your employees truly love the products and services you provide? 8. Do they find personal fulfillment in affecting customers? Do they know what their impact is? 9. What percentage of employee decisions will favor the customer first? 10. How often does your organization evolve and change? Engaging in these questions in an honest and open way will enable you to determine the level of readiness you have for distributed leadership both personally and organizationally. Distributed leadership, in light of the megatrends described earlier, is not really an option. But the pace in which you adapt to it will determine if you will lead the evolution or be led by it.
Two questions to steer the ship One of the most difficult elements of the shift to distributed leadership is the requirement that senior executives share
equally with all their employees (and, for that matter, their customers) the answer to a single question. It is a question they not only don’t know how to answer but often refuse to answer: “Why?” When executives are coached to start with “why” when making assignments to employees, some are offended. “My boss never explained to me ‘why.’ Why should I do it for my employees?” Many of the offended executives are products of the management paradigms of the ’70s or ’80s. They simply mirror their managers’ behaviors and, as such, are puzzled by the expectations that they explain themselves. They almost view doing so as a humiliating exercise that lowers their status in the eyes of employees. They’re right about one thing. Managers in the ’70s and ’80s did not bother to explain “why.” Employee engagement had a standard look: the paycheck. You got one, you are engaged. You lost it, you are disengaged. Needless to say, we have evolved since then. To combat corporate cynicism and adapt to the new Gen Y employment expectations, we need to learn to explain “why” and engage employees on a human level. Think about the “why” as the ultimate leadership coaching. The next question that can set your organization free from the shackles of centralized leadership and steer it toward distributed leadership is “What’s next?” Today’s organizations seek to “repeat and reinforce” and are focused on a different question: “What’s best?” They seek out best practices and try to institutionalize them. Institutionalizing practices and processes is the exact opposite of moving and evolving at the speed of light. It is a constant attempt to control behaviors, and it does not free employees to innovate and adapt. By focusing on “what’s next,” you accept that whatever happened yesterday was good for yesterday. Condition the organization to embrace and seek the change. Distributed leadership is the answer to the convergence of the era of transparency, change as the new romance, and the purpose-driven customer. It shifts the responsibility for leadership from a few senior leaders to thousands of employees. In reality, leadership has already been distributed if employees are expected to create an exceptional experience in every interaction and adapt to changing customer demands. Transparency requires everyone in the organization to become a chief spokesperson and defend the organization’s actions. Adaptation to change is happening faster than we are willing to admit. In short, distributed leadership is creeping into your organization as we speak. Some managers will stand by as it happens, while others will plan for it and execute against it deliberately. That is the biggest difference between the accidental leader and the one who plans for successful leadership. AQ Lior Arussy is the founder and president of Strativity Group and Be. Lead. Do! He is the author of six books, including Exceptionalize it! (Strativity Group, 2015). Follow him on Twitter @LiorStrativity
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International Skills Reflect Broadened Perspective T
his age is undeniably a global age. Virtually everything in our lives— the food and clothing we buy, the electronics we use, even the entertainment our families consume—has a global component to it. While international travel has increased slightly in recent years, travel alone doesn’t develop the kind of appreciation for cultural differences that prepares employees for positions where they have global responsibility. According to the U.S. Department of Commerce, 34.5 million employees work for U.S. multinational organizations worldwide. Even if your organization does not have offices outside the United States, you need collaboration and leadership skills to help you work with stakeholders in other cultures. Suppliers and affiliates often have global reach, and you may be selling your products to international clients. This globalization is why managing and working with people in other cultures has become such an important topic for organizations. In AMA’s 2015 Global Leadership Development Report, 47.7% of the organizations surveyed said they regard developing global capabilities in their leaders as a very high or high-level priority. In addition, we’ve seen an increase in demand for our onsite services for multinational implementation of training programs in leadership and working and managing across cultures. Unfortunately, organizations are struggling to keep up with the growing need for international skills. Only 22.5% of organizations have dedicated programs to teach these skills, often due to budget restrictions. AMA is positioned to help bridge that gap. AMA is a world-class leadership development provider in more than 40 countries worldwide. Whether you have a team of people in one location or 10, domestic or international, and need live or virtual training, for three days or three hours—AMA can provide any training delivery method you need and maintain a consistent curriculum delivered globally through any channel. Our training is internationally recognized by nine professional associations and 90% of Fortune 500 companies.
Edward T. Reilly President and CEO American Management Association
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