DEC 2013/FEB 2014 | dialoguereview.com
Global leaders debate the future of HR strategy INTERVIEW
Giovanni Bisignani: the man who revolutionized air travel OPINION
Sir Jeremy Greenstock balances leadership and teamwork
The phoenix rises again â€Ś but are global leaders as resilient and agile as the phoenix in the face of economic turbulence?
Building the female talent pipeline at pharma giant Novartis Pharma AG
If leaders really want innovative staff, they must kill stupid business rules
2014: the year social media becomes the essential leadership tool?
Meet the man who reinvented the wheel and took it to a global market
NEXT GEN! LEARNING FOR NEW CHALLENGES
Insight • Innovation • Impact We bring unique global insight to business challenges and development needs through our experience and diverse network of faculty • We create innovative educational solutions that draw on a wide range of unique learning methods • We enable leaders to raise their game where it counts, back at work
How do you turn data from a billion trades into a buying opportunity?
With next-generation infrastructure and services, Dell, together with Intel, is helping the world’s leading financial institutions securely manage hundreds of billions of pounds’ worth of transactions, every day. To see how we can help solve your most important business challenges, visit Dell.co.uk/domore.
Dell Products, Registered in Ireland. Reg. No. 191034 c/o P.O. Box 69, Bracknell, Berkshire RG12 1RD. Intel and the Intel logo are trademarks of Intel Corporation in the U.S. and/or other countries. ©2013 Dell Inc. All rights reserved.
36 Resilience redefines the terms for success and survival Luis Gallardo on why people are the reason companies succeed. Get that right, and you’ll weather any storm that comes your way
Resilience and inclusive leadership: a personal journey Business professor Kurt April gives a candid account of his long and often difficult process of personal change and development in South Africa – and how he beat the system
38 Divided we stand: the hallmark of a resilient company Strong cultural alignment results in a harmonious working environment and helps to co-ordinate employee behaviour and decision-making, as Nick Liddell discovers
42 Change-ability: the key to international success Agility is broadly defined as an organization’s capability to respond and adapt quickly and effectively to the changing environment. Linda Holbeche discovers why organizations need to exercise agility to be truly resilient
54 Putting resilience into practice in a volatile world Tiger Tyagarajan, president and CEO at Genpact, outlines the ways in which resilient companies can adapt faster, strengthen their global operations and innovate by harnessing international opportunities and resources
48 Leadership agility: a global imperative Business leaders recognize organizational agility is critical to be successful – but how are they developing this vital capacity. Bill Joiner examines how the leadership culture plays a key role in determining a company’s agility
58 If the problem is resilience, what is the answer? Liz Mellon summarizes the focus of resilience and outlines the attributes and actions that could help to create the levels needed for 21st century business
FEATURES 70 HR: dead or alive? The world is split over a boardroom recluse. The human resources profession is in need of a major overhaul according to some businesses, while others defend it explicitly. David Woods talks to some global business leaders about the future of HR
Xxx Serious business: up, up and away Xxx David Woods talks exclusively with Giovanni Bisignani, former director general of the International Air Transport Association
64 Building the female talent pipeline Claudia Bidwell examines the importance of building female talent and looks at how global healthcare giant Novartis Pharma AG tackles the issue of improving the number of female leaders in the company
78 Want to spark innovation? Try killing stupid rules Employees are finding it increasingly difficult to set aside time for big ideas or creativity. Lisa Bodell examines how people can be innovative when they are inundated with reports, policies and meetings
88 Embracing the circular economy It is unlikely economic growth can be sustained on the scale hoped for in the decades to come, unless goods for disassembly and safe recycling are designed. Alexander Collot dâ€™Escury looks at the global crises this circular economy will help to tackle
94 2014: the year of the social CEO Business leaders can no longer avoid being actively involved in social media because as consumers have become more social savvy, social media is quickly evolving into an essential leadership tool. Michael Gass looks at why it has become so crucial
98 The man who reinvented the wheel Sam Pearce recalls the excitement of how a simple idea helped him make the leap from design consultancy to global manufacturing company
OPINION & REGULARS
16 Mike Canning Curiosity might have “killed the cat”, but leaders look set to benefit from it
Editor’s Letter If “people are our greatest asset”, is the CEO really the chief people officer in business? Where does that leave HR?
SPARK! The first company in the world to recruit its CEO using only social media; business lessons from Greek philosophy; talent is defined as a critical global growth factor; our mission to increase female board membership in the African continent; the world’s worst bosses
21 Dave Ulrich Time to replace outdated business myths with new realities
26 South Africa: another ‘BRIC’ in the wall? In 2011, South Africa officially joined the BRICS group of now five emerging-market nations. Dialogue investigates the growth potential of its economy
101 Under the spotlight Global thinkers, practitioners, techies and bookworms give their views on some of the latest literary offerings, along with the apps and technology for the smart 21st century manager
22 Growing green How are global employers positioning themselves as sustainability leaders and integrating sustainable business strategies within their businesses?
28 Alberto Andreu A company – like a person – can become sick. How can leaders diagnose the illnesses?
110 Your Dialogue Have your say through letters, social media, feedback and blogs
93 Karina Robinson The tale of a whale: transforming an institution’s culture is like chasing Moby Dick
112 Sir Jeremy Greenstock Striking the balance between strength of leadership and teamwork
NOW IS THE TIME TO INVEST IN AFRICA
“Global executives and investors cannot afford to ignore the continent’s immense potential. Today the rate of return on foreign investment in Africa is higher than any other developing region.” — McKinsey Global Institute
Visit www.africacncl.org to learn more.
DEC 2013/FEB 2014
EDITORIAL David Woods EDITOR
Gareth Hobbs ART DIRECTOR, E-DIGITAL DESIGN
Glenys Trevor PRODUCTION EDITOR
Professor Kurt April is a Sainsbury Fellow and professor of leadership, diversity and inclusion at the University of Cape Town, an associate fellow of Oxford University, faculty member of Duke CE and fellow at Ashridge Business School (UK). He is managing partner of LICM Consulting (South Africa), owner-director of Helderview BMW (South Africa) and member of the Special Agenda Council on talent and diversity of the World Economic Forum.
Teodora Vezenkova EDITORIAL ASSISTANT
Juan Ramon Batista Perez GRAPHIC DESIGNER
EDITORIAL BOARD Dr Liz Mellon CHAIRMAN
NV ‘TIGER’ TYAGARAJAN
Based in New York, Tiger Tyagarajan is one of the pioneers who transformed Genpact (formerly GE Capital International Services) into a high-end business process management and technology services company with $1.9 billion in annual revenues. He began his career with Unilever in India, followed by three years with Citibank’s Consumer Financial Services businesses in business, sales, operations and credit. He became president and CEO of Genpact in 2011.
FOUNDING PRINCIPAL OF ROBINSON-HAMBRO
Mike Canning CEO, DUKE CORPORATE EDUCATION
Karl Weber CHAIR, EDITORIAL BOARD, LID PUBLISHING (US)
Marcelino Elosua CEO, LID EDITORIAL EMPRESARIAL
COMMERCIAL Rebecca Nolan
Sir Jeremy Greenstock is chairman of the UN Association in the UK and chairman of the strategic advisory company Gatehouse Advisory Partners. He was a career diplomat from 1969 to 2004, developing specialisations in the Middle East, transatlantic relations and the UN. After retiring from government service, he directed the Ditchley Foundation and worked as a Special Adviser to BP. He is also a nonexecutive director of De La Rue and Lambert Energy Advisory.
Lisa Bodell is CEO of futurethink, an award-winning author, and a global innovation expert. She has brought innovation to life for clients including 3M, Merck and the US Navy. She has carried her transformative message to 20 countries, speaking to industries ranging from pharmaceuticals and manufacturing to not-for-profit organizations. Her visionary ideas have made her one the most sought-after leaders in the field of strategic foresight and innovation.
GENERAL MANAGER (US)
Cristina Alvarez COMMERCIAL DIRECTOR (SPAIN)
Raul Vazquez MARKETING AND DIGITAL PROJECTS MANAGER
Jeanne Bracken GENERAL MANAGER (SPAIN)
Raul Lopez FINANCE DIRECTOR
MANAGEMENT BOARD Martin Liu PUBLISHER
Christine Robers MARKETING DIRECTOR, DUKE CORPORATE EDUCATION
Mike Canning CEO, DUKE CORPORATE EDUCATION
Marcelino Elosua CEO, LID EDITORIAL EMPRESARIAL
Copyright 2013 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the editor. While we take care to ensure that reports, reviews and features are accurate, Dialogue accepts no liability for reader dissatisfaction rising from the content of this publication. The opinions expressed or advice given are the views of individual authors and do not necessarily represent the views of Dialogue, LID Publishing or Duke CE.
Bill Joiner is a leadership expert and organizational change consultant, with 30 years of experience completing engagements with companies based in the US, Canada and Europe. He is co-author of the book Leadership Agility and co-developer of the Leadership Agility 360, an online feedback instrument that assesses research-based levels of leadership agility. He is also the co-designer of most ChangeWise consulting and training services. MICHAEL GASS
Michael Gass is an international new business consultant to advertising, digital, media and PR agencies. Since 2007, he has led in the use of social media and content marketing strategies to make agency new business easier. He is the founder of Fuel Lines, which has been rated among the top 100 marketing blogs in the world, according to Ad Age’s Power 150. He has worked with 160 agencies in almost all 50 states in the US and with agencies in 14 countries globally.
Picture credits: iStock: p1, 12, 13, 14, 15, 23, 26, 90 and 91. Please note that while Dialogue takes every effort to credit photographers, we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omited a credit for your image, please email the editor. ISSN: 2053-4361 Dialogue | Dec 2013/Feb 2014
David Woods EDITOR
What remains? “People are our greatest asset”. I can’t tell you how many times CEOs have bestowed the above phrase upon me with a dramatic gesture and a sincere expression. But, in all honesty, I often wonder if they mean that or if it has become one of the over-used business clichés we have become all too familiar with. “Human resources”, as we know it, did not exist 30 years ago and since then it should have become a strategic powerhouse of organizational development, as the war for talent rages on. But in the UK – as a case in point – no HR director sits on the main board of a FTSE100 company and, in some cases, the senior HR leader does not even have a seat on the executive board. This has not always been the case; large corporates including Cadbury and Cable & Wireless have had HR directors on their main boards in the past.
+ DIGITAL EXCLUSIVE David investigates the future of people strategy
What’s going wrong? If people “are our greatest asset”, why are the strategic parts of HR (talent management, organizational development and change management) moving to other departments such as finance? Is HR destined to stand for “human remains” or “historical remnants”? Over the past few months, I have been fortunate enough to have chaired two business roundtable dinners, in association with people engagement consultancy Purple Cubed, on the controversial subject “Is HR dead?” A morbid thought for a dinner discussion, you might think – but I can testify that the champagne was perfectly chilled, the food was delicious and the debate was very much alive on both occasions. All the delegates came from the service industry, which is the fastest growing business sector in the world, measured by turnover – so one would hope people really are their greatest asset. The first roundtable had guests made up only of CHROs and HR directors, while the second was compiled of CEOs and operations directors. The most interesting thing I noted was that while HR directors were keen to point out the strategic imperative of their role, CEOs agreed with them. Both groups were pushing for HR director representation in their C-suites, recognizing that the growing imperative for dynamic people strategy has moved the HR director into a role of trusted adviser to the CEO. As our columnist Dave Ulrich points out (p21), business silos have to be broken down. He says leaders can deliver capabilities by understanding how they become embedded through HR practices in people, performance, communication and work. He adds that with advice from HR professionals, leaders can make informed choices in each of these domains to stabilize capabilities.
Our analysis (page 70) takes the conversation about the future of HR into a global context asking international leaders about their views on HR (with some surprising results) – but I can’t help but think that the role of a business dialogue has to be to nurture collaboration between all the functions of a company for the greater good, rather than debating if HR is “dead” or if indeed it needs to be executed...
Dialogue | Dec 2013/Feb 2014
When the best leader's work is done the people say, "We did it ourselves." Lao Tzu
Roland Berger Strategy Consultants, founded in 1967, is one of the world's leading strategy consultancies. With more than 2,700 employees working in 51 offices in 36 countries worldwide, we are successful in all major international markets. Consulting is our passion. Along with Partnership and Entrepreneurship, Excellence is one of our company's core values. We deliver excellent results and develop world-class approaches. In this way, we create tangible and lasting value for our clients. We advise major international companies and public institutions on all issues of strategic management â€“ from strategy to new business processes and structures. For more information on who we are and what we do, go to: www.rolandberger.com Join the discussion on strategic management and read our latest thoughts on leadership at: www.think-act.com/blog It's character that creates impact!
0.1% Spain’s economy has emerged from recession after growing for the first time in more than two years, according to estimates from the Bank of Spain. Spain’s gross domestic product (GDP) grew by 0.1% between July and September this year, the bank said. Spain’s economy has been struggling ever since the credit crisis struck in 2008.
US Actor Robert De Niro is among the investors in a new property complex in the Chinese city of Shanghai, as part of a US-Chinese business partnership. Due to open in 2016, Project 179 will be a 76,500m2 (850,000sq ft) complex on Shanghai’s waterfront, including an arts centre, cinema, hotel and retail outlets. De Niro signed a deal with the Shanghai Bund Investment group.
Fashion brand Lyle & Scott has become the first employer to use only social media to recruit a CEO. The employer recognizes leadership is changing and wanted to find a dynamic forward-thinking CEO using the social sphere. The company has reported “great success” so far, with “some fantastic applicants” in the first two weeks alone, through Twitter. The screening process had an emphasis on the person rather than their CV, so Lyle & Scott also used Pinterest and Vine to narrow down candidates. Applicants had to create a “personal” CV with no professional or academic credentials. Recruiters wanted to know about their lives and what they do for fun.
of CEOs say they are able to sustain gains from their change management initiatives in the long term Source: Towers Watson Change and Communication ROI Survey (2013)
The ‘worst bosses’ in the UK 1. David Brent, The Office 2. Malcolm Tucker, The Thick of It 3. Basil Fawlty, Fawlty Towers 4. Edmund Blackadder, Blackadder 5. Lord Alan Sugar, The Apprentice 6. Derek “Del Boy” Trotter, Only Fools and Horses 7. Captain Mainwaring, Dad’s Army
‘There is only one boss, the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else’ Walmart founder, Sam Walton
The ‘worst bosses’ in the US 1. Miranda Priestley, The Devil Wears Prada 2. Mr Burns, The Simpsons 3. Tony Soprano, The Sopranos 4. Darth Vader, Star Wars 5. Bill Lumbergh, Office Space 6. Bill O’Reilly, Fox News 7. Don Corleone, The Godfather Source: Video Arts, August 2013
‘We need an EU which is open, completing the single market; competitive, reducing unnecessary regulations; and outward-looking, focused on breaking down barriers around the globe that stand in the way of all European business’ Sir Mike Rake, president of the Confederation of British Industry
of businesses train their managers to manage change, but only 22% report their training is effective Source: Towers Watson Change and Communication ROI Survey (2013)
RBS, one of the UK’s largest banks, has brought in a brand agency to help engage employees and improve customer service. Working with branding agency ORB, the company too the bold step of holding its staff conference ‘Think Outside The Bank’ in a former bus station near London. The idea of the conference was to cut through convention and protocol so the team used a blend of illustrative and visual story telling techniques and encouraged staff to paint their own graffiti. Delegates were all given coloured pens and sketch books to ‘doodle’ their experiences and interactions during the day, the whole of which was captured
‘Leadership is the art of getting someone else to do something you want done because he wants to do it’ Former US president Dwight Eisenhower
Duke Corporate Education (Duke CE) has taken up the challenge of preparing Africa’s top women to lead at board level. Its initiative, Women Leading Africa – ‘Board Leadership - Voices of the Future’ is an intensive five-day programme to enhance leadership and negotiation skills. Duke CE recognises developing woman leaders is critical to Africa’s transformation and wants female board representation to be increased by at least 30% throughout the continent. Duke CE’s regional director for Africa, Sharmla Chetty, said: ‘If we, as women, give ourselves permission to have drive and ambition and to make our perspectives count then we have the potential and power to change the world in ways that matter.’ In partnership with Oxygen Communications, the programme launched in Namibia in October, where speakers included Namibia’s prime minister Hage Geingob (pictured with Chetty) and UN executive director for women, Phumzile MlamboNgcuka.
of middle managers and 40% of first-line supervisors say their management does a good job of explaining the reasons behind major decisions. Source: Towers Watson Change and Communication ROI Survey was conducted in June 2013. A total of 276 large and mid-size organizations from across North America, Europe and Asia participated
by cameras for a live-edited film and by illustrators on giant canvases to hang in the bank’s offices. Bankers could even try skateboarding or street dance. RBS wanted to ensure employees were brought up-to-speed with strategies and knew their importance to the business and every customer. The chief executive of an RBS client shared his insights on ‘what clients want and need from their bank’ and told his journey from being disengaged by his relationship with the bank only 18 months previously, and the positive response from RBS since being confronted with the news. Two charities were also brought in to explain how business-critical it was for RBS to work with the community.
Talent, the economic potential of people, is one of the most critical drivers of growth in today’s global environment, according to the World Economic Forum and business consultancy Mercer. Their report identifies the countries that are best positioned to contribute to effective workforce development, growth potential, and economic success. The report is based on the Human Capital Index, a ranking of 122 countries representing more than 90% of the world’s population. According to the Index, countries in Northern and Western Europe account for eight of the 10 top positions. Switzerland heads the overall global ranking followed by Finland (2), Netherlands (4), and Sweden (5). Singapore, which ranks in third place, and Canada (10) round out the list.
‘We are what we repeatedly do. Excellence, then, is not an act, but a habit… To have a great idea, have a lot of them’ Aristotle
Dialogue is getting set to launch in Singapore in March 2014. As part of the journal’s mission to be a global connector, catalyst and conversation, it makes sense to unveil our vision for Dialogue, in the world’s fourth-leading financial centre and one of the five busiest ports on Earth. The 2011 Index of Economic Freedom ranks Singapore as the second freest economy in the world. There are more than 7,000 multinational corporations from the US, Japan, and Europe in Singapore as well as 1,500 companies from China and 1,500 from India. International firms are found in almost all sectors of the economy. Roughly 44% of the Singaporean workforce is made up of non-Singaporeans, so there are few better places on the planet to host an global networking event. This is your chance to meet the editorial team, senior representatives from Duke Corporate Education, find about Duke CE’s recent expansion into Singapore – and network with world-leading business thinkers and practitioners. This is an invitation only event, so contact Dialogue’s commercial manager Rebecca Nolan (Rebecca.firstname.lastname@example.org) for more information.
The case for curiosity In the September issue of Dialogue, I laid out conclusions from Duke Corporate Education’s CEO study and highlighted the new challenges facing leaders operating in this globally interconnected world – an environment shaped 24/7 by shifting rules, where grappling with the unfamiliar has become the norm. Michael Canning CEO, Duke Corporate Education
Our conversations with CEOs led us to identify that the challenges facing leaders today are less predictable, solutions need to be more systemic and the power to effect change requires moving collectives through influence as opposed to formal authority. But along the way, another interesting theme emerged. When asked how leaders need to adapt to these circumstances and challenges, several participants brought up the need for more curiosity. One CEO from Sweden noted: ‘I need to be hungry, study every day and be curious.’ Another from the Netherlands said: ‘What is really important is that you’re completely open-minded.’ And a CEO from Brazil shared his perception of leaders needing a diverse set of experiences: ‘Get as much broad-based type experiences to help you prepare—leaders need to get out and see and experience things.’ These comments hint at perceptual curiosity. A CEO from India commented: ‘There is a constant need to learn and renew, and, therefore, if leaders were relevant yesterday they may not be relevant today unless they renew.’ This highlights the increased motivation and drive to know and learn more, or epistemic curiosity. This is critical. As a CEO from Australia said: ‘We are in a turbulent situation. You have to try out a few things and be brave.’ Embedded in this quote is the need for leaders to engage in trial and error and experimentation. Engaging, not studying the problem, quickly fostering successes and killing failures are the keys. Curiosity seems to be an attribute and orientation of growing
importance for leaders to adapt and succeed. We sometimes use the phrase: ‘Curiosity needs to be part of a leader’s DNA.’ That said, I was surprised to learn 20% of human beings have a mutated gene that causes them to be more curious and restless. In an article in National Geographic called Restless Genes, scientist David Dobbs explains that geneticists believe they have isolated a variant of a gene, called DRD4-7R, which causes people to take more risks in exploring new places, ideas, relationships and embrace movement, change and adventure. Dobbs points out that 7R, the “explorer’s gene”, alone does not make someone an explorer. Five years ago, statistician Nassim Nicholas Taleb coined the term “black swans”— large events that are unexpected and highly consequential. We never see black swans coming, but when they arrive, they profoundly shape our world. Taleb suggests, since our ability and tools to predict black swans is low, the key to adaptation and survival is building anti-fragile institutions. Fragility is the quality of things that are vulnerable to volatility. So the opposite of fragile isn’t robust, sturdy or resilient—things with these qualities are difficult to break. Rather, Taleb says we need institutions that gain from volatility, variability, stress and disorder and have this crucial anti-fragile quality. A great deal of leadership energy goes into predicting the future and trying to create stability. It may be time to shift leaders’ energy to embracing the new environment and building anti-fragile organizations. To this end, I think our CEOs are onto something important. Curiosity, in its many manifestations, is well suited to help us, as leaders, widen our lens, engage the new challenges, experiment and learn faster, and build organizations that gain from disorder.
Dialogue | Dec 2013/Feb 2014
Africa: the next big opportunity
1 continent, 48 countries, 910 million consumers - 1 conference Meet, hear and learn from some of Africa’s most inﬂuential marketing professionals with expertise spanning advertising, marketing, digital, PR, social media and journalism, as they explore the rapidly changing consumer markets of sub-Saharan Africa. For more information visit www.thenetworkone.com/africa. To reserve your tickets* for what will be an insightful and inspiring day please contact; Paul Squirrell +44(0)20 7240 7117 email@example.com
In partnership with
Friday 31st January 2014 The Soho Hotel, London www.thenetworkone.com/africa * Tickets £350.00 per person before 20/12/13, £399.00 thereafter. Sponsorship packages available, please contact us for additional information. ‘Africa Day’ will be managed and hosted by thenetworkone Management Limited. For full terms and conditions please visit www.thenetworkone.com/africa
The Loft 19a Floral Street Covent Garden London WC2E 9DS tel: +44 (0) 20 7240 7117
THE DIALOGUE ROOM: bringing the world’s influential business thought-leaders together in one place
WHY is The Dialogue Room different? There are a myriad of clubs and events for business professionals, but the Dialogue Room is different – it is truly internationally focused. Great leaders think far beyond their own borders, so the focus of the content both online and at our events will have global relevance. Networking events will offer insightful debate, small panel discussions and introduce keynote speakers with audience participation and comments from Dialogue Room members. Events will be filmed and hosted online on The Dialogue Room website, reaching the international membership and being made available for those who cannot attend in person.
WHAT are the benefits for joining? Exclusive member invitations to networking events, which could incorporate intimate Q&A sessions with business gurus, working lunches, learning sessions or global forums, seminars and breakfast meetings. Exclusive access to the members’ site – the website will take the form of a modern social portal for business professionals to communicate with one another, share ideas and even headhunt. The filmed event highlights will be enriched by additional material such as essays on the theme, links to relevant news stories and further video contributions.
Exclusive access to research reports, webinars, essays, forums, news, business case studies, video interviews and additional social content on the issues facing leaders. Members set the agenda – they propose events on the topics they want to hear about, so content is tailored around the needs of the network. International networking facilitation – The Dialogue Room will help members set up private business meetings with colleagues, contacts and prospective clients across the world. Members can use the network to book conference space, meeting rooms and accommodation.
...ALL THIS PLUS – discounts, member offers and much more
The Dialogue Room is not just a club for managers – it is a forum for leaders to set the global business agenda. The Dialogue Room is for senior managers, leaders and thinkers who have agreed to foster dialogue to advance humanity’s knowledge and to make businesses more efficient, global and inclusive.
HOW to join? The Dialogue Room has the ethos that people can contribute to the conversation with their thoughts and benefit from hearing others. No one should try to convince people of their views, but just present what they believe and allow others to make their own decisions in an informed way. Members have to share that belief of an open and honest conversation – not a debate – in order to join. While The Dialogue Room benefits are exclusive, the membership process is inclusive and registration is absolutely free. Members are chosen upon invitation, by other members or by personal initiative, but must be leaders or senior management in their respective organizations (companies, universities, associations, foundations, media and political bodies from all countries). The club supports a different organization, the journal Dialogue among leaders and managers across the world, because we are sure that the forces behind this project – Duke Corporate Education and LID Publishing – share our values and we will be able to actively cooperate with each other in our common goals.
FIND OUT MORE: Visit www.thedialogueroom.com
Replacing old myths with new realities Dave Ulrich Professor at the Ross School of Business, University of Michigan, and partner at the RBL Group
Sometimes with age, experiences become routine, calcification sets in and change threatens. At other times with age comes wisdom, as perspective offers new insights. Let me hope that after many years (decades, ahem!) in observing organizations, I can offer a few insights on how old myths need to be replaced with new realities. Competitiveness is not strategy: it is strategy times organization. Many organizations win through strategic choices about where to compete, what products or services serve customers and how to measure financial performance. However, competitiveness is less about where an organization is headed and more about how to get there. Setting goals is easier than reaching them. Strategy without organizational discipline is false hope. Leaders who win over time need to spend as much time on how they get where they are going as they spend defining where they are going.
and delivered. Defining capabilities requires doing audits that specify which capabilities are required given customer expectations and strategic goals. Most leaders have done leadership 360s where they prioritize the leadership competencies they need to develop. Likewise, leaders need to audit their organizations to prioritize the capabilities that need to be upgraded. Organization 360s require getting perspectives from employees inside and customers or investors outside about the capabilities the organization requires for success. Customers who have confidence in an organization’s capabilities become customers for life. Investors who have confidence in an organization’s capabilities build reputation and increase intangible market value.
Leaders also need to deliver capabilities
Organization is not structure, but capability. A host of initiatives have been used to change the shape of organizations: downsizing, delayering, process re-engineering, rightsizing and so forth. These change the structure, but not the fundamental capability. Capability represents what the organization is known for and good at. Traditionally, organizations succeeded because they were good at capabilities of efficiency (managing costs), accountability (defining roles) and customer service (meeting customer needs). Increasingly, I see them having to become good at capabilities of innovation (new products, services and business models), collaboration (working together), adaptation (changing faster than markets) and information (communicating inside and out through social media). Capability is not ad hoc, but intentional. Just like there are strategic choices to position a company with customers, organization capabilities may be defined
Dialogue | Dec 2013/Feb 2014
Leaders must deliver capabilities. They can do so by understanding how capabilities become embedded through HR practices in people, performance, communication and work. Leaders can make informed choices in each of these domains to stabilize capabilities: • People: manage the flow of people through staffing, training and development, career and succession planning, and motivating. • Performance: manage accountability through setting standards, allocating rewards and providing feedback. • Communication: manage information flow through sharing data and insights from top to bottom, side to side and inside out. • Work: manage the flow of work through structure, policies and process management. Leaders who align these HR practices with the desired capabilities will build organizations that win. Overcoming these myths around competitiveness, organization and capability gives leaders a useful road map for fulfilling their responsibilities. When leaders create a line of sight from HR practices, to targeted capabilities, to strategy, competitiveness will not be an aspiration, but a reality.
growing green C
orporate social responsibility is a buzzword in business circles and MBA courses. The idea of the “sustainable business” and the idea that an economy can be circular – restorative or regenerative by intention and design – made it onto the itinerary of the World Economic Conference in Davos in 2013. The circular economy replaces the “end-of-life” concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems and, within this, business models (see feature, page 88). A sustainable business (or green business) is a company
that has minimal negative impact on the global or local environment, community, society or economy – it is a business that strives to have progressive environmental and human rights policies. Since the publication of the United Nations’ Brundtland Report in 1987, sustainability has been viewed by business thinkers as a three-legged stool of “people, planet and profit”. Sustainable businesses with the supply chain try to balance all three through the triple-bottom-line concept – using sustainable development and sustainable distribution to affect the environment, business growth and the society. The definition of “green jobs” is ambiguous, but usually they are linked to clean energy and contribute to the
2013 Sustainability Leaders
What specific companies that are headquartered in emerging economies are leaders in integrating sustainability within their business?
12 Other 66 DK / NA
11 ITC 2
41 DK / NA
70 DK / NA
53 Natura 5
18 DK / NA
80 DK / NA
21 Woolworths 14 Other 22 DK / NA
Dialogue | Dec 2013/Feb 2014
reduction of greenhouse gases. But more than a quarter of a century after the Brundtland Report, a comprehensive September 2013 survey of 1,712 corporate members of the United Nations Global Compact from 113 countries shows that while increasing numbers of chief executives recognize the need to change, they are not following through with concrete actions. Nearly nine in 10 of company boards say they discuss and act on sustainability issues, but a mere 8% link their remuneration packages to social, environmental and governance performance. Just over half of the companies include sustainability expectations in supplier documents, but less than a fifth actually do anything to help those companies set and review their goals â€“ and only 9% verify any remediation activities. Only 29% of respondents claim to align their lobbying to their sustainability objectives, only 38% report their emissions and other strategic data and just 14% of companies provide their directors with any sustainability training. While almost two thirds of large companies have a human rights complaint mechanism in place, this compares with less than a quarter for SMEs. But as a new breed of manager moves into the workplace, the statistics suggest change is in the air. Last year, BSkyB, part of News International, interviewed 751 graduate trainees, current and recently graduated MBA students and high potential middle managers earmarked for leadership positions. The survey found 70% of participants agree that sustainability can create new opportunities for business and just 21% believe that sustainability has to come at the expense of profit. More than two thirds believe difficult economic conditions should not be an excuse for businesses to ignore sustainability and a massive 96% plan on being involved with sustainability in their careers. In saying that, 78% of participants recognise that companies are making a real effort to address sustainability but a mere 3% believe that companies are succeeding in fully integrating sustainability.
Future Leaders In 2012, BSkyB interviewed 751 graduate trainees, current and recently graduated MBA students, and high potential middle managers earmarked for leadership positions
70% of participants agree that sustainability can create new opportunities for business
21% believe that sustainability has to come at the expense of profit
66% believe difficult economic conditions should not be an excuse for businesses to ignore sustainability
96% of respondents plan on being involved with sustainability in their careers
35% feel they have received sufficient sustainability training from their business school or employer
78% of participants recognise that companies are making a real effort to address sustainability
3% believe that companies are succeeding in fully integrating sustainability
34% say that creating social and environmental value through business is an important career goal
Dialogue | Dec 2013/Feb 2014
Sustainability A comprehensive survey of 1,712 corporate members of the United Nations Global Compact from 113 countries shows that while increasing numbers of chief executives recognise the need to change, they are not following through with concrete actions Nearly nine in 10 of company boards say they discuss and act on sustainability issues, but a mere 8% link their remuneration packages to social, environmental and governance performance
Just over half of the companies include sustainability expectations in supplier documents ...but less than a fifth actually do anything to help those companies set and review their goals â€“ and only 9% verify any remediation activities
of respondents claim to align their lobbying to their sustainability objectives
29% Just 14% of companies provide their directors with any sustainability training
While 58% of large companies have a human rights complaint mechanism in place, this compares with just 23% of SMEs
report their emissions and other strategic data
2013 Sustainability Leaders What do you think makes an employer a leader in integrating sustainability into their business model?
Commitment to sustainability values 24
Part of core business model
Executive leadership has strong sustainability values
Sustainable products/ services
Renewable energy/lowering emissions
Innovation/ research & development
Dialogue | Dec 2013/Feb 2014
South Africa: ANother ‘Bric’ in The wall? About one in seven of its citizens is infected with HIV
outh Africa, unlike other emerging markets, has struggled through the late 2000s recession, and its recovery has been largely led by private and public consumption growth, while export volumes and private investment have yet to fully recover. The long-term potential growth rate of South Africa has been estimated at 3.5%. According to South Africa’s Bureau of Statistics, between one million and 1.6 million people in skilled, professional and managerial occupations have emigrated since 1994 and it finds that, for every emigrant, 10 unskilled people lose their jobs. Among the reasons cited for wishing to leave the country was the declining quality of life and high levels of crime.
Most farmland is white-owned and the government aims to transfer 30% of farm land to black South Africans by 2014 80% of the South African population is of black African ancestry South Africa is ranked as an upper-middle income economy by the World Bank
South Africa GDP vs income/unemployment Gross domestic product ($billion USD) Unemployment rate (%)
Per capita income (% of US earnings)
It has the largest economy in Africa, and the 28th-largest in the world
By purchasing power parity, South Africa has the 5th highest per capita income in Africa
$151.11 BILLION $80.54 BILLION
$1.25 OR LESS 22.8% 18%
Poverty is pervasive, with about a quarter of the population unemployed and living on less than US $1.25 a day Dialogue | Dec 2013/Feb 2014
The UK, US, Canada, New Zealand and Australia have active recruitment programmes in South Africa. These countries accounted for 75% (by volume) of skilled emigration, with the UK receiving approximately half of annual skilled South African emigration.
REPUBLIC OF SOUTH AFRICA CAPITALS: PRETORIA (executive capital) CAPE TOWN (legislative capital) Bloemfontein (judicial capital)
According to The Economist, South Africa is falling behind other emerging markets, such as India and China, owing to several factors: the country is relatively small, without the advantage of a huge domestic customer base; it has had an unusually low rate of saving and investment, partly because of political uncertainties; an inadequate education system results in an acute shortage of skilled manpower; a strong and volatile currency deters investors and makes its exports less competitive; the infrastructure, although far better than in the rest of Africa, suffers from severe bottlenecks, including power shortages, and urgently needs upgrading. The Johannesburg Stock Exchange (JSE) is the largest stock market in Africa and the 14th largest stock market in world. At the end of 2012, the JSE had a market capitalisation of approximately of US$900 billion. There are still plans for the JSE to expand in the form of a pan-African exchange by initially enabling investors to trade in shares from Ghana, Namibia, Zimbabwe and Zambia. Later, it intends to expand this across the rest of Africa. Key employers
SABMiller (R485 million) SABMiller was the first industrial company to list on the JSE in 1897. SABMiller has 70,000 employees in 75 countries.
BHP Billiton (R627 million) The company began in Australia, but now it has expanded operations in 25 countries, employing 41,000 people. MTN Group (R334 million) This South African-based company has expanded its operations across Africa, Europe and the Middle East. MTNâ€™s vision is to be the leading telecommunications provider in emerging markets. It has 34,558 employees who communicate in five official languages and represent 55 nationalities.
AREA: 1.22 million sq km (470,693 sq miles) Population: 52,900,000
LARGEST CITY: Johannesburg
MAJOR LANGUAGEs: 11 including English, Afrikaans, Sesotho, Setswana, Xhosa & Zulu LIFE EXPECTANCY: MAJOR RELIGIONS:
MONETARY UNIT: RAnd
GNI PER CAPITA:
US $6,960 (2011)
MAIN EXPORTS: DIAMONDS
Metals & Minerals
International dialling code:
Anglo American (R364 million) Anglo American has operations in four commodities: iron ore, thermal coal, platinum and diamonds. It employs 100,000 people and contractors, and is the largest private sector employer in South Africa and the largest mining company in southern Africa. Standard Bank Group (R190 million) Standard Bank Group is the largest African bank by assets and earnings. It operates in 17 countries on the African continent and 13 countries outside Africa. FirstRand (part of First National Bank) (R130 million) First National Bank maintains banking subsidiaries it owns in Botswana, Mozambique, Namibia, South Africa, Swaziland, Tanzania and Zambia. Early evening load and haul operations in the Leeufontein pit at Anglo Americanâ€™s Kolomela iron ore mine, Northern Cape
Dialogue | Dec 2013/Feb 2014
In 2011, South Africa officially joined the BRICS group of now-five emerging-market nations. 27
Discovering your company’s corporate health status Alberto Andreu
Corporate reputation, institutional relations and social innovation director, Telefónica, and professor of organizational behaviour at IE Business School
‘I cannot understand why when we make a decision in this committee, it seems so difficult to implement it – if it gets implemented at all.’ ‘Every morning I wake up wondering why everything is so difficult, why it takes such a lot to get things moving in this company.’ How many times have we heard people say that, or said it ourselves, or something very similar? Why is everything so difficult? After 25 years teaching organizational behaviour to students taking courses in executive management and working with premier oil, banking and telecommunications companies, I believe the reason is to be found in their level of “corporate health”. I have become convinced that a company, just like a person, can become sick.
A company, just like a person, can be sick
What does “corporate health” depend on? It depends on two real variables: • The “clarity of the power structure”. I don’t mean just the formal structure or the management organisational tree. I mean an awareness of the environment of competition or responsibility, as it affects every individual. We are talking about a “management model” that lets you know who takes the decisions; at which level they are taken; the competition environment of each unit; and the speed with which decisions are taken as a consequence of this clarity. • Identiﬁcation with the company project. This means knowing to what extent the management team and the organisation is identified within the company vision, its brand, its values and its operating principles or ethical system. It implies an awareness of the level to which the strategy is shared by management units and middle management. It covers knowing whether the decision-making system operates in the light of these premises or if it responds to other variables (personal, situational, external, etc). Using these two keys or constants as the corporate health framework, four types of company can be seen:
• Fragmented companies: those in which the power structure is blurred and staff don’t identify with the company project as a whole, but with the goals of each of its components; companies where departments operate in isolation and are thus unable to share resources, objectives, customers and so on, and where power is delegated to each individual section. • Autocratic companies: those where all the power is concentrated in one person and their circle, so that important decisions as well as those concerned with micro-management are taken by a small number of people. In reality, no shared project exists, just loyalty to whoever holds power, and when dissent arises it is solved by getting rid of whoever is battling for said power. • Companies with potential: those which are able to maintain enthusiasm for an embryonic project on which everybody in the company is working. The problems facing these companies are usually concerned with growth, raising the professional level of the staff, and hence power sharing or a definition of a management model which goes further than the founder. Companies like this are in danger of splitting up if they hold different visions of the future. • Aligned companies: those which are familiar with their “management model”, which share and express the company vision, brand, values and principles. I believe this breakdown (which I have dubbed the “Corporate Health Table”) may illuminate the reasons why things are so difficult, according to which quadrant the company falls into. But it might help to initiate the measures needed to improve the health of the company via two simple courses of action – a move in the direction of the power clarification route or that of identification with the company project. I will have more to say about that in the next issue of Dialogue.
Dialogue | Dec 2013/Feb 2014
SEP/NOV 2013 | dialoguereview.com
Toppling the Brics: South Korea rocks the business world OpiniOn 19
Dave Ulrich unveils his threepoint formula for talent success REsEaRCh 62
Inside the mind of the CEO: Thriving in a leadership supernova
The only conversation that matters The 21st century globe In a multi-polar world, the structure of markets, supply chains and capital is turned upside-down. How can leaders confront the complexity? PAGE 29
$16.95 · 14.95€ · £12.95
Keep up to date with every issue of Dialogue, among leaders and managers across the world
Round-up of the latest business books, apps and management tools DialoGue article
Dialogue is an original, practical and world-class journal, which focuses on key issues and challenges encountered by business leaders and managers around the world.
down-to-earth mentality among leaders is the key to a global approach to leadership, along with an agile and pragmatic – cosmopolitan – mindset. The above sentence will read like an understatement for some, but research published in McKinsey Quarterly in 2012 reveals 30% of organisations in the US alone admit they have failed to exploit global because of insufficient leadership and personnel. Failures in a grasp of cultural savvy – outlined in the following pages – and even a reluctance to travel abroad, have placed some managers in the precarious position of attempting to lead globally while thinking locally. Back in 1994, in his Manager’s Guide to Globalization, Stephen Rhinesmith attempted to integrate the impact of people (employees, managers, and leaders) with the process of developing global organizational structures. Rhinesmith advised six managerial skills for success in a changing world: maintaining a global mindset; having a stakeholder viewpoint; trusting processes over structure; being able to adapt and change; valuing diversity; and developing lifelong global learning. He concluded that to be a competent manager, leaders must find ‘new perspectives’ for living and working in global organizations. But almost 20 years after Rhinesmith’s work, how close are companies sticking to this advice and are their plans working in making their leadership strategies truly – and effectively – global? In 2013, following a period of decline in 2008 and 2009, globalization is on the increase and corporates are preparing to expand their international empires. To do this, they need strong, decisive leadership from managers who think ‘truly globally’. Given the cultural idiosyncrasies that must be navigated, the concept of a ‘truly global leader’ is debatably more of a dream than a reality. This article will attempt to sketch out the reality, drawing exclusively on the views of managers and leaders on the ground (and overseas) in global organisations including Bosch and Fujitsu (see case study, page 71) – engaged in a dialogue addressing the issues affecting global corporates and suggesting ideas for solutions.
Global leaders: conquerors or collaborators?
A new breed of conqueror According to member based research organization Corporate Executive Board’s (CEB) study, while CEOs are increasing their investment in international growth, few are confident they have the leaders in place to execute on these strategies. CEB’s report, based on a global survey of business leaders, found 61% of CEOs are putting more emphasis today than they were four years ago on growing globally in a bid to improve revenue.
DialOGUE aRTiClE 68
ThE DialOGUE ROOm 16
The business case for leaders to improve the gender mix at work
What does it take to be a truly successful global leader?
Your invitation to join the exclusive club for global leaders and managers
vie with their competitors This is especia for lly true the suitable candidates. seasoned higher up executives are in short you go ready to Perhaps – take supply in the politiciaglobal leaders can many territori on critical roles In fact, only 14% take a leaf es. Fortune which took n’s book. Prior of this out of Global 500 to place in countries CEOs come year’s a remote the G8 summit adapt their other than , Ireland town in from homelands. in Northern their corpora base during US-style retail model, discussion June, several te have ‘gone But those leaders weeks of took place for a UK great customa recession. Best global’ and code. It who client in a bid Buy wanted moved abroad was decided– about dress to expand customers er service, but depending leaders, to offer failed reach leaders’ that world wanted to their busines on where including The report defines ‘great global as have reaped buy electric to recognise UK you are,’ Vladimir Russia’s So what, ses’ dividend he told Dialogu For growth Presiden Putin, UK those who: shape a vision for regional al product exampleand s. Are leader of global in the executives David s online. , Prime Ministert e. view, is the leadersh Camero s global re-emphasise it; take more risks PepsiCo early on in theirIndra Nooyi, CEO , was ip and what Dialogue strive for ‘Holy Grail’ Barack Obama n, born yet? US Chenna in their c-suites put to Presiden should corpora new-market tenure and learn from failures; aspire and educate of i, India, and leaders t busines Minister Andorfer, d in and, althoug tes in Shinzō Abe, Japanese Prime a German ? to leadership responsibility andbased ownership; are in the US, organisationss h she is taking the ‘forced native, is she has bolsterin informality’ would have the based at networked in the organisation and across gsilos; have focused PepsiCo beginning tentative steps UK head meetings Bosch’s of having on ’s reputati in grew global without their enough cultural sensitivity that it ‘Iwill notup derail on in anthem and abroad. completed office and has neck that all to manage expansion, cannot forget emerging market, the leaders ties to ensure rs that in their role or paralyse decision-making; spendthat,’ more been respons international a number similarly and I have were dressed she of – and Carlos time with external stakeholders than withGhosn, internal says. global empiresible for building the organiz placements for These are, no one was insulted the helm ation, as of the . course, stakeholders to gain critical marketofintelligence; car manufa man at the of challeng having a finding the but they well as generalisations (French) e previous form only and role as global leadershelusive secrets and identify and develop rising local talent to lay the cturers Renault , and marketi the list of the beginni Nissan to born in potential ng directorsales ip success Brazil into in (Japanese), was foundation for longer-term sustainable United Automo Andreas businesses pitfalls for ng of . a Lebanes educated success at Andorfe and, global tive in e general as such, Electronics r, global Shanghai, the market. need strong, languages. France and is fluent family, corporates manager, based Conquist ador: Juan tools – He has – in four to steer themdecisive, informe It is hardly a straightforward description He believes in China. power Cabrillo lawn and CNNjob d leaders explored Rodríguez as the ‘quintes been describe that to achieve through engineering garden, truly Californi minefield. and there is one surprising revelation: most global the internat sential internat d by at businessman’. a global and ional electronics company, leadersh corporates ional leaders do not want to globe trot. shows only Take US ip, AndCEB Bosch, have to electronics luxury brand ‘One of senior manage offer their for example 35% of those who are, by thiswas definition, considered giant Best the realities explains: born in Casabla Dior’s CEO, rs internat Buy, world is of today’s placements in 2011, just . It closed its UK operatio ‘great global leaders’ even as want the opportunity ional that it is there, because nca, Morocc Sidney Toledan an enginee 18 getting and more make the to prepare them o, and graduat o, r from its leaders months after launchinns to live abroad, although 51% more global has want to the École right global. Peoplemore focused were unable ed travelling g Centrale on giving ‘At Bosch, decisions. are responsibilities and 78% want leadership internatmore Do Globa to quickly more often we are constan Alexande ional footprin the brand an in Paris. He further afield adapting l leaDers r Collot and responsibilities. increasingly of fashion tly in t, expand CEO of Desso, d’Escury neeD to , and product than ever before, people to order to help our outlets a global and sport relocate? Taking the argument forward, piece of the ing the number advantaanother across • The mo carpets, develop pitches ge of growing carpet tiles and received s and components st effec toward true and move company in Asia. research from professional services firm Ernst &demand world and taking to be based in mtive global lead are being from every global leadersh qualities.’ ‘A busines for luxury sent to ers do n corner arket to ip Young, published in 2012, revealed that among outcomes, ot need goods or indirect s, no matter how of the world. localized according drive positive busines Cosm small ly affected leaders helps He is of the view the obstacles to building effective international global leaders opolit to a survey s market that having by the global or big, is directly ‘For a compan to bring an globa needs and of 11,500 company Corp by membe management teams areBut issues into could around conditions. y such as a businescultural l leadership is reflecte country’s r-based the underst the company, Bosch, orate Ex s exposur • d own leader This means differences, difficulties in balancing local and without people. anding ecutive Board ( advisory e run a success means we in our business internationalization In 2011, of the that hiring have environment, Purple Cubed’s If an observe ful ainternat as much global rethink global talent, retention problems and the lack of from all over customers, supplier managers CEB). Bellinger traditional ional busines which r were Sunley country as managi in order need to the world. s and colleagu leadership pipeline. s? in the world to visit a restaura diverse compan branch in ng director appointed Lynne to source relocation require In such a pitching Dubai. nt in any enhance corpo and watch of the compan candida multinational es y as Bosch, to is global tes most ments Bellinger and the rate performan – with all she would prospective foreign businesspeople y’s • The The CEB likely to Cultural intelligence the benefits leadership structur come with demonstrate explains: ‘A global witness study showed ce. clients, business from significa e it.’ and challeng leaders claim t he or how a global leader should Another theme that emerged the Ernst & nt differen is conduc just 18% individual But Jane es that ted. ces in how mindset of global regions, German most organizato be effective i Young report is that cultural intelligence is not yet a s will spend engagement Sunley, global will parity is looking n their role. Wh ions loo talking. essential at the areas benefit ‘global m CEO of organiz Asian busines more time ile widely accepted concept. and where concerned variation indset’ and arek for leaders wh people where listening s. This is polite even there can about the ation speople PurpleCubed, job descrip than willing to reloc o have a all about The term is relatively recent: early date. ‘There’s working failure of will be be global if theydefinitions exploring opinion. together is disagree incredibly global leadersh to hire the tion ultimately ate, that the benefits Inwere given and identify crisis, which little doubt that impact upon and studies of the concepts by P with leads compa ip to the Europea the wrong Japan, it is conside their contact of ing how The compewrong candida started one another nies ’s leadersh regions can will need type of te for n financia Christopher Earley and Soon Ang in whisky the book red rude . To do so, ip failures, in 2008, came manage an open, l successful tency that actually the position. to the incorrec to give a r and as ’ global she sharing a down Cultural Intelligence: cold Individual Interactions ‘It result explains it is rude Across global could be leader differen to establis mindset of . t level of influence to – or even tiates argued that and this hing a healthy models ce others leaders is their Cultures (2003) and amore fully developed laterattend by comes have traditional – and it ability to culture. button shirt sneeze. In the a meeting with a importa organizations become less Culturally is four times nt than having nt leadersh David Livermore in the Leading with Cultural US, ‘casual’ that (andbook ip • While is ironed relevant While means it is even have failed savvy more a ‘globa leadersh and and Bellinge relocati Intelligence. l minds polished many to realize ip requires r adds: on what constitu more difficult requirement shoes for women this. Global business ment for has typically et’. right cultural ‘To further support a combin tes casual can be According to Earley, intelligence are cultural skills to decide been a companies ha – arguabl global clothes staff, recruit nies regions around along with robust ation of strong allow capableand businesses leadership – defined as ‘a person’s capability toyadapt as he or she). North ve othe the fit in much explored. intelligence the world.’ roles, more direct friendlier than Brits, Americans d. For exampl r options that s to put their and trusted teams all locations. Then Alexander from interacts with othersfind from different cultural regions’, too, so but they hould be that that while Collot d’Escury him and organiz regional e, a busines are or herself a global experien the majorit CEB’s survey spin on and has behavioural, motivational, and meta- s contact could ces/resu chatting barbecu carpets, not wa not showed things and ations y of the e one afternoo lts. merrily carpet tiles is CEO of Desso, nt to re company, Companies share cognitive aspects.the Without cultural intelligence, operating and sport them a them re willinlocate, almost best leaders do n and negotiaat a corporate boardroom employ He believes adults, but in more three-quarters pitches theforeigners intellige ting fiercely g to tra next day. are businesses seeking to engage than 100 it year to year of in is challeng it is vital leaders spend time in vel more than down policy is not unusual for nt and capable countries. 70 susceptible to mirror imaging. think globally ing today them to that the that ‘from head the various ge 60 days a that we y oversee. resonance . ‘What office’ that be handed are going for many busines ographies But according to the Ernst & Young report, s leaders and social to challengin their location, through has little is immense yet they change as fewer than three out of 10 (28%) of those e it. They the rebalan feel unable more nurturin econom a need to ic cing of globalresult of the recessio surveyed felt that their top management team look towards econom environment g, collaborative n and wealth towards ies in Asia, a and had sufficient experience outside of their home where trusted It is creating Latin America truly valued their the rising Dialogue and respect talents and expertis work country or a sufficiently international outlook on | Sept/Nov and tensions 2013 Sunley interject ed.’ e are and differenelsewhere. decision-making. Dialogue is about substan s: ‘It’s not about t realities | Sept/Nov 2013 “an While recruiting locally would help to redress tial day-toharnessed, day informa ideas box”, it can provide this balance, in many emerging markets the supply a real compet tion which, if itive advanta of talent lags behind demand. This situation is ge exacerbated by rapid salary inflation as companies
What is today for challenging many busin leaders is ess that going throu we are economic gh immense change as and social the ongo a result of ing and the rebal recession global wealt ancing of h towards the rising economie s
In this age of globalization and diversity, no one individual, company or government has all the answers. The need is for different individuals, companies and governments, and their cultures and traditions, to learn from each other so they can better understand and resolve leadership challenges.
Dialogue will succeed as a journal by providing and explaining the best of current leadership thinking together with original insight and analyses from a range of experts, thinkers and practitioners.
Dialogue recognizes this fact and provides a vital source of new ideas for top executives creating, leading and developing businesses in today’s world.
Dialogue will be published every March, June, September and December; make sure you receive every copy in print, on your computer, on your phone or on your tablet. Subscribe today…
Following a period of decline, globalization is now on the increase and corporates are preparing to expand their international empires. In our first Dialogue article, editor David Woods talks exclusively to business leaders who have ‘gone global’ and moved abroad in a bid to expand their businesses’ reach – and have reaped dividends Illustrations: Ian Murray 68
Dialogue | Sept/Nov 2013
Dialogue | Sept/Nov 2013
Visit www.dialoguereview.com for more information or email firstname.lastname@example.org Retail price: $16.95 per issue for print, $11,95 per issue for digital; annual subscription for four issues $49.95 (including postage) and $19.95 for the digital version. Digital edition (individual price) USD $11.95 Euro €8.99 UK £7.99
Digital edition (annual subscription) USD $19.95 Euro €14.99 UK £12.99
Print edition (individual price) USD $16.95 Euro €12.99 UK £10.99
Print edition (annual subscription) USD $49.95 Euro €37.99 UK £32.99
In a Competitive Match You Have to Make Every Scoring Opportunity Count Are your leaders engaging and pitching with stakeholders and customers in ways that are…
Distinctive…engaging… inspirational…relevant... thought-leading and aligned to their world ?
The Pitch™ is an intensive “training ground” experience designed to challenge, stretch and provoke. Live business opportunities are pitched to a team of subject matter and business coaching experts who provide forensic, in-the-moment feedback.
© Transform People International
“That was intense, a real work-out. I now feel we are ready to win on ‘match day’”
To find out how your lead teams could benefit from a Pitch experience contact us now.
Transform People International improves business performance through people by changing mind-sets, beliefs and behaviours of leaders, communicators, collaborators and salespeople.
+ 44 (0) 1488 658686 E: email@example.com www.transformpeople.com
FOCUS Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world What is the answer?
RESILIENCE & AGILITY
THRIVING not merely SURVIVING As the world changes and economic uncertainty looms, the businesses that are resilient and agile in the face of turmoil are those that will not just prevail, but remain innovative and compelling
+ DIGITAL EXCLUSIVE Liz Mellon sums up the focus of resilience
Dialogue | Dec 2013/Feb 2014
focus Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world
Resilience and inclusive leadership: a personal journey Business professor Kurt April gives a candid account of his long and often difficult process of personal change and development in South Africa â€“ and how he beat the system Illustration: Mike Brooker-Jones
What is the answer?
Dialogue | Dec 2013/Feb 2014
As humans, we all experience deep yearnings for purpose. We want to mean something, and belong. We want to touch the inner reaches of ourselves and live full lives, but there are tall gates blocking the way to our inner landscapes and potentials. Learning to scale these gates should be the life work of all true leaders. It is a hard and long path that involves becoming resilient as well as changing old ways of thinking, living more consciously and purposefully, shrugging off pointless influence and standing upright in virtuous fortitude.
How can I lead more fully, and with purpose, to make others more powerful?
It therefore did not take too long for me to develop serious cognitive dissonance – on the one hand, your parents claim that you are their special/miracle child, that they love you and that they hoped that anything was possible for you; on the other hand, the country and rulers continuously reinforced the fact that you are not white and, therefore, not “fully human” and should not expect much from your life circumstances and chances. When confronted with extended periods of two such “truths” and you cannot reconcile them, the end result is continuous degradation of one’s self-esteem and selfconfidence. It doesn’t help this mindset when one sees his 6ft 1inch, normally-upright father, physically change his body shape to show submission, in the presence of white people.
I grew up in Apartheid South Africa, a person of “colour” born into a lower middle-class family. We had enough to eat, owned our three-bedroomed home (even after being moved out of an area that became designated for white people, without compensation), a car and clothes aplenty – but we did not frequent restaurants (the handful we were allowed to go to as people of mixed heritage) and no distant or overseas holidays were taken, mainly because there was no money for such “extravagances” (as my dad put it) and also because our Calvinistic (German) spiritual upbringing did not look kindly on such pursuits. Another “truth of the time” was that “work was a necessary form of suffering”, and that such suffering was good for our character development (much like the “necessary character-enhancing hidings” I got from my dad when I stepped out of line). In the main, my childhood was happy… until I developed some self- and other-awareness, and “awoke” to my context and systematized social reality (as a so-called coloured person) in which I was not considered white and, therefore, “less than”. Continuous harassment, as a young person, by the militarized police (and their attack dogs) and a ban from the multitude of beaches around Cape Town – as well as bans from the majority of restaurants, museums, movie houses, and the continuous reminder that you’re not welcome in your own country through “Whites Only” signboards on park benches, trains, buses, shop entrances, and so forth – ensured that one’s world perspective was very small.
Dialogue | Dec 2013/Feb 2014
At best, people in my community hoped for a stable job that they could go to every day. In addition, student loans, home loans and the like were not permitted for people of colour and, thus, many accepted their lot in life, and ironically appeared grateful for whatever white folk were willing to offer and dish out – and the inability for social movement and creating different, potential futures was prevalent in the psyche of the majority of South Africans.
+ DIGITAL EXCLUSIVE
Viewpoint: seeing resilience as a state of mind with Michael Jenkins.
Beating the system In such circumstances, one can: (a) fight back against the system (which I initially attempted, and got involved with the “wrong crowds” doing destructive things… and totally displeased my mother, whom I cared for dearly; I also had a family member, James April, who fought the system by being a very senior officer within the ANC military wing and, when caught, ended up spending 15 years on Robben Island with Nelson Mandela), (b) give up and give in to the system (either by putting one’s head down, doing what you were told and obeying the powers that were; or, by trying to assimilate with a white group – taking on their habits, sports, religion, ways of speaking, attempting skin whitening, straightening of hair, staying out of the sun, etc.); and (c) by beating the system, by being “better” than white folk at the very jobs they held, by being smarter and more qualified in the education they so freely received, and by never demonstrating less than excellence in whatever you attempted. I chose the last – I beat the system.
All three of these approaches required fundamental shifts in one’s personal identity, moving uncomfortably towards the very edges of one’s psyche and comfortability, and displaying an openness to being adaptable in the face of ongoing uncertainty and ambiguity. When such fundamental individual changes occur, one needs “pillars” on which to hold, because there has to be a denial of one’s inner self – mine were my deep sense of spirituality/faith, as well as the teachings of Steve Biko, founder of the Black Consciousness Movement who claimed that “our fight” was not with other white people, but with ourselves – we needed to accept ourselves for who we were and live authentically. At the time, I was not at all (ego) mature enough to live such authenticity: I had invested so much time and effort in creating a very acceptable persona (mainly for the benefit of white people, so that they could take me seriously), while subconsciously hoping that all people would learn to love and admire the external persona of myself and, in so doing, maybe I then could love myself (an external-in approach). After completing seven degrees and national diplomas (during which time South Africa had seen its first democratic elections), and numerous job-hoppings between private and government institutions, I was able to take up a job on the board of a prestigious international company, where I fought for shareholder interests. It was a time in which I invested all of my energy and time into “becoming important”. All was well, it seemed, but I longed for holidays and lacked joy and fulfilment in my work – still believing that work was a form of necessary suffering. My business school education also impressed on me that all individuals in corporate life existed for the maximization of shareholder value. Having a purpose At the time, I fulfilled the duties of my job, not understanding that real energy and influence come from having a purpose, and living out that purpose through the work and relationships one engenders. But I changed drastically one day when, inspired by my mother who, on her death bed, advised me
Inclusive leadership starts with an intention of wanting to be the best for the world
to live life passionately – not in pursuit of money and personal success only, but to focus my efforts on making other people powerful and living a life of significance (not importance). I therefore had my life crisis, in which I asked myself a few existential questions: Who am I? Is this me? What gives me meaning? Who is the “other”? Do I belong? What are my values – and am I able to live them in work and socially? What lifestyle do I want (as opposed to what job do I want)? How long was I going to mask my anger with compromise? How long was I still going to pretend to be tough and successful, when deep, deep inside I suffered from severe lack of self-esteem and self-confidence (hiding successfully, I foolishly thought, behind education, material success and outward brashness)? How can I lead more fully, and with purpose, in order to make others more powerful? Courageous choices The challenge, as always, was in translating my intent into real action, through making courageous choices. These disciplined and courageous steps towards a more fulfilling future, in which I had to unlearn and let go of many of my deeply-held attitudes and beliefs, did not come without doubts and fears. However, I was encouraged by the fact that if I did not do anything to change my personal course in life, that anger and power could continue to dominate every facet of my life, whereas there could be a shift to an enriched life experience. I knew that I needed help in embarking on a new narrative – my wife Amanda was a pillar of strength (able to help me confront the dark night of my own soul, to deconstruct my old paradigms and construct new ones collaboratively, while challenging me regarding the choices I was making in shaping who I was becoming) and others: the elders to whom I turned taught me that I had to turn from gathering more knowledge and instead had to seek wisdom, in which I had to let go of something every day (mental models, subconscious beliefs, emotional stances, stereotypes, resentment, shame and guilt); my mentors encouraged me in my search for self-identity and personal pride (self-love – not the selfish or narcissistic kind) within the milieu of disproportionate rank; and my
Dialogue | Dec 2013/Feb 2014
teachers told me to continue to demand excellence from others, while being willing to coach and teach those who could not as yet be excellent. Soft power I learnt that I did not always have to use hard power in my pursuits and work in order to get people to do what I wanted – coercion, might, control, economic muscle, operating from one’s role/position and using one’s authority. In fact, Nelson Mandela, Martin Luther King Jr, Mother Theresa and Mahatma Gandhi all effectively used soft power – equal to, or even more effective than, hard power – in which they were able to get others to want the same things that they did, responsibly. This power was characterised by generosity, attraction and influence, the appeal of cultural, social and moral messages, a respect for others’ traditions and an approach of deep care and love. I could see Plato’s “philosopher king” characteristics fulfilled by this latter form of leadership – and it was appealing to me. I learnt that true and lasting subjective wellbeing or happiness, through the lenses of this paradigm, comes when you treat the world as if it is not just a backdrop of your own journey; and if you have a relationship with the world that isn’t based on triumphing over it or complaining about it. It is premised on a dedication and orientation to something other than your own interests and concerns. It is a human trait to put ourselves at the centre of the world and attract willing followership by eliminating our concern for the smaller self, the selfish self, the political self, the material self. Role of a leader This is a form of leadership that looks deeply into the role of a leader; one that embodies four components. First, the role of the leader is to be the custodian of values, character and resources. Virtue must be understood and used in ways that heal and build community, as opposed to appealing to old stereotypes. This involves hearing the minority voice, the marginalized stance, the “other”, and widening the conversation, helping others cope with uncertainty and ambiguity, and avoiding the trap of absolutes, while teaching
Dialogue | Dec 2013/Feb 2014
The role of the leader is to be the custodian of values, character and resources
compassion (actionable empathy). Second, a leader needs to invest in personal renewal – taking time out for serenity, time for selfcare, growing in gratitude for those who have influenced their lives, investing in those people – and practices – that make them resilient, living out a purpose and saying “no” to all that is not in that purpose (vocatio). Third, leaders must be agents of healing – helping people to work through resentment and to become connected, restoring their sense of belonging, and reconciling conflicting images of the past with a vision for the future. Providing hope – becoming a voice for the marginalised and actively taking stances against and opposing despair, and embodying hope in one’s words, actions and deeds. And, fourth, leaders must move beyond just telling it “how it is” and practise “telling it how it could be” – to help others to see the potential and possibilities. Such leadership necessarily requires continuous active stances against the evidence to change the deadly tides that could lead to despair. It is not just about being optimistic or merely speaking about what could be, but actively taking stances and getting involved to help bring those possibilities to fruition – and, whenever and wherever encountered, to challenge: (1) hegemonic paradigms, (2) people who are stuck in fractured and (3) irrelevant ideologies, and evidence that highlights only spurious beliefs. In summary, inclusive leadership starts with an intention of wanting to be the best for the world, not necessarily only the best in the world. It is the basic call for all of humankind to become more than we currently are. But you can only be more if – through purposeful action – you help others and allow them to be more than you. You cannot be more if you don’t know how to be less.
● Kurt April is a Sainsbury Fellow and tenured Professor of leadership, diversity and inclusion at the Graduate School of Business of the University of Cape Town, an Associate Fellow of Said Business School (University of Oxford), faculty member of Duke CE and research fellow of Ashridge Business School (UK)
FOCUS Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand
Resilience redefines the terms for success and survival
Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world
Luis Gallardo Senior strategist, Burson-Marsteller
What is the answer?
In an uncertain time defined by rapid change, the word “resilience” has taken on new meaning. Resilience is no longer about simply fending off the occasional mishap; the ability to quickly adapt, recover and return reinvigorated is a constant requirement in the business world.
Resilience can’t simply live in the boardroom, though. It needs to be instilled throughout every organization, from its culture and capabilities to its operational decisions and development. These skills can enable employers to take control of the present – and direct their futures.
Resilient people tend to have what psychologists call an “internal locus of control”. They believe the actions they take will affect the outcome of an event. Another characteristic of resilience is the understanding that life is full of challenges. While business leaders cannot avoid many of these problems, they can remain open, flexible and willing to adapt to change.
Defining ‘whatever it takes’ Many businesses extend themselves into areas that don’t complement the company mission. Then, they ignore signs that indicate that things aren’t going well — or even deny that a problem exists at all. When the problems can no longer be avoided, it’s often so late that they fail to recover. And this is my point: resilience is about adapting before a potential problem becomes a real problem. At its best, it’s proactive — it is about being a step ahead.
Resilient people are also aware of the situation, their own emotional reactions and the behaviour of those around them. To manage feelings, it is essential to understand what is causing them and why.
To avoid complacency, emotional decisions and ill-planned ventures, it’s important to
Dialogue | Dec 2013/Feb 2014
always remember why the company is in business and what makes it different, and what are the main sources of revenue and sustainable growth. If leaders are prepared to do anything to get their businesses through a tough spot — including completely restructuring or realigning — they can turn a company around in almost any situation. Building a more resilient business Strong corporate values matter. They provide a sense of shared purpose and keep people working together for the same goals. These values are especially important in uncertain times. That is why it is essential as leaders to surround yourself with people who live by the same tenets you do — and the same strength, creativity and drive to succeed. The following are some guidelines that resilient organizations use to grow a stronger, bolder group of employees for a stronger, bolder business. Look after your people. Minimizing stress is a key issue in the frantic, changing 21st century world. People under stress are not alert to what is happening around them, and they are prone to oversights and mistakes. Establish a network of mutual support in your company, so people do not feel isolated and know how to get help when they need it. Encourage confidence. People need the strength to remain calm, focused and confident when handling crises. To do this effectively, they’ll need energy, drive, determination and conviction. Being positive, having clear goals and being open to new ideas and possibilities are essential to innovation – and making the right move for your company’s future. Provide support and challenges. Spend some time reassessing the way things are done in your business. Is there a better way of approaching an issue or completing a certain task? Ensure that your people will be able to respond to changes, including sudden crises, quickly, efficiently and successfully. Find strong, resilient leaders. People in senior roles need the experience, skills and behaviours to steer the company through difficult times, while also maintaining morale,
Dialogue | Dec 2013/Feb 2014
People are the reason companies succeed
commitment and enthusiasm. Leaders need to be challenging, forward-thinking, open to new ideas and innovative – and they should encourage these attributes in others. Value learning and experience. Expose people to experiences that will equip them for dealing with unexpected, difficult situations. Experience is a great teacher; if individuals are used to dealing with difficult situations, they will be more comfortable with, and confident in, their ability to think logically and creatively when they encounter them in the workplace. Put the right people in the right roles. Resilience needs to be part of all succession decisions – and there is no substitute for a person’s actual record of achievement: the challenges they’ve faced and what they’ve learned. Remember, you’re not just hiring for today. You’re hiring to prepare your company for tomorrow. Foster teamwork. Challenges require teamwork, all the way to the top. Trust, dependability and openness are essential, as are strong leadership and a realistic attitude. By working closely together, supporting each other, sharing ideas and spreading the workload, an overwhelming challenge will be less daunting, much easier to tackle and more successfully resolved. People make the difference Turbulent markets bring opportunity and risk; companies need to call on all their resources to navigate such uncharted waters successfully. What matters, however, is that each individual believes that these issues — values, purpose, boldness, imagination and others — are important and interprets them in his or her own personal way. In fact, the most significant lesson for any business leader is to know that while structures, procedures, processes, and systems can all be improved, the true source of resilience is people. They are the reason companies succeed. Get that right, and you’ll weather any storm that comes your way. ● Luis Gallardo is senior strategist at BursonMarsteller. Former managing director of global brand and marketing at Deloitte and author of the book Brands & Rousers, The Holistic System to Foster High-Performing Businesses, Brands and Careers
focus Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world What is the answer?
Divided we stand: the hallmark of a resilient company Strong cultural alignment results in a harmonious working environment and helps to co-ordinate employee behaviour and decision-making, as Nick Liddell discovers Illustrations: Mike Brooker-Jones There’s a rousing scene in Ron Howard’s 1995 movie Apollo 13 in which Ed Harris plays the role of Gene Kranz, NASA’s flight director, working desperately with his team to figure out how to bring the flight crew home safely, following the explosion of a service module on board a space craft. Emotions are running high. American lives are at risk. The team is discussing never-beforeattempted scenarios to get its boys home, against all the odds. At the conclusion of the conversation, Kranz galvanises his team with a solemn statement: ‘Failure is not an option.’ These are bold words. And they seem to capture the very essence of resilience: never failing. Leaders frequently hear these words repeated in the world of business – sometimes in an abbreviated form through the acronym FNAO. Failure is to be avoided at all cost.
Processes must be robust. Methodologies must be tried and tested. Certainty must be delivered. Resilience must be guaranteed. The problem is that none of this is true. The real-life Gene Kranz never uttered those words. They were dreamed up by the movie’s scriptwriters, following a conversation with flight controller Jerry Bostick, in which he explained: ‘When bad things happened, we just calmly laid out all the options, and failure was not one of them. We never panicked and we never gave up on finding a solution.’ There’s a big difference between stating that “failure is not an option” and the more reasonable approach to problem-solving described above. FNAO is used by businesses to communicate a zero-tolerance approach
Dialogue | Dec 2013/Feb 2014
to failure. This suggests sources of failure should be eradicated and that any instances of failure should be seen as a source of shame for the business, potentially prompting an inquiry into who is to blame and signalling subsequent unemployment for the poor soul who didn’t get the FNAO memo. But sound bites from Tom Hanks’ movies rarely translate into sensible management principles. Business life is not a box of chocolates. Jerry Bostick’s summary of NASA’s approach to making decisions in a crisis seems altogether more positive than FNAO: when bad things happen, don’t let failure distract you from identifying positive strategies for success. Failure is inevitable. Promoting a fear of making mistakes won’t stop them from happening. At best, it makes people risk-averse. At worst, it stifles good decision-making and encourages people to cover up cracks until they become too large to paper over. Lack of failure comes at a significant cost: lack of innovation. And innovation is vital for resilience. Of the original 1955 Fortune 500 companies, only 66 remain on the list today. And the rate of drop off is increasing. Just 283 of the 2013 list were Fortune 500 companies 10 years ago – a drop-off rate of more than 21 companies a year over the past decade. Cursory analysis of the companies that have disappeared reveals some common themes. Some companies – Dynegy, Enron, MCI WorldCom, Lehman Brothers – belong to a rogue’s gallery of businesses that have failed to act with integrity. A second group includes firms such as Motorola, Northwest Airlines, Gateway and Levi Strauss that have failed to anticipate smartphones, low-cost airlines, build-to-order direct computer manufacture and the rise of fast fashion, respectively. The surviving 66 companies are some of the world’s most relentless innovators: IBM, General Electric, Procter & Gamble, Pfizer, DuPont and 3M, to name just a few. Quantum leap It is difficult to launch new propositions or to introduce new ways of working without taking a leap into the unknown. Firms like GE, DuPont and 3M have experienced failure, but failure at these companies is regarded as an opportunity to learn. Failing in itself is not a crime, but failing to learn certainly is. Employees in these companies are not punished for pushing boundaries to unlock fresh opportunities for
Dialogue | Dec 2013/Feb 2014
Resilience is as much a cultural phenomenon as a structural issue
+ digital exclusive Click here for Fortune 500 performance data
growth. Failure is most healthily regarded as a harsh but valuable lesson in resilience. In the process of developing a commercially viable light bulb, Thomas Edison is reputed to have created 10,000 unsuccessful prototypes. I’m willing to bet he didn’t celebrate each time, but he did learn from each disappointment: ‘I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.’ These words echo the pragmatic approach to failure avoidance described by Jerry Bostick. Setbacks and disappointments are both painful and inevitable in the course of trying out pioneering ways of doing business. People like Thomas Edison can be admired because he failed systematically: failing, learning and then trying something different; never repeating the same mistake twice; persisting with the system until he had achieved his goal. These stories show that resilience is as much a cultural phenomenon as a structural issue. A strong company requires a strong culture. But what does a strong culture actually look like? In a 2007 paper titled Creating and Sustaining a Winning Culture, three Bain & Company partners shared the results of a worldwide survey of 1,200 senior executives, 91% of whom agreed that ‘culture is as important as strategy for business success’. The article stresses the importance of creating cultural alignment. First, this means working with senior management to create a “single voice” for the entire organisation. Second, this involves aligning “hard drivers” such as organisational structure, talent management systems and incentives to make sure the culture is embedded for the long term. None of this seems controversial. Strong cultural alignment results in a more harmonious working environment and helps to co-ordinate employee behaviour and decision-making. Management theorists prefer the tool of culture to a formal system of rules because it is a more positive way to inspire behaviour, rather than overtly seeking to control it. Rules also rob employees of their ability to take responsibility for their actions, whereas culture places the onus on individuals to be accountable for their own decisions and actions. Harmony, it seems, is best achieved
to its website: ‘We seek multiple points of view to ensure we have the best answers for our clients. An open mind to new information helps us improve our ideas.’ But let’s not confuse a strong culture with the need to reform. Challenging the status quo The surviving members of the original 1955 Fortune 500 have demonstrated a remarkable knack for resilience. In 1955, Thomas J Watson Jr was three years into his presidency at IBM and just beginning to refocus the business from a manufacturer of measurement and tabulation machines toward the development and commercialisation of electronic computer technology. And he understood how important it was to encourage people to challenge the status quo within a business. He coined the term “wild ducks” to describe employees who don’t fit in with the prevailing culture of the company. He saw these employees as a “priceless ingredient” for IBM.
through the exercise of “soft power” as opposed to stringent rules. But is harmony really such a good thing? Is agreement more valuable to a business than disagreement? And does a strong culture really require such a high level of consensus? The Bain report quotes an interesting statistic from another of its studies: 81% of executives agree that a company without a winning culture is “doomed to mediocrity”. Mediocrity isn’t something any business aspires to. It is something that businesses allow to happen. Could it be that this is the result of harmony and a consensus in decision-making? Are people merely pretending to agree with one another? Harmony is a seductive idea in theory, but in practice it relies on a combination of indifference, surrender, submission to authority and compromise. None of these is an attribute of effective or brave decisionmaking. Compromise is a sure-fire route to mediocrity. Intelligent people are more likely than not to disagree on important issues. It is better to encourage open discussion of their different views than to compel consensus. The Bain partners’ conclusions are striking given the culture of Bain & Company itself. According
‘Failure is not an option’ for turtles instinctively fighting their way from beach to sea
The term “wild duck” comes from a parable by Danish philosopher Søren Kierkegaard: ‘With his mates, a wild duck was flying in the springtime northward across Europe. During the flight, he came down in a Danish barnyard where there were tame ducks. He ate of their corn and liked it. He stayed for an hour – then for a day – then a week – then a month – and finally, because he relished the good fare and the safety of a barnyard, he stayed all summer. Then one autumn day when the flock of wild ducks was winging its way southward again, it passed over the barnyard and their mate heard their cries. His breast stirred with a great thrill of joy and delight, and with a great flapping of wings, he rose in the air to join his old comrades. But he found that his good fare had made him fat and his muscles so soft and flabby that he could no longer rise higher than the eaves of the barn. So he dropped back into the barnyard and said to himself: “Oh, well, my life is safe here and the food is good.” But, alas, he was not safe from the man who fed him, for he later discovered that he was being fattened for the kill.’ The moral of the story for Watson was that a wild duck can be tamed, but once tamed, the duck can never become wild again. He took to heart the point that a tame duck will never go anywhere. A retired IBM employee described Watson’s emphasis on “wild ducks” in a letter to the New York Times in 1989: ‘I first heard it in the mid-1960s when I was a young IBMer in New York. Thomas J Watson Jr, then chairman,
Dialogue | Dec 2013/Feb 2014
was speaking to employees in a telephone broadcast. Here is the part about wildfowl: “I talk a lot about wild ducks, and people kid me a good deal about my wild ducks. But it takes a few wild ducks to make a business go, because if you don’t have the fellows with the new ideas willing to buck the managerial trends and shock them into doing something new and better, the business pretty well slows down. So I would tell a 21-year-old IBMer what I’ve told a lot of 21-year-old college people… the priceless ingredient that a youngster has when he starts in business is that sense of not compromising beyond a certain point.”’
demonstrating this curiosity is that employees are in turn encouraged to be interested in their business and what it can achieve. Cultural strength isn’t measured by the level of agreement achieved within a company, but by an ability to accommodate different people and opinions without falling over. Inviting dissent provides an opportunity to stress test how resilient your company is, from the perspective of the people who are simultaneously most capable of identifying issues and resolving them. The nature of resilience? Resilience is about far more than mere failure avoidance. Fear of failure is a sign of weakness, not a source of strength. Failure is not optional: it is inescapable for a company that hopes to adapt to change. Economist Joseph Schumpeter coined the paradoxical term “creative destruction” to describe the messy process through which economies evolve. Resilient businesses evolve by challenging themselves to find new and better ways of working. It is the absence of such challenge that dooms a company to mediocrity and, ultimately, to failure. Perhaps Schumpeter would have called this “creative dissent.”
Dissent and diversity Enlightened organisations promote dissent and diversity of opinion as sources of resilience. PayPal is one such company. Set up after a chance meeting at Stanford University, Peter Thiel and Max Levchin created their first mobile wallet proposition in 1998, which evolved into PayPal in 1999. PayPal’s founders were preoccupied with fostering a culture that was strong but by no means orthodox or harmonious. Their belief was that the talent of individuals should not be held back by consensus or alignment. The organisation was antipathetic to meetings – gatherings of more than four people were viewed with caution and subject to immediate adjournment if they weren’t deemed to be productive. Disruptive behaviour was required, not discouraged. David Sacks was PayPal’s chief operating officer and subsequently founded Yammer in 2008. In a 2011 interview with the New York Times, Sacks discussed the importance of a democratic culture: ‘You have to create a culture in which dissent is valued. And there’s probably a lot of ways to set that tone. Certainly you can tell if you have a culture of dissent when you walk into a company. People can figure out very quickly whether dissent is encouraged or whether it’s actually something that’s not welcome. It’s a red flag to me if there’s just too much consensus and not enough dissent. I feel like in any human community there’s always dissent because people just disagree. Anytime there doesn’t appear to be dissent, it means that the corporate culture has just shifted way too much toward consensus. That means the leadership just doesn’t welcome dissent enough.’ Encouraging dissent lets employees know that management is curious about and willing to act upon their opinion. The corollary of
Dialogue | Dec 2013/Feb 2014
Resilience is more about people than process. Their ability to respond and behave with common sense. The importance of thinking for themselves. Peter Agnefjall, who in 2013 spoke to the Financial Times about becoming Ikea’s fifth chief executive, expressed a similar sentiment in discussing his strategy for continuing the company’s 70-year history of success: “Simplicity and common sense are key to continue to be [successful at] Ikea, and you have to trust in people. So far I’ve never seen a rule that has been better than common sense.” This sounds very basic, but it’s at the heart of resilience, where everyday human decisions and thought processes can be transformed into real action and moments of magic.
+ digital exclusive Click here for a sneak preview of Nick’s latest book
● Nick Liddell is strategy director at Dragon Rouge London and co-author of Business is Beautiful Further Reading Creating and Sustaining a Winning Culture, Meehan, D Rigby and P Rogers, Harvard Business School Publishing (2007) Business is Beautiful, Jean-Baptiste Danet, Nick Liddell, Lynne Dobney, Dorothy MacKenzie, Tony Allen, LID Publishing, 2013
focus Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world
Change-ability: the key to global success Agility is broadly defined as an organizationâ€™s capability to respond and adapt quickly and effectively to the changing environment. Linda Holbeche discovers why organizations need to exercise agility in order to be truly resilient Illustrations: Mike Brooker-Jones
What is the answer?
Dialogue | Dec 2013/Feb 2014
After a decade of unprecedented global economic and geopolitical uncertainty, many companies and institutions face extreme competitive and operating pressures with squeezed budgets and margins. Is it any wonder then that organizational agility now sits high on executive and board agendas in every sector? An overwhelming majority (88%) of executives in a substantial 2009 study by the Economist Intelligence Survey (EIU) cited agility as key to global success. Change-ability Brought together, agility and resilience represent an organization’s “change-ability” or adaptive capacity; one without the other does not work. Focusing on agility alone – especially through cost-cutting – can become a zero sum game if vital trust and employee engagement are undermined; focusing exclusively on resilience can result in risk-averse cultures. Getting the balance right is crucial, as is building the cultural foundations of change-ability, to equip organizations for continuous change. The bedrock of change-ability is a positive and trusting employment relationship between employers and their workforces, based on a shared sense of purpose and values. What is agility? Originally linked with lean manufacturing, justin-time supply chains and process improvement in the 1990s and since informed by complexity science, agility is now more broadly defined as an organization’s capability to respond and adapt quickly and effectively to the changing environment. Several current studies are discovering that to be agile, organizations need a multi-dimensional range of capabilities. Speed is of the essence in today’s hypercompetitive phase of globalization, because technological advances are pressuring costs and prices much faster through increasingly connected supply chains than in the past, squeezing margins ever tighter and making the very notion of sustainable competitive advantage questionable – as firms like Microsoft, Nokia and BlackBerry bear witness. The ability to carry out rapid decisionmaking and nimble execution is therefore a defining attribute of an agile business. Agile organizations react swiftly and decisively to sudden shifts in overall market conditions, to the emergence of new competitors and the development of new industry-changing
Dialogue | Dec 2013/Feb 2014
The ability to access the right information at the right time is crucial
technologies by developing a range of products that satisfy a range of customers. Organizations that cannot move fast enough to meet customer needs or fail to seize opportunities, innovate, trim costs and avoid major errors soon go out of business. Just look at the retail sector where a combination of tough trading conditions, reduced consumer spending and fierce competition from online retailers has led to the closures of big name UK high-street firms like Woolworths, Comet, Focus and Jessops in recent years. Many companies are struggling to make sense of the volumes of information at their disposal and to implement not just one business model, but several. For organizations whose products and services are becoming obsolete, the strategic choices are stark. They must find new and non-traditional avenues to apply strengths if they are to remain competitive and responsive. Keeping ahead requires innovation and fresh thinking around strategy. Take the case of Kodak, a company founded in 1892 and which made photography available to the masses, but had failed to adapt its business model to the development of digital photography. Kodak filed for Chapter 11 bankruptcy protection in January 2012. In contrast, Fujifilm, a firm whose roots are in photographic film – an industry that declined with the advent of digital photography – took a different course, choosing to reflect on how it might apply its expertise to new markets. In September 2007, the firm launched a line of skincare products called Astalift based on technology it had developed for film (Economist Intelligence Unit, 2009). Many market changes are driven and enabled by technological advances as new information technologies – including high-speed internet, low-cost devices and intuitive social media platforms – create new social ways of linking up, open up new communications channels and shift consumer patterns. Agile organizations remain strongly in touch with constantly changing customer needs, and a customer-centric approach provides parameters for innovation, helps create value and ensures flexibility. Agile structures feature adaptable supply chains, strong and robust operations and processes, with process improvement and team working as embedded norms, together
with clear-delegated decision-making authority at all levels. In an era of open source and collaborative networks, agile organizations are dynamically connected via partner relationships that can act as sensors for relevant emergent changes in the environment and potentially as co-builders of new markets. In a turbulent context, organizations are likely to reconfigure themselves many times in pursuit of greater agility. Organizations spend significant sums on change management, yet an estimated 70% of change programmes (such as mergers and acquisitions) fail (KPMG: Project management survey, 2010). Agile organizations learn to design and implement change programmes in such a way that change “sticks” – for a while at least. The theory is fine; in practice, despite most executives in the EIU study viewing organizational agility as a competitive necessity, many admit their companies are currently not sufficiently flexible to compete successfully. And while the good news is that Kodak has emerged from bankruptcy protection slimmer, and with a new business plan – focused on packaging, graphic communications and functional printing – to thrive in this highly competitive market, company leaders will need to lead cultural change and find fresh ways of making business faster, easier and less expensive for its customers. Resilience Agility alone will not secure sustainable success. In a future defined by ambiguity, unpredictability, complexity, multiple stakeholders and rapid change, organizations also need to be resilient, capable of responding rapidly to unforeseen and problematic change, and of bouncing back from setbacks with speed and determination (Marcos and Macauley, 2008). Ironically, market-leading businesses often lack resilience since executives typically come to believe their own brand rhetoric, making them blind to what lies around the corner. As a result, they may underestimate the strength of new competition or the potential of new technology applications to change consumer tastes. Many executives typically work to very short-term time horizons, which can make organizations reactive rather than proactive. In contexts of turbulence and increased scrutiny, some organizations develop risk-averse cultures; fear of unintended consequences can lead to stagnation and stifle innovation.
The building blocks of organizational agility and resilience are not complex
In contrast, resilient organizations anticipate and address pivotal events that affect their business by being alert to both internal and environmental changes – opportunities as well as challenges – and responding to those changes effectively using available resources in a timely, flexible, affordable and relevant manner. For a notable retail success story, look at the John Lewis Partnership, a company founded in 1864 that has recently become the largest multi-channel retailer in the UK through its shrewd anticipation of changing customer preferences and the timely development of its online business. Resilient organizations need flexible and competent staff who are engaged and productive, willing and able to adapt to continuous change. But the common pursuit of organizational agility through cutting core operating costs and embracing flexible workforce models often undermines employee engagement and leads to increased workloads, outsourcing, redundancy, short-term contracts and reduced protection for employees. Staff bear the brunt of agility in terms of lost jobs, security and satisfaction. The typically wide disparities between executive rewards and those of the remaining workforce undermine a sense of common purpose and make a mockery of the message “we’re all in this together”. When the employment relationship between an employer and its workforce becomes heavily unbalanced in terms of relative risk and return, it tends to become more transactional and low trust in character. And even when jobs are not at risk, demands for ongoing change may cause some staff to progressively become disengaged and to passively resist anything that challenges their work-world. In such circumstances, speed, innovation and willingness to “go the extra mile” become empty aspirations. Why are agility and resilience so elusive? All of this is putting pressure on leaders and boards to find new ways of running business in contexts where there are no easy answers, and where recipes of success from the past may not be helpful. Many barriers to change-ability can be found in “tangible” aspects of organization such as conflicting departmental priorities and goals, slow decision-making processes and silobased information. For instance, the largest
Dialogue | Dec 2013/Feb 2014
study into the culture and behaviour in the UK National Health Service (NHS) (Universities of Lancaster and Aberdeen, 2013) found that unclear goals, excessive box-ticking, regulation and poor organizational and information systems can cause staff to waste valuable time hunting for information, struggling to deliver care effectively, disempowered from initiating improvement and lacking valid insights into the quality of the care they provide. But the real endemic barriers to agility and resilience are more likely to be found in the “intangible” aspects of organization – in people’s mindsets, behaviours and culture, and also in the nature and state of the employment relationship between employers and workforces. Given the level of business complexity, together with the need to respond quickly to change, the effectiveness of conventional top-down leadership approaches is increasingly called into question. The style of leadership and its alignment with strategy, the degree to which leadership is trusted, the robustness and speed of decisionmaking, and the clarity of communication all affect how agile and resilient organizations can be. Many large organizations are headed by very risk-averse CEOs who made their way to the top in business by being political animals, rather than by being bold and innovative leaders. Attempting to increase agility simply by tinkering with the more instrumental aspects of organization – while ignoring their potential impact on people and culture – is like rearranging the deckchairs on the Titanic. How to ‘square the circle’ Leadership becomes part of the problem, or part of the solution. To help organizations thrive in the conditions of complexity and ambiguity described in the article in Dialogue by Anil Gupta and Haiyan Wang (September 2013), a fresh leadership mindset may be needed that transcends the conventional linear thinking promoted by many business schools and involves developing greater ease working with paradox and willingness to trust instinct. Moreover, if leaders and
Dialogue | Dec 2013/Feb 2014
managers want to rebuild trust and create a more resilient employment relationship with employees, they need to openly recognise and embrace their roles as people managers and culture builders. This requires leaders to develop self-awareness, reflection and effective communication skills for promoting constructive dialogue, a willingness to share power and involve employees in decisionmaking, and (from organization development and design) a systemic understanding of how leaders can influence cultures. Indeed, many of the skills associated with agility have long been identified with psychological and change-management studies.
Agile and resilient; the salmon swims upstream
Key to leaders being able to build trust is the notion of values-based leadership – for example, ensuring that management behaviour is consistent with the organization’s core values. They need to ensure that every aspect of the organization is sending staff messages that are consistent with the values – for instance, ensuring that reward systems are fit for purpose – and that any gaps between reward rhetoric and reality are closed, such as saying ‘we are customerfocused’, yet in reality incentivizing sales and paying less attention to service, care or quality, or ensuring that their own compenzation package is generous while keeping rewards for the workforce under tight restraint. Building a change-able, innovative culture In a change-able culture, employees are engaged, empowered, innovative and accountable; they find ways to come up with ideas, experiment and follow through to fruition. To create such a culture, leadership in innovation is needed, which is about fostering a superior customer experience and the ability to turn knowledge into value. Leaders and managers who actively lead culture change provide a strong strategic narrative and vision that glues together the organization and aligns individual, workgroup and company goals (Macleod and Clarke, 2009). They set priorities and targets that cannot be reached through “business as usual”, allocate resources and achieve a balance between risk-taking and risk containment to ensure ongoing innovation, but in the context of prudent risk minimization. The idea here is that employees feel challenged to innovate and drive change,
and to be accountable for outcomes, not just outputs. And while consistent “no surprises” execution is the ideal, it is how the organization deals with the consequences of past decisions that will determine whether or not people are willing to risk experimenting (and potentially failing). So a blame culture kills innovation while a learning culture enables it. To stimulate innovation, we need stronger, more collaborative ways of working and a broad-based, systematic approach to continually generating and sharing insights and new ideas, including using internal and external networks. In learning organizations, networks of empowered and connected employees typically self-organize into communities of practice for learning and mentoring, and are empowered to participate, lead and organize teams, commit to action and do what needs to be done. The onus for top management is on stimulating distributed leadership at all levels, on communication and sense-making, arming decision-makers and employees with the tools to find, filter and focus the information they need. The ability to access the right information at the right time is crucial and, in the information age, the effective integration and automation of fundamental knowledge-sharing processes can help people in the workplace improve their use of critical data to problem-solve, make good decisions, convert information into insight and produce superior innovation. For instance, the NHS study advocates that organizations should ‘put the patient at the centre of all they do, get smart intelligence, focus on improving organizational systems and nurture caring cultures by ensuring that staff feel valued, respected, engaged and supported’. Leaders need to actively champion the direction of travel and work with staff to identify and unblock the systemic and practical barriers to great patient care. Of course innovation can emerge, but it can also be structured in. Google’s rules encourage employees to spend 20% of their
Truly agile organizations will be able to pull ahead of their competitors
time on innovation projects, whether or not these are aligned to Google’s current business plan. Innovation can be part of everyone’s work routine if they focus it on accomplishing their team’s goals. Strategy and change-ability With respect to strategy, leaders must be wary of, and challenge, the status quo – and should probe good figures as well as bad to ensure if and how the business model explains performance. But this is not just about looking at the numbers; if performance indicators point in the wrong direction, change can be misdirected, so reorient them. Agility is defined by constant change, so the organization needs to have an appetite for change and the capability to enact it in a disciplined and structured way. Leaders need to raise people’s awareness of the need for change by exposing them to contexts and experiences where real change may be emerging outside the current remit of the organization. Focus on bringing the outside in, looking beyond the organization or even industry through scenarios to instil processes of strategic anticipation and promote the identification, testing and exploitation of emerging opportunities. It is important to bring together the right parties from the outset, including experts from around the business, communicating strategic intent and encouraging internal dialogue. The link between change programmes and the longterm strategy must be clearly and continuously communicated to all staff. By progressively engaging the whole organization, leaders have a better chance of succeeding in their aims, since staff will feel a sense of ownership of improvements and will better understand how change plays into the organization’s journey. Change will then become second nature and part of everyone’s job. During times of crisis, people at all levels need to remain calm and focused. It is therefore crucial that managers do not revert to “bunker mentality”, letting communication and teamwork lapse. Management needs to make the first move to reassure anxious employees whose confidence in the company’s direction may have waned. It is important for
Dialogue | Dec 2013/Feb 2014
leaders to be honest, forthright and direct and communicate with employees with greater frequency. Employees need to know that their ideas and potential solutions are still needed.
increase their chances of failure. Competitive advantage will go to those who continuously align their businesses well to anticipate, embrace and respond to change.
People It is not just leadership competencies that will need to change to achieve change-ability; employee attitudes, behaviour and skills will also need to shift and stretch. To harness people’s ability to lead and respond effectively during difficult circumstances requires a systematic strategy for people selection and support. Some people may need support to develop resilience and adjust effectively to new circumstances; all should continue to develop their skills. The workforce mix may need to change over time and change-ability can be accelerated by bringing in, motivating and developing employees with the skills and behaviours required to operate effectively in a highly uncertain, highly unstructured environment.
In summary, the building blocks of organizational agility and resilience are not complex and operate on foundation principles: 1. accelerate the pace of strategic renewal 2. focus intensely on the customer 3. innovate across boundaries 4. demonstrate values-based leadership 5. build a culture of purpose, empowerment, trust, meaning and accountability, and 6. select, motivate and support people who have the requisite skills to flourish in ambiguous and uncertain environments.
But above all, if organizations and their workforces are to thrive in changing times, leaders must aim for a better balance between corporate and individual needs. People at work want to be valued as humans, not seen as mere “resources”. Today’s work-intensive and insecure workplaces tend to be dehumanising and routinely destroy meaning for people. As my research into what people find meaningful at work suggests (Holbeche and Springett, 2005), people know what matters to them. Typically, this involves having opportunities to develop, to deliver to one’s full potential, provide useful service to others, to be part of a good community doing worthwhile things and be valued. In today’s organizations, there are usually many obstacles getting in the way of people experiencing meaningful work. For leaders and managers, the challenge is to unblock some of the common barriers to meaning, to help people to grow, build communities working with a shared sense of purpose and celebrate achievements. For organizations, this is not a fey luxury. Not only are people with meaningful lives happier, have less stress, more of a sense of accomplishment and contribution to society, they are also more productive. An agile, resilient organization is becoming the template for organizational competitiveness and survival in the 21st century. Resilient organizations recognise that since in an unpredictable context, nothing is guaranteed, failing to anticipate will
Dialogue | Dec 2013/Feb 2014
By taking the long-term view and focusing on the customer, on the workforce and on the culture, leaders can build adaptable, innovative organizations where people want to give of their best. A genuinely shared purpose and mutually beneficial employment relationship are the mainsprings of changeability. In an engaging, inspiring working environment, agility and resilience will flourish – along with increased staff morale, commitment and productivity, an improved ability to attract quality staff and an enhanced reputation with stakeholders (for instance, community, regulators, clients). With assets like these, truly agile organizations will be able to pull ahead of their competitors, generate increased market share and sustainable advantage. In an unpredictable environment, this seems a pretty reasonable bet. ● Linda Holbeche is co-director of the Holbeche Partnership, a research-based development consultancy, a visiting professor at Cass Business School, Imperial College London, and a Fellow at Erasmus University Further reading Organisational agility: how business can survive and thrive in turbulent times, Economist Intelligence Unit (2009) In search of meaning in the workplace, Roffey Park, LS Holbeche and N Springett (2005) Engage for Success, BIS, D MacLeod and N Clarke (2009): Organisational Resilience: the Key to Anticipation, Adaptation and Recovery, Cranfield, J Marcos and S Macaulay (2008)
focus Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world
Leadership agility: a global imperative Business leaders recognize organizational agility is critical to success, but how are they developing this vital capacity? Bill Joiner examines how the leadership culture plays a key role in determining a companyâ€™s agility Illustrations: Mike Brooker-Jones
What is the answer?
Dialogue | Dec 2013/Feb 2014
In the global business context, there is, most definitely, a “return on agility”. When international studies are considered– a combination of survey research, executive interviews, case studies and financial analyses – it’s there in black and white: organizational agility leads to higher business performance. In fact, given the broad range of factors that can affect business success, it is striking how closely agility is linked to performance.
Customer and supplier relationships are more important than ever before
The return on agility According to a global survey conducted by the UK magazine, The Economist, nine out of 10 executives believe organizational agility is critical to business success. This finding echoes that of a previous survey conducted by McKinsey (2010). The McKinsey study also found that executives around the world believe that, in the 21st century’s turbulent business environment, agility results in faster time to market, improved operating efficiency, more satisfied customers and employees, as well as higher revenues.
What’s going on? The agility imperative Two deep, long-term trends – accelerating change and growing interdependence – have made agility a global imperative. Business has entered an era of fast-paced change. But what boggles the mind is that the pace of change is
Dialogue | Dec 2013/Feb 2014
An equally important deep trend is increasing interdependence and complexity. With the advent of modern communication technologies and economic globalization, everything is becoming more interconnected. Customer and supplier relationships – and business partnerships – are more important than ever before. As a result, firms are struggling to overcome silos and increase effective collaboration within and between organizations. Agility is not simply about speeding up in response to rapid change. Whether applied to organizations, teams or individual leaders, it is the ability to take sustained effective action amid conditions of accelerating change and mounting complexity. How are we doing? The agility gap In spite of the clear benefits of increased agility, the aforementioned Economist study found executives less than enthusiastic about agility levels in their own companies. The pace of change and degree of complexity in the business environment has jumped to a whole new level – and everyone is scrambling to catch up.
These executives are onto something. A detailed international study sponsored by the American Management Association (AMA) also came up with two findings especially worth noting. While environmental turbulence makes it more difficult to compete and grow profits, companies with higher levels of agility have a distinct competitive advantage that leads to higher profitability. The AMA study found that organizational “resilience”, a related adaptive capacity, which correlates highly with agility, contributes significantly to business performance in turbulent environments. Resilience, as defined in this study, refers to an organization’s ability to resist, absorb, and respond to highly disruptive changes. Challenging the assumption that “agile government agency” is an oxymoron, a global study conducted by AT Kearney and the London School of Economics discovered that in the agile agencies they identified, productivity was 53% higher, employee satisfaction 38% higher, and customer (citizen) satisfaction 31% more than less agile agencies.
accelerating. In an increasingly unpredictable world, one thing we can confidently predict is that the pace of change will be faster next year and even faster the year after.
Interestingly, the Economist study also asked about the key obstacles to organizational agility. If it is such a powerful lever for increasing business performance, why is there such a gap? Executives mentioned organizational structures and processes, as well as IT systems. But one factor stood out above all others: the biggest barriers to increased agility lie in the organizational culture.
+ DIGITAL EXCLUSIVE Bill takes the argument for agility a step further.
To better understand these obstacles and how to overcome them, additional studies focused on the role played by the “leadership culture”, that part of the corporate culture that sets norms and expectations for effective leadership. Several clear findings emerged: companies whose leaders operate at higher levels of agility are more agile as organizations. These studies also confirmed that increased organizational agility correlates with better business performance. These were the conclusions of a study conducted by ChangeWise, a US consulting
and training firm, in partnership with the Institute for Corporate Productivity, a US firm that researches practices associated with high performance. Half of the survey respondents were in global or multinational companies. The same findings were replicated in a subsequent study conducted by ChangeWise and the Swedish consulting firm, PsyCons. What is leadership agility? Given these findings, it is not surprising that, according to another global survey, senior executives rank agility at the top of the leadership capacities needed for business success. But what exactly is leadership agility and how do leaders put it into practice in the workplace? A five-year investigation of this topic by ChangeWise, published in Leadership Agility (Joiner and Josephs, 2007), reveals that, at its core, leadership agility is the ability to take “reflective action” – to step back from one’s current focus, gain a broader, deeper perspective, then refocus and take action that is informed by this larger perspective. As leaders become more agile, their capacity for stepping back deepens and broadens, and the frequency with which they move through cycles of reflection and action increases. Agile leadership, then, is not just another tool for a manager’s tool kit. It is a core capacity, a “metacompetency,” if you will, that affects how leaders deploy all their other competencies. To better understand how leadership agility plays out in specific leadership contexts, the researchers used questionnaires, in-depth interviews, on-site observations, client case studies and manager journals to examine the thought patterns, behaviour and performance of 600 managers across a range of industries, functions and organizational levels. The study found the leaders who are most successful in turbulent environments are skilled in exercising four mutually reinforcing types of agility: • Context-setting agility: A leader’s willingness and ability to undertake initiatives that are strategic or even visionary, rather than simply tactical and incremental. • Stakeholder agility: How effectively a leader understands key stakeholders and creates alignment with those whose views, priorities and objectives differ from their own. • Creative agility: How insightful and creative a leader is when analyzing and solving the complex, novel problems generated in
Its striking how closely agility is linked to performance
turbulent business environments. • Self-leadership agility: How proactive a leader is in seeking feedback and in experimenting with new and more effective behaviours. Leadership agility goes considerably beyond the now-popular term “learning agility”, a construct based on research originally conducted in the 1990s, looking at managers who adapted well to new assignments. Learning agility is similar to self-leadership agility, which also refers to a manager’s ability to learn from experience and apply these learnings, although not only in firsttime conditions. The other three types of leadership agility go beyond the ability to learn from experience, focusing on direct applications of agility, while framing and carrying out leadership initiatives. Levels of leadership agility The ChangeWise research took the view that, as the business environment becomes more challenging, competency-based leadership models need to be supplemented with a more dynamic approach emphasizing “vertical” adult development. Vertical development refers to a robust body of research that reveals how the “meaning-making” capacity of adults broadens and deepens through a series of distinct developmental stages. In adults, these stages do not refer to age-based life phases, but rather to the development of successive levels of cognitive capacity and emotional intelligence (see Ego Development by Jane Loevinger and The Evolving Self by Robert Kegan). Central to the ChangeWise study was this question: how do leaders at different developmental stages think and act when leading change, leading teams and in pivotal conversations? The researchers not only identified distinctively different leadership behaviours that correlate with each stage, they also clarified the cognitive and emotional capacities that enable these behaviours. They called the combination of internal capacities and leadership behaviour found at each stage a “level of leadership agility”. A highly condensed summary of three key agility levels is provided in the table opposite. Leadership agility levels are not personality types or thinking styles, like those assessed by the Myers Briggs Type Inventory or William Marston’s DISC theory. Instead, they are sequential stages in a leader’s development.
Dialogue | Dec 2013/Feb 2014
About 10% of managers are at the pre-expert stage, 45% at expert and 35% at achiever. Only about 10% have developed the cognitive and emotional capacities needed to lead at the catalyst level. Think of these levels as being like nested Russian dolls: each level of leadership agility includes and goes beyond the skills and capacities developed at previous levels. Managers who have fully developed a catalyst “body” of practice still have their “inner achiever” and “inner expert,” allowing them to take action at any of these three levels, depending on what the situation requires. The ChangeWise research reveals that managers who have developed catalyst-level leadership capacities are much more effective than those limited to the expert or achiever levels. Especially in developed economies, where expert-achiever leadership has been the norm for decades, companies face the historic challenge of developing their managers’ leadership agility to a whole new level. This research provides a “road map” that helps clarify what this catalyst level of leadership looks like in practice.
Levels of agility in the leadership culture To envision the development of leadership agility on an organizational scale, it is useful to identify the agility levels that set the tone in a company’s leadership culture, realizing that different levels of agility may predominate at different managerial tiers: • In an expert leadership culture, managers tend to operate within silos with little emphasis on cross-functional teamwork. Organizational improvements are mainly tactical and incremental. Managers tend to be overly involved in their subordinates work, often fighting fires and interacting with direct reports one-on-one. As a result, managers have little time to approach their own role strategically. • In an achiever leadership culture, managers articulate strategic objectives and make sure they have the right people and processes in place to achieve them. This is a culture that encourages and rewards customer-focused, cross-functional team work. Change initiatives typically reflect an analysis of the larger environment, and consultation with key stakeholders is a cultural norm. Leaders try to minimize micro-managing. Instead, they work to
Levels of agility in the leadership culture Level of agility
View of leadership
Agility in pivotal conversations
Agility in leading teams
Agility in leading organizational change
Tactical, problem-solving orientation. Believes that leaders are respected and followed by others because of their authority and expertise
Style is either to strongly assert opinions or hold back to accommodate others. May swing from one style to the other, particularly for different relationships. Tends to avoid giving or requesting feedback
More of a supervisor than a manager. Creates a group of individuals rather than a team. Work with direct reports is primarily oneon-one. Too caught up in the details of own work to lead in a strategic manner
Organizational initiatives focus primarily on incremental improvements inside unit boundaries with little attention to stakeholders
Strategic, outcome orientation. Believes that leaders motivate others by making it challenging and satisfying to contribute to larger objectives
Primarily assertive or accommodative with some ability to compensate with the less preferred style. Will accept or even initiate feedback, if helpful in achieving desired outcomes
Operates like a full-fledged manager. Meetings to discuss important strategic or organizational issues are often orchestrated to gain buy-in to own views
Organizational initiatives include analysis of external environment. Strategies to gain stakeholder buy-in range from oneway communication to soliciting input
Visionary, facilitative orientation. Believes that leaders articulate an innovative, inspiring vision and bring together the right people to transform the vision into reality. Leaders empower others and actively facilitate their development
Adept at balancing assertive and accommodative styles as needed in particular situations. Likely to articulate and question underlying assumptions. Genuinely interested in learning from diverse viewpoints. Proactive in seeking and utilizing feedback
Intent upon creating a highly participative team. Acts as a team leader and facilitator. Models and seeks open exchange of views on difficult issues. Empowers direct reports. Uses team development as a vehicle for leadership development
Organizational initiatives often include develop-ment of a culture that promotes teamwork, participation and empowerment. Proactive engagement with diverse stakeholders reflects a belief that input increases the quality of decisions, not just buy-in
Dialogue | Dec 2013/Feb 2014
develop effective teams and hold people accountable for achieving outcomes. • A catalyst leadership culture focuses on achieving strategic outcomes, but it is animated by strong norms that support high participation, mutual trust, collaboration, creativity and straight talk. Senior teams become living laboratories that create this kind of culture within the team then work together to promote and encourage it in the organization they lead. Leaders not only coach their people, they actively solicit and utilize informal feedback about their own effectiveness as leaders. Quite frequently, especially in the developed world, the executive tiers of management embody an achiever leadership culture, while an expert leadership culture predominates in the middle management ranks. A sprinkling of catalyst leaders may be found here and there in the organization. These leaders can have a powerful impact on organizational agility and business performance. But the development of a true catalyst culture in the executive ranks is a transformational journey of historical proportions. Transforming leadership cultures Through in-depth study of how catalyst executives lead organizations, lead senior teams and engage in pivotal conversations, we know a great deal about what a catalyst leadership culture looks like in action at the executive levels. It begins with a particular kind of vision for the organization that includes, and goes beyond, the achiever’s focus on strategic business outcomes. Like achievers, catalyst leaders expand their thinking beyond current markets, products and services to anticipate new market developments and emerging business opportunities. But they are also committed to a longer-term vision: building an organization that is agile enough to sustain itself in the largely unknown future that lies beyond the current strategic horizon. While seeding business options for the long-range future, they set out to create an organization capable of continuously sensing and responding to unexpected disruptive developments that, in a highly unpredictable environment, often cannot be anticipated well in advance.
Integral to the catalyst’s business vision, then, is the vision of an agile, sustainable organization that, when realized, could be benchmarked by companies in any industry. Without ignoring performance issues, catalyst executives are alert to the positive potential that lies within people and the organization as a whole. They believe the path towards realizing this potential lies in the development of a culture with highly participative, empowering – and decisive – leadership at all levels. Genuinely interested in a diverse range of ideas and perspectives, they go out of their way to foster an environment that encourages innovative thinking and creative problem-solving – a culture where candid, constructive conversation and collaboration across boundaries are the norm. One Canadian oil company executive called this “aiming through the target”, as in archery or karate. When promoted to president of the corporation’s refining and retailing division, it had just gone public and urgently needed a $5 increase in share price. But the firm he inherited was an average player in a crowded, mature, margin-sensitive market. Earnings were going steadily downhill and morale was at an all-time low. What he aimed for, beyond the target (share price), was the development of a catalyst culture. Like other catalyst leaders, he believed that, by moving along this path, the organization would benefit both short and long term. Within three years, annual earnings grew from $9 million to $40 million and cash expenses were reduced by $40 million a year. It became one of the most efficient and effective refiners in North America and one of the top retailers in its marketplace. Once shunned by investors, the business press pronounced it one of the darlings of the stock market. To initiate this transformative change in the organizational culture, catalyst executives start by developing it within their senior team. They recognize that, for such fundamental change to become real, it cannot just be “rolled out” into the organization. It first needs to become a reality within their team. Like achievers, catalyst executives focus on the vital strategic work that needs to be done by any senior team. The key difference is that they accomplish this work by setting the context for robust dialogue and continually encouraging everyone to participate fully,
Dialogue | Dec 2013/Feb 2014
while expressing genuine curiosity and openness to alternative perspectives. Through the vision, facilitation and coaching of the catalyst leader, team members adopt a strong sense of responsibility that extends beyond their individual silos to the organization as a whole. They develop a sense of mutual trust and confidence in their ability to respond to vital business opportunities and solve tough organizational problems. Over time, as change within teams becomes real, its members bring this new approach to leadership to their own teams. They also work together to create an organization devoted to continuous improvement, not only of its products, services and business processes, but also of its “human systems” – its people, its relationships with customers and other key stakeholders, and the organizational culture that underlies everything else. Much of a leader’s most important work happens in pivotal conversations. In this crucial arena, catalyst leaders are equally at home advocating their own views and inviting others to challenge them. They seek others’ input not simply to get buy-in to their own views, but because they find they make better decisions when they consider alternative views and look for realistic winwin opportunities. These conversational capacities and skills are an essential part of the catalyst leader’s repertoire. Without them, they could not model the kind of culture they seek to create. At its core, the transformation from achiever to catalyst leadership is about developing an intensified awareness and a broader, deeper intent or sense of purpose as a leader. Achiever leadership is rooted in a robust reflective capacity that allows managers to assess their own strengths and limitations. By thinking about how they led yesterday’s meeting, they can do a better job in future meetings. Catalyst leaders build on this reflective capacity by actively cultivating an ability to step back “in the moment”. For example, they can step back while leading a meeting and attend to assumptions, feelings, and behaviours that would otherwise escape their conscious awareness – then use these insights to make course corrections on the spot.
Dialogue | Dec 2013/Feb 2014
Much of a leader’s most important work happens in pivitol conversations
The underlying intent of achiever leaders is to achieve desired outcomes so they can make important contributions to the organizations and disciplines with which they identify. Catalyst leaders add a broader, deeper intent: to develop organizations, teams and relationships that are meaningful and satisfying, and that enable the sustained achievement of desired outcomes. This intent pervades how leaders at this level of agility approach everything they do. The key to the achiever-catalyst transformation lies in making catalyst-level reflective action a regular practice. This means repeatedly re-activating catalyst intent, while experimenting toward the previously described catalyst leadership behaviours. It also means actively seeking feedback about one’s effectiveness as a leader, letting go of punitive self-consciousness and self-criticism, and becoming genuinely curious about how one is thinking, feeling and behaving while taking action. In summary, from the research referenced in this article, and from accompanying leaders and organizations working on this transformation, a clear “through-line” can be seen that runs from deeper, broader intent and awareness, to more agile leadership behaviour, and on to increased organizational agility and higher levels of business performance. ● Bill Joiner is president of ChangeWise a leadership and organization development firm headquartered in Boston, Massachusetts Further Reading Organizational agility: How business can survive and thrive in turbulent times, Economist Intelligence Unit (white paper), 2009 Competing through organizational agility, Donald Sull, McKinsey Quarterly (2010), No 1 Building agility, resilience and performance in turbulent environments, Joseph McCann, John Selsky and James Lee, People & Strategy, vol. 32, issue 3, 2009 Agile government, Demos and State Services Authority, Victoria, Australia (white paper), 2007 Leadership Agility, Bill Joiner and Stephen Josephs, Wiley, 2007 Creating a culture of agile leaders, People & Strategy, vol. 32, issue 4, 2009
focus Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand
Putting resilience into practice in a volatile world
Change-ability: the key to global success Leadership agility: a global imperative Putting resilience into practice in a volatile world
NV â€˜Tigerâ€™ Tyagarajan, president and CEO at Genpact, outlines the ways in which resilient companies can adapt faster, strengthen their international operations and innovate by harnessing global opportunities and resources
What is the answer?
Illustrations: Mike Brooker-Jones
Dialogue | Dec 2013/Feb 2014
There is no question that globalization has broken down geographic barriers and that, according to Lothar Herrmann, CEO Cluster ASEAN for Siemens, ‘with greater flexibility in the global supply chain, and a wealth of information easily accessible to anyone, today’s business powerhouse can come from any part of the world’. In spite of this, many businesses neglect addressing, in a scalable and globally effective manner, several of the critical requisites to capitalize on globalization. They often fail to realize that their ability to adapt quickly and nimbly to globalization-driven market and business changes is firmly rooted in resilience, collaboration with partners, the importance of culture over strategy, and talent management and development. Indeed, the opportunities the current global marketplace offers to adaptive organizations are substantial. For example, a recent Economist Intelligence Unit Organisational Agility (2009) report found adaptive and agile firms grow revenue 37% faster and generate 30% higher profits than non-agile companies. I believe there are three keys to organizational adaptability and resilience in a votatile world: 1) The resources you don’t have: Working with partners enables companies to extend their reach, capabilities, and scale – as well as gaining flexibility and speed of execution. 2) The resources you have, but that you cannot easily control through hierarchies and metrics: Emphasizing culture enables much faster organizational alignment even in the absence of pervasive operating rules. Fast decision-making is a must-have in our volatile times. Enabling the organization to decide effectively in the “last mile” is what culture does well. 3) The resources you can have if you invest enough in growing them: The example of emerging economies, where despite the shortcoming of the education systems millions are trained into work and become productive, shows clearly that much more can be done with the people you have – globally. By understanding the importance of these three key organizational resilience pillars, global champions embody what I call “intelligent enterprises”. They become resilient. They can adapt faster, strengthen their global operations, innovate by harnessing global opportunities and resources, and connect to global stakeholders.
Dialogue | Dec 2013/Feb 2014
Strategy is vital to an organization’s growth and competitive ability Tyagarajan: harnessing global opportunities
Speed to collaboration with partners While nearly every global services-focused publication, website and column carries daily announcements of deals inked between buyer and service provider organizations, they nearly as frequently publish stories of failed or limited success partnerships. The reason for this is rarely due to ineptness of either party. Instead, most enterprises spend an inordinate amount of time during the initial selection and down select process – often on the order of a full year for both elements – and then, under pressure from their senior executives and board members, simply toss a plan over the fence to the selected provider, expecting its internal and external teams to execute. The complete, and highly successful, antithesis of this approach is Google, which launches a product almost as soon as it conceives of it and then enables, indeed appeals to, users to offer input on what’s working, what isn’t and what they want or don’t want in it. That takes agility and resilience. The company excels in speedto-market, and speed-to-collaboration, albeit that its partners are its end-users. Rather than dwelling on the front end of the process, the most advantageous approach lies in swift selection of the third-party provider, and then focusing with laser sharp precision to create a plan that ensures the partnership will work and includes the elements that will lead to success with the provider. An enterprise can move towards the desired outcome through collaboration with the provider on defining the long-term relationship, goals, strategy and tactics roadmap, and then execute upon it, adapting it throughout the lifetime of the engagement as necessary, in order to reap mutual success.
Why culture wins over strategy According to business management fundamentals, strategy is vital to an organization’s growth and competitive ability. It must know where it’s going, why it’s going there, how it’s going to get there, who its competitors are, where the market is going and how it’s going to win in its market space. But enterprises often miss an all-too-critical point – the differentiation between companies is often not really their strategic paths, but rather the culture they embrace in order to be successful on those strategic paths. Organizational culture refers to a system of shared meaning, how all internal and external team members behave with each other, how the buyer and provider parties solve problems together, how they approach challenges and opportunities, how they make required trade-offs, and how they evaluate and take risks. All of these are stalwart entrenchments of a business’s culture, and serve as key characteristics of its global services success or failure. Another essential aspect of culture is that, unlike strategy, culture cannot be copied. Rather, culture – like resilience – is a differentiating trait that is rooted in each organization’s history, its legacy and the intrinsic, proliferating DNA upon which it has been uniquely built.
Consider Lean Six Sigma, the managerial concept that improves business efficiency and effectiveness. That an organization uses Lean Six Sigma – and virtually all do – is no longer a differentiator or a guarantor of success. The core of Lean Six Sigma’s value is in how a business works with it from a cultural standpoint, e.g., how it is championed and permeated throughout the enterprise, and how it rewards or rebukes advantageous or improper use. Of course, there’s a symbiotic relationship between strategy and culture. The strength and flavour of a business’s culture is a key contributor to the extent to which it succeeds along its strategic path. For example, a highperformance culture, characterized in large part by flexibility and openness to change as required to address situations and business conditions that arise, was cited by respondents to the above-noted Economist Intelligence Unit survey as the second-most important trait of an adaptive, or resilient, enterprise. Developing and nurturing talent While the heart of every enterprise is its people, a 2012 report by the McKinsey Global Institute stated that by 2020, employers could face a shortage of as many as 13% of highly skilled workers – 40 million less than they require – and developing nations could face a deficit of 15%. Genpact’s offices in Gurgaon, a financial and industrial centre of India, situated in the national capital region near the capital New Delhi
Dialogue | Dec 2013/Feb 2014
There are manifold reasons for this dearth of talent. Various technological innovations – such as e-commerce, mobile applications, cloud computing and social media – have altered the way businesses function, bringing technology to the forefront of their daily operations. Yet, while this global operational sea change unfolds, universities, especially in the growth (BRIC) economies of Brazil, Russia, India, China, are failing to teach these emerging skills to their students. As a result, BRIC organizations must spend as much time and money on training university graduates as they do on employees without university degrees. This lack of skills is also prevalent in advanced economies among both younger and older workers without higher education. A solution in the BRIC regions is for organizations to work with educational institutions and governments around the world to ensure that relevant content is included in curricula, thereby helping to create worldwide talent supply chains. Developed economies, despite the obvious hurdles, will have to encourage immigration of highly-skilled workers, increase higher education enrolment and attract, and welcome, a greater number of educated workers into the workforce. Overall, according to a 2008 report from the International Labour Organization (ILO), it is only “effective skills development systems which connect education to technical training, technical training to labour market entry, and labour market entry to lifelong learning that can help countries sustain productivity growth and translate that growth into more and better jobs”. Of course, finding and hiring qualified talent is only one part of the equation. Enterprises must also employ ways to retain skilled, talented workers. The usual incentives such as equity, high levels of remuneration and team- or organization-wide appreciation are effective to some extent. However, the real gem is in providing a clear career-path,
Dialogue | Dec 2013/Feb 2014
training and development opportunities to employees, thereby enabling them to pursue and achieve high levels of performance in their passion area, whether in a particular industry, domain, function or geography, and remain and grow in the organization. For example, through Genpact’s “Education at Work” programme, which supports more than 10,000 employees in taking various MBA and domain-specific courses, a certified public accountant could switch career paths to deliver high-end financial work for global businesses, and relocate from his or her native Bangalore to Barcelona or Bucharest, as desired. At the end of the day, in order to address the increasingly ubiquitous global talent shortage in every industry and every sector, enterprises need to think of themselves as – indeed become – knowledge companies and consider every worker a “knowledge worker”. A true knowledge company systematically builds continuous training and learning into its modus operandi, and supports on-the-job learning to help its employees move into more complex and senior roles through structured training and leadership development programmes. Conclusion Today’s “boundaryless organization” – a term coined by former GE chairman Jack Welch, as he wanted to eliminate vertical and horizontal boundaries within the company and break down external barriers between the company and its customers and suppliers – has significant competitive advantage at finger-tip reach. By embracing and proactively acting upon collaboration, culture and talent best practices, innovative and forward-thinking enterprises have the ability to build the requisite organizational resilience and adaptability, and therefore thrive in the global business environment. l NV ‘Tiger’ Tyagarajan is president and CEO at Genpact
focus Resilience and inclusive leadership Resilience redefines the terms for success and survival Divided we stand Change-ability: the key to global success Leadership agility: a global gmperative Putting resilience into practice in a volatile world
If the problem is resilience, what is the answer? Liz Mellon summarizes and examines the attributes and actions that could help to create the levels of resilience needed for 21st century life Illustrations: Mike Brooker-Jones
What is the answer?
Dialogue | Dec 2013/Feb 2014
Our authors all agree on the problem. To be successful in today’s 24/7 world, organizations and individuals need stamina and resilience to meet all the demands we face each and every day – to be nimble and alert enough to keep on track for success. In this issue of Dialogue, we selected several pieces of writing dedicated to trying to find how we can manage this. Luis Gallardo focuses square and central on people. Get the people resilient and inwardly confident, he argues, and the organization will naturally follow. People are indeed our most important asset. Nick Liddell again focuses on the individual, but looks outside the psyche, at individuals in interaction rather than in introspection. He argues for making learning through failure an organizational policy and for strong debate about the real business challenges facing the organization, rather than glossing over the tougher details. (He asks us a great question – whether we deliberately develop wild ducks in our organizations.) Strangely, one article that comes very close to a solution for individual resilience is off-topic. Sam Pearce, The Man Who Re-invented the Wheel (page 98), is ostensibly writing about innovation, but offers great insight into Hillary Clinton’s concept of stamina through his own dogged perseverance. Then Linda Holbeche spreads the net still wider. Holbeche’s article looks again at individual capabilities, such as speedy decision-making, nimble reactions and flexible employees. She advocates less top-down leadership and generating more trust through stronger connections between the organization and its employees. She dips into the role of organizational culture as well as the role of values-led leadership in creating a positive climate. But Holbeche goes beyond people and looks also at the role of some of the hard wiring in the organization. For her, it’s not just about how people feel and work together. The artifice of the organization is a reality, in that its routines and structure affect and infect all of its inhabitants, with good or bad outcomes. So she also looks at how the very structure and reward systems can push erroneously for short-term results at the expense of innovation and collaboration. She wants executives to be better at leading the change that inevitably accompanies all speedy responses to market changes and she wants organizational processes and structure to be robust enough to morph to match.
Dialogue | Dec 2013/Feb 2014
“I have a lot of stamina and I have a lot of resilience” Hillary Clinton
Do we really understand resilience? It feels as though we are at the beginning of a journey to define resilience. Don’t get me wrong. There’s a lot published on the topic and if you search, you’ll find more than one resilience institute. Personal resilience is not a personality trait and we can find buffers to fend off stress and ways to develop inner strength. Organizational resilience is attributed to everything from leadership and staff engagement, through to breaking silos, stress testing plans and networks. Is the recipe just a bit too complex right now? At one level, some of the proven aspects that we know to be true about people and organizations must, once again, be stirred into the recipe. These tried and tested ideas have been part of the answer to people working productively together for a long time and remain relevant today. Some examples relevant to building or increasing resilience would be the power of good leadership, the beneficial effect of a supportive climate and using reward systems to work with your aspirations rather than against them. But can we move beyond the soup of what we already know to add new insight into these particular and specific challenges? Is there something special about personal and organizational resilience that we can focus on? Or is it really just the outcome of what we have known all along? The latter seems unlikely, given that 24/7 stress and globalization have not been around as long as our fundamental ideas of what makes people and organizations tick. Surely, there is something new here? It’s not that we should take the other parts of the recipe for granted. Holbeche’s article records a timely plea for less top-down leadership, which we have still not fully achieved today despite it having been a clarion call for the past 25 years. It’s more that if we can isolate some really distinctive aspects to resilience, we might all be better at achieving success for the 21st century organization. Levels of analysis A good first step would be to get clear about what we are studying. We know that some individuals are more resilient than others and we also know that resilience can be learned – it’s not a character trait. Andy Murray, the UK tennis player, is a great example of bouncing back and keeping trying until he finally won Wimbledon in 2013, 77 years after the last
British champion, Fred Perry. And there’s been a fair amount written about personal resilience, including Harvard Business School professor Teresa Amabile’s latest research in the past five years looking at the link between individual meaning at work and personal resilience. So we should definitely look at how individuals develop the resilience that can keep them going in a world where it is not just New York that never sleeps. Organizations, on the other hand, are more than just the sum of their people, so we can still get in the way of even highly resilient employees and trip them up. We have hard factors like reward systems, knowledge management systems, functions, working policies and structures that can either provide people with a ramp for take-off or a rock to stub their toe. So to start our investigations let’s look at each separately, just as our Dialogue authors have done. Keep our feelings and our warmware distinct from our policies and our hardware. Less has been written about organizational resilience. Organizational resilience Why is it that some organisations, as living organisms, adapt and survive while others do not? How do organizations drift into sustained irrelevance? The strategy experts Gary Hamel and Liisa Välikangas wrote an article with ideas for keeping an organization resilient. Their core thesis was that “however celebrated, a turn-around is a testament to a company’s lack of resilience”. They see organizational resilience as continuously anticipating and adjusting to market trends that might permanently damage the core business. There are four steps: to be aware of and acknowledge dramatically changing circumstances (conquer denial); to spread risk through smaller, lower-risk experiments (value variety); to avoid continuing to fund moribund strategies (liberate resources); and to explore new strategic options (embrace paradox). The Hamel/Välikangas model is mostly concerned with being alert and avoiding getting stuck with a strategy past its sell-by date.
It’s a good model for creating strategic resilience. But I still think we need to dig a bit deeper to directly address the challenge of creating organizational resilience, the ability to morph appropriately and quickly. Looking beyond leadership We know that symbolic acts from leaders have a huge effect on us through the subliminal messages they send. If you want people to collaborate, collaborate yourself; if you want people to be customer-focused, visibly spend a good portion of your time with customers yourself. But it’s not enough. Humans are largely rational and we pay attention to how we are assessed and rewarded, as well as to how we are led. If we think about the classic McKinsey 7S model, we can divide it into two sections. Strategy, structure and systems combine to form the “cold triangle” – the plumbing of the organization, if you will. On the other side, staff, skills, (leadership) style and super-ordinate goals (values and culture) form the “warm square” – people and how they work with and behave towards each other. We need to keep both in sight. If we over-rely on leadership, resilience will fail when poor leaders step in or when strong leaders depart. We need to embed change into the framework and structure of the organization, if the change is to outlive individual leaders as they pass through. The cold triangle To create a resilient organization, we need to pay attention to having a relevant strategy, but also to the other two parts of the cold triangle – structure and systems. The trouble is, it’s just not fashionable. Yet for organizational endurance, we need to look at issues like systems that really underpin (rather than fight with) the changes we want to make. For example, if the leader advocates collaboration, but employees are rewarded as individuals, then the chances of getting collaboration are severely diminished. So the first argument is for adaptable systems that work with our intent. Getting in place consistent systems that work together and talk to each other is a constant challenge in global organizations, which inherit new and
Dialogue | Dec 2013/Feb 2014
IMPROVE YOUR BUSINESS BY THE POWER OF ▪ COMPANY PERFORMANCE ▪ PEOPLE ENGAGEMENT ▪ PROFIT
Influencing and transforming business strategy through people; enabling you to be a great place to work Want to be cubed? Call us on +44 (0)207 836 6999 Visit us at www.purplecubed.com
often contradictory systems each time they buy a new company. Too often, the plumbing in the company looks more like a Heath Robinson or Rube Goldberg contraptiontemporary fixes using ingenuity and whatever is to hand, often sealing wax and tape. Add a process perspective Processes are often seen as the tedious side of organizational life. Leadership is exciting; process is control. Process means activities that are routine, habitual, repetitive, lacking in creativity, devoid of intelligence, uninspiring and plain boring. Worse, adhering to a process implies restriction, constraint and reducing your freedom to act. But if everyone exercises freedom, the result is often chaos. Have you ever found yourself chafing against the inefficiencies in your own business because everyone is doing their own thing? Good systems and processes like information technology, procurement and innovation embed endurance. It’s like building a house; the very first thing you decide, even before the walls go up, is where you want your light switches and plug points. It’s hard to do, but you are essentially planning one of the key systems that will underpin and enable the running of the house. At home, good processes mean that you are never thrust into darkness. At work, they give you a greater chance of being robust against competitive attacks while your company is in transition. Networked businesses also build in dependencies on suppliers, joint ventures and other partnerships. When you start to collaborate with other organizations, it’s worth checking out how resilient and adaptable their systems and processes are and also how these systems support long-term thinking. Avoid the re-organizing bug Just as we need to focus on what we should pay attention to, we also need to think about what to avoid. Re-organizations are often used to create momentum, but can result instead in unnecessary turmoil and confusion. The rule of thumb is that “structure follows strategy”. Structure is simply an enabling framework. Restructuring can be downright dangerous, because people, like animals, fight harder to prevent losses than they do to achieve gains. Any restructuring will create perceived (and actual) winners and losers. The losers will be more active and determined and, if they are influential, they can undermine or outwit a new organizational chart. What’s the best way
+ DIGITAL EXCLUSIVE Join the Dialogue – have your say on our forum.
to know when it’s the right time to introduce restructuring in support of organizational resilience? Long after the new strategy has created new ways of working. People are gifted at getting work done despite the way the organization is structured. Don’t weave around a new organizational structure until people start to give up because the old structure starts to get in the way. At that point, they will welcome rather than resent the changes. When Lou Gerstner (IBM CEO from 1993 to 2002) moved his company into advisory work and out of manufacturing, he didn’t rush to change the company architecture. When the restructuring did come, it was welcomed. In the spirit of dialogue, our aim is to start a debate about the real, fundamental, underlying attributes of personal and organizational resilience and agility. We aren’t looking for a silver bullet, or an answer in a nutshell. But can we identify a handful of attributes and actions, that, if addressed, could help us to create the levels of resilience we need for 21st century life? Join the conversation at www. dialoguereview.com or send us your thoughts at firstname.lastname@example.org or on Twitter @dialoguetweets ● Liz Mellon is chairman of Dialogue’s
editorial board FURTHER READING The Progress Principle: Using Small Wins to Ignite Joy, Engagement and Creativity at Work, Teresa Amabile and Steven Kramer, Harvard Business Review Press, August 2011 ‘The Quest for Resilience’, Harvard Business Review, G Hamel and L Välikangas, September 2003 The McKinsey 7S Framework is a management model developed by well-known business consultants Robert H Waterman Jr and Tom Peters (who also authored In Search of Excellence) in the 1980s. William Heath Robinson was a cartoonist and illustrator, known for drawings of eccentric machines. In the UK, the term “Heath Robinson” entered the language as a description of any unnecessarily complex and implausible contraption, similar to “Rube Goldberg” in the US who is known for cartoons depicting complex gadgets that perform simple tasks in convoluted ways. Thinking Fast and Slow, Daniel Kahneman, Farrar, Straus & Giroux 2011 The Strategy of Execution: The Five Step Guide for Turning Vision Into Action, Liz Mellon and Simon Carter, forthcoming McGraw-Hill 2013
Dialogue | Dec 2013/Feb 2014
diversity and equality
Building the female talent pipeline Claudia Bidwell examines the importance of building female talent and looks at how global healthcare giant Novartis Pharma AG tackles the issue of improving the number of female leaders in the company. Introduction by Liz Mellon
Dialogue | Dec 2013/Feb 2014
In 2010, 50.6% of all health professionals were women + DIGITAL EXCLUSIVE Liz Mellon on tackling boardroom diversity.
n July 2013, Diversity Journal gave Novartis Pharma AG the Innovations Award for Excellence in recognition of the company actively addressing the gap in female leadership and fostering gender diversity. 2013 also saw Novartis’ US Pharmaceuticals affiliate listed on the Working Mother 100 Best Companies list in the United States. In the first issue of Dialogue, I discussed why a substantial part of the workforce is not represented in equal proportions in most organisations. Why is it that so many women either self-select out before moving into the very top echelons of organisations, or don’t even have an opportunity to fill these leadership roles? It makes no sense to lose female talent while good talent is still so hard to find and retain. Yet the world is full of self-aware global organizations that have good intent and policies to nurture talent, but where progress is woefully slow and painful. Novartis decided to take a new and different approach to this challenge several years ago. The company started a new strategic initiative in 2010 to develop female leaders. It was not without risk or controversy. What is Novartis getting right? Dialogue asked Claudia Bidwell, global head of organizational development for Novartis Pharma AG, to share her story of the journey the company started to make sure that women are as well represented at all levels in the company as they are in society.
The approach within Novartis Pharma Novartis is a global healthcare company and is one of the 35 largest companies by market capitalization. Its portfolio of products is designed to meet the varied and complex needs of patients. As our company moved into the second decade of the new millennium, we recognized the business case (laid out in studies by McKinsey, Catalyst and others) for improving the number of female leaders in the company, at all levels. In the Novartis context, there were very specific
Dialogue | Dec 2013/Feb 2014
business challenges. Women drive a majority of healthcare decision-making and control $12 trillion of the overall $18.4 trillion in global consumer spending. There is also an increase of women in the workforce – in both developed and growth markets. For example, in 2010, 50.6% of all health professionals were women. Both patients and the health professionals we serve need to see a matching representation of female leaders within Novartis. There are also increasing regulatory demands placed on global organizations. While legislation varies and continues to evolve, more European governments are considering introducing binding quotas for the proportion of women on corporate boards. There was a growing recognition within the organization that we should strengthen the female executive pipeline and representation. Although we have above average representation of women in senior management positions versus other Fortune 500 companies, progress to increase this further was seen within the organization as not being quick enough. We needed to accelerate. The aim was to give better exposure to top female talent and at the same time to accelerate the careers of suitable female executives.
Why an executive female leadership development programme? A key component of our strategy to develop female talent is the Executive Female Leadership Program (EFLP). It is designed to make a difference — at the individual, business and organizational level. It is also intended to make a bold statement and send a message about how serious we are. We chose participants carefully, based on their leadership achievements and potential. It was aimed at preparing them for continued leadership roles. The programme is also intended to provide an experience that impacts not just those who are part of the programme, but also their teams, their managers and the senior management of the organization. The programme is designed to address specifically
those issues that we know talented women may face when striving for the most senior levels of the organization. These include exploring development opportunities and strategic career planning, but also broad cultural issues, such as lack of flexibility in working hours, the impact of dual-career families on mobility and low tolerance for different leadership styles.
EFLP in Detail EFLP is an all-female programme and definitely not a one-off training course. It is designed as an intensive leadership experience spanning over 12 months, with three face-to-face sessions and a lot of activity in between. It has many distinguishing features, not least that 50% of sessions were led or co-led by the pharmaceuticals division head and executive committee. In fact, our division head David Epstein is very visible about championing it in the business. It is positioned as a talent initiative and built into our talent management processes. Participantsâ€™ progress is reviewed at regional and global executive committee talent sessions at least twice a year. This means the participants benefit from broad development opportunities and longer-term career planning, which was the focus of this programme. Classroom sessions are experiential in format, so that the women can replicate and then adjust some of the situations they face every day at work. But their development is about so much more than classroom learning. Mentors, handpicked from the most senior leaders in Novartis, are
assigned to each of the participants. Each also has the benefit of an external coach. Webinars are rolled out on different business and leadership development topics to keep the learning alive between face-to-face sessions. One additional but important feature is that participants are assigned to small project teams, and each team has to solve a strategic real-time business issue sponsored by an executive committee member. This is a two-way exchange. Executive committee members experience the strategic capability of each participant at close quarters, while the participant gains increased exposure at senior levels. The projects have been a great addition, as they offer real business benefit to Novartis as a company.
The projects offer real business benefit to Novartis as a company
Has It Made a Difference?
The good news is that the initial results look promising. Most of the business projects have been adopted after being presented to the executive committee and provide evidence of the return we have reaped as a company from this important investment in our female leaders. For the participants themselves, by the middle of 2013, top-line data showed that 20% of participants have been appointed as country heads or general managers, while 14% have been promoted onto a local/ country or functional executive committee. A full 80% of participants have moved to new roles (either a promotion or a lateral move to gain breadth of experience). We have also benefited from a 95% retention rate of participants over the past three years. We have had very strong feedback from participants,
Dialogue | Dec 2013/Feb 2014
Experts in Organisational Development MSc in People and Organisational Development Our MSc qualification is a unique two year part-time programme designed and delivered by developers for developers. It is the best known MSc qualification which specifically focuses on the area of increased performance and organisational health from a practitionerâ€™s perspective. Validated by the University of Sussex, you will bring together theory, practice and experience, as well as learning new skills to make you more effective and increase your personal and professional impact. As a result you will maximise the performance of the people in your organisation â€“ and achieve your full potential. To find out more, visit www.roffeypark.com/msc or telephone Susan Foran on +44 (0)1293 854047
Roffey Park Institute, Forest Road, Horsham, West Sussex, RH12 4TB, United Kingdom Roffey Park Institute Limited is a charity registered with the Charity Commission No. 254591
the executive committee, our CEO Jo Jimenez and the line managers involved. The programme has also activated internal discussions with both men and women about women in leadership. An unexpected but welcome outcome has been that our Pharma executive committee has benefited from reverse mentoring from the female leaders they are mentoring. We have a strong and extremely motivated group of change agents in the business and the alumnae continue to be very active, both together and through the extended network they are building.
they built momentum as change agents. Success breeds success.
What Next? Novartis held a further learning session for alumnae in 2013, together with the Pharma executive committee and the division head, to consider how our alumnae can continue to pay forwards everything they have learnt. There are off-shoot developments in the business at different levels to continue to build the female talent pipeline and we continue to track the career development of participants. We can definitely endorse and confirm the investment as worthwhile at many levels.
Having better representation of female executives is a must-have
Key learnings What we have learnt, and would recommend to others, is the importance of senior management commitment. Too often this translates into a guest appearance or speech somewhere along the way. We had constant and continuous sponsorship at the very highest level. We also had a tough selection procedure to ensure high caliber participants. This was about talent development and every woman had to be able to look across the room and consider herself to be in good company. The other aspect we learnt was to make no apologies for what we are doing. Having better representation of female executives is a business issue – it’s not nice to have, it’s a must-have. The level of the programme offering also has to be of the highest quality. Top talent makes for a tough audience. As our number of participants increased over the years,
● Claudia Bidwell is global head of talent management, organizational development and staffing at Novartis Pharma AG FURTHER READING The McKinsey Quarterly, G Desvaux, S DevillardHoellinger, M C Meaney, September 2008 Catalyst Research Reports, N Carter, H Wagner, March 2011 2011 Catalyst Census on Fortune 500 Women Board Directors and Executive Officers National Statistics, Labour Force Survey: Employment Status by Occupation and Sex, April-June 2010 (2010)
Dialogue | Dec 2013/Feb 2014
insightful hr from As an independent, not-for-profit research, consultancy and training organisation, IES is uniquely placed to help organisations deliver performance through their people. IES is widely respected for its knowledge and practical experience in HR and people management issues. Developed through our research programmes, our work with employing organisations, and our interaction with both practitioners and other thought leaders, our expertise is available to help you deliver improved performance.
For employers l Evidence-driven HR – using data to make better HR and people management decisions l Improved organisation effectiveness – designing and supporting change l Continuing professional development – ensuring you invest in your HR team’s future skills
For employer, sectoral and proFessional bodies l Effectiveness/impact evaluations of initiatives and interventions l Impact reports on emerging trends and external shocks l Toolkit, good practice guide and decisionsupport tool development l Sector community insights
enquiries For more information about IES’s HR research and consultancy and how we work with organisations like yours, contact Peter Reilly: email@example.com 020 7930 8748 www.employment-studies.co.uk
the ies hr netWork Members of the IES HR Network are part of a select community with access to a programme of Member-only seminars and workshops, solution-focused research, one-to-one in-house support and bitesize learning, as well as a network of peer organisations. Our Membership is an active community of reflective, outcome-focused practitioners who value evidence-based HR, want to be challenged and are willing to also contribute to the collective success of the community.
Why join? l Gain knowledge – attend seminars covering the latest findings in the HR field l be supported – get one-to-one expert advice from HR specialists l Get new skills – come to workshops to develop your HR expertise l access resources and solutions – read exclusive research reports accessible only to members l Get connected – meet other HR professionals at our conferences and learning events l craft solutions – choose from flexible modular packages to suit your needs
www.employment-studies.co.uk/network IES is a charitable company limited by guarantee. Registered charity no. 258390
HR: dead or alive? The world is split over a boardroom recluse. The human resources profession is in need of a major overhaul according to some businesses, while others defend it explicitly. David Woods talks to global business leaders about the future of HR Illustration: Travis Black
+ DIGITAL EXCLUSIVE Jane Sunley aks ‘Is HR a dying breed?’
Dialogue | Dec 2013/Feb 2014
Dialogue | Dec 2013/Feb 2014
I think that HR is broken as a profession
he sentence above is not made up of at the corporation, after she left a position at its Dialogue’s words, nor is it the view of a commercial global business, BBC Worldwide. disgruntled employee or even an opinionated The news prompted a columnist on The Telegraph CEO. These are the words of an HR director to write: ‘Finally, Adams has managed to confirm our – Robert Ritchie, global head of HR for Russian energy suspicions about HR all along: HR is a pointless department giant Gasprom. that does little for the bottom line of a business.’ He is not alone in his belief. Misty Reich, global VP, HR As may be expected, some HR directors were at Yum! Brands – the owner of Pizza Hut, KFC and Taco quick to defend the profession when Dialogue put the Bell – is not much more enthusiastic. ‘I do think there is question to them: ‘Is HR dying?’ something to the question around where HR is going,’ Pulp fiction she says. ‘The function has been DIGITAL EXCLUSIVE Stephen Moir, director of people at slow to evolve and will be left behind Jeremy Langley discusses the National Health Service, one of the if it doesn’t. I particularly think it is whether employees world’s 10 largest employers, asserts: ‘Of interesting to see differences in UK/ recognise HR as a strategic course HR’s not dead. I find it interesting Europe and the US. In my experience part of the business that the future of the profession is the HR practice in Europe is lagging and predicated on an issue relating to one even the US isn’t even where it needs to HR director. Not only is that extrapolation beyond the be currently.’ point of reason, it’s pure conjecture and supposition – In 2012, a study by Advanced Business Solutions in many ways it falls into the category of pulp fiction for in partnership with Source for Consulting found that me. I also notice that when there have been significant more than a third (34%) of business leaders believe HR issues relating to high-profile leaders in other professions directors do not need to be involved in senior decision– finance, operations, marketing and communications making. So a third of all leaders fail to see HR as a – there has rarely, if ever, been such an attack on the strategic issue. profession concerned.’ How can this be possible in a world where the Andrew Powells, HR director at the UK Government’s shortage of talent was first highlighted by McKinsey Department for Business, Innovation and Skills, adds: (defined as the “war for talent”) back in 1997? ‘At least Lucy Adams has hopefully finally scuppered In contrast, 73% of HR directors felt a “critical” the view that HR is “pink and fluffy”. The devil in me also need for them to be present in boardroom decisions. got a bit of a buzz to see HR at the Moreover, the remaining 27% of HR heart of the discussion, rather than on directors felt they should at least be the periphery – but clearly I wouldn’t represented in the boardroom. But want to see this every day.’ apparently they have some work to But Norman Pickavance, former HR do to close their credibility gap. director at supermarket giant Morrisons HR; personnel; people strategy; and currently non-executive director at human remains; historical remnants… HM Revenue and Customs, says: ‘The Whatever the press or employees role of HR has become more – not less chose to call the department, is it – critical to an organization, for good or time that HR strategy had a style Norman Pickavance, former HR ill. Since the so-called “great crash” of overhaul before its strategic arms director at supermarket Morrisons 2008, however, there have been several (talent management, organizational instances where questionable HR policy development, change management, and practice have resulted in damaging organization succession planning) are taken from the realm of the HR performance – whether that’s a culture of “entitlement” at director and handed directly to the C-suite? Barclays or cronyism at the BBC.’ Dialogue interviewed some of the world’s global The example of Barclays to which Pickavance was leaders on HR the very month the profession hit the news referring took place in April 2013, when an independent headlines, when the HR director of the BBC, Lucy Adams, review of the bank’s business practices by solicitor faced accusations of ‘corporate fraud and cronyism’. Sir Anthony Salz, concluded: ‘At Barclays, HR at times The UK’s National Audit Office revealed in September appears to have been seen more as an administrative that the BBC paid £687,333 ($1,086,809) in redundancy function required to satisfy business needs. to executive Jana Bennett, a former head of television
The role of HR has become more critical to an organization, for good or ill
Dialogue | Dec 2013/Feb 2014
‘Although Bob Diamond, on becoming president, Ritchie goes so far as to suggest that HR leaders also took on responsibility for group talent, the and chief HR officers (CHROs) in many organisations heads of HR were typically on neither the group nor are spending too much time developing their own divisional executive committees. departments and creating administration around ‘HR appears accordingly to have them, rather than focusing on the found it difficult to exercise an challenges of the business. appropriate level of challenge to ‘We need strategic and the businesses on some peoplecollaborative thinkers in HR – but related issues. I think HR people are frightened ‘Heads of HR were not given to collaborate. It seems like the authority to push sufficiently we “create what we do” and for the heads of business units HR directors often hire people to reflect desired behaviours into their departments to give in a variety of matters, such as them credibility.’ John Roddy, promotion decisions, performance He adds: ‘The preconception CEO of The Shield Group, part of reviews or remuneration. Given among employees is that HR Indian security giant Topsgroup the decentralised model, it was departments run around organizing especially difficult for the group raffle tickets, coffee mornings and head of HR to have appropriate influence within the employee engagement surveys. That’s how staff feel. investment bank.’ ‘In Russia, HR is very data driven. It’s all about reporting and HR is about reporting in a standardized
HR is there to support employees, keeping their needs at the centre of the company’s focus
‘HR has had a lead role in all these “performances”,’ says Pickavance. ‘Perhaps the [Telegraph] article therefore marks the date, not when the HR function died, but when it finally grew up.’ The supposed scandals do throw HR departments to the lions around the world because, to Pickavance’s point, questions have been raised about whether or not businesses do in fact need HR departments. And, if so, does there need to be a change in how the function operates? John Roddy, CEO of The Shield Group, part of Indian security giant Topsgroup, agrees that HR needs a style overhaul. He says: ‘Some people still tend to view HR as a department that is simply a regulatory arm of the company that does not care about its staff. On the contrary, HR is there to support employees, keeping their needs at the centre of the company’s focus.’ And Kevin Kelly, former CEO of executive headhunter Heidrick & Struggles, adds: ‘HR is a changing function and traditionally the HR directors who have “grown up” in the sector, came into the profession because they like working with people - but in today’s world CEOs want a true business partner. HR needs to change its mindset, but I believe that’s starting to happen.’
Wake up Gazprom’s Ritchie believes a damaging misconception about HR still exists. ‘It is considered that HR is policing and hand-holding, but not adding value to the business – when it should be,’ he says. ‘I don’t tell people I work in HR – I say I’m in leadership or people development. HR directors are doing managers’ jobs for them when we can add value around talent management and leadership. The day-to-day transactional work can be outsourced.’
Dialogue | Dec 2013/Feb 2014
THE DIVIDE BETWEEN HR AND LINE MANAGERS According to a study of 1,400 line managers, those that work in HR think they should have a more strategic and influential role than non-HR line managers, who want the power and ability to influence and motivate their team. Significant differences exist between the views of HR and non-HR managers regarding responsibility for compensation, benefits and restructuring. Non-HR managers rather than HR managers think the line should have greater influence. Responsibility for the punitive aspects of management remains unclear: 70% of HR managers report responsibility for conducting grievance and disciplinary procedures lie with line managers supported by HR, compared with 51% of non-HR managers. HR managers view themselves as more strategic, customer-focused and influential than other managers. Effective HR is associated with effective learning and development; better performance management and team-work; engagement, well-being and happiness; and less stress and conflict. The more effective HR is perceived to be, the more responsibility managers felt they should have on recruitment, arranging learning and development, and having career conversations. (Source: Roffey Park, 2013)
transactional role, being efficient and saving cost. I think it’s time HR directors wake up. ‘If I was running a business, I would get rid of a lot of HR.’
A partner to the business
an entrepreneurial and inspired workforce is the key to survival for businesses in today’s marketplace. Therefore, the HR department is more valuable to organizations now than ever before.’ He adds: ‘If HR departments work to place employees at the forefront of change and introduce initiatives that enhance individual performance and group productivity, it will equip them with the tools to focus on the value they can add to their clients. HR is present in the minds of employees because they benefit from the culture of innovation and creativity fostered via re-engineered HR strategies.’
Modern day HR has, arguably, evolved from the writing of US thinkers such as Dave Ulrich, professor of management at the Ross School of Business at the University of Michigan (and Dialogue columnist). Put simply, Ulrich coined the Robert Ritchie, term “HR business partner” and global head of HR for Russian said that HR professionals should energy giant Gasprom Break the silos work closely with line managers to But Gazprom’s Ritchie fears that better understand their organisation CHROs are ‘often talking to employees behind closed and the challenges it faces. This insight, according to doors about confidential things’ and this gives the Ulrich, means that HR professionals can deliver people impression they are hidden. activities that enable the business rather than act as a ‘The line manager could have these conversations,’ support function to it. he says. ‘I want my team out in the business sitting In response, chief human resources officers have with finance, for example, and listening to them – but appointed “HR business partners” to report to them, but focusing on HR,’ he says. ‘HR should be about breaking to operate in different functions of the business, to lead silos. HR directors have the responsibility to access HR across the spectrum. more disciplines. They are not comfortable with this Writing exclusively for Dialogue, Ulrich says: ‘General and it’s hard for some people to do – I have managers are the owners of their organization’s to question if people working in HR are talent. They are ultimately responsible skilled enough to do this.’ for having the investment in employees’ Shergill agrees, adding: ‘Given the competencies, delivering an employee value uncertainty in the marketplace, it has never proposition and becoming meaning makers.’ been so critical for companies to ensure But he adds: ‘HR leaders should become their talent management processes are aligned thoughtful talent architects who build across departments to deliver the right skills, at the blueprints, coach and facilitate on competence, right place, at the right cost and at the right time to commitment and contribution issues.’ deliver an optimal business strategy. Ritchie agrees in principle: ‘The real value-adders are ‘Employees are selecting to join and stay at the thought-leaders – those who are taking businesses organizations that offer a value proposition beyond forward. If HR directors are frightened of the pressure of salaries. People today are sticking to workplaces that growth or the economy, they need to grow up. offer them true democracy in their way of working – ‘They need to be innovative – and innovation is not this needs to be a company-wide commitment.’ adding a cafeteria to the workplace. I’m tired of listening This is not only dependent on a good HR to this – HR is not just about tea and sympathy, and that’s department, yet Yum!’s Reich agrees. ‘I think this what employees think. HR is a business partnership and links well with a piece that can be done around it must collaborate with the business. HR moving from simply having information ‘I don’t know if “business partner” is the right about employees to having insights that term, but we certainly have to collaborate. I work can drive the business – for example, big closely with communications and marketing data for people information,’ she says. ‘This – they should almost be one in the same in is something I want to benchmark and adding value.’ understand how to wade through all of Prithvi Shergill, chief human resources officer the data I have and derive insights.’ at HCL Technologies, is responsible for the people Ritchie takes this point even strategy for more than 84,000 employees in 31 further in his belief that HR should countries. His organization takes the viewpoint be in a triumvirate with the CEO and that employees come first, customers second; so finance director. good HR equates to happy customers. But could this happen? Roddy thinks so. ‘Not He explains: ‘Innovation provided by
HR is a business partnership and it must collaborate with the business
Dialogue | Dec 2013/Feb 2014
International Deans’ Programme 2013/14 “The best part of my IDP cohort has been meeting a global subset of leaders of business schools from all around the world, thereby having the opportunity to compare the priorities and agendas of leaders of business schools in the 21st century. This is a valuable experience that – even in our e-connected world – is not yet possible without this very personal exchange of views and insights.” Professor Per Holten-Andersen, President, Copenhagen Business School, Denmark
Gain unique insights into the multiple roles of deans of business and management schools in a cohort of around 20 participants from around the globe
UK: 5-6 December 2013
Hong Kong: April 2014
Visit a diverse range of business and management schools, take time out to network with your counterparts, re-energise and reflect on strategies for your own school, and create new strategic alliances
Engage in debates about issues under the Chatham House rule www.efmd.org www.associationofbusinessschools.org @londonabs
Saïd Business School, Oxford Imperial College Business School, London
Three Hong Kong business schools
Denmark & Sweden: June 2014 Copenhagen Business School Lund University School of Economics and Management www.efmd.org /business-schools/idp
being on the board can allow a skilled HRD to focus purely working in HR. Microsoft and Unilever are examples on the staff and without influence from the executive of companies that have recruited HR directors from board. It often does happen that the HRD forms a strong outside the HR discipline. triumvirate with the CEO and finance director to develop a Patrick Wright, William J Conaty/GE professor of corporate strategy,’ he says. strategic HR at Cornell University DIGITAL EXCLUSIVE ‘If so, HR has to change its views and senior research fellow at Tilburg Christine Porter gives her and skill sets and HR directors have University, has written extensively viewpoint that there is no to change their personal brand,’ he on transforming HR to deliver within standard pattern of HR activity muses. ‘It’s a no-brainer. Things are business. as it is continuously evolving not going to work as they are. The He writes: ‘HR transformation is biggest resource in a business is not new, not easy and never ending. people and the strongest leaders are those who drive The original focus was on processes and competencies, engagement. This is a hard commercial road – but but newer requirements are for data and accountability.’ at the same time, the organization has to give HR the And growth into emerging markets has provided a chance. Stop looking to the HRD for engagement data, significant opportunity for HR leaders to play a strategic but look to the HRD to offer business solutions.’ role in their organisation’s global expansion. Shergill adds: ‘C-level executives and directors are Kelly explains: ‘Research shows some boards spend quickly realizing that talent management occupies the only two or three hours a year on succession planning battleground for competitive advantage and, as such, and there needs to be a credible people strategist must be supported and invested in. The HR departments there to push the agenda. I think HR will become yet need to deliver. The HR team is accountable to direct more strategic in the long term as retention becomes and deliver people strategies more important. Generation that lead to the execution of the Y, for example, expects 14 desired business objectives.’ jobs by the age of 38. The war for One thing is for sure. As people talent is over – and talent won.’ strategy moves up the corporate Ritchie laughs: ‘I think the next agenda, the people who are step is to drop the name. Why do devising said strategy will be vital we have to be called HR?’ for business development. But The HR director has been given Topsgroup’s Roddy is still in two the option – and the challenge Prithvi Shergill, chief human resources minds about the future of the HR – to step into that driving seat officer at HCL Technologies profession. position, and prove the critics and ‘HR is far from dead,’ he says initially. ‘It is even more columnists wrong. But at any rate, if HR departments effective now than it has ever been.’ are not driving people strategy – and the CEO is – But then he adds: ‘Ultimately, the CEO is in command they should, at the very least, be out in the business, of HR – however, it is very necessary to distinguish the navigating it. HR department from the executive board.’ ● David Woods is Global Editor of Dialogue. You can Board level read more views on the 21st Century role of HR in his There is some evidence, nevertheless, that HR directors article, co-authored with Emily Perry, ‘HR is dead. Long are being taken more seriously at board level, including live talent strategy?’ for Purple here. more regular invitations to attend board meetings and an increase in “ownership” of the non-executive FURTHER READING director (NED) hiring process. According to a 2011 report from The Korn/Ferry Growing HR influence in the boardroom, Lynne Nixon and Anna Penfold, The Korn/Ferry Institute, 2011 Institute, with governance, leadership succession, and the “war for talent” scarcely ever out of the public eye, Report finds the majority of managers undervalue HR, HR issues are demanding more board-level attention. Advanced Business Solutions, Surrey, 2012 In fact, a poll by Korn/Ferry International of more The Chief HR Officer: Defining the New Role of Human than 700 senior executives found that more than 40% Resource Leaders, Patrick M Wright, John Boudreau, David thought that the influence of HR on board decisions Pace, Libby Sartain, Paul McKinnon, Richard Antoine, 2011 during the past five years had significantly increased. HR from the Outside In: Six Competencies for the Future Only 13% of them said it had decreased. of Human Resources, Dave Ulrich, Jon Younger, Wayne The report also concludes that HR directors would Brockbank, Mike Ulrich, 2012 benefit from senior-level experience outside the Roadmap to Strategic HR: Turning a Great Idea into a function. A survey of the heads of HR in US companies Business Reality, Ralph Christensen, 2005 found that more than 60% had spent 10 years or more
The HR department is more valuable to organizations now than ever before
Dialogue | Dec 2013/Feb 2014
Are You Globally Connected?
Combining worlds of knowledge for the advancement of women. The International Alliance for Women (TIAW) is a global organization that’s dedicated to the economic empowerment and advancement of women worldwide. We bring together the knowledge, resources and connections women need to develop their leadership capacity on a global level. TIAW’s Women’s Leadership Network Program: • Support and build connections for women at
the global level • Connect members with corporate and government leadership • Ensure strong support for women in leadership positions • Provide online “Women on Boards Toolkit” • Identify key areas of expertise for women to make transition • Assist associations in determining specific governance issues • Ensures qualified women connect with CEOs and nominating committees for leadership positions TIAW’s partnership with Global Board Ready Women (GBRW) The GBRW initiative is an international list of women who are qualified to sit on a board. This list is compiled and updated by the European Schools/Women on Boards Task Force in association with The Forte Foundation. The GBRW consists of women who: • • • • •
Are already on a board or ready for a new mandate Meet a clear set of pre-determined criteria Ready for consideration on a publicly listed corporate board level position Profile accessed worldwide by BoardEx GBRW-certified women receive free AESC BlueSteps membership through TIAW
Join us in our mission.
See how you can make a World of Difference™ by becoming an active part of TIAW.
The International Alliance for Women (TIAW) World Headquarters 1101 Pennsylvania Avenue NW, 6th Floor Washington, DC 20004 Email: firstname.lastname@example.org 888.712.5200 (North America) +1.202.351.6839 (International)
Want to spark innovation? Try killing stupid rules Employees are finding it increasingly difficult to set aside time for big ideas or creativity. Lisa Bodell examines a way in which people can be innovative when they are inundated with reports, policies and meetings Illustration: Chris Madden
+ DIGITAL EXCLUSIVE Lisa Bodell helps business leaders spark innovation.
Dialogue | Dec 2013/Feb 2014
here “global knowledge” was once essential for leaders, a 2012 IBM Global CEO Study cited “creativity” and “opportunity-seeking” among the top leadership qualities for the future. This is one of many signals that the business world is evolving away from the information age, where leftbrain technical skills, knowledge and expertise were king. In A Whole New Mind: Why Right Brainers Will Rule the Future, Daniel Pink, author and former speech writer to Al Gore, asserts that global conditions – abundance, Asian outsourcing and automation – are setting the stage for a brand new era: the “conceptual age”. In the conceptual age, rightbrain skills involving simultaneous metaphorical, aesthetic, contextual and synthetic processing will be key. Given the velocity of change and the complexity that results from this, leaders need to think beyond just knowledge or expertise. The best employees of the future will excel at creative problem-solving and different ways of thinking – synthesizing seemingly diverse things together for better solutions, using metaphors to explain fresh ideas for which no context might yet exist. In spite of this, the modern worker is finding it increasingly difficult to find the time and mental space for “big-picture thinking”. Would it shock you to know that managers in large-scale organizations spend 40% of their time writing reports and 30 to 60% of it in “co-ordination meetings”? The very structures we created to grow businesses too often hold leaders back from reaching their potential. Look under the hood of your own company: do you see long-term vision or layers of red tape? When we, as humans, are overwhelmed with processes and procedures, there’s no room for big ideas or innovation. Ideally, processes are meant to standardize and simplify the essential tasks that keep businesses running smoothly. They also provide a tangible measurement of progress and productivity, giving people a sense of efficiency and accountability. But processes can also nurture a climate of complexity that reinforces the status quo instead of encouraging innovation. How can people be expected to innovate when they are up to their necks in reports, policies and meetings? If you want to be innovative, innovation cannot be your starting point. First you have to stop, eliminate and simplify. At futurethink, we use a bold tool called Kill a Stupid Rule to identify what rules, processes and procedures should be eliminated to make room for more productive tasks. This innovation tool has been helpful to our clients to clear red tape and make more space for creative thinking.
cathartic for teams unaccustomed to being honest about what’s on their minds. Not many people feel comfortable going to their superiors and saying: ‘You know that system you rely on? We hate it.’ But a tool like Kill a Stupid Rule creates a framework to question the status quo in a safe environment. Managers can also use this exercise as a great way to start shaking their teams out of complacency. Start by bringing employees together and break them down into two- or three-person teams. Kill a Stupid Rule works best when people from different departments and seniority levels are brought in together. The more diverse, the better – from the marketing department to the legal department, and from the interns to the function heads. Encouraging crossdepartment collaboration helps break down silos and enables employees to interact with people they do not usually collaborate with. Provide each team with blank sticky notes and markers for them to write their ideas on. Have the leader ask everyone this question: ‘If you could kill or change all the stupid rules that get in the way of better serving our customers or just doing your job, what would they be and how would you do it?’ Usually this question sets the room on fire – eyes light up, employees start talking, the whole group is engaged. If they stare back at you in stunned silence, you might want to add: ‘You have 10 minutes! Go!’ After 10 minutes, people will likely ask for more time – not because they’re stumped, but because there are so many stupid rules. Do not interrupt their catharsis. After all, how often do you see your employees so engaged? Do remind them, however, that government regulations are “red rules” – illegal to change – but everything else is a “green rule” and, thus, fair game. When the pairs finish listing stupid rules, ask each person to take a single sticky note and write the one rule he or she hates the most. Meanwhile, create a 2x2 grid (below) on a whiteboard or flipchart.
The best employees of the future will excel at creative problem-solving
Kill a Stupid Rule Kill a Stupid Rule can be an eye-opening exercise for managers who have no idea that some of their operating procedures can be irritating or cumbersome and it is
Dialogue | Dec 2013/Feb 2014
Kill a Stupid Rule 2 x 2 grid
Look for visual clusters that may need re-evaluating
Rules suggested to be “killed” at HBO DND’s department
Axis Y represents how easy or difficult the rule is to kill and X represents the business impact (low to high) of killing the rule. Encourage everyone to place their rule in the most fitting quadrant. There is no right or wrong placement because each person defines what goes where according to their unique perspective in the company. If they believe it is easy to kill the rule and the effect is high impact, it belongs on the top right quadrant. If they believe it is difficult to destroy – or it will not impact the entire business – put it on the bottom left. At this point, you have a visual cluster of rules that your employees want to personally smother. Pay attention to any that show up again and again, as this is proof that it needs to be re-evaluated. Additionally, rules in the right quadrant of easy-to-implement and highimpact indicate your immediate targets – “quick wins”. As you open up discussion about the rules, listen objectively about where change is needed and resist the urge to be defensive. The majority of employers find that their most vilified rules are not really “rules” at all. Instead, they are annoying procedures like continuous reports or conference calls, reimbursement protocol and layers of sign-offs. Now it is time for the moment of truth – and action. Among these “rules”, have the employees take a vote on which ones should be killed. Encourage them to look at the implement/high impact quadrant as those rules would be easy to kill and have high impact. Then do it, right on the spot. If possible, axe more than one. Or do the next best thing: kill the rule for a few months and promise that if no one misses it, the change will be permanent. Your people will likely be shocked and ecstatic. But beyond the gratification, killing a stupid rule sends a powerful message that you are listening and committed to improving their work lives.
Case Study: HBO I recently worked with television company HBO’s domestic network distribution department to encourage “leadership and innovation from every seat” across the 200-person department. HBO wanted to explore options for streamlining its processes to make way for a more innovative and fun environment. The Kill a Stupid Rule exercise was popular with its staff, and employees were encouraged to “kill” rules they thought were “stupid” such as low-value policies and procedures. From the results, managers learned there were similar pain points across the department, which made it easy to prioritize opportunities for improvement. One common frustration that was uncovered related to meetings running on the longer side. After learning about this feedback from employees, managers decided that no meetings at HBO should run over one hour. This has resulted in more purposeful and focused meetings, and gave people permission to not feel like they always had to say something – their value is not determined based on what they do or don’t say in meetings. The aftereffect of immediate changes for this rule and others was so positive that HBO decided to add employees’ suggestions for killing stupid rules to Google Docs so everyone could access them, make comments and add ideas as they come up. Shelley Brindle, executive vicepresident of the department, explains: ‘Creating the Kill a Stupid Rule as a shared department document – making it a process, organizing it, getting everyone involved to build accountability and ownership – makes it transparent. Transparency creates accountability for everyone in the department, including leadership.’ She also makes it a point to give an update in her bimonthly team meeting of the status of stupid rules killed. Welcoming suggestions sent a powerful signal across the department that leaders were listening and has helped it strengthen the company’s innovative culture.
Encouraging cross-department collaboration helps break down silos
Dialogue | Dec 2013/Feb 2014
Tips to drive innovation The following tips will help your organization implement the exercise and start driving positive change immediately: Look for themes. If several people are identifying the same types of tasks as being a waste of time, there’s a good chance they’re right. A frequent topic that comes up during this exercise is unnecessary meetings. It is easy to schedule meetings in a bid to stay organized and keep everyone on the same page, but this time spent together can quickly become an inefficient way of making progress. A group of managers at internet services provider Sprint were concerned that staff were spending too much time in meetings, so they did a meeting audit and eliminated 30% of internal meetings. This released a huge amount of time for employees and has been estimated to have saved the company significant dollars in productivity time. This quick change allowed staff more time for other projects and cleared space for innovation.
Realize that most “rules” aren’t actually rules. Often, people keep doing things a certain way because that’s how they were taught to do them. As it’s always been done that way, they assume it’s non-negotiable. It turns out most “rules” are just cultural norms, not corporate mandates. Do not get offended. There may come a time when people question a rule you created. If this happens, don’t take it personally. Sometimes policies start out being helpful, but become less relevant over time as the organization evolves. When employees are instructed to focus on solutions instead of complaining, it makes it easier on those who initially created the rules that are on the chopping block.
Simplification is the first step toward achieving your company’s innovation goals
Keep your focus on solutions and creative suggestions for improvement. When a rule is proposed for being eliminated, make sure to get feedback from the group to gain insight from people who might be affected differently by the change. Including all levels of employees in the decision-making process will help secure the companywide buy-in needed for profound transformation. Differentiate between red and green rules. It is important to point out that not all rules can be killed. Any rules that are government-regulated are off limits to kill and hence red rules. Think employment law, tax law and industry regulations. Discuss “smart mistakes”. Managers often create rules out of fear, or the need to control the unknown. That’s normal. Recognizing that some unnecessary things were put in place with the right intent but wrong outcome still motivates people to try new things. Often too, when killing or changing a rule, the habit is to put a new one in its place. This can actually be a good thing. Getting rid of something that didn’t work and replacing it with something better means positive progress. I worked with an organization where employees didn’t like how contracted employees were treated differently than full-time salaried employees. The staff brought up these rules and suggested abolishing them, but were unaware of the legal guidelines that require employers to uphold different rules based on employment status. Although this was a Red Rule, employees became better informed of the reasoning behind the rules, which led to widespread acceptance.
Dialogue | Dec 2013/Feb 2014
Ease into change with a pilot test. Sometimes it is not immediately clear whether eliminating certain processes will be an improvement or create other issues. When you run into that type of situation, try killing the rule on a trial basis. If everything works out after the agreed time frame, you can permanently kill the rule. Publishing company McGraw-Hill decided to do this when staff suggested eliminating the monthly operating reports. Senior leadership was hesitant to make this change, but agreed to put the reports on hold for six months to see if anyone would miss them. After the pilot period ended, managers agreed the reports were not a necessity and they killed the report permanently. An unflinching look under the hood of your organization often reveals thick layers of policy that are choking its innovation potential. To move forward, reduce or eliminate low-value processes that are not driving growth. Killing “rules” and unnecessary tactics not only steers your business away from the danger of complexity, it invigorates employees and allows them to accomplish much, much more. Simplification is the first step toward fuelling and achieving your company’s innovation goals. Sometimes innovation isn’t about starting things, it’s about stopping things that get in our way. Kill a Stupid Rule will help you and your team assess whether you’re making the best use of your time, eliminate unproductive programmes and behaviours, and make space for productive work and creativity – an essential skill in the “conceptual age”. It’s a simple way of creating quick wins and driving immediate transformation, sending a positive signal across your organization to embrace change. ● Lisa Bodell is founder and CEO of futurethink, part of Duke CE’s educator network and author of provocative culturechange book Kill the Company: End the Status Quo, Start an Innovation Revolution Join the conversation in the Kill a Stupid Rule LinkedIn group: http://linkd.in/16Sxt0F
Serious business: Editor David Woods talks exclusively with Giovanni Bisignani, former director general of the International Air Transport Association
ix Degrees of Separation is the existential premise that everyone in the world is connected to everyone else on Earth by a chain of no more than six acquaintances. But it has to be said that few individuals have the details of GE’s ex-CEO Jack Welch, Pope John Paul II, UN secretary general Ban Ki Moon, Russian ex-president Dmitri Medvedev and Libyan leader Colonel Gaddafi in their little black books. Giovanni Bisignani does; and the former director general of the International Air Transport Association (IATA) and ex-CEO of Italian airline Alitalia, wastes no time in sharing anecdotes with Dialogue about watching with awe the closure of air travel giant Pan Am and travelling to Kim Jong Il’s North Korea on an
, p U
airplane with no cabin pressure, where he witnessed the unveiling of Pyongyang’s first set of traffic lights. Thinking back on his time heading the trade association for the airline industry, he laughs: ‘I knew everybody at the time. I have never taken notes, but I have a very good memory.’ An Italian native living in London, Bisignani displays all the flamboyance and charm that is characteristic of his mother country, but make no mistake: Bisignani is a man who means serious business. IATA’s stated mission is to “represent, lead and serve the airline industry” and it defines most if not all of the airline rules and regulations. The main aim of IATA is to provide safe and secure transportation to air passengers. It is also tasked with acting as the price-setting body for
Dialogue | Dec 2013/Feb 2014
I asked for a white sheet of paper so I could run IATA how I wanted – I wouldn’t have taken the job otherwise
+ DIGITAL EXCLUSIVE
Watch video interviews with Giovanni Bisignani.
y p a u aw d n a Dialogue | Dec 2013/Feb 2014
international air travel. IATA’s board is made up of CEOs of 240 airlines, representing 84% of the world’s air travel. Bisignani joined IATA in 2002 and during his 10 years with the organization, he drove significant industry changes. He made IATA Operational Safety Audit (IOSA) a condition of IATA membership. In short, airplanes have to pass an inspection from IATA teams before their airlines would be permitted to join the organisation. This contributed to a 42% improvement in safety in the skies over the period 2000 to 2010. Bisignani also started the “Simplifying the Business” (StB) initiative in 2004. This programme converted the industry to e-ticketing and bar-coded boarding passes, made common-use self-service kiosks an integral part of the travel experience and established the framework for 100% e-freight by 2015. He also mobilized the industry behind a strategy to deal with the impact of the air travel industry’s carbon emissions on climate change. Airlines, airports, air navigation service providers and manufacturers committed to achieve carbon neutral growth by 2020 and cut emissions in half by 2050. Finally, the redoubtable Bisignani strengthened IATA’s position as the voice of the industry, with firm advocacy and lobbying to focus governments on long-term issues for the viability of aviation.
by terrorists who hijacked planes, the obvious first question for Bisignani is “why would you take that job?” ‘Everyone says international organizations are lazy and bureaucratic, and IATA was a monument to the past,’ he explains. ‘Two weeks after September 11, I received a call asking if I would take over as director general of IATA and I said: “I’m the opposite to the kind of person you want to do this job – I won’t act as the CEO of Alitalia, but as if I work for GE”. ‘I asked them for a white sheet of paper so I could run it how I wanted – I wouldn’t have taken the job otherwise. ‘The board said to me: “We will help you do what you want. You have a licence to do this.” The hardest person to convince was my wife, but I told her we would go to New York for five years while I worked at IATA. I ended up staying for 10. I knew that IATA could have been run like GE – it has been a great adventure doing this.’ Bisignani joined at a time when air travel itself was under the spotlight following those notorious terror attacks and he freely admits that the airline industry was “dying”. ‘I walked in and told the board “the carnival is over”,’ he says. ‘My job title was director general as is usual in an international body, but I added CEO as well because I wanted to act like a CEO. I said to IATA, you need money; I make money. But I don’t need a management team made up of professors. We wanted to deliver. I had to change this organization and I had to do it fast. I was someone who could deliver.’ Bisignani believed it was time for a new strategy for IATA. It was time for the organization to cease to be
I said we should run IATA as a commercial organization; a consultancy for the airlines
Taking the job All very impressive – but given that he joined just weeks after September 11, 2001, when New York’s World Trade Center and the Pentagon in Virginia came under attack
+ DIGITAL EXCLUSIVE Click here for a slideshow of Giovanni’s encounters
Bisignani is pictured with (left to right) Egyptian Prime Minister Ahmed Shafik, Pope John Paul II, astronaut Neil Armstrong
Dialogue | Dec 2013/Feb 2014
a talking shop for airline CEOs and become a change agent to a global industry. ‘The only money IATA was making was from “dues” that members paid. But I said we should run it as a commercial organization; run it as a consultancy for the airlines,’ Bisignani says. And this is what happened. His first consultancy project was certainly an ambitious one. ‘Our first client was the Chinese Government. I worked with it to redress the consolidation of Chinese airlines and we merged 26 airlines into six – with the approval of the deputy secretary of the Party. ‘They trusted me. I told them it could take them six years to do this and three years would be a record. They did it in one year.’
In some countries, people were buying plane tickets from travel agents with bags of cash. This was no fault of the airlines. ‘Russia was difficult. I went to see [the then Russian premier Dmitri] Medvedev myself and I told him that without a change to Russian fiscal law, people wouldn’t be able to fly and would have to travel by train or car.’ And he listened. But due to this change in the booking process for thousands of e-tickets around the globe, IATA found itself dealing with massive amounts of money. Bisignani laughs: ‘E-ticketing is worth $660 billion this year alone. I was responsible for $2.5 trillion and was certainly popular with the banks.’ But he is the first to admit that his revolution in the skies – how we travel, how we pay for travel, how airlines measure the safety and security of our travel – is not down to him. Adapting the CEO cliché “people are our greatest asset”, he asserts: ‘At IATA, people were our only asset.’ ‘We employed 2,000 people when I started there and this went down to 1,500 people,’ he explains. ‘I was able to interview everybody for jobs. But once I was away on business, I asked another manager to do this and he said: “We usually just hire the cheapest.” ‘But I picked people who had big salaries. This job was not a pre-pension position [for airline executives] – we couldn’t have industry experts who had no leadership grip. ‘It was a shock to IATA when I brought in staff from commerce.
Being a leader is about taking risks. You won’t hit targets by standing still
But although, on the one hand, IATA was united, with Bisignani receiving support from his board and airline members, the biggest problem he faced was setting targets; for example with e-ticketing. E-ticketing is something 21st century business travellers take for granted. They book online, and use a kiosk at airports to print tickets and (hopefully) move quickly through the check-in process. Previously, a passenger would have to book their tickets over the phone or in person with a travel agent and even wait for the tickets to be posted to them in some cases. But Bisignani says: ‘It was not just about upgrading a computer system; you have to change the legislation of some countries. In some airports, you needed paper tickets to exchange currency, for example.
UN secretary general Ban Ki-moon, Singapore’s first PM Lee Kuan Yew and US Homeland Security Secretary Janet Napolitano
Dialogue | Dec 2013/Feb 2014
Bisignani presents figures for major services in the air industry
‘I’m polite. I never shout. But I’m tough. People understood: if you’re not able to change [with the organization], find something else. ‘I went to the business school of GE and I said “I need help” and I needed someone like [GE Business School consultant] Noel Tichy – but he charged $1,000 per day for consultancy. ‘Jack Welch said to me: “Noel will do it for free – he wants to enter a new market anyway”.’ ‘I changed 40% of the staff – some just came to me and said they didn’t feel right about the new system, so we gave them packages and they left.’
View Giovanni’s full presentation
‘Ultimately, every leader develops a unique style. At IATA, I soon became known for my “crazy ideas” and for “shouting politely”. But my ideas were never crazy; they were calculated risks. And for some, my politeness was not always evident. ‘Airline chiefs have big egos. They’re used to being on the front page of newspapers. But with me, they put their egos aside and they just wanted to talk about what was best for the industry.’ ‘The small airlines were great at the board level – they wanted to show they were small but good. And I knew I could work with the small airlines. IATA had been a club for the big guys and now I wanted to get everyone on board. So I made a point of visiting every airline in IATA if they invited me to see them, regardless of how small they were.’ Eleven years on from the beginnings of his organizational turnaround, Bisignani is under no illusion that the airline industry is still in the grip of serious threats. The focus of the business world has moved from developed markets towards the growth markets of the East and South, and the same, according to him, is true of air travel. And as the recession continues to affect countries globally, the crunch on corporate spending has squeezed business travel – especially given the rise of teleconferencing and virtual conferences. In fact, the very day Bisignani met with Dialogue, Skype celebrated its 10th birthday, with in excess of 50
Consolidation is the future. In Indonesia, Vietnam and Malaysia. In Asia Pacific, air travel is booming
Bisignani, as the CEO, took the stance to completely reorganize leadership and management in IATA. He is emphatic on its importance. ‘Leadership makes all the difference to an organization,’ he asserts. ‘A good leader needs to motivate his team to achieve tough targets in the short term and to work towards a strategy and vision for the organization in the long term. ‘I had a mandate for change. I applied some crucial leadership tips to three key areas: the internal structure and personnel; monopoly providers in the value chain; and governments. I set tough targets and implemented a transparent performance assessment scheme. ‘You need to be able to influence decisions. Being a leader is about taking risks. You won’t hit targets by standing still.
+ DIGITAL EXCLUSIVE
Dialogue | Dec 2013/Feb 2014
The airline profit margins and the affects of global GDP
million users worldwide. ‘The US and EU used to be the pillars of the airline industry,’ says Bisignani. ‘Now they account for 28% of air travel. Asia Pacific accounts for 30% of air traffic.’ He had hoped the Single European Sky initiative from the European Commission would have come into effect, by which the design, management and regulation of airspace would be coordinated throughout the European Union – but this has not yet come to fruition.
So what is the future of air travel? According to Bisignani, mergers and acquisitions and joint ventures will be on the horizon. ‘Consolidation of major airlines is the future,’ he asserts. ‘In Indonesia, Vietnam and Malaysia. In Asia Pacific, air travel is booming. Latin America is playing a huge role in aviation. It has good natural resources and has discovered China – it’s moving from a US-based approach to business to a Chinese approach. ‘Take the LAN [the Peruvian airline] and TAM [the Brazilian airline] merger for example, to form LANTAM in 2012 – LAN has leadership; TAM has the market. These airlines are all owned by families that have had good relationships for years. As such, the shareholders can take a long-term strategy. ‘In the Middle East, Arab airlines are 100% state owned and are subsidized by governments. They’re doing what the EU was doing 25 years ago and they are all in the market. They have built a very efficient infrastructure and have good locations for planes. Etihad is surpassing all in terms of class and no airline has developed so quickly.’ And overall, Bisignani believes the “biggest sin” of the airlines is that they are not handling capacity
Dialogue | Dec 2013/Feb 2014
the right way. He believes there are too many planes in the sky. ‘If they reduced capacity by 6%, they would see a return of 80%,’ he says. ‘The US is making better profits because it handles capacity better.’ Bisignani welcomes challenges; he welcomes the pressure that the budget airlines are placing on the larger traditional carriers. His changes have arguably revolutionized the industry, but he is clear that the challenges for his successor, Tony Tyler, and the IATA board members are still mounting. He pauses and takes a breath, thinking about the challenges facing air travel – not least the green agenda, rising taxes and the increase in virtual conferencing – before concluding: ‘This is an industry at risk; an industry with 60 years in survival mode.’ The air travel turbulence looks set to continue. l Giovanni Bisignani is the author of Shaking the Skies Further Reading Shaking the Skies The Untold Story of Aviation Since 9/11 and the Biggest Turnaround of an International Organization in History, Giovanni Bisignani (2013) The Airlines, The failure of an industry, Jean-Louis Baroux (2013) Air Transport in the 21st Century, John F O’Connell, George Williams (2011) Air Transportation, John G Wensveen (2011) Flying Ahead of the Airplane, Nawal K. Taneja (2008)
Embracing the circular economy With pressure on natural resources increasing, it is time businesses switched to a circular economy where industry becomes restorative and regenerative. This is the only way economic growth can be developed says Alexander Collot d’Escury Illustration: Shaw Nielsen
ressure on natural resources is going to increase, assuming business leaders want to continue developing the global economy. In the 20th century, the extraction of four main categories of raw materials (construction minerals, ores and industrial minerals, fossil fuels and biomass) went up by a factor of eight, according to a study from the UK-based Green Alliance. The 2011 report added: ‘Thanks to population growth and increasing affluence, we are now consuming more resources than ever: between 45 and 60 billion tonnes of resources are extracted globally every year, and current growth trends suggest that this figure could increase to 140 billion tonnes by 2050.’ In Europe, only 40% of 2.7 billion tonnes of waste produced in 2010 was reused, recycled or composted. A 2013 United Nations Environment Programme (UNEP) report showed that only one third of the 60 metals it studied had recycling rates of more than 25%. Even with
metals that have high recycling rates, significant value was lost annually – $52 billion for copper, $34 billion for gold, $15 billion for aluminium and $7 billion for silver. Globally, the middle-classes are set to increase to five billion people by 2030, purchasing ever greater amounts of consumer goods and services. This is entirely a good thing from the business point of view as well as the social aspect of lifting millions more out of poverty. But at the same time, it puts even greater pressure on an old linear economic model, a legacy of the second industrial revolution, where, according to the Ellen MacArthur Foundation, ‘resources are extracted from the earth for production and consumption on a one-way track’.
Dialogue | Dec 2013/Feb 2014
DIGITAL EXCLUSIVE Business leaders all face a game-changing technical. In this process, it is crucial to know moment in history in which they start to make what is in your materials, a process that relies Have your say the transition from the linear ‘take, make and also on knowing what your suppliers are using. on our poll: waste’ model to the circular economy, which As the world urbanises and more and more what are the is designed to be regenerative and use less stumbling blocks buildings are created, manufacturers need to material and energy. ensure the goods that go inside are made with to sustainability in The circular economy, as defined by The your oganization? human health and the environment in mind. It Ellen MacArthur Foundation is ‘an industrial is also important to know that the materials are system that is restorative or regenerative by intention non-toxic for the recycling process, so that the materials and design. It replaces the “end-of-life” concept with can be recycled and reused in a healthy process. restoration, shifts towards the use of renewable energy, 3) Scarce raw materials crisis – For a century between eliminates the use of toxic chemicals, which impair reuse, 1900 and 2000, global GDP grew 20 times, which and aims for the elimination of waste through the superior clearly raised prosperity levels for some of the world’s design of materials, products, systems and, within this, population. But this linear system was one where, as business models’. the Ellen MacArthur Foundation puts it, ‘resources The linear model leads to excessive waste of finite are extracted from the earth for production and natural resources. The stark reality is that it is unlikely consumption on a one-way track with no plans for business can sustain economic growth on the scale reuse or active regeneration of the natural systems from hoped for in the decades to come unless leaders make which they have been taken’. We simply do not have an the switch, learning how to design goods for disassembly endless supply of raw materials in the earth – copper, and safe recycling. There are four global crises the circular phosphates, zinc, oil and more – to continue on this economy will help businesses tackle: basis. At present, about 80% of the waste from consumer 1) The climate crisis – Not only is the ultimate goal of goods (e.g., food, beverages, packaging, clothes, shoes, the circular economy to move to renewable energy etc) ends up in incinerators, landfill and wastewater. to power the next industrial revolution leading As the Ellen MacArthur Foundation/McKinsey Report to lower carbon emissions, but the fact that the (Transition to the Circular Economy, Volume 2) has recycling and reuse of materials is much less energyshown, there is commercial value to be gained from intensive than the current linear system will also finding recycling and reuse business models in the fastreduce emissions. Walter Stahel, co-founder of the moving consumer goods sector which could amount Swiss-based sustainability consultancy, the Product to $700 billion in materials savings every year. In the Life Institute, points out that in the linear model, long run, we will need to change to these models to 75% of the energy used in manufacturing relates generate sustainable economic growth on a resourceto the extraction and production of raw materials constrained planet. But in the short run, companies with such as oil, copper, iron, etc, and 25% for the actual circular models will also benefit as resource scarcity manufacturing of the goods. At the same time, Stahel intensifies and environmental standards tighten. points out that only 25% of the labour is employed to 4) Energy crisis – The US writer, thinker and government produce these raw materials. Most of the labour is advisor Jeremy Rifkin describes the dilemma of relying in the making of goods. So, if this is correct, if the on oil to continue to power the world economy. shift is made to the circular model, companies will The fact that it is finite and is, in many cases, harder be less energy-intensive and more labour-intensive, to extract leads to scarcity and price hikes, thereby providing new jobs. This is a positive and highly destabilizing the economy. This goes, he says, in fourpractical way of developing economic growth in a year cycles as an economy starts to recover from a way that also helps to tackle climate change. crash – partly induced by an increase in the price of oil 2) The toxicity crisis – We consume chemicals from and its knock-on effect on other commodity prices – manufactured goods all the time. Given that humans and again the oil price starts to shoot up. spend 90% of our time indoors, this is a major issue to consider. Another related health risk is the level of Rifkin says: ‘When fuel costs rise, all the other prices fine dust in the indoor environment, which can lead across the supply chain go through the roof, because to vascular and lung diseases including the scourge everything’s made out of fossil fuels: fertilisers, pesticides, of asthma. The Cradle to Cradle philosophy (followed pharmaceuticals, construction materials, synthetic fibres, by Desso since 2008) calls for “smarter design”, so power, transport, heat and light. So, when oil went over that the materials are analysed for any potentially $80 a barrel in 2007, everything else went up. At $100 risky chemicals from the start. They are also designed a barrel, the speculators came in to gain the market. At for disassembly. The central idea of Cradle to Cradle, $120 a barrel, we had food riots in 22 countries because created by German chemist Dr Michael Braungart the prices of wheat, rice, barley and rye were doubling and the US architect William McDonough, is to design or trebling. We had one billion people in harm’s way, healthy, circular material flows – either biological or according to the UN. At $147 a barrel, it shut down.
Dialogue | Dec 2013/Feb 2014
Prices were so prohibitive, consumers stopped buying. That was the economic earthquake. The collapse of the financial market 60 days later was an aftershock.’ Rifkin argues that a more stable energy system for what he calls the “third industrial revolution” would be based on a new, technologically-enabled power grid supplying renewable energy to homes, offices and plants. He is also critical of nuclear power, which postChernobyl poses too great a risk to human health. At the same time, Rifkin added, the building of new nuclear power plants is highly costly and the energy source uses vast quantities of water, also a precious resource. The circular economy, with its long-term focus on the use of renewable energy sources and its less energyintensive model provides a great structure for developing the new economy in the way Rifkin proposes.
Air pollution reforms To put it into context, China, the economic powerhouse of the world, faces an ecological crisis, resulting from its hyper-fast industrial growth. The Economist described the problem of air pollution covering Beijing recently and suggested this was a game-changing moment for the People’s Republic: ‘A swathe of warm air in the atmosphere settled over the Chinese capital like a duvet and trapped beneath it pollution from the region’s 200 coal-fired power plants and five million cars. The concentration of particles with a diameter of 2.5 microns or less, hit 900 parts per
million – 40 times the level the World Health Organisation deems safe. You could smell, taste and choke on it.’ This so-called “airpocalypse” led to a series of reforms in China to restrict air pollution and the decision to spend $275 billion over the next five years to clean it up. But the general issue of how to manage economic growth today in a way that is environmentally responsible and non-toxic is one of the big questions facing leaders in business and politics across the world. It is for this reason, I think, the idea of the restorative circular economy has started to enter the mainstream debate. In fact, this topic was discussed at the annual meeting of the New Champions organised by the World Economic Forum in Dalian, China, in September 2013 at a number of sessions I was involved in. Senior leaders from business, NGOs and technology came together to talk about the practicality of scaling up circular economy models. This was a significant moment, as the circular idea – which has its roots in thinking that goes back several decades – is being looked at more and more seriously. It needs commitment from all these quarters to make the change happen. Businesses cannot do it alone. For example, governments may need to re-examine their tax systems, shifting the tax levy onto non-renewable items such as raw materials and reducing the burden on renewables including labour. Local governments can also make it less appealing for people to use landfill or
COMPANIES EMBRACING THE CIRCULAR ECONOMY Micromidas Micromidas produces bio-plastics made from renewable materials. Founded in 2008, the company has developed an innovative chemical process technology to make a variety of commodity chemicals from cellulosic biomass. The first commodity chemical Micromidas is addressing is paraxylene, the primary feedstock in the manufacturing of polyethylene terephthalate (PET) and polyester. Micromidas’ interest in the circular economy is in identifying under-utilized cellulosic and
waste feedstocks which could be consumed to simultaneously eliminate waste and produce renewable chemicals, and understanding the future materials needs of commodity resin consumers. ‘As a chemical technology developer working with renewable and waste materials, it is critical for Micromidas to intimately understand the structure of the circular supply chain. The Ellen MacArthur Foundation has provided an excellent opportunity to interact with the full circumference of that supply chain,’ says CEO John Bissell (pictured).
all its 48 markets. Sustainability is an important part of H&M’s offering and the company strives to reduce the environmental impact of clothes throughout their life cycle. ‘Our sustainability efforts are rooted in a dedication to social and environmental responsibility. We want to do good for the environment, which is why we are now offering our customers a convenient solution: to be able to leave their worn out or defective garments with H&M,’ says CEO Karl-Johan Persson.
H&M H&M is the first fashion company to launch a clothing collecting initiative worldwide. From February 2013, customers were able to hand in used garments at H&M stores in
Dialogue | Dec 2013/Feb 2014
incineration for dumping waste and encourage them to return materials to take-back schemes. This is not about altruism. Going circular is likely to strengthen a company’s commercial success, increase its innovative capacity and make it less exposed to raw material price hikes. In fact, the circular economy could be worth billions of dollars every year to industry. In the EU alone, the savings made through using circular models could amount to between $380 billion and $630 billion per year, according to a 2012 report from the Ellen MacArthur Foundation and McKinsey. And this was calculated on the basis of a “subset of manufacturing”. But there are major challenges to scaling up the circular economy. Governments need to look at tax and other policies. Businesses need to rethink how they design goods, so they are made for disassembly and safe recycling, bearing all the initial costs and issues involved in major organisational change and transformation. And customers and end-users need to be open to new sales models, moving more from ownership of things to leasing or renting from the manufacturer. In this way, the manufacturer retains “ownership” of the precious and finite raw materials. The rise of collaborative business models like car-sharing or renting out private homes for holidays indicates that people are already making this mind shift, which is encouraging. I would suggest everyone in the global community
Coca-Cola The Coca-Cola Company (NYSE: KO) is the world’s largest drinks company, with more than 500 sparkling and still brands. The company is exploring ways to better leverage its supply chain and other partners to support a circular economy. It is increasing communication and engaging consumers to support the circular economy and advancing metrics to measure progress within the circular economy.
Dialogue | Dec 2013/Feb 2014
has a responsibility to push for a more regenerative economic model that will satisfy the human need to drive progress and greater prosperity within the planet’s constraints, along with the need to deal with the four crises: climate change, toxicity, resource scarcity and energy. It is also the commercially smart strategy, driving new innovation and profitability. This is the future we need to embrace, no matter how hard it will be to make the shift. ● Alexander Collot d’Escury is CEO of Desso, a global carpets, carpet tiles and sports pitches company that has been making the transition to the circular economy since 2008. Desso was one of the first members of the Circular Economy 100 – a knowledge-sharing network organised by the Ellen MacArthur Foundation FURTHER READING Towards the Circular Economy, Volumes 1&2, Ellen MacArthur Foundation Reinventing the wheel: A circular economy for resource scarcity, Green Alliance (2011) Martin Wright, The future’s lateral: the new (green) economy, according to Jeremy Rifkin, 19 January 2012, Greenwisebusiness http://bit.ly/1bmuIWI The East is Grey, The Economist, 10 August, 2013.
Nespresso The Nestlé Nespresso company is an autonomous globally managed business of the Nestlé Group. With its corporate headquarters in Lausanne, Switzerland, it is present in more than 50 countries and counts more than 7,000 employees worldwide. Nespresso is selling portion coffees that require a specific machine to be brewed. Millions of these machines are sold every year, representing a million tons of raw materials and energy. Nespresso is relying on the EU’s waste electrical and electronic equipment (WEEE) scheme to manage the end-of-life of those machines and therefore do not know and do not benefit from the recycling, while some of these machines, or at least some of their components, are certainly still valuable. According to pre-studies, adapting the current Nespresso
business model to the circular economy could create business value for the company. ‘We recognise our obligations to respect the environment and safeguard resources for future generations. We are committed to producing the highest quality coffee, while balancing the economic, environmental and social impact of our operations. Achieving growth sustainably has become our way of doing business,’ says Richard Giradot, former CEO, Nespresso.
a dv e r t i s e m e n t f e at u r e
Affordable Luxury in the heart of Times Square Paramount, the landmark hotel in the heart of the theater district, unveiled the new Paramount Bar & Grill, Corso Italian coffee bar, retail concept Free & The Brave, contemporary event spaces, and a two-story lobby as a part of a year-long 40 million dollar re-imagination project in March, 2013. Located on 46th street between 7th and 8th avenue, the historic hotel is just steps away from Times Square and restaurant row, and will be fully completed with the reopening of Billy Rose’s Diamond Horseshoe in fall of 2013, following a 61-year hiatus. As one of the very few hotels designed by prolific theater architect Thomas W. Lamb, the building was designated a New York City landmark in 2009 and has since transformed for the 21st century traveler, offering modern design and amenities while paying tribute to its 1928 origins. Guests will also delight in the 597 newly reinvigorated guest rooms and suites, Paramount News, a stylishly curated store offering design-focused souvenirs, daily newspapers and travel essentials, and Paramount Fit, a state-of-the-art fitness center available 24 hours a day. For reservations
www.nycparamount.com Accommodations: • • • • • •
597 guestrooms & suites; 100% smoke free Exquisite bathrooms and luxurious Egyptian linens with down pillows and comforters Wireless HSIA in all guest rooms 32-inch mounted flat panel TV, iHome docking station In room iron & ironing board, hairdryer Oversized in-room safe
Facilities & Services
• • • • • • • •
Paramount Space: • • • • • • • •
Windows with city views 4 custom designed Executive Boardrooms Accommodate events for up to 225 guests WiFi, 80-inch LED Video Monitor, web camera/ video conferencing, X-Box 360, Apple TV Custom sound system & DJ Booth Experienced event team Onsite Private Dining Available In-house Audio Visual services available
Paramount Bar & Grill, serving American cuisine for breakfast, lunch, cocktails and dinner Corso Café, gourmet coffee bar with “grab & go” meals Paramount Space: Meeting & Special Event space Paramount Fit: 24-hour complimentary Fitness Center Paramount News: Onsite specialty gift store Room Service & Full-service Concierge Complimentary WiFi in public areas Free & Brave: Clothing and accessories Valet parking & valet dry cleaning
Karina Robinson Partner, Robinson Hambro
The tale of a whale The New York tourist sitting next to me on the London Underground with the map of the city spread out on his lap asked where he could find the London Whale. Seriously. Unlike the London Eye, I told him, the London Whale was a human being, albeit a metaphorical landmark. The London-based JP Morgan trader’s nickname derived from his large positions in the credit market, which in the summer of 2012 resulted in the bank declaring a $5.8bn loss. It subsequently faced major fines from both the UK and US regulators for, among other things, its lax supervision and for not “adequately updating” its audit committee on the findings of an internal review. Bereft of its legalese, the Securities and Investment Board’s (SEC) phrase can be translated as “deceitful behaviour”. In other words, culture. A recent survey highlighted that twothirds of global banks agree that a big part of the financial crisis was due to culture – but only one-third of banks thought there was anything wrong with their culture. Transforming an institution’s culture is a lengthy journey, like chasing Moby Dick, the symbolism-laden whale in Herman Melville’s classic book of that name. As well as obvious factors like overhauling compensation, banks need to exercise integrity through sound judgement and rewarding decision-makers who have the guts to say no.
Box-ticking is not the way forward. Unfortunately, though, the plethora of rules spewing forth from different regulators, like water from a whale’s blowhole, makes it overwhelmingly necessary. How else can universal banks active in a number of countries deal with the US’s Volcker Rule, the UK’s Vickers, the EU’s Liikanen, let alone Basel III, which appears to already be disintegrating? In fact, each country seems to be setting its own rules and banks are retreating home, capital in tow. To add insult to injury, no sooner have banks complied with a rule, than the regulator changes it. The Basel Committee admitted over recent months that perhaps securitizations per se were not “bad”. Without saying it in so many words, the implication was that forcing banks in 2009 to post higher capital requirements against them – as though all securitizations were similar to sub-prime mortgages – was wrong. The committee is set to review the issue in 2014. Meanwhile, the absurdity of zero or very low capital requirements on holding sovereign debt has steered banks to load up on it. This may be useful for over-indebted governments, but as Jens Weidmann, Deutsche Bundesbank president, noted in The Financial Times in October, ‘the current regulation’s assumption that government bonds are risk-free has been dismissed by current experience’.
Box-ticking is not the way forward
A very sensible suggestion on culture put forward in the 2013 Salz Review (an assessment of what went wrong at Barclays Bank pre and post the financial crisis ) was for bankers to spend two years on secondment to the financial regulator and vice versa. It appears to have sunk without a trace, despite the fact that there is a model for how to do it in the Takeover Panel, the UK’s mergers and acquisitions regulator, which regularly hosts top bankers and lawyers who then return to their firms.
Dialogue | Dec 2013/Feb 2014
In truth, it doesn’t take familiarity with the last few years to realise that “risk-free government bonds” has always been an oxymoron. In the best of cases, their value has been damaged by inflation or currency devaluation; at worst, it has been destroyed by restructuring or default. Moby Dick evaded his pursuers, but most of the crew of the Pequod, the whaling ship, met their death because they dared not stand up to Captain Ahab and his lack of judgement. The Pequod had a problem of culture. We shall see how the tale unfolds for some of the banks.
Year of the Social CEO
Business leaders can no longer avoid being actively involved in social media because it is quickly evolving into an essential leadership tool if not an expectation for company leaders. Michael Gass looks at why it has become so crucial Illustrations: Eva Tatcheva
Dialogue | Dec 2013/Feb 2014
om Dickson, founder and CEO of US blender falling apart. Control of brands is shifting into the hands manufacturer Blendtec, has developed a cult of customers and employees. following through social media. While many companies now understand the important In a recent interview, Dickson shared the role that social media plays in business, most have story of one of the greatest viral marketing campaigns not realized the changes it is about to make to the role of all time: ‘Will it Blend? was developed accidentally by of CEOs. As communicator-in-chief, the CEO will a marketing director hired in 2006: need to have a more prominent role in social media. ‘I have always been one to try to break my blenders And as social changes the way companies work, it impacts to find their fail points and determine how I can improve the talents and skill sets needed for the generation of them. George [Wright], the marketing director, discovered business leaders to equip them to be more social CEOs. some of the wacky things I was doing to my blenders, CEOs lack knowledge of social media including shoving 2x2s into the jars to try to break Many CEOs have grown to see the blender. the value of social media for their ‘With a $50 budget, George company’s participation, but bought a Happy Meal, a rotisserie have not yet seen the need for chicken, Coke cans, golf balls and their personal involvement. a few other items, and they made The vast majority of chief five videos. Six days later, we had executives have no presence on six million views on YouTube. Six any of the major social media years, 120+ videos, almost 200 networks (Twitter, Facebook, million views later, Will it Blend? LinkedIn or Google+). has been named as the number According to the 2012 Fortune 500 Social CEO Index one viral marketing campaign of all time,’ said Dickson. report from CEO.com, only 19 CEOs from the world’s top The importance of social media on business has 500 companies use Twitter (or have someone use it on dramatically escalated. The world has moved through their behalf) – and only nine of these are active. the “hype phase” of social media – when businesses felt CEOs have not been baptized by participating in compelled to participate because it was such a fad – social media and do not really understand how it works. and entered a “productive phase” where companies are This lack of understanding tends to make them sceptical starting to crack social’s code to turn it into a genuine and reluctant participants, unrealistically fearful of marketing advantage. making mistakes and in an uncomfortable Andy Polansky, CEO of global public DIGITAL EXCLUSIVE position of learning while leading. relations firm Weber Shandwick, explains: Michael Gass But CEOs can no longer avoid being ‘Just as having a company website has unveils the year of actively involved in social media because become standard operating procedure the social CEO as consumers have become more social over the past two decades, utilizing social savvy, social media is quickly evolving media channels has now become an into an essential leadership tool. The time increasingly essential platform has come for social media to become an for companies to communicate expectation for company leaders. their messages to the general As social business changes public and other audiences.’ the way companies work, it Social grows beyond impacts the talents and skill marketing into other sets needed for the current areas of business generation of CEOs. Publicly traded companies are Peter Aceto, CEO of ING beginning to adopt social media for Direct Canada and Toronto’s business communication and crisis Communicator of the Year management. Social is breaking down 2010, was quoted as saying: corporate silos, creating new ways ‘Successful leaders will no longer of connecting and changing the way be measured just by stock price. the company works together. It enables more Managing and communicating with collaborative relationships and enhances creative shareholders, employees, government, ideas and innovation. It is helping companies to gain community and customers will be table better consumer insights and engage with customers. stakes in the future.’ Social networks are having a broad-based impact, In a 2012 IBM study of more than 1,700 chief changing everything about the way business is done. executive officers from 64 countries, 70% of the The tightly controlled corporate environments are responding CEOs plan to shift their focus from using
The importance of social media on business has dramatically escalated
Dialogue | Dec 2013/Feb 2014
e-mail and the phone as primary communication vehicles to using social networks as a new path for direct engagement. According to the study, as soon as the next three to five years, social media is anticipated to rise from the least likely method for CEOs to connect with their audiences to the second highest method, just behind face-to-face interactions. Traditional corporate communication is beginning to give way to social communication. CEOs communicating through social media help their companies appear more human and accessible. Leslie Gaines-Ross, chief reputation strategist at communications firm Weber Shandwick, explains: ‘Companies that are truly social and engage their employees and customers in genuine conversation will be recognized as the new corporate leaders. CEOs who are social will be the next new thing.’ This is a major change from the traditional, controlled, protective corporate environments of the past towards a more open and transparent leadership structure. As social media continues to evolve towards direct engagement, as “spokesperson-in-chief” the CEO’s skills and experience in social media will become even more important. Customers expect to have direct connections to brands and brand leaders, which is why the time has arrived for social media to become an expectation for company leaders. According to the 2012 CEO, Social Media Survey & Leadership Survey by consultancy BRANDfog, 82% of consumers say they trust a company more when its CEO and leadership team are active in social media. CEOs who are “social” are perceived as better leaders and better communicators by their employees. Executives with social CEOs say their CEO’s social media presence makes them inspired (52%), and technologically advanced and proud (41%). CEO sociability provides a multitude of benefits, allowing the CEO to: • Share company news and information • Improve company reputation • Demonstrate company innovation, “humanize” the company and improve employee communications • Improve business results (the more socially tenured, the more people-focused and spontaneous he or she is considered by executives)
• • • • • • • • •
Help resolve a crisis Show innovation Enhance credibility Help CEOs to know the company Be more eﬀective in crisis management Help ﬁnd and attract new customers Have unﬁltered direct communication with consumers Attract and retain top talent Become a valuable asset for sharing corporate social responsibilities and causes.
To have success with social media, CEOs need to understand that it is not just another marketing tool. It provides a two-way channel of communication, allowing them to connect and engage with large numbers of people quickly. It also maintains the characteristics of one-to-one conversations because people can use social media to respond quickly and directly. Sir Richard Branson, world-renowned entrepreneur and businessman, has been called the consummate social CEO, arguably more for his daring balloon flights than because he tweets. He is the founder of the Virgin Group consisting of more than 400 companies around the world. Virgin has created more billion-dollar companies in more sectors than any other enterprise. Branson was named as the world’s top social media CEO for 2013 by the World of CEOs website. The chief executive candidates were appraised by their number of Twitter followers, number of tweets, LinkedIn Inﬂuencer followers and their Klout scores. Branson has amassed more than 3.5 million Twitter followers, 2.1 million connections on LinkedIn and 2.9 million Google+ circles. His blog is averaging 500,000 visitors per month. Sir Richard shares inspiring leadership stories and quotations, thereby creating online conversations about fresh business ventures. He also raises awareness for charitable initiatives or other things he finds of interest or fun. He says himself: ‘Above all, remember to be authentic and organic, answering questions in a straightforward manner – there’s no need to check with your PR team first. You know your products and services, and people will see through any eﬀort to parrot slogans or broadcast a marketing message.’ Because Branson tweets and blogs daily, almost all
CEOs can no longer avoid being actively involved in social media
Dialogue | Dec 2013/Feb 2014
Virgin employees engage directly with their customers through social media. They use it to find out what customers want and need.
How will CEOs respond organizationally and personally? CEOs anticipate the rise of social media as a primary way to connect with their audiences in three to five years. This is a huge shift in a short period of time. How are they going to get up to speed on social media so quickly? It cannot be outsourced. It will take personal involvement. Sure, there are risks involved, but not participating now appears to be the greater risk. ● Michael Gass is an global new business consultant to advertising, digital, media and PR agencies. He founded Fuel Lines, one of the top 100 marketing blogs in the world, according to Ad Age’s Power 150
Dialogue | Dec 2013/Feb 2014
Further reading What Won’t Blend? Ask Blendtec Founder Tom Dickson?, February, 2013 How CEOs Can Engage Through Social Media – A Conversation With Weber Shandwick CEO Andy Polansky On CEOs And Social Media, Forbes, August 14, 2013 2012 CEO.com Social CEO Report Leading Through Connections: Insights from the IBM Global CEO Study The Social CEO: Executives Tell All, Weber Shandwick, 2012 CEO, Social Media Survey & Leadership Survey, BRANDfog Richard Branson on How to Connect with Your Customers, Entrepreneur.com, September 9, 2012
The man who reinvented the wheel Sam Pearce recalls the excitement of how a simple idea helped him make the leap from design consultancy to manufacturing company © Jelly Products Ltd
he idea to reinvent the wheel was born in 2007 when I was sitting at Eindhoven airport in the Netherlands waiting for a flight. I saw a mother pushing her child in a buggy and when the front wheels hit a slight kerb, the child jolted forward because of the impact. I asked myself why a wheel couldn’t have suspension inside it, so it would soften an impact from any direction. I sketched the idea in my notebook, got on my flight and didn’t think much more about. Then in 2009, I was doing a lot of mountain biking and remembered my idea of a wheel with built-in suspension and thought it would be great to have that kind of cushioning in a bicycle wheel. As a mechanical engineer and industrial designer, I love understanding the way things fit together and creating simple yet innovative ideas. So I couldn’t resist making a small model one Sunday afternoon. With the concept proved, I made some prototypes and called it the Loopwheel. The wheels worked, but those early prototypes didn’t really
Dialogue | Dec 2013/Feb 2014
+ DIGITAL EXCLUSIVE Loopwheels in action. © Jelly Products Ltd
perform better than a spoked wheel. It took many more attempts and many more prototype wheels, to get to the point where my wheel had a competitive edge. In the meantime, my wife and I kept running our business Jelly Products, with me inventing the products, while my wife organised patents and sourced buyers. In fact, I invented the Quinny Yezz, a lightweight baby stroller with a simple collapsible mechanism, which we sold the patent for to Dorel Europe, a global juvenile products company. All the time, I was tweaking the Loopwheel prototype, trying to get it to fit the criteria in terms of performance (great suspension), price (not too expensive for consumers) and maintain the same innovative characteristics. The idea of springs within wheels had actually been developed in the early 1900s. But as the springs at that time were made of the same material as spokes, it didn’t really make a difference. But in the 21st century, we have the benefit of better performing material. I found out that carbon composites were best – as they are stiff (but not as much as steel springs) and also flexible. Living in Nottinghamshire UK, the land of outlaw Robin Hood, I got in touch with a local archery business called KG Archery and asked them to apply their master bowmanry and craftsmanship to the product. Having developed the world’s first carbon bow handle called Paragon, like Jelly Products, KG Archery is also a pioneer of innovative designs and the partnership was perfect. It also brought the benefit of supporting the local business community. We received a great reaction from the few people we showed our prototype to in the bike industry, but having reinvented the wheel, I wanted to make it and sell it myself. Rather than selling or licensing the patent to a big company, I decided we needed to be ambitious and set up a much larger production capability. To make the leap from design consultancy to a manufacturing company, we needed funding and support to get the Loopwheel into larger scale production. We engaged with GrowthAccelerator, a business coaching service, to help us make this transition and also decided to use Kickstarter, a global crowd-funding platform for creative products, to help us raise at least £40,000. Having launched the funding campaign in April 2013, we have already raised more than £60,000. I pledged to hire extra labour if we passed our target and have since hired a production manager to help with orders. The funding has helped us to ramp up our business; we now have cash to bulk order components (some of which are imported from China) and have in-house equipment to test the product. Another benefit of accessing funding through Kickstarter
is that it acts as a virtual shop window for products. Consumers from all over the world have been enquiring about our products – in fact, more than half our orders are from overseas. With YouTube clips of Loopwheels in action circulating on the internet, data is being shared which in turn is driving global demand. In particular, distribution requests have come from Singapore, China, Australia, Italy, Indonesia and Brazil. As Loopwheels are available for a global and almost timeless item – the bicycle – the potential is endless. At present, we are ensuring that our delivery orders are fulfilled before proactively targeting other markets. As we are new to the manufacturing and distributing side of business, we want to ensure we are getting it right before massproducing. Although the internet is organically growing our business, there isn’t a need at present. At the moment, we offer 20-inch bike wheels, typically used on BMX or children’s bikes, and offer them individually or fitted to Dahon folding bicycles. Dahon is an American/Taiwanese company and is the largest selling folding bike company in the world. I hope that going forward this relationship could help give us a greater global recognition. I already know how I want to evolve the choice of Loopwheels and have plans to create a 26-inch wheel in the future, which can be used on mountain bikes. But first things first…
It took many attempts to get to the point where my wheel had a competitive edge
Dialogue | Dec 2013/Feb 2014
● Sam Pearce (pictured) is managing director of Jelly Products Ltd, the company behind Loopwheels
Partner with Dialogue Dialogue is a space where ideas are shared, where a network is developed and where brands are taken to a global audience Dialogue can arrange for the digital issue of the journal to be sent to your members We can offer advertising, sponsorship and collaboration opportunities on special projects designed for your brand Make sure your organisation is the talking point among a global audience of engaged business managers and thought leaders
Contact us for more information North America email@example.com Europe and South America firstname.lastname@example.org UK and rest of the world email@example.com
BOOKS AND APPS UNDER THE SPOTLIGHT
Reviewed in this issue: Are you interested to know what “managing for value” really means or discover a tool that helps keep tabs on all the insight you need? If you’re intrigued, then read on. Over the next six pages, global thinkers, practitioners, techies and bookworms give their views on some of the latest literary offerings, along with the apps ands technology for the smart 21st century manager.
Technology reviews A look at the latest apps and software that aim to enhance your business
Recommended A round-up of some books available on this issue’s theme of resilience and agility
In association with
Dialogue | Dec 2013/Feb 2014
Back to the Future Books that changed the way we think. In this issue, we look back at Tom Peters’ business tips
The Blue Line Imperative What Managing for Value Really Means Kevin Kaiser and S David Young Jossey-Bass
The Blue Line Imperative is about creating value in every decision that is made. Value creation is “an evolutionary force of nature”, necessary for humanity to avoid extinction, and far from easy to sustain. According to the authors, many businesses, government agencies and non-profits pursue misguided definitions of value, and make decisions that destroy value rather than create it. To create value, you need to figure out how to give customers what they want at a reasonable price, and you need to earn a competitive return relative to the world’s other uses of the invested capital and resources. The core of this book is about present value discounting. For many, the very nature of present value can be confusing. The Blue Line Imperative illustrates how to develop an unbiased forecast of the cash flow expected from an investment, as well as how to deduce the appropriate discount rate. Frequent examples and a wellpresented case study help drive these points home. The book also endeavours to demystify and celebrate finance. It describes how medieval Europe eventually gave way to an era where ever larger numbers of people were able to join the elite in the pursuit of lifestyle improvements and pleasures – in other words “happiness”. This pursuit was enabled by the evolution of an independent and unemotional financial market that provided the requisite investment capital.
An intriguing thread of business philosophy runs throughout the book. The authors describe “blue line” thinking – a focus on essentially intangible factors such as a culture of fairness, trust, and learning – that leads to value creating decisions on a sustained basis. They contrast this with “red line” thinking that is focused mainly on the delivery of tangible shortterm metrics such as share price and growth targets, which ultimately destroy value through various distorting factors (including creating an environment where employees tend to lie). The authors offer excellent guideposts for how to move toward “blue line” decision-making and how to detect the encroachment of “red line” behaviours. They acknowledge how top-down “red line” demands can squelch blue-line practices lower in the organization – a relatively normal consequence of the constant external pressure for shortterm performance. Moreover, The Blue Line Imperative goes one step further – and touches on themes that could be used not only for surviving in this environment, but also for trying to convert the top team from red- to blue-line thinking. As a possible sequel, I myself would enjoy learning more about strategies and tactics for making blue-line thinking dominant, because – let’s face it – sometimes the forces of red don’t play fair. David Nagel is executive vice-president of BP America
Dialogue | Dec 2013/Feb 2014
BACK TO THE RESILIENCE – FUTURE BLUEBOTTLE BIZ’S TOP FIVE
Coaching for Resilience
John Humphrey, Adrienne Green
A practical guide to the principles of positive psychology. It shows you how to motivate and inspire your clients and yourself to build greater resilience. There are clear explanations of the principles of positive psychology throughout. This comprehensive resource will help you develop a clear understanding of the psychology of stress and develop your own strategies to enhance resilience.
The Emerging Alternative to Western Brands John Grant LID
Managing Uncertainty Michel Syrett, Marion Devine The Economist
Managing Uncertainty analyses the sources and triggers of business turbulence and explores different models for classifying uncertainty. Learn how embracing uncertainty can lead to greater innovation and business growth, drawing on new thinking from practitioners, academics and consultants and the experiences of a wide variety of organisations.
Executive Advantage Jacqui Grey Kogan Page
Any change presents challenges and it is the leader’s role to tackle these head on. Understanding human needs, and the consequences of not meeting these needs, is key to effectively handling change, conflict and executive “gremlins”, the barriers and sticking points that can get in the way of optimal business performance. Jacqui Grey presents a 10-step solution that promotes resilient leadership within 21st century organizations.
Leading from the Emerging Future
C Otto Scharmer, Katrin Kaufer Berrett-Koehler
Meeting the challenges of this century requires updating our economic logic and operating system from an obsolete “ego-system” focused on the wellbeing of oneself to an eco-system awareness that emphasizes the wellbeing of the whole. This guide presents proven practices for building an economy that is more resilient, intentional, inclusive and aware.
Success Under Stress Sharon Melnick Amacom
Stress is the defining characteristic of most of our lives. Real help is here – an all-encompassing, stress-busting tool kit that goes far beyond breathing exercises and visualization techniques. Such one-size-fitsall methods are no match for the stressors we experience in our daily lives. Success Under Stress provides a flexible array of strategies. 104
The new Muslim world, the so-called “Interland” of this book, consisting of Muslim majority states, accounts for most of the fastest emerging “Next 11” economies. The title reflects the distinctive approach to business and brand creation in this new frontier, one which combines humanity, meaning, soul and the crowd. John Grant explores the ideas and thinking emerging from the new Muslim world and interviews firsthand the leading creatives, entrepreneurs and marketers driving these extraordinary developments. Corporate brands and modern Muslim culture seem ideas at odds with one another, at least through a western corporate lens. But Grant’s assessment skilfully draws out the essence of the differences and challenges between western brands and the rise of these emerging markets. He makes a compelling argument for the West to take a good look at different business models emerging from the Interland where culture, business, brands, religion, politics and creativity sit alongside each other comfortably. Grant’s stories and anecdotes from innovators and entrepreneurs add depth and clarity to a complex subject, and his style is useful in connecting the reader with the reality of what is going on in these economies, in the form of real stories and faces. The book gives an insightful glimpse into a region that has long been misinterpreted. It is rare to find books that skilfully meld Islamic culture, custom and religion with politics, globalization and modern business. It is rich with fascinating stories, examples and insights into the complexities of the new Muslim world. The core of the book covers the seven emerging alternatives to western brands, all of which are plural in nature and diametrically opposite to how the West links brands with individualism. Grant’s interviews with entrepreneurs from the regions highlight the fact that not coming from a perfectly groomed way of thinking leaves you free to improve, adapt or re-apply the model. This in turn leads to a much more open and collaborative way of invention and the ability to share the benefits with the wider community. If you are looking for insights into new social economies, this book is for you. Rafat Malik, director, Duke Corporate Education
Dialogue | Dec 2013/Feb 2014
Becoming a better boss
So hot it is still a beta version, Topiclay is a curation/ e-zine tool that will help managers keep tabs on all the insight they need as a leader.
Why good management is so difficult
But let me rephrase that out of tech-speak. If you – like a lot of us in management positions – are concerned about keeping up to speed on the latest key news, research, opinion, thought-leadership pieces and trends in leadership, then this will be an app with appeal.
Julian Birkinshaw Jossey-Bass
Most authors, when writing their acknowledgements, use the opportunity to thank their friends, partner or children for support. Julian Birkinshaw, however, uses his dedication to praise the “bad bosses” he has had over the years – claiming he could not have written this book without them. It is a known fact that people leave people – as opposed to employers - and so Birkinshaw uses this information, like many “management books” before him, to delve into what is bad management and why is it allowed to happen. The difference? He writes as much as a psychologist as a business consultant, exploring and thinking about this subject as an employee “in the trenches” and finding out what makes them tick; no holds barred. Speaking passionately of his experiences and using reallife case studies, he provides very practical takeaways for existing and aspiring managers to use in their workplace straight away.
Instead of using internet search engines or social media streams to try to put your arms around information, this app will do a lot of the leg work for you. How? A mixture of your intelligence and Topiclay’s own. You tell it what you want to know about; the app uses that to launch a search and provides you with news feeds; blogs; videos; infographics; articles. If on skimming through those retrieved articles it’s not quite what you are looking for, you can tell Topiclay to add that to the dramatically titled blacklist and it learns not to retrieve that type of content again. So in one feed, you get the latest on neuroscience, sociology, leadership theory, economics or your favourite sports team if you like. A nice view – nothing too fancy, just an image and title and intro text – it is easy to navigate with colour coding to help differentiate streams/topics and helpful article summary (which you can then with one tap/click jump out to the full article on the web). There are other apps like Flipboard and Zite that do this. But Topiclay – despite its newness – appears to me to be the one with the most personal wraparound and worth a try for you to brigade your leadership insight – topically. ● Perry Timms is an independent HR/OD practitioner, writer and speaker, and is the CIPD advisor on social media & engagement. Follow him on twitter @PerryTimms
The tone of the book is conversational and engaging, asking challenging questions to the reader such as “do you really understand your employees?” and “do we know how to generate high performance in business?” – encouraging you to stop and really think about your response. By encompassing examples from a variety of businesses around the world, he makes the information accessible to all. Occasionally, a few diagrams and theoretical charts are included to add some real clout – although it should be noted he makes it clear that many management studies ignore the reality of the workplace. This book is by no means a silver bullet for management and I wouldn’t entirely agree with the blurb description of “radical”. But it does serve as a wake-up call to managers, reminding them of their most important asset – people and how to engage with them. Easier said than done – but still well worth the read. Emily Perry, head of commercial development, PurpleCubed
Dialogue | Dec 2013/Feb 2014
BACK TO THE FUTURE
A retrospective of In Search of Excellence by Tom Peters & Robert Waterman In Search Of Excellence was first published in 1982. Tom Peters has been described by The Economist as the “uber-guru of business” and by the Los Angeles Times as “the father of the post-modern corporation”. He and his co-author outline eight basic principles of how to run a successful business and stay ahead of the competition: 1 A bias for action. Get out there and try something. Even if the action you take is ultimately unsuccessful, it’s better than doing nothing. 2 Close to the customer. Don’t be distracted by the internal stuff. In far too many companies the customer has become a nuisance whose unpredictable behaviour damages carefully laid strategic plans. 3 Autonomy and entrepreneurship. Even if you’re big, act small. The most discouraging fact of big corporate life is the lack of what made them big in the first place: innovation. 4 Productivity through people. That’s what all companies are made of, so trust the people you work with. 5 Hands-on, value-driven. Top companies make meaning, not just money, by paying explicit attention to creating exciting environments in which to work. 6 Stick to the knitting. Business diversity almost never works. 7 Simple form, lean staff. Have a simple structure and outsource a lot. 8 Simultaneous loose-tight properties. A combination of centralized and decentralized gives the best blend: firm central direction and maximum individual autonomy. There is a lot to take in. Staying close to customers, valuing staff, giving them responsibility and getting on with things all make sense. But the idea of not diversifying is controversial. Many would point to the number of modern businesses that have thrived because they had the nerve to diversify. The views keep coming: Chronic use of the military metaphor leads people repeatedly to overlook a different kind of organization – machismo in business is undesirable. Communication works best when systems are informal and intensity is extraordinary. Positive reinforcement nudges good things onto the agenda rather than off. Successful companies say they don’t kill ideas, but they do deflect them. This is an important cultural distinction for keeping morale high. Big teams don’t work well. Do it, fix it, try it is the mantra of experimenting organizations. A simultaneous blend of loose and tight properties remains the perfect blend for running a successful business – although it is extremely difficult to pull off. Kevin Duncan is a business author. His blog greatesthitsblog.com summarizes 200 important books. Contact him on firstname.lastname@example.org
The Strategy of Execution A 5-Step guide for turning vision into action Liz Mellon, Simon Carter McGraw Hill
I was once asked at an executive education event by a slightly over-refreshed CEO what he should do with his business. Naively, I asked him lots of questions about his business to a point where he became short of attention. An arriving colleague was similarly accosted and responded: ‘You should identify your core competences, develop strategic intent and compete for the future.’ I thought ‘well, there is that’, but our CEO wrote it down. I would like to think that when he sobered up, he found himself in possession of this book. Liz Mellon and Simon Carter have continued their work of distilling their vast experiences of senior executive ‘strategizing’ into a cogent and readable assault on the thorniest problem in business strategy – how to implement and execute. It is thorny not least because it has to deal with the relationship between rationality and emotion. Developing strategies involves rigorous and systematic analysis of markets, competitors and capabilities. You can buy in, as the authors put it, “the biggest brains on the planet” to help do it. Executing it tests out leadership, culture and engagement throughout the organisation and you have to do it yourself. No wonder, as they note, most of the time it does not work and the vast sums spent on the vast brains are wasted. The book is essentially a road map of the necessary and sufficient steps involved in strategy execution. It is about mobilization, energizing and persistence. Some in the Mintzberg tradition might find the model a bit top-down since it clearly focuses on the roles of senior executives. Those executives will find it invaluable. The steps are clear, the actions measurable and the outcomes crucial. The book carries off the trick of outlining a rational plan for the mobilisation of emotional commitment to change. The writing is clear and the pace is crisp. I warmed to the use of varied case examples; not just your average internet startup, but a plasterboard business for the finale. This should be essential reading not only for CEO’s but for those advising them on how to execute their strategies successfully. Paul Willman, London School of Economics
Dialogue | Dec 2013/Feb 2014
The Public Sector People Managers’ Association, PPMA, is the voice and association for Human Resources and Organisational Development professionals working within the public sector.
Save the Date PPMA Annual Seminar 8-9 May 2014
The PPMA is shifting its’ focus to Leeds for the annual seminar in 2014. Scheduled for 8-9 May 2014 at the Queens Hotel, Leeds the seminar will be launched over the coming weeks alongside the PPMA Rising Star programme and the PPMA Awards for 2014. Louise Tibbert, Vice President of the PPMA and Head of HR & OD at Hertfordshire County Council ‘welcomes the opportunity to hold the event in Leeds, a thriving commercial centre and the home of many significant public sector organisations like Leeds City Council, NHS Employers, NHS England and the DWP’. She added ‘it is also where I was born and I still have some strong ties with the city. It also has excellent transport links, great hotels and vibrant leisure and shopping opportunities! All in all it was an obvious choice for the PPMA and for me as the event organiser’. The PPMA’s focus is to continue to provide a unique offer for our members and to keep strengthening relationships across the wider public sector. We also seek to influence central government about the key role that HR professionals and workforces can and will play in the future. The annual seminar, which is also open to non-members, provides an excellent opportunity to get involved in high quality debate with like minded professionals, build your networks and to pick up some useful tips and tools via themed master classes. Details of the programme and how to book will be available from early December. The PPMA welcomes members from HR and related professionals in public sector organisations and also those involved in providing related services to the public sector. You don’t have to be PPMA member to attend the annual seminar – just committed to delivering great public services.
For more information about the PPMA, including how to join, visit www.ppma.org.uk
Study with thoSe who practice MBA Westminster Business School, London
Study with us and you’ll immerse yourself in the real world of business from day one. Based in the heart of London, you’ll learn from industry-leading experts who understand today’s complex commercial challenges. You’ll also gain a wealth of practical experience and make some invaluable contacts. What better way to become a successful leader of tomorrow? Discover more at westminster.ac.uk/mba
The dialogue turns digital Download Dialogue’s app for iPhone, iPad, Android and PC to take the conversation further with exclusive additional and interactive content Lisa Bodell, CEO of FutureThink suggests some fresh and creative ideas to inspire innovation in leaders and managers – and these could be as simple as doing something different every day. Liz Mellon, chairman of Dialogue’s editorial board, gives an exclusive interview where she analyses the success of boardroom quotas to develop female leaders. Sam Pearce, managing director of Jelly Products, the company behind Loopwheels, describes the story of how an idea he had in a busy airport led to him re-inventing the wheel –
moving his small design studio into a global manufacturing company in the space of five short years. Jane Sunley, CEO of Purple Cubed, talks candidly on the future of HR within business. ‘Call it what you want,’ she says, ‘just make sure that somehow it has a voice at the boardroom table in every organisation...’ And Giovanni Bisignani, former director general and chief executive of the International Air transport Association, provides some anecdotes on the untold story of aviation from his tenure of heading up the world’s global body for the entire airline industry.
To download the digital edition of Dialogue: All this, plus exclusive sound bytes from leading authors and commentators, case studies, research, forums, opinion, interactive infographics and much more
FIND US on the App Store or Android store VISIT www.pocketmags.com OR VISIT www.dialoguereview.com or www.twitter.com/dialoguetweets for more information
YOUR The knowledge economy represents a paradigm shift in our ability to guarantee the future prosperity and legacy of nations and peoples. Creating intellectual capital is the main form of wealth creation today, accounting for 7.3% of GDP in UK, for example. In essence, this means that from the five “capitals” – human, social, financial, economic and intellectual – it is intellectual capital that is going to provide the opportunity for success and longevity... Anthony Ryman is managing director at Grow Qatar in Doha Read more at www.dialoguereview.com/intellectualcapital-opportunity-success-longevity/
Is it time that all business people took a lesson from generation Y and asserted their individuality? I find it funny that so much faith is placed in generation Y to transform attitudes in the workplace. If you believe the hype this generation who grew up on the web will bring about organisational culture change with ease and rapidity. Far from it! I heard from a client recently, who had deployed an enterprise social platform, and they were disappointed in their generation Y staff. They are cautious and conservative, fully aware that this is their first job, and why would they want to be forthright and take risks when everyone else is playing safe? Having said that, the next generation are much less convinced of the job-for-life myth and less constrained by what is deemed appropriate or “businesslike”. I think the grown-ups have lost the plot in many of our organizations, and wearing a suit and talking business bollocks is fooling less people than ever. As more and more of us take advantage of the opportunity the web gives us to “write ourselves into existence”, we will gradually lose some of our stuffiness at work and be prepared to assert our individuality more. And anyway, this whole thing about not hiring someone who had been indiscrete and put photos of themselves drunk as a student on Facebook – I wouldn’t hire someone who HADN’T been drunk as a student, that’s the whole point of being a student! Euan Semple
@DialogueTweets love the first edition great read #womeninleadership #leadership #greatnewjournal Zoe Allen @allenz61 Loved the editor’s letter from @davidpaulwoods for new business journal @DialogueTweets, beautifully written bit.ly/1dm4tCO Meghan Poulsom @Mpoulsom How the Middle East is setting standards in sustainability gu.com/p/3jgeq/tw via @guardian @greenormal @ martincyan @davidpaulwoods sangeeta haindl @SangeetaHaindl Great first edition of @DialogueTweets - fascinating insight into #business complexity. Recommended read: bit.ly/14mo3fG Emily Perry @EmilyBPerry
Do you believe boardroom quotas are an effective and appropriate way to improve the gender mix?
VOTE NOW www.dialoguereview.com/ boardroom-quotas/
Looking at it from a distance, the desert looks empty, static and dead. Upon a closer view, one discovers a richness of life and diversity. The daily transformations of the sand dunes take place in a very subtle pace that we barely notice, while deep inside it hides a wealth of water and oil. The oil-rich deserts of the Arabian Gulf gave rise to one of the wealthiest regions of the world. We have excelled in adopting all kinds of global brands, but failed in producing any brands of our own that could penetrate the global markets. This deficiency has a lot to do with design and creative communication, which are two of the most important pillars to building a global competitive advantage... Faeq Alolaiwat is the chief executive and creative officer of DaDeDo and is based in Bahrain Read more at www.dialoguereview.com/desert-earth/
Dialogue | Dec 2013/Feb 2014
Get online; get social; get involved. email@example.com
The Dialogue Review
I join a select group of forecasters who have to date been proved wrong. We continue to hammer away at our theme of the bankruptcy of the French state while enjoying the delights of long lunches with saucissons de sanglier, the local rosé and the dream of owning our own estate. The head and the heart do not always move in sync. The time to invest in equities is now. Ignore the pundits who declare them overpriced. Dismiss the majority view which emphasises these five certainties: anaemic world growth is set to persist for the foreseeable future; China is set to become a superpower; the NorthSouth Korea stand-off is unlikely to change anytime soon; US supremacy is at an end; the Israel-Arab conflict will endure... Karina Robinson, partner, Robinson-Hambro Read more at http://dialoguereview.com/ceos-caserocketing-equity-markets/
Is HR dead? I believe that as a profession, we (I’m talking HR) have an image problem and, in many cases, we do not do enough to both communicate but also demonstrate what value we add. We should not have to justify our place at the top table, our colleagues should want us there. Christian Horne, HR director (Sweden), Abbvie To say that HR is dead would be the same as saying journalism is dead because of the phone-tapping scandal. If anything, [there is] a need for HR to be strong in the face of cultural norms, even more so if the changes are going to directly effect those in the most senior positions. HR does have an image problem – if I mention that I work in HR in a social situation, the most common response I hear is: ‘Where I work my HR department is rubbish.’ Mark Pearce Bankers became a lot less popular than they used to be; there are apparently more estate agents than ever; doctors occasionally make mistakes and so on. When I want to put money somewhere safer than under my mattress, I go to a bank. When I fancy changing where I live, I use an estate agent. If I break my leg, I would favour the services of a doctor. If I am in an organisation where people are recruited, developed, promoted, get a fair hearing if it goes a bit wrong, which cares about its employees and has plans for the future, I would like to know there are some experts who do those things, collectively known as HR… Alan Warner
What do you think is the biggest stumbling block to successful global leadership in your organisation?
If you knew your boss was watching you, would you be on your best behaviour? With social media and the advent of ease from monitor to public space, you have to think about how any actions now are seen and I agree – would you want your mum to see or read it. Being silly is part of fun of life, but there is a time and place and all actions have consequences. A small tattoo at age of 17 may have seemed fun, but when you are 45 and a CEO, then it’s not always appropriate and can be limiting. So keep the silliness, but just sense check its appropriateness – think before you do and protect your personal branding. Wendy Bartlett
I have been travelling to India, on business and for leisure, since the late 1990s and was one of the earlier teachers at the India School of Business in Hyderabad. I have ridden the Maharaja Train, walked the slums of Mumbai and marvelled at the changes in Hyderabad Airport, which now feels more like Singapore, with its glass splendour and planted roads, than the small shed I used to arrive in...
One of my pieces of advice to mentees is to go about their business as though their boss/mum/me was on their shoulder – it’s the first step to self regulation and it really works. Jane Sunley, CEO Purple Cubed
Liz Mellon, chairman, Dialogue’s editorial board
Dialogue | Dec 2013/Feb 2014
Read more at www.dialoguereview.com/incredible-indiabusiness-done-handshake-good-relationship-built/
Striking the balance between strength of leadership and teamwork Sir Jeremy Greenstock Chairman of the UN Association in the UK
We live in a networking world, we are told, not a hierarchical one. Communication is everything. But is that really true? Does good networking for an organisation depend on the whole team getting engaged or is it the leader’s contacts that matter?
not transferable into private life. This recognises that the instruments of plenipotentiary power, with all their outward trappings, come from the system (we Brits say “the Sovereign”), not the brilliance of the individual.
A celebrity-obsessed world suggests that it is. Whether in business or politics, power likes to deal with power. That is the way to get things done, to cut through the systems undergrowth, to create an inner network, to preserve confidentiality and to realise the potential of a fresh idea before it gets swamped or stolen. The leader would not have reached that level without exceptional qualities. Human society requires and respects leadership, and the lower levels are quite happy to leave both room and glory for the top striker – so long as goals are scored frequently enough.
It is hard for a leader with really impressive qualities to get this. Both UK prime ministers Margaret Thatcher and Tony Blair, at their best, stood head and shoulders above their contemporaries in domestic politics and achieved sensational successes, especially in elections. They had superb teams of essentially private advisers around them.
Human society requires and respects leadership, and the lower levels are quite happy to leave both room and glory for the top striker
But there are traps. One of them, the most common, is for the leader to believe that they are the organisation. “L’etat, c’est moi” [the state is me] immediately conjures up an image of a fallible chieftain. In my profession, diplomacy, the ambassador who persuaded himself that the flag, the car, the residence, the “excellency” were an extension of his personality quickly became a laughingstock, whether with his own staff or a competitor’s. The British have a good tradition, rarely practiced elsewhere, that the title of “ambassador”, or whatever a diplomat ends up with before retirement, is
Their capacity to form and utilize network relationships with other international political giants, particularly US presidents, was grounded in their dynamism and force of personality, and enhanced by the operational skill of their lieutenants. Yet their view of themselves at the centre, magnified by their immediate staff, cut them off from a deep comprehension of how the whole UK administrative system worked, and from a sharp sensitivity to the other influences on power in a democracy, not least “ordinary” opinion. This played a strong part in their eventual exits. Thatcher insisted on replacing local taxes with a poll tax, ignoring her party’s advice that it would be deeply unpopular. Blair stood alongside hard-power USA over Iraq in the face of massive demonstrations of unhappiness from UK public opinion. Both decisions stand at the centre of their political obituaries. Another trap is to fail to delegate. Rulers always prefer to reserve as much decisionmaking to themselves as possible, because it eradicates doubt. They are also more
Dialogue | Dec 2013/Feb 2014
comfortable with the people immediately around them, where they have enough first-hand evidence on which to base trust. But the delivery of their broad objectives requires a wider group of stakeholders to be involved. The most successful empires, including the Ottoman and the British, for instance, devolved authority across huge territories and devised systems for a highly effective two-way exchange of trust downwards and loyalty upwards. When my profession, diplomacy, became competitive, as it often did in the UN Security Council, for instance, I always felt more comfortable facing up to an opposite number who insisted on devising, deciding, doing everything himself. Such people might be formidable as individuals, but the situations were normally too complex to be cracked by a single mind. The leader and his or her staff had to be much more on your toes when up against a team approach, where the experts had covered the groundwork, had been given responsibility for certain aspects of the game plan and were that much savvier for being allowed the space to show their qualities. It was no trouble to them to revert to hierarchical respect for their ambassador in public, once the performance was on. Nevertheless, as a government servant – a man from the system – I have surprised myself by ending up with a strong belief in the difference a champion at the top of the organisation can make. The most important contribution is not dynamism or presentational brilliance, but soundness of judgement. It is a very precious commodity. This can come from intellectual mastery, unusual instinct, experience or a combination of these. But they are best accompanied by one other quality – the capacity to never stop learning. Without this quality, the accuracy of judgement at the start gets clouded by such a strong assumption of rightness that it leapfrogs crucial analysis. That way lies a fall. A true champion also has an immense appeal to other commanding figures, whether from friendly or rival organisations or governments. This opens the door to exchanges, more often private ones, which can advance causes that might otherwise
Dialogue | Dec 2013/Feb 2014
be blocked, construct compromises that mundane systems cannot manage and solve the most awkward problems. I have sometimes noticed, watching top politicians at work, how they will accept a result in a match with a perceived equal which they would have rejected from someone they respected less. I would love to see a good book written about the waste of common good when personal ego or subjective bias trumps wise substance. It can happen in both directions. Many Russians believe that former president Mikhail Gorbachev should not have sold the shop to Ronald Reagan and Margaret Thatcher, but succumbed to a greater force of personality. Conversely, George W Bush and the hard people around him failed to see the arguments presented by Tony Blair for finding a solution to the Iraq problem without a military invasion, because of the strength of their belief in the utility of US power and in the ability only of Americans to understand decision-making at the superpower level.
You need a champion and a team in depth… it’s surprising how seldom you find an organization that gets this balance
So what is the right balance between strength of leadership and teamwork? As so often in complicated human circumstances, you need not one or the other of two opposites, but both: hard power and soft power; leadership and followership; doing and listening; a smile and a stick. You need a champion and a team in depth. What is surprising from this seemingly banal conclusion is how seldom you find an organisation that gets this balance spot on. Perhaps a dynamic leader mesmerizes the rest, or the team below grows lazier if it feels less used. Perhaps the high quality of the team militates for an over-consensual rather than a way-out-in-front leader. Either way, it bears thinking about, because the organisation that hits the mark in this respect has a huge advantage.
MAR/MAY 2014 | dialoguereview.com
Developing male leaders to develop female leaders… Command and control
Time for a shift in the leadership mindset towards delegation? Consciousness
Are global leaders failing to make mindful decisions?
Next issue: making sense of BIG data It’s become another topic en vogue within business circles; big data or mass surveillance? Whatever you choose to call it, businesses globally are trying to exploit it. But is big data a friend or foe to business? Is it truly a source of differentiation or has big data merely become a “siren song” for knowledge-hungry leaders? The March issue of Dialogue will explore how big data is shaping the leaders of the future, it will seek to bridge the gap between data and insight, find out how to use “thick data” as well as big data, and investigate with CEOs how big data is changing so many fields of business.
As demographics shift, is it becoming harder to lead generation Y?
The thorniest problem with strategy: how to implement and execute?
Taking an archetypal US brand and translating its relevance to Asia Pacific
Our regular columns, research, news and much more
M A N A G I N G M U LT I P L I C I T Y T O D AY B R A N D S O P E R AT E I N A C O M P L E X W O R L D , C R O S S I N G B O U N D A R I E S O F C A T E G O R Y, C O U N T RY A N D AU D I E N C E . T H E VA L U E E N G I N E E R S LO O K B E YO N D T H E CO N VE N T I O NA L, S I NGLE M IN DED TOO LS OF B RAND PLA N N I N G , TO H E LP O UR CLIEN TS M A KE S EN S E OF M ULTIPLICITY. TO FI N D O U T M O R E C ON TACT THE VA LUE EN G IN EERS WWW.TH EVALUEENG I NEERS.C O M LON DON – +44 (0) 14 94 680 9 9 9 N E W YORK - +1 646 837 8170
W O R L D W I D E˚
Creative lawyers for the modern world Greenberg Traurig Maher delivers innovative and senior-led legal advice to businesses around the clock and around the globe.
F I N A L I ST, “ LO N D O N O F F I C E O F T H E Y E A R ,” B R I T I S H L E G A L AWA R D S 2 0 1 3 G R E E N B E RG T R A U R I G M A H E R L L P | AT TO R N E YS AT L AW | W W W.G T M L AW.C O M Greenberg Traurig’s London office is operated by Greenberg Traurig Maher LLP, an affiliate of Greenberg Traurig, P.A. and Greenberg Traurig, LLP. Greenberg Traurig Maher is a limited liability partnership registered in England and Wales under number OC 346053 and is a multinational practice of Solicitors and Registered Foreign Lawyers authorised and regulated by the Solicitors Regulation Authority (SRA). °These numbers are subject to fluctuation. Greenberg Traurig and Greenberg Traurig Maher are service marks and trade names of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2013 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. 22378
Dialogue is an original, practical and world-class journal, which focuses on key issues and challenges encountered by business leaders and m...
Published on Dec 2, 2013
Dialogue is an original, practical and world-class journal, which focuses on key issues and challenges encountered by business leaders and m...