Page 1

The game changers 52

DEC 2014/FEB 2015 | dialoguereview.com

What differentiates Game Changers from other leaders? Gabriela hernandez 58

GE’s general counsel for Latin America on career-long learning A thawing opportunity 86

The Arctic evolves from an icy wilderness to an emerging market

Rewiring business for tomorrow’s world Modern technology, automation and the influx of Generation Z will bring change, challenge and opportunity PAGE 28 Sustainability 68

global team development 74

the space race 18

rethinking value creation 80

A focus on sustainability will give leaders fresh profit-generating models

Invest in face-to-face meetings to improve interactions in global teams

Corporates compete to be the first to send consumers into space, the Moon and Mars

Ignoring public value aspects can threaten the survival of entire firms


contents/FOCUS

30

Forecasting the future for technology

Technology is our ticket to a better way of life, so we must press on with its development without fear or delay, says futurologist Magnus Lindkvist

34

38

Automation and increased productivity will lead to stronger economies, says Robert Atkinson

The brains of Generation Z, rewired through technology, may boost productivity in business, writes Dr Helena Boschi

The era of the digital native

The rise of the machines

44

Bosch takes Asia by storm

Bosch is branching out into sensor technology, and its innovative aspirations hinge on the Asia Pacific region

48

Integrating the IT generation

How businesses must adapt to accommodate the needs of four co-existing generations

Dialogue | Dec 2014/Feb 2015

3


contents/FEATURES

52

58

Dialogue looks at the qualities of the Game Changer and examines what differentiates these individuals from other business leaders

Gabriela Hernรกndez Cardoso on the importance of career-long learning and the need to be creative and collaborative in a volatile marketplace

Qualities of the Game Changer

62

Journeys of discovery

In a Social Age, leaders must undertake personal journeys of discovery and growth, write Sudhanshu Palsule and Frank Guglielmo

68

Sustainability juggernaut

Succeeding in sustainability requires companies to focus on new models for generating profit, says Christopher Wedding

74

80

Harnessing the potential of global project teams may involve investing in faceto-face meetings to boost interactions between members and accelerate success, says Katherine Schroeder

How ignoring public value aspects can threaten the success of new products and even the survival of entire companies

The art of global team working

86

92

Ian Turner talks to the CEO of the Norwegian Shipowners Association, Sturla Henriksen, about the growing profile of the Arctic region, its business challenges and opportunities

Tap into the talents of your workforce and garner the support of every employee to effect change and meet tough industry challenges, says Dr Sandeep Gandhi

Breaking the ice in the Arctic

4

Driving growth in Latin America

Rethinking value creation

People strategy: driver of change

Dialogue | Dec 2014/Feb 2015


contents/OPINION&REGULARS

08

10

Editor’s letter

David Woods takes a look at the promise that Generation Z brings to business, when they enter the workplace in greater numbers over the coming years

14

Michael Canning

Employers ask job applicants to apply for roles in code; Virgin staff given as much annual leave as they like; and the employees in your business most likely to leak confidential information...

17

Dave Ulrich

Duke Corporate Education’s CEO outlines his leadership notes from the future, following an educational experience in Silicon Valley for a group of senior leaders

Our HR guru investigates the benefits of creating a leadership capital index and explains how it offers a more thorough way of assessing leadership

18

24

Space travel

Once “the final frontier”, space has become an opportunity for corporates to exploit. We investigate how businesses are planning to take consumers to the Moon, Mars and beyond

98

Books & apps

Our round up of recent releases and. This month we invite you to take a shower with Picasso and find out why freaks will inherit the Earth.

Dialogue | Dec 2014/Feb 2015

Spark!

Alberto Andreau

26

Turkish delight

Telefónica’s global director of corporate reputation on why “you can’t take a decision without making a choice – and not everybody is going to like that choice”

In our study of the MINT Nations, we take a look at the economy of transcontinental country Turkey, which is on a par with Mexico in terms of wealth

104

106

Your Dialogue

A round-up of your tweets and comments, what has featured on the website and a sneak preview of what the next edition of Dialogue holds for readers

Karina Robinson

“I have seen everything that is done under the sun and, behold, all is vanity and a striving after wind.”

5


contributors 

DEC 2014/FEB 2015

GABRIELA HERNANDEZ Gabriela Hernández Cardoso was named general counsel for GE Latin America in July, 2013. Prior to this, she was president and CEO of GE (General Electric) Mexico from 2010 to 2013, responsible for the operations and business growth of GE in the country. She has served in both the public and private sector. In the Mexican government, she worked for the negotiating team of the North America Free Trade Agreement (NAFTA). Hernández worked in corporate law and international trade for global companies such as Motorola and Tellabs Inc Mexico. She has also taught modules about foreign trade and law in public and private institutions.

sudhanshu palsule Dr Sudhanshu Palsule’s work on leadership brings together the research emerging from neurology and psychology, and his own exploration of human thinking and behaviour over 30 years. Trained as a physicist, he uses principles of quantum mechanics in his work on building effective 21st century organizations and teams that can thrive in increasingly complex global eco-systems. He teaches at Duke CE and at other business schools including the Indian School of Business and the Helsinki School of Economics.

Timo meynhardt Dr Timo Meynhardt is the managing director of the University of St. Gallen’s Center for Social Enterprise. Before taking on his current position, he worked as a consultant for McKinsey & Company in Berlin. A psychologist by training, his academic work focuses on the psychological aspects of leadership and management. He earned his PhD. degree from the Institute of Business Economics, St. Gallen.

Christopher wedding Dr Christopher Wedding is an adviser, entrepreneur and professor focused on investment, strategy and innovation in corporate sustainability, clean energy and green building. He is the CEO of g-bit.com, a market intelligence company; CEO of IronOak Innovations, a strategy consultancy; and professor at Duke University and the University of North Carolina at Chapel Hill.

Sandeep gandhi Dr Sandeep Gandhi holds a Master’s degree, a PhD in Human Resources and an LLB. He has successfully headed HR departments in a number of companies. With a career spanning manufacturing and complex service industries, his knowledge and practical experience make him a well-respected HR professional across India and globally. He has worked with some of the biggest brands across sectors, such as UniLever, Sanofi, PepsiCo, Vodafone, Telenor and currently Aircel.

Willy Østreng Willy Østreng is co-founder and president of the Norwegian Scientific Academy of Polar Research and formerly director of the Fridjtof Nansen Insitute. He has researched and written about the polar regions since the 1970s, has been an advisor to the Norwegian government on Arctic matters, and has taught the subject as Visiting Professor at leading universities around the world.

6

Dialogue | Dec 2014/Feb 2015


EDITOR’S LETTER

David Woods

Editor-IN-CHIEF

Powerful combination Having been born within the overlapping years used to define Generation X and Generation Y, I cannot call myself a “digital native”. I still remember being in school when a behemoth of a computer was wheeled into our classroom and, as children, we patiently waited in line to take at least an hour-and-a-half to write no more than a sentence on screen, using an archaic, dusty keyboard.

+ read more Read Dialogue’s ‘Leading a workforce of four generations’

I remember being allocated an email address in my final year of high school, but still having to book an appointment to use said address in one of the few computer labs in my school – where, might I add, we were assigned more time to study history than any IT-based subject. Texting was a novelty; Twitter did not exist; microchips were potato-based snacks I heated up to eat with pizza on a Friday night. After years of deciphering the digital world and clawing myself into a position of (almost) digital maturity, I – like many of you – will have grown to appreciate the situation in the workplace, comprised of Baby Boomers, Generation X and Generation Y. We have just come to respect – and learn from – our differences and indeed navigate our way through the digital maze together. But just when you thought it was safe to go back into the water, Generation Z are diving into the talent pool in workplaces around the globe – and I can tell you they will be making a much bigger splash than their Generation Y predecessors or their Generation X parents. According to Dan Schawbel, founder of Millennial Branding and author of Promote Yourself, they have seen how much their parents and Gen Y’ers have struggled in the recession, so “they come to the workplace well prepared, less entitled and more equipped to succeed”. Why? Because people born in 1990 graduated from high school in 2008, just as the global economy was on the verge of collapse; they are the products of a “new normal” of budget-cutting, economic uncertainty, increased requirements placed on workers and fewer rewards. They have less of the optimism and ambition virtually defined by Generation Y. But perhaps, most importantly, they have the capacity to be the “eLeaders” of tomorrow – those with no need to learn any fresh IT skills to support their business acumen, giving them a powerful combination of skills. Generation Z will have been immersed in the age of technology from birth and will have a symbiotic relationship with devices that have taken even today’s most accomplished global CEOs years to decipher.

@davidpaulwoods david.woods@lidpublishing.com

8

The oldest people in Generation Z turn 25 in the next year, so most of them have not yet entered the workplace. But our focus (pages 28 to 51) in this issue seeks to examine the global economic environment in which they will work, as well as the mindset they will be likely to adopt. We ask a group of global HR directors if their organizations are ready for the influx and we investigate how far these people will become the “Game Changers” who will shake up the global economy as we know it.

Dialogue | Dec 2014/Feb 2015


35% of marketing professionals work from home two to four times a week, more than any other job role  Iron Mountain/PwC

The boss of Virgin Group, Sir Richard Branson, is offering his personal staff as much annual leave as they want.

On his website, Branson said that his staff of 170 could “take off whenever they want for as long as they want”. He added that there was no need to ask for approval, nor say when they planned to return. “We should focus on what people get done, not on how many hours or days worked. Just as we don’t have a nine-to-five policy, we don’t need a vacation policy,” he wrote. Branson was inspired by his daughter, who read about a similar plan at the online TV firm Netflix.

If you had to identify, in one word, the reason why the human race has not achieved, and never will achieve, its full potential, that word would be “meetings”. Dave Barry, Pulitzer prize winning columnist


Woto, a new social media publishing space on the web with a user base of over 10,000, has released the world’s first graduate job description written entirely in code. Whoever cracks the coded criteria first and applies for the job in code will be rewarded with a paid internship with Woto. com located at Bartle Bogle Hegarty (BBH) advertising agency. With code writing being an essential part of the role, Woto saw no easier recruitment strategy than to post the actual job advertisement in code - a way to separate the wheat from the chaff.

Major research has revealed that women in their 20s and early 30s will be the first to truly smash the glass ceiling. The report, The Great Generational Shift, from talent management firm Hudson, which analysed 28,000 psychometric tests, documents the shifting dynamics in Britain’s multi-generation workplaces, where 60-year-old Baby Boomers work alongside 60-year old Generation X-ers in their forties and the twenty-somethings of Generation Y. It outlines a change in the nature of leadership, with younger females ideally positioned to excel in the leadership race of tomorrow. Generation Y women top the charts when it comes to being “socially confident”, “helpful”, “organised” and “meticulous”, compared to their male counterparts. Far removed from “traditional” leadership skills (persuasion, confidence, extraversion), they bring a completely different, and more relevant, set of skills to the business environment of today – and tomorrow. Skills that will help them navigate a datadriven future, where leaders will be required to sift through mounds of information and translate it into meaningful insights.

My own business always bores me to death; I prefer other people’s Oscar Wilde


“New business concepts are always, always the product of lucky foresight. That’s right - the essential insight doesn’t come out of any dirigiste planning process; it comes from some cocktail of happenstance, desire, curiosity, ambition and need. But at the end of the day, there has to be a degree of foresight – a sense of where new riches lie. So radical innovation is always one part fortuity and one part clearheaded vision. Gary Hamel

Following on from the theme of global risk in our September issue, Dialogue has created an environmental risk awareness campaign, which will comprise online events to develop dialogue around the topic of environmental risk management in business. If you would like more information or would like to get involved, email our community manager at kyomi.wade@lidpubliushing.com or follow @dialoguetweets to keep updated.

There were more merger and acquisition deals completed globally in the third quarter of 2014 than in any prior equivalent period during the past six years, according to Towers Watson’s Quarterly Deal Performance Monitor (QDPM). The research, run in partnership with London’s Cass Business School – shows that deal volumes are on track to make 2014 the strongest year for M&A since 2012, with 564 deals over $100 million completed so far. The report also shows that acquiring companies around the world continued to outperform the market this quarter, with an average performance of 5.2 percentage points (pp) above a global index.


48% of marketers send or receive work documents over a personal email account Iron Mountain/PwC

35% of marketing professionals look at business-sensitive work while commuting on public transport Iron Mountain/PwC

Dialogue’s editor David Woods last month joined the panel of HULT International Business School’s Dragons’ Den competition. The competition came as part of Enterprise Week and involved students pitching like professionals in front of their peers and a panel of ‘Dragons’. Teams were given a few days to come up with their business idea, conduct market research, pricing and promotion strategies and devise a way to get their product to market. The winning team on the night was Expo-prawn, which comprised two students from Ecuador, who created a proposal for a company to import prawns, cocoa and roses from South America to the UK. Woods said: “In a world where the media focuses so much on the potential for disruption generation Y could bring to the corporate world, Hult International Business School has renewed my faith in the potential of millennials. If all university graduates have the same savvy creativity, confidence and sheer grit as the young entrepreneurs from Hult’s Dragons’ Den, then I think our economies are set to be shaken up for the better.”

I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business. I do it because I like this kind of life. Warren Buffett


opinion

Leadership notes from the future “The future is already here, it’s just not evenly distributed” – William Gibson

I Michael Canning CEO, Duke Corporate Education

14

recently had the opportunity to experience a very real example of the above as I facilitated an educational experience in Silicon Valley for a group of senior leaders from five companies. As the world continues to change rapidly and in unfamiliar ways, context matters more to business and to leaders today. One approach for widening our lens and experiencing context in a rich and compelling way is to immerse ourselves in the places that are shaping the future. The trip to Silicon Valley last month provided this group of top leaders with priceless insights. It is clear that Silicon Valley is a special place that is reinventing itself again and preparing to further disrupt the world. The trip, and our experiences, provided a glimpse of several issues around the corner to which leaders need to pay attention in their businesses – even though the origins of these “disruptive influences” derive from businesses very different to their own. Silicon Valley is a major hub for high-tech innovation and accounts for one-third of all of the venture capital investment in the US. Long known as home to many of the world’s largest technology companies and start-ups, we set out to get a glimpse of what a sample of organizations are working on and what really makes the dynamic of the peninsula’s high-tech ecosystem continue to be so influential. The first visits included institutions that, by their very mission, are vested in both studying the future and enabling others to participate actively in its creation: for example, The Institute of the Future, Singularity University and the Design School at Stanford University. The second group included large, well-established companies that have chosen to invest in state-of-the-art R&D facilities to help them and their customers gain early insights into how technology is fast changing the world as we know it. This group included Google, AT&T’s Foundry and LinkedIn, with its vision for shaping the future of professional connectivity and

talent management. The third group comprised start-up and early stage companies that had secured funding and were engaged in creating truly disruptive innovations with the potential to change many aspects of our businesses. This included Carbon 3D and Authentise, which are revolutionizing 3D printing in ways that will radically alter supply chains. We learned from TechShop – democratizing the tools of innovation and turning the maker movement into a significant open-source of R&D for companies; GenZe – developing highly efficient and fun electrical vehicles that will solve the problem of urban mobility; and Scanadu – developing a suite of consumer medical products and diagnostics to empower us to monitor our health anywhere and anytime, direct from our phones, upending the current practices in medical diagnostics. All of these organizations, regardless of size and technologies, and whether start-ups or household names, have one thing in common – they benefit from the Valley’s ecosystem of intense intellect, capital and pioneering energy. Everyone realizes they are part of something much larger and it is the community that creates the space for each of them to be symbiotic and ultimately attract so many of us. For me, the experience brought to the fore what it means to live and lead in the most innovative period in human history. It does matter from where leaders are seeking insights and ideas, and, even more importantly, figuring out how to connect to the intellectual and social energy that drives disruptive innovation. While Wall Street may place industries neatly into verticals to measure performance and peers, the most disruptive forces will most likely come from outside these boundaries. We need to widen our lens and become comfortable searching for the dangers and opportunities in new places. Last month, we had the opportunity to live this first hand in Silicon Valley. It is the immersive experience in this special and unique context that brings it all together in one place and, we hope, has rubbed off a bit on all of us.

Dialogue | Dec 2014/Feb 2015


Dialogue Online In print On your phone On your tablet Via social media

Anywhere. Any time Dialogue is about conversation; bringing people together;connecting people and acting as a catalyst for fresh thinking and game-changing ideas. There are so many ways to join the Dialogue, comment on the ideas in the journal and have your say about upcoming editorial. In Digital format Download Dialogue as a digital publication at www.pocketmags.com/dialogue for exclusive video interviews with our authors and a variety of additional features and content you won’t find in print On our website Visit www.dialoguereview.com to join our interactive forums, vote in polls, read our blogs and opinion pieces, watch Dialogue TV, and gain access to a variety of exciting content between issues On Facebook Keep up to date with the news from Dialogue and take part in regular competitions on our Facebook page www.facebook.com/dialoguereview

On LinkedIn Join our LinkedIn group for global thought leaders where we debate the key issues facing business. Search for ‘Dialogue Review’ on Linkedin On Twitter Use the hashtag #dialoguetalk to have your say on the topics that are keeping you awake at night and to tell us what you would like to see addressed in Dialogue. Don’t forget to follow @dialoguetweets for news, views and updates. Or you can contact our editor @davidpaulwoods or our community manager @misskyomiwade On email You can contact us directly at your.dialogue@lidpublishing.com

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OPINION

Creating a leadership capital index

W Dave Ulrich Rensis Likert Professor at the University of Michigan and partner at the RBL Group

hen two disciplines collide, good or bad things can happen. Good things happen when discipline collisions inform each discipline. Bad things happen when the collision fragments a discipline into disparate parts. The intersection of HR and investor fields has the potential to benefit each discipline. HR professionals have worked to create value for key stakeholders. HR drives positive employee outcomes (ie, productivity, wellbeing), helps execute business strategies (strategic HR) and enhances customer share (HR from the outside in). But HR’s value may be further enhanced when it has a demonstrable impact on a firm’s financial performance. Investors have learned that a calculation of the market value of a firm may be based on earnings, but that it goes beyond that. GAAP and FASB standards have required financial reporting of earnings, cash flow and profitability. Recently, these financial outcomes have been found to predict 50% of a firm’s market value. Investors have shown increased interest in intangibles like strategy, brand, R&D, innovation, risk and information flow. These predict firm profitability.

Wise, long-term investors recognize that leadership matters Wise, long-term investors recognize that leadership matters. In my own research, I found that investors allocate 30% of their decision-making to the quality of leadership, which becomes a predictor of intangible value. My forthcoming book, Leadership Capital Index, draws on a useful metaphor for how to include, conceive and audit leadership in the assessment of company value. It offers a more thorough way of assessing leadership. A leadership ratings index would have two dimensions or domains: individual and organizational. “Individual” refers to the personal qualities of the key leaders. “Organizational” refers to the systems (human capital) these leaders create to

Dialogue | Dec 2014/Feb 2015

manage leadership and the application of organizational systems to specific business conditions. Using these two domains, previous leadership and human capital work may be synthesized into a leadership capital index that investors could use to inform their valuation decisions and HR professionals to enhance their impact. Five leadership factors define the “individual domain” of a leadership ratings index that covers half of leadership capital: l Personal proficiency: to what extent does the leadership demonstrate the personal qualities required in an effective leader? l Strategist: to what extent does the leadership articulate a point of view about the future and strategic positioning? l Executor: to what extent does the leadership make things happen and deliver as promised? l People manager: to what extent does the leadership build the competence, commitment and contribution of their people? l Leadership differentiator: to what extent is leadership behaviour consistent with expectation? To develop future leaders, current leaders create organizational cultures and invest in human resource practices in five domains: l Culture capability: to what extent has leadership created a customer-focused cultural capability that is shared throughout the organization? l Talent: to what extent has leadership invested in practices that manage the flow of talent into, through and out of the organization? l Performance accountability: to what extent has leadership created performance management practices that reinforce the right behaviours? l Information: to what extent has the leadership managed information flow to gain information asymmetries? l Work: to what extent has leadership created organizational and work practices that deal with the accelerating pace of change? The intersection of HR and investor fields benefits both. HR becomes more central to the business and investors have more data through which to determine firm value. A leadership capital index is a great beginning to this journey.

17


SPACE TRAVEL

The consumer space race T he human race may have sent probes to the far reaches of the Galaxy, put people on the Moon and sent drones to several moons and planets within the solar system - but the space race is still in full swing; this time in a bid to get consumers out of the stratosphere. Serial entrepreneur Sir Richard Branson claims still to be on track to send members of the public into space on his

consumer travel

Indian satellite Mangalyaan entered the orbit of Mars in September 2014.

an ya al g an M

The first market research into consumer space travel was carried out in Japan in 1993. The results of this survey were extremely positive - some 70% said they’d like to travel to space, and almost half said they would pay three months’ salary to do so

Virgin Galactic space ships, despite a tragic set back in the form of a crash on October 31. Mars One, a not-for-profit organization, has put forward conceptual plans to establish a permanent human colony on Mars by 2025. Mars One’s current concept includes launching four carefully-selected applicants in a Mars-bound spaceflight in 2024, to become the first residents of Mars, and that every step of the crew’s journey will be documented for a reality television program.

70% India now joins an elite club of nations which have successfully carried out interplanetary space missions, and has scored a significant point in its rivalry with China.

18

Dialogue | Dec 2014/Feb 2015


SPACE TRAVEL

Virgin Galactic - backed by Abu Dhabibased Aabar Investments PJS - says it’s still on track to become the world’s first commercial spaceline, despite the crash of Virgin Galactic SpaceShipTwo in California in October 2014. Sir Richard Branson insisted the space service would only launch once it was completely ready.

first class A seat on Virgin’s commercial space travel venture Virgin Galactic will cost $250,000

0

,00 0 5 2

$ SPACEBUS STOP

Source: virgin galactic

source: virgin galactic

Crowdfunding has the potential to give rise to a whole range of ongoing space research and education projects. Companies such as Uwingu are working to fund new commercial space ventures, which could enable humans to explore the moon again. Source: xxxxxxxxxx

Dialogue | Dec 2014/Feb 2015

19


SPACE TRAVEL

Golden Spike is the world’s first aerospace firm planning to sell human lunar expeditions to countries, corporations and individuals around the world...

Golden Spike company has budgeted between $7 and $8 billion to achieve its objective, followed by $1.5 billion fee per each “two-human lunar surface mission”. The company said it could cut costs by partnering with other aerospace companies and using existing rockets or rockets already

1813

1687

Sir Isaac Newton publishes Philosophy Naturalis Principia Mathematica

20

First rocket equasion based on Newton’s third law of motion

in development. It expects to sign up as many as 15 to 20 countries or foreign space agencies. It is thought commercail flights to the Moon could take place as soon as 2020.

1957

1946

1898

War of the Worlds is published

The US launches the first space research flight. First pictures of Earth from space

USSR launches the first satellite into space

1947

First animals in space

1960

First plants and animals arrive back to Earth alive from space travel

Dialogue | Dec 2014/Feb 2015


SPACE TRAVEL

This research confirms that other planets in the Galaxy had access to water as they were being formed. That would likely be required to sustain life on any of those planets, as it has done on earth.

Scientists have confirmed that much of the water on earth is older than the sun — which could indicate the existence of life on other planets.

Total Number of People Who Have Been in Space

Person who spent the longest time in space in a single flight

According to the NASA website, civilian astronauts earn a annual salary of between

(USAF definition)

546

Valeri Polyakov 437.749 days

$64,724 & $141,715

1969

1961

Yuri Gagarin is the first man in space

1963

Valentina Tereshkova is the first woman in space

Dialogue | Dec 2014/Feb 2015

Not only do Neil Armstrong and Buzz Aldrin land on the moon, but their departure marks the first ever launch of a spacecraft from a celestial body

1975

First multinational manned space mission (US

and USSR)

2009

1992 First satellite orbit of the sun

Keppler mission launched to source ‘earth-like planets’

2012

First probe leaves Earth’s Galaxy to travel to interstellar space

21


Preparing leaders for an uncharted world Today, the real development challenge for leaders is much more substantial than closing a knowledge gap. There is now strong scientific evidence that leaders have to “rewire” their brains to succeed strategically in an uncertain and volatile world. Introducing Quest – an exciting array of highly immersive learning experiences, real time coaching, and expertise brought together in a global context to make that happen.

LEARN MORE:

Visit: www.dukece.com/quest/ or contact Christine Robers e: Christine.Robers@dukece.com t: +1.919.680.5053


opinion

Making a decision: courage and values

W Alberto Andreu General manager, corporate organization and culture at Telefónica and associate professor at Economics and Business Administration, Navarra University

24

e know you can’t make an omelette without breaking eggs. From a business perspective, it means something along the lines of: “You can’t take a decision without making a choice; and not everybody is going to like that choice”. Deciding means choosing: that’s the key. And doing it, despite the way it often looks, doesn’t really take much. The first step is to assemble all the information needed to give you a fair ability to analyze the facts. But you actually need two more things to make a decision: courage and values. Why do we need courage? Of course, courage comes in handy for a lot of things, but mainly it’s what prevents you from being overwhelmed by organizational inertia – or what we now call “legacy” – and all the systems, procedures, standards and hurdles which, little by little, weigh you down until you feel that your hands are tied behind your back and you just can’t make any progress in the direction you need to go. In short, courage is the secret to overcoming inertia, putting your shoulder to the wheel and, in general, doing what is good for the company, even though it might not be so good for you, and not being beaten by that phrase which is far too common in business: “It can’t be done.” Every time I hear someone say “it can’t be done”, I remember a scene from the film Pearl Harbor, one recounted by Winston Churchill in his memoirs. In this scene, the US generals were explaining to President Roosevelt how difficult it was going to be to get involved in the war and to attack Japan. Roosevelt, who had suffered polio and was confined to a wheelchair, adopted an expression of extreme irritation, placed his hands on the table and with extreme difficulty rose to his feet, and in the brief period of time he was able to remain standing, he said: “I never want to hear you tell me that something can’t be done ever again.” Which led on to one of his never-forgotten

lines: “It is hard to fail, but it is worse never to have tried to succeed.” That’s courage. But why values? In practical terms, values are important for two reasons. First, so that you don’t fall into a Black Hole or, as they would say in Star Wars, onto “the dark side of the Force”. You only have to take a glance at the economic crisis to see where an absence of values has got us: anything goes, there are no limits, avarice, greed, corruption… It was only those with strong values who managed not to be seduced by that “dark side”. And second, you need values so that you are not blown off course. When you find yourself in a situation in which you are not sure what direction to take or which decision to make, you’d be surprised how helpful it is to have clear, well-defined values. I have always been a great admirer of companies like Johnson & Johnson, which have based its decision-making procedure on their famous “Credo”. I love the simplicity of a decision-making procedure which consists of four steps, founded on their values. The steps are: (1) “Acknowledge the moral challenge”, which means working out whether there is a conflict between two positives that need to be protected; (2) “Look for a good decision”, thinking long-term; (3) “Test the provisional decision”, asking yourself how you would explain the decision to your family or to a third party; and (4) “Act courageously”, lowering your expectations if necessary or taking the consequences of your decision. Astonishingly simple. In short, to decide, you have to choose, to accept that you must break eggs to make an omelette. And for that, it is equally important to have guts (to battle with all the obstacles) and values so that you aren’t led astray by the dark side of the Force. But don’t worry: if you don’t agree with me, you can always take a leaf out of Groucho Marx’s book, when he joked: “Those are my principles; and if you don’t like them, I have others.”

Dialogue | Dec 2014/Feb 2015


The only conversation that matters Keep up to date with every issue of Dialogue, among leaders and managers across the world vity creati

T THE GIF

vity creati

SEP/NOV 2014 | dialoguereview.com

WHAT MAKES A GENIUS? 58

US music guru PF Sloan says it’s time to unleash the creatives

genius

OF

oven. ing Beeth y, includ ses in histor rn workplaces? st geniu STRAIN in mode PETER the greate some of n around too freely nt ILLUSTRATION: given us tenme s’ throw for enligh Music has and word ‘geniu erg search s, lions Feinb monkey But is the being s. Ants, and s e solution do this. The humanthat he P F sloan in tion that can

THE GREAT TRANSFORMATION 84

Drucker Society president Richard Straub calls for change

birds the animal all. The the imagina ignites ers from of the good of ered of diff e spark that the world? long suff Rabbi you think of can conceiv change its source) who do mind (having 16th century “In the can The art human on from – if What and of genius? eare, once wrote: to separati to finding relief anyg you think ngelo, Shakesp come, , due explorin closest n when days to – when of Newton commo Vinci, Michela reness The comes so, it gets one with be con- Da The science , Tesla? g not self-awa And in doing answerin heart. sense will genius.” Milton? Pasteur, EinsteinBeethoven – its own the matter, comes in a and Galileo, heart of sidered How about of Mozart s. Genius has been to the Mark Twain Author he music or Brian Wilson?if we have left own question on, but it when us human e its of inspirati n Dylan agreed of the Jobs? Forgive genius. Everyon flashes commo depths . While the Steve about in An favourite working for lifetimes sizes, “The thing so common.” out your perhaps in many opined: not heart, who had one. that it’s to come human seems of a man He has sense is fields of to genius story tells s, in all his house. for Indian geniuse ball forward ring in look the little to ur, push lost a valuableand started man endeavo lamp. A line. went outside the street the goal to help. under the ring and wanted for?” the ity ed hed him creativ of recogniz looking s approac Geniu a look at two same field. for a ring.” are you “What I’m looking “In my a in the Let’s take asked. “Oh, lose the ring?” MANAGIN s working wrote from for man you geniuse prodigy, looking RISK: develdid G CENTRAL a child are you “Where that swiftly Mozart, en, “Why is better.” GOOD BANKING.” TO ed idea Beethov bedroom here?” “The light logic of fully conceiva symphony. fully out able to obverse the ring POLITICA looking oped into prodigy, was is an of its glory, thing ThereL RISK: in the man STORM in a also a childsymphony in all sense CLOUDS curious would n it right A a is ON e writing commo THE HORIZONHe conceiv years beforeMozart to find a d while ring. r to wait happene for the You cannot We discovconside but had ENVIRON us way. we are ize. Some this article.asking people MENTAL because of RISK:humoro material dark. genius on and urs CRISIS in the genius, greater ered when INTO ring inspirati of endeavo the OPPORTU , be divine nature whereas and AllNITYthe our emerabout the he received upon it, a calm to ity” since have come it, told INTERNAT tely acted to remain true than having “human about IONAL caves ers RISK: from – immediaen struggled GET THE that rather conversation percepcompos gence GLOBAL to ng shifts in and angry Beethov on. Both of beauty STRATEG seems subtle interesti own inspirati agitated Y RIGHT race from their the realm through his initial became human feels and plod for the they threatened about and who is spirits into love itself, it tion. The SOFT RISK: is lift our e to slog even And like waiting of who HOW CULTURE continu l ideas that a discusand truth. of history, and out. Genius because CAN FAIL the muck up Who knew become so ss persona BUSINESS e, is natural beauty, to lift it natural. awarene not a genius.genius could that therefor truth, next genius be a level of Genius, no idea , moves about l its nature, and discernto RISK PENDULU We had seems into practice t of all. sion ersial? tion it has, within own persona and M when put IS SWINGIN that, the benefi who controv covet their y, imagina of Beethoven G BACK y forward for simplicit one’s favourite The s. soldier, music people rst fi covets The element humanit as one ment. out!” The g in close of these How genius “Spread nt. has all marchin does ADDRESS restaura Mozart of all sentient a chang this while bullets and certain nature ON THE ING RISK his Italian ing of in the and produce 2014 BOARDyelled into a hailshould lives of It isworld analyze | Sep/Nov aff of theorganization ve. order Dialogue to think, ect the busine innovati ILLUSTRA saved many s consid certainly ss enviro death, n a beings TION: CAMERON er reactin That was self-preservatio nment LAW g? Jerem friends. Is a genius? y Greenstock and how Was he

answers. There is a need 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.

A

WORLD PEACE THROUGH BUSINESS 95

Terry Neese argues that female entrepreneurs are the key

comes Genius s of in flashe on inspirati

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11/08/2014

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THE LAUNC HING OF tions in the Arab 2011 and Spring revoluRussia’s in 2014 interven have made tion in Ukraine to ignore it the potentia impossible for more widely business developm attainabl es ents. The l impact of sudden process e, leading of localizat after the rapidity of geopolit political apparen ion in political to a marked governe t stability d states, ical shifts, has created activity. or governm of previous fail to meet an area Weakly that has ents decades of commer coincide much more public expectat 59 that completely d very disturbin cial discomf , nomic and ions, ort The example powerfully conteste find their rule financial gly with period. tribulatio the ecos of Scotland d than Yet, ns of the that, even before. 15:33 post-20 and political for all the talk in a reasonab and11/08/2014 Cataloni 07 about global appeal of risk, there a show ly governe all means local identity for the privateis little clarity about change well-stru can overcom d state, the ctured Multinat what it sector. e the logic ional compan Part of this co-operation. 2014 of increasin | Sep/Nov loss of traction ies have gly inclined Dialogue ments – been advisers, in democra to engage by central appoint governspecial cies as cies – internati boards or well as can be onal advisory bring in autocraattribute popular 59 consulta the n.indd d problem to the disaff e_9.14_Sloa growing and broaden nts to remedy or top-dow ection with the standing 058_Dialogu their underuse of . But these n comman 15:33 force have lost to lead investme both legitimac d. Governm to partial nts tend they rely ents satisfact Most business y and authority on suppress ion at best. tary power es are ion or if if framing rather poor they to the at The impact pursue their external use miliasked about questions that need of internati interests to be enlarged sory industry political risk, and . onal public by open the adviopinion, commun on the basis too often tries global ications connect to respond ivity, has and right. With that the custome concrete produce r must be this confusio change d a executiv in the between es are disinclinn in the air, senior relations rulers hip comfort and subjects can constrai ed to areas to . That review their leave their lateral risk, it can also n unjust governm approac and many ent, but make all h to faith in their find much more governm own instinctsthey have greater ent that diffi ions of This gradualcult.Y than in the “experts CTIVIT ”. Shareho opinsleep happily delegitim centralis CONNE ed authority ization with either lders should not of effect of This article approac has h. seeks into a more turning econom had the describe how a changinto do two or commun telling criterion ic capacity things: business g world of national ity strength environm diploma affects the compan ent and tic or than political, ies should military everyon suggest consider e wants capabilit how reacting a better y. Virtually selves and . Torrents their family, material life for expectat of chang themand the ions can The intensity a sense e denial ing be competi of social tion betweena factor for instabilit of their witnesse l in achiev and political d so far helpfu capital y. commun But the this century and er to be globaliza ities for considchange tion and resource under these skilled labour also is the greater do you product s, become tends to circumst of a cliché, ng, if any,freedom develop increase ances, while followi second but the ny? . The first has more of the are e at a compa implicati global opening among the like-min trade patterns poorly Which purpos ons of victoryant understo ded than in the like a paradox -up of low-barr od. Democr the of import and technolo Cold War and ier trade.43% as a acy’s that horizons 49% 63% a result It seems gy, especial progress in science of nology, should 60% 64% have generate 70%ly informat 66%ion 44% freedom the conclusi 47% greater 34% narrow as of choice, nations 69% d greater 46% 75% techthan in but of geopolit on to draw from 69% equality previous balance the last two that is between ics. eras – and of power decades Internati between a different vidual citizens. onal business governm of these The world ents and es have of indepen trends. to take indiThe behaviou dent decisionhas spawned a account national r have become controls on plethora -making and disorder tions that centres, ed on the basis international order have fostered weaker and the and on keeping is harder instituwidespre many more of agreed rules, to keep the g ad peace agreeme especial running people dispute Engagin ly nt out of steam. and expandin The rise bono those rules. when so g trade knowing in impact Giving in pro are This places already where of the people’s ry a premium g had work and next. 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Viewing risk: Threat or opportunity? Risk averse businesses that fail to grow are running the risk of stagnation. Is it time leaders used risk to gain strategic advantage? PAGE 28

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BANKER TO THE WORLD 30

LEADERSHIP DEVELOPMENT 64

BUSINESS LESSONS FROM SPORT 88

EMERGING ECONOMIES 72

William Rhodes says crisis prevention and management is the secret of good banking

Norway’s oil giant Statoil takes an original approach to management excellence

The summer of sport has come to an end but there are legacy lessons for managers

Exclusive research reveals SMEs are vital for sustained growth in Eastern Europe

S EMPLOYEE

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US_GREEN

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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. In this age of globalization and diversity, no one individual, company or government has all the

15:21

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Dialogue

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S EMPLOYEE

ANIZE “TO ORG LD’S THE WORTION INFORMA E IT AND MAK SALLY UNIVER BLE AND ACCESSI ” USEFUL

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COUNTRY FOCUS: TURKEY

Eastern promise Republic of Turkey Population:

75.4

Capital:

Ankara

million (UN, 2012)

Major languages:

T

urkey literally and metaphorically bridges the gap between the East and West, with its second city Istanbul physically bridging the Bosphorus Sea between Asia and Europe. In terms of wealth, this transcontinental region is on a par with Mexico. Turkey’s flag carrier Turkish Airlines is the fastest-growing airline company in the world and Turkey’s economy grew by 10.3% last year, faster than China’s. This makes it the third-fastest-growing economy in the world. Economic growth came mainly from construction, which makes up 6% of the economy, but if this were to count steel, timber and energy, construction and the related industries made up some 30% of the economy. According to a survey by Forbes magazine, Istanbul had 28 billionaires as of March 2010, ranking fourth in the world behind London (which has 32 billionaires). By 2050, estimates suggest its nominal GDP is set to grow to $4.45 trillion, giving Turkey the 14th largest nominal GDP in the world.

Kurdish

(official)

sq miles

(779,452 sq kM)

Turkish ...Area:

300,948

Major RELIGIONS:

Turkish Economy

15th

17th

Life expectancy:

72 years

77 years

source: UN

GNI per capita:

US $10,410 source: World Bank, 2011

26

Islam

Turkey has the world’s 15th largest GDP by PPP and 17th largest nominal GDP Source: The World Bank

The country is among the founding members of the OECD and the G-20 major economies Source: OECD

Dialogue | Dec 2014/Feb 2015


COUNTRY FOCUS: TURKEY

EXPORTS

INDUSTRY

Turkey’s exports were $143.5 billion in 2011 and they reached $163 billion in 2012 Main export partners in 2012:

Turkey has a large automotive industry, which produced more than a million motor vehicles in 2012, ranking as the 16th largest producer in the world

(Germany 8.6%, Iraq 7.1%, Iran 6.5%, UK 5.7%, UAE 5.4%) source: The World Factbook

However, larger imports, which amounted to $229 billion in 2012, threatened the balance of trade

Source: Organisation Internationale des Constructeurs d’Automobile

Main IMPort partners in 2012:

(Russia 11.3%, Germany 9%, China 9%, US 6%, Italy 5.6%)

ing build th p i h wor ish s Turk ts were in 2011 r expo 2 billion 1. US$ : OECD rce

Sou

source: the world factbook

The rate of female employment in Turkey was 30% in 2012, the lowest among all OECD countries Source: New York Times

In 2013, 37.8 million foreign visitors arrived in Turkey, which ranked as the 6th most popular tourism destination in the world. They contributed $27.9 billion to Turkey’s revenues

In 2010, the agricultural sector accounted for 9% of GDP, while the industrial sector accounted for 26% and the services sector for 65% Source: OECD

Source: World Tourism Organization

Dialogue | Dec 2014/Feb 2015

27


focus Forecasting the future for technology embracing the rise of the machines business in the era of the digital native entering the world of sensor techology integrating the it generation into business

28

Dialogue | Dec 2014/Feb 2015


focus the

the future is bright Whenever we dream up a new way of doing something – from slowing down molecular movement to developing new kinds of building materials – we have inadvertently created a new technology. So what will we dream up in the future? It is time to look into this future – to ascertain how businesses can use technology to create jobs globally and how organisations – not traditionally thought of as the world’s tech leaders – have empowered their global strategies through innovation in growth markets.

Dialogue | Dec 2014/Feb 2015

29


focuS Forecasting Managing risk: Central the future to for good banking technology embracing the rise of the machines business in the era of the digital native

Forecasting the future for technology

entering the world of sensor technology integrating the it generation into business

30

Technology is our ticket to a better way of life, so we must press on with its development without fear or delay, says futurologist Magnus Lindkvist Illustration: STEVE RAWLINGS

Dialogue | Dec 2014/Feb 2015


“Anything that doesn’t quite work yet”: that’s how many people would describe technology. In fact, in these early days of the 21st century, a lot of us take the T-word to mean “gadgets” when, in fact, a much broader definition is needed if we want to explore what marvels lie ahead in the coming decades. The two best candidates I have come across are “packaged knowledge” and “anything that enables you to do more with less”. In other words, whenever we dream up a new way of doing something – from slowing down molecular movement to developing new kinds of building materials – we have inadvertently created a new technology. So what will we dream up in the future? Any futurologist will hereby give you a disclaimer and paraphrase Karl Popper’s adage that we cannot know what we will know in the future because if we could, we would already know it. But because you are already well aware – probably even tired – of such cheap copouts, let me bravely wander further out on the “predictioneering” branch to make the thinking more interesting, tangible and with the only caveat that the branch might snap.

The IKEAfication B.A.N.G.

B = Bits. The whole computer revolution that started in the 1960s and continues to this day with the rewriting of rules and business models along 1s and 0s.

A lot of us take the WATCH THE VIDEO to +T-word Watch Magnus Lindkvist mean at TED Talk – “The Virtue of I Don’t Know” gadgets

Any fresh technology is bound to be expensive and exclusive. There is a famous portrait of IBM’s RAMAC hard drive in the mid-1950s – a behemoth box weighing a tonne with a total storage capacity of a mere five megabytes. In other words, what was only for big, rich companies in the 1950s, we now give away for free. The same can be said about salt, broadband connectivity and penicillin. What starts out as a phenomenon ends up being an Everyman’s product. I call this transition “IKEAfication” to honour the Swedish furniture store that aims to bring interior decoration and home furnishings “to the masses”. Using IKEAfication as a guiding principle makes us understand why the media industry is in such a dire situation right now; its tools have all become free. Anyone can make, and distribute globally, a song, book or movie today – not just the big labels, studios or publishers. We are beginning to see how IKEAfication is being applied in other areas too. For example, 3D printing enables everyone to have a desktop factory at home. DNA tests have dropped in price by a factor of 100 over the past decade, so we see a generation of biohackers growing up who are able to do, at home, what it took very expensive laboratories to do yesterday. To move 1kg of mass into space

Dialogue | Dec 2014/Feb 2015

has never been cheaper – which is why NASA is abandoning space travel and the private initiative SpaceX is taking over. We can summarize the frontiers of IKEAfication with the acronym B.A.N.G:

A = Atoms. The manipulation of materials using 3D printing (or additive manufacturing to use its proper name). N = Neurons. The brain cells which used to be an enigma, but whose mysteries are being unveiled by MRI scanners.

G = Genes. Screening the human genome used to cost millions (which is why the US government had to be involved in the endeavour in the 1990s), but is now down to a few hundred dollars. What new frontiers will be unlocked when these four fields begin to interact and cross-fertilize? I see a couple of possibilities.

Chemical computing There is no more effective storage mechanism than human DNA. And DNA, in turn, is made up of four components, not just two like binary computer programming. If we could harness human DNA for computing, we could create an era of supercomputing. A couple of examples would be humanoid creatures that are, in essence, robots made using DNA (with brains, emotions and feelings taken away to avoid ethical dilemmas). Furthermore, where we

31


Like energy generation, we lose current somewhere in the path from one brain to another. With greater understanding of consciousness and what actually happens, neurochemically speaking, when we hear a song or listen to somebody else speak, we will start to invent communicative superconductors. They might be accelerator devices that we place around the ear like hearing aids or on glasses (like Google Glass) and they will enable us to transmit not only articulated thoughts but emotions, smells and sounds between people. What are Instagram or Soundcloud if not “this is what my experience of event X is like” machines? Imagine today’s social media services but without all that cumbersome noise. We can subscribe to somebody else’s thoughts. We can live the life of a loved one for a day. We can put ourselves inside the now require hundreds of energy-intensive mind of a victim for a day. Yes, there data warehouses to store the zettabytes will be privacy issues and other of big data, we could store all of mankind’s problems to solve, but we might WATCH THE VIDEO information needs, present and future, in just turbocharge human empathy and Watch Magnus something the size of a postage stamp. connections. Lindkvist’s video: ‘When The Future Begins’ There are an infinite number of Omni-making possibilities beyond these three, but I Our entire industrialist world relies on want to convey the kind of magic techguesswork: what might people need? – and nologies can perform when liberated. on things slowly decaying somewhere in the That is my one worry writing this in logistical chain while we wait to see if our 2014. We have become so used guesses were correct. Will people want the to technology and scared of its Spiderman action figures or pink T-shirts we speed and effects that there’s a made for them? With the rise of instant manupolitical movement to reel it in – facturing, we can change the whole industrialist from compliance regulation to logic. You download what you want, when you doomsday scenarios in Hollywood want it – from garments to toys. movies. I say we should press on. These “Well,” you might say, “my kids will have a fieldare early days. The future started some day with this and my house will be full of meantime in the 1850s, where suddenly ingless printed objects that will make an even we could make lives longer, greater dent in our fragile environment.” Not so easier and more prosperous. We fast. What if we made these things out of mateshould let the present lead us rials that were 100% recyclable, even disposable? to the new frontiers of the Today, we focus on durability because items have future… to greener pastures. to be shipped, reused and washed. What if there Let’s make the lives of were a kind of polymer that disintegrated after our grandchildren infinitely a set period and could then be reused in the 3D better than ours. printer? No, we don’t have that material yet, but with chemical computing, we can envision the ● Magnus Lindkvist, futurologist and invention of a new kind of superpolymer whose keynote speaker, is degradability could be programmed. director for Trendspotting The brainium and Future Thinking at People want to communicate with other people Stockholm School of – whether you are writing a novel in a state Entrepreneurship, and an of isolation or spending most of your days on active member of TED social media. So far, however, all our attempts at – the world’s leading communication have lost transmission power. trends forum

A lot of us take the +T-word to mean gadgets

32

Dialogue | Dec 2014/Feb 2015


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focuS Forecasting the future for technology embracing the rise of the machines business in the era of the digital native

Embracing the rise of the machines

entering the world of sensor technology integrating the it generation into business

34

Automation and increased productivity will not drive unemployment in the long term, argues Robert Atkinson, but rather lead to stronger economies, job creation and better living standards Illustration: STEVE RAWLINGS

Dialogue | Dec 2014/Feb 2015


effects, instead of its longer-term, second order It is almost impossible to read any business effects. The negative effects are not unimportant publication without concluding that technology and economies should have a social infrastructure and automation are at the heart of high unemthat can help workers who experience them, but ployment rates in many developed nations. But they should have no bearing on our broader view while people fear the impact of automation, it is a of productivity. key source of economic growth and does not, in Automation increases productivity, so it also fact, lead to joblessness. lowers costs. If profits increase due to lower From the perspective of the indicosts, then revenue and employment may vidual worker performing tasks that subsequently grow in the automating firm. have become cheaper to automate, Studies of thousands of companies in the trend is a threat to their livelihood. many different countries have shown When a riveter on a factory assembly that this growth happens in approxiline is replaced by a robot, the riveter mately half of businesses that expericould well be laid off and have a hard ence productivity increases. time finding alternative employment, due DOWNLOAD SPECIAL to his or her specific skill set. Automation Read Robert Atkinson ‘s Cost savings can also be bad news for entire indusarticle ‘Are Robots Taking But imagine a worst-case scenario tries. In the late 19th century, the US ice Our Jobs, or Making Them?’ in which it becomes cheaper to autoindustry employed some 90,000 workers mate, than pay a worker, and the worker who cut, transported and stored ice in is simply replaced with a robot (or a refrigwarehouses around the country. Mechanical erator). Although this may sound negative, it refrigeration rendered those roles obsolete. is hardly the full story. To start with, replacing the Jobs were lost, firms went bankrupt and worker actually benefits everyone except for that investors lost money. specific individual: consumers will benefit from But 150 years later, the idea of going back the drop in the cost of products or services, the to chopping up frozen lakes in January to keep remaining workers will gain higher wages or the our lemonade cool in July seems ludicrous. shareholders will enjoy higher profits (although That we should do so in order to boost employin most industries, competitive market forces will ment only adds to the absurdity. Technological lead to the first outcome: lower prices). These progress is called progress for a reason: because cost savings are not hidden under a mattress: it’s better than the alternative. they flow through the economy as consumers People who decry technology’s impact on use the savings to buy other goods and services, employment focus on its immediate, short-term

+

200 180 160 140 120 100 80 60 40 20 0 1946

1958

1970

1982

1994

2006

–Productivity –Total Employees –Population 25-54 years Figure 1: US productivity, civilian labour force participation and working-age population (index, 1981 = 100)

Dialogue | Dec 2014/Feb 2015

35


creating jobs in other industries. These “second order” effects are hard to spot individually because they are diffuse, but they add up, across products and over time, into the significant improvements in living standards we have seen over the past two centuries. These competitive dynamics are present on an international scale as well. Productivity growth, especially in industries that trade internationally, is essential to maintaining economic competitiveness. Productivity gains, coupled with worker up-skilling and pro-employment policies, have helped Germany maintain steady manufacturing employment, even when its manufacturing wages are some of the highest in the world. If national economies can increase productivity, they receive a double bonus, because productivity both raises national output and increases a nation’s competitive trade position, increasing output further. Scholarly evidence makes it abundantly clear that productivity is not bad for employment, especially in the medium or long term. Indeed, virtually all studies of the effect of productivity on employment find that, in the medium to long term (for example, three-tofive years), higher productivity does not lead to fewer jobs. At economy-wide level, there are two related ways of looking at the effects of automation on jobs: looking at the effect of productivity on total employment growth; and also its effect on

unemployment. Because US employment growth began sharply diverging from productivity growth around 2000, some commentators have taken this to mean that productivity growth was killing jobs. The problem with this logic is that employment growth is a function of demographic and cultural factors. Employment growth slowed in the US because the growth in the number of women entering the workforce slowed and the Baby Boomers were ageing. As Figure 1 (page 35) shows, the growth of total employee numbers diverges from productivity around 2000; it simply tracks the size of the working-age population.

Scaremongering about robots and automation has real consequences

7 6 5 4 3 2 1 0 1950s

1960s

1970s

1980s

1990s

2000s

n Average productivity increase n Average unemployment Figure 2: US productivity change and average unemployment rate by decade (%)

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Employment trends

But surely high productivity must lead to higher unemployment, even if it is not related to total employment levels? In fact, over time, high productivity has gone hand-in-hand with lower unemployment, as illustrated in Figure 2. Why should we suddenly start believing that productivity is to blame for high unemployment (or will be in the future) when, in the past, the exact opposite has been the case? These broad trends in total employment and unemployment are corroborated by a wealth of academic research. Reports from institutions such as the International Labor Organization and the World Bank have found little-to-no correlation in the long-run between either productivity growth or employment growth or unemployment in a large number of countries. These findings hold in both developed and developing countries, from the US and countries of Europe to Costa Rica, Bangladesh and Taiwan. Still, despite this clear logic and broad evidence, many in the media, and even in academia, tell us we should fear “robots” because they kill jobs. This narrative gains traction because of lingering slack employment in the US and Europe since the Great Recession (of 2008). But if it were true, productivity post-Great Recession should have been higher than it was before, when in fact it has been lower. Indeed, Western employment problems stem from too little productivity and automation, not too much. As shown in Figure 3, there is no evidence that productivity has had anything to do with the recent increase in unemployment: if anything, the correlation appears to be in the other direction. Still, some scaremongers argue that, even though history suggests otherwise and unemployment is clearly not being caused by high productivity growth, the future will be different. If

Dialogue | Dec 2014/Feb 2015


3

9 8 7

2

6 5 4

1

3 2 1

0 1999-2000

2000-2007

2007-2012

0

n Average productivity increase n Average unemployment (right axis) Figure 3: US average productivity change and average unemployment (%)

technology starts making too many people obsolete all at once, the argument goes, there is no guarantee that it will also spur job creation. Worse, they argue, we are poised for “the end of work” where robots and computers do it all. But alas, there is no evidence that either of these scenarios is likely to occur. I say “alas” because if they were to be realized, average household income across the globe would increase by at least a factor of five or even 10. In fact, productivity growth has been significantly below the post-war average since 2005.

for traditional production jobs with moderate value added. The shock-value headlines about “robots coming for our jobs” focus us on the wrong issues: instead of trying to avoid any kind of economic pain, we need to embrace new technologies that will increase output and allow us to compete with rivals, old and new. A growing economy is the best solution to the unemployment crisis, and creating new jobs is the best way to preserve and raise incomes for workers in jobs that have been automated. At the very least, we need to decouple the idea of technological progress from unemployment, because it only holds true sometimes, in the short term. In the medium and long term, both theory and practice show that productivity has, at worst, a neutral effect on unemployment, while being a major contributor to rising wages and standards of living. Finally, scaremongering about robots and automation has real consequences, since it will lead to reduced support for pro-automation policies. We need to be proactive in shaping regulations and public investment in ways that help organizations drive productivity. Productivity growth has been the key driver of our national economy and it will continue to be a major factor, as long as we don’t give into fear.

Humans remain far more adaptive and retain a clear “common sense” advantage

● Robert Atkinson is president of the Information Technology and Innovation Foundation

Adaptive humans The reason neither scenario will happen is that, while computers have been making impressive leaps in many specific tasks, humans remain far more adaptive and retain a clear “common sense” advantage when interacting with the real world. They will continue to do so. How exactly will robots or computers do the work of nursery school teachers, engineers, social workers or maintenance workers? Even in industries in which superior technologies exist, transitions to real-world production and use are often slow. The current unemployment problems in the US and Europe, initially triggered by the financial system, have persisted due to a lack of growth and investment, rather than an excess of productivity. Moreover, developed countries are being out-bid

Dialogue | Dec 2014/Feb 2015

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focuS Forecasting the future for technology embracing the rise of the machines business in the era of the digital native

Business in the era of the digital native

entering the world of sensor technology integrating the it generation into business

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The agile brains of Generation Z, rewired through technology, may boost productivity in business, but at the possible price of meaningful human interaction, writes psychologist Dr Helena Boschi Illustration: STEVE RAWLINGS

Dialogue | Dec 2014/Feb 2015


As the spotlight fades on Generation Y – also known as the “millenials” (those born between 1980 and the mid-to-late 1990s) – there are new kids on the block: a whole new generation. Collectively and logically named Generation Z, these so-called digital natives are garnering attention among educators and organizations alike. Born between 1995 and 2010, Gen Z’ers will never know a life that is not connected to the internet. As well as being acknowledged as technologically savvy, this generation is being referred to by researchers as socially responsible, educated, connected and environmentally aware, drawing a marked comparison with their “overconfident” and “entitled” Y predecessors. From an employer perspective, this must surely be good news. Not only is there an upcoming generation that is able to exploit the myriad of opportunities presented by the internet, but this future workforce may also be able to contextualize their activities within the global agenda.

Has multi-tasking become a reality? It doesn’t stop there. As humans, whatever our generation, we are limited by an attentional system that can only focus on one thing at a time. So multitasking, a capability that is much debated as a requisite skill in business, is a physiological impossibility. The attentionswitching, which is more commonly ascribed to females than males, is often confused with a multi-tasking ability and is argued by some scientists to be a consequence of greater bilateral communication between the two hemispheres than is possible for males, whose brains show more connectivity front-to-back. Despite the tardy neurological evolution of the human race and the fact that we simply do not have the brainpower to cope with rapid and relentless technological advances, the brains of Generation Z’ers may represent something saviour-like to business. Their early and constant exposure to sophisticated imagery and inputs has resulted in a more highly-developed visual cortex, which means that Gen Z’ers are better able than previous generations to interpret complex visual information. Not only that – it seems that the ability to switch quickly between tasks, resulting in rapid and immediate problem-solving and a

freed-up cognitive capacity that is ready for the next challenge, is no longer the domain of the female brain. This means that Generation Z has, in theory, the potential to take on a larger workload than previous incumbents and to flit smoothly and adeptly between activities, thus enjoying high productivity and achievement.

Revolutionary or evolutionary? Because attention-shifting is not a new phenomenon, this may not represent a dramatic change, at least for approximately half the population. However, in brain evolution and epigenetic research terms, this is an exciting development. According to Randy Jirtle, director of epigenetics and imprinting at Duke University: “Epigenetics is proving we have some responsibility for the integrity of our genome.” In other words, Generation Z’s brain adaptation to constant technological exposure may be laying down new neurological foundations for future generations. But what are the true implications of this neurological ability on businesses when the Baby Boomers shuffle off their employment coil and head into retirement?

Generation Z has the potential to take on a larger workload

Dialogue | Dec 2014/Feb 2015

It is not all good news

The adaption of the Gen Z brain to learn in short, sharp bursts and take on quick-fire problem-solving also seems to come with an inability to focus for any length of time or to apply considered analysis or evaluation to complex issues. According to Dr John Ratey, associate clinical professor of psychiatry at Harvard Medical School, the rewiring of the Gen Z brain through technology has resulted in “acquired attention deficit disorder”. The endless bombardment of digital data, he says, means a low boredom threshold. “Regardless of whether the stimulation is from the internet, TV or a cellphone, the brain is hijacked.” The Gen Z shortened attention span has significant implications for learning and development in schools, colleges and beyond. The eschewal of steady and patient extrapolation of meaning from information, together with a minimal investment in genuine, full-blooded relationships in favour of the virtual here and now comes with a set of limited and short-term horizons. As Gen Z’ers nimbly navigate the modern world of easilyaccessed and freely-available information, they

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Dr Helena Boschi Helena Boschi is a psychologist specialising in applied neuroscience at work. Her particular areas of interest include the brain and behaviour, our emotional and rational neural networks, and how to improve our cognitive abilities. She has recently researched the influence of the corporate psychopath across different organizations and is currently investigating the impact of chronic, work-induced stress on brain function and structure – and possible reverse strategies – to help individuals understand and manage their physical and cognitive resources during today’s business climate of ongoing change and uncertainty. Boschi has spent the past 20 years working closely with businesses to define and design new initiatives, particularly in the areas of leadership and team development, inter­ cultural communication and organizational change. She has held senior talent management and organization development positions within international companies and now works predominantly in the telecommunications, pharmaceutical and finance industries. She has lived and worked in Switzerland and the US, and now works extensively across the Middle East, Europe, Africa and Asia. A member of the British Psychological Society, Boschi brings a scientific edge to the work she delivers and continues to apply the latest developments in the fields of psychology, neuroscience and behaviour to the organizational context.

demand immediate results or they quickly move on. Loyalty is a fragile and shortterm commodity and is only as good as their last interaction. Longevity is neither practised nor understood. The advent of the Generation Z brain to the business world will mean that the balance of power is irrevocably shifting away from the concrete organizational environment to a world of cloud devices, internet trade, virtual promotion and online entrepreneurship. From an education and talent-management perspective, there are serious and significant implications. Gone are the days of traditional lecture-based learning which represents, for the Z Generation, a dry, old-fashioned and “one-size-fits-all” approach to development. Instead, online gaming is one of the preferred tools of the trade as it offers clear goals, decision-making opportunities, challenges, instant rewards and continual feedback. Google and other employers with predominantly lower-than-average age workforces are already showing us the way. For them, executive education is the antithesis of time for reflection and contemplation of the world’s bigger issues, so productive for Baby Boomers. Sound bites,

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frenetic activity and concentrated short bursts are the education instruments of choice for enlightened organizations.

Getting the best out of Generation Z And so it seems that, in order to make the most of this pending workforce, organizations may need to rethink their past models of success and replicate, within their corporate confines, some of the adventure and customization available in the virtual world. This may be an unrealistic expectation given that managers will not be as comfortable or familiar with the latest interactive technology as the Gen Z’ers reporting to them. Moreover, the Gen Z reliance (some may call it an overreliance) on technology may impede the fostering of long-term and business-dependent relationships, as Gen Z’ers prefer, instead, to participate in social networking sites where they can communicate across global communities with like-minded groups via a carefully crafted virtual persona. As so many images of them suggest, they prefer virtual communication even when they are standing next to one another. To older generations, including Gen Y, still reliant on a relationship based on a handshake and a shared meal, this may be problematic. However, one important aspect of neurological function deserves a mention. The brain, with all its limitations, provides us with the ability to understand what other people are experiencing instinctively and immediately. Our complex mirror system – the subject of much research in recent years – enables the decoding of different facial expressions together with their emotional corollaries. As with everything, practice leads to proficiency, and the better we are at interpreting expressions, the more active and accurate our mirror system. The virtual world does not provide the right feeding ground for our mirror neurons to thrive. As a consequence, while the brain’s visual system is enhanced, the mirror system may be impoverished, leading, over time, to possible emotional blunting and an inability to “see” true reactions, and respond accordingly and appropriately.

Longevity is neither practised nor understood

Dialogue | Dec 2014/Feb 2015


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Matching Gen Z and future business needs And so, the questions that need to be asked are: what skills will be needed for future business and can the Z Generation fulfil these demands? Recent world crises have left organizations and communities reeling in the aftermath of uncertainty and insecurity. Now, more than ever before, people are seeking solace in what and whom they know in order to wrap some familiarity around themselves. Business is still reliant on relationships, especially in certain parts of the world, and nothing can take the place of real and carefully nurtured mutual trust that binds may business transactions. For Generation Z, whose existence sits somewhere between the virtual and the real, these relationships may be timeconsuming at best and beyond their capability at worst. The brain is constantly playing “catch up” to the environment around it and there is no denying that the ability to switch attention has its advantages when our senses are overloaded with a constant stream of data. Nevertheless, there is no substitute for being able to look into the eyes of another living human being and build meaningful relationships on a deeper level than is offered by virtual communication. It is true that speed is the hallmark of modern life and there is no doubt that the Gen Z brain appears to offer organizations an agility that is both needed and valued. Quick decision-making, for all its cognitive biases and fallacies, is considered a much-needed skill in business and what generally matters now is not that the decision is the right one, but that another decision can be made in quick succession. The problem comes with any role that requires the complex synthesis and analysis of data – or even the evaluation of the data’s reliability. This activity may not be suited to a brain that has adapted itself to seek out short-cuts by being fluid, flexible and quick-fix. And for a decision to move into action, it still needs

Business is still reliant on relationships

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to be sold to those who need to execute it. Like Generation Z, organizations are positioned somewhere between a world that is sociallyorientated and a world of progressive technological advances. This brings with it a dichotomy of requirements that it may be impossible for any one generation of talent to meet. As new cohorts assume the corporate mantle from exiting workers, they will find themselves designed for a world that, on one level, is well matched to their brain adaptation. On the other hand, they may also be expected to engage in cognitive processes and emotional relationships that are not straightforward or easily managed. Leaders from previous generations who understand and value the power of concentration and considered decision-making may be presented with a frustrating dilemma: namely the management of a workforce that is now neurologically incapable of meeting certain key requirements of the job.

There is no easy answer The brain’s plasticity means it can adapt and shape itself to new challenges and demands. But the important question remains: does Generation Z sufficiently appreciate and respect the legacy left by its antecedents to overlay new skills and perspectives – such as a lengthened attention span and meaningful relationship-building – on to a brain that has seen them through life successfully to date? The progression of generations through the years has always brought some degree of rejection of the past in order to create a different future. But in the end, it all boils down to one simple fact: emotion is a biological feature of human life and our continued existence depends on interaction with others. As Generation Z collides with extant workplace demands, this may force society to look more closely at early emotional and cognitive development in order to ensure that succeeding generations benefit from both an adaption to relentless technological advances and a more conscious investment in building an early emotional architecture. This could prove a powerful combination. ● Helena Boschi is a psychologist who specializes in applied neuroscience at work

Dialogue | Dec 2014/Feb 2015


I|E|E|W

The INSTITUTE FOR ECONOMIC EMPOWERMENT OF WOMEN’s PEACE THROUGH BUSINESS ® Program 2013 Graduating Class Pictured with dignitaries: H.E. Ambassador of the Republic of Rwanda to the U.S., Mathilde Mukantabana; Charlene Lake, AT&T Senior Vice President Public Affairs & Chief Sustainability Officer; Hon. Mrs. Sultana Hakimi, Spouse of the Afghan Ambassador to the U.S.; Dr. Terry Neese, Founder/CEO IEEW; Mary Millben, Broadway Actess & Singer/Global Ambassador for Education Africa; Dr. Kevin Fegan, President, Northwood University Texas Campus

investing in a peaceful future It is widely acknowledged that economically stable societies have a much greater capacity for peace. Since 2006, the PEACE THROUGH BUSINESS® program has educated women business entrepreneurs in war torn countries such as Afghanistan and Rwanda, graduating over 400 students. As of 2013, 80% of our students are still growing their businesses, working to create an atmosphere where peace is possible. Learn more about how you can help us educate and empower women at ieew.org.

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10/11/2014 09:42


focuS Forecasting the future for technology embracing the rise of the machines business in the era of the digital native

Entering the world of sensor technology

entering the world of sensor technology techology integrating the it generation into business

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Global technology giant Bosch is branching out into sensor technology, and its innovative aspirations hinge on the Asia Pacific region, writes David Woods Illustration: STEVE RAWLINGS

Dialogue | Dec 2014/Feb 2015


German multi-national engineering and electronics company Bosch is a key player in the white goods and power tools industry, globally, manufacturing devices ranging from washing machines and vacuum cleaners to lawn mowers and electric screwdrivers. But where the company is growing most rapidly is in the computer chips arena. In fact, Bosch is well on its way to success, because more than half the cars and mobile phones on the planet already contain Bosch chips. But here lies a marketing conundrum: because consumers tend to associate these innovations with the car or mobile phone manufacturers themselves, rather than with Bosch, the company has to market itself both to other manufacturers and the general public. Of course, Bosch is not the first company to face this challenge. Intel became one of the world’s most recognizable computer brands WATCH THE VIDEO following its long-running Intel Bosch Automated Inside campaign. driving The campaign launched in 1991 and a distinctive five-note jingle was introduced in 1994; by its 10th anniversary, it was being played in 130 countries around the world. The concept was simple: at the end of a commercial for a computer brand featuring Intel mother­ boards, the viewer heard the jingle and saw the Intel logo, highlighting the importance of the components. The campaign sought – and won – public brand loyalty and awareness of Intel processors in consumer computers.

+

Essential components Bosch aspires to be in a position whereby its components are the must-have devices in every car, in the same way that Intel devices are marketed as the essential components in computers. The global technology giant invited Dialogue to visit its Stuttgart headquarters earlier this year to experience its latest technologies first-hand. On its test track, Bosch’s research and development teams showcased their driverless technology innovations: enabling cars to brake automatically for drivers if, for example, a child were to run into the road in front of them; and creating systems allowing cars to reverse into a parking

Dialogue | Dec 2014/Feb 2015

space, with no input from the driver other than the touch of an app. But just days after our trip to the test track, the news broke that Intel, Google and Microsoft were also competing within the sensor market in a bid to produce driverless vehicles. This emerging family of “in-vehicle solutions” products aim to help car-makers and their supply chains deliver in-vehicle experiences “quickly and easily“, according to Intel, by providing a complete platform, with processors, operating system and development kits. This pre-integrated, pre-tested and application-ready approach, so powerful in low-cost phone handsets, will also reduce timeto-market for auto infotainment systems by more than a year, claims the chip giant, and reduce cost by up to 50%. With competitors such as Intel in the mix, the pressure is certainly mounting on Bosch. But, as Peter Tyroller, Bosch’s board director, responsible for the company’s activities in Asia Pacific, tells Dialogue in an exclusive interview, the success of the company’s innovative aspirations rests on his region, not Silicon Valley nor even its massive German HQ. He explains: “Asia Pacific is a growing area for us and we have advanced to 24% of our total global sales in the region – with a target to double this by 2020.” Considering the statistics – countries such as China produce 40 times as many engineering graduates each year as Germany – this is hardly surprising. In fact, in 2013, Bosch invested some €620 million in Asia Pacific, compared to about €280 million in North and South America. And as Tyroller iterates, “it goes without saying” that globalization and connectivity are major informants of the company’s long-term strategy. In fiscal 2013, Bosch increased its sales by 3.1%, to €46.1 billion (based on an adjusted previousyear figure of €44.7 billion). After adjusting for exchange rate effects, sales grew 6.3%. Bosch disclosed a 6% EBIT margin. This translates into EBIT of €2.8 billion and Tyroller believes this to be an important step toward achieving the board’s target EBIT margin of 8%. Local development plays a significant role in Bosch’s regional growth. Over the past 10 years, sales in Asia Pacific have more than doubled, to some €11 billion. And, as Tyroller explains, by 2020, Bosch aims to double its sales in the region once again. Bosch has already injected significant capital

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Bosch: Intelligent software and sensors – basis for the Internet of Things and services

Internet-enabled products and internet-based services are one of the focus areas of Bosch’s future sales growth. With its hardware know-how and broad technological expertise, Bosch is prepared to move into this direction. President of Bosch UK, Peter Fouquet, explains: “The number of connected devices is rapidly growing and the trend toward networking is unabated.” Sensors enable technical assistance in day-to-day life. Describing the strategic significance of sensor technology, Fouquet adds: “Whether we are talking about automated driving or the smart home, a new quality of comfort, safety and efficiency is developing, and Bosch is creating the technical conditions for this change.” In 2013, Bosch produced one billion sensors. This year, a further 30% increase is planned. In the mobile phone market, every second smart phone in the world uses Bosch sensors. In the UK, sensors in Bosch boilers not only help to reduce power consumption as the unit only comes to life when the user is in front of it, but also accurately

into Asia Pacific (from 2010 to 2014, it will have invested €3.3 billion in the region). He says: “We want to grow strongly in the emerging countries of Asia by offering the lowcost solutions that customers there are demanding. Our airbag light control unit for the Chinese market and our electronic hitch control for an Indian tractor manufacturer show that local success is the product of local expertise. “By the end of this year, we will have some 45,000 research and development associates on board. Of these, a

46

detects the room temperature, and adjusts flow temperature to meet comfort requirements. When coupled with a smartphone, the sensor knows when the user is in or out of the property. The robotic lawn mower, Indego, which is designed and manufactured in the UK, is packed full of different sensors to ensure it moves systematically all over the garden. It operates using a ”lane-by-lane” approach, rather than the more common randomized pattern used by other robotic lawn mowers, ensuring the same patch of grass is not mowed more than once. Each sensor has a specific function; from managing the rational speed of the blade to controlling the speed of the lawn mower. Many of the sensors are the same ones that are in cars, mobile phones and games consoles. Sensor technology is also a major technological prerequisite for future driving. Modern driver assistance systems require ultrasound, radar and video sensors. This year, Bosch will produce nearly 50 million ultrasound sensors – 25% more than the previous year. The Nissan Qashqai, built in the UK, is fitted with radar sensors, which continuously analyze vehicles in front while the car is in motion. These sensors are part of the predictive emergency braking (PEBS) system, which continually monitors and alerts the driver of a possible rear-end collision, thus helping to reduce the number of accidents and traffic. Moreover, Bosch is growing in the area of micromechanical sensors (MEMS), a key technology when it comes to networking things on the internet. Sensors enable a new form of technical assistance in day-to-day life – in automated driving, for example, or the smart home. Bosch’s strategic objective is to create solutions for connected mobility, connected manufacturing, connected energy systems and connected buildings.

good 17,000 will be located in Asia Pacific - 2,000 more than at the start of 2014. “There are major growth opportunities in India and China,” he says. “But China is a hard area and a great opportunity. It’s difficult to talk about the area in general as it is so diverse and heterogeneous. There is a need for local strategies there and, as such, we are targeting local management because it’s clear to us that local managers can deal better there. Around 70% of staff in Asia Pacific are natives rather than foreigners. “We are moving faster because they are

Dialogue | Dec 2014/Feb 2015


industrialized markets. There are one billion more people in the microchip market in India and China, and there is a great opportunity. Wherever there is a chance, there is a risk. “There is still corruption that is not in line with our values and compliance rules, and we have to be careful to make business there with what we can and cannot do.” He elaborates: “There are political risks, for example, in Thailand; there is ongoing conflict between China and Japan; there is heavy bureaucracy in India; we need to be careful but there are opportunities.” Despite the political challenges, untapped opportunities have opened up in the region. “The next steps for us are to differentiate and innovate,” says Tyroller. “Services are playing a major role and we want to develop products suitable for local requirements, taking a different approach [to other regions]. “In Korea, for example, the business model is

very creative when it comes to technology, and we have to adapt to requirements and certain standards. We have to be flexible and speedy. But in saying that, we want to transport our tradition of cars and the Bosch history. This is the kit for our company and our values are very true there.”

We want to grow strongly in the emerging countries of Asia by offering low-cost solutions

Peter Tyroller Biography Peter Tyroller has been a member of the board of management of Robert Bosch GmbH since 2006. He is responsible for co-ordinating activities in Asia Pacific including Australia, China, India, Japan, ASEAN countries and South Korea. Tyroller was born in Augsburg, Germany, on 7 November 1957 and is married. In 1984, he completed his engineering studies at the University of Applied Sciences in Ulm. This was followed by a second course of studies in industrial engineering. He began his professional career with Alfred Teves GmbH (ITT Automotive) in Frankfurt, Germany, in 1985. 1992 – Director of the Airbag Systems Unit of Robert Bosch GmbH, managing director of United Airbag Systems GmbH, both in Schwieberdingen, Germany 1994 – Alfred Teves GmbH (ITT Automotive), various executive functions 1998 – Managing director of the Wiper Systems & Electrical Motors Division of Valeo Autoelectric GmbH & Co KG, Bietigheim 2000 – Executive vice-president sales, Gasoline Systems Division, Robert Bosch GmbH, Schwieberdingen 2003 – President with responsibility for sales, Gasoline Systems Division, Robert Bosch GmbH, Schwieberdingen 2006 - Member of the board of management of Robert Bosch GmbH

Dialogue | Dec 2014/Feb 2015

Ambitious targets

But at Bosch, globalization is about more than dynamic growth in Asia. And the company has also set ambitious goals for the world’s other regions. The company aims to double its sales in North and South America by the end of the decade. In addition to expanding its manufacturing capacity, Bosch is strengthening its local development activities. In Guadalajara, Mexico, the company is opening a development and software centre. In Africa, too, Bosch aims to increase its sales significantly in the years ahead. In the remainder of 2014, Bosch expects recruitment to grow and headcount requirements to increase – again mainly in the Asia Pacific growth region. Altogether, 9,000 university graduates will be hired around the world. In order to achieve growth targets, Bosch is also strengthening its global network in a technological sense. Tyroller says the company is not only “doing well” with local innovations in emerging markets, but the Asian engineers also contribute to solutions for the industrialized nations in Europe and North America. The vast majority of Bosch software engineers – more than 9,000 – are located in India. And the company has the foresight to recognize that it can only network its technologies if its technical specialists are part of a network as well. “We have a matrix of a global network with platforms and specific solutions – global versus local,” explains Tyroller. “We are a networked business and are changing the traditional set-up of our organization. But in saying that, there is a huge investment in the region incorporating assembly lines and other processes in parallel, to create high volumes of products.” Business is looking promising, based on this ambitious and extremely rapidly-evolving global/ local strategy. “This is what makes Bosch a dual organization,” concludes Tyroller with a surprising twist, given the sheer numbers of staff the company employs. “We have teams in the regions [across the world] and a culture of innovation. We want to think of ourselves as small and fast – because if you think fast, you fail cheap.”

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focuS Forecasting the future for technology embracing the rise of the machines business in the era of the digital native entering the world of sensor technology integrating the it generation into business

Integrating the IT generation into business With Generation Z due to enter the workforce in significant numbers, we ask industry leaders how businesses must adapt to accommodate the needs of four co-existing generations. Interviews by Liz Mellon and David Woods

There are 350 million Gen Z’ers in India alone, and they are expected to enter the workforce in significant numbers for the first time in 2015. In fact, it is projected that by 2020 – just six short years from today – Gen Z will make up 36% of the global workforce, and they are already giving businesses a glimpse into their tech-savvy future. This is the generation that will grow up with cloud computing as the norm; the generation that will instinctively turn to cloud marketplaces to find the business apps they need to succeed; and the generation that will rely on their iWatches and other wearable technologies every day. How well prepared are companies to cope with four, or even five, generations in the same workplace? Rajesh Padmanabhan, HR head, Vedanta Resources The influx of Generation Z is a nice challenge to have. Our major areas of challenge and opportunity are going to be around decision-making or problem-solving, technology and

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“We will have to face the need for upward mentoring on technology” Rajesh Padmanabhan

management. Let’s take each of these in turn. If I focus on just three groups – the Baby Boomers, Gen X, and I will put Gen Y and Z together for the time being – we see significant differences. Many Baby Boomers in India still print out hard copies of digital data and

spend time thinking and analyzing with pen in hand. Gen X, by contrast, sees data as structured, coming in bulk, but manageable and tractable. For the first time in Gen Y, and even more so with Gen Z, we see youngsters who cope with Big Data – masses of unstructured data, freely available, but not organized into neat messages or packages. Given that each generation will value its own decision-making methodology above those of the others, we will need to do more and more talking, and enable more real communication, and faster, in order to agree. I also see the focus of decision-making moving down the hierarchy, to where the massive amounts of data are more readily engaged with and understood, rather than staying at the top, at least for day-to-day decisions. Empowerment won’t be so much a top-down gift as a bottom-up grab! I guess technology is the obvious challenge, as Gen Z is so tech-savvy. Gen Z’ers have grown up in a world in which the internet wasn’t invented or created – to them, it has always been

Dialogue | Dec 2014/Feb 2015


there. So they use multiple devices at the same time and don’t strongly differentiate between their virtual worlds and the real world; they integrate them, apparently seamlessly. We will definitely have to face the need for upward mentoring on technology from this generation. How receptive will Gen X be to this approach? How will technology interact with strategy? If strategy is top-down and the technology push comes from the bottomup, how will the two intersect in a way that makes sense and adds value? I’m not sure we’ve thought about this enough yet. The third challenge, where I believe action is needed right now, is management. In India, a dearth of management talent has been exacerbated by our speed of growth. We have moved rapidly from an era in which, to be a project manager, you had to have grey hair and 15 or so years of experience. Now, our young Gen Y employees will soon be managing the fresh intake of Gen Z, with closer to eight years’ experience, mostly of a pretty technical nature. They have more lateral experience across the company than Gen X’ers, who were mostly developed in verticals, but they are being pushed into management more rapidly and without much training. We simply haven’t had the bandwidth, given our rates of growth. We will need to remedy this in a hurry, with some training. I don’t think that Gen Z will tolerate poor management coming from a generation that seems so close to it in many respects.

“I’ve seen eightsecond attention spans in each generation” Eugenio Pirri

By 2016, the average age of the Indian population will be under 24 – so we’d better be ready for this huge transformation in the way business will need to be run. Eugenio Pirri, Vice-president, people and organizational development at luxury global hotel management company, Dorchester Collection Given all we have learned from Generation Y, I believe Generation Z will be less difficult to integrate into the workforce and, instead, will bring a comfort and ease that allows us to continue adapting our workforces through technology. For example, we’re returning to a time where listening to, and developing, people are again top of the agenda. How we use technology as a

Dialogue | Dec 2014/Feb 2015

vessel that speaks, not only to Gen Z but all generations to drive feedback, communication, idea-sharing and praise, will be vital. I also believe that, due to the sheer amount of information to which they have access and are comfortable handling, Generation Z will become subject matter experts, garnering far more clout and respect in the workplace than their predecessor generations; and doing so much more quickly. As they are the IT generation, technology will play a significant part in how we manage them – working hours/remote working will need to be addressed along with ensuring work/life balance is integrated into the everyday. For this generation, it’s no longer a choice “to have or not have”, instead it’s a symbiotic relationship throughout each day. I also believe we are underestimating Gen Z’s need for guidance and development. As a result, Gen Z’ers will have stronger connections with Gen X and the Baby Boomers, seeing them as individuals from whom they can learn and develop. Our job is to ensure the more established generations recognize the opportunities these bright young people bring to improve the workforce. Then they can act as mentors to offer the guidance and development being sought. Gen Z’s facility with IT and social media will definitely enhance the workplace. This is a truly logical generation that does not know a world without technology. Trying to avoid or pretend this isn’t the case is a futile exercise. We must learn to

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use this expertise and Gen Z’ers’ natural ease with technology to keep our businesses and operations relevant to today’s standards and those of the future. Having worked with every generation, I’ve seen eight-second attention spans (or less) in each – this isn’t specific to Gen Z. It merely seems more prevalent due to the fact that they are seeing the world in a way that is limitless and without boundaries; a world in which it’s not unusual to watch TV while simultaneously texting friends and searching Twitter to see what the wider population is saying. This does not mean we cannot keep Gen Z engaged, though. As with all generations, attempting to make them conform will not work. Instead, it’s about recognizing the things they can do, what they can process, how they learn, and then consistently applying our values and respecting their individuality as we did when Gen X and Gen Y joined the workforce. Within the Dorchester Collection, we have employees with more than 40 years of service and those who do work experience, placements, apprenticeships and stages – all starting at the age of 15. The common denominator is that they all want to be heard and respected; therefore, as a business, we must continue to prioritize communication, using tools which speak to every level. With Gen Z, I foresee the major challenge being the ability to keep up with what motivates them, in order to engage them. Many companies will want them to fit into their pre-determined mould of what an “engaged” employee looks like. However, for Gen Z, m o t i v a tions can change almost daily, depending on various factors such as the state of the company, the environment, business levels and current affairs. To overcome this challenge, we must find the spark of innovation to keep Gen Z’ers delivering what we want and to stay on top.

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The greatest opportunity presented to us is the chance to realize what we can and cannot change, and then to work with our people to align them toward the common goal, while allowing them to be themselves. Steve Rockey, previously head of people for restaurant chain, Byron, now HR consultant to the service sector The major impact Gen Z will have is to force businesses to change the way they use technology within the organization. It is most likely that learning and development will adapt first, so that online content is available all the time in quick and easy, digestible segments. E-learning also needs to take a massive leap

“Every business should have a ministry of culture” Steve Rockey

forward in order to be fun and engaging rather than just compliance-based, as it is at the moment. So, certainly, more businesses will look to gamification specialists to understand how they can use this style of learning effectively. Communication is another area in which Gen Z will have an impact. There will need to be a constant stream of updates and information as silence won’t be tolerated. It might not be relevant to Gen Z’ers specifically, but it’s about providing them with a choice, whether or not to read information and take it on board,. Finally, the concept of “the office” will be called into question, more so than it is at the moment. Will you really need a physical office or just offer an online space in which to communicate, see one another and share ideas and information? In my view, a multigenerational business will still need a physical presence in order to meet the needs of everyone; yet small businesses will be the champions of the “business bedroom”. Gen Z will need to be managed remotely. These are not office types, they don’t want pre-meeting meetings nor a typical annual appraisal. They want instant and ongoing dialogue with their leaders about performance, recognition and constructive feedback. Tools like instant messaging, Skype and FaceTime will thrive within this generation – it’s how they interact with friends and family – although they’ll still appreciate some face-to-face interaction scheduled in their week. The entrepreneurial side of business will benefit from Gen Z’s free-thinking and multiple ideas downloaded from around the world in an instant. They will have to be given lots of room to grow and self-develop, and will not respond to command and control. Therefore, they will look to a leader who can let them run with an idea, delegate freely and give them sole responsibility for achievement. I see it as an enhancement, not

Dialogue | Dec 2014/Feb 2015


a distraction from work. If you want or need something, then someone, somewhere will know more about it than you. IT and social media will connect you to these people quickly and easily. It is the new enabler, the step-up from organized networking meetings. The massive look-out is business culture. While it’s vital to allow people to be remote, autonomous and freethinking, it cannot come at the cost of culture. Businesses will need to work harder at building their culture; sticking five values on a wall or having a manager running morning shift briefs based on the “value of the day” will be long gone. Without trying to generalize too much (as not all Gen Z’ers have this issue), “the eight-second attention span” could potentially be a problem and a negative element of their inputs. When various generations work together, losing interest after eight seconds can be perceived as being rude, disrespectful and certainly not sufficient time in which to discuss an issue properly. And so, in my opinion, this will be where conflict occurs between the groups. To overcome this, balance needs to be found. For example, at times when they are required to be engaged in group work, those Gen Z’ers with eight-second attention spans will need to accept that they have to toe-the-line and interact. However, when it comes to their own work, it’s up to them to deliver as they see fit and be accountable for its completion by the deadline set. Entrepreneurial outlook is the main benefit that four generations bring to the workplace, as free-thinking and remote-working will create new ideas and new approaches to the way we do things within the business environment. There will be obvious social clashes with Gen X and Y who understand technology but don’t necessarily want to “live it” and are happy to meet, discuss issues in person and crave the more social side of work. Strangely, I see Gen Z and the Baby Boomers getting on better – with

Dialogue | Dec 2014/Feb 2015

each respecting the experience and knowledge the other possesses and being keen to share through reverse-mentoring. Business culture becomes an important element because when you have different generations co-existing, working in very different ways, they need to be working toward a common purpose, goal

“We need the generations to develop a symbiotic relationship” Adela Giral

and reason for being. Culture is that unifying gold dust and without it, you are just a place in which to work. Therefore, every business should have a “ministry of culture” to keep track of culture and to unify the different segments; perhaps this will be the role of the “people teams” of the future. Adela Giral, HR director, Microsoft, Mexico Gen Y has been a challenging generation to integrate into the workforce, wanting to be heard and continuously developed. I think the impact of Gen Z (or the IT generation) will be a

completely new way of working. This new generation will work using a range of different devices and it is very socially-dependent. Gen Z’ers will use crowdsourcing to generate new ideas and validate their marketing principles, and they will be much more driven to train and develop themselves than were their predecessors. This group of people definitely cannot be managed under a traditional “command and control” structure. Gen Z’ers need to be given “self affiliation” projects, where they, as employees, choose the projects in which they want to participate. Some futurologists predict that, in the coming years, businesses will even reach a point at which employees will be able to select their own managers. So managers will need to have a positive reputation and their own distinct “brand” as a leader to ensure that people want to work with them. Generation Z’s facility with IT and social media will enhance the business pace because these people are “digital natives” and do not need to “learn” how to work using social media – they know when and where to use it and, importantly, where it really adds value. However, they will no longer use email, so organizations had better adapt the workplace to allow for different vehicles of communication such as Yammer, Facebook and so on. Employers can help address Gen Z’s “eight-second attention span” with improved communication that is designed around this time-span. This could incorporate training based on bite-sized pieces of learning and interactivity; gamification could be used in training, so staff could re-ignite their attention with every chapter, as they would do in video games. With four generations in the workplace, the major challenge is adaptability; leaders need to foster greater adaptability to enable these generations to work together. We need the generations to develop a symbiotic relationship, in which they take advantage of one another’s skills and thrive because of their individual characteristics and in spite of their differences.

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SPONSORED FEATURE

Does your DNA make you a game Changer? Nathan Ott, CEO of business insight and executive search firm eg.1, speaks to David Woods about the results of exclusive research into the qualities of the Game Changer in business and what differentiates these individuals from other leaders

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eadership; talent; high potentials; talent pools; pipelines; “people are our greatest asset”… You’ll no doubt have heard this terminology many times before. Over the past 25 years, as people strategy has grown from humble origins to fuelling the engine of the modern economy, business leaders have become increasingly concerned about “talent”. But is it time to cut through the rhetoric? In the 21st century workplace, there is a distinction between “talent”, “future leaders”, “impact makers” and the “Game Changers”. Game Changers are the people unafraid to lift their heads above the

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Passion is temporary, but obsession is constant parapet; to make important decisions; take calculated risks; do things differently; go against the current; and leave a lasting footprint on their business. These are the people who will shake up the business world and enable organizations to thrive in a complex environment. These are the people who will guide organizations and brands from

monotony and uncertainty to success and sustainability. Now is the time for guts and goals. But not every CEO (or leader) is a Game Changer. Many of our business elite run perfectly healthy organizations, but don’t have this “star quality”. Is there something in the DNA of a Game Changer that differentiates them from the crowd or is there a dynamic that can be learned and nurtured but that business courses are failing to teach? Dialogue partnered with business insight and executive search firm eg.1 to carry out ground-breaking research in order to get inside the mind of the Game Changer and shed light on how they differ from other leaders or high potentials.

Dialogue | Dec 2014/Feb 2015


SPONSORED FEATURE

What is a game changer? “Game Changers are able to see business opportunities that others cannot. A great example of a game changer is Warren Buffett, who saw the business opportunity in buying up the railroad stock when everyone thought he was mad at the time. He saw the opportunity, in advance of connecting America by rail, so that the emerging gas finds could be transported across the US. He is now making huge profits as a result.” (Atul Mehta, vice-president at Sapient Global Technologies)

“They are ambitious – they want to be the best.” (Stephanie Hottenhuis, executive board member at Arcadis)

“They are motivated by their desire to be world-class.” (Ashok Vaswani, CEO of personal and corporate banking at Barclays)

“They would do the job even if they did not get paid for it.” (Patrick Butcher, group finance director at Network Rail)

“I often get asked to name my top Game Changer and a debate always ensues. However, Walt Disney is always near the top of the list.” (Nathan Ott, CEO, eg.1)

“They are superb performers in front of an audience – they will be very clear in what they want to say, and they enjoy showing off.” (Chris Tattersall, partner, global financial services, Grant Thornton UK)

Methodology The study was completed in two phases: a qualitative study and quantitative research. The qualitative research set out to identify the key behaviours of a Game Changer and to discern how their behaviours, personal attributes and motivations differ to that of a “leader” or “impact player” (those who make an impact by being good at their job). The Repertory Grid Technique was used along with a structured interview process, motivated by Kelly’s Personal Construct Theory. The Repertory Grid enabled participants in the study to consider differences between complex pieces of data; in this case, they were asked to give three examples of impact players, leaders and Game Changers, and then to compare and contrast them. This establishes data and follows a complex algorithm. Kelly’s theory is then applied to this, leading to identification of 10 constructs or behaviours associated with a Game Changer. The behaviour of more than 150

Dialogue | Dec 2014/Feb 2015

Game Changers, impact players and leaders was investigated through interviews, carried out by a PhD researcher, with C-level executives (including Barclays, Network Rail, Novartis and Grant Thornton). The top 10 behaviours of the Game Changer were identified, and the extent to which these behaviours differed from those of leaders or impact players was ascertained. This study was followed by an online survey of 242 respondents, 54% of whom were business owners or board directors, with the remainder in middle or junior management positions. The qualitative study was global, with 46% of respondents based in the UK; 24% in North America including Mexico; 13% in mainland Europe; 9% in Africa; 4% in Asia; 4% in South America; and approximately 1% each in the Middle East and Australasia. All industry sectors were represented in the survey.

The qualitative results The qualitative sample of respondents was asked to identify the top 10

behaviours of a Game Changer, as highlighted below: ●● Big picture thinkers ●● Very strategic ●● High on vigour/high energy ●● Creative ideas generators ●● Likeable ●● Ambitious with an obsessive drive to win ●● Risk-taker ●● Very good at influencing people (above and below) ●● Very good at articulating a vision ●● Passionate about their ideas Those characteristics or behaviours marked in bold are the areas in which Game Changers differ most in their ways of working from other leaders. Nathan Ott, CEO of eg.1, elaborates: “Compared to the traditional leader, the Game Changer has the opportunity to be more of a risk-taker. “Traditional leaders are more risk averse, but Game Changers have greater self-confidence, paired with less ego. They have a survival instinct that gives them confidence to take on a challenge. They are not so worried about failure or their status. Rejection can positively fuel them rather than demotivate them – they can take a positive from it and do better next time. They will not fall off

Can a member of staff be developed to think like a Game Changer?

7%

33%

61% l Yes l No l Don’t know

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SPONSORED FEATURE

How far do you agree with the following statements? Strongly Disagree

Disagree

Neither Agree nor Disagree

Agree

Strongly Agree

The majority of Game Changers are in senior positions

17%

40%

22%

19%

2%

The majority of Game Changers are Generation X

6%

43%

24%

24%

3%

The majority of Game Changers are Generation Y

5%

34%

32%

24%

5%

The majority of Game Changers are Baby Boomers

14%

49%

25%

10%

1%

The majority of Game Changers are male

9%

24%

30%

33%

4%

The majority of Game Changers are female

9%

48%

37%

4%

2%

their course. Game Changers are not so concerned about climbing the corporate ladder or saving face.” More specifically, the qualitative findings reveal: 1. Game Changers have a genuine belief in their idea – they will not be knocked off-course until they are able to make a difference. 2. Game Changers do not tend to be pushing for their own personal gain; quite simply, they have a belief and need to make a change and pursue an idea for the greater good of their organization. 3. Research suggests the Game Changer is about the power of the idea; the leader is about the power of the individual. Ott adds: “The strategic perspective is the one that comes through most. Game Changers tend to see the world in slow motion – so to use a sporting analogy, they see the big picture and they can see the ball coming towards them in slow motion before anyone else does, so that they can predict what action needs to be taken, giving them

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Game changers are more than entrepreneurs time to react. The same is true for a Game Changer in the corporate world – they predict situations before others and make decisions accordingly. “They are extremely focused and their energy is derived from obsession. Traditional leaders are focused on steering the ship – but for a Game Changer, their obsession is the last thing they think about at night and the first thing they think about in the morning. “Passion is created more easily and is temporary. Obsession is innate and will see the Game Changer through thick and thin.”

The quantitative results The quantitative questionnaire was designed to ascertain the areas in which Game Changers – as defined by

respondents in the qualitative study – impacted on business. When asked to define the most important characteristics of Game Changers, the top answers were: very focused and driven (32%); high selfconfidence (25%); and strong ethics and passion (20%). “These findings inextricably connect to the qualitative findings,” explains Ott. “The focus and drive correlate to Game Changers’ obsession.” True to the form outlined in the qualitative study, more than half of the quantitative study (56%) rated creativity and innovation as being one of the top areas in which Game Changers add the most value to the business, followed by instigating change (39%) and strategic thinking (36%). And when asked where in the business Game Changers were to be found, a significant 58% disagreed they were in the higher echelons of senior leadership, while just under 30% agreed Game Changers were in the Generation Y bracket – the most recent age demographic to enter the workplace.

Dialogue | Dec 2014/Feb 2015


SPONSORED FEATURE

What percentage of people in your organization do you believe are Game Changers?

0 31-50 21-30

12-20

51-75

5% 5%

More than 75%

4%

3%

5%

11%

46%

1-5

21% 6-11

32% 25% 19% 13% 7%

4% Magnetic personality / likeable

Makes decisions easily / quickly

Thrives in adversity / conflict

Strong ethics / passionate

High self-confidence / high self-belief

Dialogue | Dec 2014/Feb 2015

What is the most important characteristic of a Game Changer?

Very focused / driven

Ott comments: “A Game Changer can be found anywhere in an organization, at every level, in any role. The pity is they are too often overlooked. “Game Changers supersede generational and diversity issues and they are more than entrepreneurs.” Nonetheless, the sample of respondents was undecided about the gender of the Game Changer, with a mere 6% agreeing most Game Changers are women compared to more than a third (37%) agreeing most Game Changers are men. “I find this quite unsettling,” says Ott. “It goes back to some of the typical male/female challenges within organizations, where a man is more likely to go into an interview and talk about the “great things” he has done, while a woman – stereotypically – will list the things she hasn’t done. “I wonder if this finding serves to illustrate that Game Changers are less visible in a traditional corporate structure if they are women.” Respondents were in agreement about the development of Game Changers, with almost two-thirds (61%)

stating their belief that staff members could be developed to think like a Game Changer. “There is a belief that all leaders can be developed,” says Ott. “You can’t teach someone to be obsessive. You can’t teach someone to take risks. I think that someone can be developed to be a leader – but you can’t teach a person to be a Game Changer. “Game Changers, though, sometimes have the potential within them and need support to help release this.” According to the findings, however, respondents in smaller organizations were less likely to believe that Game Changers could be developed than were their counterparts in larger organizations. But a whopping 84% of the whole sample believe people in junior roles in business could change the game in their company without having to be put in a senior management position. “This study proves that, regardless of whether you are old, young, male or female, you can be a Game

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SPONSORED FEATURE

5% of the people in their organizations were Game Changers, compared with just 3% who believed more than three-quarters of their colleagues were Game Changers. This is despite the fact that almost two-thirds of respondents (63%) deemed themselves to be Game Changers. “This goes back to why we wanted to carry out this research,” says Ott. “We want to find people who offer something that’s a bit different. Everyone knows what a Game Changer is, but no one can describe it. “Therefore, we all naturally believe that we are the Game Changers because that is something very personal to us.”

Do you believe you are a Game Changer?

37%

63% l Yes l No

Conclusions

Changer in any walk of life,” says Ott. “This is a powerful story. But it is a question of unlocking the potential of Game Changers, rather than teaching them.” Having said that, almost half of respondents (47%) thought less than

The findings reveal that fresh skills and attributes are needed in business and the Game Changers will be those people who come up with ideas, take calculated risks, learn and grow stronger from negative feedback, and put the needs of the business before their own personal career trajectory.

Ott concludes: “The talent that is needed to drive organizations forward is going to have to be fundamentally different over the next 10 years and there is a strong need for organizations to have individuals with core technical skills, but also people skills, business skills and commercial skills combined. They will need to create followership and move organizations. “The Game Changers of the future understand the core of the business, but look at it slightly differently, with a slightly different personality. They will thrive in the increasingly fluid global economy, but, more importantly, take people with them. “We still need leaders to steer the business – they will deal with complexities that Game Changers don’t have to manage. The leader is the manager of the football team, but the Game Changer is that obsessive and selfless captain who will take the team through. “They are rare, but the Game Changers are the people who will take our organizations forward, providing we give them the freedom to operate.”

Where do you think Game Changers add the most value to business?

56%

39%

36% 30% 29% 21%

9%

6% Driving through processes

Making decisions easily

Strong ethics

Taking a global perspective

Driving through results

Starting new projects

Excelling in tough times

Driving growth

Taking people with them

Strategic thinking

Instigating change

Creativity & innovation

56

16% 15% 14% 13%

Dialogue | Dec 2014/Feb 2015


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 andrew.mueller@lidpublishing.com Europe and South America jeanne.bracken@lideditorial.com UK and rest of the world niki.mullin@lidpublishing.com


interview

Driving growth in an emerging market Top female business leader Gabriela Hernรกndez Cardoso talks to David Woods about her role as general counsel for GE Latin America, the importance of career-long learning and the need to be creative and collaborative in a volatile marketplace Illustration: LEONA PEARSON

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Dialogue | Dec 2014/Feb 2015


interview

G

abriela Hernández Cardoso was ranked the fourth most powerful woman in Mexico in 2013 by Expansion magazine. She was also placed number four in 2012, up from five in 2011. At that time, she was president and CEO of GE (General Electric) in the country, an employer rated 46th most powerful company in Mexico by the same publication – but she’s modest. “The rankings are peculiar,” she laughs. “I’m sure there are women in the country much more powerful than me.” Her Forbes rankings for “most powerful woman in Mexico” (at number eight in 2013 and number seven this year) would seem to refute this. And the facts speak for themselves. During Hernández’s tenure as CEO, the company’s business grew by 25% in Mexico. And since becoming general counsel of GE across the entire region of Latin America in July 2013, she has continued to reinforce the compliance and legal culture of the company, creating a strong team and driving simplification in this area, supporting the development of the region to achieve record revenues of $10 billion by the end of this year. But Dialogue was keen to find out more about the woman behind the rankings and the leader behind the brand. How have you progressed to where you are today? There is no magic wand. You have to be able to say to yourself: “I want to do this.” It’s about working hard; it’s about working long hours. But, most importantly, it’s about being passionate about what you do – because that makes it easy, it gives a purpose, a sense to what you do. Success is a formula of hard work and loving what you do. You have to think about what you’re doing it for. Not everyone has had the opportunities and education I have had. Working hard and contributing is giving something back. There are great projects and disastrous projects; great meetings and lousy meetings. But it is what it is – there is no such thing as a free lunch, so work has to be a compromise.

Dialogue | Dec 2014/Feb 2015

What challenges have you faced in your career and how, as a leader, have you overcome them? There are many challenges in business and we get through them. But I think you have failed a challenge if you don’t learn anything from it. Reflection is the hardest challenge. You need to think about what you did right, what you did wrong and how you can move forward, how to improve. There are many things we, as individuals, can’t do or can’t change and the world is a volatile place. But after every hurdle, you need to think “what does that mean?” or “what could I change next time?” Nothing stays still, so we need to know how to switch our strategies as change and challenges arise.

During appraisals with my team, I asked them what they thought of my leadership style” The same is completely true in government leadership or in society. There is a constantly-moving external agenda around us and we can’t change this. A lot of the success of leaders is about resilience; you need to remember what you want and what you’re fighting for and keep focused on the priorities. So do you think resilience is the key to executing strategies? Resilience is about being able to push through boundaries, but also being able to change a plan to achieve something. But this is just one part of good leadership. Leaders also need to be able to listen – not just hear, but listen to their staff, colleagues and peers. They need to be able to read between the lines

and while being resilient, remember not to be stubborn – be humble. So what do you believe is the secret of great leadership? Leadership is something very personal and individual. The most important aspect is to be authentic, be true to your values and your strengths, identify your areas of opportunity and tackle them. Let me give you an example: I love watching my children (aged nine and seven) taking part in soccer matches. But while I watch, I can identify the children who are the leaders in the team and in the group; people follow them for different reasons. So what is leadership? Why are there even leaders? I think there are common traits, but also very individual traits. Each leader brings his or her own ingredients. They learn how to be different and they apply their individual seals. Leaders grow and change – I do things completely differently to how I used to when I worked in government. I was a different leader then. I have changed – I value learning more, for example. It would be a better world if everyone listened – but they don’t. Some leaders think they are in that position because they “can do things better” and that leads to over-confidence. Leaders have to be able to maintain balance and be humble. This is the real dilemma of a leader – it’s easy to have the title and that makes you believe you know it all. I speak at women’s groups and I tell them: “I’m the same as you. If I can do it, you can.” As humans, we need leaders because this is a part of our survival. But that doesn’t make them superhuman. We need leaders – not gods. I know I can lead, but that, by itself, doesn’t make me a better person. I know I have to keep learning and must not lose perspective. Tell me about the economic situation in Mexico? Since the signing of the North America Free trade Agreement (NAFTA) [between the US, Canada and Mexico in 1994, eliminating quantitative restrictions

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interview

Gabriela Hernández Cardoso Gabriela Hernández Cardoso was named general counsel for GE Latin America in July, 2013. Prior to this, she was president and CEO of GE (General Electric) Mexico from 2010 to 2013, responsible for the operations and business growth of GE in the country. Before joining GE, Hernández served in both the public and private sector. In the Mexican government, she worked for the negotiating team of the North America Free Trade Agreement (NAFTA). She also worked at the Federal Consumer Protection Agency as underattorney; in the Ministry of Communications and Transportation, she was general director of telecommunications and under-secretary of communications. In the private sector, Hernández worked in corporate law and international trade for global companies such as Motorola and Tellabs Inc Mexico. She has also taught modules about foreign trade and law in public and private institutions. She holds a Bachelor of Laws degree from Escuela Libre de Derecho as well as postgraduate qualifications from the same institution.

Resilience helped us get through the economic crash of 2008 when more mature markets suffered and duties in the region to create the world’s largest free trade area, linking 450 million people producing $17 trillion worth of goods and services], we have been brought together and made stronger. This agreement, of course, created rules and institutions such as The Bank of Mexico. Since then, Mexico has developed well. Our society is working towards maturity and we’re on the right path. We have a strong industry and energy reform looks set to enhance our oil and gas sector in 2015. We started our growth journey earlier than many markets and we paid the price then – even a strong

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economy can go through turbulence and that takes resilience, but we have developed that. This helped us get through the economic crash of 2008 when more mature markets suffered – we’ve been through it all. I know it’s virtually impossible to predict the future, but experts have suggested the “boom and bust” cycle has ended, the global economy is entering a period of continued volatility and this uncertainty will become the “new normal” for business. Do you feel optimistic given this prediction? I feel optimistic – but there will always be cycles of boom and bust. I think we, as leaders, need to think about the wider picture. The economy can’t be strong all the time, but leaders have to be able to minimize the impact the lows have on us. Experts ask why we didn’t see the last recession coming. We didn’t see it, because we didn’t want to: we were having too much of a good time! But the recession brought a wonderful sense of perspective because we are now able to see the gap between wealthy and developing countries, and the concentration of wealth in

societies and can start to bridge it. We are reinventing our focus and moving in the right direction and we will get there. But what do you think are the major risks that threaten global leaders? Leaders need to understand the societies they are operating in; they need to follow social media; and they need to use this information to understand risk. Natural disasters present serious risks for businesses – volcanoes, global warming, and water scarcity will all have massive implications. Social media is a game changer, because it is communication without borders. We don’t know where people are tweeting from and the change is happening all around us. Innovation is happening in real time everywhere and not only in labs or formal office places. Business needs to embrace technology, communication and innovation in order to stay competitive. The challenges will not always be clearly identified; in a virtual world that moves faster than the speed-of-light, you need to be resilient and flexible at the same time. GE sponsors a global study called Innovation Barometer and some of its conclusions this year are enlightening: l Collaboration is now mainstream. The risk associated with the lack of intellectual property (IP) protection was a prime concern of executives last year, leaving just 38% wanting to increase collaborative efforts; this year 77% believe that risk is worth taking and, at the same time, two-thirds of those who collaborate have seen associated revenue grow as a result. l On the other hand, executives believe that efficient and successful innovation hinges on three factors; one of them is “quickly adopting emerging technologies” (with 67% of mentions). So, what lessons do you think growth markets can teach more developed economies? The traditional engines of growth such as the US and EU are not the only

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ones any more. Growth is coming in emerging economies. This is going to continue and the role of developed and mature economies will be to help these markets grow. We are all learning how to do business in emerging countries in Africa, Asia and Latin America, and we’re learning about new ways of running our organizations. These markets may leap-frog the rest of us and this, for me, is exciting. Having said that, the world has never looked as volatile as it does today. It’s completely different to how it was 100, 50 or even 20 years ago and this massive change is shocking. That brings me to my next point – how does “Generation Z” fit into this brave new global economy? With the scale of change taking place – I don’t know how a child can relate to a grandparent anymore, because their generations have seen completely different worlds. My grandparents were concerned about getting on a plane and my children are talking to me, excitedly, about space travel. It’s a very interesting time. But this goes back to my point that we have to keep on learning: we need to learn from Generation Z what it is they want. When I was 20, I would never have asked an employer about the option of having yoga classes at work – but a member of Generation Z might do. They will always be asking “what’s in it for me?” What can older generations learn from that? Well, life’s hard and yoga’s wonderful! These are creative, entrepreneurial individuals, familiar with the idea of businesses that are innovative, that have crowdfunded

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Social media is a game-changer because it is communication without borders or devised original social media solutions. Is it possible for a global super-corporate like GE to be “entrepreneurial” or is it too easy for such organizations to become bogged-down by bureaucracy? It is possible to be creative in a big company. At GE, we cut out bureaucracy. This is a massive transformation and it takes a great leader like Jeff [Immelt, CEO of GE since Jack Welch retired in 2011] to get us there. Jeff is working a lot on the culture of

simplification and we’re moving in the right direction. The company was born out of the invention of the light bulb after all. We are working to be lean, simple and creative. You’ve talked about the need for leaders to keep learning, but do you think it’s equally important to develop this zest for learning in your teams? How do you ensure staff are always learning and developing? In my experience, it’s about being a role model, listening to staff, learning from them and being an inspiration to them. It is critical to establish the strategy and goals with the team’s input, to steer direction and set clear expectations. My best bosses have been inspirational to me. I hate being micro-managed, but I work best when I feel inspired. I’ve been lucky to have some marvellous bosses, who have been inspirational and they have set the standard for me. It’s important for leaders to work out the needs of staff. You need to know your team and how they want to work. You need to give your team space to do what they want because it’s wonderful when they’re excited about what they’re working on. It is time-consuming for leaders to observe their staff and receive feedback – but it is a worthwhile and interesting exercise. During appraisals with my team, I asked them what they thought about me and my leadership style; it was a challenge and, broadly speaking, it was a really thoughtful exercise for me, because I really wanted to know how to improve. As a final point, what would your advice be to yourself 20 years ago? I would tell myself to be mindful that I am a role model to others. I would tell myself to be an inspiration to others and fight for what I really want. Today, I want to be an inspirational leader, and I want to care and connect, to make the journey exciting and worthwhile for others. It’s hard and it takes practice. Sometimes I forget this and my demons emerge… Then I just start again.

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Discovery-based leadership development In a social age, leaders must move away from fitting individual development to external standards, so they can undertake personal journeys of discovery and growth, write Sudhanshu Palsule and Frank Guglielmo Illustration: IKON/Sam Falconer

+ WATCH THE VIDEO Click here to watch Sudhanshu Palsule’s video on Self Leadership

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icture the scene in a simulation exercise called “dangerous opportunities” on an executive education programme, with senior leaders from a top pharmaceutical company. The leaders are in an “immersion room”, being confronted by an actor, posing as a journalist. He is making allegations regarding their company about which he plans to write. When asked for a response, one of the leaders reacts sharply and embarks on a lengthy explanation about how he will take the matter to the executive committee, followed by the company council and the in-house legal department, to formulate an appropriate response. While we should bear in mind that this is a simulation exercise, the individual’s reaction is based on several assumptions: one, that the situation will remain static while he undertakes the steps he has described; two, that reverting to the hierarchy is the appropriate way of going forward; and three, that the journalist is on the “other side of the camp” and must be confronted by an approach of distrust and suspicion.

The social age The problem with the approach described above is that it is out of touch with an environment in which communication happens instantaneously, information is created socially, multiple constituencies are joined together by social networks and where everyone (figuratively) carries a megaphone. We call this new reality the social age and it is already starting to pose a challenge

Standards set

to the static and insular world view that has shaped our routines and behaviours at work, our interactions with the external world and even the structure of our organizations. The impact of the Social Age on how we lead our organizations is huge.

Authenticity, passion and purpose trumped most other leadership capabilities Any leader who wants to remain relevant in the Social Age has to pay close attention to the following: ●● Globally-connected networks and continuous disruption ●● Information being increasingly produced and consumed socially ●● Frictionless communication leading to unparalleled transparency Our organizations are under increasing scrutiny from employees, stakeholders and customers who possess three unprecedented resources: ubiquitous access to social information; an expectation that they can engage anyone in conversation; and availability of cheap and fast communication that allows them to react to events in real time.

Assessment against standard

Gap priorities identified

What impact does the social age have on the way leaders have to turn up and lead? In our research for the book, The Social Leader, we found that authenticity, passion and purpose trumped most other leadership capabilities. The problem is that the way we develop our leaders in most organizations is not designed to grow authenticity, passion and purpose. Much leadership development is still stuck in a prototypical mechanism of retrofitting individual development to an external standard. We find this is becoming outdated.

Prototypical approach to leadership development Consider the following prototypical process for ensuring an adequate pipeline of leaders. The emphasis relies heavily on the concept of assessment. The process typically begins with the establishment of a standard, frequently through the creation of a “leadership competency model”. This model is often developed using interviews with senior executives. At its worst, it is simply bought off the shelf. An assessment process is then used to compare individuals against the competency model. From these assessments, a “gap” between the individual and the standard is identified and “development priorities” created. These are used by the individual to create a development plan, and by talent development departments to direct and justify various leadershiptraining programmes. The individual is encouraged, assigned or required to engage in

Development activities to close gap

Figure 1. Leadership development in the social age

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activities intended to close the gap by introducing new skills or changing the person’s approach to various leadership situations, to be in line with the competency model. We have identified two significant challenges inherent in this approach to leadership development in the Social Age: the challenge of creating a fixed standard, and the challenge of authenticity. With respect to the challenge of creating a fixed standard, we find that competency approaches often rely on three assumptions that are rarely true in real life: ●● Assumption of constancy: the requirement that a static state exists for the role or job, i.e. the identified competencies do not evolve, or do so within a very limited tolerance ●● Assumption of normativity: the requirement that there is one best way to succeed at the job or role ●● Assumption of sufficiency: the requirement that all competencies are mastered and that no other actions on the part of the individual can compensate for deficiencies A more profound challenge is the challenge of authenticity. The implicit assumption is that improving an individual’s capacity to lead is based on

MINDFUL SEMINAL EXPERIENCES

changing or re-directing his or her behaviour. Unquestionably, an individual’s behaviour is the manifestation of their ability to lead. However, to us, helping a person acquire a new pattern of behaviour that is inconsistent with “who they are” as a person is not a recipe either for long-term success or personal fulfilment.

Once leaders have their personal narrative, it becomes the backbone of their development process With these two limitations in mind, we propose a discovery-based approach to helping leaders grow.

Discovery-based leadership growth The essential difference between the process of discovery and the

GROWTH INTENT

DISCOVERY THE PERSONAL NARRATIVE Figure 2. The personal narrative

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mechanics of “plugging a gap” is that the former sticks better. Discovery generates growth intent in a person, which leads to what we refer to as “mindful seminal experiences”. To “discover”, or to take the cover off a part of oneself that was hitherto closed to awareness, is a process of awakening, and of growing that part productively. Discovery manifests itself through a process that we call “the personal narrative”: the story and the lens through which we see ourselves. Leaders can learn to construct their narrative based on their own “discovery” and from the feedback they receive from others. Once they have their personal narrative, it becomes the backbone of their development process.

1. Discovery – the hero’s journey: All interesting narratives have a storyarc: we borrow one called “the hero’s journey” to help individuals understand their personal narrative. Joseph Campbell, in his book A Hero With A Thousand Faces, describes what he termed “the hero’s journey”. In Campbell’s view, the hero’s journey is the common structure that underlies almost all mythology from the stories of Osiris and Prometheus to Anakin and Luke Skywalker. In the hero’s journey, a hero is called to adventure, struggles with accepting this call, receives aid, meets with a series of trials, atones for his or her past, receives a great gift or power and returns home amid additional trials where he or she uses this new gift or power for the good of all. Campbell’s eloquent 17-stage model is too detailed for our purposes. We have created a six-part learning arc as follows: ●● Seminal situation: A significant or defining career event ●● Struggle: This seminal situation causes difficulties that have not been encountered before ●● Help: Someone or some event provides new skills, learning or insight to help overcome the struggle ●● Trial: The new skills, learning or insight are put to the test ●● Success: The leader overcomes

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leadership development

a set of obstacles and deals with success within the context of the current challenge ●● New state: The leader now has a new set of learning, skills or insight to apply broadly A seminal situation is one in which the leader confronts a problem with the following characteristics: ●● Novelty – the experience of being thrust suddenly into a situation that demands “mindfulness”. We find ourselves struggling at first just to understand the nature of the challenge and are even at a loss as to how to proceed. ●● Energy – seminal situations are deeply engaging in which we find ourselves struggling but motivated by the struggle. ●● Behaviour innovation – seminal situations are those in which the proper path is not laid out before us. We are required to walk it in our own way, innovating as we go. The individual struggles with new challenges that will not yield to their normal way of doing things. This opens the door to some person, some thing or some circumstance helping the individual expand their thinking about how to solve this challenge. The individual goes forward to resolve the problems inherent to this “seminal situation” by “trialling” new approaches. Based on their success in dealing with this situation, the expanded capabilities can be applied to a wider range of scenarios. This learning arc might occur over the course of a conversation, a day, a project or many years. The figure above outlines the learning arc. By looking across the learning arc from a number of different seminal situations, it becomes possible to “dis-cover” a pattern – the themes of a leader’s personal narrative. These themes are even more apparent when multiple people describe the same story arcs from their own vantage o point – perhaps in a set of 360 interviews. These themes demonstrate where the leader has been most productive and where he or she has been non-productive.

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Figure 3. The Social Leader Learning Arc

1. Seminal Situation:

6. Now in many new situations I am able to:

2. I struggle with:

5. I succeeded in overcoming this trial by:

3. I was helped by:

4. The main obstacle trialling my abilities was:

The tenets of social leadership Uncovering themes from these learning arcs is easier when the stories from a leader’s personal narrative can be placed in a framework. We suggest the following framework: ●● Mindfulness – the capability to maintain and act on four types of awareness: temporal, situational, peripheral and self ●● Proactivity – the belief that one is in control of one’s own actions and seeing oneself as able to influence events rather than being dragged along by them ●● Authenticity – engendering in others a belief in your own credibility; the ability to build personal trust in a relationship and confront disagreement and

competing points of view positively ●● Openness to learning, growth and ambiguity – the capacity to act, thrive and learn from situations that are complex, novel and ambiguous ●● Social scalability – fluidly communicating separately and jointly to one individual, a small group and the entire organization

2. Growth intent Growth intent refers to the purposeful decision on the part of the individual to take action that enhances their productive capabilities and diminishes the nonproductive conversations, actions and behaviours in which they characteristically engage. In the prototypical development approach, the intent is inherent in the activity of prioritizing the gaps between the individual’s capabilities and

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the external standard to which they are held up. But in the discovery-based process, where the primary criterion is success in addressing leadership challenges, and the standard is the individual’s own capabilities, growth intent needs to be explicit. The individual leader, as part of the growth process, purposefully and mindfully identifies the aspects of their own characteristic leadership approach that have made them productive in the past and have the opportunity to be extended or enhanced. Similarly, they intentionally identify the characteristic nonproductive conversations, actions and behaviours they will diminish.

3. Mindful seminal experiences Seminal situations are set up by significantly changing either the content, the context or the scope of a leader’s responsibility. And, by limiting the constraints on what they can do to succeed, ensuring there is something real at stake and making sure they will know if they are succeeding along the way. Mindful seminal experiences are those that the individual approaches with a learning mindset and an expectation of growth and change.

engage in to overcome challenges along the way ●● Success: What did I do that was productive? Unproductive? Why? ●● Expand: How can I take what I successfully did in this situation and use it now in other situations. What are those situations?

Trialling fresh approaches Seminal situations are defined, in part, by the need for “behaviour innovation” – having conversations, taking actions and using behaviours that are not normally within your comfort zone. Leaders begin to consider alternative conversations, actions and behaviours that can be used authentically to compensate for the past lack of success in this situation. The next stage is to monitor success.

The standards companies can and should set are outcome standards

Creating mindful seminal experiences We now introduce a few changes to this learning arc map to turn it into a proactive growth tool. Have a look at the learning arc on page 65.

Prospective learning arc ●● Seminal situation: What significant situations can I involve myself in? ●● Struggle: For me, what will be the main leadership challenge(s) in this situation? ●● Help: Where will I find help? What productive theme will I use that I may not previously have contemplated in this type of situation; what unproductive themes will I avoid? What assistance will I need and from where will it come? ●● Trial: The purposeful conversations, actions and behaviours I will

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Succeeding This is about feedback, plain and simple. There are four critical questions to be asking along the way: “what did I do?”; “how were my actions perceived,?”; “did I accomplish my immediate goal?”; and “what were the ramifications of my actions?” The answers to these questions should lead to continuing or adjusting the types of conversations, actions and behaviours in which you are engaged.

Expansion With the recognition of the conversations, actions and behaviours (CABs) that have proved effective and the patterns within a situation that make these CABs relevant, this productive

approach can now be expanded to many new situations.

But once again, aren’t standards important? We began this article by suggesting that external standards of leadership are harming, rather than helping, develop leaders in the Social Age. In a recent conversation, the head of talent development for a large cloud computing company in the US city of Palo Alto forcefully – and correctly – noted that organization context is critical and impossible to ignore when considering leaders and leadership development. Of course we agree. The issue is not about standards per se, but what the standards are about. The standards that companies can and should set are outcome standards – the results they are expected to deliver, the challenges they are expected to address and the values they are expected to engender. These outcomes define an organization’s context and are quite legitimate and important standards against which to judge a leader’s success. The danger zone is trying to define how the leader should arrive at these outcomes. The idea that there is one ideal path, and that this is the path that has been walked by successful leaders in the past, is an idea that, perhaps, we need to move beyond. l Sudhanshu Palsule is an awardwinning educator and CEO, and Frank Guglielmo is managing director of Park Consulting. They are authors of The Social Leader: Redefining Leadership for the Complex Social Age further reading The Social Leader: Redefining Leadership for the Complex Social Age, Frank Guglielmo and Sudhanshu Palsule (2014). Bibliomotion Books + Media, Boston, MA The Hero With a Thousand Faces, Joseph Campbell, 3rd ed (2008), Novato, Calif, New World Library We strongly recommend reading either A Hero With A Thousand Faces or The Power of Myth to truly understand this powerful concept of “monomyth”

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The Ch i e f E x Is the ecutive place t o be fo O f ficers’ r learni ng, net C working lub with p eer s, and more!

Find Out More at: www.CEOClubs.org CEO Clubs International is the oldest and largest worldwide membership association of CEO’s. Headquartered in Manhattan, the 35 year old organization has chapters in Dallas, Boston, NYC, Baltimore, and Miami plus international chapters around the world. Members enjoy meetings at home and abroad at exquisite locations. We create a nurturing environment for CEO’s and business leaders dedicated to improving the quality and profitability of their life and enterprise through shared experience and personal growth.

The Club serves as an information resource for growing businesses. CEOs and entrepreneurs sharing ideas is a powerful remedy to combat challenges and economic turmoil. The CEO Club provides an outstanding opportunity to meet peers and exchange ideas while learning, having fun, making money and creating friendships. We invite you to attend future events, meet our members and let’s explore ways we can inspire each other and work together for greater personal and professional accomplishment.


SUSTAINABILITY

The sustainability juggernaut Instead of asking whether an organization can afford to act on its sustainability opportunities, Christopher Wedding asks: what is the cost of not acting?

+ read more Read Christopher Wedding’s article ‘Should you buy a green home?

Illustration: BEN TALLON

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SUSTAINABLITY

S

ustainability is one of the most used and least understood words in business today. It can mean many things. Or it can mean nothing. It often refers to goals that fall into four different categories: 1. Environment — for example, reducing greenhouse gas emissions, eliminating toxic substances 2. Society — for example, paying fair wages, investing in the community 3. Economic goals — for example, lowering operating costs, mitigating liability 4. Governance — for example, increasing transparency, balancing executive compensation But it can also be seen as an ambiguous buzzword, based on too much talk and too little substance. According to a 2013 MIT-BCG study of thousands of executives and managers across 118 countries, the leading sustainability issues include the health and wellbeing of employees, the community and customers; energy efficiency, pollution and waste management; and competitiveness, market pressure and revenue growth.

In this article I will address four aspects of sustainability in the corporate world: 1. What it is vs what it is not 2. Why it matters to stakeholders and shareholders 3. Challenges in progressing from vision to application 4. Best practices for execution and value creation

1. Sustainability is not about tree hugging Despite common perceptions, sustainability is not just about the environment, philanthropy or generating goodwill. Trust me: I say that in my capacity as a strategy and finance professional with a PhD focused on green real estate and clean energy, having spent most of the past 10 years in private equity and start-up investing. I have had hundreds of conversations about what sustainability is and what it is not. For any investment in a new project or company to have merit in this field, the business strategy has to be based on market differentiation, consumer preference, risk management, cost-savings

and related business benefits. Other research supports this perspective. Deloitte notes that corporate sustainability leaders are 400% more likely to be considered innovation leaders, and roughly 50% of corporate chief financial officers’ (CFOs) see a strong link between sustainability performance and financial performance. MIT and BCG have found that more than 50% of companies have changed their business models as a result of recent sustainability opportunities. Bain & Company has observed that most employees care more about integrating sustainability into business operations than taking the easier approach of donating to causes that matter to the organization. And Ceres’ research indicates that 53 of Fortune 100 companies reporting on climate and energy targets have saved $1.1 billion annually. In addition to these more concrete benefits, leadership in sustainability can indeed also build stronger brands. Executive interviews often indicate that improvement in corporate reputation may hold the most potential value in this context. As an example of the dollar

A 2012 Edelman survey of more than 8,000 people in multiple countries showed these results:

53%

said that a company’s social purpose is the most important factor for them, when quality and price are the same

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47%

43%

reported that they make purchases of causesupporting brands at least monthly

say they are willing to pay a premium for products associated with purpose

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A 2013 study by professors at the Harvard Business School and London Business School showed that an investment in companies that

voluntarily adopted corporate-level sustainability policies would have delivered almost

50%

greater returns between 1993 and 2009 compared to an investment in their peers following business as usual.

value of corporate brands, Millward Brown estimates that the value of the 100 strongest global brands exceeds $2.9 trillion.

2. Sustainability is not a passing fad, but instead a juggernaut Companies measure, manage and report on topics that they, their stakeholders and shareholders consider to be material. With that in mind, consider that 5,000 companies around the world, including 66% of the Fortune Global 500, publish annual sustainability or corporate responsibility reports, according to Ernst & Young and CorporateRegister.com. Why do they do this? Employees care about it. In an ever-changing and increasingly competitive global marketplace, talent is one of the most significant contributors to value creation. Executives at leading global organizations agree that the ability to attract and retain the best employees creates a major competitive advantage. In fact, this was part of the motivation for Bank of America’s chairman Ken Lewis to build its Tower at One Bryant Park in New York City as one of the greenest skyscrapers in the world. Market research by Bain & Company supports this perspective in noting that

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a company’s “nobler mission” (such as sustainability) is an important factor for 60% of employees and a powerful weapon in the war for talent. Customers think it is important An increasing number of customer surveys around the world seem to indicate the same thing: buyers of products and services prefer to engage with companies that pursue a mission higher and broader than profit motive alone. A 2012 Edelman survey of more than 8,000 people, in multiple countries, revealed these results: l 53% said that a company’s social purpose is the most important factor for them, when quality and price are the same l 47% reported that they make

Corporate sustainability leaders are 400% more likely to be considered innovation leaders

, companies world f o 00 5,0 nd the 66% bal o u aro uding e Gl ual incl ortun ann eF th , publish 500 ustainability s corporate or .com responsibility reportsRgister Y and

–E

Corporate

purchases of cause-supporting brands at least monthly l 43% said they were willing to pay a premium for products associated with purpose (word of caution: be wary of the difference between customer intentions and actions) Investors increasingly see the value it creates As in so many situations, the “golden rule” applies here too. But in this case, we are talking about a slight variation: the one with the gold makes the rules. The investment community is justifiably sceptical about most new business models. As fiduciaries entrusted to steward capital, their duty is to mitigate risk while seeking new opportunities. Accordingly, the task with regards to sustainability is to demonstrate its ability to improve profits, manage liabilities and deliver on its promises. In so doing, investors can bring the power of capital markets to shift business towards greater sustainability on a massive scale. Consider four examples of how this is happening now: l A 2013 study by professors at the Harvard Business School and London Business School showed that an investment in companies that voluntarily adopted corporate-level sustainability policies would have delivered almost 50% greater returns between 1993 and 2010 compared to an investment in their peers doing almost nothing with sustainability policies and programmes. l Research from 2012 by Deutsche Bank found that 85% of studies on the topic show that companies that demonstrate leadership and excellence in sustainability exhibit market-based and accountingbased financial outperformance of their peers over the medium term (three to five years) and long term (five to 10 years). l On behalf of 767 institutional investors representing an excess of $92 trillion in assets, the Carbon Disclosure Project (CDP) is a non-profit organization that surveys the world’s

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SUSTAINABILITY

largest companies regarding their carbon, energy and water footprints, risks and business opportunities. With this group of investors taking interest, the mere act of asking can be a powerful catalyst for change. l To date, 13 stock exchanges around the world have joined the Sustainable Stock Exchanges Initiative, which Forbes called one of the best sustainability ideas in the world, in order to require or begin asking companies to disclose the environmental and social risks that might affect their business.

3. It faces challenges in execution, despite thousands of lofty public commitments Make no mistake: more companies are making an ever-greater number of sustainability commitments today than in years past. As an example, Pivot Goals, an initiative of Winston Eco-Strategies, is currently tracking nearly 4,500 public goals by Fortune Global 500 companies. However, translating these goals into programmes and products that generate new revenue, reduce costs, mitigate risks or build brand has been difficult. Despite recognition of the major sustainability issues, and the belief that corporations should play a leadership role in addressing them,

1 in 12

Focus on business opportunities, not environmental problems most employees do not believe their organizations are doing what they should be doing. Barriers to implementing sustainability initiatives include competing priorities, short-term investment horizons, insufficient accountability, lack of personal financial incentives, difficulty in measuring the intangible benefits, inadequate engagement of supply chains, metrics that are disconnected from financial outcomes, internal misunderstanding of the benefits and poorlydefined goals.

4. It can be easier to implement; find out how Despite all these challenges, a set of best practices is emerging to help companies capitalize on

Only companies link executive remuneration to sustainability performance – United Nations Global Compact

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these opportunities. Focus, focus, focus. McKinsey & Company research suggests that corporate sustainability leaders concentrated on approximately five main priorities. In contrast, they found that most other companies spend resources on about 10 sustainability goals, and often the number was as high as 30. This shotgun approach is confusing, internally as well as externally. To illustrate this point, note that 70% of consumers do not understand the messages companies use to talk about their corporate social responsibility initiatives, according to 2013 Cone Communications/Echo Global CSR Study. Set specific and ambitious goals Only one in five S&P (Standard & Poor credit rating agency) 500 companies sets quantifiable, long-term sustainability goals, based on analysis by McKinsey & Company. Most importantly, these objectives need to be measurable, in order to assess progress along the way, and aggressive, in order to inspire teams to aim for something big and exciting. Use performance rather than prescriptive goals By only setting targets – for example, energy use reduction per year against a certain baseline – and allowing management teams in each facility to create their own sustainability action plans, instead of following a prescriptive top-down path, a larger portion of the company is empowered, vested and accountable for seeing those targets being met. Do not pigeonhole sustainability programmes and professionals Neither sustainability nor the teams engaged in identifying and capitalizing on the opportunities it presents should be narrowly focused. Sustainability must be a corporate-wide initiative that touches all departments. Luckily, many years ago, my doctoral adviser, Dr Douglas Crawford-Brown, also understood this and set me on the right path. He said:

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“The university is your department, but make a compelling case for what you are going to do with this knowledge.” Hence, study and practice in environmental management, city-planning and business strategy equipped me and similar hybrid professionals to speak “multiple languages” and be more effective team leaders. Create accountability and incentive alignment Where does the buck stop? And who cares? If too many people, or the wrong people, are charged with seeing a sustainability idea through from concept to profit and loss, its odds of success are greatly diminished. Moreover, most of these team members have mortgages to pay, college funds to seed and healthcare costs to manage. If they are rewarded financially, they have one more very important reason to succeed. Measure and communicate differently Communicate the financial impacts of sustainability. Build strong business cases. Educate the team about what is possible and how it will happen, step-by-step. Focus on business opportunities not environmental problems. Consider new metrics frameworks such as S/ GPR, put forth by David Lubin and Daniel Esty, which provides a method for companies to share data on their sustainability-driven (S) growth (G), productivity gains (P) and risk mitigation (R). In fact, it is this more rigorous way of communicating about sustainability that led us to create our own market intelligence company, g-bit. com. Quantitative trends and analysis make for much better pitches. Use creative financing alternatives Frequently, it is financial, not technological, innovation that serves as the game-changing catalyst to facilitate new product adoption. As an example, consider rooftop solar PV systems.

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Sustainability is not just about the environment, philanthropy or generating goodwill Often thought to be too expensive to make economic sense, now incentives in about a dozen US states, allow for third parties such as SolarCity or OneRoof Energy, to design, install, own and maintain these rooftop electricity generation assets. In doing so, the building owner agrees to pay these companies roughly 80% of their existing electricity bill. This means they start saving on their power bills

the first month, and the third party delivers strong financial returns to its investors, too. This clever innovation has captured about $10 billion of investor capital in just the past five years.

In summary Succeeding in sustainability requires us to be practical visionaries – simultaneously focused on the big picture, on what could be, on new models for generating profit, while also being action-orientated, concentrating on only a handful of priorities and speaking the language of finance to turn “maybes” into “yes’s”. So, instead of asking whether your organization can afford to act on its sustainability issues and opportunities, consider asking the opposite: what is the cost of not acting? l Dr Christopher Wedding is CEO of g-bit.com, a market intelligence company; CEO of IronOak Innovations, a strategy consultancy; and adjunct professor at Duke University and the University of North Carolina at Chapel Hill

The value of the 100 strongest global brands

tr $ eeds il 2.9 li o n exc

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global team effectiveness

Enhancing global teamworking

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global team effectiveness

Harnessing the potential of global project teams may involve investing in faceto-face, in-person meeting time to improve interactions between members and accelerate success, writes Katherine Schroeder Illustration: VALERO DOVAL

I

f your organization is global, in the process of globalizing or exploring a move in this direction, you may find that you, as a leader – and many of your employees – are suddenly part of global project teams. These global teams rarely develop through solid line organizational reporting relationships. Instead, most are spawned in the realm of cross-regional, crossfunctional ad hoc project teams. The formation of many of these teams is a bit like the birth of the Greek goddess Aphrodite, who apparently emerged from the primordial sea on an oyster shell – somewhat messy and a bit of a mystery, but packed with future potential and power. Instead of lamenting the difficult nature of global teams, have confidence that there are ways to ensure your global project team effectively navigates the choppy waters, harnesses the potential of its diverse members and successfully accomplishes its key deliverables.

The awkward nature of the global team Leaders and team members alike feel the impact of the complexities and challenges of the global team environment. When talking to global team members around the world, initial answers to the question “how is your team doing?” often focus on negative aspects rather than the positives. Tales of the difficulties overcoming language differences during an international teleconference call are cited in response to queries about the team’s productivity. The discomfort that arises from trying to reply to a question you did not fully understand on a WebEx is relayed during discussions about team progress. Consider this virtual teleconference scenario, which one global team member described recently: “The US and Canadian team members are

Dialogue | Dec 2014/Feb 2015

barely out of bed and attempting to consume enough caffeine to sound coherent about key issues as each of them dials into a conference call slightly before 6:30 am Central Standard Time. Meanwhile, their Japanese teammates are just back at the office for a call that begins in a few minutes at 9:30 pm, following dinner and coffee with colleagues in Tokyo. These team members are hoping that their European colleagues are able to get through the lunch line and eat a quick bite so they are not starving while on the call. The t-cons regularly take place at 12:30 pm GMT and the canteen opens at noon – giving them barely enough time to get through the lunch queue, eat something downstairs (hot meals aren’t allowed outside the canteen) and make it back to their offices to dial into the

Your team may be a global virtual team or a global hybrid team call. They are great sports about this inconvenience and always manage to dial in on time, but the team jokes that the Europeans have it harder than other members even though they are the ones in the middle of their day – especially since all the team members are hearty eaters! This difficulty is just one of many challenges global project teams face – and the meeting hasn’t even started.”

A matter of perspective The messy and circuitous nature of the global project team becomes

clearer when considering the experience of an executive asked to join an international team meeting. This senior executive’s daily work focuses solely on the Americas. She joined a global call to provide information about work happening in the US to a global team exploring similar issues. Her comment, following the call, shed light on perceptions and expectations around global teamwork. She summarized her experience by saying: “Wow! That was an agonizing meeting. We just went back and forth with each region explaining its perspectives and didn’t get anything done. If I had been in the room with my regional team, we would have discussed the issue for 25 minutes, made a decision, drawn up an action plan and moved forward.” But her experience was diametrically opposed to her American colleague’s perspective of the call. This colleague – a long-standing global team member and the person who had invited her to take part in the call – commented that a great deal of progress had been made as each region had been able to express its perspective, and greater mutual understanding was achieved. This team member added that “two steps forward, one step back, one step sideways” was the norm for a global team. In this case, perception is reality when it comes to a global project team. The implication for you as an executive and global team member is that changing expectations, not simply skill sets, is necessary to function effectively in this environment. Progress will be slower, but global understanding can, and must, increase. And while comments from colleagues may be “negative”, team members often speak of the satisfaction they feel as their team learns to navigate the global terrain and, as they begin to collaborate effectively, to progress toward a goal.

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CONDITIONS FOR UTILIZING A GLOBAL, HYBRID TEAM 1. The team has been tasked with a major deliverable that is critical to the suture success of the organization. 2. The team will exist for a longer period of time, approximately 18 months to three years.

Effective global team interaction & meeting rhythm

StRATEGY Aligned Globally

Support for STRUCTURE globally Effective Work Arounds to Non-Global SYSTEMS

GLOBAL WORKING BEHAVIOUR

Staff that is right mixture and has role clarity Team members have intention & SKILLS

Emergent shared values including commitment to outcome

Effective team LEADERSHIP STYLE

Figure 1. Model for accelerating global hybrid effectiveness

Stories shared with pride about overcoming cross-cultural challenges and achieving an important objective for an organization often follow tales of awkward moments. Whether team members view global team difficulties as draining problems or energizing challenges may depend on an individual’s ability to shift his or her lens and see circumstances from a different vantage point. It seems that global teams are tricky entities that must be finessed into a high-functioning mode. They are delicate and require extra attention and effort to ensure they successfully progress along what appears to be a disorganized, slow-moving and zigzagging path. However, if this is managed well, the power generated can be quite substantial.

The global hybrid team Your global team may be a global virtual team – with members working together to accomplish objectives who will never have a face-to-face,

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The study provided a fresh set of global working behaviours in-person meeting over the life of the team. Or your team might be a global hybrid team, using a hybrid approach of virtual working to a great degree, plus in-person working to a smaller degree. Most global hybrid teams use virtual interaction for the majority of their work together, but have intermittent face-to-face meetings. According to Maznevski and Chudoba (2000), global hybrid teams are groups that meet the following criteria: 1. They are identified by their organization and members as a team – they are not just an ad hoc collection of individuals solving a problem. 2. They are responsible for making

and/or implementing decisions important to the organization’s global strategy. 3. They regularly use a combination of technology-supported communication allowing faceto-face, in-person contact for a minimum of two-to-three days consecutively, once every three to 12 months. 4. They work and live in different countries, and often span

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global team effectiveness

multiple continents. Both global virtual teams and global hybrid teams are valid modes of global teamworking, so the issue is not which is the better option. Instead, the critical issue is making a sound decision about when to move from the less expensive global virtual team model to the more expensive global, hybrid team model. It appears that, in a cost-conscious age, some executives are making the wrong call and keeping too many teams in virtual mode. This may save money up front, but cause greater, indirect costs later.

Accelerating global hybrid team effectiveness In 2013, Schroeder, Sorensen and Yaeger published a model for accelerating global hybrid team effectiveness in Research in Organizational Change and Development (see figure 1). This model describes the ideal conditions for utilizing a global, hybrid team and the need for global working behaviours to support effective team functioning. A hybrid team approach is best when the team is tasked with a major deliverable, critical to the success of the organization. A purely virtual team is better suited to short-term projects (under 18 months) with deliverables that are less critical to the organization’s core business strategy. That is not to say that the deliverables are not important – rather that they are not as critical to the essence of the organization’s future wellbeing. Due to these conditions, the cost of investing in a faceto-face is not worth the time, energy and effort it will take a purely virtual team to overcome the barrier of never meeting face to face. It is important that leaders do a true cost-benefit analysis of the extra investment of time, energy and money needed to conduct a global face-toface meeting against the importance and the urgency of the team’s deliverable. One way to determine whether the deliverable is critical is to envision how the organization would carry on if this objective were not achieved. If accomplishing this project is considered core to the organization’s future success,

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Table 1: Global Working Behaviours Area

Global Working Behaviours

Strategy

Clear message for senior leadership team and alignment around team objective Face-to-face meeting to align strategy within two to four months of team’s start Team members transparent about concerns with strategy early in life of team Team discusses operational aspects of strategy and execution details

Structure

Discussion with each geographic region around structure to create buy-in

Systems

Effective work-arounds to non-global systems

Shared Values

Team member commitment to team outcome Explicit discussion about team’s shared values Emergent shared values arise as a team interacts together

Leadership Style

Senior leaders empower team to make decisions Team leader facilitates open dialogue and rich conversation Team leader facilitates a balance between discussion and decision-making Team leader respects roles, opinions and expertise of team members

Skills

Team members have intention to collaborate and strive for effective communication Team members with lower skill levels in global working behaviours have intention to work globally Team has “healthy conflict” Team members build a cohesive team

Staff

Role clarity is established globally Team leader has input to staffing and holistic make-up of team

Global Team Interaction

Face-to-face meeting at a minimum of every three to 12 months Team members become “real people” to one another Team members develop empathy for one another and perceived proximity Team members release regional identity and create global identity

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investment in some face-to-face activities should be strongly considered. Another key criterion is the length of the global project team’s existence. If the team will exist for a minimum of 18 months to three years, the global hybrid team model should be considered. The bottom line is that if your global project team meets these two criteria, and you are not supporting them to have some face-to-face, in-person sessions, you may be jeopardizing the success of the project and, possibly, the future of your organization.

working behaviours at once, but by assessing where the team is doing well and where it may need more input, you can provide focused support.

Global working behaviours

Global hybrid teams are more complex than their traditional team counterparts. Yet, they are also packed with power and potential; it is through these global teams that organizations will solve complex problems, innovate global solutions and take organizations into the future. As more organizations globalize, the importance of well-functioning global teams will become even more critical to achieving key objectives. Taking time to step back and help your global team assess the areas in which it exhibits strong global working behaviours, and those in which more work is needed, will go a long way to ensuring your team is on the path to success.

The study proposed a fresh set of behaviours – global working behaviours – that help accelerate global hybrid team effectiveness. These global working behaviours do not drive the skill level of team members, but accelerate global hybrid team effectiveness by impacting each of the McKinsey 7-S areas: strategy, structure, systems, shared values, leadership style, skills and staff. In the model, a final area has been added to the seven: global team interaction. Table 1 (page 77) shows the specific global working behaviours by each of the eight areas. To accelerate your global team, you should look at all eight areas. You will not need to take corrective action in each area, but you should be strategic in considering which levers need to be adjusted to steer your team towards greater effectiveness. Perhaps you “score” high in the strategy area because you have done well in all sub areas. You have a clear message for the senior leadership team, alignment around team objectives and have conducted face-toface meetings to align strategy within the first few months of the team’s life. However, you find your team does not have healthy conflict, but rather destructive conflict and that a cohesive team has not yet been formed. An intervention to help the team understand healthy conflict may be in order. No team can work on all global

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Team familiarity benefits team performance

The impact of the face-to-face meeting Carefully positioned face-to-face meetings appear to be effective, not only due to the output of the meeting itself and the progress made

during these in-person sessions, but because of how these meetings impact the ongoing virtual working of the team. Our research indicates that the most critical value of a face-toface meeting is the way in which this interaction transforms the team in the months that follow. Take a look at just a few of these important effects.

Team members become real people to one another Face-to-face meetings lead to better virtual working because team members become “real people.” This indicates that our concept of the value of face-to-face meetings may be outdated, even antiquated: face-to-face is not sought simply to fulfil the basic human need of contact with others, but actually leads to a sense that “I know this person”. While team members know their counterparts across the ocean are real people, until the first face-to-face meeting, they have not yet experienced their colleagues as “real people”. Interactions during a face-to-face meeting help team members begin the process of deobjectifying far-away team members from, for example “the Chinese operations director” to “my colleague, Ling, who is based in Guanzhou”. These shifts may be unconscious, but the impact on virtual interactions is clear.

Team members develop empathy for one another In 2006, Lewis proposed that “we can widen our horizons not only by learning foreign tongues, but also by cultivating empathy with the views of others; standing in their shoes in their geographical, historical and philosophical location; seeing ourselves from that perspective”. Espinosa et al (2007) found that team familiarity, developing perceived proximity, despite geographical distance, benefits team performance when team co-ordination is more challenging; that is, when teams are larger, or geographically-dispersed. There is a mistaken belief in

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organizations that face-to-face meetings for global teams are primarily for meeting the social needs of members and do not add true value to the organization.

Barriers disappear A team member of one global hybrid team from Japan summarized the effect of a face-to-face meeting on subsequent virtual team working as “barriers disappearing”. The effect of a productive face-to-face meeting is significant. It was also described as “a trickle effect”. The experience of barriers disappearing is rooted in stronger inclination, between team members from varying regions, functions and backgrounds, to work through the awkwardness that exists.

Better team conflict communication In the study, one team member described the impact of the face-toface meeting on members’ ability to speak their minds following a series of in-person meetings. This team member said: “It sounds completely original, but we were really outspoken with each other and that’s what we still do even when we are not agreeing… if there is an issue, we always inform each other and we know each other very well. And that’s purely because we really meet [face-to-face]. And that is something I really want to emphasize. But you can do everything by WebEx [later in the team’s life]. I would really recommend other project teams to start at least one or two years with face-to-face meetings if there’s a big international product and then move onto WebEx meetings.”

The business case for the face-to-face global meeting In an age of budget constraints, travel restrictions and misperceptions that global team members wish to meet face-to-face simply for ease and a selfish desire for social interaction, it is easy to understand why many executives are quick to put the kybosh on in-person global team meetings. But this short-term focus on budget savings may be the wrong decision

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for the greater organizational good. That is not to say global teams should run amok with face-to-face meetings, driving up expenses, to avoid the awkwardness of virtual working. In fact, this research demonstrates that a well-planned face-to-face global team meeting only need to take place only once every three to 12 months, with more teams stating that a nineto 12-month interval is sufficient. Jet-setting on a bi-monthly basis is not recommended. Some team members interviewed in our study felt senior leaders were concerned that if they sanctioned any global travel for meetings, a snowball effect would lead to teams travelling “all the time”. Some senior leaders pre-empted this by saying “no” altogether, rather than negotiating the appropriate frequency for each team. As an executive with decisionmaking authority, consider this: if your global team is driving a major deliverable that is critical to your continued success as an organization, can you afford not to fund their travel? Also, if this team’s working life together is greater than 18 months, investing in just one up-front team meeting will provide pay-back in buckets along the line. It is important to consider potential payouts from such investments over the life of the team, instead of simply thinking in terms of this quarter’s travel budget. If you are still not convinced, think back to the beginning of this article and how you were chuckling – or frowning – in knowing recognition of the messy, unpredictable, awkward, challenging nature of global teams, which are, nevertheless, key to the success of your organization. Global project teams have a high degree of difficulty – a threshold much higher than a regional team with a more homogeneous makeup and cohesion.

Conclusion One global project team member effectively summed up the importance of the face-to-face meeting on team effectiveness, while simultaneously acknowledging that it is difficult to quantify this positive impact. He

explained: “There’s something about looking across the table at somebody and knowing they’re engaged with you and they’re listening to you, that you just don’t get from a teleconference. You don’t know where they are [on the teleconference]. There’s that whole body language issue, there’s the whole issue of how they react to other team members, sidebar conversations, that you don’t get a sense for and I don’t know if you can quantify it or reproduce it, short of goal-meeting. But there’s soft, intangible stuff that goes on that I think makes the team more effective coming out of it. You go out to dinner together. It’s a whole different thing. I don’t like travel – another guy might just be a travel junkie, but that’s not it for me. I do think it’s expensive for the company to have these global “faceto-faces”, but there’s this common efficiency, intangible synergies that come out of this, that you just can’t put your finger on, but are real. If I could quantify it, I could probably make money from that.” l Katherine Schroeder is an adjunct faculty at Benedictine University and also senior director, organization development at Astellas further reading Familiarity, complexity, and team performance in geographically distributed software development, J S Espinosa, S A Slaughter, R E Kraut and J D Herbsleb (2007). Organization Science, 18(4) When cultures collide: Leading across cultures (3rd ed), R D Lewis (2006) Nicholas Brearley International Bridging space over time: Global virtual team dynamics and effectiveness, M L Maznevski & K M Chudoba (2000). Organization Science, 11(5) Accelerating Global Hybrid Team Effectiveness, K A Schroeder, P F Sorensen & T F Yaeger (2014). Research in Organizational Change and Development, A B Shani & D A Noumair (Eds.), pp335-364 Emerald Group Publishing

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public value

Public Value: rethinking value creation Managers might refute public criticism of their business as an attitude of taking everything for granted in a saturated society, but ignoring Public Value aspects can threaten the success of new products and even the survival of entire firms. Timo Meynhardt, Peter Gomez, Pepe Strathoff and Carolin Hermann report Illustration: SIMON BRADER

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public value

A

young manager of a multinational company strolls around the bookshop at Zurich Airport. The table with “airport literature” for managers is stacked with guidebooks that promise the silver bullet to tackling general management issues. Books on how to make your customers happy and thereby make your business, as a whole, successful are on offer alongside literature telling the manager that he has to abide by ethical rules and should engage in corporate social responsibility activities. In the end, he does not buy any book but gets a newspaper instead. Sitting in a coffee shop he reads his newspaper. When reading the “business” section, he shakes his head and wonders about the complexity of the demands that are asked of today’s businesses. Firms are supposed to earn returns for the shareholder and contribute to economic growth. At the same time, they should behave in an ethical manner and provide solutions to society’s most pressing problems. The manager sips his coffee and thinks about a conversation he had with his father, the owner of a medium-sized company, a week ago. His father told him that in the past, doing business was easier and without question producing goods which people need is basically a good and thing that creates value for society. The young manager is lost in these thoughts when he hears his name in an announcement: Last call! The short story above shows that there is quite a bit of confusion about which management paradigms to follow and, accordingly, the focus managers should assume when thinking about value creation. Today, the very notion of creating value needs a revision or at least an extension. The idea of Public Value, as developed at the University of St Gallen, has been designed to help leaders find a way to value creation. Public Value differs from conventional management paradigms, how it can be made transparent for society and how it helps you as a manager.

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Public Value eats management paradigms for breakfast Public Value describes the contribution organizations make to society – as perceived by the wider public. It is different from the concept of a public good in economics, which is defined as a good to which access cannot be restricted efficiently (non-excludable) and where the consumption by one individual does not reduce the good’s availability to others (non-rivalrous). Public Value transcends these categorizations. Both private goods (such as a car) and public goods (such as national security) can have a Public Value if they are positively evaluated by the wider public. If not, even a public good has no a Public Value. If an organization cannot answer

Public Value is important not only for risk management, but can be instrumental for achieving innovation and growth why and how its activities contribute to society as a whole, its very licence to operate is at risk. It is no longer sufficient to legitimize free enterprise by its capacity to create jobs and pay taxes. In a world, where economic growth is no longer seen as an uncontested idea of capitalism, an explicit Public Value proposition becomes a driver for resilience, innovation and, last but not least, for the purpose the public and employees are looking for. With Public Value there are, however, two different elements – first, being valuable in the eye of the beholder and,

second, relying on an idea of the wider public, which represents an individual’s mental image of community and society. In this sense, the public is defined as individuals’ concept of the social collective of which they are part. In this view, the public is not a social aggregation, but an image and state of mind that is influenced by organizations and their activities. The interaction of media, politics, customers, citizen, NGOs and so on provides a melting pot, in which public opinion is enacted. Such collective viewpoints in turn help people to make sense of their environment and also inform people’s decision-making not only at the cashier in a supermarket but also – and even more importantly – at the ballot box. From a societal viewpoint, organizations contribute in four

basic dimensions to Public Value: 1. Does it do well in its core business? (Instrumental-utilitarian) 2. Does it strengthen group relations? (Political-social) 3. Does it allow for positive experience and quality of life? (Hedonistic-aesthetical) 4. Does it comply with accepted standards of morality? (Moral-ethical) The answers to these questions form the basic pillars of a Public Value proposition as an offer to society, which it may accept or not. Organizations, like human beings, want to be respected. Often, they even want to be loved for what they do. In any case, they care about how they are perceived and appreciated. Even if this is exaggerated, they do

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not want to be blamed and shamed or outright ignored (which is even worse) by a public that withdraws its trust and positive attitude. Marketing experts and politicians alike take for granted that any value (“image”) is subjective and relative to peoples’ needs and wants. Public Value takes this idea to corporate performance and the value that organizations contribute to society. Even if managers are “right” in bringing about societal wellbeing and progress, they cannot simply assume that it is acknowledged. Any of the existing management paradigms somehow address the social impact of business, but none of them takes into account that this impact depends on a deeper level of cultural acceptance. But each paradigm articulates important human needs. As table 1 shows, any one-sided view runs the risk of focusing too strongly on a certain

aspect, crowding out other perspectives. Public Value, however, is a multidimensional concept that integrates one-sided approaches that favour one motive over others. In terms of stakeholder value, for example, Public Value argues that it is

Leaders cannot ignore the public debate which might jeopardize their entire business model

not enough to just come to terms with stakeholders and to fulfil their specific interests. There are concerns that are relevant to all stakeholders and go far beyond particular interests, e.g. the acceptance of the market economy as a country’s economic system. These matters touch common interests or systemic ones, to which everyone contributes, but nobody alone can change. Public Value explicitly calls not only for integrating the many dimensions of value creation, but also relates them to the idea that “society” is not a metaphysical concept, but a deeply-felt sense of being part of and belonging to a social collective. Not every tiny organization is a “society maker”, but at the same time, many firms, public administrations and non-governmental organizations not only provide goods and services, but also shape our experiences of what it means to live in a certain society. Such an extended understanding of value creation does not suspend, but integrates financial-economic value creation into a bigger picture, where hard and soft factors have to stand the test of society. Along those lines Public Value also unveils the impacts on society as value creation and not as

Table 1: Public Value integrates management paradigms

Focus of organisations Paradigm

Shareholder Value

Stakeholder Value

Customer Value

Corporate Social Responsibility

Justified focus

Value for owners

Claims of interest

Customer orientation

Side effects

Risk

Dominance of financial performance

Unmanageable integration of heterogeneous expectations

Too much focus on “satisfaction”

No relevance for core business

Consequences

Single-minded quantitative approach

Paralysis by conflicting expectations

Unbalanced view of societal consequences

Loss of credibility

Primary value orientation

Instrumentalutilitarian

Political-social

Hedonisticaesthetical

Moral-ethical

Public Value 82

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public value

Public Value of Nestlé + Public Value

Task fulfilment

Social cohesion

Quality of life

Moral

Figure 1: The Public Value profile of Nestlé

by-products, externalities or nice-tohaves. What we do have to put aside, however, is the old notion of value creation. In doing so, for organizations, a new perspective opens up if they become aware of their Public Value and start to manage it.

The Public Value Atlas – Society is calling In the attempt to find out how organizations are actually perceived by the public in terms of Public Value, the University of St Gallen’s Center for Leadership and Values in Society conducted a largescale online study. Between February and March 2014, a representative sample of 4,500 people were asked to evaluate the value organizations from different sectors create for Swiss society. Public Value was measured against the four Public Value dimensions. The Swiss study contributes to the ongoing debate about how organizations impact society and provides a database to enable a fact-based dialogue. The inquiry comprised 60 organizations from various sectors including multinational corporations such as GlencoreXstrata, UBS and Nestlé. To ensure respondents knew what they were evaluating, only respondents who reported to know the firms well or very well, gave their assessments. The results led to the world’s first

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Public Value Atlas, which ranks organizations according to their Public Value and records transparently, how they contribute to society – at least in the eye of the beholder. As always in a contest, some perform better, some worse and for some firms, the results were difficult to absorb and digest. The Public Value score is calculated from the unweighted mean of all four Public Value dimensions. Depending on whether the Public Value score of an organization differed statistically significant from the overall mean value across all organizations, it was assigned to the top, middle or bottom group. Questions concerning the underlying reasons for the different Public Value assessments of the respondents were not part of the survey and will be subject to further research. Often, the public takes corporate activities for granted and companies fail to make their contribution to society transparent or simply do not deliver. It is up to every organization to pick up and listen when society is calling. In May 2014, the first Public Value Atlas was published on the online platform www.gemeinwohl.ch. The Public Value Atlas was released at a public event in St Gallen with more than 150 international guests and broad media coverage. As figure 1 shows, the website

comes with an unusual yet intuitive data visualization by employing violin plots, which show mean values and the distribution of responses. The online platform invites the user to analyze the data and play with it by changing weights of the Public Value dimensions, selecting sectors and segmenting by industries. Interestingly, one of the key findings of the survey was that sometimes it is hard to escape one’s industry. The study revealed that belonging to a certain industry pre-determines an organization’s Public Value. Some firms are more closely identified with their industry than others. The banking sector is a case in point. In this example, the only bank that stands out from the rest is the cooperative bank Raiffeisen (see figure 2). This might be caused by the legal form and how big and international a firm is. With the Public Value Atlas, the university called a public into existence – because who is better to judge Public Value than the public? The first Public Value Atlas can be seen as a starting point. In the long-term, yearly replications of the study are planned, which will allow observations of Public Value over time. Also, an extension of the Public Value Atlas covering more organizations and countries is considered.

Public Value helps the manager How is this relevant for you as a manager? Why should you care about your firm’s Public Value and engage with a ranking, looking like a collection of violins or fish? The answer is simple: because you have to. Managers might write off public criticism as an expression of ingratitude and attitude of taking everything for granted in a saturated society and point to a general lack of knowledge in society about “what we do for them”. But this seems to miss the point. Ignoring Public Value aspects can threaten the success of new products and even the survival of entire firms. Also, it is increasingly important to customers, how organizations influence society and how firms contribute to social wellbeing – for example, by engaging in sustainability measures. The chemical industry is a case in point: a lot of plastic products rely for their production on the ingredient

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dimension, the decision is seen to actually lead to a negative experience. Similarly, the decision is seen as having a low political-social acceptance. Also, in the moral-ethical dimension, there seem to exist more risks than opportunities, but with a narrower gap. In this example, the management would have to consider, whether the dimensions are equally important to them or if they should set priorities and take a decision. The PVSC can be used to assess Public Value implications of different things. The object of evaluation can be a product or service, the impact of an initiative, a supply-chain reconfiguration or an entire institution. Depending on the issue, the aims of the investigation and the public to be called into existence, different methods can be employed to paint a five-dimensional picture of Public Value performance. Let’s get back to our manager at Zurich Airport. What could he take away from Public Value? In these turbulent times, organizations have to legitimize their operations time and again, as they cannot ignore the public debate that might jeopardize their entire business model. Public Value allows for a broader and new understanding of value creation,

which organizations just start to see and to harness. Questions like “Why should organizations care?” seem outdated given that we have developed to a world in which firms want to find out what makes them valuable for society and what they can do to increase their Public Value. Our manager starts to sense that Public Value may help him to better navigate through daily challenges and to find a yardstick for the big questions in search of purpose and meaning of doing business. ● Professor Dr Timo Meynhardt is managing director of the Center for Leadership and Values in Society at the University of St Gallen. He also holds the chair of management at the Leuphana University in Lüneburg ● Professor emeritus Dr Peter Gomez is president of the faculty council of the Center for Leadership and Values in Society at the University of St Gallen ● Pepe Strathoff has been a research assistant at the Center for Leadership and Values in Society since January 2013 ● Carolin Hermann is a doctoral student at the University of St Gallen and a research assistant for the Center for Leadership and Values in Society

Figure 3: The Public Value Scorecard assessment of purchasing from Chinese suppliers

IS IT USEFUL?

Opportunities Risks

IS IT PROFITABLE?

IS IT A POSITIVE EXPERIENCE?

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IS IT DECENT?

IS IT POLITICALLY ACCEPTABLE?

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emerging economies

Ian Turner, executive director at Duke Corporate Education, talks to Sturla Henriksen, CEO of the Norwegian Shipowners’ Association, about the growing promise of the Arctic, its business challenges and opportunities

The Arctic: the next emerging economy

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he Arctic, once a frozen frontier in a northern wasteland of tundra and permafrost is now being described by experts as the next emerging economy; a growth market and a gateway to economic and political co-operation. In March 2015, the Norwegian Shipowners’ Association (NSA); DNV GL, a major maritime classification body and advisor to the oil and gas sector; and Duke Corporate Education will join forces to launch the Arctic Leadership Program for Executives. This program, a world first, is part of a campaign to

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encourage the world’s business leaders to take immediate action in the Arctic. Sturla Henriksen, CEO of the NSA, provides insight into why such a program is timely and vital. Ian Turner: The Arctic region is shared by eight countries and, due to recent climate and environmental changes, has become a hot-bed of geo-political and commercial evolution and debate. But few people living outside the Arctic hear much about it – especially in the business media – so this is an opportunity to raise its profile. Why is now the time to raise awareness of this frozen region? Sturla Henriksen: For generations, the

Arctic has been shrouded in a cold veil of mystery. It is far from civilization; it was home to indigenous people, fishermen and explorers; and it was a remote, frozen frontier during the Cold War. Now the Polar ice caps are melting, receding. In three decades, two-thirds of the volume of summer ice has disappeared and our children will be the first to witness the emergence of a wholly new ocean. In this region, approximately the size of Africa, three continents meet at the top of the world and three items are converging at the top of the global political agenda. First, the Arctic ice is melting as a consequence of global warming, so temperatures in this region are rising at almost twice the rate of the

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emerging economies

by a third. The paradox of the melting ice is that it increases the pace of climate change, but reduces the fuel costs of the maritime industry. It will reduce sailing distances – because of global warming. These areas will become successful due to their natural resources and have the impetus to generate real change in global trade. That also has a bearing on the third element I want to discuss. This holds the potential to alter the geo-political balance of power. There is increasing interest in what is

It’s a very significant oil and gas region happening in the Arctic and 11 countries have appointed Arctic ambassadors to co-ordinate their national interests in this area.

rest of the planet. This will affect our entire planet because as the ice melts, it generates global warming. A reduced surface of ice reduces reflection to the sun, meaning the sea absorbs more heat and this can impact global weather patterns and global currents. Second is global economic growth and development. As the ice retreats, this exposes natural resources including oil, gas, timber, fish, rare earth metals and minerals. These will be uncovered and commercially exploited. New regional and global trade routes are opening up. It is known that 90% of trade goods are carried by ships, and the global shortcuts opening up between Asia and Europe will reduce sailing distances

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Can I take you back a step because readers may not know what the Arctic region actually comprises? It has quite a substantial population in its own right, doesn’t it, with sizeable cities such as Tromso or Murmansk? That depends on your definition of the Arctic. The easiest definition is “north of the Polar circle”, but there are others, formulated around where trees grow or ecological characteristics such as permanent ice. In the Polar circle alone, there are between four and five million people, but it is sparsely populated. You talked about the Arctic’s minerals and resources. I understand that 20% of the world’s oil is in the Arctic? The US geological survey estimates this area holds 13% of the world’s undiscovered oil and 30% of the world’s undiscovered gas resources. So it’s a very significant oil and gas region. It has one of the largest fish stocks in the world and is one of the richest areas in the world in terms of timber and rare metals. This

area is also home to the largest freshwater reservoirs in the world. Of course water would have to be increasingly important? Water and the other resources – they are not just necessary for economic growth in the region, but are strategic resources. As they become accessible, there will be an increasing attention, commercially and politically. This is ice melting into water in the Polar Sea, but mirroring this ice melting is the thawing of the permafrost, which creates problems in terms of the landbased infrastructure becoming more vulnerable (such as roads and pipelines). The large rivers are opening up for shipping and barging. These are large waterways – some are carrying as much water to the sea as the Mississippi or the Ganges. It means that exploring and exploiting resources will have greater attraction. What is the likely pace of change? We are seeing a robust trend of activities increasing, but the most compelling evidence is that if you look at the extension of ice, there is a steep decline. This means there is robust development in terms of ice retreating and the areas becoming commercially successful. We are already seeing increased activities in the off-shore oil and gas sector, in cruise ships coming to port, in the regional trade shipping, but also in fisheries. As the ice retreats, there is a warmer sea and a migration of fish from the Norwegian Sea into the Polar Sea. Finally, Trans-Arctic sailing is receiving a lot of media attention. It has increased from four commercial voyages through the Polar Sea in 2008 to 71 voyages in 2013. This is still very modest; the Suez Canal has 20,000 passages annually and the Panama Canal 14,000 passages. There are three routes in the Polar Sea. The Northern Sea Route runs along the Northern Russian Coast, then Transpolar voyages, which run across the geographical North Pole and the North Western Passage, from Greenland to the Canadian Coast. This is challenging because there are thousands of islands and the ice conditions are

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Sturla Henriksen Sturla Henriksen was appointed chief executive officer of the Norwegian Shipowners’ Association in June 2008, having previously served as a partner/senior executive at Accenture Management Consulting. In addition to 10 years’ experience from cross industry management consulting, he has held positions in the EU Commission Services (Brussels), EFTA (Geneva), the Norwegian Ministry of Finance, the Norwegian Central Bureau of Statistics and the Norwegian defence forces. His educational background comprises a Cand.oecon (Master of Economics) from the University of Oslo, Army Officer School, the BI Institute of Business Administration, the Norwegian Defence College and INSEAD (France).

very unpredictable. Transpolar voyages are still some time away – hopefully – because if it’s soon, the ice will be gone... Most of the commercial voyages are now taking place through the Russian economic zone. We see there are now seasonal conditions that allow voyages north of Russian waters. This means there is another challenge in terms of Russia. It indicates the challenge we’re facing in more general terms and that is the urgent need for commercial development in oil and gas, tourism, regional trade or Trans-Arctic sailings. There is a need for regulatory measures, for adequate infrastructure and for development of industrial standards that can ensure an increase in commercial activities in a safe, secure and sustainable way. Just to give one example: there are voyages in demanding conditions that are governed in the same way as voyages taking place on a sunny day in the Mediterranean. This is not viable. Also, there is a need for increased information, not only for the public and politicians, but also for commercial decision-makers and the business community, because there is no “one Arctic”. Parts of the Arctic are perfectly workable, with conditions that are no more challenging, from a technological or operational perspective, than those in other parts of the world. The Arctic proper, in terms of the icecovered area, is dark and far from populated. It lacks basic infrastructure. Parts of it are vulnerable, from an environmental perspective, but sensitive in terms of affecting the lives of indigenous people. This is the backdrop to the initiative we

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have launched, both through the Arctic Business Conference earlier this year and the Arctic Leadership Program, which launches in March 2015. We think the business community should take independent responsibility for contributing to sustainable development in the Arctic. I personally think this is a moral imperative. It’s also in the genuine interests of businesses to develop rules and conditions for commercial activities that ensure they carry out legitimate operations and maintain their licences to conduct these. This would be undermined by the reckless behaviour of a few – so it is important. So there is a need for an effective regulatory framework and for countries and major stakeholders to work collaboratively. Some would say we are moving into an era of less collaboration and notable conflict, such as instability in the Ukraine. Do you see this as a real challenge? If you look back 25 years to the fall of the Berlin Wall in Germany, I think there

has been extensive co-operation since then. However, now, trade relationships affected by the situation in the Ukraine, and the restrictions imposed on Russia by the EU and US, have impacted commercial activities, not least in terms of off-shore oil and gas. This can hamper development and there is uncertainty about how this will translate into co-operation in other fields, regarding regulatory measures and development of infrastructure to support development in the region. There is a need for a wide range of infrastructure for communication, navigation, monitoring of ice, precise weather forecasting, search and rescue, supply and maintenance. There is a number of areas in which there is a need for stronger co-operation and I am concerned that geo-political tensions, not least between Russia and the West, will hinder the co-operation needed in the north. Also, the management of fisheries will be vulnerable if conflict affects this area. But haven’t there been some positive examples of collaboration between Russia and Norway? Absolutely, and I think the most prominent example would be the formal Treaty between Norway and the Russian Federation concerning Maritime Delimitation and Co-operation in the Barents Sea and the Arctic Ocean agreement in 2010, after 40 years of negotiation. This has spurred activities on both sides. Within the past couple of decades, there has been effective co-operation between Norway and Russia with

We are concerned the ice is retreating faster than the negotiations are advancing Dialogue | Dec 2014/Feb 2015


emerging economies

is a need for widespread dissemination of information. In Norway, the awareness of, and the knowledge about, this area is higher than in general, but many of our own members are asking us for more information and advice.

regards to people living in the border areas. They have been allowed to pass freely in both directions. There has been progress with the management of fisheries and on the oil and gas front, and also on the military front, where the parties have attended each other’s military exercises. These are expressions of trust and a mutually-beneficial relationship. Now there is a concern that the bilateral relationship between Russia and the West will not translate into these areas. As the political relationships cool, the arctic is getting warmer and that calls for more co-operation, not less. Norway is a country that has been successful both in its maritime and oil and gas sectors. It has developed the technologies and capabilities to exploit resources in difficult environments. It also has a reputation for caring for the environment. Does Norway have a long-term vision for developing the Arctic? The Arctic is Norway’s number one foreign policy priority, confirmed by the new government after last year’s change of government. In the Arctic, there are different traditions and ambitions coming together. Norway has a small population, but a strong Polar tradition; Norwegians have been exploring the Arctic and Antarctic for generations. We are one of the largest and most advanced shipping nations in the world, one of the largest off-shore

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nations, and we have strong ambitions in terms of environmental sustainability. All this comes together on our own doorstep; 80% of activities in the Polar Sea are in Norwegian waters. We have the competencies and capacities, which will be important for the further development of the Arctic, but we also have a responsibility to contribute to sustainable development. The NSA has been working extensively on this over the past few years. Since I took up my role in 2008, this has been a priority. Now the area’s opening up, we don’t want commercial activities to compromise sustainable development. Your members are ship owners and members of the Norwegian Maritime Cluster – people and companies that service this tremendous industry. How prepared are they for the changes? It’s rising up their agenda. In conjunction with our annual economic report, we can see it’s climbing rapidly. There are Norwegian companies that have been operating in this area for some time, and they are well aware of the developments. There are others considering commercial opportunities and making investments. Other companies have a vaguer idea of what is happening. They know the region is important, but need to understand more about the Arctic and its diversity. They need to understand the challenges and pre-conditions for a safe, sustainable operation. There

These are not abstract, theoretical issues for people in your member companies, are they? The Arctic will inform significant investment decisions – for example, the type of ships in which they invest. All aspects of Arctic developments relate somehow to the sea, be it fishing, transportation or tourism. Our membership is evenly divided between companies that transport goods and people, from reefer ships to car carriers, to those engaged in off-shore oil and gas extraction, and those carrying out drilling. All the oil rigs on the Norwegian continental shelf are our members, as well as half of the Norwegian oil rigs across the world. There is hardly a single deep-water well drilled without some Norwegian participation. For example, in Brazil, one-in-four vessels is one of our members. It is vital for us to understand what is happening as an important area opens up, and to address it appropriately on behalf our members and the wider business community. Is this why you have partnered with DMV GL to launch the Arctic program? Yes – this is important. We held the inaugural Arctic Business Conference and Arctic Business Council in Bodø (Norway) in October and it presented an arena for the business community, enabling business executives to meet and discuss issues. This is a biannual conference and the next one is due to be held in 2016. A strong message came out of this conference: there is a need for inter-industry and inter-disciplinary knowledge and an exchange of competencies. There is a need for executives to understand what is happening in the Arctic and to raise awareness, boost knowledge and exchange best practice in terms of responding to what is happening. We are concerned the ice is retreating faster than the negotiations are advancing.

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Willy Østreng The Arctic region is a rich source of strategic resources, including oil and gas and scarce mineral deposits. As these resources have become depleted around the world, the Arctic has come to be seen as an attractive alternative source. Moreover, as the Arctic ice melts, the region is becoming more accessible and new shipping routes have opened up. There is no doubt the Northeast Passage, which runs above Russia, has become the most attractive prospect to business, because it can cut the journey time from Europe to Japan by 15 days. Transit shipping on this route is still at an experimental stage, but so-called destination shipping is already viable and this opens up opportunities for the off-shore industry to use vessels to transport oil and gas from Arctic sources as a practical alternative to pipelines. The Arctic climate is changing more quickly than was expected. Initial IPCC projections that the sea ice would have depleted by 2100 are now seen as conservative and, 20 years from now, sea ice could be gone in the summer. The ice will always be there in winter, but new technology is enabling ships to cut through it. Realizing the potential for developing the Arctic requires a robust legal and regulatory framework. The basis for this is the UN’s Law of the Sea treaty signed in 1982. Beyond that, it is internationally recognized that the Polar regions require special policies to regulate health and safety and protect the environment. The Arctic covers territory within, or adjacent to, borders of eight sovereign states (Canada, Denmark, Norway, Iceland, Finland, Russia, Sweden and the US). These are represented in the Arctic Council, the main forum for governance in the region. The council is gaining influence, but it is just a meeting place for countries to discuss sustainable development and is a weak organization that needs more decision-making and enforcement powers. Militarization and security also pose challenges. During the Cold War, the military dominated the region, with the Soviet Union regularly putting submarines under the ice. But after the Soviet Union collapsed and Russia emerged as its successor state, the country’s economic problems allowed civil society to have a bigger say. Now militarization of the Arctic is increasing again – and the Arctic Council has no say over military affairs. Having said that, there is huge potential for international collaboration in the Arctic. Sadly, recent events in the Ukraine have caused this collaboration to stall. But investment in infrastructure is set to rise in the long term. The Russians are opening the North Eastern Passage for international shipping. But these facilities need upgrading and renewing if the full potential for maritime trade across the top of Russia is to be realized. Remember the Arctic is inhabited. There are 26 different indigenous peoples along the Northeast Passage alone and it is important to consider their needs at an early stage when planning economic development. NGOs are championing the needs of the local communities in their dealings with industrial and government bodies seeking to exploit the region economically. The Arctic will be a major economic and political factor in the future. The key to understanding it, and developing business strategies, is to take an holistic approach; to keep abreast of technical and regulatory developments, but not neglect the geo-political situation; integrate the perspectives of disciplines; and take account of the interests of stakeholders. l Willy østreng is co-founder and president of the Norwegian Scientific Academy of Polar Research and formerly director of the Fridjtof Nansen Institute. He has researched and written about the polar regions since the 1970s, been an adviser to the Norwegian government on Arctic matters and taught the subject as visiting professor at universities around the world

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And there is an urgency in this area? The Arctic Leadership Program will serve a need and the business community has been on the backfoot on this. There is a number of companies in different industries that have been in the industry for a long time. Now, there will be new players entering this area and companies exploring business opportunities. To do that, they will need better education, which is why the Arctic Leadership Program is timely and responds to an urgent need. We had many positive comments from CEOs in Bodø. The paradox is that the people who are shaping the narrative of the Arctic are not those with most knowledge.

The Arctic Leadership Program is responding to an urgent need

Conferences are mushrooming, but the vast majority of delegates are from the public sector, there are very few business people. The business community has a substantial amount of relevant knowledge and experience. It will make investment decisions and calibrate commercial decisions, and these are the people who will develop the technological solutions; there is a clear mismatch between their contribution and their influence as stakeholders. This program will address this and rebalance the debate. For the business community and decision-makers to contribute, a holistic perspective is needed because no one is seeing or addressing the entire picture. We must engage stakeholders in the dialogue necessary for development.

Dialogue | Dec 2014/Feb 2015


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talent management

Using people strategy as a driver of change Tap into the talents of your workforce and garner the support of each and every employee to effect organizational change and meet tough industry challenges, writes Sandeep Gandhi

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talent management

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he Indian telecoms market is a challenging one, with fines for noncompliance almost standard across the industry, as the government seeks to tighten national security and enhance service standards. Indian telecoms operators have an extensive system of 2G and 3G networks, and the adoption of wireless data has been multiplying every year; so much so that 76% of Indian internet consumers access data via mobile devices. But many consumers complain about 3G speeds dropping as more and more people start using this service. It is against this difficult market backdrop that the leadership at Aircel has been overhauling the company to make it fit for the challenges it faces, today and tomorrow. Here is his story of the Aircel journey to date. To provide a little context: Aircel is one of the top seven telecoms operators in India, working alongside Airtel, Vodafone, RCom and the government-owned BSNL. It offers voice and data services ranging from post-paid and pre-paid plans, 2G and 3G services, broadband wireless access (BWA) and long-term evolution (LTE) to value-added services (VAS). Founded in 1999, Aircel was acquired, in 2006, by Malaysia’s largest integrated communications service provider Maxis (Maxis Communication Berhard) and is a joint venture with Sindya Securities & Investments Pvt Ltd. Today, it serves more than 70 million subscribers and is experiencing the challenges and advantages of rapid growth like so many other emerging market companies.

Aircel challenges Aircel is a pan-India operator with 2G operations across the country and is credited with the fastest 3G roll-out in the Indian telecoms space. We have positioned ourselves as a data-led telecoms player, with a focus on the youth market, so we have to innovate constantly to keep pace with the demands of young consumers, while

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at the same time remaining abreast of rapid innovation in the multifunctionality of a mobile phone. It is well-known that India is one of the most challenging telecoms markets in the world. As a young telecoms operator, we have faced obstacles and struggles. In 2011, in particular, volatile market conditions created an environment characterized by unpredictability and a range of pressures. By the middle of 2012, the cost of operations was still far exceeding the organization’s revenue, month-onmonth. So, in December 2012, the leadership team strategized about how to keep the organization focused through the challenging period. We firmly resolved to put things back in order and set ourselves the tough goal of becoming EBITDA-positive by Year End 2013. Stringent costcontrol measures, greater attention to individual and company performance and increased operational efficiency were a few of the focus points

We cascaded the responsibility down to every individual employee to help achieve these goals. It was an “all-hands-on-board” approach where each function, each area – in fact, each and every employee – was expected to contribute to help get business back on track. At this pivotal point, the story becomes interesting. The company took an unconventional path to overcoming what appeared, at the outset, to be insurmountable obstacles. We have achieved some success, although we recognize that the challenge continues. This is, overwhelmingly, the story of what can be achieved when HR strategies are used effectively to bring about transformation.

Personal responsibility for change HR is often viewed as little more than a support function in India. Yet because of the need to mobilize every single employee to bring about the radical change we needed, HR was identified as a key driving force and strategy partner. It was clear that a multi-faceted approach was critical to dealing effectively with the situation. So we set about analyzing HR policies and practices and adapting them to link them more closely with the company goals and targets. We had to become facilitators to direct change. So as well as making EBIDTA-positive a business target, it was also made an objective for each individual employee, as they are the ones who can essentially drive change and alter the face of the business. We cascaded the responsibility down to every individual employee. We introduced a lean, semiautonomous business unit structure, designed to empower and strengthen the business, with greater roles and responsibilities given to smaller, more streamlined teams. “Townhall” meetings became a regular feature of each business circle to communicate business updates and reinforce a relentless focus on customers as we drove a customer-centric culture into the business. Alongside this, ran a singleminded focus on increasing revenue and reducing costs. And, of course, rigorous talent development also became an integral part of the change journey. Our focus was on: l Decentralization – a revised strategic business unit (SBU) structure l Streamlining – roles and responsibilities were devolved and identified for individuals l Employee engagement – frequent “townhall meetings” to keep everyone focused on the business targets l Role enhancement – more empowering roles right down the business l Focus on customer-centricity, internal and external l Talent identification and

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talent management

Dr Sandeep Gandhi Dr Sandeep Gandhi has more than 20 years of experience including eight years in prime leadership roles. He holds a Master’s degree, a PhD in Human Resources and an LLB. He has successfully headed HR departments in a number of companies. With a career spanning manufacturing and complex service industries, his knowledge and practical experience make him a well-respected HR professional. He has worked with some of the biggest brands across sectors, such as UniLever, Sanofi, PepsiCo, Vodafone, Telenor and now Aircel. He adopts an unconventional approach and has the ability to tackle tough situations. He has spearheaded and sustained innovative HR practices for both strategic and operational purposes across organizations.

development – a more tightlyfocused approach, aimed at getting less for more l Cost-reduction – optimizing existing resources

Compensation and benefits as the pivot The compensation and benefits strategy became the pivotal element in our drive for change and we focused on restructuring it in such a way that it yielded maximum results in a short time span. The compensation strategy was looked at from both a macro and micro perspective. Broadly, the total compensation outlay, disbursement across levels and areas and incentive outlay were analyzed. But our key lever was at the microlevel, where we looked at all the factors affecting individual bonuses, including how personal targets were assigned and achieved and how individual goals fed into overarching company targets. Based on our findings, we created a new policy, where incentives were linked to the performance rating of the employee, as well as how well the company was doing. We refocused the incentive structure around an individual’s contribution to overall company performance. In the past, bonuses were viewed as an indicator of individual “star status” – the bigger the bonus, the bigger the star. When incentive schemes are focused so strongly on motivating individuals, they can become dysfunctional, with

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Rigorous talent development became an integral part of the change journey individuals doing anything they can to qualify for a bonus, rather than looking after the interests of the company as a whole. We now refocused primarily on company performance, with individual performance accounting for 40% of the payout, and representing the qualifying point at which access to the company bonus started. The overall company performance, if achieved, then accounted for the remaining 60% of the bonus pool. To foster speed and cohesiveness, if a given geographical division achieved its target ahead of time, employees would receive an additional payout.

Talent management – bottom of the pyramid We also recognized that to achieve business targets, talent readiness would be critical, particularly in the climate of regulatory ambiguity and economic uncertainty that prevailed in the telecoms environment. We knew we had to train leaders to align them with what the company was aiming to

do – to regain its footing on the path to profitability. Accelerated development of key leaders across the organization was identified as a key requirement to grow the business and sustain performance. On paper, this plan seemed perfectly plotted. However, there were a few teething problems along the way. These ranged from challenges achieving stakeholder buy-in to sustaining momentum and keeping employee engagement levels high. Stakeholders generally wanted their people on the talent path and sometimes their views diverged from the HR perspective. We needed training to be focused on key talent, rather than more general development across all talent. And with those employees not identified as key talent, we had our work cut out to keep them engaged and motivated. To address this, we used constant messaging and communication, and reinforcement of the idea that the only way to succeed was together. As in any change initiative, you cannot let up on the effort. We also used workshops to educate employees about how each one of them could contribute to the main goal, however small the contribution might be. Through the tougher months, the HR department shared stories about other company turn­ arounds and reiterated the message: “If they can do it, so can we.” A year-on-year comparison revealed the results were strong and

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talent management

positive. In 2012, the percentage of payouts (in comparison to the potential outflow) was close to 70%. The story for 2013 was very different: the bonuses paid out over-shot projections by 200%. With bonuses now tightly linked to company results, we also surpassed our business targets by 200%. The savings achieved from greater operational efficiency and manpower planning, strategic hiring and enabling policies helped reduce losses and more than compensated for the increased incentive payments made to staff. Hence, though the total outlay was far greater than projected outlay, the savings more than made up for such expenditure. The best outcome was the impact it had on employees; the human stories. One particularly gratifying result was that lower-level operatives gained maximum benefits and saw maximum increases in incentives, thus fostering a greater level of equity across pay grades. In the past, and particularly given the Indian approach to hierarchy, it had been the top-level workers who had traditionally received greater incentives. This bottom-up result was central to driving our improved trading results. At a personal level, this strategy touched the lives of a number of individual employees. It was as if company aspirations came close to fulfilling individual dreams too; from allowing people to pay long-standing debts to funding a child’s education, the extra bonuses made a genuine difference to people’s lives.

A sense of belonging and ownership has fostered closer ties and lowered attrition rates Integrating it all

Today

For such a policy to succeed, it became essential for different units to work together cohesively. The company strongly adopted an open-door policy. The HR department encouraged employees to innovate and share ideas and continuously applauded good performance. Senior leaders kept employees informed about new strategies and business plans they intended to implement so that each person felt like an equal stakeholder in the fate of the company. Company progress was constantly communicated and benchmarks explained through townhall meetings and emails. Our culture is changing. Gradually, we are becoming more proactive and performance-orientated through increased communication and involvement, encouragement of feedback and openness to ideas. Most importantly, greater visibility of top leaders has been one of the major driving factors that communicated (openly and subliminally) the new cultural ethos of the organization. All these factors helped consolidate the “vibe” into a concrete strategy and change for the better.

Any success is just a milestone along the path to greater achievement. Today, it feels as if we have crossed the finish line we set ourselves, but the euphoria has not died down. Everyone feels an overpowering desire to achieve more – and this is healthy, because we always need to achieve more. Curiosity about where the company is heading and a wish to contribute towards its business goals is still seen in most employees. Linking themselves to the overall goals of the company has almost become a way of life for them. They celebrate the wins and bemoan the losses. Such a sense of belonging and ownership has fostered closer ties and lowered attrition rates. It has also increased market credibility and employee loyalty. For most companies, taking the plunge is the toughest part of any strategy, but after such initial success, being challenging has become a company-wide personality trait. As the journey continues, the telecoms industry is faced with high growth in connectivity demand, persistent new challenges and ceaseless innovation in devices and services. The company continues in its efforts to follow the direction of sustained growth and innovation. Our focus remains on delivering exceptional quality services and providing a consistently high level of customer service across wide geographical areas. And what better way to do this that through an engaged and involved workforce? l Dr Sandeep Gandhi is vice-president, HR, at Aircel telecommunications firm

Dialogue | Dec 2014/Feb 2015

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GUEST OPINION

José Manuel Casado González President, 2.C Consulting

The vital difference between informing and communicating

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ary B Young and Professor James E Post, from the Boston University School of Management, have dedicated a large part of their careers to studying activity and conditions in leading companies. They have concluded that the most important quality of a successful organization is its capability for internal communication. Thomas Gilbert, the father of “Human Performance Technology”, also demonstrated that people who are well-informed work up to 50% more effectively than those who are not. Peter Drucker stated that 60% of business problems are caused by a lack of communication. I wouldn’t like to say whether or not this is the exact percentage, but, evidently, it is a chronic problem affecting organizations. I have worked in many companies, in different sectors, on a wide variety of projects, and I would go as far as to say that no organization is completely free of internal communication issues. When asking company managers about communication, I usually receive a similar answer: the company communicates a lot of information and does it well. The managers go on to highlight the fact that the company periodically publishes a glossy internal communication magazine and also provides updated information through its intranet. Many managers drop the

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phrase “digital communication strategy” into the end of our conversation as if they were using the latest buzz words designed to impress.

Employees scoff when I bring up communication on the intranet and complain it is boring and hard to read However, when I ask their employees the same questions about internal communication, the answers I get are completely different. They complain that they are not informed about anything, they are the last ones to find out about changes and their bosses explain nothing about the purpose of their own jobs, let alone company strategy. When I mention the internal magazine, I am told that people have given up reading it because it always says the same things. The employees scoff when I bring up communication

on the intranet and complain that it is boring, hard to read, written in the language of “big brother” and does not even acknowledge their opinions or feedback. Companies are more used to “informing” than “communicating” and this might be the root of the problem. Perhaps the majority of firms confuse information with communication. However, communication comes from the Latin communicatio meaning participate, bring together, share. Information, on the other hand, comes from informatio, meaning image, representation. Information is a datum, it is reason, a cold, hard fact to be analyzed by the head. Communication is feeling and emotion, and should be aimed at the heart. There is no silver bullet to solve internal communication issues. However, it is clear that having sophisticated tools and information support is not sufficient in itself. I am not suggesting that we should do without magazines, intranets, employeeportals, social network communication policies and so on. On the contrary, they are absolutely necessary. However, the real solution to internal communication issues, lies in the chain of command. The majority of workers want a more direct link to the top, so that the boss “talks to me a bit more”.

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The Freaks Shall Inherit the Earth Entrepreneurship for Weirdos, Misfits and World Dominators Chris Brogan Wiley

It goes without saying that, in recent years, the business world has shifted far more quickly and dramatically than at any time before. New ways of working, employee empowerment and technology have all encouraged individuals to open their eyes to a world of possibilities. This change, according to author Chris Brogan, has paved the way for a fresh breed of entrepreneur; the “freaks, weirdos, and misfits… those who are unwilling to conform to traditional business structures and career paths”. These individuals, says Brogan, are set to disrupt industries – conducting business in a way that has not been experienced before. Peppered with examples from his network and people he admires, Brogan explains how this unique group of individuals is no longer in hiding. Instead, people are the empowered ones; driving change and becoming more successful faster. And who can argue with this when the “freaks” he refers to – such as Sir Richard Branson, Marie Forleo and Tony Hawk – have created hugely profitable empires from doing things differently. At just 200 pages, Brogan’s book provides a passionate-yet-practical guide to starting a “revolutionary” business; covering topics such as employeepreneurs, business frameworks and marketing.

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The overarching takeaway, however, is that business is all about belonging; offering advice on how to create a community of people who think and act like you, or as Brogan puts it “connect with your freaks”. For this reason, there is a subtle similarity to Seth Godin’s Tribes, although without the feel of a self-help book. The colloquial tone offers a sense of kinship, making it feel as though you’re sat discussing your future business venture with Brogan; him providing advice and a much needed pep talk to get you over the starting line. However as someone who has worked for what would now be deemed “freak-led” businesses, sadly this book didn’t really tell me anything I didn’t know, offering little in the way of new thinking. Nor did it really go beyond scratching the surface of entrepreneurship; though how can you do in so few pages? It also used the same examples for the same key messages. But for someone new to the business world, who is looking to set up on their own, the simplicity keeps it short, punchy and the tips make it a worthwhile read. Take the plunge. Learn to fail and then win. Dare to do something that “everyone else” doesn’t do. The Freaks Shall Inherit... Emily Perry, founder and CEO of communications consultancy, Humm Media

Dialogue | Dec 2014/Feb 2015


REVIEWS

Discovery path: RISK When business leaders think of risk, the first things that spring to mind are hedge funds and finance, but risks whether environmental, internal, political, financial or even environmental can rock a business to its very core – affecting everything from HR and recruitment to branding and marketing. For this reason, risk management is paramount in any organization. But good businesses face risks head on – knowing that risks don’t turn to issues because of “bad staff” or “bad

Contents: • 1. Risk-Based Performance Management The failure of risk management: This chapter provides a really compelling argument in favour of the need for business leaders to bring together risk with their strategies; how performance and risk cannot be separate from each other; and how a paradigm shift is now necessary to address risk going forward. It sets the scene perfectly for the rest of the (very useful) book, but also the remainder of this Discovery Path. http://bluebottlebiz.com/ book/risk-based-performance-management/?l=1#page=37

• 2. Brand Risk The case for risk literacy: This chapter connects risk to employer brand (as does the rest of David Abrahams’ book), but it very elegantly demonstrates the growing importance of corporate risk thinking and reporting about the brand; highlights new uncertainties as a particular opportunity for marketers to demonstrate their unique worth and contribution to business strategy; and suggests that a risk-literate component in marketing thinking will be well received and worthwhile throughout business. http://bluebottlebiz.com/book/brand-risk/

decisions” in themselves. Leaders can use a risk strategy to mitigate risk, but more importantly to develop competitive advantage, plan ahead, increase their sustainability credentials, impress stakeholders and secure longevity. That said, the following chapters and articles will guide you through developing and implementing a world-class strategy so risk turns from a threat into an opportunity. Take part in the full discovery path here: http://www.bluebottlebiz.com

Chapter 1: Risk and risk management The first gives a history of risk management at this stage in the discovery pathway. I thought it might be useful to step back from thinking about how to implement a strategy in your own business to investigate how “risk” came to be known as it is in the 21st century. The academic and historical insights are quite informative and this gives a useful overview of the growth of corporate governance. Feel free to leave this out of the pathway if time is not on your side. http://bluebottlebiz. com/book/tame-messy-and-wicked-risk-leadership/ reader/?go=xhtml%2Fch01.html

• 5. Tame, Messy and Wicked Risk Leadership Chapter 4: Risk therapy: the talking cure This chapter investigates the “culture” of risk management and provides quite a compelling psychological thesis on how to implement such a culture in the workplace. In essence, individuals in your organization will all view risk differently, so this chapter provides insight on how to communicate with staff and colleagues about risk management. http://bluebottlebiz.com/book/tame-messy-and-wicked-riskleadership/reader/?go=xhtml%2Fch04.html

reader/?go=xhtml%2Fch01.html

• 3. Risk Culture Building and strengthening: Structure and organization: If a company is to have a strategy incorporating risk, it is prudent that the executives and managers put a structure in place to allow this, and this chapter provides information on how this can be achieved. http:// bluebottlebiz.com/book/risk-culture/reader/#page=111

• 4. Tame, Messy and Wicked Risk Leadership Don’t let the amusing title fool you. This book is quite a serious psychological study into risk. We have selected two chapters:

• 6. Managing Risk in Extreme Environments Chapter 12: The seven laws of extreme risk management. I really enjoyed reading Duncan Martin’s entire book, because he looks at examples of risk and survival from epidemic and flood to avalanche and terrorism, and how these extreme risks can provide food for thought for business leaders. The whole book is worth a read, but chapter 12 summarizes his principles into seven easily digestible “laws”. It’s an “if you read nothing else, read this” and a great conclusion to this pathway of discovery. https://bluebottlebiz.com/book/managing-risk-in-extremeenvironments/reader/#page=171

See more at: www.bluebottlebiz.com

Dialogue | Dec 2014/Feb 2015

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REVIEWS

back to the future technology – BLUE BOTTLE BIZ’S TOP FIVE

Technology, Coaching for Innovation Cristina Bianchi, Maureen Steele Palgrave Macmillan

Making innovation in the workplace highly accessible, this book presents a step-bystep guide that is full of practical tips, models, exercises and interviews with HR and business professionals. It demonstrates the integral role that coaching plays in idea generation and the innovation process.

In the Shower with Picasso Sparking your creativity and imagination Christian Stadil and Lene Tanggaard LID Publishing

The New Edge in Knowledge Carla O’Dell Wiley

This will capture the best, most practical and innovative practices to ensure organizations have the knowledge they need in the future and can connect the dots and use knowledge to succeed today. How can we use Facebook, Twitter, Google and Amazon to make our firms and people smarter, stronger and faster?

Managing the MultiGenerational Workforce

Robert G DelCampo, Lauren A Haggerty, Meredith Jane Haney, Lauren Ashley Knippel

Ashgate This book identifies the characteristics of the different generations, considers their expectations and values, and how these influence the way they relate to one another. The authors examine implications for organizational culture and structures, management styles and approaches.

Manager 3.0 Brad Karsh, Courtney Templin AMACOM Manager 3.0 is the first management guide for millennials. They will master skills such as dealing with difficult people, delivering constructive feedback and making tough decisions – while gaining insight into the four generations in the workplace and how they can successfully bring out the best in each.

Technology and Knowledge Flow Guglielmo Trentin Elsevier

This book outlines how network technology can support, foster and enhance the knowledge management, sharing and development processes in professional environments through the activation of formal and informal knowledge flows.

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With a view of sparking my creativity and imagination, I picked up In the Shower with Picasso, a title offering a refreshing and unique look inside creativity’s “black box”. The reason for choosing it was co-author Christian Stadil, the enigmatic CEO of the sports brand Hummel who has intrigued me since he grabbed the world’s attention by sponsoring the Afghanistan national football team. Stadil’s unique personality shines throughout, with human storytelling at the heart of the book; recalling interviews with, and case studies from, some of Denmark’s most creative business people and their organizations. Whether you’re in a creative function such as brand or design, or working in finance or HR, you’ll be expected to come up with new ideas and, “think outside the box”. To do so, organizational culture plays a huge part and the Danish examples in the book strengthen this argument. So why the focus on Denmark? It is arguably one of the world’s greatest creative exporters, named as such by a Gallup Europe study, and home to the likes of Lego, Ami James (one of the world’s most famous tattooists) and Hummel. Their stories and others combine to develop a model designed to get the creative juices of any business flowing. As the book shows, the more creative the business, the more successful it will be. One example is one of the world’s best restaurants, the two Michelin-starred Noma. At Noma, employees are encouraged to be as creative as possible, trying new ideas and being fearless. There is no idea that isn’t worth trying and failure isn’t penalized. With creativity at the heart of the business’s manifesto, the employees are engaged and the success of the business speaks for itself. This book offers enjoyable and fascinating stories of organizational culture and creativity that together creates a unique model for businesses to use – one that suggests culture should be “characterised by play, humour and a degree of risk-taking”. Essentially, engagement, risk and creativity are all connected and if we get the balance right, businesses will reap the benefits. Hugh Thomas, brand manager, Vita Coco

Dialogue | Dec 2014/Feb 2015


REVIEWS

Telling the story

apps apps for leaders

The heart and soul of successful leadership Geoff Mead Jossey-Bass

Dragon Dictation As famous film director George Lucas once said, “great stories happen to those who can tell them” – and this second title from Geoff Mead wholeheartedly concurs. In Telling the Story, the author’s definition of a story as “an imagined experience narrated with enough detail and feeling to cause your listener’s imagination to experience it as real” is what, in essence, every inspirational leader I’ve come across has in common – they are excellent storytellers. They lead by telling a story with a compelling plot to which their people return day-after-day in order to discover what’s next. This book inspired me to believe that if we can transform business strategy into great stories, where the plot thickens as we get closer and closer to the desired results, we would be able to connect both the hearts and minds of our people. The strategy would reveal both the character of the organization and its intellect at the same time, helping us achieve great effectiveness. Mead introduces very practical tools and techniques on how to develop storytelling skills. In one great example, he challenges the reader to tell a story about his or her shoes. Shoes are seen as a commodity – however, the story that lies behind our decision to pick certain pairs of shoes becomes, as the author says, “the secret reservoir of values”. A remarkably simple concept that few consider and can be applied to many a story. This is a unique book with excellent and unexplored and unexploited topics. I would certainly recommend to every leader who aspires to leave a legacy, although I’d suggest readers gain greater knowledge of authentic leadership and self-awareness prior to reading it. The person we spend the most of our time with, yet know the least about, is ourself. And, as the author explains, the root of good storytelling lies in “knowing telling”. This is something that cannot be achieved overnight. Unlike leadership, storytelling is not a science, it is an art. Ana Brant, director of global guest experience & innovation, Dorchester Collection

Dialogue | Dec 2014/Feb 2015

Who says you need a personal assistant to take down your correspondence from emails to Facebook updates? Dragon Dictation is an easy-to-use voice recognition application powered by Dragon NaturallySpeaking that allows you to speak easily and see instantly your text content for everything from email messages to blog posts on your iPad, iPhone or iPod touch. This handy little app allows you to use your voice to dictate a text message or email, create Facebook status updates or a tweet, and anything in between – simply speak and see your text content appear. You can say just about anything to it as well. Dragon Dictation recognizes and transcribes most words at speed and provides the flexibility to dictate for any situation. So you can “speak” your tweets and status updates, speak and type and send an email, send texts and emails up to five times faster than typing and easily dictate personal notes and reminders. When you finish speaking, Dragon can detect this. The app processes the language before providing typed text. When the text appears on screen, you can select any word to delete or revise. It also has a convenient editing feature that provides a list of suggested words. The developer Nuance has refined and tweaked its speech recognition engine for the app and the speech recognition is so good that you could easily dictate to it without giving too much attention to the words on your screen, then go back and edit after you have finished speaking. Dragon Dictation is a dictation app, and not a notetaking app, so you can’t save notes inside the app. But as far as free apps go, Dragon Dictation does a good job in transcribing what you say aloud – but is of much more use as a basic dictation device, rather than as a machine for recording meetings, conferences or speeches.

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REVIEWS

the world’s most influential business thinkers. “If you thought predicting the future was difficult, try ignoring it” “Knowing what you stand against is as helpful as knowing what you stand for” “In business as in war, the simplest thing is always the most complicated”

“Work is the great gateway to cosmic harmony”

“Conflict if well managed is a source of progress, the opposite is true when everybody thinks alike”

“The most essential step to success is to know yourself” “When you have an idea, a rough shape will do. Don’t let the whole thing be pecked to death by ducks” “Define your own brand… and keep a tight reign on perfectionism”

20/20_cover_2nd edition.indd 1

1. Learn to fight: a nice passive start. He regards competition as inevitable, but warns against seeking it for its own sake. 2. Show the way: leadership determines success and is achieved through self-discipline, purpose, accomplishment, responsibility, knowledge and example. 3. Do it right: all competitive advantage is based on effective execution. 4. Know the facts: to achieve success, you must manage information well. 5. Expect the worst: do not assume the competition will not attack – instead rely on adequate preparation to defeat the opposition. 6. Seize the day: the most important success factor is speed, and quick victory is the aim of competitive action. 7. Burn the bridges: position yourself where there is a danger of failing. When people are unified in their purpose, no obstacle can stand in their way. 8. Do it better: combine expected and unexpected tactics – the latter are more powerful when applied judiciously. 9. Pull together: organization, training and communication are the foundations of success. 10. Keep them guessing: the best competitive strategies have no form – they are so subtle that no one can discern them. If taken the wrong way, the whole idea of comparing war with business could lead to overly-macho approaches, and arguably this has already happened the world over. If you dig deep, this is not really what the book is all about, but you can see how certain elements have been extracted and wilfully made to appear pugnacious. While regarding competition as inevitable, Karause warns against seeking it for its own sake. Many modern businesses would benefit from not antagonizing their competitors. In truth, the overall message in the book is: “Do not engage the enemy unless it is absolutely necessary.” In other words, this is as much a book about the avoidance of war as the enactment of it. Kevin Duncan is a business author. His blog greatesthitsblog.com summarizes 200 important books.

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£9.99 IN UK ONLY

Robert Mighall Carlos

Rodrí guez

Braun

GrANT

20 great lists ALICIA KAUFMANN by 20

outstanding

business thinkers

Luis

Huetea Covadong O’Shea JUANCARLOS EICHHOLZ

JAVIER

Fernández Aguado

dave

ulrich

JUAN

The military strategist Sun Tzu lived in North Eastern China 2,500 years ago, around the same time as Confucius. There is no direct evidence that he ever wrote down any of his thoughts. It was probably done about 100 years later when another warlord called Cao Cao carefully annotated a text based on his teachings. In 1996, Donald Krause morphed it into The Art Of War For Executives, suggesting that the wisdom of this ancient text is an invaluable commentary on modern business topics. His 10 principles for competitive success are:

JANE SUNLEY

RDO

“Luck tends to be kinder to those who seek it, who are courageous and above all who dedicate work and effort to a project”

Andy Law JOHN Salvador Alva

Donald Krause

400 ideas from some of

GAKhLLurAshed LUDEISHN UGARA

Sun Tzu: The Art Of War For Executives

Salvador Alva Carlos Rodríguez Braun Khurshed Dehnugara Kevin Duncan Juan Carlos Eichholz Javier Fernández Aguado Luis Gallardo Ignacio González-Posada John Grant Luis Huete Alicia Kaufmann Andy Law Silvia Leal Juan Mateo Robert Mighall Piero Morosini Covadonga O’Shea Shelley Reciniello Jane Sunley Dave Ulrich

MATEO

SHELLEY RECINIELLO

back to the futurE

Kevin Duncan Ignacio González-Posada

20/20:

As part of its 20th anniversary celebrations, the LID publishing group invited 20 of its thought-leading authors to contribute to this unique book – a collection of 20 lists, with each list containing points of advice based on each author’s area of expertise.

20 great lists by 20 outstanding business thinkers

Drawing on lessons from a variety of leaders ranging from CEOs to ancient gods, 20/20 brings together a fascinating range of topics including: “starting from scratch”; “reaching for the top”, “managing change”, “being distinctive in business” and “avoiding self sabotage”.

Each expert author provides a focused and accessible list of ideas in their own style making the book lively and engaging to read but succinct, practical and easy to apply.

Various authors

This book is packed full of fascinating insights and fresh ideas and is an ideal addition to the bookshelf of any busy manager, executive or student.

LID Publishing

Psychologists, business professors, industry leaders and company directors share their unique, savvy and rich ideas and views on work and life in this rare collection.

Silvia Leal

PIERO MOROSINI

preface by Marcelino Elosua, edited by David Woods

24/09/2014 11:05

I’m not sure if it’s the lists element, the appeal of 20/20 or just the attractively-designed cover that made me pick this book from the many business titles out there, but I was somehow compelled to buy it. According to the blurb, the LID publishing house invited 20 of its 1,700 authors to contribute to this innovative, new paperback as part of its 20th anniversary celebrations. Great idea! 20/20 contains 400 ideas from a diverse collection of authors who write in a variety of styles. This makes for a highly informative, easy read from thinkers and experts in the fields of psychology, business, marketing, HR, organizational development, history, fashion, media and philosophy. There really is something for everyone within these pages. It’s the sort of book you could digest in one sitting (perhaps on a short flight); you’ll probably end up marking out more than a few of the pages for later reflection, as I did. Or you could dip in and out whenever a bit of inspiration, imagination or information is needed. Either way, it’s a book every business leader should have on his or her shelf. Take the section written by marketing expert and trouble-shooter, Kevin Duncan, for example. He writes in a practical, down-to-earth style. He includes plenty of “quick wins” that anyone could implement in sections headed, for example, “Get stuff done”, “Think inside the box”or “The next big thing might be small”. Since the authors of this book span five countries, it’s interesting to note each one’s interpretation of the brief; although every one has shared his or her more relevant ides from within their area of expertise. South American Piero Morosini reflects on lessons learned from the ancient civilizations in his 20 Andean Lessons and Ignacio Gonzalez-Posada shares 20 Business Lessons to be Learned From War, alongside HR guru Professor David Ulrich, entrepreneur Andy Law and US psychologist Dr Shelly Reciniello. I would very much recommend this book as a stimulating and relevant, up-to-date read. Jane Sunley, CEO, Purple Cubed

Dialogue | Dec 2014/Feb 2015


Your

Edited by Kyomi Wade

your.dialogue@lidpublishing.com

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The Dialogue Review

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See my article on Environmental risk: crisis into opportunity via @DialogueTweets

@heyidgroup

Are you a Game Changer? I wouldn’t say I am, but how do you fare? @nuriacsopena

Strong #employer brand is more important than offering large #salaries vía @DialogueTweets @vickisalemi @ joanncorley” @go4biz

Your company should act and think like a rock band @GDruckerForum

“Moving towards the great transformation” an ITW of @rstraub46 by @davidpaulwoods for @DialogueTweets #GPDF14

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Optimists wanted, calls Duke CE CEO Mike Canning in the latest #DialogueJournal @DialogueTweets

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Get online; get social; get involved

ON THE WEBSITE: Help wanted: conventional thinkers need not apply Jeffrey Kuhn, CEO, GrowthLeaders Established companies tend to place an inordinate focus on defending and extending today’s core business, often at the expense of creating tomorrow’s new growth platforms. The primary reason for this is a dearth of strategic leaders who can think broadly and creatively beyond the boundaries of the core business and envision exciting new growth platforms that transform the lives of customers and create fresh market spaces. The scarce resource is not financial, it’s cognitive—a lack of imagination and unconventional thinking. Read the full article at www.dialoguereview.com

Reflections on generational perspectives of authority in business Khurshed Dehnugara, CEO, Relume A recent trip to India had me reflecting on the way the forces governing the industrial society have been in my family for generations. My grandfathers were part of the British Empire in India and Kenya; they would have experienced the creation and development of our Industrial Age first hand. My paternal grandfather spent much time away from home helping to construct and maintain the railways that still cross the land. My maternal grandfather worked as an administrative clerk on the docks in Mombasa, Kenya, managing the passage of freight from India to Africa to Europe and back. I imagine their work lives were like cogs in the machines that began with the East India Company, maybe the world’s first iteration of an Industrial Age organization. I’m sure hierarchy, management, structure,

process, efficiency focus, avoidance of error and punishment were all part of their cultural norms. My maternal grandfather used to have a whiskey with soda, play whist and name Saturday nights “golden night”. I have a fantasy that if I was able to talk to them about their work life it would not have sounded very different to the cultural conditions our organizations still operate in today. Read the full article at www.dialoguereview.com

The global rise in female entrepreneurship Terry Neese, founder, IEEW Is the rise in female entrepreneurship due to the fact that women tend to have companies or organizations that are more focused on the greater good? Studies show female entrepreneurs who receive micro-loans are more likely to use that money to build their businesses to give back to their families and their communities than their male counterparts. This can be seen in the products and services that womenowned businesses produce, and the organizations into which they put their time and money. According to the National Association of Women Business Owners’ 2014 State of WomenOwned Businesses Report, 92% of women surveyed predict that more women will be venturing into entrepreneurship. Hillary Clinton’s International Fund for Women and Girls initiative reports that, in emerging markets, women reinvest 90 cents of every additional dollar of income in their families’ education, health and nutrition. Think of women’s increased income and assets as a gender dividend driving family, community and country wellbeing. Read the full article at www.dialoguereview.com

Dialogue | Dec 2014/Feb 2015


YOUR DIALOGUE

Global Warning: The E Word Our global poll found that environmental threats are seen as the area of most risk for more than half of Dialogue readers and this is something particularly relevant as it relates to our latest social campaign. As Carl Hall wrote in the September edition of Dialogue, environmental risks often hit wallets harder than wars – so why are they so often left out

of business priorities? Dialogue is taking action to raise awareness of environmental risk management with thought leaders in this field through a series of online events. Drop me an email at Kyomi. wade@lidpublishing.com if you want to get involved or simply stay updated by visiting dialogureview.com/ globalwarning or Twitter @Dialoguetweets

Poll | We asked: Which of the following do you think poses the greatest risk to global business? Financial instability 23% Political fragility 4% Environmental threats 54% International complexity 8% Risk aversion and reluctance to grow 8% Other 4% Do you agree with the results? Go online to get involved in the debate. www.dialoguereview.com

> COMING UP NEXT MONTH: We explore global healthcare, from pandemics to genomapping

Dialogue IS BROUGHT TO YOU BY... editorial board

editorial

Dr Liz Mellon

David Woods

chairman

Editor-in-chief david.woods@lidpublishing.com

Professor Pedro Nueno

DEC 2014 / FEB 2015

President, china europe international business school

Karina Robinson Founding Principal, Robinson Hambro

Michael Canning

Laura Hawkins art director

Kyomi Wade

CEO, Duke corporate education

Social and community manager

David Woods

Glenys Trevor

editor-in-chief

Management Martin Liu Publisher

Nikki Mullin BUSINESS DEVELOPMENT manager nikki.mullin@lidpublishing.com

Raul Vazquez digital and marketing

production editor

Sarah Wild copy editor Copyright 2014 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the publisher. While we take care to ensure that editorial is accurate, independent, objective and relevant for the readers, 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. This journal is also supported by Knowledge Partners, including Duke Corporate Education as Lead Knowledge partner. Whenever an author is related to a Knowledge Partner it will be noted as such. Dialogue takes every effort to credit photographers but we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omitted a credit for your image, please email the editor. ISSN: 2053-4361 Printed by Pensord, www.pensord.co.uk

Dialogue | Dec 2014/Feb 2015

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opinion

Karina Robinson Founding partner, Robinson Hambro, and former senior editor of The Banker

From Ethiopian emperors to CEOs

E

mperor Tewodros II, who reigned over much of Ethiopia for a decade from the mid-1850s, was a visionary leader. His star rose as he unified a great deal of the country, abolished the slave trade, looked to undermine the excessive power of the Church and was vocal in his disapproval of battlefield mutilations. Yet as the years wore on, excessive power, a sense of God-inspired destiny and probably some mental imbalance lead him to become a monster of massacres and murders, as detailed in a gripping book, The Barefoot Emperor by Philip Marsden. The pendulum often sways from recognition to obscurity, from undue heroism to disproportionate opprobrium, for human beings and institutions. Continuing the royal theme, consider the British Royal Family. Following Princess Diana’s death in 1997, they were perceived as unsympathetic and out of touch with the nation. Seventeen years later, they are riding high with the support of 75% of British people. And so to the corporate and financial world. Assuming the pendulum that has swung too far will always swing back, which company is due for a fall? There are common threads in many examples – the hero CEO who turns into an overcontrolling, hyped up central figure; over a decade in the job; the blind enthusiasm of investors/the public; a stream of acquisitions and the lack of an obvious successor. I propose creating an index, called

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CRASH, based on companies where a minimum of two of the above factors apply. Its motto would be the Biblical quote: “I have seen everything that is done under the sun and, behold, all is vanity and a striving after wind.” Investors who shorted CRASH would be winners.

Assuming the pendulum that has swung too far will swing back, which company is due for a fall? Tesco, captained by CEO Sir Terry Leahy, was the retailer of choice in the UK for a decade. Then it started losing market share to new competitors and, this autumn, discovered a £260m black hole in its accounts. Many blame his successors – but he was in power for 14 years and a gung-ho company culture takes many years to reverse. Something similar may be about to happen at SKF, the Swedish ballbearings makers, transformed by CEO Tom Johnstone, who is stepping down after 11 years. Jeff Bezos’s Amazon is already in the index, not least because like Jamie Dimon of JP Morgan Chase, the founder has gathered a triumvirate of titles to himself: president, CEO and chairman.

A similar story is to be found at Fiat Chrysler Automobiles. CEO Sergio Marchionne turned around the Italian (and subsequently the American) car company. He proceeded to merge them. He hasn’t looked back from 2004 when he became CEO of Fiat. So far so good. In October 2014, he listed the shares of the merged entity on the New York Stock Exchange to gain access to larger capital markets, a necessary step on the road to creating the world’s largest car maker by taking over another target. Plus, last month, he engineered the resignation of Ferrari chairman Luca Cordero di Montezemolo and appointed himself. Another example is Volkswagen. Martin Winterkorn has been chairman of the management board since 2007. He insists on personally signing off every model design change and refuses to speak English when dealing with investors. Last but not least is Simon Wolfson, CEO of retailer Next since 2001. When the Financial Times writes in an article that “as so often, Simon Wolfson at Next is showing how to do it”, you know his firm is a worthy component of the index. Companies in CRASH might be taken out of the index if the CEO took on a fool (a reputable successor or chairman), like King Lear’s, to point out his conceit. If the company head actually listened to the fool – unlike Shakespeare’s famous king – we would slip them quickly into our BULL index, whose companies we would fervently buy.

Dialogue | Dec 2014/Feb 2015


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Dialogue Review Issue6 December 2014  

Dialogue is an original, practical and world-class journal, which focuses on key issues and challenges encountered by business leaders and m...

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