Page 1

EVE POOLE

SHARMLA CHETTY

Q2 2019

THE NEW BUSINESS CONTEXT FOR LEADERS

Performance under pressure Cape crusader JOE PERFETTI DIALOGUEREVIEW.COM

THE NEW BUSINESS CONTEXT FOR LEADERS

Rethinking risk

Women leaders The ascent to the top

WOMEN LEADERS Q2 2019

LEADERSHIP

INNOVATION

FINANCE

MARKETING

STRATEGY

Giving feedback

The three spheres

Jewel in the crown

Five ambassadors

Age of ecosystems

Mastering tone and context

Differentiation for success

Financial services in India

Brand and business kingpins

Creating customer value


BEYOND THE WRITTEN WORD AUTHORS WHO ARE EXPERTS LID Speakers are proven leaders in current business thinking. Our experienced authors will help you create an engaging and thought-provoking event.

A speakers bureau that is backed up by the expertise of an established business book publisher.


CONTENTS

3

Digest FOCUS

16

14 FOCUS WOMEN LEADERS

16

Women that lead

Wome from t

22

Performing under pressure

26

We chi sha lea

Men: through the looking glass

Wo wro that Pep mak maj mal look prop con on g Inst form – re wor in D high exec

28

The future is fearless

rem abo we l fam min thei Dialogue Q2 2019

REGULARS 7

80

My edit

News nation

Patrick Woodman on diversity

Estonia – the digital nation

8

Spark What you need to know

9

Great minds Michael Chavez on ‘small p’ purpose

82

Reviews Books and apps recommended for you

13

30

86

Michael Canning on talent

Ben Walker meets fearless reformer Sharmla Chetty

Liz Mellon on having the final say

Upfront

The big interview

Last word

Q2 2019 Dialogue


Meet with Anyone, Anywhere

With Citrix GoToMeeting you can hold meetings online regardless of where your customers, colleagues or partners are located. With HD video conferencing, screen sharing and integrated audio you can still communicate professionally as if you were in the same room without the need to travel.

For reliable, simple and professional online meetings, try Citrix GoToMeeting for free – gotomeeting.co.uk

Š 2015 Citrix Systems, Inc. All rights reserved. Citrix and GoToMeeting are trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and


CONTENTS

5

In depth LEADERSHIP & PEOPLE

I N N O VAT I O N & TECHNOLOGY

35

45

36

46

Kate Cooper: The leadership column Mastering situational feedback

42

Managing the risks of virtuality

Vivek Wadhwa: The innovation column Operational excellence

50

Why test-and-learn works

FINANCE & AC C O U N TA N C Y

MARKETING & SALES

53

63

Phil Young: The finance column

Giles Lury: The marketing column

54

64

Rethinking risk

The five ambassadors

58

68

The jewel in India’s crown

The rise and fall of great sales leadership

S T R AT E G Y & O P E R AT I O N S

71

Ben Walker: The strategy column

72

Ecosystems and the new age of customer value

76

The expectations management game

Q2 2019 Dialogue


6

AGENDA

Contributors

EVE POOLE

Eve Poole is an Ashridge associate and renowned commentator on ethics in business and leadership. After gaining her MBA from the University of Edinburgh, Poole worked in change management and financial services with Deloitte before pursuing a PhD at Cambridge University investigating capitalism and theology. She is also commissioner and chairperson of Gordonstoun School in Moray.

HANNA NAIMA MCCLOSKEY

Hanna Naima McCloskey is the founder and chief executive of Fearless Futures. With experience in communications, research and finance with the United Nations, NGOs and the Royal Bank of Scotland, she is considered an expert in inequality, leadership and the creation of socially just, empowered and inclusive communities and workplaces. McCloskey is of Algerian-British heritage and has lived, studied and worked in Israel-Palestine, Italy, USA, Sudan, Syria and the UK. Dialogue Q2 2019

ILKA DUNNE

Dr Ilka Dunne heads up leadership and culture at Rand Merchant Bank. She has authored numerous textbooks, articles and over 700 online lessons, covering general education, arts-based research methods, people development, identity transitions, diversity and gender. Passionate about youth unemployment, she is an executive board member for the South African Graduate Employers Association.

AL ZEITOUN

Dr Al Zeitoun, PMP, is an organizational transformation expert with global experience in strategy execution. Holding his PhD in civil engineering, Zeitoun has occupied leadership positions with multibillion-dollar companies, including executive director for Emirates Nuclear Energy Corporation (ENEC), Abu Dhabi, UAE, and served as chief projects officer at the International Institute for Learning. He advises businesses on operational excellence as a consultant.

LIZ MELLON

Dr Liz Mellon is a world-leading business educator, author and leadership development expert. Formerly professor of organizational behaviour at the London Business School, she is executive director of Original Strategy and chair of the Dialogue editorial board. Mellon cofounded the first Duke Corporate Education office outside the US, and led Duke CE India. She is a trustee for Lupus UK.

TO N Y O ’D R I S C O L L

Tony O’Driscoll is a professor at Duke University’s Fuqua School of Business, a research fellow at Duke Corporate Education and former global head of Duke CE Labs. He worked at IBM and Nortel Networks before serving as regional managing director for Asia from Duke CE’s Singapore office, where he focused on identifying and implementing next-generation learning strategies that accelerate the development of leadership capabilities required to succeed in the present business context.


AGENDA

7

My edit

The latest McKinsey research warns that business’s progress in improving the number of women in leadership roles has remained slow. Frankly, that verges on negligence when the evidence is overwhelming: organizations with gender-balanced leadership financially outperform their competitors (as do those with ethnically-diverse teams). What other source of competitive advantage would be so neglected? One side-effect of this scarcity is that we’ve heard too few stories of women who have scaled the heights of business. Our cover feature goes some way to putting that right, with stories from 11 female leaders around the world, as told by Dialogue’s Liz Mellon (page 16). They are compelling insights. Many of our interviewees displayed real grit in overcoming barriers to their success. But isn’t it time we tore those barriers down? One person with a stunning story of overcoming barriers – literally – is Sharmla Chetty. The leader of Duke Corporate Education’s European and African arm, Chetty’s childhood anger at the injustices of apartheid grew into a resolute drive to succeed in business, complemented by deep respect for the people around her. Read her remarkable interview on page 30. Of course, debates on gender at work are a microcosm of wider social conversation. Hanna Naima McCloskey asks, in the wake of #MeToo, how we can better handle the complexity of a non-binary world (page 28). Ilka Dunne looks in the mirror and recognizes that the re-shaping of female identity may have left some men with a confused sense of their place in the world. In that inclusive vein, Eve Poole’s feature identifies 17 critical moments in the formation of leadership skills (page 22). Irrespective of gender, it’s a powerful checklist for anyone looking to build some serious leadership muscle.

The rest of the issue is packed with insight from around the world. Nikhil Raval (page 58) examines India’s flourishing financial services. Al Zeitoun looks at how to achieve organizational excellence in today’s fastchanging world (page 46), while Camelia Ram explains why agile’s test-and-learn approach works so well (page 50). Tony O’Driscoll (page 72) explores the rise of business ecosystems. For many, they pose stark choices: enter an ecosystem, compete, or risk withering away outside the walled garden – as Nokia did. Elsewhere, Joe Perfetti gives a masterclass on risk (page 54). Not only will it help you rethink how you budget; it shows why better strategy could be based on small bets. Richard Finn argues that leaders need to invest more time in their remote teams (page 42). Ignore the risks of virtuality at your peril. The costs of failure to adapt to technological change are reinforced by Ben Walker in his strategy column (page 71). It’s my privilege to take over as Dialogue editor from Ben, who has shaped the magazine so brilliantly over the last four years – and my very good fortune that he will be our editor-at-large. In my new role, Michael Chavez’s column on purpose (page 9) struck a particular chord. My own new ‘small p’ purpose has been to pull together articles from fantastic authors around the world – and to ensure we hit our press deadlines. Thanks to the superb team behind Dialogue, we have achieved that much. Our collective ‘big P’ purpose remains to provide you with insight and analysis that helps you to fulfil your potential as a leader in your field. In that, I hope we have at least partially succeeded. Enjoy the issue. Patrick Woodman is editor of Dialogue

Q2 2019 Dialogue


8

Spark

W H AT YO U N E E D TO K N O W

China demands diverse content China’s iResearch Annual Summit explores the internet in 2019 China’s current economic environment is now dominated by Millennial consumers and an accompanying new take on content, concluded China’s top internet experts at the recent iResearch Annual Summit in Shanghai. “We are seeing a major shift from an audience hungry for content, to users utilizing the internet for spiritual, intellectual upgrades,” said a breakout group of attendees, debating the challenges of 2019. As well as a generational change, noted one speaker, we are also seeing an increasingly diverse and inclusive society getting online: the traditional Chinese market must now meet diverse needs. Also up for discussion at the 50,000-strong event was the role of

corporate and industrial servicesoriented internet companies. Projections presented at the summit suggested that the annual compound

growth of the service sector for the Chinese internet economy will rise to 37.7% – double that of the commodity sales segment – by 2020. The scale of the service sector is set to exceed that of the sales category in 2020. “Enterprises need to pay attention to where the market is, where users are, and how to win users,” remarked researchers. “All of this stems from the ability of enterprises to establish business decisions that win the minds of users, and to mine the needs of users, define and accumulate products, in order to rationally judge market trends in the market of cross-border melee.” — Dialogue is media partner of the iResearch Annual Summit

Employee engagement is dish of the day Workplace learning and wellbeing experts descend on Europe’s first Productivity Summit When stocks crashed in 2008, workplace productivity went with them, revealed Kisaco Research’s latest venture, The Productivity Summit. The first of its kind in Europe, the summit saw 20 crossindustry productivity case studies, models and strategies from Unilever, Twitter, Rio Tinto, AstraZeneca, Investec and more. The Productivity Summit, held in London, touched on office space, flexible working, workplace psychology and creativity, with employee engagement systems and modelling at the core of every successful strategy presented. “Employee engagement has been proven to improve outputs,” noted Dialogue Q2 2019

conference director, Angela Tyrell, “whether it’s through the John Lewis Partnership’s employee shareholder model, Team Sky’s culture of ‘winning behaviours’, or Unilever’s investment in helping employees find purpose in their work.” Another example was Perpetual Guardian’s four-day week trial, which saw over 200 employees across New

Employee engagement has been proven to improve outputs

Zealand test out the new schedule. Christine Brotherton – head of people and capability – was on hand at the summit to reveal the results, a year on. “Our trial was to challenge our employees to look at their output; their value to the business,” Brotherton explained from the stage. “Job performance was maintained, and we saw incredible increases in levels of employee engagement.” Could the four-day week be the next step to sustainable workplace productivity? Time will tell, the audience concluded. — Dialogue is media partner of The Productivity Summit 2019


9

GREAT MINDS WITH MICHAEL CHAVEZ

For many, purpose with a small p is easier to access

CONQUER THE NEXT PEER COMPETITION

Shutterstock

Claim your place in the future of work One in five workers will have AI as a co-worker by 2022, and this – with other technologies – will change the skillset and nature of transformational leadership required for the future. Amidst such pace and uncertainty, award-winning growth and leadership consultancy Rialto’s new AI-powered Accelerated Leadership Index (RALI) promises leaders a clear path to great leadership in tomorrow’s world of work. Based on more than five years of research with Harvard Business School, RALI maps out leadership talent markets, connecting users to a real-time map of skillsets, capabilities and experiences possessed by peers and competitors. In addition, RALI can compare a leader’s profile to the industryspecific capabilities soon to be required, and even suggest a development plan as well as a career scenario planning tool. Rialto has partnered with Dialogue to offer readers an exclusive 75% discount for all subscriptions to RALI, and a complimentary 90-minute session with an award-winning Rialto leadership consultant in the country of your choice. Visit ralionline.com and use code Spr1n9 to claim your RALI package by 30 April 2019.

Search for your inner purpose When a firefighter runs into a burning building to save someone from the smoke, she’s not thinking much about the profit and loss of her local brigade. People who work in frontline services – fire, ambulance, coastguard – do so in large part from a sense of personal purpose. They are there to help people – that’s what drives them. What the great business thinker Daniel Pink calls the ‘capital P’ purpose of individuals is largely circumscribed by the organizations in which they work: “I’m a fireman because I want to save lives.” “I work in the charity sector because I want to help the less fortunate.” “I’m a teacher because education improves society.” Yet the capital P purpose of those working in charitable or public services is more easily accessed than for those who work in private commerce. “We are so seduced by capital P purpose,” Pink told me. “When I talk to groups about ‘lowercase p’ purpose, they heave a sigh of relief because, all of a sudden, it is something they can access. Small p purpose is something simpler. It answers: how am I making a contribution in this role? “So if I’m in commercial adhesives or chemicals, my individual purpose might be to help my colleagues get a product out the door. I’m going to help make a contribution internally. I might not have fed the hungry – I just helped out a teammate.” Organizations provide the big picture purpose. But employees need to create a personal purpose that is aligned to the organization yet correlates to their particular context. This point was illustrated vividly by the Great Mind that is the American Express chief human resources officer Kevin Cox. Cox’s capital P purpose is helping people and developing great talent – a noble calling. But, when I met with him recently, Cox told how he had sketched out his personal ‘small p’ purpose in business

on a single side of paper. “It helped me realize how I should use my time and energy to accomplish what I needed to do in this role,” he told me. “It provided clarity about what I needed to call up the courage to dig into issues, even if it was unpleasant.” Nobody relishes opposing or challenging senior figures in organizations, questioning business strategy or critiquing company structures. Yet for organizations to improve, such challenges are crucial. “There would be times I would take hard stands with my board and senior leaders,” Cox said. “I never did this willy-nilly, but rather because I thought it was hardwired to the purpose, and if I wanted to be true to it, I would need to play through some of this pain.” Cox’s advice for leaders and executives looking to define their small p purpose is to ask themselves a series of questions. What are your personal aspirations and goals in your current role? What are your passions? What are your unique skills and abilities? What is most important to you? “At the intersection of these,” says Cox, “is purpose.” Overarching organizational statements are likely to feel remote, impersonal – even unattainable – to many inside the company. Pink stresses that small p purpose isn’t something we craft or create. It is already inside individuals. It is something to discover – and to excavate. The Great Mind of Kevin Cox has it right. “It is difficult to find a ‘rational purpose’,” he warns. “Purpose should transcend the day-to-day. You can’t be afraid to emote and think about your underlying passions.” — Michael Chavez is chief executive of Duke Corporate Education — A version of this article originally appeared on Forbes.com Q2 2019 Dialogue


LEADERS ARE THE GREATEST LEVERS FOR WINNING IN AN UNPREDICTABLE WORLD...

To win in today’s world, filling knowledge gaps is no longer enough. Yesterday’s wisdom won’t help leaders prepare for what lies ahead: more volatility and less predictability. Leaders must do more than simply learn. To be able to grapple with the unknown, they have to reorient and rewire. As our challenges become more global, social and complex, leadership is becoming more and more critical to business success. Duke Corporate Education is the premier global provider of custom solutions that enable leaders at all levels to adapt and move the organization forward. With delivery in over 75 countries, we work together with clients to understand their context and craft the right educational solution for any level of leadership — executives, high potentials, directors or managers. We’re here to help leaders get ready for what’s next.


...WE GET LEADERS READY FOR WHAT’S NEXT


GLOBAL FEMALE LEADERS 2019 THE ECONOMIC FORUM FOR FEMALE EXECUTIVES Our world-class speaker line-up includes:

Susan Uthayakumar Country President Schneider Electric, Canada

Ellen Zentner

Michaella Rugwizangoga

Managing Director & Chief US Economist Morgan Stanley, USA

CEO Volkswagen Mobility Solutions, Rwanda

Dr Parul Pandey Vice President Talent & Engagement DIAGEO, India

Dr Katarina Barley

Dr Cecilia Malmström

Federal Minister of Justice and Consumer Protection, Germany

EU Commissioner for TRADE European Commission, EU

COLLABORATING TO BUILD A BETTER WORLD

Readers Discount: € 500,00 Use code: GFL19AD

13th – 14th May, 2019 | HOTEL ADLON KEMPINSKI, BERLIN | GERMANY

www.global-female-leaders.com


UPFRONT

13

MICHAEL CANNING

We must reframe how we measure potential

Thinking outside the nine-box Michael Canning is global head of new businesses at Duke Corporate Education

The ninebox grid is measuring potential for a world that no longer exists

Most organizations I’ve worked with use some version of the popular nine-box grid. The tool is designed to capture an employee’s performance, from underperforming to outstanding, and measure their growth potential, from low to high. On the two extremes, a score of low/low puts you in jeopardy. High/high means the person has the future ability to perform a job two levels above their current role. But the nine-box grid is measuring potential for a world that no longer exists. On a recent webinar, I hosted learning experts Heather McGowan and Chris Shipley (see also Ben Walker, page 71). McGowan described the world we are navigating today as a “superstorm of ambiguity” – driven by the combined disruptive effects of exponential technologies, fast-changing interconnected markets, and climate change. Amid this maelstrom, the world of work is also changing exponentially. Implicit in the current concept of performing a job two levels above a current role is consistency of industry and, in most cases, function. McGowan’s research indicates the generation entering the workforce today may have 17 jobs across five different industries. Not surprising, given the US Bureau of Labor Statistics suggests that 65% of the jobs the next generation will occupy don’t yet exist. And, as the famed Oxford study conducted by Frey and Osborne reports, 47% of current work is at risk of automation. Given this, the nine-box concept of potential needs to yield to something that assesses the creativity and collaborative ability to see and solve more complex problems across industries. McGowan posits that success in this new world of work will belong to those who command the following new foundational skills and dispositions:

1

Agility Learning agility is an understanding

of how we learn, the ability to learn and – equally important – unlearn. According to the University of Michigan’s Scott DeRue, speed and flexibility are the two most important

factors determining learning agility. Speed to comprehend lots of information quickly, and figure out what is most important; flexibility to change frameworks and understand how different things are connected. Adaptability The ability to navigate ambiguity and change. The ability to move comfortably in uncertainty and faster change is a force multiplier when it comes to turning learning into action. Agency The motivation and ability to affect change over your work and career. This includes the self-awareness and motivation to take ownership of your work and your future, and not sit passively on the career escalator. Humanity Human-possessed qualities, like empathy, social intelligence, creativity and collaboration, are difficult to replace with automation. As the neuroscientist Vivienne Ming says, “To be robot-proof, become more uniquely human.” The business challenges will become more complex, and more of the most valuable work will cut across more boundaries, internally and externally. People who can bring others together to solve problems and implement solutions will be at a premium.

2 3

4

Rita McGrath, strategy guru at Columbia University, argues, “It is time to move beyond the notion of sustainable competitive advantage. Organizations need to forge a new path to winning, capturing opportunities fast, exploiting them decisively and moving on before they are exhausted.” The same is true for jobs. Roles as they are currently constructed are going to change rapidly. And the knowledge and skills people have accumulated, which gave them performance advantages, will become more transient. It is, therefore, time for us to rethink the notion of potential and how we measure it. McGowan and Shipley’s multidimensional model points the way. Meanwhile, the retirement of the nine-box grid is an important – and necessary – stride into the storm of uncertainty. — The Duke CE Leadership Series webinar featuring Heather McGowan and Chris Shipley can be viewed here: bit.ly/dukecewebinar4 Q2 2019 Dialogue


14

FOCUS

Focus

Women leaders

Shutterstock

The evidence is clear: diverse organizations outperform their competitors. Yet women remain a minority in the upper echelons of business around the world. What can we learn from the inspirational stories of those who have succeeded against the odds? Women everywhere are breaking down old barriers, redefining how we think about leadership and even about female identity. As change gathers pace, what is the impact on men’s sense of self? How can leaders have a truly inclusive conversation that includes everyone, whatever their background?

ARTICLES 16

26

Women that lead

Men: through the looking glass

22

Performing under pressure

Discovery path Learn more‌ About the challenges facing women leaders and potential strategies for success www.bit.ly/ dpwomenleaders

28

The future is fearless


FOCUS

15


16

Dialogue Q2 2019


FOCUS

17

Women: from the top We know too little about female chief executives. Liz Mellon shares stories from 11 female leaders around the world Women leaders are in the news – and for all the wrong reasons. In August 2018, when it emerged that Indra Nooyi was stepping down from PepsiCo, The New Yorker reported that women make up less than 5% of the chief executives of major corporations. They’re paid less than their male counterparts, and are prone to having their looks analysed and their comments blown out of proportion. In November, global management consulting firm McKinsey reported that progress on gender diversity had stalled, while the Global Institute for Women’s Leadership – headed by former Australian Prime Minister Julia Gillard – reported that ‘leaning in’ is not enough; workplaces, not women, need to change. And in December 2018, the front page of The Times highlighted that in the FTSE 100, only six chief executives are women. Perhaps because women chief executives remain so thin on the ground, we know little about them. It’s high time that changed. Here, we look at 11 women who run everything from a family-owned business in Indonesia, to a global mining company. I have grouped it into topics, based on the themes emerging from our open conversations. I’m not even going to pretend that these insights can provide ambitious women with a blueprint for success. Yet I do hope they provoke some ideas. They are women at the top of their game, and these are their stories. Q2 2019 Dialogue


FOCUS

18

How to ask – and get

How do women get ahead at work? The research is contradictory. Some of it indicates that women don’t ask for opportunities, pay rises or promotion – and that’s why they don’t ‘get’. Other research says they do ask, but still don’t get. Clearly, the 11 women here know very well how to ask and get results, although that doesn’t mean they do it in exactly the same way. Sheila Tiwan returned to Indonesia from a directorlevel role in a San Francisco fintech company, taking over a family business on the brink of collapse. The company was riddled with corruption and embezzlement and needed drastic action to save it. Looking back, Tiwan says: “I knew it would be hard, but I couldn’t foresee how hard. I was dealing with older men who didn’t respect me because I was both young and a woman. “I wasn’t an authoritative figure at first, but I made sure that I took the job only on the condition that I would call all the shots. Whether asking someone to take a 25% pay cut, relocating or firing them – my decisions stood. I was up against 200 corrupt people, representing 99.5% of the company, and it was the only way it was going to work.” Thirteen years and 1,000% growth later, her determination to take command has paid off. Anne Sempowski Ward worked for Procter & Gamble (P&G) for 14 years, four in manufacturing as a process engineer and ten in brand management. “After two years at P&G, I was restless. I was in a plant and I wondered – why these products? Why this colour packaging? Senior leadership held an annual strategy deployment meeting and so I put up my hand and asked these questions. The head of marketing told me it was the first time that this had happened. When she explained the answer I decided I needed to understand more about business, so I applied successfully to Fuqua to study for an MBA. I told my plant manager that I was leaving and an hour later I received a call from a senior female manager in the plant, who asked me if I had considered another career in P&G. Dialogue Q2 2019

“I was flown to Cincinnati, met someone for a conversation which actually turned out to be an interview, and was offered a job as an assistant brand manager. Fuqua admissions department told me that this was the kind of job they hoped their graduates could land – so I took it.” Four years on, she found herself bored again, not learning or growing in her job. She told her boss. The general manager called her in and asked what she would rather be doing. She told him: “I would like to figure out how to grow our brands with women like me [of colour], because today we don’t speak to them.” She was immediately offered the job of brand manager, multicultural marketing, and allowed to write her own job description. “In 14 years I tried to leave more than once so that I could remain passionate about what I do. I trusted myself to be able to take on whatever came next. I wonder if women naturally do this?” Anna Gong’s family emigrated to the USA from China when she was eight. She is a serial risk-taker and entrepreneur, whose start-up career began in Silicon Valley and whose fourth venture was successfully bought out by CA Technologies. She stayed on with CA and moved to Singapore with them in 2009, then quickly on to Japan, where she was widely expected to fail in the prevailing male-dominated environment. She proved the doubters wrong, turning the business round and growing it year-on-year by 220%. Gong felt she was ready for a bigger role running the region, and when the perfect job opened up back in Singapore, she asked her boss. She was turned down. Two weeks later, she asked again, with the same result. After taking some advice from a leadership coach, she went back for a third time – and got the job. Gong says: “If you don’t try, you never know. You need fervour and tenacity – never give up too early if you believe in yourself!” When she joined Perx as a growth CEO, Gong realized that the business model was unsustainable. She had to convince the board to pivot on the strategy. She had inherited investors who were friends and family of the original two founders, and one in particular was uncooperative. Gong told him forcefully that he had to sign the agreements to close a particular fundraising round. The heated conversation included four-letter words and a graphic description of her view of his investment strategy. This isn’t to recommend swearing as


FOCUS

an influencing strategy: it is, though, to suggest that any woman faced with a tough situation should disregard notions of what is generally regarded as feminine or masculine. The outcome? The investor stopped shouting, signed the agreements and later became a trusted friend. As Gong says: “I wasn’t acting like a man. I had to be assertive, as would any business professional, given the company’s situation.” Simona Scarpaleggia also started out in a male world – in her case, a tablethumping world of union negotiations. “I had to fight hard to be heard. At the age of 23 I was defining my personality. I didn’t want to be seen as conciliatory and nice-but-ineffectual. Nor did I want to act like a man and be supertough. I have always used evidence – I share my ambitions with my manager, but I also demonstrate my achievements and results. I joke with women I mentor today that there is no Prince Charming who will come along and rescue you if you keep working harder and hope to be noticed and rewarded. I know remarkable women who don’t take the initiative to show what they have achieved.” Alexandra Altinger was headhunted into Wellington Management in early 2001. At the time she had three children younger than three and had decided that her working hours needed to be 7am-4pm, so that she could be at home when her children most needed her. These working hours were unheard-of in the industry, but were non-negotiable for Altinger, who was transparent about this request. Yet when the

19

WORDS OF ADVICE FOR WOMEN LEADERS

Don’t try to conform; if you’re not in the right place, just move on. — Varda Shine For many years I tried to be someone I was not. Nurture who you are and the things that move you. — Rosanna RamosVelita Stay true to your values and look for a company that allows you to exercise your leadership potential. — Simona Scarpaleggia Don’t be afraid to have big crazy audacious goals. Ask for what you want and invest in yourself. — Radhika Gupta Stand up for what you believe, take risks and be openminded. — Cynthia Carroll Trust yourself, believe in possibility and don’t build a coat of armour. It’s healthy to be vulnerable. — Anne Sempowski Ward

company finally made her an offer, they reneged on their initial promise to honour those working hours. Altinger felt angry and disappointed, and walked out. Four weeks later, they invited her back on her terms. Yet after only six months, Altinger told her boss that the work wasn’t challenging enough, so she was leaving. “The MD was shellshocked and asked me to wait an hour. They made me a director, a career progression that would normally have taken two years, and asked me what kind of clients I wanted.”

Take on the ‘big hairy challenge’

All of these women have taken on major challenges throughout their careers and worked immensely hard, often learning on the job. Their confidence in their own abilities is unshakeable. They trust themselves to be up to the next job. Radhika Gupta has lived her life with a broken neck, challenging enough in itself. She attended an American school in Nigeria and applied successfully to Wharton. In 2008, aged 25, she was working on Wall Street for AQR Capital, having completed a stint at McKinsey, when she and two partners decided to move to India to set up their own company, Forefront Capital Management. Although Indian, as the daughter of a travelling diplomat, she had never actually lived in India. “I was young, hungry and foolish and wanted to stretch beyond the comfort of Wall Street. My parents thought I was crazy, but I didn’t think it was courageous at the time. I didn’t take a salary and lived off my savings for two years. It was a rude shock trying to do business in India – it’s not a cheap place to start a business, and getting stuff done is tricky. I can remember travelling across the city to get a document notarized by hand, to save money. I had to learn and do everything at work, from understanding regulatory compliance to managing the pantry. I can remember my mum asking me if I was OK – I think we both knew that I wasn’t.” The business started with 2.5 million rupees under management ($35,000) and was worth $28 million when she sold it to Edelweiss Financial Services in 2014. Q2 2019 Dialogue


FOCUS

20

After starting out as a geologist, Cynthia Carroll was fresh out of Harvard and working as a strategy analyst for Alcan when she was assigned to an M&A group in Montreal. The group president decided that she had the skills to run a standalone business and sent her for an interview in Kentucky, where the response was, as she puts it, “‘there’s no way you can do this job, you have no experience.’” “I wanted the job and the president told the business they had to take me. I knew it had a few issues, but it wasn’t until I joined that I realized it was on the edge of collapse. Our largest customer – one third of our revenue and profits – decided to consolidate their suppliers from five to one. Despite being their number three supplier, we bid on all of the business and won it. People in the business told me that we couldn’t possibly meet the demand. We turned the whole place around, quadrupling our production and tripling our sales and profits in 18 months.” Carroll is best known for her time as chief executive of Anglo American, where she worked to transform one of the largest mining companies in the world with 160,000 employees in operations across six continents. The company had always been run by white South African men, promoted from within. Carroll was none of these. She was determined to run a company where employees could feel confident about surviving their day at work, and her approach was based on world-class standards and safety. Varda Shine got into the diamond business by accident. She had finished her army service in

Dialogue Q2 2019

I was told it was OK for me to hear their sexist banter because I was just one of the boys

Israel at the end of November, so had 11 months before starting university the next October, to study medicine. She took a job in diamonds to fill the gap – and stayed, learning about business through evening classes. She has taken on big business challenges: she moved to London in 1997 and in 2013 relocated De Beers trading company from London to Botswana. In common with others, she also faced the gruelling dayto-day challenge of being the only woman in the room. “I was the only woman for years and worked super-hard, because I had constantly to prove that I was better than the men. I really did not want them to win. I kept losing talented women and lots of times questioned whether I should stay. I was dealing with real chauvinism and conservatism – when the tea trolley came round, they all expected me to pour the tea. The men would get together and talk about sport and about women as objects. I was told it was OK for me to hear their sexist banter, because I was just one of the boys!” Martina Milburn started work as a journalist and has fought for and achieved many firsts that are critical to sustaining a career for women. She started out as the first woman on the Press Association’s journalist training scheme and was the first person to take maternity leave at her organization when she had her eldest son in 1985. In turn, she has used her position as chief executive to make sure that other women benefit from policies for which she had to battle, such as equal pay, maternity leave and flexible working. Milburn describes winning her first chief executive role at Aspire (Association for Spinal Injury Research): “A friend suggested that I apply for the role. The charity was doing good work through many well-meaning and hard-working people, but a lot needed to change. The trustees were very challenging at interview, but their pushback only made me fight harder to get the job.”


FOCUS

Giving back

Varda Shine’s motto is taken from the economist Bernard Baruch: “You don’t have to blow out the other fellow’s light to let yours shine.” Unfortunately, there is a tendency for some successful women to subvert others. We can be our own worst enemies. In contrast, all of the 11 interviewed here help other women to succeed, by mentoring, establishing women’s groups, speaking at female forums and institutionalizing female-friendly policies, including paternity leave. There is also a strong streak of broader social conscience. Shamina Singh has made giving back her life’s work. She explains that her work at Mastercard recognizes that giving women control of their own finances has a big impact on the unrealized economic potential of emerging economies. “I believe that companies do well by doing good. Around the world, the most consistent form of income for lower- and middle-income women is some sort of government subsidy, most of it handed over in cash that they wait for hours – and sometimes days – to access. It’s often passed via intermediaries who may take a cut, so the end receiver can get much less than they should. If governments deposit the funds directly in to a bank account that the woman owns, she gets the full amount on a card or in her phone and can more easily control where and how it gets spent. The devil is in the detail. For all the theory and all the goodwill, if you don’t focus on the mechanics of money and how it moves, you miss out on most of the impact.”

21

WORDS OF ADVICE FOR WOMEN LEADERS

The female dynamic will never change, because we are the ones who have babies, so we are different – it’s better to act as humans and speak as peers. — Anna Gong Be authentic and work with your values. Don’t let your ego bring you down. — Sheila Tiwan Women look out for each other. — Shamina Singh Be flexible, open to new opportunities and trust your instincts. — Martina Milburn Stick to your own boundaries, so that others respect you, be yourself and be authentic. It’s not a niceness competition, so don’t be afraid to give direction. — Alexandra Altinger

Rosanna Ramos-Velita also believes in the power of micro-finance. During her career, she held a series of senior executive roles at Citigroup, Bankers Trust and UBS. “As a senior CFO at Citi, I saw the power of micro amounts of dollar financing. I was born to parents who taught me that privilege brings responsibility, so after enjoying a great career I bought a bank in Peru. I did it because I knew I could make a difference. Despite the high risk profile of the investment, I trusted my instinct and my experience. I knew I could build a great financial institution which would be highly profitable and with high social impact. As women, we have to own our power, because racial or sexual harassment too often creates the pain of powerlessness in our lives. Our bank’s mission is to serve rural entrepreneurs, the poorest of the poor. We provide a full range of financial services to support the economic growth of rural entrepreneurs. When I bought the bank in 2011, we had $12 million in assets. Today we have close to $150 million, and we have grown from 20,000 to 167,000 clients.” Ramos-Velita speaks vividly of her experiences of bias and sexism. “Peru is a maledominated society struggling with a history of colonialism, where advertising features lightskinned people. None of this is me. I remember my early days of work at AT&T, when I was the only woman and the men left work together on Friday afternoons to go drinking and to strip clubs. I graduated top of my class, but something beyond my capacity meant I was not being given the same opportunities as the men. So I talk about my roots and tell my team: ‘If I can do this, so can you.’ Male, female, gay, whatever – just do your best. I have scars that I don’t want the young to have.” — Liz Mellon is chair of the Dialogue editorial board Q2 2019 Dialogue


FOCUS

22

Dialogue Q2 2019


FOCUS

23

Performing under pressure Forget the stereotypes of male courage under fire. Women are a great bet for intense business situations, writes Eve Poole

A devastating study in Harvard Business Review told of raw gender discrimination at work. Using a large multinational with a statistically typical male-biased hierarchy, the researchers collected emails and diary entries from hundreds of employees over a four-month period. They also gave 100 staff sociometric badges to track their inter-personal office interactions. These badges were designed to reveal who talked to whom, where conversations took place, and who dominated them. The team assumed that the data would show that women are undermined by their own behaviour at work: failing to network with the right people, to hang out with senior people, or to focus on the right things. But the data showed no difference in the behaviour of men and women. Women had the same number of contacts, spent as much time with senior leaders, and used their work time in a similar way to their male peers. Even appraisal data showed statistically identical scores for performance between men and women. The researchers were forced to conclude that “gender

inequality is due to bias, not differences in behaviour” (HBR, 2017).

Perception and reality

How can female leaders fight the perception that they’re less worthy of promotion than their male peers, when there is no basis for it in fact? For many years, professional women have tried to change perceptions by dialling up their ‘blue-stocking’ credentials. It’s no secret that some women wear spectacles to interviews or big meetings. Wearing glasses has been shown to make you appear more intelligent to others. What you might not have noticed is that women also credentialize more in their email signatures and business cards. A recent study commissioned by BP (Spot the Difference, 2018) reported that women are more likely to use professional accreditations to underscore their status and authority, and to build credibility and confidence. Indeed, confidence remains a major problem for women at work. A 2011 study by the Institute of Leadership and Management (ILM) found that Q2 2019 Dialogue


FOCUS

70% of male managers have high levels of selfconfidence, compared to only half the women. Half of women admit to feelings of self-doubt at work, compared to less than a third of men. These confidence levels affect ambition too: the study found that individuals with high personal confidence were more likely to expect to take on a leadership role than those without. However, what is so very devastating about the HBR bias study is that it suggests women’s efforts to project credibility and confidence are currently in vain. Even if we felt more confident, or acted that way, we would be discriminated against. How then might we fight this naked bias against us? One key insight is provided by the data on bias, which reveals another aspect of men’s advantages. In law, solicitors – including female ones – are more likely to instruct male counsel, seemingly because of a perception that men fight harder in the courtroom. In medicine, male surgeons are preferred because of a perception that they are more reliable. And the UK’s Hampton-Alexander Review of boardroom diversity found that some FTSE 350 chairs and chief executives thought that women would not want the hassle or pressure of sitting on a board, and would struggle with the complexity of the issues involved. This is clearly nonsense. It is to some degree symptomatic of the paucity of women in the data. But it also shows that at the moment, perception is trumping reality. We still see masculine behavioural traits as giving men an edge at work. Until women can evidence concrete experience of the macho side of leading, it seems they will be deemed a riskier hire than an apparently tried-and-tested male counterpart. One response therefore could be for women to redouble their efforts to ‘man up’. In fact, research suggests a different approach could pay dividends.

De-risking your leadership

If a leader encounters a new and stressful situation, their brain has to devote all its capacity to solving the problem. This is precisely the reason that, for years, the military has used the concept of standard operating procedures. Knowing that personnel in combat situations will be under extreme pressure, their training attempts to code in as habits those routine

If a leader can learn the basic practices of leading, they become automatic Dialogue Q2 2019

SEVENTEEN CRITICAL INCIDENTS

Standard operating procedures for confident leadership 1 Stepping up 2 Taking key decisions 3 Coping with increasing change 4 Managing ambiguity 5 Taking a risk 6 Accepting when you get it wrong 7 Key board/stakeholder meeting 8 Doing the maths 9 Joining the dots

10 Motivating and influencing others 11 Flexing style 12 Delegating to and empowering staff 13 Dealing with poor performance 14 Listening to staff 15 Knowing when to seek help and advice 16 Giving and taking feedback 17 Work-life balance

activities that need to feel utterly instinctive in any situation, like checking equipment or loading a gun. These habits are stored as shortcuts – or heuristics – in the brain, so that they take up less processing capacity when they are executed on autopilot, leaving spare cognitive capacity to cope with new and unfamiliar situations. In the same way, if a leader can learn the basic practices of leading, they become automatic, freeing up valuable neurobiological resource for the unexpected. If these basics are stored emotionally as well as cognitively, they also remain available under pressure, hugely reducing the risk of the selection of an incorrect emotional response by way of an amygdala hijack. In one piece of work at Ashridge, we made an effort to demystify the outdated model of ‘leader as hero’. We asked board-level leaders what they now know about themselves as leaders that they wish they’d known ten years earlier. We hoped that this ‘20:20 hindsight’ might be reversible into the kind of ‘20:20 foresight’ that can be taught to others. Talking to leaders from varied sectors, we identified 17 critical incidents which constitute the most common crucibles

Shutterstock

24


FOCUS

Wouldn’t it be far better if we could build the muscle-memory for leadership without waiting to be mugged by fate?

of senior leadership. They were a meeting, a moment, a headline or a failure that had forged their leadership, and which in hindsight our interviewees wished they’d been able to pull off with more poise and ease (see sidebar opposite). In itself, the list is completely unremarkable. What is remarkable is how these lessons were acquired. All were learned through experience, and through bitter experience at that. Wouldn’t it be far better if we could learn these templates as standard operating procedures and build the muscle-memory for leadership in a less exposing way, without waiting to be mugged by fate? To do this, we built the critical incidents into a simulation. It worked phenomenally well. Using psychometrics, questionnaires, heartmonitors, video-recording and observational data, we discovered that the simulation both accelerated learning and extended its shelf-life, by embedding it deep in the emotional memory. Participants learned faster, and acquired memories that last. Increased heart-rate during the simulation was correlated with higher levels of learning, which remained high throughout the period of post-programme testing. We also found that the learning was largely independent of any demographic or psychometric variation between participants, and – crucially – did not vary by gender. At board level, there is nothing more compelling at interview than a safe pair of hands. If you could evidence the fact that you had already triumphed in all 17 of the critical incidents, with detailed and pressured examples, who could match you?

Women are a better bet under pressure

The irony of the perceived need to ‘man up’ is that women are actually a better bet under pressure. This is because of oxytocin. Under pressure, men are biologically conditioned to respond by competing to win. This was necessary in prehistoric life, but it is only sometimes necessary in the modern world, and is far less necessary in the modern business context than generally assumed. The biology is simple and widely understood. In dangerous situations, the body moves into ‘fight-or-flight’ mode, producing adrenaline to boost performance in what is perceived as a zero-sum game. What is less well understood is that this response is not a universal one. It is a male one. The fight-or-flight theory was originally based on studies on male rats. Study moved to humans, yet before 1995, women made up just 17% of test subjects in the field. Results from women were discounted because variations in female reproductive cycles meant that their data was often confusing or difficult to interpret. In the late 1990s, researchers from the University of California became curious about why the data

25

from females didn’t fit. When the tests were re-run, it became apparent that the fight-orflight theory was predicated on the existence of testosterone. When women were involved, the stress response instead triggered the release of oxytocin, the ‘love hormone’ associated with peer bonding, affiliation and motherhood. The subsequent paper, published in the Psychological Review in 2000, dubbed this the ‘tend-and-befriend’ response. Only men are conditioned to react to stressful situations by reading them as zero-sum games to be met head-on as a matter of life and death. This is usually explained as a difference in roles from our cave-dwelling days, when men were responsible for hunting and defence, and women for tending the fires and the children. In these conditions, fight or flight would give cavemen an edge. Similarly, for women, tendand-befriend behaviours would enhance their chances of success in carrying out their roles under pressure. A protective response towards offspring, and building social networks for mutual support and protection, would help to keep everyone safe. The implications for business could be profound. They’re reinforced by parallel insights from game theory, which also provide a strong business case for preferring women in stressful roles. In game theory, mathematics attaches a positive value to cooperation, because cooperation reduces risk by allowing the parties involved to test each other out and learn about each other. The information this provides expands the set of possible outcomes, generating more solutions to any problems that arise. In game theory, automatic competition is only ever the best strategy if the interaction is a one-off and the parties will never see each other again, which is rarely the case in business.

Get ready

Such arguments are not new. But they are not being heard. We have a long way to go to eradicate bias. But we need to keep proving women’s value by winning more leadership roles and triumphing in them. When the next C-suiter retires to the golf course, we need to be ready to ace that interview. We can do it if we start preparing now. That doesn’t mean having to man up: instead, think about a process of ‘leadersmithing’ that forges your capabilities. It’s about acquiring the data points and muscle-memory to prove you can do the job. How many of those 17 critical incidents are already standard operating procedure for you? Which ones might hold you back? When the moment comes, you need to be ready. It’s time to start scheduling some serious practice. — Dr Eve Poole writes about leadership and previously worked at Deloitte and Ashridge Business School Q2 2019 Dialogue


26


FOCUS

27

Shutterstock

Men: through the looking glass Have you ever had one of those days when you look in the mirror and – even though you are wearing your favourite outfit – something just doesn’t feel right? Conversely, have you ever taken a selfie – the modern mirror – and been delighted by a picture that perfectly shows the ‘you’ that you want other people to see? I’ve always been intrigued by our fascination with mirrors and their part in the making of our identity and sense of self. Mirrors have captured the imaginations of philosophers, psychologists, historians, artists, poets and novelists over centuries. Narcissus trapped himself by falling in love with his own reflection. Alice stepped through the looking glass into a world where things were not as they should be, while Snow White’s evil queen used her mirror for daily validation. Consider the old superstitions and traditions surrounding mirrors: to break one was bad luck; we hung shawls over them for seven days when mourning; and – in even older rituals – young women chanted spells in front of their mirror to catch a glimpse of their future husband. Of course, the mirror can only reflect what stands before it, yet somehow we see much more. We glimpse our state of mind, shaped by the history of our experiences over previous weeks and years. We spot our emotional state in the here and now. And we spy the outline of our hopes and dreams for the days ahead. Each of these perceptions changes significantly over time. None of our identities are static: they are forever adapting and redefining, based on our daily experiences and the feedback we get from those around us. Charles Horton Cooley clarifies this in his theory of ‘the looking glass self’ (1902, Human Nature and the Social Order, New York). He explains that we develop a self-concept by interpreting how others react to us. That self-concept can be improved or diminished by the conclusions we reach, and we adjust our

personal identity through an internal conversation. Other people are mirrors in which we seek reflection.

Gender and the mirror beneath our feet Those reflections are further shaped by cultural and societal norms. These have been described as the mirror on which we live. Every day, we take on multiple identities, such as mother, father, sister or brother – as well as our work identity, which is now more central to our lives than ever before. Each identity comes with norms and expectations about our behaviour. In learning to play by the rules of each system, we’re learning to adapt our identity. We develop multiple identities which connect and pull at each other, constantly impacting our sense of self. That tension can result in instability, something that has been particularly highlighted by the rise of research, conversation, writing and engagement on the notion of gender roles. The very words that define us and give us stability are shifting. Could it be, as Salman Rushdie said in his 1999 novel The Ground Beneath Her Feet, that there are fresh cracks in the mirror beneath our feet? Sometimes it feels as if the mirror we live on might shatter altogether. As women have sought to redefine our place in society, we’ve spent a lot of time looking deeply into our mirrors, trying to see what we could be in the future. Doing this built a broad community: a women’s tribe, that has been bolstered through the media, online communities, work initiatives and support groups. But in redefining our roles as women, have we left others in the system confused about their roles, their spaces and their identities? The rise in male depression, trauma and suicide are terrible indicators that the mirror beneath our feet is unstable. So, too, are the horrifying levels of violence against women and children worldwide: 35% of women globally are estimated by the UN to experience physical or sexual

Changing gender roles challenge the male sense of self-identity – and that’s a problem for us all, writes Ilka Dunne

violence during their lives (a number that excludes harassment). We need to think about things at a systemic level and acknowledge that by creating a stronger women’s community, we may have left men feeling community-less. In building the strength of the female tribe we have rightly strengthened our social identity, but some men now feel bewildered as to where they belong.

A more inclusive system

In my conversations with men, I’m often confronted by the fact that they feel excluded from social identity groups and lack defined role identities. It’s as if men are now looking into a shape-bending fun-house mirror. Personal identity becomes uncertain and is reflected in confused, overlapping, geometric shapes. Any system needs all its parts to be fully-functioning, and men’s identities are critical to our shared system: to our families, communities, nations and tribes. So we have to ask, what roles can men and women now play, together, to mend our fractured perceptions? How can we support all members of society to discover their ‘you’ in the mirror? And how can we ensure that our children lean into identities that help them to better lead the future? I’m starting to think about what it would look like if I broadened my tribe and had more inclusive conversations. Working with my colleagues, my team, my family and my community, I hope to start finding new words to define ourselves – collective words, that we will shape together. We have to find collective roles and shared social identities that allow us all to feel that we can participate fully in communities. Perhaps only once we have those words will we all be able to look forward to seeing our new reflections when we look in the mirror. — Dr Ilka Dunne heads up leadership and culture at Rand Merchant Bank. She was formerly RMB’s Head of Learning Architecture Q2 2019 Dialogue


FOCUS

28

The future is fearless In 2014, I decisively left my job as an investment banker and embarked on the most exciting, powerful, hard and important adventure of my life: founding and growing Fearless Futures. Fearless Futures is an education organization that works both with senior leaders in business and with young women and non-binary young people in schools, to whom we offer equality and leadership development programmes. I set up Fearless Futures because, despite years of academic success, our society does not afford Dialogue Q2 2019

girls and women the status, opportunities, representation or power they deserve. Many young women have low confidence levels because they see themselves as lacking. In fact, it’s the environment that is at fault. That is a central premise in our programmes: that inequalities have been designed, and because of that, they can be redesigned. We focus on challenging external realities rather than on the notion that it’s people of colour, women, disabled people – or those who experience

Shutterstock

The way we think about gender inequality has to change. Hanna Naima McCloskey explains why


29

multiple inequalities – who somehow need to do, or be, better.

Inequalities have been designed and because of that, they can be redesigned We engage our programme participants in critical thought to help them understand and challenge the root causes of inequities. Through this, they grow new ways to lead and design transformative change, whether as leaders in their organizations, or in their schools. An example of our work is Jada. I first met Jada in her last year of high school, aged 17, during our Peer Power programme, which is comprised of eight sessions of 90 minutes over eight weeks. It includes a session where participants deliver a workshop – which they’ve created themselves – to younger students in their school. I contacted Jada recently and asked about her memories of the programme. “Fearless Futures is unique,” she said, “because it does not shy away from difficult or complicated issues that need to be addressed but that most people don’t want to acknowledge.”

Recognizing the realities

I firmly believe that this is an empowering and, indeed, essential context to provide to our young people. By starting from a point that acknowledges the external realities of injustice, we are able to clearly communicate to those we serve that this is not their fault. By surfacing the hidden messages that say that certain spaces are not for them, we can assert: your voice matters. Our programmes also recognize the key notion that not all women’s lived realities are alike. Too often the default woman, in our mainstream narratives of importance, is one who is white, middle class, heterosexual, ablebodied and cisgender. We saw this vividly with the #MeToo movement’s re-ignition. While Me Too came to dominate headlines around the world in 2017, it had actually been founded by Tarana Burke, a black woman, more than a decade earlier. It wasn’t until white, wealthy and beautiful women in their numbers said “me too” that the world started to take notice.

Designing a fearless future is hard work, and as Tarana Burke says, heart work

Too often, the default woman in mainstream narratives is white, middle class, heterosexual, able-bodied and cisgender What’s more, when there were over 50 allegations of misconduct, Harvey Weinstein

made retaliatory statements against only two of them. That the two were both women of colour – Salma Hayek and Lupita Nyong’o – is undoubtedly significant. When struggles accumulate and overlap, as here with racism and sexism, society’s power to de-legitimize increases. We therefore cannot focus on singular inequalities, like gender, in isolation.

We cannot focus on singular inequalities, like gender, in isolation This is key. Most of the young people we serve are people of colour and are from economically deprived backgrounds. But an Arab Muslim hijabi young woman will have different experiences of the world than a disabled black young woman. Acknowledging the particular nature of their lives is how we can build powerful solidarity for change and increase our capacity to take on the larger systems of injustice all around us. Jada says, “I think much more critically about the world around me than I did before. I challenge myself, as well as the systems of oppression around me, much more than I would have before the programme. I’ve learned and continue to learn so much, from intersectionality to colonialism.” By equipping young people in this way, we are nurturing tomorrow’s gamechangers. Reflecting on our relationship and how proud I am today of Jada, I asked her about what the programme gave her. She said: “If it wasn’t for the programme and the amazing connection that I had, and continue to have, with the organization, I don’t believe I would have done half as well in my A-levels [UK school leaving exams at age 18], I don’t believe I would have gone to university, and I definitely know that I wouldn’t have graduated.” In this sense, “the programme is not just content and knowledge focused,” she asserts, but “seeks to develop the people on the programme as well. It is all well and good to have knowledge, but if people are not going to do anything about it, it is rather pointless.” She is right. Our “outside in” approach establishes an empowering context, where young people are already everything they need to be in the world. The system just wasn’t designed for them. We can – and must – redesign it. And we see the dual reality: that designing a fearless future is both hard work and, as Tarana Burke says, heart work. — Hanna Naima McCloskey is the founder & chief executive of Fearless Futures. She has worked for the UN, NGOs and the Royal Bank of Scotland Q2 2019 Dialogue


INTERVIEW

31

Cape crusader Sharmla Chetty’s struggle against apartheid set her forward to a life of change

WRITING

Ben Walker PHOTOGRAPHY

Bridget Corke

Injury. Incarceration. Expulsion. The qualities that shape leaders come from the most adverse sources. So it was for Sharmla Chetty – president of Africa and global managing director for Europe at Duke Corporate Education – much of her profile shaped amid the tumult and deep prejudice of apartheid South Africa. Her leadership credentials were developed early. A consummate school athlete (she still holds some school records on the track), she rose to captain of the netball team before her embryonic activism led to her being expelled at age 16. “In those days, you were not allowed to challenge the government, and I was openly opposing the government while in school,” she recalls. “My parents were in a state of shock. A young girl in your family being expelled, I guess that’s not so great.” But despite the familial upset, Chetty’s life path was rolling out before her. “I was immediately known as being fearless, being a disrupter, someone who would seek to change the status quo,” she says. “Who couldn’t wish to violate these rules of white minority advantage?” After her schooling ceased, her activism grew. In a confrontation with the police, she was attacked and brutally bitten by a security dog, sustaining an injury to her leg that she

still struggles with today. Undimmed, she continued her campaign of protest, resulting in detention in police cells. “Let’s not call that prison,” she laughs, “but I have been locked up a few times, yes!” She modestly plays down her personal sacrifice, as if to act otherwise would have been unconscionable. “Everybody at that time – including you – would have been an activist,” she argues. I hope that she is right and that I would have been, despite my advantaged ethnicity. But Chetty took huge risks from which many would flinch. “When I threw myself into the anti-apartheid movement, I knew what it would mean,” she says. “It meant that I could have been forced to leave South Africa, that I could have been thrown in prison. And I knew that it was a painful experience for my parents, because they wanted a child who would help them have a better life, not become embroiled in all of this.” We are all children of our circumstances. But Chetty undervalues her contribution when she suggests that her raging against the machine was an automatic response that anyone would make. Not everyone living in PW Botha’s racist South Africa made such a stand. And she did more than many, her contributions Q2 2019 Dialogue


Getting people to buy into your creative ideas… you have to role-model the behaviour and get it done Dialogue Q2 2019

helping change a terrible injustice through teamwork and cooperative endeavour. “It’s the collective action of what people do, but mine was a way of making small changes, and becoming part of the activist movement,” she says. Did she ever question whether the movement’s efforts would be successful? “Yes, it’s very painful when you realize that change might be slow. You feel shackled. But, for me, every setback led me to ask, ‘okay, what else can we do? How do we live up to our values and champion this cause differently?’” It was this lifelong commitment to effecting social transformation that, decades later, saw her resign from a steady, lucrative post as head of human capital development at Nedbank, to take another step into the unknown. She launched Duke Corporate Education’s African operation as its first managing director in 2007. Faced with the challenge of embedding the US brand in uncharted territory, she was driven forward by her personal purpose. Education is a key driver for social justice – and building leadership capacity in the Rainbow Nation was her calling. “I wanted to continue that social change,” she says. Her aptitude for thinking outside normal parameters, identifying opportunities where

others feared to tread, composed the art of her operation. But the discipline learned in almost two decades of banking was the science. “I knew I would be able to inspire, encourage and motivate people,” she recalls. “But that alone wasn’t good enough. I had to bring in my banking experience, being clear regarding goals and strategy, and setting direction. You can be aspirational, inspirational, all those things. But if you don’t have performance measures, you are not going to achieve anything.” This fusion of human motivation and commercial steel came in no small part from Chetty’s paternal grandmother. Chetty Sr, a single mother, ran a stall on Durban market during the apartheid era, stringing together a decent living against all odds. “She was an active voice in the community who played a key role in values-based leadership,” recalls Chetty. “When I was a child, she sold vegetables on the market, and a lot of my entrepreneurial mindset comes from her.” At age six, the young Chetty could observe the nuances of business, supply chains and the importance of personal relationships. “I saw on the market how networks work,” she says. “My grandmother was not formally educated, but she shaped my mindset into being


INTERVIEW

Chetty is the freethinker who turned the one-time start-up into Duke CE’s new jewel

entrepreneurial and innovative.” Show me the girl at six, and I’ll show you the woman. The adult Chetty is known for her unorthodox, ideas-based approach to business. She is the free-thinker who turned the one-time start-up into Duke Corporate Education’s new jewel, achieving growth and success few dared hope for. “Duke CE Africa was at birth stage and didn’t have a recognized brand on the ground,” she recalls. “It was a global organization coming into a country at a time when people were very patriotic to South Africa and South African brands. There were some great brands in the country and my question was ‘how do we learn to be global to our advantage?’” Chetty’s leadership style has been burnished over a colourful career spanning the antiapartheid frontline; to the disciplined corporate strictures of banking; to the think-on-your-feet flashdance of bringing a launch to success. Her standpoint is that you are clear about your goals upfront; are realistic about the scale of your challenges; that you give people the autonomy to deliver. “I always hire people smarter than myself,” she says. “I bring people together and we all accept that the job is going to be difficult.” She gives honest feedback – “to be an accountability partner”, she says. “If we achieve something, I make sure that the team gets recognized for it, that it’s their success. You need to be able to role-model successful behaviours. People need to be empowered to do things that they enjoy doing. Good teams, good individuals, want feedback. So you need to give them the feedback and unlock their potential through goal-setting. Inspiration is not enough. You need to be clear what is the aspirational aim for that individual, set that goal, and measure their performance; and that means investing in that person. And when they see that investment, they realize that you will trust in them as well.” What happens when they don’t achieve what she had hoped? She avoids personalizing it, she says. “I am honest, but I always say this is what we need to do to achieve this. This is what we need to do better, so we can achieve it together. Focus on the issue, not the person.” Chetty cites the dean of Duke University’s Fuqua School of Business, Bill Boulding. Boulding talks about the ‘decency quotient’, simply put, that leaders should care for their people. “You really care about your people,” she says. “If you want to embrace people doing things for you,

33

you need to find out the things that excite them. What are the things that are important to them? You need to know if they have important things around family and need to leave early. If their kids have sports games, they need to go!” It’s striking how she says nothing about financial compensation, and lots about social support. “It’s personal and professional,” she says. “It’s certainly not just professional.” Does she think that this ability to convene, inspire and facilitate is born of a time when she had no monetary element to offer; her activism days when the only rewards were baby-steps of social progress; and that colleagues’ efforts could result in their being slung behind bars, or worse? “Yes, it’s not a cash exchange, right?” Chetty is incredibly persuasive. As simply as she set goals and a vision for her netball team when a teenage skipper, she has delivered projects that seemed impossible at the outset. “You have unlocked something there,” she says. “It’s around playing in teams, and these skills come early. Getting people to buy into your creative ideas. A lot of times people think I am crazy. They say ‘oh gosh, you want 500 people at Davos?’ But it happened. What you have to do is role-model the behaviour and get it done. Show people that it’s possible.” She is, she says, “a child of multiple mothers” – her real mother, her aunt, her partner’s mother – “my mum and aunt demonstrated courage during adversity; my partner’s mum showed me how to rethink failure and give myself energy for new directions.” With Chetty’s knack for thinking the unthinkable, Duke Corporate Education Africa is on the up and up. Meanwhile, she is branching out into new projects. She has launched a mentoring circle for South African children, helping develop capacity at an early age. She works closely with her friend Zanele Dlamini Mbeki, the feminist and social worker and former first lady of South Africa. “I’m blessed to have wonderful people around me,” Chetty says. “Mrs Mbeki is like a second mother to me. She plays an active role in my life, I constantly learn from her wisdom and humbleness. I am lucky that I am surrounded by so much care and love.” Despite her ostensible sanguinity, I wonder whether there will ever come a time when this great changemaker is satisfied. “You know, it’s all quite affirming to talk to you about it,” she says. “You speak about my facing adversity, making change, breaking the rules and the traditions, but my purpose is constant and stays with me – my drive for greater social justice. Even as a kid, when I was making a stand, I knew that we always need to improve.” I guess the answer is no – she won’t rest. There will forever be something else for her to change for the better. When you know her history, you can see why. — Ben Walker is editor-at-large of Dialogue Q2 2019 Dialogue


THE VOICES BEHIND THE

THINKING

Visit us @ www.LIDRadio.com Podcasts available on ITunes, SoundCloud and audioBoom To access the podcast scan the QR code


LEADERSHIP

35

KATE COOPER

We need to rewrite the contemporary notion of storytelling

Don’t confine storytelling Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management

The best cultures allow for multiple voices. If we limit story-telling to the self-appointed, we will constrain our understanding of the world

2018 seemed to be the year of ‘storytelling’. I have heard many claims from contributors to workshops, seminars and conferences that they “work with stories”. What do they mean? Humans tell stories. Some cultures have a largely oral tradition. Consider how the Irish pride themselves on their ability to tell stories – some people attribute this to the marginalization of their language by the English. Yet wherever people meet regularly and converse, they will share stories. Work is one of these places. New recruits may well be ‘onboarded’ and ‘inducted’, but in forming those important relationships with new colleagues, they will share stories. They will construct narratives about why they are there and why they left their previous employment. This is not a 21st-century phenomenon, however much the people who “work with stories” imply it is. An important function of the story is to encourage others to empathize with us. When people show an interest in us and our stories, we produce oxytocin – the hormone that helps strengthen human bonds. Culture has always been of huge interest to organizational behaviourists. While at the tenth Global Peter Drucker Forum in Vienna in November 2018, I noticed how frequently culture was mentioned. This supported the view – somewhat controversially attributed to the late Drucker himself – that ‘culture eats strategy for breakfast’. Some commentators are now taking this view further, and describing leadership as a construction of culture. Johnson & Scholes highlighted the importance of stories in their 1992 ‘cultural web’ but, in my opinion, the cultural web underestimates how many other factors are also created and transmitted through stories. We frequently explain rituals and routines, control systems and power structures by giving first-person accounts, our own examples – essentially, stories.

The culture of an organization is constantly being revised and recreated through conversations, through the stories people are telling each other and the meaning of what is happening around them. In his consideration of time, George Herbert Mead, the US philosopher and social psychologist, recognized that by telling stories of what has happened, we are constantly reinterpreting the past. This helps us make sense of the present and reimagine the future. Social constructionists such as John Shotter also emphasize how language shapes not only how we tell our stories but also how we construct, understand and make sense of them. Dialogue readers will recall how Canadian business and management academic Henry Mintzberg identified the inadequacies of a single definition of strategy, and recognized the shaping effect of the organizational context. Just as he cautioned against simplistic definitions of strategy, we should note that attempts to make storytelling different, special, and available to only those who “work with stories”, is disingenuous. It is, in many ways, reminiscent of those who claim to ‘apply’ the 70:20:10 formula to learning. 70:20:10 is not a formula, it’s an observation; a way of recognizing how much we learn from each other; how, in the grand scheme of learning, formal learning plays only a small part; and why, in the workplace, the context and purpose of the learning are key. So, rather than “working with stories”, let us concentrate more on listening to the stories that are being told without overlaying them with notions of heroes, voyages and quests. The best cultures allow for multiple voices, multiple perspectives and multiple interpretations of events. If we limit storytelling to the self-appointed, we will constrain our understanding of the world. Q2 2019 Dialogue


LEADERSHIP

36

Mastering the art of

Dialogue Q2 2019


LEADERSHIP

37

situational feedback When it comes to giving effective feedback, paying attention to context and picking the right tone is crucial. Our six-part feedback ‘menu’ could be just what’s needed to increase the impact of your performance review

WRITING

Linda Rodman & Sergey Gorbatov ILLUSTRATION

Luis Mendo

Do you ever feel that the performance feedback you give doesn’t have the impact you want? You’re not alone. Researchers have shown that a third of feedback interventions fail (Kluger & DeNisi, 1996). There are several reasons why. Some are well understood. Managers may give poorlystructured feedback that lacks a clear statement of the issue or supporting examples. Harsh, nonempathic messaging leaves recipients defensive. Timing matters too: give feedback too early and it can be overly emotional, but leave it too late and key details will have faded from memory. Two other factors are less frequently recognized but every bit as important. The first

error is disregarding the context. Too many managers fail to recognize that feedback has to be situational. By matching the right type of feedback to the circumstance, managers can dramatically increase its effectiveness. The second factor is being overly serious. Treating feedback like a life-and-death matter heightens both parties’ anxiety. By lightening the tone, managers can decrease their own anxiety as well as the recipients’ defensiveness.

THE SITUATIONAL FEEDBACK MENU

1 PA S S I V E ( AG G R E S S I V E ) DESCRIPTION No direct feedback (yet tells others) SOUNDS LIKE Verbal silence – although possibly body language “Can you believe he acted that way?!” INTENDED USE To save time To avoid confrontation or hurt feelings To avoid creating a politically fraught situation To let others know you see the issues SANDWICH Empty plate No sustenance at all

Q2 2019 Dialogue


LEADERSHIP

38

THE SITUATIONAL FEEDBACK MENU

2 POSITIVE DESCRIPTION Entirely approving feedback SOUNDS LIKE “Excellent job on the presentation today” “Your insightful approach opened the door for all” “A real pleasure to work with you” INTENDED USE To recognize a great job To build a better relationship To lay ground to deliver straight “negative” feedback SANDWICH Jam Sweet and virtually all carbs

Six feedback sandwiches

Our answer to these challenges has been the development of a model that helps managers get context and tone right by picking from a menu of six distinct types of feedback, likened to six types of sandwich. Each has particular strengths: what’s ideal for one situation is less effective in others. Throughout these pages, we summarize each sandwich, the ideal context for its use, and typical wording. On our menu, the protein filling is the constructive, substantive feedback: the carbohydrates are the softening words.

The perils of mismatched feedback

No one sandwich is right for every situation.

Indeed, each carries significant dangers in the event of a feedback/situational mismatch. Providing largely passive (or no) feedback is to do your team a disservice. They’re unlikely to grow without guidance. In fact, people’s appetite for feedback is nearly insatiable: our research, with feedback from some 550 executives, indicated that people want up to 20 times as much feedback as they currently get. THE SITUATIONAL FEEDBACK MENU

3 SUGGESTIVE DESCRIPTION Positivity encasing subtle feedback about concerns/issues SOUNDS LIKE “Great job! You may consider looking at the issue differently, but overall well done” “You are talented, but think about building bridges vs. silos” INTENDED USE To give suggestions about what could be changed while avoiding hurt To provide feedback in first- or second-time situations To guide the highly learning-agile SANDWICH Ham baguette Predominantly delicious carbs, little protein

Dialogue Q2 2019


LEADERSHIP

39

THE SITUATIONAL FEEDBACK MENU

Suggestive feedback is perhaps the most dangerous… being neither strong nor specific enough

There are also consequences in failing to give positive feedback. It means not reinforcing good behaviour and missing the chance to build someone’s self-confidence. It also means a missed opportunity to lay the foundations for giving negative feedback swiftly and effectively should it be needed. Of all the feedback types we identify, suggestive feedback is perhaps the most dangerous. Providers are certain they’ve sent a message, when those on the receiving end have barely heard feedback being given. They might even hear the opposite, because suggestive feedback risks being neither strong nor specific enough. Some force is needed to persuade people to invest the effort needed to change their behaviour. As Johan Lehrer has put it, “Unless you experience the unpleasant symptoms of being wrong, your brain will never revise its models” (How We Decide, 2009). And if it’s so vague that recipients are left not understanding what they need to do differently, the exercise has failed. By contrast, when it comes to constructive feedback, the biggest risk is that recipients discount the positive message, assuming it to be a disingenuous way of softening the blow. That’s unfortunate when it’s genuine. At the more direct end of the menu, transformative feedback typically goes wrong due to the provider’s wording and tone. It is often given when emotions are running high, coming across as more negative and less supportive than intended. Finally, the hazards with ‘save-ative’ feedback are not giving it early or clearly enough. Both are essential if the crucial “or else” message is to stop the recipient from derailing completely.

Select feedback circumstantially

All of these dangers can be avoided. The key is selecting feedback circumstantially. With a situational feedback model in hand, you can make intentional choices about which type of

4 CONSTRUCTIVE DESCRIPTION Specific behavioural feedback about improvement areas with positive opening and closing SOUNDS LIKE “Nicely done and much better than last time. But you didn’t: change the fourth slide, redo the key analyses, or provide more detail. Very good, overall” INTENDED USE To convey both what went well and what should be changed in behavioural terms To leave the person feeling good, knowing what to change and motivated to do so SANDWICH Turkey on white Multiple pieces of protein between appreciable carbs

feedback to provide, depending on the goal, the severity of the issue, the history of feedback with the recipient, and your organizational culture. There are three main areas to consider.

1

Heighten your awareness Hone your self-awareness

Start by reflecting on the balance of feedback that you provide. What portion is passive: 10%, 20%? And how much is positive? Score the six types (totalling 100%), and reflect on the balance. Is your approach effective? Then test your self-perception by asking your typical feedback recipients – normally direct reports – to complete the same distribution. In general, there’s often very little correlation Q2 2019 Dialogue


LEADERSHIP

40

between how we see ourselves and how others see us, so your view of the feedback you give may be very different from your team’s experiences.

Suit the learner Ask your recipients to again distribute 100% over the six types, this time on the basis of what they would find most helpful. Review the results, discussing reasons and examples. Then make every effort to make the changes desired by each person. In other words, vary your feedback not only by situation, but also according to the individual’s preferences.

Attend to organizational context How does your feedback style compare to the distribution for your organization as whole? If it is significantly different, assess the impact of the misalignment on how you are viewed, and make changes if it is problematic. That was the case for Christine, a senior executive whose feedback was poorly received – largely because she was the only one in her organization who routinely gave feedback without tiptoeing around the issues. This led to an unwanted and unwarranted reputation. By adjusting her messaging to align more with others, the benefits of her insightful, if direct, feedback became more widely appreciated.

THE SITUATIONAL FEEDBACK MENU

5 T R A N S FO R M AT I V E DESCRIPTION Candidly worded behavioural feedback that jumps quickly into the issues that need improvement Ends with support for the anticipated change SOUNDS LIKE “You prioritized without due attention to clients’ priorities” “Your third point was not clear enough to convince others” “I will offer whatever support you need” INTENDED USE To quickly provide a clear and compelling message regarding what needs to change To capitalize on a positive culture in which one can just be direct SANDWICH Shrimp Danish Pure protein with carbs only as concluding support

Dialogue Q2 2019

2

Optimize Catch them doing it right

Unless you’re already giving a lot of positive feedback, give much more. Make it regular and make it meaningful. Track it to ensure you follow through on your intentions. In group situations, give only positive feedback: reserve the other sandwiches for private conversations. One study has suggested that six positives to one negative is generally the ideal ratio (Zenger and Folkman 2013).

Don’t beat around the bush Ensure that all of your feedback is direct, specific and behavioural. After delivering feedback, check the recipient has heard and accepted the intended message.

Give options When providing mixed feedback, tell the recipient at the outset that you have both positive and negative observations. Ask which they would prefer to hear first.

Watch your words and tone High performers tend to be more welcoming of direct improvement feedback (Bandiera et al, 2016) but can still be sensitive to how it is delivered. Words and body language matter.


LEADERSHIP

41

THE SITUATIONAL FEEDBACK MENU

6 S AV E - AT I V E DESCRIPTION Strongly worded feedback with an ultimatum Delivered early enough to allow change SOUNDS LIKE “This is unacceptable and unless you change significantly your career here may well be truncated. Let’s review the specific problem areas closely” INTENDED USE To galvanize the recipient to focus on changing observably and quickly To prevent serious derailment SANDWICH Spicy beef Very hot, spicy and rich protein, with nary a carb in sight

Feedback is the lunch of learners: don’t let them go hungry

short: lighten up. Instead of asking people if they ‘would like some feedback?’ – a question that inspires terror in the souls of most – ask them if they are in the mood for some turkey or shrimp.

Spread the word

Don’t wait until the 11th hour If an employee is derailing, rescue them with SOS feedback quickly. Do it early enough that it can make a difference and you’re not just going through the motions before moving to a performance improvement plan or parting ways.

Continuously improve As a leader who cares about performance, you have to keep getting better. After each feedback interaction, do an after-action review to see if you made the right selection.

3

Decrease anxiety Lighten up

To reduce the stigma of feedback and make it a more natural exchange, integrate the sandwich language. Tell stories, use analogies. In

Socialize this model so that everyone in your purview feels comfortable using the terminology. It will help you, and them, give better feedback – and collectively reduce the surrounding angst. Ultimately, managers can’t ignore their duty to give feedback. They can make no excuses for turning a blind eye on performance issues. As they say on the New York City Subway: “If you see something, say something.” By selecting situationally, every manager can give great performance feedback that makes a difference to their teams. Feedback is the lunch of learners: don’t let them go hungry. — Linda Rodman is an executive coach and leadership consultant. Sergey Gorbatov teaches leadership and human resources management at IE Business School — This article represents the authors’ personal opinions and not those of their employers or affiliated organizations — Situational Feedback™ is a trademark of Rodman Resources LLC. All rights reserved Q2 2019 Dialogue


42

Managing the risks of virtuality Virtual teams are a fact of modern business. Organizations must adapt or risk mass management burn-out, warns Richard Finn Around the world, the number of people who work in virtual teams is increasing every year. In the US, there are an estimated 2.9m virtual workers, up 61% since 2005; in the UK, there are reportedly 1.3m full-time virtual workers, with another 3.7m part-time. The attractions of virtuality are clear. Virtual teams can be highly creative. They can bring together experts from all around the world and increase geographic coverage – for example, for a sales team. But there are significant possible downsides: loss of trust, isolation, Dialogue Q2 2019

disengagement, and hidden performance issues. Too few organizations and leaders have adapted to this relatively new fact of business life. It’s high time they did. Consider a typical global manufacturing and sales company. It has over 50,000 employees, with production facilities all over the world, customer and distribution centres in many countries, and sales and service technicians wherever they have products, for each of their brands. Senior executives have global responsibilities and sales technicians often


LEADERSHIP

Virtual team leaders need more time for talking to their people and influencing their ecosystems

have country-wide coverage. It’s the sort of distributed structure commonly found among today’s global manufacturing and service companies. It makes extensive use of virtuality. But in doing so, it stretches and tests almost every good leadership practice. Performance conversations, coaching, engagement, teambuilding: you name it, they are all very different in the virtual environment. They’re also much more difficult to do well. Take span of control. Traditionally, five or six subordinates per manager has been seen as ideal, but some firms now give managers 15-20 direct reports, particularly in a virtual environment. That quadruples the management task. In fact, it might be more than that. Leading a virtual team member takes much more time – or should do, if it’s to be done well. There has to be more preparation for every one-to-one coaching session. Performance conversations have to be longer to ensure alignment. Understanding has to be checked and feelings surfaced. Sustaining values and culture is much harder when employees are dispersed and diverse. And performance management becomes harder. It’s tempting to resort to management by objectives, neglecting the more effective route of regular coaching conversations which cover behaviour and ethics, as well as output.

A new approach

This all means that many managers are struggling to find the time needed to lead their virtual teams. Companies risk mass burn-out among their over-stretched managers. What might boards and the C-suite do about it? First, boards must recognize the costs of going virtual. Leaders need more time for talking to their people and influencing their ecosystems. Spans of control often need to be reduced. And travel budgets cannot be the first across-theboard cut when business gets tough. Performance needs to be made more visible. Assessment, coaching and performance conversations need to be shared by the manager with someone closer to the employee. A triangular relationship between the employee, their manager and a nominated local supporter is one way of creating greater performance visibility. There also has to be serious investment in technology and a strategy for internal communications. Many communication systems are at best unreliable. They need to be accompanied by clear protocols on when and how to use them. Even simple teleconferences often lack the most basic protocols, like saying your name before contributing. Virtuality should also feed into competency models and selection decisions. Organizations should look closely at the competencies required of virtual leaders and virtual employees alike,

43

and select on the basis of the results. Extroverts may find it hard to put in the time and effort needed to make virtual line relationships work. Being independent, self-disciplined and able to cope with isolation are critical for virtual environments. Boards also have to look at the implications for employee engagement. Virtual working means that managers need frequent pulse checks of their people’s engagement, not just the typical annual or biannual survey. Another implication is that leaders need to redouble their efforts to create a purpose- and values-aligned culture across the organization. Virtuality kills culture through isolation and the inability of employees to see their leaders demonstrating the values. Finally, there has to be a recognition of the fact that virtuality creates huge costs in life-work balance. Senior executives and some middle managers are forced to travel extensively, and they pay the price in terms of their health and family time. Organizations should consider more generous holiday and sabbatical entitlements for virtual leaders.

Managing virtual teams

What can you do, as the leader of a virtual team, to maintain high performance? Here are my six top tips.

1

Adapt your style and how you spend time to meet the realities of virtual working. Talk more about feelings; ask more questions seeking facts and information; invite more feedback.

2 3

Invest in relationships. Build personal chat into calls.

Plan and prepare even more for one-to-one conversations, meetings and the selection of new team members.

4 5

Be culturally sensitive on the timing of meetings and language used.

Ensure there is a collective purpose firmly in place for the team and invest in discussion about personal goals, to ensure alignment with company strategy.

6

Arrange a local supporter to assist you in activities that require observation or immediacy. Virtual working is not new. What is new is the extent to which businesses depend upon it. Making it work well means being more respectful of the sacrifices that managers are making, and investing in the practices that support them. — Richard Finn is an experienced consultant who has advised senior executives in global organizations Q2 2019 Dialogue


We are a team of architects, designers and creative thinkers

East Studio, Riverside Walk Sea Containers 18 Upper Ground London, SE1 9PD T +44 (0)20 7559 7400 www.bdg-a-d.com info@bdg.com Photography credit: Maris Mezulis


INNOVATION

45

VIVEK WADHWA

Those who don’t learn from history are doomed to repeat it

Yes, culture matters in tech too Vivek Wadhwa is distinguished fellow at Carnegie Mellon University’s College of Engineering and author of Your Happiness Was Hacked

Unfortunately, Apple doesn’t fall far from better name recognition of Milwaukee than the tree. A Western tech brand developed by Mumbai, despite the latter being 25 times Westerners for Westerners seems incapable the size of the former and being, by some of pivoting to new markets. Its forays into measures, the largest Anglophone city in China are underwhelming. Prospects for the the world. iPhone in the new superpower look grim – The nail in the coffin is smoothly declining market share amid competition hammered home by iTunes. Sure, Apple from more advanced Chinese and East has launched an Indian version of its music Asian challengers. Now it risks repeating streaming service, albeit one that is more those mistakes in the world’s second largest expensive than, and inferior to, the offerings smartphone market – India. from local competitors. Yet even if Indians Consider the case for the prosecution. are willing to overlook the competition, few First, it is focusing on manufacturing will get very far: iTunes relies on payment smaller and cheaper models, such as the by credit cards, which less than 1% of the iPhone SE ,while simultaneously marketing population own. the discontinued iPhone 6. This is because Apple appears to be fighting a battle in it cannot command the premium prices India that it cannot win. Given that Android for its products that it commands 97% of the does in the West. Yet the market there, hot Indian Indian upper-middle developers are unlikely Speak the cultural classes who compose its to prioritize projects for language of your chief user base on the the Californian platform. customers, or lose them subcontinent buy Apple When Apple chief for social status. They executive Tim Cook don’t want cut-price spoke to investors in yard sales of stuff the rest of the world no 2016, he said: “I sort of view India as where longer wants. China was seven to ten years ago, I think Outside India’s moneyed classes, Apple there is great opportunity there.” Few leaves the population cold. It enjoys nothing could argue with Cook’s statement. Yet like the brand recognition and prestige Apple’s chances of success in the market among young, first-time device buyers as it are statistically zero, unless it radically does in the UK, France or the US. Nor does realigns its strategy to meet the cultural it have legacy lock-in with consumers. Key and economic realities of the territory. It is to Apple’s success is that, once users are relying on non-existent brand recognition familiar and comfortable with its ecosystem, to save it, while insulting Indian consumers they are reluctant to leave it, whatever they by punting them inferior and outdated think of the company. Its lack of presence products that rely on payment systems elsewhere in the tech market means there nobody owns. is a dearth of easy converts to the As a first step, it might recruit Indian iPhone cause. nationals to its board in Silicon Valley, a Yet perhaps its greatest mistake is its hiring strategy that has proved fruitful for catastrophic cultural ignorance of the Google and Amazon. territory. Bollywood is the world’s most Meantime, the sorry tale gives the lie prolific film industry, but you wouldn’t to the notion of a homogenous, globalized know it by asking Siri. Ask her to play you a technological market. As Apple found in Bollywood tune and you’ll be banging your China and India, those that cannot speak head against the wall rather than tapping the cultural language of their customers are your foot to the beat. It gets worse: Siri has doomed to lose them. Q2 2019 Dialogue


INNOVATION

46

Organizational excellence on the superhighway Differentiating your business in the digital age demands operational excellence in three critical spheres, writes Dr Al Zeitoun

The days of striving for a structured approach to running a business are well and truly gone. The business environment has changed permanently. The digital age has dawned and we can start to see glimpses of the ways we will work in the future. For most of us today, the norm is operating in a dynamic VUCA environment. When VUCA first made the leap out of the world of military education and into common business usage, it was a way of highlighting the volatility, uncertainty, complexity and ambiguity that so many of us faced. Yet that turbulence was a fraction of what has come since – and what still Dialogue Q2 2019

lies ahead. That is largely thanks to the interplay between technology and data. In that context, delivering operational excellence is enormously challenging. I have had the opportunity to work in just about every corner of the world and have seen first-hand just how important operational excellence is to organizations of all types. But I have also seen how diďŹƒcult it can be for executives to achieve excellence in the midst of unrelenting uncertainty. The dynamics of change continue to accelerate and, for all its promise, the digital movement has undoubtedly added to the pressures.


INNOVATION

Across the variety of businesses that I have worked with, I have found that the clearest signs of operational excellence are exhibited in the consistent achievement of organizational strategic objectives. Whether in the construction industry, energy, finance, pharmaceutical, or enterprise software solutions, the common thread for excellence is identical: achieving a balance between process, people and governance. Learning, repeating and strengthening the behaviours that work is critical. As with professional tennis players, excellence is the result of repeating healthy movements time and again. We also have to be ready for when the

47

ball comes back over the net: to get the highest return on our investment in excellence, our businesses have to be dynamic and sensitive to our customers’ fluid and rising demands.

A model for operational excellence

The model that I propose consists of those three vital enablers: process, people and governance. A delicate balance is needed between the three layers. Each has its own individual gauge which impacts on how far excellence is achieved. The enablers also have an integrated eect, as they work together to achieve a higher degree of excellence. Q2 2019 Dialogue


INNOVATION

48

A MODEL FOR O P E R AT I O N A L EXCELLENCE

PROCESS

PEOPLE

GOVERNANCE

organizational culture will shape the choice of processes that enable both operational and strategic alignment, yet leave open a window for different organizational units to put a more personal stamp on their work. This combination creates operational excellence stickiness. Finding the right balance point for some of the organization’s key units is vital to demonstrate those early adopters’ successes. At that point, change becomes contagious: scaling happens when it becomes attractive for other units to follow suit. Remember, however, that there is no perfect end state. Process excellence requires continual sensitive adjustment between autonomy and alignment.

Process

For the process enabler, the operational excellence gauge has to take into consideration that our future work will be in the midst of continued and increasing uncertainty and complexity. The gauge goes from autonomy at one end of the scale, to alignment at the other. The way to achieve scale in excellence is to balance the need for strategic alignment across all processes, with the need for local autonomy and the ability to make adjustments to address local markets. In one particular business that I worked with – call it company A – an organizational transformation programme was being driven by a core team, seeking to influence the wider business. Processes were at an early stage of maturity. The organization had the appetite and energy for change, so the key was to find a formula that would not choke progress on any one organizational strategic goal at the expense of another. Fluidity was imperative. The key to process excellence is to establish the most suitable types, numbers and quantity of processes appropriate to different business areas. Processes help level the impact of politics and organizational jostling, and provide a way to manage the wide spectrum of opinions on what success looks like. With company A, I had to come up with a lean slice of processes that would create some structure yet leave enough room for individual units’ creativity, so as to build their ownership. I used stakeholder analysis and methodical buy-in approaches, as well as fast testing of newly-introduced processes. In the case of process, excellence is most likely found near AUTONOMY the centre of the scale between autonomy and alignment. The Dialogue Q2 2019

Processes should give some structure yet leave enough room for individual creativity

S T R AT E G I C & LEADERSHIP

ALIGNMENT

In some ways, the people enabler represents a balance between now and the future. The gauge goes from traditional to non-traditional competencies. At one end of the scale, the traditional is a healthy mix of strategic and leadership competencies – still challenging enough to deliver well. The non-traditional end represents the competencies required for future excellence in a world defined by digital technology. Despite the importance of digital technology, the reaction to this revolution has been quite uneven and is often difficult to sense. As with process, it’s vital that every layer of the organization is able to sense and respond fast to changing needs. Change leaders need empathy to establish where the balance should be struck. In practice, delivering excellence on the people scale in company A meant that we had to work on new implementation methodologies that D I G I TA L were comprehensively designed around customers. That outward focus on customers, shared by everyone, helped to circumnavigate internal politics. We used design thinking to bring the best ideas to the mix, and balanced machine intelligence with the impact on how our people go about their daily lives. Again, scaling the impact of the people enabler requires finding the right point on the scale between its traditional and non-traditional sides. Many organizations will find the middle of the scale comfortable, but a growing number are tilting towards more agility and increased reliance on digital competencies. Challenging as it may be, finding the right mix of people competencies is vital for organizations seeking to excel operationally while also becoming more innovative. The secret recipe for making it work will be a level of collaboration across organizational boundaries that we have not yet witnessed.

Shutterstock

People


INNOVATION

Governance

The classical view of governance is one of a steering function, fulfilled by dedicated committees. For the future of work, excellence will be achieved by a shift towards a much more fluid approach that is benefits-focused and supports fast, timely decision-making by executive teams. The governance enabler gauge therefore spans from steering to delivering. I have found that excellence is not a mid-point but is achieved with a steady movement towards the delivery side of this gauge. Leaders have to look holistically at the business and carefully weigh its appetite and readiness for this redesigned approach. In company A, we achieved change by selecting pockets of the organization that could handle a higher degree of agile governance, such as information technology groups and customer service departments. We initially stayed away from the more STEERING traditional backbone parts of the business, like finance and human capital. By finding ways to experiment fast in our chosen areas, we made some quick wins. Other parts of the organization started asking the right questions and implementing their own governance improvements. Success spread through contagion. The other critical dimension to the governance enabler is the executive leadership team. Working on complex programmes, we had to ensure that the executive group adjusted fast to the new governance model. This required revisiting the values, designing reflection sessions, creating greater transparency in the boardroom and eventually changing the executive role from one of steering, to one

Excellence is built on increasing process autonomy, digitally capable people, and agile, delivery-focused governance

49

of experimenting and redirecting. Taking lightning-quick decisions requires a massive amount of decision-making practice and muscle-building, coupled with a growing appetite for taking risks. That is often an ambitious change. A governance framework that underpins operational excellence in the future requires the bar to be set quite high in the degree of autonomy that is modelled by the executive team and cascaded down. That requires a very different way of defining organizational success. Speed is at the centre of this new definition of organizational success, and learning is a critical sub-component. Operational success metrics need to change and so too does behaviour: to achieve an organizational cultural tilt more quickly, make it safe for teams to have fun experimenting. You can count on the ripple effects created by success stories.

Bringing the model together DELIVERING

Taking lightningquick decisions requires a massive amount of decisionmaking practice and musclebuilding

Bringing together the three operational excellence enablers creates a multiplier for scaling operational excellence. Achieving the right balance of process autonomy and alignment, coupled with the right mix of traditional and non-traditional competencies, and integrating that under an umbrella of agile governance anchored in a delivery focus, is the secret to expediting operational excellence. It is critical to sense which combination will work best in your situation. The exact placement of the North Star on each of the gauges depends highly on the readiness of the organization, the nature of the initiatives and the nature of the business. Wherever the balance lies, integrating efforts being made across the three enablers has the potential of bringing a much higher return on investment as compared with a sole focus on any one of the enablers individually. In this new world, excellence continues to be a continuing journey, but the road is changing faster than predicted, primarily thanks to the pace of digital change. The recipe for creating thriving cultures of excellence means taking many more intentional but incremental steps with our processes, people and governance, coupled with an immense appetite for learning. A healthy culture of excellence for the future needs a combination of resilience in pursuing new and different ways of doing things, and the use of experimentation as the vehicle for learning. A focused approach to running strategic excellence initiatives, extracting knowledge from them and changing direction fast when it is not working, means that operational excellence outcomes are within our grasp. — Dr Al Zeitoun, PMP, is an organizational transformation and operational excellence expert Q2 2019 Dialogue


INNOVATION

50

Why test-and-learn works Agile is more than a management buzz word: it’s hard-wired to enhance performance, writes Camelia Ram

Dialogue Q2 2019


INNOVATION

Agile is defined by a collective commitment to delivering outcomes based on a test-and-learn approach. In environments characterized by uncertainty, that seems like plain common sense. Yet many organizations struggle to make the shift from a legacy of command-andcontrol approaches, which thrive under stable environments, to this more fluid way of working. Agile originated in software development, but it offers advantages in many types of business seeking to innovate and flourish in uncertain times. Its benefits are compounded by the effects on us as individuals, thanks to the way our minds work. Agile routines leverage brain activity that facilitates learning at pace. Visualizing a pathway to desired outcomes, combined with a bias for action, encourages curiosity with strategic purpose. This in turn enables learning, which is critical to performance over both the shortand long-term in the complex, unpredictable environments that we all confront.

Visualize outcomes

The brain exhibits the same activity when it visualizes an action as it does when it is performing the action. In other words, the brain is unable to distinguish between imagination and reality. As a result, daily visualization has been shown to help us be more receptive to new opportunities to meet goals. In agile, the scrum board facilitates such visualization. It provides daily line of sight on goals and the work to which the team has committed. As a result, it is a simple yet effective tool for imagining an outcome and working out what will be done individually and collectively to achieve it. By comparing items at different stages of completion, individuals can also visualize barriers to execution and proactively address them. The daily rehearsal of ‘if… then’ scenarios creates a rhythm that every member in the team can work towards in a harmonious manner. It helps everyone understand how problems are broken down, and invites individuals to explore options to solve problems. In so doing, everyone participates in creating the future instead of reacting to it. This form of group visualization also helps individuals understand what they may need to give up individually to drive success on higher priority items.

Commit to action

The more that action is taken in line with a goal, the better our brain filters information in line with that goal – allowing us to take in that which helps us achieve it, and filtering out that which does not. Action also helps to neutralize fear, because the brain is focused less on the emotional state of fear and more on the tasks necessary to action. Agile takes a single deliverable – the minimum viable product – and makes it urgent through a

51

sprint. It calls for everyone to dedicate every bit of effort to getting to that deliverable as quickly as possible. As action is taken, individuals are empowered to talk about the things that have not worked, so that others do not make the same mistakes. The open sharing of ideas underpins a sense of rapid progress and gives agile an edge over command-and-control processes, which can – despite looking superficially like a strongly action-oriented way of working – generate endless meetings with multiple stakeholders that slow down decision-making.

Unlearning and re-learning

In an unpredictable and unstable business environment, decisions are increasingly based on two simple premises: work out what needs to be done, and the easiest way of getting it done with the lowest risk. There are some dangers here, however. The bias towards acting in the best interest of the present self can lead us on the one hand to procrastinate; on the other, it can make us blind to better long-term choices that are available to us. Agile is able to balance short- and long-term considerations through an orientation towards learning more about a problem in order to increase our confidence about bigger decisions. Test-and-learn therefore makes both rewards and costs more immediate. It surfaces fears and anxieties, and engages with them, seeking to understand cause-and-effect relationships. Emphasizing action, based on what is controllable, creates a safe environment when unpicking who or what is responsible for a particular outcome. An evidence-based approach that uses clear, consistent measures of progress helps to build credibility and reliability within and across teams. This learning orientation naturally builds confidence to move forward, reinforced by continuous feedback among team members.

Acting to learn

A top-down approach to planning with clear responsibility for decision-making is possible when the environment is stable. But in the face of uncertainty, agile nurtures a mindset that focuses on managing the controllable in order to learn. This helps to build neuroplasticity – the ability of the brain to adjust its activities in response to new situations or to changes in its environment. Agile’s core techniques help individuals and teams to regularly and repeatedly visualize outcomes and ways to overcome obstacles. Combined with timely action, these methods are a powerful basis on which to rehearse moves, to act, learn and repeat the cycle. In highly uncertain environments, acting to learn is the best way to learn to act strategically. — Camelia Ram holds a PhD in operational research from the London School of Economics

Action helps to neutralize fear, because the brain is focused less on its emotional state and more on action Q2 2019 Dialogue


Immediate impact, growing advantage. At A.T. Kearney, we pride ourselves on our uniquely collegial culture and care passionately about our work and our people. We offer our clients a range of global capabilities anchored in our heritage of essential rightness. The same promise we make to our clients—immediate impact, growing advantage—we offer to our people. Working together, we drive immediate results and help build lasting, transformational advantage. Consulting Magazine has recently named A.T. Kearney as one of the Best Firms to Work For 2014 and honored the firm with an Achievement Award for Excellence in Diversity. For more information about A.T. Kearney and to read some of our latest thinking, please visit www.atkearney.com.

A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.


FINANCE

53

PHIL YOUNG

AI won’t kill FP&A if it can reinvent itself as a trend-selector

FP&A should cool it Phil Young PhD is an MBA professor and corporate education consultant and instructor

A crucial group within a company’s change, but are themselves change agents. business function is financial planning and One of the ways that they can instigate analysis (FP&A). Essentially, this team is change is through innovation. responsible for forecasting key financial So what of our friends in FP&A? indicators, such as revenue, profit and How can they work faster and be more cash flow – and for tracking and analysing innovative? Here’s one example. a company’s performance as it strives to We all know that bricks-and-mortar achieve its financial goals. Yet some fear retail is suffering because of online these folks’ days are numbered. shopping. Let’s imagine that you A recent Harvard Business Review work in FP&A for one of the major webinar on Agility and the Future high-street chains. of Finance predicted that artificial One of your core roles is using intelligence (AI) will soon relieve FP&A historical data on the financial of many of its current duties, such as performance by such categories as managing and analysing databases. In fact, store, city, state, province, country if I’m not mistaken, the speaker said that and product-mix to forecast sales, the FP&A workforce of the future would profit and cash-flow for the next year, be much diminished because of it. I’ll quarter or month. The degree of speed leave you to imagine the and granularity of chatroom fallout from reporting will depend the FP&A executives on the needs of senior Understanding within the webinar management and your trends and audience! IT set-up. responding to them is However, I think Could AI or the future of FP&A their concerns may ‘machine learning’ be premature – if not augment or replace this entirely unfounded. type of FP&A work? I There is plenty of opportunity for FP&A to think we all know the answer. prove its worth in the ‘agile’ world of AI But suppose these companies finally and digital disruption. see the light that traditional retail must In business, terms such as ‘agile adapt to changes in retail shopping by leadership’, ‘agile organizations’, opening pop-up stores that not only and ‘agile workforce’ have become introduce new or highly curated products commonplace. If you are a financial to trendy shoppers, but also give them professional, you will most likely have Instagram photo-ops? heard the term ‘agile finance’. Can these traditional retail giants Without trying to provide a complete get into the pop-up store business in definition of ‘agile’, I can safely say that a fast and profitable way? Who would this term is generally associated with the C-level executives turn to for the flexibility, innovation and speed. In my business-case on this idea? Is this job a view, these traits have always been an natural fit for FP&A? I think so. important part of a successful enterprise. So, worry less about robots and AI, But the rapid changes in technology and and embrace the human element. To help growing intensity of global competition make a good business decision, we need have made them so important that they some real people with financial skills, deserve to be put under the umbrella of business acumen and a sense of what’s a single word. cool and awesome in the world. We hear people say that agile workers Understanding trends and responding are those who not only adjust quickly to to what’s coming is the future of FP&A. Q2 2019 Dialogue


FINANCE

Shutterstock

54

Dialogue Q2 2019


FINANCE

55

Rethinking risk If you want a business that relies on skill, and not blind luck, then it’s time to brush up on probability theory. Professor Joe Perfetti explains

Ask most people to define risk in business and they will say it is about whether you make or lose money. Yet Apple had over $59 billion net income in fiscal 2018 – and between 1 October 2018 and 15 January 2019, its share price fell almost 30%. Apple had made a lot of money, but clearly, from a shareholder perspective, something else was at play. That something was risk. Risk, or uncertainty, is critical to finance. In many ways, finance cares more about the potential range of outcomes than the outcome itself. In today’s highly complex and unpredictable marketplace, we need to shift how we think through uncertainty and calculate risk.

Understanding uncertainty

Your absolute performance during the year does not matter. What matters is how you did against the plan

Take a look at the distribution of annual returns for three types of investments from 1928 through 2018 (see Figure 1, overleaf). The figure shows the returns generated annually if you had put your money in threemonth US Treasury bills, ten-year US Treasury Bonds, or the S&P 500 equity index. Notice that the range of outcomes has been far narrower for the three-month Treasury bills than for the other two asset classes. In technical terms, the ‘standard deviation’ of the returns is less for investments in three-month treasuries than for the S&P 500. This is how risk is defined in finance: by the amount of uncertainty or the volatility of the outcomes. More uncertainty – that is, more standard deviation – in the potential range of results means more risk (although of course, this can be compensated for with higher rates of return).

Evaluating budgets

The next time you go into a budget review, you should change your frame of reference. Your

absolute performance during the month, quarter or year matters less than how you did against the plan. If you plan to lose money during a period of time and you lose what you expect, there is no risk in that outcome. The same would be true if you made money. The risk comes from how far away from the plan you end up. In Apple’s case, the ‘plan’ for 2018 was to make a phenomenal amount of money selling iPhones. What was delivered – the ‘actual’ performance – fell well short of Wall Street’s expectations (the ‘variance’). Hence the tumbling share price. Every budget represents a presumption – the result is acceptable, so if you stick to budget, things are going well – so every budget meeting is basically about two questions. First, how did you do against the plan? Second, why is it different and is there anything you can do about it? That is the risk lens that finance applies to the budget discussion, especially for multiperiod projects. Take a look at Table 1 (overleaf) and decide which project is performing better. In a traditional budget setting, many leaders would favour Project B because it was more profitable than Project A. We also may not like Project A, because it is losing money and bleeding cash. But from a risk perspective, the absolute performance is not the issue. These projects could be at different stages of the life cycle. Project A could be a launch product and Project B could be mature. What matters is the variance. Some in finance use the metaphor of what’s ‘closest to the hole’: by that measure, Project B is further from its plan than Project A. From a risk perspective, Project B would have issues. My question would be: if you cannot predict accurately one period out, how can I believe your long-term forecast? Q2 2019 Dialogue


FINANCE

56

FIGURE 1

DISTRIBUTION OF ANNUAL RETURNS Annual returns on three forms of investment, 1928-2018

Three-month Treasury bills Return

Ten-year Treasury bonds S&P 500 Index Number of years Source: NYU Stern

TABLE 1

EXAMPLE PROJECT BUDGETS I N MI LLI ONS

PL AN

AC T UA L

VA RI A N CE

Project A New orders Sales Profit Cashflow

$500 $300 $(35) $(50)

$510 $305 $(30) $(40)

$10 $5 $5 $10

Project B New orders Sales Profit Cashflow

$2000 $1000 $100 $100

$1800 $925 $80 $70

$(200) $(75) $(20) $(30)

The practical application is to make more small bets and fewer big bets. This is called real option theory Dialogue Q2 2019

In general, most people have a bias to exceed the plan rather than not meet the plan. But that has challenges. If you didn’t spend what you were budgeting, the question you would need to answer is: why? If you explained it was due to something unexpected, the view from finance would be that you got lucky: that means you could be unlucky next time, and the real risk is higher. If you instead say you were originally conservative, it means you were not forthcoming. How then are you to be believed when you provide new budgets? Should finance arbitrarily cut your estimates? Funds were provided to you that you didn’t use, meaning someone else who needed them was turned down. When the dust settles, we must be as accurate as we can and realize we are having a conversation about risk, not just results.

Communicating risk

How do we get better at this, especially when we are uncertain of the result? The first step is to

realize that you need to not only give a number (the expected return), but also provide a range of outcomes (the risk). In a fast-moving, uncertain market environment, defining this cone or range of uncertainty is critical to understand the risk of the decision. Below is an example of both the challenge and the potential solution. Let’s say that you are given the option to flip a coin for $1. It is a fair flip – you could double your money or end up with nothing. To most people, the game is a 50/50 proposition, so on a $1 bet, their expected return is to have $1 after the flip. Herein lies the problem. If you called the flip correctly and won, you have $2, while the person you played against has $0. Neither of you have $1 as expected. Let’s plot this out using a simple diagram (Figure 2). This is the risk of the decision. If you flip the coin only once, you either get double or nothing: it is impossible for you to get the expected return of $1. This risk is inherent with the coin flip, and it may not be fully communicated if you focus on the expected return. Back in the real world, a budget is an expected return; so when you state in a budget that you will spend X, or generate sales of Y, you are communicating the expected return. It is the same as saying that you expect to make $1 on a coin flip. What you are not communicating is the range, or the risk. If the coin flip were your budget, I would be looking for you to deliver $1 at the end of the year. But you can’t deliver $1. You will either deliver $2 or $0. By definition, risk and uncertainty is now in the system and an unplanned surprise will occur. To add more complexity, imagine that another budget puts forth a plan to also make $1. But their range is between $0.90 and $1.10. If I do not know the ranges for both plans, and all I have to go on is the expected return, I might approve something without fully comprehending what I am getting in to. To fully communicate the risk of the project, we must communicate the range. But it cannot be arbitrary, as is too often the case. When organizations ask for best- and worst-case scenarios it often means just putting +20% on the best case, and -20% on the worst case. Why not plus or minus 25%? Why not +15% and -30%? In addition to having a realistic range, it is also critical to communicate the underlying assumptions. Thinking probabilistically and communicating assumptions provides for a much better plan and a far better understanding of the risk.

Betting on uncertainty

Even if you do everything right in the previous example, you are still betting on a coin flip. That might be too much risk to take. How could this


FINANCE

game be played in a way that reduces the risk? One way is to flip five times rather than just once. It is highly unlikely you would win five in a row or lose five in a row; mathematically, the likely outcome is that you would get closer to the expected return. The practical application is to make more small bets and fewer big bets. This is the basis of real option theory; it’s the theory behind the idea of ‘failing fast’, and what Google calls failing well. In finance, ROI is often defined as Restriction on Investment. Especially with early-stage projects, it is often difficult to prove a viable return, and successful organizations do not like failure. They no longer want to flip coins. This is risk aversion. Getting round this might mean changing the conversation. Are you willing to spend money to purchase information? Are you willing to run an experiment to gather data, which will help make a better decision when a very important opportunity comes up? If we treat the investment as an option, with choices along the way, then the game changes. Now, if we make a small bet and it doesn’t work out, it is not a failure: it is valuable information. We do not have to proceed further. But if it does work out, we can proceed with an additional bet. In today’s uncertain world, the agile organization is changing how it evaluates decisions and how it places its bets. Traditional organizations are paralysed by uncertainty and accountability systems that do not allow failure. Agile companies are instead using real options and probabilistic thinking to be flexible, learn, adapt and move forward.

Accountability and risk culture

Thinking in ranges and probabilities is nice in theory, but will it work in your organization? Sometimes the cost of failure is perceived to be so high that employees are not willing to take risk. To test your organization’s risk culture, consider this scenario. An employee is given the choice between two games. They can only play one of the games, one FIGURE 2

OUTCOMES OF FLIPPING A $1 COIN 50%

$1

$2 Expected return = $1

50%

$0

57

time. There is no financial risk to them personally in either. In the first game, the employee can flip a coin for the chance to win $1 million. In the second, the employee can flip for the chance to win $2 million. Which game should they play? Of course, the logical answer is to play the second game. The two games have the same probabilities of winning and losing, but the expected return of the second game is much higher. But think about what would happen in your organization if one employee chose to play the first game and won $1 million, while another played the second game and lost, ending up with $0. What would happen to those two employees? Does the organization reward outcomes or decisions? In an agile culture, we cannot reward outcomes. They are often based on luck and we might inhibit risk-taking, as good decisions with poor outcomes would be punished. Worse, the celebrated bad choice, good outcome behaviours might be replicated, having been mistakenly credited as successful. If we make decisions that are 70% likely to win, we will make a lot of money over time – although a 30% failure rate can still seem like a lot of failure. That is why small bets are so critical. With big bets, that 30% failure rate may be tough to stomach. With small bets, the losses can be tolerated; make a lot of small bets with a 70% success rate and the result will be a successful business. Besides, in the real world, the bets are not completely independent. If the organization learns from its failures it can reduce moneylosing options and improve moneymaking options over time, while getting better at evaluating probabilities and making decisions. Google’s purchase of Motorola to get into the mobile phone business was a failure, but the lessons learned helped in launching the very successful Pixel smartphone.

A sure-fire bet

Next time you find yourself in budget discussions, remember that risk is about uncertainty. Make sure you understand your risk and how you communicate it. Whether evaluating a budget or a specific decision, we need to start thinking in terms of ranges, probabilities and smaller bets. That will equip us to make better decisions in uncertain environments and set up an environment where skill, not luck, is rewarded. You will also be better prepared to act in an uncertain environment and not be inhibited by having to provide a hard ROI. It’s the only surefire bet on the table. — Joe Perfetti teaches equity analysis at the University of Maryland and is an innovation fellow with Duke Corporate Education. His Building Financial Acumen course is available at www.dukece.com Q2 2019 Dialogue


FINANCE

58

Dialogue Q2 2019


FINANCE

59

The jewel in the crown Nikhil Raval surveys the opportunities and challenges facing the fast-growing Indian financial services industry

‘Brand India’ is a big talking point in business circles, and rightly so. India has leapt up global rankings as a place to do business over the last three years, thanks to a sustained period of regulatory reform. There are myriad opportunities to be had in a society that is young and developing rapidly – including from increasing access to the financial system for society’s poorest. Indeed, the financial services sector is something of a jewel in the Indian crown. It is without doubt one of the world’s most vibrant capital markets and it has a diversified – and rapidly expanding – financial sector, comprised of commercial banks, insurance companies, non-banking financial companies, cooperatives, pension funds, mutual funds and other smaller financial entities. India’s services sector has always served the country’s economy well, accounting for about 57% of gross domestic product (GDP). The financial services sector has been an important contributor to that success. But the business landscape is changing rapidly thanks to political reforms and intensified competition. Executives need to evolve their strategies if they’re to avoid the potential pitfalls ahead and take advantage of the opportunities for growth.

Common challenges

At one level, the challenges facing Indian financial services are the same as those facing the industry elsewhere in the world. Prime among them are the massive changes created by technology, which will demand that the sector adapts quickly and continuously. But technology has been, and will continue to be, a significant driver of growth. A report by Boston Consulting

Group and Google India predicts that about 75% of the insurance policies sold by 2020 will, in one way or another, be influenced by digital channels. Technological change is touching every part of the financial sector: state-owned banks, for example, recently developed their own digital wallet apps to compete with private players. Increasing regulation has also had a big impact on the sector, as in other countries globally. The regulatory framework in India is one of the most complex and strict to be found around the world, and businesses may face several regulators. For the insurance sector, rules are set out by the Insurance and Regulatory and Development Authority (IRDA). Mutual funds are overseen and regulated by the Securities and Exchange Board of India (SEBI). Home finance and non-banking financial companies (NBFCs) must comply with the guidelines set out by the Reserve Bank of India (RBI), India’s central banking and monetary authority. The robustness of the regulatory framework is a double-edged sword. It is necessary to keep consumer confidence and trust high, especially in the wake of the 2008 global financial crisis, but it poses many more compliance requirements for financial services companies. Maximizing the benefits and minimizing the burdens is not just about what rules exist, but about how well they are enforced – and on this, there has been increasing debate. The RBI was under significant pressure at the end of 2018 to improve its performance.

Global opportunities

On the other side of the scales, ongoing initiatives to increase foreign direct investment Q2 2019 Dialogue


FINANCE

60

India has leapt up the World Bank's Ease of Doing Business Rankings, hitting number 77 in the 2018 report Dialogue Q2 2019

(FDI) in India are creating significant opportunities for overseas investors to establish new business operations or acquire business assets. The ‘Make in India’ initiative launched in September 2014 saw the government relax FDI rules for 25 sectors, including raising the upper limit on investment in the insurance sector from 26% to 49%. India overtook China and the USA to become the top destination for FDI in 2015. In another sign of success, India has also leapt up the World Bank’s Ease of Doing Business rankings, hitting number 77 in the 2018 report after being placed only at number 130 in 2017, and 142 the year before. India was the only large country to have achieved such a significant shift, earning it a place in the World Bank’s top ten list of improvers. This dramatic change is the result of sustained reforms over the past several years, across eight out of the World Bank’s ten indicator areas: starting a business, dealing with construction permits, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. In total, India has adopted 37 reforms since 2003, nearly half of them in the last four years. There is some way to go, however. At 1,445 days, the time taken to enforce a contract is longer today than it was 15 years ago, at 1,420 days. Yet on the whole, the indications are that the country is continuing its steady shift towards best practice in business regulation and is strengthening its position as a preferred place to do business globally. One of the most dramatic changes in the regulatory landscape followed the unscheduled television address made by Prime Minister Narendra Modi at 8pm on the evening of 8 November 2016. He informed the nation that, from midnight, the country’s two largest denomination notes – Rs 500 and 1,000 – would be “demonetized”, withdrawn from use. These notes accounted for 86% of the country’s cash supply. The government’s goals were multi-faceted: to eradicate counterfeit currency, fight tax evasion, eliminate black money (income illegally obtained or not declared for tax purposes) from money laundering, attack the financing of terrorism and promote a cashless economy. While the sudden announcement prompted some short-term turmoil, those aims are vital for the longer term and should improve the business environment over time. Another major intervention came on 1 July 2017, when the government made the allimportant introduction of a flat structure of taxes called the ‘Goods & Services Tax’ (GST). GST replaced multiple cascading taxes and so radically simplified India’s indirect taxation system. There have also been steps to improve access to financial services. India has been massively under-served when it comes to financial

services, whether in banking, insurance or investment – especially the growing younger population and those living in poverty. To bridge the gap, in August 2014 Prime Minister Modi introduced the Pradhan Mantri Jan Dhan Yojana, a financial inclusion programme which applies to anyone in the 18-65 age group. It aims to increase access to a wide range of financial services such as bank accounts, remittances, credit, insurance and pensions, making them more affordable in order to allow the population that remains below the poverty line to be part of the financial system. From a business perspective, there is a huge opportunity to be realized from meeting the need for better financial inclusion, and it spreads right across urban, semi-urban and rural areas of the country.

Strategies for success

The bad news is that differentiation is becoming more difficult with increased competition. Increasing commoditization of offerings is reducing product and innovation life-cycles, leading to client attrition and high customer acquisition rates. Numerous studies have shown that the cost of acquiring customers is estimated at five times the cost of retaining existing ones. The corollary is that a reduction in customer churn can boost net profits significantly. This means that companies have to be smart in monetizing customer churn and need to consistently touch clients to keep them connected to the brand. External benchmarking of successful companies, such as Wells Fargo in the US, highlights gaps that can be plugged, in particular the second big business opportunity: cross-selling. Cross-selling is the practice of selling an additional product or service to an existing customer and it’s one of the simplest strategies an organization can undertake to substantially increase revenue. Not only does cross-selling allow an organization to take advantage of the known risk associated with a current customer (versus taking on the unknown risk of a new customer), it allows the organization to gain valuable information such as buying patterns, preferences and willingness to try new suggested products and services. Some organizations report that as much as 35% of their revenue comes from cross-selling activities, while for others, even global brands, it remains elusive. There are several forms of cross-selling. While servicing an account, for example, the product or service provider may hear of an additional client need and offer to meet it. Another form is selling add-on services, when a supplier shows the customer that they could enhance the value of an existing service by buying another from a different part of the supplier’s company. A third kind of cross-selling is selling solutions, such as a customer of air conditioners being sold a package


FINANCE

61

I N D I A’ S F I N A N C I A L S E R V I C E S I N N U M B E R S The size of banking assets in India reached USD$1.8trn in 2015 and is expected to touch $28.5trn by 2025. Association of Mutual Funds in India (AMFI) data show that assets of the mutual fund industry have hit an all-time high of about Rs12trn (US$189.83bn).

Shutterstock

India is the 15th-largest insurance market in the world in terms of premium volume – but it has the potential for exponential growth. The total market size of India’s insurance sector is projected to

touch $350-400 billion by 2020. India’s life insurance sector is the biggest in the world with about 360m policies, which are expected to increase at a compounded annual growth rate (CAGR) of 12-15% over the next five years. However, life insurance penetration is just 3.1% of GDP and the industry is planning to hike penetration levels to five per cent by 2020. Its value could top the US$1trn mark in the next seven years. Investment in India’s pension sector is expected

of both air conditioning units and installation services. Globally, Wells Fargo is the benchmark, able to sell 6.5 products per customer. In India, HDFC Bank comes closest, with four products per customer. Successful firms invest significant resources in training sales representatives to understand the benefits of a wide range of products and services, as well as aspects of customer servicing and relationship management. When innovation is continuous in product offerings, continuous investment in sales and service can become a key differentiator. In addition, firms can use sophisticated predictive analytics techniques to predict and minimize customer churn. Companies can segment customers by profitability, volume and length of engagement and optimize their marketing campaigns to target

to reach $1 trillion by 2025, following the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013. The country is projected to become the fifthlargest banking sector globally by 2020, as per a joint report by KPMG and the Confederation of Indian Industry (CII). The report also expects bank credit to grow at a compound annual growth rate of 17% in the medium term, leading to better credit penetration.

each class of clients, resulting in higher retention at lower cost and improved customer experience.

The future is bright

A fast-growing economy, rising income levels and improving life expectancy are some of the many favourable factors that are likely to boost growth in the Indian financial services sector in the coming years. Challenges remain, of course. Politicians need to keep up the pace of reform, and business leaders need to adapt to a fastmoving and intensely competitive market. But with those in place, the future looks bright. — Nikhil Raval was formerly the managing director of Duke Corporate Education India. He founded Learn Wisely in 2018 and continues to help organizations and individuals to improve performance Q2 2019 Dialogue


The sharpest writing worldwide on global management and leadership Dialogue is a quarterly business journal for senior managers and leaders across the world, covering global business issues. It is distributed in print and digital formats. We can offer advertising, sponsorship and collaboration opportunities on special projects designed for your brand. Contact us for more information Alec Egan, Business Development Executive | alec.egan@lidpublishing.com |

www.dialoguereview.com

+44 (0) 20 7183 9643


MARKETING

63

GILES LURY

Innovation in marketing is moving at a blistering pace

The ideas machine

Giles Lury is director at The Value Engineers and author of How Coca-Cola Took Over the World: and 100 More Amazing Stories About the World’s Greatest Brands

They used to say that the only certainties in life were death and taxes. Well, you can add to those the notion of ‘constant change’. But while it is true that change is continuous – even change is changing – it’s also getting much faster. Innovation was always a key role for marketing. But its importance is increasing and evolving every day. Here are five changes I have seen in the world of innovation.

Feel the need for speed

The accelerating pace of change in many markets – with new technologies, new business models, changing attitudes and customer expectations, and the emergence of highly disruptive new players – means the need for speed is greater than ever. The buzzwords in innovation are ‘agile’ and ‘sprints’. The first refers to what you must be, and the second to the process you should be adopting. Forget six months, you should be thinking in terms of six weeks – or better still – six days. Many say innovation is a journey, but it can no longer be a marathon.

Beyond friends and family

Marketing loves a good brainstorm. These are ideal for extroverts. They are not so great for introverts

In the past, start-ups couldn’t afford the large research budgets commanded by larger brands, so had to rely on their instincts or use dipstick research among their friends and family. While that still goes on in some cases, the digital age means that even fledging brands can tap into wider audiences and get almost immediate responses. From posting questions on social media to testing multiple alternative website pages, the level and depth of response they can get is much richer. Mass digital testing is levelling that playing field. The notion that small new brands can’t afford research is increasingly a thing of the past.

Can’t innovate, won’t innovate

One trend prevalent among larger organizations is based on their acceptance that they aren’t very good at – or set up for – radical innovation. So, they are adopting an ‘if we can’t do it, buy it’ approach. Recognizing that they may not be the best environments,

that they might not have the right attitude to risk, or are simply too stuck in their ways to nurture truly novel ideas, they have decided to act as incubators for start-ups or to simply buy young companies. Others are using open source innovation in their search for the next big thing.

Ssssh! I’m innovating

Susan Cain’s book Quiet has helped millions of introverts around the world. But I’m not sure even she foresaw her role in championing ‘introverted innovators’. Marketing loves a good brainstorm – and nowhere more so than for ideation. These sessions are ideal for extroverts who are loud, competitive and want to have their ideas heard. They are not great forums for introverts, who often take a little more time to consider things and are then more reserved about putting their ideas forward. More recently, consultancies like ours are finding new means of tapping into introverts’ ideas and using ‘quiet innovation’ techniques.

One size doesn’t fit all

Innovation helps drive growth, but growth comes in numerous different forms. It can be about stealing share with an existing brand in its core category. It can come from identifying your competitors’ weaknesses and exploiting them, or from entering new territories, extending your brand into adjacent categories and finding something new to bring to that market. It can also come from reacting to emerging needs, acting fast to bring new ideas to market. Or it can come in the form of more radical innovation: pioneering, finding new market opportunities, new business models or new routes to market. Different types of innovation need different approaches with different people of different mindsets using different methodologies. It’s an approach we’ve used with great success. And will that be the end to innovations in innovation? No, because as the famous US ad man Bruce Barton said: “When you’re through changing, you’re through.” Q2 2019 Dialogue


MARKETING

64

The five ambassadors of leadership John Davis looks at five timeless leadership characteristics – and picks five business leaders who embody them today

For all the advances made by modern medicine, the Fountain of Eternal Youth has proved elusive. The Fountain of Eternal Leadership remains similarly out of reach. But we’ve achieved a lot in trying to reach them, and – in leadership as in medicine – discovered some timeless truths of benefit to us all. When it comes to our pursuit of youth, humanity has made incredible strides in delaying the onset of old age and ill health. Dialogue Q2 2019

Research has identified behaviours and routines – regular exercise, a balanced diet, a healthy lifestyle, mindfulness – that can help us enjoy a better quality of life as we age. When it comes to leadership, it often seems that leaders reflect their times: the qualities we admire change depending on context. But it is increasingly clear this isn’t the full story. A growing body of social science shows that there are certain practices and behaviours


MARKETING

65

When the headlines are full of attention-grabbing ‘leaders’ with deplorable qualities, it’s reassuring to be reminded that opportunities abound for exemplary people to succeed

that are consistently exemplified by topperforming leaders. One is a strong ethical and moral compass, which has underscored the most admired leaders throughout history: let’s assume that this is the minimum cost of entry. What, then, are the other behaviours that define today’s best leaders? It’s a question that I’ve examined closely, drawing on experiences over my career – throughout which I have been fortunate enough to work with many exemplary leaders – and the study of top performers in 300-plus organizations worldwide, including for-profit companies, nonprofits and government agencies. The definition of a top performer can be distilled down to this: A person who consistently exceeds expectations, leads by example, and whose behaviours are admirable and worthy of emulation, thereby representing the very best of society.

Five meta-behaviours

That definition is built upon hundreds of identifiable characteristics, but analysis has revealed five common meta-behaviour themes. I have called these the ‘Five Ambassadors’. Real-world ambassadors are tasked with positively representing specific entities – countries, for example – and actions, and that is exactly what these five characteristics do for leadership as a whole. For individuals to be considered a top performer in the research, they had to demonstrate all five Ambassador behaviours consistently over time. Around 10% made this cut-off. They are a fascinating and diverse group: sales people in hi-tech, NGO country heads, government leaders, entrepreneurs, and a category of

professionals I call ‘the re-inventionists’, who have thrived by pursuing a varied portfolio of interests. When the headlines are full of attentiongrabbing ‘leaders’ with questionable, even deplorable, qualities, my studies are reassuring. They are a reminder that the world has a huge number of admirable, exemplary people who are truly leaders and worthy of emulation. I remain convinced that opportunities abound for such people to succeed, willing as they are to practice the timeless behaviours of the Five Ambassadors. So, what are the Five Ambassadors and how are they demonstrated?

1

Brand Ambassador The behaviour that top performers exhibit as representatives of their organization’s culture and image.

2

Imagination Ambassador Exemplified by combining resources in novel ways to benefit stakeholders.

3

Relationship Ambassador An approach to relationships that sees them as people-centred not numbersdriven, and as life-time, not one-time.

4

Insight Ambassador Perpetual curiosity leading to deeper understanding of markets and trends, and knowledge which is integrated in their work.

5

Experience Ambassador Demonstrated by sharing lessons from experience, inviting input and advice, and inspiring collective action to create meaningful impact for stakeholders.

Looking for inspiration? Let’s look at some exemplary leaders who bring the Five Ambassadors to life today. Q2 2019 Dialogue


MARKETING

66

Brand Ambassador Nadda Buranasiri, group CEO of AirAsia X Nadda Buranasiri epitomizes the Brand Ambassador. Whenever Buranasiri gives presentations he is polished and deliberate, integrating relevant evidencebased insights that convey the AirAsia X story. He links the brand narrative to specific metrics, reinforcing the value connection between intangible perception and tangible performance. He exudes passion for the company: he avoids succumbing to corporate-speak and is refreshingly agile in tailoring his message to his audiences. The Brand Ambassador behaviour

is also evident in Buranasiri’s thoughtful use of visual and verbal imagery. Visual media are obviously powerful aids to story-telling, but verbal imagery is equally important, if more abstract. Word choices, narrative arc and the speaker’s presence all make a difference. Buranasiri is exceedingly clear on why and how the AirAsia X approach benefits customers. The entire group of operating companies put customers at the heart of their operations and this drives measurable performance gains: over 114 million passengers flown since 2001, a 25% people growth rate, 87% load factors,

Gong and her team now co-create with their customers, blending their scarce resources

Imagination Ambassador Anna Gong, CEO and founder of Perx Technologies Pte Ltd As chief executive and founder of Singapore-based Perx Technologies – a rapidly growing technology start-up in loyalty marketing and mobile customer engagement – Anna Gong is expected to create outsized value for her stakeholders and investors. She has faced significant challenges. Limited funding has demanded that capital inflows are invested with immense precision. The company lacks the luxury of investing heavily in R&D with an inherently uncertain pay-off and has not been able to easily acquire Dialogue Q2 2019

all the capabilities it needs to fulfil her vision. So Gong imaginatively upended Perx’s business model. It has not been an easy journey: the company transitioned from a failing B2C mobile app to a successful B2B, Software as a Service (SaaS) model, with an artificial intelligence enabled platform. That approach has found Perx a market among companies wrestling with the fast-changing digital economy. Gong and her team now co-create with their customers, blending their scarce resources. The result has been the development of new revenue streams for Perx and its customers simultaneously. The company is also helping large enterprises – including banks, insurance companies, telcos, retail and manufacturing conglomerates – to monetize their growing data insights by creating lifestyle solutions tuned to customers’ ever-evolving needs. In effect, Perx is helping its B2B businesses create their own social networks, built around each enterprise’s deep understanding of its customers and an imaginative approach to creating value.

and the Best Low-Cost Airline Premium Cabin prize in the 2018 Skytrax industry awards. Brand runs through the company internally, as well as in its external communications. Buranasiri emphasizes the need to bring to life the company’s values, mission and behaviours, aligning business operations accordingly. His behaviour, and that of his management team, are critical. As he puts it, “We are still running like a start-up, with very few layers and all feet on the ground. Employees are actively encouraged to be vocal, sharing their ideas with management and me.”

Relationship Ambassador Pakpoom Vallisuta, chairman, The QuantGroup The QuantGroup is an M&A advisory firm in Southeast Asia that executes several billion dollars’ worth of business every year. Although a self-described introvert, founder Pakpoom Vallisuta displays a natural enthusiasm for talking to people. Over the last 25 years, he has built an extensive network of relationships with leaders from around the world in business, government and education – even among royalty. It’s a network that extends to every continent and has been cemented through board seats with numerous organizations. As Vallisuta says, with a blend of self-awareness and selfdeprecation – a mix consistently found with top performers: “I develop my relationships based on very strong product consistency with technical specification. “I work hard to ensure people know what to expect from me in terms of the quality and precision of my work.” That consistency, he points out, builds a brand: “When customers have this ‘type of problem’ they think of ‘this particular brand’.”


MARKETING

67

Experience Ambassador Pauline Sahetapy, vice president, Visa School of Public Policy

Insight Ambassador Dr Eddy Lee, managing partner, Coffee Ventures As managing partner of Coffee Ventures, a Singapore-based venture capital firm, Eddy Lee is directly involved in dynamic high-tech markets. He has invested in over 50 start-ups, providing capital and expertise alike. Lee’s specialism is helping entrepreneurs build dynamic and successful marketplaces, which requires a dedicated understanding of technology developments, customer needs and market trends. Coffee Ventures invests when the early signs of product-market fit are still weak, and signals would often be overlooked by others. Lee is clear that waiting for perfect knowledge, product-market fit, or proof of significant revenue leads to lost opportunities. Acting quickly on incomplete and often contradictory signals is critical. That is only possible when insights are developed and shared with others. Lee’s status as an Insight Ambassador – like his business success – is built on his success in education. He has an interdisciplinary

background in semiconductor and medical imaging which has given him a deep understanding of emerging technologies, and has informed investments in a range of technologies including artificial intelligence, block chain and digital health. Building and sharing knowledge have been key to success: he taught at Stanford University, and worked in Silicon Valley, before returning to Singapore. Coffee Ventures now has a wide range of primary market data, generated by documenting and analysing hundreds of start-ups. Synthesized insights help to interpret infrastructure readiness and track emerging consumer behaviour changes, identifying gaps and the potential for new products over the next three to five years. And the process is highly interactive, allowing Coffee Ventures to regularly re-calibrate.

Eddy Lee’s status as an Insight Ambassador is built on his success in education

The Visa School of Public Policy is an education entity within Visa Inc that aims to be a “trusted partner and thought leader to governments and policymakers around the world on digital payments”. The pace of technological transformation often runs ahead of the response from countries and organizations, so the school devotes significant time and resources to nurturing understanding of the latest advances. It helps governments to create informed and enabling regulatory environments that can drive innovation for the benefit of business and citizens. As an Experience Ambassador, Singapore-based Pauline Sahetapy is purposeful in convening policymakers from vastly different political, economic and cultural environments to establish an open dialogue on the opportunities that come with new technology and the importance of appropriate policies. She creates forums for stakeholders to share their experiences, and it’s an approach that also marks her leadership style: she is quick to emphasize the collective effort of her team and colleagues. Together, they have carefully cultivated trust with governments and policymakers, facilitated through multiday programmes around the world.

Practice makes perfect

The Five Ambassadors describe timeless leadership qualities and high performance. Each of the five leaders identified here are top performers: unique in how they demonstrate their identified Ambassador behaviours, they also all excel across the other four Ambassador areas. The good news is that the Five Ambassadors can be learned and developed. No preternatural gifts are required: you simply need to practice the behaviours. It’s time to make a start. — John Davis is regional managing director Asia at Duke Corporate Education Q2 2019 Dialogue


MARKETING

68

The rise and fall of great sales leadership Senior sales leaders lose their emotional intelligence, reveal Ben Laker and Rita Trehan

It’s a truth acknowledged in every marketing book published last year: sales are made when we appeal to a customer’s human nature. Emotional intelligence (EI) is vital, allowing the salesperson to read the emotions of other people, responding empathetically whilst simultaneously controlling and expressing their own emotions. High EI makes it easy for a customer to say “yes!”. Yet mastering its component parts – resilience, influence, communication, flexibility, empathy, creativity – is no small feat. A study of more than 28,000 professionals from nine sectors (including more than 2,800 in sales) by EI testing and training firm, JCA Global, reveals – as you might expect – that successful salespeople, on the whole, have EI scores significantly higher than average. But careers Dialogue Q2 2019


MARKETING

EI DIFFERENCES BY JOB LEVEL EI differences by job level within the sales sector. The midline represents the mean for the sector

Non manager

Supervisor

Middle manager

Senior manager

Director

4%

69

If these fast-talking youngbloods ever hope to make it to managerial level, they must develop their EI

3% 2% 1% 0 -1% -2% -3% -4%

in sales are journeys, and journeys don’t always have happy endings. At the very top levels, sales leaders seem to start losing the very EI that won them their thrones.

leaders at their peak are tough, demanding and have reduced capacity for the soft skills that won them their thrones in the first place.

Troubled monarchs

Such leaders may simply be resting on their laurels, relying on their established network, putting less effort into building relationships. They might even be relinquishing ‘drive’ in favour of their well-won position of power. The psychology of an ageing or supreme sales leader is something that needs to be investigated further. But what needs to be recognized right now is the effect of a lower EI in sales leaders: when the head decays, the rest of the fish soon follows. Sales leaders – as Bradford et al wrote in 2010 – have a significant impact in shaping the emotional tone and motivation of those they lead. They play a pivotal role in nurturing existing talent and helping individuals make the significant EI transition from salesperson to sales manager. In a world where recruiting and motivating salespeople are rated as two of the top three challenges facing sales managers (Krogue, 2015), it is vital that sales leaders assess, understand and improve their EI. Breaking down barriers and building a relationship with customers – the ability to make the sale and have them coming back for more – requires salespeople to possess and exhibit a special, specific soft skillset. For those leaders who wish to see their people and corporation succeed in the future, EI warrants your attention.

The graph tells an interesting story: as fresh salespeople enter the industry, a lack of life experience, low confidence and little emotional maturity is reflected in poor average EI. But if these fast-talking youngbloods ever hope to make it to managerial level, they must develop their EI. Having built experience of customer relationships and emotional selling, salespeople who seek greater responsibility must continue their EI education, becoming strong team players and collaborators, and building the soft skills essential to leadership. Those who continue working in sales into their forties and fifties, or at senior management level, show no significant improvement in EI – but they do display a stronger sense of authenticity and less pessimistic attitudes, indicating more consistent, realistic and balanced perspectives. And then they reach the top, where it all comes crumbling down. In most other job sectors, research suggests that EI increases consistently with job role seniority (Maddocks, 2010). In contrast, EI in the sales sector tends to plateau, and then slowly erode, at senior manager and director levels. At their peak, sales leaders score higher on many aspects of personal EI, such as self-regard, self-awareness, resilience, goal-directedness, authenticity and a realistic, balanced outlook. But all this good is counteracted by a paucity of interpersonal EI and regard for others, and a tendency towards aggression. Put simply, sales

Troubled kingdom

— Ben Laker is professor of behaviour, leadership and organizations at Henley Business School and co-author of the bestselling The Salesperson’s Secret Code. Rita Trehan is an award-winning transformation and human resources expert Q2 2019 Dialogue


STRATEGY

BEN WALKER

Talent-spotters should cultivate a moonshot mindset

Stop hiring for experience no one has Ben Walker is editor-at-large of Dialogue

Be wary of seeking Marswalkers when we have yet to land on Mars

During WWII, the celebrated physicist Freeman Dyson made an inconvenient discovery. Asked by the Royal Air Force’s Bomber Command to calculate the correlation between the experience of airmen and their chances of being shot down, he found there was none. Crews were being brought to Earth by the Luftwaffe irrespective of the RAF airmen’s aggregate years of service. Experience, it turned out, had little bearing on the airmen’s survival. It wasn’t always that way. A similar study conducted before Dyson’s appointment suggested a strong correlation between stripes and success. This was good for morale, as airmen who got through their first few missions knew their chances of survival were increased. Yet by the time of Dyson’s investigation towards the end of the war, any experiential advantage had disappeared. What had changed were the terms of battle. In 1942, the RAF fought conventional dogfights, its gunners trained to scan the skies for German fighters. But, by 1944, the Germans were better equipped. The sudden introduction of Schräge Musik – upward-firing cannon – allowed Luftwaffe airmen to pick off RAF bombers from underneath as they approached stealthily from lower altitudes. This technological blindspot cancelled out senior RAF airmen’s extensive experience. In this changed theatre, they had no more chance of survival than rookies. Today’s digital transformation is the metaphorical upward-firing cannon. The traditional approach to business recruitment focused on experience. The greater the level of relevant experience a candidate had, the greater her chances of success. That thinking will soon be shot from the sky, if it hasn’t been already. In Duke Corporate Education’s recent leadership series webinar, Heather McGowan describes the current landscape “as the greatest philosophy of change in human history”. Defined technical experience in a field cannot instruct us if the field to come is entirely new.

McGowan and her colleague Chris Shipley advise a different approach to talent management that speaks to assessing people for their capabilities, rather than their experience. “I’d encourage leaders to look not at people as their business manager, accountant and such, but how those people execute the work they do,” says Shipley. “That Charlotte in accounting is actually really good at negotiating with our vendors... may mean she can help others negotiate better.” Nasa was unable to hire an experienced moonwalker when it was first trying to go to the moon, McGowan points out. “It was only able to hire people with high levels of learning agility. You need to take a moonshot mindset to hiring certain types of talent.” Today’s organizations should be wary of trying to hire experienced Marswalkers when we have yet to land on Mars. Instead, recruitment strategies should centre on personal qualities, mindsets and enabling behaviours – communication, empathy and intuition – that can transfer between roles. Back at the wartime RAF, Dyson proposed a radical solution to the problem of the Luftwaffe’s upward-firing cannon: reduce the RAF bombers’ crews from seven to five, and remove the gun turrets completely. Such a move would have decreased the mass of the aircraft and increased their airspeed by 50mph. Speed was a more critical factor than lateral firepower when attacks were being made from below. The experienced leaders of the RAF rejected the proposal, wedded to their belief that gunners saved airmen’s lives. More men were lost, possibly needlessly, as experienced hands resisted changing their strategy in the face of a changed reality. Dyson, barely 20 years of age in 1944, and with little wartime experience, had identified the problem and a potential solution. But those with experience ignored him. — The Duke CE Leadership Series webinar featuring Heather McGowan and Chris Shipley can be viewed here: bit.ly/dukecewebinar4 Q2 2019 Dialogue

71


STRATEGY

72

Ecosystems and the ne Business strategy must change in the face of reality WRITING

Professor Tony O’Driscoll ILLUSTRATION

Stefania Infante

Dialogue Q2 2019

The age of value chains is over. The companies and organizations that are winning in the 21st century have placed themselves at the centre of powerful,value, network-based ecosystems. These ecosystems generate, multiply and recycle customer value. The global business environment is powered by an ever-expanding digital network that is continuously reconfiguring how organizations coordinate, connect and communicate, collaborate and take collective action. This connectivity brings a high degree of interdependency and a compounding degree of complexity that frame how the global game of

business is being played. The challenge for today’s organizations is to explore the new ecosystem paradigm, so they might optimally exploit it.

The magnetic ecosystem Securing customers with self-perpetuating value: the new paradox of choice Think of how we shop now. The perfect ‘product’ is no longer a product in any conventional sense. Instead, there are platforms that enhance our shopping experience – a context-aware environment within which value-added products and services can be surfaced and purchases can be made. The premier ecosystems of the


STRATEGY

ew age of customer value contemporary age have embraced and exploited what might be termed ‘the new paradox of choice’ – that increasing consumer options within an expanding ecosystem results in less customer defections from the ecosystem. Consider the Apple and Android/Google Play ecosystems. Where once music fans might have flitted from record store to record store, they are now gently coerced into buying from just one supplier. The manifold advantages of low price (a digital track is far cheaper than a vinyl record or compact disc), convenience (tracks can be bought at any time), and lack of friction (the psychological commitment needed to make

a purchase is compressed into the passage of one’s index finger to one’s screen) mean Apple and Google attract, delight and retain customers within their consumption ecosystem. Nor do customers need to leave these ecosystems for many other reasons. An almost infinite roster of suppliers battle to expand the offerings available within the Apple and Google Play platforms, their profits close-shaven by the platform hosts. The ecosystems are fed by apps from mapmakers, dating companies, game developers, e-retailers, banks and news providers, making the ecosystems more comprehensive – and stickier. The bigger and Q2 2019 Dialogue

73


STRATEGY

74

more diverse the ecosystem, the more magnetic it becomes. Today’s business network contains interdependent networks of firms spanning different sectors that are consciously and continuously orchestrated to create, deliver and capture customer value. The London Business School associate professor Michael Jacobides notes the words of former Nokia chief executive Stephen Elop as his ship was going down, that the war of devices had “become a war of ecosystems”. Elop told his employees that Nokia – the undisputed king of the non-smart phone – would have to rapidly learn how to build, catalyse or join an ecosystem. “Unfortunately,” Jacobides told the 2018 Drucker Forum, “for Nokia it was too late.” The power of the new paradox of choice, suggests Jacobides, is that “Apple and Google don’t tell you what to buy, but they do circumscribe the bag from which you are choosing stuff”. More choice, less customer movement. The most powerful ecosystems bring to mind the Eagles’ song Hotel California: We are all just prisoners here, of our own device… you can check out any time you like, but you can never leave. Ecosystems operate in the background of customers’ lives, awaiting, motivating, or instigating, their next delimited consumption decision. Hardware ecosystems, such as the heating and home security series Nest and the coffee brand Nespresso, have embraced customers’ newfound fondness for benign incarceration. Nest initially appealed to a consumer demand for a heating system that was easy to programme, could be controlled remotely and learned their behaviour. Yet, once in its ecosystem, consumers quickly recognize the value of the system for other uses – such as real-time home security cameras and various functions. By increasing choice within a clearly bounded environment, Nest captures and retains customers. Nespresso works similarly. It is a coffeemaker. But, once in the ecosystem, it can offer an everincreasing selection of capsules. The company now offers a subscription service whereby the coffeemaker itself is sold for next to nothing in return for the consumer subscribing to a monthly delivery of coffee capsules. “All these examples do not mean we need to emulate these companies,” says Jacobides. “But they do mean that we need to think about how to build our own ecosystems, or compete in existing ones.”

The competitive ecosystem From markets to arenas So, how to embrace the age of the ecosystem? Jacobides offers clear advice on what not to do: “The biggest problem companies have is thinking about an ‘EGO-system’,” he says. “Rather than thinking about their clients, their Dialogue Q2 2019

RITA M C G R AT H ’S ANTI-SNOW M E LT S T R AT E G Y

1

Do I have mechanisms to come in direct contact with the edges?

2

Am I regularly gaining exposure to diverse perspectives?

3

Am I trusting and empowering small, agile teams?

4

Do I have mechanisms for fostering little bets?

5

Do I regularly get out of the building to see what’s going on?

6

Are incentives aligned with gaining uncomfortable news?

7

Am I making sure I’m not in denial?

complementors, they simply create a map around themselves.” To some extent, this was the fate of many major high-street brands, who mapped their businesses around themselves, adding product lines to a defunct traditional value chain. Rita Gunther McGrath is a strategic management scholar and professor of management at Columbia Business School. She tells the story of how the high-street fashion brands worldwide were wrong-footed – to devastating effect – by trends outside their own industry. The Wall Street Journal, she notes, looked at household spending from 2007 – when the first smartphones arrived on the market – to 2014. “What they found was that spending on things like apparel and cars was going down,” she says. “The biggest areas of growth were spending on cellular phones and internet to the home. The reason that matters is that, if you are a traditional strategist and you are benchmarking yourself against other people making apparel, you have lost the plot completely.” Rather, McGrath urges companies across different industries to vie for a pool of resources by helping stakeholders with control over those resources to add value. “We need to get away from the idea of industries,” she says. “And start thinking about something called ‘arenas’. The whole concept of industries – which is where strategy used to be rooted – is much less useful as a mechanism.” Teenage girls are a core market for womenswear manufacturers. “But what is the job that clothing does for teenagers?” asks McGrath. “Reflect on the teenagers that you know. Clothing states who they are. It signals their belonging to a tribe. It shows that they are free from their mom’s influence.” Yet, in the smartphone age, teenage girls can satisfy many of those needs via non-sartorial means. “What are other ways that teens can communicate who they are to the communities they care about?” asks McGrath. “Look at teenagers, they are on their devices nonstop, communicating, sharing and talking. Those devices are probably doing a better job of communicating who they are than their clothing would.” The advent of digital identities still generates a need for fashion, but a teenager can instead buy a dress for $6 to do the job that, a decade ago, she might have bought for $60. “You just need one that lasts 15 minutes so you can get that perfect selfie,” says McGrath. “Disposable clothing.” The fast fashion giants – Zara, H&M, Forever 21 and their ilk –have benefited massively from this inflection point, McGrath notes. “It’s an ecological disaster. But, if you trace it all the way back you can see why it’s happening – and you can see what it does to traditional providers.” So, if you are a traditional provider, such as Macy’s in the US, or Debenhams in the UK, how do you think outside your industry – and into


75

your arena – to avoid being wrong-footed by your customers leaving your sector to satisfy their needs? Disruption begins at the periphery of organizations. Or, as the late Intel chief executive Andy Grove put it, “Snow melts from the edges.” McGrath proposes seven tests for leaders to ensure they are working around the periphery and anticipating disruptive factors.

The innovative ecosystem From frequent fast failure to single success Point four of McGrath’s checklist calls for mechanisms to make small bets. This checkpoint speaks to the need to ‘think big and innovate small’ in the face of a changed business reality: making testing new ideas and offerings a habit, with an acceptance that most such bets will be losers. The business theorist Alex Osterwalder reminded the Drucker Forum that 70% of companies’ projects fail: “Look around you – seven out of ten of you are working on products nobody wants,” he quipped. “Are these people stupid? Is the strategy wrong? What’s going on?” Companies have two universes, Osterwalder argues. The first universe is about exploiting the products companies already produce – innovation in this space is about efficiency, about better processes. The second universe is about exploration – new products and service ideas. Most organizations succeed in the first universe and struggle in the second. They are adept at exploiting, but weak at exploring. Much of this comes from discomfort – the uncertainty inherent to the second universe is threatening: “We don’t know those customers, we don’t know those ecosystems, we don’t know these arenas,” says Osterwalder. The key first step to succeeding at exploration is to face the truth of ignorance. “We have to admit we have no clue,” says Osterwalder. “If we do admit that, then we will use different processes to explore these business models and value propositions.” It is critical that organizations make their peace with uncertainty and become explorers now. Osterwalder considers the traditional pharmaceutical and banking sectors as just two major examples of where traditional value chains are already dead. He recommends regular audits of products and services so those that are doomed are killed rapidly – and resources put into exploring new ideas that might become the next unicorns. The numbers sound daunting. If you are running a $10 billion business, you would need to invest in 250 projects to create the next $1 billion growth engine, Osterwalder says. “You can’t pick the winners,” he adds. “You need to invest in the losers.” With this volume of bets in play, designing

low-cost market-adoption-tests that allow the firm to quickly surface the winners becomes critical. This critical capability forms the foundation of an innovation ecosystem that can create, test and adapt quickly and cheaply. Bosch’s Accelerator program for instance, had a duration of eight months, and only 10-20% of projects invested in exit the program for further incubation.

The interdependent ecosystem Towards corporate collaboration The dizzying digital transformation of the business landscape might be causing digital vertigo. But we should not mourn the loss of traditional value chains. Ecosystems, ever morphing and diversifying in response to customer demands, offer exponentially more potential for growth and development for organizations. The businesses that are winning today are being elevated a level, above their own markets – and across markets. Forward-thinking companies partner much more to understand how to collaboratively serve the customer and create value. Success lies in creating interdependent ecosystems of companies and customers. Companies that organize together, embrace uncertainty and diversity, and create a benign environment for evolutionary innovation will survive. Those that do not are destined to become shackled by the very same value chains that previously brought them success.

The most powerful ecosystems recall Hotel California: We are all just prisoners here, of our own device… you can check out any time you like, but you can never leave

— Tony O’Driscoll is a professor at Duke University’s Fuqua School of Business and a research fellow at Duke Corporate Education — This article is based on a forum chaired by Professor Tony O’Driscoll at the 2018 Global Peter Drucker Forum in Vienna, which featured Michael Jacobides, Rita McGrath, Alex Osterwalder and Dorie Clark Q2 2019 Dialogue


STRATEGY

76

The expectations

Dialogue Q2 2019


STRATEGY

management game If you want to get to the top in business, you need to manage your expectations, writes William A Cohen

Getting to the top in business is a simple enough game. Consistently deliver positive results, exceeding the expectations of your boss, your employer and your stakeholders, and the path to the summit is surely clear. But what if it isn’t only those people’s expectations that matter? In my experience, our own expectations are every bit as important – not least because they could be influencing the results we achieve. It’s time to take a good hard look at how we manage our expectations.

Learn to expect positive results

Some of the world’s most successful business leaders have wrestled with their expectations, especially when they’ve experienced failure. Bill Gates started his first company, Traf-O-Data, expecting success. Its purpose was to process and analyse the data from traffic tapes but, as it turned out, the model was flawed. The company failed. Yet Gates didn’t let this hold him back from starting Microsoft a few years later. He expected success, despite the failure of Traf-O-Data. Q2 2019 Dialogue

77


STRATEGY

78

It is of course true that an expectation of positive results, no matter how reasonable, is no guarantee of success. But it is equally true that if you don’t expect positive results, you probably will not get them. Expecting positive results may not always lead to success, but failing to expect positive results will more often lead to failure. So what can we learn from the likes of Gates if we want to reach the top? Part of the answer is to manage our expectations about success, about our abilities, and indeed about what long term success demands of us. The great management thinker Peter Drucker wrote that if you want to reach the top, you don’t need to be outstandingly successful every time you attempt something. What’s needed is that you prove yourself to be adequately successful overall. That has to start with convincing yourself of your merits. Drucker offers five powerful insights which might just help you get to the top.

1

Develop your self-confidence

Few of us start out in life accomplishing what we think of as big goals from the very beginning. We all start as infants. At first we only accomplish ‘trivial things’, like learning to walk, talk, and later to read, write, and reason. Obviously, these are not actually trivial. The truth is, even with these ‘small things’, we started out by doing still smaller things first, slowly increasing the difficulty of the sub-tasks until we could accomplish the larger task. Rolling over and sitting up are steps on the way to walking and running. Today, for most of us there is no doubt that when we stand, put forth one leg and then another, we’re going to walk. As you read these sentences, unless you are still learning English, there is little doubt but that you will understand what you have read. Your expectations have adjusted based on the successes you’ve already had. With the more complex and challenging tasks and projects of adult life, many people fail to expect success for one of two reasons. Either they have been unsuccessful at similar tasks or projects in the past, or they have never tried to accomplish them in the first place. Among those who have never tried, many will have avoided trying because they expect to fail. But the reality is that you have already succeeded, time and again, in all the steps you’ve taken along the way. Recognizing those successes should be the basis for being confident about what you will succeed in next.

Dialogue Q2 2019

2

Become a positive thinker

You can think positively or negatively. It’s your choice. Some people seem to always expect the worst to happen, and, somehow, it often does. I don’t know whether this is black magic or a self-fulfilling nightmare created by our own actions. In many ways, it doesn’t matter, because what we think of is often what we get, whether it’s positive or negative. Given that’s the case, isn’t it time to start expecting the positive? Of course, Drucker doesn’t recommend that you become a wishful thinker, or an ever-optimistic Pollyanna figure that thinks wonderful things, no matter the situation. You can still be a steely-eyed realist. But you mustn’t let that stop you thinking positively. The difference is this. Positive thinkers keep their eye on what they want: on their goals, rather than on what they don’t want, or the outcome they want to avoid. To help do this, they first ask themselves, “what is the worst that can happen?” They accept that as a possible outcome if all goes wrong. Come to terms with that possibility and then move on to what needs to be done, and you’ll increase your chances of success.

3

Visualize positive results

One of the most powerful techniques for increasing your chances of success is to visualize success in your mind’s eye. Psychologists call this mental rehearsal, or visualization. It can be incredibly effective. It’s often used by elite athletes, and I’ve been involved in many experiments which have shown just how powerful it can be. It seems to work best in a very relaxed state, up to and including hypnotic trance. One vivid demonstration of its power is to have the subject imagine themselves in a lemon grove. They’re told to pick a lemon, then slice it in half and squeeze the juice into their mouth. The amazing thing is that if a subject does this, their lips invariably pucker as they imagine the juice hitting their tongue. (As


STRATEGY

an aside: one theory about hypnosis is that all hypnosis is really self-hypnosis, and to enter a trance yourself is quite easy. In fact, if you found yourself puckering your lips when you thought about the lemon juice, you hypnotized yourself!) What, you might ask, is the practical application in business? One common application could be in preparation for a highpressure presentation. Imagine the applause as you are called forward to begin. Imagine looking out into the audience. Visualize the expectant looks on the faces of the audience. Now, give your speech in your mind and note the audience’s rapt attention. See yourself connecting with them and notice how they respond to what you have to say. Finally, watch yourself coming to a powerful conclusion. See the audience leaping to their feet to give you a standing ovation in their enthusiasm. After you’ve done this once, repeat the whole sequence. If your project is several days ahead, I recommend repeating it several times a day. The night before your performance, you might repeat it a dozen times or more. Perfect the techniques of mental visualization and you will be amazed at the results you can achieve.

Shutterstock

4

Be who you are

AL Williams started out as an $18,000-a-year high school football coach in Georgia. But after the sudden death of his father exposed the family to financial threat, Williams realized that the insurance market could work far better. He founded a life insurance company based on the concept of term insurance. He had no MBA and limited business experience, but his company became one of the largest of its kind in the world in less than ten years. The mindset that allowed him to do that was summed up in his 1988 book, All You Can Do is All You Can Do, But All You Can Do is Enough!, which became a bestseller. What Williams said with his title was that our limitations make slight difference. What we have is still good enough to reach success. Unfortunately, we often focus on what we’re not. This shows up at work in all sorts of ways. Someone who is kind and thoughtful can be reluctant to display those qualities, perhaps having read a management article that promoted a tough management style. Another might have heard that leaders should have a participatory style, so they strive for participation, even when it’s inappropriate. Someone else might try at all costs to be friendly and informal, when by

Positive thinkers keep their eye on what they want: on their goals, rather than what they don’t want, or the outcome they want to avoid

nature they are more reserved. In any scenario, the results of forcing unnatural behaviours can be awkwardness, ineffectiveness, and even a loss of credibility when people perceive inauthenticity. Well-intentioned as the behaviour may be, that can be a real constraint on our chances of success. Far better to be who we are – and take confidence in our capacity to get to the top.

5

Be passionate

American philosopher Ralph Waldo Emerson once said, “Nothing great was ever achieved without enthusiasm.” Drucker went even further. He argued that real emotional investment is needed to reach the top: not only enthusiasm, but genuine passion is essential. That is every bit as true today as it was when Drucker wrote it. I’m absolutely convinced that if you aren’t passionate about something, no one else will be. If you aren’t convinced that your latest project will make a real difference to your customers, why should your team be any more enthusiastic for the work? Why should they go the extra mile to get results? And why should your manager buy into your latest business case, if you can’t show you believe in the project? You can’t expect others to enthusiastically accept a challenge that you haven’t enthusiastically accepted yourself. If you’re ready to take that next step towards the top, it’s time to get serious about managing expectations – starting with your own. — Adapted from the book Peter Drucker’s Way to the Top by William A Cohen (LID Publishing, 2018) Q2 2019 Dialogue

79


80

NEWS NATION

The digital nation Estonia declared internet access a human right as long ago as 2001. Now, with advanced e-services that include tax management and voting, the former USSR Baltic state styles itself the most advanced digital society in the world

Leading the pack

B A LT I C S E A

1

TA L L I N N

Ranking on the Barclays Digital Development Index ESTONIA

Go online

99% RUSSIA

GULF OF RIGA

Early evolution

L AT V I A

1997

L AT V I A

The year Estonia first launched its e-Governance initiative. The borderless ‘e-Residency’ project followed in 2014.

FAC T F I L E E S TO N I A Land area

16,366

Official languages

sq mi

(42,388 sq km) Population

1,244,288

Estonian $31,000 Life expectancy

Tallinn

82 Women

Religion

Irreligious Dialogue Q2 2019

Mobile government

GNI per capita

Capital

72 Men

Public services available online with 24/7 on-demand access. Estonia claims this has saved 800 years of working time

I should’ve called the Estonians when setting up our healthcare website Former US President Barack Obama

6

Planned “data embassy” server farms scattered around the globe where all Estonian public services can be transferred and backed up in case of an attack, invasion or data breach


NEWS NATION

81

Join the Dialogue

A G R O W I N G P O P U L AT I O N

+35,000

Number of e-residents to date, including German Chancellor Angela Merkel and Bill Gates. The scheme is described as “a new digital nation for global citizens”, offering digital ID and the ability to start a global business in a EU environment

Q U I C K O N T H E U P TA K E

+90%

Estonian prescriptions, taxes and banking transactions now managed online

P R OT E C T T H E D ATA AT A L L C O S T S

1st

Estonia was the first nation to be hit by a major cyber attack, in 2007. Today the country is home to the NATO Cooperative Cyber Defence Centre of Excellence

e-residency is building a new digital nation for citizens of the world where no one is held back from their entrepreneurial potential because of where they live or where they choose to travel Official e-Estonia website

www.dialoguereview.com @DialogueTweets @dialoguereview Dialogue Review Direct comments, queries and suggestions to: journal.editor@ lidpublishing.com

DIALOGUE IS BROUGHT TO YO U B Y… EDITORIAL BOARD

Dr Liz Mellon, chairman Tom Albanese, chief executive, Vendanta Resources Michael Canning, Duke Corporate Education Professor Pedro Nueno, president, China Europe International Business School Ben Walker, editor-at-large, Dialogue EDITORIAL

Patrick Woodman, editor Kate Harkus, art director Luisa Cheshire, chief subeditor Kirsten Levermore, assistant editor Miro Iliev, digital products marketing executive MANAGEMENT

Martin Liu, publisher Ben Walker, editor-at-large Niki Mullin, business development director niki.mullin@lidpublishing.com Alec Egan, business development executive PUBLISHING

Shutterstock

Download the latest issue of Dialogue on your mobile device. Search: Dialogue

Published in the United Kingdom by LID Publishing Studio 204, 16 Baldwins Gardens, London, EC1N 7RJ

Disclaimer Copyright 2019 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

Q2 2019 Dialogue


82

REVIEWS

IN ASSOCIATION WITH

Make space for your own sake Equip yourself with the tools to create ‘space’, writes Kirsten Levermore

Create Space: How to Manage Time, and Find Focus, Productivity and Success Derek Draper Published by Profile Books Complete the full audit at www. derekdraper.net

Boarding a flight a few weeks ago, a snippet of conversation between two business travellers caught my attention. “Brainstorming in the bathroom stall had to be the low point of that quarter,” said one. “I can’t wait to get on the plane and have some peace and quiet.” “Good luck with that,” their companion laughed. “I hear it has wifi now.” It’s the sort of ‘progress’ that prompts mixed feelings. It is often a real struggle to find the peace and quiet – the time and the space – that we want. In an always-on world, it’s harder to escape the hurly-burly of our day-to-day working lives. “We have become the first generation in one thousand generations of human beings who, rather than having the need to fill space, have the need to create it,” writes business psychologist Derek Draper in Create Space: How to Manage Time and Find Focus, Productivity and Stress, a recent Financial Times Business Book of the Month. Many jobs require deep thinking, ideation, planning and creativity, he notes, but most of us are drowning in noise, information and too much to do. The solution does not necessarily include a locked bathroom stall. “Modern life, particularly work, fills any space indiscriminately… A leader must therefore consciously push back and create space.”

A clear how-to guidebook

Create Space features an extensive review of leadership literature. Draper builds on French philosopher Henri Lefebvre’s belief that true space is made up of physical, mental and social states, and lays out four ‘dimensions’ of space that require our attention:

1 2 3 4 Dialogue Q2 2019

Space to think – we have the intellectual freedom to think deeply Space to connect – we attain the emotional capacity to share and engage with others Space to do – we are able to prioritize and generate productive impact Space to be – to ensure that we build the life we truly want.

Addressing each dimension in turn with simple illustrative case studies, easily grasped theoretical models and tools and tips that can be implemented from the get-go, Draper’s book aims to equip the reader to “embrace space” for the long-run. For those who achieve it, far-reaching benefits are ripe for the taking: “Space is vital for deeper self-insight and sense of purpose, better strategic and creative thinking, richer relationships and delivering what really matters.” In this book, Draper reminds us that balance, direction, decision-making, planning, learning, and growth all require pure, unadulterated space.


REVIEWS

IN ASSOCIATION WITH

83

S PAC E I N V E N TO R Y “How much space do I have in my life – and how much do I want?” Before you can grow as a leader, you must first create the space you will grow into. Score yourself 1-5 (1 being ‘Never’ and 5 being ‘Almost Always’) and discover if you could do with more space.

1

Do you feel like you have enough space to really think about all the things you should be considering in the depth and breadth that you would like? (1-5)

2

Are your relationships with colleagues close, rich and supportive? (1-5)

3

Do you feel like you have enough space to get the things done that you need to do? (1-5)

4

Have you been able to work out, deep down, what it’s all about? Why you are doing what you are doing? (1-5)

How did you score? 0-10 You hardly have any space to discover what you really think and feel and want to do and why. You really need to find ways to create more space for your ideas, your priorities, the people in your life, and yourself. 11-15 You create some space but not enough. You could find ways to create more space for your ideas, your priorities, the people in your life, and yourself. 16-20 You manage to create a lot of space in your life to discover who you are, what you want, and how to get it. Congratulations!

Shutterstock

Your core pathogenic belief

Merely scratching the surface of why your time, mind and life are so full of noise will not cut it. Draper suggests that many people’s space becomes crowded because of their own actions. Typically, that is driven by a deeply-embedded idea each individual holds about themselves, described as a “core pathogenic belief” (CPB); often developed as early as childhood, and “almost always entirely false”. Creating space means offloading the CPB baggage that is crowding our work and personal life. It’s something of a deep dive into psychology, but as a ground-level principle of Create Space, it’s essential. Without it, readers would be hard pushed to properly integrate Draper’s insights in their lives in meaningful ways.

You’ll need to create space to read this one

With 300 pages and 12 subsections, Create Space is a lot to take in. The author himself points out that the book is best treated as a workshop handbook to be used over several weeks or months, providing the reader with space to devote sufficient attention, to absorb the ideas on each page, and to practise each technique. This weighty presentation will likely put a lot of leaders off, but persevere. There are some fantastic ideas contained within the book’s pages, with significant research to back it up. Plus, with Draper’s natural flair and character jumping from each page, you’ll quickly feel like you have your own personal coach. This is a book well worth making space for. — Kirsten Levermore is assistant editor of Dialogue Q2 2019 Dialogue


84

REVIEWS

IN ASSOCIATION WITH

How to play the fame game Kirsten Levermore reads the book that promises to get you the recognition you deserve

Excellent performance warrants recognition – but how often does it really happen like that? The truth is, more often than not, that workplace recognition is a game: a competition between powerful faces, backstage workhorses and office innovators, struggling against each other to garner fame, until one emerges victorious. The Recognition Book is a pocket-sized guide to the rules of that game. You might think that the tone of your voicemail, a knowledge of computer shortcuts (press ‘b’ to bring up a blank screen during a PowerPoint presentation, recommends the author), or the deployment of a well-practised joke in the boardroom are too trivial to make a major difference to how you are recognized. Yet in this book, such tips warrant two full pages each. Recognition is about sales and marketing, it argues: sadly, great performance is rarely a guarantee of praise. So, while making sure you avoid the cardinal sins of “being late, doing a poor job and missing deadlines”, The Recognition Book advises that you focus your additional energy less on performance and more on selling

Recognition is about sales and marketing. Sadly, great performance is rarely a guarantee of praise

yourself to the higher-ups. One thing missing, though, is any discussion of psychologist Abraham Maslow’s idea of self-actualization: it could benefit from a chapter on self-recognition. So, too, from a discussion of how to deal with an environment that fails to recognize your good works. But this little book – part of the fantastic Concise Advice series – is designed for quick reading, serving as a ‘top-up’ for individuals already pursuing the subject in depth. As a quick revision guide to recognition, it will likely find its place with excellent innovators whose creativity has not found its audience. A feature found in the opening pages deserves a mention: the Recognition Plan. It is a very useful grid for the reader that empowers recognitionseekers to attain everything they are searching for with a few actionable steps. If you’re going to play the game, you might as well learn the rules. — The Recognition Book: 50 ways to step up, stand out and get recognized by Paul F Warriner, published by LID Publishing bit.ly/therecognitionbook

APPS FOR LEADERS: NUZZEL

Drowning in information? Help is at hand, writes Perry Timms Information overload is here to stay. Some 2.5 quintillion bytes of data are created every single day, and rising. We cannot possibly know all there is to know, yet the temptation to try is always there – along with the fear of missing some game-changing insight. Now, the machines can help us. Nuzzel learns from you, and then learns for you, giving you the news and industry content you want. We’ve seen this with apps like Zite, Flipboard, and even good old RSS feeds, but Nuzzel hits another level. Connect it to your social media and it will examine content themes, people, brands and Dialogue Q2 2019

media outlets, learning what you consume, then share or ignore to refine your feed. It also scans people with similar interests to make sure you don’t miss out. That means you get the headlines that people are actually talking about and sharing, not just over-hyped Facebook fillers. You can also curate newsletters. This may help or hinder your information consumption; I filtered out Paper.li publications when they got annoying. But if you’re a specialist, a leader of teams/professional areas, or a network/ community manager, this feature should appeal. So, too, will the desktop version.

After a free trial period, Nuzzel requires a subscription. It has become my go-to newsfeed mobile app. With quintillions more bytes of data headed our way, Nuzzel might just be our lifejacket in an ocean of information.

— Nuzzel is available for Android and iOS. www. nuzzel.com — Perry Timms is an independent HR/OD practitioner, speaker, writer and CIPD adviser on social media and engagement. Follow him on Twitter @PerryTimms


REVIEWS

IN ASSOCIATION WITH

85

PIERS CAIN ON BOOKS

Twelve elements are the critical ingredients of great working

The building blocks of better workplaces

Piers Cain is a management consultant

People need a choice of working spaces and the option to switch as their work demands

There has been a slow but steady deterioration in the quality of the working environment over the years: less space, less privacy, more distractions, less autonomy, more stress. Designer décor, free and excellent coffee, and new computer equipment are little more than expensive window dressing. What would actually improve matters? In The Elemental Workplace, Neil Usher offers a pragmatic guide based on 25 years’ experience as a workplace change leader and consultant. Management thinker Thomas Davenport pointed out in 2002 that most office schemes are based on “fad, fashion and faith”. Usher cuts through much of the hype about workplace transformation generated by self-promoting designers, architects and business leaders. He concentrates instead on 12 simple elements that are needed “to create a fantastic workplace for everyone”. Many of the insights in The Elemental Workplace may seem self-evident, but they are worth reiterating. Millennials are just people – the difference between their needs and those of older generations has been exaggerated. When planning a business change, it is a good idea to thoroughly document, analyse and understand the ‘before’ situation if you wish to successfully move to an improved situation ‘after’. A carefully thought-through brief is essential to avoid ‘mission creep’. You can save money by hot-desking and cramming in more people per square metre; but if you overdo it, work quality and performance will be affected. Usher also takes aim at faddish novelties, such as slides or pool tables. They may impress a few people in the short run, but, he warns, in the long term they are more likely to annoy people. Moving to the strategic level, a new building may facilitate a business and culture change such as a merger, but there are more important factors for the success of your growth strategy. Usher’s 12 “workplace elements” range from the prosaic to the visionary: from space, storage, and daylight, to choice, influence, and inclusion. His recommendations are eminently practical. We all should have at least 65 sq ft (6 sq m) of space (enough

to “swing a large toy cat”, apparently). Lockable individual storage for both work and personal use is vital for hot-desking and high-density offices. We are happier working in natural light. People need a choice of working spaces and the option to switch as their work demands, says Usher. That might mean a standard desk, often in open space; somewhere quiet and comfortable for work that needs concentration; somewhere informal to meet colleagues; and somewhere with a door for formal meetings. Not everything is good for everyone to overhear. IT connectivity should be of the highest standard available at the time of the fitting out. Not only will this help support higher productivity, but it helps future-proof the office, enabling the workspace to be used flexibly in response to emerging needs. Perhaps more importantly, Usher argues that inclusion means making modern offices accessible and useable to people with disabilities as the default position, not just as an add-on to meet minimum standards. For example, all washrooms should offer wheelchair access, not just one dedicated room, the minimum typically required by law. Moreover, investment in excellently equipped and well-maintained washrooms is seldom wasted. It is one of the few changes that staff will say thank you for, and it makes a strong statement to visitors. All this might strike you as a little dull compared to the visionary, but transient, statements of leading designers and architects. Yet the book has the merit of being focused on the real fundamentals of a good workplace, and it sets them out clearly. It has some weaknesses: Usher likes using three words where one would be enough, and occasionally he wanders off the topic. Overall, however, this is a thoughtful work for any non-specialist wishing to become an ‘intelligent client’, and any manager with an interest in changing their workplace for the better. — The Elemental Workplace: The 12 Elements for Creating a Fantastic Workplace for Everyone by Neil Usher, LID Publishing bit.ly/elementalworkplace Q2 2019 Dialogue


86

LAST WORD

LIZ MELLON

Our new columnist, Liz Mellon, looks at the very concept of the ‘last word’ and our enduring urge to have the final say

Having the last word Who wouldn’t want the last word? It’s an all-too-familiar scenario: replaying an important conversation in your mind, wishing you could have delivered a splendid riposte to close down the argument – one that only comes to mind three days later. Having the last word is part of the human psyche. The drive to compete, to win, is something that develops in us as children. A simple experiment illustrates its power. Children are placed in pairs. One is offered a choice: receive three sweets while their opposite number takes six; or receive two, with the other getting just one. The rational, self-optimizing choice is always to take the three, and the youngest do just that, but as early as school-age, children change their stance and start to choose two treats instead. The desire to receive more than one’s opposite number outweighs the rational aim of maximizing the absolute reward. In the same vein, determination to have the last word can imply winning the debate, regardless of cost. Are there circumstances when having the last word works well? Leaders today are usually ill-advised to close down debate and need to seek input and advice on a broad scale. It’s what gives us the insight needed to cope with the seemingly-random, eversurprising world we inhabit. Yet at some point, the information gathering has to stop. All those conversations designed to gain counsel on – and commitment to – a decision have to finish. The leader has to decide, and has to own their decision: in essence, to have the last word. We want our leaders to be decisive, because the costs of doing nothing are too high. In other circumstances, having the last word can rank anywhere on a scale from unhelpful to plain disastrous. It cannot be a good idea to limit debate in universities, where ideas should be juxtaposed in the pursuit of learning. The mostly-Western trend of the last few years, of barring speakers who disagree with liberal student views, leaves the same students Dialogue Q2 2019

ill-equipped to deal with these opposing ideas when they meet them again outside the environment they demanded be made ‘safe’. Political dictators often insist on the last word, eliminating dissent – and in some ways so, too, do democratic politicians. Just look at the saga of the UK’s attempt to leave the European Union (a story still defined by uncertainty as this issue of Dialogue goes to press). The unsightly spectacle of UK politicians jostling for the last word on Brexit simply means that dissent will persist, turmoil prevails and common ground will not be found. Collaboration, in the sense of two or more people working together to achieve a common goal (rather than the other definition of cooperating traitorously with an enemy), is one of the most enduring activities sought by business today. It is remarkably elusive, precisely because our default is to compete. In any business, a decision taken in isolation in one part can have unexpected consequences for another. Inward-looking decisions can alienate customers; shutting down debate and discussion too early means that organizations feel that they’re being constantly disrupted. This is labelled change, but is in fact just churn – the turbulence created by one business unit’s determination to have the last word on a decision (which so often has to be unravelled when viewed in the wider context of what’s best for the organization as a whole). In our complicated and multilayered world, collaboration is essential to bring together ideas that enable us to innovate and create a different, brighter, future. The goal should be to keep the debate open until the last possible moment and to develop the empathy necessary to understand and integrate other points of view, even if you don’t agree with them. The last word is a super-power. It must be exercised wisely – and that’s my last word on the topic. — Liz Mellon is chair of Dialogue’s editorial board

In some circumstances, having the last word can rank anywhere from unhelpful to disastrous


CONCISE ADVICE BIG LAB

LL SMOAOKS: B

AS

IDE

CLEVER CONTENT, DYNAMIC IDEAS, PRACTICAL SOLUTIONS AND ENGAGING VISUALS – A CATALYST TO INSPIRE NEW WAYS OF THINKING AND PROBLEM-SOLVING IN A COMPLEX WORLD

£9.99 / $14.95 conciseadvicelab.com

Profile for Dialogue

Dialogue Q2 2019  

New