AMONG LEADERS AND MANAGERS ACROSS THE WORLD
The consumer psychologist Your director is the client A N T O N I O N I E T O-R O D R I G U E Z DIALOGUEREVIEW.COM
AMONG LEADERS AND MANAGERS ACROSS THE WORLD
Why focus pays
THE NEW CUSTOMER
The payoff paradox Dan Ariely exclusive: Why consumers like to work for their purchases
Practice makes perfect
Towards everyday invention
The end of the figurehead
Meet generation share
The future of work
Digest 14 FOCUS THE NEW CUSTOMER
The Ikea payoff
The brand is dead – long live the brand
School of science
Meet the mensch
Ben Walker on the new customer
Russia – the restless bear
Spark What you need to know
Reviews Books, discovery paths and apps recommended for you
Michael Canning on China
Dr Linda Papadopoulos
Karina Robinson on Spain
The big interview
Q3 2017 Dialogue
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.
In depth LEADERSHIP & PEOPLE
Kate Cooper: The leadership column
I N N O VAT I O N & TECHNOLOGY
Vivek Wadhwa: The innovation column
The decision maker is your customer
A manifesto for everyday innovation
FINANCE & AC C O U N TA N C Y
MARKETING & SALES
Phil Young: The finance column
Giles Lury: The marketing column
Gorillas in the mist
Investment: The way through the woods
CFOs: Not just a figurehead
S T R AT E G Y & O P E R AT I O N S
Patrick Woodman: The strategy column The future of work is today
The enduring principles of Peter Drucker Why focus matters
Executives on the brink
Q3 2017 Dialogue
p r o f e s s o r d a n a r i e ly
Dan Ariely, James B Duke Professor of Psychology and Behavioral Economics at Duke University, is dedicated to helping people live more sensible – if not rational – lives. As well as appointments at Duke’s Fuqua School of Business, the Center for Cognitive Neuroscience, the Department of Economics, and the School of Medicine, Ariely is a founding member of the Center for Advanced Hindsight, as well as a bestselling author.
Linda Sharkey is an HR executive and business strategist, and internationally recognized author and expert on leadership development and talent management. Her focus is coaching and developing leaders and teams; and driving talent and workforce planning initiatives that support productivity and growth. She is managing partner of Achieveblue. Her coauthored book Winning With Transglobal Leadership was named one of the top-30 business books for 2013.
s a l ly p e r c y
Sally Percy is a specialist journalist covering the management, business, finance, banking, treasury and accountancy sectors. She is the author of a career guide for finance professionals, Reach The Top in Finance: The Ambitious Accountant’s Guide to Career Success. She is editor of the Institute of Leadership & Management’s journal Edge, and former editor of The Treasurer, the award-winning official magazine of the Association of Corporate Treasurers.
A worldwide expert on the sharing economy, Benita Matofska is founder of The People Who Share. She is a renowned international speaker, writer and awardwinning social entrepreneur. She is the pioneer behind Global Sharing Week, The People Who Share’s flagship campaign. She has recently been featured as one of the top-ten sharing economy experts to follow. A social innovator, she is the winner of multiple awards including NatWest Venus Entrepreneur of the Year 2015.
Marshall Goldsmith was recognized in 2015 as the number one leadership thinker in the world and a top-five management thinker, as well as one of the top-ten most influential business thinkers in the world, and the top-ranked executive coach at the 2013 biennial Thinkers50 ceremony. He is the author or editor of 35 books, which have sold more than two million copies, been translated into 30 languages and become bestsellers in 12 countries.
Antonio Nieto-Rodriguez is a champion of project management and strategy implementation. He is the creator of concepts such as the Hierarchy of Purpose, or the Project Manifesto; which argues that projects are the lingua franca of the business and personal worlds. Nieto-Rodriguez has been recently awarded the title of Thinker of the Month by the prestigious Thinkers50, which identifies the most influential management thinkers in the world.
Dialogue Q3 2017
In his book Predictably Irrational: The Hidden Forces That Shape Our Decisions, the great behavioural economist Professor Dan Ariely tells a story about the dinner party from hell. The problem with the soiree is not the choice of guests per se, but the way one particular guest chooses to thank the hostess. So delighted is he by her food and hospitality, he attempts, at the end of the meal, to pay her. The point of the anecdote is that humans are not the perfectly rational money-motivated beings traditional economists like to think we are. In economic terms, the guest was being fair and So delighted is rational – he enjoyed he by her food a meal so wanted to compensate the person and hospitality, he who supplied it. In real attempts, at the life, he would be lucky end of the meal, to receive an invitation to dinner ever again. to pay the hostess Ariely (page 16) dives deeper into the ‘irrational’ human psyche in this edition’s cover story. Like the dinner-party hostess, it turns out that people rather like putting their own efforts into something, and don’t expect the returns that traditional economists might expect. Consider the fascinating case of bakers who buy more cake-mix the harder it is to use; and the origami makers who pay more for poorly made paper animals, just as long as it was they who toiled to construct them. Ariely is not immune: his favourite piece of furniture is one that came flatpacked from Ikea. He hated building it. But now he has, he values it much more than the ready-made pieces he owns of much higher quality.
The focus theme this quarter is The New Customer – and the need for customization. Input and interaction is at the heart of the way the customer has changed. Look at the way consumers’ attitudes towards brands are changing. Christian Madsbjerg and Sandra Cariglio (page 20) show that the days of buying an off-the-peg identity are dying away. The companies that are stealing a march are those that offer a way of adapting, combining or customizing, to foster in their buyer an authentic feeling of individuality. One person who knows much about the ways – and changes – in which consumers value things is the psychologist Dr Linda Papadopoulos, our star interviewee (page 34). Papadopoulos, a Canadian national, is a well-known face in Europe as a TV and magazine relationships adviser. Yet behind the scenes she works with several premium brands to help executives understand what motivates customers. Not everything that seems irrational, is, she suggests. There is much more inside the issue. A lesson in project focus from the decorated thinker Antonio Nieto-Rodriguez deserves a place on the wall of every company. Grasping the art and science of focus, says Nieto-Rodriguez, is the difference between life and death in business. Read his wise words on page 74. Nieto-Rodriguez’s advice, coupled with a need to understand the nuances of sales in a world changed forever by the sharing economy, is at the heart of success in a volatile global economy. Billions of people still want to buy things. Billions, too, want to sell. Yet how those deals are made – and the relationships behind them – are changed forever. Enjoy the issue. Ben Walker is editor of Dialogue
Q3 2017 Dialogue
W H AT YO U N E E D TO K N O W
Anti-apartheid giant dies at 87 Ahmed Kathrada, a giant of the antiapartheid movement, died this spring. He was 87. Kathrada was a former contributor to Dialogue. He delivered a poignant tribute in this journal to Nelson Mandela upon the former South African President’s death in 2013. The tribute was part of an interview with Duke Corporate Education regional managing director for Africa Sharmla Chetty. Readers can find the interview at www.bit.ly/ kathradamandela Kathrada – known as Kathy – was a right-hand man of Mandela during the struggles against white rule in South Africa. He was jailed alongside Mandela in 1964. Their imprisonment was an early milestone in the global recognition of the brutality of the apartheid regime.
Kathrada would spend some 26 years in prison, 18 of them on Robben Island. Following the overthrow of apartheid, he served in Mandela’s government as parliamentary counsellor from the midto-late-1990s. Former archbishop Desmond Tutu described Kathrada as a moral leader of the anti-apartheid movement. “He was a man of remarkable gentleness, modesty and steadfastness,” Tutu said. “These were people of the highest integrity and moral fibre who, through their humility and humanity, inspired our collective self-worth – and the world’s confidence in us.” Kathrada died in hospital in Johannesburg on 28 March following a short illness after brain surgery. He is survived by his partner, Barbara Hogan.
Arctic trip for crowdsourcing comrades Leading lights from the world of crowdsourcing gathered in Sweden for a summit this spring Crowdsourcing experts from across the globe gathered in Sweden this spring for four days of presentation and debate at the Crowdsourcing Week (CSW) Summit, Arctic Circle, 2017. The summit, which took place in March, explored ideas and projects based around crowdsourcing and crowd economy models. Sweden was chosen as host nation because of its ingenuity and entrepreneurship in creating worldleading disruptor brands and citizen engagement on a mass scale. Niklas Nordström, the mayor of Luleå, opened the event. He has been credited with boosting transformative growth and fostering economic opportunities for the city, which sits in Sweden’s northernmost county. Attendees took part in a weekend of outdoor Arctic Circle activities that highlighted the importance to communities in harsh climates
of sharing resources and effort for everyone’s mutual benefit. “To prosper in such conditions has required high levels of stakeholder engagement in win-win solutions that serve as an example to wider communities throughout the world which face their own escalating challenges arising from shortages of resources and harm to the environment,” said crowdsourcing
adviser Clive Reffell. “The experiences included dinner hopping, meeting Sami reindeer herders, snowmobiling and dining in a Sami tepee.” Initiatives featured at the summit came under the broad themes of innovation, sustainable energy, sharing economy, entrepreneurship and smart cities. Crowdsourcing Week is a media partner of Dialogue.
Dialogue Q3 2017
great minds with michael chavez
Denise Pickett institutionalizes purpose by living and breathing it herself
TELECOM BOSSES SENT TO D I G I TA L BOOT CAMP Deutsche Telekom has commissioned Duke Corporate Education (Duke CE) to develop a yearlong digital leadership programme for its senior executives. Duke CE, lead knowledge partner of Dialogue, has teamed up with the German telecoms giant to deliver the programme –known as levelUP! Some 700 executives have already embarked on the groundbreaking programme, which showcases how intelligent management approaches can expand existing core business while making space in companies for innovation. The programme comprises both online and classroom training. Executives are able to select from a range of modules. Deutsche Telekom said levelUP! was part of its overall digital transformation agenda. “Managers today are facing truly unprecedented pressures to make changes,” Deutsche Telekom chief human resources officer, Christian Illek told Eurocomms.com. “The pace of digitization is producing organizations that are more agile. As a result, leadership methods and behaviour are being redefined.” He added: “The trick is to manage core business efficiently while developing new digital business areas successfully, like the cloud, for example.”
Purpose trumps strategy as a driving force As the pace of life has accelerated, and the world become more uncertain, companies’ purpose has a key role in helping employees navigate through the chaos. Yet when I met Denise Pickett, president of Amex’s US consumer service division, she emphasized that purpose won’t work unless it’s “institutionalized” – everyone from the guy in the post room to the chief executive must buy into it and live it. As someone who has worked in the strategy arena for much of my career, I found Pickett’s contrasting of strategy and purpose incisive. “Strategy is always chunked down and changed to target different levels of the business,” she told me. “It will never be digestible for everyone all together – so it cannot be a guiding light for 10,000 people.” As a Canadian, she compared purpose to the Commonwealth, a rallying point for the multitude. “It’s like the monarchy,” she says, “whereas strategy is like complex, hard-tounderstand government. Great strategy is like good government. It’s crucial – but it doesn’t excite people.” Pickett found applying the purpose of her division – ‘creating extraordinary customer experiences every day, everywhere’ – brought her closer to customers: an exercise of real value for leaders who can otherwise drift away from the very people they are supposed to serve. “As you get more senior, the distance between you and the customer gets bigger – when it should get closer,” she admits. “But when I was Canada country manager, I’d apply our purpose, and for a day every couple of weeks I’d get out there and just talk to customers. It energized me. Your people have to be convinced that it’s not just a tagline – it’s real.” This is what Pickett means by institutionalization – the organization
and everyone within it embodies its purpose. What Pickett terms “excavation” – talking to the people within and without the organization to garner insights – is key to starting the process. “When I came to run the US consumer business, it took six months,” she reveals. “We talked to customers and employees, we pressure-tested ideas. I didn’t want to come in and say ‘this is it’. That wouldn’t have been genuine.” This focus on employee and customer priorities could appear to clash with those of shareholders. Yet on this topic, Pickett is resolute. “I hadn’t thought about it,” she admits. “I tend to focus on the customer and the employee. And the customer is always at the centre for me. I
If you lead your people from a clear sense of purpose, profits will follow don’t really put it through a shareholder lens. Purpose is a long-term investment, and that’s where you get the alignment with shareholder interest. The outcome is better for shareholders, but it’s not the starting point or rallying point. Shareholders are not the guiding light. If you put the employee engagement first, and then keep customers at the centre, shareholder returns will follow.” Perhaps that is Pickett’s greatest insight: if you lead your people from a clear sense of purpose, profits will naturally follow. In her, Amex has a prescient thinker. Purpose matters because, when done right, it drives employee engagement as well as customer focus: not only a winning formula, but also a formula for winning. — Michael Chavez is chief executive of Duke Corporate Education Q3 2017 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.
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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 Niki Mullin, Business Development Manager | email@example.com |
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China’s rapid rise is now built on innovation rather than derivation
Leadership inspiration from China Michael Canning is global head of new businesses at Duke Corporate Education
Dr Hanson aspires to create genius machines that are smarter than humans, and can learn creativity, empathy and compassion
As the world continues to change rapidly, how senior leaders learn and change matters more. Reading and hearing about disruptive change is useful. But direct experience of people, organizations and ecosystems that are shaping the future usually has greater impact. During the spring, I led a visit to Shenzhen for a group of senior leaders from several companies. Often called the Silicon Valley of the East, Shenzhen is a recognized powerhouse in high technology, finance and logistics. And it is fast becoming known as a design centre. From humble beginnings as a fishing village of 30,000 people in 1979, Shenzhen, just across the old border from Hong Kong, has burgeoned. It now boasts a population of 18 million and a GDP larger than Ireland. We set out to see, understand and learn from a sample of organizations and their leaders what makes this region’s high-tech ecosystem unique – and potentially disruptive. The first category of visits took in institutions funded by the government with a clear mission to stimulate and accelerate innovation. This included E Hub, located in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. Started in 2014, E Hub has already become a base for Shenzhen and Hong Kong startups to realize their dreams. There are more than 60 of the world’s top 500 companies registered there. Academic support and favourable tax policies create an ecosystem where disruptive startups thrive and grow quickly. The second in this category was the Sino-Finnish Design Park, an innovativeprojects incubator for young designers. The park is part of a cooperation between sister cities Shenzhen and Helsinki, Finland, created by their respective mayors. With its modern feel and open culture, Shenzhen is the first choice for young designers, and home to more than 6,000 design companies employing more than 60,000 designers. The creative industries account for a fast-growing part of the city’s GDP.
The park is a platform for exchanging the latest design information, helping designers improve their concepts and gain more international business opportunities. Shenzhen’s FabLab, located nearby, provides open space, tools and expertise for open-source makers and startups to turn their ideas into prototypes. The other category of visits included a combination of new and established companies that have invested in state-ofthe-art R&D, which is enabling them to serve customers and change their business and the world as we know it. We ventured over to Hong Kong for a visit with the amazing Dr David Hanson, the creator of Sophia, the most advanced application of artificial intelligence embodied in a lifelike robot. Dr Hanson aspires to create genius machines that are smarter than humans, and can learn creativity, empathy and compassion – three distinctively human traits. Hanson believes these uniquely human traits must be developed alongside, and integrated with, artificial intelligence for robots to solve world problems too complex for humans to fix themselves. The visit underscored the notion that the future is coming much faster than most of us ever imagined. We also learned a lot from Huawei. Its story has evolved like that of China itself. Huawei started 30 years ago, focusing on local research and development to produce phone switches through reverseengineering of foreign technologies. It was an unapologetic replicator. Fast forward, Huawei has expanded its business to include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China. It is now the largest telecommunications equipment manufacturer in the world. The experience brought to the fore what it means to live and lead in the most innovative period in human history. As the science fiction writer William Gibson said, “The future is already here, it’s just not evenly distributed.” Q3 2017 Dialogue
Dialogue Q3 2017
The new customer The customer used to always be right. Now she is your best friend. The change in the relationship with our customers – from transactional servitude to collaborative partnership – has transformed the selling economy. The advent of sharing businesses, a change in the role of brands, and a shift in employee and customer values have led a permanent revolution, facilitated by the rapid penetration of social and digital media. The customersupplier relationship has altered forever. This is the era of the new customer. It’s time to meet her.
Discovery path Learn more… about the role of brands, the customer trap and why emotions matter bit.ly/ddpnewcustomer
The Ikea payoff 20
The brand is dead, long live the brand 24
Retail therapy 28
School of science 32
Meet the mensch
Q3 2017 Dialogue
The Ikea payoff Customers are deeply attached to their own creations. Clever companies sell things that consumers can shape themselves
Dialogue Q3 2017
Professor Dan Ariely illustration
You can have any colour you like, wherever you like, as long as you pay for it
The science behind consumer motivation is sometimes counterintuitive. You might think that consumers want you – the supplier – to do as much for them as possible. Manufacture the product; deliver the product; build it for them; go away. In lots of cases, you would think wrong. To grasp the motivational power of customization is to dive headlong into the more hidden areas of the human psyche. We are not always as lazy as you think; in fact, sometimes we are willing to sweat and toil to a considerable extent, provided we can call what we ‘make’ our own. A few years ago, I, like many fathers of young children, headed to the flatpack furniture giant Ikea for the first time. I needed a chest of drawers for my kids’ toys. But I didn’t want to spend the earth on children’s furniture, which would be subject to the usual excess wear-and-tear borne of being in constant close proximity to youngsters. What I hadn’t calculated was the colossal time and effort it takes to construct a piece of Ikea furniture once you have purchased the flatpack from the store. I still recall how confused I was by the instructions that relied entirely on graphics and cartoons, to avoid Ikea having to produce separate instructions in every
language under the sun. Nothing seemed to add up – one type of screw was hard to discern from another; some parts seemed to be missing. Like many Ikea builders, I discovered that it was far too easy to hastily attach sections the wrong way around, only to repent at leisure when I made the grim discovery of my mistake. Much additional time was wasted dismantling my work to correct the error I’d made a few stages earlier. I cannot say I enjoyed building the drawers. Yet, when I eventually completed the job, something bizarre happened – I gleaned an inordinate amount of satisfaction from my efforts. Although my home features many more expensive and substantially better-made pieces of furniture, I find I look more often and more fondly at my children’s Ikea chest of drawers. In that way, I am a typically irrational human being. Together with my colleagues Professor Mike Norton (at Harvard) and Professor Daniel Mochon (at Tulane) we found the phenomenon to be so pervading and so powerful that we coined a name for it: ‘The Ikea effect’.
The cake mix paradox
Ikea is the modern-day manifestation of the interface between buy-it-in and do-it-yourself. Q3 2017 Dialogue
The children selected the creation they had conceived, not made, showing a preference for their own ideas over their own labour
Yet the concept of self-assembly is hardly new. Back in the 1940s, when few women worked outside the home, a US company called P Duff & Sons disrupted the baking ingredients industry. Its innovation: boxed cake mixes. Rather than measuring out eggs, sugar and flour every time, housewives only had to add water, then stir up the mix. After half an hour at 180°C, their cake was baked. It was the simplest and most ingenious time-saving idea. And, for those reasons, it failed miserably. It turned out that home bakers didn’t much like having it so easy. The cakes made from the Duff mix tasted good enough – it was the lack of effort and complexity required to make them that was the problem. Duff discovered that housewives considered just-add-water mixes to be the width of a baking parchment away from being a shop-bought cake. The bakers didn’t feel that cakes made that way were authentic – insofar as they didn’t consider them to be their own creations. There was just too little labour and skill involved to confer on the bakers a meaningful sense of ownership. So what happened? Duff went back to the concept and rethought it. The answer was counterintuitive, yet simple: make the cakes harder to make. In its new incarnation, the mix required the addition of eggs, oil and fresh milk. The new product was instantly popular, because housewives were now able – with a small degree of justification – to claim their bakes as their
own work. Duff – and students of consumer behaviour – learned a hugely valuable lesson: human beings respond more positively to things they themselves have created or influenced. An investment of labour is also an important investment of emotional capital.
The origami test
As part of our exploration into the Ikea effect, Mike, Daniel and I asked some participants to work for us. Their job was to craft origami animals. For their efforts they would be paid an hourly wage. We handed them the materials – some coloured squares of paper and a set of instructions – and off they went. In truth, the paper frogs and cranes our intrepid volunteers created weren’t likely to win any awards – all the participants were origami novices, and their inexperience showed. At the end of the exercise, we offered to sell them the paper animals that they created while working for us. “Please write down the maximum amount of money you’d pay to take your frog or crane home with you,” we explained. We called our rookie craftsmen ‘builders’ so we could contrast them with ‘buyers’ – people who had nothing to do with folding the animals. We asked the buyers separately to evaluate the work and suggest a price for its purchase. It turned out that the builders were willing to pay an average five times more for the origami
Dialogue Q3 2017
We are willing to sweat and toil to a considerable extent, provided we can call what we ‘make’ our own
animals than the buyers were. This is an example of the Ikea effect. We love things more when we have invested energy in them. The origami test gets better, because there is a second stage. In phase two, we recruited a new group of novice builders and removed several key details in the instructions, making the task of folding the animals near impossible. The results were even worse than in phase one – many of the folded creations bore not even a passing resemblance to the animal they were supposed to represent. And indeed the buyers did not see much value in these crumpled creations. You might expect, then, the builders’ pricing of their own creations to fall. But it rose. The Ikea effect again got the better of our builders – the fact that they had spent even longer trying to make the animals led them to place a higher value upon them. The fact that their creations were of woefully low quality was a minor consideration. But this was not the end of it. We also wondered whether the builders realized that they loved their origami more than the buyers did: that others looked at their creations from a different perspective. What we found was, no, they did not. They assumed that everyone would see the beauty in their crumpled pieces of paper. This is the egocentric bias – the phenomenon that leads small children to believe that when they shut their eyes no-one can see them. And it is alive and kicking in adults.
The ideas factor
Our fondness for our own creations extends well beyond physical products. Ideas, too, are owned – indeed the evidence suggests that they command even more powerful ownership than products. During a fascinating series of experiments by Vivian Li, Alex Shaw and Kristina Olson, four-year-olds were handed two identical sets of craft materials – five paper shapes and two cotton balls that could be glued together. Li, Shaw and Olson told the children that they could think of an idea for a picture then tell the experimenters how to put the pieces together to construct it. In stage two of the experiment, the children and the experimenters reversed roles. The experimenters now gave the children their picture idea, and the children made it. At the end of the session, the children could pick and take home their favourite – either the one they conceived and the experimenters made; or the one the experimenters conceived and the children made. By a very large margin, the children selected the one they had conceived, not made, showing a preference for their own ideas over their own labour.
The creating consumer
Companies have a great opportunity to harness the power of the Ikea effect as a powerful
motivator for purchasing and long-term loyalty. Henry Ford – the man who told his customers they could have “any colour as long as it’s black” – wouldn’t succeed today. Twenty-first-century customers want to customize everything. Modern-day carmakers let buyers pick not only the paint job of their car, but also the interior layout, the number of cup holders and the wheel trims. To twist Ford’s words to the present day: “You can have any colour you like, wherever you like, as long as you pay for it.” Sportswear giant Nike lets customers customize the colour of its shoes, laces and linings. Zazzle allows consumers to customize garments and greeting cards to make them feel like they have created them themselves. Airbnb is rapidly replacing the package holiday. Vacations self-crafted by selecting your own accommodation are becoming ever more popular. Each trip is unique to the consumer that arranges it. Even products as basic as children’s sweets aren’t impervious to the customization revolution: Chocomize lets you design your own candy bar; M&M’s let you choose your own colour mix. That all M&M colours taste exactly the same is testament to how customization – even for its own sake – is a persuasive force in purchasing decisions. Yet to assume that customization is trivial and frivolous, is wrong. We might choose more red M&M’s over yellow merely because we prefer the colour. But because we have been able to ‘create’ our own bag of sweets means we are more likely to enjoy eating them. In the same way, customizing a pair of Nike trainers means we are more likely to enjoy running in them – despite the fact that they are technically identical to a similar pair of any other colour. The customization revolution holds a huge opportunity – and threat – for companies. The rapid development of 3D printing means consumers will soon be able to not only design, but also manufacture their own products. Companies should think carefully how they might exploit this trend – the answer is likely to be in making that process easier, through better machines, plans, base-model kits and tuition. There is historical precedent: the rapid rise in the 1980s of DIY giants, such as The Home Depot in the US and the UK’s B&Q, tapped into a similar motivation among consumers to shape their own world. Homemade or home-built products may often be inferior to professionally constructed items. But, like me and my Ikea drawers, or my novice builders and their origami frogs, consumers will apportion greater value to them because they made them. The Ikea effect can make more firms successful – not just Ikea. — This article is based on ideas within Professor Dan Ariely’s new book Payoff: The Hidden Logic That Shapes Our Motivations, Simon and Schuster Q3 2017 Dialogue
The brand is dead. Long live the brand Platforms for personalization and self-expression are eclipsing ready-made lifestyle brands, write Christian Madsbjerg and Sandra Cariglio
Dialogue Q3 2017
“What I love about this jewellery is that it can mean different things to different people,” says Carla, a young lawyer living in Los Angeles. “To me it’s a trip to Sao Paulo after a painful divorce. But to you it might just be a talisman.” ReD recently conducted a series of strategy projects for global consumer goods companies in the luxury, jewellery and menswear sectors. We studied people from multiple demographic groups and markets, with a focus on the role of objects and brands in the process of identity construction. An emerging pattern became clear: there has been a pattern shift in the way
We had this idea: not to explain everything to everybody people are seeking to express themselves. Fewer consumers are deriving self-expression from external references and institutions. And more of them are self-defining. This change has a consequence for consumer goods brands. In a world that places entrepreneurialism and creativity on a pedestal, ‘lifestyle’ brands that promote symbolic and prescriptive imagery are under pressure. What consumers seek are tools for constructing their own individual outlook within a variety of lifestyles. This points to a new paradigm of branding: ‘platform’ brands. We came across two modes in which platform brands project this deliberate ‘ambiguity’ – first, by providing a blank canvas on to
Q3 2017 Dialogue
which consumers can project highly personal aspirations; and second, by suggesting an attitude across contexts.
Lifestyle brands under pressure
Following a severe wave of discounting by consumer goods companies in the 1980s, companies started looking for less destructive ways to increase sales – giving birth to the idea of ‘brand equity’. Originally, this equity represented a proxy of quality. Think of the Michelin Man insuring your car tyres, or Fairy Liquid keeping your hands softer than soft. Shortly after, brand differentiation evolved at the hands of a new class of corporations that saw themselves as ‘meaning brokers’ instead of product manufacturers. Commodities soon took the back seat to the real product – the brand – sold as a concept, experience and lifestyle. As Diesel’s Renzo Rosso stated in Paper magazine: “We don’t sell a product, we sell a style of life. I think we have created a movement… The Diesel concept is everything. It’s the way to live, it’s the way to wear, it’s the way to do something.” Significantly, the rise of the lifestyle movement took place in the context – and, some would argue, as a consequence – of a decline of broader political and religious narratives that formerly provided direction to people’s lives. Lifestyle brands create total universes with an ideology and style that dictate rules for a way of life – convincing people that brand adoption will strengthen their personal codes of conduct, culture and social distinctiveness. Ralph Lauren inscribed its products in a singular world of “aristocrats, Ivy Leaguers and adventurers who ride horses on ranches, take safaris in Kenya, or yacht in Newport”. This model prompted companies to invest massive resources in building a universe of signifiers – with a mix of iconic and unreachable products whose sole purpose was to build brand imagery. More affordable products drove the sales. Soon enough, consumers came to define themselves through the ‘uniform’ of the brand, and terms like ‘brand evangelist’ evoked the hope invested in brands to unlock new forms of faith, identity and tribalism. In the last two decades – and despite an annual global brand advertising spend of $493 billion a year – consumer loyalty to lifestyle brands has become increasingly fragile, raising questions about the effectiveness of traditional direct marketing campaigns advertising ‘lifestyles’. What is more, brands like Tesla and WhatsApp have proven that spectacular success can be achieved without spending even a dollar on advertising. Such companies simply deliver high-quality products and services – with WhatsApp chief executive Jam Koum famously claiming: “Remember, when advertising is involved you, the user, are the product.”
W H Y B R A N D S FA L L FROM GRACE Branding is ubiquitous and overextended
Today, the average Western consumer is exposed to more than 3,000 messages a day. There’s a plethora of branding tools and techniques to promote everything from laundry detergents to political candidates. Companies selling products that have low significance ﬂood the marketplace with images and slogans depicting ways to lead a good life. A case in point: Johnson & Johnson’s recent Listerine ‘Bring Out the Bold’ campaign – which connects mouthwash to values of boldness and risk-taking – shows the absurdity of systematically linking consumer goods to identity claims. This has led to increasing consumer cynicism: why should businesses seek to provide meaning beyond the benefit and value of their products?
Lifestyle brands are prescriptive, hindering new forms of self-expression
The lives of most consumers ReD studied were characterized by fundamental uncertainty. Career tracks, interpersonal relationships and one’s place in the home were constantly negotiated. We witnessed a resulting strong desire to broadcast ‘who I am’ in ways that are ﬂuid, creative and autonomous. From the investment manager in London who was also an Ironman champion, to the 45-year-old Muscovite who discovered a passion for punk music once her children left the house, our respondents demonstrated a desire for hybridity and emancipation from preordained roles and expectations. Many ubiquitous lifestyle brands and logos have become synonymous with the mass market, associated to specific castes and ideologies – especially in Western territories. If once wearing a full Dolce & Gabbana outfit signalled ‘taste and distinction’, many consumers today increasingly turn away from what they see as a vulgar and one-dimensional display of status, conformism and lack of creativity. Those that continue to place the brand front and centre are paying the price.
Brands like Tesla and WhatsApp have proven that spectacular success can be achieved without spending even a dollar on advertising
Dialogue Q3 2017
“They [consumers] no longer want to be a walking billboard of a brand,” says Michael Scheiner, a spokesman for Abercrombie & Fitch, which has recently reduced the size of its logo on its clothing, while increasing choice and variety to its ladieswear. “Individualism is important to them – having their own sense of style.”
Lifestyle brands beware
The traditional lifestyle-branding model is accessible to a select few with the legacy and resources to invest in building and sustaining an iconic image. When products fail, these brands are perceived to have the buffer of consumers’ loyalty. Platform brands represent a challenge to the lifestyle model. They rely on products ‘speaking for themselves’ – beyond the slogans of direct advertising – empowering people to develop their own emotional attachments to a brand or product. Platform brands design for openness and semiotic ambiguity in two key ways…
The blank canvas Becoming a vessel for highly personal aspirations
ReD recently designed the brand DNA of a highly successful global jewellery brand. Historically, the company refrained from choosing bold faces and exclusive identity slogans to advertise its offering, opting for a more democratic approach. A global survey demonstrated that this had become its core strength as it enabled a very wide range of women to invest personal meaning in their jewellery products, using the brand as a tool to project highly intimate memories and aspirations – making it feel truly their own. We recommended a set of design, retail and marketing principles to formalize the openness and evocativeness of the product and the brand across categories, consolidating its position as a building block for dreams – not the dream itself.
Attitude brands Becoming a prop in the construction of a personal outlook
The rise of ‘humble’ brands refocusing aspirations around ‘real-life’ lifestyles and an exploration of individuality defy the ‘brand as uniform’ model. These brands take a background role – acting as a platform that strategically brings out key attitudinal characteristics of the wearer – for example, creativity, audacity or sense of taste. They refrain from creating a totalizing world by prescribing a panoply of products, complete outfits or sets of values, and instead represent an essential ingredient in a world. Acne Studios is perceived by followers
as a company that has managed to remain ‘elusive yet ubiquitous’ – making principled design decisions through denim products without advocating a way of life. Acne has a strong sense of its identity as a company, but has mastered the art of representing an attitude or mood without laying it out peremptorily. As Acne brand managing director Mikael Schiller says: “We had this idea: not to explain everything to everybody.”
Platform brands derive power from encouraging hybridity
The growth of brands, digital offerings and retail spaces that encourage consumers to combine, curate, mix and match contrasting products and trademarks shows early signs that this may be a high-value experience in the future. Platform brands enable this in their products – through design principles that invite juxtaposition. Muji’s philosophy is to ‘brand the unbranded’ by providing a minimalist experience of quality and products that are meant to be paired with furniture and lifestyle goods. The value of the product is not standalone, but increases with the time and agency invested in linking it to other contexts. In retail, a similar phenomenon takes place with the rise of mixed digital and physical spaces providing curated cross-brand, crossprice offerings characterized by surprising product combinations. Manhattan boutique Story pioneers the concept of magazine-like ‘ephemeral retail’ anchored in storytelling. Instagram shopping tool liketoknow.it or Stitch Fix feature an edited product mix that allows audiences to navigate the explosion of options at their disposal – empowering consumers to make their own creative leaps.
The rise of the hybrid
People transition to increasingly hybrid identities, with lifestyle choices that simply didn’t exist in the recent past. The growing appeal of platform brands suggests an opportunity in the consumer goods market to design for creativity and experimentation – by investing resources more heavily in products and services that enable people to build a perspective, as opposed to dictating it to them. — Christian Madsbjerg is partner at ReD Associates. Sandra Cariglio is manager at ReD Associates Q3 2017 Dialogue
Retail therapy Work with digitization and the threat of product obsolescence can be beaten, write John Bovill and Ian Turner
Clare awakes to the sound of her favourite tracks streaming from her Amazon Echo. She slips on her smart-top and brushes her teeth while the garment calibrates and measures her vital indicators. She is in good shape and ready to start her day. She asks Alexa, the personification of Echo, about any messages that may have arrived overnight. Good news: one of her favourite clothes brands has just launched a new range! As a loyal customer she was given a virtual tour of the range ahead of time – she ordered her selection on her smartphone and Alexa just confirmed that Amazon will deliver it by drone in 30 minutes. Since Amazon and Facebook merged, Clare finds most of her needs are now met within the digital platform. Of course, she likes to develop her own distinctive style and will happily support cool startups outside the system that resonate with her, such as Eckhaus Latta, another cool clothing brand. All this capability exists today. Of course, some innovations will be more successful than others. Technology that makes our lives easier – like Amazon Echo, Airbnb and Uber – that extends choice and helps us navigate our lives efficiently, will spread rapidly. Markets where consumers are tech-savvy and open to experiment will be in the forefront of the digital challenge, which will sooner or later engulf all our industries. The retail industry, which has in recent years experienced unparalleled pressure through consolidation and the growth of online retail, will be revolutionized. Let’s start by looking at the fundamental challenge facing the sector.
MANAGEMENT OF OBSOLESCENCE
Once users attach their bank cards to WeChat’s wallet, they end up indulging in more transactions per month than Americans do on their credit cards
Retailers strive to match customers’ needs with the right product in the right amount and at the right time. As the diagram shows, too much product leads to high inventory costs, discounting and margin erosion. Too little product means foregone revenue, high per-item costs and consumer frustration. By producing faster and more accurate information, technology can help retailers make better business decisions, which means that: • customers get the products they want when and where they want them at a price they are willing to pay • retailers maximize sales, retain good margins, minimize inventory costs and discounting Unlike this neat diagram, optimizing supply and demand in the real world is challenging.
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In fashion retail, for example, fashion trends are often driven by celebrity behaviour and can change very quickly, whereas supply chains – especially global ones – don’t respond fast enough to consumer desire for fashion immediacy. Yet digitization can beat obsolescence. Here are four ways.
SUPERSIZING C U S TO M E R D ATA
Retailers like Tesco and Walmart have for years blazed the trail in capturing and analysing information about customer needs. The challenge now is to create a much more finely grained picture of customer needs, by integrating data from all sources to create a single customer view. This means that patterns of online consumption can be combined with information on retail
purchases as well as other sources of information to create a truly connected enterprise. For example, video cameras can now capture data on the gender and age of shoppers in shopping centres, which means that retailers can shape the layout of space and match the timing of different promotions to patterns of consumer behaviour. This is a win-win. These insights allow retailers to sell more goods and services, but customers also benefit because offerings are targeted to their needs. The main constraints to this have been the lack of analytical talent and the inability of legacy systems in established businesses to work well together. Improved connectivity and increasing processing power coupled with device miniaturization have enabled startups like Berlin-based Lesara to show the way. It Q3 2017 Dialogue
MANAGEMENT OF OBSOLESCENCE Perfect forecast Supply meets demand. Customers can access the right product in the right place at the right time, and retailers minimize stock Excess stock Value loss due to discount sales when actual demand is lower than expected
Short stock Value loss due to unrealized sales when actual demand is higher than expected
Excess supply Caused by long global supply chains from low-cost production centres and fast-moving fashion changing customer demands
uses algorithms and artificial intelligence to analyse online trends. By locating close to manufacturers, it is able to transfer ideas into products in a matter of days, which means it can also eliminate stockpiling and costly discounting.
PERSONALIZING CUSTOMER SERVICE
Retailers have largely addressed the challenge of mobile commerce by developing mobile-friendly websites and improved product availability and delivery options. Now the key transition is towards virtual commerce. A single cloud-based system creates an omni-channel that is able to connect and respond consistently across all the channels it contains. This is the era of the ‘always on’ customer, who is checking and cross-checking products and services through multiple channels. Retailers need to ensure that all brand touchpoints (product, store, service, marketing) align, as the customer increasingly becomes device (smartphone, desktop, tablet) and channel (web, store, social) agnostic. The omni-channel encompasses a number of touch points. A customer services function delivers the customer promise and tailors services using machine-learning technology, such as IBM Watson’s cognitive advertising, that allows two-way conversations between brand and consumer, while eliminating pain points like call wait time. Digitally-enabled stores offer smartphone-based self-checkout and in-store assisted sales, personal stylists and social media experts. Social media can be used for brand storytelling; and apps to encourage differentiation through loyalty rewards. Increasingly, gamification is used to create an exciting and compelling user experience –
Excess demand Due to changing consumer needs, increasingly demanding customers, and product trapped in the wrong channels
games that are fun to play, while giving insights to the retailer. This also encourages customer loyalty and advocacy. Customer acquisition and retention can be optimized through using search engines and loyalty channels that target individual customers based on browsing and purchase history. Even the website is no longer purely transactional – it also enables research online and purchase offline (Ropo). An example is the Ministry of Supply, a Boston-based clothing line, which is installing 3D-printing technology that will enable shoppers to design and produce custom-knit blazers in the store in 45 minutes. Augmented reality is already being used by companies like Ikea, which use it to show customers how pieces of furniture would look in their own homes on a smartphone before buying. The shift is from content that is focused on customers’ moments of need (solving problems with content), to creating immersive experiences that are personalized, timely and incite desire. This is aligned brand ‘pull’ through all channels rather than single channel ‘push’.
OFFERING SMART PRODUCTS AND SERVICES
The smart home has long been an aspiration for companies, too often defeated in reality by problems of system interoperability and siloes. Today, objects that were previously standalone can connect into an integrated system through sensors. Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronically stored information. Following the success of wearable products like Fitbit, smart clothing is now appearing that helps consumers monitor their health more
Dialogue Q3 2017
closely. Lumo, for instance, produces sports clothing that measures posture and running cadence. But intelligent products have more to offer. LikeAGlove, for example, offers leggings which measure a wearer’s shape so they can shop for ideally sized clothes. The shift is from objects that are static and standardized, to solutions that are intelligent and respond to changing requirements.
REVOLUTIONIZING O R G A N I Z AT I O N A L DESIGN
Primary business activities – such as product development, marketing, manufacturing and service – will need to align and collaborate, as well as compete, to offer the best solutions. For example, if technology is an integral part of the product itself, such as the LikeAGlove leggings, then retailers will have to adopt new approaches to increase collaboration across their primary activities. Just as with the omni-channel touchpoints, there can be no gaps. Privacy and data protection laws will enable customers to take back control of their digital identity through publicly accessible windows into cyberspace that record their interactions with retailers (e.g. purchase transactions, marketing correspondence and personal details). This means that the way retailers deal with customer data will need to be open and transparent. Blockchain technology (see Dialogue Q4 2016, page 16) will allow secure distributed transactions, which means that companies will no longer need so many internal checkpoints and conventional support services, such as HR, technology and procurement. While these internal services reduce in value, the digital revolution will require new capabilities to be developed, such as data analytics, supply chain logistics and cybersecurity. Conventional forms of organization and the way business is conducted are quickly becoming obsolete.
T H E C H A L L E N G E FAC I N G R E TA I L E R S
Retailers with physical presence are vulnerable to online companies that have lower overhead costs. Now we see new competitors with assetlight business models, like Uber and Airbnb, disrupting traditional sectors. This is not just about reducing costs or unlocking the value of underutilized assets. It is also about harnessing deep insights to solve customer pain points. Uber scores not just on the cost of its service, but also by providing the simplicity of a cashfree transaction fixed up-front with the driver, a choice of cars and immediate, trackable – thus safe – access to transport. The threat of uberization is that customers will increasingly prefer to transact with a
checklist for the new reality
Nine strategic questions every retailer must answer:
Which set of smart, connected product capabilities and gestures should the company pursue? How much functionality should be embedded in the products and how much in the cloud? Should the company pursue an open or closed system? Should the company develop the full set of smart, connected product capabilities and infrastructure internally, or outsource to vendors and partners? What data must the company capture, secure and analyse to maximize the value of its offering? How does the company manage ownership and access rights to its product data? Should the company fully or partially disintermediate distribution channels or service networks? Should the company change its business model? Should the company enter new businesses by monetizing its product data through selling it to outside parties?
trusted platform that excels at meeting and anticipating their needs. China shows how this could go. Tencent’s WeChat (Dialogue Q2 2017, page 64) service has risen from being a simple chat platform, to becoming the single most trusted e-commerce platform in Asia. WeChat’s billion users use it for professional and personal purposes, and in some cases never venture outside the company’s ecosystem. Key to its success was the development of a secure online payment system. Unlike competing services like Facebook Messenger and WhatsApp, WeChat earns large profits for Tencent, by earning fees when consumers shop at one of the more than 10 million merchants that have official accounts on the app. It was estimated to be worth over $150 billion in 2016. Once users attach their bank cards to WeChat’s wallet, they end up indulging in more transactions every month than Americans do on their credit cards. A virtuous circle is operating. As more merchants and brands set up official accounts, it becomes a buzzier and more appealing bazaar. The more users sign up on the platform, the larger the treasure-trove of insights into their preferences. That, in turn, makes WeChat much more valuable to advertisers keen to target consumers as precisely as possible. The other threat is from new entrants like Zady or Everlane going direct to consumers and avoiding intermediaries like distributors or retailers altogether. They offer value through lower prices, as they remove intermediaries and high inventory costs; or by focusing on specific segments like tailored services; or by diversifying. These strategies are hardly new, but these companies differentiate themselves by focusing on values and securing the loyalty of customers who perceive an affinity with their brand and purpose. For example, Everlane promises radical transparency, showing their true costs and their markup, which is considerably lower than that typically offered by retailers with physical premises.
Retailers must respond
Life will be increasingly tough for retailers who fail to adapt to the new realities (see checklist, left). Even companies that have built successful franchises over many years will need to test that their value proposition is still valid. The advance of digitization has raised the bar in customer expectations. In a world of radical price transparency, cost will rarely provide a sustainable source of competitive advantage. Existing players need to reinvent themselves for the digital age. Fortunately, digital can enable companies to use their products as windows into the souls of their customers. By understanding their customers’ needs and speaking to their values they can create sustainable businesses, with loyal customers. Q3 2017 Dialogue
School of science Find customers’ pain points, ease them – and succeed. Liz Mellon met Nedbank’s cutting-edge design thinkers
How often have you heard companies talking about really understanding their customers’ needs? Company executives use phrases like ‘spend a day in the life of our customer’ or ‘customer insights’ – and debate whether the correct description of their intent to understand more about their customers should be described as ‘customer focus’ or ‘customer centricity’. The intent is good, but too often the impact isn’t as intended. With an organization to run and employees to motivate, attention can too easily swing back inside, focusing on managing the organization rather than paying consistent attention to customer needs. What if there was a recipe for keeping the focus on the customer? And not just on average customer needs, but on solving specific customer pain points? Nedbank South Africa believes it has found a recipe – and it’s working.
Back to the beginning
Brinsley du Plessis and Douglas Lines, executives in business banking with Nedbank, found a common interest in focusing on the customer. In 2014, du Plessis heard about a method for designing products and services from the customer’s viewpoint, and read as much as he could around the subject. “It was frustrating,” he explains. “I knew enough about what I wanted to achieve, but experimenting with achieving it wasn’t getting me there. It was as if I could see the cake, but couldn’t find the recipe to make it.” Du Plessis’ MBA degree had taught him about three laws of marketing: observe; don’t design around averages; and integrated marketing – but this wasn’t helping him either. Objective observation didn’t help understand real customer pain points; no customer is actually average; and customers play different roles, such as user, influencer or decision-maker – it’s important to understand who is doing what. Meanwhile, Lines had attended the AMP
programme at Duke Business School (Fuqua) and his thinking changed radically as a result. “I learnt about the importance of openmindedness and curiosity, and about how interconnected things really are,” says Lines. “It had a profound effect on me and my willingness to experiment.” The pair’s mutual dissatisfaction with the status quo was given shape and form when they discovered design thinking. Here was the recipe, experienced by both of them, on a Duke Corporate Education programme in 2016.
Five steps in design thinking
We have understood for a long time that hierarchies don’t respond fast enough to rapid change, and that we need different ways to organize if we are to survive in a Vuca world. But while companies see the need to change, and executives implore their employees to collaborate for the greater good of the firm, change comes hard. In a world where strategy is often emergent rather than a plan to be followed, hierarchy can get in the way. Design thinking offers a five-step process to work together laterally in support of real customer service. step 1
E M PAT H I Z E
Deeply understand the needs of the customers for whom you are designing. Customers will often ask for one thing while they actually value something different. The product or service they talk about meets a need – what is that need? Often it is to eliminate problems or irritations – smooth the path, take away the pain, rather than add something new. Understand the values and beliefs driving the need. Build empathy for who these individuals are and what is important to them. Listen to their stories, even if what they tell you they do in the story is different from the way they act in reality. Q3 2017 Dialogue
Once they understood the real pain point, Nedbank collaborated with an Edtech partner to create a school app, similar to Uber
Integrate your empathy findings to describe a particular challenge or need. What is the problem? State it clearly. Too often we fail to understand our customers well enough and so we frame the problem from our point of view, not from theirs. Test the problem with customers: does it have face validity? Are we at the core of the issue? The statement should resonate with customers – but not all customers. Identify the specific customers whose lives will be improved – and understand the specific opportunity in detail. step 3
I D E AT E
This is the step where executives have had most practice – brainstorming ideas to address the issue or challenge. Create as many ideas as possible and don’t judge them one by one, as this is the easiest route to kill creativity. Keep the ideas flowing. It doesn’t matter if the ideas sound crazy or unachievable – the aim is to think widely and deeply. Diverse teams are best equipped for this task. step 4
Despite years of encouragement, often people are afraid to experiment at work. The advantage with following this process is that permission to experiment – and fail – is built in from step one. It’s an iterative process. Prototype one is likely to be an approximation – rough and ready – to be tested with customers to see if it starts to address the need. It can be physical – an object or a mock-up – but it can also be interactive, like a roleplay or a storyboard. Testing, adjusting and re-testing get us closer to the final offering. This is still a creative process, but it’s time to build in some analysis. step 5
This is another iterative stage, as testing will allow you to refine the product or service you are offering. Now be as analytical as you like. Be self-critical in order to make the offering the best it can be. Don’t be afraid of failure – if you have been rigorous in prototyping, have confidence that you are close to an answer now.
Before their foray into design thinking, Nedbank operated, as so many other companies do, along functional lines. This is great for building deep expertise in a firm, but not great at encouraging
collaboration and ideas that work for the company as a whole. A solution crafted in one function can often only be implemented to the detriment of another function – for example, salespeople who are successful in inventing new ways to sell more, but perhaps using methods that compliance finds unacceptable. So, du Plessis and Lines’s first act was to combine product, process and frontline employees into cross-functional teams. “We have created an organizational capability through training 45 people in design thinking,” du Plessis explains. “Combining people from diverse areas of the bank, with differing perspectives, has meant that we are much more creative. This is a good thing – bankers aren’t renowned for their creativity!” As the teams moved into action, they found that the problem they thought they were addressing often turned out to be the wrong one. The design-thinking five-step process enabled them to uncover the real challenges. People have been trained at all levels, from frontline operatives, through managers and up to the executive committee. “We worked out something important – you can’t lead what you don’t understand,” says du Plessis. “Although the frontline might be the best at understanding customers’ needs, the design-thinking process needs leaders who understand that employees need the time and space to make the process work. It can’t be hurried, and it involves trial and error. As a leader, you need to create the ambience where this is accepted.” The next step will be to set up a designthinking unit, to embed the capability in Nedbank.
The proof of the pudding … or cake… in the eyes of the customer
Design thinking has had a real impact on employees. “Working in cross-functional teams allows us to learn a lot from each other,” says Lines. “And it’s important to encourage creativity, even if it’s not directly relevant to an employee’s job description. I recall that one participant, whose job is risk mitigation, came up with an incredible spider diagram addressing a completely different area. She was so excited and motivated by an approach which helps her at work, but also at home.” Nedbank is using design thinking to address big, knotty internal issues, like centralizing multiple back-offices into one, to serve customers better. The big question is – what impact have they seen on customers? Schools are big business. Banks are governed – and Nedbank is no exception – by Basel 3 rules on liquidity. Schools are liquidity-rich, yet they don’t need cash on site, so helping them to reduce their cash on site and improve their overall liquidity, while getting more funding
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Customers will often ask for one thing while they actually value something different
onto the bank’s balance sheet, enables a bank to lend more. Sounds like a win-win proposition. Wrong. Using design thinking to uncover the real need, Nedbank included teachers and educators – their customers – in the process, in pursuit of radical collaboration. By doing this, they quickly discovered that holding cash on school premises (parents pay a lot of cash into schools for trips and other school services) is a risk, as it attracts thieves. But the real pain point for teachers is the administrative overhead of collecting all the money for school trips, remembering who has paid, who is going, and which parents still need to be chased. School outings enrich pupils’ lives, but the administrative burden on teachers reduces time invested in lesson planning – their core job of teaching. Once it understood the real pain point, Nedbank collaborated with an Edtech partner to create a school app, similar to Uber. This is how it works. The parents associated with a class will receive a notice via the app and can sign up directly – no more need for signing attendance sheets. Parents’ bank accounts or credit cards are linked to the app – just like paying for an Uber cab – so the financial transaction takes place without cash. The app is also linked to Outlook, providing diary management for everyone. The more perspectives that are included in the initial design-thinking stages, the easier it
is to commercialize the outcome, because you are uncovering real demand. “The parents and teachers sell it for us,” says du Plessis. “Everyone is delighted, including us – we have met a real need.” The app will go to the market shortly.
The greater good
Anything that reduces risk on school premises and increases the time teachers spend on teaching – rather than on administration – has to be a good thing. But there’s more. Nedbank is already contemplating the wider ecosystem of the desperate need for free education in South Africa. “Design thinking helps us to solve problems at a higher level of thinking – it makes you think wider and bigger,” says du Plessis. “This is a thin wedge strategy. It opens our minds to how an app like this might be used to offer free education in the future, especially to children in remote areas.” Giving back and nation building are the next steps on the agenda. Design thinking seems to be a powerful tool. Used properly, it opens the gateway to innovation that really works for customers. But it also seems to be a recipe for cultural change – changing the way a business thinks about and manages itself. Du Plessis has the last word: “Let’s face it, we wouldn’t have come up with these ideas with our usual stiff-collar banker approach!” Q3 2017 Dialogue
Meet the mensch
Dialogue Q3 2017
The new customer is emotionally intelligent, connected and urban. She will soon be omnipotent writing
Anders Indset illustration
The new customer wants not your Plan B. She wants your Plan A, tailor-made for her. She wants your unique selling proposition mixed with your individual selling proposition. Marketing is pointless – dead, even. “Stop screaming at me!” the new customer says. “I do not care for your attention. Serve me before I realize that I need you, then you have a chance of becoming my lifelong friend. After all, I am not a piece of data. I am human. I have feelings.” The new customer is called the mensch. Mensch is a Yiddish word meaning a person of honour and integrity. In German, the word means simply: human. Get to know the mensch, as she is about to become very important. Consumers – otherwise known as humans – are the new revolutionaries. The new era will not arise from people at the top, nor from populist groups from the far-right reacting to the forces of change. It will come from the grassroots: the mensch, the emotionally intelligent consumers who exploit change. The mensch are in a clear majority. Yet for a short time they have been pushed aside. They will grow stronger. These factors will see the mensch soon regain power…
governments to all citizens regardless of their means and willingness to work – will be the norm. Technology will by 2060 erase 50% of the jobs we know today. On the one hand this is good news – as it frees up tremendous potential to play and create. But it also forces us to establish a global system of shared services and more equality through a basic income for everyone. Some have suggested that this universal income could be generated by a tax on robots – so those who made the machines that took the jobs pay for the unemployment they created. The first countries, such as Finland, have already started to experiment with universal basic income – soon it will be rolled out in Europe, and adapted to the world. As the gig economy takes hold, everyone will have a basic income which is augmented by working. Universal basic income will create an incentive to earn micropayment for the micro-projects that will define the economy of the future. It is the only way Europe and North America will avoid relegation to the global second division.
1 CITIES FIRST
3 SP OR OL UF ITTI SO N S T R U M P
The death of the nation state
The key to staying in business is by exploring creative solutions that lead to completely new business models
The mensch live in the city. In 2006, the world reached a tipping point as we had more than 50% of the world’s population living in urban areas. In parts of South America, urbanization has reached 75%. And countries in Europe – such as the UK, Turkey, Czech Republic, Sweden and Switzerland – are moving completely away from the identity and power of the countryside towards economies that are centralized around the city. This will eventually lead to the death of the nation state as we know it, where everything is clustered in some 750 global metropolises surrounded by partly subsidized rural areas of insignificance and economic junk space. These interconnected hubs and globally connected metropolises around the world will account for more than 90% of all economic transactions. Forget what we learned from the industrial revolution. The exponential growth of Tech 2.0 and the rise of mega companies is 50 times stronger and faster than any development in global economic history. As China is growing, the cities of the West are growing even faster – and every city is becoming more closely connected to its peers than the countryside around it.
2 A L L H AV E M O N E Y
The inevitability of unconditional income
Every mensch will have money to spend, because a citizens income – payments made by
The advent of radical business models
Your aim is to make the life of the mensch better. Build your solutions for the mensch, then focus on profit and return as an ancillary concern. Once you have built an ecosystem and solutions for the mensch, explore the art of making money by offering additional services to your existing customers. You can add more value and sell more services once you have gained the trust of the mensch you have just served. Where will these new services come from? Through ongoing innovation born of dedicated teams – brain trusts within companies whose job it is to solve the problems of tomorrow. Organizations will establish separate units to do the big thinking – these think tanks will create the products that make the lives of the mensch easier. The best think tanks will solve her problems before she even realizes what her problems are. Through this, companies will be flying high with the next big thing well before the last big thing dies, as all big things do.
Staying in business
The key to staying in business is by exploring creative solutions that lead to completely new business models and ways of generating economic value. Serve the mensch individually, well before time, and enjoy the ride! You’ll figure out how to monetize your efforts as you roll along. — Anders Indset is a business philosopher, investor, entrepreneur and keynote speaker Q3 2017 Dialogue
Girl, interrupted Were it not for an inspirational teacher changing her path, Dr Linda Papadopoulos might never have majored in psychology. Major consumer brands are glad she did
Ben Walker photography
When very young, Dr Linda Papadopoulos wanted to be a journalist, the sort that knows a little about a lot. It was the influence of an inspirational teacher that changed her path, driving her instead to dive deep into the human psyche and help people understand their minds, motivations and behaviour. “I originally wanted to do what you do,” she says. “But you know when you have those moments in life – maybe only one or two – where you meet an erudite, amazing, interesting teacher? I met a psychology teacher like that and I became besotted with it, I completely engaged with the subject.” She doesn’t see a fundamental difference between the two disciplines. “What you and I do come from the same motivations, right? Being interested in human behaviour. But while journalism describes what is happening, psychology explores why.” Papadopoulos is a Canadian national of Greek-Cypriot extraction (her parents moved from Cyprus to Ontario in the 1970s, before she was born). Her cultural background from a segregated, conflicted, sometimes war-torn, country runs rich in her blood, informing her passions. “I was from a very young age aware of the horrible things people were capable of doing to each other,” she says. “Psychology tries to understand things that don’t make sense.” Following her PhD, Papadopoulos rose to relative fame as a relationships expert – appearing on TV shows around the world (she helped smooth over the inevitable conflicts born of incarcerating several twentysomethings in the Big Brother house). She advises the public on issues surrounding dermatology, sex, body image and self-esteem. She’s known to many British readers as a lifestyle coach in the UK edition of women’s magazine Cosmopolitan. But her expertise extends well beyond the tricky area of emotional support into the complex field of consumer behaviour. Why do humans buy the things they do? Global brands such as Dior, Renault, Speedo and Diageo use her analysis to help them understand their customers. Her worldview, that psychology tries to understand things that don’t make sense, seems appropriate. At first blush, consumerism
– particularly the love of brands – makes no sense at all. A Dior handbag costs 100 times more than a similar piece a woman might buy in a high street chain, but isn’t 100 times better in quality. Yet Papadopoulos demurs from the notion that purchasing the designer model is inherently irrational. “The value of something – whether the price is 10 times, 100 times or 1,000 times that of an equivalent – depends entirely on how the buyer decides to value it,” she says. “You might buy into a brand. Take university courses – there are a handful of top universities that everyone wants to go to. Is what is taught there significantly different to what’s taught everywhere else? To some extent, yes, but probably not to the extent that would seem to justify the markup in the pricing. Yet what that markup implies is the projected value that we place on it – and to me, that is what’s interesting.”
The value of something – whether the price is 10 times that of an equivalent – depends entirely on how the buyer decides to value it That intangible value is potent – but unreliable. Papadopoulos says that her most surprising discovery about consumer behaviour is how quickly the landscape can change. Trust, she says, is ever more important. “Consistency of message!” she says. “It’s amazing how quickly you can get things wrong – and how quickly you can get things right, if you gain that trust.” She recalls an anti-smoking campaign. These are notoriously difficult projects – most smokers don’t respond to health messages, otherwise they wouldn’t be smokers. Smoking still has a cool image, despite it being a known killer. Yet Papadopoulos turns this on its head: “People don’t smoke to be cool,” she says. “But the traits that are considered cool do tend to be found more in smokers – because smokers tend to be more risk-taking, and less approval-seeking.” The campaign avoided traditional health-
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hammering. Instead it went for the line: ‘Lose the smoke, keep the fire.’ “It was extremely successful,” she says, “because it was tapping into something that was just beneath the surface. If you can get to a person’s truth – about their identity, about themselves – that affinity is extremely motivating. It makes them feel that they are understood.”
The advent of large-scale digital communication has to some degree made the trust equation easier to reconcile. “There is something about me sharing something with you – something about the source of that information that is becoming more important,” she says. “One thing we know about Millennials is that they trust their peers much more than they do advertisers. Do you spend millions putting something on TV, or do you spend millions on something that you hope people will share?” Essentially, she suggests, the process of sharing – and comparing – hasn’t changed in centuries, but the sheer scale of it has. “This notion of comparing is very interesting,” she says. “Whereas before you would look over your garden fence at your neighbours’ cars, now you look on Facebook. People don’t just use social media to connect – they use it to compare.” So how well are her clients doing at exploiting this quantum leap in scale in consumer comparison? “I think they are getting better,” she tells Dialogue , although she admits that some are doing better than others. What some still fail to grasp, she says, is the importance of the source – that the identity of who is saying something makes a huge difference about whether the consumer believes it. She cites a fascinating study where a focus group heard the same message given by three different voices. The first voice was instantly identifiable – it was the voice of a well-known celebrity. The second voice was unidentifiable but vaguely familiar to the group. The third voice was that of a stranger. The experiment revealed that the group trusted least the voices of the celebrity and stranger. The one they were most likely to trust was the second voice – that of the vaguely familiar speaker. “It was someone they felt they might know,” says Papadopoulos. “They felt some sort of connection with them. And the message didn’t feel disingenuous because the audience didn’t feel that the vaguely familiar speaker had been paid in the same way that the celebrity had.” The traditional spectacle of ultra-glamorous celebrities being paid millions to tell audiences that they are wearing a particular perfume will fade away, she says. Boffins and bloggers will trump beauties: “What you will see instead is trusted experts being asked about those products, or else hear from people who have written about these things for a long time. That
interests me – who we are listening to and why.” People’s consciousness of full-frontal advertising will be its undoing, Papadopoulos adds: “People see a celebrity saying that a KitKat is their favourite chocolate bar, and they know that the celebrity has been sent a cheque for several thousands of pounds just to say it.” Soon, she predicts, we can expect to see chocolate experts selling the product, “or a voice that is familiar but not so familiar that consumers are suspicious of their message”. Intriguingly, Papadopoulos herself is the embodiment of the trusted voice – she is both an expert and comfortably familiar. She is also modest. She doesn’t much like being asked about her greatest achievements, a question many interviewees relish. When pressed, she cites the work she has done on dermatology (she worked with the UK’s National Health Service on how stress and self-esteem relate to skin conditions), and the sexualization and objectification of young women (she conducted a UK government review in 2010 on the issue). But one personal milestone stands out. “Becoming a mom,” she says. “My daughter didn’t come easily. And she’s my world.” We might soon be seeing more of Papadopoulos Sr. She’s keen on hosting TV documentaries covering social change. “Politically what’s happening in the world, I find
I think leadership is the ability to inspire and to motivate, and I think those traits are probably less prone to gender differences fascinating,” she says. “The rise of nationalism, how we are vilifying the other – I’d love to look more deeply into that.” What does she think is behind the rise of nationalist movements? “To some extent political correctness overplayed its hand,” she says. “I’m all for liberty and that’s a wonderful thing. But we lost our way with ‘safe spaces’ and ‘noplatforming’. We just stopped talking. And we felt that we couldn’t talk. Civilization depends on conversation. And I need to be able to talk to you if I agree with you or if I find your views abhorrent, because if I silence you or I ‘noplatform’ you, we are not going to have those conversations, and I think that’s very dangerous. It’s particularly dangerous that it’s happening in institutions like universities where talking should be happening more than anywhere else.” She sees a restriction of free speech as to blame for the rise of populism: “When a society thinks it can’t talk it chooses the loudest voice – the biggest caricature of what it wants to be. The moderate voices, who should be reflecting
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their issues, aren’t. That’s why we see Brexit. That’s why we see Trump. That’s why we see a lot of what’s happened in the world. How this moderating of others’ behaviour manifests itself in polling booths, I find fascinating. This vilifying of the ‘other’; calling people we don’t agree with imbeciles. Freedom of speech is fundamental. We should really ask ourselves at times like this whether we should be placing so many restrictions on it.”
Battle of the sexes
Notwithstanding the outcome in France (centrist Emmanuel Macron was elected president as Dialogue went to press), her home nation of Canada has run against the global political tide with the election of liberal Justin Trudeau. As the daughter of immigrants, Papadopoulos says Canada has achieved it by focusing on unity as much as diversity. “I was born in Canada, but my parents knew more about Canada’s geography and history than I did,” she says. “They had to learn a lot about the country, they had to speak the language before they moved there. The Canadians valued our Cypriot-ness. But also they expected us to value our Canadian-ness, and I think that’s where they got it right. You felt listened to, and you reciprocated that. I think that’s lacking in Europe, and in America.” Yet her sterling defence of free speech doesn’t prevent her worrying about upsetting people. Despite advising millions on sexual politics and the minefield of romantic relations, she’s somewhat reluctant to highlight differences between male and female leadership styles: “It’s a contentious thing to say. Because of political correctness, people don’t want to say there are psychobiological differences between men and women – but there are.” She cites studies on the capacity for risk (higher among males), and suggests that the deployment of the sexes in leadership roles is mismatched to the requirement. “Had more women been at the helm of the banks, the evidence suggests the banking crisis wouldn’t have gone as far as it did,” she says. “I think there is something in it. There are clearly some differences – hormonally there are – and it’s interesting to look at how those affect behaviour.” Still, she adds the caveat that “gender doesn’t trump personality” – that great leaders appear equally in both sexes, that the ability to enthuse is key, regardless of how you get there. “I think leadership is the ability to inspire and to motivate,” she says, “and I think those traits are probably less prone to gender differences.” Certainly, the inspiring teacher of her youth changed the path of her life: journalism lost her, psychology gained. But it feels like the course of her career went the right way. Linda Papadopoulos is an explorer, destined to ask not ‘what?’ but ‘why?’ Q3 2017 Dialogue
Coaches from the world of sport know that talent must be nurtured
Only practice gives a sporting chance Kate Cooper is head of applied research and policy at the Institute of Leadership & Management
Sport has recognized – and acted on – the simple truth that any natural acumen has to be nurtured, or it is wasted
A modern-day tale of two cities compares Sheffield with Rome: both are built on seven hills, and both have rivers running through them. There the similarities end. We recently ran a round-table event looking to test the parallels that are drawn frequently between sport and business. Both domains offer the potential to be highperformance environments. Both domains share the same requirements for leadership, teamwork and a winning mindset. But, like the Steel City and the Eternal City, the similarities are limited. The sort of performance improvement that investment has delivered in sport cannot be guaranteed in the same way in organizations. The nature of sport is such that performance is clear, evident and mostly objective. The spoils of sporting success are quantifiable – goals, tries, wickets and the like. This is unlike business, where there is often a raft of complex goals that can conflict. There are more critical differences. One is demographic – the career span of athletes is far shorter than most business careers, thus policy is aimed at one age group only. This contrasts with the six-generation companies of the near future. What of the performance-rehearsal ratio? Here again the two domains contrast sharply. The proportion of sportspeople’s time that is spent training compared to playing for real is a mirror image of business, where training is a tiny fraction of one’s yearly input. It is in this key area of difference that business needs to be more like the sporting world. However gifted the athlete, there is an acceptance in sport that natural ability is only part of what is needed, and success is as much a function of training. This is less so in business, much of which still clings to the myth of the hero-leader and megamanager, for whom training is a distraction from their natural dynamism. The transferability of sporting principles to business is useful if leaders embrace athletic coaches’ recognition of the
importance of practice. Practice means two things – the act of repeating the discipline until one excels at it; and being a practitioner – doing it. Malcolm Gladwell’s popularization of K Anders Ericsson’s research emphasized that success was to a great degree a product of practice. It is not necessary to accept all of Gladwell’s conclusions to appreciate that putting in effort, consciously striving to improve, setting targets and measuring progress will yield results. The second definition of practice – the leader as a practitioner of leadership – receives much less attention. This leads to problems. Individuals are promoted to leadership and management positions because they have demonstrated competence in the activity they are supposed to manage. This is like rewarding a great centre-forward for his goalscoring by making him team captain, despite the fact that he is a lousy leader and unwilling to work on becoming a better one. At senior levels of business, and in non-corporate arenas such as politics or high-growth startups, leadership as an activity requires hours of practice and effort as a discipline in its own right. Yet a commitment to improvement is often neglected. This omission can account for the spectacular failure of high-profile figures who are moved into leadership positions from technical excellence and fail to appreciate that not only do they have hours of practice to invest before they can claim mastery, but they have to keep practising. Just as the elite athlete cannot rely solely on natural ability, even those individuals who claim to be ‘natural leaders’ must practise to develop their capability. Sport has recognized – and acted on – the simple truth that any natural acumen has to be nurtured, or it is wasted. Business still hasn’t fully got to grips with this, and that is the fundamental difference. Some say business is like sport. Like Sheffield and Rome, they do exhibit some similarities – but not many important ones. Q3 2017 Dialogue
The decision maker is your customer Know how to handle – and lead – your internal client
Marshall Goldsmith illustration
Every decision in your company is made by the person who has the power to make that decision. These people are not necessarily the ‘right’ person, the ‘smartest’ person or the ‘best’ person. Yet they are nevertheless the person. I counsel clients and students to think of decision-makers – often known as upper management – as their customer. If you can influence the key decision-makers in your organization, you can make a positive difference. If you cannot influence decisionmakers, you will make much less of a difference. Once you make peace with these facts, you will become more effective in influencing up. The following suggestions will help you influence your customer. They do not come with a guarantee. That’s because when you don’t have the power to control outcomes, you won’t always win. But if you follow these suggestions, they will improve your odds on successfully making a positive difference.
Realize you must sell your ideas
When presenting ideas to decision-makers, realize that it is your responsibility to sell, not their responsibility to buy. In many ways, influencing ultimate decisionmakers is similar to selling products or services to external customers. They don’t have to buy – you have to sell. No one is impressed with salespeople who blame their customers for not buying their products. While the importance of taking responsibility may seem obvious in external sales, an amazing number of people in large corporations spend countless hours blaming management for not buying their ideas. A key part of the influence process involves the education of decision-makers. The effective influencer needs to be a good teacher.
Focus on contribution to the larger good – not just the achievement of your objectives
An effective salesperson would never say to a customer, “You need to buy this product, because if you don’t, I won’t achieve my objectives.” Effective salespeople relate to the needs of the buyers, not to their own needs. In the same way, effective influencers relate to the larger needs of the organization, not just to the needs of their unit or team.
Strive to win the big battles
Don’t waste your energy and psychological capital on trivial points. Executives’ time is very limited. Do a thorough analysis of ideas before challenging the system. Focus on issues that will make a real difference. Be willing to lose on small points. Be especially sensitive to their need to win trivial nonbusiness arguments on things like restaurants, sports teams or cars. You are paid to do what makes a difference and to win on important issues. You are not paid to win arguments on the relative quality of athletic teams.
Present a realistic ‘cost-benefit’ analysis of your ideas – don’t just sell benefits
Every organization has limited resources, time and energy. The acceptance of your idea may well mean the rejection of another idea that someone else believes is wonderful. Be prepared to have a realistic discussion of the costs of your idea.
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An amazing number of people in large corporations spend countless hours blaming management for not buying their ideas
Challenge issues involving ethics or integrity – never remain silent on ethics violations
The best corporations can be severely damaged by one violation of corporate integrity. Refuse to compromise on company ethics. Take action.
Realize that powerful people also make mistakes. Don’t say, “I am amazed that someone at this level...”
It is realistic to expect decision-makers to be competent; it is unrealistic to expect them to be anything other than normal human beings. Focus more on helping them than judging them.
Don’t be disrespectful
While it is important to avoid kissing up to decision-makers, it is just as important to avoid the opposite reaction. Before speaking, it is generally good to ask one question from four perspectives. Will this comment help 1) our company 2) our customers 3) the person I am talking to, and 4) the person I am talking about? If the answers are no, no, no and no, don’t say it!
Support the final decision
Treat decision-makers the same way that you would want to be treated. If you stab that person in the back in front of your direct reports, what are you teaching them to do when they disagree with you?
Make a positive difference – don’t just try to ‘win’ or ‘be right’
We can easily become more focused on what others are doing wrong than on how we can make things better. An important guideline in influencing up is to always remember your goal: making a positive difference for the organization. The more other people can be ‘right’ or ‘win’ with your idea, the more likely your idea will be executed.
Focus on the future – let go of the past
One of the most important behaviours to avoid is whining about the past. Have you ever managed someone who incessantly whined about how bad things are? Nobody wins. Successful people love getting ideas aimed at helping them achieve their goals for the future. By focusing on the future, you can concentrate on what can be achieved tomorrow, not what was not achieved yesterday.
The crowning glory
Now, think of the years that you have spent ‘perfecting your craft’. Think of all of the knowledge that you have accumulated. Think about how your knowledge can potentially benefit your organization. How much energy have you invested in acquiring all of this knowledge? How much energy have you invested in learning to present this knowledge to decision-makers so that you can make a real difference? My hope is that by making a small investment in learning to influence decisionmakers, you can make a large, positive difference to the future of your organization. — Marshall Goldsmith is a world-renowned executive leadership coach, speaker and writer Q3 2017 Dialogue
Turn employees into Collaborative learning is your ticket to employee advocacy, writes Michelle Yandre
Age is no longer a barrier to leadership ambition. Even our youngest employees crave opportunities to lead, to feel accountable and to be successful. Pair this enthusiasm with a yearning to be part of a larger mission, and you have the perfect recipe for employee advocacy. In a general sense, employee advocacy means leveraging a company’s greatest asset – its employees – to promote the company using both online and offline channels. If implemented successfully, employee advocacy efforts can lead to some impressive, and perhaps surprising, results. Research from MSLGroup says brand messages go 561% further when shared by employees, as compared to sharing via an organization’s social media channels. This statistic – though initially staggering – is not, on reflection, far-fetched. As human beings, we are much more likely to put our trust in other people than in brands or corporations, at least to start with. Further, we put even more trust in those we know. Nielsen reports that 84% of consumers say they either completely or somewhat trust recommendations from family members, friends or colleagues about products and services. With this percentage in mind, think of the power behind leveraging your employees to tap
into their own social following, which likely comprises friends, family and likeminded professionals – people who could be your next client, customer, investor or partner. Aside from potentially reaching an untapped market through your employees’ networks, your employees are also your best bet for securing new business leads outside of their close-knit groups. In general, new business leads developed through employee social marketing convert seven times more frequently than other leads, according to IBM. Now, what would happen if employees begin to leverage marketing in a way that goes beyond simply explaining what your organization brings to the table, using standard ‘marketing fluff’? What if they start to demonstrate their knowledge – and therefore your organization’s capabilities – through employee advocacy initiatives?
Some employees are more eager to lead than others, but every employee wants the opportunity to learn and climb the corporate ladder
The key driver behind employee advocacy success is having you employees deliver messages of contextual relevance to target audiences. Teach your prospects something, showcase in-depth knowledge of industry challenges, and allude to innovative solutions your team can deliver. Show, don’t tell – but how? The answer lies within collaborative learning.
Leveraging collaborative learning to fuel employee advocacy
Consider your current workforce. Some employees are more eager to lead than others, but if statistics prove true, every employee wants the opportunity to grow, learn and climb the corporate ladder. Collaborative learning-fuelled employee advocacy gives each employee the opportunity to do just that, while helping the overall business grow at the same time. Below are a few steps to help employees get started:
Understand industry challenges by conducting research
The best way to understand what types of messages will resonate among your specific target audiences is to conduct research by consuming expert
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leaders content. Encourage employees to learn about your prospects’ industry challenges, innovations and trends, written by those who live and breathe these topics. Then encourage employees to think about how this content relates specifically to your prospects, and how presenting the material to them can be a tool for earning their trust – and ultimately their business. By learning, researching and thinking critically, employees are building up their own knowledge, thus better equipping them to take on more responsibility.
Compile the most relevant resources into a discovery path
Once employees feel they’ve gained a broad understanding of a prospect’s business, have them curate a chapter from a relevant book, plus a video and an industry report that showcases their understanding. The point is to package the relevant content into a bite-sized path that your prospect can easily access, consume and learn from.
Add context to the content
This step is the most crucial when it comes to demonstrating knowledge and what your employees, and thus organization, can bring to the table. It’s also the step in the process
New business leads developed through employee social marketing convert seven times more frequently than other leads where employees have opportunities to truly showcase their leadership. Adding context to the selected content means having your employees explain exactly why the chapter, video and report is relevant to targets. It’s where employees add their own ideas and interpretations. So, when a prospect opens the discovery path, not only do they receive expert content, they also receive a message that proves your employees’ in-depth understanding of their business needs.
Share the discovery path and encourage open feedback
Once the content is curated and context added, it’s time to share the packaged content with your prospective client. Have your employees invite the prospect into the learning process by sharing the information, then follow up and offer an opportunity to collaborate and discuss the content and concepts derived. The key is to encourage
collaboration, and come up with next steps – whatever they may be – together with the potential client. The steps above outline a highly targeted approach to marketing to a new business prospect. This process can be carried out prior to the first meeting, or shortly thereafter. It is important to note, however, that this type of targeted marketing can also be generalized. For example, if you are in the business of consulting startup companies on how to secure funding, your employees can develop more general discovery paths that focus on various issues related to startups. The topics then speak to a wider audience, and the paths can be shared directly to employees’ social media platforms. However broad or targeted you’d like your employees to be, the main idea is to bring collaborative learning into employee advocacy efforts. Involving employees in collaborative learning-fuelled employee advocacy will provide them with opportunities to emerge as leaders more quickly by learning from industry experts, showcasing their own knowledge, and earning the trust of other professionals. — Michelle Yandre is PR manager at BlueBottleBiz – the first collaborative learning platform for business professionals
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bbb-ad-dialogue-traced.ai 1 06/11/2015 13:46:23
The internet’s biggest challenge is how to handle the hate
The global village is turning nasty Vivek Wadhwa is distinguished fellow at Carnegie Mellon University’s College of Engineering
The simple truth is that it isn’t a lack The whole point of villages is that they of resources preventing Big Web from are nice. The word conjures up thatched controlling, monitoring and regulating the cottages in picture-postcard English misuse of its platforms – it is lack of will. hamlets where everybody knows each When, a few years ago, spam threatened to other. The ‘global village’ – the shorthand destroy email, the tech giants invested in used to advertise the internet when the web filters, blacklists and other defences, and was in its formative years – was supposed virtually eliminated it. Once marketers to be a virtual manifestation of The Shire. It learned how to game Google’s pagehasn’t quite turned out that way. ranking system, the search giant turned the The internet’s biggest problem is hate. tables on them by changing its algorithms. It’s everywhere. Google risks losing up None of these countermeasures took years to $750 million because of a boycott by to develop. When the tech giants put their advertisers, according to Nomura Research. mind to a job, they do it. Many of its clients are furious that their ads In his book Whose Global Village? Ramesh are popping up next to extremist and hateful Srinivasan explains that the idea that digital content. Facebook has similar problems – it technologies are neutral is wrong. Like became the platform of choice for the ‘fake newspapers, they are news’ that may have created by humans, who influenced the outcome approach the creation of the US presidential Without action from process on the basis election. Yet the internet the platforms, hate of a set of values and giants worry that they and ignorance will presumptions. Like are unable to control the only grow newspapers, they are way their technology is for-profit companies. used. The global village So, like newspapers, looks more like a chaotic they must be held accountable for the Mad Max dystopia with every passing day. content they propagate. It was easier when newspapers (and Srinivasan suggests asking socialtheir websites) were the chief source of media companies to make transparent and news. Editors were held responsible for comprehensible the filters and choices content. What is now pejoratively termed that go into the key algorithms; offering the ‘mainstream media’ made plenty users the choice between different types of mistakes. But the buck stopped with of information; and developing interfaces someone. Nearly half of US adults now get that allow users to look across posts from their news from Facebook. There is not one multiple perspectives, places and cultures editor, but millions. in relation to a given topic. All seem To their credit, Facebook and Google wise steps. have acknowledged that there is a problem. One possible good consequence of fake Their next challenge is one of time. In a news is the slow recognition that it exists recent blog, Facebook chief executive Mark – to some degree its recognition has caused Zuckerberg detailed plans to build a better users to question more of what they read. informed, civically engaged and inclusive Yet this questioning remains embryonic, community that looks a lot more like the and limited. The echo chambers of social vision of social media when it came into the media are designed-in. Without action from world just over a decade ago. But he warned the platforms, hate and ignorance will that the sheer volume of content which the only grow. platform handles means regulation will take Let it, and the global villagers might several years of R&D. We don’t have years – soon turn on each other with pitchforks. In what’s left of the global village might have some places, they already have. burned down by then. Q3 2017 Dialogue
A manifesto for everyday innovation Create a climate where ideas-making is once a day rather than once in a lifetime, says Tom Hughes
I work with leaders from all around the world. We discuss their issues, their challenges and what they’re trying to do about them. And one of the most common testimonies, meeting after meeting, in company after company, everywhere I go, is: “We need to innovate.” When I ask them to give me examples of innovation, I keep hearing words like iPhone, Uber and Airbnb. In fact, these examples have become so commonplace in workplace conversations, training programmes and journals, that I’m starting to hear responses echoing one I heard recently: “I’m so tired of hearing about Uber. I get that it’s cool; I use it myself. But that’s not an example that’s going to help me.” I don’t think the guy who said that was alone. The big name products, services and apps that get a lot of the ‘innovation spotlight’ are wonderful, and I too use them. But most of us don’t need to create something like that in order to achieve our innovation goals. In fact, a lot of us shouldn’t even be trying. Those who don’t aspire to be at the forefront of the next seismic disruption – but do feel the need to be constantly improving and responding to shifting market, consumer or customer expectations – should pursue an alternative goal: everyday innovation. Everyday innovation is, at heart, a mindset shift, supported by the power of five key tools. It is a way to make gradual but consistent improvements to the environment you create in your teams and organizations: the way you collaborate, and the degree of creativity you and your people bring to your work (see Figure 1). Let’s look at these one at a time.
Everyday environment The power of norms Many readers will be aware of the amazing work coming out of Google’s Project Aristotle. Google turned its formidable analytic capabilities on itself to discover why some of its teams so clearly outperformed its other teams. Through extensive research, it eliminated all kinds of possibilities, including skill differences, personalities, styles and access to resources. What did it find? That the superior teams had better norms, driven by better management behaviours and practices. As Charles Duhigg reports in the New York Times, the superior teams shared two key characteristics:
Team members shared conversational airtime more or less equally – everyone participated, nobody dominated and nobody checked out Team members had a high average level of ‘social sensitivity’. In other words, they were good at telling how each other felt
Everyday collaboration The power of empathy There’s an old parable attributed to Chuang Tzu, a philosopher in the Chinese Taoist tradition. It goes something like this: A man is in his boat near the shore of a river. He sees another boat coming directly towards him, and yells out for the owner of the other boat to turn away, since he, himself, has no way of diverting his own path. The boat continues directly towards him. Now furious with the unseen boatman, the man shouts out again, with no result. He shouts for a third time, this time more urgently, but to no avail. The oncoming boat crashes into his. As he prepares to scream at the owner of the offending boat, he discovers that the boat is empty, apparently having broken loose of its moorings. As there is no-one to yell at, no-one to be angry with, the boatman’s anger immediately dissipates. The moral of the story? The boat is always empty. When we are able to see clearly what is really happening, when we understand the perspective of the other party – in this case, the empty, uncontrollable boat – we
An injection of novelty into an otherwise exceptionally familiar mass of prior work is likely to have a high impact manage our feelings and behaviours better. Similarly, you and I have a choice about how to respond to our circumstances: will we become angry and upset with stakeholders who “just don’t get it”, or who restrict our ability to move our projects forward? Or, will we make the decision to do a little more work, both emotionally and intellectually, to understand their perspective? If you truly want to collaborate with colleagues, peers, partners, vendors, customers and so forth, you must take the time to understand not just what’s in it for you, but what’s in it for them. Sometimes you know the answer. Sometimes you have to find out – either by using your imagination, or by simply talking to them.
Everyday collaboration The power of alignment Collaboration and an organization’s collaborative power can be classified based on the way the interests of the parties align. In my experience, there are broadly three types of alignment to consider – agreed, synchronized and hierarchical (see Figure 2). The first type of alignment is a simple agreement between peers. This is when you Q3 2017 Dialogue
T H E E V E R Y D AY I N N OVAT I O N MINDSET Everyday creativity The idea of brokerage The power of attention Everyday collaboration The power of empathy The power of alignment Everyday environment The power of norms
and I share a common goal, common task or common target. Typically the biggest obstacles to achieving this kind of alignment are a) discovering that we have something in common; or b) finding or making the time to sit down together to actually discuss how we can support one another. In any organization, there’s almost always someone or some team or department who is working towards one of your goals. It is a great force multiplier when you can find those agreement partners, and work together. The second type of alignment is synchronized. This is when you and I have different priorities or aims, but we are in an excellent position to help one another. It involves a – more or less – fair trade of effort. An easy example is cross-selling products or promoting mutually supportive internal initiatives. For instance, I was once responsible for designing and delivering a training programme for the administrative staff of a consulting firm. Someone else was responsible for developing and executing a range of HR solutions for the same team. While each of us was perfectly capable of delivering our own work independently, we found that we could help one another by synchronizing our efforts, and each project turned out better than it would have otherwise been. The final type of alignment is hierarchical. Unlike the previous two, it can feel like there are winners and losers in this scenario. Every leader and every team has priorities: projects,
Everyday innovation is a way to make gradual but consistent improvements to the environment you create in your teams
initiatives, products, services that define your success. When you set about trying to collaborate with colleagues, it sometimes becomes clear that one of you is working on something that is simply more important for your organization than the other. Hierarchical alignments are the most difficult collaboration scenarios to handle, because they call for both parties to openly acknowledge the disparity in priorities. This is easier said than done because managers, employees and organizations are often reluctant to admit such disparities exist. They may not even be aware of them. Even when disparities are acknowledged, more problems can occur. It is easy for the higher-priority party to become arrogant or pushy, and the lower-priority party to become defensive and territorial. It is important that both resist their respective temptations and view this as an opportunity to do the right thing for the organization. The leader who has the lower priority needs to adopt an organization-first mindset and throw as much support as they can behind the higher priority. This may extend to requesting that high-level leaders relieve the lower-priority leader of tasks or responsibilities, to create more capacity for supporting the higher priority. The leader with the higher priority must, in turn, do everything she can to acknowledge and support the leader with the lower priority. She may be able to find some way to support their activities. By whatever means, though, it is her duty to reward the help. It is particularly beneficial if the organization has a way to reward the enterprise-focused actions of both leaders.
Everyday creativity The power of idea brokerage Idea brokerage is a powerful tool that can foster everyday innovation. This is very simply the idea that many of the things we think of as being ‘creative’ are in fact the blending or combination of pre-existing ideas. For instance, one of design agency Ideo’s big successes – a leak-proof water bottle – was essentially a traditional water bottle with the leak-proof opening of a shampoo bottle. In 2013, a team of researchers, led by Brian Uzzi and Ben Jones of Northwestern University’s Kellogg Business School, published the results of their study of 17.9 million academic papers on creativity. By examining the sources cited in the papers, they could estimate the creative impact of each paper on others. Their big insight? “Novelty and conventionality are not opposing factors in the production of science; rather, papers with an injection of novelty into an otherwise exceptionally familiar mass of prior work are unusually likely to have high impact.” Going back to Uber, the taxi app has gained a lot of credit for being a revolutionary concept
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C O L L A B O R AT I O N C L A S S I F I E D AG REED
You need to sell more of X, and so do I
S Y N C H RON I ZE D
Different but mutually supported priorities
You need to sell more of X, and I need to sell more of Y, and we can both sell more if we help each other
H I ER A RC H I C AL
Widely divergent team priorities, but agreed at higher-level
You need to sell more of X, and I need to sell more of Y, and we are basically competing with each other, but the organization has decided to prioritize sales of X
– and it is. But if you look at its component parts, it’s really the combination of several wellknown functionalities used to tackle a wellknown problem. The same is true of virtually any high-profile ‘breakthrough’ idea. So what does it take to be an idea broker? According to Charles Duhigg’s book Smarter, Faster, Better, anyone can play this role – though it is easier if you have seen a wide range of challenges and solutions in different settings. And the behaviours you need to adopt are very simple:
Spot bright spots Rather than focusing only on the problems, become a collector of interesting ideas and solutions
Become the broker ct as an intellectual ‘middle-person’ A – having spotted good ideas, it’s important that you move them around. Look for openings rather than hoarding ideas for yourself. Share ideas from different departments, companies and industries
Embrace anxiety n appropriate amount of tension A or anxiety can trigger the impulse to look for the “injection of novelty” your situation needs
Everyday creativity The power of paying attention As long as humans have been recording stories – and thinking about what they record – there has been a sense that there is a very limited range of plots. Consider the Greeks’ duality of tragedy and comedy. Or, for a slightly wider palette, take Christopher Booker’s modern-day idea that there are only seven basic plots that all novels,
movies and plays are built upon – overcoming the monster; rags to riches; the quest; voyage and return; comedy; tragedy; and rebirth. All the stories we find compelling fall into one of a limited number of basic patterns. In the same vein, I recently led a workshop on this topic of everyday innovation with a group of senior executives from a leading aviation company. When I asked them to tell me how many business questions there are – in the spirit of the seven plots concept – there was considerable disagreement on how to categorize them, but strong agreement that there were only between three and five different kinds of problems. If this is true, it means that when leaders really pay attention, they will often see that they have dealt with challenges in the past that can be referenced to solve current – apparently dissimilar – challenges. So what do you pay attention to? The short answer is: everything. Who knows where the right idea will come from? The longer answer is: pay particular attention to the way challenges similar to yours get answered outside of your team, your department, your organization and your industry. Why? Because most of us tend to go back to our old answers, which means most of us will tend to get the same old results. New answers come from new contexts.
Solving everyday problems
There are a lot of everyday problems that can be more than adequately solved using everyday innovation. And the great news is that the behaviours that lead to this kind of innovation also lead to highly satisfying interaction on teams. That is some result: more innovation and a more satisfying working environment. Every single day. — Tom Hughes is a Duke Corporate Education educator. He has worked on Duke CE programmes for over a decade Q3 2017 Dialogue
The three Rs of tomorrow’s talent The pervasive shift from product to service has changed the world. Today, companies are racing each other to capture the imagination of customers by configuring combinations of products that address their specific challenges. Interactivity, connectivity, on-demand content and ongoing relationships – underpinned by technology – are hallmarks of today’s servicedriven economy. Tomorrow’s workers, who have grown up in an ‘always on’ society, have come to expect the same freedom and flexibility in their professional lives that they enjoy in their personal lives. Labour market dynamics, career paths and competition for talent continue to evolve in myriad ways. Increasingly, the mechanisms for attracting, acquiring, retaining, developing and promoting talent must be linked by a compelling narrative that goes beyond mere affiliation with the organization’s brand and its values. So what are the key themes that matter to the workforce of the future? What are the crucial messages that organizations must advance to incoming and outgoing talent? For individuals,
adapting your mindset to reinvent and redefine your role – supported by a refreshing of your skills as technology transforms the talent landscape – will bring success. For organizations, supporting individuals and teams on this journey will go a long way to sustaining and building a resilient talent pipeline. theme 1
REINVENT From robotics and artificial intelligence to genome sequencing and wearable technology, today’s generation of workers can expect to live longer and work in environments where tasks requiring human intervention will constantly evolve. With around 30% of the US and European working population employed as free agents, flexible-working options and remote monitoring are increasingly mainstream. The oil industry for example, is struggling to shed its reputation as an old and dirty industry, especially when compared to its competitors from the renewable energy sector. Shell recently
Organizations must reinvent, redefine and refresh if they are to retain talent for the future, writes Camelia Ram
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open to change. For example, finance and HR professionals are increasingly being called on to be consultants to the business. This means developing skills to identify stakeholders, frame the business challenge, recommend solutions, and make things happen in innovative ways. theme 3
launched an oilfield robot that can carry out safety checks under the control of a human operator sitting hundreds of miles away, replacing some more dangerous and unpleasant frontline work. While such developments go some way to meeting the expectation of a touchscreen working environment, flexibility over one’s career also matters. As workers assume greater responsibility for their careers, employers who support the broader needs of employees to explore varying roles, take career breaks to pursue a personal passion, live in other places, and build other skills will be better placed to retain their talent over time. theme 2
REDEFINE Tomorrow’s workers have come to expect the same freedom and flexibility in their professional lives that they enjoy in their personal lives
There is a trend towards repetitive, rules-based, time-bound work being replaced by automated processes, which can be cheaper and more reliable than human labour. This can lead to a bifurcation in the work that humans do: either low-skilled jobs not amenable to automation – such as handling complex customer queries; or high-skilled jobs – such as partnering to develop new products, systems or processes. Addressing this requires a comprehensive, institutionalized career path that allows professionals to pick up experience across teams. This means creating an environment that encourages employees to be flexible and
Increased connectivity of products and services means employees need to understand how their role connects to delivery today as well as innovation for tomorrow. Examples, such as Boeing’s Starliner space shoe being designed by Reebok, and BMW’s collaboration with Intel on driverless cars, highlight the surprising partnerships that may develop as businesses evolve their propositions. The latest Global Talent Competitiveness Index (GTCI) shows that intense ‘connectedness’ between governments, businesses and schools is a common trait of talent-winning countries and cities, and collaboration is the keyword for their leaders. Moreover, technology means that the education we receive today is unlikely to be relevant over a lifetime. The changing nature of skills, capabilities and behaviours will mean that experiential interventions will help keep pace with evolving technology. Tools that proactively enhance workforce productivity and performance will be increasingly valuable. Academic and professional qualifications will come to be valued most for the foundation they lay for professionals to step into a range of business roles.
In with the new
The familiar pattern of education, a job for life, followed by retirement, is dying. It is being replaced by the concept of age and activity being disconnected, where a fearless approach to changing roles and a focus on balance dominates. This multi-stage life, enabled by technological developments in health, education, retail and telecommunications, poses opportunities and challenges for the nature of work, working patterns, career ambitions and motivations. The need to reinvent, redefine and refresh one’s skills and behaviours over time emphasizes the need for organizations to have clarity on the critical skills for the future, and how they will intertwine to deliver business objectives. Leveraging internal and external data about employees can enable an evolutionary view of the barriers to and enablers of high performance, how career paths are changing, and emerging best practices on adopting different experiences inside or outside an organization. This can provide the basis for a powerful narrative on how an organization sources, retains and develops its talent. Q3 2017 Dialogue
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The differences between high- and low-margin companies are as much social as they are financial. That makes them hard to reconcile
Smoke out your culture Phil Young PhD is an MBA professor and corporate education consultant and instructor
Unless different expectations about working cultures are managed and balanced properly, there could be discontent among the troops
Back in the late 1980s, big tobacco companies realized that the prospects for growth – at least in the US – were relatively limited. People were smoking less, and, for that particular bad habit, the only way seemed to be down. One way of making sure the decline in cigarette sales would not cause the companies’ engines to choke was to diversify into big processed-food makers. Tobacco and food are fast-moving consumer goods (FMCG) businesses, and the thinking ran that tobacco and food companies have similar business models, so the cost and revenue synergies would justify the acquisition prices. The reality was rather different. In the mid 1990s, I recall a meeting with the HR director of training for one of the newly formed tobacco/food conglomerates. “One of our big challenges,” she told me, “is that we have two cultures – a highmargin culture and a low-margin culture.” I never received further explanation. But, nevertheless, her brief and somewhat cryptic remark was the first step on my exploration into the linkage between finance and corporate culture. I was familiar with the concept of corporate culture, because it was a relatively new and fashionable concept at the time. But the use of a financial metric to describe a business organization’s culture was entirely new to me. I assumed tobacco was the ‘high margin’ and food was the ‘low margin’ business. I also assumed that the margin she was talking about was the gross profit margin. But what was the connection between margin and culture? It is obvious that high gross-profit margins permit a business to spend relatively more money on expenses such as sales, marketing, administrative support and R&D than companies with low gross margins. But ‘high-margin’ businesses don’t spend more simply because they can afford to. They do so because that’s the nature of their business model: they make money by spending. Why does a company like Coca-Cola spend so much on marketing? So it can continue to sell its premium-priced, high-
gross-margin products. Companies like Pfizer and Microsoft spend a lot on R&D so they can come up with the next version of their respective high-gross-margin products – patent-protected drugs and software. Meanwhile, low-gross-margin companies like Walmart make money by selling as much as possible while maintaining very tight control over their operating and capital spending. In contrast to high-gross-margin companies, low-gross-margin companies make money by saving. How all this plays out in the daily lives of those who work in the two types of business is interesting – and important. Which group gets to fly business class, have company-subsidized lunches or bigger expense accounts? Those who work in a business with a high-margin culture have very different expectations about salaries, benefits, bonuses, sales commissions, and general working conditions than employees in companies with a low-margin culture. Unless these different expectations are managed and balanced properly, there could easily be discontent among the troops. High-margin-culture employees who are used to more resources may resent tighter budgets. Low-margin-culture employees who are used to fewer resources may resent cash being lavished on their counterparts in the high-margin side of the business. How do leaders deal with this? A simple start would be to explain the differences in the way high- and low-margin businesses make money. This exercise paves the way for a better understanding of the corporate rationale for the allocation of resources across the entire company. Once that has been explained, there is the troublesome question of what to do about it – a question big enough for a column of its own. I never discovered what the HR training director did to help integrate her company’s high- and lowmargin cultures. But we all know that the tobacco-food conglomerates have long since demerged. In business, as in life, clashing cultures can be hard to reconcile. Q3 2017 Dialogue
The way through the woods
Too many clients still conflate funding with investment. Know the difference, and choose your path wisely, writes Karen Holden
Funding and investment are words I hear daily as many of my clients start their enterprising journey. The two terms are used interchangeably. But I define them as very distinct opportunities. Many clients fail to understand the array of options available to them, and the risks and benefits of each. Too often, people dive in, unaware – because of desperation, excitement, naivety or ignorance – that there is more than one path open to them. Because of this, my legal practice seeks to fill a space that the finance sector has created. We can discuss the many options available in the market without conflict or personal gain;
Sadly, those that take the wrong path can very rarely get off it explain the differences; highlight the legal pros and cons; and start them on the right path for them and their business. We say “without conflict” as we do not profit from whichever route they take. Take debt financing, bank loans, bank growth enablers and corporate bonds. These options are very much ‘funding’ for your business, as no equity is passed over – although creditors will want to see a payment vehicle
and a detailed plan. These are in sharp contrast to crowdfunding and angel investment. While equity investment might mean that you are not ‘on the hook’ for a loan or to pay back, you have released a share of your empire, and you may have to accommodate investors’ requirements. There are many opportunities, rates, structures, brokers and platforms. But how do you know where to start? I set up in 2009 with £5,000 and a case of files. I made the common mistake that many starting out on their own do – I extended too much credit to clients, failed to find the right accountants at the outset, and lacked the requisite understanding of my cash flow. But seven years later I am a far better solicitor, since I can understand and offer practical and legal advice in relation to starting up, surviving and developing a business. I use my mistakes and the strengths I discovered to help my clients avoid their own bumps in the road. As a result of my experiences, I identified gaps in the legal and financial sectors. This discovery has enabled my company to advise clients on various alternative routes. And we ourselves have sought to develop these avenues further, for example:
Creating corporate bonds anywhere from £5-20 million, which permit companies to raise funding from retail, overseas and
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sophisticated investors paying an agreed market rate interest set by the company. There are no personal guarantees or investor requirements to meet, no equity given away and companies remain in complete control of their business. However, they must have collateral and structures in place.
We frequently examine the banks’ growth enabler programmes, work with them on their ability to borrow on intangible assets, place clients on mentoring programmes, and of course clients can go for straightforward market rates loans. Understanding and knowledge of banks’ criteria and outlook is invaluable guidance for clients who want to go down the route of debt funding.
Knowing the pluses and minuses of crowdfunding and angel investment. These are often at the forefront of most clients’ ambitions. The TV show Dragons’ Den, in which would-be inventors pitch for business to a panel of limelight – and equity – hungry celebrities has a lot to answer for. It often sends people on a pitching frenzy, willing to give up inordinate amounts of equity for relatively modest investments. Such pitches remain a perfect route for some clients, but for others the terms are just too prohibitive for their business to truly grow. So we try to prepare them for this route, if that’s the way they want to go, fully armed with all the information necessary to protect themselves.
— Karen Holden is founder of A City Law Firm, which won Most Innovative Law Firm of the Year London 2016, and is listed in the Legal 500
For many, the investment and funding landscape is a minefield. When clients look at the vast array of options available to them and try to understand each one, they often fall back on simpler, more common mechanisms regardless of whether that option is best for them. Sadly, those that take the wrong path can very rarely get off it. Anyone starting up or expanding a growing business needs to be prepared to take the next leap by going in fully armed with all the information and options available to them. Find someone independent and free from conflict to offer this advice, because you may end up on a path which is not suitable for you. Good lawyers help clients understand the different options out there, let them make an informed choice, introduce them to the people in the market that can move them forward, and are always there to protect and support them. They advise on the initial terms, the paperwork, the risks, the options and structures. Their clients’ success is their success!
Q3 2017 Dialogue
Not just a figurehead What’s the secret to leading the finance function of a large public company?
Sally Percy illustration
Setting aside the seven-figure salary, who would want to be a chief financial officer (CFO) of a major public company? You’re expected to be on call 24/7, have all the company’s numbers constantly at your fingertips, understand how to calm the nerves of even the edgiest analysts and investors, and be ready to jump on to an aeroplane at a moment’s notice to resolve a calamity on the other side of the world. As for your family life... what exactly is that again? All this hassle, and the average tenure of a CFO in the Fortune 500 is 5.9 years, according to executive search firm Spencer Stuart. You wouldn’t blame an outsider for finding the prospect of being a public company CFO rather unappealing. Yet the CFOs that I interviewed for my book, Reach the Top in Finance: The Ambitious Accountant’s Guide to Career Success, love what they do. And it is this passion for their work that makes up for the long hours, stress and career uncertainty associated with the job. They like the fact that they get to kick around strategy ideas with the chief executive, commit large sums of money to potentially game-changing projects, and talk to influential people. “It’s a very exciting job where you can make an impact on people’s lives,” says Bank of America’s chief financial officer, Paul Donofrio.
If you are going to effect any change, it’s got to be evident to people early on that change is going to occur
Alongside all the other responsibilities that come with being CFO, the role is clearly a major leadership and management job. Donofrio, for example, presides over a finance function that numbers more than 4,000 people worldwide. And the finance functions of most large companies extend into the hundreds. Since finance is critical to the smooth running of every major business, a CFO must be able to attract good people to work for them, lead and inspire those people, and manage them in a way that gets the best out of them. They also need to be a coach, mentor and sponsor, and be committed to developing the next generation of finance talent. So what makes someone a great leader of the finance function?
They plan ahead
A good CFO doesn’t begin a new job on the first day in the office. Instead, they will have effectively begun the job several weeks beforehand. They will have put together a plan for how they want their first 90 days to unfold, and thought about how they are going to engage with the people reporting to them, including those working in functions outside finance. “If you’re going to effect any change, it’s got to be evident to people early on that change is going to occur,” says David Tilston, who worked as interim CFO at drug manufacturer Consort Medical. “You can’t leave it for six or nine months and then say: ‘I’m going to change what you’re doing.’ People need to see small changes happening in the first month or two. Otherwise they settle back into their comfort zones and either you won’t get change or it will be more difficult to get change.”
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He particularly emphasizes the importance of the CFO properly getting to know every function that reports to them. “You need to spend enough time with them to understand their issues and challenges, and strengths and weaknesses, as well as those of the finance function. You also need them to educate you on important issues within their area – for example, cybersecurity in the case of IT.”
They set the right tone
‘The fish rots from the head’ is how the ancient proverb goes. And this is as true when it comes to leading the finance function as it is in any other aspect of business – or life. If a CFO wants their team to follow the highest professional and ethical standards, they need to make sure that they are following those standards themselves. They also need to be aware that their people will be paying very close attention to what they do. “You set the tone, and if your tone is wrong then the tone will be wrong all the way down – unless you are lucky enough to have a very good person in-between,” says Geraldine Matchett, CFO of Dutch nutrition giant Royal DSM. “Not having a hierarchical mindset myself, it took me a long time to realize the extent to which people watch what you are doing, what you spend time on, and therefore what seems to be important to you. As the CFO, your behaviour sets the tone for the whole function, as well as its values – whether you like it or not.” Matchett also points out that the culture of a finance function will be heavily influenced by the CFO’s vision. “Your vision may be a
finance function that is extremely efficient,” she says. “So you will be focused on areas such as automation, processes and shared services. If that is the tone that you set at the very top, then people will know that improvements are going to be made in those areas. “Alternatively, you may have a very efficient finance function, but one that is disconnected from the company. So, here, your tone should reflect the need for the finance function to learn about the organization, and to know what their purpose is. The function may be able to process an invoice in a split second, but is that truly enough if their purpose is to make the organization successful?” Matchett believes that, when it comes to setting the tone at the top, a finance leader needs to recognize the needs of their people. Only by doing this will they get the buy-in they need to achieve the objectives. “When people realize that you are interested in developing them, they are much more excited about making the function really effective,” she says. “They realize that it’s about balancing the two.”
They build a great team
No CFO ends up with a great team by accident. Instead they will have deliberately built a strong team by hiring and developing finance professionals with specialist expertise – people who are far better at doing their jobs than the CFO in question would ever be. “You need a very disciplined hiring process,” says Tilston. “Motivating and retaining people is all about continuous development and improvement, and moving people into different
Dialogue Q3 2017
roles to help them broaden their careers so that they see you are interested in them.” He warns that it is a particularly bad idea to find a good person, place them in a role and then forget about them. “In my team I want to have motivated people who are developing and could go on to other roles, even if there is a risk of losing them,” he says. “If they get poached, I would rather they went to the next company and we parted on good terms and they appreciated being helped along in their careers. But if they are motivated, being challenged and getting access to new opportunities internally, then hopefully you will hang on to them anyway.” Jack McGinnis, CFO of US recruiter ManpowerGroup, believes that a CFO should be approachable if they want to get the best from their team. “I like spending time with my teams, leading them and making sure I understand how they do their jobs and that they have the support they need,” he says. “Finance departments are big departments in multinational companies.
To get things done well and efficiently, we have to draw on each other So when people know that the CFO gets it, understands what their job is and what needs to happen in the finance function, that can really strengthen the level of teamwork.” Donofrio, meanwhile, is a great believer in collective responsibility. He wants the people who report in to him to have shared ownership of all the issues that affect Bank of America’s finance function. “So it’s not, ‘Oh no, we have an issue in treasury, that’s so-and-so’s issue,’” he says. “Actually, the issue in treasury is everybody’s issue. We all own it together and we all have to help fix it. To get things done well and efficiently, we have to draw on each other.”
They step back from the detail
One of the main reasons why CFOs can become unstuck as leaders is that they start interfering with the activities of the people who don’t report to them directly but who report in to line managers lower down the chain of command. Problems can also arise if they allow themselves to get too bogged down in the detail. “They are so busy trying to manage everyone, that they don’t get the chance to lead,” says Karen Young, a director with UK-based recruiter Hays Senior Finance. “Also, their leadership will be weakened if they tolerate bad behaviour and poor performance.” So a CFO who wants to be recognized as a great manager and leader of the finance function
must show that they have confidence in the abilities of their team and be willing to let them get on with the job at hand. “I’ve got technical experts in financial reporting, tax and treasury,” says Scott Longhurst, group finance director of UK utility company Anglian Water. “I trust those people and I give them the autonomy to do what they need to do. Then I just dip in and out to keep on top of what’s happening.”
They set others up to succeed
Given the comparatively short tenures of many CFOs, and investors’ increasing interest in the sustainability of business models, it’s not surprising that succession is a perennial preoccupation for the leaders of finance functions. Hence a good CFO will continually have their eye out for potential successors and be committed to mentoring them. For example, Ian Kenyon, CFO of the UK’s largest fundraising charity, Cancer Research UK, makes a point of giving his team access to the right people. “I take members of my team with me to a meeting so that they can get to hear about something first-hand rather than through me,” he says. “When I have meetings with my trustees, very often I’ll have some of my team with me. It helps them to understand where the questions come from.” “I think about my direct reports in terms of succession,” says Julie Brown, chief operating and financial officer of UK luxury fashion house Burberry. “It’s one of the best ways of continuing the growth of the company. I’m constantly thinking about potential successors and the skillsets they need to be the successor. In the majority of the previous roles I’ve done, I’ve been replaced with an internal successor, which I think shows it works.”
The human touch
Much is being written at present about the impact that developing technologies such as artificial intelligence and blockchain will have on the finance function. But, while they will change the way in which the function operates and organizes itself, they will not change the fact that leadership of the finance function is fundamentally a very human task. A robot might be able to be on-call 24/7 and have all the company’s numbers constantly at its digital fingertips, but could it calm investors and head off a calamity on the other side of the world? Ultimately, there’s a good reason why there are so many zeroes in the salaries of the world’s leading CFOs. — Sally Percy is author of Reach the Top in Finance: The Ambitious Accountant’s Guide to Career Success, published by Bloomsbury Q3 2017 Dialogue
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It’s time to be unreasonable
The three degrees of deviancy Giles Lury is director of strategic brand consultancy The Value Engineers. He is author of numerous marketing books – the latest of which is How Coca-Cola Took Over the World: And 100 More Amazing Stories About the World’s Greatest Brands
It encourages you to consider changes to If you do the same thing over and over, you and adaptations of your normal practices. often improve it. It might, according to Be a little more extreme and you are looking Malcolm Gladwell, take you 10,000 hours for an idea that disrupts what you do; it or so. But the repetition should mean challenges the very game you are playing. At you get better at doing that same thing its most extreme, being deviant encourages eventually. The emphasis though is on you to dream the fantastic, the wild; to wish ‘same’. You won’t necessarily do anything for things that won’t happen until someone new or different. Marketing and brands are different. They like you decides to make them happen. What game do you want to play and thrive on differentiation and distinctiveness, by whose rules? Once you’ve decided how rather than just mimicking the work of deviant you want to be, you can work the company down the road. Disruption out what game you should be playing. If is the new norm. The digital revolution you aren’t being deviant, you are playing has sounded the death knell for numerous the current game by the current rules – brands. Media has grown exponentially. probably aiming to do so better than anyone Customers and critics are creating content else. It’s the conventional strategy. This quicker than companies can. doesn’t mean you can’t be excellent; it’s the In this transparent new age, where desire to be the All Blacks in rugby union. everyone can know so much and post ‘Diversion’ suggests on it immediately, you are playing the mighty untouchables same fundamental are suddenly toppled or The unreasonable game while selectively tripping themselves up. man adapts changing some of the United Airlines and Nivea surrounding conditions to rules – hopefully to your are the latest in the himself. Progress depends advantage. It is rugby firing line. league rather than rugby Consumers aren’t just on the unreasonable man union. ‘Disruption’ media literate. They are suggests you want to marketing literate too: play a new game, while selectively retaining “Excuse me, your strategy is showing, so a few rules from the original. It is no longer don’t expect me to fall for that!” Meantime, rugby – but there some similarities: it might there is a stream of unexpected new entries into old markets. Who would have predicted be American football. ‘Dreaming’ is a whole that Amazon would be in fresh foods, or that new game with a whole new set of rules. The processes and means of brands Apple would want to be a key player in the achieving these levels of deviancy will health and wellness market? vary for each form. Milder deviations will In a world of change, we need more probably remain more customer-led; rooted changemakers. As George Bernard Shaw in identifying what people are asking for; said: “The reasonable man adapts himself the changes they can articulate. At the other to the conditions that surround him. The end of the spectrum, the dreaming will unreasonable man adapts surrounding need to access the dreamers; the extremists; conditions to himself. Progress therefore the leading edge and more; drawing from depends upon the unreasonable man.” more unusual and less predictable sources It is the time to be unreasonable. It is such as intuition, creativity, science fiction a time for deviants. The question is how and beyond – the crazies. It may also start deviant do you want to be? Deviancy isn’t with technology, however contradictory like pregnancy. It’s not something you that may sound to some. either are or aren’t. There are three degrees So diverter, disruptor or dreamer, which of deviancy: diversion, disruption and one do you want to be? Because doing dreaming. At its mildest, deviancy diverts nothing is not an option. you and your brand from your normal path. Q3 2017 Dialogue
Gorillas in the mist Standout ‘gorilla’ ad campaigns are an endangered species. Here’s what clients must do to increase their numbers, writes David Meikle
Great ad campaigns are remarkably rare. Despite the best efforts of marketers and the vast talent in agencies across the great creative cities of the world, excellence remains elusive. So much so that when you do encounter one, it’s arresting. I call these kinds of ads ‘gorillas’. They have strength, stopping power, and they’re compelling to watch – in fact you can’t take your eyes off them. They’re usually unconventional – in content, format and style – but they have the confidence to carry that unconventionality off. So why is there still so much that leaves us flat and uninspired? Some of the answer comes from expectations. Many leading brands still essentially believe that great campaigns arise from a confection of luck and serendipity. Of course, their marketers do everything in their power to develop them: they hire the best agency they can get, they push for a better product or service proposition, they lobby for bigger budgets. But – unless all the stars align – they may nevertheless have to settle for something that’s just okay. That mediocrity is, to some degree, tolerated. Here’s the news: you can improve those odds. There are two things that make for the creation of an inspiring idea. Let’s call them ‘nature’ and ‘nurture’. Nature includes the product, the brand, the insight, the strategy, the brief, the proposition. But even if you give your agency a great brief, although it will radically improve your chances of getting great work from it compared to a poor brief, it doesn’t by any means guarantee it. Nurture on the other hand, can be described as the way clients pay their agencies, how much they pay them, the clients’ processes, their behaviours and ability to buy breakthrough ideas. But again, while the right nurturing environment is no guarantee of greatness on its own, it, too, will radically improve a brand’s chances of getting something transformational from their agency. When combined in the right proportions, good nature and the right kind of nurture make the most powerful combination, which is most likely to produce the outstanding work brands want. Yet, in most cases, a disproportionate
amount of time and effort is expended on nature alone – and the nurture is often overlooked, taken for granted or – at best – based on a generic idea of ‘best practice’, rather than being aligned with the specific needs of the brand. This imbalance between nature and nurture is akin to a farmer investing in the highest yielding seed but ignoring the quality of his soil. While there are many facets of nurture we could examine, let’s look at a key one. That is the level of control a client commands over their agency. Control is the degree to which a client company imposes its will on the agency – everything from the strategy, to its use of advertising research, to choosing photographers or directors, to time constraints or even the classic demand to “make our logo bigger”. There is both a point of critical mass and one of diminishing returns on the continuum of how much control is imposed on an agency (see graphic p63). Too little, and the agency is out of
Investing in nature but not nurture is akin to a farmer buying the highest yielding seed but ignoring the quality of his soil control – neither client nor agency know what the agency is doing and the whole thing is chaos. But apply too much, and the value the marketer seeks to elicit is diminished and its return on investment is consequently reduced. Consider the relationship between a doctor and three patients. Patient One doesn’t tell their doctor everything that’s wrong, perhaps to spare their blushes, and ignores the medic’s advice on their diet, drinking and lifestyle – we are all set for a bad outcome with control below critical mass. At the other extreme, Patient Two self-diagnoses, goes to the doctor and tells them what’s wrong, demands prescriptions of their choosing and selfmedicates – the higher risk and diminished return of too much control. Somewhere in the middle is Patient Three, who goes to the doctor, tells them everything, even stuff they think the doctor may
Dialogue Q3 2017
THE CONTROL CONTINUUM Consider the relationship between a doctor and three patients. Patient One doesn’t tell their doctor everything that’s wrong, perhaps to spare their blushes, and ignores the medic’s advice on their diet, drinking and lifestyle. We are all set for a bad outcome with control below critical mass. At the other extreme, Patient Two self-diagnoses, goes to the doctor and tells them what’s wrong, demands prescription of their choosing and selfmedicates – the higher risk and diminished return of too much control. Somewhere in the middle, Patient Three goes to the doctor and tells them everything, even stuﬀ they think the doctor may not need to know. Patient Three listens keenly to the doctor’s advice and follows it as well as they can. Just right.
not need to know. Patient Three listens keenly to the doctor’s advice and follows it as well as they can. Just right. It is of course obvious which patients are at greatest risk and which are most likely to be the healthiest. But we can also ask which patient can hold their doctor to any level of accountability for their outcome. Some readers will argue that a client-agency relationship isn’t the same as that between doctor and patient, because it’s commercial not medical. Well, we could consider a private physician instead. When we remember the fates of Michael Jackson, Elvis Presley and Don Simpson it generally strengthens my argument. Most importantly, as David Ogilvy succinctly put it, if a client has a dog and barks themself, the outcome – the value – is limited by their own ability. The point of hiring an agency is to elicit value greater than a client’s own ability. The world’s strongest brands have understood this and have been buying campaigns and building their brands that way for decades. They generally have happy, productive and longstanding client-agency relationships. Consequently, their brands are resilient to
newcomers to their markets, they innovate and inspire their existing customers, and they can continue to attract new ones. Brands that don’t pay attention to nurture tend to plot more erratic paths of sales with less predictable peaks and troughs. They’re more vulnerable to newcomers and other market leaders whose advertising might be more consistently good. But to stabilize their sales peaks they need to embrace gorilla brand thinking and develop their nurturing skills. Sadly, it’s rarely possible to turn a brand into a gorilla brand overnight. Relationships take time to change. Many clients are with the right agency, but have not yet worked out how best to run their relationship with them. So what should they do? The answer is: change something. A good starting point is control – many clients command too much (although a few command too little). Letting go is hard, but it is often the way to grow, so address the matter immediately. There’s an old Chinese proverb that goes something like this: “The best time to plant a tree was 20 years ago. The second-best time is now.” — David Meikle is author of How to Buy a Gorilla, LID Publishing
Q3 2017 Dialogue
Generation share Benita Matofska met the people powering the sharing economy
Rooms, rides, raincoats – everything these days, it seems, can be shared. There’s even a platform for sharing Rottweilers. The sharing economy is the biggest societal shift since the Industrial Revolution. Yet, despite the media focus on the sharing economy, there’s still confusion around what the term means. Importantly, it’s an umbrella term, a whole “socioeconomic system built around the sharing of human and physical resources”, as I wrote in 2012. It’s a hybrid economy that acknowledges diﬀerent forms of value exchange – social, economic, environmental; and diﬀerent types of sharing – swapping, renting, borrowing, collaborating and accessing shared resources. The global sharing economy was valued at $15 billion by PwC in 2014, forecasting that it would reach $335
billion by 2025, a 20-fold increase in just over a decade. But what happened next defied all expectations. When PwC revisited its research last year to examine the situation in the UK and Europe, it discovered that the sector
Generation Share is a mindset, rather than an age demographic; it’s an approach to life, work and being was on course to outrun even its bullish 2014 prediction. The sharing economy is not to be ignored. There are more than 10,000 sharing platforms, apps and businesses worldwide. But with a third of the global adult population choosing to access the economy rather than buy their own goods, what interests me
is the human dimension. I set out on a mission to discover and meet the people behind the sharing. In the beginning, the citizens creating and driving the sharing economy were Millennials, who sought experiences, adventure, and had a desire to belong. I gave them the moniker ‘Generation Share’: a global peer group, connected via technology, united by the desire to share resources – and driven by possibility. Research showed that of the world’s 2.68 billion Millennials, 73% saw the sharing economy as important to them, preferring to access rather than own goods. In the early days, most sharers had a degree, or other qualifications, and were high earners. The sharing economy, it seemed, was a young thing, an educated thing and, most certainly, a middle-class thing.
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Fast forward to 2017, and Generation Share has sucked in many more than its early hip Millennial adopters. Now, over 28% of the global adult population is participating. Some 25% of sharing economy service providers are over 55. Participation rates of over-55s on some sharing sites has boomed – adults aged 55-64 choosing renting, sharing and swapping over ownership has increased 80% in the last 12 years. Millennials may still form the largest group of sharers, but the sharing economy has spread well beyond its earlier demographics.
The human economy
In November 2016, I set out to meet and document these very people for a photography book and media project called ‘Generation Share’. My creative partner is portrait photographer Sophie Sheinwald. Our recent, successful Kickstarter campaign to raise funds for the European leg of Generation Share demonstrated the passion and support for a new, human economy that puts people and planet at its heart. What we’ve learned so far is that Generation Share goes beyond age, economics and geography. Rent, borrow, swap, exchange, collaborate – these are the activities that epitomize this generation. Generation Share is a mindset, rather than an age demographic; it’s an approach to life, work and being. For the growing numbers who are participating, it’s about a meaningful, authentic and smart way of living. We can access, be and do the things we need. We are defined by what we share. We are what we share. As sharers are by definition both producers and consumers, a term – prosumer – has been coined to define them. These social, conscious, discerning ‘prosumers’ and microentrepreneurs (micropreneurs) make decisions on more than just price and economic value. Social value is a key driver, with community, meaning and experience responsible for the participation rates and ultra-highspeed growth of the sector. Generation Share does not rely on large corporations for their products and services; they connect with peers to co-create, swap, borrow, rent, collaborate and trade. The generation is more DIP (do–it-with-peers) than
THE RESOURCEFUL NETWORK
THE LISBON UPCYCLER
To say that 35-year-old GreekAmerican Mary Valiakas is up for a challenge is an understatement. She’s started a movement called Oi Polloi, inspired by the Greek spirit of resourcefulness. The idea behind it, is that change doesn’t need to come from the top. We, the people, can create change for ourselves, using technology like blockchain, as well as philosophy and imagination. She’s making waves achieving this by connecting and promoting like-minded thinkers and projects in Greece that empower people by accessing and sharing much needed resources.
Our first Generation Share adventure took us to Portugal and the home of Candida Rato, a 37-year-old whose job description doesn’t exist, and for whom the sharing economy forms the fabric of her everyday life. Sharing is in Rato’s DNA, and every item in her Lisbon apartment has been shared, salvaged, upcycled or borrowed. Wire coat hangers fastened to the walls make a beautiful magazine rack. A giveand-get box by the door is for anything you don’t need that you’d like to share and, of course, if there’s anything you do need, you might be able to find it in the box.
KIBBUTZ IN THE CITY In Israel, we met 58-year-old Tamar Ben Shalom, who in 1989 decided to set up an ‘urban kibbutz’. Her vision was to bring nature and the sharing principles of the kibbutz to the city. In a drug-ridden, polluted neighbourhood of Jerusalem, she set out on a seemingly impossible mission to “bring the birds back”. Incredibly, she succeeded and now runs an urban school where kids learn cooperation, acceptance and how to garden. By teaching children to grow plants together, Ben Shalom believes they learn to see each other as human beings, as well as to care for the environment in which they live.
DIY, and with around $4 billion worth of idle resources in the world to access and share, who can blame them? Why own things when you can share them? Generation Share understands the importance of trust, and knows it is possible and necessary to safely trust
strangers in order to share with the crowd. When we do, we open up a world of adventure and possibility. — Benita Matofska’s book Generation Share is due to be published in 2018. 4-11 June is Global Sharing Week www.globalsharingweek.org Q3 2017 Dialogue
THE MAN WHO IS ROCKING
HOLLYWOOD, FOOTBALL AND BUSINESS…
The new paperback edition of the success secrets behind asia’s richest man.
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The question of poor British economic productivity is finally coming into focus
Managers key to productivity puzzle Patrick Woodman is head of external affairs at the Chartered Management Institute
The quality of management has been pinpointed by OECD analysis as one of the biggest factors holding back productivity
Productivity has long been of interest to wonkish policymakers. Until recently, though, it has remained under the radar of most managers. Times are changing. Successive chancellors here in the UK have spoken more loudly about the challenge. Highly regarded John Lewis supremo Charlie Mayfield is establishing a new publicly funded body to focus on employer action. There’s growing recognition of the cost of low productivity, and the potential prizes for improving it. Those problems have not evolved overnight. Before the great financial crash, UK productivity was doing ‘okay’ – growing with the economy in the early 2000s, not as quickly as might be hoped, but at passable rates. In the wake of the crash, the focus was on the short term: on economic survival, and recovery. But as that recovery has proved to be slow and relatively weak, the debate has shifted back to productivity. The data brings home the scale of the challenge. UK productivity lags some 18% behind the G7 average, with a gap of over 30% to both Germany and the US. Official data in April 2017 revealed a welcome uptick in productivity growth, yet rates remain below the 1994-2007 average. One of the most important, but least discussed, aspects of this so-called productivity puzzle is the question of people: the skills they bring to work, and how they are applied. Looked at this way, managers and leaders are one of the most pivotal groups for any organization’s productivity. Yet they are the occupational group least likely to get training. Only one in five is qualified in management (even if they have other specialist or technical training). Those same people are taking major decisions that shape their organizations’ performance. Decisions that affect their team’s skills and opportunities to learn, their enthusiasm, dedication and loyalty. The macroeconomic evidence doesn’t look great for managers. In fact, the quality of management and leadership has been pinpointed by OECD analysis as one of the
biggest factors holding back productivity growth. Investors in People has calculated that poor management costs UK employers £84 billion annually. Leaders have to ask: do our people have the skills for us to grow in the next five to ten years? What action is needed to make sure they do? For many this is an area of significant challenges. Nine in ten employers participating in the CMI/XpertHR National Management Salary survey in 2016 reported difficulties in recruiting the right people, up over ten points since 2014, with skills shortages cited as the main reason. And there’s substantial concern about the impact of Brexit on the availability of skills, as Theresa May’s intention to end free movement becomes clear. Nearly seven in ten managers (67%) surveyed by CMI said they are pessimistic about their employers’ ability to attract EU workers in the future, and 44% say uncertainty of the future status of current employees who are EU nationals will affect their organization. One of the biggest pieces in solving the UK productivity puzzle could prove to be the Apprenticeship Levy that launched this spring. Wrongly dismissed by some critics as another employer tax, it is better seen as a skills investment fund, and one that could have radical effects on employer training and development activity. Policy has created an employer-led, rather than provider-led, system, with a focus on professional-level skills in much-needed areas like computing, engineering, management and leadership. Already, numerous employers across diverse sectors – including Serco, Nestlé, Civil Service Learning, Pizza Hut, KFC, Barclays, Boots, and a host of SMEs – are running trailblazing management apprenticeship programmes. They recognize the long-term value to their businesses of having employees equipped to manage and lead in the future. Investment to bring on the next generation of home-grown managers through higher-level apprenticeships will be more than repaid by the productivity gains they deliver. Q3 2017 Dialogue
The future of work is today. Are you re Ignore the pessimists. The future is brighter than the past, write Linda Sharkey and Morag Barrett Look out! In workplaces across the globe, conventional wisdom is being thrown out of the window. Everything around us seems to be in flux – from how we conduct ourselves, to how we manage others. In our work with business leaders and teams around the world, we see too many companies missing out. They are still operating according to 20th-century mindsets, practices and technologies. We also see the careers of too many gifted individuals needlessly stalled, and ended, because of ignorance or fearful resistance. Yet it doesn’t have to be this way. The drivers of change in the workplace are hiding in plain sight. Six factors of change are emerging in the management landscape:
Leadership We are all leaders now
The drivers of change in the workplace are hiding in plain sight
More has been written about leadership than probably any other business topic. Still, for some reason, we often get it wrong. We’ve seen management in the financial sector ignore technology, choosing to resist computerization with the excuse of not wanting to disrupt their employees. As a result, entire departments, and companies, were wiped out. In the end, company success boils down to leaders: what they value and how they behave. And as a manager, you are a leader. In the previous century, leadership referred to the C-suite. But business leadership exists in every department, and inside every person. The 21st century demands a shift in leadership to be one of engagement, collaboration and adaptability. These are also the hallmarks of organizations that can innovate. Leadership is the critical factor to futureproof your company and career. Without a shift in our leadership mindset and our leadership behaviour, none of the following factors will be future-proofed.
Culture Values become foundations
In the late 20th century, the notion of ‘corporate culture’ was beginning to get some traction. Leaders realized they could have the best strategy on earth, but if the organizational culture failed to embrace the strategy, it was going nowhere. We interviewed leaders many years ago about trust, respect and other factors that affect culture. Very few got it. When there was a deeper understanding of company culture, it focused around uniformity, respectability and conformity. In the 21st century, most organizations understand that culture and values have everything to do with profitability. As Peter Drucker put it: “Culture eats strategy for lunch.” Leaders now realize that values are the underpinnings of their culture. If they want a culture that truly empowers people, they must behave consistently within those values. Culture, and living the values in daily behaviours, is essential for growth, adaptability and innovation.
Purpose Collaboration kicks in
The organizing principles of ‘mission, vision and strategy’ sometimes had ‘values’ tacked on to the framework. But in the 20th century, almost every medium to large organization had to have a mission and vision. You’d read the same verbiage on the walls: “We are collaborative” declared the posters written by the chief executive, without input from employees. Everyone knew the real focus was profit and shareholder value. Today, a compelling and impactful purpose, around which teams can get excited, is key. People need, and always have needed, an emotional connection to what they do. People want to contribute to the greater good and take pride in what they do, whether they are keeping an airport bathroom clean, or figuring out how to provide clean water for everyone on the planet.
Dialogue Q3 2017
u ready? 4
Relationships Emotions matter
Historically, many organizations played down the role of personal relationships at work. Work was a place where you did your job and got paid in return. Relationships and social connections happened outside the office. Now a greater understanding of the role of relationships, not only at work but in business in general, is coming to light. Google began an interesting study in 2012 to examine its highperforming teams and determine exactly what made them great. As it turned out, results had nothing to do with the order that was put in place to keep teams on track, and everything to do with the emotional connection between team members. This emotional connection made all the difference to what appeared, in some cases, to be a very messy team process.
Diversity Bias is recognized
Let’s be frank. Diversity has been the focus of many organizations in the later part of the 20th century, largely because of government mandates and laws – not necessarily because we value differences. Meeting quotas seemed to be the prevailing approach of many companies at that time, and still is now. Companies have indeed met the quotas, but diversity is always at the lower levels of the organization – and seems to remain there. With all the policies, programmes and quotas put in place over the years, the diversity barometer has changed only modestly. The proportion of women chief executives has increased by just 17% since the late 20th century. The figure for minorities is similar. We have to understand the root reasons why the needle has not moved substantially. Based on my research and experience, the root cause is unconscious bias. And by the way, we all have bias, even the most forward-thinking managers. The brain is wired to take mental shortcuts and react quickly to the 11,000 cues we receive per minute. Our mind and emotions react before we’re even aware of it.
Is it any wonder organizational change is so challenging? In order to create a truly inclusive environment with a level playing field for all, we need to understand the role of unconscious bias, and the role the brain plays in our ability to connect with people who are different from us.
Technology Digital goes mainstream
In the 20th century, computing technology was in its infancy. It was used to speed communication, make information more readily accessible, and improve work processes. Efficiency was the primary goal, and sometimes the only goal. The 20th century breakthrough in technology was largely missed: the ability to communicate, collaborate and enjoy our work. But it’s not too late. The 21st-century breakthrough in IT is about discovering patterns that were previously invisible. For example, predicting certain outcomes, particularly in medicine, will forever change healthcare. In the 20th century, technology was relegated to the chief technical officer and the IT department. Today, we’re all technology officers. And, as a manager, technology must be a crucial component of your approach – leveraging every tool to enhance communication and collaboration.
Results had nothing to do with the order that was put in place to keep teams on track, and everything to do with the emotional connection between team members
Distribute the future “The future is already here – it’s just not evenly distributed.” William Gibson, The Economist
Your job as a manager is to distribute the future. These times, if embraced with human purpose, can make a difference in your workplace and create a profitable company where everyone matters. The future isn’t for the chosen few, but for those who care enough to help others transform their lives. — Linda Sharkey, leadership development expert, is global managing director of Achieveblue. Morag Barrett is chief executive of SkyeTeam
Q3 2017 Dialogue
Executives on the brink Unsupportive cultures and haphazard HR strategies are leading to unmanageable professional stress, finds Ben Laker
In high-flying finance jobs, depression is an epidemic. This was the terrifying conclusion from my latest study The Salesperson’s Secret Code, which suggests more than one-in-five employees face stress, depression or anxiety. Why is this the case? After interviewing 1,000 of the world’s most influential salespeople from major global organizations, I began to understand. One person interviewed was vice president of a very prestigious firm who led the UK field sales executives in his area of work. He was a highly successful operator, and yet on Boxing Day 2015, he decided to end his life. This is his story… I have worked in financial sales for the past 20 years. This time last year I was suffering with a horrible illness called depression. The World Health
Organization believes that mental health problems affect one-in-four people in their lifetime, which is quite staggering considering how little the subject is discussed at work. Recent increased media coverage of anxiety, depression and suicide in men has given me the courage to share my story, because I hope my words can help someone avoid my dark, lonely and frightening experience. Twelve months ago I knew something was very wrong, as I felt like my head was being crushed. I
My plan that morning involved visiting some open water with a very heavy rucksack attached to me
was struggling to sleep, and I was no longer looking forward to anything. My experience of the anxiety at the start of my illness was feeling everything but my senses was amplified, then the depression was when those feelings were replaced by a new sense of loss. I felt desperate and alone. This had been gradually getting worse over a period of six months. But, due to the stigma associated with poor mental health at my firm and in the sales industry, trying to tell someone how I felt was incredibly difficult. I was scared because anxiety and depression are simply never discussed. I thought: “It must just be me feeling like this, so keep quiet or you’ll look very weak.” I told one or two of my closest colleagues that I didn’t feel great, but I just didn’t feel I could share the full truth – I was embarrassed. I was also determined I would simply get over
Dialogue Q3 2017
it, just as I had done with many other things in my life. I did reach out to HR at one point at the end of summer 2015, but, after delays in setting up a meeting, I decided to cancel. I also attempted to speak to my managing director, who was my acting line manager at the time. But, again, trying to set up this meeting was tortuous. I eventually cancelled it because I felt that work wasn’t the right place to hang out my dirty washing. What is odd, on reflection, is that during the months leading up to my ultimate low point, I pushed harder and harder at work to get results – it was my way of ‘pushing through’, hoping the feelings would pass like a bad cold. But they didn’t. A few months later, I did have a meeting with my acting line manager – on my last day at work before the Christmas break. It was my annual appraisal. It didn’t go well. I felt sick even thinking about the meeting beforehand because I was, by then, very tired, anxious and desperate to tell someone I needed help. But I didn’t feel that this meeting was the place for such a display of ‘weakness’. Four days later, on Boxing Day, at my lowest point, my fuse eventually went ‘bang’. I decided I was going to take my own life because I had calculated that I was no longer valuable to society, and I couldn’t take the pain anymore. My plan that morning involved visiting some open water with a very heavy rucksack attached to me. For whatever reason, I wasn’t meant to leave the world that day. But it was a hugely traumatic event for my wife and me, which completely changed our outlook on life forever. I received professional medical treatment during the Christmas and New Year break, which steadied the ship – but I still went back to work as scheduled a week later, which now sounds crazy! When I returned to work in the New Year, I told one of my closest colleagues that Christmas was “difficult” and I didn’t feel great. But, again, the culture didn’t allow ‘weakness’, so I kept silent and now my secret was even darker than before. With the support of my wife, one close friend, medical help and huge determination, I slowly started to feel an improvement in my mood over the coming months, but I did have big blips
T H E M E N TA L H E A LT H S T I G M A A lack of communication and trust between managers and employees is compromising professionals’ mental health:
Proportion of personal objectives meetings that are sporadic and with neither a clear plan nor agenda
Proportion of managers that ask for feedback on their performance less than once a year
of anxiety and depression (it’s not a neat, straight line of recovery). On one occasion my, by now, new and more supportive line manager commented that something seemed different about me and my performance at work. I explained that I’d had a recent episode of anxiety. Yet no help was offered – just a “sorry you have been feeling down”.
I received professional medical treatment during the Christmas and New Year break, which steadied the ship – but I still went back to work as scheduled a week later This experience reinforced my initial fears about showing vulnerability in a sales role at a large company. So I was left with the choice of either accepting the status quo, or moving to an employer that might have a better understanding of, and attitude to, mental health issues. With my employer’s unwitting encouragement, I chose the latter option later that year.
Five ways to improve employee mental healthcare
How do I think companies can help employees who work in demanding financial services jobs take mental health wellbeing more seriously?
Make sure people are not isolated In my case, I had very little clear guidance on how I was performing, which created massive anxiety in what was a very scrutinized role in the firm.
Proportion of employees that report being “comfortable” speaking with their manager about their own mental health issues Source: Dr Ben Laker et al, The Sales Person’s Secret Code research 2016
Test and check that your managers are conducting regular, documented and planned one-to-one meetings that discuss ‘clear objectives’. Also have a permanent agenda point, which is to discuss “how are you coping with the pressures of work?” and “how can I help support you?”
Don’t keep making people feel afraid by creating a culture of uncertainty. For example, telling people “one of you in this team will not be getting a bonus in January”. It is, in my experience, a cocktail for disaster.
If you are a manager and feel uncomfortable understanding how to support employees with mental health issues, ask for training from your HR team... don’t put it off as it could save someone’s life. On reflection, there were clear indications I had problems, but people needed to be aware of the signs.
HR and senior leaders – start creating dialogue on the subject with your people now! Allow informal conversations on the issue with specially trained staff. As the financial crisis clearly displayed in 2008, if you keep chasing a number without consideration of real people’s lives, nature always finds a way of rebalancing things – and it’s normally quite dramatic. — This article includes insights from The Sales Person’s Secret Code – a global study into how salespeople behave, which reveals the secret code behind consistent and high-level success. Based on 20,000 hours of research, the book is for sales professionals, or indeed anyone involved in the sales process of their company, who wants to learn the secrets of successful selling Q3 2017 Dialogue
The enduring principles The management thinking of Peter Drucker has outlived its creator and outlasted its rivals. William A Cohen finds out why
Dialogue Q3 2017
Many famous managers from industry and researchers from academia have died since making their names and contributions. Yet while we honour what they have contributed during their careers, many of the techniques and systems they developed have fallen into disuse. Some have died with them. Where have their ideas gone? What happened to Douglas McGregor’s X-Y Theory or Robert Blake and Jane Mouton’s Managerial Grid? Are Bruce Henderson’s portfolio management techniques still in common use, other than in academic courses? In the early 1980s, Japanese Management was all the rage. As it morphed into Total Quality Management (TQM) it faded and today it has largely disappeared. Even TQM is rarely put forward today as the single concept needed for success. While other management principles have vanished entirely, many of Peter Drucker’s management ideas endure. Much of what he said can still be followed with confidence today. Here are three of his classic pieces of thinking.
Drucker versus fundamentalism The case of Theory X vs Theory Y When the favoured management approach had only recently shifted to participatory management as exemplified by McGregor’s Theory Y (management with the participation of those managed) versus the now unfashionable Theory X (traditional authoritative management), Drucker pointed out that 100% management by Theory Y was never intended by McGregor. McGregor intended and wrote only that both approaches should be examined for use, depending on the situation. When Drucker was challenged as to how he could bring his knowledge and experience to bear in so many different managerial situations and environments, he responded that he did not bring his knowledge and experience to bear in any management problem – he brought his ignorance. Later I learned how he did this in a typical logical and organized Drucker fashion. Still, despite years as his student and studying his methods, I never once saw him draw so much as an economist’s price-demand curve, much less a methodology to classify and predict what businesses or products to promote, and which to abandon. He spoke against any system that excluded a manager’s gut feelings in decision making.
Drucker versus inflexibility The case of Walter Bennis Peter Drucker’s friend, the renowned University of Southern California professor of leadership Warren Bennis, was once president of the University of Cincinnati. He implemented participatory management decision-making with little situational analysis under the assumption that participatory management
would always turn out well. Drucker commented afterwards that there was a great deal of excitement about Bennis’ thinking, but ultimately it failed. Bennis left academic management to return to writing and teaching, and accepted a professor’s job at the University of Southern California where he became both successful and famous, owning up to the mistake he made earlier and agreeing that – depending on the situation – a more authoritarian style of leadership decision-making might be called for and be more successful.
Drucker versus systemization The case of the Management Control Panel Systems can be sophisticated. For example, many computer programs have been developed that allow the input of dozens of important variables. One such system is the Management Control Panel – in which the software includes the results from analyses of thousands or more competitive situations such that an accuracy of 99% predictability is guaranteed. In another words, you input the data from your situation using this data into the program and the computer assigns He spoke you a strategy based against on the conditions any system of past success. The output guarantees that excluded a 99% success rate a manager’s if the computergut feelings in generated strategy decision making is followed. What’s wrong with that? As an augmentation to your judgment, nothing. But if you follow the software’s instructions blindly and happen to be in that 1% failure from the total success rate, your resulting failure rate on that decision is 100%. Drucker felt that managers sometimes depended too much on quantitative models leading automatically to the solution of any managerial problem, when they should have used their own gut feelings. Drucker did not argue that the results from these complex automated systems should be ignored – but that the manager should interpret the results before applying them.
The Drucker Difference
The real ‘Drucker Difference’ which causes his ideas to go on and be adapted years after his death, and will no doubt cause them to continue out into the future, is quite simple. Drucker eschewed the idea of being a guru or concocting any one infallible management system. Rather, Drucker taught us to think. — Adapted from William A Cohen’s book, Peter Drucker on Consulting: How to Apply Drucker’s Principles for Business Success, published by LID in 2016 Q3 2017 Dialogue
Fewer, better, stronger Fail to focus and your organization is doomed, writes Antonio Nieto-Rodriguez
I have come to the view that managers cannot count. When I run workshops with senior leadership teams I ask them to write down their company’s top three initiatives and then list their replies on a ﬂipchart. Every time, the responses include more than three initiatives – often far more than three. When I reveal the list, there is a moment of silence in the room and a certain embarrassment. If the executives of the firm do not know the company’s priorities and are unable to focus on what is key, then they cannot expect this focus from their employees. This lack of focus can also be explained by the pressure on many chief executives to show results quickly. Consequently, they often invest in many initiatives, thinking that they will increase their chances of success. The reality is that human beings tend to be unfocused. A Harvard University study reported that at any given time, 50% of the population is unfocused. Half of a company’s staff are not focused on their work. The study also showed that those people who were focused on their tasks were happier than those who were unfocused. Whatever people were doing, whether it was working or reading or shopping, they tended to be happier if they focused on the activity in hand, instead of thinking about something else.
The dominance of disorder
The fact is that nature tends to disorder, and that being focused requires discipline, order, energy and effort. We humans have mixed feelings about expending energy, even if we know it will bring us pleasure. If top management don’t encourage their staff to focus, or even ‘impose’ focus on key tasks and priorities, the chances are that employees’ minds will wander during their working hours.
Strategic projects require full management attention – carrying out more than three almost guarantees failure
Dialogue Q3 2017
T H E FO C U S WAT E R FA L L Focus influences different elements of the organization Top management
Employees Declining attention spans and an overabundance of projects dramatically affect staff productivity. In contrast, when top management is focused, employees become focused and are better able to work on the tasks that help their businesses achieve strategic objectives. Focused employees get less distracted and often work more than is required because, as we saw earlier, focused people are happier. They have a greater feeling of accomplishment, they become passionate about their work, and they look forward to going to the office.
TOP M AN AGEM EN T
Chief executives and top management have to regularly digest thousands of documents and deal with tons of gigabytes of information. Based on their ability to synthesize all of this information, they have to make critical decisions that affect the entire company, as well as less critical decisions that can have an impact on parts of the organization. When chief executives or managers are focused, they spend most of their time where they can add the most value. Focused managers also say ‘no’ to initiatives that are not in line with the company’s strategy, and follow projects through until their benefits are delivered. Their focused approach is transmitted to managers’ subordinates, which sets the right tone even if employees do not themselves become immediately focused. When chief executives are focused, the chances that their organizations will also be focused are much higher.
EM PLOY EES Products PR ODUC T S
C L IEN T S
Because focus means specialization and quality, focused organizations tend to concentrate on a few products or services close to their core competencies that they excel at, or that give them a competitive advantage. Specialization reduces the number of projects and services. By having fewer products, companies can increase their investment in more added-value activities, such as product quality, marketing or human resource development. In addition, because management considers only those ideas that seem really worthwhile, the number of new products diminishes and better ideas are generated. This focus on a few products and core competencies helps companies execute their strategies.
Clients Finally, clients prefer to pay for those products or services where they feel they will receive value, particularly when the marketplace is glutted with millions of products and brands. Knowing that a company is focused facilitates the purchasing decision; and if the clients have good experience, repeat purchases are virtually guaranteed.
Q3 2017 Dialogue
They may work on the tasks that they think are important, which often are the easier tasks; they might respond to emails; they will probably spend most of their time in meetings. The good thing about being focused is that it sets priorities and boundaries for both organizations and individuals.
The importance of solitude
A good friend of mine is a partner at PricewaterhouseCoopers (PwC), one of the big four audit firms. She prioritizes her work based on its importance to the firm. Often, she starts with client work. When she is focused on a task, her team knows that she cannot be interrupted. In meetings, she is present, participates actively, and is never distracted by activities such as glancing at her smartphone. She is also very focused on her specialization, which has been in treasury since she began as an auditor with PwC more than 20 years ago. Because she has never changed her area of concentration, she has become one of treasury’s global thought leaders. She is able to concentrate all of her energy on the topic at hand and to keep her focus until the issue is resolved. As a result, she is very successful and happy.
The reality is that human beings tend to be unfocused Play to your strengths
The same applies to an organization. For example, when Steve Jobs returned to his old job at Apple in 1997, he decided that, in order for the company to stay alive, it had to focus on what it did best. He decided to concentrate all of the company’s energy on just four products, two laptops and two desktops, and to cancel all the other unrelated initiatives, projects and products. Jobs’ strong focus was transmitted to his team, and then in turn to the entire organization. Every business is focused when it is starting up. Those companies that manage to stay focused are likely to succeed and stay in business (see graphic page 75). Those that don’t stay focused will probably fail. The problems start when companies grow; at that point, remaining focused becomes very difficult. Management changes and they want to introduce new things, thus decreasing the focus. The fascinating thing about achieving focus is that it affects the fundamental elements that compose an organization. — Antonio Nieto-Rodriguez has been recently nominated Thinker of the Month by the prestigious Thinkers50.com, which identifies the most influential management thinkers in the world
THE CHARACTERISTICS In my research, I examined successful organizations that were not just reaching but were also exceeding their strategic objectives. Although having a great leader, a well-known brand, and a very good product or service contributed to this success, what made all the difference in their ability to surpass their expectations was the fact that they were focused. To better explain the key elements a company needs to be successful in its strategy execution, I turned the word FOCUSED into an acronym:
Fewer projects, rather than many A focused organization that is able to effectively select and prioritize its projects and invest in just one or two good initiatives at a time clearly outperforms organizations that take on too many projects. The few projects that are selected are linked to one or several strategic objectives, and are fully supported by top management. Top management monitors the execution of these strategic projects at least monthly, and follows through until the projects are completed and the benefits are delivered. It is fundamental that these few initiatives be communicated and understood by the entire organization. Strategic projects require full management attention, and carrying out more than three almost guarantees failure.
Organized staff In a focused enterprise, the staff is organized in such a way that all personnel know what is expected of them. They do not waste time on activities that are not part of their core skillset; rather, they focus on their key strengths and core capabilities instead of constantly trying to improve their weaknesses. ‘Run-the-business’ activities are clearly differentiated from ‘change-thebusiness’ activities. Project managers, project leaders, programme managers, and people working in programme management offices manage the day-to-day ‘change’ activities, with the input and collaboration of the run-
Dialogue Q3 2017
O F FO C U S E D O R G A N I Z AT I O N S the-business resources. Some of these resources will occasionally work full-time for the change-the-business activities, with management making the decisions and setting the priorities. Top management has also to split its time between managerial activities, participate as project sponsors, in project steering committees, and deal with such day-to-day operational activities as sales meetings. Because they have set the business’s priorities, they know how to distribute their time most effectively.
Competitive mindset The focused company competes with the outside world rather than internally. Internal competition, which is so negative in the long-term, is eliminated because all of the organization’s effort is placed on doing what it does best. The chief executive and top management explicitly identify rival organizations, often referring to them in their speeches and communications to the company. The focused company is also very clear about how to beat the competition. In fact, there is only one way: creating better products and delivering better services. A high degree of innovation is a key and common characteristic of a focused organization. In addition, the employees of such companies tend to have winning attitudes. They are talented and ambitious, and want to progress in their careers. Unlike employees in unfocused organizations, they do not compete with their fellow employees because the focus on outside forces is so strong.
Urgency Creating a sense of urgency is a competitive advantage. Urgency is also needed to focus people and encourage them to give their best performance. Ensuring that employees are very familiar with the key strategic projects selected by top management helps to build this sense of urgency. Employees know they cannot postpone their work, and that they have to deliver on time. Clear deadlines, fixed goals, and knowledge of the importance – and
benefits – of each strategic project are tools with which to infuse the entire organization, both management and staff, with urgency and focus. These techniques also provide the sense that things are moving faster, almost as if the tempo at which the company usually works is doubled or tripled. People work harder – and results are achieved more quickly. One point to take into account – and a real warning for top management – is to impose the sense of urgency carefully. This is probably the most important risk of a focused organization: putting too much pressure for too long on the staff and the organization – what I refer to as aggressive focus – can bring amazing short-term results but in the long-term is not sustainable.
Strategic alignment Every initiative should be linked to one or several strategic objectives. Any initiative that is not so linked should be immediately cancelled. This alignment is necessary to ensure that the company achieves its stated goals. Having only a few key projects is the best contribution to strategy achievement. For example, recently a consumer goods producer decided to acquire a company in China that built and sold ironing machines. This project was perfectly aligned with the company’s strategy, which was to have a presence in China and to increase profits coming from that region by 20%. The company successfully acquired and integrated the Chinese plant, which immediately provided a 30% profit coming from the Asian region.
Excellence A focused organization applies the highest standards to everything it does, and its products and/ or services are known for their quality. Sustainable excellence requires attention to the details of every aspect of the organization: values, quality of employees, internal and external processes, products and customer service. The key strategic initiatives are managed by and staffed with the most capable people. Both the project sponsor and the project team are selected based on which employees throughout the organization will be the
best at driving the initiative. This approach leaves little room for internal politics.
Discipline Discipline should not be seen as something negative that inhibits innovation. Rather, innovation depends on discipline. Companies should clearly distinguish between the time set aside for creativity and time allocated to strategy execution. Focused organizations are able to make this distinction and to move from the creative phase to the execution phase very quickly. If companies spend too much time on innovation, they will be too late to execute their strategy. The challenge for the chief executive and the company’s entire management team is to find the right balance between discipline, creativity and flexibility. Discipline for the staff means that once the strategic project has been approved by top management, it should be meticulously executed without being repeatedly questioned. This does not mean that there is no room for discussion, especially if the project faces unexpected issues during the design or implementation phase; but the project selection should not be further debated. One final, and very important, aspect of discipline in a focused organization is that required by the chief executive and top management when waiting to see results. Many of the benefits of strategic initiatives are not seen until the mediumto long-term, and management must be patient to achieve the bigger results. Too much pressure on short-term results will eventually be harmful. The benefits of becoming a focused organization are significant and varied. Everybody in the focused organization, from the chief executive to the accounts payable employee, knows the direction in which the organization is going; which two to three initiatives are the most important for that year; and the business case for these few critical initiatives. And the benefits can appear very quickly on the company’s bottom line. Costs are reduced when irrelevant projects are cancelled, adding up to huge savings. There are many more likely benefits. The question is whether your organization can continue to ignore them.
Q3 2017 Dialogue
The restless bear Former Cold War superpower Russia is agitating for global influence and control. Relations with the West deteriorate further as a result
ARCTIC OCEAN NORWEGIAN SEA N O R WAY
Russia has a slightly greater surface area than planet Pluto
EAST SIBERIAN SEA
E S T. L I T H. L AT.
the big country
SEA OF OKHOTSK
Proportion of the total surface of freshwater on Earth held in a single Russian lake – Lake Baikal
Number of times Russia’s pipelines could circumnavigate Earth CHINA
K A Z A K H S TA N MONGOLIA
FAC T F I L E R U S S I A Land area
6,592,800 sq mi
GNI per capita
(17,075,200 sq km)
Plus 35 regional languages
My notion of the KGB came from romantic spy stories. I was a pure and utterly successful product of Soviet patriotic education Russian President Vladimir Putin recalls his past in the KGB
Dialogue Q3 2017
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For us in Russia, communism is a dead dog, while, for many people in the West, it is still a living lion Novelist Aleksandr Solzhenitsyn (1979)
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Your leadership apprenticeship What did business leaders wish they had known when they took on the top job? Liz Mellon found out
Leadersmithing: Revealing the Trade Secrets of Leadership Eve Poole Bloomsbury www.bit.ly/ leadersmith
learning, because – as she No leader is job-ready when points out – who has 10,000 they arrive. However well hours to spare when you are they rehearse, and however trying to run a business? close the dress rehearsal to Poole offers advice on the real thing, the first night how to develop effective and all the following nights strategies for honing each are richly different – an of the 17 job requirements, evolving tale. with down-to-earth This very useful book exercises designed to help aims to help executives the budding leader complete rehearse as well as they the apprenticeship before possibly can for the the job starts. top job, to minimize Just because the advice the personal pain of is grounded and pragmatic transition, and to maximize doesn’t mean that this will organizational effectiveness. be an easy apprenticeship. Leadersmithing regards To start with, you will need leadership as an to want the job, because if apprenticeship, a chance to you think that getting the learn by practising early all job is hard, doing it is the skills that the top even harder. job requires. The nascent leader will Author Eve Poole starts have to ask for feedback that by demystifying leadership may be unpalatable, deal and turning the position This very useful book into a pragmatic job aims to help executives with poor performers and continue to influence, rather description. This in itself rehearse as well as they than command, others. If is helpful, as there is very you want the top job, you little written about what the possibly can for the top job will have to be prepared to C-level job actually entails. have the courage to step The theory comprises out into the unknown and to take risks. Among the first half of the book, based on research that other things, your apprenticeship requires brutal asked chief executives what they wish they had known when they took on the job. She identifies self-honesty and lots of practice. This book provides you with a clearer roadmap for the hard no fewer than 17 job requirements, and spells work of preparation. each out in some detail. There is also a chapter This is an easy and enjoyable read. Poole on character, which I was personally pleased bounces the reader along the storyline, with to see. Leadership is such a powerful position, erudite references alongside amusing and which can so easily be used for evil rather than practical anecdotes. Machiavelli’s The Prince good. Good character forms the basis of features alongside The Wizard of Oz. good leadership. Because the book is designed to be read in The second half of the book is entirely different ways, it is a helpful guide – whether practical. Poole counters the notion that 10,000 you are a young leader, or already only a breath hours of practice builds expertise (K Anders away from being the most senior. Based on Ericsson, popularized by Malcolm Gladwell in a mixture of research and experience, it is a his book Outliers). She offers a cheat-sheet of trustworthy guide. activities that enable the leader to accelerate
Dialogue Q3 2017
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A beacon in the mindfulness mist Not all books on psychology’s hottest topic are created equal, finds Liz Mellon
Still Moving: How to Lead Mindful Change Deborah Rowland Wiley 2017 bit.ly/ stillmovingbook
The key finding is Let me start this review with a that mindfulness alone – confession. I have always had staying calm, connected a soft spot for anthropologists. and resourceful in It seems to me that the challenging circumstances quiet practice of observing – is insufficient. It has in order to understand, to be married with the without interfering and capacity to see the world thus changing what is being systemically. This is not observed, has to be one of systems thinking, but life’s greater capabilities. And perceiving and understanding Deborah Rowland uses her a large complex system, anthropological background especially the ability to tune to great effect in the research into the emotional climate underpinning this book. of an organization. The There is a danger that her book alternates between work will get lost among stepping back to the original all the books published on four behaviours, and mindfulness in the last unpacking and linking the five years (there are over two mindfulness capabilities 23,000 titles out there (staying present and curious, today, not forgetting the and intentional responding) colouring books). and the two systemic ones I hope it doesn’t. Why? (tuning into the system, and First, because this builds on acknowledging the whole) to Rowland’s earlier research, The key finding is that those behaviours. Rowland where she discovered mindfulness alone – combines the art of doing four actions or behaviours staying calm in challenging with the art of being – practised by successful circumstances – is insufficient both essential, in my view, leaders of change. This to leading, let alone is important because her leading change. current research is not I was particularly intrigued by the two systemic jumping on any mindfulness bandwagon. In capabilities, because these require the leader to use Sustaining Change (2008), she and Malcolm Higgs the emotion they are feeling – not as an individual also found two complementary inner states reflection of their own personal drama – but as a – self-awareness and egoless intention – that clue to interpret how the system is operating or accompanied the four behaviours. Still Moving even projecting on to them. I was pleased to see now expands those inner states from two to four, a core finding from my own leadership research through more empirical research, including – the capacity of being comfortable in discomfort stepping back into the corporate world to run (Inside the Leader’s Mind, 2011) – reflected in two large change projects herself. In addition, Rowland’s finding that systemic insight requires her research moves beyond understanding how the leader to be comfortable with not being mindfulness can support the individual leader comfortable. The more that research uncovers and by reducing stress and enhancing wellbeing, to reconfirms important fundamentals, the better the drawing a direct link between mindfulness and guide we can offer leaders to be at their best. the successful leadership of change. This takes us This book is fun to read, beautifully written and beyond self-help and into the highly useful realm packed full of business stories. of organizational transformation. Q3 2017 Dialogue
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THE LEARNING CURVE WITH HEATHER MACNEILL
Don’t end up in the dead end where your business tech is outstripped by what’s in your employees’ pockets. Get ahead
Consumerization of IT: the pressure is on The technologies we use to power our businesses will never stop evolving. It’s how we adapt to these constant changes that will keep us relevant in the eyes of our employees and customers. Over the last 15 years, it’s been interesting to watch the technological shift that is taking place right in front of our eyes. The buzz term for this shift is ‘consumerization of IT’. For decades, decisions on what systems and technologies to adopt were made first by businesses, before the technologies were simplified and made available to everyday consumers. However, as consumerization of IT continues to take shape, employees expect to have access to the same types of easy-to-use, consumer-like technologies in the workplace. Alongside employee demands, there is wider market pressure for businesses to stay ahead of trends. Yet making the jump toward modernization isn’t always easy. Most organizations have used the same monolithic enterprise resourceplanning systems (ERPs) since the 1990s. Learning management systems (LMS) were implemented during this period as well. Systems like the LMS and ERPs were huge investments in both time (installations taking 12-18 months) and money. Adopting modern technologies and resources means making additional investments to implement and update technologies, and to retrain employees. However, it’s up to business leaders to adapt, or risk losing talent to more ‘hip’ organizations.
Modern technology for the modern-day learner
Employees rarely have time to sit at their desks and consume learning material during the workday, yet 87% of Millennial employees want to see clear pathways for growth, while being provided instant access to professional development resources. Legacy learning
management systems simply don’t meet these demands, whereas modern learning platforms provide ample opportunity for employees to learn when it is convenient for them. Convenience isn’t the only aspect that makes emerging learning technologies so appealing. Modern solutions are faster, more intuitive, mobile and secure – and are easy to integrate with other internal platforms and systems. Streamlining the learning experience, increasing avenues for collaboration, and providing employees with flexibility to learn remotely strengthens productivity and motivation for employees to excel in the workplace.
Making the switch
The more businesses adopt modern technologies, the more successful and nimble they will be in the long run. If cost is the hold-up, keep in mind that many modern cloud-based solutions can integrate with systems that are already installed – like a traditional LMS, for example. Additionally, maintenance of cloud-based platforms comes at a
fraction of the cost when compared to legacy systems, and adopters will be giving employees what they want. Happy employees means lower attrition rates. All of this considered, the best approach to take when analysing the right solutions for your organization is to research which platforms are all-encompassing and easy to manage internally. Going back to learning technology, we know employees demand continuous learning opportunities, but they also learn more effectively in social and informal environments (70% of knowledge is retained in this way). Additionally, 57% of people prefer to access learning materials on the go. So, ideally, companies should seek a modern and mobile learning platform that provides all the necessary and preferred learning functionalities. These include:
Access to the highest-quality learning materials (books, videos, journals and other resources) at any time, from any location The ability to collaborate using modern tools that simplify the sharing of content, resources, feedback and ideas Access to other professionals – both colleagues and industry experts – in an open network, to support informal and social learning
The key to pinpointing the right solutions for your business, as the consumerization of IT continues to build momentum, is listening to your employees and tailoring your solutions to fit their preferences. Just make sure the technologies align with your business as well. You can never go wrong with tools that provide flexibility and increased opportunities for collaboration. — Heather MacNeill is communications head for BlueBottleBiz, the collaborative learning platform for business professionals
Dialogue Q3 2017
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PIERS CAIN ON BOOKS
High performance isn’t just a matter for former finance ministers – it’s relevant to all of us
Become a productive powerhouse Piers Cain is a management consultant
Marshall’s other key insight is the importance of aligning personal satisfaction, life objectives, and one’s own psychology to the way we approach work
Improving productivity has been a concern, nay the obsession, of successive British politicians, notably of George Osborne when he was Chancellor of the Exchequer. Osborne was thinking mainly of the need for strategic investment in science, technology and infrastructure to drive change across the industries, rather than improving individual productivity. In recent weeks, he seems to have switched his focus, demonstrating how one person can hold down several substantial roles and earn a fortune – a sort of one-person Northern Powerhouse. We await with interest Osborne’s ‘how to’ book revealing his secret recipe. In the meantime, readers will have to make do with How to be Really Productive by Grace Marshall. There are some people who regard selfhelp books as the work of the Devil, of use only to those who have no clue how to get things done. Marshall doesn’t help herself by adopting a breathless, relentlessly upbeat, ‘inspirational speaker’ style, which may put off some readers. This is a pity. The book won the ‘Commuter’s Read’ category of CMI Management Book of the Year – deservedly so. I challenge the reader not to find something worthwhile in it. Marshall has a healthily realistic perspective on the world of work in the 21st century. People work from home, as well as in noisy, distracting open-plan offices – allegedly introduced to improve choice and team dynamics, but really to save money on floor space. ‘Always online’ mobile technology means that some people are checking their emails even at 2am, while in bed, and some bosses expect them to do so. Parents – still mainly mothers – have to juggle family responsibilities with work deadlines. The boundaries between work and ‘the rest of our life’ – both the physical and social space in which work takes place and the hours in which we work – have become
completely blurred. Marshall points out that the notion of ‘work-life balance’ is now virtually irrelevant because firm boundaries are hard to maintain and the volume of work has become unmanageable. A more realistic aspiration is to achieve an acceptable worklife rhythm, and Marshall provides some practical ideas on how to achieve this. Marshall’s other key insight is the importance of aligning personal satisfaction, life objectives, and one’s own psychology to the way we approach work: we decide our priorities, set our boundaries, and organize ourselves. Anyone familiar with a coaching approach will recognize much of what Marshall says. Still, it is entirely sensible to realize that one of the reasons we are less productive or successful than we might be, is that we are often working against the grain of our own emotions, our personalities, our body rhythms and mental processes. If this seems a bit too New Age for you, you may wish to dip in and out of some chapters. Overall the book has a practical feel – quite appropriately so. Every chapter concludes with a set of questions to help you develop insights about your own motivations, issues and weak spots, and actions you can take to move things forward. I tried these out and personally found them useful, even though I have done a similar test before. The work of the Devil? No. Heard it before? Possibly – although it’s clearly competent and eminently readable. Not every book has to be ground-breaking. Still, if you simply wanted to get some ideas on how to achieve more, pick up this book. You will almost certainly find something in it for you. — How to be Really Productive: Achieving Clarity and Getting Results in a World Where Work Never Ends Grace Marshall, Pearson Education Q3 2017 Dialogue
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The only master that allows you to work in the new professions of the Digital Era.
TALENT MANAGEMENT IN THE DIGITAL AGE Lead the digital transformation of Human Resources and attract the talent that your company needs.
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The conductor’s guide to orchestral management The sweetest harmonies are made when all musicians can be heard, finds Kirsten Levermore Isolation is not a successful business practice – just ask the gang at Nokia. In an ever-connected world with speedy innovation a necessity, those who can collaborate are at the top. Grounded in psychoanalysis and scientific study, business collaboration expert Martin Echavarria’s Enabling Collaboration equips readers to establish and enhance successful collaboration by becoming ‘Partnership Coaches’. In a particularly clever analogy, Enabling Collaboration envisions groups as orchestras, with individuals represented as different instruments, all coming together to make the group and their sound unique. In this way, individuals are accounted for, but are not nearly as important as the group in its entirety, i.e. the French horn may be tooting loudly in the back of the room, but how is this affecting the rest of the orchestra and its sound? Using the toolkit Operative Partnership Methodology, managers can accommodate quiet tin-whistles and loud French horns by developing a collaborative leadership strategy – just as the orchestra’s sound changes according to behaviour, approach and expertise.
Enabling Collaboration envisions groups as orchestras, with individuals represented as different instruments
Thus, through the Operative Partnership Methodology, the group’s sound is shaped and developed until a symphony emerges – until collaboration is coherent. Progress is measured using psychological scales, and is placed against Echavarria’s carefully structured development timeline, ‘5-Territories of Alliance
Development’, each ‘territory’ of which is carefully established for the reader. When collaboration is in its deepest form, and the group can maintain coherence for a long time, the group is in the ‘final territory’ and is successful. Highly detailed and steeped in science, Enabling Collaboration is packed full with clear suggestions, psychological observations and academic references, making it both a useful manual and fascinating guide to collaboration and group psychology. Best read in focused bursts, brandishing a highlighter as a conductor’s baton and with a notepad to map your thoughts. — Enabling Collaboration Martin Echavarria LID Publishing
APPS FOR LEADERS: MOTIVII
Staff feedback need make you shudder no longer, writes Perry Timms Feedback, employee engagement surveys and performance appraisals have become words to strike fear into employees’ hearts. They bring headaches to managers. Motivii (motivii.com) brings some pain relief. Where the value is really added is in data management, notifications and user activation (i.e. nudges to use the app). Everything else is down to the managers and their people to use as a self-reflective tool; a feedback-sharing tool and a chance to get a sense of how people are feeling. With this tool, it appears you may never dread end-of-
year performance reviews or engagement survey time ever again – the app is based on real-time, regular capture of information while it is still relevant and fresh in people’s minds. Monday reminders, meeting mode, a dashboard, team analytics and data are available to all – not just managers, which makes this less of a management tool and more of a connecting, sharing and adapting app. Motivii aggregates all the data, shares it with those who are in team-leading positions or divisional leadership roles and, in the case of remote teams, keeps
everyone up to speed on how everyone else is feeling and doing. — Motivii is in iOS and Play Store as an app, but also as a web-app enterprise solution – this is a subscription model for companies based on a monthly fee per employee, with a free 14-day trial — Perry Timms is an independent HR/ OD practitioner, speaker, writer and CIPD adviser on social media and engagement Tweet him @PerryTimms Q3 2017 Dialogue
In the world of the unstable, a slightly less wobbly Spain is king
Going steady in the sunshine Political upheaval stalks the West. The Netherlands went to the polls in March and the far-right party of Geert Wilders came in second place. Marine Le Pen got through to the second round of the French presidential elections in April. The US voted for Trump and Britain voted for Brexit. Yet cast your eyes south to a country with 42% youth unemployment, two inconclusive elections, almost a year without an elected government, and discover an oasis of stability. “Spain is different!” Napoleon was reported to have exclaimed after his troop’s first defeat on Spanish territory in 1808 following a remorseless string of successes elsewhere. Spain now boasts the same conservative prime minister, Mariano Rajoy, and the same economics minister, Luis de Guindos, as in 2012 when the centre-right Partido Popular came to power. Protest party Podemos has lost its puff, while the traditional opposition socialist party is leaderless and beset by infighting, forced to abstain from voting against a minority conservative government for fear of new elections at which it would likely lose more votes. At a time when the UK Conservative Party and the US Republican Party espouse policies their predecessors would not recognize, the Partido Popular administration stands by the labour law reforms from its last stint in government. There is even a whiff of hope around the Catalan question, as the government privately and publicly holds dialogues with local politicians. Meanwhile, the UK’s loss of influence in the EU has moved Spain into a more central, influential position. At the mini-EU summit in Versailles in April, Rajoy was very visible in the company of Germany’s Angela Merkel. The answer to why Spain has evaded a major upset is complex – and like recipes for paella, everyone has a different one. “We are too poor to indulge in a Brexit-like bit of populism,” states a Spanish diplomat friend. “Only a wealthy country like the UK can afford to do so.” Poor is an exaggeration, but what is true is that the years of scarcity are
The UK’s loss of influence in the EU has moved Spain into a more central, influential position
not as far back in Spain’s collective memory as in its European neighbours’. Spain’s per capita nominal GDP is $28,115. The UK’s is $39,530. For the US this is $56,115. Evidence of what populism means in practice is also cited as a reason. Podemos, with its pony-tailed, jeans-clad leader, reached the apogee of its support a couple of years ago. It then suffered the shock of actually making it into some local governments, proving to be incompetent and unable to fulfil any of its promises. This led to disappointing results for it in the last general elections. Additionally, the populace has not reacted to large-scale immigration or terrorist attacks with xenophobia and antiMuslim sentiment. Partly, easily integrated Latin Americans make up most of the 10% of the total population who are immigrants. Yet there are also an estimated one million Moroccans in Spain. It is a tolerant society. Spain’s home ownership rates provide another clue, says a Spanish bank chairman. A substantial 78% of Spaniards own their own home, even after one of the deepest recessions in the EU. Rates in the UK, the US and France dwindle towards 60%. And almost half of the population own their homes outright, without a mortgage, compared to 34% in the UK. Despite headline-grabbing statistics like 18% unemployment, the Spanish middle class has a larger stake in political stability. In fact, the economy is progressing solidly, with 3.2% GDP growth last year and forecasts of up to 2.7% in 2017 on the back of a rebound in private consumption, exports and investment, aided by past reforms. Tourism has reached record highs as the list of sunny competitor countries that are also safe becomes ever smaller. In truth, calling a country with a minority government dependent on the abstention of its rivals an oasis of stability might seem an exaggeration. But in our topsy-turvy world, what matters is relative stability, not absolute stability. — Karina Robinson is chief executive of Robinson Hambro
Dialogue Q3 2017
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