Page 1

horacio genolet

alex hill

Q4 2017

AMONG LEADERS AND MANAGERS ACROSS THE WORLD

The world leader Save our schools vl atka hlupic DIALOGUEREVIEW.COM

AMONG LEADERS AND MANAGERS ACROSS THE WORLD

Boiling frogs

LEADING THE ECOSYSTEM

Into the wirearchy Leading from the centre in a volatile world

Q4 2017

leadership

innovation

finance

marketing

strategy

Brain surgery

Fresh search

Speed demons

Behind the curtain

The choice paradox

How to nurture knowledge

The last days of googling

The quick profit makers

Why substance matters most

When much more means a lot less

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The Drucker Forum Special Report The Institute of Leadership & Management is proud to partner with the Global Peter Drucker Forum

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DIGITAL VERSION OUT 4 SEPTEMBER Download your special preview report featuring top speakers from the upcoming 2017 Forum at institutelm.com/ drucker-special-report

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CONTENTS

3

Digest 14 FOCUS

LEADING THE ECOSYSTEM

16

The power of unfocusing

20

Into the wirearchy

24

The new business of business

28

The project revolution

30

Don’t sleep through digital

REGULARS 7

78

My edit

News nation

Ben Walker on fluid leadership

Qatar – the squeezed state

8

Spark What you need to know

9

Great minds Michael Chavez meets Deborah Wahl

80

Reviews Books, discovery paths and apps recommended for you

13

34

86

Michael Canning on adaptability

Horacio Genolet, champion hunter

Karina Robinson on embracing the over-60s

Upfront

The big interview

Last word

Q4 2017 Dialogue

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Training magazine’s 41st Annual Event Conference: February 12 –14 Georgia World Congress Center Atlanta, Georgia

Co-Located Event: February 12 The Duke CE Leadership Experience

Even with 10 years of training experience, the Training Conference provided me with tools that I can use to enhance my performance in my role at AB.” Lori Hambrick, Principal Training Manager, Advanced Bionics

This conference was extremely educational, up-to-date, and effective. If you are interested in exploring efficient and cost-effective ways to invest in your employees, I highly recommend you attend this conference.” James Grover, Instructional Systems Design Engineer, Lockheed Martin

An event designed for learning professionals & executives

I would recommend attending a Training magazine Conference to every trainer. The networking and learning opportunities were limitless. I left the event feeling like I belong to a huge team of people who share my passion for bringing great information to life.” Sue Aderhold, Director of Education, Great Clips

Visit www.TrainingConference.com for more information. 004_Dialogue_Q4_2017.indd 4

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CONTENTS

5

In depth LEADERSHIP & PEOPLE

I N N O VAT I O N & TECHNOLOGY

39

47

40

48

Kate Cooper: The leadership column

How to be a brain surgeon

42

One type of headteacher can save our schools

Vivek Wadhwa: The innovation column

Gender bias in the healthcare system

50

Tomorrow’s Googling

FINANCE & AC C O U N TA N C Y

MARKETING & SALES

53

63

54

64

Giles Lury: The marketing column

Phil Young: The finance column

Marketing matters – customer experience matters more

Chinese entrepreneurialism

58

66

Bolts from the blue

Emotion costs you dearly

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

69

Patrick Woodman: The strategy column

70

Boiling frogs

72

Feeding Rwanda

76

Choice overload

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6

agenda

Contributors

dr srini pillay

Srini Pillay MD is assistant clinical professor of psychiatry at Harvard Medical School and chief executive of NeuroBusiness Group. He teaches in executive education programmes at Harvard Business School and Duke Corporate Education. Previously, he was director of the Outpatient Anxiety Disorders Center at McLean Hospital, and was a brain-imaging researcher for 17 years. Pillay is also an awardwinning author.

professor steven van belleghem

Steven Van Belleghem is a leading mind on the transformation of customer relationships and the future of marketing. He is an entrepreneur, academic, speaker and author. Previously with market research company InSites Consulting, Van Belleghem is now a partner in consultancy firm Nexxworks, a co-founder of Zembro (a wearable start-up) and of content creation company Snackbytes. He is also a professor at Vlerick Business School, Belgium.

professor tony o’driscoll

Tony O’Driscoll heads Duke CE Labs for Duke Corporate Education. In his role he focuses on discovering what’s next for leadership development. O’Driscoll previously served as Duke CE’s regional managing director for Asia, where he focused on identifying learning strategies and approaches that accelerate the development of leadership capabilities required in an increasingly complex, uncertain business context.

professor joe perfetti

Joseph L Perfetti is an expert in corporate finance and strategy. He has delivered more than 1,200 teaching days over the past 21 years for leading corporations and consulting firms including McKinsey & Co, Morgan Stanley, Santander, BBVA, Royal Bank of Scotland and Citibank. He is a lecturer for the Department of Finance at the Robert H Smith School of Business at the University of Maryland, College Park, and teaches equity analysis at MBA and undergraduate level.

dr liz mellon

Liz Mellon is a world-leading business educator. Formerly professor of organizational behaviour at the London Business School, she is now chair of the editorial board of Dialogue and executive director of Authentic Leadership. Prior to this she cofounded the first Duke Corporate Education office outside the US, and served as regional managing director of Duke CE in India. Mellon is also a successful author and leadership development expert.

professor vlatka hlupic

Vlatka Hlupic is a professor of business and management, director of the emergent leadership and development research group and director of the executive coaching and leadership development programme at Westminster Business School. Her groundbreaking book The Management Shift was listed by Forbes as one of the top eight business books in 2014. Hlupic is founder and chief executive officer of the Drucker Society London.

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agenda

7

My edit

The ladders are disappearing. The pyramids are inverting. Hierarchies are turning from iron to an amorphous fluid. Leadership is no longer about reaching the top and commanding a business from a pinnacle, but placing oneself at the centre of a ecosystem, like a head gardener amid the individual, yet interdependent, flora and fauna in a classic country garden. In business, the job is to unshackle, connect and nurture the people, teams, projects and things that make up the ecosystem – the network that our cover story calls ‘the wirearchy’. Professor Tony O’Driscoll (page 20) briefs us on how to lead from the centre in a volatile, uncertain, The pyramids complex and ambiguous (VUCA) world. The ever are inverting. thought-provoking Hierarchies are O’Driscoll provides the turning from clearest prospectus I iron to an have read for the radical shift required to engage amorphous fluid businesses for the VUCA future. Wise, forward-thinking leaders have already recognized the need to transform their model, and shifted accordingly. It might come as a surprise that at the vanguard of the change is an organization unfairly maligned as conservative and inflexible – the US Army. There is a particularly revealing passage in Michael Canning’s Upfront column (page 13) where General Stanley McChrystal of the US Joint Special Operations reveals that troops trained to be efficient, robust and linear in structure weren’t suited to fighting a nontraditional enemy of the modern age, in this case AlQaeda. Instead, McChrystal completely overhauled the structures and processes of the operation so agility – not efficiency – was the key competency.

Loosening up is, to some degree, part of the process of making the shift. I was struck by Dr Srini Pillay’s focus on unfocusing (page 16). Pillay’s essay is simultaneously unsettling and comforting. Unsettling, because he reveals that concentration might be counterproductive. Comforting, because it turns out that daydreaming is a productive use of your time after all. Yet his call to inaction is ultimately challenging – what you thought you knew is probably wrong. Being wrong is in fashion – look at the experience of English schools. Drs Liz Mellon and Alex Hill’s withering account of the performance of headteachers (page 42) shows that only one of five leader profiles had a positive and sustained impact. Read this research – it’s an exhibition in leadership gone awry. Where things have changed for the positive is in China (page 54). The transformation of the country over the past 30 years has been led by its entrepreneurs. Dr Jun Li’s story of their success should interest students of the new China and global business alike. Once, Chinese businesspeople were compelled to hide their light under a bushel. Now they are superstars with fanbases that would make rockstars proud. Dialogue celebrates success. On page 58 you can find the results of our lead knowledge partner Duke Corporate Education’s Global Productivity Rankings. There is a theme emerging – many of the top-ranking companies are those that have disrupted industries by becoming the sort of polycentred, counter-hierarchical, fluid entities that Canning and O’Driscoll advocate. The future is already here. Unless you shift now, you might miss your chance to thrive. Enjoy the issue. Ben Walker is editor of Dialogue

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8

Spark

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

Leading women scoop awards Exceptional leadership potential in UK women is celebrated with champagne and tradition Hosted at the Chartered Accountants Hall in London, the 2017 Women in the City Future Leaders Award followed city tradition: guests were greeted by the master of ceremonies, and toasts were made to the Queen, the Royal Family, the Lord Mayor, and the Corporation of the City of London. Keynote speaker Captain Kate Philp (pictured), the first British woman to lose a leg in combat, who now works as a leadership coach, had an inspirational message to share: “Leave [the ceremony] with the courage to explore, and expand your comfort zone.” With these words in mind, Future Leaders Award partners (including Dialogue, represented by business development manager Niki Mullin) and last year’s Future Leader Award winner, Kitty McCormick (now director of Lending and Capital Management, Coutts) presented shortlisted candidates and finalists. To tumultuous applause, the

audience was presented with their 2017 Women in the City Future Leader: Dr Jane Cunningham, leadership fellow and infectious diseases and microbiology specialty registrar at Health Education England. As the City Future Leaders Award winner for 2017, Dr Cunningham receives the Future Leader title alongside a glimmering trophy and a full scholarship to attend the Institute of Chartered Accountants in England and Wales’ Women in Leadership Programme. Speaking about the judging panel’s decision, Dan Howlett, head of large corporates UK and regional head of client coverage for Europe, HSBC, said that Jane stood out for her “clarity of vision, intelligence, boldness and balance”. This is the third year in a row that Dialogue has served as official media partner for the Women in the City Future Leaders Award.

What is ‘leadership’ in a digital world? Over 20 international speakers and 80 digital leaders from Google, SAP, Barclays, KLM, Virgin Megastore and more gathered at the Global Digital Leaders 2017 summit to share, explore and examine the ‘leading edge of digital transformation’. Leadership in a digital world, artificial intelligence, the future of customer experience and change management were just some of the themes discussed over the two-day event, now in its third year. Kicking off the conference was business philosopher and Dialogue contributor, Anders ‘Rockstar’ Indset (for the full report, see the Dialogue website), who was keen to highlight the role we

Now in its third year, the summit attracted 20,000 attendees from 60 countries

have in shaping our own futures, and to embrace the ‘wild’ side of data in a world undergoing rapid digital transformation. With speakers including Alex Tapscott, Delphine Desgurse and Michael Maness leading the discussion, 20,000 attendees from more than 60 countries debated digital leadership and the digital mindset, cultural transformation and change management strategy, disruptive trends and the next generation of consumers. For a full analysis of the topics discussed, or to book your tickets for next year’s summit, please see the Global Digital Leaders website.

Shutterstock / Global Digital Leaders / Alamy

Global Digital Leaders 2017 staged in Berlin

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GREAT MINDS WITH MICHAEL CHAVEZ

Deborah Wahl says that purpose – in context – is an accelerator for teams and organizations

‘HUMANS SHOULD FLOURISH’

Shutterstock / Global Digital Leaders / Alamy

Asimov’s Three Laws of Robotics replaced by single, overarching rule “One – a robot may not injure a human being or, through inaction, allow a human being to come to harm; two – a robot must obey the orders given it by human beings, except where such orders would conflict with the First Law; three – a robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.” Part of a science fiction story published 75 years ago, Isaac Asimov’s Three Laws of Robotics have guided robotics and artificial intelligence developers and engineers for the better part of a century. Now, they are to be replaced with a single principle: humans should flourish. The update comes at the recommendation of researchers from the British Academy and the Royal Society, and suggests that data should always be handled with the “flourishing” of the individual and society at its heart. A report from the team also suggests the formation of a ‘stewardship body’, responsible for monitoring and managing ethics in data and machines.

Why purpose gives you zoom Sometimes you bump into someone from your past and find they have a great story to tell. That was the case at my recent business-school reunion, when I encountered my long-time friend Deborah Wahl, who’s just completed an impressive stint as head of US marketing at McDonald’s. Wahl’s shift at the fastfood giant came on the back of a glittering career in marketing: she made chief marketing officer of Chrysler and VP marketing for Lexus, among other key roles across the automotive sector. Wahl’s magic is her ability to shape a purpose that works across conflicting spheres, in the context of strategy and wider business goals. She faced a huge task at Mazda when she had to align Japanese, European and American perspectives – no easy task given that each market has vastly different dynamics and consumers. “We settled on Mazda’s purpose offering ‘The soul of the sports car’,” she told me. Her successor then picked up the mantle with a legendary marketing campaign. “It formed the basis of the famously effective ‘Zoom Zoom’ ad – it was an inspiring message that everyone could understand.” Wahl reveals that Zoom Zoom helped Mazda shape its strategy. “It helped us articulate what should be ‘in’ and what should be ‘out’,” she said. It also inspired the famous advertising campaign that differentiated the brand for over a decade. Wahl stressed that purpose works as an accelerator of teams and organizations when placed in a wider business context. At McDonald’s, the company shaped its purpose around ‘honest food’, helping it answer the public’s concerns transparently when it faced pressure over ingredient sourcing and healthy eating. “It was motivating – but in a complex business it’s not enough to be motivating,” she said. “You still have to continuously improve customer service and restaurant operations. You still have

to get your digital strategy right. So we pivoted away from that and readopted the corporate purpose which works much better – ‘making delicious, feel-good moments easy for everyone’.” Fascinated by her experience, I asked Wahl what lessons she took from it. “Purpose should help you get back to your core, not away from it,” she told me. “Ford always had this tension, too. We were under constant pressure to move to small, efficient vehicles, but we had to remember that, at Ford, the trucks and SUVs are key business drivers. Strategy and purpose must recognize the core. “So when you craft your purpose, you have to start by looking at who you are as a company, who your core customers are, what you really deliver well and

Wahl’s magic is her ability to shape a purpose across conflicting spheres what they value. You should never get too detached from that. Where a lot of companies get stuck, is they stay there and don’t take it to the next level. For example, the McDonald’s principles of service, value and convenience are core to the brand. Defined in those terms, it’s not necessarily motivating at a human level, but it’s definitely helpful. So it’s a good starting point, but purpose must go further to inspire. My advice to anyone embarking on a purpose project is to start with the fundamental business drivers. Purpose cannot and should not exist in isolation.” Wahl’s testimony provides a key lesson in what, as she puts it, “is coming down the road for leaders”. Wahl, being the Great Mind she is, zoomed there first. — Michael Chavez is chief executive of Duke Corporate Education Q4 2017 Dialogue

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On February 12, 2018, Duke CE and Training magazine will bring you a compelling, non-traditional, executive event where you’ll get the experience, the so what and now what of what it means to lead differently so your organization can win in today’s volatile world. The Duke CE Leadership Experience: Are You Ready for What’s Next? Join us with Dialogue in Atlanta for this exclusive opportunity. Learn more at www.TrainingConference.com

Singapore | Johannesburg | Ahmedabad | London | San Diego | Durham

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www. dukece.com

Leadership for What’s Next Having an insufficient level of “ready” talent to lead faster, more agile organizations is one of the most significant strategic and operational risks for organizations today. Whether the need is building fundamentals or preparing for the unknown, Duke Corporate Education (Duke CE) offers solutions grounded in your challenges. Our leadership offerings enable your leaders to adapt and move the organization forward fast. We design and deliver leadership development in your context, customized for your challenges and your level of leaders. In addition, our new focused offerings bring deep experience and content in key areas to meet your leaders’ needs in your organization, online or on campus: Center Leader: Leaders in the Center are Critical to Speed and Agility in Your Organization

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This new certificate program from Duke CE and Strategy Execution equips people that lead project work with the adaptive mindset, toolset and skillset to execute strategy in a volatile world. Register now for the courses Aligning Work With Strategy and Influencing Without Authority, held on Duke University’s campus December 4th —8th, 2017. Additional courses are available April 9th —20th, 2018.

In our Demystifying Finance online course, award-winning professor Joe Perfetti focuses on the key financial levers and drivers of value creation. This self-paced course prepares non-financial managers to apply concepts, in real time, to business needs. In 8-10 hours participants will become fluent in the language of finance. Individual and enterprise licenses are available.

Learn more at dukece.com/our-work

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

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

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upfront

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michael canning

Adaptability, not scale and efficiency, is the crucial force of the future

Success is born of switching and shifting Michael Canning is global head of new businesses at Duke Corporate Education

Flatter isn’t always faster. Without clarity on how and where decisions get made, diversity and distance can slow down decision-making

Teams, particularly cross-boundary teams, are fast becoming the primary entity through which work gets done in organizations. There are good reasons for this. Hierarchical organizations were structured to solve linear problems and gain sustainable advantage through efficiency and scale. Today, organizations are grappling with more complex, non-linear problems requiring adaptability and speed. Take an old hierarchy, the US army, for example. Early this century, General Stanley McChrystal took command of the US Joint Special Operations. He was fighting a 21stcentury, asymmetrical war against Al-Qaeda with a 20th-century military. “We were stronger, more efficient, and a more robust fighting force,” he explains. “But Al-Qaeda was agile and resilient. When fighting such a non-traditional enemy, adaptability, not efficiency, is the central competency. And, the less linear the problem, the more the solution hinges on the people leading on the frontline, rather than on the folks developing processes far away from the problem.” It’s the same today in business. Most of the disruption is coming from non-traditional competitors driven by exponential technologies and globalization. Battling this complexity requires greater adaptability and speed. Pushing key work and decision-making closer to the problem is essential – and empowered teams are the organizational vehicle to get it done. With the right conditions, teams have the potential to combine quicker analysis, thinking and action to respond to today’s complex demands. While teams hold advantages, they also come with 21st-century challenges. Flatter isn’t always faster. Increasing cross-functional diversity on teams to solve complex problems, and placing the team closer to the problem, is good. But without clarity on how and where decisions get made, this diversity and distance can slow down decision making – particularly when the decision is of strategic importance. The work teams are doing today often cuts across organizational boundaries, largely due to the rapid rise of project work (see

page 28). As such, their members are often diverse and remote. Staying connected to each other and to the mission takes energy and work. Research suggests that highly effective teams do three things – their members communicate a lot (even personal stories), participate equally, and possess good emotion-reading skills. Similarly, McChrystal implemented a profound shift from a need-to-know mindset to a culture of information sharing, and it worked. As McChrystal says, “Trust and purpose are inefficient: getting to know your colleagues intimately and acquiring a whole-system overview are big time-sinks; the sharing of responsibilities generates redundancy. But this overlap and redundancy – these inefficiencies – are precisely what imbues teams with high-level adaptability and efficacy.” Experts have long studied what makes a ‘dream team’. The dominant logic is simply: put the best players together. But as the great basketballer Michael Jordan – a veteran of the 1992 US Olympic ‘dream team’ – said: “Talent wins games, but teamwork wins championships.” This is increasingly true today in organizations. Researchers at Google studied hundreds of teams in their organization. The massive endeavour dubbed Project Aristotle took several years, and surprised Googlers, who thought they might uncover the perfect mix of people. In the end they found it was norms that made teams productive. Teams who shared ‘conversational turn-taking’ and ‘average social sensitivity’, or understanding how to read others, were higher performers. Team-members require what Harvard Professor Amy Edmundson calls ‘psychological safety’. This is particularly true today, when we need to tap into the true power of the collective in creating solutions to more complex problems. But as McChrystal says, “Great teams are less like awesome machines than awesome organisms.” Realizing their potential is dependent on us, as leaders, learning how to shift our thinking and actions to be more connected. Q4 2017 Dialogue

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focus

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Focus

Leading the ecosystem Goodbye to what we thought we knew. Managers and leaders need to hone their tools and skills to succeed as the world digitizes and virtualizes at breakneck pace. How do we transfer the evergreen skills of management and leadership to be ready for the future workplace? What are the challenges and threats born by technomic systems and artificial intelligence? What does the data reveal about the way leadership has changed – and will change further – under the glare of new technologies? The traditional pyramid is giving way to ecosystems of people and things. How do we lead the new matrix from the centre and connect the nodes that will unleash success?

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Discovery path Learn more… about leading the new business ecosystem from the centre and facilitating success bit.ly/ ddpleadingecosystem

ARTICLES 16

The power of unfocusing 20

Into the wirearchy 24

The new business of business 28

The project revolution 30

Don’t sleep through digital

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The power of deliberate daydreaming Leading in a Vuca world means embracing distraction – not avoiding it, writes Dr Srini Pillay MD

In a world where distraction is at an all-time high, it is more important than ever to learn how to protect our brains. On a daily basis we are inundated by email requests, tweets, Facebook posts, LinkedIn alerts and breaking news. This digital distraction and information overload overwhelms our brains. It shortens attention span and interrupts memory formation too. Amid such distractions, we usually choose to hunker down and focus. Although this makes sense, it is almost never enough. While focus is undoubtedly essential to productivity and taskcompletion, recent research indicates that our brains can only take so much. Luckily, there are intelligent ways in which we can unfocus too. This will make our brains more resilient to distractions.

Competition blindness

The disadvantages of focus

Innovation relies on connecting ideas, but having your nose to the ground may prevent you from seeing these connections. For example, Gillette had a toothbrush unit (Oral B), an appliance unit (Braun), and a battery unit (Duracell), but failed to make a batterypowered toothbrush. It failed to take advantage of the fact that our brains are wired to make

On the surface, focus seems like a suitable strategy when our minds are adrift. Noise-blocking headphones, to-do lists and calendar reminders will help us get the job done. Yet keeping the door shut to the outside world, or having a onetrack mind may also disrupt our productivity, innovation and decision-making.

There is a time and place for having blinkers on, but not when there is competition in the wings. Take Wang Laboratories, for example. It had cornered the market for the word processor, and An Wang, the founder, became so obsessed with his creation that he neglected to see the PC as its replacement. In remaining steadfastly connected to his own ideas, he was unable to truly anticipate a business threat developing its own power, waiting to take centre stage. Metaphorically, focus makes your brain pathways more like train tracks than an open space for flying. As a result, you become a creature of habit – a deathly result, even for good leaders.

Lost opportunities for innovation

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connections. All it needed to do was to look beyond what was in front of it from time to time. As obvious as this seems, it is more obscure when focus dominates your thinking.

Diminished agility, resilience and team alignment When your brain focuses continuously, its energy is sapped. This has tremendous consequences. Aside from making you quickly unproductive, studies have also shown that it depletes your ‘thinking’ brain. As a result, you care less about others. Giving such depleted people glucose makes them care again. When you focus the entire day, your brain is simply drained of energy and you lose the capacity to think clearly or care enough about anybody else. This bodes poorly for sustained productivity or team alignment. In addition, it is difficult to remain agile when you lack the energy to respond to what is happening around you.

Shortsighted decision-making In business, it helps to be able to make reasonable predictions about the future. But if your head is buried in the sand, you may be blind to what’s ahead. This is called long-term discounting. Thus, you may ignore future trends and become vulnerable to decision-traps. For example, you may pay too much attention to the here-and-now and the first evidence you receive (anchoring), or you may be overconfident because you are blind to the future. These are some of the problems that hyperfocus will cause. For this reason, it makes sense to examine how you can build unfocus into your day. In all instances, unfocus offers relief from the naivety and traps of focus. And there is an unfocus circuit in the brain that you can activate too.

Activating the brain’s unfocus circuit

Innovation relies on connecting ideas, but having your nose to the ground prevents you seeing these connections

When focus and unfocus are both active and aligned, I call this cognitive rhythm. When the brain is in cognitive rhythm, it is acting most efficiently and you are most self-connected. Unfocus is a major contributor to your sense of self. Also, many experts would agree that 90-98% of brain activity is unconscious. That’s why we need to learn how to activate the brain’s unconscious circuits more effectively – isn’t it ironic that organizations often spend 100% of their budgets on 2% of mental activity? The unfocus circuit is one of the unconscious circuits in your brain. Called the DMN (Default Mode Network), we used to think of it as the ‘Do Mostly Nothing’ circuit. Although the brain occupies 2% of the body’s volume, it does much more than nothing. In fact, it uses 20% of its energy at rest. When you are apparently doing nothing, your brain is busy combining ideas, being re-

energized, and generating insights. Below are some ways in which you can activate unfocus circuits strategically.

Positive constructive daydreaming (PCD) We spend 47% of our days with our minds adrift. So why not learn how to drift off productively? In the 1950s, psychology researcher Jerome Singer studied daydreaming extensively. He found that slipping into a daydream was not helpful, nor was it helpful to guiltily ruminate over things. Yet, there is one type of daydreaming that will help you to become more creative, and even re-energize your brain. Called Positive Constructive Daydreaming (PCD), this type of daydreaming is what we should be doing. When you engage in PCD, you start by building it into your day deliberately. After withdrawing your attention from the outside, you use playful and wishful imagery. For some, this might be lying on a yacht. For others, it may involve running through the woods with their dogs. Whatever the image, you should do this while doing something low-key like knitting or gardening. Doing nothing at all is not as effective. With PCD, your brain turns on the default mode network, and when it does, your unconscious can work its magic by stimulating innovative ideas, and even helping you predict the future more effectively.

Napping When you are tired, rather than struggle through your tiredness, consider napping. A ten-minute nap is all you need for mental clarity. But if you want to be more creative, a 90-minute nap is necessary. Napping allows your brain to re-energize, and when you nap for longer, it also allows your brain to bring seemingly contradictory ideas together. Thus, novel thoughts and insights are more likely to occur.

Doodling We are often taught to pay full attention, yet when psychologist Jackie Andrade studied the impact of doodling, she found that doodling improved memory by 29%. On the next conference call, or while at a meeting, consider doodling. It makes your brain more like an absorbent sponge than a stiff one by activating the unfocus network. You will be more likely to remember the information too.

Walking on a meandering path If you want to become more creative, walking on a meandering path, preferably outside, will increase your creativity. One study demonstrated that free walking is superior to walking in rectangles. Find a safe path that offers options for detours, and go for a meandering walk outside.

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focus

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MIND TONIC QuEsTIoNs

1 2 3

Competition blindness What technology or company could most disrupt your business plan? Lost opportunity for innovation What two parts of your business could operate together? Short-sighted decision-making How do you see your business growing in the next month, six months, year and five years?

Psychological halloweenism If your team is stuck and needs to come up with a good idea, you may suggest that people adopt the identity of another person for a time (psychological halloweenism). One study showed that people who acted like eccentric poets as opposed to rigid librarians became more creative. When they switched roles, the same stereotype effect was seen.

Possibility thinking While it is important for businesses to be grounded in reality, ideas are often born in the imagination. That’s where solutions and breakthroughs come from. Unfocusing from the outside and looking within for possibilities makes a huge difference. There is a science to believing that a solution is possible too. It increases brain opioids and dopamine, allowing you to feel less stressed and more motivated by a sense of reward. Taking time to ask what is possible will activate your brain differently than always focusing on reality.

Applying the principles of focus and unfocus in a coaching or workshop session When working with leaders, you may suggest lifestyle changes, and you can ask a specific set of questions that will stimulate the unfocus circuit. In addition, you may suggest some tools and techniques in different contexts as illustrated previously.

Lifestyle changes Identify times of the day when your energy is

TEAM EXERcIsEs

1 2

Possibility thinking This will teach people what is blocking their sense of possibility, and they can focus on overcoming these obstacles too. Psychological halloweenism Use this exercise the next time you have an innovation meeting, or when you need people to understand different points of view. They should determine beforehand who they would want to emulate and how that person might solve a problem. This is likely to enhance their creativity.

low. For example, you may feel more depleted mid-morning, after lunch, mid-afternoon and at the end of your day. Then, build in one or more unfocused activities during 10-15-minute periods. You may, for example, nap for ten minutes at 10am, go for a free walk after lunch, doodle in the mid-afternoon, and do PCD while gardening when you get home. This may seem like you are wasting time, but you should think of it as refuelling your brain. To schedule this, you can use the desktop app called the TinkerTable that will synchronize with your calendar to plan unfocus times in the day. Focus is essential and necessary at work. But without unfocus, focus will be diminished, and the unconscious brain will not be utilized properly. Building unfocus time into your day can help you become more productive, creative, a better predictor, and more self-connected. So start by creating or suggesting personal lifestyle changes, then ask yourself or your clients the questions above. Practising unfocus exercises will engage your imagination and internal resources much more effectively over time (see boxout). — Dr Srini Pillay is a practising psychiatrist, brain-based technology innovator and part-time assistant professor at Harvard Medical School, US This article is adapted from his latest book Tinker, Dabble, Doodle, Try: Unlock the Power of the Unfocused Mind (Ballantine Books). When you buy a copy of the book, you get a free app and Quickstart Guide if you email the author at srini@neurobusinessgroup.com Q4 2017 Dialogue

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Into the wirearchy Winning leaders of the future distribute power from the centre. They no longer sit at the top writing

Professor Tony O’Driscoll illustration

Neil Stevens

Companies are sliding off this mortal coil. The average lifespan of today’s organization is shorter than that of the average employee. Seismic global shifts in social, technological, economic and political systems are converging. They are evolving from an already Volatile, Uncertain, Complex and Ambiguous economic ecosystem into a powerful VUCA vortex that is destroying many institutions and organizations it finds in its path. More than half the Fortune 500 organizations have been wiped out since 2000. Those that remain are fighting for their lives in an era of digital Darwinism as the wants and needs of society are emerging

and evolving much more rapidly than organizations can adapt to address them. As digital connectivity of people and things grows exponentially, survival anxiety within organizations is compounding rapidly. More than 86% of executives anticipate that the pace of change will increase significantly over the next three years. And two-thirds of them believe the next 36 months will be more critical to their industries than the previous 50 years. Industry leaders believe that roughly four of the top ten incumbents in terms of market share will be displaced within the next five years. Organizations must adapt or die.

Companies as organisms

Today’s institutions and organizations were not designed to withstand the destructive power of the VUCA vortex. Most of them came into being during stable and predictable economic times, when markets were unsaturated and customer needs were predictable. Today’s organizations and institutions are suffering from a severe case of responsiveness lag, where their internal structures, operating procedures and time signatures are increasingly out of sync with the external pace and scale of change. As Jack Welch, the legendary chief executive of General Electric, famously quipped: “If the rate of change outside

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exceeds the rate of change inside, the end is near.” Today, organizations and institutions are disappearing at increasing rates because they are failing to adapt to the increasing complexity of the economic ecosystem. To survive digital Darwinism, organizations and institutions must evolve into ‘instant enterprises’ that maintain a perpetual state of readiness to respond to the unexpected. The internet and its social and mobile offspring enable a nearfrictionless flow of information across a vast global digital network that facilitates rich human exchanges without the need for formal organizational structures. As a result, the traditional organizational hierarchy that segmented work functionally and cascaded information from top to bottom is evolving into a ubiquitous flat, open, networked wirearchy that extends well beyond the boundaries of enterprise. The modern-day enterprise is a large and complex social system with many interrelated parts. When changes are made to one part of the organizational system, many other parts are impacted – often in unanticipated and counterintuitive ways. It is more appropriate to conceive of ‘instant’ enterprises as organisms rather than machines. Instant enterprises avoid extinction by operating within an economic ecosystem as organisms that anticipate marketplace needs and respond by convening the constellation of people, systems, processes and technologies required to fulfill them. The primary evolutionary challenge to achieving enterprise instancy reflects Welch’s famous quip. The Law of Requisite Complexity states that organizations must achieve complexity parity with their environment in order to survive and thrive. Regrettably, current organizational transformation efforts reveal that the mechanistic mental-model of enterprise still dominates. Instead of increasing organizational complexity, leaders are employing simplification strategies leading to structures that define boundaries, compartmentalize responses, standardize procedures and streamline coordination. Most transformation efforts involve yanking on discrete system, structure or process

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levers within the enterprise machine to eek out one more percentage point of market share, or to add a few more pennies to bottom line profitability. These discrete acts can contribute to the demise of the enterprise. Nearly half of all chief executives launch a reorganization during their first two years on the job. An astounding 96% of organizations are in some phase of transformation. Yet the inconvenient truth is that many of these transformation initiatives fall flat. Less than one-third of reorganizations have produced any meaningful performance improvement. And more than half of transformation exercises fail to be adopted and sustained.

Most transformation efforts involve yanking on levers within the enterprise machine, often culminating in the demise of the enterprise In short, organizational transformation efforts are suboptimized because they fail to adhere to the law of Requisite Complexity. The key to surviving digital Darwinism does not lie in discretely transforming the organization’s structure, systems and processes from one static state to another. Rather, leadership must reject the dominant mechanistic mindset, recognize that organizations function more like complex adaptive organisms than machines, and apply a more holistic and systemic approach to achieving enterprise instancy.

Leading the organism

The world finds itself in a paradoxical situation where its dependence on leadership is greater than ever before – but where the pull of the VUCA vortex will require unlearning much of what we have previously known and believed about leadership in order to survive. The primary leadership challenge today lies in cultivating the capacity for instancy within institutions and organizations. Within an instant enterprise, value is created by groups of people who collectively sense impending shifts in their ecosystem and adapt to harmonize with these shifts in real-time. Adaptive actions at individual level are propagated via feedback loops

to reshape the organization system itself. The organization’s evolved structure, in turn, influences the individual agents with the organization, resulting in a further evolution of the overall organization system. This is a complex adaptive property called Emergence. As these people continue to connect and collaborate, work and learning become intertwined and the organization evolves an intuitive ability to ride the waves of disruption rather than become crushed by them. To rise to the challenge of evolving an instant enterprise, we must conceive of leadership as the central nervous system that activates the organizational organism within an economic ecosystem. A VUCA-ready leadership system requires that individual leaders engage systemically to catalyze disparate and diverse sets of people, systems, processes and technologies in real-time to increase the likelihood of organizational survival.

Leading from the centre, out

No group is more vital to organizational survival than those operating at the heart of the system. These people are Centre-Leaders. A perennial challenge facing every organization is ensuring that its strategy is executed in a way that maximizes value creation, delivery and capture. Today, the interdependencies between strategy formulation and execution are far more fluid and dynamic than in the past. Strategy and execution are no longer discrete problems to be solved at the top and bottom of the leadership hierarchy. Instead, they are two polarities that must be navigated from the centre of the leadership system. In proactively navigating the ‘Strategy/Execution polarity’, CentreLeaders play a critical boundaryspanning role in ensuring the leadership system effectively balances and iterates around a top-down directive approach and bottom-up participatory approach to formulating and executing strategy. Developing a culture that fosters learning, collaboration, innovation and adaptability is fundamental to survival. Centre-Leaders play a critical role in increasing the ability of others to respond to change by creating the conditions that encourage people to lead, follow, experiment, learn and adapt. Q4 2017 Dialogue

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 hat assumptions are inherent in W the decisions you make and how might those assumptions be flawed? How might those flawed assumptions negatively impact strategy, execution, change and people? How might you leverage a beginner’s mindset to reframe your context to create, deliver and capture greater value?

Economic ecosystem

Biological organism

Organizational organism

Nervous system

Leadership system

Primary organ

Centre leader

figure 2

LEADERSHIP AS A SYSTEM Leadership and Followership roles exercise agency through three connected and complementary relational activities: Architecting: Sensing signals in the environment, detecting patterns of change and determining options for survival

Translating: Making sense of survival options, and identifying the highest leverage set of actions required to execute them Doing: Staging and sequencing the catalytic execution of the highest leverage set of actions

Foundational dyadic relationship

Translating

Sensemaking Having gained insight from more profound perception, Centre-Leaders will develop multiple and varied hypotheses around a given situation. This can often result in deliberation and debate about who has the most accurate perception of the situation under consideration. The reality is that no single individual can hope to fully comprehend the totality of actions

Doing LE A LL D O W

Architecting

FO

Three agency activities

LE A LL D O W

Economic ecosystem

FO

The key challenge Centre-Leaders face is that our brains are friendly with familiarity and prewired to fall into default when placed under stress. To become profound ‘perceivers’, leaders must learn to frame unfamiliar situations with a beginner’s mindset and avoid the tendency to jump to solutions based on errant or outdated assumptions learned from prior experience. The three key questions Centre-Leaders should consider as they seek to become more profound perceivers are:

Natural ecosystem

LE A LL D O W

Perceiving

N AT U R A L A N D B U S I N E S S E C O S Y S T E M S

FO

Perceiving Sensemaking Choreographing

figure 1

LE A LL D O W

In proactively navigating the ‘Change/People polarity’, CentreLeaders ensure that innovation is nurtured and that people are fully engaged and motivated to adopt the next practices, routines and behaviours required to ensure organization survival and encourage ongoing renewal. Leaders at the centre of the organization are operating in a new normal of constant disequilibrium, where change is a constant that resides at the core of the ecosystem, and the tensions and tradeoffs it throws off require immediate organizational response to ensure survival. CentreLeaders function as shock absorbers within the organization by anticipating potential distresses and working from the middle-out to ensure that the organization has the requisite resilience to absorb the shock. The first step in the journey to developing a VUCA-ready leadership system requires a middle-out catalytic approach, where Centre-Leaders embrace fundamentally different ways of:

FO

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System feedback loops

and interactions within the system. The ultimate goal of sensemaking is to leverage these varying and differing, internal and external perspectives to create a shared understanding of the larger ecosystem dynamics. This shared systemic understanding enables CentreLeaders to identify key leverage points for catalytic action and to develop strategies to influence the organization system in a desired direction.

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The key challenge with sensemaking is that it requires a fundamentally different logic called Abductive Logic. Abduction is the process of seeking out data that might contradict preconceived ideas and assumptions, and then trying to make sense of it. This often requires that Centre-Leaders take logical leaps of faith in the absence of complete data and engage in rapid test-and-learn cycles to rapidly prove or disprove the validity of their abductive leaps. The three key questions Centre-Leaders should consider as they seek to become better systemic sensemakers are:  ow can you effectively integrate H multiple varying perspectives to create a shared understanding of the complexity underlying the issue at hand? What tools and resources can you leverage to develop a systemic understanding of the situational context? How comfortable are you with taking logical leaps of faith and engaging in rapid test-and-learn experiments that have a high likelihood of failure?

Choreography Economic ecosystems and the organizations within them operate through vast and varied network connections that must be influenced and nudged to catalyze action in a desired direction. Centre-Leaders must recognize that the more connected things become, the less direct control they wield. As formal physical hierarchies become increasingly outflanked by informal digital wirearchies, the need to develop network collectives of trusted and trusting stakeholders increases dramatically. Catalytic choreography entails bringing distant and disparate parties together to accomplish a shared goal, decision or action. This requires that Centre-Leaders develop a deep understanding of the varying and competing needs, priorities and interests of stakeholders, and that they address the structural and attitudinal barriers required to catalyze collective action in a desired direction. The key challenge with choreography is that it requires new ways of influencing that rely on a deep appreciation of the context and the ability to coalesce and catalyze stakeholder collectives that reside outside the Centre-Leaders’ sphere of

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figure 3

CENTRE-LEADER Strategy

Change Centre Leader

People

Results

control. The three key questions CentreLeaders should consider to become better catalyzing choreographers are:  ave you identified all of the H stakeholders that will require influencing to move the organization system in the desired direction? Do you understand the competing needs, priorities and interests of these stakeholders? Have you developed an influence strategy that addresses structural and attitudinal barriers and creates the conditions for catalytic action?

The future of leadership development

Leadership development has evolved into a vast global industry. More than $50 billion a year is spent teaching leaders how to lead, and organizations seem hungry for more. Deloitte’s 2016 Human Capital Study reports that almost a third of organizations have weak or very weak pipelines, and nearly 90% of organizations see this as a strategic business challenge. Yet traditional leadership development practices focused on building individual leadership competence will only yield minimal contribution to the evolution of a VUCAready leadership system. Human Performance Technology (HPT) has clearly evidenced that less than 20% of any organizational performance problem is attributable to deficiencies in individual competency. If leadership is systemic and not individualistic, why is our industry spending the bulk of our toil and treasure focusing on the component

of the leadership system with the least leverage? Why are we not giving due consideration to improving the performance of the system within which the leader must lead? The answer is simple yet profound. Our entire industry has unconsciously colluded to develop willful blindness to the fact that leaders do not lead in isolation, but are part of a larger leadership system that has more impact on the organization survival than the leaders themselves do. The evidence resulting from our industry’s unconscious collusion is profoundly troubling. Two thirds of organizations today believe their current leadership development programmes only provide “some” or “little-tono” value. Only 14% of firms describe themselves as “strong” at succession planning, 13% say they are “excellent” at building global leaders, and only a paltry 7% report that they are “excellent” at building Millennial leaders. The leadership development profession needs a complete reboot. The industry must focus on improving the capabilities of the leadership system, not simply the competencies of the individual leader. Organizations must focus not only on the needs of individual fish, but also on the health of the pond they inhabit. In so doing, they will cultivate a deliberately developmental organizational culture that is yielding tangible results. Organizations that focus on the systemic nature of leadership attain 37% higher revenue per employee, 9% higher gross profit margin, are five times more likely to be highly effective at anticipating and responding to change, and ten-times more likely to be highly effective at identifying and developing leaders. To begin our journey towards systemic leadership, we must let go of our obsession with individual leaders and adopt a more holistic perspective of leadership as a system. We must recognize that the design of a VUCAready leadership system begins by cultivating collective catalytic action within a group of Centre-Leaders who share a common aspiration to take both their organizations and their people to the next level. From that point, the evolution process takes over and the journey towards evolving enterprise instancy begins to naturally unfold. What are you doing to get ready for what’s next? — Tony O’Driscoll heads Duke Corporate Education Labs Q4 2017 Dialogue

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The business of business is no l

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o longer just business Companies need to raise their economic and political game, write Martin Reeves and Johann Harnoss

“Yesterday, love was such an easy game to play.” Paul McCartney, 1964

Many business leaders have spent their careers in times of relative economic predictability and political stability, punctuated by occasional market downturns. As a consequence, they have been able to focus on activities directly related to the ‘business of business’, like competitive strategy, innovation, operations and human resources. In hindsight, yesterday’s business game was a relatively easy one to play. Leaders now increasingly find themselves in unfamiliar territory, marked by high levels of uncertainty and instability, a slowing global economy, and new political realities. These change the relationship between business and other parts of society, and have profound implications for strategy and competitive advantage.

Political and economic uncertainty matters

Focusing only on the narrow game of business has become a risky proposition

Today’s multidimensional uncertainty is in part a byproduct of two important drivers of economic growth in the past 40 years: global economic integration and technological innovation. Together, they have increased global prosperity, but have also contributed to inequality within countries, giving rise to protectionist policies that directly affect trade, taxation and talent mobility. The two forces have also coupled societies, economies and businesses more intricately than ever before. In this tightly intertwined world, companies more acutely feel the impact of political and economic factors on their business. A recent BCG Henderson Institute analysis applying natural language processing (NLP) alogorithms to S&P 500 companies’ investor communications, shows that many executives now devote more attention to reacting to and shaping political and economic issues (see Figure 1). Does it matter? Yes. Our research shows that firms which are more exposed to political

and economic feedback tend to have lower profit margins (see Figure 2). This is not a surprise. Political, or regulatory, intervention and economic volatility do not generally help profits. But interestingly, the effects on growth and value creation are more ambiguous. Even in situations of high political and economic exposure, savvy leaders can find strategies to mitigate negative effects and create competitive advantage. The increasing interconnectedness of business, economic and political spheres causes disturbances to spread more quickly. From the perspective of corporate leaders, that translates into increased change and systemic uncertainty, with tangible business consequences. The performance gap between winners and losers in each industry is already bigger than ever, and large companies in particular are struggling to find growth. As a result, companies are now dying sooner – the five-year mortality rate has risen from 5% in 1970 to around 32% today.

A new mental model: from chess to matryoshka dolls

To thrive in this new climate, leaders need a different mental model for business strategy. Instead of seeing it as a self-contained game of chess, leaders should perhaps visualize it as a Russian matryoshka doll, the endearing set of wooden figures that are stacked inside one another. Why? Business today is part of a nested set of so-called complex adaptive systems: interconnected, dynamic systems in which local perturbations can give rise to unpredictable global effects and vice versa. As a consequence, leaders need to be able to both grasp each individual level and master the art of playing on more than one level at a time. What does such a nested set of systems look like in business? Companies are part of business ecosystems, which in turn are embedded in local and national economies, which are interwoven with societies. Changes at lower levels (within Q4 2017 Dialogue

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Political and economic issues impact performance expectations more than purely competitive considerations

industries and between firms) influence higher levels, such as the economy and the political system, which in turn reshape the fates of systems within them – namely, companies. In more predictable times, there is a stable equilibrium between levels, permitting business to focus mainly on business considerations. Today, the opposite is true. Many business leaders tell us that political and economic considerations currently impact performance expectations more than purely competitive considerations. It is impossible to run a business nowadays without considering what is happening on other levels.

Nested complex adaptive systems in practice

Take the US retail industry, for example. Encouraged by China’s entry into the World Trade Organization in 2001, US retailers built tightly orchestrated supply chains across the globe, taking advantage of a new politically induced opportunity for global cost arbitrage. These sourcing and logistics decisions have had significant effects on economic, social and political levels. A first direct result was the lowering of domestic prices for many household goods – in fact, this effect was so strong that the US Federal Reserve took it into account when deciding on interest rates. A more indirect result of these business decisions was the displacement of production activity in the US, leading to job losses; a new sense of social and economic insecurity; and ultimately a nativist political backlash against the trade policies that started the wheel spinning. These effects were complicated by technological advances, which increased factory productivity and further reduced manufacturing employment, even as domestic manufacturing output increased. In recent years, US retailers have been trying to increase the weight of domestic sourcing. This comes late, possibly too late to preserve the current model of global economic arbitrage. A border tax, still under consideration in some US policy circles, could even undermine the game entirely by wiping out a substantial proportion of the industry’s profits.

Imperatives for business leaders

What should business leaders do now? Above all, they need to understand that focusing only on the narrow game of business has become a risky proposition. They need new approaches to understand, manage and shape the phenomena that arise from nested dynamic systems. Going forward, leaders should embrace five imperatives to expand

their game and ensure that their companies thrive under more complex conditions.

1

Build multi-level scenario analysis skills

In this new environment, firms need to become more politically and economically astute. For that, they first need to develop political and economic analysis capabilities in order to understand what is happening in each layer, and to model implications and strategic choices. This analysis should rely not only on textbook theory and point predictions, but also on empirical evidence from analogous situations. Consider exchange rate risk. While textbook economics suggests that the depreciation of the British pound would increase prices (and lower demand) for imports, past experience with exchange rate adjustments shows that the effect on a particular company relative to competitors depends on many firm-specific factors. Leaders should then probe the effects of political and social shifts on their strategies. Contingent thinking helps. This involves developing scenarios that are rich and broad enough to challenge the implicit assumptions behind strategies, investment plans and initiatives. Ideally, scenario analysis is not a oneoff (or annual) exercise, but part of an ongoing examination of strategy. Leaders can use these scenarios to define signposts (“If we see events of type x, this validates belief y”); build better antennae to pick up signals earlier (“If we see x, type x events are likely to occur soon”); and discuss conditional actions (“If we see x, then do y”). This is easier said than done. Take European utility companies, for example, which – despite substantial political capacities and sophisticated scenario analysis skills – still struggled to grasp the impact of green-energy preferences and policies on their business models.

2

Become more resilient

Given the inherent unpredictability of nested complex systems, not every adverse effect on business can be foreseen or mitigated. This means businesses need to become more resilient so that they can sustain and possibly even gain relative advantage from external shocks. Biological systems have evolved this quality over time. In our research, we found that organizations are more robust if they have three qualities of such systems: redundant elements (in their manufacturing network, for instance), internal diversity (such as in problem-solving approaches), and modularity (a network of loosely linked instead of tightly integrated parts). For example, when a fire destroyed the production lines of one of Toyota’s key suppliers, the company was able to quickly activate and switch to other suppliers, avoiding assembly line interruptions that could have cost Toyota millions of dollars.

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figure 1

figure 2

POLITICAL AND ECONOMIC I S S U E S G R O W I N I M P O RTA N C E

POLITICAL AND ECONOMIC FEEDBACK HURTS PROFITS

BCG Politics and Economics Index

Causal effect of higher political and economic feedback Top quartile

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Sales growth % per year

EBIT margin Shareholder returns percentage points change % per year

+50%

150 Median

100

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: 2005 median indexed at 100. Percentage change as percentage points. Source: BCG Henderson Institute.

Shape the system

To moderate their exposure to uncertainty, large firms can strategically shape their immediate neighbourhoods to build safe havens of relative predictability. They can do so by controlling the context in which value is created or exchanged. Ecosystem formation (of suppliers and partners, for instance) is one such strategy, because it can allow the orchestrator to shape the context by establishing control over information flows and pricing mechanisms. Consider Amazon. By partnering with thousands of smaller independent e-commerce players, Amazon sees external shocks sooner, can percolate change within its own operations faster, and can adjust the degree of coupling between itself and players by changing the terms of exchange. They can also buffer themselves against change by being agnostic to the product portfolio transacted on their platforms.

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-0.7

Statistically significant

0

3

-1.4

Recreate the narrative

In the long-run, few things are as powerful as ideas. To get a better feel for the emergence of ideas that can spread and shape social and political layers, firms need to engage diverse audiences beyond their target customers and listen more closely to them. From that starting point they should also aim to shape the discussion. Narratives – essentially storified ideas – are powerful because they can redefine what is legitimate and valuable. Take GE, for example. In a well-received and widely cited speech in 2016, its chief executive Jeff Immelt laid out a new multipolar vision for the future of globalization and reiterated GE’s commitment to building manufacturing centres and capabilities across the globe. In other words, it is attempting to rewrite the narrative for globalization to address widening faults in the prevailing one.

5

Note: Graph shows coefficients for a one standard deviation change and 95% confidence interval. Dependent variables lagged by five years. Source: BCG Henderson Institute

Reframe leadership

Leaders need to continue focusing on value creation for customers and shareholders, but they must do so within new constraints created by economic and political layers in the broader system. To do so, leaders need to broaden their leadership repertoire. In particular, they need to increase their contribution as antennae that sense changing political and social signals, and as disruptors that translate external change signals into organizational action and overcome organizational inertia. To shape the system and the narrative, leaders must balance the need for higher visibility into, and influence on, economic and political layers with a sense of humility about their own degree of control over desired outcomes.

The systemic leader

Individuals, companies, economies, societies and political systems are increasingly and inextricably connected, making it harder than ever to understand and steer individual firms in terms of business considerations alone. In times like these, the business of business requires more than just executing or thinking about business. To refresh their game, leaders should see their firms as embedded in interconnected, nested local and global systems. Leaders who understand, and are able to manoeuvre in, this new environment will position their companies to take advantage of these new complexities. — Martin Reeves is senior partner and managing director in The Boston Consulting Group New York office, and global director of the BCG Henderson Institute. Follow him on Twitter @MartinKReeves. — Johann Harnoss is a project leader in the firm’s New York office and an ambassador to the BCG Henderson Institute. Follow him on Twitter @Johann_Harnoss Q4 2017 Dialogue

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The project revolution is here. Can you adapt? The operating environment has changed: project work is more pervasive and important than ever. Michael Canning questions whether leaders are adapting fast enough

C L A S H O F C U LT U R E The new era of project work runs counter to the instinct of traditional leaders for linear strategy, to drive variability out and direct people. These mechanistic approaches are doomed to fail in the upcoming epoch, which demands dynamic strategies, creative solutions and inspired teams.

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Disruptive technologies, new forms of competition, and more intense globalization, are making every industry more volatile and complex. This dynamism makes the future less predictable and speed more important. “The dominant idea behind strategy – establishing a sustainable source of competitive advantage – is becoming irrelevant,” says strategy guru Rita McGrath. Organizations need a new playbook to seize opportunities faster and develop their ability to adapt in real-time. This requires faster cycles between strategy formulation and execution, while learning how to stay closer to customers, innovate more rapidly, and adapt products and services. As leadership expert Peter Bregman said in his recent Harvard Business Review article, in today’s operating environment “your organization’s biggest strategic challenge isn’t strategic thinking, it’s strategic acting”. A less discussed consequence of this new operating environment is the exponential growth in project-based work. About a fifth of the world’s economic activity a year – $12 trillion – is now organized as projects. Over the next decade, organizations are expected to experience a 68% increase in projectbased work. As Duke CE educator and Dialogue author Antonio Nieto-Rodriguez notes: “This is one disruption affecting our world that media and academia have missed.” Most of today’s organizations were designed to accommodate activity within functional or geographic silos. And coordination among people, budgets and work systems was accomplished as required (see graphic, right). Project work was the notable exception, not the standard. Today, the volume and strategic importance of project work is on the rise, and being on – or leading –

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one or more projects is the norm. Chief executives recognize that projects are the lifeline of strategy. In 2017, corporate heads classified more than half of their projects as strategic initiatives. This makes sense when you are leading in a world described by one auto industry executive as “two speed”. In his view, leaders need to “stabilize the current business and

keep our promises to Wall Street, while completely transforming ourselves”. In this environment, it’s not surprising that a great deal of day-to-day baseline work still occurs in functions, while a growing portion of the important work related to executing strategy and transforming organizations takes the shape of projects. As Nieto-Rodriguez points out: “These projects cut across silos, set people to

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figure 1

T H E C A PAC I T Y D E F I C I T

64%

Proportion of chief executives who report that their businesses are volatile, uncertain and complex

74%

Proportion of chief executives who expect the level of complexity to increase over the next five years

work towards a common goal, and align the organization to deliver change that creates value.” While chief executives acknowledge that executing projects faster and better is essential to win, they also worry that their own organizations are not prepared to do so. Their concern is well founded as research indicates that, in the last three years, 44% of strategic projects failed to be implemented. So what’s behind this execution deficiency? Most testimonies suggest it stems from the inability to manage the complexity and change inherent in the operating environment. Important projects are designed as catalysts of change. These projects tend to cut across more boundaries, affect multiple stakeholders, have a greater number of external dependencies, and carry a sense of strategic importance and urgency. As such, they also often involve a cross-boundary team from multiple disciplines and locations, who work in a distributed way. The traditional theory of leading projects centred on time, cost and quality. It involved active and visible management of plans, money and people in what was assumed to be a relatively stable context. Given today’s inherent volatility and complexity, a more holistic and adaptive approach to managing projects is required. Meeting time, cost and quality goals in this disruptive context requires us to shift how we manage strategy, work and people – as depicted in Strategy Execution’s Leadership Framework (SELF) (see graphic, left).

Challenges with execution

Only 62% of strategic initiatives today have a clear link between objectives and strategy. And a whopping 41% of projects fail due to changes in strategy. The plan often calls for a linear progression. Yet the strategic reality demands adaptation to unexpected,

49%

Proportion of chief executives who feel that they are prepared to handle this increased complexity

disruptive events. Managers now spend more than 25% of their time on unanticipated work. So, good plans are essential, but the ability to adapt and manage change is increasingly becoming the real work, not the exception. Yet some 45% of chief executives say the leading barrier to successful project implementation is lack of changemanagement skills. As an executive said to me recently: “I know the world

figure 2

THE RISE OF PROJECTS

Value of economic activity worldwide that is project-oriented 2013

2027 (forecast)

$12tn $20tn figure 3

THE HUMAN FAC TO R

Individuals working in project-based roles worldwide 2017

is more complex, but we need our organization to go faster and make work simpler.” Preparing people to lean into the complexity – and simplify it for others by knowing how to focus on what matters most – is critical.

The importance of leadership

In companies that manage highly successful projects, 81% report that leadership is the most important skill. One of the key reasons cited for projects becoming more complex to manage is having multiple, diverse stakeholders. Today, projects cross more boundaries, internally and externally, making the ability to connect, collaborate and influence a diverse set of stakeholders critical to success. While diverse perspective can contribute to unique insights, the number and diversity of stakeholders often impedes decision-making. “Some decisions we have to make are hard, and the right answer doesn’t align with my functional goals,” said one project team member I interviewed recently, “so we tend to debate, push it back and schedule another meeting. But meetings create more process, not solutions.” Knowing how to own the issue, and influence the right people to act swiftly, is part of simplifying the complexity. The partnership between Duke Corporate Education and TwentyEighty Strategy Execution has given rise to the Adaptive Strategic Execution Program, which is centred on shifting the mindset – and building the skillset – of professionals to better manage projects in a more complex world. The project revolution is underway and the timing is right for chief executives to shift their frame and focus more on project leadership as a key to execution. They do this by asking a few simple questions:

2027 (forecast)

66m 88m figure 4

THE COST OF FA I LU R E

$122m

Amount wasted per $1 billion invested in the US because of poor project performance

Are we doing all we can to set up our initiatives and projects for success? Are we equipping our people correctly to succeed and execute the strategy in this new environment? Do our professionals have the adaptive mindset and skillset required to ensure projects succeed today? Shift your frame and ask some new questions. The future of your company depends on it. — Michael Canning is global head of new businesses at Duke Corporate Education Q4 2017 Dialogue

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Don’t sleep through the digital starting gun The new machines, powered by AI, won’t lead to a job apocalypse, and they may even set humans free, writes Paul Roehrig Dialogue Q4 2017

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Get fit! Stop smoking! Transform your business! Success with any meaningful change begins with a simple question: “Where do I start?” From our work with business leaders all over the world on how to compete using our new digital machines, we found that “where do I start?” is probably the most common query of our modern business age. In these days of ‘all things digital’, your work life probably seems more packed with questions than answers. When machines do more of nearly everything, what will you do? Will a robot take your job away? Will your company be ‘Amazoned’? What will your industry look like in five years? Will your children be better off than you are? By now, many clearly recognize that AI is already all around us. In fact, it’s at the core of experiences many of us have every day. It’s how we book a car through Lyft, arrange a hotel room through Hotel Tonight, or engage with Alexa to play the music we want. What’s beginning to happen, and what will accelerate over the coming years, is that AI will be applied more to work that matters – how we bank, how we heal, how we insure our families, how we educate our children. As we explain in our recent book What To Do When Machines Do Everything, the hard truth is that the debate about digital, AI and new machines is no longer about “if” but “when?”. Endlessly wondering “where do I start?” is a surefire way to land on the career downescalator. (Next floor: VCRs, Kodak film, and irrelevance...) If you’re still unconvinced, just ask the recently departed C-suite occupants from Ford, GE and Uber (or Blockbuster, Yahoo, BlackBerry), who have not met digital economy expectations. This may all sound a bit dire or alarmist, but before you reach for a breakfast martini, keep in mind that the good news is that digital means growth! We surveyed 2,000 C-suite executives from retail, banking, insurance (health and P&C), manufacturing and life sciences – with a combined total revenue of about $7.3 trillion – and found that the impact of digital transformation on these industries between 2015 and 2018 alone could be up to $20 trillion. In a business world moving at the speed of Google and growing at a Moore’s Law pace, “where do I start?” becomes an existential question for each of us. Getting it right is the great opportunity of our time. Fortunately, the early winners of the digital economy are already beginning to show a practical path to get started. Here are three things you can do immediately to become fit for the future:

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To become more digital, focus on humans

It may sound counterintuitive, but in a world of more pervasive technology, activities that humans do well will become even more important. Analytical, communication and learning skills, as well as the ability to relate to other people, have all been vital for business success throughout history. But in the coming years, these very human traits – things we do naturally, but computers struggle with – will become even more essential. The data clearly shows that distinctly human job skills – the ability to engage with others, lead, ask questions, reason, and interpret – will dramatically increase in importance. You might think: “Hang on! I saw a robot on CNN that could dance/sing/drive/pick strawberries/whatever… What about robots doing more human stuff?” Yes, machines will do more and more, but the people building the new machines will tell you that fears about robots replacing all human knowledge work overnight is largely indicative of the hysteria that accompanies every major shift in technology. (As a society, we have been worried about new technologies impacting society since the invention of the written word, which even Socrates was against). Being able to apply judgment, curiosity, creativity and the human touch are all far outside the purview of current and near-future technologies, and this will remain the case for some years to come, even as the new machines become more capable.

Fears about robots replacing all human knowledge work overnight is largely indicative of the hysteria that accompanies every major shift in technology

Enhance your workforce with the new machines Our productivity has been improved by technology since a tired Mesopotamian started using the wheel to help save his aching back 5,000 years ago. More recently, machines and software have been working with us and for us in factories for years. Now however, software bots based on AI and machine learning are becoming more ubiquitous and powerful. When you buy something from Amazon or accept a recommendation from Netflix, you are already using automation and AI in your personal life. This very same model is now being applied to countless business processes. The current AI fearmongers assert that robots will take over all the jobs. Some jobs will go away; there is no doubt about that. But the number is less than many people think, and the more common scenario is that workers will be enhanced with new technology to become much more productive. The next time you walk into your workplace, think about what everyone is doing (for work,

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fIGuRE 1

FUTUREPROOF SKILLS YOU WILL NEED TO IMPROVE TO S TAY R E L E VA N T By 2020, senior executives project that employees will need to improve their perfomance in these areas on average 15% across all industries

Source: Cognizant Center for the Future of Work, 2016

not on Facebook or League of Legends). Now imagine what your business or agency could do if 50% of your people were 50% more productive. This may sound extreme, but it can happen if you pick the right targets to enhance your workforce by automating certain routine tasks. Consider that every knowledge work job – probably like yours – is made up of different tasks. Some tasks – probably the parts of your job you hate doing – are ripe targets for AI to take over. When you pick the right tasks to automate,

the economic impact can be game-changing as the new machines improve efficiency while simultaneously freeing up workers – us – to do more and higher-value work. That means more productivity, and that’s the goal. Blue Prism, for example, is saving companies millions of pounds a year by applying AI to risk management, fraud detection and claims processing. TriZetto helps healthcare insurer clients apply process automation to improve throughput, accuracy and cost. The list goes on

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and on, and will continue to grow as applying AI to work becomes a new business imperative. So where to start? The first and most important step is to pick your spots. This will vary by business of course, but there are some common themes you should look for. (If you want a shortcut, look for a cubicle farm where lots of people are doing the same thing over and over and over again.) Software robots don’t get bored, so start with work that is highly repetitive and done by lots of people (because you want a meaningful impact). Robots are great at calculations, so tasks that rely heavily on a prescribed process and large amounts of data are far better targets for automation. Avoid trying to automate complex, ambiguous work that requires intuition, empathy, curiosity, insight or judgment. In spite of all the sci-fi talk, it’s best to leave that work to us humans. The key here is to pick your spots. Apply AI systems to automate specific (often mundane) tasks, and use that freed-up time and energy to do higher-value work. This higher-value work is often what we much prefer doing to completing forms (again), expense reports (always behind), scheduling (just a mess), and managing your endless soul-crushing daily tsunami of emails.

Make everything a code generator

You know something serious is happening when it shows up in bad jokes. “What will my refrigerator say to my sprinkler system?” “My alarm system got hacked and is demanding a Bitcoin to turn off.” Not funny, and the point is serious business. Every thing can now be a code generator. Watches, appliances, shirts, lightbulbs, cars and medical devices are now instrumented with sensors. More importantly, businesses are creating new products and services based on this data. Where to start instrumenting? The better question is where should you not? Selling or servicing mortgages? Instrument the home to help prevent predictable damage. Retail? Use sensors to better track and manage foot traffic and product placement. Healthcare? Instrument your ICU to help improve health outcomes. Manufacturing? Every machine should now be sending out data to improve productivity and uptime. With the cost of chips and sensors continuing to drop, every physical thing should be generating valuable data that your business or agency can use. The only limit is your creativity and willingness to innovate. Once you have data coming off a lightbulb, shirt, windmill or pet collar, what do you do with it? What are the correlations hidden in the data? How can you monetize the data from your table or car? It’s not really just specific physical items either. Your logistics process, call centre or

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claims process should also be generating data. Many leaders get a bit paralyzed here, because they don’t recognize fully that data is a means, not an end. It’s a raw material, not a business outcome. This is why you need support from your analytics team to help unlock value from your new raw material. Data science and algorithm building is not alchemy or a black art, it’s merely a set of tools that curious people can use to draw meaning and insight from data. If you don’t have these tools wielders next to you, and many leaders may not, then one of the most important things you can do to get fit fast is build a network of partners who can help you make meaning – and business value – from your data. Then it’s up to your business team to build new business models, consumer experiences and products based on your insights.

A postcard from your future

It’s a cliché but also true: this is all easier said than done. But similar to healthy eating and fitness habits, becoming digital should be the new practice for everyone hoping to succeed in the coming quarters and years. In five years’ time, the business landscape will be very different. New players will emerge. Venerable companies will fall. Unimagined technologies will exist. Anyone with too much certainty about how the future will play out is selling something. But we know enough to get started, and we must get started. We also know the clock is ticking. (Digital clocks don’t actually tick, but you get the idea.) If you act soon, this is going to be great. But if you don’t, your advantage will wither. After years of meeting people building new AI-fuelled systems of intelligence, one common thing that struck us was their sense of optimism. These weren’t Pollyannas or naive children, they were successful business people working hard to do the right things for their customers and their companies. They were probably like you. And that’s the point. Winners of the fourth industrial revolution will not sleep through the starting gun. They will recognize that waiting is the highest risk, decide that they had the agency to take an action, refuse to be stonewalled by perceived roadblocks, and then take the first steps described here to get fit for the future of work. — Paul Roehrig is a cofounder and chief strategy officer of Cognizant Digital Business. He is a coauthor – along with Malcolm Frank and Ben Pring – of What To Do When Machines Do Everything

The key here is to pick your spots. Apply AI systems to automate specific (often mundane) tasks, and use that freed-up time and energy to do higher-value work Q4 2017 Dialogue

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interview

World leader Ogilvy & Mather’s LatAm chief executive Horacio Genolet identifies the best people and asks them to champion change

writing

Ben Walker photography

Adam Wiseman

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We identify champions and let them lead the transformation

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“If there is anything that a man can do well, I say let him do it,” said the great reforming US president Abraham Lincoln. “Give him a chance.” Lincoln made America great with his ‘team of rivals’. He forged a road to the abolition of slavery and victory in the American Civil War by hiring people that had once opposed him politically. Some considered his recruitment of four opponents for the Republican nomination a recipe for disaster. In fact, by harnessing their talents in government, it brought the 16th president of the United States outstanding success. Lincoln’s theory ran that the key to organizational excellence is to find the best person for the job, then have them lead it. “We need the strongest men of the party in the Cabinet,” he said. “We needed to hold our own people together. I had looked the party over and concluded that these were the very strongest men. Then I had no right to deprive the country of their services.” Lincoln’s thinking came centuries before its time. Today’s most effective companies, freed from the strictures of inflexible hierarchies, follow a similar system. Find expertise, and harness it. Don’t second guess it. Identify the best at every key discipline and have them run it. Get out of their way.

Uniting nations

Ogilvy & Mather LatAm has taken the model, and developed it to whole nations. Its chief executive, Horacio Genolet, is charged with bringing 22 nations, 50 offices and 1,400 employees together. Appointed LatAm chief executive in November 2016, Genolet first worked for Ogilvy & Mather in 1993 from his native Argentina, as an account supervisor. He left to join Telecom Group, Argentina’s largest telephone company, later taking a job at the media company Carat. Yet the lure of Ogilvy & Mather was too strong, and he returned in 2004 to stage a rapid rise from VP client services to managing director of Ogilvy & Mather Miami, and chief customer officer of Ogilvy & Mather Mexico. He landed the chief executive’s job in Mexico in 2011, before being promoted, last year, to spearhead the whole group. Mexican Leaders magazine has named him in its top 300 most influential Mexican leaders list for the last four years. Individual professional success can sometimes lead to hierarchical leadership. ‘Hero syndrome’ leads chief executives to concentrate all decision-making and creative-power in their own hands. Not in Genolet’s case. Genolet avoids centralization in favour of different territories leading the whole group in their areas of strength. “We understand that each region has different needs – but also

different capabilities,” he tells Dialogue. The key for Genolet is that, like Lincoln’s rivals, those regions that have a skills advantage in any given area are given the freedom to spearhead operations and strategy in those areas. “We have a global strategy but also recognize that we need to adapt and exploit the different talents that we have,” he says. “We are in the middle of a transformation process. So we identify champions and let them lead the transformation. “We want to share the talent that we have in each different cluster. In the Mexican cluster, we have a strong capability in social media. In Brazil, we are strong in other digital media. It’s a network that we can exploit for our teams and for our clients in different clusters and different markets.” While differences between the regions and their lieutenants are celebrated – even exploited – their linguistic similarities hold the group together like social glue. “We have cultural differences for sure,” says Genolet. “But we have something for me that is an advantage. That’s our shared language. All the markets in LatAm – except Brazil – speak Spanish. It is a little thing, perhaps, but my colleagues in Asia have 50 languages to handle, my colleagues in Europe, 15. We have one thing that unifies us. The Spanish language. It is a simple thing, but it really works.” Mexico is strong in social media, so much of Ogilvy & Mather LatAm’s social media strategy is derived from its expertise and experiences. Certainly, the office has been at the forefront of using the Niagra of digital dialogue across Mexico to shape powerful campaigns. “We have a very large social media listening centre in Mexico,” he tells Dialogue. “One of the most creative things we did was related to Donald Trump and what he was saying about Mexico and Mexican people before he was elected US president.” In was an ingenious – and incredibly powerful – campaign. Ogilvy & Mather captured social media feedback on Trump’s rhetoric about building a giant barrier wall on the border line between the US and Mexico. “Many of the positive comments about Mexicans came from the American people,” says Genolet. The result was a one-minute ad that asked what good has ever come from hard borders and social division. The story is told in short black-and-white video clips that range from children putting their fingers through the border fence, to thin kids flushing a plump schoolmate’s head in the lavatory. It’s easy to get carried along, thinking it is the work of a charity, or a broadcast for a pro-immigration political party. The punchline comes at the end. It’s for airline Aeromexico. La linea que nos une. The line that unites us. “The campaign was based on insights we saw in social media,” says Genolet. “We are the only

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We have one thing that unifies us. The Spanish language. It is a simple thing, but it really works

agency that is creating really innovative content based on what we find in the social media arena.”

The power of innovation

Creativity is important to Genolet. He says he would rather be the agency with the best ideas than be the biggest. “The most important metric for us was not to be the number one agency, but to be recognised as the most innovative and most integrated agency in the market,” he says. Before graduating to chief executive of

LatAm, when heading up the Mexican operation, his patriotism for his adopted country led him to drive the country forward as president of The Mexican Association of Advertising Agencies. “My aim was to bring forward creativity in Mexico as a whole,” he says. He now considers it a “monster”, thanks to its booming economy and smartphone penetration. “It’s a monster in a most positive way!” he says. “This is because of its high potential to continue growing. Coca-Cola Mexico is now the second-biggest Coca-Cola territory in the world. American Express Mexico is their second-biggest territory. Mexico is one of the most active communities in the world in terms of Facebook and Twitter. Mexico has 120 million cellphones. Some people here have two or three active cellphones. And it’s rising, year-on-year.” Ogilvy & Mather’s success in Mexico and the LatAm region is in part due to the boom in the twin monsters of Mexico and Brazil. “Our industry is fully aligned with their economic performance,” he says. And yet, despite Ogilvy & Mather’s various world regions shaping strategy, there remains a global goal. “We are much more client-centric, we will do much more than basic tracking of clients’ needs,” he says. “Sometimes this will involve listening more to social media, sometimes more focus on shopper activity. It’s an important change. We have influence and we track the way that they are working. It is a key element of our client-centred strategy. We are focused on our top clients on a global level and at a local level. We deliver digital media solutions for our clients. We try to build in what our clients need.” The ‘team of rivals’ approach should roll on, and grow. Far from being threatened by bringing the world’s supreme marketers into the agency, Genolet wants to offer champagne at the gates. “The big goal is to bring the best talent into the region,” he says. “We need to understand how to attract and keep the best talent.”Once he has the best people, you sense that Genolet will get out of their way and let them succeed. Abraham Lincoln might have approved. Q4 2017 Dialogue

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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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leadership

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kate cooper

Middle management is complex. Those who master the art can wield great power

Leading from the heart Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management

Our challenge is to appreciate the power and complexity of this middle role

Who or what are middle managers? In 1989, renowned business and management academic Henry Mintzberg defined middle management as taking place between “the operating core and the apex”, describing a group of people who had emerged in the 1970s. The group appeared as a result of growth in the size of organizations, increasing layers of bureaucracy, and an appreciation that a single manager’s span of control could not stretch infinitely. Although the optimum size of this span has been a matter of debate since the 1800s, it is generally accepted that the number has risen. Former General Electric chief executive Jack Welch actively increased the number of direct reports of his managers as a countermeasure to micromanaging. Organizational psychologist Elliott Jaques’ contention in the 1980s that the correct number of reports is “however many a manager can know well” resonates with current theories of motivation and engagement. Middle managers are most easily defined in hierarchical organizations where there are grades and progression structures, often with associated levels of benefit, that clearly label who is ‘in the middle’. In flatter, less hierarchical, smaller and growing organizations the middle is not so clear. However unusual the organizational structure, the senior individual or team is readily identifiable, as are individuals with ‘team leader’ responsibilities. But how do we define, recognize and label those in the middle? And do we need to? Flatter organizations’ structures, projectstyle working and increasing regulatory requirements place additional and different demands on ‘middle’ leaders and managers. They are responsible for business as usual; prepare reports and recommendations on which senior leadership teams base strategic decisions; are subsequently delegated the responsibility to enact and operationalize the strategic decisions; simplify messages from above; and summarize communications from below. Furthermore, they are undeniably the ‘line managers’ who bear the burden

of expectation of every special-interest initiative, such as learning transfer, mental health awareness, diversity, inclusivity and wellbeing. They are always recognized as the key driver for increasingly measured employee engagement. Such pressure groups invariably insist that any initiative “must start at the top”. They ignore the crucial role of the next layer of management in ensuring it happens, and overlook the power of the middle manager to sabotage, ignore, obfuscate, delay or – more benignly – only half-heartedly support such initiatives. In spite of contributions to management thought from the study of complex systems, and challenges to our understanding of power and control from critical management theorists such as Mats Alvesson, many of us are still wedded to the idea of senior teams choosing the future direction of an organization and driven by a shared vision navigating people towards it. At the same time, we are bombarded with evidence of the volatile, unpredictable, chaotic and ambiguous nature of the environments in which organizations operate. If the future is uncertain and senior teams are struggling to make sense, never mind control, their environments, it is the middle managers who hold up the apex while ensuring the operational core continues to function. Not only do these middle managers have so many agendas to manage, the difficulties around defining who they are and drawing parallels with similarly positioned leaders in other organizations mean access to appropriate development is problematic. Senior leaders often share certain challenges whatever the sector, and first-time line managers may all benefit from being introduced to Leadership 101 self-awareness, team dynamics, taking responsibility, communicating progress and keeping an eye of the future. Our challenge is to appreciate the power and complexity of this middle role, and consider the best ways of supporting these people as they communicate with the apex – and bear responsibility for the operating core. Q4 2017 Dialogue

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How to be a brain surgeon There is an art to managing people who know more than you do, writes Marshall Goldsmith

To say the leader-asfacilitator process is different from the corporate norm would be an understatement

Knowledge workers are people who know more about what they are doing than their boss does. Their ever-increasing presence therefore presents challenges to modern-day leaders that their counterparts in years past were never called to address. Let’s take a closer look at this, starting with one of my favourite Peter Drucker quotes. Drucker provided a prescient perspective on the authoritative leader, when he said: “While the leader of the past knew how to tell, the leader of the future will know how to ask.” Leaders in the age of the knowledge worker need to know how to ask because they know far less about the jobs their workers are doing than their workers do! I’ve never seen anyone live these words to the degree that my friend and the former chief executive of Ford, Alan Mulally, did. And it was of great benefit of those around him. In fact, what Mulally did was so monumental that he was ranked as the third-greatest leader in the world by Fortune magazine. Prior to that he was recognized as the best chief executive in the US by CEO magazine. Here is a little more history about Mulally. After an incredibly successful career at Boeing (where he rose to the role of chief executive of Boeing Commercial Aircraft), Mulally became the chief executive of Ford and helped the company achieve one of the most positive turnarounds in the history of corporate America. The amazing story of Ford is welldocumented in the book American Icon. When he left Ford, Alan had a 97% approval rating from his employees.

How did he do it?

Let’s start with a little history about me. For over 40 years I have been a student of leadership. I have a PhD from UCLA’s Anderson School

of Management. I am the author of 35 books. I served on the advisory board of the Peter Drucker Foundation for ten years. I have had the honour of coaching over 150 of the most important organizational leaders in the world. Yet in my long career, I have never observed an approach to leadership that matches Mulally’s. His style is as unlike authoritative leadership as any style I have ever seen. It is ‘leader as facilitator’ rather than ‘leader as authority’ or ‘leader as boss’. It’s similar to my behavioural coaching process. The philosophy behind stakeholdercentred coaching is simple: leaders can learn a lot more from their key stakeholders – who interact with them every day – than they can learn from any coach. My average client has 18 key stakeholders – who am I to assume that I know more than these 18 other executives? In my coaching I am a facilitator. I create a process where my clients reach out to their stakeholders, listen and learn. I don’t get paid for spending time with my clients or for proving how smart I am. I do get paid when they achieve positive, lasting change in leadership behaviour – as judged by their key stakeholders. Mulally’s process of leader-as-facilitator is like putting my coaching process on steroids! The philosophy behind his leadership style is simple: why should I – even though I am the chief executive – assume that I know more than the thousands of leaders and professionals at the company? Mulally has each of his direct reports publicly discuss each of their five key priorities in the weekly Business Plan Review meeting. Rather than immediately leaping in to help the direct report who has a problem, he facilitates learning from everyone on the team. Rather than saying, “Here is how I can help you,” Mulally asks, “Who are the best people at the company who can help?”

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As a leader-facilitator, Mulally is perfectly comfortable facilitating a meeting where great guidance is provided – even if none of the great guidance comes from him. He is not delusional enough to believe that he has all of the answers. He is facilitating a process of finding the answers. To say the leader-as-facilitator process is different from the corporate norm would be an understatement. The main challenge is how do you help your team members achieve their goals when you – as a leader – are not an expert on the topic? Here are six quick tips for effectively managing knowledge workers.

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4

BUILD NETWORKS

Today, job security comes from having ability, passion, and a great network. Leaders who enable people to form strong networks both inside and outside the company will gain a huge competitive advantage, along with the loyalty of their workers. These professional networks allow people to expand their knowledge and bring it back to the organization.

DEMONSTRATE PASSION

In days past, working 40 hours per week and taking four or five weeks of vacation meant that people often focused less on loving what they do. Today, people work 60-80 hours a week and it’s crucial that they love their work to avoid burnout. Those who lead by example and demonstrate passion for what they do make it much easier for their followers to do the same.

2

STRENGTHEN ABILITIES

With less job security and more global competition, it’s critical that people update and refine their skills continuously. Leaders need to look beyond skills needed today and help their workers learn skills they will need tomorrow.

3

APPRECIATE TIME

People have less time today, which means the value of that time has increased. Leaders who waste their workers’ time are not looked upon favourably. Leaders will be far more successful if they protect people from things that neither encourage their passions nor enhance their abilities.

5

SUPPORT GROWTH

The best knowledge workers are working for more than money. They want to make a contribution and to grow in their fields. Leaders who ask their people, “What can our company do to help you grow and achieve your goals?” will find it comes back tenfold.

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EXPAND HAPPINESS AND MEANING

No one wants to work at a meaningless job that makes them unhappy. Leaders must show their workers how the organization can help them make a contribution to the larger world and feel rewarded for doing something about which they are passionate.

Managing knowledge workers is a challenging and rewarding job. Leaders who do so must look beyond the work, and think about the person who does the work if they are to be successful. By appreciating and encouraging the dedication, time and experience of their workers, leaders help shape not only the futures of the professionals they lead, but also the future of their organizations. — Marshall Goldsmith is an executive leadership coach, author and speaker Q4 2017 Dialogue

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Save our schools Only one type of teacher has the qualities to turn around English education

writing

Alex Hill & Liz Mellon illustration

Adam Quest

The link between education and the economy is strong. The better educated the workforce, the greater a country’s gross domestic product – a 50% increase in exam results leads to an increase of between 0.7-1.5% increase in GDP. Yet the Organization for Economic Co-operation and Development (OECD) Programme for International Student Assessment (Pisa) shows that the UK lags behind its peer countries, despite investing more than them. Specifically, the 2012 Pisa study showed that the UK invested the eighth largest amount, but scored a paltry 19th in mathematics, 14th in science and 16th in reading. In our seven-year research, we studied the results of changes made by 411 leaders of English academy schools after they were put into remedial measures by the Office for Standards in Education, Children’s Services and Skills (Ofsted). Our findings suggest that UK schools underperform because we’re appointing, rewarding and recognizing the wrong leaders, who do things in the wrong order.

Our research

Our study provided us with the rare opportunity to look at many organizations which are all regulated, documented and measured in the same way, provide a similar service and have made similar changes. This is research gold, as it’s possible to isolate variables and understand the impact of changing them. We could analyse the effects of 58 types of investment, on 18 performance measures over time, in 160 academies operating in 18 different regions. We were also given full access to the academies’ management information systems, and interviewed their leaders, staff and students.

So, what did we find? Like any turnaround, there is no magic bullet – a series of remedial steps need to be taken, and each step’s impact depends and builds on the previous steps in the sequence. We were also able to identify five types of leader and see which type was the most effective and why.

Dispelling myths

There are strongly held opinions in education about what improves a school and our findings challenge some of these. The most common mistake was to try to improve teaching first. This doesn’t work. Good teachers can’t teach students who aren’t there, or

Good teachers can’t teach students who aren’t there, or who don’t care, in an environment that doesn’t support them who don’t care, in an environment that doesn’t support them. Culture and student behaviour must improve first. Reducing class sizes helps, but it’s expensive. And we found that class sizes of 30 performed as well as those of 15, when students were well-behaved. A school that teaches children from fiveto 18-years-old works better, as good behaviour can be embedded from the start. Also, many schools tried to come down hard on poor behaviour with a ‘zero tolerance’ policy. Any short-term, positive impact doesn’t last and, in some cases, students revolted – students need to feel engaged, not excluded. We know that leadership matters, so understandably, many academies wanted to put a strong leader in place Q4 2017 Dialogue

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and parachuted in a so-called ‘superhead’ from a successful school. However, although exam results quickly improved, these super-heads stayed only for one or two years, focused their changes on students aged 15 to 16, and the subjects – mathematics and English – used to assess performance. In most cases, they made quick improvements, took the credit and moved on. In every case that we studied, exam results dipped after the super-head left, and the incoming head had to spend up to £2 million cleaning up the mess. And, more worryingly, these leaders were paid 50% more than their peers and 39% were knighted. In these 160 British academies, what mattered most was not the amount of money pumped into the system, but making the right changes in the right order. The most precious investment was time – for the headteacher to stay long enough, and the governors to be patient enough, and for parents to have faith enough to ensure that the foundations for sustainable change were slowly assembled and then built upon.

Leadership matters

We already know that the calibre of leadership makes a difference to any organization’s results. It’s the same for schools. We interviewed 411 leaders, as well as those who work for them, and analysed their impact using 64 investment variables and 24 performance measures over seven years. We could scientifically analyse the backgrounds, values, behaviours, actions and differing impact of the five types of school leader we identified, both during and after their tenure (most stayed two to three years). We found leaders who talk a good game, but have no impact. Or leaders who make everything look great while in the job, but things fall apart after they leave. And then there is the rarer, effective leader, who quietly redesigns the school to serve its community for sustainable success. We call these transformative individuals ‘the Architects’.

Why are Architects successful?

They redesign the school to create the right environment for its teachers and the right school for its community. First, they start teaching students for longer, to embed positive behaviours early (by acquiring a primary school) and to help them go to university (by setting up a sixth form). They increase revenue by

FIVE TYPES OF HEADTEACHER

Surgeons

Soldiers

Cut and transplant

Trim and tighten

Surgeons were the highest paid and most recognized leaders identified in our research, earning 50% more than the mean. Some 39% of them were knighted, while 24% held a CBE, MBE or OBE. By background, they tend to be physical education or religious studies teachers (85% in our study) who believe that the fittest win, through hard work and the right attitude. They often arrive with the reputation of having turned around several schools – the media call them ‘super-heads’, and the UK government believes we need more of them. They transplant resources to the short-term problem – this year’s exam results. They cut out poor performing students and non-essential activities, move the best teachers to the final examination year, reduce class sizes and increase revision. It’s not surprising that examination results improve dramatically in their one to two years in charge. However, these scores collapse after they leave, as the incoming final-year students have been ignored and under-resourced for two years, and it’s impossible to make this up. Buoyed by an undeserved reputation, the Surgeon has left behind the patient who, after a short rally, has a significant relapse.

Soldiers like efficiency and order. They believe schools get into trouble because they’re fat, lazy and waste public money. They are usually IT or chemistry teachers (94% in our study), who moved out of teaching and into administration early in their career. They see running a school just like managing a large project – focus on deadlines and costs, and the rest will take care of itself. They trim back every ounce of fat and make people – especially teachers – work harder. They cut support staff and non-essential activities, automate processes and start using cheaper suppliers. People are told they’re lucky to have a job and need to start working harder – morale plummets. Costs reduce dramatically in the one or two years they lead the school, but go right back to where they started after they leave. Teachers are exhausted and demotivated from working in a climate of fear and uncertainty, and the cuts are too deep to sustain. As the soldiers move on to their next mission, costs inexorably rise behind them.

developing non-teaching offerings. They then improve student behaviour (by moving the poorly behaved into a separate pathway within the school), collaborate with local organizations to show students the opportunities around them, and arrange trips abroad to open their eyes to other cultures. Only then do they focus on improving

teaching and leadership, by introducing coaching, mentoring and development programmes. Architects are the least well-known and the least rewarded, yet they are the only leaders who leave a positive legacy. They rise above the detail and take a much broader view of the school, its stakeholders and society to understand

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Accountants

Philosophers

Architects

Grow and invest

Debate and discuss

Redesign and reimagine

Accountants try to grow out of trouble. They are resourceful, systematic and revenue-focused. Usually maths teachers (78% in our research), they have a good head for figures and a sense of where extra revenue can be found. They believe that schools get into trouble because they’re small and weak. More revenue = more investment = bigger and stronger. One common early act is to acquire a primary school (the motive is to increase income, not improve student behaviour) and they also develop non-teaching offerings, such as out-of-school-hours gym memberships and using school premises as conference facilities. They take long-term decisions to enable the school to perform better financially, and believe teachers will work out where the extra resources are best spent. Revenue increases dramatically during their tenure, but examination results remain the same, because this is not where they focus. The school ends up richer, but no better.

The most common leaders (we estimate 81% of all UK heads) are Philosophers. Philosophers are passionate about teaching and love debating the merits of alternative approaches. They are typically English or languages teachers (89% in our study), eloquent, and believe that schools fail because they’re not teaching their students properly. They see themselves as experienced teachers, rather than as leaders, whose job is to pass on the knowledge and wisdom they’ve gained over their teaching career. Teachers are very excited when the Philosopher leader arrives, because they tell them how important their work is and how much value they add to society. They start going on trips to observe other teachers and invite teachers back to their school, to share ideas and approaches. But, fundamentally, nothing changes. Students carry on misbehaving, teachers become increasingly frustrated as they’re still managing poor behaviour and drowning in paperwork, parents are still not engaged, and performance – both financial and intellectual – stays the same. Nothing much improves, before or after their tenure.

Architects are the only leaders with any real long-term impact, yet they are the least rewarded and recognized, as results take time to show and everyone wants instant gratification. They usually studied history or economics (68% in our research) to understand how past leaders created the societies and economies we live in, but never thought they’d end up teaching. They worked in industry for 10-15 years first, moving into education with the aim of making a beneficial contribution to society. They’re insightful, humble and visionary leaders who believe schools fail because they’re poorly designed and are not supported by their local community.

what they want, and design the school to achieve it. Results take three to five years, but then continue to improve, with some Architects increasing exam results by 50% in the eight years after they arrive. They are visionary leaders, who think more about the future they are building than looking good today, investing time to make the right changes,

in the right order. Identify, develop and appoint more of them and the UK education system will improve.

Buoyed by an undeserved reputation, the Surgeon has left behind the patient who, after a short rally, has a significant relapse

— Dr Alex Hill is co-founder and director of The Centre for High Performance (a collaboration between the Universities of Kingston, Oxford, Duke, and London Business School). Dr Liz Mellon is chair of Dialogue’s editorial board Q4 2017 Dialogue

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vivek wadhwa

Taxing robots to pay for millions unemployed won’t work

Handouts won’t fix this jobless future Vivek Wadhwa is distinguished fellow at Carnegie Mellon University’s College of Engineering

UBI won’t replace the loss of purpose that comes from having your job stolen by a ton of metal

Once, the idea of governments handing out cash to everyone seemed crackpot. A universal basic income (UBI) had few supporters beyond a smattering of niche left-wing political parties and a handful of radical capitalist economists, who believed it was the only way to solve the near-ancient problem of the benefits trap. The trap dictates that those struggling in the economy have a disincentive to work, because doing so threatens their state benefits. The idea ran that if everyone got a UBI, any work done could be paid in addition to their basic income. Times have moved on, because support for UBI is now mainstream. Tech Moguls such as Mark Zuckerberg, Elon Musk and Bill Gates see it as a secret weapon against rapid and accelerating automation, a method of saving the working class from an economy where all the work is done by machines. As robots march into factories, UBI is colonizing the minds of thinkers everywhere, Bill Gates also suggests an additional tax on robots be levied to pay off those whose jobs they have taken. UBI is certainly one of the things we need to think about and a part of a comprehensive solution to the problems of joblessness that technology is creating. Over the next decade and a half, most jobs will be automated and done by artificial intelligence and robots. But UBI won’t solve the souldestroying loss of purpose that comes from having your economic raison d’être stolen from you by a ton of animated metal and software. Nor is a UBI even likely to happen, at least in the US. The government is rolling back over healthcare protection; how likely is it to approve a universal system of welfare that – by definition – hands payments to billionaires as well as down-and-outs? There are ways of moving forward that are less susceptible to political climate change. In a paper titled A New Deal for the Twenty-First Century, Edward Alden and Bob Litan argue that, as traditional working-class jobs disappear, jobs in the tech and caring professions will boom. Technology is taking over the world, and

the global population is aging — so follow the money. The key, say Alden and Litan, is to furnish the young with the core skills necessary to adapt to fundamental labourmarket changes so rapid that governments and educational institutions struggle to keep up with them. Older workers who become displaced should receive assistance in finding new jobs and retraining. Governments should offer tax incentives for that training. Career loan accounts could be established to encourage employees to gain new skills, with repayment of the loans linked to future earnings. The authors advocate a generous wageinsurance scheme that tops up earnings; direct wage subsidies; and minimum wage increments. They suggest that a voluntary military and civilian national-service programme for young people could mitigate social disruption and teach important new skills. In towns and cities, the extra labour generated by national service could tend to public spaces, parks and playgrounds. The danger is that the public will think this new thinking is addressing a problem coming tomorrow. A peek inside Amazon’s warehouse reveals that it is a challenge to be addressed today. Machines do all of the product storage and retrieval – the bulk of the hard work. Within five years, robots will likely take over the loading of self-driving trucks bound for distribution centres. From there, drones will fly the goods the last mile. Most of the jobs that require human labour will be eliminated. In other fields, millions of new jobs – specification not yet known – will be born, but these roles will not suit unemployed warehouse workers, because they won’t have the skills to take them. We need grand thinking to solve the big problems ahead. The world is about to throw millions of employees on the economic scrapheap, and incremental solutions should be rejected in favour of grand global experiments in meeting their human need for purpose and social cohesion. There are thousands of job vacancies for thinkers who can turn their thoughts to the coming electrical storm. Q4 2017 Dialogue

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The missing XX factor There is unconscious bias against women in the healthcare system, find Rhonda Peebles, Eunice Kim, Melissa Liew, Aurelia Caparros, Jin Gu, Marianthi Psaha

Novartis has run a series of programmes over six years designed to improve gender opportunities and balance in senior positions. As part of its participation in the 2016-17 Executive Female Leaders’ Program (EFLP), one group took on the business challenge of getting to the bottom of why women in general tend to have significantly worse clinical outcomes than men. The topic is of great interest to the organization, as the corporate Diversity and Inclusion Strategy includes not only increasing diversity of internal talent and leadership, but a desire to understand different patients’ needs – and use these insights to develop medicines that result in truly better healthcare outcomes for patients. The team also looked at which business processes could be put in place to improve the company’s ability to routinely gain and use this type of knowledge about their customers.

Identifying the problem

The first step was a systematic literature review of 12 therapeutic areas (six each in Pharma and Oncology) to identify any evidence of gender disparity. Once this review of 105 studies was completed, the team found that heart failure showed the biggest gender disparity among the six Pharma disease areas. In Oncology, the team found more ethnic group disparities than gender, especially in breast cancer. In the next deep-dive research, the team reviewed 2,500 publications to understand details of the disparities in diagnosis and treatment of female heart disease and breast cancer patients. Insights from both the Pharma and Oncology business unit leaders at Novartis further enhanced the results.

Key findings: heart failure

The group found important gender differences in the identification and management of patients with heart failure. Historically, women have Dialogue Q4 2017

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been underrepresented in structured clinical studies to assess the efficacy and safety of new treatments related to heart failure. Outcomes from such studies provide clinicians with the evidence they need to treat and manage patients, and to prescribe accurate doses of drugs. However, patients in these clinical trials tend to be younger and more often male. This means that targeted solutions and treatments are less available to women, because fewer are studied at the outset. Women tend to present with very different symptoms and underlying causes than men – so if they are treated in the same way as male patients, their symptoms will be less well addressed. Women tend to be treated less aggressively compared to men. Women are also more likely to be diagnosed at an older age with more co-morbidities (e.g. diabetes, hypertension). With limited gender analysis in these studies, there is likely a lack of genderspecific management when it comes to medication options.

Key findings: breast cancer

While breast cancer is a predominantly female disease, there are significant ethnic disparities in types of breast cancer: all women are not the same. For example, studies have shown that white women are slightly more likely to develop breast cancer than African American, Hispanic and Asian women. But African American women are more We need new likely to develop triple-negative approaches to breast cancer (more aggressive, more ensure that all women are advanced-stage breast cancer that is adequately represented diagnosed at a young age). Japanese, West African and German migrant groups have a higher prevalence of certain types of breast cancer (triple negative) compared with Western populations. New treatments for triple-negative breast cancer are being studied in clinical trials. However, these ethnic differences are under-represented in clinical trials and, as a result, some women may have less access to some of the most promising therapies. Some of the differences in outcomes may be due to less access to mammography and lowerquality medical care, as well as various lifestyle patterns (eating habits and weight issues for example) that are more common in some ethnic groups than in others. Studies have identified that both BMI and smoking are possible risk factors that differ across ethnic groups. Among premenopausal women, obesity is associated with a lower risk of breast cancer. In post-menopausal women, obesity is associated with a higher risk of breast cancer. Understanding these factors means that they can be addressed and improved.

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The ‘so what?’ question

The EFLP team has highlighted a gap in the healthcare of women, suggesting that available treatments for female patients are often less precise and less effective. Their research using data from patients in real-life practice, known as real-world evidence, confirms the gap. Market research studies are currently underway to assess the role of unconscious bias when it comes to healthcare for women. For example, what are the barriers to including more women in clinical studies? Are there insufficient female physicians? And what role might this play in narrowing female patients’ access to treatment? Closing the gap on these gender disparities will help to ensure that women are not diagnosed later, under-diagnosed, under-treated and, as a consequence, have less access to healthcare and suffer more. Even with diseases that largely affect only women, a one-size-fits-all approach does not work. For some disease areas, such as breast cancer, there are factors such as ethnicity, education, income and others that effectively apportion women to treatment sub-groups. We need new approaches to ensure that all women are adequately represented when assessing data and health outcomes. What is next? The team is engaging with Novartis stakeholders and key decision makers to explore how to apply the findings to current and future product launches. They will start with the Oncology and Heart Failure businesses, with plans to expand to other business units. The greatest opportunity lies in systematically digging deeper to understand women’s insights so that these can inform clinical trial design and, in return, the data captured reflects what can be expected in terms of relevant outcomes for female patients. The team recommends that this approach be widely expanded throughout the industry as female disparity likely affects broader areas of healthcare than just those assessed here. The evidence regarding gender disparity is clear. As the next wave of leaders at Novartis, we proudly take on the mission to ensure that we are improving outcomes for the female patients that we serve. — Below, from left to right: Healthcare company Novartis’ Rhonda Peebles, Eunice Kim, Melissa Liew, Aurelia Caparros, Jin Gu, Marianthi Psaha

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Search: the day after tomorrow Googling is old hat, writes Professor Steven Van Belleghem

A decade ago, companies were being urged to think ‘digital first’. Five years ago, this switched to thinking ‘mobile first’, which is still the current model for many. Half the revenues of e-commerce giant Zalando come from a mobile device, and almost half of the content streamed by Netflix happens on one too. The reality is, if your business isn’t thinking mobile first, you’re five years behind the rest. But what you might not know is that we’re fast approaching a new phase – it’s now time to start thinking ‘artificial intelligence first’. In fact, some of the largest tech companies in the world are already shifting towards this. For the likes of Google, Microsoft, Facebook and several others, artificial intelligence is already today’s reality, particularly when it comes to searching on the internet.

How a board game changed AI

In 2016, there was a seismic shift with AI. It was the moment that Google’s DeepMind challenged the Go worldchampion, and won. Go is an abstract strategy game and the oldest board game in the world. It has very simple rules, but the possibilities are endless. Thus, Go is

more complex than chess. To be good at Go takes years of practice, so for a computer to beat the world champion is an achievement that can’t be underestimated. DeepMind didn’t just win by a small margin, either – the final score was four to one, to the computer. For a long time, many scientific journals forecast that the moment AI could beat the best human being at Go would be a tipping point. Most predicted it wouldn’t happen until 2025. Yet it has happened nine years ahead of schedule, and the implications are huge.

The future is bots

Google’s algorithms change all the time, but the current search interface is over 18 years old – from the last century, in fact. It is a simple process we all know well: you type your request in, and pages of results are returned. Chances are, you won’t go beyond the first couple of pages. We criticise companies for failing to do their search-engine optimization (SEO) correctly, if their company doesn’t appear high enough in the rankings to be noticed in the search results. Marketers have spent a fortune on keyword optimization to be at the top of page one in recent years.

Think about this. It is a suboptimal system. Why? Well, when you type something in and get hundreds of pages of results, it can be rather overwhelming. And what if the thing you’re looking for is on page seven? You’re unlikely to stick around long enough to find it. AI, and specifically the development of bots, is set to change all this. Bots are applications that ‘intelligently’ perform an automated task, from ordering food, to telling you what the weather will be that day. They’re often programmed so it seems as if you’re having a conversation with a real human, and they’re set to change the way we search for things on the internet. It won’t surprise you to hear that Facebook has been one of the early adopters of bot technology. The social media giant has started to allow brands to offer customer service through its Messenger app. One company to take advantage of this is Dutch airline KLM. If you book a flight with KLM, it will ask you if you want your inflight documentation through Messenger. Say yes, and it will use a plug-in on its website to message you all the information you need, plus other useful things such as flight notifications.

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Evolution of customer interfaces

in three use it to order products from Amazon. This means that a huge number of households are buying products on a voice-controlled device owned by Amazon. If this increases in popularity and effectiveness, it creates a new world of search. Google is worried. Because if people start to buy stuff through a machine that is sitting on their kitchen table, the way that we search for items is shifting. It could alter the way that people find products, and buy products, completely. So how is the search giant reacting?

What if the thing you’re looking for is on page seven? You’re unlikely to stick around long enough to find it

Google’s day after tomorrow

Illustration Neil Stevens

Another huge step forward in AI was the launch of Amazon’s Echo in 2015. This smart speaker connects to a voice-controlled personal assistant called Alexa. Customers can use Echo in myriad ways around the home – to play music, create shopping lists, find out about traffic, control the central heating and lots more. By late 2016, Amazon had sold 5.1 million of the speakers to US households, making it commonplace in less than two years.

It’s not just for personal use, either. A good example of how Echo is being used by businesses is its use in hotels in Las Vegas. You can ask Alexa to close the curtains, order you a pizza from room service, and arrange for an Uber to turn up in 20 minutes to take you to a show. What’s interesting, however, is that when you look at the breakdown of what customers are using Echo for, one

Google is investing in technology for a future of search involving virtual personal assistants inside various devices. These bots will gather information about our likes and dislikes, and then act as a personal servant to go through search processes for us, presenting us with options that best fit our requirements. We’ll make a request, such as, “Hey Google, I need to book a flight to Barcelona.” The Google bot will start to talk to the airline bots, and the airline bots start to talk to the hotel bots. We’ll then receive a selection of options, and can tell our bot which one to book. While we’re still a long way off

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from this (the technology isn’t there yet), you can see some brands starting to take their first steps along this path and creating first applications of bots to optimize the search process. Disney, for example, is about to launch a bot, in the guise of Mickey Mouse, that helps you book a holiday by asking you questions about what type of hotel you want to stay in, and which activities you’ll be doing when you’re there. Sportswear company The North Face has a customer-orientated search model that asks you intelligent questions about the product you’re searching for, and tailors its responses accordingly. This is Google’s day after tomorrow. Its current search model won’t last another decade, so it needs to look to the future now to avoid being left behind. The problem is that Google currently makes £100 billion a year from its search engine, so can’t stop offering it. What it is doing, is investing in the next phase. It might not yet know how this will have value, but it does know that if it doesn’t think about the day after tomorrow now, it will be dead in ten years. — Steven Van Belleghem’s new book Customers The Day After Tomorrow is due to be published in November. Follow him on Twitter @StevenVBe Q4 2017 Dialogue

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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 | niki.mullin@lidpublishing.com |

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phil young

Cash is dying. In some places, it’s already dead

The end of money Phil Young PhD is an MBA professor and corporate education consultant and instructor

shift from concepts on PowerPoint slides The dream of a cashless society is already to something approaching reality raises a here, it just might not be on your doorstep. larger question. What determines the rate of Last year, during a trip to Copenhagen, adoption of new technology? The answer is I experienced it for myself. Even in the that old enemy of progress – incompatibility. most-connected, great cities of the world – Following my trip to Denmark, I visited London, New York, Paris – you can’t pay by Shanghai. To my surprise, I discovered that card at a street market. Not so in the Danish almost everyone was paying for goods and capital. In the four days that I was there, I services using a mobile phone, not cash. used plastic for every purchase – even at the As an American, I lacked the necessary Christmas fair. Street vendors are the final payment app but, noting that a few people frontier for cashlessness. Yet the Danes were were still using cards, I offered mine. The paying by card at the glühwein stall. trouble was, none of them worked. The The global march towards cashlessness, Mastercard, Visa and American Express and the differential experience of nations systems were not tied into the China that have tried to implement it, is worthy UnionPay network (I’m told this will change of deeper study. Necessity, as so often, very shortly). The ATM in the hotel accepted has been the mother of invention. The developing world – where many people own Mastercard and Visa, but it was out of order. The Chinese banks in the area had ATMs mobile phones but lack bank accounts – is only for the UnionPay network. I was forced a clear frontrunner. In Africa and Southeast for a few days to rely Asia, payment by mobile on the generosity of phone is common The developing colleagues to pick up practice. By contrast, the the tab. world’s tech leader – the world – where As an interesting US has been something many people own mobile aside, in China people of a laggard. Cards are phones but lack bank have been using two useful to have, but you accounts – is a clear main mobile payment can’t survive on them. platforms and apps: This is especially true frontrunner Alipay and WeChat if you want to buy Wallet. There is now a something for under $10 third option – Apple Pay. Apple has seized at the local store, where a sign demanding the enormous opportunity for mobile dirty cash will invariably confront you. payments in China by partnering with It is not that the world’s biggest UnionPay (yes, the same people who refused economy wasn’t aware of the coming my Mastercard or Visa). One has to question challenge. Way back in 2005, when I what the two Western bankcard giants were was teaching a course on the business doing while Apple made its deal with the of bankcards for MasterCard University, Chinese handler. Mastercard considered its biggest With the general acceptance of cards competitor to be cash (coins, currency and the growing use of mobile payments, and cheques) rather than the other card it seems that the world is on its way to companies. Thus, its goal at the time was becoming cashless, but with countries to increase the use of debit and credit cards evolving at different speeds. Scandinavia for the making of everyday payments, and China are getting there. In some of no matter how small. Moreover, mobile their larger cities, they have already arrived. payments were considered the next big Meantime, in the US, the trend is towards thing after cards to replace cash. Yet only less cash. But I’ll believe it is nearing now, over a decade later, is the move the finish line the day I no longer see a towards cashlessness finally gaining handwritten store sign that says: “We do not traction. The US has lumbered along while accept credit cards for charges under $10.” its peers have raced ahead. Main Street USA, not the European street The fact that it has taken mobile vendor, is now the final frontier. payments in the US about ten years to Q4 2017 Dialogue

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Goodbye, red hats Chinese entrepreneurialism hides no more, writes Dr Jun Li

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Time was when Chinese entrepreneurs had to hide under a red hat. The metaphorical headwear shrouded their capitalistic ambition. Typically, aspiring businesspeople paid a fee to be part of an existing collective enterprise, on the nod of local government officials, to gain legitimacy. How things have changed. Now entrepreneurs are widely admired and are the role model of many aspiring young people. The sea change of attitudes came in the late 1970s, thanks to Deng Xiaoping’s drive to reform and open up the country to the outside world. Today, each year around 17% of the working-age population is engaged in new business creation. In 2016, entrepreneurs created 5.5 million new firms. Internationally, Chinese entrepreneurs have left their mark, firstly through their made-in-China exports, and lately through their shopping spree in cross-border merger and acquisition deals. Increasingly, they have also made their voice

Having Chinese business leaders at the forefront of the global stage is now normal heard. At this year’s World Economic Forum, two of the best-known Chinese entrepreneurs, Alibaba’s Jack Ma and Wanda’s Wang Jianlin, were in Davos to speak about leadership and the future of the world economy. Having Chinese business leaders at the forefront of the global stage is now normal. The sheer rapidity of their rise is astounding. The past three decades has seen the emergence of four generations of Chinese entrepreneurs who have become the driving force of China’s economic growth. Each generation has marked differences in their background, and rightly reflects the economic and social changes in China. The first generation (from the late-1970s to mid-1980s) were mainly rural entrepreneurs who acted as the agents of local governments, genuinely or in disguise, to start and run township and village enterprises (TVEs). Two reforms then made their endeavours possible. The first was the allocation of collective farmland to each rural household, with the delegated decisionmaking power under the scheme of household Q4 2017 Dialogue

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responsibility systems, allowing farmers to sell surplus produce in markets and to use the proceeds to set up non-agricultural businesses. The second was the fiscal decentralization that motivated local governments to support TVEs as a vehicle for new revenue generation in order to balance the books. Enterprising farmers, many of them officials of townships and villages, quickly seized upon the opportunity and set up TVEs to target market gaps unplugged by incompetent and inefficient state-owned enterprises (SOEs). Reforms in the mid-1980s in China shifted focus from rural to urban areas, with the emphasis on revitalizing SOEs. This opened the floodgates for a new group of people who quit comfortable jobs in governments or SOEs to taste freedom and become their own boss. Among them were such legendary entrepreneurs as Liu Chuanzhi, who started Lenovo in 1984, Ren Zhengfei of Huawei (1987), and Wang Jianlin of Wanda (1988). This second generation is currently the backbone of the country’s economy. The third generation emerged in the late

The fourth generation of entrepreneurs is represented by the Millennials 1990s. As the beneficiaries of economic reform and globalization, they are better educated, alert to opportunities, not afraid of challenging the status quo, and have a global perspective. The exemplary entrepreneurs of the generation included the household names Pony Ma of Tencent (1998) and Jack Ma of Alibaba (1999). The fourth generation of entrepreneurs is represented by the Millennials who are leading China’s new economy. Many have grown up as netizens and have a strong sense of individualism. Many businesses they started are born global. For example, Musical.ly is a Shanghai-based micromultinational. Started only in 2014, the video social network app for video creation, messaging and live broadcasting has become one of the most fashionable apps among Western youngsters. For the first and second generations, they had stronger political connection or political capital, but were less educated. They treaded carefully under institutional ambiguities and strived to turn them to their advantage. Collectively, they played the role of institutional entrepreneurs in shaping the regulatory environment facing them. For the third and fourth generations, they are equipped with stronger intellectual capital. Their social capital has a global reach. — Dr Jun Li is senior lecturer in entrepreneurship and innovation at Essex Business School — LID Publishing’s ‘China’s Entrepreneurs’ series is out in 2017

TRENDS

Over the past three decades, three changes underscore the shifting patterns of Chinese entrepreneurship. From necessity to opportunity The year 2005 turned out to be a watershed in Chinese entrepreneurship. It was the first time that people pulled to entrepreneurship by opportunities exceeded those pushed by sheer survival necessity. The trend of the so-called opportunity-based entrepreneurship has since entrenched. This change matters. People who pursue the entrepreneurial dream, because of opportunity rather than necessity, are found to be more prepared, growth-minded, and are more likely to create more jobs and have higher impact. In a sense, the change underlines the dynamism of the Chinese economy.

The digital revolution Chinese entrepreneurs did not encounter revolutionary information technologies until the late 1990s, but have quickly become the technology’s converts. In embracing new technologies and e-commerce, they faced some seemingly insurmountable barriers at the time, for example, lack of infrastructure in electronic payment and logistics. Rising to the challenge, they constantly used their ingenuity to find solutions and are now leading the world in fintech. Undoubtedly, they benefited immensely from the entry barriers faced by their international rivals. They nonetheless have to earn their legitimacy and dominance in the dogfight of domestic competition with waves of newcomers.

Going global Since the turn of the new millennium, Chinese entrepreneurs have first amazed and then alarmed the world by the coming wave of Chinese takeovers. This coincided with the government’s launch of ‘Going Global Strategy’ in 2000 as part of a new growth model. The move continued to gain momentum under the government’s new ‘One Belt One Road’ initiative aimed to restore the country’s old maritime and overland trade routes. With the government’s support, a growing number of Chinese entrepreneurs have internationalized their businesses, more recently through cross-border merger and acquisitions (CBM&A). Chinese CBM&A increased from $1.38 billion in 2002 to $43.65 billion in 2015, covering 172 countries and regions of five continents.

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BARRIERS

Going international is not without its challenges. Chinese entrepreneurs need to tackle at least four challenges head-on. The upscaling challenge Some entrepreneurs have conquered domestic markets and become national champions. They now need to show that they are able to replicate and upscale their business models to become world champions. Even with the government’s backing, this is no easy task. Their business model may prove to be too deeply embedded in Chinese culture to be applicable to other culture-specific markets. The valuable social capital and political capital that have served them so well domestically so far may become less relevant.

The brand deficit Going global, Chinese entrepreneurs will face not just the lack of brand names of their own, they will face a much bigger challenge in dealing with the China brand deficit. They will have to counter the misperceptions of the country’s political and economic system, deep-rooted image of cheap and low-quality products, and suspicion of unfair state subsidy.

The innovation test Chinese entrepreneurs are also expected to emerge from the shadow of global innovators and lead from the forefront. These are uncharted waters. Chinese entrepreneurs might feel exposed but need to learn how to navigate through it.

The risk factor There is a widespread acknowledgement that many Chinese entrepreneurs were inexperienced and lack an understanding of institutional risk. As a result, they underestimated the complexity of the institutional system in the target country and were unprepared for the management of such risks.

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OPPORTUNITIES

Chinese entrepreneurs can be forgiven for feeling optimistic about their future. Their sense of optimism is underpinned by three factors. Brain drain becomes brain gain China was once so worried about the brain drain when waves of people in the 1980s and 1990s moved abroad to study and work, and rarely returned. Luckily, China’s dynamic economy has turned the tide. The once unstoppable brain drain has reversed into brain gain. According to the Ministry of Education, between 1978 and 2015 about four million Chinese students studied abroad. Of these, 80% returned after completing their studies. They have brought with them new knowledge, worldview and contacts back to China, and have played a pivotal role in shaping the pattern of entrepreneurship in China. This is international knowledge transfer on a mega scale, and with it everything can happen.

Strong innovation infrastructure Over the last 15 years, China has pushed hard to transform its growth model to an innovation-led model, as illustrated by the launch of the Outlines of Medium and Long-term National Plan for Science and Technology Development (2006-2020). A bundle of new incentive schemes has followed to support entrepreneurship. Now China outstrips everyone else in internet business: its e-commerce market is greater than the US’s; its internet-payments industry accounts for two-thirds of global volumes; and it has one-fifth of the world’s smartphone users. The infrastructure, together with venturesome consumers, is a breeding ground for innovation.

World-class, agile supply chain With rising labour costs and slowing economic growth, Chinese entrepreneurs are facing new challenges in moving up the global value chain. This is no mean feat. The experience of newly industrialized countries suggests that if you cannot adjust you fall into the ‘middle income trap’, meaning a stagnating economy as the supply of low-cost labour and international technology dries up. It’s different for Chinese entrepreneurs though. They have built their success on the strengths of a truly world-class global-supply-chain. In years to come, China will remain at the heart of a network known as Factory Asia. Q4 2017 Dialogue

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Bolts from the blue The disruptors of the global economy are characterised by a single factor – speed. Professors Joe Perfetti and Michael Cichello report

The digital disruptors that changed the world don’t look too much alike. Amazon is a warehousing giant with an internet delivery arm. Expedia is an online travel agent. Ebay is an auction house at your desk. Were the three companies siblings, they’d take after three different grandparents. Yet they are more similar than they appear. What unites them is that they are all incredibly quick at turning a profit. In the spring, we released our inaugural Financial Cycle Time (FCT) rankings. Many of those that won medals for their rapid FCT (see boxout) were disruptors: giants of the world economy that have completely reshaped the landscapes of their industries. Disruption is not driven by profitability, it is driven by productivity. Walmart – once one of the greatest disruptors on the planet, with its efficient supply chain and world-class pointof-sale data-relay – has itself been disrupted. The interloper? Amazon. It has achieved a quantum leap in productivity. The internet retailer boasts a financial cycle time of 30 days – less than half that of Walmart’s 88. Yet if Walmart has no answer for Amazon, then Macy’s – once the kingpin of American shopping – is struggling even to grasp the question. Its financial cycle time of 122 days is streets behind. It is losing revenue dollar-fordollar to Amazon, with the latter’s next day – sometimes same day – shipping and free returns policy. Macy’s runs product through its stores every 122 days, while Walmart is doing it in 88 days. Enter Amazon – it completes the cycle in a month. If one company can do things much quicker than its rival, it doesn’t matter greatly what its profit margins are. Across the retail industry, companies are trying to reduce their cycle time

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so they can compete. Macy’s challenge is that many of its suppliers also have long financial cycle times, hence why it is particularly vulnerable to disruption. The better news is that its suppliers have a great deal more flexibility than their major client does. Macy’s holds much of its product in its vast inventory, meaning it is much harder for it to improve its FCT.

The inventory problem

Macy’s is a classic Main Street big-inventory company. Of course, that gives it a few advantages – its large stocks can help customers who need to buy things quickly or on impulse. At least until same-day delivery becomes widespread, which is a long way off, there will remain a place in the economy for downtown retail. Yet what of companies outside the sector that carry giant stocks? Take Airbus, an aircraft

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manufacturer that makes planes without having an immediate customer. We remember driving past Airbus’s plant and seeing several $80m aircraft sitting in its hanger waiting for customers. The key to productivity is to have your customers lined up in advance.

The upfront bonus

Look at our winners’ league (Figure 2). What stands out? Anyone with even a basic knowledge of statistics will spot that many of our highest-ranked productivity champions posted negative cycle times. So how do they do it? By having their orders prepaid. Consider Netflix. The gold-medalwinning internet video streaming service sells you monthly subscriptions before you watch its shows. Therefore, it has a negative financial cycle time. There are other examples. Whenever

figure 1

GLOBAL TOP TEN NAM E

COU N TRY

I N D US T RY

1

Netapp

US

Technology Hardware & Storage

2

Logista

ES

Air Freight & Logistics

3

Allergan

US

Pharmaceuticals

4

Thales

FR

5

Vinci

FR

6

GPA

7 8

C YC LE T IM E -125

IN DUS T RY MEAN 77

-94

59

9

96

Aerospace & Defence

-77

60

Construction & Engineering

-110

9

BR

Food & Staples Retailing

-29

63

AstraZeneca

UK

Pharmaceuticals

Vmware

US

Software

14

96

-172

-75

9

Sherwin-Williams

US

Chemicals

42

229

10

Andritz

AT

Machinery

-59

150

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H O W TO M E A S U R E VA LU E C R E AT I O N Value creation for firms is about exceeding investor expectations. Stock prices are built on the expectation of future returns for investors, who demand sufficient returns to compensate them for the risk they bear. Exceeding these expectations is a challenge for any firm. For exceptional returns, choose investments that generate returns that beat investors’ expectations by achieving profitable growth; that is growth where the expected Return on Invested Capital (ROIC) exceeds the risk expectations of investors. Take, for example, Amazon’s acquisition of Whole Foods. A key value driver for this merger will be the improved ROIC that Whole Foods is expected to achieve by leveraging the productivity that Amazon brings to the generally low-margin grocery business. Traditionally, Whole Foods commanded a significant premium with its higher-quality products and prime

Disruption is not driven by profitability, it is driven by productivity locations, generating margins of 5-7% while other grocery stores made less than 4%. But Whole Foods’ growth has stalled and the perception among many consumers has been that prices are quite high, prompting the frequently used nickname ‘Whole Paycheck’ to describe the firm.

What if Amazon could transform Whole Foods’ productivity and lower prices? ROIC is defined as Profit Margin x Productivity. As we discussed in our

article, The Need for Speed, www.dukece. com/insights/the-need-for-speed/, a key metric that captures a firm’s productivity is Financial Cycle Time (FCT). return on invested capital

2016

NOPAT Profit Margin (%)

Financial Cycle Time (Days)

ROIC (%)

Amazon

2.0

30

23.7

Ahold

2.4

48

18.5

Kroger

2.0

64

11.4

Whole Foods

3.3

77

Walmart

3.3

88

NOPAT Profit Margin (%)

Financial Cycle Time (Days)

ROIC (%)

Kroger FCT

3.3

64

19.1

15.8

Ahold FCT

3.3

48

25.4

13.6

Amazon FCT

3.3

30

40.6

As you can see above, Whole Foods is not very efficient in terms of FCT relative to its peers, while Amazon is substantially more productive. Investors asked themselves, what if Amazon was able to transform Whole Foods’ productivity to be closer to its own? The market’s initial reaction to the announcement of the acquisition was quite telling. While Amazon’s stock price was up about 2.5%, Walmart’s stock price dropped by almost 5%, and Kroger’s stock price dropped by about 9%. Even non-US grocers saw their stock prices drop. Ahold Delhaize, a Dutch grocer with US operations, dropped 10% on announcement day, while Woolworths, an Australian-based chain, dropped 3.5%, and Tesco, a British grocery firm, dropped 5%. So what did investors see? Well, if Amazon can improve the FCT for Whole Foods just to the level of Kroger’s FCT of 64 days (shown below), then it will generate a return of 19%. If FCT could be cut to Ahold’s FCT of 48 days, then ROIC rises to 25%.

Companies that can turn over their profits quickest will succeed

maintaining whole foods’ profit margin

2016

* NOPAT Profit Margin is Net Operating Profit After Tax divided by Sales. NOPAT is Operating Profit less estimated taxes on Operating Profit. ROIC = NOPAT Profit Margin times 365/FCT.

Apple releases a new iteration of the iPhone, it already has millions of orders lined up and prepaid. Its hardware supplier, Foxconn, holds most of its inventory. Apple’s hyper-efficient supply chain is one reason why it is by far the world’s most valuable company. The defence sector – which boasts lots of ultra-reliable government clients who pay

However, we would expect through operational improvements that Amazon would find a way to decrease FCTime for Whole Foods even further. Cutting FCT to Amazon’s phenomenal 30 days, would yield a stellar ROIC of 41%.

Some may be concerned that operating margins for Whole Foods might be squeezed even more as Amazon takes control of its operations. Even if Whole Foods’ performance fell to Ahold’s 2.4% operating margin, it would only take a FCT of 56 days to maintain Whole Foods’ ROIC of just under 16%. We would anticipate that Amazon can do a better job than 56 days. reduced whole foods’ profit margin

2016

NOPAT Profit Margin (%)

Financial Cycle Time (Days)

ROIC (%)

Kroger PM

2.0

46

15.9

Ahold PM

2.4

56

15.9

Thus, if Amazon can leverage its superior productivity in the grocery business, it can generate superior returns for its investors.

their bills upfront – holds some of the fastest FCTs anywhere in the rankings. Our three medallists – Thales, BAE Systems and Bombardier – all possess negative FCTs which all benefit from customer advances. The software industry, too, is another sector that is happily familiar with negative FCT.

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recap: what is financial cycle time?

figure 2

WINNERS LEAGUE biotechnology

AbbVie 21 Celgene 27.5 Gilead 37.8 Average* 60.9 days pharmaceuticals

Allergan 9 AstraZeneca 13.6 Bristol-Myers Squibb 34 Average* 93.8 days h e a lt h c a r e providers & services

textile, apparel & luxury goods

VF 68.3 PVH 70 Luxottica 71.6 Average* 147.4 days automobiles

Peugeot -5.9 Renault -3.3 Fuji Heavy Industries 36.4 Average* 168.8 days airlines

h e a lt h c a r e equipment & supplies

aerospace & defence

Boston Scientific 61.4 Danaher 68.9 Medtronic 76.1 Average* 116.6 days

Thales -77.3 BAE Systems -46.8 Bombardier -6.4 Average* 64.8 days

beverages

Dr Pepper Snapple -7.4 Coca-Cola 74.6 Suntory 76.8 Average* 123.2 days food products

Cisco -77.9 Nokia -9.3 Motorola -5.9 Average* 17.7 days

NetApp -124.9 HP -46.7 Apple -38.9 Average* 77.2 days wireless c o m m u n i c at i o n

United 94.9 Qantas 101.2 Delta 107.6 Average* 187.8 days

Unilever 40 L’Oréal 46.3 Estée Lauder 65 Average* 56.0 days

c o m m u n i c at i o n s equipment

technology hardware & storage

Aetna -72.6 UnitedHealth Group -45.5 Anthem -43.6 Average* 35.6 days

personal products

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internet & direct marketing

Netflix -152.2 Expedia Inc -141.9 Priceline Group -13.7 Average* -69.4 days internet software & services

Ebay 0.9 Facebook 111.9 Alphabet 135.1 Average* 82.7 days software

T Mobile 152.9 SK Telecom 166 Softbank 171.3 Average* 208.4 days semiconductors

Qualcomm -14.4 Nvidia 48.6 Broadcom 81.5 Average* 170.7 days industrial c o n g lo m e r at e s

Samsung 28.9 Philips 31.1 Honeywell 54 Average* 176.4 days chemicals

Sherwin-Williams 41.5 Johnson Matthey 68.1 Umicore 68.2 Average* 227.8 days

Imagine that two companies in the same industry with very similar market focuses and financials generate a profit margin of 8%. But the first company makes that margin every 365 days compared to the second company’s cycle time of 183 days. Annually, that translates to 16 cents of cash for investors compared with eight cents of cash for the slower company. The more productive and efficient company wins financially. You can use the formula to measure your company’s cycle time. Take total invested capital and divide it by annual revenue. That tells you the percentage of the year that you are tying up capital. Then multiply by 365 to translate the metric into days. The result tells you how often, on average, it takes to turn invested capital into revenue.

Global productivity rankings GOLD

Danone 46.2 Mondelez 54.5 ADM 55.6 Average* 116.6 days

Next year

Vmware -171.6 Activision/Blizzard -83 Salesforce -73.4 Average* 75.5 days

A full list of winners is listed above. Well done to them all. These are companies that have recognized that productivity is the new profitability, and acted on it. It is the companies which can turn over their profits quickest that will succeed in this fast-moving world. Yet those that remain just outside the rankings have

SILVER BRONZE *Average cycle time for industry

a great deal to be optimistic about. Perhaps next year they will break into the medal places. It’s a fluid picture. Things can change quickly in 12 months. Good luck! — Joseph L Perfetti is an expert in corporate finance and strategy at the University of Maryland and Georgetown University. Michael Cichello is a teaching professor at Georgetown University

Download all the rankings and resources and view our exclusive webinar at www. dukece.com/ download-resultssupporting-resources/ Q4 2017 Dialogue

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THE VOICES BEHIND THE

THINKING

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

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giles lury

The USP is the holy grail of marketing for no good reason

USP – three letters, one dodgy idea 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

The USP suited advertising agencies, was seductively simple, and so it stuck

Rosser Reeves was the son of a Methodist preacher who attended – albeit briefly – the University of Virginia. He was expelled for drunkenly crashing a friend’s car. An event bad enough in its own right was rendered even worse by the fact it happened in 1929, the Prohibition era. Reeves is, however, better known for two other things. First, he is at least in part the inspiration for the lead Mad Men protagonist, Don Draper. Second, he introduced the notion of the singleminded proposition – the USP - to the marketing lexicon. Marketing news website Adage.com describes the rules for a USP in its online encyclopaedia. “The USP must follow three rules: first, the advertiser must present a definite proposition: if you buy X, you will get a specific benefit. Second, the benefit must be unique to the particular product, unavailable in the products offered by competitors. Third, the proposition must be a ‘selling’ one – that is, the benefit must be one that many people will want.” (Irony alert: even the USP, which preaches singularity, has three rules, three requirements). Paul Feldwick, in his book The Anatomy of Humbug, notes that the USP “has been so often repeated ever since [its introduction] that it now seems to be universally believed, not least in creative departments”. However, three things strike me about the USP and make me wonder at its continued appeal for brand proposition and brand purpose development. First, as Paul Feldwick also notes in his book: “He [Reeves] produced no real evidence for this claim – and I know of none myself to support it.” In other words, what has become one of the most widely used and important ideas in marketing was originally based on one person’s assertion and no empirical evidence. It suited advertising agencies, was seductively simple, and so it stuck. Second, there are numerous examples of multiple-pronged propositions, which have been – and indeed still are – hugely

successful. Third, that in this era where so many marketers are championing the benefits of storytelling, they are ignoring one of the most famous literary techniques – the power of three. The power of three is a writing principle that suggests things that come in threes are funnier, more satisfying, or more effective than any other number of things. Think of popular stories with staying power, and you get The Three Musketeers, The Three Stooges, Three Amigos, Three Men and a Baby, The Good, the Bad and the Ugly, as well as Goldilocks and the Three Bears. Not forgetting the Holy Trinity, the three wise men and the three witches in Macbeth. Winners of athletic events and talent contests tend to come in threes – gold, silver and bronze medallists. Indeed, the Olympic motto is Citius, Altius, Fortius, which is Latin for faster, higher, stronger. Speaking of Latin, the phrase omne trium perfectum (everything that comes in three is perfect, or, every set of three is complete) is another expression of the rule itself. Looking at the marketing world, the long-running Mars proposition (and tagline) isn’t single-minded. It is three pronged – ‘A Mars a day helps you work, rest and play’. Horlicks in India uses ‘Taller, stronger and sharper’. The proposition of the French Republic is threefold too – Liberté, égalité, fraternité. Brand purposes aren’t immune to the power of three either. Coca Cola’s stated mission is “To refresh the world in mind, body and spirit”. Meanwhile, Mastercard pledges to make payments “Safe, simple and smart”. Shell doesn’t have the alliteration, but speaks to three forms of engagement: “To engage efficiently, responsibly and profitably.” So by now I’m hoping you trust I’m telling you the truth, the whole truth and nothing but the truth. And you’ll have the courage to doubt, challenge and find alternatives to the USP. It really is a singularly lousy mantra to live your life by. Q4 2017 Dialogue

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What lies beneath Great marketing is soon ruined by poor customer experience

WRITING

What would it take to convince people that your business delivers a great customer experience? For tech giant Microsoft, the answer was more than $1 billion. That’s how much the company reportedly spent on its Windows 8 marketing campaign when the new operating system was launched in 2012. And how did that work out? Not so well. Windows 8 sales were underwhelming at launch, garnering far less market share than Windows 7 at the same point in its release cycle. So, what went wrong?

muscle to win the hearts and minds of consumers. Defenders of this expenditure argue that it is a required element for raising brand awareness and consideration among one’s target market. That’s a fair statement. Yet what often happens is that the marketing of a company’s brand promise gets far more attention than its fulfillment. And it’s this disconnect that will undermine even the most carefully orchestrated branding campaign.

Marketing matters… but customer experience matters more

The divergent fortunes of US wireless carriers Sprint and T-Mobile provide an excellent illustration of this dynamic. In the past few years, both companies launched significant new marketing campaigns, but realized very different outcomes. It was early 2014 when, with great fanfare, Sprint rolled out its ‘Framily’ wireless phone plan and touted its ‘revolutionary’ new pricing scheme. Within seven months, the Framily plan was unceremoniously shelved, and Sprint’s prospects looked bleaker than ever. The company had aggressively promoted Framily, but its marketing message was obscured by one basic reality: Framily made Sprint’s customer experience worse than it already was. Framily was essentially a familyshared wireless plan that could be adapted to groups of friends. The more people in your Framily, the lower the cost per phone line. That sounds good in theory, but in practice it was onerous for a consumer to set up and maintain a Framily plan. First,

In a word, it was the experience of using Windows 8. The software was designed to support both touchscreen tablets and traditional desktop PCs, but it handled neither particularly well. Many software reviewers and design gurus found the Windows 8 interface plain confusing. But this isn’t a story about the usability of a new software program. It’s a sobering reminder that great, loyalty-enhancing customer experiences – the kind that get people talking and buying – can’t be created through marketing, no matter how clever or expensive the campaign. Marketing programmes may help pique people’s interest in what your company offers, but it’s the actual interactions they have with your organization and its products – the customer experience itself – that will ultimately shape their brand perceptions. Microsoft isn’t the only organization that’s erred in this regard. Many companies try to use their marketing

Jon Picoult ILLUSTRATION

Joren Joshua

A tale of two wireless carriers

you had to herd cats to get friends and family to agree to be part of your group. Then you had to establish a Framily ID to link everyone’s accounts, as well as communicate that ID to all parties. Then, every time someone tried to join the Framily, you had to provide verification that they were allowed in. But wait, it gets worse... Framily wasn’t just onerous to set up, it was onerous to think about: who am I comfortable inviting into my group? What if I have a falling out with someone who’s in my Framily? Can I kick them out? Will other Framily members have access to my calling and billing information? All those questions created a cognitive impediment which made it difficult for consumers to wrap their heads around Framily, let alone decide to purchase the plan. For Sprint customers, Framily was more of an aggravation than an advancement. The experience wasn’t any better for Sprint’s investors – the company’s stock price fell more than 50% in the year after Framily was introduced. Contrast the Sprint story with that of T-Mobile and its ‘Un-carrier’ marketing campaign. In 2013, under new chief executive John Legere, T-Mobile started positioning itself as a different kind of wireless service provider – one that was willing to enhance the customer experience in ways other carriers had long resisted. Promoting itself as the Un-carrier, T-Mobile significantly strengthened its business in short order, and simultaneously dragged the wireless industry into a new era of competition.

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MARKETING

It accomplished this by backing up its marketing campaign with tangible, customer-facing proof points: a radically simplified rate plan, elimination of restrictive two-year contracts, unlimited video and music streaming that didn’t count against data plan caps, unlimited data and texting in over 140 international destinations, and monthly data allowances that rolled forward when not used. Within a year of the Un-carrier campaign launch, T-Mobile’s stock price climbed by 85% and the company achieved a level of brand prominence that few would have thought possible from the nation’s then fourth-largest wireless carrier. (In the last five years, its stock has also outperformed Sprint’s by a nearly tenfold margin.)

You can’t market your way to a great customer experience

Both Sprint and T-Mobile aggressively remarketed themselves to wireless consumers, but only one succeeded in generating real value for customers and shareholders. What John Legere and his T-Mobile team recognized is that you simply can’t market your way to a great customer experience. Consumer impressions are ultimately shaped, not by what a company says, but by what it does. While Sprint tried to convince people that Framily represented a new and better wireless experience, the mechanics of the plan indicated otherwise. T-Mobile, in contrast, didn’t just position itself as a different kind of carrier – it became a different kind of carrier, by removing myriad common

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consumer irritants from its customer experience. The key takeaway for business leaders? Be sure to balance investments in promoting your brand promise with investments in fulfilling it. Marketing campaigns may provide air cover, but the hand-to-hand combat of each customer interaction is where true loyalty is forged – the simplicity of your purchase process, the usability of your products, the clarity of your communications, the helpfulness of your staff, and so forth. So, before you hang your hat on an expensive marketing campaign to convince people how wonderful your product or service is… ask yourself why they need convincing at all. — Jon Picoult is founder and principal of Watermark Consulting. See more at www.watermarkconsult.net

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Buying a high Your emotions could cost you dearly, writes Kirsten Levermore

You buy a new car. If you want a reliable vehicle to transport you from A to B that is built to last, you could pay $2,000 and select the first functioning set of wheels you see. This is a rational decision. So why do some car shoppers pay hundreds of thousands of dollars more? What outweighs their rational thinking? What do they think they are buying? Negotiation psychologist Dr James R Alvarez says: “When hostage takers set a ransom, their valuation of the hostage is based entirely on perception, i.e. what does this person represent?” This same principle applies to spending money on products, brands and services. Superstar consumer psychologist Dr Linda Papadopoulos explains this best with the example of tuition fees. “The value of something – whether the price is ten times, 100 times or 1,000 times that of

an equivalent – depends entirely on how the buyer decides to value it,” she says. “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 mark-up in the pricing. Yet what that mark-up implies is the projected value that we place on it.” In short, we put a price on a perceived, projected value that is based on nothing.

It is entirely irrational. And irrationality is marketing’s best friend.

How does it work?

We have long believed humans are rational creatures who are occasionally emotional. But now, explains Dr Carl Marci, chief neuroscientist at Nielsen Consumer Neuroscience, we know that in fact the opposite is true: we humans are emotional creatures, who are occasionally rational. We are taught in school that we make decisions

The emotional brain doesn’t care whether the love stories come from human beings, pets, the pages of a good book, a Walt Disney cartoon, a car, a soda or a detergent Javier Sanchez Lamelas

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discern between whether it is being consumers will feel any permanent with our brain. The truth, however, engaged by an advert or by another effects – emotions are part of our is that we actually have three brains, person,” he says. intrinsic, evolved strategy to survive, all interacting, arguing and agreeing, “Human minds are wired to hear thus we won’t become desensitised or feeding our thought process. A and engage in stories. There are many permanently ignore them,” says Marci. ‘reptilian’ or ‘dinosaur’ brain, speaks studies that show if someone is told “What I do think, however, is that the on behalf of our basic instincts and facts in an indirect manner, such as current generation and subsequent self-preservation; an ‘emotional’ or through a fairy tale, they are much ones will be much more savvy about ‘mammalian’ brain, representing the more likely to remember them. With marketing in the future.” emotions that make us love, hate, prefer regards to marketing, specifically, if Executive chairman of The Value and dislike; and a ‘rational’ brain which, you tell compelling stories that take Engineers and marketing author Giles separating humans from most other people on a journey, a story of adversity Lury believes these people won’t be species, grants us a voice of logic in which there is some kind of payoff, overly weary of emotional marketing: and reasoning. and you can cast your brand, product “People today are not just media literate With the development of equipment or service as part of the payoff, you – they are marketing literate, too. They that can measure brain activity, heart can, and do, spot your strategy. But rate and eye-tracking, we can now begin turn something that is an advert (that no one really wants to listen to) into a that doesn’t mean if it’s done well and to ‘see’ our three brains debate potential at the right time, they won’t still go for purchases. And, more specifically, it. It’s like going to an action-packed which brain dominates those decisions. blockbuster - you know what’s going to “There are many techniques that happen, but you still go and see indicate a consumer’s thought process the movie.” when deciding whether or not to buy THE THREE BRAINS As for emotional trigger point something; and what most of them vs narrative strategies? Lury Our purchases are deliberated by three mini brains, show is that the emotional brain all connected and interacting to make decisions believes they have their place: is critical,” Marci says. “Good emotional targeting Good marketers are already hard at work on can sell something, storytelling can sell engaging our emotions, says Dinosaur brain Rational brain something; but do them Javier Sanchez Lamelas, Basic instinct, Logic both and the effect is founder and chief executive self-preservation multiplied. Sex will still of Top Line Marketing. sell, it’s just that it works “Marketing exerts its best when targeted at greatest influence when the right time for your it engages our emotional audience, and happens brain,” he says. “When we in the context of an consider the question of Your human brain appealing narrative.” buying a watch, for example, Three ‘mini brains’ luxury watch manufacturers do not talk about ‘superior A parting gift accuracy’ – they talk about Marketers can often be seen Emotional brain as cruel, manipulating our characteristics that have nothing Love, hate, kinship, emotions and making us spend to do with watches… human quests, preference money. But marketing allows us to achievements or even legacy.” elevate a purchase to a place of new importance. Why shouldn’t we take Fear and sex pride in driving our first car, or think Many campaigns aim to touch either piece of relevant, engaging information, of home when we buy gourmet baked those parts of the emotional brain that leading to higher purchases and possibly goods? Suddenly a humble – or not so make you scared of missing out on an brand loyalty. This happens because humble – purchase can bring an entirely opportunity, or to reach the pleasure making connections is an incredibly new meaning or sense of purpose into centres of the brain, attempting to our lives. stimulate a feeling of arousal, excitement sophisticated function of the brain… and yet the brain can’t really distinguish the Sanchez Lamelas agrees: “With the and happiness when you consider their source of the feelings – so, connections right narrative, the human brain can pitch. Neither, Marci stresses, is the with adverts are made with the same elevate a product or service beyond its only strategy. emotional apparatus,” Dr Marci actual, original purpose, meaning the “A campaign with a strong narrative explains. So, when we ‘fall in love’ with brand, product or service can deliver is a better guarantee of sale than a brand, service or product, we might as benefits way beyond intention. attempting to stimulate any one specific well be falling in love with a person. “And,” Sanchez Lamelas adds, emotion. This is because you cannot “people are willing to pay a premium truly predict how a consumer might for emotions.” react, or how strongly their emotion Will fear and sex always sell? may be stirred. But, with a truly “Despite the bombardment of emotional — Kirsten Levermore is assistant editor engaging narrative, the brain cannot of Dialogue brain-targeted marketing, I doubt Q4 2017 Dialogue

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patrick woodman

Politics and business can learn from each other

Lessons from the political entrepreneur Patrick Woodman is head of external affairs at the Chartered Management Institute

In France, Emmanuel Macron has drawn on his business experience to promise a bold platform of reform

The business-leader–turned-political-leader has been something of a theme over the last year. In the US, Donald Trump positioned himself as the man to bring business savviness to government, selling himself as the dealmaker needed to make America great again. On the other side of the Atlantic, Emmanuel Macron brought a similar promise of business-like focus to the French elections. Unapologetic about his time in banking, he has drawn on his business experience to promise a bold platform of reform, not least in France’s labour laws, which is set to spark confrontation this autumn. That dynamic was absent from the 2017 UK general election, with none of the main party leaders having comparable business experience to offer. But it still presents an interesting lens to focus on how governing works and what politics could learn from the ‘real’ economy. Clearly, the metaphor can only run so far. For one, governments can’t pick and choose their customers: the nation pre-exists any one government, and government doesn’t have the luxury of refocusing on a different segment of the market when it sees margins draining away from one area of its business. Democracy also demands a fundamental difference in accountability – something that’s hard to find in business. Indeed that’s one of the reasons why commentators like the business philosopher Professor Roger Steare of Cass Business School have described business culture as a “feudal plutocracy”, a medieval hangover in the democratic era. But clearly there is much to be said for the application of other business basics. A clear strategy; understanding one’s ‘customers’ and how to meet their needs; and building employee engagement, whether in the cohesion of a political party or more widely in public services, are all key. So as the UK wrestles with stubbornly low productivity rates – some 18% behind the average of its G7 competitors – and growing concern about inflation, what might a business-leader-turned-politicalleader focus on in their strategy to reboot an

ailing economy? CMI has argued for action in five key areas: boosting productivity through people; rebuilding business cultures; harnessing diversity; improving young people’s employability; and seizing the apprenticeship opportunity. In each area there are actions for government, but also for business. To improve productivity through people, for example, there’s an urgent need for better data about the problem. All the indicators show that the quality of management is a source of competitive weakness, but we lack information about which behaviours need to be changed. When it comes to business culture, government doesn’t necessarily have huge policy levers to pull. But it can do more to reward good behaviour and penalize bad. Planned reforms on corporate governance were set to address issues like runaway executive pay or the need to strengthen employee and stakeholder voices. If government is no longer prepared to lead, there is an opportunity for businesses themselves to push the agenda forward. On diversity, business has much to do to tap into the skills of the whole population, especially when the implications of Brexit for access to talent remain unclear. The focus on skills has to provide new impetus to improve employability for young people, through better experience of work from the age of 11 onwards, with a new school-to-work syllabus and embedding the direction of travel in higher education, to providing more opportunities to develop professional management skills alongside degrees. Meanwhile, the commitment to develop three million apprentices, funded through the employer levy, is leading to the delivery of development opportunities. By opening up new pathways up to degree-level courses that are suitable not only for young people, but for employees already in work, there is a real opportunity to make lasting change to the UK’s skills base. — Read Leadership for Change: CMI’s Management Manifesto at www.managers.org. uk/managementmanifesto Q4 2017 Dialogue

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The frogs in hot water Organizations are being killed slowly by their own inertia. A new form of leadership can rescue them, writes Professor Vlatka Hlupic

Many organizations today are like frogs swimming in slowly heated water. Unaware of the forthcoming danger, they are complacent. They are unwilling to change, shift to a better place, and jump out of the increasingly dangerous hot water and move to safety. They are surfing on the edge of chaos – markets change faster and faster, unforeseen influences require quick adaptation, and changing demographics of the workforce demands different management practices. Many businesses are becoming global, helped by advances in connectivity and digitization. This internationalization causes competitor profiles to constantly shift. There is an increasing emphasis on innovation, cooperation and collaboration. The management dogmas of the past fail to suit the new landscape. New thinking is required. Organizations

and societies are better able to adapt by taking a path based on values, integrity, purpose, compassion, continuous innovation and the commitment to make a positive difference and safeguard the future for young generations.

Passion and performance

Continuous learning and innovation are becoming progressively more important for sustainable performance. Engaged employees who feel passionate about their work create innovative cultures, but can be held back by outdated management practices. Managers need to create the conditions for unleashing the power of human passion, wisdom and ingenuity. Chief executives, management thinkers and practitioners have come to the view that we cannot use old solutions for new problems. We have never experienced

such a magnitude of changes before. There is a dramatic need for a shift to a new mindset and new management practices. I call it ‘The Management Shift’. Many organizations, both in the public and private sectors, need to make profound systemic changes, not just to management practices, but to organizational cultures, business processes, regulatory frameworks, work arrangements and work ethics. Traditionally managed organizations resemble supertankers that struggle to respond to sudden changes in their environment and fail to change course in time. Modern organizations should be managed and led like sailboats – a general direction is to be determined, but the journey towards the destination should be flexible, depending on the environmental conditions. Management thinking has been

Traditional organizations resemble supertankers. Modern organizations should be run like sailboats Dialogue Q4 2017

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traditionally influenced by scientific discoveries. Conventional management approaches have been based on the Newtonian machine model that focuses on hierarchical linearity: a culture based on rules, command and control, and formal relationships. It is no more than a metaphor. And while such an approach might have worked well in predictable and stable environments when the objective was efficiency in the production economy, there is ample research evidence that, in dynamic and complex business environments, this traditional approach inhibits creativity and innovation, and decreases motivation, engagement and productivity. Management innovation is a greater potential source of competitive advantage than traditional innovations of products, services or technology. Einstein’s insights into relativity have influenced other disciplines such as art, music, religion or literature at the beginning of the last century. The main paradigm was that rational and analytical were inseparable from emotional and intuitive. Yet this key finding has not affected management thinking until recently. The main reason was the ‘if it ain’t broke, don’t fix it’ mantra. From the 1950s, the traditional management model flourished, with wealth creation for industrial nations based on increasing productivity. Then, with all the technological changes and increasing importance of knowledge, new business models emerged (such as Amazon.com), where talent, collaboration and innovation enabled faster commercialization of ideas. However, embracing these new management approaches requires a shift in the mindset, which is not easy to achieve, and most organizations today are still managed using conventional, Newtonian management approaches.

The Management Shift

Not surprisingly, organizations, institutions and societies are in crisis. Performance continues to decline whether measured through Return on Assets or Return on Invested Capital; US firms’ Return on Assets has dropped progressively since 1965, despite rising labour productivity. The average life expectancy of Fortune 500 companies has steadily decreased from 75 to 15 years in the last 50 years. Furthermore, data

BOILING FROG

FREE FROG

Traditional top-down leadership

Shared, distributed leadership, leadership as emergent collective action

Leaders lead by command and control

Leaders support autonomy, collaboration and self-organized communities of passion

Direction is provided by hierarchical leaders

Direction emerges from complex network activity

Key leadership traits: being tough, controlling, analytical

Key leadership traits: being inspirational, intuitive, cooperative, compassionate

Leaders provide centralized direction

Dispersed visions are supported

Leaders control around core strategic vision

Control is dispersed around complex interactions among employees, actions are guided by a shared vision

Change is an incremental movement, led by a formal leader

Change is created by the movement that emerges from interactive dynamics

Centralized coordination for alignment with strategic direction

Decentralized coordination of adaptive functions to encourage emergence and innovation

Leading for equilibrium and stability

Leading for change and adaptability

Searching for order and avoiding chaos

Accepting some chaos that will lead to homeostasis

Leading for reduction of conflict

Leading for creation of enabling conditions for innovation and engagement

Supporting unified views

Encouraging creativity from differences

Implementing comprehensive change programmes

Enabling emergent conditions for change

Delegating tasks

Delegating responsibilities

Centralized decision based on a formal position in organizational hierarchy

Decentralized decision based on knowledge, decisions emerge through interactions

Leading based on fear and obedience

Leading based on inspiring initiative and creativity

Delegating and blaming when things do not go well

Leading by encouraging everyone to be a leader

Performance monitoring and evaluation

Energizing employees through inspiring great performance

Imposing rigid procedures, rules and regulations

Allowing flexibility with procedures, rules and regulations

Traditional leadership

shows that only 25% of the workforce is passionate about their work, despite the plethora of techniques and resources spent on learning and development. Global figures for engagement show that 80% of employees are less than fully engaged at work. ‘The Management Shift’ is based on people, purpose, collaboration, trust, transparency, community and autonomy (see boxout above). Authority is distributed and decisions are based on knowledge rather than on a formal

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Emergent leadership

position in organizational hierarchies. Organizations are managed holistically as complex adaptive systems. The new approach brings better engagement, productivity, innovation and profit – this is the future of work and we can implement it now. Only by a complete change in leadership mindset can we rescue the frogs from the warming water, and set them free. — Professor Vlatka Hlupic is a management consultant, executive coach and author Q4 2017 Dialogue

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Nourishing a nation DSM chief executive Feike Sijbesma kept his promise and helped feed a nation, finds Liz Mellon

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In January 2007, 47-year-old Dutchman Feike Sijbesma attended his first World Economic Forum (WEF) in Davos, Switzerland. Just weeks before, his employer Royal Dutch State Mines (DSM) had announced that Sijbesma would be its next chief executive. DSM – once a coalmining firm – was, at the time, predominantly a European industrial chemical company with divisions in food ingredients. But all that was about to change. On one snowy afternoon, Sijbesma sat in on a private WEF breakout session during which African leaders criticized Western food aid shipped to their continent for the last 50 years. Western food is full calories, which keeps people alive, they acknowledged. But being largely devoid of micronutrients, it leaves people unhealthy and unable to reach their full physical and cognitive potential. It is a practice that keeps people going, they argued, but leaves them unable to meaningfully contribute to Africa’s economic growth. Following the session, Sijbesma approached one African president who had spoken most passionately. He introduced himself, explained

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that DSM had a division in nutrition, and promised to help solve the issue. The response from this president was a sceptical “sure you will”, as he had heard it all before. Undeterred, and inspired to ‘Do Something Meaningful’ (the DSM initials have been repurposed), Sijbesma approached the United Nations and the World Food Programme (WFP) to ask how DSM could help. This was well before the ‘public private partnership’ concept had become entrenched in development vernacular, so DSM was forging new and difficult ground. Yet DSM persisted and signed its first memorandum of understanding with WFP later that same year – a partnership that has now lasted a decade. These days, DSM helps ensure that the food WFP serves in its school feeding programmes and emergency relief efforts is nutritious, fortified with essential vitamins and minerals. Not only has DSM made its nutritional scientist available to the WFP, but it has invented specific products for WFP missions, such as MixMe sachets, which can be added in-situ in schools and homes. Over the years, DSM employees have raised millions in cash and in-kind contributions,

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A global stage

An opportunity came in the spring of 2013 when DSM was approached by the Clinton Health Access Initiative (CHAI) to determine if DSM was willing to take the lead in a new approach to development. CHAI and the Government of Rwanda invited DSM to build a nutritious food plant in the Rwandan capital city of Kigali. At the time, some 38% of Rwandan under-fives suffered from severely stunted growth due to malnutrition. The Government of Rwanda was looking for solutions, and DSM was the organization they believed could deliver. DSM first looked for strategic partners to help finance this new venture. Unfortunately, by traditional corporate financial standards, investment would not deliver the near-term financial returns that most private sector organizations require. Additionally, this venture was not without risk. While Rwanda is now politically stable, Africa historically has been a difficult place for Western organizations to operate. And, being landlocked, Rwanda presented some acute logistical and basic infrastructure challenges. DSM had to find an alternative solution. Following a ‘road show’ to potential investors, including governmental agencies, development banks, private equity funds and NGOs, DSM reached an agreement in principle with the World Bank’s International Finance Corporation, the Netherlands Development Finance Company, and the DFID Impact Acceleration Facility. Negotiations over contractual terms on the investment took two years. Finally, in July 2015, agreements were signed in Amsterdam – and Africa Improved Foods BV (AIF) was born. Soon thereafter, Africa Improved Foods Rwanda was created, with AIF as the 91% shareholder and the Government of Rwanda as a 9% shareholder. The Government of Rwanda

never-ending story

Since 2007, Royal Dutch State Mines has continued to adapt, evolve and change. It divested its non-core industrial chemical, anti-infective and pharmaceutical businesses, and continued to acquire nutrition, food ingredient and clean energy operations to expand internationally. Today, it has US$11 billion in annual sales, with 25,000 employees operating across six continents. It bears little resemblance to the coal miner ‘Dutch State Mines’ and has readily embraced its mission to Do Something Meaningful.

made in-kind contributions of land in the Kigali Special Economic Zone, Nyandungu, in return for its shares, and committed to using any profit sharing to underwrite the costs of feeding programmes in Rwanda. Construction of the facility in Kigali finally began. It would produce nutritious porridge flour specifically for expecting and lactating mothers (Nootri Mama), as well as for children between the ages of six months and three years (Nootri Toto), using Rwandan feedstocks (such as maize and soya) manufactured to international quality standards.

The new factory

Following a year of construction challenges, the plant reached mechanical completion in December 2016. In Q1 of 2017, the first shipments of food began rolling out of the facility, and the plant continued to scale up. The total cost of construction was approximately US$60 million. The plant has been successful in manufacturing to the highest quality and safety standards. This has required training, of not only hundreds of workers in the plant who do not have a history of working in modern manufacturing operations, but also of thousands of smallholder farmers who are being taught how to better harvest, store and transport their crops. The plant currently employs 315 Rwandans in its operations, and employed over 600 during the construction phase. Annual capacity of the facility is 45,000 metric tonnes, making it one of the largest food manufacturing plants in East Africa. This one facility will soon have the capacity to feed nearly two million people a year – miraculous

Sarine Arslanian

and the firm has even seconded employees to WFP operations. During the last decade, this partnership has made it possible for tens of millions of African children to reach their full potential by ensuring that they receive not just sufficient calories, but also vital micronutrients. Post-2007, DSM started other nutrition initiatives in Africa with affiliated organizations, such as Sight & Life, working on vitamin A intervention; Partners in Food Solutions with General Mills, Cargill, Buhler and Hershey’s; and partnerships with groups like Vitamin Angels. Yet DSM wanted to do more. It wanted to facilitate nutritious food production in Africa, using African feedstocks produced, by Africans for Africans, to break the continuous cycle of undernutrition, foreign aid and economic stagnation.

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Pictured clockwise from left: Highly nutritious red beans sold at the local market in Kigali; Kigali; A woman at the market in Kigali selling fresh vegetables, including eggplants, carrots and tomatoes; Woman harvesting rice on her field in Rwanda

by East African standards. When operating at capacity, the plant will require 28,000 metric tonnes of maize and 11,000 metric tonnes of soya. In the 2015/2016 growing season alone AIF Rwanda sourced maize and soya from over 9,000 Rwandan smallholder farmers through nine farming cooperatives. These farmers were given access to microfinance through KBC (an African banking operation) and were provided with agronomic training by CHAI. As a consequence, farmers that were supplying AIF Rwanda saw an average yield increase of 20% in the first year of production.

Business, not charity

This model can be replicated anywhere, to create an ecosystem that ends ‘hidden hunger’

One of the most important aspects of this venture is the commercial operation. The venture would be impossible without the support of the WFP, which has signed a long-term deal with AIF Rwanda for a supply of super cereal for use in its own school-feeding and famine-relief efforts. Today, AIF Rwanda cereal is already helping feed those devastated by famine in Sudan, South Sudan and Somalia. Another important commercial relationship is with the Government of Rwanda’s Ministry of Health. AIF Rwanda supplies the government with Shisha Kibondo, a fortified porridge flour that the Government of Rwanda purchases to use in its own school-feeding programmes and relief efforts, distributing it to more than 97,000 of the country’s most vulnerable children for free. Finally, and as a key differentiator and core to the venture’s sustainability, AIF Rwanda is selling into the Rwandan and Ugandan commercial markets. Products like Nootri Mama and Nootri Toto can be found on supermarket shelves in Kigali and other cities. The product is high-quality and highly nutritious, and currently sells for about a third of the price of comparable imported products. The profitability of this venture is critical to its sustainability. And that sustainability is critical to the African beneficiaries – the Rwandan employees and the Rwandan smallholder farmers – who rely on AIF Rwanda for safe, affordable, nutritious food, for jobs, and for a stable market

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for their crops. This venture is not philanthropy. It is a purpose-driven, for-profit enterprise that is replicable and scalable. DSM estimates that by 2022, AIF Rwanda will have contributed $36 million to the Rwandan and regional economy, through spending on local feedstocks, energy and labour. No AIF Rwandan employee should ever live below the national poverty line, and currently workers earn between 28% and 38% more than they did with their previous employers. AIF Rwanda intends to launch a ‘Made in Rwanda’ campaign that will serve as the basis for increased international demand and sales. It is estimated that AIF Rwanda will contribute between 5% and 10% to Rwanda’s export sector, securing US$ 40 million in foreign exchange for Rwanda per year. Most importantly, the goal is to reduce childhood stunting in Rwanda – from 38% to 32% by 2020 – by exclusively using AIF Rwanda products.

Onwards

AIF Rwanda is not the end. It is, as they say, the end of the beginning. DSM and its partners are in the process of finalizing negotiations with the Government of Ethiopia to build a similar facility in Addis Ababa for Ethiopian consumers and regional beneficiaries. This model can be replicated anywhere, to create an ecosystem that ends ‘hidden hunger’, allows all children to reach their full physical and cognitive potential, and spurs economic growth through creating a manufacturing base. It also facilitates farmers to adopt better technology and practices increasing productivity, yields and profits, and helps enable social stability. African companies, employing Africans, using African crops, to feed African people. It is the first glimmer of the end of international aid. It is also a promise kept by a young chief executive on a chilly winter afternoon in Switzerland more than ten years ago. — Liz Mellon is a world-leading business educator. — MixMe, Nootri Mama and Nootri Toto are trademarks of DSM Q4 2017 Dialogue

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The double paradox o Choice is good – up to a point, writes Robin Speculand

Which do you prefer: to be told what to do by your boss, or given a choice? Most people prefer to be given a choice, and when it comes to executing strategy, this technique can dramatically impact the outcome. One powerful idea to engage your people is the double paradox of choice. Choice is a double paradox because people are more likely to choose the right actions if they have options. Yet when they have too many choices, they do nothing! People are more committed to outcomes they set themselves over those chosen for them by a ratio of almost five to one, as noted by Carolyn Aiken and Scott Keller from McKinsey & Company in their paper The Irrational Side of Change Management.

The authors cite a famous behavioural experiment in which half the participants are randomly assigned a lottery ticket number, while the others are asked to write down any number they would like on a blank ticket. Just before drawing the winning number, the researchers offer to buy back the tickets from their holders. The result: no matter what geography or demography, researchers had to pay at least five times more to those who came up with their own number. Why? Because we are more dedicated to outcomes we set ourselves.

Choice. But not too much choice

Research has also demonstrated that an excess of choice often leads to people being less, not more, satisfied. So, if you offer too many choices, people do less – and sometimes they do nothing at all. An experiment by Sheena S Iyengar (Columbia University) and Mark R Lepper (Stanford University) explained this in When Choice is Demotivating: Can One Desire Too Much of a Good Thing. They wrote about an upscale grocery

store displaying 24 jams for customers to view and purchase and, on another occasion, only six different jams. From the customers who visited the 24 jam selection, only 3% purchased. From the six jam selection, 30% of the customers purchased. That’s ten times more. TV channel National Geographic reported a similar experiment for its series Brain Games. They selected two ice cream parlours. One only offered three flavours and the other a much wider selection. Researchers concluded that the brain prefers to choose from only three options. Why? Daylian Cain from Yale University explains that the brain uses two systems to make choices. System one is automatic and unconscious; system two is deliberate and controlled (the one used in decision making). People might assume more choices will make them happier but, in fact, more choices make them unhappier. This is because of a nagging feeling that they could have done better. The aim is to give a few choices; three is ideal. Too many choices in execution can lead to the same levels

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x of choice of lower employee-engagement and satisfaction as having no choice at all. Organizations that have achieved excellence in execution follow this advice. For example, Infocomm in Singapore terminated its contract with a single IT vendor last year in favour of allowing each business unit to choose from three different vendors rather than being forced to use one vendor.

How many strategy objectives a year?

The double paradox principle also applies for leaders selecting strategic objectives to work on every year. A strategy typically has many objectives over a few years – all deemed important. But good leaders don’t aim to execute everything immediately, because lack of focus can derail your efforts. The advice is to balance and limit what’s expected, and to select the urgent and the immediate for each 12-month period. So how many strategic objectives should a leadership team focus on every 12 months? Between three and five. By focusing on between three and five, people don’t feel overwhelmed

with too much to do. It sends a clear and compelling message about what needs to be done most urgently. It also sets the tone for a high-performing culture, allows allocation of resources, and develops the discipline to prioritize. As Professor Kathleen Eisenhardt of Stanford University says: “There must

People working on several objectives are so overwhelmed, they do a little on everything and nothing is finished be a certain balance to the number and type of goals and objectives: too many goals and objectives are paralyzing; too few, confusing.” Iyengar, Lepper and National Geographic indicate that when organizations try to execute more than ten objectives, less gets done, and in some cases, none of the objectives are completed. People working on them

are so overwhelmed, they do a little on everything and nothing is finished. East West Seed, the leading provider in tropical seeds, is aware of the double paradox of choice. Over the next five years it has 13 strategic objectives to achieve. Bert Van Der Feltz, the chief executive, has prioritized five strategy objectives for 2017, to set focus globally across the group. When you try and do more you end up achieving less. When you do less you achieve more and send a clear message in execution – which is a time of turbulence within an organization – about what is important, what needs to be measured, where resources should be reallocated, where employees should take the right actions, and where employees should be held accountable. Offer choices – but not too many. — The material for this article has been adapted from Robin Speculand’s latest book Excellence in Execution: HOW to Implement Your Strategy. He is an expert in strategy implementation, and founder and chief executive of Bridges Business Consultancy

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news nation

The squeezed state Qatar has been cut-off from its Middle Eastern neighbours by an economic and geographic embargo because of its alleged support of terrorists.

MANAMA

PERSIAN GULF BAHRAIN

count Your enemies

11 Countries that have severed ties with Qatar, including Saudi Arabia and Bahrain

GULF OF BAHRAIN

unlucKY number

DOHA

QATAR

5 5.50am on 5 June was the first sign anything was wrong f lY i n g h i g h

$12bn

Payment from Qatar to US for F-15 fighters days before the embargo

SAUDI ARABIA

FAC T F I L E Q ATA R Land area

Official languages

4,473 sq mi

Arabic

Population

GNI per capita

2,258,283

$138,480

Capital

Life expectancy

Doha

81 Women

(11,586 sq km)

A very grave mistake is being made in Qatar, isolating a nation in all areas is inhumane and against Islamic values. It’s as if a death penalty decision has been taken for Qatar Turkish President Recep Tayyip Erdogan

Major religions

Islam

77 Men

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Qatar is under blockade, there is no negotiation. They have to lift the blockade to start negotiations Qatar’s foreign minister Mohammed bin Abdulrahman Al Thani




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Q U I C K LY A N D Q U I E T LY 5 June 05.50 Bahrain cuts all diplomatic ties with Qatar 06.00 Saudi Arabia follows 06.10 UAE and Egypt close the morning’s annexing 14.00 Saudi Arabia closes land and sea borders with Qatar 23.59 Yemen, the Haftar government of Syria, the Maldives and Mauritania join the embargo of Qatar

6 June Airlines based in the region suspend travel in and out of Qatar Within one week Qatari troops are ordered away from the Yemeni war (Saudi Arabia is leading the campaign), and Qatari citizens in Saudi Arabia or the UAE have been given two weeks to depart

So good to see the Saudi Arabia visit with the King and 50 countries already paying off US President Donald Trump

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Number of demands issued to Qatar to end the embargo, including shut down the Al-Jazeera network, close a Turkish military base, and scale down ties with Iran

official reason for embargo

‘Qatar supports terrorism’ An allegation denied by Qatar

Performance Matters @EdenredSMB 29 May Managers key to productivity puzzle @DialogueTweets #MondayMotivation Eve Poole @evepoole 5 Jun Thanks to @LizMellonDuke for a lovely review of #leadersmithing on p80 of Dialogue

DIALOGUE IS BROUGHT TO YO U B Y… editorial board

Dr Liz Mellon, chairman Tom Albanese, chief executive, Vendanta Resources Michael Canning, chief executive, Duke Corporate Education Professor Pedro Nueno, president, China Europe International Business School Karina Robinson, chief executive, Robinson Hambro Ben Walker, editor, Dialogue editorial

Ben Walker, editor Kate Harkus, art director Luisa Cheshire, chief subeditor Kirsten Levermore, assistant editor Miro Iliev, social media executive management

Martin Liu, publisher Niki Mullin, business development manager niki.mullin@lidpublishing.com Charlotte Hutchinson, communications executive

Disclaimer Copyright 2017 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the publisher. While we take care to ensure that editorial is accurate, independent, objective and relevant for the readers, Dialogue accepts no liability for reader dissatisfaction rising from the content of this publication. The opinions expressed or advice given are the views of individual authors and do not necessarily represent the views of Dialogue. This journal is also supported by Knowledge Partners, including Duke Corporate Education as Lead Knowledge Partner. Whenever an author is related to a Knowledge Partner it will be noted as such. Dialogue takes every effort to credit photographers but we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omitted a credit for your image, please email the editor. ISSN 2053-4361 Printed by Pensord www.pensord.co.uk

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Published in the United Kingdom by LID Publishing, Studio 204, 16 Baldwins Gardens, London EC1.

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IN ASSOCIATION WITH

Reach for the Spike René Carayol’s Spike urges readers to find not just their strengths, but the very essence of who they are, finds Kirsten Levermore

Spike René Carayol LID Publishing bit.ly/lidspikebook

This definition is at first “Everyone is a winner. frightening (do I really There need never be any know my brand?), then losers anymore.” These exhilaratingly inspiring opening words of René (Yes! This is what makes you Carayol’s Spike have a page unique on planet Earth).” all to themselves; the silence The text itself serves surrounding them is as two purposes: a love letter powerful as the sentiment to the mentors, mentees itself, reaching all the way and leadership teams that to the core beliefs we hold have guided and influenced about our personalities and Carayol throughout his life; the world around us. And and empowering readers that’s just page one. with the knowledge that, if The word, ‘spike’ – we identify and utilize our simultaneously conjuring own and others’ spikes, we up images from economics, can be winners in any arena. sports, construction and Spike comes from a man neuroscience – is leadership who has had quite the trip speaker, broadcaster and to the top, and been called coach Carayol’s shorthand upon as speaker and coach for ‘strengths positively to the biggest names in identified kick-start the world (many of whom excellence’, a philosophy he mentions early on, that asks us to look deep including President Bill within and find what makes Clinton, Prime Minister us great. Spike is a philosophy David Cameron, boxer Ricky Part-autobiography, that asks us to look Hatton and Sir Richard part-philosophy, Spike deep within and find what Branson). Simply put, imparts its wisdom via makes us great Carayol is a storyteller who personal stories from the knows how to write, and lives of Carayol and people his charismatic, engaging from his past. Each one highlights a different case, both in life and work, tone will weave Spike into your consciousness, following you throughout your day. in which a ‘spike’ was identified (or not) and Curiously, there is little instructional value utilized (or mislaid). Coming from the pen of a to Spike – the aim is simply to act as a beacon, prolific motivational speaker, it is no surprise drawing you into the search for your spikes that Spike has all the hallmarks of Carayol’s without providing the tools to identify them. character: it is flowing, detailed, enrapturing No test, not even a list of possible spikes. It is and inspiring. maddening and somehow furiously engaging, It also asks pointed, sometimes intimate forcing the reader to think, dwell and even questions: spikes are not simple strengths, meditate on the answers. like being good with Microsoft Excel. In Perhaps Carayol has founded a new subCarayol’s own words, a spike is: “Something genre of self-improvement? that is your brand, the essence of what you are.

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81

How a great consultant climbed the mountain Herbert Henzler’s autobiography gives intimate insight into the man who defines consultancy at its finest, writes Kirsten Levermore

Pushing the Boundaries Herbert Henzler LID Publishing bit.ly/ pushingtheboundaries

of Henzler’s decision, and Herbert Henzler has climbed the next 100-odd pages of the mountain, bridged the book are dedicated to the chasms and taken in Henzler’s glittering career as views at the summit. In his a management consultant. autobiography, Pushing the Here, the academics are Boundaries, he tells the story left behind for a different of how he did it, why he milieu – budding and did it and, on looking back, established consultants what he would have done at McKinsey & Company. differently. “I wanted to In the German author’s help shape society, to move characteristic style (straight the needle even if I had to go to the point yet always to my limits.” eloquent), we learn about It’s a powerful message, Henzler’s rise to power, and that drive elevated some of his most notable a tuberculosis-ridden clients, and key strategies he scamp from a farm in perpetuated and pioneered. Neckarhausen, Germany, For those without a to one of the most powerful consultancy background, management consultants on these stories and findings the planet. are tough terrain – for Beginning in Henzler’s those with consultancy youth, World War II and experience, however, Germany’s tuberculosis Henzler awards you the ‘clinics’ (read: asylums) Henzler’s relentless keys to his kingdom. set the scene for the uppursuit of knowledge As the reader finds and-down childhood of a and experience bounces off themselves standing next farm-child with big brains, the pages to Henzler, looking at the a sporting talent, and too metaphorical valleys and much illness to join the local mountains over which he factory labour force. presides, we follow his gaze to a new mountain, a Confined to future in an office, Henzler new pass, a new adventure. In the final chapters chronicles his path to his only other choice – of his autobiography, the ski-loving author education. Days at university – studying and tells of his life after McKinsey. We follow him as extra-curriculars filling every waking hour – he slaloms new pistes into the offices of Credit whisk the reader through the second portion Suisse, FC Bayern Munich and the government of of the book. Henzler’s relentless pursuit of Bavaria. Finally, as if resting on a glacier or by a knowledge and experience bounces off the ski-lodge fireside, Henzler shares his reflections pages. The section ends with a personal favourite on his life, his choices, and the people that moment: when a young Henzler must choose made him. between a career in academia or working in It is an intimate, informative portrait of a selfthe world outside – a dilemma to which many affirmed man who has won his place at the top of potential consultants will relate. the management-consultancy mountain. In this case, however, we know the outcome Q4 2017 Dialogue

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IN ASSOCIATION WITH

THE LEARNING CURVE WITH HEATHER MACNEILL

Motivated employees make for an upskilled, colourful, innovative workforce. Empower individuals to broaden their horizons

How to instill motivation Motivation. A willingness for someone to act upon something. The question is: can motivation be taught, or is it an innate quality, strengthening or fading with age and experience? Some argue that motivation depends on the individual, and how eager they are to advance in their career. Others say it’s up to leaders to instill confidence in their employees, which, in turn, motivates them to grow, thrive and succeed. There is a balance when it comes to motivation in the workplace: good leaders inspire employees to be the best at what they do, and support them along the way by providing the necessary tools and guidance. To complement that support, strong employees act upon their desire to achieve sought-after goals. And at the root of individual ambition lies the drive for continuous learning. With the fluidity that characterizes many industries and organizations today, the most successful employees are those who adapt quickly to changes and ‘skill up’ – to expand their skillset beyond traditional job descriptions. It is especially important that modern employees learn how to contribute to a network of teams, rather than only to their specific departments. This way of working – this proactive adaptability and need for skilling up – is a newer concept. And now is the perfect time for leaders to develop effective ways for motivating employees, helping them realize the power of expanding their skill horizons beyond immediate areas of expertise. Empower your employees to seize ambition in this way:

1

Highlight employee growth and future opportunities

Holding informal meetings with employees, to discuss past achievements and where they stand within the company, can be an effective way to

kick-start motivation. Consider outlining what the future could look like if the employee strengthens or expands their skillset in a few different areas. Perhaps include salary increase projections, or point out options for inward mobility or leadership roles. Goal-setting meetings such as these are great for motivating employees to make it to the next level. To breathe more life into the enthusiasm created, guide employees to relevant learning content based on the areas in which they’d like

up couches and personal screens loaded with content and collaborative tools. Create the right the mood for learning.

3

Establish internal collaborative learning groups

Collaborative learning is one of the most effective learning methods. The bulk of knowledge is retained through informal learning experiences. To capitalize on this, consider organizing online learning groups for your employees. Within these groups, employees can share books and videos with one another, paired with their own ideas and feedback. Starting with an online group empowers employees to learn when it is most convenient for them, as opposed to setting in-person meetings. Structured brainstorming sessions may feel forced and hinder your team’s ability to carry on productive discussions.

Bonus tip: make sure online groups can be accessed via desktop and mobile devices to support learning on the go.

4 to grow. For example, if your employee wants to manage an intern, recommend specific books and videos to help build leadership and management skills.

2

Create an environment that empowers your team to learn

Chances are that once you and your employees determine individual professional goals, your team will want to ‘hit the books’. To empower continuous learning in the workplace, consider establishing or refining your learning culture. Offer flexible time for learning. Evaluate whether you need new tools or learning platforms to support modern learning preferences, or simply encourage learning by setting

Guide team learning

Simply telling someone to “skill up” is beyond daunting. Where do they start? As a learning leader, consider proposing monthly or quarterly team learning topics and provide content recommendations that will help your team achieve its goals. The key to motivating employees is to help them see the benefits of expanding their skills through continuous learning, and then working with them to construct a plan for professional growth. By empowering employees to expand their skills, you’ll likely see them progress through the company ranks, and grow in new and unexpected ways.

— Heather MacNeill is head of communications at BlueBottleBiz, the collaborative learning platform for business professionals

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83

PIERS CAIN ON BOOKS

Nonconformists are less likely to prosper. No wonder companies underperform

In praise of the unreasonable man (or woman) Piers Cain is a management consultant

Grant has produced that rare beast – a business book that is a bit of a page-turner

There is a growing sense among business thinkers that the traditional corporate organization is no longer fit for purpose. It stifles the creativity we need to make the most of the opportunities of new technologies, unleash economic growth and achieve personal fulfilment. Originals by Adam Grant, a professor at the Wharton School of the University of Pennsylvania, is an interesting contribution to this debate. Grant has the knack of drawing surprising lessons from case studies by integrating research from sociology, psychology and history. He has produced that rare beast – a business book that is a bit of a page-turner. This is a manual for becoming a more effective ‘Original’, a nonconformist who wants to change the world. It suggests tactics for surviving the corporate jungle, and getting new and potentially unpopular ideas adopted. For chief executives, it discusses how to promote a corporate culture open to new ideas. It even provides tips on how to educate your children to become effective nonconformists. For example, research shows that people typically become more positive about a new idea after ten to twenty exposures to it, particularly if the idea communicated is short, spaced apart by a few days and mixed in with other things. Or, if you need to ‘pitch’ your radical proposition to a sceptical audience, consider setting out the case why your idea won’t work – counterintuitively your audience will start thinking your innovation isn’t so bad after all (this only works for good ideas). Grant is realistic about the risks of proposing new ideas in a corporate environment. In one study covering manufacturing, service retail and non-profit sectors, the more frequently employees raised ideas and concerns with their superiors, the less likely they were to receive pay rises and promotions over a two-year

period. He cites the horrible example of CIA analyst Carmen Medina, who in the 1990s proposed sharing intelligence between agencies via a secure classified intranet, rather than by circulating paper reports. Her face didn’t fit, so rather than being supported, she was nearly fired and sent to corporate Siberia for three years. But ten years later, she was able to implement what became Intellipedia and was awarded a medal in recognition. It could so easily have ended otherwise. What enabled Medina to succeed in the end? It was a combination of luck, persistence and better tactics: she had a supportive boss, she rebuilt her credibility in the intelligence community and, as she rose through the ranks and assembled a network of supporters, she reframed her ideas to make them seem less threatening. In other words, the odds are still weighted against the corporate nonconformist. There is no easy solution, but there are tactics and strategies that can help. Originals is a good place to start. Adam Grant begins this book by quoting George Bernard Shaw. “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” What Grant doesn’t mention is that, in addition to promoting various progressive causes, Shaw was also an advocate of eugenics and an uncritical admirer of Stalin. This points to an unexamined assumption underpinning this book that might have been explored further – the impulse that some people have to ‘change the world for the better’ can be uncritically regarded as a good thing. The millions who died under Stalin’s rule might consider it a mixed blessing. — Originals: How nonconformists change the world Adam Grant, WH Allen bit.ly/originalsbook Q4 2017 Dialogue

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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.

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85

Every speech can be like your favourite TED Talk Alexandra Boudreault-Manos discovers the lessons that will make you a TED talker

Talk Like TED, from communications coach and former news correspondent Carmine Gallo, is a light, interesting exploration of how to talk like your favourite TED talker. With evidence from an analysis of hundreds of TED Talks, Gallo explores the three key attributes of a great speech – that it be emotional, novel and memorable. Conveyed through stories and examples from some of the most famous speeches (including everyone from Steve Jobs to Arctic explorers), nine public speaking secrets of the world’s top minds are delivered, for your use. As well as numerous examples and references, Gallo has also endeavoured to include interesting results from his analysis, in the form of charts. These charts give the reader a hands-on guide to improving their public-speaking skills. Admittedly, though, the value of Talk Like TED lies more in the stories it

From hundreds of TED Talks, Gallo explores the three key attributes of a great speech – that it be emotional, novel and memorable

tells, framing useful public speaking tips in an engaging and meticulously analysed way, rather than in divulging tips and information. While well written and littered with interesting facts about science, business,

and everything in between, Talk Like TED does become quite repetitive – and in places even contradictory. The book also runs the risk of being confusing or simply not as effective to the average reader who is not familiar with any the hundreds of TED Talks Gallo dissects. It’s not useful to many, or in a long-lasting way – but Talk Like TED is easy to read, and the stories thoroughly entertaining. — Talk Like TED Carmine Gallo Macmillan

APPS FOR LEADERS: APPICAL

Onboarding is tricky. This app makes it easier, writes Perry Timms One simple web search reveals 659,000 entries that link to the key words ‘onboarding’ and ‘apps’, and none of them relate to cruise liners! Many of them, however, refer to attracting users to a particular app. But, in the world of work and HR, ‘onboarding’ means ‘induction’ – the way in which new employees acquire the necessary knowledge, skills and behaviours to become effective team members in an organization. And, believe it or not, now there are apps that can help with this induction process. Appical is one of a new breed of software tools suited to the digital nature of our lives. It helps familiarise new staff with their organization, brief them on company culture, and encourage a sense

of belonging to their new team. It seeks to lower the productivity lull common when newcomers arrive at a firm, by answering all those initial questions that invariably crop as fresh-starters learn their new role. Netherlands-based Appical has an impressive client portfolio, including Heineken, Philips, KLM and PepsiCo. And since its inception in 2012, it has built up a range of functions designed to help facilitate the onboarding process. With its company-jargon dictionary, to-do list, and augmented reality-tour of company location, Appical aims to turn the sometimes protracted candidate-toemployee journey into a quick, useful and inspiring experience. Unlike most App Store downloads, this is a combined product, which includes

your content and Appical’s functionality. In the near future, almost all onboarding could become a digital experience. If so, this product, like others in the marketplace, will be leading that shift by bringing another piece of the digital transformation jigsaw into our working lives.

— Appical is an iOS and Android app. You can request demos and see more at appicalweb.nl — Perry Timms is an independent HR/ OD practitioner, speaker, writer and CIPD adviser on social media and engagement Follow him on Twitter @PerryTimms Q4 2017 Dialogue

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LAST WORD

KARINA ROBINSON

There will be two billion over-60s by 2050. They can – and must – become a crucial part of the workforce

Embrace the golden age Dimmed lights are reflected on the heated seawater in the indoor pool, while New Age music wafts across the cavernous room. Aged bodies advance in slow motion from jet to jet, allowing each one to massage a different part of their arthritic limbs, while chatting with each other and Nikos, the Greek God of a lifeguard. This vision of the future, courtesy of a thalassotherapy spa holiday near Athens, shocked me into an awareness of how the population of the world’s major economies is ageing, notably in Europe, Japan, China and the US. And what a wealth of opportunities could arise out of it. People over 60 are set to become the world’s fastest-growing cohort. By 2050 there will be two billion of them. Their participation in the workforce will be crucial to make up for fewer working-age adults. For this to happen, more flexibility will be needed in the world of work, whose practices too often continue to be hidebound by tradition. Adapting the tools of work is also vital. Sixteen-year-old students at a recent workshop at ADA, the National College for Digital Skills in London, experimented with taping three of their fingers together and wearing dark glasses while trying to use a normal keyboard. The simulation of old-age travails will undoubtedly lead to breakthroughs in workable technology. Blurring science fiction and reality, Bristol-based Open Bionics creates 3D-printed robotic hands for amputees, mainly children. One child asked them for a pocket to store his iPhone on his bionic arm. In a few years, one can visualize an older person who has lost the use of their arms due to, say, Parkinson’s, asking for an app to be downloaded into their arm that could call their carers when they had a severe fall. Later that day at the spa, gently perspiring in a sticky seaweed wrap, I reflected that in 500 BC, Greek physician Hippocrates came up with a revolutionary focus on preventing sickness instead of simply treating disease. The older people

Robots will undoubtedly help with old age. Yet the warmth of human interaction is invaluable

at the spa (and those of us who meander in the middle-age range) were doing just that. Monitoring our health is becoming normal through Fitbit and other wearable devices, while exciting apps are being developed that can tell when a depressive episode is about to happen, or when a heartbeat is out of sync – as seen in the Flying Health incubator in Germany. Robots will undoubtedly help with old age. Yet the warmth of human interaction is invaluable. Penelope, one of the personal trainers at the spa – and the living image of a koure (temple maiden) – led a keep-fit class in the pool, and her smile, surely, encouraged us more than any robotic voice could. In any case, the human/tech interface is emerging as the most productive piece of the puzzle in our new world. Take Vida, a startup funded by Hambro Perks that aims to disrupt the carer market. The app lets customers book carefully vetted carers and includes capabilities like setting the tasks they are to accomplish. It sees itself as the Uber of carers. Mental stimulation is essential both to quality of life and to being a productive member of society. Tech devices will help deal with – and possibly reverse – the decline in our mental capacity as we age. But nothing can be as stimulating to our brains (and souls) as using our professional capabilities to help society. This can be seen through the work of United Nations Volunteers. Assignments can range from advising on dam building, to editing a newspaper in Haiti, or changing laws in Vietnam. In fact, the Odyssean saga of Greek debt forgiveness/ restructuring/bailout, which dominated the local papers during our stay, would assuredly benefit from the advice of old hands who dealt with the Latin America or Asian debt crises. To the young out there: embrace the older generation for their wisdom and experience. To the middle-aged and old: fear not advancing age, but grasp it with the strength of Hercules. — Karina Robinson is chief executive of Robinson Hambro

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