Dialogue Q2 2018 by LID Business Media

JOE DIVANNA

VIVIENNE MING

Q2 2018

THE NEW BUSINESS CONTEXT FOR LEADERS

Goodbye, Houdini Humanity hardwired TERENCE TSE DIALOGUEREVIEW.COM

THE NEW BUSINESS CONTEXT FOR LEADERS

Exploiting megatrends

THE COURAGEOUS LEADER

Courage in chaos Lessons from the edge from Kate Sweetman and Shane Cragun

Q2 2018

LEADERSHIP

INNOVATION

FINANCE

MARKETING

STRATEGY

Constant gardener

Marginal gains

Chinese champs

The impulse factor

Bigger is better

Collaboration that works

Why one percent is enough

Asiaâ&#x20AC;&#x2122;s brand-value revolution

Selling to the subconscious

How to go large for more success

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

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

CONTENTS

Digest 14 FOCUS

THE COURAGEOUS LEADER

Lessons from the edge of disruption: exceptional leaders embrace chaos and uncertainty

Fear is the key: how businesses can drive out cultures of fear from the workplace

Goodbye, Houdini: executives must wriggle free of management escapism and lead instead

REGULARS 7

My edit

News nation

Ben Walker on courage

Spain â&#x20AC;&#x201C; the cleaved country

Spark What you need to know

Great minds Michael Chavez meets Adriana Marais

Reviews Books recommended for you

Michael Canning on deliberate practice

Dr Vivienne Ming, hardwired for humanity

Upfront

The big interview

Last word Karina Robinson on Silicon Valleyâ&#x20AC;&#x2122;s worst nightmares

Q2 2018 Dialogue

ANITA BRIGHTLEY-HODGES Specialist advisor to family-owned businesses

Anita works as a personal advisor to those at the helm of family-owned businesses. She works side-by-side with ambitious leaders to overcome their biggest challenges. Giving them the confidence and the tools they need to take their business to the next level.

If thereâ&#x20AC;&#x2122;s trouble in your family business please remember - youâ&#x20AC;&#x2122;re not alone. Companies everywhere face very similar issues and Anita is here to help you overcome them and move forward.

Whether itâ&#x20AC;&#x2122;s planning for succession to the next generation or resolving long-standing disputes between family members.

01732 220 120 anita@familybusinessplace.com www.anitabrightleyhodges.com

For a discreet, private conversation:

CONTENTS

In depth LEADERSHIP & PEOPLE

I N N O VAT I O N & TECHNOLOGY

Kate Cooper: The leadership column At the heart of performance

Collaborate like a constant gardener

Vivek Wadhwa: The innovation column The radical restart button

Be one percent better

FINANCE & AC C O U N TA N C Y

MARKETING & SALES

Phil Young: The finance column

Giles Lury: The marketing column

Megatrends make the world go round

Don’t sell products – sell projects

Branding now begins in the East

Gone in 0.06 seconds

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

Patrick Woodman: The strategy column

Meet Sherlock Drucker

Why bigger is better

Resilience is a team sport

Six honest men

Q2 2018 Dialogue

AGENDA

Contributors

KATE SWEETMAN

Kate Sweetman is founding principal at the consulting firm SweetmanCragun Group. A former editor of Harvard Business Review, with an MBA from Harvard Business School, Sweetman has twice been included in the Thinkers50, which identifies the most influential management thinkers in the world. Sweetman is also coauthor of The Leadership Book and currently teaches at MIT’s Legatum Center.

RICHARD WATKINS

Richard Watkins founded Let’s Go in 2013 to help organizations get more from collaboration through leadership development, working with teams and wider cultural change. A research scientist by profession, with eight years at BP, and eight years with What If as an innovation consultant, he also runs global collaborative art projects. Having worked in more than 20 countries, he brings the perspective of a scientist, strategist and artist to his work with clients across the globe. Dialogue Q2 2018

JARED BLEAK

Dr Jared Bleak is a coach, consultant and advisor to chief executives. Conducting research at Harvard University, he has a wealth of knowledge regarding strategy, innovation and creativity. A former lecturer in social psychology of business at Duke University, Bleak is a partner at Plot Leadership and co-author of The Leadership Advantage: How the Best Companies are Developing Their Talent to Pave the Way for Future Success.

TERENCE TSE

Dr Terence Tse is associate professor of finance at the London campus of ESCP Europe Business School and co-founder and managing director of AI studio Nexus Frontier Tech. Formally part of mergers and acquisitions teams at Schroders, Citibank and Lazard Brothers in Montréal and New York, Tse now focuses on academia, lecturing at a number of business schools including Cambridge Judge Business School, Vlerick Business School and Aalto Executive Education.

KATHLEEN KING

Dr Kathleen King is an organizational consultant, researcher and coach. She is an adjunct of Ashridge-Hult Business School, where she was formerly director of the MSc and doctorate in organizational change programmes. Gaining her PhD in organizational consulting from the University of Bath, King specializes in cultural change and action learning, and has lectured at Brunel University and London Business School.

LIZ MELLON

Dr 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.

AGENDA

My edit

He was better known for his singing, but the Brat Pack legend Sammy Davis Jr had it right about fear. “You always have two choices: your commitment versus your fear,” the great performer said. You can be as determined as you like to do a great job, lead well, drive your business forward, but when fear gets in the way, your efforts soon become blunted. Fear is the great barrier in business, as in life – and when the world is as chaotic and volatile as it is now, it breeds readily. Our Focus topic this issue is the courageous leader. This ought not invoke thoughts of the stale ‘hero leader’ stereotype who roamed the corridors of corporate power in the 1980s, only for analysts to later discover that leadership is a facility that is better distributed than concentrated in one individual (see Kate Cooper, page 33). No, the courageous leader can come from anywhere in the business, but must be prepared to take the risks required, and use the imagination necessary, to succeed in a business landscape where disruption trumps the day-to-day. In our cover story (page 16), the brilliant Kate Sweetman and Shane Cragun demonstrate why the leaders we need are those that accept ambiguity, and act with courage, speed, and conviction. In the same section, Dialogue’s very own Dr Liz Mellon suggests ways to make it easier to be courageous by driving fear – the business killer – out of the system so risks can be taken, imaginations can thrive and, crucially, decisions can be made. Mellon has witnessed more than her fair share of fearfulness in companies. Her memorable anecdote about visiting a client where the chief financial officer had to sign off on bottled water in meetings will resonate with teams who, instead of being empowered, have become hamstrung by an escalation culture that renders most of them impotent.

A great critique on risk-aversion comes from Dialogue stalwart Joe DiVanna, who makes a powerful case that many senior chief executives are leading a Houdini-like existence, forever plotting to make good their escape (page 24). By focusing on broadly maintaining the status quo, these non-boat-rockers are failing their brief, argues DiVanna. The job of a business leader is to ready the company for what’s next; not defer, transfer and delay decision-making so they can reach retirement while incurring minimum risk. One person who personifies the courageous leader is the neuroscientist and entrepreneur Dr Vivienne Ming. Duke Corporate Education chief executive Michael Chavez interviewed her and heard a real-life story of sheer bravery; a journey from nadir to pinnacle. Read it, and quite possibly weep, on page 28. The neuroscience theme continues in part on page 60, where Gavan Fitzsimons explores unconscious marketing – and reveals some dark, astounding, truths. Read up on why fast-forwarding past TV ads on your PVR might not shield viewers from the power of advertising after all. In fact, the opposite appears true. A final word should go to the prolific William A Cohen, who, in his entertaining comparison of the great Peter Drucker with Sherlock Holmes, paints a portrait of a man who was prepared to challenge received wisdom (and client preconceptions) to deliver transformative business success. Drucker was famed as a consultant, not a leader, but he was courageous nevertheless. Just like the disruptors of the modern age, the father of modern management found that fortune really does favour the brave. Enjoy the issue. Ben Walker is editor of Dialogue

Q2 2018 Dialogue

Spark

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

Leading in extremes Recalibrating the compass is the topic of the day at World Class Leadership 2018 “Leading your team into a situation in which you are both scared is when fear gets really scary. And fear in humans comes mostly from the unknown,” says Simon Hartley, the renowned sports-psychologist and organiser of 2018’s World Class Leadership Conference. “The greatest challenge today’s leaders face is navigating extreme change and blinding uncertainty – and then to get people to perform in light of the package of emotions they are experiencing.” Gathering leaders from counterintelligence agencies (including former director-general of MI5 Dame Stella Rimington), Special Forces, the most scrutinized sporting arenas, and expedition leaders who have travelled to the edges of the Earth, this one-day conference asked for stories and lessons about leading in extreme change, and under extreme pressure.

Leadership under harsh conditions, strict rules and huge expectations is no better embodied than by polar explorer Ann Daniels CBE (left), who values trust and openness in teams in extremes: “The team has to trust – and trust so they know that if I am using a dictator-type leadership (‘You cannot cross this piece of ice!’), they know that it is because [I am trying to do] the right thing, and not for any other reason. The most important part of leadership is to look after the team and allow them to perform, because when everybody in a team works together and gives together, without any worries, that’s when the magic happens.” — Read the full report from the day on www. dialoguereview.com — Dialogue is the media partner of the World Class Leadership Conference 2018. Log onto www.beworldclass.com for podcasts, videos and more

Who is the chief financial officer? Conducted by New Yorkbased The CFO Alliance, The 2018 CFO Sentiment Study captures insights from financial executives and officers around the globe, piecing together a picture of the chief financial officer role for the year to come. This year, the survey was completed by several hundred contributors across the US, Europe and Australia. While full results are still to be tabulated, here is an exclusive early glimpse at what 2018 might hold for chief financial officers: Strategy will have a greater role – 70% Dialogue Q2 2018

of early respondents believe their role will be more strategic in 2018, with greater involvement in matters related to corporate direction, strategy and creating long-term shareholder value

The future is bright – 74% of early respondents rated their confidence in the global economy as extremely strong/ strong, and 85% rated the US economy as extremely strong/ strong for 2018. 70% also stated they expect revenues to increase in 2018 over those of 2017 Cyber-security is not a priority – 75% will not set aside funds to cover costs associated with a cyber-attack or breach Look out for a full report from The 2018 CFO Sentiment Study in the next issue of Dialogue, out 1 June 2018.

Shutterstock.com

The CFO Alliance captures global opinion on the role and future of 2018’s CFOs

GREAT MINDS WITH MICHAEL CHAVEZ

Adriana Marais is taking the human race to new frontiers—literally

THE END OF AN EQUAL INTERNET? US bill will see end of net neutrality While you were looking up turkey recipes, the US Federal Communications Commission (FCC) repealed the key ethical principle of internet access in a move many are calling ‘the end of the free internet’. A phrase coined in 2003, ‘net neutrality’ requires that internet service providers do not discriminate between users, content, website, platform, type of equipment, application or method of communication – in other words, access to any site cannot be intentionally blocked, slowed or require payment. Net neutrality was officially enshrined in US law in 2015, where it has since been challenged multiple times by key players in the internet provider business. And, on 14 December 2017, following months of campaigning from both sides, the FCC has voted to bring the legal enforcement of net neutrality to its end. Will separating ‘legal requirement’ and ‘ethical principle’ affect the internet? Many, including father of the internet Tim BernersLee, think so: if they chose to, internet providers could now offer companies the chance to hinder, hide and block competition from the worldwide web.

Purpose will put a woman on Mars Dr Adriana Marais is one of 100 on the shortlist to go on a one-way trip to Mars. If you haven’t heard of her, that might be because launch is still a way oﬀ. The Mars One project expects to send its first four settlers to the Red Planet by the early 2030s. Mars One was founded in 2011 by Arno Wielders and Bas Lansdorp. The venture rests on two fascinatingly easyto-conceive assumptions. First, we are at the point in our development as a species where such a mission is technically feasible. Second, the entire mission can be self-referentially funded by the proceeds from a documentary that will chronicle the mission. The first launch, estimated to cost $10bn, seems readily

If you’re going to Mars and never coming back, your sense of purpose must be profound attainable when one looks at the fact that the London Olympics generated over $8bn in advertising revenue over a short period. Marais, an accomplished physicist, spoke about her mission at Duke Corporate Education’s conference The Human Diﬀerence: Leadership in a Digital World last year in Johannesburg. Marais’s perspective on purpose surpasses anything I have encountered in my many conversations with senior figures. Mars One can get its astronauts there but can’t get them home: if you’re going to Mars and never coming back to Earth, your sense of purpose must be profound. In our conversation, I found that there were three core ideas that underpinned this modern-day frontierswoman’s sense of purpose. Like any good scientist, she did not dwell on arcane or quasi-spiritual

concepts – she stuck with the facts.

There is no ‘individual’

Marais became aware at an early age that there is no such thing, scientifically speaking, as a single living organism existing in isolation. From our parents, to the bacteria in our gut, to the food we eat, humans instead should be thought of as part of a living network. The implications are remarkably simple. If we cannot conceive of our existence as isolated, then we cannot see our purpose as individual.

Curiosity and learning are innately human and purposeful

Physicists are devoted to discovering the ‘blocks of reality’. So there is an individualistic, and possibly even selfish, purpose behind going to Mars – and that’s pure discovery. What could be more amazing than being the first human on another planet?

Humans are unique in their ability to generate and pass on new knowledge

We’re not the first species to change the climate on a global scale and cause the extinction of other species, but we are probably the first to be aware of it. “My sense of purpose [also] has a more collective focus,” Marais told me. “By going to Mars, we will be making an unprecedented contribution to human knowledge. We’ll learn more about water recycling, food production and sustainability in the microcosm of our settlement than we could learn in several lifetimes. This will help us... extend our collective survival.” I won’t be going to Mars, but my dialogue with a Great Mind from the world of physics helped me to see that the purpose of purpose is to take us where no one has gone before. — Michael Chavez is chief executive of Duke Corporate Education Q2 2018 Dialogue

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

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

...WE GET LEADERS READY FOR WHATâ&#x20AC;&#x2122;S NEXT

UPFRONT

MICHAEL CANNING

Quality is worth more than quantity

Only deliberate practice makes perfect Michael Canning is global head of new businesses at Duke Corporate Education

The start of the year is a great time to identify how to up our game. For many of us, this means identifying the area to become more skillful, and learning how to do it from reading, or listening and watching experts on our favourite digital platform. But have you ever questioned why some people are great at what they do? Did they read more? Make better development plans? Hear from more experts? Psychologist K Anders Ericsson has spent a lifetime studying how people cultivate extraordinary abilities across a wide range of disciplines, including sports, medicine, music and business. His key finding is that a specific kind of ‘deliberate practice’ makes the diﬀerence. In his book, Outliers, Malcolm Gladwell said: “10,000 hours is the magic number of greatness.” He pulled this finding from Ericsson. But, as Ericsson points out, it’s not the hours you put in, but the way you practise that matters most. We often associate practice with repetitive drills. While doing something new many times often stimulates early improvement, repeating a skill or task – even over a long period – doesn’t build expertise. Once you reach a reasonable level of competence, the skill becomes automatic and the brain spends less time on it. This makes us more eﬃcient human beings, but doesn’t cultivate expertise. Ericsson’s research on how the very best learn and develop their skill demonstrates if there’s something you want to excel at, you have to push past this comfortable, automatic level of competence and challenge yourself through deliberate practice.

Four steps to deliberate practice

It’s not the hours but the way you practise that matters

Pick something you care about

Developing expertise in any skill, from knitting to public speaking, isn’t easy. Many of Ericsson’s research subjects showed initial improvement with practice, but ultimately hit a natural ceiling. It was their determination to improve that got them over the hump to breakthrough

performance. So, pick something you truly care about so you stay motivated.

Set specific goals and get out of your comfort zone

Goals need to be challenging and specific. Getting better at something isn’t specific enough. Break the larger goal down into skill units, then practise these small, achievable steps. As Ericsson said: “A fundamental truth about any sort of practice: if you never push yourself beyond your comfort zone, you will never improve.”

Feedback is key

Ericsson emphasizes that when it comes to developing skills, breaking out of your comfort zone isn’t always just ‘trying harder’, but is often about ‘working differently’. Learning how to work differently often comes from gaining feedback on your performance. Self-assessment and feedback is helpful as long as progress can be measured and tracked in some objective manner. But as Ericsson’s studies reveal, a real differentiator is working with someone who has attained a higher level of performance than you: an expert, coach, mentor, etc. This is critical, as they can provide informative feedback and can help design better practice plans.

Consistency and persistence

Ericsson noted that practice regimes of top performers across a range of disciplines shared similarities. Their practice included a consistent series of brief but intense, daily or semi-weekly practice sessions. Purposeful practice sessions lasting 20 minutes with full concentration are better than longer sessions performed sporadically or while distracted. Whether your goal is being a more influential speaker, running better meetings, improving a technical skill, or stimulating more innovation, try the steps above for a better outcome. Mastery is possible – just not the Malcolm Gladwell way. Q2 2018 Dialogue

FOCUS

Focus

The courageous leader The era of the risk-averse, conservative leader is coming to an end. The leaders that will challenge for success in the era of disruption are those that seek out fear and destroy it. What are the key lessons that will bring about the fearlessness leaders require to progress? How do leaders drive fear out of organizations? What are the tools required for leaders to build a healthy culture free from fear?

Dialogue Q2 2018

Discovery path Learn moreâ&#x20AC;Ś about leading with courage and accepting uncertainty bit.ly/ddpcourage

ARTICLES 16

Lessons from the edge of disruption

Fear is the key

Goodbye, Houdini

FOCUS

Q2 2018 Dialogue

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Dialogue Q2 2018

FOCUS

Lessons from the edge of disruption Exceptional leaders embrace chaos and uncertainty, and take action

WRITING

Kate Sweetman and Shane Cragun ILLUSTRATION

Michael Kirkham

On 15 April 2013, at 2.49pm, two homemade bombs detonated within seconds of each other near the finish line of the Boston Marathon. Massive amounts of shrapnel ripped into the crowd, killing three people instantly and injuring hundreds. While most spectators fled in terror, Alexander Arredondo did not. He ran into the smoke and confusion when he saw a fellow spectator’s legs blown oﬀ. Arredondo’s courage and quick action in applying pressure to the blood vessels of a total stranger saved another’s life. Arredondo was not alone. Other bystanders ran into the danger zone to help others without knowing whether a third bomb would detonate. The result of these heroic actions? Of the 264 people injured during the bombing, not one perished. It was the willingness of the fearless few to enter disruption and take action that mitigated the impact of the bombing.

Leading in the age of disruption

For all of us navigating the day-to-day complexities of today’s age of disruption, there is a powerful lesson in the Boston Marathon rescue eﬀort: exceptional leaders, both today and in the future, will be those who run into the chaos and uncertainty. They accept ambiguity, and act with courage, speed, and conviction. And these will be leaders in all walks of life. The question is this: what are the major disruptions going oﬀ around us? And how will we respond? Disruptions can be technological, geopolitical, economic, and even climate related. We could talk about incoming disruptions, such as artificial intelligence, robotics and

cryptocurrencies. These will have, and are already having, a profound eﬀect, no question. But from a management and leadership standpoint, what is more important are the tumultuous dynamics that these technologies unleash on us strategically and operationally. These undercurrents impact everything – from our relationship with our customers and partners, to competitive posturing and threats, all the way to the culture within our own teams and organizations.

Getting ahead of disruption

To stay ahead of disruption, we must understand the effects these forces have throughout our entire business ecosystem. And we must understand this from a global perspective, as the business environment becomes ever more borderless. How can we leverage these forces to gain advantage, instead of wandering down the path of irrelevance? How can we gain clarity in confusion? How can we find the Alexander Arredondo in ourselves, and take specific and decisive action to make a crucial difference at a very difficult time? Understanding five key lessons can help us in our ability to succeed in the age of disruption:

We all compete with Amazon

This first insight is all about real-time immediacy and ultra-personalization. What used to amaze us about Amazon, Google and Lyft (in the West) or Alibaba, DiDi or JD.com (in the East) is now normal. Our patience is lower, our Q2 2018 Dialogue

FOCUS

and your credit card; lose your e-wallets, e-banks and e-retailing relationship; throw Alexis and Siri in the bin; get oﬀ the web entirely. You’ll still be trackable in cities on CCTV and in the country by drones. But the good news is this – tracking technology can make it much easier to focus on crucial activities in our businesses, and make it much easier to complete them through automation. Lesson Learn to embrace technology accelerators in your quest to stay competitive.

Challenging our beliefs and assumptions

The questions to ask in the age of disruption are not: is our competition using robots, and how good is their AI? The better questions to ask are:

attention span is shorter, and our expectation for frictionless interactions is higher. Lesson We must be willing and able to provide realtime intimacy and ultra-personalization.

We don’t need to own anything

Ownership of every asset impedes the flexibility required in a world where opportunities must be quickly seized, pivoting is vital, and speed is everything. The wealthiest companies in the world today collaborate with third parties to increase the value of their platform. They form loose, yet powerful networks in robust ecosystems that increase value in greater ways than going it alone. Lesson We must be willing and able to access needed capabilities, whether we own them or not.

We have no secrets

The digital culture is available to everyone around the globe. Big business, small business, governments, individuals – anyone can use Reddit, BitTorrent, Digg, StumbleUpon, Slack or others to cooperate and collaborate. The hardest thing today is not accessing information, but keeping it under wraps so competitive advantage can be increased. Lesson Behave as if your daily diary is on the front page of the Wall Street Journal.

We must avoid the echo chamber

Nothing will get in the way of learning, adapting and changing more than believing only in our own assumptions. Our past experiences and outdated mindset should not act as powerful gatekeepers keeping us from doing the best thing. Lesson Constantly open your ideas and assumptions to scrutiny from outsiders.

We are being virtually tracked

Try getting oﬀ the grid and see how impossible it has become. Shed your smartphone

Dialogue Q2 2018

Competition Are we at risk of being eclipsed by a competitor that creates greater and better customer immediacy and intimacy? Ownership Are we accessing the best tools, ideas, skills and people, versus simply the ones we happen to own? Do we insist on building and owning everything? Secrets Are we looking for the best ideas and practices to help us succeed? Or are we unimaginatively accessing only the sources we know and are familiar with? Echo chamber Are we aggressively challenging our beliefs? Are we even aware of our own attitudes and beliefs that constrain us from being our best? Tracking Are we doing everything we can to track information, goods and services? Do we synthesize data quickly into themes we can act upon?

Confusion in the ranks

We were recently asked to help a medium-sized pharmaceutical company recover from an epic new product-launch failure. This company has been a highly profitable organization for many years due to the success of one drug. But like many other pharmaceutical companies, its cash cow was going oﬀ patent. Although this was known for years, it was never formally acknowledged or talked about. It was eventually decided that the cash flow from this one drug had to be replaced by a series of smaller launches in new therapeutic areas. Despite being plain to see from an external perspective, senior leadership missed acting because of their limiting beliefs and assumptions in the five areas we presented above.

Constantly open your ideas and assumptions to scrutiny from outsiders

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Competition While they dithered around wondering what to do, a new competitor jumped into the market ahead of them. They lost access to the payers for reimbursement for the first drug in this crucial new series. Ownership They believed their installed base of resources to be sufficient (tools, skills, approaches and people) because they had, a decade previously, worked very well. And they failed to create significant new relationships in the physician community. Secrets They had scant knowledge of the new market – doctors or patients – and did not have a way to find out. They could not adequately gather information externally or share information internally. Echo chamber Even after the epic fail, the head of commercial insisted everything they needed to succeed going forward was in place. It was just a matter of working harder and following the approach that had been so successful in the past (which had anyway never been codified). Tracking Monday meetings of the senior leadership team were about reviewing the sales figures of the previous week. Outcomes only. There were no conversations around developing new systems or capabilities for improvement.

Imagine the diﬀerence if senior leadership had met their challenge with open hearts and minds, instead of institutional arrogance built up from past successes.

Wisdom in the ranks

Consider, by contrast, the attitudes and actions of a diﬀerent example, PASA, Mexico’s leading waste management company, currently taking giant steps to create a globally competitive, environmentally sustainable business. And this is despite operating out of a country that has little requirement for sustainability or environmentalism. PASA is setting its sights much higher than its current situation demands, and is reinventing itself in the process. Let’s examine the same five factors at this company versus the pharmaceutical company: Competition Even though PASA is the largest waste management company in Mexico, it is taking huge steps to improve in big ways. It has converted its entire fleet of trucks to natural gas, built biomass facilities, captured natural gas

from landfills, and is the first of its peers to expand internationally. Ownership Even though it buys rather than rents, PASA quickly retires outdated assets to ensure it has the best technology. Recently, it converted its entire fleet of garbage trucks to natural gas. Secrets The head of innovation is a Frenchman with deep knowledge of sustainability in the waste management business. Key members of the organization will soon visit world-class German waste reclamation firms to understand its best practices. Echo chamber PASA leadership has organized a series of educational events for employees to gain their buy-in to new changes and collect their ideas. The goal is to help them innovate throughout the legacy business so that new ideas and practices can eventually be implemented. Tracking It goes without saying that all executives are open to, and searching for, best practices external to PASA as they keep their ‘arrogance barometer’ lower than most.

Lessons from the edge of disruption

What are the lessons we can learn from the edge of disruption to help us better compete and win in the new digital economy? First, we must understand that disruption is coming to our industry. It is not a matter of if; it is a matter of when. And if we are unprepared, we could squarely launch onto the road to irrelevance. Imagine if Elon Musk announced he was targeting your industry. Are you prepared? Next, we must embrace the five key age of disruption operating principles that are now in full force: 1) We all compete with Amazon; 2) Ownership is no longer vital; 3) There are no secrets; 4) Avoiding the echo chamber is crucial; and 5) We are all being tracked. Understanding these principles is important. But leveraging them is power. Lastly, we can either lead through confusion or lead through wisdom. Our choice. One is arrogance-based, and the other embraces uncertainty and leads with humility and a willingness to learn. Let’s put into practice the astute words of Eric Hoﬀer, who said: “In a time of drastic change, it is the learners who will inherit the future. The learned usually find themselves beautifully equipped to live in a world that no longer exists.” How prepared will you be when disruption knocks on your door? — Kate Sweetman and Shane Cragun are founding principals of the SweetmanCragun Group Q2 2018 Dialogue

Dialogue Q2 2018

FOCUS

Fear is the key Drive fright out of the system, says Liz Mellon

My working career started in the relatively safe environs of the UK Civil Service. As a graduate on an accelerated development path, I was being fast-tracked through an intellectual hothouse. I never feared for my job, only whether my brain was sharp enough to keep up with the increasingly complex stretch assignments that I was oﬀered. I missed Barry Glassner’s 1999 book The Culture of Fear, written post 9/11, which concluded that Americans were afraid of the wrong things and that our perception of danger had increased rather than the actual risk level. So when, armed with an MBA and a PhD, I was working at the turn of the century as a consultant on leadership to international firms, the concept of fear at work took me by surprise. The first time I encountered real fear at work was around 2003 when I was working with a global car manufacturer. The company had taken leadership development in-house and was ruled by the concept of leaders teaching leaders. Leaders were unquestioningly revered and bad behaviour went unpunished. So when I carried out a series of workshops with the employees who were being – badly – led, I was shocked by their feelings. They were cowed and angry. They stayed because they felt they had no other employment options and resented their jobs. So much human energy and potential wasted. Fast-forward to 2017 and surely things have changed? After all, footloose and fancy-free, Generations Y and Z don’t have the goal of long employment with any one company, and move on if they are not respected. Yet the sad reality is that I continue to encounter cultures of fear at work. Fear can certainly drive people to action, but mostly avoiding risk and covering their tracks, rather than initiative or innovation. We simply can’t aﬀord to waste human spirit or human endeavour in this way. In this article I explore the sources of fear, as understanding is the first step towards change, and then suggest some remedies.

The fear generators

Whether perception or reality, the world is a pretty scary place to live today. After a period of inflation-free growth, we rediscovered global recession in the 2008 crash. There is more warmongering talk among nations’ leaders than we have seen for decades. Global warming is accelerating after slowing for a while. And just as we are discovering more and more ways to prolong human life, artificial intelligence could make humankind extinct unless we manage it more carefully than we are currently. So, a worrying context in which business operates. More specifically, what creates a climate of fear within an organization? There are five major causes: 1 Short-termism 2 Perfectionism 3 Intellectualism 4 Pugilism 5 Hierarchicalism

All of these concepts are perfectly acceptable if balanced. For example, it’s fine to pay attention to short-term results as long as this focus is balanced by the capacity to think about and nurture longer-term issues, such as investment and strategic change. Organizations and leaders get into trouble when one side of the balance weighs more than the other – for example, when intellect is prized way above feelings. So the underlying problem is an unhealthy imbalance towards each of these concepts. None of them is more important than another, so let’s describe each of them in turn.

Short-termism The tyranny of markets has been well documented, with continuous search for growth and close attention paid to quarterly results. The anguish this can create inside an organization has to be seen to be believed. Executives in

Q2 2018 Dialogue

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listed companies are under huge pressure to produce continuously improving results four times a year. The fear of not making the numbers is pervasive because of the expected kneejerk reaction on the share price. If growth (new markets, increased productivity and so on) is not achievable, then other, more pernicious policies take root to give the appearance of continuous growth. The challenge with these policies, such as indiscriminate, company-wide percentage cost cuts, travel and training bans, is that employees lose a sense of control, as HQ-ordered cuts appear unpredictably. The ability to plan is reduced, the feeling of being helpless increases and initiative wanes. Yet we need motivated employees with initiative to take the local decisions that work in local markets.

Perfectionism Perfectionism often starts from the noblest of ambitions – to do the best possible and provide high levels of service and product. But getting things right is very diﬀerent from making them perfect. People striving for flawlessness set higher and higher performance

I recently worked with an international company where the chief financial officer had to sign off personally on bottled water being served in any meeting standards, accompanied by increasingly critical self-evaluations. On an individual level, perfectionism is often accompanied by psychological disorders like depression. On an organizational scale, mistakes are outlawed as everyone strives to get it right first time. Employees are afraid to be in the wrong, afraid to make a mistake, afraid of being blamed and afraid to take chances. Risk-taking, experimentation and innovation disappear.

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Intellectualism

Dialogue Q2 2018

The third on the list is intellectualism, which is defined in the dictionary as ‘the exercise of the intellect at the expense of the emotions’. Being smart is not a bad thing – we need big brains to cope with the complexity of a globally connected business world. The challenge here is that human beings are a complex mixture of the rational and the irrational; of IQ and EQ; of intellect and emotions. We know that the most eﬀective leaders tell stories more than present pages of facts and figures, and appeal to the heart to motivate employees. A world driven solely by intellect is a cold and inhuman place. But how does this generate fear? If we inhabit a

smart world, we need to be smart and be seen to be smart. Analysis, reasoning and logic prevail. Intellectual cut and thrust can leave individuals feeling clever or, if on the losing side, diminished and foolish. And trying to run an irrational world through logic can lead to failure and increased feelings of inadequacy. I remember working with one chief executive who wanted to encourage contributions from every employee. I watched as he lost his temper and intellectually decimated an employee in public. At that point I realized why he couldn’t get ideas out of people.

Pugilism Pugilism next. This means a culture of sparring and fighting. In these organizational cultures, competition is seen as a way to improve individual performance and so drive higher levels of organizational performance. Handled well, it does just that. An Olympic rowing team gets better because each team member competes to be in the boat and then competes to be the best in the boat. Because they always keep the purpose of what they are doing in mind (winning the gold medal), individuals compete so that the team as a whole gets better. The challenge is that this clear sightline through to organizational purpose can get scrambled and lost in a business. The company may be too large, communication can be too patchy, or disagreement among senior leaders can all blur understanding of why the organization is doing what it does and how an individual is contributing towards this. So competing for the organization to do better can too easily deteriorate into competing with my peers so I achieve more or look better. This is only exacerbated by the tournament model of leadership development: in a pyramid, it’s essentially a knockout contest. So an individual’s fears range from not doing as well as peers, right through to losing their job. It’s an ‘I win-you lose’ world.

Hierarchicalism And lastly, hierarchicalism – I know, clumsy word, driven by my desire to have symmetry in the isms! Hierarchies are natural – put any group of humans together and a hierarchy will emerge. The business world has been trying to reduce its number of layers under a variety of initiatives for the last 30 years, flattening and delayering as much as possible. Yet hierarchy remains a fact of life for most in work. It’s an eﬃcient way of organizing to get work done. Yet when overdone, it becomes a problem. Lengthened hierarchies mean senior managers become remote leaders. Good news speeds upwards, bad news is buried in case the boss gets angry. Remote leaders lose touch with what’s actually going on in the business. At the top of organizations with extended hierarchies, it’s all too easy for the most senior people to become arrogant – top

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dogs in a very high pile. As in the car company example at the start of this article, bad behaviour develops unchecked and nothing puts more fear into a system than thoughtless demands or even outright bullying. Even where senior leaders are benign, others may make demands in their name – “the executive committee wants this by tomorrow” – either to service the hierarchy or to get their own demands met. Bureaucracy creeps in, work slows down and decisions get pushed upwards. People are afraid to take decisions without the boss countersigning them and form committees to disperse accountability. I recently worked with an international company where the chief financial oﬃcer had to sign oﬀ personally on bottled water being served in any meeting. It genuinely gets that silly.

How to rebuild a healthy culture?

The first step is to acknowledge that there is a problem. Too many senior executives are in denial about the shabby state of their organizational culture or they don’t think it matters – yet we all know that culture eats strategy for breakfast. The second step is to take measures to get fear and lethargy out and excitement and ownership back into the system. If the problem is bad behaviour, leaders need to manage themselves better so that they can improve how they lead others. They also need to reward good behaviour, not just financial results. One of the many reasons why Jack Welch was voted ‘Manager of the Century’ by Fortune magazine in 2000 was his insistence on a balanced scorecard. Individuals were measured on performance, balanced with how well they lived cultural values. High performance with poor values was proscribed, even to the point of removing the employee from the organization. Poor performance with

good values was seen first and foremost as a development situation, with coaching to improve performance as the initial step. Too often we close our eyes to poor behaviour if the money keeps rolling in. Thirdly, competition needs to be Olympic standard – competing only to improve together and better achieve the purpose of the whole organization, not just to keep our unit successful at the expense of others. If every individual understands how their work contributes to the organization’s purpose, it puts pride and ownership back into the job. If I feel valued as a human being, not just as a work cog, I will want to put in more eﬀort for the good of all. Individuals need an enterprise-wide perspective so they know when and how their contribution makes a positive diﬀerence. Fourthly, an external focus is critical. If we know what the market and customers want and we are aware of how our competition is doing, then energy is rightly directed towards pleasing customers more than our competition. The trouble with infighting is that all we see is each other, rather than our customers and their evolving needs. And last – and most important – we need to develop a culture of learning. There is a direct link between higher levels of education and gross domestic product; that is, better-educated people produce more wealth. So we need to keep on learning after school is behind us. It’s impossible to change and grow without making mistakes, yet too often mistakes are seen as unforgiveable errors. Mistakes are opportunities to move forwards, to learn and to help others leapfrog the pitfalls we failed to avoid. If we could learn even this one lesson, it wouldn’t only eradicate fear, it would also help work become a lot more fun. — Dr Liz Mellon is chair of Dialogue’s editorial board

It is impossible to learn without making mistakes, yet too often mistakes are seen as unforgiveable errors

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Goodbye, Houdini

Executives must wriggle free of management escapism and try leading instead, says Joe DiVanna

Senior executives are routinely caught in the profits-this-quarter trap. Majority shareholders typically get our attention, and our bonuses are often tied to performance metrics that reflect the philosophy of these shareholders: returns at all costs. Is this merely a form of modernday corporate escapism? Is our responsibility as enablers of long-term corporate sustainability thwarted if we have to make compromises that are short-term in focus? Can the short-term productively reflect the long-term goals? Senior executives are also faced with “I am almost retired” syndrome. Realizing that you are just a few years from retirement can lead to the postponement of decisions that are essential to the long-term viability of an organization. In extreme cases, some senior executives opt to ignore these types of decisions in the hope that the organization might fix itself during the course of normal business. This behaviour is not exclusive to those nearing retirement – it can regularly be seen creeping slowly into one’s personal management-style based on the type of organizational culture. These people are escape artists: they escape making the hard decisions by deflecting them to another time or to other people. Dialogue Q2 2018

Leaders lead

The cure for management escapism is called ‘leadership’. Take a step back from the process of decision-making and look at the context in which decisions are made. A pattern emerges. In many cases, our avoidance of the decision is due to the fact it is a reactive decision. A condition or event has occurred; a decision to coursecorrect is needed; this decision is counter to the status quo – or more precisely – to the plan we are currently executing. That reactive leadership appears disassociated from the strategy or plan, making the senior executive seem not fully in control of the organization. Proactive leadership is easier said than done. Academics and scholars often extol the virtues of proactive leadership but are rarely on the frontline of decision-making where pressure to meet the expectations of multiple stakeholders is often overwhelming. The first step to curing this condition is to recognize that you have the disease.

The diagnosis checklist

Finding out if you are trapped in corporate escapism is not diﬃcult. Ask yourself the following questions:

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Q2 2018 Dialogue

Do you come out of meetings wondering what the meeting was about? Are you invited to meetings because the team needs your approval, or have you been invited for your input? Have you ever entered a crowded company elevator and asked yourself “what do these people do?” When you are in a meeting, have you ever thought “haven’t we already covered this topic in a previous meeting?”

If you are still reading this article, you are probably infected with the reactive management illness, which is the main cause for corporate escapism. How then do you turn reactive leadership into proactive? Proactive leaders realize that periodically there are situations that are beyond their scope of control. In some cases these situations are the result of externalities of the market: changes in regulation, market interventions as a result of political agendas, or simply sudden changes in consumers’ attitudes. Beyond management control does not mean beyond the abilities of your management team to fashion solutions. The key for you as a leader is to engage your senior management team in proactive thinking, scenario planning, and developing a keen sense of how to execute options as events unfold. Leaders have a strategic plan. Proactive leaders Dialogue Q2 2018

assemble their senior management team regularly (at least quarterly) and ask a simple question: “What has changed in the world during the past three months that will impact our plan during the next six months, one year, two years?” Reactive leadership teams allow circumstances to dictate how they will proceed. Proactive leaders anticipate multiple versions of the future and take corrective actions. One way of thinking of this is to imagine you are captaining a ship travelling east, from New York to Lisbon. You know your true bearing won’t be far away from due east. However, as you cross the Atlantic, the Gulf Stream current is dragging the ship northward, and at the same time the wind is pushing the ship back westward. The ship’s engine is still running fine. Passengers are fed and in good spirits. Operationally, all is well as you drift further and further oﬀ course. As a result of these external factors, you – the chief executive or captain – must execute course corrections to maintain the heading. Experienced sailors can assess these factors and ‘tack’ the ship, using the forces of nature to increase the ship’s speed and maintain the course. Tacking does not happen in a straight line – it is a series of zigzag manoeuvres to overcome the external forces. With each move, we anticipate the direction and speed of the wind and currents and maintain an easterly direction toward Lisbon. As the ship gets closer to the destination, the movements become more and more refined. Management teams engaged in proactive leadership engage externalities in

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What transactional management fails to realize is that you cannot save your way to prosperity, and you have to learn from lessons

the same way by making a series of decisions to move the organization forward. Assessing the business environment and making course corrections is key. In essence, it is simply a series of decisions that anticipate trends and events without throwing the strategy out altogether, or changing the entire implementation plan. But there is a catch. Not all decisions work. What if we make the wrong decision in a corporate culture that looks to blame someone and punish the guilty? Can we reward failure? In many management teams, fear of failure equals organizational paralysis. It is like letting the wind steer the ship and the current set the course. What separates dynamic companies from companies caught in a slow decline is a combination of two important tools at their disposal: having a proactive agenda for growth, and retaining senior managers that have moved from transactional leadership to transformative leaders.

Transactional vs transformative leadership

Transactional leaders strive for the status quo – keeping the ship afloat. They keep the engines running and the passengers fed. Their focus is operations, constantly reminding the organization to reduce costs. How to know if your organization is transactional focused? Listen for these key phrases: “We need a 5% across-the-board cost reduction” “Don’t replace people, our staff just needs to work harder” “This hasn’t worked, let’s bin the initiative”

What transactional management fails to realize is that you cannot save your way to prosperity, and you have to learn from lessons. No matter how hard you focus, you will never drop your cost to zero; you will never have 100% success in all new initiatives. The cycle of continual, generic cost-reduction and fear of failure becomes a self-fulfilling prophecy; it sends two clear messages to the organization: people (our greatest asset) will be cut loose at the first sign of trouble, and costs are not examined in the context of business processes – so, management doesn’t understand the complexities of the business. Transactional management teams use compensation systems and set key performance indicators to optimize the costs of facilitating the transactions of the day-to-day business by

exchanging rewards for eﬃcient performance. Transformational leaders, on the other hand, look beyond day-to-day activities, questioning the status quo, asking: “Is this the best way to do these things?” “Can we apply our products in new ways?” “Is this delivering the highest quality – or highest value – to the customers?” “Can other types of customers use our products in ways we haven’t imagined yet?”

Transformation management asks a lot of questions but gets few answers, because the aim is to encourage the organization to think. Proactive leaders want the organization to think about the external and internal setting, not just the activities contained within their business processes; they want people to look at the externalities and think about how these trends or events will change what we do, what we make, and how we add value to customers. Transformational leaders outsource innovation, new ways of thinking, questioning of the status quo and the establishment of key performance indicators to the people who are at the coalface of the business: their employees.

The best laid plans…

For any leadership style to be effective, communication is key. In ineffective leadership styles, those that are reactive and prone to escapism, communications are often also reactive, transactional, convoluted and hard to tie back in to the corporate strategy. Staff see through it – they realize it’s inconsistent and often contradictory. Creating a strategic vision for the organization is not describing some imaginary state of the organization in five years; it is the process of providing clarity in what the organization will become. Many people throughout the organization will participate in the process of strategy creation and setting the vision for the organization. Transformational leaders take each component and seek clarity (finer course-corrections) and communicate these changes to all stakeholders, always referring back to the corporate strategy. This continual feedback loop between the management team and the operational side of the business will transform the organization. It will make it effective and resilient, able to sustain itself through thick and thin. — Joe DiVanna is a member of the Duke Corporate Education educator network, a Møller By-Fellow of Churchill College, University of Cambridge, and author of Strategic Thinking in Tactical Times Q2 2018 Dialogue

INTERVIEW

Hardwired for humanity Neuroscientist and meta-learning expert Dr Vivienne Ming says personal sacrifice holds the secret to humans winning the future

WRITING

Michael Chavez PHOTOGRAPHY

Niall David

So many people learn in deep and inescapable ways that it is not worth trying in life. I would like to change that Dialogue Q2 2018

Dr Vivienne Ming will probably never read this article. “I have a hard rule. I never read any interviews, don’t look at photographs, don’t listen to radio shows or watch videos about myself, ever,” the neuroscientist entrepreneur says. “That is its own trap. When you do it, it leads you down the wrong path. Your life starts to become all about you. And it is so hard to walk away from that – because it feels good.” Ming’s reluctance to indulge her ego is born of a greater belief: that humans should find their purpose in life and focus relentlessly on that rather than personal glory, which might be a pleasant by-product. “Your aim can very quickly start to move away from serving your purpose to serving your outcomes,” she says. “And as soon as you do that, your outcomes start to move further and further away from you.” I suggest that this is the classic ‘authenticity trap’ – the minute you start to try to be authentic because you know that it increases your influence, people start to detect a façade. Ming completes my sentence: “…and the whole thing falls apart.” Joined by Michele Taipale, Duke Corporate Education’s San Francisco-based client director, I meet Ming at her office in downtown Berkeley, California. Mathematical equations, scratched in chalk on Ming’s old-fashioned blackboard, evoke my own days studying downcoast at UCLA, where I’d often test my welcome in my economics professors’ offices. Ming’s view of the campanile at UC Berkeley, the prime Bay Area real estate, reflect Ming’s superstar neuroscientist status – the product of a brilliant mind and an inherent belief that hard work pays off. Yet brains, Ming implies, are much more common than the belief. “So many people learn in deep and inescapable ways that it is not worth trying in life,” she says. “If there was one dynamic in the world that I would like to change, it’s that.” She cites research done at MIT, where a range of students were asked to solve

mathematics problems while being filmed: “If a student supplied an answer and it was wrong, and then they frowned, that was a big predictor that they would give up – that they wouldn’t continue to work hard, not just on that problem, they’ll just give up.” Yet one group responded diﬀerently: MIT’s own students. “If they got it wrong and frowned, that predicted that they would try harder. Now perhaps that’s just an unusual experience for MIT students – ‘hey, look at that, I got something wrong!’ – but another factor is that their whole life has trained them not just to believe – but to know – that if they put in more work they are going to be rewarded. They frown because they are surprised they got it wrong, but their reassessment isn’t: ‘I’m not good enough.’ Their reassessment is: ‘This takes more work.’”

Equality of choice

This divergence in approach has clear consequences for social mobility. Much socioeconomic analysis centres on the West’s poor record in equalizing opportunities so a black child from Harlem might have the same life chances as a prepschool kid from the Upper East Side. Ming’s analysis is deeper and more radical. “It’s not just about opportunities,” she says. “Choice itself is fundamentally inequitably distributed. We think we can choose our way into a diﬀerent life, and we certainly think that other people should. But the reality is that you need to build a community, an organization, a civilization in which those choices will pay oﬀ. Because, if they did, people would make them.” She accepts that privilege creates advantage: “We know scientifically that it’s a powerful thing.” But she challenges the notion that privilege is universally helpful. “Many of the formalisms in our privileged lives work against our selfactualization,” she argues. “My research mirrors a lot of other research – incentive systems undermine us and the paths to our long-term selves. Reflect

Once people discover their own purpose, decision-making becomes easier and quicker Dialogue Q2 2018

on that: that’s almost every part of life. Grades in schools, test scores, trying to work for the right company, impressing your boss, not looking bad in front of your friends. We see clearly in the research how these exogenous motivations undermine the person you can be.” This self-actualization is critical to the challenge posed by artificial intelligence, she says, which will require humans to exploit their edge as questioning, challenging, imaginative beings. “We get trapped into trying to please other people – and we lose ourselves,” she says. “The more insensitive you are to those incentives, the better your long-term outcomes.” Once people discover their own purpose, decision-making becomes exponentially easier, and quicker, Ming says. She was offered chief scientist jobs and the like at Uber, Netflix and Amazon that would have made her wealthy enough to “buy a mansion for my family”. But she applied the test: “These offers come in on a semi-regular basis and – but for the Amazon offer that came with a framing that made me think hard about it – I think about them for three to five seconds. You know, I’d love to know more about Netflix but, let’s be honest, it would be purely self-indulgent. I love a good movie. But I don’t see how this serves my purpose.”

Finding purpose

Ming is a world leader in meta-learning. Her business, Socos, uses machine-based tools to help people in the workplace and education learn from their environments, experiences and dilemmas. Rather than simply acquire knowledge, which is held in infinite volume on the internet, yet is still taught by rote in schools, Socos helps people problem-solve, craft, create, question and make choices. “Building better people,” she calls it. It’s her purpose in life. “Self-driving cars are cool but they don’t serve my purpose – in fact, they do the exact opposite. Amazon said to me: ‘In ten years we will be a million-person company, your job will be to make their lives better.’ Now that aligns with my purpose very clearly. But I still felt that – paycheque aside – I could serve my purpose better doing what I am already doing.” Her impulse to change education came, like hope from Pandora’s box, from the near-disaster of her own youth. “It seems shocking when it is someone like me who is in such a privileged position – but I never found a connection between working hard and being happy and successful,” she says. “So I thought, ‘how can I deliver the latter part of my life to people without their having to go through the first 20 years?’”

INTERVIEW

Ming is among the clearest analysts and advocates of the sometimes-nebulous concept of purpose, thanks to being a living embodiment of its power. But she had to grapple with severe depression, reach a nadir, to get here. “Unfortunately for me that meant being homeless, having very stark experiences with suicide, and coming out the other side,” she recalls. Did her ordeal help her find the courage to change her life? “Courage sometimes is the loss of everything else,” she says. “Courage for me was easy to come by in the sense that I’d squandered everything. I had a night with a gun, in the car that I was living in. The whole night was spent saying to myself, ‘either come up with a reason to be alive, or stop suﬀering’. I grew up being told that I would win the Nobel prize and somehow that I would also be a kicker in the NFL. But you have a night like that and there’s nothing else left.” Her peers’ forecasts of her becoming a football star are not as outlandish as they might seem. Ming began life as Evan Smith, a talented college athlete who excelled not just at mathematics and science, but at track-and-field and American football. “The moment of greatest of courage for me was showing up one day at Berkeley as me,” she recalls, “the courage of showing up in the midst of gender transition. Just going in the next day as a new person and having no idea how anyone was going to react. I’d sent messages about it the night before, my hands shaking. Once you have been suicidal, and then showing up in a dress, some of the other stuﬀ in your life seems a lot less terrifying.” That was in 2006, when being transgender was not – as Ming puts it – “an en vogue thing – I literally had no idea if I would lose my parents… my friends… my positions”. As it transpired, she lost none of them, but she didn’t know that ahead of time. “There are real benefits to having these hard experiences,” Ming says. She is happily married to Norma Chang, who is her business partner and with whom she has two children. Family life came with serious challenges, yet the couple got through them: “However hard it was to spend four days in a paediatric intensive care unit with my newly diagnosed diabetic son, we were going to leave the unit as a family. A lot of families in the hospital were not – they were going to leave someone behind in that hospital. You get perspective.” Purpose with courage can be a powerful combination. She once told Alphabet-Google chairman Eric Schmidt publicly that he didn’t understand entrepreneurship: “I’m not saying that it’s not terrifying to be on a stage in front of 10,000 people, or to say something bluntly to a famous and respected leader, but those things mean nothing to me now.”

Coming-out classes

I recount my own story of coming out at a time when I was struggling to integrate my own personal growth amid the macho culture of a

strategy firm. I put it to her that all leaders – not just those who are LGBTQ– need to have the courage to ‘come out’ as their true selves. Shouldn’t we all be going through ‘coming-out’ classes? “Some of these rewiring experiences, the ones that get highlighted, are the ones that are pretty brutal,” Ming says. “You know, I understand that, but I would never wish my life on my kids. My father was in Vietnam and it was transformative, but he’d never wish that on his kids either. There’s a tension between the impact we want to have on people and the cost that comes with it. But one of the lessons that comes out of that is that purpose is defined by sacrifice.” That is, purpose isn’t purpose unless it’s in service of a greater human-centred goal that’s important and diﬃcult to achieve. The evidence proves it: “The numbers I look at are in the hundreds of millions – we are not talking small studies – this is powerful stuﬀ.” Yet in an age of accelerating technological advancement, finding a purpose – in order to become more human – is more crucial than ever. “The way to robot-proof your kids, to robotproof yourself, is to be more human,” Ming says. “Sometimes that gets oversimplified. Like, ‘AI is not good at making eye-contact, so practise these more human social skills.’ No, it’s much deeper than that.” She pokes fun at the bot that recently beat the world’s greatest Go player as “not actually understanding Go”. “Its equivalent is a factory worker that knows his process,” she says. “If you change just one rule of Go – and the rules are very simple – it would lose dramatically. If you put it in a room with the world Go champion and then burned down the room around it, would it beat the world Go champion? No, the champion would have left the room, because he understands the world. He’s not just executing an algorithm.” As it turns out, humanity still matters. Ming promotes the idea of humans using meta-learning to become craftsmen; to ask “why?” not “what now?” “My big fear is not technological dystopia, and it’s certainly not technological utopia,” she says. “It’s that we leave so many people behind we don’t find the social stability necessary to function as a civilization. The thing about meta-learning is how you manage yourself, and also your society, so these [crafting, questioning] qualities just develop. Everyone can be amazing, but it takes more than just opportunity to make it happen. “You realize that there are thousands – millions – of people who could be doing what I do – building, inventing, changing the world,” she says. “Ambitious men have been promising us spaceships and AI and cybernetics. If every little girl had been given the reins to her own potential, we’d already have them.”

Purpose isn’t actually purpose unless it’s in service of a greater human-centred goal

— Michael Chavez is chief executive of Duke Corporate Education Q2 2018 Dialogue

EUROPEAN BUSINESS FORUM 2018

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LEADERSHIP

KATE COOPER

Leadership shared is leadership multiplied

Take me to your leaders Kate Cooper is head of research, policy and standards at the Institute of Leadership & Management

In 1998, David Bradford and Alan life exercise in having your cake and eating Cohen started to talk about ‘postit: the amount of leadership available grows heroic’ leadership, popularizing what as more individuals contribute to commentators such as Mary Parker Follett its enactment. in her description of ‘reciprocal influence’ Commentators do agree that distributed had been saying decades earlier. Rensis leadership involves shared responsibility Likert, best known for the Likert Scale, for decision-making, a variety of expertise argued in the 1960s for ‘participative is involved and boundaries are fluid. management’, advocating that sharing Indeed, a recent study sponsored by the responsibility for decision-making resulted Construction Industry Training Board in better decisions and more engaged staﬀ. (CITB) for Engage for Success identified The idea of leadership as being created a strong positive correlation between by a group and not being located in a ‘distributed leadership’ and levels single individual is gaining increasing of engagement. popularity, although the myth of the heroic Another significant contributor to leader undoubtedly persists. engagement is the extent to Descriptions of distributed, which boundaries between The idea of individuals are managed dispersed, democratic, shared, collective, collaborative leadership eﬀectively. If leadership is to leadership continue to emerge. as being created be shared successfully, then With so many terms being what occurs at the interface by a group used almost interchangeably, between one individual and and not being arriving at a single definition another – the boundary – is of ‘distributed leadership’ has crucial. Important elements located in a proved elusive. single individual are ignored or overlooked if This is not surprising. expertise falls through the is gaining The ‘great man’ theory of gaps between one person increasing leadership gained prominence and another. because of the relative ease of Other contributors to popularity understanding it as a concept: the study of distributed let us focus on individuals leadership have recognized the – usually male – who seem to achieve great importance of managing expertise. This things. Let’s describe their personalities again resonates with the work of Follett, and we have the perfect template of who, as early as the 1920s, was talking a leader. about the ‘authority of expertise’. Workers Even if we look at more complex who possess valuable skills and specialisms theories of leadership – ones that focus are as important, if not more so, than their on behaviour rather than traits, and the managers. Under distributed leadership, importance of situations and adaptability – they become leaders in their own right. our focus is still the strong spearhead. Distributed leadership, at its essence, is Yet the alternative vision has its flaws. respecting that one individual cannot know Even the term ‘distributed leadership’ is everything. It ensures that contributions problematic – ‘distributed’ probably has its from those that do ‘know’ inform roots in the Latin word ‘to divide’. Division decisions. It manages relationships very evokes notions of a finite amount of carefully, and appreciates that leadership something that is shared out, so in the act involves far more than a single person – of sharing it out, someone gets less. however close he or she may Yet proponents of ‘distributed come to the traditional template for leadership’ argue that it is, rather, a reala leader. Q2 2018 Dialogue

LEADERSHIP

Dialogue Q2 2018

LEADERSHIP

Culture is at the heart of performance The chief executive of Novartis Pharmaceuticals has a clear focus on culture to make a bigger difference for patients and the business, finds Liz Mellon

Paul Hudson joined Novartis as chief executive of the Novartis Pharmaceuticals business unit on 1 July 2016, having held a variety of regional, global and country roles in other pharmaceutical companies, including AstraZeneca. In his role as business leader, he is very connected with people and has always believed that how an organization works together has a direct link to the success of the business. Hudson explains his career choice and his approach to work: “I made the decision to join healthcare right after I graduated,” he says. “I chose to be in healthcare because I felt a real sense of purpose – every day, I’m reminded of the reasons I’m here and how I can make a diﬀerence in people’s lives. During my whole career, I have always focused more on how we do things, than on what we do. I strive to understand how an organization – a large organization – takes on a personality that makes you want to work there, where people feel empowered, trusted and can bring their best self to work. I want to reach a moment where what will diﬀerentiate us most beyond the quality of our science will be the organization itself – our character – and its ability to focus on a single mission.”

The biggest opportunity is around how things are done in an organization Novartis is a global company employing around 120,000 people with an annual turnover of around $50 billion and almost a $200 billion market cap. Hudson leads around 30,000 people in his Novartis Pharmaceuticals business unit, which is a key growth driver for the overall company.

So why did you join Novartis? “I joined Novartis because of its scale and reach –

oﬀering the opportunity to have a greater impact for good. I knew we had a real opportunity to drive better patient outcomes while at the same time running a successful business and creating a great place to work. All the ingredients for success were there. We had wonderful people, clear strategies and great medicines, like Entresto in chronic heart failure and Cosentyx in psoriasis and spondyloarthritis. But I could also see that with so much change in the industry and the business itself, we needed to let go of some of our old habits to become more innovative and agile. I realized we had to focus on how we do things to capture a real competitive advantage and make a bigger diﬀerence for patients.”

What were your earliest observations? “I have always believed it’s how we work together that will enable us to achieve our mission at Novartis to discover new ways to improve and extend people’s lives. Despite all its excellent attributes, the organization I joined was too internally focused, too complex and risk-averse. Our business focused largely on internal targets instead of being close enough to the changes in the industry and the healthcare environment. We also had some unnecessary bureaucracy, like old processes that had been around for so long, people couldn’t even remember the reason behind their existence anymore. In many of these cases, bureaucracy was more about control than trust and empowerment. Also, in our eﬀorts to be our best, perfectionism was getting in our way. People didn’t have the courage to take smart risks, and were scared of failing.”

So what exactly needed to change? “I saw our biggest opportunity around behaviours. Integrity is absolutely critical, but

Q2 2018 Dialogue

LEADERSHIP

Great cultures are intentional. You have to make it a point of focus in your values, vision, mission and, importantly, in your strategy Paul Hudson

intentional. You have to make it a point of focus in your values, vision, mission and, importantly, in your strategy.”

Some things needed to stop. Were there some things that you needed to start?

it’s more than that – it’s how you work alongside each other, how you collaborate, how you celebrate, and what you tolerate. Collaborating, being surrounded by diverse teams and listening to the outside world to bring that learning inside, is critical to finding solutions that are eﬀective and simple at the same time. If we want people to bring their best selves to work, they need to feel that they can do that, whether it’s diverse thinking, speaking up, oﬀering an alternate opinion or a dissenting voice. We needed to unleash the energy of our talented associates, and enable them to focus on a few clear priorities so we could serve our mission. The culture needed to change.”

Culture and performance go hand in hand

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Why is culture so important when you have a good strategy?

Dialogue Q2 2018

“I never saw the business and our culture as being separate. I believe that culture can be a unique diﬀerentiator and competitive advantage. How we do things is at the heart of what we achieve. It’s a culmination of a hundred thousand small choices that create a culture. As an organization, you’re going to have a culture whether you like it or not. So, you have to ask yourself the question: are you going to help shape it into something productive, fun and successful – or do you just let it be whatever it’s going to be. I believe that great cultures are

“Yes. For me, the two big pieces missing were a strong external orientation, and making things simple. External orientation is imperative because we need to understand the context for our decisions and actions, and get foresight into trends. We need to understand the dynamics of our markets. In practice, this means three things. The first is that our headquarters in Basel has to serve the needs of our country operations, and not the other way around. Local markets have diﬀerent rules, regulations and contexts, and we need to empower our country-based associates to respond to these. Second, we need to focus on competitor activity and market share. And third, we need to move to an outside-in approach. This means moving from a product/science focus to a patient/physician focus.”

‘Simplification’ can mean many things. What does it mean to you? “Making things simple above all means prioritizing. In our desire to oﬀer our best, we have often taken on too much. It’s always easy to add another item to the list, but we often defer dropping items, so the list just keeps getting longer. The hardest discipline is to prioritize and focus on a handful of strategic imperatives. It is hugely motivational for anyone to be able to see a link between what they do every day at work and how this contributes to the mission. The more activities we indulge in, the fuzzier this link becomes, to the point where work can become mundane and routine. The tighter our focus, the easier it becomes for everyone to see how they are contributing.”

The organization applied its historic strength in execution to move the culture journey forward Culture change has a bad reputation for being diﬃcult to achieve and for taking a long time.

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The Pharma Executive Committee (PEC) in Novartis started the summer of 2016 by creating aligned and authentic change stories. People from across the business sat together over the course of 2017 to define the specific meaning of External Orientation and Making Things Simple. The outcome of their discussions was turned into a cultural blueprint for Novartis Pharmaceuticals, or conversation starter, that each business can use to make the constructs come alive for them. It is emphatically not a checklist. Hudson’s first task was to be sure that his own executive team understood that this change also meant they all had to work on themselves. Each of them, including himself, had to be credible and to be seen to walk the talk. By the time they launched the work to the top 150 leaders of the Pharmaceuticals business unit at their annual meeting, they came across as very aligned and committed. The leaders hold each other accountable for behaving in ways that support the culture change and for calling each other out when they slip. Then 28 teams were launched, including the PEC, the 11 leaders of the countries that generate the most revenue, selected Global Functions and business leadership teams. Leaders go through individual and team development, are observed and receive personalized and specific feedback to support their actions and behaviours.

The process is well under way, but surely too soon to look for signs of success? “We are not there yet, but we are already seeing signs that give us confidence that our culture will not only serve our mission but also diﬀerentiate us from our competition in terms of performance. We had a strong 2017 in our business unit, and I believe what contributed to this success is really how we worked to achieve things: our cultural focus to live our values and behaviours, make things simple to have more time to spend on the things that really matter, and keep an externally oriented mindset to bring valuable insights into our strategies. The external experts we hired to help us have said they’ve never seen a culture move so quickly. In a way, it wasn’t a surprise because, when I joined, our cultural diagnostic clearly stated that our phenomenal drive to achieve results and focus on execution is our towering strength as an organization. We will continue to use hard measures to track progress, such as the annual Global Employee Survey, and other measures like regular pulse checks. But the place already feels diﬀerent. For example, when Serelaxin, a treatment for acute heart failure that had great early results, failed its late-stage clinical trial, we addressed it at a town-hall meeting to

thank everyone for their passion to bring a new treatment to patients. In the past, we didn’t celebrate failure and smart risk-taking, but everyone had worked as hard as they could and did their best, and we wanted to acknowledge that and thank them.”

OQ, Organizational Intelligence, as a critical third quotient in addition to IQ and EQ Lew Platt, the former chief executive of Hewlett Packard, was famous for his 1990s quote: “If only HP knew what HP knows, we would be three times more productive.” It was the start of knowledge management.

Could this be helping to move this culture change along so fast? “It’s an interesting statement because knowledge management is important, but I have started to think about it a little diﬀerently. I believe that the best organizations have three things. It’s important to have a high degree of IQ in any organization. You also need people with high EQ to work well together and bring out the best in people. But my idea is that there is also a third quotient that can truly move the needle: OQ – Organizational Intelligence. It’s a concept and idea that’s gathering momentum in our leadership team and we’re striving for an organization where we have this high OQ, in addition to EQ and IQ. People in organizations with a high OQ have a true enterprise mindset, are driven by a real sense of purpose and curiosity to learn, and they take decisions for the greater good, not for the good of the silos. They are striving to be greater than the sum of the parts. We need people who want to build the company, not only build their own careers; associates that focus on what they can do for our mission, the business and on creating something sustainable and impressive. Self-interest decreases and shared goals increase. To achieve our mission, there is no room for self-interested behaviour. Our leaders have to be there for their associates to help them reach their full potential and encourage them to think diﬀerently. It’s about a mindset that is curious to always find new ideas to better serve patients, physicians and healthcare systems; seeing the bigger picture; and debating and challenging the status quo. I believe what often makes culture change so slow and tortuous is a lack of OQ. By building this core capability, we are creating a culture that no one else can copy and that will give us a unique competitive advantage. Ultimately, I want to create a great place to work – a place where everyone wants to work and enjoys working – while in pursuit of the company’s purpose. That’s really at the heart of it all.” — Liz Mellon is editorial chair of Dialogue Q2 2018 Dialogue

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The constant gardener

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Collaboration isnâ&#x20AC;&#x2122;t rocket science, itâ&#x20AC;&#x2122;s horticulture, writes Richard Watkins

Dialogue Q2 2018

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Productive collaboration is more like tending a garden than building a spaceship. There is always something that needs your attention, but with the right tools everyone can get good things to grow. The Let’s Go Model – a tool created to help leaders navigate collaboration – outlines the five dynamics you need to tend to.

Is collaboration over-ripe?

Encouragements to collaborate are all around us, with 30% of FTSE 100 companies having collaboration or teamwork as one of their values. It was back in 2012 that the IBM Global CEO Study really announced its significance: “Collaboration is the number one trait CEOs are seeking in their employees, with 75% of CEOs calling it critical.” And if the world has moved on since then, it’s not towards silos – most sectors are waking up to the interdependencies between initiatives as they attempt to navigate complexity. But everything ripe needs to be picked at the right time. And some are starting to bemoan that collaboration is a rotten fruit. The Economist wrote about the ‘collaboration curse’, decrying

what it saw as the distracting enemy of “deep work”. Meanwhile, Rob Cross’s HBR article ‘Collaborative Overload’ outlined how the best collaborators become workflow bottlenecks and burn out. Before we can even get into assessments of whether collaboration has gone too far, we need to clarify what we mean. When everything from open-plan oﬃces to joint ventures gets labelled ‘collaboration’, its definition is muddy. As with other vast concepts like strategy and innovation, if we aren’t careful collaboration ends up meaning everything and nothing – and the whole conversation starts to leave a bad taste.

What is collaboration, anyway?

For the sake of this article – and for the sake of our sanity more broadly – when we speak about collaboration we mean getting things done in groups, where we are working across borders – be they functional, regional, or organizational. Whether a collaboration is something little (like aligning pricing across a portfolio of products) or something big (like creating a cross-division or cross-company strategy), it can always be

Q2 2018 Dialogue

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understood as a specific activity in which people from across boundaries work together to get something done. So we should stop using collaboration as a synonym for being nice to work with, or saying “could you be more collaborative?” as a way to get what we want. Collaboration is not working in an open-plan office; being flooded with chat notifications; or spending time in all-day workshops. These things may or may not come up as part of a collaboration – and they may help or hinder such efforts – but collaboration is simply working together in a group to get an outcome. With this clarity, it becomes obvious that there is no need to collaborate on everything or with everyone. Many difficult tasks are more efficiently managed and executed solo, or within hierarchical structures. Other initiatives require keeping people informed with brilliant communication – but with no need to input, so they are not collaborative initiatives either. Other times there are sticky politics where you need to negotiate to get what you want – also not collaboration. The rightful home for collaboration is in challenges that are important, complex and shared. Collaboration is neither the free-for-all chaos of doomsayers, nor the utopia painted by enthusiasts. Tackling complex challenges in groups and getting to outcomes demands effective sponsorship, clear ownership and being thoughtful about the right structures. And it won’t always be pleasant: collaboration is challenging conversations, hard decisions, and a willingness to compromise. But when we see collaboration as an activity with outcomes – something we can grasp – we can start to see where it is done well or badly; we can understand it, we can get better at it.

Collaboration is not a well-oiled machine

We should stop using collaboration as a synonym for being nice to work with, or saying “could you be more collaborative?” to get what we want Dialogue Q2 2018

The metaphors we use have a big impact on how we think and act, and much of our organizational language is rooted in the idea that a company is a bit like a machine. We go on an ‘eﬃciency drive’, we want to put some ‘oil in the cogs’, and hope to ‘isolate problems’ and ‘engineer’ a solution so that things can ‘run smoothly’. For simple problems that can be controlled in a hierarchy, the machine metaphor may be suitable: we must clarify, systemize, optimize. But when we are faced with complex problems and need to collaborate across boundaries it is insuﬃcient: A machine is about logic and functionality, but collaboration requires harnessing the human energy of a group into a shared direction A machine follows a program and enforces rules, but collaboration needs a framework that can flex and adapt against principles

A machine needs clear information, but in collaboration we need to embrace complexity which means we need creativity and wisdom A machine efficiently executes best practice, but collaboration requires experimentation, measurement and decision-making in ambiguity A machine works by analysing the cold hard facts, but collaboration needs us to connect to emotions, which are signals of what needs attention in a group

Think about collaboration like a garden

Metaphors are of course always imperfect, but in our work we find it helpful to think of collaboration as like tending a garden. Like a garden, collaboration is a joyful, messy, human endeavour. You don’t ever get a garden right or wrong, instead it always needs work and what it needs changes with the seasons. The head gardener is no distant supervisor, but a wise and experienced practitioner. You can’t garden at a distance or only in fair weather – you need to get outside in the rain, and learn what works by getting stuck into doing. You can’t perfectly isolate problems using logic because a garden – like a group – is an interdependent system.

The Let’s Go model

Leading collaboration is diﬀerent from hierarchical leadership, because the leader sits at the centre of the action holding the objective, not at the top managing the objective. Our Let’s Go model outlines five distinct and understandable dynamics that are going on in every collaborative group. They don’t happen in a particular order, but are all happening all the time. The heart of collaboration is Presence (see graphic). As an individual in a collaborative group you need to show up and fully engage – balancing your own experience and expertise with an openness to the rest of the group. In collaboration, there isn’t any one individual who can always know exactly what is needed. It is these five dynamics that make collaborative groups work or not. A group without Belief might be lethargic or negative; but a group without Progress is more likely to be frustrated or bored. A group without Care will start to fragment or check-out; but a group without Structure might become anxious or lost. For collaboration, we don’t need perfection on each dynamic, simply enough to do what you are trying to do. For example, a collaboration to optimize a business process will need some Care – a sense of being ‘in it together’ – but you might not need the level of deep camaraderie, learning and resilience required to embark on a high-risk, high-stakes venture.

LEADERSHIP

THE LET’S GO MODEL

A good collaborator pays attention to all these dynamics and looks to keep a balance that works. Groups can get trapped on one dynamic as a way to avoid diﬃcult questions about another. We’ve probably all seen collaborations endlessly focus on getting more people Involved and having more ideas, hoping this will bypass a conflict that needs to happen to make meaningful Progress. Sometimes leaders become preoccupied with detailed plans (Structure), when what is needed is to address the glaring lack of Belief in the endeavour.

In practice – from concepts to tools

THE FIVE DYNAMICS BELI E F Collaboration needs purpose and vision, and a genuine confidence that this group can have an impact STRUC TUR E Collaboration needs a clear and grounded plan held with appropriate flexibility to adapt IN VOLVE ME NT Collaboration needs the right mix of perspectives, experience and expertise to get to grips with complexity and generate ideas

EXAMPLE OF LEADERSHIP QUESTIONS ∞ Why is this worth committing to? ∞ What happens if we don’t do this? ∞ What is the future we are going for?

∞ What is the high-level plan? ∞ What resources are available? ∞ What is the scope?

∞ What is the right mix of people to get things done? ∞ Who has a stake in what we are doing? ∞ How will we get an outside view?

The Let’s Go Model gives you a precise way to think and talk about collaboration, allowing you to reflect on what is working well and what might need more attention. By using straightforward language, it is applicable in any setting where groups are trying to get something done in collaboration. This model and approach have already proved helpful in large organizations (most notably: a major telco, a global broadcasting company, and an international insurance company), but also in agencies, start-ups and non-profits. An important part of its appeal has been that the model comes to life for day-to-day application in a range of practical tools for leaders and groups. Two examples:

The Collaboration Cards turn the dynamics into 30 conversation cards which are a good way to get important – but sometimes overlooked – discussions “on the table”. These cards have been translated into French and Latin American Spanish – with Mandarin, German and Portuguese translations planned for 2018 The Pulse Check turns the dynamics into a psychometric test that lets you gauge the pulse of a team or project group

It was Werner Erhard who said “a problem only exists in the absence of the right conversation”. The Let’s Go model and supporting tools are all ways of getting to the conversation that can move collaboration forwards.

Creating fertile ground

P ROGR E SS Collaboration needs to move from abstract discussions to proposals and action – to try things out and see what works

∞ How will we measure success? ∞ How will we make decisions? ∞ How will we know when to change course?

CARE Collaboration needs the strong relationships that give a group resilience and the commitment that endures in the face of inevitable setbacks

∞ How will we build a sense of being in it together? ∞ What alliances will we need? ∞ How can we use feedback to learn?

Many organizations are still struggling with how to get their people working together well across boundaries. Much like gardening, there are no magic fixes for collaboration, and improvement takes ongoing work. But thinking of collaboration as groups trying to get things done, and actively engaging with the five dynamics of the Let’s Go model, is good ground for the improved – and targeted – collaboration today’s world so desperately needs. — Richard Watkins is founder and collaboration expert at UK collaboration consultancy Let’s Go Q2 2018 Dialogue

THE MAN WHO IS ROCKING

HOLLYWOOD, FOOTBALL AND BUSINESS…

The new paperback edition of the success secrets behind asia’s richest man.

http://lidpublishing.com/book/the-wanda-way/

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VIVEK WADHWA

Human interaction is the first casualty of the digital age

I was wrong. Too much tech is ruining lives Vivek Wadhwa is distinguished fellow at Carnegie Mellon University’s College of Engineering and author of Your Happiness Was Hacked

Social media has led to less human interaction, not more. It has suppressed human development, not stimulated it

Just four years ago I was a cheerleader. Social media was supposed to be the great hope for democracy. I know because I told the world so. I said in 2014 that no-one could predict where this revolution would take us. My conclusion was dusted with optimism: a better connected human race would find a way to better itself. I was only half right: nobody could indeed have predicted where we have ended up. Yet my optimistic prognosis was utterly misguided. Social media has led to less human interaction, not more. It has suppressed human development, not stimulated it. As Big Tech has marched onward, we have regressed. Look at the evidence. Research shows that social media may well be making many of us unhappy, jealous and – paradoxically – antisocial. Even Facebook gets it. An academic study that Facebook cited on its corporate blog revealed that when people spend a lot of time passively consuming information, they wind up feeling worse. Just ten minutes on Facebook is enough to depress – clicking and liking a multitude of posts and links seems to have a negative eﬀect on mental health. Meantime, the green-eyed monster thrives on the social network: reading rosy stories and/or carefully controlled images about the social- and love-lives of others leads to poor comparisons with one’s own existence. Getting out in the warts-and-all real world and having proper conversations would provide a powerful antidote. Some chance! Humans have convinced themselves that ‘catching up’ online is a viable alternative to in-person socializing. And what of consumer choice? Don’t book your next city break via Google. Research shows that a typical search for a romantic weekend begins with “the best hotels in…”. Yet these searches return paid-for links from big identikit hotel companies and wellfunded broker websites. Local bloggers, who make it their job to suggest the most interesting stays, don’t appear until search page ten (AKA nowhere). Discovering real

places, recommended by locals, got a lot harder in the internet age. Guidebooks do the job, but few buy them anymore. We are becoming unthinkingly reliant – addicted – to ease-of-use at the expense of quality. We are walking dumpsters for internet content that we don’t need, and which might actively damage our brains. As long ago as 2005, Cornell University researcher Brian Wansink found that people who ate soup from bowls that constantly refilled themselves consumed 73% more than those who ate out of normal bowls. Yet they felt no more satisfied. This ‘bottomless bowl’ phenomenon is the effect Netflix has when it auto-plays the next episode of a show after a cliffhanger, and you continue watching, thinking, “I can make up the sleep over the weekend.” The cliffhanger is, of course, always replaced by another cliffhanger. We spend longer in front of the television, yet we feel no more satiated. Perhaps we should go back to our smartphones and, instead of playing Netflix or searching Facebook, use their core function. Call up our friends and have a chat or – better – arrange to meet them. Big Tech could carve an opportunity from a crisis. What about offering a subscription to an ad-free Google? For a monthly fee, searches would be based on quality of content rather than product placement. Apple pioneered the ‘Do Not Disturb’ function which stops messages waking us unless a set of emergency-criteria were met by the caller. How about a ‘Focus Mode’ that turns off all notifications so as to ease the temptation to play with our phones when we should be working, or talking to friends? In the 1980s, the BBC in Britain ran a children’s series called Why Don’t You? that implored viewers to “turn off their TV set and go out and do something less boring instead”, suggesting sociable activities that did not involve a screen. It was wise before its time. The TV seems like a puny adversary compared to the deadening digital army we face today. — See Wadwha’s book at bit.ly/happinesshacked Q2 2018 Dialogue

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2018: the year of the Seminal changes to technology are afoot, writes Anders Indset

This year will be a year of unusual earthquakes. If 2017 was exciting, expect 2018 to be strange and extreme. The strangeness will be found in the world of technology.

The quantum revolution

Dialogue Q2 2018

We are back to the days of hardcore entrepreneurship. Trying things. Being prepared to fail

Bertrand Russell, of the intelligent being anxious and the stupid self-confident, will influence our social and political systems more than ever. As the level of frustration rises, we need to find ways to cope with the permanent revolution and change. How can we learn how to expect the unexpected? Whatever is thrown at us, we need to embrace it and create new models and questions.

Homo obsoletus?

Bitcoin is the biggest bubble in history. Although it dropped to around $11,000 as Dialogue went to press, we still should remember we started out 2017 with Bitcoin being worth approximately $1,000. Eventually – even if it goes up to $50,000 – the ride will come to an end, particularly given China’s determination to clamp down on its trade. Despite that, Blockchain and cryptocurrencies are here to stay, yet the illusion of a democratized world built on the blockchain will not happen quickly. The bubble will eventually burst and it will be the biggest financial shake-up in history.

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The race is on. In the financial services, energy and automotive sectors there is a battle for the positions at the top because by the end of 2018 things will start shaking. Artificial intelligence has already started to replace larger parts of our jobs, as we defined them, but until now it has been good news as the need for new jobs has been greater than the ones getting replaced. One of the most popular questions asked in 2017 was: “Hasn’t it always been that way? Jobs go away and new ones are created?” The answer is no! This time around it is diﬀerent. Unlike previous revolutions, such as the Agricultural Revolution and the Industrial Revolution, there is a fundamental diﬀerence. Seminal changes have always been focused on authorities and technologies. This time, however, the authorities are algorithms. The new rulers of the world are algorithms run by a very small netocracy. Artificial general intelligence (AGI) will turn our world upside-down. This explosion of intelligence will lead us to a new perception of how we see the world. 2018 will be the year where we start to see the impact of the technology we have created. Furthermore, in 2018 we could see revolutionary breakthroughs in quantum computing. Silicon could be rendered obsolete – we will welcome new ways of processing data. Moore’s Law may no longer apply, but the law of accelerating returns still does. Netscape 1.0 and the internet paved way for the ups and downs of the web era. That ended in 2006 and moved on to a ten-year mobile/app era, this was harmless. In 2017 we started the next chapter, the AGI and quantum computing era – this is where the real change caused by technology will begin. The knowledge hype is on. The complexity of the world will become transparent. How little we understand will be revealed. This will lead to frustrations. The dilemma, stated by the great

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radical restart

Maybe not in 2018, but it will come – either by the underlying forces of the market, or through needed global regulation. With other strong forces in place, it might bring us a financial crisis like we have never seen before. Remember the early dreams of the internet and social media? The global village. How did that work out? Young men building a system designed to bring human beings together ended up increasing antisocial behaviour. And democratized? In fact, thanks to the consolidation of Big Web among the big players such as Alphabet, Apple, Amazon and Alibaba, corporate power has never been more centralized. We must be cautious. This rapid consolidation narrows the breadth of the world’s economic portfolio and limits the size of the crisis we can bounce back from. As the pendulum swings higher and faster, the outcome will be more radical.

The end of the start-up

Successful business owners and politicians are still talking about ‘digital agenda’ or ‘digital

transformation’ and ‘the start-up era’ – but this will soon be stone-cold dead. The Klondike years of start-ups are over. 2018 is the year that the start-up hype comes to an end. And what about those simple new ideas? Forget any romantic notions, because they are not going to happen! The problems that the world needs to solve are hypercomplex. They need huge amounts of data and thousands of the brightest minds working together with the most complex algorithms. Therefore they can only be solved by the largest corporations. Don’t get me wrong, it is still about creativity and creation, but there are no eureka moments with shortcuts to fame and fortune. We are back to the days of hardcore entrepreneurship. Trying things. Leadership, management and execution all need to be world class for businesspeople to thrive in the new era. Courage is also required – being prepared to fail. 2018 is the year of entrepreneurs. — Anders Indset is a business philosopher, author and public speaker Q2 2018 Dialogue

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Small is bountiful

Adopt a 1% better plan for dramatic personal change, writes Jared Bleak

You want to lose that pesky 10lbs. You want to get in better shape and improve your energy levels. You want to begin meditating and become more mindful as a leader. You want to improve your relationship with your son or with another key person in your life. We all want to get better – to improve ourselves. And every New Year, many of us set some very big goals, perhaps hoping to reach or achieve what we’ve been unsuccessful at in the past. I was struck by this quotation from the legendary US basketball coach John Wooden: Dialogue Q2 2018

When you improve a little each day, eventually big things occur. When you improve conditioning a little each day, eventually you have a big improvement in conditioning. Not tomorrow, not the next day, but eventually a big gain is made. Don’t look for the big, quick improvement. Seek the small improvement one day at a time. That’s the only way it happens – and when it happens, it lasts. Is one reason for our iterative failure to change because we set big hairy goals and then falter over time because the challenge becomes too daunting? What if instead we just start

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very small and get a little bit better every day? Getting better by just 1% consistently can build to tremendous improvements, and over time can make a big diﬀerence to our success. It’s called the principle of ‘aggregate marginal gains’, and is the idea that if you improve by just 1% consistently, those small gains will add up to remarkable improvement. We see this everywhere in our lives. Saving small amounts of money over time can build big sums with the power of compound interest. Beginning a regular and consistent physical exercise routine will yield impressive gains over time. Small amounts, little improvements, and incremental progress can result in huge increases. Big change and improvement can be and is achieved by small steps – but always with a grander vision and goal in mind.

Racing away

Improvement T IEM E » TI M

Decline

Compounding gains

Success is a process

Like many rules, it can work both ways. As we apply the principle consistently, we can improve. Unfortunately, the same is true in the negative – if we consistently make choices that make us 1% less, we will also see similar results over time. Thus, the second trick for success is to be easy on yourself when you fail, as you inevitably will. Failure isn’t a bad choice that can lead to us get worse; it’s just a temporary setback. Forgive yourself, work out why you faltered and then pick it up again. Over time, you will win. So, as you consider your development as a leader and as a person – rather than starting with big and flashy, think small and consistent. Just consistently get 1% better, and then watch the dramatic results that happen over time.

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AG G R E G AT I O N O F M A R G I N A L G A I N S

A prime example is the coaching and leadership of Dave Brailsford, the British Olympic and Team Sky cycling coach. Brailsford believes in the principle, and explained it to his cycling team as “the 1% margin for improvement in everything you do”. When Brailsford began with Team Sky in 2010, no British cyclist had ever won the Tour de France. Yet Brailsford guaranteed that a British cyclist would win the Tour within five years. But it didn’t take anywhere near that long. In 2012, Bradley Wiggins became the first British cyclist to win the race. That same year, Brailsford applied his 1% approach to help the British Olympic cycling team win 70% of the gold medals available in the London Olympics. And since then, Team Sky has won the Tour de France several more times. Aggregating marginal gains can help us reach our very lofty goals.

The truth is that our own development as leaders, our success in business, eﬀectiveness as a parent, or any other noteworthy accomplishment is not an event, but the result of a process – a series of little events and choices over time. So how do we do it? We can start by:

3 4 5

Identifying the big goal we want to reach and then dividing it into chunks Setting a goal and planning for what we’ll do daily or weekly – this can be very small (as small as adding just one push up a day or meditating for just a few minutes to begin with, and then adding 30 seconds or a minute at regular intervals) Creating a system of accountability that will help to remind us of the goal and hold us to it Building needed support from friends, co-workers or relatives Establishing a system of follow-up and measurement so we can see progress

The first trick for success is to keep going in the early days when progress feels slow. Set the time interval that works for you – if 1% a day is too much, try 1% a week or a month. 1% a day compounded over time doubles in 72 days (see graphic above). After a year, you have over 37 times more. And the compounding works even more dramatically as you continue consistently. This is how change happens ‘gradually, and then suddenly’ as illustrated by the slope of the graph. If you are starting at a level ‘1’ today, your 1% improvement is only .01. But as you improve and grow, eventually you will be at a level ‘10’ or even level ‘100’ . At that level 100, a 1% improvement is 1 and the whole equation starts to accelerate.

The first trick for success is to keep going in the early days when progress feels slow. Set the time interval that suits you

In reverse

— Jared Bleak PhD works with and coaches chief executives and executives of many globally recognized brands. He consults and advises regularly on formulating strategy, change leadership, innovation and creativity, leading transformation and other topics. He is co-author of The Leadership Advantage Q2 2018 Dialogue

Madrid 2018 22-24 May

FACING THE DIGITAL

Do you help your clients with their Digital Transformation? SHOW YOUR TECH SOLUTIONS MOBILE / 5G

BLOCKCHAIN

MARKETING AUTOMATION

WORKPLACE TOOLS

ARTIFICIAL INTELLIGENCE

CYBERSECURITY

ERP/CRM

GIS

INTERNET OF THINGS

QUANTUM COMPUTING

DIGITAL MARKETING

DRONES

BIG DATA

BUSINESS INTELLIGENCE

CONNECTIVITY

AR / VR

CLOUD

ROBOTICS

INFRASTRUCTURE

MACHINE LEARNING

Exhibit & Speak at #DES2018: info@des-madrid.com Follow us:

www.des-madrid.com

An event of:

FINANCE

PHIL YOUNG

The financial definition of staff as an expense rather than an asset fails to reflect the reality of business

People really are an asset after all Phil Young PhD is an MBA professor and corporate education consultant and instructor

When I introduce non-financial managers to the metric Return on Assets (net profit less total assets), I find that most people are very familiar with ‘net profit’. But many are unclear about the definition of ‘assets’, particularly in the context of finance and accounting. When we go through the list of typical current and non-current assets, it is not uncommon for someone in the audience to ask, “What about people? Aren’t people assets, too?” In anticipation of such a question, my standard retort is, “People are assets only in motivational talks. In finance and accounting, people are expenses!” It generally draws a good laugh, particularly from those who have no doubt heard such talks before. But it is not a question so easily dismissed. I suspect a major reason for the association of ‘people’ and ‘asset’ is because ‘asset’ has multiple meanings to diﬀerent people. To the non-financial manager who asks the question, ‘asset’ refers to a useful and desirable thing or quality. If their employee is told they are an ‘asset’ to the company, this is a compliment. And if an employee is considered a ‘liability’, it is another story altogether. In accounting, an asset is on the left side of the balance sheet, equally important as the right side of the balance sheet’s liabilities and equity. In finance, an asset is a resource a company invests in to generate future revenue, profit and cash flow. In this context, assets are only as good as their ability to generate appropriate return on a company’s investment. High return on assets is achieved one of two ways: earn more net profit relative to the investment in assets, or own and use fewer assets to generate whatever net profit possible. The latter is the so-called ‘assetlight’ approach. The revolution in digital technology has produced numerous asset-light companies with this strategy, and on a recent vacation to Florida I decided to rely on two of them. Through Airbnb, I rented a two-bedroom

unit owned and managed by a local company. I also signed up for an account with Uber, figuring that it would cost me less to call Uber than to rent a car, not even counting the hassle and cost of driving and parking. From a financial perspective, the business model of these two asset-light giants is beautiful. They don’t need to invest in hospitality infrastructure or fleets of vehicles. They also don’t have to carry the added expenses of HR costs, such as benefits and training, for the people who provide the actual service to the customer. The marketing perspective, and how or why these services are made possible, however, gets less attention.

Regardless of a company’s business model, its people truly are an important asset, in both the financial and non-financial sense What we customers want from an Uber or an Airbnb are awesome user experiences. During my stay, I used Uber roughly 20 times. Every driver was careful, courteous, and friendly. The Airbnb experience, however, was less than satisfactory. On several occasions, when I requested help with certain issues pertaining to the apartment, the company’s service team was either slow or unhelpful. I should also add that as a way of compensating for this, I was refunded 15% of the cost of the stay. My experience with these two asset-light companies demonstrates an important business lesson: regardless of a company’s business model, its people truly are an important asset, in both the financial and non-financial sense. So, it behooves all asset-light companies in particular to remember the non-financial meaning of the term, as well as the financial one. Q2 2018 Dialogue

FINANCE

The power of Financial innovation is steered by global shifts WRITING

Terence Tse & Mark Esposito ILLUSTRATION

Ben Oâ&#x20AC;&#x2122;Brien It is said that underpinning all movies in history there are ultimately only 36 formulae to tell a story, be they arthouse productions or action-packed blockbusters. In the same vein, in our recent book, Understanding How the Future Unfolds: Using DRIVE to Harness the Power of Todayâ&#x20AC;&#x2122;s Megatrends, we

Dialogue Q2 2018

FINANCE

megatrends investigated some of the megatrends that are potentially fundamental in many events and issues currently observed in the world – much like the underlying narratives that serve as the backbones of movies. Naturally, the economic, business and social environments are extremely complex – so much so that it would be arrogant for us to claim that we can gain and distil knowledge of how everything in the world works. Yet, even if we are only able to discern a few major trends in today’s fast-changing world, perhaps these are capable of pointing to how the future might unfold. As the three-time Pulitzer Prize winner Thomas Friedman points out, the only way to develop a fully

rounded view of what is happening around us, is to consider “… as many relevant people, processes, disciplines, organizations and technologies as possible – factors that are often kept separate or excluded altogether. For instance, the only way you will understand the changing nature of geopolitics today is if you meld what is happening in computing with what is happening in the environment with what is happening in globalization with what is happening in demographics”. In other words, by being able to involve as much as we can in our analysis, we can come to better decisions; harnessing the power of megatrends can lead to intelligent choices.

DRIVE

FIVE MAJOR MEGATRENDS

We have identified five specific megatrends that can help us make more sense of what is happening around us in the world, and where it is potentially heading.

Demographics and social changes

At the centre of all activities lies people. Many populations around the world are getting older, with healthcare and pension costs expected to increase significantly. Furthermore, people are living longer, which is putting even more pressure on these costs. At the same time, with the size of the younger population shrinking, there

Q2 2018 Dialogue

FINANCE

are far fewer workers to pay taxes to fund government social payouts – thus exacerbating the issue.

Resource scarcity

The research for our book has shown that there is little need to be concerned about oil and energy shortages. This is not least because green energy is developing at breakneck speed, compounded by the fact that crude oil prices are likely to remain low in the foreseeable future. More worrying, however, are food and water – more precisely, a shortage of quality food and clean water. While junk- and

Harnessing the power of megatrends can lead to intelligent choices. We can come to better decisions low-quality food are likely to be linked to various health conditions, a lack of clean water would have significant social implications and tear up the fabric of society. As a population, we have also demonstrated extreme wastefulness – throwing away everything from food, to plastic bags and containers, to electronics. Together with the rapid

Dialogue Q2 2018

depletion of natural resources, these wasteful actions have lately prompted a movement called the circular economy, which focuses on prolonging the lives of, or even reusing, materials and objects.

Inequalities

The fact that there exists a wide gap between the ‘haves’ and the ‘have-nots’ is now well-known. Yet governments have done very little to diﬀuse this time bomb, which, in the long run, would cause significant damage to our society. Just observe the recent tax cuts in the US, which past research has repeatedly shown to benefit wealthy individuals over the economically underprivileged. At the same time, various other inequalities are also emerging. One of them is age. Many current regulations, such as the rigid employment law in place in many countries, favour the older generations, leading to fewer new positions for the younger ones. And then there is capital inequality: government and financial regulations tend to favour debt over share-financing, leading both individuals and corporates to rely on money that they don’t have.

Volatility, scale and complexity

If the ‘haves’ are gaining more, while the ‘have-nots’ are getting

less over time, then what about those in the middle-income group? The answer: since the mid-1980s, this very group has been receiving less, even though the economic pie is, overall, growing bigger; they are going in the direction of the ‘have-nots’. The reason: the arrival of digital technologies that have subsequently eliminated plenty of white-collar jobs. In the very near future, robotics and artificial intelligence are likely going to lead to further job displacements, with greater speed and scale.

Enterprise dynamics

Technologies by themselves have little – either positive or negative – impact; it is usually how businesses use them that realizes the true potential of technologies. Just witness the swift emergence of drones. Their real strength is brought out by businesses – stretching from farming and insurance, to retailing.

HOW DRIVE CAN INSPIRE THE AREA OF FINANCE Recently, two advertisements have appeared on the London Underground. Both feature the latest products from a major UK high-street bank. The first

FINANCE

is a credit card that does not charge extra fees when used abroad; the second oﬀers 20 months of 0% interest on balance transfers. To some Tube passengers, these ideas may be brand new propositions. However, the fact is that both oﬀers are old news and have been around for a long time. But why are banks just doing more of the same, competing solely on price? Can we look at the megatrends identified in the DRIVE framework to come up with novel ideas and find new opportunities? We think the answer is, yes.

Demographics and social changes

Based on this megatrend, two observations can be made. First, in more than a few countries in the world, the population structure looks more like a beehive than a pyramid – there are more people aged 40-55 than there are in other age brackets, with the younger age brackets being particularly sparsely filled. Second, given the fact that people are living for longer and longer, many population pyramids are now coming to resemble The Shard, the iconic building in southeast London with a narrow base that stretches high up. Both points have massive economic implications – and opportunities – at least in terms of healthcare, investments and pensions. For instance, as it becomes more and more burdensome for governments to fund healthcare for elderly populations, a greater variety of insurance products will be demanded to add increased protection. If we continue to live longer, we will need new pension products. Furthermore, if 60 is the new 40, then our investment portfolios should change accordingly to reflect the longer-term thinking in terms of returns.

Resource scarcity

Investing in critical resources will likely bring higher returns. For instance, last year the Slovenian government passed a law forbidding private companies from buying the country’s bodies of clean water. As such, new technologies like water purifiers or air-to-water converters may become good investment opportunities. Moreover, it is very probable that investment opportunities will be found in businesses that seek to better use resources. For instance, we may see that companies that buy into the circular economy can, in the long run, generate higher returns.

Inequalities

Major banks are far more interested in people who have money than those who do not. A consequence of this is that many of them end up competing over the same set of customers, leaving a massive group of potential customers unserved. Hence why new business systems are on the rise, such as M-Pesa which has risen to be a major force in Africa, gaining a huge number of customers who previously had no means of engaging in financial transactions. This is not only applicable to developing countries. The inequality dimension also helps businesses find new opportunities in developed countries. France’s Compte-Nickel, for example, serves those who were previously ‘unbanked’ and ‘underbanked’. In one of our training workshops, we came across a startup that was developing medication to help drug addicts rid themselves of their dependence. One question posed to us was this: which country would

The power of understanding megatrends lies in analysing… from different perspectives be the best market in which to target their products? From our research, we found that wealth inequality is directly related to social illness, including drug addiction. In this case, our advice was simple: look for the country that is the most unequal in terms of wealth distribution.

Volatility, scale and complexity

In this age of acceleration, it is diﬃcult to see how many of the traditional financial theories are still applicable. For example, conventional ideas like portfolio theory (which assumes that risk follows a statistical pattern when it does not) and the capital asset pricing model (which assumes the government would never default) are becoming less and less relevant in a world that is changing at such a rapid pace. With mid-level, full-time jobs gradually becoming a thing of the past, what kind of new financial services will be needed? With the rise of the gig

economy, what new services would people need from mortgages to be able to receive and make payments? Any company that can address these issues well will probably succeed in tomorrow’s financial services sector.

Enterprise dynamics

As mentioned above, it is business that brings out the best from new technologies. The so-called ‘FinTech’ (financial technology) industry offers some excellent examples. We should recognize that the true power of FinTech lies far more in the ‘Fin’ than the ‘Tech’ because, in many ways, the ideas behind using the technologies are often far more interesting than the technologies themselves. Take Curve, for instance: it is based on a simple yet very useful premise – putting all your cards on to just one. Users can scroll through their different bank accounts and link them to the physical card through the company’s mobile app. Another FinTech startup, Revolut, enables users to convert their money into different currencies on their mobile phones at a rate that is close to the market spot rate. Contrast this to the traditional alternative offered by highstreet banks, which often involves filling in long forms and having to accept unfavourable exchange rates, not to mention the hefty commissions on top.

THE POWER IN YOU The power of understanding megatrends lies in analysing a product, a service and a business from diﬀerent perspectives. By looking at how the future could unfold, we stand a better chance of being rising stars and avoiding slow-motion train-wrecks. By paying closer attention to this framework, individuals, companies and governments will have a better understanding of what is in store for them, and will be able to take advantage of change and see greater impact coming from their decisions. — Dr Terence Tse is associate professor of finance at the London campus of ESCP Europe Business School. Mark Esposito is a member of the teaching faculty at Harvard University’s Division of Continuing Education, and holds the role of professor of business and economics at Hult International Business School Q2 2018 Dialogue

finance

China’s brand revolution The great emulator has turned into a global innovator, finds Ben Walker

Ben Walker: How have the disruptors broken through? David Roth: The economic environment for

disruptor brands has never been as good as it is now. There is lots of money, lots of capital, and lots of investment going in. The disruptor brands are seriously challenging the status quo. Doreen Wang: In the BrandZ Top 100 Most Valuable Chinese Brands, five years ago, almost all the top five were state-owned enterprises. Now the top five includes Tencent, Alibaba, Huawei and Baidu, so we are seeing a dramatic change where lots of entrepreneurial disruptive

We are seeing a dramatic change where lots of entrepreneurial disruptive brands have entered Dialogue Q2 2018

brands have entered. The consumer’s needs in the digital era has been met by these brands. BW: Beyond their ability to bend over backwards to meet consumer need quickly, does anything else link the most successful brands? DR: Learn fast, fail fast. Phenomenal good use of

data, beyond just measuring it. An abundance of energy. The energy and the excitement of the disruptors – you want to bottle it up. They have a purpose in life as opposed to doing a job. DW: Their business model has changed significantly. The companies that can leverage technology and deliver that consumer experience are going to win. They are very purpose-driven, they can balance long-term and short-term very well. BW: You talked last year about the difference between fundamental and incremental innovation… DR: I think Tencent is a really good example. If

you look historically over the course of the last few years, Alipay has been the market leader. But Tencent has the potential to be a market leader because it can create payment in a social sphere, and that’s been amazingly disruptive, completely

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The world’s second biggest economy has grown up on a diet of effective – and relentless – emulation. Yet the tide is turning. China is now a great innovator and disruptor, with huge companies such as Tencent (see table opposite) setting the standard by which their global rivals will be measured. Dialogue editor Ben Walker met David Roth, chief executive EMEA & Asia at The Store WPP, and Doreen Wang, global head of BrandZ at Kantar Millward Brown, at the WPP BrandZ Chinese Brand Builders reception at the House of Commons, London.

finance

C H I N A’ S C H A M P I O N S The BrandZ Top 10 Most Valuable Chinese Brands 2017

I think the Chinese economy remains very robust. It’s moving from a follower to a leader

Rank 2017

Brand

Category

Brand value 2017 ($m)

Brand value change

Rank 2016

Tencent

Technology

106,181

29%

Alibaba

Retail

58,009

22%

China Mobile

Telecoms

57,899

ICBC

Banks

31,482

-8%

Baidu

Technology

23,886

-11%

Huawei

Technology

20,383

10%

China Construction Bank

Banks

18,398

-7%

Ping An

Insurance

16,463

Moutai

Alcohol

16,219

41%

Agricultural Bank of China

Banks

14,848

-9%

frictionless. So I think those types of things are amazingly powerful in terms of how you disrupt. BW: Because there is no stopping point for the consumer? DW: Yes, you are already in their ecosystem. BW: You are in there, you are excited. The consumer is talking on social media about a new dress or whatever it is, and she can suddenly buy it without having to think too much about having to go somewhere else? DR: Yes, that’s the frictionless point. The more

friction you have in the system, the more as the consumer you think, “Well, should I or shouldn’t I?” or “I’ll do it a bit later”. The less friction, the more chance you’ll say, “I’ve seen it, I like it, I’ll just go ahead and buy it.” BW: There was some evidence last year that the brands from the BRICS countries generally were slowing. Any evidence of that affecting China itself? DW: I think the Chinese economy remains very

robust. It’s moving from a follower to a leader. The globalizing Chinese brands are not all home appliance brands, or just online gaming brands, electronics, ecommerce. They have a better advantage in globalization because they can take advantage of their technology and set up in 50 or 60 countries simultaneously. They do not have to be big in their own country before going global. They were born global. DR: Yes, five years ago, from all our data and evidence, we would have always said that it would be impossible to be big outside your home market unless you are big inside your home market. Now what we are seeing with some of these Chinese companies is that some of

them are choosing to go global first. So they are saying, “The Chinese market is very difficult, it’s oversaturated, it’s expensive, so actually what we are going to do is export first of all.” Five years ago, we would have said, “Don’t try that strategy because it doesn’t work.” But we are seeing that it does work. BW: China has moved from domestic emulator to global innovator. Has that been reflected in the index? DR: I think it has. When I first started to go

to China 20 years ago, the only thing they wanted to show you at their factories was the accommodation for their staff. Now all they want to show you is their innovation labs. China knows better than most that being the production end of the world is fine in the first stage of transformation but is not sustainable – there are cheaper places to produce now. Now is the era of adding significant value. I think, and I don’t mean this in a pejorative way at all, they are beginning to understand the magic of branding. DW: Overseas awareness of Chinese brands has increased over the past three years from 12% to 19%. Okay, 19% awareness is not high, there is still a long way to go, but it has definitely improved. China’s image has improved from being low-price, low quality, to 45% of Millennials agreeing that Chinese brands are innovative and creative. In Spain, for example, many Millennials said they were very willing to wait 10-15 days to buy cool stuff from China. So that’s absolutely the change. Because of this new generation – this Millennial generation – that is going to give lots of opportunities to brands from fast-growing markets. — Ben Walker is editor of Dialogue Q2 2018 Dialogue

Immediate impact, growing advantage. At A.T. Kearney, we pride ourselves on our uniquely collegial culture and care passionately about our work and our people. We offer our clients a range of global capabilities anchored in our heritage of essential rightness. The same promise we make to our clientsâ&#x20AC;&#x201D;immediate impact, growing advantageâ&#x20AC;&#x201D;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.

MARKETING

GILES LURY

Discover the seven uses of storytelling in marketing

Once upon a brand

Giles Lury is director at The Value Engineers and author of How Coca-Cola took over the World: and 100 more amazing stories about the world’s greatest brands

Storytelling has long been used in marketing, and in recent years it has become almost ubiquitous. Just about any brand worth its salt now talks about its stories and its narrative. The two issues arising with this ubiquity is that, firstly, things that aren’t stories are called stories. Product claims, case histories, research debriefs are all badged as stories, even though they don’t tell a tale. Marketers just love to jump on a bandwagon or, should I say, a brand wagon. The second issue comes from the fact that just as there are many types of stories in the world, so the use of storytelling in marketing varies enormously. Having looked across the industry, I would suggest that there are seven diﬀerent ways of storytelling that can be usefully employed and rightly labelled as brand stories:

The brand narrative This is a means of presenting the organization/brand as a character and its role as a story. Virgin, for example, has positioned itself as the ‘white knight’ riding to save the damsel (consumer) in distress.

Writing a presentation as a story is one way to try to avoid ‘death by PowerPoint’

Did you know… This is when brands build emotional engagement by telling the little (true) stories about themselves – how the brand started, the origin of its name. These can be used to build emotional engagement. If you look closely at the back of a packet of Bassetts Liquorice Allsorts you’ll find the story of their accidental creation: “In 1899, when accident-prone Bassetts salesman Charlie Thompson tripped up, he mixed up all the diﬀerent sweets he was carrying, creating the weird and wonderful mix of sweets that we know and love today as Bassetts Liquorice Allsorts.”

Inspiring and cautionary tales The use of stories about brands as a training tool, to provide inspiration and/or instruction for the marketing team or broader organization. They can be used to show

how employees should act, as a means of helping your organization consider how it might perform better, or to encourage people to think in diﬀerent ways. The inclusion of a moral as used by fable tellers like Aesop adds to the eﬀectiveness of getting the desired message across.

Up close and personal The telling of personal stories is another means of gaining emotional engagement. The parallels between the personal and the business situation are then highlighted to make a specific point - a technique used by chief executives and politicians worldwide. Nike, among other brands, encourages its senior management to learn how to tell these types of stories.

Going metaphorical Here a (fictional) story is created that can act as a metaphor for what has happened, needs to happen, or as an entertaining expression of what your brand is doing. The 2013 film ‘The Scarecrow’ by Mexican fast-food chain Chipotle is a good example of this.

Meet your customer Stories, fictional, but based on a true customer, are being used more frequently to personalize target segments, their beliefs and behaviours. They are a powerful way to bring to life target segments and touchpoints along any customer journey, and tend to be richer than the simple description of people used in pen portraits.

The ‘story-tation’When did a PowerPoint slide last make you cry? Writing a presentation as a story is one way to try to avoid ‘death by PowerPoint’. It is, however, not always that easy and, as mentioned earlier, can lead to many presentations being called stories when they are far from it. Yet the identification of the story you want to tell, and the use of storytelling techniques like creating a narrative arc which allows speakers to communicate points in a more engaging and memorable way, can make your points powerfully. Q2 2018 Dialogue

MARKETING

Forget about products – sell projects Companies at the cutting edge are selling programmes, not things, writes Antonio Nieto-Rodriguez

In the beginning, companies sold products. And then they sold services. In recent years, the fashionable suggestion has been that companies sell solutions, solving the needs and aspirations of customers. Companies, indeed, do all of these things. But, increasingly, what companies sell are projects. Take Philips, the Dutch landmark company founded in Eindhoven in 1891 by Gerard Philips and his father Frederik with the production of carbon-filament lamps. Despite being a cash-rich company, Philips has been blamed, for several decades, for its Dialogue Q2 2018

lack of innovation culture. Five years ago, to address this problem, and to deal with the fierce competition, Philips’ board of directors decided to split the organization in three diﬀerent companies: 1 consumer health 2 lighting 3 healthcare

The strategic programme was named Accelerate. It aimed to transform each new independent company into a focused organization and accelerate growth.

MARKETING

One of the biggest challenges companies face is that their product life-expectancy is becoming ever shorter

REVENUE STREAMS

The main revenue driver moves from the selling of products, to income generated by implementation and maintenance. QUALITY CONTROL

Two of the most disruptive changes introduced by the Accelerate programme are:

Simplify a convoluted and archaic organization structure

Over the years Philips had become an intricate blurred matrix; sharing accountabilities and responsibilities between products, segments, countries, regions, functions and headquarters. To simplify, Philips Health Tech has been divided into just three segments. At the same time, it has increased considerably the work executed through projects, which is the best management structure to break up silos and work as a team transversally – end-to-end – in an organization.

Move from selling products to selling projects

One of the biggest challenges companies face is that their product life-expectancy is becoming ever shorter. Very soon after launch, products are copied by the competition, produced and priced more cheaply. Soon after that, they become a commodity and remove any chance for long-term steady high margins. Philips Health Tech has experienced this trend even with its high-end healthcare products. It has therefore decided to move to sell ‘projects’. For example, it is selling a new healthcare centre to public authorities. Philips will provide its high-tech medical devices (that has not changed), but will also be involved from the beginning of the project until the end, as well as in the running and the maintenance of the new facility. The shift to becoming a project-driven organization presents sizeable challenges to corporations. Working in projects throughout my career, I have identified multiple challenges. Here are the key ones:

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PRICING MODEL

New pricing models will need to be developed. It’s easier to price a product, for which most fixed and variable costs are known, than a project, which is influenced by external factors.

Quality control measures on the product will not be enough to meet customer expectations. Implementation and postimplementation services will also have to be top quality to ensure that clients repeat-buy projects. BRANDING AND MARKETING

Traditional marketing has focused on short-term immediate benefits. Marketing teams will need to promote the long-term benefits of the projects sold by the organization. SALES FORCE

The buyer of the project will no longer be the procurement department of an organization; sales will be pitched to leaders of the business; therefore the sales force and sales skills will have to be upgraded with strategy and project management competencies. Philips is not alone in steady, yet unnoticed, disruptive transformation. Other leading companies, such as Microsoft, Nike, Western Union and many others, are moving fast into becoming focused and project-driven organizations. Imagine for a moment that Nike, instead of selling running shoes, shifted its focus to selling projects to meet individual aspirations – for example, running the New York City Marathon. Nike could provide you with its traditional sportswear. But it could also include a training programme, a dietary plan, a coach and a monitoring system to help you achieve your dream. And that is just one type of project. More so than products, the possibilities with projects are endless. In a few years time, Nike’s slogan could very well change from ‘Just Do It’ to ‘Together We’ll Do It’. The time has come for selling projects – don’t wait too long, or think too much: ‘projectize’ now! — Antonio Nieto-Rodriguez is one of the world’s thought-leaders in the area of project management and strategy implementation. He is the winner of Thinkers50 Ideas into Practice Award 2017 Q2 2018 Dialogue

MARKETING

Gone in 0.06 seconds Embrace your customersâ&#x20AC;&#x2122; unconscious decisions, writes Gavan J Fitzsimons

Dialogue Q2 2018

MARKETING

We are waking up to unconsciousness. Over the past 20 years there has been an explosion in academic research in psychology and marketing exploring the role of the ‘unconscious’ in consumption domains. The title of my own research lab, the Unconscious Consumer Lab, would have been highly controversial in the corridors of the world’s top business schools at the turn of the century. Today, gratefully, it seems relatively pedestrian, thanks in part to recent popular press books such as Professor Danny Kahneman’s excellent bestseller Thinking, Fast and Slow. No longer do we wonder if consumers are influenced outside their conscious awareness, but rather we wonder to how great a degree they are.

Money for nothing

Accompanying this academic research has been a wide array of research tools and insight opportunities designed to capture non-conscious consumer processing in the commercial research space. And yet, it feels like a virtually daily occurrence when I hear from an insights director or a VP of marketing that their most recent – typically quite expensive – foray into the world of the non-conscious/neuroscience/ psychophysiology has flopped, and they are under attack from their colleagues in finance for poor return on investment yet again. Why the disconnect from the growing academic acceptance that non-conscious processing is critical in consumer settings, and the lack of strong support and movement towards nonconscious research tools in practice?

The unconscious paradox

A powerful domain to explore non-conscious consumer processes has proven to be that of the consumer-brand relationship. Years ago, we demonstrated that the strong associations consumers held with brands could be nonconsciously activated and lead to changes in behaviour. One of our first such demonstrations involved subliminally priming participants with one of two brands (either the Apple logo or the IBM logo) and then examining their subsequent behaviour. Across a range of studies and contexts we found that consumers who had been unwittingly exposed to an Apple logo were approximately 30% more creative in postexposure behaviour than their counterparts who had been subliminally primed with the IBM logo. Rosie Ferraro, a former Duke PhD student now at the University of Maryland, showed

Choosing a romantic partner would ordinarily be a fairly deliberative decision – yet technology has created the millisecond swipe to categorize potential mates

that this influence extended to actual brand choice as well. She found that participants who were unwittingly exposed to Dasani bottled water in a series of photographs were about twice as likely to buy Dasani water shortly after exposure. We followed up that result and showed that consumers who fast-forwarded past advertisements when watching TV shows they had recorded at home were in many cases more positively disposed to the brand than if they’d watched the actual ads in real time. In other words, non-conscious exposure to brands led to substantial changes in behaviour. Contrast that to the very small average eﬀect of being consciously exposed to traditional advertisements: a recent study estimated an advertising elasticity of only 0.13, or in other words for every 1% increase in advertising spend, a firm should expect only a 0.13% increase in sales. We have argued that the nonconscious pathway to behaviour is potentially so substantial that consumers’ defensive mechanisms are not activated in these settings. If we have positive associations with a particular brand, non-consciously activating them leads to a more positive predisposition to act if given an opportunity. By comparison, consciously thinking about a brand not only leads to activation of the consumer’s set of associations with the brand, but also leads to the activation of our defensive screen: “Brands are attempting to persuade me to act; I do not want to be influenced; thus I will consciously resist.” These examples are just the tip of the non-conscious iceberg. And so, this should lead to great success in the commercial world of all things nonconscious, correct? Unfortunately, that hasn’t proven to be the case. Take as an example forays into using neuroscience, broadly construed to predict consumer behaviour. Some research techniques in the neuroscience category can be extremely cost- and time-intensive (for example, fMRI Q2 2018 Dialogue

MARKETING

requires extremely expensive equipment and takes an hour or more per participant for straightforward studies). Early eﬀorts to use fMRI in the consumer insights space led to some very mixed results, as documented by a recent Advertising Research Council study. Anecdotally, I’m repeatedly surprised to hear that firms have dedicated multimillion-dollar budgets to their eﬀorts in the space, with grand takeaways that distill down to “we found that the reward centre of the brain was more active for our loyal versus casual users during consumption”.

Consumers who fast-forwarded through ads when watching TV shows they had recorded were in many cases more positively disposed to the brand than if they’d watched the actual ads in real time

Implicit measures

Another example might include the use of implicit measures (e.g., the Implicit Association Test) to predict consumer behaviour. Such measures ask respondents to categorize a word or image as quickly as they can. For example, you might be asked to categorize a series of brands as either ‘good’ or ‘bad’. Which category you put the brand into obviously matters, but the implicit piece of the measure is the speed between when the brand appears on the screen and when you respond. This millisecond response time is taken as an indication of how strongly you hold the opinion that the brand is good or bad, with faster response time indicating more strongly held beliefs. Once again, while there have been some successes, there have been just as many commercial flops attempting to utilize such techniques to predict consumer behaviour. For example, a large retailer I partnered with relayed its experience of attempting with limited success to segment and target its customer base using such implicit response-time measures. Lest I appear to simply be a curmudgeon about implicit and neuroscientific research approaches, note that some of the most interesting research I’m currently involved in uses such techniques (e.g. fMRI, mobile eye-tracking and responsetime measures). The research questions these techniques allow me to answer are unique and diﬀerent from those I could answer using purely behavioural research approaches. For example, we’re currently pairing mobile eye-tracking data with response-time measures to explore how consumers are impacted by in-store primes. These tools permit us to examine millisecond diﬀerences in approach to certain items on a shelf as a function of background imagery (signage above the shelves). When working with my commercial counterparts, I try to emphasize that we first Dialogue Q2 2018

need to figure out the key question we are trying to answer with any research endeavour. Is it whether people attend to a promotional effort of some type? Is it whether their set of associations with our brand changes? Is it whether they’re more likely to pick up our product off a store shelf and investigate for more information? Or is it simply whether a particular promotional effort will lead to more sales of our product? Counterparts on the finance side of the firm typically focus on the last question, but any of the above would be examples of legitimate research questions. Once we’ve got our key question laid out, we can then dig a little deeper and explore what type of research method might be most appropriate. Let’s assume we’re going to explore whether a promotion (an ad, a feature display and so forth) leads to increased sales. I argue that the key determinant of whether a more traditional, conscious research tool fits the bill prior to launch, or whether a newer, nonconscious tool might make more sense, comes down to one key dimension: the degree to which the consumer choice is largely deliberative versus largely spontaneous. Deliberative decisions are often made in consumer settings. For example, when purchasing an automobile, most consumers are not rash, impetuous decision-makers. Rather, they gather information, compare options, weigh strengths and weaknesses etc. Smaller ticket items might also involve highly deliberative decision processes. For example, selecting a present for a loved one hopefully involves some degree of conscious processing. Selecting a product in a category that is new to the consumer would also typically involve fairly deliberative processing (e.g., purchasing an over-the-counter medication for an illness). In such categories, tried and true research

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A mixed picture

techniques, such as day-after recall, attitude toward the brand, and purchase likelihood, are going to be good predictors of whether a consumer is likely to purchase one brand versus another. Just as deliberative decisions are often made by consumers, so too are more impulsive or spontaneous ones. Choices made in categories that are selected every week might be simple fulfilment choices, and require essentially no attention or focus. While standing in the checkout queue at a grocery store, a consumer might decide whether or not to throw a package of chewing gum onto the register belt. Or it might simply be that a particular consumer is coping with three small children as he or she attempts to pick up a few items. In each of the above examples, there is very limited deliberation going on. Rather, the consumer is using their non-conscious system to determine what to do. It’s worth noting that many spontaneous or non-conscious decisions in consumption settings are choices that consumers once made in a deliberative fashion, but now need dedicate no resources to. Then there is a category of spontaneous choices that build oﬀ a set of associations with a brand, for example, that has been acquired through conscious means. Which gum you select at the register may be based on seeing ads for the gum, learning it’s dentistrecommended, and so forth, even if you haven’t purchased chewing gum in years. And finally, some spontaneous choices are truly novel with no prior input – for example, upon entering a store for the first time, do you gaze left or right first? It is in these situations research methods that tap into the nonconscious can have much more predictive success.

How do you know whether your customer is going to be making a largely deliberative or a largely spontaneous decision? As with most questions in field settings, the answer is that you should expect heterogeneity on this dimension. Customers new to a category or customers with no time constraints are likely to be more deliberative, as are those shopping for expensive goods, or those that are high stakes on other dimensions (e.g., medicine). By contrast, those making choices they have made repetitively in the past, or those making choices in lowstake settings, are likely to be making more spontaneous choices. Of course, these types of rules of thumb are made to be broken. I would have thought that choosing a romantic partner would ordinarily be a fairly deliberative decision, and yet technology has created the millisecond swipe to categorize potential mates. The key managerial decision is to work out which of your potential customers, or customer segments you are most interested in targeting, and to match the research approach accordingly. If I’m selling treats for dogs, for example, many of my customers will be regular customers that make a largely spontaneous choice. But new dog owners are likely to be highly deliberative. Acknowledging that we can’t design an effective approach to gathering insights without first deciding which of these two segments we’re interested in will be critical. Of course, one solution is to simply take measures designed to tap into the conscious side of the consumer’s mind, as well as measures designed to tap into their non-conscious side. I occasionally hear people say that the explicit measures tell you what will happen, while the implicit tell us why they happen. However, this strikes me as a cop-out, and possibly an implicit acknowledgment of the fact that consumers often don’t really know how much of what goes on in their minds is occurring outside their conscious awareness. And nor, to be frank, do firms. Rather than investing heavily in all forms of research methods, and thus very likely wasting a substantial amount of money, better to ask the deliberative-spontaneous nature of the task your consumer faces. If we can answer this question well, we can manage the resource allocation across our insights efforts more effectively. — Gavan J Fitzsimons is Edward S & Rose K Donnell professor of marketing and psychology at Duke University’s Fuqua School of Business Q2 2018 Dialogue

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STRATEGY

PATRICK WOODMAN

Work-life boundaries are way too loose

No wonder companies can’t find people Patrick Woodman is head of research and advocacy at the Chartered Management Institute

It’s time to break the downward cycle and invest in the next generation of leaders

UK leaders began 2018 with levels of confidence in the economy at a five-year low. Could Brexit-related uncertainty and the ever-present turbulence of workplace change be combining to deadly effect? According to CMI’s annual Future Forecast survey, only 28% are optimistic about economic prospects of the year ahead. Some 48% are pessimists, making it the gloomiest picture since 2012. For many, Brexit was a vote to take back control. Yet that’s one of the things that a lot of managers will feel is in precious short supply in 2018 as they are buffeted by a range of forces. While business lobby groups have focused on the strategic uncertainty created by negotiations’ slow progress, for some managers the effects are more personal. One in four managers feel a declining sense of job security due to the unfolding Brexit process. Control is also a theme discernible in managers’ priorities for 2018. They rank controlling costs as their number one, picked by 75%. It’s followed this year by restructuring (62%), suggesting that a year of substantial upheaval lies ahead. Now that might not be surprising. For most businesses, change is a permanent state of affairs. Quick responses to fastshifting circumstances are essential. But it’s worth remembering that change is inherently unsettling and can affect people on the receiving end in ways that aren’t always obvious to those leading the charge. For many, the prospect of organizational restructuring will represent a potential loss of control – not an improvement. So, pair these internal prospects with Brexit uncertainty in the wider environment and you have a potent combination that could be tailor-made to chip away at employees’ confidence and motivation. Indeed, our survey suggests that workplace pressures are starting to build. We found that 66% of managers are working more than 40 hours a week, with almost a third (29%) working more

than 49 hours. The ‘always-on’ culture is stronger than ever, with the majority of managers (59%) saying they’re checking email through evenings and weekends. The resulting gap between actual and contracted hours means managers are working an average of 44 extra days a year. And yet, at the same time, the so-called ‘war for talent’ remains in full swing, especially for much-needed management and leadership posts: 82% reported that their organization is struggling to make management-level appointments. Surely organizations should be doing everything they can to retain, grow and enthuse talented managers, recognizing their value to the firm (and the costs of replacing them), rather than leaving them to stew in the face of long working hours, downward pressure on costs and strategic uncertainty? But in practical terms, what can organizations do? Recognizing the potential impact of change is the starting point. If your organization is likely to be affected by Brexit, talk to your employees about it and about how you’re preparing for what may be coming down the line. Refocus on communication of change programmes too. After all, we know that middle managers crave transparency from their leaders. In this climate, it’s more important than ever. But don’t let Brexit dominate the discussion. Focusing on people factors needs to be a high priority. Prevent burnout by giving people licence to switch off – and actively encourage them to do so. Support flexible working, too; help staff take control of the balance between their work and personal lives. And develop managers with the capacity to manage teams through reward, empathy and praise, rather than micromanagement. It’s time to break the downward cycle and invest in the next generation of leaders. A great starting point would be offering them a better-structured working existence with the boundaries needed to offer them not just a good living, but a good life. Q2 2018 Dialogue

Resilience is a team sport Take the group seriously, write Kathleen King, John Higgins and Howell Schroeder

We are all familiar with the importance of resilience as an individual attribute. Based on our qualitative research across three organizations over 18 months, we found that team resilience exists and matters even more. If good teams outperform the best individual, then resilient teams outlast the strongest individual. Resilient teams have the ability to complete the team’s tasks successfully, however pressurized the circumstances. The dynamic at play is more complex than resilient individuals working together (F Dalal, 1998, Taking the Group Seriously, Jessica Kingsley Publishers). The metaphor of migrating birds seems apt, because diﬀerent team members carry diﬀerent levels of the burden at any one time, with everyone heading in the same direction. The nature of resilience varies between teams; it is inherently contextual, but we did find some common themes.

What do leaders attend to?

Leaders pay close attention to four things. They worry about relationships, nurturing positive connections; and they work to improve those that are stuck, hostile or combative. One important aspect is their careful attention to hiring new team members to ensure a good fit, not just looking at the skills they bring, but also checking for good chemistry with the existing team members. They manage workload, so that no-one is consistently overburdened, cutting members slack when they need it, while making sure that work is stimulating and engaging. Leaders accept mistakes. They are prepared to acknowledge their own while avoiding apportioning blame. They genuinely see mistakes first and foremost as opportunities to learn. Fourth, they make sure that the team is aware of how it contributes to the purpose of the organization. They bring attention back to the Dialogue Q2 2018

bigger, collective picture. However, leadership is only part of the story.

What do individuals attend to?

Overall, individual team members bring a spirit of ‘delusional optimism’ (see Daniel Kahneman 2011, Thinking, Fast and Slow, Farrar Straus Giroux) and energy to work: they either don’t know the odds against them or refuse to believe them. At the same time, they balance this with being realistic and without succumbing to utopian solutions (Watzlawick & Weakland et al, Change: Principles of Problem Formation and Problem Resolution). Too much lack of realism can get in the way of sound understanding and meaningful action. Thus setbacks are experienced as opportunities to grow and learn, not as personal defeats. Healthy relationships with other team members are not instrumental, but seen as valuable in their own right. People are allowed to be themselves – we all have lives outside work – while being professional. In this sense, team members are generous to each other, with lots of give and take. Asking for help is not seen as a weakness, and help is both sought and oﬀered, without guilt or resentment. And a little bit of friendly rivalry stimulates higher team performance, while a sense of humour helps keep things in perspective.

What does the team attend to?

Apart from the classic advice to have shared norms and rituals to reinforce trust and the sense of being a valued group, there is a strong feeling of all being in this – whatever this is – together. Does anyone remember Tom Peters’ advice to hire nice, because you can’t train nice? Resilient teams share the value of kindness. Being kind makes you approachable, easier to deal with and fosters mutual goodwill. More than

If good teams outperform the best individual, then resilient teams outlast the strongest individual

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this, the team does three specific things. First, they value and make time for reflection, on team dynamics as well as on the task, however hard the pressure; going slow to go fast. Second, they understand the diﬀerence between adaptive and technical challenges in change (R Heifetz, A Grashow & M Linsky, 2009, The Practice of Adaptive Leadership, Harvard Business Press). Much teamwork is technical and requires expertise. Adaptive situations, on the other hand, have no obvious expert solution. Resilient teams avoid the temptation of applying a technical quick fix to adaptive challenges, which always fail in the long run. Resilient teams are sceptical about quick fixes and are prepared to engage in debate and cope with the anxiety and frustration that adaptive solutions can engender. And third, resilient teams are curious about new ideas wherever they are found. They are prone to explore, rather than reject new approaches, even if they challenge tried and tested team methods.

The resilient team story

Everyone matters in a resilient team and the story they tell the world and each other runs something like this: “We have a collective purpose that matters to us and which we can only achieve together. We’ve had our share of setbacks and they have made us stronger, because we learnt from them. We succeed because we abide by and hold each other to the shared norms of helping each other out, coming up with creative solutions and being straight with clients/patients/bosses/each other. Each and every one of us has a contribution to make. We all have value and we all add value.” How does your team stack up against this story? — Kathleen King is an organizational consultant, researcher and coach. She is an adjunct of AshridgeHult Business School — John Higgins is a coach, author and research associate of Ashridge — Howell Schroeder is a consultant and formerly Ashridge’s strategy and leadership programme director Q2 2018 Dialogue

STRATEGY

Six honest men Rudyard Kipling taught Mark Procter all he knows about strategic thinking

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Mark Procter ILLUSTRATION

Adam Quest

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What happens if an organization doesnâ&#x20AC;&#x2122;t think strategically? The answer can be found in the many organizations that kept doing what they always did while the world overtook them â&#x20AC;&#x201C; Kodak, Woolworths, Blockbuster, Nokia and BlackBerry, to name just a few. Strategic thinking means taking the opportunity to distance yourself from the detail, do some

thinking and future-proof your organization to prosper in a rapidly changing world. Amazon, Ikea and Google are organizations that have been successful in thinking strategically and following through with implementation.

Six honest serving men

US leadership scholar Warren Bennis once said:

STRATEGY

“Too many bosses are driven and driving, but going nowhere.” US businessman Steven Covey said: “Begin with the end in mind.” So, the first step is to work out where you are going. Successful organizations understand how they will get from where they are now to where they want to be. How they reach

this understanding is the domain of strategic thinking. So let’s look at this in more detail with the help of author Rudyard Kipling… I keep six honest serving men, They taught me all I knew, Their names are What and Why and When, And How and Where and Who. Q2 2018 Dialogue

STRATEGY

And that’s all you need. These are big questions and the result of asking them should be a fully integrated strategic plan. The best strategic results will come from a senior management team taking time to undertake a proper internal and external analysis and vigorously debate the strategic options available. Let’s use these questions, but tackle them in a diﬀerent order that moves us from big picture to detail, and from the conceptual to practical implementation – a more logical order for strategic thinking.

Why are we playing?

The best organizations exist to do more than make money; they have a real sense of purpose that wins the hearts and minds of employees and customers alike. In many organizations, this would be called the mission statement, but, so often, a mission statement becomes a piece of paper on the wall that everyone ignores. Real purpose will be on the tip of everyone’s tongue and be obvious to every customer. An apocryphal story is a stranger visiting the toilets in Nasa in the late 1960s and asking the cleaner what he/ she was doing. The cleaner replied: “Helping to put a man on the moon”. This showed that everyone was in touch with the organization’s purpose. In today’s world, everyone knows that Apple is about leadership of innovation and that Amazon is about being able to shop online better, faster and cheaper.

Where are we playing?

Where we are playing would include: Geographic areas, e.g. UK, Europe, China Market segments, e.g. demographic, luxury, niche Product categories (particularly helpful when products are being phased out) Value creation stages e.g. designing, developing, making, distributing, wholesale, retailing, after sales service, etc

An organization must be clear about where it is competing, and with what emphasis. It’s also important to say what the organization is not doing, to prevent eﬀort being spent on legacy products and services. The focus should be on where it can win and to stop doing things where it can’t win.

The best organizations exist to do more than make money; they have a real sense of purpose that wins the hearts and minds of employees and customers alike Dialogue Q2 2018

How will we win?

To make a sustainable profit, an organization must be differentiated from its competitors in some way. Only one company in a market can be the low-price cost leader; others need to offer something different. It is this differentiator that allows margin to be made. Possible differentiators include: Excellent service Top product quality Product reliability Image/branding Tailoring to specific customer needs

The other side to winning (making good margins) is the cost side. For example, Ikea has a lower cost of manufacture than other retailers because it specifies low-cost furniture designs to manufacturers it has close partnerships with. A diﬀerentiator allows a premium price to be charged. Combine that with lower costs and you have a profitable strategy.

Who do we need?

‘Who’ is about getting the right people. As a strategy emerges, it often becomes clear that the organization does not have all the capabilities it needs. New capability can be grown internally or recruited from outside. It can also be found through partnerships, joint ventures or mergers and acquisitions. Another way of finding capability is by creating a template for success and then franchising it. McDonald’s acquired the capability to staﬀ many restaurants worldwide through franchising and, as a result, created more millionaires worldwide than any other business. Today, it’s almost impossible to do anything without some sort of IT capability. Developing new ways of doing things through IT can be a strategic advantage in itself. Uber has grown rapidly worldwide through developing a sophisticated smartphone app for connecting passengers with taxi drivers that is both convenient and cost-eﬀective.

When will things happen?

A good strategy can succeed or fail depending upon how it is implemented. Staging a strategy should be part of the strategy itself. A classic example of this staging is Amazon, which took its infrastructure worldwide with books and then back-filled with a wider range of products. Ikea opened a first branch in a number of countries and then, once the brand had been established, opened more stores in each country to grow.

What will we monitor and measure?

The final question recognizes that it is important to measure the implementation of a strategy. The most eﬀective way to do this is to generate Key Performance Indicators (KPIs). These should be

STRATEGY

THE SIX QUESTIONS YOU NEED

Where are we playing?

How will we win?

WHY ARE WE PL AY IN G? When will things happen?

Who do we need?

What will we measure?

These six honest serving men are key questions that any organization can answer to get strategic clarity

the key drivers of the success of the strategy. For example, in a sales environment, a KPI might be ‘number of leads generated’ and/or ‘percentage of leads converted into sales’ or ‘average size of sale’. The Balanced Business Scorecard (BBS) aims to have more than just financial KPIs to measure, for example, customer experience, operational eﬀectiveness and the human resource of the organization. The aim is to find KPIs that measure the success of the strategy across a balanced business. More important measures are likely to be customer- and marketrelated, especially early in the implementation of a new strategy where a new product or service is involved.

Never start with why

So, these six honest serving men are key questions that any organization can answer to get strategic clarity. Never start with ‘why?’

first, as it’s a difficult question and the answer will emerge if you follow the sequence suggested above. Take the questions seriously and answer each in depth, challenging each other at every step. Remember that, with any strategy, you are trying to build on the core competency of the organization – something that is unique and hard to copy and often embedded in the culture. While building on this core, don’t project past ideas into the future. Think creatively and spend time looking for the ‘difference that will make the difference’ – ideas often found at the periphery of your industry or even in different sectors. And finally, less is more. A good strategy should be easy to understand and make complete sense. So many strategies are written by nonboard members and are huge documents that end up gathering dust on a shelf. In my experience, the best strategies can be captured on a few PowerPoint slides. This is essential for its effective communication within the organization anyway. The output should be a living, breathing, dynamic document that is reviewed regularly. — Mark Procter is a member of Duke CE’s Global Educator Network. As well as teaching strategy and leadership, he works with the senior management teams of businesses to develop their strategy Q2 2018 Dialogue

STRATEGY

Elementary, Sherlock Drucker The great management consultant Peter Drucker’s spiritual home was 221b Baker Street, writes William A Cohen

Sherlock Holmes had the amazing ability to deduce facts from what he saw. Yet his assistant, Dr John Watson, complained of his own inability to do the same. Holmes responded: “On the contrary, Watson, you can see everything. You fail, however, to reason from what you see.” The great fictional sleuth pointed to a great truth – one must not only observe, but also analyse and draw conclusions from the observations. In that regard, Holmes had a real-life adherent in Peter Drucker. For Holmes’ talent was Drucker’s too.

Drucker used his powers of observation and reasoning to determine theory, then tested this theory Dialogue Q2 2018

Drucker’s methodology

Drucker empirically observed the general properties of phenomena and the responses to the questions he asked. He did not start with synthetic mathematical formulae into which data was inserted to determine what was to be done, but used his powers of observation and reasoning to determine theory, then tested this theory as he saw it applied. This is perhaps why he insisted on measurements and numbers when seeking to measure performance and progress, yet ignored quantitative methods for developing theory or strategy. This was part of Drucker’s vast mental arsenal. You cannot replicate his mathematical equations, or his favourite methods of determining significant diﬀerences, because there were none. But everyone can understand the processes of his thinking to replicate his problem-solving and decision-making methods.

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The foundation of Drucker’s thinking was analytical reasoning, based on his own observations. While looking from the outside, he would draw on the logic of what a system’s optimal or failed performance revealed, rather than taking multiple measurements from a lot of diﬀerent people. Drucker used one final link that Arthur Conan Doyle, through the Holmes character he created, also revealed. Drucker uncovered his theories by challenging “the known explanation” of what he saw. He challenged the assumed logic of the outcome of the events witnessed. Here are just a few examples that I have identified:

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He examined ideas even if they appeared intuitively obvious or everyone else believed them He stood ‘facts’ on their heads to see how they looked if basic ideas were reversed

Through practice, he could discern facts that others missed

Inside Sherlock Drucker’s mind

Ask nine out of ten businesspeople the purpose of their business and they will look at you as if you were crazy. “Why, to make a profit, of course,” or similar words, would probably be the answer. Even a Drucker acolyte may simply repeat Drucker’s quotation. “The purpose of a business is to create a customer,” without understanding Drucker’s reasoning or what Drucker meant. The profit motive and profit maximization were both fair game for Drucker’s genius. Let’s examine his thinking in some detail.

The mystery of the profit motive

The profit motive is a basic economic concept. On the face of it, there is little to question. A typical definition of the profit motive is: “The intent to achieve monetary gain in a transaction or material endeavour. Profit motive can also be construed as the underlying reason why a taxpayer or company participates in business activities of any kind.” Many also take the societal view that to maximize an economy’s growth, one must also maximize profits. Drucker told us that profit is not the purpose of business and, following that, he launched into an unheard-of concept: that profit maximization was not only meaningless, but could be dangerous. Drucker first called the profit motive itself into question. He argued that there has never been any evidence for such a motive, and that the theory was invented by classical economists to explain a reality that their theory of economic equilibrium could not explain. For example, volunteerism, in which individuals – many of them highly paid in other roles – work long, hard hours for the common good in a variety of organizations for little or no pay, is unexplained by the profit motive. Many talented individuals knowingly choose occupations that are less financially rewarding due to their personal interest or calling, such as the US Peace Corps, the Red Cross, or other organizations, because an event occurred which was important to them. Pat Tillman gave up a glamorous career as an NFL football star and a $3.6 million, three-year contract after the September 11 terrorist attacks to become an army ranger. He served several tours of combat before

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The hunt for the missing link

STRATEGY

he was accidentally killed by friendly fire during combat operations. Drucker did not claim that profitability is a waste of time, or immoral. This is not true and was not his point. He said that creating hostility to earning a profit was “the most dangerous disease of an industrial society”, causing some of the worst mistakes of public policy. Drucker countered the mistaken notion that there is an inherent contradiction between profit and an organization’s ability to make a social contribution, pointing out that a business can only make a social contribution if it is profitable. It isn’t a good thing for anyone if a company goes out of business. Yet, to continue, a business must invest both in research and development, and provide cash reserves for that future. Many times, well-meaning observers make an erroneous calculation and conclude that a business is being ‘greedy’ when it is doing exactly what it must do to continue to operate in the future. Drucker went on to prove that profitability – far from being a myth, immoral, or unneeded – is crucial for the success of both individual businesses and society. Moreover, he considered profit (as opposed to profit maximization) even more important for society than for individual businesses. However, creating a profit is not the purpose of a business. It is the customer that is essential to any business. Therefore, the purpose of a business must be to create a customer.

The strange case of standing ‘facts’ on their heads

Drucker demonstrated again and again that almost any commonly ‘known’ fact could be turned on its head and used to your advantage to gain an important insight. From this analysis came many of his comments that, as one experienced professor told me early in my academic career, made Drucker “eminently quotable”. Standing facts on their heads is relatively easy to do to come up with some rather interesting truths. Here are two other wellknown Drucker quotes: “The most important thing in communication is hearing what isn’t said.” “The most serious mistakes are not made as a result of the wrong answers. The truly dangerous thing is asking the wrong question.”

A study in instantly discerning things that others missed

At one time, it was believed that chess players must all have highly gifted memories, since the champions see several moves ahead of their apparently less-gifted opponents. But recent research shows that this is inaccurate, because

Drucker could quickly capture the important facts and immediately ascertain the important issues, what to ask and who to ask

that’s not what champion chess players do. Nor are they necessarily more intelligent than anyone else. The diﬀerence is that champion chess players can look at a given situation on a chessboard and instantly see possibilities, opportunities, threats and strategies – while others have not developed this skill. Yet their memories of other things may be just as bad as everyone else’s. This ability is not something that they were born with, but rather a result of having experienced so much quality chess that this incredible ability is automatic. They need not even stop to think to be able to grasp a chess situation and apply this rare – but developed – talent. Drucker could do the same. Given a management situation, he could quickly capture the important facts and immediately ascertain the important issues, what to ask and who to ask. You may think that this ability is unique to Drucker and can be duplicated by few if any others. Yet it is more a case of repetition over about 10,000 hours. Malcolm Gladwell noted this in his book Outliers. Simply speaking, you may see celebrities or others who seem to come out of nowhere become instantly successful. A little investigation shows that the ‘instant success’ usually has a long history of experience to get where they are. Does Drucker fit into this category? He started out as a journalist in about 1928. His first book, The End of Economic Man, was written about ten years – or 10,000 practice hours – later.

How to channel Sherlock Drucker

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Examine ideas even if they appear intuitively obvious or everyone else believes them Stand facts on their heads to see how they look if basic ideas are reversed

Keep at it with repetition for the 10,000 hours it takes until you can instantly discern certain things that others miss in any situation in consulting, management, or the vocation of your choice — This is adapted from the book Peter Drucker on Consulting: How to Apply Drucker’s Principles for Business Success by William A Cohen (LID Publishing, 2016) Q2 2018 Dialogue

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Dialogue Q2 2018

strategy

Bright lights show the way Evidence from education in England and around the world reveals that bigger is often better, find Alex Hill, Liz Mellon, Ben Laker and Jules Goddard

Oh not to be in England. The four countries of the UK (see box) spent £550 billion in the last 15 years running and improving their secondary schools. During this time, England closed 1,500 schools (35%) and opened 1,900 new ones. Yet little has changed. In a quarter of England’s schools, less than a third of students still graduate with GCSE grade C or above in five or more subjects – the same as 15 years ago. And, more worryingly, the number of schools where no students leave with five grade Cs has doubled, as other schools use them as dumping grounds to improve their own results. The strategy seems to be increasing bad practice, rather than creating good. In 2016, only 65% of all English pupils graduated with five or more grade Cs compared with 50% 15 years ago, at a cost of £37 billion per percentage point of improvement. The UK as a whole spent the 8th largest amount of 34 OECD countries, but only came 19th in mathematics, 16th in reading and 14th in science. So, what’s going wrong? Well, maybe it’s not how much they are spending, but who they are giving it to. Maybe, rather than trying to fix their Low Lights (their worst schools), they should encourage their Bright Lights (their best ones) to grow. The evidence shows that they already have the right leadership, culture and capability in place. Why not get them to do more? Why not challenge their Bright Lights to teach in their most deprived areas, as well as their most affluent ones? If England had increased the size of its Bright Lights by 10% each year in the last 15 years, rather than trying to fix its Low Lights, its test scores could have improved by 21 percentage points, rather than 15. And, if it continued this strategy, then it would be the highest performing OECD

country in 25 years, with an estimated £12 billion to £25 billion increase in UK gross domestic product along the way. The current strategy isn’t working. It’s time for a new one.

Fumbling in the dark

England’s strategy over the last 15 years has been to try to improve its education system by fixing its Low Lights (where less than a third of students graduate with five or more GCSE grade Cs, reducing their projected lifetime earnings by £140,000). By putting these schools into ‘special measures’ and offering them up for tender to other schools, it hoped the whole education system would improve. But, it hasn’t. The English have thrown more and more money at the problem, spending 84% more on each child’s education than they did 15 years ago (£57,000 rather than £31,000). But, although half their schools have improved, the other half have declined – and the overall picture is still the same. The number of Black Spots where no light shines (no students graduate with five or more grade Cs) has doubled to 900 schools, with over 28,000 graduates last year. And the new schools it has opened aren’t very good. Only 11% of them have become Bright Lights, and they’ve achieved this by staying small, 20% smaller than other UK schools. Their small size means they can be more selective, taking the best students from elsewhere, rather than creating new successes. The evidence from the English experience is stark. It has spent a lot of money and created a lot of activity, but has achieved very little. And the successes it has seen came from reshuffling the good students it already had, rather than improving its schools. One Bright Lights leader told us, “The original philosophy behind setting Q2 2018 Dialogue

strategy

up academy schools 15 years ago was to transfer the DNA from successful schools into failing ones, but this hasn’t happened. Most academy trusts have grown by bolting together failing schools, rather than good ones, hoping that by getting bigger, they would get better. But, it hasn’t worked – and the overall picture hasn’t changed.”

Ignoring the Bright Lights

While the English were busy trying to brighten their Low Lights, what happened to their Bright Lights, where more than two-thirds of students graduate with five or more GCSE grade Cs? The proportion of Bright Lights hasn’t changed, they still account for a quarter of all UK schools, but the number where 80% of students get five or more grade Cs has halved, and the number where 95% of students achieve this has quartered. So, even the Bright Lights aren’t as bright as they were 15 years ago. They have been allowed to stay small, limiting their potential impact on society. Some 80% of them are smaller than the average school in Singapore, the highest performing OECD country, and the independent Bright Lights are 22% smaller than the state ones. Why is this? Do you have to be small to be good? No, you do not. In fact, results often improve as a school gets bigger. The 2016 Pisa student assessment study found that test results improve by up to 20% every time a school doubles in size in most OECD countries. And, it’s hard to imagine why the UK should be any different. As one Bright Lights leader says, “As our school has doubled in size over the last 15 years, we’ve had more resources to invest in facilities and teachers. And having more students made it easier to stream them, tailor teaching methods to their different needs, and offer more subjects, extracurricular activities and pastoral care. In other words, we could offer a better and broader education, to a broader range of kids, as we grew. As a result, 28% more children graduated from our school last year with five or more GCSE grade Cs than they did 15 years ago.” Another Bright Lights leader explains, “I used to think you had to be small to be good, but this isn’t true. You can make a school feel small, even if it’s big, if you structure it in the right way. I’ve visited schools in India and the Middle East with 5,000 or 10,000 students, which feel like they only have 100 kids, because they have small class sizes and operate across multiple sites. As long as these sites are close together, they can share ideas, resources and facilities, so you get the best of both worlds – the advantages of scale, in an intimate environment.”

Turning school improvement on its head

What would have happened if we’d spent the last 15 years trying to grow our Bright Lights, rather than brighten our Low Lights? A similar change in strategy helped the charity Save the Children Dialogue Q2 2018

reduce malnutrition by 80% in Vietnam over two years, after decades of getting nowhere. Instead of trying to fix the problems in their worst areas, they started expanding the practices in their best ones. Could a similar strategic shift help transform our schools? “The challenge is to work out how quickly you can grow a good school without disrupting what made it successful in the first place,” one Bright Lights leader responds. The general consensus of the Bright Lights leaders we spoke to, is that it’s feasible to grow a school by 10% of its current size each year, so it doubles in size every 10 years. And this can be achieved simply by adding an extra two to four classes each year. We also found that many Bright Lights would relish the challenge of teaching in our most deprived areas, as well as our most affluent ones. “It would be very exciting to be part of a long-term, countrywide educational strategy, where all schools work together to improve standards across the UK,” one Bright Lights leader says. “We’ve worked very closely with another

Test results improve by up to 20% every time a school doubles in size in most OECD countries school in a nearby deprived area over the last five years. It’s been a great experience, with us learning as much as them. They’ve had access to our resources, facilities and extracurricular activities and it has shown that good teachers, in both schools, can teach anyone. They know their subject inside out and quickly adapt their teaching methods to different needs.” If England had adopted this strategy 15 years ago, and its Bright Lights had been able to maintain their performance while growing, then UK test scores would have increased by 21 percentage points, rather than the 15 it actually achieved. If it were to continue this strategy, then it would catch up with Singapore in 25 years and all its children would be in Bright Lights in 30 years. And this would increase UK gross domestic product by between £12 and £25 billion along the way, as better educated students are more knowledgeable, more innovative and earn more money. Not only would England get a better return on investment, it might find it’s easier too. As one Bright Lights leader explained, “I’ve led both successful and failing schools, and it’s much easier to grow a good school than fix a poor one. Everyone wants to be part of a good school, not a failing one, so it’s easier to attract staff and students. It’s also easier to develop them once they arrive too. They see what ‘good’ looks like – it’s all around them – and they get a lot of support

strategy

schools and education in the uk

Education in the UK is devolved to the four nations that make up the British union. For this reason, most of the qualifications data relates only to England, although total spending figures are mostly UK wide. Academy schools are a model of schooling that is available only in England. There is no provision for the model in the other three nations of the UK.

from the other staff and students already in the school.”

Growing our Bright Lights in practice

Although most of England’s Bright Lights haven’t grown in the last 15 years, 5% of them have doubled in size while maintaining exam results, and 23% are now larger than the average school in Singapore. How have they done this? Well, their most common strategy was to gradually expand by setting up another school nearby, typically less than ten miles away, so they can easily share resources and learn from each other. A Bright Lights leader, whose school has successfully doubled in size, explains, “We’ve grown slowly by taking on two extra classes a year on to a second site, eight miles away. We could have expanded more quickly, but we didn’t want to run before we could walk.” And another successful one told us, “A school can lose its sense of identity and

quality control if each site gets too big. We set up three different sites to stop this from happening. And we’ve learnt the hard way that they need to be close together, so that teachers and students can move easily between them. As soon as this movement stops, then barriers start to appear. People are less willing to help each other and it’s harder to maintain a consistent culture across the school.”

Time for a radical change

“Time is critical in a school,” one Bright Lights leader explains. “Children only get one chance for a good education. Every year lost is 20% of their secondary education that can’t be recovered.” It is too big a risk to simply repeat the strategy of the last 15 years. Throwing more money at Low Lights, trying to brighten them. Creating more activity, that has no impact. The lesson from England is that it is best to build on existing organizational strengths. The answer already seems to exist in some Bright Lights, which have shown it’s possible to grow while maintaining results. We need to learn from them, and encourage other Bright Lights to do more.

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— Alex Hill (Kingston University), Ben Laker (Transform Performance International), Liz Mellon (Duke CE) and Jules Goddard (London Business School) are founders and members of UK research group the Centre for High Performance, which specializes in organizational performance

Q2 2018 Dialogue

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Attain the ultimate luxury: silence

Creating silence within means giving in to human nature and facing your fears, finds Kirsten Levermore

Silence in the Age of Noise Erling Kagge Viking / Kagge Forlag bit.ly/silencenoise

A barista, doctor and chief executive all gave me the same definition: “The Age of Noise is the time we are living in. It is being constantly interrupted and crushed by manmade sounds and people.” The cacophony of noise that dogs the footsteps of a 21st-century human being is what drove polar explorer and author of Silence in the Age of Noise, Erling Kagge, to spend more than 50 days trekking across the most remote regions on Earth. The result? Some 33 concise, adventurous, crafted ‘answers’ around the definition of ‘silence’, how to find it, and its importance in today’s world. Here are just three of Kagge’s most resonant ruminations:

Silence is a luxury

Silence is golden. It’s an old expression, but Kagge’s book brings a fresh approach. Luxury, he rightly defines, is something both unnecessary and scarce. By this definition then, having the opportunity to be without interruption – from email, television, traﬃc, people and so on – therefore the chance to create silence, to “turn your back on the daily din”, as the author puts it, is a luxury. Citing the privileges that accompany power and money, namely the chance to delegate tasks, expectations and communications to others (thus, an uninterrupted workflow), as well as the chance to work (and often live) in physically quieter spaces, Kagge presents silence as something that should be pursued, and the achievement of silence as something of which we should be proud. To be busy, conversely, is common among the majority of people in an Age of Noise. Busyness, the author hypothesizes, exists on two levels: the avoidance of boredom, and the pursuit of ‘more’. Because this is how our world has fostered us: in a world of instant access to content and communication, seeking nothing gives you little pleasure, and most of us want Dialogue Q2 2018

‘more’, not ‘less’. Painting ‘silence’ as a luxury is a sad but valid observation of society today.

Silence is within

For us in the Age of Noise, Kagge has this piece of advice: you cannot wait for it to get quiet; you must create the silence inside yourself. “At school I learned about sound waves. Sound is physical and can be measured in decibels, though I find it unsatisfying to measure sound with a number chart. Silence is more of an idea. A notion.” Silence in the Age of Noise is, at its heart, a book of enlightenment. But before you consign it to the ‘wishy-washy’ pile, take heart in one of Kagge’s explanations: silence is about pausing. Although a devotee of deep philosophy, yoga and even hypnosis techniques, Kagge aims to get his message across to as many people as possible, insisting that ‘pausing’ is not something that requires a course, a special centre or even to be relaxed. Rather, he insists that everyone has

Kagge presents silence as something that should be pursued, and the achievement of which we should be proud the capacity for silence: soccer players facing a penalty kick, people taking a bath, academics reading books, parents lying in bed an extra five minutes in the morning, managers having ended a phone-call. We just need to pause.

Silence is scary

Do you listen to the radio when you are alone? Or keep the TV on in the background when you cook? Why? In 2004, Tim Wilson and his colleagues from the University of Virginia left

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volunteers aged 18–77 alone in an empty, silent room. Deprived of any distraction – not even paper and pens were allowed – the volunteers were left alone with their thoughts, and their silences. On emerging, each volunteer was asked about the experience. Most reported they were uncomfortable, and almost all said they were bored. Kicking it up a notch, the researchers asked volunteers how they felt about electric shocks. The volunteers agreed they would all pay to avoid an electric shock. Each one was then sent back into the room, for fifteen minutes. Or, if they couldn’t stand the silence any longer, they could push a button and self-administer an electric shock, after which they could leave the room. Almost half the group pushed the button. “We went into this thinking it wouldn’t be that hard for people to entertain themselves,” said Wilson at the time of publication. “We have this huge brain and it’s stuﬀed full of pleasant memories, and we have the ability to construct fantasies and stories. We really thought this [thinking time] was something people would like.” Drawing on the results of this study, Kagge questions, “What is so scary about silence?”

Silence, he urges, can speak. We can even enter into discussions with it. In fact, the author suggests, it is partly the fear of these discussions, the fear we might get to know silences and ourselves better, that keeps us chasing noise and distraction. True silence may require facing down our fears.

Dream-like

By the time I was halfway through Silence in the Age of Noise, I had a list of at least 20 people who need to read it: executives about to retire, students about to leave university, soon-to-be parents, weary colleagues, frazzled friends. The packaging is both beautiful and a little misleading: pocket-sized, hard-backed, fabric-bound and filled with expensive artwork and poetry. I am not a fan of ‘arty’ philosophy books. But this is no arty philosophy book. Silence in the Age of Noise boasts an astounding volume of ideas, recollections, research and images in its 130 pages, masterfully laid out with a dream-like quality that saw this reviewer finish the book in a single sitting. One hopes that readers will remember its questions – and answers – for life. Q2 2018 Dialogue

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THE LEARNING CURVE WITH CHRISTIAN SMYTHE

Upskilling can help the Millennial cohort take on their more optimistic successors

Meet the Millennials’ new foe: Generation Z Christian Smythe is head of content & partner strategy at BlueBottleBiz

2018 is the year that 21st-century-born workers start turning 18 and entering the workplace. They will bring new skills, knowledge and expectations. Because of this, the job market is going to need to implement some 21stcentury thinking to accommodate these new employees, sometimes known as Generation Z. What’s apparent is that many Millennials not only fear this new generation, but also have a bleaker view of what the world of work will do for them. According to Jobvite’s Job Seeker Nation Survey, one in four of all current workers see Generation Z as

Despite the small age gap between the Millennials and Generation Z, this is where the greatest amount of fear and animosity lies the largest threat to the job market. Younger people (18- to 22-year-olds) feel most threatened by Generation Z (27%), while over-55s feel much less threatened (19%). This is contrary to previous beliefs that automation was the largest threat to the workforce. According to the same survey, only 19% of 18- to 22-year-olds believe that job prospects will improve for them in the future. In contrast, 45% of workers aged over 55 believe it will improve. The labour market must look at how to address this pessimism and assuage these fears, particularly for younger employees. What is clear from the research is that despite the small age gap between Millennials and Generation Z, this is where the greatest amount of fear and animosity lies. With the earliest Dialogue Q2 2018

Millennials entering the job market at the turn of the century and the last of the Millennials being born in 1997, most of this generation’s pessimism can be traced back to the global financial crash of 2007-2008. Things like home ownership, free or cheap tuition, and jobs for life are seen as out of reach. A 2016 report by the Resolution Foundation stated that Millennials fared significantly worse than their parents in Generation X during their first years of employment. The report stated that younger Millennials who entered work during or after the financial crisis will have had their pay squeezed even harder and could have their prospects permanently aﬀected as a result. Generation Z will know about the global financial crisis, but even the oldest of its generation will not have lived through the slump, so it will be interesting to see how they assess their job prospects. So how can Millennials and others get ahead? Upskilling may be the answer. This is not just earning degrees. Online learning provides employees the opportunity to increase their knowledge and develop marketable new skills. It is important for employers to provide adequate resources for their employees in order to advance their career and integrate more fully into professional teams. Additionally, new skills are often acquired through real-life work experiences rather than dedicated training courses, so an open and collaborative learning platform is something to consider. These opportunities will help workers feel more secure and confident. It will also give them an edge over their younger, less experienced colleagues, which would – one might hope – stabilize this young workforce and allow them to flourish.

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PIERS CAIN ON BOOKS

Years of experience at the cutting edge of commerce make for a great analysis of business success

The legacy formula Piers Cain is a management consultant

Guest advocates the benefits of inverting the organizational chart to put customer-facing staff at the top and the chief executive at the bottom

Britain’s decision to leave the EU by March 2019 creates the prospect that all businesses in the UK may face a tougher, more competitive trading environment. All the more reason that we should care whether our businesses are capable of accelerated, sustained and profitable business growth – the subject of Built to Grow. The author, Royston Guest, started his career as an apprentice in the construction industry, aged 16. He rose to manage largescale construction projects before moving on to participating in the privatization of the UK rail industry, mergers and acquisitions, and finally management consultancy. As one might expect with this background, Guest takes a practical, no-nonsense, if sometimes schematic view, of how to develop a highperforming, profitable and sustainable business. Written in an approachable style, Built to Grow makes few assumptions about the business knowledge of the reader and explains concepts clearly. Overall what comes across is that Guest sees life in business as a big adventure that should be grasped with both hands. Guest makes many key points. First, to be profitable and to grow, businesses should focus on acquiring, maximizing and retaining the right – the most profitable – customers. Too often businesses put excessive energy and attention into acquiring new customers and not enough into persuading their existing ones to buy more. Second, every business that aims to be outstanding in its sector must aim to be the provider of choice, the investment of choice and the employer of choice. In other words, keeping investors and employees happy is just as important as keeping customers happy for a sustainable, highly profitable business. When thinking about products and processes, or when thinking about ethical decisions, the question should be asked: “If our customers or our investors knew we were doing this, how would they feel?” Third, companies need to take a holistic

approach to their business and execute this approach in a disciplined manner. Guest organizes his book around his Business Growth Transformation Framework, which encompasses both the obvious (leadership, market potential, customers, marketing and communications, sales and business development) and the less obvious, such as the importance of sound governance to customer value. He also advocates the benefits of inverting the organizational chart to put the customer-facing staﬀ at the top and the chief executive at the bottom as a way of changing attitudes. It is a comprehensive view of a business, and shows how the diﬀerent parts of the business must work together. More importantly, Guest talks about the need for specific strategies to be developed that need to reinforce each other and be understood by the whole business. Fourthly, Guest makes no bones about how challenging it is to be a leader who can create an outstanding business. He emphasizes speed of execution, a desire for action, and a mindset that “a life of mediocrity is not an option”. Leadership of a business is not for the faint-hearted. Leaders must “invest their time every day in being the best of the best”. A final point. Guest asks the reader to consider “what are you building your business for?”, for example to leave to your children or to sell at a profit. Entrepreneurs ought to think about their exit strategy when designing their business. Sensibly, Guest points out that too many business owners create companies that are impossible to sell when the founder decides to retire. If there is a message at the end of this book, it is that the pursuit of business growth may be important, but for the leader who wants to leave a legacy, it is not an end in itself. — Built to Grow: How to deliver accelerated, sustained and profitable business growth Royston Guest, John Wiley & Sons Q2 2018 Dialogue

LAST WORD

KARINA ROBINSON

Big tech’s easy ride is coming to an end

A Silicon Valley nightmare Silicon Valley is shaken. Don’t be distracted by the confidence with which Big Tech representatives have been testifying to Congress about Russian influence in the US electoral process. Nor by the latest top tech results. The breeze of change is turning into a proper wind, and it will do more than just ruﬄe the feathers of Big Tech. Big Tech believes its own story, best exemplified by the Google founders’ mantra: “Don’t be evil.” It subscribes to a quasi-religious faith that its products make consumers’ lives better at no cost; that it creates wealth for the many who invest in its equity; and that when founders cash out they spend it on philanthropy to solve the world’s major problems. But there is another story: that Big Tech has abused its dominant positions and uses its monstrous cash piles to buy up any competitors, thus denying choice to consumers. That its disruption of sectors like retail leads to ever increasing job losses. That their platforms are useful mechanisms for evil-doers to up-end our political processes. That they are gathering so much information on each of us that George Orwell’s Big Brother in his novel 1984 looks like a rank amateur. The Big Tech boom was largely untroubled by traditional checks and balances, such was its novelty and the rapidity of its expansion. But the world is catching up with its modus operandi, and adjusting accordingly. Here are four indicators of how the tide is turning…

Shareholders Despite Big Tech giving equity holders returns of unparalleled juiciness, they are stirring, and discovering they have clout. Note the ousting of Uber chief executive Travis Kalanick by shareholders on the back of various scandals. Meanwhile, Mark Zuckerberg’s plan to reclassify some shares to retain control of the listed company, resulting in an estimated loss of $10 billion for public shareholders, was stopped by a lawsuit led by a Swedish national pension fund. As tax, regulation and a government backlash chip away at Big Tech’s returns, its vulnerability to shareholder activism will rise. Dialogue Q2 2018

Tax The tech companies are losing the battle because they have abused the system. Indebted governments in the developed world need funds, and there is a limit to how far taxes can be raised on hardpressed voters. Big Tech has not just broken the spirit of the law, it has smashed it to pieces, thus the PR battle is lost. The European Commission has been a leader in tackling the issue. Amazon has been ordered to pay about €250 million for back taxes in Luxembourg after benefiting from illegal state aid, while Ireland is being forced to collect €13 billion in taxes owed by Apple. Across the Atlantic, the tax reform package touted by the US government would see tech giants repatriate a portion of their funds currently stashed overseas. Apple, for instance, holds 94% (or $231 billion) of its cash overseas.

Regulation There is movement on both sides of the Atlantic. Recently, a bipartisan group in Congress proposed the Honest Ads Act, which would make online political advertising subject to the same rules of disclosure as those on television, print and radio. Meanwhile, Germany has passed the Network Enforcement Law which imposes steep fines (€5-50 million) on platform companies if they don’t remove hate and other detrimental speech within 24 hours.

Political backlash Governments are expending huge eﬀort to tackle economic inequality. Once they and the media understand Big Tech’s contribution to it, there is bound to be legislation. In a pioneering study, Professor Beverley Skeggs at the London School of Economics used software to track the trackers, mainly Facebook, and analyse the use of data. Skeggs discovered that the poor are sold to advertisers – they are peddled debt, predatory lending and scams. Governments will need to respond. Big Tech would make a convenient – and justified – target. — Karina Robinson is chief executive of Robinson Hambro

Big Tech uses its monstrous cash piles to buy up any competitors, thus denying choice to consumers

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