Welcome to Management Culture...

A random walk through management theory with the occasional intercultural critique.






Thursday, November 20, 2014

What do people want from their leaders?

Moving into new media, the Harvard Business Review now produces ‘video insights’ (available direct on www.hbr.org or as podcasts) which, amongst other things, includes “Management Tips.” On the 18th November I viewed “What do people want from their leaders?” by Gareth Jones of the London Business School. His principle concern was that there is very little trust in the capitalist system right now (think of the publics’ opinion of bankers) and this might further extend to business leaders. In order to promote trust in leadership, we should no longer ask the question ‘what makes a good leader;’ rather start with the question ‘what do the followers want from a leader…?’ 
Here’s what people want from their leaders followed by further considerations (“et alors”)
What do people want from their leaders?
In the context of the definition that ‘effective’ leadership excites people to exceptional performance; and having conducted 1000 interviews, Jones concludes that there are four key things that followers are looking for in their leaders:
Community
Followers want to feel part of something, be it a team, a department, a business or a project.
Authenticity
Followers want to be led by someone who is authentic – a real person they can trust.
Significance
Followers want leaders who appreciate their contribution – feedback is sought.
Excitement
Followers want a leader who can transform (make changes) and enrich (add value).
Et alors
It could not be simpler! Make everyone feel part of a team and lead with vision to engage everyone behind a single goal or objective. Work on your self-awareness and be authentic (not whom you think you should be, but who you really are). Give feedback well (both constructive and positive) and then energize people with your enthusiasm (and ability) to make changes and increase value. Its simplicity belies the fact that it appears to be very culturally specific. This might apply to Anglo-Saxon followers (but I’m not sure as the sample profiles were not given); however it might not apply to other cultures.
Some cultures already have a very strong sense of community in everything and anything they do without leaders having to highlight it for them; followers may prefer their leaders to focus on other aspects. Some cultures don’t necessarily want their leaders to be ‘authentic’ personas – instead they might prefer someone who maintains a formal distance that (as such in that culture) strengthens the leader’s power. Some cultures might prefer their leaders to maintain the status-quo and (whilst not destroy value, at least) maintain value. Apparently, in most cultures, people are always searching for feedback; however the way in which it is done is very important and culturally specific. In short, as a leader, focus on your followers and ask them what they want, but don’t expect the response to be uniformly consistent across cultures!

Thursday, October 23, 2014

Five Challenges for Total

Having an eye on ‘management culture’ and in particular French leadership styles, it would be impossible to write anything this week other than to pay homage to the former CEO and Chairman of Total who died in a plane crash on 21 October. The global reaction to his tragic and untimely death was testament enough to a leader who evidently touched the lives of many people. In the French corporate environment, which tends to lean towards ‘management’ rather than ‘leadership’, he stood out as a leader first and foremost. He formulated clear visions of where the group needed to go and spent time communicating those; he engaged people with his energy and determination; he was empathetic and could relate to each counterparty individually; he established a truly global and senior network; and above all, was a very good communicator. He will be missed.
With all the news agencies covering the story this week, most also focused on the challenges ahead for the energy group. The most succinct of these was penned by the WSJ (“5 Challenges for Oil Group Total”, 21 October 2014). Here they are along with further considerations (“et alors”):
Five Challenges for Total
Verbatim from WSJ 21.10.14:
European oil major is a French institution
Managing Total is no easy task. The company is invariably in the political, media, and environmental spotlight. It is France’s biggest energy group by market capitalization, equivalent to nearly $130 billion, making it the second largest on the Paris bourse, and second only to Royal Dutch Shell among European oil and gas companies. Boasting nearly 100,000 staff working in more than 130 countries, Total is as admired by investment analysts for its growth potential as it is under scrutiny by environmentally-sensitive politicians and lobbyists.
Go where the oil is
Under Christophe de Margerie, Total has proved anything but risk averse. The company placed a big bet on Russia, which indirectly contributed 9% of its oil output last year—up from less than 1% a decade ago—but now has to contend with the sanctions western countries have imposed. Total’s recent investments include projects in Kazakhstan and Uganda.
A mega project turned sour
Total—along with Shell, Exxon and others—has invested heavily in one of the world’s biggest oil fields, Kazakhstan’s Kashagan, which remains unproductive after tens of billions of dollars of investment and years of delays.
Making the most of an African oil champion
Total is one of the oil and gas companies with the most experience of operating in Africa. The continent has large untapped hydrocarbon reserves but also a reputation among its governments for frittering away oil wealth, leaving many countries with large energy deficits amid robust economic growth, rapidly increasing populations and sometimes unstable politics. Africa contributed more than 28% of Total’s oil and gas output in 2013, ahead of the Middle East and Europe.
Re-inventing Total as an energy group
Under Mr. de Margerie, Total has put more effort into diversifying from oil and gas into new sources of energy. Total has chosen solar power and biomass as its preferred sectors while eschewing the big bets that rivals have made on unconventional sources of oil and gas. Total has a 65% stake in Silicon Valley-based SunPower Corp. Total’s New Energies division broke-even in 2013.
Et alors
Christophe de Margerie leaves some very big shoes to fill and to meet these 5 challenges, effective leadership will be necessary to helm this ‘French institution’ going forward. The analysts appear to be pleased with the nomination of Patrick Pouyanne as CEO.  In any succession, success is rarely achieved by replicating the predecessor’s leadership style; however, for the new CEO, there is a ‘sixth’ challenge, namely which ‘leadership style’ to adopt? Without imitating his predecessor exactly, there are potentially some points for the new CEO to carry forward from the late Mr de Margerie: vision, engagement and communication.



Toxic Leadership

Certain leadership skills are appropriate at different stages in the leader’s career. For example, the ability to step back and see the “helicopter view” is not as useful to a first-line leader as a senior executive. It is essential to have the right leadership skills at the right time; otherwise what might ordinarily be considered as a “good” skill suddenly becomes inappropriate. Beyond inappropriate leadership skills, leaders might also exhibit “dark” behaviours (e.g. aggressive, arrogant, bullying etc.). Then we can have “toxic” leadership; but is this entirely the leader’s “fault” or is the root cause contextual?

According to Einarsen et al., toxic leadership destroys value and can manifest itself against the company (i.e. disloyal) or against the employees (i.e. tyrannical). Padilla, Hogan and Kaiser proposed that toxic leadership is actually a consequence of three interdependent forces and is not just a case of the leader behaving badly. Their theory (which appears in The Leadership Quarterly, 18, 2007, pp176-194) asserts that three forces have to be present in order to witness toxic (or “destructive”) leadership.Here’s a summary followed by further considerations (“et alors”).
Toxic Leadership
When all of the three forces are aligned and noted as below, then the leader can become destructive:
The leader...
·         Is charismatic but functions narcissistically (e.g. egotistical, intolerant of others, etc.)
·         Is motivated by personal power (individually or in the organisational context)
The followers...
·         Are insecure or “vulnerable” and need to be led
·         Are in agreement with the leader if they are ambitious
The environment...
·         Exhibits cultural preferences to avoid uncertainty
·         Exhibits instable “governance” and there might be a sense of “menace”
Et alors?
At first glance, the above is actually good news as it appears that just one of these forces needs to be removed to ensure that toxic leadership does not emerge; however, this is easier said than done! Moreover, it seems that unfortunately, none of the forces are stand-alone and can therefore not be singled-out or isolated. For example, even the high personal drive on behalf of the leader – the motivation for personal power – might be contextual. According to Herzberg, “satisfaction” motivators include achievement, recognition, the work itself, responsibility, advancement and growth. So why are some people more motivated by “power” (responsibility and advancement) rather than a sense of “development” (achievement and recognition)? The references can be cultural: both corporate and national.
In a hierarchical corporate culture where power is usually centralised and limited to the “top”, employees might be motivated to “advance” so that they can actually have some power. In cultures with a high “power distance”, there is (according to Hofstede) an acceptance and an expectation that power will be distributed unequally. At once and at the same time the “followers” need to be led and there might be a greater motivation on behalf of the “leader” to obtain that rare-but-significant power. Further, if the prevailing culture is one where uncertainty is ordinarily avoided then the leader can assume power by providing certainty (e.g. taking bold decisions).
So if bad leadership is principally contextual, what can be done to avoid it? Depending on cultural references, “followers’” who need to be led cannot always be changed; and in the wider context of the “environment” and again culturally, it is difficult to address (for example) uncertainty avoidance. It would appear that the only thing that can be changed is the leader. When a particular cultural context means that there is a higher risk that bad leadership might emerge, then even more attention has to be paid to developing leaders! In particular, timing is everything – leaders have to be equipped with the right leadership skills at the right time in their development so their leadership skills are, if not “good”, then at least appropriate!

Thursday, October 9, 2014

The Limitations of SWOT Analysis

“SWOT can be a good tool if used wisely. It offers the standard framework for discussion. But in the wrong hands it can also do damage by reinforcing the status quo mindset.” So says Paul Schoemaker as published on Inc.com in September 2014 (‘five-traps-swot-analysis’ accessed on 22.9.14.) The commonly used tool which looks at internal strengths and weaknesses along with external opportunities and threats has some inherent limitations. The author suggests that there are five common strategic planning pitfalls which could “set your company in the wrong direction.”
Here are the limitations of SWOT analysis along with further considerations (“et alors”):
The Limitations of SWOT Analysis
Schoemaker suggests there are five common pitfalls to avoid when using SWOT analysis to make strategic plans:
1.       Too much navel-gazing
With an internal focus, the ‘strengths’ and ‘weaknesses’ may become a laundry list of all and sundry ranging from micro-issues to macro-ideas.
Labeling an item as a plus or minus involves a “value judgment in which your current strategy becomes the implicit reference point.” To avoid these pitfalls, make sure the focus in outside-in (cf. point #4.)
2.       Imprisoned by the status quo
The concept of ‘opportunities’ and ‘threats’ “forces you to prejudge whether external change is a positive or a negative with the current strategy as the natural reference point.”
It is therefore better to consider “neutral” language such as asking which external forces orissues could impact your business.
3.       Insufficient Systems Thinking
Systems thinking (“grasping how external trends and uncertainties may be changing your playing field”) is very difficult; in addition, trends are useless when viewed in isolation.
The strategist needs to ask when the key trends might stop, “over what time frame the key uncertainties could play out and how the pieces of the puzzle interact.”
4.       Poor Outside-in Analysis
Internal topics tend to get preference in the SWOT analysis. The changing world needs to be considered before looking internally. The analysis needs to be “outside-in.”
Instead of asking “how can we serve our customers better”, ask “why aren’t more customers buying from us” and instead of “how should we improve” ask “how are our competitors superior?”
5.       Little “Future-Back” Thinking
SWOT analysis can reduce value by taking complex strategy questions and reducing them to a list of items that “in isolation are hard to assess.”
Instead, “by reimagining how the entire market can be served better… strategic leaders discern which actions today will create new options for tomorrow.”
Et alors
There are two principle tenets to Schoemaker’s critique of SWOT analysis: firstly that it is too internally focused and therefore ‘anchors’ the strategy analysis to center around the status quo. This is a huge risk for companies as the changing environment is not fully taken into account. An arbitrary judgment of opportunities and threats can overlook how easily both of those can change, whereas what is really needed is “options.” The second main point is the challenge of seeing the dynamic. The SWOT analysis is at a point in time and can be likened to the ‘snapshot’, when what really needs to be reviewed is the changing ‘movie.’ Simply put, a current strength can be your biggest future weakness! The solution to address these two key points is to use scenario planning to focus the strategy review on an outside-in basis, to consider the forces and issues at play and to look for options in every eventuality so that you can be best placed to win tomorrow (and not just today)!

Wednesday, September 24, 2014

Changing World, Changing Management

McKinsey&Company (MKC) have been publishing their “Quarterly” for 50 years and are therefore celebrating by looking to the next 50 years. In an article by Dobbs et al, (“Management Intuition for the Next 50 Years”, September 2014) they suggest that the “collision of technological disruption, rapid emerging-markets growth, and widespread aging is upending long-held assumptions that underpin strategy setting, decision making and management.” This ‘collision’ is so significant that “much of the management intuition that has served us in the past will become irrelevant…” Their research has led to some interesting analysis and insight:
·         The world saw 5 exaflops of computing capacity added in 2008, 20 in 2012 and 40 in 2014. “Global flows of data, finance, talent and trade are poised to triple in the decade ahead, from levels that already represent a massive leap forward.”

·         By 2025, MKC estimate that more than 45% of Fortune 500 companies will come from emerging markets (c.f. 5% in 2000) and nearly half the growth of global GDP between 2010 and 2025 will come from 440 cities in emerging markets (95% of which are small or medium-sized).

·         60% of the world’s population now lives in countries with fertility rates “considerably below those needed to replace each generation.” Germany estimates that in 2060 its population will have shrunk by 20% (and its working population by 28%).
Changing world, Changing Management
So what are the implications for management? MKC propose 5 focus points to address the “magnitude of the coming changes…”
Setting Strategic Direction
MKC estimate that 66% of a company’s growth is determined by momentum (i.e. the environment): to continue to capture that momentum companies will now have to be more agile just to keep up… For strategy analysis, instead of thinking of national markets broken into value ‘segments’, think of multiple offers varied by city, distribution channels and demographic segments…
Managing Technology
Technology has to be seen as a strategic issue; it is no longer “simply a budget line… it is an enabler of virtually every strategy.” Executives need to think about how specific technologies are likely to affect every part of the business and “be completely fluent in how to use data and technology.”
Managing the New Workforce
Machine intelligence needs to be used in innovative ways as soon as possible to change and reinvent work itself. Displaced workers (est. 140 million FTEs globally) will need to be retrained. Developed and emerging markets will experience issues differently – the challenge for global companies is paramount.
Rethinking Resources
Combining IT, nano-science, biology and industrial technology should yield “substantial resource-productivity increases” enabling wealth creation for economies becoming more consumer and service orientated. More ‘productive’ natural resource use is vital to support growing consumption.
Breaking Inertia
MKC research showed that “companies almost always allocated resources” on the basis of pastrather than future opportunities; however the most active companies in resource allocation achieved on average 30% higher total returns than the least active. Be forward looking!
Et alors
The world is changing fast and MKC suggest we are at an inflection point. The ‘intuition’ that current management has gleaned during the last 20-40 years is rendered redundant by the multiple changing paradigms. Is the easiest solution simply to replace the ‘old guard’ with the new generation? No – the change is too significant and too rapid for it not to be addressed immediately by ‘new’ and ‘old’ alike. So what to do? Two key words are going to determine the potential for success in the very near future: adaptability and agility. Both need to be accelerated in all areas: riding the wave of emerging market growth, seizing opportunities and mitigating threats from demographic shifts and being at the forefront of technological change!

Friday, July 4, 2014

Twelve Absolutes of Leadership

There have been many books written on leadership (including mine), but there is one book that seems to have everything covered. Whilst it is not a simple “two step” approach, by virtue of listing twelve “absolutes” it is nothing if not complete! Gary Burnison is the CEO of Korn Ferry International and with his experience as such (delivering leadership “solutions” to many clients) he published “The Twelve Absolutes of Leadership” (2012, McGraw Hill). For anyone who wants a “definitive” overview of what a corporate leader should do, there are few guides that are better.
Here’s the twelve absolutes followed by further considerations (“et alors”):
Twelve Absolutes of Leadership
The first “absolute” (of all “absolutes”) is “lead” itself, after which there are six “elements” – purpose, strategy, people, measure, empower and reward. Then there are five “links” (“activities in which a leader must be constantly engaged”) – anticipate, navigate, communicate, listen and learn.
Lead
Leadership is about “self-discipline, distinguishing between the urgent and the important so that you can rise above the immediate.” It is not just about reacting – if problems are encountered they should be converted into opportunities shifting from “I to we…”
Purpose
“Purpose creates change, inspires possibility, and raises the altitude of the organisation.” With long-term vision, “purpose is the constant through all the upsets and setbacks…” Inspired by purpose “others will become more and achieve more as they give more…”
Strategy
“Strategy, rooted in values and purpose, gives encouragement through times of ambiguity and uncertainty. Strategy without purpose and values is a short-term plan that is directed toward shallow goals.”
People
“Leaders are facilitators on the sidelines, but they are never removed from the front line. The leader can’t be the star player, scoring all the points. Rather, the leader must be committed to helping others to do their best.”
Measure
“Never confuse measurements with data.” The real added value is knowing what the results mean. Besides the insight, action is also needed to be an effective leader. “Measuring, monitoring and metrics matter”, but in the right way…
Empower
“Be behind your people in success and in front of them in defeat.” “Empowerment means enabling and equipping others to make decisions. It means delegating authority so that hundreds of people can make thousands of decisions that are directionally in line with your vision.”
Reward
“Employees work harder for leaders who demonstrate respect for their work.” “A leader can build his reputation with employees by using purposeful praise – spending a significant amount of time praising workers’ specific efforts and actions, and noticing what they are accomplishing.”
Anticipate
“As a leader, you must always have your focus on the horizon.” Looking to the outside (economy, market, industry, competitors) you need to anticipate you plan of action and countermoves. Defining the present, you ground the reality and look forward (using both your intellect and intuition).
Navigate
“As a leader, although you do not have a complete view of the future, you must define it through navigation and action – in other words, through decision making. Navigation happens in the moment with adjustments in speed, altitude, and direction as needed.”
Communicate
“Communication is not merely telling people what you think and what you know. It is a process in which you seek first to understand what others think.” Messages need to be inspiring and “without ownership, your words – whether written or spoken – will have little impact.”
Listen
“It is gravitational for communication to cascade down, but it is far harder for it to bubble up. As a leader you must create freedom of speech through an information-sharing culture.” The “tone at the top” has to be one of listening for this to happen.
Learn
“To be an effective leader, you must have and demonstrate learning agility – the ability to learn from experience and to apply that learning to new or first-time situations.” “Distinguish your leadership not only by what you know, but also by your open and curious mind… Learning never ends!”
Et alors
Here we are talking about “corporate” leadership and however “asset-based”, “long-term” or “certain” the business, actually the whole “play” is in a dynamic which can be very suddenly impacted by changes in customer and competitor behaviors, the economy, the market, the industry, technology etc, etc. In other words, the “play” is in a permanent dynamic and change is inevitable. My vote for the most important “absolute” of leadership is therefore “learning”; moreover, Korn Ferry themselves say that this is the greatest predictor of success for any potential leader! Keep learning!

Friday, June 20, 2014

Reducing Complexity

The Boston Consulting Group (BCG) created an “index of complicatedness,” based on surveys of more than 100 U.S. and European listed companies. Measuring this over the past 15 years showed the amount of “procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed in each of those firms has increased by anywhere from 50% to 350%.” This according to Yves Morieux as published in his TED talk and “5 Rules for CEOs to Simplify Their Job,” in CEO Briefing Newsletter on ChiefExecutive.net (17.3.2014).
According to BCG analysis over a longer time horizon, “complicatedness” has increased by an average of 6.7% a year over the past five decades. In such complexity, apparently managers spend 40% of their time writing reports and 30% - 60% of it in meetings. With little time for teamwork, employees are often misdirected and end up being disengaged and dissatisfied. Such low levels of engagement lead to less productivity. Complexity appears to be a problem, so how can leaders help reduce it and/or reduce the effects of complexity?
Here’s how to reduce complexity followed by further considerations (“et alors”)
Reducing Complexity
Referring to “smart simplicity” the author proposes five rules to reduce complexity, increase engagement and hence productivity:
Understand what others do
Understanding what others do can have far-reaching implications for the organization. The author cites the example of engineers building machines that are subsequently hard to maintain; whereas it would be better during the build to understand what the maintenance people might need to do...
Reinforce integrators
“Integrators are existing managers that you as a leader must reinforce so that they have power and motivation to make others cooperate.” It is not more rules and procedures, but delegation that makes an organization more effective. Unless you empower people, they will withdraw.
Create feedback loops
The consequences of peoples’ actions are often invisible in a large organization. To improve, the author cites the example of a car manufacturer which rotates the design engineers to become maintenance engineers 3 years after the launch of the car: they become part of a very effective feedback loop.
Increase reciprocity
Reciprocity leads to cooperation: reward those who do and blame those who don’t. Lego Group CEO says “blame is not for failure, it is for failing to help or ask for help.” This makes it in everyone’s interest to be transparent and ask for help before a potential problem becomes an actual problem.
Human Resources
The author’s fifth point is to actually apply the first four points to HR management! It is not creating more complexity, it applying the simplicity of the above four points to all HR processes. In a sense, it is embedding the principles in everything the organization does.
Et alors
The above can be distilled into one key word: “leadership.” Without it, complexity tends to “take over” in large organizations… Leadership is the counterweight, the balance to level out the complexity. Even senior executives in large companies can sometimes “withdraw” to management: organizing, controlling, checking details, and reviewing (or even blaming). Essentially, “management” from such a senior level can exacerbate the complexity in the organization. What is needed is leadership: setting strategies rather than just organizing; communicating visions and missions rather than just controlling; constantly reviewing the big picture rather than checking details; and rewarding rather than just reviewing.