Business Model Generation

It is unlikely that the competitive advantage of any business will last forever. Accordingly, you need to know exactly how your business is positioned and how it fits with the context and environment. In order to facilitate such a regular strategic review, there is a very good business model “generator” which has been developed through collaborative efforts and published in a book called “Business Model Generation” by Alexander Osterwalder and Yves Pigneur (John Wiley & Sons, 2010). It gives a brilliantly concise overview of a business so that you can build your own model to see where and how you are adding value; and in so doing consider where you might need to best focus your efforts, both now and in the future.

Here’s the business model generator along with further considerations below (“et alors”)

Business Model Generation

As illustrated below, the pro-forma is in 9 parts surrounding the key “value proposition”. On the right is the customer whose interface with the value proposition is the “customer relationships” and the “channels”. These are related to the revenue streams. On the left are the “key partners” who are connected to the value proposition through “key activities” and “key resources”. These are related to the cost structure.

Key Partners	Key Activities	Value Proposition		Customer Relationships	Customer Segments
	Key Resources			Channels
Cost Structure			Revenue Streams

Here’s the various sections in detail:

Value proposition

This is why customers come to you. Create value by inventing something new; improve your product’s “performance”; or “differentiate” your offer to specific needs.

Customer segments

This is all about positioning. “Mass” markets and “niche” markets require different approaches, while “segmented” customer bases share similarities, but with differing needs.

Channels

Select the best “customer touch points” to communicate value and to distribute and sell your products and services. What is the channel e.g. internet, B2B2C, B2G, wholesale…?

Customer relationships

Establish different ways to serve distinct market segments: is the focus on mass produced commodities or on personalized service?

Revenue streams

Capturing income, each type of revenue stream may demand a different “pricing mechanism,” either a “fixed” price or a “dynamic,” negotiated price.

Key partnerships

Consider supplier links, “coopetition”, joint ventures and “strategic alliances”; along with outsourcing and subcontracting.

Key resources

Assets are “physical, financial, intellectual or human” depending on what the business is. Remember that key resources may be “owned or leased”.

Key activities

What do you actually do to capture the profit? Produce an item, provide services/solutions, manage processes?

Cost structure

“Cost-driven” or “value-driven”?  Outlays represent “fixed and variable” expenses. Consider economies of scale and “scope” from large-scale production and distribution.

Et alors

The idea is that using this template you can see where your business model adds value and also where it might not add value. Such a review applied to a private banking business might (for example) highlight that customer relationships are the most “value added” part of the value proposition which therefore need to be focused on; whereas operations could be outsourced.

The model can also be used to compare your business to that of competitors to see where there might be an opportunity or a threat. It might also assist a review of the possible temporary nature of your current “value-add”. This might highlight other parts of your business that could add value in future or even right now (eg. UPS with their offer to manage other companies’ logistics).

The key is as the authors say “virtually all business models eventually become obsolete, so proactive companies actively conceive and pursue new models. One side benefit of continual business-model design and redesign is a healthy lack of respect for long-held assumptions.” Each of the 9 sections of your business model is subject to continual repair and renewal! Keep reviewing!

Leading Millenials

To lead, a leader needs to adapt to the followers and diversity comes in many forms, not least demographics. I was recently invited to assist at a seminar where the participants were all in their 20s which meant they were all “millenials” i.e. being persons born between 1977 and 1997 (also known as “generation Y”). When talking to the participants I realised that their hopes, expectations, motivations and drivers were entirely different to my generation (“generation X”). Wondering how a “baby boomer” (born before 1964) or “Xer” (born between 1964 and 1976) might lead the milenials brought me to an article by Meister and Willyard, “Mentoring Millenials”, HBR 2010. Besides giving guidance on “new” mentoring techniques to help develop millennials, the authors also researched and identified what millenials want.

Here’s how to lead millenials including further implications (“et alors”):

Leading Millenials

The authors identified three key areas where millenials typically have clear expectations: from their boss, from their company and regarding learning. As a leader in an organisation, if you understand these expectations you can better lead millenials…

Boss

Millenials expect that their boss will:

·         Help them navigate their career path

·         Give them straight feedback

·         Mentor and coach them

·         Sponsor them on formal  development programs

·         Be comfortable with flexible schedules

Company

Millenials expect that their company will:

·         Develop their skills for the future

·         Have “strong” values

·         Offer customisable options in remuneration

·         Get the work/life balance correct

·         Offer a clear career path

Learning

Millenials want to keep learning:

·         Technical skills in their area of expertise

·         Self-management and personal productivity

·         Leadership

·         Industry or functional knowledge

·         Creativity and innovation strategies

Et alors

This generation appears to be interested in continually learning and the millenials need to have a clear sense of purpose: they need to “connect” with their organisation and it is the leader who is going to make this happen (explaining the sense of purpose and leading with values). The millenials might not yet realise it, but they need to be led: their expectations of their boss are that the boss is a leader rather than just a manager; their expectations of their company are that it can support and develop them, something in fact that the leader (rather than just the organisation) does; and in terms of learning, typically they might approach this with more enthusiasm than other generations, but they again want to be led through structured programs. Engage, support and direct – that seems to be how leaders of today need to adapt to the millenials.

Leading by listening

“It’s no wonder that ‘employee engagement’ is a serious issue in most organisations today. Everybody is talking; nobody is listening!” This comment from Kimsey-House et al. in their 2011 book “Co-active coaching: Changing Business, Transforming Lives”, Nicholas Brealey. Evidently the focus is on coaching but on reading their chapter on listening I realized that the guidelines for coaches might be equally applicable for leaders. My premise is that to better lead, you need to better listen! Only by ‘properly’ listening can you fully engage with your followers; meanwhile listening can be superficial at the best of times particularly in a busy ‘solutions-focused’ business environment. To better listen the authors propose to move from ‘level 1’ listening to ‘level 3’ listening.

Here’s how to lead by listening along with further considerations (“et alors”)

Leading by listening

The authors assert that listening is not passive and describe three levels of listening, thus:

Level 1: Internal Listening

Here the listener is focused on “what does this mean to me?”

Only the words of the other person are listened to and these are filtered by thoughts, judgments and feelings. The listener might be thinking of a solution, their own similar situation or the next question without listening any ‘deeper’. Interruptions and misunderstandings are both common and frequent.

This is not a very effective way of ‘properly’ listening, either as a leader or a coach.

Level 2: Focused Listening

Here the listener is focused on “what does this mean to the other person?”

In addition to the words, the other person’s tone, pace, expressions and emotions are listened for: in other words, not only what is said, but how it is said. As the listener’s ‘internal chatter’ disappears, Level 2 listening becomes “empathy, clarification” and “collaboration.”

This is a much more effective way of ‘properly’ listening and can be achieved at any time.

Level 3: Global Listening

Here the listener is completely in the moment and focused purely on understanding.

Beyond words, listening is also through what you ‘receive’ via the whole environment: for example the energy levels, the ‘coolness’ or the distractions of the other person. Being very open to subtle clues, the listener notices the “action, the inaction and the interaction.”

Here, you will really hear, but to attain this level of listening will take practice!

Et alors

“Anyone who is successful at influencing people is skilled at listening at level 3. These people have the ability to read their impact and adjust their behavior accordingly.” Leaders should take note of this assertion by the authors: if you want to influence, listen ‘globally’! Some might say that they do not have time, but level 2 listening can be achieved at any time: it’s much better than level 1 so there really is no excuse. Level 3 listening is challenging and in practical terms it might not be achievable all the time; however with greater awareness (and practice), the leader can get to this level according to circumstance and when necessary. The investment in listening should pay good dividends in influence!

Experiential Learning

“Action-learning”, learning-by-exposure and experience sharing (think “executive MBA”) are all the best practices for leadership development these days; however it appears that experiential learning is nothing new. Recently enrolled on a course myself, I received an article explaining the course teaching philosophy which referenced a 1975 article by Kolb and Fry, “Toward and applied theory of experiential learning”, cited in Cooper (ed), “Theories of Group Process”, London, John Wiley. Whilst “old”, this particular applied theory remains pertinent and is a good guide for leaders to accelerate and/or maximise their learning.

Here’s the four learning styles followed by further implications (“et alors”)

Kolb and Fry defined the process of learning as “the process whereby knowledge is created through the transformation of experience.” The subsequent model the authors propose is presented as a permanent cycle based on two axes: gaining knowledge, ranging from concrete to abstract; and transforming knowledge, ranging from reflective to active. The four points of the compass are then:

1.       Concrete Experience (north)

On the “gaining knowledge axis”, this is popular amongst busy leaders: being directly involved in a new experience and learning on the job. This is the start point of the learning cycle.

2.       Reflective observation (east)

On the “transforming knowledge axis”, this is “internally” focused. However concrete the experience, for true learning to occur, the leader has to stop and reflect on what this means.

3.       Abstract conceptualization (south)

On the “gaining knowledge axis”, this step is still reflective but not internal. Your own experience can be supplemented by the experience of others through books, hints and tips.

4.        Active experimentation (west)

On the “transforming knowledge axis”, this is acting on the outside world and back to experience: you can’t learn without trying what you think you have learnt!

Et alors

As the authors state, each step reinforces the other and the clockwise cycle continues, but it must be in balance: to act without reflecting can lead to “incorrect” learning; to reflect without acting can lead to inertia. A lot of leaders just want something “concrete” so that they can take away a toolkit and use it immediately – there is therefore a strong “buy-in” to the concept of experiential learning; however nothing is for free! The concrete experience is just the start point: for real learning and profound development to take place, the leader also needs to take time to personally reflect and also gain insight from others’ experiences before trying and adapting in a permanent heuristic loop. Learn by experience, but also take a moment to capitalize on that experience!

Leading Under Stress

Leadership can be stressful. Not only does it take a lot of energy but the “challenge” is further compounded by the situation: many leaders may find themselves in a crisis and therefore under extraordinary stress. What to do in such a situation? Research led me to an article by Heifetz et al, “Leadership in a (Permanent) Crisis”, 2009, HBR where the authors point to “fostering adaptation” and “embracing disequilibrium” to engage and motivate followers through the crisis; however further to that they also provide five key guidance points to “take care of yourself” as a leader so that you don’t sacrifice yourself to the crisis by neglecting yourself.

Here’s how to lead under stress followed by further observations (“et alors”):

Leading Under Stress

The authors state that “taking care of yourself both physically and emotionally will be crucial to your success. You can achieve none of your leadership aims if you sacrifice yourself to the cause.” Here are the five things a leader needs to do to take care whilst leading under stress:

Be Both Optimistic and Realistic

Not just one or the other, but create a “healthy tension that keeps optimism from turning into denial and realism from devolving into cynicism.”

Find Sanctuaries

A sanctuary may be a place or an activity that allows you to step away and “recalibrate your internal responses”. In other words, take some quality time to “get away from it all”.

Reach Out to Confidents

Seek feedback from a true confident who cares more about you than the crisis. Usually a third party, this is someone to whom you can “articulate your reasons for taking certain actions.”

Bring More of Your Emotional Self to the Workplace

A leader cannot survive being too reserved. Under stress, an appropriate “display” of emotions can help to increase trust and defuse difficult situations.

Don’t Lose Yourself in Your Role

No matter how important your work is, don’t let “a single endeavor” define you. Besides making you vulnerable to changing circumstances, opportunities may be lost… 

Et alors

At once and at the same time, the leader needs to be able to “step out” and “step into” the situation. This can only be done if the leader is “authentic”, or otherwise put: the leader is the same person both in- and outside work. Stress from a crisis can easily “de-mask” the inauthentic leader and significantly reduce leadership effectiveness. Stepping-in can be getting the balance right between optimism and realism along with bringing more of your emotional self to work (i.e. your real self “behind the mask”); stepping-out can be ensuring that there is a sanctuary, a confident and above all else your own detachment to realize that your current project is just that and only that!

Minimising decision-making biases

Managers like to think that the decisions they make are objective and rational and have been executed taking into consideration all the pertinent facts. In reality, many other forces come into play when making a decision such that most decisions are usually subjective, irrational and have been made with only limited information. As Wolf explains in his HBR blog post of September 2012, “How to minimise your biases when making decisions”, it is mainly inherent biases which cause decisions to be sub-optimal. Accordingly, in order to optimise decisions, biases have to be recognised and then minimised.
 

Here’s a summary of decision-making biases and how to overcome them followed by further considerations (et alors).

Minimising decision-making biases

Drawing on studies from Rosenzweig, Kahneman and Schoemaker, there are six principle decision-making biases noted as follows:
 

Anchoring

If expecting the same outcome as before, contradictory data tends to be ignored or omitted. This becomes more acute with numbers which are difficult to “adjust away” from.

·         To overcome anchoring, “seek diverse outside opinion to counter overconfidence”.

Framing

How a situation is presented affects the decision. In addition and generally, the pain of losing is perceived to be more powerful than the pleasure of winning.

·         To overcome framing, inverse the perspective from positive to negative or vice versa.

Availability Heuristic

Vivid and easily imaginable events (even if uncommon) along with recent events are weighted disproportionately higher than unimaginable or past events.

·         To overcome availability heuristic, “search relentlessly for potentially relevant or disconfirming evidence”.

Confirmation Bias

Initial decisions become self-fulfilling prophecies. Data is collected after the event to justify the decision (similar to anchoring).

·         To overcome confirmation bias, accept a “chief contrarian” as part of the team.

Commitment Escalation

It is difficult to accept “failure” and start again from scratch; instead, previous commitments tend to influence current decisions.

·         To overcome commitment escalation, ignore the old problem by clearly redefining the new problem.

Hindsight Bias

Once something is known, it is difficult to remember when it was not known. This can make it more difficult to learn from failures (as it is now “obvious”).

·         To overcome hindsight bias, reward due process (and in particular “lessons learnt”) rather than penalising failure.

Et alors

How many organisations do not penalise failure in one way or another? The above decision-making biases are compiled at the individual level but despite the best efforts of any individual, decision-making biases can easily become “institutionalised” in an organisation. All of the biases noted above can reinforce organisational culture: for example, it would be a very brave individual who could go to the board of Kodak in the early 1990s and tell them that photographic film was doomed and they should start preparing for an exit (yet look what happened)! On a collective basis, a lot of the biases could be compiled into one key tenet, namely “groupthink”. On the other side, the one concept which seems to appear as the solution on a collective level is “diversity”! To optimise the decision-making process and overcome decision-making biases, make sure the team making the decision is diverse! The process might seem to be more "painful" but the end-result should be a higher quality decision!

Organisational Rigidities

Claudio Feser, an executive at McKinsey consulting, started researching corporate longevity and found that 50% of all publically listed companies die within 10 years; only 15% reach 30 years; and only 5% achieve their 50^th anniversary. Further research focused on this 5% whom he referred to as “serial innovators” – those who were continually able to adapt and change in order to survive. In his book, “Serial Innovators: Firms that Change the World” (John Wiley & Sons, 2011) he identifies organisational rigidities that can lead to the demise of most firms and also details how the “serial innovators” overcome these rigidities in order to change, grow and prosper.

Here’s a summary of organisational rigidities along with further implications (“et alors”):

Organisational Rigidities

As companies age, they develop rigidities which block them from changing and adapting. Managers therefore need to overcome the following five rigidities:

1.       Hierarchical Bureaucracy

Whilst hierarchical organisations can have their merits, ossification can take place when the organisation turns into a bureaucracy. Symptoms may include centralisation of decisions with little delegation of responsibility and “excess layers of management that slow their operations.”

To create an “adaptive organisation” 1/ “positively frame the vision” seeing the future in an optimistic way whilst dealing with the issues of today; and 2/ carve out separate and autonomous units which can become “self-managed performance cells.”

2.       Loss of purpose

When companies become rigidly mired in the past, “paralysed [and] blind to the changes necessary to survive” then a sense of purpose can be lost. Without a sense of purpose, staff lose their sense of belonging along with their drive to achieve.

“Cultivate the desire to make a difference” – fulfil people’s yearning to give to a greater cause and serve all stakeholders as well as the shareholders. Use motivational stories to engage staff and include altruistic objectives in the firm’s mission.

3.       Change-resistant corporate culture

After a certain time it is not just the rules and regulations that define what can and cannot be done but also the corporate culture. Whilst a strong culture can be beneficial if it is strategically aligned and adaptive, it can otherwise cause a change-resistant rigidity.

“Cultivate a culture that fosters execution” – promote values and “norms” that encourage achievement, along with creativity and new ways of thinking. When changes are proposed, instead of asking the question “why?” start asking the question “why not?”

4.       Poor incentives

Purely monetary incentives can act as a rigidity as they tend to neither inspire nor retain staff for the long-term. Monetary rewards can “deter staff from cooperating, undermine ‘moral behaviour’ and even encourage deceit.”

Balance financial and non-financial rewards and invest in staff development. Non-financial rewards need to be managed positively and visibly. Motivation can be increased through social recognition and performance feedback.

5.       Adherence to the status quo

Some firms have “defining capabilities” in operations, abilities or specific assets; however these advantages can become restraints by tying the firm to the past and fossilising a “status quo”. This limits the firm’s ability to react to both opportunities and threats.

Two steps are required to overcome this: 1/ top executives need to have a strong desire to learn and “share diverse philosophical approaches”; and 2/ “invest in capabilities” – adapt readily to the pursuit of opportunities and have strategies in place to add to core competencies.

Et alors

The author appears to presuppose that the readers have the power to make sweeping organisational changes and accordingly, at first glance, some of the advice might appear to be “easier said than done”! So what do you do if, as a middle manager, you find yourself in a rigid organisation? Firstly you can positively frame your own vision for your own followers and you can also protect them from the worst “excesses” of the “hierarchical bureaucracy” by fully empowering them: make them a “self-managed performance cell”! Secondly, with all the other rigidities, adopt the same approach: make a clear distinction between today and tomorrow and focus your followers on the tomorrow you wish to create: communicate a motivating sense of purpose; ask “why not?” rather than “why?”; develop your staff through feedback, coaching and training; never stop learning, promote diversity in all its forms and keep an eye on the opportunities and threats arising outside the organisation. You don’t actually have to be the CEO to do this: you can start today!

Leadership and self-awareness

Self-awareness is paramount for leadership development; however an increased self-knowledge of oneself is only part of the equation. What if your behaviours are seen by other people differently than how you understand them to be yourself? The matter is further complicated by the notion of conscious and unconscious awareness: there may be aspects of your behavior that might be critical for your success as a leader that you may not know about which others may (or may not) see! In relation to this, Joseph Luft and Harry Ingham devised what was later to become known as the “JoHari” window – a method for improving self-awareness. The model was first published in the “Proceedings of the Western Training Laboratory” by UCLA in 1955 and was further elaborated by Luft in later works.

Here’s a summary of the JoHari window followed by further implications (“et alors”):

Leadership and self-awareness

The model originally used 56 adjectives from which both the subject and their peers could select five or six to describe the person’s behaviours. (Similar results can be obtained from performing a “360° feedback” exercise.) Results are then mapped onto a grid of four distinct areas:

1.       Arena

What is known by the person about him/herself and is also known by others. Open, constructive and positive dialogue can both maintain and expand the open “arena”.

2.       Blind

What is not known by the person about him/herself but which is known by others. By seeking feedback from others, the aim should be to reduce this area and thereby increase the “arena”.

3.       Hidden

What is known by the person about him/herself but which is not known by others. Appropriate self-disclosure to reduce the hidden area can enable better trust, cooperation and understanding.

4.       Unknown

What is not known by the person about him/herself and is also not known by others. Untapped potential can often remain here but can sometimes be found by trying new things.

Et alors?

There are many “auto-diagnostic” tools that a leader can use to increase his/her self-awareness however for anyone wishing to develop as a leader, it might be useful to consider embarking on a “360° feedback” exercise. The original JoHari model only considered peer feedback whereas 360° feedback will also consider direct reports and superiors: nevertheless, the essential spirit of the exercise is the same, namely to: 1/ reduce your “blind” spots by seeking feedback from others; and 2/ recognize what might appear hidden to others. The “unknowns” may still remain as such but what is important is the overall “improved” self-awareness. Knowing how you are seen (and not seen) by others is extremely useful for leaders as interpersonal relations are key to leadership.

As a leader and a manager you might have neither the time nor the resources for everyone in your team to perform a 360° feedback; however as a leader you will have a huge impact on what is in the collective “arena” of your team. For example, do people feel secure being “open” and “honest” about what they think and feel without fear of negative judgement? (Idem. for the “hidden” parts!) Is there a culture of both positive and negative feedback both giving and receiving? If not, how are the individuals going to collectively reduce their “blind” areas? Lastly, as a leader do you encourage and support others to try new things without the fear of failure? As a leader you have a direct impact on the culture of your organization and that in turn impacts the growth and development of others through self-awareness!

The Living Company

The world never stops changing and in the increasingly fast-paced dynamic the only constant is change itself! Despite the changing world, stakeholders in large companies often overlook the fact that nothing is permanent. In fact, the half-life of Fortune 500 companies is only approximately twelve years: in other words, through bankruptcy, break-up, mergers or acquisitions, 250 of today’s largest companies will have disappeared in twelve years’ time.  Nevertheless those companies “which had started to expand after they had survived infancy – during which the mortality rate is extremely high – continued to live on average for another 20 to 30 years.” So says Arie de Geus, former Corporate Planning Coordinator of Shell and author of “The living company”, Harvard Business Review, March 1997.

De Geus concluded that many companies die young because their “managers focus exclusively on producing goods and services and forget that the organisation is a community of human beings that is in business – any business – to stay alive”. His research set out to learn about long-term corporate survival by studying companies older than Shell: only 27 companies worldwide had “survived” for more than 100 years and his research centred on what these 27 had in common. He found four “shared personality traits that could explain their longevity.”

Here are the four traits that lead to long-term survival followed by further implications (“et alors”):

The Living Company

Conservatism in financing

The companies did not risk their capital gratuitously. Money in-hand allowed them to “snap up options when their competitors could not”.

Sensitivity to the world around them

All the 27 companies demonstrated that they had been able to adapt themselves to changes in the world around them. They were good at learning and adapting.

Awareness of their identity

No matter how diversified they were, their employees all felt like parts of a whole. A sense of community is essential for long-term survival.

Tolerence of new ideas

The companies tolerated activities in the margin, encouraging autonomous experimentation. They recognised that new businesses may be entirely unrelated to existing businesses.

Et alors?

There appears to be a paradox of having a strong identity and yet continually adapting; however identity does not come from business and behaviours; rather it comes from “clearly stated” values. The former can change (sometimes completely) while the latter remain constant. In this context, financing conservatism should not be equated to risk avoidance. To ensure the organisation continues to live whilst the world continues to change, leaders “must place commitment to people before assets, respect for innovation before devotion to policy, [and] the messiness of learning before orderly procedures…”

In a competitive environment, companies need to be more agile, quicker at adapting and faster at learning than their competitors. Constantly reviewing the outside world, the focus is to develop potential whether that is through new business, innovation or the development of talent (individual, team and company-wide). De Geus talks of “stewardship” where leaders pass on the corporation to the next generation in the same or better “health” than it was before. In order to do so and to nurture the sense of community, leaders need to both trust others and be trusted: a particular challenge in the very fast changing and often short-term focused world of today!

Megaproject Leadership

To meet growing energy demand there has been a significant increase (400% in 10 years) in exploration and production (E&P) “megaprojects” i.e. those with budgets greater than one billion USD. “Megaprojects are pushing the frontier of knowledge in an environment that may be simultaneously ill-defined, uncertain and random … which will significantly expose companies to high levels of strategic, operational and financial risk” says Ghosh et al., in “Organisations and Leaders Make or Break projects” Energy Perspectives, Schlumberger Business Consulting (Summer 2012).

In the last 15 years, “the E&P industry has seen a tripling of the number of projects with budget overruns in excess of 50%”. The authors’ research led to an identification of six root causes related to issues on capital projects of which “organisation and people” was highlighted in a survey as the most important (even surpassing “technical challenges”). Accordingly, they suggest that there is a need for a “paradigm shift in organisational thinking” both in terms of organisation (external stakeholder focus, and agility inter alia) and in terms of leadership (development paths and leadership model).

Here’s a summary of their proposed leadership model for megaprojects followed by further considerations (“et alors”).

Megaproject Leadership

The authors state that “megaproject leaders are required to deal with external stakeholders who have the ability to significantly influence the project’s outcome without any direct control or influence.” In addition, the leaders need a sustainable development mind-set and “a positive attitude to keep teams motivated”. The combination of these factors “takes the leadership challenge to an entirely different level” for which they propose the use of the “3PI” leadership model.

The 3 Powers Influence Leadership model is as follows:

Intellect

This is the interface between “teamwork” and “judgement.”

Intellect relies on logic, reasoning power and knowledge that stems from experience. Note the emphasis on experience, being “teamwork” experience rather than education…

Intuition

This is the interface between “judgement” and “communication.”

Intuition manifests itself in judgement, endurance, resilience and integrity. It develops over time and note an emphasis on communication, (similar to learning agility).

Interconnectivity

This is the interface between “communication” and “teamwork.”

Interconnectivity is gained through relationships, networks and communication skills. Note that it requires a mastery of both communication and teamwork.

A full synchronisation of these three sources of power “raises an individual megaproject leader to a point where he or she is perfectly capable of dealing with adversity or sudden swings in the project environment with grace, dignity and a high degree of reflex and resiliency…” Such a leader will then be able to instil trust in stakeholders, “do the right thing” vis-à-vis the environment and lead teams.

Et alors?

The 3PI leadership model has been developed by Ghosh (of the Massachusetts Institute of Technology) and has been “successfully tested across several organisations”. Further, the authors state that the adoption of the 3PI model will “lead to a positive Kaizen [continuous improvement] culture that effectively deals with complexities in a safe and efficient manner.” So why aren’t all the E&P companies adopting such a model (or similar)? The risks are high but beyond “ordinary” resistance to change, there might be other forces at play in E&P companies.

In the E&P business, intellectus omnia vincit [intellect conquers all] might be a suitable motto for many an organisation; however the “intellect” leadership required is far from just “raw” intellect. It is actually collective learning, try-and-see progression and above all else, learning from experience rather than education. Similarly “intuition” is almost taboo in engineering companies; instead facts, figures and data are ordinarily required. Again, the leadership “intuition” is more than just “intuition” – it is a dynamic stemming from continual communication. Like the authors say, these types of leadership would require a paradigm shift for most E&P companies.

“Interconnectivity” is not something which comes easily to E&P companies. Concepts and designs are tackled in the “intellectual” space and then later “connected” to the real world. The conventional and ordinary projects have hitherto been organised in professional silos which has made even internal interconnectivity difficult let alone external connectivity. Again, the continual and incremental change which may be a benefit of adopting the 3PI leadership model might only happen after there has been a structural and/or transformational change in organisational thinking. Perhaps those 500 million dollar overruns might prompt such a rethink!

Innovative Behaviours

Having attended a “Myers Briggs Type Indicator (MBTI®) Step II” course this week I came across the behaviours that are often expressed by people with preferences for the “sensing” perceiving function and the opposite “intuition” perceiving function. This is what differentiates “step II” from “step I” as there might be what are called in- or out-of-preference behaviours expressed even though the underlying type preference remains constant. It made me wonder which of the behaviours would be most related to innovation and if any correlate with leadership behaviours…

Here’s a summary of the different behaviours followed by further implications (“et alors”):

Innovative behaviours

Within the perceiving function dichotomy of “sensing” or “intuition” preferences, there are five “facets” of behaviour relating to perceiving or gathering information:

Concrete vs Abstract (how attention is focused and on what)

Concrete people tend to notice and trust the facts and what is actually present and need to know enough facts before proceeding; whereas…

… Abstract people tend to make inferences and look for meaning beyond the original facts. Accordingly they enjoy brainstorming.

Realistic vs Imaginative (how information is used)

Realistic people tend to have a common-sense perspective and seek common-sense solutions, looking for efficiencies in everything they do; whereas…

… Imaginative people tend to value and enjoy creativity for its own sake, imagining models, products and theories and then looking for supporting facts.

Practical vs Conceptual (how ideas are used)

Practical people tend to want ideas to be applied valuing practical endeavours with tangible outcomes; whereas…

… Conceptual people tend to be excited by ideas themselves, enjoying intellectual, scholarly discussions and appreciate the intangible.

Experiential vs Theoretical (ways to find patterns and make meaning)

Experiential people tend to learn best by doing and need to experience something new before they believe it works; whereas…

… Theoretical people tend to learn best by placing new information in a theoretical framework and understand the world through abstract theories and principles.

Traditional vs Original (value of social context and conditions)

Traditional people tend to need change to be connected to what is known and occur gradually, wanting to do what is socially acceptable and not stand out from the crowd; whereas…

… Original people tend to devise original ways of doing things to stay motivated wanting to do what is different and to stand out from the crowd.

Et alors?

It would be easy to say that it was one pole of behaviours or the other which corresponds “best” to innovative behaviours; but in fact it is neither. Whilst no behaviour is better or worse than the other, the whole principle of type-dynamics and development is balance. In a team environment it is recommended to not have too many members with a preference for sensing or intuition as the team might collectively miss either the big picture or the details respectively in any given situation. Innovation is more likely to be found when either an individual can bridge the opposite behaviours or collectively the team can make the links. Innovation can be found when imaginative creativity can be channelled into practical reality. Creative thinking which adds value in a corporate context can be conceptual, theoretical and abstract but it also needs to be realistic, practical and concrete!

Leaders tend to have a preference for the “intuition” perceiving type. (This is the only one of the two functions and two attitudes which appears to show any such correlation.) Are leaders more innovative per se? Not necessarily, but they can lead their teams to be more innovative through achieving preference balance within their teams. On the other “side” of the preference, age is strongly correlated with “sensing”: the idea is that the underlying preferences might not change, but behaviours might evolve with a significant majority of the population exhibiting at least one “out-of-preference” behaviour. Leaders should note this if they wish to at least enhance the chance of achieving innovation in their teams: whilst they themselves might provide the intuition, they should make sure someone else provides the sensing. Age might well be another part of the team diversity equation!

Leading Across Borders

Asia’s top companies are now looking to become regional and global players and yet the biggest constraint to their internationalisation efforts could be a lack of cross-border leadership talent. A recent study by Egon Zehnder International and Singapore’s Human Capital Leadership Institute (HCLI) indicated that building a pipeline of leaders capable of succeeding across borders was one of the top priorities for Asia-based CEOs. HCLI explored further with a seminar as to how companies can better identify and develop global leaders from Asia. The results of that review have been published in HQ Asia, Issue 4, 2012, “Leading across borders: Playing global, staying Asian”.

Here’s how to lead across borders along with further implications (“et alors”).

Leading Across Borders

In describing the DNA of “successful leaders across borders”, despite the high-level of seminar participant diversity (with representatives from many countries and industries), there was a high-level of consensus that there are three key cross-border leadership characteristics, viz:

Comfort with Discomfort

Successful cross-border leaders seem to not just tolerate discomfort and ambiguity, they seem to “embrace it.” They recognise the need to act decisively without possessing complete knowledge of the situation (realising that learning from a poor decision is better than no decision at all).

Competences required: curiosity, positivity and perseverance.

Judicious Relationship Building

Successful cross-border leaders appear to be able to not only overcome cultural misunderstandings but establish trust and build alliances across cultures. Good relations are nurtured but with prudence so that they are the right relations with the right people.

Competencies required: observation, listening and learning agility.

Authentic Adaptation

Successful cross-border leaders stay true to their own cultural roots: they adapt their behaviours according to the environment but also stay authentic realising that total assimilation into another culture would rob them of their unique value-adding differentiators.

Competencies required: strong self-awareness and inter-cultural sensitivity.

Et alors?

The study concludes that “as companies are beginning to realise, cultural differences should not be managed away. Rather they should be recognised, celebrated and leveraged.” In this respect, Asian companies are not unlike companies anywhere else in the world. For organisations who happen to have a regional or global agenda, various anti-discrimination laws might mean that that cultural differences are at least “recognised” (to some extent); however there is still some work to be done to both “celebrate” and “leverage” cultural diversity.

In the wider context, this relates back to one of the three key characteristics: authentic adaptation. If an organisation is global-but-centralised, with one predominant culture, then it is likely that there will be a corporate culture of assimilation. Diversity might be recognised but at the same time expected to adapt fully to conform with the dominant culture. If that mind-set persists, then leaders will find it very hard to successfully lead across borders because they will be unable to retain their authenticity and with it their “unique value-adding differences.”

The conclusions of the review are particular pertinent when it comes to leadership development: whilst the three key characteristics are noted as essential for successful cross-border leadership, how does an organisation identify and develop such talent? The key “tips” collected from the seminar were 1/ Avoid confirmation bias by extending your selection beyond those who are immediately visible; 2/ Use intercultural diagnostics (e.g. “Cultural Intelligence Scale”, “Intercultural Awareness Profiler” and “Global Mindset Inventory”); and finally 3/ Be objective in your talent selection process – have assessment centres to determine potential and then develop accordingly.

How Leaders Accelerate Change

John Kotter, the Konosuke Matsushita Professor of Leadership, Emeritus at Harvard Business School and author of 17 books including the seminal “leading change” has just published a new article on change management which is likely to become something leaders will refer back to for years to come: “Accelerate!” HBR, November 2012. In it he not only draws on his own “leading change” material but also that of Porter, Christensen and Kahneman to propose a solution to the dilemma that companies today “must constantly seek competitive advantage without disrupting daily operations”.

His theory is that traditional hierarchies and managerial processes are very good at addressing the daily demands of running a company; however “what they do not do well is identify the most important hazards and opportunities early enough, formulate creative strategic initiatives nimbly enough, and implement them fast enough”. He therefore proposes that two systems should operate in concert: one the “rational” hierarchy; the other a “more emotional” network. The latter is based on his eight-step change method but importantly, in the network, the steps become “accelerators”.

The network ensures that the accelerators are current and always at work (rather than being used in a rigid and sequential way); and instead of change being driven by one small powerful group, the accelerators “pull in as many people as possible from throughout the organisation to form a ‘volunteer army’”. This network approach overcomes the two principal change resistors found in a hierarchy: 1/ political: managers being “loath to take chances without permission from their superiors”; and 2/ cultural: people “cling to their habits and fear loss of power and stature.”

Here’s how to accelerate change along with further implications (“et alors”):

How Leaders Accelerate Change

According to Kotter, “mounting complexity and rapid change create strategic challenges that even a souped-up hierarchy can’t handle. That’s why the dual operating system – a management-driven hierarchy working in concert with a strategic network – works so remarkably well”. The dual operating system has five principles:

Many change agents, not just a few

To move “faster and further, you need to pull more people than ever into the strategic change game”, but in a way that is economically feasible. 10% of managers and employees at any one time is proposed by Kotter as both “plenty and possible”.

A “want-to” not just a “have-to” mindset

To mobilise a “voluntary army” people have to want to be change agents and must be given permission to do so. The spirit of volunteerism (the desire to work with others for a “shared purpose”) “energises” the network.

Head and heart, not just head

In order to engage management and staff in the change network, you must “speak to their genuine desire to contribute to positive change and to take an enterprise in strategically smart ways into a better future, giving greater meaning and purpose to their work.”

More leadership, not just more management

The hierarchy needs competent management; the strategy network needs lots of leadership. It’s “all about vision, opportunity, agility, inspired action, and celebration – not project management, budget reviews, reporting relationships, compensation and accountability to a plan.”

Two systems, one organisation

The dual operating system is not two silos: “the network and the hierarchy must be inseparable with a constant flow of information and activity between them – an approach that works in part because the volunteers in the network all work within the hierarchy.”

Et alors?

It is quite possible that this “win-win” solution will become the defining hallmark of corporate strategic change initiatives from now on! Its simplicity is beguiling and it solves the ultimate change-management question: how to effect change without having to change the hierarchy itself! However, the idea of a hierarchy being staffed by managers whilst simultaneously super-motivated and highly-engaged leaders form volunteer armies with a sense of purpose to effect change highlights one key point which should not be overlooked: at least someone in the hierarchy (very near the top) must have sufficient leadership (and management) capabilities to introduce, promote and sponsor such a change-network! Without that initial “birth” of the network from the hierarchy, the hierarchy is at risk at remaining just that!

From a Human Resources point of view, what Kotter is proposing might be the new, modern and collective version of the now old-fashioned concept of individual “garage-time”? Hitherto, in an attempt to foster innovation, many companies permitted employees to spend 10-20% of their work time on individual projects on the understanding that any resulting innovations would become the property of the company. 3M had its famous “post-it” product succeed in such a way, but that is now an old story. Google recently revitalised the idea and coined the term “garage time” but insiders insist that it is no longer a genuine offer and publically the corporation no longer promotes it. When it was fashionable, it was billed as a key offer to attract, motivate and retain staff. Now perhaps organisations should offer collective “change time” for those willing to work together on strategic change initiatives?

Staying with HR, from a learning and development point of view, this is both a fantastic opportunity and a reflection of what already happens in many large organisations. As part of a leadership development course, many corporate universities offer “action-learning” projects which in a way work exactly like Kotter’s proposed “volunteer armies” not necessarily effecting change but at least studying and proposing change under the tutelage of a senior sponsor. Not only do the diverse leaders from all parts of the organisation come together and work in a team getting to learn about the challenges of change management and developing as leaders; but also, if the proposed projects are strategic in nature then the organisation itself can gain fast insight into the changes that are needed to maintain a competitive advantage without disrupting daily operations!