Archive for the ‘Leadership’ Category
- Prioritising Short Term Profits
- Short Term Thinking
- An Addiction to Core Revenue Streams
Building on a post from Gary Hamel on the Hacking HR site, the 3 barriers typically serve to undermine or stall attempts at creating adaptability and change. Let’s examine each of these three factors in turn, how they feed off each other and how they create barriers to adaptability.
Adaptability Barrier 1. Prioritising Short Term Profits
Many of the highest profile companies are also public companies and public companies have always been held accountable by their shareholders every quarter. The rise of the ‘shareholder value‘ movement, the demands of banks, investors and analysts, the increasing speed of information flows and the desire to continually improve economic performance have all played their part in creating an environment in which short term results are deemed more important that long term performance.
An article on the HBR written by Paul Ellingstad and Charmian Love called Is Collaboration the New Greenwashing? makes some good points about collaboration and the importance of ‘walking the walk’, rather than ‘talking the talk’.
The authors start by highlighting the importance of the human element of collaboration.
From the article:
Who are the players you want to work with? What does each bring to the table? Why would each player be motivated to work with the others? Figuring this out upfront is critical. The next hurdle is figuring out how people are going to work together in practice, including which tools and resources you have available to facilitate the process.
One response to the points above is that commercial interests and remuneration account for people’s motivation whilst various communication tools determine how everyone will work together in practice.
Whilst this is reasonable, I think that an important piece is missing from this equation, namely how to determine team dynamics and group relationships amongst everyone who is collaborating. Although this is arguably inferred in the section above, it’s by no means clear and explicit – there’s nothing directly actionable.
Understanding people isn’t just a HR skill for managers.
This has to be one of the oldest clichés in management and HR. I came across this gem via a post from Harold Jarche who wrote about a presentation by Danah Boyd titled Networked Norms. Whilst the major focus for Jarche and Boyd is around increasing internal and external connections for employees and businesses, I think the message about understanding people is as interesting.
From the presentation:
Understanding people isn’t just an HR skill for managers. For better or worse, in a risk economy with an increasingly interdependent global workforce, these are skills that everyday people need. Building lifelong learners means instilling curiosity, but it also means helping people recognize how important it is that they continuously surround themselves by people that they can learn from. And what this means is that people need to learn how to connect to new people on a regular basis.
Over at HBR (here), Bill Taylor hits the nail on the head regarding the current obsession with innovation. Much like the focus on engagement a couple of years ago, innovation is the current area of focus. Business leaders have co-opted the phrase to launch a number of top down programmes focusing on championing innovation. The advent of the Chief Innovation Officer and innovation teams shows an element of misunderstanding of what is actually required.
Taylor argues that the problem is one of language, the overt use of the word innovation actually hides the fact that very little innovation is actually taking place. Whereas, the companies that really are truly innovative hardly ever, if at all describe what they do as innovative. Instead it comes from passion and purpose, a need to have innovation is a by-product of curiosity
Now, I’m all for leaders who want to ramp up the energy of their colleagues to take more chances and challenge conventional wisdom. But what strikes me about the organizations I’ve encountered that are genuinely innovative is that they rarely use the language of innovation to describe what they do or why they do it.
For me, this comes down to culture, if your organisation doesn’t have a culture of innovation it is almost impossible to artificially create.
A great post by Fred Wilson (here) looks at the role culture and fit play in growing companies. Rather than the quality of the products or services a company provides being the arbiter of performance, Wilson argues that it is the intangibles within the organisation that ultimately distinguish between success and failure. What do we mean when we talk about fit? Essentially it comes down to relationships, does person A provide a good fit for a team and will they be able to form strong, collaborative relationships with new colleagues, essentially strengthening the team. For those looking for a definition of culture, I’ve yet to find anything better than “It’s the way we do things round here”. I think that these aspects of organisational development are both hugely under appreciated by the majority, Fred Wilson does seem to be someone who appreciates the significance of behaviour, relationships and culture;
And the people side of the business is harder and way more complicated than building a product is. You have to start with culture, values, and a committment to creating a fantastic workplace. You can’t fake these things. They have to come from the top…If everyone is a mercenary and there is no shared culture and values, the team will blow apart. But if there is a meaningful culture that the entire team buys into, the team will stick together, double down, and get through those challenging situations.
As individuals and even from an organisational perspective we tend to fixate on what we can most easily influence and change, we are naturally drawn to the low hanging fruit, the activities that promise the most visible return for the least effort. With growing companies this leads to a focus on the tangible aspects of business development, ie products, systems and processes. It is no surprise that these complex, often hidden people problems tend to be swept under the carpet.
Even if you do get a handle on culture in the early stages, inevitably as the company grows this is likely to change and morph so what may have worked in one instance may not work in another. I think that many leaders get lulled into a false sense of security, particularly if they get detached from what is happening lower down the ranks and fail to grasp the ephemeral nature of culture. Unfortunately, by the time things start to go wrong, it is usually too late.
Luckily, Wilson’s view is becoming more mainstream and there are now tools such as 4G that are beginning to shed light on these very thorny problems and let both new and established companies get a more systematic grasp of both culture and fit.
Keith McGregor from Personnel Psychology NZ calls out some of the myths and mysteries around training and development and the prospect of realising change, or not…
Over the years we have run many management training courses and get wonderful feedback (causes a problem trying to get one’s head out of the door). We go back 6 months later and ask the manager how its going and they say “Great”. We ask the staff how its going and they say “How is what going?”. When we ask about the management training they say “Oh, so that where he was for a couple of days”. There may have been a brief flurry of activity and then normality prevailed. How many us can honestly say we have seen a permanent, positive change in managerial behaviour as a result of a management course? This is incredibly ego-deflating and a seeming waste of everybody’s time and money and yet the need is as strong as ever – in virtually every organisation there are people screaming out for ideas on how to manage difficult staff and deal with complex personnel issues.
Via the IONET Google Group
Over at Boing Boing (here), Maggie Koerth-Baker points us in the direction of an interesting question posted on Quora (here), where someone asks “What is it like to have an understanding of very advanced mathematics?” In response, someone posted this enlightening response;
You are comfortable with feeling like you have no deep understanding of the problem you are studying. Indeed, when you do have a deep understanding, you have solved the problem and it is time to do something else. This makes the total time you spend in life reveling in your mastery of something quite brief. One of the main skills of research scientists of any type is knowing how to work comfortably and productively in a state of confusion.
For many of us, our natural inclination is to pull in the opposite direction and actively seek certainty and operate within a world of known parameters and possibilities. Arguably, forcing oneself to become more comfortable and willing to embrace uncertainty and the question the limits of ones understanding reprensents a major step in being able to look beyond the obvious. By acknowledging the complexity and deep interrelatedness of many issues facing organisations, new insight and dare I say it, greater innovation may be achievable. However, I suspect that for many managers who have spent a career trumpeting their experience and achievements, this is a step too far.
A couple of articles dropped into the inbox last week that seem to confirm that despite decades of experience, organisations are still struggling to unlock the value in mergers and acquisitions. First up, a McKinsey survey (here), tells us that despite an uncertain economic outlook, M&A is still prominent in the minds of senior executives:
nearly half of the respondents expect their companies to explore more deals in the next 12 months than in the past 12, and small majorities expect them to start or complete at least as many, if not more.2 In addition, nearly half of the respondents report that their companies are looking outside the core business for new ways to grow.
No doubt, this is good news for nervous corporate financiers in investment banks worried about a diminishing bonus pool. However, shareholders and other stakeholders may not view this survey with quite as much relish. This is because within the survey there are clear indications that the ability and vision to successfully execute the basics is still lacking in even the largest companies:
The results also indicate that many companies still need to build critical capabilities, including integration planning, responding to cultural issues, and establishing standardized deal teams. That effort may well be complicated by a striking number of areas in which CFOs’ opinions differ from those of other C-level executives on topics as basic as which deals to do and what capabilities a company has.
The basic question this prompts is that with so much economic uncertainty, why would organisations appear to be so bullish to take risks on transactions that are notoriously variable in outcome? Personally, I think that this comes down to skewed perceptions. M&A is still seen to be a quick fix, an additive process. However, as with many things, people tend to oversimplify the complexities of each situation. Rather than two plus two equalling four, in many transactions two plus two has gone on to equal three, or even worse. In many ways these acquisitions are the ultimate example of the role of unintended consequences.
Clearly, a more subtle and nuanced approach to M&A is required. This has to do with having a greater understanding and appreciation of the intangible aspects of each transction. This requirement is highlighted over at Strategy + Business (here) in an article by Barry Jaruzelski, Marian Mueller, and Peter Conway who list some great points about common fallacies and misconceptions about the way to manage the acquisition process. The broad theme of this is that organisations fail to appreciate that each deal is unique, requiring a tailored approach to the key factors. This combined with an overestimation of the organisation’s own capabilities reduces the chances of a successful outcome.
Whilst the mechanics of M&A are well understood, the existence of these articles and many others like them show that organisations still struggle with the more intangible side of transactions, namely the people and cultural issues. Maybe this blinkered approach has something to do with the people in charge of acquisitions? Arguably, the managers in charge of acquisitions are too keen to focus on what is certain and easily quantified. When looking at an acquisition the tendency to focus on the black and white numbers of the deal is a common error. This is touched on in the S+B article:
Many executives assume that if the financial arrangements are secure, the rest of the deal will follow. But all deals have two other significant factors to consider that are often not accounted for in the numbers: the human element and the need to develop the capabilities required to succeed in the new or merged business. This is especially important if the new business model is different from the company’s established model. A comprehensive due diligence process should take into account both the cultural and capability aspects of the deal.
This transactional viewpoint dramatically underestimates the complexity of M&A integration. Organisations by their nature are hugely complex, I’m not talking about the systems and processes that need integrating, this is complicated but not complex but the act of integrating two distinct organisations with different values, culture, behaviour and relationships. Unfortunately use of the standard organisational chart to understand the entity you are trying to integrate is a useless exercise in hubris. By looking beyond that which is most obvious acquirers need to understand the network, culture and relationships they are buying as well as the more tangible assets. For example talent drain is a key issue with many acquisitions, yet it is simply not enough to look to identify the star performers or “talent” in the target company without an appreciation for the networks and context that enable these people to perform.
Acquisitions need a fresh pair of eyes and need to be driven by people with a different outlook. The fact that we are still seeing articles like the one at S+B is a clear indication of this. Instead of the traditional M&A leaders, the finance and operations people, how about letting acquisitions be managed or designed by people who understand and are comfortable with the language of complexity? This could include people from a variety of disparate fields such as network scientists, anthropologists, brand experts and psychologists. As well as limiting the downside of transactions, a more diverse approach would also increase the upside by helping understand the possibilities of greater integration and collaboration.
My previous post (here) commenting on Bill Taylor’s critique of the role of industry experience on decision making and innovation got me thinking about the systemic barriers to innovation that exist in many organisations. Taylor argues that by framing decision making on historical information, industry benchmarks and the actions of competitors, leaders are unwittingly cutting themselves off from a deep pool of innovation. He also cites two good examples of organisations (here) that have broadened their scope to identify new approaches and innovation that were developed by examining unconnected industries.
In addition to being a problem of attitude and perspective amongst leaders, I would also argue that the systems and processes that organisations rely on for their day to day also hinder the development of new ideas and innovation. In other words an inability to innovate is structural as well as psychological.
Take HR for example. HR is the ultimate experience counts function. In a desire to feed back to the business HR hoovers up all the tangible data it can, performance metrics, targets, KPI’s and benchmarks. However by trying to be seen as a valuable source of key organisational information and by extension a key sounding board, HR is doing itself a massive disservice. The result of this datacentric approach is that problems are viewed and decisions made within a highly restrictive framework. Taking this approach not only limits the possibilities of new ideas and innovation permeating the organisation, there is also little evidence that these measurements actually contribute to existing productivity.
Well, what can HR do? Allow me to take a moment to envisage what could be possible. To start, let’s follow Taylor’s advice and get people in to run HR who are not necessarily HR professionals. This would at least help provide some new perspective and as more and more of standard HR practice is either automated or outsourced an understanding of the mechanics of HR becomes less important.
Above all in order to address the systemic obstacles the new HR function needs to focus on the intangibles rather than the hard data approach currently used. HR needs to develop expertise around the idea of fit, the intersection of behaviour, relationships and culture. This clearly requires a radical change in outlook and to do this HR needs a detailed understanding of culture throughout the organisation, embrace social networks and become the disrupter in chief. Encourage cross fertilisation of ideas and move people between groups and functions. HR needs to act as the relationship architect within the organisation, not only identifying areas of potential collaboration but also helping line managers best manage and engage their teams.
Not to be too down on the HR department, it is important to state that HR is not to blame for the current situation, it merely reflects the underlying desire for certainty, predictability and simplicity of senior management, this attitude is deeply embedded in our organisations and their systems. In theory HR should be front and centre of the drive for increased innovation, however in order to achieve this a fundamental change is required in both attitude and systems.
Following on from yesterday’s post about leadership failure and the continued reliance on past experience as an indicator of leadership potential (here). The ever thought provoking Bill Taylor posted a blog (here) on HBR questioning the value or relevance of industry knowledge when it comes to innovation. Taylor argues that in many cases, deep knowledge or expertise of an industry can be an impediment to clear thinking and innovation.
the most effective leaders demonstrate a capacity for vuja dé. We’ve all experienced déjà vu — looking at an unfamiliar situation and feeling like you’ve seen it before. Vuja dé is the flip side of that — looking at a familiar situation (a field you’ve worked in for decades, products you’ve worked on for years) as if you’ve never seen it before, and, with that fresh line of sight, developing a distinctive point of view on the future. If you believe, as I do, that what you see shapes how you change, then the question for change-minded leaders becomes: How do you look at your organization and your field as if you are seeing them for the first time?
You can’t let what you know limit what you can imagine. As you try to do something special, exciting, important in your work, as you work hard to devise creative solutions to stubborn problems, don’t just look to other organizations in your field (or to your past successes) for ideas and practices. Look to great organizations in all sorts of unrelated fields to see what works for them — and how you can apply their ideas to your problems.
This makes a lot of sense, for example on a personal level when we go to someone for some specific advice, it is often with a view to understand the dangers or risks involved in a particular course of action i.e. a reason not to do something. For organisations this calls into question many innovation programs that are driven from the top down. Innovation is not something that can be conjoured up from thin air within the constraint of existing beliefs and assumptions. The harsh reality for many organisations is that to be truly innovative you need to reject or turn your back on a comfortable and easily referenceable view of the world.
Above all, this approach requires a different mindset, one that is willing to challenge and question underlying assumptions and beliefs. To compound this difficulty, the higher up the corporate ladder you go the harder this becomes. Studies have shown that the more successful and senior we become, the more deeply embedded are our underlying beliefs and behaviours and that these are based on approaches that are successful. In other words thinking and behaviours that have delivered success in the past are the hardest ones to abandon or question. Furthermore, it is a natural trait to look to reference what is familiar and can be directly compared to our current circumstances. However, as the examples cited by Taylor attest, forcing oneself to challenge, question and confront basic assumptions and look beyond most obvious can help unlock the possibilities of true innovation.