Entries in IMD: Tomorrow's Challenges (3)
Big Ego Leadership
An occasional series of articles from IMD professors from their series "Tomorrow's Challenges". For more info on IMD visit their website.
Leadership is a tricky concept. We each understand the word differently and have different views on what a "true leader" is. Academic research on and around leadership has been equally heterogeneous. Leaders have been studied along multiple dimensions (traits, behaviors, personal backgrounds, etc.), but this effort has yielded relatively few findings that stand the test of time and prove robust in different situations and across national and organizational cultures.
In this context, an intelligent assessment of the advantages, disadvantages and future prospects of "big ego" leadership would first require a clear definition of the term. What do we mean by big ego leadership? And what is its opposite? We read about the contrast between “big ego” leaders and humble, soft leaders referred to as “nice guys”. But does the world really need more nice leaders?
I am tempted to answer "yes" and "no". All things equal, most of us would like to work for leaders who empower their staff, welcome and even solicit their staff’s opinions, care about them as employees and as individuals and help them to develop. A touch of humility, a positive attitude towards life and people, and a good sense of humour would also be welcome.
Empirically, however, I am not aware of any evidence suggesting that such nice leaders are systematically more effective, or even more appreciated by their staff. Indeed, imagine this wonderful "nice person" also has a pathological problem with keeping track of priorities, or of listening to so many people that he or she ends up being indecisive. Or imagine this nice leader lacks business judgement, industry expertise, or any credit with his/her own bosses and hence is incapable of providing you with the support and resources you need. Do you still want this nice leader for a boss?
Leaders, especially senior leaders, have multiple roles and responsibilities. First, they have responsibilities in the realm of strategy definition: they need to understand the evolving competitive landscape (including potential new entrants), keep track of changes in technology and in customer expectations, understand the business and the dynamics of the industry and maintain a strategic perspective on things, including what kinds of alliances, expansions or divestitures might be relevant.
Second is the leader as organizational architect, designing and using the organization’s structure, systems, processes and technology to translate strategy into action and to shape the organization’s culture over time.
Last and obviously not least, leaders must mobilize the energy of several constituencies often presenting different expectations and mindsets: downward (direct reports and the larger unit), upward (one’s immediate boss, all the way to the board for CEOs) and outward (e.g., shareholders, analysts, journalists, customers, suppliers and competitors, regulatory authorities and the general public).
In real life, successful fulfilment of these roles often requires making difficult decisions that involve uncertainty and/or are bound to create winners and losers. Whether it’s shifting the organization’s strategy to de-emphasize some products/regions at the profit of others, changing the structure of the organization or the criteria that govern executive compensation, or postponing a salary rise to local employees in order to invest resources abroad, the leader faces uncertainty and potential resistance. Making these tough calls requires leaders to have the ability to filter out the noise around them in order not to be paralyzed. It requires self-confidence, sometimes boldness.
Leadership also sometimes involves believing something is possible when all around you believe it is not. Take the example of Lakshmi Mittal, who now controls the largest steel producing company in the world. In 1994, his company was number 32 in the world. Imagine how his managers felt when he encouraged them to set a stretch goal for themselves and shoot for the number one position in their industry!
Of course, only the most senior leaders get to make the more radical strategic calls. (And by the way, these leaders are rarely humble, contented, happy-go-lucky individuals. As Général de Gaulle once put it, “glory only offers itself to those who have always yearned for it”.) But all bosses face decisions that are difficult because they involve some degree of uncertainty (and hence one cannot be sure one is making the right decision) and/or entail negative consequences for some individuals, hence requiring some degree of self-confidence, independence and personal drive.
The danger, of course, is the fine line that separates hard-of-hearing from deaf, self-confident from arrogant, and performance driven from insensitive and heartless. As time passes, as leaders accumulate successes (some of which necessarily involved them being right against the advice of others), leaders tend to become increasingly insensitive to disconfirming evidence and push back from others, thus crossing the fine line.
Some individuals are, of course, more prone to crossing this line than others. I remember a senior executive who explained: “My mother repeated to me many times over the years to be nice to people on the way up because, she said, you’ll meet them again on the way down.” Also, he added: “I’ve had enough 'close shaves’ in my life, occasions where I almost made a mistake, or made a mistake but was rescued by others from its consequences, so I remember I’m not infallible.”
But even the most balanced individuals must remain mindful of the danger they face as success starts dulling their edge and lowers their sensitivity to weak, disconfirming signals. Some managers guard against this danger by surrounding themselves with a few strong individuals. For example, a senior executive explained to me that he always chooses one or two of his functional executives among managers who have had general management experience before, typically in a smaller structure. His experience was that such individuals would be more prone to identify, and then not be afraid to bring forward, potentially threatening but relevant information.
Leaders must also make sure they maintain and protect their ‘bandwidth’: i.e., their cognitive and emotional ability to process complex issues. Too many managers are so swamped and overwhelmed that, despite their good intentions to remain open, listen, learn and support, they end up becoming inflexible, emotionally detached and unreasonable in their expectations.
Loving one’s children helps one to be an effective parent, but effective parenting requires more than love. Similarly, being humble and nice helps one to relate to others and can be an asset for a leader, but being a manager/leader requires so much more than this. Leaders, especially senior leaders, must have solid egos. They must have the ability to face uncertainty and resistance, to choose courses of action that may be unpopular and sometimes to inflict pain on individuals and groups. They must also make sure they keep learning, adapting and developing, in order to remain on the right side of the fine line.
This continuous, never-ending process was exemplified by Mahatma Gandhi, who throughout his life systematically made time to review his day’s actions. His secretary, Pyarelal, reported that well into his seventies, Gandhi daily “held a silent court with himself and called himself to account for the littlest of his little acts. Nothing escaped his scrutiny. He gave himself no quarter”. This relentless drive for betterment is what learning is all about.
Rod Millar
in Leadership, Eccentric Leadership, IMD: Tomorrow's Challenges
|
Post a Comment
Driving Business Results with Your Executive Education Budget - How Action Learning Works
An occasional series of articles from IMD professors from their series "Tomorrow's Challenges". For more info on IMD visit their website.
Professor Corey Billington teaches on the Program for Executive Development and the Managing the Extended Supply Chain and Orchestrating Winning Performance programs. Co-authored by Rhoda davidson, Program Manager.
With stock markets in turbulence, oil prices creeping higher and the sub-prime crisis raging, you would be forgiven for believing that we are heading for a recession. So where will your company be cutting costs? No doubt the executive education budget will be an early casualty. But with a wiser spend of your HR investment, executive education could actually make money. In fact you should expect a 10-fold return on your investment. The answer? Action learning.
The business results of action learning have been measured as often being better than commissioning consulting reports and the leadership development better than anything ever done in the company. And just think, the expertise does not walk out of the door at the end of the project but stays around to lead the change and make sure that implementation happens.
What is Action Learning?
Action-learning has a number of characteristics:
- Emphasis on learning by doing
- Addressing complex and messy company issues
- Conducted in cross-functional teams
- Team decision required to move into action
Who does Action Learning?
More and more companies are requiring talent managers to create tangible returns on the executive education budget; returns that can be measured both in the bottom line and in terms of real organizational change. Some early enthusiastic users of action learning include Hewlett Packard, Johnson & Johnson, GE’s (Workout), Eli Lilly, Du Pont and Philips. In fact, it is more a case of which companies are not now using it? In some companies, such as Heineken, all executive education programs now have to show concrete returns.
What are the key success factors?
Two critical factors typically make or break an action-learning experience:
- Senior sponsorship – Someone has to care about the results of each project and be hungry to support well-thought-through solutions. Without a high level internal champion any team is going to struggle to make change stick.
- Intelligent facilitation – Look for a learning coach who has a broad business background and can bring in experiences from other industries. Otherwise the best you can hope for is a solution that utilizes internal best practice. Facilitation also needs to bring structured innovation processes to harness the creativity of the team and ensure that solutions are “doable” within the organization.
What sort of projects?
There is no typical “sort” of project but there are some common themes. Frequently the problem falls within the “important” but not “urgent” box. The business will not immediately go bankrupt but without an answer the company’s competitive position will inextricably erode over time. Also the problem typically involves many stakeholders. These cross-functional issues are trickier to solve outside of business-as-usual and often have no single owner; for example launching new products, entering new markets, reducing inventory and rationalizing the product portfolio. Also common are cross-geographic issues such as global product management, global procurement, global HR practices, or knowledge management.
Action-learning projects can also be organized as a series of initiatives. For instance, last year Canon Europe launched a number of action-learning projects to improve customer centricity e.g. customer listening, customer segmentation, direct customer relationship, all of which added up to making Canon Europe a more customer-focused business. And along the way, projects like these have the power to start to change organizational culture.
How does action learning develop executives? Proponents of business-driven action learning know that business results are only one component of the benefits that flow to the company. The management learning agenda is also underway providing:
- Learning that sticks and is re-used: Adults are more motivated towards learning when the learning is immediately relevant to their lives. They see for themselves what works and doesn’t work. Two years after an action learning event one participant commented that “Every week, I use something that I learned during that project.”
- Hands-on experience leading change: Future leaders get valuable experience in a supportive learning environment.
- Strong social networks and bonding between team members: A new manager at a wholesale bank wanted to strengthen her new team. By working on changing her organization’s sales model she greatly reinforced the team work and cooperation of her extended staff.
- View on what matters at an organizational level: Working with one Fast Moving Consumer Goods (FMCG) company the sponsor commented “a real benefit of the project was that our functional experts in finance and manufacturing now have a broad view of our entire business and this has greatly renewed their commitment.”
Rod Millar
in Executive Education, IMD: Tomorrow's Challenges
|
Post a Comment
The Many Components of Risk
This is the first in an occasional series of articles from IMD professors from their series "Tomorrow's Challenges". For more info on IMD visit their website.
Professor Didier Cossin is a banking and finance professor at IMD. He holds a Ph.D. in Business Economics from Harvard University (Robert C. Merton Chair) and is a former visiting scholar (Fulbright Fellow) at the Department of Economics, Massachusetts Institute of Technology (USA). He previously worked for Goldman Sachs.
The business landscape has changed. Major risks can take profitability away in a matter of quarters. Whole industries become suddenly obsolete, while new players re-define business models and make former leaders current losers. Effective risk taking is a key component to why companies have flourished while others have floundered.
Often, what separates a successful company from the rest of the pack, is the ability of executives to take smart opportune risks. Conversely, companies often fail because executives either don’t seize on risk opportunities or jump at ill-advised chances. Therefore, it is imperative to have a thorough understanding about the many facets of risk. Here are some of those components:
Predictable surprises deal with the elements in an organization that show weakness. A common business mistake is for executives to manage not being cognizant of the ramifications of these weaknesses, thus making it a significant threat. A well-publicized example is the current financial crisis affecting banks, a consequence of the excessive reliance on financial engineering and the lack of transparency where most involved had some awareness of the hubris engaged.
Macroeconomic risks carry implications not directly related to the company sector. The rising prices of oil affect not only auto manufacturers, while the cost of health care has implications for businesses beyond the pharmaceutical industry. Major shifts are coming and understanding these is essential so that they can be exploited to advantage. The newly found power of commodity players and of energy players in today’s world is reminiscent of such past shifts.
Information flows can be a risk. How information within an organization flows and the process of information dissemination poses both threats and opportunities. For example, the financial service industry’s ability to take advantage of information depends on the culture and compensation system of its organization, either favoring stars or favoring team work.
The idea of managing innovation is a complex process. Which technologies are worth the financial costs of investing to improve operations and financial results? How quickly/slowly should a company invest in innovation? These are just two questions that need to be considered when thinking about classical risk-taking. All companies need to innovate, sometimes on processes, sometimes on products and sometimes on client relationships. Innovation can be managed but the lack of such management creates risks in itself.
Private equity carries many lessons on risks, from financial markets to incentivization of management, from leverage to industry shifts, from contract structuring to excessive risk taking.
We all possess psychological biases. How one recognizes and challenges them is key to reducing negative results in personnel decisions. The overarching overconfidence of senior management, while an asset for leadership, can be a serious problem for risk assessment and risk management. Growing an awareness of our biases as well as others thus becomes an asset to steer the business through true risks.
Finally, there are governance issues which must be addressed in a proper context within corporations and NGOs. The way in which these two parties organize and structure themselves becomes a source of tension in negotiations. Different goals, cultures and organizations lead to major conflicts in negotiations and lack of awareness is a major risk to corporations.
To best handle the above components of risk, executives should adopt the following four-step process:
- Identify risks
- Assess the risks
- Manage the risks
- Design sharing strategy and structure the risks
Defining these points is the first-step in adopting state-of-the-art risk thinking.
Professor Didier Cossin present this four-step process in greater depth during the Take Risks, Get Growth! program. He also teaches on the following programs: High Performance Boards, Orchestrating Winning Performance, Strategic Finance, and the Breakthrough Program for Senior Executives.
Rod Millar
in IMD: Tomorrow's Challenges
|
Post a Comment