Making work meaningful: A leader’s guide

Posted in Aktuellt, Leadership / Ledarskap on December 18th, 2018 by admin

People who find meaning at work are happier, more productive, and more engaged. Four practical interventions can help make the search more likely to succeed.

By now, it is well understood that people who believe their job has meaning and a broader purpose are more likely to work harder, take on challenging or unpopular tasks, and collaborate effectively. Research repeatedly shows that people deliver their best effort and ideas when they feel they are part of something larger than the pursuit of a paycheck. (For more, see the companion article, “The link between meaning and organizational health.”)

Making work meaningful: A leader’s guide
Most business leaders know this. They take pains to broadcast the company’s strategy to employees. They say they really want employees to know that the organization has a higher purpose. And yet many of these messages aren’t getting through: in one survey of senior executives around the world, only 38 percent of leaders said that their staff had a clear understanding of the organization’s purpose and commitment to its core values and beliefs. US and global Gallup polls confirm this, finding that about 70 percent of employees are not “involved in, enthusiastic about, or committed to their work.” Another study showed that nearly nine out of ten American workers believe they do not contribute to their full potential, because they don’t feel excited about their work.3
At a time when many companies are engineering jarring transformational changes to become more agile, digitally enabled, and proactive competitors, it is more important than ever that employees find meaning in their work. Traditional rewards systems and career ladders are disappearing, so workers need new reasons to believe in their companies.

We have found four organizational-design interventions that can help. They are simple, inexpensive, practical, and local and can help employees at any level of the organization. This kind of straightforward practice is often overlooked in ambitious corporate initiatives. But it is critical for any company hoping to create an environment where organizational change is personal and where innovation becomes a bottom-up process of purposeful actions initiated by employees themselves.

1. Reduce anonymity
Humans are collaborators. We have evolved that way, understanding that we can accomplish more by cooperating face-to-face with others. Modern organizations, with their siloed workplaces and increasingly digitized operations, can foster separation and anonymity. But perceptive leaders can find ways to establish deeper connections between any worker and his or her customers.

Consider a cafeteria experiment conducted by Ryan Buell, an associate professor at Harvard Business School, and his coauthors Tami Kim and Chia-Jung Tsay. In many cafeterias, cooks and diners do not see each other, since waiters serve as the intermediary between the two. Buell changed that dynamic by setting up a video feed from the grill station to an iPad in the kitchen. There was no sound and no interaction, but the chefs could see who was ordering the food that they would prepare.

Immediately, the cooks started to work differently. For example, they began freshly preparing eggs for each customer, instead of grilling several eggs in advance and plating those when ordered. Simply seeing their customer changed everything. In short order (ahem), employee satisfaction soared. Better still, customer satisfaction went up 14.4 percent, according to Buell. Even though the chefs went unseen, the video feed had created a connection that added meaning to their work.

Alistair Spalding, artistic director and chief executive of Sadler’s Wells Theatre, in London, understands the value of direct contact.5 About ten years ago, Spalding realized that he had to improve morale at the venerable dance venue—in particular, among its supporting staff of marketers, stagehands, and administrators, as well as others. The theater had endured a history of strikes, and the prep work for many shows lacked the precision and attention to detail that Spalding craved.

Spalding saw that the artists who performed at Sadler’s Wells were essentially anonymous to the staff. The employees did their work during the day, the artists showed up at night to perform, and the groups never connected. Unsurprisingly, the employees demonstrated relatively little interest in the theater’s overarching intent to become the center of innovation in dance. Indeed, the staff tended to have a somewhat negative attitude toward the artists.

Spalding decided to combat this by launching an “associate artists” program. Artists who performed at the theater regularly would get free office space at the theater and access to its rehearsal studios and cafeteria. Spalding went so far as to position Sadler’s Wells as a center of innovation, where artists could meet, practice, dream big, or just hang out.

This was a great boon to the artists. But the employees benefited as well. As the theater became more of a home to a community of artists, the artists became much less anonymous to the employees. Gradually, Spalding began noticing proactive changes and improvements in the performance of the employees. For example, lighting staffers became more involved in the selection of lamps for performances, bringing a level of technical expertise that had been lacking before. Similarly, the cafeteria staff became more engaged as they saw how their work contributed to a dynamic atmosphere that, in turn, encouraged artists to spend time at the theater. The marketing and sales side benefited as well, and over the next four years, attendance at Sadler’s Wells grew 25 percent, to 470,000 visitors a year.

Spalding believes that none of this would have occurred without the associate-artist program. “I thought that it was important that it wasn’t just administrators around,” he said. “That there are actual living artists in the building reminds everyone of what we’re doing. The whole organization is involved in the work of artists.” By replacing anonymity with familiarity, Spalding had altered attitudes and behavior, laying the groundwork for success.

2. Help people grasp the impact of their work on the customer
Many companies give workers data about their customers. But giving employees a clear sense of how their work directly affects specific customers is more profound.

Wharton School professor Adam Grant conducted a series of experiments with university fund-raisers. Fund-raising is a tough job; many people do not appreciate unsolicited calls, and yet the typical fund-raiser must make numerous calls before receiving a pledge. Most employers pay for performance: a fund-raiser’s remuneration depends almost completely on the donations secured. But the job is so monotonous and taxing that productivity and morale are generally quite low.

Grant conducted two experiments. In one, he arranged for fund-raisers to hear a senior executive and a board member of a university speak about the significance of education in society and the importance of the fund-raisers’ work to scholarship recipients. Nothing came of these supposedly motivational speeches. Productivity didn’t improve at all.

In the other experiment, Grant arranged for fund-raisers to meet a student who had received a scholarship. The student explained that the scholarship had changed his life, allowing him to attend university and study abroad. By conversing with the student, the fund-raisers saw the impact of their work firsthand.

After meeting the student, fund-raisers placed many more calls than before and secured larger donations per call. Research shows that the person on the other end of the line can sense the caller’s enthusiasm. The fund-raisers’ new attitude made their phone conversations more engaging, convincing, and successful. In the two months after meeting the student, fund-raisers raised 295 percent more than they had in the two months before—an average of $9,704.58 versus $2,459.44.

Helping people understand the impact of their work does not have to be complicated or expensive. It should be personal, however. These kinds of firsthand interactions should be built into an organization systematically. One useful practice is to insist that all employees—whether they are customer facing or not—make regular on-site visits to the end users of the company’s products.

That is what Dorothee Ritz, Microsoft’s general manager for Austria, did with her Vienna-based employees. Ritz insisted that everyone see for themselves how people were implementing the company’s products and services. One manager spent several days out on the street with police officers to learn how they use remote data. Another manager spent two days in a hospital to see the impact of going paperless. Soon, Ritz noticed, employees were suggesting more pointed solutions for customers based on their on-site visits. According to Ritz, this simple practice gives employees a better sense of the real value of their work.

3. Notice, recognize, and reward good work
Employees want to know that their work is noticed and valued. Smart companies find meaningful ways to do this without doling out raises and bonuses.

Wikipedia relies heavily on unpaid editors who volunteer to create and correct its pages. Retaining these editors is key to the success of the company. To further this effort, the company gave UCLA Anderson assistant professor Jana Gallus permission to randomly select a number of people from a group of 4,000 eligible editors to receive an award (the remainder served as the study’s control group).
The Wikipedia award had two components: an electronic image posted on the editor’s personal page and recognition on an official Wikipedia page. Since editors use pseudonyms, the award conferred no direct personal gains in a traditional sense. Nevertheless, this symbolic award spurred productivity (up by 13 percent over 11 months) and retention (up 20 percent). Many of the award-winning editors started taking on more ambitious tasks, such as writing articles from scratch, while others tackled critical behind-the-scenes coordination and maintenance. The editors also became more engaged in helping others: reward recipients were twice as likely as other editors to answer requests for help from community members.

“Thank you very much,” one editor posted on the award’s public discussion page. “I have spent much time with Wikipedia. The recognition . . . makes me very happy.” Another wrote, “I feel very honored to receive this award. It makes me realize that contributions, even if they may be small, are recognized here.”

Put simply, work becomes more meaningful when people know that their actions are noticed and appreciated. The recognition doesn’t necessarily need to be public, as Bryan Stroube from the London Business School and Robert Vesco from Bloomberg discovered when they studied the comments posted on the website Hacker News.

The site is part of Y Combinator, which provides seed money to start-ups in exchange for an equity stake. The company built Hacker News for entrepreneurs to post ideas for start-ups and get reactions from a relevant community. All users, for example, can “like” a particular comment when they value it. At one point in its history, Hacker News made the number of likes that someone had accumulated visible to the community, but at another time, it showed the number only to the individual commenter. By comparing the public and private periods, Stroube and Vesco showed that publicizing the numbers of likes did not increase useful comments across the system. The number alone gave commenters a sense that their feedback was being noticed and appreciated.

Many companies can create an internal network where employees can “like” the work of colleagues. But the personal touch is important as well. Good leaders make constructive praise a regular part of their management routine.

4. Connect daily work to a grander goal
Our first three suggestions offer simple ways to help employees feel that their work is valuable. Our fourth suggestion offers a concrete way to help employees understand how their daily responsibilities tie in to a higher meaning, to a purpose larger than themselves.

Almost every company says they would like to do this, but few succeed. Business leaders regularly communicate their company’s higher purpose in a vision or mission statement and try to reinforce it at conferences and workshops.

While these efforts are well intended, few have a positive or lasting impact. Sometimes, the problem is the vision itself. Gerard Langeler, a cofounder of Mentor Graphics, said that his own company fell into such a “vision trap” when it defined its vision as “changing the way the world designs,” an expression of purpose that was too grand and too detached from daily tasks.10 Sometimes, the problem is the way that the vision is communicated. Remember the fund-raiser experiment? When leaders try to impose a vision, employees tend not to take the message to heart. Employees need to make the connection from their work to the company vision themselves.

To help leaders stimulate this bottom-up process, we recommend a simple intervention technique based on the work of Antonio Freitas and his colleagues from the State University of New York and New York University.11 The exercise pushes people to think about their work in an increasingly high-level way and can be exercised one-on-one, during team meetings, or in internal workshops.

Here is how it works. Imagine a manager at XYZ Technology who regularly fills out performance-evaluation forms. The exercise begins by asking the manager, “Why are you completing these forms?” Perhaps she would answer, “In order to give my team members feedback about their performance and to help them improve.” A second question builds on her answer: “Why do you want to help them improve?” She might say, “so that my team can develop better enterprise software.” A third repetition of the question builds on the second answer: “Why do you want to build better enterprise software?” She might answer, “to improve the efficiency of our customers.” A fourth and final question gets to the essence of her work: “And why do you want customers to be more efficient?” The response might be, “so they are free to be their most creative and productive selves.” That is a grand goal—indeed, the kind of thing a company might say in its mission statement. As each of her answers builds on her previous ones, the manager comes to align her task with the organization’s loftiest goals.

Wharton School’s Andrew Carton examined how a similar exercise worked at NASA during the 1960s, when the agency was tasked with putting an astronaut on the moon. In four steps, employees discovered a meaningful connection between their work and NASA’s ultimate aspirations. These steps linked their daily tasks (“I am building electrical circuits”) to NASA’s objective (“I am putting a man on the moon”) and even to a greater purpose (“I am advancing science”). According to Carton, the personal connection to a meaningful common goal boosted employees’ “coordination and collective enthusiasm.” As one former NASA employee recalled, “We didn’t want to go home at night. We just wanted to keep going, and we couldn’t wait to get up and get back to work in the morning. The clarity of NASA’s strategic objective helps remind managers of another important point about meaning: namely, that employees must see clearly how their organization is trying to contribute to a higher purpose, in the form of concrete strategic intent.
Research confirms that people are more motivated and persistent when they think about why they are doing something (for instance, losing weight to become healthy) instead of what they are doing (eating a salad). After the fund-raisers met the student, they focused less on what they were doing (making unpleasant phone calls) and more on why (helping students fund their college education). When people understand and believe in the reasons behind their actions, they display greater resilience and stamina.

The idea that employees perform better when they feel a deep connection to their work is a fundamental part of many corporate reorganizations, where agile systems and other efforts are designed to tap a company’s greatest asset: the personal creativity of its employees. But it is not enough to institute systemic changes and hope that employees will rise to the task. Instead, senior executives should take the sorts of practical steps that help employees in their search for meaning at work. When successful, these efforts provide a road map for aligning the personal aspirations of employees with the most important goals of the organization—a combination that benefits everyone.

Source:, October 2018
About the authors: Dan Cable is a professor of organizational behavior at the London Business School and the author of Alive at Work: The Neuroscience of Helping Your People Love What They Do (Harvard Business Review Press, 2018). Freek Vermeulen is the chair of strategy and entrepreneurship faculty at the London Business School and the author of Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business (Harvard Business Review Press, 2017).

Stressignalerna du ska se upp med

Posted in Aktuellt, Allmänt, Leadership / Ledarskap on December 17th, 2018 by admin

Börjar du sova dåligt, får huvudvärk eller koncentrationsproblem så ska du se upp. Då ligger du i riskzonen för att drabbas av utmattning, varnar experten.
En av fem manliga ekonomer har under det senast året drabbats av arbetsrelaterade besvär. Bland kvinnorna är siffran högre, 29 procent av kvinnorna drabbade under det senaste året. Generellt upplever fler kvinnor än män besvär till följd av arbetet. Den vanligaste formen beskrivs som trötthet.

Läs också: Ökat ansvar för cheferna – anmälningarna om stress ökar
– De allra flesta blir nog trötta av att jobba. Så i sig är trötthet inte alarmerade. Det är när det leder vidare till att man blir utmattad som det blir ett problem, säger psykolog och psykoterapeut Åsa Kruse.

Hon jobbar på Feelgood Företagshälsa och har skrivit boken ”Tillbaka till jobbet”.

För personer som drabbats av utmattningssyndrom kan det ta långt tid innan man orkar ta sig tillbaka till arbetet. Åsa Kruse nämner några varningssignaler som man bör se upp med för att inte drabbas.

– Var uppmärksam på om man märker att något är förändrat. Om man börjar sova sämre, får huvudvärk varje dag, får svårt att återhämta sig eller får koncentrationsproblem som man inte haft tidigare. Om man märker att man inte tål saker på samma sätt, varnar Åsa Kruse.

En ny rapport från Arbetsmiljöverket visar att nästan två tredjedelar av de som svarat på Arbetsmiljöverkets undersökning och som led av arbetsorsakade besvär upplevde en fysisk smärta eller värk.

– Jag tycker resultaten är oroväckande, säger Ulrika Wallén, utredare på fackförbundet Civilekonomerna.

Arbetsmiljöverkets rapport visar att personer i åldrarna 30-49 år har mer besvär av oro/ångest, depression, minnes- och koncentrationsproblem, huvudvärk och sömnstörningar än sina äldre och yngre kollegor. I den här åldern gör många karriär – och bildar samtidigt familj.
– Det är viktigt att hitta utrymme och balans mellan yrkesarbete, hemarbete och fritid. Det är också viktigt med återhämtning, säger Ulrika Wallén.

Inom finans- och försäkringssektorn, samt bland ekonomer är det främst kvinnor som drabbas av arbetsrelaterade besvär. I yrkesgruppen där ekonomer ingår var 29 procent av kvinnorna drabbade under det senaste året mot 18 procent av männen. Inom finans- och försäkringssektorn var skillnaden 22 procent av kvinnorna jämfört med 13 procent av männen.
– Jämställdhet börjar redan på hemmaplan och det tycks som att den inte har fått fullt genomslag här, kommenterar Ulrika Wallén.

I en undersökning som Civilekonomerna gjort tillsammans med forskare vid Högskolan Kristianstad och Linköpings universitet går det att dra slutsatsen att civilekonomer generellt trivs med sitt jobb och sin livssituation, men att den psykiska ohälsan vacklar.

Resultaten är inte oväntade. Psykisk ohälsa är numera ett folkhälsoproblem i Sverige. Enligt Försäkringskassan tillhör psykiska sjukdomar den vanligaste sjukskrivningsorsaken i landet.

Hur kan man förhindra att fler drabbas?
– Vi inom Civilekonomerna anser att ledarskapet är avgörande för såväl den fysiska som psykiska arbetsmiljön, säger Ulrika Wallén och förklarar:

– Man måste leda och styra individer, och olika individer behöver olika typer av ledarskap. Det gäller också att, som medarbetare, kunna leda sig själv och sätta gränser.

Åsa Kruses bok ”Tilllbaka till jobbet” ger råd och tips om hur man kan göra för att lyckas komma tillbaka till jobbet efter utmattningssyndrom.

Går det att bli frisk igen?
– Får man stöd och hjälp kan man komma tillbaka. Men det räcker inte att vila upp sig och sedan gå tillbaka till samma situation, säger Åsa Kruse.

Det är viktigt att arbetsgivaren ger aktivt stöd och engagemang under hela rehabiliteringen, enligt Åsa Kruse. Samtidigt kan den drabbade behöva göra egna förändringar, som att lära sig att minska kraven.
– Man behöver ofta erbjudas behandling av någon form, till exempel hos psykolog via företagshälsovården eller primärvården.

Arbetsmiljöverket rapport ”Arbetsorsakade besvär 2018” bygger på intervjuer med 12 000 sysselsatta personer.

Kä, 12 december 2018
Av: Matilda Nilsson

A survival guide for leaders

Posted in Leadership / Ledarskap on December 10th, 2018 by admin

Think of the many top executives in recent years who, sometimes after long periods of considerable success, have crashed and burned. Or think of individuals you have known in less prominent positions, perhaps people spearheading significant change initiatives in their organizations, who have suddenly found themselves out of a job. Think about yourself: In exercising leadership, have you ever been removed or pushed aside?

Let’s face it, to lead is to live dangerously. While leadership is often depicted as an exciting and glamorous endeavor, one in which you inspire others to follow you through good times and bad, such a portrayal ignores leadership’s dark side: the inevitable attempts to take you out of the game.

Those attempts are sometimes justified. People in top positions must often pay the price for a flawed strategy or a series of bad decisions. But frequently, something more is at work. We’re not talking here about conventional office politics; we’re talking about the high-stake risks you face whenever you try to lead an organization through difficult but necessary change. The risks during such times are especially high because change that truly transforms an organization, be it a multibillion-dollar company or a ten-person sales team, demands that people give up things they hold dear: daily habits, loyalties, ways of thinking. In return for these sacrifices, they may be offered nothing more than the possibility of a better future.

We refer to this kind of wrenching organizational transformation as “adaptive change,” something very different from the “technical change” that occupies people in positions of authority on a regular basis. Technical problems, while often challenging, can be solved applying existing know-how and the organization’s current problem-solving processes. Adaptive problems resist these kinds of solutions because they require individuals throughout the organization to alter their ways; as the people themselves are the problem, the solution lies with them. (See the sidebar “Adaptive Versus Technical Change: Whose Problem Is It?”) Responding to an adaptive challenge with a technical fix may have some short-term appeal. But to make real progress, sooner or later those who lead must ask themselves and the people in the organization to face a set of deeper issues—and to accept a solution that may require turning part or all of the organization upside down.

Adaptive Versus Technical Change: Whose Problem Is It?

It is at this point that danger lurks. And most people who lead in such a situation—swept up in the action, championing a cause they believe in—are caught unawares. Over and over again, we have seen courageous souls blissfully ignorant of an approaching threat until it was too late to respond.

Executives leading difficult change initiatives are often blissfully ignorant of an approaching threat until it is too late to respond.

The hazard can take numerous forms. You may be attacked directly in an attempt to shift the debate to your character and style and avoid discussion of your initiative. You may be marginalized, forced into the position of becoming so identified with one issue that your broad authority is undermined. You may be seduced by your supporters and, fearful of losing their approval and affection, fail to demand they make the sacrifices needed for the initiative to succeed. You may be diverted from your goal by people overwhelming you with the day-to-day details of carrying it out, keeping you busy and preoccupied.

Each one of these thwarting tactics—whether done consciously or not—grows out of people’s aversion to the organizational disequilibrium created by your initiative. By attempting to undercut you, people strive to restore order, maintain what is familiar to them, and protect themselves from the pains of adaptive change. They want to be comfortable again, and you’re in the way.

So how do you protect yourself? Over a combined 50 years of teaching and consulting, we have asked ourselves that question time and again—usually while watching top-notch and well-intentioned folks get taken out of the game. On occasion, the question has become painfully personal; we as individuals have been knocked off course or out of the action more than once in our own leadership efforts. So we are offering what we hope are some pragmatic answers that grow out of these observations and experiences. We should note that while our advice clearly applies to senior executives, it also applies to people trying to lead change initiatives from positions of little or no formal organizational authority.
This “survival guide” has two main parts. The first looks outward, offering tactical advice about relating to your organization and the people in it. It is designed to protect you from those trying to push you aside before you complete your initiative. The second looks inward, focusing on your own human needs and vulnerabilities. It is designed to keep you from bringing yourself down.

A Hostile Environment
Leading major organizational change often involves radically reconfiguring a complex network of people, tasks, and institutions that have achieved a kind of modus vivendi, no matter how dysfunctional it appears to you. When the status quo is upset, people feel a sense of profound loss and dashed expectations. They may go through a period of feeling incompetent or disloyal. It’s no wonder they resist the change or try to eliminate its visible agent. We offer here a number of techniques—relatively straightforward in concept but difficult to execute—for minimizing these external threats.

Operate in and above the fray.
The ability to maintain perspective in the midst of action is critical to lowering resistance. Any military officer knows the importance of maintaining the capacity for reflection, especially in the “fog of war.” Great athletes must simultaneously play the game and observe it as a whole. We call this skill “getting off the dance floor and going to the balcony,” an image that captures the mental activity of stepping back from the action and asking, “What’s really going on here?”

Leadership is an improvisational art. You may be guided by an overarching vision, clear values, and a strategic plan, but what you actually do from moment to moment cannot be scripted. You must respond as events unfold. To use our metaphor, you have to move back and forth from the balcony to the dance floor, over and over again throughout the days, weeks, months, and years. While today’s plan may make sense now, tomorrow you’ll discover the unanticipated effects of today’s actions and have to adjust accordingly. Sustaining good leadership, then, requires first and foremost the capacity to see what is happening to you and your initiative as it is happening and to understand how today’s turns in the road will affect tomorrow’s plans.

But taking a balcony perspective is extremely tough to do when you’re fiercely engaged down below, being pushed and pulled by the events and people around you—and doing some pushing and pulling of your own. Even if you are able to break away, the practice of stepping back and seeing the big picture is complicated by several factors. For example, when you get some distance, you still must accurately interpret what you see and hear. This is easier said than done. In an attempt to avoid difficult change, people will naturally, even unconsciously, defend their habits and ways of thinking. As you seek input from a broad range of people, you’ll constantly need to be aware of these hidden agendas. You’ll also need to observe your own actions; seeing yourself objectively as you look down from the balcony is perhaps the hardest task of all.

Fortunately, you can learn to be both an observer and a participant at the same time. When you are sitting in a meeting, practice by watching what is happening while it is happening—even as you are part of what is happening. Observe the relationships and see how people’s attention to one another can vary: supporting, thwarting, or listening. Watch people’s body language. When you make a point, resist the instinct to stay perched on the edge of your seat, ready to defend what you said. A technique as simple as pushing your chair a few inches away from the table after you speak may provide the literal as well as metaphorical distance you need to become an observer.

Court the uncommitted.
It’s tempting to go it alone when leading a change initiative. There’s no one to dilute your ideas or share the glory, and it’s often just plain exciting. It’s also foolish. You need to recruit partners, people who can help protect you from attacks and who can point out potentially fatal flaws in your strategy or initiative. Moreover, you are far less vulnerable when you are out on the point with a bunch of folks rather than alone. You also need to keep the opposition close. Knowing what your opponents are thinking can help you challenge them more effectively and thwart their attempts to upset your agenda—or allow you to borrow ideas that will improve your initiative. Have coffee once a week with the person most dedicated to seeing you fail.

But while relationships with allies and opponents are essential, the people who will determine your success are often those in the middle, the uncommitted who nonetheless are wary of your plans. They have no substantive stake in your initiative, but they do have a stake in the comfort, stability, and security of the status quo. They’ve seen change agents come and go, and they know that your initiative will disrupt their lives and make their futures uncertain. You want to be sure that this general uneasiness doesn’t evolve into a move to push you aside.
These people will need to see that your intentions are serious—for example, that you are willing to let go of those who can’t make the changes your initiative requires. But people must also see that you understand the loss you are asking them to accept. You need to name the loss, be it a change in time-honored work routines or an overhaul of the company’s core values, and explicitly acknowledge the resulting pain. You might do this through a series of simple statements, but it often requires something more tangible and public—recall Franklin Roosevelt’s radio “fireside chats” during the Great Depression—to convince people that you truly understand.

Beyond a willingness to accept casualties and acknowledge people’s losses, two very personal types of action can defuse potential resistance to you and your initiatives. The first is practicing what you preach. In 1972, Gene Patterson took over as editor of the St. Petersburg Times. His mandate was to take the respected regional newspaper to a higher level, enhancing its reputation for fine writing while becoming a fearless and hard-hitting news source. This would require major changes not only in the way the community viewed the newspaper but also in the way Times reporters thought about themselves and their roles. Because prominent organizations and individuals would no longer be spared warranted criticism, reporters would sometimes be angrily rebuked by the subjects of articles.

Several years after Patterson arrived, he attended a party at the home of the paper’s foreign editor. Driving home, he pulled up to a red light and scraped the car next to him. The police officer called to the scene charged Patterson with driving under the influence. Patterson phoned Bob Haiman, a veteran Times newsman who had just been appointed executive editor, and insisted that a story on his arrest be run. As Haiman recalls, he tried to talk Patterson out of it, a rguing that DUI arrests that didn’t involve injuries were rarely reported, even when prominent figures were involved. Patterson was adamant, however, and insisted that the story appear on page one.

Patterson, still viewed as somewhat of an outsider at the paper, knew that if he wanted his employees to follow the highest journalistic standards, he would have to display those standards, even when it hurt. Few leaders are called upon to disgrace themselves on the front page of a newspaper. But adopting the behavior you expect from others—whether it be taking a pay cut in tough times or spending a day working next to employees on a reconfigured production line—can be crucial in getting buy-in from people who might try to undermine your initiative.

The second thing you can do to neutralize potential opposition is to acknowledge your own responsibility for whatever problems the organization currently faces. If you have been with the company for some time, whether in a position of senior authority or not, you’ve likely contributed in some way to the current mess. Even if you are new, you need to identify areas of your own behavior that could stifle the change you hope to make.

To neutralize potential opposition, you should acknowledge your own responsibility for whatever problems the organization currently faces.

In our teaching, training, and consulting, we often ask people to write or talk about a leadership challenge they currently face. Over the years, w e have read and heard literally thousands of such challenges. Typically, in the first version of the story, the author is nowhere to be found. The underlying message: “If only other people would shape up, I could make progress here.” But by too readily pointing your finger at others, you risk making yourself a target. Remember, you are asking people to move to a place where they are frightened to go. If at the same time you’re blaming them for having to go there, they will undoubtedly turn against you.

In the early 1990s, Leslie Wexner, founder and CEO of the Limited, realized the need for major changes at the company, including a significant reduction in the workforce. But his consultant told him that something else had to change: long-standing habits that were at the heart of his self-image. In particular, he had to stop treating the company as if it were his family. The indulgent father had to become the chief personnel officer, putting the right people in the right jobs and holding them accountable for their work. “I was an athlete trained to be a baseball player,” Wexner recalled during a recent speech at Harvard’s Kennedy School. “And one day, someone tapped me on the shoulder and said, ‘Football.’ And I said, ‘No, I’m a baseball player. ‘And he said, ‘Football.’ And I said, ‘I don’t know how to play football. I’m not 6’4”, and I don’t weigh 300 pounds.’ But if no one values baseball anymore, the baseball player will be out of business. So I looked into the mirror and said, ‘Schlemiel, nobody wants to watch baseball. Make the transformation to football.’” His personal makeover—shedding the role of forgiving father to those widely viewed as not holding their own—helped sway other employees to back a corporate make-over. And his willingness to change helped protect him from attack during the company’s long—and generally successful—turnaround period.

Cook the conflict.
Managing conflict is one of the greatest challenges a leader of organizational change faces. The conflict may involve resistance to change, or it may involve clashing viewpoints about how the change should be carried out. Often, it will be latent rather than palpable. That’s because most organizations are allergic to conflict, seeing it primarily as a source of danger, which it certainly can be. But conflict is a necessary part of the change process and, if handled properly, can serve as the engine of progress.
Thus, a key imperative for a leader trying to achieve significant change is to manage people’s passionate differences in a way that diminishes their destructive potential and constructively harnesses their energy. Two techniques can help you achieve this. First, create a secure place where the conflicts can freely bubble up. Second, control the temperature to ensure that the conflict doesn’t boil over—and burn you in the process.

The vessel in which a conflict is simmered—in which clashing points of view mix, lose some of their sharpness, and ideally blend into consensus—will look and feel quite different in different contexts. It may be a protected physical space, perhaps an off-site location where an outside facilitator helps a group work through its differences. It may be a clear set of rules and processes that give minority voices confidence that they will be heard without having to disrupt the proceedings to gain attention. It may be the shared language and history of an organization that binds people together through trying times. Whatever its form, it is a place or a means to contain the roiling forces unleashed by the threat of major change.

But a vessel can withstand only so much strain before it blows. A huge challenge you face as a leader is keeping your employees’ stress at a productive level. The success of the change effort—as well as your own authority and even survival—requires you to monitor your organization’s tolerance for heat and then regulate the temperature accordingly.

You first need to raise the heat enough that people sit up, pay attention, and deal with the real threats and challenges facing them. After all, without some distress, there’s no incentive to change. You can constructively raise the temperature by focusing people’s attention on the hard issues, by forcing them to take responsibility for tackling and solving those issues, and by bringing conflicts occurring behind closed doors out into the open.

But you have to lower the temperature when necessary to reduce what can be counterproductive turmoil. You can turn down the heat by slowing the pace of change or by tackling some relatively straightforward technical aspect of the problem, thereby reducing people’s anxiety levels and allowing them to get warmed up for bigger challenges. You can provide structure to the problem-solving process, creating work groups with specific assignments, setting time parameters, establishing rules for decision making, and outlining reporting relationships. You can use humor or find an excuse for a break or a party to temporarily ease tensions. You can speak to people’s fears and, more critically, to their hopes for a more promising future. By showing people how the future might look, you come to embody hope rather than fear, and you reduce the likelihood of becoming a lightning rod for the conflict.

The aim of both these tactics is to keep the heat high enough to motivate people but low enough to prevent a disastrous explosion—what we call a “productive range of distress.” Remember, though, that most employees will reflexively want you to turn down the heat; their complaints may in fact indicate that the environment is just right for hard work to get done.

We’ve already mentioned a classic example of managing the distress of fundamental change: Franklin Roosevelt during the first few years of his presidency. When he took office in 1933, the chaos, tension, and anxiety brought on by the Depression ran extremely high. Demagogues stoked class, ethnic, and racial conflict that threatened to tear the nation apart. Individuals feared an uncertain future. So Roosevelt first did what he could to reduce the sense of disorder to a tolerable level. He took decisive and authoritative action—he pushed an extraordinary number of bills through Congress during his fabled first 100 days—and thereby gave Americans a sense of direction and safety, reassuring them that they were in capable hands. In his fireside chats, he spoke to people’s anxiety and anger and laid out a positive vision for the future that made the stress of the current crisis bearable and seem a worthwhile price to pay for progress.

But he knew the problems facing the nation couldn’t be solved from the White House. He needed to mobilize citizens and get them to dream up, try out, fight over, and ultimately own the sometimes painful solutions that would transform the country and move it forward. To do that, he needed to maintain a certain level of fermentation and distress. So, for example, he orchestrated conflicts over public priorities and programs among the large cast of creative people he brought into the government. By giving the same assignment to two different administrators and refusing to clearly define their roles, he got them to generate new and competing ideas. Roosevelt displayed both the acuity to recognize when the tension in the nation had risen too high and the emotional strength to take the heat and permit considerable anxiety to persist.

Place the work where it belongs.
Because major change requires people across an entire organization to adapt, you as a leader need to resist the reflex reaction of providing people with the answers. Instead, force yourself to transfer, as Roosevelt did, much of the work and problem solving to others. If you don’t, real and sustainable change won’t occur. In addition, it’s risky on a personal level to continue to hold on to the work that should be done by others.

As a successful executive, you have gained credibility and authority by demonstrating your capacity to solve other people’s problems. This ability can be a virtue, until you find yourself faced with a situation in which you cannot deliver solutions. When this happens, all of your habits, pride, and sense of competence get thrown out of kilter because you must mobilize the work of others rather than find the way yourself. By trying to solve an adaptive challenge for people, at best you will reconfigure it as a technical problem and create some short-term relief. But the issue will not have gone away.

In the 1994 National Basketball Association Eastern Conference semifinals, the Chicago Bulls lost to the New York Knicks in the first two games of the best-of-seven series. Chicago was out to prove that it was more than just a one-man team, that it could win without Michael Jordan, who had retired at the end of the previous season.

In the third game, the score was tied at 102 with less than two seconds left. Chicago had the ball and a time-out to plan a final shot. Coach Phil Jackson called for Scottie Pippen, the

Bulls’ star since Jordan had retired, to make the inbound pass to Toni Kukoc for the final shot. As play was about to resume, Jackson noticed Pippen sitting at the far end of the bench. Jackson asked him whether he was in or out. “I’m out,” said Pippen, miffed that he was not tapped to take the final shot. With only four players on the floor, Jackson quickly called another time-out and substituted an excellent passer, the reserve Pete Myers, for Pippen. Myers tossed a perfect pass to Kukoc, who spun around and sank a miraculous shot to win the game.

The Bulls made their way back to the locker room, their euphoria deflated by Pippen’s extraordinary act of insubordination. Jackson recalls that as he entered a silent room, he was uncertain about what to do. Should he punish Pippen? Make him apologize? Pretend the whole thing never happened? All eyes were on him. The coach looked around, meeting the gaze of each player, and said, “What happened has hurt us. Now you have to work this out.”

Jackson knew that if he took action to resolve the immediate crisis, he would have made Pippen’s behavior a matter between coach and player. But he understood that a deeper issue was at the heart of the incident: Who were the Chicago Bulls without Michael Jordan? It wasn’t about who was going to succeed Jordan, because no one was; it was about whether the players could jell as a team where no one person dominated and every player was willing to do whatever it took to help. The issue rested with the players, not him, and only they could resolve it. It did not matter what they decided at that moment; what mattered was that they, not Jackson, did the deciding. What followed was a discussion led by an emotional Bill Cartwright, a team veteran. According to Jackson, the conversation brought the team closer together. The Bulls took the series to a seventh game before succumbing to the Knicks.

Jackson gave the work of addressing both the Pippen and the Jordan issues back to the team for another reason: If he had taken ownership of the problem, he would have become the issue, at least for the moment. In his case, his position as coach probably wouldn’t have been threatened. But in other situations, taking responsibility for resolving a conflict within the organization poses risks. You are likely to find yourself resented by the faction that you decide against and held responsible by nearly everyone for the turmoil your decision generates. In the eyes of many, the only way to neutralize the threat is to get rid of you.

Despite that risk, most executives can’t resist the temptation to solve fundamental organizational problems by themselves. People expect you to get right in there and fix things, to take a stand and resolve the problem. After all, that is what top managers are paid to do. When you fulfill those expectations, people will call you admirable and courageous—even a “leader”—and that is flattering. But challenging your employees’ expectations requires greater courage and leadership.

The Dangers Within
We have described a handful of leadership tactics you can use to interact with the people around you, particularly those who might undermine your initiatives. Those tactics can help advance your initiatives and, just as important, ensure that you remain in a position where you can bring them to fruition. But from our own observations and painful personal experiences, we know that one of the surest ways for an organization to bring you down is simply to let you precipitate your own demise.

In the heat of leadership, with the adrenaline pumping, it is easy to convince yourself that you are not subject to the normal human frailties that can defeat ordinary mortals. You begin to act as if you are indestructible. But the intellectual, physical, and emotional challenges of leadership are fierce. So, in addition to getting on the balcony, you need to regularly step into the inner chamber of your being and assess the tolls those challenges are taking. If you don’t, your seemingly indestructible self can self-destruct. This, by the way, is an ideal outcome for your foes—and even friends who oppose your initiative—because no one has to feel responsible for your downfall.

Manage your hungers.
We all have hungers, expressions of our normal human needs. But sometimes those hungers disrupt our capacity to act wisely or purposefully. Whether inherited or products of our upbringing, some of these hungers may be so strong that they render us constantly vulnerable. More typically, a stressful situation or setting can exaggerate a normal level of need, amplifying our desires and overwhelming our usual self-discipline. Two of the most common and dangerous hungers are the desire for control and the desire for importance.

Everyone wants to have some measure of control over his or her life. Yet some people’s need for control is disproportionately high. They might have grown up in a household that was either tightly structured or unusually chaotic; in either case, the situation drove them to become masters at taming chaos not only in their own lives but also in their organizations.

That need for control can be a source of vulnerability. Initially, of course, the ability to turn disorder into order may be seen as an attribute. In an organization facing turmoil, you may seem like a godsend if you are able (and desperately want) to step in and take charge. By lowering the distress to a tolerable level, you keep the kettle from boiling over.

But in your desire for order, you can mistake the means for the end. Rather than ensuring that the distress level in an organization remains high enough to mobilize progress on the issues, you focus on maintaining order as an end in itself. Forcing people to make the difficult trade-offs required by fundamental change threatens a return to the disorder you loathe. Your ability to bring the situation under control also suits the people in the organization, who naturally prefer calm to chaos. Unfortunately, this desire for control makes you vulnerable to, and an agent of, the organization’s wish to avoid working through contentious issues. While this may ensure your survival in the short term, ultimately you may find yourself accused, justifiably, of failing to deal with the tough challenges when there was still time to do so.

Most people also have some need to feel important and affirmed by others. The danger here is that you will let this affirmation give you an inflated view of yourself and your cause. A grandiose sense of self-importance often leads to self-deception. In particular, you tend to forget the creative role that doubt—which reveals parts of reality that you wouldn’t otherwise see—plays in getting your organization to improve. The absence of doubt leads you to see only that which confirms your own competence, which will virtually guarantee disastrous missteps.

Another harmful side effect of an inflated sense of self-importance is that you will encourage people in the organization to become dependent on you. The higher the level of distress, the greater their hopes and expectations that you will provide deliverance. This relieves them of any responsibility for moving the organization forward. But their dependence can be detrimental not only to the group but to you personally. Dependence can quickly turn to contempt as your constituents discover your human shortcomings.
Two well-known stories from the computer industry illustrate the perils of dependency—and how to avoid them. Ken Olsen, the founder of Digital Equipment Corporation, built the company into a 120,000-person operation that, at its peak, was the chief rival of IBM. A generous man, he treated his employees extraordinarily well and experimented with personnel policies designed to increase the creativity, teamwork, and satisfaction of his workforce. This, in tandem with the company’s success over the years, led the company’s top management to turn to him as the sole decision maker on all key issues. His decision to shun the personal computer market because of his belief that few people would ever want to own a PC, which seemed reasonable at the time, is generally viewed as the beginning of the end for the company. But that isn’t the point; everyone in business makes bad decisions. The point is, Olsen had fostered such an atmosphere of dependence that his decisions were rarely challenged by colleagues—at least not until it was too late.

Contrast that decision with Bill Gates’s decision some years later to keep Microsoft out of the Internet business. It didn’t take long for him to reverse his stand and launch a corporate overhaul that had Microsoft’s delivery of Internet services as its centerpiece. After watching the rapidly changing computer industry and listening carefully to colleagues, Gates changed his mind with no permanent damage to his sense of pride and an enhanced reputation due to his nimble change of course.

Anchor yourself.
To survive the turbulent seas of a change initiative, you need to find ways to steady and stabilize yourself. First, you must establish a safe harbor where each day you can reflect on the previous day’s journey, repair the psychological damage you have incurred, renew your stores of emotional resources, and recalibrate your moral compass. Your haven might be a physical place, such as the kitchen table of a friend’s house, or a regular routine, such as a daily walk through the neighborhood. Whatever the sanctuary, you need to use and protect it. Unfortunately, seeking such respite is often seen as a luxury, making it one of the first things to go when life gets stressful and you become pressed for time.

To survive, you need a sanctuary where you can reflect on the previous day’s journey, renew your emotional resources, and recalibrate your moral compass.

Second, you need a confidant, someone you can talk to about what’s in your heart and on your mind without fear of being judged or betrayed. Once the undigested mess is on the table, you can begin to separate, with your confidant’s honest input, what is worthwhile from what is simply venting. The confidant, typically not a coworker, can also pump you up when you’re down and pull you back to earth when you start taking praise too seriously. But don’t confuse confidants with allies: Instead of supporting your current initiative, a confidant simply supports you. A common mistake is to seek a confidant among trusted allies, whose personal loyalty may evaporate when a new issue more important to them than you begins to emerge and take center stage.

Perhaps most important, you need to distinguish between your personal self, which can serve as an anchor in stormy weather, and your professional role, which never will. It is easy to mix up the two. And other people only increase the confusion: Colleagues, subordinates, and even bosses often act as if the role you play is the real you. But that is not the case, no matter how much of yourself—your passions, your values, your talents—you genuinely and laudably pour into your professional role. Ask anyone who has experienced the rude awakening that comes when they leave a position of authority and suddenly find that their phone calls aren’t returned as quickly as they used to be.

That harsh lesson holds another important truth that is easily forgotten: When people attack someone in a position of authority, more often than not they are attacking the role, not the person. Even when attacks on you are highly personal, you need to read them primarily as reactions to how you, in your role, are affecting people’s lives. Understanding the criticism for what it is prevents it from undermining your stability and sense of self-worth. And that’s important because when you feel the sting of an attack, you are likely to become defensive and lash out at your critics, which can precipitate your downfall.

We hasten to add that criticism may contain legitimate points about how you are performing your role. For example, you may have been tactless in raising an issue with your organization, or you may have turned the heat up too quickly on a change initiative. But, at its heart, the criticism is usually about the issue, not you. Through the guise of attacking you personally, people often are simply trying to neutralize the threat they perceive in your point of view. Does anyone ever attack you when you hand out big checks or deliver good news? People attack your personality, style, or judgment when they don’t like the message.

When you take “personal” attacks personally, you unwittingly conspire in one of the common ways you can be taken out of action—you make yourself the issue. Contrast the manner in which presidential candidates Gary Hart and Bill Clinton handled charges of philandering. Hart angrily counterattacked, criticizing the scruples of the reporters who had shadowed him. This defensive personal response kept the focus on his behavior. Clinton, on national television, essentially admitted he had strayed, acknowledging his piece of the mess. His strategic handling of the situation allowed him to return the campaign’s focus to policy issues. Though both attacks were extremely personal, only Clinton understood that they were basically attacks on positions he represented and the role he was seeking to play.
Do not underestimate the difficulty of distinguishing self from role and responding coolly to what feels like a personal attack—particularly when the criticism comes, as it will, from people you care about. But disciplining yourself to do so can provide you with an anchor that will keep you from running aground and give you the stability to remain calm, focused, and persistent in engaging people with the tough issues.

Why Lead?
We will have failed if this “survival manual” for avoiding the perils of leadership causes you to become cynical or callous in your leadership effort or to shun the challenges of leadership altogether. We haven’t touched on the thrill of inspiring people to come up with creative solutions that can transform an organization for the better. We hope we have shown that the essence of leadership lies in the capacity to deliver disturbing news and raise difficult questions in a way that moves people to take up the message rather than kill the messenger. But we haven’t talked about the reasons that someone might want to take these risks.

Of course, many people who strive for high-authority positions are attracted to power. But in the end, that isn’t enough to make the high stakes of the game worthwhile. We would argue that, when they look deep within themselves, people grapple with the challenges of leadership in order to make a positive difference in the lives of others.

When corporate presidents and vice presidents reach their late fifties, they often look back on careers devoted to winning in the marketplace. They may have succeeded remarkably, yet some people have difficulty making sense of their lives in light of what they have given up. For too many, their accomplishments seem empty. They question whether they should have been more aggressive in questioning corporate purposes or creating more ambitious visions for their companies.

Our underlying assumption in this article is that you can lead and stay alive—not just register a pulse, but really be alive. But the classic protective devices of a person in authority tend to insulate them from those qualities that foster an acute experience of living. Cynicism, often dressed up as realism, undermines creativity and daring. Arrogance, often posing as authoritative knowledge, snuffs out curiosity and the eagerness to question. Callousness, sometimes portrayed as the thick skin of experience, shuts out compassion for others.

The hard truth is that it is not possible to know the rewards and joys of leadership without experiencing the pain as well. But staying in the game and bearing that pain is worth it, not only for the positive changes you can make in the lives of others but also for the meaning it gives your own.

Source: Harvard Business Reviw, 2002
Authors: Ronald Heifetz and Marty Linsky

Seeing your way to better strategy

Posted in Aktuellt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap, Strategy implementation / Strategiimplementering on December 6th, 2018 by admin

Viewing strategy choices through four lenses—financial performance, markets, competitive advantage, and operating model—can help companies debias their strategic dialogues and make big, bold changes.

When executives gather in the strategy-planning room, they’re aiming to identify and prioritize the big, bold choices that will shape the future of the company. Many times, however, their choices get watered down and waylaid.

Companies that hold no conviction about priorities too often spread resources evenly across multiple projects rather than targeting a few projects with the potential to win big. Those companies seeking to escape slowing growth in their core businesses sabotage themselves by chasing new markets without critically evaluating if or how they can win.

To avoid this fate, companies should examine their strategic choices through four critical, interdependent lenses—the company’s financial performance, market opportunities, competitive advantage, and operating model (exhibit).

Executives tend to overemphasize the first two—viewing choices strictly in the context of financial and market opportunities—because those lenses represent critical inputs into the business case. But knowing what it will take to meet or beat financial expectations and which markets are profitable won’t do much good if the company doesn’t have the assets or capabilities required to win in those markets. Nor will it do much good if the company lacks the people, processes, and organizational structure to implement the proposed strategy successfully.

By viewing strategy choices through all four lenses, executives can identify and prioritize the big moves that will lead companies to new markets and growth opportunities, or the steps they can take to consolidate the core. When combined, the lenses provide a clear, balanced, holistic view of not just the opportunities in play but also what it will take to capture them. This kind of objective strategy diligence can improve conversations in the strategy room—and, ultimately, kick corporate performance into a higher gear.1

The financial lens
Most companies necessarily initiate their strategy processes with a look at their financial performance. The financial lens can help them incorporate an outside view into these discussions and develop an objective baseline for assessing the feasibility of long-term targets.

A company can use standard valuation methods to estimate what performance levels it must achieve in the long term to justify today’s value. If the company performs at these expectations, shareholder returns would roughly equal the cost of equity, compensating investors for their opportunity cost of capital.2 This, however, is not value creation—it’s simply the lowest threshold by which leaders can say their strategy was successful.

To create value, companies must deliver returns above and beyond the cost of capital, or they must deliver returns that exceed those of peers. Thus, executives should also use benchmarks to figure out how the company must perform to move well beyond that threshold—delivering top-quintile returns to shareholders, for instance. An objective look at peers’ performance will help companies develop a meaningful three- to five-year plan for how to earn excess returns. Companies can learn a lot from this benchmarking exercise: perhaps high returns in the past were the result of a run-up in multiples in the market and, hence, expectations, but not actual performance.

To anchor those perspectives in current company performance and market position, it is critical for teams to develop a market-momentum case (MMC). Using external market data and peer-performance benchmarks, the MMC gives the company a holistic view of how financial performance will be affected if the company follows its current trajectory relative to market growth, cost evolution, and pricing dynamics without taking any countervailing actions. The end result is an objective baseline for performance that allows executives to conduct an unbiased assessment of how to prioritize new initiatives (and big moves) without counting on them in the base plan.

By assessing implied performance, aspirations for performance, and the MMC, strategy and finance professionals can arm themselves with the information required to start meaningful, objective discussions on value creation: How does the company need to perform to achieve superior returns, and how would the company perform if it remained in steady state?

The market lens
Most companies are seeing slow growth in core businesses and wishing they were in higher-growth, higher-margin businesses. In some cases, the slowing core business may even be under attack. For instance, a low-cost entrant might destroy incumbents’ economic profit in a certain segment, as happened in markets as diverse as those for aluminum wheels and children’s electronic toys. In today’s fast-moving business environments, many companies start from a baseline of deteriorating profit, not slightly increasing earnings. This creates urgency to make big moves into new markets or to block attackers.

The market lens provides a means by which companies can identify pockets of growth within existing segments and beyond, and assess them against strategic options. The critical factor here is granularity; executives should quantify and validate shifts in profit pools in relevant markets given trends that are visible now. One consumer-apparel company, for instance, examined absolute dollar growth in the product markets it operated in. It assessed growth by channel and by region. The differences were striking. In some geographies, demand was expected to continue to grow mostly in brick-and-mortar stores for at least five years, with a significant price premium for high-end products. In other geographies, online channels were capturing profits much more rapidly than expected. Using the market lens, the strategy team recognized the need to allocate resources in product development and marketing for high-end products in brick-and-mortar stores in certain regions, as well as more localized, lower-cost production in others. By running the analysis in this granular way, it could capture better profit in all regions, leading to above-average growth.

Additionally, strategy and finance leaders should always examine adjacent markets, which may be not only attractive segments for growth but also breeding grounds for potential future competitors. Many times, the adjacencies are obvious, as in online retailers’ continued push into industrial distribution for small and medium-size businesses, or technology companies’ moves into software-as-a-service businesses. Other times, they are not as obvious—for instance, raw-materials companies selling consumer goods.

After conducting the requisite analyses of markets, strategy teams should be able to address two key questions: In which market segments will we be able to grow profitably over time? What additional attractive markets should be considered?

The competitive-advantage lens
Most companies face a critical strategic choice in the planning room: Are we better off consolidating the core, where growth is slower, or can we realistically enter new high-growth, high-profit markets and win? But given time pressures, innate biases, and other factors, executives typically fall short in their consideration of assets, capabilities, and the investments required to compete more effectively against rivals. As a result, companies end up chasing unattainable growth and underinvesting relative to what it would take to win.

The competitive-advantage lens can help executives identify whether the company has what it will take to win in current markets and those going forward, or whether a big change is required to capture value. An honest assessment of current capabilities should inform how the company chooses to play in its markets, as well as partnerships or acquisitions that may be necessary.

In the wake of new realities such as digitization and the fact that many industries are reaching the limits of consolidation, the competitive-advantage lens is more important than ever. Take as an example the notion of building a digital platform, a goal shared by many executives these days: What competitive advantage will the platform provide? What sort of market share does it need to capture to be considered a “winner” and not just “average”? Is an ecosystem of third-party players required for the digital platform to succeed, or can this be done organically—and will we be able to do it quickly enough to become the preferred platform for our customers?

The analyses and insights here are typically based more on firsthand “case load” expertise than on industry databases or reports. Interviews with sales teams and postmortems on deals that went awry can be very insightful, as can customer and supplier surveys. There is a lot at stake in gaining these perspectives. The apparel company mentioned earlier discovered that competitors still owned brick-and-mortar stores in certain markets in which the apparel company worked only through online partners. The competitors’ sales representatives in these markets had special training and a structured sales approach that allowed them to collect information on customer preferences—for instance, the shapes, colors, and sizes customers wanted to see in the next season’s designs. This gave competitors a leg up in product development that the apparel company no longer had. The essential competitive advantage in these high-growth markets was real-time customer insights fed back into a rapid product-development cycle. The apparel company learned, therefore, that it had to continue to invest in brick-and-mortar stores to recapture this advantage, even in markets driven by online sales.

The operating-model lens
Companies routinely take for granted the impact of their operating models on their strategy choices. They maintain the status quo rather than asking whether they have the people, processes, technologies, and other critical components required to make big moves. The operating-model lens, then, is essential for understanding whether the company is set up for future success. Indeed, a company’s approach to resource allocation, talent management, organizational design, and performance management can either reinforce or defeat strategic objectives. Consider the following talent- and performance-management-related examples.

A pharmaceutical company estimated that more than one-third of its cash flow would come from Asia within five to seven years. That outcome never materialized, however: senior management had stationed fewer than 10 percent of the company’s sales representatives in Asia—all of whom were focused on maintaining current sales and profit, not on expanding sales according to the strategic plan. An analysis of the growth opportunity at stake (in dollars) versus the number of full-time employees allocated to the regions over the past five years revealed the degree of underinvestment. Senior management decided to hire heavily in Asia.

Rather than prescribe performance metrics from the top down—ordering, for instance, that no one can have more than a 1 percent increase in cost in the next fiscal year—a retail company picks two or three “growth cells” each year that get twice the relative marketing budget (among other investments) compared with other areas of the business. As a result, strategy discussions are now focused solely on which cells should be designated for accelerated growth, rather than minutiae about the budget.

Companies need to look at more than just financial opportunities when embarking on a new strategy or implementing a transformation program. They need to follow a due-diligence process for strategy, in the same way they would dispassionately and holistically vet critical mergers and acquisitions. Such a process can counter innate biases that lead to indecision or incremental rather than bold moves. The four interrelated lenses we’ve described provide a road map for ensuring that a strategy plan is supported by the right investments and change in operating model.

Source:, December 2018
By: Kevin Laczkowski, Werner Rehm, and Blair Warner