How to create an agile organization

Posted in Aktuellt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on October 24th, 2017 by admin

Transforming companies to achieve organizational agility is in its early days but already yielding positive returns. While the paths can vary, survey findings suggest how to start.

Rapid changes in competition, demand, technology, and regulations have made it more important than ever for organizations to be able to respond and adapt quickly. But according to a recent McKinsey Global Survey, organizational agility—the ability to quickly reconfigure strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities—is elusive for most. Many respondents say their companies have not yet fully implemented agile ways of working, either company-wide or in the performance units where they work, though the advantages are clear. Respondents in agile units report better performance than all others do, and companies in more volatile or uncertain environments are more likely than others to be pursuing agile transformations.

Few companies are yet reaping these benefits, but that may soon change; the results also indicate that organizational agility is catching fire. For many respondents, agility ranks as a high strategic priority in their performance units. Moreover, companies are transforming activities in several parts of the organization—from innovation and customer experience to operations and strategy—to become more agile. Finally, respondents in all sectors believe more of their employees should be working in agile ways. For organizations and their performance units that aren’t yet agile, the path to achieving agility depends on their starting points. But the results indicate some clear guidance on how and where they can improve, whether they are lacking in stability or dynamism.

Organizational agility is on the rise
Across industries and regions, most survey participants agree that the world around them is changing, and quickly. Business environments are increasingly complex and volatile, with two-thirds of respondents saying their sectors are characterized by rapid change. In such environments, the need for companies to demonstrate agility is top of mind: the more unstable that respondents say their environments are, the more likely they are to say their companies have begun agile transformations.

To date, though, few organization-wide agile transformations have been completed. Only 4 percent of all respondents say their companies have fully implemented one, though another 37 percent say company-wide transformations are in progress. When asked where their companies apply agile ways of working,3 respondents most often identify activities that are closest to the customer: innovation, customer experience, sales and servicing, and product management. This is not too surprising, since customer centricity is cited most often—followed by productivity and employee engagement—as the objective of agile transformations. Companies are also focusing on internal end-to-end processes. At least four in ten respondents say their companies are applying agile ways of working in processes related to operations, strategy, and technology, while roughly one-third say they are doing so in supply-chain management and talent management.

Looking forward, the results suggest that companies have higher aspirations for agility. Three-quarters of respondents say organizational agility is a top or top-three priority on their units’ agendas, and more transformations appear to be on the way. Of those who have not begun agile transformations, more than half say plans for either unit-level or company-wide transformations are in the works. Respondents across industries also report a desire to scale up agile ways of working. On average, they believe 68 percent of their companies’ employees should be working in agile ways, compared with the 44 percent of employees who currently do. By industry, respondents in telecom and the electric-power and natural-gas industries report the biggest differences between their actual and ideal shares of employees working in agile ways—followed closely by respondents in several other industries: media and entertainment, the public sector, oil and gas, pharma, and advanced industries.

What’s more, the survey also confirms that agility pays off. Eighty-one percent of respondents in agile units report a moderate or significant increase in overall performance since their transformations began. And on average, respondents in agile units are 1.5 times more likely than others to report financial outperformance relative to peers, and 1.7 times more likely to report outperforming their peers on nonfinancial measures.

Agile organizations excel at both stability and dynamism
In previous work, we have determined that, to be agile, an organization needs to be both dynamic and stable.7 Dynamic practices enable companies to respond nimbly and quickly to new challenges and opportunities, while stable practices cultivate reliability and efficiency by establishing a backbone of elements that don’t need to change frequently. The survey scored organizations across eighteen practices (see sidebar, “Eighteen practices for organizational agility.”), which our research suggests are all critical for achieving organizational agility. According to the results, less than one-quarter of performance units are agile. The remaining performance units lack either dynamism, stability, or both.

Of the 18 practices, the 3 where agile units most often excel relate to strategy and people. More than 90 percent of agile respondents say that their leaders provide actionable strategic guidance (that is, each team’s daily work is guided by concrete outcomes that advance the strategy); that they have established a shared vision and purpose (namely, that people feel personally and emotionally engaged in their work and are actively involved in refining the strategic direction); and that people in their unit are entrepreneurial (in other words, they proactively identify and pursue opportunities to develop in their daily work). By contrast, just about half of their peers in nonagile units say the same.

After strategy, agile units most often follow four stable practices related to process and people: entrepreneurial drive, shared and servant leadership, standardized ways of working, and cohesive community. When looking more closely at standardized ways of working, the agile units excel most on two actions: the unit’s processes are enabled by shared digital platforms and tools (91 percent, compared with 54 percent for others), and processes are standardized, including the use of a common language and common tools (cited by 90 percent of agile respondents and just 58 percent of all others).

Among the dynamic practices, process—and information transparency, in particular—is a strength for agile units. Within transparency, for example, 90 percent of agile respondents say information on everything from customers to financials is freely available to employees. Among their peers in other units, only 49 percent say the same. The second practice where agile units most differ from others is in rapid iteration and experimentation. More than 80 percent of agile respondents say their companies’ new products and services are developed in close interaction with customers and that ideas and prototypes are field-tested early in the development process, so units can quickly gather data on possible improvements.

The path to agility depends on the starting point

For the performance units that aren’t yet agile, the survey results suggest clear guidance for how to move forward. But organizational agility is not a one-size-fits-all undertaking. The specific practices a unit or organization should focus on to become agile depend on whether it is currently bureaucratic, start-up, or trapped.

Bureaucratic units
By definition, bureaucratic units are relatively low in dynamism and most often characterized by reliability, standard ways of working, risk aversion, silos, and efficiency. To overcome the established norms that keep them from moving fast, these units need to develop further their dynamic practices and modify their stable backbones, especially on practices related to people, process, and structure.

First is the need to address the dynamic practices where, compared with agile units, the bureaucratic units are furthest behind. Only 29 percent of bureaucratic respondents, for example, report following rapid iteration and experimentation, while 81 percent of agile respondents say the same. A particular weakness in this area is the use of minimum viable products to quickly test new ideas: just 19 percent of bureaucratic respondents report doing so, compared with 74 percent of agile respondents. After that, the largest gap between bureaucratic units and agile units is their ability to roll out suitable technology, systems, and tools that support agile ways of working.

At the same time, bureaucratic units also have room to improve on certain stable practices. For example, bureaucratic units are furthest behind in performance orientation; in agile units, employees are far more likely to provide each other with continuous feedback on both their behavior and their business outcomes. What’s more, leaders in these units are better at embracing shared and servant leadership by more frequently incentivizing team-oriented behavior and investing in employee development. And it’s much more common in agile units to create small teams that are fully accountable for completing a defined process or service.

Start-up units
Start-up units, on the other hand, are low in stability and characterized as creative, ad hoc, constantly shifting focus, unpredictable, and reinventing the wheel. These organizations tend to act quickly but often lack discipline and systematic execution. To overcome the tendencies that keep them from sustaining effective operations, these units need to further develop all of their stable practices—and also broaden their use of the dynamic practices related to process and strategy in order to maintain sufficient speed.

First is focusing on a stronger overall stable backbone. On average, 55 percent of start-up respondents report that they implement all nine stable practices, compared with 88 percent of agile respondents who report the same. According to the results, a particular sore spot is people-related practices—especially shared and servant leadership. For example, just under half of start-up respondents say their leaders involve employees in strategic and organizational decisions that affect them, compared with 85 percent of their agile peers. Similar to bureaucratic units, respondents at start-up units also report challenges with process, particularly with regard to performance orientation. Within that practice, only 44 percent of respondents at start-up units say their people provide each other with continuous feedback on both their behavior and their business outcomes; 80 percent at agile units report the same.

Start-up units also have room to improve their use of dynamic practices, particularly in process and strategy. According to respondents, the agile units excel much more often than their start-up counterparts at information transparency—for example, holding events where people and teams share their work with the unit. Moreover, agile respondents are much more likely to say new knowledge and capabilities are available to the whole unit, which enables continuous learning. On the strategy front, the start-up units are furthest behind their agile peers on flexible resource allocation—more specifically, deploying their key resources to new pilots and initiatives based on progress against milestones.

Trapped units
The trapped units are often associated with firefighting, politics, a lack of coordination, protecting turf, and local tribes. These organizations find themselves lacking both a stable backbone and dynamic capabilities. In applying the stable practices, the trapped units are most behind on those related to people: specifically, shared and servant leadership and entrepreneurial drive. Just 13 percent of respondents at trapped units say they follow shared and servant leadership, compared with 89 percent of their agile peers. The dynamic practices in which they are furthest behind are process related, especially continuous learning and rapid iteration and experimentation.

Looking ahead
In response to the challenges that the survey results revealed, here are some principles executives and their units or organizations should act upon, whether or not they have already begun agile transformations:

Embrace the magnitude of the change. Based on the survey, the biggest challenges during agile transformations are cultural—in particular, the misalignment between agile ways of working and the daily requirements of people’s jobs, a lack of collaboration across levels and units, and employee resistance to changes. In our experience, agile transformations are more likely to succeed when they are supported by comprehensive change-management actions to cocreate an agile-friendly culture and mind-sets. These actions should cover four main aspects. First, leaders and people across the organization align on the mind-sets and behaviors they need to move toward. Second, they role-model the new mind-sets and behaviors and hold each other accountable for making these changes. Third, employees are supported in developing the new skills they need to succeed in the future organization. And finally, formal mechanisms are put in place to reinforce the changes, rewarding and incentivizing people to demonstrate new behaviors.8
Be clear on the vision. The results show that agile units excel most at creating a shared vision and purpose and aligning on this vision through actionable strategic guidance. In contrast, at companies that have not yet started a transformation, one of the most common limitations is the inability to create a meaningful or clearly communicated vision. An important first step in deciding whether to start an agile transformation is clearly articulating what benefits are expected and how to measure the transformation’s impact. This vision of the new organization must be collectively held and supported by the top leadership.
Decide where and how to start. Respondents whose organizations have not started agile transformations most often say it’s because they lack a clear implementation plan. While the right plan will vary by company, depending on its vision, companies should first identify the part(s) of the organization that they want to transform and how (for example, by prototyping the changes in smaller parts of the performance unit before scaling them up, or by making changes to more foundational elements that go beyond a single unit). Second, they should assess which of the 18 agile practices the organization most needs to strengthen in order to achieve agility, so that the actions taken across strategy, structure, process, people, and technology are mutually reinforcing. Third, they should determine the resources and time frame that the transformation requires, so the effort maintains its momentum but the scope remains manageable at any point in time.

Source: McKinsey.com, Octobr 2017
Authors: Karin Ahlbäck, Clemens Fahrbach, Monica Murarka and Olli Salo.
About the author: The contributors to the development and analysis of this survey include Karin Ahlbäck, a consultant in McKinsey’s London office; Clemens Fahrbach, a consultant in the Munich office; Monica Murarka, a senior expert in the San Francisco office; and Olli Salo, an associate partner in the Helsinki office.
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Shifting the board’s focus from compliance to engagement

Posted in Aktuellt, Board work / Styrelsearbete on September 28th, 2017 by admin

Board members today must grapple with increasingly complex matters of strategy and risk. In response, many companies are rethinking board meetings to enhance alignment, energize the board and elevate its performance.

In a conversation with a board chair and a CEO following a successful board search, we asked if their recently completed board review had surfaced any issues regarding the chair of the governance committee. The board chair was a bit surprised and asked what prompted our question. We then discussed what “good” looked like for a governance committee chair, and compared that benchmark of behaviors with the experience and inclinations of the incumbent. It quickly became evident that the board review they had undergone had relied too heavily on a simple questionnaire, which, to make matters worse, was analyzed in a cursory way by an outside firm. This “check the box” compliance-oriented exercise rarely leads to a meaningful improvement of board effectiveness and engagement.

Given that today’s investors scrutinize a company’s board of directors as closely as its financial results, boards increasingly are seeking more thorough board reviews to help ensure that their team interactions and processes are aligned. A proper board effectiveness review goes beyond the standard questionnaire and is centered on individual behaviors and team dynamics and interactions.

Each board has its own set of issues, depending on the history, structure and personalities involved. Even so, in the more than 550 board effectiveness reviews that Egon Zehnder has conducted, we have seen a common challenge emerge: The ongoing struggle to stay focused on strategy and not get bogged down with administrative and procedural matters. And it is a struggle: As more and more topics, from digitalization to diversity, are added to the board’s agenda, it becomes increasingly difficult even to track the various issues that directors must monitor, let alone for directors to step back and consider those issues in a larger context. The reality is that the board’s processes and information flow can unwittingly be at cross purposes with a strategic perspective. These are the sorts of derailers that a thorough board effectiveness review can uncover, while also putting in place mechanisms for ongoing, rather than periodic, feedback.

The board meeting today: Documentation and the agenda
Consider how the typical two-day board meeting unfolds. Approximately two weeks before the meeting, members receive the agenda and supporting materials to review. In the hard-copy era, the thickness of the board book was limited by the size of the FedEx box it was shipped in. Today, however, most companies use digital board books accessed through tablets. These applications are rightly heralded for their convenience, but they also remove any physical constraints on the amount of material distributed to the board. As a result, we have found that board members are inundated with reports, presentation decks and miscellaneous analyses on everything from investor relations to cybersecurity to safety compliance. Board members are sometimes surprised to learn that they contribute to this problem by their own requests for additional information. This is why some governance experts have sounded an alarm on a “boardroom information crisis”; it becomes harder and harder for even the most diligent board members to absorb, digest and reflect on all the material they are given. Managing the deluge of data crowds out the time needed to ask important questions. The board book material, instead of supporting the agenda, can detract from the agenda items truly needing attention.

We see this when we examine how typical board meetings unfold. The first day is frequently devoted to committee meetings. The board then gathers for dinner and then convenes the next day to work through the board agenda. At some point in the afternoon the meeting adjourns and everyone departs.

On its face, there is nothing objectionable about this structure, but a better approach is to recognize that significant amounts of committee work today can be conducted by teleconference, allowing the committee to work through many issues before the board meeting. This is not to say that the entire committee agenda can be dealt by phone, but that there are many ways of being more effective in filtering what requires the attention of the full board.

The board meeting reconsidered: Deep dives and discussion
What would a board meeting look like if the meeting were designed to maximize meaningful strategic discussion? Two to three weeks before the board meeting, a much thinner board book would be distributed. It would start with a one- or two-page letter from the CEO and board chair. The CEO would summarize the state of the company and frame key issues, and the chairman would outline the agenda for the upcoming board meeting, The agenda would include more time for discussion and debate, and be centered on a select number of strategic issues, sizable operating issues and major risk items. The supporting material in the board book would provide background on those topics. Of course, other administrative matters will still need to be discussed, but the majority of time would center on priorities that could unlock value.

For example, instead of reviewing in detail an investor relations presentation that has already been vetted and approved by the CFO and CEO, the board might be asked to consider the key issues and concerns that shareholders and analysts have most recently surfaced and flagged. Instead of the company’s latest 100-page sustainability report, the quarterly board book might include a summary of metrics and performance indicators while reserving a full-board “deep dive” discussion for once a year.

Committee chairs would conduct many agenda items by conference call. When the directors arrive on the first day, instead of breaking into committees, the entire board would meet for a detailed briefing by the CEO on the most pressing matters. A working dinner would follow, during which directors would discuss specific topics and could begin to identify points of agreement and divergence. The next day, the board would meet for a frank discussion to stretch and challenge assumptions and to work toward decisions. While some of the board meeting will have to be devoted to procedural matters, the board’s major focus is kept on a higher, strategic plane. The board chair of one of the world’s largest public companies recently shared with us his realization that when he was CEO and chairman of a prior company, he didn’t devote sufficient time to the board agenda. Only later did he realize that getting the agenda right has a sizable impact on board performance.

In an earlier day, it was sufficient for boards to monitor management’s performance, approve major decisions and ensure conformity with a much smaller set of regulations. But in today’s much more complex environment, it is not enough for boards to be stewards; they, like management, need to create value. The board does this when it focuses on its role as advisor and resource to management, rather than its mere overseer. Rethinking board meetings, considering team dynamics and providing open feedback to board members can align the board with this goal. That, in turn, will energize the board and elevate its performance.

Source: Egonzehnder.com, September 2017
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Authors: Steven V Goodman, Egon Zehnder, Houston, Calgary and Roopa Mehendale Foley,
Egon Zehnder, Dallas

Culture for a digital age

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Leadership / Ledarskap, Strategy implementation / Strategiimplementering on August 23rd, 2017 by admin

Risk aversion, weak customer focus, and siloed mind-sets have long bedeviled organizations. In a digital world, solving these cultural problems is no longer optional.

Shortcomings in organizational culture are one of the main barriers to company success in the digital age. That is a central finding from McKinsey’s recent survey of global executives, which highlighted three digital-culture deficiencies: functional and departmental silos, a fear of taking risks, and difficulty forming and acting on a single view of the customer.

Each obstacle is a long-standing difficulty that has become more costly in the digital age. When risk aversion holds sway, underinvestment in strategic opportunities and sluggish responses to quick-changing customer needs and market dynamics can be the result. When a unified understanding of customers is lacking, companies struggle to mobilize employees around integrated touchpoints, journeys, and consistent experiences, while often failing to discern where to best place their bets as digital broadens customer choice and the actions companies can take in response. And when silos characterize the organization, responses to rapidly evolving customer needs are often too narrow, with key signals missed or acted upon too slowly, simply because they were seen by the wrong part of the company.

Can fixes to culture be made directly? Or does cultural change emerge as a matter of course as executives work to update strategy or improve processes?1 In our experience, executives who wait for organizational cultures to change organically will move too slowly as digital penetration grows, blurs the boundaries between sectors, and boosts competitive intensity. Our research, which shows that cultural obstacles correlate clearly with negative economic performance, supports this view. So do the experiences of leading players such as BBVA, GE, and Nordstrom, which have shown what it looks like when companies support their digital strategies and investments with deliberate efforts to make their cultures more responsive to customers, more willing to take risks, and better connected across functions.

Executives must be proactive in shaping and measuring culture, approaching it with the same rigor and discipline with which they tackle operational transformations. This includes changing structural and tactical elements in an organization that run counter to the culture change they are trying to achieve. The critical cultural intervention points identified by respondents to our 2016 digital survey—risk aversion, customer focus, and silos—are a valuable road map for leaders seeking to persevere in reshaping their organization’s culture. The remainder of this article discusses each of these challenges in turn, spelling out a focused set of reinforcing practices to jump-start change.

Calculated risks

Too often, management writers talk about risk in broad-brush terms, suggesting that if executives simply encourage experimentation and don’t punish failure, everything will take care of itself. But risk and failure profoundly challenge us as human beings. As Ed Catmull of Pixar said in a 2016 McKinsey Quarterly interview, “One of the things about failure is that it’s asymmetrical with respect to time. When you look back and see failure, you say, ‘It made me what I am!’ But looking forward, you think, ‘I don’t know what is going to happen and I don’t want to fail.’ The difficulty is that when you’re running an experiment, it’s forward looking. We have to try extra hard to make it safe to fail.”

The balancing act Catmull described applies to companies, perhaps even more than to individuals. Capital markets have typically been averse to investments that are hard to understand, that underperform, or that take a long time to reach fruition. And the digital era has complicated matters: On the one hand, willingness to experiment, adapt, and to invest in new, potentially risky areas has become critically important. On the other, taking risks has become more frightening because transparency is greater, competitive advantage is less durable, and the cost of failure is high, given the prevalence of winner-take-all dynamics.

Leaders hoping to strike the right balance have two critical priorities that are mutually reinforcing at a time when fast-follower strategies have become less safe. One is to embed a mind-set of risk taking and innovation through all ranks of the enterprise. The second is for executives themselves to act boldly once they have decided on a specific digital play—which may well require changing mind-sets about risk, and inspiring key executives and boards to think more like venture capitalists.

An appetite for risk
Building a culture where people feel comfortable trying things that might fail starts with senior leaders’ attitudes and role modeling. They must break the status quo of hierarchical decision making, overcome a focus on optimizing rather than innovating, and celebrate learning from failure. It helps considerably when executives make it clear through actions that they trust the front lines to make meaningful decisions. ING and several other companies have tackled this imperative head-on, providing agile coaches to help management learn how to get out of the way after setting overall direction for objectives, budgets, and timing.

However, delegating authority only works if the employees have the skills, mind-sets, and information access to make good on it. Outside hires from start-ups or established digital natives can help inject disruptive thinking that is a source of innovative energy and empowerment. Starbucks, for example, has launched a digital-ventures team, hiring vice presidents from Google, Microsoft, and Razorfish to help drive outside thinking.

Also empowering for frontline workers (and risk dampening for organizations) is information itself. For example, equipping call-center employees with real-time analysis on account profiles, or data on usage and profitability, helps them take small-scale risks as they modify offers and adjust targeting in real time. In the retail and hospitality industries, companies are giving frontline employees both the information (such as segment and purchase history) and the decision authority they need to resolve customer issues on the spot, without having to escalate to management. Such information helps connect the front line to the company’s strategic vision, which provides a compass for decision making on things such as what sort of discount or incentive to offer in resolving a conflict or what “next product to buy” to tee up. Benefits include improvements in the customer experiences (due to faster resolution) and greater consistency across the business in spotting and resolving problems. This lowers cost at the same time it improves customer satisfaction. In addition, frontline risk taking enables more rapid innovation by speeding up iterations and decision making to support nimbler, test-and-learn approaches. These same dynamics prevail in manufacturing, with new algorithms enabling predictive maintenance that no longer requires sign-off from higher-level managers.

Regardless of industry, the critical question for executives concerned with their organization’s risk appetite is whether they are trusting their employees, at all levels, to make big enough bets without subjecting them to red tape. Many CFOs have decided to shift all but the largest investment decisions into the business units to speed up the process. The CFO at one global 500 consumer-goods company now signs off only on expenditures above $250,000. Until recently, any spend decision over $1,000 required the CFO’s approval.

Making bold bets
At the same time they are letting go of some decisions, senior leaders also are responsible for driving bold, decisive actions that enable the business to pivot rapidly, sometimes at very large scale. Such moves require risk taking, including aggressive goal setting and nimble resource reallocation.

A culture of digital aspirations. Goals should reflect the pace of disruption in a company’s industry. The New York Times set the aspiration to double its digital revenues within five years, enabled in part by the launch of T Brand Studio as a new business model. In the face of Amazon, Nordstrom committed more than $1.4 billion in technology capital investments to enable rich cross-channel experiences. The Irish bank AIB decided customers should be able to open an account in under ten minutes (90 percent faster than the norm prevailing at the time). AIB invested to achieve this goal and saw a 25 percent lift in accounts opened, along with a 20 percent drop in costs. In many industries facing digital disruption, this is the pace and scale at which executives need to be willing to play.

Embracing resource reallocation. Nimble resource reallocation is typically needed to back up such goals. In many incumbents, though, M&A and capital-expenditure decisions are too slow, with too many roadblocks in the way. They need to be retooled to take on more of a venture-capitalist approach to rapid sizing, testing, investing, and disinvesting. The top teams at a large global financial-services player and an IT-services company have been reevaluating all of their businesses with a five- to ten-year time horizon, determining which ones they will need to exit, where they need to invest, and where they can stay the course. Such moves tax the risk capacity of executives; but when the moves are made, they also shake things up and move the needle on a company’s risk culture.

The financial markets are double-edged swords when it comes to bold moves. While they remain preoccupied with short-term earnings, they are also cognizant of cautionary tales such as Blockbuster’s 2010 bankruptcy, just three years after the launch of Netflix’s streaming-video business. Companies like GE have nonetheless plunged ahead with long-term, digitally oriented strategies. In aggressively shedding some of its traditional business units, investing significantly to build out its Predix platform, and launching GE Digital, its first new business unit in 75 years, with more than $1 billion invested in 2016, GE’s top team has embraced disciplined risk taking while building for the future.

Customers, customers, customers
Although companies have long declared their intention to get close to their customers, the digital age is forcing them to actually do it, as well as providing them with better means to do so. Accustomed to best-in-class user experiences both on- and off-line with companies such as Amazon and Apple, customers increasingly expect companies to respond swiftly to inquiries, to customize products and services seamlessly, and to provide easy access to the information customers need, when they need it.

A customer-centric organizational culture, in other words, is more than merely a good thing—it’s becoming a matter of survival. The good news is that getting closer to your customers can help reduce the risk of experimentation (as customers help cocreate products through open innovation) and support fast-paced change. Rather than having to guess what’s working in a given product or service before launching it—and then waiting to see if your guess is right after the launch takes place—companies can now make adjustments nearly real-time by developing product and service features with direct input from end users. This is already taking place in products from Legos to aircraft engines. The process not only helps derisk product development, it tightens the relationship between companies and their customers, often providing valuable proprietary data and insights about how customers think about and use the products or services being created.

Data and tools
Underlying the new customer-centricity are diverse tools and data. Connecting the right data to the right decisions can help build a common understanding of customer needs into an organizational culture, fostering a virtuous cycle that reinforces customer-centricity. Amazon’s ability to use customers’ previous purchases to offer them additional items in which they might be interested is a significant element in its success. The virtuous circle they’ve created includes customer reviews (to reassure and reinforce other shoppers), along with the algorithms that share “what customers who looked at this item also bought.” Of course, Amazon has also invested heavily in automated warehouses and a sophisticated distribution model. But even those were tied to the customer desire to receive merchandise faster.

A unifying force
At its best, customer-centricity extends far beyond marketing and product design to become a unifying cultural element that drives all core decisions across all areas of the business. That includes operations, where in many organizations it’s often the furthest from view, and strategy, which must be regularly refreshed if it is to serve as a reliable guide in today’s rapidly changing environment. Customer-centric cultures anticipate emerging patterns in the behavior of customers and tailor relevant interactions with them by dynamically integrating structured data, such as demographics and purchase history, with unstructured data, such as social media and voice analytics.

The insurance company Progressive illustrates the unifying role played by strong customer focus. Progressive’s ability to persuade customers to install the company’s Snapshot device to monitor driving behavior is revolutionizing the insurance space, and not just as a marketing tool. Snapshot helps attract the good drivers who are the most profitable customers, since those individuals are the ones most likely to be attracted by the offer of better discounts based on driving behavior. It also gives the company’s underwriters actual data in place of models and guesswork. This new technology is one that Progressive can monetize into a business unit to serve other insurers as well.

Busting silos
Some observers might consider organizational silos—so named for parallel parts of the org chart that don’t intersect—a structural issue rather than a cultural one. But silos are more than just lines and boxes. The narrow, parochial mentality of workers who hesitate to share information or collaborate across functions and departments can be corrosive to organizational culture.

Silos are a perennial problem that have become more costly because, in the words of Cognizant CEO Francisco D’Souza, “the interdisciplinary requirement of digital continues to grow. The possibilities created by combining data science, design, and human science underscore the importance both of working cross-functionally and of driving customer-centricity into the everyday operations of the business. Many organizations have yet to unlock that potential.”2 The executives we surveyed appeared to agree, ranking siloed thinking and behavior number one among obstacles to a healthy digital culture.

How can you tell if your own organization is too siloed? Discussions with CEOs who have led old-line companies through successful digital transformations indicate two primary symptoms: inadequate information, and insufficient accountability or coordination on enterprise-wide initiatives.

Getting informed
Digital information breakdowns echo the familiar story of the blind men and the elephant. When employees lack insight into the broader context in which a business competes, they are less likely to recognize the threat of disruption or digital opportunity when they see it and to know when the rest of the organization should be alerted. They can only interpret what they encounter through the lens of their own narrow area of endeavor.

The corollary to this is that every part of the organization reaches different conclusions about their digital priorities, based on incomplete or simply different information. This contributes to breaks in strategic and operating consistency that consumers are fast to spot. There isn’t the luxury of time in today’s digital world for each division to discover the same insight; a digital attacker or more agile incumbent is likely to swoop in before the siloed organization even knows it should be mounting a response. So the first imperative for companies looking to break out of a siloed mentality is to inspire within employees a common sense of the overall direction and purpose of the company. Data and thoughtful management rotation often play a role.

Data-driven transparency. Data can help solve the blind-men-and-the-elephant problem. A social-services company, for instance, created a customer-engagement group to better understand how customers interact with the company’s products and brands across silos—and where customers were running into difficulty. Among other things, this required close examination of how the company collected, analyzed, and distributed data across silos. The team discovered, for example, that some customers were cancelling their memberships because of the deluge of marketing outreaches they were receiving from the company. To address this, the team combined customer databases and propensity models across silos to create visibility and centralized access rights with regard to who could reach out to members and when. Among other achievements, this team:

created segment-specific trainings that offered an integrated view of each segment’s suite of needs and offerings that would meet them
drew on information from different parts of the organization to give a more developed picture on engagement, retention, and the total number of touches associated with various segments and customers
showed the net effect of the entire organization’s activities through the customer’s eyes
embedded this information into key processes to ensure information was accessible in a cross-disciplinary way—breaking siloed viewpoints and narrow understandings of the overall business model
Management rotation. Another way to achieve better alignment on the company’s direction is to rotate executives between siloed functions and business units. At the luxury retailer Nordstrom, for example, two key executives exchanged roles in 2014: Erik Nordstrom, formerly president of the company’s brick-and-mortar stores, became president of Nordstrom Direct, the company’s online store, while Jamie Nordstrom, formerly president of Nordstrom Direct, became president of the brick-and-mortar stores. This type of rotation can be done at different levels in an organization and helps create a more consistent understanding between different business units regarding the company’s aspirations and capabilities, as well as helping create informal networks as employees build relationships in different departments.

Instilling accountability
The second distinctive symptom of a siloed culture is the tendency for employees to believe a given problem or issue is someone else’s responsibility, not their own. Companies can counter this by institutionalizing mechanisms to help support cross-functional collaboration through flexibly deployed teams. That was the case at ING, which, because it identifies more as a technology company than a financial-services company, has turned to tech firms for inspiration, not banks. Spotify, in particular, has provided a much-talked-about model of multidisciplinary teams, or squads, made up of a mix of employees from diverse functions, including marketers, engineers, product developers, and commercial specialists. All are united by a shared view of the customer and a common definition of success. These squads roll up into bigger groups called tribes, which focus on end-to-end business outcomes, forcing a broader picture on all team members. The team members are also held mutually accountable for the outcome, eliminating the “not my job” mind-set that so many other organizations find themselves trapped in. While this model works best in IT functions, it is slowly making its way into other areas of the business. Key elements of the model (such as end-to-end outcome ownership) are also being mapped into more traditional teams to try to bring at least pieces of this mind-set into more traditional companies.

Start by finding mechanisms, whether digital, structural, or process, that help build a shared understanding of business priorities and why they matter. Change happens fast and from unpredictable places, and the more context you give your employees, the better they will be able to make the right decisions when it does. To achieve this, organizations must remove the barriers that keep people from collaborating, and build new mechanisms for cutting through (or eliminating altogether) the red tape and bureaucracy that many incumbents have built up over time.

Cultural changes within corporate institutions will always be slower and more complex than the technological changes that necessitate them. That makes it even more critical for executives to take a proactive stance on culture. Leaders won’t achieve the speed and agility they need unless they build organizational cultures that perform well across functions and business units, embrace risk, and focus obsessively on customers.

Source: McKinsey.com, August 2017
By Julie Goran, Laura LaBerge, and Ramesh Srinivasan
About the authors: Julie Goran is a partner in McKinsey’s New York office, where Ramesh Srinivasan is a senior partner; Laura LaBerge is a senior practice manager of Digital McKinsey and is based in the Stamford office.
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How CEOs can work with an active board

Posted in Aktuellt, Board work / Styrelsearbete, Executive Coaching on August 10th, 2017 by admin

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.

This change can be daunting and frustrating for CEOs. However, based on our experience of advising CEOs, operating as CEOs, and sitting on boards, we have found that executives can be effective in the new environment by revamping their interactions with their boards. It consists of four approaches.

Work with board members individually as well as in the group — and selectively seek their help. It’s remarkable how many CEOs focus mainly on formal boardroom relationships. Yet by investing the time in regular one-to-one informal interactions, a CEO will help address the new active board members’ sense of duty to get close to the business. Through a personal dialogue, the CEO can better enlist them in important initiatives and address issues before they become crises. In addition, by creating a personal bond with the individual directors, the CEO lessens the odds that they will undermine or blindside him.

It is especially important to create a bond with the lead director and/or the chair. As boards have become more active, the lead director and board chair hold the keys to setting productive agendas and managing issues with the total board or individual members. One of us served on an active board that included members who frequently threatened to derail agendas and process with counterproductive questions. The CEO quietly recruited the lead director and chair to restore order, which they did. As boards have become more active, the lead director and board chair hold the keys to setting productive agendas and managing issues with the total board or individual members.

CEOs should consider recruiting one board member as an informal advisor. This must be done with great care and an ear for political nuances. For example, as one CEO we know discovered, a prospective board advisor actually had his eye on the CEO role for himself — hardly the right confidant! By using already-scheduled one-on-ones to assess board members for this advisory role, the CEO can better identify an appropriate advisory board member. This board member can be of great value as a sounding board and a guide to working effectively with the rest of the board.

Communicate less formally, more intensively, more often. Many CEOs and their teams still deliver traditional 80-slide PowerPoint summary presentations at board meetings. But given that today’s boards increasingly want a substantive dialogue, we advise replacing the presentation with a thoughtful, verbal review and Q&A around critical updates, challenges, and opportunities. (Further background can be provided in brief pre-reading material.)

This will show that the CEO is using his or her face-to-face time with the board for serious discussion. It will focus board activism on topics where the CEO will benefit from directors’ insight and counsel. And by taking the lead in inviting the board to engage on business-critical matters, the CEO can better manage the process and avoid one of the biggest downsides of the active board: disruptive interference by board members in business operations.

It may seem obvious that CEOs should communicate with board members regularly and substantively between board meetings. But in reality, CEOs often communicate mainly when there is a problem. Many also have difficulty regularly addressing a balanced mix of important topics.

One very effective approach to this issue is regular CEO letters to the board. The management of this letter should be delegated to a top lieutenant such as the head of communications or the COO. A monthly rhythm has proven effective with many boards. To assure balanced, relevant content, the letter should routinely address a fixed set of regular topics (e.g., business-environment trends, business updates, people/talent news, and early warnings of potential upside and downside developments).

Expose Level 3 and 4 managers to the board. While boards in the past were typically focused on CEO succession planning and the talent among the CEO’s direct reports, active boards are also very interested in the levels below. They rightly see these executives as the future leaders and the operational leaders of today who should be driving performance. Active board members will therefore seek to get to know them.

Some CEOs feel this is overly intrusive or worry that the lower-level executives are not ready for board exposure. But, in fact, it’s positive to have board members engaging with deeper levels of talent. They learn more about the business and the next generation of the company’s leaders. Board members can also give the CEO valuable feedback about the people they meet and their view of the company’s overall bench strength. And for the executives, the right kind of exposure to board members is a great development opportunity.

The CEO should take the lead with the board in driving the engagement process, which will allow him or her to have greater influence over it. She can select the highest potential individuals for the interactions and organize the interactions so that they are most productive — for example, by holding them as one-to-ones over a breakfast or dinner. She can also brief the executives in advance on the style of the board member and potential question areas and brief the board members on the executives they will meet.

Handle strategic planning… strategically. Older-style boards typically become involved only at the end of the strategic-planning process — typically in a board meeting devoted to review and approval of the strategy. By contrast, active boards often push to be involved from the start because the strategy is so important to the company’s performance.

The notion of involving the board in strategic planning can make CEOs anxious and defensive. They fear that the board may undermine the planning process due to insufficient knowledge about the business. They also worry that board involvement in strategic planning will be the thin edge of a wedge and lead to board interference in day-to-day management of the company.

The key to navigating this challenge is to keep strategic planning in the hands of management but to invite the board to provide advice and feedback from the beginning. One good way to do this is to involve the board early in deciding on the right, big-picture, strategic direction for the company, without getting into the details. The CEO and her team can develop and present to the board several options to the board, explaining why each has merit. Then the executives can solicit board input on each but not ask for a vote. In this way, the CEO and her team can gain valuable board perspective that will strengthen all the choices that are developed and obtain early board buy-in for both the options and the ultimate strategic plan that’s chosen.

The CEO can then provide periodic updates on the strategic-planning process through letters to the board and board meetings. This allows the board to stay engaged and provide input but keeps the control over the actual process with the executive team, where it belongs.

Active boards are a corporate reality. How to work with them effectively should be one of the most important items on the CEO agenda. As we have outlined, the CEO has an opportunity not only to manage this new relationship but also to make the active board an asset in building long-term, high performance of the company.

Source:hbr.com (Harvard Business Review)
Authors: Ken Banta and Stephen D.Garrow
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How anxiety affects CEO decision making

Posted in Aktuellt, Board work / Styrelsearbete, Leadership / Ledarskap on June 29th, 2017 by admin

While top executives tend to be thought of as a confident bunch, they are no less susceptible to anxiety than the rest of us. After all, they routinely have to make important decisions, often under conditions of uncertainty, that affect countless people, organizations, and industries.

It is less clear, though, what this anxiety means for how they do their jobs. Psychology research has shown that anxiety influences decision making—for example, job anxiety can cause people to fixate on potential threats, thus missing big opportunities. This made us wonder whether boards or employees should be worried about anxiety influencing their CEO’s strategic decision making in ways that might hold back their firm.

We interviewed 84 CEOs and other top executives of major corporations to find out. They described some of the toughest decisions they had faced in their roles. Overall we collected data on 174 big decisions, such as those relating to acquisitions, major product launches, new foreign market entries, and complex corporate restructurings. We analyzed transcripts to assess whether executives’ language focused on opportunities or threats. Then we surveyed the people who knew them best – their spouses (mostly wives, but a few husbands), close friends and family, and their chief lieutenants (COOs, general counsels, etc.) – to get more information about their personal lives and how they handled tough decisions. We combined this with archival data about their businesses, competitors, and industries. Finally, we conducted a follow-up survey of employees at the lower levels of these organizations to see how their anxiety levels compared to top executives.

We found that more-anxious leaders (those that were described as experiencing job anxiety “to some extent,” “to a considerable extent,” or “to a great extent”) took fewer strategic risks than their less anxious peers in order to avoid potential losses. Job anxiety reduced the attractiveness of big strategic bets for the company, despite their potential to drive large gains.

This isn’t necessarily a bad thing, as excessive risks can lead companies into ruin. But smart risks are often key to driving corporate growth, and our results suggest that anxious executives may, in their overriding desire to avoid threats, miss out on high-upside strategic opportunities and thus limit growth.

However, context matters. Researchers have shown that executives facing loss contexts (e.g., when the company has recently underperformed relative to peers) are more inclined to make big strategic bets that, if successful, can undo the loss. Conversely, executives facing gain contexts (e.g., when the company has recently performed better than its peers) eschew risky bets in favor of safer alternatives that offer more predictable, albeit lower upside, returns.

This suggests that while anxiety may lead executives to avoid risky strategic initiatives, such tendencies may be counteracted when the executive is facing a loss context that calls for bold action. We found that job anxiety exerts a weaker effect on risk-taking in loss contexts, while gain contexts exacerbate anxious executives’ risk-reducing tendencies.

For example, consider the case of a tech CEO in our sample who was described as experiencing “a considerable extent” of job anxiety by his close friends and family. This CEO was facing an important strategic decision for his firm regarding future growth, and made the decision to sell the firm to a larger rival rather than pursue the potentially much higher upside of independent growth as a standalone business.

Already naturally inclined to play it safe, anxious executives are especially careful not to upset the apple cart when things are going well. While a conservative bias might sound reasonable, or even admirable, markets might very well see this as a serious threat to shareholder interests if it causes a firm to miss out on promising opportunities that would propel growth.

Our results also showed that anxiety drives some executives to stack the deck. Prior research has shown that one of the ways anxious individuals deal with their worries is to lean on trusted others for support and protection, a phenomenon known as “social buffering.” Similarly, we found that anxious executives are more likely to staff their teams with loyal subordinates whom they know and trust. This is especially true in loss contexts, where threats loom large. Anxious executives are particularly driven to close ranks within their teams and stack their inner decision-making circle with loyalists. This effect disappears in gain contexts where anxious executives are presumably less compelled to create a protective shield against perceived threats.

The main takeaway is that top executives are influenced by job anxiety just like the rest of us, but because the impact of their biases can have serious downstream consequences for thousands of employees, shareholders, and stakeholders, leaders should ask:

Maybe the paranoid are more likely to survive, but at what cost? Intel CEO Andy Grove famously noted that paranoia can be a good thing for executives when it compels them to keep a close eye on their environment. Our results suggest, however, that overly anxious (and perhaps paranoid) executives may be less willing to make the big strategic bets that could catapult the company to long-term success. Serious consideration of both potential upside and downside outcomes is necessary for forming a clear-eyed assessment of firm strategy, but anxiety may cause executives to become myopic to such balanced views.

Who is asking the tough questions? One can hardly fault anxious executives for relying upon subordinates that they trust. But this could come with drawbacks if a sense of loyalty prevents subordinates from asking difficult questions or otherwise engaging in healthy debate with leaders. Executives are well-advised to put together teams that are nevertheless unafraid to challenge them when the situation calls for it.

What can boards do? Boards may not have an easy way to assess anxiety in executives, but they should realize that anxiousness plays a meaningful role in the fortunes of their firms. For instance, an anxious executive’s risk-averse outlook may run counter to the board’s (or shareholder’s) vision for bold strategies.

Although a CEO is unlikely to report to their board that they are feeling anxious about their job, boards can be proactive in looking for signs of stress that may bias executive decision-making, perhaps through informal conversations with executives’ close colleagues. They can also offer social support and encouragement to help mute some of the more dysfunctional effects of executive job anxiety. And to avoid anxious leaders surrounding themselves with loyalists, board members can protect the firm by requiring CEOs to present multiple strategic options before making big decisions, or by asking individuals other than the CEO to present opposing options.

Source: Harvard Business Review, July 19, 2016
Authors:Mike Mannor, Adam WowakViva, Ona BartkusLuis and R. Gomez-Mejia
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Slutfakturerat för styrelearvodet!

Posted in Aktuellt, Board work / Styrelsearbete on June 26th, 2017 by admin

Läs mer här!

Slutfakturerat för börsens styrelseproffs

Posted in Aktuellt, Board work / Styrelsearbete on June 22nd, 2017 by admin

En dom från Högsta förvaltningsdomstolen i tisdags slår fast att styrelseproffs inte längre ska kunna fakturera styrelsearvodet via egna bolag. Det kommer leda till att styrelserummen tappar tungviktare, tror experterna.

Läs mer här.

Källa: SvD.se, 22 juni 2017

The CEO’s role in leading transformation

Posted in Aktuellt, Board work / Styrelsearbete, Executive Coaching, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on June 9th, 2017 by admin

The CEO helps a transformation succeed by communicating its significance, modeling the desired changes, building a strong top team, and getting personally involved.

In today’s business environment, companies cannot settle for incremental improvement; they must periodically undergo performance transformations to get, and stay, on top. But in the volumes of pages on how to go about implementing a transformation, surprisingly little addresses the role of one important person. What exactly should the CEO be doing, and how different is this role from that of the executive team or the initiative’s sponsors?

Based on a series of interviews we have conducted with nearly a dozen executives over the last couple of years—as well as our own experience working with companies—we believe there is no single model for success. Moreover, the exact nature of the CEO’s role will be influenced by the magnitude, urgency, and nature of the transformation; the capabilities and failings of the organization; and the personal style of the leader.

Despite these variations, our experience with scores of major transformation efforts, combined with research we have undertaken over the past decade, suggests that four key functions collectively define a successful role for the CEO in a transformation:

Making the transformation meaningful. People will go to extraordinary lengths for causes they believe in, and a powerful transformation story will create and reinforce their commitment. The ultimate impact of the story depends on the CEO’s willingness to make the transformation personal, to engage others openly, and to spotlight successes as they emerge.
Role-modeling desired mind-sets and behavior. Successful CEOs typically embark on their own personal transformation journey. Their actions encourage employees to support and practice the new types of behavior.
Building a strong and committed top team. To harness the transformative power of the top team, CEOs must make tough decisions about who has the ability and motivation to make the journey.
Relentlessly pursuing impact. There is no substitute for CEOs rolling up their sleeves and getting personally involved when significant financial and symbolic value is at stake.
Everyone has a role to play in a performance transformation. The role of CEOs is unique in that they stand at the top of the pyramid and all the other members of the organization take cues from them. CEOs who give only lip service to a transformation will find everyone else doing the same. Those who fail to model the desired mind-sets and behavior or who opt out of vital initiatives risk seeing the transformation lose focus. Only the boss of all bosses can ensure that the right people spend the right amount of time driving the necessary changes.

Making the transformation meaningful
Transformations require extraordinary energy: employees must fundamentally rethink and reshape the business while continuing to run it day to day. Where does this energy come from? A powerful transformation story helps employees believe in the effort by answering their big questions, which can range from how the transformation will affect the company down to how it will affect them. The story’s ultimate impact will depend on not just having compelling answers to these questions but also the CEO’s willingness and ability to make things personal, to engage others openly, and to spotlight successes as they emerge.

Adopt a personal approach
CEOs who take time to personalize the story of the transformation can unlock significantly more energy for it than those who dutifully present the PowerPoint slides that their working teams created for them. Personalizing the story forces CEOs to consider and share with others the answers to such questions as “Why are we changing?”; “How will we get there?”; and “How does this relate to me?”

Some leaders include experiences and anecdotes from their own lives to underline their determination and belief—and to demonstrate that obstacles can be overcome. Klaus Zumwinkel, the chairman and CEO of Deutsche Post, talked about his passion for mountain climbing, linking the experience of that sport and the effort it requires to the company’s transformation journey. John Hammergren, the CEO of McKesson, stressed that every employee was or would be a patient in the health care system and that this “larger purpose” made a difference. “Had we been in the ball-bearing business, I’m not sure it would have been as easy to personalize it,” he acknowledges.

Openly engage others
When a CEO’s version of the transformation story is clear, success comes from taking it to employees, encouraging debate about it, reinforcing it, and prompting people to infuse it with their own personal meaning. Most CEOs invest great effort in visibly and vocally presenting the transformation story. Julio Linares, the executive chairman of Telefónica de España, says the most important and hardest part of the transformation was “to convince people of the need for the program.”

Once the story is out, the CEO’s role becomes one of constant reinforcement. As P&G CEO Alan G. Lafley says, in “Leading change: An interview with the CEO of P&G,” “Excruciating repetition and clarity are important—employees have so many things going on in the operation of their daily business that they don’t always take the time to stop, think, and internalize.” Paolo Scaroni, who has led three public companies through various chapters of change, likes to find three or four strategic concepts that sum up the right direction for the company and then to “repeat, repeat, and repeat them throughout the organization.”

Reinforcement should come from outside as well. Passera notes, “If everyone keeps reading in the newspapers that the business is still a poor performer, not contributing to society, or is letting the country down, people will not believe you.”

Spotlight success
As the company’s transformation progresses, a powerful way to reinforce the story is to spotlight the successes. Sharing such stories helps crystallize the meaning of the transformation and gives people confidence that it will actually work. Murthy of Infosys describes how high-performing teams were invited to make presentations to larger audiences drawn from across the company, “to show other people that we value such behavior.”

Ravi Kant, the managing director of the integrated Indian auto business Tata Motors, deliberately identified people who would serve as examples to others. In “Leading change: An interview with the managing director of Tata Motors,” he talks about how he highlighted the achievements of one young man whose success on a risky project and subsequent promotion showed colleagues that talented and determined people can rise through the hierarchy.

Emphasizing the positive, behavioral research shows, is especially important. In 1982, University of Wisconsin researchers who were conducting a study of the adult-learning process videotaped two bowling teams during several games. The members of each team then studied their efforts on video to improve their skills. But the two videos had been edited differently. One team received a video showing only its mistakes; the other team’s video, by contrast, showed only the good performances. After studying the videos, both teams improved their game, but the team that studied its successes improved its score twice as much as the one that studied its mistakes. Evidently, focusing on the errors can generate feelings of fatigue, blame, and resistance. Emphasizing what works well and discussing how to get more out of those strengths taps into creativity, passion, and the desire to succeed.

Role-modeling desired mind-sets and behavior
Whether leaders realize it or not, they seem to be in front of the cameras when they speak or act. “Every move you make, everything you say, is visible to all. Therefore the best approach is to lead by example,” advises Joseph M. Tucci, CEO of EMC, the US-based information storage equipment business. Ultimately, employees will weigh the actions of their CEO to determine whether they believe in the story.

Transform yourself
Employees expect the CEO to live up to Mahatma Gandhi’s famous edict, “For things to change, first I must change.” The CEO is the organization’s chief role model.

Typically, a personal transformation journey involves 360-degree feedback on leadership behavior specific to the program’s objectives, diary analysis to reveal how time is spent on transformation priorities, a commitment to a short list of personal transformation objectives, and professional coaching toward these ends. CEOs generally report that the process is most powerful when all members of an executive team pursue their transformation journeys individually but collectively discuss and reinforce their personal objectives in order to create an environment “of challenge and support.

Murthy’s 2002 decision to take on the job title of chief mentor at Infosys, for example, meant that he had to reinvent himself, because he laid aside his formal managerial (CEO) authority at the same time. He explains, “You have to sacrifice yourself first for a big cause before you can ask others to do the same,” adding, “A good leader knows how to retreat into the background gracefully while encouraging his successor to become more and more successful in the job.”

Take symbolic action
The quickest way to send shock waves through an organization is to conceive and execute a series of symbolic acts signaling to employees that they should behave in ways appropriate to a transformation and support these types of behavior in others. For instance, C. John Wilder, CEO of the Texas energy utility TXU, gave a large bonus to a woman who had taken a clear leadership role in a very important business initiative. “This leader’s contributions generated real economic value to the bottom line,” he explains. “Of course, news of that raced through the whole organization, but it helped employees understand that rewards will be based on contributions and that ‘pay for performance’ could actually be put into practice.”

Building a strong and committed top team
The CEO’s team can and should be a valuable asset in leading any transformation. As Deutsche Post’s Zumwinkel suggests, “You need excellent individual players, but you also need players who are dedicated to playing as a team.” Sharing a meaningful story and modeling the right role will certainly increase the odds of getting the team on board, but it is also vital to invest time in building that team.

Assess and act
Successful CEOs take time to assess the abilities of individual members of the team and act swiftly on the result. In some cases, input from third parties (such as executive search firms) is sought to create a more objective fact base. Many CEOs find it useful to map team members on a matrix, with “business performance” on one axis and “role-modeling the desired behavior” on the other. Those in the top-right box (desired behavior, high performance) are the organization’s stars, and those in the bottom-left box (undesired behavior, low performance) should be motivated, developed, or dismissed. The greatest potential for sending signals involves the employees in the box of “undesired behavior, high performance.” When clear action is taken to improve or remove these managers, the team’s members know that role-modeling and teamwork matter. Banca Intesa’s Passera affirms that, “If necessary, you have to get rid of those individuals, even the talented ones, who quarrel and cannot work together.”

How do CEOs know when to intervene with the strugglers? They can reflect on the following questions:
Do team members clearly understand what is expected of each of them in relation to the transformation?
Is the CEO serving as a positive role model?
Does everyone recognize the downside and upside of getting on board and doing what is required?
Have struggling team members received a chance to build the needed skills?
If the answer to all of these questions is yes, decisive action is justified.

Experienced CEOs attest to the positive impact this can have on the rest of the company. EMC’s Tucci says he had to take “public” action to tackle the “whiff of arrogance” that used to characterize certain parts of the company. TXU’s Wilder recalls that “When we did a cultural audit, we found that the number-one complaint was that management was not dealing with employees that everyone knew weren’t carrying their load.“

Invest team time
Even with the right team in place, it takes time for a group of highly intelligent, ambitious, and independent people to align themselves in a clear direction. Typically, the first order of business is for members to agree on what they can achieve as a team (not as individuals), how often the team should meet, what transformation issues should be discussed, and what behavior the team expects (and won’t tolerate). These agreements are often summarized in a “team charter” for leading the transformation, and the CEO can periodically use the charter to ensure that the team is on the right track.

Intesa’s Passera speaks of how he brought his team together regularly to “share almost everything,” to make it “clear to everyone who is doing what,” and to “keep the transformation initiatives, budgets, and financial targets knitted together.” P&G’s Lafley emphasizes the importance of spending the time together wisely: “You need to understand how to enroll the leadership team.” As a rule of thumb, 80 percent of the team’s time should be devoted to dialogue, with the remaining 20 percent invested in being “presented to.”

Effective dialogue requires a well-structured agenda, which typically ensures that ample time is spent in personal reflection (to ensure that each person forms an independent point of view from the outset), discussion in pairs or small groups (refining the thinking and exploring second- and third-level assumptions), and discussion by the full team before final decisions are made. In this process, little tolerance should be shown for minutiae (losing the forest for the trees) and for any lack of engagement. Face-to-face meetings, as opposed to conference calls, greatly enhance the effectiveness of team dialogue.

Relentlessly pursuing impact
Organizational energy—collective motivation, enthusiasm, and intense commitment—is a crucial ingredient of a successful transformation. There is no substitute for a CEO directing his or her personal energy toward ensuring that the company’s efforts have an impact.

Roll up your sleeves
Initiatives with a significant financial or symbolic value require the CEO’s personal involvement for maximum impact. There may be several beneficial effects, among them ensuring that important decisions are made quickly—without sacrificing the value of collective debate—and sowing the seeds of a culture of candor and decisiveness.

Leaders must be willing to leave the executive suite and help resolve difficult operational issues. Peter Gossas, president of Sandvik Materials Technology and a man with lifelong experience in the steel industry, observes, “If there’s a problem, it can be helpful if I come to the work floor, step up on a crate so that everyone can see me, and hold a discussion with a shift unit that may be negative to change.” He adds, “It’s hard for me to walk into a melt shop and not begin discussing ways to solve operational problems.”

Hold leaders accountable
Successful CEOs never lose sight of their management responsibility to chair review forums. Through these, they compare the results of the transformation program with the original plan, identify the root causes of any deviations, celebrate successes, help fix problems, and hold leaders accountable for keeping the transformation on track, both in activities (are people doing what they said they would?) and impact (will the program create the value we anticipated?). A central role for the CEO during these review forums is to ensure that decision making stays grounded in the facts. As Narayana Murthy wryly observes, “We have embraced the adage ‘In God we trust; everyone else brings data to the table.’”

The CEO also plays a critical role in ensuring an appropriate balance between near-term profit initiatives (those that deliver performance today) and organizational-health initiatives (those that build the capacity to deliver tomorrow’s results). This is a lesson applied by John Varley, CEO of Barclays: “For several years, the focus on initiatives to improve financial performance dramatically crowded out attention on franchise health, leaving us with a set of issues in some businesses that needed urgent attention. We are addressing those issues.” During the transformation, some CEOs even choose to hold separate review meetings for short- and long-term objectives in order to ensure that companies maintain a balance between operational improvement (tactical strategies, wage management, productivity, and asset management) and long-term growth (revenue and volume growth through market share, new products, channels and marketing, M&A, talent, and capability management).

For CEOs leading a transformation, no single model guarantees success. But they can improve the odds by targeting leadership functions: making the transformation meaningful, modeling the desired mind-sets and behavior, building a strong and committed team, and relentlessly pursuing impact. Together, these can powerfully generate the energy needed to achieve a successful performance transformation.

Source: McKinsey.com, June 2017
Authors: Carolyn Aiken and Scott Keller.
About the authors: Carolyn Aiken is a consultant in McKinsey’s Toronto office, and Scott Keller is a principal in the Chicago office.
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Därför ska du investera i hängivna företagsledare

Posted in Aktuellt, Board work / Styrelsearbete, Leadership / Ledarskap on May 30th, 2017 by admin

Investera Aktieinvesteringar är mer än bara ekonomiska nyckeltal, räkenskaper och finansmodeller. Bolag som leds av inspirerande och hängivna ledare har visat sig vara särskilt lönsamma, skriver ODIN Fonder som ger ett exempel på ett sådant bolag som tagits in i portföljen.

I sin bok «Intelligent Fanatics Project – How great leaders build sustainable businesses» beskriver Ian Cassel vad som kännetecknar ledare som åstadkommit exceptionell aktieavkastning under många decennier.

Den här typen av ledare har två utmärkande drag som förklarar varför det går så bra för dem:

• De vet hur man ska behandla medarbetare

• De vet hur verksamheten ska organiseras

Världsmästare på kapitalallokering

Vi har tidigare pratat om vad ”god” ledning är ur ett finansiellt perspektiv. Slutsatsen var att goda ledare alltid vet vilken kapitalkälla som ska användas (skuld, eget kapital eller fritt kassaflöde), och var kapitalet ska sysselsättas (investeringar, förvärv, utdelning, skuldavbetalningar eller återköp av aktier).

Så kallad kapitalallokering, det vill säga förmågan att flytta pengar från ett ställe till ett annat, är ett utmärkande drag hos goda ledare ur ett ägarperspektiv. Men ”intelligenta fanatiker” går ett steg längre. De vet hur verksamheten ska läggas upp för att åstadkomma konkurrensfördelar och de vet hur man behandlar medarbetarna.

Organisation och ledning

När ett bolag rör sig från litet till stort så klarar dessa ledare att bevara småföretagskänslan utan byråkrati fast med korta beslutsvägar, riskbenägenhet och entreprenörskap i behåll. Och de är aldrig nöjda.

De har ofta en informell ledarstil och pratar med alla medarbetare oavsett nivå i organisationen; de flyger ekonomiklass; bor på vanliga hotell och går i jeans på jobbet. De har inte ledningsgrupper – de arbetar i team. De kommunicerar enkelt och tydligt och har mycket få ledningsnivåer i organisationen. De strävar ständigt efter förbättringar och är paranoida när det kommer till kostnader.

Carlos Brito, koncernchef på bryggerijätten ABInBev, slår huvudet på spiken när han säger:
«Costs are like fingernails. You have to cut them all the time. If not, they grow»

De bryr sig mindre om tjänsteår och rang. Som anställd blir du bedömd utifrån dina prestationer. Och presterar du bra så får du bra betalt. Sådana ledare bryr sig mer om kunderna än aktieägarna, då de vet att det gynnar aktieägarna på lång sikt.

Överraskande nog har dessa ledare ofta begränsad branscherfarenhet och saknar ofta både affärsplan och uttalad strategi. De börjar som regel med noll erfarenhet och lite kunskap om den bransch bolagen verkar i. Det gör att de tänker helt annorlunda än etablerade aktörer.

Visste inget om öl
Exempelvis visste inte grundarna av ABInBev – världens största öltillverkare – hur man brygger öl. Men de visste allt om hur anställda fungerar. Det hade de lärt sig genom att bygga upp en mäklarfirma.

På ABInBev har filosofin fungerat i flera decennier, och vi tror att trenden kommer att hålla i sig en lång tid framöver. Detta är anledningen till att vi investerat i bolaget. Vi värdesätter bolaget just tack vare dess ledning och kultur.

Medarbetarna som ägare
Ledare som kan få medarbetarna att agera och tänka som ägare har goda chanser att skapa något unikt och varaktigt. Ägarna uppför sig inte på samma sätt som medarbetarna. Äger du bilen du kör beter du dig annorlunda än om du hyr en bil. Vem har inte varit frestad att testa vad som händer med hyrbilen om man gasar och håller i handbromsen samtidigt? Det gör du inte om du äger bilen själv.

Dessa hängivna och inspirerande ledare respekterar medarbetarna och ger dem möjlighet att utvecklas. De vill att medarbetarna ska få chansen att lyckas. Incitament som involverar medarbetarna i bolagets resultatutveckling är ett viktigt verktyg för dem.

Eller för att citera en av de centrala figurerna i uppbyggandet av ABInBev, Marcel Telles:

«Actually, the main role of a manager is to recruit, train, motivate and especially to keep people within the organization. A business manager should be called a people manager. Those who are really good with people will be good as a manager»

Investeringar handlar om så mycket mer än kassaflöden, kvartalsrapporter och nästa års marginaler.

Källa: Privata Affärer och Odin Fonder, maj 2017
Länk

Why good board fails (part 3)

Posted in Aktuellt, Board work / Styrelsearbete, Executive Coaching on May 8th, 2017 by admin

Not knowing “The Rules”

Every corporation is unique. Understanding the corporation’s constitution, both the “formal” and “informal” rules and the Board and organisational policies, procedures and protocols takes time. I have yet to serve on two Boards that are similar. Every Board and every corporation is substantially unique.

Attempting to follow practices and procedures you know from previous Board experiences may not fit the culture and environment of the next Board you sit on. In a one-on-one interview with a new Board Director of an Industrial/Construction Corporation, the leader described how he had historically taken the habit of walking around prior to Board meetings; informal chats, a quick coffee with the CFO, a couple of phrases exchanged with the COO, a brief conversation with receptionists. When he attempted this in a new, culturally-different organisation, he was finally taken aside by a fellow Board member who explained the cultural implications and the negative perception that his “constant spying” was having on the Executive. This was resolved by scheduling formal appointments, over coffee, and once the trust had been established, he received complaints from the individuals who he may have missed having coffee with at subsequent Board meetings. He did, however, learn a substantial amount about the organisation and its internal “rules” and workings which aided in making him a better Board Member.

Source: Stanton Chace, April 2017
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