Quick takes

Citation

Gorrell, C. (2011), "Quick takes", Strategy & Leadership, Vol. 39 No. 3. https://doi.org/10.1108/sl.2011.26139cae.002

Quick takes

Article Type: Quick takes From: Strategy & Leadership, Volume 39, Issue 3

These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.

Sustainable leadership practices for enhancing business resilience and performanceGayle C. Avery and Harald Bergsteiner

The purpose of a business is to maximize value for the (Fill in the blank). Select from two choices: shareholders or stakeholders. This debate has heated up in the wake of The Great Recession and a number of respected strategic thinkers have weighed in, including most recently, Michael Porter. Those criticizing shareholder-first thinking (which prevails in the Anglo/US world) say it’s characterized by short-term thinking/rewards and leads to the long-term destruction of the company’s value. Yet, such shareholder-first businesses cite an array of obstacles to adopting the stakeholders-first approach.

At the same time, around the world numerous companies are successfully practicing the alternative path of stakeholder-first approach. It is referred to as “sustainable,” “Rhineland” or “honeybee” leadership. Its aim is delivering better and more sustainable returns, reducing unwanted employee turnover and accelerating innovation. The reasons/proof for converting to a sustainable leadership are well researched and supported by new converts each year. One example is Walmart.

The sustainable leadership pyramidOffered are 23 practices that are building blocks for creating a sustainable leadership company. They are organized as a pyramid with foundation practices, higher-level practices and key performance drivers. The pyramid has been developed on the idea that when relevant foundation practices are in place they facilitate and support the emergence of the higher-level practices. The key performance drivers emerge from both sets of lower level practices. The apex of the pyramid contains five performance outcomes that create sustainable leadership.

The cost of not changingThe major force brought to bear on recalcitrant managers, who are practicing the stakeholder-first approach, will be the increased cost of doing business in an unsustainable way. The financial sector could exert enormous pressure for change if it chose to, valuing people-centered, innovative, ethical and stakeholder-based leadership practices over current business-as-usual practices. A combination of optimizing business conditions, gaining stakeholder support, and protecting the firm’s reputation make sustainable leadership practices an increasingly attractive choice.

Unfortunately, executives remunerated on the basis of short-term results may have no incentive for seriously pursuing long-term change, to the detriment of shareholders and other stakeholders. This is where the fundamental short-term focus of the shareholder-first or business-as-usual model begins to destroy shareholder value and endanger a firm’s very survival.

MasterclassReinventing management: the practices that enable continuous innovationStephen Denning

As firms such as Apple, Amazon and Zappos have demonstrated, when customers are delighted through a continuous stream of added value, the gains can be extraordinary. Achieving this end entails simultaneously implementing five fundamental management shifts aimed at achieving continuous innovation and disciplined execution. The five transformations required are:

1. 1.

   The firm’s goal becomes delighting and engaging customers (a shift from an inside-out to outside-in perspective).

2. 2.

   The role of the manager changes (from controller to enabler).

3. 3.

   The mode of managerial coordination switches (from command-and-control to dynamic linking).

4. 4.

   The values practiced shifts (from a single focus on shareholder value to values relevant to all stakeholders).

5. 5.

   The communications mode of management changes (from command to conversation.

None of the five shifts is new in itself. Success, however, requires putting all five shifts into operation together. This Masterclass offers leaders an overview of the practices needed to accomplish and institutionalize the five shifts.

Shift 1 Goal: delighting customersThe shift amounts to a transition from shareholder capitalism to customer capitalism. It enables the firm to forge relationships that result in sales not just today but also tomorrow. Ten practices that enable the shift are cited.

Shift 2 Managers as enablersTo continuously add new value for clients, management must empower those doing the work and draw on their full talents and creativity. Ten principal practices are explained.

Shift 3 Dynamic linkageMeshing a client focus with autonomous teams and disciplined execution requires a set of measures called “dynamic linking.” Work is done in short cycles; priorities are set on what delights the client; the workers make the decisions about how the work is to be carried out; progress is measured by direct client feedback.

Shift 4 Changing valuesWhen the firm’s priority shifts from shareholder returns to providing a continuous stream of additional value to customers, there is a necessary changeover from a single-minded preoccupation with economic value – efficiency, economies of scale and cost-cutting – to a broader focus on the values that will grow the business by generating innovation and customer delight.

Shift 5 Conversational communicationsNone of the above shifts will be sustained if management communicates in the traditional mode of top-down commands that dispirit knowledge workers and customers with unresponsive one-way messages. Instead, communications need to adopt the mode of listening attentively and responding openly, with authentic stories, metaphors and open-ended questions.

Nine paradoxes of problem solvingAlex Lowy

A common aspect of complex problems is that they often contain some form of paradox. By addressing the inherent paradox, complex problems are more understandable and solvable. The following nine paradoxes are encountered with surprising frequency in corporate decision-making.

Paradox 1 – using problems as shields – clinging to problems that protect us from facing even bigger problems. In these cases, we make symptoms, rather than causes, the target of our efforts, finding short-term relief at best, but getting us no closer to a lasting solution. For example, it’s easier to complain endlessly about a company’s dysfunctionality than it is to face the possibility of firing many employees and retraining the ones remaining.

Paradox 2 – secondary gain – problems that help us to get things we want. In this paradox, the benefit is something we gain as a result of the problem and risk losing if the problem is solved: A CEO who isn’t an inspiring speakers gets to skip boring public speaking chores.

Paradox 3 – Herbert Simon’s dilemma. Over-cautious types who insist on having all the hard, cold facts before making a decision risk missing opportunities time and again.

Paradox 4 – the solution is the problem – when solving the problem is really just a fancy way of avoiding it. Wise problem solvers have learned that perspective learning and listening will be more helpful than imposing a solution to feel a momentary relief.

Paradox 5 – too much choice – paralyzed by options.

Paradox 6 – the helper’s paradox – where help only makes things worse. Sometimes it’s simply too hard to leave things alone when we see, or believe we see, a need. The result tends to be the opposite of what we hope for, and the problem either gets worse or more complicated as a result of the tension created.

Paradox 7 – Anais Nin’s puzzle. The harder you look, the more you base your search on what appears to be there. It’s only at the point when you stop trying that other possibilities can be seen.

Paradox 8 – knowing too much can hurt you. Sometimes the less you know about a situation, the easier it is to see opportunities or to make interesting connections. Creative ignorance allows you to ignore common wisdom and to think more freely.

Paradox 9 – the shortest path is sometimes the longer route – being indirect can be the most direct approach. Really big, complex problems can be overwhelming. As long as you remain intent on fixing the whole problem you can’t do much good at all.

Interview with Richard PascaleHow corporate leaders can use the Positive Deviance approach to stimulate radical changeRobert J. Allio

In his recent book, The Power of Positive Deviance, management guru Richard Pascale outlines the basic steps executives should follow to successfully implement this unconventional change methodology. In an interview with Robert Allio, he applies positive deviance to the corporate setting.

What: The positive deviance (PD) approach derives from a deceptively simple idea. Faced with a seemingly intractable or impossible problem or situation, a few people having the same resources as their peers manage to succeed against all odds. The PD process entails identifying these unusually effective individuals – the positive deviants – and adopting their practices

When: For managers, PD is often the solution of last resort: you’ve tried everything else and nothing works. Leaders can turn the conventional wisdom on its head by looking for exceptions to the rules. The key is to look within for the “invisible innovators.”

Example – Merck sales force in Mexico: PD methodology can produce dramatic results in a corporate setting. The staff had been working on the problem of poor sales of Fosomax for years without success. But after finding several reps that had exceptional success and copying their unorthodox methods, the sales force’s performance vaulted them from bottom of Merck’s 43 units in Latin America to top rankings.

Adoption of a PD practice: Leadership is important, and the leader as sponsor is a big deal. But when solving intractable problems using the positive deviance approach, leaders must not be the decision-makers, the providers of answers. Instead, the leader should be the convener of the community. The key is to engage the community in addressing the question – can something be done, even if we’ve already convinced ourselves that there is no solution? Designing a process so that the members of the community discover the solution has a lot to do with whether discovery actually sticks.

How to find PDs: The challenge is to identify PDs who are working well despite the system, innovating by functioning on the fringe. To find people to learn from you must get beyond the usual suspects. One of Pascale’s success stories: to find a solution to chronic antibiotic resistant staph infection in hospitals, we didn’t just talk to experts whose formal responsibility is disease control. Instead we enlisted orderlies, bus drivers, physical therapists, cafeteria staff, and others in the process. While not high status, these people know a lot about how infections get transmitted through contact. And when they are included in the solution process they feel appreciated and empowered.

Lessons from turnaround leadersDavid P. Boyd

How to repair and re-launch a sinking company? Learn from managers experienced in the turnaround process. A five-step model, offered here, synthesizes their best practices into a sequential process. By adhering to this model, executives of troubled firms can increase the likelihood of engaging all organizational members to help when a crisis looms.

The five-step turnaround process and requisite leadership actions:

Step 1 – solidify personal leverage

• •

  Secure board support – new leaders should manage up before they manage down.

• •

  Make prudent promises – “under promise and over deliver.”

• •

  Analyze market perceptions - strategy should never be based only on self-assessment; rather it should be driven by the perception of others.

Step 2 – set the stage

• •

  Articulate objectives and performance expectations that will provide context for the transformative efforts.

• •

  Explain the plight – organizational transformation rarely happens unless people “feel the fear.”

• •

  Create an external challenge to imbue the organization with purpose.

Step 3 – generate open dialogue

• •

  Practice participatory leadership with a structure for involvement (committees can be a fabric to unite the organization as conduits for internal change).

• •

  Acknowledge reflective response – interaction can breed innovation.

• •

  Lead by example – leaders must not only tell their story but also live it.

Step 4 – stabilize the situation

• •

  Halt the hemorrhage – only then address the challenge of how to make money.

• •

  Optimize the talent – recruit and retain; top priorities for prospects are “character, competence.”

• •

  Shed bureaucratic clutter.

Step 5 – spawn success

• •

  Enable learning – errors of commission are preferable to errors of omission.

• •

  Monitor momentum – leaders cannot manage and cure what they do not measure.

• •

  Reinforce results – rewards can encourage new behaviors and reinforce desired performance.

Each step is explained with two or more insightful examples of work drawn from the five turnaround executives’ experience. Their succinct stories clarify the principles, techniques, and tasks to illustrate why they worked so successfully.

Offered here is a sequential approach to arrest decline, secure stabilization, and then pursue growth. While the lessons emanate from turnarounds, the model is relevant to any major organizational change.

New business models for emerging media and entertainment revenue opportunitiesSaul J. Berman, Bill Battino and Karen Feldman

The market turmoil and the resulting opportunities to create new business models in the media and entertainment (M&E) industry offer insightful lessons about how to succeed in vying for the consumer mind and wallet share.

The three key drivers are:

• •

  Value shifts. The balance of power has shifted, as device manufacturers and distributors/aggregators continue to innovate and deliver superior experiences for the consumer, capturing greater revenue share.

• •

  Substitution. Once merely a threat, the mainstream adoption of digital devices and content across all age groups continues to drive fragmentation and declines in traditional media consumption.

• •

  Weaker digital revenue models. Current digital revenue models tend to be weaker than traditional revenue models, whether due to lower unit value, lower inventory or the move toward à la carte offerings.

The answerTo tackle these issues and chart a course toward growth and prosperity, M&E companies should concentrate on three key principles:

• •

  Focus on the experience. Media companies need to “rethink” their business models and seek innovative ways to enhance the consumer experience and connect with consumers. Three practices to do this are cited.

• •

  Embrace new distribution platforms. Media companies can leverage connected platforms to engage consumers in an ongoing relationship while optimizing value across distribution channels. Ideas are offered.

• •

  Expand revenue models. New marketing, consumer-paid and packaged revenue models must be flexible and tailored, offering relevancy, choice, integration and packaging options for consumers. Cited are innovative suggestions for consumer-centric marketing across paid, owned, and earned categories.

To successfully address the revenue challenge by delivering a better consumer experience, M&E companies will require the capabilities to build analytics and insights, develop consumer-centric models and enable multiplatform delivery.

To help M&E leaders overcome the revenue issues they face, three strategies – focusing on the consumer experience, embracing new distribution platforms and expanding revenue models – are offered in a case study. Media and entertainment leaders and new entrants should work now to build the capabilities necessary to take action and overcome the revenue challenge they face.

Catherine GorrellPresident of Formac, Inc. a Dallas-based strategy consulting organization (mcgorrell@sbcglobal.net) and a contributing editor of Strategy & Leadership.