Cynthia A. Montgomery is the Timken Professor of Business Administration at Harvard Business School. One of the programs she teaches is for accomplished executives and entrepreneurs at one of Harvard's flagship programs.
Very early on in the program she asks these senior business people to list three words that come to mind when they hear the word strategy. Collectively they have produced 109 words, frequently giving top billing to 'plan', 'direction', and 'competitive advantage'.
In more than 2,000 responses, only 2 had anything to do with people: one said 'leadership', another 'visionary'.
Isn't that amazing. In over 2,000 responses from experienced, senior leaders and business owners, the term leadership was mentioned once in regard to strategy.
And as Montgomery, author of the book The Strategist: Be the Leader Your Business Needs, says; "Downplaying the link between a leader and a strategy, or failing to recognise it at all, is a dangerous oversight...After all, defining what an organisation will be, and why and to whom that will matter, is at the heart of a leader's role."
In a recent McKinsey Quarterly article 'How strategists lead' (paid access required for full article) she goes on to say:
"It is the leader...who must make the vital choices that determine a company's very identity, who says, "This is our purpose, not that. This is who we will be. This is why our customers and clients will prefer a world with us rather than without us." Others, inside and outside a company, will contribute in meaningful ways, but in the end it is the leader who bears responsibility for the choices that are made and indeed for the fact that choices are made at all."
Do you as a leader understand your role in creating, communicating and embedding strategy?
- Are you profitable?
- Are you building something great?
- Are you taking care of your people?
- Are you treating your customers well?"
So, how can organisations effectively deliver their quarterly results and at the same time maintain their competitive advantage when faced with so much change?
The November 2012 edition of HBR includes an article by John Kotter titled 'Accelerate' [note: payment is required to access the full article] that poses a solution. Kotter advocates letting the formal 'operating system' (the hierarchy) run the day-to-day activities and creating a second operating system using the informal system to design and implement strategy.
Kotter argues that the formal structures and hierarchies in organisations are excellent for the day-to-day operation of the organisation and delivery of business results, but they are barriers to implementing strategies to adapt to changes. "…the old ways of setting and implementing strategy are failing us." The formal structures and processes have difficulty even keeping up with changes, let alone getting ahead of them. Kotter points out that his 'eight step change process', developed in the mid-90s, has a hard time producing results in a fast-moving world.
The majority of the article is focussed on a 'new' concept Kotter calls 'Strategic Accelerators'. In effect, he is talking about using Communities of Practice/collaborative networks to tap into the power and agility of the informal capabilities of an organisation. The network of strategic accelerators complements the formal systems; it does not replace them. Collaborative networks are not a new concept, but Kotter's application of them to the arena of strategy is very insightful.
Kotter's article has crystallised a natural link between two of Anecdote's core activities: Making Strategies Stick and our many years of work in helping organisations develop effective collaborative networks.
If you want to establish a network of 'strategic accelerators', our experience highlights some of the things you need to focus on:
- more leadership, less management - the network members are volunteers so they can't be managed as conscripts. Networks require leadership that creates the conditions for them to succeed. Importantly, leadership support must be visible yet it does not require enormous effort. Here is an example of the effect of 'being managed' on a network
- follow the passion - network members have 'day jobs' so the amount of time they spend on network activities will vary. In essence, the effort they invest in the network is discretionary. The things that are most likely to get done are things they are interested in or passionate about
- invest in social capital - network activities require high levels of trust between members so attention is needed to activities that build better and deeper relationships. It can't be 'all work and no play'.
Networks of strategic accelerators can be developed purposefully and intentionally. To do so requires paradigms of 'control' to be replaced by 'empowerment and autonomy'. Kotter notes that if you succeed "the network and the accelerators can serve as a continuous and holistic change function - one that accelerate momentum and agility because it never stops. They impart an kind of 'strategic fitness'".
Most leaders really struggle to use plain language, especially when it comes to communicating something like strategy.
Here at Anecdote we specialise in oral storytelling, and we see this every time we work with a group of leaders in helping them tell their strategic story, or when using stories to build employee engagement or when they are trying to influence change in their organisations.
They don't seem to be able to get past the formal language they are used to using in business.
Instead of talking the way they normally would when they are sharing anecdotes informally, they resort to using big words, abstractions, and terms that people just don't use in every day speech. And it gets in the way.
Using your own language, your own words, the way you normally speak increases the chances that people understand what you are saying, and what they need to do to make this new strategy a success.
With a bit of coaching, guidance and sharing a few stories we can usually get a group of leaders to tell their stories using plain language. But its much harder when it comes to how they write. Our default when writing is not to write as we talk, but to use much more formal language, complete with lots of complicated terms and big words.
I saw a great little tip yesterday about how to make your writing more informal.
I was reading an article about Irish author Maeve Binchy who passed away yesterday. She was a hugely successful author who has sold over 40 million books, been translated into 37 different languages and, in 2000, was ranked third in the World Book Day poll of favourite authors.
Part of her success has been put down to her informal, almost 'chatty style'.
"I don't say I was 'proceeding down a thoroughfare', I say I 'walked down the road'. I don't say I 'passed a hallowed institute of learning', I say I 'passed a school'.
When she was asked how she did it she said she simply wrote the way she spoke.
That's the tip. Before you send anything out that you have written, read it aloud. Does it flow? Does it sound like the way you would speak? Are there words in their you would never say in conversation?
If it doesn't flow, if it doesn't sound like the way you speak, if you are using words you would never use in conversation - then keep editing.
Maeve Binchy also gave one more reason to use plain language, and to write the way you talk;
"You're much more believable if you talk in your own voice."
So move away from the big words, use plain language and you will build trust in you and the messages you are sending.
When asked for the secret of his success in the steel industry, American industrialist Charles Schwab (1862-1939) always talked about using praise, not criticism, giving liberal bonuses for work well done, and "appeal[ing] to the American spirit of conquest in my men, the spirit of doing things better than anyone has ever done them before."
He liked to tell this story, retold in Dale Carnegie's How to Win Friends and Influence People, about how he handled an unproductive steel mill:
Schwab had a mill manager whose people weren't producing their quota. "How is it that a manager as capable as you can't make this mill turn out what it should?"
"I don't know," the manager replied. "I've coaxed the men, I've pushed them, I've sworn and cussed, I've threatened them with damnation and being fired. But nothing works. They just won't produce."
Schwab asked the manager for a piece of chalk, and asked: "How many heats did your shift make today?"
Schwab chalked a big figure six on the floor. When the night shift came in, they saw the "6″ and asked what it meant. "The big boss was in here today, he asked us how many heats we made, and we told him six. He chalked it down on the floor."
The next morning Schwab walked through the mill again. The night shift had rubbed out "6″ and replaced it with a big "7."
When the day shift reported for work the next morning, they saw a big "7″ chalked on the floor. So the night shift thought they were better than the day shift did they? Well, they would show the night shift a thing or two. The crew pitched in with enthusiasm, and when they quit that night, they left behind them an enormous, swaggering "10."
Shortly, this mill, which had been lagging way behind in production, was turning out more work than any other mill in the plant."
Schwab's improvised just-in-time leader board was simple, quick, cheap and powerful. Leaderboards can stimulate and motivate people to succeed. Making outcomes more visible to more people guarantees more discussion about who's successful and why. Leaderboards are therefore a terrific way to trigger stories.
Did you see Dave's team is leading this week, did you hear about that big deal they did last week? See Tracey's guys have gone up since last week after she had them on that training course? What do you think is going on with Gary's team to bomb that badly?
Visible results, tied in with competition, trigger stories. This is a central tenant of the whole gamification movement
Carnegie concludes his anecdote by quoting Schwab: "The way to get things done is to stimulate competition. I do not mean in a sordid, money-getting way, but in the desire to excell."
Obviously, no sane organisation wants a competition right out of David Mamet's Glengarry, Glen Ross. But if it drives the right behaviours and triggers the right stories then it can be a great way to build motivation and increase performance.
I did a blog post in February about reconnecting with an old friend of mine, and how she is one of the most gifted storytellers I know. In that post I said I would be sharing some more of her stories, and here is one she shared with me recently.
A few years back, I attended a reception at Parliament. We wanted to share with selected MPs and officials the results of our research, which showed the considerable contribution our industry made to the country's economy. One of the issues that both sides of the House had had with our industry in the past is that the industry wasn't united, and there was ongoing disharmony. After a round of drinks, the CEO began our presentation. He hadn't got more than a few slides in when the Chairman stood up from the floor, and took over the presentation, leaving the CEO still standing at the podium looking like a deer in the headlights.
Can you imagine how the story of disharmony that the audience were already telling themselves would have just been confirmed as true? How the belief of not being joined up was reinforced by these actions?
This is a classic case of story triggering. By simply taking over from the CEO the Chairman triggered a story amongst the audience, a story that just reinforced their existing beliefs.
There was nothing that could have been said by the Chairmen, or the CEO for that matter, that changed this belief. As the saying goes; "You can't talk your way out of something you have acted your way into".
You can only act strategically, day in, day out, if you know your company's strategy. Here are five things that happen when you really do know it.
- you know when to say 'no.'
- you get better support from your colleagues--they are trying to achieve the same things
- you can wing it with confidence--the strategy is your safety net
- you can focus on doing the right things rather than just doing things right
- you can act with more autonomy because you know where others are going, and autonomy is motivating
It's quite possible you'll lose your job as CEO if you are unable to persuasively communicate your company's strategy. Léo Apotheker, the recently fired CEO of Hewlett-Packard, has just learned this lesson.
Mr Apotheker was appointed CEO of HP in October 2010 less then a year before he was let go. Before HP, Apotheker was CEO of SAP at the end of a 20 year career with the German software giant. He left SAP under a cloud and in a memo SAP issued to its employees on his departure he said, "My communication towards you was not always optimal." This should have rung some alarm bells. 1
After about 5 months in the job (March 2011) Mr Apotheker announced the company strategy. They were going to expand into the cloud business, build out its software business, open up an app store and reinvest in R&D. The aim was to lift profit margins. They would move into business analytics. He promised to take a conservative approach suggesting there wouldn't be the massive company purchases like the Compaq or EDS buy outs HP had done in the past. 2
In August 2011 Mr Apotheker announces that HP will purchase British software company Autonomy for just over $10 billion and that he is considering selling the PC business.
In September 2011 Mr Apotheker is replaced with eBay's celebrity CEO Meg Whitman. The HP stock price during Mr Apotheker reign falls from $46 to $25.
Of course this is a high level telling of a CEO's demise which has many more twists and turns including the fanfare announcement of a new tablet to rival the iPad that was eventually withdrawn from sale only weeks after its launch. The important points to note in terms of communicating a strategy are these:
- Massive changes in mind are going to hurt you. Mr Apotheker suggested they weren't going on a spending spree then announces its third biggest purchase. Our Prime Minister in Australia, Julia Gillard, is suffering a similar fate. On election she promised not to introduce a tax on carbon. As of last week the Parliament has voted in a tax on Carbon (something I support by the way) and she has been crucified for it.
- A good strategy means something is going to change. That means there will be people who are strong supporters of the old way of doing things. The misunderstood Machiavelli put it this way, "There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things." Telling everyone you might sell your PC business only creates uncertainty. IBM pursued the same strategy of selling their PC business to the Chinese company Lenovo. IBM, however, sold the PC division before announcing it to the world. Sometimes its better to rip the band-aid off quickly.
The effectiveness of HP strategic story Mr Apotheker told (and there was a good chance he didn't actually tell a story) comes from not just what's in the story, its believability and novelty, but also how it is told and whether it becomes a story worth listening to, remembering, retelling and acting upon. Add to this the importance of consistency. From all accounts Mr Apotheker failed at each step. Now let's see how Meg Whitman fairs.
Steve Jobs introduced iCloud at Apple’s WorldWide Developers Conference in June 2011 . iCloud is Apple’s ‘next big thing’. After explaining the iCloud concept, Steve says, “Now, you might ask ‘why should I believe them – they’re the ones that brought me MobileMe?’” The audience laughs uproariously. Everyone in the audience knows that MobileMe is pretty much the opposite of Apple’s reputation for user-friendliness. It just doesn’t work. Steve continues. “It wasn’t our finest hour. Let me just say that. But we’ve learned a lot.”
Acknowledging an uncomfortable truth goes a long way to removing its power. If everyone knows the story, ignoring it increases it power. Tackling these anti-stories (the stories in your organisation that work against your strategy) is vital.
But there is a downside of 'running down' MobileMe. There are many people in apple who have invested a lot of their energy and enthusiasm into MobileMe and hearing this public admission is probably uncomfortable or even painful for them. For this reason, most organisational communication overlooks the negatives and avoids risking upsetting anyone. The resultant messages have a 'pollyanna' feel to them that undermine their credibility.
We are working with many organisations to develop their strategic stories and find one of our key roles is helping them find and maintain the courage to say the tough things. Kevin and I are writing a paper on this at the moment reflecting on the lessons of our projects in the past few years. We'll blog about it when we finish.
How do you get your people to think about what the future could be, in a way that inspires them and starts to spark action, but also takes into account the simple fact that the future is unpredictable?
I was reminded of this challenge, yet again, last week.
We were working with a client on developing a session for a two day leadership conference focussing on bringing their strategy to life. As we were throwing round ideas on the types of things we could do, someone suggested an exercise that involved the participants spending time writing a magazine article about how things are for that organisation in 5 years time.
This triggered a recollection when we did a similar thing when I was working in the UK for the Royal Bank of Scotland (RBS). I was involved in planning and running a series of workshops for the management population of my division, working with American management guru Noel Tichy to bring his concept of " cycle of leadership to life. These were 2 day courses, and we ended up running them for nearly 5000 leaders, over a two year period in 2006 and 2007.
On day two there was an exercise where everyone had to draft a magazine article, for the leading business magazine The Economist, with these instructions:
You are assigned to write a cover story for the Economist - dated September 21st, 2012. The story is about the dramatic transformation of RBS, and how through your leadership and outstanding execution, RBS is achieving unprecedented success. The article should be written as if it were 2012 and should discuss the challenges RBS has overcome, how that was done and what the business now looks like.
Now to understand the rest of this story you need to know that RBS during that time was one of the biggest and most successful companies in the world. In 2005 it announced a profit of $A10.27bn, up 14% from the year before, and in
2006 the profit increased another 16% to $A13.69bn. By 2007 the profit stood at a very impressive A$15.33bn and the share price stood at $A8.94.
It was held up as a major success story in the UK corporate world, and its Chief Executive, Sir Fred Goodwin, who had been knighted in 2004, was a darling of Wall Street and the city in London. The feeling was that we could do no wrong, the business would just keep growing and growing, and become even more and more successful.
People spend an hour crafting these beautiful magazine articles talking about RBS and its success five years in the future. They then worked in three's sharing each other stories, before three or four of the best ones were shared with the whole group. I remember they talked about things like how RBS now had 500,000 staff (up from its 120,000 at the time), that its market share has gone through the roof (i.e. its share of the credit card market was now 80%, up from 20%), that the world's most innovative companies came to RBS to learn how to do it, and that its profit had just hit A$30bn a year.
At the time I thought the exercise was very useful. It created energy in the room, made people feel good about themselves and the organisation and all of what was mentioned seemed realistic and achievable.
On the 19 January 2009, RBS announced a loss of AS41.65bn, the biggest ever annual loss in UK corporate history. On that same day the British Government increased its holding in the bank to 70%, and the share price stood at less than 14 cents. Tens of thousands of people lost their jobs, businesses within the RBS Group were sold and Sir Fred resigned, he was vilified by the British press, and his house was even attacked by angry protestors.
There is no way in 2006 or 2007 that we could see this downfall happening. It was completely realistic to think of continued success and global domination. The exercise seemed to do exactly what Tichy had wanted it to do, and people were still talking about months after the events. But every single prediction that 5000 people made about the future proved to be wrong.
How do you get your people to think about the future, and what it could be, but which also takes into account its unpredictability? How do you manage and deal with that paradox? Was the exercise we did at RBS 'wrong', or did it achieve what it wanted, if its purpose was to get people excited about RBS' future, and reinforced to them why they wanted to be there. Is it more of an engagement technique than a strategic visioning exercise?
I would really like to hear your views on exercises like this and your experiences of dealing with the challenge of trying to envisage a rapidly changing, unpredictable future and the value in doing so.