Business Strategy, Leadership Transition

Key Observations from 2017 – Leadership Transitions

In 2017 we coached many leaders as they transitioned into new roles within some great organisations. Let us share some key observations from our work, which may prove valuable for your organisation in 2018.

For Organisations:
Most of the companies we worked with over last year had extensive leadership development programs and yet still struggled with their transitions. The challenges coming from two components unlikely to be corrected in the short to medium term, specifically:

  1. New leader paradox – greater role complexity, visibility and accountability, yet little or no learning or coaching support provided, and
  2. No redundancy – everyone is too busy with his or her own role to spare the time needed to support a new leader.

Several organisations we worked with underestimated the amount of leader turnover in 2017 and as a result, due to the down time that surrounded each new appointment, failed to deliver on key projects across the year.  Unfortunately, one senior change often leads to several subsequent lower-level staffing changes in the following 3-6 months.

For HR:
2017’s challenge for HR continued to be found in the difficulty to effectively control the recruitment process and resources required to coach / mentor new leaders, yet still carrying the burden when the new leader struggled to promptly get up to speed or failed completely.  Whilst this challenge is not new, 2017 saw HR needing more than ever to both appreciate – and communicate – that the bulk of the investment in appointing new leaders goes into the process and not the person. After all the recruitment efforts and expense, we have found there is little or no effective support/investment, from day one through to the end of the new leader’s first quarter, addressing this we have found to be a critical success factor.

Interestingly, in 2017 when we saw appointees struggling, we worked closely with HR to review the recruitment process and in the majority of cases, with hindsight; HR would have made the same recruitment decision.  Whilst this is positive, it points the finger firmly at how the new leaders are on-boarded (or in-boarded).  Even a small increase in the amount of support early in a new leader’s tenure dramatically reduces their risk of failure.

For Line Management:
Line management tend to run a reactionary approach to transition and succession, and we certainly saw this again in 2017.  The old view of “I made it on my own and so can they’ from some senior managers in regards to leaders in new roles was heard again in 2017.  The biggest gap was seen with internal promotees who were expected to already know the culture, the dynamics of the new peer group and the business and therefore got the least support.

Again we saw a significant step when leaders started to lead other leaders. Leading leaders can often provide some unique challenges for many who struggle to articulate why they do what they do.

For Promoted Leaders (experienced):
In the assignments where the new leaders were both internal and experienced, common challenges included:

  • Managing the separation from the old role to the new one. For many there was a period where they acted in both the old and new role.  Inability to move away from the old resulted in a failure to ‘show up’ in the new role early enough, though the eyes of senior management and their peers.
  • Making the tough assessments with the new team. Where the outgoing leader stayed in the organisation, there was a real reluctance for the incoming leader to make hard assessments for fear of offending or casting doubt over the outgoing leader (sometimes their new boss).  This delay added stress and anxiety, damaging the new leader’s performance significantly.

For Promoted Leaders (new to leadership):
This is the most vulnerable of the three groups: even leaders in organisations with a strong leadership development programs find their first leadership role challenging.  New leaders with a positive relationship with the direct manager (supportive andtrusted) fared much better. Ones that lacked this did best when they had someone trusted to confide in.  The key challenges we saw in our assignments were:

  • Getting out from amongst the team.
  • Changing their style of communication to suit peers / senior management and managing the requirements of reporting up and across.
  • Diving straight to solution mode without effectively understanding the issue or the open options

For Externally Recruited Leaders:
This group faces the greatest challenges and this was acknowledged by most organisations. Where we saw the biggest gaps in 2017 were in these newly appointed leaders finding the right balance between making decisions too early or too late. There is a heightened pressure to perform, often coming most from the leaders themselves. We saw many new leaders damaging their credibility by going hard too early or alternatively creating doubt in their appointment by waiting too long to start to voice their opinions on important matters.

We also saw some leaders choose to focus on an early win (which is a good tactic for your transition) that was not aligned with the priorities of their organisation and as a result they ‘appeared’ to not understand the business.

Thoughts for 2018
In 2018, these will be some of the recommendations we make to clients for their leadership transitions:

  1. Ensure someone ‘owns’ the new leaders transition – whether it is line management or HR, every transition needs to have an owner.
  2. Build a structure to better support internally promoted leaders acting in two roles during their transition.
  3. All leaders in new roles to write and discuss their detailed plan for their first 90 days.
  4. Define the “process” in as much detail as we define the “people”
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Business Strategy, Leadership, Leadership Transition

Why leaders should ‘show their working’

“Show your working’ is an expression we use when working with leaders around improving their communication and developing their teams. The concept comes from the days doing high school maths where we were encouraged to ‘show our working’ during the exams so that even if the end answer was incorrect we would receive marks based on the working.

In the context of leadership the ‘show your working’ is really ‘show your thinking’. Your team want to understand how you think as much as what you think. By this we mean that they are most interested in understanding how you got to the solution so they an follow the same process to the same solution.

When you don’t share your thought process and use of other information to get the solution, you rob your staff members of one of the most important learning opportunity that situation offered.

Leaders that adopt a coaching approach instead of a telling approach tend to get better engagement scores from their staff. A coaching approach means that you help your staff member develop their understanding by not solving the issues directly but ‘coaching’ them through the process. It tends to take a few minutes longer in every exchange but ultimately leads to greater engagement and leverage.

Consider the following exchange:
Staff – “I have an issue, what should we do here?”.
Leader – “In these cases we should do X”.
Staff – “Ok thanks”.

Very limited learning and development. Certainly there are situations where you can’t take the time to explain your thinking but in most businesses they are rare.

This is what we help leaders move to:
Staff – “I have an issue, what should we do here?”
Leader – “OK what are you thinking we should do?”
Leader – “Why that option?”
Leader – “What other solutions did you consider?”
Leader – “Why did you dismiss those options?”

If they have chosen the right or appropriate solution:
Leader – “Excellent, that is the same reasoning and solution I would have chosen as well”.

You might even want to extend it to:
Leader – “Excellent, that is the same reasoning and solution I would have chosen as well. In future with decisions like this one I am comfortable for you to make them using the same reasoning without my involvement”.

The key is to understand how they got from A to B.  If correct them make sure that they know they have matched your thinking and outcome (be crystal clear).

If they failed to identify the correct path, this is the coaching opportunity  to show them not only the path they should have chosen, but to clearly and with as much detail as possible, explain the ‘whys’ around your decision.
Leader – “In this case the best solution is X and the reasoning (or the missing information) is …..”

The most important element is that you have had a discussion about the source (thinking) instead of just the outcome (decision) and this is where the real leverage and engagement is gained.

Much of our work is with new leaders or experienced leaders in new roles and it is also very beneficial to use the same concept with newly acquired staff to understand their thinking.

When you are working with new staff one of the most powerful assessments you can make is their approach to problem solving, what steps do they take, what other information do they collect and how consistent are the outcomes. If you can ascertain their capability early you will know if they can be relied upon to make decisions without you or if you need to retrain their process so that they come to the same outcome as you would.

Ultimately if you can trust your key staff member’s process / approach then you can trust their ability to be consistent in solving problems and making decisions.

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Business Strategy

3 Rules to Make a Company Great

The April 2013 issue of Harvard Business Review features a story that argue there are only 3 rules to making a company truly great.  The article provide insights into how exceptional companies deliver superior long-term performance, even as they face similar obstacles to their competitors.

The scope of the study is pioneering. They draw on “big data” – hard financial information on more than 25,000 companies that spans nearly half a century. They identify 344 exceptional companies—either Miracle Workers or Long Runners using rigorous statistical methods to identify them and analytics to determine what makes them great.

Here are the 3 rules;

(1) Better Before cheaper
When it comes to how you differentiate yourself from the competition, seek out a position based on non-price value — that is, performance, broadly understood. Do not compete on price. Price-based competition can work, but only rarely does it drive exceptional performance.

The authors found that Miracle Workers competed mainly by offering superior non-price benefits such as a great brand, exciting style, or excellent functionality, durability, or convenience. “Average Joe” companies, by contrast, competed mainly on price, while the Long Runners showed no clear focus.

(2) Revenue before cost
Driving superior profitability means having some combination of higher revenue and lower costs than your competition. The advantages of higher revenue tend to be more valuable and durable than the advantages of lower cost. Use your differentiated position to charge higher prices or appeal to more customers. Do not try to “cut” your way to greatness. Just like price-based competition, cost advantages can be effective, but only infrequently.

The authors found that Miracle Workers competed mainly by offering superior non-price benefits such as a great brand, exciting style, or excellent functionality, durability, or convenience. “Average Joe” companies, by contrast, competed mainly on price, while the Long Runners showed no clear focus.

A dollar more of revenue is worth more than a dollar less of cost (profit is just revenue minus cost so there are two ways to get to the net result however increasing revenue is better that reducing cost)

(3) There are no other rules
Whatever competitive or environmental changes or challenges you might face, do not give up on the first two rules. Everything else is up for grabs. Everything. Change whatever you must about your business — your markets, your technologies, your people… anything. But no matter what, stick with better before cheaper and revenue before cost.

This cheeky rule was developed to underscore the idea that other strategies that supposedly lead to business success, from operational excellence to corporate culture, don’t seem to matter in a statistically consistent way. Still, they note, “the absence of other rules doesn’t give you permission to shut down your thinking. You are still responsible for searching actively — and flexibly — for ways to follow the rules in the face of what may be wrenching competitive change. It takes enormous creativity to remain true to the first two rules.”

 

Reference
Raynor, Michael E., Mumtaz Ahmed. “Three Rules for Making a Company Truly Great.”Harvard Business Review, April 2013.

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Business Strategy, Strategic Failure, Strategic Understanding, Strategy to Performance Gap

CEO’s Talk Strategy – 70% of Employees Don’t Understand!

New research conducted through the University of Technology has found that only a small proportion of employees can articulate their organisation’s strategy.

The researchers asked employees of 20 major Australian corporations with clearly articulated public strategies to identify their employer’s strategy from among six choices. Just 29% answered correctly.

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Business Strategy, Strategy Design, Strategy Implementation

Strategic Triggers

Have you identified your strategic triggers before you start rolling out the strategy?

A key aspect of the strategic planning process is that once you have decided and agreed your strategic plan – and while you still have the design team together – that you identify what the events, conditions or circumstances are that will force a strategic response.  A strategic response is a change to the plan.

What are the things that will

  • you will ignore,
  • that you will review separately (i.e. not as a group)
  • that will warrant an immediate review of your strategy and a regroup of the strategic design team?

If you don’t agree these at the time of the planning process you leave yourself open to over or under responding to things that either do or don’t siginificantly affect your strategy.  Over-responding will potentially waste valuable time, break the momentum in your strategy and cast doubt over the strategy as a whole.  Under-responding could mean that you exposure the business to increased risk or miss a key opportunity.

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Business Strategy, Strategic Failure, Strategy Implementation, Strategy to Performance Gap

Are you implementing or executing your strategy?

Within your organisation do you implement or execute strategy?  The choice of language can have very different implications on how your staff view both the process and the desired outcomes.

Implementation and execution are often used interchangeably in many organisations and in business articles & books.  However they have two very different connotations especially in terms of strategy.

If a strategy is implemented then it implies that it was not in the business previously i.e. either the business didn’t have a strategy or this is a new strategy.  Also it implies that there will be a ‘start date’ and ‘end date’ of the implementation.  That is, at some point it will be in and working.

Implementing a strategy can also imply that there is an implementation team.  So as an employee I may or may not be involved.  If I am not involved in the implementation then I wait for the team to come and tell me when it is ready.

Execution on the other hand implies task level actions and decisions.   There are many opportunities every day or every hour for an employee to execute the strategy, all staff are involved and responsible for the outcome and there is no end date – we never stop executing our strategy (even though it may change over time).

Having an execution approach means that the emphasis of success has to lie in communicating to the staff not only what the strategy is but also ‘how’ they execute it.  What do they do day-to-day to move the business forward in line with the strategy.

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Business Strategy, Strategy Design, Strategy to Performance Gap

Strategy = How

We are all using the same words but we mean so many different things.

This comes up frequently in my research, my general discussions about my research and in my consulting work.  Whilst I have already written that at the heart of this issue is not the particular jargon but the organisational understanding of the jargon, it is worthwhile to give a simplistic view as a start point.  *What I mean by that comment is that it doesn’t really matter which term you use, what matters is that when you say it that everyone in your organisation associates the same meaning and application as you do.  Beware of assuming that your staff or colleagues  have your exact definition.

So here is the simplistic view;

Mission = Why
Vision = What / Where
Strategy = How

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Business Strategy, Strategic Failure, Strategy Design, Strategy to Performance Gap

Interesting Research on Strategy

In support of my “why does business strategy fail” work here is some research that asks some very direct questions of senior executives about their strategy with disappointing results.

In 2011 Booz & Co conducted a survey of 2,800 executives from companies of various sizes, geographies, and industries. According to this survey, most executives don’t feel their company’s strategy will lead to success, two out of three respondents admit that their company’s capabilities don’t fully support their strategy, only one in five are fully confident they have a right to win, and the majority say their company has too many conflicting priorities.

Executive frustration is unmistakable
The survey results show that setting priorities is a significant challenge for companies — and that linking priorities to decisions is a hurdle that few companies get past. According to the survey:

     
  • A great majority of executives (64% of survey respondents) say that their biggest frustration factor is “having too many conflicting priorities.”
  • Executives report that their biggest challenges are (a) allocating resources in a way that really supports the strategy (56%) and (b) ensuring that day-to-day decisions are in line with the strategy (55%).
  • Half of the executives (50%) consider setting a clear and differentiating strategy a significant challenge.
  • In fact, most executives (54%) do not feel their company’s strategy will lead to success.
  • Only 20% say their company has a right to win in all the markets in which it competes.
  • Most executives (82%) say growth initiatives lead to waste, at least some of the time.
 
   
 

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Business Strategy, Strategic Failure, Strategy to Performance Gap

Strategy-to-Performance Gap

What is your strategy-to-performance gap?

Written by Mankins & Steele this well cited article published in the Harvard Business Review challenged many senior executives to seriously examine what they were accepting in their business in terms of the year on year performance of their strategic endeavours.

Companies typically realise only about 60% of their strategies’ potential value because of defects and breakdowns in planning and execution.

Mankins & Steele’s survey indicates that, on average, most strategies deliver only 63% of their potential financial performance, and more than one-third of the executives surveyed placed the figure at less than 50%.  Put differently, if management were to realise the full potential of its current strategy, the increase in value could be as much as 60% to 100%!

Why such a low percentage of their promised financial value? Leaders press for better execution when they really need a sounder strategy. Or they craft a new strategy when execution is the true weak spot.

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