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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Leadership Transition

What is HR’s Role in a New Leader’s Success

New executives and leaders often struggle with the transition to a new role, especially ones that are hired externally.  In many organisations HR is responsible for recruitment, on-boarding and induction of new staff.  Whilst there can be a blurred line between HR and line management’s responsibility, it is interesting to look at the role HR plays in the success of new leaders.

Typically with new leadership appointments the bulk of HR’s energy and resources are spent on the recruitment process; defining the business need, attracting a pool of suitable candidates, interviewing and assessing.  Once the selected candidate has been wooed and appointed, HR’s role is generally completed. Apart from varying levels of on-boarding and the occasional leadership or mentoring program, the new leader is generally left to sink or swim.

For most new leaders one of two scenarios will play out:

  • They have a successful start in their role, through a combination of personal ability, determination and some luck; or
  • They have a slow start, fails to establish themselves in the business quickly, struggles to build effective relationships with key stakeholders, and fails to deliver the early results expected by the organisation.

Even if the executive in the second scenario can turn things around and make an impact (often moving on under some doubt), the business costs are significant.  Ideally someone in the organisation should take ownership of the executive’s success during their transition or risk failed leadership appointments, reduced morale and higher attrition rates.

There are often some inherent limitations with what can be set in place internally.  If the organisation or HR has expertise in managing the transition period and are able to coach or mentor the leader through their transition, they might still find that the new leader does not feel comfortable in being completely open to someone inside the organisation.

At probably the hardest time for a new executive and when the need for support is the greatest, there is commonly a lack of willingness to invest further resources and support to help. One reason for this is that many organisations and HR professionals feel that if they have selected the right candidate, there should not be any need to invest in their development at the start of their role. Another reason, probably more common, is that most organisations do not have the redundancy or spare capacity to have people allocated to assisting new leaders.  Everyone is generally too busy with their own roles to truly devote the time to helping the new leader.

The key point for HR to recognise is that, after all the work is completed in attracting, securing and starting the right candidate, that to this point they have only invested in the process. They are yet to invest anything in the person.

The sooner you start to invest in the person the greater their success will be, or the lower the likelihood that that they will fail.  Remember that even the most ideal candidate may not be skilled at the transition and any slip or damage here takes a long time to correct.  HR need to maintain ownership of the new leaders success by devoting resources to the first 3 – 6 months of the new leaders instead of just before they join and after they start to falter. Otherwise the new leader may have a tough transition and the business may be forced back to the recruiters 12 – 18 months later.

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Leadership Transition

What if 50% of executives hired or promoted didn’t fail within 18 months?

More importantly what if 50% of the executives your organisation hired or promoted didn’t fail within 18 months.

It has been over 10 years since Michael Watkins published the results of his research showing that up to 50% of executives and leaders in new roles fail in the first 18 months and it would seem that for many large businesses nothing much has changed.

Watkins’ research and his book “The First 90 Days” revealed that the issue is not limited to the 50% that fail but also includes the 50% that succeed but have a very tough first 6-12 months getting up to speed and ingrained in their new role.

Leadership transitions are among the most demanding and difficult situations executives face – and leaders at all levels are especially vulnerable in their first few months in a new role because they lack in-depth knowledge of the challenges they will face and the understanding of what it will take to succeed.

Initially, new leaders are typically a drain on an organisation, drawing a salary, incurring training and orientation expenses, and consuming co-workers’ time without providing much in return. In the case of an unsuccessful transition, the impact on an organisation can be measured in poor financial results, decreased employee morale and costly turnovers.

For a multiple of reasons organisations have not taken the necessary action to clawback this enormous loss of productivity. The primary reason is that most organisational structures do not provide the support for new leaders.

Whose role is it to mentor in new leaders – HR, the direct manager, the CEO, the predecessor or L&D?

We have a current example within an international company where the Group MD of Asia Pacific is being promoted to fill a vacancy in Europe.  As a result the MD for Australia is being promoted to his role and they are looking to promote a local Manager to MD of Australia.  In each role change there is a significant increase in responsibility both in terms of staff numbers and size of business in terms of revenue.  The issue is that each role is designed to mentor the next one to success but in each role the incoming person will have their hands full just trying to understand their new requirements, establish credibility and build momentum.

The gap is clear but organisations are not designed to have redundancy or spare capacity in this area. In most organisations everyone is just too busy to really devote the time to properly support the new leader.

Unfortunately we seem to have a sink or swim attitude with executives expecting them to be able to manage the transition. Almost like a “well I did it so you can too” baptism of fire.

Being a good leader or executive does not necessarily mean that you are good at the transition phase. In fact, the more desirable candidates are commonly the ones who have had fewer transitions. Damage in the transition stage, either to the executives creditability within the organisation or to the candidate’s view of the organisation, takes a long time to repair.

All new leaders (like new products) have a J-Curve across their first 12 months. This J-Curve will be deeper or flatter depending on the focus organisations have on working with and supporting new leaders in their first 3 – 6 months.

On the positive side, organisations that do manage the transition of new leaders well can create a ‘fast landing’ culture where new leaders get to full contribution in a shorter time frame clawing back months and years of lost productivity across multiple senior leadership changes in any given year.

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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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Strategic Failure, Strategy Design, Strategy to Performance Gap

10 Reasons Why Strategic Plans Fail

Looking at the failure of strategy is the broad basis of my DBA so I am always interested in articles or commentary on this area.  In my personal view there is a serious bias to writing about the positive and ignoring how and why we fail.

Here is an article from Forbes listing the 10 reasons that strategic plans fail.  All 10 are valid though in my experience within Australian companies  1, 3, 4 & 6 are most common.

1. Having a plan simply for plans sake. Some organisations go through the motions of developing a plan simply because common sense says every good organisation must have a plan. Don’t do this. Just like most everything in life, you get out of a plan what you put in. If you’re going to take the time to do it, do it right.

2. Not understanding the environment or focusing on results.Planning teams must pay attention to changes in the business environment, set meaningful priorities, and understand the need to pursue results.

3. Partial commitment. Business owners/CEOs/presidents must be fully committed and fully understand how a strategic plan can improve their enterprise. Without this knowledge, it’s tough to stay committed to the process.

4. Not having the right people involved. Those charged with executing the plan should be involved from the onset. Those involved in creating the plan will be committed to seeing it through execution.

5. Writing the plan and putting it on the shelf. This is as bad as not writing a plan at all. If a plan is to be an effective management tool, it must be used and reviewed continually. Unlike Twinkies or a fine vino, strategic plans don’t have a good shelf life.

6. Unwillingness or inability to change. Your company and your strategic plan must be nimble and able to adapt as market conditions change.

7. Having the wrong people in leadership positions. Management must be willing to make the tough decisions to ensure the right individuals are in the right leadership positions. The “right” individuals include those who will advocate for and champion the strategic plan and keep the company on track.

8. Ignoring marketplace reality, facts, and assumptions. Don’t bury your head in the sand when it comes to marketplace realities, and don’t discount potential problems because they have not had an immediate impact on your business yet. Plan in advance and you’ll be ready when the tide comes in.

9. No accountability or follow through. Be tough once the plan is developed and resources are committed and ensure there are consequences for not delivering on the strategy.

10. Unrealistic goals or lack of focus and resources. Strategic plans must be focused and include a manageable number of goals, objectives, and programs. Fewer and focused is better than numerous and nebulous. Also be prepared to assign adequate resources to accomplish those goals and objectives outlined in the plan.

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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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