Workforce restructuring – a leadership challenge for the 21st century

The phrase “Demography is Destiny”, attributed to the 19th century French philosopher Auguste Comte has been a popular saying to describe shifts in politics or in the relative power of nations.  Typically when the phrase is used, particular attention is   placed on changes in population growth and the relative change in the ethnic mix within society.

The 21st century is experiencing a shift in demography unlike any other previously experienced.  In the year 2000 in developed countries – the percentage of people over 60 was equal to the percentage of people under 15 for the first time in history. By the year 2050, the percentage of people over 60 is forecast to be 34% vs. 16% for those under 15.  If demography is destiny, what does this mean?

There are many implications for society as a whole including such major issues as social security and health care – among others.  There are many doomsday sayers to be found about this topic, but I tend to side with Michael Hodin of the Global Coalition on Aging, who I invited to be a keynote speaker at the ESMT Annual Forum with ILA conference last year in Berlin.  Michael Hodin believes that this demographic shift actually represents a golden opportunity if governments, business and civil society deal with the change in a positive way.

In this blog I would like to focus on the impact on businesses and organizations.  Their workforce will continue to grow older – reflecting the general shift in society at large.  What does that mean for the way that businesses go about organizing the way work is done?

At a minimum, corporations will be faced with the new issue of attracting and retaining older employees.  Most emphasis in the past has been squarely focused on the younger workforce.  Older workers tend to have a very different set of priorities than younger workers.  For instance, they tend not to be as focused on career advancement.

Secondly, the massive number of retirements that threaten to take place in the next ten years as the baby boomer population quits the active workforce, is forcing businesses to think about how they can ensure the retention of valuable knowledge inside their organizations.  At an insurance company I was recently working with, they mentioned their concern about their actuarial department.  Apparently it takes seven years for a young actuary to become experienced in all the necessary aspects of the business.  At this insurance company, a good portion of their employees in the actuarial department are set to retire in the next five years.

Businesses which are considering creating a more age-friendly workplace are well advised to actively include their older employees in the re-structuing effort.  As common sense as this advice may sound, more often than not, such restructurings tend to be carried out by HR specialists who are mostly in their 30s and 40s.

How effective inclusion can be – was made manifestly clear at an EVAA (European Voices for Active Ageing) event in Bologna last year.  As a board member of World Café Europe, e.V., I helped to design and organize the special event held in Bologna, Italy where workers 50+ were invited to talk about the future of Work.  Approximately 100 participants took part in the dialogue.  They represented several companies and were both white collar as well as blue collar workers.  The average age was 55 and was evenly divided between men and women.  The purpose of the event was to understand what should happen in the workplace from the perspective of the older workforce.

In a four hour dialogue, this group was able to come up with an entire overview of the changes that needed to be made. Below is a mind-map summary of the recommendations made by the group.

Bologna Mind Map

The recommendations matched many of those being made by  headhunters and think tanks today.  

The difference of course, is that if you let your own employees come up with recommendations and solutions, they will be a lot more committed to putting the recommendations in place.  In addition it creates awareness and understanding for the intracacies of structuring a workforce which may have as many as 5 generations.  The following graph underlines the level of motivation that the participants at the EVAA – Bologna event had as a result of their participation in this dialogue.

Bologna_Participant_Motivation
“The principle of co-operation, spontaneous or concerted, is the basis of society, and the object of society must ever be to find the right place for its individual members in its great co-operative scheme. There is, however, a danger of exaggerated specialism; it concentrates the attention of individuals on small parts of the social machine, and thus narrows their sense of the social community, and produces an indifference to the larger interests of humanity.”

Auguste Comte

Obliquity – Reaching Goals and Objectives indirectly

The dictionary definition of obliquity is:

                                   a. A deviation from a vertical or horizontal line, plane, position, or direction.
                                   b. The angle or extent of such a deviation.
At first glance, this would not seem to be a term that would be of much importance to business.  In his recent book entitled Obliquity.Why our Goals are best achieved indirectly, John Kay (a leading economist in the UK) explains why this word and the concept behind it may very well be invaluable in the implementation of business strategy.
In attempting to achieve our goals, we often take the most direct route possible.  It turns out, writes Kay, that this is often counter-productive.
One of the more vivid examples from the book, was the topic of fighting forest fires.  Initially, the US forestry department had as a goal to put out all forest fires as soon as they occured.  This turned out to be a disastrous policy, since forest fires are part of the natural regeneration of fires.  In other words, in order to minimize the amount of damage done from forest fires, the forestery department, had to slowly learn that best way of fighting forest fires was to allow certain fires to go unchecked.
Forest Fire
Similar forces are in play in the economy.  The well known top level objective of maximizing shareholder value is probably best achieved by not pursuing every profitable opportunity.  Kay lists various examples, among them the chemical company ICI. He noted that in the postwar period until the 1990s, that ICI’s top-most objective was “the responsible application of chemistry”.  Under the pursuit of this goal, ICI achieved admirable results and created substantial value for its shareholders.  In 1997, the orientation of the company shifted towards maximizing shareholder value.  A series of acquistions and re-engineering efforts were made in the direct pursuit of profit.  The result was a destruction of shareholder value.  ICI ceased to exist as an independent company in 2007.
Jack Welch was quoted to say: “Shareholder Value is the dumbest idea in the world…The job of a leader and his her team is to deliver commitments in the short term while investing in the long term health of the business.  Employees will benefit from  job security and better rewards.  Customers will benefit from better products and services.  Communities will benefit because successful companies and their employees give back.  And obviously shareholders will benefit because they can count on companies who will deliver on both their short term commitments and long-term vision.”
In other words, Jack Welch – historically one of the greater creaters of shareholder value achieved that distinction by not pursuing the maximization of shareholder value directly.

The reasons that the direct approach often fails are many according to Kay:

Pluralism:  There are many solutions to a problem, not just one.  Often the direct or most obvious route is not the best solution.  True innovation requires thinking outside of the box – a highly indirect undertaking.
Interaction:  The objective and its attainment will shift through the interaction of various players.  Lowering price for instance in order to get market share may be counterproductive.  If competitors lower their prices to meet your initiative, the direct approach just leads to lower profits for everyone.
Complexity:  Complex environments are unpredictable.  They are like the weather.  We may know a lot about the individual variables that influence the weather – but we don’t know all of them.  In addition, predicting weather patterns requires knowledge about initial conditions – information that is outside of our reach.  As complexity science has shown, weather prediction can only be approximate at best.  Economic systems are in many ways similar to weather systems.  Who could have predicted the turmoil caused in the mobile phone industry by the introduction of the iphone?
Incompleteness:  We are always working from incomplete information.
Abstraction:  High level goals and objectives such as “maximize shareholder value” are abstract in the sense that even if you have increased shareholder value by a greater amount than your competitors, did you really maximize it.  What was the overall potential? 
What are the implications for business?  Typically strategy attempts to clarify top-line goals as much as possible.  Often substantial market analysis and evaluation of organizational capabilities is involved in setting those targets.
The traditional way of implementing these organizational goals and objectives is then for managers to take the overall goals and break them down into action items for their departments and teams.
This traditional process is the direct approach.
Obliquity implies that this process more often than not will be unsuccessful – or at least not optimal.  What obliquity requires is an ability to change direction in pursuit of top-level goals – and perhaps even an ability to question those goals if better opportunities should present themselves.
Strategy conversations
In my experience, the oblique approach begins with leaders taking ownership of the goals and objectives.  I worked for a pharmaceutical company that was in the business of selling generic drugs in the oncological sector.  An opportunity arose to actually acquire a company with patented pharmaceutical products in their line of business.  Since this was not their normal business model, they wanted buy in from their top managers before going ahead.  The top 60 managers were invited to deliberate on this new strategy and its implications.  The board was not willing to go forward without a consensus decision from these 60 managers.   They realized the risks to the business and the changes that would have to occur were not insignificant.  Right from the beginning of the implementation of this new strategy, they realized they needed buy-in from all key leaders in the organization.
Understanding the risks involved and reaching consensus was done through a large participatory process where each person had the opportunity to voice their concerns and listen to others’ perspectives at the same time.
Mayne Group
I think this type of ownership should be no different for so called “normal” strategic initiatives.  Only if leaders throughout the organization have a sense of JOINT ownership of the strategy, the oblique approaches that will be necessary to be successful will not be explored.  Each leader will break down the strategy into as direct and as linear a process as possible, often conflicting with the actions of others inside the company.

“The straight line lies, the truth is a circle.”                                                                                                         Friederich Nietzsche

Leadership vs. Leaders – a new framework to differentiate the two

In a 2006 article published in the Financial Times, business school professor Henry Mintzberg attacked the obsessive focus on individual leaders as the pillar of organizational effectiveness: “By focusing on the single person…leadership becomes part of the syndrome of individuality that is … undermining organizations”.

Henry Mintzberg is not alone in bemoaning the excessive attention to individual leadership.  Many authors have voiced their objections.  To be fair however, the fixation on leaders as individual actors results from the lack of an alternative framework from which to view leadership.

That alternative framework is readily available today.  The difficulty is that old habits and ways of thinking die hard. It is far too easy for us to conceive of leadership in terms of the individual actor.  As a result, we do not see the alternative framework – even when it stares us in the face.

The frame of reference that helps us to better understand the effectiveness of  leadership  is the network.  Work in organizations gets done through the collaboration of individuals.  Individuals that work with each other (and/or exchange information) form the basis of a network.  A mapping of the networks inside of an organization reveals how information flows inside of an organization and what patterns of collaboration exist.  From this framework we can begin to talk about leadership in the plural.

Let us look at an example:

Network analysis

The above diagram is a network analysis of two companies that have recently merged.  Each small square represents an individual.  From this diagram it is clear that managers are still only interacting with those individuals from the company from which they came.  There is one individual who straddles the information flow between the groups, but otherwise the groups interact separately (with minor exceptions).

The individual at the center of the information flow  could be seen as an invaluable asset to the organization.  He or she is the leader that connects the two organizations.  From a systemic perspective that same individual could potentially also be seen as a major bottleneck in the effective collaboration of the two teams.

Through network analyses like this one, the role of leadership can be visualized.  Leadership is the interaction of various “leaders”.  Effective leadership in this case would visibly alter the pattern of collaboration.

Creating maps such as the one above is not difficult.  The software and analysis tools to create such diagrams are readily available.  The biggest inhibitor in using the network frame of reference is our lack of familiarity with it.  If we were able to change the mental models of our leaders so that this frame of reference were commonplace, the impact on our organizations would be immense.

Individual leadership development is as necessary as ever.  Perhaps as part of that leadership development, we should teach our leaders to view leadership from a different perspective.

“Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.”       Marcus Aurelius

A small company invests in leadership – Part 3 – initiating the process

Circle - phases 1 and 2

The team development process in which I spoke about in previous blogs (posts from Feb 12 and Feb 24) got started in the past two weeks.  The managing director of the German operations agreed with the process I proposed and gave the green light to go ahead.

Since then I have put the process in motion, concentrating on establishing the appropriate framework for the team development process and starting the initiative.

Getting the right framework is critical.  Two questions need to be answered before anything else can be done.  The first question is Why? – i.e. what is the purpose of making this effort and what does the company expect to be the  outcomes of this initiative.  The second question is Who? – who is and who is not on the team (and why or why not?).

I met with the managing director and the executive in charge of personal development for three hours to discuss these two vital questions.

Normally I would include more people in the search for the answers to these questions.  In the case of this client, I made a judgement call that keeping the number of people to a minimum was the appropriate strategy.  The key in this particular situation is having the 100% buy-in of the managing director who is de-facto the team leader.  This company has never gone through a process like this before.  Opening up the process to a larger group of people might create more questions and doubts than answers at this very early stage of the process.

My role was to facilitate an answer to the two key questions of Why? and Who?  that was both compelling and motivating.  Our conversation was very fruitful and the two company representatives came up with the following formulation:

“The purpose of this initiative is to prepare our organization for the next level of performance by strengthening our key success factor ‘Customer-Centricity’ and living and transmitting our values (respect, readiness to communicate and continuous improvement).”

This formulation puts the whole initiative in perspective, indicating what needs to be emphasized and what does not.

The next step was a bit more difficult – who should actually be on the team.  Studies have shown that in order to build a cohesive and interconnected team, that the optimal size is between 4 and 8 people.  The managing director had originally conceived of her team as consisting of 12 people.  Size does matter.  The larger the group, the more it tends to subdivide into smaller units.  If cohesion is an important goal of a teambuilding initiative, reducing the size of the team is imperative.  Of course, by reducing the team you have to avoid creating adverse effects with those people who are not selected.

After a thorough discussion, the team was paired down to 9.  The managing director the next week then communicated the purpose and the goals to not just the selected team, but to the entire company.  She also had personal meetings with the 3 that were not to be part of this development process.

With the purpose in place and the team defined, this week I officially launched the process for the team with an online questionnaire.  I wanted them to begin to think about what it means to be a team.  The questionnaire was made up of 12 basic questions about teams and took approximately 20 minutes to fill out.  Below is a sample view of a few of the questions in the questionnaire:

Questionnaire

Next week I will be meeting with all nine team members individually.  Two hour interviews have been arranged.  The purpose of the interviews are for me to get to know the team members personally, get them to think further about the meaning of a team and their role within that team and to address any barriers that may exist in entering into this team development process.

Circle - complete

The rubicon has been crossed….

Many men go fishing all of their lives without knowing it is not fish they are after.”   Henry David Thoreau

Building Global Leadership Capacity – My week in Brazil

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Today’s leaders are global and leadership development has to take into account and bring to life this global dimension.  As part of the Philips Octagon leadership development program, I spent a week in Sao Paolo, Brazil as part of a year-long program preparing the company’s top leadership.

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26 leaders from the company from all corners of the world (Australia, Brazil, China, India, Netherlands, Germany, USA) came together in Sao Paolo for the second week of the program.

Day 1

The best way of learning is learning by doing – and Philips has one of the best programs I have seen in this regard.  The leaders work on a project together.  The results are presented at the end of the program to the CEO, CFO and head of HR of Philips.  Project presentations in the past  have developed into real businesses.  For the project members themselves, these project presentations can have significant career implications.

There could hardly be a more global approach than the 4 projects being prepared this year: Lighting Strategy in Brazil, Expansion of Oral Healthcare Products and Services, Domestic Appliances in Africa, and Home Health Service in India.  In addition, each of the teams is global in its composition.

Participants spent most of the day working on their project ideas, taking advantage of being physically in the same place at the same time and not having conflicting matters to attend to.

Day 2

Today featured a field trip into Sao Paolo to better understand the local market conditions in this fascinating fast developing economy.  The field trip was well organized by local Brazilian Philips staff.  It included visits to retail establishments, discussions with store managers, directors of hospitals and most memorable of all for me was a visit to an average Brazilian household.  Local Brazilians opened up their homes (receiving credits for Philips products in return) to the Octagon participants.  The purpose of such visits was to get an insight into the “typical” consumer.

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Having grown up in Mexico, the environment that we visited was certainly not foreign to me.  Nevertheless, having lived in Germany for a couple of decades the exposure to this kind of reality is always eye-opening.  We visited a family with 5 daughters living in a space which at best was 80 m².  The family was extraordinarily gracious and from the looks of it, living a contented and rich existence.  Despite modest means, they had a plethora of appliances, including a microwave, blender and fully equiped kitchen.  We asked the wife what was the most valuable piece of equipment they owned and were surprised by the answer – a rice cooker (saves a lot of time!).

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Spent the rest of the day reflecting on the learnings from the day’s visit.

Day 3

The inauguration of the new 360° instrument Global 6 (see my blog from Jan 26 and  Feb 2).  Octagon leaders got direct feedback from bosses, direct reports and peers on how their leadership style works or does not work in a global context.

We also included an interactive group activity – The International Trading Game.  The purpose of the game was to show how barriers and boundaries create difficulties in creating genuine collaboration.  Everyone cognitively understands the benefits of collaboration, but when put to the test, competitive, non-collaborative behaviors automatically come to the fore.  For the Octagon participants this was no exception.  We need to be constantly reminded how difficult collaboration is to achieve.

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Much of the rest of the day was spent looking at leadership tools to enhance collaboration including aspects of influence tactics and political savvy.

Day 4

Spent mostly with local Philips Brazilian managers discussing what has been learnt so far and learning more about the local Philips businesses.

One of the highlights of the day was a presentation by an external speaker – an entrepreneur who has started an online distribution business selling baby products in Brazil.  This presentation led to a lively debate about how to incorporate elements of entrepreneurship into Philips.

Day 5

Wharton professor David Wessels looked at project finance as an input for the project teams.  The teams then proceeded to present the current state of their projects.  Final presentations will be in Amsterdam in May.  Stay tuned…

 

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“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.”        Pele

A small company invests in leadership – Part 2 – team development process

The leadership investment mentioned in my previous post of Feb 12 is moving forward.  This week we will be discussing and agreeing to the process to be undertaken.

The purpose of the intervention with this small company is to support the executive team to take greater accountability for the direction and development of the German organization.

The following is a six step model which I will propose to accompany the team in its development over the next six months.

Team_Development_Process

Like all cultural issues, a circle is the best symbol to use in describing the process to be undertaken.  No sooner are you finished with the development process  than you find yourself at the beginning of the circle, ready to initiate the next phase of  development.  The process for this next phase looks very similar to the process which has just been gone through.  Developing teams and or organizational culture is similar to life-long learning-  it needs to be constantly nurtured.

G5_Actuators_mvn

Entheos’ Six Step Team Development Process contains the following items:

1) Establish Framework

This involves clearly setting the purpose of the team development process as well as defining what should be achieved.  It may also require clearly setting the boundaries around who is and who is not part of the team.

2) Initiate process

This phase has its challenges and pitfalls.  The objective is to get as much acceptance as possibile from the team members while at the same time taking a pulse of what is actually happening in the team.  Many team members may be lukewarm or downright hostile about getting involved in another activity which adds to the burden of their busy schedules.  Obtaining their understanding and acceptance that this process will be of great benefit to them is paramount. As a team consultant Entheos needs to diagnose initial team dynamics issues (i.e. existing conflicts within the team) at this stage  in order to plan for the next phase of the intervention.

3) Foster team awareness

This sounds simple, but is actually quite complex.  People’s understanding of team and their role within that team varies greatly.  Some individuals may not even acknowledge that they are part of the team. In this phase it is key to look at people’s understanding of the team as well as the various links which glue a team together.  Focus is on the functioning or non-functioning of relationships within the team as well as getting team members to deepen their sense of team. I also likes to look at team values s stage and compare those with how they co-exist with company values.

4) Create team identity

This stage requires a deep dive into team roles – who is filling them and what is lacking.  After sorting out team priorities, team members then make commitments to fill in the gaps where certain roles are underrepresented.  New team agreements emerge.

Throughout Stages 3 and 4 the individual team members may need individual coaching.  After Stage 4, the consultant/coach needs to shift into a team coaching role – looking not necessarily at the individuals but at the interactions among individuals.

5) Reinforce new team dynamic

With the new priorities and agreeement in place, it is time and essential to test these new commitments.  The team building development will only remain a theoretical exercise  unless it is quickly put to the test.  My preferred approach is to pick ONE challenge that the team is facing and then approach it through the prism of the new team understanding.  Team members are asked to be particularly aware of interactions on this priority item.  Through this strengthened consciousness, the possibilities of new team interactions become real and are strengthened.

6) Reflect on team development

After a sufficient amount of time has passed (approx. 6 months), team members are invited to reflect as a group on what has changed, what has improved (or not).  As part of this exercise, team members ponder what might be the next step in their development.

Throughout the process I make an extra effort to build capacity within the organization. By approaching  the team coaching in this manner, the team members develop the skills to guide the team through the next level of development.  Emerging from the positive expererience of teram coaching, the team members have acquired the language, the tools and the motivation to carry the process forward.

It is the mark of an instructed mind to rest satisfied with the degree of precision to which the nature of the subject admits and not to seek exactness when only an approximation of the truth is possible.       Aristotle

Executive Team Development

Most leadership development work focuses on the individual.   And indeed the leadership skills that individuals bring to the table are fundamental to the success of any endevour.  Nevertheless the real music takes place in the ensemble of how individuals work together.  We all know from watching professional sports that having the best talent on a team does not guarantee a first place finish.

As a workshop facilitator I have often run activities where the results of teams are compared with the results of individuals.  One rather sophisticated activity is a case study on change management.  A company on the verge of bankruptcy needs to change quickly.  Both individuals and teams can choose what should be done from a menu of options.  Almost invariably the team comes up with the better solution.

These activities interestingly enough are really aimed at individual leadership development not at team development.  The point of such exercises is to help individuals become aware of the qualitative difference.

However if the music is in the ensemble, why aren’t there more leadership development efforts aimed at teams?

I find the lack of attention to team leadership troubling, particularly at the top executive level.  I did work for an automobile part manufacturer where the so called executive “team” only met twice a year.  In another case for a very large non-profit, the “team” which operated in various locations globally did not actually know each other personally.  In a third case – for a reknown truck manufacturer – the executive team would on principle never get together for any longer than two hours.

Such “team” constellations are in my opinion not really teams but fiefdoms.  The heads of the various clans come together only to make decisions that they could not otherwise make alone.  Perhaps each of the individuals is a great leader – but what image are they projecting about leadership through their team interactions?  Can such a constellation at the top truly inspire great teamwork throughout the organization? A critical dimension of leadership appears to be neglected.

Breakthrough research was conducted by Dr. Meredith Belbin in the 1970s on teams. Over 9 years teams were asked to participate in simulations.  During these simulations the different kinds of contribution from team members were observed, recorded and categorized.  The results were illuminating.  The best teams were not those with the greatest intellectual capacity, but those teams that demonstrated the best balance in the types of contributions that were being made.  From this research sprung the conceptual model of team roles.  In his book Management Teams – why they succeed or fail Belbin highlights 8 various roles (later expanded to 9 roles) that teams need to be successful.  The Financial Times selected this book as one of the top 50 business titles ever.

Belbin_Circle

Each of the segments in the above circle represents one of the 9 essential team roles.   Each of the individuals on the team have been placed into the different segments twice (represented by their initials) – for their top two contributions to the team.  There are two roles which are not represented in the team – both roles which are part of the social category.  The implications of this finding are that there could be a substantial risk to team cohesion.

Presenting this type of information to a top executive team can be very insightful.  The non-profit organization I spoke of earlier  had 3 roles underrepresented which highlighted many of the issues that the organization was facing.  In addition to the overall team report, individuals also get an overview of where there could be “chemistry” issues between certain members as shown in the sample report below.

Relationship_Report

Leadership is three dimensional. Development occurs at the individual, team and organizational levels.  Investment in individual leadership capability is not enough.

“Talent wins games, but teamwork and intelligence wins championships.” Michael Jordan