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

Advertisements

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 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

A small company invests in leadership – Part 1

Last week I had the opportunity to meet with a small to medium sized company in the precision instruments business.  With manufacturing in Europe and the US and the opening of distribution centers in China and Brazil, it has become in the past few years a truly global enterprise.

G33_InCoherentSources_mwn G36_Detectors_mvn

I have known the director of the German operations for many years.  Over that time we have had interesting conversations on leadership, culture and high performance teams.  The conversations usually ended with her telling me that I should help her with her business, but nothing concrete materialized.  I always told her that when the time was right, she would know.  Over the years, she has had a lot on her plate to put the house in order.  There were two changes in ownership of the organization.  This disruption was accompanied by operations running in the red for a few years.  Re-organizing production and distrubution were top priorities.

When I took a tour of the facilities last week, I was impressed with what had been achieved.  They have a catalogue of approximately 12.000 items – most of which can be assembled and shipped within twenty-four hours of receiving an order.  They are able to do this even though most products have to be assembled before being shipped.  Approximately 180 orders go out a day.

They have also done an admirable job in attending to the culture of the organization.  When a new employee comes into the organization, they have a one-on-one session with the director and talk about the values of the company.  Absolute priority is given to customer orientation.  As proof of that commitment, an extensive feedback system has been developed in which scientists who use the instruments are in constant dialogue with the company’s management.  The company’s CEO takes pride in being part of those conversations.

After reading the feedback from her employees from a 360° feedback instrument, the director of the German operations decided that it was time to invest in leadership.  Despite or perhaps because of all of the success that had been achieved, there was a limit as to how much further she could take the company, based on her leadership capabilities alone.  She realized that the time had come for an increase in the level of leadership within the organization.

Last week we had a discussion on what it would take for her team to begin to take more ownership for the direction in which the organization is developing and more accountability for the alignment and commitment of its employees.

I will be putting a proposal together in the next two weeks and hope through this blog to keep you informed on the way the  leadership consulting process unfolds through this most interesting case study.

“I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.”                                                                                                                                 – Johann Wolfgang von Goethe

“If you’re walking down the right path and you’re willing to keep walking, eventually you’ll make progress.”                – Barack Obama

Leadership Pipeline at Maersk

This past week I was at the new leadership centre of A.P. Moeller Maersk in Rolighed. A former 19th century patrician home was converted last year into a state-of-the-art training and development facility.  It has a beautiful lake as a back drop and is only a few minutes walk from the ocean.  It is a temple of calm and reflection – a perfect setting for leadership development.

A.P. Moeller Maersk is one of the world’s largest shipping companies.  The company’s main shareholder is The A.P. Møller and Chastine Mc-Kinney Møller Foundation, which was established by company founder A.P. Møller in 1953 to ensure that the company would always be owned by parties that held a long-term view of the company’s development.

It is therefore not surprising that Maersk would be attracted to long-term development of its leadership.  In 2005, Maersk was introduced to the concept of the Leadership Pipeline, pioneered by former General Electric executives Stephen Drotter and Jim Noel.  The first edition of their book, co-authored with Ram Charan, came out in 2001 and was so well received in the corporate world, that a second edition came out last year.

The Leadership Pipeline Concept is simple.  As leaders progress through an organization there are several critical transition points.  At these transition points, the way that leaders lead changes.  Leaders transition from “Individual Contributors” to “Leaders of Others” to “Leaders of Leaders” to “Functional Leaders” to “Business Leaders” to “Enterprise Leaders”.  At each level different priorities, skill sets and usage of time are required.  For instance, a “Leader of Others” needs to learn the skill of delegation which was not necessary at the previous lower level.

It is important to manage the transitions well at each level.  If that does not happen, first you will have ineffective leaders in the organization.  Second, the pipeline gets clogged.  Leaders that do not make the transition make it difficult for the next transition to take place.  If an organization wants to insure that it has the leadership capacity it needs throughout the company, it has to manage and support these transitions at every level.

Curious? Take a look at the Entheos approach to instutionalize the Leadership Pipeline in your organization.

In my next blog, I will describe how I supported 18 top leaders at Maersk to make the transition to a “Leader of Leaders”.

Leadership Strategy at Philips

This past week I was in Amsterdam.  I had the privilege of being part of one of the longest running leadership development programs that I am aware of – the Philips Octagon program.  This leadership program has been running for more than 30 years. In 2011, the program received an excellence in practice award from the European Foundation for Management Development (EFMD).

The program combines the development of both business and leadership skills.  Participants are top leadership prospects at Philips.  During the 3 module – 3 continent program, participants prepare new business proposals which are presented to members of the Philips board .  In the past many of these proposals have been the inspiration for the launch of new businesses at Philips.

The current group of 24 top leadership prospects was finishing its program in Amsterdam after previous sessions in Philadelphia and Moscow.  On Wednesday morning, the group had the opportunity to listen to the Philips CEO, Frans van Houten.  The focus of his talk was on leadership and organizational culture.

I spoke to the group immediately after the session with Frans van Houten on the topic of leadership strategy.  Managers of companies throughout the world are well trained to put together business strategies.  They know how to analyze market and product opportunities.  They can put together project plans, calculate costs and estimate returns on investment.  This is all part of normal business practice.  But does anyone know how to put a leadership strategy together?

Leadership strategy has many components.  First is the issue of capacity.  Is the leadership in place to actually implement the foreseen business strategy.  Very often great plans fail, because that capability is not in place.  A second aspect of leadership strategy has to do with mental mindsets.  If you are proposing something new, very often the new way will require a new mindset.  For example, if as a manufacturer you are used to only delivering hardware, a shift to a a service mentality – where most of the profit comes from the comprehensive services provided with the hardware – can prove to be a major challenge.  Finally there is the issue of individual leadership. This is where leaders look into the mirror.  In leading this change, do I have the passion, skills and resilience to make this happen?

I asked the 24 Octagon participants if they had ever put a leadership strategy together for any of the business plans that they had crafted.  The answer was as expected.  None of them had ever done so.  Yet if the success of a business proposition is so dependent on having the right leadership in place, why is this not part of normal business practice?

“Leadership is the ability to do, not the ability to state”  Paul von Ringelheim – sculptor