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.

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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

Global6 – Assessing Leadership in a Global Context – Part 2

The Global6 360° feedback instrument is a brand new tool for global leaders developed by the Center for Creative Leadership.  It is ideal for business managers who are leading global teams.  Like any 360° instrument, Global6 provides the opportunity for a leader’s boss, peers, and direct reports to provide him/her with direct feedback.  The focus of that feedback is on leadership effectiveness and Global6 helps a leader to note how their leadership style might or might not be effective in different cultures.

The instrument is based on the ground-breaking research conducted by the GLOBE (“Global Leadership and Organizational Behavior Effectiveness”) research program conceived and managed by Robert House of the Wharton School of Business. 17.300 middle managers from 951 organizations  in 58 countries contributed to the findings.  It is the most comprehensive study to date that has empirically researched the relationship between culture and leader behavior.

One of GLOBE’s major findings was to make explicit how other cultures conceptualize leadership. Leader effectiveness is contextual.  People’s expectations of leadership are shaped by their early experiences with leaders which in turn are shaped by one’s culture and upbringing. As a result, what consititutes good leadership across the world differs depending on your cultural perspective.  For example, compassionate leadership which is concerned with the well-being of others may be seen as effective or ineffective depending on what culture you come from.

The GLOBE study began by looking at 112 leadership characteristics such as trustworthiness, decisiveness, modesty, etc. This list was statistically boiled down to 21 scales of relevant leadership characteristics.  In turn, these 21 characteristics were conceptually grouped into 6 leadership dimensions.

It is these characteristics and dimensions that form the backbone of the Global6 360° instrument.  The SIX leadership dimensions in Global6 are: Hierarchical, Autonomous, Humane-Oriented, Participative, Charismatic, and Team-Oriented.  A leader gets feedback across all of these dimensions.

Let us take a look at the type of output generated by this instrument.  Below is a matrix which summarizes the information for the Hierarchical leadership dimension.  The leader in question had teams reporting to him in the Anglo-Saxon World, Latin Europe and Scandinavia.  The hierarchichal dimension incorporates various characteristics – among these are the degree of formality and status-orientation of the leader.   As can be seen from the table, this leader’s teams disagree with their perception of the leader’s style.  Whereas Latin Europe and the English-speaking teams would like to see more hierarchical behaviors than the leader is currently showing, the team in Scandinavia finds the style just right.  In addition, because the Scandinavian team is in the lower left-hand quadrant, they would find any more hierarchical behavior actually ineffective.

Sample A - Hierarchy - Regional Breakout

Similar data is available for each of the 6 dimensions with also detailed information on the 21 characteristics.  Data is also presented not just by region but also by role.  For instance, a leader can see how his boss, direct reports and peers are rating him/her and how this fits in with their perception of good leadership.

Below is a table which highlights where there is the greatest amount of disagreement of ALL raters with the leader’s style.

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This wealth of information can provide valuable insights for today’s global executive. This is concrete and practical information based on the feedback from the leader’s own teams.

“Ask for feedback from people with diverse backgrounds. Each one will tell you one useful thing.”   Steve Jobs

Global6 – Assessing Leadership in a Global Context – Part 1

What is considered good leadership practice  in Germany may not be considered good leadership in Japan or may need some modifications when dealing with US Americans.  Intercultural differences have been the subject of much study since the 1950s.  I have always been fascinated by the insights derived from these studies given that I am thoroughly multicultural person myself.

As an aside – I was born in Panama, raised in Mexico, and studied in the US and Germany. My mother’s side of the family is French, my father’s US American. I have worked in Mexico, US, France, Belgium and Germany.  My work as a strategy and leadership consultant over the past twenty years has taken me to – at latest count – 30 different countries.  I truly think of myself as a World Citizen.

My first encounter with the intercultural literature was reading Edward T Hall – considered the founding father of intercultural communication as an academic field of study.  During the 1950s he worked for the US State Department,  teaching inter-cultural communications skills to foreign service personnel.  He came up with the concept of low-context versus high-context cultures – a concept still much in use today.  Low-context cultures such as the Germanic culture transmit information explicitly – i.e. through language and tangible information.  High-context cultures such as the Japanese culture transmit messages implicitly – the context, the body language and other non-verbal clues provide the information.  A spoken ‘Yes’ does not necessarily mean ‘Yes’ – it depends on the context.

The Three H’s of Intercultural Communication – Hall, Hofstede and House

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Obviously leadership in these very different cultural environments needs to take on different forms.  Ever since Edward T. Hall various further attempts have been made to codify the differences between cultures.  As our economy has become more global, understanding how to navigate in these diverse waters and currents of culture has received increasing attention from both public and private sector leaders.

In the 1970’s Geert Hofstede significantly expanded the framework from which to look at different national and organizational cultures.  Using survey data from over 100.000 individuals from over 40 countries, he developed a model composed of 5 different dimensions of culture.  It was a great honor in the year 2004 to have Geert Hofstede talk at a Forum which was organized by my colleague Ted Baartmans and me in Maastricht.

This work has been continued through further studies.  The most recent and comprehensive being the GLOBE Study led by Robert House, professor at Wharton at the University of Pennsylvania.  The GLOBE study included 170 countries and established 9 cultural dimensions.  I was also very fortunate to be present in London in 2011 when he received the prestigious Lifetime Achievement Award from the International Leadership Association.

Yet despite all of this information, how can business leaders truly know how to change and adapt their style globally?

This week I had the privilege to be one of  the first people to be certified in the brand new 360° instrument – Global 6 created by the Center for Creative Leadership. It is the first instrument I am aware of that provides business leaders with practical information directly from the people they work with.   It gives them pragmatic advice on how they need to adapt their leadership style globally.  In my next blog I will explain how this instrument works.

If we are to achieve a richer culture, rich in contrasting values, we must recognize the whole gamut of human potentialities, and so weave a less arbitrary social fabric, one in which each diverse gift will find a fitting place.”  Margaret Mead

Communication, Communication, Communication (aka Leadership made simple)

When a painter considers what to paint there are two primary factors that he/she needs to take into account before beginning to paint on the canvas – form and color.  The approach to these two factors has influenced the style of painting throughout the ages.

Leaders also have two main ingredients with which to work –  Energy and Information.  The latter is so essential, that leadership without communication is unthinkable.

I recently assisted a mid-sized company to address the issue of effective communication at all levels.  This company is a family business in Germany’s Westphalia region which is specialized in the area of technical gases.  Over time, the number of products and services which the company offers has multiplied. As a result, the geographical footprint of where these products and services are sold has also expanded into 6 different countries.  With this much sought after and desired expansion, both the complexity of the business and the challenge of optimizing effective communication throughout the organization have increased.

As with any company, communication is at the heart of co-ordination, effectiveness and efficiency. But how do you go about adressing this key issue?

The first step in the process is to create a collective awareness of the specific issues at hand.  By doing so, the foundation is being established for taking decisive action and implementing concrete measures.  140 managers from across the organization were invited to participate in a 4 hour large group participative dialogue. During this dialogue, they discussed and mutually agreed on the communication issues which are of greatest importance for their work in the company. The following Word Cloud captures the key issues that were discussed.  (FYI – the larger the words, the more importance which was placed on the issue by the managers).

word_cloud_communicationAll of the 140 managers explored these issues together and identified concrete recommendations on how to improve the communication within the company.  The following mind map summarzies the managers’  key recommendations. A detailed data base of the individual entries were used to create this overview. The numbers adjacent to the recommendations record the number of suggestions made in this category.

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Through this large group dialogue process, the communication issues within the company was made visible to everyone.  The platform to launch a systemic change in the way the company communicates with each other (as well as with clients) has been established. The next step is to prioritize the issues and create working groups of managers throughout the company to put these ideas into action.

“The art of communication is the language of leadership.”     James J. Hughes

3rd Industrial Revolution and Leadership

Let me start 2013 with a macro view of leadership…

I was in Philadelphia last year as part of the delivery team for one of the acknowledged top leadership development programs in the world – the Philips Octogon program.  It is a program involving 32 selected top performers at Philips.   The program takes place over 8 months in three locations.  The first session was at the Wharton School of Business.

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Steinberg Conference Center – Wharton School of Business

Of course I felt quite comfortable coming back to this location.  Back in the 1980s I obtained my MBA at Wharton – one of the more prestigious business schools in the world.

I had the privilege to be able to listen to a presentation by Jeremy Rifkin on the first day of the program.  Mr. Rifkin established the Foundation on Economic Trends (FOET) .  Among many of his activities, he is a valued advisor of heads of state in Europe (including Angela Merkel) and has had very direct impact on European economic policy.  He is the author of the concept of the 3rd Industrial Revolution which is a road map for long-term economic sustainability.  This concept was formally endorsed by the European parliament in 2007.

This concept has fundamental implications for leadership in the 21st century.

His talk began pessimistically enough.  We are in the end phases of the Second Industrial Revolution and the only way out of this dead end is to completely change the fundamental infrastructure on which our current civilization is based.

Each industrial age is characterized by two fundamentals: energy and information.  Mastering a new energy process provides the means to create a new form of information dissemination.  The First Industrial Revolution centered around coal-fired steam-driven power generation.  This new energy regime also enabled the advent of mass produced newspapers and magazines based on steam-powered rotary press and linotype technologies.

The Second Industrial Revolution began with the advent of the internal combustion engine powered by fossil fuels.  This revolution was complimented by a communication revolution based on the creation of an electric grid infrastructure which eventually led to telephone, radio and television.

This Second Industrial Revolution is reaching its limits according to Rifkin.  The most important recent economic occurrence in the past five years is not the financial crisis of 2008, but the rise of oil prices to over 140$ a barrel in 2007.  This rise in the price of oil represents a major threat to the welfare of human society on the planet.  So many of current modern materials are based on fossil fuels (from plastics to fertilizer), that this price has seismic implications for the economy.  Rifkin concludes that the current economy is doomed to limited growth for decades to come.  Every time the price of oil goes over 120 $ a barrel, a new global recession is virtually assured.  The problem is not the amount of fossil fuel available.  There are still plenty of reserves.  The problem is that getting at those reserves is becoming more costly over time.  This limit threatens ALL economies including emerging economies such as China and Brazil.   It is a global phenomenon.

What is the way out?  What are the implications for leadership?  Stay tuned for more….

“One thing I have learned over these last 30 to 40 years is that people make history.  There is no fait accompli in any of this.”         Jeremy Rifkin

The Science of Motivation

One of the more provocative pieces of the Maersk workshop in Copenhagen had to do with the issue of employee motivation and performance appraisal.  Many corporate incentive and performance systems are not taking into account what the science is saying about what motivates people.  Daniel Pink in a TED talk outlined the key points:

  • As long as a task requires only mechanical skill, bonuses work as they would be expected – the higher the pay, the better the performance.
  • Once a task calls for even a rudimentary amount of cognitive skill, a larger reward often leads to poorer performance.
  • Extrinsic motivators, which Pink refers to as “if-then” rewards, often destroy creativity.
  • The secret to high performance isn’t rewards and punishment but rather that unseen intrinsic drive, the drive to do things for their own sake, the drive to do things because they matter.

There are two videos that I highly recommend.  The first is the original TED talk from August 2009.  More visually entertaining is the RSA video which shows the same content but portrays it using graphic recording.

The conclusions reached by Pink are the result of various studies.  For instance, in early 2009, economists at the London School of Economics looked at pay for performance schemes and concluded that “financial incentives … can result in a negative impact on overall performance.”  In the video, Pink cites studies sponsored by the Federal Reserve Board of the United States.

The implications of these studies for how we manage and lead our organizations is fundamental.  These findings are the essential building blocks of any modern approach to leadership.  So what motivates people?  Autonomy, Mastery and Purpose

In short, people are most motivated when they have choice, when they are able to demonstrably improve their skills and when what they do has meaning to them.

This may not seem like surprising results, but they do contradict what most business do in trying to incentivize performance.  Watching this video at Maersk produced the expected results.  Workshop participants had a long discussion on the implications for their performance review system and for the company bonus system.  At Maersk, there is a forced ranking of employees on a performance scale.  The ranking directly influences the bonus that an employee receives.  Every year, the “leaders of leaders” at Maersk could sense the demotivation that is created by this process. The Dan Pink video helped them to see their intrinsic unease with the process in a different light. Real motivation – that extra striving to do something not only well, but to the best of one’s abilities – is not created by a bonus system.

“Motivation is a fire from within. If someone else tries to light that fire under you, chances are it will burn very briefly.”  Stephen Covey

 

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”.