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

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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.

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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.

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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.

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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.

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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

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