Can Executives Try Too Hard to be 'Liked' in Order to Succeed?

By the time of its collapse, in 2008, Lehman Brothers reportedly had one of the strongest cultures of teamwork and loyalty on Wall Street. Yet Lehman’s board of directors had become too agreeable and too loyal, happy to follow Dick Fuld even when they knew better. This loyalty led Lehman executives to an almost wilful blindness, as nobody wanted to disrupt the peace; (Joni and Beyer, 2009, p.48-49).

Yet there is a fine line between supporting your CEO and challenging the status quo. Marshall Goldsmith (2009) reminds us that “in 1978 many observers considered Ford Motor president Lee Iacocca the obvious candidate for the new CEO position that Henry Ford II would shortly vacate. Iacocca, of course, not only didn’t get the position but was fired. In explaining why he cut Iacocca loose, Ford famously remarked – sometimes you just don’t like somebody,” (p.74).

So how does CEO succession, and even just the thought of it, effect individual performance; and who is responsible for ensuring that the organisations future comes before individual aspirations that may negatively impact board performance and organisational growth.

As Goldsmith (2009) mentions, “much of what has been written about CEO succession ignores the personal drama that unfolds when it’s time to pass the torch of leadership. CEO succession isn’t an entirely rational process. In practice, succession decisions may be influenced as much by stakeholders’ gut feelings and emotions as they are by business logic. Strains in relationships between stakeholders and their heir apparent can emerge and quickly scuttle succession plans, and faulty assumptions can cause decision makers to suddenly change their minds about who should lead the company next,” (p.74).

The stakeholders that influence CEO succession, aren’t just the board of directors and the shareholders, but also include the current CEO, the peers of the potential successor, the direct reports of the potential successor, the organisation’s key customers, and influential external business analysts, (Goldsmith, 2009, 74).

In the end, the most influential decision maker on CEO succession is the board of directors; yet there is often a lack of evidence to prove that the board themselves have the knowledge, skills and experience to make the best decision for the organisations future. That the board members focus solely on the organisations future strategic and operational needs, rather than their personal likes and dislikes. There are mechanisms for boards to measure and evaluate their individual and group effectiveness, yet these business tools are seldom used appropriately (if used at all).

As Kazanjian (2000) notes, “every year the Toronto Stock Exchange requires listed companies to disclose how they stack up against a set of 14 corporate governance ‘best practice’ guidelines. Scores were encouragingly high (80 percent or more) for guidelines dealing with control of board size and participation in strategic planning. Fewer than 20 percent of the respondents had any formal process in place for assessing the effectiveness of the board and even fewer had any process for assessing the contribution of individual directors” (p.46); and it’s worth noting that the New York Stock Exchange also requires board evaluations (Nadler, 2004). “The concept of board evaluation has met with particular resistance; directors remain either unprepared or unconvinced of the benefits gained from evaluation. Potential benefits such as improved leadership and teamwork, clarity of roles and responsibilities, improved accountability, decision making and delegation, and enhanced communication and operations are countered by fears concerning operational disruption, board dysfunction, and individual humiliation and exposure” (Long, 2006, p.551).

Without effective board evaluation how can we be sure that the best decisions are being made for the future of our organisations, especially when it comes to CEO succession?

References

Goldsmith, M. (2009). How not to Lose the Top Job. Harvard Business Review, Vol. 87, Issue 1, p.72-80.

Joni, S.A. and Beyer, D. (2009). How to Pick a Good Fight. Harvard Business Review, Vol. 87, Issue 12, p.48-57.

Kazanjian, J. (2000). Assessing boards and individual directors. Ivey Business Journal, May/June, p.45-50.

Long, T. (2006). This year’s model: Influences on board and director evaluation. Corporate Governance, Vol.14, No.6, p.547-557.

Nadler, D.A. (2004). Building better boards. Harvard Business Review, May, p.102-111.

How to Lead Your Organisation Out of the Recession

In a Harvard Business Review article, March 2010, Donald Sull wrote that, “more than ever, companies need agility – the capability to consistently spot and execute on unexpected opportunities before rivals do.”

“As companies crawl out of the recession,” Sull says, “it’s not enough for leaders to ‘craft’ the perfect strategy, put their heads down, and make it happen, confident that the market will cooperate. Instead, they must set a broad strategic direction but remain open to unexpected opportunities that appear along the way. And make no mistake – for all their risks, volatile markets do produce opportunities. Shifting regulations generate unexpected sources of funding; changing consumer preferences create demand for new products or services; distressed competitors sell off assets cheaply” (p.71).

A downturn in the market often tests how well organisations have applied and implemented core business principles, relevant to their industry; and developed a strong business foundation – those principles that they may have not considered important while the ‘sun was shinning.’ Have they developed a loyal customer base and do they have the channels in place to engage with their customers directly, to find out in ‘real time’ what their expectations are; and to be able to react quickly to changing needs and expectations. Has the organisation attracted and retained the best talent – the talent that sees obstacles as opportunities, and aren’t sitting somewhere, sulking which a calculator, wondering how much their bonus will be cut this year. Has the organisation developed strong collaborative partnerships with key organisations that include their suppliers, advisors and/or custodians of outsourced functions; to ensure that they can work together, through the tough times, to find new opportunities that will benefit all involved?

One of my favourite quotes, states that;
There are three types of organisation,
Those that make things happen,
Those that watch things happen, and
Those that wonder what happened.

In a time of global crisis, organisations must make things happen for themselves – this can be achieved by initially watching the competition and/or market for unique opportunities. However, you cannot afford to ‘sit and watch’ for too long and must be alert and focused to respond quickly to any opportunity that arises for your organisation to grow, either within your existing markets, or through new markets or new products and services. This requires flexibility at all levels of the organisation, a flexible strategic leadership team who are focused on sustainable growth and adaptable to change; and a flexible organisation, that has its ear to the ground picking up customer ‘chatter’, and that have an internal communication process that can feed the relevant information to the decision makers quickly and accurately.

The business environment is unlikely to return to how it was before the recession and hence organisations need to focus on attracting and retaining the best talent for their current and future strategic initiatives. Business success cannot be taken for granted, having the right talent will ensure organisations implement the business principles they need for a solid foundation; and that leads to sustainable business growth and continuous improvement into the future.

The organisations that come out of the recession as the future leaders in their respective industries will ensure that;

1) They attract, develop and retain the best talent, from the strategic leadership to the employee base;
2) They have a culture that embraces innovation and diversification;
3) They thrive on problem solving and flexible responsiveness;
4) They embrace strong values and social responsibility; and
5) They set the standards for other organisations to follow.


References

Sull, D. (2010). Are You Ready to Rebound. Harvard Business Review, Vol. 88, Issue 2, P.70-74.

Innovative Leaders Develop Unique Brands

Developing a strong brand is a key factor for sustainable growth and allows organisations to innovate and diversify new products and services; and take them to market as an extension of their existing brand status. This is a powerful competitive advantage and significantly improves the chances of early market success for these new product or service offerings.

In 1982, with a revenue of $693 million, Nike only produced running, tennis and basketball shoes for male teenagers and adults in the US, this then grew over the next 25 years to a revenue of $18 billion, where Nike produces shoes, clothing and sports equipment for all sports, in countries all over the world. As Kevin Keller and Donald Lehmann (2009) highlight, “the ability of the Nike brand and its brand promise of ‘authentic athletic performance’ to be leveraged across many product categories, market segments and geographical markets has been extremely valuable to the firm” (p.7). It was the ‘Just Do It’ campaign that transformed Nike overnight into the leader in athletic apparel.

Branding has now developed beyond the organisation, its products and services; where today you’ll find political leaders seeking to develop branding concepts around countries and cities; and also where employers seek to develop their own superior brand compared to competitor organisations.

Employer branding, for example, has received specific attention from leaders and organisations over the last few years, as part of their talent acquisition and retention strategies. If you can create a brand image around your organisation you can attract the best talent, and ensure that you retain and motivate this talent pool. As Lara Moroko and Mark Uncles (2009) state, “when a firm undertakes employer branding as a strategic activity, the ‘product’ they are branding is the employment experience that the firm offers, and the ‘customers’ of this brand and product are the prospective and current staff” (p.183). Of course understanding your customer segmentation is just as important with organisational branding (as with product branding), as recent graduates, for example, are likely to have different requirements that will attract them to an organisational brand, compared to other employee segments.

In today’s global competitive marketplace it takes innovative and visionary leadership to build a unique brand and image, and to identify latent market opportunities. As Keller and Lehmann mention, “many brands have latent brand equity that is never realised because of the inability or unwillingness of a firm to consider what the brand could and should become in the broadest sense” (p.7).

Remember a successful brand is associated with an image that resonates a distinctive form of quality with its customer base; where they are attracted to the brand as it meets their needs, exceeds their expectations and gives the customer ‘a feel good factor’.

Growing a brand can relate to the latent brand value that exists to develop new products or services that appeal to new target markets and customers, in the present and the future (Keller and Lehmann, 2009, p.9). The ability to grow the brand is not a guaranteed success as it depends on having the resources, in respect of capital and skills, to transfer the opportunity into a market reality.

Finally Keller and Lehmann mention that, “a good brand vision and positioning strategy has both a foot in the present and a foot in the future. Brand vision needs to be inspirational so that the brand has room to grow and improve in the future. The trick in developing a brand vision is to strike the right balance between what the brand is and what it could become and to define the right series of steps to get it there” (p.8).

So take a moment to ask yourself if you have identified all the potential opportunities for your brand?

References

Keller, K.L. and Lehmann, D.R. (2009). Assessing long-term brand potential. Journal of Brand Management, Vol. 17, Issue 1, p.6-17.

Moroko, L. and Uncles, M.D. (2009). Employer branding and market segmentation. Journal of Brand Management, Vol. 17, Issue 3, p.181-196.

Career Transition: The Key to Success

“Life isn’t a dress rehearsal” though, occasionally, we probably wish that it was. We have to be constantly alert to see the opportunities that exist and grab the ones we want before they pass us by, (Kerry Packer).

In respect of careers, there are two key steps, firstly finding the right opportunity, either within your existing organisation or elsewhere, and then making a successful transition into the new job.

While keeping alert for your next opportunity and when planning the transition, it helps to know yourself first, “knowing whether you tend to be left-brained, the logical arithmetic type who likes formal structured activities, or right-brained who is more intuitive and relies more on the feel and sense of a situation. This all has a good deal to do with the type of organisation you will be more comfortable with,” (Kanter, 2003, p.45)

A 2009 survey found that “87% of the 143 senior HR professionals who responded either agreed or strongly agreed with the statement – ‘transitions into significant new roles are the most challenging times in the professional lives of managers’. Further, 70% agreed or strongly agreed that – ‘success or failure during the transition period is a strong predictor of overall success or failure in the job,” (Watkins, 2009, 47).

Michael Watkins found that “leaders in transition reflexively rely on the skills and strategies that worked for them in the past; after all, their previous successes are what propelled them to the new opportunity,” (p.48) – yet Andrew and Valerie Stewart remind us that the relationship between performance and potential is not a simple one; and that the best performers are not necessarily those of high potential. Promotion solely on the basis of past performance almost inevitably leads to promotion to the person’s level of incompetence.

Transition isn’t just challenging for senior roles, it’s challenging for any job change, where part of the problem in preparing for the transition is finding the time to plan and also knowing what to plan for. Kanter (2003) suggests that you set yourself four to six success criteria that link to your new objectives. But transition isn’t just about performance objectives, it involves getting to know the people, the new teams you’ll be operating with, the expectations from different individuals in the organisation and creating the right first impression – as you don’t get a second chance at a first impression.

There are pros and cons of promotion and transition from within and some may think internal transition is easier than transition from the outside. Yet the problem with internal transition is that your reputation precedes you, which can be good (or not) – especially if the new role requires you to manage personnel that were previously you friends and colleagues. The problem is that the person being promoted, often assumes that since they got on well with their team while they were part of it, the team will automatically accept them as their new boss – which, if not planned as part of your transition, can be your first big mistake (and one that you may not recover from). With internal promotions you must plan a detailed communication strategy as part of your transition to discuss your expectations and those of your team.

Transition into a new role is critical at any level as it set’s the ‘tone’ for your future – a poor transition is likely to lead to a less than optimal future. During your first few weeks you should establish priorities, define strategic intent, engage with your new team, identify your internal suppliers and customers, identify where you can achieve short-term successes in line with your goals and objectives, and meet and greet all your key collaborative partners, inside and outside the organisation (Watkins, 2009).

Don’t take your future career opportunities for granted; and when they come, remember to plan your transition carefully to make sure that your next job is a resounding success.

References

Kanter, J. (2003). Planning and Managing Your Career. Information Strategy: The Executive Journal, Vol. 19, Issue 2, p.43-48.

Watkins, M.D. (2009). Picking the Right Transition Strategy. Harvard Business Review, Vol. 87, Issue 1, p.46-53.