Sunday, October 23, 2011

Can the Death of Yueyue Bring More Humanity to Leadership?

Yueyue, which translates as “little joy” in Chinese, is the little toddler who sadly died in hospital after she was run over in the street, not once, but twice and then lay on the ground bleeding while eighteen people walked or cycled by and ignored her pain.
Eventually an elderly lady helped get the little girl out of the road. She said, “I walked up in a hurry to the child and heard her groan. I lifted her up and saw that one of her eyes were closed, that she had tears in her eyes, and she was bleeding from her mouth, nose and the back of her head.”
The shocking incident was caught on CCTV and has stunned millions in China and around the World, with many saying their society, which has enjoyed 30 years of rapid development, is rotten and immoral.
Li Xiangping, a professor of religion at Huadong University, asked “what prompted such a sad phenomenon? Officials? The rich? Or is it our own cold heartedness?”
What’s frightening is that many people in China are hesitant to help people who appear in distress over fears that they will be blamed. High profile law suits have ended up with good Samaritans ordered to pay hefty fines to individuals they sought to help.” Of course the leadership, The Communist Officials, have called for tighter controls over reporting the incident for fear of a public backlash.
How mad is this? But let’s not fool ourselves that this is an incident peculiar to China – as this could have been a story from anywhere in today’s world. The professor from China asked if it is cold heartedness and others ask if it’s the fear of being blamed – but who’s asking if this should even be acceptable, in the slightest.
Those reading this far may be asking, but what has this to do with business and leadership – and the answer is – everything. Leaders set the example and define the values and ethics for others to follow. When values become engrained they become part of our daily lives and our basic moral compass. If one can turn ‘values’ on and off, one set of values for when you’re at work and then another set for when you’re away from work, then you don’t ‘own’ those values and you are simply pretending to enact them through compliance.
One of the core attributes of effective leadership is creating a culture that is owned by the whole organisation – hence the greater the number of effective leaders in the workplace then the greater the change in ‘positive values’, both in and outside the work place.
There are still too many colonial leaders in the business world, living and enacting an outdated form of ‘poor’ leadership – maybe scared of their own fragile weaknesses – and using a form of colonial power to have their way (and hide their inadequacies).
The worst outcome for our future is that these colonial leaders are scared of real talent and ensure that their successors are as weak as they are – ensuring a further generation of inadequate leadership without the backbone to stand up and ‘fight’ for the values the world yearns for.
In my lifetime I have seen amazing progress in technology, medicine and science - all improving our knowledge, our health, and our understanding of the earth and our universe. But sadly as fast as this amazing knowledge has developed – we, the human race, don’t seem to have made much progress from our sad and barbaric past.
If we are going to ignore a child bleeding in the street, whether out of fear or cold heartedness, don’t we all need to take a real good look at our moral compass?

Sunday, October 16, 2011

Are the E7 About to Take the Lead Over the G7?

They say the only place to go, once you’ve reached the top, is down. The G7 countries have been sitting at the top for some time now and maybe, just maybe, their time at the top is coming to an end and seven emerging markets are about to take over. History will tell us that no single nation has stayed at the top and, probably, all those that were there and then were knocked off their perch never saw it coming either – maybe something to do with the arrogance of dominating for too long.
Can you name the top seven emerging economies – that’s a good place to start? If you can it means you’re up-to-date with current trends and who’s driving the global economic recovery. If not, maybe, you’re still embracing a ‘status quo’ that is out of date and ignoring a scenario which may have a significant impact on the future growth of your own organisation.
The seven countries that make up the E7, as the largest emerging economies are – China, India, Brazil, Mexico, Russia, Indonesia and Turkey. It’s these seven countries that Michael Queen, 3i CEO, states will surpass the G7 group of the largest industrialised nations within five years from now; and he goes on to predict that these same seven emerging economies will be twice the size of the G7 by 2050, (Helen Power, The Times, 13th October, 2011, p.48).
Unless the current G7 countries wake up to the fact that the world is changing, they will fall into the trap of many countries before them – of believing they are invincible (and being proved wrong).
What’s interesting in this specific era is that one could argue that it appears as if the citizens of the G7 countries, seem to be more aware of the global environment than their business and political leaders around them, who seem determined to cling to a past state that gave them ‘power’ and refuse to see the need for change or maybe it’s simply they don’t know how to change.
Clever, forward looking organisations have been developing trade links with the seven emerging economies over many years – developing sustainable strategies and long-term relationships that will give them a competitive advantage as the global economy shifts its dominance.
Those organisations who can’t embrace the change are doomed to fighting for the local scraps of business with other arrogant post-dominant wannabe’s. What’s sad about this forthcoming scenario isn’t that these blind leaders will be brought down to earth with a thud, but the damage that they will do to their local communities in the process, through the creation of horrific levels of unemployment and deprivation, all through their blind arrogance.
However the good news is that the tide hasn’t completely turned yet and there is still scope and time for the G7 countries, or some of them, to make the required changes that will allow them to compete with the strong emerging economies and play a significant part in the next generation of global economic dominance. It will just take some humility and honesty, both by those in power and those ‘reporting’ events, like the media – who could through their constant desire for sensationalism, drive some of the G7 economies into oblivion, just for the sake of a story – and taking no responsibility in their role as the country declines, until they too are just a blast from the past.
The main message for organisations is to look after themselves through detailed strategic analysis, strategic formulation and implementation – seeking the ‘real’ opportunities in the global economy and being totally honest about their real weaknesses and the real threats on their business, both in the short and the long term.
Emerging from the next few years will be the truly great leaders within the G7 business environment – but don’t expect to be counting them on more than two hands….

Sunday, October 9, 2011

Which is the Best Strategic Model?

Strategy is one of those business phrases, a bit like Leadership, that can be on everyone’s lips as a key business topic – but when you ask what strategy actually is, you can end of with a lot of fancy words and waffle, that doesn’t define anything - except that the person hasn’t a real clue what the subject is about.
First and foremost strategy is nothing without implementation – and that means effective, efficient and successful implementation.
Many organisations have ‘collections’ of strategic documents, analysing this and recommending that, which never get implemented – these documents are often either generated internally after a few nights away at a luxury conference centre or generated for a hefty fee by less than scrupulous consultancies that use the organisations knowledge to develop a ‘future’ that the organisation hasn’t  a hope in hell of achieving – because they’ve analysed a future state without matching the implementation requirements against the current skills, productivity, cash flow, and other ‘real’ constraints….creating a fictitious masterpiece.
When business people talk about strategy, why do they many only talk about the plan and not about the results of the implementation? Strategic planning without implementation is a waste of time and resource.
There are various strategic models that are ‘punted’ as offering the best approach to the ‘strategic processes’, including; Michael Porter’s – Five competitive forces that shape strategy; Strategic mapping models; Six Sigma (and the several variants of the programme) and the concept of Strategic herding which many follow blindly….
All of these models offer a valuable insight to the strategic process but none of them give a blue print for successful implementation. It’s assumed that organisations will take care of this last little bit themselves. But this last little bit is dependent on the leadership accurately recognising their skills and expertise, and accurately identifying what skills they may have to ‘recruit’ to successfully reach their strategic goals.
It appears obvious – but in practice is a lot harder than you might think,  as it requires the leadership to admit that they have developed the right strategic plan for their organisation, but that they don’t currently have some of the core skills they will need to reach their goal. This can prove to be the biggest stumbling block an organisation can have. Because they’ve developed the strategy, they often find it hard to admit they aren’t geared to achieve it – seeing this as a failure. All it means is that sometimes if you can dream it you’re going to need some other skills to achieve it.
For strategy to be truly beneficial it must deal with;
1)      The systematic identification of emerging opportunities and threats;
2)      Preparedness to meet change;
3)      Risk assessment and analysis;
4)      The specification of sustainable competitive advantage;
5)      Improved communication among executives, management and staff;
6)      Prioritising of strategies;
7)      Reduction of conflicts between individuals and departments;
8)      The involvement of all levels of management in the planning process;
9)      More appropriate allocation of scarce resources;
10)   Consistency of approach across the organisation;
11)   Developing and following through on a detailed, flexible implementation plan.
The primary responsibility business leaders have is to develop organisations that will be more successful tomorrow than they are today, (Harper and Glew, 2008). To the frustration of executives and employees alike, many firms get caught in a performance rut that prevents them from reaching their true potential.
Implementation has too often been considered a strategic afterthought, possibly because some consider execution less ‘glamorous’ than formulating vision and strategic content. In fact the main cause for executive job turnover is the failure to execute strategy. There is a big difference between formulating strategy and executing it.
Many businesses need to shift from relying on superior strategy to developing superior strategic implementation capabilities. Ineffective implementation can cripple a business, as the needed strategy goes wanting. So while we often think of the strategic planning process as a core competency, I propose that implementation expertise and capability is an equally important entity for creating and maintaining a sustainable competitive advantage.
“Effective implementation of an average strategy beats mediocre implementation of a great strategy every time” (Sterling, 2003).

Sunday, October 2, 2011

Who Is Setting the Example for Corporate Reform?

Despite the efforts of national governments and international organisations to improve corporate governance in emerging markets, the response of the companies themselves has been underwhelming. Many companies ignore the initiatives - which primarily involve reform of boards of directors - or just pay lip service to them. Little attention is paid to the directors' qualifications, even when reforms are mandated, as they are in South Korea, where 25 to 50 per cent of a company's directors (depending on its size and sector) must now come from the outside. Could the problem be that the would-be reformers are focusing on the wrong reforms? (p.89).

Paul Coombes and Mark Watson mention that “over half (55 per cent) of the respondents in a recent McKinsey survey of private equity investors said that reform of the institutional context – reform driven by governments, local stock exchanges, and regulatory watchdogs - was at least as important as reform of companies. Within the institutional context, the two main concerns were weak enforcement of legal rights and the management of the economy,” (p.91).

What’s particularly interesting about this 2001 article is that they state that “the corporate-governance model usually prescribed is the one that prevails in the United States and the United Kingdom. Its emphasis on shareholder value reflects the environment in those two countries, where a very large, dispersed class of investors, with no prior connection to the companies listed on the public exchanges, insists on boards that are similarly independent. These investors also demand a high level of financial and business disclosure,” (p.90).

Yet we see ten years later that the governance models of the United States and the United Kingdom have not stood up to the test – and maybe it was assumptions like these that have let first world organisations and their external analysts, become over-confident about their ‘real’ operational control. In fact contrary to the article some emerging markets were enforcing credit controls prior to the global crisis – showing strong leadership, which though never spoken about, made these emerging markets much stronger than their first world counter parts.

It’s as if the first world economies really didn’t believe they could be affected by a ‘global crisis’ in such a catastrophic way, compared to their ‘lowly’ counter-parts around the world - proving once again that arrogance is the worst predictor of future success.

Going beyond the mistakes of some of the top organisations and their respective analysts – another question that seems to have been cleverly avoided is; ‘how have first world countries managed their success or rather failure?’ If a CEO or CFO allowed their organisations to accumulate a tenth (or even less) of the debt some first world countries have amassed – they would not only be fired but criminal charges would swiftly follow.

I reckon we’d all be reasonably ‘successful’ to the outside world, if every time we mismanaged our finances, we could simply borrow more – wow, what a life that would be. People are often critical of family or friends who mismanage their finances and ‘over-extend’ themselves – going for expensive cars or holidays when they can’t afford them. Yet not only is no one, seemingly, being held accountable for the debt crisis in these first world countries – worse still, without a care in the world, they will spend billions of dollars (or pounds) on wars around the globe – while their people back home are suffering.

What example does this set for the next generation when it comes to financial control – I can hear sons and daughters in the not so distant future arguing that they might be in debt, but would still like mum and dad to bail them out, considering they’ve managed their finances better than the US, Greece, Ireland, Portugal, Italy and numerous other countries.

So where are the leaders of the future who are going to put organisations and countries back on a ‘real’ sustainable path of growth and success, rising above the game playing both with their respective organisations or the lives of their citizens?


Coombes, P. and Watson, M. (2001). Corporate Reform in the Developing World. The McKinsey Quarterly, No. 4, p. 89-92.