When a business hits crisis, particularly a large firm that has overstretched itself and been challenged by new entrants, commentators and investors typically call for two things: a restructure and a change in leadership.
We often forget that the term ‘structure’ in business is a metaphor. Who has ever seen one, except on a flip chart or a computer screen? What you have is people - coming to work, trying to make things happen and serve the customer (or not, if the company is extremely dysfunctional). The right leader with the old ‘structure’ is unlikely to effect a turnaround. But the right leader with a ‘restructured’ firm may not work either. In most cases, we have to dig deeper.
For an enterprise to thrive many positive factors have to come together. In recent years the understanding of the dynamics of the thriving, resilient enterprise has become authoritative and substantial. It has been difficult to translate to practice not because the evidence base is questionable - it is actually very robust - but because the implications are momentous: nothing less than a fundamental rewriting of the orthodoxies of business. Specifically, we now understand that:
- The organization is not a structure, it's a living community.
- Quarterly accounting profits don't accurately track performance; they're a lagging indicator, and can provide misleading information on their own.
- People are not a static resource, they are living assets that create all the other assets.
- Employee engagement is crucial. It doesn't guarantee success, but its absence pretty much guarantees failure.
- Values and culture are important: you can't financially incentivize your way to lasting success.
- Personal leadership coaching cannot be understood as being separate from organizational development: one is ineffective without the other.
Applying this knowledge becomes ever more critical with technological and demographic change. Mobile technology means many companies comprise a network of teams in multiple locations, not the traditional department in a factory or office. The millennial generation has grown up online and with high expectations of autonomy and meaning at work. Managers will have to be communicators and motivators; they cannot sit in a top-floor office issuing group emails and just saying "Get it done".
All this means that many organizations need more than a change at the top to equip themselves for new challenges. They may need a new structure, but more importantly a new culture and mindset. Typically, this has to start at the top. Everything has to come together.
The Management Shift book is the result of 20 years of research into understanding the dynamics of success - and not only this, but more crucially learning how to change from inertia or underperformance to a higher level of effectiveness. This is the biggest challenge: identifying the detailed steps of the journey required, not simply describing the destination.
It also helps to work at both the individual and the collective level, so we talk about the "Individual Shift" and the "Organizational Shift". The essence of the shift in both dimensions is away from a hierarchical "command and control" approach to an empowering culture that seeks to get the best performance out of the people who ultimately make up the enterprise.
As any manager will tell you, you begin with a sound base of good information. Until recently, the bias towards accountancy prevented us from paying sufficient attention to other forms of quantitative data, such as staff turnover; or qualitative data, such as employee engagement and the customer experience. Intelligence on individual leaders' capabilities was often only loosely linked to organizational culture and performance.
The in-depth analysis of the Individual Shift and of the Organizational Shift, and the discipline of attending to them simultaneously, helps restore or establish a deep connection between the different elements that are necessary for success, informed by a rich blend of both quantitative and qualitative intelligence on people and the company. Here's how it works:
This is based on an understanding of the links between the individual and the collective. It is unlikely, almost impossible, that indifferent, cynical or unfocused individuals can lead a successful enterprise. Research in neuroscience confirms that behaviour and attitude can be infectious - that the positive enthusiasm of an effective boss directly affects the brain chemistry of those around them. This can then ripple out to the wider community.
Based on theories of personal development, this approach envisages five levels of personal effectiveness, from Level 1 - Lifeless or apathetic; to Level 5 - Limitless and passionate. In-depth interviews and questionnaires can identify the level at which a leader is operating, indicated for example by typical thought patterns, e.g. at Level 1 "I feel demoralized/I cannot win" or by contrast at Level 5 "I inspire people to achieve their unlimited potential."
We have recently completed a very successful 12-weeks the Individual Shift Program with 15 senior leaders at the City of Glasgow College, designed to anchor leaders mindset at Level 4. A College spokesperson observed: "The Individual Shift Program has encouraged the Senior Team to reflect on personal and collective leadership strengths and created greater capacity for broader development. I am confident we are better equipped to deal with future challenges as a result of this development and would recommend it to others".
At an organizational level, there are multiple, complex interactions between individuals and the broader community. The same concept of different Levels applies. A particularly significant transformation occurs when a company moves from Level 3 (functional and orderly but passionless), to Level 4 (highly engaged and innovative).
This analysis of different Levels of functioning is best supplemented by analysis of the different dimensions on which an organization has to perform. This is centred on understanding six key elements, in what is termed the 6 Box Leadership Model. Three areas relate to people dynamics: Culture, Relationships and Individuals; while three are process-related: strategy, systems and resources.
How do these approaches work in practice? In one city of London insurance company, the inquiry revealed high levels of performance and culture, with many areas achieving Level 4 performance. But a more detailed analysis yielded some intriguing differences. For example, leaders tended to rate the culture more highly than other staff; there were indications of potential burn-out, and training strategies were not keeping pace with customer needs. The comprehensive intelligence enabled the firm to overhaul its induction and training strategies and maintain a competitive edge.
In a U.S. management consultancy, the presenting issues were rather different. People were highly motivated and the culture was strong, but the detailed examination revealed hidden areas in need of development. There were some indications that stress or overwork could become problems. The analysis led to a plan to boost social media communications and enhanced personal development plans. It also informed major strategic and operational questions, such as: What should we stop doing? What should we continue and build upon? Some 18 months after the project was completed, the revenue grew 500% and the company doubled in size.
In business, we often talk about disruptive technology, and assume that as technology progresses, so do humans. Often, however, modernization of organizational design and management has not kept pace. We need to replace a static, outdated business model with a dynamic one suited for the times we live in. This requires a new business model and new thinking. The most disruptive technologies of all are ideas.
Written with Philip Whiteley