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Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited
These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.
Effective leadership response to crisisHelio Fred Garcia
Effective crisis response is a competitive advantage. But many leaders – who are otherwise given credit for vision, strategic focus, and discipline – preside over undisciplined crisis responses, often at great risk to their career and their company’s future. Whether an organization survives a crisis with its reputation, operations, and financial condition intact is determined less by the severity of the crisis than by the timeliness and effectiveness of the response. A perception of indifference is the single largest contributor harm in the aftermath of a crisis, especially when there are victims. Companies, governments, and leaders may be forgiven when bad things happen. But not if they’re seen not to care that bad things have happened. This is a lesson that many leaders fail to understand or to act on in the initial early phases of a crisis.
The new paragon of ineffective crisis response is the government’s delay in marshalling resources to help the victims of the New Orleans flood in August 2005. Speed matters, and time is a leader’s enemy in a crisis. When a crisis looms, the usual business processes and decision velocities need to be suspended and decisions need to be made in ways that reassure key stakeholders that a company and its leaders a) understand that there’s a problem; b) take it seriously; and c) are taking steps to address the problem.
Two successful examples are cited: McDonald’s response to the death of their CEO and Boeing’s response to scandals. But why are McDonald’s and Boeing’s responses so uncommon, and Exxon Valdez oil spill/New Orleans flood kinds of response so prevalent? One big reason is the tendency of CEOs and others in positions of authority to assume that they can manage their companies in bad times the same way they do in good times. But many leaders mis-judge their own ability to control the course of events, and wait too long before suspending business as usual.
Avoidable mis-steps have two negative effects: they make the crisis worse and distract internal attention from solving the underlying problem. Six common mis-steps are discussed:
Ignoring the problem.
Denying the severity of the problem.
Compartmentalizing the problem or solution.
Telling misleading half-truths.
Assigning blame to others.
The bottom line
Effective crisis response has direct impact on a company’s productivity, demand for its product, stock price, and other quantitative measures of success. An Oxford study shows that the tangible difference between effective and ineffective crisis response was, on average, 22 percent of a company’s market capitalization.
Effective leaders must see crisis response not as an interruption in their stewardship of a company, but as the test of that stewardship.
The winning formula for growth: course, capability, convictionVivek Kapur, Jeffere Ferris, John Juliano and Saul J. Berman
In this article – the second part of a two part series – the three vital areas for successful grow and value creation are discussed, supported with numerous company examples.
Course: the identification and selection of opportunities, the development of a winning model and the creation and funding of initiatives sufficient for sustaining growth.
Four principles are critical to shaping and adapting a successful course:
Develop a point of view on the future. Four levers to put this principle into action are discussed.
Continuously evolve the product-market portfolio, but not straying far from true strengths.
Develop a competitive model.
Create and sustain multiple growth initiatives. Four growth paths were studied: product and service innovation, customer intimacy and market penetration, channel management, and new markets and globalization. Within a given industry, companies tend to cluster around a few paths. But to increase potential, combine mutually reinforcing initiatives. Guidance for selecting initiatives is presented.
Capability: the activities, skills and assets that support the operational model and enable the successful execution of the growth strategy.
Whichever growth path a company chooses, it is vital to line up the operational model with the capabilities that enable it. Each of the major growth paths requires a different set of capabilities. Capabilities are the sustaining foundation of a strategy. Successful growers develop their capabilities methodically, harnessing process, organizational and technology elements to create an ingrained, repeatable strength. They seek alliances when needed capabilities reside outside the company. The actions to develop and align capabilities are cited.
Conviction: the creation of organizational belief, momentum and resilience in moving toward growth goals. Sustaining growth requires change. But change can be wrenching. Successful growers foster a pro-change culture, and leaders with the passion and follow through to make the change stick. When inevitable setbacks occur, these companies have the resilience to bounce back. They exploit several levers (cited) to drive conviction deep into the organization.
Course, capability and conviction are equally fundamental to achieving and sustaining growth over the long term. Furthermore, to be effective, the three Cs must also be aligned in a coherent whole. And, because no competitive model is successful forever, reinvention is needed. Successful growers not only align the three Cs to begin with, they also evolve them over time.
Overcoming the barriers to effective innovationPierre Loewe and Jennifer Dominiquini
If you want your company to stay in business tomorrow but also prosper longer term, you need to manage the present and create the future simultaneously. Innovation is essential. But the reality is that most companies are not good at innovation and few understand what it really takes to build a sustainable organization-wide competence for innovation.
Strategos research shows that the reasons why so many companies fail at innovation are:
The obstacles to innovation that most executives identify are merely symptoms – the root causes are deeply embedded in: the leadership behaviors; management processes; people skills; and values and culture of their companies.
Companies that want to become truly good at innovation need to act systemically on all four root causes – action in one area alone won’t yield sustainable success.
Conducting an “innovation diagnostic” that pinpoints a company’s specific innovation issues and opportunities is the best place to start to develop a core competence in innovation. A sample is offered.
A case study of Whirlpool is presented. Whirlpool is among a select group of companies that have taken a holistic approach to building a competence in innovation.
Building an innovation competence takes time, but getting started is simpler than it looks. Conduct an Innovation Diagnostic to identify organizational enablers and impediments. Look for the root causes, not symptoms. The action plan needs to reflect the company’s specific innovation situation and priority areas. The three main components of the diagnostic are:
A review of the opportunity pipeline and marketplace results.
A “health check” of the four keys to a systemic innovation capability – leadership and organization, processes and tools, people and skills, and culture and values.
Comparison to the practices of leading innovators.
To change your company’s approach, the bad news is that there is no magic bullet to develop an innovation competence and that it can’t be done overnight. The good news is that companies have done it successfully. Conducting an innovation diagnostic and acting on its results is a proven way to get started, while acting systemically on all four-root causes of innovation blockages will help companies get the job done.
The case for real changeOmar S. Khan
Corporate change programs are expensive adventures that rarely deliver the vision behind them. A creative look at the many hurdles involved in implementing change can provide leaders with a clear indicator of whether or not to proceed with a major effort. The five cardinal sins of misleading change efforts are:
Too much hype and not enough action.
Over-advertise how “massive” change will be, then deliver only a tweaked version of the current strategy.
Create a consensus for dramatic change and then waste a great deal of time in committee meetings.
Make no change in senior leadership.
Involve no customers and ignore the marketplace.
By addressing these five issues, we can make better decisions as to whether or not to engage in a full-fledged change effort. We should do so if, and only if, the following conditions are satisfied:
We really have to take action.
The actions required are dramatic enough in and of themselves to need very little hyping.
The change we’re asking for addresses some of the most common and pervasive frustrations experienced by the company, externally (customer experience) and internally (our own team’s priorities).
Three to four great first steps are evident and have been aligned.
We are willing to enroll customers and other partners to help us make the plan workable, profitable, and valuable to all concerned. Our leaders demonstrate changes in their own work style and behavior before asking for it in others.
The Unilever case: how to create global brand teams that can influence their country operations, work effectively with their global supply chain colleagues, and still understand the various markets in order to deliver the right innovations is discussed.
The power of relationships and communication
The fundamental challenge of change is that it finally depends, as does all leadership, on relationships and communication. For change to succeed, all leaders must:
Have a leadership vision and overall values in common.
Genuinely and demonstrably believe that they can personally help lead and deliver what they are asking of others.
Understand that their daily priorities and behavior have to anchor and validate the change.
Be coachable and open to feedback, as a way of modeling that requirement for others.
Know that they would be proud to realize this change.
Achieve personal satisfaction from achieving their goal together with their colleagues and teams.
When these six conditions for igniting a transformation process are fulfilled, and are coupled with these six requisites of leadership engagement, real change will occur.
How storytelling can drive strategic changeGary Adamson, Joe Pine, Tom Van Steenhoven and Jodi Kroupa
Strategy implementation will always fail if employees do not understand or accept the underlying intent and means. That is why storytelling must become an integral tool of corporate strategy. Stories are the experience that lets strategy be understood at a personal level. In order to be effective, communication of strategy must not just inform, it must inspire. And people are never inspired by reason alone. That’s why the “Just Tell ‘Em” approach – a CEO speech backed up with analysis, PowerPoint presentations, and pep talks – usually fails. It totally overlooks the role emotion and meaning play in any life-altering action. And if altering your strategy isn’t about changing the way your company and its employees do business, why do it?
Storytelling develops relationships by helping everyone realize we all have issues in common. Stories can crystallize common values and beliefs. They can build stronger teams and a stronger sense of community. Stories invite people to bring the “whole person” to work (heart and head), and therefore elicit much more thorough perspectives and meaningful commitments. They can create a platform for more aspirational work and can make each employee feel more valued. In short, stories have the potential to revitalize the way we do business.
An excellent example is given in this article that clearly demonstrates the use of storytelling to propel the re-positioning of a medical center with a new mission, vision, and strategy. The key message from this story about storytelling is that executives should not spend countless hours and barrels of money doing the research, analysis, goal-setting, and implementation planning necessary to come up with an industry-altering strategy that is communicated in a power point presentation. If you want your change message to take hold – if you want it to alter how things are done in your company – them weave your message about the new strategy into a compelling and memorable story. When more leaders immerse their employees in compelling and inspirational strategy stories, more companies will thrive “happily ever after.”
Effective storytelling: strategic business narrative techniquesStephen Denning
The use of narratives (storytelling) is an effective way to address many leadership challenges, such as rallying teams to action or transmitting values. The key points to know about storytelling are these:
Storytelling is a powerful tool to promote a business purpose; it should not become an end in itself.
The right narrative pattern needs to be matched to the intended business purpose.
Crafting the appropriate story for a specific purpose is half the challenge. Performing the storytelling in the right way is the other half. The way a story is delivered can radically change its emotional tone in the mind of the listener. This skill can be enhanced with guided practice.
Storytelling is most effective when those in several levels of leadership, functions and geographic regions are skilled with this tool. The managers who are leading strategy implementation, communication, or driving any other business purpose, will initially need to have storytelling training.
Matching narrative patterns to a business purpose
Eight narrative patterns are presented. Each one is tied to a different business objective, and will have a different story pattern and a different delivery, and will inspire a different reaction. One of the many examples given is:
Narratives that spark action, for example, to get stakeholder buy-in to a fundamentally different way of doing things (new business model, change in culture, critical strategic shift). Most organizations want to learn how to master the underlying narrative pattern of a springboard story, so that they can spark transformational change in their own corporate settings. The principal trick to successfully using this narrative pattern lies in realizing that the story that is told is much less important than the new story that listeners imagine for themselves. As listeners envision new narratives set in their own contexts, they unwittingly craft action plans for implementation of the change program. And because the stories are the listeners’ own, they tend to find them both believable and compelling. In effect, they are already co-creating the strategic shift.
Other objectives discussed are:
Stories that communicate who you are.
Narrative to enhance the brand (as in “… customers buy the product to experience the stories … ”).
Taming the grapevine.
Communicating future stories and scenarios to prepare others for what lies ahead.
Narrative employs an array of tools, each suitable to a different business purpose. Understanding the differences is the key to effective storytelling.
Catherine GorrellPresident of Formac, Inc., a Dallas-based strategy consulting organization (email@example.com) and a contributing editor of Strategy & Leadership.