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Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited
Catherine Gorrell is president of Formac, Inc. a Dallas-based strategy consulting organization (email@example.com) and a contributing editor of Strategy & Leadership.
These brief summaries highlight the key points and action steps in the feature articles in this issue of Strategy & Leadership.
Why leaders lose their wayBill George and Andrew McLean
The development of a leader can be viewed as a long journey through challenging terrain. This terrain is filled with both opportunities for growth and perilous leadership temptations. Authentic leaders learn to avoid the temptations and overcome personality flaws that lead to destructive behaviors. Leaders who lose their way do not. Instead, they adopt a set of personal behaviors that worked temporarily but were unsustainable in the long run.
The destructive behaviors perils of the leadership journey tend to occur in the ‘hero stage’ of managers’ early careers, when the focus is on themselves: their skills, performance, achievements, and rewards. Successful leaders grow beyond this focus and embrace the truth that authentic leadership entails – empowering others throughout their organizations, enabling their teams to develop, taking responsibility for mistakes but offering others the credit for success, and engaging in work with a larger purpose.
The five behavior perils of leadership are:
Being an imposter leader – Power is achieved through cunning and aggression, but with little sense of how to use that power for the good of the organization. Leaders who succumb to this hazard embrace the politics of getting ahead and letting no one stand in their way.
Rationalizing – Unable to admit their mistakes for fear of being considered a failure or of losing their jobs, this leader does not take responsibility for setbacks and failures. By rationalizing their problems away, they ultimately become the victims of their own behavior.
Glory seeking – For a leader stuck in the trap of glory-seeking the thirst for fame is unquenchable. They are prone to try to divert more and more resources – money, fame, glory and power – from their organization to their own use.
Playing the loner – When leaders adopt the loner role they avoid forming close relationships, fail to seek out mentors, and don’t create support networks. As a result they are cut off from appropriate feedback, and thus are prone to make major mistakes.
Being a shooting star – The lives of shooting star leaders center entirely on their careers. These leaders lack the grounding of an integrated life. Eventually, shooting stars flame out.
On the long journey of leadership development, leaders can make mistakes and fall prey to hazards, yet regain their footing and continue on their developmental journey. In fact, their mistakes, especially those that come early in their careers, are highly beneficial in their developmental process and reduce the likelihood of making major mistakes when reaching the pinnacle of power. The critical factor: If emerging leaders are aware of the hazards and willing to devote sufficient time to their personal development, they will be less likely to become enmeshed in destructive patterns and more likely to persevere and emerge as authentic leaders.
Key questions and suggestions for personal development are offered as a basis for perspective and staying grounded.
Bad leaders: how they get that way and what to do about themRobert J. Allio
What is the cause of the epidemic of CEO misbehavior in the past few years? For a board of directors, the challenge is to determine in advance which potential leader will work for the stakeholders and which one will damage their interests. Here are five failing characteristics/red flags:
Personality disorder: Narcissism seems to be a common syndrome among failed leaders; individuals exhibit a pattern of grandiosity, a need for admiration, and a lack of empathy.
Akrasia: This incontinent behavior manifests when leaders fall prey to a lapse in judgment. In doing so they temporarily believe that the worse course of action is better because they have not evaluated fully all the implications and consequences of our actions, but have inadvertently sub-optimized.
Misguided values: Some leaders simply choose their own interests above all else; they consciously act in ways that serve their own purposes. Machiavelli is their mentor.
Avoidance of reality: Some leaders resist facing the facts. Deficiencies of perspective are a common corollary. They often exhibit “risk myopia”; they place greater focus on imminent crises while ignoring a longer-term potential cataclysm until it’s too late. And often leaders are reluctant to accept change – the possibility that new technologies or shifts in consumer needs dictate a change in corporate policy and strategy.
The complicity of followers: In any organization, followers can have as much influence on a leader as does a leader on the followers. Followers often abdicate responsibility and become sycophants or toadies. When leaders are charged with misfeasance or malfeasance, the role of followers often doesn’t get the attention it deserves. But followers always share culpability for their leader’s misdeeds, often as a result of their crimes of obedience.
How to curb bad leadership? Recommendations include:
Boards review their practices regarding selection of leaders and separation of the CEO and Chairman roles.
Constructive actions by leaders include publishing their vision and strategy, then adapting to stakeholder response; listening to the other views; relying on the team; fostering a culture of integrity; and cultivating personal awareness to balance intuition with data, confidence with context, personal needs with the greater good.
Constructive action by followers includes giving strong and fearless feedback and developing coalitions (strength in numbers).
Boards of directors, leaders and followers enjoy a symbiotic relationship. The interaction between them can either produce great success or exacerbate failure. By more conscientious adherence to an explicit moral code, more consistent communication and transparency, and greater attention to the needs of all the stakeholders, we can close the gap and help leaders do the right thing.
Exploring the distinctions between a high performance culture and a cultBert Spector and Henry Lane
The characteristics of high performance organizational cultures and those of cults bear a disquieting resemblance. Though some of the characteristics of cults, (most especially the creation and maintenance of a strong, shared belief system) may overlap with attributes of a high performance culture; other aspects of cult-like organizations spell real trouble. Identifying some “red flags” will offer a set of signals for leaders and stakeholders who are concerned that their organizations might be developing a cultish culture. The goal is to instill a shared culture of high performance, adaptation, and innovation in their firms, while not promoting an organization with a truly cult-like culture. The differences of high performing General Electric and cultish Enron are used to explore the surprisingly fine line between the two models. The two stories are remarkably similar – to a point.
The key characteristics of cults are: recruitment and persuasion, isolation, elitism, charismatic and unaccountable leadership and wealth mainly for an elite few.
Examples are provided.
So what’s wrong with cults?
The combined dysfunctionalities of a cult company (a tyrannical CEO, a leadership blindly committed to a “unique” business model and a passive or co-opted board) and the over-reliance on cultural compliance (putting absolute faith in a charismatic leader, while focusing on internal needs and erecting barriers to thorough consideration of outside forces) create a cycle of dependency. These are not the conditions likely to generate the level of candor required to promote effective organizational learning and adaptation.
Cults operating as businesses may take on the appearance of a high performance company, but only for a time. Because they close themselves off from the outside world and become self-sealing entities, they are fundamentally non-adaptive. Non-sustainability is the penalty. Executives in search of long-term outstanding performance need to be aware of trap that arises from a cult-like culture. Even absent the intent, or the willingness to engage in unethical or illegal behavior, the drive for a shared belief system, high levels of social cohesion and strong behavioral norms that characterize high performance cultures may lead executives directly into that trap.
Quashing cult-like behavior
Since cult-like behavior can appear at any stage of a company’s lifecycle, executives or boards of directors need to understand how to avoid the development of a destructive culture on their watch. The solution is to counter cult trends with:
Guidelines for CEO-speak more potent: editing the language of corporate leadership Joel H. Amernic and Russell J. Craig
CEOs lead largely through the words they use, their CEO-speak. With the advent of digital media, CEOs words are quickly available for analysis by competitors, regulators, financial analysts, traditional journalists and bloggers. The speeches of CEOs, their letter to stockholders in the corporate annual report, and their use of the internet and other communications media, provide important insights to company policy, strategy, commitment, attitudes, and accountability. CEOs and those who prepare their message should be mindful that everything they tell one set of stakeholders is almost instantly available to all interested parties.
Four Insights for CEO-Speak
Insight 1: Monitoring CEO-speak for narcissistic-like signs
Hints of destructive CEO narcissism would likely predispose corporate stakeholders to be watchful for unsuitable strategies, ill-conceived views of the corporate environment, and extreme methods of setting strategic goals and measuring progress towards those goals. The four tell-tale signs of narcissism are hyperbole; self-styling as an archetypal company; language of war, sport and extremism; excessive self-attribution.
Insight 2: Revealing metaphors
The metaphors that are adopted for communicating to stakeholders often reveal insights to corporate thinking. An insidious metaphor that has gained widespread currency among CEOs is: “Financial statements are a truth telling lens.” CEOs who use this metaphor mischievously infer that there is a finite, singular set of financially-related numbers that represent “truth” and “accuracy.”
Insight 3: Framing of CEO-speak
The idea of “framing,” or how attention is directed in CEO-speak, is important. The use of metaphor to frame a crucial stockholders’ letter during a crisis can signal strong and nuanced leadership. In truth, leading through language is a large part of the challenge of being a CEO.
Insight 4: Inappropriate cultural keywords in CEO-speak
CEOs and those who help them prepare their message should avoid the temptation to appropriate ill-fitting cultural keywords – such as democracy, patriotism or sanctity – from the vocabulary of politics or religion. And if a cultural keyword such as “integrity” is used appropriately, it should not be adopted as a self-validating mantra in the hope that this will reflect favorably on public perceptions of management and the company.
As a society, we need to monitor the balance achieved between corporate law and disclosure rules and the goal of achieving effective communication between the leader of an organization and stakeholders. Corporate leaders at all levels should encourage greater attention to the power and importance of the words of CEOs and develop better skills to employ CEO-speak to communicate corporate purpose.
Winning new customers using loyalty-based segmentationRob Markey, John Ott and Gerard du Toit
An ongoing question is “What is a smarter way to identify and reach the best customers?” Fewer than 25 percent of the major consumer goods companies believe they use their market research effectively. So what is a better way? Bain’s research shows that companies that get segmentation “right” excel in three skills:
They broaden their appeal by narrowing their focus. Segmentation strategies often fail because marketers cast their nets too widely and try to capture overly large, amorphous customer groups. Watered-down offerings fail to wow. So smart marketers study the group most likely to become profitable loyalists. It is the “bull’s eye” of a larger population of customers who share many of their attributes – and who will also be attracted to the company’s offerings.The key is asking this target group the right question: “How likely are you to recommend our company’s products or services to a friend or a colleague?” When customers answer this question on a scale of zero to 10, they will fall into three key groups: promoters, passives, and detractors. When the conceptually attractive customer segments turned up by the market researchers overlap with the passionate promoters already in your customer base, you’ve hit pay dirt. Customers in this space are prime prospects for sharply targeted new offerings.
They strengthen ties with the right customers by staying close to what they do best. Segmentation-savvy companies evaluate customer insights with their organization’s operational advantages firmly in mind, and focus on those that they have the best ability to develop into new platforms for growth. Marketers must avoid the temptation to chase after customer populations that their company is not well equipped to serve – no matter how attractive they may appear to be.
They spur innovation by listening patiently. Customer segmentation requires painstaking, time-consuming analysis, yet markets can change in quick and surprising ways. The conventional tools that companies rely on to navigate the markets’ inevitable twists are themselves slow and backward looking. Customer satisfaction surveys, for example, may be out of date by the time their results make their way to decision makers.Organizations that excel at segmentation enlist their customers’ help to anticipate shifts in direction—and keep their market insights fresh and focused by building virtual communities that gather real-time reactions from customers.
The bottom line
Over a five-year period, businesses that successfully tailor product and service offerings to desirable customer segments post annual profit growth of about 15 percent. By contrast, companies that fail to connect the right value propositions to the right customer segments have annual profit growth of only 5 percent.
Emotional interactions: the frontier of the customer-focused enterprise Robert Heffernan and Steve LaValle
The ideal business realm is one in which profitable customers are strong advocates for the company’s products and services. The question is how to create this ideal by offering the right buying experiences at the right time in the right way for the right cost. The difficult core of this question is creating the “experience.” Customer experiences have emotional characteristics that companies historically haven’t been good at delivering. Real progress in shaping the customer experience comes from fully understanding the customers’ needs and expectations. By doing so, companies can identify what the most important interactions are – key “moments of truth” – and prioritize delivery on these interactions.
Companies that excel in the customer experience arena embody six key characteristics. Each has specific competency benchmarks:
Customer authority – This is the consumer driven, “outside in” approach to designing customer interactions that delivers the specific company performance that drive optimal customer behavior. Companies that understand customer authority are able to approach their customers in ways that build advocacy through knowing the mindset of their customers, while simultaneously understanding the value of the customer to the enterprise.
Customer dialog – Customer dialog refers to a business’s ability to communicate and transact with customers intelligently and responsively during each interaction, on a customer-by-customer basis. This is achieved by capturing discrete behavioral triggers, secondary events and patterns. This information is used to generate specific communications, and route them.
Integrated execution – Integrated execution is how companies deliver a consistent experience and allow intelligent, cross-channel execution of customer interactions. Different channels are used to enable a consistent interaction based on customer needs, preferences and profitability.
Solution experience – Solution experience is about delivering needs-based solutions (combinations of products and services) that enhance the customer experience.
Human performance – Human performance is how companies foster sustained employee commitment and engagement to allow employees to better meet personal and organizational objectives, while better serving and being advocates for the customer.
Customer-focused organization – A customer focused organization focuses on the managing and nurturing of a customer experience driven enterprise.
By employing a “customer experience framework” to prioritize resources according to the impact of particular customer interactions and by paying particular attention to emotional experiences, companies can build achievable operational models that create profitable customer advocates.