Perspectives

Dinosaurs Weren’t Replaced By Better Dinosaurs – Upsetting the establishment: how small and purposeful beats power and scale

THE FOUNDATION FORUM

22nd june 2017. WRITTEN UP WITH THE HELP OF SIMON CAULKIN

To download a PDF, click here: Dinosaurs Weren’t Replaced By Better Dinosaurs – The Foundation Forum 22nd June 2017

Disruption has become one of the most familiar and therefore least disruptive words used in business today.  Talked about endlessly it’s often an idea that sounds good in theory but then makes only a tentative step or two in the direction of practice.

That’s not really a surprise.  Truly disruptive businesses tend to reverse whole sets of industry assumptions.

“While adding value for customers they take value away from the businesses supplying them, until such time as their new ways of making money come into their own at scale”

While adding value for customers they take value away from the businesses supplying them, until such time as their new ways of making money come into their own at scale.

So disrupting a sector isn’t just mentally hard because the approach is hard to imagine, it also looks like proactive suicide for a business apparently doing well and therefore very hard indeed to argue for until a crisis makes the decision the best of a set of poor options.  Often by then it’s too late.

The aim of this particular evening of upset, for the establishment at least, was to bring vividly to life the way three disruptors see their world, and then to draw conclusions from their approach and achievements thus far – what are the kinds of insights that make their new models so strong, and what could be learned by bigger businesses trying to do similar things in their own way?

Our three examples came from three great people and three strong organisational ideas in various states of distance travelled:

  • We had Client Earth, with their Deputy CEO Beth Thoren. Their reason for existing is to use law as a tool to mend the relationship between human societies and the Earth.  They are part of a new breed of activist charities, using belief in the cause to attract motivated individuals who apply scalpel-sharp skills to create impact many times their scale and resources.  They protect the environment through advocacy, litigation and science, and they have had a string of successes such as their EU court ruling forcing the UK Government to act on air pollution back in 2014 and then following-up in early May, forcing the government to publish their clean air plans ahead of the General Election.  Beth has been there for 9 months after a career that included Directing Fundraising and Communications for the RSPB as they moved to campaigning for nature not just protecting birds, running marketing for the campaign to switch the UK over to digital TV, and playing a similar role for the BBC with their digital marketing
  • We had Riversimple, with their Chief Engineer and co-founder Hugo Spowers. They are a Hydrogen fuel cell car company with not just technology that challenges convention but also a business model that creates advantage from apparent constraint. By using Hugo’s motorsport background in combination with his desire to save the planet from our love of moving around, they have a beautiful lightweight high tech car that produces only clean water as an emission.  It is owned permanently by Riversimple so they profit from efficiency and longevity and can recycle and re-use all the parts that last for decades.  Initially the cars will be leased to people living close to a Hydrogen fuel station for use as their local car, so a genuine market can be created at a small scale.  The technology is open, so makers can reproduce the idea around the world at low, profitable volumes and with only what’s needed where they are based – no heating in Saudi for example.  Hugo found himself ignored by the major manufacturers thus far, and has duly ignored them in return on the basis that they are the wrong businesses to make the most of the potential in the technology.  They are, indeed they have to be, determined to fit it into the rest of what they do like a new and more shiny component. Hugo’s conviction is that the problem needs a new systemic solution, and that applies as much to the business model and the companies involved as to the technology, which is why he has chosen to run his own race in such a determined fashion
  • And we had Zopa, with their Chairman and co-founder Giles Andrews. They were the world’s first peer-to-peer lender, and we’re proud to say that one of our alumni, James Alexander, was there with Giles from the start too.  They saw that digital technology and the way we liked the communities that followed as a means of toppling the banks, reinventing what they do from the first principles they followed – take money from savers and give them a return, while lending it to borrowers and manage the risk.  They are the furthest on in their journey of our three and can describe hurdling a succession of barriers that threatened to disrupt their progress – getting people to trust them or even understand them in the first place, getting beyond the early enthusiast adopters, dealing with competitors when once they were alone, broadening the business while staying true to their principles, and managing succession, for example in CEO, a role Giles filled from 2007 to 2015 before taking the Chair.  Giles had form as an entrepreneur, growing a (conventional, polluting) car dealership business before consulting and then Zopa-ing for a living

 

How then did the conversations pan out?  An overturned establishment might be messy but the views exchanged turned out to be more elegant than that, especially with Simon Caulkin summarising

It sometimes seems as if the acreage of print devoted to ‘disruption’ over the last decade is in inverse proportion to the insight it generates.

“It sometimes seems as if the acreage of print devoted to ‘disruption’ over the last decade is in inverse proportion to the insight it generates.”

No kidding – ‘disruptive mayonnaise’? In 2012 a celebrated spat between historian Jill Lepore and the begetter of disruption theory, Harvard’s Clayton Christensen, broke out in the pages of the New Yorker, the New York Times and HBR over whether ‘disruption’ existed at all.

One thing missing in all the after-the-event analysis and Silicon Valley hype over Uber, Airbnb et al, is the worm’s-eye view – where the new idea came from, how it happened, what it feels like to the people actually doing it: ‘unpasteurised’ disruption, as Foundation Partner and Forum Chair Charlie Dawson put it in his introduction. ‘Before the neat case studies have been written making it appear obvious that the million-to-one shot was nailed on from the start, what was really going on?’

If we didn’t know before, we certainly did at the end of a remarkable June 2017 Forum, which under the title ‘Upsetting the Establishment’ heard three vivid stories of innovation that make Silicon Valley’s ‘we move fast and break things’ look both glib and grotesque. Here instead were examples of the kind of breakthrough innovation that tired economies and tetchy societies badly need,

“…replacing older business models not just with newer but also better ones that align first with human and planetary needs and only then with venture-capital wallets.”

Aligning business and human need was a key idea of the evening. Take peer-to-peer lending, the first example, as described by Giles Andrews, co-founder and now Chairman of pioneer lender Zopa. Zopa was born of the conviction that the banks had forgotten who their customers were, selling, or mis-selling, them stuff that they didn’t particularly want but that the bank could conveniently supply. This opened an opportunity, using today’s technology, to start from scratch at the other end: ‘If we look at the business from the customer’s point of view, can we generate enough scale to have an interesting business, rather than looking at it from our point of view and asking, how much money can we make from the customer?’

Zopa’s idea was to use technology not just to align lenders and borrowers but through it also to engender a sense of shared purpose that has vanished from traditional banking. It was a good call. Lenders liked knowing their savings were being recycled to ordinary people rather than money markets or launderers; less expectedly, borrowers responded by prioritising Zopa repayments over other owings.

birmingham_northern_rock_bank_run_2007

On the other hand, admiring press coverage of the bank’s ‘disruptive’ business model did not translate into marketing advantage. Mass market consumers don’t want a service to be mould-breaking, says Andrews ruefully: they just want it to be better. The message was underlined in the Global Financial Crash of 2007-2008. In contrast to other lenders, the money Zopa had lent out all came back, and it began to be written about approvingly as stable and boring – for a financial services brand, a much better recommendation than being disruptive, Zopa realised. The crash, which had the additional effect of making Zopa’s returns look attractive as well as stable, was its second piece of luck. The first had been banning of PPI; shorn of its insidious cross-subsidy, the mainstream banks were forced to put prices up for their legitimate services.

However, while an interesting idea and a dose of good fortune are fine, necessary even, they don’t of themselves guarantee success: you have to be good at something, too. Zopa, data-driven and customer-focused (with ‘literally hundreds’ of customer service awards to prove it), is good at credit. So good it now has a lower cost of capital than all of its competitors, which is a real advantage in a sector with razor-thin margins.

Zopa’s final piece of alignment, controversial within Zopa at the time since it had a big head start, was to band with its emerging competitors to form a fledgling industry association.

“Looking back, we gave our competitors an enormous leg up by aligning ourselves with them,” acknowledges Andrews. “Yet I still think it was the right thing to do, because we’ve grown faster as a result”

…partly by leitimising the sector as a whole and partly by making it into a credible interlocutor for the government, which responded by taking a positive view of Fintech in general and allowing sector members to sell ISAs. With all the signs pointing in the right direction, Zopa is now halfway towards launching a bank – ‘the most exciting thing we’ve done since the day of the original launch. It will allow us to use the skills we’ve built in customer focus, in efficiency, in underwriting credit, and providing great user experience to become, simply put, the best consumer bank in the UK’.  We look forward in hope!

Disrupting the motor industry sounds even more quixotic than taking on the banks. Massive capital requirements, giant factories, economies of scale: you’d have to be certifiable to decide to compete against the US, German and Japanese multinationals – wouldn’t you? But wait. Hugo Spowers, the second disrupter, yields to no one in his respect for the auto industry’s achievement – ‘there’s nothing on the planet that’s remotely as good value for money as a modern car with all its complexity and refinement’, he says. The small snag, he adds, is that its product is utterly unfit for purpose in the 21st century.

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“Yet the fact that the combustion engine and the business model it engendered are now radically mis-aligned with human and planetary needs gives today’s insurgent an improbable opportunity.”

Today’s cars are optimised around the 100-year-old technology of the combustion engine, and there is no obvious incremental route to advanced replacement technologies such as hydrogen fuel cells. On the other hand, notes Spowers, redesigning the vehicle around fuel cells lowers the technical challenges and risk, with huge improvements to costs and a three-times boost to energy efficiency. ‘Riversimple [Spowers’ firm] as a start-up has very few advantages, but the one we do we have is a clean sheet of paper. It’s not to be underestimated’, he says.

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Which explains the business model. ‘We’re the only car company that hopes never to sell a car,’ says Spowers proudly. Instead, like Michelin in commercial tyres and Rolls Royce with jet engines, Riversimple will sell mobility for a monthly fee that includes fuel. This reverses the usual incentives: the more efficiently they operate, the longer they last and the fewer cars it can build for a given customer mileage – cars which remain on its balance sheet, with long-lasting parts re-used not disposed of – the more successful it will be. Suppliers are aligned too, retaining ownership of their contribution, rewarding them for investing in quality by achieving longevity rather than engaging in a win/lose negotiation with their customer that rewards the highest possible price for the lowest possible cost of production.

To stay true to purpose it has adopted a unique governance arrangement under which the board’s fiduciary responsibility is to provide benefit not only to investors who are promised a fair long run return, but also the environment, customers, staff, supply chain and community, six interests explicitly recognised and given equal weighting in decision-making. The aim, says Spowers, is everywhere to align interests taking a careful long-term view, in accordance with the principle that you can’t optimise a system by optimising the individual elements – you can only do it as a whole system.

The evening’s final variation on the alignment theme was a more direct, even brutal one. Client Earth is a charity with a difference – a legal firm which uses the law to realign governments with their own rules respecting the environment. ‘We sue governments,’ says deputy CEO Beth Thoren cheerfully. (“It’s a fraction of what we do, but it is what we are best known for”, she added, carefully.)

Client Earth’s insight was the powerful influence it could bring to bear through the law. It’s thanks to Client Earth’s small team of full-time lawyers (earning a fraction of what they would in a commercial firm) that the UK government was obliged first to commit to action on air pollution in 2014 and then to publish its clean-air plans before the 2017 General Election.

It has closed coal-powered power stations throughout Europe. Sometimes matters don’t even get to court. In the case of the UK’s 30 marine protected areas, ‘one of our lawyers wrote to the officials saying, you know, allowing fishermen to dredge the reefs in marine protected areas probably isn’t meeting either the letter or the intent of the law. Oh, and by the way we’re lawyers’. Amazingly, no lawsuit was needed:

“3,000 square kilometres of marine areas and reefs are now protected, effectively because of one letter”

Now, after 10 years, only a minority of Client Earth’s work is adversarial. On the contrary: it has used its reputation to ‘make friends with the establishment’. ‘Two-thirds of what we do is working with governments and helping them write the laws,’ notes Thoren.  It advises pension funds on their fiduciary duty around climate risk, constrained resources and various climate effects – even the implications of Brexit. ‘They want our advice, and it’s not a conflict because they realise that, yes, we can challenge them but actually it’s in our interest to help them if they want to listen to us.’

air-pollution-1866788_1920

If Client Earth now wields an impact out of all proportion to its size and resource base, however, it didn’t come about automatically. As Andrews and Spowers also recognise, game-changing implementation often requires a change to the context as well. In this case, putting the insight into practice –  that the law could be used to reset the relationship of human societies and the planet – was in practice near-impossible because of the huge legal costs involved. So before it could fulfil its purpose, Client Earth had to convince the EU and national governments that the cost represented a denial of citizens’ rights to justice. Eventually it did, establishing a £10,000 maximum that brings legal recourse within reach of most charities and some individuals too.

As this suggests, scale, like everything else, looks somewhat different in disruption-land.  Convinced of the imperative to stay small and agile, Client Earth ‘grows’ by expanding the scope of its leverage, and by seeding small imitator groups in other countries. Ignored by the major manufacturers, Riversimple makes its technology open-source so the smart thinking behind its high-tech hydrogen powered prototype, the Rasa, means other makers can reproduce it around the world, each operating at low volumes but as a group finding economies of scale.  The Riversimple brand is the differentiator within its narrow market – its mind-set and systemic worldview, as a means to exploit the technology, the difference against the established industry.  Zopa shrewdly made its sector more robust and attractive by making common cause with its peer-to-peer rivals, giving it a smaller slice of a much bigger pie; now, with the new bank, its seeks to export its learning into adjoining business areas.

Although all are deeply immersed in science and technology, each is an object lesson in subordinating activities to an overall purpose. Thus for Andrews, blockchain is a technology searching for an application. Spowers thinks the same of self-driving cars, which address none of the industry’s primary issues. What’s more, he adds, they come with a number of negative consequences which given our track record in misapplying technologies will surely dominate. ‘There you go; we can retrofit it to our Riversimple cars, but it’s a red herring’.

“What all three most conspicuously share is a commitment to the great leap forward rather than the incremental improvement beloved of business schools, together with a rock-like sense of purpose.”

Indeed the two go tightly together. Purpose can’t be overcommunicated; living it is the leader’s first job, says Andrews. Spowers notes that the reason step-change looks daunting is that it’s viewed from within the old context; challenge the latter and it suddenly seem both logical and doable: ‘I mean, dinosaurs weren’t replaced by better dinosaurs.’ For that reason, purpose can’t be compromised: ‘It’s easier to stick to your principles 100% of the time than 99% of the time, and we have to be pretty rigid about that.’

Perhaps the most disruptive thought is this: we must do these things not because we can or because they make us money (although we hope they will), but because they matter. Let Thoren’s ringing conclusion speak for all of them: ‘I work [at Client Earth] because I care that by 2020 70% of wildlife will have disappeared from the face of the earth. I care that if you believe the United Nations by 2040 there’ll be no fish left in the sea. I care that by 2050 cities that we know – New York City, Miami, Guangzhou – will be at grave risk for flooding. I care that instead of a million people immigrating into Europe it’ll be hundreds of millions. It’s not right that we use our skies as a sewer. It’s not right that we leave such a world to our children. And it’s for that reason I’m so incredibly proud to be working for a disruptive charity’.

 

THE FOUNDATION’S VIEW

An impressive set of big ideas from small organisations.  The smaller you are the more able you are to think holistically, and to do something about it if you have courage and conviction too.  Our reflections overlap with the account above but bring some of our experience, especially in encouraging the world to succeed by starting with customers, to the fore.

  1. The point about good disruption is not that it’s disruptively different, just that it’s simply better
    As Giles observed, disruption tends not to be described as such until after the event.  People rarely set out intending to disrupt an industry, just to improve it, and most customers don’t want to buy something disruptive, just something that works better.  He described the early Zopa days where they tended to talk about the completely new peer-to-peer approach but this only attracted a small band of innovation enthusiasts.  Once they ditched the idea of telling people how the business worked and focused instead on the benefits – lower rates for borrowers, higher rates for lenders – serious growth into the mainstream took off
  2. To create a step change in performance comes not from hard work improving elements of the existing system, but from hard thinking re-imagining the whole system
    Hugo described the huge investment and vast teams of people needed to gain the small increments of improvement that characterise something like a new car launch. Roughly the same as before but a few percent better is hard work, usually coming from teams working in silos on each aspect of the overall system.  When a step change in technology is introduced, performance improves in leaps by working very differently, seeing the entire system and imagining a very different configuration of its elements.  He told of Formula 1 history when Ferrari, so strong and with huge teams focussed on ultra-powerful engines, was usurped by Cooper and then Lotus from the UK, using much less special and less powerful motors – in fact, neither ever designed an engine.  They had re-imagined the car, taking the engine from the front and putting it behind the driver, making it a part of the chassis and making the cars lighter and much better handling as a result.  He is doing something similar with his hydrogen fuel cell car which is part of a dramatically different business model, one that aligns the interests of his company with customers, suppliers and the planet in a number of ways.  By only selling miles not cars, Riversimple is encouraged to achieve what customers need with as few cars and using as little fuel as possible, with vehicle designs that stay current for as long as possible.  By paying suppliers in similar ways they are incentivised to raise quality and spend more because they, and not their customer, gets the benefit.  There’s more to it than that, but you get the idea – smart thinking and the bravery to follow it through produce the potential to leap forward
  3. The ingredients of success – wholesale re-imagining then rapid ego-free learning – come most easily from small teams of young people with a blank sheet of paper
    As Beth talked us through the Client Earth approach one of the many factors that stood out was that they do best by hiring young, smart but relatively inexperienced lawyers not those that know the ropes.  Because although people further on in their career might tackle aspects of what they need more effectively, to make something new that started with a blank sheet re-design operate well requires energetic experimentation and a willingness to keep adjusting, in their case finding ways to make the law work for the environment not just for the establishment.  Their motivation to get to the outcome and their willingness to take risks, to be wrong in their pursuit of the cause, means the team as a whole has achieved amazing things in the last few years, with the UK’s air and undersea habitats benefitting accordingly

ABOUT THE FOUNDATION

The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth

What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged

We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value

This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different

By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success

We most often answer three questions:

  1. Developing new propositions
  2. Improving customers’ experiences
  3. Developing customer-led strategies for broader issues such as increasing retention or lifetime value

Our clients include HSBC, JLR, O2, M&S and Ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth

Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well

This link will take you to more information about us and our Forum events: http://www.the-foundation.com

 

Contact Details

Charlie Dawson (Founding Partner):
cdawson@the-foundation.com / +44 7785 268 859

Terry Corby (Partner)
tcorby@the-foundation.com / +44 7446 173 137


Seriously High Performing People – Are they Found or Made?

THE FOUNDATION FORUM

26th april 2017. WRITTEN UP WITH THE HELP OF SIMON CAULKIN.

To download a PDF, click here: Seriously High Performing People – Are they Found or Made?

Nature or nurture is a perennial debate… and these are not words much used in the world of work which is somehow more direct. ‘Pay peanuts, get monkeys’ is another way you hear recruitment being described,while ‘ruthless performance management’, an approach that’s included firing the so-called worst 10% annually, is another approach to nurturing.Yet sometimes groups of people achieve something exceptional, and rather than wallow with the worst, we devoted a Forum evening to three views around the best.

One example is a tiny team with a vast challenge, so surely selection is all? The other two are big, well established teams with long histories of awkward relations between unions and bosses, public sector management and dreary performance. How do you change an environment like that? Firing everyone sounds attractive but isn’t especially practical, leaving nurture as the default option…
Our speakers, each with one of the best stories we’ve had for a long while, lined up like this:

  • We had Natalia Cohen, one of a team of six women who rowed, unsupported, 9,000 miles across the Pacific, the first time such a feat had been achieved. The group came together just for this challenge so they didn’t know each other from Adam, or indeed Eve. Somehow they had to literally get the right people in the boat, then find ways of working together in all weathers, no space, a 24/7 need to make progress, huge uncertainty, physical exhaustion, currents and a need to pay for it all, plus, as a bonus, not killing each other in the process. What Natalia learned is valuable, and not just when you’re up a creek of some kind.
  • We had Vernon Everitt, also one of a team but in this case overseeing the whole of London’s transport system as Managing Director for Customers, Communication and Technology at Transport for London or TfL. The world of London’s transport is not for the faint hearted. Numbers keep growing as the population increases, expectations rise as we all get a bit more American about service and digital media let us share our views. Yet the infrastructure available to move people around is brutally limited, largely build decades or more ago, with a workforce not afraid to challenge the management. Despite this the TfL team has achieved wonderful things including steering us through the Olympics, taking on roads, bikes, rail, ways of paying (Oyster then contactless technology) and the digital revolution (including free, open data) alongside buses and the underground, then dealing with terrorist
    threats and terrorist reality too. At the heart of the story is a clear reason to exist that has brought everyone together and given them direction. They have added useful insight into what matters (managing time in various ways). And then turned it into everyday practice with a resolutely honest, pragmatic yet imaginative approach, working through what’s in the way of a good result.
  • And we had Fergus Cusden bringing a story about safety at our National Air Traffic Service or NATS. Another organisation that was fond of the way we’ve
    always done things around here, and full of long serving air traffic controllers that had risen through the ranks, it didn’t look like fertile ground for something
    vibrant. Fergus was one of those who’d been there going on two decades, but something irked him about the attitude to safety. It wasn’t unsafe but there was
    an assumption that twenty or so risk-bearing near misses a year was as good as it was possible to get. What followed was a change of attitude, initially at the
    top, in two ways – any near miss was one too many and the ambition for zero was boldly stated internally. And then the senior team admitted they had no idea how to get there, to everyone, loudly. What followed is somehow counter-intuitive and complete common sense only underlining how uncommon such thinking is in business. It also worked, and Fergus told us how.

In a previous Forum we looked at a similar subject from another angle, getting insight into why good people do bad things. It turned out that no matter how ethically inclined an individual, the system they work within determines 85% of their performance. Why? A mixture of targets that point away from what matters and towards what’s easy to measure, coupled with authority that is difficult to defy even if gently expressed, and in many places its style is closer to robust.

“So the system is critical to performance and surely the answer we’re looking for, no?”
“There’s another view that’s also persuasive. Recruit for values and train for skill.”

The assumption here is that the qualities you really want in any group of people assembled around a shared goal are those that naturally fit. When we have individual preferences for ways of doing things, and principles that we hold dear,
it’s best to mix like with like. Fairness and democracy plus individualism and market forces tend to equal a difficult result. Precision and reflection versus ‘charge’ can be similar. Of course a balance of some kind is ideal, but perhaps more a balance of ways of working rather than more deeply held attitudes and beliefs.

“In our work we have learned about the importance of belief – less in individuals and more what’s shared, unspoken, across a group.”

If the group believes you exist to maximise profit, no amount of saying customers come first will make it so. What actually happens is mainly the former, only reinforcing collective certainty that deeds not words tell the story of priorities.
Changing or shaping these shared beliefs is extremely difficult. We’re social animals and we like to fit in, so even the most determined CEO can find themselves slipping beneath the surface, overcome by the status quo, or if they’re more determined experiencing organ rejection (in this case all of their organs and whatever fits in a cardboard box). Which goes to explain why this conversation promised much. Two versions of changes in beliefs, encouraging people to care and to try things that could have been rejected out of hand, and one of the forging of belief amongst a group freshly recruited, who didn’t really have much to go on other than a small vessel and an awful lot of water.

So to the discussion itself – three views, plus wisdom from around the room, on how where human high performance is found, or how it might be created, summarised by Simon Caulkin

Spending nine months rowing 9000 miles across the Pacific as part of a six-woman crew in a 29-foot rowing boat called Doris, setting two world records in the process, is seriously high performance by any standards. So on a different scale is moving 2 million aircraft and 150m passengers safely through increasingly crowded UK airspace annually with a vanishingly small margin of error. Likewise the challenge of keeping a great capital city working and moving, 24/7, 365 days a year. These were the narratives through which April’s Foundation Forum looked at the nature of outperformance – is it born, is it made, how do you get to it? These questions of course go to the heart of performance management, whose literature is nearly as extensive as that on leadership.
Are there commonalities between endurance rowing, extreme safety and maintaining a complex human entity in perpetual motion? It turns out the answer is yes: different as the achievements are, as intriguing are the denominators that the Forum teased out as the speakers filled the gaps that the ‘exam question’ begged: fundamental questions about discretionary effort, motivation, and how and why people work together in organisations for common aims.

In his investigation of the chemistry of ‘great groups’, leadership guru Warren Bennis wrote that super-performers believe they are ‘on a mission from God’. Being British, forum speakers didn’t put it like that. But without prompting each made abundantly clear that shared purpose and the meaning derived from it were central to what was achieved. Imagine sharing a tiny privacy-free vessel 24 hours a day for months at a time, the euphoria shot through with episodes of exhaustion, boredom and terror, on an enormous empty ocean. It would be inconceivable without a vision to keep a team strong and stable, to coin a phrase, under extreme pressure the personalities, backgrounds and motivations of the six women were different – but ‘as long as we had that shared vision and purpose, there was a unifying factor’, said Natalia Cohen, one of the ‘Coxless Crew’.

For the newly privatised NATS, formerly National Air Traffic Services, it was the ‘impossible’ challenge of reducing riskbearing air misses from the previously accepted level of 20 a year to zero that galvanised the management team and, after some considerable soul searching, agonising around whether it was achievable or not and whether that mattered or not, aligned it behind a compelling purpose, said Fergus Cusden, NATS Safety Director at the time.

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Meanwhile TfL’s challenge is presenting a unified face to the public with a workforce of 100,000 of whom 75,000 are employed by suppliers and franchised bus companies and only 25,000 are direct employees. The visual unifier is the famous LT roundel that is part of the uniform. The roundel represents the purpose that binds them together – a purpose that is not transport as such, emphasizes Vernon Everitt, TfL’s Managing Director for Customers, Communication and Technology, but rather the end to which transport is the means, that is the daily challenge ‘to keep London working, moving and growing [at the rate of two full tube trains of new people a week], and to make life in the city better.’

“Performance is dependent on knitting individuals into a team”

Any sports follower knows that star talent, while charismatic and an aid to ticket sales, doesn’t translate directly to winning on the pitch. Poor systems turn geniuses into idiots – as systems guru Peter Senge lamented, ‘how can a team of committed individuals with individual IQs above 120 have a collective IQ of 63?’ Conversely, a brilliant system can perform way above the sum of the individual parts. You’d probably want an air-traffic control system to work like Toyota, where installing a new Chairman excites as much notice as changing a lightbulb, rather than as a collection of clever temperamenta individuals.
Everitt spoke for all the speakers when he noted that ‘the working environment lends itself most heavily to actually producing the types of behaviours that organisations want to suit the needs of their customers’; which in turn suggests that ‘the key for leadership is to create the conditions to enable people to do the right thing – not with a manual from head office but just intuitively know what the right thing is – for the organisation’. And then trust them to do it.

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An energised and engaged staff rose brilliantly to the occasion in the 2012 Olympics, ‘where, in the minds of many, we were the only people left who could screw it up’. More dauntingly, ‘no one told the staff at Westminster Station what to do on the day of the recent attack. There’s no manual for it. The staff just acted and did the right thing. And that’s because the management say I’ll tell you what, there’s no point in us telling you what to do you’re the experts, you deal with the situation on the ground’.

Nevertheless, since not everyone can or is willing do everything, outperformance demands some selection, or self-selection, for context. Signing up for the purpose is non-negotiable. Whether or not they’d left the riverbank before (‘I’d never rowed before and never want to again,’ insisted Cohen with feeling), members of the Coxless Crew had to want to spend months together traversing the Pacific in a cockleshell. In air traffic control, Cusden noted that only one in 500 applicants makes the grade, ‘because your brain has to work in a specific, rather strange way. So there’s definitely some “found” in there – and that’s the case for leadership as well’.

The ‘finding’ bit isn’t always obvious, however. When NATS leaders decided that zero airmisses was the only goal that made sense, Cusden admitted, they had ‘no idea’ how to get there. It quickly dawned that their focus was the wrong way round. The big story wasn’t how controllers were allowing through 20 air misses a year – it was how 1.999 million times a year they got it right. They were the solution, not the problem, and to fix the real issue they had to be free to say what was really going wrong instead of hiding it. Incident reports soared. ‘An extraordinary amount of data emerged, and suddenly we’re on the same side, right? …So maybe the first question is, are they really the problem, or have you not engaged them in the right way – and actually our unions became a massive strength for us on the whole safety side of things’.

With shared purpose supported by measures that keep people pointing in the right direction, methods adapt as necessary. Thus NATS managed to install a new facility to manage general aviation movements in three months instead of the normal five to 10 years. How? ‘Because we were getting up in the morning to create the space for our people to deliver the solutions’, says Cusden. Over the big picture, NATS went from 20 a year to just one air miss in five years. On the Doris, methods were more personal. Crew members had developed individual motivators to call on when needed. When things got really tough (and 2 hours on, 2 hours off, rowing, 24 hours a day, for nine months, sometimes because of wind and currents going backwards despite the effort to go forwards, is tough), Cohen broke it down to manageable chunks – each two-hour rowing shift, each stroke, being there in the moment enjoying the light and the sea, not looking forward, not looking back.

At TfL, a light bulb moment, said Everitt, came ‘when we realised that the sorts of pain points for our customers are exactly the same pain points for staff, so if you fix one you fix both.’ Oyster and contactless payment are a win-win-win, benefiting customers through ease of use, staff because they are dealing with happier customers, and the organisation by reducing cost. ‘You just find those pain points and you very often find there are wins in it for everyone.’

In three stories of seriously high performance, as noteworthy as what the speakers did talk about was what they didn’t. The conventional language of management was barely used.

“There was not one mention of incentives or money. No one talked of ‘human resources’, ‘performance indicators’, ‘outcomes’ or ‘delivery'”

Rules and regulations were invoked, but to play down their importance compared to principles and doing the right thing.  Each in their different way emphasized the importance of purpose, honesty and the extraordinary results that follow from allowing, even requiring, ordinary people to be themselves.

Cohen summed it up for all of them: ‘For us, we all had the same vision. We worked hard and I suppose we found the magic in the journey. For any team to function at all you need to have an underlying trust and respect, and I think that was evident with the team. We stepped on that boat as teammates and we stepped off as lifelong friends’.

 

The Foundation’s view

What an outpouring of common sense but in a way that is extremely uncommon…  From our perspective and in the context of our work and experiences at The Foundation, three headlines emerged:

  1. ‘Purpose’ can be more usefully framed as getting everyone onto the same side. The importance for any organisation of having an answer to the question ‘why do we exist?’, and for that answer to be more fulfilling than maximising money in some way, is increasingly recognised.  But the more it is discussed the harder it gets to hang on to what it really means – what makes the idea useful not just fashionable.  Fergus described the difficulty at NATS of first saying out loud that they should only accept and aim for zero near misses a year despite the widespread view that this might be impossible.  What if the organisation ended up simply underlining its inadequacy, making everyone feel bad, rather than celebrating the achievement of managing millions of flights a year in exemplary fashion?  But having realised that zero was the only target the team could morally contemplate, they found that sharing it had a wonderfully aligning effect.  The biggest fear for an air traffic controller is that they make a mistake that kills hundreds of people.  Having your employer stand shoulder to shoulder with you and share both that fear and the intent to stop at nothing to avoid it, then open up channels to explore honestly, constructively and in a ‘Just culture’ how to achieve it together meant that now everyone was aligned.  The unions were suspicious to start with, but once they trusted that motives were genuine they too swung behind the work.  Maximising money for one group, shareholders say, pits people against each other.  Achieving something worthwhile, funded by enough money, brings everyone together
  1. Human, common sense ways of working are liberating. Transport for London has nigh on 60,000 people working directly and indirectly across the transport systems of London, and plenty more than that across the country in related activities.  They have people from all kinds of backgrounds and all corners of the globe managing millions of customers and journeys. Those customers’ experiences matter, their journeys need to be effective and timely to keep London running, and everything needs to be safe.  Costs need to be reduced, new technology embraced and unions kept onside.  Potentially a recipe for The Office levels of management contribution.  What Vernon Everitt described though was wonderfully straightforward and yet extremely rare.  Be honest – tell it how it is.  Treat people like adults in explaining the pressures to deliver more while keeping costs down, to use technology to change the ways things are done, to have fewer people working and to change the nature of the job (modern signalling changes the way a train is driven for example).  And let people do things their way, like the announcements made on the tube system and now on buses too – it just matters that travellers are kept in touch, but the style is down to the individual.  Or whiteboards at tube stations with messages of the day that just started happening, and in that awful Westminster moment where the station team acted effectively and as they saw fit in the moment, the whiteboards provided an outlet for solidarity and heartfelt messages of empathy and defiance.
  1. The answer to the question? Perhaps it is that ‘people and teams are found and THEN made’.  Natalia had never even rowed before.  She answered an ad on a website, and went through a series of interviews and tests that were fairly extreme.  But nothing compared to rowing the Pacific.  Did they know they could do it, or were they just the best six from a fairly small pool who responded?  They were very different characters tackling the challenge for a range of reasons, but what made the exceptional possible seemed to be the way they went about it.  Natalia described the 2 hours on, 2 hours off, 24 hours a day, and the 29 foot boat with a smaller-than-single-bed-sized shelter for two people to rest in, but then the way they understood each other, learned to work constructively with their strengths and hot buttons, stayed in the moment enjoying the light, sky, sea and banishing thoughts of the past and future.  They constructed a way of working that allowed the upper end of ordinary to become extraordinary, and this seemed to be exactly what Fergus and Vernon were also describing.  Good people doing great things, lifted by what they shared, the ways they operated and the ways they were led.

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A couple more things to add…

If you want to know what the NATS challenge really looks like, this two and a half minute video will make your hair curl and your eyes widen.  It’s also beautiful.  https://www.youtube.com/watch?v=a8CQ29yWvZI

If you want to see and hear a much fuller version of Natalia’s story and the team’s journey, their documentary Losing Sight of Shore is available on iTunes, Amazon and Netflix.  The trailer is here

www.losingsightofshore.com

We would also like to mention that Natalia is looking to share her learning more widely and is keen to do inspirational keynote talks and team workshops of different kinds.  So do get in touch on natalia@nataliacohen.co.uk if keen

Fergus is also happy to share his learning and help in relevant situations, and he’s on fergus.cusden@assuredoperations.com

 

About The Foundation

The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth

What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged

We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value

This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different

By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success

We most often answer three questions:

  1. Developing new propositions
  2. Improving customers’ experiences
  3. Developing customer-led strategies for broader issues such as increasing retention or lifetime value

Our clients include HSBC, JLR, O2, M&S and Ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth

Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well

This link will take you to more information about us and our Forum events: http://www.the-foundation.com

 

Contact Details

Charlie Dawson (Founding Partner):
cdawson@the-foundation.com / +44 7785 268 859

Terry Corby (Partner)
tcorby@the-foundation.com / +44 7446 173 137


Innovate or Die A challenge for specialists or crucial for all?

THE FOUNDATION FORUM

23rd February 2017. Written up with the help of Simon Caulkin.

To download a PDF, click here: Innovate or die – a challenge for specialists or crucial for all?

Innovate or die, apparently. And many organisations seem to choose the latter. Not consciously of course, but as a by-product of finding it so hard just to be big. Most people spend most of their time making sure what’s planned to happen is what happens in practice. There’s precious little left for finding a better plan.
Given innovation is crucial and it’s largely badly done (UK productivity figures make the point all too eloquently), we thought we’d shine a trio of lights on the issue and see what that told us about how to improve.

  • We had Julian Birkinshaw, Professor of Strategy and Entrepreneurship at the London Business School, where he is the Academic Director of the Deloitte Institute of Innovation and Entrepreneurship. He recently co-founded the Real Innovation Awards alongside Management Today with the stated aim of showcasing the authentic, haphazard and, as a result, exciting business of real innovation
  • We had Mark Evans, Marketing Director at Direct Line, where a determination to steer clear of the price fighting aggregators led to the only alternative, innovating to create something worth paying more for. A search for wow factors and a deliberately grown capability in digital technology have led to a business enjoying rude health in a market with a heavy dose of flu
  • And we had Scott Cain, a leader at the Future Cities Catapult, with the challenge of nudging a whole country into more innovative action to make our cities work better by becoming smarter. When you stop for a moment to think how many organisations have a view on how cities work, and competing views on how they might improve, you realise this is the mother of all pieces of string to push and a serious motivation and co-ordination challenge

According to the ONS it takes a German worker four days to produce what we make in five. In the time a British worker makes £1, a German worker makes £1.35. Unsurprisingly the average British worker toils away for longer, in return for lower pay, than their German equivalents. No wonder they get to the sun loungers first. Their towels are thicker too.

But to be fair everyone, even the Germans, finds it tough to make new things happen in large organisations

And good new things are rarer still.
At the heart of the conundrum is the need for innovation (which starts small) to make a significant difference (which means big).

At the beginning end of the equation, having ideas, it seems self-evident that a focused group of people intent only on finding new and better ways will get a great deal further than an army marching in step on a route that’s prescribed trying a bit of juggling on the side. But later on, when the small team of lateral thinkers has something that works, they find they have a serious persuasion job on their hands, and a question or two about whether their baby can survive a serious growth spurt without losing its essential but delicate brilliance.

This is only one way that specialists have been tried. We’ve also had corporate accelerators that became all the rage at about the time of peak beard. And catapults are another example of a specialist team, in their case taking raw potential from academia and building bridges to the commercial world and issues that society needs solving.

But maybe this is all a distraction. Maybe innovation never really takes hold unless its everyone’s job, front and centre, what we do all day. When a business or a charity or a government gets a serious challenge under its skin, a sense of purpose that is authentic and all consuming, then mountains get moved. When Singapore was ejected by Malaysia and found itself becoming a nation state in 1965 it was assumed to be ‘non-viable’. Economic development wasn’t nice to have, it was critical, and 20 years on it was thriving with unusual approaches to tax, education, chewing gum and more.

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When something’s burning, most often a platform but sometimes an ambition to go further, faster, to win and to prove people wrong, then a whole body of people spend their time on improvement. Necessity really is the matriarch perhaps?

But where are the matches kept? if you’re somewhere that’s comfortable, at least on the surface, how do you create the urgency that seems to be needed?

The Real Innovation Awards took a more bottom-up approach to understanding. It’s a scheme that’s kicking back on some of the neatness above. The assumption behind them was that, for such a crucially important process, innovation is badly served by awards that largely describe a simplified, sanitised and inaccurate view. The belief was that real innovation is messy, more uncertain, and more serendipitous than most believe. And the first winners’ stories, which we at The Foundation enjoyed playing a small part in helping choose, bear this out.

So many thoughts, so much familiarity, serious importance and a need for some guidance.
So to the discussion itself – three views, plus wisdom from around the room, on how to innovate not die.

How do we do innovation?

It’s a question that has worked its way steadily to the very top of the economic agenda. At national and international level, fading innovation is one important reason why some leading economists foresee a period of global secular stagnation as the long era of growth comes to an end.
At firm level, the same innovation drought has left large incumbent firms across a swathe of industries perilously vulnerable to disruption from digital-savvy insurgents with massively more efficient business models.

And without a jolt from innovation, a public sector confronted with the need to do ever more with ever less faces a future of near permanent austerity.

Yet as a crowded February Forum heard, innovation, like the Holy Grail, is fervently desired, difficult, mysterious and often tantalisingly out of reach. There are a number of reasons for this elusiveness. One is that although the need to innovate seems obvious, setting out to do it in the abstract, like deciding to paint a masterpiece, is meaningless. There must be something to drive and shape it – a purpose. While there are good negative reasons to innovate (change will overwhelm you if you don’t), as Mark Evans, marketing director at the Direct Line insurance group, put it, the positive imperative for innovation is purpose, in its hard-edged sense of ‘having a legitimacy for your business in the future.’

Five years ago, he recounts, Direct Line was a broken brand (part of RBS) in an industry that, having spent the last two decades talking only about price, was absolutely ripe for disruption. Actually, the pivotal insight was hiding in plain sight: ‘blow me, it’s not a point of purchase thing, it’s point of need: insurance is about fixing things, putting things right. How could we have lost that category insight for 20 years?’ Then it was a question of going back to marketing 101 ‘and saying, we have a better mousetrap, we do insurance better. We do it at point of need and we differentiate ourselves that way’.

A 40 per cent rise in the motor insurance business last year is proof of the pudding. Thus emboldened, and in line with its purpose of ‘protecting an ever-changing Britain’, and the principle of prevention, it has launched eye-catching innovations like a ‘Shotgun’ app which rewards safe young drivers with pizza and coffee during their first 1000 miles when they are most accident-prone, and ‘Fleet Lights’, a system of drones to light the way in dark streets.

 

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A second reason why innovation is elusive (one dear to the Foundation’s heart) is the difficulty of maintaining a customer focus. Most organisations look at the world from the inside out, through the prism of their boardroom or their product or service, rather than from the outside in, through the eyes of the customer. Even if you can maintain this unnatural stance, it’s easy, as LBS’s Professor Julian Birkinshaw pointed out, to pay attention to the wrong kind of customers or misinterpret what they are saying. ‘What we’re trying to do of course is to get to the unarticulated views – what is the underlying thing that the customers need but they don’t actually know quite how to express, what is the underlying ‘job to be done’?

This means much real innovation is a gamble based on guesswork (‘unreasonable conviction based on inadequate evidence,’ as Tom Peters once put it) – gambles often don’t sit well with shareholders or those with a vested interest in the status quo. Mark speaks feelingly of the internal ‘vitriol’ that was directed at Marketing as a result of suggesting, then pursuing, bold and unusual initiatives. Not surprising, then, that for every Direct Line that cracks it, there’s a Kodak or Nokia that can see the tip of the iceberg ahead, but can’t change direction fast enough to avoid the hidden bulk below.

Further blurring the issue for would-be innovators is the widespread assumption that never mind the question, the answer is technology. For Scott Cain, who leads on business and project development at an organisation called the Future Cities Catapult, ‘where innovation fundamentally failed over the last 10 years or so, it’s primarily because people are saying I’ve got this great big technology hammer and I just need to find that available nail and keep on hitting with it.’
Thus in his field there is a plethora of vibrant, exciting technologies for making cities smarter or more liveable, to the extent that city authorities are overwhelmed by the proliferation of choice. But features don’t necessarily translate into benefits – particularly in complex entities like cities, systems of systems where each has knock-on effects on others so that it’s hard to establish reliable evidence of what works or work out a viable business model between them.

Again, purpose is key. When Dubai in 2014 decreed its aim of being the smartest and happiest city in the world (by 2017), it approached the Future Cities Catapult to establish just what that meant in context and how technology could contribute to its achievement. The city state has now worked through the first set of projects from the findings and is into its second.

Finally, most organisations are good at either being efficient (‘exploitation’) or being inventive (‘exploration’) – and for all the reasons above exploration is the road less taken, which of course makes it all the more desirable, and essential.

But innovation-driven companies such as Apple, or Intel in semiconductors, that exhibit this drive are rare. Those that don’t have it in their DNA and have to summon up the impetus from elsewhere. Evans calls it a ‘groundswell’, a combination of pride and striving to do the job better, that Direct Line has channelled into an ideas lab that yielded 3000 suggestions in its first year.

Organisations should focus on areas they are competitive in – ‘not necessarily Real Madrid or Bayern Munich; Arsenal will do,’ says Cain – and where something is broken, or markets are not providing a good solution. Internally, a burning platform, as at Direct Line, may be the stimulus to get things moving. The timing needs to be right – innovating too far ahead of customers is as bad as being too late. And while scaling up is a huge issue in itself, ‘the way it becomes a bit more viable is to start at the smallest scale you want to be operating at’, counsels Cain. ‘Start at the very, very human scale, that’s my insight’.

Unsettlingly, innovation isn’t primarily a matter of cold management reason. On the contrary, cautions Birkinshaw, big data and analytics can be bad for innovation. With information everywhere and research costs approaching zero, marshalling data can take only a company so far. (In any case, most of what we call disruptive innovation is actually emergent: the disruption only becomes clear after the event.) So it’s avoiding the trap of over-analysis with decisive action and emotional commitment that are the key to successful innovation, Birkinshaw argues: ‘When we look at the Facebooks, the Amazons of this world, the companies that succeed are the ones that know when to stop gathering information and when to start actually acting on a little bit of intuition’.

This puts a premium on leaders with the wit and courage to make the important calls (and knock some heads together if necessary to bring the talking to a stop) – and on the cussed, unreasonable people, sometimes lower down in the organisation, who make it their business to provoke, stir up the status quo and go on asking the uncomfortable questions until they are either kicked out or get their way.

On the people, in fact, for whom the phrase ‘innovate or die’ has a literal meaning.

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The Foundation’s view

Three points most starkly stood out for us from the evening, complementing Simon Caulkin’s summary.

  1. Diversity matters. And in a substantive way. Mark Evans shared his belief in Neurodiversity, a hitherto unrecognised version referring to people who literally have different brains. Dyslexia, dyspraxia, colour blindness, autism and plenty more lead to very different ways of seeing the world, of drawing conclusions from it and of having ideas. If you want to look round corners that usually get in the way, ensuring diversity of thought and style matters, in version 1.0 gender, ethnicity, sexual orientation and the like, and in this version 2.0 way as well (as he described it). What also emerged less intentionally was a rather masculine way of describing the qualities needed to succeed with innovation, and cajones along with their Anglo Saxon counterparts were referred to several times, and called out by one of our questioners too. It was a sobering moment and showed how less visible things like language matter when discussing and framing issues, opening up or closing down options unconsciously
  2. Innovation is no way to have an easy life. All the way through the examples that were shared, unreasonable people were the ones who had to put up with the slings and arrows on their way to outrageous fortune. Mark described the vitriol that was directed his way as a result of suggesting then pursuing bold and unusual initiatives in the insurance business, like helping young drivers have a ‘shot-gun’ riding alongside them, coaching them towards safety and away from £20m claims that result from disfiguring best friends in all-too-common accidents. There are more or less challenging styles that go with being unreasonable, but relentlessness and unshakeable will are at the core, and ideally these people need some air-cover and space, so they can work through the process of ruling out all the wrong ways to do something towards the right way where the pot of gold lives
  3. Well-meaning collectivism is an enemy. Well-meaning collectivism is fantastic for many many things and would ideally be far more common in the world of work. But innovation is not one of them. Ask enough people and someone will find a reason to say no, or a sensible suggestion to modify, or to test a bit more carefully. Benevolent dictators made their presence felt, labelled, like unreasonable people, by Julian Birkinshaw and described by him at places like Oracle (Larry Ellison – we are moving to cloud, no debate) and by Scott Cain in cities like Dubai where interestingly the person in question was female (we want to create the world’s happiest City, and we’ll do it by a week on Tuesday – well, three years, but you get the idea). This kind of unarguable direction can also come from a deeply held purpose that gives direction and conviction that something matters to everyone involved. Direct Line now has a belief in being fixers, there to put things right when insurance is called on, and people across the business are in action with their interpretations like delivering a replacement TV in person because otherwise it wasn’t getting there before a crucial boxing match that a customer desperately wanted to see

 

About The Foundation

The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged.

We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different.

By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success.

We most often answer three questions:
1. Developing new propositions
2. Improving customers’ experiences
3. Developing customer-led strategies for broader issues such as increasing retention or lifetime value Our clients include HSBC, JLR, O2, M&S and Ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth

Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well

This link will take you to more information about us and our Forum events: http://www.the-foundation.com

2007-10-07 at 23-39-27

Contact Details

Charlie Dawson (Founding Partner):
cdawson@the-foundation.com / +44 7785 268 859

Terry Corby (Partner)
tcorby@the-foundation.com / +44 7446 173 137

 


How fortune favours the old – Unlocking the potential of health, wealth and wisdom

THE FOUNDATION FORUM

23rd November 2016. Written up with the help of Simon Caulkin.

To download as PDF, click here: How Fortune Favours The Old – The Foundation Forum 23rd November

It’s not just Generation X, Y and Z that are changing. Generation U, V and W, as they were never known, are also busy re-writing the rulebook.  ‘Retirement’ is retiring, longevity has rampant inflation, it’s coming to us all, yet it’s rarely discussed.

On 23rd November 2016 we gathered to hear four perspectives to shake us out of our ignorance:

  • Charles Handy, one the world’s leading management thinkers, alongside wife and photographer Liz, 84 and 76, bringing a personal view of the key to fortunate old-hood, illuminating ideas in Charles’ recent book The Second Curve, the latest in a series that has foreseen or forecast portfolio working, shamrock organisations and a return to purposeful, human organisation in business.
  • Liz is his life partner, a photographer who only started pursuing it seriously in her mid-40s. Now 30 years later it remains vibrantly at the heart of her life, covering subjects ranging from young entrepreneurs in Tottenham, where the 2011 London riots kicked off, to potato farmers in Ethiopia for an Irish charity.
  • Paul Flatters, founder of The Trajectory Partnership, a futures business with some deep thinking around older age living and a futures business leader with strong views on why we need to wake up to it. Paul’s aim with Trajectory has been to make futures work more useful and less faddy, ensuring the future is better understood, better planned and less feared.
  • Andrew Haigh, long-standing pioneer of Coutts innovative Entrepreneurs practice and thereby advisor to many on life choices and the meaning of fortune. Andrew’s work was a genuinely new approach for a high-end bank, being customer-led by organising not led by the financial value of clients but by the activities that had led to their success. This recognition was followed by a further realisation – that helping people with similar experiences talk to each other, not listen to a banker, was the most useful way for them to learn and find value in their offer.  In the entrepreneurs’ world, much of this was about ‘post-exit’ life, a form of enforced retirement.  Post Coutts, Andrew is now acting on his own advice across an eclectic mix of the arts and business.

 

We’re a sucker for stereotypes and habitually herd-like.  So it’s no surprise we’re locked into looking to youth for our views of the future.  For the last 50 years it’s been the right thing to do.  But while Generation Z is bringing a strong set of values and digital nativity into the world, in many ways they’re more worried about fitting in and getting a foothold than ripping up yet more assumptions.

Meanwhile, at the other end of the telescope something much more fundamental is happening.  We’re leaving behind the idea of working for decades and enjoying a short, leisurely retirement. We’re realising instead that we’re going to have as long post-work as in-work.  Well we would if we had the funds to be post-work.

Funds aren’t the only issue though.  When quantity of life becomes plentiful, outlasting the default content of work and kids, how to we fill our time?  Individually, how do we stay interested and interesting?  And collectively, at a societal level, how do we stay productive when formal employment at large organisations is unlikely to work because they’d end up full of oldies and nobody would ever join or get promoted?

As Charles Handy said to us in discussing the idea, old people don’t cost much – they have plenty of clothes, they don’t eat much and their house is paid for. What’s more important is being useful, doing something valuable and feeling valued. In many ways it’s a step towards happiness and away from GDP, the relative merits of which we have started to debate as we wonder why we seem to be so busy but getting no happier in the process. Maybe this question about later life is a big step in the right direction?

160111_tf_3

Or maybe that’s being too optimistic. In this post-Brexit post-truth increasingly strident and decreasingly tolerant world we live in, maybe the old will become resented by the generations straining to make ends meet, working long hours and with debt not pension to accompany them into their own twilight years.

What unquestionable is the degree of change coming down the line, for individuals, for employers, for markets, for society.  And yet it’s little discussed beyond a few familiar platitudes.

Our aim was to put this right.  To get us thinking, giving us insight, foresight and a view of what might be coming down the line.

 

So to the discussion itself – four views on the way we can embrace a happy longer life, individually and as a society

What are old people for? Oddly, no one seems to know.

Scientifically, aging is an evolutionary puzzle. Socially, with some exceptions, most societies treat the elderly as if they were already in the departure lounge, at best with pity, more often with indifference or disdain; historically some even speeded them on their way.  To many in officialdom, as social philosopher Charles Handy pointed out at an absorbing November Foundation Forum on the subject, they are simply invisible.

Age is most considered a disability: look it up and you get a depressing list of frailties the aging flesh is heir to, precious little about compensating pleasure or benefit. One writer begins her book on aging,

‘Getting old sucks. It always has. It always will.’

But more satisfying answers are suddenly now both important and pressing. Up until 100 years ago, with life expectancy hovering at its historic level in the mid-40s, the concerns of the old were a non-issue: there weren’t any. Now, however, societies are aging at the extraordinary rate of five hours a day.

The 85s and over are the fastest-growing age group in the UK, noted Paul Flatters, founder of futures consultancy the Trajectory Partnership. Their number will double to 5m by 2030, and by the end of this century there will be 1.5 million centenarians, up from 13,000 today. At least one-third of those born today will be alive in 2116, according to projections. Techno-utopians in Silicon Valley go further, arguing that just as the first great spurt in life expectancy was triggered by machine power and the Industrial Revolution, so the rapid convergence of robotics, AI and biotech will lead within decades to a ‘cure for death’ and ‘virtual immortality’. ‘[The changes are] not distant stuff. They’re happening now, and it’s moving quite rapidly’, summed up Flatters.

If youth knew; if age could. Getting beyond generational stereotypes to reconcile the two and tap the potential of age is urgent not just because of rising numbers. Of course, intergenerational friction over appearance, dress, manners, drinking habits and taste in music, to name a few, is never far from the surface. But this time, pointed out chairman Charlie Dawson, there is a real prospect of ‘serious grinding of gears’ between young and old. As in other cases, the conflict is amplified by austerity, far-reaching change in the job market and declining social mobility.

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On the one hand the elderly are the heaviest consumers of society’s healthcare and support services, and, as any visit to a care home will confirm, among their number are some of society’s neediest members. On the other, said Andrew Haigh, previously head of client propositions at Coutts bank and now a consultant,

‘Baby boomers have been really good at exercising their power as a generation to accrete wealth to themselves’

– such that over-50s account for fully 68 per cent of UK household income, 77 per cent of financial assets and 66 per cent of property.

No wonder there is a sense of unfairness in the air that runs both ways (a new book just published is called The War on the Old). Today’s young adults are the first generation to be poorer than their parents (although this may be softened by inheritance – ‘all that property has to go somewhere,’ noted Flatters). This, as well as their numbers, means that the old carry real political clout, reflected most conspicuously in the notorious ‘triple lock’ on pensions and political upheaval culminating in last summer’s Brexit vote – which triggered sharp comments about the right of an older generation to decide a future which it won’t live to see for a younger one which will reap the consequences.  Another recent book title, The Jilted Generation, adds a further recriminatory slant.

But it’s more complicated than this.

In their book The 100-year Life, Andrew Scott and Lynda Gratton describe ratcheting life expectancy as a huge potential gift, with the prospect of more experiences, multiple careers, and greater possibilities for self-actualisation. The longer the life the further we can travel. The catch is that life is at least to some extent path-dependent – so its end can equally well turn into a terrible burden. For it to be experienced as a boon – if living to 100 isn’t to mean giving up everything that you want to live to 100 for, as Woody Allen inimitably put it – those living the life have to take charge of it. From now on, people will have to invest in and curate their own lives better, more actively, and from an earlier age than ever before.

For better or worse, many of today’s elders are not starting from there. Consider too that while they are richer, they also face mounting material responsibilities. They must not only provide for their own later (and longer) care and that of their parents – they are also, pointed out Haigh, increasingly playing the part of ‘bank of mum and dad’. So even without the compulsion of a rising retirement age, living longer will undoubtedly entail earning longer, probably with several switches of career: even today’s entrepreneur imagining he or she can cash in with £2m at 40 and retire to the Bahamas may have to think again.

At the same time, people will need to be prepared for many more life changes that in the linear three-stage education-work-retirement trajectory that is now fragmenting before our eyes. ‘With each successive age cohort, life changes that are taking place after 50 or 55 are increasing’, Flatters said.

It’s around those life changes, he added, that many important spending decisions are made. Which is another reason for plucking the old from under their current blanket of invisibility. Their wants and needs will clearly be different from those of younger age groups – the old don’t go in much for fashion, or consume much of anything apart from heat, transport and other utilities, Liz and Charles Handy noted. But even if they become less materially driven with age, older people have other needs for sociability and feeling useful that often go begging because of their invisibility to the outside world.

There are rich business opportunities here, perhaps especially for social enterprises. Consider the Casserole Club, described by Haigh as ‘a 21st century reinvention of Meals on Wheels’. It helps people making food, perhaps for a family, connect with older neighbours, inviting them to make an extra portion and then to pop it round.  It connects people across generations.  Where Meals on Wheels was simply about delivering food on an industrial scape, Casserole Club is as much about social as nutritional sustenance. Yes, it’s a tech-enabled platform that emerged from social media – but it’s one for combatting isolation and developing community, and as such a sharing-economy app that actually deserves the name.

As for individuals, it’s up to the old to decide for themselves who they are and what they are for. With time no longer at a premium, filling it with wall-to-wall leisure and hobbies, the old retirement prescription, suddenly seems less appealing. There’s only so much appetite for golf or cruises. ‘All this doesn’t just happen,’ said Liz.

‘You have to plan your lives – you can’t rely on businesses doing it for you, or the state. You’ve just got to work out what you want in life and take hold of it’.

But take heart. As Dawson noted, Charles and Liz Handy eloquently demonstrated what an older person work and life ethic looks like, why it is important and how to make it happen. When the pair describe themselves as ‘the fortunate old’ and being 80 as ‘the best time of our lives’, it’s a reward for resisting fatalism and doing exactly that. ‘I’d like to think we’re a resource – if people knew we existed. But we try to be useful in our own way,’ said Charles. The Handys boil down the essentials of a good old age to three: work – not necessarily paid, but activity with purpose that gives value and is valued in return; health; and meeting people. Liz described a regime of early morning exercise (a brisk walk) followed by breakfast with a variety of interesting people of all ages – the exchanges at the same time a means of keeping current and connected, and in return of bringing older proportion, experience and connections to bear on life’s challenges.

Perhaps this foreshadows what a second curve for society as a whole might look like: a shift from quantity to quality, from consumption to reflection, from pursuing material success to nurturing relationships.

It may be no coincidence that Japan, which is sometimes called the first post-growth society, is furthest down the line to becoming happily post-youth too. ‘It’s salutary to see – it has an active, aging population, and it’s going to happen here,’ predicted Haigh.

Perhaps the old are ahead of the game. When the actress Shirley MacLaine was asked about the purpose of aging she replied:

‘To learn why you came in in the first place. We are the sole creators of the reality we are pleased with, or not.’

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THE FOUNDATION’S VIEW

As we listened to the assembled wisdom taking shape, and in particular to the Handys becoming heroes of many on the night with their stream of self-deprecating common sense that was at the same time ground-breaking (and rather funny), we observed three big points emerging:

1. CROSS-GENERATIONAL PAIN

There is the potential for serious grinding of gears between younger and older generations.  In this country, people in their 60s and beyond have a hair-raisingly high proportion of the wealth, and our children might be the first to have less than their parents.  The recent Brexit vote saw a strong divide between old & out, and young & in, followed by sharp comments about whose right it was to choose our long term future.  Could this snowball?  There’s a strong overlap with having and not having, being stuck in a shared flat while old folk live in big echoing mansions, being saddled with debt while listening to old people talking about their investments, and so on.  There was a counterpoint put forward by Paul, which is that houses, jobs and other forms of asset need to go somewhere and so adjustment is likely.  The Autumn Statement from the Chancellor prepared the ground for a change to the triple lock on pensions as a topical example.  The point is that the differences are extreme and both generations need to find their voice and take proactive steps to bridge the divide.

 

2. THE INVISIBILITY CLOAK OF AGE

What about realising the potential in our older generation, to be useful, to contribute, to buy things?  Charles described a conceptual challenge from his perspective as an 84 year-old who’s healthy and out there, living life fully, being fortunate, not stuck in a care home which is the stereotype of the generation.  Clearly there are a lot of people in that kind of unfortunate situation, but many more are like Charles and Liz – it’s just that they are invisible.  Charles described filling in a US tax form and finding his birth year, 1932, wasn’t even on the form as an option (being invisible to the US tax authorities was not necessarily a problem he was looking to solve).  In the UK he was called by a social researcher, and on explaining he was self-employed was given options to be in his 40s, 50s or 60s.  On revealing he was 84 the researcher put the phone down.  This matters.  Products and services for this growing, wealthy, cohort won’t be the same as those for people in earlier lifestages.  Material needs are largely satisfied, but social ones, like loneliness, can be tackled in smart ways.  Andrew described the Casserole Club, referred to earlier (https://www.casseroleclub.com/), with the shift from Meals on Wheels to this has been from logistics and function to putting people in touch with people in a way that gives the perfect excuse to say hello.  To get more of this to happen, the group needs to be seen, be thoughtfully understood and provided for.  We have some self-interest in making this happen!

 

3. QUALITY NOT QUANTITY OF LIFE

Given that material needs are small, life is all about leisure, right?  Not so. Charles and Liz showed what an older person work ethic looks like, why it matters and how to go about making it happen.  The aim is to be useful – to be valuable and valued as a result.  The outcome is feeling current and being connected to other people, across generations.  Liz described their routine – up at 7 with a lie-in to 7.30 on her birthday, out for a walk around the woods for reflection and time to talk, then breakfast, often with some ‘interesting younger people’ who can share what they’re doing and some of their challenges.  This allows a bit of perspective to be provided, wisely and calmly, by the older hands, not giving answers but re-framing and making connections too as that’s another benefit of having been around for longer.  This shift from things to time, from achievements to people, is something that society needs more widely too.  The observation that higher GDP is entirely unconnected to higher happiness suggests that maybe here the old are ahead of the pack.  Unlocking the potential of health, wealth and wisdom looks a bit like this?

If you’d like to explore more of the argument around this subject, you could also try a Handy book on the subject, via here http://www.lizhandy.net/charles-handys-books

 

ABOUT THE FOUNDATION

The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth.

What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged.

We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value.

This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different.

By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success.

We most often answer three questions:

  1. Developing new propositions
  1. Improving customers’ experiences
  1. Developing customer-led strategies for broader issues such as increasing retention or lifetime value

Our clients include HSBC, JLR, O2, M&S and ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money

proposition, and giving Morrisons a competitive direction contributing to their return to growth.

Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well.

CONTACT DETAILS

Twitter: https://twitter.com/TheFoundation

Website: www.the-foundation.com
Charlie Dawson (Founding Partner):

cdawson@the-foundation.com / +44 7785 268 859

Terry Corby (Partner):

tcorby@the-foundation.com / +44 7446 173 137


Leading Minds Research – Senior Leaders’ Forums on Leadership Ethics

Over the last few years we have got to know Professor Chris Megone and the Leeds University Faculty for Applied Ethics of which he is Director.  For the last two years Jamie Dow, Director of Research, has been conducting studies looking at ethical leadership.  We have worked with Jamie and Chris to bring together groups of leaders who have relevant experience and a thoughtful outlook, from a wide range of backgrounds, to discuss the subject, exploring why it matters, what it means and how to do a better job of it.

The 2016 version of this started with an introduction from Professor Dominic Scott describing Socrates and then Plato’s learning about different styles of leadership (and as it happened different versions of democracy, absolute and representative, which coincided with the day preceding and then the day of the Brexit referendum).  This gave all involved something to explore, comparing experiences with the models from 2,500 years ago

What follows is a summary of the conversation that resulted.

Click here: Senior Leaders’ Forums on Leadership Ethics

 


The Pavement of good intentions. How do we rebuild trust to get beyond the scandals and lies?

The Foundation Forum.  8th September 2016. Written up  with the help of Simon Caulkin.

This particular exploration was built around three big vortices of trust, which we ventured into with the help of some knowledgeable and sure-footed guides.

  • Going to war, with Rob Weighill, former Major General & Brigadier who led planning and operations for NATO’s mission to protect civilians in Libya, and who served in Iraq, Afghanistan, Kosovo, Northern Ireland and with the UN in Cyprus. In the early 2000s Rob wrote the concepts and produced doctrine that directly influenced the medium and long term development of the British Army’s organisation and operation, and he then spent time applying its principles on operations with the UK and NATO joint forces command.
  • Applying spin, with Robert Phillips, former CEO of Edelman Europe, now leading a new kind of trust-building organisation called Jericho Chambers. They help organisations with communications, leadership and trust in a post-PR world, one where substance and action, listening not transmitting, accepting imperfection and ambiguity all play a central role.
  • Industrial deceit and the Volkswagen issue, with Toby Rubbra, Partner at systems thinking advisors Vanguard whose work shows how widespread the assumptions and practices that led to the scandal really are. Toby has been central to the development of their approach and it is a conundrum. They apply profound common sense in helping organisations give customers what they want in ways that cost less, and yet their work has much unrealised potential because the conclusions challenge commonly held ‘obvious’ assumptions about the way things work at work.

Integrity is the most commonly occurring value in the FTSE 100. Yet high profile lying seems so common that the big surprise would be for the flow of outrageous examples to stop.

Yet it’s not as simple as virtue versus evil. It’s not just good or bad people. Somehow good people end up doing bad things. Somehow the systems we’ve created lead us into situations where our actions and their consequences are hard to connect, or hard to take responsibility for. Where inhuman decisions become the norm and arguing for empathy and togetherness feels weak.

In each of the three examples above, apparently benign assumptions lurk behind a chain that leads to disaster. The idea of intervening to stop a crazed ruler wreaking havoc and harm, restoring order and establishing democracy. The idea of communicating the positives and winning attention to bring them to life. And the idea of measuring what matters and rewarding its achievement.

How do such obviously good ideas lead to such obviously bad results? Perhaps for once this really is rocket science? Actually that was part of the Iraq problem, so maybe not.

Each of these examples, when understood beyond the headlines reveals shades of grey to rival steamy best-sellers. Situations are complicated.

Our action in Iraq is now officially a serious mis-judgement with much of the country (Iraq and, now, the UK) in a state of chaos. Libya has gone a similar way. Syria is so obviously a snakepit of interests and agendas that we avoided entanglement, but the cost of inaction is also high and threatens the trust of groups who desperately want help. How can the military, acting with good intent in difficult situations, retain the confidence of the different groups involved – the UK public, serving troops, people in the troubled territories themselves, other countries who are part of the solution, or the problem… Tough to get right!

‘Making a car with a device that detects an emissions test so it can deliberately adjust settings to appear to meet regulatory standards sounds about as clear cut as badness gets’.

Image result for volkswagen emissions scandal key

But have you tried working for an over-driven boss in a car company, tried explaining that the target can’t be met, that you’re running late and costing too much money? Have you tried being an ambitious boss in a car company, with shareholder expectations that you’ll launch your new models in the US as planned, judging you against your peers who don’t seem to be having problems, having found in your career to date that setting stretching targets and ‘motivating’ people to achieve them has always worked? Have you tried investing in car companies…? And so on.

Whether its cars, hospitals, or PPI scandals we seem to be living in an age where predictably a news item breaks of “cheating”. The equally predictable outcry and response is for more regulation, inspection and for heads to roll. But what’s really going on here? Very little airtime seems to explore the root causes; the assumptions that underpin the system. As Demming learned, 95% of the issues affecting the performance of a system are down to its design and management; only 5% attributable to people. So rather than point the finger at “corrupt” senior executives maybe we need to better understand the management system they are caught up in; one where ever more onerous targets result in schizophrenia between an organisation’s true purpose and the creativity that has to be applied just to survive.

‘As for spin, enough time has yet to pass to have forgotten the £350m NHS Boris-bus, the rejection of experts, the promise to trade freely while also taking back control’

Or indeed the need for an emergency budget if we voted out, from the other side of the fence. Just say what it takes, have a bit of fun around the edges, write it off as natural electoral bluster.

How bleak.

Luckily we had some knights in high-gloss armour to give us some hope, although we weren’t promising easy.

So to the discussion itself – three ways of looking at why good people acting with the best of intentions do bad things.

British soldiers caught up in the maelstrom of Iraq or Libya, managers who connived in fiddling emissions data at Volkswagen and Brexit voters might seem to have little in common. But as participants discovered at a wideranging, probing Foundation Forum on 8 September, each of these in their way is a telling reflection of a very ‘today’ phenomenon, a facet of what has been called our posttruth, post-trust age.

As described by Rob Weighill, soldiers in Libya found themselves not just protecting civilians, their official mandate, nor even fighting for their lives, but also having to make instant strategic choices in the midst of the operation that had ramifications far beyond the battlefield and their pay grade. At VW, noted Toby Rubbra, engineering managers dealing with emissions policies, under fierce competitive and performance management pressures, effectively had to make a similarly strategic choice: customers or shareholders? The Brexit vote, finally, was a massive kick up the arse from voters who had had it up to here with an elitist political system that had simply shrugged off their choices in last year’s general election and (Michael Gove was intuitively right) no longer trusted a word uttered by an ‘expert’, even when it was true.

Image result for protest outside westminster

The latter example was drawn by Robert Phillips, who quit top PR firm Edelman in 2013 to write a book about the industry self-explanatorily entitled Trust Me, PR is Dead. Phillips argues forcefully that the trust crisis is also a truth crisis, which traces back to fake leaders who believe they can camouflage their fundamental inauthenticity, the non-congruity of their words and actions, by spin. Yet the result of this obfuscation is always corrosive. As Weighill put it: ‘Strategic indecision combined with an absence of clear political vision forces strategy to be developed and enacted from the bottom up rather than the top down. Accountability becomes ambiguous, responsibility is forced downwards, authority drifts … and confusion reigns’.

So is trust dead, gone with Downton Abbey and the simpler age of deference and social certainty that fostered it? Is a trust-deficient society the inevitable result of human shiftiness – ‘the crooked timber of humanity, [out of which] no straight thing was ever made’ – now systematically outed by citizens, journalists and Twitterati, enabled by the instant global reach of social media?

Over the evening a more nuanced conclusion began to emerge.

Trust is an outcome of behaviour and action, not a message or something that can be created by CEO fiat. Likewise its opposite, mistrust, which is a rational response to cheating, lying and broken promises. There is plenty of research evidence to say that humans aren’t fundamentally liars, cheats or self-interested shirkers. But they are malleable, as the chilling results of Stanley Milgram’s 1960s experiments, referenced by Rubbra, famously showed. Expectation plays a huge part in behaviour, trust tending to breed trustworthy behaviour, while the reverse is also the case. (Hence the ‘supervisor’s dilemma’, in which close surveillance is observed to generate the bolshy behaviour that justifies not only the initial discipline but a further tightening of the screw.)

If lying, broken promises and muddle on the lines of our three examples are so prevalent in business and politics, we need to understand why they happen. Is there a common structure?

It turns out that there is. In any organisation, suggests Vanguard’s Rubbra, there is a necessary, although often neglected, link between purpose (with a small ‘p’) – what it exists to do for the people it is serving or providing for – and the measures, targets and incentives it uses to manage by.

In a strictly practical sense, how can an organisation judge how well it is performing if it doesn’t have an express purpose to measure performance against? Absent (as it often is) an unambiguous purpose, the measures that appear to matter most fill the purpose vacuum. These are often financial at the top level, sales or otherwise activity-based further down (make x sales this month, x calls today, see 95 per cent of A&E patients in four hours). There is thus a tension between the purpose from a customer point of view (solve my problem) and purpose from the day-to-day manager’s angle (make shorter calls even if they don’t solve any problems, ensure no one is counted as waiting more than four hours in A&E so find some imaginative ways of counting).

‘If, as Rubbra says, ‘you combine measures that distort behaviours with hierarchical power you end up with a really, really quite interesting, dysfunctional situation.’

W. Edwards Deming, the godfather of the systems approach, was thinking of this when he estimated that 95 per cent of the issues affecting performance were down to the design of the system itself and 5 per cent to the individual. As for dysfunctionality, he added that ‘People with targets and jobs dependent upon meeting them will probably meet the targets — even if they have to destroy the enterprise to do it’.

This of course is exactly what happened at VW, Enron, Lehman Brothers and many more. In Libya, as the House of Commons foreign affairs committee has just made clear in a damning report, differing views on the purpose of the intervention among NATO allies left commanders on the ground struggling to decide whether to prioritise civilian protection or regime change, as some national governments wanted. In the event, by using the former to cloak the latter, but without any of the planning for postconflict resolution that should have gone with it, politicians handed the military an impossible task and ensured that even the goal of civilian protection was unachievable. As actions diverged from promises, trust at home and abroad withered, creating the strategic vacuum now exploited by warlords and extremists of all stripes. In the very different context of the UK referendum on Europe, reckless promises over the aims of Brexit triggered a result with incalculable consequences for the UK economy – and possibly even greater ones for political society if, as now seems certain, some of outcomes voted for are mutually exclusive.

As Rubbra’s analysis suggests, one part of breaking out of post-truth cynicism is overcoming dissonance over purpose. This isn’t always easy.

In business, self-serving assumptions about maximising profit or shareholder returns often override customer concerns – one FTSE CEO quoted by Phillips started every board meeting with the question, ‘Who do we f*** today?’ In the military, as Weighill admitted, the high testosterone levels needed for battlefield success become an obstacle at head office when the job is reconciliation or nation building.

Nor can it be done by regulation or legislation (as the government seems intent on doing with proposals to make boards answerable for white-collar fraud, for example), which simply add to the compliance overhead while barring the door behind a long-departed horse. And regulation has nothing to say about the insidious but in the long term more debilitating problem of flagging workforce engagement, currently running at record low levels. As Phillips insisted, trust is created by actions, not words, and it has to come from internal mission. In the end, he says, ‘what we need is intelligently placed trust and intelligently refused trust’, and that can only be based on three simple elements: real honesty, competence and reliability of those in charge of organisations.

A second part of the remedy, building on the first, is reinforcement.

If trust feeds on itself, then the manager’s job is twofold: first, to recruit people who can be trusted to take initiative, collaborate and put the purpose first – who are themselves trustworthy. The second, in the words of LBS’ late Sumantra Ghoshal, ‘becomes one of designing an organisational context that encourages people to act in desired ways: away from free-riding and shirking to the exercise of initiative and creativity; away from selfishness and opportunism to cooperation and collaboration; and away from inertia and apathy to flexibility and continuous learning’. An interesting example here is the so-called sharing economy, whose proponents claim that the incentives it provides for reciprocal trustworthiness, together with the move from owning to sharing, could be the harbinger of a new, internet-enabled era of trust in business.

That’s as may be. But oblique and hard to achieve as it is, we should remember why trust is worth pursuing in the first place.

High-trust environments are inherently less rule-bound, more flexible and carry less management overhead in the shape of value-sapping compliance and monitoring activity. They are more pleasant and more creative to work in. Soldiers who couldn’t unthinkingly trust each other would be incapable of fulfilling their primary military task, let alone complex post-combat ones. And no one contemplating the turmoil of international geo-politics can avoid the conclusion that the inability of governments and voters to trust each other on what to do about Syria, Iraq and other global hotspots has left us with what Weighill called a ‘world of pain’.

Image result for british soldiers marching

Indeed, a post-trust, post-truth world might not just be unpleasant – it might be impossible to live in. ‘It is happier,’ said Samuel Johnson, ‘to be sometimes cheated than not to trust.’

The Foundation’s View

As the views coalesced but while they were still hot from the potato oven we found ourselves drawing three conclusions that might be useful:

1.

Not just leaders but all of us need to be honest about uncomfortable truths, and to understand the consequences of wanting or voting for or supporting an attractive sounding but flawed promise. What do we mean? Toby described the ridiculousness of ambulances queuing up outside the A&E Department of a hospital he worked with, doctors and nurses running between building and vehicle, while the patient waited on board. Why? Because once admitted the clock starts ticking, and the four hour maximum waiting time kicks in, with serious consequences for the people involved if it is breached. Of course the waiting time might be more than four hours counting properly, but that’s not what’s measured, and the fear of failure was now keeping ambulances tied up and unable to respond to more calls while energy and attention are diverted from what really matters – cared for and recovering people – to something that doesn’t.

Why was the target introduced? Because after one or two long waits and the associated horror stories someone said ‘this should never be allowed to happen again’. And everyone agreed. Well intentioned. But leading to the debacle above. It would have been more useful to say that this might indeed happen again – it is impossible to design a system that never has some probability of an extremely unusual incident. Sadly it is easy to change a system so it no longer works towards what ultimately matters, in this case getting injured people to feel better again as swiftly, painlessly and easily as possible. But would we accept ‘that might happen again’ as a message…?

2.

All of the issues described had in common confusion and obfuscation around the real purpose of the organisation or the mission. Some countries want to protect Libyan civilians, others want to kill Gaddafi, and they aren’t able to agree. So they set a mission and then try to influence to adjust direction. If you’re leading the mission with troops whose lives depend on you – both now, in the field of battle and later, when returning home to scepticism around perceived failure – how do you make decisions and follow them through consistently? As actions start to diverge from promises, trust at home and abroad withers.

‘In a commercial environment the same things happen. Publicly and in internal forums the customer comes first, but in smaller meetings where the real work is done it’s different.’

Getting approval for emissions performance on time and on budget comes first – profit, volume and market share are what matter most in practice. If you want to keep your job and your sanity you find a way to make it happen. It seems to be how it works around here. And the dissonance between advertising ‘Clean Diesel’ and producing diesel that’s quite deliberately and illegally dirty somehow diminishes. At least until it’s all exposed to daylight, when it becomes hard to work out why there isn’t a single evil individual behind such a clear-cut mis-deed. Mis-aligned purposes, overt and implied, caused the whole trail of events that followed. They established the system people were working in, and the system led to disaster.

3.

Aligning the purpose of what we all, as customers, workers and members of society want with the ways organisations operate seems just too hard. How can we reverse the assumptions around western business, politics and what we view as success? How can we move from the directly quantitative or unrealistically aggressive (defeating an enemy in Afghanistan for example) to something that starts with people and the relationships between them?

This is about changing a belief system, the invisible set of assumptions held by groups of people about the way the world works, that leaks out in the words we use, the offices we work in and plenty else we take for granted as ‘normal’. Beliefs move slowly. But 30 years before this Forum, we would have been in a smoke-filled room. Asking people not to light up would have been madness. Now it’s the other way round.

We are optimistic. We think the belief system is changing, from the issues we describe, towards something better balanced. It won’t happen in a linear way, and no one person can strike the decisive blow. But little by little, including from conversations like these, new ideas are becoming more confidently held. In 30 years’ time the world will work very differently in this regard

About The Foundation

The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth.

What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged.

We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value.

This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different.

By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success.

We most often answer three questions:

1. Developing new propositions

2. Improving customers’ experiences

3. Developing customer-led strategies for broader issues such as increasing retention or lifetime value

Our clients include HSBC, JLR, O2, M&S and ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth.

Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well.

This link will take you to more information about our  Forum events: http://www.the-foundation.com

Contact Details

Charlie Dawson (Founding Partner):

cdawson@the-foundation.com / +44 7785 268 859

Terry Corby (Partner)

tcorby@the-foundation.com / +44 7446 173 137
Twitter:

https://twitter.com/TheFoundation


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