Category: Topic – High Performing Teams

Why ‘Good Management’ is bad and ‘Mad Management’ is the answer

THE FOUNDATION FORUM

27th June 2018. WRITTEN UP WITH THE HELP OF SIMON CAULKIN

To download a PDF of this write up, please click here: Why ‘Good Management’ is bad and ‘Mad Management’ is the answer

steering

 

For a long time we thought the Earth was flat.  But if you’re faced with a mix of what looks obvious and what everyone else seems to be convinced by, you have to be a pretty strong character with an unusual degree of insight to go another way.

Let us put it to you that this same degree of mistaken herd-like belief applies to the way we manage our organisations and institutions today.  Maybe, instead of being a highly sophisticated super-species, we are still early in our evolution when it comes to running things with very large numbers of people in them.

Let us give you an example.  In most organisations this success is achieved by setting higher sales targets, promising people lots of money if they hit them and shouting at them if they don’t.  Which sounds obvious.  And it works too, for a while.  It only becomes tricky when the sales push goes beyond what can be comfortably achieved with willing customers.  At that point you get to high pressure sales tactics, manipulating people to get a yes, and then to targets like selling 8 products per customer and illegal ways to meet them because the consequences of failing, or the social difficulty of challenging the norm, are both more painful than the prospect of being found out.

Approaches that are literally accepted wisdom can become toxic. But this Forum wasn’t just about criticising.  We had a conversation containing hope, illumination, constructive suggestions and examples of success.

Our three speakers brought unusual ideas rooted in experience and the real world.  They weren’t idealistic start-up fiends!  They brought ideas that sound bold and unusual which in fact lead to sensible, useful and productive outcomes. We had…

 

Pernille Sahl Taylor, Chief Communications Officer at Swedish Bank Handelsbanken, which is 147 years old, publicly quoted, immensely commercially successful and utterly unconventional.  It is largely unheard of despite having 208 UK branches and a significant presence in six countries. Since the early 1970s it has been run very unconventionally by the standards of any business not just a bank.  It gives local branches autonomy within their area to choose their customers, decide what to lend, what to charge and how to staff up including dealing with all customer types, from individuals to small businesses to vast corporates. Handelsbanken has only one target – for return on equity to be better than the average of its sector, something the bank has achieved every year since 1973 – and beyond that, nothing.  No targets and no budgets because they believe these encourage unhelpful behaviour.  This is just the tip of a very unusual iceberg.  They are understated but we have much to learn from them

David Alexander, a Director at Centrica, former MD of their Home Services Division, and more unconventional than his titles might sound.  He has led innovation including the Uber meets Plumbing mash-up that is their Local Heroes service (https://www.localheroes.com/) and he has developed what he describes as the joy of imperfect management as a way to help people find their human common sense and confidence at work, another obvious sounding but rare occurrence.  Currently David leads a number of businesses in Centrica that resolve 550,000 plumbing domestic ‘emergencies’ and 600,000 heating breakdowns per year.

And our very own Simon Caulkin, the immensely respected business writer, who showed us why everything we know about management is diametrically wrong.  He is former Management Editor at the Observer, an early Editor of Management Today and a widely published commentator who we have known for many years, great at showing how what’s accepted is not what’s helpful, for business and for society too.

These are big questions but they matter assuming that we want to get beyond the equivalent of Stone Age management.  Where did we get to on the night?

 

Management Madness.  The discussion that followed, summed up by Simon Caulkin

From the sophisticated heights of the 21st century it’s easy to condescend to our superstitious ancestors. As Forum chair Charlie Dawson noted, time was when bien pensants would have shuddered at crazies who denied that the earth was flat, and it took a fundamentalist fanatic like Galileo to advance the self-evidently barking idea that the sun and not the earth was the centre of the universe.

Yet although we are massively better informed about the physical world today, future generations may marvel at our one-dimensional notions of our humanity, and in particular how simplistically, even dangerously, it uses them in management – the vital technology of getting things done in organisations.

They might wonder at the idea that management could be thought of as a science, like physics, and that the business cosmos revolved around the shareholder. They might think it weird that a discipline that presents itself as hard-nosed and pragmatic is in fact the opposite, based not on empirical research about ‘what works’ but on ‘what would work if certain assumptions were true’: the two most important being that the purpose of companies is to maximise shareholder value (‘the dumbest idea in the world’ – Jack Welch), and that all human beings are motivated uniquely by economic self-interest and opportunism. No wonder Prof John Kay once remarked that our knowledge of management was about where medicine was in the mid-19th century.

In different ways all three speakers at a well-attended and attentive late-June Forum took aim at the absurdly unrealistic view taken by conventional management of the human element in business.

 

For David Alexander, a director at Centrica, the target was perfectionist notions of leadership that put more people off than they inspire – which is ‘a great shame, because the reward in business is not from the few perfect leaders and instead from the many who choose to become good, imperfect ones’.

(There is heavyweight support for this position: Peter Drucker once said that organisations needing super-humans to run them could never survive, and Warren Buffett more cynically that you should only invest in businesses that an idiot could run, ‘because one day an idiot will’. The withering conclusion of top Stanford researcher Jeff Pfeffer is that most of today’s utterings about leadership have more in common with lay preaching than social science.)

Good imperfect leaders, said Alexander, have qualities that are recognisably and directly human.

They are inquisitive, alert to what people are both saying and doing, have the courage to act on less than complete knowledge, and behave as themselves rather than trying to be something they aren’t (he shrewdly noted that the ‘corporate twaddle’ that fake leaders talk is a reliable giveaway of inauthenticity).

The best imperfect leaders tell great stories too. ‘I don’t have a toolbox,’ he summed up, ‘because at Centrica toolboxes used to injure more people than anything else. In their place we have a tool roll, and in my leadership tool roll would be a badge, and on that badge it would say simply ‘how can I help you?’, to remind people to be inquisitive and listen with their ears and their eyes. There would be an egg timer or an hourglass to remind people to have the courage to be decisive, to make a good-enough decision soon not a perfect decision eventually. There’d be a mirror to remind them to be themselves and authentic, and there’d be a Nemo toy to remind us of the power of simple stories… By taking a more pithy human being rather than human doing approach we can all be great imperfect leaders.’

tools

The second speaker, Pernille Sahl Taylor, is chief communications officer at Handelsbanken UK, the branch of the Swedish group that is one of the fastest growing banks in Britain (not that this rate of growth matters to them, as we will see.  They are more pleased to have the highest customer satisfaction scores in the sector – nine years running according to EPSI who run an independent survey of such things)

Handelsbanken is distinguished as much by what it doesn’t do as what it does. It doesn’t do conventional marketing or budgeting, it grows without product or sales targets, and doesn’t pay individual bonuses. Says Taylor: ‘We have one simple corporate goal, which is to have a slightly higher return on equity than the average of our peers, and we achieve that by having lower costs and more satisfied customers. That is how we have run the bank since the early 1970s, and we have reached our corporate goal for 46 years in a row.’ Part of the excess is shared equally among all employees.

Handelsbanken’s secret is hidden in plain sight. It employs people who like to do banking and trusts them to do what it takes to make customers happy.

It opens new branches as and when it needs to in order to satisfy customer demand, and when it has enough good employees who are able to do it.

Handelsbanken’s equivalent of the ‘tool roll’ is a church spire, the view from which defines the area a branch can serve. The bank is the branch and the branch is the bank, with full decentralised responsibility for choosing customers, products and the rates it offers. Headquarters offers support and, crucially, guardianship of a guiding philosophy founded on a positive view of human nature: when Jan Wallander, the architect of the modern bank, wrote a book about it, the title was ‘Working With Human Nature and Not Against It’.

church

It sounds simple, and it is – but it is a sad commentary on contemporary business that, like the idea of imperfect leadership, it is also extraordinary and exceptional in today’s world, inspiring puzzlement and cautious admiration among other organisations – but not whole-hearted imitation.

Handelsbanken is not alone in this, pointed out Simon Caulkin, journalist and business commentator (and also of course, author of this note!)  In many industries there is a company like the Swedish bank that thrives mightily by doing the direct opposite of its conventional rivals. Call them ‘positive deviants’: Toyota, Apple, W.L Gore, Semco, Berkshire Hathaway… the list goes on. Why is the lasting success of such exemplars – which is neither fluke nor conceptually hard to understand – so consistently ignored and marginalised by the mainstream?

The only answer is that the underlying assumptions are so profoundly different that holding both in your head at the same time is impossible. You can’t get from RBS to Handelsbanken, or from Ford to Toyota, by incremental means: the roads lead in different directions.

Yet it’s the exceptions that are right – organisational Galileos or Copernicuses – and the mainstream that are the successors to the flat earthers of the 17th century.

It’s no exaggeration to say that the things wrong with our organisations – oppressive hierarchy, lack of trust and engagement, petty regulation, burgeoning bureaucracy, mediocre performance (pretty much everything, in fact) – are the result of trying to cram the crooked timber of humanity into the reducted equations of shareholder capitalism.

Alexander noted that many in his organisation, Centrica, especially the middle managers, didn’t initially feel at all comfortable with his Local Heroes initiative ‘because it was something beyond its command and control, a fundamental challenge to the organisation, so they tried to smother it with governance and all the rest of it. It was really difficult, very energy sapping and while well-meaning, it almost proved terminal’. In the same way fear of losing control prevented it handing more autonomy to skilled engineers even though they imposed tighter budgets on themselves than the organisation did. ‘The organisation can’t handle that free spirit. It worries about the few bad apples, so the whole thing is structured to manage that exception rather than the rule.’

Here in a nutshell is the reason why bureaucracy always increases, bullshit jobs multiply, new technology is used for job control rather than liberation – and management, unlike other disciplines, never gets better, just more complicated. Hence Peter Drucker’s famous lament that ‘so much of management consists of making it difficult for people to work’.

Here also is business’s very own version of Catch-22: to build a high-trust, low-cost organisation like Handelsbanken is eminently sane; but since it is so unusual, and it appears to involve giving up control, it’s crazy and you can’t do it.

And most companies don’t. As Taylor stressed, such a structure ‘comes with great flexibility, but also great responsibilities’ – one of which is to employ only people who fit. ‘It’s not for everyone. But we aim to employ people for a long time, so we take great care to find people who share our values… It’s like a big orchestra. If someone is playing the wrong tune it’s easy to spot – but you have to deal with it’.

This is is danger of sounding easy, and perhaps once you’re in this logic, it is.  But for most companies it’s the hardest thing in the world. The danger, of course, is that considerations of what is ‘sane’ and ‘crazy’ become normative and thus self-fulfilling. Unlike in the physical sciences, in human affairs beliefs can create their own reality. Sufficiently widely shared and used to shape how we think and act in their societies and organisations, such definitions and theories can harden into self-fulfilling prophecies, trapping organisations and leaders in sterile or harmful cycles of behaviour that are almost impossible to change. You can see it happening in our frozen organisations now.

The antidote: memorise the contents of the tool roll, and the church spire. Repeat to yourself at least five times a day: everything we have learned to think about management is wrong. Take heart from the great physicist Nils Bohr, who after a particularly contentious seminar observed: ‘We are all agreed that your theory is crazy. The question that divides us is whether it is crazy enough to have a chance of being correct.’

 

 

The Foundation’s view

Strong views then.  As the smoke cleared, what were we left concluding from the evening’s slaying of sacred cows?

  1. At the root of this issue are the shared beliefs we have come to hold about work and how it is done. Shared beliefs are powerful and invisible.  We are social animals and we are good at fitting in with a group, supressing what we might believe individually in favour of what seems to matter collectively. Changing shared beliefs is very difficult for one person and it usually happens over many years with many separate ‘moments of belief’ – belief-changing actions that show there is a better way.  Think apartheid, suffragettes and #Metoo.  On an everyday level what gets most firmly in the way is our fear of looking silly – of being laughed at and not accepted by the group.  It sounds small but it is huge.  So what David described was fascinating.  He has learned to do things in effective but unusual ways, human ways, in a large and conventional organisation.  The key seems to have been finding a label that legitimises unusual ways of behaving in the eyes of people holding the prevailing beliefs.  So he calls his approach imperfect leadership, recognising that it deviates from the accepted view of what’s right, and he then labels four simple-sounding ways of doing things that are each a way of being ‘human’ at work – for example making decisions with 80% of the information 100% on time as a prompt to make progress and make mistakes, and for that to be fine.

 

  1. Simon described things from the other end of the telescope, the very big picture. His realisation was that organisations work as complex systems, but conventional ‘good management’ works at a more simplistic level – direct inputs leading to successful outputs.  Simple inputs and outputs sound logical – they make sense to us individually.  Are waiting times too long in A&E?  Then set a target to reduce them and penalise people if they fail.  In a simple world that would work.  But in a system it’s more complicated than it looks – the reason the waiting times were long wasn’t that the people involved were lazy or stupid and in need of a push.  There are numerous things outside their control that contribute.  So given a simple target, penalties for missing it, and little control over, or even understanding of, what it would really take to achieve the outcome, all that’s left is manipulating the work and the measurement to hit the target.  For example keeping patients in ambulances until the A&E team is ready because the clock only starts when they move from ambulance to A&E.  Quick fixes litter our world – simple promises, attractive and logical, that are impossible to fulfil because they miss the bigger systemic picture.  Like Brexit and £350m to the NHS perhaps?  Quick fixes are an important enemy in this discussion

 

  1. Before you despair, there is a better way. Not natural because of our habits and instincts, as above.  But human AND effective, at a whole-organisation level.  Pernille described what this answer, not ‘the answer’ she was careful to emphasise, can look like.  Handelsbanken is more than 160 years old but since the early 1970s it has operated in a very unusual way.  Central to this is a stated belief that became shared.  It is a belief in people and that an organisation set up to work with human nature and not against it will work better.  This means trusting – assuming that people want to do the right thing and that if they have the skills, the information, the support and the tools they need, then they will do a good job.  In a bank this meant decentralisation – putting branches in control, within small geographical areas, of who their customers are, what they are charged, what lending is offered and on what terms…  And this means ALL customers.  If your area includes 500 individuals, 40 small businesses, plus Shell and Unilever’s HQs, then that branch handles the lot.  All of Shell’s banking, all of Unilever’s banking, and the small businesses and private individuals too.  So the branch has to staff up accordingly.  ‘But that’s mad’.  Yes, in conventional terms it is.  But it’s better. The fascinating thing about what Pernille described is that even at Handelsbanken, after nearly 50 years of success and 50 years of deepening shared beliefs about the way the bank operates, it is somehow still un-natural for things to just stay this way.  There is a gravity pulling us to the simplistic quick fix, and it takes conscious and determined resistance from the leadership of the bank to, in their words, keep pushing the cork back into the bottle of water.  ‘Moments of belief’, in our language, are what do it – specific actions that show that the unusual way is still the way that works and the way things are done around here, like asking a team member to stop keeping track of how many credit cards each branch has sold because human nature will lead to competition between branches.  And that will in turn lead to a shift, from only doing what matters to customers to doing what grows volume instead.

 

About The Foundation

We are 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 around the natural and limiting inside-out beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success

We answer three sizes of question:

  • Small – a new proposition or an improved customer experience
  • Medium-size – growing value per customer or improving retention (a sub-set of the former)
  • Large – creating customer-led business success, often by uncovering a true outward-looking purpose and the genuine belief needed for it to be acted on

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

Charlie Sim (Director)

csim@the-foundation.com / +44 7958 574 917

Anna Miley (Director)

amiley@the-foundation.com / +44 7816 261 987

John Sills (Director)

jsills@the-foundation.com / +44 7990 943 402

 


Why Diversity is Difficult – Plus what it means and why it matters

THE FOUNDATION FORUM

31st january 2018. WRITTEN UP WITH THE HELP OF SIMON CAULKIN

To download a PDF, please click here: Why Diversity is Difficult – Plus what it means and why it matters

The aim of this Forum was to get beyond the blather about diversity.
Genuine diversity is a difficult thing to live with. A united team just flows. When the awkward squad gets involved the temperature goes up, exasperation grows, debate intensifies, progress slows. Diverse views are often unwelcome.

‘They make you stop and think, they make it hard to agree. We’re wired deep down to go with our own. We’re social animals and if someone looks or sounds or behaves like they’re from a different tribe we can’t help our dog brain kicking in, telling us to beware.’

It might be a social effect but it’s not a helpful one for society. To be tolerant, peaceful and happy we need free expression, choosing what we love because we won’t appreciate everything, but not closing down what we don’t. This can be tough when views are distasteful, challenging values held dear. There need to be boundaries, but how are they set and policed? Who decides what is useful dissent? When does an argument poison society more than it adds in resilience?

‘Like we said, it might sound all sound obvious but it is anything but.’

So we asked three people with vivid experience and well thought-through views to share them with us. Our aim was to add depth to the nodding of heads and a counter-point to the divisive politics of our age.

Jan Gooding is at the heart of diversity’s main roads and in a position to influence the establishment. She is Aviva’s first Global Inclusion Director leading on their diversity and inclusion strategy. She is also Chair of Trustees for LGBT charity Stonewall.

Ije Nwokorie was until recently CEO of global creative consultancy, Wolff Olins, in an industry with strong white middle-class male tendencies. He has been successful in a very human and personable way, despite the odds being stacked against him.

Jodie Ginsberg is chief executive of Index on Censorship who exist to promote diversity of views no matter how tricky this is in the countries their work takes them to. She has argued against student unions and in favour of hard-line religious speakers being allowed on campus because free expression is not just about embracing safe, comfortable debate. She has thought deeply about where society’s lines should be drawn if we want a tolerant and open world.

So did we find meaning beyond cliché, sense in sensibility? Did we emerge with guidance to help our grappling with reality? Simon Caulkin has summarised where we got to on an evening of enlightenment and the odd challenge too‘It’s a tricky subject’ warned the chairman.

Too right. ‘Jesus, do we really need another report on this?’ exclaimed the first speaker crossly. ‘Ugh,’ grimaced the second, reporting his wife’s reaction on hearing the subject of his contribution. ‘Talk less.
Listen more. Thank you’, was the concise summing up of the evening’s lessons by the third.’

Phew. At first sight the heat engendered was surprising, given that the subject of the January Foundation Forum, one of the most revealing and challenging ever, was diversity. And if there’s one thing that you won’t get anyone to say anything against these days, at least in public, it’s diversity. It’s so politically correct it aches.
‘And that, it turned out, was one of the things that made people cross.’
We really don’t need another report saying that firms with diverse leadership and people are more innovative, grow faster and are more profitable, declared Jan Gooding, Director for Global Inclusion at insurer Aviva. Just do it.

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Ije Nwokorie, until recently CEO of brand consultancy Wolff Olins and now at Apple, rejected the very idea that you needed a business case ‘just to give people just a chance to survive in our organisations’. It’s not that it’s not important: we do need strategies and arguments – but that’s what makes it a tiresome, even ‘skin-crawling’ subject to deal with. Oh, and he wasn’t going to answer the questions the chairman had posed in setting up the session – what it means and why it matters – but simply tell some stories. (Although it turned out these answered the questions rather well)
What got up the nose of third speaker Jodie Ginsberg, ex-journalist and now CEO of Index, was a variant on the same thing – the tick-box approach that assumed that once the ‘correct’ ratio of colour, gender and sexual orientation had been complied with, that was it, job done. For Ginsberg the main challenge was something box-ticking doesn’t get near: ‘how do we marry corporate culture and a homogenous value set with a tolerance not just of race, religion, gender and sexuality but also of opinions?

‘How do we live with people whose political opinions are different from our own?’ Good question, which we’ll come back to later.’

For Gooding, a marketer who is also currently Chair of Stonewall, the LGBT rights campaigning charity, the commercial issue was relatively straightforward. At Aviva, she said, it was quite important not to come at diversity from an ethics and human rights angle. Aviva is a 21st century, technology-savvy insurance company dealing with customers who have suffered misfortune or who want to manage risk of some kind. ‘So what I said was that in
a digital world where we want to work fast, we have to be effortlessly in tune and empathetic. It doesn’t work if we’re just one type of person – and insurance people are of a kind, I can tell you’.
But while being different is important, people also need to feel they belong to the culture being created, because that’s when they enjoy their job and give of their best – which is at least 5 per cent better than those not so engaged. ‘So I’m afraid there is a nasty capitalism productivity argument’. An argument moreover that she could attest to personally. Not long after coming out as gay she joined Aviva and was advised to go back in the closet, which she did, and
‘I’m telling you it was absolutely untenable. It affected my performance by much more than 5 per cent’. So she came back out again.

stonewall_2
Then a little while later she was asked to be Aviva’s first Global Inclusion Director, and first on the to-do list was managing the fall-out. ‘There is a backlash. Even though I was careful to say, no, I’m not diversity director, I’m inclusion director, I’m here for everyone, men aren’t the problem – everyone is a minority in something. But someone somewhere thinks you’re taking something away so there will be a backlash’.
Nwokorie’s arc was just as revealing. Nigerian-raised, architecturally-trained in the US, entrepreneurial, he found himself at 34 harvesting plenty of job interviews but no offers – not, he insists, because of racism, more because people couldn’t think what to do with someone so difficult to pigeonhole: ‘We just don’t think you’ll fit’.

 

The world changed when Robert Jones, in charge of strategy at brand gurus Wolff Olins, decided that this was precisely the reason why Ije should be hired. ‘I think what got Robert and people at Wolff Olins excited was that they understood organisations needed to change, and if they were going to change they had to become less and less like what they already were,’ is how Nwokorie described it. That wasn’t (and isn’t) the norm for companies, or society, for that matter, for the good reason that it ran against the grain not of race but of tribe.
The tribe allows like to identify and bond with like (its strength), but by the same token it is also a powerful mechanism for sniffing out and rejecting potential threats to the integrity of the system.
The characteristic was of fundamental importance for industrial-age companies. In these times competitive advantage came from consistency, stamping out identical goods time after time. For this, the job of the manager was to ensure compliance.

Contrast that with today’s digital world where the differentiator is creativity, and creativity feeds on a multitude of diverse sources and ways of thinking. ‘I don’t care about another McKinsey report – for me that is the entirety of the business case for getting beyond uniformity,’ he said. And as with Gooding, it’s a case he has lived out himself. Three years after joining Nwokorie was running Olins’ London office. After seven he was global CEO, and Wolff Olins is now the dominant brand consultant in the UK and the west coast of the States. No one would argue that hiring a self-described ‘six-foot black guy wearing a lot of leather with a strange Nigerian/American accent, a booming laugh and comically exaggerated hand gestures’ wasn’t a brilliant decision.

Index Against Censorship, which Ginsberg runs, is a campaigning organisation that was created in 1972 to help artists trapped behind the Iron Curtain find the oxygen their work deserved by giving them an audience in the west.
Its central purpose is standing up for free expression. Her observation from direct experience is that ‘diversity is great until someone disagrees with you’. This is an angle that leads very quickly out of the comfort zone. It’s not just going beyond the tick box – although Ginsberg remembers with discomfort being taken to task for failing to realise that an apparently diverse panel she had put together faithfully reproduced in its composition the power structures that it was supposed to challenge. ‘It’s not even just saying we’re tolerant of your colour, gender and sexuality: it’s saying we recognise that you bring your whole person to the job. And sometimes doing that means you bring ideas and opinions that your co-workers disagree with.’

When that happens, how do you reconcile a strong corporate culture and values with the right to disagree? This was the issue at the heart the famous Google case, when engineer James Damore stirred up a hornet’s nest by querying the value of diversity initiatives when women and men had congenitally different aptitudes (incidentally, something recent research contradicts). ‘Google showed its tolerance of diversity by sacking James Damore. Now I’m not saying that I agree with his opinion on women,’ Ginsberg went on.

‘But asking people to suppress their opinions doesn’t make them go away. I do think as organisations we have to think
about better ways of handling the fact that other people have different opinions and may not always agree.’

It’s a key question that evoked suitably diverse reactions. Gooding warned of the danger of retreating into holier than thou purism, and of the need to accept that living with difference isn’t always comfortable:

‘You have to be prepared to offend, you have to be prepared to be offended. You have to cope with people’s rudeness. This is deeply personal’.

But only up to a point: the greater good demanded that there had to be red lines, and beyond them the cause
of inclusion might entail exclusion of those who couldn’t accept it – a tough leadership decision. She nuanced it with a plea for the benefit of the doubt, concluding impatiently: ‘Let’s calm down once we’ve got some diversity and inclusion in the mix and then get the prize, which is the creativity, the ideas and the new world that we all want to
have, because actually that’s what this is all about.’

Nwokorie confessed that he’d have probably done the same thing as Google – not necessarily because it was right ‘but because I would have been livid that somebody in my organisation thought fit to express the view that half of our employees are not up to the job’. But he set the comment in a wider context of privilege: the need for men in general to face up to the conditions they have created for women in the workplace, and in particular for straight white men to recognise that wherever they are, it is not at the bottom of the social heap. ‘So they can bear with the gay and black people and the women for a while, while we address the imbalance of hundreds of years. I’m a big fan of #MeToo, and if a few men wrongly get accused I think that’s collateral damage as we address these important things’.
Other important questions came up in the discussions, But in the end, perhaps the most telling argument in favour of diversity was the Forum itself, which in raising questions, half answering them, disagreeing, doubling back and reframing them, acted out the issue in a way it is difficult to do justice to here.
Opinions differed – naturally – about causes for optimism, or the reverse. Everyone agreed that to call it a tricky subject was a huge underestimate, and to make diversity work in practice is a test of leadership and self-scrutiny that everyone must face up to, bar none. But it was hard not to feel that the evening was part of the process of working through it, which was why it was both compelling and, finally, hopeful.

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As the chairman summed up, we’ve reached a point (in the world not the Forum) where we seem to be shouting at each other from greater and greater distance and understanding each other less and less. Yet ‘actually in business you’ve got a chance. You’re close enough to find out a bit more and listen a bit more, and of course it’s hard if you’re under pressure from the media or colleagues getting pissed off and shouting that you need to act or what have you. That’s maybe where you need to be strong and try and find some firm ground to stand on’. Maybe that’s where this kind
of discussion, in rehearsing the arguments, helps most profoundly. It feels we are a little bit nearer working this all out. And we didn’t even mention Brexit (until now – doh!).

 

THE FOUNDATION’S VIEW

So where did we come out? The three biggest things from where we were standing, not quite in the speakers non-matching shoes but ever so close to them, were these:

  1. As Ije described, diversity matters because as we move from an industrial to a digital age what it takes to win moves too, from sameness as in mass production, to creativity where difference counts
    Creativity can literally be described as putting familiar ideas together in unfamiliar ways. So if you want to increase the odds of an organisation being creative then putting people familiar with different ideas, beliefs and influences next to each other creates at least one part of the conditions for success. The start of a business case for sceptics perhaps?
  2. As Jan described, inclusion is a much more useful idea to act on than diversity. An inclusive business will find itself becoming more diverse because people beyond the original core find themselves feeling they fit, and able to do their best work as a result
    A  team of similar people will find it easy to get on, comfortable to work together, nice to be with. But when did comfortable lead to some kind of breakthrough? It’s not easy putting a new team together or starting a new business – chaos is an enemy and finding some kind of traction means aligning people, creating common ground. But there comes a point where order becomes the enemy not the friend, assuming you also have the skills to make the most of the raw material – inclusive leadership and a sense that as a team member I feel like I belong.
    In fact measuring this inside Aviva was at the head of the plan for Jan’s ways of assessing progress, not the more common tick-box lists of particular minority groups
  3. And then we had our final question, asking whether the panel would have done the same as Google and sacked James Damore. Jodie’s response showed being genuinely inclusive can go against your most immediate instincts
    Mr Damore’s views were distasteful to many, and definitely not inclusive in spirit. The most common visceral reaction might be outrage or similar, and that gets amplified by the wider popular response – upset people across departments, social media rage, a media campaign… But that doesn’t make it right. Free expression isn’t limited to views that are the same as the majority, even if you happen to be in the majority yourself and believe you are ‘right’. What Jodie described was a more tolerant response – space for the view being expressed and curiosity about what led to it being held.
    This means putting yourself firmly in other people’s shoes, maybe assuming good intent but a different set
    of beliefs from a different background, upbringing and life experiences, leading on to a search for at least some common ground and respect for difference. The opposite in other words to the discourse we’re having now around issues like Brexit where the two sides shout more and more loudly from greater and greater distances apart, with zero increase in mutual understanding and respect. This was very counterintuitive. It clearly requires emotional control. You might call it inclusive leadership

 

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.

Contact Details

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

Charlie Sim (Director) csim@the-foundation.com / +44 7958 574 917

Anna Miley (Director) amiley@the-foundation.com / +44 7816 261 987

John Sills (Director) jsills@the-foundation.com / +44 7990 943 402


Reconnecting Managers with the Real World – Why hard, why crucial, why now and how

THE FOUNDATION FORUM

16TH november 2017. WRITTEN UP WITH THE HELP OF SIMON CAULKIN

To download a PDF, please click here: Reconnecting Managers with the Real World – Why hard, why crucial, why now and how

Losing touch is the easiest thing in the world on a personal level. It’s also remarkably common at work. It’s hard enough to stay in tune with customers and colleagues. It seems harder still to stay in touch with the mood of the nation. If the people in charge of the nation’s institutions prioritise themselves, feathering nests, looking out for their own, then unsurprisingly, eventually, support wanes. If at the same time organisations we buy from and work for treat hitting the numbers as everything with people’s wellbeing a bonus at best, despite the good words on the website, you can see how a country might start coming apart at the seams.
So managers are evil? That may be a bit hasty. Any group of people who spend time working closely together develop a shared view of the world and common beliefs about what matters. As social animals we’re good at fitting in with our tribe. What it looks like from a distance, standing in other people’s shows, is hard to empathise with, at least without deliberate effort. Out of sight is out of mind. No one means to become out of touch – it happens naturally. So what can be done? And is there more to this than the thoughts above?

“Almost certainly, and so we asked three people to share their views one dark November night, people who know about the boardroom and about the real world, people brave and honest enough to say it how it really is. They were…”

Rita Clifton, who has a long and strong-speaking background in brand and communications with Saatchis, Interbrand and now as a Non-Exec at Nationwide,
Asos, Ascential plc and Populus. She has also served on boards including Dixons plc, BUPA and Emap plc. She has publicly challenged high pay (and some highly paid individuals), and is closely connected to the world of the customer and to issues faced by society more broadly. She saw environmental challenges coming in the late 80s and started to urge the business world to act. Now, a scarcely believable 30 years on she’s just as vocal and even better informed, seeing what to be inspired by and what to worry about from groups of leaders around Board tables and groups of ordinary people around the world.

Danuta Gray, ex of O2, now sits on the boards of Aldermore, Direct Line Group, Old Mutual and at the Ministry of Defence. O2 in its prime was famously and customer-led, pioneering all sorts of industry changes in a bid to make the world of mobile work better for the people it served and better for the people who worked there. It took bravery and conviction, qualities she brings to her Non-Executive roles. From these experiences she feels strongly, and more than ever, that it’s essential always to have customer and people on the Board agenda.

And Anthony Hilton, a business journalist and writer who speaks as he finds and whose honesty and experience led to early calls that all was not well on the subject of which we plan to speak. He is at his paint-stripping best around issues like this, and he’s been banging on about the risks of business leaders remaining in their own over-paid bubble for many years. He’s challenged leaders directly and seen occasional outbreaks of common sense, but more often it’s been pointing out that what feels wrong is indeed wrong and foreseeing the issues that follow.

So what did they say? And where did the discussion take us? Can the country be put back together again? Simon Caulkin has summarised where we got to, which was arrived at via a strikingly bold and challenging discussion.
It’s the paradox of the age. Never have we been more connected. Never has so much been known about so many by pollsters, marketers, probably governments and also crooks. We quantify ourselves and almost everything else.
Yet the age of Big Data is also the age of the Big Disconnect. Elites from the just-about and really-not-managing. Politicians from voters. London and Washington from their hinterlands. News media from those they aim to inform. And business from customers and workers.

“The speakers at The Foundation’s November Forum on ‘reconnecting managers with the real world’, in a conversation that was both fascinating and sobering, all agreed that business and the people it serves increasingly appear to inhabit different planets.”

‘The values that business executives run on are increasingly divorced from the values of society’, observed the Evening Standard’s Anthony Hilton, the gulf between the two neatly reflected in, and exacerbated by, the widening pay ratio between CEOs and the average worker. The pay disparity between top and bottom currently stands at 140 times, compared with 33 in 1984. The resulting evaporation of trust in business, was indeed ‘the elephant in the room’, according to brand guru and experienced non-exec Rita Clifton.

It is one that many boardrooms have had the utmost reluctance to acknowledge and the panel described the way some boardroom conversations were capable of making them cringe. ‘Most people don’t live in the bubble that those making decisions about their lives inhabit. There is a disconnect that has got greater and greater as the years have gone on’ confirmed Danuta Gray, also in demand as a non-exec as well as being a member of the Defence Board at the Ministry of Defence.
Business people like to tell each other that they have a communication problem. No, said Clifton: the problem is that they do alien and unacceptable things that distance them from the society of which they now seem only nominally a part.

women-in-leadership

Evidence of the divergence is everywhere. Business people often look and sound different from ordinary folk, noted Clifton, their strange jargon sometimes reflecting the linguistic strain of trying to euphemise the unjustifiable. Banks and telcos unwittingly demonstrate what they think of their customers by placing their service centres on the other side of the world. Ignoring the evidence that many people prefer humans to machines, retailers and airlines automate check-ins and check-outs, and governments boast of making their services digital by default, irrespective of human cost – see Universal Credit.
Boardroom discourse centres on the numbers, share price and City opinion, pointed out Gray, which is also how success is measured, while customers and workers who make it happen barely get a look in. According to Gallup, the thing most people in the world want more than anything else is a steady job and a paycheck. Yet work gets ever more precarious and oppressive (think Amazon, Ryanair, social care), and as Gray noted average pay has lagged behind economic growth for the past three decades.

“In other words, the disconnect with business is not an illusion. We’re not stupid. Interests have diverged. What’s good for business is no longer necessarily good for society as a whole.”

How this happened? Several hypotheses emerged. Hilton noted that fear and loathing largely centred on large and remote public companies, as opposed to the local shop or enterprise – an important distinction. Among the former, herd behaviour and fear of standing out from the crowd play a part; Paul Polmans – leaders who are willing, like the Unilever CEO, to speak up for sustainable, inclusive business – are rare. Clifton felt that issues of high – and low – pay could be difficult to discuss in many or most boardrooms. A generally macho, aggressive business culture didn’t help. As Hilton remarked, business is a game played by alpha males to norms devised by men, to which many women understandably decline to submit themselves. ‘On that basis many people get to the top not because they are the most talented or aware or sophisticated, but because they are best at corporate infighting, or luckiest, or both’.

A weightless economy coupled with an abject race to the bottom in national tax regimes has allowed large corporates to swerve taxes for which everyone else believes they are liable. And Hilton described a version of Gresham’s law
in which bad business methods drive out good – a prime example being the rapid spread of unscrupulous sales tactics by banks and derivative houses chasing seemingly unlimited profits in the early 2000s, culminating in the great crash of 2008. If you acted responsibly your figures looked poor next to competitors who didn’t play by the rules. Pressure was applied to the good guys to behave like the bad, who didn’t get found out until years later.

“Because questions weren’t asked about how such good news was being generated, we sowed the seeds of bad business. And it’s still happening now. Just as striking is the adoption by recent Silicon Valley ‘unicorns’, copiously backed by venture capital, of business models incorporating tactics clearly bordering on the unlawful.”

The big unsaid here, as hinted at by both panelists and questioners from the floor, is the doctrine of shareholder-value maximisation, which despite increasing criticism from outside business still holds hard-to-question sway in most boardrooms, at least in the Anglosphere. By demanding overriding allegiance to capital markets, and by linking executive pay to this narrow result, current corporate governance orthodoxy is itself responsible for driving a wedge between executives and other stakeholders. At the same time it both legitimises the behaviours that have fostered the great disconnect and creates a formidable vested interest behind the status quo.
‘Although a lot of chief executives I know are well aware of the problems and can articulate them better than I can, whether they will follow through with embracing the wider stakeholders is another matter. Ultimately their personal financial interest is against change,’ reflected Hilton. ‘Does this mean the gap is now so wide as to be unbridgeable?’

No, said the panel – although for all the above reasons doing so may be painful. But a burning platform is a powerful motivator for change: ‘Human beings only respond to catastrophe, and what has happened over the last year socially, politically, economically has certainly been a catastrophe. This is one good thing [that may come out of it],’ opined Clifton. One unexpected ally is social media. ‘I mean, you used to be able to rape and pillage with impunity, but now it’s out there so you can’t get away with it,’ noted Hilton. Turning it round, transparency mandates authenticity: ‘You can’t be a fat, lazy and evil business and cover it up by spending a ton of money on marketing and communication,’ added Clifton. ‘This is good.’
Perhaps ironically, the strongest argument for an impending break with the past may simply be that the pendulum has reached the end of its swing. Changing economic and working conditions are dramatically shortening the life cycle of the traditional large hierarchical public company, Hilton suggested. Too inflexible to cope with the new world of networks and distributed information, it is being left behind by flatter, fleeter, more fluid organisations in better sync with the needs of individuals and today’s evolving society, and thus ‘perhaps better able to avoid the mistakes of the past’.

busy-street

This tallies with wider research showing that in both the US and UK the population of publicly quoted companies is in decline, having more than halved in the last 15 years – a finding that to many suggests that the short-termist, stock-exchange driven prescriptions of Wall Street and the City of London are simply not conducive to long-term corporate survival.
But even if the Darwinian thesis is correct, human effort is urgently needed to hasten the new age into being. As Stanford’s Jeffrey Pfeffer, a dispassionate observer of power in organisations, has put it, getting the powerful to do good is above all a matter of getting more of the good into power.
The case for gender (and other) diversity is incontrovertible – all the panel agreed that more women in the boardroom is a pressing necessity. Gray signalled that boards need to be uncompromising in their choice of leaders as well as how to reward them. ‘Having a leader who is genuinely curious and passionate about putting the customer at the heart of decision-making, and who also understands that to get great service you have to treat your own people really well’, had to come before financial track record in the selection, she insisted.
If we want a better, more inclusive business world, then responsibility is inclusive too. ‘Whatever capacity we work with in business, if it’s to do with driving diversity then we should own that personally. If it’s to do with challenging the thinking in a boardroom, then do that,’ she urged. ‘We should each reflect on how we consume goods and what messages we give to business by what we allow them to do on our behalf versus what they shouldn’t do; we should all take personal ownership of this as well’.

THE FOUNDATION’S VIEW

So we did we make of it all? The three points we took home with us at the end of the night were these, some of which Simon has drawn out above.

  1. To really change the situation might take a catastrophe, which would explain what’s going on now and why it isn’t necessarily a bad thing
    As Rita said, we only make really big changes when we’re faced with disaster and there seems to be no other way. Danuta described the need to force it, to push hard and confront some of the dissonant behaviour going on. The panel seemed to feel there were often fine words about purpose and values, but then self-serving behaviour in remuneration committees and the Executive Suite (we’ll come on to language in a minute!) The force is needed because we seem to be stuck in some kind of social glue. Carefully crafted language is used to explain outrageous decisions, such as what leaders are paid (as Anthony said, CEOs were paid 33x average salaries in 1984 and 140x now). The precise-sounding waffle makes the situation justified enough to allow the practice to continue, but it doesn’t convince anyone really.
    Then we get plain speaking outsiders – think Trump and Farage – who talk in words that make sense even if the ideas behind them aren’t sensible. In a world paralysed by politeness, being forced to confront some of the catastrophic decisions that come from their rise in popularity will shake-up the status quo. Only when a current situation becomes untenable do we invest completely in creating a better alternative. The NHS and the European Union came out of the last World War. Let’s hope we use the unfolding crisis well before we need another battle on that kind of scale.
  2. Changing the conversation, literally, is a much more crucial part of this challenge than it sounds
    The reality of the Board Remuneration Committee was described, including the fear of looking silly in challenging the easy conversation to do more of the same. It sounds like it shouldn’t matter but we are social animals and it literally hurts to be excluded. Despite some progress on diversity, diverse views are difficult to embrace.
    The language we’re surrounded by shapes our perceptions of what’s going on. As Anthony described, the media and the markets respond only to numbers and don’t question how they are achieved. So the business smashing sales out of the park without integrity puts massive pressure on the lower performing competitor doing the right thing. It is far harder for them to justify their approach than for the charlatans who might or might not get found out years down the line, bonuses banked, hero status enjoyed.
    We explored measurement and interestingly it is possible to measure the beliefs, or the discourse to give it a more precise anthropological term, of an organisation. Linguistic Landscapes http://www.linguisticlandscapes.co.uk/ is a company doing just that, and for leaders who want to make a change, something that holds a mirror up to people’s conversations can give a means to steer with a little more skill.
  3. Fashion in business may have a part to play, with a new kind of leader becoming an aspirational role model for the next generation
    Part of the problem with money is that it becomes a proxy for status, and given the human quality that more status is good, more money becomes the aim whether or not you already have so much that you couldn’t possibly spend it all.
    The focus is on the peer group in the race, not on what the race looks like from the stands. Individuals have bucked the trend. Richard Pennycook when he was CEO at Coop had to lead the difficult and painful turnaround from a proper disaster to something true to their values and commercially sustainable. But what stood out was his request in April 2016 for a 60% pay cut – he explained that the job had been very intense and would now be less so, and so he should be paid accordingly.
    Paul Polman has tackled other parts of the problem, announcing on his first day as CEO that Unilever would abolish quarterly reporting because it was unhelpful in building a business to succeed in the long term and in the right ways. He reasoned that his first day was the one on which he was least likely to be fired.
    What we need is for this kind of behaviour to start to equate to status, for leaders who do the right thing, who call out the system where it is failing us and take action not just say stuff to be the most admired of the lot. If enough of our next generation find this kind of leader, this kind of choice and this kind of organisation aspirational then maybe our human instincts can take us to a better place. Smoking used to be cool. These things can change.

So the situation is tough. But to have hope is not to admit insanity! 

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.

Contact Details

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

Charlie Sim (Director) csim@the-foundation.com / +44 7958 574 917

Anna Miley (Director) amiley@the-foundation.com / +44 7816 261 987

John Sills (Director) jsills@the-foundation.com / +44 7990 943 402


Do we believe in customer-led commercial success?

photo-1506774518161-b710d10e2733

Read full PDF here: The Belief Trade-off: Customers or Efficiency First?

Our Founding Partner, Charlie Dawson, is in the process of writing a book about customer-led business success alongside Seán Meehan who is the Martin Hilti Professor of Marketing and Change Management at IMD, the Swiss business school.  It is examining why breakthrough customer-led success happens so rarely given that when it does it often sounds like common sense, and also why once firms have succeeded in this way they don’t go on succeeding forever.

As a contribution to this we asked a large number of senior business managers, internationally, for their views, looking at the ways their companies address organic growth challenges and the relative effect that a focus on different stakeholder groups, in particular customers compared to the financial community, has on performance over time.

The piece this relates to is a summary of our findings.

In a world where managers frequently say they are customer centric, our research goal was to determine what they really believe.  What are their deeply held assumptions about success and how it is achieved?  Do they assume it comes from being aligned with and responding to customers current and future needs, which we call being customer-led? And if they do, does being customer-led affect overall business performance compared to other ways of operating?

It turned out that of the 454 senior executives who responded, 62.7% believe that understanding customers and acting on that understanding is critical to success.  But….  only 24% adopt a customer-led approach to running their business.

Using some good statistical analysis, led by our friends at IMD, the conclusions suggest that organisations are either customer-led or efficiency-led and that only the customer-led approach contributes to competitive success.

We are continuing our exploration of what it means to be customer-led and would welcome any reactions this summary.


Turnarounds That Last – Returning seriously ill, high profile organisations to vigorous health

THE FOUNDATION FORUM

20th september 2017. WRITTEN UP WITH THE HELP OF SIMON CAULKIN

To download a PDF, please click here: Turnarounds That Last – Returning seriously ill, high profile organisations to vigorous health

Turnarounds sound heroic from a distance…but reality is different. Lots of turnarounds don’t turn anything around. Succeeding at all isn’t easy. Then the ones that do get somewhere are painful, exhausting and fraught with uncertainty. Many are not that heroic. A business in trouble can be an opportunity for a financial magician to create the illusion of a return to health while performing a disappearing act on a large pile of money, followed smartly by themselves. BHS or Rover anyone? Then there’s a category of turnaround that’s even more tricky. These involve organisations that are deeply caredfor by a chunk of the nation. It means you’re in the public eye with a passionate following from the highly vocal and lowly business-aware. Support for the outcome is strong, support for the medicine is not, so every step gets a loud and challenging reception.

“At times we are all going to be faced with situations with similarities, so we thought we’d ask some people with direct experience of the pain and the gain in creating a turnaround that lasts to share what they’ve learned.”

We heard about Jaguar Land Rover from Mike Wright, formerly Executive Director and centrally involved from the 2008 Tata takeover. Mike has been part of the British Car Industry since 1975 so he’s seen some serious ups and downs, but nothing to match the JLR journey. Note the date – 2008 – and then remember the global financial meltdown that came almost immediately after Ford had completed the transaction. Within months the business came close to collapse. Senior managers’ salary payments were moved from the middle to the end of the most critical month, always a sign to be slightly afraid… Just three years later the Range Rover Evoque launch brought the opposite problem, with demand three times more than expected and a new kind of challenge in keeping up. The business has grown strongly, but it still faces a battle to survive with formidable German competitors operating at much larger scale.

“How does a sparky car company makes its way through the vast global automotive jungle without getting eaten or ill?”

Talking of which, we had animal survival in a more obvious guise with the challenge to conserve Gerald Durrell’s legacy, itself dedicated to conservation… Oliver Johnson, CEO of his original organisation for an intense three years and faced with the potential demise of what is now a leading conservation charity with a zoo and sanctuary for animals that is close to the hearts of millions. After an interesting career that took in the country’s leading wine retailer (mutually owned), a private equity backed turnaround and Mercedes cars, Oliver found himself called on to rescue an assortment of animals and their keepers on an island that guaranteed little passing trade, with accounts that were at best opaque and in need of untangling to see the true, unpalatable picture. If that wasn’t hard enough, he had the prospect of Gerald Durrell’s widow’s continued vague involvement, who one assumes might have a view on dramatic change. And outside the wildlife pressure mounts with serious conservation work to be done in protecting endangered species, the ultimate, sole purpose of the organisation. The stage was set…

Which brought us to another rather high profile stage, this time in a curiously circular building – The Roundhouse and Marcus Davey. It is just over 50 years old as an arts venue and has been in and out of business several times over that period. Marcus became involved nearly 20 years ago, and the organisation is now enjoying its longest spell of solvency and success in that half century. It is the largest independent performance space in London, determined to bring artists with a distinctive contribution to make to audiences who will enjoy discovering and being simulated by them in ways that might otherwise not have happened. But even more importantly, the venue is just a front. The Roundhouse is in fact it’s a charity dedicated a transforming young people’s lives by introducing them to and coaching them through the creative arts. In the last 10 years 30,000 young people have been helped to progress, artistically and in life, by growing confidence and life-skills with access to world-class facilities, training, and opportunities. It has deep roots connecting it to its local and spiritual communities and is smartly run – well set up to be a turnaround that lasts…

 

So what’s the answer then? How to you turn around a basket case to go from sick to slick in a way that sticks? Thankfully we have Simon Caulkin summarising to inject a bit more class into our reflections, on what was a thoughtful and surprisingly emotive evening.

Everyone likes a turnaround story. Like any genre, each turnaround is composed of stock elements and characters – a crisis, a new broom, who may turn out to be a hero or villain, a surprise, good or bad, and a satisfactorily transformative ending. But reality plays tricks with the stereotype. Success is neither assured nor definitive and in any case often sows the seeds of what will become the next turnaround (‘Success ruins everything,’ as one wag put it). The story plays out in public – sometimes with audience participation. Hence the subject’s rich elusiveness and the audience’s boundless appetite for more. All the turnaround’s uncertainties were on high-res display at the September Foundation Forum.

“Jaguar Land Rover’s seminal crisis was the result of a shock that came via Ford, its then owner, which began its own turnaround by putting its premium automotive brands, including JLR, on the block in 2006.”

As in a slapstick comedy, no sooner had JLR been acquired to general surprise by the Indian Tata Motors – who? – than it was sent reeling by the financial meltdown of 2008: a double shock since it revealed just how different Tata was from JLR’s previous parent. On one hand it was as interested in stakeholders as it was in shareholders and took a long term view when it came to investment; but on the other it was instantly clear that when Tata promised empowerment, empowerment meant empowerment: as in, cash flow is your business not ours, no corporate Treasury function to lean on, and in terms of sales no sweetheart deals with Tata Steel or other Group companies… Deal with it. This was new and really quite uncomfortable for a senior team used to life in a Corporate. The other side of the empowerment coin was that the new JLR was free to act faster and more boldly than rivals. A case in point: the launch of the Land Rover Evoque in 2010, a bold expression of the company’s new intent and a calculated gamble. It paid off, and JLR was suddenly faced with a rather different problem: meeting demand running a long way ahead of expectations. Evoque helped crystallise JLR’s three-point focus on great products, ’with disproportionately higher investment in product and R&D than competitors’, putting customers first, and environmental innovation.

 

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“With a stream of successful launches under both brands, JLR has been running full tilt ever since.”

Reflecting on the story, Wright notes the crucial importance of vision from the top. ‘Everyone close to JLR will only credit one person with the vision and ultimate success, and that’s Ratan Tata,’ he insists. For Tata buying JLR was a piece of inspired opportunism, grounded in his conviction that the Group’s long-term orientated ownership could provide the framework in which the two iconic but chronically underperforming brands could finally fulfil their potential. Spool forward to the Frankfurt Auto Show this September, when Wright watched his ex-colleagues announce revenues up 9 per cent over 2016 to £24bn, profits of £1.5bn and retail sales up 16 per cent to 600,000 units – more than three times the level at the takeover. They also launched three new models, and have the stunning electric I-Pace SUV to come next year. Tata’s hunch was right; JLR has grabbed its destiny with both hands.

Jaguar’s symbol is a big cat, all lithe strength and dynamic movement. Jersey Zoo’s symbol is the dodo. The zoo is home to the Durrell Wildlife Conservation Trust, set up by naturalist and author Gerald Durrell in 1959, and the dodo is a dreadful reminder of why conservation is necessary, ie extinction is easily achieved. In fact the dodo was on the verge of becoming even more symbolic four years ago, when Oliver Johnson realised the first species he had to save was the listing Trust of which he had just become CEO. Johnson quickly discovered that while Durrell was doing terrific work in conservation, training and running a zoo, its vagueness about money could have come straight from a chapter in ‘My Family and Other Animals’, Gerald’s delightful account of his rackety upbringing in Corfu. When the finances were unravelled it transpired the zoo was heavily loss-making and could not be sustained on Jersey’s meagre tourist and resident numbers alone. The sobering conclusion was that ‘we had about three years before we’d completely run out of cash… So it was really quite urgent’. One part of the turnaround was about focus. Since the mission was saving species (rather than running a zoo) Johnson reasoned that training offered the best bang for the buck because of the multiplier effect – ‘if we trained 50 people they would go off around the world and train others, and we’d achieve much more than we could on our own.’ If we could sell consultancy and set up training in the field in other parts of the world, then we’d be onto a business model that might have legs, if not fur. But Durrell also needed sustainable commercial income in Jersey to supplement the zoo gate and unpredictable donations. One immediate project was an out-of-town charity shop. Another, more original, was to set up a children’s nursery at the zoo, where Gerald’s widow Lee would read her husband’s stories and the children would interact with the animals. A generous subvention by the proposer and her husband funded building work, and the result was ‘a great and successful income developer’.

“A final poser was finding a way to exploit Durrell’s most valuable asset – a lot of land on a small well-off island.”

Big developments were obviously out – but how about a few unobtrusive ecologically-friendly buildings, to show how it should be done? And accommodation for keepers and researchers on the zoo site, where they would pay rent to the Trust rather than to a private landlord? Better than Durrell and the zoo disappearing from the island, surely, went the argument to the local authorities? ‘That in a nutshell is what we did,’ says Johnson. The ‘interesting thing’, he notes, is doing them simultaneously rather than in sequence, for which there just wasn’t time. Speed, shortcuts and risks were of the essence, which not everyone was comfortable with. That put a premium on engagement and managing people. ‘I was completely transparent with everyone, including the media, local businesses and business-people, and politicians. You really benefit if you engage through being honest and you show them the problems, the plans, and the progress, and then you’re all in it together. That’s really what you’re aiming to do with that type of turnaround…It was choppy, it was difficult, but it was very enjoyable. We turned those million pound deficits into million pound surpluses. So now we’re gradually building up the reserves again’.

“The Roundhouse, the third Forum subject, is a compendium of turnarounds all on its own.”

Built in 1846 as a railway engine maintenance shed, it lasted just eight years in its original incarnation and spent most of its existence FIRST as an agricultural store and THEN AS A bonded warehouse for a gin distiller before finding its role in the 1960s as a cultural centre through the unlikely agency of playwright Arnold Wesker and the TUC. That it stands at all is a miracle in itself, the building having fought off numerous threats of demolition as well as the close attentions of the men in blue as the theatre for a number of the 1960s counterculture’s more lurid happenings. When the underground and punk ran out of steam, a rundown Roundhouse closed and mostly faded from view in the 1980s (albeit with a brief renewal of notoriety for a week-long New Year’s Eve party when makeshift generators failed and power was ingeniously sourced from the nearby train lines). The building’s latest and by far most durable turnaround, recounts CEO and Artistic Director Marcus Davey, began in 1996 with its purchase (for £6m) by a charity run by businessman Sir Torquil Norman. Norman – ‘an amazing man’ – proposed to use the venue not just as an arts centre but as a vehicle for transforming the lives of young people through the arts they had largely been excluded from at school. That required a massive fundraising exercise (rebuilding cost £30m). But an even bigger transformation, says Davey, ‘was deciding to have the young people, who are at the heart of our organisation, on the board of Trustees’, where they are involved in every important decision the organisation takes. The aim is nothing less than to change society by transforming the lives of young people who can be its motive force, with many of them ‘Neets’, those not in education, employment or training. Ninety per cent of those who work in the creative industries currently come from middle-class backgrounds, notes Davey. ‘We have a determination to change that’, he adds.

 

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“The Roundhouse and its staff and board are the most diverse you could possibly find. We represent and include society every single day.”

You can’t change society and remain immune to change yourself, however. No sooner had the rebuilt Roundhouse triumphantly reopened in 2006 than Davey realised that it was time for the organisation to transform itself all over again. Part of that was a shift at the very top. Norman, the Trust’s inspirational Founder-Chairman, felt that after 10 years developing the roundhouse that bit was time for him to stand down. He became President, making way for a new Chair to oversee the next stage.

“It was an emotional moment. But the payoff is that this ‘next stage’ has been the most financially sound and rewarding in the long and winding Roundhouse history.”

It works triumphantly as both venue and venture, having made itself simultaneously the largest independent arts centre in London and Britain’s most important creative centre for young people. It has big ambitions for both in future, with young people partly running the show. Even the counterculture would approve. As for Davey, ‘I started in 1999 and I love it more today than I have loved it at any moment in all that time’. Prediction, as they say, is hard, especially about the future. But if passion and purpose, or perhaps passion for purpose, are critical ingredients for turnarounds that last, then these three organisations appear to have little to fear. Leadership that can articulate a convincing destination is also critical (even as it switches from Jersey to Bath, as the conservation programmes and science arm of Durrell’s organisation did, among other changes on the road to recovery): JLR’s vision voiced by CEO Ralf Speth of ‘an intelligent organisation’ able to integrate long and short term and balance financial demands with underlying purpose is a case in point, but would go for all of them. Boldness always becomes necessary at some point, commensurate with the heat of the burning platform beneath; carrying it off requires honesty, openness and real (not fake) ‘we’re all in this together’ to trigger energy and adrenaline rather than numb fright. For this reason fear is not a good motivator. Smart change, going with rather than against the flow, has to underpin it all. ‘Everything must change,’ as Don Fabrizio puts it in Lampedusa’s masterpiece The Leopard, ‘so that everything can stay the same’.

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THE FOUNDATION’S VIEW

So we did we make of it all? For us, at the end of the evening, three points had emerged that hadn’t been obvious when we walked in, and Simon has them woven into his notes.

  1. The ‘burningness’ that comes with the turnaround territory is painful but creates the potential for a decisive break from the past.
    It is often more obvious with hindsight, but the fraught nature of a crisis mustn’t be wasted, as Mike Wright put it. When the situation is dire, then the usually safe, inwardlooking options are clearly not going to be the answer. They won’t be enough. It means that bravery and bold steps into the unknown become the only possible routes to salvation. Not guaranteed, but with odds worth taking when failure looms. It means the usual debate over the business case gets short-circuited and the people involved are freed up to use their imagination to change the usual rules – a concept car gets rapidly taken to market (the Range Rover Evoque), planning permission is granted on the periphery of a Jersey zoo, donors back a vision for a commercially challenging young people’s charity with an uncertain track record.
  2. The conditions for success come from owners (or similar) creating freedom and confidence not seeking control
    The burning situation could be paralysing without an accompanying umbrella of freedom and support. At The Roundhouse, Sir Torquil Norman brought inspiration and investment that gave space to others who could develop the detailed plans and the gumption to make them real. At Jaguar Land Rover, Tata was a complete change from Ford, the previous owner. Where Ford was a corporation that handled large parts of the business – including managing cashflow, administering training, developing significant aspects of technology – Tata was truly empowering, and not just on the nice bits. When cash was in danger of running out, the JLR team needed to find the solution, not Tata, and neither were other Group companies going to be encouraged to buy JLR’s products if they didn’t genuinely want to. On the flipside, the team realised they could move much faster than their more established competition and made decisions they believed in, with real responsibility because they could see the downside too. It has proved transformational. Despite constraints, the firm has produced an amazing flow of innovative and desirable products, set up its own facilities producing engines in Wolverhampton and cars in China, Brazil and, soon, Slovakia, and has production numbers approaching 1m cars a year from just 200,000 before the deal.
  3. For a turnaround to last, you need deep roots, and that comes from people with the inspiration and purpose to really come together
    Oliver described what happened as the people involved in the zoo and the conservation charity started to grow belief in where they were going. Ultimately they exist to save the world’s most endangered species – the zoo and the charity are means to that end, and that’s an end worth fighting for. Feeling you are part of a team that’s serious about it, throwing off what wasn’t right and making more and more determined progress in a direction that works, helped everyone involved. Their energy, commitment, mutual support and creativity all grew to go the extra mile and the whole nine yards. The Roundhouse has a similar sense of momentum, and Tata, interestingly, is ultimately set up to serve a charitable foundation not the stock market.

So there are ingredients of success. They don’t guarantee anything. But if you’re up a foul-smelling creek and you’re short on paddles, they’re not a bad place to start…

 

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.

 

Contact Details

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

Charlie Sim (Director) csim@the-foundation.com / +44 7958 574 917

Anna Miley (Director) amiley@the-foundation.com / +44 7816 261 987

John Sills (Director) jsills@the-foundation.com / +44 7990 943 402


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.

 methode%2ftimes%2fprodmigration%2fweb%2fbin%2f63b443ec-b0a1-3b7d-961d-5667ca82914d

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


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

 


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