Author: edamdoctor

This is the result of an extensive set of discussions among a group of organization development consultants and internal HR staff under the auspices of the Change Affinity Group of the New Jersey Human Resource Planning Society.

Key Questions for Discussion:

    1. What is culture change?
    2. What are the major models?
    3. What is the role of executive management in culture change?
    4. What is the role of HR in culture change?
    5. What works and doesn’t work in culture change?

      Summary of Key Thinkers’ Ideas
    1. John Kotter’s perspective.
      1. Definitions
        1. “Culture” refers to norms of behavior and shared values among a group of people.
        2. “Norms of behavior” are ways of acting that persist because they are rewarded and the group teaches these behaviors to new people, sanctioning those who do not conform.
        3. “Shared values” are important concerns and goals held by most people in the group: they shape group behavior.
      2. In Kotter’s model, changing the culture is the last of eight steps, not the first.
        1. “Even when there is no personality incompatibility with a new vision, if shared values are the product of many years of experience in a firm, years of a different kind of experience are often needed to create any change. That is why culture change comes at the end of a transformation, not the beginning.”
        2. Culture is not something you can directly manipulate, as if by decree. Culture change occurs after you have successfully altered people’s actions and their new behavior has produced success, which can be traced back to the new actions and behaviors.
        3. This is not to say that culture issues don’t arise in the early stages of a transformation. But to try to change the culture as a first step is a bad idea what proof do you have to offer that it’s the right way to go?
        4. Remember, you are always trying to engender an adaptive culture, one that benefits the four main constituents: shareholders, employees, customers and management. This type of culture values good leadership and management. It also encourages teamwork at the top, while minimizing layers of management and bureaucracy, as well as counterproductive interdependencies.
      3. Anchoring change in a culture.
        1. Culture change comes last, not first.
        2. Lasting change depends on results. You must show new approaches work and that it’s worthwhile to change.
        3. Requires a lot of dialog.
        4. May involve turnover of key people who block change.
        5. Promotion practices need to be changed to be compatible with the new practices. New leaders should be compatible with the new culture and champions of it.
      4. Shallow roots require constant watering.
        1. Kotter uses an example of a technology-oriented company to illustrate the point. As long as the new general manager was around to focus the organization constantly on speed to market and the customer, progress was made substantial progress. When the GM retired, because the underlying cultural belief that “good technology will solve all our problems” had not changed, the company quickly regressed over two years.
      5. In an organization, the less visible shared values and group norms are, the harder they are to change.
      6. Culture is powerful for three reasons.
        1. Individuals are selected and indoctrinated to support the existing culture.
        2. Culture propagation occurs through the actions of hundreds or thousands of people in the organization.
        3. This reinforcement happens without much conscious intent and is therefore difficult to challenge or even discuss.
      7. There are different culture-change scenarios, some much harder to accomplish. For example:
        1. The core of the old culture is not incompatible with the new vision. The challenge is to graft new practices onto old roots, while eliminating inconsistent practices. This is least difficult to do.
        2. The core of the old culture is incompatible with the new vision. This is a much more difficult situation to cope with.
    2. Kotter and Heskett in Corporate Culture and Performance.
      1. Alan Wilkins’ study reflects the beliefs of many academics that culture is very hard to change. In 22 cases Wilkins studied, even the managers admitted failure in 16 instances.
      2. Kotter and Heskett studied 10 cases of major culture change that seemed to be successful. The companies were Bankers Trust, British Airways, ConAgra, First Chicago, General Electric, ICI, Nissan, SAS, American Express TRS, and Xerox. They found:
        1. “The single most important factor that distinguishes major culture changes that succeed from those that fail is competent leadership at the top.”
          1. All ten cases of major change occurred after an individual with a track record for leadership was appointed head of the organization. Each had a track record of producing change.
          2. In their new jobs they created change on a grander scale.
          3. These leaders demonstrated the close interrelationship of competition, leadership, change, strategy and culture.
          4. All of these leaders either:
            1. Came from the outside.
            2. Came to their firms after an early career somewhere else.
            3. “Grew up” outside the core of the company.
          5. While a limited sample, one can theorize that an outsider’s perspective is important to change.
            1. In all four very large companies in our study, the change leader had spent considerable time in the company before taking over, thereby developing a good sense of the resources in the company.
            2. Complete outsiders tended to be successful at smaller companies.
        2. Why you can’t change culture from the bottom up.
          1. The sheer resistance to change in an organization requires great power to overcome, and that power resides at the top.
          2. Interdependence in organizations makes it very difficult to change anything important, without changing everything. Only people at the top can do that.
    3. Delta Consulting’s (David Nadler) perspective: Discontinuous Change.
      1. Definitions:
        1. “Organizational culture” is a set of commonly shared values and beliefs. It influences the behavior of people and is reflected in work practices, i.e., how we do things here.
        2. “Values” are the fundamental axioms or established feelings about the desirability of some quality, like innovation or individualism.
        3. “Beliefs” are perceptions about the connections of things such as events and outcomes, for example: “Hard work will be rewarded,” or “challenging the boss will get you shot.”
      2. Culture is reflexive: Beliefs shape behavior, but behavior also shapes beliefs. Values affect beliefs and behavior, but beliefs and behavior also affect values.
      3. Often espoused beliefs and values are not consistent with the beliefs and values that can be inferred from observed behavior. This lack of alignment can cause great dysfunction.
      4. Most organizations are a mixture of many cultures: one in R&D, another in Sales, etc.
      5. External forces, historical forces and internal forces all shape behavior. Managers can most affect internal forces giving them a lever to change culture.
      6. In changing culture, there are three critical areas to address.
        1. Content of the change (vision of the new culture).
          1. Do a culture audit: What is the culture like, what needs to be changed?
          2. Leadership is essential for successful culture change.
          3. Key champions at all levels are required.
        2. Leverage points for change (what and how to change).
          1. Full-blown culture change requires change in all the key elements of organizational context: structure, business processes, measurement, appraisal and rewards. If, in fact, you do all these things, Nadler argues that culture change will be the ultimate outcome.
          2. Values must be articulated in terms of expected behavior. Establishing one value as more important than others is important to give people a set of priorities.
            1. Good technique used at AT&T, where Senior Executives interviewed people lower in the organization about the new values and how they saw them being implemented. This is a good check on implementation, and helps senior executives understand the issues involved in the effective transformation of a culture.
            2. A key test of culture change is who is getting promoted, the good guys or the bad guys
            3. What happens to someone delivering good results but not living the new values? This is a critical dilemma for leadership. Support and coaching for change must be offered; if a person refuses or does not change, then they must be removed. GE under Jack Welch was very strongly committed to having executives both get results and live the values. If they did not live the values, and did not improve, they were out.
        3. Tactical choices (when and where to change).
          1. Culture and values are the very foundation upon which the overall change agenda rests.
          2. Interventions into culture should be sequenced separately from the hardware changes. One effective sequence is to have culture initiatives occur sometime after the announcements of structural and work-process changes.
          3. Use bottom-up interventions also, e.g., education and training, meetings, forums, etc.
          4. Migrate change laterally from one organization to another. Use beta sites and skunk works to try out changes and work out the kinks. Transfer that learning to the next site. Customer visits can be a very powerful tool in this change. Customer needs get the attention of almost any level in the organization.
    4. Built to Last. By Collins and Porras.
      1. They do not talk about changing culture, but about what great companies do to maintain their cultures, which they describe as cult-like. This is useful to consider once you decide what you want to change the culture to.
      2. The cultures in visionary companies are not soft or undisciplined:

“Because visionary companies have such clarity about who they are, what they’re all about, and what they are trying to achieve, they tend not to have much room for people unwilling or unsuited to their demanding standards.”

    1. Visionary companies are not great places to work, at least not for everyone. If you can’t embrace their ideology, they expel you like a virus. If you do not fit their practices, they will weed you out in the hiring process or shortly thereafter.
    2. Cult-like cultures are key to preserving the core ideology of a company.
    3. Visionary companies have these characteristics about their culture that are cult-like:
      1. Fervently held ideology
      2. Indoctrination
      3. Tightness of fit
      4. Elitism
    4. Visionary companies create these cultures through practical, concrete things:
      1. Orientation and training programs
      2. Internal universities
      3. On-the-job socialization with peers and immediate supervisors
      4. Rigorous up-through-the-ranks policies such as promoting from within, and hiring young people and shaping their minds from the start.
      5. Exposure to pervasive myths of heroic deeds
      6. Corporate songs, cheers, etc.
      7. Tight screening practices; hiring and removal in first few years
      8. Incentives and advancement are closely linked to core ideology
      9. Awards, contests and public recognition are closely linked to core ideology
      10. Tolerance for honest mistakes, but severe penalties or termination for breaching core ideology
    5. These cult-like cultures succeed because they are balanced by mechanisms to stimulate progress, e.g., taking on challenging tasks (Big Hairy Audacious Goals or BHAGs).
    6. Adhering to a small set of core beliefs allows these companies to grant a good deal of operational autonomy.
    7. The authors conclude: “It means that companies seeking an ’empowered’ or decentralized work environment should first and foremost impose a tight ideology screen and indoctrinate people into that ideology, eject the viruses, and give those that remain the tremendous sense of responsibility that comes with being a member of an elite organization. It means getting the right actors on the stage, putting them in the right frame of mind, and then giving them the freedom to ad lib as they see fit.”
  1. The Last Word on Power: Executive Re-invention for Leaders Who Must Make the Impossible Happen. By Tracy Goss.
    1. The power to make the impossible happen.
      1. As a leader your source of success in the past is probably preventing you from making the impossible happen now. You must re-invent yourself, put past success at risk to make the impossible happen.
      2. “I define this advanced level of power as the ability to take something that you believe could never come to pass, declare it possible, and then move that possibility into a tangible reality.”
      3. She claims there is a set of theories and methods for learning to make the impossible happen, and that these can be taught.
      4. Reinventing yourself does not imply that something is wrong with you; it’s a process that takes you to a new place, to unfamiliar and unknown territory.
      5. Executive re-invention is primarily an ontological journey. Ontology is a branch of philosophy concerning the nature of reality and different ways of being.
      6. If you are going to re-invent your organization, then in order to succeed, you must first re-invent yourself. (Note: This is an alternate strategy to Kotter, where re-invention occurs when a different type leader takes over. None of Kotter’s success stories seems to have re-invented themselves.)
      7. Goss uses the analogy of a Navy SEAL and corporate leaders. The green recruit, despite being among the top 1% of officers in Navy, needs considerable training to take on the impossible missions assigned the SEALs. Similarly, the top 1% of leaders in organizations when they get to the top are not prepared to take on the impossible; they need training.
      8. Transformational change is an oxymoron. “Transformation” is a function of altering the way your being, to create something that is currently not possible in your reality. “Change” is a function of altering what you are doing, to improve something that is already possible in your reality.
        1. To transform yourself, you must transform your context, that is, the way you think, talk and act.
        2. “Language is the only leverage for changing the context of the world around you. This is because people apprehend and construct reality through the way they speak and listen.”
        3. “By learning to uncover the concealed aspects of your current conversations and learning to engage in different types of conversations, you can alter the way you are being, which, in turn, alters what’s possible.”
    2. The seven stages of leadership re-invention. First four have to do with freeing yourself from the past; last three, with building your capacity to make the impossible happen.
      1. Uncovering your winning strategy: learning to understand what has really created your current level of success.
      2. Experiencing the limits of the universal human paradigm at work in your actions. The universal human paradigm colors all choices, decisions and actions. Simply stated, it says: “There is a way that things should be, and when they are that way, things are right. When they’re not that way, there is something wrong with me, with them, or with it.” This paradigm is inherited simply by being brought into a group or culture.
      3. Learning to put everything at risk: becoming willing to operate with no guarantee you will succeed, with your eyes wide open to the high odds of failure and the accompanying consequences.
      4. Inventing a new master paradigm that provides you with a new source of power: making a series of declarations that constitute a new master paradigm (Similar to personal vision).
      5. Inventing an impossible game to play: making bold promises in a game you have chosen to play
      6. Breaking the addiction to interpretation: every problem and dilemma is seen through the way it contributes to your invented future, rather than through filters from the past.
      7. Operating beyond the limits of your winning strategy: building the capacity to bring about your “impossible future.”
  2. “The Reinvention Roller Coaster: Risking the Present for a Powerful Future.”  By Tracy Goss, Richard Pascale and Anthony Athos.
    1. Incremental change is not enough for many companies today. These companies need to re-invent themselves. Re-invention is not changing what is, but creating what isn’t. A butterfly is not more or a better caterpillar, it is a completely different animal.
    2. “When a company reinvents itself, it must alter the underlying assumptions and invisible premises on which its decisions and actions are based.” In other words, it must change its context.
      1. The first step is for a company to uncover its hidden context. A company is only going to do this when it is threatened, losing momentum or eager to break new ground.
      2. “The journey to reinvent yourself and your company is not as scary as they say it is; it’s worse,” says Mort Meyerson, chairman of Perot Systems. You do it only out of the conviction that the only way to compete in the future is to be a totally different company.
      3. Shifts in context can only occur when there is a shift in being. Nordstrom’s is used as an example. Their way of being is summarized as “Respond to Unreasonable Customer Requests.” Those that have tried to copy Nordstrom’s have not understood their fundamental way of being and have failed.
      4. A declaration from a leader, like Sir Colin Marshall’s pronouncement that British Airways would be “the world’s favorite airline” (when, at the time, it was one of the worst), does a couple of things:
          1. Creates possibility
          2. Stimulates interest and commitment
      5. A declaration is different from a vision statement, which provides a more elaborate description of the desired state and the criteria against which success will be measured.
      6. Key to re-invention is the re-invention of the leader (see Goss notes).
    3. Managing the present from the future
      1. Assemble a critical mass of key stakeholders.
        1. Many more than just the top 8 to 10 leaders.
        2. Should include key technologists and leading process engineers.
        3. Group should be sufficiently diverse to ensure conflict, which will get issues on the table so they can be resolved.
        4. Have to decide how it’s going to happen.
      2. Do an organizational audit to generate a complete picture of how the organization really works.
        1. Understand the competitive situation.
        2. Reveal barriers to moving from “as is” to the future.
        3. Core values.
        4. Key systems.
        5. Strategic assumptions.
        6. Core competencies, etc.
      3. Create urgency. Discuss the undiscussable.
        1. A threat that everyone perceives, but no one is willing to talk about, is most debilitating to an organization
        2. Book of Five Rings Japanese guide for samurai warriors. Written four centuries ago, directs the samurai to visualize his own death in the most graphic detail before going into battle. Idea being, once you have experienced death, there is not a lot left to fear: one can then fight with abandon.
        3. This helps explain the value of discussion about not changing and the dire consequences to a company in a difficult business situation.
      4. Harnessing contention.
        1. Conflict jump-starts the creative process.
        2. Most companies suppress contention.
        3. Control kills invention, learning and commitment.
        4. Emotions often accompany creative tension, and they are often unpleasant.
        5. Intel plays rugby; your ability at Intel to take direct, hard-hitting disagreement is a sign of fitness.
        6. Many excellent companies build conflict into their designs.
      5. Engineering organizational breakdowns.
        1. Breakdowns should happen by design, not accident.
        2. In trying to manage back from the future, concrete tasks will have to be undertaken; continuing on the current path will not get you there. Often you don’t know how to make these tasks occur. This will generate breakdowns, which can generate out-of-the-box thinking and solutions, if the situation is managed/lead correctly. Continuous open dialogue is key to working through breakdowns.
        3. Setting impossible deadlines is another way to encourage breakdowns and out-of-the-box thinking.
  3. Organizational Culture. By Edgar Schein, MIT (He, Kotter and Heskett are in similar places.)
    1. “Let me begin bluntly there is no such thing as the “right” culture and culture can not be fostered or installed.”
    2. Success of the company creates organizational culture. If the founders had a wrong set of assumptions about how things are, they would have failed. The right set of assumptions is relative to the business environment. The longer the company is successful, the more stable the culture becomes.
    3. Pronouncements that we must change our culture either will be denied or cause levels of anxiety that trigger intense resistance to change. Therefore, you will fail if you take culture head on.
    4. If the present culture is dysfunctional, or out of line with current environmental realities, then take these steps:
      1. Start with what the business problem is. The issue is not about culture, but about the mission of the organization and whether it is being fulfilled.
      2. Figure out what needs to be done strategically and tactically to solve the business problem. What does the organization need to do concretely to solve its survival or growth problems?
      3. When there is clear consensus on what needs to be done, examine the existing culture to find out how present tacit assumptions would aid or hinder that. Some parts of the culture may be fine, or certain subcultures within the organization maybe fine.
      4. Focus on those cultural elements that will help you get to where you need to go. It is easier to build up the strengths of a culture than to change dysfunctional elements. The diversity of a culture and its subcultures almost always have strengths to leverage.
      5. Identify the culture carriers who see the new direction and feel comfortable moving in that direction. This helps create role models, these people are often found in subcultures or in marginal roles in the organization.
      6. Build change teams around the new culture carriers. Different parts of the organization, because of environmental needs, may have to go in a different directions to produce the desired changes in thinking and acting.
      7. Top management must adjust the reward, incentive and control systems to be aligned with the new strategy.
      8. Ultimately the structures and routine processes of the organization must also be brought into alignment with the desired new directions.
    5. All of this takes a great deal of time and energy across many layers of management and many task forces and change teams. It is fueled by the need for a solution to a clear business problem. Culture change occurs as a by-product of fixing fundamental problems.
    6. If the culture prevents correcting the business strategy, that culture will be broken by destroying the group that carries the culture. That means firing a lot of people, or the organization will die.
    7. Culture is not a suit of clothes to be changed at will. The residue of past success, it is the most stable element in an organization.
  4. “Organizational Change.” Consortium Benchmarking Study conducted by the American Productivity and Quality Center.
    1. Overview of findings.
      1. Successful organizations believe the organization’s culture must be changed.
      2. Organization change requires vision, tenacity and a long-term horizon.
      3. Organization change requires commitment from top management.
      4. Organization change requires extensive communication with all stakeholders. Employees must be empowered and educated so they can exploit their new power.
      5. It is necessary to systematically measure progress and results.
    2. Key elements of success.
      1. Leadership
      2. Culture change
      3. Work force involvement
      4. Communication and measurement
      5. Education
      6. Supportive Human Resource systems
      7. A shared sense of urgency for change
    3. Triggers for change.
      1. Organizations on the brink of disaster that had engaged in change efforts consistently rated triggers higher than organizations not currently in dire circumstances.
      2. Highest ranking triggers
        1. Changing regulatory or legal environment
        2. Competition
        3. Customer dissatisfaction
        4. Declining or increasing profits
      3. Second ranked triggers
        1. Declining or increasing market share
        2. Declining or increasing revenue
        3. Rising costs
        4. Technology change
      4. Third ranked triggers
        1. Employee morale
        2. Merger or acquisition
        3. Public Image
        4. Quality
      1. Organizational Development and Change. By Thomas Cummings and Christopher Worley.
        1. Definition: Examination of different definitions suggests that organizational culture is the pattern of basic assumptions, values, norms and artifacts shared by organizational members. These shared meanings help members to make sense out of the organization. The meanings signal how work is to be done and evaluated, and how employees are to relate to each other and to constituencies such as customers, suppliers and government agencies.
        2. Corporate culture is the product of long-term social learning and reflects what has worked in the past.
        3. Diagnosing organizational culture culture change efforts begin with diagnoses.
          1. Behavioral approach
            1. Assesses key work behaviors that can be observed.
            2. Describes how specific relationships are managed and tasks performed (see example, pg. 483).
          2. Competing values approach
            1. Culture can be understood by how an organization handles dilemmas around four contradictory values. (see model, pg. 484).
            2. Four sets of competing values: Participation vs. goal achievement; internal focus vs. external focus; stability vs. creativity and innovation; organic processes vs. mechanistic processes.
          3. Deep assumptions approach
            1. Very difficult and time consuming to do.
            2. See pg. 485 for details.
        4. Culture change.
          1. There is considerable debate over whether it can be done or not.
          2. Given the problems with cultural change, most practitioners in this area suggest that changes in corporate culture should be considered only after other, less difficult and less costly solutions have either been applied or ruled out.
          3. Knowledge about culture change is in its formative stages; however, here is some practical advice if you embark on the journey:
            1. Start with a clear vision of the firm’s strategy and the shared values and behaviors needed to make it work.
            2. Have top management commitment, because culture change must be managed from the top.
            3. Symbolic leadership is critical: leaders must walk the talk. In successful cases of culture change, leaders almost always demonstrate a missionary zeal for new values and behaviors.
            4. Support organizational changes in structure, reward systems, HR systems, information systems and leadership style.
            5. Pay careful attention to the selection and socialization of new-comers, as well as the termination of deviants. This is particularly important for key leadership roles. Jan Carlzon of SAS replaced 13 of 15 top executives.
            6. Manage ethical and legal issues effectively. Don’t promise values for culture change that the organization can not deliver on.
      2. Corporate Culture: Removing the Hidden Barriers to Team Success. By Jacalyn Sherriton and James Stern.
        1. They believe that corporate culture change is needed for successful implementation of formal teams.
          1. Senior managers trying to implement teams continue to act individually: they are concerned about control over the teams and concerned that consensus decision making is too time consuming. They often set a very bad example, for example, by protecting their turf.
          2. Team members are typically not used to working in teams. They often are uncomfortable and lack the communication skills to make the teams work effectively.
          3. Introduction of teams while downsizing or facing threats of downsizing creates forces that are antithetical to teams.
        2. Corporate culture is defined by four elements.
          1. Ritualized patterns of beliefs, values and behaviors.
          2. Management environment created by management styles, philosophies, what is said, done and rewarded.
          3. Management environment created by systems and procedures.
          4. Written and unwritten norms and procedures.
        3. They believe that you can make a direct assault on culture change differing with Kotter, Heskett and Schein.
        4. Their book describes successful change in subcultures when top-level support was either absent or sporadic.
          1. They feel that each major functional organization such as marketing or R&D has its own subculture, as do divisions and other large units of the organization.
          2. Subcultures are influenced by the overall corporate culture, but subcultures are never the same as the overall culture.
          3. There is much more freedom to change a subculture than is commonly realized or acted upon
        5. “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things.” Niccolo Machiavelli
        6. How pervasive is the issue of culture and change? They did a survey of 100 companies and found that recently:
          1. 15% had been involved with a merger.
          2. 22% had been acquired.
          3. 41% had formed alliances.
          4. 78% were increasing the utilization of teams.
          5. 95% were involved in at least one of these initiatives that culture impacts significantly.
          6. Only 51% of respondents felt that their organization understood the need to address culture issues in making these changes.
          7. Only 31% of respondents felt their organization had the skills and knowledge to address organizational culture issues.
          8. Only 36% had assessed the culture and identified changes needed.
          9. But 56% (highest) had plans for training to address culture change.
        7. Gives a good detailed approach to what needs to be done to change culture. They also describe in some detail the culture needed to support teams. A lot of how-to’s. Very practical, particularly, if you need to work around some organizational constraints.
        8. Model does not put as much emphasis on the external environment, vision and strategy as other models.

Content Sponsor

Herminia Ibarra , Professor of Organizational Behavior, and Faculty Director of the INSEAD Leadership Initiative, contests that we learn to lead in relationship, by becoming a part of a community and network of leaders, but what we preach, however, is very different.

Let’s draw some inferences by considering a few schools of thought:

Situational leadership, — originally conceived as the antidote to the great man theories of leadership. The situational school brought us the notion of “fit:” person to situation and leader to follower. The original version said the situation makes the leader. The simpler version we retained says something else altogether, that good leaders choose among the leadership styles or change strategies in their repertoire the one that best matches their current situation.

Discover your strengths — another great example of a one-sided and static focus on personal attributes that make people effective leaders. According to this theory, we can categorize ourselves according to a number of themes and clusters of themes that describe our strengths; once identified, they help us make decisions about what situation best match us.

Practice — From Malcolm Gladwell’s Outliers to Geoff Colvin’s Talent is Overrated we learn about the magic rule of 10,000 hours. Bill Gates, we are told, became a computer wiz because he had access to an early computer and was able to clock the requisite number of hours. Putting in the hours, not innate talent, makes the leader.

Prof. Ibarra’s research on how effective managers make the transition to bigger, broader leadership roles and cements their contribution to the growth and transformation of their organization, incorporates 4 key enablers:

o    Motivate the transition to leadership. When asked to do things that don’t come naturally, we implicitly ask ourselves “am I the sort of person who behaves this way?” “Do I want to be that sort of person?”. When managers’ identification is rooted in functional groups or expert communities, the answers are negative when it comes to leadership, and thus it is no surprise that they do not sustain the arduous practice it takes to develop as leaders. On the other hand, when they identify with recognized leaders, learning to lead is motivated by the desire to become a member of a valued group.

o    Make the “competencies” come alive. One of the difficult things about learning to lead is distinguishing between “what” (content knowledge) and “how to” (process knowledge). We may know, for example, that “sensing external trends” is a critical competency in forging a strategic direction, and we may also want to become more like the leaders we know who are very good at that. But, how does one actually learn to strategize? In a successful learning cycle, role models, peer groups and communities of practice motivate change by changing our reference point on what is desirable and possible, and then once motivated, providing tacit knowledge on how to do it.

o    Experiment from the outside in. Many aspiring leaders struggle to stretch their leadership within their current organization and roles. Caught in between delivery pressures and outdated views of their capacities, they more quickly or easily find roles outside the organization that allow them to lead. Their new activities, in professional organizations, clubs, informal advisory and so on, create external identities that they eventually internalize.

o    Build external support & networks to sustain change. Often it is hard to get support for change from old mentors, bosses or trusted colleagues. They may have good intentions but maintain of what we can and should do that are based in the past and not the future. People and groups, on the fringe of our existing networks help us push off in new directions while providing the secure base in which change can take hold, one of the reasons why learning methods like peer coaching are so powerful.

Built To Last – Summary of Key Points Written by James Collins & Jerry Porras
About this book:
This summary of Built to Last is included because if one is going to change an organization, one needs to know what to change towards. This book is one of the best we know of that answers that question. It is one of the best pieces of research done on why certain organizations are more successful over time than others.

The book makes a comparison of Visionary Companies to a comparison group of good companies. The lessons of the Visionary Companies can be learned and practiced at all levels of the organization.

What is a Visionary Company?
For the purpose of this study they:

  1. were the premier leader in their industry, widely admired
  2. made an indelible mark on the world
  3. have multiple products and have had multiple CEO’s
  4. are at least 50 years old

The authors compared 18 Visionary Companies to 18 comparison companies. The comparison companies have done more than twice as well as the stock market since 1926, while the Visionary Companies have done 15 times as well as the stock market. The comparison is through the end of 1990. Think of the comparison companies as the bronze medalists. Most of the Visionary Companies have had problems, but have displayed a remarkable resiliency in overcoming business challenges.

  A dozen common myths were shattered:

  1. It takes a great idea to start a great company. In fact, having a great idea to begin with is negatively correlated with becoming a great company.
  2. Great companies require charismatic leaders. In fact, charismatic leaders can be detrimental to the long term health of the organization. The leaders of Visionary Companies sought to be clock builders not time tellers.
  3. The most successful companies exist to maximize profits. In fact, maximizing profits has not been the dominate theme in the Visionary Companies. They pursue a number of objectives, sort of like the balanced scorecard. Clearly, profit is one of their objectives.
  4. They share a common (“right”) set of core values. The core values don’t have to even be enlightened (Philip Morris), though they often are enlightened. What’s most important about core ideology is how deeply the company believes in its ideology and to what extend it is aligned with it.
  5. The only constant is change. The Visionary Companies have maintained their core values for many years. But they are adaptive, everything but the core values is subject to change.
  6. The companies are conservative. In fact, they are not. They are willing to engage in BHAG’s (big hairy audacious goals).
  7. These companies are comfortable places to work. In fact, only those comfortable with the core ideology are comfortable working there.
  8. Visionary Companies make their best moves by high level successful strategic planning. In fact, they progress by trying a lot of stuff and keeping what works.
  9. Companies should hire outsiders as CEO’s to breath new life into the organization. The authors found that only 4 of 113 CEO’s in Visionary Companies came from the outside. The comparison companies go to the outside 6 times more frequently.
  10. Visionary Companies focus on beating the competition. In fact, they focus on beating themselves. Always striving to be the best.
  11. You can’t have your cake and eat it to. The Visionary Companies believe in the genius of “the and” and abhor the tyranny of “the or.”
  12. Visionary Companies become visionary by writing vision statement. While they tend to write them, this is only one of thousands of things they do to be visionary.

Clock Building not Time Telling:
Clock building allows a visionary company to exist long beyond the founder. Leaders of Visionary Companies take an architectural approach to building the company. These leaders try to build a company. For example, Hewlett & Packard had no great concepts for products, they just wanted to build a company. HP went a year before it sold anything. Sony’s first products were not very good. J.W. Marriott’s first business was an A&W Root Beer stand in Washington DC, 3M started as a failed corundum mine. In fact, only 3 of 18 Visionary Companies started off successfully (J&J, Ford & GE). However, 11 of the comparison companies started out successfully with a great idea. The companies with early success are much more likely to stick with these products long after they should have been replaced by new products or abandoned.
For example, George Westinghouse was much more brilliant than Coffin at GE. Coffin’s major contribution to GE was the development of the world’s first industrial lab.
When David Packard was asked about HP’s greatest innovation, he responded by talking about the HP way. The article’s headline read, “Packard executive develops company by design, calculator by accident.”
The comparison companies were just as likely to have had strong leadership in their formative years. What the authors are describing is leadership at the Visionary Companies that is interested in socialized power not personalized power.
The contrast between Disney and Columbia Pictures is a good example to illustrate the differences between clock building and time telling. Tape goes into good details.
The Tyranny of the “Or”:
Visionary Companies do not accept that you have to chose between things, i.e. you can have quality or low cost. As F. Scott Fitzgerald pointed out, “The sign of a first rate mind is that it can hold two opposing ideas at the same time and be able to function.”
More than Profits:
Clock builders at Visionary Companies build clocks with a purpose, with a human spirit. The sense of purpose goes beyond just making money. Their values fix a stake in the ground, this is what we stand for, this is what we are all about. Profitability was not the driving force in the Visionary Companies, but seen as necessary. Profits are like oxygen, food and water. You can not live without them, but they are not the purpose of life. In seventeen of eighteen pairs the Visionary company was more ideologically driven than their counterpart. This was one of the strongest correlation in the study. For example, in examining TI the comparison to HP, the authors could not find one single statement that linked TI to anything other than trying to maximize shareholder return. They looked at over 40 articles, studies etc. on TI.
The authors give the example of Merck’s decision to develop a product to cure river blindness, an illness that affects millions in third world countries. While they knew there was not much profit in it, they also knew that they would probably get a lot of free and good publicity. George Merck 2nd, “If we focus on helping cure people through medicine, the profits will be there.”
Not one core value was common across the eighteen companies. There is no set of core values one needs to have to be a visionary company. What is key is the authenticity of the core values and the alignment to those core values. For example, Walmart’s key core value is customer service. Sam Walton would say if you are not serving the customer or helping someone to serve the customer we don’t need you.
Core values are the things the company holds self evident. Core values exist independent of the business environment. Purpose is the fundamental reasons the company exists beyond making money. You should never be able to complete or achieve your purpose. As Walt Disney said, “Disneyland will never be completed as long as there is imagination left in the world.” GE can never complete the task of improving the quality of life through technology and innovation.

Preserve the Core/Stimulate Progress:
The central concept of the book is preserve the core/stimulate progress. The only sacred cow in a company should be its philosophy of doing business. Companies must be able to adapt and change to thrive. Boeing’s being on the leading edge of aviation technology is core, however, building a 747 Jumbo Jet is a strategy that can change. Over time competencies needed, strategies and goals all change, but the core remains the same. The drive for change in a Visionary Company is internal, they don’t often wait for the external forces to make them change. These companies have a high level of achievement motive. Visionary Companies display an interesting mix of self confidence and self criticism. The self confidence allows them to set audacious goals. Self criticism allows them to make changes before the outside world demands them.
Visionary Companies develop tangible mechanisms to preserve the core and stimulate progress. For example, HP helps assure the HP way will continue by having a policy of promoting from within. It supports that policy by tying appropriate reinforcing criteria to selection, promotion and appraisal decisions.
The key is to align everything to the core . Comparison companies frequently tolerate cynicism, strategies, behavior and attitudes that are not aligned with the core values.
Big Hairy Audacious Goals (BHAG’s):
The Visionary Companies use BHAG’s to challenge and motivate their workforce. True commitment to the BHAG is critical, its where the rubber meets the road. A certain amount of hubris is needed to set these goals. However, the goals seem much more audacious to those outside the company than those inside the company. The leaders of the Visionary Companies had great faith they could do what they set out to do. The authors found that 14 of 18 Visionary Companies used BHAG’s more frequently than did the comparison companies.
As an example, they give Boeing’s decision to develop the 707 at a time when they were not the leader in commercial aviation. McDonnell Douglas then the commercial aviation leader thought the future of aviation was in propeller driven airplanes. Building the 707 was a BHAG, it required a commitment of a quarter of Boeing’s then net worth. Its accomplishment propelled Boeing into commercial aviation leadership, where it has stayed. Boeing has a history of using BHAG’s.
GE’s vision statement, which is a BHAG, is compared to Westinghouse’s. GE’s vision, “Be number 1 or number 2 in every market we serve and revolutionize this company to have the speed and agility of a small enterprise.” Westinghouse’s was, “Total quality, market leadership, technology driven, global, focused growth, diversified.” The contrast is that GE’s goal is clear, compelling and exciting, and therefore, much more likely to propel progress.
The example of the moon mission illustrates the motivational power of BHAG’s. Kennedy the charismatic leader, who set the BHAG, died six years before we landed on the moon. Yet we were able to achieve this momentous accomplish because the BHAG itself was compelling, it took on a life of its own. BHAG’s help Visionary Companies transition across changes in leadership.
Paul Galvin of Motorola used BHAG’s to propel the engineers to greater achievement, Zenith did this some in its early years, but stopped doing this with the death of its founder. Eugene McDonald, the founder of Zenith was a great leader, but he was a time teller. Galvin was a clock builder.
An organization can have multiple BHAG’s at one time at different levels of the organization. They need to be very clear and very compelling. A BHAG is a goal not a statement. They should be outside your comfort zone. An organization has to watch out that once they have achieved their goal, they do not become complacent. One answer to complacency is to set another BHAG. BHAG’s needs to be consist with your core ideology. Boeing’s decision to develop both the 707 and 747 were clearly consistent with its core ideology of being on the cutting edge of aviation technology.
When a company develops a sense of its ability to defy the odds and accomplish great things, it makes people feel they belong to something unique, better. This is a key to high morale.

Cult Like Cultures:
Visionary Companies are not great places to work for everyone. If you do not endorse the core values of a Visionary Company, you will probably not like working there. Visionary Companies are not soft. They tend to be more demanding of their people for both accomplishment and adherence to the core ideology.
Visionary have four things in common with a cult: 1) a fervently held ideology, 2) indoctrination procedures, 3) acceptance of only those who adhere to the core ideology and 4) elitism. They draw clear boundaries to being inside or outside the company. If you are inside you are part of an elite group. The authors are not saying that these companies are cults, just more cult like.
The authors use IBM and Disney as really good examples of what it means to indoctrinate their people. The “In Search of Excellence” video has excellent examples to illustrate.

Try a lot of Stuff and Keep What Works:
Many of the Visionary Companies did their best things by opportunistic experimentation. They tried a lot of stuff and kept what worked and got rid of what did not work. Examples include:

  • J&J getting into the talc (Baby Powder) business
  • Marriott’s getting into the business of supplying food to the airlines.
  • 3M’s getting into the wet sand paper and masking tape businesses.
  • Walmart’s people greeters system.

This is evolutionary progress. The book argues for a Visionary Company being able to make revolutionary progress (BHAG’s) and evolutionary progress, if it is going to remain great. Evolutionary theory holds that changes that are adaptive to the changing environment allow the species to survive. “Multiply, vary, let the strongest live and weakest die,” those were Darwin’s words. RW Johnson said, “Failure is our most important product.” Managing failure is a key to evolutionary progress. Many companies, try a lot of stuff. Many are not able to get rid of things that don’t work all that well. They don’t prune well.
A 3M concept is that, “You so often get to where you are going by stumbling, but you can not stumble unless you are moving forward.” 3M understands that big things often come from little things, but you can not tell which little things will blossom into big things, try a lot stuff and keep what works. 3M in contrast to Norton installed a lot of practices that encouraged individual initiative and experimentation, Norton did no such thing. The saying at Norton was you could develop any product you wanted as long as it had a hole in the middle and was round. Norton is in the grinding wheel business.
Five rules to pursue to achieve evolutionary progress:

  • Give it a try and quick
  • Accept that mistakes will be made, let the weakest die
  • Take small steps, its easier to accept failure when it is small
  • Give people a lot room to act, allow people to be persistent
  • Build that ticking clock, that is make the four points above into a process. 3M Examples: a) researchers get 15% of their time to research anything they want & b) turning new products into divisions when they get to a certain size.

They found that the Visionary Companies were less likely to stick to knitting than the comparison companies. The knitting in a Visionary Company is the core ideology.

Home Grown Management:
The authors point out that Jack Welch was not a savior for GE. Welch inherited a very well managed company. Welch’s predecessor retired as the most respect business leader at that time. He was CEO of the year, one year. GE performed as well under Jones’ eight years as they did under Welch’s first eight years. Swope, CEO in the 20’s, introduced what we would call today the Balanced Scorecard. Welch has done a fine job at GE, but the point is that so did Welch’s predecessors at GE. They all: 1) were management guru’s for their time, 2) changed the company and 3) outperformed the competition.
The Welch era is about average for GE. See page 280 for the data. Also see tape for excellent description of the succession planning process used by Jones to select Welch. Jones started the selection of his successor seven years prior to the actual selection.
Comparison companies are six times more likely to have their CEO come from the outside. Only about 3.5% of CEO’s (4) at Visionary Companies came from the outside and three of them were from one company. Its the continuity of quality leadership that counts at the Visionary Companies. The authors found that continuity of leadership was better in 15 out of 18 pairs. Continuity of leadership is critical if you are going to preserve the core, while stimulating progress.

Good Enough Never Is:
A critical question at Visionary Companies is, How can we do better tomorrow than we have done today? Visionary Companies are tremendously demanding of themselves, i.e. they have very high standards.
Willard Marriott adapted what we’d call continuous improvement principles soon after opening his first AW Root Beer stand. Comfort is not the objective in Visionary Companies, they install powerful mechanisms to increase discomfort and stimulate change before the external environment demands it. They worry about becoming fat, lazy and complacent. Examples of mechanisms used to challenge complacency:

  • The brand structure at P&G
  • Merck consciously yields market share as products become older and less profitable
  • Motorola stops funding products that stop improving Comparison companies much more frequently take the easy road, milking successful products. Visionary Companies are much more likely to invest in the future. In all eight pairs where there was data, the Visionary Companies invested more in R&D. The Visionary Companies invested 30% more in R&D than the comparison companies. They also invested much more in human capital. They were much more likely to be early adopters of new ideas and technology. They give a good example of how Philip Morris reinvested in their future trying to become number one, while RJ Nabisco executives were spending money on self aggrandizing monuments to themselves (excellent example of personalized power at work).
    In 16 of 18 companies the Visionary Companies drove themselves harder for self improvement. They use the parable of the Black Belt to explain this ongoing quest for self improvement. The question posed to a would be holder of the black belt is, What is the essential meaning of the Black Belt? The person receiving the Black Belt must understand that they are at a beginning, not the end of a journey. The journey is a journey of never ending quest for self improvement and understanding.
    The End of the Beginning:
    To become a Visionary Company you must align objectives, strategies, policies and mechanisms within the company. You never really attain full alignment. Sweat the small stuff that paints a total picture of alignment. Cluster mechanisms to create alignment. don’t shot gun mechanisms. That is, cluster reinforcing mechanisms together to deliver a powerful punch. Be guided by your own compass in creating your great company. Ask not whether this practice is good, but whether its fits with our own ideology and ambitions. Obliterate misalignments.
    • Be a clock builder not a time teller, that is, an architect
    • Embrace the genius of the “and”
    • Preserve the core, while stimulating progress
    • Seek consistent alignment.

    People at all levels can help build a Visionary Company.

    Where to begin in building a Visionary Company? 

    First understand your core ideology and then build a worthwhile purpose.
    Put in place BHAG’s and mechanisms to stimulate progress.
    Then align the organization. The biggest mistake managers make is failing to get alignment.



Rather than seek increased revenues and profits by expanding products and markets, companies should follow a seven-step strategy for achieving more with less.

Faced with economic headwinds, many global corporations are struggling to grow their businesses profitably. In the consumer packaged goods business, for example, the worldwide recession has hurt premium brands as consumers have traded down to cheaper brands, private labels, or generics. In the retailing business, same-store sales are flat or declining for numerous companies. Meanwhile, many business leaders continue to seek growth by extending their existing product lines and brands, as well as by entering new geographic regions. After all, growth is supposed to be about “more” — more products on the shelf, more categories, more brands, and more markets.
However, this approach is exactly the opposite of what business leaders should do to drive increased revenues and profits. A typical “growth through more” strategy diffuses the organization’s efforts. It increases the complexity of the organization and its operations. We have found that “growth through less,” or more precisely “growth through focus,” is the best prescription for growth, regardless of the economic environment. This conclusion is based on our own experience in three well-known companies — Kraft Foods, Unilever, and Fonterra Brands (a dairy products business based in New Zealand) — on three continents over 10 years. In all three cases, a deliberate strategy of focusing on a few markets, brands, and categories produced impressive revenue and profit expansion. We have learned that seemingly mature businesses can be energized by making fewer but larger bets and by focusing relentlessly on executing a simple but powerful vision.
Growth through focus is not as easy as choosing what strategic bets to make. Rather, it requires the leadership team to follow a systematic approach that spans everything from strategy and vision to execution and measurement. We propose a framework that consists of seven steps that an organization must go through in its quest for growth through focus. Our framework is grounded in three key ideas: focus in strategy, simplicity in communication, and empowerment in execution………

Growth and the Winemaker’s Logic

To understand the logic behind growth through focus, consider what winemakers know about getting the best out of grapevines. Grapevines are very vigorous. With abundant water and nutrients in the soil, they tend to grow into large, leafy plants. However, overly vigorous vines produce lower-quality wine and smaller crops. When growing conditions are too rich, grapevines grow more leaves and become tangled. Leaves take nutrients away from grapes, which contain the seeds for future growth, and create shade, which inhibits ripening. To improve the quality of grapes, winemakers carefully prune grapevines and remove excess bunches of grapes to reduce yields. The remaining bunches ripen more fully and ultimately produce more concentrated wine.

Many companies, in effect, behave like inattentive vintners. Growth initiatives are often overstimulated with money and leadership attention. The result is lots of activity and a large number of growth projects, and this activity often does not correlate with outcomes. Quantity does not mean quality. To improve the quality of growth, business leaders need to cut back on marginal products, brands, and markets so that they have a better chance of winning in their chosen areas of focus.
Following the winemaker’s logic, company leaders must overturn conventional thinking about how to manage the organization, processes, and people for growth. (See the exhibit.) For example, a conventional core belief about growth is that companies need to extend their product lines and brands and to expand their categories and markets. Leaders hope that the more arrows they have in their quiver and the more targets they have to shoot at, the more bull’s-eyes they will score. But in reality, growth often comes from fewer but stronger arrows aimed at fewer targets. The engines of growth are focus (fewer brands, fewer categories, and fewer markets) and simplicity (simple vision, simplified execution, and simpler organizational designs). Conventional thinking also assumes that although complexity adds cost and makes the organization less agile, it is inevitable in a large global company. But complexity is an avoidable enemy of growth if you know what you are doing.
The logic of growth through focus also suggests a very different view on planning and leadership. Many companies tend to make long-term strategic plans, but they often have a short attention span in execution. CEOs and business leaders get seduced by doing something new and different well before the strategy has had time to play out. We recommend the reverse: Plan quickly and then stay the course for a long time, as long as five years. Leaders should resist the temptation to change strategies too often.

Seven Steps in Growth through Focus

Our experience suggests that growth through focus requires the organization to progress systematically through a set of seven steps: discovery, strategy, vision, people, execution, organization, and metrics. Taken together, they represent a powerful formula for driving profitable growth.

1. Discovery: Figure Out What Works

Science fiction author William Gibson observed, “The future is already here. It’s just not very evenly distributed.” And so it is with excellence. All large companies have pockets of excellent growth performance. The first step in the growth journey is to discover what is working well and where the company is already winning. These pockets of excellence help identify focus areas for growth. An effective way to uncover what works is to conduct a series of workshops with the top leaders from the company.
At Unilever’s Lipton beverages business, the process began at Colworth House, the company’s R&D center in the United Kingdom. The top 100 leaders of Unilever beverages from around the world were invited to a workshop in 2000, whose agenda was to build upon what was working well in specific markets and to scale the success across other geographies. One year later, this was followed by a “10 in 10” workshop in Brussels to discuss how to achieve sales of US$10 billion within 10 years in these markets and to imagine the future of Lipton as seen through the eyes of Unilever’s major competitors.
In Kraft Foods’ international business, the growth process kicked off in 2007 with seven workshops in six locations around the world, each including about 20 of the company’s regional business leaders. The agenda was open-ended, with the top leaders taking a backseat to prevent their rank from impeding the flow of ideas and insights. An external facilitator ensured that collective experience was gathered objectively. The workshops focused on what worked rather than on what did not work, because it is easier to build on what is working than to fix what isn’t working. To ensure a customer focus, workshops included extensive immersion with consumers and customers to provide insights into behavior, needs, and problems. This kind of immersion generates insights in ways that quantitative market research never can.
A few themes began to emerge from the workshops. Kraft Foods had excellent people, but their insights and ideas had been getting lost because of geographic dispersion, and their potential was not being fully realized. The company’s iconic brands had been built over many years, but several were underperforming. The planning process had tended to focus internally instead of externally, and had looked backward rather than forward. There was a lot of emphasis on analyzing what happened instead of figuring out what needed to be done. The conclusion was clear. The company urgently needed to establish clear priorities and accountability at a global, regional, and local level.
At the outset, the discovery process should be inclusive and democratic. It is important to involve key stakeholders within the company, particularly those who can make a valuable contribution and those who have the influence to get the masses of employees behind them. In addition, great insights often come from engaging with suppliers, creative and media agencies, and consultants who have worked with the company for a long time. On the other end of the spectrum, it is also important to listen to people who push back — and to manage dissent. As the process goes on and the framework and vision are agreed upon, debate on the strategic framework should cease and the emphasis should switch to execution.

2. Strategy: Focus through Lenses

The discovery process produces a set of success themes. In the second step, these themes need to be clustered and prioritized to define the focused bets that the company should make. Narrowing the focus is essential in order to concentrate resources on areas where the company has the best chances of winning. To take an analogy from photography, sharpening the focus on an object requires a telephoto lens that homes in on the subject while de-emphasizing background objects. Similarly, we have found that strategic focus requires lenses through which a company can look at its businesses. Lenses can be categories that the company is doing well in, brands that are performing well, geographies that are doing a stellar job, and platforms (like wellness or bone health in healthcare) that can serve to unify the company’s products and brands.
Consider the experience at Fonterra Brands. Through the discovery process, the company used two lenses — a product platform and a distribution channel. Using the platform lens, Fonterra identified osteoporosis as a key platform to bet on, based on its expertise in bone-health products. To pursue leadership on this platform, Fonterra entered into a partnership with GE Healthcare’s Lunar business to tackle the growing global health problem of osteoporosis using Fonterra’s Anlene bone-health products and GE Healthcare’s bone density technology. The partnership’s first initiative was the Anlene Bone Health Check, which provided free bone density screenings to millions of people in nine countries in Asia.
Using the second lens, Fonterra bet on the food-service channel as a key to its future growth. The outcome was a focused business called Fonterra Foodservices, which offers a complete suite of dairy products and tailored solutions for food-service professionals. Focusing through the distribution channel lens led to the strategy of creating a single “cow to customer” integrated business.
During the focusing process, each lens may produce several possible opportunities. These opportunities should be prioritized according to two criteria: the expected impact of the initiatives and the effort required. This exercise should result in a one-page preliminary plan that lists priorities for each lens. This preliminary plan should then go through several rounds of iteration with the input of key stakeholders. To improve the framework’s odds of adoption, it is important to involve as many of these stakeholders as possible in “owning” the outcome.
Once you find out what works, you can focus on it and scale the success to other markets, products, and brands. In the Unilever workshops, the company discovered that Lipton Portugal and Lipton Arabia were performing consistently well over time. Diving deeper into the reasons for this standout performance, the company found an interesting theme. In both markets, Lipton had been successful because it competed in the broad beverages market rather than limiting itself to the tea category. Further, in these markets, Lipton had done an excellent job of adapting its products to local tastes. For instance, Portugal had a successful iced tea business, whereas Arabia represented a successful hot tea market, despite the fact that Arabian countries have hot climates. The idea of taking a broader view of the business while remaining relevant to local tastes could be applied to Lipton’s other markets and categories.

3. Vision: Find a Simple Hook

Once the focus areas have been defined, the findings need to be summarized in a compelling yet simple vision. The vision serves as a rallying cry for the organization to align its efforts behind a clearly understood goal. Too frequently, the business strategies of large corporations are poorly understood outside the corporate headquarters and beyond the senior leadership of the company. To get everyone in the organization behind the strategy, it is vital to communicate the strategy across all levels and functions in the organization. This is the role that the vision plays.
To make the vision compelling yet easy to understand, we recommend creating a “hook.” The hook should be kept consistent over time and across customer touch points. It can be a color, a number, an acronym, a phrase, or a symbol. At Fonterra, the rallying cries were “Winning through Brands” and “Dairy for Life.” The vision embodied two themes: farmers’ pride (Fonterra is a cooperative owned by farmers) and the company’s emphasis on natural products, captured through the blue and green color of the company’s logo and merchandising. At Kraft International, the vision was expressed in numbers — “the 5-10-10 strategy,” which meant winning by focusing on five categories, 10 brands, and 10 markets. At Lipton, the vision was “Paint the World Yellow with Lipton.” The brand’s characteristic color signified brightness and sunshine, and stood for a broader Lipton beverage experience than just a cup of tea.
Once a vision is chosen, it needs to be launched with a bang through a seminal event designed to inspire the team. For Kraft Foods’ international business, the top 100 leaders were brought together on the 99th floor of the Willis (formerly Sears) Tower in Chicago in May 2007. The event kicked off with awards for teams around the world that recognized great work in various categories. Awards can set a positive tone, instill a can-do attitude, and make people feel like winners. At Lipton, the kickoff event was held at Colworth House, the 18th-century mansion at Colworth Science Park, where everything was painted yellow — including the lawn in front of the building. The theme “Paint the World Yellow with Lipton” was brought to life through winning stories from successful markets.
In communicating the vision, pictures are often worth a thousand words or PowerPoint slides. Simple visuals that depict the “from–to” journey can serve as powerful communication tools. Lipton used two visuals to bring the transformation journey to life — a picture of Audrey Hepburn, representing the Lipton brand as it was (classic, aristocratic, reserved), and a picture of Cameron Diaz, representing the new Lipton (bright, sunny, vibrant).

4. People: Unleash the Potential

Once the vision and strategy have been defined and powerfully communicated, the next step is to find the right people and to place disproportionate resources in their hands. The right people need to be placed in all functions — supply chain, R&D, marketing and sales — to ensure that you have the skills to win. Selecting those people requires a rigorous process of matching skills with the needs of the business. For instance, if the strategy involves focusing on a specific channel or set of brands, you need to find people who have expertise in the relevant channels and brands and put them in charge.
In Kraft Foods’ international business, significant changes were made in the top leadership. Less than two years after launching the transformation initiative, two-thirds of the top 30 leaders were new to their roles. Many of the new leaders came from within Kraft Foods. Some were hired externally, and some came from the successful acquisition of Groupe Danone’s biscuit business in November 2007. Similarly, at Lipton, a number of managers were hired from leading companies in the beverage industry (Coke, Pepsi, Schweppes) to augment the traditional grocery skills within Unilever.
Once new leaders are appointed, they need to be given the freedom to operate within the strategic framework so that their potential can be truly unleashed. Leaders should be challenged to act as entrepreneurs within large companies that have traditionally been perceived as process-driven and bureaucratic. In our experience, the biggest enemy of creativity and imagination in large companies is the budget. Resource constraints, real or perceived, limit the imagination of business leaders and prevent them from thinking creatively. To liberate people from these constraints, we recommend a counterintuitive approach: Give people huge targets and empower them with virtually unlimited resources. The targets should represent a quantum leap from historical results. Although it may seem that unlimited resources would encourage profligate spending, business leaders have a strong incentive to spend wisely, because they do need to deliver profits and margins, not just revenue increases. When leaders are asked to act like owners, they behave with an amazing sense of responsibility and often arrive at sensible trade-offs among risks, rewards, and resources. It is important that leaders not be penalized for failure unless they consistently fail to learn from experience.
Unleashing the potential of people also involves identifying and nurturing tomorrow’s growth leaders. During Kraft Foods’ transformation journey, a formal program called the Winners’ Circle was created to recognize and reward performance and potential in the international business. This program was designed after benchmarking against some of the world’s best companies. Rising stars from around the globe were nominated through a rigorous selection process, and the Winners’ Circle members were inducted into a leadership program designed to build their capabilities. Today, their career progress is carefully monitored and they are selected for challenging growth assignments across the company. The program has generated tremendous buzz within Kraft Foods because of its richness and depth.

5. Execution: Clarify and Delegate

With the discovery, strategy, vision, and people in place, the next challenge is execution. This is the most important step in the journey, and it is also the most difficult. Execution has two key elements. First, everyone needs to be clear about who will do what, to avoid ambiguity about roles and responsibilities. Second, decision making needs to be moved closer to customers and consumers so that the people responsible for results have the operating freedom they need. Most organizations have a mistaken conviction that the leadership team has superior knowledge on every subject. This belief conditions managers to assume that success lies in pleasing the leadership team rather than in winning in the market.
Kraft Foods found that the organization had become such a complex matrix that accountability was fragmented across functions, markets, and business units, yet decision making had become highly centralized. Decisions such as product pricing were being made at corporate headquarters, which took longer and excluded the rich knowledge and context of local markets. Even such routine decisions as the pricing of coffee in Germany were made at the corporate headquarters in Northfield, Ill.! This was changed to give business leaders the freedom to make decisions that would allow them to compete effectively in their markets. The role of corporate headquarters was made more strategic and less operational. Certain decisions involving food safety and purchasing were still kept centralized because they had to be made on a large scale, as opposed to those that demanded intimacy with local consumers and customers. These changes have had a profound effect in making the organization more nimble.
To accelerate execution, we recommend a strong bias for action. Business leaders should demand a dramatic reduction in internal documents and meetings. In our experience, too many meetings and documents foster analysis paralysis, promote internal focus versus external focus, and emphasize the past over the future. Much of the documentation is generated to please senior management, with endless hours spent on “wordsmithing” and editing. For the most part, we suggest a “no PowerPoint” policy in presentations; meetings are often far more productive if they focus on discussion based on pre-reading. Numbers may help tell the story, but too often, we find that numbers become the story and the big picture gets lost.

6. Organization: Build Collaborative Networks

Growth initiatives rarely fit within organizational silos of function, geography, and business unit. Rather, they need to be managed by creating communities and networks across the company, formal as well as informal. At Kraft Foods, certain networks, such as R&D, have always been strong. However, as business units were pushed to take P&L responsibility, it was important to set up collaborative networks to ensure that the best people with the best ideas were connected to leverage expertise and scale. Kraft Foods set up global category teams consisting of executives drawn from different functions and geographies to manage global brands, innovation, and supply chains across markets. Each team follows the approach that works best for its brand or category in terms of what needs to be done by whom, globally or locally.
Consider the example of Oreo cookies, one of Kraft Foods’ billion-dollar brands. Oreo was a strong brand in the United States but had historically been weak in the rest of the world. One reason was the assumption that what was good for Oreo in the U.S. was also good in China, the U.K., and elsewhere. The company learned from experience that this was not the case. To grow the brand in China, Oreo cookies were made less sweet to suit local consumer tastes. Oreo packages were made smaller, and new forms, like wafers, were introduced. Heavy emphasis was placed on local promotions and on-the-ground marketing activities unique to China. This localization, however, was carried out within the global brand positioning for Oreo. After implementation of the new strategy, Oreo became the market leader in China, and the Oreo business outside the U.S. began growing about 30 percent per year. Through the global category teams, Kraft Foods now has an energized, highly motivated community of employees around the world who sleep and dream Oreo.
This approach of matching skills with priorities and connecting communities to get the best mix of global and local ideas, within a clearly defined strategy, has a powerful effect in leveraging scale and expertise.

7. Metrics: Manage Numbers and Tell Stories

As the execution and organization processes get under way, it is important to keep score. Scorecards should be objective, and they should be kept simple. Overly complex metrics take attention away from the measures that really matter and can obfuscate execution priorities. At Kraft Foods, Chairman and CEO Irene Rosenfeld asked that the businesses create a one-page scorecard system that included three key measures — sales, profits, and cash flow. These three measures were made the basis for bonuses to all employees. This simple scorecard dramatically reduced reporting complexity and created clear accountability for results. Kraft Foods’ international business also uses a single-page scorecard to monitor the progress of the 5-10-10 strategy. Simplicity begets focus, because everyone knows what numbers the executives are looking at.
Managing growth requires a focus on numbers, but numbers alone are not enough. Storytelling is a powerful tool for propagating the culture of winning in the organization. A conscious effort should be made to write up and disseminate success stories from around the world. Leadership should make it a point at every large internal meeting to put successful people on the stage to share their stories with their colleagues. Success stories become part of the culture, and successful people become heroes in the eyes of their peers and managers. Moreover, highlighting the achievements of successful teams creates “positive shame”; the teams that are not on the stage feel strong peer pressure. This positive pressure is far more effective than the “negative shame” that would be created if the less-successful teams were berated in reviews.

Avoiding the Traps

With any transformation initiative, there are pitfalls to avoid and hurdles to overcome on the way to success. Here are a few to keep in mind in implementing growth through focus.
One common pitfall is to seek to build scale before fixing underlying problems. In choosing the markets and categories to focus on, for example, it is easy to get seduced by the size of the opportunity. Most large companies covet the hundreds of millions of consumers in emerging markets such as China, India, and Brazil. And they quote the minuscule per capita consumption of their products as an indicator of vast untapped potential. To convert potential into actual revenues and profits, however, you first need a business model that works. You must have the distribution reach, the supply chain, the manufacturing capabilities, and the right products before you can scale the business. Kraft Foods was in China for many years and had set ambitious targets that it did not achieve. In reality, the model was not working and the business was losing money. Scaling up the model simply made things worse. To fix this problem, Kraft Foods redesigned its business model, integrated its business with the acquired Danone biscuits unit, and got the appropriate talent on the ground. Only then did Kraft Foods’ business in China begin to grow and make money.
Another potential trap in implementing growth through focus is neglecting or mismanaging the parts of the business that do not fall within the core focus areas. This is the “tail” of your business — products, brands, categories, and markets that do not make it to the priority list. Consider, for example, the brand portfolio. Most large companies have hundreds of brands, but only a few will make it to the priority list. So what should you do with the rest? Simply cutting off the tail can be disastrous, because the decline of the tail is often faster than the growth of the core. Further, the non-core businesses often have fixed costs that are linked to the core businesses. Finally, cutting and divesting can have a huge demoralizing effect, because people often have strong emotional ties to some of these businesses.
What you need is a clear plan to manage the tail. We find it helpful to cluster the non-core businesses into two buckets — “milk or divest” and “local jewels.” The two buckets need very different management approaches. The first category includes businesses that do not make money and have no hope of making money, despite repeated promises of future turnarounds. These need to be divested over a defined time frame. Fonterra Brands exited markets such as Mexico and Egypt where the business had not performed well for some time, which freed valuable resources that could be redeployed to grow the core businesses. Local jewels are successful local businesses that can be retained in the portfolio but managed at arm’s length by local teams, leaving the global teams to focus on the core businesses. At Kraft Foods, the company found a number of such jewels that are now managed locally, but still help to provide scale in manufacturing and distribution. These businesses should be left to determine their own destiny but should be held accountable for revenues, margins, and cash flow.
Too often, when companies rationalize and focus, they slash expenses across the board. Two areas that take the brunt of cost cutting are people-related expenses (recruitment, training, travel) and brand advertising. However, talent and brands are the two most valuable assets for driving growth. We recommend increasing investments in hiring and developing talent, even ahead of the company’s needs. We also recommend increasing investments in building brands. The good news is that the growth-through-focus approach yields significant cost savings through elimination of management layers, reduction of overhead, and elimination of marginal businesses. Focus frees up resources that can be used to invest in the future.
Once a strategic direction has been established, it is important to stay the course until the strategy has been fully implemented. We find that large companies suffer from “corporate attention deficit disorder” — they tend to search for new strategies every few years, particularly after a change in leadership. But growth through focus requires patience and perseverance. In our experience, the transformation process takes as long as five years to play out. Leaders should resist the temptation to go for the “next big thing” in strategy peddled by management consulting firms and management gurus. Change for the sake of change merely produces a loss of momentum.
Finally, keeping a positive tone is vital to the success of growth through focus. It is very easy to slip into a negative spiral that can destroy morale and derail the transformation initiative. Although you do need to face the facts and make the difficult decisions, it is important to keep a positive tone and to promote a can-do attitude among employees. The energy that comes from winning is infectious. It inspires people to achieve goals that they have never before considered possible. Leaders should act as evangelists and cheerleaders, spreading the positive energy and making sure the teams are having fun at winning.
The sun generates a tremendous amount of energy, but it gives us only a warm glow. By contrast, a laser beam that uses a few kilowatts of energy can cut through metal. Such is the power of focus. If you are running a large global business with a big portfolio of brands, products, and markets, adding to your portfolio is likely to create more complexity than growth. To win in your businesses, you must harness the power of focus. By following the seven steps in our blueprint, business leaders can drive profitable growth even in difficult economic times. 

Building Scale for Focus: A Tale of Two Acquisitions

Growth through focus involves a reduction in the number of products, categories, brands, and markets that the company should focus on. But it also demands an increase in the scale of the businesses that the company chooses to focus on. Scale can be generated by building on the brand and product assets that the company has in its portfolio through organic growth. However, organic growth may not be enough to get to the required scale, particularly when the company is betting on markets or categories in which it is not a market leader. Further, in some emerging markets, building distribution networks from scratch is a Herculean task. This is where acquisitions play an important role in the growth-through-focus approach. They can help the company acquire scale in its chosen domains. The acquisition strategy should be driven by the focus strategy, and a clear logic should link the acquisition to the strategic framework for growth.
Consider Kraft Foods. The company had chosen biscuits and chocolates as two of the categories it wanted to focus on. It had also determined that markets like India, China, Brazil, Russia, and Mexico would be important for the company in the future. However, it lacked the scale, the brands, and the distribution networks it needed to compete globally in these categories and these markets.
Using this focus strategy, Kraft Foods identified two key acquisitions — the global biscuit business of Groupe Danone and Cadbury PLC, the U.K.-based confectionery company. In November 2007, Kraft Foods acquired the global biscuit business of Groupe Danone for US$7.8 billion. After this acquisition, Kraft Foods’ biscuits business accounted for 20 percent of the company’s revenue and catapulted Kraft Foods into the leading position in this category across the world. More importantly, it gave Kraft Foods an engine for faster growth in emerging markets. And in February 2010, Kraft Foods completed the acquisition of Cadbury for $19.5 billion, which has made the company a global powerhouse in snacks, confectionery, and quick meals. Kraft Foods now has access to Cadbury’s strong international distribution networks, which will allow it to penetrate deeper into emerging markets.

The focus lenses chosen in the second step of our approach can be used to identify and prioritize acquisition targets. In the case of Kraft Foods, the Danone biscuits and Cadbury business were attractive targets because they represented a triple win on the 5-10-10 scorecard — priority categories, strong brands, and strong presence in the key markets that Kraft Foods had decided to focus on. Further, these acquisitions brought in talent and a diversity of culture that will be a powerful asset for Kraft Foods as it grows its international business.
strategy and business

Author Profiles:

  • Sanjay Khosla is president of Developing Markets and Global Categories for Kraft Foods. He has more than three decades of leadership experience in global consumer packaged goods companies and has lived and worked around the world.
  • Mohanbir Sawhney is the Robert R. McCormick Tribune Foundation Clinical Professor of Technology and director of the Center for Research in Technology and Innovation at Northwestern University’s Kellogg School of Management. He has coauthored five books and many articles on marketing, technology, and innovation.

There are many theories on how to correctly “onboard” someone to an organization or a team. Most focus on how to provide the new hire with the information and skills she needs to succeed. But that can only take her so far. She will need connections and an understanding of the inner workings and culture of your company to be truly successful. Whether she is transitioning from another part of the organization or is brand new, you can get her up to speed more quickly by going beyond the basics and explaining how things actually get done.
What the Experts Say

According to Michael Watkins, the Chairman of Genesis Advisers and author of The First 90 Days and Your Next Move, there are four domains that new hires need to master: business orientation, expectations alignment, political connection, and cultural adaptation. The last two are often the hardest for managers to convey, and yet the most critical for the new person to understand. Watkins’ research shows that lack of cultural adaptation is the most common reason newly-hired managers fail. “It’s also the hardest area for managers to provide good advice, in part because they are embedded in the culture and not necessarily reflective about it,” he says. Jon Katzenbach, Senior Partner of Booz & Company, author of The Wisdom of Teams, and co-author of the forthcoming Leading Outside the Lines, notes that “a lot of onboarding focuses on the formal side of the organization and is programmatic.” But helping new hires understand the informal side of the organization will accelerate their acclimation. Follow these three steps to get your new employee productive faster.
1. Start early
Onboarding really begins with hiring. Start as early as possible in the process to expose your new hire to the organization’s or unit’s culture and to explain how work gets done. While selling your organization in the interview process is key to recruiting the right person, don’t risk his eventual success by not being upfront about how things truly work. “The starting point is to recognize that the best onboarding process can’t compensate for the sins of recruiting,” Watkins says. Be honest and don’t allow your vision of how you wish your company operated to confuse your communication of the reality of the situation.
Always recruit for cultural fit as well as skills and experience and identify transition risks, such as capability gaps or tenuous relationships, before the new hire starts. If he is transitioning from another part of the organization, don’t assume that he knows the culture. Companies, even small ones, often have different ways of doing things across units or functions.
2. Get them the right network
“The first thing a manager can do is ensure that the new hire understands how important the informal or ‘shadow’ organization is in getting things done,” Watkins says. It is your responsibility to explain this, but she will only truly experience it by meeting her colleagues. As soon as she starts — or even before — introduce her to the right people. “If the informal organization is really important, then the manager can accelerate the new hire’s political learning process by identifying key stakeholders and helping to establish connections,” Watkins says. Katzenbach suggests creating an “indoctrination inventory that includes meeting the people recognized as valuable resources for understanding how to make the organization work for you.”
You also need to be sure early in her new job she meets with “nodes” or “culture carriers” — people who others go to for different kinds of information and insight. These won’t necessarily be the people who have the highest rank or best title; instead they may be may be particularly connected middle managers or administrative assistants who decide when key meetings are held and who gets invited. “One simple way to do this is to identify ten people that the new hire really needs to know, explain to the new hire why they are important, and send messages to these stakeholders asking them to meet with the new hire,” Watkins says. If you don’t know who these people are, ask around or create a network map that helps you identify the “go to” people in your organization.
3. Get them working
This may seem like a no-brainer for bringing new people on board. Yet many companies start off new hires with a stack of reading and a series of trainings. Giving them real work immerses them in the way things function at the organization. This doesn’t mean you should let them “sink or swim”; definitely provide the support they need. Katzenbach recommends putting them on a real team where they can work on a real business problem. “Get them in working mode rather than a training or student mode,” he says. Doing this instead of busy work exposes them to the company culture, introduces them to the ways things get done, and helps them to begin making the critical connections they need to productively contribute.

Principles to Remember

  • Hire for cultural fit as much as for capabilities and skill
  • Introduce your new hire to “culture carriers” and “nodes”
  • Explain how work actually gets done at your organization


  • Let a new hire stay in “learning” mode for too long
  • Assume your new hire can’t be productive from the start
  • Rely on the org chart to help explain lines of communication

Case Study #1: Working within the first five minutes on the job
Michelle Pomorksi, started her job as a contract programmer at the software design and development company Menlo Innovations after an intensive hiring process. Within five minutes of walking into the office in Ann Arbor, Michigan, Michelle was working on a project. This wasn’t an “onboarding project” but a real one for clients. She was “tripled” (that’s company lingo for teamed with two other people) and sent off to a client site to do interviews. Rather than observing, Michelle actively participated and was expected to contribute by asking questions.
Rich Sheridan, founder and CEO of Menlo, thinks he has created a unique process to get new people productive faster than at other software companies. Every new hire is immediately paired with a current employee to do design and development work, in what the company calls “paired programming.” Pairs are switched every week so by the end of the first three weeks, a new person has three mentors to rely on for advice and help. Even better, after the initial three weeks, she is ready to mentor someone new. “The real power is in the pairing,” Michelle says. “There isn’t one day I’ve gone to work that I haven’t learned and taught at least one thing.”
The process is facilitated by an open work space: Menlo doesn’t have offices, cubes or doors. Rich thinks his hiring and onboarding strategy gives him an advantage over competitors because he can seamlessly expand and contract his work force according to client demand. It also makes employees enjoy a task they might otherwise dread. He acknowledges that onboarding this way requires careful attention to how pairs are put together and a good deal of orchestration. But he does not see it as a loss to productivity. “I probably get four times as much work done with two people pairs than most people get with two individuals,” he says.
Case Study #2: Start early and see the whole picture
Pat Lee, a top Marketing Director at Johnson & Johnson Asia, happily received a promotion to Vice President of Marketing. But, she was not fully prepared for the suddenness of the promotion and all that it entailed, including relocating to a different country. She immediately began planning the logistics of the move: deciding which town to live in, exploring job prospects for her spouse, investigating schools for her children. She expected to have all these details worked out in advance so that she could “hit the ground running” on her first day in the new job.
However, Joe, her HR business partner, urged her to begin the transition to the actual job before she made the move. He suggested she take a “transition risk assessment” to help her better understand the challenges she faced in the new role. This helped Pat to fully see the situation she was getting into and better understand herself. It uncovered several issues: she had never worked in another country before; she had never taken on a regional role; she had minimal understanding of how her company did business in other countries; and she had little knowledge of the people on her new staff, the office politics, and how things got done. She also didn’t know what her new boss expected of her and what phase of operation her businesses were in — start-up, turnaround, downsizing, optimizing on-going, etc. She realized she needed to address these problems and so with Joe, developed a Transition Acceleration Plan and started working with a coach, who helped her by interviewing her boss, direct reports, and colleagues to get honest feedback about their expectations. seo data . Doug Soo Hoo, former Director of Learning and Development at J&J, explains that this intense process is “a good way to get out of ‘sink or swim mode’ and an investment in the company that also shows a caring for the success of the individual.”
After three months on the job, Pat’s boss and her peers gave her rave reviews on how quickly she had mastered the “ins and outs” of the new situation and taken actions to address them. One of her new reports said it was almost as if she had been in the division for years.

According to IBM Global CEO Study titled “The Enterprise of the Future”. “Disruptive by Nature” is the fourth of the five characteristics that define the Enterprise of the Future.

Business processes, as well as some products and services, are becoming more virtual. New delivery channels and electronic methods of distribution are overturning traditional industry conventions. And these advances are not just changing the way individual companies work — they’re creating entirely new industries according to the survey.

Bottom line is simple. If the company is not ‘disruptive by nature’ it will be very difficult avoid commoditizing of its products or services. Future organizations cannot just capitalize on existing product advantage they possess. They need to continually look for ways to disrupt their own products and services. If they are not willing to do it, it’s quite likely that their competitors will be working on those products substitutes.

According to the study, The Enterprise of the future is:

1) Hungry for change: The Enterprise of the Future is capable of changing quickly and successfully. Instead of merely responding to trends, it shapes and leads them. ip info Market and industry shifts are a chance to move ahead of the competitions

2) Innovate Beyond Customer Imagination: The Enterprise of the Future surpasses the expectations of increasingly demanding customers. Deep collaborative relationships allow it to surprise customers with innovations that make both its customers and its own business more successful.

3) Globally Integrated: The Enterprise of the Future is integrating to take advantage of today’s global economy. Its business is strategically designed to access the best capabilities, knowledge and assets from wherever they reside in the world and apply them wherever required in the world.

4) Disruptive by Nature: The Enterprise of the Future radically challenges its business model, disrupting the basis of competition. It shifts the value proposition, overturns traditional delivery approaches and, as soon as opportunities arise, reinvents itself and its entire industry.

5) Genuine, Not Just Generous: The Enterprise of the Future goes beyond philanthropy and compliance and reflects genuine concern for society in all actions and decisions


According to a fascinating article in the current issue of Scientific American Mind, new research suggests that simply letting employees decorate their own office space yields quite significant benefits in productivity and employee well-being.

In the authors’ experiments, workers who could customize their office decor showed about a 30% improvement in productivity and well-being over those placed in undecorated office space. Not a bad return on office mementos! Meanwhile, people who worked in an environment that had been set up to include art and plants were 15% more productive than those in the undecorated space.
Bosses, however, should resist the urge to tinker unnecessarily with an employee’s decor if they’ve let the employee choose it. In the experiments, Scientific American Mind reports, productivity gains disappeared for “disempowered” workers who had their decoration choices overridden and their office rearranged — even though the rearranged office still contained art and plants. The Scientific American Mind article’s authors, S. Alexander Haslam and Craig Knight, conclude:

Employees perform best when they are encouraged to decorate their offices as they see fit, with plants and ornaments, comic calendars, photographs of their children or their cats — whatever makes them feel most comfortable and in their element.

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Extract from the MIT Sloan Management Review article Flat World, Hard Boundaries – How To Lead Across Them

…Technological innovations have revolutionized the workplace, bringing the competitive power of emerging economies’ fast-growth organizations into closer alignment with their developed-world counterparts. Paradoxically, at the same time that these developments have made doing business across borders easier, relational barriers — obstacles to productive human interactions — not only remain largely unchanged but in some cases have deepened. 

Consider the hurdles faced by those who lead functionally diverse teams across levels of management — often involving a variety of organizational partners who may be based in different countries. These leaders’ jobs are made easier by the technological advances that help to close gaps involving distance and knowledge. But the leaders also are confronted with entrenched boundaries such as residual bitterness between historical enemies, culture clashes, turf battles and generation gaps. Such boundaries invite conflict, impose limitations on performance and stifle innovation…

Technology has changed the way knowledge work gets done.
But have you changed your work habits enough to get the most from information technology?

MIT Sloan Professor Erik Brynjolfsson

MIT Sloan Professor

Erik Brynjolfsson

Researchers Sinan Aral, Erik Brynjolfsson and Marshall Van Alstyne have been studying information worker productivity for a number of years. (See, for example, “What Makes Information Workers Productive,”
In a new working paper, the three researchers highlight selected findings from their own work and that of others in order to offer practical tips to help information workers — and top managers — improve their own productivity and that of their organizations.
Here’s a quick summary of Aral, Brynolfsson and Van Alstyne’s four recommendations for improving individual productivity in information work:
1. Be an “information hub” in your network and maintain a diverse network of contacts.
Getting or sending a lot of e-mail is not, by itself, the best predictor of high productivity. But workers who are more central to information networks – who are well-connected and broker information between others – tend to be more productive, the researchers report.
2. Keep your e-mail messages brief and focused.
Research, the three authors observe, suggests that people who send short e-mails are likely to get responses more quickly than those who send longer, less focused ones. And getting faster responses to e-mail questions translates into better productivity.
3. Use technology such as e-mail to multitask more — within reason.
In one of their studies, Aral, Brynolfsson and Van Alstyne found that more productive employees used technology to enable them to multitask more and complete more projects. But that tip comes with an important caveat: The researchers also found that, if taken to extremes, excessive multiasking can actually decrease productivity.
4. Delegate routine information work to subordinates and use information-support systems.
The scholars found that the most productive information workers were more likely to allow lower-value information work to be handled by subordinates or IT-based tools. Those high-productivity information workers also were most likely to have knowledge of specialized information sources that gave them an advantage.

The Productivity Paradox

There’s a strange paradox when it comes to productivity. Rather than an exponential curve, our productivity will eventually reach a plateau, even with advances in technology. So what does that mean for our personal levels of productivity? And what does this mean for our economy as a whole? Here’s what you should know about the productivity paradox, its causes, and what possible solutions we may have to combat it.

What is the Productivity Paradox?

There is a discrepancy between the investment in IT growth and the national level of productivity and productive output. The term “productivity paradox” became popularized after being used in the title of a 1993 paper by MIT’s Erik Brynjolfsson, a Professor of Management at the MIT Sloan School of Management, and the Director of the MIT Center for Digital Business.

In his paper, Brynjolfsson argued that while there doesn’t seem to be a direct, measurable correlation between improvements in IT and improvements in output, this might be more of a reflection on how productive output is measured and tracked.

“Intangibles such as better responsiveness to customers and increased coordination with suppliers do not always increase the amount or even intrinsic quality of output, but they do help make sure it arrives at the right time, at the right place, with the right attributes for each customer.

Just as managers look beyond “productivity” for some of the benefits of IT, so must researchers be prepared to look beyond conventional productivity measurement techniques,” he wrote in his conclusion.

How Do We Measure Productivity, Anyway?

And this brings up a good point. How is exactly is productivity measured?

In the case of the US Bureau of Labor Statistics, productivity gain is measured as the percentage change in gross domestic product per hour of labor.

But other publications, such as US Today, argue that this is not the best way to track productivity, and instead use something called Total Factor Productivity (TFP). According to US Today, TFP “examines revenue per employee after subtracting productivity improvements that result from increases in capital assets, under the assumption that an investment in modern plants, equipment and technology automatically improves productivity.”

In other words, this method weights productivity changes by how much improvement there is since the last time productivity stats were gathered.

But if we can’t even agree on the best way to track productivity, then how can we know for certain if we’ve entered the productivity paradox?

Possible Causes of the Productivity Paradox

Brynjolfsson argued that there are four probable causes for the paradox.

▪ Mismeasurement: the gains are real, but our current measures miss them;
▪ Redistribution: there are private gains, but they come at the expense of other firms and individuals, leaving little net gain;
▪ Time lags: the gains take a long time to show up; and
▪ Mismanagement: there are no gains because of the unusual difficulties in managing IT or information itself.

Why Work-Life Balance is Becoming Critical

The problem of work-life balance is becoming more acute in organizations, and there is a disconnect between employers’ and employees’ perspective on this issue.

A study of the issue of work-life balance in Europe completed by Joan Lazar and published in the journal, European Research Studies (link is external), showed that competing and multi-faceted demands between work and home responsibilities have increased substantially in Europe, and the result has been many government-led policy initiatives. Her research shows that workers who feel they have some control over their working environment tend to suffer less stress-related ill-health; and turnover is less frequent.

Millennials will represent the majority of the workforce within the next few years. Employers that grasp the importance of understanding Millennials will be better positioned to adjust their employer branding strategies and employment offerings around the expectations of Millennials. Of these expectations, two stand out: Millennials rank achieving wealth below spending time with family followed by personal growth and learning. They spend a much higher value on having enough personal time. Work-life balance is critical to them., a research and advisory membership portal servicing forward-thinking HR professionals, and CareerArc, a global recruitment and outplacement firm, announced the results of a new study (link is external)entitled, “2015 Workplace Flexibility Study.” The study was based on a national survey of 1087 professionals. The study included the following conclusions:

  • 67% of HR professionals think that their employees have a balanced work-life, yet 45% of employees feel that they don’t have enough time each week
  • 65% of employees say that their manager expects them to be reachable outside of the office
  • 64% of HR professionals expect their employees to be reachable outside of the office on their personal time
  • 87% of HR leaders believe that workplace flexibility programs lead to employee satisfaction, and 70% of HR leaders use workplace flexibility programs as a recruiting and retention tool
  • 50% of employers ranked workplace flexibility as the most important benefit they believe their employees desired, compared to 75% of employees
  • 79% of employees ranked financial support, such as tuition assistance, as being most important after time off.
  • Only 34% of the organizations surveyed currently offer outplacement assistance to their laid-off employees.

Dan Schawbel, Founder of and New York Times best-selling author of Promote Yourself, said “Technology has expanded the 9-to-5 workday into the 24/7 workday, which has made it extremely difficult for employees to have personal time… In the future, every company will have flexibility program and those that don’t will lose the battle for the top talent.”

Part of the problem can be seen in the debate or push-back from employers. They are concerned that giving workers too much flexibility or “free time” will result in abuses.  At the same time, there is no evidence to support the proposition that “face-time” or “seat time” is the equivalent of engagement or productivity, which can realistically only be measured by results. There are new studies now available that show that in organizations that provide flexible work-life balance arrangements productivity actually increases.

The other perspective that becomes part of the issue of work-life balance is that of gender. With the increase in the numbers of women in the workforce, combined with the predominant expectation that they will continue to shoulder most of the responsibilities of child-rearing, the lack of work-life balance becomes more acute.

My experience in coaching CEOs and senior executives is that work-life balance is a serious and troublesome issue for them. Increasing demands on their time, and brutal meeting schedules regularly interfere with their intentions to spend time with their families. But most interestingly, many of them express dissatisfaction about not having time for themselves, because precious little time is left over.

It’s clear from recent studies such as the and CareerArc study, that the issue of work-life balance is becoming more significant, particularly in light of the large influx of Millennials into the workplace. Smart employers would do well to take note and become proactive.

Post published by Ray Williams  in Wired for Success

Buddhist trained HR executive, Michael Carroll, author of the Mindful Leader: Awakening Your Natural Management Skills Through Mindfulness Meditation applies the key principles of mindfulness and how they could apply to leaders of organizations. He argues that mindfulness in leaders and their organizations can:

  • Heal toxic workplace cultures where anxiety and stress inhibit creativity and performance;
  • Cultivate confidence;
  • Pursue organizational goals without promptness;
  • Lead with wisdom, not only with ambition, relentless drive and power;
  • Develop innate leadership strengths.

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