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By Morrey Ewing
INTRODUCTION
Today, many chief executives feel torn. Looking down their boardroom table at their Executive Committee, they feel acutely ambivalent: "I like these people, I like what they do in their own areas, but how do I get this crew of individuals to work together, as a team?"
xxxTrue, this cry is neither new nor startling. The difference we hear repeatedly from Presidents and CEOs is that now, more than ever, it matters. Top executives now rely on their line and staff leaders to show joint initiative, act together and take collective responsibility. Anything less risks underperformance - across the board.
xxxThe emerging response is a new model of company direction, away from what we call a 'team of leaders,' to something closer to a 'leadership team.' At least, that is the new goal; getting there will be more difficult.
II. THE 'TEAM OF LEADERS' MODEL
At one time, most observers saw a firm's President or CEO as the one, truly significant leader. The 'Commander-in-Chief's' direct reports were 'CEOs in waiting.' An individualistic leadership style was a given. How they performed as a group was not significant. Harry was the 'baron' of Western Region, Sally ran R&D, and Fred controlled Ops. Their own function's results mattered far more than anything they did in common.
xxxThis 'Team of Leaders' model was simplicity itself. 'Job One' for mid-level managers was to produce the best numbers possible in their own sphere. Sales Directors strove to meet rising sales targets. HR Managers kept labour costs in line. The more consistently they met their personal targets, the faster they rose in rank. True, they always had tasks to perform for the wider business, but success at these was rarely critical. Failing to hit their personal goals, however, ensured a seat on the bench.
xxxThe lure of this model went further. First, accountability seemed clear. If sales declined, we held the head of Sales responsible. If R&D yielded few new winning products, we could fire the Chief Technologist.
xxxBetter yet, in a 'Team of Leaders,' everyone's role was clear. Leaders had a defined territory, knew their job, and worked among familiar people who talked the same language. Plant Managers managed operators and CFOs led controllers. Each junior manager learned and grew by climbing up the ladder of his or her own function.
xxxThus, it was often only at the top table where functions regularly met. Only there did the SVP Marketing have to sit down with the SVPs of Sales, Operations, Finance, and Systems. Only there was each likely to learn from the others about their chosen directions or decisions. Even so, such meetings usually failed to foster any true 'meeting of minds' yielding real business benefits. Often, talk either displayed a veneer of politeness masking indifference or a constant sparring revealing general hostility.
xxxCEOs have long noticed this lack of teamwork and collaboration when their Executives gather. Until recently, many saw it as a fact of life. Some even encouraged it, treating their top table as an arena in which managers could compete for position, or prospects of promotion. More and more, however, they see that this leadership style no longer meets their needs.
III. PORTENTS OF CHANGE
Why are CEOs becoming impatient with this trusted leadership model? Why does the tried no longer seem true? To explain their attitude shift, consider the forces for change at work in today's organizations.
xxxOne potent force is the growing complexity of business. Domestic firms are 'going global,' everywhere. Investor demands for ROE and share performance keep rising. Customers grow ever more exacting and distinct - no longer accepting mediocre service, or 'one size fits all.' Technologies and new products trace declining life cycles - so we plan their successors even before they peak. As workforces become more diverse, old motivators no longer apply. The organizations we raced to restructure are now so lean they seem harder to energize with so few people doing so much work. And the list goes on.
xxxAs complexity mounts, so do the challenges to leadership. We no longer rely on the head of Sales or Marketing for double-digit revenue growth. We engage all our best minds, to find the 'breakthrough' ideas that most often emerge when different viewpoints swarm around a shared problem.
xxxA related ingredient is the growth of issues demanding cross-functional solutions. Take cost control. Now that all units have cut back by say, 10%, on their own, we need more radical insights. Often, these surface only when we combine different areas of knowledge and experience in new ways. So, we learn that choices made upstream years ago in Product Development lead to overruns in Customer Support, today. Unless we discover how our business works as a system, we take the wrong action in the wrong place. Revenues may fall, yet without sustainable lower costs.
xxxA third driver is the decline in the CEO's direct resources. Without large head offices or staff groups, whom can they call on? Increasingly they look to Harry, Sally, Fred, Charlie, and Nancy to take on major project work, on critical, firm-wide issues. Initially, this looks like a one-of-a-kind event; soon, these leaders find out that their roles have changed forever. Perhaps most important has been the growing use of the top team for strategy development. In past, either professional strategists or CEOs did this, on their own. Then, people began to notice that some of the best performing companies rarely relied on some brilliant, complex strategy. Instead, success appeared to be due more to superb execution of simple ideas, understood, and followed by everyone. Apparently, the best way to build commitment to a strategy throughout its leadership was to involve them in every aspect of its creation, enhancement and implementation.
IV. LEADERSHIP TEAM MODEL
To adapt to these forces, old-style leaders need to stretch - for some, way beyond their comfort zone. Their CEO needs them to become different people than they were trained to be, or for some, have the potential to be. Consider what must change for traditional leaders to start contributing to an effective leadership team. They must learn new skills, perspectives, tools and competencies, and leave behind old ways of doing business.
From Departmental Advocacy to Joint Solutions Development:
In the old model, the head of, e.g., Operations had the task of promoting that department's views whenever disputes arose with others. Whether fighting for scarce capital or resisting demands from Sales that could disrupt smooth operations, a key skill was competitive advocacy. The goal was to win the resources to do the job, plus the chance to get on with it, preferably alone. In Executive Committee, the focus was on persuading the boss or fending off interference by others in one's function. In part, success relied on keeping all other departments at arm's length.
xxxNow their task is often to work together on common challenges, to reach common answers. Costs of production are rising? Product quality is failing? CEO at Leadership Team meeting: "I think this calls for a working group with representatives from Marketing, Sales, Operations, and Product Development. Together, your areas probably hold the answers. Fred and Nancy, you should be co-sponsors. Would you report to us next time on a proposed project mandate, objectives, timeline and staffing?"
From Directing to Collaborating:
Whether cross-functional task groups or the top team is meeting, a leader's style must become more cooperative, and less authoritarian. In part, this is because they need to build joint solutions together. Fred and Nancy cannot throw their weight around with Each other; both will fail, if rivalry impedes group performance. Equally, in the boardroom, the Leadership Team will be searching for joint conclusions and decisions. Such a mandate requires open, non-defensive, thoughtful contributions from all members. Curiosity and listening skills become paramount.
xxxMoreover, hierarchy within teams also declines. Today, a cross-functional, company-wide project may involve members from many levels, and often, customer-facing staff. Anyone bringing needed insight and data straight from the market can be as critical as those with high rank. So Fred and Nancy must suppress their directive instincts, and listen to those from other levels whose ideas they rely on to succeed.
From Narrow Specialists to 'Whole Business Managers':
It used to be that, as head of Marketing or any other function, you could be 'unilingual.' When you talked about CPMs and audience reach, it only mattered if your boss understood you. Some even preferred other functions to be in a continuous fog about what they were saying.
xxxThis was more than specialist jargon; it also stemmed from the unique contribution each was to bring. Marketing designed product 'specs' to meet customer demands they had surveyed. Engineering then built a prototype. Ops. made the product, Marketing advertised it, and Sales moved it. When each knew his or her own role, others did not need to.
xxxToday, we expect each senior leader to become a 'whole business manager.' Each needs to understand how all the pieces fit together and how to resolve problems, not only 'at the interface' between functions, but also at their core. For example, the origin of symptoms showing up in Sales (e.g., poor retention) may lie within Marketing and Operations.
xxxThis means each leader must understand the language, perspectives, and problems of their peers, not as experts, but as 'informed consumers.' It also means they must build an understanding of how the entire operation works, how processes fit together, and how they drive outcomes across the business. Just as critical, they must learn to communicate their own areas of skill and knowledge to their peers. (This also means they cannot permit the specialty skills that first got them to the table to grow rusty.) So, they must become both learners and teachers, all at once.
From Tactical to Strategic in Orientation:
In past, we did not want functional leaders engaged in strategic thinking. This was the preserve of the CEO, 'Corporate Planning,' and their report writing allies, the global consulting firm. Today, the CEO wants much broader involvement in strategic thinking, among the leaders and indeed, employees. Corporate Planning either takes a lower profile, or has gone away. Meanwhile, Global Consultants Inc. struggles to adapt their 'expert outsider' model to the job of encouraging internally developed strategies.
xxxTo those who have been immersed in making and implementing tactical decisions, the word strategy can seem overwhelming. Happily, the best strategies are the simplest, which everyone can understand, support and act upon. They answer basic questions in simple language:
•Who are the customers we will pursue?
•What are the benefits they want we will offer?
•How will we deliver and communicate those benefits to them?
•Which activities must we excel at and how, in support of this strategy?
xxxOur experience teaches us that any manager who is intelligent and open can learn to think about these questions, and develop strong, creative strategies that can succeed in their marketplace.
V. HOW CEO'S CAN DEVELOP THEIR TEAMS
It is not enough to know what kind of team to build. How can we pull an existing group of leaders into that future? Where should we begin?
xxxOne place to start is an inventory of the skills and potential of those on the team. To signal an immediate change, a CEO could involve the members of that group in evaluating the strengths and weaknesses of themselves, and each other, from a team contribution perspective.
xxxFrom this inventory, and the CEO's own observations, a personal development plan could emerge for each individual leader.
xxxSome of these will highlight gaps that educational programming could fill. For example, there may be a lack of understanding of other key functions and a general management perspective. Many business schools offer focused executive management programs to fill these gaps. The very largest businesses are building their own leadership curricula.
xxxOther areas for growth may be much more due to personality traits than skills or knowledge. While courses may help here, it could also be that individual counseling may better support someone who recognizes a need to change and is committed to work at it. For example, leaders who relapse into old-style communication patterns may need professional guidance to help them change.
xxxStill, the two most powerful levers rest in the hands of Chief Executives themselves. These are: the style they bring to their one-on-one interactions, and the ways they lead their teams when they convene.
CEO Interpersonal Leadership Style:
CEOs can have a major influence on their direct reports simply by giving them new types of challenges. These challenges ought to be those that a head of Sales could only resolve by getting closer to Operations. Overall, CEOs conversations with each of their leaders should reflect the development priorities they have for that leader.
xxxSimilarly, they can demonstrate curiosity about what each functional leader is seeing in their own part of the business, but in ways that constantly raise up a wider company viewpoint. For example, to the leader of Customer Service, "What are customer complaints telling you about what new products we should be building? How are you sharing that data?"
xxxThey can assign general management problems to pairs of their leaders, and provide resources that will strengthen their mutual understanding of the problems they need to solve, and cross-functional solutions to consider.
Approaches to Leading the Leadership Teams:
Meetings of the Leadership Team represent a critical opportunity for a CEO to develop their team, into a team. They can also demonstrate how seriously they take this priority. Leadership team agendas need to be primarily about building and implementing strategy, building and implementing company values, overseeing company performance, and taking corrective measures when performance lags. CEOs must ensure that their 'general managers' focus on these subjects, rather than tactical actions or sterile reports of departmental progress.
xxxLeadership team discussion styles are the responsibility of the CEO, who should both promote positive behaviours and discourage negative ones. Constructive, collegial conversations are important, but equally so, debates that enable members to tackle tough subjects openly, creatively, and without fear. An ability to ask questions that reveal ignorance, and a willingness to explore uncomfortable subjects both offer CEOs the chance to model the very behaviour they might want to encourage.
xxxParticipation expectations are also in the hands of the CEO, at least initially. It should be clear that no member of the team can sit on the sidelines, either by saying little, or by taking shots at others. For those expectations to be real, consequences for lack of contribution will be essential. In time, the team can develop Guiding Principles it can use to govern itself.
xxxMeeting outcome expectations are equally important. Each meeting should assess whether objectives were met. As appropriate, each should result in assignments of work, with agreements on who should report by when. Initially, the CEO may need to oversee follow up. Here, too, an effective Leadership Team will gradually take over that role from its CEO.
xxxTo make expectations real, those responsible must accept joint and personal accountability for performance. CEOs can lead by owning up to their own mistakes, and by failing to tolerate finger pointing, whenever it emerges. The Leadership Team must come to see poor results as a vital lever to aid the improvement of the business, not a threat to be ducked, or a chance to take shots. Most of all, CEOs can demonstrate respect for the role of their Team, involving them in major decisions, taking their thinking seriously, and demanding the highest quality performance from the group overall.
VI. LAST THOUGHTS
Chief Executives can greatly strengthen their task of leading a high performing company by fostering a genuine Leadership Team. To do so, they must continually promote the collective ability of their leaders to run the business, in common. The first challenge for CEOs is to understand the development needs of each of their leaders. Then, they must decide how best to stretch each individual, while encouraging the growth of their team as a whole.
xxxThe prize is worth the time and effort - an effective, collaborative group of general business managers, taking initiative, responsibility, and strategic action, together.
If you have any comments or questions for Morrey Ewing, he may be reached at: morrey@sympatico.ca
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