‘Enter the Dragons’ Den’ by Alicia Clegg, Management Today, January 2012

This article builds on a theme that has been covered in several recent blogs, the need for those with top management ambitions to get international experience, particularly in the bigger growth markets of India and China.  Like most articles in Management Today, it is quite short but, unlike many, it shows considerable knowledge and provides many insights.

The article starts by suggesting that the conventional solution for those who want to gain international experience has been to look for a stint in the local operation of a major multinational.  However, this is unlikely to provide the necessary insights because the cultures of such operations tend to reflect their country of origin.  At MTP we can confirm this; a group of managers from a multinational business are a totally different challenge from those working for a local company.

The author therefore argues that the really ambitious potential CEOs should be - and increasing numbers are - looking for a post in locally owned businesses which truly reflects the national culture.  And it is argued that such opportunities are around because many such companies are looking for western managers to spearhead their global ambitions.

The downside is that fewer than half of such ambitious managers make the transition successfully, with many lasting less than a year.  This is because of a failure to adjust to the different culture, for instance in Asia it is hard to adapt to the length of time in decision making and the speed of execution once decisions are made.  An even more difficult adjustment is the importance of out of hours socialising, an essential part of senior jobs in Japan, India and China.  There is also a failure to understand the complex power structures and the importance of age and seniority.

Though I found the article valuable and topical, I was surprised not to read anything about that most recent drama in Japan, the attempt by Michael Woodford, British CEO of Japanese company Olympus, to unseat his fellow board members.  Here was a current battle that backed up this point in spades; it showed that, even with right on your side, you cannot be sure of defeating those with history, culture and seniority to protect them.

The author puts forward two examples of managers who have taken this career road, one in India, one in China.  Both happen to be women, though the article makes it clear that this is not typical; one of the barriers to finding senior positions in such companies is the continued dominance of men, for instance only 12% of those in senior positions in India are female.

The article also makes it clear that this is a two way street.  For some time indigenous companies with truly global ambitions have been realising that their senior management has to have multinational experience.  In a few years’ time it will be normal for CEOs from China and India to be running companies of western origin and for western CEOs to be running major companies in Asia.  And their success will depend on how well they adapt to different corporate and national cultures.

Click here to view the article in full:

http://www.managementtoday.co.uk/features/1109849/business-developing-economies-enter-dragons-den/

‘The Shackled Boss’, Schumpeter column, Economist, January 21st 2012

Once again I visit the Schumpeter column for an insightful and topical contribution.  Schumpeter challenges the conventional view that corporate CEOs are ever more powerful and are paying themselves too much.  The article points out that, in reality, they have never been more powerless and are under increasing pressure.  It is suggested that the developments of the first decade of this century - Enron and similar scandals, the financial crisis - have made CEOs feel ever more embattled by events and public criticism.

The article reveals that the job tenure has been shortening, though I have to confess surprise that it is still so long, apparently down from 8.1 to 6.6 years during the last decade.  There are however many examples of CEOs bringing the average down; for instance, Leo Apotheker stayed only seven months at SAP and ten months at Hewlett Packard; surely, once is unfortunate, twice is incompetent!

These shortening tenures and the pressures involved are seen by Schumpeter as an argument that the much criticised levels of pay for top people are justified by the risk and insecurity that goes with the job.  

Nevertheless the demands to curb these pay levels are increasing, placing yet more pressure on those at the top.  And the article argues that, though there has been criticism that shareholders are not proactive enough in challenging strategies and pay levels, there has in fact been a major increase in shareholder activism in recent years.  There are now far fewer CEOs who also act as Chairman, and the days of appointing friendly, acquiescent non-executive directors to toe the line are largely over; the calibre of the people and the breadth of their experience are much increased.  In many board rooms the CEO is facing a group of adversaries, watching every move.

There is also evidence - which I had not seen before - that companies with active shareholders and challenging Boards of Directors, actually achieve higher operating profits.  The downside is that this may be at the expense of long term growth.  It may also cause the tenures to be even shorter, as embattled CEOs decide to move to the smoother waters of private companies.  This might cause those who insist on cutting pay levels to think again; the large amounts which cause so much criticism will have to be paid to reward and retain those who choose the high risk and high pressure at the top of public companies.

Click here to view the article in full:

http://www.economist.com/node/21543117

‘How the growth outliers do it’ by Rita Gunther McGrath, Harvard Business Review, Jan/Feb 2012

This article is based on some interesting research by Columbia (New York) Business School where the author is a professor.  It adopts the same approach as many previous studies – started by ‘In Search of Excellence’ thirty years ago - looking at successful businesses and trying to find the common characteristics that correlate with success.  The pitfalls are that correlation does not always mean cause and effect and - as Peters and Waterman found with In Search of Excellence – success is rarely sustained long term.

The objective of the research was to find the drivers behind that holy grail of modern companies and economies - consistent, sustainable growth.  The initial statistics around those companies who have achieved consistent growth are very surprising and make you realise how difficult it is to deliver.  According to the research analysis, only 10 companies out of 2,347 (less than 0.5%) managed to achieve 5% compound growth consistently for 10 years.  And only 4% did so for 5 years.

The researchers looked for common factors but were able to eliminate all the obvious ones; industry, size, market, region, age of company, environment, founder type, were all found not to be correlated with consistent growth.  The companies who delivered were found to be different in every way.  The only common factors that seemed to deliver consistent growth were:

• Stability of top management (although lower level executives were moved around)
• A willingness to take small bets early in new markets
• Diversification of the portfolio; those that are growing compensate for those in decline
• A willingness to acquire to gain access to new markets, usually small acquisitions
• An ability to adapt to changing markets and consumer needs
• Innovation that is centralised and integrated (see Steve's  Jobs autobiography review for similar views)
• Companies that are not very well known, and therefore have less public pressures
• Central control of key decisions
• Consistent strategies, no major divestments

Most interesting to those involved in learning is the final factor, the importance of corporate culture and shared values, with coordinated training as key to success.  This results in the ability to develop and retain talent.

With this kind of research, the inevitable follow up question is - what do we do with it?  Aren’t some of the above just obvious factors that are associated with success?  Aren’t, for example, stable top management and retention of talent, the effects of consistent growth rather than the causes?  And isn’t it obvious that those companies who acquire others will grow?

Nevertheless the results are food for thought and question some of the conventional wisdom, particularly around acquisitions and diversification.  But you would expect more on the implications for decision making from an Harvard Business Review article.

Click here to view the article in full:

http://hbr.org/2012/01/how-the-growth-outliers-do-it/ar/1

‘Two sides of the same coin’ by Bruce Murray, Training Journal, February 2012

This is a rather academic article that may seem short on practical application but is nevertheless thought provoking.  At MTP we found after the first few years of our existence that using the word ‘training’ as part of our title gave the impression to some potential clients that we were working at a lower level than our competitors the business schools.  I remember one particularly pretentious contact telling us that training is for dogs, education is for managers.  So we were not too concerned when the origins of our name became forgotten as ‘MTP’ became our brand.

We also found that emphasising ‘learning’ rather than training seemed to work best with many clients and was in line with the way things were moving.  But I always retained the view that it is not ‘either/or’ and we should not be ashamed to say that there are elements of both training and education in what we do.

The article starts with an amusing example of the importance of choice of words, pointing out that most parents who hear that their child is attending a sex education class would not be worried but sex training would be a different matter.  This makes the point that, in most people’s minds, education is about knowing whereas training is about doing.  And this distinction leads on to another feature of attitudes of learning professionals in recent years; the tendency to reject any initiative that is positioned as awareness or knowledge, because it does not change behaviour.  Thus both words - training and education - have been ones to avoid and the emphasis has been on learning and the transfer to behaviour.

The author goes back to some early theory to justify his arguments.  He quotes John Dewey’s ‘constructivism’ which emphasised the importance of interaction between new learning and existing experience; the teacher is not all knowing but offers concepts and ideas for students to build on.  He follows this up by quoting Pablo Freire’s work which condemned the conventional academic lecture and saw the teacher’s role as posing problems, mentoring and guiding.  This was later converted into the catchy slogan - no longer the ‘sage on the stage’ but instead a ‘guide on the side’.

This trend has been strengthened as modern economies have moved towards the service sector with more complex business models; there are fewer hard techniques and accepted right answers in the study of business.  On the other hand there are still many industries and processes where the scope for argument is limited; the author quotes weapons training as an area where you wouldn’t want to allow scope for learner interpretation!

All this leads to the perhaps obvious view that it is ‘horses for courses’; all depends on content and audience and most learning programmes will quite rightly have a combination of education and training.  There are some areas where knowledge is not in dispute and must be retained; others where there is scope for adaptation to context and situation.  The good trainer/educator - at MTP we use the word ‘tutor’ in an attempt to find the right balance - will see the need for both approaches and design a programme that integrates them in a way that is engaging and enjoyable.

It could be argued that this article takes a long time to say something that is pretty obvious but, despite this potential criticism, I found the journey interesting and informative.  It is often useful to be given an academic framework to support an approach that has evolved pragmatically.

Click here to view the article in full:
http://www.trainingjournal.com/magazine/

‘How leaders kill meaning at work’ by Teresa Amabile and Steven Kramer, McKinsey Quarterly, January 2012

This article focuses on an issue around strategy that does not always get enough coverage, the importance of communicating and engaging key people to achieve implementation.  However it tends to have a negative approach, focussing on what top managers often do badly rather than positive suggestions to get it right.

Nevertheless there are some interesting insights and examples, taken from a recent book by the authors ‘The Progress Principle’.  The central theme is that, to achieve fulfilment at work, managers and employees have to see meaning and progress in what they do.  Yet this meaning is often undermined by top managers who keep shifting goals, failing to keep people informed and being dismissive about the importance of the work that is being done.  To be fully motivated managers require incentives, recognition, clear goals and interest in progress of their work; but too often they fail to receive this kind of support.

The essential factor is for the person at the top to be seen and heard doing and saying the right things.  The article quotes four traps that CEOs frequently fall into and which should be avoided; these are based on interviews with 669 managers in a range of companies.  The labels for these traps are:

• ‘Mediocrity Signals’ - talking the talk about innovation and investment, then cutting costs in the areas needed to achieve these goals
• ‘Strategic Attention Deficit Disorder’ - shifting from one initiative to another, not allowing time for initiatives to succeed
• ‘Corporate Keystone Cops’ - lack of coordination, complex structures, lack of functional coordination
• ‘Misbegotten BHAGs’ - grandiose plans (Big Hairy Audacious Goals) that are unrealistic and not based on rational analysis

There are some suggestions of ways to avoid these traps but these do not emerge from the research and come across as rather obvious and unoriginal; for instance strategic clarity, taking the employees perspective, early warning systems, higher purpose, support talk with action.

On the evidence of the article, I would not recommend moving onto the book.  There is too much emphasis on the negative and the positives feel too much like motherhood and apple pie.

Click here to view the article in full:

http://www.mckinseyquarterly.com/How_leaders_kill_meaning_at_work_2910

Steve Jobs, the exclusive autobiography, by Walter Isaacson, published by Hachette (Review Part Two)

After reviewing this book last month, I went back to reading key parts of it again, concerned that my review had not done full justice to such an excellent book about such an iconic figure. This is no longer a critical review of the book - I couldn’t praise it more highly - but more of a selection of messages that deserve further thought.

During my first review, I pointed out the dangers of trying to apply the actions and philosophies of someone who was by any standards a genius; for instance most companies would go bust if they followed his advice to ignore market research and, instead, look into the mirror each morning.  But there are messages that we can learn from, or at least think about, in the context of our own ‘genius-less’ companies.

These are my highlights for further thought:

Centralisation

Jobs did not believe in separate divisions with all the potential for sub-optimisation, particularly in the area of innovation.  He owed a lot of his success to being in personal control which he could only achieve with a tight centralised group.  This also allowed him to make very quick decisions when reallocating resources between projects.

Personal contact

It is highly ironical that Jobs, who did so much to help us communicate electronically, did not believe in electronic communication in the workplace.  He was against video conferences and the like; he wanted people around him, brainstorming, arguing, bouncing ideas off each other.  He believed in the old fashioned virtues of ‘management by walking around’, keeping people on their toes, questioning and challenging what they were doing.  In many ways he was an old fashioned manager.

Importance of buildings

This is another irony.  While others talk about remote working and hot-desking, Jobs was obsessive about the importance of the building to work happiness and success.  This was originally in the context of Pixar and Apple’s offices, later in the context of Apple’s retail stores.  He was personally involved in every detail of building planning, which most CEOs would delegate to specialists and lower level managers.

Perfectionism

This was not only apparent in his obsession with buildings, but in every aspect of his work that involved design.  He was even obsessed with what a product looked like in areas that could not be seen by the customer, for instance the inside of a PC.  This obsession would extend to holding back development if there was something he was not happy with, even if this meant the team working all night to catch up.  This was one of many examples of his refusal to compromise and accept second best.

Simplicity

This obsession did not mean that the products became more complex, usually his perfectionism was about eliminating complexity, for instance cutting out a button on a PC or reducing the steps in the logging-off  process. He saw that the customer wanted simplicity and this became his obsession too.  He made Apple the perfect example of how high customer perceived quality leads to high return on investment.
 

A-list people

One of the many negative aspects of his behaviour was his division of people into ‘heroes or bozoes’, with very few in-between.  But beneath this unpleasantly black and white behaviour was a view that success depended on getting and keeping ‘great people’.  Either intentionally or sub-consciously, he was unkind and judgmental about those he did not rate - many of whom left - but totally different with those he saw as the heroes essential for future success.  In them he created a high level of loyalty which ensured that they were not lured away to the competition.

Selection

He believed that his success was partly around the ability to say no to many projects and yes to a few, and then to back the chosen few with all the resources necessary to deliver.  This is another example of where it helps to be a genius, most of us would follow the same philosophy but fail to back the winners!


Although he backed winners, he was also very flexible as projects developed.  For example he saw the opportunity to develop iTunes to link with the iPod and find a way of making the downloading of music legal, while making a huge amount of money for Apple at the same time.

Product Focus

To Steve Jobs, the product was everything; he didn’t like talking about anything but how to make a great product that would wow the customer.  And he didn’t need to ask the customers what they wanted because he believed that they didn’t know what was possible.   This approach is valid - indeed necessary - where radical or disruptive innovation is taking place.  When you are dealing with incremental innovation, the argument is less compelling.

Most of the above would not work in other businesses without the genius factor.  But we can at least use the experience of this brilliant man to question what we do and whether we can challenge conventional wisdom in the same way as Jobs did throughout his career.

I strongly recommend you read the book if you haven’t done so already.

http://www.amazon.co.uk/Steve-Jobs-Exclusive-Walter-Isaacson/dp/1408703742