Cutting Through The Grey

Reflections 3 years on

 

March 2020 Looking back at my diary, the month started with a busy week facilitating a number of different workshops for Boards of Directors and Governance Professionals in London. On Friday 6 March I replanned all my Q2 scheduled activity for virtual delivery. Looking back, it is difficult to identify the single trigger which prompted me to replan but based on my experience as a founder member of The Henley Future Work Forum (FWF) back in the 1980s, and my subsequent collaboration with Dr Laurence Lyons, the FWF Research Director, the technological and behavioural transition was smooth. I am fortunate to have a valued support network and trusted client relationships.

 

Adversity Much of my time over the last three years has been spent supporting business leaders as they navigate adversity. The privileged position of being invited to talk with leaders across multiple sectors and territories, highlights two truths:

Adversity corrodes inspirational leadership

and

Adversity reinforces inspirational leadership

Identifying angels and devils has pre-occupied business authors for decades. The corrosive damage which toxic behaviour can wreak on any organisation is universally recognised. Perhaps it is surprising that multiple recent examples exist of visible devilry being tolerated and condoned. The behaviour can be viral and damages people.

Conversely, spirits lift with examples of inspiring leadership practiced passionately and altruistically. This celebration of angels is also viral and draws together communities of loyal followers, eager to share and collaborate.  

Leaders Our decisions and behaviour are scrutinised to determine whether we are devils or angels, or perhaps a bit of both. Taking time to consider the impact we have on others is essential, but as a solitary activity we can be selective in what we choose to see and believe. It takes curiosity and also bravery to develop self-awareness of the real impact of our behaviour and how people perceive us.

 

Relationships Resilient and agile leaders nurture relationships, investing time and effort in building and sustaining trust. These relationships extend beyond the boundaries of their organisations and create continuous conversations which lead to shared solutions to challenges. It is heartening to hear many examples of supply chains and customers collaborating to sustain organisations in the difficult trading environment of the last three years.

 

Constructive challenge Talking to people who don’t think like us takes more effort but provides insights which may be far more valuable than existing in an echo chamber. Inspirational leaders are increasingly ensuring that they make robust strategic decisions by creating small groups of empowered individuals with the brief to rigorously test implications and impact.  The practice is not new. When co-writing the British Airways Leadership Story with Tony Voller back in 2004, we highlighted how the CEO, Rod Eddington, navigated the airline through 9/11 supported by a ‘Gang of 5’ constructive challengers who gathered ideas and perceptions from across the airline and beyond.

 

Learning The last three years have been characterised as ‘unprecedented.’ Reflecting on  the organisations who have navigated well, one characteristic stands out. They have experienced adversity before and learned from it. Going far beyond a mechanistic review process generating ‘lessons learned,’ these organisations have probed to discover causes behind symptoms and developed new ways of operating which anticipate change. Mistakes are shared not hidden and ‘near misses’ are discussed openly. This behaviour requires the visible sponsorship and involvement of all leaders to become instinctive. It requires inspirational leaders.

Now, Soon and the Future

 

Multiple research reports counsel against short term thinking and decision making in boardrooms. Regulation seeks to prevent directors capitalizing on short termism. Governance codes highlight the importance of balancing short term performance with long term stability. Working across different time horizons is recommended.

When a crisis occurs like a global pandemic, thinking beyond survival becomes more difficult. It is a brave board which sponsors significant changes in strategic direction and major investments. We will hear the stories of these brave boards, navigating their organisations through transformational change. We may hear less about the teams who enabled their informed bravery.

Behind every high performance board are professionals from many disciplines, accountable for providing intelligence to inform strategic decision making. Working in partnership with the board, they enable holistic questioning and are responsive to constructive challenges. From disciplines including corporate governance, compliance, strategy, risk, legal, internal audit, investor relations and communications, these experts enable board effectiveness.

To sustain a range of initiatives which simultaneously maximises short term survival/performance, while planning changes to the current business model and exploring innovative and transformation changes, calls for courage, imagination, stakeholder engagement and excellent programme management.

The Board’s future thinking is often overtaken by the time required to solve problems in the ‘now’ and ‘soon’. A recent McKinsey Sustainability at COP26 event predicts the emergence of ‘50 new Tesla’s’ led by innovative technologists engaging multiple stakeholders in their ambitious plans.

Beyond auditing the time investment each board makes in operational problem solving and designing the future, exploring board health and dynamics is often an effective means of identifying the quality and effectiveness of strategic thinking, decision making and monitoring. With better understanding of their effectiveness and the support of internal stakeholders, each board is well equipped to improve their strategy formulation process and outcomes.

'Second star to the right and straight on 'til morning.' J M Barrie

As 2020 draws to a close, the viral nature and impact of both positive and negative messaging is apparent. We each hear information which confirms our world view. It takes effort to extend the range of sources we monitor and the people we listen to.

My thanks go to the wide range of clients and colleagues I have had conversations with this year. It has been a privilege to support boards, directors and governance professionals as they navigate their organisations through turbulent times. Sharing their stories and exploring the situations they face results in renewed energy and the intention to build innovative solutions. 

Situational Intelligence has been at the heart of my coaching conversations since Dr Laurence Lyons and I published our research in 2012. In November, judging the Chartered Governance Institute Awards, it was gratifying to read how the principles we promote have been successfully applied:

Reading your strategic context accurately.

Understanding the motivations of your key stakeholders.

Recognising how to deploy your strengths situationally.

This year, clients from across several decades have reconnected to share reflections on the transition points in their lives and their hopes and dreams for the future. There are no boiler plate solutions for the challenges we face, but these three vignettes illustrate examples of inspirational behaviour:

Few people combine global strategic awareness with attention to the impact on individuals. In 2005, while writing the Leadership History of British Airways, I interviewed Colin (Lord) Marshall about his 21 year tenure as Chief Executive and Chairman of the airline. His concise analysis of the global sector was coupled with clear recollection of the individuals involved and the impact of strategic change on them. This rare combination of strengths was also apparent in a recent conversation with a Chairman navigating another large organisation through the current global pandemic.

 

In both the public and private sectors, organisations have been creating agile strategies and new organisation models to deliver them. In conversation with board members and governance professionals, those with a clear organisational purpose and embedded values have highlighted how critical these factors are in creating and preserving relationships with their networks of stakeholders during a period of continuing uncertainty. The investment in building trust has paid dividends and there is a natural inclination to collaborate around a shared agenda.

 

The first week of March 2020 was busy. For the first four days I commuted into London to run focus groups, facilitate workshops and attend meetings. On Thursday evening, something prompted me to suggest we go virtual for the Friday meetings. And virtual we stayed. As a founder member of the Future Work Forum launched by Professor David Birchall and Dr Laurence Lyons in 1992, we produced research papers on new ways of working independent of location and time. Virtual comes naturally. Among fellow baby boomers, the transition to virtual hasn’t always been smooth. Directors have highlighted the importance of the technology mentoring they have received from young, enthusiastic reverse mentors and from their governance teams.

 

With these insights in mind, let us all travel hopefully towards 2021.

Or in the words of Ogden Nash in Good Riddance But Now What?

Hark! It’s midnight, children dear.

Duck! Here comes another year.

Applying Situational Intelligence

In a world where existing knowledge is codified and available for those who know where to look, a spirit of enquiry is a strength worth cultivating. And now we have time.

The global pandemic provides periods of frenetic activity interspersed by periods of reflection. This ‘black swan’ event has been on the risk:impact maps of futurists for some time but we don’t always pay attention to voices that don’t share our world view.

Now is certainly the time to gather intelligence, anticipate, plan, respond and re-plan in continuously evolving circumstances.

The search for intelligence which provides certainty may be rather fruitless. Innovative thinking and imagination can appeal as we all seek solutions to universal problems. Collaborative thinking may not respond quickly enough, but conversation is critical.

Now is also the time for kindness and gratitude.  

Over the past two decades of running Cutting Through The Grey, I have been fortunate enough to work with thousands of business leaders and governance professionals from across the globe. Building trusted business relationships has enabled individuals, boards and their organisations to realise the greatest value from our activities together.

In the last 100 days, clients, colleagues and friends have generously contributed their insights to Situational Intelligence stories we have been developing and I am grateful for their time and energy. Together we are creating a different way of thinking.

#Insights 2020 - market dynamics

Boardrooms are busy exploring how they anticipate and respond to multiple global trends that are making fundamental changes to the ways in which marketplaces operate.

Globalisation has impacted supply chains and the relationships between competitors. Interdependence characterises many sectors. The scarcity of resources, including the war for talent, has resulted in more co-opetition.

The growth of platform businesses has changed the relationship between supplier and consumer. Consumer aspirations and expectations have changed. The desire for instant satisfaction and the availability of buy now, pay later options have impacted business to customer transactions.

ESG (environmental, social and governance) drivers have reinforced the legitimacy of localisation in the creation of markets.  And as with globalisation, interdependence characterises success.

Thought leader, Henry Mintzberg, published the Declaration of our Interdependence in January 2020

As UK PLC explores the implications of Brexit, potential new trade deals and possible responses to Covid-19, we are reminded of this interdependence.

Multiple thought leaders direct us to choose in which markets we wish to operate and to pay as much attention to determining those we do not wish to address. This presupposes that a market exists.

November 2019 was the first time that proponents of market creating strategies, W. Chan Kim and Renée Mauborgne topped the list as #1 Thinkers 50 ranking for their work on blue ocean strategy.

The difficulty of innovating as an incumbent in an existing market had exercised the mind of Clayton Christensen RIP January 2020. His 1997 work ‘The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail’ was developed by Rita Gunther McGrath in February 2020. 

Understanding the dynamics of marketplaces is clearly essential for Boards in order to inform their strategic choices. A plethora of academics are available to inform thinking with different perspectives on the subject. As always, we seek to build the rich picture of our small piece of the world.

 

 

#Insights2020

January – scanning the horizon

Curiosity is considered a differentiating characteristic of excellent leaders and an essential strength in the boardroom. A director’s ability to ask the right questions and listen to a range of people providing the answers, determines the quality of board intelligence which will inform strategic decisions.

We start 2020 considering the wider world in which we live and exploring a range of sources providing curated insights into the themes preoccupying organisations in the public, private and third sectors.

Most business schools, strategy houses and professional firms publish their insights early in each calendar year, so January provides a wealth of intelligence.

Each year The World Economic Forum gather a global audience in Switzerland.  Davos2020 invited teenagers from around the World to join political and business leaders and explore ‘Stakeholders for a cohesive and sustainable world.’ Climate change and its financial impact dominated conversations. Greta Thunberg, Swedish climate change activist called for global action now. Other themes included the potential for technology to enrich lives and the way in which we live and share resources. The forum leaves many questions to be answered by individuals, organisations and governments.

McKinsey shared four themes they took away from Davos2020. Highlighting the business cases which have already been made in boardrooms, they point to a change in tone and a decrease in trust, making clarity of purpose and stakeholder understanding critical for organisational success.

PwCs 23^rd CEO Survey involved 1,581 CEOs in 83 countries with 126 CEOs in the UK. Economic uncertainty is perceived as the greatest threat and the focus is on implementing practical measures in order to keep growing. Confidence levels grow from 70 to 90% when considering the 1 and 3 year outlooks. Globally CEOs rank UK as the fourth most important territory for growth.

Scanning and triangulating sources will help avoid the natural bias to seek insights only from those who agree with our world view.  We live in a global, instantly connected environment but the desire to focus on the ‘village’ we inhabit and share and explore patterns with people we trust, may limit our understanding. As Harvard Business School Professor, Rosabeth Moss Kanter has exhorted us for decades, we should think global and act local.

During 2020, I look forward to working with my clients as we explore strategic responses to these themes.

A robust strategic process

Increased scrutiny by a range of interested stakeholders is prompting many boards to explore how robust their strategic process is. For listed entities, regulators require evidence of compliance and have extended their interest to incorporate a broader governance agenda. Positioned as good practice for all, the agenda has been tailored for large private companies into the Wates Principles. For public and third sector entities, standards bodies provide inspection regimes.

Investors expect to make informed choices and seek assurances that they have a true and fair picture of organisation performance and aspirations. Talent is attracted to organisations that clearly position their strategic intentions and report on their delivery. 

 

When health checking their strategic process, boards may choose to consider the following: 

 

Inputs - board intelligence 

Specification  - asking the right questions and requesting the exploration of alternatives.

Collation - triangulating sources to increase confidence and including big data and human intelligence. 

Clarity - ensuring that assumptions are explicitly stated.

 

Process

Timing - building on the board rhythm. 

Urgency – determined by the level of dynamics in the wider world and market places

Order - sequencing activities to recognise appropriate involvement and sustain focus and momentum through time.

Involvement - building engagement through conversations between horizon scanners and those with operational insight. Ensuring respect for different perspectives and perceptions. 

 

Outputs - decision and tracking 

Aspiration - developing a storyline to explain the journey to the future.

Evidence - showing how decisions have been arrived at.

Metrics – choosing the few lead strategic metrics which will clearly show progress and behaviour.

 

Most critically, a robust strategic process requires the commitment of all members of the board and the teams who enable them to govern effectively. It takes time to align individuals and build common purpose. Failing to ensure that alignment before health checking your process will deliver flawed results.

 

And for the curious, the picture shows the ward of Samson and Bryher, from whence the ballot boxes have finally been collected to enable the last UK General Election result to be declared.

Strategic Insights

Digital connectivity has made the World a much smaller geographical space. Curiosity drives many organisations and individuals to explore strategic options in new territories with potential new partners.

The inherent biases we all have tend to result in conversations about possibilities which misinterpret intention and aspiration.

It takes time to develop a common understanding of what you are trying to achieve and a collaborative approach enabled by a shared vocabulary.

Surfacing implicit assumptions and discussing their impact on all parties is valuable in creating a foundation for more complex conversations.

 

The Brand:Reality gap

Teflon leaders

Toxic cultures

Tribal behaviour

 

Trust dissipates. 

Reputations tumble

Performance in trouble. 

 

But how long does the impact last and are lessons learnt to prevent repetition? 

Regulation and legislation may be a blunt and slow instrument for dealing with systemic dysfunction. 

New leaders emerge to deal with the mess, and so we go on. 

 

Self interest and the loss of contact with reality seem to define so many stories. 

Motivational Risk Model

It was a pleasure to join a global audience of risk professionals and board members in November. We explored motivational risk and approaches to influencing boards of directors. This article appears in the Winter 2018 edition of Enterprise Risk Magazine

Download Enterprise Risk Winter 18 - Bateson

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Directors and Governance Professionals enhance their understanding of the context in which they operate by developing Line of Sight.