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The Secret 7 Culture Conversation: #7 OF 7: INCLUSION

Mon, 24 Aug 2020 16:19:55 GMT

An esteemed professional colleague of mine once said: “Diversity is the mix; inclusion is what you do with the mix.”

In our experience, high-performing organizations intentionally form diverse-by-design teams by inviting a diverse slate of team members based on their unique backgrounds, perspectives and experiences. But the most diverse teams, without inclusive leadership , won’t help you toward your goal of ideation and innovation either. In a perfect world, organizations and their leaders will achieve both the “Yin and the Yang.” They will not only form diverse teams, but they will have possess/develop inclusive leaders who can foster an environment or climate that creates a safe place for all team members to contribute their unique perspectives.

Said differently, the most diverse teams, without inclusive leadership won’t create material value for an organization. And the most inclusive leaders who create inclusive environments, but who are working with a “homogenous” team may not help the organization achieve new thinking either. It is the “Yin and the Yang” of having both dynamics present at once, which allows leaders to leverage diversity of thought into actionable, innovative solutions that help an organization achieve greatness.

A breakdown of this pattern of organizational culture and high-performance can also be found in the sub-dimensions which are a part of this final Secret 7 dimension. Contributing to the dimension of inclusion we also see the importance of leaders and organizations being adaptable vs. limiting. We see strong leaders being flexible with their styles of managing their teams, adapting to the situation based on what is called for in the context for what they are trying to solve.

We also see leaders in high-performing organizations being open and welcoming to diverse perspectives, as opposed to being more set in their ways, or hesitant to try a new path; innovation comes faster and more fluidly.

But even more important than simply greater innovation, there’s nothing wrong with a bi-product of this work: healthier cultures, safer climates, and a more welcoming and inclusive workplace. In this time of re-thinking privilege, power structures, and the environments in which we all were raised, we have a unique opportunity to create workplace cultures that foster greater inclusion, acceptance, and equity for all.

The Secret 7 in Sum

Our goal for this Secret 7 journey is to ultimately create really positive and productive workplaces, where individuals can bring “their whole selves” to work. Imagine a day when the workplace, where we spend a majority of our waking hours during the week, is a place we look forward to going every day. Imagine employees feeling psychologically safe, able to contribute their best work, and feeling engaged, respected, and treated so well they give exceptional levels of discretionary effort.

The organizational benefit? Employees are committed to the larger cause and fully behind the vision laid out by senior leadership. Retention is improved, workplace satisfaction is higher, and performance is at levels that we may have only previously dreamed about. Here’s to the new reality, a chance to push the reset button, and build the kind of organization we all want to work at for years to come.

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/organization, please click here and complete the form.

The Secret 7 Culture Conversation: #6 OF 7: COMMUNICATIONS

Wed, 19 Aug 2020 12:37:05 GMT

When The Clarion Group built The Secret 7 culture framework, we wanted to address three main aspects of global communications:
1) direct vs. indirect styles; 2) comfort (or not) with conflict and confrontation, and 3) the level of information sharing from senior leadership to all employees.

Most people around the world naturally default to a high-context style of communicating. Neighbors, villages, students who go to the same school for a long time and who often go on to work in large conglomerate companies together (think Japan, historically) – all communicate based on a shared history and contextual understanding. Interestingly, it is often in cultures that have been built on immigration (whereby people from multiple ethnicities and diverse nationalities come together in a “new land”) where we see the greatest need to reduce the context of speech, adopting a “low-context” style of communications (i.e., mostly verbal) until the community builds up adequate history to “earn the right” to communicate with fewer words.

As advisors, we seek first to understand an organization’s cultural approach to communicating, particularly how open and transparent they are with information, especially with bad news. Unfortunately, we routinely see in much of our client work a cultural propensity to withhold information, based on senior leadership’s determination of what employees “need” to know.

It is our belief that organizations with high employee engagement retention scores, where leaders are grown and developed from the inside, and where employees feel they are trusted and respected are often the organizations that tend to be overly comfortable communicating with greater levels of transparency in their communications.

In addition, high-performing cultures almost always have a higher degree of comfort in creating environments where people can spar/debate/dialogue/discuss areas of disagreement, en route to building a better solution to a common challenge. Conflict is not seen as personal, but more a chance to work through an issue which often makes the larger organization stronger and the outcome better.

Why don’t more organizations and their senior leaders feel comfortable sharing more information? Is it perhaps due to the legal advice they get advising them to limit the information shared to minimize exposure and risk?

We believe risk management concerns are often very real; once something is in print, online or verbally spoken in a town hall, social media will likely perpetuate the message – often out of context – hurting more than helping the original content and purpose of the message.

However, we also think many leaders have a general lack of trust that employees can handle the total message. We are reminded of that famous scene from the movie “A Few Good Men.” Tom Cruise is pressing Jack Nicholson, saying “I want the truth.” And to that, Jack slams his hand on the witness stand, stands and yells, “You can’t handle the truth!” In our experience, employees “handle the truth” more than top leadership is led to believe. And in the absence of sharing the whole truth, employees will very often make up the rest of the story on their own; that can often do more damage than having the actual facts.

It would be irresponsible to not point out some of the common habits of highly successful organizations who have adopted a less direct means of communicating as well. In certain parts of the world, open and honest transparency can run into significant conflict with either certain existing structures, be it unions (works councils), government requirements or societal norms.

It can also “fly in the face” of certain organizational norms, based on senior leaders protecting their key constituent groups. One example would be in certain organizational structures in parts of Asia, the Middle East or Latin America, where leaders will serve as buffers between external forces impacting the health of a company and what they perceive the employees need to know to do their best work.

To enable superior results, leaders must be intentional around choosing the best approach to communications inside their organizations, and they must get comfortable addressing conflict and being challenged.

So, while each organization needs to decide what works best for it, in our experience across over 200 projects in more than 40 countries, we believe many of the strongest organizations with the highest employee engagement have open cultures represented by healthy debate, comfort with difficult conversations and conflict, and leadership at the top who trust their employees with “the truth, the whole truth, and nothing but the truth.”

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/organization, please click here and complete the form.

The Secret 7 Culture Conversation: #5 OF 7: INTERDEPENDENCE

Mon, 10 Aug 2020 13:36:07 GMT

We’ve seen many organizations shifting their command and control, autocratic and authoritative leadership style to one that fosters collaboration, often through taking risks, empowering their people and their teams, and welcoming the dissonance that comes from breaking down silos and allowing for horizontal, cross-functional teams to form.

In many ways, silo behavior isn’t anyone’s fault. Silo structure came about during the Industrial Revolution, when a “divide and conquer” approach to manufacturing was an efficient path to successful assembly and delivery of product to customer. Standardized process, lean manufacturing, assembly-line mentality and individualistic task completion rolled up to the overall goals for project completion.

This continued as economic globalization ensued. Sourcing and manufacturing moved to lower-cost geographies. At one point, power moved into a regional model, where not only business units were accountable for their own P&L management, but regional “theatres” became owners of their P&L as well. In some ways, this matrix operating model fostered some elements of a decentralized power structure, but power dynamics remained strong and new geographic siloes were created.

There was a biomedical client we worked with years ago who adopted the model of “global/local” in a unique way. This client would invite a cross-geography and cross-business unit guest list to a neutral meeting location to co-develop a global strategy

and set of strategic solutions. Being a Dutch company played in this client’s favor as the cultural behaviors common to many Dutch companies enabled an effective combination of egalitarian leadership, direct speech (comfort with debate and dialogue to get to a better outcome), collective mindset, and comfort with risk-taking and ideation.

Once this cross- geography and cross-functional team had developed the global project plan, they were able to pursue a rapid-cycle development of a new product introduction, leveraging a 24/7, follow-the-sun project management discipline and superior online collaboration tools to keep the conversation going in real-time. Because each leader had been a part of the original co-creation of the global plan, they were able to translate specific sub-steps of the plan in their local geographies, yielding quick implementation and local customization.

Where we have seen weakness or inability to grow beyond current metrics, we often see the organization held back by siloes. People and teams working in their own lanes. Somehow sharing the load with other functions is seen as losing control or power, as opposed to distributing the wealth across the width of the organization.

Cultural features of these vertical-only organizations often include centralization, autocracy, and conventional approaches to task completion. Leaders of P&Ls represented by individual departments or separate business units often seek to maintain control over decision-making, choosing to prioritize budgets that primarily help their individual agendas.

Conversely, the organizations we are increasingly seeing as “best in class” have been willing to go to an uncomfortable place, where they give up control and their authority, and sit with the dissonance associated with invention and innovation. In the end, the yield that comes from horizontal teams, working collaboratively, leveraging each others’each other’s strengths, can far outweigh any short-term benefits that come from sticking to a familiar drum-beat.

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/organization, please click here and complete the form.

The Secret 7 Culture Conversation: #4 OF 7: TIME

Fri, 24 Jul 2020 19:00:15 GMT

In the context of organizational culture, “time” is defined as the priority people place on time vs. relationships, and in our experience, organizations that “get it right” more often than not enjoy greater success. Many clients over the years have challenged us as to whether they need to choose between the two ends of this dimension. “No, you don’t.” But you do need to know when to play each end of the culture dimension of time to get the best results.

It’s not just the volume or output (i.e., perceived performance) that drives our behavior; it can also be our approach to task completion. In traditional, industrial manufacturing environments, employees are more wired to see their work in a linear fashion, i.e., “assembly-line mentality,” “my job goes from here to here, nothing more, nothing less.”

I recall a great story from a client in Mexico City when I was just getting into the field of cross-cultural training and consulting. It went something like this:

“I hosted a vendor the other day from Los Angeles. He came in that morning, how do you say, ‘guns a blazing,’ all set to sell me the next shipment of goods we often used in our manufacturing process. He greeted me in his classic manner, overly firm handshake, big personality, loud voice, ready for action. I decided to play a trick on him.

I picked him up at the airport, brought him to a nice hotel where many of our visitors stay, near our famous Plaza de la Constitución (aka zócalo), assured him that he must be tired, and told him I would pick him up for an early dinner at 7:00 p.m. Without hesitation, he reacted, ‘No, no, that is not possible, I have a flight back to LAX at 7 p.m. tonight; I’m just here for the day.’

I knew he was all business from my previous encounters with him, but this took it to a whole new level. I suggested we sit, have some coffee, and I was sure everything would work out okay. He went on and asked me, ‘How do you all get anything done here; how do you make any money, if all you are doing is having coffee and delaying getting down to business?’

He continued. ‘Don’t you see, if you all worked harder, if you pushed the manufacturing process further, if you spent more time building up your business, building more plants, producing more product, selling more product, you could retire early, and have plenty of time to do whatever you want, like drinking coffee.’ He paused, realizing his last sentence. I barely needed to comment, but I took the chance to close the circle. I simply shared, ‘Like we are doing right now, my friend?’”

Obviously, we can’t all sit back, sip coffee, and fill every day in this calm manner. But it does point out the importance of balance, some call work/life harmony. Many organizations would benefit from slowing down a bit, considering the value of what they are creating, and reducing the pace and pressure leaders place on themselves and their employees.

As a colleague once shared with me when I was being particularly high-strung: “Time is time; and money is money.” Some of the most impressive organizational cultures with incredible results, are often the ones that are measured in their pace of work. They are strategic, thoughtful, planful, and thorough. They engage their employees deeply, and they see time from a long-term perspective. They are willing to delay short-term gratification for long-term gain.

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/ organization, please click here and complete the form.

The Secret 7 Culture Conversation #3 of 7: CREATIVITY

Mon, 20 Jul 2020 15:55:53 GMT

Imagine a culture where all ideas are welcome, even the crazy and “out of the box” ones, where employees feel safe to ask the question, “Have we ever thought about X before?” A work environment in which senior leaders create a “no idea is a dumb idea” environment such that teams come together, brainstorm new ways of looking at organization-wide problems, and create breakthrough ideas together?

Think for just a moment. If you could make just one change to the culture in your organization, what would that be?

In my experience over the last several years, the response I hear most to this question is: “I wish our organization could come up with effective new ways of working and serving our customers faster.”

I’ll share a recent example of how horizontal collaboration accelerated innovation across an entire industry. Perhaps this can be a case study for your organization? A few years back, senior leaders at an outdoors specialty retailer we were working with, were wrestling with how to better compete on “Black Friday.” In a culture where decisions normally came from the top, these leaders made a bold (for the CEO at the time) move and assembled a cross-functional team to quickly develop options, vet them, and come up with a recommendation. The team came up with many ideas, at first relying on what they had seen work in the past. “We could open our doors at midnight on Thanksgiving night.” “We could run deeper discounting than our competitors.” But as ideas begat more ideas, creativity blossomed. In the end, #optoutside became the breakthrough idea, a pace-setting innovative step that today has hundreds of retailers following their lead, all because one retailer dared to step out of their comfort zone and allow a horizontal, cross-functional team to take the challenge from senior leadership and “invent” a new way.

With the pace of technological advancement along with the continued shifting of power to the consumer, the need to move towards greater innovation seems rather obvious. However, many organizations today still consider most major decisions through a historical lens. A fixed mindset, a fixed culture, where all roads lead back through legacy processes and systems; where leadership’s general position is, “If it ain’t broke, don’t fix it!”

Interestingly, renowned Dutch social psychologist Geert Hofstede’s behavioral dimension of “High Uncertainty Avoidance” comes into play here: 80% of people do not like ambiguity, uncertainty, or change. Not surprisingly, we see senior leaders preferring to stick to what they know, what has always worked in the past, and rely on historical patterns and time-proven ways as their guideposts for any new decisions.

During the era of process re-engineering, many organizations became fixated on standardization, centralization, and control. To avoid repetition (rightfully so) in their processes and systems, they sought to be “lean” by creating standards for how things should get done around their shops. However, what that also created was a desire to always reference those proverbial manuals, or standard operating procedures, which at times, makes for a most efficient enterprise. But it also has a potential downside: creative individuals with breakthrough ideas are stymied and many become irreparably disengaged. So, while best practices should always be leveraged, looking at the marketplace and current challenges through a fresh lens often unlocks amazing ideas.

Another way to look at this is described in many training programs as “Growth Mindset” vs. “Fixed Mindset.” According to Carol Dweck, Psychologist and Stanford professor, in a fixed mindset , “students (and employees) alike believe their basic abilities, intelligence, and talents are set traits.” They adopt a mindset that you are born with a certain amount and that's all you have. She goes on to describe a great alternative: “In a growth mindset , however, students (and employees) believe their abilities and intelligence can be developed with effort, learning, and persistence. Their basic abilities are simply a starting point for their potential. They don't believe everyone is the same, but they hold onto the idea that everyone can become smarter if they try.” (Dweck, 2015)

I like to imagine what leaders can do to create an inclusive climate that promotes a “Growth Mindset” vs. a “Fixed Mindset.” Nurturing cultural behaviors like building on others’ points, becoming a learning organization (Peter Senge), considering all possibilities, using the conjunction “ and ” instead of “ but ” while facilitating or following a colleague’s previous point, and more.

In the end, high-performance cultures that express open, inclusive, additive behaviors, and are reinforced by key talent levers, i.e., effective performance management and talent development systems will see a rise in innovation potentially leading to greater results.

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/ organization, please click here and complete the form.

The Secret 7 Culture Conversation #2 of 7: PERSPECTIVE

Mon, 13 Jul 2020 21:40:24 GMT

“Naval-gazing” and “myopic” are two phrases often used to describe insular, internally focused, and inward-looking organizations. Of course, leaders must take care of their people, be empathic to the employee experience, and focus on improving and
strengthening internal processes. These are all critical steps in building a high-performance organization.

However, leaders also need to constantly look out ahead, anticipating customer needs, trends in the industry, and market forces that can have an impact on not only their customers, but also their relevance as a provider of certain products and services.

Zoom forward to the modern era. Customers expect multiple options for availing themselves of a company’s products and services, forcing many leaders to re-think their platforms, if not their entire business model. Just think about the rapid shift to e-commerce over the past few months. Despite ongoing uncertainty and economic challenges, leaders today must “take their heads up out of the sand” and focus their attention on the future if their organizations stand a chance of winning. Bluntly, they must carefully consider the challenges their customers/clients may face down the road, and innovatively solve these challenges.

An equally difficult conversation being had in boardrooms, C-suites, break rooms, and after-work bars alike, is whether an organization is showing up as more margin-driven or mission/purpose-driven. We know this is a painful dilemma for leadership teams to wrestle with. At a recent academic medical center in Boston, we heard the statement uttered several times during our culture transformation work: “No margin, no mission.”

We would like to release top leadership from this “either-or” choice. Time to have it all! How can the organization lay out a plan to be able to achieve its mission/purpose, while still producing a meaningful profit margin at the end of the day? The answer is not only “it can!” but “it must.” The challenge comes not from the “what” (this is non-negotiable mission/purpose), but the “how” (this is the somewhat fluid tactical plan).

The most impressive organizations we have followed, some of which we have had the privilege to work with, have figured out how to balance the two, and achieve both. It often comes down to being resolute on one’s values and purpose, and never compromising these at any intersection…ever. When making decisions or prioritizing resources, high-performing organizations with enviable cultures seem to make the right
choices with these “keystones of culture” (mission/purpose, vision, and values) as their litmus test every step of the way.

What drives an organization to greatness, in this regard, is to be situational in their choices, over mere consistency. It is critical for the leadership team to enable the rest of the organization by empowering them to make smart choices based on the situation they find themselves in at any given moment.

For example, even though an organization has decided to launch a certain product, with a well-conceived marketing strategy, it must allow local geographies to customize the approach they take based on their local knowledge of their unique market. Better yet, leaders should invite a cross-representation of all markets to the original table where they are developing the global market strategy, so when they land back in their local market, they “own” the campaign and can implement their localized version for what makes sense to their local/regional customers.

Tremendous progress can be made when an organization has the ability to release the control from the top, where status-quo often lives, and allow for “out-of-the-box” thinking and new and creative ideas to flourish. Some of the best and most innovative ideas come from outside perspectives, customer focus groups, listening to our clients’ needs and especially from new and younger employees who have their own unique perspectives.

In summary, leaders must be willing to release the need to control by sticking to the organization’s historical ways. The organization can always return to tried and true methods – these are well-known, and they still may be the best choice. But leaders must make sure the situation and key constituent groups drive a majority of decisions. And they must listen; listen to employees, listen to customers; listen to the “street” – memorize the messages being imparted. This can unleash a whole new perspective on the organization’s go-forward strategy and tactics of implementation.

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/organization, please click here and complete the form.

Black Lives Matter in Corporate America

Thu, 09 Jul 2020 17:21:55 GMT

As the momentum of the Black Lives Matter movement continues to grow, I have been struck by how companies are responding to it. Most are openly acknowledging the unintentional complicity of their own organizations in perpetuating the issues; implicit biases are being illuminated like never before.

I am impressed by how this movement that is challenging systemic (i.e., across the “ecosystem”) biases is unearthing the core of our implicit biases. The broader context from which this heightened awareness has spawned has come about, I think, from the collision of many forces that are culminating to create one giant breaking wave: confusing and divisive messages from the U.S. administration, pent up isolation and angst from COVID-19, an economy that has heightened the disparity between the “have and have nots,” positive overseas relationships with allies turning adversarial, and so much more. Metaphorically, these forces, strengthened by mass-impact movements such as Black Lives Matter, have created a huge pile of dry kindling; the death of George Floyd (following way too many others) was perhaps the spark that ignited the bonfire now burning.

Companies today have three choices to make in response to the challenge so well-articulated by the Black Lives Matter movement:

Do nothing, assuming “this too shall pass.”
Assess, and where needed, adapt their own internal culture and operating environment in ways that surface and eliminate implicit biases.
Embrace the work in choice #2 WHILE CONCURRENTLY :

Developing holistic clarity around how, as a player in society, the organization is knowingly – or unknowingly – perpetuating biases, racist principles, and divisive behavior in their marketplaces; and then
Making the changes needed, accepting that pillars so foundational as mission, vision, and values may be at stake.

I am optimistic that the Black Lives Matter movement is going to make a difference – ideally at the systemic level but at least at a “dent” level. So many company leaders with whom we’ve worked have chosen #3 as the necessary course to follow. This is encouraging as it reflects broad recognition that the organization’s contribution to societal change requires both “inside” and “outside focus.” In our experience, working with literally hundreds of leaders, most organizations had begun the journey towards creating truly diverse and inclusive cultures some time ago; the fires now have accelerated those efforts, prompting deeper consideration into areas such as:

Talent Management : How is our leadership team “mapping” (from a diversity perspective) to our customer base, employee base, and the communities we serve/operate in?
Leadership Principles : Have we reviewed our leadership principles and considered development strategies/learning to ensure we are building the muscle required of our leaders to be inclusive leaders, who also stretch themselves to form diverse-by-design teams intentionally to broaden the unique perspectives brought to a business problem or opportunity?

Today we see leaders and their organizations examining with real scrutiny “who they be” with their customers, partners, and shareholders:

How are we selecting the market segments to do business with? Why? Do these choices harmfully exclude others from our products/services?
Have we reviewed our approach to supplier management and selection and considered any implicit bias or leanings based on historical relationships only?
Who do we recruit and select to represent us in the marketplace, either our employees, agents, distributors, or sales representative agencies?
Are we too aggressively going after the segments where we can maximize profits or are we balancing the need to make money with the needs of all of society?
How do we best reset our strategic choices on the ways we interact with the marketplace so as to not perpetuate implicit bias and exclusion?

We should all applaud the companies that are pursuing this much bolder and harder path. It is not lipstick on the pig; it is holistic and systemic change. It will take years of concerted effort, millions of dollars, and great courage to stay the course to fully operationalize the principles of diversity, equity, and inclusion. Patience is needed but inaction is unacceptable. For the companies being heralded, we should expect to see steps of progress while always remembering that lasting systemic change will take time.

The Secret 7 Culture Conversation #1 of 7: POWER

Tue, 07 Jul 2020 13:00:53 GMT

One of the most important dimensions of culture anywhere in the world is the concept of power.

Who has power within an organization and how that power is viewed can also be tied to the country in which the company was formed. In Greater China, for example, power is found near the top of most organizations, and is often a reflection of their views influenced by their political structure, educational system and philosophical beliefs.

As organizations consider power distribution, it is essential that decision-making authority be strongly considered as it is inextricably linked to issues of speed, performance, and the like. Certain industries (and country cultures) call for a more hierarchical, autocratic decision-making approach in which leadership decides the best path forward. This often comes from a more paternalistic, or command-and-control style than one where individual contributors are encouraged and empowered from the start.

In fact, many cultures of the world have employees who are comforted by the care and supervision of their leaders. It lowers the risk (ambiguity, uncertainty and change) and provides clear direction for what their company needs from them to perform at optimal levels. When thinking about power within your organization, consider who makes decisions and how they make them.

At The Clarion Group, we continually see examples of power dynamics within organizations:

Clients from certain industries that grew up with innate hierarchies, top-down decision-making, autocratic leadership, formal honorifics (forms of address, titles, meeting protocols, etc.);
Country culture norms that can then have influence on company cultures born out of war times or political structures, including directive leadership, gender dominance, decisions made by only the senior-most leaders, inner circle exclusivity, “good ol’ boy’ clubs/networks,” etc.;
Wealth creation that can then drive who has the power, benevolent leaders (or not so benevolent) who as entrepreneurs created the organization and have a difficult time letting go of the control (“my way or the highway”); and
Mergers and acquisitions or joint ventures where, as my father once said, “there’s no such thing as an equal merger.” Meaning, the acquirer has more power over the acquiree, despite actual financial terms of deal valuation.

It is essential to remember that no one size fits all. There is no power structure that is “right” or “wrong.” “Empowered” is not always better. As mentioned earlier, there are many organizational cultures around the globe that are thriving with high levels of authority, top-down decision-making, and hierarchies that protect their employees, provide clear direction, resulting in a very engaged and high-performing workforce.

However.

The operating environment for almost every organization is changing, challenged by the ongoing acceleration of technology; changing consumer needs and expectations; pandemic response; renewed movements around gender and race equity; and many other social, political and economic drivers. We believe successful organizations will have to address, and for many, change, the way they think about and manage power.

Very few organizations we have worked with can remain at high levels of centralization and control. The impact of the messages being sent on an organization’s people can limit employee engagement, negatively impact discretionary effort, stymie innovation, and damage an employer reputation, impeding its ability to attract, develop and ultimately to retain, the best and brightest talent.

In closing, consider this: when people are empowered, they often feel more in control, and often feel a deeper sense of responsibility to not let their teammates and leadership down. While I am not a big fan of the word “accountability,” I believe that empowering people (i.e., shifting more “power” to people) leads to both greater accountability and greater engagement. A win-win, where success begets more success for the employee and the employer. This is what we would call a “Culture of Ownership.”

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL) free for your company/organization, please click here and complete the form.

THE SECRET 7

Wed, 01 Jul 2020 14:32:10 GMT

SEVEN CONVERSATIONS YOU SHOULD BE HAVING ABOUT YOUR CULTURE

For almost 70 years, organizational culture has been described by scholars, executives and corporate anthropologists along continuums that are intended to represent polarities of behavior. For example, authoritarian vs. consensus, team-based vs. individual-driven.

Now, you might think, “surely there are more than seven dimensions of an organization’s culture?” You are right, there are. In fact, we have identified four sub-dimensions for each of The Secret 7 – 28 sub-dimensions of culture that we see consistently emerge in our work.

Over the next several weeks, we will be sharing more detail around what the advisors of The Clarion Group have learned about each of these seven dimensions. It’s important to note there are no “better” or “worse” dimensions of culture. An organization must consider which elements empower the organization to align with its vision and strategy, its mission/purpose and values, and its place in the market. We encourage you to discover where your organization sits on these seven dimensions and determine if a shift (to the left or right) would have an impact. Let us know if we can help.

For more information on The Secret 7, or if you would like to receive a unique survey link (custom URL), free for your company/organization, please click here and complete the form.

Finding Meaning Beyond the Grief of COVID-19

Fri, 03 Apr 2020 20:07:22 GMT

In response to the human emotions around coping with COVID-19, the Harvard Business Review (HBR) recently published an interview* with David Kessler, a globally respected expert on the stages of emotional response when confronting negatively perceived change (ultimately, death) initially formulated by Elizabeth Kubler-Ross. (Clarion founder and my partner, Bill McKendree, published a good piece last week on this: Times of Crisis Call for Leadership Heart ). With Kubler-Ross’ family’s agreement, Kessler postulated the presence of a sixth and final stage beyond acceptance – finding meaning.

I think that finding meaning in the face of such loss of human life and economic devastation crosses over into a profoundly human spiritual dimension. That HBR would have the courage to enter that dimension is somewhat astonishing. But it is also an accurate and insightful acknowledgement that COVID-19 has erased any artificial boundaries between business and humanity. It is a door opened that I now walk through cautiously.

It seems obvious that in past times we would have looked to spiritual leaders for the kind of guidance sought in the face of grief, death and dying. Here, now, in the face of a global pandemic, the stage for spiritual leadership feels very, very empty. Sadly, the divisiveness that rips across a complicated mixture of ethnic groups and religious sects, clinging to seemingly irrelevant historical and political conflicts, undermines the ability of any one religiously affiliated person to represent us all, to speak to us individually, to touch our hearts directly.

How then do we find even the slightest thread of meaning that is in fact by its very nature fundamentally spiritual, but does not say so in a way that alienates any one of our fellow employees? Or our customers? Our neighbors? Our friends?

Perhaps it is just me, but there is something about the nature of COVID-19 that I cannot help but feel is speaking to us all, collectively, in a single, unifying voice.

We are all human. We are all vulnerable. We are all able to help. We are all in this together. Right now , that alone is meaningful.

If a virus can view us this way, why can we not view ourselves this way? Our survival may depend upon it, and yet we remain stuck in our separateness. We are our own worst enemies.

If it helps, then see this “meaning” as coming from a purely scientific view, not a religious view. At one level it is more important that we just see it. But truth be told, it is not one or the other. As seen by a scientist, it is both:

Perhaps in this we can somehow find hope and meaning beyond the personal loss of those we love and grieve: Our collective, common humanity is more real and more meaningful than the illusion of our individual differences. We are all ONE human population. We need to face COVID-19 as the ONE we are. And we need to learn now how best to face the next crisis as the ONE we are.

Speaking to human spiritual needs in the face of fear and grief is not the most comfortable item on the agenda for many business executives. But no less an authority than HBR just opened the door. This is an invitation for all of us to be more vulnerable in the hopes of helping each other through the journey we’re all in. Take read of HBR’s work ( https://hbr.org/2020/03/that-discomfort-youre-feeling-is-grief ). At The Clarion Group, we’ve been having a lot of conversations with our clients around the “normal” stages of grieving over the past few days; most leaders are experiencing the most difficult – emotionally, intellectually, physically, and yes, spiritually – challenges they’ve ever faced. The conversations we’re having are encouraging – and bringing deeper meaning to our own work.

COVID-19 views leaders and employees as equals in our world. So, we must too. Being totally human may just be the most powerful action a leader could take in a moment such as this. We all need each other. We need you.

*That Discomfort You’re Feeling Is Grief, Scott Berinato, HBR, March 23, 2020

**The New Quotable Einstein, Alice Calaprice, 2005, Princeton University Press

Times of Crisis Call for Leadership Heart

Tue, 24 Mar 2020 14:50:04 GMT

Leaders today are being asked to step up to a challenge few ever imagined. There simply is no playbook for leading through COVID-19. Carefully crafted strategic plans have suddenly become irrelevant, and leadership teams across the globe have moved into aggressive downsizing in anticipation of an unprecedented economic slowdown. We’ve talked to a lot of our clients over the past week. The block and tackle of re-forecasting is well underway, but most are privately feeling alone and simply unsure of how to approach the “soft side of business” – keeping employees settled and engaged.

Times of crisis call for heart. And heart starts with understanding how employees’ needs have changed; for many, needs have changed dramatically. With the “silent enemy” now among us, the cadence of life has been significantly altered: work-from-home, children out of school, elderly parents to care for, and illnesses to manage, often while we are trying to come to terms with the real financial impact many are experiencing.

Leaders, consider this: in a crisis, humans revert down Maslow’s Hierarchy of Needs, focusing on the basics: safety, security and health. Project deliverables, reports, and even the economic viability of the organization will for most take a backseat to individual concern for personal and family well-being and financial security.

Crises trigger deep emotional responses to negatively perceived change. Renowned psychiatrist Elizabeth Kubler-Ross gave us great insight into how people come to terms with what we’re confronting now, outlining the multiple stages of emotional response that are common to everyone. We begin completely immobilized (think about how you felt the first time you heard “a disaster is coming”). Then we move through several, sequential stages: denial (“this is NOT happening!”); anger; bargaining (“if we just take a few weeks to hunker down, this will all go away”); depression (aka despair); acceptance (“this is really happening”); and finally, movement into action by testing various approaches to confronting the challenges.

What stage are you, personally, currently experiencing?

Here’s what leaders need to know: everyone in your organization – without exception – will go through these stages. But…every person will go through these stages at their own pace. Herein lies the leadership challenge.

It may seem paradoxical, but taking care of others starts with taking care of self, personally and professionally. We offer the following recommendations:

Allow yourself to absorb the impacts of the crisis – on you personally and on your organization. What are your own fears and worries?
Allow yourself to express those fears and worries to others, including your staff. Authenticity is powerful and much needed in times like these. Employees need to know their leaders really feel the range of emotions and fears they’re experiencing.
Allow yourself to adopt a positive outlook. Accept that these events are out of your control; you can only control your response. Let yourself go with the flow of each hour, day and week. As was written in a recent McKinsey publication (Leadership in a crisis: Responding to the coronavirus outbreak and future challenges, March 6, 2020), reflect “bounded optimism” in your communication, actions and interactions.
Avoid overwhelming yourself with frequent news alerts and updates. Take a couple of minutes once or twice a day to see where things stand, and allow yourself a few quiet moments to think about the implications of the new information on your organization.
Perhaps most importantly, stay busy! Keep yourself engaged with activities that intellectually engage or relax you to prevent yourself from getting sucked into the vortex of despair.

Strong leadership has never been more important. Your employees are watching you closely. This is your moment to shine.

When this crisis is over – and it will be – your people will judge you and your organization by whether they have been treated fairly, honestly and with care. Leaders are going to be tested like never before, and it’s going to be exhausting. But, when done well, you will have profoundly helped many people, who will respond with well-earned loyalty to your organization. Isn’t that worth the effort?

Strategy at the Edge of the Unknown

Fri, 13 Mar 2020 16:58:37 GMT

Right now, business leaders are dealing with critical in-the-moment tactical planning on the battleground to protect against the invasion of a new enemy that snuck through the lines, unseen. That is where they should be: taking care of their troops, regrouping, making provisions for a temporary camp and laying out contingency plans.

But contingency plans for what? It feels like we have crossed over into the unknown, but more accurately, the unknown crossed over into us. Even our own territory is now strange and unfamiliar. For some, it feels more like entering the Twilight Zone.
At some point very soon, in a quieter moment, perhaps waking up in the middle of the night, business leaders will begin to face the deeper strategic question of planning in an unknown future. This moment in time may require a different approach to strategy than most have been taught or are comfortable with. Yet it is one proven successful in military planning for some time now. Herman Kahn developed a technique in the 1950s of describing future “stories” of what military wars might look like – Scenarios. In Rita McGrath’s current book, Seeing Around Corners , she employs much the same techniques. Business leaders need to become much more skillful at anticipating inflection points. A skillful way to do that is to identify a range of future options, based on a range of possible futures.

In our experience, there are differences today in the application and the technique from the original, but the practice is solid. For sure, the time perspective of anticipating future worlds has dramatically shortened if not disappeared. Pierre Wack, at Shell Oil in the 1970s, was looking out some 20 years. Forget that. Viruses spread with exponential speed through networks of human touch points. But scenario techniques are just as relevant out over the next 20 months, the time it may take to have a working vaccination:

Identify possible relevant factors in the environment that may drive sustainable business results: social, economic, scientific, demographic, etc. Basically here, important factors at the intersection of business and humanity.
Use some structured tools to anticipate direction and degrees of changes, but also to stimulate creativity and open mindedness. What is actually possible is beyond what many believe is possible.
Stretch the thinking to the limits of imagination, outside ordinary bounds of constrained “inside the box” ideas. Great example: not linear but exponential degrees of change and speed – like the virus that started all this.
Monitor leading indicators and begin, now, to lay plans out ahead to be ready for possible directional changes.

So, the strategic question is what are the possible scenarios for the business environment in the next 20 months? What possible range of futures can you envision or anticipate? This requires a willingness and a capability to imagine how things could be different, to see things we do not see today. We just went around a corner that perhaps no one saw coming. We are at an infection point. If ever there was a moment when we could all agree the future is unknown, this is it.

This strategic focus need not divert the attention of the whole of the organization. Pierre Wack (Shell Oil) was apparently quoted as follows: “I had the feeling of hunting in a pack of wolves, being the eyes of the pack, and sending signals back to the rest. Now if you see something serious, and the pack doesn’t notice it, you’d better find out – are you in front?” You just need a small pack of forward-looking thinkers to lead the way.

And by the way, developing this capability in the organization is not just temporarily relevant to the threat of the coronavirus. This capability lies at the core of business strategy in the world of digital transformation where the speed of change and disruption is also exponential.

Agile Methodologies Is About The Mushy Stuff Of Values And Culture

Tue, 20 Aug 2019 15:04:20 GMT

The title above was not created by an organizational consultant. These are the words of a software engineer and developer. But not just any developer.

We seem to have arrived at a point where the term “agile” is being used and applied in a variety of different ways. Perhaps it could be helpful to refer back in history to the origins. This is kind of like referring back to words of the “Founding Fathers” of the US Constitution. In 2001, a gathering of 17 “independent thinkers about software development”, who described themselves as “organizational anarchists,” created the Agile Manifesto. One of them, Jim Highsmith, wrote the following:

“At the core, I believe Agile Methodologists are really about "mushy" stuff—about delivering good products to customers by operating in an environment that does more than talk about "people as our most important asset" but actually "acts" as if people were the most important, and lose the word "asset". So in the final analysis, the meteoric rise of interest in—and sometimes tremendous criticism of—Agile Methodologies is about the mushy stuff of values and culture.” Jim Highsmith, https://agilemanifesto.org/

The Principles Behind the Agile Manifesto

“We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value”:

Individuals and interactions          over          processes and tools
Working software                            over        comprehensive documentation
Customer collaboration                  over          contract negotiation
Responding to change                  over        following a plan

“That is, while there is value in the items on the right, we value the items on the left more.”

We follow these principles:

Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.
Welcome changing requirements , even late in development. Agile processes harness change for the customer's competitive advantage .
Deliver working software frequently , from a couple of weeks to a couple of months, with a preference to the shorter timescale.
Business people and developers must work together daily throughout the project.
Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.
The most efficient and effective method of conveying information to and within a development team is face-to-face conversation .
Working software is the primary measure of progress.
Agile processes promote sustainable development . The sponsors, developers, and users should be able to maintain a constant pace indefinitely.
Continuous attention to technical excellence and good design enhances agility.
Simplicity--the art of maximizing the amount of work not done--is essential.
The best architectures, requirements, and designs emerge from self-organizing teams .
At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly .

As stated in the words of the Manifesto above, this is about culture, values, employee value proposition, behavior, communication, motivation, decision-making, quality, customer orientation, change, adaptability, sustainability:

Customer focused (outside in) and more: collaboration with customers
Welcoming (adapting to) continuous change
Business and software developers working together (inclusive, horizontal, cross-functional, silo-busting, diversity of perspectives)
Self-organizing teams (autonomous, decentralized, “hierarchical” in a sense, but not industrial top down structures)
Continuous reflection, learning and adjustment of behaviors working together (leaders create climate for constructive “radical candor,” direct feedback)
Art of minimizing unproductive work (simplicity and efficiency, not measured by volume of output, Minimal Viable Traction principles)
Technical excellence and design (motivated and rewarded for quality of outcomes)
Frequent delivery of “working” software (minimal, outcomes oriented, rapid feedback loops)
Sustainable pace of human work (people, talent, motivation, work environment, lifestyle, employee value proposition)

Agile. The mushy stuff.

The Secret to Changing Culture is in the Genes

Mon, 10 Jun 2019 14:27:01 GMT

We have supported a broad spectrum of companies in various industries in their efforts to identify and shape cultural change. There are some striking similarities emerging. In the face of seismic shifts in the competitive landscape, digital transformation being one, for many clients and the industries in which they play, there is a fairly common cluster of aspirational cultural features that have emerged. But in addition, what is almost universal is the degree of difficulty of actually making any change stick. This is true, despite everyone going through a common process to define a desired culture that will serve the organization’s vision and strategy, while honoring its coveted mission/purpose and values.

The difficulty of successfully implementing change is itself quite troubling. We believe one reason for the lack of success in so many organizations is the tendency to simplistically want to follow a common set of proscribed “best practices” around culture change. This is the classic “one size fits all” mistake that fails to take into consideration the unique combination of characteristics that make every organization different. Every organization has its own unique set of genes. That specific combination of genes forms unique challenges and opportunities.

In the field of medicine, until recently, the widely held opinion was that everyone responds to prescription drugs pretty much the same. Medical research now provides evidence that, due to our genetic map, we all metabolize prescription drugs differently. The fact of the matter is that people experience a wide range of possible effectiveness and/or unintended side effects . And with gene research, now we can even pinpoint specific genes that account for various differences. This knowledge is enabling a more refined practice of “personalized medicine.”

Changing culture is far from medical science, but the same principle applies: the effectiveness and/or unintended side effects of change efforts depend in part upon the unique genes in the organization. It is too easy to just peg an organization into a pre-set classification of culture type. Of course, we also know from medicine that environmental surroundings and an individual’s lifestyle choices are critical in determining their health. The same can be said for the culture of an organization. It is important to understand the context – the history of a company, the industry in which it operates, its stage of growth/development, geography, size, the nature of external relationships, etc.

But like human beings, no two companies will react exactly the same in the same environment. What is more effective is to approach each organization as unique – or “personalized” – looking to capture their unique DNA or “secret sauce.” This consists of some combination of their keystone of culture; their strategy, mission/purpose and indelible values. And it includes a sense of “how work gets done,” meaning how they are organized, their guiding principles/work practices, and accepted behaviors; this includes meeting practices, modes of communications and governance/decision making patterns. All of this, and more. We need to understand the interplay between this unique DNA and the environment.

For sure, it requires additional effort and thoughtful reflection. But that knowledge is important, especially in the face of so many failed attempts to change (or integrate, in an M&A/JV) culture. It is the holistic alignment of multiple perspectives and factors in the organizational system – from vision and strategy to mission and values to behaviors/competencies – that uncover the genetic composition unique to each organization. This unique genetic map needs to be assessed in the context of the challenges faced in its surrounding environment.

From this more deeply informed perspective, more nuanced approaches to finding the most effective points of leverage can be determined to initiate and drive change. It may have to do with new talent development programs. Or a stronger succession planning process, more rigorously pursued. Or a different approach to how leadership decisions are made across the organization, or between specific functional or geographical units, or in very precise pain points of customer support. Or in the composition of the performance management and reward system. Or to drive a better employee experience, where leaders need to create a more inclusive culture for all employees to bring their whole selves to work and contribute the best they can.

This is not only a matter of selecting where to start to initiate the greatest momentum shift, but when and how : the timing and sequencing of a series of follow-up measures and steps to reinforce change over time. As for the “ who,” at the very least we know it requires leadership; that is a given, and that is where we start.

And as much as we might like culture change to be easy and formulaic, our experience has shown that is it not. In the face of industry disruption (e.g., digital, globalization, consolidation), an organization’s ability to change is absolutely critical. Our advice to leadership is that it is worth the time and effort to do this right. The cost of not doing so is much greater.

Time, Space and Horizon 1-2-3: A Changing Framework for Driving Organizational Growth

Tue, 04 Jun 2019 18:01:20 GMT

Steve Blank wrote a great article recently on Horizon 1-2-3 pointing to a “fatal flaw” in the model: in our own words, the exponential speed of change has so badly warped the time dimension that Horizon 3 no longer sits comfortably out in the future but rather is now running right alongside Horizon 1- and may even be winning the race.

Over the years, our clients have benefited immensely from considering their own businesses through the Horizon 1-2-3 framework. And we totally agree it is necessary to re-evaluate Horizon 1-2-3 today. What we would add to Blank’s insights around the time dimension of the model is an important perspective around the spatial dimension.

What do we mean by “spatial dimension”?

First, the challenge we have always seen for companies pursuing Horizon 1-2-3 has included allocation of resources that can be visualized spatially. Horizon 1 dominates the “space” of resources in terms of floor plan, people and investment dollars, and contribution to current revenue. Oh, and leadership “mind space.”

The dominant Horizon 1 core business engine, the revenue driver, takes up approximately 80% of all these resources with a focus on day-to-day operations and realities. Horizons 2 and 3, by definition, compete with Horizon 1 and often negatively impact Horizon 1 efforts (i.e., they pull human and financial resources, “distract” leadership, etc.).
A Horizon 3 idea that crawled up out of the basement into the light of day, now in Horizon 2 focusing on building market share, still struggles to get maybe 10% to 15% of the resources it needs to GROW, GROW, GROW. What many leaders (and boards) don’t understand is that the risk profile and leadership mindset needed in Horizon 2 growth mode to break through the walls of the established Horizon 1 business model is dramatically different from the typical risk profile and leadership mindset of most Horizon 1 leaders.
And Horizon 3 efforts, often hidden down in a basement lab somewhere, populated by “mad R & D scientists,” hope to get maybe 5% of the revenue somebody else earned to experiment with some “crazy” ideas – just one of which might generate revenue some day in the future.

But a huge assumption of the Horizon 1-2-3 model is that all of this jostling for resources takes place INSIDE the physical space (and absolute control) of an established company that has earned the right to grow and is willing to reinvest in itself. And that, too, is a dimension that has radically changed spatially because the infrastructure of industry has changed.

Jeremy Rifkin, renowned economic and social theorist, tells us that at every stage of economic evolution three dimensions of industry structure have undergone radical innovation: communication, energy and the logistics of movement. This is precisely what is happening in our Digital World. The building blocks of this new digitally-shaped industry infrastructure are software, bits of data, virtually networked internet communications, technology systems, APIs, etc. And in this infrastructure, startups have a vast network or “ecosystem” of independent resources (i.e., not formally INSIDE the organization) available to partner with utilizing a variable cost structure and delivered virtually. Plug and play what you need, when you need it. Horizon 3 R & D has moved out of the basement and into the garages of a vast range of unknown outliers – and critical infrastructure partners. Somebody opened the doors of the industrial plant, and now the space for Horizon 3 has changed dramatically.

In his article, Blank goes on to talk about the development, and importance, of “minimum viable products” (MVPs) –“barely finished, iterative, and incremental prototypes.” Fundamental to enabling speed and ability and made possible in part because of the nature of space, i.e., “open sourced” infrastructure. “Minimal Viable Traction” that Blank talks about should now be understood as the evolving methodology of Horizon 3 development now taking place in that open space. Heady, maybe, but really critical for leaders to understand and embrace.

You may be thinking this is just the speed Blank talks about, but it’s more. This is about fast, yes, but the change to the Horizon 1-2-3 model is also influenced by the fact that speed through a “Minimal Viable Traction” approach is not controlled internally at the top or from the inside out. Instead it is driven by working “outside in” – or “backwards” if you will – from the traditional Horizon 1-2 3 model. It is a grass roots, bottoms-up movement where proven success is what moves the winners from Horizon 3 along. What the winners “win” is sufficient funding and resources to move just far enough to the next stage of expansion. While this appears to be quite different from the past, it is nevertheless a carefully structured process of minimizing risk and investment of resources along a series of very rapid stages of proven “traction” or success. For venture founders themselves, of course, this is an all-or-nothing risk commitment taking up 100% mind space and resource allocation. And many a venture is quickly screened out. For investors, risk is spread across a pool of opportunities, and carefully monitored if traction fails to materialize. But the payoff is huge if successful.

In conclusion, it is clear that there is one significant difference today from the traditional H 1-2-3 model: the mindset of key decision makers – the entrepreneurs and investors participating in this network of development. Much as Blank says, their “mental space” is likely unencumbered by the legacy thinking of an H1 business model.

Quite the opposite, entrepreneurial digital leaders are more the creative visionaries on the edge of discovery, likely driven by deep passion, and trying to figure out how to bring others along with them.

Much has been written now that identifies the challenge for established H1 business leaders in traditional companies in transforming their mindset from “industrial” to “digital” along this time – and space – dimension. Less has been written about these new leaders moving along Minimal Viable Traction in this new Digital World, basically from “H3 to H1” outside a traditional company structure. These are the new challenges for creative visionaries as they transverse the stages of Minimal Viable Traction moving “backwards” – from concept to product to scale – and along the way successfully building an entire company, maybe to new kind of digital “H1”, for the very first time. The challenges grow and differ at each stage of size and organizational complexity, whether built through internal or external space. And it all happens fast.

Oh! The Lessons We Can Learn From Sheep!

Thu, 09 May 2019 17:59:15 GMT

My wife and I recently spent several days hiking the Outer Hebrides, islands off the northwest coast of Scotland. These are very rugged islands, a few of which have large steep mountains and all with sheep everywhere. As we’d approach one of these mountains, my inclination would be to set my goal to reach the top and go straight at it. Sheep, on the other hand, know better. They gracefully walk in a zig zag pattern to eventually make their way up. Following their paths makes for much gentler and enjoyable hikes.

This makes me think about how many of us in business go head first at addressing challenges, akin to the way I was inclined to tackle the mountain. Instead, perhaps we should consider a more “sheepish” approach to business challenges and seek out the less aggressive and more graceful route to the desired outcome. This may take a bit longer but certainly makes the going less tiresome and strengthens our endurance for the long run.

Moving at the Speed of Digital: What Time Is It?

Tue, 23 Apr 2019 18:59:17 GMT

“For from now on the world will be split between the fast and the slow.” Alvin Toffler, Powershift, 1990.

What time is it? It’s 2019: time for leaders to assess their speed of change, fast or slow.

On June 27, 2016, futurist Alvin Toffler passed away. In the three years since, any number of research studies have affirmed the overwhelming consensus of business leaders that their organizations face an urgent need to transform in order to compete in a digital age and concern that most are moving too slowly. There is need to accelerate, and the question is how to move at the speed of digital.

In our most recent article on Exponential Leadership we identified new characteristics we are seeing in those successfully driving accelerated change in both emerging and legacy businesses. These include bolder, visionary agendas with a sense of urgency and impatience, grounded in personal courage and conviction. This is not to imply that individual leaders have all the answers themselves, but that they enable their people to experiment, learn, and take necessary risks aligned with a bold vision. Our point of view on leadership attributes is echoed in the most recent research released by Korn Ferry, “The Self-Disruptive Leader”: Anticipate and accelerate, while understanding that organizational innovation is achieved collectively.

One differentiator we see is the willingness or courage of legacy leaders to effectively tap into the full toolset of transformational options available to them. These are business model “levers” across the operating model…strategy, organizing structures, culture, leadership capabilities and team performance that can be designed to work at faster speeds. Legacy businesses are being described as moving at best at the speed of sound, contrasted with new start-up digital business models moving at the speed of light. Legacy businesses adopting a portfolio of business model initiatives are better equipped to leverage transformation from both sides: historic and new, inside and outside, the speed of sound and light.

Here is one way for leaders to visualize a holistic approach to accelerate change across the organization by pursuing a portfolio of multiple initiatives in parallel, something we call the socio-tech business model approach:

An exponential leader sees and has the ability to create significant organizational value by accelerating change to and integrating a historic business model with an advanced digital platform model.

Pipeline Industrial Model

From inside the larger core business operations (starting from the left), there is need for leaders to undertake steps to transform current ways of working and thinking. This requires collective organizational learning, beyond the competent management of existing functions, to lead collaborative initiatives that anticipate change. This only happens with some measure of leadership “self-disruption,” as Korn Ferry so aptly describes.

There is considerable talk about and investment in employing agile techniques internally. In concept, this is an effective approach to increasing speed; but the range of understanding, application and execution is wide. When initiated piecemeal, impact can be slow.
Ultimately organizations need to transform holistically, creating congruence between strategy, structure, culture and behavior. Starting “inside out” with this approach alone often takes too much time. It requires a compelling sense of urgency and an investment – from the ground up – in skills, behavior and mindset and most important, leadership exponential talent.

Platforms Digital Model

At the same time, inserting innovative digital startups from the outside into the mix might be thought of as “jump starting” or shocking the system. But seen differently, this introduces close-up, hands-on views of just how different work processes and behaviors can be, right now, today…if only allowed.

There is much to be said for acquiring a successful early stage digital platform business, moving at the speed of light, as a catalyst for transformative change. Outright acquisition is not the only option, as other forms of effective partnering are available.
The larger ecosystem of digital networked platforms has evolved significantly. Many of these innovative startups now provide pieces of the industry value chain. Instead of attempting transformation of legacy functions internally, traditional businesses have the option of substituting with a “plug and play” strategy. This leverages ready-to-use digitally networked modular SaaS components in CX or Supply Chain as examples, piece by piece.

Toffler was a visionary who saw this coming many years ago: “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” John Kotter also identified this early on: his research identified a common cultural attribute that correlated with organizational success – an organization’s ability to change and adapt.

Today this is not just some obscure future threat; it is “in our face.” AM Best, the insurance rating agency, has recognized this now by introducing a risk assessment factor based on an organization’s capacity to innovate and demonstrate results quickly. Boards are recognizing that they lack directors with sufficient digital technology business experience and are asking the same about their leadership teams.

Korn Ferry states quite emphatically that leadership will make or break the business. Industries are being disrupted. Companies are being disrupted. For executives to lead disrupted companies in disrupted industries, they are hearing they must self-disrupt. What we are talking about here is not technical expertise, but rather the business acumen required to shape new digital socio-tech business models. There is no great supply of this talent out there somewhere else. Yet there is a tremendous need for current leaders who have the courage and willpower to self-disrupt from inside existing legacy companies.

It can be done. It starts with taking a hard look at the existing reality:

Do you have the right team in place, and have you enabled each leader to drive the effort needed to pursue a digital socio-tech transformation?
Are you strategically ambidextrous, anticipating and accelerating, taking sufficiently bold steps and appropriate risks to transform and grow?
Are you pushing the operating model design levers to create the strategies, organizational structures, culture and behaviors that support continuous learning, risk taking, and adaptive change?
Are you effective in leading people collectively through the necessary changes at the speed of sound and the speed of light to maintain long-term viability and market relevance?

It can be done. Now is the time. Can you move at the speed of digital?

Board Insight Required for Digital Transformation

Mon, 22 Apr 2019 21:53:05 GMT

Boards are finally beginning to recognize the challenges they face in overseeing digital transformation. Three top the list.

The depth of knowledge required to offer expert opinion on any one digital technology is significant, let alone multiple technologies operating in parallel. Acumen here is not acquired through summary articles, presentations or quick studies. It takes time and is based on direct experience.
The speed of change in digital technology is “exponential”. That is a fact-based mathematical observation, not a matter of opinion or choice. Expertise can fall behind in a matter of months not years. And the speed of change continuously increases the size of the expertise gap.
These Board challenges are not just about technologies; they are about different economic logic and new business models made possible by technologies (software, data analytics, digital communications networks, etc.).

The classic Board role of “oversight responsibility” is really being challenged. Oversight implies the capability to have expert insight into business practices and decisions … from a distance … based on years of experience on the front lines in the business. Today we must courageously admit that when it comes to digital transformation, Board members have not yet acquired sufficient digital insight to exercise informed oversight .

There are not enough digital experts to populate Boards, and so most lack sufficient experience with entirely new technological innovations, tech-driven business models and effective work methods in a digital organization. All of this places Board directors in an unfamiliar position fraught with paradox. What is less recognized is just how deep this paradox runs.

Let’s unpack this.

Insight is a different mental activity than oversight , and requires some nifty neurological gymnastics to shift from one to the other.

Board oversight typically draws upon the traditional “watch out” role of fiduciary and ethical responsibility: make sure nothing goes wrong. Research in neuroscience indicates that threat or fear shuts down the “executive function” of the cerebral part of the brain, and kicks the amygdala into gear which in turn reacts emotionally with the classic “fight/flight” response. This applies not only to physical danger but also to intangible emotional or social threats.

Developing insight into entirely new economic and business models -- dramatically different from the past -- draws upon the plasticity of the brain to form new neural pathways. This requires learning through a more expansive cerebral mindset of curiosity, openness, creative experimentation and exploration of foreign territory.

In the face of digital transformation, the Board’s highest oversight responsibility now is to learn to be open to new insight . Herein lies the paradox.

And if that were not enough, some suggest that Board Directors may need to learn from their own employees – the very people they are charged to oversee. This is an odd, potentially awkward, reversal of roles. Typically it is not healthy to interject Board members down into the inner workings of an organization. But admittedly, here is where the learning might happen, “down” where the digital natives live, out ahead of the rest of the organization… assuming an organization is fortunate enough to have them.

So what does a Board do about this?

First, the Board needs to raise awareness of the size of its challenge and the seemingly “unorthodox” nature of its “insight /oversight” role. Put simply: Directors need to be prepared to act differently.

Second, the Board needs to be astute about its approach and focus. There is a huge amount to take on here and focus will be critical.

One essential step will be to conduct an assessment of the organization’s readiness for digital transformation. This should be thorough, top-to-bottom, and include the Board and senior leadership. The Board needs to really understand the digital transformation capability internally to evaluate how much help needs to come from outside.

We also believe the Board needs to focus its learning efforts at the business model level around higher level strategic and economic decision making. How has digital technology changed the nature of business? And how does the Board continue to add value while it is concurrently in a continuous technology learning mode?

Here is a two-step approach to prioritize:

Keep the focus on the new business models made possible through digital technology. Employ multiple strategic lenses in parallel, using a “Zoom Out and Zoom In” approach. This applies to both time and “space”: near-term to long-term; specific internal objectives to broad industry disruption and formations of new “ecosystems”.
Understand new dynamics such as:

The economic logic of platform business models
The disruption of industry value chains
The nature of exponential change
Minimal Viable Traction as a methodology to invest in digital experiments

Today, data analytics and digital technology are so engrained in the daily operations of business that it is probably already a misnomer to delineate “Digital Transformation Oversight” as something separate from business model economics and strategic transformation. The greatest value from Board oversight (aka, insight) will come at that higher level.

This need for Boards to shift their mindsets isn’t a new phenomena. The same happened in the Industrial Era. The difference is that “back then” directors of Boards rode on the backs of a century of accumulated experience. Now they sit at the cusp of a new technologic era. Their greatest fiduciary responsibility is to be open to learning what that means - as fast as possible. This means directors today must pioneers and explorers, discovering new uncharted territories, new pathways -- both neurological and otherwise.

Customer Intimacy Value Proposition

Tue, 19 Apr 2016 00:00:00 GMT

We have long been advocates of Treacy's Value Proposition framework. Over the years, it has helped many of our clients clarify their competitive strategies in order to align their resources, organizational structures and cultures more effectively.

We still believe having one primary value proposition establishes a clear focus from which the rest of the organization is developed. Yet the clarity derived seems less impactful in the face of changes in market forces. We have wondered why. Borrowing liberally from the 13th century Persian poet, Rumi, perhaps the answer is...

Treacy's Framework

Treacy's research suggested that most successful organizations are clear about the specific value that they provide to their customer. To do so they must emphasize one of three approaches – Product Innovation, Customer Intimacy and Operational Excellence – without taking their eye off the other two. Organizations that try to put equal emphasis on more than one often fail.

Consumer Engagement Knocking from the Outside

If in fact Treacy's Value Proposition is having less impact in driving company success, it behooves us to understand why. Are the three values no longer the right three? Are there now four? Or none? Are they still there, but with muted impact?

Our belief thus far is that the three are still alive and well, and perhaps not even muted. Rather we believe the dramatic rise in consumer power has brought with it a new dimension that cuts across all three equally. And it is coming from a different place – from the outside of the door.

Consumer Engagement may be the new Value Proposition. And if indeed it is, then it must be perfected in addition to – not in place of – any one of the original three Value Propositions a company has selected. And to call it out explicitly: Consumer Engagement and Customer Intimacy are not one and the same. More on that below.

How the World Has Changed

By now we are all familiar with technological forces that have combined to create a dramatic shift of power to consumers, including:

1. the "democratization of knowledge" and information flowing through the internet, accessible to anyone and everyone,
2. the kind of disintermediation possible in a networked world where individual consumers can now go directly to the source,
3. and the new but quickly evolving technological capacity to "individualize" consumer transactions along the entire product (or service) value chain from design to delivery.

Transparency of information and direct access to a vast range of small, previously unknown providers of products and services, regardless of geographic location, have lowered barriers of entry for small companies and removed the dependency on distribution intermediaries. Think Amazon. Consumers can shop when they want, where they want and how they want. Remote, totally unknown, unproven shops can go-to-market immediately at minimal cost with huge marketplace exposure. The breadth of information, choice and direct access has shifted the balance of transaction power to consumers.

And while still in its infancy perhaps, technological advances continue to make feasible the individualization of products, services and transactions...right down to personalized medications designed around a single individual's DNA.

More and more, consumers now seek, expect and DO have a say in shaping their interactions with business entities in alignment with personal preferences. Consumers now expect to be able to engage companies on their own terms... knocking on the door from the outside ... and expecting someone inside to know how to answer.

The Unspoken Assumption

A fundamental and perhaps unspoken assumption underlying Treacy's Value Proposition framework is that the choice an organization makes regarding its Value Proposition is well within its control. Consumer Engagement is not.

The knocks on the outside of the door are now "viral" in nature, and occur at every conceivable consumer touch point, sometimes humorously, sometimes embarrassingly:

A while back the GAP launched its new brand logo with fanfare, but almost immediately retracted in the face of consumer disappointment gone viral.
Bank of America reversed new consumer charges shortly after being announced due to strong criticism from existing customers.
The CEO of Dick's Sporting Goods publically apologized to one single, previously unknown, teenage girl for the company's failure to include young female athletes in its catalogue photos; her father tweeted her letter to the CEO.

These kinds of consumer-to-company exchanges now grab media headlines on almost a daily basis. Not exactly the kind of free publicity the PR strategy had envisioned. Not at all within an organization's control. And by no means indicative of the depths of change that is being required inside organizations to compete successfully in a consumer-driven world. The fundamental underlying dynamics of how business operates have changed.

If we think of Treacy's original Value Proposition as a flat, two dimensional triangle, Consumer Engagement approaches it from an unanticipated third dimension – knocking from the outside.

This new dimension of consumer demand knocks on all three points of the triangle equally. And the position from which the consumer is seeking engagement is not fixed or constant: it is rapidly evolving, changing, and emerging. It has created a force that impacts a business' Value Proposition from a totally new and unanticipated angle: from the outside in.

A New Value Proposition?

There is evidence to suggest that companies that are increasing market share and profitability are those that are engaging consumers in the kind of reciprocal experience that enables consumer choice and individualization to the benefit of both consumer and company alike.

This suggests the existence of a new Value Proposition that does not eliminate or replace Treacy's three Value Propositions, but instead underlies, enables or circles around all three. It is becoming fundamental to the success of any one of the three Value Propositions. Well-established companies appear to be losing growth, market share or profitability, even with a clear Value Proposition. This is something more. This is developing the capacity to be engaged when the knock is coming from outside the door: Consumer Engagement .

Customer Intimacy is Different from Consumer Engagement

ronically perhaps, where the challenge of Treacy's Value Proposition has been most perplexing is where you would least expect it – for those who have pursued the Customer Intimacy Value Proposition.

We are seeing a significant uptick in the number of client organizations who now gravitate toward Customer Intimacy as their primary compass. In many cases, this is likely in response to a recognition of the changes in market forces described above. But we believe it is important to understand that Customer Intimacy and Consumer Engagement are two overlapping but different Value Propositions. They should not be confused.

Customer Intimacy is a discipline that starts with the selection of a specific customer segment. USAA is a clear example: their Value Proposition is fully serving all the needs of the customer segment of the military and their families. All the products and services USAA has developed from inception remain centered on that customer segment. Entire business strategies and organizational structures are built to serve that one customer segment. Data-driven customer segmentation is a core competency – know the needs of that customer segment better than anyone else. The expansion of products and services are all aligned around the needs of that customer segment.

Given the mobile nature of military life, from the start USAA was oriented toward building service platforms that engaged a transient, geographically disperse customer segment circling the globe – electronically, on line, virtually, time zone agnostic, 24/7 accessible, mobile. It just so happens that the rest of the world has caught up. As a result, almost every other Customer Intimate company must now do the same. They must learn how to "co-create" with their customers the "engagement platforms" the consumers in their customer segment now demand. They must do this outside-in as well as inside-out.

But they must also remain true to the discipline of clear strategic focus on their customer segment. That is the bow of the ship. Customer Intimacy and Consumer Engagement go hand-in-hand, but do not replace each other. Together, they are knocking from both sides of the door.

But for Product Leadership, the bow of the ship is product, not a customer segment. The discipline is to continuously create new and innovative products (Apple, Intel, etc.) that outpace the competition. Does this mean that Apple and Intel are free from the powers of consumer demand? Hardly. That is why retailers like Starbucks have created an open consumer platform online, taking the risk of being totally transparent in the process of engaging passionate and even critical consumers in the design of products, stores, service, etc.

And the same goes for Operational Excellence. Yes, Walmart is a retail store, but many would argue that what has made them successful is Operational Excellence – managing the supply chain side of the business to perfection, reducing costs, providing local convenience and dependability to shoppers. Again, the bow of the ship.

Maybe a New Value Proposition - For Sure, a New Dimension

As Treacy would say, all companies must perform beyond a certain level of acceptability on all three Value Propositions just to stay in business, but those that outperform financially and otherwise excel on one.

Now that may be two. Regardless of the bow of the ship – Customer Intimacy, Product Leadership, Operational Excellence – Consumer Engagement may be just as essential for success. There cannot be any questions that the groundswell of consumer demand is making it clear that this kind of impactful, genuine, direct engagement with the provider of products and services is of huge value to individuals. One that cannot be ignored.

This is a different world, a different dimension, and it looks like this:

At the Lip of Insanity

For many business leaders the toughest challenge is a change in mindset – opening the door. Even before opening the door, one must learn to listen for the knock. If the door is soundproof, you're in trouble. As Rumi might say in today's world of consumer power, not enabling consumers to engage you is like knocking from the inside only, and that is "living at the lip of insanity."

There are new kinds of engagement platforms that support consumer-driven experience – from the outside-in. The efforts that are still internally driven and controlled do not sufficiently acknowledge, invite in or engage consumers as authentic partners in designing their customer experience. While many companies continue to knock on the door from the inside with familiar but outdated tools, consumers are knocking on the door from the outside. Many companies have not yet figured out how to answer the door.

In the words of the 13th century Persian poet, Rumi:

"I have lived on the lip
of insanity, wanting to know reasons,
knocking on a door. It opens.
I've been knocking from the inside."