Leading in Crazy Times

The need for EXTREME Leadership

2009-04-22T20:16:00.000-07:00

We are witnessing extreme times. I never thought I could write that sentence with a straight face. But it is true. The level of complexity and gut-wrenching pressure that corporate leaders are dealing with today is unprecedented. The latest public evidence of our times is the suicide of Freddie Mac CFO, David Kellerman. It may be presumptous to link the tragedy directly to the pressures at Freddie, but to say that his worklife had no role to play in the event will be disingenuous.

Most of us are not, thankfully, being grilled by the SEC everyday. But we are living through uncertainty, negativity, heightened interpersonal dissonance, and no sense of direction on a daily basis. If you are not, feel free to stop reading the rest of this post.

How does a leader navigate through these times? Especially when one feels more like a victim of the waves than the captain of the ship? How does one get to work every morning, ignore one's own personal travails, rally the troops, chart the course ... all the good stuff that leadership gurus tell us we must be doing?

A good point to start is to make a list. This will sound a little cute for some, but I have tried to distill out 7 things that define our challange today ... using the anagram EXTREME (ok, so sue me :-))

1. Energy: Called upon to implement tough, unpopular measures, we are finding it difficult to renew and refresh ourselves and bring our personal energy to inspire others

2. X-factor : Jeff Immelt has characterized the downturn as ‘a reset, not a cycle’. The future will have no precedence. Uncertainty will remain high, calling for constant change in direction.

3. Trust : Trust and confidence in leaders is at an all-time low – reducing the traction that we need to get things done through others. Harvard published a report last week noting that 80% of Americans do not trust corporate leaders, 50% of managers don't trust their bosses. Wow.

4. Retention: Dis-engaged and de-motivated talent is keen to move on … waiting for the market to turn. If you think I am crazy, look at the growth in linkedin membership - you will be amazed.

5. Expectations : Leaders will be challenged to continuously achieve significantly more …. with significantly less … now. The more we squeeze, the more we will be expected to squeeze in the future.

6. Motivation: The overwhelming anxiety of losing one’s job is a negative motive force for employees - making it difficult for leaders to positively engage their teams. If you try to cheer people up with optimism you will sound insincere. And, by the way, HR just took out your entire budget for rewarding strong performers.

7. Experience : Managers have little to no experience of leading through similar periods of prolonged downturns - leaders (45 years) today, were in school (18 years) in the early 80’s. In ex-Japan Asia, leaders, even at the top, have not experienced long recessions in their worklives ... ever.

Once you have this list, get cracking on a plan. For each item, think of the following.

- Is this challenge germain to my situation? Should I tackle this now, or leave it for later?
- What ideas can I generate that can work in my environment?
- Who should I talk to, to get more ideas and perspectives on this issue?
- How can I get my team to discuss this, openly, and come up with tactics to address the challenge on the ground?

I have built mine. I realized quickly that, for me, energy, x-factor and experience are the top 3 biggies for the first 100 days. I have a list of about 30 people that I want to talk to about these 3 things. I also have a list of attack-ideas that may or may not work - I'll find out pretty soon.

Try it. At least it will give you a break from staring at the spreadsheet that tells you that your business just had a terrible quarter.

On a personal note ...

2009-04-19T20:34:00.000-07:00

3 weeks ago I took a decision to leave my company where I have spent most of my career. The decision itself was easy. It was a rational decision based on opportunity, risk and the ability to follow my dreams. What happened after that took me by surprise.

People build their worlds around what they think is real. I am no different. My own reality centered around "what I did". My own achievements, my relationships and my personal challenges constituted the reality that I owned and nurtured. What I have realized over the last 3 weeks is that when you lead, you create a reality for those who choose to follow you. And when you decide to change your reality, it affects others deeply, in often un-intended ways.

I have spent the last few days dealing with the reality of others. It has been an amazing experience. I have come to notice that my impact on others was greater than I could ever imagine possible. The more I under-estiamte this impact, the less effective I become as a leader. By that order, I realized that I have not been very effective after all.

To all my colleagues who feel the impact of my decision ... I am sorry. Not for the decision itself, but for not taking the time to work with you in managing the impact. For being too focused on my reality and ignoring yours.

As I take on my new challenge, I am making a quiet promise to myself.

I will be aware of my impact ... at all times.

Tomorrow's leaders must vow to rid the world of the hubris, greed and self-interest of yesterday's boardrooms. As I embark on a journey to build tomorrow's leaders, I know that I will need to 'walk the talk'. Might as well make a start.

To everybody who has made the last 11 years of my life worth every minute ...

... Thank you.

Indro

What to do while you wait for buyers to buy again ...

2009-02-01T17:08:00.000-08:00

... honestly, it may take a while.

As I walked into a doctor's clinic in Singapore and joined the long queue of patients waiting outside, I glanced up at a tacky poster on the wall with the words PATIENCE printed in bold over a grim picture of man waiting, alone, at a deserted train station. Below it was some really sage advice .... "The key to patience is doing something else in the meantime".

As I meet clients around the world, I can't help but notice the increasing sense of restlessness and frustration building up in companies and individuals. A frustration born out of waiting ... for the buyer. Retailers are waiting for consumers to arrive, investment firms for deals to be made, and service firms for the phone to ring. And the wait keeps getting longer and harder each day.

The problem is, its going to be a really, really long wait. So, first things first, we need to stop holding our breath. Once we start breathing again and reset our expectations of a "quick return to normalcy", we will find ourselves empowered to act. I am advising clients to split their 'to do lists' into 2 parts - one for the 'DIP' and another for the 'RECOVERY'. That way you avoid confusing between short term belt tightening actions and longer term renewal actions.

Steve Balmer recently said (and I paraphrase) - "every time the economy tanks like this, we are not going to see the same reality bounce back at us, we are simply going to reset to a new reality". This is true whether you are running a corner shop or a billion dollar business. We will see a new reality emerge in 4-6 quarters from now.

Till then, we will all have to go through the 'DIP'. Depending on your company's view on how long your 'DIP' is going to last, you need a to-do list for this period. I call it the 'DIP' agenda. A typical 'DIP' agenda could look like this:

- Maintain a cash balance of 3-4 months' cash flow on our balance sheet at all times
- Reduce capacity by 10% over the next 100 days. Review capacity levels every month
- Pull out all stops to secure loyalty of top 50 customers. Meet them every week.
- Craft and launch 2-3 new revenue streams utilizing existing capabilities in this period
- Talk to employees every Monday and appraise them of actions we are taking
- Enroll top 50 managers into the DIP plan and re-align their incentives to DIP plan outcomes
- Train and develop top 15 leaders to communicate, motivate and lead through the DIP
- Retrain and redeploy key staff to short term revenue generating challenges
- Identify load-bearing walls in the cash equation (inventory, pricing, overhead expenses, etc.)
- Plan for and assign champions to each load-bearing wall
- Reduce investments in new initiatives to only the top 3 critical ones for the future. Review all new investments with a clear 'house view' on criteria to evaluate and fund for the future.

Once you have the DIP agenda in place, you might want to gather the 'best team' you can pull together to execute this agenda over the DIP period. Make sure the team understands the criticality of this period and is competent to execute. If you need to hire specific capabilities for the short-term, try options like interim experts and free lance consultants / experts.

While it is critical to know what to do during the DIP, make sure the RECOVERY agenda is available as well. You may not execute this agenda for the next couple of quarters, but you team needs to know how you plan to win in the new world. A typical RECOVERY agenda can look like this.

- Form a collective view (top 15 leaders) of the new landscape - customer, regulation, competition, funding and talent (among other factors)
- Enroll key customers in building the new proposition (products, pricing, positioning etc.)
- Re-orient the entire product portfolio to the new proposition
- Redefine the business model for future growth. Ensure new assumptions on margins, asset turnover and leverage (among other indicators).
- Craft a new incentive program to shift mindset of managers from DIP to RECOVERY
- Fuel innovation before the market hits bottom. Insert gates into the innovation and innovation funding process that open / close based on market demand conditions
- Review and change the decision making framework for managers - while one needs to centralize all decision making in the DIP, one also needs to let go before the RECOVERY
- Craft a separate agenda for opportunistic actions (acquisitions, team hiring, spin offs, etc.) to take advantage of emerging opportunities during the RECOVERY
- Set in motion an aggressive 'renovation' plan to build the key capabilities required for RECOVERY. Include staff training, brand building, organization sustainability etc. in the plan.

These are just a couple of examples of clients actually using the downtime to re-shape their destiny as an organization. Without these 2 lists and a strong leadership commitment to working hard on the agenda, our only strategy is to hope and pray for lady luck to arrive.

And, as Tiger Woods says, the harder you work at something, the luckier you'll get.

Bringing Risky Back ...

2009-01-13T18:40:00.001-08:00

... why would anyone want to take risks in the new world

No matter how the current downturn unfolds over the next few quarters, one thing is certain. We have to re-learn the art of taking risks in a highly de-leveraged world.

What does this mean for the average CEO? Look at it this way. Imagine that from today all your credit cards are taken away from you and you are forced to live life the old fashioned way - on cash. How would this change your behaviors and, most importantly, your view of risk?

For those readers who are as old as I am, you might remember a time before the proliferation of credit cards. We used to wait for the monthly pay-check, make a list of purchases we must make (consumables, mostly) and then make a separate list of 'discretionary spend' - stuff we've always wanted to buy, but couldn't afford. We would then painstakingly prioritize the second one and arrive at a very short list of items we felt we could 'afford' that month. Say, we decide that a sound system makes the cut. We would then go about studying the various options in the market, talk to friends at length about the pros and cons of each and then go out and make the purchase - in cash. As we handed out the money to the store keeper, we would feel a serious level of anxiety and dissonance (called post purchase dissonance by marketing people in those days).

Then came the age of credit and we forgot most of the steps and jumped straight from urge to splurge. The same holds true for the corporate world - investing on credit was never quite the same as investing in cash.

Well, looks like things have changed a fair bit around here. Leverage has suddenly become a four letter word and investors are returning to value today as opposed to growth tomorrow. How on earth do you make a risky move in these markets.

Here's my list of 4 things that we need to do to embrace risk in the new world
Understand the difference between good and bad risk. Good risk is the risk you take after you make lists, prioritize heavily, do the due dilligence, talk to people and seek out best value. Without good risk, you will simply not be successful in business or in life.

Don't indulge in anything that you don't understand. Even Warren Buffet owns up to the fact that he would not put money in a deal that wasn't crystal clear to him. So, trust only yourself, not the smart-talking financial advisor. Your own limited intelligence is a wonderful filter - use it.

Feel the dissonance, its good for you. The dissonance you feel when you have to pay for things in cash is a natural and powerful force that makes you build your own sixth sense about value. Running away from post purchase dissonance is a step towards the lala land of avoidance. So, whether you're buying a BMW for yourself or an asset for your business, embrace PPD.

Learn from your mum. Mothers have an amazing ability to scope out value. Over generations, mums have done the little things that constitute the art of 'buying into value'. That huge bottle of shampoo that you needed both hands to lift is an important lesson from your mum. If you are getting cheaper assets today at bargain prices that you can consume well into the future, have the sense to invest now. Conversely, conserve cash if you believe that the swanky jacket you saw in Saks (or Saks itself) will go into sale in a couple of months.

Hopefully, if we all do our bit to bring risky back ... we'll end up saving the world ...now that's a risk worth taking.

Time to be positive again ...

2009-01-11T22:02:00.001-08:00

... why leaders need to find a way to change before the market does

In my work with clients I have often observed this phenomenon I call the "mood lag" in business. I would define "mood lag" as the amount of time that a leader takes to adjust his / her mood to reflect the mood of the market.

Look around you. The real global downturn started around March 2007. For CEOs around the world to take off their rose tinted glasses and stop saying things like "this will pass quickly and we'll be alright next quarter" ... it has taken about 7 months.

The mood lag in Asia is even more pronounced. Asian CEOs are still in denial and will probably take another 2 months to change their own personal mood about the future. What this translates into is irrational decisions about investments, costs and restructuring. It puts people and companies in danger and makes recessions deeper and more painful for everyone.

Here's the clincher. The mood lag works both ways. Once business leaders actually switch to the doom and gloom mood that they should have activated 7 months ago, they continue to cruise in negativity well into the first couple of quarters of recovery.

Unfortuantely, by then, the best seats in the new world have been taken by competitors. Leaders struggle to work on their own positivity, and more importantly, struggle and fail to get their people to think positively about the future.

In fact, the best leaders operate in "mood lead" not "mood lag". By sensing what the future holds round the corner, the best in the world are able to bring to bear a personal conviction that pre-empts changes in the marketplace by 1 or 2 quarters. Using this, they are able to move their organizations towards stronger market positions by acting before everyone else.

As markets hit a series of 'bottoms' around the world, there is an increasing sense that a second half (of 2009) global stabilization is on the cards. Ideally, if you are leading a business, your mood should be moving from negative to positive just about now. That way you will have 2 quarters to rally the troops, think recovery strategies and invest in new growth pathways when the recovery gets underway in 6 months time.

The challenge for leaders is that their mood needs to change at a time when the night is darkest.

If you are not turning positive now, watch out ... you are possibly heading for another bout of "mood lag".

When will we ever learn?

2009-01-09T02:02:00.000-08:00

Ever since I was a kid, I have been told (repeatedly) that leadership is about heroism. I was taught in school about the great heroic leaders in history, in college about the heroic leaders in science and technology and, finally, in B-school, about the fearless CEO!

Yet, over my career I have noticed a peculiar fact. Every time I turned to worship the heroic CEO, I was told "oops, sorry ... that one is a fraud, and the other one there that you thought was god... sorry, he is on his way to jail too!"

Ramalinga Raju was one such hero. Worshipped in India, and, increasingly, around the world, he built the aura of invincibility around him that says ... "I am a hero ... I can do no wrong". The world bestowed on him award after award, calling him (and I quote) - "an extraordinary entrepreneur", "a global example", "a tough leader with a heart of gold" ... the list is endless. And yet ...

Nothing is more sad than watching angels fall. People like Raju made me want to believe in the "Great Indian Dream". Where Indian companies (and their leaders) will one day become the gold standard of the business world - leading not only in stellar performance and shareholder value, but pioneering an understated, unassuming and balanced style of leadership that makes our American counterparts look callow in comparison.

You can argue that Satyam is a one-off incident and the ascendancy of the Indian business leader is going to continue. I am willing to buy half that argument. I don't think that Satyam is one-off. I am convinced that there are others that will emerge as the high tide recedes and (to paraphrase Warren) we suddenly realize that some of us were swimming butt naked. At the same time, I do believe that the new generation of Indian businesses will continue to thrive over the next few decades.

But I'd like to see one thing change.

I'd like for us to see leaders not as heroes but as stewards. I'd like for us to see success in business as a team sport, not a spark of individual genius. I'd like for us to put our heroes to bed ... and build institutions instead. I'd like to see us look beyond Ratan Tata and Narayan Murthy ... to the institutions of that will hopefully outlast their grandchildren.

The CEO and the cult of hero worship is not an Asian thing. It was imported from the US over the years and has slowly taken over our love for institutions and belief in collective success in India. It has created an entire generation that has grown up wanting "to become like Bilgay!"

Hopefully, Satyam will be our wake up call. Hopefully, the patriots in us will not reach for the snooze button.

Followership in a post-crisis world

2008-12-30T01:47:00.000-08:00

Who will you follow in tomorrow's world?

- Bernie Maddoff, once held up as a role model of old-fashioned values on Wall Street, turns out to be the biggest scamster in history.

- Ramalinga Raju (Asia Business Leader Award 2002), the revered and celebrated CEO of India's software superstar Satyam, brings his career and his company to shame and disgrace.

- 2 of the most respected CEOs on Wall Street - Dick Fuld and Sam O'Neal drive their firms straight into a train smash

I can go on, but you get the drift.

So, who do you trust? If the smartest and cleanest corporate leaders are turning out to be common crooks, who will you choose to follow?

As I watched Jamie Dimon (CEO of JPM) accept the 'Legend in Leadership' award from Yale School of Management, I couldn't help but wonder - is he really ...

We are heading into a severe crisis of trust - in leadership. In 2007, before the current crisis emerged, Harvard University carried out a study to explore the level of trust that people had in their leaders.

On a scale of 1(none at all), 2 (not much), 3(moderate amount) and 4 (great deal), they found the following.

- Only Military (3.15) and Medical (3.02) leaders managed to breach a score of 3.

- The worst sector for leadership was the press (2.26)

- Business leaders were 5th from the bottom at 2.75

Overall, 77% of Americans believed that the country is facing a crisis of leadership.

... and this was before the real crisis even surfaced !!! I shudder to think what results we will see if they were to carry out the same study this year.

Now, almost everything I've said so far is intuitive ... sad, but intuitive. What's not so intuitive, though, is the fountain of hope that drives followership in the world. Its the irrational, downright naive view that otherwise smart people take ... that the world and our leaders will be better in the future.

In the same Harvard study in 2007, when asked the question "Compared to today, do you think that 20 years in the future we will have better leaders or worse leaders?", a whopping 59% of respondents said 'better leaders'.

This is the cool-ade induced view that gives Barrack Obama a 68% confidence rating from the same American people who have just gone through 8 years of the worst president ever. Hope is not audacious, its just the only thing we have.

Something tells me that followership will be alive and well in the post-crisis era as well. We are simply 'eternal suckers' for a smooth voice, a message of hope and optimism, and a nicely tailored suit.

Possible Ways to Make Money in 2009

2008-12-28T23:07:00.000-08:00

Whatever benchmarks you may take, 2009 will be awful. Whether you subscribe to the second Great Depression view of Olivier Blanchard (IMF Economist) or the audacity of a trillion dollar fiscal stimuli (Barrack O), it doesn't take away from the fact that we are in for a rough ride.

Recently, I was wondering what I'd do if I were to lose my job (hopefully with a reasonable severance). Where would I put my money? What venture (s) would make sense in this environment? So, I sat down to make a list of the things I would like to do if my career were to be 'freed up'.

Thankfully, I haven't lost my job (yet). But I wanted to share the list anyways. Quick caveat : if you burn your fingers at any of these, don't blame me.

Investment banking memorabilia: could range from photocopies of bonus cheques issued to senior managers over the last 3 years to autographed ex-CxO picture cards with total personal earnings, value destroyed for the company and a range of other trivia at the back. Also includes things like Lehman Brothers door signs, fully discounted CDO certificates and other collectibles.

Bad news re-packaging service: helping senior leaders figure out ways to communicate bad news in upbeat language. The idea is that the company will send us the bad news that they want to communicate to employees and we will put a positive spin on the message to make it sound like a good thing. The service could then be extended to creating upbeat logos for layoffs and pay-cuts and eventually producing speeches, videos, posters, mouse pads, micro-sites and t-shirts etc to communicate the worst news in the best possible way.

Discreet management off-sites: this service will be a great hit with the likes of AIG - we will plan and execute super discreet management meetings in remote but gorgeous islands (like in the Maldives or Seychelles) while ensuring that no-one gets to know of the event. All members of the management team will be taking synchronized leave of absence for the period of the meeting. They will then be whisked away from their homes in top secret vehicles under cover of the night and then transported by unlisted private jets to undisclosed locations for the offsite. At the end of the process, all evidence of the offiste will be destroyed and the managers will be back in office without a clue of where they went. The invoice for our services will read 'miscellaneous charges'.

The online trading game: this is a video game that will be targeted at out-of-job traders itching to make big bold trades but with no real money to do them. The game will simulate a real trading floor environment and will be a multi-player game with an online currency system. The 'central bank' will keep auto-generating 'liquidity' into the gaming environment and players will be able to leverage themselves as wildly as they wish to make huge bets on everything from the price of oil to the temperature at the north pole. Once a player goes 'bust', he will simply be knocked off the system and the 'bank' will monetize his losses immediately in the system. He can then come back into the game with a different user id. Winners will get massive bragging rights and will be elevated to the level of "Big Swinging Dicks" with their avatars splashed all over the site.

Recycling facility for private jets - this facility will take apart private jets sold off by companies getting a bailout from the government and trading the spare parts with commercial airline manufacturers, auto companies (those that survive), university aerospace labs, odd-ball collectors and London's Tate Gallery of modern art.

Hope you like these ideas. If you do, hope you will lose your job in time to execute some of them and make lots of money :-)

Welcome to the BLAME GAME ...

2008-09-24T01:25:00.000-07:00

... or, ARE YOU SMARTER THAN AN INVESTMENT BANKING CEO?

Phew, we finally got through the death week of AIG, LEHMAN and MERRILL! Now that we are all in hindsight mode, can the real culprit please stand up?

Huh, no one seems to be forthcoming. Let's see, who can it be ... here are a few suspects :

1. Capitalism : Love that one. Let's all blame it on an abstract philosophy and get it over with ... haha!

2. Exec Comp : "If only I got paid way less than I did ... I'd never have allowed this to happen" .... yeah right.

3. Wall Street : yes, lets go blame a street. That'll fix it.

4. Mortgage markets : abstract enough to not offend any real person ... specific enough to sound insightful on CNBC ... hmmm, good one.

5. Toxic assets : sure ... when they paid my bonuses over the last 6 years they sure looked diet friendly ... all of a sudden I see the toxins within!

6. Greed - my personal favorite. Don't blame the greed-y ... just the greed. Don't investigate the fat-cats who sat and watched the thing go down - just hypothesize and lament the growing greed in society. What a brilliant idea! "Its not me, its the invisible aura of greed around us .... "

Well, let's get real. All 6 of the above candidates have one thing in common. They are concepts, not people. And we all know why blaming concepts is far easier than blaming people.

The fact that not a single human being has been held accountable ( not counting those "fired with a fat severance") for 1 trillion dollar debacle is simply astounding. In fact, Hank the saviour has come up with a brilliant plan to kill the 'toxic assets' and save the 'toxic banker'. What a stroke of genius!

The events unfolding around us are testimony to the fundamental problem that nobody is willing to address. The problem of not just a few bad apples, but an entire rotten orchard. I remember a comment made by an Indian politician several years ago ...

"The problem is not when one becomes corrupt, its when one starts believing that corruption is the new normal"

This is a case where several individuals, over time, came to the conclusion that collusion, non-disclosure, public lies (obfuscation taken to the extreme), in-group favor trading, flawed ratings, and complete lack of accountability ... had become the new normal. These individuals are now trying to quickly shift the blame on to anything other than them - helped, in part, by the growing panic that the common man will take the hit.

Don't get me wrong - I don't think Andrew Mellon's 'lets purge the system' approach will yield a different outcome this time than it did in the 1930s ... I am squarely against a revisit to depression era economics.

What I would like to see, however, is a plan for rescue and a plan for renewal. Lets rescue the banks and the markets by all means. But lets renew our expectations of bankers. Lets hold significant individuals accountable for criminal errors in judgment. Lets set new expectations in transparency ... train the next generation of bankers to talk straight, be authentic, speak simple english and stand up to pblic scrutiny.

Lets take a stand that the financial elite is no longer an acceptable social class - just like we discarded the royal elite in the French revolution. Lets recallibrate our expectations from our bankers and hold them accountable to a new era of market practice.

How will all this get done?

Well how 'bout you send me a blank cheque for 700 billion and I'll send you a plan ....

Employer of Choice brands can attract talent

2008-08-14T23:49:00.000-07:00

... but you need Leaders of Choice to retain them.

Companies believe that becoming an Employer of Choice (EoC) will somehow help attract and retain talent. Unfortunately, only 50% of this hypothesis is true.

It is fairly well established that EoC status helps attraction. Your unsolicited applications will climb by over 40%, your brand image in key talent catchments will improve, and your ability to pull in better people (conversion rates) will see an uptick.

But what confounds companies is that attrition rates prove to be far more stubborn. In fact, with some companies who win such awards, competitors start targeting their people more actively, leading to temporary increases in attrition.

The reality is that 'people join companies but leave managers'. We have known this to be true for decades. The new EoC brand campaign that you just funded will not impress the people who already work for you. What they need is not an EVP statement but better managers / leaders to work with.

What are you doing about that? How many of your people leaders would qualify as 'leaders of choice'. We know that 'leaders of choice' do 5 things exceptionally well :

1. Talent scouting - they regularly network inside the company and across several external communities and scout for good talent. At any given time, they will be able to build a list of people they know that we should be trying to hire.

2. Relationships beyond the team - they are constantly building deep and personal relationships with talent in their team as well as outside. They maintain long and meaningful relationships with subordinates they may have managed a long time ago but have moved on to do other things. They are sought out by young employees as coaches / mentors.

3. Creating authentic and trusting environments - these leaders are able to create open, transparent, authentic and trusting environments at work. They behave in a consistent and open manner, actively seek and provide feedback and are quick to admit mistakes. They talk straight, have clear views on issues and will 'tell it as they see it'. As an employee you will always know where you stand with these leaders.

4. Bias for development - they bring a bias for development over utilization. What this means is that they see their primary role as a leader in developing employees to be the best that they can be rather than simply utilizing employees for their own success. They take this role very seriously ... often being tough on employees who are not performing at full potential.

5. Personalizing the organizational brand - these leaders spend less time making presentations to employees on values , mission etc. and more time on 'living' these values. Over time, these leaders are seen as living examples of the companies values.

Do you have enough of these leaders in your organization?

If you don't, I suggest you take some of your budgets for the 'Employer of Choice' brand campaign and use it to build 'leaders of choice'.

Game for the switch?

Living dinosaurs - the Galactic Headquarter

2008-08-05T23:24:00.000-07:00

... or why American companies are losing the plot on global growth.

If you have worked for any American company that operates in more than 2 and a half countries, you will likely know about this thing called THE GALACTIC HEADQUARTERS (GHQ), sometimes endearningly referred to as the MOTHER SHIP.

Once the symbols of American economic dominance on an unsuspecting world, these GHQs are characterized by a number of equally intriguing quirks.

1. The one horse town : Often set up in out-of-the-way towns in the US as a sprawling campus of mind-numbingly dull, low rise buildings, these galactic centers defy location logic. Here are a few examples

Walmart has 2,100,000 employees. Bentonville has a population of 32,000

IBM has 390,000 employees. Armonk has a population of 3,461 (really!)

P&G has 138,000 employees. Cincinnati has a population of 332,458

Dell has 88,200 employees. Round Rock has a population of 61,136

Motorola has 66,000 employees. Schaumburg's population - 75,386

Funny how American companies routinely expect senior leaders to take bold strategic decisions on global growth and innovation sitting light years away from real life, real consumers and real markets.

2. Obsession with internal stuff - Almost as a natural extention of their Martian surrounds, these GHQs are often obsessed with matters not even remotely related to the real world of competitive action. Staffers consume gallons of coffee and terrabytes of computing power trying to make sense of a global business through the lens of centralization, consistency and compliance. Data rich and insight poor, these GHQs spend enormous time drawing out fairytale strategies, policy papers, process-charts and implementation roadmaps that have little relevance to what goes on in the real world.

3. The diverging realities - Over time, the GHQ staff begin to see 'field staff' as unruly children, in dire need of discipline and order. Without corporate policy guidelines, they surmise, these little kids would run off and 'do their own thing' - the GHQs worst nightmare.

Managers in the field, in return, inevitably start viewing the GHQs as a necessary nuisance and a sleeping giant - not to be disturbed from deep slumber unless absolutely necessary. Soon, there are 2 realities - the market realty known only to those in the market and the GHQ reality - relevant only in a dingy meeting rooom somewhere in small town America.

4. One size fits all - Most GHQs, over time, have come to believe in a very dangerous premise. What works in the world's largest economy must, eventually, work everywhere else. If, by any chance, there is a doubt cast from some lowly field manager in a third world (wonder why there's no second world) country, it must be because his limited intelligence cannot grasp the 'big picture' view of GHQ.

To most of us who live and work in the real world it is clear that the all-American GHQ is a dinosaur waiting for a meteor shower.

Interestingly enough, the process has started already.

- A major FMCG major has decided to spread its senior leadership team in multiple locations around the world - one in the US, one in Europe and one in Asia.

- A leading global bank has broken its headquarters into 2 parts - one in London and the other in Singapore.

- A retail major has shifted all its governance for emerging markets to Brazil and China - a much smaller GHQ handles only the US business

- A leading consulting firm recently announced the end of its corporate HQs, instead choosing to locate its global Chairman in the Middle East, CEO in NY and other senior leaders in various offices around the world.

I can go on, but you get my drift. American companies are slowly waking up to a new world where 'one size does not fit all'. A multi-polar world where diverse and distributed leadership is the only way to succeed. A world where decisions need to be taken now, not later, and leaders need to stay connected to the real world of business.

It will be interesting to see how many American companies have heard the alarm go off.

Talent is not an asset ...

2008-08-03T20:57:00.001-07:00

... no matter what corporate propaganda may suggest.

Talent, in the corporate context is, by definition, not an asset. It is, however, in some other fields like the English Premier League.

In the EPL, if you 'buy' a player, you are entitled to a specific (negotiable) sum of money if another team was interested in 'buying' the player during the period of the player's contract with your team. In other words, as a team, you have some 'ownership rights' to the player and can claim some value in transferring these 'ownership rights' to another team. As the contract progresses you can 'depreciate' the value of these rights just like you are likely to do for any other asset on your books.

In the corporate world, however, you do not have any such 'ownership rights' in most cases. An employee is only liable to give you a fixed period of 'notice' before he / she moves to another organization. The receiving organization need not pay any 'transfer fee' to you. Only in rare cases, where the employee is serving a mutually agreed 'bond' with your organization, any such payment can be in play.

In most employee contracts, there are no 'ownership rights' for the organization. There is no 're-sale value' for the employee's membership. There is no 'transfer fee'. In accounting terms, therefore, the employee is a fully depreciated asset from day one. In other words, the employee is not an asset at all.

If you take the same argument forward, you will realize that organizations rent talent, pay a monthly rental (salary), some annual rental adjustments (bonus / increment) and that's that. So where does the asset argument come about?

The asset argument holds water only if you look not at the employees themselves but what they help create. The intellectual property created by a talented team of employees can be categorized as an asset (with ownership rights and re-sale value), just like the customer relationships (customer capital or goodwill) that can be created by specific employees over a period of time.

In other words, we need to start figuring out the asset value of relationships, ideas, processes, products and technologies created by employees in order to fully understand the value of our talent pool. Some organizations do this quite well. It requires some discipline around defining a number of different asset classes, creating a valuation technique that is simple yet fairly accurate, and then ensuring there is the requisite technology in place to link this back with individuals or teams of employees.

That way, you may be able to figure out that John Doe in IT has created $2.3 million of new asset value over 3 years of his membership in your company, while Jane Tan in Product Development has created $4.1 million in the same period.

Over a period of time, managers of John and Jane will be able to appreciate that simply measuring the number of training hours of John and Jane or other such measures of input investments is not an accurate indicator of the notional asset-generation value of John / Jane. It is only when we start assigning values to what they help create, do we start treating John and Jane as asset-generators, a label that is much more in line with the nature of employment in corporates.

So, as a manager, do you have any idea of who the most significant asset-generators in your team are? What are you doing to make sure that their ability to generate more valuable assets for the company increases every year (hopefully much faster than their rental costs / salaries)? Do you recognize (at least qualitatively) the value of assets generated by your team members? Are you able to position the asset-generation value of your team appropriately to others and with-stand the glare of corporate scrutiny?

Time to rethink the way you look at your team and what they do?

Leadership is a Perishable Commodity ...

2008-07-31T22:01:00.000-07:00

... but the expiry date changes when you change the shelf.

A friend of mine was asked to move from the US to China 7 years ago to start a new venture for a large chemical company. Lets call him Bill, for the purpose of anonimity.

He started slowly, struggled through the early months and faced an uphill challenge in navigating a new culture, a foreign language and an opaque regulatory system. 2 years through his frustration, things started falling into place. Bill managed to build a strong team, mostly with local talent, created a highly innovative distribution network and started on a path to success.

By the 4th year, the business was a raging success. China was contributing more to the bottomline than all other emerging markets combined and was set to triple the top line in 3 years. Products were flying off the shelf and the contract manufacturing network was creating millions of dollars in savings for the global company. Around the fifth year on the job, things took a sudden turn.

Bill started to hit a wall. While the company continued to expect miracles from China, he started to run out of new ideas. The small irritations in the business that he would take in his stride earlier began to sap his energy. By Year 6 he looked like he hadn't slept for a month. Bill was acutely aware that his expiry date as a leader might just be over.

The company, however, ran scared from the possibility of replacing their star manager in China. What if it all falls apart? Where can we ever find anyone to replace our best market leader? Several discussions ensued in the galactic headquarters and ended with elaborate action plans towards grooming a successor. But the eventuality of pulling Bill out of China was always pushed back by a 'couple more quarters'.

The first 2 quarters of Year 6 were nightmarish for Bill. He missed (for the first time since he started in China) the top line goals by a few percentage points. While 30% growth sounded robust by all standards, galactic headquarters was expecting 'more like 35'. Bottomline held up, but only because he managed to postpone some critical investments.

Finally, Bill had to take things in his own hands. He flew to the US, resignation letter in his pocket and demanded a move to a different role. To cut a long story short (some might say -too late for that!) he is now in Brazil effecting the largest turnaround in the company's history - and he looks and feels 10 years younger. A young upcoming manager from Poland moved into Bill's role in China and is enjoying the challenge of taking China to the next level.

Moral of the story - leaders have personal expiry dates on any given challenge. The best way to build leaders is to move them around and take them through a steady stream of progressively steeper challenges. Keeping them on the same shelf for too long is courting disaster.

Trouble is, we all know that. Bill's story is by no means exceptional. There are hundreds and thousands of Bills in global companies, driven by personal motivation, desire to prove themselves and strong organizational support working themselves ever closer to the dreaded expiry date.

A handful of companies around the world have mastered the art of moving leaders into new challenges ahead of this date. These companies enjoy, as a result, less variability in results, stronger pipeline of future leaders, and faster growth trajectory for existing leaders. They tend to lose less of their key talent to competition simply because it is easier to find new challenges inside the company than outside.

The vast majority of companies, however, simply refuse to understand the fact the leadership is perishable. They spend an enormous amount of money and resources in assessing and identifying their best talent, send them to the occassional leadership development retreat in a business school and believe that their contribution to leader building is done.

When some of these 'superstar' leaders derail, they quickly start blaming the assessment process (we didn't pick the right horse) or the development retreats. The fact is, real leader building involves a carefully orchestrated set of moves, from shelf to shelf, with increasing steepness in challenge for a carefully selected set of talent ...

... all with expiry dates stamped on their backs.

The talent magnet

2008-07-31T02:12:00.000-07:00

Organizations, especially large ones, need talented people much more than talented people need organizations.

Every time I meet a client I ask one simple question. Why would talented people want to work for you? Other than a few inspired souls, most respondents span 4 equally lame categories.

1. The 'we provide' response. A list of things (pay, time off, work-life balance, challenging opportunities, monday morning massage blah blah...) that will numb your senses as you listen. By the time the long list of 'provisions' draws to a close, you are inclined to suppress a yawn and move on to other, more meaningful, topics.

2. The 'how-dare-you-ask-do-you-not-know-who-we-are' response. Steeped in arrogance, often based on history, size, or reputation, this response is a classic. It flies in the face of evidence that talented people are attracted to companies not becuase of what they have done in the past but what they are looking to do in the future.

3. The 'we care' reponse. I admit, this one might work with some people out there ... not the sharpest or the most talented. It helps if you care, even better if you can show exactly how and how much. But care-bear companies are likely to show up on the top destination lists of B and C team talent from competitors. Not sure you want to be there.

4. The 'whatever you want it to be' response. Characterised by infinite flexibility to tailor everything around talent that they need to pull, these companies are often successful in their initial push to bring talent in. Soon the realization dawns that you can't be all things to all people all the time (sorry Abe!). Often leads to a curious mix of highly competent but incompatible teams pulling in different directions and having watercooler conversations on ' do you know how much they paid the new guy?'

So, is there really such a thing as a talent magnet - something your company can use to attract the best? There's an answer and a catch.

The answer is yes, there is. That magnet is basically a combination of who you are as a company and who you would like to be when you grow up.

The catch is that the magnet has 2 poles - it doesn't only attract, it repels as well.

The best magnets for talent involve 3 things:

1. Your story, told well - this involves a clear, simple narrative of your company's roots, its dreams and aspirations and the many challenges that are getting in your way to reach your dreams. The story must be personal, honest, simple and uplifting ... and the narrator must be believable.

2. The human face, literally - this part is about putting a human face, or faces, on the kind of talent you already have. Examples of people one can expect to work with. Picking the ones who most intimately represent the talent you need for the future will ensure the right people are attracted to you ... and the wrong people are repelled, naturally.

3. The 2 sided confession. The third, and possibly, the strongest magnet for talent is a confession. An honest, open disclosure that cuts both ways. It gives the talent you are trying to attract a view that your company's brand is edgy, not neutral. There are people who love your company, and people who aboslutely hate your guts. You then proceed to share what kind of people love your company and what kind of people are likely to hate you. In the process, you are subtly asking the candidate to take sides, make a choice, and build up some emotional stakes. If the candidate really identifies with the kind of people who love you, he / she will likely love you as well. If not, you spare yourself a wrong hire.

So, the next time you think about why talented people should join you, make sure you also think about why they shouldn't.