Thursday June 25, 2020

Thinking Beyond The Crisis: The CXO Imperatives

Thinking Beyond The Crisis: The CXO Imperatives

In conversation with Mark Oliver, Founder of MarkTwo Consulting

In today’s tough times, CXOs must not only captain the ‘organisational ship’ from a long-term strategic point of view, but in the short-term, ensure that the ship stays afloat. At a recent all-India session of The India CEO and CHRO Forums, Mark Oliver, Founder of MarkTwo Consulting, drew interesting comparisons between the battlefield and the situation that businesses face today. He also shared valuable leadership lessons, gathered from his own experiences in the British Army and the corporate world. Mark also elaborated on how greater engagement can help augment the 3Ps: productivity, performance and profit.

   Leadership imperatives for today

There are uncanny similarities between a business and military combat…   

…and CXOs can replicate pertinent military lessons in today’s war-like situation   

Fundamentally, a business is a competitive, highly dynamic, complex and risky human activity, grounded in individual and collective human behaviour, and conducted between complex organisations. In many ways, it is similar to military combat. Like in a battlefield, companies need to find sustainable solutions while suffering the minimum possible damage. To do this, they first need to know the problem they are trying to solve. During World War II, the British Air Force suffered heavy losses – as many as half its aircraft – while bombing Germany. Research suggested that most planes were hit in the fuselage or wings, but that there were almost no ‘hits’ to the cockpit or tail. To reduce its losses, the British Bomber Command decided to reinforce the armour on the fuselage and wings. However, this did not help. Re-evaluating the situation, the Command found, in fact, that many planes were hit in the cockpit or tail areas, but tended to crash in enemy territory and therefore did not return home. It then decided to shift the additional armour to these areas, which ended up significantly reducing losses. The takeaway for CXOs is to look for deep-rooted, well-thought-out solutions, and not to settle for ‘on the surface’ answers.

   Draw on established models

McKinsey’s 7S model, and the idea of multiple types of intelligence, are both important   

To counter the present crisis, CXOs might deploy McKinsey’s 7S model, which includes both ‘hard’ elements such as strategy, systems and structures, and ‘soft’ elements like shared values, skills, and stakeholder engagement. Moreover, it is critical to embrace all ‘four intelligences’: Intellectual/IQ (academic), Spiritual/SQ (creative/strategic), Emotional/EQ and Physical/PQ (practical).

   Focus on the company’s mission

Avoid winning the battle but losing the war…   

…by having a clearly defined goal-oriented mission in place…   

In times of crisis, leaders must re-evaluate the relevance of their vision/mission. By following a purely ‘task’ based approach (or ‘doing something’), they will only be able answer the ‘what’ aspects of the wider business problem. On the other hand, by focusing only on the vision, they might answer the ‘why’ aspect. What helps bring the two ends together is to focus on the mission, which is really about doing something in order to achieve something. Hence, the purpose/mission of a company should be structured in a way that both communicates clarity and inspires people. For instance, Amazon has a well-articulated mission ‘To become Earth’s most customer-centric company, to build a place where people can come to find and discover anything they might want to buy online.’

…as well as an effective strategy to support the purpose   

An effective strategy today is one that balances shorter-and longer-term imperatives; translates environmental strategy into a source of resilience and competitive advantage; copes with future lockdowns/pandemics; and supports remote working. In many cases, companies will need to look at strategic alliances or M&A to bolster their competitiveness and financial muscle.

   Invest in technology systems and roles

Covid will accelerate the shift to digital…   

…and the development of specialised roles    

Post-Covid, companies will also need to accelerate their digitalisation/Industry 4.0 initiatives, move from online commerce to a ‘contact-free economy’, and transition from ‘just-in-time’ to ‘just-in-case’ supply lines. For instance, at the height of its pandemic, China suddenly became the weak link in many manufacturing supply chains. Going forward, it will be critical to guard against such risks. Businesses will also need to ensure that their staff are equipped with the technology needed to work remotely and deal with the ‘new normal’. This includes protecting and training them against cyber-attacks and applying best practices around collaboration and accountability. To deal with these multiple priorities, firms should create specialised tech roles, including chiefs of technology, digital, data, analytics, and information security.

   Build effective structures

Teams and organisations need to be reimagined for the world of today   

In the Navy, ship-designers rank second in importance only to the Captain. This is because, essentially, they are the ones who determine the parameters in which a battleship operates, and what it can or cannot do. In the corporate context, the CEO must be both the Captain and the ship-designer, ensuring that the organisational structure helps drive its purpose. Today, this might include building smaller, more agile, cross-functional teams with clear reporting lines, and ones that are optimised for working remotely. The makers of Gore-Tex fabric, a privately-held manufacturer with over 10,000 people, have always kept the workforce size in each factory under 150. This is in line with the Dunbar’s number principle, which states that people work most effectively when the team size is less than 150.

Avoid having too many levels…   

A typical organisational framework may consist of a technical team at the operator level, above which are the 1st line (Supervisor), 2nd Line (Functional Head) and the Executive/Board levels. Research shows that companies should not normally have more than 5 levels of management if they operate at a purely domestic level, and no more than 7 if they operate across borders. What is crucial, though, is to avoid mechanically drawing up structures and slotting people into them. A more effective strategy – and one practiced in the military – is to start with a framework built around the dynamics of the business, and adapting the structure in line with one’s people/capabilities.

   Tap into different types of intelligence and experience

…and draw on the best in people   

In guiding their teams, today’s leaders must be able to tap into multiple types of intelligence. PQ may work best in terms of tactical issues, but IQ comes into play in operational management and SQ in strategic management. Most often, though, CEOs rely on EQ to hold their companies together during and after a crisis. In parallel, it is important to institutionalise and deepen diversity. Over an extended timeframe, diverse companies tend to out-perform non-diverse ones. However, diversity should not be limited to gender/ethnicity but should also span the four types of intelligence. This can help companies build customer insight, improve their global image, enhance the quality of decision-making and augment employee engagement

   The road ahead: leading the recovery

CXOs will need to balance multiple imperatives in the months and years ahead…   

Going forward, CXOs will need to balance the softer aspects of leadership with the harder enablers. They will need to get knee-deep into the operational side of the business, while also prioritising the safety and morale of their employees, including their ‘psychological safety’. However, nothing fails like success, and hierarchical structures only work up to a point. Thus, it is vital to ensure engagement and to release the full potential of all employees by building agile and adaptive teams that enjoy full accountability, authority and control over their work.

Traditional methods of appraisal – which only track tangible ‘lag’ indicators such as productivity – need to give way to those that look at intangible ‘lead’ indicators, such as talent development. What is also needed is a shift away from top-down assessment systems, a greater emphasis on coaching and mentoring, and a ‘balanced scorecard’ approach to performance measurement. Finally, unprecedented events such as the pandemic cannot be predicted, but businesses must keep a close eye on geopolitical developments in this inter-connected world, and have contingency plans in place for when the next Black Swan arrives.