EXECUTIVE EDUCATION RANKED FOURTH BY THE FINANCIAL TIMES 2017, 2018
Developing Leaders Quarterly
Customized Executive Education with Impact A Conversation with Dr Markus Frank, Director and Head of Customized Learning at the Executive School, University of St. Gallen 12 A Tipping Point Ilona Haaijer, Dave Tullett and Andrew White 16 Smart Products Vs A Meaningful Life Gita Johar 19 How to Walk in the Fog Carole Osterweiler EXECUTIVE DEVELOPMENT 28 Moving On Up A Gender Perspective Kim Turnbull James, Susan Vinnicombe and Hillary Harris 35 Design Thinking Vs The Lean Start-Up Daniel Chadwick 39 In Search of Staying Power Tom Nash 47 Leadership Journeys – Jeff Bezos Bob Rosen 51 Leading Major Projects Roddy Millar CORPORATE PRACTICE 54 Digital Transformation and the NHS Rakesh Sondhi 62 Otto Group’s Kulturwandel Journey Roddy Millar 69 Creating a Global Champion TRATON GROUP (formerly Volkswagen Truck & Bus) with IESE and HEC Tom Nash
In this issue
How to Walk in the Fog p19
Moving On Up p28
EXEC ED UPDATE 77 Book Reviews 81 Directory 86 What’s New on IEDP.Com
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Developing Leaders Issue 30: 2018 | 3
Welcome to Developing Leaders from IEDP Welcome to this 30th issue of Developing Leaders magazine. Reaching these arbitrary milestones is an interesting moment – in reality our publishing of a 30th issue has been no different to publishing the 29th issue but it will be different to the 31st issue, as this is the final hardcopy issue we will be publishing. Our digital copies now represent over 90% of our distribution – and by committing to go 100% digital we can incorporate video and other interactive elements into the magazine without having to run a different print version. It seems that the time is right to do so. The 30th milestone also provides a moment to do what we have been preaching in nearly every issue since we launched: to stop and reflect. It perhaps comes as little surprise to anyone who has studied leadership to see that many of the same issues are emerging today as we encountered when we published the first issue in 2010. Leadership is ultimately a mix of behaviours and actions that allow people to manage other people to achieve enhanced outcomes – and what is clear, and that every leadership program will focus in on, is that this starts with ourselves. Good leadership is largely about controlling our biases and urges so that our followers feel safe and secure and able to act in ways that fulfil well communicated objectives. These biases – like dieting – need to be continually observed and regulated to prevent bad habits re-emerging. Human nature cannot be reshaped in a generation, or even several, and so we keep encountering the same issues time and again in trying to develop better leaders. This is no reason to give up, but it also explains why leadership is unlikely to improve across the board in the way that technology or medicine can. New leaders do not start on the advances their predecessors have made, but back at square one all over again. Constant attention to self-improvement is the only option. This 30th issue tackles some of these intangible issues. Our cover story from Carole Osterweil explores how to lead and manage when the context is unclear – but when certainty is, as ever, required from your team. Our Tipping Point article from authors at Oxford Saïd looks at how we can develop leaders who can cope with this uncertainty. Faculty contributions from Columbia, Cranfield, IMD and IESE amongst others add to the breadth of insight in this quarter’s content from leading global business schools.
Many thanks for reading Developing Leaders – and here’s to the next 30 issues.
Roderick Millar | Editor
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Customized Executive Education with Impact A Conversation with Dr Markus Frank, Director and Head of Customized Learning at the Executive School (ES-HSG), University of St. Gallen
I n his role as Head of Customized Learning, Dr Markus Frank, has a unique perspective on the complex interplay between individual learning and organizational capability improvement. This perspective is perhaps not just shaped by his 12 years as a Director at the Executive School at University of St Gallen in Switzerland, but also tempered by his extra-curricula experiences on the golf course. For when not at work Markus Frank brings his knowledge of mental resilience and personal development to top level golf competition where, in 2017, he was the European Golf Association’s Senior Champion. The University of St. Gallen, Executive School (ES-HSG), while serving a global client base, is very much rooted in the DACH region – Germany (D), Austria (A), Switzerland (CH) – the technologically advanced powerhouse in which it sits, and the client organizations the school works with, from ABB to Porsche, already amongst the most sophisticated and advanced in the world, expect the very best in executive development.
By Roddy Millar
Developing Leaders Issue 30: 2018 | 5
“The change I see from the client is that it’s very much a commercial rationale. It’s an investment. It’s very results driven”
A director of ES-HSG since 2006, Frank, has witnessed significant changes not only in the content and delivery of executive education but also in its aims and objectives as dictated by the needs of clients. “The change I see from the client is that it’s very much a commercial rationale. It’s an investment.” says Frank. “It’s very results driven.” Whereas in earlier years focus was more on developing the best talents and keeping these people in the organization, which is still valid, now programs need to achieve measurable business outcomes. “You need to demonstrate tangible results and visible impact… changes in the practises, in the behaviour, in the way people run their businesses. So it’s very much about impact.” In the context of custom programs, there is an opportunity now not only to develop the skills and competencies of the senior people in organizations, but at the same time to develop the culture and the strategy of the organization as a whole. “In the environment we live in right now with all this insecurity in the political field, market disruption, and technological revolution, and our much more networked economy causing more complexity, leads to a point that organizations look for company development initiatives – that we called in the former times custom programs – as a true investment aimed at coming up with results in changed behaviour, increased capabilities and better practises,” says Frank. This presents a big challenge in terms of measuring the return on this investment, and the challenge in assessing what is really achieved through a learning initiative is as individual as the initiative itself. It depends so much on the client and their ways of assessing changes and impact. Some companies are very numbers driven and try to measure if the learning has improved how many of the people progress within the company, that can be measured through HR related KPIs around promotion and talent management, or their business results or EBIT margins. In other organizations people go more by gut reaction, looking more at the softer side –people can tell if somebody does improve and does change – and the best people to make this assessment, the same people that can facilitate real progress, are colleagues and peers. Furthermore, says Frank “In order to come to an honest assessment of improvements and changes, you need a certain culture in the company. You need a culture of trust and a culture of mutual respect and also a culture that is able to deal with failure.” This is important because, at times when companies are looking for the School to help foster transformative innovations – maybe involving lean start-up techniques – as Frank points out “Innovation requires the courage to fail in programs, but then learn from the new insights when back at the workplace - which in our geographies is not so common.” Measurement also depends on the aims of the program. If the focus of the program is on the development of individuals, there will be a pre-program 360˚ personal assessment, and then after a certain lapse of time, a post program assessment that takes into account the evaluation of managers, colleagues and even clients – on an individual level.
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If the focus of the program is on the business level, enabling the company in terms of change, innovation and transformation, an action learning approach is usually applied, focusing on very concrete and specific projects or performance improvement initiatives for the company. When program participants work on these projects/initiatives they usually present the results to the board and the most positive outcome is if the company decides to continue the initiative. The big challenge for the action learning approach is not so much one of measurement, as the outcomes are clear, but one of resources and availability of participants. The project assignments invaluably come on top of what the people in the program do anyway in the organization and at times this can be too much leading to postponements and complicated logistical issues. But when the whole set up works the result are very good. The reason most companies come to St Gallen for a custom program is to make a bold move that builds a solid platform for further growth, particularly in the context of being ready for a digital future. Others may come to enable their senior leaders to deal with VUCA. Either reason presents “fantastic opportunities”, through ambidextrous leadership, to make the best out of current business models on the one hand and on the other to innovate new business models and to transform the whole business culture. Ambidexterity resonates very much in every industry, in companies large and small but particularly in complex multi-business companies. And as Frank observes, “Being able to lead with both hands is a good way to frame the leadership challenge – a way that is understood by almost every board and company.” Companies come to St. Gallen because, as Frank puts it, “Closeness to practise is part of our DNA. We are a research-based institution, with many of our research centres set up like labs for companies – for example Bosch, which is one of the biggest suppliers for the automotive industry or Audi, one of the automotive companies.”
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This closeness to practice, already built at the research stage, enables ES-HSG to bridge the gap from the insights that you get from research through to a broader transformative business impact. “You try to frame it and phrase learning in a way that practitioners understand. And right from the start, try to identify relevant issues that we want to focus on in our research. And then, we add our capabilities, our competence in designing let’s say, transfer mechanisms and learning settings that are proven, and that are able to translate these insights into tangible outcomes.” For example, one of the research centres has an ‘internet of things’ lab, that is working on new smart products and services based on machine learning technologies that will open whole new market opportunities. And the school is working with Bosch to help them develop business models in terms of new services for completely new kinds of approaches to market. Although ES-HSG is regularly acquiring new clients from around the world, the enduring, long-term relationships it has with many
of its clients is clearly very powerful and engenders a level of trust that underpins its collaborative approach. “That we have many clients who stay with us, once having done a program or learning initiative, and don’t just repeat what we’ve started, but are open to start new programs and initiatives in different topic areas, is, I think, a proof and a strong indication,” says Frank. In many cases though, where companies have some crucial reason to do a custom program ES-HSG has to pitch against competitors. Its USP in these instances is threefold: first its foundation in the DACH region – with its profound understanding of the ‘German mindset’, enabling the school to deliver really cutting-edge technical content – which is important because companies today look for specialised knowledge and expertise based on sound research; secondly there is ES-HSG’s up-to-date and very innovative didactical methodology and logical approach to learning; then the third ingredient is the trusting client/school relationship which allows “a kind of safety in terms of how we talk, how we act, and how we deal with problems and challenges and so on.” This third element of ‘culture fit’ is critical. Part of the impact of participating in a custom program is not so much just the content but the opportunity to have access to structured thinking and conversation time with people who are very knowledgeable, and a space away from the normal work environment and its incessant interruptions and crises.
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In the end, for companies engaged in these learning initiatives the “perception – how they see themselves” in these times of transformation is key and requires serious reflection. “The wheels are turning faster and faster. But it’s not just about running faster,” says Frank, “you have to do things differently and see what you have to hold onto and what to let go of. You have to think ‘Have I ever stopped and asked myself how I do that and if that’s the best way?’.” A successful program speaks to this ‘perception’ in a way which is carefully prepared and is structured and helps participants to meet people who are knowledgeable and understand their situation and challenges and help them to reflect on what they do and challenge their thinking and practises. “This is really appreciated. Let’s say this is the philosophical side to the whole thing. If we can help people and organizations find time where they can exchange and reflect on their thinking, their practises, how they decide and so on, this is really something that is most motivating for us and very, very helpful for them.” This in itself presents a challenge, because creating an environment which allows transformative conversations and thinking space to occur is rarely valued by results-driven clients before they have experienced it. To meet this challenge Frank says “We try to draw every possible register. Everything that helps to raise the awareness of the importance of this aspect of learning. For example, we do video interviews with our people, the CEOs, or participants of programs; we bring together people who make this experience with others who might be interested and are looking for such kind of insights and learning experiences.” If the first hidden benefit companies get from custom programs is that creative space to have these conversations, the second one that clients appreciate is the opportunity to connect people across the organization who would not otherwise be interacting with each other. Many companies are aware of this opportunity and are looking for a setting which facilitates this, getting to know and networking with other people in the company. Even a space for constructive ‘peer consulting’. “First you have to prove as an academic provider that you have the content and the methods that can really bring people into a mode that is receptive to changing and learning and then, once you’re there, you can start to bring in new formats that usually, right from a cold start, the company would not have been ready for. You need to create that relationship and trust,” says Frank. With this understanding of the power of learning through conversation and reflection ES-HSG has taken on a further challenge in that it aims to keep a sense of the level of learning through reflection going after the program. One of its solutions to this has been to run a series of alumni events, bringing together people from different years. Where there have been recurring programs, different cohorts from different years, who went through the program are then brought together. For example, a very large healthcare company started a program in 2012, the first alumni event was in 2015, and the second in 2017 and the experience was “fantastic.” A large automotive company holds regular annual alumni events to bring people together from different years. Preparation for these events is very carefully discussed with the Management Board in terms of setting a stage to discuss alumni experiences based on what they took out of the programs and what they have subsequently implemented. Events are then often set up in a peer-consulting format, where people in the company who have a burning issue or a challenge, in terms of a transformation or a change program project, are asked to bring these to the event so they get some peer-consulting.
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“If we can help people and organizations find time where they can exchange and reflect on their thinking, their practises, how they decide and so on, this is really something that is most motivating for us and very, very helpful for them”
ES-HSG orchestrates the events, bringing in facilitators or even faculty to offer a refresher or add a new perspective on a topic that was worked on during the original program, working closely with the client’s L&D people to surface interesting cases that can be presented and discussed at the event. “The big advantage if you do it after two, three, four cohorts have run through the program is that these people really know what we’re talking about. They share the same knowledge. They have experienced and worked on simulations and applied the same tools and methods so this is solid robust common ground to build on,” says Frank. This alumni initiative is a powerful way to cement the benefits of custom learning within organizations. It not only offers a great inter-company networking space but by introducing the peer-consulting aspect it allows colleagues who have been through the program to engage with other people in the organization to do the teaching and the learning. As with the program itself it is a great way that individual learning is being harnessed by ES-HSG to improve organizational capability. Frank is a big believer in the continued interaction with participants after the formal program ends. He knows that great results come not just from continuous preparation and expert coaching, but as every golfer knows the extra distance comes from a well- executed follow-through. The development initiatives that suddenly stop at the end of the program, will have as much impact as a swing that stops at the moment the ball is hit. The post-program engagement is a critical part of the process to ensure improved performance is achieved.
Developing Leaders Issue 30: 2018 | 11
A Tipping Point A Time for New Leadership
By Ilona Haaijer, Dave Tullett and Andrew White
“The weather is closing in, the ground beneath my feet is shaking, I’m at an edge, on an edge, and the view from here is shrouded in mist” Corporate Senior Executive, Davos 2017 E ven a cursory glance at a newspaper these days gives a sense of the shaky grip we have on the forces that are driving change across and within our society. We see a world that has reached a tipping point; entered a threshold space where “the old order simply cannot contain the trajectory of the new.” We experience an extraordinary and palpable sense of urgency for the emergence of a more relevant and sustainable leadership archetype, people who are able to take the lead in shaping mindsets and leadership practices to create the conditions for greater engagement with all of society. Such a transformation is no longer an idealised or idle dream but a pressing business imperative. A New Corporate Leadership Archetype We see this new archetype of (corporate) leadership emerging. Leaders that no longer crave certainty but have learned to live with and lead in the face of unpredictability, ambiguity and complexity. Leaders with inner strength and resilience who hold the space for the development of their teams. These ‘space-holders’ do not just create the space within which meaningful conversations can take place; they actively sustain that space even when the tension of competing ideas and points of view ratchet up the discomfort. This new archetype has clarity, possesses the courage to act, and delivers direction and value by focusing on purpose and engagement for the organizations and communities they operate in. In describing the emergence of this new archetype our intention is not to offer a prescription nor a five-step plan. This is not a new form of ‘super-charged’ heroic leader, nor is it a collective leadership mired in consensus and compromise. We see leaders taking responsibility for themselves and their actions and choosing to create the space for purposeful collective leadership. In 2014 we interviewed 150+ CEOs to understand what it takes to develop the capability to be an authentic and effective leader in the 21st century. They described a meta-capability, an ‘early warning system’ that helps them predict how trends and contexts may intersect, interact and change direction. We coined the expression ‘Ripple Intelligence’ to describe how CEOs anticipate disruption, make time to plan and protect their organizations against unexpected events.
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CEOs also described some kind of ‘individual awakening’, often catalysed by a personal challenge or a ‘defining moment’ or insight. A ‘night of the dark soul’, that initiated them into a new view of the world and shifted their awareness and behaviour. Critical in this transition was the journey from an ‘I’ to ‘We’ mindset, from Ego to Soul. A shift to a deep relational approach that recognises the possibilities that collective action and responsibility can create. Accelerating the emergence of the new archetype – Leadership Journeys It is clear we do not have time to wait for these ‘crucible’ moments to strike but must actively seek to create the conditions in which CEOs and the teams they lead can transition to a new level of leadership awareness and performance. DSM Food Specialities, for example, created such conditions when they embarked upon a series of tailored ‘Leadership Journeys’ co-created and led by their CEO. These ‘Leadership Journeys’ are curated and tailor-made development experiences. The CEO contributes to the design and delivery of each journey providing intention and direction and plays an active part in it. A journey may address conventional issues, but does so using unconventional surrounding and activities, providing ‘impulses’ to trigger defining moments. What might the play ‘The Curious Incident of The Dog in The Night’ have to reveal about empathy and communication? What insights are created by journaling? Or what new insight regarding ambition is triggered by a session with the director and primary violinist of the no.1 philharmonic orchestra in the world? The purpose of each journey is not passive content consumption or teaching but active individual and collective awakening to new ways of ‘being’ as a leader. ‘Leadership Impulse’, challenges to the thinking or senses, are used to stimulate and embed new perspectives or to throw old and unhelpful assumptions into sharp relief. Above all the space is created for leaders to explore, share, define and embed their individual and collective sense of purpose for the goal of overall value creation. A Journey sits within an overall context of mindful leadership, driven initially by the CEO. It aims to contribute to a continuous state of being and doing as a leader rather than be a ‘once a year exercise’.
This new archetype… Leaders that no longer crave certainty but have learned to live with and lead in the face of unpredictability, ambiguity and complexity
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Lessons Learned From our experience of designing Leadership Journeys here are a few guiderails to be aware of: • Demonstrate competence – build trust and share permission to act, experiment, and learn together. Enrol the team in the questions – ‘Who are we? And whom do we serve?’ From this a clear and collective purpose will emerge. • Build on firm foundations – activities build through personal, to group, to organization to industry understanding. Edging leaders out of their comfort zone. • Do the hard climbing yourself – do not outsource personal and leadership development. Call on others to act as Sherpas but be in the thick of the learning as CEO. Sherpas are experienced guides, they help spread the load of learning, keep the group on safe ground but it is the participants that do the hard climbing. • Get out of the office and the classroom – but keep it connected to specific work goals. Use unconventional approaches to tackle conventional problems like strategy and direction. Move from place to place to experience different energy levels, and the impact of different environments and approaches. • Invite not instruct – offer experiences that allow individuals to interrogate their own interpretation and learning and determine how they will apply it. • Impulse not content – the journey is an opportunity for ‘leadership impulses’. For individuals to explore personal experience not just consume content. • Start close in – with something you know – your industry, trends and perspectives and purpose – before expanding and stepping into personal development and reflection. • Create a vision - create a guiding light for the organization and a ‘why’ to base major decisions on. Leadership Journeys are but one response to the urgent need to accelerate the emergence of new leadership practices. Business schools, like Saïd at University of Oxford, are adapting their programs to combine experience and theory and provide a useful stimulus to the development of meta-capabilities that are required to operate in a VUCA world.
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The Business Benefits For DSM Food Specialities the benefits were very clear;
• Increased courage – inspiring and safe space to host conversations that matter, at the individual and organizational level. • Strengthened relationships – a space to address communication difficulties and build strong working and personal relationships. • Increased ambition – a collective vehicle to create a sense of common purpose and ambition – ‘Enabling Better Food for Everyone’ – that can guide strategic and day-to-day decision making. • Strengthened leadership community – creating a joint identity and narrative for the team and organization. • Increased drive for self-mastery and development – where each leader can explore and realise their individual potential and contribute to the collective wisdom of the organization. • Increased performance across the board – a focus for performance and business growth with significant increase in EBITDA, accelerated growth, increasing EES (Employee Engagement Score • Increased execution speed – trust creates increased speed of recovery and space for more and more rapid learning whilst dealing with short and long-term business challenges. Conclusions We are in a threshold space, where a new leadership consciousness can emerge. This transformation requires the active development of a new corporate leadership archetype, built on an individual and collective sense of responsibility and awakening. Leaders who are able to live and lead with purpose, creating greater value in a business environment at this tipping point in time. So how do you address this challenge as a CEO? Do not outsource leadership development to a third party. Rather, work alongside them to lead your team. Not just to ensure they and the organization performs at a higher level – but also to help you and them become the leaders we need. Leaders who face their shadows and face the personal and collective challenges the world has presented to you.
Critical in this transition was the journey from an ‘I’ to ‘We’ mindset, from Ego to Soul. A shift to a deep relational approach
Ilona Haaijer, former President and CEO of DSM Food Specialties, Supervisory Board member of Royal Boskalis N.V., recipient of several international Leadership awards and accolades. CEO and senior leader with a successful 20+ year global track record in both B2C as well as B2B complex, multi-continent, multi-assets, multi-currency and multi-cultural environments. Dave Tullett: An Associate Fellow at the Saïd Business School at the University of Oxford. An experienced Integral development coach and leadership consultant, he is a former Vice President at Heidrick & Struggles. Areas of expertise include leadership development, individual and organizational purpose and talent management. Andrew White: Associate Dean, Executive Education and Corporate Relations, Saïd Business School An experienced program director, teacher and researcher, his areas of expertise include innovation management and leadership development.
Developing Leaders Issue 30: 2018 | 15
Smart Products Vs a Meaningful Life The Psychology Behind Smart Product Adoption
A ccording to recent figures, 40% to 90% of new products will fail. This reinforces just how difficult it is to convince consumers to buy products that are new to the market. The reason for this high rate of failure relates to the barriers to adoption that prevent consumers from trying out new products. In many cases, those barriers are more psychological than functional: the new products may have attributes and benefits that consumers value, but they fail nevertheless because of how consumers feel about that product. Four Psychological Barriers to Adoption Research specifically focused on the adoption of autonomous products, also known as smart products, reveals even greater insights into psychological barriers to adoption. Smart products have computer chips or sensors or some other kind of artificial intelligence (AI) technology that enables them to take on tasks autonomously. For example, an autonomous vacuum cleaner uses sensory technology to move about the entire house without any guidance from humans. Through an extensive qualitative study with consumers in the U.S., China and Switzerland, researchers identified four major categories of psychological barriers to adoption of proactive smart products, which are based on four key desires of human beings:
By Gita V. Johar
• The desire for control • The desire for social connectedness • The desire to engage in experiences • The desire for individuality
Recently, my research colleagues and I demonstrated the link between desire for control and rejection of new products. In the study, participants with a higher need for control were less likely to be open to new or non-traditional products.
Since then, I have begun to explore whether the desire to engage in experiences causes consumers to view smart products as barriers to leading a meaningful life.
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How Daily Tasks Become Meaningful The experiences in your life give your life meaning. However, it’s important to distinguish between meaningfulness and happiness. Recent research demonstrates that certain types of experiences might not make you happy, but they still add meaning to your life. For example, when you expend a certain effort on something, and then see the outcome, that outcome helps to give a sense of meaning and purpose to your life. Thus, even every day chores like cleaning your house may not lead to happiness, but they lead to meaningfulness. When talking about meaningfulness, it’s also important to think about the process as much as the outcome — that is, the way that things get done, and not just whether they get done. The process of cooking a great meal, for example, is more meaningful than just having a great meal. So even though the meal might be better if a smart cooking system can cook it for you, you lose the meaning because you lose the process of making that meal. The Fear of Outsourcing Meaningful Tasks Currently, I am exploring how the meaningfulness that comes from the tasks in our lives can help us understand why some people are more resistant to smart products than others. For example, if someone’s life is already filled with meaning, there’s a greater chance that they are not looking to the more quotidian types of experiences described previously for meaningfulness. As a result, they may be more willing to ‘outsource’ these kinds of tasks to smart products. While still preliminary, the evidence from the research so far confirms that as with the desire for control, the desire for meaningfulness is a potent barrier to the adoption of smart products: outsourcing even mundane tasks to smart products can reduce one’s sense of meaning and purpose.
With the desire for control, the desire for meaningfulness is a potent barrier to the adoption of smart products
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The most successful people are going to be those who are able to focus the greatest amount of time possible on the most meaningful activities in their lives
Freedom to Focus on the Meaningful For consumers concerned about giving up control to smart products, marketers should emphasize consumer control when positioning the product. We found in our previous research that the best way for marketers to reduce psychological barriers is through careful ‘framing’ of the product. A tag line that reads “Take Charge of Your Taste Buds with this New Sensation Blend” was found to be more effective than the tag line, “Let this New Sensation Blend Take Charge of Your Taste Buds.” The same careful framing approach can be applied to the psychological barrier of meaningfulness. Instead of emphasizing that the smart product is taking a potentially meaningful job away from you, marketers would want to emphasize that the smart product is freeing you to spend more time on more meaningful activities. For example, let the smart cooking system cook the meal so that you can spend more time your child. Products can also be designed to give consumers an illusion of control as well as a feeling of autonomy when using the product so that they do not feel that the product is taking over for them. In this context, smart products become a tool for success in life. The most successful people are going to be those who are able to focus the greatest amount of time possible on the most meaningful activities in their lives. Because sophisticated smart products vastly expand the type of tasks that can be outsourced, they represent an unexpected new resource for today’s busy people looking to add more meaning to their lives.
A fully referenced version of this article is available on application to email@example.com
Gita V. Johar has been on the faculty of Columbia Business School since 1992 and is currently the Meyer Feldberg Professor of Business. She served as the school’s Senior Vice Dean from 2011 to 2014, as the inaugural Vice Dean for Research from 2010 to 2011.
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How to Walk in Fog Creating Order in an Unordered Environment
By Carole Osterweil
T he challenges faced by the 2020 team closely parallel those of many people I work with. Talented, experienced and highly-motivated, they are charged with delivering ambitious objectives in relentless and demanding environments. They know about VUCA environments, and they know VUCA environments do not conform to expectations. But this knowledge is not enough. They still get stuck and they still get frustrated, and often they cannot put a finger on what is going wrong or why. Reputations depended on it. Failure was not an option. They were desperate for clear parameters, but the Steering Group was unable to oblige. Things were moving too fast and, no matter how much they wished otherwise, there was little the team could do to influence it. The Project2020 team first glimpsed light at the end of the tunnel when, during a team meeting, a consultant offered a label courtesy of complexity theorists Kurtz and Snowden to describe their environment. It was un-ordered . “In Un–ordered environments so much is changing on so many fronts that it seems impossible to keep up let alone influence the way forward… The way to thrive is to recognise that the lack of order is NOT a matter of poor investigation, inadequate resources or lack of understanding. It is simply a characteristic of a complex system at work. What’s more the lack of order is not necessarily a bad thing or a problem that can be resolved if someone else would only set their mind to it.” Project 2020’s remit was to restructure a partnership organization delivering health and social care across the NHS, central, regional and local government. For the senior team charged with delivery it was turning into a nightmare. The environment was changing so fast that every time they got a clear sense of the way forward, there would be a new policy announcement and the goalposts shifted. This article explores business ‘messiness’ – and draws on an emerging understanding of how the human brain works to offer thoughts and frameworks for dealing with it.
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For the 2020 team this one word, un-ordered, was worth its weight in gold. It validated what, at some level, they had individually come to understand – the lack of order was here to stay, for the foreseeable future at least.
In one way nothing had changed – they still had to deliver; in another, everything had shifted.
They had permission to acknowledge reality and revise their baseline assumptions. Their usual approach, which aimed to create certainty across the board would never pay off, and there was no point in pretending it would. The notion of an unordered environment opened the way for a very different approach which ultimately led to a successful outcome. It worked on several levels. At an intellectual level it provided a new frame of reference – that of complex systems to help the 2020 team make sense of the situation they found themselves in. They saw that the sense of chaos reflected the state of the system, it was not caused by their inability to lead or control. At an emotional level it created psychological safety – it enabled to team members to speak for the first time about how stressful and difficult things were. They could now admit that things felt chaotic without fear of being the only person who thought the project was going off the rails. And they could speak this truth without fear of being embarrassed, punished or rejected for speaking up.
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The way to thrive is to recognise that the lack of order is NOT a matter of poor investigation, inadequate resources or lack of understanding
The combination of a new frame of reference and psychological safety was the starting point for creating an environment where the Project 20220 team could:
• Relax and stop trying to force-fit their project in its entirety to standard tools and methods • Separate the aspects of the project which were un- ordered from those which were ordered • Use standard methods where there was order • Use dialogue and sense-making elsewhere • Be confident that order would emerge
With the publishing of research like Google’s Project Aristotle, leading businesses are gradually coming to understand the importance of psychological safety – at its simplest this is permission to make mistakes in pursuit of better performance.
However, most businesses are still a long way from appreciating that a lack of psychological safety has a huge impact on productivity.
If this sounds like an outlandish claim, take a moment to consider just some of the facts we are learning from the emerging field of Neuroscience which have been explored in previous articles and webinars. See Brain Basics in a Nutshell: Brain Basics in a Nutshell 1. The human brain is wired for survival. 2. The human brain responds to social threat in same way as it responds to physical threat - it tries to avoid it. 3. In judging whether a situation is threatening, the brain trusts its own experience above all else. 4. Previous authors have explored the impact of this response to social threat on our emotions. It generates fear, anger and shame for example, and leads to avoidance behaviours such as attack, defensiveness, denial and withdrawal. 5. They have also explored what happens when we feel psychologically safe. The brain generates emotions such as excitement, trust, joy and love. Emotions that make collaboration, creativity and productivity possible. 6. In the 21 st Century workplace social threats abound. The resulting avoidance behaviours consume large amounts of energy, add to complexity and distract from achieving organizational goals. David Rock of the Neuroleadership Institute has written extensively about the five key sources of social threat – Status, Certainty, Autonomy, Relatedness and Fairness, which go by the mnemonic of SCARF. A perceived reduction in any one of these activates avoidance behaviours.
The notion of an Unordered environment radically challenged the way Project 2020 team members thought about one of the SCARF domains – Certainty.
Mark Phillips in Defining Complexity for Practitioners points out we have choices about how to treat uncertainty. We can choose an orientation towards certainty or an orientation towards uncertainty.
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The differences are summarised below:
IF YOUR ORIENTATION IS TOWARDS CERTAINTY
You fundamentally believe
• All drivers of uncertainty can be identified. • We can estimate their potential impact on outcomes and put plans place to deal with this. • There may be unknowns and unknown unknowns, but these too can be identified and managed away. • The drivers of uncertainty cannot be identified ahead of time. • It’s not possible or desirable to plan how best to deal with an unforeseen event before it occurs. Doing so will constrain you in delivering ambitious results.
IF YOUR ORIENTATION IS TOWARDS UNCERTAINTY
You fundamentally believe
Like many of the people I work with, the Project 2020 teamwere working in an environment that demands an orientation towards certainty. Everything from business planning through forecasting and budgeting to performance reviews was structured around a belief that all drivers of uncertainty can be identified.
Leadership texts may talk about what it takes to thrive in a VUCA environment. All too often this talk is divorced from the reality of organizational life.
The Project 2020 team were struggling to make their work fit a business model that required an orientation to certainty. They did not realise they were doing this, and they did not realise there was an alternative approach – why would they?
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Risk and Uncertainty • Risks are associated with clarity and predictability – they can be quantified through a rational assessment of how likely, based on past experience, an event is to occur. These assessments are the basis of risk management approaches • Uncertainties are assumptions associated with ambiguity and novelty – they are difficult to articulate and define, but this should not prevent you treating them seriously and exploring them carefully. After all, uncertainties that come to pass have a real, and sometimes catastrophic, impact on delivery and outcomes
As a consultant it is easy to hold up a mirror and make glib assertions about what is wrong and what needs to change. It is far more difficult to get traction and action – especially when dealing with fundamental beliefs about the way the world works.
One powerful technique is it to recognise the emotional content whilst offering observations about the pattern of interaction and inviting a reframe.
For Project 2020 this meant asking the team if they had ever seen a construction site in Hong Kong – where skyscrapers are built with bamboo scaffolding. Could it be that anxiety about not being able to control things meant they were taking risk management to extremes? Were they over-engineering the monitoring systems to create the equivalent of rigid steel scaffolding when what they really needed was the flexibility provided by bamboo poles? To work effectively in messy and unordered environments we must keep anxiety in check. A key facet is building environments which are oriented towards uncertainty. Environments which use bamboo scaffolding to create just enough structure and stability to make progress in the messy business world.
How do we do this?
Building Environments Oriented Towards Uncertainty I find it particularly helpful to use a framework that combines organizational theorists Eddie Obeng’s project typology with Ralph Stacey’s work on complexity to:
• Consider the nature of the work at hand – in terms of complexity • People’s individual preferences
Stacey suggests the two dimensions for considering the nature of complexity shown in Figure 1
• The degree of divergence of view (about the way forward, processes to be used etc) • The degree of uncertainty about the future
Both are subjective. I focus primarily on the second.
People working on the same project often have very different views about where to position it on these two axes – especially when they come from different organizations, different stakeholder groups or even different levels or specialities within the same organization. We know from the earlier discussion that perceived social threats, from any of the SCARF domains, has the potential to evoke avoidance emotions and behaviours. Unconscious assumptions about certainty inevitably guide every aspect of our work.
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Most businesses are still a long way from appreciating that a lack of psychological safety has a huge impact on productivity
Learning to surface and explore assumptions about certainty is a crucial skill for leaders operating in a VUCA world. Doing so helps to create the psychological safety to enable all involved in delivery to contextualise and better understand the challenges. Exploring the Work at Hand I encourage exploration of two positions on Figure 1. The top right where there is pressure to deliver even though it we are peering into a future we cannot predict (like the Project 2020 team), and the bottom left where we have absolute clarity and clear agreement about the way forward (the terrain of traditional management processes).
EXPLORING THE PROJECT
Walking in fog
Increasing diversity of view (about the way forward processes to use etc)
Painting by numbers
Increasing uncertainty about the future
Figure 6, Exploring the Work at Hand (Source: OMQ Consulting Ltd)
When you are working in the top right it is like Walking in Fog. When walking in fog the best approach is to set out to explore and understand the uncertainty. You make pro- gress by explicitly exploring the terrain, aiming to put stakes in the ground as you gain clarity, and make informed decisions about where to look next to reduce the uncertainty further. Working in this way, you move from the top right towards the middle of Figure 1, eventually developing enough experience of the terrain to make realistic risk assessments. When you reach this point it is appropriate to adopt more traditional approaches to planning and risk management. Approaches which are akin to Painting by Numbers. Essentially, there is sufficient outline of the way forward to make filling in the detail relatively straightforward.