Leadership lessons from "Up in the Air"

George Clooney’s character and the situations presented in “Up in the air” were fairly realistic reflections of the anxiety that plagues much of today’s business world. Allow me to briefly set up the movie.

Clooney’s character works for a company who is contracted to manage the termination process for downsizing organizations. His job takes him all over the world, helping him in his pursuit of elite status with Frequent Flyer programs. Of particular note is the brilliant product placements throughout the film which almost serve as characters. Clooney’s character brilliantly spins a termination into an opportunity for the films “victims”. As Clooney mentors a Generation Y protege, we are taken on a journey of the frailty and victories of human relationships. So what does this have to do with leadership.

People are anxious today. Even those in the most stable of industries are seeing the dark veil of uncertainty as tomorrow’s accessibility becomes more a question than an expectation. Leadership is most visible during times of adversity. If it’s not evident in your organization during these times, chances are your ranks don’t contain many leaders. Here are some tips

LISTEN. Simply stated but often a complex execution. Clooney’s character was cleaning up a termination meeting gone south (due to the naivety of his mentee). He read between the lines on the employees resume only to unveil that this job was a prison to the employee’s aspirations. He restated this as an opportunity to follow that dream for the benefit of his children. The employee took pause to this. What are your employees aspirations and needs? Do you create opportunities to listen?

ENGAGE IN RELATIONSHIP BUILDING. Your employees are feeling more and more isolated these days. Every time they don’t see their managers, they started drawing their own conclusions. This fosters that “stay off the radar” mentality my mentee stated. It’s destructive and a sure fire way to slow the progression of success.

COMMUNICATE. Information is gold in this day and age. As “Knowledge Workers” your employees need it. As a leader, it should be a driving passion to provide it. Let them know what you know and what you don’t know. They need a leader they can trust. Don’t hide behind the curtain of uncertainty. Instead bask in the warmth of focus and direction.

CELEBRATE THOSE THAT TAKE RISKS. You need to grow today. This isn’t the time to join your cowardly competitors who are hiding under rocks and regressing from the life force of business, growth. Growth is not waste. Help your employees see their potential by “Getting on the Radar”.

Reasons why mergers fail

Culture shock: Can you imagine IBM buying Google? The 'suit' culture of IBM will not at all jell with the casual approach that Google has, and a merger of this sort would fail miserably.

 2+2>4 attitude: This is a merger between #2 and #3 trying to take over #1 by merging. Typically, the customers of both #2 and #3 get confused and move to #1, leaving the merged entity in the lurch.

 No plan: Two companies try to sometimes merge and see if they can work out something in the long run. But if both of them didn't have a plan to begin with, then they may end up not having a plan even when they join.

 Poor integration: In IT, integration between products matters a lot, and a company that tries to grow by acquiring many companies tends to fail simply because it looks like a jigsaw puzzle that has not been put together properly.

 People trouble: Many companies tend to tell employees about mergers way too late in the day, and so confused people tend to leave and the ones who leave first are the smartest ones.

Lack of enthusiasm: Usually you hear of a brilliant start-up that was acquired by a respected brand and one year later, the founder of the start-up decides to 'pursue other interests' and from then on, the project runs out of steam. The failure here happens more due to lack of enthusiasm because the bright idea has become staid as time passes.

Who needs you? Sometimes, two companies decide to merge a little too late, when both their technologies have been outdated and surpassed by a superior force. A merger at such a time is not bound to produce the best of results. In fact, the top gun company may actually benefit while the two merged companies struggle to find their collective feet.

 Poor decisions: Who will do what at the top management level once the merger happens? Will the CFO of the bigger entity become the CFO of the combined entity even if the CFO of the smaller company is more capable? Put the wrong CFO on top and he will botch up, while the better CFO resigns in disgust and moves on to a competitor.

 Ego clashes: This is ultimately one of the reasons why a merger fails. People who have been given short shrift, or who perceive it as such (let's face it, most of us are legends in our own minds) are bound to try to cause friction, leading to a failed merger.

Importance of leadership in Strategy Execution

In the Best Companies for Leaders survey, management consultancy Hay Group identified the top 20 best-in-class companies as well as what makes these companies known for great leadership.

Key findings of the Hay Group's research:

• When asked what organizations value the most in leaders, 83 percent of the best-in-class organizations as compared to others said “execution.”
• Organizations value leaders who can achieve results through others.
• In tough economic times, employees desire more communication and clarity around goals. They want their leaders to become more visible and to be leading from the front.
• During tough economic times, best-in-class companies create clarity, encourage development, drive accountability and recognize successful leaders.
• The top 20 best companies for leaders make leadership development a priority.

BOTTOMLINE:  What's valued most in leaders?  The ability to execute on strategy - and get the job done.

Implementing Strategy

Reiterating the importance of execution in implementing strategy. Here are 5 keys to getting the job done.

Develop a model for execution.

Strategic yardsticks are plentiful. Michael Porter's theory of comparative advantage, for instance, gives strategists a way to conceptualize market leadership goals. In the evaluation of narrower plans, William Sharpe's capital asset pricing model, or more recent schema such as real options theory, can play a similar role. But when it comes to managing change, there are few such guidelines.

It's important for managers to have a model identifying the critical variables that define -- at least for the manager -- the things they have to worry about when they put together an implementation plan. Without that, managers will say something like, 'We just hand the ball off to someone and let them run with it,' and that's the execution plan. That isn't going to go anywhere.

Choose the right metrics. 

While sales and market share are always going to be the dominant metrics of business, more and more of the best companies are choosing metrics that help them evaluate not only their financial performance, but whether a plan is succeeding. For example, when a large cable company realized that the speed at which it penetrated a new market correlated directly with the number of service representatives it had in the field, executives began tracking the progress of how quickly representatives were being added in particular territories.

It’s important to choose metrics in a package so that they can change if market conditions change. For example, sales of cars might be a good metric for a car manufacturer, but if interest rates rise, sales will likely suffer. A good set of metrics takes that into account.

Don't forget the plan. 

As noted above, plans are often simply agreed to and then forgotten. One way to keep the plan on center stage is to separate executive meetings about operations from those focused on strategy. Strategy only succeeds when it is integrated into operations, but day-to-day concerns often so overwhelm the executive team that such an agenda management process is the only way to keep executive attention focused on the organization's progress. 

 Assess performance frequently.

Performance monitoring is still an annual affair at most companies. However, plan assessments at many of the leading companies happen at much more frequent intervals than they did in the past. The reason why Wal-Mart is so good at execution is it knows daily if what it is doing in each of its stores gets results or not. For example, when Wal-Mart learned this year that its Christmas sales strategy hadn't worked just eight days after the close of the season, it was able to mitigate the damage in a way it wouldn't have if results had been slower in coming. By shortening the performance monitoring cycle -- from quarter-by-quarter to month-by-month or week-by-week -- top management can get more "real-time" feedback on the quality of execution down the line.  

Communicate. 

Companies often go wrong by creating a cultural distinction between the executives who design a strategy and people lower down in the corporate hierarchy who carry it out. Asking ongoing questions about the status of a plan is a good way to ensure that it will continue to be a priority. 

Myths about Business Innovation

Geofferey Moore lists the top ten myths about Business Innovation. So here goes, in classin David Letterman tradition:

10. We don’t innovate around here any more.    Baloney.  You are innovating all the time.  The problem is, you are no longer differentiating your offers in distinctive ways.  Your innovations, in other words, parallel your competitors’ innovations, with the result that you all look more or less alike.  Customers, seeing little to no difference, put more and more emphasis on price.  Unable to distinguish your offer, you have no bargaining power, and most capitulate to their pressure.  On weekends you complain about commoditization, but during the week you do nothing to address the problem.

9. Product life cycles are getting shorter and shorter.  And whose fault is that?  If you do not differentiate in hard-to-copy ways, you cannot expect what differentiation you do create to be long-lived.  iPod’s product life cycles are longer than its competitors, not because it has a way-cool form factor but because iTunes is part of the iPod experience that Apple’s rivals are still struggling duplicate.  And as cars make their dashboards iPod compatible, then once again the competitors have to run around catching up to Apple instead of making their offers distinctive in some other dimension.  Sustainable differentiation requires barriers to entry and barriers to exit.

8. We need a Chief Innovation Officer.  Like a hold in the head.  Think about what your true goal is:  you want innovation that creates differentiation that leads to customer preference during buying decisions.  That sounds about as close to a core business strategy as you can get.  It has to be grounded in the realities of operational capabilities, customer feedback, competitor investments, and capital constraints.  So your chief innovation officer by default must be your P&L owner.  If that person isn’t stepping up to the innovation task, replace them with someone who will.

7. We need to be more like Google.  Not on your life.  Google is a once-in-a-decade phenomenon, a company riding a wave of adoption so powerful that not only is the first derivative of its growth curve positive, but so is the second derivative as well.  If that describes your market, we doubt you are worrying about innovation.  If it does not, and you want outside help, seek it from someone who has had recent experience with markets like yours.

6. R&D investment is a good indicator of innovation commitment.  No, it is not.  In the first half of this decade, HP invested 15% in R&D and Dell invested 5% and cleaned their clock.  How?  They out-innovated them in process innovations led primarily by their operations folks.  Innovation that leads to sustainable competitive advantage can be initiated and led by any organization in the company.  R&D represents the engineering department’s lead, and in general pays off well in double-digit growth markets and increasingly poorly in single-digit growth markets.  Continuing major investments in R&D in slow-growth markets is a good measure of lack of innovative thinking.

5. Great innovators are usually egotistical mavericks.  Not any more (although there is no shortage of egotistical mavericks that would have you think otherwise).  In the current decade there is more competitive differentiation to be gained through collaboration than through busting out on your own.  That’s because our extended supply chains reward each company for focusing on its core and outsourcing the rest of the offer to someone else in the chain.  But actually orchestrating these chains to perform effectively in real time requires enormous innovation.  And that is a job for people who listen well, empathize deeply, and make the differentiated performance of the chain as a whole as important as their own local success.

4. Great innovation is inherently disruptive.  Not necessarily.  To be sure, authors like Clay Christensen and myself have spent much of our life’s work chronicling the impact of disruptive innovation, but it is only one type among many.  And the more established your company, the less likely it is a type for you to specialize in.  Alternatives include application innovation, product innovation, platform innovation, line extension innovation, design innovation, marketing innovation, experiential innovation, value engineering innovation, integration innovation, process innovation, value migration innovation, and acquisition innovation.  This last one, in particular, is usually an established enterprise’s best bet for dealing with disruption.

3. It is good to innovate.  No, it is good to differentiate on an attribute that drives customer preference during buying decisions.  Innovating elsewhere costs money and entails risk but does not create competitive advantage.  It might still be worth doing, either to neutralize another company’s competitive advantage or to improve your own productivity, but you would be surprised about the amount of innovation going on in your company right now that serves no economic purpose.  Rather it is being undertaken as a form of corporate entertainment, creating the illusion of purpose and meaning while carefully skirting the need to be economically accountable.

2. Innovation is hard.  Actually, it is not.  What is hard is deploying innovation, especially in an established enterprise.  That’s because the critical deployment resources are all engaged trying to make the quarter on the back of the existing offer set in the existing market categories.  They cannot be bothered with next-generation responsibilities when their current ones are hanging by a thread.  The net result: Too often, when a genuinely innovative offer is ready to go to market, there is simply no one there to sponsor it, and it dies on the vine.

1. When innovation dies, it’s because the antibodies kill it.  Yes, but not how you think.  The murder takes place in the customer’s world, not in yours.  Here’s how.   As a management team you hope to leverage the current relationships managed by your sales force to introduce the next-generation innovation.  But the synergies implied by this tactic are revealed over time to be false—the current team does not have any relationships of merit with the new target customer.  Instead it has legacy commitments to the old target customer who in turn is threatened by and resents the intrusion of the new innovation.  Thus your own sales force finds itself more or less honor-bound to sabotage your next-generation effort.  Whether they actually do or not, they are in no position to lead the kind of charge required, and it is no wonder when some piddly little start-up beats your finely tuned sales machine to the punch

In troubled times, boards must step up

This post is essentially Lucy P Marcus' (founder and CEO of Marcus Venture Consulting, who also serves as an independent director in number of boards) opinion about the role and importance of boards in troubled times.

There are some essential things boards and board members need to think about, no matter the size, location or sector of the organization. They are infrastructure, technology, internationalization, communication, and the balance of continuity and change. There is a need to achieve balance between grounding and strategizing. 

1) Infrastructure
Is the organization addressing issues around energy consumption, including integrating clean tech and sustainability? Is it covering infrastructure and from all angles--from facilities to building stock and rolling stock and the risks they may be exposed to, from changing work patterns and practices to the ways in which companies engage with their stakeholders and the local communities where they are based?

2) Technology
Is the organization flexible enough to recognize important technological developments and incorporate them into existing business models? Does it recognize places where technology and technological innovation may be fundamentally changing the way their organization is run in the future?

3) Internationalization
No matter what a company's main business is or where it is located, its success will ultimately depend on grasping the internationalized environment in which it operates. The world today is politically, socially, and economically more inter-connected, and this offers opportunities and poses risks at the same time. Is the company focused on attracting the best people from anywhere and put them in a place where they work most productively for the success of the company as a whole?

4) Communication
Is the company effective and dynamic in its communications, both with all its stakeholders (customers, staff, investors, etc.) and with the board room? Companies that send out a message of a forward-looking, socially and environmentally responsible, and politically aware strategy and do it by old and new forms of communication also send a message about the right balance between continuity and change, about the unity of word and deed, demonstrating in action to which it rhetorically commits.

5) Balancing Continuity and Change
Boards will only succeed in their task of future proofing their organizations if they see the connections between the old and the new. Is the board embracing new ideas and new ways of thinking while at the same time not ignoring or disregarding the old? Is the company being driven by short-lived 'flavors of the month' or temptations of every disruptive technology or idea that comes into the room, rather than being guided by the needs and vision of the business?

Organizations of all kinds, be they public or private, profit or not for profit, educational institution or Fortune 500, will need the best from their boards and from their director. By leading through example, boards will help organizations face the sense of instability with aplomb, and emerge stronger, more self-assured, resilient and capable. 

Keiretsu : A Japanese concept

Keiretsu is defined as a system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings. It can be briefly described as a long continual business relationship, and has been a significant force in the Japanese economy for over sixty years

Keiretsu relationship can be defined as a series of repetitive transactions that occur long term between two or more entities in an asymmetrical relationship where one entity uses its position to govern the relationship. A Keiretsu relationship is based on close and stable business collaboration between affiliated entities. This can be especially useful in company’s supply chain management to get a competitive edge.

• ·    long-term trade relationships that often prevent third parties from participating freely in the market : This can create excellent economic efficiencies and make sense among companies that specialize in a particular product
• ·    companies often hold significant amounts of each other's stock to prevent other companies from acquiring shares; This can create stability in the stock market  and provides protection against hostile takeovers
• ·    fixed non-symmetrical trade between companies

Furthermore, Keiretsu is often established to

• ·    move low-value-add production to subsidiaries
• ·    ensure continuous high quality production capability to avoid excess production and consumer problems
• ·    improve risk management, especially with regards to variable or uncertain demand
• ·    ensure that increased sales mean a corresponding increase for subsidiaries
• ·    prevent technological information from being disclosed to competitors through close continuous relationships

A close examination of each of the above points is based on an underlying idea that can improve your supply chain. Specifically:

• ·    strategic long-term trade relationships with key partners with a long-term focus on process improvement can generate excellent efficiencies
• ·    a minor position in your key partners demonstrates commitment, and it can help provide financial stability in unstable times
• ·    non-symmetrical trade stabilizes the relationship
• ·    seasoned executives have a lot to offer, and should consider consulting beyond retirement from full time positions
• ·    companies with more resources and established processes should transfer those capabilities to their strategic suppliers to improve processes and reduce costs
• ·    a company should be focused on high-value-add production, and since value-add production is relative, low-value-add production for one company might be high-value-add production for its supplier
• ·    the best way to maintain quality is to maintain relationships with suppliers who consistently produce quality
• ·    risk can be shared among partners and reduced
• ·    strategic relationships can insure that your key suppliers succeed and remain stable
• ·    forming key relationships with key suppliers that can adapt to changing demand minimizes the spread of trade secrets

Thus correctly applied Keiretsu teachings can rejuvenate your supply chain, and eventually your business.