Costa Rebrandia: A study in strategic leadership and governance

February 29, 2012

A luxury cruise liner hits the rocks with 32 fatalities. Within weeks, another ship from the same company suffers another serious incident, and is towed to safety. The company faces serious dilemmas of retaining credibility in the marketplace and of finding a way of dealing with its corporate reputation.

The leadership challenge

What would you do, as a member of the board of this hypothetical company?

Hints for students of leadership

A recent series of events prompted this post. A crisis calls for creative actions, be they to preserve the past, or initiate changes for the future. Study of firms who found ways of dealing with reputational threats might suggest parallels. The Perrier recovery from contamination of its brand has become a business school classic. Disgraced politicians and celebrities find ways back into public acceptance. Even the ostrich strategy (do nothing to attract attention) may have to be considered

Suggestions welcomed

LWD subscribers suggestions welcomed and will be added (after editing) to this post.

How a news story develops

The fatalities in the Costa Concordia accident ensured that attention would be turned to the parent company. Without that impetus, the story of a cruise ship being tuged to harbour would have hardly captured attention. By then jouurnlists have begun searches for other stories to add to the developing narrative. Here’s one claiming evidence of ‘sex and drugs on Concordia cruises’. Maybe that even has some positive rebranding opportunities. Perish the thought.

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Pearson invests in an IT growth strategy

February 28, 2012

Marjorie Scardino

Pearson group led by Dame Marjorie Scardino has been investing in innovation to secure its future, and that of its flagship product The Financial Times

LWD has followed the successes of the grande dame of organizational leaders since one of our earliest posts [2007].

More recently we grumbled at the FT policy of restricting extractions from its e-content which we saw as part of the new emerging models for IT businesses, and not unlike Rupert Murdoch’s efforts to reinvent his own business model [2009], now threatened by the legal morass News International finds itself in. So it is somewhat more pleasing to report positively on this week’s news [28th Feb 2012] of Pearson’s efforts to reinvest its profits in innovation.

Dame Marjorie Scardino, the head of Pearson, has again scotched stories that the Financial Times could be sold as she earmarked another £1bn for acquisitions to drive the education group’s international expansion. Pearson, which also owns the books publisher Penguin and Edexcel, Britain’s main exams-testing body, spent £900m last year as it began to recycle proceeds from the sale of its stakes in the data provider IDC and the FTSE indices business. The money went on testing, technology and work-training firms in China, the US and Britain.END
According to the Thisismoney website

The publisher’s chief executive Dame Marjorie Scardino said the proportion of sales derived from digital output and services – such as teacher training – was more than 50 per cent. She fleshed out a rosy future in which the Pink’Un – as the Financial Times is affectionately known – would no longer be published in print format in some regions.

‘In places where our print run is very small, they’ll become digital places,’ she said, citing parts of Australia and west coast USA. Pearson reported rising sales in all divisions except North American education, where lower school funding has hit sales.

She added that she was ‘a bit sad’ that FT staff threatening strike action had refused to accept an offer including a 3.5 per cent pay rise and no compulsory redundancies. Pearson (down 47p to 1204p) has £1bn firepower for acquisitions. Directors have agreed not to take a 2 per cent pay rise this year, said Scardino, who earned a pay and bonus package worth £2.5million last year.

For a contemporary knowledge-based company, Pearson has a powerful statement of intent: Always Learning.

To go more deeply

See the thisismoney website post


Developing global leaders: the 21st century corporate challenge

February 27, 2012

Professor Bill George

Harvard’s Bill George argues that too many multinationals are still ignoring the need to identify and develop global leaders equipped for the challenges of the 21st century

Tudor Rickards

Professor Bill George suggests that a new era for global leadership is developing which requires greater focus on emotional intelligence, self-awareness, and empowerment. We examine and test his ideas as published in Harvard Business Review and compare them with experiences from a major exercise developing such leaders within the Manchester Business School’s executive programme.

Synopsis of the article:

Too many multinational still concentrate vital decisions in the hands of a small group of trusted leaders from their home country. They rarely promote [local staff] Instead, they groom future global leaders from the headquarters. In order to adapt to local cultures and market needs, companies must shift to decentralized, collaborative decision-making. That requires developing many leaders capable of working anywhere. Rather than concentrating on the top 50 leaders, global companies need to develop hundreds, even thousands, of leaders comfortable operating in a variety of cultures. Developing such leaders with cultural sensitivities and collaborative skills requires greater focus on emotional intelligence, self-awareness, and empowerment than on traditional management skills.

Coke’s global leaders

Atlanta-based Coca-Cola is one such pioneer in geographic diversity. Since the 1960s Coca-Cola has had South African, Cuban, Australian, Irish and its current Turkish-American CEO Muhtar Kent.

Nestle & Novartis

Over the past decade, Nestle and Novartis have made dramatic shifts from Swiss-dominated boards and executive leadership to a diverse set of nationalities.

IBM’s revival

Samuel Palmisano reorganized IBM into an “integrated global enterprise” based on leading by values and collaboration, using special bonuses to empower leaders. Its former chief learning officer recently estimated that the company will need 50,000 leaders in the future.

Unilever

Unilever has undertaken a major initiative to develop 500 global leaders in intensive leadership development programs to prepare them for expanded roles. According to CEO Paul Polman, “Unilever’s Leadership Development Programme prepares our future leaders for an increasingly volatile and uncertain world where the only true differentiation is the quality of leadership.”
Such global roles require experience working and living in multiple countries. German chemical maker Henkel insists its executives live in at least two different countries before being considered for promotion.

More than international experience

Developing global leaders necessitates a shift focusing on helping leaders increase their self-awareness, emotional intelligence, and resilience. It’s not [even] enough just to work overseas. To process and learn from their experiences, individuals should utilize introspective practices like journaling, meditation or prayer, and develop support networks of peers. There they can consult confidentially with people they trust about important decisions and have honest conversations about their dilemmas, mistakes, and challenges. These methods are still in their nascent phase, but there is little doubt that they will have a profound impact on developing global leaders in the years ahead.

The Global Events and Leadership module

The Global Events and Leadership module (GEL) introduces the Manchester Business School’s executive MBA programmes around the world. Its basic messages chime with those suggested by Bill George, and his Harvard colleague Teresa Amabile, studied as part of GEL.

Ten thousand leaders and more

It is worth noting that the point about the need for ‘tens of thousands of leaders’. This implies a major rethink in many corporate boardrooms on the nature of leadership and the further split between traditional modes of top-down cultures and structures.

Dilemmas, mistakes, and challenges

GEL, like Bill George, emphasises the dilemmas of leadership through its course textbook, and its ‘learning through doing’ project-based workshops. global leadership is inherently a process
requiring what has been described as a Yes And approach to challenges. This involves an openness to change and a commitment to ‘authentic’ ethical values.

Acknowledgements

To an increasingly diverse and skilled group of associates dedicated to facilitating global leadership through exploration of its practices.


Wolves faced a leadership dilemma over Mick McCarthy: what might the board have done differently?

February 25, 2012

Terry Connor


One of the most difficult dilemmas facing a sporting business occurs if the board decides that a leadership change is necessary. Wolves FC serves as a case study.

The pressures on the board at Wolves FC mounted as the team struggled to escape relegation [Jan 2012]. Mick McCarthy as head coach bore the brunt of the anger from frustrated fans. The board decides to fire McCarthy. After some delay the chairman announces the appointment of Terry Connor, McCarthy’s assistant

The dilemma: terms of engagement

The difficulties facing the board must have been relatively easy to simplify into finding a decisive course of action to kick-start a reversal of fortunes. Firing McCarthy and bringing in a new chief coach would offer the prospects of radical change. On the other hand, firing McCarthy would leave the club with the possibility that any high-calibre manager would be in a strong position to negotiate advantageous terms.

Intended and unintended consequences

The intended consequences of firing McCarthy would be renewed support from the fans and players alike. The unintended consequences included the possibility that no deal could be brokered. Also, as McCarthy argued, he had several exceptional seasons at Wolves working with limited resources. His dismissal would have sent warning signals to prospective managers

The fall-back position

Under such circumstances, a board needs some holding position. Wolves first indicated their intention of finding an experienced replacement for McCarthy. It seems several such candidates were approached. Eventually the club announced an interim appointment. McCarthy’s deputy Terry Connor would be promoted with the possibility of a full-time contract, according to results.

Just like the appointment of Stuart Pearce by the FA?

There appear to be some similarities to the position facing the English FA recently [2012] as the contract with current manager Fabio Capello approaches its termination date. There has been media clamour for appointment of Tottenham’s Harry Redknapp. The FA decided to go for a holding position, appointing Steward Pearce as an interim manager.

When the two cases are compared, it is seem that the FA could (for once) be seen as avoiding a tricky premature decision. Redknapp has shown interest in taking a part-time appointment. And there is some evidence of longer-term planning. Pearce as youth team coach has been seen as being groomed as a possible future England manager. On the other hand, Connor’s interim appointment could have been made immediately as the unfortunate McCarthy was being relieved of his duties. It appeared to follow failed attempts by the board to attract an experienced manager to the club.

Leadership issues

The case raises interesting issues. There is the tricky question of promoting someone who was himself appointed by the manager that had just been fired. There is the issue of the ways in which a change can appear to have been mishandled. This is where students of leadership may find it useful to think themselves in the minds of the board and assess the likely dilemmas they faced.
An additional issue: The appointment of a black manager to Premier League football is surely worthy of comment. The press broadly avoided comment on the story. Which maybe itself is worth a little reflection..


Home secretary Theresa May creates a new Border security force

February 21, 2012

Theresa May announces a restructuring of the Border Agency. Her announcement coincided with release of the Vine report into border security checks. The links between the report and the Home Secretary’s announcement seem rather loose

Although the Vine Report into Border Security and the Ministerial announcement were made simultaneously, they are quite different in focus.

The Minister indicates that she accepts “all the recommendations of the report”, but makes it less clear that her proposal is not based on the report, which offers operational ‘fixes’ rather than strategic ones.

The ministerial announcement concentrates on a reorganization which splits the Agency into two. In organizational terms it is an attempt to differentiate structures and activities to reflect a major distinction between two groupings. The Vine report is strictly operational, and makes no strategic recommendations.

The BBC reported the announcement by the Home Secretary [20th Feb 2012] :

“The Vine report reveals a Border Force that suspended important checks without permission; that spent millions on new technologies but chose not to use them; that was led by managers who did not communicate with their staff; and that sent reports to ministers that were inaccurate, unbalanced and excluded key information. The Vine report makes a series of recommendations about how to improve the operation at the border, and I accept them all. I do not believe the answer to the very significant problems exposed in the Vine Report is just a series of management changes.
The Border Force needs a whole new management culture. There is no getting away from the fact that UKBA, of which the Border Force is part, has been a troubled organisation since it was founded in 2008. From foreign national prisoners to the asylum backlog to the removal of illegal immigrants, it has reacted to a series of problems instead of positively managing its responsibilities.
The extent of the transformational change required – in the agency’s caseworking functions and in the Border Force – is too great for one organisation. [The Border Force is to] become a separate operational command, with its own ethos of law enforcement, led by its own director general, and accountable directly to ministers”

How to Create Organizational Silos

MBA students will recall how this sort of change has major organizational consequences which have been well-documented since at least the 1960s. They may also recall the dilemmas of centralizing and decentralizing control over business activities, and how any such differentiation risks creating organizational ‘silos’.

How to Deal with Potential Silos

Implicitly, the change will not work if it adds a layer to what may be seen as a classical organizational pyramid. The traditional structures are now recognised as too inflexible to function in fast-changing environments. In any change programme, the new system requires designed-in ways permitting integration so that there is valuable communication flow between the two sub-systems.

To be continued …

See background in an earlier LWD post


Lessons for Leaders from the People Who Matter (Followers)

February 20, 2012

Tracy Killen John Lewis PartnershipAn international report, Lessons for Leaders from the People Who Matter, finds two thirds of employees found their line managers ineffective, and a half were rated as lacking empathy. In contrast, Tracey Killen of the John Lewis Partnership (pictured above) suggests a way of improving matters.

The survey for DDI [Development Dimensions International] by Harris International pollsters was reported in HR Magazine :

Simon Mitchell, director at DDI UK and one of the report authors, said: “We wanted to hear how the customers of leaders themselves saw their managers and bosses. These findings should be of enormous concern to any business. They show that leaders are failing in their obligation to employees and, therefore, their organisation. The consequences of managers and bosses with poor leadership skills are enormous, and the impact good leaders have in terms of employee motivation and productivity are significant.”

The report found one in three respondents (34%) only sometimes or never consider their leader to be effective, and over a third (37%) are only sometimes or never motivated to give their best by their leader.
The survey also found nearly half (45%) of respondents think they could be more effective than their manager, but only 46% would actually want to. Respondents cited the additional stress, responsibility and pressure as reasons for staying where they were. This has implications for the future supply of leaders.

Mitchell continues, “Workers report that managers fail to ask for their ideas and input, are poor at work related conversations and do not provide sufficient feedback on their performance, so it’s no wonder employee engagement levels are low. Leaders remain stubbornly poor at these fundamental basics of good leadership that have little to do with the current challenging business climate. It’s important that organisations equip the people managing their workforce with these basic leadership essentials, and that managers are aware of their own blind spots in these areas. The good news for businesses and employees alike is that many of these leadership skills can be learnt.”

The Good News

The good news expressed in the news story supports the views held by those who believe in leadership development. It leaves open the vital questions of the nature of those ‘fundamental basics of good leadership’,how to ‘equip the people managing their workforce with these basic leadership essentials’,how to ‘raise [managers’ awareness] of their own blind spots in these areas’,and how ‘many of these leadership skills can be learnt’.

The Dilemmas

The dilemmas for business are clear. Many leaders today are appointed after some form of appraisal. DDI, authors of the report, are themselves advocates of the battery of assessment methods available to identify leaders (and, as its corporate name suggests, to develop their potential). One of the oldest leadership dilemmas is whether leaders are born or made. The report suggests they can be identified (‘born’) and developed ‘made’. The evidence suggests also that for the most-part that leaders are too often failing to show either natural or developed leadership capabilities.

To go more deeply

Of interest is the approach followed by John Lewis partnership through which HR is placed more centrally with corporate operations in this highly successful and unusually democratic organization. The image above is of Tracy Killen, HR director of John Lewis Partnership. The link outlines the way in which John Lewis integrates HR with the planning and operations of the company.

See also Training Industry’s list of top 20 leadership training companies (which includes DDI).


Pringles, acquired by Kelloggs, is a product of creative leadership

February 16, 2012

Pringles has been acquired from Proctor & Gamble for a figure reported as nearly $3 billion. The product may be one of the early examples of deliberate efforts at harnessing team creativity

Proctor and Gamble (P&G) is a company that has encouraged creative leadership for over four decades. A possible outcome of its creativity is the Pringles stacked potato product, valued this week at 2.7 billion dollars by Kelloggs its new owners .

Official histories of Pringles suggest that like many inventions it can claim several inventors. An early unsuccessful product had been around since the 1930s. Other accounts suggest that an army engineer had a patent for an easily-transported potato product in which he could not interest the army, and which he brought to P&G.

A different story

I want to offer a different story which I had assumed to have some truth to it for many years.

Some forty years, ago a small number of pioneering corporates in the US and Europe, including Proctor & Gamble (P&G) and Unilever, were experimenting with so-called structured techniques for stimulating creativity. Advocates liked to relate successful outcomes of such approaches. I can recall that claims were made at the time that Pringles had been one such success story.

My recollection is that the teams which involved extended flights of fancy, directed by a team facilitator or creative leader. The leader’s task was, among other things, to direct the creative process without concern for his or her own ideas regarding the topic. Charged with developing an easily transportable product, the team, according to this account, put together the ideas needed to go from concept to supermarket offering.

It would be typical of such a group to play around with a metaphor for a product with improved stacking features designed in. So the team, prompted by a facilitator or creative leader may have speculated on the metaphor of easily stacked chairs, arriving at the idea of an easily-stacked food product which was to become Pringles.

Did this really happen?

I have failed to find any confirmation for this interesting story. Maybe someone will be able to confirm it or provide a better-documented suggestion?