Five Practices of the Most Change-Ready Leaders
Highly successful CEOs
in volatile environments delight in turning conventional leadership wisdom on
its head.
Our book Athletic CEOs: Leadership in
Turbulent Times describes effective leaders from emerging markets. In our
previous INSEAD Knowledge blog, we discussed the mindset of athletic leaders,
specifically their improbable combination of mental toughness and
adaptability. Now let’s look at what they do.
We have identified
five leadership meta-practices of athletic CEOs. Each of them allows leaders to
effectively manage a particular challenge. Within each meta-practice, we found
a number of very specific behaviour strategies, which we called leadership
practices.
Meta-practice 1:
Pragmatic exploration.
This meta-practice
allows athletic leaders to deal with the challenge of staying ahead of the game
in fast-changing environments. Exploration is about continuously pushing the
boundaries of personal and organisational expertise, expanding the frontiers of
applied knowledge and striving for new discoveries. Athletic leaders make
learning and unlearning part of their daily routine and, more importantly, part
of their companies’ routine. Their curiosity is insatiable yet pragmatic.
General knowledge doesn’t interest them; they want to acquire or generate
know-how that adds value. Athletic leaders explore when they are in the office,
on holiday, at a business dinner or at a social function.
One of the practices
all athletic CEOs excel at is going out, going down and going
deep. They continuously scan the environment: They go out.
Benchmarking and gathering market intelligence are the two routines that
athletic leaders nurture in their organisations. They look out for best practices
and new ideas that will enhance performance – just like top athletes. They do
not limit themselves to industry benchmarks, but look for knowledge across the
spectrum. We found that their companies spend heavily on global consulting in
order to gain insights. “We don’t hire consultants for solutions; we hire them
for knowledge acquisition. We will find solutions ourselves,” Alexander Dyukov,
CEO of Gazprom Neft told us.
At the same time, our
protagonists actively explore their organisations at different levels:
They go down. After earning a black belt in the Toyota Production
System, Herman Gref, Sberbank CEO, made gemba walks (a
practice wherein an executive regularly spends time on the front lines)
mandatory for every Sberbank manager, including himself. This exercise is less
about telling people what to do “than learning from them about challenges and
solutions,” says his deputy Alexander Torbakhov.
Athletic
leaders also go deep into different aspects of their company’s
business. They might pop up unexpectedly in offices, plants and oilfields;
servicing customers; immersing themselves in investment projects; and reading
emails and suggestions from employees. These activities yield an enormous
amount of first-hand data.
Meta-practice 2:
Navigating towards a moving target.
Under the traditional
“command and control” or “carrot and stick” leadership model,
leaders chart their organisation’s course by setting long- and short-term goals
and incentives, as well as developing annual and five-year budgets. Athletic
leaders, however, de-emphasise familiar levers in favour of unorthodox
approaches and tools.
Making clothes with
room for growth. They set a very high bar and let their followers figure out
how to get there. The initial reaction may be shock, but soon the followers
accept the target, start thinking about achieving it and then go do it. When
Dyukov presented Gazprom Neft’s ten-year strategy in 2010, many executives
dismissed it as surreal. But the CEO remained firm and asked for implementation
plans. Senior managers started to think it over, ran a series of workshops and
soon saw ways to make it happen. Within three years, the strategy had to be
updated to raise certain targets.
Furthermore, athletic
leaders do not suffer from sunk-cost syndrome. They readily abandon programmes
and goals that cannot be achieved or are no longer relevant. Such moving of
goalposts creates stress for followers. Yet the leaders
consider it necessary for growth and development. Dyukov says, “Stress is
useful for a company as it is useful for an individual – a change in
scenery. The need to work in new conditions helps develop skills and unite
a team.”
‘Both ends’
leadership. Athletic leaders defy traditional management dichotomies such as
low cost vs. differentiation, quality vs. volume and innovation vs. discipline.
They want both at the same time and get their organisation to pursue both ends
of the spectrum.
Meta-practice 3: The
slack rope.
When mountaineers are
engaged in climbing, the most experienced person does not tell other members of
the team what to do, but keeps an eye on the rope that connects them,
intervening immediately in case of danger.
Vitaly Savelyev, CEO
of Aeroflot, told us that he manages by variances: “If I don’t see negative
deviation from the norm, I sit still. If something goes wrong, I dive in.” When
followers deliver superior results on a continuous basis, they get more
autonomy and authority, but the leader keeps watching and, should a problem
arise, the rope shortens quickly.
Athletic leaders
surround themselves with large groups of executives and extended leadership
teams. Gref’s management team at Sberbank consists of almost 250 people, while
Dyukov invites 150 executives to the regular meetings of Gazprom Neft’s
extended management board. However, the leader-team dynamics in these companies
do not follow the popular recipes of inclusive and enabling leadership based on
emotional intelligence. Their leaders are demanding captains rather than wise
and attentive coaches. Their focus is on the game – the business – rather than
on the people they are playing with. They set the goal and invite others to
work together to achieve it.
Meta-practice
4: Hogging the limelight.
The
Russian leadership tradition puts any CEO in a tight spot. On the one
hand, in a vertically organised society, the position comes with a lot of
power. On the other hand, followers who deify their leaders expect
miracles from them. If the magic fails to materialise, employees may not openly
challenge the leader’s authority, but could lose interest and withdraw
emotional support. This also applies to external stakeholders. Athletic CEOs
recognise the challenge of constantly proving their leadership legitimacy and
use the meta-practice of hogging the limelight to overcome it. Like top
athletes, they enjoy playing to full stadiums and crave the roar of the crowd.
Evangelism. Athletic leaders
passionately promote their values, worldviews and specific methods and
instruments to various audiences. Some limit themselves to their industries,
while others, like Eugene Kaspersky, speak to the country or the whole
world. To a large extent, it is thanks to Gref that the Russian business and
government communities have discovered such concepts as productive corporate
culture, lean technology, gemba and Agile. Athletic leaders
strengthen this position by influencing customers, suppliers, the general
public and even regulators.
Meta-practice 5:
Feeding and milking.
The Russian
government presents a formidable challenge to business leaders. It is becoming
more and more involved in business, but that involvement is also ambiguous in
many ways. The government regulates the economy while actively participating in
it; it supports business but constrains its freedom. Government officials
create and enforce universal rules for all economic actors, but may have
private business interests in some of them. For some leaders we interviewed,
the government is a majority shareholder, and the Russian president is a key
figure who decided their appointment. As one Russian CEO said, “In my country,
government is everything – major opportunity, major threat and major
uncertainty.”
To work with the
government, athletic leaders have developed an equally ambivalent response,
which we call feeding and milking. Feeding follows a rational logic
of economics: In order to receive something, one needs to contribute. Feeding
involves paying the correct corporate taxes, supporting specific projects,
drafting legislation, attending important events or providing small favours to
some officials. This enables them to milk, i.e. to receive a greater level of
autonomy, lucrative contracts or support for regional and international
expansion.
One specific practice
is displaying loyalty publicly, challenging privately. Athletic
leaders in Russia demonstrate loyalty, respect and obedience in their
relationships with senior government officials. They use expressions like “I
will report back”, “I will execute” and “It will be done”. They play by the
rules of a vertically organised Russian government. As Savelyev puts it, “I
don’t agree that government is an ineffective shareholder. A lot depends on
management. There are some visible examples of effective state-owned
companies.”
Yet behind closed doors they fiercely
defend their companies’ interests before the most powerful politicians. When
the Russian government asked Aeroflot to save the defunct Transaero by
acquiring it and assuming its debt, Savelyev firmly refused and negotiated a
favourable deal for the company. On a larger scale, athletic leaders lobby to
advance industry-wide issues and offer solutions to macroeconomic and fiscal
policy problems. But this always happens in private and with the fundamental
premise of ‘supporting the government but challenging a specific idea’.
Stanislav Shekshnia, INSEAD Senior Affiliate Professor of Entrepreneurship and Family Enterprise, Veronika Zagieva, Ward Howell Talent Equity Institute Project Manager, and Alexey Ulanovsky, Associate Professor, Higher School of Economics. | January 19, 2018
Read more at
https://knowledge.insead.edu/leadership-organisations/five-practices-of-the-most-change-ready-leaders-8181?utm_source=INSEAD+Knowledge&utm_campaign=0c1560e315-EMAIL_CAMPAIGN_2018_01_25&utm_medium=email&utm_term=0_e079141ebb-0c1560e315-249840429#oxiFPIzWzK7d8Cvs.99
No comments:
Post a Comment