Wednesday, January 11, 2006

Leading In Uncertainty Environment

In the last 5 years, organisations have faced a competitive landscape, transformed by unprecedented levels of change.
New technologies, organisational structures, non-traditional forms of competition and economic uncertainty have added both new challenges and a greater degree of uncertainty to strategic planning and execution. Companies increasingly have to compete on the basis of knowledge – what they know, rather than what they make. In this 'knowledge economy', it is the people and the knowledge that they create that become the source of greatest competitive edge in the market place. Building and retaining the talent in which that knowledge is created is a key strategic priority for today's businesses. Against this background, many of the traditional leadership and management methods—developed for more a stable context—often do not apply. For example, the new economic environment has challenged traditional organisational hierarchies and structures, putting greater emphasis on the need for flexibility. Tom Peters, among others, has popularised the view that 'all work today is project work'. Managers need to bring differing groups of people together—those with the knowledge to address a particular business issue—build relationships, establish common goals, get the work done and move on to the next issue, and the next team. Building the capability of these 'knowledge networks' is one of the keys to achieving results. Leadership no longer equals authority. Organisations need leaders at all levels. New Fundamentals of Leadership In short, today's leaders are required to do more…with less. Forum's most recent research highlights three leadership practices that we believe can be helpful to leaders to manage this dilemma, no matter where they sit in the organisational hierarchy. These are about some of the key behaviours that will help leaders steer their companies through periods of change and uncertainty, with one eye on today and one eye on the future. They are about building collaboration and commitment, creating leadership throughout the organisation and, above all, alignment with clearly laid out goals. Think how things have changed: The 'new fundamentals' of leadership are geared to helping leaders, at all levels of the organisation, cope with a variety of fast-moving and challenging business conditions…enabling them to lead others successfully in the achievement of stretching business goals.
Fundamental No.1 – Be Credible In a recent survey across 187 multi-national companies, only one third of the employees interviewed expressed 'high confidence' in the ability of their leaders. Why is this so important? It is because people who feel their leaders are credible are significantly more likely to feel pride in the organisation, to feel strongly connected to their team, and to be committed to the rganisation's goals and values. Furthermore, people are less likely to believe the message if they don't believe the messenger. Those whose leaders' credibility is not strong may comply with directives but will be less motivated. In a business environment where so much is changing so quickly, this extra measure of commitment can make the critical difference in a company's performance. Indeed, Watson Wyatt reported that companies with 'high trust and confidence in senior leadership' generate up to 40% higher return to shareholders than those with low trust and confidence. Four building blocks of credibility are important for building momentum, and moving forward.
1. Consistency A leader's words and actions must be aligned. Proactive, honest, and ongoing communication and updates are often the keys to closing the credibility gap. People don't want uncertainty on top of uncertainty. They want to know the truth, even if the truth changes from time to time. 'Give people as many facts about the business as possible. Let them know the process for dealing with the business issues,' says Ann Rice Mullen, a Forum executive coach. Consistency also demands that leaders set expectations clearly, contract for realistic deliverables, and not over commit themselves or their team. As organisations realign to meet new business challenges, consistency in how people are treated can either build or erode a leader's credibility—respecting people's confidentiality and feelings, treating people fairly and impartially, and presenting a consistent point of view when talking with different audiences. A lack of consistency is the greatest potential drain on the balance in one's 'credibility bank account'.
2. Concern for people 'People must come first…. Even before profits.' Says Jim Kouzes, Co-author of the best-selling book The Leadership Challenge. Credibility is built genuinely demonstrating sensitivity to the thoughts, feelings and experiences of others. An increasing interest is being placed in understanding more effectively the impact that emotional intelligence (EQ) can have on an individual and business performance. To what extent do individuals exhibit the core qualities of EQ, such as self-awareness, self-control and empathy? If they are 'lacking', how can these attributes be developed. Whilst the detail of much of this is still being researched and understood, there is no doubt that concern for people is an increasingly important leadership capability. To quote Daniel Golemen—one of the leading thinkers in this area—'A coercive style of leadership is a negative driver on every measure of climate in a company. Bosses who lead by coercion are the kinds of bosses whom people hate'. Part of concern is also to stay visibly connected. 'Visibility has always been an important part of leadership,' says Jim Kouzes. 'In today's business environment, it is absolutely critical.' Leaders must think carefully about their communication. Realising that in an uncertain environment, what they say and what they don't say and the manner in which they do or don't say it may have both intended and unintended consequences.
3. Competence As the model of the organisation structure changes to become more networked and less hierarchical, leaders are faced with the challenge of managing subject matter experts from a wide range of disciplines, many of which will be outside their area of detailed knowledge. This requires a broader definition of competence, to support and develop leaders. The focus is less on their 'expertise' in a particular business area and more on their ability to build teams and networks that deliver results around a particular issue. An additional challenge to the 'traditional' idea of leadership competence is the speed of obsolescence of knowledge. The average 'shelf life' of the skills and knowledge of an MBA is currently estimated to be no more than 3 – 5 years. To compete effectively in the knowledge economy, everyone needs to be learning constantly.
4. Commitment. Commitment means persevering to achieve goals despite obstacles and setbacks. Commitment also means working through the challenges of recovery and moving confidently into the future. Leaders who foster commitment in others anticipate critical events and take steps to influence them positively. Commitment also comes through involvement, giving people a concrete way to help.
Fundamental No.2 – Create Clarity and Focus Research indicates that less than 5 percent of a typical employee group understands their organisation's strategy. In an environment where people's heads and hearts are in a myriad of places, moving the organisation forward means drawing a clear line of sight from your strategy to people's actions. This provides focus and confidence-keys to coping with economic downturn and less certainty about the future. Charting the way forward may involve shortening your strategic horizon. This does not mean abandoning your vision. On the contrary, a compelling and credible vision of the future is more important than ever. It does mean, however, focusing on shorter-term concrete, actionable outcomes and initiatives. Financial outcomes may be linked to specific, short-term customer, process, and people goals. The ability to 'map' the strategy of your team or organisation and to show the links to individuals' roles is another of the emerging leadership requirements. What is the overall strategy? What are the target outcomes sought and how will they be measured? Above all, what actions do people need to take? To create this line of sight between the organisational strategy and individual actions, effective communication is key. Using stories rather than the usual slide presentation can accelerate people's strategic focus and engagement. Stories can demonstrate the power of individual persistence and contribution. They can show how to meet customer needs during difficult times. Stories can help employees reconnect to the company's vision and values. Stories can also illustrate what is important during these times and what is not. Stories create memorable impressions and vivid images that have far more lasting impact than directives or memos. Ignore what your Mum said; telling stories is a key leadership capability! Fundamental No.3 – Build a Coaching Culture In the non-hierarchical, networked environment, coaching becomes a critical leadership skill that enhances performance at all levels of the organisation. The traditional coaching models were largely defined for one-on-one relationships between managers and their direct reports. The 'knowledge network' will include a much more eclectic group of individuals from different parts and levels of the organisation and even resources from outside. It may also include partnerships that only work together on that one project. Coaching in this context has moved from the traditional performance management arena, to helping individuals or teams learn core competencies by applying them in their current work. Coaching is a high return investment. Leaders throughout the organisation must increasingly see coaching as an opportunity both to build organisational capacity and their own capability to lead in the future. The capacity to coach is an underdeveloped skill in many of today's leaders, as is the inclination to seek coaching. Helping people to identify 'missed coaching opportunities', where they could have offered or sought insight or advice is a compelling way to start creating a coaching culture. The focus of 'new' coaching is not on eliminating existing performance gaps related to current processes; rather, it is on learning and developing emerging capabilities that enable individuals to adapt to constantly changing requirements. However, though the range of possible coaching partnerships may broaden, coaching in the 'knowledge economy' does not mean taking action on all potential coaching opportunities, all the time. A key leadership capability is in selecting coaching 'investments', based not only on where the greatest potential payoff is for the coaching partners, but also where the greatest organisational competitive advantage is to be gained. To this end, coaching relationships need to extend beyond direct reports, to reach across networks and levels of the organisation. To be effective, organisations need to ask themselves a number of key questions:
• Do we have a 'coaching culture'? Have we moved away from formal, direct reports, to targeted coaching investments across networks?
• Do leaders take responsibility for developing other leaders? Are they rewarded for doing so? • Are leaders skilled in a range of coaching techniques—selecting the critical issues at the critical moments; developing coaching relationships of mutual respect and becoming a 'coaching partner'; providing both motivational and formative feedback in an insightful way; creating 'teachable moments' that add impact to the learning process?
• Above all, do leaders seek out coaching relationships for themselves, to continually develop their own capabilities? The goal is to build learning into everyday work. The leadership requirement is to ensure that the relevant skills are learned 'on the job' and that individual leaders take an active role in being a coach to those in their network. The nature of that role is one of the 'thinking partner', helping and supporting, whilst seeking similar development relationships for their own learning. Feedback—motivational and formative—can also play a significant part, providing it is also given 'in the moment' and in the context of the task at hand. Summary Leaders can influence how their organisations respond to uncertainty by ensuring that their actions and words are aligned. They must build their credibility 'bank balance' by staying visible and connected to their people and their needs. They must create meaning for employees to lift their sights from the mundane to the purposeful. They must chart the path forward and create a clear line of sight from strategy to action. They must interpret the emerging realities and adapt to unforeseen changes. They must seek to create a coaching culture that fosters continuous learning across a networked organisation. In uncertain and changing times, leaders are tested. Those who continue to develop their own capabilities in these new areas will be the ones who succeed, prosper and deliver business results in the future. Also consider reading: In the company of leaders Citigroup backs Leadership The importance of Leadership The Six Principles for Developing Global Leaders Re-imagining leadership: The big eleven A communicator looks at American industry Visa backs leadership