The Small Change Paradox: how to transform leaders, boards and work in the 21st. Century

Ideally your organisation should be comprised of leaders and followers who all share in an exciting purpose. And, if you’re a leader, your job is to create an environment in which the people you lead thrive in the service of that purpose. That’s the dream.

But we’re not even close.

The financial crash of 2008 put an end to any doubt, if any existed, that the world order had changed. Fundamentally, you’re on your own. There is no social contract. Yet organisations still cleave to human capital asset and human resource models as if they own “their people” by some sort of magical unwritten consent. They don’t.

Despite many attempts at modernising work theory, most organisations doggedly refuse to come anywhere close to leading the revolution necessary. That’s not because they don’t want to. They desperately do. Most people would love to change the system but they’re afraid of being the pioneer with the arrow in their backs.

They’re waiting for permission to change. And so they wait. And wait. But Godot never comes.

The answer to this dystopia is evolution, not revolution. It starts with you. If you are a follower and you change how you behave at work others will change too. This may seem like pie in the sky, which is why most people don’t attempt it. That and, of course, not wanting to “rock the boat”. But small change doesn’t cause big waves.

If you are a leader and you change how you lead, then the evolution will be even faster. Your career will yield more fulfillment and your organisation will improve in the process.

The term “Change Management” has been part of the business lexicon since the 1960s. Somewhere along the way this morphed into the now widely used term “Transformational Change”. This came to be used as shorthand for an organisation wide step-change or the fabled quantum leap forward.

The term is now as ubiquitous as it is meaningless. Change is change. Transformation is different. In my experience organisational change comes from individuals changing their worst behaviour. That’s where the transformation occurs. Your worst behaviour is that behaviour which others experience as having the most negative impact on them and on the objectives of the organisation. And you don’t have to make big changes, just small changes in improving your worst behaviour and exploiting your best.

In general, there will be broad consensus on the exact nature of this behaviour. It’s easily discovered by playing the “Least Likely To Say” game with your friends. They will very quickly let you know what it is. If you are self-aware you will know before they tell you.

Your best behaviour is probably hidden from you as you read this. It’s what you’re capable of achieving given half a chance. If supported in making small changes to your worst behaviour your best will be revealed to you by you and from feedback from others.

This is an exciting prospect for you and for the organisation for which you work because you are unique and small changes in unique beings are highly visible and impactful. Uniqueness has never been celebrated but denied. Management speak reinforces this commoditisation of people: you’re a hire; a direct report or a leaver. You’re certainly not seen as unique.

But you are unique – check out your fingerprints – and your organisation is made up of unique people which makes it infinitely dynamic because each person can trade in unique behavioural change agreements. This means that you can agree to make small changes in your behaviour on the understanding that others will reciprocate. With this approach anything is possible. Leaders, boards and work itself could be transformed through small change at low cost, high return. What’s not to like?

Directors: Why your conduct should go to the top of your Risk Register

Conduct risk is now a familiar term in the financial services sector, not by choice, but because the Regulator has regulated conduct heavily since the Global Financial Crash. Not that regulation seems to have made a huge difference.

At least the Regulator has put the term “conduct” on the business road map albeit the effect is like a speed camera which slows us down in high risk areas but after those tell tale markings on the road, we all put the boot down.

However, the regulators of the conduct of those in the financial services sector do not own exclusive intellectual property rights to the term nor would they want to claim such rights. You are free to use it in your business and especially on your board without fear (save that some on your board may fear it).

This raises an issue regarding a related term that has achieved widespread currency in all sectors and that is behaviour or, rant alert, “behaviours”.

My rant is not about semantics, although there is a grammatical point to be made here: behaviour is a mass noun with no plural. The more important reason the accurate use of the word matters is because: how someone behaves is unique to them. This means how we behave as a group, for example a board, is also unique. It is why we should resist the seemingly “codifying” trend of using the word “behaviours” as if they can be policed like a charge sheet from afar.

The word behaviour reflects the complexity of human nature. “Behaviours”, on the other hand, suggests uniformity. For example, the precise nature of Mr Trump’s bullying behaviour is different that of Kim Jong-un’s although you might rightly argue that both could result in a nuclear holocaust.

But what is the difference between conduct and behaviour? It depends on the context. Conduct refers to the result of continual observation as in “Lucy received a Good Conduct Award last year” or “The conduct of all parties in the election campaign was shocking” or “The conduct of the Banks has improved/not improved since the crash”. Delete to taste.

Behaviour is about immediate interactions as in “Billy’s behaviour in school yesterday was unacceptable” or “The CEO’s behaviour when challenged at the last board meeting was outrageously bullying, to say the least” or “The Chairman was quick to call out unacceptable behaviour by some directors at the AGM”.

If a company’s Risk Register is a list of top and emerging business, legal and reputation risks which could affect outcomes, it follows that conduct by directors should go right to the top of that list because most risks and opportunities are forged in the crucible of boardroom relationships.

So what language might directors use to describe these risks? I feel just one entry at the top of the Risk Register would capture most issues:

Conduct Risk: The risk of systemic weaknesses in board decision making and governance due to the failure of each director to change their worst behaviour and exploit their best.

And how can this risk be mitigated, realistically? It’s simple: each director should trade a change in their behaviour for a change in another’s.

The problem with traditional change programmes is that they lack the right soft incentives to attract directors who value only hard returns.

The feeling that the person who winds you up most on your board might change their behaviour if you change yours is often enough.

This approach might have prevented defeat software being included in cars; false accounts being created in banks or a myriad mis-selling scandals avoided.

But these are the big stories. What about the thousands of board meetings going on up and down the country today where poor conduct prevails because of unchecked behaviour? And what of the cost: real and opportunity cost?

These are the stories which lead to creating that great Yorkshire understatement: “trouble at t’mill”.

And how stressful, and damaging and awful to the individual director a troubled board can be. And worst are those who say: “That’s not us”. When I say, “How do you know?”

I propose every board appoints one director as official “Devil’s Advocate” at the beginning of every board meeting. Each director would get a turn. Their job at that board meeting with the agreement and full mandate of their colleagues would be to challenge everything, bar nothing.

This step would help reduce conduct risk and might even surface some opportunities which otherwise would have remained buried.

There’s nothing more positively cathartic on a board than the removal of fear.

WHAT NASCENT CEOS CAN LEARN FROM PRESIDENT ELECT MACRON AND BY OBSERVING HIS FIRST 100 DAYS

The significance of Emmanuel Macron’s success cannot be overstated in political terms, and much has been written about this. But much also has been written of his leadership skills and, from this, nascent CEOs can find many useful tips. They can also watch and learn how he exploits, or not, that special honeymoon period – his first hundred days.

President Elect Macron’s outstanding leadership quality is his ability to empathise and to demonstrate it clearly while at the same time disagreeing with an opposing view. CEOs must do this on a daily basis.

Empathy is one of the three cornerstones, in my view, of emotional intelligence. The other two are self-awareness and the ability to negotiate needs, productively.

Capacity to connect with what other people are feeling and to communicate that to them is at the heart of empathy. This is not about “feeling your pain”. You can’t feel someone else’s pain. That’s impossible. This phrase is often used in management speak and qualifies as mumbo jumbo.

To empathise and then to disagree requires courage, confidence and clarity of purpose. Emmanuel Macron demonstrated these qualities best when he visited the soon-to-close Whirlpool appliance factory near Amiens during the election campaign. He had the courage to meet with workers angry with him and his policies and who had been courted by Mme. Le Pen only a few hours earlier.

He listened to them. He acknowledged their anger. And then he explained why he wouldn’t be doing what they want him to do, which is to prevent the closure of the factory.

He said he couldn’t do that. Mme Le Pen had said she would nationalise it. She also talked broadly in terms of closing borders, whereas he talked about the importance of keeping them open.

This was a high-risk strategy for him. The situation could have backfired. But “The Battle of Whirlpool” will go down in election history for good reason: he demonstrated rather than asserted his competence to lead.

Now this young President Elect must deliver on his promises. This is a daunting task especially as he has to build a legislative party from the ground up. This task is similar to that facing many CEOs who have secured PE backing for their rapid growth ventures. Success can be his/hers and theirs if they follow three First 100 Days rules for leaders:

First: They must communicate what they intend to achieve in their first 100 Days. This should be crystal clear and, most of all, achievable. The mistake many new CEOs make is that they overpromise and under deliver in their honeymoon period when followers merely expect them to demonstrate that they are capable of executing in the future. That’s all.

Second: They must manage their Relationship Grid carefully.  This is a tool I have developed to help leaders manage their relationships. On this “grid” or spread sheet they list and rank their 20-30 key relationships business and family, including a vision of success and failure for each relationship after one hundred working days.

They track these using a Red, Amber, Green (RAG) dashboard. Invariably, some “amber” and “red” will relationships emerge during the first hundred days. Red means a relationship is in serious trouble, amber that it is heading that way and green that all is well.

The challenge is to know how to manage the amber and red relationships effectively. Get these wrong, and they will struggle because everyone is watching them. Their first hundred days will be judged as much by the manner in which they handle these challenges as their delivery of successes.

Third: most importantly, they must show without fail that they know how to support the people following them to help them be as good as they can be. This requires, almost counter intuitively, a willingness to be honest about their own flaws so that their followers don’t fear exposing theirs. They need to know.

Let’s see how Monsieur Macron manages his first hundred days. He has made a great start.

 

Three steps to unblocking road blocking behaviour on your board of directors

Last week The Times reported that the term “roadblock” was used to describe a surgeon at the centre of a shocking medical malpractice case in the north of England.

Colleagues, apparently, had to “work around” him and concerns about his behaviour were either ignored by him or buried by others. The case reminded me of how prevalent this story is in business.

Although the roadblock cases we all witness on boards may not be as devastating as that one, they can nevertheless cause grievous harm to people and businesses.

But what can you do? These are often bright, effective and key people in the business. They may be robust in their dealings with colleagues but charming with clients and, crucially, they deliver results.

Challenging them is difficult. They are powerful and don’t use, shall we say, Queensbury Rules during difficult exchanges. In short, they bully.

It’s not easy to tackle this problem but it’s not impossible. In fact the issue itself is simple: how to deal with bullying behaviour. The problem is in mustering the courage and enlisting support to deal with it. I use a three step approach in my programmes which I hope you find helpful.

Step 1: Ensure that each director, including the “roadblock”, has a shared, and agreed, understanding of the objectives and strategy of the business.

More often than not, I find there isn’t such a shared understanding save that everyone wants to make as much money as possible. That doesn’t count in my book. That’s like breathing. It goes without saying.

Ask each director to come up with a more sophisticated objective than making money and a strategy to achieve it. The outcome can be surprisingly positive, productive and unifying. At the very least it will clarify any misunderstandings.

It’s crucial to ensure that the “roadblock” signs up to the strategy too. Don’t move to the next step until they do. You may find that this process leads to some softening by the offending director. Or not.

Step 2: Check that there is unanimity amongst all the directors on the roadblock issue. Unless everyone is saying the same things, the problem could be something, or someone, else.

If there is unanimity then agree that everyone on the board not only has the right but also the duty to call out the behaviour on the next occasion it arises. Then, crucially, the person who does call out the bad behaviour must be backed by the others.

This is not about “ganging up” but an important step in reinforcing the agreed approach in dealing with the roadblock which is about always coming back to business strategy and objectives, not personality differences. This is good corporate governance, not corporate politics.

Step 3: Is to make a small change in how everyone deals with the roadblock at board meetings. The principle here is that the other person won’t change unless you change first. A commitment to small change in behaviour, over time, is easier to secure than so called “transformational” change which is a lesser spotted occurrence than some commentators would have us believe.

On the next occasion and at a fully attended board meeting – ideally an operating board meeting, not a main board meeting because procedures tend to be more formal there – when roadblocking behaviour occurs, then one director must muster the courage to enquire how that behaviour helps implement the strategy to achieve the agreed objective. I say “must”, intentionally.

The response is likely to be a strong, if not brutal, push back or to obfuscate or both. Each director should in turn ask the same question or otherwise indicate that they back the questioner. It’s as simple as that, even though it may not feel that simple.

Unless you have chosen the wrong battle to fight or someone lets you down in the room, this approach should work, over time. You will find that on each occasion the other party is challenged to explain the link between their behaviour and business strategy to which, after all they have signed up, they will struggle to maintain the roadblock behaviour in the face of such ongoing unity of purpose.

If their behaviour is unconscious they may even see the light. On the other hand, if they are successful narcissistic bullies they will try everything to bully their way out of the challenge.

If every director sticks to their guns and quietly and calmly return, each time they are rebuffed or traduced, to the agreed business purpose and strategy the other party will have to relent, ultimately.

And if they don’t then the directors have a choice: either to remove the roadblock or become part of it themselves. Sadly, too often the latter is the case but it doesn’t have to be so, if everyone has each other’s backs.