Three reasons why directors of UK businesses should change their leadership behaviour on the day Article 50 is triggered

CEO

On the day Article 50 is triggered, most likely 31st. March 2017, the context in which you lead if you are a director – CEO, COO, CFO, CIO, CMO, CRO, or NED – of a business trading in the United Kingdom of Great Britain and Northern Ireland, will change significantly and, probably, irrevocably.

You will not have experienced this context before. Nor will anyone else. At least this creates a level playing field. But on April Fool’s Day, only fools will deny that, as well as opportunities for some, the risks for all will be significant.

Competitive advantage will be with those who confront the leadership behavioural changes required and rise to the challenge. These need to be tried and tested before the 24-month negotiation period elapses not least because I believe a deal, acceptable to all, will not be in place at the end of the two-year negotiation period.

Why would any, or all, of the other 27 members of the EU not wait at least two years and one day to leverage maximum negotiating position?

For this reason prepare to witness, as Janan Ganesh recently wrote in the FT, Mrs May losing some of her “present swagger” as time progresses. In his view, and I agree with him, she has not managed our expectations well. Business leaders would do well not to replicate her error.

The Prime Minister has led us to believe, because she genuinely believes it herself, that we will thrive outside the EU and in the period running up to leaving it. If she’s wrong then your business, at worst, will die and at best will suffer, not least from enforced macro-economic change.

She has not prepared us for these possibilities. That’s why you should start reframing your leadership style now, for the times they are a-changing.

The first behavioural change I propose is that you should carefully manage, more than usual, the expectations of the people you lead.

It’s going to be a very rough ride, and you should spell out as starkly as possible the implications of the 24 month negotiating period and, separately, of Brexit itself on their lives and on your business, or the part of it, which you lead and in which they operate.

A lazy shorthand has entered everyday speech which conflates in the single word Brexit three related but distinct milestones: the outcome of the Referendum, the triggering of Article 50 and the day on which the UK leaves the EU with or without a deal.

Brexit means only the third of these scenarios. It’s not going to happen for another two years. Brexit, for the avoidance of doubt, has not already happened.

But the implications of the outcome of the Referendum on business have manifested themselves. Some have been positive and none, thankfully, as dire as the predictions.

But the negative impact so far has been very significant for many businesses and best summarised by the fall in the value of sterling which process, many people regard, as the only real oppositional force to Mrs May in the absence of a coherent Labour Party parliamentary strategy.

The fall in the pound is, as Mr Blair said in his fight-back speech, the market’s way of telling us we will be poorer after Brexit. Love him or loathe him as a leader, he is not wrong in calling out the fact that the media largely failed to cover a recent Ipsos Mori survey of senior executives, which found that 58 per cent felt last year’s referendum result was already having a negative effect on their business.

That sterling’s fall has been good for some businesses is no consolation to those for whom it’s a disaster. Even Mr Johnson’s infamous bus didn’t carry the additional strapline “ Vote Leave for a lower pound…”

This negative impact will significantly worsen from the day that Article 50 is triggered. Those who cry “Let’s just get on with it”, as if we are merely painting the spare room when in fact we are selling the house and leaving the neighbourhood, will find that “getting on with it” is not as easy as it sounds.

Your leadership task, therefore, is to create an environment in which the people you lead can thrive at a time of systemic stress, exacerbated by developments in The White House and the rise of the far right elsewhere.

The best way to do this is to allow time for people to talk openly at meetings about these issues. Why not put a “General discussion on Brexit and World Affairs”” on the agenda of your next board or team meeting?

Allow people to share and let off steam on these issues, irrespective of their voting preferences. They will thank you for it and will repay you with higher levels of performance than otherwise.

If you’re worried that turning your meetings into political debates is a recipe for hot-tempered anarchy, consider for a moment the danger of not doing so.

Your board and teams will comprise a mix of Remainers and Leavers – both unhappy and insecure for different reasons. We live now in a divided society. Therefore your business is riven with division, more than usual. This constitutes a business risk; not one you want to push underground. Some consultants are now offering advice on how to manage this development.

My second leadership change behaviour proposal is that you should have no truck whatsoever with people “having to do more with less because of Brexit.” This approach is the last refuge of the desperate. Understandable but doomed to failure from the get-go.

There are three flaws in a “do more for less” campaign. First, it creates both and anxiety and frustration which is bad for morale and therefore performance; second, it’s meaningless because it’s imprecise – how much more? how much less?; and third, it implies that previously Finance, IT, HR, Marketing, Sales, Operations and Legal were all, merrily, doing less for more.

The right answer is to tear up your current business plan altogether and rewrite it. This is what a rookie MBA graduate might do. I know this because of the work I do with LBS.

I have been a mentor for the past ten years on The London Business School Summer Entrepreneurship Programme. They use Professor John Mullins’ book “A New Business Road Map” as their core text. I especially recommend it for the Brexit context because it has a pre-business plan template, which flushes out all contextual issues, especially macro ones. You can’t get more macro than Brexit, except perhaps a world war. I wouldn’t rule that out either.

My third proposal is related to the second, and it’s to do with the importance of reframing personal and business purpose in the light of Brexit. To what extent has your personal career and life purpose changed in the light of Brexit? Have you given it any thought? Are you putting security and risk management for you and your family higher up your list of priorities?

Since your personal purpose and that of each of your fellow directors are interdependent with the purpose of your business, should you not discuss these openly and reframe your business purpose accordingly and in the light of your revised risk appetite?

Your job as a leader is to create an environment in which people thrive, grow your business and keep stakeholders happy. Many of these stakeholders will be employees who won’t be as rich as you are. They won’t have the luxury of adjusting their risk appetites as you do. So they will be stressed. More than you will. You should take care of them. It makes sense. Not just ethical sense, but business sense also.

This blog will be published offline in the next issue of Digital Business Magazine.

Ciaran Fenton

February 2017

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Want to talk leadership? Contact me through my website or call me on +44 (0) 207 754 0335

How CEOs can learn lessons from the Brexit-Trump shocks to build capability, not just performance, by investing in relationships with people they don’t like…

 

Trump

… because the commentators tell us that many voted for Brexit and Trump because they felt “left behind”. It follows that they would not have done so if they had felt the opposite.

The opposite of feeling left behind is to feel included. You can’t feel included if you are not in an inclusive relationship. The Remain Campaign and Hilary Clinton would have won if they had been in relationships with people who disagree with them but were willing to trust them.

The Remain Campaign did not campaign to Remain. They campaigned not to leave. Try that with a lover and see how far you get. If it doesn’t work in love, it won’t work in politics. It’s about both emotion and facts. The fact is that the Remain team did not believe in Remain, but they didn’t like the Leavers either. Mrs May was one of these fence sitters. They were not in a relationship of any sort with the Leavers. No wonder they lost.

Hilary Clinton did not build strong enough relationships with the poor of Ohio, the cynical of Florida, the fed-up of North Carolina. The fact is, Mrs Clinton didn’t demonstrate enough that she cared. Bernie Sanders did. Moreover, her relationship with the disaffected was so weak that many of them were willing to overlook Mr Trump’s misogyny, racism and lack of ability. No wonder she lost.

Now Mrs May and Mr Trump have to deliver. They won’t because they can’t. They don’t know what they don’t know about leadership, a lethal compound ignorance. What they don’t know is that success depends on creating relationships in which most of the people you lead, even those you don’t like, thrive. You can’t do that if you are not in a relationship with them.

Mrs May is heading for a fall. It will be a big fall, and it will happen soon because a) the disaffected Leavers have merely swapped places with unheard Remainers b) she has a hectoring leadership style which alienates people and is not conducive to the deal making she must now do and c) and above all, history will recall her nadir as the moment she failed to support her judiciary in the High Court. For many, this failure to lead will neither be forgotten nor forgiven because they care deeply about hard-won core values of democracy.

Mr Trump is also heading for a fall. It will come soon as he holds all the levers of power in Congress, Senate and The White House so there is little to stop him from falling. He has toxic relationships with those he doesn’t like. No weasel words in an acceptance speech or in the transition talks with Mr Obama will change this. He will fail because he needs the help of the people he hates. And they won’t help him.

How can CEOs learn from this? What has this to do with them? Surely there is no comparison between Mrs May, Mr Trump and the CEO of any business? There is because we all know CEOs who don’t build relationships wide and deep in their organisations. They stick with the people they know and like and only do the things they feel comfortable doing. There are Trump-like characters in business. We all know them. We also know leaders like Mrs May who may be useful function leaders but make poor CEOs.

Once, I ran a change Programme at a large organisation that treated one function poorly. They saw it as non-core, a bit second-class. Even its physical location reflected its low status. Morale was low. They felt “left behind”. But they made things worse for themselves by giving out a strong smell of burning martyr – understandable, but fatal.

The function was, as IT people like to say, “mission critical”. So I asked the CEO if I could move some of them from their out of the way location into the centre of the “mission”. To his credit, he said yes.

I facilitated a relationship change programme between the function and the centre by bringing them physically into the centre where healthy relationships could develop. It got off to a shaky start but as soon as “both sides” realised that they had a shared purpose and were valued and valuable in achieving that purpose, the relationships were transformed – a word I rarely used but is true in this case.

The lesson for CEOs is that it is no good trying to achieve excellent performance without building sustainable capability. Sure, you can deliver stunning results in the short term without paying much attention to the medium term, to “the important not urgent” issues and, crucially, to those who are not at the centre of your short-term bubble. But, sooner or later you will fail.

Former Goldman Sachs chief economist, Lord Jim O’Neill is reported in the Press as saying that the recent shock results may jolt business into realising it must do more for the workers and communities it serves. He also feels leaders appear to have lost the ability to connect with many of the people they are leading. He’s right.

If you build relationships with these, they will support you even if they don’t agree with everything you say. Fail to do so, and you may experience in your organisation an internal version of Brexit-Trump because you won’t know until it’s too late and, rest uneasy, these will do lasting damage to your business.

Ciaran Fenton

November 2016

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Want to talk leadership? Contact me through my LinkedIn profile or call me on +44 (0) 207 754 0335