Business or personal strategy: which dominates your board?

What is it with our obsession with strategy? We are respectful of words like profit and loss but somehow treat strategy differently.

After 15 years consulting and nearly 20 years in corporate life, it is the word which stands out for me as the most abused because it appears to mean wholly different things to different people.

Conversations, which tend to be liberally peppered with it, bear this out: “I’m hiring someone to do the day to day stuff, so that I can concentrate on strategic stuff” or “We have just hired an awesome Head of Strategy” or “Frankly, and strictly between you and me, the problem with Joe Bloggs is that he’s not very strategic”.

Worse is when strategy is confused with purpose and execution as in “we intend to be the best in the world by hiring good people”.

Being the best in the world, if you mean it, is a business objective and is not a strategy. Hiring good people is as basic a leadership behaviour as breathing. Strategy, it ain’t.

But why the confusion? Strategy means how your board achieves its purpose. That’s it.

It should be decided once and, while it may change, it should stay fixed for a reasonable period to allow for its implementation.

Therefore there should be no need to use the word strategy in any context other than “since our agreed strategy is X then we are doing y or we should do z”. Or not, if those actions are not congruent with your strategy.

For example, Ryanair’s objective was, it appears, to be the best and most profitable no frills airline in the world – or words to that effect.

Its strategy appears to have been to train the market  to expect nothing but a safe and cheap flight. Its execution behaviour – love it or loath it – was to do everything to lower market expectations of airline service which had been raised over a generation which believed  flying was for a certain “class” of person. Ryanair broke that myth.

Proof that its poor treatment of customers was “strategic” is the manner in which it reacted almost overnight to the introduction of a business class product by rival Easyjet. Suddenly, Ryanair became user friendly, introduced its own business class product and sales went up by c 20%.

That’s a story of a simple purpose, sophisticated strategy and clean execution behaviour in action. There was no confusion whatsoever about the meaning of those words. The results bear this out.

The problem on many boards however is that there isn’t a shared business purpose nor, in addition, are the directors upfront about their personal purpose.

If your business purpose is not shared by your colleagues on your board and if your and their personal purpose is also not clear then it’s not surprising that your business strategy will be weak, at best.

Some clients “push back” on this by saying that “our purpose is to make money, everything else is strategy”. To which I reply “it’s no wonder you all have a different spin on strategy since making money is, again, as essential as breathing. It is a collateral benefit, not a purpose.”

The reason purpose and strategy are problematic is because they are difficult to get right. It is a truly challenging task in complex markets to get your purpose statement right and then to follow through with choosing the right strategy to implement it.

But, and perhaps surprisingly, this can be made much easier if your directors are upfront about their personal purposes.

After all, the purpose of any organisation is inter dependent with the purposes of each of the people working in it and, particularly, with the members of its board.

Initially I find this a hard sell. Directors  find it  difficult to accept that they constitute the business. They speak of the business in the abstract, as if it were a third party. But it isn’t.

It is the sum of their individual purposes brought to bear on a market need. But often the personal purpose of one or two individuals can dominate or skew business objectives and therefore strategy.

Once I get a board to address the matter of their shared business purpose in the light of their personal objectives, I find that business purpose and strategy can be reframed much more cogently.

Your CEO is key to the success of this reframing process. If he or she is willing to share their personal purpose and strategy honestly and openly they will be a catalyst for the others to do the same. This is called leadership.

There are three steps to harmonising business and personal strategy on your board:

First ask each director to articulate their personal financial and fulfilment needs and objectives and how these fit with their understanding of business purpose and strategy.

Second, in the light of these shared insights your board should work on the precise wording of business objectives and which all directors are happy to sign.

In my experiences this process can be difficult and can surface deep and painful disagreements. But it’s worth the pain because future disagreements will be more easily resolved by reference back to agreed objectives.

Finally when, and only when, there is absolute shared clarity on business purpose and one that fits with the articulated personal objectives of each director, can you move on to addressing strategy.

Then, often to everyone’s pleasant surprise, agreeing a good and robust strategy becomes relatively straight forward. Are you surprised?

www.ciaranfenton.com

Purpose: why you should use that word carefully and sparingly

If you are reviewing your career and or organisational purpose you may find it a useful exercise to reflect on the meaning of the word purpose, it’s use and frequent abuse.

The word purpose is a noun meaning, according to The Oxford English Dictionary,  “the reason for which something is done or created or for which something exits”. The example given is: “the purpose of the meeting is to appoint a trustee”.

So far so straight forward. But the purpose (sic) of management-speak, with which we are bombarded daily, is to render meaningful words as emotionless as possible.

Emotion, which is the expression of feelings, is the mortal enemy of management speak because feelings make us question orthodoxy. And mainstream management orthodoxy doesn’t always brook questioning.

So, the word purpose which was going about its business contributing beautifully to our sentences down through the ages was recently hijacked by management speak and converted into a proper noun as in “purpose-led, purpose-driven and purpose based”.

What’s wrong with those terms you may reasonably ask? Isn’t the intended meaning clear? Is it not pedantry to challenge a well intentioned use of a word, albeit ungrammatical?

Well it does matter not only because grammar matters but because the use of the term “purpose-driven” may assume that we share the presumed definition of their purpose. And we may not.

There are of course many organisations whose purpose is to promote better behaviour in business and who use the word as a shorthand for a higher purpose. This works provided everyone has a shared understanding of what that higher purpose might be.

Your business purpose may be to maximise shareholder value. Another might see that merely as a collateral benefit of providing excellent products and services. A third might view their purpose as neither of the above but to be the best in the world at what they do. And so on.

The point is you can’t be told what your purpose is. It’s yours. You can be led or driven by your purpose but not by purpose itself.

The precise use of the word matters for a second reason: it’s imprecise use can contribute to conflict in the boardroom because conflict is reduced when board members have a shared purpose. A purpose can’t be shared fully if there are preconceived ideas as to its meaning.

The third reason you should use this word with care and sparingly is because it has a direct impact on strategy, another mightily abused word.

If purpose means why you do what you do, then strategy means how you achieve that purpose. It doesn’t mean anything else. As the OED helpfully points out, strategy serves purpose.

So if there is confusion about your business purpose then your strategy will be flawed. If some of your directors feel that purpose is a proper noun with an inherent meaning and others don’t well the board is going to be at, er, cross-purposes.

This happens more frequently than you might think. I’m often taken aback in my work  at how often boards, particularly operating boards, do not have a clearly articulated purpose and a strategy which serves it other than to make money which is neither a purpose nor a strategy but a result of both in combination.

If you treat the word purpose almost as a sacred term you will derive more benefit from it for yourself and for the people you lead and for the organisation for which you work.

Jim Collins in his bestselling book Good to Great set out a framework for what he called your business BHAG: a big hairy audacious goal. I call it purpose.

His framework requires your board to answer three questions: what can we become the best in the world at? what can we become passionate about? and how will we drive profitability?

I think his is an elegant framework for figuring out your purpose whether personal or organisational and I commend it to you provided you use the widest definition of profitability which can be intangible as well as tangible.

So, there is nothing wrong with board members wanting to be purpose-driven or led provided they all share the same meaning of the word. The problems occur when the don’t.

But communication in boardrooms is frequently constrained by interpersonal politics. This often results in confusion. The word purpose is a special word and should be used carefully and sparingly. Purpose matters.

How to turnaround an unhappy board of directors in three steps

With apologies to Tolstoy, all happy boards are alike; each unhappy board is unhappy in its own way.

Unhappy boards consist of unhappy directors. This is obvious. But since people speak of boards as if they are people – anthropomorphism, to give this behaviour its technical term – they need reminding that they’re not. It’s the directors who are unhappy, not the board.

Happy boards outperform unhappy boards because unhappy, stressed and frustrated directors don’t perform as well as those who are content, energised and empowered.

The reasons for unhappiness will vary from director to director. But directors share one systemic grievance, also shared by their workforce, which is that work in the 21st Century is often not very fulfilling, at all. The happiness at work surveys, which make for grim reading, bear out this assertion.

If directors can address the systemic issues between themselves on the board, can you imagine what they can do for the rest of their workforce?

I believe the world of work can be fulfilling. Not 100% of the time of course, but I believe in the 75% rule that three-quarters of the time you should be able to say: I’m happy at work. But the world of work is still not what it could be especially for those who sit on boards.

We have only ourselves to blame. In the 20th century we permitted a framework for work to develop which created three components that ensured people became and continue to be trapped on a treadmill:

  • The maximisation of shareholder return as a primary purpose
  • Human capital management designed to serve that purpose
  • Exploitation of human and other resources as the main focus of boards

But the movement towards a new model has been building for some time. Everyone knows that the shareholder framework is no longer fit for purpose but have struggled to break its grip.

As far back as 1994 Charles Handy published The Empty Raincoat to set out a “…philosophy beyond the impersonal mechanics of business organisations…if economic progress means that we become anonymous cogs in some great machine, then progress is an empty promise”.

Even mainstream human capital writers like Jon Ingham were trying to humanise thinking in the early part of this Century in his book Strategic Human Capital Management – Creating Value through People, recognising that value can’t be created through any other means.

In what has been considered a “ground-breaking book”, Frederic Laloux’s Reinventing Organisations (2014) set out a thesis that “a new shift in consciousness” is underway which could help us invent “a more soulful and purposeful” way to run our businesses.

He sets out what he calls a “Teal” approach to this new way. This includes self-management rather than cumbersome management structures, bringing the whole person to work and what he calls ‘evolutionary purpose” focusing on what society wants from the business and not on the bottom line.

These are just three of many writers addressing these issues. Their work has been augmented by the growth of “not just profit” movements, which sprung up after the Global Financial Crash in 2008. These include Blueprint for Better Business (of which I am one of several advisers); B Corporations and Tomorrow’s Company.

Many of these use “top down” approaches that have strengths and weaknesses. My contribution to this canon is to take an individual rather than a corporate approach. I believe in individual change as an agent of, so called, organisational change, using the following steps:

First, while I agree with others that the purpose of organisations should be to make all stakeholders equally happy – shareholders/other risk takers, workers, suppliers, their families, their communities and future generations through the proper use of the physical environment involved in the business – I nevertheless believe that they will do so only if directors unilaterally grant themselves permission to do so.

The block so far is that directors are afraid of the investor. But if investors are educated to understand that they are not getting as good a return on investment without conceding to equal stakeholder happiness, then they are likely to give it. The first step, therefore, is to take responsibility for enlightening them.

Second, It has always struck me as odd that companies motivated – red in tooth and claw as it were – by profit, continue to allow their workers, especially their highly paid directors, to leave large chunks of their value at reception because boards have failed to create an environment which encourages them to bring their whole selves to work not just the part circumscribed by their job description or, more often, by the culture of the organisation.

The reason of course for this is linked with the first step, but also because they may not know how, precisely, to deal with the whole person. As one delegate quipped rhetorically at a people conference: “Do we really want people to bring their “whole selves” to work? Really?”

Third, is what I call the “paradox of small change” which is that small changes lead to big outcomes. Changing just ten interactions out of every hundred is just 10% change.

That’s small change. But it’s hard to do. You must start with yourself if you want others and your world of work to change; then you must accept that organisations don’t exist, except in law and in the minds of people who work in them, save that they are groups of individuals who are struggling to be who they should be.

If your board is unhappy and you’re serious about doing something about it, start by demanding equality of return for every stakeholder in the business; then find out what each director needs to be happy, 75% of the time and, finally, negotiate the behavioural small changes required to create an environment in which these are met. That’s it. Simple.

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.

Why CEOs and directors, unlike Mrs May, should actively encourage dissent on their operating boards

Mrs May continues to present students of leadership with excellent material on the dos and don’ts of modern leadership.  Her speech this week announcing the General Election was another great contribution to that canon.

The strongest part of her speech, and one that CEOs would do well to emulate, was her absolute clarity of purpose. This is no “Theresa Maybe” as The Economist described her at the start of her premiership. Love her or loathe her, you can be in no doubt that she wants as hard a Brexit as she can negotiate. That’s her purpose. No maybe about it.

CEOs who don’t convey this level of clarity on their own purpose go on to struggle to articulate a credible strategy and as a result their implementation plans are weak and risk-rich from the outset.

But then Mrs May needlessly threw away this early advantage.  Had she been a client of mine, I would have insisted she maintain that level of clarity in all aspects of her speech because it pains me to see leaders score avoidable own goals and she scored a veritable hat-trick, all of which CEOs can learn from.

Her first own goal was when she said that the reason for calling an election was because “…there should be unity in Westminster, but instead there is division.” It is bad enough that this was a huge lie  – everyone knows she called it for party political reasons – but it was the underlying disregard for opposing views, so well known to directors who have to work for bullying CEOs, that will have done her damage.

Rafael Behr put it well in The Guardian: “The democratic process is being requisitioned not to air competing opinions but to dispense with them.”

She could easily have just stuck to the line that she wanted a stronger negotiating hand via a stronger majority. No one would have blamed her for that. But like many CEOs with low EQ she confuses dissent with an attack on her identity and so she attacked her dissenters, who are elected and one could argue, paid to dissent, just as NEDs are on  main boards or divisional directors and function heads are on operating boards.

Her identity, like many CEOs, is tied up with being right. Any questioning of that is forbidden because to question is to undermine and that casts you, in that most damning of all verdicts, as “not a team player”.

In my corporate career I experienced and witnessed brutal treatment of dissent on many boards and executive committees. On one ExCom I was warned on arrival that new people were easy to spot because they were the ones smiling. No one, I was told, smiled again after receiving their first humiliating and public slap down. So I didn’t smile. I still got slapped.

The reason this behaviour doesn’t benefit Mrs May or CEOs is that they, ultimately, are the losers. Mrs May lost many floating voters who share Rafael Behr’s views. In addition she lost her moral authority with Tory MPs who agree with Rafael Behr but are afraid to speak out. Later when she needs their support when things get rocky for her, as they surely will, she won’t have it.

CEOs lose badly with this behaviour because it negatively impacts the ROI on their wage bill, especially to directors who are usually highly paid.  This ROI is already affected by the standard behaviour of any employee – director or not – to leave, daily, a significant part of themselves and therefore their value at Reception because they feel it’s unsafe to bring it in.

No amount of HR sponsored “bring your whole self to work” campaigns will change this unless the “invitation” from the CEO is there to do so. But in situations where slaps are administered for daring to be yourself, CEOs and HR Directors should be under no illusion that their ROI plummets drastically and they won’t even know what they’re missing. This is one of those own goals that’s barely visible, because it happens so fast.

The well documented behaviour of advisers in The Oval Office during the Bay of Pigs fiasco is a good example of the dangers of not encouraging dissent. The problem was that no one spoke up because the agenda was controlled. Therefore there was no room for dissent. This contributed to what was an historic disaster for American foreign policy in the 20th century.

I believe CEOs should open every operating board meeting with the same announcement each time: “I need to hear people disagree with me and with each other, constructively. If you don’t you’re not doing your job and if you’re not doing your job you’re of no use to the business.”

If Mrs May had announced an election saying she wanted a stronger mandate and that she welcomed a stronger challenge within and without her party at this difficult time, then that would be a sign of courageous leadership and she, and we, might get not just what we want but need.  But to complete her hat trick Mrs May missed that too and she and we will suffer, needlessly as a result.

 

 

 

How unresolved issues between your board members are impacting your business, and what to do about them

Why not have a facilitated emotional intelligence workshop at the end of your next board meeting?

  • Your board meeting is finished, the agenda covered, and the minutes taken but what about the unresolved relationship issues that are never minuted? My clients tell me that these are the biggest barriers to effective boards and which effectiveness reviews don’t address.
  • The future of your business depends, largely, on the quality of interactions between your board members. If there are problems or a lack of clarity, they matter because they impact the bottom line. Your board is unique. So yours needs bespoke attention, not generic change management solutions.
  • We avoid these issues because they are difficult to address. My workshop provides a framework to address them, incrementally, safely and with a high chance of success in three steps:
    • Supporting the acknowledgement of the behaviour on your board you would you like to see changed and by whom
    • Exploring the positive impact on your business of the changes
    • Tools to assist the behavioural change
  • You may feel that people just don’t change or won’t on your board. But people can and do change behaviour if incentivised to do so.  What better incentive than knowing that if you change your behaviour, every other board member will do so too? It’s simple and it works.

For information on case study examples and costs, you can arrange an exploratory telephone call by  emailing me at cfenton@ciaranfenton.com or text me on 07966168874

Why non-banking CEOs and boards should bother reading The Banking Standards Board second annual review

Last week The Banking Standards Board published its second annual review which received page two coverage in The Financial Times with the strange headline: “Bankers battle with ethics versus career quandary”.

The headline was strange not only because it implied that there are circumstances in which career considerations could trump ethics but also because, given that the 2008 crash resulted from unethical behaviour, these shocking results should have been the headline, not the quandary they seemed to present.

As reported by the FT, some of the results of the Review based on a survey of 28,000 employees at banks and building societies are jaw-dropping: “more than a third fear negative consequences of voicing concerns…one in eight had seen instances where unethical behaviour had been rewarded…[a large number saw] a conflict between their organisation’s values and how it did business”.

The impact of this environment on ethical decision-making must be grave, making another crash a certainty, if not highly possible. Certain because the results were not front page news; certain because we have become immune to such behaviour and, above all, certain because permission to behave well in banking is still not ubiquitous.

If the banks are heading towards another crash – so be it. But you and your board can avoid risks just as grim by giving your directors and their team’s permission to behave ethically. How can this be achieved?

You could start simply, by announcing that there will be zero tolerance on your board for the three behaviour examples below:

– the rewarding of unethical behaviour

– experiencing negative consequences for voicing concerns

– failing to confront conflict between our values and how we do business

The first of these might seem obvious, but if as much as one in eight has seen instances of such behaviour in the banking sector, the chances are that some of that behaviour is happening in your business and without challenge.

And this will persist if you do not support the second rule by encouraging people to speak the truth to the powerful. Of course, the best way to ensure an ethical culture is to create an environment in which people feel that they can speak up on normal issues i.e. those which have nothing to do with ethics or the law.

If your people feel comfortable challenging you on normal business issues, then they are more likely to feel comfortable calling you out on bad behaviour.

My guess is that those banks where people are afraid to voice concerns are also afraid to voice just about anything else which might not meet with approval from on high. Where this becomes seriously mad is when people start assuming what will and won’t be approved and are wrong. Then you have a truly sick organisation of your own making.

Emotionally intelligent boards can create emotionally intelligent businesses that are more likely to make ethical decisions which are right in themselves and also reduce risks and increase opportunities.

One way of creating emotionally intelligent businesses is to have zero tolerance for shaming language. Shame is a great mental killer in business, especially amongst men. Guilt means I’ve done something bad. Shame means I’m bad.

Over the years I’ve observed shaming language at its worst in many contexts. Once I worked in an organisation where the “D word” was the shaming weapon of choice at meetings, as in: “Joe Blogg’s quarterly results were very disappointing, indeed.”

This would be said as if Joe was not in the room. He was of course and would die a thousand deaths in that boardroom and had nowhere to go because of kids, mortgage and all of that.

Another example of shaming language is when a powerful person is reasonably challenged on a strategy or routine issue by a less powerful person as in: “Joe Bloggs, I think we need a bit more light than heat on this issue”. Withering.

Have you ever been that Joe Bloggs? I have. And I can tell you that there’s nothing more certain to discourage someone from voicing concerns about ethical or legal matters if they are shamed for voicing concerns about issues that are perfectly legal and ethical and, please, remember where you first heard about the next banking crash and its causes, if you read it here first.