The DEW Line and A Business Early Warning System

1024px-Map_of_Distant_Early_Warning_(DEW)_Line

The Distant Early Warning Line, also known as the DEW Line or Early Warning Line, was a system of radar stations established by the US and Canadian governments across the Canadian Arctic region in 1957 to detect incoming Soviet bombers during the Cold War, and provide early warning of any air, sea or land invasion. DEW_radar_site_in_Greenland_(cropped)

It proved to be not only an effective warning system, but also a psychological deterrent to any such attacks. Plus it helped stimulate the Canadian economy and link remote villages together.  All in all a fairly effective system against potential external threats.

Business DEW?

Is there an equivalent early warning system for businesses that can forewarn of a potential downturn in sales or profitability?  While no one has a crystal ball that can tell the future or a time machine to look ahead and see looming business problems, there is a business Early Warning System that over the years has proven highly effective in signalling upcoming problems.

With an understanding of the principles of corporate culture (seeLEVERAGE: The CEO’s Guide to Corporate Culture), it becomes straightforward to see a series of relationships that nearly always foreshadow a decline in business effectiveness.

The graph below shows the relationship between senior team alignment, employee trust in leadership, overall productivity and results.

Business DEWIt’s commonly understood that when overall productivity falls inside an organisation, greater effort, time and money must be spent to keep output at required levels, thus negatively impacting profitability and overall business results. In fact, productivity measures are commonly used by firms to establish valuations on potential acquisitions.

What is not so well understood is the relationship between “trust in leadership” and “overall productivity”, although there is a growing body of work being done by business academics and others on this connection.  Management guru Stephen Covey makes a strong case that lack of trust in leadership imposes a “hidden tax” on the organisation in terms of greater controls and a larger number of processes to ensure the work is being done in a timely and compliant manner.  The Edelman Trust Barometer annually polls the public on whom they tend to trust most.  Routinely CEOs and business leaders rank close to the bottom, barely above government officials. As trust in leadership falls inside a company, so do behaviours such as creativity, innovation, going-the-extra-mile, customer service and many other drivers of productivity and performance.

What’s nearly invisible, at least to senior executives, is the impact their individual and collective behaviour has on the overall company performance. One of the insights we have gained over the years through our work with leadership teams, corporate culture and strategy execution is the almost direct relationship between senior team alignment and employee trust in leadership.  Look at it this way.

Organisations are shadows of their leaders; that’s the good news and the bad news!

Whether consciously or subconsciously, employees watch the behaviour of the leadership team. Leadership behaviour provides employees with clues on what is important and what behaviours are acceptable. Employees also observe the interactions between members of the senior team as a clue to the level of cohesion and teamwork at the top.  When employees see VPs fighting each other over budgets and resources, over time it undermines their confidence in leadership. Leadership is not about winning against the other VP, it’s about the entire company winning.  When employees see a lack of leadership alignment at the top, motivation and pride in the company suffers, which as we has a direct impact on productivity and overall business results.

The Good News

The good news is that by paying attention to the level of leadership team alignment and the behaviours displayed by the senior team gives the CEO a “time opportunity” to improve alignment and team behaviours before the other elements in the chain of events (trust in leadership, overall productivity, business results) begin to decline. We call the “opportunity for recovery”!

DEW opportunity time

 

In many organisations, however, leadership is minutely focused on important issues such as cost control, schedule adherence and quality and tend to miss the equally important element of senior team alignment. As a result they only begin to react when business results tend to fall off and miss a significant opportunity to change the negative chain of events that began with the deterioration of leadership alignment and behaviour.

One solution is for the CEO to routinely make “senior team alignment and behaviour” an agenda item at all senior meetings.  Put it on the agenda, talk about it, educate the team on the “shadow of the leader” process, identify those on the team who don’t get along and provide coaching and feedback.

Imagine the positive impact if businesses managed their “leadership culture” as finely as they manage costs!

Thanks for joining the dialogue.

John R Childress

Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

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Leadership Development: The Room with Two Doors

Lets-Make-a-Deal

Let’s Make a Deal is a television game show that has been going, in various formats for over 50 years.  The most celebrated of its many hosts was the charismatic Monty Hall, with his perfect attire and dry sense of humour. One of the elements of the show was the opportunity to choose one of three doors, behind which was the grand prize. The other two doors concealing prizes of near zero value. Somehow the ingredients of the show, including a lovely co-host, captured the imagination of generations of TV audiences. A game of chance to win a big prize!

Personal or Professional Development

Imagine you are in a windowless room with just two doors, one in front of you and one behind. To get out of the room is easy, open a door and walk through.  But which door to open? Or you could just stay in the room!

Personal or professional development, whether it be concerned with leadership, relationships, family, friends, business or non-business situations, is all about choice. CHOICE. We are faced with hundreds if not thousands of choices every day, most small, a few with life changing potential. Even not making a choice is a choice! Choosing not to choose.

Now, back to the room with two doors. Opening the door in front means engaging directlyFront Back Door with whatever lies beyond; threat, fear, opportunity, an easy or difficult situation.  Choosing the Front Door does not guarantee success (surprise: there is no guarantee for success in life), but it does guarantee learning! Like it or not, the Front Door is the only path to learning, development, improvement and growth.

Leadership and learning are indispensable from each other.  ~John F. Kennedy

The door behind is what we commonly call the “Back Door”, or a way out without confronting the situation head on (what lies outside the front door). The Back Door will get you away from the situation outside of the front door, but you will have learned nothing and not developed your skills or capabilities to deal with life’s issues and challenges.

Taking the Back Door in life involves coming up with excuses that justify lack of direct engagement with issues. This choice  also retards progress or development. In business the Back Door for poor quarterly results sounds something like this: “The global economy took an unexpected turn for the worst, therefore our poor results were a result.” “This quarter’s results were the result of unexpectedly cold weather which kept shoppers away.” Etc., etc., etc.  (the fact that a few companies were able to quickly adjust their activities and make money escapes the back door types)

In leadership development the excuses sound like this: “My boss doesn’t respect my skills and never gives me developmental opportunities.” “I’m not loud or aggressive like the others so I don’t get chosen for the good work opportunities”.  Choosing the “excuses track” is safe, gives you a rational explanation for lack of progress, and puts the blame on others. Lots of excuses, few results.

Then there are those who just choose not to choose.  They stay in the same place, neither taking a risk or offering up excuses.  They are the observers of life who give little and get little. They sit in the meeting and say nothing, then head back to their office or cubicle, not interacting with anyone. The are steady, dependable, predictable and of little use during times of change (which is becoming more and more a daily fact of modern business life).

Life is either a daring adventure, or nothing at all!  ~Helen Keller

Too often our choices in life are based on unconscious habits that promote nearly automatic responses, like when the doctor hits a certain part of your knee with the rubber mallet and your leg automatically straightens. A reflex reaction.  Most times when confronted with a Front Door or Back Door opportunity, we don’t think, we just react out of habit.  If you find that excuses rule your life more than results, then it is time to make a new deal:

Stop….Think …. Choose

John R Childress
Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

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World Knowledge Forum – Seoul, South Korea

wkf banner

Last week I had the privilege of attending the 15th Annual World Knowledge Forum in Seoul, South Korea as both a panel moderator and speaker.  And this Forum attracted an impressive collection of politicians, academics, business leaders and entrepreneurs. The keynote speakers were the President of South Korean, Madam Park Geun-hye, and former President of France, Nicolas Sarkozy.

¼¼°èÁö½ÄÆ÷·³ °³¸·½Ä Âü¼®ÇÑ ¹Ú ´ëÅë·É My speech to about 200 participants of the Forum was titled:  The Importance of Corporate Culture in Asia’s Global Business Expansion. However, the majority of the forum panel topics and presentations focused on the uncertainties of the Asian economy and the Asian political arena as key drivers of the current slow growth of the region.

What was most interesting to me, however, is that while my topic was the only one specifically focused on corporate culture, at nearly every panel discussion or speech I attended, issues of corporate culture and national culture came up repeatedly in the discussions! The most frequent culture topic centered around the traditional Korean corporate culture of hierarchy, loyalty and top-down decision-making and whether this set of corporate behaviours was still a benefit in a more globally competitive world. Is the Korean culture of efficiency and low-cost still a competitive advantage? Should Korea shift to more of a Creative Economy, given that China is now the world low-cost producer and technological innovations seem to be the driver of modern business growth?

The panel discussion I moderated dealt with the topic of how Korea could build a more creative and innovative economy. We had a very engaging discussion on this topic due to the expertise and diversity of the four panelists: Professor Andrew McAfee from MIT, Ben Casnocha, an entrepreneur from Silicon Valley, Yigal Erlich, the founding father of the Israeli Venture Capital industry, and Ryu Jung-hee, CEO of Future Play and serial Korean Entrepreneur.

What became apparent was the many fundamental strengths of the Korean economy and society, including government support, education for all, technological infrastructure, work ethic and many others.  All the panelists agreed that with shifts in certain government policies to encourage start-ups and entrepreneurs, the Korean economic miracle to the past 50 years could successfully be refocused on innovation and creativity for the next 50 years.

100728_p26_korean1

If you are interested, here is a synopsis of the panelists key points.

The World Knowledge Forum was a stimulating gathering of bright minds and business experience and the over 3000 participants who attended certainly came away with food for thought and tools for improvement.

John R Childress
Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

 

 

 

 

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When National Culture and Corporate Culture Collide . .

Military+discipline+hats+off_6e0bb0_4398712

A frequent reader of my blog postings on leadership and culture sent me the following paragraph from a much longer article:

The British military recently revealed that this past August they had to deal with a mutiny among 300 Libyan soldiers being trained at a British base. The Libyans were selected to receive combat and leadership training so they could better train and command Libyan soldiers back in their own country.

The mutiny occurred when British officers in charge of the training put three of the trainees under guard after police picked them up for being off base without permission. Then twenty other trainees went and threatened the British soldier guarding the three Libyans. Rather than risk violence or an incident, the guard let the three go free. Senior British officers were uncertain about how to further handle this seeming act of insubordination.

What seems like insubordination to one culture looks entirely different to another.  In this case, the behaviour of both British and Libyan officers were determined more by national culture than organisational (military) culture. In the British national culture, rules and regulations are viewed as critically important for order, civility and efficiency.  In the Libyan national culture, man-made rules are more like suggestions with loyalty to friends and family being far stronger! In terms of strong behaviour motivators, National culture trumps organisational requirements every time.

A National Culture Test

Here is a classic example of how different National cultures would respond to a situation:

You are riding in a car with a close friend, who hits a pedestrian. You know that he was going at least 35 miles per hour in 20 miles per hour zone. There are no witnesses. His lawyer says that if you testify under oath that he was only driving 20 miles per hour it may save your friend from serious legal consequences.

What would you do?

As much as we in Western society would like to think that honesty is a universal human value and is always “the best policy”, not all national cultures see it that way.  Below is a representative graph of how different cultures would behave in the above situation:

car accident

In other words, not understanding or taking into account national culture when dealing with others can lead to seemingly hopeless and intractable situations, such as the British military situation above.

Below is a chart I often use to explain the differences between National Culture and Corporate Culture:

national vs corporate

As you can see, of the two, national culture is by far the earliest, deepest and strongest in determining how people react to situations, events and other people.

No wonder the Libyans reacted the way they did, it’s in their DNA, not in their training!

 

John R Childress
Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

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Risk and the World of the CEO . . .

financial-risk

Risk comes from not knowing what you’re doing.  ~ Warren Buffet

I was having lunch the other day at one of my favourite business restaurants in London with a colleague. At one point the conversation turned to the “world of the CEO”; that is, what those in charge of large groups of people and organizations have to deal with and what really “keeps them up a night”.

At one point in the conversation my colleague put our whole discussion into sharp focus with these words:

“There are three risks that keep CEOs up at night: financial risk, market risk, and reputational risk!”

The first two, financial risk and market risk are easy to understand. Overspending to get a product to market poses a financial risk since there is no guarantee adequate sales will materialise.  Opening new facilities in emerging markets in order to capture early entry advantage is an example market risk since emerging markets are notorious for not growing as predicted.

These two risks, while potentially huge, are the most studied and analysed. Every newly minted MBA spends hours devoted to lectures and case studies on them.  CEOs surround themselves with risk experts of all sorts to assess and analyse financial and market risks. The probability of making a giant mistake in either of these areas is becoming less and less as we learn more and more about the world through the use of new technologies such as Big Data, market intelligence and sophisticated analytics.

Reputational risk is less well understood.

Imagine that the company has an account similar to a bank account. Every time the company does something good its reputational capital account goes up; every time the company does something bad, or is accused of doing something bad, the account goes down. What’s interesting about a reputational risk account is that it can be filled or depleted with either actual actions, or perceived actions. And the consequences of reputational risk can be enormous.

For example, look at the current state of global banking. As a result of excessive profit seeking individual traders and others in the banking world have crossed the bounds of ethical activities, such as the LIBOR rate fixing scandal and  pension mis-selling activities, causing fines in the billions from regulatory authorities and others. To date, the financial services industry, and mainly banking, has been fined more than $100 billion.

2013-edelman-trust-barometer-global-financial-services-industry-13-638As a result of poor behaviour at all levels and an unwillingness on the part of banks to really address rogue and unethical behaviour, the reputation of big banks is at an all time low.  Basically the financial services industry, even 6 years after the global financial crisis of 2008, remains the least trusted of all industries (Edelman 2014 Trust Survey).

“The most remarkable finding is that risk professionals – on the whole a highly analytical, data rational group – believe the banking crisis was caused not so much by technical failures as by failures in organisational culture and ethics.”  ~ UK Institute of Risk Management

An additional example is the poor media handling by BP and its former CEO, Tony Haywood of the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. The cost alone to BP has been upwards of $40 billion, but the reputation and trust in BP took a giant hit in the eyes of the public, and its share price has yet to fully recover.

Corporate Culture at the Heart of Reputational Risk

Risk is not knowing what your culture is doing!

Our conversation then turned to ideas on how CEOs can more effectively deal with reputational risk.  Since reputations are usually damaged by behaviours that are out of alignment with company values and/or consumer values and regulation, and since corporate culture is the habitual behaviours used by employees at work to solve problems, deal with colleagues, customers and stakeholders, then a greater understanding and management of culture can be an effective way to mitigate reputational risk.

The problem is, most CEOs and senior executives don’t know what their culture is, and most importantly, don’t realise that their corporate culture is not one unified element, but actually is a collection of subcultures.

Subcultures are formed when employees trust and respect informal leaders (trusted colleagues) more than management (Edelman). As a result, they take their clues on how to behave not from Company Values Statements or CEO speeches, but from peer and subgroup pressure to “fit in” and “be a part of the team”.  And all the regulation and corporate training cannot overcome the power of peer pressure in determining how people behave at work.

subcultures

When subcultures are aligned with the overall company strategy and values, culture can be a significant business asset.  But when subcultures are out of alignment, corporate culture becomes a significant business (and reputational) risk.

Who is advising you on culture and reputational risk?

 Thanks for joining the conversation.

John R Childress
Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture
Visting Professor, IE Business School, Madrid

email: john@johnrchildress.com

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The Seven Faces of Corporate Culture

John’s Note:  The following is the first draft of the Introduction to a new book I am writing. A book prompted by readers of my last book suggesting I give them more detail, more “how to”, more specifics on corporate culture.

I will be putting successive chapters out on my blog, Rethinking . . . , in the hopes that it will stimulate readers and those interested in corporate culture and leadership to further the dialogue and also send me ideas and suggestions that I can work into this new book.

The book title is: The Seven Faces of Corporate Culture.  Here is the first draft of the Introduction:

Introduction: The Seven Faces of Corporate Culture

Regard the holy trinity of change and progress: insight, implication and application.

 
Buddha 4 facesOn my office desk sits a small brass bust of a Buddha with four faces. Each of the four distinct sides sports a different facial expression. One shows contentment, the other amusement, another empathy and the fourth face laughter. The purpose of a Buddha with four faces in different directions is to ensure that no matter from which direction prayers emanate, the Buddha could hear them and respond. Sort of a spiritual omni-directional listening device.

 The business concept of corporate culture reminds me of a multi-faced Buddha in the sense that corporate culture exists everywhere inside a company, no matter in which direction you look, yet the internal subcultures are not always the same. As one of my business partners likes to say, “Whether you like it or not, whether you designed it or let it happen, you have a corporate culture!”

 For being such a popular business term (especially with “consultants” and the business press), corporate culture is still a mystery to most C-suite executives and managers, and even among business academics it remains poorly understood. There is no standard or agreed-upon definition and on the market today there are currently over 70 different corporate culture assessments, each purporting to diagnose your real culture. And even the large global consulting and executive search firms are now offering culture surveys and culture change programs. (If it’s branded by a big consulting firm it must be good, or at least expensive.)

 In my recent book, LEVERAGE: The CEO’s Guide to Corporate Culture (The Principia Press, 2013), I took a practitioner’s scalpel to the entire corporate culture movement; from culture assessments to culture change methodologies to culture consultants in an attempt to find the most useful business principles in the vast ocean of culture literature. My goal was to provide CEO’s and business leaders practical insights and useful tools to better understand their own corporate culture and how it influences, both positively and negatively, tangible business performance.

A review in The Economist magazine (Jan. 11, 2014; Vol 410, No. 8869) called my book one of the most “sensible efforts in an otherwise charlatan-infested field”. Okay, so I’m experienced and sensible, and maybe a bit of charlatan!

 In the past several months I have received many emails and letters from readers urging me to provide even more clarity and useable business applications relating to corporate culture and business performance.

 After over 30-years consulting and advising on corporate culture and performance, I have consistently run into seven scenarios where costly business mistakes are being made due to a lack of understanding of corporate culture.

 These seven scenarios are:

  1. Culture as a Hidden Business Risk
  2. Leadership Culture: Organizations are Shadow of the Leaders
  3. M&A: Avoiding the culture clash train wreck
  4. Business Turnaround: Culture and a sustainable turnaround
  5. Rapid Growth: How to avoid diluting your culture
  6. Start-up: Culture by design
  7. Building a Global Corporate Culture

 This short book is designed to provide insights, implications and useful applications for these seven specific business scenarios, where a better understanding of corporate culture could prove the difference between success and failure.

Comments and suggestions welcome, and thanks for joining the conversation.  

John R Childress

email: john@johnrchildress.com

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Reinvent Yourself . . . especially with a short runway

Doolittle raid

 People who cannot invent and reinvent themselves must be content with borrowed postures, secondhand ideas, fitting in instead of standing out. ~Warren Bennis

pearl harborOne of my favourite movies is the 2001 epic war film, Pearl Harbor,  starring Ben Affleck, Josh Hartnett and with Alec Baldwin as Col. Jimmy Doolittle. There is a particular scene in the movie that stands out for me as containing an important message not only for each of us an individuals, but also for business organizations.

In trying to decide how to counter the devastating sneak attack on Pearl Harbor, Doolittle and his team come up with a daring plan to bomb Tokyo and other key Japanese cities, thus showing the Japanese war machine that the US was still strong, capable and determined.  The problem was how to get bombers to Japan from a safe location, especially given a limited fuel supply and range.  The solution? Launch them from an aircraft carrier in the Pacific 500 miles off the coast of Japan.

Brilliant idea, but seemingly impossible, since the flight deck of an aircraft carrier at that time was shorter than the normal B-25 take-off length required.

The solution, reinvent the B-25 Bomber!  To do this, they stripped out all unnecessary extra B-25's En Route to Tokyoequipment and weight, loaded only 4 – 500 pound bombs, added extra fuel tanks for the long journey and a crew of 5.  Then they practiced short-field take-off techniques in Florida before loading 16 planes onto the USS Hornet in San Francisco harbor for the highly secret voyage across the Pacific.

The result was a significant morale boost for the US military and an action which forced the Japanese to change their war strategy and beef-up their homeland defense, at the expense of continuing to press their previously successful Pacific conquests. The rest is history, as they say!

Insights and Applications:

There are many highly experienced business executives and managers who are approaching the age where retirement is traditional, and getting hired again is extremely difficult.  In essence, they are running out of runway!  They don’t have 20 years to devote to a company, but on the other hand have well over 30+ years of experience and knowledge learned by doing, not by reading books.  Yet most companies are looking for younger talent with new ideas and a “longer runway”.

When the rate of change on the outside exceeds the rate of change inside, the end is in sight!  ~Jack Welch

The same is true of many businesses today.  The world is getting smaller and the pace of change faster and faster.  And competition is coming from all directions, even from outside your traditional industry.  How to keep up? How to stay ahead?

The solution? Reinvent yourself!  Think like Colonel Doolittle. Take your core strengths, strip away the no longer required, and morph into a valuable, lean mean machine that is all about adding value.  Lose some weight and get your energy and creativity back.

How big is your company headquarters? Radically reduce it, push accountability out.  How big is your monthly living budget? Cut it back.  Live simply. Read outside your field.  Use your knowledge from one industry or profession to come up with ideas to help solve challenges in another company or industry. Believe in your people.  Believe in yourself.  What you have learned along life’s journey has value. Figure out how to use it.

One of my earliest and most influential tutors about life and success used to say:

“The next time you see me, you won’t be able to say ‘Here comes the same old Tom Willhite’! I will always be changing, evolving, learning and doing new things.”

Yet I see too many capable executives and managers who keep doing the same thing over and over, and loving it less and less.  I see too many corporations just marginally improving their products rather than reinventing them for new markets and a new consumer.

So, what are you waiting for?

Thanks for joining the conversation.

John R Childress

Senior Advisor on Leadership, Culture and Strategy Execution
Business Author
Visiting Professor, IE Business School, Madrid
email: john@johnrchildress.com

View my website: www.johnrchildress.com

Latest books:  LEVERAGE: The CEO’s Guide to Corporate Culture; FASTBREAK: The CEO’s Guide to Strategy Execution.

PS: John also writes thriller novels: http://novels.johnrchildress.com

 

 

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