There are innumerable articles, explaining the virtue of good leadership, and lessons from the good to great companies. This article, however, focuses on drawing a few insights from what went wrong, and what is going wrong in various organisational context - be it Corporate, Social, Government, or Education sectors. The article is an outcome of intensive internet literature review on this subject, and also the author’ s almost two and half decades experience in multiple sectors and interaction with almost 40 top notch professionals, in various industries, functions over the years.
Organisation is a live organism. A living system, where in inputs get converted to an output which is sold in a place of economic activity. In the world of economy, we can see a Institutions of all types are attempting to build a pace at which they can:
Create a healthy top and bottom-line, quarter on quarter
Reach market place, faster than anybody else and get connected to the confused
specimen - “so-called-customer”
The story line is same - be it an industrial enterprise, an educational institute, a non-governmental agency, or even a “Pan” Shop/Saloon – all are running fast and faster to create that inspirational economic surplus known as “profit”. This profit then gets further utilised to expand the economic scenario, and the expectation goes on... In today’s world economy, paradoxical organisational reality, and stringent policies for raising additional funds makes each organisation’s survival a complex process. The inability to identify the right talent at critical positions, besides the top gun, brings untold woes to even large conglomerations. The most important factor in making this happen is another specimen called “Employees”, who are expected to analyse, assimilate, and apply new knowledge to create effective wisdom to build the Bottom-line.
Managers are expected to make decisions to achieve these “numbers”, given to them by the enterprise’s owners. During the last 10 years, after the beginning of the millennium, researchers and consultants are striving hard to identify new meanings to the existing knowledge and capsule it various branded “knowledge”. They develop trends, which are sold at a huge cost, and finds that the same is not useful, when it gets applied. Reason – the context and the way in which the knowledge applied was improper.
Let’s look at some of the best corporations in the world (in 2000) and recent phenomena in India and get some insights?
Two Wipro CEOs sacked for poor results. :” Wipro chairman Azim Premji, in a decisive move, ousted the two men - Co-CEOs, Girish Paranjape and Suresh Vaswani - he had handpicked less than three years ago to run the country’s third largest IT services company and the 21st most- valued firm, on Friday,1st March, 2011, and replaced by an insider K Kurian”
The Chairman of Satyam Computers, one of the fastest growing IT Companies in the country, has been arrested for mis-appropriation of massive funds of the Company.
Period 1999- 2001: “Lucent Technologies, One of the best technological companies in the world, boots out. Richard McGinn, and brings back Henry Schacht, who led its 1996 spin-off from AT&T Corp., after the company's shares plunged 68%. Stories during Henry’s regime give other interesting. perspectives on the leadership profile of some senior members of his team, which have caused. this debacle”.
“Nasser, CEO of Ford, one of the greatest automobile companies in the world, after spending 33 years at Ford (where he became president and chief executive officer and was renowned both for his abrasive style and ruthless attitude to cost-cutting, earning him the sobriquet of “Jac the Knife”) has been moved out. His resignation brings to a close an increasingly embattled tenure, troubled by a dispute with Bridgestone that led to Ford's recall of millions of Firestone tires. During this period, Ford reported a third-quarter net loss of $692 million, the second consecutive. losing quarter and the first successive losses in nearly a decade. Shares in Ford have declined. almost by 50%”.
“Gillette had invested $35 billion to bring the entire Mach 3 system, protected by 35 patents, to the market. As a result, the corporation set the price for replacement cartridges about 35% more than its previous best-selling razor, the SensorExcel. Marketing strategy was slanted to persuade current Gillette product users to trade up their previous equipment in favour of the newer, more expensive models because of their improved performance, offering a closer shave with fewer nicks and cuts. Gillette saw its worst economic performance in almost a decade in 1998. Sales during the third quarter of the year alone dropped 15%. Gillette management announced staff cuts of 4,700 jobs, about 11% of its total workforce. Lowered sales in key markets such as Brazil, Germany, and Russia also contributed to the loss of income. Share prices dropped by 11% virtually overnight. Gillette's underperformance continued in 1999 and 2000. In October 2000 Gillette's managing board responded by firing CEO Michael Hawley”.
Xerox: “G. Richard Thoman arrived for work to find an urgent summons from Paul A. Allaire, the man he had replaced as chief executive of Xerox Corp, a few years back. Allaire said that Thoman's colleagues had lost confidence in him and that the next afternoon the board would announce his resignation. In other words, Thoman, who had left IBM in 1997 to join Xerox as heir apparent to Allaire, had been fired in absentia. The CEO succession plan that had begun so promisingly had ended in utter disaster for Xerox and Rick Thoman. Xerox story provides an insight into corporate interpersonal dynamics.
“CEO Durk Jager of Procter and Gamble resigns abruptly. A controversial corporate veteran who tried to shake up the venerable consumer products maker through an aggressive growth strategy quit abruptly amid the company's ongoing profit woes, after serving as its CEO for a turbulent year and a half. He spearheaded an ambitious restructuring effort, dubbed "Organization 2005," which was intended to boost sales and profits by introducing an array of new products and by closing plants and eliminating jobs. The six-year, $1.9 billion effort, however, cut into profits at the largest U.S. household products company - a 162-year-old blue-chip firm that traditionally had been known for steady earnings growth and conservative management. Former CEO John E. Pepper, who retired from the company in 1999, will return as chairman of the board”.
“The resignation of Douglas Ivester, the chairman and chief executive of Coca-Cola, was a shock. The company's share price fell by 12% in two days as investors fretted over why a Coke veteran of 20 years, hand-picked by his esteemed predecessor, Roberto Goizueta, and for whom Coke was "the most noble business on earth", would suddenly retire at the age of 52 after barely two years at the helm. Not that things have gone well for Ivester. Since he took over in October. 1997, he has presided over two of the worst years in Coca Cola. Coca-Cola needs more than a change of chief executive to solve its problems. It needs to lose its fear of risk.”
“Compaq CEO Eckhard Pfeiffer, who masterminded transition from PC vendor to broad-based computer supplier, gets the boot after warning of lower profits for its first fiscal quarter, ended March 31, 1999. Pfeiffer's departure from Compaq also places a question mark over how successful the company has been in its integration of Digital Equipment. When Compaq did the acquisition of Digital, people said, 'If anyone can do it, it'll be Eckhard Pfeiffer. Pfeiffer joined Compaq in 1983 and became company CEO and president in October 1991, in a dramatic. shakeup that led to the departure of cofounder Rod Canion. Rosen has been made as Interim Chairman, who is one of Compaq's founders.”
The literature review of Corporate world during the last one decade, and the economic slowdown witnessed by all of us a few years back all bring out four major insights:
We are extremely good in acknowledging mistakes and its lessons, but never learn to apply the same, pro-actively. Reason – Organisations‟ inability to effective listening.
Inability to take effective decisions with long-term perspective. Many lessons including erosion of market capitalisation of big companies clearly indicates the inability to take managerial decisions from a long-term result orientation. Reason – The Management’s inability to work as an effective team, over dependence of past perspectives, and non-appreciation of risk (the inability to defend the operating team, against a volatile stock market).
Lack of focus. Many times our performance measures are only short-term indicative. Neither our monitoring process nor our measurement yardsticks help us think and deliver effectively. Reason – Our uncanny ability to use benchmarking experiences, in a non-innovative manner!!
Prescriptive communication – Communication with post-mortem reviews, non- exciting, non-energetic communication extolling people to deliver without actively engaging them to understand why they are not delivering? Reason: Our basic attitude of “I-know-what to do here, you just listen and do as I direct”, while impressively sharing the need to work as a team!
Research on many organisations also clearly indicates that Board/Management seldom see what needs to be seen, listen what needs to be listened to, and act on what needs to be acted. On the contrary, with stakeholders mandate to create economic surplus, the management moves around different directions, along with its with “huge individual wisdom” – based on “what is desired” from the enterprise owners. How successful companies manage to make wrong decisions: in Marketing, in choosing the leaders and team of critical people etc., as can be seen from the cases above? Let’s ponder over another four main insights.
Some organisations, which were doing very well have gone down, and the tell tale signals were there in such organisations much before the downfall occurred. Reason – Complacency and the attitude “we survived an earlier crisis and managed it well, and we have enough. wisdom to correct, if at all it occurs again”.
Some other organisations snaps up other organisations and then struggles to manage the acquisition. Inorganic growth through acquisition helps to improve top and bottom line, but it need not be a simple addition (1+1=2). It can also be 1+1 =< 2. However, the entire projection generally will be on 1+1=2 or 1+1>2, without having a contingency plan. Reason – Lack of ineffective communication and having a buy-in at multiple. levels to make it a winning combination.
Some other organisations are too busy in putting systems and processes, which are world class, without appreciating the existing culture –“as is” basis. Reason – Our belief that if “x‟ best practices are helping some organisations successful, these best practices to be successful in our organisations too.
Most of the organisations, in crisis, deploy national/international consultancies and expect them to deliver better, collective wisdom. These consultants with their varied experiences mostly dip in to their vast research library (with European, American case studies!!) and gives umbrella solutions to an issue, which is contextually far more different. A more pragmatic, in-house “empowered” solution would have more chances to succeed. Reason – The basic purpose of engaging an international /external consultancy, and lack of buying in process in engaging them, resulting into a “Group Thinking”. Phenomena and the attitude of “if boss believes that it has to be done, let it be so”.
The Business needs in today’s context are simple and are universal. They are:
Ability to build flexible process and systems, depending on the dynamic market environment
Ability to be adaptive – maturity of the Systems and Processes to relate to the environment – to generate additional pace
Focus on building an effective, sustainable organization and not just Quarterly Result orientation
Creating a high Knowledge base – an interactive process of learning from past and applying these. learning systematically in the organization by all who matters.
These eight insights shared earlier very clearly indicate that to get these four simple business needs to be implemented in any organisation, the following four behaviour to be instilled: organisation-wide, which otherwise will never build a positive, stable and result oriented Organisation.
Ability to reflect and do course correction- ability to listen and learn what others do not learn.
Value oriented leadership – not just integrity, but the ability to walk the talk.
Ability to reach out to help and provide help – have a social conscience.
Able to be creative – a mind to “let go”, and team learning.
Whether the organizations are moving towards this direction or not can be seen and felt, if we look at the “points of reflections”.
Defensive” while interacting?
“Reactive; emotional” – works on personalities and not issues
“You need to understand me – rather than me understanding You” – Does not listen.
“Standing with the team” – high “I” syndrome in all decisions and communications.
“ Corridor Talk of what is going wrong”; “Buy-in – participative or consultative”
“What behavior a leader is exhibiting” – total alignment or participative alignment?
“Is my team growing” or “ what is in it for me?
“What are the success points of Sustainable growth – in the history of the company” – Anybody
identified “what” and “why” part of this, and taken any actions?”
“In the last few years of running the organization, in what way leaders at different levels have stopped creativity in the organization”? – How many ideas have been really translated into actions?
What parameters get reviewed month on month by the leaders? – Review points are focusing on
processes or only on results and how results can be achieved within the budget? A Stable, Result Oriented Organisation pre supposes a visionary, people sensitive, focused and firm leadership. Organisations must have a longer national perspective of building national economy, not just its stock market and market capitalisation. A robust national economy - reflective education, thoughtful political leadership, rejuvenated social leadership (recent episode of Anna Hazare and the support he garnered indicate how much this type of leadership is missing in the world today) and visionary, conscientious corporate leadership – helps build better economic surplus all around. Knee-jerk actions with a short term perspective with more focus is on “increasing economic surplus” by each companies are not going to help the world economy. These changes will also help to create a responsive media, which brings quality readership/viewership, creative thoughts than today’s vicious, cut-throat, decaying “fourth estate”.
References:
Unnatural Leadership: Going against Intuition and experience to develop ten new leadership instincts, David L Dotlich, Peter C Cairo,Jossey Bass Publications, 2002
The three laws of Performance: Rewriting the future of your organisation and your life, Steve Zaffron, and Dave Logan, 2009, Wiley India Publications
Managing Radical Change: What Indian Companies must do to become world-class, Sumantra Ghoshal, Gita Piramal, Christopher Bartlett, Penguin Books India, 2000
Winning , Jack Welch, Harper Collins Publications, 2005
Learning Group: A process tool to enhance Communication and Group Working, Baburaj V Nair, in Value Creation (Edited Book), Tata McGraw Hill Publications, 2000
The differentiated workforce: Transforming Talent into Strategic Impact, Brian Becker, Mark Huselid, and Richard W Beatty,2009, Harvard Business Press
The Elements of Great Managing, Rodd Wagner and James K Harter, Gallup Press
Corporate Creativity: The Winning Edge, Prandip N Khandwalla, TataMcGraw Hill Publishing Company. Limited, 2003
Internet Literature on: worst CEOs in American History; Worst CEOs of the Decade, and 10 most common traits of bad leaders,
Confronting Reality, Larry Bossidy & Ram Charan, Random House Publications, 2004.
The Quick Wins Paradox, Mark Van Buren & Todd Safferstone, Harvard Business Review South Asia,
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