The Coming Tension: The Democratic High Performance Enterprise

April 19th

There is a growing tension that will will be seen in the future Enterprise as many of the same technologies that are making it possible for new voices to be heard will also empower the sometimes opposing effect of top-down, centralized management.

I have discussed the dynamics of the bottom up communications revolution from a number of perspectives. But in essence what is most important is the recognition that the constituencies of the traditional firm–the myriad stakeholders are being given a new voice What’s more., the transparency of the modern enterprise makes it possible for these stakeholders to see the effect of the forces of competition. They can see and now they have every reason to be concerned.

What the empowerment of stakeholder constituencies has done is to create a new democratic force that will ultimately change the dynamics of the traditional hierarchical enterprise. The force of democracy will exert new pressures that will ultimately change historical traditions and strategic priorities for the future.

Yet at the same time, technology is making it possible to improve performance in the short term by creating a new age of performance management.  Today we live in the era of the smart enterprise as IBM might put it where there are indicators of performance, intelligence about the movement of the operating parts and interoperability among information systems.  By creating measures of performance where none have existed in the past, the modern enterprise is going to be able to wire itself to a new performance ethic.

The Coming TensionMany of the conversations about data and technology are leading in this direction.  The Internet of Things and the new capabilities of Big Data analytics are going to empower the power of top down controls at the same time that Information Technology has strengthened the capacity of the grassroots organization to assert new powers from the bottom up.

That there will be new tensions within the modern organization as top down meets bottom up.  Successful future leaders will build the capacity to mitigate tension and establish decision priorities.  There will be times when different, and possibly contradictory priorities are most important to the future of the enterprise.

To establish principles of service and frameworks for evaluating value will be critical in defining the ultimate goal by which these contrary impulses may be reconciled in the future

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The Transformation Strategy Model

April 15th

There is value in creating a model to understand the interactive dynamics of the elements of transformation. In a time of rising and falling fortunes, the growing stakeholder activism is going to create major communications challenges.  The model helps anticipate the forces of the changing system dynamics.

The strategic transformation model was created overnight in 2002 when the final editor in a series of publishing stages ask for a change in an article that I was going to publish in the Harvard Business Review. The initial proposal had been to discuss lessons learned in the effort to transform the US Postal Service. I was leaving my position as Vice President for Strategic Planning at the Postal Service to return to my private sector management consulting career.

The article was ultimately named (by the Harvard Business Review)”When a Turnaround Stalls”. I learned the hard lesson that you don’t necessarily get to put a title on your own article and there are many, even most readers, for whom the title is the most important part and sometimes the only thing that they read.

My personal view was very supportive of the senior management of the Postal Service that I continue to believe does an extraordinary job just to make the complex, difficult machine work as well as it does. Every night the service moves almost a half a billion pieces of mail and many local postal workers would literally be buried in the mail if they didn’t make the machines work in the night. But when I tried to get a final anecdote into the article, Word came back from the editors “Does he understand the phrase pandering?” and I found out who was running the show.

But in fact, the transformation of the Postal Service, at one point in 2000 referred to as the turnaround story of the nineties, had stalled.  While chairing a hearing on how to perform in the spring of 2001, seven or Fred Thompson set man exclaimed “Okay I get it the taxes in the ditch, big time”

Given the setting, lessons learned seem to be agreed to far and we headed them out of the draft. But with 24 hours to go to the publishing deadline, the final editor came back and wanted lessons learned. I wrote them in an hour, Although I had written them before over the period of months and we have been debating for transformation for six years you’re in

Screen Shot 2014-04-15 at 1.27.46 PMPostal transformation inevitably followed a pattern that has been shaped by dozens of American icons in business that have had wholesale change in the years following the Internet Revolution and other traumatic turning points of recent years.

The enterprise comes to recognize that it must change.  Alternative innovations that would redefine the future are considered.  A balance must be struck between the vision of the future and the traditional enterprise.

In the Strategic Transformation model above each of these three perspectives are captured and noted. In coming posts we will explore the dynamics of transformational change.

 

 

Your Personal Brand

April 15th

You need to be ready with your own concept of your personal brand because it anchors your mission.  In the modern market, where everyone can be their own publisher, no one will have time to wait for you to think it up; nor can you sustain authenticity if you shoot from the hip and aim haphazardly. 

I learned the hard way.

We were at the high-end British Columbia ski resort, Whistler, at a conference on the global postal industry. In retrospect, I should have been more appreciative of my surroundings. This was living large. But at the time it just seemed as though it was a nice dinner at another economics conference.

Some friends and colleagues and I got up to leave to go back to the hotel. Others were going to move to the bar.  Suddenly a colleague from Swiss Post for whom I have great respect looked up and said,

“Are you leaving? We haven’t gotten a chance to talk this week.  Tell me, what’s your brand?”

I must’ve looked puzzled.

“…So that I can tell others about what you’re doing these days,” he explained. It didn’t help. I didn’t have an elevator pitch about my brand.

Of course I knew what he was talking about. At Harvard Business School the marketing professors used to talk about brand management as one of the great breakthrough management innovations that has come from the American marketplace.  And when I was at Market Opinion Research, we used to talk about the rise of new brands, especially in political policy analysis.

And I knew the concept of having a personal brand.  I remember Tom Peters (of In Search of Excellence, Tom Peters, Robert Waterman. 1982) talking about personal brands and personal mission statements in the 1980s.  But the point was that here I was being asked for my brand and this was probably exactly the setting and exactly the questioner that I would have chosen to illustrate the need to have a personal brand.

The Triumvirate

The Eiger, the Monk and the Jungfrau

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 Not only was this  a respected colleague, an executive with Swiss Post, but he was also collaborating in setting up a Center on Innovation in Lausanne.  You could not have picked a questioner who would have been closer to the heart of my work and interests.

I have watched as the concept of personal branding has moved from the self help section of the book store to a central concept among the leadership books in the on-line book store.  In these times, there is a practical necessity to communicating with brands, a concept that’s not far from SEO (search engine optimization).  But even more importantly, if you are going to communicate in symbols, you need to connect the short hand to your moral compass or you will consign yourself to living in the froth.

For me, the symbol of the Eiger the Monk and the Jungfrau anchors the recognition that my work on the growing activism of the stakeholders and their constituencies was in fact illustrating an emerging dynamic that will be especially important to future leaders of transformation.

Figure 1 The Transformation Model

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It’s important to see that in the successful, thriving enterprise,  points of Strategic Inflection will be replaced by the innovation that is traced by a second curve.

But the constituencies are going to have significantly different agendas on the upslope and on the down slope.

Leaders have spent their careers learning how to advance with one set of assumptions and then, one day, while colleagues and forecasters are telling them that the change is not really coming, it does.

In the transformational setting, there will be a need to rethink the givens.   Far smoother transformations will come for those who can anticipate the way that expectations and priorities will change as growth is replaced by decline and then replaced again by new growth.

 

Telling Your Story

April 15th

Leaders in a complicated, over communicated marketplace will need to focus on telling their stories in an increasingly compelling manner, that and to recognize that the audience is listening for a story about a success and the way forward, not another Information Age melodrama

Unquestionably one of the most striking aspects of my experience in teaching at Georgetown’s McCourt School of Public Policy was to watch the power of telling the stories that came from my experience in more than 3 decades of working on public policy concerns during times of stress and transformation.  Frankly, I had slipped into a pattern that’s familiar, especially in the business, government and academic, settings where I had worked, of taking the work seriously and sometimes ourselves even more so.  But it was stories that communicated.

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And its not as though I had not been given fair warning.  In 2011 I had traveled to Wilmington to teach a class at the National Association of Corporate Directors advanced workshops.  My subject was the experience of telling the Board of the USPS that volume would almost certainly decline unless there were an unexpected change in the patterns that were already visible in  the markets that were being reshaped by the Internet.  But they didn’t believe me.

My story may have been believable from an analytic perspective.  They allowed me to put the forecast of decline into the Strategic Plan that we published in 2000.  But as Vice President for Strategic Planning more should have been expected of me than making the right forecast and publishing it.  The organization did not want to face the painful choices that would follow from accepting this view.  Multiple stakeholders were even more passionate in their rejection of the forecast of decline.  And to be fair, for at least 6 more years the trend seemed to be rising, not falling.  Only later was it clear that this was only a recovery from the decline that followed 9-ll.

“You needed a better story,” one of my director students told me after the session.

I remembered an interview that I had seen in the Harvard Business Review in 2003, (“Storytelling that Moves People, A conversation with Screenwriting Coach Robert McKee”, Bronwyn Fryer, June 2003.)  She asked a professional screenwriter and coach “why is persuasion so difficult and what can you do to set people on fire?”

His advice was that you have to unite an idea with an emotion.  “The best way to do that is by telling a compelling story.”  McKee explains that your goal needy s to be to harness imagination and the principles of a well told story.  “A story expresses how and why life changes,”  He explains that stories begin with a situation where life is relatively in balance “but then there’s an event – in screenwriting we call it the “inciting incident” – that throws life out of balance.  The story is the description of the protagonist’s experience with the crash when subjective expectations confront uncooperative objective reality.

The classes that I taught at Georgetown soon contained the stories that had shaped my perceptions of leadership and what it takes to lead change successfully.  I commited to finishing writing about what I had learned before I returned to communicating it and one of the benefits of doing that will be that now the stories will be included as well.

Including the stories also lends a sobering touch to recalling my experience.  If my story had given the leadership any compelling message that connected an idea with emotion, it had to have been a story that conveyed an ominous warning of pending disaster.  Perhaps that was appropriate.  But its not a story that you want to tell inadvertently, and it would have been even more important to have recognized that the story needed to be about the successful conclusion rather than the pending crash.

 

Grounding

April 14th

GerogetownDefining your vision and connecting it to ground truth is more important in an age when the pace of change is accelerating exponentially than it has ever been before.

The process is surprisingly personal.  Some leaders may find it difficult to take the path that grounds strategic insight by making a personal connection.  Yet this personal grounding process is critical to sustaining legitimacy and practicing authentic leadership, especially when turning points requiring judgment are coming faster and more often.

In my case, the process came together in a classroom.  In the spring of 2013, I had an opportunity to teach a course on Leading Transformation at Georgetown’s McCourt School of Public Policy.  Because the experience created such an important turning point in focusing my interest in exploring the dynamics of transformation, I wish that I could point to a key moment or an encounter with a burning bush when there was a dramatic conversion. But instead it was the process of teaching and then writing that created the most significant impactGerogetown.

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Gerogetown

Gerogetown

Gerogetown

GerogetownCertainly the class did have its moments.

  • I asked the students whether they knew what I was talking about when I referred to Andrew Grove’s “Strategic Inflection Points”. One of the students told us “that’s what my boss calls the ‘Come to Jesus moment’ ”.  And I smiled and thought to myself only at Georgetown.
  • Or there was the time when I asked the students whether they remembered what I had talked about the previous week when I had described five arguments for democratizing transformation. I watched with astonishment as one of the students read back to me the five points in succession. It’s frightening. They were taking notes and listening to what I said is if it was doctrine.
  • And there was, at least for me, the dramatic moment when I began telling my own stories about my experience with energy policy making.  There has been such a dramatic change in the US strategic position as the country is now poised now to become an energy exporter.  This moment seems so different from the grim days of Energy independence in the ‘70s that I thought there was a need to anchor the change.  These were stories that dated back to government and to teaching in a classroom at the Yale School of Management decades earlier, and yet they were part of the insights that had brought me to that graduate school classroom at Georgetown. A visitor would have found it difficult to miss the fact that these stories were communicating far more effectively than anything that I had said earlier in the evening about policy or theory.

What was as important as the interaction with the students, was my commitment this time to write about what I had learned.  A monograph that I had written for the IBM Center for the Business of Government, “The leaders guide to transformation: Creating a Playbook for leading Transformational Change” was what had led me to Georgetown in the first place. The class was an opportunity to explore what I had learned about leadership and the dynamics of transformation

The experience of teaching the course and writing the book was important in shaping a turning point in my thinking.

  • First, the book took me back to a much broader perspective.   When I was recruited by the postmaster general to lead the development of the digital strategy for the Postal Service at the dawn of the Internet revolution,  I found, as many leaders do, that there is a severe challenge in living in both the world of strategic insight and high performance at the same time.  Even when it’s possible to sustain the focus on strategic initiatives rather than the next quarter’s earnings, it’s often because of an investment in depth rather than breadth and performance is achieved at the expense of perspective.
  • Second, the course and the book kept my focus on the dynamics of transformation.  I was given a unique vantage point in the ‘90s. Two decades later, the experience had yielded as many insights about the dynamics of changing large complex organizations in the new marketplace as it had identified digital business opportunities. (There were many of those.  But ultimately one of the things that was most interesting about them was the struggle that they created within the traditional organization that often was highly effective in killing them off.)  The story is rich.  But the distractions are many.  What may be most important in the end may be the insight into the dynamics of leading change
  • Third, the interaction with the students made it necessary to draw upon experiences in multiple public policy and public-private areas of interest.  When I was recruited to be the first Vice President for technology applications at the Postal Service and went on to be Vice President for strategic planning, I found myself hearing the echoes of the challenges that I had seen former leaders face in fields that ranged from energy policy to healthcare to telecom, politics and government.  The creation of the Internet was not my first experience with at epic transformations or the traumas that they create for leaders.  The course at Georgetown and the book that followed reconnected me with broader interests.

Perhaps most of all the experience of teaching reminded me that there is a ground truth that comes from the process. Ground truth is often cited today as critical in balancing the perspectives of leaders.  For those who have not yet encountered the phrase, ground truth is what General Colin Powell describes as the kind of insight that he was able to get throughout his career by walking around and talking to people about real problems.  Leaving the eighth floor and the view over the mall to talk to State Department employees in hallways, waiting for elevators and on their way home was critical to him in keeping him grounded.

The process of teaching, of trying to explain the ideas in simple clear terms, was a filter that drove much of the theory into the end notes.  Talking to students with diverse backgrounds, and in Georgetown’s case, with diverse public policy interests, reset my focus to the wide-angle lens.  The experience caused me to personalize the story in a way that I never would have anticipated would be useful, even important in making in accessible for future leaders who will have to make such connections to sustain their authenticity.

Gerogetown

The Creative Balance

February 21st

Triumvirate

 

PART III:

FORMULATING SUCCESSFUL STRATEGY:

FINDING THE CREATIVE BALANCE

Only in rare cases can a transformation strategy assume that it is being created from scratch. What is more common is a situation where there is an ongoing enterprise. The traditional business model may even have been highly successful even though the time for transformational change may have been evolving for some time.

The basic strategic initiatives are not likely to be a great surprise. They most likely involve new strategies for reducing costs and increasing revenue. (For colleges this has often meant going beyond cutting perks and even staff. And new revenue has been sought through new special programs.) But these strategies are rarely achieved without pain. On the other hand, reducing the cost line through improved productivity, new technology or through innovation or new revenue sources will hold the promise of a smoother transition to the new state. This much is generally well known.

What will be increasingly important to future transformations will be the need to find a creative balance between the innovators and the traditionalists. With rising activism in the stakeholder constituencies everywhere, the balance point is most likely going to be difficult to calculate without engaging the stakeholders. (Even if the president realizes the ship is sinking, you can’t assume that every stakeholder just wants to save their position and maintain status quo.) To learn where everyone is, the most effective approach will be to democratize the enterprise and grant the stakeholders roles in strategy formulation, ones that they will most likely seize for themselves in any case.

➢ Do you have the key transformation initiatives in your sight?

➢ Will they be difficult to balance between the traditionalists and the innovators?

➢ Do you know who the interested stakeholders will be? Are you including them in the process of shaping the future?

Democratize the enterprise to find the creative balance point and secure the transformation strategy on a solid foundation of trust.

NEXT: MANAGING IMPLEMENTATION DYNAMICALLY

Centering Transformation with Innovation

February 14th

Triumvirate

PART II:

Innovation 

The vision of a new future is essential to transformation. In fact, the transformation process is, at its core, the journey from one state that is facing decline to a new and better existence.

Innovation is the process that you have to rely upon to create a focal point for such a vision of the future. For it to be reliable, your innovation process has to become a proven method where you have confidence that you can invest resources and produce expected results in a predictable timeframe.

Yet, even as innovation is being discussed more frequently by the leaders of colleges everywhere and its dynamics are becoming better understood, many leaders have come to recognize that innovation often must be disruptive. Incremental changes that are made to sustain the traditional enterprise and the traditions of the past are not likely to be equal to the scope of the transformation that will be needed. In many organizations, as stakeholders gain greater voice, disruptive innovation will be difficult to manage unless it is crafted through open dialogue that brings all the stakeholders into the conversation.

➢ Do you have a shared vision of an innovative future?

➢ Is the innovation process a trusted and reliable one that will produce predictable outcomes in the time that you need them?

➢ Will the innovation process that you have today produce results that will be equal to the scope of the challenges that you face?

➢ Is the innovation likely to be broad enough? Is it going to be disruptive of the traditions or distressful for the stakeholders who will have to support it?

In the modern transparent enterprise, it’s unlikely that disruptive innovation can be kept secret and sequestered—more likely it will have to be open and the stakeholders will have to be invited to participate in order to let it proceed at all.

NEXT:

FORMULATING SUCCESSFUL STRATEGY BY FINDING THE CREATIVE BALANCE

Leading Transformation: Timing the Launch

February 7th

Triumvirate

LEADING TRANSFORMATION 

PART I:

TIMING THE LAUNCH

A common theme among would-be leaders of successful transformations is the need for crisis to spur action. And veterans of managing change initiatives will concede that indeed it is sometimes useful to have a larger compelling event to encourage acceptance of change. But what is even more important to successful transformation than having the stimulus of crisis-driven urgency is the need to understand context.

The need for transforming both public and private organizations often begins with recognizing that there is a decline coming, a place where the traditional growth path that has sustained the institution turns downward. But it’s too easy to assume that every case that requires transformation should be treated as if it were a crisis, or that every transformation requires immediate action. In some cases immediate action would come none too soon. In others there may be time to build capabilities, to develop new programs and introduce orderly change.

The problem with jumping the gun is that it creates confusion. Especially in an age of activist stakeholder constituencies, the perception of the timing of a coming downturn in finances and the prospects for the future will have a different meaning for different groups. You need to start by understanding where you are or stakeholder reactions will confound even the best-crafted plan of action.

You should ask a number of basic questions:

➢ Is there a turning point coming?

➢ Is change necessary?

➢ Do you know how much time you have?

➢ Do the key actors in a transformation understand and support the need for change?

In the end, the leader will still have to decide that the time to launch new initiatives has come; but now, in the age of activist stakeholders and transparent enterprise, you will have to build consensus and bring the crowd along.

NEXT: CENTERING TRANSFORMATION WITH INNOVATION

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Leading Transformation: Introduction

February 1st

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LEADING TRANSFORMATION

INTRODUCTION

There are five questions that inevitably must be faced by any leader who seeks to lead enterprise transformation. Difficult challenges involve the timing of the launch of the transformation initiatives, the role of innovation in defining the future vision, the best way to formulate successful strategy, the best way to manage implementation dynamically, and to how to institutionalize the process of sustaining the gains. No matter how the need to transform presents itself, these five core topics will be at the top of the list of the challenges that future leaders and their boards must face.

In the past two decades, and particularly in places like the Postal Service, newspapers and the telephone companies, technology has played a critical role in forcing the issue. But it’s important to recognize that critical moments of strategic inflection, when transformation becomes an imperative, are being driven by many different causes from technology to risk to financial crisis. Technology change that has created a global marketplace, transparent enterprise and collaborative work styles serves here as a valuable illustration of a broader dynamic. Transformation will not only mean adapting to technology change, it’s going to change the way that we have the conversation about the future, even who gets to participate and how.

If the moral of this story were just “adapt to new technology,” there would be little news here. Instead, the new dynamics of transformation will be shaped both by new forces for change and by the rising democratic impulse among the stakeholders who have recognized that their interests are at risk. Their voices will increasingly be heard in guiding future transformations and they play a central role here.

 NEXT: Timing the Launch

 

As I came to the end of the process of writing about the course on Leading Transformation that I taught at Georgetown’s McCourt School of Public Policy a friend who has been exceptionally successful in working with small and independent colleges and universities on transformational leadership asked me to tell him about the course.  The conversation led to this introduction and 5 brief sketches.  

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Thinking About Tomorrow

October 28th

In 2000, I was the leader of Strategic Planning at the USPS when the agency was required to write a Five Year Strategic Plan.  The Board of Governors was extremely interested in this requirement and I soon found that the effort to write the Strategic Plan at the height of the Internet Revolution was a controversial task that was debated at the highest levels of the organization.

For me, predicting a dramatic mail volume decline seemed to be a no brainer.  But there were many smart people who had seen predictions of mail volume decline before and they remembered that the earlier forecasts had all been proven to be wrong. I had a good deal of analytic support.  Focusing on the coming loss of First Class Business Mail (businesses sending one another bills and making payments) alone explained a good deal of of the pending loss of volume.

But the opposition view was strenuously held.  There were a significant number of individuals and businesses who had a lot at stake .  Private companies in the mailing industry who had to defend their businesses to Wall Street every 90 days clearly did not want to hear about the predictions of decline.

Postmaster General Bill Henderson wanted me to find a more persuasive basis for anchoring the Strategic Plan.  He directed me to go up to Harvard to meet with one of our advisors, Professor Anthony Oettinger, the well known Harvard Professor of Computer Science.

I laid out my case.  ”OK,” Professor Oettinger responded, “But how do you know that this is going to happen? It’s the future.”

I recognized that he had a point and we put three alternative scenarios into the Strategic Plan.  The graphic to the left was presented to a conference of Mailers in 2009 by the former Chief Financial Officer and me.  The Red line represents our baseline.  The Green line was the worst case.  We left the optimistic case off of this chart when we presented it in 2009 because it seemed to be a distraction that increasing mail volume could have ever seemed to be a reasonable forecast.  The actual mail volume (Blue and Purple) showed that we had been pretty close in 2000.  We were correctly forecasting the decline.  (I still don’t believe that this was rocket science given what was happening in the world in 2000.)  The purple line shows that following the financial crisis, mail volume collapsed.

One of the problems with putting scenarios into the forecast was that everyone could find their favorite theory and it didn’t force anyone to act differently.  Acceptance of the baseline prediction of mail volume decline would have allowed the USPS to construct a far softer landing than it is struggling with today and to see transformation of the institution as much more of an imperative.

But i don’t think that those who continued to have faith in growth were Neanderthals.  What the curve that represents “actual” volume (Blue) shows is that after 9/11 there was a decline that was associated with the recession.   The recovery restored volume but it left open the question of whether to interpret the growth curve as a short term reprieve or sustaining a long term growth trend.  The pattern is clear today.  But to have understood the strategic framework sooner  would have been valuable and important to the future of the institution.