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LEADING ORGANIZATIONS
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LEADING ORGANIZATIONS: Ten Timeless Truths Scott Keller and Mary Meaney
Bloomsbury Business An imprint of Bloomsbury Publishing Plc
LON DON • OX F O R D • N E W YO R K • N E W D E L H I • SY DN EY
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Bloomsbury Business An imprint of Bloomsbury Publishing Plc 50 Bedford Square 1385 Broadway London WC1B 3DP New York NY 10018 UK USA www.bloomsbury.com BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc. First published 2017. © Scott Keller and Mary Meaney, 2017. Scott Keller and Mary Meaney have asserted their rights under the Copyright, Designs and Patents Act, 1988, to be identified as Authors of this work. Dilbert © 2007 Scott Adams. Distributed by Universal Uclick for UPS. Reprinted with permission. All rights reserved. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. No responsibility for loss caused to any individual or organization acting on or refraining from action as a result of the material in this publication can be accepted by Bloomsbury or the authors. British Library Cataloguing-in-Publication Data. A catalogue record for this book is available from the British Library. ISBN: PB: 978-1-4729-4689-8 ePDF: 978-1-4729-4687-4 ePub: 978-1-4729-4688-1 Library of Congress Cataloging-in-Publication Data. A catalog record for this book is available from the Library of Congress. Text design: Scrap Labs Cover design: Downey Drouin Cover image: © Billy Currie Photography, Getty Images Collection Typeset by GS Typesetting
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INTRODUCTION Why? Like most organizations today, McKinsey & Company (the firm in which both authors are Senior Partners) is investing heavily in understanding the power of technological advances to help our clients and to enable us to work more efficiently and effectively as an organization. As part of our “Digitizing our Firm” initiative, we’ve implemented a relationship management support tool we call ClientLink. Starting in early 2015, client contact information in all of our partners’ e-mail address books was automatically cross-referenced with a database of just-released, publically-available business articles from top-tier sources around the world. Based on the company and position of a client executive, the database matched potential articles of interest and sent partners the relevant articles for them to then forward to their clients. This is a great service both to us as business consultants and to our clients, as it means we all have timely access to cutting-edge, relevant information across myriad sources we couldn’t possibly curate ourselves. Except that we then received these e-mails daily. At first it was novel, then a chore, then it started to feel absurd. The reason wasn’t one of volume (a manageable one or two articles were sent per day), or that the articles individually weren’t well written and compelling. It was Introduction
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that one couldn’t help but get lost in a blur of buzzwords, frameworks, hype, and contradictory assertions. One day a headline would be akin to “Compassion is Better than Toughness”. A month later, “Power is the Great Motivator”. Another day it would be “Focus on your Strengths”. A few weeks after that, “Stop Focusing on your Strengths”! Then “Kill your Performance Management System”, followed by “Performance Management: Don’t Throw the Baby out with the Bathwater”. It also struck us that the vast majority of topics being written about were the same as those we studied in business school and those that we’ve helped our clients with over the past twenty or more years. Topics related to talent and leadership, organization design, and culture and change management haven’t suddenly appeared. Yet if you read many of the latest articles about the power of collective leadership, holarchies, or predictive or recruiting analytics, you’d think humans haven’t learned anything about organizing themselves in the last 1.8 million years or so of working together. Stepping back from these observations, suffice to say we are more inclined than ever to lump business literature squarely into Bodleian Librarian and author Richard Ovenden’s view that “knowledge is created and consumed at a rate that would have been inconceivable a generation ago... Yet we overlook—at our peril—just how unstable and transient much of this information is... we [need to] choose, more actively than ever before, what to remember and what to forget.”1 The reason we wrote this book is to provide leaders with a one-stop shop for “what to remember” when it comes to leading an organization—in plain speaking. Cutting through the ever-increasing, oversensationalized, and often contradictory clutter of advice for leaders
TEN TIMELESS TRUTHS
Leading Organizations • Ten Timeless Truths
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What? to Determine which leadership and organization topics to include, we looked at three data sources. The first was the volume of articles published in the Harvard Business Review (HBR) from 1976 to 2016. We grouped the articles into twenty topics related to organizational leadership (versus other topics covered related to specific functions such as strategy, operations, marketing and sales, finance, risk, etc.). Then we analyzed how the number of articles written on those topics varied over time as a percent of all articles published. Our logic was that the lower the variance over forty years, the more timeless the topic (i.e. the topic is consistently written about, versus topics that come and go with the changing times for which there is a higher variance).
HARVARD BUSINESS REVIEW ARTICLES BY ORGANIZATIONAL LEADERSHIP TOPIC, 1976–2016 Relative standard deviation of articles on topic versus total articles in 5-year periods, % 10 Timeless Truths we’ve chosen to cover
Other organizational leadership topics
Decision-making 22
75 Influencers
Attract and Retain Talent 36
93 Gender
Manage Performance 36
96 Diversity
Transition 42
99 Joint ventures
Reorganize 42
118 Managing uncertainty
Develop employee skills 43
135 Lead self
Culture 45
141 Globalization
High-performing leadership team 50
150 Knowledge management
Overhead costs 53
158 Projojoect management
Transformational change 67
188 Lead others LOW VARIANCE
HIGH VARIANCE
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Ten topics that every leader has to grapple with, whether forty years ago, today, or forty years from now
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We then looked at the frequency of queries by consultants to McKinsey & Company’s knowledgemanagement system (as a reflection of what our clients are asking us about), for which we have data going back to the late 1990s. This analysis showed that over 90 percent of the organizational leadership-related searches were inclusive of at least one of the top ten “timeless” topics uncovered in our HBR analysis. Finally, we looked at the history of McKinsey & Company’s consulting engagements since World War II (for which we have reliable records) and confirmed that we have relatively consistently served clients on these topics over time. While none of these sources are definitive by any means, combined with our own judgement they were enough for us to stop analyzing and start writing—confident that the ten topics we’ve chosen will be as helpful to leaders today as they would have been forty years ago, and will be forty years from now!
How? some Business Books tend to have one good idea that’s explained in the first few sections and the rest of the book is padding. Others cover so much ground that they fall victim to the old adage, “If you write about everything, you write about nothing.” We’ve endeavored to structure the content and create a format so that every minute you spend with us you’ll gain a new idea that is punchy and powerful. The content is organized so that you can digest the book in one sitting, or easily snack on it throughout the day, week, or month. Every topic is divided into three intuitive, bite-sized sections: Why, What, and How clearly explained in a modern, snackable format
WHY
WHAT A AT
HOW
Why is this important? After an introduction where we define the topic and illustrate its timelessness, we then dive into the top three reasons why this topic is value-creating for Leading Organizations • Ten Timeless Truths
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your organization. Here you’ll find a treasure trove of facts to help you judge the business case for tackling the issue. What are the big ideas? Here we share the most important insights related to capturing the value for your organization. We do our best to avoid restating what’s common sense and push you to think and do things differently as a result. How do I make it happen? We then get exceedingly practical and share how to apply the insights to deliver real results. We do so by sharing a case study so you can envision the look and feel of the improvement journey, as well as detailing the specific process steps to take. Every journey is structured into the “5As” approach to change that Scott wrote about with Colin Price in Beyond Performance: How great organizations build ultimate competitive advantage. Since publishing in 2011, the approach has been proven to increase the odds of success in change programs from the well-known standard of 30 percent to 79 percent.2 1. Aspire: Where do we want to go? 2. Assess: How ready are we to go there? 3. Architect: What do we need to do to get there? 4. Act: How do we manage the journey? 5. Advance: How do we keep moving forward? While the topics are timeless, the format by which we cover each section described above is decidedly modern. Each idea is conveyed first with a Twitter-friendly summary of the key takeaway that leaders need to know. Then the idea is expanded on in a blog-style format that’s accompanied by infographics that visually reinforce the key points. Our hope is that the sum of the ideas in each chapter add up to the same kind of intellectual adrenalin rush as a great TED Talk. And your journey with us doesn’t end when you put this book down. Quite the opposite. The same tweet-/blog-/ infographic-oriented approach is used in the mobile-friendly website at www.mckinsey.com/LeadingOrganizations that enables you to access further information on these topics, receive the latest insights from McKinsey & Company’s
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organization practice experts, and help shape what topics we tackle next. What’s more, the site provides an opportunity to connect with peers who are passionate both about applying timeless wisdom and staying on the cutting edge of leading organizations.
Who? We feel fortunate to be holding the pen when it comes to putting all of this on paper. In pulling together our best thinking for you, we’ve drawn on the knowledge and research of many of our colleagues at McKinsey & Company and many other practitioners and thought leaders around the world. That said, we acknowledge that we are simply the beneficiaries of any truly timeless insights offered— these have been forged by the experience and wisdom of innumerable leaders over decades and centuries. For those not familiar with McKinsey & Company, we are a worldwide management consulting firm founded in 1926. Our clientele includes 80 percent of the world’s largest corporations, and an extensive list of governments and nonprofit organizations. More current and former Fortune 500 CEOs are alumni of McKinsey than any other company. As for the authors, Scott is a Senior Partner who has been with McKinsey & Company for over twenty years. He lives in Southern California and is the Global Leader of Knowledge for the firm’s organization practice. Outside of work he enjoys spending time with his wife and three boys, playing guitar, exercising, and traveling—a lot (so much so he’s been to 194 of the 196 countries in the world to date!). Scott holds an MBA and undergraduate degree in Mechanical Engineering from the University of Notre Dame, both with distinction. He has previously worked as a manufacturing manager for Proctor & Gamble and a photovoltaic engineer with the United States Department of Energy. Mary is a Senior Partner who has worked for McKinsey & Company for almost twenty years. She lives in northern France and leads the firm’s organization practice in Europe, the Middle East, and Africa. Outside of work, she loves her family, reading, and travel. She has a doctorate from Oxford
Leading Organizations • Ten Timeless Truths
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on a Rhodes Scholarship, and an undergraduate degree in Public and International Affairs from Princeton. Both Scott and Mary would love to hear your perspectives on leading organizations, and can be reached directly at: scott_keller@mckinsey.com and mary_meaney@mckinsey.com. Enough with the preamble. Let’s do this!
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